It’s a Wrap

I can’t truthfully say we were holding our breath as we waited for a sine die this past Friday.   We were confident that the 2015 Legislature would come up with a budget to keep our state of Florida in business.  We followed the debate and the volleying back and forth between the two chambers until the handkerchiefs were finally dropped, a symbolic gesture used to signal the end of a legislative session.  A $78.7 billion dollar budget was passed unanimously by the Senate, with 96 yeas and 17 nays by the House. Governor Rick Scott has until Tuesday, June 30 to sign the bill that was a “compromise” between the two legislative chambers.  Even with a compromise in the works, the last week of the special session was not without strong words of dissension during the debates.  Sen. Jack Latvala (R-Pinellas) blasted the House for resisting some incentives while supporting others. “If we’re not going to do incentives for anybody, and if that’s your philosophy, then I respect that,” Latvala said. “But when you won’t do incentives for bills that move all the way through the process, that are adopted by overwhelming majorities of both houses of the Legislature, and you, in the dark of night, stick incentives and appropriations in the budget for the same kind of projects owned by millionaires ….that’s just plain wrong.”  Sen. Arthenia Joyner (D-Hillsborough) was quite vocal on Friday when she chastised the House for stymieing the Senate on the health-care expansion plan and further blasted them for a lack of money spent on land conservation and a tax cut for cable-TV and cell-phone services that she said was measly. “What this all came down to was a singular devotion to a political ideology obedient to the few at the expense of the many — the many Floridians, the 1 million people who need and deserve quality, accessible health care.” But even with the debate and difficulties that abounded during both session one and two, in the end lawmakers exchanged handshakes and hugs before their departure Friday evening. Before we know it, they’ll be back for committee meetings in mid-September as they, and we, get ready for the 2016 Legislative Session, along with lots of bills that died during the three days of Regular Session when the House “left the building.”  We were there so you didn’t have to be.  And while this past Friday’s end of special session may be the last time we see the 2015 Florida Legislature in action, we’ll be keeping a close watch on the Florida Supreme Court. The state’s highest court could possibly prompt another special session before year’s end if justices strike important provisions in the state’s workers’ compensation laws. Rulings by the Supreme Court in legal challenges to workers’ comp legal fees and benefits provisions could be handed down late in any week leading up to the Court’s August recess. We are on top of this issue as well and will brief you immediately upon the release of any decisions impacting workers’ compensation insurance.

Omnibus Property & Casualty Bill (CS/CS/HB 165) Signed by Governor Scott

On Thursday, June 11, Gov. Scott signed the omnibus property and casualty bill package under CS/CS/HB 165.  The final bill is a collaboration of HB 165 and SB 258 and contains the following:

• Enacts a standard 120-day notification period for all property insurance non-renewals, cancellations, or terminations to make consistent all time periods for these insurer actions;
• Revises pre-insurance inspection requirements for new, unused leased motor vehicles leased from a licensed motor vehicle dealer or leasing company;
• Restricts insurer notification to policyholders of the right to participate in neutral evaluation of sinkhole claims to only those policies with sinkhole coverage with claims received within the 2-year statute of limitations;
• Clarifies the Medicare fee schedule used in personal injury protection insurance runs from March 1 through the end of February of the following year;
• Extends the time insurers have to implement a new version of a hurricane model from 60 to 120 days;
• Contains commercial insurance provisions relating to rate certification and annual rate filing; and
• Exempts federally licensed physical therapy and speech pathology clinics from PIP clinic licensure.
• Allows advertising of the existence of the FIGA backstop to sell insurance, but if used, the advertisement must also explain the FIGA coverage limits for the type of insurance advertised.

Gov. Signs HB 715 – Eligibility for Coverage From Citizens

House Bill 715, sponsored by Rep. Holly Raschein (R- Monroe/Dade), was signed by the Governor on Tuesday, June 3. This bill is an effort to fix a glitch in Florida law that prevents construction improvements for structures particularly in Monroe County by removing a provision that prohibited certain structures from being eligible for Citizens.

Governor Vetoes Citizens Property Insurance Corporation Operations HB 1087

Gov. Rick Scott vetoed HB 1087 on Tuesday, June 4, a bill that was intended to reform the Citizens takeout process, called the “Citizens takeout reform bill,” sponsored by Rep. Michael Bileca (R-Miami/Dade) and Sen. Anitere Flores (R – Miami/Dade).  In vetoing HB 1087, Scott said the bill “undermines progress” in shifting policies into the private insurance market from Citizens. Scott expressed concerns in his veto message about a provision in the Citizens-backed HB 1087 that would have allowed policyholders to choose to get no more than one “takeout” offer every six months. “This provision is inherently unfair to Citizens policyholders in that it limits policyholders’ private market options, which means they may miss an opportunity to move to a better property insurance alternative,” Scott said. In addition, Scott’s second issue with the legislation was a provision that would have allowed policyholders to return to Citizens after being insured by private carriers. It’s no secret that Governor Scott considers the depopulation of Citizens one of his crowning achievements in his administration so we were not surprised that he would not support any measure that would deter the depopulation momentum.

We do have to share a little back-story on HB 1087.  The catalyst behind Sen. Flores’ bill was the fact that her mom had received multiple takeout notices from Citizens and the Senator repeatedly referenced the real-life confusion her mom and other folks in her district had experienced, when addressing various legislative committees regarding her bill.  It is not surprising this bill, when filed on February 26 of this year “grew legs.”  It reminded us of the catalyst behind a Citizens bill 2 years ago regarding how Citizens calculated dwelling replacement costs when the then-Rules Chairman Rep. Rob Schenck (R-Hernando) was unhappy when his mom’s home had a replacement cost that seemed excessive and drove up her insurance premiums. That scenario led to Citizens replacement cost statutory mandate – that Citizens accept not only the electronic replacement cost calculator figures but a contractor’s statement or appraisal or other documentation. Behind most bills, there’s a reason and once our team understands that, we can better manage our advocacy for or against a legislative proposal.

REALITY CHECK:  PRIVATE, PRIMARY FLOOD INSURANCE – New Study Promotes the Fundamentals of Insurance Common Sense!

In our continuing coverage of flood insurance and its emerging status in our state and country, we wanted to draw your attention to a study released this month by the Federal Emergency Management Agency, the National Academy of Sciences, National Academy of Engineering, Institute of Medicine, and National Research Council cited seven possible incremental changes to the NFIP rating platform and claims processes:

• Use information from existing detailed flood studies to better define the water surface elevations for frequent floods;
• Calculate the average annual loss component of the flood insurance rate using local rather than national flood hazard data;
• Research which drivers of flood damage beyond inundation depth, such as flood duration, water contamination, and debris content, are most important and develop an appropriate damage prediction function for calculating rates;
• Build a large set of flood damage reports from relevant agencies and use it to adjust damage estimates annually;
• Assess the ability of levees to prevent inundation of negatively elevated structures by frequent events;
• Discourage deliberate underinsurance and compensate for it, for example, by tying the underinsurance adjustment to the replacement cost of the structure, reducing loss payments or imposing penalties for severely underinsured structures;
• Adjust deductible discounts or increase minimum deductibles to reduce high risk-based premiums.

You can buy the study for about $40 from this link.

Sound familiar? These are most of the basic fundamentals of the private insurance industry and no one knows that better than Florida Senator Jeff Brandes (R-Pinellas County).  Many of you know of LMA’s work and support of Sen. Brandes who is the single biggest champion for private flood insurance in the country.  In fact, I have talked to, just in the past week, 6 insurer executives sharing Sen. Jeff Brandes dream of 10 private, primary flood insurance companies operating in Florida by January 2017.  Between now and then you will see our newsletter referring to the latest in the private, primary flood insurance journey but will you let us know your thoughts and what challenges you face if you were to launch a private, primary flood insurance program in your respective companies?  Sen Brandes wants to know so he can help you knock those down!  Standing by to assist you!

Insurance Defense Firm Wins Critical Appellate Case on Behalf of UPC

Earlier this month, attorneys with Groelle & Salmon, P.A., one of Florida’s leading insurance defense firms, prevailed in an important homeowner’s insurance case on behalf of United Property & Casualty Insurance Company (UPC) after the Second District Court of Appeal (DCA) issued a Per Curium Affirmed ruling of an Order granting a Motion for Summary Judgment. The Order granting summary judgment obtained by UPC’s attorneys which was affirmed by the 2nd DCA was based upon the Continued or Repeated Seepage of Leakage Exclusion.

In Samuel Oquendo v. United Property & Casualty Insurance Company, Case No. 2D14-4263, the claim originated as a water loss with minimal to no visible damage, a similar fact pattern to so many present day water claims. The homeowner maintained that the entire plumbing system needed to be replaced, along with the kitchen, bathroom, and tile flooring throughout the dwelling.

During deposition, the insured testified that there was seepage of water occurring in the kitchen, a smell emanated from the sink, and toilets were not flushing properly.  He also testified that rust had developed on the refrigerator and there were water stained baseboards. The homeowner testified these conditions were ongoing for years, that he noticed the damage had occurred, and that he never contacted a plumber or the insurance company until recently.

Attorneys for UPC moved for summary judgment on the Continued or Repeated Seepage or Leakage exclusion. The insurer  argued that the policy provided that there was no coverage for leakage or seepage of water which occurs over the course of weeks, months or years, unless the water and damage is unknown to all insureds and hidden beneath the walls and floors of the residence. On the eve of the hearing, Plaintiff filed an Affidavit contradicting his prior testimony at deposition and stated his testimony was made with the “benefit of hindsight” and that he was not aware of the water and resulting water damage for four years.  Manatee County Circuit Court Judge Dunnigan ruled that Florida law does not allow a party to contradict prior testimony with an affidavit. Therefore, the affidavit did not create a question of fact as to the Plaintiff’s knowledge of the leaking over the course of weeks months or years.

The Second DCA certainly understood the argument made by UPC. At oral argument, Judge Morris asked the Plaintiff’s attorney whether he agreed that this is the exact scenario that insurance companies wanted to avoid, and thus excluded in their policies: an insured who watches a problem worsen. In this regard, the Court did not give credence to the Plaintiff’s argument that the exclusion was ambiguous.  The Court further affirmed the rule that one cannot provide an affidavit directly contradicting prior deposition testimony. The Court acknowledged that the deposition of the Plaintiff was peppered with references to damages which were ongoing for a number of years. Vanessa Ross with  Groelle & Salmon’s Sarasota Office conducted the deposition of the Plaintiff, and Erica Arend argued the motion.

An Interesting Twist – AOB Vendor versus AOB Vendor

Right when we thought we had seen it all in the world of AOBs, now we have AOB vendors fighting AOB vendors. Recently, Homeowners Choice Property & Casualty Insurance Company won a partial summary judgment ruling in Hillsborough County recently in Nicon Construction, Inc. & B&M Clean, LLC d/b/a/ Sun Construction a/a/o Richard Prager v. Homeowners Choice Property & Casualty Insurance Company.  The litigation resulted when two vendors alleged standing based upon separate assignments of benefits. Attorneys for Groelle & Salmon’s Tampa office successfully argued that since B&M Clean LLC secured an agreement with the insured purporting to assign “all rights and benefits” to the insured’s claims, that a subsequent agreement between the insured and Nicon Construction, Inc., for the same rights and benefits, was invalid. Judge Rex Barbas agreed that once an insured has assigned the benefits under his insurance contract, he no longer has any rights to assign so any subsequent assignment is invalid. Therefore, Nicon Construction, LLC will be removed from the lawsuit. Homeowners Choice filed a Proposal for Settlement against Nicon Construction, which expired prior to the ruling on the motion for partial summary judgment.  It gets more interesting every day and you all know that LMA is at the forefront of leading efforts to stop Assignment of Benefits (AOB) abuse. We work very closely with Scott Johnson of Johnson Strategies among others as we tirelessly attempt to shed a light on nefarious roofing and water extraction activities.  Very recently Channel 6 CBS Action News did an excellent job of raising the awareness of roofing scams. We invite you to take a look at a terrific news story highlighting this insanity by clicking HERE.

On The Road Again

Summer for some means those lazy, hazy, crazy days we hear about in the old songs.  But for us at LMA, summer means hitting the road again for those wonderful conferences and conventions that we attend on your behalf. They provide great information, great networking, and an opportunity to visit with friends, clients and other folks who want to learn more about the Florida insurance marketplace. Most recently we were in Orlando jumping between the 23rd Annual FIFEC (insurance fraud) Conference, the annual CAT Fund Participating Insurers Workshop, the Building Officials Association of Florida (BOAF) and the 2015 Florida Association of Insurance Agents (FAIA) Convention. All four events were chocked full of good information and we came home with new ideas and better ways to serve the citizens of our great state. At the FAIA Convention, the folks providing the 2015 legislative update session told us more about HB 1133, the Division of Insurance Agent and Agency Services bill that among other things, allows certain licensing applicants to be exempt from taking state licensing examinations, as a way to spur greater ranks among the agent profession:

• General lines agents or all-lines adjusters earning a degree in insurance from an accredited institution of higher learning approved by the DFS. Qualifying degrees must indicate a minimum of 18 credit hours of insurance instruction, including specific instruction in the areas of property, casualty, health, and commercial insurance.
• Personal lines agents earning a degree from an accredited institution of higher learning approved by the DFS. Qualifying degrees must indicate a minimum of nine (9) credit hours of insurance instruction, including specific instruction in the areas of property, casualty, and inland marine insurance.
• Life agents earning a degree from an accredited institution of higher learning approved by the DFS. Qualifying degrees must indicate a minimum of nine (9) credit hours of insurance instruction, including specific instruction in the areas of life insurance, annuities and variable insurance products.
• Health agents earning a degree from an accredited institution of higher learning approved by the DFS. Qualifying degrees must indicate a minimum of nine (9) credit hours of insurance instruction, including specific instruction in the area of health insurance products.

At the FIFEC (insurance fraud) conference, we learned more ways to combat fraud in our state and were happy to join with industry representatives and law enforcement folks who attend this annual conference.

The BOAF conference shed light on the new building code effective July 1. We are happy to go over it with you.

At the annual CAT Fund Participating Insurers Workshop, we found it fascinating to hear from a representative from the National Oceanic and Atmospheric Administration (NOAA), who taught us the intricacies of how hurricanes that impact Florida are really born. Amazing!

Obviously, there’s more to share than we have room in our newsletter, but if you want to give us a call, we’ll tell you all about our two weeks on the road.

What You Do Makes All the Difference

Just like what happened when Rep. Schenck shared his mom’s experience about the increase in her homeowners’ premium due to a questionable replacement cost figure and what Sen. Flores’ tried to do when her mom was confused with multiple Citizens take-out options (and we are sure she’ll be back with that proposal again next year), real life situations can create the catalyst needed to change, create or eliminate laws.  Even though you may not be related to someone in the legislative body, you certainly have access to them and certainly should make your life events known to them.  Their job is to represent you and me; however, if they aren’t aware of what goes on in the lives of Florida’s business owners and consumers, they are not truly armed to do the good work they are elected to do.

We challenge you to make it a priority before the 2016 Legislative Session to get to know your representatives and get in touch when you have a concern.  It’s the right thing to do for all of us. We’ll be there right beside you as always.

Lisa and the LMA Team

June 22, 2015