A new state report points to signs that recent tort reforms aimed at reducing litigated property insurance claims are gaining traction, but industry officials caution that more time is needed before any victory can be declared in the current insurance crisis.
In 2022, the percentage of the nation’s total homeowners claims filed in Florida stood at 14.93%, according to the Florida Office of Insurance Regulation (OIR). The agency’s Property Insurance Stability Report released on Jan. 1 also found that Florida homeowners’ lawsuits filed in 2022 represented 70.83% of the U.S. total.
The latter statistic may seem way out of sync with Florida’s population, but the report also shows that in 2020, Florida’s litigated property insurance claims made up 79.16% of the nation’s total. This shows a downward litigation trend in recent years, according to the report.
In 2022, Florida insurers paid $2.95 billion in defense cost and containment expenses (DCC) for domestic homeowners policies, according to the report. That represents a downward trend compared to legal expenses in 2021, the OIR report says.
Recent reforms passed by the state Legislature and signed by Gov. Ron DeSantis include a bill passed in 2022 to limit the assignment of attorney fees to third parties in property damage cases. In addition, last year lawmakers passed House Bill 837 to repeal the state’s one-way attorney fee statutes in insurance litigation and reduce the use of contingency-fee multipliers in attorney fee awards.
“There are emerging signals that the reforms signed into law are having a positive impact on Florida’s property insurance market, and OIR cautions against any major changes that would disrupt these positive developments,” the report states. “These signals include the deployment of capital into Florida’s market, with six new property insurers admitted to operate in Florida.”
OIR is also seeing a greater interest among private insurers to take part in efforts to reduce the number of policies being handled by the state-run insurer of last resort, Citizens Property Insurance Corp., according to the report.
“OIR has approved insurers to assume 650,399 policies from Citizens Property Insurance Corp. … during 2023, a more than 800% increase from the previous year,” the report says.
Insurance Commissioner Michael Yaworsky also signaled an optimistic tone about the property insurance market earlier this month.
"“The fact that insurance companies are expanding their business in Florida following historic legislative reforms is an indicator that the legislation is having a positive effect on our state’s insurance market," Yaworsky said in a prepared statement.
The legislative reforms are also leading to modest rate reductions among Florida property insurers, the study states. But industry observers warn that HB 837 has yet to take its full effect due to the delayed effect of some of its provisions.
“"Given that the bill was signed on December 2022, we have not passed the point when all property policies in force have been renewed, therefore reforms included in SB 2A are not fully implemented,” Michael Carlson, the president and CEO of the Personal Insurance Federation of Florida, told the Florida Record in an email. “We need to allow time for the law to apply statewide before we can draw any meaningful conclusions about its impact on litigation volume. That said, we are hopeful litigation trends will start to improve in the coming months."
Based on the report’s numbers, the percentage of litigated claims are highest in Palm Beach, Broward and Miami-Dade counties (27.5%). And in Seminole, Orange, Lake and Osceola counties, litigated claims are 9.9% of all property insurance claims.
Homeowners insurance premium costs in Florida remain highest in the southern part of the state. As of Sept. 30 of last year, those costs averaged $8,162 in Monroe County and $6,124 in Palm Beach County, according to the report.