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| Everything Was Fine Until Part of the Engine Fell Off |
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Last week, a longtime friend and insurance colleague, Cheryl Cole, sent me a news article link because she was on that plane when the engine fell off. I asked her to write this edition’s opening to give us her personal point of view of that story.
“My weekly flights to and from Chicago for work since November 2015 has become a routine of sorts. Getting home each Thursday night and leaving again on Sunday afternoon basically gives me time to unpack, repack and spend a few days at home tending my veggie garden and flowers. While it’s more tiring some weeks than others, I enjoy the work and certainly have made some new friends on those four legs of flights each week. Anyone that flies out of Tallahassee to anywhere MUST stop in Atlanta and Sunday, May the 8th was just another travel event through Atlanta to Chicago. The weather was nice as we left Tally and the ride on the smaller Delta plane into Atlanta was smooth and quick. After the two-hour layover in Atlanta, the folks at our Delta gate inAtlanta boarded our much larger plane to Chicago Midway. Everything was normal other than the airplane was unusually hot inside as we waited to taxi out to the runway. The normal quiet chatter started and I settled into my aisle seat with the current edition of the Martha Stewart Living magazine open in my lap. The nice lady next to me had quietly dozed off and I was careful not to disturb her. All was uneventful as had been the case during past flights to and from Chicago, as well as on most of the other airline travels I have made throughout my life. Then it happened…a loud and very frightening sound of a crash on or around the plane shook me to the core as it shook the airplane. The chatter went eerily and suddenly silent, and folks begin to look at each other with fear and wonder in their eyes. The young woman across the aisle gazed at me with very wide eyes as she said, “What do you think that was?” Nothing from the pilots yet, and the crew, who was in the process of serving drinks, had no answers. After what seemed like hours, the pilot came on to tell the flight attendants to immediately return to their seats and for all passengers to make sure their seat belts were buckled. Then he said there appeared to be a problem with one of the engines and it had been shut down. What???? What does that mean? I could see the questions floating from the hearts and minds of my co-passengers. Then he said we would be doing an emergency landing in approximately 20 minutes. What???? Where are we anyway? More questions filled the atmosphere of the plane. So….I am thinking….is this how it feels to be so very close to eternity? It only took a few seconds until my hand clasped the hand of the quiet woman who was seated next to me and we began to pray together. With my eyes filled with tears, my prayer was simple…Lord, if now is my time to meet you in paradise I only ask that the folks on this plane not suffer pain and agony, and anyone who does not love and know you as I do, they would know you now. I thought about my beautiful daughter, sweet son-in-law and precious, precious grandchildren. At that moment, I hoped I had represented goodness, courage, kindness, and love to them in such a way that their memory of me would include all those attributes. And, that was it. I was ready. I can’t tell you I wasn’t afraid because I was very afraid. And for the remaining very, very long minutes until we finally touched down in Nashville, Tennessee, I and the sweet, quiet woman still holding our hands together, shared our life stories. It was a precious time indeed, and I have a lifetime friend now, and no one else in the world can share her special place in my life. Even through this fearful, fearful time, God sent me peace, love, a new friend and a story to share. I am thankful.”
And we are thankful, too —that this story had a good ending after such a harrowing event!
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| Workers’ Comp Law Changes for Florida in 2016 |
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On the heels of last month’s ruling by the Florida Supreme Court that attorney fee caps in current Workers’ Compensation law violate both the Florida and U.S. constitutions, it is expected the legislature will need to come up with a new remedy to prevent significant rate increases in the future. In the meantime, here’s what changes we can count on for certain this year, in Workers’ Comp.
The Florida Workers’ Compensation Insurance Guaranty Association (FWCIGA) will be changing the manner in which it recoups assessments. Instead of recoupment as part of the premium in a rate filing, it will now be added as a policy surcharge collected by the insurer, and as a result, will not be subject to the state insurance premium tax. The assessment cap will also increase from 1.5% to 2% of net direct written premiums, to be consistent with the cap for insurers.
Other FWCIGA changes include allowing insurers to choose whether to pay an immediate single assessment or a quarterly installment payment, and basing assessments on the net direct written premium of the calendar of the assessment, rather than the prior year. Also, authority for assessments as well as other reporting related to insurer financial condition will now rest with OIR and not DFS. All of these changes take effect July 1. Also taking effect this day will be long-awaited updates to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual that due to a glitch, were never formally approved last year. Here’s a link to the updated 2015 manual.
Also new to Workers’ Comp this year in Florida is a revised method that allows an injured worker and the employer and insurance carrier covering them to agree on selection of an expert medical advisor. If the parties don’t agree, the judge of compensation claims will select an expert from the official list. (DFS adopted significant changes to the rules governing expert medical advisors this spring.) We’ll also see the elimination of the $100 registration fee that insurers pay as a condition to writing Workers’ Comp. All of these changes take effect October 1.
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| Citizens Hopeful Policy Language Changes Will Dampen AOB Abuse |
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This past Tuesday (5/10/16) with OIR’s approval in hand, Citizens Property Insurance Corporation (Citizens) announced that it was moving forward with implementing a series of policy changes effective July 1. The state-run insurer said that at a goal oriented level, the changes will help it better connect with and protect customers early in the claims process while controlling costs that threaten to raise rates. At a more surgical level, the OIR recently approved a set of focused policy contract changes for Citizens regarding loss reporting, use of emergency services, and the nature of permanent repairs. Regulators approved the contract changes to address abuses of the insurance contract that are needlessly reducing consumer control, complicating claims, and increasing rates, particularly in South Florida. Although Citizens refers to the needless “reduction” in consumer control as one of the driving reasons for policy language change, we’ve reported many times that in the most abusive situations consumers sign AOBs where they assign total and complete control over their claim to remediation contractors.
According to Citizens, the policy contracts changes will ensure that the use of emergency services is reasonable, that Citizens has the opportunity to assess the damage before additional permanent repairs are made, and that permanent repairs properly address the cause of the loss. Specifically: policyholders are required to take emergency measures to protect insured property from further damage. Emergency measures only include what is reasonable and necessary to secure the home and prevent further damage, and may not exceed the greater of $3,000 or 1 percent of Coverage A limit. Second, to ensure that Citizens has the opportunity to inspect the damage and confirm coverage, the revised policy restricts when permanent repairs can begin. There may be no coverage for permanent repairs that begin before one of the following occurs: 72 hours after the loss is reported to Citizens, the loss is inspected by Citizens, or verbal or written approval is provided by Citizens. Finally, when a home system (such as plumbing) suffers damage that causes a loss, Citizens has clarified that it will cover the access required to replace the part or portion of the system that caused the loss. Access to repair or replace parts and portions of the system not affected by the specific covered loss will not be covered.
The changes are needed, in part, to curb abuses involving assignment of benefits (AOB), under which policyholders give third party vendors the ability to control their claims following a loss. “Protecting our policyholders after a loss remains the focus at Citizens,” said Chris Gardner, Chairman of Citizens Board of Governors. “These changes will not affect our commitments to policyholders, but will help control costs, protect surplus and make sure we are ready when our customers need us most.”
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| Public Adjuster Rule Workshop |
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As we reported in our April 18 Newsletter (click to read), the DFS’s Division of Agent and Agency Services (Division) is again attempting to amend its administrative rules governing the activities of public adjusters (PAs), this time to set a required number of days by when an insurer must be notified of a claim. In its proposed amendment to Rule Chapter 69B-220.051 published April 12, the Division recommended codifying into the rule a five (5) day requirement for insurer notification. Notice given within 5 days of a public adjuster contract being entered in to is presumed to be “prompt” by the proposed rule. On April 26, 2016, the Division conducted a rule workshop to obtain input from the industry and other stakeholders. What didn’t surprise anyone about the workshop was the fact that representatives of insurers and public adjusters both expressed significant concerns about the Division’s proposed 5-day notice requirement.
Some insurance company advocates said they believed notice of the claim should be submitted earlier than 5 days and argued for a 24 hour notice. Other carrier advocates asked the Division for consistency with the notice required in the rule with the recent Citizens policy changes that require notice of a claim within 3 days. During the workshop public adjuster advocates challenged whether the Department of Financial Services even had clear statutory authority for the rule and argued the case law definition of prompt notice is different from the rule. The PAs also represented that they need more than 5 days to investigate a loss to determine whether there is a claim under the policy. The PAs and insurer representatives both noted that much of the worst behavior occurring out in the field regarding delayed notice of claim is from loss consultants and remediation firms and that the rules do not address these entities. Both the PAs and insurer representatives agreed that a major focus should be placed on “loss consultants” who are unlicensed associates in some law firms. These consultants meet with policyholders and “handle” the claim but the concern is their handling of it…concern that they have a tendency to inflate the claim or use their position to stall the claim, which ultimately inflates the claim.
The Division responded that it will take all comments received from the workshop into consideration when preparing the next rule draft. LMA will continue to closely monitor this rulemaking effort and let you know when the rule is published for an official hearing. We expect a hearing to take place and we will be there to cover the action.
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| Transparent Insurance Standards Act |
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Ongoing overseas efforts to “internationalize” insurance regulation and treat insurers like banks is bringing new pushback by the U.S. Congress.
The Transparent Insurance Standards Act of 2016, introduced earlier this month in the U.S. House of Representatives, is designed to protect America’s insurance markets by increasing transparency and strengthening Congress’s role in supervising foreign standards setting organizations.
The bill, H.R. 5143, was introduced by U.S. Rep Blaine Luetkemeyer (R-MO) who chairs the House Subcommittee on Housing and Insurance. It would provide the backstop needed by U.S. representatives to the International Association of Insurance Supervisors (IAIS), which is trying to adopt international insurance standards.
The bill would reinforce that any international insurance standard agreed to at the IAISwould not be self-executing and could not be applied in the United States until it is implemented through the required domestic process. It also provides Congress the opportunity to reject a bad agreement. It would require the Treasury Department and the Federal Reserve to work to ensure policyholder protection, increased transparency, and recognition of the state-based model of insurance regulation.
Our country continues to move to more national (Model Holding Company Act and ORSA) and prospective international regulation (ORSA Part II and International Capital Standards) and away from the state-based regulatory system that has served us well for the past 70+ years. The U.S. has the largest, most resilient, consumer-centric, and competitive insurance markets in this world, with 87.4% of it exclusively states-regulated, per the NAIC. Former Florida Insurance Commissioner McCarty recently noted that our counterparts around the world have a hard time understanding our system. Rep. Luetkemeyer says this bill helps ensure the U.S. will “sit at the head of the table” in ongoing international discussions.
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An insightful insurance agent sent in the below question to LMA recently:
“Do you think PIP reform will be back on the table in the next year or two? I think it is timeFlorida grows up and eliminates PIP and raises BI/PD and UM to a mandatory 25/50/25 and 25/50 limit. The attorneys, doctors and hospitals are making a killing due to our current system. What are the chances of PIP elimination in Florida?”
His question was prompted by the State Farm lawsuit against a hospital in the last newsletter and by outgoing Commissioner McCarty’s recent remarks before the Cabinet that OIR is working with Senator Brandes on a potential PIP alternative, but that “the fact is people are driving more and so there are more accidents”, as an explanation for the 13% increase in PIP rates this past year.
LMA’s answer: The legislature was right in creating PIP – it did help resolve some of the high loss issues. It arrested the 40% increases in the previous years. But as Ray Blacklidge with American Traditions Insurance noted though, in his presentation before the Florida Cabinet last month, PIP hasn’t helped as much as we’d hoped and that a pitch to adopt the full Canadian model – which includes third-party liability – failed.
Many, perhaps including Florida CFO Jeff Atwater (who has raised the question repeatedly), believe PIP’s time has come and gone. Forty-five other states have mandatory Bodily Injury coverage, with data that supports that approach and it’s certainly worthy of consideration. Several bills to eliminate PIP this past legislative session never saw the light of day though.
Countering the consumer cost argument is that those who have little or no chance of access to medical care because they aren’t able to afford even federal healthcare premiums, need coverage from somewhere – and PIP currently provides that. The hospitals generally oppose eliminating PIP, because their reimbursement under it is higher than Medicare pays. The trial lawyers support eliminating PIP because they want to restore the full rights and privileges of TORT.
The chances of eliminating PIP in Florida in 2017? My gut says 30%. Thank you for the question!
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| Louisiana Expands Definition of Fraud |
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Louisiana Governor John Bel Edwards has signed into law a bill that expands the definition of what constitutes a “fraudulent insurance act” in the Pelican State.
House Bill 363 by Rep. Kirk Talbot (R-River Ridge) expands the definition to include presenting materially false written information to the Property Insurance Association of Louisiana in connection with the grading of a municipality or fire district. Existing law is less stringent and defines such an act as certain specific acts or omissions committed with knowledge and intent to defraud. The new law becomes effective in August.
Florida law currently requires the “intent to injure, defraud, or deceive any insurer” in its definition of fraud, which is a third degree felony.
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| Florida Is A GREAT Place To Live |
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We often forget that we have an amazing state. Yes, we are spoiled and it often takes an extended trip to other states to be reminded of how great it is here in Florida. Besides having no state income tax, there is so much more that welcomes visitors and new citizens to our state constantly. Florida is filled with so much diversity and innovation. Our tourism spots are multi-faceted, including our emerald beaches and crystal clear springs, beautiful golf courses, delights for the scuba diver with accessible shipwreck sites, Native American archaeological sites. This month is National Historic Preservation Month and our Department of State’s Division of Historical Resources is participating in the “Preservation 50” initiative, which recognizes the 50th anniversary of the National Historic Preservation Act. The cultural heritage tourism effort alone has generated more than $2.5 billion in spending for our state. The Florida Historic Golf Trail is a collection of historical courses that golfers can still play on today. In addition, we also boast about the Panhandle Shipwreck Trail, which presents the stories of 12 historic shipwrecks along Florida’s northern Gulf coast. There so much to appreciate and celebrate here in Florida and these are just a few to remind us of how fortunate we are to call Florida home. Let’s take good care of our home and keep it beautiful for all to see.
Until next time – Lisa and the LMA Team |
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