Florida Insurance-Related Bills Become Law Today, July 1, 2014
Jul 1, 2014
The majority of the successful insurance-related bills from the 2014 Regular session became effective today, July 1, 2014. The notable exceptions to this are the “Flood Bill” (SB 542), which became effective on June 13, 2014, and the “Model Holding Company Act Bill” (SB 1308) , which contains provisions effective October 1, 2014, and January 1, 2015. Below is a brief summary of important bills effective today:
HB 271 contains various provisions offered by the Division of Workers Compensation to modernize the process surrounding Stop Work Orders, and also change the methodology for calculating the Workers’ Compensation Special Disability Trust Fund assessment.
Specifically, the bill increases the time frame that an employer has to produce certain business records to DFS prior to issuance of a stop work order; authorizes DFS to issue an order of conditional release from an SWO to an employer that has met certain conditions; reduces the look back period for failure to comply with coverage requirements from 3 to 2 years and increases the penalty multiplier.
The bill requires DFS to calculate the assessment based upon the net premiums written by carriers, the amount of premiums calculated by the DFS for self-insured employers, and the anticipated fund balance and expenses of the SDTF. It also reduces the statutory rate cap on the SDTF.
This bill was an initiative of the National Rifle Association. After extensive discussion with insurance industry representatives, the ultimate product is considered acceptable by the insurance industry. SB 424 states that a personal lines property or automobile insurer commits an unfair discriminatory practice if it:
- Refuses to issue, renew or cancel a policy or charge an unfairly discriminatory rate based on the lawful ownership, possession or use of a firearm or ammunition by the applicant, insured or household member of the insured; or
- Discloses the lawful ownership or possession of firearms of an applicant, insured or household member of the applicant unless the insurer discloses the need for disclosure and the applicant expressly consents.
This legislation began as the product of a work group convened by the former Insurance Consumer Advocate, and the initial drafts contain a number of wide ranging proposals supported by the insurance industry, trial attorneys, vendors, public adjusters, and others. Prior to the beginning of session, the new Insurance Consumer Advocate narrowed the focus of the bill significantly.
The initial draft included provisions related to post claims underwriting; a limitation on the validity of assignments of benefits; standards for emergency mitigation vendors; and some other Department of Financial Services “clean up items.” During the course of the Session, items which caused controversy were removed from the bill at the CFO’s request, namely all the provisions relating to assignments of benefits and additional standards and criteria for emergency mitigation vendors.
Ultimately, the bill included:
- A prohibition on “post claims underwriting,” which disallows an insurer from denying a claim or cancellation of a policy based on credit information that is available in public records, if a policy has been in effect for 90 days or more;
- Criteria upon which an appraisal umpire may be disqualified due to conflicts of interest; Professional standards for “neutral evaluators” for sinkhole claims; and
- A “Homeowners Bill of Rights,” which is intended to advise claimants of the rights they have with 14 days after they submit a claim. Exceptions to the time frame apply if the event causing the claim causes the Governor to declare a state of emergency. This section included verbiage stating the Bill of Rights created no new cause of action under Florida law. The Office of Insurance Regulation has advised us that the hope to issue regulatory guidance on implementation of this new requirement by the end of July.
Senate Bill 754 replaces the 80 percent damage standard that a total loss vehicle must be issued a certificate of destruction by Department of Highways Safety & Motor Vehicles. Under current law, any total loss vehicle that is damaged at 80 percent or more of its fair market value cannot be rebuilt and put back on the road. The vehicle is used for scrap and recycling only.
Under the new law, late model vehicles that have a retail value above $7,500 must be issued a certificate of destruction if the damage is 90 percent or more of the fair market value. The bill defines a “late model vehicle” to mean an automobile that is 7 years old or newer. A discretionary, narrative certificate of destruction standard applies to all other vehicles.
This bill extends the underwriting period for non-cancellable coverage required to reinstate driving privileges revoked or suspended for failure to maintain required security or for DUI. During the underwriting period, the policy is effective but the insurer may cancel the policy. The primary objective of this bill is to allow changes in required liability policy coverage limits, as long as financial responsibility requirements are maintained, so insurers no longer are required to cancel and re-write these policies to implement coverage changes.
Agents and Agency Services
HB 633 makes significant changes to streamline the insurance agency licensing process and to better align the regulation of insurance agencies in Florida with other states.
The bill repeals current law allowing certain insurance agencies to obtain a registration in lieu of a license and converts all agency registrations to licenses effective October 1, 2015. The bill also eliminates the three-year expiration of an agency license, allowing an agency license to continue in force until canceled, suspended, revoked, or otherwise terminated.
Under the bill, each insurance agency and branch office is required to designate an agent in charge.
The bill also makes the following changes:
- Creates a new type of insurance agent, an unaffiliated insurance agent, and specifies the scope of the license.
- Requires DFS to immediately suspend the license or appointment of licensees charged with crimes that would preclude them from applying for licensure from DFS.
- Bars applicants for licensure with sealed or expunged criminal history records from denying or failing to acknowledge arrests covered by these records.
- Exempts members of the United States Armed Forces, their spouses, and veterans who have retired within 24 months from the application filing fee for certain licenses.
- Requires agents who recommend the surrender of an annuity or life insurance policy to provide financial information to the consumer.
- DFS Agent and Agency Bill
- Amends eligibility requirements for mediators under alternative dispute resolution programs administered by DFS; requires DFS to deny an application to be a mediator or neutral evaluator (sinkhole claims) or revoke or suspend a mediator or neutral evaluator in certain circumstances.
- Authorizes DFS to investigate improper conduct of mediators, neutral evaluators, and navigators. Permits DFS to share investigative information with any regulatory agency.
- Amends requirements for licensure as a nonresident surplus lines agent.
- Bars issuance of any new limited customer representative license after September 30, 2014.
- Deletes requirement that applicants who take a licensure examination in Spanish must pay all associated costs.
SB 1344 corrects outdated information about the members of the boards of the Medical Malpractice Joint Underwriting Association and the Florida Birth-Related Neurological Injury Compensation Association. The bill removes the references to the extinct predecessor insurance trade associations and replaces them with the correct name of the successor association, the “Property Casualty Insurers Association of America,” adds the Florida Insurance Council into one of the seats vacated by PCI, and updates the name of the American Congress of Obstetricians and Gynecologists, District XII. The bill also amends the composition of the Florida Workers Compensation Guaranty Fund Board of Directors, reducing the number of appointments to the board by Self Insurance Funds to 2 people and redirecting the remaining appointment to the Governor.
The bill also adds a provision that modernizes regulatory procedures related to Third Party Administrators (TPAs), allowing for some flexibility on the filing date for TPA financial statements and audited financial statements. TPAs’ may now provide financial statements 3 months after the end of the TPA’s fiscal year, and audited financial statements within 5 months after the end of the TPA’s fiscal year. The bill changes which persons are subject to biographical review by OIR during the licensing process, and allows an insurer that uses a TPA for more than 100 certificate holders to contract with a qualified third party to review the TPA for its semi-annual review.
Finally, SB 1344 included an initiative that allows an insurer to electronically transfer unearned premium to a policyholder who cancels a motor vehicle insurance policy. If an insured pays the premium with a credit or debit card, the insurer can make a refund to that card if the insured changes carriers.
HB 785 provides that medical foods are not eligible for reimbursement under workers’ compensation insurance without prior authorization of an insurer. The bill also permits a retrospective rating plan to contain a provision for negotiation of a workers compensation premium between an employer and insurer if insurer has at least $500 million in surplus and the employer:
- Has an estimated annual standard premium in Florida of $100,000 or more; and
- An estimated countrywide standard premium of $750,000 or more for workers compensation.
Citizens Property Insurance Corporation
HB 1089 delays the ban on Citizens coverage for buildings under construction within the coastal construction zone. The bill also prohibits Citizens from writing wind-only policies for condo buildings that rent the majority of their units as vacation rentals.
SB 1672 prohibits public adjusters from receiving referral fees, or accepting a power of attorney from policyholders that would allow the public adjuster to choose a vendor. Contractors are now prohibited from waiving or rebating deductibles. Citizens bid disputes must now be handled by the Department of Administrative Hearings (DOAH). Citizens must stop writing new commercial multi peril policies in the coastal account, but may continue to offer commercial wind-only policies and x-wind policies. Citizens must provide a report to the Legislature and Financial Services Commission stating its claims paying and bonding capacity for the upcoming 12 months, as well as the cash balance as of December 31 and a prohibition for contractors to waive or rebate insurance deductibles.
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