The Florida insurance market has been a hotbed of controversy over the last year, and many are looking at the Florida State Legislature to alleviate some of the concerns coming from consumers, businesses and the industry itself.
From insurance fraud to workers’ compensation to the escalating assignment of benefits (AOB) issue, there is no shortage of insurance topics for lawmakers to discuss when the 2017 session begins March 7.
Some of the current proposals lawmakers will consider in the upcoming session include:
Legislation addressing the tailspin of Florida’s workers’ compensation market is considered a top priority, thanks to several 2016 decisions from the Florida Supreme Court.
The most significant was an April ruling that found the state’s workers’ comp attorney fees cap is unconstitutional. Rates went up 14.5 percent in response on Dec. 1, and that is just the tip of iceberg, experts say.
Florida will consider bills on the attorney fees cap and workers’ comp alternatives such as an opt-out system.
Insurance industry advocate group Property Casualty Insurance Association of America (PCI) said it is in favor of a bill proposed by the Associated Industries of Florida that proposes injured workers would be responsible for their own attorney fees and that judges could not award attorney fees that are to be paid by employers or insurance carriers.
“We believe the proposal effectively addresses the constitutional issues identified by the courts in Castellanos v. Next Door Company and Miles v. City of Edgewater,” said Logan McFaddin, PCI’s Regional manager. “In addition, the proposal would create new efficiencies for dispute resolution while restoring stability to the Florida workers’ compensation system.”
The 12-page proposal would make several other changes to the workers’ comp system, including revising the criteria requiring the Office of the Judges of Compensation Claims to dismiss a petition for benefits and requiring the claimant or attorney to make a good faith effort to resolve a dispute before filing a petition.
AIF said that under this proposal employees are free to retain their own attorneys; The Workers’ Compensation Act will remain intact, expediting resolution of outstanding cases/issues to avoid a costly and prolonged litigation process; injured workers will be attended to by the appropriate medical providers quicker based on mandatory state oversight; unnecessary litigation will be avoided; and personal information of injured workers will not be publicized.
“We believe that under this united business effort, this product will deal with the catastrophic threat head on that has been created by the current legal environment that is hurting the workers’ compensation system, which has worked since the 2003 reforms,” said Tom Feeney, CEO of AIF and chair of its Florida Workers’ Compensation Strategic Task Force.
The bill was yet to be sponsored or officially filed as of March 2.
The industry is backing a bill (Senate Bill 1038) drafted by the Florida Office of Insurance Regulation and sponsored by State Senators Dorothy Hukill and Kathleen Passsidomo to address the abuse of assignment of benefits in Florida, particularly related to water claims.
The bill defines the term “assignment agreement” and would prohibit certain awards of attorney fees to certain persons or entities in suits based on claims arising under property insurance policies.
The bill also stipulates that an assignment agreement will not be valid unless it meets the following conditions:
- Agreement is in writing and is executed by all named insureds
- Allows insureds to rescind the assignment agreement within seven business days without penalty
- Requires the assignee to provide a copy of the assigned agreement to the insured no later than three business days after the agreement is executed
- And includes a written, itemized, per-unit cost estimate of the work to be performed by the assignee.
“Under provisions of the bill, consumers would be held harmless, assignment of benefits could still be utilized and incentives to file unnecessary litigation would be eliminated,” said Florida Insurance Commissioner David Altmaier. “We look forward to working with the Legislature this session on this important issue and are in full support of this bill.”
Florida CFO Jeff Atwater announced that he is working with State Sen. Jeff Brandes and Rep. Holly Raschien to “tackle the ever-evolving issue of insurance fraud in Florida.”
Atwater said the goal is “to further improve our processes and hone our techniques so that the Department of Financial Services can continue to stay a step ahead of the criminals who seek to defraud Floridians.”
The legislation, if passed, would aim to reduce fraud through several measures, including: requiring insurers to designate primary anti-fraud employees; create an Insurance Fraud Dedicated Prosecutor Program; require insurers to adopt an anti-fraud plan; and require that anti-fraud plans and statistics be filed annually with the Florida Department of Financial Services.
“This legislative change will strengthen our fight by more closely aligning our fraud investigators with those who work within these in-house fraud-fighting units. We’ll provide in-depth training on how to spot fraud to industry members, and they will provide important data about the fraud each company is facing specifically,” Atwater said. “By gathering better data, [DFS] will be armed with the information needed to make strategic staffing decisions that place resources where the hot beds for fraud are happening.”
Other proposals related to the insurance industry include repealing the personal injury protection mandate and instead requiring bodily injury coverage; further revising provisions to encourage the state’s private flood insurance market; and reforming Florida’s Hurricane Cat Fund to give insurers more choice between the Cat Fund and private market options for their insurance needs.
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