Florida Lawmakers Consider New Bill to Increase Consumer Protection and Insurer Accountability

Florida lawmakers are considering a new bill, SPB 7052, that aims to increase consumer protection and insurer accountability in the state.[0] The bill contains provisions related to insurance coverage, rates charged for insurance, insurer claims handling, and regulatory oversight practices.[1] Under the proposed legislation, insurers would be required to calculate in their rate filings the effect of recent legislative changes, and property insurance and motor vehicle rate filings must include the combined effect of recent legislative reforms and updates to property insurance mitigation discounts at least every five years.[0]

The bill also includes provisions for increasing fines that regulators can impose on insurers, increasing information-reporting requirements, and requiring rate filings to reflect changes in laws aimed at helping insurers.[2] The maximum fines imposed on insurers for “nonwillful” violations will increase from $20,000 to $100,000, while for “willful” violations, the maximum fines will rise from $200,000 to $1 million.[2] The proposed legislation would substantially raise fines for insurers by 250%, and even up to 500% for violations committed during a state of emergency following a hurricane. Additionally, the Office of Insurance Regulation (OIR) would be mandated to carry out market conduct investigations of insurers that have been found to reject or underpay significant amounts of claims after a storm. Furthermore, insurers would be required to provide their claims handling manual to the OIR.[3]

The proposed legislation comes at a tumultuous time in the insurance market, particularly after Hurricane Ian and Hurricane Nicole hit the state last year.[4] The hurricanes worsened the issues that had already caused property insurers to abandon customers and increase rates. In certain instances, these problems even resulted in insolvency.[4] The bill seeks to provide the proper balance between insurers and policyholders and makes certain that insurers “will be held accountable if they do not meet the obligations of their contracts,” said Sen. Travis Hutson, a St. Augustine Republican and bill sponsor of the bill.

The bill has drawn pushback from insurance and business groups, including the Florida Chamber of Commerce, which objected to parts of the bill 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.[4] Carolyn Johnson, a lobbyist for the Florida Chamber, expressed concern about the proposed legislation, stating that it could lead to increased costs for consumers, and that the new provisions would lead to more litigation.

The proposed legislation also includes provisions for increasing documentation and scrutiny of payments that insurers make to affiliated companies for services.[5] The proposed legislation intends to establish standards for regulators to assess payments and determine whether they are just and equitable.[5] The OIR would also issue a quarterly report about actions taken against insurers, including identifying the insurers and providing information about violations and penalties.[0] The bill would also make clear that changes passed during a December special session do not apply to insurance policies in effect before the law was approved.[6] To some extent, this would hinder insurers from attempting to enforce lawsuit restrictions that were enacted in December to resolve disagreements regarding past claims.[6]

Overall, the bill seeks to balance fair costs and protections for consumers, while strengthening state review and analysis of the insurance market, so that bad actors can be held accountable.[0] The proposed legislation is meant to bring a “healthy balance” of oversight to the state’s insurance market, said Sen. Hutson.

0. “Republicans promote insurance bill as protecting consumers, holding bad actors accountable” Florida’s Voice, 5 Apr. 2023, https://flvoicenews.com/republicans-promote-insurance-bill-as-protecting-consumers-holding-bad-actors-accountable/

1. “Senate bill would prohibit insurers from canceling policies during pending claims” The Capitolist, 5 Apr. 2023, https://thecapitolist.com/senate-bill-would-prohibit-insurers-from-canceling-policies-during-pending-claims/

2. “Florida lawmakers have new plan for insurance crisis: ‘Insurer accountability'” Tampa Bay Times, 6 Apr. 2023, https://www.tampabay.com/news/florida-politics/2023/04/05/florida-insurance-legislature-insurers-accountability-premiums-homeowners

3. “Lawmakers seek to beef up insurer oversight after tort reforms” Florida Politics, 5 Apr. 2023, https://floridapolitics.com/archives/601225-lawmakers-seek-to-beef-up-insurer-oversight-after-tort-reforms/

4. “Florida Senate moves forward with proposal increasing regulations for insurance companies” WCJB, 5 Apr. 2023, https://www.wcjb.com/2023/04/05/florida-senate-moves-forward-with-proposal-increasing-regulations-insurance-companies

5. “Florida lawmakers get pushback seeking insurer accountability” WKMG News 6 & ClickOrlando, 5 Apr. 2023, https://www.clickorlando.com/news/2023/04/05/florida-lawmakers-get-pushback-seeking-insurer-accountability/

6. “Florida insurer ‘accountability’ sought – Tampa Bay Business Journal” The Business Journals, 5 Apr. 2023, https://www.bizjournals.com/tampabay/news/2023/04/05/plan-seeks-insurer-accountability-in-florida.html

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