Navigating Florida's Property Insurance Market: Challenges and Reform

Florida's Unique Insurance Landscape

Florida, with its third-largest population in the U.S., faces a higher-than-average frequency of natural disasters, making it a challenging environment for property insurers. The state's legal system has also contributed to market instability through the misuse of one-way attorney fees, bad faith claims, and other litigation trends.

The Legal System's Role in Market Instability

The exploitation of one-way attorney fees and bad faith law has incentivized unnecessary disputes, while the abuse of assignment of benefits (AOB) agreements has inflated costs. According to the Florida Office of Insurance Regulation (OIR), despite accounting for only 9% of all homeowners insurance claims nationwide, Florida accounted for 79% of all homeowner insurance litigation in 2020. Additionally, over the last decade, only 8% of the $51 billion paid out by insurers went to claimants, with plaintiffs' attorneys taking home 71%.

Legislative Reforms and Future Outlook

In response to the crisis, the Florida Legislature has passed significant insurance reforms, including the elimination of one-way attorney fees in property insurance litigation and the prohibition of using appraisal awards to file bad faith lawsuits. These reforms aim to decrease the volume of property insurance litigation and foster a more stable market. While the impact of these reforms may take time to materialize, there is optimism that the market is moving towards sustainability.

For readers, it is advisable to stay informed about legislative updates and consider consulting with insurance professionals to navigate the evolving market effectively.