TEST: Final Legislative Report: 2007 Regular Session

The 2007 Regular Session came to a close on Friday, May 4, 2007 at 4:10 p.m.

In the final moments, the Legislature passed SB 2498, a comprehensive property insurance bill that included provisions of the “Glitch Bill” and the Governor’s package regarding Citizens Property Insurance Corporation.

Throughout Session, the Governor had expressed his intent to lower insurance rates by expanding Citizens and freezing its rates.  The House took the position of attempting to reign in some of the Citizens’ expansion that occurred in the 2007 Special Session A.  In the end, the final product of the property insurance bill was a compromise between the Governor and the House of Representatives.

In regard to automobile insurance, the Legislature, through inaction, left open the opportunity for the Florida Motor Vehicle No-Fault laws to expire or sunset on October 1, 2007. However, it is our understanding that the No-Fault laws will be re-considered in a Special Session tentatively scheduled for June 12- 22, 2007.

Below is a detailed summary of the major property insurance bills as well as a brief summary of other insurance related legislation that passed. In addition, we have included a list of every bill that passed the legislature. The bills that passed will become law upon the Governor’s signature or self-operatively.

 

Property Insurance Bill–Committee Substitute for Senate Bill 2498 by Senator Rudy Garcia (R-Miami) relating to Insurance

Senate Bill 2498 makes changes to the Citizens Property Insurance Corporation (“Citizens”) law, prohibiting the formation of Florida domestic residential property insurance subsidiaries (“pup companies”) and providing that rate filings for insurance subsidiaries must include the parent company’s profit information.

More specifically, the bill:

• Revises Citizens’ legislative intent language emphasizing the need for affordable property insurance to be provided by Citizens;

• Lowers the threshold to be eligible for Citizens coverage when the premium for comparable coverage from a private insurer is 15% greater than that of Citizens. Previously, the threshold was 25%;

• Provides that effective December 31, 2008: A new certificate of authority (COA) may not be issued to a Florida domestic residential property insurer that is a wholly owned subsidiary of an insurer authorized to conduct business in another state and the rate filings of any Florida domestic insurer that is a wholly owned subsidiary of an insurer authorized to do business in another state shall include information relating to the profits of the parent company of the Florida domestic insurer;

• Extends the Citizens rate freeze through 2008;

• Allows mobile home insurers to obtain a $7 million surplus note even if the insurer applies for the surplus note after July 1, 2006 but before June 1, 2007 and requires total amount of surplus, new capital and surplus note to be $14 million;

• Expands the coverage of the Florida Hurricane Catastrophe Fund (FHCF) for limited apportionment insurance companies and to insurers that purchased supplemental FHCF coverage in 2006;

• Extends the exemption for medical malpractice insurance from the FHCF assessment base to May 31, 2010;

• Amends the definition of “diligent effort” for surplus lines. The bill provides that insureds who have residential homes with a replacement cost of $1 million or more only have to be rejected once by a private insurer to be eligible for surplus lines coverage;

• Creates the Florida Catastrophic Storm Risk Management Center at Florida State University to promote and disseminate research on hurricane-related issues;

• Requires an insurance agent to provide written notice that Citizens coverage may be available and less expensive than surplus lines coverage;

• Provides that a moratorium on “use and file” rate filings applies only to those made or submitted after January 25, 2007 but before December 31, 2008;

• Extends the ineligibility for Citizens coverage on property insured for $1 million or more to January 1, 2009, rather than July 1, 2008;

• Delays the reporting of certain yearly information to the Office of Insurance Regulation until January of the following year or later; and

• Clarifies the laws relating to the Florida Insurance Guarantee Association (FIGA). The bills provides that FIGA can use emergency assessments for the direct payment of covered claims of insurers rendered insolvent by the effects of a hurricane, stipulates that any kind of self-insurance fund, liability pool, or risk management fund is not covered by FIGA, and permits all municipalities and counties in the state to issue bonds to assist FIGA in the handling and payment of covered claims of insolvent insurers.

• Allows for two or more public housing authorities to create a self-insurance fund for the purpose of insuring real or personal property as local government entities are currently authorized to establish.

Except as provided in this bill, this act is effective upon becoming law.

 

Hurricane Mitigation Bill–Committee Substitute for House Bill 7057 by the Jobs and Entrepreneurship Council and Representative Trey Traviesa (R-Tampa) relating to Hurricane Mitigation

This bill relates to the Florida Comprehensive Hurricane Damage Mitigation Program, also known as the “My Safe Florida Home Program,” administered by the Department of Financial Services (DFS). The program was established in 2006 to provide financial incentives for the purpose of encouraging residential property owners in Florida to retrofit their properties, making them less vulnerable to hurricane damage and helping decrease the cost of residential property and casualty insurance. Specifically, the bill provides that:

• A no-interest loan program is created in the Florida Comprehensive Hurricane Damage Mitigation Program. The loan program is to provide loans in an amount up to $5,000 for three years to homeowners meeting the loan underwriting requirements set by the lender.

• DFS may allocate $10 million of the $250 million initially appropriated to the My Safe Florida Home Program for the no-interest loan program.

• The program is intended to provide free home inspections to 400,000 residential homes and grants to at least 35,000 applicants before June 30, 2009.

• To be eligible for a grant, the home must have an insured value less than $300,000, be located in a “windborne debris region,” and have a building permit application for initial construction before March 1, 2002.

• Qualified inspectors are authorized to participate as mitigation contractors.  The bill requires registered and certified contractors to take classes on mitigation as part of their required continuing education.

• DFS is authorized to provide a communications and public awareness campaign to inform consumers about the program.

This act is effective upon becoming law.

 

House Bill 7031 by the Safety and Security Council and Representative Mark Mahon (R-Jacksonville) relating to Community Associations

This bill contains a provision that includes commercial self-insurance funds in the definition of a covered policy under the CAT fund and subjects said funds to CAT fund assessments.  Further, a commercial self-insurance fund is no longer required to participate in the Florida Self Insurance Fund Guarantee Association.

This act is effective upon becoming law.

 

Other Insurance-Related Bills

 

Committee Substitute for Committee Substitute for House Bill 1381 by Representative Garrett Richter (R-Naples) relating to Insurance Branch Agencies

This bill authorizes certain agencies designated as a branch office to file an application for registration in lieu of licensure; provides an exemption from a required written examination to certain applicants for licensure as a claims adjuster; authorizes certain licensed agents to be the agent in charge of branch locations under certain circumstances; revises the requirements for identification of insurers, agents, & insurance contracts.

Except as otherwise provided in the bill, this act is effective July 1, 2007.

 

House Bill 1549 by Representative David Rivera (R-Miami) relating to Examination of Insurers

A priority for the Office of Insurance Regulation (OIR), this bill extends the interval at which insurers must be examined by OIR; deletes provisions allowing the OIR to accept audit reports from certified public accountant in lieu of conducting its own examination; and revises guidelines for conducting such examinations.

This act is effective July 1, 2007.

 

Committee Substitute for Senate Bill 746 by Senator J.D. Alexander (R-Lake Wales) relating to Workers Compensation for First Responders

The bill provides a standard of proof for first responders having injury or disease caused by exposure to toxic substance; provides that any adverse result or complication regarding smallpox vaccinations is an injury by accident arising out of employment; provides a standard of proof in cases involving occupational disease; provides for continuation of permanent total supplemental benefits after age of 62 for certain first responders.

This act is effective upon becoming law.

 

Committee Substitute for Committee Substitute for Committee Substitute for Senate Bill 1894 by Senator Bill Posey (R-Rockledge) relating to the Florida Workers’ Compensation Joint Underwriting Association (JUA)

The bill provides requirements for joint underwriting plan of insurers which operate as a JUA; revises restrictions on who may serve on the JUA board; requires that a market-assistance plan be periodically reviewed & updated; requires that excess funds received by the plan be returned to state; provides for applicability of specified statutes regulating ethical standards.

This act is effective July 1, 2007.

 

House Bill 7169 by Representative Ron Reagan (R- Sarasota) relating to Workers’ Compensation Public Records and Meetings Exemption

The bill provides exemption from public records requirements for certain records of the Florida Workers Compensation Joint Underwriting Association (FWCJUA); authorizes the release of confidential & exempt records under certain circumstances; provides an exemption from public meetings requirements for portions of meeting of the FWCJUA’s board of governors or subcommittee thereof during which confidential & exempt records are discussed.

This act is effective July 1, 2007.

 

Committee Substitute for Committee Substitute for Senate Bill 1624 by Senator Mike Bennett (R-Bradenton) relating to Owner-Controlled Insurance

The bill requires the purchase of owner-controlled insurance in connection with public construction projects if program maintains completed operations insurance coverage for no less than 10 years; exempts contractors & subcontractors working under construction projects insured by said insurance program from individually satisfying eligibility requirements for large deductible workers’ compensation rating plans.

This act is effective October 1, 2007.

 

The above information intended to provide a general analysis of the bills that passed and is not intended to be offered, or to be relied upon, as specific legal or regulatory advice regarding any issue. Should you have specific questions or require additional information, please do not hesitate to contact this office.