The Florida Legislative session concluded March 8 and while so much progress has been made to restore balance to the tort system in Florida, much remains to be done.
Make no mistake about it. Due to the work of the legislature and governor in last year’s legislative session, Florida’s lawsuit culture has improved by leaps and bounds. This should have a big impact on the price of insurance over the next several years. Will rates go down? Maybe not because of inflation, but they will flatten in their trajectory as opposed to spiking along with everything else.
This past legislative session, legislative leaders proposed some next steps including reforming the concept of third-party financing of lawsuits and also placing reasonable limits on “pain and suffering” damages that can be awarded in medical malpractice suits. Both proposed reforms would provide an additional stabilizing force on the economic environment.
Third party financing of lawsuits has become one of the most disturbing investment practices: suing businesses is now a business in itself. Deep pocketed investors provide financing to lawsuits not based on merit or need but on the opportunity for a big payout. Market-playing tactics in such a vital area of our lives degrades our basic standards of decency and, in the end, costs everyone.
Legislation under consideration this past session would have prohibited investors from directing the decision-making of the plaintiffs. And we continue to lack proper and necessary disclosures, so that everyone—including the judge and all opposing parties—are fully aware when a lawsuit is being financed by a third party. Unfortunately, legislation addressing this issue died, but it would be smart for the legislature to bring it back next year and get it done.
Frivolous lawsuits or lawsuit investment schemes create additional costs for businesses that must be passed along to customers. That’s why the cost is often called the tort tax. Remember this every time you see an advertisement for a promised big payout for a lawsuit. When someone sues, we all pay, regardless of whether it is frivolous.
We need a special session. There’s no reason we couldn’t take back up some of these important lawsuit reforms that did not have enough time for full consideration.
Despite the stalled progress this year, we are seeing indicators of positive results. Insurers have finally gotten their heads above water in Florida. An article in the Associated Press this week shows that the reforms of the past several sessions are working. For the first time in 7 years, insurance companies in Florida did not absorb a complete loss. Some of these companies continue to struggle, but Florida regulators have approved six new insurers to enter the residential property insurance market. New companies and increased competition will introduce market forces to lower the high insurance premiums so many Floridians have suffered from. We’re almost there.
We have much to be thankful for. We have much work yet to be done. Let’s finish strong and enact additional reforms to finish the job.