With Florida lawmakers set to convene in lower than three weeks to face the swirling winds of the state’s property insurance coverage disaster, Gov. Ron DeSantis has but to unveil a draft of the reform laws he wish to see.
However sources have instructed the Insurance coverage Journal that the governor has stated he’s open to modifications that might amplify final yr’s Senate Invoice 76 – by additional discouraging claims litigation, decreasing one-way lawyer charges, and opening the door to wider use of arbitration in claims disputes, amongst different measures.
Some have pointed to Texas’ reforms, together with its 2017 claims litigation legislation, as a mannequin for Florida to observe. Insurance coverage teams within the Lone Star State have hailed the legislation, whereas client advocates and plaintiffs’ attorneys have stated it strips policyholders of most of their skill to take balky insurers to court docket.
Either side agree, although, that Texas House Bill 1774 has performed a job in decreasing the quantity of claims fits within the Lone Star State.
“It’s had a really numbing impact on litigation and claims,” stated Joe Longley, a plaintiffs’ lawyer in Austin who as soon as dealt with many claims towards insurers. “It’s made it so tough to file swimsuit and get claims settled, that the majority attorneys received’t deal with claims litigation any extra.”
A report from Texans for Lawsuit Reform, which lobbied for the 2017 invoice, present that litigation over hail and wind injury claims dropped like a rock after the legislation took impact, from simply over 500 a month to about 150. Evaluate that with Florida, which has seen about 4,500 claims-related lawsuits per thirty days filed towards the 16 largest Florida property carriers, based on CaseGlide, a litigation administration software program agency.
The lawsuit quantity is staggering and is the chief motive why a variety of insurers have gone bancrupt in Florida and others have stopped writing within the state, insurance coverage trade supporters have stated.
Texans for Lawsuit Reform and Texas insurance coverage regulators don’t observe the typical quantity of awards or claims settlements. However some plaintiffs’ attorneys stated they’ve seen a decline, partly as a result of many householders now really feel that they’re caught with what their insurance coverage firm provides after a declare is filed.
Texas Watch, a client advocacy group, has known as Texas Home Invoice 1774 “the blue tarp invoice,” as a result of it has left many householders with out the funds to pay for a brand new roof after a storm.
Texas insurance coverage attorneys stated that issues are overblown and that HB 1774, also referred to as the “hail invoice,” nonetheless permits loads of fits to go ahead. However the legislation, together with different measures handed by Texas lawmakers lately, has helped take the abuse and self-serving roofing contractors, adjusters and torts out of the claims course of.
“What Florida did final yr was all screwed up,” and didn’t go practically far sufficient to stem pointless authorized actions, stated Steven Badger, a Dallas insurance coverage protection lawyer who has centered on fraudulent claims.
Badger labored for passage of the Texas reforms and has stored a watch on Florida’s latest troubles. He was referring to Florida’s SB 76, signed into legislation final summer time, which aimed to restrict lawyer charges and discourage litigation in addition to solicitation of householders by roofing corporations.
If the Texas legal guidelines are for use as a mannequin for Florida, as some Florida insurance coverage insiders have prompt, some key necessities stand out.
HB 1774 requires a 60-day discover earlier than a lawsuit will be filed. Florida’s SB 76, signed into legislation in 2021, mandates solely a 10-day discover. And in Texas, the discover should be fairly detailed, with the precise quantity owed by the insurer and the quantity of “affordable and essential” lawyer charges – calculated based on a prescribed method. It should be despatched to the insurer and to the claimant.
The insurance coverage firm then has 30 days to request a chance to examine the property injury. If the presuit discover doesn’t meet the entire necessities famous within the legislation, isn’t specfiic sufficient, or is even at some point late, the insurer can ask a decide to abate the lawsuit altogether. In some circumstances, if the insurer can present that the discover process was not adopted precisely, the authorized motion will be robotically stayed.
“And insurance coverage corporations do take a look at each jot and tittle to seek out one thing that’s not precisely proper,” stated Longley, the trial lawyer.
One other part of the 2017 Texas legislation applies strict guidelines on lawyer charges, one thing some Florida lawmakers and the governor are stated to be eyeing fastidiously. The invoice is one thing like Florida’s SB 76 –taken up a notch. Each observe complicated formulation to reach on the quantity of charges, however the Florida rule primarily forces insurers to pay the plaintiff’s lawyer prices if the policyholder wins at the least 50% of what she or he was asking for.
The Texas legislation units the brink at 80%.
One well-known Houston claimants’ lawyer stated that regardless of HB 1774’s stricter necessities, the variety of claims lawsuits his agency has dealt with has not considerably declined. So long as attorneys are cautious to exactly observe the foundations on pre-suit notices and provides affordable calls for for damages, policyholders can nonetheless get a good shake and attorneys can nonetheless receives a commission, stated lawyer Jeff Raizner.
The extra far-reaching modifications added by Texas lawmakers included permitting carriers to imagine the legal responsibility of native insurance coverage brokers who could also be named in a lawsuit. Since many carriers and surplus traces insurers in Texas’ evenly regulated area are domiciled exterior of Texas, that additionally has had the impact of eradicating many fits to federal courts.
Texas’ 2017 legislation was solely a part of the story behind the drop in claims litigation, Badger stated. Texas courts for years have held that assignment-of-benefits agreements are invalid.
“That’s the primary factor, it’s a must to put an finish to assignments of advantages,” Badger stated.
Assignees in Florida, comparable to restoration contractors, have been a big contributor to Florida claims litigation. CaseGlide experiences present that, regardless of the 2019 Florida laws that tried to curtail AOB-related fits, these sorts of actions nonetheless make up greater than a 3rd of claims litigation.
It’s uncertain the Florida Legislature will take additional motion on AOB agreements, although. Lawmakers and insurance coverage advocates as an alternative plan to give attention to taking away the motivation for attorneys to win charges by working with assignee contractors in litigation, insurance coverage insiders have stated.
In 2015, Texas additionally tightened its public adjuster statute to bar the kind of practices usually seen in Florida, during which some adjusters have been accused of doing little greater than signing the house owner up with a lawyer. “Now a public adjuster can solely enroll a consumer provided that he intends to truly modify the declare and attempt to get it resolved,” Badger defined.
Different litigation-limiting concepts that Florida’s governor is claimed to be in favor of are the elevated use of binding arbitration. One Florida insurer, American Integrity, was not too long ago authorised for an endorsement that grants premium reductions if policyholders comply with arbitration in lieu of litigation in claims disputes. Laws on the desk on the particular session may go as far as to permit insurers so as to add related clauses to insurance policies, maybe with out regulatory evaluate, and even to require obligatory arbitration on some claims.
Florida claimants’ attorneys have begun to push again a bit. One famous that Florida statutes require insurers to ship notices to policyholders that the state Division of Monetary Companies offers non-binding mediation companies – paid for by the insurer – if the policyholder requests it.
However as an alternative of continuing with mediation, insurance coverage corporations typically ask for an increasing number of documentation on the householders’ compliance with the phrases of the coverage, which delays a decision, stated Gina Clausen Lozier, an lawyer in West Palm Seaside.
“They’ve the instruments already to resolve a few of these claims with out litigation if they need,” she stated.
Insurance coverage protection lawyer Josh Beck, of Boca Raton, stated the DFS mediation is a “good program,” and he wasn’t certain why mediation isn’t utilized extra usually.
However it could must do with the truth that plaintiffs’ attorneys received’t usually have their charges coated by the insurer when the case is dealt with exterior of the court docket system, and a few policyholders could also be reluctant to wade into mediation with out illustration.
Raizner, the Houston plaintiffs’ lawyer, urged his Florida counterparts to try to stop “over-reach” by insurers when the Florida Home and Senate meet Could 23.
“What we noticed in Texas began out as a selected reply to a selected challenge,” Raizner stated. “Then that received expanded. So they need to maintain their antennae up. As a result of what occurs in Texas appears to be occurring in Florida.”
Badger argued that even with the modifications, extra must be finished to restrict lawsuit abuse in his state – and in Florida.