Legislative Session to Cover a Range of Insurance Issues
The New Year’s celebrations are over and it’s back to work in Tallahassee. Before the annual legislative session begins in March, the Florida Legislature will hold a series of committee weeks to continue considering proposals for 2013. The insurance-related issues under consideration will range from health insurance to property insurance to workers’ compensation. The following are among the major insurance initiatives we expect to receive a lot of attention this year.
Implementation of Federal Healthcare Legislation
Florida did not take any steps to implement the Affordable Care Act before last fall’s presidential election. With the Act now being here to stay, the legislature must consider options for implementing it. This is likely to be challenging as the law remains unpopular among many in Florida’s Republican-dominated legislative and executive branches. Longtime observers of Florida’s legislative process will recognize that despite the legislature’s efforts to consider these issues early in the session, they always seem to go down to the wire. We’ll likely be hearing a lot about the Affordable Care Act, and its financial impact on the state, over the next four months.
Citizens Property Insurance Corporation
Should Citizens Property Insurance Corporation be a residual market, or a competitive market selling products below their actuarially indicated rates? Individual legislators have diverging views on this, and certainly the public policy emanating from the legislature as a whole has varied over time. Most recently, more policymakers are expressing concern with the adverse impact Citizens assessments could have on all Floridians. Most Floridians do not have a policy with Citizens, but all Floridians eventually will pay its assessments to make up for years of selling insurance at levels that are not actuarially sound.
Senator David Simmons, chair of the Senate Banking and Insurance Committee, says major parts of Florida’s property insurance market are “broken or are at least in need of significant repair.” Citizens’ continuing influx of new business at the rate of about 8000 policies per week certainly fits this description. On the other hand, some lawmakers are already expressing concern with proposals that would alter the state-mandated glide path cap on Citizens’ rates.
Florida Hurricane Catastrophe Fund
The legislature might entertain proposals to reduce the maximum single-year payout of the Florida Hurricane Catastrophe Fund (FHCF). The FHCF advanced a similar proposal last year, but the proposal did not pass due to concerns about its impact on primary rate levels– by shrinking the FHCF too much or too fast, insurers would need to raise their rates, putting pressure on policyholders. At the same time, the disparity between private market rates and the capped rates at Citizens would grow, compounding Citizens’ existing exposure problem. Jack Nicholson and the FHCF have been talking about a revised approach (sometimes referred to as a “right-sizing” proposal) that would make smaller changes to the FHCF over time.
Workers’ Compensation
Drug repackaging prescription drugs at medical clinics promises to be a hotly contested issue in the workers’ compensation arena. The Florida Office of Insurance Regulation has identified drug costs as a cost-driver that is causing workers’ comp rates to go up again after years of reductions. Other groups like the Florida Medical Association have said they will be involved this year, arguing that the costs are overstated and changing the system would adversely affect patient access to medications.
The 2013 legislative session will offer a wide range of insurance issues to follow. We will continue to monitor them on our website at www.radeylaw.com