Florida Lawmakers May Re-Authorize Lawsuits Over Property Insurance Claims
In a surprising turn of events, Florida lawmakers are considering consumer-friendly legislation that could alter the landscape of property insurance claims. The proposed legislation, if passed, would allow policyholders to legally challenge insurance companies that deny their claims. This shift comes after years of restrictions and is a welcome, though belated, move to address the ongoing property insurance crisis in the state.
House Bill 1551, spearheaded by State Rep. Hillary Cassell, R-Dania Beach, aims to restore homeowners’ ability to sue insurance companies that refuse to pay claims. This right was significantly curtailed in 2022 by the legislature under the direction of Governor Ron DeSantis. The initial rationale for the restrictions was the need to protect the insurance industry, as lawsuits were blamed for insurers fleeing the state.
The earlier policy changes, often referred to as tort reform, purportedly benefited insurers. However, while litigation against insurers decreased, a recent report revealed that insurers in Florida paid substantial funds to shareholders and affiliates while simultaneously reporting significant losses. This disclosure triggered strong reactions among policyholders and has prompted lawmakers to reconsider consumer protections.
The proposed legislation, which is currently moving through the Florida House, would require insurers to cover the legal fees of plaintiffs in select cases. The bill gained bipartisan support, passing out of the Insurance and Banking Subcommittee with a 15-1 vote. The Florida Chamber of Commerce has voiced its disapproval of this move.
The insurance industry is resisting the bill, warning that allowing more lawsuits will lead to increased rates and premiums and make it less attractive for insurers to offer property insurance in Florida. However, these industry concerns must be considered with caution, given the payouts detailed in the 2022 report, which occurred while insurers were raising rates and claiming financial difficulties.
State lawmakers are beginning to thaw to efforts to improve consumer protections when it comes to property insurance claims.
Prior to 2022, Floridians faced a severe insurance crisis. Changes in the climate and an increase in severe storms caused insurers to either leave the state or raise premiums and restrict coverage. In response, the governor and lawmakers implemented measures to limit litigation and provide financial aid to assist insurers with rising reinsurance costs. These measures were presented with assurances that rates would decrease within two years.
However, the promised rate relief did not materialize. Following the 2022 law, the Post Editorial Board sought information from the Insurance Information Institute regarding when policyholders might experience relief. The response suggested it could take years, with Institute officials emphasizing the enduring impact of litigation despite numerous legislative attempts to mitigate its effects. Now, there are better signs. Several insurance companies have started business in the state, and the rise in insurance rates has either been flat or reasonably less than the previous annual rate requests.
Despite these positive developments, policyholders remain unsatisfied. Rates have not decreased to the extent promised, and legislative committee hearings have highlighted ongoing difficulties, including slow responses to claims and hesitance to cover damages. Cassell’s bill, alongside another that would require qualified professionals, rather than AI, to review claim denials, signifies a welcome step in a state that has often favored the insurance industry over consumers.
In the previous year, Cassell’s attempts to address the insurance crisis only sparked a committee discussion. The advancement of her bill through one legislative chamber signifies progress. Lawmakers in both chambers now need to pass the legislation.
