NU Online News Service, March  8, 3:00 p.m.EST

Florida Senate President Mike Haridopolos threw down a gaveltoday to open the 2011 State Legislative Session, beginning a newround in the reform fight for the insurance industry.

From sinkhole claims and reinsurance to the state's last-resortinsurer and auto insurance fraud, there are at least a half-dozenbills the insurance industry is watching closely.

The measure gaining the most attention is SB 408, this year'somnibus property insurance reform bill that addresses many of thesame issues contained in last year's SB 2044—a bill vetoed by former Gov. Charlie Cristdespite widespread support among lawmakers, regulators, tradegroups and consumer advocates.

Provisions within SB 408 gaining the most attention centeron sinkhole claims—an issue that was left out ofSB 2044 in hopes that it would make it more likely to be inked intolaw.  

Sinkhole claims have become a huge problem for property insurersin Florida, supported by studies by the Office of Insurance Regulation(OIR) and the Senate Banking and Insurance Committee.

According to the Florida Insurance Council (FIC), which supportsSB 408, the bill also requires insurers to carry more surplus,modifies replacement-cost methodology, limits the time a claim canbe filed after a hurricane to three years, reforms mitigationdiscounts and sets new rules for public adjusters (who worked with lawmakers onthe language in the bill but who remain concerned about thesinkhole provisions). 

It looks as though lawmakers will decide on a bill designed torestore Citizens Property Insurance Corp. as the true insurer oflast resort in the state. Citizens has become the state's largestproperty insurer, but SB 1714 looks to adjust caps on gradual rateincreases outlined in legislation adopted two years ago.

The proposed bill could increase the cap on Citizens' rateincreases per policyholder to 15 percent from 10 percent and repeala law allowing a policyholder to veto "takeouts" that have beennegotiated by the OIR. Certain companies in Florida are authorizedas "takeout companies" and are permitted to select policies fromCitizens—but policyholders have a right to refuse.

Additionally, SB 1714 may change what is known as the "15percent rule." Currently, a homeowner can turn to Citizens ifquotes from the private market are 15 percent higher than ratesoffered by Citizens. This bill would increase that requirement to25 percent.

Property insurance affordability concerns led to legislation in2007 that froze rates at Citizens for three years, making it easierto meet the 15 percent rule and, consequently, putting Citizens indirect competition with the private market.

To illustrate the point on competition, Insurance CommissionerKevin McCarty, while addressing the Florida Chamber of Commerce inlate January, said one of the state's largest insurers filed a rateincrease for 0.1 percent though its actuarial analysis called formore than a 43 percent increase. The company asked for the lowincrease to compete with Citizens, Mr. McCarty said.

"This is not an isolated event," he said. "In many recent ratefilings, the (OIR) has forced insurance companies to accept higherrate increases than what they requested."

FIC said a bill is being drafted to tackle auto insurance frauddue to people taking advantage of the state's personal injuryprotection (PIP) system.

The Sunshine Alliance to Erase Fraud is working on a bill to introduce during thelegislative session. The group was started by FIC, ConsumerFederation of the Southeast and the Coalition Against InsuranceFraud.