Florida Bill Would Limit AI in Claims Denials, Extend Bar on Execs, Raise Surplus Levels

After years of rising insurance premiums, anger from homeowners, and recent reports about some property insurance carriers’ alleged diverting of profits, bills seen as “consumer friendly” continue to gain traction in the Florida Legislature.

One of those bills, Senate Bill 1740, introduced by state Sen. Blaise Ingoglia, was approved this week by the Senate Banking and Insurance Committee without a single “nay” vote. Among other changes, the bill would extend the prohibition period for insurance executives who had worked with insolvent carriers.

Current Florida law bars executives of insolvent insurers from leadership positions at other insurance companies for at least two years, if it can be shown that the executive contributed to the insolvency. Ingoglia’s bill makes it five years.

And just weeks after a 2022 draft Office of Insurance Regulation report was made public, questioning the financial arrangements with carriers’ managing general agents, the bill would give OIR a little more enforcement power.

If former officers of insolvent carriers are found to have violated the rules, OIR “shall prohibit an insurer or reciprocal insurer authorized in this state from paying any compensation to a managing general agent, affiliate, attorney in fact that has an officer or director or is an attorney in fact that engaged in such violation until the office determines the violation has been remedied,” the bill reads.

The measure also would increase the amount of surplus capital that new, domestic insurers would need before launching in Florida.

Further, it would require that the state’s ever-popular wind-mitigation grant program, known as My Safe Florida Home, limit grants to only those retrofits that result in a premium discount for homeowners.

A committee-approved amendment to the measure also would bar the use of artificial intelligence, machine learning or algorithms as the sole mechanism for denying claims.

“An insurer’s decision to deny a claim or any portion of a claim must be made by a qualified human professional,” the amendment reads.

Lastly, the amendment would forbid OIR from asking carriers to waive rate-filing approval for rate decreases, “provided that the decrease is not solely due to a reduction in coverage or changes to policy forms.”

SB 1740 now goes to at least one more Senate committee before a floor vote. A similar bill in the House is in the House Banking and Insurance Subcommittee of the Commerce Committee.