Florida Leads Nation in Homeowners Litigation by Staggering Margin
The Florida Office of Insurance Regulation (OIR) recently analyzed nationwide homeowners insurance claims and litigation data and reached a well-known but unfortunate conclusion– Florida leads the country in litigation by a staggering margin.
OIR aggregated market conduct survey data related to lawsuits opened throughout the United States from 2016 through 2019 (the last year for which data is available). The analysis revealed that in 2019 Florida accounted for 8.16% of all homeowners claims opened by insurance companies. However, Florida accounted for an incredible 76.45% of all homeowners’ suits opened against insurance companies in the same year. Florida makes up less than ten percent of the nationwide homeowners insurance claims and yet experiences more that three-quarters of all homeowners insurance litigation in the country.
Unfortunately, Florida’s commanding lead in homeowners insurance litigation is not an anomaly. In 2016, Florida had less than 8% of the countrywide homeowners claims but had almost 65% of the countrywide litigation. In 2017, Florida had 68% of the countrywide litigation and in 2018 the number reached almost 80%
The OIR further reviewed the ratio of claims closed without payment to total claims, and the ratio of suits opened to clams closed without payment. Florida is similar to the national average in terms of claims closed without payment to total claims closed— in other words, the litigation is not resulting from a higher rate of claims denials or non-payments than seen throughout the country. However, Florida experiences a substantially higher ratio of lawsuits to claims closed without payment. In fact, Florida’s lawsuit ratio in this area is eight times higher than the next highest state.
The increased litigation also cannot be attributed to composition of Florida’s property insurance market and the number of domestic insurers operating in this state. The OIR considered this possibility and “did not detect any systemic pattern” that could explain the disparity in lawsuits.
The reasons for Florida’s excessive insurance-related litigation are clear. This state has legal and behavioral processes and cultures that uniquely incentivizes lawsuits against insurers. As long as this persists, the Florida market will be plagued by excess claims costs, increased costs of insurance and reduced availability.