SB 1672 Makes Minor Adjustments to Citizens
As with prior legislative sessions, the 2014 session began with a variety of competing proposals affecting Citizens Property Insurance Corporation, many of which were intended to continue efforts to significantly reduce the size of the residual market. However, by the end of the session, the more ambitious proposals such as allowing surplus lines insurers to participate in the Citizens clearinghouse gave way to more minor adjustments that could gain sufficient support.
The legislature specified in SB 1672 that effective July 1, 2014, Citizens Property Insurance Corporation must cease offering new commercial residential policies providing multiperil coverage and instead will offer wind-only commercial residential policies. Citizens also may offer commercial residential policies excluding wind. This restriction affects only new business, and Citizens may continue to renew commercial residential policies on buildings that are insured on multiperil policies as of June 30, 2014.
The bill also specifies that protests relating to Citizens procurement matters must be heard by the Division of Administrative Hearings (DOAH). DOAH will have jurisdiction to determine the facts and law relating to a procurement protest and to issue a recommended order. DOAH procedural rules will apply, except that the requirements for a protester to post a bond do not apply in challenges to Citizens procurements. Following an administrative law judge’s issuance of a recommended order, the Citizens board of governors must consider the recommendation at a public meeting and take final action on the protest. Any appeal then must be taken to the First District Court of Appeal.
SB 1672 moves to March 1 the current January 15 deadline for Citizens to prepare a report each year on its non-catastrophe loss ratios. Citizens also will be required in May of each year to provide information to the legislature and the Financial Services Commission relating to its estimated bonding capacity and claims-paying capacity for the ensuing 12-month period.
The bill also gives the Department of Financial Services discretionary authority to suspend or revoke the license of an agent or other licensee for directly or indirectly accepting any compensation, inducement or reward from an inspector for the referral of a property owner to the inspector or inspection company when the inspection is intended for use in connection with obtaining property insurance or determining the applicable premium. A corresponding provision will prohibit authorized mitigation inspectors from accepting these types of inducements.
SB 1672 further prohibits a public adjuster or public adjuster apprentice from entering into any contract or accepting a power of attorney that gives the public adjuster or apprentice the effective authority to determine the person or entities that will perform repair work on a property insurance claim.
Current law allows an insurer to independently verify, at its expense, the content of mitigation discount forms before accepting them as valid. SB 1672 then provides that an insurer, at its option, may exempt from its independent verification process forms submitted by an inspector or inspection company having a quality assurance program that has been approved by the insurer. With respect to Citizens Property Insurance Corporation, if a mitigation discount form comes from an inspector or inspection firm having a quality assurance program it has approved, the form is not subject to independent verification and remains valid for the term stated on the form, absent any material changes to the structure.
Finally, the bill specifies that a contractor may not knowingly or willfully pay, waive or rebate all or any part of an insurance deductible applicable to repairs to property covered under a property insurance policy.
The new provisions will become effective July 1, 2014 assuming the bill becomes law.