Citizens Property Insurance Corp. has approved a total of $100 million for the year 2022 to pay attorneys to litigate the rising number of disputed claims, raising new concerns about the struggling Florida insurance industry.
Citizens, the state-run insurer of last resort in Florida, approved $50 million in spending for legal services for the remainder of the year, according to records of its June 23 Claims Committee meeting. That amount follows the approval of another $50 million in anticipated attorney spending in December of last year.
These rising costs reflect new claims litigation, the amount of pending litigation and a rising number of policies the company has taken on as some private insurers become insolvent and others have struggled to provide home insurance coverage in the state.
“Citizens continues to see claims-related litigation increases in terms of both new and total pending lawsuits,” the company’s executive summary of the legal-claims spending proposal states. “Since November 2021, the number of pending claims-related lawsuits has risen over 2,000 to 18,500, averaging almost 1,000 new lawsuits per month for 2022.”
Michael Carlson, president and CEO of the Personal Insurance Federation of Florida, said the Citizens data points to the need for the state to continue to scrutinize Florida’s legal climate.
“The only thing I can say is that this is further proof that Florida’s litigation environment is increasing costs for insurers and, ultimately, for insurance consumers,” Carlson said in an email to the Florida Record. “We are hopeful that the positive legal reforms included in SB-2D, which passed just recently during the special session, will help limit predatory claims activity and lawsuits.”
Citizens has taken on an additional 75,000 insurance policies between Jan. 1 and April 30 of this year, the company reported. Over the same time period, assignment-of-benefits (AOB) lawsuits have risen 93% during the first four months of 2022, compared to the same period of the previous year, according to Citizens.
Among Florida’s largest property insurance companies, the percentage of AOB litigation compared to total litigated claims in May remained higher than at any month in 2021, according to the litigation-management software company CaseGlide.
“We are likely to have to continue to address the litigation environment in Florida, which is fundamentally driven by our pro-plaintiff attorney fee-shifting law,” Carlson said. “That law, while well-intended, has been turned into an engine of profit for trial lawyers at the expense of ordinary Floridians.”