Written by Sam Elliott, Florida Safe Communities Council
Summer has arrived. As of June 1st, hurricane season has arrived. Homeowners and small businesses are stocking up on supplies. They also check insurance policies.
Over the past two years, Florida’s insurance market has shown significant improvement. The number of new insurance companies entering the Florida market has nearly quadrupled since last year. Your car insurance rates won’t just go down. Hundreds of thousands of customers actually received rebate checks. More importantly, the state’s last insurance company, Citizen Property Insurance, was significantly reduced, and many of the group’s taxpayer-supported policies were taken over by private insurance companies. At its peak in late 2023, people had more than 1.4 million insurance policies. As of April this year, that number had fallen to less than 300,000.
This complete turnaround in Florida’s insurance market is remarkable, as Florida is the only state in the nation where both auto and property and casualty insurance premiums have remained flat or declined. Repeat. The only state.
Before 2023, Florida was considered a judicial hellhole due to its litigation environment. The reason for this is that our country had a unilateral litigation fee system. In other words, if a consumer sues an insurance company and the insurance company settles the case regardless of the amount, the plaintiff will be responsible for 100% of the plaintiff’s legal costs. For the marquee lawyer, it was a system that guaranteed payment. All cases, no matter how frivolous, were accepted and pursued.
The 2023 litigation reform proposed by the governor and Legislature would suspend that system and eliminate frivolous lawsuits. This is the biggest reason why insurance premiums have dropped significantly.
Under the previous system, frivolous lawsuits, even frivolous settlements and subsequent legal fee payments drove up insurance premiums, and those costs were baked into nearly every product and service offered by even the smallest small business.
Unfortunately, many legislators do not understand how the system worked in the past, as it is easier to understand the current situation. Affordability is the word of the day and the challenge of the year. But Florida fares better than other places, at least when it comes to insurance, because we have good leaders who understand the difference between a legitimate claim and a frivolous lawsuit.
Now, let’s hope future legislators understand the difference and don’t take the bait and turn back the clock. For now, at least during this hurricane season, policyholders are better off and better prepared to face challenges than ever before. If we have another year with a milder hurricane season, Florida’s insurance market could achieve the full resilience it has always needed.
