The agenda developed by the insurance community and its businessallies for Florida's 2011 legislative session is our biggest "ask"ever. It includes a property package more comprehensive andstronger than SB 2044 vetoed by then-Gov. Charlie Crist in 2010;insurer bad faith law reform, including a right to cure;significant medical malpractice insurance issues; expanded ratederegulation for commercial insurance; flex rating for residentialinsurance; an insurance fraud package preserving the two topfraud-fighting tools, independent medical exams (IME) andexaminations under oath (EUO); and PIP attorneys fee caps.

It isstaggeringly ambitious, but one reflective of the insurance marketcrises facing us. Florida now has not only one of the most troubledproperty insurance markets in the country to underpin its status asthe hurricane risk epicenter of the entire world, but one of theworst auto insurance markets and the fastest growing region forstaged accidents and PIP clinic fraud. Additionally, for years ourinsurer bad faith law has been considered the most onerousanywhere, with its "gottcha clause" producing multi-million-dollarbad faith settlements.

Consensus Is Critical
We actually have a fair to good chance at passing much or most ofthis ambitious agenda. The problems are severe enough and thecoalitions behind the proposed legislative solutions are broadenough, including a new pro-business governor and Cabinet andpro-business legislative leaders, such as House Speaker Dean Cannon, R-Winter Park, and Senate President Mike Haridopolis,R-Melbourne.

We as an industry must achieve as great anagreement as possible on dozens of contentious issues and preservethis consensus throughout the session. At this stage, when thedetails of the actual bills are being worked out, this is ourbiggest challenge. Our agenda has little chance if we are notpursuing consistent goals with a consistent plan.

Florida Insurance CouncilPresident Cecil Pearce has years of experience  workingwith legislatures in Florida and the other Southern states. Meetwith a speaker or president and talk about legal reforms orsomething equally controversial and have to admit that theinsurance community is not yet in agreement on the details, Cecilsays, and they will respond, "Come back next year when you agreeamong yourselves. Don't expect heavy lifting from the Legislaturewhen you can't even agree."

The Florida insurance trades spent a day together in Novemberalong with their key members in a Florida Property Insurance Summitto develop a high-level, comprehensive agenda targeting thecritical issues. It wasn't difficult to find them. There is asinkhole insurance claims crisis, not a sinkhole crisis, with$100,000 and $200,000 claims supported only by cosmetic damage suchas cracks in drywall or a driveway. It is ridiculous that hurricaneclaims are still being filed five years after the last storm,Hurricane Wilma. It is clear what elimination of the mandatoryholdback in replacement cost coverage has done to property losscosts, how it has stimulated a cottage industry of publicadjusters, and how it has created a moral hazard for normallyhonest consumers during these tough economic times.

Insurance Commissioner KevinMcCarty is acknowledging what the insurance industry hasbelieved for the last several years — the rates for Citizens Property InsuranceCorp. are so low that private insurers cannot compete for thebusiness they would willingly assume.

Bad Faith, Autos, andMore
Property is not the only issue. It has been clear for years thatFlorida's legal system is upside down with our notorious bad faithlaw and one-way attorneys fees.

Florida is now the staged auto accident capital of the country,having three of the top five cities in staged accidents in the U.S.The trends in auto insurance loss costs are absolutely alarming,with fraud a big factor; large attorneys fee judgments in suitsinvolving small amounts of benefits add to the problem.

Agreeing on broad objectives is one thing, working out thedetails is quite another. That is the task now facing the insurancetrades, their insurance company members, state regulators, and thelegislative leadership.

Ending lottery-like windfalls from frivoloussinkhole claims seems pretty straight forward if you can get thevotes on a clarifying definition of structural damage fromsinkholes that could not be met with minor credits, a presumptionof correctness for the insurer's engineering report, and so on.Attacking "the tail," with law firms and public adjusters filingclaims under previous policies to avoid the new reforms, is atougher issue.

Some insurers want a public sinkhole repair facility patternedafter mine subsidence programs in other states to assume thisliability. This is being resisted by commercial and auto insurersand business associations that believe they would eventually beassessed for deficits as they are by Citizens. Moreover, any newgovernment program seems inconsistent with the less government,smaller government bent of Gov. Rick Scott and the currentlegislative leadership. We must deal with "the tail" somehow, andthere are other alternatives.

Auto insurers are united behind preserving IMEs and EUOs andoverturning the recent Custer Medical Center v. United AutoIns. Co., SC08-2036 (Nov. 4, 2010) and Shaw v. State FarmFire and Cas. Co., 37 So.3d 329 (2010) decisions outlawingthem. They also are backing a series of reforms sought by theDivision of InsuranceFraud and the SIU community for years, including requiring lawenforcement officers to list all passengers in a motor vehicle inan accident long-form report. They all agree that PIP legal feesare outrageous, that caps are necessary, and that the lodestarmultiplier for attorneys' fees must be repealed.

But even that doesn't fix everything wrongwith Florida's auto insurance system. It does not address astronger verbal threshold, more realistic fee schedules, and thecritical need for utilization review. Some insurers and theirlegislative supporters want all the PIP reforms in a big bill,while others are concerned that such a bill would be so heavy itwould fail. They want the Custer and Shaw fixesand the Division of Insurance Fraud/SIU provisions in a separatebill. Insurers fighting for comprehensive PIP reform are concernedthat passage of only the fraud bill this year would close the dooron their agenda later.

Our industry also doesn't totally agree on the details ofshrinking Citizens, reducing or eliminating its competition withprivate insurers, and returning it to a market of last resort. Inthe past there were intra-industry differences over the rate reformbills and which companies would be covered, although it is notclear we will see that this time around.

We have been struggling to work our way through all of this inthe spirit of the Florida Property Insurance Summit and the agendawe were able to develop. Navigating this maze is extremelydifficult, but everything depends on it.