Governor Signs SB 2012 Relating to Insurance Policies: June 23

On June 23, 2008, Governor Charlie Crist signed Senate Bill 2012 relating to Insurance Policies/Adjusters, Agents and PIP.  The bill, sponsored by Senator Ted Deutch (D- Delray Beach), originally addressed long-term care issues.  However, it was amended several times during the legislative process to include other insurance-related provisions. 

As passed, the bill amends the laws relating to public adjusters, the Florida Hurricane Catastrophe Fund, multiple-employer welfare arrangements, the Personal Injury Protection fee schedule, Citizen’s Property Insurance Corporation, insurance agents, title insurance, self-insurance funds, and risk pooling for hospitals, among other provisions. 

The bill is effective July 1, 2008 unless otherwise provided. 

A complete summary of Senate Bill 2012 is included below for your reference.  To view the bill text, click here. 

 

 

 Should you have any questions, please feel free to contact Colodny Fass.

 

SUMMARY:  CS/CS/SB 2012 Relating to Insurance Policies/Adjusters, Agents and PIP

SB 2012 was passed in the Senate on April 3, 2008, by a vote of 38 Yeas, 0 Nays.  In the House, this bill was substituted for HB 1431.  On the second reading, amendments 613621 and 944233 were adopted.  On April 30, the bill was read a third time and additional amendments were adopted (003745, 320751, 758247, 794475, 824245, 916039, 961399, and 988445).  This bill, with adopted amendments, was passed in the House on April 30 by a vote of 114 Yeas, 0 Nays.  The bill, as amended, was then referred back to the Senate for reconsideration.  On May 2, the Senate passed the bill as amended by a vote of 39 Yeas, 0 Nays.

Overview

This bill revises Section 627.94073, Florida Statutes (“F.S.”), to require insurers to notify policyholders of the right to designate a secondary addressee to receive a notice of termination of long-term care insurance.  The bill also requires that a canceled long-term care policy be reinstated if the policyholder failed to pay the premium under certain circumstances.  The bill also amends Section 626.9543 F.S. to extend the time that certain insurers must permit claims from a Holocaust victim or from their beneficiaries, descendants, or heirs.

Several late-filed amendments to this bill expanded its breadth significantly.  These amendments include numerous changes to the law governing public adjusters, such as fees, solicitation and business practices, licensure, continuing education requirements and contract requirements.  The bill also revises Section 215.555 F.S. concerning the Florida Hurricane Catastrophe Fund (“FHCF”).  Specifically, the bill, as amended, allows limited apportionment companies and other specified insurance companies to purchase an additional $10 million in coverage from the FHCF below the statutory retention for another year.

The bill was also amended to include authorization for the Office of Insurance Regulation (“OIR”) to waive the principal place of business requirement for multiple-employer welfare arrangements in certain circumstances.  Another amendment revises Section 627.736 F.S. identifying the participating physicians’ schedule of Medicare Part B for 2007 as the schedule of maximum charges an insurer may utilize for a limited reimbursement of certain medical services for injured persons covered by personal injury protection.  The bill also revises Section 627.351 F.S. concerning the confidentiality of Citizens Property Insurance Corporation (“Citizens”) underwriting files and clarifying the right of certain parties to discovery.

The bill, as amended, revises Section 626.221 F.S. regarding applicants for license as a customer representative; Section 626.2815 F.S. regarding continuing education requirements for persons licensed to engage in the sale of insurance; and Section 626.381 F.S. regarding the renewal, continuation, reinstatement, or termination of appointment. 

The bill also includes a statement of legislative intent regarding the Uniform Commercial Code (“UCC”) insurance product and authorization for title insurers to seek approval for rate deviations from the UCC insurance product.  Additionally, the bill revises Section 624.4266 F.S. regarding the authority of public housing authorities to form self-insurance funds.  Finally, Section 395.106 F.S. concerning risk pooling by certain hospitals and hospital systems, is also addressed in the bill. 
 

Section 1   Long-Term Care Policies

• Amends Section 627.94073 F.S. to require insurers to notify policyholders on an annual basis, instead of every 2 years, of the policyholder’s right to designate a secondary addressee to receive a notice of termination of long-term care insurance policies.  The insurer’s form must also include a provision for the policyholder to update any changes made to the address of the secondary addressee. 

• Amendment 003745 to the bill further amends Section 627.94073 F.S. to require notice of possible lapse in coverage due to nonpayment of premium to be given by U.S. Postal Service proof of mailing or certified or registered mail to the policyholder and secondary designee.  The bill further provides that if a policy is canceled due to nonpayment of premium, the policy may be reinstated under certain circumstances.

Section 2 Holocaust Victims

• Amends Section 626.9543 F.S. to extend the period within which certain insurers must permit claims from a Holocaust victim or from a beneficiary, descendant, or heir of such victim.  The bill also extends the period of time during which certain actions brought by such a victim, descendant, or heir seeking proceeds of certain insurance policies may not be dismissed.

Section 3  Effective Date

• The effective date for this act is July 1, 2008.

Amendment 758247 – Public Adjusters

This amendment includes provisions from HB 661.

1.  Filing fee for an Application for Reinstatement of Suspended License

• This amendment to the bill amends Section 624.501 F.S. by providing for filing fees for an application for reinstatement of a suspended license.  Effective date is January 1, 2009.

2.  Public Adjuster Apprentice

• Section 626.015 F.S. is amended to redefine the term “adjuster” to include a public adjuster apprentice.  Effective date is January 1, 2009.

3.  Examination Requirements – Reinstatement

• Section 626.221 F.S. is amended to provide that certain company employee adjusters and independent adjusters seeking reinstatement of a suspended license are not required to take an examination.  Effective date is January 1, 2009.

4.  Examination Requirements – Separate Exam for Public Adjusters

• Section 626.241 F.S. is amended to require the Department of Financial Services (“DFS”) to create a separate examination for applicants seeking licensure as a public adjuster and a separate examination for applicants seeking licensure as a company employee adjuster or independent adjuster. 

The amendment also provides that no examination on workers’ compensation insurance or health insurance is required for public adjusters.  Effective date is January 1, 2009.

5.  Reinstatement Requirements

• Section 626.641 F.S. is amended to require that a suspended licensee may not be reinstated unless an application for reinstatement is submitted and approved by DFS.  Further, DFS is prohibited from approving such applications if DFS finds that the circumstances for which the license, appointment, or eligibility was suspended still exist or are likely to recur.  Effective date is January 1, 2009. 

6.  Restrictions on Solicitation and Business Practices – Effective October 1, 2008

• Section 626.854 F.S. is amended to prohibit public adjusters from soliciting business except between the hours of 8 a.m. and 8 p.m., Monday through Saturday.  Public adjusters are prohibited from initiating contact, engaging in solicitation, or entering into a contract with any insured or claimant until at least 48 hours after the occurrence of an event that may be the subject of the claim, unless the contact is initiated by the insured or claimant. 

• An insured or claimant is authorized to cancel a public adjuster’s contract to adjust a claim without penalty or obligation if done so within 3 business days (or 5 business days if during any state of emergency and for a period of 1 year after the date of loss).  The public adjuster’s contract must inform the insured or claimant regarding his or her right to cancel the contract, and advise the insured or claimant that notice of cancellation must be submitted in writing.

• The amendment provides that it is an unfair and deceptive insurance trade practice pursuant to Section 626.9541 F.S. for a public adjuster to circulate or disseminate any advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance which is untrue, deceptive, or misleading.  Public adjusters and public adjuster apprentices are prohibited from giving or offering monetary loans or advances, or any article of merchandise with a value in excess of $25 to a client or prospective clients. 

• If a public adjuster enters into a contract with an insured or claimant to reopen a claim or to file a supplemental claim that seeks additional payments for a claim previously paid in part or full, or otherwise settled, the public adjuster may not charge, agree to, or accept any compensation or other value based on a previous settlement or claim payment by the insurer for the same cause of loss.  Moreover, public adjuster compensation is limited to ten percent in certain circumstances, and twenty percent in all other cases.

• Public adjusters are required to provide the claimant with a written estimate of the loss to assist in the submission of a proof of loss or any other claim or payment of insurance proceeds.  Public adjusters are required to retain such written estimates for 5 years and make such estimates available upon request.

7.  Public Adjuster Apprentice

• Section 626.8541 F.S. is created to define “public adjuster apprentice,” and requires a public adjuster apprentice to work with a licensed and appointed public adjuster for a period of 12 months prior to being eligible for appointment as a licensed public adjuster.  Effective date is January 1, 2009.

8.  Required Qualifications

• Section 626.865 F.S. is amended to require additional qualifications, including successful passage of the public adjuster examination, which applicants must possess before DFS may issue a public adjuster license.  Effective date is January 1, 2009.

9.  Public Adjuster Apprentice License

• Section 626.8651 F.S. is created providing the requirements for licensure as a public adjuster apprentice.  In addition, the new statute requires DFS to approve an application under certain circumstances and that all license fees must be paid before DFS may issue a license. 

• An applicant must also file a bond in a specified amount in favor of DFS.  The apprentice’s work must be supervised by a license public adjuster in good standing, and the supervising adjuster is responsible for the acts of the apprentice.  DFS is authorized to adopt rules governing employment requirements.  Effective date is January 1, 2009.      

10.  Continuing Education Requirements

• Section 626.869 F.S. is amended to provide that an examination on workers’ compensation or health insurance may not be required for public adjusters.  Also, continuing education requirements for company employee adjusters, independent adjusters, and public adjusters are revised.  The statute is also amended to provide continuing education requirements for non-resident public adjusters.  Effective date is October 1, 2008.

11.  Disciplinary Guidelines

• The disciplinary guidelines set forth in Section 626.8698 F.S. are amended to include public adjuster apprentices.  Effective date is October 1, 2008.

12.  Application Requirements – Reinstatement

• The application requirements set forth in Section 626.870 F.S. are amended to require an application, examination and fee in order for an applicant to be considered for reinstatement following suspension.  Further, successful completion of the examination does not automatically entitle the applicant to have a license reinstated.  Effective date is January 1, 2009.

13.  Non-Resident Public Adjuster’s Qualifications

• Section 626.8732 F.S. is amended to revise the requirements for licensure as a nonresident public adjuster.  This provision further requires nonresident public adjusters to provide certain information with his or her application and requires DFS to verify the nonresident applicant’s licensing status.  Effective date is January 1, 2009.

14.  Contract Requirements

• Section 626.8796 F.S. is created to require all contracts for public adjuster services be in writing and must prominently display the following statement on the contract:  “Pursuant to s. 817.234, Florida Statutes, any person who, with the intent to injure, defraud, or deceive any insurer or insured, prepares, presents, or causes to be presented a proof of loss or estimate of cost or repair of damaged property in support of a claim under an insurance policy knowing that the proof of loss or estimate of claim or repairs contains any false, incomplete, or misleading information concerning any fact or thing material to the claim commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.803, or s. 775.084, Florida Statutes.”  Effective date is October 1, 2008.

15.  Proof of Loss; Fraud Statement

• Section 626.8797 F.S. is created to require that all proof of loss statements prominently display the same notice set forth in item 14, Contract Requirements, above.  Effective date is October 1, 2008.

Amendment 794475 – Florida Hurricane Catastrophe Fund

This amendment includes provisions from HB 7021.

• This amendment allows limited apportionment companies and other specified insurance companies to purchase an additional $10 million in coverage from the FHCF below the statutory retention for another year.

Amendment 944233 – Personal Injury Protection Benefits

This amendment includes provisions from SB 2174/SB 2338.

• Section 627.736 F.S. is amended to identify the participating physicians’ schedule of Medicare Part B for 2007 as the schedule of maximum charges an insurer may utilize for limited reimbursement of certain medical services incurred by injured persons covered by personal injury protection.

Amendment 613621 – Multiple-Employer Welfare Arrangement

• Section 624.443 F.S. is amended to authorize OIR to waive the requirement that a multiple-employer welfare arrangement maintain its principal place of business in this state if the arrangement meets certain specified conditions and has a minimum specified fund balance at the time of licensure.

Amendment 988445 – Citizens Property Insurance Corporation

• Section 627.351 F.S. is amended regarding the confidentiality of Citizens’ underwriting files and clarifying the right of certain parties to discovery of these files.  Specifically, a policyholder who files suit against Citizens has the right to discover the contents of his or her own claims file to the same extent that discovery of such contents would be available from a private insurer in litigation.

Amendment 320751 – Insurance Agents and Other Licensees

This amendment includes provisions from HB 565.

Customer Representative Examination Requirements – Exemptions

• Effective January 1, 2009, Section 626.221 F.S. is amended to create an exemption from examination for any customer representative license applicant who had earned an associate’s degree or bachelor’s degree from an accredited college or university with at least 9 academic hours of property and casualty insurance curriculum.

Continuing Education Requirements for Insurance Agents

• Section 626.2815 F.S. is amended to expand the application of continuing education requirements to each insurer, employer, or appointing entity, in addition to insurance agents.

• An appointing entity, except one that appoints individuals who are employees or exclusive independent contractors of the appointing entity, may not require as a condition of appointment that the appointed agent take an approved course or program that is not of the appointed agent’s choosing.

• The statutorily-created residual market entities, such as the Citizens and the various Joint Underwriting Associations, may require their employees to take training relevant to their employment.

• Monitored examinations are not required for independent study programs presented in a paper or printed material format that imposes a final closed book examination that meets the requirements of DFS’s rule for self-study courses.

• Such final examinations may be taken without a proctor, provided that affidavits that the student did not receive outside assistance are provided by the examinee and the examinee’s supervisor, manager or agency owner; or, if the examinee is a sole proprietor, self-employed or a partner of an agency, an affidavit from a distinguished third party must be provided.

• Sworn affidavits must be received by the approved provider prior to the reporting of continuing education credits to DFS.

Renewal, Continuation, Reinstatement, or Termination of Appointment

• An appointing entity may require an appointee to attend training and education programs of the appointing entity in order for the appointee to receive a new appointment or maintain an existing appointment.  However, an appointing entity may not require, directly or indirectly, any appointee to attend any training programs that are wholly or partially approved for general continuing education credit as provided in section 626.2815 F.S.

• Each appointing entity may appoint only those persons who have met the continuing education requirements of the license necessary for such appointment as provided in Section 626.2815 F.S.  However, an appointing entity may not make or allow, directly or indirectly, the appointment of any appointee or potential appointee to be contingent, in whole or in part, on any appointee’s attendance at any course that is approved, in whole or in part, for continuing education credit pursuant to Section 626.2815 F.S.

Amendment 824245 – UCC Insurance Product

• This amendment includes a statement of legislative intent regarding the UCC insurance product and authorization for title insurers to seek approval for rate deviations from the UCC insurance product.

Amendment 916039 – Public Housing Authorities Self-Insurance Funds

• This amendment revises Section 624.4266 F.S. regarding the authority of public housing authorities to form self-insurance funds.  The amendment further specifies self-insurance fund requirements and provides for application of certain provisions of law to premiums, contributions, and assessments of public authority’s self-insurance funds.  In addition, an alternative tax rate is specified. 

Amendment 961399 – Risk Pooling by Hospitals

• Section 395.106 F.S. is revised to authorize certain alliances formed by hospitals to implement self-insurance coverage for its members.  This amendment also authorizes reinsurance companies to issue coverage to certain self-insuring alliances under certain circumstances.  In addition, this provision provides for the consideration of certain alliances as insurers for certain purposes, and provides that alliance reinsurance contracts receive the same tax treatment as reinsurance contracts entered into by insurance companies. 

 

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