Demotech Summarizes Major Legislative Reforms Impacting Florida Residential Property

Since 1996, Demotech, Inc. has reviewed and rated insurers focused on Florida’s residential property insurance marketplace. We will continue to do so. Having stepped up when other rating agencies stepped away, Demotech has witnessed the financial impact of the disparate, disproportionate levels of litigation identified and quantified by the State of Florida Office of Insurance Regulation. Fortunately, under the leadership of Governor Ron DeSantis, Senate President Kathleen Passidomo, and House Speaker Paul Renner, calendar year 2022 was a year to remember for the policyholders who bear the availability and affordability burdens caused by the disparate level of litigation that once defined Florida’s residential property insurance marketplace.

Given the upcoming 2023 catastrophe reinsurance renewals of residential property insurers focused on Florida, the reforms enacted through the tenacity and determination of the Governor and the legislative leadership in conjunction with additional considerations offered for the upcoming 2023 session necessitates objective education on the legislative changes that have been made to redefine the Florida residential property insurance marketplace.

In an effort to provide an overview of the major changes that have been enacted, Joseph Petrelli, President and Co-founder, Demotech, summarized the major provisions of Florida law that the legislature has changed since Hurricane Irma struck in 2017: 

  • A two-year time limit on filing property insurance claims was established.
  • In 2021, the legislature mandated that any claim made under a property insurance policy issued or renewed after July 1, 2021, could not be litigated until the plaintiff attorney had filed a Notice of Intent to File Litigation listing the amount in dispute.  The filing of the Notice could be followed by mandatory mediation if requested by either party to the dispute.  The new law prohibited the payment of plaintiff’s attorney fees unless the plaintiff recovered more than 50% of the difference between the plaintiff’s demand and the insurance company’s offer of settlement.
  • In May 2022, the legislature prohibited the holder of an Assignment of Benefit (AOB) from recovering attorney fees.
  • In May 2022, the legislature changed the Florida Building Code to eliminate the requirements that a full roof replacement was required whenever insured damage exceeded 25% of a roof’s surface.  This change should increase the number of roofs that are repaired rather than replaced after Hurricanes Ian and Nicole.
  • Also, in May 2022, the change to bad faith claims and to the multiplier should remove two of the negotiating tactics used by plaintiff attorneys to present inflated settlement demands and serve to mitigate adverse results after a trial.
  • In December 2022, the legislature eliminated statutory one-way attorney’s fee shifting in residential as well as commercial property lawsuits.
  • In December 2022, the deadline for reporting claims or reopening a claim was further reduced from two years to one year and the time to report a supplemental claim was reduced from three years after date of loss to 18 months after date of loss.
  • Section 627.70152 addressing attorney fees has been deleted although pre-suit notice of loss and resolution has been left in place.
  • Assignments of benefits to those providing services are prohibited on all property insurance policies issued or renewed after December 31, 2022.
  • Breach of contract is required for a bad faith claim against an insurer.
  • A policyholder may secure mandatory binding arbitration and receive an actuarially sound discount for selecting such an endorsement.

On February 8, 2023, an intermediate appellate court reversed a trial court order related to compelling discovery of work product materials from an insurer’s claim file, in Family Security Ins. Co. v. Stein, et. al. No. 4D22-1468 (Fla.4th DCA Feb. 8, 2023). By doing so, the appellate court made it clear that “an insurer’s claim file constitutes work product and is protected from discovery prior to a determination of coverage.”

On February 14, 2023, Governor Ron DeSantis, Senate President Kathleen Passidomo, and House Speaker Paul Renner announced their intent to eliminate one-way attorney fees and fee multipliers for all lines of insurance during the upcoming session commencing in March 2023. 

In summary, catastrophe reinsurance coverage associated with policies covered by the June 1 and July 1, 2023, renewals will reflect the cumulative reforms enacted to date as well as some component of any additional reforms enacted in the upcoming session. As such, the rules of engagement in Florida’s residential property insurance marketplace have been revised.

The reinsurers offering coverage at June 1 or July 1 renewal will benefit from these major reforms passed by the legislature. It is estimated that by September, when the height of hurricane season hits, approximately two-thirds of the residential property insurance policies in Florida will have been issued after January 1, 2023; i.e., be subject to all recent reforms. 

Petrelli concludes, “The legislative reforms of the dual special sessions of 2022 are in place, as is the cumulative impact of previous legislative reforms. The Family Security decision stabilizes claims procedures, practices, and protocols. Governor DeSantis, Senate President Kathleen Passidomo, and House Speaker Paul Renner have accumulated an impressive series of meaningful reforms. Florida’s residential property insurance marketplace has been redefined.”

About Demotech, Inc.

Demotech, Inc. is a financial analysis firm specializing in evaluating the financial stability of regional and specialty insurers. Since 1985, Demotech has served the insurance industry by assigning accurate, reliable, and proven Financial Stability Ratings® (FSRs) for Property & Casualty insurers and Title underwriters. Demotech’s philosophy is to review and evaluate insurers based on their area of focus and execution of their business model rather than solely on financial size. Demotech was the first to review and rate independent regional and specialty insurers. Demotech’s consistently increasing list of accreditations and acceptances has resulted in rating and reviewing more than 450 insurers operating in the US. As of 7/11/2022, Demotech, Inc. is registered with the U.S. Securities and Exchange Commission (SEC) as a nationally recognized statistical rating organization (NRSRO) in the class of ratings for insurance companies. Visit for additional information.

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