Last year was one of the most tumultuous in recent times for Florida’s insurance markets.
Home insurance premiums spiked by double digit percentages after carriers requested substantial hikes to cover rising reinsurance costs, increasing litigation and lingering storm claims. Florida’s insurance regulator launched an examination of the financials of many of the state’s carriers.
And while the final figures are not yet in, 2020 losses for Florida’s domestic property insurers are projected at about $1.3 billion, according to Mark Friedlander, Florida representative for the Insurance Information Institute.
Litigation over windshield replacement claims, meanwhile, have also shot up, particularly in the Interstate 4 corridor from Orlando to Tampa.
Several proposed bills this session take aim at some of the underlying issues in the state’s insurance industry, particularly ballooning litigation.
SB 906: Motor vehicle windshields
Auto glass replacement is one of the state’s hot spots for litigation over claims. When someone’s windshield breaks or cracks, the repair is often covered by comprehensive auto insurance. Windshield repair companies may offer to deal with the insurance company directly for the claims process, asking the customers to sign over their right to do so. But thousands of lawsuits are filed every year by glass companies over disputes about the fair price of a windshield replacement. The glass company often argues the price for the job is higher than what the insurer is willing to pay. Because the glass company ends up representing the policyholder, the policyholder is effectively filing a lawsuit against their own insurance company, which can raise their rates in the future. Tampa Bay is ground zero for these claims.
This bill takes aim at auto glass repair companies that try to entice potential customers into this process with freebies such as a box of frozen steaks or a gift card. If passed, the bill would bar repair shops from “offering anything of value” in exchange for making an auto glass insurance claim. It would also require the repair shops to give the customer written notice before they file a lawsuit. Often, customers have no idea they are part of litigation. Insurers would be required to respond to these lawsuits in a specific time frame and have a process for addressing this kind of dispute.
SB 54: Motor vehicle insurance
One of the most significant changes proposed also involves auto insurance. Florida is one of a small number of states with a no-fault law for auto accidents, which means both parties involved in an auto accident can file claims directly with their own insurer, regardless of who was responsible for the accident. Drivers are instead required to have a minimum of $10,000 in personal injury protection, which pays for medical bills, lost wages and other expenses. Changing this system has been the subject of discussion for nearly a decade over concerns that fraudulent claims were rampant.
The bill would do away with that approach, instead requiring drivers to carry $25,000 in coverage for bodily injury or death they cause another person, and double that for two or more people. Drivers would also need to have coverage for $10,000 in property damage they cause. Under this bill, insurers would be required to provide medical payment coverage with either $5,000 or $10,000 limits, and the insurers would be subject to standards for approaching the claims process that is meant to curb “bad faith” litigation over claims.
Opponents of the bill are concerned that rates would increase and price out low-income drivers.
SB 212: Lawyer fee multipliers
One of the main drivers of recent property insurance premium increases is exploding litigation around claims. Litigated claims can cost more for insurers because of what’s known as a “fee multiplier,” where lawyers can request that their fee be doubled or tripled if a case is more complex or goes beyond their standard costs. Additional expenses for insurers means higher premiums. The fee was meant to help give average Floridians who might not be able to afford a lawyer for such a case access to quality legal representation.
This bill would create a “strong presumption” that the standard fee model is appropriate when the case involves property insurance, and that significantly increasing that fee would be reserved for “certain circumstances” that weren’t specified in the bill.
SB 76: Residential property insurance
Florida insurers have long faced significant numbers of lawsuits for water damage not caused by storms, which drove up premiums for policyholders. While legislation passed in recent years has curbed this, new iterations of the problem are popping up. One such issue involves roof repairs, where a customer files a claim to have their roof replaced, which can be covered in full by the insurance company. Under this bill, the reimbursement amount policyholders are given would depend on the age of the roof and its material. Its critics say that it could hurt customers, who would have to foot more of the bill for an older roof, even after paying their deductible.
It would also address an issue related to hurricanes. Part of the rising premium costs this year was because of claims for Hurricanes Irma and Michael. Claims may be filed up to three years after a storm hits. This bill would drop that to two years.
It also folds in the reduction of the fee multiplier for property insurance cases that SB 212 does.