Property Insurance Special Session

The Florida Legislature convened in December for a second special session on property insurance, yielding another round of reforms to try to prop up the state’s struggling marketplace. During the three-day special session, legislators also tackled issues related to Hurricane Ian and Hurricane Nicole relief and toll rebates for frequent travelers on Florida’s toll road systems. In this month’s article, let’s review the highlights of the special session legislation passed by the legislature and signed by Governor Ron DeSantis.

SB 2A Property Insurance by Senator Jim Boyd (R – Bradenton) – The bill requires insurers to more promptly communicate, investigate and pay valid claims. Anticipated shortages in the reinsurance market are addressed through a new optional state reinsurance program. Excessive litigation is addressed by eliminating one-way attorney fees for property insurance and instead allowing both parties to obtain fees through the offer of judgment statute. The bill strengthens the regulatory authority of the Office of Insurance Regulation over property insurers. More specifically, the bill:

■ Eliminates assignment of benefits.

■ Eliminates one-way attorney fees.

■ Requires a bad faith breach of contract before a policy holder can sue a property insurer.

■ Creates the Florida Optional Reinsurance Assistance Program (FORA) that provides optional hurricane reinsurance that property insurers can purchase at near market rates.

■ Reduces the time limit for providing notice of a loss to a property insurer from two years to one year for initial or reopened claims and from three years to 18 months for supplemental claims.

■ Changes the prompt pay statute to encourage property insurers to settle claims in a timely manner.

■ Provides Mandatory Binding Arbitration – codifies that companies, for a premium discount, may issue an optional endorsement with consent from the policyholder that requires participation in binding arbitration to settle a claim.

■ Notice to Policyholders – requires that a property insurer place the “Flood Coverage Not Included” statement on the policy declarations page rather than just “with the policy documents.”

■ Strengthens the Office of Insurance Regulation (OIR) – enhances OIR’s ability to do market conduct examinations of property insurers after a hurricane, including examinations of managing general agents; allows OIR to discipline insurers for abuse of the appraisal process; adds information regarding the use of appraisal to the list of information that a property insurer must include in its quarterly reports to OIR; allows OIR to review property insurers’ forms, withdraw approval and suspend an insurer’s ability to invoke appraisal for up to two years; requires OIR to add the names of insurers who abuse the appraisal process to its Property Insurer Stability Unit biannual report and post those names to its website; at OIR’s option, allows additional time for agents to place policyholders during insolvencies.

Citizens Property Insurance Corporation (Citizens), for renewals and take-out offers (depopulation), establishes that if a renewal or take-out offer from an authorized insurer is within 20 percent of a policyholder’s Citizens premium, including surcharges and assessments being levied, a policyholder is ineligible to remain in Citizens; for new policies, establishes that the risk is ineligible for Citizens coverage if the admitted-market policy is within 20 percent of a policyholder’s Citizens premium; requires Citizens residential lines policyholders to obtain flood insurance as a condition of having coverage from Citizens by 2027; provides a different glidepath for the rates that Citizens charges non-primary residents so that those policies become actuarially sound more quickly; authorizes Citizens to combine its three policyholder accounts into a single account upon eliminating all outstanding financing obligations to allow Citizens to use its entire surplus to pay claims.

SB 4A Disaster Relief by Senator Travis Hutson (R – Palm Coast) – The bill provides a partial property tax refund for residential property owners whose real property was destroyed or rendered uninhabitable for at least 30 days by Hurricane Ian or Hurricane Nicole.

■ The partial refund of taxes is based on the number of days the home was uninhabitable and requires property owners to first pay their property taxes on time and in full.

■ The bill establishes the “Florida Emergency Management Assistance Foundation,” a directsupport organization of the Division of Emergency Management (DEM). The foundation will provide assistance, funding and support to DEM in its disaster response, recovery and relief efforts for natural emergencies.

■ The bill provides an appropriation to cover the entire match requirement for FEMA Public Assistance to local governments within counties designated in a FEMA disaster declaration for Hurricane Ian or Hurricane Nicole.

■ The bill appropriates $150 million from the General Revenue fund to the Florida Housing Finance Corporation.

The bill authorizes the Department of Environmental Protection (DEP) to waive or reduce match requirements for eligible local governments for beaches located in areas impacted by Hurricane Ian or Hurricane Nicole; creates the Hurricane Restoration Reimbursement Grant Program within DEP to assist coastal property owners with beach erosion costs as a result of Hurricane Ian or Hurricane Nicole and creates the Hurricane Stormwater and Wastewater Assistance Grant Program within DEP to provide financial assistance to certain local governments that operate a stormwater or wastewater system that sustained damage from Hurricane Ian or Hurricane Nicole.

SB 6A Toll Relief by Senator Nick DiCeglie (R –St. Petersburg) – The bill directs the Florida Turnpike Enterprise (FTE) to establish a toll relief program effective January 1, 2023 through December 31, 2023 for all Florida toll facilities or Florida toll facility entities that use a Florida-issued transponder or are interoperable with the Department of Transportation’s (DOT) prepaid electronic transponder toll system.

■ A person must have a prepaid SunPass account or another Florida-based electronic prepaid toll program account in good standing and a SunPass or other transponder issued by a Florida toll entity must be linked to the qualifying account.

■ A qualifying account that records 35 or more “qualifying transactions” per transponder per calendar month is eligible for an account credit equal to 50 percent of the amount paid in that calendar month for the qualifying transactions per transponder.

■ A “qualifying transaction” is a paid transponderbased toll transaction incurred by a two-axle vehicle for travel on a Florida toll facility using a Florida issued transponder linked to a qualifying account. The account credit must be posted to the qualifying account the month after the credit is earned.

FRM

Chris Dawson is an Attorney and professional Lobbyist for GrayRobinson’s Orlando office and is licensed to practice law in both Florida and Alabama. He primarily focuses on lobbying and government relations for public and private sector clients at the executive and legislative levels of state government. He is credentialed as a Designated Professional Lobbyist by the Florida Association of Professional Lobbyists. Chris also holds two degrees in Civil Engineering and has experience in construction litigation and design professional malpractice defense.