A new bill in Florida could change how attorney fees are handled in insurance lawsuits. House Bill 1551, currently under review by the state legislature, aims to award legal fees to the winning party in these cases. This proposal is raising eyebrows among industry groups, who worry it may lead to higher litigation costs.
Under this bill, if a policyholder wins a judgment that is greater than the insurance company’s best settlement offer, they will be considered the prevailing party. Conversely, if the judgment is less than the insurer’s offer, the insurance company would win. This law would also define a judgment to include not just the awarded amount, but also reasonable attorney fees, taxable costs, and any prejudgment interest that the insured incurred by the time of the settlement offer.
The Personal Insurance Federation of Florida (PIFF) has expressed concerns that this legislation could spark an increase in lawsuits, which would ultimately raise costs for both insurers and policyholders. PIFF President Michael Carlson pointed out that defendants might need to estimate the potential attorney fees to avoid judgments that exceed final settlement offers. He warned that this could lead to more cases where plaintiffs secure judgments that allow them to recover these fees.
This proposed legislation comes on the heels of Florida’s repeal of a previous one-way attorney fee law in 2023, a change that was part of broader reforms aimed at stabilizing the property and auto insurance markets. Carlson cautioned that if House Bill 1551 passes, insurers will have to rethink their risk pricing in Florida, likely leading to higher premiums for consumers.
Insurance litigation costs have been rising sharply in the United States, driven by factors like social inflation and changes in the legal landscape. The commercial casualty insurance sector, for example, saw losses grow at an annual rate of 11% over the past five years, amounting to $143 billion in 2023.
Supporters of the bill argue it offers a fair approach, allowing policyholders to recover attorney fees if they prevail against insurers. Rep. Hillary Cassel, who sponsors the bill, said it aims to discourage wrongful claim denials while also preventing insurers from incurring excessive litigation costs when they make good faith settlement offers.
As the Florida legislature considers this bill, the insurance industry and policyholders alike are watching closely, aware that the outcome could significantly impact the state’s insurance landscape.