From the April 2011 issue of Florida Underwriter • Subscribe!

A Legislative Forecast

Our industry entered the 2011 legislative session with high hopes. A pro-business governor and Republican-controlled legislature led us to believe they would be receptive to ideas that remove unwarranted restrictions and get the economy on a fast-track to recovery. As Gary Fineout notes in his Capital Report on page 17, things are not turning out quite as we expected. Here’s a look at some of the major insurance bills and their current chances on becoming law.

PIP FRAUD – HB 967/SB 1694 and HB 1411/SB 1930
We’ll start off easy. This one is truly a no-brainer. PIP fraud is driving up motorists’ insurance costs in Florida to frightening levels (see Lynne McChristian’s column on page 14). This may be the year legislators finally demolish the cadre of fraud rings, sham PIP clinics, staged crashes, and pretend passengers. The problem has received a generous amount of positive media attention thanks to aggressive and collaborative actions from industry, consumer, and government groups. We just need to settle on one set of bills.

Forecast: Sunny.

BAD FAITH – SB 1592/HB 1187
This one is not quite as easy, if only because the trial lawyers stand firmly on the other side. SB 1592 squeaked through its committee hearing with a 4-3 vote. As I write this, the House version of the bill is yet to get its first committee hearing.

The legislation sets new timeframes for the amount of time a homeowner has to file a claim and creates specific statutory standards for a bad faith claim against an insurer. It also provides a process for insurers to facilitate settlement within policy limits for multiple third-party claims. Supporters say the legislation will encourage settlements; opponents say it is akin to killing an ant with an elephant.

Forecast: Fair; changing to Sunny if the governor comes through on his tort reform pledge.

This legislation addresses cost drivers, deceptive trade practices by public adjusters, sinkholes, insurer surplus, and more. William Stander of the Property Casualty Insurers Association of America calls the legislation “a great step forward toward restoring private, market-based solutions in Florida.” Opponents have been vocal, confrontational, and relentless—it’s almost like having Charlie Crist back in town.

The bill has been inundated with proposed amendments, most of which have failed in committee hearings. (Although an amendment that keeps in place current state law requiring insurers to pay replacement cost in advance of repairs being made, instead of allowing insurers to hold back a portion of payment until a policyholder shows receipts for part of the work, did pass—for now.)

Forecast: Stormy, with excessive winds. Slight chance of Partly Sunny if we can beat back naysayers.

This legislation seeks to address the unchecked growth of  Citizens Property Insurance Corp. It tightens eligibility requirements, mandates rate hikes, and more. We’ve got amendments to amendments happening on this one. Public adjusters are prohibited in the Senate version, OK in the house.

Forecast: Cloudy. Gov. Rick Scott says Citizens needs reformed; he needs to get on board with this proposal or present one of his own. 

The 2011 version of the 2010 “deregulation” bill would let insurers adjust their rates without much interference from the regulator, within certain parameters. It also requires that agents obtain acknowledgements from insureds who choose Citizens that they understand the potential liabilities.

Forecast: Variable. This legislation may undergo significant change and morph into something entirely different. The rate flexibility probably is out; the Citizens’ portion may move to another bill.

That’s my take on the major insurance issues being debated by legislators and the governor. Don’t get me started on Scott’s social policies.

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