A bill under consideration in the Florida Legislature would award attorney fees to the prevailing party in insurance litigation, reversing aspects of recent tort reform and raising concerns among industry groups about increased litigation costs.
Under House Bill 1551, policyholders would be considered the prevailing party if they secure a judgment exceeding the insurer’s highest good faith settlement offer. If the judgment falls below that offer, the insurer would be deemed the prevailing party.
The bill defines a judgment to include reasonable attorney fees, taxable costs, and prejudgment interest incurred by the insured at the time of the settlement offer. Settlement offers revoked before five business days pass would be considered made in bad faith.
The Personal Insurance Federation of Florida (PIFF) has raised concerns that the bill could lead to a rise in litigation and increased costs for insurers and policyholders.
PIFF president Michael Carlson (pictured above) said the proposed legislation would force defendants to estimate plaintiffs’ attorney fees to ensure those costs do not push judgments above final settlement offers.
He warned this could result in more plaintiff judgments exceeding insurers' final offers, entitling plaintiffs to recover attorney fees.
Florida repealed its previous one-way attorney fee law in 2023 as part of broader reforms that have been credited with stabilizing the property and auto insurance markets.
He cautioned that if the bill becomes law, insurers will have to reassess risk pricing in Florida, and reinsurers are likely to follow suit. He added that these changes would ultimately impact policyholders through higher premiums, calling the bill a reversal of recent reforms.
Insurance litigation costs in the United States have soared in recent years, influenced by factors such as social inflation and evolving legal landscapes.
In fact, the US commercial casualty insurance sector experienced substantial losses, growing at an average annual rate of 11% over the last five years, culminating in $143 billion in 2023.
Social inflation, characterized by rising litigation costs and larger jury awards, has significantly impacted liability claims. According to the Swiss Re Institute, social inflation increased liability claims in the US by 57% over the past decade, reaching an annual peak of 7% in 2023.
In recent years, courts have seen the expansion of legal theories such as public nuisance, which have been applied in cases involving environmental and public health issues. This trend has broadened the scope of liability for companies.
Supporters of House Bill 1551 argue it strikes a balanced approach by allowing policyholders to recover attorney fees if they prevail against insurers.
The bill’s sponsor, Rep. Hillary Cassel, a Republican representing District 101, said the legislation is intended to discourage wrongful claim denials while preventing insurers from incurring excessive litigation costs when making good faith settlement offers.
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