Florida Gov. Ron DeSantis’s proposed insurance coverage fraud and authorized system abuse reforms, introduced this week for consideration throughout the legislative session that begins in March, would construct on measures authorised within the closing weeks of 2022 and go a great distance towards fixing the state’s insurance coverage disaster.
Laws handed throughout the 2022 particular session eradicated one-way lawyer charges and task of advantages (AOB) preparations for property insurance coverage claims. Gov. DeSantis’s proposal would go additional, eliminating these mechanisms and “lawyer price multipliers” for all strains of insurance coverage.
“For many years, Florida has been thought of a judicial hellhole as a consequence of extreme litigation and a authorized system that benefitted the attorneys greater than people who find themselves injured,” DeSantis stated in his announcement. “We are actually engaged on authorized reform that’s extra in keeping with the remainder of the nation and that can deliver extra companies and jobs to Florida.”
Earlier than the 2022 reforms, state regulation required insurers to pay the charges of householders insurance coverage policyholders who efficiently sued over claims, whereas shielding policyholders from paying insurers’ lawyer charges when the policyholders lose. The laws additionally eradicated AOBs – agreements wherein property house owners signal over their claims to contractors, who then work with insurers.
AOBs are a normal 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 few 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.
In consequence, Florida accounts for almost 80 p.c of the nation’s owners’ insurance coverage lawsuits, however solely 9 p.c of claims, in response to the state’s Workplace of Insurance coverage Regulation.
Eliminating these two mechanisms for property claims addresses a lot of the insurance coverage fraud within the state. Eliminating them for all strains could be a promising signal that the state is really 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 gained’t see premium advantages any time quickly. Job 1 is to “cease the bleeding” as insurers fail, depart the state, or cease writing vital private strains coverages like auto and owners.
Triple-I has printed a new Points Transient in regards to the disaster and the state’s efforts to restore it.
Study Extra:
Florida and Authorized System Abuse Highlighted at JIF 2022
Fraud, Litigation Push Florida Insurance coverage Market to Brink of Collapse
