Tallahassee Was Busy All Over
Last week we saw lots more action in and around the state capitol building, including the profuse blooming of our azaleas, redbud trees, Bradford pear trees and the plethora of other flowers that make our fair city extra beautiful this time of year. While we sneeze more from the pollen that blankets everything, we are happy to pay that price to enjoy the spectacular views and fragrant smells of spring time in the state’s Capital City.
Some of the bills we are following for you saw action last week, which we cover in this edition of our newsletter. In addition to staying on top of those bills, we covered a series of other important events, including the Citizens Insurance Corporation quarterly committee meetings.We’ll share much of that information with you also. So, let’s get moving and take a look back at the third week of session.
Legislative Activity Updates
Property & Casualty Insurance
(AKA Omnibus Insurance Bill)
CS/SB 258 and CS/HB 165
CS/SB 258 by Sen. Jeff Brandes (R-Hillsborough/Pinellas), is this year’s omnibus bill that is increasing the length of time during which an insurer to transition to using a catastrophe model’s new release. Among other things, it also standardizes the amount of prior notice required with respect to the nonrenewal, cancellation, or termination of certain insurance policies, etc. The bill was heard by the Senate Appropriations Committee on Wednesday, March 18 and moved forward by a favorable vote of 15-3. The companion bill, CS/HB 165 by Rep. David Santiago (R-Volusia) still waits in line to be heard by the House Government Operations Subcommittee, after the successful passage of its first stop in the House Banking and Insurance Committee. We’ll continue closely monitoring this legislation in both chambers and let you know the progress of this bill. It is customary that bills be heard in at least three substantive committee of reference in each chamber (House & Senate) in order to successfully move through the legislative process before reaching the House and Senate floors.
Florida Insurance Guaranty Association
(FIGA) Reform Legislation
CS/SB 836 and CS/HB 557
The FIGA reform bill, SB 836 by Sen. Jack Latvala (R-Pinellas) didn’t move this past week and is in its 2nd committee of reference (the Appropriations Subcommittee on General Government) awaiting its place on an agenda. The companion bill, CS/HB 557 by Rep. Jake Raburn (R-Hillsborough) remains with the House Finance and Tax Committee. We believe the committee may take up Rep. Raburn’s measure when it meets this Wednesday (3/25/15).
Transportation Network Companies (TNCs)
CS/HB 757; SB 1298; and, CS/HB 817
CS/HB 817by Rep. Matt Gaetz (R-Walton), which was heard last week in the House Transportation Committee, is waiting to be heard in the House Economic Affairs Committee. SB 1298 by Sen. David Simmons (R-Orange) is scheduled to be heard today at 1:30 PM by the SenateBanking and Insurance Committee. The other two transportation network bills, CS/HB 757 by Rep. Bill Hager (R-Palm Beach) and SB 1326 by Sen. Jeff Brandes (R-Pinellas) didn’t move this past week.
We did find it interesting last week that in New York City, Uber cars now outpace yellow taxis for the first time, and the NYC taxi industry is proposing a cap on the number of Uber cars allowed in the city. It is very clear that the competition between the TNC industry and the taxi industry is getting hotter and hotter.
SB 1006 and HB 1087
SB 1006 by Sen. Anitere Flores (R-Dade) changes the current “opt out” process for Citizens Take-outs to an “opt in” process where Citizens policyholders must sign an acknowledgment that they want to accept the takeout offer vs the process where they are acquired by an insurer without any affirmative action on the policyholder’s part. The bill further prohibits an insurer that removes a policy from annually increasing the rate for the renewal of a replacement policy by more than a specified amount for a specified number of terms. Sen. Flores’ measure is scheduled to be heard today at 1:30 PM during a meeting of the Senate’s Banking & Insurance Committee. HB 1087 by Rep. Michael Bileca (R-Miami/Dade) still waits to be heard in the House Insurance and Banking Subcommittee.
Assignment of Benefits (AOB)
HB 669 by Rep. John Tobia (R-Brevard); Similar bills, SB 1064 by Sen. Dorothy Hukill (R-Volusia); SB 1210 by Sen. Alan Hays (R-Lake County)
This past Wednesday (3/18/15) the House Insurance and Banking Subcommittee considered its own Proposed Committee Substitute (PCS) for CS/HB 669 by Rep. John Tobia (R-Brevard). Sen. Tobia’s original bill was two pages and the 2nd version was 9 pages, which says volumes about what changes were added. If you read the bill at this Link, notice it is almost like two bills – the front version containing some measured AOB reforms and the back of the bill reducing certain timelines insurers have to resolve a claim, send out the claims bill of rights and other claim requirements statutorily prescribed for property insurers. There was close to an hour of testimony with one speaker asking the committee to keep their eye on the (AOB) ball and another presentation by Rytech’s CEO who discussed that being successful in the water extraction business is as simple as doing a good job for a fair wage. The debate was heated and the PCS passed with a commitment from Rep. Tobia to continue to work with all parties. The bill has now been added tentatively to the House Civil Justice Subcommittee’s meeting agenda for tomorrow (3/24/15) at 8:00 AM although the agenda for this committee had not been released at the time we released our newsletter. Similar bill, SB 1064 by Sen. Dorothy Hukill (R-Volusia) is scheduled to be heard today (3/23/15) by the Senate Banking and Insurance Committee at 1:30 PM. We’ll keep you well up to date on developments as they occur.
SB 1094 by Sen. Jeff Brandes (R-Pinellas); HB 895 by Rep. Larry Ahern (R-Pinellas)
This past week, the first House committee heard the House’s flood insurance bill companion (HB 895 by Rep. Larry Ahern, R-Pinellas)on Wednesday (3/18/15). The House version is different from the Senate version (SB 1094 by Sen. Brandes), particularly in the portion of the bill dealing with the flexible flood insurance product language. The idea behind the flexible policy language, as envisioned by Pinellas county Senator Jeff Brandes (R-Pinellas) is that consumers need choices because they have none now for all practical purposes – its NFIP or else! Sen. Brandes and Rep. Ahern believe that Floridians need some flood coverage, even if it’s not Cadillac coverage. Speaking personally, I am a huge believer in choices for flood insurance because in my opinion, the entire state is a flood zone, despite the arbitrary ones set by the federal government. I think of this flexible flood insurance legislative proposal as a cafeteria of choices meaning that I as a consumer, according to the Senate version, can pick how I want my claim adjusted (either using replacement cost or actual cash value) or whether I want to buy “just a little” coverage, i.e., a stated amount of coverage. These choices give me flexibility in premium. The House version has eliminated these two choices in its first draft that was voted on favorably last Wednesday. We will stand by to see how the Senate and House reconcile the differences in these vital bills.
Quota Share Reinsurance-Citizens
SB 936 by Sen. Jeff Brandes (R-Pinellas); HB 1307 by Rep. Dan Raulerson
These bills establish a program for private market insurers to remove risk from Citizens with Citizens serving as a partner and quasi reinsurer. The bills have received three committee references each, however, neither were heard in committee this past week and as of the release of this newsletter it is unknown whether committee action will occur this week. Stay tuned.
Civil Remedies against Insurers
SB 1088 by Sen. Jeff Brandes (R-Pinellas)
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. The measure is scheduled to be heard today at 1:30 PM by the Senate Banking & Insurance Committee. 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. HB 1197 is tentatively scheduled to be heard this week in the House Civil Justice Subcommittee on Tuesday at 8:00 AM, although the agenda for this committee had not been released at the time we released our newsletter.
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; adds 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. Last Tuesday (3/17/15) the Senate Banking & Insurance Committee approved the measure by a 10-0 vote and the bill has now moved on to the Senate’s Finance and Tax Committee.
Property Insurance Appraisal Umpires
HB 491 by Rep. Frank Artilies (R-Miami/Dade); Similar Bill: SB 744 by Sen. Garrett Richter (R-Lee/Collier)
Rep. Artiles’ bill creates the property insurance appraisal umpire licensing program including continuing education and disciplinary processes under the auspices of the Department of Business & Professional Regulation. The bill is in the House Insurance and Banking Subcommittee, although not scheduled at this time for a hearing.
Sen. Richter’s measure is highly similar to HB 491 and was unanimously approved as a Committee Substitute (CS) this past Wednesday (3/18/15) during a meeting of the Senate Regulated Industries Committee.
Insurance Fraud Reform
SB 1306 and HB 1127
Neither of these bills made a move last week. HB 1127 is waiting to be heard in the House Insurance and Banking Subcommittee and SB 1306 was referred to the Senate Banking and Insurance Committee on 3/2/15 where it has remained. We’ll continue closely monitoring and let you know these bills’s progress.
SB 1060 and HB 1013
SB 1060by Sen. David Simmons (R-Seminole/Volusia) was heard by the Senate Banking and Insurance Committee on 3/10/15 and was approved as a Committee Substitute. The bill is in its 2nd and final committee stop before reaching the Senate floor. The similar bill, CS/HB 1013 by Rep. Bill Hager (R-Palm Beach) passed through the House Insurance and Banking Subcommittee last Wednesday (3/18/15) by an 11-1 vote and only has one more committee stop. The bills are simply a way for the Division of Worker’s Compensation to have their various provider reimbursement manuals be updated without legislative approval, particularly when the reimbursement rates are based on Medicare rates and there is no controversy as to the amounts.
Insurer Solvency Reform
SB 1190 and HB 1085
SB 1190by former Senate President Tom Lee (R-Hillsborough) moved forward last week. It passed through the Senate Banking and Insurance Committee by a 10-0 vote on Tuesday, (3/17/15) and now waits to be heard in the Senate Appropriations Subcommittee on General Government. The companion bill, HB 1085 by Rep. David Santiago (R-Volusia) still waits to be heard in the House Insurance and Banking Subcommittee.
Citizens Property Insurance Corporation Holds Quarterly Meetings
Citizens held its quarterly committee meetings this past Tuesday, (3/17/15) and its Board of Directors meeting on Wednesday, (3/18/15) in Orlando. The LMA Team did spend ALL day on Tuesday and several hours on Wednesday listening and learning of the status of Citizens as they reported in the following committees: Market Accountability Advisory Committee, Actuarial & Underwriting Committee, Audit Committee, Consumer Services Committee, and the Finance and Investment Committee. We were listening and taking copious notes during these meetings and can tell you as a recap that Citizens continues to improve in all of their business units including claims handling, consumer outreach, marketing, and their finance and investments. We have been following Citizens for many years and are happy to report again that under the continued leadership of Barry Gilway, the leadership of the corporation, and the excellent Board of Governors, great advancements have been made. While we continue to be blessed here in Florida with “hurricane free” years, Citizens has used that time to further build their infrastructure and prepare themselves for the CAT event that we know will come again one day. We encourage you to check out the Citizens website, where you will find the minutes of the committee meetings and the board meeting last week. To give you a bit of flavor from the committee meetings, we heard about a change in product language regarding claim settlements/taking claims to appraisal process. Basically, the new language will improve the process when Citizens or a customer wants to request an appraisal, including how an umpire is chosen and how the standards for the umpire/appraisal are met. This language change will need OIR approval but as soon as that happens, Citizens will move quickly to put the improvements into place. We were also glad to hear that Citizens’ work on addressing cyber risk continues as the corporation looks at operational quotes and pricing for this very important coverage. Data breach is the hot topic on every insurance company’s top list of important issues and Citizens also takes it very seriously. We also learned that for 2014, the clearinghouse process served to place business outside Citizens at a ratio of 25 percent for new business and 61.5 percent for renewal business. In addition, 466 policies were kept out of the Citizens coastal account. Some other good news was 5,658 policies were bound with insurers since inception of the clearinghouse and approximately $4 billion dollars of Coverage A exposure. Beginning April 1, several carriers will begin accepting Dwelling Fire policies (DP-1 and DP-3), which is a major step in moving the more risky properties out of Citizens.
In the Depopulation report, we were told that 2014 was a banner year with 416,623 policies and $117 billion in exposure moved out of Citizens. And, OIR has approved over 219,000 more policy takeout for 2015. One question by a board member during the meeting was, “Are we going to still be able to respond to CAT events with the downsizing that is going on in Citizens? We will still be responsible to resolve market needs when carriers can’t go forward after a CAT event.” John Rollins, the Chief Risk Officer for Citizens, responded that Citizens must remain aware and focused all of the time. “Everything we are hearing speaks to this area…..when premium drops, how do we remain aggressive in being able to be there? How do we continue to purchase what we need to stay strong? When we cede risks through risk transfer, are we still ready for a cat event? The answer is that we have to stay aware and focused all the time.” We invite you to read the article entitled, “How low can it go? Citizens is at its smallest since its creation in 2002”, at this link to get a little more insight on the discussion regarding depop and where Citizen goes from here.
We’re There So You Don’t Have to Be
Gosh, it’s really difficult to not stay home and play in the garden during these beautiful spring days, but we are committed to the task of keeping you ahead of the game when it comes to the laws that govern our industry and state. We try hard to make sure we know as much as we can during these important days of government in action. If that means walking the halls of your capitol building instead of planting our veggie garden, that’s what we’ll do. So, you get outside and enjoy this beautiful weather, and we’ll keep watch for you.
Lisa and the Team