This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0505.IBS
DATE: 3/7/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 505 Insurance
SPONSOR(S): Berfield
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fortenberry Lloyd
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
The bill makes the following changes regarding insurance:
Hurricane Modeling – provides that a property insurer may use a weighted or straight average of two or
more approved hurricane models in a rate filing.
Commission on Hurricane Loss Projection Methodology (Commission) – provides that a designee of
the Director of the Division of Emergency Management may be a member of the Commission in lieu of the
Director.
Mitigation Credits in Residential Property Insurance Rate Filings – allows residential property insurers
to give mitigation credit for evaluation by, and compliance with, standards developed by an independent,
not-for-profit, scientific research organization.
Automatic Withdrawal of Premium – modifies the notice requirement for a change in the amount of
premium by automatic bank withdrawal from an increase of any amount to increases greater than $10 and
also changes the number of days’ notice that must be given from 15 to 10 to match federal law.
Policy Documents – revises notice requirements for certain limited-coverage automobile insurance
policies.
The bill has no impact on state or local government revenues or expenditures. It has an unknown direct
economic impact on the private sector.
The bill has an effective date of July 1, 2023. STORAGE NAME: h0505.IBS PAGE: 2
DATE: 3/7/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Commission on Hurricane Loss Projection Methodology
The Florida Commission on Hurricane Loss Projection Methodology (Commission) is a panel of experts
created to provide “actuarially sophisticated guidelines as standards for projection of hurricane losses
possible, given the current state of actuarial science.”
1
The Commission consists of 12 members
including the Director of the Division of Emergency Management (Director).
2
However, the Director has
indicated that he is sometimes unavailable to attend the Commission’s meetings and would like the
discretion to send a designee to those meetings.
Effect of the Bill
The bill establishes that the Director may designate a full-time employee of the Division of Emergency
Management to be a member of the Commission as a replacement for the Director.
Use of Hurricane Models in Residential Property Insurance Rate Filings
The law regarding the Office of Insurance Regulation’s (OIR) review and approval of residential
property insurance rate filings requires that a rate filing consider mitigation measures that policyholders
undertake to reduce hurricane losses.
3
It sets forth the criteria under which OIR may disapprove rate
filings, including disapproval of rates that it determines to be excessive, inadequate, or unfairly
discriminatory.
4
The law also establishes criteria for the Commission’s consideration, and approval, of
hurricane loss models and prescribes how those models affect OIR’s approval of property insurance
rate filings.
5
Effect of the Bill
The bill amends the parameters for OIR’s approval or disapproval of rate filings by providing that, with
respect to residential property insurance rate filings, the rate filing may use a modeling indication that is
the weighted or straight average of two or more hurricane loss models found to be accurate or reliable
by the Commission.
Mitigation Credits in Residential Property Insurance Rate Filings
Current law requires residential property insurers to include “positive and negative rate factors that
reflect the manner in which building code enforcement in a particular jurisdiction addresses the risk of
wind damage” in their rate filings that are filed with, and approved by, OIR.
6
Insurers utilize factors that
statewide organizations develop to indicate how building code enforcement units evaluate risk in
particular geographical areas.
7
However, these factors are often are flawed and not an accurate
depiction of actual building code enforcement activity in a jurisdiction.
Since 2003, residential property insurers have been required to provide credits, discounts, and other
rate differentials to reduce insurance premiums for properties with mitigation features.
8
Mitigation
features are construction techniques used or items installed to protect a structure against windstorm
1
S. 627.0628(1)(c), F.S.
2
S. 627.0628(2)(b)4., F.S.
3
S. 627.062(2)(j), F.S.
4
S. 627.062(2)(b), F.S.
5
Ss. 627.0628-627.06281, F.S.
6
S. 627.0629(2)(b), F.S.
7
See, e.g., ISO Mitigation, ISO’s Building Code Effectiveness Grading Schedule (BCEGS),
https://www.isomitigation.com/bcegs/ (last visited Mar. 1, 2023). BCEGS is a program that provides these rating factors.
8
See s. 627.0629, F.S. STORAGE NAME: h0505.IBS PAGE: 3
DATE: 3/7/2023
damage or loss.
9
Examples of mitigation features include hurricane shutters, a hip roof, or a specific
type of roof covering.
Code-plus programs help property owners avoid or reduce damage caused by natural hazards and
other risks by implementing additional levels of resilience to hazards beyond those required by building
codes.
10
Presently, insurers are unable to submit rating plans for review and approval by OIR that
include mitigation credits for those insureds that are evaluated by, and comply with, code-plus
standards established by independent, not-for-profit, scientific research organizations.
11
Effect of the Bill
The bill allows insurers to file a rating plan (plan) with OIR in which it offers additional windstorm
mitigation credits based on standards established by an independent, not-for-profit, scientific research
organization that meets the requirements of the rate filing statute.
Notification of Automatic Withdrawal of Insurance Premiums
Insurers issuing personal lines residential and commercial property policies are required to provide
premium payment options for quarterly and semiannual payments. They may, but are not required to,
offer monthly payment plans.
12
Insurers and policyholders may enter into automatic bank withdrawal
agreements for paying insurance premiums.
13
Current law requires insurers to provide the policyholder
with 15 days’ advance written notice prior to any automatic bank withdrawal if the premium payment
increases from the previous withdrawal period by any amount.
Federal law gives consumers the option of receiving notice of a change in an automatic bank
withdrawal only when the withdrawal differs from the most recent withdrawal by more than an agreed-
upon amount.
14
Federal law also only requires that a policyholder receive 10 days’ notice as opposed
to 15 days’ notice before a change in the amount withdrawn.
15
Effect of the Bill
The bill changes the written notice requirement of any increase in policy premiums to require the notice
only if the increase in policy premiums results in the next automatic withdrawal being increased by
more than $10. The bill also reduces the number of days’ notice required before a change in a
withdrawal from 15 days to 10 days to match federal law.
Limited Coverage Notice Requirements
Automobile insurance policies that do not contain coverage for bodily injury and property damage
16
must be stamped on the policy declarations page with the following language in a font larger than the
largest font otherwise used in the declarations page (notice):
THIS POLICY DOES NOT PROVIDE BODILY INJURY AND PROPERTY DAMAGE
LIABILITY INSURANCE OR ANY OTHER COVERAGE FOR WHICH A SPECIFIC
PREMIUM CHARGE IS NOT MADE, AND DOES NOT COMPLY WITH ANY
FINANCIAL RESPONSIBILITY LAW.
9
See id.
10
Whole Building Design Guide, Code-Plus Program for Disaster Resistance, https://www.wbdg.org/resources/code-plus-
programs-disaster-resistance (last visited Mar. 1, 2023).
11
See, e.g., Insurance Institute of Business & Home Safety, https://ibhs.org/ (last visited Mar. 1, 2023).
12
S. 627.4035(1)(a), F.S.
13
S. 627.0665, F.S.
14
12 CFR 1005(10)(d).
15
Id.
16
S. 627.7276, F.S. These limited policies are typically issued to certain antique cars. STORAGE NAME: h0505.IBS PAGE: 4
DATE: 3/7/2023
The stamping requirement is antiquated and prevents these types of policies from being
delivered electronically.
Effect of the Bill
The bill eliminates the requirement that the notice be stamped on the declarations page of limited
coverage automobile policies. Instead, the notice must accompany the declarations page and must be
typed in a font at least as large as the font used in the declarations page. This change will allow these
types of policies to be delivered electronically.
B. SECTION DIRECTORY:
Section 1. Amends s. 627.062, F.S, relating to rate standards.
Section 2. Amends s. 627.0628, F.S., relating to Florida Commission on Hurricane Loss Projection
Methodology; public records exemption; public meetings exemption.
Section 3. Amends s. 627.0629, F.S., relating to residential property insurance; rate filings.
Section 4. Amends s. 627.0665, F.S., relating to automatic bank withdrawal agreements; notification
required.
Section 5. Amends s. 627.7276, F.S., relating to notice of limited coverage.
Section 6. Provides an effective date of July 1, 2023.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may have an unknown positive direct economic impact on the private sector through the
application of mitigation credits to residential property insurance policies.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
STORAGE NAME: h0505.IBS PAGE: 5
DATE: 3/7/2023
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES