Consumer eViews

Volume 2, Number 19, May 9, 2005    

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. 


                      -- Tom Gallagher


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.”  

The legislation contains multiple improvements to Florida homeowners, mobile homeowners, and condominium policies and institutes other market enhancements including:

  • Prohibits insurance companies from non-renewing homeowners polices until 90 days beyond the completion of storm repairs.

  • Requires insurance companies to pay replacement costs up front without holding back any of the money owed to the policyholder for repairs.

  • Adds in a policy checklist that the insurer must fill out so the policyholder can see what is and what is not covered along with a simple outline of coverage.  The language would enable consumers to understand the principal benefits, exclusions and limitations of the policy.

  • Requires insurers to offer a range of hurricane deductibles – 2, 5 and 10 percent, and to disclose the cost that could result from each choice, including impact on premiums and out-of-pocket expenses. 

  • Increases the level of law and ordinance coverage insurers must offer for losses caused by having to rebuild a home to meet new building codes from 25 to 50 percent.

  • Expands the current mediation program to allow commercial residential insureds to participate.

  • Establishes a low-interest loan program up to $1 million for homeowners to retrofit their homes to reduce hurricane losses.

  • Requires insurance companies to make it clear in polices what discounts can be received for home improvements that would make a property better able to withstand hurricanes.

  •  Improves the Florida Catastrophic Hurricane Fund to increase the availability of homeowners coverage.

  •  Requires a public hearing for rate requests exceeding 15 percent.

  • Requires several changes in Citizens Property Insurance Company, including requiring the Auditor General to conduct an operational audit.


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.

Legislation repealing the substitute communications tax.  “This tax was a ticking time bomb for Florida’s businesses, particularly when no other state in the country had this onerous tax,” Gallagher said.

A fire safety bill that will protect elderly residents in older nursing homes by requiring all nursing homes to have fire sprinkler systems by Dec. 31, 2008.  The bill was sponsored by Sen. Daniel Webster and Rep. John Stargel.  “A fire sprinkler system could be the difference between life and death for nursing home residents, particularly for those who are disabled and need help to get around,” Gallagher said. 

Legislation reducing the intangibles tax by half.   This tax burden has fallen almost entirely on seniors, small business owners and middle-aged savers – the very people who drive our economy.

Legislation that lays the groundwork for Floridians to set up hurricane savings accounts and protects these accounts from creditors, which was sponsored by Sen. Lisa Carlton and Rep. Thad Altman.  Money in the accounts can be used to pay for wind mitigation home improvements or to pay deductibles charged for hurricane damage.  Gallagher has already begun to lobby Congress to create the accounts under federal law with a tax-exempt designation.  Gallagher said, “This gives Florida’s families one more financial planning tool and better prepares them for a catastrophic loss.”

Legislation that gives regulators the ability to track, monitor and perform background checks on insurance agencies and their owners, which was sponsored by Sen. Nancy Argenziano and Rep. David Rivera. Gallagher said, “In recent years our department has investigated more than 400 complaints annually involving misappropriation of funds for insurance sold at agencies.  We needed more teeth in the law to protect people.” 

Legislation that boosts the department’s ability to stop unauthorized entities from selling bogus insurance in Florida.  Gallagher thanked Sen. Mike Fasano and Rep. Priscilla Ann Taylor for their sponsorship.  “Too many Floridians have been left with millions in unpaid claims,” said Gallagher.  “This measure will help us shut these bogus operators down faster.”


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.


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.” 

On March 13, a resident of Cross Creek Apartments, at 240 SW 56 Ave., barricaded himself in his apartment after allegedly firing several gunshots into the apartment of his ex-girlfriend in the same complex.  The Margate Police Department responded and called the Broward County Sheriff’s Office SWAT team for assistance.  The SWAT team fired four rounds of Flite-Rite tear gas containers into the man’s apartment, three of which entered the residence.   

The resident, Dan Lee Magno, was found dead in his apartment of a self-inflicted gunshot wound.  It was determined that he poured gasoline throughout the apartment, and gasoline was found on the couch and the clothes he was wearing. 

Investigators determined that gasoline was the main, if not the only, factor that caused the fire to ignite and burn so rapidly.  But, because of the extent of the damage, it could not be determined if the suspect set the fire prior to shooting himself. 

The investigation also looked at whether the Flite-Rite tear gas canisters could have sparked the fire.  According to the report, the objective of the battery of tests was “to determine if the Flite-Rite device could produce temperatures sufficient to either ignite or melt common combustible products normally found in a residence … to determine if the Flite-Rite device could act as an ignition source for gasoline vapors poured into a residence …to determine if the Flite-rite devices could produce chemical patterns consistent with those from gasoline.” 

The findings in the report state: “Observing each test and review of the data produced by these tests indicates that it is highly unlikely that a Flite-Rite projectile could cause an instantaneous fire in a room with a normal fuel load of common combustibles.  

The report on the tests of the Flite-Rite canisters is available at

The Bureau of Fire and Arson Investigations is a law enforcement branch of the Division of State Fire Marshal that assists other state and local fire and law enforcement agencies in the investigation of fires of suspicious origin.  Anyone with information about this case or any incident of fire is asked to call 1-877-662-7766 (1-877-NOARSON).  


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.” 

Gallagher met with several members of Florida’s congressional delegation in March to promote legislation in Congress creating Hurricane Savings Accounts.  Structured in the same manner as Health Savings Accounts and IRAs, a tax-free savings account could be opened to cover current and future hurricane-related expenses. The money deposited, as well as the interest earned, would be tax-deferred.  Unused balances would roll over from year-to-year. |

According to Gallagher, the ceiling on the accounts could be twice the amount of the individual’s deductible, and the money could only be withdrawn to cover qualified hurricane expenses tax-free. Qualified expenses would include: deductibles, uninsured losses such as docks, flood damage, and structural upgrades for future storms.

“As balances accumulate tax-free, consumers would also have the option to purchase higher deductible policies which would result in lower annual premiums,” Gallagher said. 

The legislation (Senate Bill 660), sponsored by Senator Lisa Carlton and Representative Thad Altman, adds hurricane savings accounts to the types of assets protected from creditors. Under the legislation, the amount that may be protected from creditors is limited to twice the deductible of a person’s homeowners’ insurance.

The bill now heads to the governor for signature. 


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.
The Florida Administrative Code (Rule 4-166.051, F.A.C.) requires a public hearing to be held when a rate filing exceeds 25%. Service’s rate filing meets this criteria.
All Service policyholders and interested parties are invited to attend the hearings. The hearings will take place from 3-5 p.m. and 6:30-8:30 p.m. on Wednesday, May 11, 2005 at the Spartan Manor on 6121 Massachusetts Ave. in New Port Richey, Florida due to the high number of policies in the area.
“Policyholders will have the opportunity to interact with company representatives in person and discuss their insurance concerns at these hearings,” said Florida Insurance Regulation Commissioner Kevin McCarty.
A copy of the hearing agendas will be posted on the Florida Office of Insurance Regulation website at
For more information on these hearings, please call the Florida Consumer Helpline at 1-800-342-2762.
Pursuant to the provisions of the Americans With Disabilities Act, any person requiring special accommodations to participate in this hearing should advise the Office of Insurance Regulation at least 5 calendar days before the hearing, by contacting the number listed above.



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.

The legislation, House Bill 1267, heads to Governor Bush for his consideration.  If signed, a loan guarantee program would be available to the estimated 35 nursing homes, mostly older facilities, which currently are not protected by any kind of sprinkler system. 

“Nursing home residents are least able to help themselves, and the Legislature has acted with these residents’ special needs in mind,” Gallagher said.  “I commend all of the legislators who voted for this bill, and I especially thank Senator Webster and Representative Stargel for their commitment and dedication to getting this legislation through.”

The nursing homes without fire sprinkler systems represent 4,200 beds, but regulators have estimated that there could be as many as 5,000 unprotected nursing home beds.  This represents about 5 percent of Florida’s nursing home beds.


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.”

The investigation, based on a referral from Northwestern Mutual Life Insurance Company, uncovered that Martin submitted false information on a disability claim.  Martin reported that, following a motor vehicle accident, he became partially disabled and that his condition deteriorated making him totally disabled in September of 2003.  Fraud investigators found that Martin had continued to practice law in Florida as well as New York while he was collecting disability benefits from July 2003 through February 2004.

The Department of Financial Services, Division of Insurance Fraud, investigates various forms of fraud in insurance, including health, life, auto, property and workers' compensation insurance.  Anyone with information about this case or another possible fraud scheme should call the department's Fraud Hotline at 1-800-378-0445.  A reward of up to $25,000 may be offered for information leading to an arrest and conviction.


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.” 
Although private Long Term Care insurance has been available for some time, recent estimates suggest that this insurance pays only about 3% of all expenses. The remainder falls to either families or Medicare/Medicaid. Nationally, there have been significant issues regarding pricing, contract specifications and Long Term Care availability.
“Management of Long Term Care expenses is a facet of personal risk management that is becoming increasingly important nationally as our population ages,” said Florida Insurance Regulation Commissioner Kevin McCarty. “This is especially true for us in Florida. Private Long Term Care insurance could be an important tool in this process; to date, however, it has not lived up to its potential. Through careful research and analysis, we want to know why, and more importantly, we will use what we learn to help structure a healthy market for the people of Florida; with products and pricing practices that will restore consumer confidence in Long Term Care insurance.”
This project is being conducted by the Office’s newly created Market Research Unit.


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


WHEREAS, the CFO is directly responsible for 7 billion dollars in regulatory collateral deposits and protecting 9 billion dollars of the public’s deposits; and

WHEREAS, the CFO provided the environment to reorganize, redirect and reengineer the business processes that oversee the regulatory collateral deposits under his authority; and

WHEREAS, the CFO provided the funding source for the successful implementation of the reengineered technology solution through the Aspire-Collateral Administration Program for the regulatory collateral deposits; and

WHEREAS, the Collateral Administration Program has successfully increased efficiency, reduced costs, enhanced customer service and is poised to become nationally recognized for improving service delivery. 

NOW, THEREFORE, BE IT RESOLVED that the Bureau of Collateral Management, Division of Treasury, Department of Financial Services to hereby recognize and commend


for his outstanding contributions and commitment to Florida through creative support of the Collateral Administration Program and all divisions and division staff in their pursuit of the mission of the Department of Financial Services.

IN TESTIMONY WHEREOF, the Collateral Administration Program Project Staff have hereunto subscribed their names and have caused the Official Seal of the Bureau of Collateral Management to be hereunto affixed in the City of Tallahassee on this 21st day of April, 2005.

Rebecca Priddle, Financial Administrator, Project Manager

Brenda Chukes, Financial Analyst Supervisor, Collateral Administration

Kenneth Lee, Financial Analyst Supervisor, Program Administration

Ernie Domondon Jr., Financial Analyst II, Collateral Cash Management

Terry Wile, Financial Analyst II, Collateral Account Management

Cheryl Carter, Accountant III, Collateral Transaction Management


Consumer Services HelpLine
(800) 342-2762.