The Florida property insurance reforms signed into law earlier this month are already producing some encouraging signs that the market is in the process of recovering from rising litigation costs and premium rates, according to the state’s insurance commissioner.
During a roundtable discussion June 11 that preceded Gov. Ron DeSantis signing Senate Bill 76 into law, Commissioner David Altmaier said competition within the industry seems to be on the upswing after months of double-digit rate hike announcements.
“Already since the passage of this bill, we've seen some positive signs from the marketplace,” Altmaier said. “We have seen carriers that have brought in additional private market capital to re-bolster their balance sheets. We have seen positive news from the reinsurance markets with respect to the direction that reinsurance rates are going."
The challenges facing the property insurance market have been the result of more lawsuits, losses from multiple catastrophic hurricanes and rising reinsurance costs, according to the Florida Office of Insurance Regulation. Reinsurance costs result from the practice of regional insurers transferring portions of their risk to other insurance companies.
Altmaier also said SB 76, which was authored by Sen. Jim Boyd (R-Brandenton), would help to hold the line on insurance cost drivers and curb fraudulent or abusive practices carried out by bad actors.
“OIR will continue to closely monitor litigation trends, consumer rates and the financial condition of companies to track the impact of the bill,” the commissioner told the Florida Record in an email. “As always, OIR will use every regulatory tool at its disposal to help promote stability in the market and will continue to work with the governor, Cabinet and legislature to address these challenges.”
In the months leading up to hurricane season in Florida, fewer than 1,000 of the 53,000 homeowners who were looking for coverage had to turn to the state-run company of last resort, Citizens Property Insurance Corp., according to Altmaier.
One of the provisions of SB 76 highlighted by supporters changes when insurers have to pay claimants’ attorney fees. Under current law, a plaintiff only has to win one penny more than an insurer’s initial settlement offer in court in order to win attorney fees. But SB 76 allows for full recovery of a plaintiff’s attorney fees only when the disputed amount won by the claimant is 50 percent or more above the pre-suit settlement offer.
Between 2013 and 2020, property insurance claims worth $15 billion were processed in Florida, with 71 percent of the funds going to attorneys and only a fraction reaching property owners, according to Boyd.