Florida Property Insurance Crisis No Longer Caused by Claim Litigation?

Posted by Phillip Warren | Aug 09, 2023 | 0 Comments

When passing the most sweeping insurance reform bills in history—Senate Bill ("SB") 76 in 2021 and SB 2A in 2022 which severely limited policyholders' rights—insurance companies and Florida legislators blamed the need for such harsh regulation on “out of control” claim litigation, i.e., lawsuits filed against insurance companies that fail to properly pay claims. Despite this hoopla, when Florida's Department of Financial Services (DFS) recently issued its official 2022 Annual Report, claim litigation didn't even make it on the top seven list of reasons for these extreme reform laws.  This glaring omission has only confirmed what advocates for policyholders, attorneys like those at Taylor, Warren, Weidner & Hancock who fight for homeowners' rights, already knew: internal mismanagement and other factors—not claim litigation—created the current insurance crisis.   

insurance claim denial

The Seven Causes of the Insurance Crisis per Florida's Department of Financial Services

Rather than claim litigation, Florida's DFS listed seven primary causes of the current property insurance crisis (companies collapsing and skyrocketing premiums) in Florida:

  • Inadequate capitalization or asset deterioration
  • Improper management
  • Insufficient claim reserves
  • Rapid premium growth
  • Inappropriate transactions with affiliates or subsidiaries
  • Inadequate premium rates
  • Natural disasters or catastrophic losses
  • Change in business conditions
  • Reinsurance market issues

Claim Litigation Was Not Listed as a Cause

Claim litigation isn't even mentioned directly in the DFS's Report. Rather, the Report suggests internal insurance company mismanagement, not plaintiff's lawyers, are more to blame for the current state of property insurance prices and challenges in Florida, a crisis that resulted in the collapse of St. Johns, Avatar Property & Casualty, United Property and Casualty, FedNat, Weston Property & Casualty, and Southern Fidelity.  In the post-mortem reports for these failed companies, which must state the reasons for their demise, several do not list claims litigation at all.  Others point to poor operational results, limited access to additional capital, and costly weather events.  Read more at

This apparent change in position—from blaming the insurance crisis on litigation to get the severe reform laws passed in 2021 and 2022 to, now, citing poor internal management by insurance companies—has advocates for policyholders aggravated and rightfully concerned for homeowners who will have far less ability under the new laws to hold insurance companies accountable if they fail to pay claims timely and in full. 

About the Author

Phillip Warren

Phillip devotes the same honor, courage, and commitment to his clients as he did in the USMC.


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