Nelson Strike-All To Be Submitted for House Property Insurance Bill Package

On Friday, April 3, 2009, State Representative Bryan Nelson will offer a strike-all amendment to House Bill 1495, which is scheduled to be considered by the Florida House Insurance, Business and Financial Affairs Policy Committee.  Representative Nelson’s amendment is attached for your review.

Both the strike-all and HB 1495, which also is sponsored by Representative Nelson, relate to the Florida Hurricane Catastrophe Fund and Citizens Property Insurance Corporation, among other insurance-related issues.

While HB 1495 is not identical to SB 1950, the Senate property insurance legislative package sponsored by State Senator Garrett Richter, it is considered to be the House of Representatives’ counter-proposal to the Senate’s version. 

Drafting details in the amendment will be modified as the Florida Legislative process progresses, but the general provisions in the strike-all amendment include the following:

• Specific authorization for the Florida State Board of Administration to purchase Florida Hurricane Catastrophe Fund (“FHCF”) bonds
• Re-authorization until Dec 31, 2011 of an additional $10 million of coveragefrom the FHCF for limited apportionment companies, companies approved to participate in the Insurance Capital Build-Up Incentive Program, and insurers that purchased this coverage in 2008;and clarificationthat this coverage would be paid after losses from a covered event are reported
• Provides a “cash build-up factor” for the FHCF beginning in 2009, and increasing incrementally until the factor reaches 25 percent
• Extends portions of the Temporary Increase in Coverage Limit (“TICL”) layer until 2013; however beginning in 2009 TICL coverage is reduced incrementally each year. Specifically, beginning in 2009 the TICL layer is reduced by $2 billion in total capacity and the co-pay will increase by 25 percent. Each year after 2009, the TICL layer will continue incremental reductions on both the total capacity and co-payment. The amendment also will increase the cost of purchasing the TICL layer incrementally.
• A prohibition on the purchase of TICL by Citizens Property Insurance Corporation (“Citizens”)
• Deletion of the option for the Florida State Board of Administration to authorize the $4 billion layer above TICL
• Allowance of a rating “flex ban” of 10 percent for residential-only policies beginning January 1, 2010, provided that the increase does not result in an increase of (approximately)15 percent in any one territory. This option may be exercised once a year
• Authorization of the Florida Office of Insurance Regulation to use attorney-client privilege and work product doctrine to protect certain communications
• Allowance for an insurer to pass through the cost of reinsurance coverage (not to exceed 10 percent), that duplicates the TICL layer
• A delay until 2012 of the exclusion from Citizens of high-value homes without certain mitigation features
• Increases the amount allowed in an initial Citizens assessment to Citizens policyholders in the event of a deficit from 15 percent to 25 percent
• Staggers the terms of the Citizens Board of Directors
• Establishes a “glide path” for Citizens rates of 10 percent statewide average per year, not to exceed 20 percent per any single policy
• Requires 10 percent of the Citizens rate increase to be allocated toward funding the My Safe Florida Home (“MSFH”) program
• Provides certain parameters for inspections and inspectors in the MSFH
• Provides for a Condominium Mitigation program in MSFH
• Establishes that a misrepresentation on a mitigation verification form is a first-degree misdemeanor
• Provides a mechanism to review mitigation discounts
• Prohibits multi-line discounts for policies issued after January 1, 2010, if the homeowners’ policy remains in Citizens
• Allows agents to explain the Florida Insurance Guaranty Association

Amendments are expected to be filed and adopted to Representative Nelson’s strike-all amendment.  Specifically, it is expected that one amendment will be offered to effect further regulation on the conduct of public adjusters.

For additional information on Florida’s Legislative Process and terminology, click here.

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

To unsubscribe from this newsletter, please send an email to ccochran@cftlaw.com.