1. Limits homeowners’ rights. Limits the ability for homeowners to receive statutory attorney fees from insurance companies even when an insurance company has been found to have treated a policyholder unfairly by denying, delaying, or underpaying their claim. The law effectively replaces the prevailing consumer attorney fee law that has been in place for more than 100 years.
  2. Repeals recent reforms that have helped decrease litigation. The bill eliminates the demand letter and proposal for settlement sections from the 2019 AOB law that are working. There has been a marked decline in lawsuits since the Legislature passed litigation reform during the 2019 and 2021 regular sessions and the 2022 special session. OIR has publicly stated that there has been a 30 percent decrease in litigation, which CFO Patronis also noted during the September Cabinet meeting.
  3. Creates unnecessary & costly burdens for policyholders. Requires an unnecessary written notice of intent demand letter procedure 60 days before a suit can be filed. However, the Notice of Intent cannot be filed before the insurer has made a “determination of coverage” under section 627.70131 (the 90-day prompt pay law). This new time-consuming and expensive process will increase the insurance companies’ anti-consumer practice of delaying, denying, and underpaying legitimate claims. This means that an insured cannot fight their carrier for at least 150 days after having suffered a disaster.
  4. Enforces extremely limiting timelines for policyholders to file claims. The legislation limits policyholders to one year to file a notice of intent on an initial claim and 18 months to file a notice of a supplemental claim when the initial claim requires needed changes. If these deadlines are missed, the insurance claims are barred, and the policyholders are left on their own. This places significant statutory prompt claims burdens for policyholders, while on the other hand, the Legislature is weakening the prompt payment requirements for insurance companies.
  5. Insurer timelines to adjust claims lack penalties or enforcement. While the bill decreases the timeframes the insurance companies have to respond to a claim, it does NOT put in place any enforcement mechanism giving insurance companies another way to delay their response to claims without holding them accountable. Additionally, the bill allows the timeframes to be avoided if there are factors “beyond the control” of the insurance company. “Beyond the control” is broadly defined and could include something as simple as “technical difficulties.” Delayed payments will be the result.
  6. Limits access to the courts. Property owners will NOT have the ability to hold an insurance company accountable for the claims handling requirements, thereby harming a policyholder unless there has been a trial court judgment in an underlying suit. In other words, even when an insurance company has violated its contract with a homeowner and acted in bad faith, the policyholder will be unable to hold an insurance company accountable for not acting in good faith.
  7. Imposes mandatory binding arbitration on policyholders. Insurance companies can prevent access to courts by placing mandatory binding arbitration provisions in insurance policies as an enticement for lower premiums. Many property owners may opt for the savings, not understanding that it is removing their constitutional right to a jury trial. In addition, the fees and costs of private arbitration will result in policyholders never being made whole when an insurer wrongly underpays or denies a claim.
  8. Unfairly burdens property owners after a loss. The legislation put homeowners on the hook for all appraisal and arbitration costs, which can severely limit the “net” that homeowners ultimately recover from their insurance company, making it extremely difficult to have enough funds at the end of a dispute to actually repair, rebuild or replace damaged or destroyed contents.
  9. Supports taxpayer-funded bailouts for insurance companies. During the special session in May, lawmakers approved the $2 billion Reinsurance to Assist Policyholders Program (RAP) to help Florida property insurance companies struggling to obtain enough reinsurance and provide some premium relief for policyholders. Insurance companies received funds by reducing their rates in an attempt to lower premiums paid by consumers. However, while private for-profit insurance companies are getting millions from the RAP program, policyholders are seeing little to no premium reduction and, in some cases, seeing their policies canceled.

Amy Bach of United Policyholders commented on yesterday’s post, Florida Political Leaders Sell Out Their Constituents To Insurance Industry Desires. She stated in part:

United Policyholders is getting a steady stream of reports from Ian victims about outrageously unfair claim handling. This bill will make a bad situation so much worse. There are three things that deter insurers from abusing their power and reneging on their promises. The most effective one is the possibility that the insured will hire an attorney and a jury will issue a substantial verdict against them. The other two – bad publicity in the media and regulatory enforcement actions don’t have nearly the same deterrent effect. Insurers simply blitz the airwaves with feel-good ads to counter negative publicity, and lobby and overwhelm regulators to avoid significant penalties. [In my] 30+ years as a policyholder advocate – never thought I’d see this level of evil.

Politicians not immersed in the nuances of property insurance law and practice may not understand how this legislation will harm Florida homeowners and business owners—at least, my aspirational hope is that they do not understand. The alternative is that elected officials really want to sock it to small businesses and homeowners when they suffer an insurance loss by taking away most of their legal rights. There is not a single state with these types of anti-consumer laws.

Democracy only works if people let their elected officials know how they feel. Since the Governor is the one who has to approve this legislation, here is a link to let him know how you feel.

Here is a link to send an email to Florida’s Senate President Kathleen Passidomo.

Here is a link to send an email to Florida House Speaker Paul Renner.

Thought For The Day

It does not take a rocket scientist to figure out that it is a lot more profitable for an insurer to not pay claims than to do otherwise.
—Chip Merlin