Senate Banking and Insurance Committee Meeting Report: Mar. 11

Mar 12, 2008

On Tuesday, March 11, 2008, the Senate Banking and Insurance Committee approved two measures to further regulate public insurance adjusters and property insurance umpires.

Senate Bill 1018 by Senator Mike Fasano (R-New Port Richey) establishes a property insurance appraisal umpire license that would be regulated by the Department of Financial Services (“DFS”), and further provides that after June 1, 2009, no person may act as an umpire for a residential or commercial residential property insurance claim unless licensed by DFS. The Bill creates several definitions regarding property insurance loss appraisers and umpires, establishes certain criteria that both umpires and appraisers must meet to participate in the appraisal process, and states that the parties will share the costs for the umpire unless the final award is fifty percent more than the insurer’s pre-appraisal estimate. The Bill was amended to make certain exceptions to the licensing education requirement for retired judges or court civil certified mediators.

Also by Senator Fasano, SB 1098, which further regulates public adjusters, was approved during the meeting. Specifically, the Bill prohibits public adjusters from charging a fee unless a written contract is executed, prohibits public adjusters from charging more than 15 percent on non-hurricane claims, 10 percent on initial hurricane claims, and 15 percent on re-opened or supplemental hurricane claims. The Bill also limits solicitation by public adjusters and creates several qualifications for licensure.

Citizens Property Insurance Corporation (“Citizens”) gave a short presentation regarding its current financial status. Sharon Binnun, Citizens’ Chief Financial Officer, told the Committee that Citizens did experience some growth in 2007, but that this growth was slowed by a large amount of “take-out” companies and “keep-out” companies (i.e. companies that are actively writing insurance policies).

Ms. Binnun also reported that Citizens has approximately $4 billion in surplus and $6.5 billion in pre-event liquidity. Citizens relies on the Florida Hurricane Catastrophe Fund (“FHCF”) for an estimated $12 billion in reinsurance, but would use its surplus and pre-event liquidity to pay claims while any reimbursements from FHCF were pending. Several senators expressed concerns about the ability of the FHCF to bond and pay claims in the event of a hurricane. Citizens’ financial advisor, John Forney of Raymond James, stated that the current state of financial markets would make it difficult for the FHCF to bond enough to fulfill its obligations.

Wednesday, March 12
House Bill 995 by Representative Julio Robaina (R-Miami) will be heard March 12 in the House Committee on Courts. Among other things, HB 995 will remove any requirement that condominiums obtain and maintain windstorm insurance. This is the Bill’s first committee of reference.

Thursday, March 13
On March 13, the House Insurance Committee will hear HB 983 relating to windstorm insurance by Representative Dennis Ross (R-Lakeland). Representative Ross’ bill would create two options for insurance companies by allowing companies to cede all of their wind risk to the state and remain in the current ratemaking regulatory environment, or to keep the wind risk and have unregulated market rating. The Committee will also hear bills relating to employee leasing companies, group self-insurance funds, and health insurance. To review the agenda please click here.

Friday, March 14
On March 14, the House Insurance Committee plans to hold a six-hour meeting during which it will hear sworn testimony from representatives of the Florida Office of Insurance Regulation, Citizens, and the DFS. An agenda for this meeting has not yet been released.


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