News from Tallahassee for 4/18/15

State storm fund disclosures spark debate ahead of Cabinet meeting posted on 4/14/15

by charles elmore | palm beach post

Proponents say the time is right for Cabinet officials to approve a first-ever plan for the Florida Hurricane Catastrophe Fund to buy private reinsurance, but opponents say it’s a better deal for Bermuda financiers than Florida homeowners.

Skeptics questioned terms disclosed less than 24 hours before a Cabinet meeting today they understand to show homeowners will pay $12.60 more on a $2,000 policy this year to save them from the slim risk of paying a storm tax of $14.40.

“It makes no sense whatsoever,” said Jay Neal, CEO of the Fort Lauderdale-based Florida Association for Insurance Reform, whose members include representatives from Florida property insurers. “There’s an overwhelming chance it’s going to Bermuda’s operating profit.”

Part of the deal involves $1 billion in private reinsurance, costing $68 million, that kicks in only after the state storm fund has already paid out $12.5 billion to cover storm losses, a memo to Cabinet members shows. The private coverage has between a 3.5 percent and 4.4 percent chance of being triggered, documents show. If it’s not needed, offshore reinsurers keep the money.

A memo from State Board of Administration executive director Ash Williams to Gov. Rick Scott, Attorney General Pam Bondi and Chief Financial Officer Jeff Atwater recommends approval.

The memo “recommends seeking to obtain $1 billion of risk-transfer at a rate-on-line not to exceed 6.78 percent and $1.2 billion pre-event debt financing that would maximize the fund’s claims-paying capacity at favorable terms and structure given market conditions,” Williams wrote.

The combined $2.2 billion package would raise residential premiums 0.63 percent, the memo says. Supporters note the effect is blunted by the ending of a 1.3 percent assessment to pay off Cat Fund debt from 2004-5 storms, and the net effect would be a decrease in consumer bills.

Neal called that “disingenuous” because the assessment formally ended Jan. 1 of this year, and the real comparison is costs now with the plan and without it.

After nine storm-free years in Florida, forecasters expect one of the quietest hurricane seasons since the mid-twentieth century in 2015.

That’s no guarantee catastrophe won’t strike, of course, but the question is whether the back-up protection purchased offshore is a good deal financially for Floridians. An alternative: Put the money into the Cat Fund’s surplus as it has traditionally done, so it can grow in storm-free years and remain available to pay claims without having to pay offshore interests.

» Read more

Storm season does not stop another 45,000 Citizens offers posted on 4/8/15

by charles elmore | palm beach post

Offers from private insurance companies to take customers from state-run insurer Citizens keep on coming — straight into hurricane season that starts June 1.

That was once rare. Now it’s less so as Florida’s largest property insurer’s rates have climbed high enough after years of increases to make policies more attractive to private companies. Citizens has shrunk to its lowest customer count since its 2002 founding, below 600,000. It once had 1.5 million.

Remember you have the option to refuse an offer, and be sure you get a clear quote comparing much Citizens and the private insurer intend to charge. Don’t be unduly swayed by any 45 percent assessment warnings that may still be kicking around.

Approvals from state regulators don’t necessarily mean all 45,000 offers will be sent, but these have been OKed for June:

• Heritage Property & Casualty Insurance Co. – up to 20,000 personal residential policies and 500 commercial residential policies

• Mount Beacon Insurance Co. – approved to remove up to 25,000 residential policies

» Read more

Florida Bill Allowing Electronic Insurance Documents Sent to Governor posted on 4/8/15

by insurance journal

Florida may soon be the 28th state to adopt legislation that enables insurers to conduct all policyholder transactions over the internet. The State Legislature has passed House Bill 273, which allows policyholders to receive their insurance documents via email as opposed to regular mail delivery provided they choose this option.

The bill now goes to Governor Scott and would become effective July 1, 2015 if he signs the legislation.

“This is great for Florida consumers and it helps insurers meet policyholder’s demands by offering them flexibility with e-delivery,” said Logan McFaddin, PCI’s state government relations manager. “It also frees policyholders from having to keep track of paper renewal notices and other important insurance documents, which is a real win for Floridians.”

» Read more

Is Florida’s workers comp system unconstitutional? Court to decide posted on 3/31/15

by JIM SAUNDERS | NEWS SERVICE OF FLORIDA

lady justiceTALLAHASSEE — A South Florida appeals court Monday heard arguments in a challenge to the constitutionality of the state’s workers-compensation insurance system — as two other closely watched challenges also await rulings at the Florida Supreme Court.

The 3rd District Court of Appeal took up a case in which a Miami-Dade County circuit judge ruled last year that a key underpinning of workers-compensation laws was unconstitutional. That underpinning involves cases being handled through the workers-compensation insurance system instead of through civil lawsuits.

The workers-compensation system is designed as a sort of tradeoff: Workers are supposed to receive benefits for on-the-job injuries while not going through potentially costly and time-consuming lawsuits. But Miami-Dade Circuit Judge Jorge Cueto ruled in August that the workers-compensation law preventing cases from going to civil trial — known legally as “exclusivity” — was unconstitutional, at least in part because of legislative changes in 2003 that reduced benefits.

“I find that the Florida Workers’ Compensation Act, as amended effective Oct. 1, 2003, does not provide a reasonable alternative to the tort (civil) remedy it supplanted,” Cueto wrote. “It therefore cannot be the exclusive remedy.”

During Monday’s hearing, state Chief Deputy Solicitor General Adam Tanenbaum argued primarily that Cueto’s ruling should be overturned for procedural reasons. The case initially involved Julio Cortes, who alleged he was injured while working for Velda Farms.

The constitutional issue was later dismissed from the Cortes dispute, but the challenge continued with the involvement of two groups that had intervened in the case — Florida Workers’ Advocates and Workers’ Injury Law & Advocacy Group — and Elsa Padgett, an injured Miami-Dade County worker.

» Read more

Insurance requirements possible for Uber, similar companies in Florida posted on 3/24/15

by JIM Turner | NEWS SERVICE OF FLORIDA

TALLAHASSEE — New insurance requirements are heading in the direction of app-connected for-hire drivers.

And Uber and Lyft, leaders among the growing transportation-network companies, want to put the brakes on some legislation.

The Senate Banking and Insurance Committee on Monday supported a measure (SB 1298) by Sen. David Simmons, R-Altamonte Springs, that would createinsurance requirements for the companies that connect motorists with passengers through cell-phone apps.

The proposal, which must still clear two additional committees and has yet to be heard in the House, would establish coverage requirements for when a customer is in a vehicle and during an “on call” period, considered a coverage “gap,” between when a driver is notified about a customer to pick up and the time the passenger gets in the vehicle.

Lobbyists for the companies have argued that the “on-call” coverage will require them to increase costs, which are now typically lower than standard taxicab company rates.

» Read more

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