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Office and Cabinet Applaud the Passage of HB 7015 by House of Representatives

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Office Releases Results of AOB Data Call

The Florida Office of Insurance Regulation (Office) and Cabinet applaud the actions of the Florida House of Representatives in passing legislation today to specifically address assignment of benefits (AOB) reform. House Bill 7015, which was sponsored by the Judiciary Committee, Representative Jay Trumbull, and Representative James Grant, and co-sponsored by Representative Jim Boyd, provides consumer protections and strengthens provisions in Florida law to reduce unnecessary litigation associated with AOBs that is causing an increase in homeowners insurance costs across the state.
Today, the Office released the “2017 Review of Assignment of Benefits (AOB) Data Call Report,” which provides aggregated results of information received by the top 25 personal residential insurance companies encompassing more than 85% of the Florida market and writing Homeowners and Dwelling Fire policies from January 1, 2015 – June 30, 2017. The findings of this report show a larger progression in the geographic spread, frequency, and average severity of water loss claims across the state; however, this occurred in half the time it took to develop when compared to the nearly six-year analysis of the February 2016 report on this same issue. Since 2015, results indicate the frequency of water claims has risen by 44% with all regions of the state experiencing double-digit increases. Likewise, the average severity of water claims has increased by 18%. The total combined impact of these changes reflect an average 42.1% annual increase in water losses, which is nearly triple the 14.2% average annual increase shown in the previous report.
“I am thankful for the support of the Cabinet, bill sponsors, and all House members who have been working hard to address AOB reform,” said Insurance Commissioner David Altmaier. “The results of my Office’s newest report is a clear sign that Florida is seeing an aggressive rise in the number of water loss claims associated with an AOB and this impact is being felt statewide. Without a legislative remedy, this problem will lead to an increase in homeowners insurance premiums and lack of consumer choice as insurers stop writing or renewing policies in areas with high water losses. I look forward to working with the Florida Legislature and other stakeholders on a proactive solution to address this issue in the 2018 Session.”
Governor Rick Scott said, “I appreciate the Florida House for passing meaningful reforms that will help Florida families. I look forward to continue seeing this important issue addressed throughout the legislative session.”
“House Bill 7015 is the multi-layered legislative approach our state needs to address the rapid climb in AOB water loss claims, and I applaud Rep. Jay Trumbull and the Florida House for passing this good bill today,” said Chief Financial Officer Jimmy Patronis. “The data paints a bleak picture for Florida’s Insurance market. With skyrocketing homeowners insurance costs, consumers are on the losing end.“
“As Attorney General, consumer protection is one of my top priorities, and I applaud the Office of Insurance Regulation’s efforts to protect policyholders. This legislation aims to protect homeowners who are simply trying to repair their homes after a disaster,” stated Attorney General Pam Bondi.
A copy of the report can be accessed here. For additional information, please visit the Office’s “AOB Resources” webpage.

DEO Explains Economic Incentives' Return on Investment for Florida Taxpayers

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The Florida House of Representatives today used data maintained by the Florida Department of Economic Opportunity (DEO) that was unfortunately used to inaccurately describe the result of the state’s economic incentive programs. DEO would like to take this opportunity to accurately explain the data and how the incentive programs work to create valuable Florida jobs while aggressively protecting taxpayer dollars.
DEO Director Cissy Proctor said, “Before Governor Scott came into office, state incentives were often awarded before stringent requirements were met. However, under Governor Scott, Florida companies receive economic incentives after these requirements are met, including proven job growth and wage requirements. Only contractual commitments that are met are paid. This ensures a return on investment for Florida families.”
CLAIM
64.3 percent of the economic incentives listed below were unsuccessful because:

  • They only completed a portion of their requirements for which they were paid and can receive no more payments (inactive) 14.2%
  • They never received any payments though a contract was executed and are ineligible for future payments (terminated) 36.9%
  • The contract was never signed (vacated) 11.9%
  • The application was withdrawn 1.2%

FACT
It is inaccurate to say that all inactive, terminated, vacated and withdrawn projects are not successful. While inactive projects met some performance measures, businesses were only rewarded for the jobs they created. This means the program is working. Only contractual commitments that are met are paid.
For example, if a company moves to Florida and commits to creating 100 jobs over five years but ultimately only creates 75 jobs over four years, the company only receives payments for the 75 jobs created; not for the full 100. Are those 75 jobs a failure? No. Are the 75 Floridians who found a new opportunity to provide for their family or achieve their dreams evidence of a failed project? No.
Job creation should never be viewed as a failure. This process shows the reforms that Governor Scott put in place are working to protect taxpayer dollars while encouraging job growth.
Furthermore, terminated, vacated and withdrawn projects NEVER received taxpayer funds. This shows that the Governor’s strict accountability measures are working to safeguard taxpayer dollars. This is part of the due diligence process that was reformed under Governor Scott’s leadership.
CLAIM
Less than 10% of approved incentives were completed having met all its contractual obligations with the state.
FACT
Many state incentive projects resulted in the creation of new jobs, capital investment, or higher wages in companies across the state. These job creation deals are multi-year projects with multiple different types and sizes of businesses across various industries. A multitude of factors can result in a company changing its business model, which is why Governor Scott’s reforms included strict performance-based contracts for each year of the agreements. In the years that the companies meet their contract goals, jobs are created for Florida families and investments are made in Florida communities. These new opportunities and investments are a success for the state. Again, if jobs are not created, no taxpayer dollars are spent.
CLAIM
A trend worth noting for many of the incentive programs is the common practice of either providing a one or more year extension for the various businesses receiving incentives to meet performance criteria with no award penalty, or simply amending contracts to change performance criteria.
FACT
When companies enter into agreements with the State of Florida, they are projecting performance up to a decade in advance. When initiating their projects, companies may experience delays related to local permitting, construction, renovation, federal contracts, and relocating their business. While some extensions may be provided after a thorough and strict review process, state money is not given out until full job creation, wages and capital investment from the contract are made.
CLAIM
6 out of 10 approved incentives do not result in successful projects
FACT
While inactive projects met some performance measures, they were only paid for the investments that were made. Furthermore, job creation is never a failure. Terminated, vacated and withdrawn projects NEVER received taxpayer funds.
CLAIM
3 (“Active”) of the remaining 4 that could potentially be successful could still end in a status of “Termination” or “Inactive”
FACT
All incentive projects are held accountable for the life of the project and taxpayer dollars are not spent until strict performance measures are met.
CLAIM
12% of approved incentives never execute a contract with the state
FACT
In these cases, companies seeking incentives meet with the state to discuss their business growth plans. During the due diligence process that was reformed under Gov. Scott’s leadership, the state works with the company regarding the strict requirements of the incentive program. At this point, a company may decide not to pursue an agreement. Again, in this case, no taxpayer money is ever spent. This shows that the program is working.
CLAIM
Since 1994 a total of 186 (9.6%) of approved incentives have resulted in a project that completed its contract with the state.
FACT
While inactive projects met some performance measures, they were only paid for the investments that were made. Furthermore, job creation is never a failure. Terminated, vacated and withdrawn projects NEVER received taxpayer funds.
CLAIM
No statistics are currently available for the 9.6% to determine how many, if any, were sanctioned during contract performance for failure to meet their full performance requirements.
FACT
All performance-based contracts have sanctions and clawbacks in the event that a company is unable to meet a requirement. This is part of the reforms of the incentive process done by Governor Scott, and the state will continue to aggressively pursue efforts to hold companies accountable in order to safeguard taxpayers’ dollars.

About DEO
The Florida Department of Economic Opportunity combines the state’s economic, workforce and community development efforts. This new approach helps expedite economic development projects to fuel job creation in competitive communities. For more information, including valuable resources for employers and job seekers, please visit www.floridajobs.org.

ICYMI: Gov. Scott fights for Florida jobs despite House of Representatives job killing legislation

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Governor Rick Scott met with reporters earlier today to discuss the importance of funding jobs and tourism following news that the Florida House of Representatives has decided to push legislation to undo economic development funding in Florida and defund the state’s tourism agency.
Below is a transcript of a portion of the Governor’s remarks – To watch the full video of the Governor’s remarks, click HERE to watch on the Florida Channel.
Governor Rick Scott said, “Now I go into my next Legislative Session and I watch the Florida House- they don’t care about people’s jobs. These are individuals who haven’t experienced what I went through as a child; have never been in business; don’t know the difficulty of building a business; must not think about the importance of business or jobs; are not thinking about their constituents…They are individuals who have never been in business and they want to lecture me. I’ve taken the risk of starting businesses. I’ve gone through the struggles of building a  business. I watched my parents struggle. And now I have people that want to lecture me that have never done anything like this.
“When the House wants to stop Enterprise Florida, they’re hurting our poorest communities, they’re hurting our rural communities. When they want to say that we don’t need to do anymore marketing for VISIT FLORIDA, what they are saying is we don’t need any more jobs in tourism. Now let’s think of what’s happened. In business, what you learn is you have to get a return on investment. Otherwise there will be no shareholders who give you money, there will be no bondholders who give you money, you won’t be able to stay in business. So when I came in…I said, we’re going to get a return. I’m not going to put the money out unless we get a return…And we’ve gotten a much better return than anybody’s going to get in their bank account.
“On top of that, look at what we’ve done with VISIT FLORIDA. We have increased the number of our expenditure and what have we seen? We have seen unbelievable number of new jobs and new tourists. The state had stagnated around 80 million tourists- 82 million tourists a year before I got elected. This year, we’ll have over 110 million tourists. Even after going through all the issues we had last year- whether it’s Zika or the hurricanes or other issues. We’re seeing tourism grow. So these are two groups that have gotten very good return for all of our taxpayers.
“But the most important thing- they’ve given people the opportunity for a job. A job creates hope, a job creates opportunity for your family. I know the importance of that. That’s what my parents struggled with. Now…we are seeing people that just want to run for higher office that are not concerned about what happens to other people. They just think it’s a nice soundbite. That doesn’t help anybody in their community, it doesn’t help anybody in our state.”