Welcome to your 2nd Quarter Insurance Market Update provided by your favorite local independent insurance agency, Park & Associates! Moving forward we will be releasing a quarterly insurance market update to make sure that you, our clients, are as informed as possible on the current state of the insurance industry. With carriers leaving the state, going out of business, raising rates, and reducing coverages it has never been more important to keep your finger on the pulse of the insurance market.
This blog will focus on Senate Bill 2A which was signed by Governor DeSantis on December 16, 2022. It can be argued that this was the most sweeping insurance reform bill passed in Florida’s history. This was such an important and potentially impactful legislative session for a few reasons:
- We have lost (in one way or another) more than 20 insurance companies in the state since 2020. Some have gone out of business altogether and others have significantly or completely reduced their ability to write insurance in the state.
- Claim costs have consistently been on the rise in Florida at a much higher rate than in the rest of the country. One of the main reasons for this is the unique issue Florida has related to litigation in and around the insurance process. Prior to this legislation we were considered to be a “judicial hellhole” because of the way our laws have allowed outside parties into the claims process (attorney’s, public adjusters, contractor companies, etc.). One statistic that drives this issue home is, on average:
Some of the key issues addressed in this bill were:
- We repealed the one-way attorney fee provision related to property insurance claims which essentially says both parties are responsible for their own attorney’s fees regardless of who prevails and who does not. Previously the prevailing party could be awarded attorney’s fees to be paid by the non-prevailing party. This is one of the key reasons for our claims costs being significantly higher than the rest of the country (along with our premiums).
- Assignment of Benefits are now prohibited in property insurance claims if your insurance policy was issued after January 1, 2023.
- Reduced the deadline to report a claim from 2 years to 1 year for new or reopened claims. Statistics increasingly show that claims filed years after an event and closer to the prior filing deadline are usually fraudulent and orchestrated by a “bad actor” or third party.
You can read more about Senate Bill 2A here: https://www.myfloridacfo.com/Division/ICA/2022PropertyInsuranceChanges#2A.
In closing, while we have had several months of these changes being effective, it will be several more until we see the true effects this bill has on the Florida insurance market. We remain cautiously optimistic and continue to keep our fingers (and toes) crossed for calm storm season. The industry is focused on recovering from the state of the current market and providing incentive for more carriers to come back or enter the state new. As we know from basic supply and demand, the more options a consumer has for a product or service the better that product or service tends to be.
Stay tuned for our next market update coming next quarter!
Robbie Korth, CIC
President of Park & Associates Insurance