LMA Newsletter March 7, 2016

This is a bi-partisan bill that is aimed at offering additional choices to consumers with a mortgage and living in a high-risk flood zone.  Bi-partisan support of this bill is no small feat, especially as a bill that has the potential to reduce the size of a government program (the National Flood Insurance Program). The sponsors, Rep. Ross and Rep. Murphy, and their staff members have done an amazing job crafting a bill with broad support AND securing the support of Rep. Waters, who initially opposed the bill.  Kudos to former Florida House of Representatives Insurance Committee Chairman Don Brown who testified at a hearing before the U.S. House Insurance and Housing Subcommittee, the National Realtors Association, members of the insurance and reinsurance industry, all who worked tirelessly to reach this point in our country’s efforts to move away from government flood insurance.

This focus of this bill is to provide choices to consumers and private, primary flood insurance as an alternative to NFIP for homes that are  1) covered by a mortgage and 2) in a high-risk flood zone. The bill does this by clarifying how a private carrier can issue a policy that satisfies the Federal mortgage requirement for flood insurance on a home that is mortgaged and located in a high-risk flood zone. It also clarifies what we’ve been referring to as “grandfathering” by permitting people that leave the NFIP for a private carrier to come back to the NFIP under the same rating plan they would have had if they had kept the NFIP policy.

Read the bill as it was introduced and approved by the House Financial Services Committee here. We expect that this will be the final version voted on by the House.

The official description of HB 1175/SB 1496 says: Bill title–Transparency in Health Care: Requires hospitals & insurers to make available information which can be used by consumers to make health care decisions based on cost & quality; requires AHCA to contract with vendor to provide public access Internet-based health information platform; requires AHCA to design patient safety culture survey for licensed hospitals & ambulatory surgical centers; requires health insurers & HMOs to make available on their websites information to estimate certain health care services costs & charges; requires certain health insurers, HMOs, managed care plans, DMS, & vendor for state group health insurance plan to contribute claims data to contracted vendor selected by AHCA; provides appropriation.  Effective Date: July 1, 2016.

This past week, the effort to eliminate the age-old diligent effort process failed.  During a meeting a month ago of many stakeholders who had concerns about this proposed legislation, several of us committed to work during the summer on finding ways to improve the process and make suggested changes to the law so that agents and consumers would benefit from the collective wisdom of those at the table.   We will report more during the spring and summer on our firm and others convening a summit on diligent effort reforms and encourage all agents who are approached by those to compromise the diligent effort process to contact me so we can discuss your concerns. Once we have a consensus document to present to legislators and regulators, we will ensure a transparent process so that all concerned can have input.  We appreciate all you do every day and look forward to continued conversations.

Efforts in the Florida Legislature this session to provide pay raises to legislators – and to state workers – have failed.

Senate Democratic Leader Arthenia Joyner (D-Hillsborough) proposed an almost 69% pay increase for lawmakers, which would have raised Senate and House members’ salaries from $29,600 to $50,000 per year.  Presiding officers would have seen a 39% increase, from $41,100 to $57,000, under her bill (SB 712).Senator Joyner said the increase was necessary to help attract more “everyday people” to run for office – not just the attorneys, business executives, realtors, and developers who make up the top occupations.  She said the legislature could use more diversity, such as teachers, bus drivers, and bartenders – people who can’t afford to leave their current jobs for an elected position paying less.

 

A measure pending before the Florida Legislature that would require life insurance companies to periodically wash their active policy database against the Social Security Administration’s master death index file is steadily moving towards possible passage. The legislative initiative comes on the heels of a large-scale effort by Insurance Commissioner Kevin McCarty and the OIR, in concert with four other states, to examine the practices of a number of life insurers and how they have used the master death index file previously. A number of examinations have revealed that life insurers have used the index file to verify the death of annuitants and stop routine annuity payments while not utilizing the index file to identify deceased insureds covered by life insurance so that beneficiaries unaware of policies can submit death claims. As a result of OIR’s campaign, settlements have been reached with about 20 life insurers and beneficiaries have received approximately $310 million in death claim benefits they would have otherwise not received. The actions have also required insurers to remit about $172 million to the state’s unclaimed property office, and state officials have located and paid nearly $51 million to life policy beneficiaries.

Among the big surprises last week in the Legislature were the fate of Governor Scott’s economic incentives plan and his proposed list of tax cuts.  The governor wanted $250 million to create the Florida Enterprise Fund, his biggest budget priority.  It would have replaced the Quick Action Closing Fund and provided enhanced incentives to bring new companies to Florida. Legislative leadership declined, providing zero funding. Americans for Prosperity-Florida had called it ‘corporate welfare’.

The U.S. Center for Disease Control and Prevention (CDC) in Atlanta is reporting that it was notified last month of an error in its report released February 10, 2016, about the possible health effects from exposure to formaldehyde emitted from select laminate flooring samples. Further, insurance industry media sources are reporting that Lumber Liquidators Holdings Inc. flooring, tested by the CDC for formaldehyde, was found to have a three times higher risk of causing cancer than previously stated. This revised data is what prompted CDC officials to reverse their own findings from earlier this month. Accordingly, health risks of people who have the laminate flooring are being revised to reflect greater exposure to formaldehyde, which could cause eye, nose, and throat irritation for anyone. Additionally, the estimated risk of cancer associated with exposure to the flooring increased. According to the CDC, its indoor air model used an incorrect value for ceiling height.  As a result, the health risks were calculated using airborne concentration estimates about 3 times lower than they should have been. Lumber Liquidators’ stock has fallen more than 70 percent since the March 2015 airing of a “60 Minutes” segment that alleged the company’s flooring had potentially dangerous levels of formaldehyde. Formaldehyde is a chemical used to make building materials such as carpet and laminate flooring, and some household products. It’s also widely used in the funeral industry as the key component in embalming fluid. Formaldehyde is highly toxic to animals, including humans and people with breathing disorders including asthma and bronchitis are highly sensitive to formaldehyde exposure.

Between December 1, 2015 and February 17, 2016, reports indicate that 52 hoverboard fires have occurred in 24 states resulting in $2 million in property damage as well as the destruction of two homes and an automobile. Most of the fires happened indoors and would have likely caused serious injuries to occupants had they not been put out by the residents. The fires and insured losses have triggered a full investigation by the U.S. Consumer Product Safety Commission (CPSC) and pressure is being applied to hoverboard manufacturers to comply with U.S. safety standards or risk the threat of product seizures. CPSC Chairman Elliot F. Kaye recently stated that the Commission is actively investigating a number of companies that make or sell hoverboards and that his agency is searching to find the root cause of hoverboard fires.  According to insurance industry reports, the CPSC has sent correspondence to hoverboard manufacturers seeking compliance with newly released voluntary safety standards as established by Underwriters Laboratory. Kaye went on to say that his staff is focusing on the components of the lithium-ion battery packs as well as their interaction with the circuit boards inside the units. CPSC is working with test laboratories, lithium-ion battery representatives and other experts to verify safe design practices for use of lithium-ion batteries in hoverboards. The Commission is also aware of the increasing number of serious injuries and ER visits relating to the use of hoverboards and its investigation has been expanded to include injuries associated with hoverboards. CPSC is focusing on the product’s design to evaluate any hidden dangers that may cause fall injuries to occur. Mr. Kaye has expressed concern that the current designs of hoverboard products might not take fully into account the different weights of different users, possibly causing the units to speed up or lurch forward, occurrences that would be difficult to predict, particularly for first time users. We’ll continue monitoring this story and let you know when all the findings are in.