The Florida Senate has recently approved Senate Bill 7052, a comprehensive legislation known as the Insurer Accountability Act, aimed at bolstering consumer protection and ensuring insurer accountability within the state. Sponsored by Senator Travis Hutson (R-St. Augustine), the bill encompasses various provisions designed to address the challenges faced by Florida's insurance market.
Senator Hutson emphasized the importance of a healthy insurance market, characterized by consumer choice, competitive pricing and coverage options, and financially strong insurers capable of promptly fulfilling claims. However, excessive litigation has negatively impacted Florida's insurance market, leading to insolvency among property insurers, their departure from the state, or a reduced willingness to underwrite new policies. To tackle this issue, the legislature and the Governor have been actively taking measures to resolve the problem, passing significant property insurance legislation in previous years and implementing legal reforms affecting multiple insurance lines.
Senate President Kathleen Passidomo expressed the need to strike a balance between fair costs and consumer protection, ensuring that policyholders have access to reliable and affordable property insurance. The Insurer Accountability Act aims to strengthen state review and analysis of the insurance market, promoting transparency between homeowners and insurance companies and holding bad actors accountable. The bill is a result of collaborative efforts among stakeholders, with Senator Hutson spearheading the development of a robust and meaningful insurer accountability package that builds upon consumer-friendly provisions of existing laws.
Florida's Chief Financial Officer, Jimmy Patronis, acknowledged the state's efforts to mitigate the impacts of a challenging insurance market while prioritizing policyholders. Recent reforms have addressed fraudulent activities that drive up rates for all Floridians, shifting the focus from excessive claims litigation to leveraging vital services offered by the Department of Financial Services (DFS), such as the insurance mediation program and the Consumer Services Division. By alleviating workload challenges, the DFS can better support policyholders and promote greater accountability in the insurance system.
The Insurer Accountability Act encompasses several key provisions that enhance consumer protection and insurer practices. In terms of insurance rates, the bill mandates property insurance and motor vehicle rate filings to include the combined impact of recent legislative reforms, providing a comprehensive overview for review by the Office of Insurance Regulation (OIR). The OIR is allocated $500,000 from the Insurance Regulatory Trust Fund to conduct an actuarial study in order to implement this requirement effectively. Additionally, the bill necessitates regular updates to property insurance mitigation discounts and mandates insurers to provide easily accessible information on their websites regarding hurricane mitigation discounts available to policyholders.
The legislation also focuses on improving insurer claims handling. It requires liability insurers to adhere to proper claims handling practices on behalf of their insureds and mandates residential property insurers to develop and employ claims-handling manuals that comply with the Insurance Code and industry standards. The OIR is empowered to request these manuals at any time and ensure compliance with Florida law. Furthermore, the Unfair Insurance Trade Practices Act is strengthened to prevent the alteration or amendment of an adjuster's report without a detailed explanation, and it prohibits officers and directors of impaired or insolvent insurers from receiving bonuses from the insurer or related entities.
In terms of regulatory oversight, the bill enhances the role of the OIR by requiring it to forward relevant records and information to the DFS, law enforcement agencies, or prosecutorial agencies if any criminal law may have been violated. The OIR is also granted the authority to take actions to assess an insurer's financial condition and order remedial measures if necessary. Administrative fines that the OIR can levy on insurers are increased by 250 percent, with a 500 percent increase for violations occurring during a state of emergency. The bill also focuses on enhancing staffing levels at both the DFS Division of Consumer Services and the OIR.
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