Florida's 2023 Lawsuit Reforms Drive Insurance Market Stability

Florida implemented broad lawsuit reforms in 2023 aimed at curbing litigation abuse that had driven up insurance costs for homeowners and drivers.

Key reforms included repealing 'one-way' attorney fees, limiting bad-faith claims, and restricting recoverable medical costs to actual expenses rather than inflated estimates. These changes addressed a disproportionate share of national litigation costs originating from Florida, which previously bore 78% of litigation costs despite only 8% of claims nationwide.

The reforms have fostered market improvements including the entry of 17 new insurance carriers into Florida, increased competition, and a shrinking risk pool for the state-backed Citizens Property Insurance, indicating a recovering private insurance market. Regulators secured nearly $1 billion in premium credits and rebates from a national insurer, directly benefiting Florida policyholders. However, challenges persist as some abusive practices linked to litigation abuse, such as medical lien mills and referral kickbacks, continue to surface.

Florida's comprehensive approach to lawsuit reform is now viewed as a model for other states struggling with high auto and homeowners insurance premiums. The state's proactive legislative action and regulatory enforcement demonstrate a method to stabilize insurance markets by addressing underlying legal system incentives.

Further efforts will be necessary to build on initial successes and fully resolve residual abuses.