F.A.I.R. for Collier
Insurance Bill of Rights
Property and Casualty Insurance
Senate Bill 2860 is entitled the Homeowners Bill of Rights Act.
Rating Law for Property and Casualty Insurance (s.
Repeal of Arbitration - Repeals the option for an insurer, for any property and casualty insurance rate filing (or any other filing), to appeal a rate filing disapproved by the Office of Insurance Regulation (OIR) to an arbitration panel in lieu of an administrative hearing. Current law prohibits use of arbitration until January 1, 2009.
Extension of Prohibition on "Use and File"- Extends for one additional year, until December 31, 2009, the current prohibition on insurers using the "use and file" option for property insurance rate increases. This would continue to require that an insurer make a "file and use" filing that prohibits an insurer from increasing its rates prior to approval by the OIR, unless deemed approved by failure of the OIR to issue a notice of intent to disapprove within 90 days. Current law prohibits "use and file" rate increases until December 31, 2008.
Use of Approved Hurricane Loss Models - Requires that projected hurricane losses must be estimated using a model or method found to be accurate or reliable by the Florida Commission on Hurricane Loss Projection Methodology.
Profit Factor - Deletes the requirement that the OIR approve a profit factor in a rate filing for an insurer that is commensurate with the risk, for that portion of the rate covering hurricane losses for which the insurer has not purchased reinsurance. By striking this language, the law requires the OIR to consider "a reasonable margin for profit and contingencies."
Expedited Hearings on Rate Filings - Provides for an expedited hearing process for rate filings by:
· Requiring Division of Administrative Hearings to hold the hearing within 30 days after the request for the hearing.
· Requiring the hearing officer to issue the recommended order within 30 days after the hearing (or after receipt of the transcripts).
· Requiring parties to submit written exceptions within 10 days.
· Requiring the OIR to enter a final order within 30 days after the entry of the recommended order.
· Allowing timeframes to be waived upon agreement of all parties.
· Allowing an insurer to request an expedited appellate review of a final OIR rate order and providing legislative intent that the 1st DCA grant the insurer's request.
Transparency in Rate Regulation (creating s.
For residential property insurance rate filings the OIR must provide information on an Internet website of all assumptions made by any OIR actuary; the overall rate change requested by the insurer; a statement describing any assumptions that deviate for actuarial standards of the Casualty Actuarial Society; and a certification by the office's actuary that based on the actuary's knowledge, that his or her recommendations are consistent with accepted actuarial principles.
In any administrative or judicial proceeding, the work-product and attorney-client privilege exemptions from public disclosure do not apply to communications with office attorneys or records prepared by or at the direction of an OIR attorney except when the communication or record reflects a mental impression, conclusion, litigation strategy, or legal theory of the attorney or the OIR that was prepared exclusively for civil or criminal litigation or adversarial administrative proceedings and the communication occurred or the record was prepared after the initiation of a court action, after issuance of a notice of intent to deny a rate, or after the filing by an insurer of a request for a hearing.
Administrative Proceedings in Rate Determinations
The bill allows an administrative law judge (ALJ) to make the certain findings of fact in an administrative hearing on a property insurance rate filing. The ALJ may find whether the factors used in a rate filing or applied by the office are consistent with standard actuarial techniques or practices or are otherwise based on reasonable actuarial judgment, whether a factor for underwriting profit and contingencies is reasonable or excessive, or whether the cost of reinsurance is reasonable or excessive. The administrative law judge may enter a recommended order that approves, modifies or rejects the requested change, as supported by the record.
Requirements for Trade Secret Documents (s.
The bill specifies requirements for submission of a document to the OIR or the Department of Financial Services (DFS) in order for a person to claim that the document is a trade secret. Each page or portion that is a trade secret must be labeled as such and be separated from non-trade secret material. The submitting party must include an affidavit certifying certain information as to the trade secret status of the documents.
The OIR is authorized to release a document marked as trade secret to a requestor if the OIR provides the insurer with 30-days notice and opportunity to obtain a court order barring disclosure. The bill allows the OIR or DFS to disclose a trade secret to employees or officers of another governmental agency whose use of the trade secret is within the scope of their employment.
Market Conduct Examinations—Required Filing of Claims Handling Practices (s.
The bill authorizes the OIR to order an insurer to file its claims handling practices and procedures as a public record based on findings of a market conduct examination. The OIR findings must be that the insurer had a pattern or practice of willful violations of an unfair insurance trade practice related to claims-handling causing harm to policyholders, as prohibited by s.
Administrative Fines for Violations of the Insurance Code (s.
The bill doubles all current fines that may be imposed by the OIR upon an insurer for violation of the Insurance Code or any rule or order. A maximum fine of $40,000 (rather than $20,000) may be levied for a willful violation, not to exceed an amount equal to $200,000 (rather than $100,000), for all willful violations arising out of the same action. A maximum fine of $5,000 (rather than $2,500) for a nonwillful violation, not to exceed an amount of $20,000 (rather than $10,000) for all nonwillful violations arising out of the same action.
Administrative Fines for Unfair Insurance Trade Practices (s.
The bill doubles all current fines that may be imposed by the OIR or the Department of Financial Services (within each agency's respective jurisdiction) upon a person who violates any unfair or deceptive act or practice related to insurance. A maximum fine of $40,000 (rather than $20,000) may be levied for a willful violation, not to exceed an amount equal to $200,000 (rather than $100,000), for all willful violations arising out of the same action. A maximum fine of $5,000 (rather than $2,500) for a nonwillful violation, not to exceed an amount of $20,000 (rather than $10,000) for all nonwillful violations arising out of the same action.
Unfair Insurance Trace Practices; Payment of Undisputed Claim Amount (s.
The bill prohibits an insurer from failing to pay undisputed amounts of partial or full benefits owed under first-party property insurance polices within 90 days after determining the amount and agreeing to coverage, unless payment of the undisputed benefits is prevented by an act of God, prevented by the impossibility of performance, or due to actions by the insured or claimant that constitute fraud, lack of cooperation, or intentional misrepresentation regarding the claim for which benefits are owed. Violations are grounds for a private civil remedy action, due to the cross-reference in current s.
Notice of Non-Renewal
The bill increases the required notice of nonrenewal of a personal or commercial residential insurance policy from 100 days to 180 days if the policy has been written for 5 years or more. Insurers that are planning to nonrenew more than 10,000 policies within a 12-month period must notify the OIR 90 days before issuing any notices of nonrenewal.
Required Use of Models Approved by
The bill requires that for purposes of a rate filing insurers must use, and may not modify or adjust, a model or method found to be accurate or reliable by the Commission on Hurricane Loss Projection Methodology. The bill deletes the current law that in order for an approved model to be admissible and relevant, the OIR must have access to all of the assumptions and factors used in developing the model.
The commission is required to adopt findings related to a model's probable maximum loss calculations. An insurer must use and may not modify or adjust models found by the commission to be accurate or reliable in determining probable maximum loss levels for rate filings made more than 60 days after the commission has made such findings.
The bill specifies that the processes, standards, and guidelines of the commission do not constitute final agency action or statements of general applicability that implement, interpret, or prescribe law and are exempt from chapter 120, F.S.
Use of Public Hurricane Loss Model
The bill allows insurance companies to use the Public Hurricane Loss Model to determine rate requests in advance of a filing, but requires the insurer to pay for use of the public model. It requires the Financial Services Commission to establish by rule, by January 1, 2009, a fee schedule for access and use of the model, reasonably calculated to cover only the actual costs.
Hurricane Mitigation Premium Credits Tied to Uniform Home Rating Scale (s.
The OIR is required to develop, by February 1, 2011, a proposed method for insurers to establish windstorm mitigation premium credits (discounts) that correlate to the numerical rating of a structure pursuant to the uniform home rating scale. The Financial Services Commission must then adopt rules by October 1, 2011, requiring insurers to make rate filings which revise their credits pursuant to this method, consistent with generally accepted actuarial principles and wind loss mitigation studies. The rules must allow a period of at least two years after the effective date of the revised credits for a property owner to obtain an inspection or otherwise qualify for the revised credit, during which time the insurer must continue to apply the old mitigation credit.
Disclosure of Windstorm Mitigation Rating Upon
The bill provides that, effective January 1, 2010, the potential purchaser of a residential property with an insured value of $500,000 or more, insured by Citizens, and located in the wind-borne debris region be informed of the structure's windstorm mitigation rating.
Effective January 1, 2011, a purchaser of residential property located in the wind-borne debris region must be informed of the windstorm mitigation rating of the structure, either in the contract for sale or as a separate document attached to the contract. The Financial Services Commission is authorized to adopt rules, including the form of the disclosure and the requirements for the inspection or report that is required.
Citizens Property Insurance Corporation (s.
Extension of Rate Freeze - Extends the freeze on rate increases in Citizens from January 1, 2009 to January 1, 2010. Requires Citizens to make an annual, actuarially sound rate filing beginning July 15, 2009, to be effective no earlier than January 1, 2010.
Assessments for Citizens Deficits - Revises the required assessments to fund a deficit in each of Citizens' three accounts (high risk, personal lines, or commercial lines) to:
· Require up to a 15 percent of premium surcharge for 12 months on all Citizens' policies, collected upon issuance or renewal;
· If this is insufficient, require a regular assessment against insurers which may be recouped from their policyholders, of up to 6 percent (rather than 10 percent) of premium for most lines of property and casualty insurance or 6 percent of the deficit, whichever is greater;
· Require any remaining deficit to be funded by a bond issue, funded by multi-year emergency assessments on policyholders on most types of property and casualty insurance, of up to 10 percent of premium for most lines of property and casualty insurance, or 10 percent of the deficit, whichever is greater.
The bill grants the board of Citizens the discretion to apply the amount of any assessment or surcharge which exceeds the amount of the deficit to various business purposes.
Eligibility for Higher Value Homes - Provides that homes with a dwelling replacement cost of $2 million or more, rather than current law's $1 million or more, are ineligible for coverage, effective January 1, 2009, with limited exceptions for current policyholders who obtain rejections from three surplus lines insurers and one authorized insurer.
Eligibility for Properties Within 2,500 Feet of the Coast - Deletes the current law requiring that new properties constructed after January 1, 2009, within 2,500 feet of the coast must meet "Code Plus" requirements in order to be eligible for Citizens. By repealing this provision, the law would still require that any new home meet the Florida Building Code.
Forced Purchase of Bonds - Deletes current law requiring insurers to purchase bonds that remain unsold for 60 days.
Access to Claims and Underwriting Files - Provides that a policyholder who has filed suit against Citizens has the right to discover the contents of his or her claims file to the same extent that discovery would be available from a private insurer. Allows Citizens to release confidential underwriting and claims file information under certain circumstances.
Multi-Policy Discount
Allows an insurer to offer a multi-policy discount if the policyholder has wind-only coverage with Citizens or an insurer that has removed a policy from Citizens, provided that the same insurance agent services both policies.
Citizens Property Insurance Corporation
The bill creates the Citizens Mission Review Task Force to analyze and report on changes needed to return Citizens to its former role as a state-created, noncompetitive residual market mechanism that provides property insurance coverage to risks that are otherwise entitled but unable to obtain such coverage in the private market. The task force must submit reports by January 31, 2009, to the Governor, the President of the Senate, and the Speaker of the House of Representatives. The task force is composed of 11 members and must be funded by Citizens.
Insurance Capital Build-Up Incentive Program (s.
The bill revises the requirements for the Program, which provides for surplus note loans to insurers of up to $25 million, repayable over 20 years at the 10-year Treasury bond rate, as approved by the State Board of Administration (SBA). Insurers that apply by September 1, 2008 are eligible for a surplus note loan equal to the amount of new capital that an insurer contributes. Insurers that apply after September 1, but before June 1, 2009, may apply for a surplus note equal to one-half of the amount of new capital that the insurer contributes. The bill revises the minimum premiums that the insurer must commit to write, by adding a minimum gross premium to surplus ratio requirement, as an alternative to the current net premium to surplus writing ratio requirement. The distinction is that net premiums deduct the reinsurance premiums that the insurer pays (cedes) to a reinsurer. An insurer must write at least 15 percent of its premiums for new policies for policies taken out of Citizens, for each of the first 3 years of the surplus note.
To fund the program, Citizens is to transfer $250 million from its personal lines account and commercial lines account to the General Revenue Fund on December 15, 2008, unless the estimated year-end surplus in the Personal Lines Account and the Commercial Lines Account is less than $1 billion. The State Board of Administration (SBA), beginning July 1, 2009, must make quarterly transfers to Citizens of interest and principal payments for surplus notes that were funded by appropriations from Citizens in FY 2008-09. Citizens is prohibited from using any of the amendments to the Insurance Capital Build-Up Program or any transfer of funds as justification or cause in seeking any rate or assessment increase. However, this provision does not limit the amount of an assessment that may be greater due to the transfer of these funds.
The bill requires the SBA to make annual reports to the Legislature on the results of the program and each insurer's compliance with the terms of its surplus note. The SBA must transfer to Citizens on January 15, 2009, uncommitted or unreserved funds, that were funded by transfers from Citizens.
The bill requires the FHCF to offer $10 million of additional coverage to limited apportionment companies (having $25 million in surplus or less and writing at least 25 percent of premiums in
Annual Report by CFO
Requires the CFO to annually report to the Governor and Legislative presiding officers regarding the economic impact on
Vote: Senate 33-5; House 117-0
The bill makes several changes to the My Safe Florida Home Program (MSFHP) administered by the Department of Financial Services (DFS). The intent of the MSFHP is to provide free home inspections for at least 400,000 site-built, single-family residential properties and provide grants to at least 35,000 applicants prior to June 30, 2009.
The bill provides that to qualify for selection by the DFS as a wind certification entity to provide hurricane mitigation inspections, an entity must use hurricane mitigation inspectors who are certified or licensed as building inspectors, general or residential contractors, professional engineers or architects, or individuals who have at least two years prior experience in residential construction or residential building inspection and who have received specialized training in hurricane mitigation procedures.
The legislation requires DFS to adopt a quality assurance program that includes a statistically valid number of reinspections. It also allows DFS to verify that mitigation improvements have been made to all openings, including exterior doors and garage doors, prior to issuing a reimbursement grant check to the homeowner. The bill eliminates a provision in current law which requires DFS to transfer $40 million to the Volunteer Florida Foundation to provide inspections and grants to low-income homeowners. This provision is removed due to concerns about the tax status of the Foundation. The DFS may provide the remaining $18.7 million that has not yet been transferred to the Foundation, directly to non-profit organizations to serve low-income homeowners.
The bill mandates that DFS implement a no-interest loan program by October 1, 2008, which is to be contingent upon the selection of a qualified vendor and the execution of a contract acceptable to DFS and the vendor. The DFS is directed to set aside $10 million from the MSFHP funds for the loan program.
The bill allows DFS to contract with third parties for the provision of information technology and contractor services for low-income homeowners, which shall be considered direct program costs, rather than administrative costs for purposes of administrative cost limitations.
The bill clarifies that policyholders may submit a uniform mitigation verification inspection form to their insurers for the purpose of determining premium discounts for wind insurance. Further, insurers must accept as valid the uniform mitigation verification forms certified by the DFS or signed by a hurricane mitigation inspector employed by an approved My Safe Florida Home wind certification entity, a building code inspector, a general or residential contractor or a professional engineer or architect so that homeowners can access insurance discounts or credits for which they are eligible.
Vote: Senate 40-0; House 118-0
NOTE: These are the provisions of this bill that apply to real estate issues.
The bill amends various provisions of the Insurance Code to provide for the following:
Citizens Property Insurance Corporation (Citizens)
The bill amends s.
The bill requires Citizens to electronically report claims data and histories to a consumer reporting agency upon the request of such agency. A consumer reporting agency, as defined by the federal Fair Credit Reporting Act, that is in compliance with the confidentiality requirements of the Act maintains claims data and histories for use in connection with the underwriting of insurance involving a consumer. Insurers are able to review the claims history of insureds using the service provided by a consumer reporting agency.
Public Adjusters
The bill contains the substance of CS/SB 1098, as revised, and is the product of recommendations pertaining to public adjusters from the Task Force on Citizens Claims Handling and Resolution. The Task Force found that while the services of public adjusters can be beneficial to policyholders who have suffered a loss, the current laws do not adequately protect consumers from unscrupulous public adjusters.
The bill amends various provisions of the Insurance Code to provide for the following changes:
· Requires the Department of Financial Services to create a specific examination for public adjusters and mandates continuing education requirements for such adjusters;
· Prohibits public adjusters from contacting an insured or claimant until 48 hours after the occurrence of an event that may be the subject of a claim under a policy;
· Prohibits public adjusters from soliciting an insured or claimant except on Monday through Saturday and only between the hours of 8 a.m. and 8 p.m.;
· Prohibits public adjusters from charging a fee unless a written contract was executed prior to the payment of a claim;
· Prohibits public adjusters from charging more than:
o 20 percent of the insurance claims payment on non-hurricane claims;
o 10 percent of the insurance claims payment on hurricane claims for claims made during the first year after the declaration of emergency;
· Provides for no cap on re-opened or supplemental hurricane claims; however, the fee cannot be based on any payments made by the insurer to the insured prior to the time of the public adjuster contract;
· Allows insureds or claimants to have 5 business days after the date on which the contract is executed to cancel a public adjuster’s contract during a state of emergency declared by the Governor; insureds or claimants have 3 business days to cancel a contract as to claims involving non-emergencies;
· Creates a public adjuster apprentice license and examination;
· Requires public adjuster contracts to be in writing and to display an anti-fraud statement; and
· Provides for nonresident public adjuster qualifications.
Title Insurance (UCC Personal Property Insurance)
The bill allows a title insurer to petition the OIR for a rate deviation under s.
The bill amends s.
Insurance Agents and Other Insurance Representatives
The bill amends several sections of the Insurance Code pertaining to insurance agents and other insurance representatives and provides for the following:
· Allows applicants to be exempt from the customer representative licensing examination if they have earned a specified degree and have completed at least nine academic hours in property and casualty insurance;
· Prohibits insurers, including Citizens, from requiring appointees (insurance agents) to complete specified continuing education (CE) courses offered by such insurers or by Citizens, in order for the appointment to be issued or renewed;
· Allows insurers, including Citizens, to require appointees to attend non-CE training and education programs offered by such insurers or by Citizens, in order for the appointment to be issued or renewed;
· Allows Citizens to require its employees to take training relevant to their employment and to require appointees to take CE courses which pertain solely to Citizens' internal procedures or products; and
· Authorizes independent study programs offering CE courses through correspondence to allow students to take a final closed book examination without being monitored provided that the student submits a sworn affidavit attesting he or she did not receive assistance while taking the exam.
Except as otherwise provided in this act, this act shall take effect July 1, 2008.
Vote: Senate 39-0; House 118-1
Section
The bill amends current law relating to the process by which group self-insurance funds pay dividends to members. The bill allows the trustees of a fund, established prior to June 1, 2008, to distribute dividends to fund members without prior approval of the office; however, the fund must notify the office within 10 days after the dividend distribution and provide certain information to support the dividend payment. The bill limits the amount of the dividend and prohibits the distribution of dividends if it jeopardizes the financial condition of the fund. Group self-insurance funds established after June 1, 2008 are required to obtain prior approval of the office for the distribution of dividends for the first 7 years of operation.
Vote: Senate 40-0; House 117-0