The modification to replacement cost methodology was a "central component to the bill," and one that the industry "will be working overtime" to reinstate in the measure as it continues through the legislative process, says William Stander, assistant vice president and regional manager for the Property Casualty Insurers Association of America (PCI).

The amendment is "very troublesome," adds Samuel Miller, executive vice president of the Florida Insurance Council. "No other state in the country handles claim payments like Florida," he says. "This is a huge cost-driver for insurance companies in the state."

Roger Desjadon, spokesperson for the Florida Property & Casualty Association and president of Florida Peninsula Insurance Company, says under the current payment structure "homeowners are not effectuating repairs" and are pocketing the money.

Fasano also managed to work in an amendment to repeal file-and-use. A suspension of the rate system was in SB 2044 last year—which was vetoed by then-Gov. Charlie Crist. Therefore, file-and-use has actually been available to insurers in Florida but has not been readily utilized.

File-and-use is an "important tool for companies with an immediate rate need," says Miller. Companies can use rate adjustments before receiving regulatory approval.

Overall, SB 408 would "help restore a balanced market place to Florida," says Liz Reynolds, Southeast state affairs manager for the National Association of Mutual Insurance Companies.

Provisions in the bill address sinkhole claims, public adjusters, insurers' surplus requirements, deadlines to file a claim after a storm, mitigation discounts and Citizens Property Insurance Corp., the state's last resort insurer.

Fasano, Sen. Rick Kriseman, D-St. Petersburg, former State Consumer Advocate Sean Shaw and private citizens have formed a group called the Policyholders of Florida to speak out against the bill and other measures being bandied about the Legislative Session.

"Policyholders are being shut out and legislators are selling out, all so big insurance companies and their lobbyists can line their pockets," says Shaw, who is now with the Merlin Law Group.

PIP Litigation Bill Advances

In other Florida legislative news, HB 967 cleared the House Civil Justice Subcommittee. It already passed the House Insurance and Banking Subcommittee and now moves on the Health and Human Services Committee.

HB 967 caps attorneys' fees to a percentage of benefits obtained. Right now insurers are obliged to pay attorneys' and the policyholder's attorneys' fees if the insurer loses in court.

The measure also allows insurers to use what is known as an examination under oath (EUO) to investigate fraud and conduct an independent medical examination (IME) to determine reasonable treatment of an insured. According to PCI, participants in fraud rings or those following the advice of an attorney involved in a fraud ring "often miss or never go to these appointments in order to keep the crime a secret."