Analysis of S 408, one of the insurance bills currently in the Legislature

It’s a busy, busy year for insurance in Tallahassee.  Insurance company lobbyists are keeping legislators running to keep up with their wish lists.  Below is an analysis of one of the most prominent bills, S 408 (pdf). Another bill (S 1330) would raise Citizens' rates 25% and allow insurance companies to take your policy out of Citizens and charge you another 24.9%.

S 408 is return of last year’s major insurance bill, and nominally relates to sinkholes, but does much more. It is currently to be heard on the floor of the Senate and there are many amendments.  The House version (H 803) passed out of Insurance & Banking, and has two other committee stops.  Here’s what S 408 would do:

• Requires insurers to have $15 million in surplus funds to pay claims, up from $5 million;
• Reduces the insurer’s written notice of nonrenewal, cancellation, or termination to 90 days;
  
• Modifies replacement cost coverage so you only get “actual cash value” and get the replacement value when you produce receipts. You could still get the full replacement value policy you have today, but it will cost more.
  
• Requires windstorm and hurricane property insurance claims to be brought within three years and sinkhole loss claims to be brought within two years;
  
• Mitigation discounts are still in the bill, but watch out for amendments;
  
• Repeals the requirement that the Consumer Advocate prepare an annual report card for personal residential property insurers;
  
• Limits your ability to hire a public adjuster to help with your claim. Apparently, Citizens customers will still be allowed to use one.
• Insurers will not have to offer sinkhole coverage and probably won’t. But another bill (S 1330) requires Citizens to offer the coverage. That means a lot more policies in Citizens, but legislators said they wanted to do just the opposite. ???
• Revises what constitutes a sinkhole loss to make it much harder to collect.  This part is probably actually needed;
  
• Limits the authority of the Office of Insurance Regulation (OIR) to disapprove rates for sinkhole insurance, but they’re probably not going to offer it anyway, and if they do, the price will be sky high. Too bad for anyone living in Pasco or Hernando.
  

There’s a lot here and that’s only one bill. There’s lots of drama too, as amendments put things like “file and use” back in the bill. Just like last year, this is mostly a gift basket for insurers and FCAN opposes the bill.