Hurricane Milton the true test for Florida legislative property insurance reforms: Heritage CEO

While lawsuits against insurers in Florida are said to have declined again across the first three quarters of 2024, the claims environment following hurricane Milton is expected to provide a “true test” for the legislative reforms that were enacted to reduce the litigious property insurance environment in the state.

It’s the second year running that litigated insurance claims in Florida have fallen, according to data from reinsurance broker Guy Carpenter.

As reported by the South Florida Sun Sentinel newspaper, data from the reinsurance broker, the number of lawsuits filed against insurers dropped by some 23.8%, from 36,639 to 27,923, for the first nine months of 2024 compared to the same period in 2023.

There had been a similar 23.9% decline from the same period in 2022 to 2023, and a further 23.4% decline from the same period of 2021 to 2022.

The Sun Sentinel reported that Guy Carpenter’s data shows that since 2021, the number of lawsuits filed against insurers in Florida over the first nine months of the year dropped from 67,788 to 27,923, which represents a 58.8% decline.

Looking at just the third-quarter of 2024, the trend of decline was faster, with 30% fewer cases of litigation against insurers in Florida, the Sun Sentinel said.

In addition, Notices of Intent to Litigate received have also been declining, from 57,000 during the first nine months of 2023 to 37,003 over the equivalent period of 2024, which could signal the decline will persist.

For a time at least, as now some are suggesting hurricane Milton may be the first proper test for the legislative property insurance reforms.

Ernie Garatiex, CEO of Heritage Property & Casualty Corp told the Sun Sentinel, “In 2023, we had (Hurricane) Idalia, which hit a less populous area, and we didn’t have other storms that compared to Debbie, Helene and Milton in 2024.

“Milton will be the true test, in my opinion, of the reform and whether it really makes a difference when it comes to frivolous lawsuits and litigation in general.”

As litigation arises from recent claims activity due to hurricane Milton, this will be a key factor in seeing whether the legislative reforms hold, or prove fully-effective, Garatiex suggested.

Milton, being the first major hurricane loss for Florida since 2022’s Ian, will indeed provide a chance for the industry to see how effective the reforms have been.

But it is also worth noting that, already there have been signs that way’s around the reforms have been found to boost the value of property insurance claims.

As we’ve reported before, as loss creep from hurricane Ian drove some small principal losses to holders of one of insurer Kin’s catastrophe bonds, the company said that one cause for the loss creep was new litigation tactics being seen in the Florida market.

Kin had said that delays in litigation timelines and plaintiffs not settling early have been serving to boost litigation charges, which means the average claim size has also been rising over time, as too was the number of claims that ended up in litigation.

That suggests those motivated to litigate are already finding ways to boost claims quantum, so it is not as if the Florida litigation issue has been fully-solved.

But, the fact new litigation tactics are needed does suggest that many of the old routes have been successfully closed off. So it is going to be interesting to see whether Florida catastrophe loss events perhaps now have a slightly shorter tail of development, than they did before the reforms.