Florida lawmakers to consider more reforms after special session on home insurance failed to bring down rates

TAMPA, Fla. - Florida lawmakers said they’ll consider more reforms and oversight of the homeowners insurance industry during their upcoming regular session, after a special session last year failed to bring promised relief. 

During the December 2022 special session, lawmakers claimed frivolous lawsuits were the reason home insurance rates are going up. They said Florida made it too easy to file bogus lawsuits and the risk of being sued forced many companies to leave the state. 

So, lawmakers passed new laws making it harder to sue insurance companies. But, it has done little to help homeowners.

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Consumer advocate Birny Birnbaum said lawmakers relied on statistics that showed Florida represents 76% of all litigation against insurance companies, but those stats exclude data and can be misleading. 

"There certainly was more litigation among certain companies in Florida than you would find in other states but over half of the companies had very little or no litigation," said Birnbaum.  

He said that suggests litigation is not an industry-wide problem.

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Doug Quinn, who leads the American Policyholder Institute, agrees.

"We know there are multiple reason why premiums are going up, but they’re not telling the full story when they cite the statistics," he said.  

Quinn said his research suggests that high rates of lawsuits may be driven by legitimate grievances against a comparatively small number of companies that operate in Florida – and said there are bigger problems facing the industry.

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"Again, we don’t doubt there are a certain degree of frivolous lawsuits in Florida, like every state," Quinn said. "We also know they are exaggerating the impact on the market, and it seems to be they’re using that to cover up some really disturbing dynamics that’s causing the mess of the Florida insurance crisis."

Quinn is referring to insolvency reports – or state audits which reveal why some insurance companies have failed. One cites mismanagement and a lack of funds.

Another notes the failed company paid sister companies for duplicate services and paid out millions to its affiliates as it ran out of money. Some of the audits also cite large payments to company executives as the companies went broke. 

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For example, Quinn cited one "company that used corporate assets to buy an $8 million estate, and it’s not an income-producing investment that actually cost them a half million dollars a year, and they used it as a hunting lodge and the CEO’s private residence."

Quinn and other watchdogs are calling for more state reforms in the upcoming session. They want more transparency in insurance company profits, transparency in their payments to affiliates, and more scrutiny over companies that go insolvent.  

State leaders said they would consider more changes to step up oversight of the industry during their upcoming regular session.