By Al Navas
As a small business owner who provides services for many other small businesses, there are two main financial expenses that can become a nightmare for every owner: taxes and insurance.
Taxes are what they are. Payroll taxes, property taxes, sales taxes, specialty inventory taxes, you name it. However, for the most part, those are line items on an expense sheet that can be relatively stable and predictable, especially in Florida. Insurance is another story. Many small businesses carry liability insurance, some are paying property or contents and inventory insurance, and almost every one of them is carrying some sort of vehicle insurance. The threat of a hurricane can affect their property or contents insurance. Even the threat of a hurricane in another part of the state.
But up until a few years ago there was a hurricane threat that was making insurance rates go way more haywire than any storm and that was lawsuits. For a small business, a lawsuit of any kind can be a drain, but the number of lawsuits and the frivolous and costly nature of them were driving up the cost of insurance for every policyholder. This was attributable to something called one-way attorney fees within the insurance industry. Anyone could sue their insurance company, prevail with a small settlement for tens of thousands of dollars, and then have their attorney present a “must-pay” bill for hundreds of thousands of dollars. This led to massive costs borne by insurance companies to be paid by policyholders everywhere.
After the legislature did away with one-way attorney fees back in 2023, the financial impact of frivolous lawsuits has greatly lessened, and now auto, property, and liability insurance is coming down. Florida is one of the only states in fact, that has seen multiple rounds of auto insurance rebates directly related to this lawsuit reform.
We need rates to continue to go down, and Florida’s lawmakers should resist any temptation to go back on the reforms that were passed in 2023. If anything, there are probably some more areas like third-party litigation financing where they could improve the litigation system even more. Third-party litigation is almost exactly like it sounds. It is the process by which one party lends money and resources to another party to carry on with a lawsuit so that after it is concluded, if there is an award, the party lending the money can profit in some way. At a minimum, disclosure of these arrangements would help to bring fairness to the system.
Small businesses are now doing better in Florida because of the litigation reforms of 2023 that have driven down the cost of insurance and brought more certainty to our economy. Now we need our legislature to stand strong and keep those reforms in place permanently.
