Abusive lawsuits driven by tag teams of trial attorneys and unscrupulous contractors are causing the Florida property insurance market to break down, raising the specter of a doubling of premium costs in the next three years.
That’s the assessment of state Sen. Jeff Brandes (R-St. Petersburg), a tort-reform advocate who authored SB 914 in the last legislative session. The bill would have prohibited the use of contingency rate multipliers in property insurance claims – a tactic lawyers employ to boost their compensation.
“My overriding concern is that insurers have not been profitable for years in Florida and are abandoning the Florida market for more affordable markets,” Brandes told the Florida Record.
Brandes’ concerns about the need for civil litigation reform have only increased in recent months as a few insurers have left the market and others, including Capitol Preferred, are raising rates by more than 20 percent. In addition, private insurers are shedding policies that have become increasingly costly, which will force the nonprofit public option, Citizens Property Insurance Corp., to take on more policies.
The prospect of Citizens, which was set up by the legislature as the property insurer of last resort, taking on tens of thousands of additional policies is a grave concern since taxpayers ultimately will bear any resulting financial burdens.
“We’ve worked incredibly hard over the last decade to get policies down at Citizens to sub-500,000,” Brandes said. “... My fear is what looks like just a change in the tide could turn into a tsunami.”
The No. 1 threat insurers face in the state is abusive litigation, he said.
“They can get reinsurance for hurricanes,” the senator said. “The challenge the insurers are facing is excess litigation.”
The problem is largely driven by water-related claims filed in southern Florida and roof claims in the central part of the state, according to Brandes.
“We have almost every carrier in Florida abandoning certain counties largely because of roof and water claims,” he said. “You have a pandemic spreading across Florida – of litigation.”
The legislature will have to act because Florida seniors and young families just starting out will be seeing 20 percent to 40 percent hikes in property insurance on average this year, which translates to annual premiums costing $400 to $700 more, according to Brandes. Bipartisan support for reform will likely result as lawmakers will be forced to help financially struggling constituents, he said.
“That is not a sustainable mode for them,” Brandes said.
In a recent opinion column the senator co-authored in the Tampa Bay Times, he pointed to how People’s Trust Insurance Co. in southern Florida recently announced that it would not be in a position to offer insurance to residents of the state’s six largest counties. This is due to a continuing stream of lawsuits driving up claims costs, the opinion piece said.