January 17, 2007

ACCOUNTABILITY IN INSURANCE

Tallahassee- This afternoon the Florida House of Representatives passed House Bill 1A. This multi-faceted bill is designed to hold the insurance industry accountable for the decisions made that affect Florida citizens. One major aspect of this legislation requires an oath of truth, with penalties of perjury, for rate filings. This removes plausible deniability for executives in the insurance industry.

Rep. Greg Evers (R-Milton) began this movement of responsibility just under a year ago when he first proposed this language.

“The insurance company does not mind asking for more money,” stated Rep. Evers, “I don’t think they should mind certifying what they say is true.” “This language insures that the information the insurance industry provides to government officials is factual and true under the penalty of perjury.”

The bill is now in the Senate awaiting action. This bill and several other measures passed the House of Representatives and are listed below:

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Insurance Industry Accountability and Consumer Protection Act (HB 1A)

Passed unanimously

• Prohibits the formation of any future Florida-only pup insurance companies.
• Eliminates the practice of “cherry-picking” by requiring that any insurer that offers homeowners policies in other states and offers any other line of insurance in Florida must also offer homeowners insurance in Florida.
• Requires the Office of Insurance Regulation to consider the profitability of national affiliates during the rate review process for current Florida-based subsidiaries.
• Requires a signatory oath of truth with a penalty of perjury on all insurance company financial documents filed with the state.
• Prohibits excess profits by property insurers and requires return of excess premiums to policyholders.
• Requires insurers to use the storm-worthiness of homes rather than the date of construction to determine risk.
• Allows a homeowner to exclude personal contents coverage from their insurance policy, thereby allowing a reduction in premium.
• Allows any homeowner to select insurance coverage limits equal to the outstanding balance of their mortgage, thereby allowing a reduction in premium. 

The Homeowners Rate Reduction Act (HB 3A)

Passed unanimously

• Creates lower cost reinsurance options through the State’s CAT Fund.  This provision is estimated by the Florida Office of Insurance Regulation to reduce total residential property insurance premiums by 33-38%.
• Requires insurers who purchase low cost reinsurance through the CAT Fund to pass 100% of savings onto consumers and guarantee at least a 25% overall savings to consumers.
• Suspends the rapid cash buildup provision to the CAT Fund which would immediately result in a 3% savings for consumers.

The Citizens Reform and Private Market Restoration Act (HB 9A)

Passed unanimously

• Calls for replacement of Citizens Board of Directors.
• Repeals the January 1, 2007 Citizens rate filing and refunds any premium already paid. Freezes rates at 12/13/06 level for 2007.
• Requires Citizens rates to be actuarially adequate, but no longer requires Citizens’ rates to be the highest in the market.
• Eliminates the reinsurance factor in calculation of Citizens rates, eliminating an estimated 56% increase in expected increases.

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• Suspends the provision in law which allows insurance companies to automatically raise rates without review.

Home Enhancement and Loss Prevention (HELP) Act (HB 5A)

Passed unanimously

• Authorizes $100 million from Florida Small Cities Community Development Block Grant Program Fund to Hurricane Damage Mitigation Program for home storm-proofing.
• Improves and enhances program to receive storm-proofing grant dollars to homeowners sooner.
• Ensures agents and insurers provide homeowners with specific information about mitigation premium discounts. Includes a continuing education requirement for agents.
• Creates a uniform grading system for evaluating hurricane strength of homes.

The Uniform Building Code Act (HB 7A)

Passed unanimously

• Eliminates current regional exemptions to the Uniform Building Code.
• Prohibits future changes to the building code unless the changes enhance the structural integrity of the code as it relates to wind protection.
• Requires the Florida Building Commission to develop voluntary “code-plus” guidelines for increasing the hurricane resistance of buildings, modeled on the Miami-Dade building code.

House National Memorial on Federal Solutions (HM 11A)

By Deputy Majority Leader Adam Hasner

Passed unanimously

• Advocates creation a National State Summit on Property Insurance between Florida, other high risk states, and elected and appointed leaders from the federal government.
• Renews Florida’s commitment toward the creation of a National Catastrophe Fund.
• Renews Florida’s commitment toward amending Internal Revenue Service code to allow tax-deferred hurricane reserve accounts.
• Renews Florida’s commitment toward amending Internal Revenue Service code to allow Hurricane Savings Accounts.
• Establishes Florida’s commitment toward amending Internal Revenue Service code to allow personal income tax deduction for home mitigation.
• Supports the National Hurricane Research Initiative 

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