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Insurance

Florida has endured its share of hurricanes—namely Matthew, Hermine, Irma, and Michael—after a period of relative calm. While reinsurance partners have helped ease the blow of catastrophic events, Florida has been be plagued with several “non-catastrophic hurricanes,” such as Assignment of Benefits (AOB). Moreover, despite generally pro-business leadership, tort reform has still proved elusive, dampening our market’s full potential as it relates to liability insurance and workers’ compensation.

AIF has consistently worked to pursue a responsible insurance agenda that promotes competition, removes cost drivers, increases regulatory efficiency, embraces tort reform, and fosters stability for the benefit of the insurancebuying public. In 2019, AIF will maintain that commitment and focus on the following areas:

Workers’ Compensation

Although Florida’s workers’ compensation marketplace was dealt several curveballs from the Florida Supreme Court which pose a great risk to the litigiousness of the system, the rating system has yet to bear out the full brunt of the associated costs. Positive loss experience led the National Council on Compensation Insurance (NCCI) to file for multiple rate decreases in its most recent annual filings, although the industry is prepared for the full brunt of unchecked attorney’s fees to start to bleed into the system in the near future, eroding the moderating effects of these recent decreases. This means that AIF and its Workers’ Compensation Coalition will be persistent in monitoring the workers’ compensation marketplace as loss trends develop.

Consistent with our goal to inject predictability and commonsense litigation reform into all insurance markets, AIF SUPPORTS workers’ compensation proposals that further those objectives. Until that can be done effectively, AIF will closely and carefully track trends in the workers’ compensation marketplace to develop and propose future reforms that ensure Florida’s businesses do not suffer a devastating increase in the cost of doing business.

Assignments of Benefits (AOBs)

The abuse of the one-way attorney fee statute in relation to the “assignment of benefits” mechanism has spawned a relatively new creation of litigation over auto glass repairs and property damage. Sadly, these legal abuses are perpetrated by a handful of plaintiff’s lawyers and vendors who work together to strip benefits away from policyholders and use these to force higher settlements from insurers, and even go so far as to sue in the name of the policyholder, often without the policyholder’s full and informed consent. AIF SUPPORTS reforms to the assignment of benefits process to protect consumers against these abuses.

Residual Property Insurance Market

AIF applauds the governance of our residual market entities and will OPPOSE anything that depletes their capital, expands their interference with the private market, or fails to address persistent cost drivers.

Florida Hurricane Catastrophe Fund

The Florida Catastrophe Fund is a state-run program that provides reinsurance coverage. Its capable management over the last decade has allowed Florida to benefit from this reinsurance backup without the need to resort to assessments on private insurance policies. Despite this, some seek to change the operation of the CAT Fund to include more coverage at lower levels.

Expanding the size and scope of the Florida Hurricane Catastrophe Fund sends an unfortunate signal to private reinsurance markets that their capital is unwelcome. Policymakers should guard against efforts to adjust its coverages at the expense of depleting its cash build-up, making it more likely that Floridians and business owners could see another “hurricane tax.”

Citizens Property Insurance Corporation

Much like the CAT Fund, Citizens Property Insurance Corporation’s leadership has led to a dramatic, but positive, realignment of risk from the state to the private market. Citizens’ has, to the extent possible, attempted to return to its original goal of being an “insurer of last resort.” While the 10% rate cap, in conjunction with unfortunate market developments such as the proliferation of assignments of benefits (AOBs), created a tremendous rate need in pockets of South Florida, Citizens has been creatively trying to minimize costs to the state and policyholders by implementing programs that provide necessary services without the propensity for fraud and inflation, such as instituting a program where policyholders are encouraged to use preapproved contractors. While those who seek to profiteer off insurance claims have pushed back, AIF SUPPORTS the efforts of Citizens—as well as their private market counterparts— to address insurance cost drivers in the absence of legislative reforms.

Automobile Insurance

While most can agree that Florida’s no-fault automobile insurance, also known as Personal Injury Protection (PIP), has not operated as intended, consensus on how to fix the problem has been elusive. While bodily injury liability insurance has been embraced by a majority of states, Florida must be willing to embrace tort reform as part of any legislative solution promoted to Florida’s rate payers as a cost saving measure. AIF also recognizes the need to ensure that appropriate emergency medical care can be provided and reimbursed. AIF SUPPORTS solutions which provide for a simpler and more cost-effective system that also can provide necessary emergency medical care for Floridians, however AIF OPPOSES bills that seek to simply “ditch PIP” without a more comprehensive and thoughtful replacement, particularly if that replacement does not include a fix to Florida’s out of check common law bad faith gamesmanship.

Rental Car Liability

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 that subject 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 indus16 2019 AIF Session Priorities try, AIF will continue to OPPOSE these higher financial requirements which are at the expense of tourism industry stakeholders.

Automobile Lien Enforcement

Currently, towing companies and auto repair shops, among others, may impose a lien on automobiles for towing and storage charges, as well as unpaid repair costs. The current statute requires the lienor to give the auto owner, and all parties that have a financial interest in the auto, notice of the lien and the public sale of the auto to cover paying off the lien. AIF SUPPORTS legislation designed to curtail bad actor companies taking advantage of current Florida lien laws for personal gain.

Liability Insurance

Trial lawyers have devised a way to prevent juries from hearing the true cost of medical services by using what is called “Letters of Protection,” which allow trial-lawyer-backed doctors to inflate their “costs,” which then allows trial lawyers to inflate their attorney fees by inflating the overall award.

This trickery must be stopped, and it can be stopped it the most common sense of ways: allow juries to hear what things actually cost. This can be done by applying the plaintiff’s insurance coverage, by using a nationally recognized medical pricing database, or through various other methods. This medical gamesmanship orchestrated by the trial bar must come to an end, and facts must be able to prevail in the courtroom. As a result, AIF SUPPORTS accuracy in damages, which can only happen if the wayward use of Letters of Protection is reformed.

Health Insurance

In recent years, proposals that seek to make health care more expensive have proliferated in the Florida Legislature. These include limitations on effective step-therapy protocols, restraints on mail order pharmacy fills, restrictions on necessary formulary updates, and reforms that would inappropriately incentivize un-reimbursable care. AIF OPPOSES legislation that increases the cost of health care, or that discourages safe, effective, and proven methods that achieve cost savings without jeopardizing high quality health services or positive patient outcomes, and will continue to do so.

Further, consistent with the experience of many other states across the nation, Florida has experienced a severe opioid crisis. AIF SUPPORTS the efforts of our governor and political leaders to provide common sense solutions to this public health epidemic. These include limiting the availability of addictive opioids, promoting nonaddictive alternatives, and expanding access for opioid antagonists that can save lives, while promoting appropriate therapeutic care for victims.

Life Insurance

Life insurance is a product purchased to protect family members and loved ones upon passing. Akin to every other type of insurance, risk is a factor in how premiums are calculated for life insurance. Therefore, medical documentation is routinely reviewed before a life insurance policy is bound to ensure the appropriateness of the premium.

Recently, with the advent of genetic testing, some are advocating that such information not be included as part of a medical review. This creates a tremendous cost shift in the marketplace, and allows for adverse selection, which has the very real potential of creating significant rate distortions for premium payers. AIF believes that all insurers, due to their inherent business goal of covering risk, must be allowed to evaluate that risk before they then decide to risk its capital, which is supported by all other premium payers. Not doing so ignores the practical reality of insurance and creates market aberrations.

Dangerous Instrumentality

Florida’s Dangerous Instrumentality Doctrine (DID) was created in the early 20th century, a time where automobiles began traveling on public roads. The doctrine originally allowed for the imposition of liability for harm caused by a vehicle on the owner rather than the driver.

Through the years, the doctrine has been expanded by judicial fiat far beyond the borders of its original intent. It now applies to off-highway vehicles such golf carts, tractors, and construction equipment. The definition of a “dangerous instrumentality” and the circumstances in incidences where harm occurs, is continuing to expand without reason. The far-reaching bounds of the doctrine holds liable the owners or lessors for harm caused by an operator, even when the lessor is not in control of the equipment or vehicle at the time of the occurrence.

Other than constant criticism by commentators on Florida’s application of DID, there are other economic concerns to the business community that include attraction of new industry and the affordable expansion of existing business. If there is no legislative remedy, leasing companies of most vehicles in Florida will continue to suffer increased risks and costs through no fault of their own. Many lessors may have no choice but to eliminate equipment leases and only offer full purchases of equipment. This would drive up costs and eliminate financing flexibility, particularly for smaller contractors. Simply put, this form of vicarious liability is extremely harmful to the business community and may weaken Florida’s competitive edge. Florida is the only state in the country where DID is applied in this manner and AIF SUPPORTS the reforms being proposed in HB 355 and SB 862.