From Investigations to Legislation: Florida Lawmakers Weigh Changes for Insurers and Agents

Florida legislative leaders, facing increasing pressure from the public and the press, pledged to investigate property insurers’ financial structures as they met in Tallahassee in early March. And bills filed before the session began would require other changes that could affect insurance agents and insureds.

Here’s a look at some of the issues Florida lawmakers are considering this year:

Newly sworn House Speaker Danny Perez, R-Miami, on Tuesday announced an investigation into property insurance carriers’ relationships with their managing general agents and other affiliated companies. The call for House hearings came a week after the Tampa Bay Times and Miami Herald reported that a 2022 analysis by the Florida Office of Insurance Regulation suggests that insurers had diverted billions to affiliated companies while claiming financial hardship from hurricanes and claims litigation.

It’s far from certain if the speaker’s probe will lead to new restrictions or new reporting requirements for Florida carriers and MGAs. And it’s not the first time the issue has been raised.

Insurance agents and industry advocates and lobbyists have pushed back on the news report and on the call for further investigations. Several have noted that the MGA arrangements that carriers employ must be approved by OIR, and that it would be absurd for insurance holding companies to deliberately allow a carrier to sink into insolvency while diverting profits.

Meanwhile, legislative changes enacted in recent years seem to be working, slowly but surely, bringing new capital and new carriers to the Florida market, with a slowing of rate increases.

HB 643, by Rep. John Snyder, R-Palm Beach, is considered a top priority for the FAIA, the Florida Association of Insurance Agents. It would make it easier for agents to move commercial and commercial residential policyholders to surplus lines, and to sell Citizens Property Insurance Corp. policies. Agents would no longer be required to make a “diligent effort” to find coverage before obtaining surplus lines coverage.

The bill also would soften the 2024 requirement that agents be appointed with at least three carriers before writing Citizens’ policies. Under HB 643, agents would be able to obtain a signed statement showing they have access to primary market carriers through a broker.

Sponsored by Rep. Keith Truenow, R-Tavares, this omnibus-type bill would make a number of changes. For agents, it would reduce the number of pre-licensing education hours from 200 to 60 — a rule change that FAIA strongly opposes. That would “dumb down” the requirements for agents, something few people really want, FAIA’s Dave Newell said.

The measure, however, also would make it a little easier for insurers to avoid bad-faith claims, by further clarifying 2022 law that requires a court finding that the policy contract was breached, before extra-contractual damages can be demanded. It also would require plaintiffs to specify exact damage amounts, and would exclude attorney fees from damages.

It also would bar public adjusters from engaging in adversarial conduct with insurance adjusters, including recording insurer personnel.

The bills would extend the popular My Safe Florida Condominium pilot program but would clarify that some detached buildings would not be eligible for the grants. It also would allow just 75% of unit owners to agree to apply for the program, not the current level of 100%. Only condo buildings of three stories or higher would be eligible.

For single-home mitigation measures, SB 1466 and HB 851 would set up a trust fund that could provide perhaps as much as $70 million annually for the My Safe Florida Home program. It would allocate 5% of sales tax revenue generated from hurricane-impacted counties in the two months after a storm makes landfall.

SB 128, by Sen. Danny Burgess, R-Zephyrhills, may get some attention since it appears to be consumer-friendly at a time of rising concerns about insurance corporation rates and practices. But it has led to some confusion.

The bill would require cancellation and nonrenewal notices be mailed and emailed at least 45 days before the termination date. But Florida law already requires 120-day notice for most nonrenewals and cancellations. Also, SB 790 and HB 941 would bar insurers from cancelling policies for at least 90 days after repairs are made.

The measure would exempt new Citizens policies from the glidepath, a statutory mechanism that limits Citizens’ rate increases each year. The change would be highly controversial but is considered free-market friendly.

Primary market insurance leaders and Citizens’ top brass have all called for an end to the glidepath, in order to allow the insurer of last resort to truly be an insurer of last resort and charge market rates or higher, which could encourage more competition. But Florida’s insurance commissioner and OIR recently slashed a proposed Citizens rate increase in half, keeping premiums for the carrier lower.