A first-ever report on lawsuits and property insurance claims in Florida shows the three counties around Miami account for nearly half of all the litigated claims in the state in 2022.
The report, released by the Office of Insurance Regulation, shows Miami-Dade, Broward and Palm Beach counties accounted for 28,653 litigated claims that year, nearly as many as the rest of the state, where 29,742 additional claims were filed.
Lawyers filed suits against insurers in the three-county area in 27.5% of all claims filed. In the four-county area around Orlando, that rate was 9.9% and 5.4% everywhere else, it said.
The 58,395 litigated claims statewide were just under 8% of all property claims closed in 2022, it said.
The report was the first to be produced as part of S.B. 2-D, which was passed by the legislature in a special session in 2022.
“It’s no surprise that OIR’s report shows the highest volume of litigation being filed in Miami-Dade as this area is saturated with billboard attorneys that aggressively market their services to consumers with the promise of winning big awards from insurers,” said Mark Friedlander, director of corporate communications for the Insurance Information Institute.
Legal system abuse, he said, was directly responsible for the insolvency of six Florida residential insurers in 2022, all occurring before Hurricane Ian struck the state in September 2022.
The report also shows the rate of litigated and non-litigated claims by peril, average indemnity and loss adjustment expenses and the litigated and non-litigated claims by county.
Because the report was the first to be generated through S.B. 2-D, the OIR didn’t have data to compare. But the industry representatives said entry of new property insurers in the state and tightened limits on lawsuits involving the assignment of benefits suggest that the reform measures taken in 2022 are beginning to work.
“The legal system abuse reforms are already having a positive impact on Florida’s property insurance market,” said Logan McFaddin, American Property Casualty Insurance Association vice president of state government relations. “In 2023, six additional insurance companies entered the market and OIR approved more than 650,000 Citizens (Property Insurance Corp.) policies to be assumed by insurers, representing a more than 800% increase over the previous year.
“OIR also just announced that more than $1.25 billion of capital is being invested in Florida’s property casualty insurance market as an existing company grows its footprint in the state.”
The National Association of Mutual Insurance Companies and the Personal Insurance Federation of Florida also said the recent legislative reforms were beneficial but still need time to show results.
Still, Florida remains an outlier, as lawyers filed tens of thousands of notices to sue in the days leading up to the implementation of another tort reform bill.
In addition, while litigated case rates may be going down, they’re still far outside the norm, as other states may report litigated insurance claims in the hundreds, not in the tens of thousands, McFaddin said.
One item the report seems to have disproved from insurers’ tort reform argument is the danger of increased costs driven by a contingency fee multiplier. The report identified only four of the 58,395 litigated claims showing contingency fee multipliers being applied.
An attempt to obtain comment from the OIR was not immediately successful.
The report has limitations, among them is that while 621 companies received notices to report, 180 submitted data. (Companies licensed in the state but with no policies in force would have no data to report.).
The OIR also acknowledged a number of companies failed to meet the statutory reporting deadline of March 1, noting it issued fines for missed deadlines totaling $38,000 to 13 carriers.
Further, companies often did not report whether a claim generated a lawsuit or not. For example, in the most common peril with closed claims in 2022 — hurricane — nearly 18% reported it was unknown if it was litigated. The unknown rate for closed fire or lightning claims statewide was nearly 25%, it said.