I want to thank the Florida Legislature for its hard work and wisdom in passing COVID liability protections earlier this year. This was something that all of us in the healthcare industry needed. There is still much work to bring our economy back to full speed, but the COVID liability protection was a great move and perhaps points to another area where similar reform is needed.
I just read a report in April that found that although only eight percent of the property insurance claims in the nation were from Florida, the Sunshine State accounted for more than 70 percent of the country’s property insurance litigation. Why is this? It comes down to the fact that it is too easy to sue insurers for bad faith and the courts are too unpredictable on how they will deal with lawsuits over bad faith.
I am not arguing for there to be a complete ban for lawsuits over bad faith, but there needs to be a provision for insurance companies to comply with a set of legislative guidelines so that once they do, they are exempted from a bad faith charge. That would immediately rein in the wild swings that lawyers take, looking for a windfall and keep the bad faith lawsuits relegated to those where true bad faith occurred.
Until a year ago, Florida was included on the American Tort Reform Association‘s annual list of judicial hellholes. Also, every year, Citizens Against Lawsuit Abuse publishes an independent report to estimate what consumers pay in tort taxes annually. This year, the report estimated that every Floridian pays just over $250 a year in extra costs due to excessive lawsuits. For a family of 4, that means $1,000. There are a lot of things that a non-taxed $1,000 could buy.
A major part of that tort tax is the increased cost of property insurance. In fact, the biggest issue facing Florida right now is the rising cost of property insurance. It is beginning to affect homeowners, vacation homeowners and renters. On average, since 2016, property insurance rates have gone up more than 30 percent. Some reports estimate that many of our main carriers will increase rates by 15-30 percent this year alone. Expensive insurance is better than no insurance, but no insurance means that the taxpayer-backed and funded Citizens Property Insurance is the only option. A lot of folks would rather not have Citizens Property Insurance as their only option.
A property insurance crisis will also affect all of the elements of our real estate industry. If unaddressed, this issue alone will cause a premature market slowdown, caused simply by a failure to act. The Legislature needs to take a lesson from its own playbook on COVID liability reform to work on property liability reform and get this right before it is too late.
Tom Wheeler is the president of DetailingTally in Tallahassee.