LMA Newsletter June 13, 2016

Why Do I Do It?

Those of you who know me well know that I spend many days on the road, away from the home and family I love.  In fact, I travel so much that I keep a packed suitcase, with all the basic necessities, ready to go at all times.  After I throw in some appropriate apparel for what the trip requires, I am pretty much ready to hit the road.  Easy breezy you might think.  That is true, until the care and arrangements for my three dogs and a cat comes into play.  They are my family and I would never leave them without making sure all is well in their lives.  To those of you who haven’t met them in person, there are 3 “girls” – Katie, Dinah and Abby.  They are extra special in many ways, not the least of which is the extra special care they need.  For example, Katie is deaf and had puppy training with a fabulous trainer who taught us sign language to “talk” to her.  Dinah has epilepsy and must have specially prepared food, as well as her daily dose of seizure prevention medicine.  Dinah is also an acupuncture patient seeing her special veterinarian twice a month. Abby is 13 years old and oversees the brood including our cat who is 10 years old and loves to stay in the spare bedroom we now call “Stella’s room”. Are you exhausted yet?

My non-pet friends and family members ask, and have been asking me for years, “why do you do this?” With a schedule like mine and the many irons I have in the fire all the time, why would I add the responsibilities and expense of caring for these creatures?  I even ask myself that question from time to time.  But, the answer is an easy one :  I LOVE AND ADORE THEM!  I cannot imagine my life without these beloved pets.  But what is it about having pets that makes us happy? Why is it that even though we know all the work and responsibility involved; even though we know we will have to bear the eventual heartbreak of watching our pets grow old; even though we know we will someday lose them altogether, why, then, do we still regard the prospect of sharing our homes with cats or dogs (or horses, or goats, or what have you) with such unalloyed joy?  A little scientific research told me it is because humans are in fact pack animals ourselves and our very nature requires that we make others happy.  Some of us feel this need to a greater or lesser extent than others, but we are all hard-wired this way.  So, whether giving love to all the humans in your life is sufficient or you require more “creatures” to love, that extra love can come from the love and care we give to our four legged family members.  If there is a purer, less complicated joy than that of making an animal happy, I have yet to experience it.  And there’s something deeply fulfilling about knowing that, even in a complicated and often unkind world, you can manage to create a pocket of perfect security and bliss for at least one small creature. Or maybe it’s us humans getting the love WE need.  I think that might be the real answer!  Next time you are in Tally, stop by and meet the gang.  You might fall in love with them too!!!


Supreme Court Deals State Workers’ Comp Law Another Harsh Blow

This past Thursday (6/9/2016) the Florida Supreme Court handed down a ruling finding the temporary total disability portion of the state’s embattled workers’ compensation statute unconstitutional. This decision comes less than six weeks after the Court issued its ruling in the Castellanos v. Next Door Company workers’ compensation case wherein the state’s highest court found unconstitutional attorney fees that were placed in statute when the law was passed in 2003 and significantly amended in 2008. The fee caps applied to plaintiffs’ attorneys and were set at 20 percent for cases less than $5,000, 15 percent in cases between $5,000 and $10,000 and 10 percent in cases greater than $10,000.

In this most recent Supreme Court case judges (in a 5-2 decision) sided with Bradley Westphal, a St. Petersburg firefighter who suffered a severe back injury while on the job in 2009. The case spotlighted a workers’ compensation statute that resulted in Westphal’s benefits being terminated after two years, creating what the Supreme Court described as a coverage gap.  “As applied to Westphal, the current workers’ compensation statutory scheme does not just reduce the amount of benefits he would receive … but in fact completely cuts off his ability to receive any disability benefits at all,” stated the lengthy majority opinion created by Judge Barbara Pariente and joined fully by Chief Justice Jorge Labarga, Judge Peggy Quince and Judge James E.C. Perry. “It does so even though there is no dispute that Westphal remained a severely injured and disabled firefighter under active treatment by doctors the city selected for him.”

The ruling may have been a good sign for labor groups and plaintiffs’ attorneys, who in the past have criticized the Legislature for allegedly going too far in diminishing the rights of injured workers in an effort to hold down insurance costs for businesses. This view must, however, be taken in balance with the view of a workers’ compensation system that has been an important model and one of the backbones of a business environment that largely helped fuel Florida’s recovery from the major recession. Several of the state’s largest business trade associations quickly issued statements on Thursday echoing similar sentiments and noting that the decision could have far reaching impacts on businesses in Florida.

There is little doubt that the Florida Supreme Court decisions over the past year directly impacting the state’s workers’ comp system will build significant pressure on the Florida Legislature to make workers’ comp law changes a major priority during the 2017 Regular Session. Business trade groups have already announced their intentions to push for legislative changes to impact the April Supreme Court decision freeing up caps on attorney fees in workers’ comp litigation. This portion alone of the compensation insurance dilemma will likely stage a huge legislative battle between the business trade associations and Florida’s plaintiffs’ attorneys. Also, on May 27th the NCCI filed with the OIR a proposed overall rate increase of 17.1% equaling $623 million. The rate increase filing remains under review by the office and a public rate hearing will be held on a date to be determined in July. LMA will continue closely monitoring this situation and bring you important updates as developments occur.

Appraisal and AOBs: Old Solution to a New Problem

There have always been differing opinions about appraisal as an alternative to litigation.  Appraisal can be an expedient and economic option to resolve covered losses where only a dispute as to the amount of loss remains, as well as effective means of avoiding exposure to attorneys’ fees.  Appraisal was often an insurer’s favored means of resolving claims in the wake of the 2004 / 2005 Hurricane Seasons given the volume of claims.  Unfortunately, appraisals sometimes resulted in coverage disputes and litigation leading many property insurers to abandon the appraisal process altogether and removing it from their policies.

Fast forward nearly ten years later and some property insurers are now amending their policies to include appraisal.  No doubt there are a variety of reasons for property insurers to swing back to appraisal – but the timing seems to be very fortunate for those insurers able to resolve claims via appraisal.

Property insurers are again facing an ever increasing number of lawsuits – this time fueled by water damage mitigation companies, damage repair contractors and roofers holding assignments of insurance claim benefits obtained from the policy holders.  Whether the assignee of an insurance claim is required to comply with an insurer’s election to resolve a dispute via appraisal in lieu of litigation has remained unsettled until recently.

In Certified Priority Restoration v. State Farm Florida Insurance Company, Florida’s Fourth District Court of Appeal has affirmed a trial court’s order compelling appraisal.  One appeal, the Court noted: “Selecting an appraiser is not one of the duties required of the insured under the policy in “Your Duties after a Loss[.]” The policy does not classify this as a duty of the insured, unlike the examination under oath, which is considered a non-assignable duty.”

The Court further referenced its prior opinion in One Call Property Services, Inc. v. Security First Insurance Company, 165 So. 3d 749 (Fla. 4th DCA 2015) wherein it was held “that policy provisions did not impose a ‘duty to adjust’ solely on the insured. A ‘duty to adjust’ was not a required duty of the insured under the policy provision for ‘Duties after Loss [,]’ and thus did not preclude assignment of benefits to a vendor providing services. The reasoning of One Call applies to this case. Therefore, the trial court did not err in compelling the appraisal.”

Where a property insurance policy includes appraisal, timely invocation of appraisal to resolve a covered claim may be an expedient means of resolving a dispute with an assignee and avoiding or minimizing exposure to the assignee’s attorney fees.

About the author:  Roland V. Bernal, Esq. has represented insurance companies in first party insurance matters since admission to the Florida Bar in 2000 and is the managing partner of Groelle & Salmon, P.A.’s Vero Beach office.  [email protected]


  Are Building Inspections What They Should Be?

At last month’s Florida Hurricane Catastrophe Fund Conference in Orlando attended by LMA, came a rather disturbing warning, one that hits at a pillar of property and casualty risk assumption: building inspections.

The assumption is that building codes are followed during construction and that the system of government inspections will fully enforce those codes and when violations are discovered, they will be remedied prior to final Certificate of Occupancy.

Inspector Robert Sheppard, a panelist at the conference, warned attendees that city and county building inspectors are underfunded and as a result, unable to do thorough inspections, leading to a lack of uniform enforcement of codes.  There have been notable cases, including one in Marco Island two years ago where a couple sued over lack of proper inspections.

Tim and Regina Dayton said they had to spend about $300,000 to fix deficiencies in their home that were not caught during the inspection process.  They sued the City of Marco Island and filed complaints with the Florida Department of Business and Professional Regulation (DPBR) against the city’s chief building official, the electrical inspector, the plumbing inspector, and the structural inspector.

The Daytons contended that applicable building codes and permit requirements were not enforced or proper inspections done while their home was being built by the now defunct Kimball Hill Homes between 2003 and 2006. They said the inspectors lacked the proper state licenses during that time period, too.  The city settled out of court, as did the inspectors with the DPBR.  A second lawsuit filed by the Dayton’s and one of their neighbors against the city for failure to provide public records was also settled.

Catastrophe modelers count on proper enforcement and if our industry assumes 100% enforcement, then perhaps we should rethink this and factor in a percentage as a “margin of error.”  We will monitor this emerging development.


OIR Attempted Market Conduct Rule Repeal Draws Industry Opposition

On Tuesday of last week (6/7/2016) the Office of Insurance Regulation (OIR) conducted a formal rule hearing concerning its effort to repeal Rule Chapter 69N-121.066, F.A.C., the rule that allows insurers to request informal conferences with regulators to iron out draft exam report errors and other problems before market conduct exams become a matter of public record. Under current law (624.319, F.S.), market conduct examination reports are confidential and exempt from Florida’s public records law (Ch. 119, F.S.) until reports are finalized and officially filed with the OIR.

The OIR brought in some of its heaviest hitters to conduct the hearing including, Chief of Staff Belinda Miller, General Counsel Anoush Brangaccio and Deputy Commissioner of Market Investigations Susanne Murphy. OIR Assistant General Counsel Steve Frederickson was also in attendance. Prior to the rule hearing many industry representatives became highly concerned because the OIR’s published hearing notice led readers to conclude that the office intended to completely repeal the informal conference concept and not replace it with any alternative mechanism for two-way communication and negotiation between insurers and the regulator. At the onset of the hearing Belinda Miller informed attendees that the hearing notice indeed sought the total repeal of the informal conference rule but that such repeal was not the OIR’s ultimate goal. Miller sent on to say that OIR leadership’s true intent was to amend the existing rule or the market conduct statute (624.319, F.S.) in an effort to make the entire market conduct exam process work quicker and more efficiently. She further explained that the current process of bringing draft exam reports to a final disposition takes far too long. However, many industry representatives supported the current process and gave examples of situations where informal conferences identified exam errors and prevented those errors from being placed before the public. The industry also made it clear that publishing reports containing errors or other incorrect information could damage the reputations of insurers and could be used by competitors to create unfair market competition.   Several times during the hearing Ms. Miller made it clear to the audience that OIR has no desire to publish incorrect or incomplete information about regulated entities.  She also expressed concern that the current exam process and rule does not provide licensees with clear grounds to request an adversarial DOAH hearing when exam content disputes between licensees and the OIR cannot be resolved prior to exam reports being finalized. In response, a number of industry representatives recommended that OIR draft and float proposed amendatory language to either the rule or the market conduct statute to address this issue. Near the end of the hearing OIR requested that interested parties develop and submit proposed rule amendment language that will shorten the market conduct exam report process, especially the process addressing the release of the draft report to regulated entities and the back and forth process to correct perceived errors or incomplete information. As always, you can count on us to keep you posted.


Grappling With Texas Hail Storms and their Claims-Data Call Issued

This Spring has been one for the record books when it comes to the sea of claims generated by a series of devastating hail storms that pounded North Texas beginning in March. A late April estimate showed that the hailstorm that hit Collin County, Texas caused more than $300 million in damages. The later storm that hit Wylie and parts of Plano will not be the most expensive in North Texas but did push insured losses in the geographic area to over $1.5 billion in less than four weeks time. The $1.5 billion is in addition to an estimated $700 million in damages on March 23 when large hail battered Plano. Six days before that, Tarrant County was hit hard to the tune of $600 million. The latest storm puts the overall total in North Texas at around $1.6 billion.

And perhaps borrowing a play from Citizens’ manual on how to better address sky rocketing litigation costs associated with abusive AOB practices, the Texas DOI recently issued a data call directed at insurers providing coverage against loss from hail and windstorm events. The purpose of this data call is to collect information for the examination of data on the cost of weather-related property insurance claims and the incidence of litigation of these claims. The Texas DOI will use this information to assist the House Insurance Committee and the Senate. Insurers required to respond to this data call must respond by no later than August 19, 2016.  Although the results of this data call will be based upon the Texas marketplace and judicial environment, we here at LMA believe the results could be beneficial in better understanding Florida’s unique and highly litigious business environment. Accordingly, we will continue monitoring the Texas DOI’s work and share with you their results as soon as they become available.


 Autonomous Vehicle Update

Florida continues its leadership role in Automated Vehicles with a new law July 1 allowing riderless vehicles on Florida’s public roads for research purposes.  The legislation, championed by Senator Jeff Brandes (R-Pinellas), includes both Autonomous Vehicle and Connected Vehicle Technologies.

It allows someone with a valid drivers’ license to operate an autonomous vehicle on public roads; eases equipment requirements; prepares for a truck platooning test; and requires our metropolitan planning organizations around the state to consider autonomous technology when writing long-range transportation plans.

Truck platooning may have more immediate applications according to some private engineers working with the Florida Department of Transportation on its FAV initiative. Platooning links vehicles together like a train on the highway, separated by an invisible but calculated distance between each truck through vehicle-to-vehicle communication.

Google’s self-driving cars have logged about 1.6 million miles around Mountain View, California, the company’s headquarters, as well as Arizona, Texas, and Washington – all without major incident.  Of the 20 or so accidents that did occur, Google has accepted blame for only one, which involved a collision with a bus.

Despite the progress that’s been made in developing and street testing these so-called “ghost driver” cars, efforts to bring driverless trucks to the road are likely decades away say researchers, given the consequences any component failure would have, as some trucks carry as much as 80,000 pounds of cargo.

A team of former Google robotic engineers are trying to make autonomous 18-wheelers a reality sooner through Otto, a San Francisco startup company.  Otto’s plan uses software, sensors, lasers and cameras that would allow trucks to navigate the more than 220,000 miles of U.S. highways on their own, while a human driver monitors systems or even naps in the back of the cab.

For now, the driverless trucks would only take control on the highways, leaving humans to handle the tougher task of driving through city streets. It’s similar to the auto pilot feature that flies aircraft at high altitudes while leaving the takeoffs and landings to humans.


Profit and Contingency Factors

The Florida Office of Insurance Regulation (OIR) issued Informational Memorandum OIR-16-04M (pursuant to Florida Administrative Rule 69O-170.003, subsection 9) which establishes underwriting profit and contingency factors for 22 lines of insurance coverage. The OIR bulletin provides that insurers may use these factors if they cannot produce credible factors from their own data.  Please let us know if you have any questions about these factors.


2016 Candidate Interviews

We have certainly appreciated the opportunity to participate in the candidate interviews coordinated by the Florida Association of Professional Lobbyists.  By the end of next week, will have been able to meet 95 candidates on the campaign trail, with events in Orlando, Tampa, Jacksonville, Tallahassee and Ft. Lauderdale.  There are some very impressive individuals who are seeking office and will provide a great service to Florida when elected. We hope that you are scrutinizing these candidates also so that you can be well prepared come election day!


A Sad Result from Tropical Storm Colin

Needless to explain to my readers, that I am a very serious animal lover.  If you didn’t know it before today’s publication, you certainly do now.  So, it made me very sad to read about the storm surge from Tropical Storm Colin that wiped out scores of endangered loggerhead turtle nests filled with eggs on our beautiful St. George Island.  The folks who watch over these nests reported that nearly all of the 58 nests they’ve been monitoring on the island were washed away – possibly destroying thousands of turtle eggs. The surge also took out nests farther east at Alligator Point.  A member of the Alligator Point Sea Turtle Patrol said, “I watched two nests get washed away. One was formed yesterday. Just laid the eggs yesterday.”  He also said that the surge was strong enough to wash a loggerhead onto the highway, and although a family from Cincinnati helped him try to rescue the nearly 3-foot long turtle, it it had been battered by the rocks lining the shore so severely, it didn’t survive.  We love our sea creatures here in North Florida and try our best to care for their fragile environment.  Sadly, with the force of Tropical Storm Colin, this is a battle we lost.   Don’t forget to hug your two and four legged family members today!


Lisa and the LMA Team


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Troubled Waters:  Finding a Balanced Approach to Florida’s Water Loss Crisis
June 14, 2016
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June 15-18, 2016

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Orlando, FL



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