Comprehensive Property Insurance Package (CS/HB 803) Clears House Economic Affairs Committee by Vote of 11 to 7

The House Economic Affairs Committee (“Committee”) met today, April 14, and considered CS/HB 803 relating to Property and Casualty Insurance, which is sponsored by Representative John Wood and the House Insurance and Banking Subcommittee.  CS/HB 803 was passed favorably, as amended, by a vote of 11 to 7.

Representative Wood introduced the bill, describing it as the omnibus property insurance bill designed to address cost drivers in Florida’s property insurance industry.  Following introduction of the bill, Committee Chair Hukill noted that 17 amendments to the bill had been filed.  At that point, the Committee considered the amendments and took the following actions:

• Amendment 1, filed by Rep. Wood, clarifies an exception to licensure exemption for adjusters. There were no questions, public testimony, or debate on the amendment. ADOPTED.
• Amendment 2, filed by Rep. Wood, includes language from CS/HB 885 regarding providing an expedited reinsurance pass through. There were no questions, public testimony, or debate on the amendment. ADOPTED.
• Amendment 3, filed by Rep. Wood, was withdrawn.
• Amendment 4, filed by Rep. Nelson, addresses the Insurance Capital Build-Up Incentive Program and provides the ability for insurers to renegotiate the terms of surplus notes under certain circumstances. There were no questions, public testimony, or debate on the amendment. ADOPTED.
• Amendment 5, filed by Rep. Nunez, provides for reasonable costs to be charged for private sector access of the public hurricane loss projection model, and that such fees shall not apply to access and use of the model by the office. There were no questions, public testimony, or debate on the amendment. ADOPTED.
• Amendment 6, filed by Rep. Wood, provides that any notice of a property insurance claim must be made within 4 years after the date of loss that caused the covered damage. The amendment expands applicability to all claims, rather than just hurricane claims, and increases the time from 3 years to 4 years as previously existed in CS/HB 803. There was one question, no public testimony, and no debate. ADOPTED.
• Amendment 7, filed by Rep. Wood, provides that any notice of claim for sinkhole damage must be made “within 4 years after the policyholder knew or reasonably should have known about the sinkhole loss.” There was one question, no public testimony, and no debate. ADOPTED.
• Amendment 8 was temporarily postponed pending the filing of a substitute amendment.*
• Amendment 9, filed by Rep. Wood, reduces the amount of notice required to nonrenew, cancel or terminate a policy from 180 days to 120 days for those policyholders who have been insured with the insurer for at least the 5 year period immediately prior to the date of the written notice. Some questions were asked regarding the amendment regarding the purpose, to which Rep. Wood replied that he is trying to bring Florida in line with the rest of the country in order to attract other carriers.  It was also asked whether the time frame remains the same if the policy nonrenewal, cancellation or termination occurs during hurricane season, to which Rep. Wood explained it is 120 days regardless of the time of year. There was some debate on the bill, and a vote was taken by roll call. ADOPTED.
• Amendment 10, filed by Rep. Nehr, requires an insurer to obtain prior approval before implementing a rate increase for property insurance by bringing back the moratorium of use and file until May 1, 2012. This amendment conforms CS/HB 803 to CS/CS/CS/SB 408. There were no questions, public testimony, or debate. ADOPTED.
• Amendment 11, filed by Rep. Nehr, was WITHDRAWN.
• Amendment 12, filed by Rep. Abruzzo, reduces the total annual premium amount required for public housing authorities to form a self-insurance fund from $5 million to $3.5 million. There were no questions, public testimony, or debate. A roll call vote was taken. FAILED.
• Amendment 13, filed by Rep. Jenne, removes the provision in CS/HB 803 allowing supplemental information to be filed regarding a rate filing without requiring additional certification. There were questions on the amendment, but no public testimony or debate. A roll call vote was taken. FAILED.
• Amendment 14, filed by Rep. Jenne, provides OIR with the authority to examine all MGAs, including those that solely represent a single domestic insurer, which are exempt under current law. There were questions on the bill, and a representative from the Florida Justice Association provided public testimony in support of the amendment. The Committee members debated the amendment. Rep. Wood noted that the amendment is unfriendly, and stated that OIR currently has sufficient tools to regulate MGAs. A roll call vote was taken. FAILED.
• Amendment 15, filed by Rep. Jenne, creates a new statute providing that the consumer protection statutes apply to the business of insurance, including the Florida Anti-Trust Act of 1980. There were no questions by Committee members. Former Florida legislator Steven Geller provided public testimony in support of the amendment. There was debate on the amendment and a roll call vote was taken. FAILED.
• Amendment 16, filed by Rep. Nehr, provides consumers with a choice of purchasing a policy with actual cash value up front and a replacement cost value holdback for personal items. The insurer must offer full replacement cost coverage on contents, but may also offer coverage to limit initial payment of actual cash value until property is replaced. The amendment would conform CS/HB 803 to CS/CS/CS/SB 408. There were questions on the amendment, as well as public testimony. The Committee members debated the amendment and a roll call vote was taken. FAILED.
• Amendment 17, filed by Rep. Holder, changes the statute of limitation on property insurance claims from 5 years to 6 years from the date of loss. There were no questions, public testimony, or debate. A roll call vote was taken. ADOPTED.

*Rep. Wood explained that he had a substitute amendment for Amendment 8 that was the same as Amendment 17 except with a 5 year statute of limitation rather than 6 years.  Because Amendment 17 had already passed, Rep. Wood withdrew his substitute amendment. 

The Committee then considered CS/HB 803 as amended.  During the debate, some Committee members noted concern that the bill did not contain enough consumer protection provisions.  In closing on the bill Rep. Wood rejected adamantly the characterization that the bill is anti-consumer.  A roll call vote was taken on the bill and it passed favorably by a vote of 11 to 7.

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

To unsubscribe from this newsletter, please send an email to bellis@cftlaw.com.