by Jason Levine, Vice-President of Harry Levine Insurance and EGAC Chairman

Living and working in west Orange County provides a front-row seat to the complicated nature of municipal growth.  One of the world’s most desirable destinations to live and operate a business, West Orange is brimming with both opportunity and challenge.  The West Orange Chamber of Commerce has been a pillar of the local community for the last half-century.  The organization is thrilled to be at the cutting edge of this great community’s direction as it continues to redefine and build itself.

Robust growth brings a host of challenges from traffic to hydrilla to the cost of living.  The Chamber is excited to focus on both local and state initiatives aimed at making Central Florida a premier spot to call home.  As such, the Chamber’s Economic and Governmental Advocacy Committee hosted a legislative luncheon in January.  The event was attended by Florida Senator Geraldine Thompson, Florida Representative LaVon Davis Bracy, and aid to Florida Representative Douglas Bankson.  The conversation was robust, and topics ranged from changes at polling places to the success and desired expansion of programs such as the Parramore Kidz Zone to West Orange. 

The Chamber is also excited to continue its relationship with Friends of Lake Apopka, a conservation organization dedicated to the rehabilitation and maintenance of one of the most important and influential waterways in the State of Florida.  Increased population leads to increased on-water recreation.  This activity highlights the importance of such things as designating conservation areas through land purchases and responsible boat ownership, including rinsing watercraft after use to cut down on the spread of invasive aquatic plant life in the region.

The cost of living is always a hot topic in the Orlando metro.  Most people think of affordable housing and immediately jump to rent costs.  The truth is that there has been a major affordable housing crisis brewing across Florida for nearly a decade; the cost of Homeowner Insurance.  The Florida Legislature has held multiple special sessions over the past year aimed at making Homeowner Insurance affordable.  It’s easy to view insurance carriers as profit centers, but in actuality, the domestic (Florida-domiciled) property insurance industry has lost billions of dollars since 2016, without turning a profit in any one single year since then. The reason is not the weather. Simply put, about 4 in 5 Homeowner Insurance lawsuits in the United States of America are in Florida courts.  Most of them are opportunistic cases in which homeowners are ultimately being preyed upon by unscrupulous contractors, mitigation specialists, and law firms.  They aren’t claims gone sideways.  They are claims in which the first notice of loss to the insurer was via lawsuit.  These are pure exploitations of the system that have driven up costs for every homeowner in the state.  Many counties are now seeing rate increases of 100% or more.  Enter Senate Bill 2A.

During the December 2022 special session, the Florida Legislature passed Senate Bill 2A.  The bill does many things, including bringing dearly needed reform to the state’s self-proclaimed inferior-by-design insurer of last resort, Citizens Property Insurance Corp.  Designed to house distressed properties uninsurable elsewhere, the program has become a dumping ground for otherwise excellent properties as the open market recoils from the never-ending litigation that is responsible for 6+ insurer failures in the last year alone.  Most importantly, though, 2A has four noteworthy attributes that every homeowner should be excited about:

1- The repeal of one-way attorney fees unique to Property Insurance.  Despite precedent in the majority of U.S. States, Florida had retained a well-intended but deeply dysfunctional consumer protection in which the holder of a policy/plaintiff had zero responsibility for an insurer/defendant’s legal fees even if they lost.  In fact, if they won a single penny more than an insurer had offered, the insurer was now responsible for both parties’ fees.  Exploitative litigators knew this, and this is why they led with lawsuits versus the usual claims process.  This is now fully repealed, as well as meaningful reform to attorney fee multipliers that were commonly applied.  Should an insurer formerly be made to pay a plaintiff’s legal fees they were also often made to pay them inclusive of a multiple as much as 10x.  That is how insurers in Florida were made to fail.  Someone might win a $25,000 indemnity, but the legal fees could be as high as $750,000 in that same case given fee multipliers.  A simple shingle roof on a modest home became a $1 million expense to the insurance company.  Everyone has heard the phrase, “You don’t pay unless we win,” which further solidifies how the repeal of the one-way fee doctrine will do nothing to hurt the consumer. 

2 – At the core of rising costs was the Assignment of Benefits, which is now forbidden in Property Insurance.  You see, the situation with one-way attorney fees warped itself into such a lucrative cottage industry because the abusive contractors/mitigation specialists/litigators were themselves usurping status as the holder of a policy.  The unscrupulous actor would promise to handle everything from soup to nuts for a homeowner if they’d sign on the dotted line.  The thing was, the dotted line was an Assignment of Benefits clause.  The clause transferred all contractual rights of the policyholder to a third party; the bad actor.  Now, the homeowner was cut out of their own claim.  That’s right.  Their own insurer couldn’t even legally update them on it.  It wasn’t theirs anymore.  That claim, the policy rights, and any payout now belonged solely to the assigned party.  This is finally gone, and gone with it is the incentive to lead via lawsuit! 

3 – There is now a higher threshold for Bad Faith claims. Previously, there was a very low threshold for filing what is called a Bad Faith claim against an insurer.  Essentially, Bad Faith opens the door for punitive damages, which can award payouts at levels well above insurance policy limits.  Imagine an insurance company being made to pay $10,000,000 on a mere $100,000 policy by a jury.  Remember, abusive litigation exploited this possibility and bankrupted an industry on it, causing insurance premiums to skyrocket and coverage to become scarce.  Simply put, now there must be a judgment of breach of contract in order to open the door to Bad Faith.  If a company does act in Bad Faith, it can still be held fully accountable.  It is just no longer a “gotcha” game where costly fear-driven settlements are sought after day in and day out. 

4 – Claims handling procedural changes that will absolutely help consumers have been made.  In short, the timeline to pay or deny a claim (formerly 90 days, now 60 days), review and acknowledge a claim notice (formerly 14 days, now 7 days), and conduct physical inspections of a loss (former 45 days, now 30 days) have been moved up in an effort to improve homeowner experience.  It’s also noteworthy to cite that if an insurer fails/goes under there is now a 45-day period during which coverage can be replaced or transitioned versus the previous 30-day standard.  This gives insurance agents and state regulators more time to come up with acceptable solutions for affected policyholders. 

Ultimately, it will probably take 12-18 months for these reforms to start being felt in the form of a stabilizing property insurance industry and stabilizing insurance premiums.  Premiums will likely continue to rise in 2023 largely due to global reinsurance costs.  Where there was a plethora of fresh capital 5 years ago, there is next to none at present.  The good news is that there is light at the end of the tunnel, finally. 

Operating a business and living in West Orange County is exciting.  The experience of living in a place that continues to grow so robustly and is coming into its own makes every resident, worker, and entrepreneur part of something special.  Remember, just a half-century ago most of Orange County was citrus groves.  The theme park industry was just cementing its stronghold on the region.  Orlando was barely on the map.  Today, we are faced with profound challenges including skilled labor shortages, supply shortages amidst increasing demand, the capacity of our critical infrastructures, and more.  These challenges are as exciting as they are significant.  For isn’t it fabulous to be a part of this growth?  Isn’t it wonderful to be able to participate in our community’s coming of age leaving our mark on this great place for generations to come?