FPCA Homeowners Division: Senate Rules Committee Report — April 5, 2011
Apr 5, 2011
Florida Property and Casualty Association Members:
During its meeting on Tuesday, April 5, 2011, the Senate Rules Committee considered CS/CS/CS/HB 408 Relating to Property Insurance, sponsored by Senator Garrett Richter (R-Naples) and co-sponsored by Sen. Alan Hays (R-Umatilla). Of special note, the Committee approved amendments that allow an insurer to offer a policy that allows for payment of actual cash value with replacement cost holdback but also requires an insurer to offer a policy without the holdback process, removed the prohibition from using a “use and file” rate and replaced it with a moratorium on “use and file” rate filing until May 1, 2012, maintained the optional offer of sinkhole coverage for private market insurers but requires Citizens Property Insurance Corporation (“Citizens”) to offer sinkhole coverage, renames Citizens as the “Taxpayer Funded Insurance Company,” allows a participant in the Capital Build Up Incentive Program to renegotiate certain terms of their surplus notes, and allows for supplemental information to be submitted in a rate filing. Following the consideration of several amendments, CS/CS/CS/HB 408 passed favorably by a vote of 9 Yeas, 3 Nays.
After introduction of the bill by Sen. Richter, the Committee entered in the amendatory process, taking the following actions:
(1) Amendment 192750 filed by Sen. Smith, restoring the mitigation credit program (making no change to current law), was ADOPTED after some questions and debate.
(2) Amendment 741250 filed by Sen. Smith, requiring upon the completion of any building stabilization or found repair for a verified sinkhole loss, an engineer to issue report to property owner specifying what repairs have been performed and certifying within a reasonable degree of professional probability, was ADOPTED without question or debate.
(3) Amendment 971970 filed by Sen. Smith, requiring every insurer authorized to transact property insurance, including commercial insurance, to provide catastrophic ground collapse was ADOPTED with no question or debate.
(4) Amendment 475834 filed by Sen. Smith, raised questions and debate over the provisions requiring Citizens to offer sinkhole coverage and the payment on sinkhole claims to be entirely dedicated to the cost of repairing the structure or remediation of the land, with concerns that it went against the goal of lessening the policies in Citizens by making it attractive to consumers by offering sinkhole coverage. During the original vote, the amendment was NOT ADOPTED. However, a motion was later made to reconsider Amendment 475834 and it was thereafter ADOPTED.
(5) Amendment 879158 filed by Sen. Smith, adds a provision to § 627.351, F.S., governing Citizens, that prohibits Citizens policyholders from engaging the services of a public adjuster to represent the policyholder with respect to any claim filed under a policy until the corporation has tendered an offer regarding such claim. Also provides that for any claim not filed under any policy of the corporation, a public adjuster may not request payment or be paid on a contingency basis a percentage of the claim amount and be only be paid a reasonable hourly fee based on actual work perform, subject to maximum of 5% of the additional amount actually paid over the amount originally offered. After some clarification questions were raised, there was no debate and the amendment was ADOPTED.
(6) Amendment 102810 filed by Sen. Richter, provides that Citizens is not subject to bad faith liability. Following question, debate, and testimony on the amendment, the amendment was NOT ADOPTED.
(7) Amendment 530402 filed by Sen. Smith, operates as a substitute amendment for the traveling Amendment 901222, filed by Sen. Fasano, and restores the original provisions for ACV/RCV by providing that the insurer must offer coverage under which the insurer is obligated to pay the replacement cost without reservation or holdback for any depreciation in value, whether or not the insured replaces the property. Also provides the insurer may also offer coverage under which the insurer may limit the initial payment to the actual cash value of the personal property to be replaced, require the insured to provide receipts for the purchase of the property financed by the initial payment, use such receipts to make the next payment requested by the insured for the replacement of insured property, and continue this process until the insured remits all receipts up to the policy limits for replacement costs. Requires the insurer to provide clear notice of this process in the insurance contract and that the insurer may not require the policyholder to advance payment for the replaced property. Following questions on the amendment, there was no debate and the amendment was ADOPTED.
(8) Amendment 430842 filed by Sen. Smith was withdrawn without objection.
(9) Amendment 421098 filed by Sen. Smith, effectively changing the date of the “use and file” provision, was ADOPTED.
(10) Amendment 138968 filed by Sen. Smith, clarifying that Citizens must annually implement a rate increase, except as to sinkhole coverage, that does not exceed 10% for any single policy issued, was ADOPTED.
(11) Amendment 300768 filed by Sen. Smith regarding certification of rate filing and supplemental information was ADOPTED.
(12) Amendment 170848 filed by Sen. Alexander, amends § 627.711, F.S., to provide an insurer may require that a uniform mitigation verification form provided by a policyholder, policyholder’s agency, or authorized mitigation inspector be independently verified by specified persons was ADOPTED.
(13) Amendment 131476 filed by Sen. Alexander, amends the insurance Capital Build-Up Incentive Program under § 215.5595, F.S., by adding subsection (12) to read: “The insurer may request that the board renegotiate the terms of any surplus note issued under this section before January 1, 2011. The request must be submitted to the board by January 1, 2012. If the insurer agrees to accelerate the payment period of the note by at least 5 years, the board must agree to exempt the insurer from the premium-to-surplus ratios required under paragraph (2)(d). If the insurer agrees to an acceleration of the payment period for less than 5 years, the board may, after consultation with the Office of Insurance Regulation, 16 agree to an appropriate revision of the premium-to-surplus ratios required under paragraph (2)(d) for the remaining term of the note if the revised ratios are not lower than a minimum writing ratio of net premium to surplus of at least 1 to 1 and, alternatively, a minimum writing ratio of gross premium to surplus of at least 3 to 1.” After no questions, public input, or debate, the amendment was ADOPTED.
(14) A Late Filed Amendment by Sen. Alexander was considered without objection, changing the name of Citizens to “Taxpayer Funded Insurance Corporation.” The Committee made one technical change to the amendment and the amendment was ADOPTED over Sen. Smith’s objection.
The Committee then turned to the bill as amended and a motion was made to offer the committee substitute for CS/CS/CS/SB 408. Debate on the bill followed, Sen. Richter closed, and CS/CS/CS/HB 408 favorably passed.
Should you have any questions or comments, please contact Katie Webb (kwebb@cftlaw.com) at Colodny Fass.
