Final Legislative Report: 2007 Regular Session

The 2007 Regular Session came to a close on Friday, May 4, 2007 at 4:10 p.m.

In the final moments, the Legislature passed a comprehensive property insurance bill, Senate Bill 2498, that included provisions of the “Glitch Bill” and the Governor’s package regarding Citizens Property Insurance Corporation.

Throughout Session, the Governor expressed his intent to lower insurance rates by expanding Citizens and freezing its rates. Initially, the House of Representatives’ position attempted to rein in any further expansion of Citizens’, however, in the end, SB 2498 contained several compromises between the Governor and the House of Representatives.

With regard to automobile insurance, the Legislature, through inaction, left open the opportunity for Florida’s Motor Vehicle No-Fault laws to expire or “sunset” on October 1, 2007. However, it is our understanding that the No-Fault laws may also be considered in the upcoming Special Session on property tax reform tentatively scheduled for June 12- 22, 2007.

In addition to an attached, enrolled copy of SB 2498, and a policy brief on the issue from House Majority Whip Ellyn Bogdanoff, below is a detailed summary of the bill, as well as a brief summary of other insurance-related legislation that passed.

We have also included a list of every bill that passed the legislature during 2007.

The bills that passed will become law with or without the Governor’s signature, or be vetoed by the Governor.

 

Property Insurance Bill

Committee Substitute for Senate Bill 2498 by Senator Rudy Garcia (R-Miami) relating to Insurance

Senate Bill 2498 makes several changes to the laws regarding Citizens Property Insurance Corporation (“Citizens”). The bill contains many revisions, characterized as “glitches” from the legislation passed during the 2007 Special Session. More specifically, the bill:

• Revises Citizens’ legislative intent language emphasizing the need for affordable property insurance to be provided by Citizens;

• Lowers the threshold to be eligible for Citizens coverage when the premium for comparable coverage from a private insurer is 15% greater than that of Citizens. Previously, the threshold was 25%;

• Provides that effective December 31, 2008, new certificates of authority (COA) may not be issued to a Florida domestic residential property insurer that is a wholly-owned subsidiary of an insurer authorized to conduct business in another state (prohibits new “pup” companies). Further, rate filings for “pup” companies must include information relating to the profits of the parent company of the Florida domestic insurer;

• Clarifies that “pup” companies that are wholly-owned subsidiaries of a parent company domiciled in another state are required to maintain $50 million in surplus;

• Extends the Citizens rate freeze through 2008;

• Provides an exception to insurers writing only manufactured housing policies in the state to obtain a $7 million surplus note even if the insurer applies for the surplus note after July 1, 2006 but before June 1, 2007. To be eligible, the insurer must write at least 40 percent of its policies covering manufactured housing. The bill also gives priority to the insurer writing the highest percentage of its policies covering manufactured housing;

• Clarifies that limited apportionment companies, companies participating in the Capital Incentive Build-Up Program, and companies that bought supplemental Florida Hurricane Catastrophe Fund (FHCF) coverage in 2006 will qualify for the same supplemental coverage in 2007;

• Extends the exemption for medical malpractice insurance from FHCF emergency assessments to May 31, 2010;

• Requires that insurers pay or deny a claim or a portion of the claim within 90 days of receiving notice of the claim. Further, any portion of the claim not paid within 90 days will be subject interest unless there are factors beyond the control of the insurer which reasonably prevent payment;

• Amends the definition of “diligent effort” by allowing insureds who have residential homes with a replacement cost of $1 million or more to be eligible for surplus lines if they have been rejected once by a private insurer;

• Creates the Florida Catastrophic Storm Risk Management Center at Florida State University to promote and disseminate research on catastrophic storm loss and to assist in securing grant funding for research;

• Requires an insurance agent to provide written notice that Citizens coverage may be available and less expensive than surplus lines coverage, but the notice must also state that Citizens coverage may be less comprehensive and the policyholder may be subject to higher assessments;

• Provides that all filings made or submitted after January 25, 2007, but before December 31, 2008 must make a “file and use” filing. This provision does not apply to policies for motor vehicle insurance;

• Extends the ineligibility for Citizens coverage on property insured for $1 million or more to January 1, 2009, rather than July 1, 2008;

• Clarifies several provisions relating to the Florida Insurance Guarantee Association (FIGA). The bill permits all municipalities and counties in the state to issue bonds to assist FIGA. Currently, only counties and municipalities that are substantially affected by a hurricane have that authority. Amends the powers and duties of FIGA such that insureds rendered insolvent by the effects of a hurricane can use emergency assessments for the direct payment of covered claims. The bill exempts any kind of self-insurance fund, liability pool, or risk management fund from coverage by FIGA;

• Defines “non-payment of premium” as the failure of the named insured to discharge when premium payments are due, as well as bouncing a check;

• Authorizes, but does not mandate, that the Office of Insurance Regulation can establish a pilot program to offer optional sinkhole coverage;

• Provides an exemption for notice of cancellation, nonrenewal or renewal premium for revisions in sinkhole coverage and policies nonrenewed by Citizens when the policies have been assumed by an authorized insurer;

• Provides that effective August 1, 2007, a renewal premium must specify the dollar amount recouped for assessments by the FHCF, Citizens, and FIGA and the dollar amount of any premium increase that is due to an approved rate increase and coverage changes;

• Provides that an insurer must make available windstorm coverage, but also offer an exclusion for windstorm coverage at the option of the policyholder;

• Creates the Citizens Property Insurance Corporation Mission Review Task Force to return Citizens to its former role as a noncompetitive corporation. The bill appropriates $600,000 for this task force for 2007-2008.

Except as provided in this bill, this act is effective upon becoming law.

 

Hurricane Mitigation Bill

Committee Substitute for House Bill 7057 by the Jobs and Entrepreneurship Council and Representative Trey Traviesa (R-Tampa) relating to Hurricane Mitigation

This bill changes the name of the Florida Comprehensive Hurricane Damage Mitigation Program to the “My Safe Florida Home Program” (the “Program”), and will be administered by the Department of Financial Services (DFS). The Program will provide grants and low-interest loans to residential property owners in Florida to storm-harden their properties. The intent of this bill is to decrease the cost of property and casualty insurance for middle and low income residential property owners and strengthen homes and building codes. Specifically, the bill:

• Creates a no-interest loan program that will allow certain homeowners to be eligible for up to $5,000 in three years, subject to requirements by their lender, to retrofit homes;

• Allows the department to allocate $10 million of the $250 million initially appropriated to the My Safe Florida Home Program for the no-interest loan program;

• States the program is intended to provide free home inspections to 400,000 residential homes and grants to at least 35,000 applicants before June 30, 2009;

• States that to be eligible for a grant the home must have an insured value less than $300,000, be located in a “wind-borne debris region,” and have a building permit application for initial construction before March 1, 2002;

• Requires the Office of Insurance Regulation, the Department of Community Affairs and the Florida Building Commission to conduct wind loss mitigation studies including an analysis of data from the 2004 and 2005 hurricane season and provide its report by January 1, 2008;

• States that certain qualified inspectors are authorized to participate as mitigation contractors. The bill also requires registered and certified contractors to take classes on mitigation as part of their required continuing education;

• Requires personal lines residential policyholders with structures valued at $750,000 or more in the wind-borne debris regions to implement certain mitigation features to remain eligible for insurance coverage by Citizens;

• Requires that roof replacements comply with stringent guidelines, and further instructs the Florida Building Commission to develop rules in this regard;

• Authorizes the Department of Financial Services to provide a communications and public awareness campaign to inform consumers about the program.

Unless otherwise provided in the bill, this act is effective upon becoming law.

 

House Bill 7031 by the Safety and Security Council and Representative Mark Mahon (R-Jacksonville) relating to Community Associations

This bill contains a provision that includes commercial self-insurance funds in the definition of a covered policy under the FHCF, and also subjects self-insurance funds to FHCF assessments. Further, a commercial self-insurance fund is no longer required to participate in the Florida Self-Insurance Fund Guarantee Association.

This act is effective upon becoming law.

 

Committee Substitute for House Bill 1375 by Representative Mike Davis (R-Naples) relating to Affordable Housing

This bill allows for two or more public housing authorities to create a self-insurance fund for the purpose of insuring real or personal property in the same manner as local governments. The funds are exempt from assessments under the FHCF and Citizens.

This act is effective July 1, 2007.

 

Other Insurance-Related Bills

Committee Substitute for Committee Substitute for House Bill 1381 by Representative Garrett Richter (R-Naples) relating to Insurance Branch Agencies

This bill authorizes certain agencies designated as a branch office to file an application for registration in lieu of licensure; provides an exemption from a required written examination to certain applicants for licensure as a claims adjuster; authorizes certain licensed agents to be the agent in charge of branch locations under certain circumstances; revises the requirements for identification of insurers, agents, & insurance contracts.

Except as otherwise provided in the bill, this act is effective July 1, 2007.

 

House Bill 1549 by Representative David Rivera (R-Miami) relating to Examination of Insurers

This bill was a priority for the Office of Insurance Regulation (OIR). It extends the interval at which insurers must be examined by OIR; deletes provisions allowing the OIR to accept audit reports from certified public accountant in lieu of conducting its own examination; and revises guidelines for conducting such examinations.

This act is effective July 1, 2007.

 

Committee Substitute for Senate Bill 746 by Senator J.D. Alexander (R-Lake Wales) relating to Workers Compensation for First Responders

The bill provides a standard of proof for first responders having injury or disease caused by exposure to toxic substance; provides that any adverse result or complication regarding smallpox vaccinations is an injury by accident arising out of employment; provides a standard of proof in cases involving occupational disease; provides for continuation of permanent total supplemental benefits after age of 62 for certain first responders.

This act is effective upon becoming law.

 

Committee Substitute for Committee Substitute for Committee Substitute for Senate Bill 1894 by Senator Bill Posey (R-Rockledge) relating to the Florida Workers’ Compensation Joint Underwriting Association (FWCJUA)

The bill provides requirements for a joint underwriting plan of insurers which operate as a JUA; revises restrictions on who may serve on the FWCJUA board; requires that a market-assistance plan be periodically reviewed & updated; requires that excess funds received by the plan be returned to state; provides for applicability of specified statutes regulating ethical standards.

This act is effective July 1, 2007.

 

House Bill 7169 by Representative Ron Reagan (R- Sarasota) relating to Workers’ Compensation Public Records and Meetings Exemption

The bill provides exemption from public records requirements for certain records of the FWCJUA; authorizes the release of confidential & exempt records under certain circumstances; provides an exemption from public meetings requirements for portions of meetings of the FWCJUA’s board of governors or subcommittee thereof during which confidential & exempt records are discussed.

This act is effective July 1, 2007.

 

Committee Substitute for Committee Substitute for Senate Bill 1624 by Senator Mike Bennett (R-Bradenton) relating to Owner-Controlled Insurance

The bill requires the purchase of owner-controlled insurance in connection with public construction projects if program maintains completed operations insurance coverage for no less than 10 years; exempts contractors & subcontractors working under construction projects insured by said insurance program from individually satisfying eligibility requirements for large deductible workers’ compensation rating plans.

This act is effective October 1, 2007.

 

Committee Substitute for House Bill 517 by Representative Greg Evers (R-Milton) relating to Exempting Armed Forces Members

This bill exempts members of the Armed Forces who are on active duty outside Florida from providing proof of financial responsibility as the owner of a motor vehicle.

This act is effective July 1, 2007.

 

Committee Substitute for Senate Bill 1206 by Senator Jeff Atwater (R- Palm Beach) relating to Motor Vehicle Manufacturer/Distributor/Warranties

The bill requires motor vehicle manufacturers to provide reasonable compensation to motor vehicle dealers for warranty “work” and “repairs and service.” It also clarifies that “labor and parts’’ are included in warranty work, repairs, and service. The bill could have the effect of increasing costs to manufacturers by requiring them to provide additional compensation to dealers without the ability of using a surcharge to cover their costs.

This act is effective July 1, 2007.

 

Committee Substitute for House Bill 615 by Representative Peter Nehr (R-Tarpon Springs) relating to Voluntary Motor Vehicle Registration Charity Check-Off

This bill specifies that the voluntary $1 check-off on motor vehicle registrations distributed to the Florida Heart Research Institute is to stop heart disease. The bill also requires the Department of Highway Safety and Motor Vehicles to include a check-off for a voluntary $1 contribution to the Children’s Hearing Help Fund on each motor vehicle registration and renewal form.

This act is effective October 1, 2007.

 

Committee Substitute for Committee Substitute for Senate Bill 2836 by Senator Lee Constantine (R-Altamonte Springs) relating to the Florida Building Code Compliance and Mitigation Program

This bill originally related only to the Florida Building Commission, however, during the last week of the Legislative Session Senator Posey (R – Rockledge) proposed several controversial amendments to this bill that would have required the OIR, in consultation with the Department of Community Affairs, to conduct a wind-loss mitigation study to evaluate wind storm loss relativities. These amendments would have also made certain homes ineligible for insurance coverage from Citizens Property Insurance Corporation if the homes did not install certain mitigation features by a certain time. These proposals were ultimately not included in the bill, but the bill does authorize the Department of Community Affairs to create the “Florida Building Code Compliance and Mitigation Program” which will study the effects of mitigation features after storms. Some of the concepts contained in Senator Posey’s amendments were included in HB 7057.

This act is effective upon becoming law.

 

Committee Substitute for Committee Substitute for Committee Substitute for Senate Bill 2234 by Senator Stephen Wise (R- Jacksonville) relating to Commercial General Liability Insurance Inspectors

This bill requires home inspectors, mold assessors and mold remediators to maintain certain amounts of insurance coverages. Specifically, the bill requires home inspectors to maintain a minimum of $300,000 in commercial general liability insurance. It also requires mold assessors and mold remediators to carry a minimum $1 million in general liability coverage, and the bill also requires mold assessors to carry a minimum of $1 million in errors and omissions coverage.

This act is effective July 1, 2010.