Florida Gov. Rick Scott hassigned SB 408, a bill designed to address cost drivers in anattempt to reform Florida's unsteady property-insurance market.

 Hailed as a "good first step" by Katherine Webb ofColody, Fass, Talenfeld, Karlinsky and Abate, the bill containsseveral provisions Lisa Miller, former state deputy insurancecommissioner, calls "pocketbook issues."

Miller, who now owns lobbying firm Lisa Miller & Associates,says the bill may not completely reverse a trend of underwritinglosses in the state, but it could "mitigate the losses," or "stopthe bleeding."

Due to so-called "cost drivers," insurers have felt pressureeven in years without a hurricane. SB 408 may alleviate some ofthese concerns, but the measure should be thought of as "one partof a two-part play," says Miller.

"This is not the wish list of the industry," adds Webb.

SB 408 looks to curb insurers' losses from sinkholes. Carrierssought to have the mandatory coverage language deleted but settledfor language specifically defining "structural damage" in order tonarrow the definition of a sinkhole loss. Sinkhole claims must befiled within two years of the covered loss.

Roger Desjadon, spokesperson for the Florida Property &Casualty Association (FPCA) and president of Florida PeninsulaInsurance Co., says sinkholes in Florida are a "catastrophe withoutwind and rain." The industry has long alleged people have beengaming the system.

SB 408 "codifies what structural damage really means," Desjadonsays. "So anyone with a hole in their garden can't say they have asinkhole."

Miller says sinkhole-related language in the bill is intended togives the courts guidance. "Courts didn't know what to do with[sinkholes]," she adds.

Webb, whose firm lobbies for the FPCA, says the way insurers hadshelled out replacement costs "was getting out of control."

Prior to SB 408, insurers had to give policyholders the entirereplacement cost for a home repair. Insurers suspected many repairswere never done.

With the bill, insurers can now dole out a check for the actualcash value of the repair and give another check to the homeownerwhen receipts for repairs are presented.

Policyholders will also be given the option of two policies forreplacement costs on home contents. They can either buy a fullreplacement-cost policy for contents or a presumably cheaperhold-back policy.

Desjadon says "no one got hoodwinked" by the legislation, as hasbeen alleged by some consumer and attorney groups.

Detractors also alleged that a provision allowing an expeditedrate filing to recoup up to 15 percent of reinsurance costs amountsto a free pass for insurers to raise rates. The Office of InsuranceRegulation (OIR) must look at this type of filing within 45 days,not 90 days.

"The fact of the matter is thatthe OIR will scrutinize it just the same as they always have,"Desjadon says. "Just because they have to look at it sooner doesn'tmean they will put blinders on when they do."

Samuel Miller, executive vice president of the Florida InsuranceCouncil, says rates will be "dramatically less with this bill thanwithout it" because the bill goes after sinkholes and replacementcosts.

"The truth is most Floridians haven't filed an abusive sinkholeclaim and they haven't taken advantage of the replacement costvalue, but they are all paying for those who do," he says.

SB 408 also aims to limit public-adjuster compensation forreopened or supplemental claims, and homeowners must file a claimwithin three years of a storm, not five.

The bill increases the minimum surplus requirements for newresidential property insurers from $5 million to $15 million forthose approved on or after July 1. The surplus requirementgradually increases to $15 million over the next decade for thoseinsurers already in Florida.