NAIFA-Florida-Session Dispatch Week 3
By Timothy J. Meenan, NAIFA-Florida Lobbyist

DAY ON THE HILL VERY IMPACTFUL

The 2016 “Day on the Hill 2016” was a great success. It officially opened on January 26 with a luncheon where our keynote speaker was Representative Jose “Pepe” Diaz, Chairman of the House Regulatory Reform Committee. In addition, NAIFA-Florida  lobbyist Tim Meenan also discussed advocacy efforts and proposed legislation affecting our industry. Over 100 NAIFA members scoured the Capitol, meeting with legislators every step of the way.
SB 650 PROHIBITING STRANGER ORIGINATED LIFE INSURANCE (STOLI) PASSES FIRST SENATE COMMITTEE

SB 650 by Senator Legg was adopted by the Senate Banking and Insurance Committee. SB 650, like its House companion HB 445, would explicitly prohibit STOLIs and would render any transaction that meets the definition of STOLI to be void. The bill would also make numerous changes to the products, requirements, and business of viatical arrangements. STOLIs are a scheme where unscrupulous investors prey on elderly life insurance policyholders. These investors loan money to an elderly individual to purchase life insurance, then at the end of 2 years, the investor forgives the loan and pays the future premiums, in exchange for being named as the beneficiary. In addition to creating a moral hazard of giving benefits to someone who has no insurable interest, this scheme harms the elderly person because it can prevent them from qualifying for other life insurance that they can actually use for their chosen beneficiary. If the STOLI product uses up the limit for which the person would otherwise qualify, he or she would not be eligible to purchase life insurance for their real need. Further, when the loan for the initial premium is “forgiven” by the investor, this becomes a taxable event for elderly person, who will have to pay the tax out-of-pocket, for a product that provided no benefit to them.
SB 650 and HB 445 are NAIFA priorities. HB 445 was passed by the House Insurance and Banking Subcommittee on January 13, with only one “no” vote. One amendment was adopted with technical revisions.
HOUSE COMMITTEE PASSES AMENDED VERSIONS OF BILLS ON ASSIGNMENT OF BENEFITS (AOB); HB 1097, HB 671

Proposed Committee Substitutes for both HB 1097 by Representative Caldwell and HB 671 by Representative Broxson were adopted by the House Insurance and Banking Subcommittee on January 25. Unfortunately a key cornerstone of the legislation has been deleted.

PCS/ HB 1097: prohibits an assignment, except for emergency repairs, until the insured has notified the insurer of the loss; provides the insured with a right to cancel the agreement within 3 business days of the insurer being notified; requires notice to the insured of the right to cancel; requires the assignee to deliver a copy of the assignment to the insurer within 3 business days of its execution; requires the assignee to accept duties of the policy relevant to the claim; prohibits an assignee from attempting to recover payment from an insured for work that is covered by the insurance policy; provides that the insured retains the right to determine the scope of repairs and is also liable for relevant duties under the policy; and adds language into the Homeowners Bill of Rights cautioning the policyholder about assignment agreements.
PCS HB 1097 gives insurers specific authority to require notice of loss to be reported as soon as practicable after the loss occurred and to limit the scope of repairs that may be undertaken before the insurer inspects the property, but it also shortens the timeframes, requiring insurers to fulfill claim related duties more quickly, as follows:

  • Upon receiving communication with respect to a claim, an insurer must provide the Homeowner Claims Bill of Rights within 10 days, rather than the current 14.
  • Upon receiving proof of loss statements, an insurer must begin its reasonably necessary investigation within 7 working days, rather than the current 10.
  • After receiving proof of loss, upon written request, the insurer must provide confirmation that the claim is covered in full, partially covered, denied, or being investigated, within 20 days rather than the current 30.
  • Upon initial notice of claim, an insurer must pay or deny the claim, or part of the claim within 60 days, rather than the current 90.
PCS HB 1097 does not change the current statutory safeguard for exigent circumstances when an insurer would be unable to meet the timeframe, and it keeps the current statutory language excusing an insurer from strict compliance with the timeframe when it “is caused by factors beyond the control of the insurer which reasonably prevent” the insurer from complying.

PCS/HB 671 would prohibit activities by licensed professionals that may result in fraudulent or inflated property insurance claims. Specifically, the bill creates new grounds for discipline against a licensee who:

  • Gives or receives referral fees or other items of value as an inducement for business that is paid by property insurance proceeds;
  • Interprets insurance coverages or duties of the policy, unless the licensee is separately licensed as an adjuster under part VI of ch. 626, F.S.; and
  • Fails to give an insured a detailed estimate of the cost of services and materials provided in connection with a property insurance claim before executing the contract authorizing the work.
While the two bills contain some helpful provisions, unfortunately neither of the House PCS bills contain the critical provision that is in SB 596 and that was in the original HB 1097. That all-important language states that an agreement is void if “it purports to assign or transfer the right to enforce payment for post-loss benefits in the policy.”  This cuts off the vendors from getting attorneys’ fees, and is the root of this problem. We are lobbying hard to explain the critical nature of this provision.

The Senate version of the AOB bill, SB 596 by Senator Hukill, is on the agenda in the Senate Banking and Insurance Committee for February 1. We are continuing to aggressively lobby for a strong bill on this issue, and will work to prevent a detrimental bill from being passed.
SENATE COMMITTEE WILL HEAR BILL THAT AFFECTS AGENTS ACCESS TO CERTAIN CITIZENS’ UNDERWRITING DATA, AND REQUIRES CONTINUING PRIVATE COMPANY APPOINTMENTS; SB 958/HB 931

A bill addressing the use of Citizens’ underwriting data, SB 1630 by Senator Flores, will be heard on February 1 by the Senate Banking and Insurance Committee. There is a delete-all amendment for SB 1630 that will affect the ways that underwriting information from Citizens can be used by licensed agents. Current law allows Citizens to release underwriting and claims files to an authorized insurer, if the insurer is considering underwriting the policyholder and agrees in writing under oath to maintain the confidentiality of the files. Citizens can also release such files to the staff and board of governors of the market assistance plan (MAP), which must retain the confidentiality of the files. Finally, current law allows Citizens or the MAP to release to licensed general lines agents the following information: name, address, and telephone number of the residential property owner or insured; location of the risk; rating information; loss history; and policy type. The agent receiving the information must retain the confidentiality of the information.

The proposed amendment to SB 1630 would remove the current allowance for Citizens or MAP to release any information to a general lines agent. HB 931 by Representative Passidomo, the House companion to the Senate bill that was withdrawn, passed the House Insurance and Banking Subcommittee on January 19. HB 931 continues to allow the release of information to general lines agents, but it places tighter restrictions on the use of the information, allowing it to be obtained by a licensed agent only for the purposes of developing a take-out plan to be submitted to the OIR for approval, or for analyzing the underwriting of the risks on behalf of the private insurance market. HB 931 specifies that the licensed agent and an insurer receiving this information under this subparagraph cannot use the information for the direct solicitation of policyholders.

Both HB 931 and the SB 1630 amendment provide that an authorized insurer, a reinsurer, a licensed reinsurance broker, a licensed rating organization, or a modeling company can receive this information, for the sole purpose of analyzing risks for underwriting or developing rating plans in the private insurance market, and these entities must retain the confidentiality of the information.

The SB 1630 amendment will also require that to maintain a Citizens’ appointment, an agent must also continue to maintain an appointment with a private insurer that is writing or renewing in Florida. Current law requires that the agent must have a private insurer appointment “at the time of the initial appointment by” Citizens.

SENATE HEALTH COMMITTEE TO HEAR BILL TO PREVENT OUT-OF-NETWORK HEALTH PROVIDERS FROM BALANCE BILLING POLICYHOLDERS; SB 1442
 

On January 19, the House Insurance and Banking Subcommittee passed a Committee Substitute for HB 221 by Representative Trujillo, to reverse the current trend of policyholders with health insurance being billed by out-of-network health providers for covered benefits that are received at an in-network hospital. The Senate companion, SB 1442 by Senator Garcia will be heard by the Health Policy Committee on February 1.

The problem results when, unbeknownst to the policyholder, a health service provider is out-of-network, working at a hospital that is in-network. This practice puts the agent right in the middle of a very difficult situation. By the terms of the policy, both the policyholder and the agent believe full coverage has been purchased for an event, only to find out after the fact that the policyholder must pay out-of-pocket for the provider’s charges above the reimbursement paid by the insures. The agent is on the front line and must work with his or her client to try to make the best of a difficult situation.

SB1442 contains a number of provisions, including: (1) Prohibiting health care providers from balance billing insured patients, except for deductibles and copays, when the patient has no opportunity to choose a participating provider; (2) Requiring hospitals to disclose to the patient providers who may treat the patient and whether they are nonparticipating; (3) Requiring insurers to cover emergency care without prior authorization; (4) Requiring the insurer to reimburse the out-of-network provider the greater of:
  • The amount negotiated with an in-network provider in the same community;
  • The usual and customary reimbursement received by a provider for the same service in the community where the service was provided;
  • The amount that would be paid under Medicare.
SB 1170; HEALTH INSURANCE REGULATORY MODERNIZATION MOVING
 
SB 1170 by Senator Detert was passed by the Senate Banking and Insurance Committee on January 26. SB 117, and its House companion HB 951 by Representative Cummings is set for a hearing by the House Insurance and Banking Subcommittee on February 1. Both bills are an effort to clean up existing Florida requirements that are costly to the insurers, but are no longer relevant in light of changes imposed by the Affordable Care Act. The bills would repeal three general areas of Florida law: certification of creditable coverage, outline of coverage, and some of the current conversion and continuation of coverage requirements.
CERTIFICATION OF CREDITABLE COVERAGE. Because Federal law now prohibits health insurers from imposing pre-existing condition restrictions for coverage (45 CFR 147.108), health insurers want to repeal Florida laws requiring the issuance of a certification of creditable coverage. Other methods of proving creditable coverage, such as a letter from the former employer, documentation from unemployment compensation, or other documents are accepted today by insurers.

OUTLINE OF COVERAGE. Federal law requires health insurers to provide a Summary of Benefit of Coverage (45 CFR 147.200). The requirements for this SBC overlap the current State requirements for Outline of Coverage. Health insurers want to repeal the overlapping Florida law.

CONVERSION AND CONTINUATION COVERAGE. Because Federal law requires coverage on a guaranteed basis, health insurers want to repeal Florida’s provisions for conversion and continuation as being irrelevant. The CS for SB 1170 retains the current law provisions. The NAIFA Florida Health Care Committee has raised issues with the deletion of the Florida Conversion statues, and we worked to restore current law. The key issues is affording conversion rights to groups of less than 20, which is provided in Florida, but not federal law.
SENATE COMMITTEE PASSES PROPOSED LEGISLATION TO OVERRIDE OF STEP THERAPY PROTOCOLS FOR PRESCRIPTION DRUG USE

On January 19, the Senate Banking and Insurance Committee unanimously passed SB 1084, with one technical amendment and a second amendment that would set the effective date to be January 1, 2017. The bill is now scheduled to be heard by the Senate Health Policy Committee on February 1. SB 1084 by Senator Gaetz, as well as its House companion HB 963 by Representative Harrison, would impose a major limitation on the use of drug step therapy protocols by managed care plans for Medicaid, by health insurance plans, and by HMOs.

NAIFA-Florida continues to oppose legislative efforts that continue to erode health insurers’ and HMOs’ ability to manage costs. Advancing technologies and inflationary pressures keep health care costs on the rise. Insurers and HMOs are expected to implement cost containment measures to keep coverages affordable.

The bills require that health plans must provide a “clear and convenient process” for a prescribing physician to request an override of the plan’s step therapy protocols for prescribed drugs. The plan must grant the prescribing physician’s override within 24 hours if the physician concludes that the preferred treatment has been ineffective or the physician believes that the preferred treatment is likely to be ineffective or cause an adverse reaction. If the prescribing physician does follow the preferred treatment protocol, the duration of that treatment cannot exceed a period deemed appropriate by the physician.

NAIFA-Florida opposes this proposed legislation. It would place significant upward pressure on health insurance rates.
HOUSE APPROVES BILL TO REGULATE OF TRANSPORTATION NETWORK COMPANIES (TNC)
On January 27, the House of Representatives voted to pass CS/HB 509 by Representative Gaetz which will establish standards and requirements for transportation network companies (TNC). There was one floor amendment which changed the Preemption section from allowing an airport to charge “an appropriate annual fee, not to exceed $5,000” to allowing “a reasonable fee,” among other changes that were mostly technical.

CS/HB 509 contains most the provisions that developed last year from a national compromise between some of the TNCs – primarily Uber – and the national property and casualty trades. That compromise language was largely incorporated into a delete-all amendment resulting in last year’s CS/CS/HB 817 (Representative Gaetz) that passed the House Economic Affairs Committee, but died on the House floor. The bill passed by a vote of 108 yeas and 10 nays.

On January 19, the Senate Banking and Insurance Committee passed a committee substitute for SB 1118 by Senator Simmons. The main change for the CS was to place the same insurance coverage requirements when the driver is logged in, regardless of whether he/she is actually providing a ride or not. CS/SB 1118 also prescribes coverage requirements for “all other times.” At this point, there are differences in coverage requirements between the House and the Senate.

HOUSE BILL 509. When a driver is logged into the network and available to receive transportation requests, but is not actually providing TNC service at the time, there must be liability coverage of $50,000 for death or bodily injury per person and $100,000 per incident, and $25,000 for property damage (plus requirements of no-fault law). When a driver is actually providing TNC service at the time, there must be liability coverage of $1 million for death, bodily injury, or property damage.
SENATE BILL 1118. When the driver is logged in and available, regardless of whether he/she is actually providing a ride or not, there must be liability coverage of $125,000 for death or bodily injury per person and $250,000 per incident, and $50,000 for property damage (plus requirements of no-fault law). For “all other times,” there must be liability insurance of at least $25,000 for death or bodily injury per person and $50,000 per incident, and $10,000 for property damage (plus requirements of no-fault law).

There are also some differences between the House and the Senate on the non-insurance provisions of the bill. NAIFA – Florida is neutral on the issues of general regulatory authority, but strongly supports efforts to establish clear insurance requirements. Until clear requirements are established, an agent is in an extremely difficult situation because a personal lines policy likely won’t pay a claim when a car is utilized for commercial use, such as providing TNC services.
HOUSE AND SENATE SPONSORS SET THE LIMIT OF FUNERAL DIRECTOR’S AUTHORITY TO SELL LIFE INSURANCE AT $21,000
Current law allows a funeral director to obtain a license limited to selling life insurance covering the prearranged cost of a funeral up to $12,500, updated annually for inflation by the CPI since 2003. At this point, we believe that amount to slightly exceed $16,000.

The NAIFA Legislative Committee recognizes the rising cost for funerals, and that small dollar life policies are becoming less common. In this light, the Committee believes that the limit for this license could be increased by a reasonable amount, continuing to cover only prearranged funeral costs.

Initially, however, there were parties seeking legislation that would push the limit to $25,000. NAIFA opposed this as being excessive. In light of NAIFA’s involvement, SB 1386 by Senator Richter and HB 1303 by Representative Jones were initially filed to allow the limit to be set at $22,500. NAIFA continued to express concern, and both sponsors subsequently filed amendments to their own bills to bring the limit down further to $21,000.

On January 26, the Senate Banking and Insurance Committee passed SB 1386, as amended by Senator Richter. The House Insurance and Banking Subcommittee will hear HB 1303 on February 1.

NAIFA-Florida will continue to stay involved in the issue.
HB 543 CLARIFYING SMALL EMPLOYER HEALTH INSURANCE COVERAGE PASSES FIRST COMMITTEE, SCHEDULED TO BE HEARD IN SECOND SUBCOMMITTEE

HB 543 by Representative Stark was passed by the House Health Innovation Subcommittee on January 25. The bill is now scheduled to be heard by the Insurance and Banking Subcommittee on February 1. HB 543, and its Senate companion, SB 910 by Senator Braynon, would make it clear that a small business can buy a health insurance policy that covers only its employees, and is not required to cover the employees’ family members. Currently, Florida’s small group statute is not absolutely clear about whether a small employer is allowed to buy health policies that cover only its employees, without being required to also provide the coverage for their family members as well.
Small employers are exempt from the PPACA’s mandate to provide coverage, but they often want to provide some coverage for their workers. When a small employer provides coverage for its employees but cannot afford to pay the additional coverage for the employees’ family members, they offer the family coverage as an option, if the employee wants to pay for it. The problem is that because of that offer of coverage, the family members technically have access to employer coverage — even though it’s unaffordable – and under PPACA, that access to coverage means they don’t qualify for the tax credits that make the Federal Marketplace plans affordable. This has left many spouses and children uninsured in what has come to be called the “family glitch.”

This bill tweaks state law to clarify that a small business can indeed buy health policies that cover only its employees, without being required to cover their family members.
HOUSE COMMITTEE SET TO HEAR LEGISLATION ALLOWING THE SALE OF INTERSTATE INDIVIDUAL HEALTH INSURANCE
During the 2011 legislative session, HB 1117 by Representative Wood and SB 1566 by Senator Alexander sought to allow the sale to Florida residents of interstate insurance policies governed by the laws of any other state. The policies would have been exempt from rate approval, form approval, underwriting restrictions, coverage mandates, and many other requirements of the Florida Insurance Code. Both of those bills died in the Insurance Committees of their respective chambers. NAIFA-Florida opposed those bills and is not aware of any other such bills being attempted until now.

This year, HB 1317 filed by Representative Miller, would provide that a foreign insurer from any state can sell individual health insurance in Florida if:
  • The foreign insurer holds a valid certificate to transact individual health insurance in its domicile state.
  • Individual health insurance offered for sale under these provisions must comply with all laws of the domicile state and is offered for sale in the domicile state.
  • The foreign insurer files an annual report that includes the state of domicile, the number of individual health insurance products sold in Florida, a list of the Florida counties in which the foreign insurer sold individual health insurance, the number of individuals covered, and the total premium collected on individual health insurance sold in this Florida.
The policy must include a statement in 12-point type that it is being issued by a foreign insurer and is governed by the laws of another state and is not subject to any insurance laws or rules of Florida. The statement must recommend that before purchasing, the consumer should review the terms of coverage and consult their agent.

Finally, the foreign insurer must establish a grievance procedure for Florida residents.

HB 1317 is set to be heard on February 1 by the Insurance and Banking Subcommittee. NAIFA-Florida is concerned that this legislation would open up problems in the marketplace. Notwithstanding the caveats included in the policy, many Florida consumers would expect the fundamental protections that are available through Florida laws. NAIFA will oppose this bill but appreciates the dialogue on mandates Representative Miller has created in filing this legislation.

MAJOR CHANGES IN REGULATION OF SINKHOLE COVERAGE TO BE HEARD IN HOUSE SUBCOMMITTEE; HB 1327

SB 1274 by Senator Latvala and HB 1327 by Representative Ingoglia would establish new standards for “sinkhole only” domestic insurers that solely transact personal residential property insurance for the peril of sinkhole. HB 1327 is set to be heard by the House Insurance and Banking Subcommittee on February 1.

In order to obtain a certificate of authority, an insurer that sells personal residential property coverage only for sinkhole would be required to have surplus as to policyholders of $2.5 million, and to maintain its certificate it would need $1.5 million. By comparison, a residential property insurer must have $15 million to obtain a certificate and $15 million to maintain its certificate.

For filings before October 1, 2019, an insurer can file rates based on 627.062 standards and use the rates by notifying OIR within 30 days of the rate change essentially de-regulating rate filings for these new insurers. The insurer must retain its actuarial data for the rates for 2 years.

The bills also provide that:
  • The coverage must include additional living expenses.
  • Any loss that is repaired or replaced must be adjusted on a replacement cost basis.
  • That a surplus lines agent can export sinkhole insurance to surplus lines insurer without the “diligent effort” to seek coverage from authorized insurers.
  • An insurer providing sinkhole coverage must notify OIR at least 30 days before writing the insurance, and file a plan of operation and financial projections or revisions to the plan.
  • Citizens cannot issue or renew personal lines residential property insurance for sinkhole coverage after July 1, 2018, but will provide coverage for catastrophic ground cover collapse.
The CAT Fund cannot reimburse for personal residential property losses caused by sinkhole. NAIFA has spoken to the house sponsor about increasing the solvency levels of these insurers.

SB 286/HB 817; LEGISLATION ON MERGERS AND ACQUISITIONS BROKERS MOVING THROUGH SENATE AND HOUSE

SB 286 by Senator Brandes has passed all three of its committee references, and its House companion, HB 817 by Representative Raulerson, passed its second committee on January 28. The bills provide a definition for mergers and acquisitions brokers, and would provide an exemption from registration with the Office of Financial Regulation for the brokers facilitating the offer or sale of securities in connection with the transfer of ownership of an eligible privately held company.