Fla. CFO Applauds Gov. Bush, Lawmakers for Enacting Consumer Friendly Legislation Effective July 1

June 29, 2004

Florida’s Chief Financial Officer Tom Gallagher commended state policymakers this week for passing important legislation during the 2004 Session aimed at helping insurance consumers.

After hearing from thousands of consumers reportedly frustrated over cancellations, denials of coverage and the lack of availability, Gallagher successfully pushed for several reforms to restore the state’s insurance market to one that is fair and reasonable for consumers.

“Floridians deserve to be treated fairly when dealing with insurance companies, not held hostage,” Gallagher said. “These reforms give consumers more choices and protections for insuring their homes and automobiles.”

Under legislation effective July 1, Florida’s consumers now have more protections and increased rights when dealing with insurance companies. Senate Bill 2038 gives reportedly much-needed protections to consumers insuring homes or automobiles, including requiring insurance companies to reinstate coverage when a consumer’s insurance policy is canceled for non-payment by the mortgage company.

The legislation restores a standard of “like, kind and quality” for replacement parts, a requirement which had been in place in department rule for nearly 10 years.

It also establishes standards for dealing with total loss of automobiles to ensure consumers are paid a fair price when their car is totaled in an accident. The legislation also prohibits insurance companies from mandating arbitration as the sole claims-dispute resolution process in lieu of a consumer’s statutory right to have the claim mediated.

“Arbitration can place a considerable burden on the insured, both in terms of time and money, which may lead some consumers to accept what they consider an unfair settlement of their claim,” Gallagher said.

Other strong provisions in the legislation include requiring insurance companies to refrain from canceling coverage for homeowners due to a water damage loss that was rectified, as well as disclose to applicants who are denied coverage the reason for denial, including information used from CLUE reports, which record the claims history of a consumer or piece of property.

Finally, the legislation calls for a study to be done on the feasibility of creating a state-sponsored insurer to offer sinkhole insurance and creates a dedicated consumer contact within the department to track trends and provide information to state policymakers regarding sinkholes.

Other legislation, also effective July 1, gives state regulators the authority to enforce federal law, including the Patriot Act, to prevent money laundering in Florida financial institutions.

Senate Bill 2562 requires Florida’s state chartered banks and other money service businesses to cooperate with Florida officials as part of the overall strategy to combat the use of U.S. financial institutions as vehicles to launder money for terrorist groups. The measure allows the Department of Financial Services, Office of Financial Regulation to serve as a first line of defense, assisting federal regulators and law enforcement in implementing an effective anti-money laundering program.

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