Florida House Panel Debates Contentious Insurance Bills
A Florida House subcommittee on insurance recently advanced two highly debated bills, sparking a flurry of discussion among industry stakeholders. While one bill found support among insurance agents, another faced opposition from both agents and insurance carriers. Simultaneously, a different subcommittee voted to repeal the auto insurance personal injury protection (PIP) law and increase the minimum liability coverage limits. However, the ultimate fate of House Bill 1181, or its Senate counterpart, remains uncertain as it navigates the legislative process. Moreover, Governor Ron DeSantis has hinted at a potential veto of the PIP measure should it pass both chambers.
Property Insurance Bill
Regarding property insurance, the House Commerce Committee’s subcommittee on insurance and banking approved a revised version of House Bill 643, introduced by Representative John Snyder, a payroll and staffing company owner. If enacted, this bill aims to streamline the process for agents seeking surplus lines coverage for properties that are difficult to insure. Specifically, it would eliminate the “diligent effort” requirement currently mandated by state law.
Currently, agents must seek coverage from at least three admitted carriers before utilizing a surplus lines insurer. The proposed bill would remove this requirement. The Florida Association of Insurance Agents (FAIA) supports this aspect of the bill. “The diligent effort requirement has just been a bureaucratic roadblock that has added delays,” stated B.G. Murphy, FAIA’s government affairs director, following the meeting.
However, Chip Merlin, a well-known plaintiffs’ attorney, voiced opposition to the bill. He argued that it would weaken consumer protections by potentially pushing policyholders toward more expensive and less-regulated surplus lines. “This bill favors those companies that do not want to invest in the admitted market in Florida,” Merlin stated during the meeting.
An earlier version of the bill also included a provision to eliminate the requirement for agents to be appointed with three carriers before writing policies with Citizens Property Insurance Corp., a state-created entity. That section was removed from the amended bill, but it remains in a Senate bill, SB 1184, which has already been approved by the Senate Banking and Insurance Committee and is now under consideration by the Senate Judiciary Committee.
Arbitration and Litigation Options
A contentious part of HB 643, discussed at length during the House subcommittee meeting, addresses Citizens’ policyholders’ choices regarding litigation versus state-managed arbitration in claims disputes. Current law allows either Citizens or the insured to choose, post-claim, when a dispute can be decided by the Florida Department of Administrative Hearings, a state agency that arbitrates disputes. HB 643 proposes to include the arbitration option directly within the policy language.
The bill mandates that policyholders must be notified in writing at the time of policy initiation and upon each renewal, requiring them to decide whether to resolve disputes through arbitration before the Division of Administrative Hearings. This notification must be in boldface 12-point type, immediately preceding the insured’s signature, and includes the following statement:
AN INSURED MUST CHOOSE AT THE TIME OF ENTERING INTO THIS POLICY OR UPON RENEWAL WHETHER TO RESOLVE DISPUTES THROUGH ARBITRATION BEFORE THE DIVISION OF ADMINISTRATIVE HEARINGS. THE INSURED MUST INDICATE THIS SELECTION BY MARKING ‘ACCEPT’ OR ‘DECLINE’ BELOW. THIS DECISION CANNOT BE CHANGED DURING THE TERM OF THE POLICY.
While some representatives expressed concerns that arbitration could favor the wealthy due to their ability to afford attorneys, the bill’s sponsor argued the opposite. Litigation in the courts can be a lengthy and expensive process with high attorney fees, a burden that can be sustained more easily by wealthier policyholders. A Citizens spokesperson said the insurer is reviewing the bill.
Agent Licensing and Other Discussions
Meanwhile, the subcommittee also approved HB 1047, despite reservations from lawmakers about unanswered questions and the need for further refinement. “The bill is not ready for prime time,” said Representative Mike Caruso, who voted against the measure.
Among other changes, the bill, introduced by Representative Kim Berfield, proposes a significant reduction in the number of education hours required for an insurance agent’s license. Representative Berfield noted that Florida currently mandates more hours than any other state. After extensive research, she proposed a requirement of 60 hours, without providing further details. The FAIA opposes the bill, citing concerns about Florida’s volatile property insurance market and the potential for inexperienced agents. Existing regulations already allow exemptions to the 200-hour rule for experienced professionals. FAIA’s Murphy further clarified that the FAIA does not derive financial benefits from providing education courses for agents.
The most debated section of the bill concerned amendments to the 2023 tort-reform statute provisions related to alleging bad faith by insurance companies. Both insurance groups and consumer advocates opposed the proposed wording. The bill would allow “sufficient evidence” of a claim to encompass photographs or surveillance video of an accident, alongside medical bills. However, several committee members criticized a provision allowing insurers only ten days to object to the evidence, with policyholders given a mere ten days to respond.
It would also permit carriers to cancel or non-renew policies before repairs are completed if the insured no longer has an insurable interest in the property. “What about an older person whose house is gone after a storm, who has moved in to her children’s house out of state, and the insurance company mails the notice to the house that’s not even there anymore?” Representative Caruso asked. “She has just 10 days to respond to a letter she never even got?”
William Large, president of the Florida Justice Reform Institute, spoke at the meeting, expressing concerns that the bill would jeopardize the HB 837 tort-reform law approved in 2023, which raised the standards for plaintiffs’ bad-faith claims. The 2023 law gives insurers 90 days to tender policy limits in claims, a process which has worked effectively for the past two years, Large stated.
The Florida Insurance Council also opposes HB 1047. Nonetheless, the subcommittee approved the bill with a 12-6 vote on Thursday, with members suggesting that the issues could be addressed in the subsequent committee review.
Rep. John Snyder explains HB 643 at the Capitol Thursday.
