Florida Passes Law to Encourage Arbitration of Property Insurance Claims

Florida recently passed legislation encouraging arbitration in order to help solve the serious problems facing the homeowner's insurance market in the state. 

By way of background, Florida homeowners have been facing rapidly increasing insurance rates, liquidations, and failures of their carriers, over the last few years. As a result of rapidly increasing litigation over claims in the state courts, and other factors, insurance companies in Florida were facing increasing difficulty in getting required reinsurance, among other problems. To put a point on the "excessive" homeowner claims in Florida—the country's third largest state in population (having just surpassed New York)—in 2021 there were 100,000 lawsuits in Florida with claims totaling $7.8 billion in damages, whereas the other 49 states had a total of 24,000 cases claiming $2.4 billion.

To begin to solve these problems, Governor DeSantis convened a special legislative session in late November to comprehensively deal with the issue. A complex and detailed law was passed overwhelmingly in both houses of the legislature, and was signed into law on December 16, 2022, and became effective on January 1, 2023.

The 61-page law, which includes a number of protections for insured persons, is too comprehensive and complex to describe here. (See Ch. 2022-271 (Senate Bill 2A) of the Florida Laws.) However, it includes a section 18 on Mandatory Binding Arbitration (to be section 627.70154, Florida Statutes Revised), that is directly relevant to this website.