Florida Senate’s Comprehensive Property Insurance Bill Rolled to Third Reading Today, April 27

In the Senate Floor Session held today, April 27, 2011, CS/CS/CS/SB 408 relating to property and casualty insurance, was heard on Second Reading.  The bill was amended, ordered engrossed, and rolled over to Third Reading.

Twenty-four amendments to the bill were filed.  Amendments ADOPTED by the Senate on Second Reading include:

• Amendment 343842, filed by Senator Smith, provides that public adjusters must make the written estimate of the loss available to the insurer.
• Amendment 762998, filed by Senator Fasano, returns the definition of “professional engineer” to current law.
• Amendment 453922, filed by Senator Smith, provides that the findings of the insured’s engineer and geologist are presumed correct.  Amendment 283390 is an amendment to Amendment 453922 to correct a scrivener’s error, which was also adopted.
• Amendment 407132, filed by Senator Storms, allows the Office of Insurance Regulation (“OIR”) to examine managing general agents (MGAs) that represent only one insurer.  In debate on this amendment, Senator Richter stated he opposes the amendment and that as of this morning, the OIR also does not support it because the OIR does not believe it is necessary. Senator Storms maintained that the OIR does not have authority to examine those MGAs currently covered by the exemption in the statute.  This amendment was adopted by a vote of 16 to 14.
• Amendment 926644, filed by Senator Diaz de la Portilla, requires that fees charged for the private sector to use the Florida Public Model must be reasonable.  Senator Fasano inquired who would be paying the fee.  Senator Diaz de la Portilla explained that the private sector that uses the Public Model would be required to pay a reasonable fee only for their use of the public model, rather than continuing to have the OIR pay all fees associated with the operation and maintenance of the Public Model.
• Amendment 151382, filed by Senator Smith, is a substitute amendment for Amendment 782618.  The substitute amendment clarifies that the sinkhole provisions in the bill that affect procedural rights do not apply to sinkhole claims filed prior to February 1, 2011, but do apply to claims filed after that date.  Sinkhole provisions in the bill that affect substantive rights apply to claims reported to an insurer on or after July 1, 2011.  (The original Amendment 782618 did not make the procedural/substantive distinction).
• Amendment 488760, filed by Senator Richter, exempts persons who adjust claims for institutions servicing or guaranteeing mortgages from the adjuster licensing requirements.
• Amendment 136604, filed by Senator Richter, amends the definition of “structural damage” to remove the portion of the definition that allowed the term to be defined by the insurance policy.
• Amendment 957742, filed by Senator Richter, deletes the provision legally changing the name of the Citizens Property Insurance Corporation (“Citizens”) to the “Taxpayer Funded Insurance Corporation” and instead requires Citizens to incorporate the taxpayer-funded language in a new logo.  Senator Fasano asked if Senator Richter would entertain an amendment to require all state-funded entities, such as universities, to also be compelled to adopt such a logo.  Senator Richter replied that he would not be in favor of such an amendment to his amendment because it is not germane.
• Amendment 426476, filed by Senator Richter, limits the compensation a public adjuster may charge for a claim filed under a policy issued by Citizens to 10 percent of the additional amount actually paid over the amount originally offered by Citizens.
• Amendment 117314, filed by Senator Richter, allows a package policy covering both a home and motor vehicle to be nonrenewed to provide 90 days notice of nonrenewal.  Senator Richter explained that this is a late-filed amendment designed to attract new capital to Florida, and in particular, a large national carrier.  This amendment generated many questions and significant debate.  Concern was expressed by Senators Storms, Fasano, and Lynn that creating law for one particular company is bad policy.  Senator Bogdanoff stated that the reaction was “much ado about nothing” because the amendment merely conforms what is already in the bill to a particular product offered by certain companies.   She explained that “there is nothing sinister” occurring.  In closing on the amendment, Senator Richter apologized for getting excited about expanding the insurance marketplace in Florida. He clarified that this applies to a particular product, and not any one company.  Other carriers that write the product also may avail themselves of the provision.

The following amendments FAILED on Second Reading:

• Amendment 415180, filed by Senator Smith, would extend the claims filing deadline for new and reopened claims from 3 years to 5 years from the date the hurricane first made landfall or the windstorm caused the covered damage.
• Amendment 173446, filed by Senator Fasano, would require insurers to offer full sinkhole coverage.  There were many questions asked regarding this amendment and discussion ensued among Senators regarding whether requiring Citizens to provide sinkhole coverage and making it option for the private market would be inconsistent with the goal of reducing Citizens.  Senator Richter remained firm that the Legislature should not be mandating private insurers to write this coverage.  When Senator Dockery asked if insurers would be able to charge adequate premium to write sinkhole risks, Senator Fasano replied that they would, but conceded that any such rate increases would have to be approved byOIR  first.  Senator Alexander stated that “it is a fundamental fallacy” to rely on any statement made that OIR will approve the appropriate rate for sinkhole coverage.  Senator Richter agreed, referring to the ultimate goal of getting “Florida on sound footing” through the identification of cost drivers and properly addressing those cost drivers.  Following debate on the amendment, a vote was taken and the amendment failed by a vote of 12 to 20.
• Amendment 455890, filed by Senator Storms, would remove the language from the bill that would allow an insurer to re-certify a rate filing when additional or supplemental information is submitted to the OIR.  In debate, Senator Latvala explained that this issue was addressed previously in committee and that he and Senator Richter compromised to require an actuary to certify any additional submissions relating to a rate filing.  Senator Storms maintained that it should not be a burden to sign such submissions.  The amendment failed on voice vote.
• Amendment 544312, filed by Senator Fasano, would require insurers to repair structural damage or catastrophic ground cover collapse.  This amendment generated quite a few questions regarding whether such repair requirement would be capped at policy limits.  Senator Oelrich read a solicitation letter he received from 5 Star Adjusting and commented on the fear mongering engaged in by public adjusters.  Senator Fasano agreed and stated that this amendment would remove the monetary incentive to file such claims because there would not be an opportunity to pocket the cash; rather, repairs would be mandated.  There also was discussion regarding whether sidewalk cracks, etc., would have to be repaired.  At one point, it was suggested that the amendment be withdrawn so technical amendments could be made.  Senator Fasano stated he was amenable to amendments, but did not want to withdraw the amendment. The amendment failed on voice vote.

The following amendments were WITHDRAWN:

• Amendment 497744, filed by Senator Fasano, would restore the actual cash value/replacement cost value provision to current law.  Senator Fasano agreed to withdraw the amendment after Senator Richter explained that this is still a requirement of insurers and that the bill merely provides an additional option for insurers to offer a policy with a payment schedule based on actual cash value.
• Amendment 365730, filed by Senator Fasano, would change the definition of “sinkhole loss” to specify that additional living expenses are available and further, that cosmetic damage consisting of hairline to one-sixteenth-inch cracks are not covered unless accompanied by structural damage.
• Amendment 455150, filed by Senator Joyner, would lower the amount of premium required for a housing authority to form a self-insurance fund and delete an exception regarding the applicable tax rate.
• Amendment 216520, filed by Senator Joyner, also would lower the amount of premium required for a housing authority to form a self-insurance fund.
• Amendment 577456, filed by Senator Smith, would delete the legislative intent language relative to sinkholes.
• Amendment 208910, filed by Senator Diaz de la Portilla, would require that fees charged to use the Florida Public Model be calculated to cover the operation and maintenance costs of the Public Model, but not be used to cover the cost of the OIR’s use of the Model.
• Amendment 691464, filed by Senator Smith, would provide that the bill applies to policies issued on or after July 1, 2011.

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

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