Provisions within SB 408 gaining the most attention center on sinkhole claims—an issue that was left out of SB 2044 in hopes that it would make it more likely to be inked into law.  

Sinkhole claims have become a huge problem for property insurers in Florida, supported by studies by the Office of Insurance Regulation (OIR) and the Senate Banking and Insurance Committee.

According to the Florida Insurance Council (FIC), which supports SB 408, the bill also requires insurers to carry more surplus, modifies replacement-cost methodology, limits the time a claim can be filed after a hurricane to three years, reforms mitigation discounts and sets new rules for public adjusters (who worked with lawmakers on the language in the bill but who remain concerned about the sinkhole provisions). 

It looks as though lawmakers will decide on a bill designed to restore Citizens Property Insurance Corp. as the true insurer of last resort in the state. Citizens has become the state's largest property insurer, but SB 1714 looks to adjust caps on gradual rate increases outlined in legislation adopted two years ago.

The proposed bill could increase the cap on Citizens' rate increases per policyholder to 15 percent from 10 percent and repeal a law allowing a policyholder to veto "takeouts" that have been negotiated by the OIR. Certain companies in Florida are authorized as "takeout companies" and are permitted to select policies from Citizens—but policyholders have a right to refuse.

Additionally, SB 1714 may change what is known as the "15 percent rule." Currently, a homeowner can turn to Citizens if quotes from the private market are 15 percent higher than rates offered by Citizens. This bill would increase that requirement to 25 percent.

Property insurance affordability concerns led to legislation in 2007 that froze rates at Citizens for three years, making it easier to meet the 15 percent rule and, consequently, putting Citizens in direct competition with the private market.

To illustrate the point on competition, Insurance Commissioner Kevin McCarty, while addressing the Florida Chamber of Commerce in late January, said one of the state's largest insurers filed a rate increase for 0.1 percent though its actuarial analysis called for more than a 43 percent increase. The company asked for the low increase to compete with Citizens, Mr. McCarty said.

"This is not an isolated event," he said. "In many recent rate filings, the (OIR) has forced insurance companies to accept higher rate increases than what they requested."

FIC said a bill is being drafted to tackle auto insurance fraud due to people taking advantage of the state's personal injury protection (PIP) system.

The Sunshine Alliance to Erase Fraud is working on a bill to introduce during the legislative session. The group was started by FIC, Consumer Federation of the Southeast and the Coalition Against Insurance Fraud.