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by Timothy J. Meenan, FAIFA Lobbyist
SUPREME COURT REJECTS CONSTITUTIONAL AMENDMENTS WHICH COULD HAVE
LED TO AGENTS COMMISSIONS TAX: STATEWIDE TAX COMMSSION MAY CONSIDER
THE SAME ISSUE THIS SUMMER
Former Senator John McKay has been attempting to get several
proposed constitutional amendments certified as a ballot referendum
for the 2008 General Elections. Two of his three amendments to
completely overhaul the state’s tax structure, were
disapproved by the Florida Supreme Court.
The most objectionable amendment would have extended the state's
sales tax to all consumer “service charges.” This would
have made agent commissions taxable under the sales tax. FAIFA has
strongly opposed, and makes it its top priority to oppose, any
taxation of agent commissions. The court found misleading and confusing
language in the actual ballot amendatory language. Once the Supreme
Court approves the language for a ballot initiative, more than
600,000 registered voters must sign a petition to place the
proposal on the statewide ballot. This sets the stage for the
upcoming Florida Taxation and Budget Reform Commission, a panel
which meets every ten years pursuant to the State Constitution to
consider proposed amendments for the ballot to revise our
Constitution and our state’s tax base.
FAIFA must be vigilant to prevent the Commission from recommending
any taxation of our commissions. We will be monitoring this group
closely over the summer and will continue to update our members.
HOUSE BILL 1381 (SB 2702) – INSURANCE AGENTS/BRANCH
AGENCIES
Banks in Florida for many years maintained an exemption from the
primary agent requirement which allowed a single agent to sell
insurance on different days at different branch banks. Adoption of
the agency licensure law forced banks and all multiple location
insurance agencies to maintain a full-time agent at each agency
location. House Bill 1381 and Senate Bill 2702 authorize banks to
get back to allowing a single traveling agent to visit multiple
branch locations on different days.
The House Insurance Committee passed HB 1381 with an amendment
which FAIFA drafted and worked aggressively to get adopted and then
was passed as a Committee Substitute by the House Jobs and
Entrepreneurship Council. That amendment protects member interests
by providing that a licensed insurance agent in charge of an
insurance agency which is not affiliated with a financial
institution, securities dealer, or funeral establishment may also
be the agent in charge of branch insurance locations. So agents
with multiple locations will still need to get them licensed as a
branch agency, but will not need to maintain a full-time agent at
those locations.
Activities which require licensure may not take place when the
agent is not physically present. Additionally, no unlicensed
individuals may conduct activities which require a license. The
amendment “levels the playing field” regarding branch
insurance office activities to ensure that we have the same
exemption as banks, brokers, and funeral homes for our branch
offices.
Senate Bill 2702, the related Senate bill to HB 1381, has not
received any committee consideration, but it has been referred to
the Senate Banking and Insurance Committee and then the Regulated
Industries Committee for hearing. No hearing date has been
scheduled for the Senate bill. We are already working on getting
the same language amended into the Senate bill as well.
SENATE BILL 1880 – PIP/NO-FAULT AUTOMOBILE INSURANCE
LEGISLATION
In 2003, the Legislature repealed the Florida Motor Vehicle
No-Fault Insurance Law, but effective as of October 1, 2007. If the
Legislature chooses to re-enact the law prior to October 1, 2007, it would
be saved from repeal. This legislative Session is pretty much the
last opportunity (unless a Special Session is called to address the
issue) to re-enact or amend the law to avoid the repeal taking
effect. The Senate Banking and Insurance Committee has adopted
Committee Substitute for SB 1880, introduced by the committee
chairman, Senator Bill Posey, to re-enact the law, but with some
new features. The bill:
• Re-enacts Florida’s No-Fault Law, but provides for
future repeal on January 1, 2009;
• Allows insurers to limit amounts paid to providers to 200
percent of the reimbursement allowed for the applicable procedure
code under the Medicare Part A (hospital insurance) or Medicare
Part B (medical insurance) participating fee schedule in effect at
the time for the region where the treatment, care, procedures or
services are provided;
• If the treatment or services are not reimbursable under the
Medicare fee schedules, insurers may limit amounts paid to the
maximum reimbursable allowance under workers’ compensation;
• If the treatment or services are not reimbursable under
either Medicare or workers compensation, they are not reimbursable
by the insurer. However, this does not allow the insurer to apply
any limit on the number of treatments or other utilization limits
that apply under Medicare or workers’ compensation;
• Prohibits a provider from billing or attempting to collect
from an insured any amount in excess of the fee schedule payment
limit, other than amounts not covered by the insured’s PIP
coverage due to deductibles, coinsurance amounts, or maximum policy
limits;
• Removes existing fee schedules for specified medical
procedures; and
• If the law is reenacted, provides that it will take effect
July 1, 2007, and shall apply to treatment, care, procedures, or
service rendered or performed on or after that date.
The committee heard extensive testimony on the bill from hospitals,
trial lawyers, and insurance companies. The bill has been assigned
to the Judiciary, General Government Appropriations, and Rules
Committees for further hearings; it has not been scheduled for its
next hearing at this time. Other bills addressing the PIP/no-fault
insurance issue have been filed, but none have received a hearing
-- CS/SB 1880 is considered the bill to watch. FAIFA supports
repeal of PIP, as long as it is replaced with mandatory medical
payment or mandatory bodily injury insurance. Our main concern is a
potential cost shift of the legitimate PIP claims to voluntary
insurers which will result in an increase in health insurance
premiums.
SENATE BILL 1884 – INSURANCE CONSUMER ADVOCATE LEGISLATION
CFO Alex Sink appointed former State Comptroller Bob Milligan as
the new Insurance Consumer Advocate. When CFO Sink appointed Mr.
Milligan, she announced her intentions to pursue legislation that
would strengthen the Insurance Consumer Advocate’s power and
authority. Specifically, she stated that she wanted the Consumer
Advocate to be: proactive, investigative, and a challenger of
unfair rate increases.
Committee Substitute for Senate Bill 1884 is legislation which
would accomplish CFO Sink’s announced objectives. This bill
expands the powers of the Consumer Advocate by authorizing him to:
(1) appear in appellate court actions resulting from actions by the
Department of Financial Services (DFS or Department) or OIR; (2)
intervene as a party in proceedings before the Division of
Administrative Hearings or an arbitration panel; (3) have access to
and use any pub model for hurricane loss projections developed as
provided by law; (4) subpoena witnesses and subjects anyone not
complying with the subpoena to disciplinary action under the
Insurance Code; (5) refer investigations to OIR or the Department
when he believes further regulatory action is warranted, and if the
Department or OIR decline to take further action, the bill requires
that the Consumer Advocate be informed in writing of the basis for
such a determination; (6) seek administrative review of any
proposed agency action, determination finding, or order of OIR,
DFS, or the Financial Services Commission in which the Consumer
Advocate participated as a party; and (7) research and analyze
insurance issues from the perspective of consumers and prepare and
disseminate such information as he deems appropriate to inform or
assist consumers, the Financial Services Commission, DFS, or OIR.
The bill also provides for five staff positions including: one life
and health insurance actuary, one life and health actuarial
analyst, one general life and health insurance expert, and two
attorneys. Insurance companies are nervous about allowing a third
party to intervene in rate filing proceedings, and fear it will
further politicize rate filing proceedings. Additionally, this
expansion of power dilutes the power of the Office of Insurance
Regulation to do its job to thoughtfully review and approve rate
filings.
SENATE BILL 1100 – INCREASES FEES FOR STOCK BROKERS &
INVESTMENT ADVISORS
Committee Substitute for SB 1100, by the General Government
Appropriations Committee and Senator Alexander, is an
appropriations bill which amends s. 517.12, F.S., relating to
regulation of securities transactions, to increase the
registration, renewal, and late fees of dealer and investment
adviser firms by 25 percent. It also provides for a 75 percent fee
increase for “associated persons.” The dealer and
investment adviser registration fee is increased $50, from $200 to
$250, and an associated person’s fee is increased $30 from
$40 to $70. A 25 percent fee increase is applicable to Canadian
dealers and federal covered advisers, as well.
According to Senate staff, on a national level, Florida ranks third
in the number of securities firms and agents registered to conduct
business; the fee increases are anticipated to generate an
additional $12.9 million in revenue. The fees collected will be
deposited into the Securities Guaranty Fund, the Regulatory Trust
Fund within the Office of Financial Regulation, and the state’s
General Revenue Fund. The bill is now on the Senate Calendar for
final consideration by the Senate.
RULE 69O-149.055 – GROUP HEALTH MULTIPLE YEAR RATE CAP
RULE
In response to concerns raised at the public hearing in January,
the Office of Insurance Regulation (OIR) has published changes to
proposed rule amendment for Rule 69O-149.005, Florida
Administrative Code, which authorizes insurers to issue
multiple-year rate guarantee or rating cap provisions in policies
subject to five conditions. The conditions are: (1) the coverage is
for annually-rated group health insurance policies which are
exempt, by law, from rate filing, and excluding disability income
policies; (2) the provision may not be effective for longer than 24
months; (3) the rating period must reflect the increased risk of a
rate guarantee with an increased premium or other consideration, is
actuarially sound, and meets other specified requirements; (4) the
provision is available to groups on a nondiscriminatory basis as
determined by the insurer’s underwriting standards; and (5)
the insurer uses experience rating in determining the group’s
rate consistently based on its rating and underwriting practices
without regard to whether the rate issued with or without a rate
guarantee.
SENATE BILL 1678 (HB 411) – LIMITED INSURANCE LICENSES FOR
TRAVEL PROTECTION
The Senate Banking and Insurance Committee passed Committee
Substitute for SB 1678 out of committee; it is now in the Senate
Regulated Industries Committee. The original bill was substantially
amended by the committee to add a definition of “travel
insurance” and to provide for biennial licensure and payment
of a licensure fee for motor vehicle rental insurance agents.
As provided in the bill, “travel insurance” means
“policies or certificates of insurance which provide coverage
for risks incidental to travel, planned travel, or accommodations
while traveling, including, but not limited to, accidental death
and dismemberment of a traveler; trip cancellation, interruption,
or delay; loss of or damage to personal effects or travel
documents; baggage delay; emergency medical travel or evacuation of
a traveler; or medical, surgical, and hospital expenses related to
an illness or emergency of a traveler.”
Under this legislation, travel agents and condominium sellers may
offer travel insurance with a 60-day cap under a limited
agent’s license. The House companion bill, HB 411, was passed
by the House Jobs and Entrepreneurship Council as a Committee
Substitute, and is now ready for floor debate in the House.
HOUSE PROPOSED COMMITTEE BILL JEC 07-01 (SB 2084) –
FINANCIAL INSTITUTIONS/CREDIT LIFE INSURANCE LIMIT
The House Jobs and Entrepreneurship Council has adopted Proposed
Committee Bill (PCB) JEC 07-01 and, it is now designated HB 7087,
which includes language which removes the $50,000 cap on credit
life insurance, which is a limit on the maximum amount for which a
creditor or its parent holding company may insure the life of a
customer who obtains an installment loan offered by a financial institution.
The removal of the cap on the maximum amount of credit insurance
was enacted by last year’s legislature in HB 1361, but
Governor Bush vetoed the bill due to other objectionable provisions
in that legislation. The Senate companion, SB 2084, was scheduled
for a hearing before the Senate Banking and Insurance Committee,
but was not heard and has not been re-scheduled for hearing.
The House and Senate bills create debt cancellation products which
are lending transactions between a financial institution and a
debtor through which, for a fee charged the debtor, the institution
may cancel a debt if certain events occur to protect the
institution against risk of default. House Bill 7087 is now on the
House Calendar.
SENATE BILL 988 – INSURANCE AGENT ACCESS TO SCHOOL GROUNDS
The Senate Pre-K through 12 Committee amended and passed SB 988,
relating to high-risk offenders, to make changes to the Jessica
Lunsford Act provision requiring fingerprint-based background
checks for contractors who are permitted on school grounds when
students are present. This is an issue which directly affects the
ability of insurance agents to do business on local school grounds.
As amended, the bill exempts the following non-instructional
contractors from fingerprint-based background checks: (1) those
under direct line-of-sight supervision of a person who meets the
screening requirements; (2) those who are already required by law
to undergo a level 2 background screening and who submit evidence
that they meet the standard, were screened within the previous 5
years, and are licensed or certified in good standing; (3) law
enforcement officers assigned or dispatched to school grounds; (4)
employees and medical directors of ambulance providers; (5) those
who work and remain in an area separated from students by a 6-foot
chain link fence; and (6) those who provide pick-up or delivery
services that involve brief visits to a school.
The bill will next be considered by the Senate Governmental
Operations Committee. FAIFA is supporting this legislation and will
keep you informed on its progress.
HOUSE BILL 97 (CS/SB 266) - MEDICARE SUPPLEMENT POLICIES
The House Healthy Seniors Committee passed HB 97 (CS/SB 266) which
excludes from the definition of “Medicare supplement
policy” Medicare supplement insurance (Medigap policies)
offered by employers or employer groups to employees or former
employees. The Committee adopted one amendment to delete
duplicative language from the bill.
As passed, Medigap policies issued in Florida will continue to be
regulated under Florida’s Insurance Code, but employer group
Medigap policies issued outside of Florida which cover Florida
residents will be exempt from most form and rate regulation by the
State of Florida. They will be regulated by applicable federal law
and the state law where issued. The bill is now in the House
Healthcare Council; it has not been scheduled for a Council
hearing. FAIFA is wary of this legislation and is working to gain
assurance its passage does not disrupt the Medicare supplement
market in Florida.
SENATE BILL 2708 – HEALTHY FLORIDA
The Office of Insurance Regulation (OIR) lists SB 2708, by Senator
Rhonda Storms, as one of its priority bills for the 2007 Regular
Session of the Florida Legislature. The bill is intended to increase
access to affordable health insurance for those who are currently
uninsured or underinsured and provides an incentive to insurers to
insure individuals and qualified employees (full and part-time) of
small employers. It would create a new standardized health
insurance subsidy program for small businesses, sole proprietors,
and individuals who meet certain eligibility requirements.
The program would be a state-subsidized reinsurance mechanism or a
stop-loss subsidy which reimburses health plans for ninety percent
of claims paid between $5,000 and $75,000 on behalf of a member in
a calendar year. According to OIR, Florida is ranked 10th in the
nation for the highest rate of uninsured individuals. OIR estimates
that approximately 3.4 million Floridians are uninsured, which is
nineteen percent of the state’s population, and approximately
one-third of the state’s workforce. The bill has been
referred to the Senate Banking and Insurance, Health Policy, and
General Government Appropriations Committees, but has not been
scheduled for a hearing.
SENATE BILL 930 (HB 1173) – KIDCARE PROGRAM RESTRUCTURING
BILL MOVES FORWARD
The Committee Substitute for SB 930 has passed out of the Senate
Health Policy Committee. The bill restructures the Florida Kidcare
Program by consolidating it under the Department of Health
effective July 1, 2008.
It makes several substantial changes to law which will impact the
health insurance market in Florida. For example, for the first time
the term “health” is defined to include physical,
mental and dental health, for purposes of the Florida Commission on
Children’s Health that is created by the bill. The bill
establishes the Commission in the Executive Office of the Governor;
specifying the commission shall have 12 members with the Governor,
the Chief Financial Officer, the President of the Senate, and the
Speaker of the House of Representatives each appointing three
members; specifying terms of office; and prohibiting employees of
the Florida Kidcare partner agencies, the Florida Healthy Kids
Corporation, or other state agencies from serving on the commission
as voting members. Furthermore, the bill renames the Department of
Health’s Children’s Medical Services the
“Division of Children’s Medical Services Network and
Specialty Programs;” and creates the Division of
Children’s Health Insurance and the Office of Child Health
Coordination.
This bill is very controversial because it is dismantling the
statutorily-created, private-sector Florida Healthy Kids
Corporation’s operations and re-constituting it under state
operation. It is controversial also because it is anticipated to
have a huge fiscal impact. To date, no related House bill has been
filed. The bill next goes to the Senate Health and Human Services
Appropriations Committee. House Bill 1173 is a related bill which
provides for more limited changes to the Kidcare
program—expands enrollment eligibility and provides for
additional funding sources. It has been referred to the Healthcare
Council and the Policy and Budget, but has not been scheduled for a
hearing.
HOUSE BILL 177 (SB 2094) – HEALTH INSURANCE IDENTIFICATION
CARD BILL ADOPTED IN COMMITTEE
The House Jobs and Entrepreneurship Council approved Committee
Substitute for HB 177, the health insurance ID card legislation,
without debate. This concept was enacted by last year’s
legislature, but then vetoed due to other measures in the bill that
were found to be unacceptable to Governor Bush. This bill will
require all health insurers and HMO plans to offer a detailed ID card
to all policyholders to aid in admitting patients to hospitals and
other health care provider scenarios. The Senate companion, SB
2094, was scheduled for hearing by the Senate Banking and Insurance
Committee, but was not heard and has not been re-scheduled for a
hearing.
HOUSE BILL 1267 (SB 2498) – LEGISLATION MAKING CITIZENS
MORE COMPETITIVE WITH THE PRIVATE MARKET
House Bill 1267 allows Citizens Property Insurance Corporation
(CPIC) to be more competitive with the private market. This bill
authorizes CPIC to sell multi-peril coverage, wind-only coverage,
or both types of coverage in high-risk accounts and authorizes
policyholders to choose coverage from CPIC regardless of
availability of other coverage. Additionally, the bill: 1) deletes
limitations on eligibility for policies issued by CPIC; 2) revises
requirements for CPIC in determining whether individual risk is
eligible for coverage; 3) deletes provisions providing that a
policyholder is no longer eligible for coverage if an authorized
insurer offers coverage at an approved rate; 4) effective January
1, 2008, prohibits issuance of a new certificate of authority to a
subsidiary insurer that is wholly owned by an insurer authorized to
do business in any other state; 5) provides for expiration of
existing certificates of authority of such insurers at the end of
their respective periods of validation; 6) prohibits the Office of
Insurance Regulation and the Financial Services Commission from
renewing or reissuing existing certificates of authority of any insurer
authorized to do business in any other state; and 7) requires rate
filings of an insurer that is a wholly-owned subsidiary of an
insurer (parent) authorized to do business in any other state to
include the parent company’s profits information. This legislation
is not likely to be enacted this Session.
MANDATE BILLS ADVANCE
As always, several legislative measures receiving consideration
during the 2007 Regular Session of the Florida Legislature relate
to health care issues which impact our interests. A number of bills
creating new health care mandates for health insurers have already
passed out of at least one committee to which they were referenced.
Some of the mandate issues under consideration this Session are:
• Senate Bill 16, requires a study evaluating the medical
necessity, efficacy, and costs associated with mandating health
insurance and health maintenance organization coverage for cranial
skull molding orthotics and other therapies used in the treatment
of certain craniofacial anomalies. It passed out of the Senate
Health Policy Committee and is now in the Senate Health and Human
Services Appropriations Committee. The House companion, HB 161, has
not had a committee hearing.
• Senate Bill 274, passed by the Senate Banking and Insurance
and the Health Policy Committees, requires that group health
insurance policies (would not apply to individual or small employer
policies) and group health maintenance organization (HMO) contracts
provide various specified treatments for cystic fibrosis if the patient’s
treating physician or a physician authorized by the insurer or HMO
who specializes in the treatment of cystic fibrosis certifies that
such services are medically necessary. It is now in the Senate
Health and Human Services Appropriations Committee. The House
companion, HB 1105, has not been heard by a committee.
• House Bill 291, providing coverage for mental and nervous
disorders, expands the scope of required mental health services
provided by insurers was passed by the House Health Innovations
Committee; its Senate companion, SB 1834, has not received a
committee hearing.
• Committee Substitute for Senate Bill 590, requiring that
HMO contracts disclose to new subscribers who reside in continuing
care facilities or retirement communities of their right to request
transfer to a nursing facility in their community and of a
grievance procedure available when such a request is denied, passed
out of the Senate on March 29. The House companion bill, House Bill
1001, is scheduled for hearing on April 4 by the House Healthcare
Council.
• House Bill 833 provides for infant eye care, requires that
all babies born in a Florida hospital receive, at birth, an
examination for congenital and ocular abnormalities; its Senate
companion, SB 366, was passed by the Senate Health Policy Committee
and was on the Senate’s Banking and Insurance Committee
agenda, but was not considered.
FAIFA opposes all mandates to reduce the escalation of health
insurance rates.
CONSTITUTIONAL AMENDMENT PROPOSAL REQUIRES ELECTED INSURANCE
COMMISSIONER
Senate Joint Resolution 262, House Joint Resolution 829, and House
Bill 831 would amend the State Constitution to provide for an
elected Insurance Commissioner, who would be a member of the
Cabinet, and re-establish a Department of Insurance were introduced
for consideration this Session. However, none have been heard by a
committee of the Senate or House of Representatives.
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