The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Fiscal Policy
BILL: CS/SB 7052
INTRODUCER: Fiscal Policy, Banking and Insurance Committee
SUBJECT: Insurer Accountability
DATE: April 24, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Thomas Knudson BI Submitted as Comm. Bill/Fav.
2. Thomas Yeatman FP Fav/CS
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 7052 contains various provisions intended to increase consumer protection and insurer
accountability in this state.
Regarding insurance coverage, the bill:
Expands current law prohibiting authorized insurers from cancelling a residential property
insurance policy until 90 days after repairs are complete. Under the bill, for all other types of
losses, authorized insurers are prohibited from cancelling a property insurance policy during
any pending claim until the earlier of when the property has been repaired or 1 year after the
insurer issues the final claim payment;
Protects policyholders whose insurance company becomes insolvent by requiring that
Citizens Property Insurance Corporation cover property with open claims that are being
handled by the Florida Insurance Guaranty Association;
Requires insurers that violate the insurance code to obtain prior approval of forms from the
Office of Insurance Regulation (OIR) for 3 years after the violation;
Clarifies that if a roof deductible is applied, the prohibition on applying any other deductible
under the policy encompasses any other loss to the property caused by the same covered
peril;
Tolls the time period for filing a property insurance claim during an insured’s term of
deployment to a combat zone or combat support posting; and
REVISED: BILL: CS/SB 7052 Page 2
Clarifies legislative intent that Chapter 2022-271, Laws of Florida, passed during Special
Session A in December 2022, (SB 2-A [2022] on Property Insurance) shall not be construed
to impair any right under an insurance contract in effect on or before the effective date of that
chapter law (December 16, 2022).
Regarding rates charged for insurance, the bill:
Requires that property insurance and motor vehicle rate filings must include, and the OIR
must consider in reviewing rates, the combined effect of recent legislative reforms;
o Appropriates $500,000 from the Insurance Regulatory Trust Fund for the OIR to obtain
an actuarial study to implement this requirement; and
Requires that property insurance mitigation discounts be updated at least every 5 years and
requires insurers to provide consumer-friendly information on their website describing
hurricane mitigation discounts available to policyholders.
Regarding insurer claims handling, the bill:
Requires liability insurers to follow proper claims handling practices on behalf of their
insureds and that violations are subject to a 2.0 multiplier of fines;
Requires residential property insurers to create and use claims-handling manuals that comply
with the Insurance Code and comport to industry standards. The OIR may request a claims
handling manual at any time and requires that each property insurer attest that their claims
manuals comply with Florida law and that the insurer is able to properly implement their
manual; and
Strengthens the Unfair Insurance Trade Practices Act by:
o Prohibiting altering or amending an adjuster’s report without providing a detailed
explanation as to why any change that has the effect of reducing the estimate of the loss
was made. The insurer must also either create a list of changes and who made the change
or retain all versions of the report;
o Prohibiting officers and directors of impaired or insolvent insurers from receiving a
bonus from that insurer or other entity under common ownership with that insurer.
Regarding regulatory oversight of insurers, the bill:
Specifies factors the OIR may consider in determining whether the continued operation of an
insurer may be deemed to be hazardous to its policyholders, creditors, or the general public;
specifies actions the OIR may take in determining an insurer's financial condition and actions
the OIR may order an insurer to take in an effort to improve the insurer’s financial condition.
Increases maximum administrative fines that may be levied by the OIR on insurers by 250
percent generally, and 500 percent for violations stemming from a state of emergency such as
a hurricane;
Requires insurers to more promptly respond to the Department of Financial Services (DFS)
Division of Consumer Services and increases fines for noncompliance;
Increases staffing for the DFS Division of Consumer Services by appropriating funding for 7
full-time equivalent positions;
Increases staffing at the OIR by appropriating 18 full-time equivalent positions; BILL: CS/SB 7052 Page 3
Specifies objective criteria to be used by the OIR to prioritize necessary financial and market
conduct examinations;
Provides conditions whereby the OIR must initiate a market conduct examination after a
hurricane;
Requires property insurers to report to the OIR any temporary suspension of writing new
policies;
Specifies that insurance fraud referrals may be made to the statewide prosecutor for crimes
that impact two or more judicial circuits; and
Requires additional reporting from regulators regarding their enforcement actions.
See Section V. Fiscal Impact Statement.
The bill is effective July 1, 2023.
II. Present Situation:
Department of Financial Services
The Department of Financial Services (DFS) has broad duties, including licensure and regulation
of insurance agents, agencies, and adjusters; insurance consumer assistance and protection; and
holding and attempting to return unclaimed property to its rightful owner.
1
The DFS has a
number of regulatory responsibilities over the Florida insurance market. The DFS regulates
insurance adjusters, which includes public adjusters, independent adjusters, and company
employee adjusters under Part VI, ch. 626, F.S. The DFS conducts insurance-related consumer
outreach through its Division of Consumer Services. The Division of Workers’ Compensation
within the DFS administers ch. 440, F.S., through enforcement of coverage requirements,
2
administration of workers’ compensation health care delivery system,
3
data collection,
4
and
assisting injured workers, employers, insurers, and providers in fulfilling their responsibilities
under ch. 440, F.S.
5
The DFS also administers insurer rehabilitation and liquidation in Florida
under part I of ch. 631, F.S.
DFS Division of Consumer Services
The Division of Consumer Services (Division) provides education, information, and assistance to
consumers for all products or services regulated by the DFS or the Financial Services
Commission (Commission).
6
The Division’s duties specifically include:
Receiving consumer questions and complaints;
1
See, e.g., Department of Financial Services, What is the Purpose of the Department, https://oppaga.fl.gov/ (last accessed
April 2, 2023).
2
Section 440.107(3), F.S.
3
Section 440.13, F.S.
4
Sections 440.185 and 440.593, F.S.
5
Section 440.191, F.S.
6
DFS, Department of Financial Services Long Range Program Plan: Fiscal Years 2023-24 through 2027-28, 15 (Oct. 17,
2022), available at http://floridafiscalportal.state.fl.us/Document.aspx?ID=24407&DocType=PDF (last accessed April 2,
2023). See also, DFS, Consumer Guides,
https://www.myfloridacfo.com/Division/Consumers/understandingCoverage/Guides/Default.htm (last visited April 2, 2023). BILL: CS/SB 7052 Page 4
Educating the public about insurance-related topics;
Providing mediation to resolve disputes between a consumer and insurance company; and
Serving as a conduit for referrals for further legal action by the DFS.
7
Section 624.307(10)(b), F.S., permits the Division to impose an administrative penalty on a
person who holds a license or certificate of authority from the DFS if that person fails to respond
to the Division’s request for information within 20 days. A licensed individual must produce any
requested documents not subject to attorney-client or work product privilege.
Regulation of Insurance in Florida
The Office of Insurance Regulation (OIR) regulates specified insurance products, insurers and
other risk bearing entities in Florida.
8
As part of their regulatory oversight, the OIR may suspend
or revoke an insurer’s certificate of authority under certain conditions.
9
The OIR is responsible
for examining the affairs, transactions, accounts, records, and assets of each insurer that holds a
certificate of authority to transact insurance business in Florida.
10
As part of the examination
process, all persons being examined must make available to the OIR the accounts, records,
documents, files, information, assets, and matters in their possession or control that relate to the
subject of the examination.
11
The OIR is also authorized to conduct market conduct examinations
to determine compliance with applicable provisions of the Insurance Code.
12
Financial Examinations
The OIR is responsible for all activities concerning insurers and other risk-bearing entities such
as licensing, solvency, rates, and policy forms. Section 624.361, F.S., requires the OIR to
conduct financial examinations of insurers. The scope of the financial examination includes a
review of the affairs, records, transactions, accounting procedures and financial condition of an
insurer. The OIR is charged with conducting an exam once every five years, with the exception
of a domestic insurers that have held a certificate of authority for less than three years, which are
required to be examined on annual basis. The OIR is required to examine an insurer applying for
an initial certificate of authority prior to issuing the certificate of authority.
Market Conduct Exams
The OIR is authorized to perform a market conduct examination of, among other entities, any
authorized insurer.
13
The purpose of the examination is to determine the entity’s compliance with
7
Section 624.307(10)(a), F.S.
8
Section 20.121(3)(a), F.S. The Financial Services Commission, composed of the Governor, the Attorney General, the Chief
Financial Officer, and the Commissioner of Agriculture, serves as agency head of the Office of Insurance Regulation for
purposes of rulemaking. Further, the Financial Services Commission appoints the commissioner of the Office of Insurance
Regulation.
9
Section 624.418, F.S.
10
Section 624.316(1)(a), F.S.
11
Section 624.318(2), F.S.
12
Section 624.3161, F.S.
13
Section 624.3161(1), F.S. BILL: CS/SB 7052 Page 5
Florida law.
14
The costs of the examination are to be paid by the subject entity.
15
Section
624.3161, F.S., authorizes the OIR to subject any authorized insurer to a market conduct
examination after a hurricane if the insurer:
Is among the top 20 percent of insurers based upon a calculation of the ratio of hurricane-
related property insurance claims filed to the number of property insurance policies in force;
Is among the top 20 percent of insurers based upon a calculation of the ratio of consumer
complaints made to the DFS to hurricane-related claims;
Has made significant payments to its managing general agent since the hurricane; or
Is identified by the OIR as necessitating a market conduct exam for any other reason.
The relevant criteria under ss. 624.3161 and s. 624.316, F.S., are to be applied to the market
conduct examination. The market conduct examination, if any, must be started within 18 months
after the landfall of the related hurricane. The insurer’s managing general agent must be included
in the market conduct examination as if it were the insurer.
If a market conduct examination reveals that the “insurer has exhibited a pattern or practice of
willful violations of an unfair insurance trade practice related to claims-handling which caused
harm to policyholders,” the OIR may order the insurer to file its claims-handling practices and
procedures with the OIR for review and inspection.
16
The practices and procedures are to be held
by the OIR for 36 months and are considered public records, not trade secrets, during the 36-
month period.
17
The term, “claims-handling practices and procedures,” is defined as “any
policies, guidelines, rules, protocols, standard operating procedures, instructions, or directives
that govern or guide how and the manner in which an insured’s claims for benefits under any
policy will be processed.”
18
Annual Report on Insurer Compliance
The OIR is required to submit an annual report to the Speaker and Minority Leader of the House
of Representatives, the President and Minority Leader of the Senate, the chairs of the legislative
committees with jurisdiction over matters of insurance, and the Governor.
19
The report is to
cover information from the preceding calendar year, the following:
Names of the authorized insurers transacting insurance in this state, with abstracts of their
financial statements including assets, liabilities, and net worth.
Names of insurers whose business was closed during the year, the cause thereof, and amounts
of assets and liabilities as ascertainable.
Names of insurers against which delinquency or similar proceedings were instituted and
related information.
The receipts and estimated expenses of the OIR.
Other pertinent information as the OIR deems to be in the public interest.
A compilation of the laws passed by the Legislature relating to insurance.
14
Id.
15
Section 624.3161(4), F.S.
16
Section 624.3161(6), F.S.
17
Id.
18
Id.
19
Section 624.315, F.S. BILL: CS/SB 7052 Page 6
An analysis and summary report of the state of the insurance industry in Florida.
Administrative Fines
The OIR, through its ongoing oversight and examination process, determines whether insurance
companies are operating in compliance with the code. The OIR is authorized to impose
administrative fines in lieu of suspension or revocation if the OIR finds that one or more grounds
exist for the discretionary revocation or suspension of the certificate of authority.
20
The OIR may
impose an administrative fine, not to exceed $5,000, per nonwillful violation, with a limit of
$20,000 for all nonwillful violations arising out of the same action. With respect to any willful
violation, the OIR is authorized to assess a fine, not to exceed $40,000 per violation and
$200,000 in aggregate for all willful violations arising out of the same action. Additionally, if an
insurer owes restitution due to a violation, the insurer must provide the restitution and include 12
percent interest from the date of the violation or the inception of the insured’s policy.
Authority for Insurers in Unsound Financial Condition
Section 627.7154, F.S., establishes a property insurer stability unit (unit) within the OIR. The
purpose of the unit is to detect and prevent insurer insolvencies in the homeowners’ and
condominium unit owners’ insurance market. Specifically, the unit is to identify significant
concerns regarding insurer compliance with the insurance code. The unit must, at minimum:
Conduct target market exams when there is reason to believe that an insurer’s claims
practices, rate requirements, investment activities, or financial statements suggest said insurer
may be in an unsound financial condition.
Monitor closely all risk-based capital reports, own-risked solvency assessments, reinsurance
agreements, and financial statements filed by insurers.
Have primary responsibility, coordinating with Florida Commission on Hurricane Loss
Projection Methodology, to conduct annual catastrophe stress tests of all domestic insurers
and insurers that are commercially domiciled in this state.
Update required wind mitigation credits.
Review the causes of insolvency and business practices of insurers that have been referred to
the Division of Rehabilitation and Liquidation of the DFS, and make recommendations to
prevent future occurrences of such insurers.
File biannual reports on the status of the homeowners’ and condominium unit owners’
insurance market to the Governor, the President of the Senate, the Speaker of the House of
Representatives, the Minority Leader of the Senate, the Minority Leader of the House of
Representatives, and the chairs of the legislative committees with jurisdiction over matters of
insurance.
21
The section also specifies events that trigger a referral to the insurer stability unit. Expenses for
the unit are to be paid from the Insurance Regulatory Trust Fund, except that, if the unit
20
Section 624.4211, F.S.
21
Section 627.7154(3), F.S. BILL: CS/SB 7052 Page 7
recommends that a market conduct examination or targeted market examination be conducted,
the reasonable cost of the examination must be paid by the person examined.
22
National Association of Insurance Commissioners Model Regulation to Define Standards and
Commissioner’s Authority for Companies Deemed to be in Hazardous Financial Condition
The National Association of Insurance Commissioners (NAIC) provides expertise, data, and
analysis to provide guidance to insurance regulators. Founded in 1871, the organization is
governed by the chief insurance regulators from the 50 states, the District of Columbia, and five
U.S. territories to coordinate regulation of multistate insurers.
23
The NAIC has adopted
numerous model laws on various insurance regulatory topics.
24
The NAIC has adopted Model
Law MO-385, entitled, Regulation to Define Standards and Commissioner’s Authority for
Companies Deemed to be in Hazardous Financial Condition.
25
The purpose of the model law is
to set standards which may be used to identify insurers in such condition as to render the
continuance of their business hazardous to their policyholders, creditors or the general public.
26
The model law provides the following standards to consider to determine whether the continued
operation of any insurer transacting an insurance business might be deemed to be hazardous to
its policyholders, creditors or the general public:
Adverse findings reported in financial condition and market conduct examination reports,
audit reports, and actuarial opinions, reports or summaries;
The National Association of Insurance Commissioners Insurance Regulatory Information
System and its other financial analysis solvency tools and reports;
Whether the insurer has made adequate provision for the anticipated cash flows required by
its obligations and expenses;
Whether the insurer’s reinsurance program provides sufficient protection for the insurer’s
remaining surplus after taking into account the insurer’s cash flow and the classes of business
written as well as the financial condition of the assuming reinsurer;
Whether the insurer’s operating loss in the last twelve-month period or any shorter period of
time is greater than fifty percent (50%) of the insurer’s remaining surplus as regards
policyholders in excess of the minimum required;
Whether the insurer's operating loss in the last twelve-month period or any shorter period of
time, excluding net capital gains, is greater than twenty percent (20%) of the insurer's
remaining surplus as regards policyholders in excess of the minimum required;
Whether a reinsurer, obligor or any entity within the insurer’s insurance holding company
system, is insolvent, threatened with insolvency or delinquent in payment of its monetary or
other obligations which in the opinion of the commissioner may affect the insurer’s solvency;
Contingent liabilities, pledges or guaranties which either individually or collectively involve
a total amount which in the opinion of the commissioner may affect the solvency of the
insurer;
22
Section 627.7154(4), F.S.
23
National Association of Insurance Commissioners, Our Story, https://content.naic.org/about (last accessed March 31,
2023).
24
National Association of Insurance Commissioners, Model Laws, https://content.naic.org/model-laws (last accessed March
31, 2023).
25
https://content.naic.org/sites/default/files/MO385.pdf (last accessed March 31, 2023).
26
Id. BILL: CS/SB 7052 Page 8
Whether any “controlling person” of an insurer is delinquent in the transmitting to, or
payment of, net premiums to the insurer;
The age and collectibility of receivables;
Whether the management of an insurer fails to possess and demonstrate the competence,
fitness and reputation deemed necessary to serve the insurer in such position;
Whether management of an insurer has failed to respond to inquiries relative to the condition
of the insurer or has furnished false and misleading information concerning an inquiry;
Whether the insurer has failed to meet financial and holding company filing requirements in
the absence of a reason satisfactory to the commissioner;
Whether management of an insurer either has filed any false or misleading sworn financial
statement, or has released false or misleading financial statement to lending institutions or to
the general public, or has made a false or misleading entry, or has omitted an entry of
material amount in the books of the insurer;
Whether the insurer has grown so rapidly and to such an extent that it lacks adequate
financial and administrative capacity to meet its obligations in a timely manner;
Whether the insurer has experienced or will experience in the foreseeable future cash flow or
liquidity problems;
Whether management has established reserves that do not comply with minimum standards
established by state insurance laws, regulations, statutory accounting standards, sound
actuarial principles and standards of practice;
Whether management persistently engages in material under reserving that results in adverse
development;
Whether transactions among affiliates, subsidiaries or controlling persons for which the
insurer receives assets or capital gains, or both, do not provide sufficient value, liquidity or
diversity to assure the insurer's ability to meet its outstanding obligations as they mature;
The ratio of the annual premium volume to surplus or of its liabilities to surplus in relation to
loss experience and/or the kinds of risks insured;
Whether the insurer's asset portfolio when viewed in light of current economic conditions
and indications of financial or operational leverage is of sufficient value, liquidity, or
diversity to assure the company's ability to meet its outstanding obligations as they mature;
Whether the excess of surplus to policyholders over and above an insurer's statutorily
required surplus to policyholders has decreased by more than 50 percent in the preceding 12-
month period or any shorter period of time.
Whether residential property insurers have sufficient capital, surplus, and reinsurance to
withstand significant weather events, including but not limited to hurricanes;
The insurer's required surplus, capital, or capital stock is impaired to an extent prohibited by
law;
The insurer continues to write new business when it has not maintained the required surplus
or capital;
The insurer attempts to dissolve or liquidate without first having made provisions,
satisfactory to the OIR, for liabilities arising from insurance policies issued by the insurer;
The insurer meets one or more of the grounds for the appointment of a receiver; and
Any other finding determined by the commissioner to be hazardous to the insurer’s
policyholders, creditors or general public. BILL: CS/SB 7052 Page 9
Financial Services Commission Rule Chapter 69O-141, Florida Administrative Code
The Commission adopted Rule Chapter 69O-141, F.A.C., in 1991 related to the establishment of
“standards and procedures for administrative supervision of insurers in unsound condition or
which are engaging in methods or practices which render the continuance of business hazardous
to the public or insureds.”
27
These rules closely track the NAIC model regulation on this subject
discussed above. The rule chapter includes the following rules:
69O-141.001 Purpose
69O-141.002 Standards Regarding Administrative Supervision
69O-141.003 Plan of Correction
69O-141.004 Period of Supervision
69O-141.005 Appointment of Deputy Supervisors
69O-141.006 Costs of Administrative Supervision
69O-141.020 Procedures for Withdrawal, Surrender of Certificate of Authority, or
Discontinuance of Writing Insurance in this State Pursuant to Section 624.430, Florida
Statutes
Unfair Insurance Claim Settlement Practices
Florida law prohibits a person from engaging in an unfair or deceptive act or practice involving
the business of insurance.
28
The definition of unfair or deceptive acts or practices includes, in
part, the following unfair claim settlement practices:
Attempting to settle claims on the basis of a document that was altered without knowledge or
consent of the insured;
A material misrepresentation made to an insured for the purpose and with the intent of
effecting settlement on less favorable terms than provided under the contract or policy;
Committing or performing with such frequency as to indicate a general business practice
certain acts, such as failing to adopt and implement standards for the proper investigation of
claims;
Failing to pay undisputed amounts of partial or full benefits owed under first-party property
insurance policies within 90 days after an insurer received notice of a residential property
insurance claim, determines the amounts of partial or full benefits, and agrees to coverage,
unless payment of the undisputed benefits is prevented by “an act of God, prevented by the
impossibility of performance, or due to actions by the insured or claimant that constitute
fraud, lack of cooperation, or intentional misrepresentation regarding the claim for which
benefits are owed.”
29
An insurer that violates these provisions is subject to a fine in an amount not greater than $5,000
for each nonwillful violation, not to exceed an aggregate amount of $20,000, and not greater than
$40,000 for each willful violation arising from the same action, not to exceed an aggregate
amount of $200,000.
30
27
Rule 69O-141.001, F.A.C.
28
Section 626.9521(1), F.S.
29
Section 626.9541(1)(i), F.S.
30
Section 626.9521(2), F.S. BILL: CS/SB 7052 Page 10
DFS Insurance Fraud Investigations
The Division of Investigative and Forensic Services investigates various types of insurance fraud
including Personal Injury Protection fraud, workers' compensation fraud, vehicle fraud,
application fraud, licensee fraud, homeowner's insurance fraud, and healthcare fraud.
31
The
Division is directed by statute to investigate fraudulent insurance acts, violations of the Unfair
Insurance Trade Practices Act,
32
false and fraudulent insurance claims,
33
and willful violations
of the Florida Insurance Code and rules adopted pursuant to the code.
34
The Division employs
sworn law enforcement officers to investigate insurance fraud.
Mitigation Discounts
Residential property insurance rate filings must account for mitigation measures undertaken by
policyholders to reduce hurricane losses.
35
Specifically, the rate filings must include actuarially
reasonable discounts, credits, or other rate differentials or appropriate reductions in deductibles
to consumers who implement windstorm damage mitigation techniques to their properties.
36
Upon their filing by an insurer or rating organization, the OIR determines the discounts, credits,
other rate differentials and appropriate reductions in deductibles that reflect the full actuarial
value of such revaluation,
37
which in turn may be used in rate filings under the rating law.
Windstorm mitigation measures that must be evaluated for purposes of mitigation discounts
include fixtures or construction techniques that enhance roof strength, roof covering
performance, roof-to-wall strength, wall-to-floor-to-foundation strength, opening protection, and
window, door, and skylight strength.
38
Citizens Property Insurance Corporation—Overview
Citizens Property Insurance Corporation (Citizens) is a state-created, not-for-profit, tax-exempt
governmental entity whose public purpose is to provide property insurance coverage to those
unable to find affordable coverage in the voluntary admitted market.
39
Citizens is not a private
insurance company.
40
Citizens was statutorily created in 2002 when the Florida Legislature
combined the state’s two insurers of last resort, the Florida Residential Property and Casualty
Joint Underwriting Association (RPCJUA) and the Florida Windstorm Underwriting Association
(FWUA).
41
Citizens offers property insurance through three different accounts: a personal lines
account, a commercial lines account, and a coastal account.
31
See https://myfloridacfo.com/Division/DIFS/ (last accessed April 2, 2023).
32
Section 626.9541, F.S.
33
Section 817.234, F.S.
34
Section 624.15, F.S.
35
Section 627.062(2)(j), F.S.
36
Section 627.0629(1), F.S.
37
Id.
38
Id.
39
The term “admitted market” means insurance companies licensed to transact insurance in Florida.
40
Section 627.351(6)(a)1., F.S.
41
Section 2, ch. 2002-240, Laws of Fla. BILL: CS/SB 7052 Page 11
Citizens operates in accordance with the provisions in s. 627.351(6), F.S., and is governed by an
eight member Board of Governors (board) that administers its Plan of Operations. The Plan of
Operations is reviewed and approved by the Commission.
42
The Governor, President of the
Senate, Speaker of the House of Representatives, and Chief Financial Officer each appoint two
members to the board.
43
Citizens is subject to regulation by the OIR of Insurance Regulation.
Form Review
Each insurer must file with the OIR their basic insurance policy or annuity contract forms and
any application form that is to be made a part of the policy or contract.
44
These forms may not be
delivered or issued for delivery unless the form has been filed with the OIR.
45
Notice of Cancellation, Nonrenewal, or Renewal of Insurance Policies
The requirements for an insurer to provide notice of cancellation, nonrenewal, or renewal
premium are set forth in s. 627.4133, F.S. The specific notice depends on the type of insurance
provided and the particular circumstances of the subject policy.
Insurers writing personal lines residential or commercial lines residential property insurance
policies are generally subject to the following requirements:
An insurer must give written notice of cancellation, nonrenewal, or termination at least 120
days prior to the effective date of the cancellation, nonrenewal, or termination and the
notice is required to include the reason for nonrenewal, cancellation, or termination;
46
and
An insurer must give written notice of renewal premium at least 45 days prior to the
renewal premium
47
and the notice of renewal premium must specify certain information,
including the dollar amount of any premium increase that is due to an approved rate
increase and the total dollar amount that is due to coverage changes.
48
Separate Roof Deductibles
An insurer issuing a personal lines residential property insurance policy may include in such
policy a separate roof deductible that meets all of the following requirements:
Allows property insurers to include in the policy a separate roof deductible of up to two
percent of the Coverage A limit of the policy or 50 percent of the cost to replace the roof.
The policyholder must also be offered the option to decline the roof deductible by signing a
form approved by the OIR. If a roof deductible is added to the policy at renewal, the insurer
must provide a notice of change in policy terms and allow the policyholder to decline the
separate roof deductible.
42
Section 627.351(6)(a)2., F.S.
43
Section 627.351(6)(c)4.a., F.S.
44
Section 627.410, F.S.
45
Id.
46
Section 627.4133(2)(b), F.S.
47
Section 627.4133(2)(a), F.S.
48
Section 627.4133(7), F.S. BILL: CS/SB 7052 Page 12
Requires that policyholders that select a roof deductible must receive an actuarially sound
premium credit or discount.
Provides that the roof deductible does not apply to:
o A total loss to the primary structure in accordance with the valued policy law under
s. 627.702, F.S., which is caused by a covered peril.
o A loss caused by a hurricane.
o A roof loss resulting from a tree fall or other hazard that damages the roof and punctures
the roof deck.
o A roof loss requiring the repair of less than 50 percent of the roof.
Specifies that when a roof deductible is applied, no other deductibles under the policy may be
applied.
Specifies that a roof deductible only applies to a claim adjusted on a replacement cost basis.
Authorizes an insurer to limit the claim payment for a roof to the actual cash value of the loss
to the roof until the insurer receives reasonable proof of payment by the policyholder of the
roof deductible.
Requires a roof deductible provision to be clear and unambiguous.
Requires the inclusion of the following disclosures:
o On the page immediately behind the declarations page, notice that a roof deductible may
result in high out-of-pocket expenses to the policyholder.
On the policy declarations page, prominent display of the actual dollar value of the roof
deductible at issuance and renewal. Allows an insurer to limit payment on a roof claim to
actual cash value until the policyholder pays the roof deductible.
49
Claim Handling – Late Payments
Florida’s property insurance prompt payment statute provides for an insurer’s
50
duty to
acknowledge, investigate, and settle payment of a claim, if appropriate, within certain
timeframes. These laws are meant to require insurance companies to make quick payments of
any claims filed and deter unnecessary delays.
The insurer must acknowledge a filed claim within 14 days of its submission,
51
and begin an
investigation, as is reasonably necessary, within 14 days after receiving a proof-of-loss
statement.
52
Within 90 days of receiving notice of the initial, reopened, or supplemental claim,
the insurer must either pay the claim in full, pay a portion of the claim, or deny the claim.
53,54
These provisions must be complied within the stated timeframes unless the failure is caused by
49
Section 627.701(10), F.S.
50
Section 627.70131(5), F.S., defines “insurer” as any residential property insurer.
51
Section 627.70131(1)(a), F.S.
52
Section 627.70131(3)(a), F.S.
53
Section 627.70131(7)(b), F.S., defines “claim”, for purposes of this subsection, as: 1. A claim under an insurance policy
providing residential coverage as defined in s. 627.4025(1), F.S.,; 2. A claim for structural or contents coverage under a
commercial property insurance policy if the insured structure is 10,000 square feet or less; or 3. A claim for contents
coverage under a commercial tenant policy if the insured premises is 10,000 square feet or less.
54
Section 627.70131(7)(a), F.S. BILL: CS/SB 7052 Page 13
factors beyond the control of the insurer which reasonably prevent the insurer from complying
with them.
55
Except for claims subject to a hurricane deductible, any physical inspection must be conducted
within 45 days after the insurer receives the proof-of-loss statement.
56
Within 7 days of assigning
an adjuster, the insurer must notify the insured that a request may be made for an estimate of the
amount of the loss. If a request is received, the insurer must send such estimate to the insured
within the later of 7 days after the insurer received the request or 7 days after the detailed
estimate is completed.
57
A licensed adjuster assigned to investigate a claim must provide a policyholder with written
notification of his or her name and state adjuster license number, and include it on any
subsequent communication with the policyholder.
58
An insurer must keep a record or log of each
adjuster who communicates with the policyholder and provide a list of such adjusters to the
insured, the OIR or the DFS upon request.
Notice of Property Insurance Claims
Section 627.70132, F.S., requires insureds to notify an insurer of a claim or reopened claim,
59
within 1 year after the date of loss.
60
Notice of a supplemental claim
61
must be given to the
insurer within 18 months of the date of loss or such claim is barred. Section 627.706(5), F.S.,
requires insureds to notify an insurer of a claim, supplemental claim, or reopened sinkhole claim
within 2 years after the insured knew or reasonably should have known about the loss.
III. Effect of Proposed Changes:
DFS Division of Consumer Services
Section 1 amends s. 624.307, F.S., to:
Reduce insurer response time from 20 to 14 days upon a written request for documents and
information from the Division concerning a consumer complaint.
Increase fines for non-compliance to $5,000 per violation (from $2,500 per violation) on
entities and up to $1,000 per violation on a licensed individual (from a sliding scale of
$250/$500/$1,000 on individuals for a 1st/2nd/3rd+ violation).
Allow electronic responses upon a written request for documents and information from the
Division concerning a consumer complaint.
55
Section 627.70131(1)(a) and (3)(a), F.S.
56
Section 627.70131(3)(b), F.S.
57
Section 627.70131(3)(d), F.S.
58
Section 627.70131(3)(b) and (c), F.S.
59
Section 627.70132(1)(a), F.S., defines “reopened claim” as a claim that an insurer has previously closed, but that has been
reopened upon an insured’s request for additional costs for loss or damage previously disclosed to the insurer.
60
Section 627.702(3), F.S., provides that the date of loss for claims resulting from specified and other weather-related events,
such as hurricanes and tornadoes, is the date that the hurricane made landfall or the other weather-related event is verified by
the National Oceanic and Atmospheric Administration.
61
Section 627.70132(1)(b), F.S., defines “supplemental claim” as a claim for additional loss or damage from the same peril
which the insured has previously adjusted or for which costs have been incurred while completing repairs or replacement
pursuant to an open claim for which timely notice was previously provided to the insurer. BILL: CS/SB 7052 Page 14
Annual and Quarterly Reports on Insurer Compliance
Section 2 amends s. 624.315, F.S., to require that the OIR quarterly issue a report of all agency
actions taken against insurers. The report must identify the insurer, the violation, and the penalty.
The report must be submitted to the Commission, the President of the Senate, the Speaker of the
House of Representatives, and the legislative committees with jurisdiction over insurance
matters. The OIR must also issue an annual report on the same matters.
Financial Examinations
Section 3 amends s. 624.316, F.S., to require the OIR to develop a risk-based selection
methodology for scheduling examinations of insurers. Such methodology must include:
Use of a risk-focused analysis to prioritize financial examinations of insurers when such
reporting indicates a decline in the insurer’s financial condition.
Consideration of:
o Level of capitalization and identification of unfavorable trends;
o Negative trends in profitability or cash flow from operations;
o National Association of Insurance Commissioners Insurance Regulatory Information
System ratio results;
o Risk-based capital and risk-based capital trend test results;
o The structure and complexity of the insurer;
o Changes in the insurer’s officers or board of directors;
o Changes in the insurer’s business strategy or operations;
o Findings and recommendations from an examination made pursuant to ss. 624.316 or s.
624.3161, F.S.;
o Current or pending regulatory actions by the OIR or the DFS;
o Information obtained from other regulatory agencies or independent organization ratings
and reports; and
o The impact of an insurer’s insolvency on policyholders of the insurer and the public
generally.
Prioritization of property insurers for which the OIR identifies significant concerns about an
insurer’s solvency pursuant to s. 627.7154, F.S.
Any other matters the OIR deems necessary to consider for the protection of the public.
To facilitate the development of the methodology for scheduling examinations, the
Commission may adopt by rule the National Association of Insurance Commissioners
Financial Analysis Handbook, to the extent that the handbook is consistent with and does not
negate the requirements of this section.
Market Conduct Exams
Section 4 amends s. 624.3161, F.S., to provide that any authorized insurer transacting residential
property insurance business:
May be subject to an additional market conduct examination after a hurricane if, at any time
more than 90 days after the end of the hurricane, the insurer is among the top 20 percent of
insurers based upon a calculation of the ratio of hurricane-related property insurance claims
filed to the number of property insurance policies in force; BILL: CS/SB 7052 Page 15
Must be subject to a market conduct examination after a hurricane if, at any time more than
90 days after the end of the hurricane, the insurer:
o Is among the top 20 percent of insurers based upon a calculation of the ratio of hurricane
claim-related consumer complaints made about that insurer to the DFS to the insurer’s
total number of hurricane-related claims;
o Is among the top 20 percent of insurers based upon a calculation of the ratio of hurricane
claims closed without payment to the insurer’s total number of hurricane claims;
o Has made significant payments to its managing general agent since the hurricane; or
o Is identified by the OIR as necessitating a market conduct exam for any other reason
The bill requires the OIR to create a risk-based selection methodology for scheduling and
conducting market conduct examinations of insurers and other entities regulated by the OIR.
Such methodology must prioritize examinations of insurers and other entities to whom any of the
following conditions applies:
An insurance regulator in another state has initiated or taken regulatory action against the
insurer or entity regarding an act or omission of such insurer which, if committed in this
state, would constitute a violation of the laws of this state or any rule or order of the OIR or
the DFS.
Given the insurer’s market share in this state, the DFS or the OIR has received a
disproportionate number of the following types of claims-handling complaints against the
insurer:
o Failure to timely communicate with respect to claims;
o Failure to timely pay claims;
o Untimely payments giving rise to the payment of statutory interest;
o Failure to adjust and pay claims in accordance with the terms and conditions of the policy
or contract and in compliance with state law;
o Violations of the Unfair Insurance Trade Practices Act;
o Failure to use licensed and duly appointed claims adjusters;
o Failure to maintain reasonable claims records; or
o Failure to adhere to the company’s claims-handling manual.
The results of a National Association of Insurance Commissioners Market Conduct Annual
Statement indicate that the insurer is a negative outlier with regard to particular metrics.
There is evidence that the insurer is violating or has violated the Unfair Insurance Trade
Practices Act.
The insurer otherwise meets the criteria for a market conduct examination.
Any other conditions the OIR deems necessary for the protection of the public.
Administrative Fines
Section 5 amends s. 624.4211, F.S., to increase caps in administrative fines to:
For violations related to a covered loss or claim arising out of a state of emergency:
o Non-willful violations – Up to $25,000 per violation with an aggregate up to $100,000
for violations arising out of the same action.
o Willful violations – Up to $200,000 per violation with an aggregate up to $1,000,000 for
violations arising out of the same action.
For all other violations: BILL: CS/SB 7052 Page 16
o Non-willful violations – up to $12,500 and up to an aggregate $50,000 for violations
arising out of the same action.
o Willful violations – up to $100,000 and up to an aggregate $500,000 for violations arising
out of the same action.
Notice of Temporary Suspension of Writing New Business
Section 6 creates s. 624.4301, F.S., to require authorized insurers to give written notice to the
OIR before any temporary suspension of writing new residential property insurance policies at
least 20 business days before the effective date of the suspension or 5 business days before
notifying its agents, whichever is earlier. The notice must specify the reason for and time period
of the suspension and the proposed communication to its agents. This requirement does not apply
to a temporary suspension made in response to a hurricane that may make landfall if such
temporary suspension ceases within 72 hours after hurricane conditions are no longer present.
Hazardous Insurer Standards
Section 7 creates s. 624.805, F.S., to provide standards for the OIR to consider in determining
whether continued operation of any insurer may be deemed to be hazardous to its policyholders,
creditors, or the general public. In making such a determination, the OIR may consider, in the
totality of the circumstances, any of the following:
Adverse findings reported in financial condition or market conduct examination reports, audit
reports, or actuarial opinions, reports, or summaries;
The National Association of Insurance Commissioners Insurance Regulatory Information
Systems and its other financial analysis solvency tools and reports;
Whether the insurer has made adequate provisions for the anticipated cash flows required to
cover its obligations and expenses;
The ability of an assuming reinsurer to perform and whether the insurer’s reinsurance
program provides sufficient protection;
Whether the insurer’s operating loss in the last twelve-month period is greater than fifty
percent of the insurer’s remaining surplus;
Whether the insurer’s operating loss in the last twelve-month period excluding net capital
gains, is greater than twenty percent of the insurer’s remaining surplus;
Whether a reinsurer, obligor, or any entity within the insurer’s insurance holding company
system, is insolvent, threatened with insolvency or delinquent in payment of its monetary or
other obligations, and which may affect the solvency of the insurer;
Contingent liabilities, pledges, or guaranties which in the opinion of the OIR may affect the
solvency of the insurer;
Whether any “affiliate” of an insurer is delinquent in the transmitting to, or payment of, net
premiums to the insurer;
The age and collectability of receivables;
Whether the management of an insurer fails to possess and demonstrate the competence,
fitness, and reputation deemed necessary;
Whether management of an insurer has failed to respond to inquiries relative to the condition
of the insurer or has furnished false or misleading information to the OIR; BILL: CS/SB 7052 Page 17
Whether the insurer has failed to meet financial and holding company filing requirements in
the absence of a reason satisfactory to the OIR;
Whether management of an insurer has filed or released any false or misleading financial
statement, or has made a false or misleading entry, or has omitted an entry of material
amount in the books of the insurer;
Whether the insurer has grown so rapidly and to such an extent that it lacks adequate
financial and administrative capacity to meet its obligations in a timely manner;
Whether the insurer has experienced or will experience in the foreseeable future cash flow or
liquidity problems;
Whether management has established reserves that do not comply with minimum standards
established by state insurance laws, regulations, statutory accounting standards, sound
actuarial principals and standards of practice;
Whether management persistently engages in material under reserving that results in adverse
development;
Whether transactions among affiliates, subsidiaries, or controlling persons for which the
insurer receives assets or capital gains, or both, do not provide sufficient value, liquidity, or
diversity to assure the insurer’s ability to meet its outstanding obligations as they mature;
The ratio of the annual premium volume to surplus or of its liabilities to surplus in relation to
loss experience and/or the kinds of risks insured;
Whether the insurer’s asset portfolio when viewed in light of current economic conditions
and indications of financial or operational leverage is of sufficient value, liquidity or
diversity to assure the company’s ability to meet its outstanding obligations as they mature;
Whether the excess of surplus to policyholders over and above an insurer’s statutorily
required surplus to policyholders has decreased by more than 50% in the preceding 12-month
period;
Whether residential property insurers have sufficient capital, surplus, and reinsurance to
withstand significant weather events, including but not limited to hurricanes;
The insurer’s required surplus, capital, or capital stock is impaired to an extent prohibited by
law;
The insurer continues to write new business when it has not maintained the required surplus
or capital;
The insurer attempts to dissolve or liquidate without first having made provisions,
satisfactory to the OIR, for liabilities arising from insurance policies issued by the insurer;
Whether an insurer has incurred substantial new debt, has had to rely on frequent or
substantial capital infusions, has a highly leveraged balance sheet, or relies increasingly on
outside consulting sources;
The insurer meets one or more of the grounds in s. 631.051, F.S., for the appointment of the
DFS as receiver; or
Any other finding determined by the OIR to be hazardous to the insurer’s policyholders,
creditors, or general public.
In making a determination of an insurer's financial condition, the OIR may:
Disregard any credit or amount receivable resulting from transactions with a reinsurer that is
insolvent, impaired, or otherwise subject to a delinquency proceeding;
Make appropriate adjustments including disallowance to asset values attributable to
investments in or transactions with parents, subsidiaries, or affiliates consistent with the BILL: CS/SB 7052 Page 18
National Association of Insurance Commissioners Accounting Practices and Procedures
Manual, state laws and rules;
Refuse to recognize the stated value of accounts receivable if the ability to collect receivables
is highly speculative in view of the age of the account or the financial condition of the
debtor; and
Increase the insurer’s liability in an amount equal to any contingent liability, pledge, or
guarantee not otherwise included if there is a substantial risk that the insurer will be called
upon to meet the obligation undertaken within the next twelve-month period.
If the OIR determines that the continued operations of an insurer licensed to transact business in
this state may be hazardous to its policyholders, creditors, or the general public, the OIR may
issue an order requiring the insurer to do any of the following:
Reduce the total amount of present and potential liability for policy benefits by procuring
additional reinsurance;
Reduce, suspend, or limit the volume of business being accepted or renewed;
Reduce general insurance and commission expenses by specified methods or amounts;
Increase the insurer’s capital and surplus;
Suspend or limit the declaration and payment of dividend by an insurer to its stockholders or
to its policyholders;
File reports in a form acceptable to the OIR concerning the market value of an insurer’s
assets;
Limit or withdraw from certain investments or discontinue certain investment practices to the
extent the OIR deems necessary;
Document the adequacy of premium rates in relation to the risks insured;
File, in addition to regular annual statements, interim financial reports on the a form
prescribed by the commission adopted by the National Association of Insurance
Commissioners or in such format as promulgated by the OIR;
Correct corporate governance practice deficiencies, and adopt and utilize governance
practices acceptable to the OIR;
Provide a business plan to the OIR in order to continue to transact business in the state; and
Adjust rates for any non-life insurance product written by the insurer that the OIR considers
necessary to improve the financial condition of the insurer, notwithstanding any other
provision of law limiting the frequency or amount of rate adjustments.
These provisions are not to be interpreted to limit the powers granted to the OIR by any laws of
this state or to supersede any laws of this state. The OIR may, pursuant to law, in its discretion
and without advance notice or hearing, issue an immediate final order to any insurer requiring
the authorized actions.
Section 8 amends s. 624.81, F.S., relating to notice to comply with written requirements of the
OIR, to repeal Commission rulemaking authority to define standards of hazardous financial
condition and corrective action.
Section 9 creates s. 624.865, F.S., to provide rulemaking authority to the Commission to
administer ss. 624.80-624.87, F.S. (administrative supervision of insurers). Such rules must
protect the interests of insureds, claimants, insurers, and the public. BILL: CS/SB 7052 Page 19
Section 10 amends s. 628.8015, F.S., to conform a cross-reference.
Insurance Fraud – Licensure
Section 11 amends s. 626.207, F.S., to revise the DFS licensure suspension statutes to specify
that the 7-year disqualification period for misdemeanors applies to misdemeanors related to
Insurance Code violations, in addition to the current ground that the violation is directly related
to the financial services business.
Fines for Unfair Insurance Trade Practices
Section 12 amends s. 626.9521, F.S., to increase the fines for any person that violates the Unfair
Insurance Trade Practices Act. Fines for each nonwillful violation may not exceed $12,500 (up
from $5,000) and fines for each willful violation may not exceed $100,000 (up from $40,000).
Fines may not exceed an aggregate amount of $50,000 (up from $20,000) for all nonwillful
violations arising out of the same action or an aggregate amount of $500,000 (up from $200,000)
for all willful violations arising out of the same action.
Fines for “twisting” and for “churning” may not exceed $12,500 (up from $5,000) for each
nonwillful violation and may not exceed $187,500 (up from $75,000) for each willful violation.
Fines for willfully submitting fraudulent signatures on an application or policy-related document
may not exceed $12,500 (up from $5,000) for each nonwillful violation and may not exceed
$187,500 (up from $75,000) for each willful violation.
Fines for a violation related to a covered loss or claim caused by an emergency for which the
Governor declared a state of emergency may not exceed $25,000 for each nonwillful violation
and may not exceed $200,000 for each willful violation. Such fines may not exceed an aggregate
amount of $100,000 for all nonwillful violations arising out of the same action or an aggregate
amount of $1,000,000 for all willful violations arising out of the same action.
Unfair Insurance Claims Settlement Practices
Section 13 amends s. 626.9541, F.S., to provide that it is an unfair claims settlement practice to,
with such frequency as to indicate a general business practice, alter or amend an insurance
adjuster's report without providing a detailed explanation as to why any change that has the
effect of reducing the estimate of the loss was made; and either:
Including on the report or as an addendum to the report a detailed list of all changes made to
the report and the identity of the person who ordered each change; or
Retaining all versions of the report, and including within each such version, for each change
made within such version of the report, the identity of each person who made or ordered such
change.
The bill provides that it is an unfair insurance trade practice for a director or an officer of an
impaired insurer to receive a bonus from such insurer or from a holding company or an affiliate
that shares common ownership or control with such insurer.
BILL: CS/SB 7052 Page 20
DFS Insurance Fraud Investigations
Section 14 amends s. 626.989, F.S., to provide that insurance fraud referrals may be made by the
DFS to the statewide prosecutor for crimes that impact two or more judicial circuits.
The bill directs the Division of Investigative and Forensic Services, Bureau of Insurance Fraud,
within the DFS, to submit a performance report to the President of the Senate and the Speaker of
the House of Representatives by January 1 of each year. The report is to include at least:
The total number of initial referrals received, cases opened, cases presented for prosecution,
cases closed, and convictions resulting from cases presented for prosecution by the Bureau of
Insurance Fraud by type of insurance fraud and circuit.
The number of referrals received from insurers and the outcome of those referrals.
The number of investigations undertaken by the Bureau of Insurance Fraud which were not
the result of a referral from an insurer and the outcome of those referrals.
The number of investigations that resulted in a referral to a regulatory agency and the
disposition of those referrals.
The number and reasons provided by local prosecutors or the statewide prosecutor for
declining prosecution of a case presented by the Bureau of Insurance fraud.
The total number of employees assigned to the Bureau of Insurance Fraud delineated by
location of staff assigned; and the number and location of employees assigned to the Bureau
of Insurance Fraud who were assigned to work other types of fraud cases.
The average caseload and turnaround time by type of case for each investigator.
The training provided during the year to insurance fraud investigators.
Mitigation Discounts
Section 15 amends s. 627.0629, F.S., to require insurers to provide information on their website
describing the hurricane mitigation discounts available to policyholders. The bill further provides
that on or before January 1, 2025, and every five years thereafter, the OIR reevaluate and update
the fixtures or construction techniques demonstrated to reduce the amount of loss in a windstorm
and the discounts, credits, other rate differentials, and reductions in deductibles that reflect the
full actuarial value of such fixtures or construction techniques.
Insurance of Policies with Claims of Insolvent Insurers
Section 16 amends s. 627.351, F.S., to provide that the Citizens Property Insurance Corporation
may not determine that a risk is ineligible for coverage with the corporation solely because such
risk has unrepaired damage caused by a covered loss that is the subject of a claim that has been
filed with the Florida Insurance Guaranty Association (FIGA). This requirement applies until the
earlier of 36 months after the date the FIGA began servicing such claim or closes the claim.
Form Review
Section 17 amends s. 627.410, F.S., to provide that the OIR may not waive review of the
insurance documents or forms of any insurer whom the OIR enters a final order determining that BILL: CS/SB 7052 Page 21
such insurer violated any provision of the Insurance Code for a period of 36 months after the
date of such order.
Claims Handling Manuals
Section 18 creates s. 627.4108, F.S., to require each authorized residential property insurer to
create and use a claims-handling manual that provides guidelines and procedures and that
complies with the Insurance Code and comports to usual and customary industry claims-handling
practices. Such manual must include guidelines and procedures for:
Initially receiving and acknowledging initial receipt of the claim and reviewing and
evaluating the claim;
Communicating with policyholders, beginning with the receipt of the claim and continuing
until closure of the claim;
Setting the claim reserve;
Investigating the claim, including conducting inspections of the property that is the subject of
the claim;
Making preliminary estimates and estimates of the covered damages to the insured property
and communicating such estimates to the policyholder;
The payment, partial payment, or denial of the claim and communicating such claim decision
to the policyholder;
Closing claims; and
Any aspect of the claims-handling process which the OIR determines should be included in
the claims-handling manual in order to:
o Comply with the laws of this state or rules or orders of the OIR or the DFS;
o Ensure the claims-handling manual comports with usual and customary industry claims-
handling guidelines; or
o Protect policyholders of the insurer or the general public.
The bill provides that the OIR may request a copy of the insurer’s claims-handling manuals. If
requested by the OIR, the insurer must submit within 5 business days:
A true and correct copy of each claims-handling manual requested; and
An attestation, on a form prescribed by the Commission, that certifies:
o That the insurer has provided a true and correct copy of each currently applicable, or
otherwise specifically requested, claims-handling manual; and
o The timeframe for which each submitted claims-handling manual was or is in effect.
Each authorized residential property insurer must annually certify and attest that:
Each of the insurer’s current claims-handling manuals complies with the requirements of this
code and comports to usual and customary industry claims-handling practices; and
The insurer maintains adequate resources available to implement the requirements of each of
its claims-handling manuals at all times, including during natural disasters and catastrophic
events.
The bill provides that the Commission may adopt emergency rules to implement this section.
Cancellation during Pending Claims BILL: CS/SB 7052 Page 22
Section 19 amends s. 627.4133, F.S., to provide that an authorized insurer insurer may not
cancel or nonrenew a residential property insurance policy:
For a period of 90 days after the property has been repaired, if such property has been
damaged as a result of a hurricane or wind loss that is the subject of the declaration of
emergency and the filing of an order by the Commissioner of Insurance Regulation.
Until the earlier of when property has been repaired or 1 year after the insurer issues the final
claim payment, if such property was damaged by any covered peril, but was not damaged as
a result of a hurricane or wind loss that is the subject of the declaration of emergency and the
filing of an order by the Commissioner of Insurance Regulation.
A structure is deemed repaired when substantially completed and restored to the extent that it is
insurable by another authorized insurer.
The bill extends the application of the provisions of this section to personal residential and
commercial residential policies covering property that was damaged as the result of Hurricane
Ian or Hurricane Nicole.
Administration of Claims
Section 20 amends s. 627.426, F.S., to require each liability insurer, upon receiving actual notice
of an incident or a loss that could give rise to a covered liability claim, to do all of the following:
Assign a licensed and appointed insurance adjuster to investigate the extent of the insured’s
probable exposure and diligently attempt to resolve any questions concerning the existence or
extent of the insured’s coverage.
Evaluate the claim fairly, honestly, and with due regard for the interests of the insured based
on available information; consider the extent of the claimant’s recoverable damages; and
consider the information in a reasonable and prudent manner.
Request from the insured or claimant additional relevant information the insurer reasonably
deems necessary to evaluate whether to settle a claim.
Conduct all oral and written communications with the insured with the honesty and candor.
Make reasonable efforts to explain to persons not represented by counsel matters requiring
expertise beyond the level normally expected of a layperson with no training in insurance or
claims-handling issues.
Retain all written and recorded communications and create and retain a summary of all
verbal communications in a reasonable manner for a period of not less than 5 years after the
later of the entry of a judgment against the insured in excess of policy limits becoming final
or the conclusion of the extracontractual claim, if any, including any related appeals.
Provide the insured within 30 days of a request, all communications related to the insurer’s
handling of the claim which are not privileged as to the insured.
Provide, upon request and at the insurer’s expense, reasonable accommodations necessary to
communicate effectively with an insured covered under the Americans with Disabilities Act.
In handling third-party claims, communicate to an insured the identity of any other person or
entity the insurer has reason to believe may be liable; the insurer’s evaluation of the claim
given the facts known to the insurer at that time; the likelihood and possible extent of an
excess judgment; steps the insured can take to avoid exposure to an excess judgment, BILL: CS/SB 7052 Page 23
including the right to secure personal counsel at the insured’s expense; the insured’s duty to
cooperate with the insurer, including any specific requests required because of a settlement
opportunity or by the insurer in accordance with the policy, the purpose of the required
cooperation, and the consequences of refusing to cooperate; and any settlement demands or
offers.
Initiate settlement negotiations by tendering its policy limits to the claimant in exchange for a
general release of the insured if the facts available to the insurer indicate that the insured’s
liability is likely to exceed the policy limits.
Give fair consideration to a settlement offer that is not unreasonable under the facts available
to the insurer and settle in exchange for a general release of the insured, if possible, when
reasonably prudent to do so. The insurer must provide reasonable assistance to the insured to
comply with the insured’s obligations to cooperate and act reasonably to attempt to satisfy
any conditions of a claimant’s settlement offer. If it is not possible to settle a liability claim
within the available policy limits in exchange for a general release of the insured, the insurer
must act reasonably to attempt to minimize the excess exposure to the insured.
Attempt to minimize the magnitude of possible excess judgments against the insured when
multiple claims arise out of a single occurrence and the combined value of all claims exceeds
the total of all applicable policy limits.
Attempt to settle the claim in exchange for a general release of all insureds against whom a
claim may be presented if a loss creates the potential for a third-party claim against more
than one insured. If it is not possible to settle in exchange for a general release of all insureds,
the insurer, in consultation with the insureds, must attempt to enter into reasonable
settlements of claims against certain insureds in exchange for a general release of such
insureds to the exclusion of other insureds.
Respond to any request for insurance information in compliance with ss. 626.9372 or
627.4137, F.S., as applicable.
Take reasonable measures to preserve evidence, for a reasonable period of time, which is
needed for the defense of the liability claim if it appears the insured’s probable exposure is
greater than policy limits.
Comply with the existing provision for claim administration, as applicable; or
Comply with the Unfair Insurance Trade Practices Act.
The bill defines “actual notice” for purposes of this section to mean the insurer’s receipt of notice
of an incident or a loss that could give rise to a covered claim that is communicated to the insurer
or an agent of the insurer:
By any manner permitted by the policy or other documents provided to the insured by the
insurer;
Through the claims link on the insurer’s website; or
Through the e-mail address designated by the insurer under s. 624.422, F.S.
The bill provides that, in determining whether an insurer violated these provisions, it is relevant
whether the insured, claimant, or their representative was acting in good faith in furnishing
information regarding the claim, in making demands of the insurer, in setting deadlines, and in
attempting to settle the claim. This includes whether: BILL: CS/SB 7052 Page 24
The insured met its duty to cooperate with the insurer in the defense of the claim and in
making settlements by taking reasonable actions requested by the claimant or required by the
policy which are necessary to assist the insurer in settling a covered claim, including:
o Executing affidavits regarding the facts within the insured’s knowledge regarding the
covered loss; and
o Providing documents, including if reasonably necessary to settle a covered claim valued
in excess of policy limits and upon the request of the claimant, a summary of the
insured’s assets, liabilities, obligations, other insurance policies that may provide
coverage for the claim, and the name and contact information of the insured’s employer
when the insured is a natural person who was acting in the course and scope of
employment when the incident giving rise to the claim occurred.
The claimant and any claimant’s representative:
o Acted honestly in furnishing information regarding the claim;
o Acted reasonably in setting deadlines; and
o Refrained from taking actions that may be reasonably expected to prevent an insurer from
accepting the settlement demand.
A violation of the subsection is a violation of the Florida Insurance Code and subject to the
applicable enforcement provisions and any imposed related administrative fines imposed is
subject to a 2.0 multiplier and may exceed the limits on fine amounts and aggregate fine amounts
provided for under the Code. The subsection does not create a civil cause of action and does not
abrogate or diminish any existing civil cause of action. Any proceedings, determinations, or
enforcement actions taken by the OIR for violations of the subsection are not admissible in any
civil action.
Roof Deductibles
Section 21 amends s. 627.701(10), F.S., to provide that if a roof deductible is applied, no other
deductible under the policy may be applied to the loss “or to any other loss to the property
caused by the same covered peril.”
Notice of Property Insurance Claims
Section 22 amends s. 627.70132, F.S., to toll the time period for filing a property insurance
claim during any term of deployment to a combat zone or combat support posting which
materially affects the ability of a servicemember to file a claim, supplemental claim, or reopened
claim.
Legislative Intent
Section 23 provides legislative intent that Chapter 2022-271, Laws of Florida, passed during
Special Session A in December 2023, shall not be construed to impair any right under an
insurance contract in effect on or before the effective date of that chapter law (December 16,
2022). The bill provides that to the extent that Chapter 2022-271, Laws of Florida, affects a right
under an insurance contract that chapter law applies to an insurance contract issued or renewed
after the effective date of that chapter law. This section is intended to clarify existing law and is
remedial in nature. BILL: CS/SB 7052 Page 25
Insurance Rates - Change in Law
Section 24 requires, in order to ensure that rates accurately reflect the risk, that every residential
property insurer rate filing and every motor vehicle insurer rate filing made or pending with the
Office of Insurance Regulation on or after July 1, 2023, must reflect the projected savings or
reduction in claim frequency, claim severity, and loss adjustment expenses, including for
attorney fees, payment of attorney fees to claimants, and any other reduction actuarially
indicated, due to the combined effect of the applicable provisions of:
Chapter 2021-77, L.O.F. (SB 76 – 2021);
Chapter 2022-268, L.O.F. (SB 2-D - 2022);
Chapter 2022-271, L.O.F. (SB 2-A - 2022); and
Chapter 2023-15, L.O.F. (HB 837 - 2023).
In its review, the OIR must consider the projected savings or reduction in claim frequency, claim
severity, and loss adjustment expenses, including for attorney fees, payment of attorney fees to
claimants, and any other reduction actuarially indicated. The OIR is authorized to develop
methodology and data that incorporate generally accepted actuarial techniques and standards to
be used in its review. The OIR is authorized to contract with an appropriate vendor to advise in
developing such methodology and data. The methodology and data are not intended to create a
mandatory minimum rate decrease, but rather to ensure that the rates are not excessive,
inadequate, or unfairly discriminatory and allow such insurers a reasonable rate of return
The bill appropriates $500,000 from the Insurance Regulatory Trust Fund to the OIR to
implement this section.
OIR Program Funding
Section 25 authorizes 18 FTEs with associated salary rate of 1,116,500 and appropriates
$1,879,129 in recurring funds and $185,086 in non-recurring funds from the Insurance
Regulatory Trust Fund to the OIR to implement the bill.
DFS Program Funding
Section 25 authorizes seven FTEs with associated salary rate of 350,000 and appropriates
$574,036 in recurring funds and $33,467 in non-recurring funds from the Insurance Regulatory
Trust Fund to the DFS to implement the bill.
Effective Date
Section 27 provides an effective date of July 1, 2023.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None. BILL: CS/SB 7052 Page 26
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
The bill should have a positive impact on individuals and businesses whose premiums for
property insurance and motor vehicle insurance will include consideration the impact of
recent legislative reforms on projected losses. Property insurance customers should
benefit from more frequent updates to mitigation credits and greater public awareness of
their availability.
The additional reporting requirements created by the bill will have an indeterminate
impact on insurers.
C. Government Sector Impact:
The bill appropriates $500,000 from the Insurance Regulatory Trust Fund to the OIR to
implement section 24 of the bill relating to rate review.
The bill authorizes 18 FTES with associated salary rate of 1,116,500 and appropriates
$1,879,129 in recurring funds and $185,086 in non-recurring funds from the Insurance
Regulatory Trust Fund to the OIR to implement the bill.
The bill authorizes seven FTEs with associated salary rate of 350,000 and appropriates
$574,036 in recurring funds and $33,467 in non-recurring funds from the Insurance
Regulatory Trust Fund to the DFS to implement the bill.
VI. Technical Deficiencies:
None. BILL: CS/SB 7052 Page 27
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 624.307, 624.315,
624,316, 624.3161, 624.4211, 624.81, 626.207, 626.9521, 626.9541, 626.989, 627.0629,
627.351, 627.410, 627.4133, 627.426, 627.701, 627.70132, and 628.8015.
This bill creates the following sections of the Florida Statutes: 624.4301, 624.805, 624.865, and
627.4108.
IX. Additional Information:
A. Committee Substitute – Statement of Substantial Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS by Fiscal Policy Committee on April 20, 2023:
The committee substitute:
Deletes section 7 (payments to affiliates), section 12 (motor vehicle insurance claim
settlement practices), section 22 (emergency order after a natural disasters), and
section 23 (title insurance rates) from the bill.
Revises risk-based selection methodology factors for financial examinations.
Revises market conduct examination provisions.
Specifies factors the OIR may consider in determining whether the continued
operation of an insurer may be deemed to be hazardous to its policyholders, creditors,
or the general public; specifying actions the OIR may take in determining an insurer's
financial condition; specifying actions the OIR may order a hazardous insurer to take;
authorizing the Commission to adopt rules.
Revises claim administration practice provisions to provide that administrative fines
imposed for violations are subject to a 2.0 multiplier and may exceed the limits on
fine amounts and aggregate fine amounts provided for under the Insurance Code;
providing that any proceedings, determinations, or enforcement actions taken by the
OIR against an insurer for violations are not admissible in any civil action.
Applies notice of temporary suspension of writing new business provision to only
residential property insurance; exempts temporary hurricane-related suspensions.
Provides that in lieu of making a list of changes to the adjuster’s report, the company
may retain all versions of the report.
Prohibits officers and directors of insolvent insurers from receiving bonuses paid by a
holding company or affiliate with common ownership.
Revises the date by which insurers must include available discounts on their websites.
Requires residential property insurers to create and use claims-handling manuals that
comply with the Insurance Code and comport to industry standards. Eliminates
annual submission requirement. The OIR may request manual at any time and
requires attestation with submission. BILL: CS/SB 7052 Page 28
Revises standards for handling liability claims; specifies the section does not create a
civil cause of action, nor does it abrogate or diminish an existing civil cause of action.
Tolls the time period to file a claim for a servicemember deployed to a combat zone
or combat supporting posting.
Revises language specifying the purpose of the insurance rate change in law section.
Provides that the OIR may develop “methodology and data” – rather than “factors” -
that incorporate generally accepted actuarial techniques and standards to be used in its
review of rate filings based on the passage of recent legislation.
Authorizes 18 FTES with associated salary rate of 1,116,500 and appropriates
$1,879,129 in recurring funds and $185,086 in non-recurring funds from the
Insurance Regulatory Trust Fund to the OIR to implement the bill.
Authorizes seven FTEs with associated salary rate of 350,000 and appropriates
$574,036 in recurring funds and $33,467 in non-recurring funds from the Insurance
Regulatory Trust Fund to the DFS to implement the bill.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.