The Home Insurance Guru

By Timothy J. Meenan, NAIFA-Florida Lobbyist

Please call L & S Insurance at 1-888-244-7400 for free quotes on Home Insurance, Auto, Flood, Private Flood, Business & Commercial & Life & Financial products as well.

Today officially marks day 50 of the regularly scheduled 60-day legislative session. The 50th day marks the last day for regularly scheduled Senate committee hearings by rule; the House does not have the same rule, but has historically followed the same timeline. There has been much discussion regarding when the chambers would begin the budget process, but they have not entered budget conference at this point. The House and Senate seem to remain at odds regarding the budget, which could shape the timeline of the rest of session.

AOB Reform SB 1038 (Hukill); HB 1421 (Grant); SB 1218 (Farmer) The House Commerce committee approved a committee substitute for HB 1421 last week. The CS was heard on second reading this morning on the floor. Representative Jenne attempted to add on a rate rollback amendment, but was unsuccessful. We anticipate the bill will be heard on final passage in the House and be sent to the Senate this week. The CS does the following: A. Makes assignments invalid if they don’t comply with the new requirements. B. Requires assignments to be in writing and executed by an insured and the assignee. C. Allows a rescission of the AOB by the insured for any reason within 7 days of the insured having executed the assignment. D. Requires the assignment to be sent to the insurance company within 3 business days after the date the assignment is executed or work has begun, whichever is earlier. E. Requires assignments to include a written cost estimate for the work to be performed. Requires work done by water remediation companies to be certified in a class approved by the American National Standards Institute. F. Contain a notice to the consumer that the AOB might result in litigation, and explaining the right to rescind in 7 days. G. Assignments cannot contain mortgage or check processing fees, penalties for rescission, or other administrative fees. H. Requires the assignee to prove that the insurer is not prejudiced if the assignee fails to maintain records of all services, cooperate with the insurer in the investigation of the claim, and providing the insurer with all requested records, or failed to deliver the new assignment within 3 business days. I. Assignees must provide additional updates on supplemental repairs as they are required. J. Assignees must perform the work in conformance with accepted industry standards. K. Assignees cannot seek payment for amounts denied from the insurer from the insured. L. Assignees must submit to EUO’s, participate in insurer required appraisal or alternative dispute resolution methods required in the policy. M. Assignments do not interfere with any managed repair requirements in law or the policy. N. Assignees must provide a written notice of intent to initiate litigation 10 days before filing suit, and include a specific pre-suit settlement demand, including a detailed written invoice and estimate including all labor and materials, etc. O. Insurers must respond to the 10-day notice of intent to initiate litigation within 10 days by making a pre-suit settlement offer. P. If the difference between the judgment obtained and the difference between the pre-suit demand, and the pre-suit offer is less than 25%, the insurer is entitled to an award of reasonable attorney fees. If the difference is at least 25 percent, but less than 50 percent, no party gets attorney fees. If the difference is greater than 50 percent, the assignee gets attorney fees. In calculating this requirement, the judgment cannot include interest, attorney fees, or costs, and only includes the damages recovered. Q. If an insurer fails to inspect the property, or provide written or verbal authorization for the repairs within 7 days of the first notice of loss, the insurer waives the right to an award of attorney fees. This section is waived if a claim is the result of an event where the governor declares a state of emergency. R. Starting in January 2020, and each year thereafter, the OIR must do a data call requesting AOB claims. Data includes data about claims adjustment and settlement timeframes, procedures, trends, litigated versus non-litigated loss adjustment expenses, and amount and type of attorney fees incurred or paid. S. Policies may not prohibit the post loss assignment of benefits. Industry input, including Citizens Property Insurance Corporation and the major homeowners’ insurers are that this bill is a good faith attempt to fix the problem, and appears to have the support of the majority of insurers. The plaintiffs’ bar absolutely hates the bill and is attacking it, so that tells you something. The senate bill, which is SB 1218 filed by Senator Farmer, is extremely unfriendly to insurers, does not contain any attorney fee reform language, requires insurers to eliminate the costs of attorney fees on cases they lose from being a part of the base rate, and essentially ends the ability to utilize a managed repair program or to invoke the right to repair on a particular claim. The Senate bill supported by the industry, SB 1038 by Senators Hukill and Passidomo, was not given a hearing in Senate Banking and Insurance, its first committee of reference. We do not believe the Senate will take the house bill, but we are working with the Governor to see if we can get this bill heard on the full senate Floor, where we might have a chance, with the Governors help, to get 21 votes.

Flood Insurance SB 420 (Brandes); HB 813 (Lee) SB 420 and HB 813 mandate that the Florida Commission on Hurricane Loss Prevention Methodology to revise hurricane loss prevention models every four years. The House and Senate bills differ in two respects. First, the House bill requires a surplus lines insurer to be rated by A.M. Best in order to be eligible to write flood policies without a diligent effort and the Senate bill requires a rating from any rating agency acceptable to the OIR. Second, the House bill allows flood insurance policies to be exported to the surplus lines market without a diligent effort only until July 1, 2025 and the Senate bill allows this for an indefinite period. HB 813 has one remaining committee stop, Commerce, before it can head to the floor. The Senate bill was heard by the Senate Community Affairs Committee and passed with a committee substitute. Senator Brandes filed an amendment the night before the bill was to be heard by the Rules Committee. The amendment would require certain National Flood Insurance Program disclosures be provided to and acknowledged in writing by the applicant within 21 days after the NFIP policy expires, and eliminates the requirement altogether if Congress ends the practice of requiring a consumer be charged the full risk rate if they leave the NFIP, and thereafter attempt to re-enter the NFIP. SB 420 was passed out of the Rules Committee and placed on the calendar for second reading. The House bill is slated to be heard today on second reading by the full House.