Insurance Journal 2015 Florida Supplement 2015-07-20

FOCUS ON FLORIDA

Florida Fraud Report

State Sinkhole Rates & Rules

Florida Workers’ Comp Constitutionality Case

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July 20, 2015 INSURANCE JOURNAL-FOCUS ON FLORIDA | 3www.insurancejournal.com

Inside This IssueJuly 20, 2015 • Vol. 93 No. 14 • Focus on Florida

4 Insurers Warned to “Think Before You Snap” as Florida Drone Privacy Law Takes Flight

8 Florida Fraud Report

10 Florida Court Rejects Workers’ Comp Constitutionality Challenge

Citizens Update:12 Florida Approves Removal of More Than 80,000 Citizens’ Policies

14 Citizens to Hold Off on 2016 Sinkhole Rate Increases, For Now

FLORIDA COVERAGE

FOCUS ON FLORIDA

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16 Florida Updates Alternative Procedure Rules for Sinkhole Claim Disputes

18 People

19 Florida Study: Liability, Weather, Development Hamper Effective Wildfire Prevention

19 National Hurricane Center, Florida University Launch Website in Spanish

19

12

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4 | INSURANCE JOURNAL-FOCUS ON FLORIDA July 20, 2015 www.insurancejournal.com

News & Markets FOCUS ON FLORIDA

One of the most important stipulations of the law is that individuals who feel their privacy has been violated under the terms of the law may now sue for civil damages and injunctive relief and be awarded attorneys’ fees if they are successful. That could end up being costly, says Matt Grosack, a Miami-based attorney with DLA Piper. “There are a lot of litigators out there that predict this could inspire a new wave of liti-gation,” he says. But even where privacy laws like Florida’s are in place, insurance companies are still interested in using drone technology. Major insurers including State Farm, AIG, Liberty Mutual and USAA have received approval from the Federal Aviation Administration (FAA) to test the use of drones for their busi-nesses. Insurers aren’t the only interested parties.

Insurers Warned to ‘Think Before You Snap’ as Florida Drone Privacy Law Takes FlightBy Amy O’Connor

The new Florida drone privacy law could have some unintended consequences for

insurers looking to use or insure unmanned aircraft systems (UAM) technology. The Freedom from Unwarranted Surveillance Act (FUSA), which took effect in Florida July 1, prohibits a person, state agency or political subdivision from using a drone to capture an image of privately owned property or those on the property – including an owner, occu-pant or invitee – with the intent to conduct surveillance. The law, signed by Gov. Rick Scott in May, further requires that those using drone tech-nology in such a manner must have written consent from the people on the property

under surveillance if a reasonable expecta-tion of privacy exists. The law applies to law enforcement and private individuals and was intended to go along with Florida’s 2013 law that requires police to obtain a warrant to use drones to

collect evidence, according to the Electronic Privacy Information Center (EPIC). The new FUSA law does allow exceptions for the use of a drone by a person or entity engaged in a busi-

ness or profession licensed by the state in certain circumstances. However, this excep-tion does not apply to a profession in which the authorized scope of practice includes obtaining information about the identity, habits, conduct, movements, whereabouts, affiliations, associations, transactions, repu-tation, or character of any society, person or group of persons. continued on page 6

‘FUSA allows individuals to sue for civil damages if they believe their pri-vacy has been violated.’

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Wisconsin, according to The Washington Post. The U.S. Congress has also introduced the Drone Aircraft Privacy & Transparency Act, which if eventually passed could trump any

state privacy laws. “The insurance industry is all about managing risk and the moral of the story is think before you snap that picture – be very mindful of what picture you are taking because it could inadvertently be

a liability,” Grosack said. “Instead, identify the use of drone technology in the insurance policy and let the insured know they may be filmed during the adjustment process.” Florida’s FUSA doesn’t differentiate if a drone is used for commercial or personal purposes. “It’s just the use of a drone – so does it fall under personal policy, commercial policy? Are insurance companies excluding these intentional acts? I think right now yes, they are,” said Grosack. “Whether that changes in the future I am not sure.” Case law in regards to drones will be espe-cially important to the insurance industry, Grosack added. It still remains to be seen how Florida courts will interpret FUSA as no litigation has come up, yet. “As with any new law that comes out, we are operating in a vacuum right now. When you are looking at [legislation] from a litigation perspective, you are looking at it through the lens of ‘how will the court see this?’ But we don’t know that yet because there aren’t any cases,” he said. In the meantime, those in the industry hope Florida regulators won’t completely shut the door on drone technology. “We look forward to continuing the dia-logue with Florida policymakers to develop regulations that will ensure privacy concerns are addressed while enabling insurers to ben-efit consumers by using the latest technolog-ical developments,” PCI’s Hackett said.

A Munich Re survey of risk managers esti-mated that almost 40 percent of businesses could be using drones in fewer than five years. Insurers do not want to miss the opportunity and are developing insurance products for drone operators even though the Federal Aviation Administration (FAA) has not issued final government regulations and is not expected to do so until next spring. The FAA has eased its permit process and is now approving an average of 250 permits a month for commercial drone experiments, according to Bloomberg News. ISO has come out with coverage and exclu-sion options for insurers to use in developing insurance programs for businesses that may use drones. ProSight Specialty Insurance has developed an insurance product for drone operations in filming, rental, events, agricul-ture and non-flight related exposures. AIG offers coverage that includes physical damage and liability. Brokers and agencies special-izing in the risk include Transport Risk Management Services, Costello Insurance, and Unmanned Risk Management. “The application of drone use in the insur-ance industry is a real boon for the industry as a whole, assuming they follow the proper FAA guidelines,” said Grosack. State Farm spokes-person for Florida, Michal Brower, says the company believes its FAA approval to use drones for roof inspec-tions and research and development purposes (including catastrophe response) is in com-pliance with Florida’s new privacy law. “We believe these uses are consistent with what is allowed under the Florida law. State Farm considers customer privacy one of our top priorities, and our use of this technology will adhere to all applicable laws and regu-lations to ensure consumer privacy protec-tions are in place,” she wrote in an e-mail to Insurance Journal.

Some in the industry are concerned that regulators may become too restrictive rather than see the potential benefits of drone tech-nology. “We are hopeful lawmakers [in Florida] will see the value in how drones, when used properly, can improve safety by not sending people into very hazardous envi-ronments and assist insurers in meeting consumer needs by quickly assessing damage after a significant weather event, especially in hurri-cane prone states such as Florida,” Property Casualty Insurers’ (PCI) Director of Personal Lines Policy Chris Hackett said in an e-mail statement to Insurance Journal. State Farm acknowledges the benefit on the business side as well. “The use of this technology in the insur-ance industry is in its infancy, but we believe it has the promise of improving customer experience in several applications – from remote roof inspections to surveying damage after a catastrophe,” said Brower.

Industry Hurdles, Opportunities The insurance industry is approaching the

drone market with caution. The companies that offer insur-ance policies for drone use currently exclude privacy claims, according to Grosack, and he expects insurers will need more data before that changes and policies become broader. “Right now, we are looking at an immature market,” he says. “I think the insurance industry needs data to see exposure and determine if they want to insure it. But on the whole insurance companies think this could be a huge market in the future.”

However, in the development of products and in their own usage of drones, insurers will face the potential of violating state laws such as Florida’s. Nearly all states have considered some kind of drone legislation at this point and several others have enacted privacy-related laws, including Idaho, North Carolina, Oregon, Tennessee, Texas, and

continued from page 4

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insurance fraud scheme were made June 16, according to an announcement by Florida CFO Jeff Atwater. An investigation led by the Department of Financial Services’ Division of Insurance Fraud revealed a large-scale premium fraud scheme in which these six individuals created multiple shell

corporations in order to systematically conceal payroll amounts for the pur-poses of obtaining low-cost workers’ compensation policies. Investigators believe that beginning in September 2012, the following

Central Florida businesses were opened and operated as shell companies:

Alfa Construction, Burgos Construction, Ginel Construction, Rejevaz Services Inc., and PHH Construction. Shell companies are owned by straw owners, or individuals who, for a fee, agree to serve as the legal owner of a business because they have a clean criminal record. These businesses, however, were alterna-tively run by organizers who directed the day-to-day activities and operations of the illegal activities. According to DFS’ statement, by grossly deflating accurate payroll amounts, mem-bers of this fraud network fraudulently secured low cost workers’ compensation insurance policies. Payroll amounts were concealed through the use of check cashing stores, which circumvented proper book-keeping measures. After securing certifi-cates of insurance, organizers would ‘rent’ the certificates to work crews for a fee. Since the policies were obtained fraudulent-ly, employees were not covered and there-fore left vulnerable to high-dollar medical costs in the event of an on-the-job injury. To further their scheme, organizers would print and provide fake business cards to these work crews, who were instructed to present them to workers’ compensation compliance investigators who routinely conduct compliance checks at job sites to ensure proper coverage is in place. This cycle of fraud would continue until an insurance policy expired or was cancelled, at which time organizers would open another shell company under a differ-ent name and begin the process again.

Florida Insurance Fraud Education Committee Conference The annual Florida Insurance Fraud Education Committee (FIFEC) Conference was held in Orlando last month and featured Florida’s Chief Financial Officer, Jeff Atwater, who has led the charge on cracking down on insurance fraud in the state. In a statement before the con-ference, Atwater said the Division of Insurance Fraud is taking down larger, more complex fraud rings because of its collective efforts across the state. “By bringing together all of the pieces of this puzzle – insurers, law enforcement, as well as prosecutors – we are able to gather and share information, improve our strate-gies and work smarter by empowering one another,” he said. Atwater said the efforts are working. So far this fiscal year alone, Florida has made more than 1,200 insurance fraud arrests that have led to 1,083 convictions – a conviction rate of 89 percent. Atwater also stated the Division of Insurance Fraud has filed criminal charges in $47 million worth of insurance fraud. “Considering the past four-and-a-half years, that number skyrockets to $210 million. When insurance companies lose money due to acts of fraud, they pass that loss onto consumers in the form of higher premiums,” Atwater stated. “That means when scam artists and fraudsters steal money, they aren’t just taking money away from insurance companies, they are ulti-mately taking money away from you, and me, and all of the hard-working, honest consumers in our state.”

Florida Busts Workers’ Comp Scam Involving Multiple Shell Companies Six Central Florida insurance fraud arrests that breakdown an elaborate Central Florida workers’ compensation

The defendants were booked on Organized Scheme to Defraud charges in their respective jurisdictions, either Hillsborough or Orange County, and if con-victed, face a maximum possible sentence of 15–30 years in prison.

4 Arrests Made in Central Florida Injury Clinic PIP Fraud The Florida Division of Insurance Fraud announced the arrest of Dr. Douglas Price, owner of the Florida Pain Trauma and Injury Clinic in Auburndale, Fla., and three others on charges related to the operation of a complex PIP fraud scam. Price, along with Paulin Sanon and Sonya Rivera of Haines City, and Juliena Julien of Winter Haven are accused of recruiting patients to visit Price’s clinic for treatment of fake injuries following staged accidents. Following an October 2014 staged acci-dent, Julien unknowingly recruited an undercover police officer to assist with their scheme, according to a statement by DIF. Julien reportedly requested that the officer visit the Florida Pain Trauma and Injury Clinic to report fraudulent injuries and stated that he would receive monetary compensation for doing so. Between October 2014 and March 2015, an investigation uncovered evidence that Price’s Auburndale and Tampa clinics were engaged in patient brokering, and also that clinic staff were performing treatments that they were not qualified or licensed to per-form, the DIF stated. Price and his associate, Rivera, reported-ly offered $500 as compensation for 15 clinic visits, and an additional $500 after 25 visits to the clinic for treatment of injuries that did not exist. A monetary offer was also extended for the recruitment of additional individuals to attend the clinic. Based on their roles in the scheme, Price will be charged with three counts of patient brokering, a 3rd degree felony. Rivera and Sanon, one of Price’s market-ers, will both be charged with one count of patient brokering. Julien will be charged with the unli-censed practice of healthcare, according to DIF.

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present case.” The justices also stated that the associations in this case “are not suffer-ing immediate or threatened injury of the kind comprising a justiciable issue had an individual member of the association—in this case, an attorney regularly representing workers’ compensation claimants—brought the action.” Katherine Giddings, partner, Appellate Practice, Akerman LLP, who served as co-counsel for the Florida Chamber of Commerce and the Florida Justice Reform Institute as amici curiae in support of revers-ing of the trial court’s order, said the deci-sion is a victory for all Florida employers and employees. “On behalf of our clients, the Florida Justice Reform Institute and the Florida Chamber of Commerce, we are pleased the Third District Court of Appeal recognized the invalidity of the trial court’s decision, which declared the Workers’ Compensation Law unconstitutional,” said Giddings. “As the Third District noted, the law immunizes from lawsuits both employers and their employees for covered, work-related injuries — while ensuring that employees have ben-efits when they are injured on the job.”

Editor’s Note: At press time, Insurance Journal learned that this case is not yet set-tled. The Florida Workers Advocates has now asked the Florida Supreme Court to take up an appeal of this ruling by the 3rd District Court of Appeal.

Florida Court Rejects Workers’ Comp Constitutionality ChallengeBy Amy O’Connor

Florida’s Third District Court of Appeals has thrown out a case by a lower

court that declared Florida Workers’ Compensation Law unconstitutional, con-cluding that the threshold requirements for the prosecution of such claims were not met, but did not rule on the constitutionali-ty of the law itself. The June 24 ruling was in response to a 2014 judgment by Florida 11th Circuit Court Judge Jorge Cueto, who determined that the “exclusiveness of liability” provision of the Florida Workers’ Compensation Law that immunizes an employer and its employees from lawsuits for covered, work-related inju-ries, is facially unconstitutional. In the appeals court’s 13-page ruling by a three-judge panel, the justices stated the two legal issues for their decision to over-turn were mootness and lack of standing by the plaintiffs – Florida Workers’ Advocates and Workers’ Injury Law & Advocacy Group, and Elsa Padgett. The original case stemmed from a law-suit by Julio Cortes who sued his employer Velda Farms in 2010 after he was injured while operating equipment. In 2012, several employee advocacy groups and state govern-ment worker, Padgett, who had sustained an on-the-job injury and was forced to retire due to complications, joined the suit. Padgett, along with several trial bar groups, argued that her workers’ compensa-tion benefits were inadequate and the law unfairly blocked her constitutional right to access the court. In 2013, Velda Farms vol-untarily dismissed its affirmative defense of workers’ compensation immunity and con-tended that any remaining claims relating to statutory workers’ comp issues – including the judgment relief sought by the advocacy groups and Padgett – had become moot and should also be dismissed. In response, the advocacy groups filed to continue the case independently. Circuit Court Judge Cueto ruled in Padgett’s favor last August, focusing on the exclusive reme-

dy provision of Florida’s workers’ comp law. Cueto said at the time that cuts in medical and wage-loss benefits made by lawmakers over the years had led to a system that no longer gave injured workers a “fair deal” and specifically cited workers’ compensation changes made by lawmakers in 2003. “The Act of 2003 no longer provides full medical benefits or any compen-sation for permanent partial disabil-ity,” opined Cueto, adding that “it is inadequate as an exclusive remedy for all injured workers.” Pamela Jo Bondi, Attorney General; Allen Winsor, Solicitor General; Adam S. Tanenbaum, Chief Deputy Solicitor General; and Osvaldo Vasquez, Deputy Solicitor General (Tallahassee), appealed on behalf of the State of Florida shortly after the circuit court’s ruling and the case was sent to the Third District Court of Appeal. The appeals court opined in its ruling that the case had strayed from its original intent. The justices wrote that the plaintiff’s assertions that the state’s work comp sys-tem no longer provided adequate benefits to injured workers giving up their right to sue, “were transformed by the present appellees and their counsel into a completely different set of claims and parties over the three years which followed” and said, in the process, “the case lost (1) the essential elements of a justiciable ‘case or controversy,’ (2) and iden-tifiable and properly-joined defendant, and (3) a procedurally proper vehicle for the trial court’s assessment of the constitutionality…” While not ruling on the constitutionality, the court said its reasons for dismissal pre-cluded the plaintiffs from pursuing the con-stitutional claims and obtaining relief and added “because we find the issues dispos-itive, we decline to review the trial court’s analysis of the appellees’ state and federal constitutional claims.” The court further added in its ruling that the advocacy groups may have an “economic interest in establishing their clients’ rights to file tort claims, but that indirect interest does not confer standing upon them in the

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FOCUS ON FLORIDA

News & Marketsfollowing three companies:• Heritage Property & Casualty Insurance

Co. – approved to remove up to 40,000 personal residential policies (17,426 per-sonal lines account and 22,574 coastal account) and up to 50 commercial res-idential policies (45 commercial lines account and five coastal account)

• Southern Oak Insurance Co. – approved to remove up to 15,000 personal residential pol-icies (10,000 personal lines account and 5,000 coastal account)

• United Property & Casualty Insurance Co. – approved to remove up to 25,000 personal residential policies (19,800 personal lines account and 5,200 coastal account) and up to 1,000 commercial residential policies (940 commercial lines account and 60 coastal account)

Citizen’s Personal Lines and Commercial Lines Accounts are mostly non-coastal properties and the Coastal Account is coastal properties. The take-out periods are September 22, 2015 for personal residential impacting both the personal lines/coastal account pol-icies and September 15, 2015 for commercial residential impacting both the commercial lines/coastal account policies. The take-out offers are part of the state’s ongoing depopulation effort to reduce the number of policies in the state-created Citizens and transfer them to the private insurance market. The announcement brings the total number of policies approved for take-outs in 2015 to 713,336. Earlier this year, Citizens announced the company is the smallest it has been since its creation in 2002. By statute, policyholders may choose to remain covered by Citizens during take-out offers. To date, 128,133 policies have been removed from Citizens this year.

Florida Approves Removal of More Than 80,000 Citizens’ Policies

The Florida Office of Insurance Regulation (FLOIR) announced July

8 it has approved the removal of up to

80,000 personal residential policies and 1,050 commercial residential polices from Citizens Property Insurance Corp. by the

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matters related to sinkhole claims, it gen-erally takes five to six years for a sinkhole accident year to fully mature and thus to know the true costs, Citizens said. For now, given the continued downward trend in reported sinkhole claims, the unknown resolution of court challenges to the law, and the high level of uncertainty in the ultimate outcome, Citizens recom-mends that overall sinkhole rates remain unchanged. As the ultimate effect of recent law changes emerges in the claims experi-ence, however, there is no guarantee that future sinkhole rate increases will not be necessary, the company said. “Although it will take several years to definitively determine whether the trend of falling sinkhole-claims costs will con-tinue, Citizens’ actuaries believe the most prudent course is to hold off on sinkhole rate increases until the level of uncertainty in rate indications is more acceptable,” said Citizens.

Citizens to Hold Off on 2016 Sinkhole Rate Increases, For Now

In Citizens’ 2016 rate proposal, approved last month by the Citizens Board of

Directors and awaiting approval by the Florida Office of Insurance Regulation, the insurer of last resort did not recommend any sinkhole rate increases for 2016 for most of the state, including in the sinkhole prone areas known as “Sinkhole Alley.” In its 2016 Rate Kit, Citizens credited legislation passed in 2011, which it said has helped to rein in sinkhole losses and result-ed in a significant decrease in sinkhole-re-lated claims, as the reason for the sinkhole rate stability. “Although some aspects of the reforms are being challenged in court, Citizens believes the prudent course is to hold off on additional sinkhole rate increases in most areas until the full effect of these changes is better known,” the company said. In 2011, major sinkhole claims reform legislation – Senate Bill 408 – clarified the definition of sinkhole damage and required that repairs be completed if a sinkhole claim is paid. When it was passed, an actu-arial analysis of SB 408 indicated that these changes could reduce sinkhole claims by approximately 54 percent. Citizens’ claims experience since the bill went into effect in 2012 seems to bear this out, the company stated, with the number of reported sink-hole claims to Citizens steadily declining since the end of 2011. In fact, the company reported claims falling by more than 60 percent since that time. In 2011, over 4,500 claims were reported. In 2012, that number decreased to around 3,100, and in 2013 the number was further reduced to around 1,200. This declining trend has continued into 2014 and 2015. The company stated that in 2014, Citizens recommended “actuarially sound” sinkhole rates for all counties outside “Sinkhole Alley,” which includes Hernando, Hillsborough and Pasco counties. In those areas rate increases were phased in to cush-ion their impact on affected policyholders, per the recommendation of Citizens’ Board

of Governors. In addition, between 2011 and 2014, Citizens increased sinkhole rates by close to +90 percent in the most sinkhole-prone areas of the state (Hernando, Pasco, and Hillsborough counties). These combined factors have led to a statewide indicated rate change for sinkholes of +57.2 percent, an all-time low since sinkhole rate indica-tions were separated from all other perils in 2011, Citizens said. The sinkhole indi-cations for Hernando, Hillsborough, and Pasco are +214 percent, +24.2 percent, and +23.9 percent respectively. However, as was the case last year, there is a high level of uncertainty in these indi-cations. Some aspects of SB 408 are pending court challenges. Citizens reported that more than 2,000 sinkhole claims currently remain in litigation, the outcome of which may affect sinkhole rates going forward. Because of geotechnical testing and legal

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Florida’s Sinkhole Neutral Evaluation Program requires by law that insurance companies inspect the premises of a prop-erty upon receipt of a claim for a sinkhole loss to determine if there has been struc-tural damage that may be the result of sink-hole activity. If the insurer discovers structural damage which is consistent with a sinkhole loss, or if the insurer is unable to identify a valid cause of such damage, the insurer must engage a professional engineer or geologist to conduct testing to determine the cause of loss and report their findings to the insurer, DFS states on their website. Following the receipt of the report or the denial of a claim for a sinkhole loss, the insurer is required to notify the policyhold-er of their right to participate in the neutral evaluation program. The neutral evaluator is defined by DFS as a professional engineer or geologist who has completed a course of study in alternative dispute resolution designed or approved by DFS for use in the neutral evaluation process and who is determined by DFS to be fair and impartial to the pro-cess. Neutral evaluation requested by an insured or their insurer is mandatory.

Florida Updates Alternative Procedure Rules for Sinkhole Claim Disputes By Amy O’Connor

New rules changing the way disputed sinkhole claims are handled in Florida

as part of the state’s Sinkhole Neutral Evaluation Program have been approved and will take effect July 27. The main changes to the consumer sink-hole claim dispute process include:• Repealing the Neutral Evaluator stan-

dards because the standards are now set forth in Florida statute.

• Imposing a five business day limit on insurers to contact claimants after notice of a request for neutral evaluation.

• Imposing a three business day deadline on neutral evaluators to disclose conflicts of interest.

• Requiring professionals used by a neutral evaluator to disclose conflicts of interest.

The Florida Department of Financial Services proposed the new rules earlier this year. Amendments and additions requested by the Florida Insurance Council were also approved following a May hearing requested by FIC, according to Tasha Carter, director of the Division of Consumer Services of DFS. The council testified at the May 12 hear-ing on behalf of its member companies. FIC said its main concern was the proposed time limit of three days on insurers to con-tact claimants after receiving notice of a request for neutral evaluation and requested a seven day time period instead. “A lot of times policyholders are repre-sented by a public adjuster or plaintiff’s attorneys and when insurance company [representatives] have to contact a policy-holder and then go through an attorney or adjuster three days is just too short,” said Katrina Calloway, general counsel for FIC. Tom Valentine, senior attorney for DFS, rejected this request, saying a seven day waiting period would eat too much into the time allowed to resolve the sinkhole dispute (14 days). The parties ultimately compro-mised on changing the limit to five days.

Calloway also requested the new sink-hole rules include additional language stat-ing that if all time periods are not complied with the request for a neutral evaluation would not be invalidated. She said a lack of such language could create a situation where a policyholder or attorney could try to get out of the neutral evaluation process. “Our companies love neutral evaluation,” said Calloway. “Any kind of alternative dis-pute resolution mechanism helps decrease litigation and is good for the policyholder and is good for the insurance company.” DFS agreed to the request. The depart-ment also approved an FIC recommen-dation allowing any professionals that a neutral evaluator retains (building contrac-tors, geologists and engineers) to come and inspect the property as part of the dispute resolution process, not just neutral evalua-tors and the representatives of the insured. Other additions requested by FIC and incorporated into the revised rule included:• Allowing insurance companies to contact

policyholder representatives and not just the policyholder.

• Starting the neutral evaluation request process as of the date insurers receive notification from DFS, instead of the date DFS was first notified of the dispute.

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Peoplewill also work closely with Willis’s National Construction and Real Estate Practice to align resources across the firm’s global plat-form to deliver risk management options and services to local and national clients. Miami-based Zutel joins Willis from Marsh & McLennan Companies where he served as vice president. Prior to that, he worked at Brown and Brown of Florida. Hiram Marrero, national partner of Willis’s South Region, said the move will further elevate Willis’s position in this key market, where, “contractors and real estate developers are currently facing a rapidly evolving set of risks.”

Florida Association of Insurance Agents Elects New Officers, Board Members Florida Association of Insurance Agents installed new officers and board members at the 111th Anniversary Convention & Education Symposium, on June 20, 2015. Chip Greene, president and CEO of Jacksonville-based Greene-Hazel Insurance Group, was elected chairman of FAIA. Brian R. Scarborough, vice president and co-owner of Scarborough Insurance in Gainesville, was elected chairman-elect.Scarborough is the current Florida InsurPac chair. He also serves on the Finance, Audit, Good Works Fund and National Alliance Education committees. Douglass F. Wiles, president and owner of Herbie Wiles Insurance in St. Augustine, was elected vice-chairman. He currently chairs the Legislative Council and the Pay It Forward Task Force, and is a member of the Good Works Fund Committee. New elected board members, who will serve a three-year term, from 2015 to 2018, include: Karyn Roeling, president of Seibert Insurance Agency in Tampa; Robert K. Rollins, Jr., president of The Beacon Group in Boca Raton; and Garrett Butler, sales executive, Butler, Buckley Deets in Miami. Outgoing board members cycling off the board are: Frank Kowalski, Brendan Lynch, Sam Rogers, Jr., and Nicole Williams.

Zutel Appointed as SVP of Willis of Miami Willis North America, a unit of Willis Group Holdings plc, the global risk adviso-ry, re/insurance broking, and human capital and benefits firm, has appointed Fred

Zutel as senior vice president of Willis of Miami. In this role, Zutel will be responsible for business development throughout South Florida with a focus on serving the con-struction, surety and real estate sectors. He

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July 20, 2015 INSURANCE JOURNAL-FOCUS ON FLORIDA | 19www.insurancejournal.com

News & MarketsFlorida Study: Liability, Weather, Development Hamper Effective Wildfire Prevention

Forest managers would prefer to use prescribed burns every few years to

help prevent costly wildfires and rebuild unhealthy ecosystems, but hurdles like staffing, budget, lia-bility and new develop-ment hinder them, a new University of Florida study shows. Fighting wildfires is costly. The U.S. gov-ernment now spends about $2 billion a year just to stop them, according to the National Interagency Fire Center. That’s up from $239 million in 1985. Leda Kobziar, an associate professor of fire science and forest conservation in UF’s School of Forest Resources and Conservation, led a web-based survey of 523 public and private land managers across Region 8 of the U.S. Forest Service, which consists of 13 Southern states, including Florida. She and her colleagues wanted to see whether front-line experts think prescribed burns prevent wildfires and maintain vegetation and healthy eco-systems. And if they do, what are the cir-cumstances under which such burns work best. As it turns out, prescribed burns should be done every few years to prevent wild-fires or reduce their severity, depending on weather and the type of ecosystem land managers are trying to protect, according to the survey. “Although managers reported increases in prescribed fire use in the South over the last decade, these increases have attenuated in the last five years,” Kobziar said. Public land managers said burning can be limited by staffing and budget, while private land

managers were more concerned about liability. “Even though prescribed burns cannot prevent all wildfires, survey respon-dents agree that regular burning helps

reduce wildfire intensity and severity, and therefore cuts costs and risks for fire-fighters and the public.” According to the survey, prescribed burns are conducted to restore unhealthy ecosystems. A beneficial prescribed burn can minimize flammable materials and the spread of pest insects and disease. It can also improve habitat for

threatened and endangered species, recycle nutrients back to the soil and promote veg-etation growth. As time passes, prescribed burns lose their effectiveness, according to the UF study. If forest managers wait five years or more between prescribed burns, only 10 percent said they saw reductions in wild-fire in pine forests. But forest managers can’t do prescribed burns as often as they’d like because of con-straints such as weather and smoke man-agement, said Kobziar, an Institute of Food and Agricultural Sciences faculty member. Another hurdle is the proximity of com-mercial and residential areas to forests. Private forest managers cite liability as an impediment to more prescribed burns. Although many Southern states offer liability protection for burn managers, pri-vate landowners remain concerned about potential costs of smoke-related incidents. Although less than .01 percent of pre-scribed fires escape, such concerns force private contractors to purchase prescribed burning insurance, which can cost $1,000 to $10,000 annually, or up to $700 per burn, according to Kobziar. Still, given the critical nature of pre-scribed burning for maintaining fire-adapt-

FOCUS ON FLORIDA

Land managers are seen trying to contain a fire. (UF/IFAS file photo)

National Hurricane Center, Florida University Launch Website in Spanish

The National Hurricane Center and Florida International University are

launching a new Spanish-language website for hurricane preparation. The website will include infor-mation on hurri-cane science, resi-dential mitigation strategies, preparedness, and announcements, including tropical cyclone advisories. The six-month Atlantic hurricane season started June 1. It’s expected to be slower than an average season, with six to 11 named storms. Predictions for a storm’s path have improved significantly over the last couple decades, narrowing the so-called “cone of uncertainty” that influences preparations. However, forecasters have made little head-way when it comes to improving predic-tions for how strong a tropical storm will become. Researchers have a new lab that allows them to generate tropical storm conditions with the flip of a switch that will be vital to making storm intensity forecasts better.

ed ecosystems across the South, the benefits outweigh the costs, according to survey responses. As one manager said, “Prescribed burning is the most important forest management tool we have.” Kobziar tries to help fire managers use prescribed burns through the Southern Fire Exchange, www.Southernfireexchange.org. The portal includes resources to help land managers predict and thereby, better man-age, potential smoke impacts, she said. Kobziar’s study is published online in the journal Forests.

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Insurance Journal 2015 Florida Supplement 2015-07-20