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If You Can’t Legislate, Regulate!

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OIR leadership is hope for consumers

Florida CFO Jimmy Patronis (center) meets with Florida Insurance Commissioner David Altmaier (right) on March 30, 2022. Courtesy, DFS

There are generally three ways to create or change public policy: legislate, regulate, or adjudicate.  What Florida lawmakers failed to legislate this past session in property insurance, the Florida Office of Insurance Regulation (OIR) is now accomplishing to some degree by regulation in encouraging ways.  It caps a series of behind-the-scenes meetings that Insurance Commissioner David Altmaier said he’s been having over recent weeks, culminating in a March 30 meeting with CFO Jimmy Patronis, referenced in this picture at left posted to social media. 

We applaud the CFO and Commissioner’s engagement to move in the direction of more consumer protections and willingness to be open to innovative ideas for policy forms and products, as well as rating platforms that provide consumer choices.  This is similar to what regulators in West Virginia and North Carolina have done in considering out-of-the-box ideas in the “regulatory sandbox.”  OIR’s moves fall into five critical areas.

OIR Allowing Roofing Deductibles: To counter the “free roof” offers by some unscrupulous contractors, Commissioner Altmaier has announced new steps to address roof-damage claims that have exploded in frequency and cost.  He’s going to allow insurance companies to offer roof deductibles along with a roof surfaces payment schedule endorsement based on the roof’s life.  This is similar to last session’s SB 1728 which passed the Senate but died in the House.  What differs is OIR giving the consumer the choice to accept or reject the endorsement.  Some agents say the effect of this will be negligible because they do not believe consumers will opt-in to buy the coverage.  We will watch as this unfolds to determine what is commonly called “the takeup rate” of this new coverage should it become prevalent in the market. 

FBC Considering Exception to the 25% Roof Repair/Replacement Rule: The Florida Building Commission (FBC) is considering a proposed exception to the 25% repair/replacement rule that would take into account the age of the roof material.  Current code requires that most roofs be replaced when 25% or more of the surface is damaged.  This idea, pushed by the Florida Roofing and Sheetmetal Contractors Association, would help keep otherwise perfectly good roofs in place and avoid expensive replacement costs often born by insurance companies.  Other proposed changes include allowing the first layer of shingles to remain in place if undamaged and updating South Florida’s roof code to conform to the rest of the state.  These developments were first reported in the Insurance Journal.

OIR Eases Material “Matching” Requirements: The lawsuit by Olympus Insurance against OIR that we reported in the last newsletter has been resolved, with the carrier dropping its suit without comment.  It had sought reasonable limitations in its repair and replacement of damaged items to meet the state’s “matching” requirement.  The day after the suit was dropped, OIR approved the company’s form filing, which we understand remained largely intact.  You can read the lawsuit, which includes the form in question.  Look for more carriers now to file similar forms. 

OIR Approving Mandatory Arbitration:  OIR is now allowing policy endorsements requiring most homeowners insurance claims disputes go to mediation, then arbitration.  It approved a filing last month from American Integrity Insurance with an endorsement that governs not only the policyholder but any third-parties to the claim, including Assignment of Benefits (AOB).  This will help address the rising frequency and cost of litigation insurance companies face, as arbitration is a faster and less expensive process, while still protecting a consumer’s right to sue in certain circumstances.  Look for more carriers now to file similar endorsements with OIR.

OIR Considering Lowering Cat Fund Retention Level: Commissioner Altmaier said recently that OIR is still evaluating a request by insurance carriers to lower the retention level of catastrophic losses they must incur before tapping into the Florida Hurricane Catastrophe Fund.  Any change would ultimately require legislative action.

Commissioner Altmaier told the Governor and Cabinet in their recent meeting that the property insurance market is in a “critical couple of months” as carriers purchase reinsurance to protect them from excessive payouts in the upcoming hurricane season that begins June 1.  Like excessive roof claims, reinsurance has become increasingly expensive for Florida carriers.  “Reinsurance companies don’t mind paying claims. They do mind paying claims that are three times as much as they thought that they were going to be,” Altmaier said.  “That makes Florida not an attractive place for them to deploy their capital and that’s a bad outcome for consumers as well.”

LMA Newsletter of 4-11-22
Read the rest of the LMA Newsletter                                                                                                                                                                                                                       

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Tags: American Integrity Insurance Company, Arbitration, David Altmaier, Florida Homeowners Insurance Market, Florida Hurricane Catastrophe Fund, Florida Office of Insurance Regulation, Florida Property Insurance, Insurance Litigation, Jimmy Patronis, Matching Requirement, Olympus Insurance Company, Roof repair, Roofing Deductibles, Roofing Solicitation

“Another great Newsletter on Florida industry this week.  Your service and advocacy in Florida is very important to keeping me updated and apprised of the Florida insurance laws, trends and overall environment.  Something similar is very much needed in Louisiana, too.”

Jennifer Tedesco, Esq., Claims Director
Pharos Claims Services
Orlando, FL

“Your newsletter is fabulous!  I greatly appreciate the topics you expose, so that insurance professionals like myself can keep up with the latest events that affect the public we serve and ourselves.”

Cynthia Hoehn, Independent Property & Casualty Personal Lines insurance agent
Clermont, FL

“Lisa Miller is a true champion for the insurance industry, with her regular updates! We appreciate all you do and keeping us up to date on priority issues!”

Gillian Lloyd, Account Executive
Zywave
Milwaukee, WI

“I have followed your weekly newsletter and podcasts and now have a full appreciation for what you bring to this industry.  You are an inspiring force, plain and simple.  I wanted you to know that you make a difference.  Thank you for all you do!”

Jeffrey Karam, CPCU
Bradenton, FL

“Just wanted to say that I thoroughly love your newsletter. It’s is always informative and insightful to the ins and outs of our industry.  You are an inspiration and an important asset in the insurance world.  Keep up the great work!” 

Cynthia Scott, President
University Insurance Group
Davie, FL

“Just a quick note to let you know how much I have appreciated your newsletter over the years and the assistance they offer for those in the field of claims. We depend on the information more than you will ever know!”

Laurie Rasberry, Chief Claims Officer
Acorn Claims
Prosper, Texas

“Great article on Risk Rating 2.0!”

Austin Perez, Senior Policy Representative for Federal Housing, Valuation, Insurance and Commercial Issues
National Association of Realtors
Washington, D.C.

“Lisa this is another great newsletter, and we appreciate the time and energy you put into these informative updates – you are on top of these topics!”

Mike Graham, CEO
Smart Vent Products, Floodproofing.com, & Risk Reduction Plus
Juno Beach, FL

“Thank you Lisa for staying on top of, as well as advocating, for Florida residents and legislative reform. Your newsletters are very informative and enjoy reading the points of view.”  

Shawna Miller, Sr. Claims Quality Assurance & Compliance Manager
Florida Peninsula Insurance Company
Jacksonville, FL

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