Senate Judiciary Committee Passes Surplus Lines Exemption Bill 5-4; Workers’ Comp Attorney Fee Bill Postponed

As part of its regular agenda today, April 1, 2009, the Florida Senate Committee on Judiciary (“Committee”) considered SB 1894 relating to Surplus Lines Insurers.

Senator Mike Bennett, the bill’s original sponsor, explained a strike-everything amendment that had been filed to the bill by Senator Mike Fasano specifying that surplus lines insurance would be exempt from Chapter 627 F.S. (which is part of Florida’s Insurance Code).  Senator Fasano’s amendment included some provisions of a March 25 amendment by Senator Jeremy Ring stating that surplus lines insurers would be required to comply with certain consumer protections.

To view Senator Fasano’s amendment, click here.

Testifying against the amendment was a surplus lines homeowners policyholder who was involved in a lawsuit against her insurer because she had been unable to recoup the full value of her claim.  Representatives from that insurance company, re-affirming their advocacy of minimal state regulations of surplus lines insurers, testified in response to the homeowner, noting that her claim had been resolved through the judicial system. 

Democratic members of the Committee expressed concerns on behalf of policyholders’ legal rights and the rationale for deregulation. 

Senator Fasano posed several questions that stressed the importance of surplus lines insurers in the marketplace.    

Following debate, the amended bill passed as a committee substitute by a vote of 5-4.     

 

About SB 1894

SB 1894 amends the provision under Florida’s surplus lines law relating to “legislative purpose.”  The bill provides that, except as may be specifically stated to apply to surplus lines insurers, the provisions of Chapter 627, F.S., do not apply to surplus lines insurance authorized under the State’s surplus lines law.

This provision appears to be in response to recent court decisions that surplus lines insurers must comply with the other provisions of Chapter 627, which include filings with the Florida Office of Insurance Regulation (“OIR”), as well as OIR review and approval. 

In effect, under SB 1894, unless a provision in Chapter 627, F.S. expressly provides that it applies to surplus lines insurance, this type of insurance would be exempt from those provisions.  However, although the bill includes the exemption language in Chapter 626, F.S., the surplus lines exemption language subject to the court decisions regarding the applicability of Chapter 627, F.S., to surplus lines insurers remains unaltered in Chapter 627, F.S.

The bill also provides that it will operate retroactively to October 1, 1988.  This is the effective date of the law enacted in 1988 that had added the surplus lines exemption to Section 627.021(2), F.S., in order to provide that Chapter 627, F.S., does not apply to surplus lines insurance.  (In general, courts will refuse to apply a statute retroactively if it affects substantive rights, liabilities, and duties, impairs vested rights, creates new obligations, or imposes new penalties.  However, statutes which do not alter contractual or vested rights, but relate only to remedies or procedure, can be applied retroactively).

 

Senate Workers’ Comp Attorney Fee Bill Postponed

Also as part of its agenda, the Committee considered SB 2072 relating to Attorney’s Fees/Workers’ Compensation Cases by Senator Garrett Richter. 

A strike-everything amendment to SB 2072, which was explained by Senator Jeremy Ring, would exclude attorney’s fees in limited circumstances and allow for the right to contract, but contains other provisions described as “fairness” provisions that effectively negate the bill’s intent. 

During the meeting, Senator Ring directed questions to an actuary from the Florida Office of the Insurance Consumer Advocate about the National Council on Compensation Insurance (“NCCI”) rate filings and the impact of reducing expenses.  The actuary indicated that reduced expenses would cause rates to decline. 

A workers’ compensation attorney and her client testified about their case and the importance of attorney involvement in workers’ compensation claims.  Some committee members discussed the importance for injured workers’ to receive adequate legal protection.  Representatives from other groups, including the Firefighters’ Association, spoke in favor of Senator Ring’s amendment.

An NCCI official explained the company’s role in the ratemaking process and noted that the amendment would not impact the rate increase caused by the Murray vs. Mariner Health decision.

During the middle of discussion and testimony, Committee Chairman Lee Constantine informed members and interested parties that SB 2072 would have to be re-considered at the next committee meeting, which has not yet been scheduled.  He also urged the interested parties to find common ground on the bill prior to that time. 

The meeting concluded following the Chairman’s comments.

 

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

 

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