Florida’s insurance market is troubled, with many people pointing to tort law as part of the problem. New efforts for Florida tort reform are underway, meaning big changes could be coming to the state.

The Florida Insurance Market

If you live in Florida, you probably pay more than the national average for car insurance. According to Autolist, Florida drivers paid an average of $2,364 for full auto coverage in 2021, compared to the national average of $1,674. Minimum car insurance coverage costs $1,101 in Florida, compared to $565 nationally.

Multiple factors may contribute to these higher rates, including the prevalence of high-risk and uninsured drivers. Florida’s tort system may be another contributing factor.

According to Insurance Journal, Florida doctors can take a share of the judgment in an injury lawsuit. Critics say this rule is responsible for inflating medical costs. Liability and auto insurance companies often end up paying these additional costs.

To make up for the higher costs, insurers need to charge higher premiums, meaning policyholders end up bearing the expense.

The Proposed Tort Reform Bill

On February 15, 2023, House Judiciary Chair Tommy Gregory filed HB 837.

According to the Florida Bar, Senate President Kathleen Passidomo says the reform would build on property insurance legislation introduced in December. According to Business Observer, HB 837 goes further than the insurance reform from 2022.

According to Floridians for Lawsuit Reform, Gregory has said insurance rate relief is his top concern this year. “Floridians are paying more and more every year out of their pockets for insurance. We all know because we get those property insurance bills and those auto insurance bills that we have to do something to address those raising prices and increasing premiums,” said Gregory.

What’s Inside the Florida Tort Reform Bill?

According to Insurance Journal, the proposed law includes multiple key provisions, including raising the threshold for bad-faith claims and ending one-way attorney fees for claims litigation against different types of insurers. Other provisions in the 22-page bill include the following:

The elimination of multipliers. HB 837 creates a “rebuttable presumption that a lodestar fee is a sufficient and reasonable attorney fee in most civil actions.” This means attorney fees must be calculated without contingency risk multipliers.

Disclosure requirements for letters of protection. According to Insurance Journal, critics have argued these letters are why medical costs and damages in injury verdicts often exceed normal health insurer costs. HB 837 would require disclosure of these letters and the amount the third-party factoring company agreed to pay the doctor.

The end of attorney-client privilege when attorneys refer their clients to doctors. Juries should know if a doctor has a financial incentive for inflating medical costs. However, Insurance Journal says that due to a 2017 Florida Supreme Court decision, the financial relationship between an attorney and doctor does not need to be disclosed during discovery. HB 837 would end lawyer–client privilege when “a communication is relevant to the lawyer’s act of referring the client for treatment by a health care provider.”

Denying recovery if the plaintiff is more than 50% at fault. Should someone who is primarily responsible for an injury be allowed to recover damages? Not according to HB 837. According to the bill, “any party found to be greater than 50 percent at fault for his or her own harm may not recover any damages.”

Restricting insurer liability to policy limits for competing claims. Insurance policies typically include per-incident limits, but what happens when multiple third-party claimants make competing claims for a single incident? HB 837 could prevent insurers from having to pay more than the policy limit, as long as the insurer complies with certain requirements. “If two or more third-party claimants make competing claims arising out of a single occurrence, which in total exceed the available policy limits of one or more of the insured parties who may be liable to the third-party claimants, an insurer is not liable beyond the available policy limits for failure to pay all or any portion of the available policy limits to one or more of the third-party claimants.”

Basing damages on real medical costs. In the U.S., medical costs can be extremely high, but HB 837 states that damages should not be based on unsupported medical estimates. “Evidence offered to prove the amount of damages for past medical treatment or services that have been satisfied is limited to evidence of the amount actually paid, regardless of the source of payment.”

HB 837 has not passed into law yet. If it does, it will have a major impact on tort law and liability insurance in Florida.

Need Help Navigating Florida’s Complex Insurance Market?

Wilson, Washburn & Forster is a boutique independent insurance agency that has been in business since 1961. We have expertise and connections in liability insurance and risk management. Our experience, claims handling, service, and community commitment is unrivaled.

Contact us today at 786-454-8384 for a complimentary analysis of your current insurance program by an insurance specialist in this field.