California homeowners: America’s ‘other’ court cost challenge

California may be the United States’ hidden problem child in litigation, with defence and cost containment ratios second only to the infamous Florida readings amongst major US insurance markets.

Florida has dominated the headlines for homeowners litigation amid oft-quoted talk of single-digit US market share in insurance claims leading to a 70-something percent market share in court action.

Enough that in a series of landmark legislative moves starting late 2022, Florida hacked down on the one-way attorney fees and assignment of benefits rules that had created an unholy alliance between lawyers and roofing contractors.

California, drowned out by noise from Florida, rings in as the nation's next biggest problem child in terms of defence and cost containment expense ratios, a study by AM Best has indicated.

Excluding Florida from the count, California would be left with a 10.4% market share in the remaining 49 states in terms of premium, but an 18.2% share in terms of defence and cost containment expense.

California's defence and cost containment expense ratio, at 2.4%, would trail only the much smaller market of Louisiana, a problem child in its own right with a 3.1% defence cost ratio.

Amongst the nation's largest insurance markets ex-Florida, only New York and Pennsylvania join California in suffering outsized DCC costs via-a-via their market size, the data indicated.

Florida remains the flood that obscured the trickle. Florida had a 9.5% defence and cost containment expense ratio in 2022. Those expenses in Florida accounted for 44.5% of the nationwide total, despite Florida's mere 10.8% of the US market by premium.

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