| Monday, February 8, 2016 |
| Leaders Are Natural Born…But Leadership Can Be Learned |
| This past week in the legislature we saw Senator Dorothy Hukill and Senate President-Elect Joe Negron, as well as some others on the Senate Banking and Insurance Committee, demonstrate tremendous leadership in attempting to reform Assignment of Benefit (AOB) abuse. As we watched the debate on this very hot and complicated issue, we wondered if those who follow in the footsteps of these folks will also be extraordinary leaders. It is a tough balancing act to do the best for policyholders and insurers all the time as those of us who served as state insurance regulators know all too well. It is so important to have strong, financially healthy insurance companies, making sure they provide the coverage they have promised, and yet, not overpay claims or undercharge rates just to keep policyholders happy. It is all about leaders and leadership when the tough decisions must be made. With that thought, we did a little internet surfing on the subject of leadership and found a very interesting article entitled, “Five Ways to Turn Top Performers into Leaders.” In that article, Mary Ann Cook wrote about how executives can help their workers become true leaders, propelling them beyond individual accomplishments, sharing their talents unselfishly, and exhibiting behaviors that truly serve others. We know that it begins with hiring, promoting and developing the right people. The article goes on to provide some guidance on developing management skills of workers and tells us that there are five ways to put resources and effort into helping employees become true leaders. They are:
1) Give top performers exposure to different jobs throughout the company-cross-training; 2) Create individualized formal development plans, complete with goals, deadlines, and training and development opportunities: 3) Give workers problems to solve and a team to help solve it- in other words give them a challenge to meet and conquer; 4) Give future leaders a chance to get in front of people and lead – the only way to overcome the fear of being in the front of the room; and lastly, 5) Know that some will not be the leaders you would like. Not everyone is cut out to be a leader. Not everyone has the skills to manage and inspire others, and many don’t want to do these things. If a top performer doesn’t take to leadership, don’t force it. What we know from the many years of working with small teams and large teams, is that everyone has natural skill sets and if executives can find and develop those natural skills, everyone wins. Good luck as you continue to develop the folks under your watch and guidance. |
| Florida’s Second DCA Issues Binding AOB Decision Last Friday |
| With the backdrop of the Florida Legislature this week tackling bills addressing the Assignment of benefits (AOB) crisis, the Judicial Branch of government decided to get into the act as well. This past Friday the state’s Second District Court of Appeals issued a decision in an important AOB case likely to have significant impacts on the AOB front. The DCA case concerns an appeal by Bioscience West, Inc., (“Bioscience”) of a circuit court final order granting summary judgment to Gulfstream Property and Casualty Insurance Company (“Gulfstream”). The circuit court held that Gulfstream’s insured, Elaine Gattus, was precluded from assigning the benefits of her homeowner’s insurance to Bioscience, an emergency water mitigation company, without first receiving Gulfstream’s consent. After de novo review and oral argument the Second DCA has reversed that circuit court’s order. In deciding to reverse the circuit court, the DCA made the following findings: (1) the plain language of the insurance policy merely prohibited the insured’s unilateral assignment of the entire policy, not a financial benefit derived from that policy; and (2) Florida law prohibits an insurer from restricting an insured’s unilateral post-loss assignment of a benefit derived from that policy. In this particular case, Ms. Gattus, the insured, purchased homeowner’s insurance from Gulfstream and the policy contained a provision limiting the assignment “of this policy” without Gulfstream’s written consent. We are continuing to study this late breaking DCA decision closely and will bring you an expanded analysis and overview in our next newsletter edition. In the meantime, please click HERE if you wish to read the DCA’s entire decision. Stay tuned! |
| Lightbulb Moment: Lawsuits Against Insurance Companies for Work Not Done |
| In the February 1, 2016 Senate Banking and Insurance Committee meeting, CEO Lisa Miller testified on behalf of Jim and Lillian Hetrich – please click HERE to listen to the committee meeting and go to 52:33 to hear Lisa’s comments. The Hetrichs have authorized our firm to represent their interests and as we have reported in past newsletters, they had a roofing company canvas their neighborhood, secure the Hetrich’s signature on an Assignment of Benefit form (AOB), tell the Hetrichs they needed a new roof because of hail damage, and then that same roofing company filed a lawsuit on the Hetrich’s “behalf” when the insurance company denied the claim because the engineer said a new roof wasn’t needed. The point is that this roofing company sued an insurance company for work that was never done and that was precisely the point incoming Senate President Joe Negron made during the committee meeting. In fact, it is estimated that with roofing claims, 80% of the lawsuits associated with these claims are for work that has never been done. With water claims, the lawsuits ensuing from the execution of the AOB are because of claims for work that was inflated or overstated. Whether the lawsuit is for work that hasn’t been performed or for work that was claimed to have been done but wasn’t, the key here is the lawsuit.
A parallel to this is testimony by Rep. Greg Steube (R-Southwest Florida) regarding his bill HB 1021 to stop a select few trial lawyer firms who file multitudes of public records requests with cities and counties and then sue these same cities and counties for not being able to produce the public records requested. To see it, go to the following link, http://thefloridachannel.org/videos/2216-house-government-operations-appropriations-subcommittee/ and reference time marker 30:55 so you can get right to his testimony and the ensuing debate. Rep. Steube was a champion for the rights of taxpayers who have to foot the bill for attorneys’ fees that are demanded by these frivolous suits. The cities and counties are unable to comply with the public records requests because of the sheer volume of requests, not because the municipality is refusing to produce the records. The law currently mandates that judges, who rule against cities and counties for not complying with a public records request, SHALL order attorneys fees to be paid. Rep. Steube simply wants SHALL to say MAY so the judge has the discretion to award attorneys’ fees. Rep. Steube in testimony said that there are 100 cites in statute where the law says a judge MAY order attorneys fees versus the word SHALL award them. So if you think about the AOB fight and follow the money, i.e., the attorneys fees, and if you think about 627.428 citing that attorneys fees shall be included in the award, do you see any parallel, and if you do, please call LMA and let’s discuss your thoughts! |
| Concealed Weapons Legislation |
| Certainly one of the most contentious legislative issues this week – and definitely the one with the lengthiest debate – was the issue of open carry of handguns in Florida, and closed carry on currently “gun-free” zoned university and college campuses.
After more than three hours of total debate on the issues, the Florida House passed HB 163 (read the bill’s history at http://myfloridahouse.gov/Sections/Bills/billsdetail.aspx?BillId=55017) which would allow concealed weapons permit holders to instead openly carry their firearms in public. Forty-five other states allow it, but current Florida law doesn’t. The measure passed 80-38 mostly along party lines, with Republicans in support and Democrats in opposition. Opponents, including the Florida Sheriffs Association, said they feared it would hurt tourism and make police officers jobs more difficult. Supporters, including the Florida Police Chiefs Association, said it’s a constitutional right so long as the person is properly licensed to carry, and that it will actually deter shootings. The measure was sponsored by Rep. Matt Gaetz (R-Shalimar). His father, Senator Don Gaetz (R-Niceville) is sponsoring the Senate companion bill, which is likely to see some action. Likewise, the House also passed HB 4001 which would allow concealed weapons permit holders aged 21 or older to carry firearms onto public college and university campuses, so long as the guns remain concealed (http://myfloridahouse.gov/Sections/Bills/billsdetail.aspx?BillId=54808). The bill was sponsored by Rep. Greg Steube (R-Sarasota) and passed 80-37, again mostly along party lines. Supporters said not allowing such freedom on campuses would be discriminatory and that it would allow women to defend themselves from assaults. Opponents, including many university presidents, faculty unions, and campus police departments, said it would lead to more violence on campuses and lead to extra costs, such as hiring more campus officers. Legislative leaders say the measure may not see the light of day on the Senate side. Both firearms bills acknowledge that private employers can ban weapons on their property upon display of written notice to the same. Speaking of costs, here’s an interesting question for insurance companies and their customers (especially our colleges and universities in Florida). Should open carry and campus carry become the rule of the land, what impact would that have on insurance liability policies? Would a more open environment of handguns increase or decrease the risks of accidents or body injury or even death? This is perhaps a question for the actuaries. |
| 2016 Session Brings Effort to Create True Sinkhole Coverage Only Policy |
| For some reason this legislative effort rings a bell. Perhaps its because this year’s legislative effort by Rep. Blaise Ingoglia (R-Hernando) to establish a limited sinkhole coverage insurance policy (See HB 1327)sounds somewhat familiar to efforts expended the past few years creating a private market for flood insurance in our state to offer consumers a choice over NFIP coverage. While the concept certainly has its positive elements, the bill as originally filed has triggered a number of concerns from the Office of Insurance Regulation. This past Monday (2/1/2016) Rep. Ingoglia’s unique measure was considered by the all-important House Insurance & Banking Subcommittee where it underwent major change through an adopted strike all amendment. Some of the changes to the bill addressed in the strike all were designed to address OIR concerns, however, whether the amended version of the measure takes care of every issue remains to be seen. The Representative’s original bill version and the recently amended version allow insurance carriers with reduced surplus to underwrite personal residential property insurance policies that cover only sinkhole losses. No other perils will be insured under the policy form. Further, policy forms for the sinkhole coverage established by the measure are exempt from OIR filing and approval for an indefinite period of time and this feature of the legislation has garnered concerns from a number of stakeholders . Additionally, newly formed sinkhole insurance only insurers would only be required to possess a minimum $7.5 million surplus to keep their Certificate of Authority while other multi-line existing P&C insurers selling the limited coverage must maintain a $15 million surplus. The bill also exempts surplus lines agents for a four year period from the diligent effort requirements in existing law for the new form of sinkhole coverage. Exempting agents from the due diligence requirements before exporting commercial residential risks to the surplus lines market is already stirring up controversy this session in other legislation. On a positive note, AOBs for claims arising from the newly established sinkhole loss insurance are prohibited, except for assignment to someone who purchases the property that is subject to the claim with an insurable interest. LMA is monitoring this legislation closely and will bring you updates as further developments occur.
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| Unclaimed Property Legislation Impacting Life Insurers Keeps Moving |
| This past Tuesday (2/2/2016) the legislation sponsored by Rep. Bill Hager (R-Palm Beach) known as the House unclaimed property bill, HB 1041 successfully navigated its second committee stop and has only one stop left before consideration by the full House. The unclaimed property bill is being championed by CFO Jeff Atwater and strongly supported by Insurance Commissioner Kevin McCarty. The measure amends Florida’s unclaimed property laws to make it clear that funds held or owing under any life or endowment insurance policy or annuity contract which has matured or terminated are presumed unclaimed if unclaimed for more than 5 years after the date of death of the insured, annuitant, or retained asset account holder. The measure mandates that insurers annually compare its insured (covered lives list) against the Death Master File of the Social Security Administration. The bill creates a presumption that an insured, annuitant, or retained asset account holder is deceased if the Death Master File contains a date of death. A number of members of the life industry continue to point out a list of concerns regarding the bill’s current provisions. Those concerns include: * Date of death being made the dormancy trigger, regardless of date of notice which conflicts with a contractual provision required by s. 627.641, F.S. * Retroactive language which means all policies active on January 1, 1992 must be reviewed. * Retroactive application of the bill because the changes in the bill are substantive and not procedural/remedial. * Retroactive application of the bill unconstitutionally impairs existing contracts, which require the submission of due proof of death and surrender of the policy to settle a claim. Representatives of Florida’s life industry also say that the proposed measure does not promote uniformity among the states on unclaimed life insurance proceeds because 19 states have adopted the NCOIL Model and the NCOIL Model is different than the bill. Thus far, there has been no other opposition to the bill but we will continue monitoring the measure and update you as the session progresses. |
| 2016 Proposed Constitutional Amendments |
| Of course, the legislature and the Governor (by Executive Order) aren’t the only ones who can make laws and establish policies. The citizens of Florida get that potential opportunity every two years through proposed amendments to the state constitution.
Two citizens initiatives collected the required number of signatures by the February 1 deadline to make the ballot this coming November – one regarding medical marijuana and the other with solar energy in the Sunshine State. Amendment One establishes a right for consumers to own or lease solar equipment installed on their property to generate electricity for their own use. State and local governments would retain their abilities to protect consumer rights and public health, safety and welfare, and to ensure that consumers who do not choose to install solar are not required to subsidize the costs of backup power and electric grid access to those who do. Supported by the group “Consumers for Smart Solar,” the measure still needs state Supreme Court approval of its proposed ballot language. Amendment Two allows the medical use of marijuana for persons with debilitating medical conditions as determined by a licensed Florida physician. It allows caregivers to assist patients’ medical use of marijuana and requires the state Department of Health to register and regulate centers that produce and distribute marijuana for medical purposes and issue identification cards to patients and caregivers. While it applies only to Florida, the amendment also does not immunize violations of federal law or any non-medical use, possession or production of marijuana. It’s similar to a measure that failed to pass by two percentage points on the 2014 ballot. The measure has already had its ballot language approved. The proposed amendments are the only two among 29 that collected the necessary 683,149 signatures to qualify for the November 8th ballot. To view the complete list of proposed constitutional amendments in the works now for future years, click here: http://dos.elections.myflorida.com/initiatives/ DID YOU KNOW? Citizen initiatives are one of five methods to change Florida’s Constitution? The Florida Legislature can propose changes through a Joint Resolution; Constitutional Conventions can propose amendments; The Taxation and Budget Reform Commission, meeting every 20 years, can recommend taxation and budgetary process changes; The Constitutional Revision Commission can recommend changes. Meeting every 20 years, the group will being meeting next year to contemplate changes for voters to consider on the 2018 ballot. For more information, you can visit the Partnership for Revising Florida’s Constitution, found at: |
| Lots of New Housing Coming to Central Florida |
| Strong demand for apartments in all four major metropolitan areas of Florida should be welcome news for insurance companies writing HO6 policies in Florida in 2016.
The apartment vacancy rate in Tampa is at 4.3%, the lowest point in nine years, with 10,000 additional units planned or under construction. Vacancy rates in Jacksonville (5.8% with 1300 units planned), Miami (3.4% with 12,500 units in the pipeline), and Orlando Metro (3.8% with 6,000 units now under construction) are following suit. Orlando Metro’s vacancy rate is the lowest in 15 years. Real estate research firm Real Data, which provided these numbers, predicts apartment occupancy rates to remain steady here in 2016, well above the southeast U.S. average. The latest announced projects are in the Orlando suburbs of Apopka and Maitland. Cleveland, Ohio-area developer NM Residential is investing $101 million into building two apartment complexes. According to published sources, construction is set to begin this year on the 272-unit Marden Ridge apartments in Apopka. The $47 million project will include a new $6 million interchange on State Road 414 being built by the developer, utilizing city incentives. The second project is the 315-unit Maitland West apartments in Maitland. The $54 million project will be located on West Maitland Boulevard near Forest City Road. It’s the first phase of a larger mixed-use development that will include retail and office space for this growing part of Orange County. NM Residential has chosen MMI Development of Winter Park to develop both apartment complexes. |
| Time To Get In Tax Mode- IRS Lends A Hand |
| Income tax time is here again. For those Americans who are fortunate to have jobs and income, we do have the obligation to support the financial needs of our country. We are happy to do our part but as with all things financial, the fraud monster is ever present to steal from hard working Americans. In Florida, we have a new weapon against income tax fraud. Thanks to an IRS pilot program, taxpayers in Florida can help fight tax fraud by applying for a special personal identification number. This six-digit number helps prevent the misuse of our Social Security number on federal income tax returns by creating an extra security barrier ID thieves need to hop before they can submit any false paperwork in your name. Once we have our PIN, we submit it along with our Social Security number when filing any tax form so that the IRS knows to carefully check over our account. After the initial filing, a new PIN is received each year. Keeping track of another series of numbers may seem like pain, but if it stops identity theft of our personal tax and social security information, it is more than worth that small headache that could turn into a big headache. To get the PIN, you need to register and verify your identity online. You can sign up on the IRS website at
https://www.irs.gov/Individuals/The-Identity-Protection-PIN-IP-PIN Until next time, The LMA Team |
