Florida Justice Reform Institute

Investigations to Legislation: Florida Lawmakers Weighing Insurance Industry Changes

/in

By William Rabb | March 6, 2025

Florida legislative leaders, facing increasing pressure from the public and the press, this week pledged to investigate property insurers’ financial structures. And bills filed before the 2025 Legislature began this week also would require executive pay disclosure by carriers, along with other changes that could affect insurance agents and insureds.

Here’s a look at some of the issues Florida lawmakers are considering as they convene in Tallahassee.

Investigation on MGAs

Newly sworn House Speaker Danny Perez, R-Miami, on Tuesday announced an investigation into property insurance carriers’ relationships with their managing general agents and other affiliated companies. The call for House hearings came a week after the Tampa Bay Times and Miami Herald reported that a 2022 analysis by the Florida Office of Insurance Regulation, made available only after a two-year wait on a public records request, suggests that insurers had diverted billions to affiliate companies while claiming financial hardship from hurricanes and claims litigation.

 Perez

It’s far from certain if the speaker’s probe will lead to new restrictions or new reporting requirements for Florida carriers and MGAs. It’s not the first time the issue has been raised.

Insurance agents and industry advocates and lobbyists have pushed back on the news report and on the call for further investigations. Several have noted that the MGA arrangements that carriers employ already must be approved by OIR, and that it would be absurd for insurance holding companies to deliberately allow a carrier to sink into insolvency while diverting profits.

The Tampa Bay Times report “glides right by the comment that many affiliated companies poured back almost $700 million to the insurance companies in order to keep them from insolvency,” wrote Alan McGinnis, principal at McGinnis Himmel Insurance Agency in Tallahassee. His guest column was posted in Florida Politics and in insurance consultants recent blog posts.

Meanwhile, legislative changes enacted in recent years seem to be working, slowly but surely, bringing new capital and new carriers to the Florida market, with a slowing of rate increases.

Bills in the Hopper

Even without a House investigation on the table, insurance costs remain the number one concern for Florida homeowners, the Florida Association of Insurance Agents’ B.G. Murphy said in a recent webinar. At the same time, Florida business leaders and insurance executives and agents have urged lawmakers to steer clear of any changes to the 2022-2023 reforms that ended one-way attorney fees and disincentivized costly claims litigation.

The opposing sentiments have resulted in several bills that insurance interests are watching this year.

House Bill 643

HB 643, by Rep. John Snyder, R-Palm Beach, is considered a top priority for the FAIA. It would make it easier for agents to move commercial and commercial residential policyholders to surplus lines, and to sell Citizens Property Insurance Corp. policies. Agents would no longer be required to make a “diligent effort” to find coverage before obtaining surplus lines coverage.

“The diligent effort requirement serves no purpose,” Murphy said.

The bill also would soften the 2024 requirement that agents be appointed with at least three carriers before writing Citizens’ policies. Under HB 643, agents would be able to obtain a signed statement showing they have access to primary market carriers through a broker.

Senate Bill 230

Sponsored by Rep. Keith Truenow, R-Tavares, this omnibus-type bill would make a number of changes. For agents, it would reduce the number of pre-licensing education hours from 200 to 60 – a rule change that FAIA strongly opposes. That would “dumb down” the requirements for agents, something few people really want, FAIA’s Dave Newell said.

The measure, however, also would make it a little easier for insurers to avoid bad-faith claims, by further clarifying 2022 law that requires a court finding that the policy contract was breached, before extra-contractual damages can be demanded. It also would require plaintiffs to specify exact damage amounts demanded, and excludes attorney fees from damages. If insurers require more information from policyholders, that would have to be requested within a 60-day notice period, with 10-day extensions allowed.

It also would bar public adjusters from engaging in adversarial conduct with insurance adjusters, including recording insurer personnel. This has been an issue in recent years, with Citizens and other carriers charging that some public adjusters have physically threatened insurer claims workers, have video-recorded them and have taken other actions to thwart inspections.

SB 592 and HB 393

The bills would extend the popular My Safe Florida Condominium pilot program but would clarify that some detached buildings would not be eligible for the grants. It also would allow just 75% of unit owners to agree to apply for the program, not the current level of 100%. Only condo buildings of three stories or higher would be eligible.

For single-home mitigation measures, SB 1466 and HB 851 would set up a trust fund that would provide up to $300 million annually for the My Safe Florida Home program. It would allocate 5% of sales tax revenue generated from hurricane-impacted counties in the two months after a storm makes landfall.

SB 128

SB 128, by Sen. Danny Burgess, R-Zephyrhills, may get some attention since it appears to be consumer-friendly at a time of rising concerns about insurance corporation rates and practices. But it has led to some confusion in the industry.

The bill would require cancellation and nonrenewal notices be mailed and emailed at least 45 days before the termination date. But Florida law already requires 120-day notice for most nonrenewals and cancellations. SB 790 and HB 941 would bar insurers from cancelling policies for at least 90 days after repairs are made.

HB 705

The measure would exempt new Citizens policies from the glidepath, a statutory mechanism that limits Citizens’ rate increases each year. The change would be highly controversial but is considered free-market friendly.

Primary market insurance leaders and Citizens’ top brass have all called for an end to the glidepath, in order to allow the insurer of last resort to truly be an insurer of last resort and charge market rates or higher, which could encourage more competition. But Florida’s insurance commissioner and OIR recently slashed a proposed Citizens rate increase in half, keeping premiums for the carrier lower than other insurers in many areas of the state for 2025.

SB 554/HB551

State Sen. Don Gaetz was in the Florida Legislature for a number of years until he retired in 2016. Now he’s back, after being re-elected last fall. His bill, SB 554, would make a number of revisions that can be seen as consumer-friendly, but which insurers and agents say would unwind most of the 2022 litigation reforms.

The measure would repeal the 2022 ban on one-way attorney fees, replacing it with a sliding scale. It also would require more disclosure of insurer executive compensation packages.

SB 734/HB6017

The bills would allow non-dependent family members to file medical malpractice suits. Long an issue in Florida, the current “free kill” statute, as it’s known derisively, limits tort actions only to spouses or dependent children of people fatally injured in medical treatment. Critics, including the Florida Justice Reform Institute, insurance companies and medical providers, have said passage of the measures would greatly increase the number of lawsuits filed in the state.

Dozens of other bills have been filed this year, including one that would make Citizens the wind insurer for all of Florida. But many of those offers are not expected to see much traction. Because the weeks preceding the regular session were taken up with immigration bills, that left little time for committee action on insurance legislation, meaning lawmakers now have only about five weeks to move bills across the finish line, explained former deputy insurance commissioner Lisa Miller.

Investigations to Legislation: Florida Lawmakers Weighing Insurance Industry Changes

Florida Justice Reform Institute

Did Florida Appeals Court Put the Final Nail in the AOB Coffin? Maybe

/in

January 7, 2025 By William Rabb

Almost five years after Florida lawmakers clamped restrictions on assignment-of-benefits agreements and two years after they effectively outlawed AOBs altogether, state appeals courts may have finally put an end to one creative way that had been used in attempts to get around the law.

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.

Roddenberry

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.

Photo: In January 2018 more than 125 insurance agents from across Florida, along with members of the Consumer Protection Coalition, marched to the Florida Capitol to highlight the need for AOB reform. (Colin Hackley photo)

Did Florida Appeals Court Put the Final Nail in the AOB Coffin? Maybe

Florida Justice Reform Institute

Florida Justice Reform Institute

  • Phone

    (850) 222-0170

  • Hours of Operation

    Monday – Friday, 9 a.m.-5 p.m.

  • Address

    210 S Monroe Street
    Tallahassee, FL 32301

Site Links