Each year, FAIA's advocacy staff develops succinct summaries of insurance-related issues to help lawmakers, the media, and the public better understand these often-complicated insurance topics.
Workforce Development for Insurance CareersAssignment of BenefitsRide-Sharing Insurance GapsPatent Trolling
PROBLEM: Almost 20 percent of the American Agency
System’s workforce is expected to retire by 2018. This huge talent gap
threatens the growth and stability of the insurance industry.
current law, state college students who complete nine credit hours of
Department of Financial Services (DFS) approved curriculum and earn an
associate’s degree are awarded a customer service representative license upon
completion. Very few, if any, students take this path, because there are
quicker ways to obtain the license through existing designation programs. As
such, some state colleges are reluctant to put academic insurance programs in
place. Increasing the licensing options for students who complete a
college-level insurance specialization program will make the programs more
attractive to both state colleges and students, which in turn will help expand
the pipeline of educated, qualified applicants for insurance industry jobs.
SOLUTION: Senate Bill 1222 by Sen. Richter and House Bill 1133 by Rep. Fant creates
a college-to-career pathway for degree-seeking students who pursue insurance
careers by waiving state exams based on the completion of college coursework.
Specifically, the bill authorizes DFS to waive the state exam for a personal
lines agent’s license if the applicant receives an associate’s degree that
includes a minimum of 9 credit hours of insurance instruction approved by DFS.
In addition, the bill authorizes DFS to waive the state exam for a general
lines agent’s license if the applicant receives a four-year college degree that
includes a minimum of 18 credit hours of insurance instruction approved by
DFS. The bill also includes other
provisions proposed or supported by the DFS Division of Agent and Agency
Services. The bill:
CALL TO ACTION: Support
passage of SB 1222 and HB 1133.
PROBLEM: Assignment of Benefits (AOB) abuse,
which occurs when unscrupulous vendors file inflated claims with insurance
companies and then threaten to sue if the claim is not paid, is driving up the
cost of residential property insurance premiums in Florida.
BACKGROUND: In residential property insurance, AOB
occurs when a policyholder has a loss and signs a contract with a third party
to remediate the damage. The contract also provides for forfeiture (assignment)
of the proceeds (benefits) of the homeowners insurance policy to the third-party
remediator, often a water extraction firm or roofer.
Since water claims are the single
greatest cause of loss in Florida, representing over 50 percent of the total
non-catastrophic claims frequency, let’s use one for example. A cracked water
pipe floods a home. A plumber fixes the leak and refers the homeowner to a
water extraction company. The extraction company assures the homeowner it’s
there to help, but a contract must be signed before work can begin. The
homeowner often doesn’t know about the AOB provisions or doesn't understand the
implications. The insurer is billed $12,000 but knows extractions for a
comparable house typically run about $3,500. It investigates or attempts to
negotiate, but the mitigation company files suit and threatens to put a lien on
the insured’s home.
In far too many situations, the
claim is paid (since attorney fees are in addition to the claim in such
situations and costs mount quickly), but the homeowner is left with an
incomplete job, shoddy workmanship, and no recourse. The Division of Insurance
Fraud is now investigating nearly 200 complaints regarding such abuse.
SOLUTION: Insurance carriers agree AOB needs
reform, and roofers favor outright prohibition of AOB. This session, lawmakers should focus on
either prohibiting the use of AOB in property insurance claims, or allowing
insurers to limit AOB in their policy language. The problem could also be
addressed by amending the “add on” attorney fee statute that underlies much of
CALL TO ACTION: Support SB 1064 by Sen. Hukill and HB 669 by Rep. Tobia.
PROBLEM: Regulation has not kept pace with the rapid
growth of ride-sharing services such as Uber and Lyft. As such, there’s no
statute that specifically addresses insurance coverage requirements for
ride-sharing companies and/or drivers. Until “rules of the road” are in place,
the personal and financial safety of consumers, passengers, and drivers is at
auto insurance policies (PAPs) are not intended to cover the higher risks
associated with using a car for commercial purposes, which is why the typical
standard PAP contains a “livery” exclusion that applies when the vehicle is
being rented out or used to carry passengers for hire. This exclusion means any
damages or losses sustained when the car is being used for ride-sharing
activities will not be covered by the PAP. The policy also will not provide
coverage for the driver or passenger if they are hit by an uninsured or
underinsured driver, and won’t provide coverage to repair the driver’s vehicle
if it is damaged while being used for hire.
companies may have commercial liability coverage, but it’s not clear when it
applies. Does it apply when drivers have the app on but have not yet been
matched with a passenger? Does it apply after a passenger has been dropped off
at her location? It must be clear when the ride-sharing company’s coverage on
the vehicle is in effect and when it is not.
policymakers taking action that better clarify what insurance coverage is being
provided and when, there will continue to be uncertainty about whether there is
proper coverage for injuries or damage caused by an accident.
SOLUTION: Senate Bill 1298 by Sen. Simmons and House Bill 757 by Rep. Hager ensures adequate insurance is in place to protect drivers and passengers. The
CALL TO ACTION: Support passage
of SB 1298 and HB 757.
that buy cheap patents from declining companies and then seek money from firms
that infringe upon these patents are targeting small businesses in Florida.
These so-called “patent trolls” send small businesses that use off-the-shelf
technology such as printers, scanners, and wireless networks, letters asserting
that the business may be infringing on a patent owned by the troll. The troll
demands licensing fees, and, if the fees aren’t paid, threatens to sue. Some
businesses choose to pay the licensing fee, even though the letter is
questionable, because of the high cost of patent litigation.
trolling is an emerging problem that now accounts for more than 60 percent of
all U.S. patent litigation according to the Federal Trade Commission. Licensing
fees demanded by patent trolls range from a few hundred dollars to several
thousand dollars. The patent troll often lacks any evidence that the business
is even using the patented technology, but they seek the licensing fee anyway. Typically,
a troll will ask for information about a business’ computer network
configuration and request that the business enter into a licensing agreement in
the amount of $1,000 per employee. If the business refuses to pay the fee
within a short period of time, a lawsuit is threatened. These actions often
appear to be nothing more than fishing expeditions and the follow up threats of
legal action sometimes appear to be made in bad faith.
SOLUTION: Senate Bill 1084 by Sen. Brandes and House Bill 1103 by Rep. Stone
creates the “Patent Troll Prevention Act,” which protects the rights of
legitimate patent holders, while protecting businesses from frivolous suits. It
prohibits a person from making a bad faith assertion of patent infringement and
sets forth the criteria for what is considered a violation. It puts forth a
series of steps that must be followed in alleging patent infringement and
provides penalties, including attorney fees in defending frivolous lawsuits, if
those steps are not followed. It also provides for punitive damages equal to
$50,000 or three times the total damages, costs, and fees in defending
CALL TO ACTION: Support
passage of SB 1084 and HB 1103.