The challenge of sourcing GL/ PL coverage in a “judicial hellhole”

by | Apr 24, 2023

There’s no question that Florida is a challenging venue when it comes to sourcing carriers willing to provide GL/PL coverage for the senior living and health care markets. It’s been regarded as being so risky, that many carriers currently avoid any exposure in this venue.

So the bill that Governor Ron DeSantis recently signed is a welcome development that many hope will alleviate the situation. House Bill (HB) 837, known as Civil Remedies, which aims to curb superfluous lawsuits and stop exploitative strategies utilized by some trial attorneys, was signed into law last March 24.

The bill is designed to revise the existing bad faith framework, eliminate one-sided attorney fees and fee multipliers, and ensure that Floridians cannot be held accountable for damages if the complainant holds more responsibility. Additionally, the bill extends immunity for property owners who defend against criminals injured on their property, sets consistent criteria for juries in determining medical damages, and reduces the statute of limitations for general negligence cases from four years to two.

Governor DeSantis initially proposed this legislation in February, saying: “Florida has been considered a judicial hellhole for far too long and we are desperately in need of legal reform that brings us more in line with the rest of the country,”

Senate President Kathleen Passidomo threw her weight behind the legislation, saying, “the vast majority of attorneys work very hard to provide sound legal representation for Floridians in these difficult circumstances. Unfortunately, there are a few bad actors who are in the business to draw out civil cases as long as possible, collecting more and more fees from insurance companies.” “Litigation drives up the basic costs of goods and services for everyone across all areas of industry and commerce.” She added.

Blaming those lawyers who are abusing the process, Governor DeSantis called them “billboard lawyers”—referring to those with their faces on billboards. “You won’t necessarily see this in many other states.” He added.

DeSantis certainly has a point with this observation, I’ve often personally commented on the visual pollution caused by this barrage of litigation attorney billboards we’re assailed with whenever we venture onto a Florida freeway.

While the legislation is not aimed specifically at the senior living industry, many of Florida’s embattled nursing homes will breathe a sigh of relief at the legislation’s introduction, particularly those who suffer from cash-flow problems or are too small to fund an alternative structured insurance policy.

We’ve set up a large number of alternative structures in Florida over the years as a result of the absence of carriers willing to fund PL/GL policies there. While alternative structures come with a greater risk to the insured, I think it’s unlikely that many clients that we’ve set up these policies for would want to return to standard GL/PL policies, even if the rates were competitive.

There are a number of advantages in self-insurance, the main one being that they save money on premiums — provided of course that they are not faced with a catastrophic year, (where they incurred $1 million or more in expenses) in the early stages of the move to an alternative structure. Naturally, with an increased participation in the risk, self-insured clients are much more involved with the claims process. They usually have an effective legal counsel to work with and their claims are well-managed.

At the end of the day, I would go as far as to say that alternative structures often result in facilities providing a better standard of care, as because when the operators are more involved in the litigation, and they hear more clearly about the series of events within their facilities, that led up to that litigation, they have a better understanding of the importance of taking some corrective measures.

So ideally when you participate, you get a better outcome in litigation, then the information gained during the litigation process, can be transferred back to improve operations. We believe that evidence shows, that the self-insured who take a greater participation in the risk have a greater opportunity and propensity to take corrective measures, which inevitably leads to an improvement in the quality of their service.

So while House Bill (HB) 837 is a positive step forward for the insurance landscape in Florida and a lot of smaller senior living and health care facilities will benefit from an increase in the number of carriers offering GL/PL policies in the state, it probably won’t change anything for our self-insured clients.

Click here to find out more about alternative structures on our knowledge base, or watch our discussion on alternative structures on insurance insider.

Michael Richards

Michael Richards

President, Westwood Insurance Group

Michael began his insurance career over twenty years ago, working with a risk purchasing group, giving him a wealth of experience in both medical malpractice insurance and captives. Since founding the Westwood Insurance Group in 2001, Michael has developed solid relationships with many underwriters serving the healthcare and senior living marketplaces and is able to effectively help commercial agents with coverage for their clients

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Michael Richards, President, Westwood Insurance Group

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