New Florida Insurance Law Is Poised to Put a Damper on Property Claims Litigation
12.21.22 By Michelle Kaske
What You Need to Know
· Gov. Ron DeSantis signed a statute aiming to overhaul Florida's property insurance market.
· Lawmakers had been focused on changing the market as rates increased and insurers pulled out of the state.
· Now, the new law may affect insurance lawyers across the state.
Last week, Gov. Ron DeSantis signed a law that seeks to fix Florida’s spiraling property insurance market, and insurance lawyers are paying close attention.
In recent years, Florida has seen property insurance rates rise, prompting insurers to leave the state. This has caused a crisis within the insurance market that has been a focus for Florida lawmakers, especially as housing costs continue rising and natural disasters threaten the state. The new bill signed into law aims to limit lawsuits over insurance claims, which will have a direct effect on some insurance lawyers.
Although the new legislation may lead to less insurance litigation, Cole, Scott & Kissane partner Aram Megerian is enthusiastic about its consequences.
Megerian heads the firm’s first-party trial and coverage division, which helps insurance carriers fight claims. He also helped the Florida Justice Reform Institute lobby for the legislation, despite its effect on his practice area, arguing that it does three crucial things.
First, it repeals attorney fees.
“The plaintiffs lawyer knows that all they have to do is prove that it costs $500 more than what was paid and they get all of their attorney fees paid,” he said of the state’s prior system allowing “one-way” attorney fees.
He argues that the new legislation removes the incentive for attorneys to take the claim into costly and time-consuming litigation.
Assignments of benefits were also eliminated with the new law, meaning that policyholders can’t enable third parties to file claims and make other decisions for them.
Lastly, an insured now has to file a civil remedy notice and obtain a judgment that the insurance company breached a contract in order to initiate a bad-faith claim, adding an extra obstacle before a claim goes into a court battle.
“It’s going to make it a much more palatable market for insurance companies and reinsurers,” Megerian said.
He argues that the friendlier insurance market will avoid bankruptcies, which could ultimately have led to no insurers being able to take claims in the state.
“We want to help the insurance market,” he said. “I’m tired of dealing with a water claim coming into our office and having five different lawsuits emanating from the same water claim.”
Although it may mean less litigation down the line, Megerian says there’s still plenty of cases to deal with from the old law. Additionally, Hurricane Ian-related lawsuits are set to start piling up soon.
Meanwhile on the plaintiffs’ side, insured people are facing the prospects of attorney
fees coming out of their own pockets if they want to dispute a claim, said Sanjay Kurian, a managing shareholder at Becker & Poliakoff.
Kurian argues that that may disincentive claimants from fighting claims, even if they have a legitimate case.
There’s also concern surrounding who will be willing to pick these claims up now that the legislation has eliminated lawyer fees, he said.
“I think that there’s going to be a category of claimants that are going to look at this and say, ‘There’s no one who’s going to be able to pick up and pursue these claims because there’s no benefit for the lawyer to pursue those claims for them,’” he said. “Those folks will probably get hurt.”
Kurian usually handles commercial residential insurance, meaning his clients are typically large condominiums. He predicts his work won’t be significantly affected because clients don’t typically engage in assignments of benefits and also because getting attorney fees back isn’t such a driving force in his cases.
But language having to do with arbitration is one unknown area that may affect both small and big claimants, according to Kurian.
In order for an insurance dispute to go into arbitration, the insurer must now offer lower premiums thanks to the new law, Kurian said. But the wording does not restrict the location of the arbitration venue.
That could allow insurers to put provisions in insurance policies that choose arbitration venues outside of Florida that may be friendly to the insurers, he said.
“I think you’re going to see arbitration pop up with all these various carriers in all sorts of forums other than Florida,” Kurian said.