Sides Battle Over Insurance Litigation Changes
TALLAHASSEE — Florida lawmakers began moving quickly Monday to pass major property-insurance changes, with supporters saying the plan would stabilize the troubled system and critics saying it would hurt consumers.
Sen. Danny Burgess, R-Zephyrhills, said lawmakers need to take action as homeowners across the state face large rate increases and struggle to find coverage.
“This is real, this is serious,” Burgess said before the Senate Banking and Insurance Committee approved the 105-page plan. “We are at a crisis level.”
But opponents said the bill (SB 2-A) is tilted toward insurers instead of providing relief to homeowners.
“This bill doesn’t do anything to help them, not by a long shot,” Sen. Victor Torres, D-Orlando said.
The Senate and House began a special legislative session that focuses heavily on property insurance. But a deal appeared already done: The Republican-dominated Senate and House proposed identical bills, and House Speaker Paul Renner, R-Palm Coast, advised House members he expected the session to be done by 6 p.m. Wednesday.
The plan addresses myriad issues, including trying to nudge customers out of the state-backed Citizens Property Insurance Corp. and into the private market. Another big part of the plan is trying to help insurers purchase critical reinsurance, including by making available $1 billion in tax dollars to aid with coverage.
But the biggest debate Monday centered on changes that supporters say are needed to reduce lawsuits over claims. Insurers have long blamed lawsuits for driving up costs and argued that changes are needed in attorney fees and a controversial practice known as assignment of benefits.
The plan, in part, would eliminate what are known as “one-way” attorney fees in property-insurance cases. Under one-way attorney fees, insurers pay the attorney fees of policyholders who successfully file lawsuits.
Insurers contend one-way attorney fees create an incentive for litigation. Senate Banking and Insurance Chairman Jim Boyd, R-Bradenton, called lawsuits the “underlying problem” that leads to higher rates.
“We have got to get at that root cause,” said Boyd, the Senate sponsor of the plan.
But critics said the change would make it difficult for policyholders to fight insurers to get money needed to fully fix homes. In part, that is because homeowners would have to pay attorney fees out of whatever money they might receive in lawsuits.
Several speakers during the Banking and Insurance Committee meeting said the bill would limit access to courts for policyholders and create a “David and Goliath” situation that would benefit insurers.
“This bill gives Goliath a better helmet, and it hurts me,” said Jonathan Albaugh, whose family has been battling over a claim from Hurricane Michael, which made landfall in 2018 in Mexico Beach and caused massive damage in Northwest Florida.
Among other things, the plan also would eliminate the use of assignment of benefits, which involves policyholders signing over claims to contractors, who then pursue payment from insurers. The insurance industry argues that assignment of benefits fuels litigation, but attorneys and contractors say so-called AOB helps homeowners, who need damage repaired and do not have experience dealing with insurers.
President @Kathleen4SWFL opens Special Session A -"We will continue to focus on fair costs and strong protections for consumers while adding reasonable guardrails for insurance companies against frivolous litigation and fraudulent claims that drive up rates for everyone." pic.twitter.com/vOovLeZ6sh
— Florida Senate (@FLSenate) December 12, 2022
Florida insurance reform bills propose $1bn reinsurance fund
The state’s legislature has published its reform bill to be debated in the special session this week with wide-ranging reforms to tackle high litigation costs.https://t.co/GjS94deI3x #reinsurance #insurance
— Inside P&C (@InsidePC1) December 12, 2022
Mark Friedlander, spokesman for the Insurance Information Institute, said that there were 116,000 lawsuits filed last year in Florida alone and while Florida has 8% claims filed in the country, it has 80% of the litigation. pic.twitter.com/bUYfzxqcdS
— Miami Herald (@MiamiHerald) December 11, 2022
The property-insurance system has nosedived during the past two years, with private carriers shedding policies and raising rates because of financial problems. As an indication of the problems, six insurers have been deemed insolvent this year. Also, Citizens, which was created as an insurer of last resort, has grown to more than 1.13 million policies.
Lawmakers held a special session in May to grapple with property insurance, but problems have persisted.
Parts of the new plan could increase costs for at least some homeowners. For example, the bill would phase in a requirement that Citizens customers buy flood insurance, which is not required with many typical property-insurance policies.
Democrats on Monday repeatedly questioned whether the plan would lead to lower rates for homeowners and unsuccessfully proposed amendments. The Republican-controlled Banking and Insurance Committee passed the bill on a straight party-line vote.
“What I have not seen from the Republicans’ bill is any meaningful reform that will actually bring rates down, and that is what I believe Floridians sent us here to do,” House Minority Leader Fentrice Driskell, D-Tampa, said.
Boyd expressed confidence that the plan will lead to lower rates, though he acknowledged it would likely take 12 to 18 months for the changes to filter through the rate-making process.
Insurance Commissioner David Altmaier told the Senate panel that the bill is “going to go a long way” to stabilizing the market.
“This will take some time,” Altmaier said. “It will take some time for the provisions of this bill to be effective in stabilizing the marketplace and seeing the data points that we need to see in order to have insurance companies be comfortable in lowering their rates for consumers. But I think in the long run, this bill is going to go a long way into mitigating the rate increases that we are seeing.”
— News Service Assignment Manager Tom Urban contributed to this report.
Additional stories you may want to read:
- DeSantis, Florida GOP Senators Support Migrant Flights Plan - February 7, 2023
- ‘Fairness and Diversity’ Courses for Judges Nixed - February 3, 2023
- Unanimous Jury Recommendations Targeted in Death Cases - February 1, 2023