USA – FLORIDA Trends and Developments Contributed by: Melissa Sims and Patrick Betar, Berk, Merchant & Sims
panies reported a combined net underwriting that almost broke even. Even though that may not sound impressive at first blush, it is a signifi- cant improvement from losing more than USD1 billion in the three preceding years. Further, the domestic carriers showed positive income for 2023 when profits from investments were con- sidered – for the first time since 2016, according to the OIR. Litigation Some signs post-reform indicate a major change in the litigation of property insurance disputes. The OIR year-end statistics for 2023 show expenditure on legal defence costs, expressed as a percentage of premium, fell from 8.4% in 2022 to 3.1% in 2023. Although not at the 1.2% industry average, it shows a significant decrease. The above-mentioned figures are likely corre- lated to a decrease in overall litigation. Whereas Florida had 79% of the nationwide homeowners’ insurance lawsuits in 2020, that figure has fallen to about 70% recently. Further, it appears the number of Notices of Intent to Initiate Litigation have been falling. Significantly, lawsuits involv- ing AOBs have declined from a peak of more than 3,500 in June 2019 to fewer than 500 filed in December 2023, according to statistics from the OIR. The OIR also reports that there has been a double-digit decrease in non-catastrophe claims from 2022 to 2023. Anecdotally, in conversations with attorneys representing policyholders and carriers alike, it appears that a significant number of claims that would have gone to suit previously are now resolving in pre-suit mediations invoked in response to a Notice of Intent to Initiate Litiga- tion. Whether this is the result of the “safe har- bour” provided to the carrier to re-examine its claims decision or is down to the repeal of the
one-way fee statute for policyholders’ counsel ‒ or a combination of the two ‒ is less clear. Still, a claim resolved earlier and more efficiently than it might otherwise have been is a net benefit to the policyholder and the carrier alike. Citizens Property Insurance Corporation Citizens Property Insurance Corporation (“Citi- zens”) is a quasi-governmental entity created by statute to be an insurer of last resort for Florida homeowners who are unable to obtain insur - ance in the marketplace. Prior to the reforms, however, Citizens was becoming an insurer of first resort for many Floridians unable to find affordable insurance. This was seen as a seri- ous problem by the Florida legislature and the OIR. Citizens was meant to provide stopgap coverage; it was not meant to become another domestic carrier. The reforms, together with the added market capacity from the infusion of new carriers, have been making inroads in depopulating Citizens’ portfolio. The number of policies issued by Citi- zens reached an all-time high of 1.4 million in September 2023. At the end of February 2024, the number of policies had decreased to 1.17 million. Prior to Hurricane Milton, Citizens had predicted its 2024 loss ratio to be 37.7%, which is down from 42.8% in 2023. Depopulating Citizens continues to be a prior- ity. In 2024, the OIR approved 18 companies to assume more than a million policies from Citizens, which is an increase from the 646,617 policies approved for assumption in 2023 and the 80,201 polices approved in 2022. As of 4 September 2024, 132,455 polices have been removed from Citizens year to date. That is in addition to the 275,324 policies removed from Citizens in 2023.
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