Important Changes to Insurance Regulations in Florida with the "Insurer Accountability" Act

The Florida Legislature has approved the "Insurer Accountability" Act, which is slated to come into effect on July 1, 2023. This new law introduces comprehensive insurance coverage and claims handling standards for insurance companies operating in the state. Moreover, it empowers the Office of Insurance Regulation (OIR) with expanded regulatory authority over the insurance industry.

The Act encompasses several provisions aimed at bolstering protection for insured individuals:

Extension of Residential Property Insurance Policies: Insurers are prohibited from canceling residential property insurance policies until 90 days after repairs have been completed.

Suspension of Policy Cancellation During Pending Claims: Insurers are barred from canceling property insurance policies during the pendency of a claim until either the property has been repaired or one year has elapsed after the insurer issues the final claim payment.

Coverage for Open Claims: The Citizen’s Property Insurance Corporation is mandated to provide coverage for properties with open claims being handled by the Florida Insurance Guaranty Association (FIGA).

OIR Approval for Insurers Violating Insurance Code: In cases where insurers violate the insurance code, they must secure prior approval from the OIR for their forms for a period of three years following the violation.

Roof Deductibles: If a roof deductible is applied, insurers are not allowed to apply any other deductible under the policy for any other loss caused by the same covered peril.

Tolling of Filing Time Period for Armed Forces Members: The Act tolls the time period for filing claims for armed forces members deployed to a combat zone.

Consumer-Friendly Information on Hurricane Mitigation Discounts: Insurers are required to offer easily accessible information on their websites, describing the hurricane mitigation discounts available to insured individuals.

The Act also introduces new requirements for insurance companies during the claims handling process. These requirements include the following:

Claims Handling Manuals: Residential property insurers are now obligated to create and employ claims handling manuals that comply with the Insurance Code.

Alteration of Adjuster’s Reports: Insurers are prohibited from altering an adjuster’s report without providing a detailed rationale for any changes that reduce the estimate of the loss. The insurer must maintain a list of changes and the individuals responsible for making them, or retain all versions of the adjuster’s report.

Bonus Prohibition for Insolvent Insurers’ Officers or Directors: Officers or directors of insolvent insurers are prevented from receiving bonuses from those insurers.

The Act grants the OIR additional enforcement mechanisms to ensure compliance with the new standards:

Requesting Claims Handling Manuals: The OIR has the authority to request insurer claims handling manuals at any given time.

Certification of Compliance: Residential property insurers are required to annually certify that their claims handling manuals comply with Florida law and that they possess adequate resources to implement the requirements outlined in the manuals.

Enhanced Fines and Market Conduct Examinations: The OIR has the power to levy higher administrative fines on insurers, including significant increases for violations during emergency situations such as hurricanes. The OIR is also authorized to conduct market conduct examinations of insurers following a hurricane.

The passage of the "Insurer Accountability" Act in Florida brings extensive changes to insurance coverage, claims handling, and regulatory oversight. With increased protection for insureds, stricter compliance measures, and expanded powers for the Office of Insurance Regulation, insurance companies must adapt to these new requirements and prioritize full compliance.