It’s time to prevent a handful of South Florida plaintiff’s attorneys from driving up home insurance premiums for everyone in Florida, three of Florida’s most powerful insurance officials told members of a key Senate committee Tuesday.
Chief Financial Officer Jimmy Patronis, Insurance Commissioner David Altmaier and Barry Gilway, president and CEO of state-run Citizens Property Insurance Corp., appeared at a meeting of the Senate Banking and Insurance Committee to urge enactment this spring of reforms aimed at quelling costly claims and lawsuits.
For six straight years, efforts to reach compromise on the issue have ended in stalemate between legislators loyal to insurers and trial attorneys.
But this year, insurers are more confident. Doug Broxson, a Republican representing the westernmost district of the Florida Panhandle, has taken over as committee chairman and filed a bill that takes direct aim at plaintiff’s attorneys’ source of income. Broxson succeeds Anitere Flores and Miguel Diaz de la Portilla, both of Miami, who refused to bring bills favored by the insurers up for votes during their stints chairing the committee.
Broxson announced early in Tuesday’s meeting that he planned to grind away until a resolution is reached.
“We’re going to deal with this issue this session if we have to spend every meeting of this committee [on it],” he said.
Failure to act will keep the number of lawsuits – and resulting insurance premiums – rising ever higher, said the three officials.
The number of lawsuits involving residential properties against all insurers in Florida increased from 27,416 in 2013 to 82,663 in 2018, according to data presented by Gilway. And because litigation adds about $25,000 to the cost of resolving a claim, Gilway estimated the additional 55,247 suits in 2018 cost all home insurance customers an extra $1.38 billion in the form of higher premiums.
Until recently, South Florida homeowners have borne the brunt of those increases because most litigation involves properties there. But lawsuits are increasing throughout the state and more than 90 percent of Citizens customers statewide are facing rate increases next year, Gilway said.
Insurers say a small group of plaintiff’s attorneys are driving up costs by exploiting a state law originally created to help consumers. The law reimburses legal fees for insurance customers that sue over a claims dispute and their insurer loses or agrees to pay any amount over the original offer, the insurance officials told the committee. Meanwhile, customers aren’t at risk of paying their insurers’ legal costs if their suits don’t succeed.
The plaintiff’s attorneys discovered they could use these protections to create large numbers of lawsuits – and a deep reservoir of legal fees, insurers contend. More than a decade ago, a single attorney began teaching repair contractors, usually roofers or water restoration contractors, how to convince homeowners to sign over their right to seek payment from insurers on an affidavit known as an “assignment of benefits” (AOB).
After securing assignments, contractors bill their insurers and their attorneys file suit if the insurer denies or refuses to pay the full invoiced amount.
Plaintiff’s attorneys contend they wouldn’t have to file so many suits if insurers didn’t deny or underpay so many claims.
Broxson’s bill would prevent the right to collect attorney fees under an insurance policy unless representing a named insured or named beneficiary and not when representing anyone “assigned or extended by agreement.” Broxson said Tuesday that he expects to amend the bill so it pertains only to property insurance and the auto glass portion of auto insurance.
Lee Jacobson, an Orlando-based attorney who spoke on Tuesday on behalf of the Florida Justice Association, a plaintiff’s attorneys’ trade group, later said enactment of Broxson’s bill will force homeowners to sue insurers if their insurer won’t pay. Contractors will be forced to file liens against homeowners to guarantee payment, he said.
Asked about the bill, Paul Handerhan, senior vice president of the Fort Lauderdale-based Florida Association for Insurance Reform, said he doesn’t foresee “any scenario” in which Broxson’s bill does not advance out of the committee. From there, it would go to the Judiciary and Rules committees, before negotiations begin to merge it with a bill approved by the full House in 2017.
© 2019 the Sun Sentinel (Fort Lauderdale, Fla.), Ron Hurtibise. Distributed by Tribune Content Agency, LLC