Monday March 24, 2014
A Time to Stop, Reflect and Give Thanks for A True Public Servant
As a state, we mourned the loss of one of our truly great public servants last week with the passing on our 37th Governor, Reubin Askew. Many of those who read our newsletter will remember his groundbreaking efforts in bringing Florida into the forefront of open government, courageously confronting issues surrounding racial diversity and above all, his ever present integrity and graciousness as he fought for what was/is right for our great state. Some of the folks within our LMA team actually knew him personally, working for him in his press office in the early 70’s. “Governor Askew was a southern gentleman who was gracious and appreciative of all those who worked with him, no matter how great or small the task”, was what we heard from one of our staff members. With that said, we continue to hope that Florida’s leaders will continue his tradition of gracious appreciation. While many committee meetings were shifted about to recognize the Governor’s funeral services, we stayed on task to provide you with as much information as possible during this last week. The below is a recap of those meetings and issues:
Senate Passes Insurance Measure Protecting Gun & Ammunition Owners
Tuesday 3/18/14- While many have said “this bill is in search of a problem,” the Florida Senate overwhelmingly passed CS/CS/SB 424 sponsored by former Senate President Tom Lee (R-Hillsborough) protecting owners of firearms and ammunition against discrimination in the purchase or renewal of personal lines property and automobile insurance policies. Our team personally talked to no less than 20 property insurers who said they don’t and haven’t asked about firearms on their standard insurance application. Only ONE insurer had a question regarding whether or not the insurance applicant owned automatic assault weapons. Nonetheless, the legislation makes it clear that it constitutes an unfair insurance trade practice for property or auto insurers to refuse to issue, reissue, or renew a policy; cancel or otherwise terminate a policy; or charge an unfairly discriminatory rate in this state based on the lawful use, possession, or ownership of a firearm or ammunition by the insurance applicant, insured, or a household member of the applicant or insured. During the committee meeting process the industry worked diligently with Sen. Lee, the National Rifle Association (NRA) and other stakeholders to ensure that under the new law insurers are not prohibited from charging a supplemental premium when a separate rider is voluntarily requested by an insured or prospective insured to cover a firearm or firearm collection (if the value of the collection exceeds standard policy coverage) so long as it (supplemental premium) is not unfairly discriminatory. The bill’s companion legislation (HB 255) sponsored by Rep. Matt Gaetz (R-Okaloosa) has cleared all of its committees of reference and could go to the House floor at any time. The two bills are almost identical and the Senate has transmitted its version to the House in messages so it’s possible the House could take up the Senate version, pass it, and send the bill to the Governor for signature. We’ll continue monitoring this measure and let you know as soon as its approved by both chambers.
Bill Will Protect Validity of Coverage, Even When Countersignature Lacking
Under current Florida law (Section 624.425, Florida Statutes), no authorized property, casualty, or surety insurer shall assume direct liability as to a subject of insurance resident, located, or to be performed in this state unless the policy or contract of insurance is issued by or through, and is countersigned by, an agent who is regularly commissioned and licensed currently as an agent and appointed as an agent for the insurer. Rep. David Santiago’s (R-Volusia) House Bill 375 makes it clear that a contract of insurance remains valid and binding, even when an insurer fails to make certain that one of its licensed and appointed agents countersigned the policy prior to delivery to the insured. The proposed law change appears necessary because insurance companies waive any defense regarding a policy’s invalidity due to the lack of a countersignature if the company accepts payment for that policy from the insured. Because of this, insureds are typically protected from an insurance company claiming a disputed policy is invalid based solely on the lack of a countersignature. Currently, it is unclear whether insurance companies enjoy the same protection if the consumer claims a similar defense. Santiago’s measure has moved swiftly through its committees of reference and as of this past Thursday (3/20/14) the legislation was added to the House calendar for second reading on the floor. The bill’s companion (SB 870) sponsored by Sen. Christopher Smith (D-Broward) is scheduled to be heard tomorrow (3/25/14) in a meeting of the Senate Judiciary Committee. LMA will continue monitoring and let you know when the measure is adopted by both chambers.
Mississippi Legislature Passes and Governor Signs First Statewide Building Code [contributions for this article from Liz Reynolds, Southeast State Affairs Manager, National Association of Mutual Insurance Companies (NAMIC)]
Monday 3/17/14- The State of Mississippi has for the first time in its history enacted a statewide building code establishing clear construction guidelines to harden residences and other buildings against potential hurricane damage and other weather-generated perils. Since the state suffered severe damage from 2005 hurricanes Katrina, Dennis and Rita insurance company trade associations and other advocates have been calling on the Mississippi Legislature to pass comprehensive building code reform legislation. Finally accomplishing the feat, Governor Phil Bryant signed legislation requiring cities and counties to adopt as a minimum standard any of the last three editions of the International Building Code and any additional codes as adopted by the Mississippi Building Code Council. Under the new law effective August 1, 2014, local governments would also have to enforce other Mississippi Building Code Council requirements addressing electrical, plumbing, fuel gas and other systems. The newly adopted Code, however, does not apply to industrial facilities, farm buildings and fishing camps. When questioning the necessity one need to look no further than the August 2013 report issued by the Insurance Institute for Business and Home Safety which found that Mississippi had the weakest building standards of all hurricane prone states. The report noted that Mississippi is not only highly exposed to damage from hurricanes, but also to windstorm events and fires. Passage of the new building code was strongly supported by industry groups including the National Association of Mutual Insurance Companies (NAMIC) as well as construction contractor groups. In the past, construction contractors have opposed stronger building codes citing how they can increase the cost of construction. NAMIC played a vital role in educating construction contractors that the long term benefits of a stronger building code outweigh the short term increased building costs. LMA has tremendous admiration for Mississippi Commissioner Mike Chaney and his leadership among wind mitigation and “storm strong” issues.
Bill Reducing Workers’ Compensation Fees Passes House Insurance & Banking Subcommittee
Wednesday 3/19/14 – HB 1351 Workers’ Compensation Fees, sponsored by Rep. Charlie Stone (R-Levy/Marion) passed the House Insurance & Banking Subcommittee despite strong opposition from the Florida Hospital Association. The bill, along with its companion SB 1580 by Sen. Alan Hays (R-Lake, Marion, Orange and Sumter), limits the maximum reimbursement for inpatient, as well as outpatient hospital care, to 140% of Medicare. The limitation follows the recommendations of the Three-Member Panel in their 2013 Report. The Florida Hospital Association strongly opposed the billing giving five specific reasons for their opposition:
•There is no problem needing attention, since worker’s compensation premiums have fallen over 50% since the 2003 workers’ compensation reforms;
•The legislature has been cutting Medicaid reimbursements over the last 10 years and under the under the Affordable Care A, Medicaid will add further cuts so this is the WRONG time to reduce work comp payments to providers.
•Any further revenue loss in hospital reimbursements will be made up somewhere, and most likely come from health insurers and payers;
•It makes no sense to use a fee schedule designed for the senior citizen population (Medicare) to reimburse working individuals who have a workers’ compensation claim; and,
•A better solution is for employers to improve their work safety programs in order to reduce injuries and improve return to work programs.
Proponents of the bill included the Florida Chamber of Commerce, the Florida Retail Federation, the Florida Restaurant/Lodging Association, the National Federation of Independent Business, and the Department of Financial Services. Specifically, the Chamber testified that it had worked with Rep. Stone to help develop the bill after members had brought their concerns forward. Due to many of the concerns regarding hospital funding and cost shifting, Subcommittee members shared their concerns about the bill and asked Rep. Stone to work further to make the bill a bit more amenable to hospitals before it hits the Floor for a vote. The bill passed with 8 yeas and 4 nays, with the vote being split largely down party lines. Rep. Stone’s bill now moves to the House Governmental Operations Appropriations Subcommittee and the House Regulatory Affairs Committee. We will closely watch both Rep Stone’s and Sen. Hays’ bill as they move forward.
House and Senate Versions of the Omnibus Insurance Bill Pass the House Regulatory Affairs Committee and Senate Banking & Insurance Committee, Respectively
This past week, Senate Bill 1260 sponsored by Sen. Jeff Brandes (R-Hillsborough and Pinellas) passed the Senate Banking & Insurance Committee on Wednesday and the House version of this bill, House Bill 565 by Rep. David Santiago (R-Volusia) passed unanimously as well in its second committee stop. These 80+page bills are a hodge-podge of insurance reforms designed to streamline insurance processing as well as afford enhanced consumer protections. For a complete list of what these bills have in them, please go to http://www.flsenate.gov/Session/Bill/2014/1260/?Tab=Analyses and select the bill analysis dated 3/21/14.
The Florida Division of Workers’ Compensation Submits Notice of Proposed Rule Development
Wednesday 3/19/14 – The Florida Division of Workers’ Compensation filed a notice of proposed rule development regarding self-insurer net worth requirements, specifically for:
– Rule 69L-5.209, F.A.C. – Financial Statements Reporting
– Rule 69L-5.215, F.A.C. – Parental Guaranty
– Rule 69L-5.219, F.A.C. – Excess Insurance
– Rule 69L-5.225, F.A.C. – Requirements
PURPOSE AND EFFECT: The proposed rulemaking amends Rule 69L-5.209, F.A.C., deleting references to a Current or Former Self-Insurer’s Net Worth requirements, with regards to Financial Statements Reporting requirements. Proposed Rule 69L-5.225, F.A.C., is amended to provide guidance to Current and Former Self-Insured entities regarding purpose-specific distinctions in methodologies used when determining a self-insured’s Net Worth. Proposed Rule 69L-5.219, F.A.C., is amended to increase a self-insurer’s maximum per occurrence retention from the greater of $500,000 or 1% of the self-insurer’s net worth to the greater of $600,000 or 1.5% of the self-insurer’s Net Worth, and to clarify factors that the Department must consider when reviewing a Current Self-Insurer’s request for a higher self-insured retention. The aforementioned changes are made to reflect inflation in the costs of claims and to provide self-insurers with a measure of control over premium costs for excess insurance. Proposed Rule 69L-5.215, F.A.C., is amended to delete erroneous references to Rule 69L-5.209, F.A.C., and to make certain technical changes.
SUMMARY: The proposed rulemaking provides guidance to current, former and prospective self-insurers regarding allowable, purpose-specific methods for use when determining a self-insured’s Net Worth. The proposed rulemaking also provides for an increase in the maximum dollar-amount (and, in the alternative an increase in the percentage-amount of a self-insured’s net worth) of a self-insured’s per occurrence retention rate. The proposed increase in the maximum amount of the per occurrence retention rate provides self-insurers with a measure of flexibility in controlling the costs of excess insurance.
If requested, a rule hearing is scheduled April 8, 2014 at 9:00 a.m.-11:00 a.m., at 2012 Capital Circle, SE, Room 102, Hartman Building, and Tallahassee, Florida.
Current and Former Melbourne Cops Arrested For Insurance Fraud
Tuesday 3/18/14- Investigators with the Florida Department of Law Enforcement (FDLE) have announced their arrest of Melbourne Police Department Sergeant Brian Wical and former Melbourne Police Officer James R. Hartman for arson and filing a false insurance claim. According to FDLE investigators, 38-year-old Wical reported in September 2013 that his 2008 Stratas boat was stolen from his home in Palm Bay, Florida. The vessel was later discovered burned and destroyed. The boat had an estimated value of $40,000 and Wical collected $45,066.72 from his insurance claim. FDLE began investigating Wical and Hartman earlier this year after receiving a tip that Wical was committing insurance fraud. FDLE investigators indicated Wical and Hartman conspired to burn the boat and Wical later collected on the insurance claim. Wical faces charges of arson, false and fraudulent insurance claim, burning to defraud an insurer and filing a false report to a law enforcement authority. The first three charges are felonies, and the latter is a misdemeanor. Hartman was charged with two felonies, arson and burning to defraud an insurer. The men turned themselves in to the Brevard County Jail and were released. Wical was placed on paid leave in late February, having served with the Melbourne Police Department since March 2003.
State Fraud Detectives Arrest Weston Man In Auto Claims Scheme
Wednesday 3/19/14- State Division of Insurance Fraud Detectives announced the arrest of David Glincher, 47, of Weston on charges of theft, white collar crime and fraud for allegedly filing auto insurance claims on behalf of consumers who were either unaware of the filings or never received claim payouts. Working closely with the Broward County State Attorney, the Insurance Fraud Division’s investigation revealed an elaborate scheme which targeted more than 270 victims. In conducting the scheme, Glincher allegedly sent letters to victims of traffic accidents and encouraged them to file claims through his company, Auto Loss Claims Consultants, LLC (ALCC). Regardless of whether the victim completed the claim form or discarded it, claims were filed and funds were paid to ALCC by various insurance companies without the knowledge of the victims. The magnitude of the alleged scheme led to charges against Glincher of Aggravated White Collar Crime-a seldom used first-degree felony. A review of bank records in addition to witness interviews determined the total theft to be nearly $300,000. If convicted, Glincher faces up to 30 years in prison. This case is yet another example of the damage insurance fraud inflicts on society through, among others, increased premium costs and the added burden on our criminal justice system. The industry and consumers must continue working together and remain
vigilant in counteracting this on-going threat.
The Process Works, Even with the Important Disruptions of Life
While last week saw last minute committee cancellations, rescheduling, and the overwhelming sense of sadness as we put the day-to-day business of legislative duties aside to pay our respects to Governor Askew, we also quickly kicked the pace back in and got it done. It is the responsibility of those who spend their days doing the government’s work, to stay on task. With only 60 days of session to do the hard work before them, the challenge is met with dedication and duty. Gov. Askew would be the first to say, get back to the work of the people and do it with integrity and commitment. Let’s be sure and listen to those words each day in all aspects of our lives!