The state legislature is holding a special session over rising insurance rates as sky-rocketing costs are hurting homeowners across Florida.
Harry Appel, sued insurance company: “I was in shock because I couldn’t believe that there was nothing left of a concrete house.”
Harry and Jennifer Appel’s home and their bed and breakfast were completely destroyed when Hurricane Irma hit Big Pine Key.
Jennifer Appel, sued insurance company: “I knew we had insurance, and I thought we had good policies.”
They had flood and windstorm, their flood carrier paid the full claim right away. Windstorm…
Jennifer Appel: “They just ghosted us.”
The Appels spent months emailing and calling trying to get their carrier to look at their claim. They had no choice but to file a lawsuit.
Jennifer Appel: “You’re desperate, right? You are just, you don’t have a place to live. You don’t — you know — your business is closed for two years, your house is gone, and they’re just jerking around.”
And they are not alone. Litigation over insurance payments is big business in Florida.
The Office of Insurance Regulation says while we account for only 8% of homeowners claims in the nation, Florida has 76% of the property insurance lawsuits.
Dr. Charles Nyce, FSU: “There is a huge cost of fraud in Florida right now in property insurance.”
Insurance expert, Dr. Charles Nyce of Florida State University says the cost of lawsuits and fraud for insurance carriers is not sustainable.
Dr. Charles Nyce: “We’ve had an extremely fragile property insurance market, and now what we’re seeing is that these companies are going bankrupt. We’ve lost four companies so far this year, in 2022. That is on top of the eight or nine companies now that have said they’re going to stop writing new policies in the state of Florida.”
And suing insurance companies is big business. State-owned citizens has spent nearly $406 million on legal fees since Hurricane Irma in 2017.
Other insurers say their numbers are about the same, which is why rates are going up.
Stacey Giulianti from Florida Peninsula: “Eighty percent of it is the cost of litigation that, in the last eight years, insurance companies in the state of Florida have paid out $12 billion to the trial lawyers. None of that money went to the consumers.”
Stacey Giulianti is the chief legal officer at Florida Peninsula Insurance Company. He says some lawsuits are warranted but many are just outright fraud.
Stacey Giulianti: “The problem is when a public adjuster, or an attorney, or someone called in a claim a year or two years, three years after the incident, and there’s all this damage, and now we have no way, or a much more difficult way, of trying to prove whether it happened or not.”
And Giulianti says, under Florida law, attorneys are guaranteed a paycheck because the insurance company has to pay their bill as long as they recover something on behalf of their clients.
Stacey Giulianti: “On one case, it may have been worth $20,000 or $30,000. The attorney’s fees could be over $1,000,000.”
Citizens fought back, it actually sued a Miami law firm for racketeering and won. The firm agreed to pay Citizens a million dollars in a settlement.
The company said the fraud scheme, if left unchecked, could have cost policyholders $16 million a year and that, for the insurance companies, is the bottom line.
Stacey Giulianti: “The amount of costs that are going out, especially in terms of this whole litigation explosion, which is really what’s causing all the problems, is the same economically: a Cat 3 hurricane hitting the state every year.”
Insurers want the legislature to throw out the law that guarantees lawyers get paid even if they lose.
Stacey Giulianti: “It’s been widely abused, and until that changes, the cost is going to continue to rise.”
But Dr. Nyce says that’s not likely to happen.
Dr. Charles Nyce: “You know, consumers have to have legal recourse, and it should not be something that’s prohibitively expensive for those consumers to kind of pursue.”
As for the Appels, it took two engineers, several adjusters and an attorney to get their insurance to pay.
Harry Appel: “So it ends up costing them more money. If they would have just paid us in the beginning for a complete disaster, we would have it, wouldn’t have gotten to that point.”
The legislature plans to tackle the insurance issues during the week, along with roofing problems. Currently, there is legislation that would say that if your roof is under 15 years old, an insurance company would not be able to deny you if the roof is in decent shape, and if your roof is over 15 years old, you are still able to get coverage if an inspector finds there are still five good years of life, then you will still be able to be insured.
The Senate has passed that along to a committee, and the House is set to gavel it into their meeting Tuesday morning.
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