And then there was one

Yes, folks, there is only one, S. 408 – the Sinkhole Bill. That’s the only property insurance bill that survives after the deadline for committees to meet. At this point, a bill would have to be amended on to something else to be passed, and that would need to happen in both houses.

We are down to the “horse trading” section of the legislative Session. That’s where powerful people, like the Senate President or the House Speaker, want something really badly, and they’re willing to give something up to get it. That’s Florida politics.

There could be several reasons for this unexpected outcome, if it holds.  Legislators were more focused on political work such as disenfranchising voters and packing the Supreme Court, rather than insurance. The budget is a huge problem consuming many hours. It is possible legislators plan to raise even more money from insurance interests ahead of next year’s elections.

S. 408 is still pretty bad. It takes rights away from consumers. For instance, we would be limited to three years to file claims instead of five.  It reduces our benefits – your “replacement cost” policy will only pay in full if you spend the funds to replace and present those to the insurance company.  Of course, you probably can’t or won’t do that, so your payout will be “actual loss” instead. Oh, you will still be able to buy a “true replacement value” policy that works like the one you have now, but, surprise, it will cost more.

Call Senator Jack Latvala and Senator Dennis Jones and tell them to fix S. 408. Ask them to vote “YES” on floor amendment 497744 by Senator Fasano to deal with replacement cost value and amendment 415180 by Senator Smith on time to file claims.

The current bill does one good thing – it extends “file and use” ratemaking. That means insurers have to get approval from OIR before raising your rates.

On sinkholes, insurers will have to offer coverage for complete collapse, but nothing else. Citizens will be required to offer sinkhole coverage. The effect would be to pile even more policies into Citizens, which I did not think was a goal of the legislature.  But insurers don’t want to offer that coverage and people have to get it somewhere.

Finally, the bill changes the name of Citizens Property Insurance Company to Taxpayer Funded Property Insurance Company. Now, I don’t think this new name accurately states the situation. It’s just a dig by legislators. And, in fact, Citizens has been making money since there have been no hurricanes for five years. It hasn’t made enough money, but if there are no storms it will continue to make money.  It only become taxpayer funded if there’s a really big storm and it has to assess everyone.  So, should it be named the “Possibly Taxpayer Funded, But Probably Not, Property Insurance Company (With Lower Rates)”?

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.