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Florida Senate Passes Insurer Accountability Package

Businessman drawing protective and car, family, life and health insurance icons. Insurance concept.
Worawut -
Businessman drawing protective and car, family, life and health insurance icons. Insurance concept.

Florida - Monday May 1, 2023: The Florida Senate has passed Senate Bill 7052 on Insurer Accountability. The legislation contains various provisions intended to increase consumer protection and insurer accountability in Florida.

The measure was sponsored by Senator Travis Hutson (R-St. Augustine), Dean of the Senate,

“A healthy insurance market results in a wide array of consumer choices, competition on price and coverage options, and insurers that are financially strong and able to promptly pay the full value of claims. Unfortunately, due primarily to excessive litigation, Florida’s insurance market has grown increasingly unhealthy. Many property insurers have gone insolvent, left the state, or reduced their willingness to write new policies,” said Senator Hutson.

“This bill seeks to provide the proper balance between insurers and policyholders. It makes certain that insurers will be held accountable if they do not meet the obligations of their contracts. 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,” continued Senator Hutson.

Regarding rates charged for insurance, the bill:

  • Requires property insurance and motor vehicle rate filings to include, and the Office of Insurance Regulation (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 property insurance mitigation discounts to be updated at least every 5 years.
  • Requires insurers to provide consumer-friendly information on their website describing hurricane mitigation discounts available to policyholders.

Regarding insurer claims handling, the bill:

  • Requires liability insurers to follow proper claims handling practices on behalf of their insureds;
  • Requires residential property insurers to create and use claims-handling manuals that comply with the Insurance Code and, at a minimum, comport to industry standards;
  • Allows OIR to request a claims handling manual at any time and requires each property insurer to attest that their claims manuals comply with Florida law and that the insurer is able to properly implement their manual; and
  • Strengthens the Unfair Insurance Trade Practices Act by:
    • Prohibiting any altering or amending of an adjuster’s report without providing a detailed explanation as to why any change that has the effect of reducing the estimate of the loss was made. The insurer must also either create a list of changes and who made the change or retain all versions of the report.
    • Prohibiting officers and directors of impaired or insolvent insurers from receiving a bonus from that insurer or other entity under common ownership with that insurer.

Regarding regulatory oversight of insurers, the bill:

  • Requires OIR, if it has reason to believe that any criminal law may have been violated, to forward relevant records and information to the Department of Financial Services (DFS), law enforcement, or prosecutorial agencies, as applicable, and for OIR to provide investigative assistance as required;
  • Specifies factors OIR may consider in determining whether the continued operation of an insurer may be deemed hazardous to its policyholders, creditors, or the general public. This part of the bill also specifies actions OIR may take in determining an insurer's financial condition and actions OIR may order an insurer to take in an effort to improve the insurer’s financial condition;
  • Increases maximum administrative fines that may be levied by the OIR on insurers 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 DFS Division of Consumer Services and increases fines for noncompliance;
  • Increases staffing for the DFS Division of Consumer Services by appropriating funding for 7 full-time equivalent positions;
  • Increases staffing at the OIR by appropriating 18 full-time equivalent positions;
  • Specifies objective criteria to be used by OIR to prioritize necessary financial and market conduct examinations. The amendment requires that OIR conduct financial examinations of high-risk insurers once every 3 years, rather than every 5 years as under current law;
  • Provides conditions whereby the OIR must initiate a market conduct examination after a hurricane;
  • Requires property insurers to report any temporary suspension of writing new policies not caused by a hurricane or a natural emergency to the OIR;
  • 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; and
  • Requires the state attorney or other prosecuting agency having jurisdiction to inform the DFS of the reasons why prosecution of an insurance-related criminal referral has been declined.