The Florida insurer of last resort is still grappling with legal challenges from two years ago.
Florida Governor Ron DeSantis and state lawmakers recently approved a Citizens Insurance overhaul plan. The overhaul redesigned the controversial “assignment of benefits” practice. It also added new restrictions regarding lawsuits that can be filed against insurance companies.
The state-backed insurance company will still need to deal with its thousands of existing lawsuits.
Citizens Insurance is still attempting to work its way through thousands of existing lawsuits. These were filed well before the overhaul was put into place. Many of them reach back as far as being related to claims made for Hurricane Irma damage back in 2017.
As of March 31, 2019, Citizens had 420,000 polices. Citizens was still facing 14,091 pending lawsuits as of April 30, 2019. That represents a 14 percent increase in the number of lawsuits it faced on the same date in 2018. At that time, the figure was 12,363. During the first third of this year, the state-backed insurance company was averaging a fresh 833 new monthly lawsuits. That, however, represented a 22 percent decrease in the number of new monthly lawsuits added during the same period of 2018, following Hurricane Irma.
Last week, Citizens Insurance hired an additional 12 law firms to help in its legal defense.
The 12 new law firms were in addition to the 100 defense firms that were already defending the flood insurance company. The new legal contracts were issued by the Claims Committee of the Citizens Board of Governors. These were necessary to help the insurer make its way through the high volume of lawsuits against it.
Last week, the committee provided information which stated: “However, despite having firms currently under contract to provide these services, a need to retain additional law firms has arisen due to the current volume of pending litigation resulting from the influx of new lawsuits associated with recent catastrophic events that directly impacted various parts of Florida.”
It also pointed out that while the law firms that were under contract were able to meet the legal needs of Citizens insurance, doing so was stretching their resources too thin. This was straining those resources and the capabilities of the firms. Moreover, any additional catastrophic weather events would place Citizens’ capacity to effectively manage claims in danger as it would have inadequate legal counsel for handling any additional litigation volume.