Originally published by The Capitalist | Read Full Study
By Jordan Kirkland
The James Madison Institute (JMI) released a new report on Monday, analyzing the state’s insurance climate and offering solutions ahead of the 2022 Legislative Session.
In a new report entitled “Battening Down: Policy Reforms to Avoid a Florida Insurance Meltdown“, JMI examines the rise in Florida’s insurance costs while also detailing several recommendations on how to curtail the growing trend. The report, written by Christian Cámara, outlines how insurance rate increases have stemmed from behavior by stakeholders exploiting vulnerabilities in the law, highlighting meaningful steps the Florida Legislature has taken in recent years to combat the abuse, and offering solution to stabilize the insurance market and promote more investment, competition, and lower rates for Florida consumers.
“Florida’s pro-growth business environment, as well as its climate, and low taxes have propelled the state to new heights, but growth invariably brings growing pains. All of this combined with almost two decades of Florida’s property insurance market being plagued by excessive litigation and fraud has led to massive increases in insurance rate costs. The Legislature has taken great steps to curtail this rise, but more must be done to build on those reforms and shore up the market in the short-term to mitigate losses, slow the bleeding, and avoid additional insolvencies, said Sal Nuzzo, Vice President of Policy for JMI.
JMI noted in the report that Florida accounts for only eight percent of insurance claims, but 76 percent of all insurance litigation nationwide. Additionally, the analysis found that 8 percent of the $15 billion in insurance payouts since 2013 went to Florida policyholders and 92 percent to lawyers and other legal expenses.
Cámara says lawmakers must tackle Florida’s property and auto insurance problems during the upcoming 60-day session.
“Despite the efforts of policymakers over the past several years, Florida’s property insurance market is quickly nearing a meltdown that will hurt millions of residents. Lawmakers deserve credit for addressing frivolous litigation and other abuses that have plagued the state’s insurance system and driven up rates on consumers, Cámara added. However, delays have allowed the situation to degrade further, to a place where insurers are reducing coverage, withdrawing from Florida, and even going insolvent. The Legislature must take meaningful steps this session to shore-up the market and buy enough time for their recent reforms to begin having an impact. Florida’s insurance system cannot afford the cost of additional delays.”