Property & Casualty Insurance Legislation
The House Insurance Subcommittee passed
HB 1127 relating to
Citizens Property Insurance Corporation assessments
on private insurers and their policyholders. The
Senate companion,
SB 1346, was passed in its committee
of reference this week as well. The bills stand a
strong chance of passage as support builds for this
proposal including Citizens and the Office of
Insurance Regulation. The bill eliminates the
regular assessment in the Citizens Commercial Lines
Account and Personal Lines Account and reduces the
assessment from 6% to 2% in the Coastal Account. The
emergency assessment remains in place and would be
triggered sooner.
The House Insurance Subcommittee also passed the House "Omnibus"
Insurance bill,
HB 1101, by Rep. Horner. Provisions
include:
-
Corrects
contradictory language in the commercial
surplus lines disclosure form by
removing the terms "superior" and "at a
lesser cost" from the surplus lines
disclosure.
-
Amends
624.610(11) (c) and provides for an
exemption from 624.610(11) for contracts
of facultative reinsurance or to any
ceding insurers with surplus as to
policyholders that exceeds $100 million;
it further provides exemption from this
subsection for ceding insurers with
diminutive business in Florida and
removes an ambiguity in the law as to
the diminutive exemption.
-
Permits the
Department of Financial Services to
offer, at its discretion, agent
licensing exams, and applicants
requesting the exams in Spanish will
bear the cost on a prorated basis, of
making the Spanish exam available. The
department is to consider the percentage
of the population speaking Spanish in
determining whether to make it available
in Spanish.
-
Changes the
definition of limited apportionment
benefits from a surplus amount of $20
million to the $25 million surplus found
in section 627.351(6)(c), F.S. This
change corrects a glitch in the
definition of limited apportionment
benefits in this cross reference which
removes any potential confusion in the
standard definition.
-
Clarifies
the legislative intent of the sinkhole
provisions passed last year in Senate
Bill 408 by ensuring that the definition
of a change in policy terms includes
those changes related to sinkhole
coverage. This ensures that the
policyholder will receive a notice of at
least 45 days for changes to sinkhole
coverage.
-
Establishes
that the procedures for alternative
dispute resolution with regard to
property insurance claims may only be
requested by the policyholder as a
first-party claimant or the insurer.
This specifically excludes third-party
vendors and will prevent these vendors
from incurring additional expenses by
using the mediation process which was
established as a protection for
policyholder consumers. This section
also states that claims resulting from
hurricane damage must be noticed as a
loss to the insurer within 36 months of
a hurricane making landfall.
-
Corrects a glitch from HB-1087 passed
during the 2011 session and allows
cancellation for any type of nonpayment,
including fraud or misrepresentation, or
failure to meet basic underwriting
guidelines, as opposed to the current
language passed in 2011 which permits
cancelation solely for a bounced check.
The section was not intended to prohibit
cancellation for any of the other valid
reasons allowed by statute.
The Senate companion will be carried by Banking & Insurance Chairman
Richter, but has yet to be addressed in committee.
Bad
Faith Legislation Fails
In a surprising vote, the bill addressing Insurer "Bad Faith" was voted
down on a (7-8) vote by the House Civil Justice
Subcommittee. Technically, the bill can be brought back
due to a procedural move by the Chairman of the
committee; however, for all practical purposes, it
prevents any chances of revising the bad faith statute
this year. This was a priority of many in the business &
insurance community, and advocated by many trade groups,
but in the end the trial lawyers lobbying efforts
prevailed. If passed, the bill would have allowed
insurers a reasonable time to settle third party claims
and avoid the so-called 'gotcha' bad faith lawsuits.
Florida Hurricane Catastrophe Fund- Commentary provided
by the Heartland Institute
New reform
proposals to address the CAT Fund include H.B. 833, a
bill sponsored by state Rep. Bill Hager (R-Boca Raton).
The bill is based on a reform previously proposed by
Jack Nicholson, the Florida Cat Fund's chief operating
officer, and is designed to reduce or eliminate the
possibility of the fund going broke after a storm and
posing a risk to the state's fiscal future.
As
in all states with significant hurricane risks,
windstorm coverage is expensive for people in Florida.
To control the costs of this coverage, Florida's
legislature has established the Florida Hurricane
Catastrophe Fund, a massive government-owned reinsurance
entity. All private insurers operating in the state are
required to buy coverage from the Cat Fund (as it's
commonly known), and the Florida Citizens Property
Insurance Corporation buys only Cat Fund coverage.
In theory, the Cat Fund provides reinsurance (insurance
for insurance companies) at below-market rates and
thereby produces savings they can pass on to consumers.
This system, however, poses enormous risks to Florida's
fiscal future. According to Ray Lehmann, deputy director
of the Center on Finance, Insurance, and Real Estate at
The Heartland Institute, these liabilities have risen to
multibillion-dollar levels: "The Florida Hurricane
Catastrophe Fund has $18.4 billion of liabilities this
year, and the fund's own management concedes that its
funding structure would leave it billions short of its
obligations should a major storm hit the Sunshine
State."
These liabilities are impossible to pay. No state ever
gas issued more than $11 billion in bonds all at once.
Changes are needed to reform the Cat Fund.
Session resumes Monday, January 30th.
Regular Legislative Session Ends March 9th, 2012 |
