Does each of you remember the days your parents told you to “make sure” your bed were made or “make sure” you swept the kitchen? Or how ’bout your teachers saying you needed to “make sure” you turned in your extra credit or to take note of an important concept that will be on the test! That’s what the LMA team has ensured for the past couple weeks. We have “made sure” that your opinions, ideas and expertise is communicated. In fact, there have been 3 committee weeks in February and you and we know that the legislation session is only “60 days” of March and April. But there’s nothing in the law that says the legislature can’t have as many committee weeks as they need or want to hold! We like to think of these extra meetings before the session as the legislature’s way of “making sure” that parties agree or that the legislature is “making sure” that the debate is out and in the open so legislators know challenges and successes early. And these 3 weeks in February of committee meeting after committee meeting has opened our eyes to not only insurance issues that we track very closely but to human services issues (how much should Florida spend on child protection?) and gaming issues (casinos or no casinos?), or education (should we build more universities or pay teachers more?) and the list goes on. We invite you to come sit with us in our daily journey through the capitol in these meetings. It’s a way to be up front and personal with legislators and to “make sure” they hear YOU through US! Now, let’s take a good look at the issues over the past 3 weeks we’ve been making sure about for you…
Citizens Reaches a reduced Policy Count Milestone
Monday 2/10/14- Citizens Property Insurance Corporation’s policy count has dropped below 1 million for the first time since 2006, marking a significant milestone in the corporation’s continuing efforts to reduce the risk of assessments and return to its role as an insurer of last resort. Recent takeout efforts, legislative initiatives and an improving private insurance market have combined to push Citizens’ exposure to the lowest level in more than seven years, reducing the risk on all Florida policyholders who would be on the hook if Citizens cannot pay claims following a major storm or series of loss events. Recently released policy counts show Citizens with 942,321 policies in force, a drop of 36 percent from a high of nearly 1.48 million policies in October 2012. The latest figure represents the first time Citizens has gone below 1 million policies since August 2006. Exposure has fallen from a high of $515 billion in November 2011, to $302 billion, a drop of more than 41 percent. “Today’s announcement marks the culmination of efforts from all Citizens’ stakeholders,” said Chris Gardner, chairman of the Citizens Board of Governors. “A lot of credit needs to go to the state leaders, insurance regulators and agents who have helped Citizens reach this critical milestone.” Following eight years with no major storms, Florida’s financially sound private insurance market has begun to rebound as new investors and companies look to expand and increase their footprint in the Florida marketplace. Depopulation efforts over the past few years have led to nearly 500,000 policies being shifted from the corporation to private market carriers able to provide comparable or better coverage at competitive rates. Improving reinsurance markets have also allowed Citizens to transfer more risk to the private market and off the backs of Floridians. In January, Citizens launched the Property Insurance Clearinghouse, which will provide access to more private market options for new applicants and current policyholders. “For most Floridians, the biggest news, certainly, is that we’ve reduced possible assessments from nearly $12 billion to under $4 billion following a 1-in-100 year storm,” said Citizens CEO and Executive Director Barry Gilway. “This reduction has come without the benefits of the clearinghouse, which will further reduce assessment risk.” As we’ll discuss in the article below, the Legislature will likely consider a number of additional proposals this upcoming session to even further reduce Citizens’ overall size and exposure.
Senate Committee Continues Deliberations on Citizens Reforms
Tuesday 2/18/14- During today’s Senate Banking & Insurance Committee meeting Chairman David Simmons (R- Seminole/Volusia) and committee members continued their weeks long deliberation regarding potential further reforms to Citizens Property Insurance Corporation. According to Chairman Simmons, if pursued, such additional reforms would be incorporated into a Proposed Committee Bill (PCB) and filed for consideration during the soon to begin 2014 Regular Session. During a string of pre-session committee meetings in recent weeks a number of ideas to further reduce Citizens’ exposure, policy counts and ultimately the assessment risk to all Florida policyholders have been considered but some have already proven too controversial in this election year. On Tuesday consensus agreement was reached among committee members to include the following Citizens reforms in a soon to be released Committee Bill:
1. Citizens shall stop writing NEW multi-peril Commercial-Residential policies in the Coastal Account and instead offer All Other Peril (AOP) policies along with Wind Only.
•Addresses an inequity in rates that results in commercial-residential buildings covered by a multi-peril policy paying less than the same building insured by Citizens with a wind-only policy and an AOP policy at current rates.
•Citizens’ AOP coverage is comparable to the private market, allowing for more takeout opportunities.
•This proposal will not affect current Citizens commercial-residential multi-peril policyholders, who are allowed to continue renewing their multi-peril policies.
2. Apply a 15 percent limit on rate increases to all commercial non-residential policies.
•A 15 percent glide-path on rate increases for commercial non-residential policies should, based on current projections, result in all of Citizens commercial nonresidential policies achieving close to actuarial soundness after 4 years.
•There are 21,467 policies insuring 30,480 buildings with a total exposure of $14.27 billion and a 1-100 PML of $1.175 billion.
•An average commercial non-residential wind-only policy is 24.3 percent below actuarially sound. The average commercial non-residential multi-peril policy in the Coastal account is 73.5 percent below actuarially sound.
•An average commercial non-residential multi-peril policy in the Commercial Lines Account is near actuarial soundness.
3. Allow Citizens 18 months to develop and establish a Citizens Clearinghouse for commercial residential policies.
•A commercial clearinghouse would help enforce the 15 percent eligibility requirement for new Citizens applicants, and encourage private-market insurers to offer coverage to existing Citizens policyholders.
•Private market insurers are actively writing commercial residential policies that insure newer buildings with a replacement cost greater than $10 million.
•Citizens estimates 5-15 percent of its current commercial residential policies would be attractive to the private market.
4. Require Citizens to annually report their bonding capacity, claims paying capacity and their current cash balance as of December 31 of each year.
5. The proposal to remove the requirement that insurers offer a $500 deductible option for non-hurricane losses took a surprising twist. The committee not only kept a minimum deductible option for non-hurricane losses but raised the amount from $500 to $1,000.
Two additional issues were considered by the committee, shifting 5 percent of the Citizens policyholder surcharge from the Personal Lines Account to the Coastal Account and lowering the current statutory fee cap for public adjusters on non-disaster related claims from 20 percent to 15 percent. However, after considerable discussion, those issues were for the time being tabled to allow for additional research and discussion among stakeholders. It is our understanding that the House Insurance & Banking Subcommittee is also considering proposing additional Citizens reforms during the upcoming Regular Session and that discussions are underway between Senate and House committee leaders to hopefully find common ground on a list of legislative insurance reforms prior to either chamber filing reform legislation. LMA will continue closely monitoring this situation and will provide you with the latest developments as they break.
Consumer Advocate’s Property Measures Pass First Major Committee
Assignment of Benefits Language Survives, Just Barely
Tuesday 2/11/14- Many of the recommendations made by the Insurance Consumer Advocate’s Homeowners’ Insurance Policy & Claims Working Group were incorporated into bills which CFO Jeff Atwater is strongly pushing. SB 708 sponsored by Senator Aaron Bean (R-Duval/Nassau) successfully passed its first major committee stop when it was heard by the Senate Banking & Insurance Committee on February 11th. It includes a Bill of Rights for policyholders of residential property insurance and new restrictions on a post-loss assignment of benefits. The legislation also incorporates a prohibition against post-claim underwriting by insurers and definitions of conflict of interest in the mediation, appraisal and neutral evaluation processes. During the Tuesday committee meeting the Assignment of Benefits (AOB) issue practically took on a life of its own and generated significant and lengthy discussion among committee members. It was apparent that some committee members believed the language completely prohibited policyholders from assigning benefits to a mitigation vendor or other repair contractor when in reality the language maintained a policyholder’s right to assign benefits and put in place seven conditions on post-loss assignment of benefits, many of which are consumer protections designed to prevent insureds from being taken advantage of. An amendment filed by Sen. Miguel Diaz de la Portilla deleting from the bill the assignment of benefits section was defeated on a 6-6 tie vote. The bill later passed with a significant majority, although committee Chairman David Simmons said “some place in the middle” should be found on the assignment of benefits issue. The bill now heads to the Senate Appropriations Committee. Sen. Bean made it clear that he will be working on the AOB issue with CFO Atwater, Consumer Advocate Burgess and other stakeholders, including the insurance industry, trial lawyers and public adjusters before the bill’s next committee stop. Chairman Simmons also requested that Sponsor Bean additionally work with the six senators who voted to strip the seven AOB conditions from his bill. “What we have seen. There is some work that needs to be done,” he said. “There is some place in the middle.” We will stay on top of this industry important legislation and keep you apprised of all developments.
Compromise FIGA Assessment Bill Unanimously Approved By Senate Committee
Tuesday 2/18/14- Working like the genuine statesman he is known to be, former Senate Present Tom Lee (R-Hillsborough) over a fairly short period, successfully brokered a comprise among industry stakeholders, FIGA and regulators at OIR to keep much needed FIGA assessment reform alive for the upcoming session. The result was a strike-all amendment to the Lee sponsored bill (SB 346) which was unanimously passed on Tuesday by the Senate Banking & Insurance Committee with no public testimony in opposition to the measure. The now amended bill (CS/SB 346) accomplishes the following major improvements to the FIGA assessment process:
1. Makes the FIGA assessment apply equally to all policyholders, removing discrimination on how much is charged, or whether it’s charged at all, between policyholders in Florida.
2. Changes both of FIGA’s regular and emergency assessment mechanisms to be collected as a flat percentage to every policyholder. All insurers begin applying the assessment percentage on the same day, collect it for one year, and stop collecting on the same day (one year later).
3. Once insurers pay up front, and begin collecting the flat percentage during an assessment year, if an insurer “over” collects, they remit the overage to FIGA and if an insurer “under” collects what they paid up front, they receive a credit with FIGA for that amount to be applied to a future FIGA assessment.
4. Requires new companies that had no premium in a prior year to be subject to assessment like all other insurers if they are writing business in the year the assessment will be collected, eliminating the past “new insurer” competitive edge.
5. Still requires insurers to remit funds up front (for regular and emergency assessment) so FIGA has enough funds to pay claims. However, a new “monthly installment method” is authorized as another alternative if FIGA has enough funds to pay claims for six months or more, FIGA has the discretion to not collect the FIGA (emergency or regular) assessment up front from insurers, and allow insurers to pay monthly.
6. Eliminates all rate filings with the OIR and now allows insurers to file a simple reconciliation report with FIGA at the end of a collection year.
7. Clarifies that both the upfront remittance method, and the monthly installment method, whether used for emergency or regular assessments, are treated favorably with statutory accounting to allow the receivable to be collected from policyholders to be counted as an asset so assessments don’t negatively affect an insurer’s statutory balance sheet.
In addition to keeping Senator Lee’s bill moving in the Senate, we will continue to work with the House sponsor, Rep. Jake Raburn (R-Hillsborough) to move this new version of the bill in the House. As we reported in an earlier newsletter, HB 143 was considered on January 15th by the House Insurance & Banking Subcommittee where it was sabotaged by opponents using anti-consumer scare tactics as a means to prevent the bill from moving forward. This legislation as originally filed and as amended is pro-consumer and creates a much fairer and simpler mechanism for calculating and paying FIGA assessments. It’s strongly supported by the consumer oriented Florida Association for Insurance Reform (FAIR) and a large number of Florida’s domestic property insurers. LMA will continue working hard along-side our colleagues to help ensure that this important legislation receives open-minded and truth-based consideration by the Legislature.
Senate Flood Insurance Legislation Headed Back To Primary Committee
House Also Wrangling With Flood Insurance Dilemma
Thursday 2/20/14- Today the Senate Appropriations Committee gave its overwhelming approval to Senator Jeff Brandes’ (R-Hillsborough/Pinellas) bill designed to give private market property insurers the form and rate filing flexibility necessary to establish a private market alternative to buying flood insurance through the National Flood Insurance Program (NFIP). Although moving well through Senate committees in recent weeks, the measure has undergone significant amendments and a number of Senators with the Senate Appropriations Subcommittee on General Government week before last expressed they would have a greater level of comfort if the bill were heard again by the Senate Banking & Insurance Committee. Therefore, the bill has been sent back so its primary committee of reference can closely evaluate its amended form and coordinate more closely with the House Insurance & Banking Subcommittee on flood legislation in general. There are two House bills (HB 581 and HB 879) aimed at expanding flood insurance coverage but neither have passed a single committee.
Further, House Insurance Subcommittee Chairman Bryan Nelson has key differences with Senator Brandes’ flood bill and is continuing to develop an approach to authorizing flood insurance sales by private insurers as an alternative to purchasing NFIP coverage. A major difference, which could end up being a “deal breaker,” is a provision in the Senate bill which allows homeowners to purchase flood coverage limited to their outstanding mortgage amount. Nelson and other House committee members are strongly opposed to this provision and believe doing so creates a moral hazard. Also still developing is whether the House will create a new definition of flood damage more broad than the current NFIP definition. Additionally, the degree to which surplus lines carriers will be allowed to sell flood insurance to property owners may also create some friction between the chambers as the House is entertaining approving a more expanded role than that contained in the Senate legislation. With all this said, however, House committee chairman Nelson appears confident the two chambers can resolve their differences and send an agreed upon flood insurance bill to the Governor early in the upcoming session. LMA will continue closely tracking this critical legislative issue and update you at every turn.
Division of Worker’s Compensation Rule Activity and Employer Outreach
The Division of Workers’ Compensation (Division) will have an active spring!
For those of you that follow worker’s comp regulatory activities please note the following including the Division’s outreach efforts to educate those who are required to have worker’s comp coverage:
The Division offers the free seminars and webinars www.myfloridacfo.com/Division/WC/employer/2014-Education-Seminar-Flyer-Mar-June.pdf regarding workers’ compensation and workplace safety to educate employers, business owners, licensed contractors and other interested stakeholders who are responsible for assuring that workers’ compensation insurance and safety in the workplace is a priority. The Division has partnered with the U.S. Department of Labor Office of Safety and Health Administration (OSHA), and the University of South Florida “Safety Florida Consultation Program”, in making these presentations.
Two types of training opportunities are available:
– Classroom sessions (www.myfloridacfo.com/Division/WC/employer/2014-Education-Seminar-Registration-Form-Mar-June.doc) are held in several locations around the state.
– Webinars (www.myfloridacfo.com/Division/WC/employer/2014-Web-Based-Registration-Mar-Aug.doc) are held once a month.
Both seminars and webinars provide the same material and information for participants. To participate please complete the appropriate registration form and return it to BOCSeminars@MyFloridaCFO.com. Questions should be directed to BOCSeminars@MyFloridaCFO.com or by telephone at (813) 221-6518.
Hospital Reimbursement Rule
Rule 69L-7.501, F.A.C., Florida Workers’ Compensation Reimbursement Manual for Hospitals, will be discussed in a rule hearing on Tuesday, March 4, 2014 at 10:00 a.m. in Tallahassee’s Hartman Building. The purpose of the proposed rule hearing is to allow public comment on the proposed changes to the current hospital rule. The changes would adopt by reference the 2014 Edition of the Florida Workers’ Compensation Reimbursement Manual for Hospitals, replacing the 2006 Edition of the Florida Workers’ Compensation Reimbursement Manual for Hospitals in the existing rule. The 2014 Edition of the Florida Workers’ Compensation Reimbursement Manual incorporates a fee schedule for certain hospital outpatient services within defined geographic areas in Florida utilizing current procedural terminology (CPT) line level charge data. The methodology for the incorporated fee schedule establishes criteria to evaluate 18 months of hospital outpatient bill data. In addition, the manual increases the current inpatient surgical and non-surgical per diem amounts by 16.5% and raises the current stop-loss threshold by 16.5%. Finally, the 2014 Edition of the Florida Workers’ Compensation Reimbursement
Manual for Hospitals makes technical changes to include a new manual format, and expanded table of contents and chapters organized by topic.
Insurer and Self-Insurer Assessment Reporting/Payment Rule
Rule 69L-4.001, F.A.C. – Reporting Assessment Information and Paying Assessments and Rule 69L-4.002, F.A.C. Offsets for Dividends and Premium Refunds will be discussed on Wednesday, March 5, 2014 at 10:00 am in Tallahassee’s Hartman Building. The purpose of the workshop is to discuss adoption of a form that shall be used by all carriers and self-insurance funds to report quarterly assessments owed to the Workers’ Compensation Administration Trust Fund and the Special Disability Trust Fund. The rule changes will provide for an offset for dividends and premium refunds.
Ambulatory Surgical Center (ASC) Reimbursement Manual Revisions; Electronic billing cost/benefit to Worker’s Comp System Discussion
The Division of Workers’ Comp will be conducting a one-day public meeting Tuesday, April 1, 2014, 9:30 a.m. to 4:30 p.m. in Tallahassee’s Hartman Building to receive comments related to possible changes to the Ambulatory Surgical Center (ASC) Reimbursement Manual, including revisions regarding maximum reimbursement allowances established for specific procedure codes, electronic billing policies for payers and payees, and the Florida Workers’ Compensation Uniform Medical Treatment/Status Reporting Form (DWC-25). The morning session is scheduled from 9:30 a.m. until 12:00 p.m. and will focus on what changes, if any, should be made to the ASC Reimbursement Manual. The Division will be seeking input on potential recommendations that may be submitted to the Three Member Panel for consideration. The afternoon session will begin at 1:30 p.m. and end at 4:30 p.m. The first part of the afternoon session will be devoted to receiving feedback on the electronic billing environment in workers’ compensation in Florida. The Division was asked by the Three Member Panel to gather information from the stakeholders about the benefits and costs of electronic billing systems and to develop an action plan with the goal of determining whether to mandate electronic billing. During the second part of the afternoon session, the Division would like to receive comments about the use and effectiveness of the DWC-25 and any recommendations to improve the form.
Making sure; Making a way
This newsletter started with the theme that we want you to know we are making sure you are heard as the session approaches in committee meetings or informal meetings. We make our way through the halls of the Capitol with you in mind. We draw our strength and ideas through you and appreciate and applaud what you do every day. Thank you for the opportunity to be a part of your world – we are making sure that we are making a way for each of you to be successful!
Our best, Lisa