Florida Property Bill SB 408 Advances Through Second Reading

Florida’s massive property bill SB 408 was taken up on the Senate floor for a second reading today, garnering yet more amendments on its way to a third and final reading. Its next appearance will entail a debate and a final vote in the full Senate.

Supporters of the bill, sponsored by Sen. Garrett Richter, R-Naples, say the legislation is designed to create a more competitive private insurance marketplace. Opponents label it a “wish list for insurance companies.”

SB 408 addresses a number of “hot topic” issues, including sinkholes, public adjusters, the Florida Hurricane Catastrophe Fund, replacement costs, and mitigation discounts.

The sinkhole issue, in particular, has generated much debate. The bill currently contains language that repeals the requirement that private insurers include sinkhole coverage in their mandatory offerings. (The bill does, however, require the state-run Citizens Property Insurance Corp. to offer comprehensive sinkhole coverage.)

The insurance industry has complained that fraudulent sinkholes claims have mushroomed over the past few years, and sought relief from the mandate. Sen. Mike Fasano, R-New Port Richey—perhaps the bill’s most outspoken critic and a legislator from the state’s sinkhole epicenter of Pasco County—claims that without the requirement insurers will not offer the coverage. That, according to Fasano, will leave homeowners with limited and expensive purchase options if banks and mortgage companies compel them to buy the coverage. An amendment by Fasano requiring all insurers to “make available, for an appropriate premium, coverage for sinkhole losses on any structure” failed during the second reading.

The wide-ranging bill also reduces the timeframe that carriers must give notice of non-renewals to homeowners from six months to 45 days; places restrictions on public adjuster advertising; establishes a three-year timeframe in which a policyholder can file or reopen a claim or supplemental claim; and addresses mitigation credits.

In the area of replacement costs, the bill allows insurers to use a replacement cost holdback on both the structure and contents, subject to certain restrictions. A similar provision was in the 2010 SB 2044 property bill, which was vetoed by then-Gov. Charlie Crist.

This year’s much-debated bill has attracted 94 amendments, 24 of which were filed in the past two days. Amendments green-lighted at today’s reading include:

 Amendment 136604: A technical amendment relating to the definition of “structural damage” as it relates to sinkholes.

Amendment 343842: Specifies that public adjusters must also make available to insurers the written estimates they are required to retain for five years.

Amendment 488760: Provides a licensure exemption for claims adjusters servicing guarantee mortgages in regard to policies covering the mortgaged properties.

Amendment 407132:Allows the Office of Insurance Regulation (OIR) to examine managing general agents that represent only one insurer. (The OIR has declared this amendment unncessary and currently does not support it.)

Amendment 762998: Simplifies the educational requirements for “professional engineers” to only a bachelor’s degree or higher in engineering.

William Stander, assistant vice president and regional manager for the Florida office of the Property Casualty Insurers Association of America, has been closely following the legislation and attended the second reading. Stander noted the bill’s progress today and said, “SB 408 addresses the property insurance cost drivers, and at this time the bill’s provisions, generally speaking, appear stronger than those in its House companion, HB 803.”

The time and date for the bill’s third and final reading and vote has not been set, although it could come as soon as Thursday.

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