Florida’s Property Insurance Market Is ‘Spiraling Towards Collapse’ Due to Litigation: Report

By | January 20, 2021

  • January 20, 2021 at 11:17 am
    Common Sense says:
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    500 litigation lawyers at the bottom of the ocean is a good start.

  • January 20, 2021 at 12:17 pm
    Mark W says:
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    So just doing the math…..it looks like an average lawyer payout for litigated HO claims works out to be close to $50,000 per claim. That’s ridiculously high and one more reason why Florida HO rates are almost the highest in the US.

  • January 20, 2021 at 12:27 pm
    Should Be A Law Against That says:
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    Absolute insanity: “The fees paid to attorneys by Florida carriers … are on average more than 750% of the damages paid to the plaintiffs/insureds. In one case Fraker examined, the plaintiff attorney was awarded 21,041% of the damages in fees… Fraker said just 8% of damages are paid to insureds while plaintiff attorneys receive about 71% of the insurance litigation cash flow…Insurers have paid out more than $12 billion in fees to attorneys since 2013…Florida consumers are the ultimate victims of what is happening Fraker says, as they are essentially paying a “hidden tax” to fund the litigation. This hidden tax averaged $487 per family in 2019, and is growing annually by 25.6%, totaling about $680 per family in 2020. That “tax” is being paid to less than 2,500 attorneys and contractors in the state.”

  • January 20, 2021 at 2:54 pm
    INS2021 says:
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    Hey Dan Newlin got me $750,000
    Morgan & Morgan – Insurance companies must pay
    Newlin: We’ve “recovered” over a $Billion for our clients.
    At what point does it become a crisis for the insurance industry?
    At what point does insurance become unaffordable to consumer?
    Well, it appears we are at that point on both accounts!
    Insurance has been very profitable for lawyers! (well at the expense of the consumer of course)

  • January 20, 2021 at 3:23 pm
    Illegal Solicitation By Runners Omitted says:
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    The author-researcher failed to study and report on the impact of contractors, roofers, plumbers, dry-out companies, and a host of other unlicensed loss consultants since 2013 and before engaged in illegal solicitation and “running” for the attorneys. This would serve to cut off the head of the snake. There is a symbiotic relationship between the attorneys and their “runners”. Investigate, arrest, and prosecute the “runners” who are soliciting for the attorneys and this will negate most of the draconian measures proposed. The suggestion that the roofers be estopped from conversations with the carrier will have a minor impact and is feather treatment which is an underlying “runner” problem. The salesmen/estimators/marketers of the roofers need to be prohibited from soliciting and advertising to homeowners to make insurance claims and hire attorneys or having the roofers attorney involved with the claim. There should be strict laws against the advertisement for roof replacement using insurance claim language. The roofers are nothing more then runners for the attorneys who refer the homeowner to an attorney or their attorney during the initial contact with the homeowner, an attorney in most instances that has no prior relationship with the homeowner. The attorneys hold seminars and write the roofers contracts designed in the form of an aob and now direction to pay to entrap the insurance company into ultimately paying legal fees. The DBPR sets up stings and arrests unlicensed individuals who are soliciting for construction work that requires the pulling of a permit yet looks the other way when the roofers and plumbers solicit homeowners for the making of an insurance claim. Investigating, arresting, and prosecuting the Unlicensed Practice of Public Adjusting(UPPA) by individuals referred to as loss consultants would curtail claims made and referred to attorneys. These criminal UPPA violations have been ignored by the Dept of Financial Services and economic crime units through the state. Inserting a mandatory binding appraisal provision in the policy would substantially curtail litigation and negate the necessity of attorney involvement. Wholesale elimination of the attorneys fees and overhaul of the attorney fee statute will ultimately penalize the consumer and leave them with no means of protection in denied and grossly underpaid claims and is not the solution to the problem.

    • January 21, 2021 at 3:09 pm
      Tiger88 says:
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      You are so correct. Our insurance agency is normally (pre-pandemic and probably post as well) with restoration contractors, water damage specialists, insurance repair “consultants” and public adjusters, all trying to get us to refer them into any and every property claim. They have driven up the cost of claims dramatically (many of them, when drunk will admit this). It’s just gotten completely out of control here with water damage, roof damage (many times phony damage), fire/smoke and other occurrences getting double digit settlements plus, many times, lawyer’s fees. Break the cycle is going to be very, very painful.

    • March 4, 2021 at 4:50 pm
      Guy Fraker says:
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      I appreciate this feedback. As the author, criticism this thoughtful deserves a response. Data black holes are also a key enabler of this Florida crisis. Specifically, the only reason this study was the least bit feasible is because the court records, and lawsuit tracking, come from public records. Tracking the actual payments to contractors, public adjusters, field-based door to door illegal solicitors is simply not possible given the technological deficiencies. I hope you did see scans of actual contractor related documents in the study. Now, that said, we still have to go back to the 71/21/8 split: the 8% to claimants includes damages awarded to those who are completing the work, hustling those roofs. i.e. 71% of over $15B 2013-2020 were plaintiff fees. I’ll close my reply with 3 additional items I hope you find helpful Illegal Solicitation By Runners:
      1. The abuse in roofing claims is a warm-up, a beta test, compared to what is happening with pipes,
      2. Plaintiff Atty arguments that any reforms are an effort to violate consumer’s access to courts are so haplessly self-serving coming from such an articulate, well educated, profession. Let me restate their argument from an actual consumer’s perspective: I cannot find a lawyer who will take my case if they don’t have a good chance of billing five to eight times my damages. Why do lawyers in 49 other states accept cases for 40% of what I’m asking for? If anyone is blocking consumer’s access to courts, it is the lawyers.
      3. I recently completed a follow-up study on Plaintiff atty political PAC funding following the 2019 AOB reforms see transparencyUSA.org. Look up PolicyholdersCooperative; ConsumerProtectionAlliance

  • January 20, 2021 at 4:24 pm
    John says:
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    It is legislative season. It would be nice to see several states move forward on AOB legislation. I would, also, like to see some regulations to assist with resolving concurrent causation disputes.

  • January 20, 2021 at 9:11 pm
    Lisa says:
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    Hidden due to low comment rating. Click here to see.

    • January 21, 2021 at 8:22 am
      Confused says:
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      were there any supplements? did you dispute the value of the loss? did you try to settle the dispute through the appraisal clause of the policy? was there any recoverable depreciation held back until the repairs were complete?

    • January 21, 2021 at 12:41 pm
      Tiger88 says:
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      Lisa, It sounds like a flood claim. So, did you have a private flood policy or was it written through the National Flood program? If it is the latter, it’s not an insurance company who (may have) failed to deliver, it’s the federal government.

    • January 21, 2021 at 1:25 pm
      cc says:
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      “maybe if the insurance companies paid what they were supposed to”

      Yeah. You are part of the problem Lisa. They did pay what they were supposed to. You didn’t pay what you should have (ie. buying flood coverage). It is not the insurance company’s job to tell you what coverages you should buy.

  • January 21, 2021 at 7:15 pm
    Joe Petrelli says:
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    Despite some legislative reform in 2019, the inaction in 2020 prolonged the bleeding and the historic number of events making landfall in the SE, where many Florida focused carriers “diversified,” cost them dearly. Reinsurance programs were rigorous so each storm cost most carriers a retention, usually 10% to 15% of surplus, pre-tax. The bad news is that the number of storms generated a large population of potential plaintiffs, and the lawsuit factories were ready for another round of nonsense.

    • January 22, 2021 at 10:35 am
      Mr. Solvent says:
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      My experience hasn’t been losses being driven in the Southeast…at least not catastrophe losses. The “weather” events are all in Central Florida and are taking their toll on loss ratios.

  • January 21, 2021 at 9:27 pm
    Hoosierone! says:
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    Not funny! Call Morgan and Morgan.

  • January 22, 2021 at 11:05 am
    Matt says:
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    This has been a problem growing for years in FL.
    You saw it happening over the years – first thing you see when you cross into FL or land at one of the airports is attorney billboards and ads.

    It was also rapidly increased by the large amount of NY/NJ ambulance chasers that moved to greener tort pastures in FL.

    I remember a time when Attorneys were banned from certain advertising – might need to revisit that.

    • January 22, 2021 at 11:22 am
      Mr. Solvent says:
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      I don’t think anyone whether it be an attorney, public adjuster, or contractor should be able to advertise to create a claim. Roofclaim.com for example? Disgusting.

  • January 22, 2021 at 11:59 am
    Actuary says:
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    People focus on hurricanes as a big source of losses for FL carriers but from a solvency standpoint, hurricanes have not been the issue. FL domestic carriers tend to have pretty small retention for hurricane events so the hit to surplus from storms like Irma and Michael is relatively small. The reinsurance market takes most of the hit from those storms leading to higher reinsurance costs in the long-term. A much bigger issue is severe weather from non-named storm events. Other than quota shares and maybe an aggregate treaty, those go straight to the bottom line. Combined with litigation costs on those claims, things are pretty dire.

    If it was just ridiculous water losses, carriers could subsidize with wind premium but now they’re being attacked on all fronts. You can take a 20% rate increase every year but that rate change will take 2 years to be fully earned. Until the market stabilizes, carriers will always be behind. We’re in a situation where net losses are being covered capital infusion which is very dangerous. If the money tap is turned off, bad things will happen quickly.

    • January 24, 2021 at 12:42 pm
      Mr. Solvent says:
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      $3,000 water losses turned into $30,000 water losses combined with free roofs for everybody are the problems…and I’d argue the only real problems with the Florida market. Solve those issues and kiss the double digit rate increases annually goodbye.

  • January 22, 2021 at 3:54 pm
    Andrew says:
    Hot debate. What do you think?
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    You can thank Rick Scott, oh wait, FL already did by voting for him into the Senate as well.

    “The fees paid to attorneys by Florida carriers far exceed the damages paid to the insureds.”

  • January 22, 2021 at 10:15 pm
    okt0ber says:
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    As a Texas agent, I’m always surprised when I see some of these FL HO dec pages. I’ve seen premiums of $600-$700 in the Orlando area. That’s the problem – these FL carriers are giving coverage away in many areas of the state. I can’t imagine selling a policy in Florida for, at a minimum regardless of the situation, less than $1,000. These carriers were chasing market share for years. If one of these carriers would have been the carrier that cost more for all those years, it’d probably be in pretty good shape today – both because of adequate premiums but also less market share to worry about lawsuits to be filed from.

  • February 3, 2021 at 4:15 pm
    LMSeal says:
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    Every year the insurance industry comes out with more excuses and pointing the finger. Reinsurance costs, sinkholes, storms, AOB, contingency fees, the list goes on. They never point the finger at themselves and the MGA model which sucks the companies dry of any profit or growth. They say the model is necessary to attract capital to the marketplace…. Funny it costs a lot more to issue a policy in Florida than it does Oklahoma due to the MGA fee and expense factor when its about the same number of pages.

    • March 4, 2021 at 5:36 pm
      Guy Fraker says:
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      When regional carriers have an inventory of 6940 open lawsuits and 180 are spread across 11 states, with the balance all in Florida Courts, this translates into MGA costs how? So your best argument as to this report’s inaccuracy is MGA costs? 7 million Floridians are paying $850.00 per year more than the same coverage on the same house in every disaster prone market because of MGA expenses? Reinsurers premiums being 45% higher for Florida carriers than other hurricane and disaster prone markets is primarily the fault of the MGA model? So what’s the next argument, incompetency in claim handling? So, companies that have 1/10th of the lawsuits in any of the remaining 49 other states are choosing to be incompetent in the 1 and only state with the highest routine exposure to excess fees? hmmmmmmm.

  • February 27, 2021 at 3:54 am
    JackieBee says:
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    I was reading some of the comments. Part of the problem is the companies and the Agents. Start educating consumers. As an agent I my agency writeS hundreds of policies a month and We find clients are being Inadvertently brainwashed into lower deductibles. Florida has some of the poorest trained CSR in the country. They don’t educate people on higher deductibles and prudent use of filing a Claim. I see it every day. Once we explain it to people they get it. However when they have been given 5 other quotes with low deductibles it’s hard to overcome.



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