Top 10 Southeast Insurance Journal Stories of 2021

December 30, 2021

Florida’s distressed property insurance market continued to be a top concern for readers of the Insurance Journal’s Southeast section in 2021. From legislative reform attempts, to struggling insurance carriers, to the collapse of a 12-story condominium building, the Sunshine State remained a cauldron of insurance-related issues in the year that is now almost over.

Here’s a look at the top 10 Insurance Journal Southeast articles in 2021.

In January, a consultant hired by Florida insurers, tort-reform groups and state officials released a report that confirmed what many had been saying: Florida’s property insurance market is “spiraling towards collapse” and requires immediate attention if there is any chance of protecting the market, consumers, and ultimately, the state’s economy.

The report pointed a finger at the state’s “litigation economy” as the main contributor to insurance market woes — seeing it as more of a direct cause than the many weather events Florida has suffered.

The report’s author, Guy Fraker, a 30-year-veteran of the Florida insurance arena, also found:

  • Litigation frequency and severity represents an additional expense load of 17% (and rising) on all earned premiums for insurers in Florida compared with other catastrophe-prone states.
  • The fees paid to attorneys by Florida carriers far exceed the damages paid to the insureds.
  • In 2019 alone, Florida insurers paid almost $3 billion in lawsuit costs that translated into higher premiums for insureds.
  • Although the volume of claims after storms is a factor in costs, claims unrelated to catastrophes account for approximately 60% of all litigation.
  • Florida consumers are paying a “hidden tax” to fund the litigation that averaged about $680 per family in 2020.

In May, more than 50,000 Florida policyholders had to look for a new carrier for their homeowners insurance, after three Florida-based companies were approved by the state regulator to drop the policies. The moves came just a few weeks before the official start of hurricane season and just after the Legislature approved laws designed to reduce litigation and costs for insurers.

Florida lawmakers passed two bills on the last day of their 2021 legislative session that made major changes to the state’s auto and property insurance markets.

Although many have said the property reforms did not go far enough to help Florida’s market, lawmakers have said, “give it time” — it may take two years for the law to make a difference.

Some of the most significant property insurance changes came from Senate Bill 76.

The law attempts to address some of the issues plaguing the state’s homeowners insurance market in which insurers lost more than $1.5 billion in last year. The legislation was revised significantly from its original form at the start of the session and includes:

  • Changing the eligibility, rate glidepath and actuarily sound rate indication for Citizens Property Insurance Corp.
  • Replacing the one-way attorney fee-statute to make the recovery of attorney fees and costs contingent on obtaining a judgment for indemnity that exceeds the pre-suit offer made by the insurance company.
  • Reducing the claims deadline on all claims to two years from the date of loss, except for on supplemental claims which will have an additional year.
  • Requiring plaintiffs to file a pre-suit demand at least 10 days before filing a lawsuit against an insurer that includes an estimate of the demand, the attorney fees and costs demanded and the amount in dispute; disallows pre-suit notices to be filed before the insurance company to make a determination of coverage; and allows an insurer to require mediation or other form of alternative dispute resolution after receiving notice.
  • Makes it illegal for roofing contractors or any person acting on their behalf to make a “prohibited advertisement,” including an electronic communication, phone call or document that solicits a claim. This section has been temporarily put on hold by a court decision, after roofing companies charged that it violated their constitutional rights to free speech.

For years, Florida has been reminding motorists not to use flashing hazard lights while driving. Well starting soon, feel free to flash away – but only on the highway, after a bill was passed by the Legislature.

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