Did Florida's litigation overhaul work? Data shows insurance premiums and claim denials have gone up

ATLANTA — The path that Gov. Brian Kemp is leading state legislators down to limit lawsuits has been trodden before in several states, including Florida.

It’s been two years since Florida Gov. Ron DeSantis signed into law his state’s version of what proponents call “tort reform,” arguing it would bring down insurance rates and help businesses.

Whether the overhaul has delivered as promised in the Sunshine State depends on who you ask.

Proponents, like DeSantis, say the state’s insurance market is stabilizing and note that 11 new insurance companies entered Florida’s market over the past two years. But critics point to data that shows insurance premiums and claim denials have risen.

DeSantis and others who advocated for the changes say they’re partly why the state’s insurance market is stabilizing after years of problems. Florida limited plaintiffs’ ability to recover their attorney fees and certain damages and expanded immunity for property owners, among other things.

“For the last four years, inflation spurred by the Biden Administration, active hurricane seasons and unchecked litigation in Florida made for an environment that caused turbulence in insurance markets and steep increases in premiums,” DeSantis said in February when announcing rate reductions.

Opponents of the Florida legislation say it hasn’t lowered insurance premiums and never will. They say those kinds of law changes, including what’s currently proposed in Georgia, only benefit insurers, who in turn deny more claims because it’s harder for anyone to hold them accountable.

“The losers are going to be the citizens of Georgia, the taxpayers of Georgia, the consumers of Georgia,” Florida plaintiff attorney Todd Michaels, president of the Florida Justice Association, said of Kemp’s proposal.

The Insurance Information Institute reported that average annual homeowners premiums in Florida climbed sharply after 2020. The organization said the growth in premiums is slowing.

Meanwhile, 61% of property insurance claims were denied in 2023-2024, up from 31% in the five-year period before the litigation legislation was passed, according to the FJA, citing data from the Florida Office of Insurance Regulation.

Florida is also currently investigating the findings in a 2022 report from a Connecticut-based consultant, which found that insurers hid billions of dollars in profits while seeking the state’s litigation overhaul.

‘The same tired old scare tactics.’

Insurers and corporate advocates have spent decades and millions of dollars persuading state lawmakers across the country to limit lawsuits filed by injured plaintiffs against those deemed responsible, Michaels said. He said proponents recycle falsehoods about litigation driving up insurance costs and forcing insurers out of the market.

“You get the same tired old scare tactics and there doesn’t seem to be any correlation between that and reality,” Michaels said. “At the end of the day, the loser is always the consumer.”

Bill Peterfriend, president-elect of the Florida Defense Lawyers Association, supports the state’s 2023 litigation overhaul, which happened when he served as the association’s secretary-treasurer. He said it has decreased the number of “frivolous or questionable” lawsuits being filed and helped prevent “predatory practices” by plaintiff attorneys.

“I think so far, it’s working as intended,” Peterfriend said. “We’re still relatively new into it to know whether we’ve seen the full effect.”

The Florida Office of Insurance Regulation reported that in 2022, before the state’s lawsuit rule changes went into effect, Florida accounted for 14.9% of closed insurance claims for personal and commercial residential property nationwide, but had 70.9% of the nation’s related litigation.

Peterfriend said the legislation is the main reason some property insurers are now entering Florida. He said it may take longer to determine whether the law changes help to reduce insurance premiums in the state.

Michaels disagrees. He said there’s little evidence that the legislation has done anything to improve the lives of everyday Floridians, who are still complaining about rising insurance premiums.

“Our 2023 tort reform was the largest transfer of money and rights and power from Florida citizens to the insurance industry that we’ve ever seen,” he said.

Florida didn’t make the latest annual list of “judicial hellholes” where defendants are deemed by the American Tort Reform Foundation to have a disadvantage in civil cases, last getting a mention in 2019. Georgia is currently fourth.

In July, the U.S. Chamber of Commerce Institute for Legal Reform reported which states had the most verdicts of $10 million or more in personal injury and wrongful death cases between 2013 and 2022, with Florida second behind California. Georgia was fifth.

There was a surge in lawsuits across Florida in anticipation of the state’s litigation rule changes, the Florida Bar reported in April 2023.

Holding insurers to task

Florida’s law changes made it impractical at best for policyholders to sue their insurers for failing to pay claims, Michaels said. He said it has rendered many insurance contracts unenforceable and means insurers can get away with lowballing policyholders or denying claims, all while reaping massive profits.

Insurance company profits are under the spotlight in Florida’s current legislative session, thanks to a report showing insurance companies moved billions of dollars to affiliates while claiming losses and lobbying for the state’s 2023 litigation overhaul.

“There are very few insurance crises that are actually anything other than manufactured crises,” Michaels said.

Atlanta litigators opposed to Kemp’s proposal say it doesn’t require insurers to pass on any cost savings to policyholders and won’t help business owners getting crushed by insurance premiums. Similar legislation in other states, including Florida, has routinely failed to impact premiums, they say.

Darren Penn, an Atlanta litigator on the plaintiffs’ side, said it is “crazy and ironic” to justify Kemp’s proposal based on high insurance premiums at a time when insurers in Georgia are being criticized for responding too slowly to Hurricane Helene-related claims despite making record profits.

“It’s basically a money grab and it’s a sham,” Penn said. “I feel like this whole effort is a little shortsighted. It’s pandering to the insurance companies and big business.”

Supporters of Kemp’s planned changes say they could help to lower insurance premiums, citing Georgia’s last round of significant lawsuit limitations in 2005. Brent Walker, general counsel for the Medical Association of Georgia, told state lawmakers during a March 5 hearing that medical liability insurers reduced premiums by 10% to 18% in the two years after that last litigation overhaul.

“There is a profound impact that can be had by these very reasonable reforms,” Walker said.

The Insurance Information Institute reported in February that Georgia has above-average costs for personal auto insurance. The institute, which has more than 50 insurance company members, supports Kemp’s proposal.

“With below-average income and above-average insurance expenditures, Georgia has become one of the least affordable states for personal auto insurance,” the institute said in news release. “Moreover, analysts predict that insurance rates will play an increasing role in the affordability of homeownership in the state over the next few years.”

Bankrate, which offers rate comparisons, reports that Georgia’s average full coverage car insurance rates are on par with the national average at $2,976 per year.

Michaels said there are countless factors driving up insurance costs for average citizens, including natural disasters and inflation. He said most people don’t understand that it’s not just insurance costs that are impacted by legislation like what Kemp has proposed, but also, that the consumer’s right to have their day in court is limited, so there’s no recourse if a person disagrees with their insurer.

“People generally don’t know that these issues are in the legislature at any given time. They don’t know that their rights are on the chopping block,” he said. “But when something inevitably happens and your pipe bursts or there’s a tornado or there’s a hurricane and you go to your insurance company to collect what you bargained for and paid for, they’re going to have 1,000 reasons not to pay the money that you’re legally entitled to.”