Jenna Lomax summarises all the latest surrounding the controversial Florida 516 Bill
The National Risk Retention Association (NRRA) is creating a pushback plan for the Florida 516 Bill on motor vehicle liability policies. The controversial bill was approved by the Florida
Senate by an 84-30 vote on 26 April.
In its latest statement, the NRRA strongly argued against the bill which it claims is “fatally flawed, unconstitutional and discriminatory.”
The legislation would change the definition of the term “motor vehicle liability policy” and define the term “risk retention group (RRG)”. It would also require RRGs writing commercial auto liability in Florida to carry a Financial Strength Rating of “A” or higher and be of a financial size category (FSC) of VIII, or above, from ratings company AM Best.
NRRA’s executive director, Joe Deems, has announced that the association will campaign to communicate with and educate legislators about what he calls the “inherent flaws”
in the bill.
In addition, the NRRA will continue with its campaign to develop “favourable understanding of the issues with the governor’s office and multiple state agencies.”
The NRRA has also said: “If all else fails, and (when) the bill passes, with the current damaging language, [NRRA’s litigation will commence] to challenge it under the federal law.”
In recent weeks
Deems attended multiple hearings last week to articulate the NRRA’s opposition to the bill, including the third reading session on 26 April where the bill was passed.
Commenting further on the NRRA’s fundraising plan, Deems says: “How much money you have does not make you a safer company!”
Last month, the NRRA said the bill will have a “devastating impact” on every RRG writing commercial liability, including auto, if passed in its current form. The association made the first of many statements on 5 April in which it also predicted that the bill could see “hundreds, if not thousands of RRG owner-insureds lose their coverage.”
According to the NRRA, the proposed bill could halt the business of, or negatively impact, 96 per cent of the 140 RRGs registered
in Florida.
“If history is any example, regulatory intervention calculated in response to the bill could actually disqualify or interfere in a number of ways with RRG commercial liability insurance,”
it says.
The NRRA adds: “By imposing the requirement of an AM Best “A” rating and a minimum financial size status of US$100 million in capital surplus — in order for an RRG to write commercial auto liability in Florida — the bill unlawfully seeks to regulate RRGs, and discriminates against RRGs that do not have to, or cannot obtain, such ratings.”
On 14 April, the bill was approved for review by the Florida Senate. The Appropriations Committee on Criminal and Civil Justice voted 11 to one in favour of the review.
What’s next?
If passed into law, the bill would go into effect on 1 July 2023.
The National Council of Insurance Legislators has also opposed the bill as it stands.
Deems has also said: “We need to stop this bill before it passes because, if it passes, suing the state will take years and it will be too late to help RRGs impacted.”
“If Florida can get away with violating the federal law, by making any financial rating a requirement to do business in their state, it may set a precedent to make other states bolder to do the same thing.”
