Major Property Insurance Reform Bill signed into law

During the current Florida Legislative session, residential and commercial property insurance reform has been a focal point of the Legislature. On December 13, 2022, the Florida Senate passed Senate Bill 2A (“SB 2A”), which was passed without amendment by the Florida House and presented to the Governor on December 14, and signed into law on December 16th.

The bill eliminates the statutory language that currently creates a one-way right to attorneys’ fees for insureds upon a favorable judgment against surplus line or domestic property insurers, and reinstates the ability for either insureds or insurers to seek fee-shifting through service of a proposal for settlement. Prior to this bill, following the recent changes signed into law in May 2022, proposals for settlement were not available in property insurance litigation, and if an insured obtained a favorable judgment against a property insurer, under Fla. Stat. §627.70152 the insured’s attorney could be entitled to fees as determined by result obtained in relation to a pre-suit demand and offer. (Prior to the May 2022 change, the insured’s attorney was entitled to fees if any favorable judgment was obtained, regardless of the amount.)

Among other changes, SB 2A further prohibits the assignment, in whole or in part, of any post-loss insurance benefit under any commercial or residential property policy issued on or after January 1, 2023, modifies first-party bad faith law in reaction to recent court decisions, and makes modifications to the Citizens Property Insurance Corporation program.

SB 2A also shortens time periods for insurers during the adjustment of the claim. Under SB 2A, the time frame to arrive at a claims decision and issuance of any undisputed damages payment is reduced from 90 days to 60 days. Further, it reduces the time for the insurer to begin an active investigation from 14 days to 7 days and reduces the time for an insurer to conduct a physical inspection from 45 days to 30 days, including for hurricane claims. The bill further requires an insurer to send any estimate to the insured within 7 days after it is created. Additionally, SB 2A reduces the time frame for an insured to report a claim from the current 2 years down to 1 year for a new or reopened claim and from 3 years down to 18 months for a supplemental claim.

Finally, SB 2A aims to make changes to the Florida reinsurance market, setting up a $1 billion general revenue fund to create an optional hurricane reinsurance program for property insurers to purchase at reduced premiums.

We are continuing to monitor SB 2A and its impact on the Florida property insurance market.