Florida’s infringement reform: Happy second birthday

March 24 will mark two years since Republican Florida Gov. Ron DeSantis signed the tort reform measure Enter the law. HB 837 is directly targeting the litigation epidemic, which is a factor leading to a sharp rise in homeowner insurance rates and the failure of some Florida insurance companies. One statistic is enough to tell the story: Although Florida only has eight percent of insurance claims for homeowners in the country, it was the location before the reform 76% Mark Wilson, president and CEO of the Florida Chamber of Commerce, said it was in the homeowner insurance lawsuit across the country.

The impact of HB 837 and other tort reform measures adopted by the Florida Legislature has been felt. The rash lawsuit has lowered double-digits, insurance rates are falling, and there are ten new companies entering the Florida market, encouraged by climate improvements for insurance buyers and providers. Facts and data are convincing – out-of-control lawsuits far out of the way 40%The insurance rate for the homeowner is down The statewide average is 5.6%, exceeding the ten New insurance companies are approved to enter the market. There are even plans IPO Florida Insurance Company’s slide. These developments represent life in the Florida insurance market two years ago support.

There is one kerfuffle Over the past week, the Florida Legislature has centered on the latest newspaper articles around the state’s insurance market. These articles and their origins are so misleading that we are forced to figure out the story.

this article From the dying embers of the homeowner’s insurance lawsuit, the craziest flame is Miami Herald “Secret research found that Florida insurance companies sent billions of dollars to branches while crying,” Related Tampa Bay Times“Insurers in Florida turn to investors while claiming losses.” The main purpose of the article is that the wholly-owned general agents (MGAs) of insurers make “billions of dollars” due to their relationships between the MGAs and the insurers they serve.

In the insurance context, MGA is an agent representing the insurance company to perform agreed functions. These may include purchasing business through relationships with retail agents, underwriting, policy issuance, collection and claim adjustments. In short, MGA performs multiple tasks on insurers in accordance with the MGA agreement and serves them by insurers as a percentage of premiums, just like an independent agent. Some insurance companies and most Florida insurance companies operate with a 100% owned MGA. The nearest white Paper A more detailed introduction to the operation and value of MGA in the Florida market.

Fifteen years ago there was a Florida insurance company fail Excessive feeding of MGA is allegedly associated. Florida insurance regulations, then Commissioner Kevin McCarty action Oppose Florida insurance companies, which transfer excessive capital to their affiliated MGAs. Today’s Florida insurance market is much stronger than the 2010 market, as are insurance regulations and risk management, with Florida-focused companies being scarce and having higher leverage than the early days.

These articles suggest that there is something sinister or secret about MGA relationships and the true financial performance of Florida insurance companies. The source of the article reported a comment on the period 2017-2019, during which a strong hurricane hit Florida. To be sure, the statutory insurance documents indicate that [direct incurred] The loss rate for homeowners insurance in Florida was 93.0% in 2017 and 103.3% in 2018. This means the merger ratio is about 123% – 133%, with an estimated cost of 30 percentage points. This is a very unprofitable and unsustainable result. =

this Miami Pioneer “This year’s regulators require lawmakers to define “fair and reasonable” to include the actual cost of the services provided, the overall health of the insurer and how much dividends they paid. Regulators demanded that in 2023, but lawmakers rejected it, claiming it would “disturb the Apple carts in Florida’s insurance industry.”

We will continue to watch discussions and debates about the Florida insurance market.

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