Recap of Week 1 & Preview of Week 2 of Session
The Florida Legislature convened its 2020 session this past week with further litigation reform doubtful for now but with discussion forthcoming of insurance litigation reform bills. Governor DeSantis, in his State of the State address, praised last year’s AOB fraud reform measures that are starting to produce results and said that further reform is “most welcome”.
In his address (which you can read or watch here), the Governor noted that the number of AOB-related lawsuits involving Citizens Property Insurance has dropped from over 500 in June of last year to only 148 in December. “The legal system is supposed to be used for redressing concrete injuries and disputes; it is not a game and shouldn’t be used as such. Reforms such as AOB that improve the legal climate here in Florida are most welcome,” the Governor said.
The Governor used the address to note Florida’s achievements from last year and to put forth his vision for 2020, including specifics from his proposed fiscal year 2020-2021 state budget, totaling $91.4 billion. For a preview of some of the major insurance issues facing the legislature, we invite you to listen to our latest Florida Insurance Roundup podcast.
Here is a master list of the legislative bills we’re following so far in this 60-day session (you can click the link to go directly to the bill). “New” and “Updated” bills are so noted. Updates within each bill are noted in red font:
Assignment of Benefits (Windshield AOB) Updated
Bad Faith Updated
Property Insurance (attorney fees) Updated
Omnibus Insurance Bill Updated
Public Records/Records of Insurers/Department of Financial Services Updated
Property Insurance (surplus lines) Updated
Consumer Protection Updated
Insurance Claims Data Updated
Insurance Guaranty Associations Updated
Construction Defects Updated
Disposition of Insurance Proceeds
Residential Property Disclosures (Flood) New
Sanitary Sewer Levels
Florida Building Code
Motor Vehicle Insurance (PIP) Updated
Motor Vehicle Rentals
Credit for Reinsurance Updated
Genetic Information for Insurance Purposes Updated
Pharmacy Benefit Managers (PBMs) Updated
Criminal Justice Reform Updated
Cruelty to Dogs
Assignment of Benefits (Windshield AOB) – Unfortunately, the House version of the AOB windshield reform bill (HB 169) was withdrawn from further consideration. And as you read in our previous edition, the Senate Banking and Insurance Committee showed no appetite to pass its proposed bill (SB 312), although the Senate sponsor vowed to keep an eye out on ways to get something passed.
While we never quit, it appears that any reform of this insane practice of the flood of lawsuits against auto insurance companies will not occur this session. We will work with our colleagues who are working every day to bring some sense to this litigation insanity and will keep you posted. On my desk is a case where a lawsuit was filed for a $4 difference in what was paid by the insurer and what the glass shop charged. You decide if that makes sense or not!
You will recall that these bills are part of the ongoing effort to reform growing AOB abuse in automobile windshield repair and replacements. It was initially part of the 2019 session’s broader AOB reform, but was dropped during negotiations on final passage of HB 7065 which became law last year.
The House and Senate versions were drafted to put consumers back in charge…not windshield replacement companies and their favorite trial lawyers who are gaming the system, laughing all the way to the bank at our expense.
The Florida Justice Reform Institute released its latest Auto Glass AOB Data Update in November. Using Department of Financial Services’ data, it shows growth from about 400 auto glass AOB lawsuits in 2006 to 24,000 in 2017, with a leveling off last year to about 17,000 suits and holding steady for 2019. Orange (Orlando) and Hillsborough (Tampa) Counties are the most popular spots for such litigation, with 15 firms accounting for 90% of the litigation. One firm (Malik Law) is responsible for filing nearly 30% of all lawsuits. (Return to Top of Page)
Bad Faith – Reforming homeowner AOB abuse last year took care of part of the problem. Reforming Florida’s Bad Faith law will take care of the other part, in the view of many in the insurance industry. Senator Jeff Brandes (R-Pinellas) has filed SB 924 that aims to do just that. The barely four-page bill requires that policyholders and claimants in third-party bad faith actions against insurance companies must prove that the company acted with reckless disregard.
The bill also limits an insurance company’s liability to third-party claimants under certain circumstances, if it files an interpleader action within a certain time period. The bill is similar to one the Senator filed last session in response to a bill that would have repealed Florida’s Personal Injury Protection (PIP) no-fault auto insurance law, but didn’t address bad faith. A similar PIP bill has also been filed this session. The bill, which has no House companion, awaits its first hearing before the Banking and Insurance committee. (Return to Top of Page)
Property Insurance (attorney fees) – SB 914 by Senator Jeff Brandes (R-Pinellas) is designed to do away with enhanced attorney fees that came into being several years ago under a Florida Supreme Court decision. Courts have used the traditional Lodestar method for calculating attorney fees, where the court multiplies a reasonable hourly rate by a reasonable number of hours expended. The bill would require the maximum attorney fee a court may award in insurance claims cases be the Lodestar fee, prohibiting the court from considering contingency risk or using a contingency risk multiplier to enhance the fees. The bill gets its first hearing tomorrow at noon before the Senate Banking & Insurance Committee. (Return to Top of Page)
Omnibus Insurance Bill – HB 359 by Rep. David Santiago (R-Deltona) has a variety of issues including an audit of the Cat Fund’s premium formula, requiring proper notice of a lawsuit including requiring the notice be mailed to the insurer’s address on file with DFS’ service of process unit versus a random address a plaintiff lawyer may find on the internet, and a host of other changes to insurance laws. Omnibus bills are aimed to be consensus bills with the aim to provide greater consumer protection including ways to drive down rate increases.
The bill passed the House Insurance and Banking subcommittee last week unanimously, with very little debate, except with respect to the Statute of Limitations language to move all claims filing deadlines to 3 years across the board for “daily” claims in line with catastrophe claims. Rep. Santiago agreed to work with those who expressed concerns on the Statute of Limitations language and most likely we will see changes at the next committee stop.
Rep. Santiago delivered a strong closing presentation on his bill, citing a call he had with a constituent homeowner who had been approached by someone canvassing a neighborhood encouraging the homeowner to make a claim for a new roof. The canvasser said that all the roofs in the neighborhood only had a few years left and the homeowner said that that was funny since he just built his house two years prior! With that, the committee passed the bill and Rep. Santiago is preparing for the next committee of reference.
Senator Jeff Brandes (R-Pinellas) has filed a comparable bill, SB 1334 in the Senate, which leans more toward litigation reform. It awaits its first hearing. (Return to Top of Page)
Public Records/Records of Insurers/Department of Financial Services – Consumers’ personal financial and health information, certain underwriting files, insurer personnel and payroll records, and consumer claim files that are made or received by the Department of Financial Services would be exempt from public records law under SB 1188, by Senator Ben Albritton (R-Bartow). The bill is a necessary consumer protection and would keep consumers’ confidential information away from over-zealous attorneys seeking prospective clients.
The bill would also exempt from public records law certain reports and documents held by the department relating to insurer own-risk and solvency assessments, corporate governance annual disclosures, and certain information received from the National Association of Insurance Commissioners or governments. The bill unanimously passed the Senate Banking and Insurance Committee last week, its first of three committee stops. An identical House bill, HB 1409 by Rep. Michael Grant (R-Port Charlotte) was filed last week. (Return to Top of Page)
Property Insurance (surplus lines) – SB 1760 by Senator George Gainer (R-Panama City) addresses Surplus Lines regulation. This bill is directed at ensuring consumers have access to Florida based courts and dispute resolution processes based in Florida versus what many surplus lines policies include which requires disputes to be heard in states or countries outside Florida. But the bill affects the admitted market, raising concerns about overreaching regulation. An identical House bill, HB 1357 by Rep. Jay Trumbull (R-Panama City) was filed this past Friday. Both bills await their first hearings. (Return to Top of Page)
Consumer Protection – HB 1137 / SB 1492 prohibits certain charges for removal of security freeze; prohibits unlicensed activity by adjusting firms & bail bond agents; provides administrative & criminal penalties; revises actions against certain license, appointment, & application of insurance representatives; revises status, notice, & payment requirements for claims; revises classes of insurance subject to disclosure requirement before eligible for export under Surplus Lines Law; prohibits certain writing of industrial life insurance policies; revises Homeowner Claims Bill of Rights; removes certain deductible obligation of the Florida Insurance Guaranty Association; and revises unclaimed property recovery agreements & purchase agreements. Further discussion and work is necessary on these bills to prevent unintended consequences.
The House bill is sponsored by Rep. Chuck Clemons (R-Newberry) with Senator Tom Wright (R-Port Orange) sponsoring the identical Senate version, with both awaiting their first hearings. (Return to Top of Page)
Insurance Claims Data – SB 292 by Senator Doug Broxson (R-Pensacola), who chairs the Banking and Insurance Committee, addresses disclosure of, and defines a “loss run statement” as a report relating to risks maintained by an insurer which contains the history of claims occurring during a policy term. The bill requires surplus and admitted carriers to provide a statement to a policyholder at no charge upon request. It’s awaiting a hearing before the Rules Committee, its last stop before heading to the full Senate. A similar bill in the House, HB 269 by Rep. Daniel Perez (R-Miami) passed the Commerce Committee unanimously last week, its last committee stop prior to it reaching the House floor. These bills are still “evolving” with various suggested changes. “The overall effect of the bill is to establish a statutory framework for an insurance practice that routinely occurs,” states the bill analysis. As such, we find it odd that a routine practice needs to put into law. (Return to Top of Page)
Insurance Guaranty Associations – Essentially a “Condo Parity Bill”, HB 529 by Rep. Jennifer Webb (D-St. Petersburg) would provide an increase from $100,000 to $200,000 per unit as the payout to condominium and homeowners associations. The bill unanimously passed the Insurance & Banking Subcommittee last week and heads to Ways & Means. An identical bill, SB 898 by Senator Joe Gruters (R-Sarasota), unanimously passed the Senate Banking and Insurance Committee last week and now heads to the Innovation, Industry, and Technology Committee.
The Guaranty Association protects a traditional single-family dwelling for an up to $300,000 loss for the dwelling should the insurance company go bankrupt. The associations in favor of this year’s legislation argue that a total loss where a condo building is leveled would cost substantially more than $100,000 “per door” to rebuild and that the payout hasn’t been increased in over 30 years. This has been a point of conversation for many years and we look forward to the debate.
Another bill making its way through the process is HB 329 (also titled “Insurance Guaranty Associations) by Rep. David Smith (R-Winter Springs). This bill tweaks the major FIGA reform of several years ago, changing assessment calculations for both homeowners and workers compensation guaranty funds.
The bill has been on a fast-track and last week unanimously passed the House Commerce Committee, its last, with Rep. Smith saying the bill had the support of CFO Patronis and Insurance Commissioner Altmaier. He talked about how the bill clarifies the method that FIGA assessments are collected and remitted. Remittance would be quarterly, instead of the monthly remittance passed in the 2016 changes to the law. The bill also allows out of state adjusters operating under a licensed FIGA adjuster to adjust claims. The bill is now being teed-up for consideration by the full House. An identical bill in the Senate, SB 540, unanimously passed the Banking and Insurance Committee last week and is scheduled to be heard Wednesday before the Appropriations Subcommittee on Agriculture, Environment, and General Government. (Return to Top of Page)
Construction Defects – SB 1488 / HB 295 specify that certain disclosures and documents must be provided before a claimant may file an action; revising the timeframes within which certain persons are required to serve a written response to a notice of claim; providing requirements for the repair of alleged construction defects; prohibiting certain persons from requiring advance payments for certain repairs; and requiring parties to a construction defect claim to participate in certain mandatory nonbinding arbitration within a specified time.
The Senate bill is sponsored by Senator Joe Gruters (R-Sarasota) and the similar House version by Rep. David Santiago (R-Deltona). There’s also a comparable Senate version, SB 948, recently filed by Senator Dennis Baxley (R-Lady Lake). All bills await their first hearings. (Return to Top of Page)
Disposition of Insurance Proceeds – When the work is completed, contractors like to get paid as soon as possible and HB 999 by Rep. Chip LaMarca (R-Lighthouse Point) is designed to do just that. The bill establishes requirements for disposition of specified insurance proceeds held by mortgagees, assignees, financial institutions, and subsidiaries, as well as notification to policyholders. Contractors need banks and mortgage companies to release those funds more quickly so they, in turn, can pay subcontractors. Banks are very careful though in protecting their financial interest in a property and like to send their own inspectors out to the site to confirm the job was done. The bill also codifies existing Fannie Mae and Freddie Mac rules requiring these funds be in interest bearing accounts. The bill is awaiting its first hearing. A similar bill, SB 1408 by Senator Bill Montford (D-Tallahassee) was filed in early January. There are two comparable bills, HB 895 and SB 1606 also filed in early January. HB 895 also adds language to a “covered policy” allowing a lender to request of a homeowner how much coverage is necessary per lender. (Return to Top of Page)
(NEW) Residential Property Disclosures (Flood) – Sellers of residential property would have to specifically disclose any past flooding, present flood insurance coverage, and a host of other prescriptive conditions under SB 1842 by Senator Bobby Powell (D-West Palm Beach). The bill was filed last week. The disclosure summary, whether separate or included in the contract for sale, would also require disclosure of any past insurance claim filings for flood damage, past FEMA or other federal assistance, and any flooding due to reservoir release. The disclosure also requires notice that the buyer should not rely on the seller’s current property taxes, as a change in ownership triggers reassessments.
The Miami Herald and others have reported that although current Florida law requires sellers and their real estate agents disclose known defects or anything that “materially affects” a property’s value, there are cases where someone bought not knowing they were in a flood plain or had suffered previous flooding. The idea has the support of the Federal Association for Insurance Reform (FAIR) and others in recent editorials.
While Realtors® are being targeted, can’t we get insurance agents to step-up? The piece that’s missing is the fact that insurance agents are not required to talk about flood insurance with their customers. Regardless of a home’s past experience or future flood propensity, insurance agents have a responsibility to TALK about flood insurance with customers at the time of initial property insurance policy issuance and on every renewal. A handful of agents do, but for those that don’t? The results are disastrous yet Florida’s law is silent when it comes to mandatory insurance agent documentation of a conversation with its customers. We hope the Federal Association for Insurance Reform can get behind this as well. (Return to Top of Page)
Sanitary Sewer Levels – SB 150 by Senator Jeff Brandes (R-Pinellas) would require a seller of real property to disclose any known defects in the property’s sanitary sewer lateral. The bill has unanimously passed two committees and awaits a hearing in the Rules Committee, its last stop before heading to the full Senate for consideration. As of yet, it has no House companion. (Return to Top of Page)
Florida Building Code – SB 710 is in reaction to the destructive damage created by last year’s Hurricane Michael and other recent hurricanes. Sponsored by Senator Ben Albritton (R-Bartow), the bill mandates the Florida Building Code require that the entire envelope of certain buildings being constructed or rebuilt be impact resistant and constructed with high wind-resistant construction materials; requiring that all parts or systems of a building or structure envelope meet impact test criteria or be protected with an external protection device that meets such criteria; and provides certain exceptions. The bill is still awaiting its first hearing and as yet, has no House companion.
(See Is Florida’s Building Code Protecting All of Us? and Why the Panhandle Wasn’t Hurricane Strong for Michael episodes for more details, from The Florida Insurance Roundup podcast.) (Return to Top of Page)
Motor Vehicle Insurance (PIP) – This is a perennial effort to do away with Personal Injury Protection (PIP) coverage under Florida’s No-Fault insurance law and replace it with bodily injury (BI) liability coverage. Similar bills failed last session. Senator Tom Lee (R-Brandon) is back with SB 378 which has its first hearing tomorrow at 4:30pm before the Senate Infrastructure and Security Committee. A similar HB 771 by Rep. Erin Grall (R-Vero Beach) and comparable HB 731 by Rep. Daniel Perez (R-Miami) are awaiting first hearings in the House.
(See LMA Backgrounder: Personal Injury Protection for more details on the history of PIP reform and the failed 2018 bills, data, and past committee and stakeholder discussions.) (Return to Top of Page)
Motor Vehicle Rentals – Just as you can rent out your home when you go away on vacation, likewise your car, with online services such as Turo (https://turo.com/). HB 377 by Rep. Chris Latvala (R-Clearwater) would insert government intervention to regulate another sharing economy company advance.
In a nutshell, if a car owner parks their car at an airport for any length of time, a Turo user could “rent” that car and drive it until the owner returns from their trip. The bill provides financial responsibility & insurance requirements and a host of other regulations on this emerging idea/market. Of course, the traditional rental car companies are in favor of the legislation and Turo opposes, calling the regulations unnecessary. The bill is still awaiting its first hearing, as is its Senate companion, SB 478 by Rep. Keith Perry (R-Gainesville). There’s a comparable “peer-to-peer car sharing” bill in the House, HB 723, also awaiting its first hearing.
The National Council of Insurance Legislators (NCOIL) in December adopted the Peer-to-Peer Car Sharing Program Model Act for states to consider adopting as law. (Return to Top of Page)
Credit for Reinsurance – The Florida Legislature has begun the process to remove or reduce existing collateral restrictions on European Union and United Kingdom based reinsurers, to comply with the 2017 U.S. Covered Agreements.
HB 1211 / SB 1376 would amend section 624.610 Florida Statutes, to comply with the changes required by the Covered Agreements and provide the Financial Services Commission sufficient time to amend Rule 69O-144, Credit for Reinsurance.
The House bill is sponsored by Rep. Shevrin Jones (D-West Park), the House Deputy Democratic Leader, and the similar Senate bill is sponsored by Senator Doug Broxson (R-Pensacola). The Senate bill will have its first hearing tomorrow at noon before the Banking and Insurance Committee. The House bill is awaiting its first hearing. (Return to Top of Page)
Genetic Information for Insurance Purposes – Did anyone get a “23andMe” or “Acestory.com” gift certificate for Christmas? When we listened to testimony last year about the issue of life insurers using genetic information in underwriting, many of us in The Capitol pondered the future of life insurance. We recalled that in 2008, a federal law called the Genetic Information Nondiscrimination Act (GINA) made it illegal for health insurance providers in the United States to use genetic information in decisions about a person’s health insurance eligibility or coverage, with certain exceptions. The movement is now in the life insurance arena. Legislators’ attempts last year to stop life insurers from using genetic information failed.
This year’s effort, HB 1189 / SB 1564, prohibits life insurers & long-term care insurers from canceling, limiting, or denying coverage, or establishing differentials in premium rates based on genetic information. It also prohibits such insurers from taking certain actions relating to genetic information for any insurance purpose. Florida would become the first state to enact such a law.
The House bill last week passed unanimously in the Health & Human Services Committee without debate and now awaits a hearing in the Commerce Committee before heading to the full House. The Senate bill is awaiting its first hearing.
The House bill is co-sponsored by incoming House Speaker Rep. Chris Sprowls (R-Clearwater) and Rep. Jayer Williamson (R-Pace). Senator Kelli Stargel (R-Lakeland) is sponsoring the Senate’s identical version. (Return to Top of Page)
Pharmacy Benefit Managers (PBMs) – While the federal government pursues tougher restrictions on PBMs in an ongoing effort to lower the cost of prescription drugs for consumers, there’s an effort underway in the Florida legislature to do the same. Rep. Jackie Toledo (R-Tampa) has filed HB 961 that would regulate PBMs, targeting “predatory practices”. It’s inspired in part by a University of Southern California study that found that 23% of pharmacy prescriptions involved a patient copayment that exceeded the average reimbursement paid by the insurer by more than $2.00. The average overpayment was $7.69. Small pharmacies claim the system also creates an unfair competitive disadvantage with larger pharmacy chains.
There are mixed feelings about PBMs with some insurance companies seeking to manage their prescription drug costs owning a PBM vs. other insurers who believe PBMs are part of the drug pricing problem. This is another marketplace issue, where PBMs utilize sometimes monopolistic methods in their pricing and lawmakers and regulators have now decided they want more oversight.
The bill awaits its first hearing, as does a similar bill, SB 1444 by Senator Gayle Harrell (R-Stuart) and a comparable bill, SB 1682 by Senator Javier Rodriguez (D-Miami).
Meanwhile, Senator Tom Wright (R-Port Orange) is sponsoring SB 1338, which would increase regulation of PBMs but appears to be more oriented toward data collection by insurance regulators for future recommendations. That bill will be heard tomorrow at noon before the Senate Banking and Insurance Committee. (Return to Top of Page)
Criminal Justice Reform – Led by Senator Jeff Brandes as chair of the Senate Criminal Justice Appropriations Committee, his bill SB 1308 authorizes resentencing and release of certain persons who are eligible for sentence review under specific conditions, including subsequent sentencing guidelines.
Senator Brandes’ guiding principal is that offenders should come out (of prison/incarceration) better than they went in. His passionate advocacy includes a more formal education system in correctional facilities, ready to work programs, updating the cleanliness and conditions of facilities and sentencing reform. Reform will come down to a matter of resources. The Tallahassee Democrat newspaper ran this op-ed: My son was sentenced to life in prison at age 19 for a crime in which no one was physically harmed that references his bill, which is awaiting its first hearing. A comparable bill, HB 1131 by Rep. Michael Gottlieb (D-Plantation) and Rep. Fentrice Driskell (D-Tampa) also awaits its first committee hearing.
In the meantime, the Senate is fast-tracking actual changes in mandatory minimum sentence laws. SB 346 by Senator Rob Bradley (R-Fleming Island) would give judges discretion in sentencing certain drug offenses if the defendant meets certain criteria. It unanimously passed the Senate Appropriations Committee last week, its last, and now heads to the full Senate. A comparable House bill, HB 339 by Rep. Alex Andrade (R-Pensacola) and Rep. Mike Grieco (D-Miami Beach) awaits its first committee hearing. (Return to Top of Page)
Cruelty to Dogs – People who leave their dogs outside and unattended on a restraint during a natural disaster would face a misdemeanor charge of animal cruelty under SB 522 by Senator Joe Gruters (R-Sarasota). The punishment would carry a potential $5,000 fine and be triggered any time there’s a hurricane, tropical storm, or tornado warning, or in the case of mandatory or voluntary evacuation orders. It passed the Criminal Justice committee unanimously in December and awaits a hearing in the Judiciary committee.
LMA Newsletter of 1-20-20
