Measurable Progress in Reasonable Time
As promised in my closing remarks of last week’s newsletter, the 5th week of Florida’s legislative session started off fast and resembled another round in a championship prize fight. We witnessed some bills take it on the chin but nonetheless successfully passed critical committee stops. Time this session is running short (we are headed to week 6 of the 9 week session) and some bills may have little chance of being heard in a substantive committee. This normally spells doom for the bill because if it doesn’t get through the committee hearing process, it doesn’t get to the full house or senate floor. Regardless, several bills critical to our interests met with success thanks to strong sponsors and heavy advocacy on your behalf.
FIGA Assessment Reform Legislation Moves Past Two Major Committee Stops
House Bill 211, designed to bring much more flexibility and fairness to the way FIGA’s executive board levies assessments and removes an impediment to private risk capital entering Florida, successfully passed the House Government Operations Appropriations Subcommittee on Tuesday. First, we owe major congratulations to bill sponsor Rep. Jake Raburn (R-Hillsborough) for doing a fantastic job in presenting the bill before the committee, answering complex questions from committee members and countering opposing arguments made by a small number of opposition lobbyists. To say that Representative Raburn had a phenomenal command of the issues addressed by the bill might be the understatement of this Session. Interestingly, the very small number of insurers (perhaps three) opposing this bill testified (when asked questions by committee members) that they neither write homeowners insurance in Florida, nor are they actively writing and continue to shed existing policies annually. This fact was not lost on most of the committee members. In fact, a consumer advocate stood before the committee and said, “Let’s be clear, this is a consumer friendly piece of legislation that will bring more fairness to the way FIGA makes assessments and encourage insurance investment capital and new insurers to enter Florida’s property insurance market.” That message was heard loudly and clearly as the bill passed the committee unanimously.
On the same day, the Senate companion to HB 211, Senate Bill 324, sponsored by Senator Jeff Brandes (R-Hillsborough/Pinellas), was favorably voted upon during a meeting of the Senate Banking and Insurance Committee. Senator Brandes was outstanding in presenting his bill and very skillfully responded to a small number of committee member questions. The opposition was much less vocal during the Senate committee meeting with the vast majority of public speakers expressing strong support for the bill.
Citizens Reform Bill Receives Approval from Senate Appropriations Committee
CS/CS/SB 1770, commonly called “the Citizens bill” sponsored by Senator David Simmons (R-Seminole/Volusia) was wholeheartedly approved by the Senate Appropriations Committee on Wednesday. The legislation contains numerous provisions impacting property insurance including:
• A requirement that Citizens employ actuarially sound rates and not compete with the private market;
• A lowering of the Corporation’s maximum policy limit down to $1 million from $2 million and continuing this reduction by $100,000 a year for the following five years;
• Forcing Citizens to become non-competitive by using a Clearinghouse to make certain that coverage by the Corporation is only available for eligible applicants; and,
• Allowing insurers to include in rate filings reinsurance that is bought to cover possible shortfalls in the CAT Fund.
During debate on the bill, Senator Simmons was heaped with praise by numerous committee members for taking on this endeavor. Senators recognized that Sen Simmons has worked diligently to improve Florida’s property insurance market by including provisions in the bill that strengthen our state’s long-term economic viability. The bill is now ready for action on the Senate floor but has no identical House companion. Various bills dealing with Citizens have been introduced in the House but it is still unclear what will emerge as a final package of reforms. We should know more in the next two weeks as to the provisions of both House and Senate bills that will survive the Governor’s veto pen when the bill hits his desk sometime in May.
CAT Fund Legislation Stalls in Senate After Controversial Amendment
Senate Bill 1262 sponsored by Senator Alan Hays (R-Lake, Marion, Orange and Sumter) was heard during Tuesday’s Senate Banking and Insurance Committee meeting and the action had members of the public, and likely committee members as well, sitting on the edge of their seats. The bill was designed to reduce the Florida Hurricane CAT Fund coverage – reduce coverage limits, increase the company’s co-payments, etc. The goal of Senator Hays’ bill was to strengthen the CAT Fund and reduce the financial liability facing the state and its property owners. However, minds differ on how best to accomplish this goal and Senator Jeremy Ring (D-Broward) proved that point dramatically with a strike-all amendment taking the CAT Fund in an entirely different direction. Senator Ring’s amendment kept the maximum coverage limits at $17 billion but with a lowered attachment point at $5 billion, down from the existing $7.3 billion. The Ring amendment also required the CAT Fund’s bonding and claims paying estimates to be based upon bonding believed possible during the three year period immediately after storm landfall as opposed to during the first 12 months post landfall. As Senator Ring pointed out in his debate, “this is a timing issue, not a cash issue,” referring to the $9 billion the cat fund has in the bank. The Ring amendment passed on a 7-4 vote which left the committee room in utter silence for what seemed like an eternity. At that juncture Sponsor Hays requested of the Chair that no vote be taken on the amended bill. At this point the Senate and House (CS/HB 1107 by Bill Hager, R-Palm Beach) are on largely different paths in dealing with the CAT Fund. As with the Citizens bill referenced above, we should learn more in the next week about if (or what) bill will finally emerge.
House Insurance Omnibus Bill Passes With Critical Sinkhole Repair Amendment
On Thursday the House Regulatory Affairs Committee moved a major insurance clean-up bill forward with 13 amendments, one requiring Citizens to institute a managed sinkhole repair program. The bill, CS/HB 635 sponsored by Representative Katie Edwards (D-Broward) contains approximately 21 amendments to the Insurance Code, the majority of which appear to be non-controversial. An amendment requiring the creation of a Managed Sinkhole Repair Program within Citizens was adopted and there appeared to be consensus that such a program will save Citizens and consumers money in the long run and deter fraud and abuse surrounding sinkhole claims. Representatives of the Florida Homebuilders Association and Citizens expressed some concern regarding the language, but vowed to work with the sponsor and proponents to work out any issues. The companion to CS/HB 635, Committee Substitute for SB 1046 sponsored by Senator Jeff Brandes (R-Hillsborough/Pinellas), was successfully passed on Tuesday during the Senate Banking and Insurance Committee meeting. The House and Senate versions are almost alike, except for one significant difference. The Senate bill does not include the provision which extends for another three years the exemption from CAT Fund assessments for medical malpractice insurance premiums. The argument in the house rejecting exempting med mal carriers went like this: Should all other Floridians pay assessments when doctors shouldn’t? Rep. Greg Steube asked in committee, “How do I tell the farmers in my district that they must pay an assessment but their physician doesn’t?” Stay tuned on this important policy debate.
PIP Reform Takes Center Stage…….For 30 Minutes
During the last 30 minutes of Tuesday’s Senate Banking and Insurance Committee meeting Chair David Simmons (R-Seminole/Volusia) held a workshop to take public testimony concerning his recently released PIP reform bill (SB 7152). Sandra Starns with the OIR also gave a brief presentation on recent statistics she pulled together from auto insurer filings. Of surprise to some and pleasing to Chair Simmons, Starns reported analyzing 70% of current filings and found that 90% of the auto policies sold in Florida contained coverage for Bodily Injury. A statistic which bodes well for Senator Simmons’ proposal to dump mandatory/minimum auto insurance as it presently exists. When public testimony was opened representatives of Nationwide Insurance Company, the Florida trial lawyers, Florida Blue and the Florida Hospital Association all encouraged the committee to amend the legislation to require the purchase of med pay coverage, in addition to BI. As the old saying goes, politics does make for strange bedfellows! As the 6th week of Session begins and time is drawing near my team and I will remain on top of this critical issue and keep you informed of all developments.
State Moves to Implement Aspects of Federal Health Care Reform
After rejecting an expansion of traditional Medicaid as authorized under the PPACA, the Florida Senate has two alternate proposals making their way through the upper chamber. Authored by Senator Joe Negron is a proposal known as Negron-Care that would expand coverage to 1.1 million adults in Florida and would do so by using Medicaid expansion funds to implement a premium assistance program available under Medicaid waivers and rules. Let’s see… Medicaid funds, Medicaid waivers, Medicaid rules, but some say it is not Medicaid.The Supreme Court’s ruling this past summer made the Medicaid expansion under PPACA optional for states with the Obama Administration also determining that the “option” was an all or nothing option – Florida can cover all 1.1 million of the target population with Medicaid funding or zero.The competing proposal, known as Bean-Care, is the brainchild of freshman Senator Aaron Bean. Known for his enthusiasm and cheerful disposition, his approach is a polar opposite to Negron-Care. Bean, in reviewing the state’s options during a recent meeting of the Senate Health Policy committee that he chairs, cited some interesting factoids. The potential expansion population of 1.1 million Floridians, can be divided into two distinct groups if the state does not take the Medicaid funding. Believe it or not, about half of those 1.1 million adults can get subsidies through the federally facilitated exchange that will operate in Florida and those subsidies will send more federal funding to Florida than the state would receive for the same adults if Florida accessed the Medicaid funding via Negron-Care and would do so by a couple of hundred million dollars.
Bean readily admits that leaves the other half of the 1.1 adults with no coverage and that is where Bean-Care comes in. Acknowledging that this population already has access to the Medically Needy program, hospital emergency rooms and other safety nets, Bean proposes to supplement their access to that care by offering them primary care and discount medical plans. Packed with a lot of personal responsibility, the proposal was approved as a committee bill but without the support of Democrats on the committee. It is noteworthy that both Senate proposals have been referred to identical committees for further hearing. It appears these two bills may travel together for a while.
Interestingly, the Florida House has not introduced any alternatives after also rejecting the Medicaid expansion option. However, this past week, Speaker Weatherford was quoted in the press as saying “never say never” to using Medicaid dollars for an expansion of coverage and also said the House would be bringing its own proposal to the table during this legislative session. This is a major shift for the House as leadership has repeatedly expressed an intent to reject any proposal that includes federal funds. With just four weeks to go, and possibly three separate proposals on coverage expansion in play, everyone should play close attention.
In other healthcare news, the Senate Banking and Insurance Committee during its Tuesday meeting approved Senate Proposed Bill 7138 authorizing the Office of Insurance Regulation to conduct market conduct examinations of health insurers to verify their compliance with PPACA requirements and provisions as well as to refer potential violations to the US Department of Health and Human Services. Also, the bill was amended to grant DFS broad authority to license and regulate Federal health insurance “Navigators” who are to provide factually accurate information regarding qualified health plans, the availability of premium tax credits and cost sharing reductions. Navigators may not perform any of the duties of a licensed insurance agent and may not receive compensation from an insurer, health plan, business or consumer in connection with performing Navigator activities.
Controversy Brewing Over Elimination of Insurer Employee Premium Tax Credit
As we reported last week, the Senate continues on its march to repeal the very important premium tax credit insurance companies receive based on the salaries of their employees who are not licensed to transact insurance. The Senate seems bent on using the approximately 220 million in additional premium tax revenue the repeal will supposedly generate to roll back Florida vehicle registration fees which were significantly increased four years ago. Even though at present there is no House companion to SB 1832 (formerly SPB 7132), the repeal appears strongly supported by Senate President Don Gaetz (R-Bay, Holmes, Jackson, Walton, Washington & Okaloosa) and other leading senators. Those voicing strong opposition to the measure include insurance trade associations, Florida Insurance Council, The Florida Chamber and Associated Industries of Florida. My colleagues and I continue to strongly carry your message that repeal of this insurer tax credit is one of the last things we need to see happen when we are all fighting to grow Florida’s economy, revive our property insurance market and encourage new insurance and business ventures in the Sunshine State. Please continue communicating with me on your ideas and strategies on how we further convince Senate leadership to abandon their repeal efforts.
Citizens to Cover Manufactured and Mobile Homes, Including Attached Structures
The House Regulatory Affairs Committee met Thursday and considered a number of bills we have been closely monitoring and reporting on. CS/CS/HB 573 sponsored by Representative Ed Hooper (R-Pinellas), requiring Citizens to provide coverage on manufactured and mobile homes successfully passed the committee, but only after a spirited exchange between Sponsor Hooper and committee member Representative Matt Gaetz (R-Okaloosa) regarding the actuarial soundness of Citizens’ rates. The exchange appears to have been prompted by a bill amendment requiring Citizens to also provide coverage for structures attached to manufactured and mobile homes such as screened enclosures, awnings and the like. It was learned through discussion that many, if not most manufactured and mobile home park owners require the existence of these attached structures for aesthetic and consistency reasons, therefore, homeowners have no choice but to install them. Representative Gaetz requested an assurance that Citizens would charge actuarially sound rates in extending coverage to manufactured homes and for taking on the additional exposure of covering attached structures. Although Representative Hooper could offer no such assurance, Citizens spokesperson Christine Ashburn did and assured the committee that the Citizens Board had already voted to charge actuarially sound rates for manufactured home coverage.
Insurance Companies’ Proprietary Information to Become Confidential in OIR’s Hands
An important bill to the Office of Insurance Regulation’s continued NAIC accreditation and industry’s trade secrets appears to be successfully moving through the Legislature. CS/CS/HB 823 sponsored by Representative Clay Ingram (R-Escambia) would make insurers’ proprietary business information turned over to the Office confidential and exempt from Florida’s public records law. Thus far, the bill has made it through three important committee stops, including Thursday’s House Regulatory Affairs Committee meeting. The bill’s Senate Companion, SB834sponsored by Senator David Simmons (R-Seminole/Volusia) is likewise successfully moving.
Lots to Watch For In Week Six
Lots of the issues we discussed in this newsletter will most likely come to some sort of conclusion during week six of session. We are camping out at the Capitol, keeping our eyes and ears open and using our mouths to speak the truth to those who need to listen. Be sure we will continue to fight the fight and keep you informed.
Regards,
Lisa
