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You are here: Home / Advocacy / The Nick of Time…

The Nick of Time…

April 30, 2021 - Opinions by Scott Johnson Leave a Comment

On Friday (yesterday at this writing) April 30, 2021 at 2:27 P.M. the very last bill to be taken up by Florida’s House of Representatives was passed and forwarded to Governor DeSantis for his signature. That bill was a materially amended, but none the less meaningful, version of SB-76 sponsored by Senators Jim Boyd and Jeff Brandes.

Lawmakers also passed meaningful property reforms in SB-1598 dealing with Public Adjusters.

Following are summaries of the highlights of both bills.

The major provisions of SB-76 are:

  • Reducing the time limit for filing insurance claims to two years from the date of loss. Currently hurricane claims can be filed within three years of the date of loss and non-hurricane claims can be filed up to five years after the date of loss. Lawsuits disputing claims that have been timely filed can still be initiated up to five years after the date of loss.
  • Requiring plaintiffs to go thru several additional steps prior to filing a lawsuit on a property insurance claim:
  1. The bill contains a new pre-suit requirement for a demand to be filed at least 10 days prior to filing a lawsuit and requires the demand to give a complete estimate of the indemnity demanded, the attorney fees and costs demanded, and the amount in dispute.
  2. The bill states that the pre-suit notice cannot be filed before the insurance company has made a determination of coverage. Current law allows the insurance company to take up to 90 days to make that determination.
  3. The bill permits the insurance company to require mediation or any other form of alternative dispute resolution after receiving the notice. Litigation cannot be commenced prior to the completion of the alternative dispute resolution process or the passage of 90 days from filing the notice of litigation if the alternative dispute resolution process hasn’t been completed. Under current law, mediation can be avoided by simply filing a lawsuit.
  • Replacing the one-way attorney fee statute with a statute that makes the recovery of attorney fees and costs contingent on obtaining a judgement for indemnity that exceeds the pre-suit offer made by the insurance company. In the event of a trial, the bill requires the plaintiff to obtain a damage award (excluding attorney fees and costs) of at least 50% of the “disputed amount” (the difference between the offered indemnity payment and the indemnity amount demanded) in order to be entitled to 100% of reasonable attorney fees. A recovery of less than 20% of the disputed amount result in no fee recovery by the plaintiff attorney. Recoveries of between 20% and 50% result in a proportionate recovery of attorney fees and costs. This is a major change from Florida’s current one-way attorney fee statute which has been in effect for decades. This change only applies to lawsuits brought on behalf of the insured.
  • Requiring the consolidation of legal  actions involving coverage for multiple claims under the same residential insurance policy. This will reduce defense costs and prevent inconsistent decisions from multiple courts.
  • Prohibiting roofing contractors or any person acting on their behalf from making a “prohibited advertisement”. A “prohibited advertisement” includes any electronic communication, phone call, or document that solicits a claim, offers anything of value for performing a roof inspection, offers to interpret a policy of insurance, offers help in filing an insurance claim, or offers to adjust a claim on the insured’s behalf. The bill also prohibits a contract from providing the insured with a contract for repairs that does not include a detailed cost estimate of the labor and materials required to complete the repairs. Roofers are subject to a fine of up to $10,000 for each violation.
  • Giving the Department of Financial Services new authority to levy fines of up to $10,000 per violation against companies or individuals who illegally engage in activities that, under Florida law, are limited to licensed public adjusters. It expands the firms and individuals DFS can fine for engaging in those activities to those companies and individuals that can now be fined or charged with a third degree felony, including:
  1. Contractors and subcontractors engaged in the solicitation of claims
  2. Any individual or company who assists others in committing the prohibited acts
  • Making several changes regarding Citizens, as follows:
  1. Policies are not eligible for coverage if comparable coverage in the private market is within 20% of Citizens price (the current rule is 15%)
  2. The “glidepath” which currently limits Citizen’s annual rate increases to a maximum of 10% per policy is increased to 11% in 2022, 12% in 2023, 13% in 2024, 14% in 2025 and 15% in 2026 and beyond.
  3. Citizens “actuarially sound” rates must include the cost of purchasing reinsurance up to the 100-year event–even if it’s not purchased. Currently the amount allocated for reinsurance includes only the amount actually paid for reinsurance.

Note: SB-76 (ordered engrossed and enrolled version) does not make any changes regarding AOB’s as reformed in 2019.  For example, it does not modify the improved 1-way attorney fee formula enacted in the 2019 reform package.

Once signed by Governor DeSantis, the changes above will become effective July 1, 2021.

Other sections of SB-76 have different effective dates and deal with the following: expanded powers of the Office of Insurance Regulation, new requirements for surplus lines policies, additional procedures for handling claims and additional reporting requirements for insurance companies.  These sections are not included in this summary.

Note: SB-76 does not address several issues which were included in the initial versions of the bill, as follows: attorney fee multipliers (the Joyce decision) or ACV on roofs (the SEBO decision). This means, of course, that plaintiff attorneys will continue to request a fee multiplier and will be incentive to file suits for this reason. Insurance companies will still be able to offer HO-3 customers an ACV roof endorsement on the current “voluntary” basis.

SB-1598_____________________________________________________________________

In addition to SB-76, the legislature also passed SB-1598 which makes some notable improvements governing public adjusters, including:

  • Requiring  public adjuster firms to be licensed by the State of Florida. Current law, which does not require public adjuster firms to be licensed, permits individuals who have lost their individual public adjuster license to continue in business by simply owning a public adjusting firm and hiring licensed individuals to work on their behalf.
  • Prohibiting public adjusters from being paid by contractors or attorneys. This new provision is designed to eliminate “loss consultants” from being employed by law firms; I.E Strems Law Firm and Contender Claims Consultants
  • Extending from 3 days to 10 days the time a consumer has to rescind a contract with a public adjuster
  • Requiring standard disclosure language in all public adjuster contracts
  • Requiring a public adjuster to complete a detailed estimate within 60 days of signing a contract with an insured. The estimate must include an itemized per unit cost of the repairs. This will prevent the situation which occurred after Hurricane Michael when some public adjusters concentrated on soliciting customers and delayed presenting their estimates to their client and to their client’s insurance company for months or presented estimates which were incomplete. This was one of the causes of the unreasonable delays in settling some of those claims.

Opinions on all of the above will be rendered once a detailed analysis is made. While more should’ve been done, the enactments above will reduce the frequency and severity of claim related litigation in Florida, in my opinion.

The full impact, including impact on rates, will reflect the true value of what has passed.

Stay tuned. There’s much more to come.

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