Insurance law 'glitches' put lobbyists in mood to tweak

Article Courtesy of The St. Petersburg Times

Published  March 14, 2007

TALLAHASSEE - Florida's insurance industry lobbyists, unbent by the populist tide, are quietly asking lawmakers to rewrite parts of the January law that cleared the way for premiums to drop.

"Just a small simple change," State Farm's Mark Delegal said at a meeting last week. "Just repeal House bill 1A."

Delegal was joking. Sort of.

The hurried pace of January's special session on insurance produced a new set of insurance regulations that even advocates say needs to be amended to eliminate technical errors.

But insurance industry lobbyists are hoping that any "glitch fix" legislation will allow them to change elements of the law they find objectionable. Among the "glitches" they want to fix:

- Ease the new requirement that claims be paid in 90 days.

- Limit the premium discounts the law provides for homeowners who reinforce their homes.

"I think we probably saw a little less glitches and little more of substantial changes, in terms of legislative impact," said Rep. Carl Domino, R-Jupiter, who sat through the committee workshop on glitches.

But, he added, "They may have a legitimate complaint."

The top problem insurance companies identified was the requirement that they be forced to pay claims within 90 days. Insurers want a more generous time line and less severe penalties if they can't make the deadline.

Gerald Wester of the American Insurance Association told the House committee that the 90-day clock should start ticking after the insurer has verified or proved that a claim is eligible for coverage, not after the consumer calls one in.

They also don't want the 90-day clock to apply to commercial properties, saying those claims are too expensive and complex to figure out in 90 days.

"You tell someone they have to pay a claim on a $50-million building in 90 days, that will not work," Wester said.

One fix that appears to have momentum is a request by the Florida Home Builder's Association to delay enforcement of a stronger building code for most coastal counties.

Statewide building codes used to give builders of new homes in coastal areas a choice when it came to preventing hurricane-force winds from blowing out windows and then blowing off the roof. The stronger standard was to install impact-resistant windows and shutters. They could also opt to "engineer" the house to withstand such pressure with things like reinforced bars and a stronger roof.

The Legislature changed the building code, saying that as of Jan. 25 homes must be built with impact-resistant windows and shutters, dropping the other option. But home builders say about 6,000 houses now under construction in 33 coastal counties are in limbo. A Senate committee has already approved a measure pushing back the effective date by six months.

Jim Graganella, who runs Capitol Preferred and Southern Fidelity Insurance, asked lawmakers to rewrite the state's wind damage mitigation credit program, which promises lower insurance premiums for homes that are secured against heavy wind. He says the state plan is too generous for some homes and is based on outdated information that doesn't fully take into consideration the wind damage claims Florida experienced during the 2004 and 2005 storm seasons.

Under the current damage mitigation credit program, a homeowner can get up to an 88 percent break on the windstorm premium if a house has the maximum protections, such as a reinforced concrete deck and the most hurricane-resistant windows and doors covering every opening, said Keith Lessner, a vice president of loss control at Property Casualty Insurance Association.

Graganella said such damage mitigation discounts should be capped at 25 percent. He said giving steep discounts for newly strengthened homes is the equivalent of hiking premiums on homes not secured at the same level.

"People should be compensated for making stronger and safer," Graganella said after the meeting. "It shouldn't burn both ways."

Graganella would like to rework wind damage mitigation credits to be based on a sliding scale, so the credits are most generous when a new roof is first installed. Over time, as the home improvements age, the credits should decrease, he said.

Several lobbyists also asked lawmakers to weaken requirements in an incentive program for insurers who write mobile home policies exclusively. Insurance lobbyists want to make it so that insurers who also write other types of property insurance, in addition to mobile home policies, can take advantage of the incentives.

Rep. Don Brown, R-De Funiak Springs, said House leaders still must decide which glitches should be fixed in this session. And his take on "glitches" spotted by the insurance companies?

"A glitch is in the eye of the beholder," he said.