News from Tallahassee for 4/25/14

When being insured is not a choice posted on 4/21/14

by John Hielscher | Herald Tribune

Florida regulators have ordered the state's two largest lender-placed insurance companies to lower rates and reform certain business practices.

Lender-placed insurance, also known as "force-placed," is taken out by banks, lenders or mortgage servicers when borrowers fail to provide the coverage required by their mortgages.

Premiums for lender-placed insurance, or LPI, are often much higher than the coverage individual borrowers can buy on their own. Homeowners are billed by lenders for the cost of their policy, and they have little or no say on the insurance provider the lender selects.

"LPI can be twice as expensive, or greater, than voluntary insurance," said Harvey Bennett, spokesman with the Florida Office of Insurance Regulation.

The use of LPI grew during the Great Recession and in its aftermath. Many Florida homeowners stopped buying property insurance during the economic downturn, or discontinued existing policies, as they struggled to keep their homes out of foreclosure.

Others simply walked away from their properties, leaving them uninsured. Under state rules, lenders also are able to step in and buy LPI if they think a property is underinsured. They also can purchase flood insurance on homes in flood zones.

House preps Citizens sinkhole bill for final vote posted on 4/10/14

by Gray Rohrer | Florida Current

House member Wednesday readied HB 129, which requires Citizens Property Insurance Corp. customers to choose from contractors approved by the company to conduct sinkhole repairs, for a final vote that could come as soon as Friday.

The bill is designed to crack down on sinkhole claims expenses by requiring homeowners to use payments to fix a home. But Democrats questioned bill sponsor Rep. Jake Raburn, R-Lithia, noting that current law already requires homeowners to get the repairs. Raburn said a loophole exists...

Rep. Frank Artiles, R-Miami, had filed an amendment identical to a previously-defeated amendment pushed by Rep. Richard Corcoran, R-Land O’Lakes, to allow Advanced Pier Technology, a Brooksville-based contractor currently in litigation with State Farm over allegedly inflating the cost of repairs, to be on Citizens’ preferred vendor list. But Artiles withdrew the amendment before it was considered.

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Citizens sinkhole repair bill heads to House floor posted on 4/4/14

by Gray Rohrer | Florida Current

Legislation requiring Citizens Property Insurance Corp. policyholders looking to repair sinkhole damage to choose from vendors selected by the state-run company cleared the House Regulatory Affairs Committee on Thursday, it’s last stop before heading to the floor.

Four Democrats voted against HB 129, taking a negative view of a new mandate on Citizens customers. Also, after lawmakers passed SB 408 in 2011, allowing Citizens to offer non-catastrophic sinkhole damage as an optional part of a policy, sinkhole claims have diminished.

“(The staff analysis of the bill) talks about how claims are going down year after year,” said Rep. Richard Stark, D-Weston.

Rep. Jake Raburn, R-Lithia, sponsor of the bill, said it was needed to clamp down on the practice of homeowners drawing down claims payments for small cracks to their house but not repairing the damage. Citizens has seen sinkhole litigation costs rise in recent years as the company changed tactics, forcefully fighting claims it shouldn’t pay.

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As insurance company lobbies for tax break, it steps up its campaign contributions posted on 4/1/14

by jason garcia | orlando Sentinel

The nation’s largest title insurance company is lobbying the Florida Legislature for a controversial tax break that could save its industry more than $5 million a year.

If lawmakers sign off, the measure would allow Jacksonville-based Fidelity National Financial Inc. to employ a tax-avoidance strategy that a Florida court ruled illegal just six months ago.

As it presses the Legislature to approve the break, Fidelity has also begun making larger campaign contributions. Records show Fidelity has handed out $150,000 to various legislators and political groups since losing its court case in September – including $25,000 to an organization set up by state Sen. Wilton Simpson, a Republican from Pasco County who is carrying the legislation through the Florida Senate.

Opponents quesiton whether consumers would see any benefit from the tax break. Title insurance rates are regulated by the state, so the tax savings would not directly translate into lower premiums. "I don't know if the consumer is helped," Rep. Richard Stark, a Democrat from Weston who is also an insurance broker, said during a recent hearing on the measure.

But Fidelity, which could save more than $1 million annually by itself, defended the legislation, framing it as an issue of tax fairness for the title-insurance industry in Florida.

“All Florida taxpayers benefit when the tax system treats individuals and business with fairness,” the company said in written responses to questions.

In Florida, insurance companies are generally required to pay a 1.75 percent tax on the total premiums they collect from consumers. The state’s “insurance-premium tax” applies to most types of policies, including life, health, property and title.

Fidelity is lobbying state lawmakers to exempt a big chunk of title-insurance premiums from that tax. Specifically, the company does not want to pay tax on the portion of its premiums that go to third-party title agents with whom Fidelity contracts to sell policies on its behalf. The portion paid to title-insurance agents ranges from 60 percent to 70 percent of the total amount that consumers pay.

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Fla. Legislature may reject consumer protections posted on 3/28/14

by GARY FINEOUT | AP

TALLAHASSEE, FLA. — Florida's chief financial officer went to the Legislature this spring with a simple request: grant additional protections to customers dealing with property insurance companies.

But the push by Jeff Atwater is in serious jeopardy. That's because insurers, such as State Farm Florida, are only willing to accept the added protections if they come with other changes that could help keep their costs down.

And that's proving to be a big problem.

The House and Senate are now divided over the issue and are advancing very different versions of the bill (SB 708). It's a sign that nearly halfway through the Legislature's 60-day session that the bill could easily die.

"I really hope some important consumer stuff is not lost in the fight," Atwater said.

Atwater says he's pushing the bill in reaction to thousands of calls his offices receive from consumers confused about how to file a claim when their home is damaged by a storm or a fire. Atwater oversees the state's insurance consumer advocate office.

The bill would create a "homeowner claims bill of rights" that requires insurers to spell out to homeowners what they can expect when they file a claim.

The legislation also would prohibit insurance companies from using credit information to deny a claim or cancel a policy if the policy has been in effect for more than 90 days. This provision came out of a dispute between regulators and one of Florida's largest insurance companies.

Atwater said that the Legislature has given consumers specific rights over the years, "but consumers don't have a bookshelf at home with these statutes. They are not conversant in this."

But some insurers want a separate provision that would place limits on when a homeowner can sign over to a contractor the right to collect payments directly from an insurance company. They contend that this is a looming problem and that some companies hired to fix roofs and repair water damage have inflated the costs. Without the change the fear it is could drive up homeowner insurance rates once again.

Atwater initially backed this provision and said there are places where it is being abused. But the provision has drawn opposition from contractors and earlier this month a Senate panel voted to strip it out of the bill (SB 708).

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