LMA NEWSLETTER MAY 15, 2017

Will They Be Baaack?
The Session’s “Terminator” Issues

Will there be a special session to prevent smokeable medical marijuana from becoming the (Florida Department of Health) rule of the land? And will a special session answer the question of how many dispensaries Florida should have, i.e. one on every corner or a limited number?  These are the two critical issues that seem to be on elected officials’ minds as we read with interest Senate President Joe Negron’s May 11 memo to each of Florida’s 40 senators.  His Memo on Implementation of Amendment 2 (2016), Use of Marijuana for Debilitating Medical Conditions discussed what he believes happened in the final hours of session where the medical marijuana bill failed to pass because of disagreement between the House and Senate on its content.  House Speaker Corcoran has his own opinion of why things failed and has announced his desire for a special session soon.  Senator Negron at this writing hasn’t announced whether he’ll agree to bring his Senate colleagues back to Tallahassee for this important issue.  You can read the Bill Watch recap in last week’s LMA Newsletter for all the crazy last minute details that prevented the two chambers from agreeing on one bill.

Last November, voters passed a state constitutional amendment by over 70% (6.5 million voters out of the 9.1 million votes cast) in favor of medical marijuana sales for debilitating conditions in Florida.  With the legislature failing to come to an agreement, it is now up to the Department of Health to implement the amendment and most certainly, the courts will be weighing-in on what happens next.  Smokeable marijuana – not allowed in either the House or Senate bills – is now being sold just in the last week since the regular session ended, with the medical marijuana treatment center vendor saying that using a “volcano” is permissible.  (Read about “Personal Weed Vaporizers” here.)

Of course, another reason legislators may return to Tallahassee soon would be to override Governor Scott’s potential budget veto.  Although it rarely happens, this year talk of the Governor vetoing the entire budget is superheated. The Governor must weigh if he has the votes to make the veto stick. It takes two-thirds of the senate and two-thirds of the house to overturn a Governor’s veto, and if that happens, the legislature’s budget becomes law.  So that means that out of the Senate’s 40 members, 27 senators would have to vote to override and of the House’s 120 members, it would take 80 votes to override.  When the budget passed last Monday, May 8, there were 34 senators who voted FOR the budget and 98 house members who voted for it – more than enough to override a potential veto.  In this game of high stakes, we will be watching and reporting to you up to the minute happenings.

The 2017 budget for the fiscal year beginning July 1 totals $82.4 billion, just about $100,000,000 more than last year’s budget.  But $2.4 billion in additional appropriations are in budget conforming bills for items including state employee pay raises, enhanced education programs, hospital funding for the low income pool, and although not fully funded respecting the Governor’s wishes, Visit Florida together with Enterprise Florida received a fraction of the moneys these organizations say they need to operate at top performance.

What will you find in the budget?  The News Service of Florida (it’s a wonderful publication that we recommend to all to subscribe) did a terrific analysis of budget and highlighted a few notables:

-$2.5 million for temporary facilities at Benderson Park in Sarasota to prepare for a rowing championship

-$200,000 for the City of Palm Bay’s pier/shoreline restoration; another $200k for Jacksonville to improve the Northbank Riverwalk; $200k for Port St. Lucie’s Riverwalk; and $1 million for the City of Milton’s Riverwalk improvements.

-$300,000 to move Ft. Walton Beach’s historic Gulfview Hotel to city-owned land

-$100,000 for the Pensacola Heritage Foundation

-$500,000 for the Arcadia rodeo (if you haven’t been you must – it’s a blast!)

-$250+k for the Nassau County Fair

-$860,000 for the Pasco County Fair

-$100+k for the Hardee County Fair

-$415k+ for city/county programs providing bear-resistant garbage containers

There’s money for local zoos; studies to explore moving to central Florida the Highway Patrol Academy; and much more.   Sometimes though what’s in the budget isn’t as telling as what is NOT in the budget.  As we referenced, there are two significant items that are not in the budget to the extent Governor Scott thinks they should be and those are his two pride and joys – Visit Florida which is our tourism promotion government agency and Enterprise Florida which is our public-private business development agency.  The legislature just said, “sort of” and the Governor considers this unacceptable from his perspective.


Florida A Great State to Do Business
Minding your business pays off

Speaking of doing business in Florida, Governor Scott wants every business in the world to be aware of the survey by Chief Executive Magazine titled The 2017 Best & Worst States for Business.  The magazine’s annual survey gathered the opinions of more than 500 CEOs this year and for the fifth year in a row, Florida came in number two overall among the best states for business.  Number One?  Texas, of course, for the 13th year in a row.

The survey noted that Florida businesses created 60,600 private-sector jobs in the first quarter of 2017, bringing the total number of new jobs added since December 2010 to more than 1.3M. For the fifth consecutive year, Florida’s annual job growth rate of 3.2% is exceeding the nation’s rate of 1.7%.

The magazine said Florida keeps ranking in runner-up place in part because CEOs find it the No. 5 living environment in the country.  Other Florida rankings include:  Workforce quality – No. 18 and Taxes and Regulation – No. 8

The survey also ranked states by industry.  Florida came in No. 1 in health care and pharmaceuticals/medical products, No. 2 in retail, technology/telecommunications and financial services, No. 5 in manufacturing, and No. 10 in energy/utilities (tied with Indiana and Tennessee).

Ten Best States:  TX, FL, NC, SC, IN, NV, TN, GA, AZ, WI

Ten Worst States:  CA, NY, IL, NJ, CT, MA, OR, HI, RI, MD


Office of Insurance Regulation:  2017 Will See a Continuance of Rate Increases
South Florida dubiously leads the way

Two insurance companies based in Florida (People’s Trust and Homeowners Choice Property & Casualty) were ordered to increase their overall rates higher than requested, with the Office of Insurance Regulation (OIR) citing that excessive claims in South Florida require the increased rates.

People’s Trust Insurance (who requested a 14.5% average increase was required to charge 16%) and Homeowners Choice Property & Casualty (seeking a 3.3-percent statewide average increase and instead was ordered to charge an 8% increase overall) cited increase in claims cost as one of the reasons for their original rate request.

What is an “average” throughout Florida means a number entirely different in South Florida as rates will almost always be higher. OIR stated publicly that the decision to approve higher rates than the companies sought was not connected to the long-standing failure (over 5 years) of legislation aimed at reducing claims abuses, but rather, simply higher losses in the area.  For insight on the failure of AOB reform and other major insurance legislation this session, listen to The Florida Insurance Roundup podcast here.

One of our readers asked LMA if it was common for OIR to demand an insurer to charge a higher rate and frankly, it’s as common as a claims crisis dictates.  Adequate rates are a function of solvency.  So OIR looks at the solvency of insurers when approving rate filings.  Rates are VERY competitive now and some insurers are pricing their policies to increase market share by keeping rates low but they also have to balance that they aren’t too low to meet the OIR’s solvency requirements. OIR closely watches those insurers who want to be competitive but will always strictly enforce solvency needs.  In this environment of “flat” rates with few increases up until last year, insurers face a dilemma when requesting rate increases because AOB costs are skyrocketing versus trying to stay competitively priced to increase or maintain market share.

For reasons not publicly known, Delaware this week reinforced its regulations that insurance companies (and insurance agents) can’t cite the regulator as the reason rates are increasing, issuing an official “Universally Applicable Bulletin.”  The Bulletin’s goal apparently was to make it abundantly clear that rate increases for insurers were not the Delaware DOI’s doing but rather evaluated in accordance with the Delaware Insurance Code – period. The Bulletin says false or misleading statements with respect to rates is a violation of Delaware’s unfair trade practices act with penalties possibly as high as $10,000 and/or license revocation. Read the bulletin here.


DCA Upholds Workers’ Comp Rate Increase
Claims of secret meetings dismissed

We are following Workers’ Compensation happenings and this past week, not surprisingly, Florida’s conservative 1st District Court of Appeals ruled in favor of the Office of Insurance Regulation and the National Council on Compensation Insurance (NCCI), upholding last year’s 14.5% rate increase and the procedure for its calculation and ultimate adoption.  With the 2017 legislature not acting on worker’s comp reforms (see Bill Watch here), we anticipate employers and the business community to continue its outcry of the burdens these increases are placing on businesses’ bottom line.  Please see Amy O’Connor’s Insurance Journal story here.  PS – we salute Amy who does an outstanding job covering the insurance beat.


Cybersecurity Order Issued
A recipe for risk analysis in uncertain times

Timing is everything.  This phrase could not be truer than what happened on the cybersecurity front last week.  On Thursday, May 11, the White House released an executive order titled “Presidential Executive Order on Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure.” Citing that “the (federal) executive branch has for too long accepted antiquated and difficult–to-defend (information technology),” the order stresses that effective risk management involves more than just protecting IT and data currently in place. It also requires planning so that maintenance, improvements, and modernization occur in a coordinated way and with appropriate regularity. Effective risk management requires agency heads to lead integrated teams of senior executives with expertise in IT, security, budgeting, acquisition, law, privacy, and human resources.

Two days later, newspapers across the country including a front page headline of the Wall Street Journal reported a worldwide cyberattack, potentially affecting almost 100 countries.  Cynics will undoubtedly declare that the White House knew of the impending attack and scrambled to issue the cyber executive order.  Others will say the order was issued just in time.  No matter the opinion and the timing, the order is well-written and provides a recipe for risk analysis and steps organizations can put in place to protect from cyber-attacks. We will listen out for you to hear what you think! Click here and send us your thoughts!


Helping Johnny and Janice Hit the Road
Driving the way to independence

The Florida Legislature this year made permanent a pilot program that helps children in foster care get their driver’s license.  What many teenagers take for granted as a rite of passage was extremely rare for foster kids to attain – only 3% had driver’s licenses in 2013.  Then along came a program known as K2I, short for Keys to Independence, and today about 700 kids are enjoying the independence that comes from driving.

The K2I program began in 2014 when the legislature approved a pilot program that recognized that a young adult will be less likely to be able to live independently without a driver’s license.  Community Based Care for Central Florida runs the program which pays for the cost of driver education, licensure, and insurance for those children in foster care.  By November of last year, more than 55% of eligible foster teens were enrolled.

This session, SB 60 (by Sen. Bean) made the program permanent with an $800,000 appropriation, expanding it to children in non-licensed foster care, and allowing youth to remain in the program halfway through their 18th year of age.  It also requires that getting a driver’s license be addressed in a foster child’s plan of transition to adulthood.  Governor Scott signed the bill into law on May 2.  Started in Florida, K2I is now in various stages of development in six other states.


Thank you Mom
A lesson to live by

Now that the legislative session is over, LMA will revert back to our newsletter releases twice a month versus every week.  Remember, if you are feeling creative, send us a couple paragraphs of what’s new and hot in your head!  We love to review and will do our best to get you published!

And the final thought, but certainly the most important this entire edition, is that we should be thankful each day for the gift and love of our mothers.  It is a labor of love to birth us, raise us, protect us, and value us.  When no one seems to care.  We hope that yesterday won’t be the only day to be good to your mom; in fact, you should honor her every day.  And for those of you who no longer have the gift of your mom in the present, share her stories and memories with your loved ones so her spirit and wisdom can enrich you and everyone around you!   Happy Mother’s Day to all Moms…everyday!