Florida House, Senate Insurance Committees Consider Citizens, FIGA, Florida Hurricane Catastrophe Fund Bills
Mar 6, 2014
Insurance-related committees in the Florida Senate and House of Representatives met today, March 5, 2014. Following are summaries of their discussions and actions:
Florida Senate Committee on Banking and Insurance
As part of the Senate Committee on Banking and Insurance (“Committee”) agenda, Senator Lee presented Senate Bill 758 relating to Title Insurer Reserves to the Committee. The bill specifies that the title insurer is liable for all of its unpaid losses and claims, reserves that specific title insurers must set aside after a specific date, how much reserves will be released, and which state law governs the amount of the reserve when a title insurer transfers its domicile to the State. The Committee adopted an amendment that clarifies the reserve requirements only apply to domestic insurers. There was no debate on the bill and it was adopted as amended. A representative from the OIR testified in support of the bill and it was recorded favorably as a committee substitute.
Chairman Simmons presented Senate Bill 7062 relating to Citizens Property Insurance Corporation (“Citizens”) Coverage. The bill revises the applicability of the limitations on public adjuster charges for claims, requires Citizens to cease offering new commercial residential policies within specific limitations, and also requires Citizens to provide specified annual estimates to the Florida Legislature and the Florida Financial Services Commission.
A handwritten amendment filed to SB 7062 by Senator Montford that removes a fee cap for public adjusters was adopted onto the bill. Chairman Simmons filed a title amendment changing the title to “An Act Relating to Property Insurance” that was also approved. He also submitted a late-filed amendment that removes language addressing revising Citizens’ annual rate increase for commercial nonresidential policies that was adopted.
Senator Margolis filed an amendment to SB 7062 that allows surplus lines carriers to take policies out of Citizens’ Clearinghouse if the insured property value is over $700,000 and an admitted carrier has not made an offer of coverage. The amendment was withdrawn from the bill and Senator Simmons has agreed to work with Senator Margolis on the issue.
Senator Hays filed an amendment that removes a restriction on Citizens coverage for structures within the coastal barrier resource system in counties were Citizens provides 75 percent of the personal wind storm coverage. The amendment was adopted.
Senator Hays introduced three late-filed amendments to SB 7062. The first authorizes Citizens to create an addendum to the Uniform Mitigation Verification Inspection Form (“Form”) in counties that implement building codes more stringent than the highest code recognized on the Form, and that have completed a study verifying their use of that more stringent code. The second late-filed amendment revises notices standards in SB 7062 for surplus lines carriers taking policies out of Citizens’ Clearinghouse. The third late-filed amendment allows the Citizens Board of Governors to refer procurement-related protests to the Florida Division of Administrative Hearings. All of Senator Hays’ late-filed amendments were adopted.
SB 7062 was temporarily passed so the Committee could take more time to hear public testimony.
Florida House of Representatives Insurance and Banking Subcommittee
In the Florida House Insurance and Banking Subcommittee (“Subcommittee”), State Representative Raburn presented House Bill 143 relating to the Florida Insurance Guaranty Association (“FIGA”), which revises FIGA’s duties, authorizes it to collect emergency and regular assessments directly from policyholders, and clarifies that assessments are not considered insurance premium for premium tax purposes.
Representative Raburn filed a strike-all amendment to HB 143 that was adopted. Representatives from FIGA and the OIR testified in support of the bill as amended, which was ultimately adopted.
State Representative Santiago presented House Bill 375 relating to Insurance, which provides that an insurance policy or contract’s validity isn’t affected by the absence of a countersignature. The Subcommittee approved the bill.
State Representative Hager presented House Bill 391 relating to the Florida Hurricane Catastrophe Fund (“FHCF”) as a Proposed Committee Substitute. The bill phases in a reduction in the FHCF’s coverage limits for reimbursement contracts, authorizes insurers to recoup specific reinsurance payments to cover a potential gap in the FHCF claims-paying capacity, and removes provisions of existing law prohibiting recoupment of other reinsurance costs. FHCF Chief Operating Officer Jack Nicholson answered questions about the operations aspect of HB 391, but clarified the FHCF didn’t have a particular position on the bill at this point. The Subcommittee approved the bill.
State Representative Hooper then presented House BIll 879 relating to Flood Insurance as a Proposed Committee Substitute. The bill would add projected flood losses as an additional factor for the OIR to consider while reviewing rate filings. Provisions in the bill also increase the membership of the Florida Commission on Hurricane Loss Projection Methodology among other requirements, including the adoption of flood loss standards and guidelines, and that certain limitations must be noted on a declaration page of a policy. HB 879 also requires that an insurer notifies the OIR with a plan of operation before writing flood insurance and authorizes insurers to offer flood insurance. The bill establishes minimum coverage requirements and allows insurers to export contracts of specific amounts to surplus lines insurers without meeting certain requirements. The bill also provides rate options, coverage limitations and pre-emption for any conflicts.
The OIR representative testified that the agency has been working with Representative Hooper in addressing some of the concerns the OIR has about the bill. State Representative Rader expressed his concern about the bill, but supported it, nevertheless. The bill passed unanimously as a committee substitute.
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