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Florida Justice Reform Institute

Does Car Insurance in No-Fault States Cost More? | Insurify

February 27, 2025/in Insurance Newsnet

Staff Writer – Delaware Business Daily

February 27, 2025

Lawmakers in the 1970s designed no-fault insurance laws to lower car insurance premiums by reducing the number of expensive lawsuits to decide fault. But that hasn’t exactly worked, and consumers are paying for it.

No-fault systems suffer from patchy insurance laws and low “tort” thresholds, which describe how costly or severe an injury has to be before a driver can sue, said Insurify Carrier Relationships Manager Daniel Lucas. Some medical providers and personal injury attorneys have learned how to game the system, leading to lawsuits and fraud that increase costs to insurers, according to the Insurance Information Institute (Triple-I).

While no-fault laws aren’t the only factor contributing to high car insurance rates, they appear to be largely failing to protect drivers from expensive lawsuits and climbing rates.

What does ‘no-fault’ really mean?

Most states have at-fault auto insurance laws, meaning insurers pay out injury claims based on who causes an accident. In no-fault states, all drivers have to carry personal injury protection (PIP) coverage and file their injury claims with their own insurance company, no matter who’s at fault in a crash.

For example:

In an at-fault state, if Driver A clearly causes an accident that injures Driver B, Driver A’s insurance company pays to cover related medical expenses.In a no-fault state, if Driver A clearly causes an accident that injures Driver B, Driver B would file a bodily injury claim with their own car insurance company. PIP would cover medical and related expenses up to the coverage limit.

“No-fault” only applies to bodily injury claims. Insurers will likely work to determine fault for vehicle and other property damage. And, unlike the term “no-fault” suggests, fault in a personal injury claim could still matter in no-fault states.

No-fault states have legal thresholds for injury severity and cost. If a claim surpasses the threshold, the insurance company and court will work to determine fault as part of a lawsuit.

Some at-fault states require PIP, and others allow drivers to add PIP as an additional coverage. Three states have choice no-fault systems, where drivers choose a no-fault or traditional auto insurance policy, though all require PIP.

Comparing no-fault to at-fault systems

Proponents say no-fault systems can streamline the claims process because an injured driver isn’t waiting on an insurance company or court to determine fault before they can get their medical costs paid. PIP is a “first-party” coverage, meaning it only covers the policyholder and their passengers. No-fault states limit whether drivers can sue for damages based on “verbal” or “monetary” thresholds.

For example, Florida requires $10,000 of PIP and has a verbal threshold. In this case, a verbal threshold would mean an injured person may recover damages for pain and suffering if the accident causes significant and permanent loss of an important bodily function, permanent injury, significant scarring or disfigurement, or death.

“Because PIP is a first-party coverage, the insured is able to use this coverage immediately following a loss and have guaranteed payment up to the limits,” said Lucas. “In an at-fault state, PIP is not mandatory, and the claimant can seek medical to be paid by the at-fault party. This gets significantly more messy given that liability could be disputed, or at least take time to investigate and determine. Meanwhile, the injured party may not be getting treatment.”

At-fault states, on the other hand, have no restrictions on lawsuits and no threshold. The injured persons can sue the at-fault driver for out-of-pocket costs as well as pain and suffering.

How medical providers and attorneys adapted

While no-fault laws aimed to prevent excessive fault litigation, the original laws — written mostly in the 1970s — aren’t working that way anymore.

“Decades later, the medical systems and plaintiff attorneys have adapted to operating successfully in both at-fault and no-fault states to largely negate the intended benefits,” Triple-I Director of Media Relations Scott Holeman told Insurify.

Lucas said it comes down to states’ “antiquated” PIP minimum limits and too-low legal thresholds.

“The state minimum limit is only $2,000 in Virginia, and you can’t walk into an emergency room for $2,000 these days,” he said. “With the rising cost of healthcare, limits are most likely exhausted very early on when there is a real injury from a covered loss.”

Medical providers know the system, Lucas said, and may collude with attorneys to charge higher rates for treatment.

“In some states, attorneys can direct care, meaning an injured person does not need a referral from their doctor or insurance to obtain treatment, and the attorney will direct the claimant to seek treatment at a specific facility with a specific doctor that the attorney has already negotiated rates with,” he said. “If you are in a tort state, and a threshold needs to be breached, the attorney and their doctor will surely direct treatment above that threshold to build up the injury claim.”

What’s next: No more taking advantage of the system

Triple-I coined the term “legal system abuse” to describe how trial attorneys are “gaming the system at the expense of consumers,” driving up costs. No-fault and at-fault states are both vulnerable to legal system abuse. It’s particularly affecting Florida, Georgia, and Louisiana, according to Triple-I.

The good news is that reform works.

“Florida’s 2022/23 legislative reforms are a powerful example of how changing the laws can materially reduce [legal system abuse] to help improve both the affordability and availability of insurance,” Holeman said.

Florida prohibited the assignment of vehicle glass benefits in 2023, which prevents drivers from assigning their auto claims rights to repair shops. Lawsuits dropped substantially: courts saw about 83% fewer auto glass lawsuits in 2024 than in 2023, according to the Florida Justice Reform Institute.

Legal system abuse is also affecting New York. In 2024, Allstate sued multiple medical clinics for allegedly overbilling treatment for car accident victims. Rep. Ken Blankenbush introduced legislation to the New York State Assembly in January to reduce insurance fraud, improve medical treatment standards, and lower premiums.

Does Car Insurance in No-Fault States Cost More? | Insurify

https://www.fljustice.org/wp-content/uploads/2024/11/fjri-news.jpg 800 800 Becky Lannon https://www.fljustice.org/wp-content/uploads/2024/11/Florida-Justice-Reform-Institute.jpg Becky Lannon2025-02-27 17:40:182025-05-20 17:40:41Does Car Insurance in No-Fault States Cost More? | Insurify
Florida Justice Reform Institute

Property insurance bill would repeal 2022 reforms that stabilized the market, insurers say

February 18, 2025/in Insurance Newsnet

Property insurance bill would repeal 2022 reforms that stabilized the market, insurers say

February 15, 2025
Ron Hurtibise, South Florida Sun-Sentinel

A political titan has filed a provocative bill he says will reduce insurance costs in Florida — and the insurance industry doesn’t like his proposals.

One provision would roll back recent restrictions on fees that attorneys can collect when they sue insurers. Another provision would require insurers to publicly disclose their companies’ subsidiaries and affiliates and all of the ways their executives benefit from them.

The proposals are in similar bills filed in the state House and Senate this week. The House bill was filed by Rep. Alex Andrade, R-Pensacola.

The Senate bill was filed by Sen. Don Gaetz, R-Crestview, a longtime heavyweight in Florida politics and father of former U.S. Rep. Matt Gaetz.

Don Gaetz was reelected to the state Senate last fall after an eight-year absence. Last year, he campaigned on promises to fix an insurance system that has continued to raise costs for homeowners while saving significant money avoiding legal costs.

“Floridians pay far more for property insurance than anyone anywhere else in the nation,” the two lawmakers were quoted in a news release as saying. “Admittedly, Florida is a high-risk market, but we believe there are steps the Legislature can take to improve how rates are set and how individual claims can be processed faster and fairer.”

The release quoted Gaetz blaming high insurance prices for the slowing pace of new residents coming to Florida.

“High insurance costs make the Free State of Florida into the Unaffordable State of Florida for many seniors on fixed incomes trying to stay in their homes, young families including military families trying to buy their first homes, and businesses of every size,” Gaetz was quoted as saying.

Gaetz ran on fixing insurance

In an interview with the South Florida Sun Sentinel, Gaetz said he came out of retirement and ran for Senate last year because he had heard from Northwest Florida residents going through “serious problems” caused by “bad actors in the insurance industry.”

Despite Gaetz’s stature and name recognition, the bills’ proposals will elicit pushback among members of the House and Senate who — assuming the bills are taken up by committees — will contend that the current set of reforms enacted between 2021 and 2023 are working as intended.

“We cannot support these bills,” said Michael Carlson, president and CEO of the Personal Insurance Federation of Florida, which represents national insurance carriers and their subsidiaries.

Stacey Giulianti, chief legal officer for Boca Raton-based Florida Peninsula Insurance, said the reforms enacted from 2021 to 2023 are working and should be left as is.

“My take is that it’s not necessary, at least from the attorney fee perspective,” Giulianti said. “There are still plenty of lawyers taking cases. In fact, we still get about 100 lawsuits per month. Moreover, to go back to the old days where we paid 70% of the monies to attorneys, which was basically a cottage industry, seems completely unnecessary now that the market is stabilizing and capacity is up.”

Insurers contended that prior to the reforms, a limited but prolific group of plaintiffs attorneys figured out how to profit from a century-old Florida law that held insurance customers harmless if they sued their insurers in claims disputes and lost, but paid 100% of their legal fees if the insurer agreed to pay as little as a $1 more than their original settlement offer.

That law, called the “one-way insurance fee statute,” made way for an avalanche of frivolous lawsuits, according to insurers, that attorneys could file without exposing themselves to the possibility that they or their clients might be stuck paying insurers’ fees.

Now, a policyholder who wants to sue an insurer has to pay an attorney upfront or guarantee a percentage of any award. Attorneys who make their livings taking cases on contingency — without requiring upfront payment — are turning away cases over small damage amounts that they once eagerly accepted.

The bills would create a framework for reprising payments to plaintiffs’ attorneys. They would get 100% of their fees if an insurer agrees to settle for at least 80% more than the policyholder demands.

If the judgment falls within 20% and 80% of the demand, the plaintiff would collect an equal percentage of their attorney’s fees.

Only if the award is less than 20% would insurers be required to pay none of the plaintiff’s attorney fees.

The language also enables full recovery of attorneys fees by plaintiffs if insurers fail to comply with timelines for responding to claims or participating in mediation, if the plaintiff’s demand “is deemed reasonable by the court,” or if a court finds evidence of bad faith or abuse of the litigative process.

Those provisions, said William Large, president of the Florida Justice Reform Institute, amounts to “inserting the one-way attorneys fee provision back into law.”

While the reforms required plaintiffs to risk losing to the insurance company and paying its legal fees, the bill would again leave policyholders harmless whether they win or lose.

Gaetz acknowledges that, but counters, “This bill is going after bad actors in the insurance industry who don’t respond in a reasonable, fair and prompt fashion to legitimate claims.”

He points to the experience of a Panama City mother of two disabled sons who he had known. They lost their home in Hurricane Michael in 2018 and for more than a year was “ping-ponged back and forth between adjusters and lawyers” before her insurance company offered her 40 cents for every dollar of damage, which would have left her unable to rebuild her home, Gaetz said.

Ultimately, “she was so grateful to get 85 cents on the dollar” to settle her claim, he said.

Bill would require disclosure of subsidiaries

Another proposal in the bills would require the state to create reports disclosing to the public information that insurers currently label as trade secrets.

One would list all of an insurers’ subsidiaries, management companies, captive vendors and reinsurers that they have ownership stakes in and share common officers or directors. The report would detail the financial relationships between the entities.

Another report would detail compensation of each executive officer, including salaries, benefits, stock options, bonuses, stock buybacks and other taxable payments, along with profits and losses of each entity and highlight any compensation exceeding the industry average. It would also be required to explain effects of the compensation on insurers’ rate change requests.

Gaetz says the information would have to be used in rate setting, which he says isn’t occurring now.

He says he’s aware of insurers who move funds to management companies and consultants — “basically captive and owned vendors” — so they can appear to have much lower capital and profit levels when filing for rate increases.

“So if we find there’s excessive compensation with stock options and bonuses and perks and salaries, or if we find that the insurance company is sliding money off of their books and into other subsidiaries … we need to have an honest set of books that tells us where the premium dollars came from and how the premium dollars are used.”

But Paul Handerhan, president of the Fort Lauderdale-based Federal Association for Insurance Reform, says the Office of Insurance Regulation already requires such reports to be submitted. They just don’t post them on their website because they include proprietary information about companies’ business strategies.

“The insurance commissioner 100% is looking at every expenditure, every expense the insurance company has, even if those contracts are with affiliate or captive organizations,” Handerhan said.

A Dec. 18 story posted on the industry website Insurance Journal reported that ratings firm AM Best found that 13 Florida insurers that went insolvent since 2017 had surrendered almost all of their premiums to subsidies known as Managing General Agencies. Handerhan and other industry representatives were quoted in the story as saying that Florida insurers are so scrutinized by regulators, reinsurance and ratings firms, they had little room for diverting revenue unnecessarily.

Other proposals in the bill would:

— Increase the interest rate on insurance judgments or settlements from 4% to 8%.

— Require insurance adjusters to use electronic estimating software with price data consistent with contractor rates in a home’s geographic market. A loss adjustment report would have to be provided to policyholders within seven days of the inspection.

— Require insurers and policyholders to share equally in the cost of mediation, when invoked. Insurers can no longer delay claims disputes by asserting the right to reinspect damaged property.

Gaetz says he’s aware that the bill has its critics and might not even be heard by a committee — a decision that would lead to its defeat.

“I would expect William Large and others who speak for the insurance industry to oppose the bill. I would be surprised if they didn’t. But I expect a fierce fight.”

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071 or by email at rhurtibise@sunsentinel.com.

©2025 South Florida Sun-Sentinel. Visit sun-sentinel.com. Distributed by Tribune Content Agency, LLC.

https://insurancenewsnet.com/oarticle/property-insurance-bill-would-repeal-2022-reforms-that-stabilized-the-market-insurers-say

https://www.fljustice.org/wp-content/uploads/2024/11/fjri-news.jpg 800 800 Becky Lannon https://www.fljustice.org/wp-content/uploads/2024/11/Florida-Justice-Reform-Institute.jpg Becky Lannon2025-02-18 11:23:012025-02-18 11:23:01Property insurance bill would repeal 2022 reforms that stabilized the market, insurers say
Florida Justice Reform Institute

Florida property insurance bill would repeal 2022 reforms that stabilized the market, insurers say

February 17, 2025/in Uncategorized, Yahoo News

South Florida Sun Sentinel
Florida property insurance bill would repeal 2022 reforms that stabilized the market, insurers say
Ron Hurtibise, South Florida Sun Sentinel
Mon, February 17, 2025 at 5:59 PM EST
Florida property insurance bill would repeal 2022 reforms that stabilized the market, insurers say

A political titan has filed a provocative bill he says will reduce insurance costs in Florida — and the insurance industry doesn’t like his proposals.

One provision would roll back recent restrictions on fees that attorneys can collect when they sue insurers. Another provision would require insurers to publicly disclose their companies’ subsidiaries and affiliates and all of the ways their executives benefit from them.

The proposals are in similar bills filed in the state House and Senate this week. The House bill was filed by Rep. Alex Andrade, R-Pensacola.

The Senate bill was filed by Sen. Don Gaetz, R-Crestview, a longtime heavyweight in Florida politics and father of former U.S. Rep. Matt Gaetz.

Don Gaetz was reelected to the state Senate last fall after an eight-year absence. Last year, he campaigned on promises to fix an insurance system that has continued to raise costs for homeowners while saving significant money avoiding legal costs.

“Floridians pay far more for property insurance than anyone anywhere else in the nation,” the two lawmakers were quoted in a news release as saying. “Admittedly, Florida is a high-risk market, but we believe there are steps the Legislature can take to improve how rates are set and how individual claims can be processed faster and fairer.”

The release quoted Gaetz blaming high insurance prices for the slowing pace of new residents coming to Florida.

“High insurance costs make the Free State of Florida into the Unaffordable State of Florida for many seniors on fixed incomes trying to stay in their homes, young families including military families trying to buy their first homes, and businesses of every size,” Gaetz was quoted as saying.

Gaetz ran on fixing insurance

In an interview with the South Florida Sun Sentinel, Gaetz said he came out of retirement and ran for Senate last year because he had heard from Northwest Florida residents going through “serious problems” caused by “bad actors in the insurance industry.”

Despite Gaetz’s stature and name recognition, the bills’ proposals will elicit pushback among members of the House and Senate who — assuming the bills are taken up by committees — will contend that the current set of reforms enacted between 2021 and 2023 are working as intended.

“We cannot support these bills,” said Michael Carlson, president and CEO of the Personal Insurance Federation of Florida, which represents national insurance carriers and their subsidiaries.

Stacey Giulianti, chief legal officer for Boca Raton-based Florida Peninsula Insurance, said the reforms enacted from 2021 to 2023 are working and should be left as is.

“My take is that it’s not necessary, at least from the attorney fee perspective,” Giulianti said. “There are still plenty of lawyers taking cases. In fact, we still get about 100 lawsuits per month. Moreover, to go back to the old days where we paid 70% of the monies to attorneys, which was basically a cottage industry, seems completely unnecessary now that the market is stabilizing and capacity is up.”

Insurers contended that prior to the reforms, a limited but prolific group of plaintiffs attorneys figured out how to profit from a century-old Florida law that held insurance customers harmless if they sued their insurers in claims disputes and lost, but paid 100% of their legal fees if the insurer agreed to pay as little as a $1 more than their original settlement offer.

That law, called the “one-way insurance fee statute,” made way for an avalanche of frivolous lawsuits, according to insurers, that attorneys could file without exposing themselves to the possibility that they or their clients might be stuck paying insurers’ fees.

Now, a policyholder who wants to sue an insurer has to pay an attorney upfront or guarantee a percentage of any award. Attorneys who make their livings taking cases on contingency — without requiring upfront payment — are turning away cases over small damage amounts that they once eagerly accepted.

The bills would create a framework for reprising payments to plaintiffs’ attorneys. They would get 100% of their fees if an insurer agrees to settle for at least 80% more than the policyholder demands.

If the judgment falls within 20% and 80% of the demand, the plaintiff would collect an equal percentage of their attorney’s fees.

Only if the award is less than 20% would insurers be required to pay none of the plaintiff’s attorney fees.

The language also enables full recovery of attorneys fees by plaintiffs if insurers fail to comply with timelines for responding to claims or participating in mediation, if the plaintiff’s demand “is deemed reasonable by the court,” or if a court finds evidence of bad faith or abuse of the litigative process.

Those provisions, said William Large, president of the Florida Justice Reform Institute, amounts to “inserting the one-way attorneys fee provision back into law.”

While the reforms required plaintiffs to risk losing to the insurance company and paying its legal fees, the bill would again leave policyholders harmless whether they win or lose.

Gaetz acknowledges that, but counters, “This bill is going after bad actors in the insurance industry who don’t respond in a reasonable, fair and prompt fashion to legitimate claims.”

He points to the experience of a Panama City mother of two disabled sons who he had known. They lost their home in Hurricane Michael in 2018 and for more than a year was “ping-ponged back and forth between adjusters and lawyers” before her insurance company offered her 40 cents for every dollar of damage, which would have left her unable to rebuild her home, Gaetz said.

Ultimately, “she was so grateful to get 85 cents on the dollar” to settle her claim, he said.

Bill would require disclosure of subsidiaries

Another proposal in the bills would require the state to create reports disclosing to the public information that insurers currently label as trade secrets.

One would list all of an insurers’ subsidiaries, management companies, captive vendors and reinsurers that they have ownership stakes in and share common officers or directors. The report would detail the financial relationships between the entities.

Another report would detail compensation of each executive officer, including salaries, benefits, stock options, bonuses, stock buybacks and other taxable payments, along with profits and losses of each entity and highlight any compensation exceeding the industry average. It would also be required to explain effects of the compensation on insurers’ rate change requests.

Gaetz says the information would have to be used in rate setting, which he says isn’t occurring now.

He says he’s aware of insurers who move funds to management companies and consultants — “basically captive and owned vendors” — so they can appear to have much lower capital and profit levels when filing for rate increases.

“So if we find there’s excessive compensation with stock options and bonuses and perks and salaries, or if we find that the insurance company is sliding money off of their books and into other subsidiaries … we need to have an honest set of books that tells us where the premium dollars came from and how the premium dollars are used.”

But Paul Handerhan, president of the Fort Lauderdale-based Federal Association for Insurance Reform, says the Office of Insurance Regulation already requires such reports to be submitted. They just don’t post them on their website because they include proprietary information about companies’ business strategies.

“The insurance commissioner 100% is looking at every expenditure, every expense the insurance company has, even if those contracts are with affiliate or captive organizations,” Handerhan said.

A Dec. 18 story posted on the industry website Insurance Journal reported that ratings firm AM Best found that 13 Florida insurers that went insolvent since 2017 had surrendered almost all of their premiums to subsidies known as Managing General Agencies. Handerhan and other industry representatives were quoted in the story as saying that Florida insurers are so scrutinized by regulators, reinsurance and ratings firms, they had little room for diverting revenue unnecessarily.

Other proposals in the bill would:

— Increase the interest rate on insurance judgments or settlements from 4% to 8%.

— Require insurance adjusters to use electronic estimating software with price data consistent with contractor rates in a home’s geographic market. A loss adjustment report would have to be provided to policyholders within seven days of the inspection.

— Require insurers and policyholders to share equally in the cost of mediation, when invoked. Insurers can no longer delay claims disputes by asserting the right to reinspect damaged property.

Gaetz says he’s aware that the bill has its critics and might not even be heard by a committee — a decision that would lead to its defeat.

“I would expect William Large and others who speak for the insurance industry to oppose the bill. I would be surprised if they didn’t. But I expect a fierce fight.”

https://www.yahoo.com/news/florida-property-insurance-bill-repeal-225900973.html

https://www.fljustice.org/wp-content/uploads/2024/11/fjri-news.jpg 800 800 Becky Lannon https://www.fljustice.org/wp-content/uploads/2024/11/Florida-Justice-Reform-Institute.jpg Becky Lannon2025-02-17 11:42:162025-05-21 11:42:50Florida property insurance bill would repeal 2022 reforms that stabilized the market, insurers say
Florida Justice Reform Institute

Florida property insurance bill would repeal 2022 reforms that stabilized the market, insurers say

February 17, 2025/in ArcaMax

Ron Hurtibise, South Florida Sun Sentinel on Feb 17, 2025
Published in Business News

Workers struggle to cover a damaged after Hurricane Wilma in 2005 in Florida. Judy Slone Reich/South Florida Sun Sentinel/TNS

A political titan has filed a provocative bill he says will reduce insurance costs in Florida — and the insurance industry doesn’t like his proposals.

One provision would roll back recent restrictions on fees that attorneys can collect when they sue insurers. Another provision would require insurers to publicly disclose their companies’ subsidiaries and affiliates and all of the ways their executives benefit from them.

The proposals are in similar bills filed in the state House and Senate this week. The House bill was filed by Rep. Alex Andrade, R-Pensacola.

The Senate bill was filed by Sen. Don Gaetz, R-Crestview, a longtime heavyweight in Florida politics and father of former U.S. Rep. Matt Gaetz.

Don Gaetz was reelected to the state Senate last fall after an eight-year absence. Last year, he campaigned on promises to fix an insurance system that has continued to raise costs for homeowners while saving significant money avoiding legal costs.

“Floridians pay far more for property insurance than anyone anywhere else in the nation,” the two lawmakers were quoted in a news release as saying. “Admittedly, Florida is a high-risk market, but we believe there are steps the Legislature can take to improve how rates are set and how individual claims can be processed faster and fairer.”

The release quoted Gaetz blaming high insurance prices for the slowing pace of new residents coming to Florida.

“High insurance costs make the Free State of Florida into the Unaffordable State of Florida for many seniors on fixed incomes trying to stay in their homes, young families including military families trying to buy their first homes, and businesses of every size,” Gaetz was quoted as saying.

Gaetz ran on fixing insurance

In an interview with the South Florida Sun Sentinel, Gaetz said he came out of retirement and ran for Senate last year because he had heard from Northwest Florida residents going through “serious problems” caused by “bad actors in the insurance industry.”

Despite Gaetz’s stature and name recognition, the bills’ proposals will elicit pushback among members of the House and Senate who — assuming the bills are taken up by committees — will contend that the current set of reforms enacted between 2021 and 2023 are working as intended.

“We cannot support these bills,” said Michael Carlson, president and CEO of the Personal Insurance Federation of Florida, which represents national insurance carriers and their subsidiaries.

Stacey Giulianti, chief legal officer for Boca Raton-based Florida Peninsula Insurance, said the reforms enacted from 2021 to 2023 are working and should be left as is.

“My take is that it’s not necessary, at least from the attorney fee perspective,” Giulianti said. “There are still plenty of lawyers taking cases. In fact, we still get about 100 lawsuits per month. Moreover, to go back to the old days where we paid 70% of the monies to attorneys, which was basically a cottage industry, seems completely unnecessary now that the market is stabilizing and capacity is up.”

Insurers contended that prior to the reforms, a limited but prolific group of plaintiffs attorneys figured out how to profit from a century-old Florida law that held insurance customers harmless if they sued their insurers in claims disputes and lost, but paid 100% of their legal fees if the insurer agreed to pay as little as a $1 more than their original settlement offer.

That law, called the “one-way insurance fee statute,” made way for an avalanche of frivolous lawsuits, according to insurers, that attorneys could file without exposing themselves to the possibility that they or their clients might be stuck paying insurers’ fees.

Now, a policyholder who wants to sue an insurer has to pay an attorney upfront or guarantee a percentage of any award. Attorneys who make their livings taking cases on contingency — without requiring upfront payment — are turning away cases over small damage amounts that they once eagerly accepted.

The bills would create a framework for reprising payments to plaintiffs’ attorneys. They would get 100% of their fees if an insurer agrees to settle for at least 80% more than the policyholder demands.

If the judgment falls within 20% and 80% of the demand, the plaintiff would collect an equal percentage of their attorney’s fees.

Only if the award is less than 20% would insurers be required to pay none of the plaintiff’s attorney fees.

The language also enables full recovery of attorneys fees by plaintiffs if insurers fail to comply with timelines for responding to claims or participating in mediation, if the plaintiff’s demand “is deemed reasonable by the court,” or if a court finds evidence of bad faith or abuse of the litigative process.

Those provisions, said William Large, president of the Florida Justice Reform Institute, amounts to “inserting the one-way attorneys fee provision back into law.”

While the reforms required plaintiffs to risk losing to the insurance company and paying its legal fees, the bill would again leave policyholders harmless whether they win or lose.

Gaetz acknowledges that, but counters, “This bill is going after bad actors in the insurance industry who don’t respond in a reasonable, fair and prompt fashion to legitimate claims.”

He points to the experience of a Panama City mother of two disabled sons who he had known. They lost their home in Hurricane Michael in 2018 and for more than a year was “ping-ponged back and forth between adjusters and lawyers” before her insurance company offered her 40 cents for every dollar of damage, which would have left her unable to rebuild her home, Gaetz said.

Ultimately, “she was so grateful to get 85 cents on the dollar” to settle her claim, he said.

Bill would require disclosure of subsidiaries

Another proposal in the bills would require the state to create reports disclosing to the public information that insurers currently label as trade secrets.

One would list all of an insurers’ subsidiaries, management companies, captive vendors and reinsurers that they have ownership stakes in and share common officers or directors. The report would detail the financial relationships between the entities.

Another report would detail compensation of each executive officer, including salaries, benefits, stock options, bonuses, stock buybacks and other taxable payments, along with profits and losses of each entity and highlight any compensation exceeding the industry average. It would also be required to explain effects of the compensation on insurers’ rate change requests.

Gaetz says the information would have to be used in rate setting, which he says isn’t occurring now.

He says he’s aware of insurers who move funds to management companies and consultants — “basically captive and owned vendors” — so they can appear to have much lower capital and profit levels when filing for rate increases.

“So if we find there’s excessive compensation with stock options and bonuses and perks and salaries, or if we find that the insurance company is sliding money off of their books and into other subsidiaries … we need to have an honest set of books that tells us where the premium dollars came from and how the premium dollars are used.”

But Paul Handerhan, president of the Fort Lauderdale-based Federal Association for Insurance Reform, says the Office of Insurance Regulation already requires such reports to be submitted. They just don’t post them on their website because they include proprietary information about companies’ business strategies.

“The insurance commissioner 100% is looking at every expenditure, every expense the insurance company has, even if those contracts are with affiliate or captive organizations,” Handerhan said.

A Dec. 18 story posted on the industry website Insurance Journal reported that ratings firm AM Best found that 13 Florida insurers that went insolvent since 2017 had surrendered almost all of their premiums to subsidies known as Managing General Agencies. Handerhan and other industry representatives were quoted in the story as saying that Florida insurers are so scrutinized by regulators, reinsurance and ratings firms, they had little room for diverting revenue unnecessarily.

Other proposals in the bill would:

— Increase the interest rate on insurance judgments or settlements from 4% to 8%.

— Require insurance adjusters to use electronic estimating software with price data consistent with contractor rates in a home’s geographic market. A loss adjustment report would have to be provided to policyholders within seven days of the inspection.

— Require insurers and policyholders to share equally in the cost of mediation, when invoked. Insurers can no longer delay claims disputes by asserting the right to reinspect damaged property.

Gaetz says he’s aware that the bill has its critics and might not even be heard by a committee — a decision that would lead to its defeat.

“I would expect William Large and others who speak for the insurance industry to oppose the bill. I would be surprised if they didn’t. But I expect a fierce fight.”

https://www.arcamax.com/business/businessnews/s-3602288

https://www.fljustice.org/wp-content/uploads/2024/11/fjri-news.jpg 800 800 Becky Lannon https://www.fljustice.org/wp-content/uploads/2024/11/Florida-Justice-Reform-Institute.jpg Becky Lannon2025-02-17 11:31:252025-05-21 11:29:43Florida property insurance bill would repeal 2022 reforms that stabilized the market, insurers say

Property insurance bill would repeal 2022 reforms that stabilized the market, insurers say

February 17, 2025/in Sun Sentinel

South Florida Sun Sentinel

 Florida Foundation Authority/R/J Group, Inc.)

A blue tarp covers a roof after a recent Florida hurricane. A state senator has filed a bill that aims to get policyholders paid by their insurers more quickly,, but insurance experts say it will do more harm than good. (Florida Foundation Authority/RJ Group, Inc.)

By Ron Hurtibise | rhurtibise@sunsentinel.com | South Florida Sun Sentinel
PUBLISHED: February 15, 2025 at 7:00 AM EST

A political titan has filed a provocative bill he says will reduce insurance costs in Florida — and the insurance industry doesn’t like his proposals.

One provision would roll back recent restrictions on fees that attorneys can collect when they sue insurers. Another provision would require insurers to publicly disclose their companies’ subsidiaries and affiliates and all of the ways their executives benefit from them.

The proposals are in similar bills filed in the state House and Senate this week. The House bill was filed by Rep. Alex Andrade, R-Pensacola.

The Senate bill was filed by Sen. Don Gaetz, R-Crestview, a longtime heavyweight in Florida politics and father of former U.S. Rep. Matt Gaetz.

Don Gaetz was reelected to the state Senate last fall after an eight-year absence. Last year, he campaigned on promises to fix an insurance system that has continued to raise costs for homeowners while saving significant money avoiding legal costs.

“Floridians pay far more for property insurance than anyone anywhere else in the nation,” the two lawmakers were quoted in a news release as saying. “Admittedly, Florida is a high-risk market, but we believe there are steps the Legislature can take to improve how rates are set and how individual claims can be processed faster and fairer.”

The release quoted Gaetz blaming high insurance prices for the slowing pace of new residents coming to Florida.

“High insurance costs make the Free State of Florida into the Unaffordable State of Florida for many seniors on fixed incomes trying to stay in their homes, young families including military families trying to buy their first homes, and businesses of every size,” Gaetz was quoted as saying.

Gaetz ran on fixing insurance

In an interview with the South Florida Sun Sentinel, Gaetz said he came out of retirement and ran for Senate last year because he had heard from Northwest Florida residents going through “serious problems” caused by “bad actors in the insurance industry.”

Despite Gaetz’s stature and name recognition, the bills’ proposals will elicit pushback among members of the House and Senate who — assuming the bills are taken up by committees — will contend that the current set of reforms enacted between 2021 and 2023 are working as intended.

“We cannot support these bills,” said Michael Carlson, president and CEO of the Personal Insurance Federation of Florida, which represents national insurance carriers and their subsidiaries.

Stacey Giulianti, chief legal officer for Boca Raton-based Florida Peninsula Insurance, said the reforms enacted from 2021 to 2023 are working and should be left as is.

“My take is that it’s not necessary, at least from the attorney fee perspective,” Giulianti said. “There are still plenty of lawyers taking cases. In fact, we still get about 100 lawsuits per month. Moreover, to go back to the old days where we paid 70% of the monies to attorneys, which was basically a cottage industry, seems completely unnecessary now that the market is stabilizing and capacity is up.”

Insurers contended that prior to the reforms, a limited but prolific group of plaintiffs attorneys figured out how to profit from a century-old Florida law that held insurance customers harmless if they sued their insurers in claims disputes and lost, but paid 100% of their legal fees if the insurer agreed to pay as little as a $1 more than their original settlement offer.

That law, called the “one-way insurance fee statute,” made way for an avalanche of frivolous lawsuits, according to insurers, that attorneys could file without exposing themselves to the possibility that they or their clients might be stuck paying insurers’ fees.

Now, a policyholder who wants to sue an insurer has to pay an attorney upfront or guarantee a percentage of any award. Attorneys who make their livings taking cases on contingency — without requiring upfront payment — are turning away cases over small damage amounts that they once eagerly accepted.

The bills would create a framework for reprising payments to plaintiffs’ attorneys. They would get 100% of their fees if an insurer agrees to settle for at least 80% more than the policyholder demands.

If the judgment falls within 20% and 80% of the demand, the plaintiff would collect an equal percentage of their attorney’s fees.

Only if the award is less than 20% would insurers be required to pay none of the plaintiff’s attorney fees.

The language also enables full recovery of attorneys fees by plaintiffs if insurers fail to comply with timelines for responding to claims or participating in mediation, if the plaintiff’s demand “is deemed reasonable by the court,” or if a court finds evidence of bad faith or abuse of the litigative process.

Those provisions, said William Large, president of the Florida Justice Reform Institute, amounts to “inserting the one-way attorneys fee provision back into law.”

While the reforms required plaintiffs to risk losing to the insurance company and paying its legal fees, the bill would again leave policyholders harmless whether they win or lose.

Gaetz acknowledges that, but counters, “This bill is going after bad actors in the insurance industry who don’t respond in a reasonable, fair and prompt fashion to legitimate claims.”

He points to the experience of a Panama City mother of two disabled sons who he had known. They lost their home in Hurricane Michael in 2018 and for more than a year was “ping-ponged back and forth between adjusters and lawyers” before her insurance company offered her 40 cents for every dollar of damage, which would have left her unable to rebuild her home, Gaetz said.

Ultimately, “she was so grateful to get 85 cents on the dollar” to settle her claim, he said.

Bill would require disclosure of subsidiaries

Another proposal in the bills would require the state to create reports disclosing to the public information that insurers currently label as trade secrets.

One would list all of an insurers’ subsidiaries, management companies, captive vendors and reinsurers that they have ownership stakes in and share common officers or directors. The report would detail the financial relationships between the entities.

Another report would detail compensation of each executive officer, including salaries, benefits, stock options, bonuses, stock buybacks and other taxable payments, along with profits and losses of each entity and highlight any compensation exceeding the industry average. It would also be required to explain effects of the compensation on insurers’ rate change requests.

Gaetz says the information would have to be used in rate setting, which he says isn’t occurring now.

He says he’s aware of insurers who move funds to management companies and consultants — “basically captive and owned vendors” — so they can appear to have much lower capital and profit levels when filing for rate increases.

“So if we find there’s excessive compensation with stock options and bonuses and perks and salaries, or if we find that the insurance company is sliding money off of their books and into other subsidiaries … we need to have an honest set of books that tells us where the premium dollars came from and how the premium dollars are used.”

But Paul Handerhan, president of the Fort Lauderdale-based Federal Association for Insurance Reform, says the Office of Insurance Regulation already requires such reports to be submitted. They just don’t post them on their website because they include proprietary information about companies’ business strategies.

“The insurance commissioner 100% is looking at every expenditure, every expense the insurance company has, even if those contracts are with affiliate or captive organizations,” Handerhan said.

A Dec. 18 story posted on the industry website Insurance Journal reported that ratings firm AM Best found that 13 Florida insurers that went insolvent since 2017 had surrendered almost all of their premiums to subsidies known as Managing General Agencies. Handerhan and other industry representatives were quoted in the story as saying that Florida insurers are so scrutinized by regulators, reinsurance and ratings firms, they had little room for diverting revenue unnecessarily.

Other proposals in the bill would:

— Increase the interest rate on insurance judgments or settlements from 4% to 8%.

— Require insurance adjusters to use electronic estimating software with price data consistent with contractor rates in a home’s geographic market. A loss adjustment report would have to be provided to policyholders within seven days of the inspection.

— Require insurers and policyholders to share equally in the cost of mediation, when invoked. Insurers can no longer delay claims disputes by asserting the right to reinspect damaged property.

Gaetz says he’s aware that the bill has its critics and might not even be heard by a committee — a decision that would lead to its defeat.

“I would expect William Large and others who speak for the insurance industry to oppose the bill. I would be surprised if they didn’t. But I expect a fierce fight.”

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071 or by email at rhurtibise@sunsentinel.com.

©2025 South Florida Sun-Sentinel. Visit sun-sentinel.com. Distributed by Tribune Content Agency, LLC.

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