TALLAHASSEE – A Florida lawmaker has introduced a bill that would restrict a practice that ramps up fees paid to attorneys who represent a property owner suing an insurer on a contingency-fee basis.
Rep. Bob Rommel (R-Naples) filed House Bill 305 on Jan. 19 in an effort to rein in what are referred to as “contingency risk multipliers.” This practice allows attorneys involved in certain property claims to earn pay that amounts to multiples of their regular hourly rates as a reward for the risk they take by accepting a contingency-fee arrangement.
Critics have blamed this practice on putting upward pressures on the cost of property insurance policies around the state at a time when many insurers have applied for double-digit rate increases.
“It’s time to curb use of the contingency-fee multiplier allowing some greedy attorneys to essentially double-dip on fees,” Michael Carlson, president and CEO of the Personal Insurance Federation of Florida (PIFF), told the Florida Record in an email. “We thank Rep. Rommel as well as Sens. (Jeff) Brandes and (Jim) Boyd for leading on the issue.”
PIFF favors efforts to lower the cost of insurance premiums through legislative reforms, according to Carlson.
“Use of the fee multiplier is already severely limited at the federal level, yet today in Florida, attorneys taking on routine residential property claims are asking to be paid twice their hourly rate, not because they deserve it but because they can,” he said. “And those costs are passed on to insurance consumers.”
HB 305 would require the awarding of attorney fees in claims involving property insurance policies to follow what’s known as a lodestar fee in most cases. The lodestar calculation refers to paying the attorney a reasonable rate for the number of hours that would be reasonably required to complete the task at hand.
The legislation would also allow property insurers to limit coverage on roof replacements using reimbursement schedules. The bill would require insurers to replace in full any roof that is under 10 years old, but for older roofs, the insurer would be allowed to pay out only a portion of the replacement costs.
The insurer’s share of the replacement costs for older roofs could be anywhere from 70 percent to 25 percent, depending on the roof material, according to the bill’s provisions.
If signed into law, the bill would take effect July 1.