Florida Gov. Ron DeSantis’s proposed insurance coverage fraud and authorized system abuse reforms, introduced this week for consideration through the legislative session that begins in March, would construct on measures authorized within the closing weeks of 2022 and go a good distance towards fixing the state’s insurance disaster.
Legislation handed through the 2022 particular session eradicated one-way legal professional charges and project of advantages (AOB) preparations for property insurance coverage claims. Gov. DeSantis’s proposal would go additional, eliminating these mechanisms and “attorney fee multipliers” for all traces of insurance coverage.
“For decades, Florida has been considered a judicial hellhole due to excessive litigation and a legal system that benefitted the lawyers more than people who are injured,” DeSantis mentioned in his announcement. “We are now working on legal reform that is more in line with the rest of the country and that will bring more businesses and jobs to Florida.”
Before the 2022 reforms, state legislation required insurers to pay the charges of householders insurance coverage policyholders who efficiently sued over claims, whereas shielding policyholders from paying insurers’ legal professional charges when the policyholders lose. The laws additionally eradicated AOBs – agreements through which property homeowners signal over their claims to contractors, who then work with insurers.
AOBs are an ordinary observe in insurance coverage, however in Florida this consumer-friendly comfort has lengthy served as a magnet for fraud. The state’s authorized setting – together with a number of the most beneficiant attorney-fee mechanisms within the nation – has inspired distributors and their attorneys to solicit unwarranted AOBs from tens of 1000’s of Floridians, conduct pointless or unnecessarily costly work, then sue insurers that deny or dispute the claims.
As a end result, Florida accounts for practically 80 p.c of the nation’s owners’ insurance coverage lawsuits, however solely 9 p.c of claims, in line with the state’s Office of Insurance Regulation.
Eliminating these two mechanisms for property claims addresses a lot of the insurance coverage fraud within the state. Eliminating them for all traces can be a promising signal that the state is actually dedicated to addressing the foundation causes of the disaster.
Florida’s insurance coverage disaster didn’t occur in a single day, and it’ll take years for the impacts of fraud and authorized system abuse to be wrung out of the system. Policyholders received’t see premium advantages any time quickly. Job 1 is to “stop the bleeding” as insurers fail, depart the state, or cease writing essential private traces coverages like auto and owners.
Triple-I has printed a new Issues Brief in regards to the disaster and the state’s efforts to restore it.
Learn More:
Florida and Legal System Abuse Highlighted at JIF 2022
Fraud, Litigation Push Florida Insurance Market to Brink of Collapse