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My initial impression is that this statute is a large step in the right direction, as it eliminates one-way attorney fees and assignment of benefits (AOB), though we are expecting that it will take approximately 18-24 months until the full benefits of this law are realized. The one aspect of this law that will present a challenge is the requirement that all Citizens policyholders obtain flood insurance. While this does present an opportunity to provide more Floridians with flood coverage, the aggressive timeline for consumers in designated flood zones means that certain customers will likely be looking to leave Citizens before the market fully stabilizes and affordable private options are available.
Below is a summary of the statute from the FAIA.
From the FAIA:
Senate Bill 2A creates the Florida Optional Reinsurance Assistance (FORA) Program within the Florida Hurricane Catastrophe Fund (FHCF). The FORA Program provides four layers of optional reinsurance at “reasonable rates” (50–65 percent rate online), starting at the FHCF attachment point and proceeding downward.
Claims Filing Deadline
Senate Bill 2A reduces the claims filing deadline from two years to one year of the date of loss for new or reopened claims. The bills provide 18 months for supplemental claims.
Office of Insurance Regulation (OIR) Regulations
Senate Bill 2A provides additional authority to the OIR to subject any authorized insurer to a market conduct examination.
Insurance Company Duties
Senate Bill 2A amends the prompt-pay statutes to ensure timely claims handling. This is accomplished by:
Senate Bill 2A repeals the one-way attorney fee statutes for litigated property (commercial and personal lines) insurance claims. The bill also provides other legal reforms addressing abusive litigation tactics.
Assignment of Benefits
Senate Bill 2A prohibits the use of assignment of benefits, in whole or in part, of any post-loss insurance benefit under any property (commercial and personal lines) insurance policy issued on or after January 1, 2023.
Senate Bill 2A includes several provisions addressing the growth and exposure of Citizens. Additionally, SB 2A provides a phased-in flood requirement for Citizens’ policyholders. These provisions include:
Continuation of Coverage
At the request of FAIA, the Legislature included a provision that provides the insurance commissioner discretion to extend the 30-day cancellation period of policies of an insolvent insurer to 45 days to provide more time for agents to replace coverage for consumers.
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