May 17, 2022
With Florida on the cusp of hurricane season, all eyes are on the Sunshine State’s homeowners’ insurance market, which is in a crisis with national implications.
As the state continues to welcome 800-plus new residents daily from high-tax big-government states like New York and Illinois, the prosperity the state has enjoyed is at risk.
Homeowners are seeing double (and sometimes triple) digit premium increases in their insurance rates, carriers are leaving the market, and taxpayers are on the hook for billions in claims if the state catches a rough storm or two.
But there is hope that state policymakers will soon address the true man-made roots of a crisis that has made Florida’s property insurance market an anomaly in the United States – a crisis dating back 15 years to then-Gov. Charlie Crist.
Gov. Ron DeSantis, R-Fla. has called state lawmakers back to Tallahassee for a special legislative session this month for the sole purpose of addressing the crisis in the homeowners’ insurance market.
In doing so, DeSantis issued a strongly-worded proclamation that gets at the heart of what’s driving higher costs for consumers — Florida’s insane litigation environment.
While the Sunshine State comprises 7% of the U.S. population and 9% of the country’s homeowners’ insurance claims, it accounts for almost 80% of the litigation in this area.
This system of fraud is fueled by unscrupulous billboard trial attorneys getting rich by filing thousands of meritless lawsuits that taxpayers are ultimately paying for, threatening the very success that Gov. DeSantis is touted for nationwide.
Florida’s governor has repeatedly shown a willingness to take on powerful special interests that have enjoyed outsized influence on the state’s public policy.
Floridians (and those moving there) should be heartened that he now intends to take on the state’s formidable trial attorney lobby, who have repeatedly blocked the reforms needed to fix the mess.
The symptoms of Florida’s insurance crisis are well-known: homeowners from Pensacola to Key West are seeing their premiums skyrocket, with the state’s chief financial officer warning that some residents are already paying monthly insurance premiums higher than their mortgage.
Florida’s insurance industry has faced two straight years of losses totaling more than $1 billion each year, and since 2021 seven insurance companies have either gone insolvent or had to cancel scores of homeowners’ policies to cut their risk.
Consequently, the government-run “insurer of last resort” is on pace to exceed one million total policies this year. It’s a powder-keg waiting to explode with bad actors holding the match — if Florida gets hit with a couple of major storms, Florida taxpayers and insurance customers are on the hook to bail it out.
Policymakers cannot control hurricanes, tropical storms, or other bad weather.
But what they can control the state’s surreal litigation environment, one of the worst in the nation and the cause of much of the distortions in the state’s insurance marketplace.
Four out of every five homeowners’ insurance claim lawsuits nationwide are filed in Florida — that’s mind boggling. Last year Florida recorded 100,000 property insurance lawsuits.
No other state, including Texas and California, had more than 900 lawsuits.
What’s fueling this?
Current Florida laws incentivize billboard trial lawyers to file meritless lawsuits — through wonky concepts like one-way attorney fees and contingency-fee multipliers.
Leveraging exceptionally liberal laws governing how insurers can be sued, trial attorneys have gamed the system and lined their pockets in the process. Their billboards claim they are David, when they’re actually Goliath, sucking Florida’s prosperity out from under it.
According to one state lawmaker’s recent report, industry data shows that of the $15 billion paid out in property insurance claims since 2013, 71% went to plaintiff’s attorneys and only 8% went to consumers. In the end, these unscrupulous attorneys fuel their private jets with Florida taxpayers’ money.
DeSantis’ proclamation indicates he is going to take direct aim at the cottage industry of meritless litigation-for-profit that is devastating Florida’s homeowners’ insurance market and disrupting the normal functioning of a free market.
The 225,000 new Floridians who moved here last year, and the hundreds of thousands more eyeing the Sunshine State as a potential home should be paying very close attention over the next couple of weeks — Florida’s viability as a destination hangs in the balance.