Looks like they’re officially in Chambers Now
Last week’s events clearly marked the end of the committee meetings we have been listening to, watching, and participating in since last fall. This is a truly awesome process we are blessed to be a part of when our legislators do their duties for the citizens of Florida. Some of you probably catch the events via your television and/or internet service, but I must tell you, there is nothing like being face-to-face, in the midst of the action each and every week. We love being there for you and we love what we do (although we’ve been told we need to have more fun), so here’s another week of action for your review.
Insurance Consumer Advocate’s Bill Passes Final Committee Stop Assignment of Benefits Restrictions Stripped from Measure
Thursday 4/10/14- Proposed legislation born out of this past summer’s Homeowners Insurance Policyholder Claims and Bill of Rights Working Group (Working Group) was considered Thursday and approved by its last committee of reference, the House Regulatory Affairs Committee. Initiated by former Insurance Consumer Advocate (ICA) Robin Westcott, the Working Group in its final report recommended legislative action addressing a number of issues which led to the filing of HB 743 by Rep. Charles Hood (R-Volusia). The Proposed Committee Substitute (PCS for HB 743) approved by the House Regulatory Affairs Committee represents a new version of the bill crafted around current ICA Steve Burgess’s top recommendation, a Homeowner Claims Bill of Rights, and no longer addresses Assignment of Benefits (AOB) as did the bill when originally filed. As Session has progressed, the AOB issue has become highly volatile with water remediation firms, trial lawyers, and public adjusters seeking to remove from the legislation restrictions on the use of AOBs. In fact assignment of benefits restrictions were stripped from the Senate companion [CS/CS/SB 708 sponsored by Sen. Aaron Bean (R-Nassau/Duval)] in a committee stop several weeks ago. The stripped language would have allowed insurers to have a property insurance policy form prohibiting a post-loss assignment, with exceptions for assignment of public adjuster and attorney fees and assignment of benefits to name a person or entity making repairs or mitigating damage to a property as a co-payee on a claim. The following is a more detailed analysis of the provisions contained within the PCS passed by the Regulatory Affairs Committee:
The Department of Financial Services (DFS) administers alternative dispute resolution programs for insurance. The PCS gives DFS increased power relating to the approval, suspension, and revocation of approval of mediators and neutral evaluators in the DFS property mediation and sinkhole neutral evaluation programs. If an insurer discovers a misrepresentation or omission on the insurance application after issuing the policy, it may deny coverage after a claim is made or cancel the policy. The PCS provides that if a residential property insurance policy or contract has been in effect for more than 90 days, a claim filed by the insured cannot be denied and the insurer may not cancel or terminate the policy or contract based on credit information available in public records. Current law does not address disqualification of an umpire used in appraisals of property insurance claim disputes and the PCS provides grounds for challenging the impartiality of an umpire for disqualification purposes. The PCS creates a “Homeowner Claims Bill of Rights” (Bill of Rights) which describes some of the rights held by personal lines residential property insurance policyholders. Starting October 1, 2014, insurers must provide a copy of the Bill of Rights to the policyholder within 14 days of the insurer’s receipt of an initial communication on a claim from a policyholder. The Bill of Rights does not create a new civil cause of action against insurers.
The PCS creates new requirements for agreements between insureds and providers of services needed to mitigate damage caused by fire, water, or catastrophic events and provides conditions upon which these agreements for these types of services will be valid and the services paid for by insurance.
Both the House and Senate versions of the ICA’s legislation are through their final committee stops and could be heard on the chamber floors at the discretion of leadership. LMA will continue closely monitoring these bills and update you as developments occur.
Flood Insurance – Still Going Through the Paces
Thursday 4/10/14- On Thursday, Rep. Ed Hooper (R-Pinellas) presented HB 879 to the House Regulatory Affairs committee. Aside from the technical and clarifying amendments (there were 4) there was an amendment that was withdrawn. As with any committee meeting or bill presentation, it’s what is NOT taken up and discussed that can be as important as what IS discussed. In this case, Rep. Matt Gaetz (R-Okaloosa) filed an amendment that would move Rep. Hooper’s bill closer to the Senate version of the bill, but withdrew the amendment without discussion or debate. The House and Senate disagree on one main point – should a consumer be able to choose their coverage amount OR should the consumer be mandated to purchase a coverage amount, particularly replacement cost coverage. We asked a very seasoned insurance scholar this question and his answer is below:
Question: Should insurance companies be required to offer replacement cost coverage when offering flood insurance?
•Florida law does not require homeowners to purchase flood insurance. Mortgage lenders may require it of some customers, but customers without a federally backed mortgage or those whose homes are not considered to be in a flood zone are not required by federal law to have flood insurance.
•There are approximately 7 million homes in Florida – only about 2 million are covered by an NFIP policy.
•Those 5 million or so Floridians with no NFIP policy have NO flood coverage in the event of a storm.
•A standard flood insurance policy from the NFIP pays for direct physical damage to an insured property up to the replacement cost (RC) or Actual Cash Value (ACV) of the actual damages or the policy limit of liability, whichever is less. In order to qualify for RC value, you must meet the following criteria:
The building must be a single family dwelling, and you must live in the building at least 80% of the year, and your coverage must be at least 80% of the full replacement cost of the building, or it must be the maximum coverage available under the NFIP. If flood insurance is not mandatory and replacement cost is not guaranteed under federal guidelines, it’s hard to understand why some argue that flood insurance offered through the private market in Florida should be required to provide replacement cost coverage. Since providing full replacement cost coverage could be expensive for some homeowners, it would seem that the better public policy would be to encourage all Floridians to purchase at least some flood insurance coverage tailored to meet their particular needs and financial circumstances.
We would love your feedback and in the meantime, both the House (HB 879) and Senate (SB 542) flood insurance bills are awaiting debate by the full House and Senate – as we say, “it will be decided on the floor.”
OIR Reminds Insurers about Compliance with Crimes Compensation Act Attorney General Notes Violations in Letter to Insurance Commissioner
Tuesday 4/8/14- On Tuesday, Florida Insurance Commissioner Kevin McCarty issued an Informational Memorandum to all authorized insurers writing property, casualty and health insurance in Florida regarding their obligation to comply with the provisions of Section 624.128, Florida Statutes, which addresses the mandatory waiver of policy deductible and copayment provisions pursuant to the Florida Crimes Compensation Act. The Act requires that insurers waive policy deductibles or copayments for persons determined by the Office of the Attorney General to be eligible for relief under the Act. The statutory provision noted above states:
624.128 Crime victim’s exemption. Any other provision of the Florida Statutes to the contrary notwithstanding, the deductible or copayment provision of any insurance policy shall not be applicable to a person determined eligible pursuant to the Florida Crimes Compensation Act, excluding s. 960.28.
A letter dated April 7, 2014, from Florida Attorney General (AG) Pam Bondi’s office to Commissioner McCarty bringing to his attention that a number of insurers have refused to honor eligibility determinations made by the AG’s Bureau of Victim Compensation (BVC) appears to have prompted the Commissioner’s Informational Memorandum. The AG’s letter indicates that some insurers have taken it upon themselves to re-evaluate or second guess eligibility determinations made by the BVC, even after crime victims have been provided with a “Special Notice of Insurance Waiver Provision” which guarantees a victim’s right to avoid having to pay claim deductibles and copayments. LMA has since learned that a total of thirteen insurers have refused to honor some number of eligibility determinations made by the BVC while the AG’s office asserts that only the BVC has the lawful authority to interpret eligibility statutes under Florida’s Crimes Compensation Act. A complete copy of Commissioner McCarty’s Informational Memorandum to insurers and the letter from Attorney General Bondi’s office can be viewed by clicking HERE. Please contact our office if you have any questions concerning this matter.
Citizens Sinkhole Stabilization Repair Program Measure Passes Full House
Friday 4/11/14- The House of Representatives waited until late Friday afternoon to take up HB 129 by Rep. Jake Raburn (R-Hillsborough) which will establish a mandatory sinkhole stabilization repair program within Citizens Property Insurance Corporation. The measure passed by an 85-25 vote largely along party lines with the majority of “no” votes coming from Democrats. Throughout the bill’s various committee stops this session, spirited debate has occurred regarding the true need for the program and whether the measure takes away consumer choice in determining which contractor will perform consumers’ sinkhole repairs. Opponents have cited the overall reduction in the number of sinkhole claims being filed with Citizens and more realistic sinkhole coverage rates being charged as evidence in demonstrating why the program isn’t needed. However, the evidence presented has been one-sided and supporters of the measure’s repair program have effectively pointed to the astronomical loss ratio on Citizens’ sinkhole book as realistic justification for the repair program’s need. In fact, only two members of the House openly spoke against the bill during Friday’s floor debate. Representatives Richard Stark (D-Broward) and Amanda Murphy (D-Pasco) asked fellow House members to vote against the measure citing improved sinkhole claims statistics based on earlier legislative reforms and reduction in consumer choice as their reasons. Nonetheless, as mentioned above, the bill passed by a large margin and the repair program is inching closer to reality. The charge now for supporters in the waning weeks of session is to hopefully reconcile the Senate version of the bill to the House version. At present, the Senate version, which has been sitting in the Senate Appropriations Committee for several weeks, differs significantly. LMA will continue its vigilant watch on this important legislation and keep you apprised of developments.
Workers’ Compensation Task Force Measure Seeking Balance among Members
Tuesday 4/8/14 – We reported recently that CS/SB 1580 was a complete rewrite of the original bill which would have pared workers’ compensation hospital reimbursement rates to 140% of the Medicare reimbursement schedule. The rewrite of the bill deletes this concept and instead, substituted language that creates a “task force” to study hospital reimbursement rates. The task force consists of many stakeholders, mostly from insurance company and regulatory bodies. At this week’s Senate Health Policy Committee, several amendments were offered in an attempt to “balance” the task force with representatives of plaintiff lawyers and employees. The debate began with Sen. Alan Hays (R-Lake/Marion/Orange/Sumter) explaining a technical amendment to amendment 877048, which basically gives authority to the president of the senate and the speaker of the house to appoint an attorney who is practicing workers’ compensation law to the task force. Sen. Joyner then filed a hand-written late filed amendment which would put more employee and employer representation on the task force. After further discussion and the opportunity for Sen. Hayes to see the handwritten amendment, he agreed to work with Sen. Joyner on her request. Several speakers objected to the amended bill (The Associated Builders and Contractors of Florida and the Florida Roofing, Sheet Metal and Air Conditioning Contractors Association-FRSMACA), sharing with the committee that the task force is not needed and is much broader than what was being addressed in the original bill. It was further stated that the task force does not, in fact, include enough employee or employer representation and puts too much decision-making into the hands of the hospital healthcare system, attorneys and regulators who, as some would contend, are not considered true stakeholders. Further comments by the FRSMACA were that the real issue is regardless of whom the payer is, the prices should be the same… and commented that it was “simple math.” Supporters of the bill were the American Insurance Association, the Manufacturers Association of Florida and the Florida Chamber of Commerce. The Florida Justice Association stated the task force must have good representation by all parties within the workers’ compensation system. A representative of the Associated Industries of Florida provided an opinion that the issues to be addressed by the task force were miniscule compared to the impact on the workers’ compensation system of the three pending supreme court cases which speak to: 1) Exclusive remedy; 2) limitations on temporary disability benefits prior to being determined permanently disabled; and, 3) challenges to the 2009 law that fixed attorney fees in Section 440. It appears to us at LMA that this bill has moved from an effort to address workers’ compensation fees for inpatient and outpatient charges to a “task force remedy “of creating a very large and (growing every day), task force to review the issues of workers’ fees for hospital charges. The fate of this bill is uncertain as the dialog on hospital reimbursement charges in the work comp system, which has been a decades old debate, continues.
Insurance Omnibus Bill moves through the Appropriations Subcommittee on General Government
Monday 4/7/14 – SB 1260 by Sen. Jeff Brandes, (R-Pinellas County) moved forward through the Senate Appropriations Subcommittee on General Government. We have reported much of the contents of this 75+ page bill and you can read all of its provisions in http://www.flsenate.gov/Session/Bill/2014/1260/?Tab=Analyses (see the 4.8.14 document). The amendments were quite interesting and we wanted to chronicle them for you:
Amendment 500632 – Adds language to the bill in the section that speaks to s. 626.621, Florida Statutes, which sets forth the grounds for discretionary refusal, suspension, or revocation of agent’s, adjuster’s, customer representative’s, service representative’s, or managing general agent’s license or appointment. The Department of Financial Services may take any of the above action against any of the parties noted above for “directly or indirectly accepts any compensation, inducement, or reward from an inspector or inspection company for referring the owner of property requiring inspection to the inspector or inspection company. This prohibition applies to any inspection of property intended for submission to a carrier in order to obtain insurance coverage or to determine the appropriate amount of the insurance premium.”
Amendment 589854 – This amendment is called the “Goodwill” amendment as it allows charities that receive public funding to access a self-insurance fund. Section “624.4265, Florida Statutes, addresses not for profit self-insurance funds and their insured members …this section says: (1) Notwithstanding any other provision of law, any two or more corporations not for profit located in and organized under the laws of this state may form a self-insurance fund for the purpose of pooling and spreading liabilities of its group members in any one or combination of property or casualty risk, provided the corporation not for profit self-insurance fund that is created: (b) Requires for qualification that each participating member receive at least 75 percent of its revenues from local, state, or federal governmental sources or a combination of such sources, or qualify as a publicly supported organization as evidenced on the member’s most recently filed Internal Revenue Service Form 990.” This underscored language is the new language added to the bill.
Another interesting amendment (582796), adds under s. 627.0653, Florida Statutes, a new section to insurance discounts for specified motor vehicle equipment and this new section reads: “(6) The office may approve a premium discount applicable to any rates, rating schedules, or rating manuals for liability personal injury protection, and collision coverage’s for motor vehicle insurance policies filed with the office for vehicles equipped with electronic vehicle crash avoidance technology that is factory installed or with a retrofitted system that complies with National Highway Traffic Safety Administration standards.”
For those of you who follow workers’ compensation issues, amendment 560680 adds language that will require the “Office of Insurance Regulation, in consultation with the National Council on Compensation Insurance, to prepare a report that analyzes the use of negotiated workers’ compensation premium provisions within retrospective rating plans. The report must examine the use of such provisions in neighboring and competitive states, specifically as to any savings in the actual premium if a retrospective rating deviation is applied, compared to the standard workers’ compensation premium, and the potential inequity for the state’s employers due to the lack of such provisions in this state. The report must also examine the potential savings to Florida employers which results from implementing negotiated premiums for employers having exposure in more than one state and an estimated annual countrywide standard premium of at least $250,000, $500,000, and $750,000. The report shall be delivered to the task force for approval by September 1, 2014, and the approved report shall be delivered to the President of the Senate and the Speaker of the House Representatives by November 1, 2014”.
Bill to Aid Monroe County Passes House Regulatory Affairs Committee
Thursday 4/10/14- A measure (HB 1089) sponsored by Rep. Holly Raschein (R-Monroe/Dade) that postpones a provision in House Bill 1770 passed during the 2013 Session which would adversely affect Monroe County passed out of the House Regulatory Affairs Committee with little discussion. The new committee substitute version of the bill that was presented indicates that Citizens will keep writing coverage in areas where the state-run insurer has 75% or more of coverage in a particular area.The exception created in Raschein’s bill permits major structures that are substantially improved at any time to be insured in Citizens if they are located in a county where Citizens issues 75 percent or more of the total number of policies for personal lines residential, commercial residential, and commercial nonresidential insurance policies. For personal lines residential property, it appears Monroe County is the only county in Florida that would currently fall within the exception created by the bill. Further, it appears the exception would apply to a maximum of 656 parcels of land in Monroe County. Rep. Raschein is a tireless advocate for her constituents and we commend her for her efforts in making a difference for Monroe County property owners!
House “Mini” Omnibus Bill Approved In Committee Stop
Thursday 4/10/14- House Bill 1109 by Rep. Charles Hood (R-Volusia) is a shorter version of the insurance omnibus bill (SB 1260/HB 565) and has many of its provisions with amendments added during its successful committee stop in House Regulatory Affairs Committee. Three amendments were published with a 4th being “late filed” an hour or so before the meeting dealing with surplus lines insurance companies being added to the Citizens clearinghouse. The amendments offered included a provision that is being called the “Goodwill” provision which allows Goodwill Industries and approximately four more nonprofits to purchase its property and/or casualty insurance from a self-insured fund called, “Non-Profit Insurance Services, Inc., of Lake Mary”. Interestingly, this amendment (bar code 466677) was withdrawn, but it was noted that this provision is in two other bills traveling through the session. This concept was heavily debated the day before (4/9/14) in the Senate Appropriations Subcommittee on General Government where concerns were expressed that self-insured funds don’t have FIGA coverage or other regulatory protections in place for admitted carriers. OIR testified that this particular self-insurance fund has not had any issues since its inception.
In addition, an amendment (bar code 468053) that has been tacked on in other bills as well, prevents licensed windstorm mitigation inspectors and contractors from paying referral fees to insurance agents or agencies. This amendment is in response to Declaratory Statement issued July 19, 2013, by DBPR indicating that the current prohibition in law isn’t sufficiently clear to prohibit the practice. Then the fireworks began when Rep. Matt Gaetz (R-Okaloosa) introduced an amendment (bar code 772033) to revise circumstances surrounding who can be awarded attorney’s fees in litigation where an assignment of benefits has been made. The amendment would have prohibited a third party to an insurance contract where the third party is a named plaintiff in the suit from being able to recover attorney’s fees in bad faith litigation. Gaetz’ effort resulted in extended back and forth debate and ended with Rep. Gaetz withdrawing his amendment. However, it’s highly likely we will see this amendment again if HB 1109 makes it to the House floor. We are keeping extremely close tabs on this bill and will keep you apprised of developments.
Senate Approves Measure Impacting Post-DUI Insurance Requirements
Friday 4/11/14- In floor action Friday, the Florida Senate gave its final approval to a measure [SB 490 by Sen. Rene Garcia (R-Miami-Dade)] which will give insurers more time to thoroughly underwrite non-cancellable post-DUI auto insurance policies. Under current law, every owner or operator who, regardless of adjudication of guilt, has been found guilty of or entered a plea of guilty or no contest to a charge of driving under the influence (DUI) must maintain a motor vehicle insurance policy that provides Bodily Injury (BI) liability coverage of $100,000/$300,000 and Property Damage (PD) coverage of $50,000. These higher limits must be carried for a minimum of three years. If the owner or operator has not been convicted of driving under the influence or a felony traffic offense for a period of three years from the date of reinstatement of driving privileges, the owner or operator is no longer subject to this requirement. SB 490 amends s. 627.7275, F.S. by extending the underwriting period from 30 to 60 days for non-cancellable coverage required to reinstate driving privileges revoked or suspended for failure to maintain required security or for committing a DUI offense. This change will allow insurers additional time to properly complete underwriting, during which the insurer may cancel the policy. The longer underwriting period will also extend from 30 to 60 days the period of time that elapses before an insurer reports to the DHSMV that non-cancellable coverage is in full force and effect and cannot be cancelled. The bill also allows the insured to change the coverage amounts under such policies without requiring the policy to be cancelled, so long as at least the minimum required coverage amounts are maintained. SB 490’s House companion [HB 401 by Rep. Tom Goodson (R-Brevard/Orange)] is on second reading on the floor and close to final passage as well.
Counting our Blessings
As many know, our legislative body is taking this week off to spend time with family and friends for Holy Week, however, they will return on Monday, April 21st to continue their work. For purposes of reporting in our next newsletter, we will do a “summary” of the status of all the bills we are covering. We hope this will provide you with a quick reference for your needs in keeping up with what’s happening in Tallahassee.
Most importantly, we hope for you and yours, which you also take a break during this special week to count the many, many blessings we enjoy by living in our great state and country. True, our state and country aren’t even close as the perfect place to live, but we do try very hard each day to do the best we can to constantly make things the best possible for our freedoms. It is a statewide and countrywide team and we are proud to be a part.
Special blessings to all this week….Lisa