House Bill 1A is being discussed in Tallahassee

SUMMARY ANALYSIS

The bill makes changes regarding property insurance, including:

Attorney Fees – eliminates one-way attorney fees in suits arising in residential or commercial property insurance.

Assignment of Benefits (AOB) – eliminates a policyholder’s ability to execute an AOB for all property insurance policies (but maintains an existing carve-out for seller-to-buyer AOB related to an ongoing insurance claim).

Bad Faith – requires a breach of contract before a policyholder can sue a property insurer for settlement-related bad faith; acceptance of an offer of judgment or the payment of an appraisal award, alone, is not sufficient to support a lawsuit.

Offer of Judgment – makes attorney fees available for the prevailing party in offers of judgment (proposals for settlement) in property insurance cases; allows joint offers of judgment to be contingent on the acceptance of all joint offerees.

Florida Optional Reinsurance Assistance Program (FORA program) – creates a program that provides optional hurricane reinsurance that property insurers can purchase at near market rates. The FORA program is funded with $1 billion in general revenue for the 2023 year, and is supplemented by the premium insurers pay for coverage.

Notice of Claim – reduces the time limit for providing notice of a loss to a property insurer from two years to one year for initial or reopened claims and from three years to 18 months for supplemental claims.

Claims Investigation and Prompt Payments – changes the prompt pay statute to encourage property insurers to settle claims in a timely manner; requires the Office of Insurance Regulation (OIR) to collect certain additional data.

Mandatory Binding Arbitration – codifies that companies, for a premium discount, may issue an optional endorsement with consent from the policyholder that requires participation in binding arbitration to settle a claim.

Notice to Policyholders – requires that a property insurer place the “Flood Coverage Not Included” statement on the policy declarations page rather than just “with the policy documents.”

Office of Insurance Regulation (OIR) – enhances OIR’s ability to do market conduct examinations of property insurers after a hurricane, including examinations of managing general agents; allows OIR to discipline insurers for abuse of the appraisal process; adds information regarding the use of appraisal to the list of information that a property insurer must include in its quarterly reports to OIR; allows OIR to review property insurers’ forms, withdraw approval, and suspend an insurer’s ability to invoke appraisal for up to two years; requires OIR to add the names of insurers who abuse the appraisal process to its Property Insurer Stability Unit biannual report and post those names to its website; at OIR’s option, allows additional time for agents to place policyholders during insolvencies.

Citizens Property Insurance Corporation (Citizens) – for renewals and take-out offers (depopulation), establishes that if a renewal or take-out offer from an authorized insurer is within 20 percent of a policyholder’s Citizens premium, including surcharges and assessments being levied, a policyholder is in ineligible to remain in Citizens; for new policies, establishes that the risk is ineligible for Citizens coverage if the admitted-market policy is within 20 percent of a policyholder’s Citizens premium; requires Citizens residential lines policyholders to obtain flood insurance as a condition of having coverage from Citizens by 2027; provides a different glidepath for the rates that Citizens charges non-primary residents so that those policies become actuarially sound more quickly; authorizes Citizens to combine its three policyholder accounts into a single account upon eliminating all outstanding financing obligations to allow Citizens to use its entire surplus to pay claims.