If Florida lawmakers defer to power of attorney, property insurance reform a long way off

The Legislature will be back in Tallahassee Monday to deal with a property insurance mess that is largely of his own making. Will legislators meeting in a brief special session be able to accomplish everything that needs to be done but was not done during their 60-day regular session?

The odds are about the same as those of the Miami Marlins win the World Series this year. Instead, what is likely to happen are half measures that may avert an impending crisis, but will recall Henry David Thoreau’s oft-quoted remark that “there are a thousand hacks to the branches of evil for him who strikes at the root”.

The proximity of the special session to the official start of the following week Atlantic hurricane season contributes to the widespread perception that property insurance premiums are high in Florida because of our vulnerability to hurricanes.

That’s part of the problem, and it’s certainly a factor in the difficulty that some Florida property insurers are currently having in getting reinsurance, meaning insurance for insurance companies. Reinsurance is sold in a global market that is currently rocked by multiple natural disasters and man-made crises.

There are concerns that some of Florida’s property insurers may not be able to afford reinsurance coverage when their current policies expire on June 1lawmakers may therefore be urged to allow the state’s disaster fund to fill the void — even if it exposes the state to huge financial losses if multiple destructive storms were to strike in a brief period.

Retaining multiple providers in the Florida property insurance market is important if the state is to avoid serious economic problems, such as the shutdown of its hugely important housing market for reasons summarized in two scary scenarios.

Scenario 1: Your mortgage application has been approved, but you can’t find home insurance coverage, so you’re stuck.

Scenario 2: A storm destroys your house. You call your insurance company. He replies “Sorry, we’d like to help you, but we’re broke. Contact the state.

Insurance companies going bankrupt are not as unusual as policyholders might assume. Indeed, as a journalist Laurent Reaper highlighted in a well-documented document May 17 Herald story, “Since 2018, the last time a named hurricane hit Floridaseven property insurers have been declared insolvent, four of them in the past 13 months.

It is complicated

While there’s no doubt that Florida’s vulnerability to hurricanes is a factor in the state’s high property insurance rates, it’s not necessarily the most important factor, as the cost indicates. high for other types of coverage, such as medical malpractice, workers’ compensation, and car. insurance – policies whose costs have little or nothing to do with hurricane exposure.

In fact, only Louisiana residents pay a higher share of their personal income for auto insurance than Floridians. The root cause of this – and many other Florida insurance problems – is evident in the fact that Florida Department of Highway and Motor Vehicle Safety uses the terminology “traffic accidents” rather than “traffic accidents” in its reports.

Why? Because, especially in the capital of fraud South Florida, many collisions are staged and not accidental. For example, imagine that you are driving along the Palmetto Highwayrespecting the speed limit and keeping an appropriate distance from the vehicle in front of you.

Suddenly, the driver of this vehicle slams on his brakes. The result: a rear-end crash and a lawsuit in which the ‘injured’ driver claims he suffered from severe whiplash, with expensive treatment required from doctors, physiotherapists and even masseurs who happen to be in on it.

Often, when calculating the cost of defending against such claims, insurers will settle for an amount which, while significant, is cheaper than taking the case to court. Indeed, if the case goes to court and somehow ends up in a jury trial, the plaintiff’s attorney will stage a little drama featuring the “victim” in a neck brace telling his story of misery.

Sympathetic jurors will wonder why a deep-pocketed insurance company is fighting such a claim. Their bias is reinforced by ads from personal injury law firms that constantly demonize insurance companies.

The Lawyers Rule

Likewise, with property insurance, costs are inflated by blatant fraud, the rampant power of Florida personal injury attorneys, and “settlement factories.” As a researcher Christian Camara noted in a January 2022 study by The James Madison Institute“In 2019 alone, Florida accounted for 76% of all insurance disputes nationwide, even though the state accounted for only 8% of all insurance claims filed during the same period.

(Disclosure: From 2005 to 2014, I served as Director of Policy for the James Madison Institute.)

Florida Insurance Commissioner Jimmy Patronis aptly describes the situation as “disastrous”. However, its ability to control property insurance rates is limited by the so-called toggle between affordability and availability. Set rates too low and companies will walk away Florida; set rates too high, and Floridians will revolt.

Meanwhile, a report from Florida Justice Reform Institutewho has been advocating tort reform for decades, notes that many lawyers are still circumventing reforms passed by the Legislature in 2019 and 2021 in an effort to tackle property insurance abuses related to the “assignment of property”. ‘benefits’ and one-way attorney’s fees.

In the Legislative Assembly, overcoming the power and influence of personal injury lawyers will not be easy, because all lawyers have to do is prevent any meaningful change from happening. A roadblock will suffice.

On the other hand, reformers must run the gauntlet of the House, Senate (and the committees therein), plus the governor, and, often in the past, a Florida Supreme Court who, until recently, unabashedly sided with personal injury lawyers.

So, for meaningful reforms to become a reality, lawmakers will for once have to defy personal injury lawyers and align themselves in favor of a series of serious trial reforms and other changes.

The lack of tort reform is driving up the price of insurance, including for property. Litigation is driving up the cost of living for Floridians. For plaintiffs, suing may be free, but everyone else must pay the price.

Robert F. Sancheza Tallahassee resident, is a former member of the editorial board of the Miami Herald. He currently writes for the Herald’s conservative op-ed, Right to the Point, in which a version of this op-ed appeared. Click here to subscribe.

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