A new law is bringing far-reaching legal reform to Florida’s insurance industry. Governor DeSantis signed House Bill 837 into law on March 24, 2023. HB 837 is intended to decrease the frivolous lawsuits that have been driving up insurance costs in the state.

Inside HB 837

According to Governor DeSantis, “Florida has been considered a judicial hellhole for far too long and we are desperately in need of legal reform that brings us more in line with the rest of the country.” According to Senate President Kathleen Passidomo, a few bad actors have been drawing out civil cases to collect more fees from insurance companies.

HB 837 aims to address this by:

• Modifying the state’s bad faith framework
• Eliminating one-way attorney’s fees and fee multipliers
• Ensuring Floridians can’t be held liable for damages if the person suing is more at fault
• Expanding immunity for property owners who are defending against a criminal who is injured on their property
• Providing uniform standards that juries can use to calculate medical damages
• Reducing the statute of limitations for general negligence cases from four years to two years

Florida’s Troubled Property Insurance Market

The Insurance Information Institute (Triple-I) says Florida homeowners pay the highest average premiums in the nation – and it’s not due to hurricanes. Florida has more insurance-related litigation than any other state. Even though only 9% of all homeowners insurance claims occur in Florida, 79% of all homeowners insurance lawsuits occur in the state. These lawsuits drive up costs for insurance companies and their policyholders.

Part of the problem – according to Triple-I – is that Florida has a legal system that invites litigation. This is combined with the fact the state has had problems with roofing scams and fraud. Roofing scams often involve contractors who offer to inspect a roof and say they’ve found damage. The contractor claims the homeowner can receive a free roof and the insurance deductible will be waived, but the contractor pressures the homeowner to sign an assignment of benefits (AOB) agreement that allows the contractor to file the claim. When the claim adjuster later finds little or no damage, the insurer denies the claim or offers a smaller amount. The contractor then sues the insurer. The insurer is forced to either fight the lawsuit or pay to settle it – either option is expensive.

Insurers Have Been Fleeing Florida

Islander News says at least 16 homeowners insurance companies have left the Florida insurance market. One of the companies – Bankers Insurance Group – cited the state’s failure to combat fraud and litigation, saying “This decision was difficult, however, necessary to allow us to grow responsibly and maintain our long-term financial objectives.”

Some insurance companies have decided to leave Florida, stop writing new policies, or decline to renew current policies. Other insurance companies have been declared insolvent. According to CBS Miami, no fewer than six Florida property insurers were declared insolvent in 2022.

Insurers that have stayed in the market have had to find ways to reduce their risks. ABC Action News says some Florida insurance companies have been changing their requirements to avoid covering older roofs. A new law states that insurers can’t refuse to write or renew policies on homes with roofs that are more than 15 years old based solely on the roof’s age, but some insurers have been adding stipulations to get around this rule. Additionally, some companies have outright refused to insure older homes, regardless of the age of the roof.

As a result, many Florida homeowners have been struggling to find coverage. Citizens Property Insurance is Florida’s insurer of last resort, where property owners go if they don’t have any other options. ABC Action News says Citizens Property Insurance ended 2022 with 1.1 million policies and could reach 1.7 million policies in 2023.

What the New Bill Means for Florida’s Insurance Market

According to Tampa Bay Times, HB 837 will make it harder and more expensive to sue insurance companies. The bill has drawn some opposition – some lawmakers worry it pushes the scales too far in the favor of insurance companies. Additionally, the changes may or may not result in lower insurance rates.

Please be aware that businesses may see a spike in lawsuit filings before the enactment of the new bill. If you receive any notice of a potential claim, please notify us immediately so your claims team can do everything possible to mitigate losses during this tumultuous  time.

Need Guidance?

Wilson, Washburn & Forster is a boutique independent insurance agency that has been in business since 1961. We have expertise and connections in 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.