NU Online News Service, March  23, 2:17 p.m.EDT

This year's massive Florida property insurance reform bill hasmade its way through the Senate Budget Committee, but changes tothe bill irk industry representatives.

State Sen. Mike Fasano, R-New Port Richey, was successful on twofronts—getting rid of a provision dealing with replacement costmethodology and repealing file-and-use.

Provisions in the bill (SB 408) changed the way the industrypaid for damages to homes, allowing them to pay some initial costsand then pay the rest when homeowners provided a contract with acontractor for repairs or replacement. Fasano's amendment keeps thestatus quo where insurers have to pay all costs up front.

The modification to replacement cost methodology was a "centralcomponent to the bill," and one that the industry "will be workingovertime" to reinstate in the measure as it continues through thelegislative process, says William Stander, assistant vice presidentand regional manager for the Property Casualty Insurers Associationof America (PCI).

The amendment is "very troublesome," adds Samuel Miller,executive vice president of the Florida Insurance Council. "Noother state in the country handles claim payments like Florida," hesays. "This is a huge cost-driver for insurance companies in thestate."

Roger Desjadon, spokesperson for the Florida Property &Casualty Association and president of Florida Peninsula InsuranceCompany, says under the current payment structure "homeowners arenot effectuating repairs" and are pocketing the money.

Fasano also managed to work in an amendment to repealfile-and-use. A suspension of the rate system was in SB 2044 lastyear—which was vetoed by then-Gov. Charlie Crist. Therefore,file-and-use has actually been available to insurers in Florida buthas not been readily utilized.

File-and-use is an "important tool for companies with animmediate rate need," says Miller. Companies can use rateadjustments before receiving regulatory approval.

Overall, SB 408 would "help restore a balanced market place toFlorida," says Liz Reynolds, Southeast state affairs manager forthe National Association of Mutual Insurance Companies.

Provisions in the bill address sinkhole claims, publicadjusters, insurers' surplus requirements, deadlines to file aclaim after a storm, mitigation discounts and Citizens PropertyInsurance Corp., the state's last resort insurer.

Fasano, Sen. Rick Kriseman, D-St. Petersburg, former StateConsumer Advocate Sean Shaw and private citizens have formed agroup called the Policyholders of Florida to speak out against thebill and other measures being bandied about the LegislativeSession.

"Policyholders are being shut out and legislators are sellingout, all so big insurance companies and their lobbyists can linetheir pockets," says Shaw, who is now with the Merlin LawGroup.

PIP Litigation Bill Advances

In other Florida legislative news, HB 967 cleared the HouseCivil Justice Subcommittee. It already passed the House Insurance and BankingSubcommittee and now moves on the Health and HumanServices Committee.

HB 967 caps attorneys' fees to a percentage of benefitsobtained. Right now insurers are obliged to pay attorneys' and thepolicyholder's attorneys' fees if the insurer loses in court.

The measure also allows insurers to use what is known as anexamination under oath (EUO) to investigate fraud and conduct anindependent medical examination (IME) to determine reasonabletreatment of an insured. According to PCI, participants in fraudrings or those following the advice of an attorney involved in afraud ring "often miss or never go to these appointments in orderto keep the crime a secret."