Florida - Thursday April 6, 2023: The Florida Senate Committee on Banking and Insurance Thursday passed a proposed bill aimed at making insurers more accountable and protecting consumers from unscrupulous insurance companies
The Insurer Accountability act, Senate Bill 7052, was introduced by Senator Travis Hutson (R-St. Augustine).
“This legislation continues our efforts to balance fair costs and protections for consumers, while strengthening state review and analysis of the insurance market, so that bad actors can be held accountable," said Senator Hutson. "We are expanding resources and tools that will help DFS and OIR better serve Floridians as well as the insurance companies doing business in our state."
The bill includes the following provisions:
Regarding insurance coverage, the bill:
- Prohibits authorized and surplus lines insurers from cancelling a property insurance policy during any pending claim until after repairs are complete
- Requires that Citizens Insurance cover property with open claims that are being handled by FIGA (Florida Insurance Guaranty Association)
- Prohibits the Office of Insurance Regulation (OIR) from waiving its review of policy forms for 3 years for any insurer that has violated the Insurance Code
- Provides that the prohibition on applying any other deductible under the policy if a roof deductible is applied encompasses any other loss to the property caused by the same covered peril
- Tolls the time period for filing a property insurance claim during an insured’s active duty military service
- Clarifies legislative intent that Chapter 2022-271, Laws of Florida, passed during Special Session A in December 2023, (SB 2-A [2022] on Property Insurance) shall not be construed to impair any right under an insurance contract in effect on or before the effective date of that chapter law (December 16, 2022)
- Clarifies that the provisions of do not impair rights under policies in effect before the act’s effective date
Regarding rates charged for insurance, the bill:
- Requires that property insurance and motor vehicle rate filings must include, and the OIR must consider in reviewing rates, the combined effect of recent legislative reforms
- Appropriates $500,000 from the Insurance Regulatory Trust Fund for OIR to obtain an actuarial study to implement this requirement
- Requires that property insurance mitigation discounts be updated at least every 5 years and insurers to provide consumer-friendly information on their website describing hurricane mitigation discounts available to policyholders
- Makes title insurance rates subject to OIR rate review
Regarding insurer claims handling, the bill:
- Requires OIR to ensure liability insurers are complying with proper claims handling practices by following specified best practices
- Creates a 60-day prompt-pay law for non-PIP motor vehicle insurance claims similar to the prompt pay law for residential property insurance claims
- Requires insurers to annually submit their claims manuals to the OIR and attest that the manual comports to usual and customary industry claims handling practices
Strengthens the Unfair Insurance Trade Practices Act by:
- Prohibiting altering or amending an adjuster’s report without including a list of changes, who made the change, and an explanation of a change that reduces coverage
- Prohibiting payment of bonuses to officers and directors while an insurer is impaired or insolvent.
Regarding regulatory oversight of insurers, the bill:
- Increases maximum administrative fines by 250 percent generally, and 500 percent for violations stemming from a state of emergency such as a hurricane
- Requires insurers to more promptly respond to the Department of Financial Services (DFS) Division of Consumer Services and increases fines for noncompliance
- Provides additional funding for the DFS Division of Consumer Services:
- Appropriates five positions with associated salary rate of 325,000 and the sum of $494,774 in recurring funds and $23,410 in non-recurring funds to the DFS from the Insurance Regulatory Trust Fund - Specifies objective criteria to be used by OIR to:
- Prioritize necessary financial and market conduct examinations
- Determine when payments to affiliates are excessive - Provides conditions whereby the OIR must initiate a market conduct examination
- Requires insurers to report to the OIR any temporary suspension of writing new policies
- Applies the standard order that OIR issues to protect consumers after hurricanes to surplus lines insurers
- Specifies that insurance fraud referrals may be made to the statewide prosecutor for crimes that impact two or more judicial circuits
- Requires additional reporting from regulators regarding their enforcement actions