Workers’ Comp, Other Industry Bills Headed to Gov. Bush as Fla. Session Concludes

Although so-called consumer protection initiatives dominated the headlines in the 2004 Florida legislative session, insurers were reportedly equally concerned with bills addressing workers’ compensation and other industry-related topics.

“A number of workers’ compensation bills passed the Legislature when the session ended late last week, and others that would have undone last year’s comp reform were defeated,” said William Stander, regional manager for the Property Casualty Insurers Association of America (PCI). “We supported fixing the Joint Underwriting Authority (JUA) and opposed the establishment of a state workers’ comp fund, so we succeeded on both counts.”

HB 1251, approved by the House and the Senate, has gone to the governor for his signature. The bill will provide an immediate $10 million appropriation to the JUA to address the current deficit. The legislation restructures the JUA to allow for three tiers based on an employer’s loss history rather than the four subplans that are currently in place. As such, the current caps on rates in these subplans would no longer exist.

PCI and other insurer interests lobbied to get several favorable amendments added to the bill, including:

* An immediate $10 million transfer to the JUA from the Workers’ Compensation Administrative Trust Fund;
* An additional $10 million available for future deficits; and
* A 2008 sunset for the funding mechanism and for the deficit below the line assessments.

Other workers’ comp bills that passed were:

* CS/SB 1926, the result of the Joint Select Committee on Workers’ Compensation Rate Reform, allowing the Office of Insurance Regulation more latitude in approving deviations to workers’ comp insurance rates;
* CS/SB 2696, placing restrictions on owner-controlled insurance programs(OCIPs);
* CS/SB 2588, including a provision requiring insurers to offer the drug-free workplace credit at the first written offer of coverage; and
SB 2994,including a provision allowing an insurer to immediately cancel coverage (rather than with 30 days’ notice) when theinsured requests cancellation, and providing a net worth exclusion and other positive changes to the FWCIGA.
* SB 2268, the PCI-opposed workers’ comp “glitch bill” that would have taken several steps backwards from last year’s omnibus reform bill, passed the Senate but died in House Messages.

One of the session’s most controversial bills was the Department of Financial Services’ Consumer Protection Act. The proposal passed in two different bills: CS/CS/SB 2038, and CS/CS/SB 2994. Major provisions include:

* Preserving homeowners’ insurance coverage when the mortgage company fails to pay escrowed premium;
* Requiring the Florida State University Department of Risk Management and Insurance to conduct a feasibility and cost-benefit study of issues relating to sinkhole insurance, and designating a sinkhole expert in the Division of Consumer Services;
* Clarifying that insurers cannot refuse homeowners coverage based on a single previous water claim unless appropriate repairs were not completed; and
* Allowing applicants denied coverage based on loss history to obtain some of the information relied on by the insurer.

Also passing was Chief Financial Officer Gallagher’s number-one priority, the Florida Hurricane Catastrophe Fund expansion bill, CS/CS/CS/CS/S.B. 2488.

The bill increases the Fund’s capacity from $11 billion to $15 billion by increasing the Fund’s emergency assessment authority, including surplus lines in the assessment base, and exempting medical malpractice from the assessment base for three years.

PCI reportedly made a substantial impact on several other pieces of legislation including:

· HB 1899, the homebuilders’ construction defect right-to-cure proposal. Originally the bill included a provision that would have impaired an insurer’s right to control and settle a contractor’s liability claim, but PCI amended the bill to preserve that linchpin of the CGL contract;

· CS/CS/CS/SB 160, the Department of Revenue’s child support intercept proposal. As proposed last year, the bill would have mandated insurer participation in a DOR database-matching scheme while imposing liability for unpaid child support, attorneys’ fees, penalties, and interest on a noncompliant insurer. PCI amended the bill to make participation voluntary, provide broad immunity and reimbursement of costs to insurers, and authorize the use of the ISO/CSLN method of data matching; and

· CS/SB 2588, the aforementioned insurance “train,” to provide the FAJUA with additional tools to avoid bad faith claims, thereby potentially reducing future FAJUA deficits.