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New insurance law will take years to curb soaring costs


Florida’s new property insurance reform law – touted as curbing skyrocketing premiums by reining in abuses of the court system – will take years to have any meaningful impact on litigation costs to insurance carriers.

The old laws created opportunities for huge judgments against insurance companies – sometimes four to five times the dollar amount of the original claim – when the attorney fees of plaintiffs were added on after protracted litigation.

The new law, passed during the May Special Session of the Legislature, imposes caps on the award of plaintiff attorney fees, and dictates, to some extent, who has standing to sue, in an effort to curb frivolous lawsuits by contractors who convince clients to sign over their litigation rights.

But will this reduce massive litigation costs borne by insurance companies and passed down to homeowners through premiums? Someday, perhaps, but not anytime soon.

It might seem obvious that the law would not apply to legal actions initiated before the legislation was signed last month by Gov. Ron DeSantis, but when Vero Beach 32963 inquired, both the governor’s office and the state senator who represents the barrier island had to research the question.

The answer:  According to the governor’s office, not only the initiation date of the lawsuit, but possibly even the effective date of a homeowners policy, might determine whether the new law applies or the old.

That, combined with the fact that Florida is the most litigious state in the nation when it comes to suing property insurance carriers, led insurers to stop writing policies in the state, to cancel existing policies, or worst case, to go out of business.

The full answer from DeSantis’ Deputy Press Secretary Bryan Griffin:

“With some exceptions as outlined in the bill, the effective date of SB 2-D was upon becoming law, and it was signed May 26th. It will apply to lawsuits filed after that date. There are 3 different types of claims at question whenever a change to law like this happens:

• Claims on insurance policies effective before the effective date of the bill, and the claim occurred before the effective date of the law;

• Claims on insurance policies effective before the effective date of the bill, and the claim occurred after the effective date of the law;

• Claims on insurance policies effective after the effective date of the bill, and the claim occurred after the effective date of the law.

“It is possible that retroactive application may occur in any of these fact-patterns, but it is a question that will be decided by a court after litigation is brought,” Griffin said.

Later that day, state Sen. Debbie Mayfield, who this year serves as Republican Majority Leader in the Florida Senate, said: “Here is the answer. It applies to new cases, the bill is not retroactive.”

Attorney Julie Lewis Hauf, who has an office on Ocean Drive travels to try insurance cases all over the state, explained that insurance litigation is based upon a breach of contract – that contract being the insurance policy – and the matter being litigated being “a snapshot of time when the breach occurred.”

So if the breach – a claim denial or a payment that fell short of what the homeowner felt was fair – occurred prior to May 26, “those would be the times when you’d want to go back and see what was in effect at that point,” Hauf said.

So the new law would not apply to the substance of cases where the “breach” occurred prior to the bill signing on May 26.

To complicate matters, Florida law affords plaintiffs in property insurance matters a five-year statute of limitations, meaning that cases filed today could be attempting to remedy a breach that occurred nearly five years ago.

Then there’s what Hauf called the procedural elements of the new law, for example, the cap on the attorneys’ fees that can be awarded to a contractor who has been assigned the insurance benefits by the policyholder. And in some cases, the right for that contractor holding an Assignment of Benefits to file suit at all.

“For example, an attorney fee provision. That’s something that, if the suit is filed on or after the effective date of the new bill, all of those attorney fee provisions saying that someone who filed suit on an Assignment of Benefits who is not actually the insured, if they had not filed suit prior to that being in effect, the law would say that they don’t get that (attorneys’ fees),” Hauf said.

What Hauf anticipates will happen is that contractors with an Assignment of Benefits in hand, executed prior to May 26, will argue that they got all of the homeowner’s rights – including the right to get attorney fees from their insurance company – and the Florida Legislature can’t retroactively nullify that contract.

Compounding this complex legal landscape is the fact that civil courts all over the state are still gradually digging out from under an extreme backlog of cases from 2020 when COVID-19 halted jury trials for seven months. Cases dragging on for years more than necessary only exacerbate the legal bills insurance companies must pay should policyholders or their assigned representatives be awarded a judgment. 

Then, as the governor’s spokesman pointed out, the application of the new law will be open to legal interpretation as judges and juries hear real cases filed by real people, and judgments get appealed and precedent is set.

“Anytime there’s a change in the law it causes litigation, this happened with the changes to PIP, the personal injury protection automobile insurance law,” Hauf said.

Hauf said there’s way too much money involved for the new law to not be hotly challenged to see if it holds up to judicial scrutiny.

The new property insurance law is already being tested and debated, and it will be litigated in courtrooms at the county, circuit and appellate level for many years while Vero residents continue to pay skyrocketing premiums, or scramble to find and negotiate for coverage after getting their policies cancelled.

None of this was mentioned as state leaders closed the May special session and celebrated the new “reform” bill and sent out press releases and executive summaries with bullet points touting its benefits to Floridians.

To all the lawyers in Tallahassee, maybe it was a no-brainer that a new law would only apply to litigation going forward and it would be years before homeowners would reap the potential benefits.  But to the average consumer hoping for some relief from high premiums, it should have probably been explained a bit more clearly. 

Former Vero Beach Mayor Harry Howle, a partner in the Grotzmann Insurance Agency on Ocean Drive, cited some numbers provided by state Sen. Jeff Brandes, who represents the St. Petersburg area, to demonstrate that the status quo is simply “not sustainable.”

Brandes has harshly criticized the new law, saying it’s about three years too late. With approximately 95,000 new property insurance lawsuits filed in 2021, Brandes equates the bill passed during special session to having Stage Four cancer but treating it like Stage One cancer.

Brandes has said the other 49 states in the country have an average of fewer than 750 property insurance lawsuits per year, so Florida already has a problem of epic proportions, and it compounds each year as old cases linger and new cases pile on.

“As to how long things might take, it depends on the number of cases that are already filed or in the courtroom process today. If you can put stock in Brandes’ statement (about the 95,000 cases in 2021), and you probably can, we are in for a long haul,” Howle said.