During a recent property insurance special session, Governor Ron DeSantis, Senate
President Kathleen Passidomo, House Speaker Paul R enner, and the bill sponsors, Senator Jim Boyd, Representative Tom Leek, and Representative Bob Rommel, championed reform legislation that increases consumer choice and consumer protection.
Senate Bill 2A and House companion 1A make great strides to ensure Floridians can access property insurance while targeting frivolous lawsuits and protecting consumers during the claims process. Consumer-friendly reforms aimed at ending abuse litigation practices in Florida’s property insurance market include:
Attorney Fees – eliminates one-way attorney fees in suits arising in residential
or commercial property insurance.
Assignment of Benefits (AOB) – eliminates a policyholder’s ability to execute
an AOB for all property insurance policies (but maintains an existing carve-out
for seller-to-buyer AOB related to an ongoing insurance claim).
Bad Faith – requires a breach of contract before a policyholder can sue a
property insurer for settlement-related bad faith; acceptance of an offer of
judgment or the payment of an appraisal award, alone, is not sufficient to
support a lawsuit.
Offer of Judgment – makes attorney fees available for the prevailing party in
offers of judgment (proposals for settlement) in property insurance cases;
allows joint offers of judgment to be contingent on the acceptance of all joint
offerees.
Florida Optional Reinsurance Assistance Program (FORA program) –
creates a program that provides optional hurricane reinsurance that property
insurers can purchase at near market rates. The FORA program is funded with
$1 billion in general revenue for the 2023 year and is supplemented by the
premium insurers pay for coverage.
Notice of Claim – reduces the time limit for providing notice of a loss to a
property insurer from two years to one year for initial or reopened claims and
from three years to 18 months for supplemental claims.
Claims Investigation and Prompt Payments – changes the prompt pay
statute to encourage property insurers to settle claims in a timely manner;
requires the Office of Insurance Regulation (OIR) to collect certain additional
data.
Mandatory Binding Arbitration – codifies that companies, for a premium
discount, may issue an optional endorsement with consent from the
policyholder that requires participation in binding arbitration to settle a claim.
Notice to Policyholders – requires that a property insurer place the “Flood
Coverage Not Included” statement on the policy declarations page rather than
just “with the policy documents.”
Office of Insurance Regulation (OIR) – enhances OIR’s ability to do market
conduct examinations of property insurers after a hurricane, including
examinations of managing general agents; allows OIR to discipline insurers for
abuse of the appraisal process; adds information regarding the use of appraisal
to the list of information that a property insurer must include in its quarterly
reports to OIR; allows OIR to review property insurers’ forms, withdraw
approval, and suspend an insurer’s ability to invoke appraisal for up to two
years; requires OIR to add the names of insurers who abuse the appraisal
process to its Property Insurer Stability Unit biannual report and post those
names to its website; at OIR’s option, allows additional time for agents to place
policyholders during insolvencies.
Citizens Property Insurance Corporation (Citizens) – for renewals and take-
out offers (depopulation), establishes that if a renewal or take-out offer from an authorized insurer is within 20 percent of a policyholder’s Citizens premium,
including surcharges and assessments being levied, a policyholder is in
ineligible to remain in Citizens; for new policies, establishes that the risk is
ineligible for Citizens coverage if the admitted-market policy is within 20 percent
of a policyholder’s Citizens premium; requires Citizens residential lines
policyholders to obtain flood insurance as a condition of having coverage from
Citizens by 2027; provides a different glidepath for the rates that Citizens
charges non-primary residents so that those policies become actuarially sound
more quickly; authorizes Citizens to combine its three policyholder accounts into
a single account upon eliminating all outstanding financing obligations to allow
Citizens to use its entire surplus to pay claims.
If you have questions about the current insurance market here in Florida, the special session, or your policy, please contact us at singhinsurancegroup.com or send us an email info@singhinsurancegroup.com