Florida Gov. Ron DeSanti’s proposed insurance fraud and justice system abuse reforms, announced this week for consideration in the legislative session that begins in March, would build on measures approved in the final weeks of 2022 and go a long way toward fixing the state’s insurance crisis.
Legislation passed in the 2022 special session eliminated one-way attorney fees and assignment of benefits (AOB) arrangements for property insurance claims. Governor DeSanti’s proposal would go further and eliminate these mechanisms and “attorney fee multipliers” for all lines of insurances.
“For decades, Florida has been considered a legal hell because of excessive litigation and a legal system that favored lawyers more than people who are injured,” DeSantis said in his announcement. “We are now working on legal reform that is more in line with the rest of the country and will bring more businesses and jobs to Florida.”
Prior to the 2022 reforms, state law required insurers to pay the fees of homeowner’s policyholders who successfully litigated claims, while protecting policyholders from paying insurers’ attorneys’ fees when policyholders lose. The legislation also eliminated AOB – agreements where property owners write off their claims to contractors who then work with insurance companies.
AOB is a standard practice in insurance, but in Florida this consumer-friendly convenience has long served as a magnet for fraud. The state’s legal environment—including some of the most generous attorney’s fee mechanisms in the country—has encouraged providers and their attorneys to solicit unwarranted AOBs from tens of thousands of Floridians, perform unnecessary or unnecessarily expensive work, and then sue insurance companies that deny or dispute the claims.
As a result, Florida accounts for nearly 80 percent of the nation’s homeowner’s insurance lawsuits, but only 9 percent of claims, according to the state’s Office of Insurance Regulation.
Eliminating these two mechanisms for property claims addresses much of the insurance fraud in the state. Eliminating them for all lines would be a promising sign that the state is truly committed to addressing the root causes of the crisis.
Florida’s insurance crisis did not happen overnight, and it will take years for the effects of fraud and abuse of the justice system to fade from the system. Policyholders won’t see premium benefits anytime soon. Job 1 is to “stop the bleeding” when insurers fail, leave the state or stop writing critical personal lines like auto and home owners.
Triple-I has published a new Issues Brief on the crisis and the state’s efforts to repair it.
Read more:
Florida auto law, hot on the heels of 2022 reforms, suggests state is serious about insurance crisis fix
Abuse of Florida and the justice system was highlighted at JIF 2022
Fraud, litigation push Florida’s insurance market to the brink of collapse
Florida dropped from 2020 ‘Judicial Hellholes’ list
Florida’s AOB Crisis: A Social Inflation Microcosm
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