After six weeks of committee meetings this past fall to begin hashing out some of the most important issues – including details of the Governor’s $91.4 billion proposed state budget for next fiscal year – the Florida Legislature begins its formal 2020 session tomorrow. But committee meetings actually resume later this morning in the House and this afternoon in the Senate. One issue appears doubtful it will be heard: Windshield AOB reform.
The Governor will give his State of the State address tomorrow at 11am before a joint session of both the House and Senate. You can watch it on The Florida Channel, which will also carry many of the committee meetings of both chambers throughout the 60-day session.
For a preview of some of the major issues facing the legislature, we invite you to listen to our latest Florida Insurance Roundup podcast. Jim Saunders, Executive Editor of the News Service of Florida sat down with us to preview the session, with a heavy emphasis on insurance and related issues. These include growing concern about Florida’s property insurance market, automobile AOB, litigation & bad faith law reform, Hurricane Michael recovery, and the statewide building code.
Florida Trend magazine has produced a very deep dive of various issues this session, including the Governor’s proposed $900 million in spending for teacher raises and bonuses, $635 million for Everglades’ restoration and other water resources, increases in transportation and prison spending, together with strategic tax cuts, which we touched on as well in the podcast.
Here’s an update on the bills so far that we’re keeping an eye on for you – but the list is growing. Relevant new bills filed since last Monday’s Bill Watch are so noted. Bill updates from week-to-week, as always, are noted in red font.
Assignment of Benefits (Windshield AOB) – This is 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 2020 Florida House of Representatives version of the Windshield AOB bill (HB 169 by Representative Richard Stark) was withdrawn last week. That means that the House’s appetite to stop the insanity of the thousands of windshield dispute lawsuits filed just to ensure that a handful of plaintiff lawyers collect attorney fees may continue, despite the fact that everyone watching this scam knows the hustle is real. This bill and the Senate version 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 bill would prohibit repair shops or compensated third parties from offering gift cards and other incentives to motorists to file such insurance claims. It’s similar to a companion bill that died in the Senate Banking and Insurance Committee in December.
SB 312 by Senator Linda Stewart (D-Orlando), a former insurance agent, was voted down, in part, because of an amendment that would allow insurance companies to offer policies with a windshield deductible, to help dissuade fraud. Senator Stewart indicated the language from it could find its way into another existing insurance bill. The House’s HB 169 hadn’t even been heard in a committee before it was withdrawn.
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.
(NEW) 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. Will it pass this year? We will be watching!
The House bill is co-sponsored by Rep. Chris Sprowls (R-Clearwater) and Rep. Jayer Williamson (R-Pace). Senator Kelli Stargel (R-Lakeland) is sponsoring the Senate’s identical version.
(NEW) Credit for Reinsurance – HB 1211 / SB 1376 transfers specified powers & duties of the Insurance Commissioner to the Office of Insurance Regulation (OIR) proper and requires credits to be allowed to ceding insurers under reinsurance agreements under certain circumstances. The bill also provides requirements for those assuming insurers and requires them to provide security in a specified amount. It also authorizes ceding insurers to seek orders requiring assuming insurers to post security for certain liabilities, and authorizes OIR to revoke & suspend eligibility of assuming insurers under specified circumstance. This bill was released last week. We are analyzing it with our team and will have an update next week.
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).
(NEW) 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. It was just filed this past Friday and as yet, has no House companion.
(NEW) Construction Defects – SB 1488 / HB 295 Specifying 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; requiring parties to a construction defect claim to participate in certain mandatory nonbinding arbitration within a specified time, etc
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).
(NEW) 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.
The House bill is sponsored by Rep. Chuck Clemons (R-Newberry) with Senator Tom Wright (R-Port Orange) sponsoring the identical Senate version, both filed last week.
Bad Faith – Reforming AOB abuse 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 awaits its first hearing before the Banking and Insurance committee.
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 currently has no House companion bill. The bill is still awaiting its first hearing. A similar HB 771 by Rep. Erin Grall (R-Vero Beach) and comparable HB 731 by Rep. Daniel Perez (R-Miami) are also 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.)
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 unanimously passed the Senate Commerce and Tourism committee in December, its second of three committee stops. A similar bill in the House, HB 269 by Rep. Daniel Perez (R-Miami) passed unanimously in early November in the House Insurance and Banking subcommittee. 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.
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.
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.
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. Senator Jeff Brandes (R-Pinellas) has filed a comparable bill, SB 1334 in the Senate. Both bills are awaiting their first hearing.
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 is awaiting its first hearing and as yet, has no House companion.
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. An identical bill SB 898 by Senator Joe Gruters (R-Sarasota) will get its first hearing Wednesday by the Senate Banking and Insurance 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 appears to tweak the major FIGA reform of several years ago in that it changes assessment calculations for both homeowners and workers compensation guaranty funds. It also proposes to change the way assessments are remitted. We are studying this bill in its entirety and encourage our readers to do the same to ensure no unintended consequences. The bill passed unanimously in the House Government Operations and Technology Appropriations Subcommittee in December, its second of three committee stops. The Senate companion awaits a hearing before its second committee.
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.)
We do still expect a “Sellers Flood Disclosure” bill to be filed this session, as Senator Jeff Brandes (R-Pinellas) has publicly expressed interest in this topic and his SB 150 (“Sanitary Sewer Levels”) 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.
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.
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 last week. There are two comparable bills, HB 895 and SB 1606 just filed last week.
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. 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 will have its first hearing Wednesday in the Senate Banking and Insurance Committee. As of yet, it has no House companion.
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, while a similar bill, SB 1444 by Senator Gayle Harrell (R-Stuart) and a comparable bill, SB 1682 by Senator Javier Rodriguez (D-Miami) were filed last week. 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 is also awaiting its first hearing.
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) was filed last week.
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 1-13-20