The leader of the state-backed insurance company, Florida's largest, pushed back against what he called a "campaign" to undermine legal reforms that industry officials insist have eased the insurance crisis and made the Sunshine State more attractive to new insurance companies.
“The fact is that the conduct of the lawyers who do engage in … fraudulent litigation … drove up policyholder premiums and helped create Florida's insurance crisis,” said Tim Cerio, the CEO of Citizens Property Insurance Corp., the state's insurer of last resort, during a meeting of the insurers’ governing board on Sept. 24.
"And these voices cannot now be allowed to cry foul and undo all the good work that's been done simply because they're not earning the fees that they did prior to the reforms,” Cerio said.
The "good work" that's been done includes constraints on policyholders' ability to sue insurers when they feel they are being stiffed on claims checks to repair insured damage to their homes. Insurance industry officials blamed the state's litigious past for the woes in the market, while consumer advocates said the lawsuits resulted from insurers' unwillingness to treat their customers fairly.
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Consumer advocates, however, say these changes have come at a cost to policyholders in Florida who are still paying some of the highest insurance rates in the country and now have a diminished chance of contesting insurers’ estimates of legitimate damage costs.
Joanne Doroshow, an attorney who is executive director of the Center for Justice and Democracy, based in New York City, and a cofounder of Americans for Insurance Reform, said the tort reform the Florida Legislature enacted puts the blame for the state's problems in the wrong place.
Insurance companies “created an insurance crisis and are dishonest about the cause,” Doroshow said during a recent panel discussion that faulted weak regulation, insurers' financial instability and climate risk as the culprits.
Doroshow, who worked with the consumer advocate Ralph Nader on insurance issues, denied insurance claims that end up in court involve fraud.
“Policyholders are forced to go to court against insurance companies because these companies fail to pay legitimate claims, or they are receiving lowball settlement offers,” she said.
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