Senate Banking and Insurance Committee Approves Property Insurance Reform Legislation

On February 2, 2021, the Florida Senate Banking and Insurance Committee approved a bill addressing issues related to property insurance claims and property insurance litigation. The bill provides a presumption to limit the application of contingency fee multipliers, provides attorney fee reform and presuit notice requirements for suits brought under property insurance policies, requires that a notice of a property insurance claim be provided to the insurer within 2 years of the date of the loss, and allows an insurer to offer homeowner’s insurance policies that adjust claims on roofs 10-years old or older on the based on a roof surface reimbursement schedule that provides less than replacement cost coverage. If the bill becomes law, it will take effect on July 1, 2021.

SB 76 by Senator Jim Boyd makes several changes to property insurance claims and property insurance litigation. Senator Boyd told the committee that attorneys should be paid fairly and that his bill creates a system to pay attorney fees in property insurance cases based on their success in recovery for policyholders. He also told the committee that he was concerned that  property insurance policies are becoming “warranty” policies to provide replacement of older roofs rather than replacement or repair after the roof was destroyed or damaged. The bill addresses several issues, as follows.

Contingency Fee Multiplier

Senator Boyd argued that the current contingency fee multiplier law can lead to increased insurance rates and that fee multiplier reform will help consumers. Under federal law, contingency fee multipliers are awarded only in “rare and exceptional circumstances” when the lodestar fee would not have been “adequate to attract competent counsel.” The Florida Supreme Court has not adopted the federal standard and has held there is no “rare and exceptional” circumstances requirement before a court can apply a contingency fee multiplier.

The bill creates a presumption that in an award of attorney fees under section 627.428, Florida Statutes, the lodestar amount is sufficient and rebuttable. The presumption is rebuttable only in rare and exceptional circumstances with evidence that competent counsel could not be retained in a reasonable manner.

An amendment by Senator Darryl Rouson to remove the contingency multiplier provisions from the bill failed on a voice vote.

Claims Filing Deadline

Section 627.70132, F.S., requires insureds to notify an insurer of a claim, supplemental claim, or reopened windstorm or hurricane claim within 3 years after the hurricane first made landfall or the windstorm caused the covered damage. This bill requires that notice of all claims, supplemental claims, or reopened claims under a property insurance policy must be provided to the insurer within 2 years of the date of the loss. Senator Boyd argued that insureds should know within 2 years of the loss whether to make a claim.

The committee defeated an amendment by Senator Rouson to remove the claim filing deadline provisions from the bill.

Roof Reimbursement Schedule

The bill allows an insurer to include a roof surface reimbursement schedule in the policy. The roof surface reimbursement schedule must:

• Provide reimbursement based on the annual age of a roof surface type.
• Provide full replacement coverage for any roof surface type less than 10 years old.
• Include a specific disclosure statement. 
• Allow for all actuarially sound methods of the Insurance Rating Law to apply.
• Be approved by the Office of Insurance Regulation.
• Be provided to the insured with the policy documents at issuance and renewal.

The bill provides for reimbursement amounts of no less than:

• Seventy percent for a metal roof type.
• Forty percent for a concrete tile and clay tile roof type.
• Forty percent for a wood shake and wood shingle roof
• type.
• Twenty-five percent for all other roof types.

The committee defeated an amendment by Senator Annette Taddeo to change the notice requirement of the bill.

Attorney Fee Reform and Presuit Notice

The bill required claimants under a property insurance policy to provide notice before the filing of a lawsuit and make a presuit demand. The bill allows insurers to file to abate proceedings until notice has been provided.

The bill also revises how attorney fees are awarded to claimants under property insurance policies. The bill allows claimants to recover 100% of their attorney fees when they recover 80% or more of the presuit demand. If the claimant recovers between 20% and 80% of the amount demanded, attorney fees are based on the amount recovered. For example, a claimant that recovers 70% of the demand receives 70% of incurred attorney fees. The bill provides that no attorney fees may be recovered by insureds if the amount awarded is less than 20% of the amount they demanded.

The committee defeated amendments by Senator Perry Thurston to remove the presuit notice and attorney fee language from the bill.

The committee also approved SB 168 by Senator Ed Hooper. The bill extends the Hurricane Loss Mitigation Program (HLMP) until June 30, 2031. The HLMP funds programs that improve the wind resistance of residences and public hurricane shelters. The HLMP program operations are funded through an appropriation of $10 million from the Florida Hurricane Catastrophe Fund. The HLMP is set to expire on June 30, 2021.

Finally, the committee approved SB 7014 to save from repeal the public records exemption relating to insurer reporting of certain proprietary business and other information that is held by the OIR. The information includes reports submitted by insurers, such as the enterprise risk report, the own risk and solvency assessment (ORSA) summary report or substantially similar ORSA reports, the corporate governance annual disclosure (CGAD), and supporting documentation. This information will continue to be confidential and exempt from public disclosure if the bill becomes law.