TALLAHASSEE, Fla. – A new bill making its way through the Florida Legislature seeks to address a variety of insurance issues in the state.
That bill — HB 1263 — was filed early last month by state Rep. Linda Chaney (R-St. Petersburg), who provided the following statement about why she put it forward:
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“Since the passage of insurance reforms beginning in 2022, 17 insurers have entered Florida’s property insurance market, and 38 insurers have filed for a rate decrease.
New insurers that have entered the market since 2022 have brought in more than $574 million in policyholder surplus. Changes like the elimination of one-way attorney’s fees have resulted in greater relief and stability for Floridians.
This bill builds on that success.
First, it enhances transparency and consumer protection by requiring insurers to provide detailed rate transparency reports, empowering consumers to make informed decisions about their insurance coverage. Then, it establishes clear guidelines for the use of artificial intelligence in insurance, ensuring that all entities regulated by the Office of Insurance Regulation comply with the latest regulatory standards.
Furthermore, the legislation updates regulations for reciprocal insurers, ensuring they meet regulatory standards for financial stability and consumer protection. Lastly, it empowers the Office to incentivize homeowners who implement mitigation techniques that exceed the Florida Building Code standards, rewarding them for fortifying their homes against potential risks.
By addressing these critical areas, this legislation aims to foster a more transparent, technologically advanced, and consumer-friendly insurance landscape in Florida."
Florida Rep. Linda Chaney, "Why I Filed This Bill"
Chaney’s statement refers to legislation passed during a 2022 special session, which targeted issues like excessive litigation and established a $1 billion reinsurance fund.
Last week, HB 1263 unanimously passed its first hearing with the Insurance & Banking Subcommittee, meaning it has one more committee to go through before it can get a full House vote.
If approved by lawmakers and the governor, it’s set to take effect on July 1.
Below are some of the more notable changes that would be brought on by the bill, per legislative analysts:
- Background Checks
The bill requires background checks for people involved in the insurance industry, including organizers, officers, employees and volunteers.
These results can be used to determine whether such people are eligible for licensure and certification under the Florida Insurance Code.
- Loss Models
When car insurance companies in Florida set rates, they may include an extra charge to cover expected hurricane-related losses — a charge dubbed a “hurricane catastrophe load.”
To calculate that hurricane load, companies often use models or methods that estimate how much money they could lose from future hurricanes.
Under this bill, if a company wants to use those loss estimates in its car insurance rate filings, the insurer’s method or model must be approved by the Florida Commission on Hurricane Loss Projection Methodology.
This rule also extends to projected flood losses for personal residential property insurance. If the bill’s approved, these rules will kick off on Jan. 1, 2027.
- Minimum Discounts
The Office of Insurance Regulation (OIR) will have to determine minimum discounts, credits or deductible reductions that insurers must offer when a home uses fixtures or construction methods that meet or exceed the requirements of the Florida Building Code.
While the bill says that the OIR must establish a minimum discount, this doesn’t prevent insurers from giving out extra discounts.
Under the bill, a notification form must also be sent to policyholders to let them know whether the insurer officers an enhanced discount for a roof system that uses a secondary water resistance.
- Rate Filings
Current law provides that if no rate change is proposed, an insurer may file with the OIR a certification by an actuary that existing rate levels produce rates that are actuarily sound.
Under the bill, residential property insurers and private passenger auto insurers must file with the OIR a full rate filing after two consecutive years of certifying the current rate is adequate.
This gives more chances for regulators to push back on unjustifiably high rates, though it also creates more opportunities for insurers to seek increases if costs have actually gone up.
- Inspection Form Database
The OIR would be required to work with a state university to design, operate, and maintain a statewide database for uniform mitigation verification inspection forms.
This can make it easier for residents to transfer mitigation proof between insurers.
- Group Capital Calculation
The bill would require the top parent company of every insurer that is part of a group of related insurance companies to file a group capital calculation report each year by April 1, with a few exceptions.
That report shows whether the whole insurance group has enough capital to absorb losses.
- Data Breaches
If approved, HB 1263 requires the OIR to be copied in any notice sent to the Department of Legal Affairs if a data breach happens that impacts at least 500 insurers in Florida.