USA – FLORIDA Trends and Developments Contributed by: Melissa Sims and Patrick Betar, Berk, Merchant & Sims
Berk, Merchant & Sims 2 Alhambra Plaza Suite 700 Coral Gables FL 33134 USA Tel: +1 786 338 2900 Email: msims@berklawfirm.com Web: www.berklawfirm.com
Are the Winds Shifting for Florida Property Insurance? An Exercise in Cautious Optimism During the past few years, the Florida legisla- ture has enacted significant insurance reforms. Their focus? Fixing an unsustainable insurance marketplace that had raised concerns not only in Florida and the C-suites of many legacy car- riers, but even in Washington, DC. The US Sen- ate’s budget committee, having put this issue in its sights, had begun to wonder if Florida and its insurers could handle several catastrophic storms in a single season. Senator Sheldon Whitehouse (Democratic Party, Rhode Island) had described it as “an insurance market that is swirling in the drain”. But are those reforms working or is Florida mere- ly rearranging the deck chairs on the Titanic? The arrival of hurricanes in the 2024 season – Debby, Helene and Milton – may tell the story. As discussed in this article, however, many signs are beginning to point towards positive changes for consumers and the industry. How did Florida get here? Florida’s climate – both geographically and lit- igation-wise – has long been considered risky for insurers, if not downright inhospitable. Fol- lowing Hurricane Andrew in 1992, Florida saw many legacy insurers re-evaluate their exposure
in the state. Then, after a period of relative calm, the 2004 and 2005 hurricane seasons wreaked havoc on the state. In 2004, Hurricanes Char- ley, Frances, Ivan and Jeanne caused more than USD45 billion in damages. Then, in 2005, Hurricane Wilma struck and caused more than USD20 billion in damages alone. Those losses paved the road to the crisis to come. On the one hand, many in the insurance industry say excessive litigation began to bloom follow- ing those storms. For decades, Florida allowed homeowners to recover attorney’s fees if they prevailed in a lawsuit against their insurer. Although intended to assist a policyholder in fighting a wrongfully denied claim, some unscru- pulous actors began to use Florida’s “fee stat- ute” to benefit themselves. As the saying goes, a few bad apples spoil the bunch. At its peak, Florida was home to 9% of the country’s homeowners’ property losses, but it had 79% of the country’s property insurance lawsuits. One particular law firm that represent- ed policyholders was found to have filed 1,679 lawsuits in 2017 alone. After the Florida Bar began investigating, one young lawyer stated that he handled 700 cases at a time. Because the caseloads were unmanageable, that same lawyer said his firm was being sanctioned
1482 CHAMBERS.COM
Powered by FlippingBook