Governor DeSantis Signs Property Insurance Reform Legislation

On June 11, 2021, Governor Ron DeSantis signed Senate Bill 76, a property insurance reform bill that passed on the last day of the 2021 Florida legislative session. The law makes changes to attorney fees in property insurance litigation, requires presuit notice before a lawsuit arising from a property insurance policy can be filed, and reduces the time for filing property insurance claims. The law requires additional reporting by insurers to the OIR and clarifies the OIR power to examine insurer affiliates. The law also restricts solicitations relating to roofing claims. Finally, the law makes changes to eligibility for coverage from Citizens and changes the “glide path.” The law takes effect on July 1, 2021.

Presuit Notice and Attorney Fees

The law requires the insured to give presuit notice before filing a lawsuit arising under a property insurance policy, requires the insured to make a presuit settlement demand, requires the insurer to make a presuit settlement offer, and changes the attorney fee statute to tie attorney fee recovery to the amount recovered. The law’s provisions relating to presuit notice and attorney fees apply to suits arising under residential and commercial property policies, including policies issued by eligible surplus lines insurers.

Presuit Notice

The law requires, as a condition precedent to filing a suit under a property insurance policy, a claimant to provide written notice of intent to initiate litigation. The notice:

• Must be given at least 10 business days before filing suit.
• May not be given before the insurer has made a coverage determination.
• Must state the alleged acts or omissions of the insurer giving rise to the suit.
• Must provide an estimate of damages, if known.

If the notice is provided following acts or omissions by the insurer other than denial of coverage, the notice must state:

• The presuit settlement demand, which must itemize the damages, attorney fees, and costs.
• The disputed amount.

Insurer Response to Presuit Notice

An insurer must respond in writing within 10 business days after receiving the presuit notice. If the notice is following a denial of coverage by the insurer, the insurer must:

• Accept coverage;
• Continue to deny coverage; or
• Reinspect the damaged property.

If the notice is following an allegation of an act or omission by the insurer other than a denial of coverage, the insurer must:

• Make a settlement offer; or
• Require the claimant to participate in appraisal or another method of alternative dispute resolution.

Attorney Fees

The law provides that in a suit arising under a residential or commercial property insurance policy, attorney fees and costs shall be calculated as follows:

• If the difference between the amount obtained by the claimant and the presuit settlement offer is less than 20 percent of the disputed amount, each party pays its own attorney fees and costs.
• If the difference between the amount obtained by the claimant and the presuit settlement offer is at least 20 percent but less than 50 percent of the disputed amount, the insurer pays the claimant’s attorney fees and costs equal to the percentage of the disputed amount obtained times the total attorney fees and costs.
• If the difference between the amount obtained by the claimant and the presuit settlement offer is at least 50 percent of the disputed amount, the insurer pays the claimant’s full attorney fees and costs.

Insurer Reporting and Affiliate Information Reporting to the OIR

The law requires each authorized insurer issuing personal lines or commercial lines residential property insurance policies to file information with the OIR to provide the OIR with the ability to track litigation and claims trends occurring in the property market. Information that must be reported annually includes: 

• The total indemnity paid by the insurer.
• The total loss adjustment expenses paid by the insurer.
• The amount paid for the claimant’s attorney fees, if any.
• The amount paid in costs for claimant’s attorney’s expenses, including, but not limited to, expert witness fees.
• The contingency risk multiplier, if any, that the claimant’s attorney requested to be applied in calculating the attorney fees awarded to the claimant’s attorney.
• The contingency risk multiplier, if any, that a court applied in calculating the attorney fees awarded to the claimant’s attorney.

Examination of Insurer Affiliates

Section 628.801, F.S., currently allows the OIR to examine any insurer and its affiliates “to ascertain the financial condition of the insurer.” The law includes additional provisions related to examinations under the Holding Company Act. It requires the insurer to pay the expenses of the examinations. The law reaffirms and clarifies the OIR power to examine the affiliates of the registered insurer. It limits the scope of the examination of an insurer’s affiliates to information “reasonably necessary.” The law further provides that an examination of an insurer’s affiliate, unless reasonably necessary to ascertain the financial condition of the insurer, may not extend to the passive investors of affiliates in the holding company system which do not provide services directly or indirectly to the insurer or have direct or indirect relationships with the insurer.

Managing General Agents

Section 626.7452, F.S., provides that a managing general agent may be examined as if it were the insurer except in the case where the managing general agent solely represents a single domestic insurer. The law strikes the exception for a managing general agent that solely represents a single domestic insurer and allows all managing general agents to be examined as if they were the insurer.

Notice of Property Insurance Claims

The law provides that a claim, supplemental claim, or reopened claim under a property insurance policy is barred unless notice of the claim is given within 2 years after the date of loss. This applies to all claims, not just windstorm or hurricane claims. A supplemental claim is barred unless notice of the supplemental claim is given within 3 years of the date of loss.

Solicitation by Roofing Contractors and Public Adjusters

The law creates new prohibitions and requirements for contractors and public adjusters. The law :

• Prohibits a contractor from encouraging or inducing a residential property owner to make an insurance claim for roof damage.
• Limits a public adjuster’s or contractor’s ability to offer gifts in exchange for allowing the contractor to inspect a residential property owner’s roof.
• Limits a public adjuster’s or contractor’s ability to offer compensation in exchange for referrals.
• Requires a contractor to provide an insured a good faith estimate of the itemized and detailed cost of services and materials for repairs undertaken under a property insurance claim with an agreement authorizing repairs.

Changes to Citizens

The law provides that Citizens need not purchase catastrophe reinsurance if it is not available at reasonable rates but requires Citizens to include the cost of reinsurance to cover its projected 100-year probable maximum loss in its rate calculations. The law also changes the Citizens “glide path.” Current law prohibits a rate increase of more than 10 percent for any single Citizens policy. The law allows increases not exceeding:

• 11% for 2022.
• 12% for 2023.
• 13% for 2024.
• 14% for 2025
• 15% for 2026 and subsequent years.

The law provides that a new risk is not eligible for Citizens coverage unless the premium for coverage from an authorized insurer is more than 20% greater than comparable Citizens coverage. Current law provides that a new risk is not eligible if the premium from an authorized insurer is no more than 15% greater than comparable Citizens coverage.