Guidance and Leadership
When considering the importance of leadership in solving problems, I’m always eager to learn from those who came before us for guidance and inspiration.  As our nation readies for the launch of a new presidential administration, we look at the many challenges we face…. personal, family, community, national and the many crises around the world.  It’s important to understand the lessons learned from great leaders who have made the choice to rise above the mundane and trivial by approaching the future with well-advised wisdom, powerful optimism and bountiful passion.   Who can deny that our problems can be solved if we bring ourselves to the game fully prepared to fight for causes we care about and exert our best effort to achieve worthy goals?My advocacy travels have taught me that every one of us has the potential for making a real difference…. if the will to overcome odds is greater than the temptation to quit.

Take a minute to think about who in your life guided and inspired you, and tell us about it.  And we are always looking for those who want to write and contribute to this newsletter that is sponsored by a small number of contributors to send to so many of you.   And now the news…

Constitutional Revision Commission Applicants Needed
The Governor and Senate President are still accepting applications for those who would like to serve on the Constitutional Revision Commission, which meets every 20 years to recommend changes to the Florida Constitution.  Click here for an application for gubernatorial consideration and click here for Senate President consideration.
Dirt Is Expensive! 
In San Francisco’s Sunset District, a home destroyed by fire and the land beneath it sold for $1 million with a new structure erected 7 months later selling for $1.77 million.  This may be no surprise to our readers as we all understand we can’t produce more land.  The Lincoln Institute of Land Policy data provides a snapshot of the 10 housing markets where land comprises more than half of a home’s total value. The majority of the cities are in California, where buildable land tends to be scarce. For example, in San Francisco, the average home value was $1.35 million in 2016. But about $1.09 million of that was attributed to the cost of the land, or 81 percent of the total price, the study found. On the other hand, in St. Louis, Mo., land is only about 10 percent of a home’s total value.Here are the cities where land costs exceeds property values by the highest amounts:

  •  San Francisco, Calif.: 81%
  •  San Jose, Calif.: 77%
  •  Santa Ana, Calif.: 76%
  •  Oakland, Calif.: 71%
  •  Los Angeles, Calif.: 71%
  •  San Diego, Calif.: 66%
  •  Boston, Mass.: 60%
  •  Miami, Fla.: 54%
  •  Seattle, Wash.: 53%
  •  Portland, Ore.: 51%

Source: “Not Dirt-Cheap: 10 Cities Where Land Is Worth More Than the Home on It,” realtor.com (Jan. 11, 2017).

Millennials Investing in Fixer-Uppers and Housing Starts Still Roaring
We found it ironic that an old mainstay magazine like Better Homes & Gardens released a survey about one of the millennial first-time homeowner trends.  The results conflict with many held notions that millennials want all new everything and reflected that they have more of a willingness than previous generations to complete do-it-yourself projects around the house or wait until they can afford to make the improvements they desire.  Fifty percent of those surveyed said that their current home required some degree of repair or remodeling at the time they moved in and the other half said they would spend what it took to get all the high quality features of today’s modern homes.These results, according to the magazine’s editor, indicate that first-time millennials want to build equity, not debt– a refreshing trend American hasn’t seen in the past few decades.  Almost all of the respondents viewed owning their own home as an investment with dreams of having a 2,000 square foot home with updated kitchen and bathroom and reasonable outside living space.   Most of the fixer upper respondents said they tile, paint and improve lighting and features to fit their budgets.  The editor also commented,  “These ‘firsts’ are replacing big-budget homes and expensive renovations with patience, frugalness and practicality.”  In addition, townhome construction, which tends to appeal to younger buyers, is already showing significant growth, comprising 12 percent of all single-family starts last year.

On a related note, The National Association of Home Builders (NAHB) projected a 5% increase over 2015 numbers in total housing starts in 2016, with an estimate of 1.16 million.  NAHB is forecasting a 10 percent increase in single-family production for 2017 and a 12 percent rise for 2018.  The economy is booming and unemployment is at historic lows but there are still pressing challenges. The NAHB cites constraints they call the three Ls – lots, labor and lending, with buildable land being at a premium and skilled construction talent being tough to find and retain.  And of course, cost of regulation for builders or in the lending arena is estimated to add about 25% to each home cost.  NAHB forecasts mortgage interest rates to average 4.5 percent in 2017 and then 5.3 percent in 2018.   And the hope is that these increases will be offset with stronger wage gains and job growth.  Realtors often cite that housing sales are a balancing act…if there aren’t enough homes on the market and demand surges, prices increase making homes tougher to be sold.  We all know that real estate is inextricably tied to the insurance industry and we will keep watching!

Source: “Millennials Patient, Thrifty When It Comes to Homeownership,” RISMedia (Jan. 11, 2017) and the NAHB.

Implementation of New Medical Marijuana Law Proceeding on Dual Fronts
The New Year brought-in a more relaxed law on who can legally use medical marijuana here in the Sunshine State.  More than 71% of voters last November approved going beyond current law, which allows non-euphoric pot for patients with certain chronic conditions, and the full-strength version for terminally-ill patients to now marijuana for anyone deemed to have a “debilitating medical condition.”  Only non-smokeable marijuana is permitted.Amendment 2 gives the state Department of Health (DOH), as well as the state legislature, until July 3 to create new rules.  DOH recently announced that it will steer doctors toward registering qualifying patients into the existing state database of marijuana users, while the Legislature decides over the next few months what new rules it wants to put into place.  DOH is now going around the state holding rulemaking workshops, but in the meantime is trying to clear up confusion over whether patients can get marijuana before formal rules are adopted.

The DOH has published initial proposed rules that use the existing database as well as the existing requirement that doctors have a relationship with their patient for 90 days before entering prescription orders into the database.   But DOH proposes to limit the drug to patients with one of 10 specific ailments, including cancer, HIV, and post-traumatic stress disorder, unless the state Board of Medicine adds other debilitating conditions.  Amendment 2, however, gives doctors the sole power to decide those debilitating conditions if “a physician believe that the medical use of marijuana would likely outweigh the potential health risks.”  The DOH proposal doesn’t allow any new growers or dispensaries beyond the current seven in Florida nor does it allow separating growers from dispensaries.

Meanwhile, in the legislature, one of the major supporters of medical marijuana use, Senator Rob Bradley (R-Orange Park) recently unveiled his own proposed rules in the form of SB 406.  Under the bill, the number of growers/dispensaries could grow to 27 once the patient registry has 500,000 names and those facilities could also operate as “medical marijuana treatment centers” as defined in Amendment 2.  The 90-day treatment requirement would go away under the bill, but written parental consent for minors would be required and the bill would ban edible marijuana products “in a format designed to be attractive to children.”

Those seven growers/dispensaries currently allowed are wasting no time expanding their operations.  One just opened its third dispensary, in Tampa, this week.  Another recently received a license to open a dispensary in Tallahassee one week before the City Commission is scheduled to vote on a 120-day moratorium on future permits.  It will be the third such dispensary in the Capital city.

The “Professional” AOB Attorney
For construction and roofing companies utilizing Assignment of Benefits (AOB) and flashy lawyers to try to force insurance companies to pay out big claims, sometimes things just don’t go as planned.  Sometimes they go very wrong indeed.Springhill Builders of Jacksonville is learning that lesson the hard way.  Lured by attorney advertising, Springhill a few years back hired Harvey Cohen and his Altamonte Springs law firm currently called Cohen Grossman P.A. to handle a mere 23 legal matters for insurance claims owed to Springhill.  (If Cohen rings a bell, he should: he’s known as one of the founding fathers of AOB litigation in Florida.)

According to the lawsuit Springhill later filed this past summer against the Cohen Firm, the hiring of Harvey Cohen seemed to have been the highlight of the relationship.  Things went downhill from there.   According to Springhill’s suit for legal malpractice and breach of fiduciary duty, Cohen and his underlings engaged in a pattern of litigious mistakes and failures to communicate with their client, which resulted in Springhill paying hundreds of thousands of dollars in attorney’s fees, judgments and other costs.

The suit references three specific AOB cases in which the Cohen firm at times failed to voluntarily dismiss the AOB case within the 21-day safe harbor period, kept right on litigating without Springhill’s knowledge and consent, requested bad faith discovery items, refused to coordinate hearings on motions with insurance company counsel, failed to timely respond to discovery and when it did, was deficient, repeatedly changed attorneys, and then tried to withdraw from cases, citing irreconcilable differences with their client Springhill.

In one instance, the law firm was in such a hurry to sue, that it failed to make sure the insured had submitted a proof of loss, according to Springhill’s lawsuit.  In another case, it transposed the first and last names of the insured, sued the wrong insurance company subsidiary, ad attached wrong exhibits to its AOB complaint.

The court in one of those cases found the Cohen Firm was 100% responsible for filing a meritless lawsuit and awarded the insurance company $93,000 in attorney fees to be paid by the Cohen Firm.  In another case, Cohen had to pay $83,000 in attorney fees to the insurance company.  In yet another, the court itself pointed out the many errors in Cohen’s work, including mislabeling its client Springhill as an insured, rather than a third-party company.  Oops!

Folks, these are trying times.  People are trying everything and getting away with it.  It’s nice to see that Lady Justice cuts both ways and that Karma also uses balance scales.  We are happy to discuss this case with you.

“Covered Agreement” on Insurance & Reinsurance Now Before Congress
After a multi-year effort to make sure each other’s regulatory system was adequate to prevent a future world financial collapse, the Federal Insurance Office has sent Congress the proposed US-EU covered agreement on insurance and reinsurance regulations.  The agreement covers three areas of insurance oversight: reinsurance, group supervision and the exchange of insurance information between regulators.According to the agreement, U.S. and EU insurers operating in each other’s market will only be subject to oversight by the regulators in their home jurisdiction. For reinsurers, the agreement requires an end to collateral and local presence requirements.

The U.S. and EU are the two largest insurance markets in the world and as such, both present opportunities to begin and expand existing insurance and reinsurance business.  The stated goal of negotiators on both sides of the Atlantic was to level the regulatory playing field for U.S.-based insurers and reinsurers operating in Europe, who became jittery after the 2008 financial market difficulties in this country and questioned the strength of the U.S. regulatory system.  The agreement is viewed by many as achieving EU recognition of our state-based U.S. insurance regulatory system while facilitating the exchange of confidential regulatory information between lead supervisors across national borders.   It will also afford uniform treatment of EU-based reinsurers operating here in the U.S., including collateral requirements.

The agreement (here beginning on page 17) is the result of more than a year of secret talks between the EU and US and comes not a moment too soon.  The EU implemented its new insurance regulatory reform known as “Solvency II” last year that subjected foreign insurers and reinsurers to disadvantageous treatment unless their home country had regulations deemed equivalent to EU standards.  Authorized under Dodd-Frank, FIO and parent Treasury Department vowed to consult with insurance-related committees of the U.S. House and Senate before entering into any agreement and now it is in the hands of those committees.  The NAIC, which was excluded from the talks, will be looking over the agreement with a fine-tooth comb.

So what exactly is a “covered agreement”?  According to the Treasury it’s “an agreement between the United States and one or more foreign governments, authorities or regulatory entities, regarding prudential measures with respect to insurance or reinsurance.”   For those in the broader financial world, there is an even deeper definition (with requisite depository institutional involvement, of course!) that you can  read about here.

A Glimpse of What Federal Policymakers Say About National Flood Insurance Debt
Last week, FEMA borrowed $1.6 billion from the Treasury to help make up for one of the most expensive years in National Flood Insurance Program’s (NFIP) history, exceeded only by Hurricanes Katrina and Sandy.  The 2016 losses were primarily in Louisiana, Hurricane Matthew, Texas events, Hermine.  NFIP’s debt now totals $24.6 billion.NFIP expires at the end of September and House Republicans are seeking to strengthen the private market and eliminate some of the government’s role.  What is telling about this recent announcement is this statement:

“Reforming this unfair, unsustainable and bailout broke government monopoly will be a major focus for the House Financial Services Committee in 2017,” Financial Services Chairman Jeb Hensarling said today. “We will pass legislation that begins the transition to a competitive, innovative and sustainable flood insurance market that gives consumers real choices.”

For those readers who follow the federal flood insurance debate, this statement signals Chairman Hensarling’s strong desire to have states move away from NFIP’s current government-subsidized operations.  We will keep you apprised.

Report: Florida a Dangerous Place to Walk
While the state of Florida is ranked number one in some key economic and social areas, there’s one number one spot we could literally live without having – pedestrian deaths.  A new report called Dangerous By Design, says that on average, 13 pedestrians are killed every day in the U.S. by various vehicles, and Florida tops the list as the most dangerous place to walk in America.For the fourth consecutive year of the report, Florida had the most pedestrian deaths of any state, and eight of the top 10 most dangerous metropolitan areas for pedestrians.  The report by Smart Growth America, an anti-sprawl group, says the way streets are designed is a factor in the fatal collisions.  “Many of these deaths occur on streets with fast-moving cars and poor pedestrian infrastructure.  People walk along these roads despite the clear safety risks – a sign that streets are not adequately serving everyone in the community,” according to the report.

Between 2005 and 2014, a total of 46,149 people were struck and killed by cars while walking in the United States. In 2014, the most recent year for which data are available, 4,884 people were killed by a car while walking-105 people more than in 2013.  The report said you’re 7.2 times more likely to die as a pedestrian than from a natural disaster.

The report uses a “Pedestrian Danger Index” (PD), which is a calculation of the share of local commuters who walk to work and the most recent data on pedestrian deaths.  Its PDI notes a higher incidence among non-whites and older adults, as well as those of lower incomes and the uninsured.  “As rates of uninsured individuals rise, so do PDIs, meaning that the people who can least afford to be injured often live in the most dangerous places,” noted the report.

The Florida Department of Transportation last year committed to the group’s “Complete Streets” plan to change the way roads are designed and built to make them safer for all travelers.  More on FDOT’s plan here.

Senator Kathleen Passidomo (R-Naples) has introduced a bill (SB 408) that would allow fines of up to $2,500 for motorists who collide with bicyclists and other “vulnerable” road users, in addition to any other charges by police.

Please Keep in Touch – Let’s Discover Ways to Collaborate
I look forward to keeping in touch as we work for our next level of achievements for Floridians of all ages, across the generations, in our communities.  Please keep me in mind for keynote addresses, strategy seminars and professional development events to boost morale, teach advocacy and resource development skills.  Would love to come for a visit!My best,