Litigated claims remain a potent factor in Florida’s increasingly challenging property insurance market as recent reform measures have yet to yield tangible benefits, Citizens Property Insurance Corp. officials said at a recent board meeting.
Citizens, the state-run insurer of last resort in Florida, has been seeing a rise in its policy numbers as eight private insurance companies have suffered insolvencies since 2019, forcing Citizens to take on more residential policies, the company’s president, Barry Gilway, said at the Sept. 21 board meeting.
Industrywide in Florida, this trend has been accompanied by a spike in the combined numbers of lawsuits and intentions to file lawsuits, with the tally going from 85,000 in 2020 to 116,000 in 2021, the President’s Report given by Gilway states. The number of 2022 lawsuits and lawsuit notices through the end of August reached 91,390, he said.
It’s unclear at this point whether Citizens would advocate for additional reforms when the state Legislature reconvenes next March, according to Citizens spokesman Michael Peltier.
“There’s going to be elections in November,” Peltier told the Florida Record. “There will be a new Legislature in place after that point. We’re probably going to wait and see what comes out of that.”
The current challenges facing the Florida property insurance market are twofold, he said.
“Probably more pronounced are litigation frequency and severity and, secondly, is the price of reinsurance for domestic property insurers,” Peltier said.
The Citizens policy count as of Aug. 31 was 1,026,829, reflecting a 13% share of the state’s property insurance market. In comparison, Louisiana’s nonprofit insurer of last result has a policy count that is only 5% of the state’s total.
In some southeast Florida counties, however, Citizens covers a much greater share of the residential market. In Monroe County, Citizens’ market share is more than 70%, Gilway said.
Citizens officials expect the passage of the Senate Bill 76 reforms during a legislative special session earlier this year, including restrictions on the practice of assignment of benefits (AOBs) to third parties, will have a positive effect over time, he said.
“But the combined litigation numbers for the industry and for Citizens has not yet experienced the benefit of the legislation that has passed,” Gilway said. “In fact, the driver for the increase continues to be AOBs.”