Session Dispatch # 2

NAIFA-Florida-Session Dispatch

By Timothy J. Meenan, NAIFA-Florida Lobbyist

Session Dispatch # 2

We have officially finished week two of the 2017 legislative session. A number of bills are moving. Below is a roundup of key insurance legislation as we enter week 3 of this 9 week session:

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.

The House bill was heard by the Insurance and Banking Subcommittee and passed unanimously with a committee substitute. We expect the Senate bill to be heard during the fourth week of session by committee.

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.

House Moves on AOB Bill
SB 1038 (Hukill; HB 1421 (Grant)

Representative Jamie Grant moved the House AOB bill, HB 1421, out of the House Insurance and Banking Subcommittee this week. Before the committee voted the bill out, Representative Grant filed a strike all amendment which, among other things, would have:

Limit AOBs to only be available to licensed contractors.
Allow an assignor to rescind an AOB within 7 days, in writing.
Require the assignee to provide the AOB to the insurer within 7 days.
Require a written cost estimate of the work to be provided be given to insured.
Limit the assignment to work done by the contractor, and provide a notice.
Prohibit penalties or fees for recission, a check or processing fee or other admin fees.
Shifted the burden to assignee to prove insurers are not prejudiced by failure to cooperate with the insurer in the investigation of the claim, maintain records on a claim, deliver the assignment within 3 days.
Limits referral fees to $300.
Prohibit the contractor and subcontractors for charging the consumer directly for claims costs not paid by the insurer.
Require assignee to file a notice with insurer 7 days before filing suit if the insurer inspected the claim within 3 days of the loss. Require insurers to respond within 7 days.
However, if an insurer does not inspect the property within 3 days, the assignee must give 21 days’ notice before filing suit, and the insurer would have 21 days thereafter to respond.
Require insurers to have a procedure for the prompt investigation of claims in good faith.
Award the insurer attorney fees if the judgment obtained by the assignee is no more than 5 percent greater than the difference between the pre-suit settlement offer and the pre-suit settlement demand.
Require both sides to pay their own fees if the judgment obtained by the assignee is more than 5 percent but less than 15 percent of the difference.
Allow an assignee to recover 50 percent of attorneys’ fees if the judgment is between 15 and 50 percent.
Allow an assignee to recover all attorney fees if the judgment is greater than 50 percent.
Require insurers to report the number of days between first notice of loss and the initial inspection, loss severity, ALAE.
For litigated claims require the insurer to report the amount in dispute, the amount of any proposal for settlement and the settlement or judgment amount, the amount of fees paid to the claimants and insurers’ attorneys.
For Non-litigated claims, the difference between the insurers initial offer and the amount paid on the claim, the time before each is closed, certification of licensed adjusters.

This legislation was roundly opposed by trial lawyers, water remediators, and the insurance industry, and was defeated in committee. The original bill moves forward to the Commerce Committee, where Representative Grant is expected to again attempt to completely re-write the bill. In the Senate, SB 1038 which outright prohibits attorney fees under AOB’s, has not moved and is still awaiting to be heard in the Senate Banking and Insurance Committee.

In a highly unusual move, Senator Flores has canceled the Senate Banking and Insurance Committee for the third week of session, so no hope of a bill moving until the fourth week, if at all.

AUTO

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.

The House bill has seen bipartisan support and passed both assigned committees of reference and has been placed on the House calendar for consideration and second reading. The Senate companion, SB 340, passed its first committee of reference with a vote of 7 to 2. SB 340 moves on to be heard in the Senate Judiciary Committee.
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. Both bills have been referred to committee but neither has been set for a hearing.
Autonomous Vehicles

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.

HB 725 was scheduled to be heard during the second week of session by its last committee of reference, but was temporarily postponed by the Government Accountability Committee. The Senate bill has not been heard by a committee yet.

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 bill’s is scheduled to be heard on March 22 by the Senate Transportation committee. However, the House is unlikely to act on the bill.

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. These bills have not yet been heard in committee.

Flood Insurance

SB 420 (Brandes); HB 813 (Lee)

CS for SB 420 and CS for HB 813 revise the statutes regarding flood coverage. The bills move back (from 2019 to 2015) the dates before which Flood rates must be submitted for prior approval. The bills make permanently eliminate the diligent effort requirement to place flood in surplus lines. However, the surplus lines insurer must have a superior, excellent, exceptional, or equivalent financial strength rating by Demotech or A.M. Best.

The bills require that an agent to obtain a signed statement from the insured 20 days before the expiration of Federal Flood coverage before moving the insured to private flood coverage; the acknowledgement must notify the applicant that the full risk rate for flood will apply to the property if such insurance is later obtained from the Federal Flood Program. If the agent fails to obtain the signed acknowledgement, then the agent must put the consumer into the Federal Flood Program.

Both the House bill and Senate bill have received support and been granted committee substitutes out of their first committees, respectively.

LIFE & HEALTH

FLHIGA

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. SB 814 passed its first committee of reference with two more committee stops to go; the Senate bill is now identical to the House bill. The House bill has been placed on the House calendar for its second reading.
Prejudgment Interest

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. 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. HB 449 is scheduled to be heard by the Government Operations & Technology Appropriations Subcommittee on March 21. Meanwhile, SB 528 has not been heard.

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 Health Policy Committee, its 2nd of three committee stops and is slated to be heard in its final committee stop, Senate Rules Committee. The bill’s identical House companion has been referred to the House Health Innovation Subcommittee but has not yet been scheduled for a hearing.

BILLS NOT MOVING SO FAR

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.
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.

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.

Bills to License Water Remediators

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.