Nothing Funny about April Fool’s Day This Year
There certainly wasn’t any time for April Fool’s Day fun and games last Tuesday at and around the Capitol. In fact, it was ALL BUSINESS all week as our legislators crammed their days with continuing committee meetings, work on the House Floor, and work on the Senate Floor. With only twenty days left in session, everyone is doing all they can to bring bills closer to decisions. While some bills did move gracefully forward, many, many, many bounced back and forth, up and down, moving forward very little. We worked crazy last week as they moved about so we have lots to report with this publication of our newsletter.
Both House and Senate Pass Beginning Budgets-Negotiations Now Begin
Thursday 4/3/14- Both chambers of the Florida Legislature today passed their versions of a proposed budget which will spend approximately $75 billion next fiscal year beginning on July 1st. The focus now is to establish and begin meetings of budget conference committees for the purpose of hammering out the fine details and coming to agreement on a final budget. Despite a routine degree of infighting within both chambers over the content of each proposal, both budgets passed by extremely large margins. Afterwards, key leaders in both chambers expressed confidence in their ability to come to agreements on allocations putting in place spending ceilings for large areas of the budget. House Appropriations Chairman Seth McKeel (R-Polk) noted, “The differences aren’t as extraordinary as they have been in some years, so I don’t think we should have much difficulty getting to allocations relatively quickly”. Senate President Don Gaetz (R-Okaloosa) concurred and expressed his hope that conference committees could begin their intense work around the end of this week. The budget passed by the House contained increased spending for schools, child welfare and services for people with disabilities, however, Democratic leaders said the budget didn’t go far enough because it neglects to fund raises for state employees and counts too heavily on an increase in local property taxes to help increase school resources to levels that remain below the historical highest level for per-student funding. The House budget was summed up this way by the Democrats when Rep. Mark Pafford (D-Palm Beach) stated, “Clearly, this budget misses the mark and it has abandoned Florida’s middle class”. Over on the Senate side there was less consternation and the budget received fairly broad bipartisan support. Controversy did develop over one significant issue having to do with funding for the FAMU-FSU College of Engineering. In spite of the program’s long joint history, the Senate budget included a $10 million appropriation for Florida State University (FSU) to begin the planning and construction of an on-campus, stand-alone engineering school. Sen. John Thrasher (R-Flagler/Putnam/St. Johns/Volusia) who many believe will be selected as FSU’s next President added an amendment appropriating an additional $3 million in operating funds for the FSU project. African-American lawmakers said the idea raised painful memories of a time when the FAMU College of Law was closed in favor of the law school at FSU. Sen. Thrasher, who in 2000 played a key role in reopening the FAMU law school, said he hoped the proposal would strengthen FAMU’s program, in part by getting rid of a requirement that students at the school meet the same admissions requirements. “If I thought for one second that this was not going to enhance the Florida A&M University engineering school, I wouldn’t do it,” he said. The Senate budget also eliminated a proposal to cut $3.5 million from state colleges’ four-year degree programs and funnel the money back into the state university system. Our team will continue monitoring the budget and bring you major highlights as the Session moves into its final weeks.
FIGA Assessment Reform Bill Passes Last Committee Stop
Thursday 4/3/14- A bill which early on in the session received unfair criticism from opponents is now sailing in the House and received unanimous approval this morning from the Regulatory Affairs Committee. CS/HB 143 sponsored by Rep. Jake Raburn (R-Hillsborough) makes common sense and fairness driven changes to the manner in which assessments are collected and remitted to the Florida Insurance Guaranty Association (FIGA), a state-sponsored consumer protection association in which all admitted property & casualty insurers join by virtue of their licensure to conduct business in Florida. As currently drafted, Raburn’s measure provides a new process for insurers to remit regular and emergency assessments to FIGA. Insurers must make an initial payment of the assessment to FIGA by the date in the Order from the Office of Insurance Regulation (OIR) levying the assessment. Insurers begin collecting the assessment from their policyholders no sooner than 90 days from the OIR Order and collect the assessment for 12 months. Insurers reconcile the difference between their initial assessment payment total and the total amount collected at the end of the 12 month assessment period and report the reconciliation to FIGA. If an insurer collects more from policyholders than it initially paid to FIGA, the insurer pays the excess to FIGA. If an insurer collects less from policyholders than it initially paid, FIGA credits the insurer on future assessments. This remittance method is similar to the method under current law where insurers pre-pay assessments and later recoup them from policyholders over time. The reconciliation process created by the bill removes the need for insurers to do a rate filing to recoup assessments from policyholders to streamline the process. Alternatively, FIGA can use a monthly installment method for insurers to remit regular and emergency assessments. The monthly installment method can only be used if FIGA projects it has cash to pay six months of claims. Under the monthly installment method, insurers remit assessments to FIGA each month in the amount they collect from their policyholders. The monthly installment method of remittance can also be used in conjunction with the initial payment method described above. Current law allows for emergency assessments to be paid to FIGA over a 12 month period, but requires regular assessments to be paid within 30 days of the OIR Order. The new assessment methodology proposed in the legislation provides a uniform percentage assessment on all policyholders subject to a FIGA assessment. CS/HB 143 is now ready to be heard on the House floor. On the Senate side, proponents this week were successful in amending the House Bill language onto SB 870 sponsored by Sen. Christopher Smith (D-Broward) during a Judiciary Committee meeting. Smith’s bill regarding insurance policy countersignature requirements is currently better positioned to make it to the Senate floor than CS/HB 143’s companion, SB 346. LMA will continue closely monitoring this important legislation and provide frequent updates.
Committee Action Concludes For Sinkhole Repair Program Measure
Thursday 4/3/14- In its final committee stop in the House, HB 129 sponsored by Rep. Jake Raburn (R-Hillsborough) establishing a mandatory Sinkhole Stabilization Repair Program within Citizens Property Insurance Corporation won, approval from the Regulatory Affairs Committee this past Thursday morning (4/3/14). Just like its Senate companion [SB 416 sponsored by Sen. Wilton Simpson (R-Hernando/ Pasco/ Sumter)], however, the bill has and will likely continue to receive strong opposition from Florida’s trial lawyers and others involved in the claims resolution process. The 12-4 committee vote on Thursday had Representatives Rouson, Stark, Stewart and Watson, all Democrats, aligning with the trial bar and voting against the bill. Despite publicly stated objections, what really has opponents concerned about the bill is its provisions which dictate that policyholders will no longer receive a direct monetary sinkhole claim payment, but will get their property repaired instead. Opponents also like to point out that in 2013, new sinkhole claim volume at Citizens was down 61% from 2012 and that Citizens had 54% fewer pending sinkhole claims in 2013 than 2012; therefore, the legislation is unnecessary. However, in 2012, Citizens earned almost $57 million in sinkhole premium but paid almost $227 million in sinkhole losses and expenses. Citizens’ losses on sinkhole claims continued to rise drastically in 2013 and it’s extremely evident based on data that the state-run insurer’s sinkhole rates are severely inadequate from an actuarial standpoint. HB 129 could now head to the House floor; however, the Senate version of the bill [SB 416 sponsored by Sen. Wilton Simpson (R-Hernando/ Pasco/ Sumter) is now drastically different as a result of an amendment filed by Sen. Jack Latvala (R-Pinellas) on March 13th during a meeting of the Appropriations Subcommittee on General Government. Session is beginning to wind down and whether the House and Senate can come to terms on establishing a mandatory sinkhole repair program in Citizens remains to be seen. LMA has a focused watch on this legislation and we’ll keep you apprised of developments.
Senate Committee Chairman Pulls “Bad Faith” Bill From Agenda
As we reported in last week’s newsletter, the Senate Banking & Insurance Committee was scheduled on Tuesday (4/1/14) to hear and vote on SB 1494 sponsored by Sen. John Thrasher (R-Duval). Known as the Insurer Fair Claim Settlement Act, the bill and its House companion (HB 187) sponsored by Rep. Kathleen Passidomo (R-Collier) is designed to address the state’s perilous bad faith laws by creating a safe harbor from third-party bad faith claims as long as insurers follow statutorily prescribed procedures as set out in the bill. At the very beginning of Tuesday’s (4/1/14) committee meeting Chairman David Simmons (R-Seminole/Volusia) without public explanation informed committee members and meeting attendees that the bill would be temporarily postponed (tp’d). LMA has learned, however, that Chairman Simmons shortly before the meeting informed the bill sponsor and major stakeholders that he decided over the prior weekend to workshop the bill rather than bring it up in committee for a formal vote. However, Simmons’ Banking & Insurance Committee will meet again tomorrow (Tuesday 4/8/14) from 3:00-5:00 p.m. and the current published agenda shows no workshop scheduled for SB 1494. With Session now well past the half-way point it is highly doubtful sufficient time remains to workshop the bill on the Senate side, have a committee vote, and move the bill forward during this legislative session. It’s LMA’s understanding that the House was amenable to considering and moving forward this important tort reform legislation but would not move Passidomo’s companion bill to its second committee stop until equal movement was seen in the Senate. Your LMA team will continue closely following this important measure and let you know whether it’s revived in the last weeks of Session.
Insurance Omnibus Bill Finally Passes House
Tuesday – Thursday 4/1-3 – It was a busy week on the House floor for CS/CS/HB 565 the Insurance Omnibus bill filed by Rep. David Santiago (R-Volusia). It started with an amendment (167853) to the bill on Monday by Rep. Santiago, which he withdrew on Tuesday morning. Tuesday afternoon the bill was read for the 2nd time and added to the 3rd reading calendar. On Wednesday morning, the bill was temporarily postponed in the 3rd reading and in the afternoon had a second amendment (163551) filed. Finally, by Thursday, the bill as amended passed the House with a vote of 109 yeas and 6 nays. One of the debated issues involved a provision in the bill that allows “single zip code rating” in automobile insurance and concerns of redlining. Rep. Santiago assured his fellow legislators that acts of redlining would not be the result of allowing single zip code rating territories. “I feel comfortable it will not allow that,” he said, “I feel very confident and the Office of Insurance Regulation does also.” While we have reported on the details of this bill in prior newsletters, we wanted to bring to your attention again, several provisions including the single zip code rating territories, a new 120-day uniform notice period for cancellations and nonrenewal, and authority for property insurers to average results of two hurricane loss projection models. See those topics below:
Zip Codes and Rating Territories for Motor Vehicle Insurance
Section 627.062, F.S., is Florida’s rating law. Among other requirements, it provides that insurance rates cannot be excessive, inadequate, or unfairly discriminatory. Insurer rate filings that comply with the law and are adequately supported by actuarial justification must be accepted by the OIR. Pursuant to s. 627.0651, F.S., the use of a single zip code as a rating territory for motor vehicle insurance rates is deemed unfairly discriminatory and is thus prohibited. OIR reports that this provision was most likely enacted as an anti-redlining measure, and at that time it was probably considered unlikely that defining a territory consisting of less than two zip codes had a legitimate purpose. However, OIR notes that given the increasing role of “big data” in rating insurance, it may become more common for models including demographic data and insurance data to be used in the determination of rating territory boundaries in the future. The bill amends s. 627.0651, F.S., deeming motor vehicle rating territories that are based on a single zip code to be unfairly discriminatory, unless submitted to OIR for review prior to use and the proposed rating territory has sufficient actual or expected loss and loss adjustment expense experience to be actuarially measurable and credible.
Non-renewal Notice for Property Insurance
Under current law, personal lines or commercial lines residential property insurers must give policyholders a notice of cancellation, nonrenewal, or termination at least 100 days prior to the effective date of the cancellation, nonrenewal, or termination. Further, for any cancellation, nonrenewal, or termination that takes effect between June 1st and November 30th, an insurer must provide at least 100 days written notice, or notice by June 1st, whichever is earlier. The June 1st notice deadline ensures policyholders whose property insurance policies will be cancelled, nonrenewal, or terminated during hurricane season (June 1st – November 30th) will receive notice of the cancellation, nonrenewal, or termination by the start of hurricane season. The bill repeals the required notice by June 1st for policies being cancelled, nonrenewal, or terminated between June 1st and November 30th. The bill also lengthens the notice time period under current law from 100 days to 120 days. Under the bill, policyholders with a policy renewal date from June 1st to November 30th will receive 120 days’ notice before the policy’s cancellation, nonrenewal, or termination date. This change means some property insurance policyholders will receive notice of cancellation, nonrenewal, or termination during hurricane season (June 1st-November 30th). Under the bill, policies renewing September 28th-November 30th that are being nonrenewal, cancelled or terminated by the insurer will receive notice of nonrenewal, cancellation or termination during hurricane season. Policyholders with property insurance by the same insurer for five years or more receive 120 days’ notice of cancellation, nonrenewal, or termination and the bill does not change the notice period for these policyholders.
Hurricane Loss Models
In 1995 the Legislature established the Florida Commission on Hurricane Loss Projection Methodology (Commission) to serve as an independent body within the State Board of Administration. The Commission adopts findings on the accuracy or reliability of the methods, standards, principles, models and other means used to project hurricane losses. Members of the Commission include experts in insurance finance, statistics, computer system design, and meteorology who are full-time faculty members in the State University System and appointed by the state Chief Financial Officer (CFO) or other state officials. The Commission sets standards for loss projection methodology and examines the methods employed in proprietary hurricane loss models used by private insurers in setting rates to determine whether they meet the Commission’s standards. Only hurricane loss models or methods the Commission deems accurate or reliable can be used by insurers in rate filings to estimate hurricane losses used to set property insurance rates. Additionally, insurers have 60 days after the Commission finds a model accurate and reliable to use the model to predict the insurer’s probable maximum loss levels in a rate filing. The bill allows insurers to average model results if the insurer uses multiple models to project losses in their rate filing for property insurance rates. However, the average must be a straight average, thus a weighted average is not allowed. Current law allows only one model to be used to project loss estimates and does not authorize use of an average of model results. Thus, the sole result of the model used is the only result that can be used in a rate filing. The bill also lengthens the time insurers have to use a model or models in their rate filing from 60 to 180 days after the Commission finds the model reliable and accurate.
Senate Insurance Omnibus Bill Sent to Senate Appropriations Subcommittee on General Government
Friday 4/4/14 – CS/SB 1260 sponsored by Sen. Jeff Brandes (R Hillsborough/Pinellas) was placed on the Senate Appropriations Subcommittee on General Government for Wednesday, April 9. This bill, similar the Rep. Santiago’s bill in the above article, addresses multiple insurance issues which we have reported on in detail in prior newsletters. As session nears its end, both the House and Senate versions will need to be identical and we will report on the bill’s final version.
Senate Banking and Insurance Committee Hears Bill Creating WC Task Force
Thursday 4/3/14 – CS/SB 1580 by Sen. Alan Hays (R-Lake/Orange), originally titled the Workers’ Compensation Hospital Fee bill, is now titled the Workers’ Compensation Cost Task Force bill via a strike-all amendment (809718) by Sen. Hays on March 31 and replaced by Committee Substitute on April 1. The bill as originally filed, implemented recommendations of the 2013 Biennial Report of the Three-Member Panel, which included the limiting of the maximum reimbursement for inpatient and outpatient hospital care to 140 % of Medicare. The bill encountered very strong and immediate opposition from the Florida Hospital Association. In an effort to respond to issues presented by various organizations, Sen. Hays’ strike-all amendment instead created an 18-member task force that would be assigned to addressing the issues presented. However, the task force as created in the amendment would be comprised of mostly business and hospital representatives. In response to the make-up of the task force, Sen. Miguel Diaz De La Portilla (R-Dade/Broward) offered an amendment to Rep. Hays’ amended bill, which would add task force members representing workers’ advocates, trial lawyers and unions. After further discussion by the committee and receipt of an assurance from Sen. Hays that the make-up of the task force would be re-addressed, Sen. Diaz de la Portilla withdrew his amendment. The bill passed the committee with a vote of 9 yeas and 2 nays (Senators Ring and Clemens voting no). The bill is currently on the agenda for the Senate Health Policy Committee which meets tomorrow (4/8/14).
Workers’ Compensation Retrospective Rating Plan Bill Passes House Regulatory Affairs Committee
Thursday 4/3/14 – HB 785 Workers’ Compensation sponsored by Rep. Ben Albritton (R-DeSoto/Hardee/Polk) passed the House Regulatory Affairs Committee without debate on Thursday. The only item that slowed the movement of the bill was an amendment filed by Rep. Debbie Mayfield (R-Indian River/St. Lucie) that clarifies that”
Such plans and associated forms must be filed by a rating organization and approved by the Office of Insurance Regulation. However, a premium negotiated between the employer and the insurer pursuant to an approved retrospective rating plan is not subject to this part.” The bill passed with a vote of 18 yeas and 0 nays. The next stop should be the House floor. The companion bill (SB 952) to the House bill was approved by the Senate Banking and Insurance Committee and now moves to the Senate Commerce and Tourism Committee which meets today (4/7/14).
Workers’ Compensation Stop Work Order Bill Awaiting Senate Action
Thursday 4/3/14 – CS/CS/HB 271 sponsored by Rep. Travis Cummings (R-Clay) dealing with stop-work orders unanimously passed the House and is awaiting Senate action. The Senate companion, SB 444 sponsored by Sen. Bill Galvano (R-DeSoto/ Glades/ Hardee/Charlotte) has been idling in the Appropriations Committee since 2/10/14. So for now, the ball is in the Senate’s court and we will keep you apprised.
DFS Division of Agent and Agency Services Bills Continue to Move Forward
Wednesday 4/2/14 – Both CS/CS/HB 633 sponsored by Rep. Clay Ingram (R-Escambia) and CS/SB 1210 sponsored by Sen. Aaron Bean (R-Nassau/Duval) this past week moved forward with favorable action. SB 1210 was voted on favorably by the Appropriations Subcommittee on General Government and is now in Appropriations. Both bills are division clean-up bills which moved forward without much debate and will most likely continue in the same manner.
Citizens to Implement Office Consolidation Plan-Employees Will Relocate
Citizens President and CEO Barry Gilway informed the corporation’s Board of Governors in a letter last week of his intentions to move forward with an office consolidation plan that will hopefully save the state-run insurer $12 million over five years. The plan will consolidate operations in Tallahassee and Jacksonville into single offices in both cities, while moving most of its information-technology staff from Tallahassee and Tampa to Jacksonville. Citizens currently leases four facilities in Jacksonville, four in Tallahassee and one in Tampa. The leases for three of the offices expire in 2015 and a decision was made to consolidate operations in each location. The decision to consolidate the systems and operations staff, which handles computer information technologies, was because most of the department’s work is already performed out of Jacksonville. The move is expected to impact most of the 130 systems and operations staff members in Tallahassee and 18 in Tampa. “All but a handful will be asked to relocate to Jacksonville,” according to Michael Peltier, a Citizens spokesperson.
“We have the opportunity, through building consolidation, to explore ways to improve operational efficiencies and increase cost savings, while improving the functionality of our leased space,” Gilway wrote in his notice to the Board of Governors. “This effort also aligns well with our reduction in policyholder count.” Citizens had 941,221 policies as of Feb. 28. On Feb. 10, the agency dropped below the 1 million mark for the first time since August 2006. According to Citizens, the employee relocation aspect of the consolidation plan will begin later this year.
DFS to Once Again Attempt Rulemaking for All-Lines & Public Adjusters
Monday 3/31/14- Today the Department of Financial Services’ Division of Agent & Agency Services published official Notice of Proposed Rule Development for Rule Chapter 69B-220, Florida Administrative Code, relating to adjusters. The Division previously attempted for almost two years to update its rules regarding adjusters; however, last September the 13th Agent & Agency Services issued an official notice of withdrawal of all rulemaking in this area (see our Newsletter published 9/16/13).The Division’s most recent notice states the purpose of the proposed amendments is to update the rules and incorporate legislative changes to Part VI of Chapter 626, Florida Statutes. The subject area of the proposed amendments relates to conduct of public adjusters and public adjuster apprentices as well as ethical requirements for all adjusters. If requested, a rule hearing will be held on Tuesday, April 15, 2014 @ 10:00 a.m. in Room 116 of the J. Edwin Larson Building. The full text of the Division’s notice as well as the proposed rule amendment language can be viewed by clicking here.
In related rulemaking news, this past Friday (4/4/14) the Division of Agent & Agency Services issued a second notice of proposed rulemaking for Rule 69B-220.052, Florida Administrative Code, relating solely to the supervision of public adjuster apprentices and prohibited acts by apprentices. According to the Division, the purpose of the proposed rule is to implement Section 626.8651, F.S. The Department would like to adopt a new rule that will specify when a public adjuster apprentice requires supervision by a licensed supervisory public adjuster and specify the activities that a public adjuster apprentice shall not conduct. If requested, a rule development workshop will be held on Tuesday, April 22, 2014, at 10:00 a.m. in Room 116 of the J. Edwin Larson Building. The Division’s official rule making notice can be viewed by clicking here. Unfortunately, the Division pointed out in its notice that there is no drafted text for the proposed rule development at this time. LMA will remain laser focused on the Division’s attempt to amend existing adjuster rules and develop new rule requirements for public adjuster apprentices. We will keep you updated on developments and request your input on any concerns you have regarding the agency’s draft rules. As soon as draft rule text is available regarding public adjuster apprentices we’ll share same with you.
Allow Us a Moment to Brag on One of our Own
Last week our hard-working and highly devoted Chief Operating Officer for LMA was featured in the Tallahassee Democrat as she presented the Golden ACE awards to 20 young professionals under the age of 40. Many of you know Meghan Kelly as the go-to-person who keeps LMA functioning every day as the rest of us run here and fro trying to cover the many subjects we are committed to “stay on top” of throughout the State. While Meghan balances her mega responsibilities at LMA she also makes time for her work as the President of the Tallahassee Network of Young Professionals. The TNYP is an organization that supports and encourages young professionals to be leaders in our Tallahassee community and eventually, the entire state. These are the folks that exemplify an authentic community engagement. “The Golden ACE awards program supports that mission by celebrating those young professionals who are making our community better. Our goal is to continually demonstrate that Tallahassee is a great place for young professionals to live, work, play and stay,” said Meghan at the awards banquet last week. Of course, WE that know and love Meghan and believe SHE is the exemplification of authentic community engagement and we KNOW she has only just begun to make a difference in our world. You GO girl….We are proud you are one of our own!!!!
So, in closing, next time you call the office or send an email to Meghan, we would love it if you took the time to say….”we appreciate ya”!!!
Warmly, Lisa
