Florida lawmakers have three days to hammer out a deal on sweeping property insurance legislation that would allow certain rate hikes and shorten the time policyholders have to file claims.
There are still key differences between the versions of the bill, SB 408, that the Senate approved last week and the House plans to vote on today.
Sen. Garrett Richter, R-Naples, who drafted the Senate bill, said on Tuesday that he’s confident the differences will be resolved. “There is leadership support in both chambers to pass a responsible bill that addresses fraud, strengthens the solvency of the industry to ensure claims are paid and increases competition so policyholders can rely on their policy and have choices,” he said in an email.
Here’s a look at how the bills stack up:
Sinkhole rates and coverage: Unlike the bill approved by the House, the Senate’s version allows insurance companies to charge as much as they want for sinkhole coverage and, with the exception of state-backed Citizens Property Insurance, to drop full sinkhole coverage. The House version would allow insurers to require an inspection of a property before offering the sinkhole coverage. Both versions require policyholders who want sinkhole testing done after their insurer denies a claim to pay up to half the cost of the test.
Rates for backup coverage: State law allows insurers to avoid full regulatory review when charging customers for back-up coverage costs, as long as an individual policyholder's premium doesn't go up by more than 10 percent. The House’s version would allow up to 15 percent.
Fees to affiliates: Some insurer’s affiliates, called managing general agents hired by the insurers to manage day-to-day operations, are exempt from a law requiring insurers to report financial information to regulators, so it's not clear how much of policyholders premiums go to affiliates and the parent company as profits instead of being used to build claims-paying reserves. The Senate approved removing the loophole. The version the House sent back to the Senate did not.
Provisions in the legislation approved by both the House and Senate would:
Allow insurers to raise consumers' rates without approval from regulators to cover advertising costs and agent commissions. In 2008, the Office of Insurance Regulation denied State Farm Florida's rate hike request in part because it found the company didn't need to spend more for marketing when it hadn't sold new Florida policies in years.
Allow companies to withhold full payment for a claim for damage to a home until policyholders sign a contract for repairs and repairs are made, except for homes that are destroyed, and the rules would be more lenient for claims for damage to personal property, such as furniture;
Shorten the time policyholders have to file claims, from the five years currently allowed to two years for sinkhole claims and three years for hurricane claims;
Require new home insurance companies to have $15 million in reserves starting this year and existing insurers to have $15 million by 2021; and
Allow insurers that offer combined policies, covering both a home and motor vehicle, to drop the policy if they warn policyholders at least 90 days beforehand. Richter, who proposed the idea, said the perk aims to attract an unnamed insurer to Florida.
Clarify gray areas of state law that courts have had disagreements on to say "the legal presumption intended by the Legislature is clarified to reduce disputes and litigation associated with the technical reviews associated with sinkhole claims." Miami Republican Reps. Frank Artiles, Jose Felix Diaz and Carlos Trujillo questioned the move, saying the language could be applied to policyholders' pending claims disputes.
The House approved changes to the Senate bill Tuesday and will formally vote on the legislation Wednesday. But the House rejected some major changes aimed at making the bill more palatable to consumers. For instance, lawmakers struck down a proposal to allow consumers five years to file an insurance claim, by a 61-to-48 margin.
Florida has dodged a direct hit from a hurricane for five years. But insurers said premiums aren't keep pace with costs, including claims - especially sinkholes. That’s why regulators have approved dozens of rate hikes in recent years.
Legislators say the proposed changes could bring insurers to Florida and reduce costs for insurance companies, which could help policyholders find more insurance options.
Opponents question the claim, saying provisions that allow rate increases and make it harder for policyholders with claims would hurt consumers and the state’s housing market.
The House session starts at 9:30 and can be viewed live online.
Consumers can weigh in on the bill, SB 408, by contacting their legislators and contacting Gov. Rick Scott's office.