Plaintiffs’ attorneys and the state’s insurance coverage shopper advocate are pushing again on Florida insurers’ plans to require arbitration to settle extra claims disputes. Some attorneys warned that the plans might result in authorized challenges and doubtlessly extra claims litigation.
“That’s going to be an actual subject,” mentioned Dan Rheaume, a trial legal professional in Hollywood, Florida, who represents owners in claims disputes. “They’re taking away the insured’s day in courtroom. There might be challenges to that.”
Rheaume was reacting to information that broke final week that the Florida Workplace of Insurance coverage Regulation had authorized an endorsement submitting by American Integrity Insurance coverage Co. The insurer will supply premium reductions if owners conform to mediation or binding arbitration, for brand spanking new insurance policies beginning April 22 and for renewals beginning June 21.
Different insurance coverage corporations’ leaders have mentioned their corporations are actually contemplating related endorsements as a means to assist cut back the acute quantity of claims litigation that has plagued the trade in Florida for the previous few years. One service’s executives met on the plan late this week, proper after phrase unfold about American Integrity’s approval.
However arbitration is probably not in one of the best curiosity of policyholders, mentioned Tasha Carter, the insurance coverage shopper advocate on the Florida Division of Monetary Providers.
“I undoubtedly assume increasingly more insurance coverage corporations shifting to incorporate a compulsory arbitration clause in owners insurance policies needs to be a priority for policyholders,” Carter mentioned this week. “Arbitration might put policyholders at a drawback.”
Non-litigation options can get rid of among the authorized protections shoppers now get pleasure from, together with the suitable to trial by choose or jury, and, generally, appeals to a better courtroom, she mentioned.
Carter mentioned her workplace plans to scrutinize related endorsement requests that different insurers might file with OIR in coming months, and will submit feedback.
American Integrity’s out-of-court method will work like this, in accordance with the endorsement: If a home-owner initiates a dispute over the worth of a declare, it ought to first go to mediation. The policyholder should request the continuing inside 5 days of the loss. American Integrity pays the price of the mediation, together with the mediator’s payment.
If the 2 sides can’t agree on a mediator, the house owner will choose one. If not, or if the events can’t come to settlement throughout mediation, the dispute will transfer to confidential, binding arbitration.
The intent of endorsement wording, nevertheless, might depart some room for argument. After the mediation part, it states that “all disputes … between us and also you,” together with these based mostly on breach of contract, “authorized theories” and different issues, might be dealt with by way of arbitration.
If the 2 sides can’t agree on an arbitrator, which have to be a lawyer or retired choose, then both occasion can ask the circuit courtroom to nominate one. The insurer pays the arbitrator’s payment and submitting payment. However the firm is not going to pay the insured’s attorneys charges, one thing Carter and trial legal professionals have criticized.
“That may be costly for the policyholder,” mentioned Gina Clausen Lozier, of West Palm Seaside, a former insurance coverage legal professional who now represents first-party claimants. She mentioned that arbitration in claims disputes is being seen across the state one other methodology insurers are utilizing to chop out attorneys’ charges and prices.
Rheaume agreed and mentioned that the arbitration endorsement is one other blow towards shoppers, who don’t normally have the deep pockets of insurance coverage corporations. Till final yr, when the Florida Legislature devised a schedule that limits insureds’ legal professional charges based mostly on the distinction in award and demand, Florida regulation had allowed most plaintiffs’ authorized charges to be paid by the insurer if the policyholder prevailed in courtroom.
“We will’t lose monitor of who that regulation was written for – it was meant to guard the shoppers,” Rheaume mentioned. “Now, little by little, it’s change into a slippery slope and it has curtailed the power to rent legal professionals and get aid.”
One other query in regards to the arbitration clause: Within the uncommon cases when arbitration outcomes could be appealed, it’s unclear which courtroom degree could be applicable. “Would you enchantment to circuit courtroom or the appeals courtroom?” Rheaume requested.
To see how arbitration may work in claims disputes, insurers and policyholders may look to Collier County on Florida’s southwest coast. Judges there, after the Florida Supreme Court docket in 2020 urged courts to hurry up their dockets, ordered most insurance coverage claims disputes to first be despatched to non-binding arbitration.
Rheaume mentioned the jury remains to be out on the efficacy of the method. Out of about 15 claims disputes that he has dealt with which have gone to arbitration, most have ended up in mediation or in courtroom anyway. He famous that arbitration places insureds in an ungainly place, partly as a result of it’s much like a trial, however with no choose. The appointed arbitrators aren’t all the time conversant in property insurance coverage case regulation.
He additionally mentioned that insurance coverage corporations don’t seem like taking arbitration as critically as they do litigation, and haven’t introduced in as many skilled witnesses in the course of the proceedings.
Binding arbitration, like that stipulated within the latest American Integrity endorsement submitting, could possibly be considerably completely different for either side.
“If insurance coverage corporations add that to their insurance policies, that’s going to be an actual subject and I believe it would trigger extra litigation,” Rheaume mentioned.