Titular de Insurance Insights
Volume 2, No. 4 - May 2013

In The Know

- Keeping you informed is what it's all about

2013 Legislative Session Roundup

The information below is only summarized portions of some bills passed during this year's legislative session that affect our licensee population. It is not intended to be a guide or interpretation of law. Please review the Florida Senate's website del Centro Nacional de Huracanes o la House of Representative's website for the full language of the laws that were passed.

CS/SB 1770 - Property Insurance

The bill makes the following changes to the Florida Hurricane Catastrophe Fund, Citizens Property Insurance Corporation, and Public Adjusters:

Florida Hurricane Catastrophe Fund (CAT Fund)

  • Renames the "Florida Hurricane Catastrophe Fund Finance Corporation" to the "State Board of Administration Finance Corporation."
  • Extends the CAT Fund assessment exemption for medical malpractice until May 31, 2016.
  • Repeals outdated language for the $10M additional coverage for specified insurers and the Temporary Emergency Options for Additional Coverage.
  • Requires the CAT Fund submit to the Legislature and Financial Services Commission an annual Probable Maximum Loss (PML) report for the upcoming storm season.

Citizens Property Insurance Corporation (Citizens)

  • Exempts Citizens from "exchange of business" restrictions to facilitate the operations of the clearinghouse.
  • Adds a professional structural engineer to the Florida Commission on Hurricane Loss Projection Methodology.
  • Reduces the maximum Citizens' policy limit from $2 million to $1 million and further reduces this amount by $100,000 a year for 3 years to $700,000. Allows for an exemption in certain counties in which the Office of Insurance Regulation (OIR) determines do not have a reasonable degree of competition.
  • Prohibits Citizens from covering structures commencing construction after July 1, 2014, seaward of the coastal construction control line.
  • Allows the Governor of Florida to appoint a consumer representative to the Citizens Board of Governors in addition to the current two appointments.
  • Clarifies a private company's offer within 15 percent of Citizens' rate for a new policy and no greater than the current rate for a renewal makes the policy ineligible for coverage with Citizens.
  • Requires that Citizens disclose potential surcharge and assessment liabilities with each renewal notice.
  • Allows insurers who take policies out of Citizens to use Citizens' policy forms for 3 years without approval from the OIR to use the forms.
  • Establishes an office of Inspector General at Citizens to be appointed by the Financial Services Commission.
  • Requires Citizens to prepare an annual report on Citizens' loss ratio for non-catastrophic losses on a statewide and county basis.
  • Subjects Citizens to the purchasing of commodities restrictions under s. 287.057, F.S.
  • Establishes the Citizens clearinghouse by January 1, 2014.
  • Requires the establishment of a process to divert commercial residential policies.
  • Requires that companies participating in the clearinghouse must either appoint the agent of record or offer a limited servicing agreement.
  • Requires that agents are to be paid Citizens commission or the company's standard commission, whichever is greater.
  • Clarifies that the 45-day notice of nonrenewal applies to policies submitted to the clearinghouse.
  • Provides that independent and captive agents are granted and must maintain ownership of records including policies placed in Citizens.
  • Allows captive companies to approve their agents limiting servicing agreements with each participating company.
  • Requires Citizens to submit to the Legislature and Financial Services Commission an annual PML report for the upcoming storm season.

Tasadores Públicos

  • Prohibits a public adjuster from receiving compensation from any source over the statutory fee cap. Applies disciplinary provisions in current law to public adjusters who violate the statutory fee caps through any maneuver, shift, or device.
  • Repeals the current provision that for any claim filed with Citizens, a public adjuster cannot charge more than 10 percent of the difference between Citizens' initial offer and the amount actually paid.
  • Requires a public adjuster to meet or communicate with the insurer to try to settle. Prohibits a public adjuster from acquiring any interest in salvaged property, without the written consent of the policyholder.

If approved by the Governor, these provisions take effect July 1, 2013, except as otherwise provided in this act.

Click here for the full text of the bill as enrolled >>

CS/SB 1842 - Health Insurance

The bill makes changes to the Florida Insurance Code related to the requirements of the federal Patient Protection and Affordable Care Act (PPACA) that apply to health insurers and health insurance policies. PPACA preempts any state law that prevents the application of a provision of the PPACA. Each state may enforce the requirements of the PPACA, but if the U.S. Department of Health and Human Services (HHS) determines that a state has failed to substantially enforce any provisions, HHS must enforce those provisions.

The bill makes the following changes to the Florida Insurance Code:

  • Provides that a provision of the Florida Insurance Code (Code) or rule adopted pursuant to the Code applies unless such provision or rule prevents the application of a provision of PPACA. This is substantially the same preemption provision that is included in PPACA.
  • Authorizes the Office of Insurance Regulation (OIR) to assist HHS in enforcing the provisions of the PPACA by reviewing policy forms and performing market conduct examinations or investigations for compliance with PPACA. OIR must first notify the insurer of any noncompliance and then notify HHS if the insurer does not take corrective action.
  • Authorizes the Division of Consumer Services within the Department of Financial Services (DFS) to respond to complaints by consumers relating to requirements of PPACA, by performing its current statutory responsibilities to prepare and disseminate information to consumers as it deems appropriate, provide direct assistance and advocacy to consumers, and require insurers to respond, in writing, to a complaint, and further authorizes the division to report apparent or potential violations to OIR and to HHS.
  • Temporarily suspends, for 2014 and 2015, the requirement that health insurers and HMOs (insurers) obtain approval from OIR for nongrandfathered health plans which, generally, are plans under which an individual was insured on March 23, 2010, and for which rates must be filed with HHS. Insurers will still be required to file rates and rate changes for such plans with OIR prior to use, but such rates may be used without OIR approval. For this 2-year period, the rates for nongrandfathered plans would be exempt from all rating requirements. These rating law changes are repealed on March 1, 2015. Under PPACA, insurers must file rate changes with HHS for nongrandfathered health plans, subject to review and determination of whether the rate increase is unreasonable. Grandfathered health plans are not subject to PPACA rate filing requirements and remain subject to the current Florida law requirements for filing rates for approval with OIR.
  • Requires insurers to provide a notice to individual and small group policyholders of nongrandfathered health plans that describes or illustrates the estimated impact of PPACA on monthly premiums. This notice is required one time, when the policy is issued or renewed on or after January 1, 2014. The notice must be in a format established by rule by the Financial Services Commission. The OIR and DFS must develop a summary of the estimated impact of PPACA on monthly premiums as contained in the notices, which must be available on their respective websites by October 1, 2013.
  • Requires individuals acting as a "navigator" under PPACA to be registered with DFS, beginning August 1, 2013. Under PPACA, beginning on October 1, 2013, individuals and small businesses will be able to purchase private health insurance through Affordable Insurance Exchanges (Exchanges). Exchanges must certify qualified health plans (QHPs) offered by insurers through the Exchange. PPACA directs Exchanges to award grants to "navigators" that will facilitate enrollment in QHPs and exercise certain other duties.
  • To be registered as a navigator under the bill, an individual must certify completion of federally-required training, submit fingerprints for a criminal background check, and pay a $50 application fee (currently, there is a $50.30 fingerprint processing fee for agents, so the total cost for a navigator would be $100.30). Certain crimes would either permanently bar an individual from registration or disqualify an applicant for specified periods. A navigator will be prohibited from:
    • Recomendar la compra de un plan de salud particular o manifestar que un determinado plan de salud es preferible a otro;
    • Recomendar o ayudar a cancelar la cobertura de seguro comprada fuera del Intercambio;
    • Recibir compensación o algún tipo de valor por parte de una aseguradora, plan de salud, empresa o consumidor que estuviera relacionada con la realización de actividades como navegador, que no sean aquellas del Intercambio o de una entidad o individuo que haya recibido una subvención para navegador según la PPACA.
  • Specifies grounds for suspension or revocation of registration and authorizes DFS to impose an administrative fine in lieu of, or in addition to suspension or revocation. Any person who acts as a navigator without registration is subject to an administrative penalty not to exceed $1,500.
  • Makes the following changes that allow or require insurers to take certain actions that would preserve the status of grandfathered health plans which, in general, are plans under which an individual was insured on March 23, 2010, and which are exempt from many of the requirements of PPACA:
    • If a policy form covers both grandfathered health plans and nongrandfathered health plans, the bill allows an insurer to non-renew coverage only for all of the nongrandfathered health plans, subject to certain conditions.
    • Requires that the claims experience for grandfathered health plans be separated from nongrandfathered health plans for rating purposes, as also required by PPACA.
    • Allows an insurer to discontinue a policy form that does not comply with PPACA without being subject to the current prohibition on selling a new, similar policy form after a policy form is discontinued.
  • Provides two different definitions of "small employer" - one for grandfathered health plans, which is the current law definition, and one for nongrandfathered health plans, which is the same as the federal definition used for PPACA (but capped at 50 employees, as allowed by PPACA). For nongrandfathered health plans, any state law that applies to small group coverage will apply to coverage for a small employer as defined under PPACA and will no longer apply to an employer who is not a small employer under the federal definition.
  • Requires the dissolution of the Florida Comprehensive Health Association (FCHA), which is the state's high risk pool for persons unable to obtain health insurance, by September 1, 2015. Coverage for current FCHA policyholders will be terminated by June 30, 2014. The FCHA is required to assist each policyholder in obtaining health insurance coverage, which is available to all persons on a guaranteed-issue basis under PPACA beginning October 1, 2013, with coverage beginning January 1, 2014.
  • Specifies that health insurers and HMOs may nonrenew individual conversion policies if the individual is eligible for other similar coverage (which is available under PPACA).
  • Repeals the statute that establishes the Florida Health Insurance Plan, which has never been implemented.

If approved by the Governor, these provisions take effect upon becoming law.

Click here for the full text of the bill as enrolled >>

CS/CS/SB 166 - Annuities

The bill substantially revises Florida consumer protection laws relating to sales of annuities by incorporating the 2010 National Association of Insurance Commissioners (NAIC) model regulation on annuity protections. The bill expands the scope of the consumer protection laws to generally include all consumers purchasing annuities. Current law only applies the protections to consumers aged 65 and older. The bill also retains current law limiting the surrender charges and deferred sales charges that may be imposed upon senior consumers.

The following are primary consumer protections contained in the bill:

Suitability of Annuities - The bill requires an insurer or insurance agent recommending the purchase or exchange of an annuity that results in an insurance transaction to have reasonable grounds for believing the recommendation is suitable for the consumer, based on the consumer's suitability information. The bill imposes additional duties on insurers and insurance agents when a transaction involves the exchange or replacement of an annuity.

Documentation of Sales Transaction - The bill requires agents and agent representatives to record recommendations made to a consumer.

Prohibitions on Agents - The bill prohibits agents from dissuading or attempting to dissuade a consumer from truthfully responding to the insurer's request for suitability information, filing a complaint, or cooperating with the investigation of a complaint.

Unconditional Refund Period - The bill expands to 21 from 14 days the unconditional refund period for all purchasers of fixed and variable annuities.

Limit on Surrender Charges - The bill retains the prohibition against surrender charges or deferred sales charges in annuity contracts issued to a senior consumer exceeding 10 percent of the amount withdrawn. The charge must be reduced so that no surrender or deferred sales charge exists after the end of the 10th policy year or 10 years after the premium is paid, whichever is later.

Penalties - Authorizes the imposition of corrective action, appropriate penalties, and sanctions on insurers, agents, managing general agencies, or insurance agencies that violate the requirements of s. 627.4554, F.S. An insurance agent must pay restitution to a consumer whose money the agent misappropriates, converts, or unlawfully withholds.

If approved by the Governor, these provisions take effect October 1, 2013.

Click here for the full text of the bill as enrolled >>