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High litigation fees are public enemy No. 1 in the complex marketplace, say
multiple industry leaders and officials.
by: Louis Llovio Commercial Real Estate Editor
Fees lawyers are allowed to collect when filing insurance claims are helping push an already
precarious property insurance system in Florida to the brink, causing rates to skyrocket and leaving
the state one big storm away from total catastrophe.
That’s the opinion of insurance agents, some state officials, homeowner associations and lobbyists
who want the state legislature to act — now. They say if the state can cap fees or implement a fee
schedule, it will begin to bring back carriers who have left, taking pressure off of the state’s insurance
company, Citizens Property Insurance Corp., helping bring down rates and, most importantly,
strengthening the entire system.
The problem with rising rates and the fear the system is teetering on the brink is not new nor is it
solely the result of high attorney fees. Neither are the concerns about the health and stability of
Citizens, created in 2002 as a last resort for property owners unable to secure coverage from private
companies, but is too often the only choice or one of the few choices.
(Courtesy of Florida Association of Insurance Agents)
Critics believe these high fees awarded to attorneys are a big reason many property insurance
carriers are reluctant to sell policies in the state. It is also one of the big reasons why the carriers that
do stay have to raise rates. Officials with the Florida Justice Association, formerly the Academy of
Florida Trial Lawyers, declined to comment for this story.
What’s happening is that left with fewer options, homeowners turn to Citizens, a precarious situation.
According to Citizens, it is adding about 5,000 new polices a week and had 759,305 policies in effect
as of Dec. 31. Citizens did hit 1.4 million policies in 2012, but the number of policies slowly fell in the
years since, reaching 421,332 in 2019.
The concern is with Citizens being overburdened, a major hurricane could cost the state billions, with
rates on most insurance policies in the state spiking to cover claims and insurance carriers without
enough reserves collapsing.
Addressing the fees will not solve the entire problem, but critics say it would go a long way toward
improving the situation.
“There’s no rhyme or reason for it,” says Matthew Mercier, national practice leader for the community
association division of CBIZ Insurance Services in Sarasota. “I think if we can address that, that will
attract carriers to come into the marketplace because they will have more certainty about the litigious
nature of our state.”
So just how bad is the problem?
According to the Florida Association of Insurance Agents, between 2013 and 2020, insurance carriers
in Florida paid out $15 billion in claims costs. Of that, only 8% was paid to consumers. Attorneys got
This, naturally, translates into higher costs for home and property owners. Florida property owners,
the association says, paid $651 more in rates in 2020 than property owners in Georgia and Alabama.
And it’s going to get worse. Insurance carriers are asking for and getting massive rate increases in
order to stay competitive in the state and to be able to cover claims. That too is creating problems for
Citizens — which is only allowed to raise its rates 11%.
The association says the difference between what Florida property owners pay and what property
owners in Georgia and Alabama pay is going to jump to $866 this year.
“Years of fraud and frivolous litigation pushed the Florida homeowner’s insurance market into crisis,”
says Kyle Ulrich, FAIA’s president and CEO.
Ulrich points to the legislature adjusting the state’s one-way attorney’s fees statute to determine fees
during last year’s session. It’s a start, he says, “but everyone involved knew that it could take years
for those reforms to stabilize premiums for consumers.”
Mercier calls the one-way statute a “loser-pays system that only works in one direction, from the
insurer to the insured. If the insurer succeeds, it is not entitled to recover attorney fees from the
Agents and lobbyists aren’t the only ones concerned about the state of
property insurance and how attorney fees are affecting the market.
In December, when Citizens’ board approved the rate hike, the
organization reported the state’s property insurance market was facing
major challenges. It said the 52 private companies writing 79% of property
insurance policies in the state lost $847 million through the third quarter of

  1. While that was happening, Florida led the nation in litigation.
    According to Citizens, Florida accounted for 8% of policies in 2019, yet the
    state accounts for 76% of all litigation nationwide. “We have a litigation
    system that is truly, absolutely out of control,” Citizens President, CEO and
    Executive Director Barry Gilway says.
    Travis Moore is a St. Petersburg
    lobbyist who represents community
    and condominium associations for
    Moore Relations. (Courtesy image)
    Sarasota homebuilder and the chair of Citizens’ board Carlos Beruff went a little further. He says in
    the report that growing premiums and high litigation rates make it nearly impossible for Citizens to
    “We need to take a look at all our options to stop this
    unsustainable trajectory,” says Beruff, CEO and founder of
    Medallion Homes. “Any solution is going to require legislative
    action to provide Citizens with the tools and flexibility to return
    to its role as an insurer of last resort.”
    There is legislation proposed this session that will allow
    surplus line carriers into the state.
    Sarasota developer and the chair of
    Citizens Property Insurance Corp’s
    board Carlos Beruff. (File photo)
    These lines aren’t controlled by the Florida Office of Insurance Regulation and often don’t use
    standard state-mandated forms. But many of the companies are well capitalized and those looking for
    substantial change say if guardrails are in place to ensure the best of these carriers come in, it would
    Travis Moore is a St. Petersburg lobbyist who represents community and condominium associations.
    He says the rate increases are hitting his clients hard because the cost of insurance is the highest
    budget item for any association. So, as rates rise, so do residents’ dues.
    This is coupled with new regulations coming down the pike as a result of the Surfside condo collapse.
    “You start adding all that up, and things that are $500 a month quickly go to six, seven, eight, $900 a
    month,” says Moore, with Moore Relations. “For people, that’s hard to come by. At some point we’re
    going to get to a place, really quickly, where insurance premiums are more than your mortgage.”