Last month, the Florida Senate introduced S.B. 2860, a comprehensive property insurance bill aimed at protecting property owners from arbitrary and unsupported property rate increases.  Florida’s House of Representatives subsequently approved an amended version of the bill, which the Florida Senate adopted earlier this month.  The Governor approved the bill on May 28, and it will take effect on July 1, 2008.  Highlights of the 114-page bill include:

1. Revising the requirements of the Capital Build-Up Incentive Program that provides for surplus note loans to insurers of up to $25 million.  The revisions include, among other things, (i) revising the conditions and requirements for providing funds to insurers; and (ii) requiring a commitment by the insurer to meet minimum gross premium to surplus writing ratio requirement as an alternative to the current net premium surplus writing ratio requirement;

2. Strengthening regulation in the rate making process by (i) repealing the option for arbitration to appeal a rate filing disapproved by the Florida Office of Insurance Regulation (“OIR”); and (ii) extending for one additional year the prohibition on insurers using the “use and file” option for property insurance rate increases;

3. Doubling administrative fines that may be imposed upon an insurer for violating the Insurance Code or any rule or order or committing an unfair or deceptive act or practice related to insurance.  Fines, currently ranging from $2,500 to $100,000, become $5,000 to $200,000 under the new legislation;

4. Extending the freeze on Citizens Property Insurance Corporation rate increases from January 1, 2009 until January 1, 2010; and

5. Requiring an insurer planning to non-renew more than 10,000 policies within a 12-month period to notify OIR 90 days before issuing any notices of non-renewal.