Altering Adjusters’ Reports a No-No Under Florida Insurer Accountability Bill

By | April 6, 2023

As trial lawyers and news reports around the state continue to criticize Florida lawmakers for the far-reaching tort-reform passed last month, the Senate Banking and Insurance Committee has approved a bill designed to bring more accountability for property insurers.

By a vote of 8-0, the committee on Wednesday adopted Senate Bill 7052, dubbed the “Insurer Accountability Act.” If signed into law, the multi-faceted measure would require many new rules for insurers. Notably, it would prohibit insurers from altering or amending an adjuster’s report without including a list of changes, who made the change, and an explanation of a change that reduces coverage, according to a staff analysis of the bill.

That practice has come under fire from some independent adjusters, who have said that some carriers and insurer-hired adjusting firms have doctored their damage assessments, drastically reducing the amount of wind damage but leaving the adjusters’ names on the reports. State regulators are said to be investigating the alleged fraud.

SB 7052 also would bar payment of bonuses to officers and directors while an insurer is impaired or insolvent. That’s something that Florida news reports have highlighted after recent insolvencies.

The bill, drafted by the committee that’s chaired by Sen. Jim Boyd, R-Bradenton, also would require Citizens Property Insurance Corp. to cover property with open claims that are being handled by the Florida Insurance Guaranty Association after an insurer insolvency, according to a staff analysis of the bill. That type of action has been followed to some extent in recent years, although the Office of Insurance Regulation has been criticized for allowing one primary market insurer, Slide Insurance, to assume thousands of policies held by insurers in runoff or facing liquidation.

Other provisions would:

  • Require regulators to consider the recent legislative reforms when reviewing proposed rate increases, and would prohibit the Office of Insurance Regulation from waiving review of policy forms for any insurer that has violated the state’s insurance code.
  • Prohibit authorized and surplus lines insurers from cancelling a property insurance policy during any pending claim until after repairs are complete.
  • Provide that the prohibition on applying any other deductible under the policy if a roof deductible is applied encompasses any other loss to the property caused by the same covered peril.
  • Toll the time period for filing a property insurance claim during an insured’s active duty military service.
  • Clarify legislative intent that Senate Bill 2A, passed in a December special session to limit attorney fees and claims litigation, shall not be construed to impair any right under an insurance contract in effect on or before the effective date of that law.
  • Require that mitigation discounts be updated at least every five years, and that insurers provide consumer-friendly information on their website describing hurricane mitigation discounts available.
  • Require OIR to make sure that liability insurers comply with best practices for claims handling.
  • Create a 60-day prompt-pay rule for non-PIP motor vehicle insurance claims, similar to the prompt-pay law for residential property insurance claims.
  • Require insurers to annually submit their claims manuals to the OIR and attest that the manual comports to usual and customary industry claims handling practices.
  • Increase maximum administrative fines by 250% in most instances, and by 500% for violations during a state of emergency such as a hurricane.
  • Require insurers to respond more promptly to the Department of Financial Services’ Division of Consumer Services, and would increase fines for noncompliance.
  • Provide additional funding for the DFS Division of Consumer Services.
  • Specify objective criteria to be used by OIR to prioritize market conduct examinations and to determine when payments to affiliates are excessive.
  • Require insurers to report to the OIR any temporary suspension of writing new policies.

The bill’s full text can be seen here. A video recording of the committee meeting is here. The measure has at least two more stops in the Senate before reaching the floor. A companion bill in the House of Representatives has yet to be introduced. The legislative session runs until the first week of May.

Top photo: Citizens Property Insurance CEO Tim Cerio at the Senate committee hearing Wednesday. (The Florida Channel)

Topics Florida Carriers

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