Florida Senate - 2025 SB 554 By Senator Gaetz 1-00566E-25 2025554__ 1 A bill to be entitled 2 An act relating to insurance practices; amending s. 3 55.03, F.S.; revising the calculation that the Chief 4 Financial Officer performs to set the rate of interest 5 payable on judgments or decrees; amending s. 624.315, 6 F.S.; providing legislative findings; requiring the 7 Office of Insurance Regulation of the Financial 8 Services Commission to create specified reports on 9 related entities and compensation of executive 10 officers for insurers, licensees, and registrants; 11 specifying requirements for such reports; requiring 12 the office to publish the reports annually on its 13 website and submit the reports annually to specified 14 entities; requiring the office to use a reliable and 15 up-to-date methodology and software to create 16 specified reports and review such methodology and 17 software for accuracy; specifying that certain data is 18 not considered a trade secret and may be used for 19 certain purposes; prohibiting insurers from 20 withholding certain data from the office under certain 21 circumstances; amending s. 627.062, F.S.; revising the 22 facts the office must consider in determining whether 23 a rate is excessive, inadequate, or unfairly 24 discriminatory; amending s. 627.70131, F.S.; requiring 25 insurers to send policyholders a written estimate of 26 the amount of loss under certain circumstances; 27 specifying certain requirements for insurers when 28 creating and sending such estimates; prohibiting 29 insureds and insurers from waiving such requirements; 30 amending s. 627.7015, F.S.; conforming a cross 31 reference and provisions to changes made by the act; 32 amending s. 627.70152, F.S.; revising the manner in 33 which an insurer must respond to a notice to initiate 34 litigation; requiring a claimant and insurer to 35 participate in mandatory mediation under certain 36 circumstances; requiring the court to determine 37 attorney fees in a specified manner for cases arising 38 from a property insurance dispute; authorizing the 39 office to impose penalties for violations of certain 40 provisions; amending s. 627.70154, F.S.; requiring 41 insurers to disclose to policyholders the dollar 42 amount of a credit or premium discount for a mandatory 43 binding arbitration endorsement; reenacting ss. 44 627.151(1), 627.715(3)(b), and 627.7151(9)(b), F.S., 45 relating to workers compensation or employers 46 liability insurance filings, flood insurance, and 47 sinkhole coverage insurance, respectively, to 48 incorporate the amendment made to s. 627.062, F.S., in 49 references thereto; providing an effective date. 50 51 Be It Enacted by the Legislature of the State of Florida: 52 53 Section 1.Subsection (1) of section 55.03, Florida 54 Statutes, is amended to read: 55 55.03Judgments; rate of interest, generally. 56 (1)On December 1, March 1, June 1, and September 1 of each 57 year, the Chief Financial Officer shall set the rate of interest 58 that shall be payable on judgments or decrees for the calendar 59 quarter beginning January 1 and adjust the rate quarterly on 60 April 1, July 1, and October 1 by averaging the discount rate of 61 the Federal Reserve Bank of New York for the preceding 12 62 months, then adding 800 400 basis points to the averaged federal 63 discount rate. The Chief Financial Officer shall inform the 64 clerk of the courts and chief judge for each judicial circuit of 65 the rate that has been established for the upcoming quarter. The 66 interest rate established by the Chief Financial Officer takes 67 shall take effect on the first day of each following calendar 68 quarter. Judgments obtained on or after January 1, 1995, must 69 shall use the previous statutory rate for time periods before 70 January 1, 1995, for which interest is due and must shall apply 71 the rate set by the Chief Financial Officer for time periods 72 after January 1, 1995, for which interest is due. This 73 subsection does not Nothing contained herein shall affect a rate 74 of interest established by written contract or obligation. 75 Section 2.Present paragraph (c) of subsection (4) of 76 section 624.315, Florida Statutes, is redesignated as paragraph 77 (d), and a new paragraph (c) is added to that subsection, to 78 read: 79 624.315Annual reports; quarterly reports. 80 (4) 81 (c)1.The Legislature finds that the state has a strong and 82 legitimate financial interest in the health and performance of 83 the property and casualty insurance market. Further, the costs 84 of property insurance may have a strong impact on the 85 performance of Floridas housing market, to the benefit or 86 detriment of Florida residents. Therefore, it is in the interest 87 of Floridians that the office collect and analyze data regarding 88 market conduct and performance. 89 2.The office shall create a report that, for each insurer, 90 licensee, or registrant, provides a list of related entities, 91 including, but not limited to, subsidiaries, management 92 companies, captive vendors, and reinsurers, which share common 93 executive officers, directors, or offices or at least 10 percent 94 common ownership with the insurer, licensee, or registrant. The 95 report must also detail the financial relationship between the 96 entities. The office shall publish the report on its website and 97 submit it to the commission, the President of the Senate, the 98 Speaker of the House of Representatives, and the legislative 99 committees with jurisdiction over matters of insurance on or 100 before January 31 of each year. 101 3.The office shall create a report detailing the 102 compensation of executive officers for each insurer, licensee, 103 or registrant, including, but not limited to, salaries, 104 benefits, stock options, bonuses, stock buybacks, and other 105 taxable payments, expressed both as dollar amounts and as a 106 percentage of the entitys total revenue. The report must 107 include the profits and losses of each entity as reported in its 108 financial statements and highlight any compensation exceeding 109 the industry average. The office shall also include in the 110 report any rationale provided by the insurer justifying 111 compensation exceeding the industry average and, for each 112 insurer, an explanation of how specific data gathered during the 113 creation of the report informed the offices decisions on that 114 insurers rate change requests. The office shall publish the 115 report on its website and submit it to the commission, the 116 President of the Senate, the Speaker of the House of 117 Representatives, and the legislative committees with 118 jurisdiction over matters of insurance on or before January 31 119 of each year. 120 4.To create the reports required under subparagraphs 2. 121 and 3., the office shall use a reliable and up-to-date 122 methodology and software and shall routinely review such 123 methodology and software for accuracy. 124 5.Any data provided by insurers to the office under this 125 paragraph is not considered a trade secret under s. 812.081, and 126 the office may use such data for market analysis, financial 127 assessments, rate-setting, and compliance reviews. Insurers may 128 not withhold any financial and other data requested by the 129 office under this paragraph as being business sensitive or a 130 trade secret. 131 Section 3.Paragraph (b) of subsection (2) of section 132 627.062, Florida Statutes, is amended to read: 133 627.062Rate standards. 134 (2)As to all such classes of insurance: 135 (b)Upon receiving a rate filing, the office shall review 136 the filing to determine whether if a rate is excessive, 137 inadequate, or unfairly discriminatory. In making that 138 determination, the office shall, in accordance with generally 139 accepted and reasonable actuarial techniques, consider the 140 following factors: 141 1.Past and prospective loss experience within and without 142 this state. 143 2.Past and prospective expenses. 144 3.The degree of competition among insurers for the risk 145 insured. 146 4.Investment income reasonably expected by the insurer, 147 consistent with the insurers investment practices, from 148 investable premiums anticipated in the filing, plus any other 149 expected income from currently invested assets representing the 150 amount expected on unearned premium reserves and loss reserves. 151 The commission may adopt rules using reasonable techniques of 152 actuarial science and economics to specify the manner in which 153 insurers calculate investment income attributable to classes of 154 insurance written in this state and the manner in which 155 investment income is used to calculate insurance rates. Such 156 manner must contemplate allowances for an underwriting profit 157 factor and full consideration of investment income that produces 158 a reasonable rate of return; however, investment income from 159 invested surplus may not be considered. 160 5.The reasonableness of the judgment reflected in the 161 filing. 162 6.Dividends, savings, or unabsorbed premium deposits 163 allowed or returned to policyholders, members, or subscribers in 164 this state. 165 7.The adequacy of loss reserves. 166 8.The cost of reinsurance. The office may not disapprove a 167 rate as excessive solely due to the insurer having obtained 168 catastrophic reinsurance to cover the insurers estimated 250 169 year probable maximum loss or any lower level of loss. 170 9.Trend factors, including trends in actual losses per 171 insured unit for the insurer making the filing. 172 10.Conflagration and catastrophe hazards, if applicable. 173 11.Projected hurricane losses, if applicable, which must 174 be estimated using a model or method found to be acceptable or 175 reliable by the Florida Commission on Hurricane Loss Projection 176 Methodology, and as further provided in s. 627.0628. 177 12.Projected flood losses for personal residential 178 property insurance, if applicable, which may be estimated using 179 a model or method, or a straight average of model results or 180 output ranges, independently found to be acceptable or reliable 181 by the Florida Commission on Hurricane Loss Projection 182 Methodology and as further provided in s. 627.0628. 183 13.A reasonable margin for underwriting profit and 184 contingencies. 185 14.The cost of medical services, if applicable. 186 15.Any report created by the office pursuant to s. 187 624.315(4). 188 16.Other relevant factors that affect the frequency or 189 severity of claims or expenses. 190 191 The provisions of this subsection do not apply to workers 192 compensation, employers liability insurance, and motor vehicle 193 insurance. 194 Section 4.Paragraph (e) of subsection (3) of section 195 627.70131, Florida Statutes, is amended to read: 196 627.70131Insurers duty to acknowledge communications 197 regarding claims; investigation. 198 (3) 199 (e)1.The insurer shall must send the policyholder a 200 written copy of any detailed estimate of the amount of the loss 201 within 7 days after the estimate is generated by an insurers 202 adjuster. This paragraph does not require that an insurer create 203 a detailed estimate of the amount of the loss if such estimate 204 is not reasonably necessary as part of the claim investigation. 205 2.When creating and sending the written loss estimate as 206 required under subparagraph 1., the insurer shall comply with 207 all of the following: 208 a.Adjusters shall use an electronic estimating program to 209 create or modify loss estimates. Such program must generate an 210 itemized, per-unit estimate of loss to the property, including, 211 but not limited to, any loss of equipment, materials, labor, or 212 supplies. The program must also generate price data that 213 consists of unit-cost breakdowns consistent with contractor or 214 repair company rates in the relevant geographic market area. The 215 price data used by the program must be updated at least monthly 216 to reflect current market data. 217 b.An adjuster may not modify price data unless the 218 adjuster documents that such modification is necessary for an 219 accurate estimate and reflects current market data. If the 220 adjuster modifies the loss estimate to reflect actual cash value 221 due to depreciation, such modification must be identified in a 222 separate line item. 223 c.An adjuster may not modify a loss estimate unless the 224 modified estimate meets all of the following requirements: 225 (I)Clearly identifies all the modifications made to the 226 original estimate. 227 (II)Provides a detailed explanation for each modification. 228 (III)Specifies the identity of the adjuster who makes each 229 modification. 230 d.If an adjuster modifies the loss estimate pursuant to 231 sub-subparagraph c., the insurer must ensure that all versions 232 of the loss estimate are retained for at least 7 years after the 233 claim is resolved. 234 3.The insurer or insured may not waive any requirements of 235 subparagraph 2. 236 Section 5.Subsection (2) of section 627.7015, Florida 237 Statutes, is amended to read: 238 627.7015Alternative procedure for resolution of disputed 239 property insurance claims. 240 (2)At the time of issuance and renewal of a policy or at 241 the time a first-party claim within the scope of this section is 242 filed by the policyholder, the insurer shall notify the 243 policyholder of its right to participate in the mediation 244 program under this section. A claim becomes eligible for 245 mediation after the insurer complies with s. 627.70131(7) or 246 elects to reinspect pursuant to s. 627.70152(4)(a)3. If the 247 insurer has not complied with s. 627.70131(7) or elected to 248 reinspect pursuant to s. 627.70152(4)(a)3. within 90 days after 249 notice of the loss, the insurer may not require mediation under 250 this section. This subsection does not impair the right of an 251 insurance company to request mediation after a determination of 252 coverage pursuant to this section or require appraisal or 253 another method of alternative dispute resolution pursuant to s. 254 627.70152(4)(c) s. 627.70152(4)(b). The department shall prepare 255 a consumer information pamphlet for distribution to persons 256 participating in mediation. 257 Section 6.Subsection (4) of section 627.70152, Florida 258 Statutes, is amended, and subsections (8) and (9) are added to 259 that section, to read: 260 627.70152Suits arising under a property insurance policy. 261 (4)INSURER DUTIES.An insurer must have a procedure for 262 the prompt investigation, review, and evaluation of the dispute 263 stated in the notice and must investigate each claim contained 264 in the notice in accordance with the Florida Insurance Code. An 265 insurer shall must respond in writing within 10 business days 266 after receiving the notice specified in subsection (3). The 267 insurer must provide the response to the claimant by e-mail if 268 the insured has designated an e-mail address in the notice. 269 (a)If an insurer is responding to a notice served on the 270 insurer following a denial of coverage by the insurer, the 271 insurer must respond by: 272 1.Accepting the presuit settlement demand coverage; 273 2.Making a counteroffer to the presuit settlement demand 274 Continuing to deny coverage; or 275 3.Providing a statement that indicates the insurer is 276 declining to respond to the notice Asserting the right to 277 reinspect the damaged property. If the insurer responds by 278 asserting the right to reinspect the damaged property, it has 14 279 business days after the response asserting that right to 280 reinspect the property and accept or continue to deny coverage. 281 The time limits provided in s. 95.11 are tolled during the 282 reinspection period if such time limits expire before the end of 283 the reinspection period. If the insurer continues to deny 284 coverage, the claimant may file suit without providing 285 additional notice to the insurer. 286 (b)After the response provided under paragraph (a), and 287 before initiating litigation, the claimant and insurer must 288 participate in mandatory mediation in the same manner as 289 provided in s. 627.7015 except that the mediation is mandatory 290 and the cost of mediation must be shared equally between the 291 parties, unless otherwise agreed upon. 292 (c)If an insurer is responding to a notice provided to the 293 insurer alleging an act or omission by the insurer other than a 294 denial of coverage, the insurer must respond by making a 295 settlement offer or requiring the claimant to participate in 296 appraisal or another method of alternative dispute resolution. 297 The time limits provided in s. 95.11 are tolled as long as 298 appraisal or other alternative dispute resolution is ongoing if 299 such time limits expire during the appraisal process or dispute 300 resolution process. If the appraisal or alternative dispute 301 resolution has not been concluded within 90 days after the 302 expiration of the 10-day notice of intent to initiate litigation 303 specified in subsection (3), the claimant or claimants attorney 304 may immediately file suit without providing the insurer 305 additional notice. 306 (8)ATTORNEY FEES.In cases arising from a property 307 insurance dispute, the court shall determine attorney fees as 308 provided in this subsection. 309 (a)If the judgment entered is at least 80 percent greater 310 than the claimants presuit settlement demand, the prevailing 311 partys attorney must be awarded 100 percent of the reasonably 312 incurred attorney fees. 313 (b)If the judgment entered is between 20 percent and 80 314 percent, inclusive, of the claimants presuit settlement demand, 315 the prevailing partys attorney must be awarded the percentage 316 of reasonably incurred attorney fees which is proportional to 317 the percentage of the judgement relative to the presuit demand. 318 (c)If the judgment is less than 20 percent of the 319 claimants presuit settlement demand, the prevailing partys 320 attorney may not be awarded attorney fees. 321 (d)Paragraphs (a), (b), and (c) do not apply in any of the 322 following circumstances: 323 1.The insurer fails to comply with statutory timelines for 324 responding to claims or engaging in mediation. 325 2.The claimants demand is deemed reasonable by the court, 326 regardless of judgment outcome. 327 3.The court finds evidence of bad faith or abuse of the 328 litigation process by either party. 329 (9)PENALTIES.The office may impose any penalty authorized 330 under the Florida Insurance Code on a person who violates this 331 section, including injunctions, fines, and fees. 332 Section 7.Subsection (2) of section 627.70154, Florida 333 Statutes, is amended to read: 334 627.70154Mandatory binding arbitration.A property 335 insurance policy issued in this state may not require that a 336 policyholder participate in mandatory binding arbitration unless 337 all of the following apply: 338 (2)The premium that a policyholder is charged for the 339 policy includes an actuarially sound credit or premium discount 340 for the mandatory binding arbitration endorsement. The insurer 341 shall disclose the dollar amount of such credit or discount when 342 providing a quote to the policyholder. 343 Section 8.For the purpose of incorporating the amendment 344 made by this act to section 627.062, Florida Statutes, in a 345 reference thereto, subsection (1) of section 627.151, Florida 346 Statutes, is reenacted to read: 347 627.151Basis of approval or disapproval of workers 348 compensation or employers liability insurance filing; scope of 349 disapproval power. 350 (1)In determining at any time whether to approve or 351 disapprove a filing as to workers compensation or employers 352 liability insurance, or to permit the filing otherwise to become 353 effective, the office shall give consideration only to the 354 applicable standards and factors referred to in ss. 627.062 and 355 627.072. 356 Section 9.For the purpose of incorporating the amendment 357 made by this act to section 627.062, Florida Statutes, in a 358 reference thereto, paragraph (b) of subsection (3) of section 359 627.715, Florida Statutes, is reenacted to read: 360 627.715Flood insurance.An authorized insurer may issue an 361 insurance policy, contract, or endorsement providing personal 362 lines residential coverage for the peril of flood or excess 363 coverage for the peril of flood on any structure or the contents 364 of personal property contained therein, subject to this section. 365 This section does not apply to commercial lines residential or 366 commercial lines nonresidential coverage for the peril of flood. 367 An insurer may issue flood insurance policies, contracts, 368 endorsements, or excess coverage on a standard, preferred, 369 customized, flexible, or supplemental basis. 370 (3) 371 (b)For flood coverage rates filed with the office before 372 October 1, 2025, the insurer may also establish and use such 373 rates in accordance with the rates, rating schedules, or rating 374 manuals filed by the insurer with the office which allow the 375 insurer a reasonable rate of return on flood coverage written in 376 this state. Flood coverage rates established pursuant to this 377 paragraph are not subject to s. 627.062(2)(a) and (f). An 378 insurer shall notify the office of any change to such rates 379 within 30 days after the effective date of the change. The 380 notice must include the name of the insurer and the average 381 statewide percentage change in rates. Actuarial data with regard 382 to such rates for flood coverage must be maintained by the 383 insurer for 2 years after the effective date of such rate change 384 and is subject to examination by the office. The office may 385 require the insurer to incur the costs associated with an 386 examination. Upon examination, the office, in accordance with 387 generally accepted and reasonable actuarial techniques, shall 388 consider the rate factors in s. 627.062(2)(b), (c), and (d), and 389 the standards in s. 627.062(2)(e), to determine if the rate is 390 excessive, inadequate, or unfairly discriminatory. If the office 391 determines that a rate is excessive or unfairly discriminatory, 392 the office shall require the insurer to provide appropriate 393 credit to affected insureds or an appropriate refund to affected 394 insureds who no longer receive coverage from the insurer. 395 Section 10.For the purpose of incorporating the amendment 396 made by this act to section 627.062, Florida Statutes, in a 397 reference thereto, paragraph (b) of subsection (9) of section 398 627.7151, Florida Statutes, is reenacted to read: 399 627.7151Limited sinkhole coverage insurance. 400 (9) 401 (b)For limited sinkhole coverage insurance rates filed 402 with the office before October 1, 2019, the insurer may also 403 establish and use rates in accordance with the rates, rating 404 schedules, or rating manuals filed by the insurer with the 405 office which allow the insurer a reasonable rate of return on 406 limited sinkhole coverage insurance written in this state. 407 Limited sinkhole coverage insurance rates established pursuant 408 to this paragraph are not subject to s. 627.062(2)(a) or (f). An 409 insurer shall notify the office of any change to such rates 410 within 30 days after the effective date of the change. The 411 notice must include the name of the insurer and the average 412 statewide percentage change in rates. Actuarial data with regard 413 to such rates for limited sinkhole coverage insurance must be 414 maintained by the insurer for 2 years after the effective date 415 of such rate change and is subject to examination by the office. 416 The office may require the insurer to incur the costs associated 417 with an examination. Upon examination, the office, in accordance 418 with generally accepted and reasonable actuarial techniques, 419 shall consider the rate factors in s. 627.062(2)(b) and (d) and 420 the standards in s. 627.062(2)(e) to determine whether the rate 421 is excessive, inadequate, or unfairly discriminatory. 422 Section 11.This act shall take effect July 1, 2025.