TALLAHASSEE, Fla.--(BUSINESS WIRE)--With only a handful of days left in the 2020 legislative session, the future for Florida’s insurance market is bleak. Florida homeowners are left with fewer choices, less coverage to protect their homes and skyrocketing premiums.
The Legislature filed two bills this session to reverse the crisis: SB 914 by Sen. Jeff Brandes and HB 7071 by Rep. Beltran. These bills took aim at the contingency risk multiplier fee that trial attorneys use to line their pockets on property insurance claims. It allows them to collect up to 30 times more than the claim they represent.
HB 7071 passed the Florida House 72 to 46 last week. The Senate companion, however, is at a standstill.
The standstill is a surprise – and a disappointment – given what Floridians have heard key stakeholders say about the need for tort reform, as well as statements specific to the legislation. Here’s a look back at “What They’re Saying”:
"That, to me, is more of a lawyer-driven culture than it is based on people who actually suffer harm. If we can make it so that it’s based on the clients rather than the attorney, I think that would be better.” – Gov. Ron DeSantis on Florida’s ranking as one of the worst legal climates in the nation, Florida Capitol, Sept. 18, 2019
“I think the insurance market in many ways, it has the coronavirus and is not healthy at all. As we’ve seen a variety of companies go under in 2019 largely because of roof claims or other lawsuits. We’re seeing a rapid increase in the amount of litigation going on. And understand, we had no storms in 2019. We’ve also seen insurers file for a number of rate increases. We’ve had rate increases between 22% and a 40% or 45% have been filed and have had rate hearings in the last few weeks. So, I think it’s important to notice that the market is not healthy at all, and it is struggling to find its footing in this space.” – Sen. Jeff Brandes, Senate Banking and Insurance Committee, Feb. 11
“Florida really is an outlier here. There are essentially 49 other states and the federal government have this rare and exceptional standard for contingency fee multipliers… These fees were never designed to be the slot machines for the legal profession. We should go back to this rare and exceptional standard.” – Sen. Jeff Brandes, Florida Chamber of Commerce, Feb. 21
“The current system is not a level playing field. When there’s a contingency risk multiplier on the table, the business accused is forced to pay three fees: their own attorney’s fees, the plaintiff’s attorney’s fees, and the plaintiff’s attorney’s fees again because of the multiplier. This bill will fix something that’s gone too far. I would not be sponsoring this bill if I thought it created an unfair advantage to an insurance company. On the contrary, I believe this bill will create more reasonable settlements, which will provide rate relief for consumers." – Rep. Mike Beltran, Florida House Judiciary Committee, Jan. 30
“When you think about our consumers who have to pay higher insurance rates because of the need for tort reform … we’re not trying to disadvantage any group. We’re trying to advantage our consumers. We have a major insurance crisis for homeowners at this point because a lot of lawsuits are going into [areas in need of reform].” – Sen. President-Designate Wilton Simpson, Florida Chamber of Commerce, Feb. 7
"The ability of the ecosystem to protect Floridians has been compromised by a small number of Floridians who have revised the rules of engagement through judicial decisions and/or utilize litigation as a tool to create claims protocols, practices and procedures in Florida that do not exist in any other U.S. jurisdiction. This converts the peninsula of Florida to the island of Florida." -- Joseph Petrelli, president and co-founder of Demotech, Insurance Journal, Mar. 4
“We want homeowners to be able to afford insurance… But contingency risk multipliers benefit lawyers at the expense of consumers. This bill codifies into Florida law the intent of the U.S. Supreme Court that these multipliers should only be available in rare and exceptional circumstances." – Aram Megerian, Florida Justice Reform Institute, Florida House Judiciary Committee, Jan. 30
While lawmakers have been discussing tort reform, the crisis in the insurance market has continued to grow.
Since December, multiple homeowners insurance companies have filed requests with Florida’s Office of Insurance Regulation to impose rate increases on their policyholders:
- National Specialty Insurance Co. requested a 28.1% average statewide rate increase;
- Capitol Preferred Insurance Co. needs a 36.5% average rate hike; and
- Edison Insurance Co. submitted and received a 21.9% average rate increase.
Central Florida will bear the brunt of these hikes, as homeowners in the region will see increases of 40% or higher.
During the same period, about a half dozen companies have been downgraded by their financial ratings agency, resulting in some being immediately purchased to prevent bankruptcy.
Many of these carriers point to the high cost of litigation as the most pressing challenge preventing these companies from making ends meet. Lawsuits tied to property insurance claims have grown exponentially in Florida in recent years. In 2017, there were 25,000, and by 2018 that number had doubled to 50,000. Due to the contingency risk multiplier, trial attorneys are taking home up to 30 times more than the value of these claims.
ABOUT FLORIDIANS FOR LAWSUIT REFORM
Floridians for Lawsuit Reform is a 501(c)4 organization that was formed by Floridians to pursue lawsuit reform. The goals of the nonprofit are to: 1) raise awareness for the abuse of the system; 2) demonstrate the impact of frivolous lawsuits and over-the-top attorney fees on homeowners property insurance rates; and 3) promote possible solutions that will benefit Florida families. Learn more at www.fltortreform.com.