FPCA Homeowners Division: Florida Insurance Legislative Outlook

Jan 19, 2010


FPCA Homeowners Division Members:

Below is a summary of recently gathered intelligence on pending 2010 insurance-related Florida legislation.  This information is for consideration in conjunction with the information already provided on bills that have actually been filed to date.  As the Florida Property Casualty Association (“FPCA”) further develops its legislative strategy, we look forward to discussing this in more detail during our upcoming meeting next Friday, January 22, 2010.

Note:  Due to the sensitive nature of this information, please do not forward the content of this email outside of your organization.  While the information is current as of the date of this publication, the status of these proposals could change quickly and substantially. 

Ominbus Insurance bill:

The Florida Senate is considering an omnibus insurance bill that would be intended to facilitate a progression toward a more market-based approach to insurance in Florida, as opposed to a more limited initiative with partial deregulation outlined in the recently filed HB 447 and SB 876.  A Senate omnibus insurance bill would include some open market provisions; however, each aspect of the bill that would be favorable to the insurance industry would be balanced with a consumer protection provision.  

Representatives of Colodny Fass have discussed the omnibus insurance proposal with several legislators and staff.  Much of this proposal is still in the development stage and has not been formally approved by a legislator for filing as a bill.

The Florida House of Representatives does not appear to be considering any omnibus-type insurance bill at this time.

A proposed Senate omnibus insurance bill is expected to include:

On rating:

  • The incorporation of a flex-band (although the ultimate term used may be different) that would allow statewide rate increases of up to 5 – 7 percent, but no more than approximately 10 percent per policyholder. This rate increase would be filed with the Florida Office of Insurance Regulation (“OIR”) and followed by an expedited and perfunctory OIR review.  A certain time restraint would be placed on the OIR’s review of these filings. Insurers could use this expedited filing for four years or so, before being required to do a full rate filing.  If the OIR determines a rate was too high after the full reviewed, insurers would simply be required to lower their rate, rather than make policyholder refunds.  Over the four-year period, an insurer’s rate could not rise above a certain percentage, which is expected to be approximately 25 percent.
  • As an alternative to using flex-band filings, an insurer could elect to pass through reinsurance costs.  This would only be allowed for insurers that have not purchased reinsurance through a parent company.  No cap would exist on the pass-through increase.
  • The consumer balance provision would be a new Web site or a revised version of Florida’s www.shopandcomparerates.com that would furnish information on insurance pricing in a certain geographical area and contain information on insurers’ financial strength (such as an A.M. Best or Demotech rating, or premium-to-surplus ratio).  Insurers would be required to provide and maintain up-to-date information for this Web site.  

On actual cash value/replacement (“ACV/R”) costs:

  • Current law would be revised to state that an insurer may hold back replacement costs, except in a catastrophe situation.  A distinction for contents replacement could be specified.
  • Companies may be required to offer roof replacement costs, unless the roof is a certain number of years old (most likely 10).  In that case, ACV would be used.
  • Insurers could receive specific authorization to offer a preferred vendor network of contractors and be allowed to pay contractors directly.  

On mitigation discounts:

  • Any provisions in the Senate’s version of the bill likely will be predicated on the Florida Commission on Hurricane Loss Projection’s statutory report on wind mitigation credits.

On the Office of the Florida Insurance Consumer Advocate:

  • A draft bill is expected to provide for increased authority during the ratemaking process for the Florida Insurance Consumer Advocate.

Florida Hurricane Catastrophe Fund (“FHCF”)

A bill relating to the FHCF Contract Year is expected to be a stand-alone proposal sponsored either by a committee or committee chairman.  Early passage of such a bill during the 2010 Regular Session is anticipated.  Legislative staff is hopeful that drafting an FHCF bill will not include a discussion on FHCF retention levels, because there appears to be much debate about how effective and beneficial it would be to change them. 

Citizens Property Insurance Corporation (“Citizens”)

Senator Mike Bennett and State Representative Scott Plakon may file a bill to sunset Citizens.

Public Adjusters

Senator Bennett is considering filing legislation relating to public adjusters.  Should he not file such a bill, a Senate committee may file one instead.  Whether a sponsor exists for a House version is still unclear, although State Representative Janet Long may agree to fill that role. 

Legislative staff meetings have taken place with public adjuster trade group representatives, some of whom are reportedly agreeable to a variety of public adjuster reforms.  However, these public adjuster groups want insurers to operate by many of the same rules that would regulate their own constituency. 

While the information below would have to be verified with the public adjuster groups, we have been advised that they would be willing to consider the following conditions and concessions:  

  • Acceptance of a three-year statute of limitations on claims;
  • Florida Department of Financial Services’ (“DFS”) development of a standard public adjuster agreement to be used with insureds;
  • An increase in the public adjuster licensing fee that would be dedicated to funding public adjuster fraud investigation;
  • The requirement that umpires be licensed;
  • That judges would assign umpires on a rotation basis;
  • That the DFS would create public adjuster advertising regulations in exchange for a repeal of the 48-hour prohibition before public adjusters may contact an insured.  Legislative staff also indicated interest in requiring public adjusters to be subject to the same restrictions as attorneys, but has not yet reviewed this with public adjuster legislative representatives.
  • That insurers would be required to have all damage estimates done by licensed in-house company adjusters – not just company employees;
  • Examinations Under Oath (“EUO”) of public adjusters may be acceptable if the insured’s attorney can do an EUO of the in-house company adjuster;
  • That insurers would receive a detailed “damage outline” or estimate from public adjusters if, in turn, public adjusters can receive the same from the insurer’s in-house adjuster;
  • Interest in an “offer of judgment” mechanism for use in arbitrations.  For example, if an insured offers to settle a particular damage claim for a certain amount (“X”) and the insurer offers a different amount (“Y”) and the arbitration award is within 15 to 20 percent of X, then the insurer has to pay for costs.  Conversely, if the arbitration award is within 15 to 20 percent of Y, then the costs would be borne by the insured.  

FPCA discussion, evaluation and a determination of support for each of the above points is recommended.


State Representative Bryan Nelson is working on an insurance anti-fraud legislative package that would include funding mechanisms for Personal Injury Protection (“PIP”) fraud prosecutors.  The legislation could also include provisions for tightening regulations on clinics without altering the existing PIP statutes.  Workers’ compensation and mitigation inspection fraud measures also would be incorporated.

Representative Nelson’s proposed anti-fraud bill does not appear to have a Senate sponsor.   It is possible that the legislation ultimately could be rolled into the omnibus bill discussed above. 

For your reference, we have included the following information in attachment or hyperlink format where designated:

Please review the information above and send comments to Katie Webb at kwebb@cftlaw.com.  We look forward to discussing this in further detail at the FPCA January 22 meeting.