Florida Senate Committee on Banking and Insurance Report: December 7, 2011

 

The Florida Senate Committee on Banking and Insurance (“Committee”) met yesterday, December 7, 2011.

Committee Chairman Senator Garrett Richter called the meeting to order.  The first bill considered by the Committee was SB 792 relating to financial institutions.   SB 792 is sponsored by Senator Don Gaetz and would require all State financial institutions to certify that they have adopted policies, procedures, and controls to assure they are not doing business indirectly with Iran or a terrorist organization.  The bill was passed unanimously.

SB 610, relating to Captive Insurers by Senator Diaz de la Portilla, also passed unanimously. 

The following legislation reenacting expiring public records exemptions was approved as committee bills:

• SPB 7026 relating to personal information and policy numbers in Personal Injury Protection (“PIP”) Insurance and property damage liability insurance policies supplied to the Florida Department of Highway Safety and Motor Vehicles

• SPB 7028 relating to the confidentiality of consumer information in consumer complaints and information supplied to the Florida Workers’ Compensation Employee Assistance and Ombudsman Office

• SPB 7030 relating to information held by the Florida Department of Financial Services relating to unclaimed property

SB 578 by Chairman Richter also was heard by the Committee.  The bill would allow surplus lines insurers to participate in Citizens Property Insurance Corporation (“Citizens”) depopulation programs.  The following seven amendments were adopted to the bill:

• Amendment 163542 by Chairman Richter:  Changes the effective date to “upon the bill becoming law.” 

• Amendment 252080 by Chairman Richter:  Corrects the name of the Bureau of Collateral Management.

• Amendment 589860 by Chairman Richter:   Clarifies when additional funds are required to be deposited, if necessary. 

• Amendment 621564 by Chairman Richter:  Allows an entity that has filed an application for licensure with the Florida Office of Insurance Regulation (“OIR”) and is planning to participate in depopulation to receive Citizens files.  Current law governs the confidentiality of the files.

• Amendment 721946 by Chairman Richter:  Changes the term “admitted insurer” to “authorized insurer.”

• Amendment 769920 by Senator Mike Fasano:  Removes the requirement that the notice to the policyholder state that surplus lines insurers are not covered by the Florida Insurance Guaranty Association.

• Amendment 914512 by Chairman Richter:  Requires surplus lines insurers to file certain biographical information for officers and directors, audited financial statements, and other information with the OIR prior to the OIR’s approval of a takeout or depopulation plan.

The bill passed the Committee by a vote of 7 to 3.

Action on SB 336, relating to credit counseling services by Chairman Richter, was temporarily deferred.

The Committee then conducted a workshop on PIP.  

James Pratt, Regional Staff Counsel with Geico Insurance Company stated that Florida consumers are being victimized by fraud in the PIP system.  To illustrate, he said, the OIR has reported that for every $1.00 that is collected in premium, $1.40 is used to pay claims.  

Mr. Pratt continued, noting that examinations under oath are a key fraud-fighting tool for insurers.  He also suggested that key reforms for PIP should include eliminating the attorney fee multiplier, limiting attorneys’ fees, implementing utilization reviews and addressing loopholes in clinic licensing.  

Ty Cullifer, Section Manager for Claims with State Farm, stated that Florida law should be amended to eliminate the incentives for PIP-related lawsuits.  He said this could be addressed by eliminating the aforementioned multiplier and capping attorneys’ fees.  He also noted that the Florida Legislature should clarify the intent of the PIP fee schedule.  

The Committee also heard testimony from attorneys who handle PIP cases.  Among them was Glen Ged, who represents providers in PIP cases.  He stated that his law firm has sent demand letters on behalf of 200 providers to insurance companies,  and these insurers have paid the providers $9 million to date.

Don Masten, who represents insurance companies in PIP-related lawsuits, also addressed the Committee.  He stated that Florida’s No-Fault system is broken and the initial objectives behind the system have been compromised.  He outlined major revisions that have been made to it, and what effect those changes have had.

Chairman Richter concluded the meeting due to time constraints and stated that Senator Joe Negron would be sponsoring the PIP reform bill. 

To view yesterday’s meeting packet, click here.

 

 

 

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