A committee of the Residents Property Insurance coverage Corp. governing physique produced some excellent news on litigated claims and a few dangerous information Thursday, giving additional perception into an enormous a part of Florida’s insurance coverage market.
The dangerous information first: The variety of new litigated claims elevated by a 3rd final yr over the earlier yr. In 2021, Residents, the state-run insurer, was hit with 10,085 lawsuits, or a median of 878 new fits per 30 days, Jay Adams, chief of claims for Residents, informed the company’s Claims Committee at its month-to-month assembly.
For January of this yr, the insurer was served with 943 lawsuits, a 41% improve over January 2021. The overwhelming majority of the fits had been from owners, and most had been filed in South Florida.
Water harm is more and more a price driver. “Water-loss lawsuits are additionally now on a pointy upward development, reversing the earlier downward development skilled from 2020 to 2021,” reads a summary report to the committee.
Task-of-benefits fits made up a few third of the residential lawsuits in 2021, a 14% improve over the earlier yr. In January 2022, Residents noticed 1,146 AOB lawsuits. If that degree continues, 2022 numbers will outpace 2021 by about 2,000.
The rising litigation numbers seem to buck the development for the Florida property market as a complete. CaseGlide, a litigation administration software program agency that tracks lawsuits, reported that since final summer time, the variety of litigated claims for the 17 largest property/casualty carriers in Florida had declined steadily, till January of this yr.
However Residents’ general coverage depend is rising quickly, whereas another carriers’ counts usually are not. The will increase in lawsuits in opposition to Residents are due partly to the regular rise within the variety of Residents policyholders lately, as different carriers have stopped writing in Florida or raised premiums, the committee was informed.
Senate Invoice 76, accepted final yr by the Florida Legislature, was designed to assist scale back litigation by requiring that policyholders and assignees give 10-day discover after they plan to file swimsuit. It’s nonetheless too early to know if the regulation is having an influence, however Residents employees members mentioned they need to know extra by the center of this yr. The variety of notices of intent for AOB litigation was solely 73 in January of this yr, a fraction of the notices filed in all of 2021.
Some Florida lawmakers and information studies have steered that some plaintiffs’ attorneys usually are not submitting the notices as required by the regulation, so the notice-of-intent numbers could or could not replicate a sea-change in litigation. Litigation numbers even have been affected by the COVID-19, which has prompted a backlog within the courts, Residents employees mentioned.
The excellent news for Residents’ monetary image: Whereas the amount of litigation remains to be climbing, the quantity paid out seems to be on the wane. Adams reported that the common quantity of indemnity per litigated case fell from simply over $18,400 in 2019 to about $13,800 in 2021. The quantity of authorized charges additionally has declined considerably. For brand new fits, complete protection prices fell from $85 million in 2019 to $71 million in 2021.
Employees members mentioned one purpose for the decline in payouts and prices is a deliberate technique by Residents to keep away from litigation and litigation bills. The insurer has modified its coverage language for a lot of owners to cap non-weather water harm at $10,000, and launched a managed restore program in 2019, utilizing contractors that supply a three-year guarantee on repairs.
Residents additionally requires using appraisal panels in lots of instances to resolve disputes with out want of litigation.
“It’s good to see authorized spending taking place,” mentioned Reynolds Henderson, a member of the Residents Board of Governors, from Walton County.
One other little bit of potential excellent news: The Claims Committee agreed to advocate to the total Residents board that it beef up fraud detection by signing a contract for as a lot as $7.6 million over the subsequent a number of years. Employees members mentioned that after greater than a yr of overview, they’ve beneficial the contract with FRISS Inc., to supply synthetic intelligence and data-mining software program methods that can assist detect patterns of insurance coverage fraud.
FRISS is taken into account one of many largest makers of insurance coverage fraud detection software program. This week, the Ohio-based agency introduced it had acquired Polonious, a particular investigations and case administration software program firm.
The corporate’s software program can rapidly do what it will take human investigators months to do, comparable to determine photographs submitted by claimants which will have be plucked from the web, mentioned Greg Rowe, director of claims vendor and system administration for Residents.
He famous that Residents’ already-swamped fraud investigators have discovered that about 4.5% of claims are fraudulent. However the insurance coverage trade has indicated that the share for the trade as a complete could also be greater than 10%. So, doubling the quantity of fraud detection might end in vital financial savings for Residents, employees members mentioned.
Committee members had been involved that Residents would be capable of finish the contract if higher fraud detection expertise turns into out there within the coming years. Adams assured them Residents would be capable of do this.
The complete Residents Board of Governors meets March 23.