Carrier Management – Florida Justice Reform Institute

March 31, 2025 by William Rabb

The Florida House subcommittee on insurance advanced two hotly debated bills Thursday, one supported by insurance agents but another that was opposed by agents and carriers alike.

And another subcommittee voted to repeal the auto insurance personal injury protection law and increase the minimum liability coverage limits. But it’s far from certain if House Bill 1181 or the Senate version will pass both chambers of the Legislature. Gov. Ron DeSantis seems set to veto the PIP measure if it does pass.

On property insurance, the House Commerce Committee’s subcommittee on insurance and banking approved a new version of House Bill 643, by Rep. John Snyder, a payroll and staffing company owner. The bill, if it is signed into law, would ease the workload for agents searching for surplus lines coverage for hard-to-place properties, by repealing the “diligent effort” currently required by state law. The statute now requires agents to seek coverage from at least three admitted carriers before writing with a surplus lines insurer. That would be removed under the bill.

The Florida Association of Insurance Agents has supported that part of the bill.

“The diligent effort requirement has just been a bureaucratic roadblock that has added delays,” B.G. Murphy, government affairs director for FAIA, said after the meeting.

Well-known plaintiffs’ attorney Chip Merlin argued against the bill, contending that it would weaken consumer protections by allowing insurance agents to move policyholders too quickly to more expensive and less-regulated surplus lines.

“This bill favors those companies that do not want to invest in the admitted market in Florida,” Merlin said in the meeting.

An earlier version of the bill also would have repealed the statutory requirement that agents be appointed with three carriers before writing policies with the state-created Citizens Property Insurance Corp. That section was removed from the pared-down House committee substitute adopted Thursday, but it remains in a Senate bill, SB 1184.

The Senate Banking and Insurance Committee has approved that bill, and it is now in the Senate Judiciary Committee.

A part of HB 643 that saw extensive debate in the House subcommittee on Thursday would give Citizens’ policyholders an upfront option on litigation versus state-managed arbitration in claims disputes. Current law allows either Citizens or the insured to choose, post-claim, when a dispute can be decided by the Florida Department of Administrative Hearings, a state agency that is best known for arbitrating disputes between businesses and state agencies over enforcement actions.

HB 643 would put the arbitration option in the policy language.

“Each insured must be notified in writing, at the time of entering into a policy with the corporation and upon each renewal, that they must decide whether to resolve disputes through arbitration before the Division of Administrative Hearings,” the bill reads. “Such notification must be included, in boldfaced 12-point type immediately preceding the insured’s signature, in the following statement: “AN INSURED MUST CHOOSE AT THE TIME OF ENTERING INTO THIS POLICY OR UPON RENEWAL WHETHER TO RESOLVE DISPUTES THROUGH ARBITRATION BEFORE THE DIVISION OF ADMINISTRATIVE HEARINGS. THE INSURED MUST INDICATE THIS SELECTION BY MARKING ‘ACCEPT’ OR ‘DECLINE’ BELOW. THIS DECISION CANNOT BE CHANGED DURING THE TERM OF THE POLICY.”

While some representatives said that arbitration favors the wealthy who can more easily afford attorneys, the bill’s sponsor said the opposite is true: Litigation in the courts can take years and result in large attorney fees, which only well-heeled policyholders can sustain. A Citizens spokesman said the insurer is reviewing the bill.

Meanwhile, the panel also approved HB 1047, despite concerns from lawmakers that it raised too many unanswered questions and needed more work.

“The bill is not ready for prime time,” said Rep. Mike Caruso, who voted against the measure.

Among other changes, the bill, by Rep. Kim Berfield, would greatly reduce the number of education hours required for an insurance agent’s license. Berfield said Florida now requires more hours than any other state. The next-closest state, New York, mandates just 90 hours of education for agents. So, after extensive research, Berfield landed on 60 hours, she said, without further explanation.

The FAIA has opposed the bill, noting that Florida’s ever-changing and crisis-prone property insurance market should not be left to inexperienced dilettantes. Regulations already allow exemptions to the 200-hour rule for those with extensive experience working at an insurance agency, FAIA’s Murphy explained. The FAIA does not have a financial interest in providing education courses for agents, Murphy said.

The section of the bill that received the most debate was one that would amend the 2023 tort-reform statute provisions on alleging bad faith by insurance companies. Insurance groups and consumer advocates both opposed the wording.

The bill would allow “sufficient evidence” of a claim to include photographs or surveillance video of an accident, or medical bills. But several committee members decried a provision that would let insurers object to the evidence within 10 days, while policyholders would then have just 10 days to respond. It also would allow carriers to cancel or non-renew policies before repairs are completed if the insured no longer has an insurable interest in the property.

“What about an older person whose house is gone after a storm, who has moved in to her children’s house out of state, and the insurance company mails the notice to the house that’s not even there anymore?” Caruso asked. “She has just 10 days to respond to a letter she never even got?”

The Florida Justice Reform Institute’s president, William Large, spoke at the meeting and said the bill would threaten the HB 837 tort-reform law approved in 2023, which raised the bar on plaintiff’s bad-faith claims. That 2023 law gives insurers 90 days to tender the policy limits in claims, and that has worked well for two years, Large said. The Florida Insurance Council also opposes HB 1047.

Nonetheless, the subcommittee voted 12-6 in favor of the bill Thursday, with members suggesting that the bugs can be worked out in the next committee to hear the bill.

Photo: Snyder explains HB 643 at the Capitol Thursday. (The Florida Channel)

https://www.carriermanagement.com/news/2025/03/31/273594.htm

Florida insurance industry advocates said some players, though, will likely continue to seek new mechanisms to skirt the laws that took away what was once a highly lucrative business model for a number of contractors and policyholder attorneys.“I’m sure they’ll still come up with a way to try and get around the statutes,” said Tiffany Roddenberry, an attorney with the Holland & Knight law firm who was involved in two recent AOB appeals. “But at least on this, the appeals courts have come out against it and are in agreement.”

In the most recent decision, Florida’s 5th District Court of Appeals late last week upheld a Marion County judge’s ruling that an organization known as Holding Insurance Companies Accountable (HICA) had no standing to sue Tampa-based American Integrity Insurance Co. The case was one of several HICA had pursued for years against American Integrity and against Security First Insurance, two of the largest insurers in the state.

It all began in 2019, as the insurance litigation crisis in the state worsened. The Florida Legislature that spring approved House Bill 7065, which became the landmark statute 627.7152 and put new limits on AOBs in an attempt to reduce lawsuits.

HICA argued in the appeal that it was not a contractor, only a service that advocated on behalf of homeowners. The AOB law, including its rules requiring an itemized listing of damage to the property, signed agreements, notices of intent to file suit, provisions to allow insureds to rescind the agreements, limits on attorney fees, and other provisions, did not apply, the organization said.

Leonard Caruso, a homeowner in The Villages who had sustained some wind damage to his roof, had filed a claim and hired Noland’s Roofing Inc. to make the repairs. Caruso signed a directive to pay, essentially instructing his insurer, American Integrity, to pay the roofer. He also signed an AOB contract with HICA, which calls itself a business that helps enforce homeowners’ rights under their insurance policies, the appellate court explained.

But the courts held that HICA principals had pledged to give recovery from the lawsuits to Noland’s Roofing, its chosen contractor. That is the same as an AOB, the trial and appellate court judges noted.

“As the trial court found, this mandatory pass-through of benefits from HICA to Noland’s Roofing places the assignment within the broad reach of section 627.7152,” Judge Harvey Jay wrote in the 5th DCA’s Jan. 3 opinion. “Even though HICA will not personally scale Caruso’s house to repair his roof, it is seeking funds to facilitate those repairs.”

The Florida Legislature in 2019 had mandated that AOBs comply with all provisions of the assignments law. And because the HICA assignment agreement did not do that, it is invalid and unenforceable, the court noted.

The ruling followed similar recent decisions: one by the 5th DCA in December in another HICA suit filed against American Integrity; one in May involving American Integrity; and another in February 2024, by the 2nd DCA, involving Security First. The 2nd District Court also in 2022 ruled against another contractor, Richie Kidwell’s Air Quality Assessors, in yet another American Integrity case. The court found that Air Quality’s agreement with a homeowner was, in fact, an AOB and did not comply with the 2019 law, despite Kidwell’s arguments that it was an assessment of damage, not an assignment of benefits.

Perhaps seeing the futility of pursuing further appeals, HICA in December tried to drop its appeal of the Caruso suit. But the 5th DCA refused to accept the dismissal “because the issue presented is one of importance and for which a published decision would be helpful,” the judges noted, citing the precedent of a 2016 court ruling.

The recent appellate decisions are considered significant victories for insurance companies that have battled AOB suits for years, said William Large, president of the Florida Justice Reform Institute. Large and Roddenberry penned amicus curiae briefs in two of the 2024 appeals, on behalf of the insurance industry.

“This appeal presents an issue of paramount importance to Florida’s property insurance industry: ensuring the application of legislative reforms designed to prevent abuse of assignments of benefits,” reads the amicus brief in the December 5th DCA HICA appeal, decided Dec. 23, 2024.

AOBs may have started as a way to make it easier for storm-stricken homeowners to leave the hurricane restoration and insurance recovery work to others. But by the mid-2010s, several contractors and their attorneys had learned to game the system and take advantage of one-way attorney fees, generating thousands of unnecessary lawsuits against insurers and abusing the legal system, Large and others have argued.

“Studies have confirmed those abuses, and underlined further that AOBs were one of the driving forces of insurance-related litigation in Florida since 2000,” the Justice Reform Institute’s brief noted. The Institute’s own 2019 study, authored by industry consultants and lobbyists Mark Delegal and Ashley Kalifeh, said the number of lawsuits brought by AOB holders had increased by 16,000% in the two decades since 2020.

The recent appeals were expected after the 2019 AOB law was adopted, and it has taken five years for courts to nail down the full reach of the statute, Large noted. This means insurers can now know the extent of the law for actuarial purposes. It’s unlikely the HICA suits will be appealed to the state Supreme Court.

And although Florida lawmakers in 2022 in a special legislative session specifically put an end to assignments of benefits, the multiple lawsuits by Holding Insurance Companies Accountable shows the lengths that some contractors will go to try and get around the statutes, attorneys said.

“It always surprises me the imagination that some of these people have,” Large said.

And in instead of AOBs, some restoration companies continue to pursue similar agreements under the name of “directives to pay.” The 5th DCA addressed that issue only in passing in the Jan. 3 opinion.

“I do not think this decision was so much a commentary on ‘directions to pay’ as it is on what qualifies as an assignment of benefits under FS 627.7152,” said south Florida attorney Michael Packer, of the Marshall Dennehey law firm. “I think the 5th DCA, following the lead of the 2nd DCA, is sending a message that they are not going to look favorably on these attempts to circumvent the requirements” of the 2019 AOB statute.

This article was originally published by Insurance Journal. Reporter Will Rabb is the Southeast Editor of Insurance Journal.

https://www.carriermanagement.com/news/2025/01/07/270224.htm

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