Senate Amends ‘Open Rating’ Bill Onto House Version–HB 1171; Third Reading Expected Today

After three consecutive days on the Senate Special Order calendar, SB 2036 relating to Residential Property Insurance was considered and amended on second reading by the Senate on April 30, 2009.   

During floor action, SB 2036 was substituted by HB 1171 and all amendments that had been adopted on SB 2036 during the second reading then were adopted onto HB 1171, and those amendments that had been defeated or withdrawn in regard to SB 2036 were all withdrawn as well.  Thus, HB 1171 and SB 2036 are now identical.  SB 2036 was then procedurally laid on the table and now will reference HB 1171.

HB 1171 is expected to be heard by the Senate today (May 1) on third reading.

The following is a summary of the amendments that were initially considered and passed onto SB 2036, and are now part of HB 1171:

• A technical amendment to an amendment (Bar Code 247958) was adopted.

• An amendment by Senator Mike Bennett (Bar Code 738868) that includes additional surplus and net written premium requirements was adopted.

• An amendment by Senator Bennett (Bar Code 682420) relating to a form disclaimer statement that includes the www.shopandcompare.com Web site was adopted.

• An amendment by Senator Bennett (Bar Code 804398) requiring an insured to obtain an additional quote from Citizens Property Insurance Corporation or a private market insurer was adopted.

• An amendment by Senator Bennett (Bar Code 416296) requiring an insurer to provide a policyholder with a 180 notice of non-renewal was adopted.

The following amendments that failed or were withdrawn from SB 2036 were also withdrawn from HB 1171:

• An amendment failed by Senator Steve Oelrich (Bar Code 597406) that would have expanded the bill to include additional insurers. As it was written, the bill only applies to 15 companies.

• An amendment failed by Senator Dan Gelber (Bar Code 195670) that would have provided for a maximum 12 percent rate increase.

• An amendment by Senator Jeremy Ring was withdrawn (Bar Code 810378) after a substitute to that amendment failed (Bar Code 965744).  That amendment related to rating standards for companies purchasing reinsurance from any reinsurer other than the Florida Hurricane Catastrophe Fund.

• An amendment failed by Senator Ronda Storms (Bar Code 386462) that would disqualify any insurer from issuing a policy under the provisions of the bill that has filed an application to withdraw from the Florida residential property insurance market within 18 months of the section’s effective date (ie: State Farm).

• An amendment failed by Senator Gelber (Bar Code 451798) that would require an insurer issuing a policy under the provisions of the bill and section 627.062(2)(k) to maintain its percentage of Florida residential property insurance market share as calculated by the Florida Office of Insurance Regulation as of December 31 of the previous year.

• Two amendments by Senator Gelber further restricting the types of policies that could be written under the section were withdrawn.

HB 1171 would authorize certain insurers to use a rate in excess of the otherwise applicable filed rate and prohibit the consideration of certain policies by insurers when making a specified calculation.  The bill also would preserve the Florida Office of Insurance Regulation’s authority to disapprove rates as inadequate, or disapprove a rate filing for using an unlawful rating factor.

The bill would create a new section of Florida law that permits property insurers to offer residential property insurance policies covering the perils of windstorm or hurricane to use a rate in excess of the insurer’s filed rate, if, among other provisions, the following apply:

• The insurer is authorized to write property insurance in Florida;
• The insurer has, at the time of policy issuance or first renewal: (i) a surplus as to policyholders equal or greater than $500 million; (ii) a surplus of $200 million and a ratio of the insurer’s net written premium to surplus that does not exceed two to one; or (iii) a surplus of at least $150 million and a primary purpose of offering insurance as a service or benefit to members of a nonprofit corporation; and
• The insurer does not purchase Temporary Increase in Coverage Limit coverage pursuant to s. 215.555(17), F.S., from the Florida Hurricane Catastrophe Fund.

 

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

 

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