NAIFA-Florida-Session Report: Day 50 Update
By Timothy J. Meenan, NAIFA-Florida Lobbyist
Session Dispatch # 4 (Day 50 Update)
Today officially marks day 50 of the regularly scheduled 60-day legislative session. The 50th day marks the last day for regularly scheduled Senate committee hearings by rule; the House does not have the same rule, but has historically followed the same timeline.
There has been much discussion regarding when the chambers would begin the budget process, but they have not entered budget conference at this point. The House and Senate seem to remain at odds regarding the budget, which could shape the timeline of the rest of session.
Below is a summary of legislation we believe is of interest to NAIFA and its members:
I. NAIFA PRIORITIES
Agent Continuing Education & Prohibition on Unlicensed Transaction of Life & Health Insurance
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. Additionally, the bill includes language prohibiting the unlicensed transaction of life and health insurance and clarifies that the exemption from agent licensure only applies if the person explaining coverage is an employee or a member of the group or business in question.
The House bill was heard on final passage and approved with a vote of 118 to 0. The Senate bill is currently awaiting being heard on second reading on the Senate floor. Because the bills are identical, we anticipate that Senator Stargel will substitute the House bill for the Senate bill on final passage.
SB 1038 (Hukill); HB 1421 (Grant); SB 1218 (Farmer)
The House Commerce committee approved a committee substitute for HB 1421 last week. The CS was heard on second reading this morning on the floor. Representative Jenne attempted to add on a rate rollback amendment, but was unsuccessful. We anticipate the bill will be heard on final passage in the House and be sent to the Senate this week. The CS does the following:
A. Makes assignments invalid if they don’t comply with the new requirements.
B. Requires assignments to be in writing and executed by an insured and the assignee.
C. Allows a rescission of the AOB by the insured for any reason within 7 days of the insured having executed the assignment.
D. Requires the assignment to be sent to the insurance company within 3 business days after the date the assignment is executed or work has begun, whichever is earlier.
E. Requires assignments to include a written cost estimate for the work to be performed. Requires work done by water remediation companies to be certified in a class approved by the American National Standards Institute.
F. Contain a notice to the consumer that the AOB might result in litigation, and explaining the right to rescind in 7 days.
G. Assignments cannot contain mortgage or check processing fees, penalties for rescission, or other administrative fees.
H. Requires the assignee to prove that the insurer is not prejudiced if the assignee fails to maintain records of all services, cooperate with the insurer in the investigation of the claim, and providing the insurer with all requested records, or failed to deliver the new assignment within 3 business days.
I. Assignees must provide additional updates on supplemental repairs as they are required.
J. Assignees must perform the work in conformance with accepted industry standards.
K. Assignees cannot seek payment for amounts denied from the insurer from the insured.
L. Assignees must submit to EUO’s, participate in insurer required appraisal or alternative dispute resolution methods required in the policy.
M. Assignments do not interfere with any managed repair requirements in law or the policy.
N. Assignees must provide a written notice of intent to initiate litigation 10 days before filing suit, and include a specific pre-suit settlement demand, including a detailed written invoice and estimate including all labor and materials, etc.
O. Insurers must respond to the 10-day notice of intent to initiate litigation within 10 days by making a pre-suit settlement offer.
P. If the difference between the judgment obtained and the difference between the pre-suit demand, and the pre-suit offer is less than 25%, the insurer is entitled to an award of reasonable attorney fees. If the difference is at least 25 percent, but less than 50 percent, no party gets attorney fees. If the difference is greater than 50 percent, the assignee gets attorney fees. In calculating this requirement, the judgment cannot include interest, attorney fees, or costs, and only includes the damages recovered.
Q. If an insurer fails to inspect the property, or provide written or verbal authorization for the repairs within 7 days of the first notice of loss, the insurer waives the right to an award of attorney fees. This section is waived if a claim is the result of an event where the governor declares a state of emergency.
R. Starting in January 2020, and each year thereafter, the OIR must do a data call requesting AOB claims. Data includes data about claims adjustment and settlement timeframes, procedures, trends, litigated versus non-litigated loss adjustment expenses, and amount and type of attorney fees incurred or paid.
S. Policies may not prohibit the post loss assignment of benefits.
Industry input, including Citizens Property Insurance Corporation and the major homeowners’ insurers are that this bill is a good faith attempt to fix the problem, and appears to have the support of the majority of insurers. The plaintiffs’ bar absolutely hates the bill and is attacking it, so that tells you something.
The senate bill, which is SB 1218 filed by Senator Farmer, is extremely unfriendly to insurers, does not contain any attorney fee reform language, requires insurers to eliminate the costs of attorney fees on cases they lose from being a part of the base rate, and essentially ends the ability to utilize a managed repair program or to invoke the right to repair on a particular claim. The Senate bill supported by the industry, SB 1038 by Senators Hukill and Passidomo, was not given a hearing in Senate Banking and Insurance, its first committee of reference.
We do not believe the Senate will take the house bill, but we are working with the Governor to see if we can get this bill heard on the full senate Floor, where we might have a chance, with the Governors help, to get 21 votes.
II. LIFE & HEALTH
SB 1600 (Young); HB 1205 (Stevenson)
SB 1600 and HB 1205 revise the viatical settlement statutes making it more difficult for life settlement companies to engage in Stranger Originated Life Insurance (“STOLI”) policies. The bills define a STOLI and makes agreements to further or aid a stranger originated transaction void and unenforceable.
The bills provide a fix for decision in the Pruco case by specifically stating that a life insurer may contest a life insurance policy that was obtained in STOLI transaction. The proposal clarifies that the two-year incontestability clause does not prevent an insurer from contesting the issuance of STOLI policy on lack of insurable interest.
CS for SB 1600 was heard by Senate Appropriations on April 20 and approved with a committee substitute. CS for CS for SB 1600 still must be heard by the Rules Committee before it can head to the floor. HB 1205 was temporarily postponed on second reading last week, but is scheduled to be heard on the floor this afternoon.
SB 182 (Mayfield); HB 95 (Massullo)
SB 182 and HB 95 prohibits health insurers and HMOs from removing a covered prescription drug from its formulary except at the time of policy renewal with some limited exceptions. The bills also prohibit an insurer or HMO from reclassifying a drug to a more restrictive drug tier during the policy year.
The Senate bill was approved by the Rules Committee and is scheduled to be heard on the special order calendar tomorrow, April 26. The House bill passed its first committee of reference, House Health Innovation, on February 22, but has not moved since.
Motor Vehicle Insurance/ PIP Repeal Measure
1766 (Lee, T); HB 1063 (Grall)
SB 1766 and HB 1063 are both moving. The House bill eliminates PIP and replaces it with Mandatory BI with limits of 25/50/10 (limit for death or injury to one person of $25,000, up to two persons of $50,000, and $10,000 of physical damage coverage. No medical payments coverage is required or contemplated in the House bill. The House bill was heard on final passage late last week and was passed by a vote of 89 yays to 29 nays. The bill is now awaiting being heard by the Senate.
A floor amendment was adopted to move the implementation date from January 1, 2018, back to July 1, 2018. The Senate bill repeals PIP, but includes a $5000 benefit for mandatory Med Pay, along with mandatory bodily injury and property damage liability coverage. The Senate bill phases in the bodily injury coverage: From the effective date of the act through December 31, 2019 the limits are 20/40/10; from January 1, 2020 through December 31, 2021 the limits are 25/50/10; from January 1, 2022 and thereafter the limits are 30/60/10.
Ignition Interlock Device Legislation Continues to Move
SB 918 (Simmons); HB 949 (Byrd)
SB 918 and HB 949 address DUI penalties and, specifically, ignition interlock devices as a condition of probation. They remove language that specifies that the court may only place the devices on vehicles individually or jointly owned by the convicted person while allowing the court to place the device on any vehicle routinely operated by the convicted person.
The bills also add language which states that if an ignition interlock device is placed on the vehicle of a first-time offender, whether ordered by the court or placed voluntarily by the convicted person, then the court shall withhold adjudication, providing that the offender does not have a prior withholding of adjudication. Failure to comply with the terms of the order for placement of the device may result in the court ordering an adjudication of guilt. The bills also define conviction as a determination of guilt that is the result of a plea or trial, regardless of whether adjudication is withheld. The one difference between the two bills is that the Senate bill includes a provision which lowers ignition interlock leasing fees for lower income users.
Committee Substitute for SB 918 deals with DUI penalties and ignition interlock devices. It passed the Senate Criminal Justice committee and is scheduled for a hearing in front of the Senate Transportation Committee on April 19. The bill’s House companion, HB 949, passed the House Transportation and Infrastructure Subcommittee on March 21 but has two more committee stops to go.
Pre-Owned Auto Inspection
SB 1316 (Bracy)/ HB 1299 (Dubose)
SB 1316 and HB 1299 allow automobile 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 opt out. HB 1299 was amended and passed with a vote of 12 to 1 with a committee substitute through the House Insurance and Banking Subcommittee. The CS for HB 1299 amends the original bill and creates express authority for an insurer to elect not to participate in the required pre-insurance inspection. The amended bill limits the consumer’s expense to $5 in those instances where an insurer opts out of the inspection and the consumer implements their own inspections instead. The bill heads to the Commerce committee next for its last stop.
The Senate bill was amended in its first committee hearing to conform to the House language capping the consumer expense for an inspection at $5. SB 1316 was approved with a committee substitute by the Senate Committee on Transportation. The bill still has a reference to Rules remaining, which may be the death of the bill at this point if the Senate chooses not to hold any additional Rules meetings. We have been working with other bill sponsors to possibly add this provision on to a different bill in case the Senate does not hold any additional Rules hearings.
These bills continue to face opposition from the vendor with the inspection contract, but with only one committee stop in each house remaining, they have a good chance of passage this year.
IV. PROPERTY & CASUALTY
Unfair Insurance Trade Practices/ Rebate Bill
SB 1032 (Mayfield); HB 1029 (Yarborough)
SB 1032 and HB 1029 raise the cap from $25 to $100 for promotional items that can be given to insureds, prospective insureds, and others by agents or insurance companies for the purpose of conducting a promotional or advertising program. The bills limit the value of promotional items and prohibit items exceeding $100 in total value from being given. 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.
The Senate bill was reported favorably as a committee substitute out of the Senate Commerce and Tourism Committee on April 17. The CS for SB 1032 expanded the bill to permit a licensed insurer or its agent to make charitable contributions up to $100 per calendar year on behalf of each insured or perspective insured. The CS also clarified that any item given by title insurance agents, title insurers, or title insurance agencies may not exceed a value of $25. The Senate bill still has one more committee stop to go. HB 1029 was heard by the House on final passage and passed without opposition, and is now awaiting hearings in the Senate.
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 House and Senate bills differ in two respects. First, 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. Second, 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. HB 813 has one remaining committee stop, Commerce, before it can head to the floor.
The Senate bill was heard by the Senate Community Affairs Committee and passed with a committee substitute. Senator Brandes filed an amendment the night before the bill was to be heard by the Rules Committee. The amendment would require certain National Flood Insurance Program disclosures be provided to and acknowledged in writing by the applicant within 21 days after the NFIP policy expires, and eliminates the requirement altogether if Congress ends the practice of requiring a consumer be charged the full risk rate if they leave the NFIP, and thereafter attempt to re-enter the NFIP. SB 420 was passed out of the Rules Committee and placed on the calendar for second reading. The House bill is slated to be heard today on second reading by the full House.
Public Adjuster Licensing
SB 922 (Garcia); HB 911 (Shaw)
The bills amend licensure requirements for public adjusters, public adjuster apprentices, and all-lines adjusters. They also create licensure requirements for public adjusting firms and subsequent penalties for violations of the licensure laws. However, it does provide an exemption for insurance companies which directly appoint adjusters from the adjusting firm licensure laws.
The House bill was heard last week and passed through the House Commerce Committee with a committee substitute. The CS for HB 911 clarified that individuals who photograph or inventory damaged personal property or business property are not required to be licensed. The CS also restricted the authority of certain adjusters to enter into contracts or accept power of attorney that cause the policyholder or third party to expend funds in excess of certain amounts. HB 911 is scheduled to be heard on the floor on second reading today. SB 922 is on the schedule to be heard by the full Appropriations Committee this afternoon.
SB 334 (Steube); HB 469 (Harrison)
SB 334, and HB 469 require the payment of prejudgment interest in certain court awards. SB 334 requires that in a negligence action in which a plaintiff recovers economic damages and costs as the result of personal injury, the court shall include interest on each component of economic damages only, back to the date of loss of an economic benefit to the plaintiff. That bill is on the Senate Calendar, and has not yet received placement on the special order of the Senate.
HB 469 allows recovery of prejudgment interest on both economic and non-economic damages. That bill still must be heard in the House Judiciary Committee, and we are working to try and stop that from happening. There is a possibility that this bill is dead in both chambers.
House Passes Legislation Addressing Workers’ Compensation
SB 1582 (Bradley); HB 7085 (Insurance & Banking Subcommittee)
HB 7085 addresses the recent decisions declaring some components of Florida’s Workers Compensation law unconstitutional. The bill would permit direct payments of attorneys by or on behalf of claimants and increases the total combined temporary wage replacement benefits (TTD/TPD) from 104 weeks to 260 weeks. It also allows a Judge of Compensation Claims (JCC) to award an hourly fee that departs from the statutory percentage based attorney fee schedule under certain situations. Among several other components, HB 7085 also permits insurers to uniformly reduce premiums by no more than 5% if they file an informational-only notice within 30 days. Insurance industry representatives believe that the ability of a judge to award additional attorneys’ fees makes this bill less than ideal, and likely means that litigation will continue to expand causing rates to increase.
The House bill was heard on the floor on April 18. A number of amendments were offered on the bill, with two amendments actually being passed and added to the bill. The amendments, both by the bill sponsor, Rep. Burgess, limits attorney fees to $150 per hour and requires any vacancy on the three-member panel to be filled by the Governor within 120 days of the vacancy; if the Governor fails to fill the vacancy, the bill requires the Chief Financial Officer to do so within 120 days. The bill was heard on final passage last week and passed by a vote of 82 to 37.
SB 1582 requires insurance carriers to authorize or decline requests for authorization from health care providers within a three-day period and provides that a request is deemed to be authorized if the carrier fails to respond. Like the House bill, the Senate bill increases the temporary partial disability benefits from 104 weeks to 260 weeks, in compliance with the Florida Supreme Court’s decision in Westphal v. City of St. Petersburg. SB 1582 retains the statutory fee schedule for setting claimant attorney’s fees but allows the JCC to consider certain factors and permit deviation from the attorney fee schedule.
The Senate bill was passed by the Appropriations Committee with a committee substitute that created a presumption that firefighters who have multiple myeloma or non-Hodgkin’s lymphoma are presumed to have contracted such occupational disease in the course and scope of employment as a firefighter. The presumption extends workers’ compensation benefits to firefighters with either of the above-named conditions. Additionally, the CS provides corresponding appropriations and allows eight full-time equivalent positions be funded to the Office of Insurance Regulation. The Senate bill now moves to the floor to be heard on second reading.