Life in Steinhatchee Florida
Slow and peaceful

I was invited to attend a live town hall meeting at Florida’s Steinhatchee Landing and in attendance were local elected officials from the surrounding counties of Taylor, Dixie, Gilchrist, Madison, Lafayette, Levy, and many others.  Each county’s representative passionately expressed to the three Florida senators present how important it was that their residents have access to the internet and the ability to help their residents learn a skill (welding, certified nurse assistance, etc).

Many said the prison or the hospital in their counties were their largest employers.  What struck me was that these counties have vast expanses of land that can support economic and residential development.  In one instance, a county manager expressed his frustration because the legislature, under the heading of eliminating taxes, ceased the fire assessment among multi-acre landowners.  The manager surmised that wealthy landowners approached the legislature and complained they shouldn’t have to fund fire services for large tracts of land.  The elimination of the fire assessment in this small county amounted to $68,000 annually, a “king’s ransom” in his words.

This discussion made me think about structures that might be on these tracts of land and if these structures are insured.  And, worse, will the elimination of this tax increase fire damage risk?  So many times in the legislature, the stroke of a pen can have a devastating effect on many and that’s why it is so important that we all pay attention and talk to our elected officials about what is important to us.

As a resident, I encourage you to pay a visit to your legislators while they are home in their districts before the January 2018 start of the Florida legislative session.  And if you live out of our great state, be sure to do the same in your neck of the woods.   I hope someday soon you will visit old Florida and spend some time on the slow and peaceful side of life.

Next up are some hot topics for you.  We always welcome guest authors who want to spend some time with us on articles of interest!

Bill Watch
The beginning of the 2018 Florida legislative season

If it seems it was just three months ago that the Florida Legislature last met and yet interim committees are meeting in just three weeks from tomorrow – you are correct!  Welcome to the 2018 Florida Legislative season!  The quick turnaround this year is because session starts early – on Tuesday, January 9, with a scheduled ending on Friday, March 9.  We’ll have six weeks of interim committee meetings this fall (a week in September, two each in October and November, and a final week in December) before session kicks-off.  A complete list of links to keep you in the know can be found at the end of this and every Bill Watch.  As of this past Friday afternoon, 82 bills had been filed.

Here’s our inaugural 2018 Bill Watch on the major legislation we’re following so far:

Personal Injury Protection (PIP), also called No Fault Insurance – Republican Senator Tom Lee of Hillsborough County has re-filed his legislation last year that would eliminate the state requirement that motorists carry $10,000 in personal injury protection. SB 150, totaling 131-pages, would increase the minimum coverage requirement to $20,000 per individual and $40,000 per incident.  It updates the state’s no-fault insurance provisions that were enacted nearly 40 years ago to reflect inflation.  “The Senate has wrestled with this for 20 years,” Lee said. “From my perspective, it’s about adequacy of coverage.”  The issue of keeping PIP in law or eliminating it has been the subject of debate for almost two decades.  Stay tuned.

Assignment of Benefits (AOB) – Republican Senator Dorothy Hukill has again filed her version of AOB reform (SB 62) prohibiting certain awards of attorney fees in suits based on claims arising under property insurance policies and requiring those vendors that execute the Assignment of Benefits to comply with certain requirements prior to filing suit.  Many of you followed this legislation filed last year and it did not move. We will report further updates as the AOB debate heats up.  Suffice it to say that in the past several months, almost every single Florida newspaper and other media have reported about the great consumer harm that is occurring because of assignment of benefits abuse.  Newly appointed CFO Jimmy Patronis has come out swinging about AOB on the Florida Chamber’s Bottom Line program and Insurance Commissioner David Altmaier has made AOB reform his top priority.  Lastly, Citizens Property Insurance Corporation’s attempt to address AOB abuse –the implementation of a managed repair program with a $10,000 water claim limit for those who don’t use the program — was approved by OIR last week for Citizens HO-3 and DP-3 policies.

Direct Primary Care & Health Insurer Authorization SB 80 by Senator Tom Lee, and bills SB 98 and SB 162 by Senator Greg Steube deal with health insurance and allow doctors to contract directly with businesses or others to provide healthcare, essentially bypassing health insurance organizations; and address reforming the use of the prior authorization process; and prohibiting health insurers and HMOs from retroactively denying insurance claims.  We will closely watch these as well.

Flood Insurance and Mitigation SB 158 by Senator Jeff Brandes provides greater funding for flood mitigation so that more individuals and communities can meet NFIP flood insurance standards.  The bill would allow flood mitigation projects to be funded by the Florida Communities Trust to reduce flood hazards. Senator Brandes has for the past 5 years taken the lead in Florida in the flood insurance arena. Read on for a full discussion of sea level rise and how Senator Brandes’ forward thinking starts the wheels in motion to address it.

Helpful Links:

2018 Legislative Session Interim Committee Meeting Schedule

House Calendar for the week of September 11

Senate Calendar for the week of September 11

Keep updated on changes in the legislature’s schedules here House Calendar and here Senate Calendar

Rising Sea Levels a Fact in Florida for Now
What a third of an inch may mean to you

The Florida Legislature’s SB 158 by Senator Jeff Brandes certainly reflects the growing threats of flooding in Florida.  Whether you believe in global warming or not, scientists have now confirmed by direct device measurement that sea levels around Florida are back on the upswing – and it could mean more frequent and severe flooding if the trend continues.  The National Oceanic and Atmospheric Administration (NOAA) reports that sea levels along portions of our coast are rising by about a third of an inch every year now.  While it doesn’t sound like much and is certainly invisible to the naked eye, the various gauges around the state’s 2,276 miles of tidal coastline show the waters, they are arisin’.  The impacts are already being felt.

NOAA’s report “Global and Regional Sea Level Rise Scenarios for the United States,” was done in conjunction with the South Florida Water Management District and other agencies.  While it acknowledges that seas have always risen and fallen throughout the centuries and in fact vary from decade to decade, that we are now in a period of steady and measurable rise that started in 2006.  The cause and whether it will continue remain unknown.

Scientists at the University of Florida think they know why the rapid increase is happening: Two naturally occurring large-scale atmospheric patterns had intersected to push up the water off the Southeast coast, causing a “hot spot” of sea-level rise.  The area extends from North Carolina’s outer banks south to Miami.  The UF report “East Coast’s rapidly rising seas explained” shows that from 2011 to 2015, the sea level along the southeastern American coastline rose six times higher than the average global increase.  Regardless of the cause – natural or otherwise – both the scientists at UF and NOAA say if sea level rise doesn’t level out, Florida’s coastal communities will be in for some trouble.

The NOAA report’s mid-range projections estimate that by 2030, Florida sea levels will be up to 17 inches higher than they are today.  There are low-lying communities in parts of Miami Beach and New Smyrna Beach that are already impacted with minor street flooding occurring on perfectly sunny days.  Officials in Miami Beach are spending nearly half a billion dollars to put check valves on storm drains and elevate certain roads and sidewalks susceptible to flooding.  Building code changes are also in the works.   Some lunar high tides and storms are now strong enough to reverse the flow of drainage canals, flooding neighborhoods.

For now, the NOAA report should raise awareness and provide data that can be used in future planning decisions, from residential & commercial development, to mitigation, to emergency management.  The greater Tampa Bay area was cited in this recent Washington Post article as one of the most vulnerable in the United States to flooding and damage if a major hurricane ever scores a direct hit.

Are You Mapped In or Mapped Out?
Does the water know?

Our newsletter wouldn’t be any fun without an article about flood issues.  We have a loyal following of readers who understand the implications of maps, flood insurance rates, and sea level rise, and flood issues overall. In terms of Florida flood news, Palm Beach County was front and center recently with the release of its “new” flood maps.

When maps are released, there’s always anxiety attached to the map changes.  Those who get “mapped in” face higher insurance rates or a mandate they buy the coverage and those who get “mapped out” feel like they have a new payday because they are no longer required to pay flood insurance premiums.  Still, there’s not a lot of folks who believe that a flood map (i.e. lines on paper), determine where the water goes when water rises.  Maria Wells, President of the Florida Realtors, continues her message of the fact that FLORIDA is a flood zone!

Florida is the top U.S. market with about 40% of the nation’s five million flood policies. As of March 31, there were more than 100,000 policies in Palm Beach County, including more than 66,000 in unincorporated areas, nearly 15,000 in Boca Raton, more than 9,000 in Boynton Beach, and more than 7,000 each in Jupiter, Palm Beach and Delray Beach. In terms of map changes (the last map was released in 1992!) 50,839 Palm Beach County parcels are moving-in to higher-risk flood zones, 45,640 are coming out and 36,983 are staying in.

To put this in perspective, however, Palm Beach County has over 1.5 million residents.  And it takes years of planning and public meetings and efforts by local governments to gather data to make sure residents were not incorrectly designated as living in areas with a high risk of flooding. So once a flood map is released, the data used in the “new” map is already stale.

Meanwhile, it appears Congress will “kick the can” down the proverbial road.  The National Flood Insurance Program will expire on September 30th if Congress does nothing, but our sources in Washington DC report that most likely Congress will just “re-up” the NFIP for another couple of years with little to no reform.  (See our June 12 newsletter for the ideas that were floated earlier this summer.)

For those of you who want to view Palm Beach County’s flood map, click on http://maps.co.palm-beach.fl.us/cwgis/?app=floodzones. Want to see a specific address? Type it within the bar in the upper left corner of the screen.

Citizens Rate Hearing Wednesday in North Miami
Follows approval of coverage caps with managed repair program

As we mentioned in the Bill Watch, the Assignment of Benefits issue is responsible for rapidly rising homeowners insurance costs in Florida.  Nowhere is that impact more keenly seen than with the state’s so-called insurer of last resort, Citizens Property Insurance Corporation.  It says AOB costs are behind its requested statewide average 6.7% HO3 policy hike and an 8.1% commercial lines increase.   This Wednesday, Citizens will face some of its policyholders at a public hearing being held by the state Office of Insurance Regulation (OIR) in the heart of “AOB Abuse Alley”: Miami-Dade County.  There, Citizens’ proposed rates would go up by the maximum 10% for the second year in a row.

Citizens is slated to lose $85 million this year because of the exponential growth in water losses. Citizens President & CEO Barry Gilway joined us this past week for a taping of The Florida Insurance Roundup podcast, and said Citizens isn’t alone in suffering such losses.  Click on the box to listen to a 38-second preview of his comments.

We spent most of the podcast talking about two controversial proposals that Citizens won OIR approval for this past week:  A managed repair program requiring policyholders use the insurer’s contractors for repairs in exchange for waiving the deductible on water claims; and a $10,000 limit on non-weather related water damage repairs unless the policyholder voluntarily agrees to use the managed repair program, in which case they can overcome the cap and get full coverage.

OIR also approved Citizens’ requested policy changes that will now require contractors to submit damage reports and repair estimates, participate in appraisals by Citizens’ adjusters, and answer questions under oath.

Also joining us on the podcast for her perspective was Cam Fentriss, the Legislative Counsel for the Florida Roofing and Sheet Metal Contractors Association.  She and Barry Gilway found common ground on some key AOB concerns.  We’ll be publishing the podcast this week and if you’re a subscriber to this LMA Newsletter, you’ll automatically receive the podcast in your inbox.  All other readers can visit The Florida Insurance Roundup webpage and subscribe to the podcast via a number of popular platforms, including iTunes.   We welcome your feedback and topics for this lively program on the people, issues, and regulations shaping Florida’s Insurance Market!

Class Action for the No-Class
How Texas is attempting to solve its AOB problem

Everything is bigger in Texas, including the fraud perpetrated by contractors acting illegally as public adjusters.  Now a Texas appeals court has given the okay to file class action suits against the chicanery in a clear warning to roofers who’ve been breaking the Lone-Star law and getting away with it.  It sounds a lot like what’s been happening in Florida with our Assignment of Benefits (AOB) abuse:  Roofer meets homeowner; roofer tells tall tale to homeowner promising a new free roof; homeowner falls for roofer and signs a contract with AOB rights; roofer overbills homeowner’s insurance company and then goes after homeowner for the balance due – or worse – for upwards of 40% of the claim if the homeowner tries to cancel the contract.

Here in Florida, of course, we’ve written the book on AOB abuse.  We have the T-shirt, turned it into a weekly made-for-television news story, and are now fine-tuning the storyline to produce a major motion picture, starring the Florida Legislature, the trial bar, a largely unregulated water mitigation cottage industry, and insurance companies who are now losing millions of dollars annually through an increased number and severity of claims and making it up through double-digit rate increases on Florida homeowners and businesses.

Despite having two separate public adjuster licensing statutes on the books in Texas that make it very clear that roofing contractors are not allowed to negotiate insurance claims and provide criminal penalties for doing so, the practice has continued.  The Department of Insurance sends cease-and-desist letters but there is no real criminal prosecution.  The Texas Court of Appeals decision to allow class action lawsuits could result in a first of its kind case by 3,000 affected customers of A-1 Roofing, which has been accused of operating as a public adjuster.  Insurers hope the class action status will be a wake-up call to roofers and other contractors to reconsider how they go after business and empower consumers to get out of onerous contracts.

So until Florida gets its collective act together to go after these unscrupulous practices and abuses here in the Sunshine State, we tip our five-gallon hats to Texas and its courts for their creative class action remedy!

Implications in SCOFLA’s Concurrent Causation Ruling
by Elizabeth B. Fata, litigation consultant for Cozen O’Connor, Miami

Last December, the Florida Supreme Court held in an insurance coverage case that “when independent perils converge and no single cause can be considered the sole or proximate cause, it is appropriate to apply the concurring cause doctrine.”  This decision came on the heels of a recent district split in the state between Florida’s Second and Third District Courts of Appeal. The split concerned which legal theory of recovery should apply when two or more perils converge to cause a loss, and at least one of the perils is excluded from coverage. The Third District, in Wallach v. Rosenberg, 527 So. 2d 1386 (Fla. 3d DCA 1988), applied the concurrent causation doctrine, which holds that insurance coverage may exist when there are concurrent causes of a loss and at least one cause is covered under the policy.

In contrast, the Second District, in American Home Assurance Co. v. Sebo, 141 So. 3d 195 (Fla. 2d DCA 2013), the decision from which the appeal was taken to the Florida Supreme Court, directed application of the efficient proximate cause doctrine. This theory holds that when different perils contribute to a loss, the efficient cause — the one that set the other causes in motion — is the cause to which the loss is attributable. If that cause is covered under the policy, the insured is entitled to coverage for the entire loss. The Florida Supreme Court resolved this divergence of views in Sebo v. American Home Assurance Company, Case number SC14-897, in favor of the Third District’s reasoning and the concurrent cause doctrine.

John Sebo of Naples had an $8 million policy covering his four year-old house, which he discovered shortly after purchase was leaking in many rooms and months later was made even worse by Hurricane Wilma in 2005.  His insurance company denied the claim twice, paying only $50,000 for mold damage.  The damage was so extensive that the house was eventually demolished.

The Supreme Court decision noted that AHAC had explicitly written other sections of Sebo’s policy to avoid applying the concurrent cause doctrine. Because the relevant exclusionary language did not explicitly avoid applying the doctrine, the court found that the plain language of the policy did not preclude recovery.

This is a policyholder friendly decision as it is not uncommon for multiple perils to combine and simultaneously cause properly damage. It now frees policyholders from having to prove that the primary cause of a loss was a covered peril in circumstances involving unrelated causes of loss. While it provides policyholders some benefit when concurrent causes converge, the decision does not prohibit the application of the efficient proximate cause doctrine when the causes of loss are not concurrent; that is, when it is possible to trace the damage back through a chain of events and pinpoint a single cause that set the chain into motion.

Given that both the concurring cause and efficient proximate cause doctrines can still apply under Florida law when multiple causes contribute to a loss depending upon the facts giving rise to a particular claim, insurers handling claims in Florida will have to carefully evaluate the specific fact pattern giving rise to the loss to consider which causation doctrine should be applied and how. Furthermore, the court, while briefly mentioning that AHAC did not employ anti-concurrent cause language in the relevant exclusion, did not squarely address how the case would have been resolved if such language had been employed.

The resolution of this case in favor of policyholders should be an indicator to the insurance industry that they can expect to see an increase in claims, especially in the volatile environment of Florida where windstorms and similar occurrences are far from irregular. Policyholder and insurers alike will need to consider the implications this has on coverage of current contracts and how policies language will now be written moving forward in the wake of Sebo. Needless to say, as insurers adjust to this state of the law, similar coverage issues involving causation of loss will inevitably surface and the courts will have to address them at such time.

What Does the AARP and the Real Estate Market Have in Common?
The 55+ baby boomers!

The sheer size of the baby boomer generation has been a marketing bonanza for retailers since they started to walk, and it appears to be a boon for the housing industry as they continue to retire – and 10,000 per day are retiring.

Builder confidence in the single-family 55+ housing market strengthened in the second quarter of 2017 with a reading of 66 – an 11-point increase over the first quarter of 2017, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI). It’s not only a sizable quarter-to-quarter uptick, it’s also the 13th consecutive quarter with a reading above 50, which means that more builders view conditions as good than poor.

There is actually an NAHB 55+ Housing Industry Council that studies two segments of the 55+ housing market in particular: single-family homes and multifamily condominiums. For each, the HMI measures builder sentiment in a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic).

All three components of the 55+ single-family HMI posted increases from the previous quarter: Expected sales for the next six months increased 12 points to 80 (an index high), while present sales rose eight points to 70 and traffic of prospective buyers jumped 19 points to 53, also an index high.

The 55+ multifamily condo HMI rose seven points to 53, with all three components also posting gains in the second quarter: Present sales increased six points to 56 (an index high), while expected sales for the next six months and traffic of prospective buyers both rose eight points to 55 and 45, respectively.

All four indices that track production and demand of 55+ multifamily rentals posted gains in the second quarter: Present production rose three points to 53, expected future production climbed eight points to 52, current demand for existing units increased two points to 66 and expected future demand rose five points to 67.

For those interested in joining the 55+ Housing Industry Council, click this link.

Fidget Spinners
Time to relax!

If you have children, then you most likely have in your home the new fidget spinners. The mania for fidget spinners — the 3-inch twirling gadgets taking over classrooms and cubicles — is unlike many other toy crazes. They’re not made by a major company, timed for the holiday season, or promoted in TV commercials. They’re more easily found at gas stations or 7-Elevens than at big toy chains.

The devices, as you may know, are made out of metal or plastic and have a bearing in the middle that allows it to be spun. Some of the products have prongs on them, while others are circular. The spinners, which range in price from just a few dollars to hundreds, are intended to calm nerves and help with stress and anxiety, a Godsend in the hectic worlds of insurance, disaster management, environmental engineering, telecommunications and well, just about every profession. The handheld gadgets are now so popular that different versions of fidget spinners made up all of Amazon’s top 20 best sellers for toys and games in the spring of this year.  In fact, you can watch them being made here.

As with any successful invention, there may be one or two or several that “misfire.”  Such is the case with the fidget spinner.  Washington State plaintiff firm Schmidt and Clark is seeking consumers who have had an issue with the fidget spinners.  On their site they feature a young girl whose spinner caught on fire.  Not surprisingly, but what is a bit unusual, is how quickly the defective spinner suit emerged.  On another front CNB aired a report where two high schoolers grossed $350,000 in fidget sales.  We all love the progression of fun toys that make us smile – the yoyo, hula hoop, and slinky.  Get your Fidget Spinner today!

Today’s Solar Eclipse

Today is all about the solar eclipse!  We took a peek at NASA’s safety tips (https://eclipse2017.nasa.gov/safety) and the only safe way to look directly at the uneclipsed or partially eclipsed sun is through special-purpose solar filters, such as “eclipse glasses” or hand-held solar viewers. Homemade filters or ordinary sunglasses, even very dark ones, are not safe for looking at the sun; they transmit thousands of times too much sunlight.

In fact, today may be more about trying to maneuver longer than normal commutes to and from work and hopefully enjoying time with family and friends.  Some employers are giving the day off, calling the holiday Eclipse Day!   So around 1 pm ET today, I will be thinking of all of you whether you are in South Carolina or Illinois or Kentucky!  Be safe and see you on the trail!

Lisa & The Team