‘Citizens insurance for all’ among insurance proposals filed for spring legislative session

January 28, 2025/in Insurance Newsnet

Ron Hurtibise, South Florida Sun-Sentinel
January 25, 2025

“Citizens insurance for all’ among insurance proposals filed for spring legislative session

Citizens windstorm insurance for all. Closing loopholes for a “bad-faith” insurance claim. Creation of an insurance advisory council. Requiring mediation before policyholders can sue their insurer.

They are among proposed insurance law changes that will face scrutiny in the Florida Legislature this spring. More are likely to follow with five weeks left before the session’s scheduled March 4 start.

So far, no insurance-related bills have been filed for the special session that’s slated to begin on Monday. Condominium safety is one of the subjects that Gov. DeSantis has said he wants addressed.

The biggest proposed insurance change so far, and likely toughest to get passed, would make state-owned Citizens Property Insurance Corp. the provider of all windstorm insurance sold to homeowners in the state.

First proposed last year, the bill would end Citizen’s status as “the insurer of last resort” that provides multiperil coverage to customers who cannot obtain it affordably from the private market.

Spencer Roach, the North Fort Myers-based Republican representative who co-sponsored last year’s version, has retired from the House. But Rep. Hillary Cassel of Broward County, the bill’s co-sponsor, refiled her version in December, shortly before announcing that she had switched political parties from Democratic to Republican. Cassel was then appointed as vice chair of the House Subcommittee on Insurance and Banking, which should boost the bill’s chances of being brought forward for debate by the subcommittee.

Cassel did not respond to a request to discuss the new bill, which is co-sponsored by Democratic House members Christine Hunschofsky, Anna Eskamani, and Marie Paule Woodson.

Roach and Cassel presented their proposal in February to the House Subcommittee on Insurance and Banking, but the group did not vote on it and it wasn’t heard by any other legislative committee.

Regardless of the sponsors’ political parties, the bill will face scrutiny and pushback by lawmakers who will be reluctant to expand the state’s exposure to losses during a time that hurricanes appear to be getting stronger and more destructive.

Citizens, now with fewer than one million policies, is entering the third year of its depopulation push after peaking at 1.4 million policies in September 2023. Lawmakers, regulators and members of the company’s own governing board have long warned that nearly all Florida insurance customers would face steep assessments if Citizens ever becomes unable to pay all claims after a severely destructive hurricane or string of storms.

The bill would require Citizens to make windstorm coverage available for any home, including condo buildings and mobile homes, and their contents.

Private insurers would be able to sell the coverage alongside their products — which would consist of everything else that insurance normally covers, including fire, theft, liability from animal bites, lightning strikes, and flooding from ruptures of pipes, water heaters, washers, driers and dishwashers.

During a hearing before the Insurance and Banking Subcommittee in February, Citizens CEO Tim Cerio said the proposal could cause Citizens’ reinsurance costs to increase by 645% to $5.6 billion. “We don’t even know if there’s enough capacity in the reinsurance market” to provide the needed backstop, he said.

Roach and Cassel argued that the idea would save policyholders money, by saving money that insurers pocket during years with no storms, so it would be available to pay claims when hurricanes strike. Florida homeowners currently pay three times the national average for property insurance.

A former Florida state representative who proposed a similar plan in 2006 projected that the pool would amass an $82 billion surplus if the state managed to avoid catastrophic storms for 10 years. Lawmakers turned a blind eye to his proposal, while Florida avoided a direct hit from a hurricane for 10 years.

With hurricanes now hitting Florida at an accelerated pace — six have come ashore since 2020 — it might not be so easy to accumulate such a large surplus, financial comparison website Bankrate.com suggested in an October post.

‘Bad-faith’ claims would face restrictions

A deputy commissioner of the Office of Insurance Regulation said at the Florida Chamber Insurance Summit in December that the office did not want major new reforms enacted this year. Still, there’s a proposal filed by Sen. Keith Truenow, a Republican representing Lake County and a part of Orange County, to impose new restrictions on bad-faith claims against insurance companies, which is certain to generate opposition from the lobby representing plaintiffs attorneys.

Bad-faith claims typically involve proving that insurers acted negligently or intentionally, including by delaying a settlement in an unreasonable manner, denying claims without investigating, failing to communicate with clients, and misrepresenting policy terms.

The bill would require a court ruling and final judgment that an insurer breached the insurance contract before a policyholder could file a bad-faith claim that can generate an additional financial award. It would bar bad-faith claims from being triggered by insurer payments that follow a demand for judgment or notice of intent to litigate.

It would also require plaintiffs to cite specific bad-faith laws that the insurer is accused of committing, the amount of damages needed to “cure” the violation, and require that the damages sought be available under terms of the insurance customer’s policy.

Under the bill, damages sought by the insured in a bad-faith claim could not include attorney fees or costs.

Mark Delegal, a lobbyist whose firm represents insurance interests including the Florida Justice Reform Institute and State Farm Florida, says Truenow’s bill is intended to fix “loopholes” in state laws that plaintiffs attorneys are “exploiting” to collect legal fees from insurers.

While reforms enacted in 2022 and 2023 “substantially, revolutionarily addressed this problem,” Delegal said, “now the trial bar is up to its same old tricks and exploiting loopholes in the statutes that need to be plugged.”

Asked why he filed the bill, Truenow, through a spokesman, said, “We’ve learned over the past few legislative sessions that there are plenty of carrots and sticks to ensure there is balance in the system. We’re doing our best to ensure consumers get paid quickly for their claims and that we have the right levers to pull on to expand and foster a healthy marketplace. For example, I want to explore what else we can do to ensure insurance companies pay consumers for their losses without clogging up the court system.”

He called the bill, which also includes a bid to cut training hours for agents, “a starting point to get this important conversation rolling,” adding, “my door will be open to all sides of this issue so we get it right.”

Chip Merlin, founder of the Merlin Law Group, said the bad-faith proposal would make it harder to hold insurance companies responsible for their “bad-faith actions” and make it “nearly impossible” for consumers to sue their insurers.

“The claims executives simply do not want to be held accountable for acting in bad faith and do not want to be sued when their own actions harm their customers,” he said.

Reducing coursework for insurance agents

Truenow’s bill also proposes reducing the coursework required to become a general lines insurance agent, from 200 to 60 hours.

Truenow called the 200-hour requirement an “extraordinary barrier to entry” and said the bill “will allow us to examine the pros and cons of rightsizing these requirements to better correspond with national standards and whether that can better serve the needs of Florida’s consumers.”

Mediation would be required

Prior to filing a lawsuit, a policyholder would have to attempt to settle a dispute with an insurer by participating in mediation under a Senate bill filed by Tina Polsky, a Democrat representing parts of Broward and Palm Beach counties.

Creation of advisory council

Sen. Lori Berman, a Democrat representing part of Palm Beach County, proposes creating an Insurance Solutions Advisory Council to compile and analyze data and information about the state’s property and automobile insurance markets.

The council would consist of various insurance experts and be in place for roughly five years between Oct. 1, 2025, and June 30, 2030.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071 or by email at rhurtibise@sunsentinel.com.

‘Citizens insurance for all’ among insurance proposals filed for spring legislative session

Roofers See Growing Curbs on Contractor-Insurer Communication

January 9, 2025/in Roofing Contractor

Roofers See Growing Curbs on Contractor-Insurer Communication

Fla. appelate court affirms underpinning of ‘arms-length’ to ensure accountability
By Bryan Gottlieb

A decision by Florida’s 5th District Court of Appeals affirmed reforms made five years earlier to reign in the use — and some say abuse — of Assignment of Benefit agreements allowing homeowners to have contractors collect money directly.
— Image courtesy of law.com
January 9, 2025

5 Takeaways

Distinction is a Difference: A Florida appeals court affirmed that a Direction to Pay, which allows a policyholder to authorize direct payments to a contractor, is not the same as an Assignment of Benefits, which transfers claim rights to the contractor.
Legal Standing in Insurance Claims: The court ruled that entities like HICA cannot sue insurers for homeowners without a valid AOB. This highlights the need for contractors to secure proper legal agreements in insurance claims.
Stay in Your Lane: States are cracking down on a perceived or actual lack of arms-length relationships regarding homeowners and their insurance payouts.
Impact of AOB Reforms on Contractors: Florida’s 2019 AOB reforms aim to reduce litigation and insurance costs by preventing misuse of AOB agreements.
Emphasis on Professional Boundaries: Florida and Iowa each emphasize the need for contractors to adhere to legal standards and focus on their core skills.

Florida’s 5th District Court of Appeals upheld a ruling last week that a “direction to pay” agreement is not an “assignment of benefits” in a disputed roof repair claim, affirming the state’s effort to curb misuse of AOB agreements, which were all but outlawed after a series of reforms enacted five years ago.

The ruling stems from a 2019 roof damage claim by Leonard Caruso, a homeowner in The Villages, Fla., who reported roof damage to his carrier, American Integrity Insurance Co., and chose Noland’s Roofing to perform repairs. Caruso signed a “Direction of Payment” form, allowing the insurer to pay the contractor directly.

Subsequently, Caruso signed an AOB contract with Holding Insurance Companies Accountable, a company that claims to help homeowners “enforce their insurance rights” and had been involved in similar litigation.

In fact, HICA filed a motion to dismiss the case, which the court rejected, cited precedence in declining the move: “[T]he issue presented is one of importance and for which a published decision would be helpful,’ we do not accept HICA’s notice,” the decision read.

The court determined that Caruso’s agreement with HICA did not meet the statutory definition of an AOB under Florida’s reformed insurance laws and that HICA principals had pledged to give recovery from the lawsuits to Noland’s Roofing, the chosen contractor.

The trial and appellate court judges noted that HICA’s action was a distinction without difference and an AOB in all but name only.

“Even though HICA will not personally scale Caruso’s house to repair his roof, it is seeking funds to facilitate those repairs,” Jay’s decision continued, determining that “[W]ithout a valid assignment, HICA has no standing to sue American Integrity for its alleged breach of Caruso’s insurance policy.”

Understanding “Direction to Pay” and Assignment of Benefits Reforms

A DOP is an arrangement where the policyholder authorizes the insurer to pay a contractor directly for repairs. Unlike an Assignment of Benefits, a DOP does not transfer claim rights to the contractor. Florida lawmakers reformed AOB laws in 2019 to address rampant abuse by third-party contractors and legal representatives, which they argued drove up litigation and property insurance premiums.

The Florida Justice Reform Institute has criticized businesses like HICA, stating they “seek to make an end-run around the Legislature’s assignment of benefits reforms.” The reforms bar contractors and other third parties from assuming insurance benefits, aiming to prevent frivolous lawsuits and fraudulent claims that have long plagued Florida’s insurance market.

The Issue of ‘Arms-Length’

The notion of contractors overstepping their roles is not unique to Florida. The crux of the issue is a central tenet of contract law known as acting at “arms-length.”

Essentially, an arms-length transaction is one where each party in a contract is free to negotiate and make decisions based on their best interests without undue influence or pressure from the other party.

In Iowa, the state’s Insurance Division has intensified efforts to address roofing contractors acting as unlicensed public adjusters, violating state law. According to the Iowa Insurance Division, contractors cannot negotiate with insurers on behalf of homeowners without a public adjuster license and with whom they have a financial self-interest. Acting as an unlicensed public adjuster has resulted in fines and legal action.

In a 2023 advisory, Iowa’s Insurance Division stated, “Roofing contractors should focus on their expertise — repairing roofs — and leave claim negotiations to licensed professionals.”

Broader Industry Implications

According to the Insurance Information Institute, Florida’s legal environment has historically accounted for a disproportionate share of property insurance litigation nationwide. Florida’s insurance reforms could influence similar efforts in other states grappling with high property insurance costs.

David Altmaier, Florida’s former insurance commissioner, emphasized the need for these reforms, stating, “The goal is to stabilize the market and bring down costs for consumers while ensuring legitimate claims are paid.” By reducing abuse of AOB agreements, Florida aims to curb escalating premiums and attract more insurers to the state.

Similarly, the Iowa Insurance Division’s crackdown on unlicensed public adjusters reflects a national trend of stricter regulations in the roofing industry. Contractors should prepare for increased oversight by following legal guidelines and collaborating with licensed adjusters when needed.

Roofing contractors in Florida and other states need to stay updated on changes to Assignment of Benefits reforms and the enforcement of unlicensed practices. As states tighten regulations, contractors nationwide may need to adapt to similar market changes.

https://www.roofingcontractor.com/articles/100304-roofers-see-growing-curbs-on-contractor-insurer-communication

Did Florida Appeals Court Put the Final Nail in the AOB Coffin? Maybe

January 8, 2025/in Insurance Journal

By William Rabb | January 7, 2025

Almost five years after Florida lawmakers clamped restrictions on assignment-of-benefits agreements and two years after they effectively outlawed AOBs altogether, state appeals courts may have finally put an end to one creative way that had been used in attempts to get around the law.

Florida insurance industry advocates said some players, though, will likely continue to seek new mechanisms to skirt the laws that took away what was once a highly lucrative business model for a number of contractors and policyholder attorneys.

“I’m sure they’ll still come up with a way to try and get around the statutes,” said Tiffany Roddenberry, an attorney with the Holland & Knight law firm who was involved in two recent AOB appeals. “But at least on this, the appeals courts have come out against it and are in agreement.”

In the most recent decision, Florida’s 5th District Court of Appeals late last week upheld a Marion County judge’s ruling that an organization known as Holding Insurance Companies Accountable (HICA) had no standing to sue Tampa-based American Integrity Insurance Co. The case was one of several HICA had pursued for years against American Integrity and against Security First Insurance, two of the largest insurers in the state.

It all began in 2019, as the insurance litigation crisis in the state worsened. The Florida Legislature that spring approved House Bill 7065, which became the landmark statute 627.7152 and put new limits on AOBs in an attempt to reduce lawsuits.

Roddenberry

HICA argued in the appeal that it was not a contractor, only a service that advocated on behalf of homeowners. The AOB law, including its rules requiring an itemized listing of damage to the property, signed agreements, notices of intent to file suit, provisions to allow insureds to rescind the agreements, limits on attorney fees, and other provisions, did not apply, the organization said.

Leonard Caruso, a homeowner in The Villages who had sustained some wind damage to his roof, had filed a claim and hired Noland’s Roofing Inc. to make the repairs. Caruso signed a directive to pay, essentially instructing his insurer, American Integrity, to pay the roofer. He also signed an AOB contract with HICA, which calls itself a business that helps enforce homeowners’ rights under their insurance policies, the appellate court explained.

But the courts held that HICA principals had pledged to give recovery from the lawsuits to Noland’s Roofing, its chosen contractor. That is the same as an AOB, the trial and appellate court judges noted.

“As the trial court found, this mandatory pass-through of benefits from HICA to Noland’s Roofing places the assignment within the broad reach of section 627.7152,” Judge Harvey Jay wrote in the 5th DCA’s Jan. 3 opinion. “Even though HICA will not personally scale Caruso’s house to repair his roof, it is seeking funds to facilitate those repairs.”

The Florida Legislature in 2019 had mandated that AOBs comply with all provisions of the assignments law. And because the HICA assignment agreement did not do that, it is invalid and unenforceable, the court noted.

The ruling followed similar recent decisions: one by the 5th DCA in December in another HICA suit filed against American Integrity; one in May involving American Integrity; and another in February 2024, by the 2nd DCA, involving Security First. The 2nd District Court also in 2022 ruled against another contractor, Richie Kidwell’s Air Quality Assessors, in yet another American Integrity case. The court found that Air Quality’s agreement with a homeowner was, in fact, an AOB and did not comply with the 2019 law, despite Kidwell’s arguments that it was an assessment of damage, not an assignment of benefits.

Perhaps seeing the futility of pursuing further appeals, HICA in December tried to drop its appeal of the Caruso suit. But the 5th DCA refused to accept the dismissal “because the issue presented is one of importance and for which a published decision would be helpful,” the judges noted, citing the precedent of a 2016 court ruling.

The recent appellate decisions are considered significant victories for insurance companies that have battled AOB suits for years, said William Large, president of the Florida Justice Reform Institute. Large and Roddenberry penned amicus curiae briefs in two of the 2024 appeals, on behalf of the insurance industry.

“This appeal presents an issue of paramount importance to Florida’s property insurance industry: ensuring the application of legislative reforms designed to prevent abuse of assignments of benefits,” reads the amicus brief in the December 5th DCA HICA appeal, decided Dec. 23, 2024.

AOBs may have started as a way to make it easier for storm-stricken homeowners to leave the hurricane restoration and insurance recovery work to others. But by the mid-2010s, several contractors and their attorneys had learned to game the system and take advantage of one-way attorney fees, generating thousands of unnecessary lawsuits against insurers and abusing the legal system, Large and others have argued.

“Studies have confirmed those abuses, and underlined further that AOBs were one of the driving forces of insurance-related litigation in Florida since 2000,” the Justice Reform Institute’s brief noted. The Institute’s own 2019 study, authored by industry consultants and lobbyists Mark Delegal and Ashley Kalifeh, said the number of lawsuits brought by AOB holders had increased by 16,000% in the two decades since 2020.

The recent appeals were expected after the 2019 AOB law was adopted, and it has taken five years for courts to nail down the full reach of the statute, Large noted. This means insurers can now know the extent of the law for actuarial purposes. It’s unlikely the HICA suits will be appealed to the state Supreme Court.

And although Florida lawmakers in 2022 in a special legislative session specifically put an end to assignments of benefits, the multiple lawsuits by Holding Insurance Companies Accountable shows the lengths that some contractors will go to try and get around the statutes, attorneys said.

“It always surprises me the imagination that some of these people have,” Large said.

And in instead of AOBs, some restoration companies continue to pursue similar agreements under the name of “directives to pay.” The 5th DCA addressed that issue only in passing in the Jan. 3 opinion.

“I do not think this decision was so much a commentary on ‘directions to pay’ as it is on what qualifies as an assignment of benefits under FS 627.7152,” said south Florida attorney Michael Packer, of the Marshall Dennehey law firm. “I think the 5th DCA, following the lead of the 2nd DCA, is sending a message that they are not going to look favorably on these attempts to circumvent the requirements” of the 2019 AOB statute.

Photo: In January 2018 more than 125 insurance agents from across Florida, along with members of the Consumer Protection Coalition, marched to the Florida Capitol to highlight the need for AOB reform. (Colin Hackley phot0)

https://www.insurancejournal.com/news/southeast/2025/01/07/807043.htm

“Citizens insurance for all’ among insurance proposals filed for spring legislative session

Mark Delegal, a lobbyist whose firm represents insurance interests including the Florida Justice Reform Institute and State Farm Florida, says Truenow’s bill is intended to fix “loopholes” in state laws that plaintiffs attorneys are “exploiting” to collect legal fees from insurers.

While reforms enacted in 2022 and 2023 “substantially, revolutionarily addressed this problem,” Delegal said, “now the trial bar is up to its same old tricks and exploiting loopholes in the statutes that need to be plugged.”

Roofers See Growing Curbs on Contractor-Insurer Communication

Florida Justice Reform Institute

Site Links