A Rude Awakening: the 2015 Florida Homeowners Insurance Litigation Alarm

Florida Homeowners Insurance Claims and Litigation Handbook

Alarm ClockDon’t you wish you were in your bed, with your pillow and your comforter? Imagine the blinds are dropped all the way to the window sill. They’re tilted in a way that not one flicker of light shines in.

I know. Its painful to think about. Everyone loves a good night’s sleep, and everyone probably wishes they were in that cozy cotton cocoon right now.

But too much sleep isn’t good for you either. Sometimes you just have to wake up.

The recent Florida homeowners insurance litigation statistics are the wake-up call. Like the loudest alarm clock, these statistics will startle you.

Based on the 2015 data, Florida’s homeowners insurers can expect lawsuit amounts to at least double over the next twelve months. That means double the compromised indemnity payments, and double the legal fees.

These statistics from the Florida Department of Financial Services website are a rude awakening:

Florida Peninsula has been sued almost 1,000 times this year. Not 1,000 claims. 1,000 lawsuits. That means they have been sued approximately once for every 150 policies they issued this year. With five months left in 2015, that ratio could turn to 1 lawsuit out of every 75 policies.

In June of 2014, Heritage was sued 33 times. One year later, Heritage gets sued 120 times in June. Heritage’s policy count increased by about 30%; however, that doesn’t explain the nearly 400% increase in lawsuits.

Similarly, last June, Universal P & C was sued 78 times. Universal added a small percentage of policies over the past year. That small increase doesn’t explain this: Universal was sued over 200 times this June.

These insurers are not outliers. Most insurers saw a drastic spike in litigation over the past couple of months.

I hope each insurer hears their alarm and doesn’t hit snooze. I doubt shareholders want to wait to find out about a litigation epidemic.

Plaintiffs’ attorneys? They’re the ones sounding the alarm. After handing it to the insurers repeatedly these last few months, there’s no reason to think that the litigation numbers won’t continue their feverish rise.

So what happens if the lawsuits double? If the legal defense costs were $10M in the last year, they could be $20M in the next twelve months. If the compromised settlements were $25M last year, they will total $50M over the next twelve months.

Despite spending hundreds of millions of dollars settling and defending these cases last year, many insurers are still in the dark. Many insurers have no way to analyze what’s going on except through manual spreadsheets. What did insurers pay for in the last twelve months? You show me the product.

With all the money that was spent, insurers should expect to to see either good results … or at least good information on how to obtain good results moving forward. Nope. Insurers don’t have either of those.

Some insurers, however, are capturing and analyzing every piece of data they can. They’re no longer letting their vendors keep all of their valuable information in emails and Word documents. Some insurers have shed light on their most valuable asset – their claims and litigation data – and they’re one click away from knowing what’s going to happen and when. These innovative insurers don’t delegate their most valuable data to vendors’ email inboxes.

With real-time access to every piece of information they need, these maverick insurers see the light at the end of the tunnel: data-driven decisions on underwriting, claims, litigation, and legislation.

The rest of the insurers: good luck figuring out how to profit by analyzing these cases email-by-email over the next couple of years. Continue to delegate settling cases to people without any data, and you will continue to remain in the dark on the solutions.

The alarm has been sounded, now when will the rest of the insurers see the light?

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook and Litigation Data Reports:

Before we go on, if you are in the Florida homeowners insurance claims industry and are looking for a guide with the key cases, strategies, laws, attorneys, and adjusters, or if you’re looking for Florida litigation data reports, please visit this page to learn more about our Florida Homeowners Insurance Claims and Litigation Handbook.

If you have any questions about this article or anything else Florida homeowners insurance related, please contact me.