Governor signs property insurance reforms and condo safety measures
The Legislature adjourned a special session on May 25 after approving property insurance reforms that target litigation costs, and a building inspection mandate prompted by the deadly June collapse of Champlain Towers South in Surfside.
The governor signed the measures into law the following day.
Moments before the House voted 110-0 to approve SB 4D, which included the building safety measure, lawmakers praised the bipartisan effort.
“People talk about coming to Tallahassee and it being too political, but this real policy with real change affecting real families in the past but also in the future,” said Rep. Daniel Perez, R-Miami.
The property insurance debate was more contentious.
The House on the same day voted 95-14 to approve SB 2D – the main insurance reform package – by Sen. Jim Boyd, R-Bradenton. Rep. Jay Trumbull, R-Panama City, sponsored the House companion. The Senate approved it 30-9 the previous day.
“I would say we’re on a respirator in the homeowner’s market in Florida right now, and it’s not getting better,” said Boyd, who is an insurance agent. “It’s getting worse and we just have to do something.”
Boyd acknowledged that most homeowners won’t feel the impacts for at least 18 months.
“I do believe what we’re doing today will stabilize the market, and allow rates to come down, [but] sadly, it won’t happen tomorrow,” he said.
Sponsors insist that a heavy dose of litigation reform, and a $2 billion reinsurance fund, backed by taxpayer dollars, are necessary to counter triple-digit premium hikes, lack of availability, and growing insurer insolvency.
In his special session proclamation, Gov. Ron DeSantis cited industry statistics that show Florida, which just 9% of property insurance claims, generates 79% of the nation’s homeowner insurance lawsuits.
“We’ve got claims that aren’t real and then we’ve got lawyers’ fees that are driving them up and we’ve got to end that,” Rep. Randy Fine, R-Palm Bay, said moments after the House vote.
The industry blames a blizzard of “frivolous” lawsuits by shady contactors who wield the threat of attorney fee multipliers after homeowners sign over their benefits.
The reforms restrict the awarding of fee multipliers in property insurance disputes to “rare and exceptional circumstances.” Plaintiffs would have to show that they could not have engaged competent counsel otherwise.
Courts would not be permitted to award attorney fees in cases where homeowners “assign” their benefits to a contractor. Defendants could be awarded attorney fees if a plaintiff fails to provide a pre-suit notice.
Before prevailing in a bad-faith lawsuit, plaintiffs would first have to prove that an insurer breached the contract.
William Large, president of the Florida Justice Reform Institute, praised the reforms.
“Despite assignment of benefits reform in 2019, and the additional reforms last year with Senate Bill 76, property insurance lawsuits have exploded in the past several years,” he said. “Senate Bill 2D contains significant reforms and get to the heart of the escalating rates and limited coverage – lawsuit abuse.”
But critics contend the reforms force consumers to make concessions without any guarantees that rates will fall.
They questioned the industry’s claims and contended that property insurance lawsuits have declined more than 22% since SB 76 went into effect.
South Florida attorney Hillary Cassel, who represents homeowners in property insurance disputes, told the Senate Appropriations Committee earlier in the week that insurance companies routinely denying meritorious claims are to blame.
“Where in this bill are we holding them accountable for their wrongful denials?” she asked.
House Democratic Leader-elect Fentrice Driskell of Tampa, a Georgetown Law grad, called the reforms “incomplete.”
“When we go back home, our constituents are going to want to know what we did on property insurance to lower their rates and bring them relief right now,” she said.
Driskell noted that Republicans refused to accept many Democratic amendments, including an attempt to preserve attorney fee multipliers.
“That is something that is a tool in a consumer’s toolkit, and frankly, is awarded very rarely by a court anyway,” Driskell said.
Other amendments offered would have imposed a 12-month rate freeze or tapped an insurance trust fund to offer direct rebates to policy holders.
The building safety provisions in SB 4D would require inspections for all high-rise residential structures that are 25 years or older and within three miles of the coast. Inland structures would have to be inspected at 30 years.
The inspections would have to be repeated every 10 years thereafter. Condominium associations would no longer be able to waive maintenance reserves.
Sen. Jennifer Bradley, R-Orange Park, sponsored the condo safety bill in the January regular session, only to see it die after lawmakers went into overtime to complete negotiations on a $112 billion state budget.
“I pledged at that time when session ended…that we would not stop trying to find a solution and trying to find a meaningful response to what was an absolute tragedy in Surfside,” Bradley said.
In a bipartisan nod, Bradley thanked Sen. Jason Pizzo, D-Miami, for his help with the bill.
Pizzo’s district includes Surfside and he reminded his colleagues that he is the only member of the Florida Senate who lives in a condominium.
Pizzo praised a group of prominent South Florida lawyers, including Michael I. Goldberg and Paul Singerman, for helping negotiate a $997 million settlement for the Surfside victims. Pizzo stressed that the attorneys are working pro bono.
“Attorneys got a bad rap this session,” Pizzo said. “But it’s world-class lawyers, without which, some bit of solace and comfort never would have come.”