FPCA Member Input Requested on Sinkhole Tail Claims Alternative Legislative Proposal
Feb 4, 2011
After meeting with Florida Senator Mike Bennett in late January, during which he encouraged a continued effort to create a non-governmental entity that would address sinkhole tail claims, American Strategic Insurance General Counsel, Angel Bostick, in conjunction with the company’s External Counsel, has formulated a potential option based on asbestos claims litigation-related Florida legislation enacted in 2005.
Specifically, the 2005 Florida Legislature addressed asbestos claims with the enaction of the Asbestos and Silica Compensation Fairness Act (“ASCFA”), which applied retroactively to all claims other than those already in litigation and raised the burden on claimants. The ASCFA enumerated various and specific elements of a prima facie case and established that a claimant must establish a prima facie showing of the enumerated elements before being permitted to bring a claim. Subsequently, ASCFA was challenged on Constitutional grounds and upheld.
Thus, the ASCFA is being proposed as a model to create the Sinkhole Compensation Fairness Act (“SCFA”), which would be designed to control the cost of tail claims–those that are made subsequent to the effective termination date of the occurring policy period–by weeding out questionable claims and ensuring that only real sinkhole claims qualify for consideration.
For example, the proposed SCFA could require that, before filing a sinkhole claim, a claimant must show:
(1) That “structural damage” (as defined therein) has occurred;
(2) That it has occurred during the policy period; and
(3) That it has occurred as a result of a sinkhole.
This process would eliminate insurers’ duty to investigate the types of questionable, profit-motivated settling-and-cracking claims that are currently causing sinkhole claims frequency and expenses to skyrocket.
Mr. Bostick notes that the SCFA could be used in conjunction with the State of Florida Sinkhole Facility proposal, or it could also be used with legislation filed by Senator Garrett Richter if passage of a State-run sinkhole facility becomes impossible.
Before drafting of the proposed statutory SCFA language begins, Florida Property and Casualty Association members are being asked to consider this concept and provide input.
- Please send all comments at your earliest convenience to Katie Scott Webb (kwebb@cftlaw.com) at Colodny Fass.
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