A Time of Reflection

Christmas and the holidays are a time for joy and love and above all, warm feelings of caring.  For many people, the holidays mean sharing with others – whether it’s the gift of time or other treasures for a special person or family member.  Often, this time of year can be a time of sorrow. For so many, there’s not enough money to buy presents for children, family, and friends.  Many are saddened when they think of their loved ones who will not be able to come home for a variety of reasons, including serving our country. And turkey dinners and holiday feasts may be only a wish and not a reality for some.  For those we know in this situation, let’s help them create a season of great joy.  It is a time to show great love for those in your world. It is a time of healing and renewed strength.  We wish for all of you a Merry Christmas and beloved holiday in the manner our readers celebrate.  Most importantly, we appreciate each of you for supporting LMA and caring enough to contribute to our success!

Bill Watch
The fifth week of legislative committee meetings

The Florida Legislature’s full focus this morning is two-fold – enjoying time in the district preparing for the holidays and preparing for the January 9, 2018 legislative session start.  Last week was the fifth and final week of interim committee meetings to move proposed bills along, have them publicly discussed, debated, changed, and for the lucky few of the 2,303 bills filed so far this year – readied for the floor of the Senate or House for a full vote by the respective chamber.  Lately, only about 10% of all bills ever make it into law.

On the major insurance issues (Assignment of Benefits, Personal Injury Protection auto insurance, and Workers’ Compensation insurance) the House is leading the way, with bills in all those areas successfully through committees and ready for full votes of the House.  Meanwhile, the Senate not so much so – still seemingly struggling with how seriously to take these threats to the insurance marketplace.  The House is also showing bold leadership on innovative bills this session, including Direct Primary Care as an alternative to Obamacare and the private health insurance markets, and tackling improvements needed to strengthen Florida’s response to the next big hurricane.  Here’s a wrap-up of just where things stand going into session in this week’s 2018 Bill Watch, with this past week’s updates in bold print in individual bills:

Assignment of Benefits (AOB)Late Friday afternoon (December 8), Senator Greg Steube (R-Sarasota) released SB 1168, which has good and bad elements in it. The conservative senator from southwest Florida often puzzles many of us following his work.  He is a brilliant attorney and great fun to work with on projects of public policy.  What is puzzling is his version of AOB reform.  SB 1168 indeed has some key reforms but one item shared among some AOB experts falls under the heading of “spoiler alert.”  It’s language that prohibits insurance companies from including the costs of attorney fees paid in losing cases into their rate base or future rate requests. That idea, originally floated by Democratic Senator Gary Farmer in SB 256 (see below) prompted Insurance Commissioner David Altmaier in a Senate Banking and Insurance committee meeting in October to call it “one of the worst ideas he’s heard.” The reason the commissioner has this opinion is that insurance companies, for the most part, are not the instigator of litigation; the vast majority of AOB suits are from AOB law firm “factories,” much like the home foreclosure saga where trial lawyer firms filed thousands of suits against banks. 

Banking & Insurance Committee Chair Anitere Flores (R-Miami) has taken testimony this fall from various sides over several weeks to try to broker an AOB reform compromise bill – and Senator Steube’s bill may apparently be it. Trust that the LMA team will work with Senator Steube to educate him on life in the field that so many of you face every day in the insurance industry.

Meanwhile, Rep. Jay Trumbull (R-Panama City) who is leading the AOB reform effort in the House with his bill, HB 7015, has received approval by its only committee of reference and is ready for a full vote of the House. The bill addresses AOB abuses and enhances consumer/policyholder protections. It’s a replica of last session’s HB 1421, which had passed the House but was never heard in the Senate. The bill allows AOBs to exist under certain conditions, and requires that they be in writing, contain an estimate of services, notice the insurer, and allow the policyholder 7 days to rescind the AOB.  It prohibits specified fees as part of an AOB as well as any policy changes related to a managed repair program.  It requires a 10-business day notice prior to filing suit against an insurer, an assignee’s pre-suit settlement demand and insurer’s pre-suit settlement offer, and puts parameters around attorney fees.  There would be consumer disclosure language so the consumer is fully aware of the consequences when executing an AOB and would limit an assignee from recovering certain costs directly from the policyholder.   Beginning in 2020, insurers would be required to report to OIR their data on claims paid via AOBs.

While one-way attorney fees would continue to exist for first-party claims filed by a policyholder against an insurer, this bill sets special two-way attorney fees for third-party claims. Insurance Commissioner David Altmaier said consumers would be held harmless regardless of who wins the lawsuit and described the bill as a balance between discouraging abusive vendor claims while still allowing contractors to go after insurers who low-ball claims and settlement offers. Here’s how (from the bill):

“If the parties fail to settle and litigation results in a judgment, the PCB provides the exclusive means for either party to recover attorney fees. The PCB defines the difference between the insurer’s pre-suit settlement offer and the assignor’s pre-suit settlement demand as “the disputed amount.” The award of fees are as follows:

  • If the difference between the judgment and the settlement offer is less than 25 percent of the disputed amount, then the insurer is entitled to attorney fees.
  • If the difference between the judgment and the settlement offer is at least 25 percent but less than 50 percent of the disputed amount, neither party is entitled to fees.
  • If the difference between the judgment and the settlement offer is at least 50 percent of the disputed amount, the assignee is entitled to attorney fees.”

Rep. Trumbull said the bill protects consumers, pointing out that the number of residential water loss claims jumped 46% from 2010 to 2016, “and it’s not because it was raining harder.” An amendment to limit to one the number of under-oath examinations and statements an insurer might demand of a vendor failed to pass.  The bill can now go to the full House floor for a vote.

Back in the Senate, in addition to Senator Steube’s SB 1168, other previously existing bills, such as SB 62 by Senator Dorothy Hukill (R-Port Orange) are all stalled. The bill prohibits certain attorney fees and requires those vendors that execute the AOB to comply with certain requirements prior to filing suit.  HB 7015 has some elements of this bill.

Likewise, SB 256 by Senator Gary Farmer (D-Ft. Lauderdale) is still awaiting a hearing. It would prohibit insurer managed repair programs and prevent most property insurance policies from prohibiting or limiting AOB.  But it would also require the AOB be in writing, be limited to an accurate scope of work to be performed, and allow the policyholder to cancel the AOB within seven days without penalty and otherwise, be shared with the insurer within seven days of execution. A final repair bill would be required to both policyholder and insurer within 7 days of work completed.  Referral fees would be limited to $750 and require water damage remediation assignees to be ANSI certified. Insurance companies would be required to offer any settlement within 10 days of assignee filing suit over an AOB dispute.  It also prohibits insurers from including the costs of attorney fees paid in losing cases into their rate base or future rate requests.  Under the bill, OIR would be required to conduct an annual AOB data call beginning in 2020.  HB 7015 has some elements of this bill, but not the attorney fee rate recoupment.

Rep. David Santiago (R-Deltona), who has been a champion in the fight against the abuse of assignment of benefits for the past several years, in early November filed a catch-all insurance bill (HB 465), known as an “omnibus” bill to change several provisions of the insurance code.  The bill covers several insurance topics such as property, auto, surplus lines and some general regulatory provisions.  One of the most interesting is that it excludes from the Department of Financial Services complaint registry complaints filed by third parties who are not satisfied with an insurance company’s claims handling when an assignment of benefits is involved.  The thinking is that there is an incentive by third party vendors to dispute the claim to delay it, which drives up the cost of the claim.  The bill also makes a priority the use of the Department of Financial Services mediation program for property insurance claims disputes involving an assignment of benefits. This bill, too, is stalled as is its identical companion bill in the Senate (SB 784) by Senator Brandes.

Windshield AOBAssignment of Benefits abuse is now occurring in the auto insurance lines, as insurance companies note an increase in customers being solicited out of the blue for a “free windshield” with accompanying exorbitant claims costs. Senator Hukill’s SB 396, would allow auto insurers to require an inspection of the damaged windshield of a covered motor vehicle before the windshield repair or replacement is authorized. The bill was scheduled to be heard last week in the Senate Banking and Insurance Committee, but was crowded out by the parade of firefighters testifying on Workers’ Comp (see below) and wasn’t taken up, with some believing this was the intent of the committee chairman to “let the clock run out.” It has an identical companion bill in the House (HB 811) by Rep. Plasencia.

Workers’ Compensation – Like AOB reform, Workers’ Comp reform is another issue being fast-tracked by the Florida House, with HB 7009 by Rep. Danny Burgess (R-Zephyrhills) ready for a House floor vote. It’s a near replica of HB 7085 from last session that died over disputes on maximum hourly attorney fees. This is by far one of the most contentious – and by court rulings, most immediate – issues facing the legislature after the state Supreme Court’s 2016 ruling that our workers’ comp system was unconstitutional.

Last year’s bill came on the heels of a 14.5% average increase in workers’ comp rates – adding to the urgency. This fall, however, OIR approved decreased rates averaging 9.5%.  Rep. Burgess has warned that those decreased rates don’t reflect the lagging cost increases still anticipated from state Supreme Court decisions throwing out limits on attorney fees and extending certain disability payments.  Rep. Burgess said it was important to be proactive and pass reforms now, before the next rate increase.  The bill eliminates fee schedules but puts a cap of $150/hour on plaintiff (workers) attorney fees.

Rep. Jamie Grant (R-Tampa) has noted this bill does not include a competitive rate making process that was in last year’s bill at one point. Florida is one of seven states solely using a “Full Rate” or administered system that takes into account an insurer’s extraneous expenses and profit.  Thirty-eight states instead use a “Loss Cost” or competitive system which limits insurers to a rate necessary to cover losses and benefit costs and only expenses directly related to claims settlement. “Every dollar spent unnecessarily is another dollar not spent on workers care,” said Rep. Grant. “A competitive rate making process will go a long way to reducing rates.” HB 7009 has no Senate companion – not a good sign for any bill’s future success – and time is running out for one.

Workers’ Compensation for First RespondersCS/SB 376 by Senator Lauren Book (D-Plantation) removes the requirement in some on first responders that there be a physical injury in some circumstances in order to receive medical benefits for a “mental or nervous injury”, so long as the responder witnessed a specified traumatic event. The bill occupied 90-minutes of last week’s 2-hour Senate Banking and Insurance Committee and squeezed out consideration of other major bills in the process, as a parade of firefighters and other first responders shared personal stories of anguish on the job. The bill passed and is pending reference review. It’s the only bill on the subject getting traction so far.  A similar House bill HB 227 by Rep. Matt Willhite (D-Royal Palm Beach) and SB 126 by Senator Victor Torres (D-Kissimmee), which would require treatment begin within 15 days, have not been heard.

Personal Injury Protection (PIP), also called No Fault InsuranceVarious bills under consideration would eliminate the state requirement that motorists carry $10,000 in PIP insurance and put responsibility for vehicle accidents on the party at fault. At this point, the House is making much more progress with PIP reform than the Senate. Senator Tom Lee got just 15 minutes of the remaining time in last week’s Senate Banking and Insurance Committee but couldn’t finish his presentation of SB 150, which replaces PIP with mandatory $5,000 of Med Pay coverage and varying amounts of Bodily Injury liability limits which appears to give consumers choices:

  • 20/40/10 minimum coverage from 1/1/19-12/31/20 or a Med Pay and motor vehicle liability policy with a combined property damage and bodily injury coverage of $50,000 for one crash;
  • 25/50/10 minimum coverage from 1/1/21-12/31/22 or a Med Pay and motor  vehicle liability policy with a combined property damage and bodily injury coverage of $60,000 for one crash; and
  • 30/60/10 minimum coverage from 1/1/23 and thereafter or a Med Pay and motor vehicle liability policy with a combined property damage and bodily injury coverage of $70,000 for one crash.

The House, meanwhile, has fast-tracked its bill, HB 19, which is ready for a full House floor vote. The bill eliminates PIP and would require motorists instead to carry Bodily Injury liability insurance at a minimum $25K/$50K level. Rep. Erin Grall (R-Vero Beach) who is sponsoring this bill for second year in a row, has noted that despite various PIP reforms in the past, costs keep going up, driven partly by fraud. OIR and committee staff analysis show auto rates would go down (5.6% overall) if the bill passes and should encourage those driving illegally without proper insurance (22% of Florida drivers she has said) to get coverage.  The bill also revises the uninsured and underinsured coverage legal damage thresholds.  HB 19’s companion bill in the Senate is SB 150.

HB 6011 by Rep. Julio Gonzalez (R-Venice) deletes the requirement for policyholders & health care providers to execute disclosure & acknowledgment forms to claim personal injury protection benefits. These requirements were originally established to help prevent fraud and include verification that actual services were rendered and weren’t solicited by the provider.  While we have not had a personal conversation with Rep. Gonzalez to understand the catalyst behind this bill, we surmise that as an orthopedic surgeon, lessening the insurance paperwork burden for medical providers has long been a goal of those in the profession.  This bill appears to be a step in that direction. The bill has been referred to the House Insurance and Banking Subcommittee but is still stalled. HB 6011 has no Senate companion – not a good sign for any bill’s future success – and time is running out for one.

Hurricane Irma Damage The House Select Committee on Hurricane Response and Preparedness last week listened to a recap of the 141 member recommendations to date for responding to Hurricane Irma and preparing for future storms. They include extending the Suncoast Parkway from Citrus County to the Georgia line to aid in evacuations, using cruise ships to evacuate the Keys, burying more electric utility lines, and toughening penalties in state contracts for vendors that don’t deliver what they promise (such as debris cleanup). Most don’t have price tags attached.  This caps two months of committee hearings on various ideas from government and private interests. Of interest to insurance interests, Rep. Holly Raschein (R-Key Largo) suggests high-risk areas not be rebuilt after storms and instead, could be part of a state buyout program, with the land to revert to natural buffers. (This is an idea that will be familiar to newsletter readers from this past summer’s report Aligning Natural Resource Conservation, Flood Hazard Mitigation, and Social Vulnerability Remediation in Florida  which found Florida has 15,000 “Repetitive Loss Properties”.) Committee Chairwoman Jeanette Nunez (R-Miami) said she expects the committee will deliver its report to House Speaker Richard Corcoran by January 8, the day before the 2018 legislative session begins.  Speaker Corcoran has made clear the House spending priorities this upcoming session will be for hurricane relief, noting specifically the Suncoast Parkway extension and underground utilities during an appearance last Wednesday on C-SPAN.

Florida Building Commission – The Florida Building Commission, which oversees state building codes – some of the toughest in the nation due to Florida’s susceptibility to hurricane damage – would be downsized under HB 299  by Rep. Stan McClain (R-Ocala), who is a residential contractor. The bill would cut the board more than in half, from 27 to 11 members, removing representation from several sectors in the building industry.  The bill removes members representing: air conditioning, mechanical or electrical engineering, county code enforcement, those with disabilities, manufactured buildings, municipalities, building products, building owners/managers, the green building industry, natural gas distribution, the Department of Financial Services, the Department of Agriculture and Consumer Affairs, the Governor appointee as chair, and reduces from three members to one municipal code enforcement official and would no longer require a fire official. The bill also changes the qualifications of the architect member, removing the requirement of actively practicing in Florida. Rep. McClain said the bill is meant to remove any Commission members that aren’t directly involved in the building process but that he’s open to suggested changes. An amendment that would have removed the insurance representative was withdrawn this fall.  HB 299 would leave the Commission comprised mostly of contractors. The bill is on its way to its last stop at the Commerce Committee but it has no Senate companion – not a good sign for any bill’s future success – and time is running out for one.

Property Tax Exemption for Generators – Designed to help those who want to help themselves the next time a big hurricane or other calamity hits and the power goes out, SJR 974 by Senator Jeff Brandes (R-Pinellas) would place a constitutional amendment on the 2018 ballot for voters to consider a property tax exemption for the just value of a permanently installed stand-by generator system when assessing annual property taxes; a companion bill SB 976 (Brandes) would implement the measure.

Contractors Without Insurance HB 89 by Rep. Ross Spano (R-Riverview) requires that contractors lacking public liability insurance shall be personally liable to a consumer for damages that having the proper insurance would have covered. The bill passed the Civil Justice & Claims Subcommittee in early November but has two more stops.  Its Senate companion SB 604 by Senator Greg Steube (R-Sarasota) hasn’t had a hearing in any of its three committees yet.

Trade Secrets in Public Records HB 459/HB 461 by Rep. Ralph Massullo (R-Beverly Hills) were filed in October following House Speaker Richard Corcoran’s press conference about his objection to state agencies who claim trade secret to shield contract and vendor information. Corcoran said that agencies should not be entitled to trade secret privileges if they “spend one penny of taxpayers’ dollars.”  HB 459 repeals over 75 public records exemption references in current law, including the trade secret process used in the insurance code, Section 624.4213, Florida Statute.  Interestingly, a “sister” bill to HB 459, HB 461 appears to re-enact a new trade secret process that is not unlike current law regulating insurance entities use of trade secrets now.  So in essence, HB 459 repeals the current insurance entity trade secret practice and HB 461 restores it.  Much of this is procedural and we will follow this closely. HB 459 and HB 461 are stalled. HB 459 has companion SB 956 and similar bill SB 958 (both recently filed by Senator Mayfield) and HB 461 has a similar bill in SB 958.

Insurance Rates Like he’s tried to do with AOB, SB 258  by Senator Farmer would prohibit insurance companies from including the costs of attorney fees paid in losing cases into their rate base or future rate requests in Workers’ Compensation and Life policies. Farmer’s similar bill in the 2017 session failed.  SB 258 has been referred to the Committees on Banking and Insurance, Appropriations, and Rules but has not been scheduled to be heard.  It is stalled and has no House companion – not a good sign for any bill’s future success – and time is running out for one.

Direct Primary Care SB 80 by Senator Lee, allows doctors to enter into monthly fee for service arrangements directly with individuals or employers, essentially bypassing health insurance organizations. Informally dubbed “concierge medicine for the masses”, the bill passed by unanimous votes in October out of the Banking and Insurance, as well as the Health Policy Committees and awaits action in the Appropriations Committee.  SB 80 has a companion bill in the House (HB 37) by Rep. Burgess which passed the House Health and Human Services Committee unanimously in November – it’s only stop – and now awaits to be taken up by the full House when it convenes in January.

Health Insurer Authorization CS/SB 98 by Senator Steube passed unanimously out of the Senate Judiciary Committee last week.  It and companion bill HB 199 by Rep. Shawn Harrison (R-Tampa) would prohibit prior authorization forms from requiring information not necessary to determine the medical necessity or coverage for a treatment or prescription. The bills would also require health insurers and their pharmacy benefits managers to provide requirements and restrictions on prior authorizations in understandable language and to make them available on the internet, along with a 60-day notice of any changes. There has been public question whether the House will take this up as it’s still awaiting its first hearing.  Senator Steube is also sponsoring SB 162 that would prohibit health insurers and HMOs from retroactively denying insurance claims under certain circumstances. The bill passed unanimously last week out of the Senate Banking and Insurance Committee and now goes to the Health Policy Committee.  

Flood Insurance and Mitigation SB 158 by Senator Jeff Brandes (R-St. Petersburg) 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. The bill has been referred to the Committees on Environmental Preservation and Conservation, Appropriations, and the Appropriations Subcommittee on the Environment and Natural Resources but has not been scheduled to be heard. We are closely following this bill, however, it is stalled and has no House companion – not a good sign for any bill’s future success – and time is running out for one.

Insurance Credit Scoring and Redlining SB 414 by Senator Farmer would ban the use of credit scores as a determining factor in calculating auto insurance premiums. Currently, insurers are permitted to use a customer’s credit history as a justification for higher insurance rates. Statistically, drivers with poor credit scores pay more and according to Farmer “the use of credit scores as a determining factor for auto insurance rates has been found to disproportionately affect minority populations, with African American and non-white Hispanic policyholders often paying higher premiums, and is not a reliable indicator for increased risk.”  Similarly, SB 410 would prohibit the use of zip codes as a determining factor in calculating auto insurance premiums, which Farmer called “de facto discrimination.” HB 659, which passed and became law in 2016, allows single zip code rating territories if they are actuarially sound and the rate is not excessive, inadequate, or unfairly discriminatory. Neither SB 414 nor SB 410 have had a hearing yet, and with no House Companion, their future is uncertain.  

Florida Hurricane Cat FundHB 97 by Rep. David Santiago (R-Deltona) adds an additional 10% charge to an insurer’s reimbursement premium with the money going to the Division of Emergency Management to fund a wind and flood mitigation program for residential structures. The charge would increase to 15% and remain there until the fund reaches $10 billion. It also contemplates OIR levying an emergency assessment to cure certain deficits in the fund. The bill also revises reimbursements the SBA must make to insurers to add a 25% and 60% level of insurer’s losses from each covered event in excess of the insurer’s retention and the overall contract year obligation. The bill has been referred to the House Insurance and Banking Subcommittee meeting but is stalled. Senator Brandes will be filing a companion bill in the Senate.

Patient’s Choice of ProvidersDubbed the “Patient’s Freedom of Choice of Providers Act”, HB 143 by Rep. Ralph Massullo (R-Beverly Hills) prohibits a general health insurance plan from excluding willing and qualified health care provider from participating in a health insurer’s provider network so long as the provider is located within the plan’s geographic coverage area. The bill has been referred to the Health Innovation Subcommittee, but has stalled. There is a Senate companion, SB 714, which in mid-November was referred to the Banking and Insurance, Health Policy, and Rules Committees.

TelehealthSB 280 by Senator Aaron Bean (R-Fernandina Beach) is part of a continued effort to put remote health practitioner visits via the internet on an equal footing as in-office visits, in order to reduce health costs and provide parity of care to rural patients. A state panel has spent the past year executing a list of legislative directives to help smooth the kinks and establish recommended procedures to help make this bill a reality.  SB 280 would establish the standard of care for telehealth providers; encourage the state group health insurance program to include telehealth coverage for state employees; and encourage insurers offering certain workers’ compensation and employer’s liability insurance plans to include telehealth services.  The bill has been referred to the Banking and Insurance; Health Policy; and Appropriations Committee, as well as the Appropriations Subcommittee on Health and Human Services, but no hearing has yet been scheduled.  A companion, HB 793 by Rep. Massullo, was filed in late November and has been referred to the House Health Quality Subcommittee and the Health and Human Services Committee.

Texting While Driving – Moving Florida’s current ban on texting while driving from a secondary offense (where you can be ticketed during a traffic stop made for another reason) to a primary offense got a big boost last week, with House Speaker Richard Corcoran lending his support to newly filed HB 33 by Rep. Jackie Toledo (R-Tampa). First-time violators would face a $30 fine plus court costs for a non-moving violation. Second-time offenders would face a $60 fine plus court costs with a moving violation. Those involved in crashes or texting in school zones face additional penalties.  Like SB 90 by Senator Keith Perry (R-Gainesville), this bill requires the officer notify the driver of the constitutional right not to have their cellphone examined by authorities. HB 121 goes a step further by doubling fines for violations in school zones.  

Controlled SubstancesFlorida has seen a huge increase in accidental drug overdose deaths. A recent report by the FDLE’s Medical Examiners Commission found the total number of drug-related deaths rose 22% from 2015 to 2016. The number of opioid deaths were up 35%, where opioids were either the cause of death or present in the decedents.  And this whopper: deaths from the especially dangerous synthetic opioid fentanyl rose 97%.  In fact, the report showed death from almost all kinds of drugs, prescription, street drugs, and alcohol – were all up.  Deaths by cocaine jumped 83%.  The Senate Health Policy Committee held a November hearing on the issue.

Proclaiming that opioids are “ravaging families and communities” in Florida, Senator Lizbeth Benacquisto (R-Ft. Myers) has filed SB 8 which would restrict opioid supply to three days for standard prescriptions but would allow doctors up to a seven-day supply in certain medical cases. Additionally, it provides for more continuing education for responsibly prescribing opioids and requires participation in the Prescription Drug Monitoring Program by all healthcare professionals that prescribe opiates. It comes on the heels of President Trump’s declaration of a national health emergency over opioid abuse. One of our readers sent us this research published in the Journal of the American Medical Association showing that states with any kind of medical marijuana law had a 25 percent lower rate of death from opioid overdoses than other states. Although SB 8 is stalled, a similar bill in the House (HB 21) was filed in mid-October and referred to the referred to Health Quality Subcommittee, the Appropriations Committee and the Health and Human Services Committee.

Just this past week, news that insurers are seeking reimbursement for the high cost of opioid addictions: Opioid Pain Treatment Addiction Costs Workers’ Comp Carriers, Health Insurers Billions

Autonomous VehiclesHB 353 by Rep. Jason Fischer (R-Jacksonville) authorizes the use of vehicles in autonomous mode. The autonomous technology would be considered the human operator of the motor vehicle and provides that various provisions of law regarding motor vehicles such as rendering aid in the event of a crash do not apply to vehicles in autonomous mode where a human operator is not physically present as long as the vehicle owner promptly contacts law enforcement. The bill also addresses the applicability of laws regarding unattended motor vehicles and passenger restraint requirements as they relate to vehicles operating in autonomous mode where a human operator is not physically present in the vehicle. The bill unanimously passed the House Transportation and Infrastructure Subcommittee in November and now moves to the Appropriations Committee. A Senate companion (SB 712) by Senator Brandes was filed in November and referred to the Transportation, Banking and Insurance, and Rules Committees.

Helpful Links:

2018 House Session Calendar

2018 Senate Calendar

Another Day, Another DCA Decision
Different District Courts of Appeal Rule Differently on Treatment of AOB Policy Language

Here at Lisa Miller and Associates, we continue to follow Assignment of Benefits (AOB) issues very closely, not only in the Florida Legislature and the Office of Insurance Regulation (OIR), but in the Florida Courts as well. Readers of the November 13 edition of the LMA Newsletter will recall our story on the recent ruling by Florida’s Second District Court of Appeals (DCA) in Lakeland in favor of an insurer’s restriction on the use of an AOB.  In that case (Bio Logic, Inc. vs. ASI Preferred Insurance Corp.), the 2nd DCA allowed ASI to keep its policy language requiring that an insured party, such as the bank as mortgager, has to sign off on an Assignment of Benefit (AOB).  If the bank doesn’t, then the AOB isn’t valid.

Well now comes a decision last week by another DCA, the Fifth District Court of Appeal in Daytona Beach, which ruled that Security First Insurance Company should be restricted from having the same language regarding AOBs in its policies. Security First had sought permission from OIR to add the language but was rejected by OIR and upon appeal, by a Florida Department of Administrative Hearings officer as well.  The Fifth DCA noted that the hearing officer concluded “restriction on the right of a policyholder to freely assign his or her post-loss benefits is prohibited under Florida law.”

Further, the court wrote: “Review of the case law relating to the subject of the assignability of post-loss benefits reveals that Florida courts have been previously invited to consider these public policy arguments; however, the district courts have refused these invitations, concluding that such considerations are for the Legislature to address.”

So for now, one could be left to conclude that we have two different sets of rules existing in one state insurance marketplace. No word yet on whether this latest decision will be appealed to the Florida Supreme Court.  Stay tuned!

Hurricane Irma Three Months Later
Insurance adjusters and construction workers remain in high demand

Today marks three months since Hurricane Irma hit Florida on September 10-11. The official death toll in Florida has been put at 72, not including those 14 heat-related deaths at that Broward County nursing home.  Here’s the latest on post-Irma developments:

Damage & Claims

  • Total Estimated Insured Losses in Florida as of a week ago Friday (Dec.4) surpassed the $6 billion mark, at $6.3 billion (they had been $5.5 billion at this time last month). Almost 853,000 claims have been filed, with 73% closed (compared to 55% closed this time last month), and a paid to unpaid ratio of 3.4 to 2. The Keys, hit hardest by Irma, have a closed claims rate of 62%, reflecting the ongoing adjustment work there. Industry estimates of total damage have ranged from $8 billion to $16 billion. OIR will post updated figures here later today. The Florida Cat Fund, which provides reinsurance for insurers, is expected to pick up in excess of $5 billion of the above claims.
  • Private flood insurance claims represented 1,496 of the above claims totals (an adjustment from OIR’s figures of 1,548 one month ago). In addition, FEMA’s latest update notes more than 26,600 Florida flood claims had been filed with the National Flood Insurance Program (NFIP) as of November 1, with policyholders receiving $239.5 million in payouts for repair and rebuilding flood damaged property. Yet reports estimate that up to 80% of Florida flood victims may not have either NFIP or private flood coverage.
  • Citizens Property Insurance Corporation, Florida’s state-run insurer of last resort, expects $1.2 billion in insured losses and 70,000 Hurricane Irma claims over the next 18-24 months. As of the end of November, Citizens had closed nearly two-thirds of the 62,000 claims it had so far. It expects to achieve a 90% case closure rate by the end of this year, due in part, to greater use of drones for damage inspection and greater utilization of claims estimation software technology.
  • Irma recovery has been slowed by shortages of insurance adjusters and repair contractors. Citizens reported on its Claims Committee call last week that it faced resource challenges. Because of Hurricane Harvey, a very large number of adjusters were employed by NFIP to go to Texas. Most of the qualified adjusters were deployed to Texas so Citizens’ Contracted Independent Adjuster Vendors struggled to find qualified resources to respond to Hurricane Irma – despite Citizens increasing its adjuster compensation rates by 30% to compete with NFIP. It’s been a problem for private insurance carriers as well, as detailed in this Sun-Sentinel story.
  • Florida citrus growers continue their efforts – so far unsuccessfully – to get federal aid to cover their crop losses from Irma, which range from 30% to 70% depending on the individual grove. In addition to fruit drop, the storm blew over thousands of trees and damaged many more, which will affect crop sizes for the next few seasons. Growers have received only federal low-interest loans for building and other farm infrastructure losses. Meanwhile, Florida vegetable operations have returned to normal production, with most growers reporting a four-six week delay in processing after the storm.
  • The last of the U.S. Small Business Administration Business Recovery Centers are expected to close this month in Florida with Centers in Broward, Palm Beach, and Highlands Counties having ceased operations this past weekend. The SBA reported as of mid-November having approved 13,757 loans for more than $505 million related to Hurricane Irma. The filing deadline to return applications for physical property damage expired on Nov. 24, 2017.  The deadline to return economic injury applications is June 11, 2018.

With the Atlantic hurricane season officially behind us, this year’s six-month season was officially the most expensive ever, with $202.6 billion in damages across all affected states and U.S. Territories.

With Hurricanes Come Fraud
Two tales from South Florida

With hurricanes and other calamities come fraudsters both home-grown and out of state. Shortly after Hurricane Irma struck Florida, the Department of Financial Services (DFS) activated three dedicated anti-fraud strike teams and deployed them to South Florida, Southwest Florida, and Central Florida – in the heart of the damaged areas.  Often times, disaster brings out the best in people, but in these two examples they did not.

The strike force has arrested a West Palm Beach man for lying to his insurance company in an attempt to file a false insurance claim on his vehicle for damage supposedly caused by Irma. According to DFS, Claude Milhomme filed a claim with his insurance company the day after Irma hit, claiming water damage to his vehicle from Irma in the amount of $225 to cover a diagnosis, after-hours fee, and storage fee.  Acting on a tip the next month, the strike force discovered that four days before Irma hit, a Georgia repair shop ran tests that revealed the vehicle was inoperable due to a blown gasket caused by overheating.  He was booked on one count of fraudulent insurance claim by falsely stating a material misrepresentation of facts.

Farther south in Miami, Renee De La Maza was arrested for insurance fraud and grand theft following her attempt to file a damage claim against a new insurance policy after already receiving a $60,000 insurance payout from her former insurance provider for the same damages. An alert insurance company became suspicious of her recent claim-filing activities and alerted the strike team.  De La Maza is learning the hard way there’s a reason you’re supposed to use your insurance settlement to pay for the claimed repair.

According to DFS, De La Maza initially filed her claim way back in 2005 after her home suffered water damage from Hurricanes Katrina, Rita, and Wilma. She received more than $60,000 to make repairs.  Five years later when she filed a supplemental claim, she was turned down because her insurer noted the damage was similar and very few initial repairs had ever been made.  Undeterred, she took out a new policy with a different insurer in 2015 and then made a claim for wind and rain damage that she said had just occurred.  It hadn’t – DFS later determined it was the same old damage from back in 2005 and in that supplemental claim in 2010.  And despite being turned down in 2015 after her refusal of repair, the very next month she resubmitted it: this time for $178,200 in damages.  The investigation also revealed De La Maza’s prior claims for damages were never disclosed to her new insurance provider.

NFIP Reauthorization Kicked Down the Road
Current federal flood program now set to expire December 22

Congressional leaders and the President in extending funding of the federal budget last Friday for two weeks while they try to work out a new budget, included the National Flood Insurance Program (NFIP) in that extension. But even so, Congress will likely push into 2018 a decision on how to reform the beleaguered NFIP that 1.8 million Floridians depend on for their property flood protection. Congress must reauthorize the program, because without it, federally-backed home mortgages which require flood coverage for high-risk zoned properties could come to a standstill.

But the taxpayer-subsidized NFIP is $25 billion in debt and still using old flood data and maps, with rates that don’t match risk. As we reported in the last LMA Newsletter, Congress is considering reauthorization under a package of reform bills called the 21st Century Flood Reform Act.   It passed the U.S. House last month but is still awaiting Senate consideration.

One of those reforms addresses grandfathered properties that are still enjoying 1960’s-era premiums and riddled with repetitive losses. It would strip grandfathered NFIP rates after two future claims, with rates then rising 10% per year until hitting the current risk-rate. A third claim would raise rates 15% per year.  Another reform sets qualifications for private carrier flood policies to satisfy federal mortgage requirements, while also encouraging the growth of private market alternatives to the NFIP.   It’s estimated that 77% of Florida properties would see lower premiums with private market flood policies.

Those two key reforms are the subject of our newest episode of The Florida Insurance Roundup podcast. I had the pleasure to sit down last week to discuss this important issue with Brian Squire, Managing Executive Senior Vice President at Hays Companies in Destin, Florida and Helen Devlin, Senior Lobbyist with the National Association of Realtors in Washington D.C.  Together on this podcast, they helped outline what’s at stake for Florida NFIP policyholders and shared ideas on how best to balance flood insurance affordability with NFIP sustainability, without hurting Florida’s growing real estate market.  It’s worth the listen at the link above!  As always, we welcome your feedback and input on future podcast topics.

There’s also late news that FEMA has selected Milliman to design a new nationwide rating plan for the NFIP. We look forward to closely following this welcome development.

Which do you “like” better?
Floridians rate their governments

“Liking” on Facebook, Re-tweeting on Twitter, and Sharing on Instagram…say what you want about social media but liking or not liking something is all the rage!  So when Floridians were asked which branch of government they liked the best, they overwhelmingly chose their local officials versus state and federal ones underscoring the old adage that all politics “is” local, a phrase that was often used by Tip O’Neill.

According to results released recently of the annual USF-Nielsen Sunshine State Survey, county governments get the highest marks, with 41% of Floridians ranking their performance as good or excellent. That was followed by 37% giving good or excellent marks to school boards and city governments. The survey found that 33% of Floridians give good or excellent marks to state government and 21% give those ratings to the federal government.

The results also noted that residents of the Miami and Fort Lauderdale region “rate the performance of all governments more negatively than residents in other parts of the state.” The survey, a joint effort of the University of South Florida College of Arts and Sciences and The Nielsen Company, LLC, was conducted from July 24 to Aug. 14.  It has been conducted annually for four years. Floridians rate “government at the grassroots level” as more trustworthy and responsive, although overall ratings dipped for governments at all levels, except the state, in 2017

Florida’s Constitutional Revision Commission
Shaping Florida for the next 20 years

In 1968, Florida became the only state that allows for its state constitution to be revisited and changed through a regularly scheduled commission called the Constitution Revision Commission (CRC). The CRC, which meets every 20 years, is a group of 37 commissioners who examine the relevance and applicability of Florida’s Constitution to current and future needs. In February 2017, Florida named its third CRC.

The CRC itself is an unusual creature of constitutional construction and is not within one of the traditional three branches of government. The Governor’s Office has provided full time staff, including an Executive Director and the commission is led by Chairman Carlos Beruff, who is a businessman and native Floridian who has been a resident of Manatee County since 1980.  Chairman Beruff has built more than 2,000 homes and developed, owned and managed dozens of other properties, employing thousands of people in the process. He was appointed by the Governor to lead the panel that has until spring 2018 to decide which ballot measures ought to be put before Florida voters.

Here’s How This Works

Per the Florida Constitution, the Commission must adopt its own rules of procedure and examine the state constitution (except for matters related to taxation or the state budgetary process). After its creation, the CRC held two sets of public hearings to garner ideas from the public and gain feedback on the proposals. After the proposals have been approved by the CRC, they are placed directly on the 2018 General Election ballot. The CRC is meeting this week to consider proposals that would require two-thirds votes of the House and Senate before state taxes or fees could be increased, and another one that would guarantee grandparent visitation rights in divorces.

The CRC is comprised of 37 members, which are appointed as follows:
·         Governor Appointments: 15
·         Senate President Appointments: 9
·         Speaker Appointments: 9
·         Chief Justice Appointments: 3
·         Attorney General: + 1

Why the CRC Matters to You

Twenty years ago, the 1998 Commission passed eight out of nine proposals, three of which would have failed today due to the 60% vote threshold. The CRC holds incredible power over Florida’s Constitution. Its decisions on topics ranging from gambling to education to redistricting to the courts, could impact Florida’s families and businesses for the next 20 years. To follow the CRC’s work, see https://www.flcrc.gov/

Easy Living for Baby Boomers – Hands Free Lifestyle
The older the person, the more likely they are to rent

Often, property insurance companies try to track home buying and rental trends to forecast growth.  A recent story in the Florida Realtors news clips provided some recent insight. Baby boomers are the fastest-growing group of renters in the nation, increasingly being drawn to the convenience of apartment rental life. Between 2009 and 2015, the number of renters ages 55 and older jumped 28 percent, while renters ages 34 and younger only increased 3 percent. Further, more than 5 million baby boomers nationwide are expected to rent their next home by 2020, according to a 2016 study by Freddie Mac.  And a 2017 Harvard University study cited US house prices rose 5.6 percent in 2016, finally surpassing the high reached nearly a decade earlier. Achieving this milestone reduced the number of homeowners underwater on their mortgages to 3.2 million by year’s end, a remarkable drop from the12.1 million peak in 2011. In inflation-adjusted terms, however, national home prices remained nearly 15 percent below their previous high. As a result, the typical homeowner has yet to fully regain the housing wealth lost during the downturn and many are choosing to rent.

More companies are offering “ease of living” products and services. For example, Ollie, a national co-living brand, markets an all-inclusive experience in fully furnished micro-unit studio apartments or micro-suites (less than 400 square feet). With micro-suites, renters have private bedrooms but share the kitchen, bathroom and other common areas. Ollie says just under 20 percent of its tenants are over the age of 50. The company also offers a butler service for such tasks as watering plants and making beds; and each of Ollie’s buildings offer social activities for tenants, such as ski trips and guacamole-making contests.  Zach Ehrlich of New York-based brokerage Mdrn. Residential launched a concierge-like rental service called Stoop, which offers short-term leases.

The bottom line is this:  downsizing boomers are willing to sacrifice extra square footage for a brand-new home.  They want maintenance-free living and to be able to call someone when the toilet overflows!

A Note of Gratitude

Thank you for spending time reading this edition of our newsletter.  I am able to see, for the most part, how many of you are faithful readers and I am humbled at the following we have!  Feel free to share our work with all your friends and family, as we do this as a labor of love. We know that the 2018 year is going to be fantastic and we will be by your side.  We will return to our publication on Monday, January 8!  But you all know how to find us if you need us!  My best for a wonderful season!