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Florida Justice Reform Institute

New Florida Insurance Law Is Poised to Put a Damper on Property Claims Litigation

December 21, 2022/in Daily Business Review

Daily Business Review

12.21.22 By Michelle Kaske

Governor DeSantis

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.

law.com/dailybusinessreview/2022/12/21/new-florida-insurance-law-is-poised-to-put-a-damper-on-property-claims-litigation

https://www.fljustice.org/wp-content/uploads/2024/11/fjri-news.jpg 800 800 RAD Tech https://www.fljustice.org/wp-content/uploads/2024/11/Florida-Justice-Reform-Institute.jpg RAD Tech2022-12-21 15:53:472024-12-06 12:25:10New Florida Insurance Law Is Poised to Put a Damper on Property Claims Litigation
Florida Justice Reform Institute

Leader not a laggard

December 17, 2022/in Florida Politics

Florida Politics

December 17, 2022

Florida Justice Reform Institute President William Large praised DeSantis and the Florida Legislature for passing SB 2A.

“SB 2A includes substantial reforms that remove the incentive to file lawsuits over questionable claims,” Large said in a prepared release.

William Large William Large and FJRI say thank you. Image via Colin Hackley.

Established in 2005 and backed by the Florida Chamber, Large’s group lobbies the Legislature on all tort related issues, from workers compensation to medical malpractice to property insurance. Large said the bill provides “common sense solutions” that will hold all parties accountable.

“With his signature on Senate Bill 2A, Gov. DeSantis will have another opportunity to cement Florida’s reputation as a litigation reform leader and not a laggard.”

DeSantis signed the bill on Friday.

Meanwhile, the like-minded group Floridians for Lawsuit Reform also issued a prepared release on the property insurance reform package. The headline read: “Florida Lawmakers Deliver an Early Holiday Gift to Floridans and No Grinch in Sight.”

https://floridapolitics.com/archives/576940-takeaways-from-tallahassee-12-days-of-christmas-scams/ 

https://www.fljustice.org/wp-content/uploads/2024/11/fjri-news.jpg 800 800 RAD Tech https://www.fljustice.org/wp-content/uploads/2024/11/Florida-Justice-Reform-Institute.jpg RAD Tech2022-12-17 15:53:472024-12-06 12:27:36Leader not a laggard
Florida Justice Reform Institute

Governor signs property insurance reform bill that would end one-way attorney fees

December 16, 2022/in Florida Record

 

FLORIDA RECORD

William Large

Governor signs property insurance reform bill that would end one-way attorney fees

By Michael Carroll
Dec 16, 2022

Gov. Ron DeSantis on Friday signed a bill that tort-reform supporters say is a landmark measure to shore up the state’s property insurance market, ban the heavily criticized one-way attorney-fee provision and eliminate the assignment of benefits (AOB) in property claims.

Senate Bill 2A passed the Florida Senate on a vote of 27-13, and the state House of Representatives approved the measure 84-33. The Legislature’s action occurred during a special legislative session on property insurance reform in which tort-reform supporters and insurance industry insiders called on lawmakers to pass robust reforms.

“This is a pro-consumer bill that should drive down litigation abuse and put the property insurance market on a path to stability,” Michael Carlson, president and CEO of the Personal Insurance Federation of Florida (PIFF), said in a statement emailed to the Florida Record. “The Legislature is right to focus on lawsuits, and Senate Bill 2A includes bold provisions, including the prohibition of the one-way attorney fee, to fully address the property insurance litigation environment in Florida.”

The Florida Justice Reform Institute also applauded the lawmakers’ action.

“SB 2A includes substantial reforms that remove the incentive to file lawsuits over questionable claims,” William Large, president of the Florida Justice Reform Institute, said in a statement emailed to the Record. “The Florida Justice Reform Institute commends Gov. DeSantis and the Florida Legislature for working together on common-sense solutions that will hold all parties accountable and deliver real results.”

According to PIFF, Florida laws have been exploited to the extent that litigation costs are driving property insurers to exit the Florida market, even without major storms striking the state. Data from the Florida Office of Insurance Regulation shows that last year, Florida represented 7% of U.S. property claims but more than three-quarters of litigated property insurance claims.

SB 2A bans AOB within the property insurance system. Critics have said the assignment of homeowner policy benefits to unscrupulous third-party contractors have led to inflated roof repair bill submissions statewide.

The reform bill would also end what PIFF says is the heavily abused one-way attorney-fee law.

“Florida’s unique one-way attorney-fee statute is intended to shield policyholders against legal bills if they need to sue their insurers,” PIFF said in a statement. “However, unscrupulous attorneys and contractors exploit the law to file unnecessary lawsuits against insurers.”

In addition, SB 2A tightens the process for filing bad-faith claims against insurers, shortens the initial claims filing period from two years to one and allows for alternative measures to resolve claims disputes, including arbitration.

https://flarecord.com/stories/637557592-governor-signs-property-insurance-reform-bill-that-would-end-one-way-attorney-fees 

https://www.fljustice.org/wp-content/uploads/2024/11/fjri-news.jpg 800 800 RAD Tech https://www.fljustice.org/wp-content/uploads/2024/11/Florida-Justice-Reform-Institute.jpg RAD Tech2022-12-16 15:53:482024-11-24 22:05:29Governor signs property insurance reform bill that would end one-way attorney fees
Florida Justice Reform Institute

Special session opens Monday on troubled property insurance market: Will reforms work long term?

December 13, 2022/in Florida Phoenix

Florida Phoenix

If approved, legislation would include hundreds of millions of dollars for property tax, toll, and disaster relief

BY: MICHAEL MOLINE – DECEMBER 12, 2022 7:00 AM

Florida Capitol

The Florida Capitol, January 2021. Credit: Michael Moline

Insurers and the larger business community would get virtually everything they want under legislation proposed for the Legislature’s special session on that topic and trial attorneys would likely take it on the chin, as lawmakers convene Monday in the Florida Capitol.

That includes repeal of the state’s one-way attorney fee in insurance disputes — perhaps the No. 1 item on the insurance industry’s wish list. The Legislature approved the fee law to even the balance between policyholders and their carriers, but insurers now claim it’s leading to frivolous, but expensive, litigation.

In addition, the Legislature will take up toll relief for commuters and property tax relief for Floridians who suffer significant hurricane damage.

The proposed insurance legislation would authorize $1 billion for a new reinsurance program to back insurance companies, on top of $2 billion authorized in another special session last spring.

But that’s not all when it comes to the hundreds of millions proposed in several pieces of legislation. For example, the toll relief program, if approved, would include $500 million in the 2022-23 budget year. And the disaster relief bill would include everything from $350 million for FEMA public assistance grants to $150 million for affordable housing for hurricane recovery and $100 million for beach erosion projects, according to legislative documents.

As to homeowners, don’t expect lower property insurance premiums soon. In fact, people could be forced out of the Citizens Property Insurance Corp., the state-backed insurer of last resort, if a policy is available on the private market for no more than 20 percent above the Citizens premium. They’d be blocked from insuring through Citizens under those same conditions.

‘Difficult but careful balance’

Kathleen Passidomo Naples Republican Kathleen Passidomo answers reporters’ questions following her installment as Florida Senate president on Nov. 22, 2022. Credit: Michael Moline

Senate President Kathleen Passidomo and House Speaker Paul Renner announced that the legislation had been filed on Friday night, “I believe the goal we all share is for Florida to have a robust property insurance market that offers homeowners the opportunity to shop for insurance that meets their needs and budget,” Passidomo said in a written statement. “We also want to make certain that when damage occurs, claims are paid promptly and fairly, so homeowners do not have to contend with time-consuming and expensive litigation,” she added.

“This special session is about providing short and long-term relief to property insurance consumers, extending aid to victims of hurricanes Ian and Nicole, and helping commuters using Florida’s toll roads save money,” Renner said on Twitter.

“Our policymaking strikes a difficult but careful balance that ensures Floridians can access property insurance, targets cost-driving frivolous lawsuit while protecting access to the courts, and sends a strong signal to insurance carriers that Florida is open for business.”

Rampant receivership
Gov. Ron DeSantis pressed for the special session while taking heat from Democratic opponent Charlie Crist during his reelection campaign this year, after an earlier special session on the topic failed to produce immediate relief.

According to the Florida Office of Insurance Regulation (OIR), eight insurance companies have entered receivership in Florida since 2019, five of them during 2022 alone.

They’ve been losing a ton of money. According to a legislative analysis, Florida insurers all together ran a $1 billion in the red during 2020 and 2021; the last time they showed a profit was in 2016.

Complicating the picture were hurricanes Ian and Nicole, which struck Florida, respectively, in late September and November. The first caused estimated damage in the range of $40 billion to $64 billion, including uninsured flood losses of $10 billion to $16 billion. Estimated insurance losses from Nicole run to nearly $2 billion.

The result of these trends has been a surge in policies written by Citizens, which reported an increase in policies from 759,305 worth more than $232.5 billion at the end of 2021 to more than 1.1 million policies worth around $399 billion as of Oct. 31 this year.

“If we get to have a stable and competitive market, consumers will benefit, because companies will be competing against each other to take market share. You do that most quickly by being able to lower the price,” said Michael Carlson, president and CEO of the Personal Insurance Federation of Florida, representing companies including State Farm, Progressive, Allstate, and Farmers.

Blame game
One of the main culprits, to the industry and even the OIR, is the plaintiffs’ bar, which they accuse of exploiting legal loopholes to extract money from insurers.

The Florida Justice Association, a lobby for plaintiffs’ attorneys, didn’t respond to an interview request, but in the past has blamed mounting litigation on insurers that don’t pay claims fully or promptly.

But during a speech at the Florida Chamber of Commerce’s annual insurance summit last week, Florida’s Chief Financial Officer Jimmy Patronis targeted assignment of benefits agreements, in which policyholders transfer their right to sue carriers to a law firm or a contractor. The argument is that these agreements — AOBs in shorthand — encourage unnecessary litigation.

Jimmy Patronis Florida Chief Financial Officer Jimmy Patronis. Credit: Florida Department of Financial Services

As mentioned above, the legislation would repeal another long-term insurance industry target, that one-way attorney fee laws (here and here). It was designed to discourage insurers from low-balling claims; if a policyholder sues and gets awarded any amount above the offer — even a relatively small amount — he or she could demand the insurer pay his or her litigation costs

Incentives
“It’s created an incentive to bring lawsuits over low-dollar amounts,” William Large, president of the Florida Justice Reform Institute, told the Phoenix in a telephone interview.

“So, you see lawsuits where the amount recovered is a low-dollar amount, but it leads to huge fees. If they can collect a penny on a lawsuit, they get their fees paid. And it’s not that difficult to go behind an estimate and get a penny or a dollar more to be paid,” he continued.

William Large William W. Large, president, Florida Justice Reform Institute. Credit. FJRI website.

That’s especially true following a large storm that causes extensive damage. Competition for contractors and building supplies can delay repairs to individual homes and spin off inflation that drives up repair expanses. Unscrupulous contractors and lawyers can leverage homeowner frustration to take advantage of that, Large said.

“Multiply that fact pattern times 100,000 homes. This is not a tenable business model, and this is what is driving insurers to file for bankruptcy and leave the state of Florida. It’s creating an increase in the number of insured under the state-run property insurance company, Citizens Property Insurance,” he said.

Even if the policyholder is entitled to more money, “it’s not meant to be a lawsuit. But that’s the system that we have in place,” Large argued.

Another law allows courts to order insurers to pay a policyholder’s court fees in any suit filed seeking timely payment of claims, within 60 days. The insurer is entitled to have an appraisal done, but it can be difficult to perform those within the time allotted under some circumstances, Large said. The policyholder is still entitled to recover his or her attorney fees.

Large categorized the dynamic as “rent seeking,” which he defined as “parking yourself on a regulatory mechanism that offers absolutely no value to society, and that’s what the plaintiffs are doing with the one-way attorney fee provision. They’re making money on a provision that was meant to benefit the insured but it’s only benefitting attorneys.”

Again, the Florida Justice Association provided no comment to the Phoenix, but in remarks to the Florida Bar News association president Curry Pajcic complained that insurance companies bring litigation upon themselves through their claims practices.

“The corporate elites and the insurance industry want to take your arm and your leg, and in exchange, give you a crutch,” Pajcic said. “They don’t want to make it right; they don’t want to make it even.”

Bad faith
The legislation attempts to address these complaints. It would become harder to press bad-faith claims against insurance companies accused of low-balling or slow-walking claims. For one thing, a policyholder no longer would automatically have a claim for bad faith if he or she forces the carrier to improve on an initial offer of settlement — instead, the customer would have to establish breach of contract.

And the Florida Office of Insurance Regulation would gain new powers to punish insurers for abusing the appraisal process; they could lose their ability to use for process for two years and get publicly named and shamed on the office’s website. The legislation would tighten timelines for insurers to respond to claims.

What’s getting very little mention is the climate change driving these losses — either by the Republicans driving the legislation or the industry.

“It’s not something we’re actively talking about,” said Carlson, the insurance lobbyist.

“I think some of the national companies have looked at the issue to see what the risk of sea-level rise, for example, is. What the risk of increased storm frequency and severity is driven by warmer temperatures of the planet. But, to my knowledge, the companies have never stepped into the public policy arena with regard to that. I do know that we strongly support any resiliency measures,” he said.

https://floridaphoenix.com/2022/12/12/special-session-opens-monday-on-troubled-property-insurance-market-will-reforms-work-longterm/ 

https://www.fljustice.org/wp-content/uploads/2024/11/fjri-news.jpg 800 800 RAD Tech https://www.fljustice.org/wp-content/uploads/2024/11/Florida-Justice-Reform-Institute.jpg RAD Tech2022-12-13 15:53:492024-12-06 17:11:19Special session opens Monday on troubled property insurance market: Will reforms work long term?
Florida Justice Reform Institute

Sunburn

December 7, 2022/in Florida Politics

Florida Politics

Sunburn

Peter Schorsch – December 7, 2022

The Florida Chamber of Commerce’s 2022 Insurance Summit continues today with discussions centered on the state’s litigation climate.

 After a recap of the 2022 elections, Florida Justice Reform Institute President William Large will moderate a panel on “fixing Florida’s legal climate.” FJRI and other tort reform groups have pinned the blame for rising rates on boatloads of frivolous lawsuits filed against insurers.

 Participating in the panel are Joseph Tessitore, a partner at Roper PA; Kansas Gooden, a shareholder at Boyd & Jenerette PA and Michele Morales, a partner at Cole Scott & Kissane.

 https://floridapolitics.com/archives/574465-sunburn-the-morning-read-of-whats-hot-in-florida-politics-12-7-22/

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