Florida’s Insurance Reform Is Working

For many years homeowners and motorists in Florida have suffered from sky-rocketing insurance premiums.  Annual double digit increases became the norm. In addition to the premium increases, many homeowners discovered their insurance companies were refusing to renew policies and were leaving the Florida market.  As a result many Floridians wound up with policies from Citizens Property Insurance Corporation the state’s “insurer of last resort. Why? Some blamed hurricanes, some claimed it was caused by inland residents subsidizing higher risk coastal landowners, some contend it was because of rampant insurance fraud like roofing scams, while still others  faulted  state regulators for approving the premium increases. While hurricanes and fraud were significant causes, the real culprit was the process by which trial courts awarded attorney fees.

For example in 2019, Florida accounted for about 8% of homeowners claims which is consistent with its population.  However, Florida was also responsible for 76% of insurance issue litigation filled in all 50 states.   Why? For several decades, Florida Statute 627.428 required the trial court to award costs and reasonable attorney fees to policy holders when they prevail against insurers either by litigation or settlement, a process called one-way attorney’s fees.  

In determining a reasonable fee, the trial courts employed a process known as a multiplier.  It allowed the court to adjust the “lodestar” fee (reasonable hours x hourly rate) enhancing it by a factor of 1.0 to 2.5 to account for risks, market needs and results. 

In 1985, the Florida Supreme Court rejected the federal “rare and exceptional standard” (which is used in 49 other states) allowing a broader application of multipliers. The Supreme   Court decided this was necessary to ensure attorneys were properly compensated in risky cases.  As a result a $6,000 policy owner’s claim against an insurance company could result legal fees in excess of $100,000 thereby creating a very litigious climate and corresponding insurance premium increases.

What could be done?  On March 24, 2023, Florida took a significant step toward insurance reform when Governor DeSantis signed House Bill 837.   This legislation known as “Tort Reform” was spearheaded by Governor DeSantis and Speaker Paul Renner. The bill made several changes intended to address a major cause of Florida’s insurance crisis.  Among the key provisions of Bill 837 was the repeal of Statute 627.428 which required the trial court to award costs and reasonable attorney fees.  Bill 837 also reinstated the “rare and exceptional” standard necessary to award a multiplier to attorney fees.

The reform is already having a positive impact, but it will take time to see the full benefits. In the narrow window from the date House Bill 837 was signed into law on March 24th 2023 until its effective date, more than 280,000 lawsuits were filed to protect attorneys’ fees. These cases are now working their way through the legal system.

Evidence of a Florida’s healthier insurance climate include the fact that State Farm is now Florida’s largest carrier.  Since the reforms passed Citizens Property Insurance has gone from 1.4 million policies (the largest insurer in the state) to 336,000 policies.  In addition other insurance carriers are again issuing policies and 17 new homeowner’s insurance carriers have entered the market. As further evidence the reform is working, recent insurance filings with the Insurance Commissioner indicate premium decreases of 18% by some carriers.  Also the five largest automobile insurance companies representing about 80% of the policies written have also filed premium decreases of 6.5% for 2025.

What can you do to take advantage of the improving insurance climate? Take nothing for granted, do your homework, shop around for the best rates and coverage, consult a trusted insurance agent.  Remember many service groups such as AAA and AMAC have endorsed insurance plans for their members.

The VHA Editorial Board

Rich Cole