Scenic Route
2013 Greetings to you all!
During the holiday season, our family traveled to New Orleans to cheer on the Florida Gators in the Sugar Bowl and for those who watched the game and the Gator loss, all you are probably thinking is “utter humiliation.” On our travels back home from New Orleans and to get over loss doldrum, we decided to take the “scenic route” back to Florida. There are so many things to see on the scenic route from Louisiana to Florida – antique stores, old gas stations, duck blinds, and deer on the side of the road. I thought about our industry as we drove back and how so many of you help me see the scenes of the various insurance issues we face. In 2013, here are some you’ll want to slow down and observe as you travel!
HEALTH INSURANCE
Florida will struggle – continues to struggle – with what to do about federal health insurance legislation. I sat through a 3 hour, standing room only committee meeting of a select committee to deal with issues Florida faces in having to implement this legislation. Five speakers laid out issues dealing with the federal law’s effect on employers, on our state budget, on Medicaid which is $21 billion of our $70 billion budget, and other impacts. If you look at the 200+ page document at http://www.flsenate.gov/Committees/Show/SPPA/ and select “12/3/12 meeting packet” and scroll through it, you will see pages 7 and 24 for example with headings that say “Decision Points” where lawmakers must make decisions on what to do to comply with the federal law. There are basic questions like “how much will it cost”? and “who does what”? I encourage each of you to study this document (will take you 20 minutes to scroll through) so you can get a flavor of the enormous magnitude of this issue and the weight it will carry during the 2013 session, as well as Florida’s economy.
AUTO INSURANCE
Federal Court Says No: We can always count on the courts to give us lots of scenic color when it comes to auto insurance. Now that House Bill (HB) 119 is on Florida’s law books, those that disagree with its provisions (many believe that the HB 119 contrarians are the same folks who created the reasons for the bill’s passage) are doing all they can to undo the bill. The first stop was the federal court and right before the holidays, U.S. District Court Judge Richard Lazzara refused to grant an injunction requested by a group of chiropractors, massage therapists and acupuncturists to stop the bill’s implementation. The judge said these groups “utterly failed to demonstrate that there is a substantial likelihood they will eventually prevail on the merits.” There’s more court challenging going on as this new law is now headed to trial and the real scenery will begin.
Forms Rule the World: Ever notice when a new law takes effect, the first thing government does is believe that putting the new law’s provisions in a written form will ensure that the entire free world knows about the law changes? We have ourselves a new form for this very purpose – to inform auto insurance policyholders about the new law and its attached and can be found HERE How do we figure out a way to inform the public about a new law without having to require insurance companies to mail paper and/or adopt a form? Granted there are over 10 million auto policyholders in our state and the challenge is daunting to reach the masses, but bright minds read this publication, therefore, I encourage and welcome your ideas to better the public disclosure “scenery” in auto insurance notification processes!
PROPERTY INSURANCE
As I type this, I reflect on the past year of attempted property insurance reform – concepts like allowing surplus lines carriers to acquire policies from Citizens and allowing primary insurance companies to receive a surplus note/loan to acquire Citizens policies. As one CEO said, “All of us are working on ideas to make the property insurance market better and get Citizens out of its current role of competing with the private sector. We all must keep rowing in the right direction but face the fundamental issue that we as Floridians must pay the correct price to live in this beautiful state.” Here are some “scenes” to watch for in 2013:
Citizens Reform: Look for scenes and debate about whether Citizens should be in the reinsurance business with its $6 billion in assets. Will that be enough to provide incentives to get policies out of Citizens? Or do we need to take the bitter pill and raise the bar to get into Citizens? How does Citizens get a handle on sinkhole and water claims, ie, should they have preferred vendor programs to address these perils? We all know costs drive rates so what can be done if we aren’t able to raise rates to reduce Citizens costs? On January 16, 2012, the Senate is hosting over a dozen speakers to discuss ideas for Citizens and property reform. Count on hearing more about this meeting before and after!
Cat Fund Reform: Picture this: Cat Fund Director announced at a public meeting that in 2012 he worked hard to pass a bill that he characterized as a burger, fries and shake but all he was left was a trampled French fry on the restaurant floor! Now that’s a scene! Most are wondering if there will again attempts to change the cat fund to either reduce its exposure or to change its mechanisms to make it more efficient. One senator implored his senate counterparts to “leverage” the Cat Fund. Other senators warned that “leveraging” it would “expand” it and wouldn’t allow that. Basically, use of the Cat Fund boils down to two philosophies: Those who believe that the Cat Fund is a state asset and should be used in whatever way necessary to support insurance companies doing business in the state vs those who believe that we should work toward reducing the size of the Cat Fund so that the risk it absorbs is transferred to private reinsurance markets. Look for this scene to play itself out over the next 12 months.
Florida Insurance Guaranty Assessment (FIGA) Reform: FIGA levied in November $143 million assessment to insurance companies who all wrote checks before December 31 to fund a FIGA deficit created by the downfall of Homewise Insurance Company. While it’s not palatable to think about assessments at all, this $143 million could have been broken into millions of tiny pieces and paid incrementally by policyholders at a few dollars month at the outset versus insurers having to be Florida’s insurance bank. There’s a team working on making FIGA assessments more efficient for all consumers. Stay tuned for more information about this and we will reach out to you to get your help on passing this important legislation.
Wrap Up
During 2013 I will do all I can to keep you apprised of all things insurance but will also do my best to take you through the “scenic route” so that you will receive all the color, flora and fauna of the Florida insurance industry. Please make sure you stay close as I draw strength from what you do –every day!
Best to you in 2013!
Lisa
