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Thursday, April 05 2018
With over 900 items on the Florida legislative docket and only 60 days to consider them, it’s not surprising that many bills simply die in committee or are never seriously considered. Add to that a tragic event right in the middle of the session and what you get are shifted priorities. What was important becomes now relegated by something new.
The shooting that happened on Feb. 14, 2018 at Marjory Stoneman Douglas High School in Parkland, Fla., that left 17 people dead led to an uprising of popular support for changes to gun laws in Florida and created this shift in priorities for the Florida Legislature.
Suddenly, the problems in the Florida insurance market became much less important than other issues.
“We had one of the worst tragedies in Florida history drop in our lap,” said Democratic Rep. Jared Moskowitz, a Stoneman Douglas graduate and a lawmaker who was key in helping pass a school safety bill, as reported by The Associated Press. “What happened in the first five weeks of session, I don’t even remember.”
In light of that, there are several insurance-related bills that didn’t make it this year, though they also faced stiff opposition from outside the industry as well.
Assignment of Benefits
For a sixth straight year, the Florida legislature failed to consider reform for assignment of benefits (AOB) abuses associated with water loss claims (not related to weather events).
A homeowner has a water leak and they call a company that promises to repair the leak and all of the damage that the leak created. That’s when they ask the customer to sign the assignment of benefits.
An assignment of benefits allows a contractor to get paid directly by the insurance company, rather than the money being paid to the insured customer. In theory, this system should make the completion of repairs and payment of claims faster. What actually happens at times is that the contractor makes repairs beyond what the insurance company would normally agree to pay. The numbers indicate that there is a rise in these claims and the amounts that are being paid out because of them.
This year’s bill, SB 62, was first introduced to the Senate in August. It was sponsored by Sen. Dorothy Hukill (R-Port Orange) and had the support of both the Florida Property & Casualty Association and the Florida Office of Insurance Regulation.
The bill created several requirements for an assignment of benefits agreement to be considered valid by an insurer, including a provision that allows named insureds to rescind the agreement within seven business days of signing it and a provision that required the assignee (contractor) to provide a copy of the agreement to the insurer within three business days of executing the agreement.
It also made several fee provisions of assignment agreements unenforceable, including a penalty or fee for rescinding the agreement, administration fees and check or mortgage processing fees.
Another assignment of benefits bill, SB 1168, sponsored by Sen. Greg Steube (R-Sarasota) made it out of the Banking and Insurance committee, but died in the Rules committee. This bill included several of the same provisions as SB 62, including the seven-business day rescission period and prohibition on certain fees.
The bill went farther than SB 62 in stating that insurers may not restrict the assignment of post-loss benefits; may not require that a particular vendor make repairs; may not recommend or suggest a particular vendor for repairs unless requested by an insured.
What Does This Really Mean?
It means that for another year, the insurance consumers of Florida will be asked to absorb the rising costs of these claims.
According to a policy study completed by R Street, “AOB lawsuits in Florida are up 90,000 percent since the turn of the 21st century.”
The Consumer Protection Coalition, a group of business leaders, consumer advocates, real estate agents, construction contractors, insurance agents and insurance trade groups fighting for reforms to AOB abuse, said the number of lawsuits involving an AOB grew from 405 in 2006 to more than 28,000 in 2016 – an increase of more than 6,800 percent. Last year, 20,000 lawsuits were filed as of July.
“Without a legislative remedy, this problem will lead to an increase in homeowners insurance premiums and lack of consumer choice as insurers stop writing or renewing policies in areas with high water losses,” Florida Insurance Commissioner David Altmaier said in January.
Two bills related to windshields were introduced this year – SB 396 and HB 811 – were both written to address different problems with coverage for damage to windshields, a form of AOB abuse that the industry has dubbed “auto glass.”
Florida law requires that auto policies provide comprehensive coverage without a deductible.
HB 811, sponsored by Rep. Rene Palsencia (R-Titusville), would have allowed insurers to require an inspection of the windshield before authorizing repair or replacement.
SB 386, sponsored by Sen. Rene Garcia (R-Hialeah), was originally filed for a similar purpose, but after several amendments in committee, it was rewritten to address incentivizing customers to file fraudulent auto glass claims.
Both of these bills were designed to reign in auto glass claims fraud and lawsuits that have been rising at an alarming rate.
According to the Florida Department of Financial Services, in 2006, approximately 400 auto glass AOB lawsuits were filed against auto insurers. In 2016, nearly 20,000 lawsuits were filed.
SB 150, introduced to the Senate by Sen. Tom Lee (R-Brandon), would have repealed the Florida No-Fault Law. Currently, vehicle owners are required to maintain personal injury protection (PIP) coverage, but not liability for bodily injury.
This bill would have changed that requirement so that owners would have to maintain coverage for bodily injury and property damage, removing the requirement to maintain personal injury protection and replacing it with a requirement to maintain medical payments coverage.
SB 90, sponsored by Sen. Keith Perry (R-Gainesville), would have made amended the law related to texting and driving. Currently, a police officer cannot stop a driver just for texting. It is considered a secondary offense. This bill would have allowed officers to stop drivers specifically for texting and driving.
Is This That Important?
Florida lawmakers have been working on personal injury protection (PIP) reform for the last several years. A significant change within the last few years has been to place a time limit to make the first claim for PIP benefits.
Florida law currently allows most drivers to only carry PIP coverage and property damage liability, where most states require a minimum amount of liability coverage for bodily injury as well as property damage. Since this bill did not pass, the old system is still in place.
Many of these bills had made it past one committee or another and ended up stalling in part because of the shift in legislative focus.
But while the events of February 14 played a part in the legislative priorities, it may not be the only reason that these insurance reforms were not passed. After all, the legislature did pass the Daylight Savings Time bill to keep Florida on Daylight Savings Time.