House General Government Policy Council Report: April 14
Apr 15, 2009
The Florida House of Representatives General Government Policy Council (“Council”) met on Tuesday, April 14, 2009. As part of its agenda, the Council considered two insurance-related bills:
- House Bill 1171 relating to Residential Property Insurance by the House Insurance, Business and Financial Affairs Policy Committee.
- House Bill 1495 relating to Insurance by the House Insurance, Business and Financial Affairs Policy Committee
The following is a brief summary of the discussions and actions on these bills that took place during the meeting.
HB 1171, which would permit insurers to sell non-assessable residential property insurance policies that would not be subject to Florida Office of Insurance Regulation (“OIR”) approval of whether those policies’ rates were excessive, previously was amended to include insurers that have a surplus greater than $500 million; or insurers that have a surplus exceeding $150 million but less than $500 million, and a net written premium-to-surplus ratio that does not exceed two-to-one.
Several Council members asked questions about the bill:
- State Representative Rick Kriseman expressed concern regarding the potential impact on bond agreements.
- State Representative Bill Proctor noted that the bill does not impact bond agreements.
- State Representative Mary Brandenburg expressed concern about the assessment impact for remaining Citizens’ policyholders
- State Representative Proctor noted that there would be less policies in Citizens, so any assessment should be less.
- State Representative Ralph Poppell suggested that a provision be added to HB 1171 that would require private companies to write coastal policies, to which Representative Proctor responded that he was open to discussing that option.
- State Representative Alan Hays spoke in favor of the bill.
- State Representative Priscilla Taylor had several questions regarding OIR’s ability to approve the rate. A representative from OIR testified that OIR is given authority in the bill to disapprove a filed rate because it is inadequate, but not because it is excessive.
Florida Tax Watch and the Florida Chamber testified in support of HB 1171.
Representative Proctor briefly closed on his bill, noting that it is intended to provide consumers with a choice. The bill passed unanimously.
Sponsored by State Representative Bryan Nelson, HB 1495 is the House version of the omnibus insurance package. The bill, as amended on April 3, 2009:
- Provides for specific authorization for the State Board of Administration (“SBA”) to purchase FHCF bonds;
- Provides a “cash build-up factor” for the FHCF beginning in 2009 and increasing incrementally until the factor reaches 25 percent;
- Until December 31, 2011, reauthorizes an additional $10 million of coverage from the FHCF for limited apportionment companies, participants in Florida’s Insurance Capital Build-Up Incentive Program, and insurers that purchased this coverage in 2008;
- Extends portions of the Temporary Increase in Coverage Limits (“TICL”) layer until 2013. However, beginning in 2009, the TICL layer would be reduced by $2 billion in total capacity and the co-pay would increase by 25 percent. Each year thereafter, the TICL layer would continue incremental reductions. The cost of purchasing the TICL layer will increase incrementally;
- Prohibits Citizens Property Insurance Corporation (“Citizens”) from purchasing the TICL layer;
- Deletes the option for the SBA to authorize the $4 billion layer above TICL;
- Provides an allowance for an insurer to pass through the cost of reinsurance coverage (up to 10 percent), that duplicates the TICL layer;
- Delays until 2012 the exclusion from Citizens of high-value homes without certain mitigation features;
- Increases the amount allowed in an initial Citizens’ assessment to Citizens’ policyholders from 15 percent to 25 percent in the event of a deficit;
- Establishes a “glide-path” for increasing Citizens’ rates of 10 percent statewide average per year, not to exceed 20 percent per any single policy;
- Requires 10 percent of Citizens’ rate increase to be allocated toward funding the My Safe Florida Home Program;
- Provides certain parameters for inspections and inspectors in the My Safe Florida Home Program;
- Provides for condominium mitigation in the My Safe Florida Home program;
- Allows a rating “flex ban” of 10 percent for residential-only policies beginning January 1, 2010, provided that the increase does not result in an increase of approximately 15 percent in any one territory. This option could be exercised once a year;
- Prohibits multi-line discounts for policies issued after January 1, 2010 if the homeowner’s policy remains in Citizens;
- Allows agents to explain the Florida Insurance Guaranty Association (“FIGA”).
Seven amendments were adopted onto HB 1495 during the Committee meeting. Below is a brief description of those amendments:
Amendment 1 conforms HB 1495 to SB 1950, which is the Senate version of the bill. The amendment changes the FHCF contract period to June 1 through December 31 in 2010, and to January 1 through December 31 for 2011 and each year thereafter. The amendment passed without objection.
Amendment 2, which passed without objection, conforms HB 1495 to SB 1950 and provides that the FHCF optional coverage retention is accessed before the mandatory coverage under the FHCF reimbursement contract.
Amendment 3 conforms HB 1495 to SB 1950 in regard to the FHCF date for publishing estimated borrowing capacity. The amendment passed without objection.
Amendment 4 would require documents submitted to the SBA to be notarized. The amendment passed without objection.
Amendment 5, which would eliminate HB 1495’s public adjuster language, passed without objection. Representative Nelson noted that the bill’s stakeholders would reconvene to negotiate a potential compromise on this issue.
Amendment 6, which passed without objection, would prohibit the OIR from interfering with agent commission contracts.
Amendment 7 would establish a 30-day limit for notice of withdrawal from a local government self-insurance fund. The amendment passed without objection.
HB 1495 passed as amended with no debate.
Council Chairman Baxter Troutman closed the meeting by noting he will request approval for another meeting to finish hearing those bills that were not considered during the meeting, including House Bill 853 relating to Surplus Lines.
Two Insurance-Related Bills Heard During Senate Session
The Florida Senate considered two insurance-related bills during its April 14, 2009 Session:
SB 1432 by Senator Ronda Storms (R-Brandon) would clarify that insurers may apply certain discounts to policies in which an insured pays the entire premium at the inception of a policy. The bill was read a third time on the Senate floor, and then temporarily postponed. The House companion bill, HB 741 by State Representative Pat Patterson, was approved by the House of Representatives on March 31.
Additionally, SB 741 by Senator Mike Fasano (R-New Port Richey) was amended and passed on second reading to allow insurers to non-renew policies in Pasco or Hernando County, and then offer a policy excluding sinkhole coverage.
As originally drafted, the bill would require the Florida Building Commission to adopt rules establishing a “building code effectiveness grading schedule,” that would evaluate “sinkhole loss prevention ordinances.” The bill states that these ordinances will be evaluated four years after the ordinance takes effect, and will be tied to insurance surcharges or discounts on personal residential property insurance policies.
For additional information on Florida’s legislative process and terminology, click here.
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