Cincinnati Rate Hearing Recap

On Tuesday, September 18, 2007, this office attended a public rate hearing for Cincinnati Insurance and Cincinnati Indemnity Companies (“Cincinnati”) in Tallahassee, Florida. 

Representatives that were present from the Florida Office of Insurance Regulation (“OIR”) included Belinda Miller, Deputy Commissioner; Michael Milnes, Deputy Director, Property and Casualty Product Review; Robert Lee, Actuary; and C. Khai Patterson, Assistant General Counsel. 

Ms. Miller opened the meeting and stated that Cincinnati is seeking a statewide average rate increase of 37.5 percent for its homeowners policies and 13.5 percent for its dwelling fire policies.

The OIR panel and Cincinnati representatives began an open dialogue following brief introductory remarks by the Cincinnati representatives. 

It was noted that Cincinnati writes the majority of its business in Sarasota, Collier and Manatee counties and the OIR expressed its concern that the average increase in those counties is over 45 percent.  OIR also expressed concerns that Cincinnati is not actively writing new business at this time. 

The representatives from Cincinnati indicated that they would write new business for existing policy holders.  For example, a Cincinnati policyholder who has automobile insurance only would be considered for a homeowners policy.  The OIR stated that this practice could be considered a new underwriting guideline, and thus, subject to a filing with OIR. 

The OIR also stated concerns about the significantly higher rate increase for homeowners policies compared to dwelling fire policies.  Cincinnati indicated that this was because wind does not have as significant an impact on dwelling fire as it does for homeowners policies. 

Next, there was discussion regarding the use of the projected savings on reinsurance rates from the State’s increase in the Florida Hurricane Catastrophe Fund (“FHCF”).  The OIR was concerned that Cincinnati was not complying with the requirements of House Bill 1A because it did not purchase coverage from the FHCF.  Cincinnati stated that it used those projected savings in its rate filing even though it is not actually realizing those savings because its filing was made prior to the effective date of House Bill 1A.

Following the discussion, a representative from the Florida Insurance Consumer Advocate’s Office testified that they supported the efforts of the OIR in closely-scrutinizing rate filings and that they will continue to monitor the progress of this filing. 

The OIR indicated that it will take the comments from this hearing into consideration and make a determination in the near future.

Please note that we have attached a copy of the Public Hearing Agenda for your review.

The above material is intended to be a brief summary of the activities that took place during the public hearing and is not intended to be a comprehensive analysis of the issues contained therein.  Please feel free to contact this office should you have any questions or would like additional information regarding this matter.