This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0505a.IBS
DATE: 3/9/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 505 Insurance
SPONSOR(S): Insurance & Banking Subcommittee, Berfield
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 18 Y, 0 N, As CS 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 designees of
the Executive Director of Citizens Property Insurance Corporation and the Director of the Division of
Emergency Management may be members of the Commission in lieu of the directors.
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 – allows the electronic delivery of health insurance policy documents; removes
requirements regarding paper insurance policy documents; revises notice requirements for certain limited-
coverage automobile insurance policies.
Declination of Wind and Contents Coverage – Allows policyholders to type their intent to decline wind
and contents coverage in their property insurance policies, rather than requiring them to write it in their
own hand, as currently required.
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: h0505a.IBS PAGE: 2
DATE: 3/9/2023
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 Executive Director of Citizens Property Insurance Corporation (Citizens Director) and the
Director of the Division of Emergency Management (Emergency Management Director).
2
However, the
Emergency Management 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. The
Citizens Director has indicated that he would like to be able to send a member of his senior
management team or someone with actuarial experience to attend those meetings.
Effect of the Bill
The bill allows the Emergency Management Director to designate a full-time employee of the Division
of Emergency Management to be a member of the Commission. It also allows the Citizens Director to
designate a full-time employee with either actuarial science experience or senior operations
management experience to be a member of the Commission.
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.
1
S. 627.0628(1)(c), F.S.
2
S. 627.0628(2)(b), 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. STORAGE NAME: h0505a.IBS PAGE: 3
DATE: 3/9/2023
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
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.
8
See s. 627.0629, F.S.
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. STORAGE NAME: h0505a.IBS PAGE: 4
DATE: 3/9/2023
Electronic Transmission of Policy Documents
The law requires that an insurance policy be mailed, delivered, or electronically transmitted to an
insured or other person entitled to receive the policy (designated person) within 60 days of the policy
taking effect.
16
An insurer may allow a personal lines policyholder to elect delivery of policy documents
by electronic means instead of by mail.
17
Electronic delivery of commercial risks constitutes delivery to
the insured or designated person, unless the insured or designated person notifies the insurer that he
or she does not agree to electronic delivery.
18
Current law does not include health insurance policies in
the list of policies that may be delivered electronically.
If a policy is delivered electronically, the insurer must include with the policy, a notice of the right to
receive the policy by mail rather than electronically.
19
Additionally, an insurer must provide a paper
copy of an insurance policy to an insured or designated person upon his or her request.
20
Effect of the Bill
The bill adds health insurance policies, and related documents, to the list of policies for which electronic
delivery is permitted. It also removes requirements regarding the delivery of paper insurance policy
documents.
Declination of Windstorm and Contents Coverage
Under current law, a policyholder may decline windstorm or contents coverage as part of a property
insurance policy.
21
However, when a policyholder declines such coverage, the policyholder is required
to write the intent to decline windstorm and contents coverage in his or her own hand.
22
This
requirement is particularly antiquated when a policyholder elects to receive policy documents
electronically.
Effect of the Bill
The bill allows policyholders to type their intent to decline windstorm and contents coverage in their
property insurance policies, rather than requiring them to write it in their own hand.
Limited Coverage Notice Requirements
Automobile insurance policies that do not contain coverage for bodily injury and property damage
23
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.
The stamping requirement is antiquated and prevents these types of policies from being
delivered electronically.
Effect of the Bill
16
S. 627.421(1), F.S.
17
Id.
18
Id.
19
Id.
20
Id.
21
See s. 627.712, F.S.
22
Id.
23
S. 627.7276, F.S. These limited policies are typically issued to certain antique cars. STORAGE NAME: h0505a.IBS PAGE: 5
DATE: 3/9/2023
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:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other: STORAGE NAME: h0505a.IBS PAGE: 6
DATE: 3/9/2023
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
On March 9, 2023, the Insurance & Banking Subcommittee considered the bill, adopted one amendment,
and reported the bill favorably as a committee substitute. The amendment made the following changes to
the bill:
Allows the Executive Director of Citizens Property Insurance to designate a person to serve on the
Florida Commission on Hurricane Loss Projection Methodology in the executive director’s place.
The designee must be full-time employee with either actuarial science experience or senior
operations management experience,
Allows the electronic delivery of health insurance policy documents and removes requirements
regarding paper insurance policy documents,
Allows policyholders to type their intent to decline wind and contents coverage in their property
insurance policies, rather than requiring them to write it in their own hand, as currently required, and
Corrects a technical error made in a bill last year.
The analysis is drafted to the committee substitute as passed by the Insurance & Banking Subcommittee.