Once more, Florida’s legislature has shaken up insurance claims in the Sunshine State. After making sweeping changes to insurance claim laws in a December 2022 special session, Florida legislators convened for their regular 2023 session intent on further modifications. They succeeded, and new statutes affecting public adjusting, insurance bad faith, attorney’s fees, regulatory oversight, Citizens Property Insurance, and the My Safe Florida Home program are now on the books and in effect.
To make sense of the new laws, we created this handy summary, which focuses on the statutes that are most relevant to insurance claims. For an overview of all property claims laws in Florida, see our Florida Guide to Property Insurance Claims.
More Regulation of Public Adjusters
Public adjusters were already subject to extensive regulation under Florida statutes and regulations. In the 2023 regular session, the Florida legislature further beefed up those regulations with the passage of House Bill 1185. The bill, which became law and went into effect in July 2023, establishes the following new rules and restrictions on public adjusters.
For a comprehensive look at the laws and regulations governing public adjusters in Florida, read our Florida Guide to Public Adjusting Laws.
New Contract Restrictions for Public Adjusters
House Bill 1185 added several new rules around the contract between public adjuster and their clients, particularly for residential claims and condo unit claims. The rules cover a variety of issues, but the big-picture takeaway is that public adjusters must get compliant, written contracts with their clients in place ASAP or risk forfeiting their rights to payment for their work.
That said, one caveat to many of the new rules is that they “apply only to residential property insurance policies and condominium unit owner policies as described in s. 718.111(11).” Section 626.854(19), Florida Statutes. So for commercial or landlord property claims, these new rules may not apply.
Signed contracts are a precondition to payment for residential/condo claims.
For residential and condo claims, public adjusters cannot collect fees or other compensation from named insureds on residential or condo claims without first securing a written, signed contract with the named insured or the insured’s legal representative and submitting a copy of that contract to the insured or insurer. In addition, public adjusters need to retain a copy of the contract and proof of submission to the insured or insurer for five years.
This provision mostly just reinforces the already extensive rules and regulations governing the contract between a public adjuster and an insured — especially if the insured is a residential homeowner.
If an insurer pays or agrees in writing to pay a residential/condo claim before the client signs the public adjuster’s contract, the public adjuster cannot charge a commission on the payment.
This one is big. Florida statutes now provide that a public adjuster can charge zero percent on a residential or condo claim “where the claim payment or written agreement by the insurer to pay occurs before the date on which the public adjusting contract is executed.” Section 626.854(11)(b)(4), Florida Statutes. In other words, no matter what services the public adjuster has or hasn’t provided to an insured, if there isn’t a valid signed contract between the public adjuster and the residential/condo client before the insurance company pays or agrees in writing to pay, the public adjuster cannot take any commission from that insurance payment.
The insured must sign or initial every page of the contract.
This means that if a page of the contract doesn’t have a signature block for the insured’s full signature, it needs a space for the insured to sign.
More contractual disclosures required.
Public adjuster contracts must now include a range of disclosures, from the right to cancel the contract within specified periods to explanations about the roles of different types of adjusters and the responsibilities of the insured regarding the public adjuster’s compensation.
For the full list of required contractual disclosures, see our Guide to Public Adjusting in Florida.
It’s easier for public adjuster clients to cancel contracts on residential/condo claims.
The new Florida laws expand insureds’ or third-party claimants’ rights to cancel their contract with their public adjuster. Both of the provisions below are now the law of the land in Florida.
- Expanded cancellation rights in disasters. For contracts based on events that the Florida governor declares an emergency, residential/condo claimants can now cancel a public adjuster’s contract within 30 days of the loss or 10 days of executing the public adjuster’s contract, whichever is longer.
- A right to cancel for failing to deliver the 60-day estimate. A residential/condo claimant can cancel a contract with their public adjuster if the PA fails to deliver an estimate of the loss within 60 days of executing the contract. The requirement of providing the client with an estimate within 60 days of the contract was already on the books in Florida. See Section 626.854(12)(a), Florida Statutes. Now the failure to meet that deadline will entitle the client to walk away from contract without penalty.
New Compensation Rules for Public Adjusters
Public adjusters are now restricted from charging more than 1% of a residential or condo claim in a very specific scenario, which is worth quoting from the newly revised statute in full:
A public adjuster may not charge, agree to, or accept from any source compensation, payment, commission, fee, or any other thing of value in excess of . . . one percent of the amount of insurance claim payments or settlements, paid to the insured by the insurer for any coverage part of the policy where the claim payment or written agreement by the insurer to pay is equal to or greater than the policy limit for that part of the policy if the payment or written commitment to pay is provided within 14 days after the date of loss or within 10 days after the date on which the public adjusting contract is executed, whichever is later.
Section 626.854(11)(b)(3), Florida Statutes.
In other words, a public adjuster’s compensation is limited to 1% of a claim where the insurer pays or agrees in writing to pay up the policy limits within 14 days from the date of loss or 10 days from the signing of the public adjuster’s contract, whichever is longer. The idea here is that a public adjuster shouldn’t receive a huge payment on a claim that was probably going to get paid in full without the PA’s assistance.
In a separate part of the new laws, Florida statutes also now establish that if a public adjuster represents a third-party claimant instead of the insured, then only the third-party can pay for the public adjuster’s services.
New Operational Requirements for Public Adjusters
Scattered throughout House Bill 1185 are a couple new rules that affect public adjusters’ day-to-day operations and activities.
For starters, public adjusters must display their license prominently at their primary place of business or carry it with them when conducting business elsewhere.
In addition, for residential/condo claims, public adjusters cannot charge their client for third-party services in furtherance of a claim (e.g., engineering report or home inventor specialist) unless the client has agreed in writing to accept those charges and this written agreement occurs after the primary PA-PH contract is signed. If a public adjuster believes outside services would help the claim and wants the client to pay for it, the PA needs to get separate written consent from the client to accept those charges.
More Regulation and Oversight of Insurance Companies
Public adjusters aren’t the only insurance professionals facing new regulations and restrictions. Insurance companies must now comply with several new regulations and deal with a regulator — the Florida Office of Insurance Regulation (OIR) — empowered with added oversight and enforcement powers.
These expanded regulatory powers are critical now that the state of Florida has weakened policyholder’s recourse via the courts.
Examinations of Insurance Companies by the Office of Insurance Regulation (OIR)
- The OIR is now mandated to conduct thorough investigations or examinations of insurance companies. If, during these examinations, the OIR suspects a potential or actual violation of the law, it is required to forward all relevant records and information to the Department of Financial Services Division of Investigative and Forensic Services. This also extends to law enforcement or prosecutors, with the OIR assisting in subsequent investigations.
- Post-hurricane, if an insurance company garners a significant number of consumer complaints or claims within 90 days, the OIR is granted additional authority to conduct market conduct examinations.
- The OIR now has clear guidelines on prioritizing examinations of insurance companies. This prioritization is based on complaints related to claim handling and potential legal violations.
- The OIR has new powers in overseeing the financial stability of insurers. These laws are a direct response to the widespread bankruptcies of insurance carriers following Hurricane Ian — most notably United Property and Casualty.
Penalties on Insurance Companies
- The OIR now has the authority to impose enhanced enforcement penalties on insurance companies that meet specific criteria.
- The response time for insurance companies or licensed insurance professionals to an inquiry from the Department of Financial Services has been reduced from 20 days to 14 days. Failure to respond within this timeframe can result in penalties: up to $5,000 for an entity and $1,000 for an individual licensed insurance professional.
- The maximum administrative fines that the OIR can impose on insurance companies have seen a significant increase. There’s a 250% general increase, and a 500% increase for violations related to a governor-declared state of emergency, such as hurricanes.
- Officers and directors of insurance companies that are impaired or insolvent are now prohibited from receiving bonuses from that insurance company or any other entity owned by said insurance company. Violating this provision can lead to charges of a 3rd-degree felony.
Reporting and Transparency
- Insurance companies are prohibited from altering or amending an adjuster’s report without providing a detailed explanation. If any change reduces the estimate of the loss, the company must either create a list of changes and identify who made the change or retain all versions of the report. These new laws address widely covered reports of insurance companies slashing payouts by modifying the independent adjuster’s reports without the knowledge or consent of the adjuster.
- The OIR is now mandated to produce both quarterly and annual reports detailing all enforcement actions taken to ensure insurance companies comply with the law and code. These reports must be comprehensive, including details about the insurance company or licensed insurance professional, the action taken, violations, penalties, and so forth.
- Insurance companies are now required to notify the OIR at least 20 days in advance if they plan to temporarily suspend the writing of new residential property insurance policies.
- To promote transparency, insurance companies are now required to display on their websites the available hurricane mitigation discounts for policyholders.
More Curbs on Insurance Bad Faith Claim and Plaintiff Attorney’s Fees
In the December 2022 special session, the Florida legislature significantly limited both claims of insurance bad faith and plaintiff attorney’s fees. The 2023 laws take those limitations further. The changes are complex, especially for insurance bad faith, which has statutory and common-law elements. But at a high-level, here are some of the biggest takeaways.
Statutory Safe Harbor for Insurance Defendants
Under the new Florida laws, an insurer cannot be liable for insurance bad faith if it “tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of a claim which is accompanied by sufficient evidence to support the amount of the claim.”
Negligence alone cannot constitute bad faith
In another win for insurers, the new laws codify that negligence by itself can never give rise to a claim for bad faith. In other words, to sue for bad faith, policyholders will have to prove that the insurer did something especially bad or malicious.
New calculations for attorney’s fees
In the December 2022 session, the legislature eliminated one-way attorney’s fees for plaintiff’s counsel. The 2023 laws add to these limitations, both restricting the overall amount available in attorney’s fees, and eliminating an exception to these restrictions for surplus line claims.
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The overall takeaway from the 2023 legislative session is that Florida lawmakers want policyholders to resolve their disputes with insurance carriers through the state regulatory agency (OIR), and not through the courts. In addition, Florida wants the practice of public adjusting tightly regulated. We’ll continue to keep an eye on all these developments as the ground beneath insurance professionals in Florida continues to shift.
