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    Each year, FAIA's advocacy staff develops succinct summaries of insurance-related issues to help lawmakers, the media, and the public better understand these often-complicated insurance topics. Here are the topics for the 2017 Legislative Session:

    Exporting Commercial Residential Policies to Surplus Lines Market
    Assignment of Benefits
    Workers' Compensation
    Personal Injury Protection (PIP) Insurance
    Ride Sharing Insurance Gaps 

    Exporting Commercial Residential Policies to Surplus Lines Market

    PROBLEM: The law requiring a diligent effort form for exportation of commercial residential risks (condominiums) to the surplus lines market does not align with marketplace realities, is haphazardly enforced, and doesn’t serve the best interests of the sophisticated commercial residential customer. The law also sets traps for agents, who risk investigation and enforcement action if they act in accordance with their customer’s wishes.

    BACKGROUND: Current law prohibits agents from securing insurance coverage for commercial residential property through a surplus lines insurer if the risk is already covered or could be covered by an admitted insurer. Before agents can export a policy, they are required to complete a diligent effort form that shows rejection of coverage from at least three admitted insurers, even though the commercial residential customer in many cases is looking specifically for coverage in the surplus lines market, where better coverage is sometimes available at a better price. A customer will typically seek out another agent who either does not have access to an admitted insurer willing to write the risk, or who might not properly execute a diligent effort form, thus allowing the policy to be exported to the surplus lines market.  

    SOLUTIONSenate Bill 208 by Sen. Passidomo and House Bill 191 by Rep. Beshears amends the law to remove the diligent effort requirement, as is the case for most types of commercial insurance, and instead require an agent wishing to export a commercial residential policy to the surplus lines market to obtain the insured’s signature on a disclosure form. This encourages an agent to discuss all available insurance options with his client, including those offered by admitted and non-admitted carriers.

    CALL TO ACTION: Support SB 208 and HB 191. 


    Assignment of Benefits

    PROBLEM: Assignment of Benefits (AOB) abuse, which occurs when unscrupulous vendors file inflated claims with insurance companies and then threaten to sue if the claim is not paid, is driving up the cost of property insurance premiums in Florida.

    BACKGROUND: In residential property insurance, AOB occurs when a policyholder has a loss and signs a contract with a third party to remediate the damage. The contract also provides for forfeiture (assignment) of the proceeds (benefits) of the homeowners insurance policy to a third-party remediator, often a water extraction firm or roofer.

    Since water claims represent over 50 percent of total non-catastrophic claims, let’s use one for example. A cracked water pipe floods a home. A plumber fixes the leak and refers the homeowner to a water extraction company, which tells the homeowner a contract must be signed before work can begin. The homeowner often doesn’t know about the AOB provision or doesn't understand its implications. The insurer is billed $12,000, but knows that extractions for a comparable house typically run about $3,500. It investigates or attempts to negotiate, but the mitigation company files suit and threatens to put a lien on the insured’s home.

    In far too many situations, the claim is paid (since attorney fees are in addition to the claim in such situations and costs mount quickly), but the homeowner is left with an incomplete job, shoddy workmanship, and no recourse.

    SOLUTION: Senate Bill 1038 by Senators Hukill and Passidomo defines "assignment agreement," prohibits the transfer of one-way attorney fees from the policyholder to third parties, provides consumers the ability to rescind the assignment agreement, and includes several other provisions meant to keep policyholders in control of their claim.  

    CALL TO ACTIONSupport SB 1038. 


    Workers’ Compensation

    PROBLEM: Recent Florida Supreme Court rulings declaring parts of Florida’s model Workers’ Compensation law unconstitutional have led to the filing of a 14.5-percent increase in workers’ compensation rates for 2017, the first of what likely will be many such requests. Unless a legislative remedy is found, Florida’s workers’ compensation rates could return to pre-2003 record highs.

    BACKGROUND: In Castellanos v. Next Door Company, the court found the workers’ compensation attorney’s fee schedule unconstitutional, effectively removing statutory caps on fees. In Westphal v. City of St. Petersburg, the court declared the law’s 104-week limitation on temporary total disability unconstitutional on the grounds that it creates a gap in benefits. The decision effectively more than doubles the period of time (260 weeks) an injured worker can collect temporary total benefits.

    The court’s rulings undo key parts of the last major reform in 2003. At that time, Florida ranked among the states with the highest workers’ compensation rates in the country. After the reform, rates decreased steadily for 13 years. 

    SOLUTION: Legislation is needed to, among other things:

    • Address attorney involvement by either reinstating the fee schedule with some modification for extraordinary cases, or doing away with insurer/employer paid fees entirely,
    • Codify that 260 weeks applies to both temporary total benefits and temporary partial impairment benefits (not 260 weeks for each), and
    • Ensure adequacy of benefit levels, which could include increasing death benefits and funeral benefits; or eliminating or reducing the co-pay that some workers pay for certain medical expenses.

    CALL TO ACTION:  Support legislation that provides fair, no-fault benefits to injured workers while also keeping workers’ compensation insurance rates affordable for Florida employers.


    Personal Injury Protection (PIP) Insurance

    PROBLEM: Staged accidents and other fraudulent activities, coupled with high attorney involvement in a supposedly no-fault system, continue to drive up the cost of personal injury protection (PIP) insurance to a level at which those Floridians who most need it can hardly afford it.

    BACKGROUND: In 1972, Florida adopted a mandatory no-fault motor vehicle insurance law. Florida’s no-fault coverage, also known as PIP coverage, provides for up to $10,000 in medical, disability, and funeral benefits to those injured in motor vehicle accidents. It is a “first party” coverage, meaning that the injured person gets the benefits from his own insurance policy without having to sue, regardless of who caused the accident—hence the “no-fault” name. In exchange for the benefits, restrictions are placed on the person’s ability to bring suit for things such as “pain and suffering.”

    Over the years, the legislature has tried to reform the system and fix problems, but as soon as one “fix” is enacted, another problem emerges. In recent years, some in the insurance industry have suggested that PIP be repealed and replaced with mandatory liability insurance. This year is no exception, but the voices for “repeal” are getting louder.

    SOLUTION: Florida’s independent insurance agents support responsible measures to make auto insurance more affordable for consumers. While the universe of individuals carrying PIP-only coverage is small, they tend to be lower-income Floridians who are the most affected by rate increases that result from PIP fraud.


    Ride-Sharing Insurance Gaps

    PROBLEM: Regulation has not kept pace with the rapid growth of ride-sharing services such as Uber and Lyft. As such, there’s no statute that specifically addresses insurance coverage requirements for ride-sharing companies and/or drivers. Until rules of the road are in place, the personal and financial safety of consumers, passengers, and drivers is at risk.

    BACKGROUND: Personal auto insurance policies (PAPs) are not intended to cover the higher risks associated with using a car for commercial purposes, which is why the typical standard PAP contains a “livery” exclusion that applies when the vehicle is being rented out or used to carry passengers for hire. This exclusion means any damages or losses sustained when the car is being used for ride-sharing activities will not be covered. The policy also will not provide coverage for the driver or passenger if either is hit by an uninsured or underinsured driver, and won’t provide coverage to repair the driver’s vehicle if it is damaged while being used for hire.

    Ride-sharing companies may have commercial liability coverage, but it’s not clear when it applies. Does it apply when drivers have the app on but have not yet been matched with a passenger? Does it apply after a passenger has been dropped off? Without policymakers taking action, uncertainty about whether there is proper coverage for injuries or damage caused by an accident will continue.

    SOLUTION: Senate Bill 340 by Sen. Brandes and House Bill 221 by Rep. Sprowls ensures adequate insurance is in place to protect drivers and passengers. The bill: 

    • Develops clear guidelines that define when ride-sharing-company coverage begins and ends,
    • Requires companies and/or their drivers to carry primary coverage that specifically applies to livery activity, and
    • Requires disclosure about what insurance coverage is being provided, when, and by whom.

    CALL TO ACTION: Support SB 340 and HB 221.