Florida Senate Committee on Banking and Insurance Approves Workers’ Compensation Bill; Discusses Reforms For Citizens, Personal Injury Protection Insurance
Oct 5, 2011
Florida’s Senate Committee on Banking and Insurance (“Committee”) met yesterday, October 4, 2011, during which it considered Senate Bill 140.
Sponsored by Senator Mike Bennett, SB 140 would repeal s. 440.59, F.S., which requires the Florida Department of Financial Services (“DFS”) to compile an annual written report of Florida’s Workers’ Compensation Law (Chapter 440). The report is then published on the DFS website. There was no discussion on the bill, and it passed the Committee unanimously.
Sharon Binnun, the Chief Financial Officer of Citizens Property Insurance Corporation (“Citizens”), made a presentation to the Committee on the status of Citizens. In her report, she provided a basic overview of Citizens, which included information on market share and claims paying capacity. According to Ms. Binnun, Citizens’ claims paying capacity, inclusive of surplus, reimbursement from the Florida Hurricane Catastrophe Fund and private reinsurance, is $16.7 billion. Citizens currently has over $12 billion in cash and an assessment base of $31 billion.
At the conclusion of Ms. Binnun’s presentation, discussion ensued among the Committee members. Senator Alan Hays pointed out that Citizens’ business model is the polar opposite of a good insurance risk because it has such a concentration of policies with no sharing of risk. It was noted that, if new policies written in Citizens were required to be actuarially sound, this would reduce the number of policies being written in Citizens. Currently, Citizens policy count grows by 1,000 policies a day, he said.
There also was discussion of Citizens’ assessment base. Ms. Binnun noted that, if the Florida Hurricane Catastrophe Fund was unable to meet its obligations, regular assessments by Citizens would be triggered earlier and perhaps emergency assessments might also need to be levied.
Senator Don Gaetz asked what Ms. Binnun thought should be enacted to help shrink the size of Citizens and what could be done to strengthen it. She stated that the Citizens bill from last year contained a lot of good elements, but it did not pass. She added that SB 408 went a long way to reduce fraud and increase competition and will have a positive impact on the entire market.
Senator Gaetz said that he felt a Citizens bill also would have a big impact. Senator Hays remarked that he filed the Citizens bill last year, but was not planning to file the bill again this year unless he felt that lawmakers had an appetite to pass Citizens-related legislation.
Committee Chairman Garrett Richter said he would ask the Florida Office of Insurance Regulation (“OIR”) to address the Committee regarding Citizens’ most recent rate filing.
Personal Injury Protection
Senate Banking and Insurance Committee staff presented Issue Brief 2012-203, which relates to Personal Injury Protection Insurance (“PIP”). This presentation reviewed the mandatory and non-mandatory insurance coverages in Florida and the benefits provided by PIP. It also highlighted the purpose of Florida’s No-Fault system, as well as that of the PIP re-enactment and legislative reforms from January 2008.
Committee staff pointed out that, since 2008, PIP rates have increased. There also has been a 66 percent increase in PIP claims-related losses paid between 2006 and 2010. While the losses have increased, the number of drivers in Florida has held steady, while the number of crashed and injuries has decreased. Increases also have been seen in the amount of PIP-related fraud, unnecessary litigation, and overutilization and excessive treatment of accident-related injuries.
Senator Eleanor Sobel asked Committee staff why Florida does not have mandatory bodily injury, to which they responded that most states require this coverage, but Florida requires PIP and property damage liability instead of mandatory bodily injury. There was speculation that requiring mandatory bodily injury coverage would be too costly to the consumer.
OIR Legislative Director Monte Stevens noted that the OIR and the DFS are in discussions with a vendor that would assist in identifying individuals and certain clinics that are involved in the PIP system.
Committee Chairman Garrett Richter stated that, because of time constraints, the OIR would be invited to the next Committee meeting to make a presentation on PIP.
To view the Committee packet, click here.
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