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'Homeowners Bill of Rights' Passes 32-7 in Florida Senate

April 18, 2008 excerpts from Foster Folly News

"Homeowners Bill of Rights" Passes 32-7 in Florida Senate and Companies held accountable in sweeping reform of property insurance practices
 
The Florida Senate has approved a series of changes to the state's insurance code that make it harder for insurance companies to raise rates and cancel policies and easier for policyholders to collect from insurers.
 
The overwhelming vote came after hearings held by the Senate Select Committee on Property Insurance Accountability into unfair and misleading business practices by insurance companies.
 
The "Homeowners Bill of Rights" is sponsored by Senator Jeff Atwater (R-Palm Beach), who chaired the panel.  Senator Don Gaetz (R-Niceville), a member of the select committee, is co-sponsoring the measure. 
 
The bill requires that insurance rates be set using only hurricane loss models that are scientifically valid and approved by the state.  Loss models predict the likelihood and severity of hurricanes and potential losses and are used as the basis for rate-setting.
 
"We subpoenaed insurance executives and put them under oath," Gaetz said, "We learned that some insurance companies purposely used unapproved models to justify huge rate increases.  They manipulated the actuarial analysis and overstated the risks.  Savings that should have gone to policyholders were diverted into stock buybacks and self-dealing transactions.  With this bill, these wrongful practices will be illegal."
 
The legislation also ends the ability of insurers to appeal denied rate increases to arbitrators.  Under current law, when insurance companies ask for rate increases and are denied by state regulators they can appeal to an arbitration panel.  Arbitrators can be individuals with no background in rate-setting or actuarial analysis and are not even required to be familiar with Florida's insurance regulations and market.  Supporters of the "Homeowners Bill of Rights" point out that these arbitrators often side with insurance companies and allow rate increases even when justification is flimsy.
 
Another reform made by the bill requires insurance companies to promptly pay undisputed claims.  Some insurance companies have refused to make any payment on a claim if any part of the claim is disputed.  The "Homeowners Bill of Rights" stops this practice.  The bill allows policyholders to receive payment within 90 days for all parts of a claim that are agreed upon even while disputed aspects are still being settled. 
 
"During our 'Neighborhood Days' in Gulf Breeze and Navarre I met with many people who were victimized by 'take it or leave it' settlements after sustaining serious hurricane damage," Gaetz said.  "Some insurance companies told their customers they would receive no payment whatsoever if there was any dispute about any part of the claim.  So, in desperation, families agreed to accept less in order to get something.  Our bill remedies this injustice."
 
 The select committee found that certain insurance companies justify rate increases based on some of their customers living near the coast and then cancel those policies while keeping the rest of customers' rates high.  The legislation allows the Office of Insurance Regulation to disapprove rates if companies engage in this practice.
 
The bill also requires that insurance companies provide discounts to homeowners who reduce risk of windstorm damage, based on the uniform home rating scale.  An additional aspect of the proposal is a requirement that policies be guaranteed renewable for at least three years if a home meets the windborne debris protection requirements of the Florida Building Code.  This provision will stop the all-too-prevalent practice of canceling policies even when the property does not present a significant risk to insurers.
 
Potential purchasers of a home will be entitled to know the property's windstorm mitigation rating if the bill passes. 
 
The "Homeowners Bill of Rights" now goes to the House of Representatives for action.  To follow the progress of this legislation and learn which senators have supported or opposed the bill go to: www.flsenate.gov and enter Senate Bills 2860 and 1196.   To send Senator Don Gaetz an email:  http://www.gulf1.com/Elected/gaetz/Gaetzmail.htm.