SunSentinel.com
by Julie Patel
April 14, 2011
Broad legislation to allow insurers to withhold part of a claims payment until repairs are made and allow certain rate hikes was cleared by a final House committee Thursday despite fierce opposition from Democrats on the panel.
The bill, HB 803, has more than a dozen provisions, including some that would:
Allow home insurers to hold back part of a claims payment before repairs are made;
Limit the time homeowners have to make any kind of claim to four years instead of five;
Allow an insurer to drop full sinkhole coverage on everything but the main building of a property and requires a property inspection before the insurer provides sinkhole coverage;
Bar regulators from rejecting rate hikes due to higher costs for advertising and agent commissions;
Allow insurers to increase policyholders’ premiums without full oversight from regulators by up to 15 percent a year – as opposed to the 10 percent allowed by state law – to pay for reinsurance, or catastrophe insurance for insurers;
Create new limits on fees charged by public adjusters and how they advertise; and
Scrap a 2009 rule requiring insurers to report by the end of the month information for all sinkhole claims closed between 2005 and 2010.
The committee approved a change proposed by Rep. Peter Nehr, R-Palm Harbor, to extend by one year a state law that expired recently requiring insurers to get approval for rate hike before implementing them, instead of issuing refunds later if the increase is rejected.
The committee rejected several other proposals back by Democrats to change or water down the bill.
For instance, Rep. Evan Jenne, D-Dania Beach, proposed deleting a provision in state law that exempts regulation for some so-called managing general agents, companies hired by insurers to handle their day-to-day operations. Some insurers say they’re losing money in Florida, but regulators have said they can’t track the flow of money from some insurers to their sister or parent companies that act as their MGAs, administering policies and processing claims.
“The money is being shuffled around,” Jenne said. “There is no regulation whatsoever protecting yourselves or your constituents when it comes to [most] MGAs…This is one of the main problems exacerbating our property insurance situation.”
But the bill sponsor, Rep. John Wood, R-Winter Haven, said the regulators have all the tools they need and the state won’t be able to attract insurers to the state if it keeps creating regulations that “attack the insurance industry and its ability to function.”
Insurance industry representatives have said profits that can be earned through MGAs are needed to draw and keep investors supporting Florida-based insurers, which fill the gap left by national insurers that scaled back from the state.
HB 803 was approved by a 11 to 7 vote. All Democrats on the committee and all but one South Floridian, Rep. Jeanette Nunez, R-Miami, voted against it.
It will now go to the full House. The Senate version, SB 408, cleared four committees and also awaits a full chamber vote.
In the final weeks of the annual legislative session, lawmakers will work to come to an agreement on a final version of the legislation, which would then go to the governor’s desk for a signature to become law.
Two other bills with provisions allowing rate hikes are up for votes tomorrow.
Consumers can weigh in on the bills by contacting their legislators.
