In the wake of companies winning approval for double-digit increases in property insurance rates, a Florida Senate panel this week sent an insurance reform bill to the Senate floor on a 12-5 vote.
The Senate Rules Committee had delayed action on Senate Bill 76, authored by Sen. Jim Boyd (R-Brandenton) a week earlier, suggesting that it needed additional vetting amid concerns raised by consumer groups and trial attorneys. Supporters of the bill say its provisions will reduce litigation costs for insurers and lead to less upward pressures on premium costs.
“We are facing a litigation crisis in Florida,” Michael Carlson, the president and CEO of the Personal Insurance Federation of Florida (PIFF), said in a statement emailed to the Florida Record. “It’s the consumers who get hit with higher insurance rates at the end of the day when insurance companies have to compensate for litigation factories who drum up lawsuits to win big attorney fee payouts.”
PIFF President and CEO Michael Carlson
The bill includes reforms such as a presumption against using contingency-fee multipliers in the calculation of attorney compensation in insurance claims. Instead, the bill emphasizes the use of the “lodestar” calculation, whereby the fees are calculated by multiplying a reasonable hourly rate by the number of hours worked.
In addition, payouts for new roofs would be limited based on the age of the roof that was damaged. Though owners with roofs under 10 years old would be fully compensated for replacement costs, the replacement cost for older roofs would be subject to a reimbursement schedule.
The proposal would also reduce the time period homeowners have to file property insurance claims – from three years to two years.
Attorney fees remain a key concern for supporters of the bill. One case identified by the Florida Justice Reform Institute involved a court awarding $1.2 million in attorney fees – almost 30-fold more than what the homeowner received for damage from a plumbing leak.
“Florida’s homeowners are being whiplashed by double-digit rate increases and fewer options for purchasing coverage, with excessive litigation and runaway attorney fees to blame,” Carolyn Johnson, senior director of business, economic development & innovation policy for the Florida Chamber of Commerce, said in a prepared statement. “Senate Bill 76 contains common-sense reforms that will directly address the root causes of Florida’s current property insurance market crisis and will help protect consumers from the impacts of the bad behavior we are seeing in the marketplace.”
Supporters of the bill also expressed hope that the House version of the bill would retain the same provisions included in the Senate bill.
"We are encouraged by the Rules Committee’s passage of SB 76, and we hope the Senate will continue to support the bill on the floor," Carlson told the Record.