May 15, 2019

Happening This Week

Legislative Update

Florida's annual legislative session came to a close recently. Below is a summary of the measures that affect the surplus lines and the insurance industry as a whole.

NOTE: All measures that passed the legislature are set to go into effect on July 1, 2019, but have not been signed into law by Governor DeSantis.

Surplus Lines

Amending the Definition of “Diligent Effort” (626.914(4))
Lowers the threshold for the dwelling replacement cost of a residential structure from $1 million to $700,000  when requiring only one declination. 

Policy Fees (626.916 (4))
There will no longer be a $35 cap on the policy fee. The filing surplus lines agent may charge a reasonable policy fee that must be itemized separately to the customer before purchase and enumerated in the policy.

Policy Fees (626.916 (5))
A retail agent may also charge a reasonable per-policy fee for placement of a surplus lines policy. This fee must be itemized separately to the customer before purchase.

Residential Flood Protection (627.715(4))
Currently, the law allows a surplus agent to export a personal lines residential flood policy without requiring a diligent effort. This exemption will expire on July 1, 2019. No extension was passed, thus all residential flood risks will be subject to Diligent Effort requirements on July 1, 2019. 

All Insurance

Discretionary Refusal, Suspension, or Revocation of Insurance Agency License (626.6215 (7))
Adds additional grounds for DFS to take action against an agency license based upon previous actions taken against another professional, business, or vocational licenses issued to those who hold majority ownership or partnership; or those in a managerial role such as manager, director, or officer in an insurance agency.

Unfair Trade Practices (626.9541(5))
Allows an insurer or agent to give an insured free or discounted, services or other merchandise, goods, wares or other items of value that relate to loss control or loss mitigation with respect to the risks covered under the policy.

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Headlines

Florida Passes ‘Catch All’ Insurance Bill Impacting Surplus Lines, Catastrophe Fund

A Florida bill that the insurance industry says will help modernize the state’s surplus lines system, as well as impact property insurer contracts under the Florida Hurricane Catastrophe Fund and reduce “bad faith” lawsuits, is now awaiting the governor’s signature after being passed by state lawmakers.

House Bill 301, sponsored by Representative David Santiago, was dubbed an omnibus bill because it included several insurance-related provisions, including:

• Increasing reimbursement from the Florida Hurricane Catastrophe Fund for loss adjustment expenses from 5 percent to 10 percent of reimbursed losses beginning with contracts issued after June 1, 2019
• Provides that workers’ compensation insurance applicants and their agents are not required to have their sworn statements notarized
• Prohibits an insured from filing a civil remedy notice with 60 days after an appraisal is invoked
• Expands the allowance of multiple policy discounts in certain circumstances
• Reduces the minimum amount of premium that must be collected for motor vehicle insurance at the initial issuance of a policy

Number of Insurance Claim Lawsuits Filed Since Hurricane Michael Skyrockets

It’s not just general contractors and construction companies experiencing a post-hurricane boom in the seven months since Hurricane Michael — the courts, too, have ramped up to handle an inundation of insurance-related lawsuits.

From Oct. 11, 2018 to May 8, 2019, more than 1,058 lawsuits related to insurance claims were filed at the Bay County Courthouse, according to records obtained by the News Herald. That number includes only claims exceeding $15,000, so the full number of suits filed is likely much higher.

House-Passed Hurricane, Farm Disaster Aid Bill Includes Flood Insurance Extension

The House on Friday passed a $19 billion disaster aid bill that would deliver long-sought relief to farmers, victims of hurricanes and floods, and rebuild southern military bases, as Democrats try to dislodge the legislation from a Senate logjam over aid to hurricane-slammed Puerto Rico.

The measure passed by a 257-150 vote over the opposition of most Republicans, who said it should also include the Trump administration’s $4.5 billion request for stepped up humanitarian aid and law enforcement along the U.S.-Mexico border, which is facing a wave of migrants fleeing violence in Central America.

 When it Comes to Flooding, Florida’s Risk is Real

As Floridians are approximately 30 days from the start of the 2019 Atlantic Hurricane Season, Chief Financial Officer (CFO) Jimmy Patronis and Florida Insurance Commissioner David Altmaier are reminding consumers to start preparing now, if they haven’t already. Consumers should review their insurance policies, understand their coverages and secure flood insurance coverage as soon as possible. Typically, there is a 30-day waiting period before a flood policy takes effect, so it is vital to act now.

The Office of Insurance Regulation (OIR) has proactively worked alongside CFO Patronis’ office to expand Florida's private flood insurance market. As of April 30, 2019, the number of insurers eligible to write private flood insurance in Florida increased from 20 to 29, a 45 percent increase since June 2017. Private carriers have written more than 62,000 personal primary flood insurance policies in Florida, a 169 percent increase since June 2017. This coverage is usually offered at prices similar to or lower than those of the National Flood Insurance Program (NFIP), providing more consumer choice and an alternative to the federal program. 

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