Lawsuits Continue to Plague Property Market
The Florida property insurance market continues to experience reduced availability and increasing prices due to extraordinary litigation levels. Widely-discussed sources show that Florida has nearly 80% of the nation’s property insurance litigation despite having less than ten percent of the countrywide claims. Stated differently, Florida had about 100,000 lawsuits last year, which vastly outpaced the number of lawsuits in the rest of the country combined.
The elevated lawsuit activity is driving significant rate increases in the admitted market and reductions in admitted insurers’ willingness to write policies in Florida. Consequently, Citizens Property Insurance Corporation is on its way to having over 1 million policies by year-end.
These trends are not expected to reverse anytime soon. For example, Citizens added about 75,000 policies in the first four months of 2022 and received nearly 4,000 new lawsuits. The tri-county area in South Florida continues to lead the state in generating lawsuits. About 75% of suits filed against Citizens are in the tri-county area, with most being non-weather water damage claims. Other areas of concern include Tampa Bay and the so-called SOLO counties in Central Florida.
Particularly alarming, Citizens has experienced a 93% increase in lawsuits arising from assignments of benefits (AOB). The Florida legislature passed AOB-related reforms in 2019, but those reforms have not altered the downward trajectory of the market. The legislature took another swing at AOB reform in the 2022 special session when it declared policyholders’ rights to attorneys’ fees cannot be assigned. It is unclear how effective this change will be– it is already the subject of a legal challenge, and at a minimum it will be several years before it influences claims, assignments and the ensuing litigation.