Revealed – how new Florida law could lower cost of homeowners' insurance | Insurance Business America
An issues brief from the Insurance Information Institute (Triple-I) has stated that a new law in Florida could potentially lower the cost of homeowners’ insurance in the state.
“Reforms put in place in the closing weeks of 2022 and proposed in the first quarter of 2023 suggest Florida is now quite serious about fixing the fraud and legal system abuse that have contributed to the state’s insurance crisis,” Triple-I said in its issues brief, Addressing Florida’s Property/Casualty Insurance Crisis.
“It will take years for the impacts of fraud and legal system abuse to be wrung out of the system and for policyholders to experience premium benefits. Job 1 is to ‘stop the bleeding’ as insurers fail, leave the state, or stop writing critical personal lines coverages like auto and homeowners.”
The institute is referring to Florida’s Senate Bill 2A, which passed in state Legislature in December 2022 and was later signed into law by Governor Ron DeSantis.
Citing information from the Florida Office of Insurance Regulation, Triple-I said that Florida accounts for nearly 80% of America’s homeowners’ insurance lawsuits, but only 9% of all US homeowners’ insurance claims are filed in the state. This, the institute noted, is why Florida’s home insurers have cumulatively incurred net underwriting losses of more than $1 billion in both 2020 and 2021.
In 2022 alone, six insurers operating in Florida’s home insurance market became insolvent, while others left the state of limited their policies sold.
“Legislation approved during Florida’s late 2022 special session eliminated “one-way attorney fees” for property insurance claims. Before the reform, state law required insurers to pay the fees of policyholders who successfully sued over claims, while shielding policyholders from paying insurers’ attorney fees when the policyholders lose,” the brief noted.
Triple-I’s brief also noted how the legislation eliminated the practice of assignment of benefits (AOBs) – agreements where property owners sign over their claims to contractors, who then work with insurers.
“AOBs are a standard practice in insurance, but in Florida this consumer-friendly convenience has long served as a magnet for fraud,” the brief said. “The state’s legal environment – including some of the most generous attorney-fee mechanisms in the country – has encouraged vendors and their attorneys to solicit unwarranted AOBs from tens of thousands of Floridians, conduct unnecessary or unnecessarily expensive work, then file lawsuits against insurers that deny or dispute the claims.”
Do you think SB 2A would solve Florida’s troubled property insurance market? Let us know in the comments below.