Six property insurers have failed in Florida this year, and many more are on the verge of failure in the wake of Hurricane Ian.
“Is it possible that more Florida companies will close because of Hurricane Ian? Yes,” said Mark Friedlander, a spokesman for the Insurance Information Institute, a nonpartisan research group. “The reason is litigation, not actual claims that are being paid.”
Ian dealt a major blow to Florida’s already crippled property insurance market. The Category 4 storm is expected to be one of the costliest in U.S. history and is expected to force more private insurance companies out of business in the state.
Friedlander said Ian was likely to become the second costliest hurricane to hit the United States on record — costing insurance companies more than $60 billion.
“Here’s the breakdown of the $60 billion in losses: We expect $1 billion to $20 billion, or about a third of the total loss, to be related to litigation costs,” Friedlander said. That’s a problem because several Ten insurance companies are closing in the state.
Last year, Florida filed a record 116,000 lawsuits related to property claims. Friedlander said that number was expected to reach 130,000 this year, but that was before Ian. “The bottom line right now is that you could have thousands of lawsuits for claims related to Hurricane Ian.”
Florida lawmakers will work to stabilize the state’s property insurance market when they meet in mid-December.
“Until the statute is changed and stricter regulations are enacted, we will continue to see high levels of litigation and claim fraud in the state.”
Friedlander said the insurance industry is demanding an end to “one-way attorney fees” that companies must pay if they lose a claims dispute.
Lawmakers could do so when they meet in a special legislative session on Dec. 12. 12 – 16.
But any policy changes are not expected to depress rates for at least a few years. “There’s already a lot of litigation going on,” Friedlander said. “Sometimes litigation can take years to wind up in the court system. So there’s no immediate change. In fact, we expect homeowners’ rates to continue to increase over the coming year.”
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