New Homeowners Insurance Law Signed Into Effect By Governor Scott

When Governor Scott said he was going after the Florida Trial Lawyers, we knew the beneficiary would be the Insurance industry. Governor Scott left no doubt with the anti-consumer legislation he pushed during the 2011 session, and when he signed into law on Tuesday a wide-ranging bill that could allow home insurers to raise premiums up to 15 percent a year for reinsurance, on top of regular rate hikes.

Opponents said the law benefits insurers at the expense of homeowners.

A provision to effectively allow insurers to raise premiums by up to 15 percent a year for reinsurance costs drew the most fire in recent weeks. In 2009, the legislature allowed quicker approval of rate hikes for costs related to reinsurance, or catastrophe insurance for insurers, so long as premiums didn’t increase by more than 10 percent.

The new law this year raises the cap and allows insurers to ask for another rate hike – using the normal oversight process – during the same year. Insurers are also allowed to charge a profit margin on the reinsurance costs, though they’re shifting the risk to reinsurance companies.

Sen. Mike Fasano, R-New Port Richey, who led efforts to fight the legislation, said it conflicts with Scott’s goal of avoiding tax increases. “For an administration which vowed not to support new taxes or fees, this bill virtually guarantees [premium increases] for Florida policyholders,” he wrote in a statement. “Insurance companies will only get richer because of this legislation while policyholders will have to pay more of their hard earned money for what will amount to less coverage.”

As reported by the Sun Sentinel, Scott received hundreds of emails, letters and calls about the legislation.

The new law makes more than 20 changes. Among other things, it will:

Shorten the time policyholders have to file claims to two years for sinkhole claims and three years for hurricane claims, from the current five years;

Allow insurers to withhold full payment for home damage claims until the work is performed and expenses incurred, except for homes that are destroyed;

Require policyholders to pay up to half of the cost of testing for sinkholes if the insurer denies the claim and its engineer determines there is no sinkhole;

Allow insurers to require an inspection of a property before issuing coverage for sinkholes;

Allow insurers to drop sinkhole coverage for anything other than the main building on a property;

Prevent regulators from urging insurers to charge policyholders less for advertising and agent commissions;

Require Citizens Property Insurance to hire an outside consultant to examine whether the state-run insurer could save money and do a better job if it shifted some work done by full-time employees to contractors;

Require new home insurance companies to have $15 million in reserves starting this year and existing insurers to have $15 million by 2021, with some exceptions;

Bar public insurance adjusters, hired by policyholders in claims disputes with insurers, from advertising with logos that resemble those of a government agency or saying there is “no risk” to a policyholder by filing a claim;

Prohibit public adjusters from charging more than 10 percent of the portion of a claims payment they help recover for Citizens policyholders;

Require public adjusters to provide a copy of their contracts with policyholders to insurers;

Allow insurers that offer policies covering both a home and vehicle to drop coverage if they warn policyholders at least 90 days in advance, a perk intended to draw an unnamed insurer to the state; and

Clarify gray areas of state law to say the Legislature intends to reduce disputes and litigation from sinkhole claims, a standard that might be applied to pending claims disputes.

As a Florida Personal Injury Lawyer I am grateful that Senator Fasano broke party lines and fought for Floridians and against the powerful Insurance Lobby. Unfortunately, Most Floridians are not aware about the damage that is being done in Tallahassee until they are victimized and have a claim-whether it be Medical Malpractice, Automobile Negligence, Workers Compensation, or Homeowners Insurance.

We, as Florida Trial Lawyers, must do a better job of informing the public about proposed legislation and the impact it may have.