Florida has a dynamic, challenging, and vast insurance marketplace. Legal issues persist in all markets and, despite the state’s good fortune regarding hurricanes, property insurance cost drivers abound. AIF will continue to push a responsible insurance agenda and support initiative that continue to address cost drivers, increase regulatory efficiency, and foster stability for the benefit of the insurance-buying public.
In November 2015, the Office of Insurance Regulation issued an order lowering workers’ compensation rates by 4.7%. Since the historic reforms of 2003, Florida workers’ compensation rates are over 50% lower than they were more than a decade ago, and the market is competitive and sustainable. Despite some successes in the courtroom, the business community needs to remain vigilant in the face of continued challenges to the workers’ compensation system’s exclusive remedy and attorney fee provisions.
These particular provisions account for a large portion of the premium savings. AIF is on the front lines of a coordinated and well-developed response to the many challenges by the trial bar. AIF SUPPORTS Florida’s current workers compensation law and any proposed change to the workers’ compensation system—in the courtroom or the Legislature—will be evaluated through the prism of coverage affordability, market stability, and employee safety.
While the personal lines automobile market avoided a meltdown in 2012 when personal injury protection (PIP) was reformed, providers and attorneys continue attempts to erode protections that help control costs. Specifically, third party bad faith continues unrestrained, with attorneys taking advantage of the lack of legal structure to intentionally manipulate and impede the claims process. Additionally, some of the PIP problems—with third parties stripping benefits away from policyholders and asserting such benefits in their own right—have bled over to comprehensive collision coverage, resulting in a sharp increase in litigation, brought by a small subset of providers, over auto glass claims. Despite failed legislative attempts last year, uncertainty surrounding insurance requirements for ridesharing providers remain. As ridesharing becomes more popular, these safety and liability questions must be resolved. AIF will continue to advocate for smart reforms to Florida’s automobile insurance market.
Given AIF’s historic commitment to promoting Florida as the best state in which to live, work, and play, proposals that could hinder or impede services to tourists must be carefully scrutinized. Previously, legislation subjecting rental car companies to higher minimum financial responsibility levels—essentially increasing liability for their customer’s actions—was appropriately rejected. This legislation also sought to impose higher financial responsibility requirements on tourists who reside in other states or countries. Given the punitive effects on tourists and the rental car companies who support Florida’s tourism industry, AIF will continue to OPPOSE these higher financial requirements, which are at the expense of tourism industry stakeholders.
Citizens Property Insurance Corporation has consistently reduced its policy count, a nod to sound, free-market reforms enacted by legislative and executive branch leadership. As such, the corresponding risk of assessments to all Florida policyholders—individuals and businesses alike— has been minimized. Unfortunately, segments of certain industries have devised schemes to contrive, or increase the price of, repair work for non-catastrophic claims. This typically involves stripping the policyholder’s benefits, which are then given, oftentimes irrevocably and in total, to a third party. Such “assignments of benefits” have created a wave of litigation unseen even during periods of natural disaster. It is critically important to be on guard for market distortions like this to ensure that the problem does not increase costs in the absence of hurricanes, or become magnified when a natural disaster strikes, creating potentially crippling economic effects. AIF SUPPORTS steps to shrink Florida’s residual market and lessen property insurance cost drivers, and will actively oppose anything that undermines the health of the private property insurance market.
AIF SUPPORTS all efforts to stamp out cost drivers and control attorneys’ fees for the benefit of premium payers statewide. Last year, legislation introduced in both chambers sought to cut down on AOB abuse. Predictably, it was met with significant opposition from those who currently profiteer on asserting policyholder benefits as their own. Working together, these vendors and attorneys conspire to inflate claims and rack up attorneys’ fees. In October, the Office of Insurance Regulation (OIR) released cost information about data call seeking, a fairly new and inventive scheme. AIF looks forward to working with stakeholders, regulators, and legislators to advocate for policyholder benefits to remain intact and for common sense regulations with regard to notifications, communications, the provision of estimates, and policyholder consent.
AIF SUPPORTS continued focus on reducing the reliance on Florida’s residual market entities, Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund. These entities, designed to insure risks that the private market cannot cover and allow for reinsurance on a tax-preferred and economical basis, must continue to be evaluated and reviewed to ensure they continue to meet their narrow and targeted purposes. Most importantly, they must carefully scrutinize any situation where their roles may bleed over into the private market or no longer fill a void from the private market. Florida’s leadership has done a very effective job of narrowly tailoring these entities’ responsibilities, and AIF looks forward to continuing to work with these leaders in that endeavor.
AIF expects that certain life insurance speculators will again try to undo established case law requiring an insurable interest in a life insurance policy. Instead, these speculators will attempt to ease restrictions on the ability for “strangers” to originate a life insurance policy on another person as an investment tool. These Stranger Originated Life Insurance (STOLI) arrangements will continue to be disavowed by the insurance community as a predatory practice that undermines the integrity of the insurer/ insured relationship. This year, legislation has been filed to regulate viaticals and practices related to purchases of life insurance policies by third parties. This legislation requires certain disclosures by viatical settlement providers to the OIR, cracks down on fraudulent acts by viaticals, and requires specific financial disclosure to violators’ attendant to executing such a contract. AIF SUPPORTS legislation to ensure that third parties cannot profiteer from the life insurance policies of strangers, which is necessary to establish reasonable bounds in currently unrestrained territory.
Over the years, Florida’s common law regarding how insurers’ handle claimants who seek windfall recoveries in excess of policy limits has evolved to allow lawsuit gamesmanship that pierces policy limits even when no objective “bad faith” occurs. Left uncorrected, then litigious practices threaten the availability and affordability of insurance. AIF will continue to advocate for a bill that sets clear rules as to what good faith dealings are to ensure certainty and fairness for all parties.
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