What to Watch for: The Florida Legislative Session

Florida's Legislative Session recently convened with a number of legislative proposals related to insurance under review. The session, scheduled to adjourn on May 3, promises active debate of various proposals geared to address Florida's ailing insurance market. 

Here are some things to keep track of as the session progresses:

Florida House and Senate Leadership 

The Chair of the House Insurance and Banking Subcommittee remains Bryan Nelson, a Republican and an insurance agent from Apopka. The Vice Chair is now Representative Bill Hager (R, Boca Raton), a former insurance regulator.  

The makeup of the Senate Banking and Insurance Committee has changed substantially. The Chair is now David Simmons, who is a lawyer from Orlando. Its vice chair, Jeff Clemens (D, Lake Worth), is a former newspaper reporter and energy contractor.

These representatives, along with Gov. Rick Scott, will take a significant role in shaping the issues considered in this year's session. 

Homeowners' Insurance 

An omnibus homeowners' insurance bill, SB 1770, is under consideration by the Legislature. This bill would make some broad changes to Citizens Property Insurance Corp. It would create a mechanism that is referred to as a “clearinghouse” to allow agents and consumers to shop policies with all participating insurers in an effort to keep homeowners' policies out of Citizens.

Citizens has recently estimated that over half of the new business coming into Citizens is from captive agents, and one reason for this could be that many homeowners choose coverage from Citizens simply because they are unaware of other options. This bill would establish a clearinghouse to better assure that consumers know of all private market options that may be available.  There would be an enhanced application for coverage, and insurance agents submitting applications to the clearinghouse would retain control of the expirations.

Any new policies with a private market offer of coverage within 15 percent of Citizens' rate would be ineligible for Citizens. Renewal policies would be ineligible for Citizens coverage if a private carrier's rate is within 5 percent of Citizens' rate.                                                                                                                                    

In addition, the bill includes measures to reduce Citizens' maximum policy limit from $2 million to $1 million; to prohibit Citizens coverage of new coastal policies not built to code-plus standards; and to require Citizens' rates to be actuarially sound and non-competitive with the private market. 

Other proposed Citizens-related legislation includes a prohibition on payment of agent commissions for ineligible policies placed in Citizens after January 1, 2014; the disclosure of potential surcharges and assessments with each renewal notice; and the establishment of an auditor-general of Citizens' finances. 

The bill would also create a Florida Catastrophe Risk Capital Access Facility within the State Board of Administration to help insurers identify global capital that is available for additional coverage options around the various layers of the Florida Hurricane Catastrophe Fund. 

Workers' Compensation Insurance

The Legislature is considering a bill to allow a commercial wrap-up policy to include large-deductible workers' compensation coverage. There are also several bills filed concerning drug repackaging and relabeling. Finally, there is also a “clean up” package that would make numerous technical changes to several workers' compensation statutes. 

Automobile Insurance  

HB 341, regarding uninsured motorist coverage, has already passed through some House committees with little discussion or debate. This bill would allow the insured to choose either stacked or nonstacked coverage to be applied to all insureds covered under the policy. There is also a proposed ban on texting while driving that is moving through the legislative process despite failed efforts to pass this ban over the past several Legislative Sessions.  

General Insurance 

More generally, several bills have been filed that, if enacted, would allow insurers to deliver insurance policies via electronic mail, or through a secure website, instead of just by mail. There are also proposed bills to authorize the Florida Insurance Guaranty Association to collect regular assessments directly from policyholders. 

In the annuities arena, CS/SB 166 would make changes to the duties of insurers and agents when recommending annuities; the currently-required consumer disclosures; and the training requirements for agents selling annuities, among other things. 

Additionally, a major issue that will be addressed in the 2013 Legislative Session is the implementation of the health care reforms required by the federal Patient Protection and Affordable Care Act of 2010. Although Gov. Scott recently endorsed an expansion of Florida's Medicaid program–at least for three years while a substantial amount of federal funding is available–Republicans hold significant majorities in both chambers of the Florida Legislature and both chambers recently voted against Medicaid expansion.