 There
is potential trouble brewing in the legislature with
respect to the main property insurance bills moving
through the process.
In the Senate,
Sb 408 by
Senator Richter is on the agenda next week for
its final committee stop, and looks like it will
pass without any more significant amendments adopted
before it heads to the Senate floor.
The House bill however (HB 803 by Representative Wood) was not addressed this week as
leadership in the House has gotten more directly
involved which has created a little conflict with
the bill sponsor.
The bill is expected to be addressed next
week in the House Insurance committee, but it is not
clear what changes will be in the amended bill.
It will most likely continue to deviate from
the Senate bill as it stands now.
There are
already whispers that the property bill will have to
be bumped up to top leadership in the respective
chambers for final resolution on the insurance bill
issues.
SB 408
still contains key provisions such as:
Ø
A 3 year deadline on
hurricane claims for both residential and commercial;
Ø
Sinkhole reforms:
deregulating sinkhole rates, a two-year deadline on
sinkhole claims, a new definition of structural damage
from a sinkhole and allowing as an option rather than
requiring an offer of the much-abused sinkhole coverage
for cosmetic damages by Citizens Property Insurance
Corporation and private insurers (insurers would still
have to offer catastrophic ground collapse coverage);
and many other provisions;
Ø
Tougher regulation of
public adjusters, including new restrictions on
solicitation;
Ø
Repealing the statutory
“choke-down” of Citizens’ High Risk Account;
Ø
Modifying provisions related to windstorm damage
mitigation discounts for residential property insurance
and repealing the provision requiring the OIR to develop
a method correlating mitigation discounts to the uniform
home grading scale
The
Surplus Lines NRRA implementation legislation has
one committee left in the Senate, and two in the House
before it reaches the floor in the respective chambers.
The House bill expanding Commercial Rate
De-regulation to all commercial auto and P&C (HB
99 by Rep. Drake) passed the House. The
Senate companion (SB
178 by Sen. Olerich) has passed two
Senate committees and has only one left before heading
to the floor for final vote.
The main
Citizens legislation, a proposal aimed at raising
rates and making eligibility more difficult, passed both
the Senate Banking & Insurance Committee, and House
Insurance subcommittee this week.
The packages are similar, but are now no longer
identical as the amendatory process takes shape.
Both bills still increase the Citizens glide-path
to “actuarially sound” rates from the current 10% per
policyholder to 20% per ‘rating territory’ and 25% per
individual risk. Both bills also revise from 15% to 25%,
the rate differential eligibility standard for Citizens
and revises eligibility based on the value
of property insured, which would be reduced from
$1 million to $750,000 beginning January 1, 2014, and $500,000 January 1, 2016.
Key differences in the proposals currently include:
Ø
The amendment to
eliminate the option of commercial coverages being
placed into Citizens is still contained in the Senate
bill.
However, the House provision was amended out in
committee, as the bills moved in different directions.
We will be working to have the provision
re-inserted as it moves through the process.
Ø
The House bill no longer
contains restrictions on use of Public Adjusters by
Citizens policyholders.
The Senate bill states a policyholder could not
contract with a Public Adjuster until it had received a
settlement offer from Citizens. It caps Public Adjuster
commissions at 5% of the difference between the Citizens
offer and the amount negotiated by the Public Adjuster.
Ø
The House proposal
repeals the Citizens HRA ‘chokedown’, and prevents
Citizens from covering structures seaward of the coastal
construction setback line that are permitted after June 1, 2011.
This provision is included in the main Senate
property bill (Sb 408).
Ø
Requires Citizens
Property to offer the broad, much-abused sinkhole
insurance, which private insurers no longer would be
required to offer under the main property package.
Ø
Discontinues the current
statutory authorization for companies to give a mult-policy
discount when the homeowner is with Citizens or a take
out (effective Jan 1, 2013).
Ø
Specifies that Citizens
will not cover detached structures separated from the
dwelling.
Ø
Specifies that Citizens
will not cover certain personal items (furs, jewelry,
firearms, etc.)
Ø
Prohibits Citizens from
making any payment for sinkhole loss, unless that
payment is used for repair or remediation.
Ø
Changes the original bill
by specifying that Citizens is NOT liable for "one way"
attorney fees under s. 627.428.
Ø
Both bills now contain an amendment adopted
allowing Surplus
Lines Insurers to participate in Citizens takeouts
under certain conditions.
The exact language is as follows:
Notwithstanding any other provision of law, for
purposes of a depopulation, take-out, or keep-out
program adopted by the corporation, including an initial
or renewal offer of coverage made to a policyholder
removed from the corporation pursuant to a depopulation,
take-out, or keep-out program, an eligible surplus lines
insurer may participate in a depopulation, take-out, or
keep-out program in the same manner and on the same
terms as an authorized insurer, except as provided under
this sub-subparagraph. To qualify to participate in a
depopulation, take-out, or keep-out program, an eligible
surplus lines insurer must first obtain approval from
the office for a depopulation, take-out, or keep-out
plan and must then comply with all of the corporation's
requirements for the depopulation, take-out, or keep-out
plan applicable to admitted insurers and with all
statutory provisions applicable to the removal of
policies from the corporation. With regard to a
policyholder removed from the corporation through an
assumption agreement, until the end of the assumption
period, the policyholder remains eligible for coverage
from the corporation regardless of any offer of coverage
from a surplus lines insurer. In considering a surplus
lines insurer's request for approval for a depopulation,
take-out, or keep-out plan, the office must determine
that the surplus lines insurer meets the
following requirements:
(I) The surplus lines insurer maintains a surplus to
policyholders of at least $50 million on a company or
pooled basis;
(II) The surplus lines insurer maintains an A.M. Best
Financial Strength Rating of A minus or better;
(III) The surplus lines insurer maintains reserves,
surplus, reinsurance, and reinsurance equivalents
sufficient to cover the insurer's 100-year probable
maximum hurricane loss at least twice in a single
hurricane season. In addition, the surplus lines insurer
must submit such reinsurance to the office to review for
purposes of the takeout;
(IV) The surplus lines insurer provides prominent notice
to the policyholder before the assumption of the policy
that surplus lines policies are not provided coverage by
the Florida Insurance Guaranty Association and an
outline of any substantial differences in coverage
between the existing policy and the policy being offered
to the insured; and
(V) The surplus lines insurer provides similar policy
coverage.
This sub-subparagraph does not subject any surplus
lines insurer to requirements in addition to the
requirements contained in part VIII of chapter 626 . A
surplus lines broker who makes an offer of coverage
under this sub-subparagraph is not required to comply
with s. 626.916 (1) (a), (b), (c), and (e).
Calendar:
Session Ends May 6th.
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