Florida Legislature Passes Significant Changes in Auto and Property Insurance Markets

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Florida Legislature Passes Significant Changes in Auto and Property Insurance Markets By ITI190 – Insurance Top Info 190

Florida lawmakers passed two bills on the last day of their 2021 legislative session that will bring major changes to the state auto and property insurance markets.

The actions follow weeks of debate on the proposals between the House and Senate chambers.

Stakeholders say none of the potential new laws will do enough to meet the legislature’s goals of reducing rates or eradicating fraud in their respective insurance sectors. Both bills now go to Governor Ron DeSantis, who will need to sign them before they can become law.

Senate Bill 76

The bill seeks to address some of the problems plaguing the state’s home insurance market, in which insurers lost more than $ 1.5 billion last year. He approved Friday in the Senate by 35 votes to 5 and 75 to 41 in the House.

The legislation was significantly revised from the original form at the start of the session and includes:

  • Eligibility change, rate slide and correct indication of actual rate for Citizens Property Insurance Corp.
  • Replacement of the one-off attorney fees statute to make the recovery of attorney fees and costs conditional on obtaining compensation greater than the pre-trial offer from the insurance company.
  • Shortening of the claims deadline for all claims to two years from the date of loss, except for additional claims which have an additional year.
  • require claimants to file a claim at least 10 days before filing a legal action against an insurer, including an estimate of the claim, legal fees and costs claimed and the amount in dispute; does not allow the filing of a prior litigation notice with the insurance company to determine coverage; and allows an insurer to require mediation or any other form of alternative dispute resolution upon receipt of the notice.

The bill also makes several changes to address what insurers say is an explosion in roofing claims and lawsuits. More precisely SB 76:

  • Makes it illegal for roofers or others acting on their behalf to create a “prohibited advertisement,” including any e-mail, phone call, or material presenting a complaint.
  • Forbidden to offer anything of value to perform a roof inspection, an offer to interpret an insurance policy or make a claim, or to amend the claim on behalf of the insured.
  • Prohibits a contractor from making repairs for an insured with a repair contract that does not include a detailed estimate of the costs of labor and materials required to complete the repair.
  • Offers a potential fine of $ 10,000 for any breach by roofers.
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Removed from the final legislation was the elimination of the multiplier for state attorney fees and allowing insurers to include policy wording that provides actual cash value rather than the costs of full roof replacement. The industry had urged lawmakers to include these provisions to combat cost drivers, but it has become a sticking point in both chambers. A change adopted on Friday also eliminated offers of judgment for the insured or the insurer.

Senator Jeff Brandes, who co-sponsored the bill, voted in favor of the bill, but said it was just a “40% solution to what it takes in Florida to bend the curve costs”.

“I hope that will stabilize the rates, but in the end, it will do nothing to bring them down,” he told his colleagues.

Locke Burt, chairman and CEO of Florida-based insurance company Security First, said he was disappointed lawmakers failed to enact reforms to deal with two Florida Supreme Court cases: Joyce vs. FedNat (2017) and Sebo v American Home Assurance (2016) – are believed to be partially responsible for continuing lawsuits in the state, as noted in a recent report by Florida Insurance Commissioner David Altmaier. But, said Burt, the legislation passed makes much-needed changes and is a “step in the right direction.”

“I would describe this as one step,” he told Insurance Journal. “But I would also like to tell consumers that their prices will continue to increase.”

Senator Jim Boyd, who is also an insurance broker, admitted that the bill is far from perfect and that no one, including the insurance industry and the tasting bar, is happy with the outcome. .

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However, he noted, “we have to do something. We cannot wait until next year to resolve an incredibly serious problem for our constituents. ”

Representative Bob Rommel, who worked on the House version of the bill, said the legislation would oversee insurance companies, help attract new carriers to the state of Florida and “ ensure that owners will have a competitive market and will have the right to make the right choice. insurance for themselves. ”

The Florida Office of Insurance Regulation (OIR) said in a statement that it “appreciates the tireless work of the Florida legislature to drive meaningful property insurance reform. SB 76 protects consumer rights and responds to current challenges in the property insurance market. ”

If signed by DeSantis, the new law will come into force on July 1, 2021.

Law 54 of the Senate

The passage of this bill by Florida repeals the state’s PIP (PIP) system and instead requires mandatory personal injury coverage starting at $ 25,000 for all drivers in the state of Florida. Earlier versions of the legislation required insurers to offer medical benefits (MedPay) in the amount of $ 5,000 or $ 10,000, but the approved version makes the offering optional and includes an optional MedPay benefit of $ 5,000.

The bill will also create a new framework for the handling of auto damage claims and for the non-settlement of claims against auto insurance companies by third parties. A House amendment passed this week added a statement that the law governing such bad faith actions is not intended to exclude any grounds of action currently available against insurance agents selling automobile liability insurance in that state.

Brandes, one of three senators who voted against the bill, said the sponsors had not done enough to study how the bill would affect tariffs.

“Florida already has some of the highest rates in the country and unfortunately if you’re just struggling to get there … [and] only buy PIP today the rates will go up 40%,” he said. Brandes said.

But the bill’s sponsor, Danny Burgess, a Republican, argued that a 2016 study by the OIR showed rates would drop if the state repealed PIP. He said the bad faith provisions will also help stop pervasive PIP fraud and lead to further rate cuts.

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“It’s hard to predict market forces, but the data overwhelmingly shows that we will see a cut [in rates],” he said. “Certainly not a big reduction, but I think we’ll see a reduction.”

However, many industry players and stakeholders opposed this assessment.

The trade group of insurers, the American Property Casualty Insurance Association (APCIA), opposed approval of the bill, saying it could raise rates for Florida drivers and raise the current rate for non- 20% state insured.

He was working on an actuarial study to assess the impact of the bill and said analysis shows it could increase the cost of average auto insurance by 23%, or $ 344. Drivers with the lowest coverage can see increases of up to $ 805 per year.

APCIA said more than 28,000 letters from Floridians have been sent to lawmakers opposing the bill. The group encourages the governor to veto the legislation.

“When SB 54 goes to Governor DeSantis’s office, it has the ability to protect Florida drivers from rising auto insurance costs and keep our roads safer by vetoing it,” APCIA said.

The Personal Insurance Federation of Florida (PIFF) and the Consumer Protection Coalition (CPC) are also encouraging the governor to veto the bill.

“We are extremely concerned that this bill would dramatically increase rates for our Florida customers and residents who can least afford an increase, while the hundreds of thousands of Floridians who are already struggling to pay premiums current would be forced to do without insurance. Carlson, President and CEO of PIFF.

On behalf of Florida consumers, the CPC urges Governor Ron DeSantis to investigate the potential cost impact of this legislation on Florida consumers and to consider vetoing the bill if it turns out that ‘it increases tariffs and that the number of disputes does not decrease, “the group said.

If signed by DeSantis, the new law will come into force on January 1, 2022.

It’s an ongoing story …

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