December 5, 2022
With the Legislature poised to return to the Capitol on Dec. 12 for a Special Session to pass changes to the state’s property insurance laws amid a free-falling market, Tallahassee-based conservative think tank James Madison Institute released a paper outlining steps to solve the issue.
Step one: Eliminate Florida’s one-way attorney fee law.
“In order to restore sanity and predictability to the state’s insurance system, one-way attorney fee laws must be repealed and insurance litigants should have to follow the common-law American rule—that parties bear their own litigation costs, the rule applicable in most states and for most types of litigation,” Christian Camara, a senior fellow at the institute, wrote in the paper.
The law allows a homeowner to receive attorney fees in the result of a settlement with an insurance company or if they prevail after a trial over the company’s failure to pay a claim or to pay only a portion of the full claim. Insurance companies have long pointed to the law as providing an incentive for frivolous claims from law firms, which can reap large fees even after a quick settlement.
Lawmakers have attempted to address that issue but the one-way attorney fee statute has remained intact.
Camara recounts the laws passed by the Legislature to curb lawsuit abuses: HB 7065 in 2019, which put limits on attorney fees in assignment of benefits, or AOB, lawsuits; HB 76 in 2021 which required homeowners and their attorneys to give 10 days notice before filing a lawsuit to give an insurer time to pay the claim or reach a settlement; and SB 2-D in a Special Session earlier this year that eliminated one-way attorney fees for AOB cases.
Those changes have helped, Camara writes, but came too late to prevent the market from flagging under a spate of lawsuits and, in the last few years, devastating hurricanes. He noted 49 out of Florida’s 52 carriers in the domestic property insurance market have had net losses since 2017, losing $1 billion.
“While the Florida legislature has enacted several reforms over the years, challenges continue to plague Florida’s insurance market,” JMI Vice President of Policy Sal Nuzzo said in a released statement. “These are problems that can be addressed through policy that gets at the root causes driving premiums skyward. It is our hope that JMI’s efforts over the years, and continued in this policy study, ultimately result in reforms that not only provide relief to policyholders, but also remedy the fraudulent litigation environment plaguing the Sunshine State.”
Other recommendations in the paper include allowing unregulated surplus lines carriers to provide homeowners insurance policies; require homeowners with coverage in state-run Citizens Property Insurance to move to the private market if they receive an offer within 20% of Citizens’ rate; and increase the area along the coast that Citizens can’t provide coverage.
The Session is scheduled to begin Dec. 12 and end Dec. 16. There has been no formal proclamation for the session yet, but Gov. Ron DeSantis has said it will also address the elimination or reduction of property taxes for victims of Hurricane Ian, which hit Southwest Florida as a Category 4 storm, causing more than 100 deaths.