Major Florida Insurance Changes Advance

Several measures to amend insurance procedures in favor of consumers have progressed in the Florida legislature this week.

On Tuesday, a House committee advanced a bill that would revoke previous provisions exempting specific information about defunct insurance companies from public records requests.

A day before, Florida's Senate Banking and Insurance Committee unanimously approved a bill extending the ban on executives responsible for a company's insolvency from taking a position at another insurance firm, increasing the duration from two to five years. An amendment to the bill also seeks to prohibit the use of artificial intelligence as the sole method of denying claims.

Why It Matters

For several years, Florida has been battling an insurance crisis fueled in part by frequent hurricanes, escalating litigation costs, and insurers leaving the market. Some homeowners who are unable to secure insurance on the private market have turned to the state's insurer of last resort, Citizens Property Insurance Corporation. However, many have been redirected back to the private market as Citizens faces a record number of policies.

The consumer-friendly changes outlined in the recent bills, if implemented, could inspire more faith in the integrity of Florida's private insurance market.

What To Know

In 2020, as the state's insurance crisis was coming to a head, Florida's Chief Financial Officer Jimmy Patronis pushed forward legislation protecting consumers' claims from public records requests, while also exempting information concerning failed insurance companies—such as details on executive compensation, corporate governance, and risk assessments.

"We should have never passed that bill in the first place," said Florida State Senator Joe Gruters on Tuesday, as quoted by the Miami Herald. "There's no reason to protect those who left taxpayers on the hook."

As the Herald notes, Tuesday's bill would repeal the exemption on information related to executives, but would still maintain the exemption for employee files and policyholders' personal information.

According to the text of Tuesday's bill, introduced by State Senator Blaise Ingoglia, any individual who served as an officer or director of an insurance firm which became insolvent, will not be permitted to take up the same role at a state-authorized insurer for a five-year period following the insolvency. However, this rule will only apply if it can be proved that the executive's actions were "a significant contributing cause to the insolvency."

The amendment to bill 1740 states that insurance companies must have a "qualified human professional" sign off on any decision to deny a claim.

"An artificial intelligence system, a machine learning system, or an algorithm may not serve as the sole basis for determining whether to deny a claim," the amendment reads.

Additionally, SB 1740 would mandate that Florida insurers maintain reserves at least $35 million above what is needed to meet obligations to policyholders.

What People Are Saying

Linda Chaney, member of the Florida House of Representatives, quoted in the Miami Herald, said the public disclosure exemptions were being narrowed to enhance the "integrity of the insurance market."

"To me, it's important that we have transparency in government and that the public has got access to the information that they need," Chaney added.

Florida State Senator Blaise Ingoglia, who introduced bill 1740, posted to X on Tuesday: "Yesterday, my consumer protection bill designed to help bring down insurance premiums and hold insurance companies accountable passed committee 7-0! Looking forward to getting this done for Floridians!"

What Happens Next?

While the bill concerning public records exemptions advanced on Tuesday is slated to take effect in July, the Florida Senate has introduced its own competing bill, which seeks to fully extend the 2020 exemptions.

Senate bill 1740, meanwhile, with have to go to "at least" one more Senate committee before a floor vote takes place, Insurance Journal reports.