House Amendment of Senate Property Insurance Package Expected

Apr 26, 2010


The fate of an omnibus property insurance package will be determined in the final week of Florida’s 2010 Regular Legislative Session, which ends this Friday, April 30.

With versions of the legislation pending in the House and Senate, it is unclear if the Legislature will be able to agree on a total package that Governor Charlie Crist would not veto.  The Senate passed CS2/1st Eng. SB 2044 on April 23, 2010, while HB 447, its companion, was temporarily postponed by the Florida House of Representatives on third reading the same day.  

Meanwhile, a strike-everything amendment to SB 2044 is expected to be filed by State Representative Bill Proctor in the House by late Monday, April 26, 2010, and taken up for consideration on the House Floor by tomorrow.  Some minor changes to the amendment, a draft copy of which also is attached, are expected prior to its filing. 

Following any action by the House, the Senate would reconsider SB 2044 and either concur with the House language or amend the bill again.  Before a bill would go to the Governor, both chambers must pass an identical bill.

Colodny Fass& Abate has prepared a comprehensive comparative chart that outlines components of the two omnibus property insurance packages.  A copy of this chart is attached for review.

To view the engrossed version of SB 2044, click here.

Following is a summary of SB 2044 as it has been amended to date:

Section 1:  Delays the repeal of the medical malpractice exemption from FHCF emergency assessments to May 31, 2013;

Section 2:  Increases surplus requirements for insurers ($15 million for new companies; $5 million for existing insurers until 2015, then $15 million) The Florida Office of Insurance Regulation (“OIR”) can reduce this amount in limited circumstances;

Section 3:  Defines “Surplus action level” as a loss of surplus on any quarterly or annual financial report that exceeds 15 percent, or which cumulatively for the calendar year exceeds 15 percent as of the most recent filed quarterly or annual report;at the OIR’s request, an insurer must provide a worksheet on affiliates with financials from the previous calendar year with various information; provides that, if a surplus action level event occurs, the insurer must prepare and submit a risk-based capital plan with certain information in 45 days;

Section 4:  With regard to capital and surplus requirements, relates to gross written premiums for federal multiple-peril crop insurance that are ceded to the Federal Crop Insurance Corporation or authorized reinsurers and may not be included in the calculation of an insurer’s gross writing ratio;

Section 5:  Relates to a license exam exemption for an applicant for a property insurance customer representative license who has earned the designation of “Certified Insurance Representative” from the National Association of Christian Catastrophe Insurance Adjusters;

Section 6:  Provides that an insurer may not use the same accountant or accounting partner for more than five years, rather than seven years; extends the time that the insurer must forgo using that accountant or partner from two years to five years;

Section 7:  Allows the use of financial contracts other than reinsurance to provide catastrophe loss funding;

Section 8:  Removes an exemption for examinations of managing general agencies that solely represent domestic insurers;

Section 9:  Relates to public adjuster reform by limiting compensation for supplemental or re-opened claims to 20 percent, and 20 percent for non-emergency claims or claims older than one year; provides advertising restrictions;

Section 10: Further regulates public adjusters by requiring a person representing a carrier to notify a policyholder 48 hours prior to an inspection of the insured property, expressly provides for information sharing between public adjusters and insurers;

Section 11:  Requires eight hours of continuing education for public adjuster apprentices;

Section 12:  Provides that all contracts for public adjuster services must be in writing and must prominently display a certain statement on the contract that relates to fraud prevention;

Section 13:  Creates a duty to file original, supplemental and re-opened windstorm or hurricane claims within three years of the event;

Section 14:  Requires insurers to use retail costs or computer software databases to determine repair or replacement cost estimates;

Section 15:  Extends insurer annual report card Rule completion date to June 1, 2012 and defines “valid complaint;”

Section 16:  Specifies various rating-related provisions as follows:

  • Extends use and file prohibition to 2012;
  • Provides that the OIR cannot directly or indirectly interfere with acquisition costs;
  • Limits expedited rate filing to 10 percent;
    • Provides for an inflation trend factor to be included in expedited rate filings beginning in 2011;
    • Deletes a provision that states that the reinsurance costs filings under this paragraph cannot be loaded for expenses or profit;
    • Establishes that only one filing can be made in any 12-month period under this section (deletes the prohibition of filing for any other rate increase six months before, or after this provisions is used)
  • Directs the OIR to gather information on creating a consumer-oriented Web site
  • Deletes obsolete/outdated medical malpractice provisions
  • States that an insurer can supplement a rate filing without rendering a prior rate filing certification invalid;

Section 17:  Relates to mitigation discounts by:

  • Providing that credits and debits may be used;
  • Stating that the Legislature intends that the implementation of discounts should not result in a loss of income to insurers and that, in circumstances where an insurer can demonstrate that the mitigation discounts are resulting in a loss that is greater than the reduction of losses, it can recover lost revenue in base rates;
  • Allowing Insurers to include costs for replacement Temporary Increase in Coverage Limits in rate filings, while deleting a provision stating that this cannot include expense or profit load;

Section 18:  Relates to Citizens Property Insurance Corporation (“Citizens”) by changing the name of the “High-Risk” account to the “Coastal” account; clarifies that Citizens’ surcharges are payable upon cancellation or termination of a policy; clarifies that Citizens policyholders must be assessed fully first; requires a signed acknowledgment of potential surcharges and assessments for Citizens policyholders; provides for a Citizens Board of Governors members ethics section; extends the redrawing Citizens’ of high-risk area in which policies are eligible for wind-only coverage to December 1, 2012;

Section 19:  Directs the Division of Statutory Revision to prepare a reviser’s bill for introduction at the next regular session of the Legislature to change the term “high-risk account” to “coastal account” to conform the Florida Statutes;

Section 20:  Requires Citizens to give 45 days for notice of non-renewal with OIR approval.  Also, provides for a 45-day notice requirement for insurers that cancel or non-renew;

Section 21:  Relates to “notice of change” in policy terms without canceling or non-renewing;

Section 22:  Relates to actual cash value and replacement cost value (“ACV/RCV”):

  • For dwelling claims, allows an insurer initially to pay ACV, then pay the remainder of the claim as repairs are performed;
  • Provides that an insurer has one year to file for RCV after ACV is paid; in the case of a total loss, then RCV is paid upfront without holdback;
  • For personal property claims, RCV is paid without reservation or holdback;

Section 23:  Clarifies that insurers must pay or deny a claim or supplemental claim in 90 days;

Section 24:  Provides for alternative procedures for dispute resolution; provides for documentation and information sharing from insurer and insured in mediation proceedings.  An insured must submit quotes from licensed contractors and claims disputes must occur less than five years before a request for mediation;

Section 25:  Relates to sinkhole repairs by requiring full payment for stabilization and foundation repairs once an insured enters into a contract for repairs; requires final payments within 20 days of completed work; provides that an insured has one year after ACV is paid to make a claim for RCV.  In the case of a total loss, the insurer must pay RCV without holdback. Provides that, once the insurer approves coverage for a sinkhole loss, the insured has 90 days to enter into a contract for repair, however, this section allows for tolling of this time frame if either side requests a neutral evaluation.  Stabilization and other repairs must be completed in 12 months of entering the contract for repairs;

Section 26:  Relates to sinkhole reports; shifts the burden of proof to the insured, unless the insured gets an opinion from a geologist that disputes the insurers’ findings, requires payments of sinkhole claims to be filed with county clerk and reports of findings to be furnished to a future buyer of the property;

Section 27:  Amends the neutral evaluation process by providing standards for neutral evaluators;

Section 28:  Provides standards for mitigation inspectors and expressly allows an insurer to verify inspections at its own expense;

Section 29:  Requires a domestic property insurer to notify the OIR of its intention to entering into contracts with affiliates; requires 30 days notice to the OIR;

Section 30:  Provides a funding appropriation for an OIR consumer Web site;

Section 31:  Provides for an effective date of July 1, 2010.


Other property insurance proposals that will be decided during the last week of Session include, but are not limited to:

  • CS2/1st Eng. SB 2176 by the Senate Committees on General Government Appropriations; Banking  and Insurance and  Senator Durell Peaden Jr., which relates to commercial insurance deregulation
  • HB 7217 by the House General Government Policy and State Representative Bryan Nelson, which relates to the medical malpractice exemption from assessments in the Florida Hurricane Catastrophe Fund (“FHCF”).  The bill’s language also is included in SB 2044.
  • CS2/1st Eng. SB 2264 by the Senate Committees on Judiciary; Banking and Insurance and Senator Mike Bennett relates to property insurance claims and public adjusters.  The language from this bill also is included in SB 2044.
  • CS3/HB 561 by the House Criminal and Civil Justice Policy Council;  Insurance, Business, & Financial Affairs Policy Committee; Civil Justice and  Courts Policy Committee and State Representative Ellyn Bogdanoff relates to community associations and loss assessment coverage requirements.
  • CS/CS/CS/CS/1ST Eng. HB 663 by the Full Appropriations Council on  Education and Economic Development; General Government Policy Council;  Military and Local Affairs Policy Committee, Insurance, Business and Financial  Affairs Policy Committee and State Representative Gary Aubuchon relates to building safety and includes a provision on windstorm mitigation procedures.  The windstorm mitigation language is also in SB 2044.


The 2010 Session is scheduled to conclude on Friday, April 30, 2010.  Colodny Fass will continue to keep you updated on pending insurance proposals. 


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