How much more Floridians are paying for property insurance due to lawsuits
Bottom Line: You don’t have to be an insurance expert or good with math to look at a couple of numbers and realize Florida’s property insurance market is a disaster (which is ironic because that’s what it’s there to help you recover from). The two numbers are these...
- Florida’s percentage of property insurance policies nationally: 8%
- Florida’s percentage of property insurance lawsuits nationally: 76%
Those were the findings of Florida’s Office of Insurance Regulation based on the National Association of Insurance Commissioners Annual report. And as you might imagine all of that adds up to you paying a lot more for property insurance. Florida’s long held the unfortunate distinction of having the highest property insurance rates, however that’s been explainable due to Florida’s status as the highest-risk state based on insurance risk mitigation models. What’s apparent is that we’re paying for far more than just the risk of natural disasters. In fact, we might be paying as much for legal fees as we are property insurance.
For several years there have been calls for tort reform in Florida, which would be aimed at curbing the potential abuse of the legal system with frivolous lawsuits and/or those with relatively thin cases. These findings are the strongest case I’ve seen regarding the need for reform. You might recall the first measure aimed at curbing abuse – the AOB or Assignment of Benefits reform which passed in the 2019 legislative session. At the time of its passage over 130,000 annual cases of insurance fraud were identified by regulators adding an average of $350 in cost to the average Florida property tax bill annually. It appears that may have just been the tip of the iceberg.
According to Florida Insurance Commissioner David Altmaier reform is needed that would eliminate Florida’s one-way attorney fee statute which he states incentivizes illegitimate litigation. He supports a model used by other states which requires 61-day notice to an insurance company before filing litigation and a variable attorney fee model. Quoting Commissioner Altmaier: These solutions could substantially reduce the litigation associated with claims, bringing more certainty into Florida’s property insurance market. Ultimately this will provide more stability in the market and more rate stability for consumers.
Initial analysis suggests litigation levels consistent with the national average could result in a reduction in annual costs of around $500. Clearly there’s a problem with our state’s structure and there’s clear savings available here that’d be meaningful to most households. While trial attorneys won’t support reform, it’s evident it’s necessary.
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