NAIFA-Florida-Session Dispatch Week 5
By Timothy J. Meenan, NAIFA-Florida Lobbyist
By Timothy J. Meenan, NAIFA-Florida Lobbyist
FLORIDA CABINET BEGINS SEARCH FOR NEXT INSURANCE COMMISSIONER
The website for the Florida Cabinet has begun receiving applications for Florida Insurance Commissioner. As of this week, the site showed 25 candidates who have applied. All of the applications can be viewed on the Cabinet’s website. The website link lists the salary range as $134,157 to $200,000. The application process is open until March 11.
On January 6, Commissioner Kevin McCarty, who took office in 2003, announced that he would leave in May. The Florida Cabinet, which makes the appointment, intends for the new Commissioner to take office before McCarty leaves office and before hurricane season begins.
The qualifications required by Florida statutes are 5 or more years of responsible private sector experience working full-time in areas within the scope of the subject matter jurisdiction of the Office of Insurance Regulation within the last 10 years, or 5 or more years of experience as a senior examiner or other senior employee of a state or federal agency having regulatory responsibilities over insurers or insurance agencies within the last 10 years.
Many candidates are rumored to be in the running, including former legislator Tom Grady of Naples, current Representative Bill Hager from Boca Raton, and others.
SB 650 AND HB 445 PROHIBITING STRANGER ORIGINATED LIFE INSURANCE (STOLI)
PASS KEY COMMITTEES
PASS KEY COMMITTEES
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. In addition to creating a moral hazard of giving benefits to someone who has no insurable interest, STOLIs can prevent an applicant from qualifying for other life insurance by using up the limit for which a person would otherwise qualify. They can also create a tax liability for an elderly person, who will have to pay the tax out-of-pocket, for a product that provided no benefit to them.
HB 445 passed the House Appropriations Committee on February 9. NAIFA testified in support of this legislation in both the House and Senate, and will continue its efforts to push this good legislation through the process.
SENATE COMMITTEE PASSES BILL ON ASSIGNMENT OF BENEFITS (AOB); SB 596
SB 596 by Senator Hukill is currently the strongest legislation to curtail the assignment of benefits problems. SB 596 passed the Senate Banking and Insurance Committee on February 1, with the all-important language stating that an agreement is void if “it purports to assign or transfer the right to enforce payment for post-loss benefits in the policy,” still in the bill. This provision cuts off the vendors from getting attorneys’ fees, and is the root of this problem. Unfortunately, however, several Committee members said their support was contingent on Senator Hukill amending that provision in the next Committee. CS/HB 1097 by Representative Caldwell has removed that “enforcement” provision. CS/HB 671 by Representative Broxson, which passed the House Government Operations Subcommittee on February 8, does not address “enforcement.”
In addition to the enforcement provision, CS/SB 596 would provide for the following:
- The insurer must be notified of the assignment within 3 business days; and an estimate for materials and services must be provided.
- Within 3 business days following the insurer being notified, the policyholder has a right to rescind without penalty, except for reimbursement for work already performed to mitigate or repair; if the Governor has declared a state of emergency, the policyholder has 5 business days.
- The assignment must contain in 14-point type a statement to the policyholder describing the right to rescind; that the assignment cannot impose any kind of cancellation fee or a check processing fee, or add a provision for overhead and profit; that the final bill cannot exceed the estimate, unless approved by the policyholder and insurer.
- The transfer of the right to enforce payment is prohibited and anything that prevents or inhibits an insurer from communicating with its policyholder is prohibited.
- The assignment cannot transfer the authority to adjust, negotiate, or settle the claim to anyone who is not otherwise authorized to do so; and provides that the law will apply to all assignments which are executed after the effective date.
- The provisions of the bill will not apply to powers of attorney granted to management companies, family members, or guardians.
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 AND HOUSE COMMITTEES PASS BILLS THAT AFFECT AGENTS’ ACCESS TO CERTAIN CITIZENS’ UNDERWRITING DATA, THAT REQUIRE CONTINUING PRIVATE COMPANY APPOINTMENTS, AND THAT AMEND TAKE-OUT PROCESS; SB 1630/HB 931
A bill addressing the use of Citizens’ underwriting data, CS/SB 1630 by Senator Flores, was passed by the Senate Banking and Insurance Committee on February 1. The bill 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.
CS/SB 1630 would remove the current allowance for Citizens or MAP to release any information to a general lines agent. CS/SB 1630 provides 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.
CS/HB 931 by Representative Passidomo, was passed by the House Regulatory Affairs Committee on February 4 and is now on the House floor. CS/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. CS/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.
Like CS/SB 1630, CS/HB 931 also provides 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.
Both CS/HB 931 and CS/SB 1630 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.
Both CS/HB 931 and CS/SB 1630 also require a number of changes for Citizens’ take-out process, including:
- CS/HB 931 requires Citizens to publish a schedule of take-out cycles, but does not specify the number. CS/SB 1630 limits it to 6 cycles per year.
- That private insurers must include in their take-out offers to Citizens policyholders, a comparison of coverages and rate between the insurer’s policy and Citizens policy.
- The requirement that private insurers must agree to offer similar coverage to that being offered by Citizens and CS/SB 1630 requires that their initial premium will be within 10 percent of the estimated premium.
- That Citizens compile a list of companies requesting to take out a policy and make the list available to the agent of record.
- Must allow a Citizens policyholder who accepts a take-out offer, the ability to reapply to Citizens and be treated as a renewal through the clearinghouse if within 36 months of leaving Citizens.
This legislation is expected to reduce the opportunity for some aggressive MGAs that are targeting commercial residential policies from “poaching” those policies from the agent of record.
HOUSE AND SENATE COMMITTEES PASS BILLS TO PREVENT OUT-OF-NETWORK HEALTH PROVIDERS FROM BALANCE BILLING POLICYHOLDERS; SB 1442/HB 221
SB 1442 by Senator Garcia and HB 221 by Representative Trujillo are NAIFA priority bills that attempt 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. On February 1, the Senate Health Policy Committee voted 5-4 in favor of CS/SB 1442, and on February 10, the House Appropriations Committee passed CS/CS/HB 221 by a 25-0 vote.
The problem of balance billing puts the agent 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 out-of-network 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 this difficult situation.
CS/SB1442 and CS/CS/HB 221 share a number of similar provisions, including:
- The insurer is solely responsible for payment to a non-participating provider for emergency services; coverage for emergency services cannot require prior authorization and must be provided regardless of whether the service is furnished by a participating or nonparticipating provider.
- The insurer is liable for payment of fees to a non-participating provider for non-emergency services provided in a facility which has a contract with the insurer when the insured has no ability and opportunity to choose a participating provider at the facility.
- The health service provider cannot bill the patient, except for copayments or deductibles.
- The insurer must pay the provider consistent with the current standards applicable for HMOs. A dispute will be resolved in either a court or by the voluntary dispute resolution process in s. 408.7057, F.S. CS/CS/HB 221 creates a new process within that section.
- A hospital must post certain information about all health insurers and HMOs the hospitals contracts with as a network provider or participating provider, and a statement alerting patients that services provided in the hospital may not be included in the hospital’s charge, and health care practitioners who provide services in the hospital may not participate in the same health insurance plans as the hospital.
- Insurers must keep on their websites updated information on all participating providers, including facilities, board specialties, languages spoken, and affiliations with local hospitals. The website must be updated at least monthly.
CS/HB 951; NAIFA LOBBIES TO MAINTAIN FLORIDA’S CONVERSION LAW
CS/HB 951 by Representative Cummings was passed by the House Insurance and Banking Subcommittee on February 1, and CS/SB 1170 by Senator Detert was passed by the Senate Appropriations Subcommittee on Health and Human Services on February 8. The bills make numerous changes throughout the statutes repealing or revising state law requirements to reflect current federal law. The federal Patient Protection and Affordable Care Act (PPACA) effectively allows states to adopt and enforce laws that do not directly conflict with PPACA, but preempts any state law that does conflict. As a result, provisions in Florida law that are in conflict with PPACA are preempted and provisions that merely duplicate PPACA continue to be viable and enforceable by OIR.
The bills repeal:
- The medical loss ratio standard for major medical health insurance policies;
- The requirement for insurers to issue a certificate of creditable coverage;
- The requirement for certain insurers to provide an outline of coverage.
In addition, the bills contain numerous sections that revise cross-references and transfer language that is required to continue implementation of requirements unrelated to those that have been repealed.
Of note, the NAIFA Health Committee was opposed to a provision in the original bills eliminating the Florida health insurance conversion statute. This could be problematic for groups of less than 20. With our support, current law was restored in the bills, and Florida conversion law will still be in force.
SENATE COMMITTEE PASSES PROPOSED LEGISLATION TO OVERRIDE OF STEP THERAPY PROTOCOLS FOR PRESCRIPTION DRUG USE; CS/SB 1084 & HB 963
The Senate Health Policy Committee passed CS/SB 1084 on February 1. CS/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.
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 allow physicians to side step lower cost treatment options and increase premiums to employers and individual health insurance purchasers.
BILLS REGULATING TRANSPORTATION NETWORK COMPANIES (TNC); CS/HB 509 & CS/SB 1118
CS/CS/HB 509 has passed the House and CS/CS/SB 1118 passed the Senate Judiciary Committee on February 9. CS/CS/HB 509 by Representative Gaetz contains most of the provisions that developed last year from a national compromise between some of the TNCs – primarily Uber – and the national property and casualty trades. CS/CS/SB 1118 by Senator Simmons, contains different coverage requirements than the House bill.
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). When a driver is not logged in or providing a ride, 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. NAIFA will continue to monitor and report the progress of this potential legislation.
HOUSE COMMITTEE PASSES BILL TO SET THE LIMIT OF FUNERAL DIRECTOR’S AUTHORITY TO SELL LIFE INSURANCE AT $21,000; CS/HB 1303; CS/SB 1386
On February 1, the House Insurance and Banking Subcommittee passed CS/HB 1303 by Representative Jones, and on February 8, the Senate Judiciary Committee passed CS/SB 1386 by Senator Richter. Both bills establish $21,000 as the limit of funeral directors’ authority to sell life insurance to cover funeral costs.
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. As a result of NAIFA’s involvement, both SB 1386 by Senator Richter and HB 1303 by Representative Jones were amended to set the limit at $21,000. NAIFA-Florida will continue to stay involved in the issue.
HB 543 CLARIFYING SMALL EMPLOYER HEALTH INSURANCE COVERAGE PASSES SECOND HOUSE COMMITTEE
HB 543 by Representative Stark was passed by the House Insurance and Banking Subcommittee February 1. This bill, along with 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 bills tweak 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 NARROWLY PASSES BILL ALLOWING THE SALE OF INTERSTATE INDIVIDUAL HEALTH INSURANCE; HB 1317
On February 1, the House Insurance and Banking Subcommittee voted 7 – 5 in favor of HB 1317, which would allow an insurer from any state to sell individual health insurance in Florida under certain conditions. The bill is similar to two bills that were offered during the 2011 legislative session, that sought to allow the sale to Florida residents of interstate insurance policies governed by the laws of any other state, and exempt from rate approval, form approval, underwriting restrictions, coverage mandates, and many other requirements of the Florida Insurance Code. NAIFA – Florida opposes this bill and testified in Committee against the measure.
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, and that before purchasing, the consumer should review the terms of coverage and consult their agent.
NAIFA-Florida is concerned that this legislation would open up problems in the marketplace. Many Florida consumers would expect the fundamental protections that are available through Florida laws. The bill no longer serves to save money through the sale of a policy from a state with fewer mandates, because PPACA now requires minimum coverage in all states. NAIFA will oppose this bill but appreciates the dialogue on mandates Representative Miller has created in filing this legislation.
HOUSE COMMITTEE HEARS BILL MAKING MAJOR CHANGES IN REGULATION OF SINKHOLE COVERAGE TO BE HEARD IN HOUSE SUBCOMMITTEE; HB 1327
CS/HB 1327 by Representative Ingoglia was passed by the House Subcommittee on Insurance and Banking on February 1. CS/SB 1274 by Senator Latvala was passed by the Senate Banking and Insurance Committee on February 9. The bills would establish new standards for “sinkhole only” domestic insurers that solely transact personal residential property insurance for the peril of sinkhole.
The bills create a new type of sinkhole coverage. Among the key features, the bills:
- Permit an authorized insurer to issue a “limited sinkhole coverage insurance” policy providing personal lines residential coverage for the peril of sinkhole loss on any structure or the contents of personal property;
- Cover only losses from the perils of sinkhole loss as the term “sinkhole loss” is currently defined in law;
- Coverage of loss of personal property or contents is not required; coverage may be limited to stabilization of the building and repair of the foundation; coverage of land stabilization is not required;
- Allow policy limits, subject to a minimum limit, and deductibles as agreed by the insurer and insured which could be far less than the value of the home;
- Require the insured’s signed acknowledgement of reading and understanding the policy limitations;
- Do not apply to commercial lines residential, commercial lines nonresidential coverage, or excess coverage for the peril of sinkholes;
- Do not require form filing;
- Lower surplus requirements for a new or existing domestic insurer that only transacts limited sinkhole coverage insurance for personal lines residential property to a minimum of $7.5 million.;
- Remove the due diligence requirement on the exportation of policies to surplus lines insurers until July 1, 2020;
- Until October 1, 2019, these limited sinkhole coverage insurers will not be subject to file and use rate review by the Office of Insurance Regulation;
- Prohibit assignment of a post-loss claim, except to a certain property purchasers.
NAIFA was successful in getting the house sponsor to increase the solvency level up to $7.5 million from original bill, which required only $2.5 million to obtain a certificate and $1.5 million to maintain it.
SB 286/HB 817; LEGISLATION ON MERGERS AND ACQUISITIONS BROKERS CONTINUE TO MOVE 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 third committee, Regulatory Affairs, on February 4. 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.