State of Florida End of 2010 Legislation Session

The bill's title was 'inadvertently' amended in committee changing it from "A bill relating to commercial insurance..." to "A bill relating to insurance..." thereby allowing it to become a vehicle for other insurance provisions which would have previously been 'not germane' to the bill's intent. The bill's main provisions remained intact. Rates for certain commercial insurance products will now be excluded from the OIR's filing and prior approval process provided the products meet three criteria, 1- There are many competing insurers selling these products; 2- The insured risk of these products are not subject to catastrophic losses such as hurricanes; and 3-

The customers of these products are generally sophisticated buyers. The lines specifically:

* Excess or umbrella

* Surety and fidelity

* Boiler and machinery and leakage and fire extinguishing equipment

* Errors and omissions

* Directors and officers, employment practices, and management liability

* Intellectual property and patent infringement liability

*Advertising injury and Internet liability insurance

*Property risks rated under a highly protected risks rating plan

*Any other commercial lines categories or kinds of insurance or types of commercial lines risks that the OIR determines should not be subject to the rating provisions.

Insurers will now be required to notify the OIR within 30 days of changes to rates for these products and to maintain supporting data subject to audit by OIR. The rates for these products continue to be subject to current law which authorizes OIR to review rates utilized by an insurer at any time and in the event rates are found to be excessive, inadequate or unfairly discriminatory, to disapprove them and require new rates. The bill also removes professional liability from products exempted from filing requirements; limits commercial motor vehicle to fleets which is defined as 20 or more vehicles; and clarifies that the rates for the products in the bill will continue to be subject to the provisions in current law that rates cannot be excessive, unfairly discriminatory or inadequate.

The bill was amended on the floor to include provisions that were contained in SB 212, which provides a broader interpretation of workers' compensation benefits payable to off-duty deputy sheriffs to include, but not be limited to, providing security, patrol, or traffic direction for a private employer.

Another amendment dealt with the regulation of Medicare supplement policies by revising provisions related to unfair methods of competition and unfair or deceptive acts to provide that this section does not prohibit a Medicare supplement insurer from providing a premium credit to an insured for using an in-network inpatient facility.

The provisions contained in SB 2618, were also included. It reduces much of the regulatory oversight that OIR currently exercises over warranty associations, and creates new prohibited acts and adds new criminal penalties to the statutes that regulate warranty associations.

Hb 159 Guaranty Associations by Rep. Legg.

Ø Upon approval by the Governor, the bill would be effective on July 1, 2010.

Makes changes to the Florida Insurance Guaranty Association (FIGA), the Florida Life and Health Insurance Guaranty Association (FLAHIGA), and the Florida Workers' Compensation Insurance Guaranty Association (FWCIGA). Combines the two automobile accounts in FIGA (auto liability and auto physical damage accounts) and changes the assessment recoupment process insurance companies use to recoup assessments levied by FIGA from their policyholders by removing the requirement that insurance companies must do a rate filing to pass through a FIGA assessment to the companies' policyholders. The bill also makes FWCIGA, rather than FIGA, responsible for covering employment liability claims of insolvent workers' compensation insurers. The maximum amount FWCIGA will pay for employers liability claims is $300,000 (ie the same as FIGA's coverage limit on these claims).

Hb 545 Residential Sales by Rep. Patterson.

Ø Effective upon becoming law.

Repeals the second part of the 'disclosure phase-in', which requires disclosure of windstorm mitigation ratings, before it takes effect in January 2011. Sellers of homes located in the wind borne debris region would 'not' be required (originally starting January 2011) to disclose the home's windstorm mitigation rating, thereby saving sellers of homes located in the wind borne debris region, the cost of a windstorm mitigation inspection.

Sb 1196 Community Associations by Sen. Fasano.

Ø Effective July 1, 2010.

Creates the "Distressed Condominium Relief Act" to define the extent to which successors to the developer, including the construction lender after a foreclosure and other bulk buyers and bulk assignees of condominium units, may be responsible for implied warranties. Revises laws related to community associations, including condominium, homeowners', and cooperative associations, and with respect to property insurance, specifically:

Revises and clarifies the property insurance requirements of condominium associations and condominium unit owners under ch. 18, F.S.
Repeals the requirement that condo unit owners must maintain property insurance coverage
Repeals the requirement that the condo association must be an additional named insured and loss payee on policies issued to unit owners.
Repeals the provision that a condominium association may purchase property insurance at the expense of the owner when the unit owner does not provide proof of insurance.
Requires that residential condominium unit owner policies issued or renewed on or after July 1, 2010, include loss assessment coverage of $2,000, for certain assessments with a deductible of no more than $250 per direct property loss.
Permits condo, cooperative, and homeowners' associations to demand payment of any future regular assessments from the tenant of a unit or parcel owner.

Sb 1460 Cat Fund Contract Year by Sen. Richter.

Ø Effective Upon becoming law.

Corrects an inadvertent error as a result of legislation passed in 2009 which changed the contract year of the Florida Hurricane Catastrophe Fund to January 1st through December 31st (a calendar year), starting January 1, 2011. This shortening of the contract year to 7 months caused an accounting problem for insurers due to the acceleration of the recognition of an insurer's expense resulting in potential solvency difficulties for insurers. The bill changes the Cat Funds contract year 'back' to June 1st through May 31^st. The bill also changes the retention multiple formula in calculating an insurer's retention, by using exposure from "two years" prior (as opposed to "one year" provided under current law) in calculating the retention factor. This will enable property insurers to obtain Cat Fund reinsurance earlier in the year and be able to more accurately assess their need for additional private reinsurance in advance of the upcoming hurricane season.

Hb 7217 Florida Hurricane Catastrophe Fund ("Cat Fund") Emergency Assessments.

Ø Effective upon becoming law.

The bill continues the exemption of medical malpractice insurance premiums from the Cat Fund emergency assessment for three years, from May 31, 2010 to May 31, 2013.

Sb 846 Residential Fire Sprinkler Requirements by Sen. Bennett

Ø Effective upon becoming law

Provides that provisions in section R313 of the most recent version of the International Residential Code relating to mandatory fire sprinklers (currently requiring the installation of automatic fire sprinkler systems in newly constructed one-family and two-family residential dwellings and townhouses) shall not be included in the Florida Building Code; or adopted as a local amendment to the code. Also prohibits a local government from requiring a property owner to install fire sprinklers in any residential property based on its use or reclassification as a rental property.

Also of note, as part of the budget negotiations, lawmakers continued the 50 staffing positions in the Office of Insurance Regulation that several House members were looking to eliminate.