Strike-All Omnibus Property Insurance Amendment To Be Considered Today by the Florida Senate Committee on Banking and Insurance

A strike-everything proposed committee substitute that would amend an omnibus property insurance package onto Senate Bill 2044, a “shell” bill, is scheduled to be considered by the Florida Senate Committee on Banking and Insurance (“Committee”) at its 3:15 p.m. meeting today, March 3, 2010.  A copy of the omnibus amendment summary written by Senate Staff is attached for review.

Representing a collaboration between the Senate President’s Office and Senator Garrett Richter, the Committee Chairman, the amendment is a companion to House Bill 1341 by State Representative Bryan Nelson, although it is not identical. 

 

Strike-All Summary Points

The omnibus Senate amendment would make the following primary changes to laws relating to residential property insurance:

Consumer Education – Contingent on an appropriation, would direct the Florida Office of Insurance Regulation (“OIR”) to develop a comprehensive insurance Web site for consumers to provide the necessary information to make informed purchases of homeowners’ insurance.  It would contain price comparisons, filed complaints, financial strength, underwriting and receivership information and other useful consumer data.

Mediation Procedures for Property Insurance Claims – Would require the Florida Department of Financial Services to prepare consumer information relating to the State’s mediation program.  It also would mandate that, during a dispute, insurers and insureds provide documents specifying the costs to repair or replace damaged property.

Surplus Requirements for Insurers – Would increase the minimum surplus requirements for “new” residential property insurers from $5 million to $15 million, as well as increase the minimum surplus requirements for “current” residential property insurers from $4 million to $5 million until July 1, 2015.  Thereafter, the requirement would be $15 million.

Insurance Rating Law – Would extend the current prohibition on “use and file” rate filings until December 31, 2012.  Would expand the current expedited rate filing procedure for property insurers to include a rate adjustment for reinsurance costs, financing products used to replace reinsurance and applicable inflation trend factors published annually by the OIR.  All costs contained in the filing would be capped at 10 percent per policyholder.  An insurer could make only one filing under this provision in any 12-month period.  Would prohibit the OIR from directly or indirectly prohibiting, impeding or otherwise compromising an insurer’s right to include acquisition costs in a rate filing or include agent’s commissions, advertising, or the right to acquire policyholders. Would prohibit the OIR from determining whether expenses are unreasonably high in relation to services rendered, because that provision is applied to an insurer’s acquisition costs, including agent commissions.

Replacement Cost Coverage – Revises replacement cost adjustment requirements for homeowners’ insurance policies for damages to dwellings and personal property.  For dwelling losses, an insurer must pay the actual cash value of the loss and subsequently pay the reservation or holdback of any depreciation in value, if the insured executes a contract to replace or repair the dwelling or property.  For personal property losses, an insurer may pay the greater of the actual cash value or 50 percent of the replacement cost value and must subsequently pay the reservation or holdback upon the insured providing receipts for the replaced property.

Mitigation Credits, Discounts and other Rate Differentials (Debits) – Provides that, if an insurer demonstrates that the aggregate of mitigation discounts results in a reduction of revenue that exceeds the reduction of the aggregate loss expected to result from mitigation, the insurer may recover the lost revenue through an increase in its base rates.

Financial Condition of Insurers – Allows an insurer to cancel or non-renew a property insurance policy upon a minimum of 45 days’ notice–subject to OIR approval–based on a finding that the insurer lacks adequate reinsurance coverage for hurricane risk and other financial factors.

Insurer Rehabilitation and Liquidation – Clarifies that the Circuit Court of Leon County has exclusive, original jurisdiction over any insurer and its affiliates in a delinquency proceeding and also has jurisdiction to identify funds and property belonging to an entity in receivership.  The amendment expands the definition of an affiliate.

 

Amendments Filed to Strike-All

As of today at 11 a.m., four amendments have been filed to the strike-all amendment to SB 2044. These include:

200586–Reclarifies the Florida Insurance Consumer Advocate’s authority to intervene as a party in any proceeding or action before the Florida Office of Insurance Regulation (“OIR”), the Florida Department of Financial Services, or the Florida Division of Administrative Hearings; authorizes the Insurance Consumer Advocate to submit a demand to an insurer for additional information concerning a rate filing within a specified period of time; requires Insurance Consumer Advocate to submit his or her recommendations relating to a filing with the OIR

263552–Relates to the annual report card for authorized Florida residential property insurers; specifies the use of an “objective” grading scale based partially on “valid” consumer complaints and “measurable and objective” factors identified as “capable” of assisting homeowners in making informed choices about homeowners’ insurance

614258–Delays the repeal of a provision exempting medical malpractice insurance premiums from emergency assessments to the Florida Hurricane Catastrophe Fund; delays the date on, and after which medical malpractice insurance premiums become subject to emergency assessments

784780–Technical amendment

 

An updated summary of actions to SB 2044 will be sent after today’s Committee meeting.  To view the (March 3) Committee packet, click here.

 

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

 

 

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