Elections and Early Voting Draws Near

With the November 4th general election only fifteen days away, we thought we would share the official voting day information with you in this newsletter publication.  We obtained our information from the Florida Division of Elections, so we are relying on it as accurate.

•General Election:  November 4, 2014

•2014 Early Voting General Election Period:  October 25, 2014 – November 1, 2014 (This represents a minimum mandatory 8 days beginning on the 10th day and ending on the 3rd day before election day, however, each county Supervisor of Elections may at his or her own discretion offer additional days of early voting on any or all days during the 15th through 11th day and the last Sunday before Election Day.)

Of course, you know how passionate we are about voting!  It’s not only our right but our privilege and obligation as Americans.  We know you’ll be sure and exercise your right to speak through our democratic process during this election.  Check out the state website for additional valuable information www.election.dos.state.fl.us

Governor’s Race Shows Big Difference in Insurance Platforms

Republican Governor Rick Scott says he’ll stay with the “free market approach” to the insurance industry.  Democratic gubernatorial challenger Charlie Crist says he’ll “reverse rate increases that have occurred under Scott’s watch”.  It has been said of the strategies being touted by Scott and Crist that they are the Scott “pay now” model and the Crist “pay later” model.  Many within the insurance industry back Scott because they feel his approach will bring more private insurers into Florida and subsequently push policyholders out of Citizens. Jay Neal, President and CEO of the Florida Association for Insurance Reform, said a non-political middle ground is needed between the Crist plan of rolling back rates and Scott’s plan of further industry deregulation.  “I think we’d be better off, overall, if the extremes were not the policy, if we found a way to lower rates but to do it in a way that is actually paid for, actually responsible,” Neal said.  Neal contends rates could be lowered about 7 percent by reforming the reinsurance industry, which is heavily based offshore.  With all that said, we absolutely believe that Florida property owners are paying close attention.  In fact, Susan MacManus, Political Science Professor at the University of South Florida, recently stated that insurance could be the deciding factor for many of the property owners who cast ballots.  “Homeowners are much attuned to their insurance coverages and homeowners tend to vote”.  In addition to her comments, a recent Sunshine Survey conducted by the University of South Florida showed that property insurance coverage is one of the top stressors for homeowners in Florida, following food, maintenance costs, health care, utility bills and unemployment.  We are all in this together no doubt, as our homes, business and the economic growth of our state, very much depends on the ability to insure and care for our properties.  We know you are paying very close attention, as are we.

OIR Data Call to Check 2011’s Senate Bill 408 Sinkhole Reforms

Concerns have begun to surface that major sinkhole insurance reforms instituted in 2011 by Florida’s Legislature may have gone a little too far. At this point there seems to be little doubt that 2011’s Senate Bill (SB) 408 has gone a long way towards accomplishing its mission, to curb the massive flow of sinkhole claims that by 2011 were fueling insurance rate increases and significantly harming property values, especially in the most sinkhole prone areas such as Hernando, Pasco and Hillsborough Counties. However, now some homeowners, plaintiffs’ attorneys and sinkhole repair contractors are complaining that reforms have caused a new, perhaps unintended set of problems. They say SB 408 has reduced the availability of sinkhole insurance coverage and has allowed insurance companies to charge rates near the cost of a standard homeowners insurance policy. According to the reforms’ critics, SB 408 has made it extremely difficult for policyholders to meet criteria and substantiate claims leaving them bound to homes they cannot afford to repair and developing a new detriment to property values in certain markets.

While recently acknowledging that the 2011 reforms have aided in reducing the rampant fraud and runaway abuse that was occurring up until 2011 when policyholders were obtaining large claim payouts for minor cracking damage, Insurance Commissioner Kevin McCarty recently noted that some of the criticisms may have merit. He noted in a recent interview that it could be argued that the pendulum has swung too far the other way and that it makes sense for his office to perform a more in-depth analysis of the market to determine what is occurring.  McCarty went on to say that his office lacks a sufficient volume of complaints to warrant action, therefore, he noted the possibility of initiating a data call to property insurance companies to examine key issues such as affordability of sinkhole insurance coverage and the frequency of claim denials under the current statutes. If Commissioner McCarty issues a data call, we believe it will clearly prove that the objectives of Senate Bill 408 and its intent have been clearly met. While data calls are not popular and take us from our day-to-day work, in this instance ensuring that we tell this story so that all of our policyholders are protected is in our best interest. Recently we discussed this issue with the Office of Insurance Regulation and can brief you individually on the outcome of those conversations. LMA will continue to closely monitor this issue and if a data call is initiated, share with you the call elements and results as soon as they are available.

DFS’s Division of Insurance Fraud Reorganized

Monday 10/13/2014- Colonel Simon Blank, the Director of the Department of Financial Services’ Division of Insurance Fraud  announced that the Division has undergone significant internal changes to it organization.  Effective immediately, the Division has three main components:  1) Bureau of General Fraud; 2) Bureau of Workers Compensation Fraud; and 3) Operational Support Services.

The general and PIP Fraud units have been combined into the Bureau of General Fraud which will now encompass the consolidation of fraud operations and the Bureau of Intelligence and Analytical Support.  The regions around the state under the Bureau of General Fraud will now be organized as District I (the Panhandle, North, Orlando and Tampa/St. Pete Regions) and District II (Miami, Broward, West Palm Beach and Ft. Myers). Both districts will be under the direction of a Major who will be reporting to Major Buddy Hand.  Major Hand has been promoted to the position of Bureau Chief assuming the primary leadership role for accomplishing the investigative mission of the Division. Chief Hand has 25 years of law enforcement experience, 21 of those with the Division of Insurance Fraud.

Other staff changes as a result of the reorganization include: Tim Cannon’s promotion to the position of Assistant Director. Lt. Colonel Cannon possesses thirty years of law enforcement experience from both the state and county level; Michael Byrne has been promoted to Major and is now leading the Division’s  District I. Major Byrne has a combined total of 40 years of military, local and state law enforcement experience and worked as an SIU investigator in the industry for nine years. Glen Hughes has been promoted to Major and is responsible for leading the Division’s new District II. Major Hughes has 29 years of law enforcement experience both working and supervising major case investigations for the Division and with state attorneys throughout Florida.

The Bureau of Workers Compensation Fraud will be under the direction of John Dygon who has been promoted to Bureau Chief. Chief Dygon brings 38 years of diverse law enforcement experience to this position and has supervised and investigated complex investigations for nearly 28 years.  Major Geoff Branch will now oversee Workers’ Compensation Money Service Business (MSB’s) investigations in southeast Florida.

Operational Support Services has been formed by combining the Office of Professional Standards and Planning, the Administrative Unit, and Information Technology. Captain Janet Hartman, formerly of the State Fire Marshal’s office, has joined the Division and promoted to Major. Major Hartman possesses nearly 19 years of experience in state law enforcement, as well as a strong background in training, accreditation and leadership of special operations units.

In Director Blank’s announcement he stressed that these were positive changes that are meant to ensure the continued high quality services provided by the Division.  We at LMA continue to support the hard work and dedication of the Insurance Fraud Division team members and recognize the outstanding services these folks provide to Florida consumers and our industry.  We’ll be there to help, as always.

Family Will Not Collect $2.4 Million In Workers’ Comp Death Case

In late September a state appeals court ruled that the family of a Florida construction worker who was killed by a 1-ton falling steel column, cannot collect a $2.4 million judgment from his employer, Metal Bilt, a subcontractor on a warehouse expansion project. Metal Bilt was working on the 33-foot-tall steel columns that would support the building when Victor Lizarraga, a foreman for Metal Bilt, was tightening a wire attached to one of the columns when the column fell and killed him. The project’s general contractor, R. L. Haines Construction, told the Metal Bilt employees to begin settling the steel columns after the epoxy had been drying for 44 hours, rather than the recommended 72 hours. Eva Santamaria, Mr. Lizarraga’s wife and their two children, sued R.L. Haines for wrongful death.  The trial court agreed that the case fell within the intentional tort exception to workers’ compensation immunity and awarded them $2.4 million. However, Florida’s Fifth District Court of Appeals reversed the trial court on September 19, saying the standard to meet was that the injury was “virtually certain.”  “Appellees were required to establish, among other elements, that as a result of the shortened epoxy cure time, the column was virtually certain to fall and injure the decedent,” Associate Judge D.E. Silverman wrote for the majority. “This court must, therefore, review the facts and circumstances of this case to determine whether the evidence was sufficient to satisfy this ‘extraordinarily high’ standard.”  For the majority, the evidence did not meet that standard. “The record is devoid of evidence of prior similar accidents,” Silverman said. “Moreover, the remaining three columns in the set – all of which were subject to the same shortened curing period-remained anchored to the base and standing upright.” Even if the column was virtually certain to fall, no expert said it was virtually certain to kill someone, the ruling notes. Judge Jay Cohen wrote in dissent that R.L. Haines ignored the “red flag” of the movement of an anchor bolt on the set of columns and that the company falsely assured the employees of their safety.

Controversial Florida Medical Malpractice Law Upheld

Friday 10/10/14-   A three-judge panel of the 11th U.S. Circuit Court of Appeals overturned a ruling last year by Tallahassee-based District Judge Robert Hinkle who ruled that the law would lead to violations of HIPAA, which prevents disclosure of personal medical information.  The appeals court, however, ruled that the law does not violate requirements aimed at protecting patient privacy.  The specific controversy surrounds the part of the law that would allow “ex parte communications” in medical-malpractice cases and the requirement that patients sign authorizations allowing ex parte communications. An ex parte communication would allow a doctor’s defense attorney to receive personal health information about the patient involved in the case, without the patient’s attorney being present. In the 36-page decision by 11th U.S. Circuit Court of Appeals Judges Frank Hull, Stanley Marcus and James Hill, the appeals court disagreed with District Judge Robert Hinkle, pointing in part, to the authorization forms that would be signed by patients. The decision stated, “Murphy, (the plaintiff/patient in the case) and others like him, voluntarily choose to seek redress for grievances through Florida’s judicial system.” “By enacting (the section of the malpractice law), the state conditioned an individual’s ability to use a state-provided resource to advance medical negligence claims, — the state judicial system — upon that individual’s executing a limited HIPAA authorization in a form that complies with HIPAA’s requirements. An individual retains the choice whether to file suit, and therefore whether to sign the authorization form.”

The ex-parte communications issue was a hot topic during Florida’s 2013 Legislative Session, with plaintiffs’ attorneys fighting the proposal and saying it would trample patient privacy. Supporters of the law argued it was a fairness issue, because ex-parte communications would give defense attorneys access to information that plaintiffs’ attorneys already can review. Also, the supporters said the information could help defense attorneys make decisions more quickly about whether to settle or proceed with cases. Even with the decision by the U.S. Court of Appeals, we wonder whether this is the last we will see of this issue.  We think perhaps not.

We Have a Ways to go, But Flood Insurance Solutions Getting Closer

Many of you followed intently the journey of Florida’s flood insurance legislation that ultimately was signed this year by the governor (Senate Bill 542). We at LMA worked closely, and very hard, with Senator Jeff Brandes (R-Pinellas/Hillsborough) (who is in a November re-election bid and our firm whole heartedly supports him) and a team of insurance professionals, to ensure the bill’s passage. Senator Brandes was the champion of this bill for many reasons, not the least of which is that he never wanted to see again what happened when the federal government decided to reform the National Flood Insurance Program over the past 24 months. Senator Brandes, like so many of us, realized the facts: that Florida has 2 million of NFIP’s 5.5 million flood policies; that the federal government’s attempts at managing risks, pricing risks, and forecasting risks can be drastically improved (admittedly so by NFIP administrators); and, that while NFIP runs a deficit, passing legislation that imparts tremendous sticker shock on its insureds isn’t the answer. The bill provides incredible consumer protections, as well as a framework for interested insurers and their agents to explore writing primary flood insurance policies in the admitted market. An important part of the bill addresses the use of flood and surge risk models. To that end, the Florida Commission on Hurricane Loss Projection Methodology (“Commission”), chaired by statistician Lori Medders, PhD, FSU’s Director of the Storm Risk Management Center, adopted a plan recently to produce draft standards for new flood loss models by the end of 2015, with formal standards by the end of 2016. The bill has no restrictions on how modelers are to create their flood model platforms and as one commission member pointed out, the commission shouldn’t attempt to tell them. There was agreement that flood loss models would stand alone from hurricane loss models. Jack Nicholson, Chief Operating Officer, Florida Hurricane Catastrophe Fund will chair a standards drafting committee for purposes of reviewing standards prior to commission approval. See Dr. Nicholson’s 35 slide PowerPoint presentation HERE. Other members of the commission and drafting committee are Floyd Yeager, actuary and member of the Cat Fund Advisory Council; Steve Burgess, Insurance Consumer Advocate, State of Florida; Dr. Randy Dumm, insurance finance expert, FSU; Barry Gilway, President and Chief Operating Officer, Citizens Property Insurance Corporation; Brian Koon, Director, Florida Division of Emergency Management; Robert Lee, actuary, Florida Office of Insurance Regulation; Dr. Forrest Masters,  licensed structural engineer, UF faculty member; Dr. Jainendra Naviakha,  computer system design expert, Florida International University faculty; Kristin Piltzecker, actuary; and, Dr. Hugh Willoughby, meteorologist, Florida International University. The draft standards (see initial draft HERE) will be included in the Commission’s Report of Activities (ROA), which will be released at the end of 2015. The formal standards will be developed throughout 2016 and must be in place by July 1, 2017. SB 542 requires that the modeling commission adopt the new flood loss standards by July 1, 2017, and that actual models then be certified for flood insurance rate filing purposes after July 1, 2019, with reviews every two years to ensure continual compliance with the standards.

I, like many of you, recall the days where there were no models. Old fashioned underwriting and gut instincts were used to decide if and how a risk was put on the books and we have a feeling that here may be lots of that going on with this emerging primary, private flood insurance market. Let us know if you want to brainstorm!

Next Time we Visit it will be November 3

It will be a crazy, busy next two weeks in our shop, as in yours, as we move toward the general election and of course, the holidays that are right upon us.  The summer sure flew by and we have put our vacation memories behind us as we jumped right in to the last quarter of the year and then, 2015.  Can it really be 15 years since that “oh so scary” Y2K event!  Just goes to show us how quickly time does move along and how important it is to appreciate and live each day to the absolute fullest.

Have some fun and we’ll see you soon…..Lisa