USA – FLORIDA Trends and Developments Contributed by: Melissa Sims and Patrick Betar, Berk, Merchant & Sims
The Notice of Intent to Initiate Litigation statute hopes to reduce any such uncertainty and assist in resolving claims prior to litigation. The carrier has certain duties with which it must comply upon receipt of the Notice of Intent to Initiate Litigation. On a covered claim, the carrier must either make a settlement offer or invoke either appraisal or another form of ADR. If the latter is invoked, the ADR must be completed within 90 days. If coverage was denied, however, the carrier must either: • accept coverage; • advise it is maintaining its coverage denial; or • assert the right to reinspect the property (which must be completed within 14 days). If the claim is not resolved after the carrier com- pletes its election, only then can suit be filed. Essentially, this creates a “safe harbour” allow- ing the carrier to take a second look at a claim before litigation commences. Have there been any changes in Florida’s insurance market post-reforms? The current average cost of Florida homeowners’ insurance for a USD300,000 home is USD5,531 per year. Florida’s citizens are hoping for drastic rate decreases. Meanwhile, carriers are hoping both for a decrease in litigated claims and for a stabilisation of the market. Have the reforms worked for both sides? While it may be too early to say for certain, and the 2024 hurricanes may provide the first real test, there are many positive indicators. Premium rates According to reports from the Florida Office of Insurance Regulation (OIR), nine homeowners’ insurance carriers filed for rate reductions and
ten have filed for zero-rate increases in 2024. Even though ‒ according to the OIR website ‒ those filings are still pending approval, this is a positive sign for Florida consumers. The OIR also reported that the average rate fil- ing in 2024 was less than 2%. According to the OIR’s May 2024 market update, the average homeowner’s premium in the admitted market in Florida is USD3,600. Even though premium rates are still some of the highest in the country, this is a positive sign. Nonetheless, Hurricanes Helene and Milton have just come through the state. As such, it remains unclear whether these trends will continue into 2025. New carriers entering the market In 2021, six insurance companies writing in Flor- ida became insolvent – many claiming a mix of unprecedented claims and high litigation losses. When an admitted Florida carrier becomes insol- vent, the claim is usually then turned over to the Florida Insurance Guarantee Association (FIGA). FIGA is a non-profit corporation created by the Florida legislature in 1970. It services pend- ing claims by or against Florida policyholders of member insurance companies that become insolvent and are ordered liquidated. When that happens and FIGA takes over a claim, the Flor- ida taxpayer ultimately funds any payment on the claim. Since the reforms, the OIR reports that eight new carriers have entered Florida’s market. Additionally, carriers already in the market have expressed cautious optimism about their future in Florida ‒ and with good reason. Data from the OIR shows that, at the end of 2023, Florida domestic property insurance com-
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