Florida Senate committee OKs plan that seeks insurer 'accountability'

TALLAHASSEE - Drawing pushback from insurance and business groups, a Florida Senate committee Wednesday backed a proposal that the sponsor said would increase "transparency and accountability" for insurance companies.

The bill (SPB 7052) emerged as many Floridians continue trying to recover from last year's one-two punch of Hurricane Ian and Hurricane Nicole and after lawmakers passed a series of legal protections for insurance companies.

The measure would make wide-ranging changes, including increasing fines that regulators can slap on insurers, increasing information-reporting requirements and requiring that rate filings reflect changes in laws aimed at helping insurers.

"The idea is not only are we going to hit those bad actors a little harder, but we're going to make sure everybody knows who they are," bill sponsor Travis Hutson, R-St. Augustine, said before the Senate Banking and Insurance Committee backed the measure.

But insurance-industry groups and the Florida Chamber of Commerce objected to parts of the bill, which comes after lawmakers in recent months passed major changes to try to shore up the troubled property-insurance industry and shield insurers and other businesses from costly lawsuits. "We do agree that bad actors should be held accountable, and I think that's the overarching goal of the bi l l," Florida Chamber lobbyist Carolyn Johnson told the committee. "Unfortunately, the bill as current ly draf ted brushes a much-broader stroke. And we have started hearing from all kinds of insurance companies that are our members that are concerned with how this bill will impact them."

Hutson and Senate Banking and Insurance Chairman Jim Boyd, R-Bradenton, indicated they expect the bill to be changed as it moves forward in the Senate. Also, a similar bill has not been filed in the House midway through the 60-day legislative session.

The proposal comes during a tumultuous time in the insurance market, particularly after Hurricane Ian and Hurricane Nicole hit the state last year. Those hurricanes exacerbated problems that had already led to property insurers dropping customers and raising rates - and, in some cases, going insolvent.

While insurers have blamed many of their financial problems on heavy litigation, plaintiffs' attorneys have long argued that insurers don't properly handle claims and face a lack of regulatory oversight. Those arguments gained extra fuel last month, when The Washington Post reported that insurance companies had changed adjusters' damage estimates to lower amounts paid to homeowners after Hurricane Ian.

Stephen Cain, a Miami lawyer who is president-elect of the Florida Justice Association, a plaintiffs' attorneys group, told the Senate panel Wednesday it's "nice to see insurance companies being put under a microscope."

"What has finally become clear to the Legislature, what has been clear to us for years, is that (the) homeowner insurance crisis isn't a market failure," Cain said. "It is a regulatory failure."

Examples of proposed changes in the 46-page bill include: - Increasing a series of potential fines for violations of insurance laws. For example, currently, insurers can face fines of $5, 000 per "non-willful" violation, with a limit of $20, 000 for all related violations. Under the bill, those amounts would go to $12, 500 per violation and a $50, 000 aggregate amount in non-emergency situations. They would go to $25, 000 per violation and a $100, 000 aggregate amount when they involve losses or claims stemming from emergencies such as hurricanes. Fines would be higher for "willful" violations.

- Requiring the Office of Insurance Regulation to issue a quarterly report about actions taken against insurers, including identifying the insurers and providing information about violations and penalties.

- Requiring that property-insurance and auto-insurance rate filings take into account the expected effects of laws passed during the past two years that were designed to help reduce costs. The Office of Insurance Regulation also would have to take those issues into account in reviewing the rate filings.

- Increasing documentation and scrutiny of payments that insurers make to affiliated companies for services. The bill would set criteria for regulators to evaluate such payments to determine if they are "fair and reasonable."

- Making clear that changes passed during a December special session do not apply to insurance policies in effect before the law was approved. At least in part, that would prevent insurers from trying to apply lawsuit limits passed in December to disputes about earlier claims.

In a s t a tement a f t e r Wednesday's meeting, Hutson said the 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," Hutson said. "Additionally, the bill will make sure savings generated from all the reform bills we have passed will begin to be passed on to Florida policyholders."

But Gary Guzzo, a lobbyist for the Florida Insurance Council, raised a series of concerns, including that the bill could "negatively affect capital investment at a critical time in the marketplace." "We fully understand the call for insurer accountability. Your constituents and our policyholders deserve nothing less," Guzzo told senators. "But we urge you to be wary of passing laws that have unintended consequences that run counter to essential reforms this body (the Senate) has fought hard for before they can express themselves in the marketplace."