Florida insurance officials have reacted positively to the Florida Office of Insurance Regulation’s (FOIR) recent decision to allow a property insurance company to mandate mediation or arbitration in claims disputes in return for homeowner rate reductions.
The February decision by FOIR approved a filing by American Integrity Insurance Co. of Florida to change property insurance policy language for new or renewing customers. In return for premium reductions, the policyholder would be required to settle disputes using mediation or binding arbitration, according to the wording of the approved filing.
The new American Integrity form language would take effect April 22 for new customers and on June 21 for renewing customers, according to FOIR.
The decision was applauded by the Personal Insurance Federation of Florida (PIFF) as a way to lower litigated property insurance claims costs at a time when insurers in the state are struggling financially, having to deal with severe weather events and increasing rates for homeowners.
“PIFF members believe that alternative dispute-resolution tools, such as appraisal, mediation, and arbitration, are good ways to reduce litigation and the increased cost of insurance caused by litigation,” Michael Carson, PIFF’s president and CEO, told the Florida Record in an email. “We applaud the Office of Insurance Regulation for exercising its authority to permit the use of arbitration in homeowner’s claims.”
Though some plaintiffs’ attorneys have signaled that this new emphasis on mediation and arbitration could be challenged in the court system, the Florida Supreme Court recently issued a decision that affirms the validity of contracts referencing the delegation of arbitration using American Arbitration Association Rules. The 6-1 ruling involved a challenge to wording in an Airbnb contract.
“Specifically, we address whether Airbnb’s Terms of Service that incorporate by reference the American Arbitration Association (AAA) Rules that expressly delegate arbitrability determinations to an arbitrator constitute ‘clear and unmistakable’ evidence of the parties’ intent to empower an arbitrator, rather than a court, to resolve questions of arbitrability,” the March 31 court opinion states. “... We hold that under the Federal Arbitration Act (FAA), it does …”