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Florida Gov. Ron DeSantis’s proposed insurance coverage fraud and authorized system abuse reforms, introduced this week for consideration in the course of the legislative session that begins in March, would construct on measures authorized within the closing weeks of 2022 and go a good distance towards fixing the state’s insurance coverage disaster.

Laws handed in the course of the 2022 particular session eradicated one-way lawyer charges and project of advantages (AOB) preparations for property insurance coverage claims. Gov. DeSantis’s proposal would go additional, eliminating these mechanisms and “lawyer payment multipliers” for all strains of insurance coverage.

“For many years, Florida has been thought of a judicial hellhole attributable to extreme litigation and a authorized system that benefitted the legal professionals greater than people who find themselves injured,” DeSantis stated in his announcement. “We at the moment are engaged on authorized reform that’s extra according to the remainder of the nation and that can convey extra companies and jobs to Florida.”

Earlier than the 2022 reforms, state regulation required insurers to pay the charges of house owners insurance coverage policyholders who efficiently sued over claims, whereas shielding policyholders from paying insurers’ lawyer charges when the policyholders lose. The laws additionally eradicated AOBs – agreements by which property house owners signal over their claims to contractors, who then work with insurers.

AOBs are a typical apply in insurance coverage, however in Florida this consumer-friendly comfort has lengthy served as a magnet for fraud. The state’s authorized setting – together with a few of the most beneficiant attorney-fee mechanisms within the nation – has inspired distributors and their attorneys to solicit unwarranted AOBs from tens of 1000’s of Floridians, conduct pointless or unnecessarily costly work, then sue insurers that deny or dispute the claims.

In consequence, Florida accounts for practically 80 % of the nation’s owners’ insurance coverage lawsuits, however solely 9 % of claims, in line with the state’s Workplace of Insurance coverage Regulation.

Eliminating these two mechanisms for property claims addresses a lot of the insurance coverage fraud within the state. Eliminating them for all strains can be a promising signal that the state is actually dedicated to addressing the foundation causes of the disaster.

Florida’s insurance coverage disaster didn’t occur in a single day, and it’ll take years for the impacts of fraud and authorized system abuse to be wrung out of the system.  Policyholders gained’t see premium advantages any time quickly. Job 1 is to “cease the bleeding” as insurers fail, depart the state, or cease writing vital private strains coverages like auto and owners.

Triple-I has printed a new Points Temporary concerning the disaster and the state’s efforts to restore it.

Study Extra:

Florida Auto Laws, on Heels of 2022 Reforms, Suggests State Is Critical About Insurance coverage Disaster Repair

Florida and Authorized System Abuse Highlighted at JIF 2022

Fraud, Litigation Push Florida Insurance coverage Market to Brink of Collapse

Florida Dropped From 2020 “Judicial Hellholes” Listing

Florida’s AOB Disaster: A Social-Inflation Microcosm

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