Preview of the 2010 Florida Legislative Session By Leonard E. SchulteThe Florida Legislature's 2010 regular session will convene on March 2, 2010 and is scheduled to end 60 days later on April 30. Hundreds of bills have already been filed for 2010, and legislative committees have already held several rounds of meetings to prepare for the 2010 session, though the session's major insurance controversies have yet to emerge. The Political Environment Under Florida's unique governmental structure, some insurance matters (including company licensing, rates, forms, and solvency) are regulated by the Office of Insurance Regulation (OIR). The OIR is governed by the Financial Services Commission (FSC), which adopts rules and appoints the Insurance Commissioner. The FSC, also known as the governor and cabinet, consists of the governor and three other officers who are elected statewide: the chief financial officer, the attorney general, and the commissioner of agriculture. Other insurance matters (including agent licensing, consumer complaints, and insurance fraud) are regulated by the Department of Financial Services, which is headed by the elected chief financial officer. The 2010 election cycle will see contested races for all four offices with regulatory power over insurance. Republican Governor Charlie Crist is running for the U.S. Senate; Attorney General Bill McCollum is the likely Republican nominee for governor; Chief Financial Officer Alex Sink is the likely Democratic nominee for governor; and term limits prevent Republican Agriculture Commissioner Charles Bronson from seeking reelection. Insurance matters have been among the most controversial issues of recent legislative session, but it is unclear at this point whether any of these statewide campaigns will try to make insurance a major issue in the upcoming session or whether they will seek instead to avoid insurance controversies, at least while the Legislature is in session. Key legislators also are seeking higher office. Senate President Jeff Atwater (R-North Palm Beach) is running for chief financial officer; Sen. Carey Baker (R-Eustis), who has been prominent in insurance issues for many years, is running for commissioner of agriculture; and several members of the state House who have been involved in insurance issues are running for election to the state Senate. Does Deregulation Have a Future? In 2009, the Legislature passed HB 1171, the so-called Consumer Choice bill, which effectively deregulated residential property insurance rates for insurers that met certain surplus requirements. Gov. Crist vetoed the bill, alleging that it would cause significant and unpredictable rate increases, would harm newly created Florida domestic companies, and would give large insurers the ability to cherry-pick among their customers. Supporters saw the bill as a means of preserving a private sector property insurance market, while opponents viewed it as increasing the market power of large companies. The sponsors of the vetoed bill, Rep. Bill Proctor (R-St. Augustine) and Sen. Mike Bennett (R-Bradenton) have stated publicly that they intend to file legislation for the 2010 session with similar goals to the vetoed HB 1171, while trying to address at least some of the governor's objections. As an alternative, other prominent legislators are suggesting a new openness to more flexible regulatory approaches, including rapid recovery of reinsurance costs and "flex-band" rating that would allow small rate changes without regulatory approval. Other Property/Casualty Issues A number of other property/casualty issues are currently in the discussion stage, including: Mitigation: Property insurers have raised concerns that mandatory premium discounts for hurricane shutters, roof anchors, and other devices that reduce losses were too high or were being applied fraudulently. Under legislation enacted in 2009, the Florida Commission on Hurricane Loss Projection Methodology is studying mitigation discounts. The study could result in regulatory or legislative actions to revise the mandatory discounts. Insurers also are seeking to address the concern that substantial numbers of mitigation discounts may have been obtained fraudulently. Florida Hurricane Catastrophe Fund: Legislation enacted in 2009 will gradually reduce the fund's obligations by phasing out the optional TICL layer of reinsurance coverage, which was added in 2007 in an effort to force property insurers to lower their rates....
Insurance Industry Developments For Fall 2009
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