Awaiting more reinsurance help
Governor DeSantis continues to leave open the door for further property insurance market help following the reforms passed in the May and December 2022 special sessions. In comments to the media last week, he said “I think everyone who’s acknowledged, has looked at this, said Florida is more attractive today than it was a month and a half ago. And that’s good, but I do think it takes some time to percolate. We may need to do other things in the regular session and we’ll be standing by, and we’ll be ready to do it.”
One of those other things needs to be making reinsurance more available and affordable to Florida’s struggling insurance companies. While the December special session established a second optional hurricane reinsurance fund (The Florida Optional Reinsurance Assistance Program) of $1 billion for carriers on top of the Reinsurance to Assist Policyholders Program (RAP) created in the May special session, there is still expected to be both a gross lapse of capacity and affordability in the private reinsurance market.
Look no further than the recent headlines in the trades: January Renewals See Hardest Property Catastrophe Reinsurance Rates in Generation and Renewals: Catastrophe retro rates +50%, global property cat +37%, says Howden and Renewals: Tense, late, but largely complete despite bruises, says Gallagher Re. About 50% of catastrophe reinsurance is renewed in January each year – the rest around June 1 in preparation for the Atlantic hurricane season. It’s the June 1 renewal that companies are sweating (and the legislature needs to be very worried about). Insurance brokers say some insurance companies won’t be able to access reinsurance at any price, while other companies will be able to access some but at prices significantly higher than they paid in 2022. Without proper reinsurance, our homeowners insurance companies won’t be able to meet their financial requirements with the Florida Office of Insurance Regulation (OIR) and will further put at risk their ratings by ratings agencies, such as Demotech. As go ratings, so go insolvencies. Consumers will ultimately bear the burden through even higher premiums or a further dwindling choice of carriers in the Florida market.
The legislature begins its third of six committee weeks of meetings today. Here’s what we’ll be following:
Tuesday, Jan. 24
1:00pm – The House Infrastructure Strategies Committee will be discussing water reuse.
3:00pm – The Senate Community Affairs Committee will hear a presentation by the Florida Building Commission, which is responsible for the Florida Building Code.
Wednesday, Jan. 25
9:30am – The Senate Appropriations Committee on Transportation, Tourism, and Economic Development will hear from the Division of Emergency Management on its Legislative Budget Request for the next fiscal year.
1:30pm – The House Local Administration, Federal Affairs & Special Districts Subcommittee will hear a presentation from the Florida Housing Finance Corporation on affordable housing issues.
3:30pm – The Senate Select Committee on Resiliency will discuss Hurricane Michael Recovery and utility infrastructure hardening for storms.
Thursday, Jan. 26
1:00pm – The House Select Committee on Hurricane Resiliency & Recovery will hear several pertinent presentations including the My Safe Florida Homes Program, Syd Kitson of Babcock Ranch on Community Preparedness, and the impacts of Hurricane Ian on Florida’s agriculture sector.
Neither the Senate nor House insurance committees are scheduled to meet this week. So while we hopefully await a reinsurance bill to be filed, here’s the list of bills we’re following so far, with more to be added in coming weeks. Any updates from the last committee week are noted within each bill in blue font:
Auto Insurance:
Motor Vehicle Liability Policies ̶ HB 57 by Rep. Keith Truenow (R-Tavares) revises the definition of “motor vehicle liability policy” to include certain policies issued by specified risk retention groups and further defines those groups as being “A”-rated and providing only commercial coverage for its members. The bill currently has no Senate companion. It is awaiting its first hearing before the House Insurance & Banking Subcommittee.
Health Insurance:
Governor DeSantis released a legislative proposal of reforms January 12 on Pharmacy Benefit Managers (PBMs) that “will enhance transparency and reduce the influence of pharmacy middlemen, which will help consumers as well as our small pharmacies,” he said. This is a subject we have followed for years and picks up where the Florida Legislature left off in March 2022 with passage of HB 357 to increase oversight of PBMs, in part by giving the Office of Insurance Regulation (OIR) more authority over the companies.
Access to Pharmacies and Prescription Drugs Under Insurance and Pharmacy Benefit Managers Policies ̶ HB 203 by Rep. Karen Gonzalez Pittman (R-Hillsborough) addresses much of the Governor’s proposal. It requires OIR to examine PBMs to ascertain compliance with specified laws; requires PBMs to have standard contracts with pharmacies; prohibits PBMs from denying pharmacies & pharmacists the right to participate as contract providers; authorizes persons & entities to bring actions & injunctive relief; prohibits PBMs from engaging in acts against patients; and prohibits health insurers & PBMs from engaging in acts relating to covered clinician-administered drugs. The bill currently has no Senate companion and is awaiting committee assignments.
Health Insurance Cost Sharing ̶ SB 46 by Senator Tom Wright (R-Volusia) also addresses Pharmacy Benefit Managers (PBMs). It required specified individual health insurers and their PBMs to apply payments by or on behalf of insureds toward the total contributions of the insureds’ cost-sharing requirements. Similar requirements would be made on specified health insurance groups and in contracts with PBMs. The bill currently has no House companion and is awaiting its first hearing before the Senate Banking and Insurance Committee.
Telehealth Practice Standards ̶ HB 267 and SB 298 by Rep. Tom Fabricio (R-Miramar) and Senator Jim Boyd (R-Bradenton) revises the definition of the term “telehealth” to strike the current prohibition on audio-only telephone calls. A similar bill reached an impasse in last year’s regular session over whether to strike the prohibition.
Consumer Protections:
Contacting Consumer Debtors ̶ SB 128 and HB 113 by Senator Ana Maria Rodriguez (R-Miami-Dade) and Rep. Alex Andrade (R-Pensacola) prohibits a creditor from contacting a consumer whose debt arose from documented elder and economic abuse or human trafficking. Those who violate that would be subject to the same sanctions as any other consumer debt collector. The bill also requires the state Office of Financial Regulation to inform and furnish relevant information to the appropriate regulatory body of the state, the Federal Government, or The Florida Bar if a person has been named in a certain consumer complaint alleging specified violations of law. It also authorizes debtors to bring civil actions against creditors who violate the act. We spend a lot of time trying to help the elderly, who are often victims of contractor fraud and/or unscrupulous attorneys. This is a helpful bill in combating additional abuse at the hands of such abusers. The two bills are similar and are awaiting first hearings before their respective insurance committees.
Disaster Recovery & Construction:
Causes of Action Based on Improvements to Real Property ̶ HB 85 by Rep. John Snyder (R-Stuart) reduces the statute of limitations to file an action founded on the design, planning, or construction of a property improvement and defines “material violation.” Such an action would have to be filed within four years, and in any event would need to be commenced within seven years rather than the current 10 years after a certificate of occupancy or completion is issued. Material violations would be those that have or likely will cause physical harm or significant damage to the performance of the building or its systems. Similar to a bill that didn’t pass in the 2022 session, the measure is meant to protect builders from frivolous lawsuits and help control rising liability insurance costs. The bill currently has no Senate companion and is scheduled to have its first hearing before the House Civil Justice Subcommittee this Thursday (January 26) at 9am.
Real Estate:
Limitation of Actions Involving Real Estate Appraisers and Appraisal Management Companies ̶ HB 213 by Rep. David Borrero (R-Miami-Dade) is another bill aimed at reducing frivolous litigation. With the exception of allegations of fraud, it requires any action against a real estate appraiser or appraisal management company that occurred prior to July 1, 2023 must be filed by July 1, 2024. Subsequent actions would need to similarly be filed within one year after the alleged act is discovered or should have been discovered, but in any event brought no more than four years after services were rendered. The bill currently has no Senate companion and is awaiting committee assignments.
LMA Newsletter of 1-23-23
