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.

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