Jan 9, 2024 - News

South Florida lawsuits blamed for high property insurance costs

Illustration of a house in a deflating life preserver floating in water

Illustration: Sarah Grillo/Axios

South Florida homeowners sued their insurance companies at a greater rate than anywhere else in Florida — and that might have led to higher insurance premiums.

  • A new study commissioned by the state legislature partially supports the argument long made by insurance companies that lawsuits are driving up insurance costs in Florida, the Tampa Bay Times reports.

By the numbers: The Florida Office of Insurance Regulation analyzed 58,395 insurance claims that led to lawsuits in 2022, showing that the litigated claims were more than six times as expensive as other claims.

  • About 28% of closed claims in Miami-Dade, Broward and Palm Beach counties led to lawsuits although South Florida wasn't hit by a hurricane in 2022, the report says. The statewide average was about 10%.

What they're saying: "We clearly had a litigation issue going on in this state," Florida Insurance Commissioner Mike Yaworsky told the Times. "This high disparity exists that ultimately everyone in the state is paying for, or has been paying for."

Yes, but: The data is incomplete.

  • Of the 291,155 hurricane claims closed in 2022, about 18% are unaccounted for, the Times reports. For windstorms and hailstorms, it's 23%.

Meanwhile, litigation is not the only reason Florida has the highest insurance premiums in the nation, Yaworsky said. Storms and reinsurance costs — which insurers pay to cover claims — also drive up prices.

  • The litigated claims analyzed in the study comprise less than 8% of all insurance claims closed in 2022, the Times reports.
  • They cost insurance companies about $580 million, compared to the $16 billion that homeowners paid in premiums that year.
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