Bad Faith Bill Halted in Senate Committee Hearing Today; Other Insurance-Related Bills Approved

 

Despite the backing of groups such as the Florida Chamber of Commerce, Associated Industries of Florida and the National Federation of Independent Business, SB 1088, a bill relating to Civil Remedies Against Insurers that would provide a 45-day time window for insurers to avoid a bad faith claim was temporarily postponed by the Florida Senate Committee (“Committee”) on Banking and Insurance during its meeting today, March 31, 2015.

Along with SB 1088, the Committee heard the following insurance-related bills as part of the agenda:

• SB 1306 relating to Insurance Fraud by Senator Rob Bradley
• SB 1138 relating to Unclaimed Property by Senator Jeff Brandes
• SB 516 relating to Health Insurance Coverage for Emergency Services by Senators Aaron Bean and Rene Garcia
• SB 1250 relating to Motor Vehicle Insurance by Senator Bill Montford
• SB 744 relating to Property Insurance Appraisal Umpires and Property Insurance Appraisers by Senator Garrett Richter

Senator Montford, who presented SB 1250, explained that would allow policyholders to electronically reject Uninsured Motorist Coverage or select it with lower limits than Bodily Injury coverage.  The bill also clarifies the applicability of the Medicare fee schedule under Personal Injury Protection insurance and exempts new leased motor vehicles from pre-insurance inspection requirements for coverage.

In addition to two technical amendments that were adopted to the bill, Senator Montford offered an amendment to allow the Florida Automobile Joint Underwriting Association to cancel policies within the first 60 days for nonpayment of premium.  His amendment would also prohibit a policyholder from canceling his or her coverage during the first 90 days of the policy, except if the vehicle is destroyed, its ownership is transferred, or upon the purchase of a policy from another insurer.  The amendment was adopted.

Senator Negron expressed concern that notice provided to an insured when he or she is selecting or rejecting uninsured motorist coverage will no longer be provided in 12-point type.  The two lawmakers agreed they would work together to address this issue.

The Committee passed SB 1250 unanimously as a Committee Substitute. 

Also presented was SB 744, which would require property insurance appraisers and umpires to be licensed by the Florida Department of Business and Professional Regulation.  A strike-all amendment was offered that would make technical changes to the bill, as well as establish an effective date of October 1, 2016.  The amendment would also exempt judges and certified mediators from the licensing examination requirements. 

An amendment to amendment also heard today would prohibit contingency fees and clarify the definition of the term of “appraisal” as ” . . . the process defined in the property insurance contract for determining the amount of the loss once coverage is established.”

Both amendments were adopted as part of the Committee Substitute ultimately approved.

Senator Brandes presented SB 1088, which provides insurers with 45 days during which to act to avoid liability for failing to attempt to settle a claim in good faith.  Under the provisions of SB 1088, before a third-party bad faith action for failure to settle a liability insurance claim may be filed, the claimant must provide the insurer a written notice of loss.   At that point, the insurer must comply with a request for a disclosure statement and, within 45 days after receipt of the written notice of loss, offer to pay the claimant the lesser of the amount that the claimant is willing to accept in exchange for a full release of the insured from any liability arising from the incident reported in the written notice of loss or the limits of liability coverage applicable to the claimant’s insurance claim.  SB 1088 provides that, if an insurer complies with these conditions, it would not liable for bad faith failure to settle.

A consumer present at today’s meeting spoke against SB 1088, saying it grants insurers immunity from bad faith.  A legal reform advocate spoke in favor of the bill, countering that it does not grant immunity to insurers, but simply allows them a reasonable amount of time to evaluate and investigate claims.

A trial lawyers’ representative also spoke against the bill, saying that it does not protect policyholders, but rather that it only protects insurance companies. 

Although other business and insurance industry organizations voiced their support for SB 1088, it was nevertheless temporarily postponed.

Also receiving unanimous passage as a Committee Substitute today was SB 1306, which would require certain clinics to have a certificate of exemption to receive reimbursement under the Florida Motor Vehicle No-Fault Law under specified circumstances, among other provisions. 

An amendment was adopted to SB 1306 that removed a requirement for insurers to establish Special Investigative Units to combat fraud.  As amended, the bill also revises health care clinic licensing requirements and repeals Florida law authorizing the Automobile Insurance Fraud Strike Force.

SB 1138 was approved as well, which would allow unclaimed U.S. savings bonds to escheat to the State of Florida bonds when they are more than five years past their maturity date.

SB 516 relating to Health Insurance Coverage for Emergency Services by Senators Aaron Bean and Rene Garcia was temporarily postponed.

To access audio, video and complete materials from today’s Committee meeting, click here.

 

Should you have any questions or comments, please contact Colodny Fass.

 

 

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