FULL TEXT OF SECTION 39 OF CS/HB 1-A

MEETING AGENDAS
FEBRUARY 8, 2007
FEBRUARY 15, 2007
FEBRUARY 22-23, 2007
MARCH 1, 2007
MARCH 2, 2007
MARCH 5, 2007

MEETING SCHEDULE

WINDSTORM MITIGATION STUDY COMMITTEE MEMBERS

PRESENTATIONS

NEWS & MEDIA

Home builders balk at building codes
By Paige St. John
Fort Myers News-Press Capital Bureau
Originally posted on February 27, 2007

TALLAHASSEE — Florida’s home-building industry is pushing to delay strengthened building codes, claiming hurricane protections sought by Gov. Charlie Crist and passed by the Legislature in January come too fast.

“While your efforts will bring forth reductions in property insurance rates, the very law that provides the relief has spawned an immediate, and minimum, $72 million negative impact on Florida’s second largest economic engine — the construction industry,” wrote John Wiseman, president of the Florida Home Builders Association, is a letter asking Crist to issue an emergency order delaying the new building requirements.

The builders’ group is taking its case back to the Legislature, lobbying for a six-month reprieve because it’s been unable yet to persuade either the governor or the Florida Building Commission.

At the heart of its complaint is the Legislature’s decision last month not only to remove a Panhandle exemption to impact resistant windows or hurricane shutters in high-wind areas, but also to kill a statewide exemption allowing internal engineering as an alternative.

The latter was so popular with West Florida builders one official estimates 85 percent of new homes there are built without exterior storm protection.

“Homeowners in hurricane-prone states need all the protection they can get from high winds, hurricanes and even tornadoes,” said Leslie Chapman-Henderson, president of the Federal Alliance of Safe Homes, a disaster safety advocacy group with backing from insurers as well as manufacturers.

The code changes went into effect the day Crist signed the bill, Jan. 25, and a majority of coastal Florida counties began applying the requirements to all new permits.

“We knew the law was going to be changed, that was a given. What we weren’t prepared for was that it would happen immediately,” said David Peaden, executive director of the Home Builders Association of West Florida, where Escambia and Santa Rosa counties have begun to enforce the new codes.

“Right now people are coming up to speed as best they can.”

But some county’s building officials, including in Lee County, are not enforcing the new law, giving the construction industry a reprieve until July.

“I think this is a very reasonable approach,” said Michael Reitman, president of the Lee Building Industry Association. “We’re suffering enough with an economic downturn right now.”

The Florida Home Builders Association estimates some 6,000 homes are in the process of being permitted in Florida, and adding window and door protection to them will cost $72 million.

“From the builders’ standpoint, the primary concern is impairment of existing contracts,” said state association spokeswoman Edie Ousley.

“There were permit applications already in the pipeline and the bill is signed into law, which puts all of those contracts in jeopardy because it changes everything,” Ousley said.

More help to harden homes

Published February 16, 2007
Editorial
St. Petersburg Times

There is no question that one of the long-term solutions to Florida's insurance crisis is to fortify homes so they will better withstand hurricanes. As the state overhauls a new program to provide free inspections and matching grants to harden homes, it has another opportunity to get it right and make a significant difference in our hurricane preparedness.
My Safe Florida Home is a good initiative that got off to a bumpy start after it was created by the Legislature last year. There was an imprudent rush by then-Chief Financial Officer Tom Gallagher to make an immediate impact as he campaigned for governor, and the interest by homeowners seeking help was overwhelming. In hindsight, expectations were too high and Gallagher should not have been so quick to award a contract to the nonprofit Federal Alliance for Safe Homes to run the initial phase of the program. The contract ballooned from nearly $460,000 to almost $3-million. While FLASH trained hundreds of inspectors who inspected 14,000 homes in 16 counties, it's not good public policy for contracts to be awarded so quickly and escalate in value so dramatically.

There is some understandable frustration as the program takes a pause before it expands statewide. FLASH's involvement is ending as was always anticipated, new inspections are on hold as thousands of homeowners wonder about the status of their pending applications and the first matching grants - more than 500 worth a combined $203,000 - finally were to be mailed by today. But new Chief Financial Officer Alex Sink is making solid progress.

A beefed-up Web site (www.mysafe floridahome.com) has plenty of useful information, including an online search for certified contractors by county and a toll-free number for questions (1-800-342-2762). In late March, the state expects to award up to eight contracts for inspections, with the state divided into four districts. Home inspections are expected to resume in April. The sooner, the better.

Plenty of challenges remain, of course. The insurance bill passed by the Legislature last month requires the state to develop uniform inspection forms that will be used by insurers to factor discounts for windstorm coverage. A new home grading scale will be created to rate a home's ability to withstand hurricane winds. Insurers also will be required to offer reductions on deductibles for mitigation efforts and to provide notice of the available discounts or credits. All of this should help homeowners determine how to make their home more hurricane-proof and what that investment will do to their insurance premiums.

As My Safe Florida Home cranks back up, the state's new Windstorm Mitigation Study Committee should continue to brainstorm ways to efficiently inspect and harden homes. Lawmakers also should be prepared to allocate more positions and money to Sink's department, which will be performing the oversight that the nonprofit provided in the initial phase. Florida homeowners have demonstrated their interest in seeking help to harden their homes against hurricanes. Now it's up to the state to provide that help more efficiently to more homeowners.
 

Ivan Penn covers consumer issues and can be reached at ipenn@sptimes.com or 727 823-9395.

-NEWS FROM THE FLORIDA OFFICE OF INSURANCE REGULATION-

For Immediate Release: 

Contact:   Bob Lotane or Jonathon Kees
850/ 413-2515

MCCARTY RELEASES RATE REDUCTIONS TO BE ADOPTED BY FLORIDA PROPERTY INSURERS

TALLAHASSEE (03/01/2007) – Florida Insurance Commissioner Kevin McCarty today released the property insurance discounts that insurers are required to pass along to policyholders.  Legislation passed during the recent Special Session of the Florida Legislature required the Office of Insurance Regulation (Office) to calculate the Presumed Factors which establish how much savings the insurance reforms should yield for policyholders in various regions around the state.

 “Gov. Crist promised Floridians lower insurance rates, and he has delivered,” said McCarty.   “Floridians have been forced to make difficult economic choices due to rising insurance premiums.  They can take comfort that relief is on the way.”

The Presumed Factor savings that insurance companies must file with the Office are to be applied to the hurricane premium and not to the entire premium of the policy.  In many parts of the state the hurricane portion of the premium represents a substantial or even the majority percentage of the total policy premium. 

For homeowners policies the discounts in region 1, which contains some zip codes in north Florida and the Panhandle, will be decreased by 10.2 percent of the total policy premium.   The discounts will range to a decrease of 52.8 percent of the total policy premium in region 25, which contains some zip codes in Miami-Dade.  Similar rate savings were released by the Office for manufactured homes, condominium units, apartment and condominium buildings and for renters’ insurance policies.  

The public needs to be aware, however, that these are average savings.  Policyholders could see differing savings for a variety of reasons.  These include the insurer already having an approved rate increase in the pipeline that will not appear until the policy’s renewal date.  Also, some insurers have capped increases in some territories and do not have all costs reflected in current pricing.    Rate information can be found at www.floir.com.

All residential insurers must make a filing containing new rates by March 15th to become effective for new or renewal policies beginning June 1st and thereafter on the renewal date of the policy.  Insurers are also required to make a second filing which will “true up” the savings used by the insurer in the initial filing to reflect actual reinsurance savings.  That filing can be made over the summer, but no later than September 30th. 

The bill passed by the Legislature during January’s Special Session expanded and provided valuable enhancements to the Florida Hurricane Catastrophe Fund (FHCF).   The reinsurance coverage offered through the FHCF will be sharply lower in price relative to coverage currently being sold by private reinsurance companies.  These savings are achieved due to the elimination of profit margins incorporated into the rates of private reinsurers, as well as the FHCF receiving favorable tax treatment from the IRS.

The Office hired J. Robert Hunter as a consulting actuary to help determine the rate reductions which are required to be incorporated in rate filings by all Florida residential property insurers.  Hunter is the former insurance commissioner of the state of Texas and presently serves as the director of the Consumer Federation of America.  Hunter was joined by Paul Walther, CPCU, ARe, who is a renowned reinsurance specialist and consultant.

Commissioner McCarty also said he is concerned that based on some of the reports and/or editorials published since his Presumed Factor Order (Case No. 89321-07), on February 19^th, there appeared to be some confusion about that order, about Emergency Rule Number 690ER07-1, about the Commissioner’s letter to the Financial Services Commission interpreting the rule, and/or about CS/HB 1A.  He provided the following explanation of the issues surrounding these communications to help clarify any misunderstanding or misreporting.

The non-renewal provisions contained in Emergency Rule Number 690ER07-1 stated:

            Until an insurer makes a rate filing reflecting the effects of CS/HB 1A and the presumed factor calculated by the Office, an insurer may not non-renew a personal residential insurance policy covering property in Florida,

            The Emergency Rule did not say that non-renewals were prohibited for 90 days, and it did not say that non-renewals were prohibited for the 2007 hurricane season.  It clearly stated that any non-renewals are only prohibited until an insurer makes a presumed factor rate filing. 

           Commissioner McCarty’s February 7, 2007, letter to the Governor and members of the Financial Services Commisssion interpreting Emergency Rule Number 690ER07-1 said:

1.               Cancellations and non-renewals which were to take effect on or after the adoption of the Emergency Rule pursuant to notices of cancellation and non-renewal issued prior to the adoption of the rule, are prohibited;

2.                              Cancellations and non-renewals which were to take affect after the adoption of the Emergency Rule pursuant to notices of cancellation and non-renewal issued on or after the adoption of the rule, are likewise prohibited; and

And Commissioner McCarty restated the non-renewal provisions contained in Emergency Rule Number 690ER07-1:

3.                No new notices of cancellation or non-renewal shall be issued until a rate filing reflecting the presumed factor is made.

            Again, the Commissioner’s letter did not say that non-renewals were prohibited for 90 days, and it did not say that non-renewals were prohibited for the 2007 hurricane season.  It said that non-renewals – whether noticed prior to adoption of the emergency rule and having an effective date during the period of the emergency rule or after the adoption of the emergency rule – are prohibited until an insurer makes a presumed factor rate filing.

            The Presumed Factor Order, released on February 19th, was mandated by CS/HB 1A – it was not a further clarification as was reported in some media outlets.  It had nothing to do with Emergency Rule Number 690ER07-1.  It was in response to Section 3 (2) of CS/HB 1A - Line 1030 through 1033 – which mandated that:

            The office shall specify, by order, the date or dates on which the rate filings required by this section must be made and be effective in order to provide rate relief to policyholders as soon as is practicable.

The purpose of the timeframes contained in the order which was mandated by CS/HB 1A, was to allow enough time for:

·         Insurers to produce filings that adopt the presumed factor calculated and published by the Office.

·         The Office to review over 200 filings expected to be submitted by insurers.

·         Insurers to configure their systems to send notices containing new rates to policyholders by April 15th. These notices must be sent by this date to meet the statutorily mandated 45-day notification for renewal notices.  June 1st is the first day the new rates must be effective as required by CS/HB 1A.

The dates ordered by Commissioner McCarty will provide only a 45-day turnaround time for these three steps to be completed and for the Office and the industry to comply with the mandates of CS/HB 1A, which was the reason the Office worked to have the Presumed Factor calculated and released by today.

___________________________________________________________________________

MEDIA ADVISORY             
CONTACT: Tara Klimek or Nina Banister
(850) 413-2842
February 12, 2007

CFO SINK ANNOUNCES SECOND MEETING OF THE WINDSTORM MITIGATION STUDY COMMITTEE

TALLAHASSEE—The next meeting of the legislatively-created Windstorm Mitigation Study Committee will be Thursday, February 15, 2007, from 9 a.m. to 5 p.m. in Room 37 of the Senate Office Building in Tallahassee.

The committee was created as a result of House Bill 1A, passed recently by the Florida Legislature during Special Session. The committee is composed of eight members, with two appointments each from the Governor, Chief Financial Officer, Senate President and Speaker of the House. The following Floridians have been appointed to the committee:
• Mr. Garrett Walton, Chair (Governor)
• Mr. Bill Coffey, Services Director of Home Services, Home Depot (Governor)
• Mr. James Ayotte, Florida Manufactured Housing Association (Chief Financial Officer)
• Mr. Ed Dees, former Business Manager for Ironworkers, Local #397 (Chief Financial Officer)
• Mr. Michael Aranda, EH Building Group II, LLC (Senate President)
• Mr. Stephen C. Burgess, Office of Public Counsel (Senate President)
• Ms. Deirdre Finn, Meridian Strategies, LLC (Speaker of the House)
• The Honorable Trey Traviesa, Florida House of Representatives (Speaker of the House)

The committee is charged with analyzing short- and long-term solutions and programs that address the need to immediately and effectively mitigate homes in Florida. A final committee report, including legislative recommendations, is due to the Governor, Chief Financial Officer, Insurance Commissioner, Senate President and Speaker of the House by March 6, 2007. Floridians can learn more about the committee, its duties and upcoming meetings at http://www.WindstormMitigationStudyCommittee.org/. Floridians interested in hurricane mitigation are encouraged to attend the meetings.