Two bills that are supposed to deal with Florida’s crumbling property insurance market have taken different paths in the state parliament as the legislature approaches the final weeks of the 2021 session.
Senate Bill 76 and House Bill 305, both originally supported by the Florida insurance industry and stakeholders, essentially started the session as ancillary legislation, but recent changes to the House proposal have reforms some in the industry say are urgent are required, deleted. While both bills have been tabled in their respective chambers this week, significant compromises will have to be made to either stand a chance of becoming law.
Stakeholders have supported SB 76 and HB 305 since the session began, as they say the proposals will help combat excessive insurance disputes, legal fees and abuse by predatory lawyers and contractors, causing serious losses for carriers and higher rates for consumers leads.
“Every year if we don’t address this issue, rates will keep rising,” Florida Senator Jeff Brandes told the Senate committee on Thursday.
Brandes urged his colleagues to support SB76, which was sponsored by the chairman of the Senate Banking and Insurance Committee, Jim Boyd, also an insurance broker. Among other things, the bill would amend Florida law to allow attorney fees in property insurance claims to be awarded using a Lodestar fee instead of the current contingency multiplier method, except in rare or exceptional cases. The invoice also stipulates that applicants must give their insurance carrier at least 60 days notice before initiating a legal dispute against them. The notification must contain the alleged acts or omissions of the insurer; the insured’s claim; and reasonable and necessary legal fees incurred by applicants in calculating the Lodestar fee.
The bill would also allow insurers to offer homeowner insurance policies that adjust rooftop claims for ages 10 and over based on a rooftop reimbursement plan.
HB 305 was equivalent to SB 76, with the exception of the requirement that claimants must indicate their intention to initiate litigation. However, the original version was replaced last week by the bill’s sponsor, Representative Bob Rommel, with another version that has “changed significantly” since its inception, Rommel told the Home Insurance and Banking Subcommittee.
“It seems that none of the stakeholders are extremely satisfied with the bill,” said Rommel at the hearing on Monday about the new version.
The bill substitute no longer includes the language used to empower insurers to offer limited roof coverage for homeowner policies through a roof reimbursement plan, nor does it include what the industry has described as essential to solving problems in the marketplace to determine the risk multiplier for legal fees .
Instead, the proposed committee replaces:
- Imposes salary restrictions on citizens’ employees.
- Provides prior notice requirements for any residential and commercial property lawsuit not filed by an assignee, including a written litigation letter of intent detailing the amount of attorney fees and expenses incurred by the applicant. The cost would be calculated by multiplying the number of hours an applicant’s attorney actually worked on the application at the time of notification by a reasonable hourly rate.
- It is made clear that the Florida Office of Insurance Regulation has the same authority to review MGAs as it does reviewing insurers.
- Notes that insurers doing business in Florida are required to submit certain quarterly litigation data to OIR related to personal and home ownership claims.
- Allows Citizens Property Insurance Corp. to increase interest rates an additional 1% per annum for the next five years, up to 15% if OIR determines the financial need to increase interest rates.
- Revised the eligibility for residential property owners to obtain citizen coverage so that they are not eligible for residual market coverage if a policy is available on the private market that is less than 20% higher than the premium for a comparable one Citizen coverage. The current amount is 15%.
- Prohibits a court from paying legal fees to an applicant for services rendered if a lawsuit is dismissed.
The change also adds several provisions aimed at contractor regulations against homeowners and insurers.
In particular, it would be determined that contractors may not:
- Get a homeowner to file an insurance claim.
- Provide an incentive for a homeowner to have the homeowner’s roof inspected or to file a roof damage insurance claim;
- Offer or accept compensation or reward for transferring services for which property insurance proceeds are payable.
- Interpret the insurance regulations, advise an insured person on insurance regulations or adjust claims on behalf of an insured person, unless this is approved as a public expert.
- Provide an insured person with an agreement to authorize repairs without a good faith estimate of the cost of the repair.
- Enter into a contract with a residential property owner to repair or replace a roof, ignoring that the contractor is prohibited from doing certain things.
The shortening of the registration period from three to two years has proven itself in the new HB 305 and is also included in SB 76.
Rommel said the Florida insurance market was in crisis and his bill was an appropriate solution “without giving the insurance company too much power”.
“We have to make sure that we can attract airlines to the state of Florida that want to do business here,” he said. “Right now it’s very difficult under the current legal conditions.”
However, industry players say HB 305 doesn’t go far enough.
“We believe that if you cannot address the process environment, the cost drivers will not be adequately addressed,” said Michael Carlson, president and CEO of the Personal Insurance Federation of Florida.
Carlson praised the SB 76, which the Florida Senate Rules Committee passed Thursday and which now goes to the entire Senate.
“We are facing a litigation crisis in Florida,” said Carlson. “It is the consumers, who end the day at higher insurance rates when insurance companies have to compensate litigation factories, who sue to win large payouts for legal fees. We are grateful to Senator Boyd and the Senate Rules Committee for getting this bill nearing the finish line, and we hope that the Companion of the House will include important consumer protection measures in the end. “
Before he passed, Senator Brandes told his colleagues that they should continue to be committed to the proposals in SB 76.
“We have to act, and that’s a good calculation,” said Brandes. “I hope that in the further course of this law this Senate has the courage of its convictions to assert itself, since our colleagues on the other hand have very different ideas about what should happen. If we do not act, we will fail our voters. We have to assert ourselves here. “
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