Florida Insurance Legislative Action: March 17, 2010

House Insurance, Business and Financial Affairs Policy Committee

As part of its March 17, 20101 agenda, the Florida House of Representatives Insurance, Business and Financial Affairs Policy Committee (“Committee”) considered House Bill 447 by State Representative Bill Proctor.   As originally filed, HB 447 related to insurance rate deregulation and commonly has been referred to as the “consumer choice” bill.  

During the Committee meeting, Representative Proctor offered a strike-everything amendment to his bill that incorporated provisions from the Senate and House omnibus insurance packages–SB 2044 and HB 1341, respectively.  A copy of the strike-everything amendment is attached for review.

In explaining his amendment to the Committee members, Representative Proctor noted that HB 447 originally had two objectives:  to maintain capital in Florida and deregulate insurance rates. He explained that his strike-everything amendment is intended to meet those objectives, with the primary purpose of preserving capital in Florida.

The following amendments, which are also attached, were considered for adoption to Representative Proctor’s strike-everything amendment:

• An amendment by State Representative Bryan Nelson that would modify several statutory provisions relating to sinkhole claims was adopted;
• An amendment by Representative Nelson that would allow insurance companies to change the terms of an insurance policy at renewal was adopted;
• An amendment by State Representative Peter Nehr that would have provided alternative mechanisms for insurance credits for reinsurance contracts and financial products was withdrawn.  In testifying against this amendment, a reinsurance company representative noting that its provisions would treat derivatives as reinsurance.
• An amendment by State Representative Alan Hays providing for notice requirements on insurance policies of potential Florida Hurricane Catastrophe Fund (“FHCF”) and Citizens Property Insurance Corporation (“Citizens”) assessments was adopted.  State Representative Tom Grady suggested that the surcharge amount stated in the notice should be specified at 45 percent.

Following consideration of the amendments, Committee members engaged in significant discussion.

State Representative Kevin Rader raised issues regarding the cash balance in Citizens and the FHCF.

State Representative Dwayne Taylor asked about HB 447’s impact on Citizens’ structured rate increase, to which Representative Proctor noted that the bill would not have a direct impact. 

Representative Hays expressed serious concern about the strike-everything amendment’s provisions for exempting existing Florida domiciled companies’  from additional surplus requirements, as well as allowing existing companies to form subsidiaries that would not be subject to the new surplus requirement contained in the proposal.

Florida Insurance Consumer Advocate Sean Shaw also expressed concern with the contents aspects of the strike-everything amendment’s actual cash value/replacement cost value provisions, as well as its references to the annual insurer report card and across-the-board statewide rate increases.  Committee members discussed free market principles and took issue with many of Mr. Shaw’s objections.

State Representative Anitere Flores expressed concerns with the strike-everything amendment, citing its lack of a specified time period during which rates may increase, along with the aforementioned actual cash value/replacement cost value provisions that could lead to policyholders not receiving adequate payment for their claims. 

Nevertheless, the strike-everything amendment passed on an oral vote, with Committee Chairman Pat Patterson voting against it.

During the portion of the meeting in which public comment was heard, State Representative Rick Kriseman also expressed concern with the bill’s provisions allowing hold-back for contents coverage claims.  

Several business groups then spoke in support of the bill, after which a Trial Bar representative spoke in opposition to it.  Additional discussion took place regarding a recent news article on insurer profits and executive salaries. Representative Hays noted that it may be appropriate to hold legislative hearings on this matter.

A representative from the Florida Office of Insurance Regulation (“OIR”) testified, noting that the OIR supports some provisions of the bill and would like to work with the sponsor on others. 

Following discussions by the legislators, HB 447 passed as amended by a vote of 11 to 3, with Representatives Patterson, Flores and Evan Jenne voting against it.

Next, HB 447 is scheduled to be heard by the House General Government Policy Council, which is its final committee of reference. 

 

Senate Committee on Banking and Insurance

At its March 17 meeting, the Senate Committee on Banking and Insurance (“Senate Committee”) approved SB 740 and SB 2264, both of which are sponsored by Senator Mike Bennett.

If ultimately passed into law, SB 740 would require the Florida Financial Services Commission to reconfirm the appointment of the Florida Insurance Commissioner every two years. 

During yesterday’s Senate Committee meeting, SB 740 was amended to require the reconfirmation of the Director of the Florida Office of Financial Regulation as well. 

Substantial debate took place on the legislation, with some senators expressing concern that a reconfirmation would politicize the two regulatory oversight positions.  Ultimately, SB 740 was approved by a vote of 5 to 3.

The Senate Committee also approved SB 2264 relating to public adjusters after adopting a strike-everything amendment to the bill that was considered to contain concessions from both the insurance and public adjuster industries.  To view the strike-all amendment, click here.

The strike-everything amendment to SB 2264 provides the following:

• Restricts public adjuster solicitations and advertisements by defining certain statements on advertisements as deceptive and misleading;
• Restricts the compensation that a public adjuster is eligible to collect on a supplemental or reopened claim to a maximum of 30 percent;
• States that a public adjuster may not interfere with an insurer communicating with its insured, or inspecting or adjusting a claim;
• Provides penalties for contractors or subcontractors who adjust insurance claims without a license;
• Provides guidelines for public adjuster apprentices;
• Requires certain information to be contained in a contract between a public adjuster and an insured;
• Creates a policyholder duty to report a windstorm or hurricane claim within three years of an event.

Although several public adjusters and trial attorneys testified against the bill, it was approved unanimously.   

 

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

 

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