Florida Insurance
11:00 am
Sun January 13, 2013

Why Florida Session Will Be Dominated By The Affordable Care Act And Other Insurance Issues

Affordable Care Act issues are expected to dominate discussions of insurance in the Legislature in the weeks ahead but lawmakers will also take swipes at workers compensation, hurricane preparations and Citizens Property Insurance Corp when they return.

It's raining insurance policy in Tallahassee this spring.
It's raining insurance policy in Tallahassee this spring.
Credit digitalart / freedigitalphotos.net


With major changes made to no-fault auto insurance during their last session, lawmakers are likely to steer clear of car concerns for the time being, choosing instead to let reforms hammered out during the final days of the 2012 session have a chance to work.

Stakeholders instead said they expect to spend much of the time formulating a response to what has been commonly referred to as Obamacare, a sweeping national insurance plan that the Republican-led Legislature must address following the re-election of President Barack Obama. 

The state-backed insurer Citizens is also expected to be in the crosshairs as Republicans continue to seek to reduce its predominance in the property insurance market

With premiums deemed too low and the possibility of statewide assessments too high, Gov. Rick Scott and legislative leaders have set their sights on reducing the number of Citizens policies and returning those customers to private carriers.

"There are major components of the property and casualty insurance market that are broken or are at least in need of significant repair," Sen. David Simmons, R-Altamonte Springs and chairman of the Senate Banking and Insurance Committee, told committee members at their first meeting last month. "It's my intention that our committee addresses these problems in an effective way."

Citizens Property Insurance Corp

For most Republican leaders, Citizens has turned into a behemoth, with customers capitalizing on legislation in 2006 that immediately froze rates and capped increases. The result, stakeholders largely agree, was to make Citizens rates much lower than what a private carrier could charge, a discrepancy that in most markets has widened every year and kept some private firms from writing policies here. 


Two bills have already been filed that would allow Citizens to exceed a 10-percent cap lawmakers placed on the insurer's ability to raise rates on existing policies. Both would allow Citizens to charge actuarially sound rates. 

"If nothing else, we must stop the practice of allowing new policies to come into Citizens at rates that are financially unsound," said Sen. Allan Hays, R-Umatilla. "It is just insane to me."
"We also have to keep in mind that there is a reason people have gone to Citizens," said Sen. Jeremy Ring, D-Margate. "Clearly, they have been removed from their policies and there is nowhere else to go."

Citizens President Barry Gilway has said the insurer could act as a clearinghouse to steer potential customers to private carriers before letting them be absorbed into the state-backed pool. Such a push may require legislative approval. 

Other Insurance Issues

In 2011, the Legislature passed SB 408, which made a number of changes to the property and casualty market including limits on sinkhole coverage, private adjusters, CAT fund exclusions and shortening the time homeowners have to file claims. Major additional changes aren't expected right now.

"SB 408 is still relatively new," said Jeff Grady, president of the Florida Association of Insurance Agents. "I think the market needs a little break from constant changes." 

CAT Fund

While leaving property insurance alone, lawmakers are more likely to seek legislation modifying the Florida Hurricane Catastrophe Fund, a state-backed reinsurer that steps in if hurricane losses exceed a pre-set limit.

Currently, the CAT fund has about $15.6 billion in capacity, including $8.5 billion in reserves to pay off claims, a figure that falls short of the mandatory $17 billion threshold the fund could be required to pay out.

Next year, the fund's reserves are expected to be in the neighborhood of $9.8 billion.

Critics say the fund places too much risk on the backs of Florida taxpayers, who would face assessments charged to insurance policy holders across the state if the CAT fund comes up short. A better option would be to allow private re-insurers to pick up more of the responsibility, industry watchers say.

Last year, a bill that included provisions to gradually reduce the CAT fund's mandatory ceiling from $17 billion to $12 billion failed to gain traction and may be considered again this year. Jack Nicholson, the CAT fund's chief operating officer, said the agency is not expected to put out a legislative package, per se, but will work with insurance committees in both chambers

One proposal calls for the CAT fund to obtain about $2 billion in pre-event coverage, a short-term measure that would provide the fund with increased liquidity for a three, five or seven year window.

Health Insurance

Much attention will be paid to health insurance this session as lawmakers respond to the 2010 Affordable Care Act, which following Obama's re-election remains the law of the land.

Both chambers have assembled committees with the express purpose of mapping out the state's response to the federal health care mandate.

Sen. Joe Negron, R-Stuart, and chairman of the Senate committee, said a first order of business will be to get a handle on potential costs of the federal program, which includes an expansion of Medicaid that could add 1 million people to the Medicaid rolls. 

Price estimates for a 10-year period have varied from $2 billion to $26 billion, though the latter figure has come under fire. Most estimates say the state will be on the hook for less than $8 billion, in large part because the law as written has the federal government picking up at least 90 percent of the tab at first.

Workers' Compensation

The repacking of prescription drugs at medical clinics will again be up for debate as a way to control workers compensation costs. Efforts last year to curb the practice of physician dispensed medication fell short as groups battled over cost savings and patient access to medication. Rising workers comp premiums in recent years have prompted stakeholders to ask lawmakers to make changes to the system that underwent its last major overhaul a decade ago.