Georgia bill bulks up tort reform to tackle rising premiums

After nearly two years of Florida’s tort reform laws being in effect, Florida Gov. Ron DeSantis announced upcoming rate decreases for the state-run Citizens Property Insurance. He also announced that car insurance premiums have decreased in some areas of the state.

But property insurance premiums, which have complicated finances for individual homeowners and real estate dealmakers alike, have remained high despite the promises of relief.

The Georgia measures not only doubled down, but added new language to further limit third-party litigation financing, which could lead Florida to tighten its own rules around litigation financing, according to Miami-based Jason Giller, managing partner of boutique firm Giller.

During last year’s state legislative session, Florida lawmakers tried to pass a bill regulating litigation financing, but it died before it got to DeSantis’ desk.

“I think that the intent of regulating the litigation financing is to create impediments to a lot of claims that are being filed by the run-of-the-mill plaintiffs attorneys,” said Giller, who represents plaintiffs against insurers.

Giller isn’t wrong. One of the main reasons politicians see tort reform as a strategy to lower insurance premiums is because insurers have been lamenting about the impact of "nuclear verdicts" for years. Advocates for Florida’s own measures have not been shy about the intent to decrease the volume of lawsuits, but Giller and others worry the reforms might go too far.

“When [Florida] took away the prevailing party fees, you’ll still find an attorney or a litigation financier who'd be interested. But I think a lot of the smaller, lower-value claims will never see the light of day because there's no way to capitalize the cost of litigation,” Giller, whose firm has an insurance practice, said. “Then with the litigation financing, for each case that they undertake, there's an underwriting process. So whether it's a $10,000 claim or a $1 million claim, they would still have to deploy research resources, do research and underwrite the claim, and they would probably just say it's not worth even looking at it.”

Giller does point out that litigation financiers can be lucrative predatory entities at times and he agrees that there should be some regulations around how they’re run, but he worries that the regulations may be going too far.

“I think that some of these laws are passed with good intentions, like the litigation financing. I think that there's a lot of validity to the consumer protection aspect of it, but there needs to be some rebalancing of the equities between the insurance companies and the consumers,” Giller said.

Stephen Cain, a Miami-based personal injury attorney at Stewart Tilghman Fox Bianchi & Cain, goes a step further to call it a hand-out to insurers, a sentiment which isn’t uncommon among lawyers within that practice area, including the state's most prominent plaintiffs' attorney.

“A year ago, I predicted blue tarp 'DeSantisville' communities would cover the state because DeSantis, Tom Leek and the rest of the Legislature decided to pad insurance CEOs pockets instead of protecting homeowners. They passed tort reform under false premises and empty promises,” John Morgan, founder of one of the largest personal injury firms in the country, Morgan & Morgan, said on X days after Georgia’s tort reform passed. “Now Florida homeowners are left to cover their most valued possession with a blue tarp from Home Depot.”

Insurers have only paid about half the claims stemming from Hurricanes Helene and Milton, which ripped through Florida’s Gulf Coast last year, according to a recent report from realtor.com.

“They've now incentivized bad actors who are doing business in Florida. The only way to change the conduct of these bad businesses and insurance companies is to hold them accountable,” Cain said. “By limiting the ability of plaintiffs to bring these cases and restricting what they can recover only serves to benefit the insurance industry.”

When asked if he can name one positive thing about Florida’s tort reform measures, Cain said the only positive outcomes from the measures have gone to the insurers.

In December, Florida’s largest property insurer Universal Property and Casualty Insurance Co. announced $385 million in revenue. The year before, its revenue was at $375 million.

Meanwhile, some Floridians have even chosen to forgo insurance coverage and risk losing their homes.

“The median income in Florida is $60,000. If you have a $30,000 claim and end up having to pay an adjuster and an attorney about 40% of that, you're really getting only about $18,000 out of a $30,000 claim, assuming you get every penny,” Hollywood-based attorney Michael Cassel, who runs a firm that specializes in property claims, said. “Those people are less interested in fighting so that they have to do repairs for a quarter of their annual income. They're just saying, ‘Screw it. We're not going to do anything. We're just going to let it be as it is, and eventually we'll sell the house.’”

This article first published in the Daily Business Review.

See also:

• Insurers must adapt to stop nuclear verdicts before they begin
• Social inflation and decades of insurance litigation abuse
• Nuclear verdicts widen gap between insurance coverage and loss