Florida House Amends CS/CS/CS/SB 408 With Strike-All On Second Reading Today, May 3

The comprehensive property insurance bill, CS/CS/CS/SB 408, was taken up by the House today, May 3, 2011.  Several amendments to the bill were filed, including a strike all amendment by Representative Wood.  The strike all amendment was explained by Representative Wood as including numerous provisions designed to address the cost drivers plaguing the insurance industry in Florida. 

Representative Wood’s strike all Amendment 399507 includes the following provisions:

• Provides a statute of limitations period of 5 years from the date of loss for an action for breach of a property insurance contract.
• Revises the definition of losses for covered policies under the Florida Hurricane Catastrophe Fund.
• Provides the ability to renegotiate the terms of surplus notes in certain circumstances.
• Increases capital and surplus requirements.
• Restricts public adjusters in compensation, advertising.
• Requires notice of windstorm or hurricane claims to be filed within 3 years after the hurricane first makes landfall or the windstorm causes the covered damage.
• Provides for an expedited rate filing for reinsurance costs and allows for an overall premium increase up to 15 percent.
• Specifies that fees charged for private sector access and use of the public model be reasonable.
• With respect to Citizens:
  • Public adjusters cannot collect more than 10 percent of additional amount paid over original offer by Citizens
  • Changes the name of the High Risk Account to the “coastal” account
  • Surcharges are payable at cancellation or termination of policy
  • Prohibits sinkhole coverage of appurtenant structures
  • Requires agent to obtain policyholder signature on form acknowledging risk of surcharges and assessments
  • Exempts sinkhole coverage rates from the 10 percent glide-path
• Reduces time for notice of cancellation to 120 days from 180 days for those insureds with the insurer for at least a 5-year period immediately prior to the date of the written notice.
• Citizens only needs to provide 45 days notice of nonrenewal for policies assumed by an authorized insurer.
• Insurers may provide 45 days notice of nonrenewal or cancellation if the OIR finds that early cancellation is necessary to protect the best interests of the public or policyholders.
• Allows changes in coverage by a “Notification of Change in Policy Terms” rather than nonrenewal
• Provides that an insurer must initially pay at least the actual cash value of the insured loss for a dwelling, and any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred. For personal property, insurer must offer coverage under which the insurer is obligated to pay replacement cost value; however, the insurer may also offer coverage under which the insurer may limit the initial payment to the actual cash value.
• With respect to Sinkholes:
  • Provides findings and legislative intent, including that this legislation is “clarifying”
  • Requires catastrophic ground cover collapse coverage and sinkhole coverage
  • Specifically allows for inspections
  • May restrict coverage to the principal building
  • Defines neutral evaluation and evaluator
  • Revises definition of structural damage
  • Requires insured to pay 50% of costs of testing or $2,500, whichever is less – subject to reimbursement if sinkhole is present
  • Requires repairs to be made pursuant to recommendations made by insurer’s report
  • Imposes a 90 day time limit to commence repairs, which is tolled if neutral evaluation process is invoked
  • Requires repairs to be made within 12 months except in certain circumstances
  • Prohibits rebates
  • Requires policyholder to file sinkhole report
  • Requires engineer to file report upon completion of repairs
  • Prohibits FIGA from paying attorneys’ fees or public adjuster fees
• Includes severability clause.
• Effective date is upon becoming law.

Several questions were asked of Representative Wood regarding his strike all amendment.  Specifically, Representatives Kriseman, Cruz, Bernard, Jenne, Perman, Fullwood, Nehr, Artiles, Garcia, Sands, Diaz, Trujillo, and Clarke-Reed asked questions relating to almost every topic addressed in the strike all.  Representative Wood at times deferred to Representatives Boyd and Nelson in responding to the questions.  Representative Wood remained steadfast in his comments that this bill is the result of input from many sources and in particular, the Office of Insurance Regulation, and is a necessary step to address the cost drivers in the insurance industry.

Several amendments to Representative Wood’s strike all amendment were filed.  Some of these amendments were not considered because they were late-filed.  Several others were withdrawn.  Of the amendments considered by the House, Representative Wood identified them as either hostile or unfriendly, and they subsequently failed to be adopted.

Representative Wood’s strike all amendment was then considered, adopted, and rolled to Third Reading.

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