Florida is facing a serious problem with rising property insurance rates. The situation has become more critical, with arrests for insurance fraud happening across the state.
The owner of Florida P&C Insurance, Naser Hasan Al-Sweity, and others in Miami and Tampa are facing charges of fraud and embezzlement, highlighting the widespread issue in the state.
Insurance Commissioner Mike Yaworsky pointed out to lawmakers that there is a “litigation issue” in Florida, making insurance costs for homeowners even higher.
A report by Tampa Bay Times supports this, but it doesn’t solely blame litigation for the increasing premiums. Yaworsky explained that how insurance claims are handled also plays a role. If insurers take longer to settle a claim, policyholders are more likely to resort to legal action.
The report examined 58,395 insurance claims that ended up in lawsuits out of millions. Less than 8% of closed claims went to court, but this small percentage cost a significant amount, totaling $580 million.
As the legislative session begins, Florida lawmakers are considering a set of bills to reform property insurance. Stacey Giulianti, co-founder of Florida Peninsula Insurance Company, reported that insurance fraud is a nationwide problem costing $300 billion annually, with Florida’s share being up to $50 billion.
An alarming trend was noticed with a high number of litigated claims from counties like Miami-Dade, Broward, and Palm Beach, which did not experience hurricanes last year but had a litigation rate of 27.5%.
Yaworsky couldn’t provide clear reasons for this high rate but acknowledged that these practices might be contributing to premium increases.
State Sen. Erin Grall criticized the industry, stating that the argument of frivolous lawsuits driving costs is false.
She believes policyholders are just seeking what they are owed and that the industry may have misled the public and lawmakers to focus on reforms benefiting insurers over homeowners.
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