Florida Senate Committee on Banking and Insurance Reviews Hurricane Irma, AOB Challenges

Presentations on hurricane-related insurance issues and a discussion on property insurance-related post-loss assignment of benefits accounted for the majority of the Senate Committee on Banking and Insurance (“Committee”) interim meeting yesterday, October 11, 2017.

To access the meeting materials, audio, video and presentations, click here.

Florida Insurance Commissioner David Altmaier was on hand to present the Florida Office of Insurance Regulation’s (“OIR”) Hurricane Irma action report.  Among the OIR actions included:

• Issuance of a substantial number of consumer outreach announcements
• Preparation and activation of a catastrophe claims data call for insurance company reporting
• Maintaining close contact with insurance company executives to determine insurers’ unmet needs and stress the importance of expedited claims handling
• Following up on implementation of evacuation plans for more than 70 licensed continuing care retirement facilities in Florida
• Issuance of an early prescription refill notice to all health insurance companies
• Reminding consumers about available contact information for homeowners insurance companies to help with claims reporting
• Monitoring consumer complaints received by the Florida Department of Financial Services’ (“DFS”) Division of Consumer Services
• Meeting with National Flood Insurance Program Director Roy Wright to discuss flood claims affecting Floridians
• Assisting insurance companies with deployment of new technology to assess damage and process claims

Commissioner Altmaier noted that the OIR issued an Emergency Order on September 13, 2017 that specifically prohibits cancellation or nonrenewal of any residential homeowners insurance policy if the property sustained damage from Hurricane Irma, and until 90 days after it has been repaired.  The Emergency Order also broadly prohibits cancellation or nonrenewal of any insurance policy between September 4 through October 15.  To date, the Emergency Order has suspended over 300 new rate filings for rate increases from taking effect between September 4 through December 3, he said.

Commission Altmaier then presented updated claims data associated with Hurricane Irma. As of October 6, 2017, 703,671 statewide claims were reported with $4.5 billion in estimated insured losses. Of those, 24.6 percent have been closed.

Florida Hurricane Catastrophe Fund (“FHCF”) Chief Operating Officer Anne Bert then addressed the Committee, outlining the FHCF estimated losses and financial standing following Hurricane Irma.

She explained that the FHCF is in its strongest position ever, and is fully liquid up to, and slightly over its maximum limit for the 2017-2018 FHCF Contract Year:

• $17.0B Maximum Statutory Limit.
• $14.9B Projected Year-End Fund Balance.
• $2.7B Pre-event Bonds.
• $1.0B Risk Transfer.
• No post-event bonds outstanding.
• Emergency assessments ended – 0% on all policies new or renewed on or after January 1, 2015.

Estimated FHCF losses for Hurricane Irma are between $3 and $5 billion, she said.

Representatives from the DFS then spoke, detailing the Irma-related efforts of their respective specialized areas:

• The Division of State Fire Marshal coordinated Irma-related aid for fire and rescue services, through the pre-staging of resources and organizing personnel, to post-storm resource needs. The Fire Marshal also coordinated urban search and rescue missions, as well as incident management teams statewide.
• The Division of Investigative and Forensic Services provided aid missions for local law enforcement, staffed urban search and rescue missions, and organized post-storm anti-fraud strike teams.
• In addition to establishing a clearinghouse of consumer insurance complaints, the Division of Consumer Services organized pre-storm and post-storm consumer/media alerts; post-storm insurance villages and consumer public service announcements, and provided one-on-one insurance advice to Florida policyholders.
  • Although no specific trends were identified, over 150 calls were reported against one insurance company. Those related mostly to waiting for an adjuster, the cancellation/nonrenewal of a policy, or a claim denial.
  • Since Consumer Services helpline assistance is most used when a claim has matured, Hurricane Irma-related complaints are expected to increase as claims are paid or denied, it was explained.
• The Division of Insurance Agents and Agency Services provided licensing for emergency adjusters. As of September 30, 2017, 225,926 individuals were licensed to adjust claims on behalf of insurers.
  • 115,665 are All-Lines Adjuster licenses
  • 95,606 General Lines Agents licenses
  • 14,655 Emergency Adjuster licenses
  • 1,984 Public Adjusters
• According to the Division of Insurance Agents and Agency Services by comparison Florida had 198,538 total licensees in these categories at this point last year-an increase of 29,372 licensees during the past 12 months. During the month of September, the Division of Insurance Agents and Agency Services issued 17,857 new licenses to adjust property claims.
• Florida CFO Jimmy Patronis also extended continuing education deadlines for licensees.

Citizens Property Insurance Corporation President, CEO and Executive Director Barry Gilway spoke next on the State-run insurer’s Hurricane Irma preparation and response.

According to Mr. Gilway, Citizens has received 51,958 claims as of October 5, the bulk of which have come from Miami-Dade (37.1 percent), Monroe (15.4 percent), and Broward counties (14.9 percent).  Over the next 18 to 24 months, that figure is expected to reach 70,000.

He also discussed Citizens’ Hurricane Irma costs and financial outlook, stating that the gross modeled loss related to Irma is $1.2 billion.  Projected reinsurance recoveries are $193.6 million; and the projected net loss is $1 billion, leaving remaining surplus of $6.4 billion.

Mr. Gilway assured that Citizens has not encountered any difficulties with claims payment and has sufficient liquidated funds for the projected Irma losses.

Assignment of Benefits Panel

The Committee invited a panel of interested parties to debate the assignment of benefits (“AOB”) issue.  They included Commissioner Altmaier; attorney David Bronstein; Angel Conlin of American Strategic Insurance; Dave DeBlander, Owner and CEO of Pro Clean Restoration and Cleaning; Mr. Gilway; Orlando trial attorney Lee Jacobson; and Florida Insurance Consumer Advocate Sha’Ron James.

Panelists appeared to agree that AOB agreements should be in writing, and that a deadline should be imposed for delivering them to insurance carriers.

Chairwoman Flores explained that she plans to tackle AOB challenges through methodical consensus-building over several weeks, and asked Committee staff to review related legislation proposed during the past three years in order to narrow the major contentions.

Two of the attorneys on the panel had differing views of how AOB should be handled in situations involving couples who are going through a divorce, insofar as whether or not the residence’s mortgage company should be included in the AOB agreement.

In regard to these AOB “sign-offs,” Mr. Jacobson said that some carriers already are submitting agreements to mortgage lenders without authority under state law.  Contending that the practice is justified, Ms. Conlin said that assertion is being tested in a case currently pending before the Second District Court of Appeal.  

The OIR has projected policyholders can expect rate increases of around 10 percent during each of the next five years, largely because of inflated costs due to AOB, it was advised.

Mr. DeBlander argued that, while there are a small number of “bad actors” causing the rest of his profession to “look bad,” the real problem was with insurance companies taking too long or refusing to pay bills at all.

Direct Primary Care Bill Approved

A bill by Senator Tom Lee that would regulate direct primary health care agreements was the only legislation considered during yesterday’s Committee meeting.  Amended and passed unanimously, SB 80 would allow physicians and patients to contract directly for basic health services.

Senator Lee explained his position that supporters of his bill agree such contracts should be categorized as an exemption from insurance rather than a health care policy.

SB 80 has two more stops before it may proceed to the Senate Floor.

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