Florida’s post-recession rebound and corresponding population growth has contributed to increasingly dynamic insurance markets. With more people and more buildings comes more risk, and an ever-present need to attract capital to support it. Nationally, health insurance remains at the forefront of public consciousness, while state leaders have attempted to reduce regulatory burdens and respond to federal laws with market-based solutions. In Florida, legal reform stands out as the biggest, and most costly challenge for property and casualty rate payers. Its tentacles reach from attorney fee awards unrelated to benefits secured for workers’ comp claimants to excessive bad faith litigation, and from third-party abuses of the policyholder-created protection of the one-way attorney fee statute to mounting pressure in the medical malpractice market that, left to the courts, is likely to pinch health care providers.
AIF SUPPORTS a responsible insurance agenda and
initiatives that continue to stamp out cost drivers, increase
regulatory efficiency, and foster stability for the benefit of
the insurance-buying public.
Florida is in the throes of a workers’ compensation market crisis due to rulings released by the Florida Supreme Court and appellate courts this past summer. The Florida Supreme Court’s rejection of an attorney fee schedule, whereby claimant attorneys are paid based on the actual value created for their clients, has caused the number of petitions for benefits to climb, and is fueled by the opportunity for these attorneys to secure unchecked amounts of fees. In addition, the court system has recently held that attorney fee agreements between claimants and their counsel cannot be reviewed for reasonableness, meaning claimants may be induced to make agreements that leave them with very little in the way of benefits to ameliorate their disability. Additional attempts to hold other portions of the workers’ compensation law unconstitutional have also been successful, chipping away at the balance achieved in 2003 for claimants, their employers and those employers’ carriers.
Consequently, the Office of Insurance Regulation recently approved a nearly 15% workers’ compensation rate increase on all Florida businesses. While the trial bar’s challenges mount to the actuarially-indicated and peer-reviewed rate filing, the rate increase will squeeze Florida businesses until balance can be restored and attorney compensation is again linked to actual benefits secured. Following the series of legal blows to the business community and their employees this past summer, AIF assembled a broad-based group of employee, employer, provider and insurer representatives to tackle alternatives to the currently unchecked legal climate. As a result, AIF has released a series of recommendations - from reestablishing equity in attorney’s fees to protecting injured workers’ private information from being surreptitiously used to deplete their benefits—and will work tirelessly this session to advocate for the reestablishment of the balance achieved post-2003, which led to a near 50% reduction in insurance rates for the business community.
AIF SUPPORTS lowering attorney fees in workers’ compensation litigation. The great majority of employees, employers, providers, and carriers want a system that works for all, instead of for a niche market of attorneys.
Florida’s growth, coupled with the strain caused by legal and other challenges, underscores the need for Florida to attract as much capital as possible to support our state’s risk.
Efforts to stymie private capital will be met with resistance by AIF. This includes attempts by some to expand the size and scope of the Florida Hurricane Catastrophe Fund, which sends an unfortunate signal to private reinsurance markets that their capital is unwelcome. It similarly includes attempts to place undue restrictions on a surplus lines market that SUPPORTS our peninsular state’s tremendous need for underwriting large, niche and more fragile risks. Unquestionably, it also includes any legislative effort to increase taxes on insurance companies who employ thousands of Floridians, which is a double blow to capital attraction and employment.
Simply put, the business community is unable to take risks when they cannot purchase insurance to help guard against it. AIF is unwavering in its commitment to attract capital to underwrite risk, and will resist all attempts to make it more difficult, more expensive or less available for Florida’s employers. Similarly, anything that raises taxes, jeopardizes employment or rebuffs the economic contribution made by risk bearers to our state must be defeated for the benefit of Florida’s business climate, on which hard working families statewide rely for their own success. AIF OPPOSES policies that make it more expensive, less attractive or more difficult to attract and appeal to those that support capital formation and risk in our state.
Automobile insurance is another market where legal abuse abounds. Although 2012 legislation stabilized the personal injury protection market, the trial bar continues to challenge its soundness. On the bright side, the outlook for a statewide ridesharing solution is positive in 2017, which will pave local regulatory hurdles for ridesharing companies and also provide sensible measures - including insurance coverage standards—for the safety and benefit of ridesharing passengers.
AIF SUPPORTS smart reforms to Florida’s automobile insurance market that address unchecked litigation, which adds costs for policyholders, and ensures the safety and availability of ridesharing services for Florida’s passengers.
Given AIF’s historic commitment to promoting Florida as the best state in which to live, work, and play, proposals that could hinder or impede services to tourists must be carefully scrutinized. Previously, legislation subjecting rental car companies to higher minimum financial responsibility levels - essentially increasing liability for their customer’s actions - was appropriately rejected. This legislation also sought to impose higher financial responsibility requirements on tourists who reside in other states or countries. Given the punitive effects on tourists and the rental car companies who support Florida’s tourism industry, AIF will continue to OPPOSE these higher financial requirements which are at the expense of tourism industry stakeholders.
The abuse of the one-way attorney fee statute in relation to the “assignment of benefits” mechanism has spawned a relatively new creation of litigation over auto glass repairs and property water damage. Sadly, these legal abuses are perpetrated by a handful of plaintiff’s lawyers and vendors who, working together, strip benefits away from policyholders and use these to force higher settlements from insurers, and even go so far as to sue in the name of the policyholder, often without the policyholder’s full and informed consent. AIF SUPPORTS reforms to the assignment of benefits process to protect consumers against these abuses.
Citizens Property Insurance Corporation has consistently reduced its policy count; a nod to sound, free-market reforms enacted by legislative and executive branch leadership. As such, the risk of assessments to all Florida policyholders - individuals and businesses alike - has been minimized. Unfortunately, segments of certain industries have devised schemes to contrive or increase the price of repair work for non-catastrophic claims.
These claims typically involve an assignment of benefits, which strips the policyholder of their benefits, and are then given, oftentimes irrevocably and in total, to a third party. Such “assignments of benefits” have created a wave of litigation, unseen even during periods of natural disaster. This wave has now reached tsunami like status and is causing attrition from the private market back to Citizens and putting stress on Florida’s residual market. Like many of the legal abuses discussed above, this too is concentrated in a small amount of law firms and vendors who scheme to manufacture losses or who use a policyholder intended benefit - the one-way attorney fee statute - for their own economic gain. Neither Citizens nor private companies are immune from the mounting pressure.
AIF is unwavering in its call for legal reform, which is benefitting a small minority of plaintiff’s attorneys at the expense of Florida’s consumers. In an effort to control spiraling costs and the resulting adverse impact to Florida’s residual market, AIF SUPPORTS reforms that will eliminate the abuses of policyholder’s protections by lawyers and vendors.