Florida lawmakers will not provide resolution for two controversial issues currently facing the Florida insurance industry, this year at least.
At the close of the 2016 Florida legislative session on March 11, attempts to address the rising cost of water damage claims from the misuse of assignment of benefits and to regulate the Florida ridesharing industry were unsuccessful.
The bills introduced in the Florida House and Senate to curtail the assignment of benefits abuse problem – being called a critical issue by insurers, consumer and industry advocates – were dropped in mid-February. A “compromise” bill introduced by another lawmaker that had a glimmer of hope of being passed before the 2016 session ended ultimately died as well.
Supporters of the original assignment of benefit legislation mounted several statewide campaigns to encourage state lawmakers to tackle what they deem as insurance abuse by attorneys and water remediation contractors. But their efforts weren’t enough to sway legislators, many of whom were lobbied hard by those who stood to lose from any new laws.
“We’re very disappointed that we were unable to pass legislation that would eliminate the practice of requiring consumers to sign away rights they have under their insurance policy,” said Steve Burgess, a former three-time state of Florida Insurance Consumer Advocate and a member of the recently formed Consumer Protection Coalition. “The data shows that the practice is very costly to consumers, and it’s now beginning to spread statewide.”
Meanwhile, insurers and their advocates have warned Florida homeowners to expect rate increases from the “skyrocketing water losses,” particularly in Miami-Dade, Broward and Palm Beach counties.
According to the Florida Office of Insurance Regulation, water losses have increased by 46 percent over a five-year period, and insurers would have to raise rates by at least 10 percent in order to cover the increase.
OIR also found a dramatic rise in the use of assignment of benefits for water loss claims of at least 10 percent from 2010-2015.
Citizens said in statement that rates will be increased by the state-allowed 10 percent every year for the foreseeable future in order to cover the increase in non-wind related losses.
“This is a true crisis,” said Barry Gilway, Citizens president, CEO and executive director. “I’m not sure people are fully aware of that.”
Citizens’ spokesperson Michael Peltier said Citizens has filed a “slate of proposed rule changes” with OIR, which will be ruled on at a later date. One such change is the requirement that policyholders give 72 hours’ notice to Citizens or their insurance agent in the event of a loss or damage to covered property.
Despite approval on Jan. 27 of a Florida House bill, called the ridesharing “model” legislation because it followed similar laws that were passed in other states, lawmakers in the Senate were unable to come to an agreement on its companion bill.
The Senate version called for stricter insurance requirements and allowing local governments to pass their own regulations, which transportation network companies (TNCs) opposed.
The debate grew even more contentious in the final weeks leading up to the end of the 2016 session, with taxi companies and TNCs attacking each other and lawmakers through negative statewide ads.
In the end, both the House and Senate bills ended up falling by the wayside.
State insurance advocacy groups expressed frustration with lawmakers’ inability to provide regulation for the burgeoning industry again this year.
“The legislature’s failure to take action allows inconsistencies in the rules and could leave drivers and the public vulnerable should something happen while they are on the road,” said Michael Carlson, executive director of the Personal Insurance Federation of Florida. “With Uber, Lyft and other app-based ride-hailing services becoming popular modes of transportation by both residents and visitors to our state, it’s unfortunate lawmakers could not come to a consensus on something so basic and important as insurance.”
Logan McFaddin, state government relations regional manager for the Property Casualty Insurers of America (PCI), worked closely with lawmakers on both sides, and said PCI will try again next year to get regulations passed.
“Twenty-nine other states have passed legislation addressing insurance coverage requirements for TNCs, and it is past-time for Florida to do the same. PCI will continue to work with lawmakers on a solution for 2017 so that this is the last year rideshare drivers and passengers operate without the necessary protections in place,” she said.
McFaddin says until then, ridesharing regulations will continue to be controlled at a county level statewide, and the insurance requirement will still be up in the air.
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