We were super busy during Week five of the 2015 Florida Legislative Session. Covering the many bills moving through the multiple committees does require us to bring out our best juggling talents and we like to think we are members of Cirque du Soleil troops! In keeping you up to date, we try to not only provide you the status, information about recent amendments to the bills, but also a flavor of any interesting debate and discussion at the meetings. We hope you’ll enjoy our narratives of the bill action.
Before we get started with the legislative updates, however, we wanted to share some information about a meeting we attended last week on an issue that is certainly important to Floridians: Flood Insurance, as well as, some important information contained in a press release issued by the Office of Insurance Regulation.
The Flood Standards Development Committee Continues Its Important Work
The Florida Commission on Hurricane Loss Projection Methodology, Flood Standards Development Committee held a meeting on Tuesday, March 31 to continue its work on drafting meteorological/hydrological flood standards, flood hazards and vulnerability flood functions, and statistical flood standards. Florida Legislation passed in 2014, which allows insurers to write primary, private flood insurance in Florida, necessitated the need to draft modeling flood standards and therefore, move forward with the important work of the Committee. Since experts say 40% of hurricane property damage comes from storm surge, the Committee must consider storm surge when looking at the peril of flood. One of the members of the Flood Standards Committee, Hugh Willoughby, a meteorology expert, says, “From the Galveston hurricane on, most of those disasters resulted in large loss of life rather than large property loss, with the exception of Katrina. Eighty percent of Florida’s flood losses come from hurricanes. That may give us a window into being able to do something that’s worthwhile.”
The committee is chaired by Lorilee Medders, Ph.D., Statistics Expert, and Director of The Florida State University’s Storm Risk Center and co-chaired by Floyd Yager, FCAS, Actuary, Florida Hurricane Catastrophe Fund Advisory Council. It is a prestigious and brilliant group that includes insurance finance experts, insurance regulators, consumer advocates, emergency managers, actuaries, professional structural engineers, computer design, meteorology, and geological experts.
The Committee’s highly technical work of drafting and editing flood standards to be utilized by Florida insurers and regulators is of extreme importance to Floridians as we work toward finding private, primary flood insurance options outside of the National Flood Insurance Plan. On Tuesday, the Committee reviewed, discussed, debated and edited the most recent version of the draft standards, receiving comments from all stakeholders who have been deeply involved in the draft from the start. The flood standards must be adopted by 2017 and there is still much to be done.
The next meeting of the Flood Standards Development Committee is April 22, and we’ll be there, as we have been, in order to stay informed on this important topic to our Florida citizens.
OIR Issues Press Release on Changes to the National Flood Insurance Program
On Wednesday, 4/1/15, the Office of Insurance Regulation advised Floridians that with the beginning of hurricane season 60 days away, Floridians have a choice when it comes to purchasing flood insurance, as premiums increase on 4/1/15 on policies issued by the National Flood Insurance Program (NFIP). “A growing number of private companies in Florida are now offering regular flood insurance, often at prices below the NFIP,” advises Commissioner McCarty. “The actual cost will depend on where you live and the amount of coverage you choose.” Commissioner McCarty also noted that NFIP premiums could increase by up to 18% starting 4/1 due to changes associated with the federal 2014 Homeowner Flood Insurance Affordability Act. The Act repealed 25% premium increases and modified a number of other provisions in the 2012 Biggert-Waters Flood Insurance Act. NFIP policies effective 4/1/15 will also include new annual surcharges of $25 for primary residences and $250 for non-primary residences and non-residential properties. Greater consumer choice was made possible last year when the Florida Legislature passed, and the Governor signed SB 542, which streamlined the process for private insurance carriers to write flood insurance in Florida. The legislation provides an alternative to the NFIP. To read the complete press release, click HERE.
Legislative Activity Updates
Property & Casualty Insurance
(AKA Omnibus Insurance Bill)
CS/SB 258 by Sen. Jeff Brandes (R-Pinellas) and CS/HB 165 by Rep. David Santiago (R-Volusia)
CS/HB 165 by Rep. David Santiago (R-Volusia) passed the Government Operations Appropriations Subcommittee with 10 yeas and 2 nays on Tuesday, 3/31. The bill now waits to be heard in the Regulatory Affairs Committee, the measure’s last committee stop The bill allows a unique and granular motor vehicle rating platform for three years, makes uniform the time frame for property nonrenewal notices, allows electronic delivery of personal lines policies, requires notice of sinkhole neutral evaluation for covered and timely claims, clarifies the dates for application of the Medicare fee schedule in PIP, makes changes to the pre-insurance inspection law to exempt new leased vehicles from pre-insurance inspections, revises documents required by insurers for pre-insurance inspection exemptions, and limits claim reimbursement and property damage coverage suspension based on the timing of document delivery for pre-insurance inspections,.
CS/SB 258 by Sen. Jeff Brandes (R-Hillsborough/Pinellas) has now passed all committees and at the discretion of the Rules Committee, will go to the full Senate. While this is the companion to CS/HB 165, it doesn’t contain the three year sunset which is a 3 year timeframe to review the effectiveness of this rating feature on a pilot basis.
Florida Insurance Guaranty Association
(FIGA) Reform Legislation
CS/SB 836 by Sen. Jack Latvala (R-Pinellas) and CS/HB 557 by Rep. Jake Raburn (R-Hillsborough)
Both of the above referenced bills have traveled well through the committee process with the Senate bill (CS/SB 836) likely having its last committee stop this week in Senate Appropriations and then joining Rep. Raburn’s measure (CS/HB 557) on the bills’ respective chamber floors for final votes. This past Thursday (4/2/15) Sen. Latvala’ s measure won unanimous approval from the Senate Appropriations Subcommittee on General Government and then quickly moved for consideration by the parent Appropriations Committee. Likewise, on Friday (4/3/15) Rep. Raburn’s House bill (CS/HB 557) was added to this week’s Second Reading Calendar for consideration on the House floor. While we never assume passage of any bill, we are definitely keeping our fingers crossed!
Transportation Network Companies (TNCs)
CS/HB 757 by Rep. Bill Hager (R-Palm Beach); SB 1298 by Sen. David Simmons (R-Seminole/Volusia); and, CS/HB 817 by Rep. Matt Gaetz (R-Walton)
SB 1298 by Sen. David Simmons (R-Seminole/Volusia), CS/HB 817 by Rep. Matt Gaetz (R-Walton)
As we mentioned in last week’s newsletter, the debates regarding new laws to regulate transportation network companies and short term rentals are a great venue for watching the legislative process in action. Strong proponents and opponents continue to make their positions known. A real push-pull is coming from the loss of revenue by the local jurisdictions once the law places the TNC’s under state regulation and permits. Some action did happen last week that indicates that stakeholders are coming together on what is best for Florida consumers.
SB 1298 by Sen. David Simmons (R-Orange) was favorably passed by the Senate Judiciary Committee on Tuesday, 3/31 with 9 yeas and 0 nays. The bill, as explained by Sen. Simmons, “catches the law up with technology” did not, however, touch upon the national agreement negotiated last week by AIA, PCI and NAMIC and Uber. Regardless, there is talk that the national agreement may be incorporated into the bill as it moves forward to its next stop, the Appropriations Committee.
Since much of the focus of this bill relates to specific insurance coverage, we wanted to provide some details of coverage during this update. Sen. Simmons’ bill requires TNC’s during the ride-acceptance period, to provide liability insurance coverage at $1 million for death, bodily injury, and property damage, uninsured and underinsured motorist coverage of at least $1 million, PIP, and physical damage coverage, including collision or comprehensive physical damage coverage, if the driver carries such coverage on his or her personal motor vehicle insurance policy. During the on-call period, the TNC must provide liability coverage at $125,000 per person and $250,000 per incident for death, bodily injury of property damage of at least $50,000, uninsured and underinsured motorist coverage of at least $250,000, PIP, and physical damage coverage, including collision or comprehensive physical damage coverage, if the driver carries such coverage on his or her personal motor vehicle insurance policy. The American Insurance Association, Florida Restaurant and Lodging Association and the Property and Casualty Insurance Association spoke in support of the bill and as has been the case with other TNC bills being heard this session, taxi associations spoke against the bill. The Florida Taxi Association specifically requested that all insurers providing insurance should be covered by the Florida Insurance Guaranty Fund. Sen. Simmons assured the committee that he is speaking to all stakeholders and plans to address those concerns in an amendment at the next bill stop.
CS/HB 817 by Rep. Matt Gaetz (R-Walton), having passed affirmatively through the Transportation and Ports Subcommittee and the Economic Affairs Committee, was placed on the House Calendar on Tuesday, 3/31. The rewritten bill incorporates the national agreement on transportation network company insurance issues reached by the national property & casualty trades and Uber into the bill package.
As just a special note for those of you who are thinking about becoming an UBER driver or renting out your couch as a part of Airbnb.com or www.couchsurfing.com, you may have the added benefit of the insurance coverage being required by these bills. And of course, you will also have the privilege of paying for it as you sign up to be a part of these networks. Check them out and let us know what you think of the TNC and Short Term Rentals bills.
SB 1006 by Sen. Anitere Flores (R-Miami/Dade) and HB 1087 by Rep. Michael Bileca (R-Miami/Dade)
CS/HB 1087 by Rep. Michael Bileca (R-Miami/Dade), changes the Citizens’ takeout program and restricts takeout offers to once every six months per policy, allows the policyholder to elect to restrict takeout offers to once every 6 months, allows Citizens to dictate how that is implemented, allows a policyholder taken out of Citizens to return and be considered a renewal if the takeout insurer increases rates over 10% per year, and requires more detailed comparison information starting January 1, 2016 in a format promulgated by Citizens. Last week, CS/HB 1087 passed the Regulatory Affairs Committee with 13 yeas and 0 nays, its last committee stop and is awaiting House floor action
CS/SB 1006 by Sen. Anitere Flores (R-Dade) is similar to the House bill, with a few differences. Both bills restrict takeout offers to once every six months per policy; however, Sen. Flores’ bill restricts the offers only if the policyholder declines a takeout offer first and does not have language that allows the policyholder to return to Citizens as a renewal if the initial premium from the takeout insurer is more than 10% of the premium estimated when the takeout offer is made. There are other differences as well and we expect these two bills, if they continue to proceed, to become part of negotiations between the Senate and the House as we progress this session CS/SB 1006 passed its second committee last week, and is scheduled to be heard on Wednesday, April 8 in the full Appropriations Committee.
Assignment of Benefits (AOB)
HB 669 by Rep. John Tobia (R-Brevard); similar bill, SB 1064 by Sen. Dorothy Hukill (R-Volusia)
Hats off to Rep. David Santiago (R-Volusia), who during a committee stop this past week for the omnibus bill, (HB 165) tried to add a sentence of good public policy that said if a loss restoration vendor performs duties that are considered unlicensed public adjusting, then the contract under which those duties are performed is void. This is a consumer protection provision DFS has included in post natural disaster emergency rules off and on since the Hurricane Andrew days. This good public policy would have allowed unsuspecting homeowners who are misled and sign an assignment of benefit to cancel these onerous contracts when a water extraction vendor oversteps or exaggerates the repairs needed. Unfortunately, those who oppose good public policy and consumer protection testified at the podium using scare tactics to put doubt in House members’ minds and Rep. Santiago withdrew his amendment to fight the good fight another day. Other than the situation referenced above, no other movement on the AOB fight occurred this past week. On March 26, HB 669 by Rep. Tobia moved to the House Regulatory Affairs Committee, its last committee stop. Its most similar measure, SB 1064 by Sen. Dorothy Hukill (R-Volusia) was approved on March 23 by the Senate Banking & Insurance Committee but must still successfully navigate the Senate Judiciary and Rules Committees before it can move to the Senate floor.
SB 1094 by Sen. Jeff Brandes (R-Pinellas); HB 895 by Rep. Larry Ahern (R-Pinellas)
This session’s flood insurance bills in the House and Senate continue to progress and thus far, no major issues of concern have arisen. We’re keeping our fingers crossed that this trend continues and that identical versions of both bills will be passed by their respective chambers. Last Tuesday (3/31/15) Rep. Ahern’s measure (HB 895) was quickly and unanimously passed by the House Appropriations Committee and is now under review by the House Regulatory Affairs Committee. More recently, this past Thursday (4/2/15) in its last official committee stop, Sen. Brandes’ SB 1094 won approval of the Senate Rules Committee. This measure is now clear to be heard on the Senate floor when Senate leadership gives the nod.
Quota Share Reinsurance-Citizens
SB 936 by Sen. Jeff Brandes (R-Pinellas); HB 1307 by Rep. Dan Raulerson
These measures establish a program for private market insurers to remove risks from Citizens Property Insurance Corporation with the state-run insurer serving as a reinsurer. Neither bill accomplished forward movement this past week nor thus far this session, none of their referenced committees have held a hearing. Time for committee consideration is rapidly drawing to a close but for now, the bills remain alive in the legislative process.
Civil Remedies against Insurers
SB 1088 by Sen. Jeff Brandes (R-Pinellas/Hillsborough)
This measure requires an insured, a claimant, or a person acting on behalf of an insured’s or a claimant’s behalf, to provide an insurer with written notice of loss as a condition precedent to bringing a statutory or common law action for a third-party bad faith action for failure to settle an insurance claim; providing that an insurer is not liable for such claim if certain conditions are met. After idling for several weeks waiting to be heard by the Senate’s Banking & Insurance Committee, this controversial bill finally had its day in the limelight this past Tuesday (3/31/15) when it was heard in this substantive, practically “must pass” committee. After Sen. Jeff Brandes (R-Pinellas/Hillsborough) explained his measure an extensive and at times divisive debate ensued with a number of interested parties testifying in support or opposition to the measure. Those showing strong support for the bill included Associated Industries of Florida, the Florida Justice Reform Institute, Florida Chamber of Commerce and the Property Casualty Insurers Association of America, among others. As they typically do when faced with any type of tort reform legislation, the trial bar attorneys vigorously opposed Sen. Brandes’ measure, with help coming from a couple of friends who actually sit as members of the committee. After lengthy consideration of the bill, committee Chairwoman Lizbeth Benacquisto (R-Lee) announced that the measure was being Temporarily Passed (Tp’d). This does not bode well for the legislation and at this late hour, it’s doubtful there is time during session for the bill to be heard again by the committee and a final vote taken. The Senate Banking & Insurance Committee does meet again tomorrow (4/7/15) at 1:30 p.m., however, as of the publication of this newsletter, the bill is not on the committee’s published agenda.
HB 1197 co-sponsored by Rep. Mike Hill (R-Escambia/Santa Rosa) and Kathleen Passidomo (R-Collier)
This is a very similar House measure to Sen. Brandes’ SB 1088. Just like during the two previous sessions, efforts to amend the laws concerning alleged bad faith by insurers will become highly controversial and fought against hard by the plaintiffs trial bar. The measure has passed the House Civil Justice Subcommittee, however, it has yet to be heard by the House Insurance and Banking Subcommittee and the Subcommittee presently has no further meetings scheduled this session. Therefore, this bill too appears in great peril of not moving forward this legislative session.
Sinkhole Activity Damage Improvement
SB 404 by Sen. Wilton Simpson (R-Hernando)
This measure declares that there is a compelling state interest in enabling property owners to voluntarily finance certain improvements to property damaged by sinkhole activity with local government assistance; ads as a qualifying improvement the repair of sinkhole activity damage under Section 163.08, FS, Property Assessed Clean Energy financing mechanisms; and expands the definition of “blighted area” to include a substantial number or percentage of properties damaged by sinkhole activity which are not adequately repaired or stabilized. Ultimately, the bill allows local governments to redevelop sinkhole damaged land using funding generated through tax increment financing. This past Monday (3/30/15) the bill won unanimous approval from the Senate Finance & Tax Committee and has now moved to the Senate Rules Committee. An approval by the Rules Committee will allow the measure to move to the Senate floor for the chamber’s final consideration.
Property Insurance Appraisal Umpires
HB 491 by Rep. Frank Artiles (R-Miami/Dade); Similar Bill: SB 744 by Sen. Garrett Richter (R-Lee/Collier)
These proposed measures by Rep. Artiles and Sen. Richter create the property insurance appraisal umpire licensing program including continuing education and disciplinary processes under the auspices of the Department of Business & Professional Regulation. Rep. Artiles’ bill is scheduled to be heard tomorrow (4/7/15) in a meeting of the House Government Operations Appropriations Subcommittee and should it pass, the bill must then be approved by the House Regulatory Affairs Committee before it can move to the House floor for a full vote. Sen. Richter’s bill (SB 744) has successfully navigated two committee stops and must now receive approval from Senate Appropriations Committee. From there the measure could be considered on the Senate floor at the discretion of leadership. One potential stumbling block for these measures is significant differences remain between the House and Senate versions in the areas of exemptions from licensure, qualifications for licensure and prior experience requirements. Sen. Richter’s bill also has a much more expansive definition of the terms “appraiser” and “appraisal” than Rep. Artiles’ House bill. The Senate bill describes “appraisal” as the process defined in the property insurance contract for determining the amount of the loss once coverage is established. The two bills must become identical during these waning days of committee meetings and if they do not, either the House of Senate must become willing to lay their bill on the table and totally accept the other chamber’s version. We’ll keep you posted.
Insurance Fraud Reform
SB 1306 by Sen. Rob Bradford (R-Alachua/Bradford) and HB 1127 by Rep. Jennifer Sullivan (R-Lake/Orange)
SB 1306 by Sen. Rob Bradley (R-Clay), which was amended to remove all additional fraud reporting and SIU changes, deals with PIP fraud only, cleans up language for healthcare clinic unlicensed activity and un-compensable and unlawful charges, and sunsets the direct support organization for PIP, was passed by the Senate Banking and Insurance Committee on Tuesday, 3/31 with 9 Yeas and 0 nays. This bill is now on the Criminal Justice Committee agenda for tomorrow, 4/7, at 10 a.m.
CS/HB 1127 by Rep. Jennifer Sullivan (R-Lake), which is identical to SB 1306 and passed favorably by the House Insurance and Banking Subcommittee on 3/25 and is scheduled for the House Appropriations Committee on Tuesday, 4/7 at 1:30., but has a 3rd stop. It remains to be seen as time runs out if this bill will make it through the process.
SB 1060 by Sen. David Simmons (R-Seminole/Volusia) and HB 1013 by Rep. Bill Hager (R-Palm Beach)
CS/SB 1060 by Sen. David Simmons (R-Seminole/Volusia), which removes the need for legislative ratification for maximum reimbursement allowances and manuals that are approved by a three-member panel for purposes of the Workers’ Compensation Law, was placed on the Senate special order calendar 4/2 and awaits floor action.
CS/HB 1013 by Rep. Bill Hager (R-Palm Beach), the house companion to SB 1060, amended quite a bit, requires the DFS to adopt, by order, the maximum reimbursement allowances approved by the three-member panel. The DFS order will be subject to an administrative hearing and judicial review under the APA. This bill still sits in the Regulatory Affairs Committee.
These bills are interesting to watch because they, in essence, delegate authority to a state agency that currently rests with the legislature. While our team agrees with the premise behind these bills, we are also sensitive to how this delegation authority transfer may have opponents from a pure process standpoint. There was a similar objection to a delegation of authority when the Florida Hurricane Cat Fund asked for it a week or so ago to negotiate and PLACE about $1 billion of risk transfer in the private reinsurance market. The Cabinet was hesitant and while they reinforced their full confidence in the Cat Fund team, they retained the final authority to execute the reinsurance contracts that could total $1 billion. We are watching the dots at LMA – and doing our best to connect them for you.
Insurer Solvency Reform
SB 1190 by former Senate President Tom Lee (R-Hillsborough) and HB 1085 by Rep. David Santiago (R-Volusia)
SB 1190 by former Senate President Tom Lee (R-Hillsborough) is scheduled to be heard by the Senate Appropriations Subcommittee on General Government this Wednesday (4/8/15). The companion bill, HB 1085 by Rep. David Santiago (R-Volusia) still must be heard in the House Insurance and Banking Subcommittee just to get started and it is unclear whether any further House subcommittee meetings will occur. As a result, it appears doubtful this legislation will succeed this session.
We’re There So You Don’t Have to Be
During this week we will see more bills move from committees to the House and Senate Chamber floors. However, some bills still have a committee stop or two, so we thought we would post the schedules for some of the committees where we’ll be spending our time this week. Yes, we certainly do know how to juggle just like you and we will see you in the circus tent!
Tuesday April 7
H Transportation & Economic Development Appropriations Sub 8-10 am
S Criminal Justice 10 am-12
S Finance and Tax 10 am-12
H Government Operations Appropriations Subcommittee 10:30 am-12:30
H Justice Appropriations Subcommittee 10:30 am-12:30
H Appropriations Committee 1:30-3:30 pm
S Banking and Insurance Committee 1:30-3:30 pm
S Community Affairs Committee 1:30-3:30 pm
H Finance & Tax Committee 1:30-4:00 pm
S Governmental Oversight and Accountability Committee 1:30-3:30 pm
S Judiciary Committee 4-6:00 pm.
Wednesday, April 8
H Judiciary Committee 9 am-12
H State Affairs Committee 9 am-12
S Appropriations Subcommittee on General Government 10 am-12
H Economic Affairs Committee 10 am-12
S Regulated Industries Committee 1:30 -3:30 pm
Thursday, April 9
H Regulatory Affairs Committee 8 am-12
S Fiscal Policy Committee 9-11 am
H Local & Federal Affairs Committee 9 am-12:00
S Rules Committee 9-11 am
S Appropriations Committee 1-4 pm
S Special Order Calendar Group 4:15-
Until next week, Lisa and the LMA Team