Volume 2 Number 19 May 9, 2005

TEXT VERSION

The legislative session ended late Friday with a flurry of bills passing.  I applaud state lawmakers for tackling a variety of issues and for supporting legislation that will improve the protections of, and opportunities for, Florida’s families, seniors, businesses and insurance consumers.  Several measures that I supported and helped initiate that passed include reforms of Florida’s homeowners insurance policies and market to increase availability and accountability; better protections for Floridians who invest with viatical companies; a fire safety bill requiring sprinkler systems in all nursing homes to safeguard our seniors; and a bill that lays the groundwork for Floridians to set up hurricane savings accounts.  Two other key bills that passed critical to our economy were the repeal of the substitute communications tax and a 50 percent reduction in the intangibles tax.  Finally, many Floridians came together last Thursday for the National Day of Prayer to pray for America, its leaders and the brave men and women who are serving our country.  I encourage all of us to continue to reach out in prayer and compassion for the families who are still recovering from the hurricanes of the past year.  Sincerely, Lake County, the 43rd county, was established  May 27, 1887, being taken from Orange and Sumter counties and named for the large number of lakes within its boundaries. The courthouse, above, was built in 1924.

GALLAGHER LAUDS PASSAGE OF HOMEOWNERS INSURANCE PROTECTIONS FOR FLORIDIANS Florida’s Chief Financial Officer Tom Gallagher said that the homeowners insurance legislation that passed late Friday contains numerous provisions that will benefit Florida’s consumers.  “Following last year’s devastating hurricanes, there was a clear demand from storm victims for  simpler insurance policies that would allow Floridians to better understand what they are buying,” said Gallagher.  “This legislation is a giant step forward in providing transparency and accountability in homeowners insurance policies.”   CONTINUED

LEGISLATURE APPROVES FUNDING FOR MORE INSURANCE FRAUD INVESTIGATORS AND A PROSECUTOR Florida’s Chief Financial Officer Tom Gallagher thanked legislators for approving his request for funding to add more law enforcement investigators to look into Personal Injury Protection (PIP) fraud and workers’ compensation fraud and a dedicated prosecutor to take on the expected increase in arrests.  The request for the funding was in the department’s budget request and included funding for six PIP fraud investigators, a lieutenant, a crime intelligence analyst, and a secretary to allow the Department of Financial Services, Division of Insurance Fraud, to create a dedicated squad in South Florida where most of the arrests occur.  Legislators also approved funding for a dedicated prosecutor to prosecute PIP fraud and funding to add three new workers’ compensation fraud investigators throughout the state. “Increasing our investigative force sends a strong message that we’re serious about stamping out this costly crime,” Gallagher said.  “We’re now making more than 200 PIP fraud arrests a year, and we have aggressive sentencing guidelines that include a minimum two-year prison sentence for participating in a staged accident or soliciting an accident victim with the intent to commit insurance fraud.  Still these schemes perpetuate, and Florida’s consumers get the bill.” CONTINUED

GALLAGHER COMMENDS STATE LAWMAKERS FOR POSITIVE ACTION ON A VARIETY OF BILLS Florida’s Chief Financial Officer Tom Gallagher praised state lawmakers for passing a variety of bills that will greatly help or protect Floridians and their families.  Several measures that passed include:  The homeowners insurance consumer protection bill, championed by Sen. Rudy Garcia and Rep. Joe Negron, which will:      Prohibit insurance companies from non-renewing policies until 90 days after hurricane repairs are completed. Require insurance companies to offer plain language policies, including financial disclosures, and a checklist that details what is and what is not covered. Require insurance companies to offer the option of higher Law and Ordinance coverage to 50 percent.  Currently, insurers only offer 25 percent. This is critical for homeowners who are required to build up to tougher building code. Require insurance companies to pay replacement costs up front on a storm claim rather than holding back money for recoverable deprecation. Require state regulators to develop a standard policy that would be offered by all insurers and could be used by homeowners to comparison shop when searching for coverage. Sets aside $350,000 for four new positions in the Consumer Advocate’s Office. Legislation to better protect Florida investors from viatical companies that commit fraud or fail to properly disclose the risks involved when investing in viatical settlements. The legislation, which would define viatical settlements as “securities,” was sponsored by Sen. Rudy Garcia and Rep. Dudley Goodlette.  Gallagher also thanked Gov. Bush for his support of the investor protection bill.  “This legislation will enable us to proactively protect investors and aggressively pursue fraudulent practices in this industry,” Gallagher said.  CONTINUED

CFO GALLAGHER ON HURRICANE CLAIMS REPORTING DEADLINE Last month, citizens in the state of Florida were still facing more than 140,000 open storm insurance claims.  To spur action on settling these claims Gallagher brought a rule before the Governor and Cabinet requiring insurance companies to settle all outstanding claims by April 18th, with a reporting deadline of April 28th to explain why the claims had not yet been settled. The Office of Insurance Regulation was asked to provide an update on compliance with the rule at last week’s Cabinet meeting.  OIR Commissioner McCarty reported 186 insurers had a total of 57,830 claims still open. The preliminary numbers look positive and it appears things are moving in the right direction. However, judgment is being reserved by Gallagher until the Office of Insurance Regulation has time to develop more concrete data.  It appears many of the open claims can be closed once contractors can finish repairs, and it is known contractors have been in short supply.  The focus will remain on getting the 57,830 claims resolved.

STATE FIRE MARSHAL’S OFFICE INVESTIGATION FINDS PRESENCE OF GASOLINE MAIN FACTOR IN MARGATE FIRE Florida’s Chief Financial Officer and State Fire Marshal Tom Gallagher today issued a report that gasoline played a major role in a fire that destroyed part of a Margate apartment complex in March.  The State Fire Marshal’s Office was called to investigate because a man died in the fire.  Dozens of residents also were left homeless.  “Our role at the State Fire Marshal’s Office is to determine the cause of the fire, and particularly to determine if arson is at play,” Gallagher said.  “Despite numerous and extensive tests, we could not conclude the actual ignition source of the fire, but we did conclude it was incendiary.”  CONTINUED

HURRICANE SAVINGS ACCOUNTS Hurricane Savings Accounts, which could also be named Catastrophe Savings Accounts for more universal usage, would encourage responsibility by saving for future adverse financial impacts associated with hurricanes or other natural disasters.

GALLAGHER APPLAUDS LAWMAKERS FOR LAYING THE GROUNDWORK FOR HURRICANE SAVINGS ACCOUNTS Florida’s Chief Financial Officer Tom Gallagher today applauded state lawmakers for approving a measure that lays the groundwork for Floridians to set up hurricane savings accounts and protect these accounts from creditors.  Congress would now need to create the accounts under federal law and grant a tax-exempt designation. “Hurricane savings accounts would give Floridians the opportunity to put money aside to prepare for the financial impact of a catastrophic storm,” said Gallagher, who initiated the idea with state lawmakers.  “I applaud the Legislature, especially Sen. Carlton and Rep. Altman, for setting the wheels in motion for Floridians to take advantage of these accounts.  The next step is to aggressively lobby Congress to act.” CONTINUED

FLORIDA OFFICE OF INSURANCE REGULATION ANNOUNCES PUBLIC HEARINGS REGARDING SERVICE MOBILE HOMEOWNERS’ RATE REQUEST The Florida Office of Insurance Regulation has announced public hearings regarding a proposed rate increase filed by Service Insurance Company. The rate filing is for Service’s Mobile Homeowners Insurance Program.   The Bradenton-based company’s filing requests an average statewide rate increase of 32%. The average rate change varies by county from 0% in several counties to 37% in Highlands County. A list of average, county rate changes by policy is included with this notice.   The filing took effect on February 25, 2005 for new policies and April 2, 2005 for renewal policies. The company filed under a statutory provision allowing companies to implement a rate adjustment before it has been approved by the Office. If the rate filing is disapproved or approved at a lower rate, the company must refund the premium difference to their policyholders. CONTINUED

CFO GALLAGHER COMMENDS LEGISLATURE FOR PASSING NURSING HOME SPRINKLER BILL Florida’s Chief Financial Officer and State Fire Marshal Tom Gallagher commended the Legislature for passing legislation to protect some of Florida’s most vulnerable citizens – the elderly.  Sponsored by Sen. Daniel Webster and Rep. John Stargel, the legislation requires all of the state’s nursing homes to have automated fire sprinkler systems by December 31, 2008.  The bill also establishes a loan guarantee program to help nursing homes defray the cost of installing sprinkler systems. “This legislation will save lives.  Just in the last couple of weeks we saw firsthand how an automated sprinkler system can mean the difference between life and death,” Gallagher said, referring to an April 24 fire at the Palm Terrace of Lakeland nursing home.  One resident died in the fire, but fire officials credited a sprinkler system with saving many other lives.  There were 167 patients in the facility at the time of the fire. CONTINUED

SARASOTA ATTORNEY CHARGED WITH INSURANCE FRAUD An attorney is facing an insurance fraud charge after state fraud investigators documented that he had continued to work while collecting more than $130,000 in disability benefits. Peter W. Martin, 58, surrendered on the charge Wednesday afternoon at the Sarasota County Jail and was released on a $2,500 bond.  The charge was based on an investigation by the Department of Financial Services, Division of Insurance Fraud.  If convicted, Martin faces up to 15 years in prison in addition to fines and restitution. “Insurance fraud is wrong no matter who does it,” said Florida’s Chief Financial Officer Tom Gallagher, who oversees the Department of Financial Services.  “But it is particularly offensive when committed by someone who has sworn to uphold the law.” CONTINUED

FLORIDA OFFICE OF INSURANCE REGULATION UNDERTAKES ANALYSIS OF LONG TERM CARE INSURANCE MARKET The Florida Office of Insurance Regulation (Office) has begun a comprehensive analysis of the Long Term Care insurance market. The project will include at least two public hearings to solicit input from those who may be affected by changes in the Long Term Care market. This project examines the economic, regulatory and public policy aspects of the private long term care market. Detailed analysis focuses on innovative pilot projects developed in a number of different states.   The Office looks forward to working with the Florida Legislature and executive branch on finding solutions to protecting our seniors. “Florida’s most vulnerable population purchases Long-term Care insurance to protect their independence, their assets and their families,” said State Senator Mike Fasano (R-New Port Richey). “We are going to ensure that the problems in this market are remedied.”  CONTINUED

RESOLUTION FROM THE BUREAU OF COLLATERAL MANAGEMENT, DIVISION OF TREASURY, DEPARTMENT OF FINANCIAL SERVICES TO CFO GALLAGHER WHEREAS, the Chief Financial Officer (CFO) acts as the State of Florida’s financial watchdog, serving as the State Fire Marshal, administrator of the Deferred Compensation plan for employees of the State of Florida and the Florida Security for Public Deposits Act; and WHEREAS, the CFO is also responsible for administering the receipt and disbursement of state moneys, the investment of excess funds, and the maintenance of regulatory collateral deposits; and WHEREAS, the mission statement of the Department of Financial Services declares “To Serve the Citizens of Florida by Ensuring Fiscal Accountability, Enhancing Fire Safety Services, and Protecting and Assisting All Insurance and Financial Consumers”; and  CONTINUED