Florida's Homeowner's Insurance Laws by gnq53402


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Government Relations
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Emerging Issues
 – Federal Issues

 – Sunset Advisory Commission Recommendations

 – 80th Legislative Session Recap

 – TDI Biennial Report to the 81st Legislature
Federal Issues
• H.R. 1065: The Nonadmitted and Reinsurance Reform Act of
   – H.R. 5637 – N&R Reform Act of 2006

  Key Points:
  Only the domiciliary state may collect premium tax for nonadmitted

  Reinsurer’s state of domicile has sole responsibility for regulating
  the reinsurer’s financial solvency if that state is NAIC accredited.

Terrorism Risk Insurance Program Reauthorization Act of 2007
• Extended through December 31, 2014
• Revises the definition of a certified act of terrorism
  to eliminate the requirement that the individual(s) are
  acting on behalf of any foreign person or foreign
• Requires clear and conspicuous notice to
  policyholders of the existence of the
  $100,000,000,000 cap and fixes that level for all
  additional program years.
 H.R. 3121: Flood Insurance Reform and Modernization Act of 2007

 Key Points:
 Amends the National Flood Insurance Act of 1968 to continue the program
 to 2013. Program currently expires 9/30/08.
 Provides for phased in actuarial premium rates for non-residential property
 and non-primary residences.
 Requires the initial purchase no later than 30 days after the loan
 transaction, property purchase or transfer.
 Creates the Commission on Natural Catastrophe Risk Management and
 Insurance to examine the risks posed to the US and means for mitigating
 those risks and paying for losses caused by natural catastrophes.
Federal Issues
•   H.R. 3200: National Insurance Act of 2007

    Key Points:
•   Authorizes the issuance of Federal charters and licenses for the sale, solicitation, and
    underwriting of insurance.
•   Establishes a system of Federal regulation and supervision of national insurers and
    national agencies and policyholder protections.
•   Establishes the Office of National Insurance in the Department of the Treasury.
•   Removes national insurers, national agencies and federally licensed insurance
    producers from state oversight.
•   National insurers would be subject to state taxation and would be required to join
    state guaranty associations.
•   Creates a National Insurance Guaranty Corporation.
Federal Issues
H.R. 5840: Insurance Information Act of 2008
   Key Points:
   Creates the Office of Insurance Information (Office) within the Treasury
   Office will collect and analyze data on insurance, issue reports and advise
   Congress and the Administration on domestic and international issues.
   Office will develop federal policy on international insurance issues and
   make sure states’ laws are consistent with the federal policy.
   Establishes an advisory group to make recommendations to the Office and
   the Treasury Secretary.
Federal Issues
H.R. 3355 Homeowners’ Defense Act of 2007

Key Points:
         Provides federal support for state-sponsored insurance programs
   designed to help homeowners prepare for and recover from damages
   caused by natural catastrophes.
         Maximum aggregate potential federal liability in a single year: $200 B
Three Titles:
         National Catastrophe Risk Consortium
         National Homeowners’ Insurance Stabilization Program
         Reinsurance Coverage for Qualified Reinsurance Programs
Federal Issues
H.R. 91 – Homeowners Insurance Protection act of 2007
S. 928 – Homeowners Protection Act of 2007

• Each directs the Secretary of the Treasury to establish
  the National Commission on Catastrophe Preparation
  and Protection.
• Intent is to make homeowners protection coverage
  available through contracts of reinsurance.
Federal Issues
H.R. 5611: National Association of Registered Agents and Brokers Reform Act of
   2008 (NARAB II)

   Key Points:
   Reestablishes the NARAB as a nonprofit corporation to adopt and apply producer qualification
   requirements and conditions on a multi-state basis.

   Preserves the rights of states to license, supervise and discipline producers.

   Preserves state consumer protection and market conduct regulation powers.

   Sets forth membership requirements, including a mandatory criminal background check applicable
   to state-licensed insurance producers.

   Establishes an office of consumer complaints.
Federal Issues
H.R. 5633: Nondiscriminatory Use of Consumer Reports and Consumer
Information Act of 2008

Key Points:
Amends the Fair Credit Reporting Act (FCRA) to prohibits the use of a
consumer report or information for use in making an underwriting or rating
decision in personal lines of insurance for which the FTC determines that such
         1) results in racial or ethnic discrimination
         2) represents a proxy or prosy effect for race or ethnicity.

Excludes CLUE reports, driver history, and medical history derived from
specified data bases from proscription property loss data.
Federal Issues
H.R. 5792: Increasing Insurance Coverage Options for Consumers Act of
Key Points:
Amends the Liability Risk Retention Act to cover risk retention groups (RRGs)
offering commercial property insurance & renames the act the Risk Retention
Businesses organized under the laws of the Cayman Islands and Bermuda no
longer considered a RRG.
Prescribes governance standards together with license or charter criteria
regarding state examination authority.
Prohibits a state from issuing a cease-and-desist order to or attempt to regulate
any RRG that is not chartered or licensed in such state, except as specifically
permitted under the Act.
Sunset Advisory Commission Dates
          TDI Hearings

• June 24th and 25th
  Public Testimony
  Room E1.030, Capitol Extension

• September 23rd and 24th
Sunset Staff Report – TDI Recommendations
• Homeowners Rate Regulation
   – Set time limits for reviewing and disapproving
   – Define the process for requesting supplemental
     information from insurers
   – Define prior approval condition by rule
   – Regularly assess and issue an order releasing
     rate filings from prior approval
Sunset Staff Report – TDI Recommendations
Texas Windstorm Insurance Association
   – Commissioner appoints all board members,
     designates presiding officer, adds public members
   – Establish administrative process for rate, form and
     operations approval
   – Transfer windstorm inspections and engineer
     oversight to TWIA
   – Allow TWIA flexibility in setting rates based on
     appropriate data
   – Authorize TWIA to require proof of two
     declinations from insurers from applicants
Sunset Staff Report – TDI Recommendations

• Regulate Preferred Provider Organizations (PPOs)
   – Require PPOs to obtain a certificate of authority from
     TDI to operate in Texas.
Sunset Staff Report – TDI Recommendations

• Title Insurance Regulation
   – Require TDI to examine title agents, including
     verifying expense data.
   – Require title agents to annually submit audited
     financial statements of operating accounts to TDI.
   – Require Commissioner to collect data that will be
     relevant to title insurance rate making.
Sunset Staff Report – TDI Recommendations

• Maintenance Tax
   – Increase the life, accident, and health insurance maintenance
     tax cap in order to cover the cost of regulation of that line of
  HB 1849 (80th Session) eliminated biennial revenues of $19 M
  previously collected for life valuation fees.

   The proposed rate/cap change from .04% to 0.2% is two tenths of a
Sunset Staff Report – TDI Recommendations

• Advisory Committees
   – Eliminate all but two TDI advisory committees from
   – Adopt rules for use of advisory committees pursuant
     to Chapter 2210 of the Government Code.
   – Clearly distinguish between the purpose and
     appropriate use of advisory committees and informal
     working groups.
Sunset Staff Report – TDI Recommendations

• TDI - State Fire Marshal Office (SFMO)
   – SFMO inspect state-leased buildings.
   – SFMO create risk-based approach for routine
     inspections of state buildings.
   – Authorize SFMO to charge a fee for inspections of
     privately-owned buildings.
   – SFMO work with local communities on fire prevention
Sunset Staff Report – TDI Recommendations

• TDI – SFMO Fines
   – Establish, by rule, a penalty matrix for SFMO licensee
Sunset Staff Report – TDI Recommendations

• Continue TDI
   – Continue TDI for 12 years
   – Update TDI’s statutory duties to better reflect the
     agency’s role in protecting consumers and
     encouraging a competitive insurance market in
Sunset Staff Report – TDI Recommendations
               TDI New Issue
• TWIA Funding
   – Decrease exposure to General Revenue, while
     allowing for economic growth and insurance
   – Pre-event and/or post-event bonds
   – Bonds funded by policyholder surcharges.
  Sunset Staff Report – OPIC Recommendation

• Abolish the Office of Public Insurance Counsel and
  create a Consumer Representative within TDI
   – Transfer the Public Counsel’s statutory board
     positions and nomination duties to the Consumer
   – Transfer the responsibility from OPIC’s consumer
     publications to TDI
   – Transfer the authority to assess insurers to pay for
     consumer representation from OPIC to TDI
      80th Legislative Session Recap
  Proposed Legislation: HB 2960 – Smithee/Fraser

• Insurance companies are not required to write windstorm
  insurance along the Texas coast.
• Texas Windstorm Insurance Association created in 1971.
• Current Exposure $70 Billion (31 Billion in 2006).
• Possible General Revenue exposure for major hurricane
Windstorm – Possible Options
• Evaluate and enhance risk management and
• Provide incentives for carriers assuming coastal risk
• Restructure TWIA financing
80th Legislative Session Recap
Repeal Of Chapter 702 (Motor Vehicle Theft and Motor Vehicle
Insurance Fraud Reporting)
       HB 2569 – Thompson/Fraser

• HB 2387 (Thompson) & SB 782 (Fraser) 79th Session
• Potential Conflict with Chapter 701 (Comprehensive Fraud Unit
  statute) in fraud reporting
80th Legislative Session Recap
Premium Rating Plans
      Proposed Legislation: HB 2570 – Thompson
                            SB 1432 – Van de Putte

HB 2286 (Taylor) 79th Session
• Repeal 5.01-1 – Deletion of this provision would put all insurers
  on the same footing and allow all companies to impose a
  surcharge for traffic violations.
• Surcharge would have to be actuarially sound and subject to
  review by TDI.
80th Legislative Session Recap
Commercial Property Rate Filings
  Proposed Legislation: HB 2547 – T. Smith

• Amend Article 5.13-2 (Chapter 2251) to make all
  insurance companies writing the lines of property
  and casualty insurance regulated under 5.13-2
  (Chapter 2251) subject to the same regulatory
80th Legislative Session Recap
  Proposed Legislation:    HB 2640 – Smithee
                           SB 828 - West

• Identifying unknown relationships that may predict
  differences in expected losses among insured, thus
  establishing new risk classifications.
• Moderate impact on rates of new risk classifications.
80th Legislative Session Recap
Holding Company Act
      SB 1542 – Fraser/Eiland

• Governs transactions between insurers and their
  affiliates as well as acquisitions of insurance.
• Amend to make it consistent with model act
  legislation for uniformity and consistency.
80th Legislative Session Recap
Investment Statute
   Proposed Legislation: HB 2550 – T. Smith

• Insurance companies may only invest in certain specified
  assets to ensure that funds are available to pay obligations.
• Clarify applicability to all insurers doing business in Texas.
  Provide authority to limit investments that the Commissioner
  determines result in a hazardous condition.
80th Legislative Session Recap
Risk Based Capital (RBC)
  Proposed Legislation: HB 2191 – Eiland

• RBC is an important tool used by all states to
  monitor insurance company solvency.
• Make all insurers subject to RBC requirements and
  allow impacted insurers a phase in period.
80th Legislative Session Recap
Maintenance Tax
  Sunset Advisory Commission Recommendation

• Currently, different lines of insurance have different
  tax rates in Texas.
• Propose a study to examine the merits of a single tax
80th Legislative Session Recap
Workers’ Compensation

• Licensing of TPAs: HB 472 – Solomons/Van de Putte
• Prompt Pay – Add language to Section 408.027 of the Labor
  Code that mirrors the language in Section 843.337(a) of the
  Insurance Code: HB 1005 – Giddings/Van de Putte
• Penal Code – Labor Code: SB 1627 – Carona/Martinez
  Need Uniform Penalty Structure
80th Legislative Session Recap
SB 1670 (79th Session) - Financial Responsibility
Verification Program

• Statute requires that TDI, along with TxDOT, DPS, & DIR
  establish a program to verify that owners of motor vehicles
  have established financial responsibility.
• Issued an ITN and have developed rules to implement the
• Possible legislation to provide additional enforcement
• June, 2008 – TexasSure Campaign
80th Legislative Session Recap
   Sunset Advisory Committee Recommendation

• National Issue – several states currently looking at
  the effect of rebating on title rates.
• Reviewing Texas Law to determine if changes are
  needed to our rebating statutes.
80th Legislative Session Recap
Consolidated Insurance Programs
  Proposed Legislation: SB 354 - Carona & HB 2014 -

• Senate State Affairs Interim Charge to study the use
  of CIPs
• Often called Wrap-Up & Owner Controlled Insurance
     80th Legislature Interim Charges
House Committee on Business and Industry

• Study the original purposes, development and current need for the
  Subsequent Injury fund and determine whether the fund should be
  continued or altered
• Monitor the Texas workers’ compensation system and the continued
  implementation of the reforms of HB 7, 79th Legislature (joint charge
  with Insurance)
• Evaluate impact on the system of the Texas Supreme Court
  decision, Entergy v. Summers
    80th Legislature Interim Charges
House Committee on Civil Practices

• Study the cumulative effects of Texas civil justice
  reforms enacted since 2003, with particular attention
  toward effects on medical malpractice insurance rates
• Examine whether health care professionals are
  adequately protected from liability when rendering
  charitable care in emergency situations or as part of a
  charitable preventive care program
      80th Legislature Interim Charges
House Committee on Defense Affairs

• Study and make recommendations to address the need to identify
  essential personnel necessary to enter a disaster area to restore
  critical infrastructure.
• Review the current requirements for driver's license and
  identification card holders in Texas in order to recommend legislative
  measures to prevent these documents from being used to further
  criminal activities and recommend ways to enhance homeland
  security. (Joint Interim Charge with the House Committee on
    80th Legislature Interim Charges
House Committee on Energy Resources

• Discuss further the issue of financial assurance in
  relation to oil and gas wells, and evaluate the current
  bonding structure
     80th Legislature Interim Charges
House Committee on Government Reform

• Study and review current laws regarding licensing and
  regulation of professionals, as well as current laws
  regarding practice acts
• Make recommendations on creating limitations and
  streamlining of licensure requirements, such as the
  public policy implications of decriminalization of license-
  related violations
     80th Legislature Interim Charges
House Committee on Insurance

• Research state and federal law to determine whether Texas may
  enact legislation that mandates proof of financial responsibility for
  vehicles entering the United States
• Study the need for a catastrophe fund to protect the Texas economy
  against major disasters. Assess the potential of such a fund to
  reduce the reinsurance costs and premiums borne by Texas
• Monitor the implementation of the Texas Financial Responsibility
  Verification Program (joint charge with Transportation)
    80th Legislature Interim Charges
House Committee on Law Enforcement

• Review the current requirements for receiving a Texas
  driver's license or ID card to determine whether they
  should be more stringent in order to prevent a criminal or
  terrorist from fraudulently obtaining an official form of
  Texas identification.
     80th Legislature Interim Charges
Senate Committee on Business and Commerce

• Study the advantages and disadvantages of developing a building
  code specific to coastal properties to mitigate hurricane damage.
• Focus on avoiding catastrophic losses of property during a major
  storm (Consider Florida’s building code)
• Examine statutory changes needed to maintain affordable and
  available homeowner’s insurance and industry reinsurance following
  a natural disaster in Texas
    80th Legislature Interim Charges
Senate Committee on Government Reform

• Examine criminal background check requirements
  across Texas health and human service, law
  enforcement and education agencies, as well as other
  licensed professionals
• Determine best practices, develop cross-agency
  standards and make recommendations for reducing
  costs and streamlining the process
       80th Legislature Interim Charges
Senate Committee on Health and Human Services

•   Study the effectiveness and efficiency of nursing homes and home-based
    solutions/homecare in Texas, and make recommendations to improve
    nursing homes and their funding.

•   Examine the possibility of an incentive-based “pay for performance” rate
    plan for nursing facilities and consider factors that it could be based on,
    taking into account similar plans implemented in other states.
       80th Legislature Interim Charges
Senate Committee on Intergovernmental Relations

•   Review title insurance requirements relating to the purchase of a home
    under an installment contract and contract for a deed
•   Study title insurance requirements and costs in Texas as compared to other

Subcommittee on Flooding and Evacuation
• Report on the implementation of SB 1436 which transferred the National
  Flood Insurance Program
• Make recommendation for improving the efficiency and effectiveness of the
    80th Legislature Interim Charges
Senate Committee on State Affairs

• Study the economic impact of recent civil justice reform
  legislation in Texas
• Monitor the Texas workers’ compensation system and
  implementation of HB 7, 79th Legislature
• Evaluate the Entergy v. Summers Texas decision in
  terms of its impact and the impact of previous legislation
  on the workers’ compensation system.
    80th Legislature Interim Charges
         Senate Committee on Transportation
               and Homeland Security

• Examine the roles and best practices among individuals,
  state and local governments, hospitals and other health
  care providers, and the insurance industry for disaster
  planning and first response efforts
• Explore what changes are needed to better prepare for
  natural disasters to mitigate claims and losses
TDI Biennial Report to the Legislature
• Section 402.066 of the Labor Code requires the
  workers’ compensation portion of TDI’s Biennial
  Report no later than December 1st each even
  numbered year.

• Section 32.022 of the Insurance Code requires the
  submission of TDI’s Biennial Report on or before
  December 31st of each even numbered year.
81st Legislative Session Important Dates

   •   November 4, 2008 – Election Day
   •   November 10, 2008 – Pre-filing Begins
   •   January 13, 2009 – 81st Legislature Convenes
   •   March 13, 2009 – Deadline for Bill Filing
   •   June 1, 2009 – Last Day of 81st Session
TDI Contact Information
• Government Relations
  Carol Cates     (512) 463-6123

• Public Affairs
  David Durden (512) 463-6410

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