Personal Insurance Federation of Florida
2018 Legislative Priorities
The Personal Insurance Federation of Florida (PIFF) is a leading property & casualty insurance trade association that advocates for a healthy and competitive marketplace for the benefit of insurance consumers in Florida. PIFF member companies write 45 percent of automobile insurance policies in Florida and approximately 20 percent of homeowner’s residential property insurance policies, providing a strong foundation for the state’s economy. These are PIFF’s top legislative priorities for the 2018 session.
Assignment of Benefits
The issue? Assignment of Benefits (AOB) is a legal tool that allows policyholders to assign the benefits of their insurance policy to a third party, such as a water damage restoration company or other vendor, after a loss. It is our view that the law was designed to facilitate prompt payment by insurers to vendors for the work they perform; it was not intended to allow third parties to assert “ownership” of the claim and all the rights under the policy. However, in recent years, unscrupulous trial lawyers and vendors have used AOB to inflate claims and file costly lawsuits against insurers, resulting in higher insurance rates.
AOB-related lawsuits were nearly non-existent prior to the busy hurricane seasons of 2004 and 2005 but have since skyrocketed, especially in southeast Florida. AOB lawsuits filed against Florida property insurers have risen nearly 1,000 percent, reaching more than 92,500 in 2013-14.
Citizens Property Insurance Corp., the state’s insurer, has been especially hard hit. These costly lawsuits have become so much of a concern that in its 2017 rate filing, Citizens indicated it needed to increase rates nearly 7 percent statewide due to water damage lawsuits and other non-catastrophic claims. Importantly, Citizens has stated that rates in Miami-Dade would need to nearly triple to effectively cover the cost of inflated water claims and related litigation.
Where does PIFF stand? PIFF recognizes the usefulness of Assignment of Benefits but recommends legislative reforms be enacted to prevent AOB abuse from becoming a statewide consumer crisis on par with sinkhole claims abuse and PIP auto insurance fraud, which resulted in increased premiums for Floridians.
What can be done to curb the problem? PIFF supports a change to Florida’s “one-way attorney fee” law so that businesses that sue insurance companies are required to pay their own lawyers – just like they do when they sue any other business. PIFF also supports legislation that will include the following consumer protections: ending excessive cancellation and administrative fees; prohibiting assignees from placing a lien on the home or taking other action against the homeowner; requiring detailed written estimates for work to be performed by a vendor; requiring notice to the consumer about the effect of the AOB; and requiring that all work performed be done according to industry standards.
Personal Injury Protection (PIP) Insurance
The issue? Florida’s Motor Vehicle No-Fault Law provides up to $10,000 in guaranteed medical coverage if you are seriously injured in an auto accident, regardless of fault. These benefits are required by law and are payable without the need for the insured motorist to file a lawsuit against the responsible driver. However, the law has been rife with fraud, abuse and unnecessary litigation, resulting in premium increases for consumers. PIP has been reformed many times, but the fraud and abuse that is driving costs has not been effectively reduced.
Where does PIFF stand? PIFF has been an industry leader in calling for meaningful reform of the PIP law, and particularly for reform of the one-way attorney fee statute that drives unnecessary PIP lawsuits filed by medical providers against insurers. PIFF supported House Bill 119, passed in 2012, that attempted to reduce consumer costs. PIFF members believe that any changes to the PIP law must be thoughtful, comprehensive, and consumer-focused. PIFF members further believe that any legislation to repeal PIP and move to any other system of mandatory insurance must meet several important criteria.
What should the legislation include? PIFF has the following principles for evaluating any proposal to repeal PIP and move to a mandatory bodily injury coverage: First, any new mandatory coverage amounts should be dictated by market forces, and not set so high that the cost of such coverage will result in an increase in motor vehicle insurance. Second, there should be no mandatory first-party medical payments coverage – even coverage limited to hospital services. Such coverage is available to consumers today, and a mandated coverage would increase the cost of motor vehicle insurance for many drivers. Third, any repeal of PIP should include reforms to Florida’s deeply unfair third-party insurance “bad faith” law, which is a source of unnecessary and highly costly lawsuits. Finally, PIFF members believe that any repeal of PIP should not include a government-mandated change in the price of motor vehicle insurance. Insurance rates must be lawful and reflect the true costs of providing coverage.
Third Party Bad Faith Reform
The issue? Florida’s bad faith laws were enacted to require insurers to deal fairly and responsibly with their policyholders in resolving legal disputes. However, over time, Florida’s law has become a mechanism for obstructing good faith settlement offers by insurers in order to obtain high damage awards that far exceed an insured’s policy limits. While current law allows an injured party to file a lawsuit against an insured business or individual, third-party claimants and trial lawyers are also allowed to file separate lawsuits against the insurer based solely on the way it handled the claim. The trial lawyer has no interest in protecting the insured or settling the claim but rather seeks a judgment well above the limits of the insurance policy. The threat of an excess judgment from a bad faith claim often pressures insurers to settle cases for a higher amount than is warranted.
Where does PIFF stand? PIFF supports restoring bad faith laws to their original intent—as a tool to protect consumers—and end the windfall profits for trial lawyers. It backs previous reform efforts driven by the Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce, along with the Florida Justice Reform Institute, the Florida Chamber of Commerce, and Associated Industries of Florida.
What should the legislation include? Legislation should provide insurers a “safe harbor” from bad faith liability of 45 days after receipt of a written notice of the claim, during which time the insurer has an opportunity to make a settlement to the third-party claimant. Claimants and trial lawyers should be required to send a specific notice of loss to the insurers that explains the nature of their bad faith allegations. This notice would start the 45-day period. These reforms, among others, would bring more balance and fairness to the legal system but still protect policyholders.
Premium Tax Credit
The issue? For three decades, Florida has offered insurance companies a highly effective, performance-based tax credit that has resulted in tens of thousands of good jobs being created or imported to our state. Not only does this credit bolster Florida’s economy in a transparent, accountable way, it also helps ensure insurance rates for Floridians stay as affordable as possible.
Eliminating tax credits that have been working exactly as intended sets a bad precedent for other businesses considering a move to Florida based on the availability of similar tax credits. Importantly to consumers and businesses, it would amount to a $300 million tax increase that could translate to higher insurance rates for everyone.
An independent evaluation of the tax credit in 2013 found it had led to the creation of 40,000 insurance industry-related jobs since 2008 – a tremendous return on the state’s investment. In other words, while many industries were being hit hard and laying off workers during the Great Recession, the insurance industry in Florida was able to create good-paying jobs for Floridians.
Where does PIFF stand? PIFF supports the current tax credit that allows insurers to deduct 15 percent of the employee salary for each job they create or import to Florida from the premium tax they pay each year. Our members believe that the tax credit has allowed them to grow their physical presence, supporting Florida’s economy, and hire more Florida-based employees in recent decades. If the Legislature moves to repeal the Premium Tax Credit, insurers will be forced to consider relocating their brick-and-mortar operations to another state, passing the 15 percent expense onto insureds as a new tax and effectively increasing their premium, or cutting expenses, possibly by reducing the number of employed Floridians.
The issue? Under Florida law, interest on a claim that accrues before the judgment of a court is entered in favor of a plaintiff in a personal injury or wrongful death lawsuit is not ordinarily awarded to the plaintiff with other damages. This is primarily due to the speculative nature of such losses, the dollar amount of which is not known at the time the underlying tort occurs.
Where does PIFF stand? PIFF members believe that people who suffer damages through the wrongful action of others should be fairly compensated for their losses, and Florida law currently provides means for seeking full compensation. PIFF opposes mandatory awards of prejudgment interest in negligence cases because the determination of damages in such cases is often speculative, and the mandatory award in every case would increase the cost of claims and put pressure on insurance rates.
The issue? Policymakers are often called upon to address increases in the cost of insurance that are driven by external factors, such as changes in the cost of goods and services vital to the payment of claims and claims fraud, abuse, and unnecessary claims litigation in the insurance markets. Such increases are understandably of concern to consumers. Florida law provides a mechanism by which insurers file and justify rates with the Office of Insurance Regulation, which is charged with protecting consumers and ensuring a healthy insurance market. External costs, particularly those created by fraud, abuse, and litigation, can be reduced by effective changes in law that targets bad actors. Positive changes in law should lead to lower costs in the insurance markets, if law changes are fully implemented. These reduced costs will be reflected in rates.
Where does PIFF stand? PIFF opposes government-mandated price controls on insurance products. Such controls, given their arbitrary nature, are contrary to Florida’s well-settled regulatory law governing how insurance rates are made, and may put the solvency of insurers at risk. PIFF supports current Florida law that prohibits insurance rates that are inadequate, excessive, or unfairly discriminatory, and further endorses the current regulatory system, which places oversight for approval or rates with the Office of Insurance Regulation.