Florida Governor Ron DeSantis has signed a comprehensive legal reform bill aimed at reducing frivolous lawsuits against businesses and insurance companies.
House Bill 837, which passed in the Senate by a 23-15 vote on Thursday, modifies Florida’s bad faith framework by clarifying that negligence alone does not demonstrate bad faith and requiring claimants to act in good faith when furnishing information and attempting to settle insurance claims, according to a press release from the governor’s office.
Furthermore, it allows insurers to limit their bad faith liability when there are multiple claimants in a single action by paying the total policy amount before negotiations for a settlement begin, in addition to eliminating one-way attorney’s fees and fee multipliers.
In a tweet about these reforms, DeSantis said Florida has long been a “judicial hellhole” and that the changes are necessary to “protect Floridians and our economy from predatory lawsuits.”
Florida has long been known as a “judicial hellhole” due to the legal system’s incentivizing of excessive and frivolous lawsuits.— Ron DeSantis (@GovRonDeSantis) March 24, 2023
Today, I signed a series of reforms that will protect Floridians and our economy from predatory lawsuits. pic.twitter.com/SEXUoookuh
Several insurance industry players have also welcomed the reforms, saying that the new law will help address Florida’s insurance affordability issues.
“By eliminating one-way attorney fees and fee multipliers for all lines of insurance, modernizing Florida’s bad faith law, and protecting small businesses from paying exorbitant damages, the reforms enacted will help restore fairness to Florida’s legal system, reduce the excessive number of frivolous lawsuits being filed, and ultimately help benefit consumers by increasing the availability and affordability of insurance over time,” a statement from American Property Casualty Insurance Association (APCIA) read.
Neil Alldredge, president and CEO of the National Association of Mutual Insurance Companies (NAMIC), additionally stated that the reforms will bring “much-needed stability” that is crucial to the “long-term goal of achieving a healthy and competitive insurance marketplace.”
Meanwhile, Louisiana insurance commissioner Jim Donelon discussed the possibility of introducing similar reforms in the state and said he would “absolutely” support a proposal targeting insurance lawsuit abuse, according to a report by the Louisiana Illuminator.
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