Senate Banking and Insurance Committee Report: March 29, 2011

 

The Florida Senate Banking and Insurance Committee considered a couple of insurance-related bills during its meeting today, March 29, 2011.

SB 1826 Relating to Workers’ Compensation, was passed by the Committee with no questions, no public testimony, and no debate among Committee members.  This bill repeals s. 627.092, Florida Statutes, because the Office of Insurance Regulation (OIR) does not monitor or audit workers’ compensation insurance companies and does not employ a Workers’ Compensation Administrator.  In addition, the bill removes outdated language for rerating workers’ compensation policies to conform to the tier system created in 2004.  The next committee of reference for this bill is the Senate Budget Committee.

A “Strike All” amendment to SB 1714 Relating to Citizens Property Insurance Corporation was filed yesterday by Senator Alan Hays.  In addition, Senator Bennett filed an amendment to the amendment, providing that certain homes that do not have required shutters or “opening protections” are still eligible for coverage from Citizens, but will be required to pay a surcharge for the lack of “opening protections.”  Senator Bennett’s amendment to the amendment was adopted without objection.  A motion to take a vote at a time certain was passed.  Just before time expired on the Committee meeting, the Strike All to SB 1714, as amended, was adopted by the Committee, and then the Committee voted on SB 1714 as amended, which was passed by a vote of 6 Yeas to 4 Nays.

Prior to the vote, Senator Hays described his Strike All amendment.  He began by thanking the community for helping to “make the bill happen.”  He briefly outlined the precarious financial position of Citizens as a result of its rates being “woefully inadequate.”  The rate inadequacy results in a tremendous threat of assessments, which Senator Hays likened to “a sour pickle.”

Senator Fasano asked a series of questions regarding the bill, insisting that it is a government mandate.  He asked how they should inform those constituents who have no option other than Citizens that their rates are increasing.  Senator Hays responded that the Legislature has to take responsibility for artificially suppressing rates that has led to the current state of Citizens, and the resulting need to increase rates.  Christine Ashburn, Director of Legislative and External Affairs at Citizens, answered many of the Senators’ questions regarding Citizens and its current financial state.  She noted that last year Citizens needed a 48% rate increase to become actuarially sound.

Senator Margolis noted the provision in the Strike All amendment requiring Citizens to offer sinkhole coverage and asked whether that was inconsistent with the goal of shrinking Citizens.  Senator Hays responded that he expects the private market to offer sinkhole coverage, if made optional, once rates become actuarially sound for that risk.  Senator Richter agreed, noting that the sinkhole provision is an effort to address a foreseeable problem.

Senator Bennett raised concern regarding eliminating the ability to sue Citizens for bad faith.  Kyle Ulrich of the Florida Association of Insurance Agents explained that this provision was included to mitigate the requirement that Citizens offer sinkhole coverage.  Senator Richter further noted that Citizens should be exempt from bad faith liability since it is a state entity.

There was an exchange between Senators Hays and Bennett suggesting that they may meet to agree on amendment to SB 1714 to allow Citizens to cover residential property over $1 million in value provided that Citizens rates for that coverage are “actuarially sound plus 10%.”

Public testimony was given by two representatives from the Fair Insurance Rates of Monroe County.  They suggested that Citizens policyholders in Monroe County have been subsidizing the other Citizens policyholders, and further claimed that the models do not accurately reflect the wind risk in the Keys as opposed to the flood risk.  A representative from the Insureds Public Action Coalition expressed concern regarding the limitation on public adjusters and the elimination of bad faith claims against Citizens.

SB 1714 was ordered reported out as a committee substitute.  The next committee of reference is the Senate Budget Committee.

Other bills passed by the Committee include CS/SB 670 Relating to Powers of Attorney, and SB 100 Relating to Autism.

Although initially expected to be heard, SB 1930, sponsored by Senator Ellyn Bogdanoff, was temporarily passed because Senator Bogdanoff was unable to attend the meeting. SB 1930 amends Florida’s Motor Vehicle No-Fault law to address fraud.

The Committee ran out of time before it could take up the other bills on its agenda, SB 1806 Relating to Motor Vehicle Insurance, and SB 1694 Relating to Motor Vehicle Personal Injury Protection Insurance.

 

 

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