Episode 43 – Future of Florida Insurance Litigation

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The December 2022 property insurance market reforms passed by the Florida Legislature are making a big difference already, with fewer and less severe non-hurricane claims and fewer daily lawsuits, according to a major Florida insurance company.

Former Florida Deputy Insurance Commissioner Lisa Miller talks with Stacey Giulianti of Florida Peninsula Insurance Company on how the reforms have leveled the playing field in insurance litigation and together with innovative industry practices, will bring positive results for consumers, carriers, and their reinsurance companies.

Stacey Giulianti, Co-Founder and Chief Legal Officer, Florida Peninsula Insurance Company (Photography by: ©Michael B. Lloyd)

Show Notes

Stacey Giulianti is a Co-Founder and Chief Legal Officer at Florida Peninsula Insurance Company, a Florida-based homeowners property insurance carrier.  Together with its sister company Edison Insurance, they have a combined 180,000 polices in Florida.  The 2022 reforms were designed to stem high insurance and reinsurance rates, carrier insolvencies, inflated claims, an overly-competitive residual market, and especially excessive litigation.  According to the Florida Office of Insurance Regulation, in 2021 Florida had 7% of the nation’s homeowners insurance claims yet 76% of the nation’s homeowners insurance lawsuits.  

Giulianti, a former plaintiff attorney before representing insurance companies, said the reforms, specifically the elimination of one-way attorney fees, will “level the playing field” between plaintiff and defense attorneys in disputed claims.  “The problem was that it really only gave the incentive to the plaintiff lawyers, to people like me back in the day, to file that suit, no matter what, it doesn’t matter about mediating, it doesn’t matter about coming together and trying to find common ground, it was like, ‘Who cares, I am going to get attorney fees one way or the other,’” he said.

He disagrees with critics who argued that eliminating the one-way attorney fees would create a barrier for consumers looking to find an attorney to sue an insurance company on their behalf.  He said courts at the end of a case can still award attorney fees if justified and tax costs, such as the hiring of an expert witness, something he said is actually needed in less than 10% of disputes.  “That’s a little bit of nonsense from plaintiff lawyers trying to say that you need an expert in every case,” said Giulianti, who is also an accredited claims adjuster.  “You don’t, because most of these cases, we already know what the damage is.   And it’s really a scope and pricing differential.  Do you repair it, do you replace it, is it $5,000 to repair that, or is it $50,000 to repair that?”  Giulianti said that hiring an expert would still be less expensive to the consumer than paying 30% to 40% of their court award in attorney fees.

Innovative Options: The reforms allow insurance companies to offer mandatory binding arbitration in their policies with a resulting premium discount.  “Ultimately what we want is a quick, easy, and inexpensive way to get an answer.  What we are really looking for is for someone to tell us either way, what the answer is to the dispute.  You get the answer relatively fast and it’s resolved, versus court cases that can last for years.”  Giulianti said the vast majority of claims are undisputed and simply get paid by insurance companies.

Citizens Property Insurance Corporation, the state-backed residual market carrier in Florida, recently received regulatory approval to handle contested claims outside of court through the state’s Division of Administrative Hearings.   These are for claims that were either denied because of a determination of no coverage or contract limitations regarding the coverage amount.  “I think those types of judges from the administrative side are every bit as smart as anybody else who’s going to be sitting on the bench and making those decisions,” said Giulianti, who is a member of both the Florida and Maine Bars.

Florida Peninsula Insurance, along with some other carriers, have created “Customer Experience Departments,” in an effort to avoid disputes in the first place by making the claim process “as smooth as possible,” he said.  During Hurricanes Ian and Nicole, Giulianti said he personally handled 300-400 First Notice of Loss calls and an additional 200-300 follow-up calls.  “We have to do a better job, all of us as an industry, of walking people through the process and being transparent.”  His suggestion: treat the customer as you would “the friend of the company’s CEO.”

Reinsurance: Host Miller noted that although the recent legislative reforms included some state-provided assistance for insurance carriers needing reinsurance, it will not be enough, given the dwindling availability and affordability of reinsurance.  She asked Giulianti what a reinsurer should look at in an insurance company that it’s considering offering reinsurance coverage to.  “Look at the company’s operations in regards to what data they collect and how they use it, especially in underwriting.  Some companies do better than others in using data to better protect their capital,” he replied.  “Carriers are going to remember who in the reinsurance side stuck with them during this time when they weren’t sure, because I’m telling you, it’s going to get much better.  I saw it with the sinkholes issue.  I was a plaintiff’s lawyer.  I know how people think.”

Expanded Elimination of One-Way Attorney Fees: Host Miller and Giulianti also discussed Governor Ron DeSantis’ recent proposal to expand the elimination of one-way attorney fees to disputes in all insurance lines, including automobile insurance, to address what the Governor called a “cottage industry of litigation.”  Giulianti applauded the move.  “So we’re going to modernize it and not have this old ‘Hey, if you get $1 more than what you said you were going to get, you get a million dollars in attorney fees,’ which is, by the way, sometimes what happens.  You have a $10,000 case, somebody gets an extra dollar or $1,000 more than they thought they were going to get, and they get 500,000 to a million dollars in attorney fees.  That’s not hyperbole, that’s actually what’s going on,” Giulianti said.  Eliminating the contingency fee multiplier that judges can award to sometimes double the attorney fees and reforming bad faith law – all part of the Governor’s proposal – is also very welcome he said.

“2023 will be a bit bumpy as policies are changed over to reflect the new language in the recent legislative reforms, but for those who stick it out, 2024 is going to be a banner year,” predicted Giulianti.

Links and Resources Mentioned in this Episode

Barry Gilway: Florida’s New Law is a Profound Change (The Florida Insurance Roundup podcast of December 29, 2022)

Florida Peninsula Insurance Company

Florida One-Way Attorney Fee Statute 627.428 

Key Provisions of 2022 Insurance Consumer Protections & Market Reforms (SB 2-D & SB 2-A)

Property Insurance Stability Report (Florida Office of Insurance Regulation, January 2023)

Florida Citizens’ Endorsement Now in Effect: Disputes to be Heard by Admin Judges (Insurance Journal, February 6, 2023)

Governor Ron DeSantis Announces Comprehensive Lawsuit Reforms to Protect Floridians from Predatory Billboard Attorneys (Governor’s Office Press Release, February 14, 2023)

2022 Litigation Reform & Consumer Protections (Lisa Miller & Associates)

Florida Market ‘Plagued’ by Attorney Fee-Shifting (LMA Newsletter of December 5, 2022)

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The Florida Insurance Roundup from Lisa Miller & Associates, brings you the latest developments in Property & Casualty, Healthcare, Workers’ Compensation, and Surplus Lines insurance from around the Sunshine State.  Based in the state capital of Tallahassee, Lisa Miller & Associates provides its clients with focused, intelligent, and cost conscious solutions to their business development, government consulting, and public relations needs.  On the web at www.LisaMillerAssociates.com or call 850-222-1041.  Your questions, comments, and suggestions are welcome!  Date of Recording 2/14/2023. Email via [email protected]   Composer: www.TeleDirections.com  © Copyright 2017-2023 Lisa Miller & Associates, All Rights Reserved