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Florida Legislature Passes Major Changes to Auto, Property Insurance Markets
The actions follow weeks of back-and-forth debate on the proposals between the House and Senate chambers.
Stakeholders say neither of the potential new laws will do enough to accomplish lawmakers’ goals of reducing rates or weeding out fraud in their respective insurance industries. Both bills are now headed to Governor Ron DeSantis, who will have to sign them before they can become law.
The bill attempts to address some of the issues plaguing the state’s homeowners insurance market in which insurers lost more than $1.5 billion in last year. It passed Friday in the Senate by a vote of 35 to 5 and 75 to 41 in the House.
NAIC Data: Florida Property Lawsuits Total 76% of Insurer Litigation in U.S.
New information from Florida’s insurance regulator paints a stark picture of the extent of litigation facing the state’s domestic insurers. The information comes as numerous stakeholders push for legislative reforms to address the litigation issue they blame for fueling the current insurance market crisis.
According to National Association of Insurance Commissioners (NAIC) data mined by the Florida Office of Insurance Regulation, while Florida homeowners insurance claims accounted for just over 8% of all homeowners claims opened by U.S. insurers in 2019, homeowners insurance lawsuits in Florida accounted for more than 76% of all litigation against insurers nationwide.
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Recoupment of defense costs (defense fees and costs) by insurers in the absence of a duty to indemnify under a liability policy is an unsettled issue in many states. In a
recent decision, a New York intermediate appellate court held that even though there was no duty to indemnify an underlying personal injury action under a CGL policy, the insurer could
not recoup the defense costs it had advanced under a reservation of rights (ROR) letter where the policy at issue provided for a duty to defend but did not contain an express contractual provision allowing for the recoupment of such defense costs. This decision, however, by a court for one of four judicial departments in New York, is contrary to other state and federal decisions allowing recoupment under New York law and should be limited to its facts.
Florida’s Property Insurance Market Is ‘Spiraling Towards Collapse’ Due to Litigation: Report
Florida’s property insurance market is “spiraling towards collapse” and requires immediate attention if there is any chance of protecting the market, consumers, and ultimately, the state’s economy, according to an analysis about to be presented to the Florida Legislature.
The report points a finger at the state’s “litigation economy” as the main contributor to insurance market woes seeing it as more of a direct cause than the many weather events Florida has suffered.
Among its findings:
Litigation frequency and severity represents an additional expense load of 17% (and rising) on all earned premiums for insurers in Florida compared with other catastrophe-prone states.