Florida lawmakers have new plan for insurance crisis: ‘Insurer liability’

TALLAHASSEE — After years of giving Florida homeowners insurance companies pretty much what they wanted In an effort to stop skyrocketing premiums and insurer bankruptcies, lawmakers introduced a new approach this week: “underwriter’s liability.”

This is the title of a new bill which would increase fines for bad behavior by insurance companies, require them to report more information to the state and follow “best practices” for handling claims.

Property insurance companies will also be prohibited from evicting a policyholder until repairs are completed on their home.

“If there are bad actors, we will hold them accountable,” said the bill’s sponsor, Sen. Travis Hutson, R-Elkton.

Hutson said the bill aims to bring a “healthy balance” to oversight of the state’s insurance market.

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On Wednesday, a Senate committee voted in favor of the bill, but not before hearing lobbyists and insurance industry groups speak out against it.

“(We) just want to make sure we’re really going after the bad actors and not the whole insurance industry as a whole,” said Carolyn Johnson, senior director of the Florida Chamber of Commerce, which counts insurance companies among its members.

“New Sheriff in Town”

The legislation is confirmation that insurance companies have been treated lightly by state regulators, who routinely approve companies’ rate filings and advocate for making it harder to sue insurers.

The former commissioner of the Office of Insurance Regulation, David Altmaier, has become an insurance industry lobbyist and joined the board of directors of a Bermuda-based reinsurance company after leaving the post in December.

The state’s elected chief financial officer, Jimmy Patronis, oversees insurance fraud and complaints against insurers while collecting nearly $2 million in campaign contributions from the industry. After a spike in complaints against insurance companies after Hurricane Ian, Patronis’ office limited the state complaint hotline to just three hours a day, citing limited staffing.

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The new Commissioner of the Office of Insurance Regulation, Mike Jaworski, is Altmeier’s former chief of staff. Hutson said he is interested in holding insurers accountable.

“We have a new sheriff in town … who really wants to go after these guys,” Hutson said of Jaworski. “Some of that language came directly from him when he said, ‘I need more tools in the toolbox.’

According to SPB 7052:

  • Insurers will be required to report their claims handling policies to the state.
  • Fines against insurers will increase from a maximum of $20,000 to $100,000 for “inadvertent” violations and from a maximum of $200,000 to $1 million for “willful” violations.
  • Regulators will have wider powers to carry out checks on the conduct of insurers.
  • Insurers will be banned from paying bonuses to officers and directors while an insurer is impaired or insolvent.
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Patroni’s office will get five new positions, and Hutson said he wants to assign more resources to the Office of Insurance Regulation, per Jaworski’s suggestion.

The changes did not result in lower rates

The legislation also targets specific actions by insurers to undermine the payment of claims.

During one of last year’s special legislative sessions to address the property insurance crisis, lawmakers removed the requirement that insurers pay the policyholder’s attorneys’ fees if the policyholder sued them and won. It was the latest change by lawmakers to make it harder for homeowners to sue their insurers after companies complained that lawsuits were driving up rates.

Insurance companies have since argued in court that the provision is retroactive and applies to policies that were in effect before the legislation was passed. SPB 7052 clarifies that the provision is not retroactive.

It also examines allegations made by several private adjusters working for insurance companies who said insurers manipulated their reports to pay homeowners less for their claims. The charges were reported a Washington Post story last month.

The bill would require insurers to document all changes in the regulator’s report and include the name of the person who ordered the changes.

Recent legislative reforms have not yet resulted in lower rates. In recent weeks, First Community Insurance Co. requested a total increase of 44.8%, Kin Insurance Network requested a total increase of 61.5%, and American Strategic Insurance Corp. and ASI Preferred Insurance Corp. they asked for an almost 20% increase in interest rates.

During rate hearings for First Community Insurance and Kin Insurance, company representatives said the recent legislation still hasn’t made sense effect on rates.

According to the bill, insurers will be obliged to calculate in their declarations the effect of the latest legislative changes.

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