Cabinet Meeting Report: November 17

The Florida Cabinet met yesterday, November 17, 2009, to consider various financial and insurance-related matters as part of its regular agenda.  The following is a brief summary of the discussions and actions that occurred during the meeting.  To view the complete meeting agenda, click here.

 

Florida Office of Insurance Regulation (“OIR”)

Prior to reviewing the OIR agenda items, Florida Insurance Commissioner Kevin McCarty briefed Cabinet members on continuing discussions with State Farm Florida Insurance Company (“State Farm”) regarding its proposed withdrawal from the Florida property insurance market.  Commissioner McCarty said he is optimistic that a “trimmed down” State Farm may maintain some of its Florida property insurance business.  A scheduled hearing on the proposed withdrawal plan has been postponed in the hope that State Farm and the OIR can reach a favorable resolution. 

The Cabinet then reviewed and approved the following OIR agenda items:

• Final Adoption of Amendments to Proposed Rule 69O-156 Part 1 Medicare Supplement Insurance

On September 24, 2008, the National Association of Insurance Commissioners (“NAIC”) adopted revisions to the NAIC Model Regulation to Implement the NAIC Medicare Supplement Insurance Minimum Standards Model Act.  The revisions included major changes to Medicare Supplement plans and benefits that initially had been approved by the NAIC in March 2007 and subsequently authorized by the Medicare Improvements for Patients and Providers Act of 2008.  In addition, the model revisions contain changes required by the Genetic Information Nondiscrimination Act of 2008.  States are required to adopt the NAIC model revisions in order to continue to regulate the Medigap market.  (Note:  Medicare supplement plans are commonly referred to as Medigap.) 

• Final Adoption of Amendments to Proposed Rule 69O-137.001 Annual and Quarterly Reporting Requirements

Florida law requires every authorized insurer to file annual and quarterly statements of its financial condition with the OIR. To allow uniformity in filing, the Florida Legislature permitted the Financial Services Commission to adopt the NAIC-approved form for financial statements.  With the Cabinet’s approval today, the existing Rule was amended to adopt the NAIC’s 2009 annual and quarterly statement instructions.  The Rule also was amended to adopt the 2009 NAIC Accounting Practices and Procedures Manual.  The 2009 versions of these manuals are the most recent and will replace the current Rule that adopted the 2008 version.

• Final Adoption of Amendments to Proposed Rule 69O-138.001: NAIC Financial Condition Examiners Handbook

Florida law requires the OIR to examine the affairs, transactions, accounts and records of authorized insurers.  It also allows the Financial Services Commission to adopt the NAIC Financial Condition Examiners Handbook in order to facilitate uniformity in examinations and reduce the frictional costs of doing business in Florida.  The existing Rule was amended to adopt the 2009 NAIC Financial Condition Examiners Handbook.  The now-previous Rule adopted the 2008 version.

• Publication of Proposed Rule 69O-170.0155 Form OIR-B1-1655 Notice of Premium Discounts for Hurricane Loss Mitigation

Florida law requires the OIR to adopt a form to be used by insurers to notify applicants and policyholders about premium discounts for actions they have taken to mitigate the impact of hurricanes on their property.  Proposed amendments to the Rule would adopt a revised version of existing Form OIR-B1-1655, which is entitled “Notice of Premium Discounts for Hurricane Loss Mitigation.”  Most recently revised in July 2007, the Form would be updated to reflect changes to the My Safe Florida Home program and the collective and applicable experiences of the OIR, insurers and consumers with the form since its last revision.

• Publication of Proposed Rule 69O-170.0155; Form OIR-B1-1802 Uniform Mitigation Verification Inspection

Amendments are proposed to the existing Rule that would adopt revised versions of Form OIR-B1-1802, which is entitled “Uniform Mitigation Verification Inspection Form.”  Most recently revised in July 2007, the Form is being updated to reflect recent changes to the My Safe Florida Home program and the experience of the OIR, insurers and consumers with the Form since its last revision.

• Publication of Proposed Rule 69O-236.001 Annual Report Card

Florida law requires the Florida Insurance Consumer Advocate’s office to prepare an annual report card for each authorized personal residential property insurer.  The report card would use a form and a letter-style grading scale developed by the Financial Services Commission. The proposed Rule outlines the procedure by which insurers would be graded and adopts the form on which the results would be presented.

• Approval for the OIR to contract with the American Actuarial Consulting Group, LLC to Conduct the Workers’ Compensation Peer Review

Florida law requires that the Financial Services Commission contract–at least once every other year–for an independent actuarial peer review and analysis of the ratemaking processes of any licensed rating organization that makes rate filings for workers’ compensation insurance in Florida.  The National Council on Compensation Insurance is responsible for collecting statistical information and making workers’ compensation rate filings on behalf of Florida’s insurers.  By law, the contract requires the submission of a final report to the Financial Services Commission, the President of the Senate, and the Speaker of the House of Representatives by February 1, 2010.  Ten responses were received by the OIR to its recent request for proposal.

 

Florida State Board of Administration (“SBA”)

SBA Executive Director Ash Williams reported on the status of Florida’s Local Government Investment Pool (“LGIP”) and a recent inquiry by the Securities and Exchange Commission (“SEC”) into related liquidity issues resulting from the LGIP’s risky investments that ultimately caused the LGIP to temporarily shut down.  The Cabinet members all stressed the importance of being notified about these types of matters in a timely manner.

An update was given on the SBA’s ethics policies and related procedures.  The Financial Services Commission is directing the SBA to include additional disclosure requirements for “placement agent” marketing firms that do business in Florida.   The disclosures would include these firms’ fees.

 

Florida Office of Financial Regulation

Florida Office of Financial Regulation Commissioner Tom Cardwell reported on the status of Florida’s small businesses and the banks that lend to them.  He noted that more banks are expected to fail this year, as well as in 2010.  While small business loans have diminished, it is not because banks are unwilling to lend, but because of a lack of demand.

 

The Florida Financial Services Commission (“FSC”) comprises the Governor and Cabinet (Governor Charlie Crist, Attorney General Bill McCollum, Chief Financial Officer Alex Sink and Commissioner of Agriculture Charles H. Bronson).  The FSC regulates the banking, securities and insurance industries and appoints the officials who oversee the Office of Financial Regulation and the Office of Insurance Regulation, which are administratively housed in the Florida Department of Financial Services, but report directly to the FSC.  For more information on the FSC, click here.

 

Should you have any questions or comments, please contact Colodny Fass.

 

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