By Timothy J. Meenan, NAIFA-Florida Lobbyist
Session Dispatch # 1
The Florida Legislature convened its 2017 Legislative Session this week beginning March 7. Session is slated to run for 60 days with a projected sine die on May 5. However, as was very apparent in the Governor’s State of the State address to both chambers and the Speaker of the House’s address to his chamber, differences in opinions could lead to an extended session.
Below is a report of where we stand on important NAIFA priorities:
Agent Continuing Education
SB 986 (Stargel); HB 925 (Miller)
SB 986 and HB 925 are identical bills from the Department of Financial Services (DFS). We have worked with DFS and have included NAIFA priority language in the department’s bill package. The bills allow members of NAIFA Florida to receive up to two hours a year in continuing education credit for active participation in their professional or trade association. The bills include life, health and property insurance agents, public adjusters, and bail agents. To qualify, a member must attend four hours of association meetings every year to qualify for the two hours of Continuing Education. SB 986 is scheduled to be heard in the Senate Banking and Insurance Committee next week, while HB 925 has been referred to the House Insurance & Banking Subcommittee but has not yet been scheduled for a hearing.
Prohibition on Unlicensed Transactions of Life & Health Insurance
SB 986 (Stargel); HB 925 (Miller)
This issue is also addressed in the DFS package along with NAIFA’s continuing education component. The bills include language prohibiting the unlicensed transaction of life and health insurance. The bills clarify current law which allows employers, associations, trustees and other legal entities to explain insurance coverages to their employees or members without having a life or health insurance agent’s license. The amendment clarifies that those explaining coverages must be employees or members to qualify for the exemption from agent licensure.
Assignment of Benefits
SB 1038 (Hukill); HB 1421 (Grant)
The House bill differs from the two Senate AOB bills. The House bill prohibits personal and commercial lines residential property policies from prohibiting post-loss assignment of benefits. It does not prohibit attorney fees being awarded to vendors in AOB cases like SB 1038 does. Alternatively, HB 1421 uses a comparison of the amount of the claim awarded to the prejudgment settlement amount to trigger payment of attorney fees and costs. Under the House bill, either party may be granted the means to recover attorney’s fees. The Senate AOB bill filed by Sen. Farmer does not do anything to change attorney fees in AOB matters.
The House bill outlines elements an AOB must contain in order to be valid and makes AOBs that do not include the required elements invalid and unenforceable. Some, but not all, of the elements required for AOBs provided by the bill are: 7-day right of recission period, 3-day period for AOB to be provided by the assignee to the insurer, per-unit cost estimates, and notice to consumers.
It provides elements that are prohibited in an AOB. These include: recission fees, check cashing fees, cancellation fees, and other administrative fees. Although the bill does not require the assignee to comply with the duties under the policy, it requires the assignee to prove the insurer is not prejudiced by the assignee’s noncompliance with specified duties under the policy.
The bill limits referral fees paid by AOB vendors to $300 per AOB and provides other parameters on AOB vendors such as quality guarantees. The House bill protects the insured from liens or other claims from AOB vendors. It does not affect an insurer’s managed repair program. The House bill applies to AOBs executed after July 1, 2017.
Transportation Network Companies (TNCs)
SB 340 (Brandes); HB 221 (Sprowls)
HB 221 (Sprowls-R) creates a regulatory framework for Transportation Networking Companies (TNCs) like Uber and Lyft. The bill addresses a number of concerns, including TNC operator insurance. The bill creates two different insurance standards for TNC drivers. Once the driver logs onto the service, the amount of coverage necessary changes based on whether or not the driver has passengers in the car.
The bills are comprehensive bills and each includes an insurance component. Essentially, they require the TNC driver, or the TNC company on behalf of the driver, to maintain primary auto insurance that specifically recognizes that the driver is a TNC driver who transports riders for compensation. The primary coverage must cover the driver while the driver is logged on to the TNC’s digital network or while the driver is engaged in a “prearranged ride.”
During the period in which a driver is logged onto the digital network but is not engaged in a prearranged ride, the driver, or the TNC on the driver’s behalf, must have auto coverage
that provides primary liability coverage of at least $50,000 for death and bodily injury per person, $100,000 for death and bodily injury per incident, and $25,000 for property damage. Additionally, the coverage during this period must meet the minimum PIP benefits required under Florida’s Motor Vehicle No-Fault law.
Under both bills, during the time when a driver is engaged in providing a ride, the auto liability coverage must provide primary liability coverage of at least $1 million for death, bodily injury, and property damage. It must also cover the required minimums under Florida’s No-Fault law. The bills allow the above-mentioned coverages to be satisfied by automobile insurance maintained by the driver, maintained by the TNC, or a combination of such. If the driver’s insurance policy has lapsed or does not provide the minimum required coverage, the insurance maintained by the TNC must provide the remaining coverage beginning with the first dollar of a claim, and have the duty to defend such claim.
Notably, the bills prohibit coverage under a policy maintained by the TNC from being dependent on a personal automobile insurer first denying a claim; it also specifies that a personal auto policy is not required to first deny such a claim. The House bill has seen bipartisan support and passed both assigned committees of reference. It has been placed on the House calendar but has not yet been scheduled for a first reading. The Senate companion, SB 340, is slated to be heard this week on March 14 by the Senate Banking and Insurance Committee.
Motor Vehicle Insurance/ PIP (“Florida No Fault”) Repeal
SB 156 (Brandes); HB 461 (Hager)
SB 156 and HB 461 are similar bills which both seek to repeal PIP. HB 461 proposes to repeal and replace the current PIP structure while SB 156 proposes a repeal with no replacement mandated.
HB 461 replaces PIP with mandatory bodily injury coverage. Under the House bill, drivers must be able to show, at a minimum, the following proof of financial responsibility (25/50/10):
- $25,000 for bodily injury to, or the death of, one person in any one crash;
- $50,000 for bodily injury to, or the death of two or more people in any single crash;
- $10,000 for damage to or destruction of property of others in any one crash.
The current minimum requirements for insurance are 10/20/10, respectively.
SB 156 has been referred to the Senate Banking and Insurance Committee but is not currently on the agenda. HB 461 has been referred to the House Insurance and Banking Subcommittee but has not yet been placed on the agenda.
Pre-Owned Auto Inspection
SB 1316 (Bracy)/ HB 1299 (Dubose)
Identical bills SB 1316 and HB 1299 allow insurers to opt out of inspection requirements for pre-owned motor vehicles. They also would allow insurers to establish their own pre-insurance inspection requirements if they should opt out. SB 1316 has not yet been assigned committees of reference and HB 1299 has been referred to the House Insurance and Banking Subcommittee, but has not yet been scheduled for a hearing.
Surplus Lines Insurance
HB 191 (Beshears); SB 208 (Passidomo)
HB 191 and SB 208 are similar bills which address surplus lines insurance. Both bills exempt commercial lines residential coverage from the requirements for export eligibility. The bills incorporate the conditions for export eligibility into the commercial lines residential section of Florida statutes. Many condominium boards choose to purchase surplus lines coverage if the admitted carrier offering coverage does not maintain substantial surplus. Admitted carriers oppose eliminating the due diligence requirement. Neither bill has been scheduled for a hearing yet.
HB 725 (Brodeur); SB 1066 (Brandes)
These bills modernize Florida law by refining the statutes to cover autonomous vehicles. They permit a person to operate an autonomous vehicle or to engage such technology to operate the vehicle for them if the vehicle meets provided requirements. The bills clarify that when a vehicle is operating in autonomous mode, the autonomous technology, not the person inside is deemed to be the operator of the vehicle. The bills remove previous requirements for operation of such vehicles by a licensed driver and outlines system requirements and safety precautions for vehicles with a human operator in the vehicle. They additionally exempt autonomous vehicles from statutory provisions under s. 316.1975 pertaining to unattended motor vehicles. The bills do not directly amend the insurance code but we will monitor them for any potential amendments.
Texting and Driving Ban
SB 144 (Garcia); HB 47 (Stark); HB 69 (Slosberg); SB 1742 (Rodriguez); SB 784 (Gainer); HB 545 (Payne)
SB 144 elevates enforcement of Florida’s texting and driving law to a primary offense for all drivers. The bill initially made it a primary enforcement only for drivers 18 and younger, but was amended to include drivers of all ages. The amended bill passed the Senate Communications, Energy, and Public Utilities committee with a 6-1 vote. The bill’s next committee stop is the Senate Transportation Committee, but it has not yet been scheduled for a hearing.
HB 69 is an identical companion to Senator Garcia’s SB 144. The bill has been referred to the House Transportation and Infrastructure Subcommittee but has not been scheduled for a hearing.
HB 47 seeks to make texting and driving a primary offense for all drivers inside an active designated school zone. This bill has been referred to the House Transportation and Infrastructure Subcommittee but, like HB 69, has not been scheduled for a hearing. SB 1742 enables enforcement of the texting and driving law as a primary offense. It also doubles the fine for violation of the texting and driving law if the violation occurs in a school zone or school crossing. The bill also mandates that law enforcement agencies in the state to adopt policies to prohibit racial profiling with regards to the enforcement of this law. The bill has only very recently been filed and has not yet been referred to any committees of reference.
HB 545 addresses changes to the Department of Highway Safety and Motor Vehicles. The bill makes numerous changes to existing laws pertaining to a number of topics (license plates, suspensions, fees, etc.). The bill simply recodifies the law, moving the provision from one section of the statutes to another. We will monitor changes as they develop.
Because the prospects for the other texting bills are not promising, we are working closely with a coalition of other interested parties to come up with a workable solution. We have drafted language and are securing feedback from the coalition regarding a more defined graduated driver license program that we may submit as an amendment on an appropriate legislative vehicle.
III. Property & Casualty
Unfair Insurance Trade Practices/ Rebate Bill
SB 1032 (Mayfield); HB 1029 (Yarborough)
SB 1032 and HB 1029 amend the statutes to permit an insurer or its agent to give certain promotional items to insureds, prospective insureds, and others for the purpose of conducting a promotional or advertising program. The bills increase the value of promotional items from $25 up to $100 in total value. Further, the bills prohibit an insurer or its agent from giving an aggregate total value exceeding $100 in a single calendar year to a single individual. Previously the value was capped at $25, and limited to advertising items only, but this bill allows gift cards and other non-logo type items.
SB 420 (Brandes); HB 813 (Lee)
SB 420 and HB 813 mandate that the Florida Commission on Hurricane Loss Prevention Methodology to revise hurricane loss prevention models every four years. The bills also extend the period of time insurers writing private flood insurance may use rates without the approval of the department through October 1, 2025. Finally, the bills add a provision requiring a signed acknowledgment that the applicant received notice explaining that the full risk rate for flood insurance may apply to the property. If the acknowledgment is not signed, then the policy must be canceled. HB 813 makes changes to the current law governing flood insurance offered by the private market. The amendments adopted
modify the bill’s provision allowing private flood policies to be put into the surplus lines market without a diligent effort, expand the Florida law on flood insurance to excess flood insurance policies, and maintain current law relating to commercial lines residential and commercial lines nonresidential flood insurance. HB 813 passed unanimously with an amendment in its first committee stop on March 7.
The House and Senate bills differ in two respects. One, the House bill requires a surplus lines insurer to be rated by A.M. Best in order to be eligible to write flood policies without a diligent effort and the Senate bill requires a rating from any rating agency acceptable to the OIR. Two, the House bill allows flood insurance policies to be exported to the surplus lines market without a diligent effort only until July 1, 2025 and the Senate bill allows this for an indefinite period.
Property Insurance Appraisal Umpires
SB 94 (Artiles); HB 767 (Fischer)
Senator Artiles has again filed a bill to create the Property Insurance Appraisal Umpires program within the Department of Financial Services. A comparable House companion has also been filed. The bill delineates the role of the umpire and specifies that the umpire would act as the intermediary between appraisers of the insurer and insured and aid in the effort to resolve any disputes. The appraisers would select the umpire themselves unless they are unable to agree, in which case the courts would select an umpire. The bills create a number of new rules regarding umpires and inserts umpires into existing rules pertaining to appraisers. The House bill has been filed, but has not been referred to any committees. The Senate Bill has been referred to the Senate Banking and Insurance Committee, but a hearing on it has not yet been scheduled.
Water Damage Restoration and Licensure
SB 1150 (Artiles)/SB 1218 (Farmer)
SB 1150 creates a licensure program for professional water damage restorers and gives certain requirements for attaining a license. SB 1218 contains identical language, and also contains language pertaining to assignment of benefits. The bill clarifies that post-loss benefits may be assignable in addition to policies. The bill then creates a new section titled “Post-Loss Benefits Under Certain Property Insurance Policies.” The bill creates certain qualifications that must be met in order for an agreement to assign post-loss benefits to be valid. The bill then mandates that if the insurer has a preferred vendor program, the insurer must consider a person certified by the Institute of Inspection Cleaning and Restoration Certification to be a preferred vendor. It also states that an insurer must provide contact information on its website for the purposes of receiving the assignment of benefits agreement. SB 1150 has been referred to the Senate Regulated Industries Committee, and SB 1218 has been referred to the Senate Banking and Insurance Committee; neither bill has been scheduled for a hearing.
- LIFE & HEALTH
HB 307 (Drake); SB 814 (Broxson)
CS/HB 307 imposes liability caps for the Florida Life and Health Insurance Guaranty Association life insurance, deferred annuity contracts, and health insurance. The House bill was amended and now imposes identical caps to its Senate companion. The bill increases the FLAHIGA administrative assessment from $250 to $500 per insurer year. The bill also increases FLHAGIA’s liability for claims of insolvent health insurers from $300,000 to $500,000 per life for basic hospital expense, basic surgical, or major medical health policies. Lastly, the bill provides FLAHIGA coverage for annuities held by a custodian or trustee as part of an individual retirement account.
HB 307 unanimously passed its last committee on March 9. There was no opposition to the bill in its final House committee. The Senate bill is identical to the House bill, but has not been heard by committee yet.
HB 469 (Harrison); SB 334 (Steube)
The Senate prejudgment interest bill stalled in its last committee on March 9, 2017 even after the bill was substantially watered down. It appears the bill sponsor, didn’t have the votes to get the watered down bill out of committee, thus the bill was postponed. The House companion bill, HB 469, is in its last committee and is more expansive than the Senate bill.
The initial version of Senate Bill 334 allowed prejudgment interest on economic and noneconomic damages, attorney fees and costs to a prevailing plaintiff in any action.
However, an amendment (398962) was adopted by the Senate Rules Committee to completely replace the original bill with language that allows prejudgment interest only on noneconomic damages and only when a judge finds they are warranted based on the nature of the damages, the time elapsed between the notice of the claim and the verdict or judgment, and the conduct of the parties and counsel in the case. The amendment sponsor was Sen. Lee and the bill sponsor characterized it as “friendly.”
The trial bar was the only proponent of the bill at the hearing.
Patient Savings Act
SB 528 (Steube); HB 449 (Renner)
These bills are commonly known as “Right to Shop” initiatives, which require health insurers to create a shared savings initiative program to encourage individuals to shop for high quality, lower cost services and share any savings accrued as a result of the ability to shop around. The bills require insurers to establish methods by which insureds can request and obtain information on the contracted services and average prices for such services. Additionally, the bills require the insurer to post certain quality information on shoppable health care services and providers. The main component of these bills is the ability for the consumer to use the information provided by the insurer to shop around for better prices on certain services. If the insured shops around and obtains services for less than the average price for the service, the savings would be shared between the insured and the insurer.
While the bills sound like solid consumer measures in theory, they will likely have adverse effects on the quality of care for insureds in practice. By encouraging consumers to make health care decisions based on the potential to save money, the insured may opt for suboptimal care in hopes of a cash savings payment. This suboptimal care could lead to more services being needed down the road, ultimately costing the insured and insurer more money in the long run.
HB 449 has been heard by two committees and been replaced with a committee substitute out of each. The bill was heard on March 3 by the House Insurance and Banking Subcommittee and passed by a vote of 12 to 3. Although the bill did pass its committee, there was significant discussion regarding the actual benefits of the bill. Last week, the bill had a fourth committee reference added, which will make it more difficult to make it out of committees and to the full House for a vote.
SB 528 has been referred to committees but has not been scheduled for a hearing.
Retroactive Denial of Claims
SB 102 (Steube); HB 579 (Hager)
SB 102 adds language which prohibits health insurers and health maintenance organizations from retroactively denying claims at any time if the insurer verified eligibility at the time of treatment. The bill passed the Senate Banking and Insurance Committee and is scheduled to be heard next week in the Senate Health Policy Committee, its 2nd of three committee stops. The bill’s identical House companion has been referred to the House Health Innovation Subcommittee but has not yet been scheduled for a hearing.
***Don’t forget about NAIFA’s Day on the Hill on March 21! We are looking forward to hosting you and having a fun and productive day of legislative impact. We are excited to have Representative Danny Burgess, Chair of the House Insurance and Banking Subcommittee, speaking at our breakfast to kick the day off. ***