March 8, 2016
It’s looking like Florida lawmakers will not provide resolution for two controversial issues currently facing the Florida insurance industry, this year at least.
With just three days left in the 2016 Florida Session, legislative attempts at addressing the rising cost of water damage claims from the misuse of assignment of benefits and regulating and mandating insurance requirements for the Florida ridesharing industry have stalled.
The bills introduced in the Florida House and Senate meant to address the assignment of benefits abuse problem – being called a critical issue by insurers, consumer and industry advocates – were dropped in mid-February. However, a “compromise” bill introduced by another lawmaker still has a glimmer of hope of being passed before the 2016 session ends on March 11.
According to the Florida Sun Sentinel, an amendment that required notification to insurance companies soon after a contract is signed between a policyholder and repair contractor was added late last week to the bill. The amendment was one aspect of AOB reform requested by the insurance industry. As of March 8, the bill was still on the table, but insurance insiders say it doesn’t offer all the protections and reforms the industry wanted.
Meanwhile, insurers and their advocates warned that Florida homeowners can expect rate increases if something isn’t done to deal with “skyrocketing water losses,” particularly in Miami-Dade, Broward and Palm Beach counties.
“Given the latest data, rates in those counties would have to nearly triple to pay for non-wind related losses,” the government-backed property insurer Citizens said in statement. “Under Florida law, Citizens rate increases are limited to 10 percent a year.”
The Florida Office of Insurance Regulation (OIR) released its analysis of the data call it issued last fall to homeowners insurers. According to OIR, water losses have increased by 46 percent over a five-year period, and insurers would have to raise rates by at least 10 percent in order to cover the increase.
It also found a dramatic rise in the use of assignment of benefits for water loss claims of at least 10 percent from 2010-2015.
“This is a true crisis,” said Barry Gilway, Citizens president, CEO and executive director. “I’m not sure people are fully aware of that.”
Citizens’ spokesperson Michael Peltier said in an e-mail to Insurance Journal that regardless of the legislative outcome, Citizens has filed a “slate of proposed rule changes” with OIR, which will be ruled on at a later date. One such change is the requirement that policyholders give 72 hours notice to Citizens or their insurance agent in the event of a loss or damage to covered property.
Some had hoped this would be the year the state would finally pass a law regulating the ridesharing industry, but that doesn’t look to be in the cards after all.
Instead, the Florida debate has gotten even more contentious, with taxi companies and ridesharing, or transportation network companies (TNCs), escalating their attacks against each other.
The state has been inundated with negative ads by taxi companies against ridesharing firm Uber as legislation not supported by either industry is at a standstill in both the House and Senate. Uber launched attack ads against Senate President Andy Gardiner and taxi company Mears Transportation, but they were pulled from YouTube for copyright infringement, according to the Orlando Sentinel.
“Uber is blaming Mears for their lack of progress in passing legislation this year in Florida – legislation by the way that will have zero impact on whether Uber continues to operate in Florida, but instead will save them millions in taxes, insurance and legal costs. Who wouldn’t like that?” said Roger Chapin, executive vice president, Public Affairs, for Mears.
Chapin, whose company Mears is also a member of the Florida Taxicab Association, said the House version of the TNC bill was passed in the form Uber approved. The Senate version called for stricter insurance requirements and didn’t address other aspects of ridesharing that have been part of similar state TNC insurance models. The Florida Taxicab Association has been pushing for this version to go through.
Logan McFaddin, state government relations regional manager for the Property Casualty Insurers of America (PCI), said the House version addresses insurance coverage requirements for TNC drivers and also deals with other regulatory issues. It is considered TNC “model” legislation and is similar to what has been passed in 29 other states. Florida Insurance Commissioner Kevin McCarty has also said he approves of this model.
However, taxi cab companies argue the House bill offers Uber and others like it a competitive advantage by not requiring the same level of insurance coverage and eliminating other passenger protections.
“The Florida Taxicab Association believes all vehicle for hire drivers, whether they be taxi, rideshare, or transportation network company drivers should be required to pass a Level II background check that includes fingerprinting and Uber drivers should be required tohaveadequateinsurance 24/7,” the Florida Taxicab Association said in a statement.
McFaddin said if Florida lawmakers fail to pass a bill this session, ridesharing regulations will continue to be controlled at a county level statewide, and the insurance requirement will still be up in the air.