House and Senate Omnibus Property Insurance Bills Amended Extensively; Status Remains Uncertain

 

While CS/CS/SB 2044 was temporarily postponed in the Senate yesterday, both this bill, and the House omnibus property insurance bill, CS/CS/1st Eng. HB 447, are on the Senate and House calendars today, April 23, 2010.  It is unclear at this time whether either one will be heard.

Both bills have been amended extensively.  Following is a summary of the most recent floor amendments filed to each:

 

CS/CS/1st Eng. HB 447

• Amendment 466201, which was late-filed by State Representative Joe Gibbons, would add a provision in § 627.062, F.S. stating that an insurer or rating organization may not use credit scoring when establishing and using rates, rating schedules and rating manuals.
• Amendment 474951, filed by State Representative Rick Kriseman, would amend the rate deregulation portion of HB 447 to mandate that the Florida Office of Insurance Regulation (“OIR”) review all rates, at least annually, to determine whether any rate charged by an insurer is excessive.
• Amendment 517803, also filed by Representative Kriseman, provides that any additional information added to a pending filing that has not yet been disapproved by the OIR must include a new certification.  Such additional information may not be considered a “new filing” but rather, must relate to a pending filing.
• Amendment 672333, filed by Representative Proctor would amend § 627.7011, F.S. to provide that the insurer shall initially pay the actual cash value (“ACV”) of the insured loss, less any applicable deductible and deletes the portion of the bill that states “ACV of the loss and shall pay the ACV of the insured loss, less any applicable deductible.”
• Amendment 710597, filed by Representative Kriseman, would amend § 627.7011, F.S., to provide that, in order to receive payment from an insurer, a policyholder must subsequently enter into a contract for the performance of building and structural repairs.  The insurer would then pay any remaining amounts for expenses incurred to perform such repairs as the work is performed.  Under the provisions of the amendment, payment by the insurer would be made within 15 days after the insurer’s receipt of a contractor’s invoice for work performed or expenses incurred.  With the exception of incidental expenses to mitigate further damage, the insurer or any contractor or subcontractor may not require the policyholder to advance payment for such repairs or expenses.  The amendment further provides that the insurer may waive the requirement for a contract.  When an insurer pays a claim by applying the ACV provisions of this section, and when the insured paid premiums based on replacement cost coverage, the insurer must pay the insured a premium refund representing the difference between the ACV premium and replacement cost value (“RCV”) premium.  The amendment specifies that, if a total loss occurs, the insurer must pay the replacement cost for the dwelling without reservation or holdback of any depreciation in value.
• Amendment 839113, filed by Representative Kriseman, would amend § 627.7011 and provide that, if a loss occurs to personal property that is insured on the basis of RCV, the insurer may limit its initial payment to a lump sum in an amount no less than 50 percent of the total RCV of all personal property to be replaced, less any applicable deductible, and must pay the remaining 50 percent of the total RCV in a lump sum within 10 days after an insured provides the insurer with receipts showing that the initial payment was used to purchase replacement property.  Under the provisions of the amendment, the insurer also may not require an insured to advance payment for the purchase of replacement property.  The insurer may not refuse to pay a policyholder if replacement property purchased is not identical to the destroyed property.  If a total loss occurs, the insurer must pay the replacement cost for content coverage without reservation or holdback of any depreciation in value, and the insured would not be required to submit receipts or an inventory of the contents.
• Amendment 977435, filed by State Representative Julio Robaina, is a non-substantive title amendment.

 

CS/CS/SB 2044

• Amendment 267518, filed by Senator Ronda Storms, would amend section 627.7011, F.S. to require that, after initial payment of ACV, the insurer shall pay any remaining amounts incurred to perform such repairs as the work is performed within 15 days after the insurer’s receipt of a contractor’s invoice for work performed.  The amendment would also require the mortgagor to endorse and return the payment check to the insured within 15 days after presentation of the check to the mortgagor, if the payment is required to be made to the insured and the mortgagor.  In addition, the amendment states that an insured will have a period of one year after the date the insurer pays ACV to make a claim for replacement cost.  Under the provisions of the amendment, if a total loss of a dwelling occurs, the insurer must pay the RCV without reservation or holdback of any depreciation in value.
  • Amendment 723638, which was late-filed by Senator Storms, would amend Amendment 267518, by correcting a typographical error specifying that Amendment 267518 should read actual “cash” value and not actual “case” value.
• Amendment 245148, also late-filed by Senator Storms, would amend section 627.7011, F.S. to require the insurer to pay at least the ACV of the insured loss, less any deductible.  It also would require the insured to subsequently enter into a contract for the performance of structural repairs. 
• Amendment 487212, which was late-filed by Senator Storms, would amend section 627.7011, F.S. to require payment by the insurer to be made within 15 days after the insurer’s receipt of a contractor’s invoice for work performed.
• Amendment 854232, also late-filed by Senator Storms, would amend section 627.7011, F.S. to require the the occurrence of a “total loss” as a trigger event.
• Amendment 962506, which was late-filed, but withdrawn by Senator Storms, would amend section 627.7011, F.S. to require a mortgagor to endorse and return a check to the insured within 15 days after presentation of the check to the mortgagor, if payment is required to be made to the insured and the mortgagor.  It also specifies that the mortgagor may not retain any portion of such funds to satisfy any claimed debt of the insured.
• Amendment 434440, filed by Senator Mike Fasano, would amend § 626.9541, F.S. that governs unfair methods of competition and unfair, or deceptive acts to provide that an unfair claim settlement practice includes failing to adopt and implement standards for the proper investigation and adjustment of claims.
• Amendment 457380, which was filed, but withdrawn by Senator Fasano, would have amended § 627.707, F.S. that governs standards for sinkhole claims investigation by insurers and non-renewals to require final payments for the structural or building stabilization and foundation repair work to be remitted within 15 days (rather than 30 days).  It also would also require the mortgagor to endorse and return the check to the insured within 15 days after presentation of the check to the mortgagor, if the payment is required to be made to the insured and the mortgagor.  The amendment specifies the mortgagor may not retain any portion of such funds to satisfy any claimed debt of the insured.  It also specifies an insured would have one year after the payment date of ACV to make a claim for replacement costs.  Finally, the amendment specifies that, in the event of a total loss of a dwelling, the insurer shall pay the RCV without reservation or holdback of any depreciation in value.
• Amendment 540640, filed by Senator Storms, is a non-substantive title amendment to § 627.707, F.S.
• Amendment 785946, filed by Senator Mike Bennett, would amend § 626.854, F.S., which governs the regulation of public adjusters to provide that compensation for a re-opened or supplemental claim may not exceed 20 percent of the re-opened or supplemental claim payment.  The amendment also provides that a public adjuster may not charge or accept anything of value in excess of 20 percent of the amount of insurance claim payments by the insurer for claims that are not based on events that are subject of a declaration of a state of emergency by the Governor.  The amendment also would provide that it is an unfair and deceptive insurance trade practice for a public adjuster to make statements, advertisements or solicitations that are deceptive or misleading, including:
  • A statement or representation that invites an insured policyholder to submit a claim when the policyholder does not have covered damage to insured property;
  • Any statement or representation that invites a policyholder to submit a claim by offering monetary or other valuable inducement;
  • A statement or representation that invites an insured policyholder to submit a claim by stating that there is “no risk” to the policyholder by submitting such a claim; and
  • Any statement or representation, or use of a logo or shield, that would imply, or could be mistakenly construed that the solicitation was issued or distributed by a governmental agency, or is sanctioned or endorsed by a governmental agency.

Amendment 785946 further states that, for purposes of this paragraph, the term “written advertisement” includes only newspapers, magazines, flyers and bulk mailers.  It also provides that the following disclaimer, which is not required to be printed on standard-size business cards, shall be added in bold print and capital letters in typeface no smaller than the typeface of the body of the text to all written advertisements by any public adjuster: “THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU MAY DISREGARD THIS ADVERTISEMENT.”

The Amendment also would require certain persons who act on behalf of an insurer to provide at least 48 hours notice to the insured, claimant, public adjuster or legal representative for an onsite inspection of the insured property.  It also authorizes the insured or claimant to deny access to the property if notice is not provided.  The insured/claimant may waive notice.

Amendment 785946 would require a public adjuster to ensure prompt notice of certain property loss claims and provides that an insurer shall be allowed to interview the insured directly about the loss claim.  It also would prohibit an insurer from obstructing or preventing a public adjuster from communicating with an insured and requires the insurer to communicate with the public adjuster in an effort to reach agreement as to the scope of the covered loss under the insurance policy.  Under the provisions of the amendment, a public adjuster would be prohibited from restricting or preventing persons acting on behalf of the insured from having reasonable access to the insured or the insured’s property and prohibit a public adjuster from restricting or preventing the insured’s adjuster from having reasonable access to, or inspecting the insured’s property. 

Senator Bennett’s amendment would authorize an insured’s adjuster to be present for the inspection, as well as prohibit a licensed contractor/subcontractor from adjusting a claim on behalf of an insured if such person is not a licensed public adjuster (unless excepted).  Further, Amendment 785946  amends § 626.8651, F.S. to require that a public adjuster apprentice complete a minimum of eight hours of continuing education to qualify for licensure.  Section 626.8796, F.S. also would be amended to set forth certain requirements that shall be included in a public adjuster contract. 

Amendment 785946 would create § 626.70132, F.S. to require that notice of a claim, supplemental claim or reopened claim be given to the insurer within three years after a hurricane first made landfall, or a windstorm caused a covered damage.  The new statute would set forth a definition for re-opened claim and supplemental claim to mean any additional claim for recovery from the insurer for losses from the same hurricane or windstorm for which the insurer has previously adjusted pursuant to the initial claim.  Amendment 785946 specifies that this section may not be interpreted to affect any applicable limitation on civil actions provided in s. 95.11 for claims, supplemental claims or reopened claims filed under this section in a timely manner. 

Amendment 931266 (which would amend Amendment 785946) would amend § 626.70132 to provide that when a public adjuster assists an insured in resolving a claim, the insurance company, upon the written request of the insured, shall provide payment to the public adjuster-via separate instrument-for an amount equal to the public adjuster’s fee as memorialized in the agreement between the public adjuster and the insured. The balance of the proceeds would be directly payable to the insured and any other lienholders

• Amendment 912646, which was filed, but withdrawn by Senator Fasano, would delete a newly adopted provision providing that a certification is not rendered false if, after a rate filing is made, the insurer provides the OIR with additional or supplementary information pursuant to a formal/informal request from the OIR, or for any reason.
• Amendment 520870, filed by Senator Dave Aronberg, would amend § 624.4095, F.S. by clarifying that the provision is with regard to § 624.407 and § 627.408, F.S.
• Amendment 291350 by Senator Garrett Richter, would amend § 627.0613, F.S. by expanding the definition of “valid consumer complaint” to mean a written or oral communication that is subsequently converted to a written form from a consumer, rather just a written communication from a consumer. In addition, the Amendment would provide that a valid complaint does not arise if, in the disposition thereof by the Florida Department of Financial Services, the insurer’s position is upheld, or if the policy provision is upheld, the coverage is explained, additional information is provided or the complaint is withdrawn.
• Amendment 527714, filed by Senator Carey Baker, would amend § 627.70131, F.S. to specify insurers’ duties within 90 days of receipt of either an initial or supplemental property insurance claim.
• Amendment 562376, filed by Senator Storms, would provide a non-substantive title amendment.
• Amendment 676430, filed by Senator Baker, would amend § 627.711, F.S. to include a new provision that the insurer may require the mitigation inspector or inspection company to provide evidence of the inspector’s or inspection company’s quality assurance program. At the insurer’s expense, before accepting this program as valid, the insurer may require that any uniform mitigation verification form provided by a mitigation inspector or inspection company that does not possess, or has not provided evidence to the insurer of a quality assurance program, shall be independently verified by an inspector, inspection company or independent third-party quality assurance provider that possesses a quality assurance program.
• Amendment 831248, which was filed, but withdrawn by Senator Richter, would amend § 627.707, F.S. relating to final payments for structural or building stabilization and foundation repair work to state that these payments shall be remitted after such work is completed in accordance with the terms of the policy and the report’s recommendations, and after final bills or receipts have been submitted to the insurer. If payment is required to be made to the insured and the mortgagee, the mortgagee shall endorse and return the check to the insured after presentation of the check to the mortgagee and may not retain any portion of such funds to satisfy a claimed debt of the insured. An insured shall have a period of one year after the date the insurer pays ACV to make a claim for replacement cost. If a total loss of a dwelling occurs, the insurer shall pay the replacement cost coverage without reservation or holdback of any depreciation in value, pursuant to section 627.702(1)(a).
• Amendment 837380, also filed by Senator Richter, would amend § 627.7011, F.S. to state that if a “total loss occurs, the insurer shall pay the replacement cost without reservation or holdback of any depreciation in value.” The provision also strikes “for contents coverage.”
• Amendment 103172, filed by Senator Fasano, would amend § 624.424, F.S., which governs annual statements, by revising the frequency that an insurer may use the same accountant or partner to prepare an annual audited financial report.
• Amendment 124830, filed by Senator Aronberg, would amend § 626.221, F.S. by expanding the list of individuals who are exempt from the requirement to pass an examination before being issued a license as an agent, customer representative or adjuster.
• Amendment 538148, filed by Senator Aronberg, would require applicants for Citizens Property Insurance Corporation (“Citizens”) coverage and Citizens policyholders to sign an acknowledgement that a policy may be subject to surcharges under certain circumstances.
• Amendment 597492, filed by Senator Bennett, would create § 624.611, F.S. to govern “catastrophe contracts” and allow an insurer to submit to the OIR, in advance of the hurricane season, a plan to use financial contracts other than reinsurance contracts to provide catastrophe loss funding. In such a plan, the insurer shall demonstrate that the coverage, together with its reinsurance program, will provide adequate protection for policyholders in the event of a natural catastrophe. If the contract does not provide for coverage that is highly correlated with the actual losses of the insurer, the insurer shall demonstrate its ability to cover the risk created by such lack of correlation. If the OIR approves the plan, the insurer may purchase the contracts and take credit for reinsurance for amounts expected or due from other parties to the contracts in accordance with any terms, conditions or limitations established by the OIR.
• Amendment 602482, filed by Senator Aronberg, would amend § 627.351, F.S. to revise the conditions under which the Citizens policyholder surcharge may be imposed.

 

In addition to CS/CS/SB 2044 and CS/CS/1^st Eng. HB 447, today’s House and Senate Session agendas include the following insurance-related bills:

House

• HB 7217 relating to Florida Hurricane Catastrophe Fund Emergency Assessments
• HB 1035 relating to Elevator Safety
• HB 663 relating to Building Safety
• HB 7241 relating to Employee Leasing Companies

Senate

• SB 2176 relating to Insurance

 

Colodny Fass will monitor the status of these bills and provide additional information as it becomes available.

 

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