Florida Cabinet Approves Workers’ Comp Audit Rule; 2010/2011 Florida Hurricane Catastrophe Fund Reimbursement Contract Moves Forward

The Florida Cabinet held a regularly scheduled meeting today, January 26, 2010 in Tallahassee.   To view the complete agenda, click here.

The Cabinet members took action on the following insurance-related agenda items:

Florida Office of Insurance Regulation (“OIR”)

Florida Insurance Commissioner Kevin McCarty presented the OIR agenda.

Rule 69O-189.003 relating to Workers’ Compensation; Application and Audit Procedures was approved for final adoption without objection.  Under the new Rule, electronic signatures will be allowed in applications for workers’ compensation coverage, as well as in annual audits, as long as the electronic signature process complies with Florida’s Uniform Electronic Transaction Act.  Rule 69O-189.003 explicitly provides the procedures for audits required by the former Rule.  Further, it also raises the threshold for an onsite audit from $5,000 to $10,000.  Audits under $10,000 will be handled by mail.

Approval for publication was granted without objection for proposed Rule 69O-137.002 relating to the National Association of Insurance Commissioners’ (“NAIC”) Model Audit Rule.  Florida law requires the OIR to adopt rules “in substantial conformity with the 1998 Model Rule Requiring Annual Audited Financial Reports adopted by the NAIC, or subsequent amendments.”  Proposed Rule 69O-137.002 would amend the OIR’s current audit Rule to make it substantially conform to the NAIC’s version.  It has been determined that achieving interstate uniformity through conforming regulations reduces the cost of doing business in Florida.  Notwithstanding, substantial conformity to NAIC’s Model Audit Rule also is required for NAIC accreditation.

Proposed Rules 69O-157.302, .303, .304 relating to new business rates for long-term care insurance also were approved for publication without objection. This item pertains to Facility-Only Rates, Home Health Care-Only Rates and Comprehensive-Only Rates. Florida law requires that any premium increase for existing long-term care consumers should not result in a cost that exceeds the premium charged on a newly issued policy.  The law further provides that if an insurer is not issuing new coverage, the new rate will be calculated upon the new business rate of insurers that represent 80 percent of the carriers currently offering policies with similar coverage, as determined by the prior calendar year earned premium. Every year, the OIR surveys companies issuing new long-term care policies to determine the “new business rate.” The survey is categorized by geographical area and type of long-term care policy offered.

State Board of Administration (“SBA”)

SBA Executive Director Ash Williams presented the SBA agenda items.  The request for approval of authority for the Florida Hurricane Catastrophe Fund to file a Notice of Proposed Rule for the five Rules listed below was approved:

• 19-8.010 Reimbursement Contract
• 19-8.012 Procedures to Determine Ineligibility for Participation in the Florida Hurricane Catastrophe Fund and to Determine Exemption from Participation in the Florida Hurricane Catastrophe Fund due to Limited Exposure
• 19-8.013 Revenue Bonds Issued Pursuant to Section 215.555(6), F.S.
• 19-8.029 Insurer Reporting Requirements
• 19-8.030 Insurer Responsibilities

The Cabinet concluded the meeting following the SBA agenda. 

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