TALLAHASSEE, Fla. – Insurance industry groups are backing a Florida state senator’s reintroduction of legislation intended to reduce water damage claims litigation by preventing attorney fee awards in cases involving assignment of benefits to third parties.
Senate Bill 62, offered by Republican Sen. Dorothy Hukill, is the same legislation she offered for the 2017 legislative session. It would prevent attorneys from being awarded fees in claims disputes involving third parties acting on behalf of insureds who assign claims to them. During the recent legislative session, the House passed a companion bill to Hukill’s, but the Senate never considered it despite public support from the Florida Office of Insurance Regulation (Best’s News Service, April 27, 2017).
Insurance industry sources view the bill’s effort to kill the state’s one-way attorney fees as essential to controlling rate increases. State law currently says that a claimant’s counsel is paid by the insurer in assignment of benefits cases if the insurer loses the case or if it is settled out of court.
Michael Carlson, president of the Personal Insurance Federation of Florida, said Hukill’s bill is the best developed solution to the assignment of benefits problem driving insurance rates upward for Florida insureds. He said elimination of the one-way attorney fee statute is “a silver bullet that will arrest this abuse.”
Also, provisions in the bill require the assignee or transferee to perform a list of separate actions to show they have no prejudice against the insurer. These include cooperating with insurers in claims investigations and delivering a copy of the final assignment agreement to an insurer no later than three business days after the agreement is executed by the named insureds.
Carlson said his group supports provisions apart from the elimination of the one-way attorney fee, including the three-day insurer notification of claim assignment.
The number of water damage cases has reached the point where Citizens Property Insurance Co., which is the state’s insurer of last resort, fears rate increases caused by the litigation will result in large numbers of new entrants after years of depopulation if nothing is done (Best’s News Service, May 6, 2016).
Logan McFaddin, southeast regional manager for the Property Casualty Insurers Association of America, told Best’s News Service that the political landscape will be much the same for Florida in the coming session. Consumers and legislators have become more educated about the issue than last year, she said. “They all know it’s an issue that needs to be addressed,” she said. “I don’t think there’s a lack of awareness.”
The top five writers of homeowners multiperil insurance in Florida during 2016 were Universal Insurance Holdings Group, with an 8.95% market share; Tower Hill Group, with 6.90%; State Farm Group, with 6.60%; Federated National Insurance Co., with 4.88%; and Citizens Property Insurance Corp., with 4.87%, according to BestLink.
(By Thomas Harman, Washington Bureau manager, BestWeek: Tom.Harman@ambest.com)