FLORIDA PROPERTY & CASUALTY ASSOCIATION

HOMEOWNERS DIVISION

Minutes for January 18, 2011

A General Meeting of the Florida Property and Casualty Association’s (FPCA) Homeowners Division was held at 1:00 p.m. on January 18, 2011,via teleconference.

I.Call to Order

Chairman Grimsley called the meeting to order. The following Members were in attendance:

Chuck GrimsleyArgus Fire & Casualty

Dan HurleyAmerican Traditions

John JergerAmerican Traditions

Gordon JenningsAssurance Managing General Agents

Jimmy GraganellaCapitol Preferred

Stacey GiuliantiFlorida Peninsula

Lara MoweryGuy Carpenter

Adam SchwebachGuy Carpenter

Kevin StokesGuy Carpenter

Andy MartinezModern USA

Ray BlacklidgeModern USA

Brad BurtonOlympus Insurance

Bill LowryOlympus Insurance

Doug RaucyPrepared Insurance

Reid EdwardsRMS

Locke BurtSecurity First Insurance

Melissa BurtSecurity First Insurance

Walt ZehnderSecurity First Insurance

Tony LoughmanSouthern Oak

Reese BowenSt. Johns Insurance

Also in attendance were Fred Karlinsky, Katie Webb, Megan Grant, Trevor Mask, and Lynn Tkacz of Colodny, Fass, Talenfeld, Karlinsky and Abate, P.A. (CFTKA) and Don Silver Boardroom Communications.

II.Antitrust Statement

Chairman Grimsleyread the antitrust statement, which was heard by all present.

III.Demotech

Chairman Grimsley opened a lengthy discussion regarding Members' questions and/or issues for Demotech in anticipation of the upcoming conference call/webinar. The comprehensive list compiled based on Member input had been circulated. Mr. Loughman and Mr. Burt noted that some questions could be viewed as confrontational and defeat the purpose of establishing communication with Demotech.

The Members noted that the questions related to certain topics, such as models, reinsurance, etc. Mr. Burt advised that in regard to communications with companies, Mr. Petrelli’s position is that Demotech’s correspondence to a company is company-specific and does not necessarily apply to other companies. Since Mr. Petrelli had requested much fewer questions, Mr. Karlinsky recommended limiting the list to no more than 6 or 7, for distribution to the Members for approval. In this regard it was agreed that the list should be revised with bullet points under the major topics, and that the confrontational questions be reworded or removed. The revised list will be circulated for review and final comment before submission to Demotech.

IV.SB 408

Chairman Grimsley acknowledged a memorandum from Mr. and Ms. Burt recommending amendments to this proposed legislation. Ms. Burt advised that for the most part, the memorandum proposes tweaks to SB 408. Chairman Grimsley then suggested a point-by-point review and discussion of the memo.

A.Replacement Cost

The Members generally agree that ACV/RCV is a top priority for legislative initiatives. Mr. Loughman stated that his preference would be to return to the old statutory language, putting Florida in line with every other state. Ms. Webb explained that some language, while not ideal, was left alone anticipating a need to "pick your battle" when the bill comes up. She added, however, that she will bring it up to Senator Richter.

Chairman Grimsley stated he believes Senator Richter's response to the prior language will be that we've already been down that road and we should get what we can now and try for additional changes later. Ms. Webb concurred and added that if we are going to introduce a new concept at this point, we may need to enlist another sponsor. Mr. Burt argued that because we have new leadership and this is the optimum time for our success, we should push now for our agenda. Ms. Webb agreed to reach out to staff and Committee Chairs to gauge their receptiveness.

B.Florida Hurricane Cat Fund

There was discussion regarding the FHCF and the need to clarify the statute to counter Dr. Nicholson’s interpretation. The suggested amendment to SB 408 would delete the word "direct" from the definition of "losses," thereby overriding Dr. Nicholson's interpretation. The Members generally agreed with this proposed amendment.

C.Civil Remedy Notice

Chairman Grimsley agreed to the amendments proposed regarding civil remedy notices. There was no opposition and no further discussion.

D.Statute of Limitations

A general discussion ensued regarding Florida's statute of limitations, the need to bring Florida in line with every other state by reducing the time from five years to no more than two, and the need to clearly define whether the time for a breach of contract suit is triggered from the date of loss or from the date of denial of a claim.

Ms. Burt expressed concern thatSB 408 could actually extends the "tail." There was unanimous agreement that the most important issue is the need to reduce the time. There was some disagreement and opinions were expressed as to what the time should be, with suggestions ranging from 1 to 3 years.

Ms. Webb cited the language of most insurance policies requiring "timely" notice or notice within a "reasonable time" as being far too ambiguous. Mr. Burt suggested a claimant be required to notify an insurer of loss as soon as they know or should have known, but in no event later than 2 or 3 years.

Mr. Graganella informed the Members that he had a one-on-one talk with the Governor, who agreed that 5 years is definitely too long. The Members agreed it should be as short as possible.

E.Sinkhole

Ms. Burt explained that SB 408 is basically acceptable as it stands regarding sinkholes, and the points made in the memo are just for clarification.

Mr. Burt brought up the requirement in SB 408 that sinkhole coverage be offered by an insurer who is nonrenewing. He believes that requirement was a carryover from the provision intended specifically for Pasco and Hernando counties. Ms. Webb suggested that may just be a drafting error and offered to look into it.

Mr. Giulianti stated that he does not believe that SB 408 helps the industry at all in regard to sinkhole, citing the language regarding repairs and paying above policy limits, and there is no proposed amendment to rectify that.

The Members discussed in detail the need to limit payout to policy limits. Mr. Burt reminded the Members that they always have the option of electing not to write sinkhole coverage. He added that this bill is just the beginning of the process toward reforms we want to see, and believes we should propose at least something that Senator Richter would be willing to accept. Mr. Graganella proposed that alternatively, sinkhole be defined as catastrophic ground collapse. He agreed to provide Ms. Webb with an audit he has that may help convince Senator Richter to limit coverage to catastrophic ground collapse. In addition, Ms. Webb asked Mr. Giulianti to send her proposed language limiting damages which she will also bring to Senator Richter.

Chairman Grimsley requested that anyone having specific language they want proposedshould send it to Ms. Webb.

F.Citizens

There was general agreement that this is Governor Scott's hot-button issue. Mr. Burt reiterated that the major issues involved are the "glide path," policyholder surcharge, eligibility, and agent appointment. He opined that Senator Richter may decide to propose a separate bill on Citizens as this is such a broad topic. Ms. Webb concurred, adding that it will be sponsored either by Senator Richter or by another Senator on behalf of the Governor.

G.Public Adjusters

Mr. Burt began a discussion on the inherent opportunity for fraud created byan insured's 3-day right of rescission regarding a public adjuster. As an initial remedy, Mr. Loughman recommended an amendment to SB 408 to allow an insurer direct access to an insured and his property, regardless of public adjuster involvement. In addition, Mr. Graganella submitted that a more logical time for rescission would be 3 days from the date the insurer inspects the loss or 5 days in the case of a hurricane. These changes would also provide a distinct benefit to the insured.

There was general agreement on thesepoints and Ms. Webb stated she will present them to Senator Richter.

H.HRA Boundary

Ms. Webb reported that at the request of Senator Alexander, this deadline has been extended for 3 years. Mr. Burt stated this is at the behest of State Farm and would not be to our benefit.

Ms. Webb added that Senator Richter seems to be aligned with Senator Alexander on this. Mr. Burt suggested she ask Senator Richter how that position squares with Governor Scott's goal of reducing Citizens, given the fact that HRA is approximately 75% of Citizens PML.

Mr. Graganella suggested this issue does not affect this group directly and recommended that Ms. Webb's time and effortsbe focused on the issues that the FPCA agreed are higher priorities.

VII.Adjourn

Hearing no further business, the meeting was adjourned.

FPCA Homeowners Division Meeting Minutes 1.18.11 - Page 1 of 5