Gov. Bush Pledges to Sign SB1486; Insurers Uneasy About Its Provisions

Florida Gov. Jeb Bush pledged during the May 11 opening of the annual Governor’s Hurricane Conference at the Tampa Convention Center to sign and approve Senate Bill 1486, controversial legislation that consumer advocates say doesn’t go far enough, and insurance industry observers say goes “too far.”

The Florida Legislature debated SB 1486 until the early morning in Florida – and that is not good for consumers or insurers, according to one critic of the bill.

Among the key changes:

• Consumers will get cash up front for their damages. Insurers will no longer be allowed to withhold part of the check until repairs are complete.

• Insurers won an exemption from paying policy limits when flooding or storm surge-normally covered under federal flood insurance-contributes to the destruction of a home. Hundreds of 2004 hurricane victims with current claims are
protected from the exemption. They’ll have to continue to fight for those contested payments in court, a venue that includes class action lawsuits against four of Florida’s largest insurers.

• Policy content changes including large-type warnings about the flood gap, itemized lists of what’s covered, policy discounts and the dollar value of their hurricane deductible.

• A rate cap on the state-sponsored insurer of last resort, Citizens Property Insurance, was removed. So was a provision requiring insurers pay uncontested claims in 30 days.

• A checklist to explain clearly what’s covered and not in their insurance policies.

• A low-interest loan program to help pay for retrofitting property to meet stronger building codes.

• More choices for hurricane deductibles.

Policyholders are promised they can still seek policy limits if they prove wind would have destroyed their homes even without flood. Insurers are guaranteed that when consumers do that, they don’t collect more than it costs to rebuild.

It also means the insurance industry will see changes to the Florida Hurricane Catastrophe Fund, from which companies buy coverage to help them pay claims after a hurricane.

Companies will now be able to draw from the fund for smaller storms that resulted in $1 billion or more in losses, provided the two worst storms of the season caused at least $4.5 billion apiece in damage.

Allstate Floridian lobbyist George Grawe said the bills failed to address the major problem facing the industry-the lack of capital to pay hurricane claims. Grawe tried to convince lawmakers to change the Florida Hurricane Catastro-phe Fund to make it easier for companies to tap in the event of a series of major storms.

SB 1486 would provide consumers with a checklist to make it easier for them to know what is covered in their household policies and changes state law determiningwhat insurers have to pay if a home is destroyed. It allows insurance companies to pay only for the damage they cover, meaning a wind insurer wouldn’t pay for flood damage.

Provisions also make it easier for insurance companies to tap into the Florida Hurricane Catastrophe Fund to help pay claims, something the industry wanted since last year’s four storms.

The Senate bill ends arbitration as an alternative for insurers when state regulators reject homeowner rate increases, establishes standard rating territories and requires companies to pay claims within 30 days.

Florida Governor Jeb Bush