The Florida Senate

The Florida Senate Committee on Banking and Insurance, chaired by Senator Jim Boyd (R-Bradenton), today passed a Senate Bill 7052, Insurer Accountability. The legislation, presented by Senator Travis Hutson (R-St. Augustine), Dean of the Senate, contains various provisions intended to increase consumer protection and insurer accountability in Florida.

“Over the last several years, during regular and special sessions, we have worked on reforms to strengthen the property insurance market in our state so policyholders have access to quality, affordable, private market property insurance. Ultimately, every homeowner needs property insurance that is reliable and affordable. When disaster strikes, we want to make sure impacted Floridians can successfully navigate the claims process and be compensated for losses in a timely manner,” said Senator Hutson. “This legislation continues our efforts to balance fair costs and protections for consumers, while strengthening state review and analysis of the insurance market, so that bad actors can be held accountable. We are expanding resources and tools that will help DFS and OIR better serve Floridians as well as the insurance companies doing business in our state. We are incorporating feedback from the Department of Financial Services, the Office of Insurance Regulation as well as proposals put forward in legislation sponsored by Senator Grall and Senator Martin. Together these efforts enhance consumer-friendly provisions of current law and increase transparency between homeowners and insurance companies.”

Florida’s Chief Financial Officer Jimmy Patronis said, “Florida has done a lot to mitigate the impacts of a hardening insurance market in our state while working to keep policyholders at the forefront. For too long, unscrupulous insurance companies, public adjusters, and attorneys have been allowed to drive the decline in the state’s insurance system. Thankfully, last year we passed vital reforms to alleviate the fraud, waste, and abuse that drives up rates for every Floridian. With the recent changes in law, there will be shift from excessive claims litigation, to leveraging vital Department services like the insurance mediation program and the Consumer Services Division. By alleviating workload challenges, the Department can better support policyholders and install more accountability into the system. I have no doubt that this legislation will help empower storm victims so they can get back on their feet quicker and further down the road to recovery. Thank you to Senate President Passidomo and Senator Hutson for supporting DFS as we work to further support Florida’s policyholders.”

“Over the last several months, we have passed major legal reforms that impact most lines of insurance. The goal of all of this activity has not been to benefit the insurance industry but rather to benefit policyholders. However, we have no desire to go from a system that enriches trial lawyers, to a system that incentivizes insurance companies to use the law to avoid paying claims that should be paid,” continued Senator Hutson. “This bill seeks to provide the proper balance between insurers and policyholders. It makes certain that insurers will be held accountable if they do not meet the obligations of their contracts. Additionally, the bill will make sure savings generated from all the reform bills we have passed will begin to be passed on to Florida policyholders.”

Regarding insurance coverage, the bill:

· Prohibits authorized and surplus lines insurers from cancelling a property insurance policy during any pending claim until after repairs are complete;

· Requires that Citizens Insurance cover property with open claims that are being handled by FIGA (Florida Insurance Guaranty Association);

· Prohibits the Office of Insurance Regulation (OIR) from waiving its review of policy forms for 3 years for any insurer that has violated the Insurance Code;

· Provides that the prohibition on applying any other deductible under the policy if a roof deductible is applied encompasses any other loss to the property caused by the same covered peril.

· Tolls the time period for filing a property insurance claim during an insured’s active duty military service; and

· Clarifies legislative intent that Chapter 2022-271, Laws of Florida, passed during Special Session A in December 2023, (SB 2-A [2022] on Property Insurance) shall not be construed to impair any right under an insurance contract in effect on or before the effective date of that chapter law (December 16, 2022).

· Clarifies that the provisions of do not impair rights under policies in effect before the act’s effective date.

Regarding rates charged for insurance, the bill:

· Requires that property insurance and motor vehicle rate filings must include, and the OIR must consider in reviewing rates, the combined effect of recent legislative reforms;

Appropriates $500,000 from the Insurance Regulatory Trust Fund for OIR to obtain an actuarial study to implement this requirement.

· Requires that property insurance mitigation discounts be updated at least every 5 years and insurers to provide consumer-friendly information on their website describing hurricane mitigation discounts available to policyholders; and

· Makes title insurance rates subject to OIR rate review.

Regarding insurer claims handling, the bill:

· Requires OIR to ensure liability insurers are complying with proper claims handling practices by following specified best practices

· Creates a 60-day prompt-pay law for non-PIP motor vehicle insurance claims similar to the prompt pay law for residential property insurance claims;

· Requires insurers to annually submit their claims manuals to the OIR and attest that the manual comports to usual and customary industry claims handling practices; and

· Strengthens the Unfair Insurance Trade Practices Act by:

o Prohibiting altering or amending an adjuster’s report without including a list of changes, who made the change, and an explanation of a change that reduces coverage; and

o Prohibiting payment of bonuses to officers and directors while an insurer is impaired or insolvent.

Regarding regulatory oversight of insurers, the bill:

· Increases maximum administrative fines by 250 percent generally, and 500 percent for violations stemming from a state of emergency such as a hurricane.

· Requires insurers to more promptly respond to the Department of Financial Services (DFS) Division of Consumer Services and increases fines for noncompliance.

· Provides additional funding for the DFS Division of Consumer Services.

o Appropriates five positions with associated salary rate of 325,000 and the sum of $494,774 in recurring funds and $23,410 in non-recurring funds to the DFS from the Insurance Regulatory Trust Fund.

· Specifies objective criteria to be used by OIR to:

o Prioritize necessary financial and market conduct examinations.

o Determine when payments to affiliates are excessive.

· Provides conditions whereby the OIR must initiate a market conduct examination.

· Requires insurers to report to the OIR any temporary suspension of writing new policies.

· Applies the standard order that OIR issues to protect consumers after hurricanes to surplus lines insurers.

· Specifies that insurance fraud referrals may be made to the statewide prosecutor for crimes that impact two or more judicial circuits.

· Requires additional reporting from regulators regarding their enforcement actions.