Florida Cabinet Meeting Report: April 15

On Tuesday, April 15, 2008 the Florida Cabinet (“Cabinet”) met in Tallahassee, Florida and discussed several insurance-related matters as part of its regular agenda.

The following is a brief summary of the Cabinet discussions and actions on pertinent matters. To view a copy of the complete meeting agenda, click here.

Florida Office of Insurance Regulation (“OIR”)

Florida Insurance Commissioner Kevin McCarty presented the OIR agenda.

• The Request for Approval to adopt proposed Rule 69O-204.010: Viatical Settlements and the forms associated with the Rule were withdrawn.

• The Cabinet approved amendments to Rule 69O-149.003(2)(b)4.a.: Medicare Supplement Rate Collection. The proposed Rule change is being made to adopt a new Medicare rate filing collection system that would enable the operation of a search and comparison tool established in 2007. The search and comparison tool will be posted to the OIR’s consumer Web site and allow consumers to shop and compare Medicare supplemental products from different insurers.

State Board of Administration (“SBA”)

SBA Interim Executive Director General Bob Milligan presented the SBA agenda.

Approval to adopt proposed Rule 19-8.030: Insurer Responsibilities was approved by the Cabinet with no objection.

General Milligan also requested authority to file a Notice of Change for the proposed Florida Hurricane Catastrophe Fund (“FHCF”) Rules listed below and to file these Rules for adoption as amended:

• Proposed changes to Rule 19-8.010: Reimbursement Contract include general year information updates

• Proposed changes to Rule 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 include minor technical changes

• Proposed changes to Rule 19-8.013: Revenue Bonds Issued Pursuant to Section 215.555(6), F.S. include minor technical changes

• Proposed changes to Rule 19-8.029: Insurer Reporting Requirements include conformity changes to the form included with this Rule

• Proposed changes to Rule 19-8.030: Insurer Responsibilities include setting the filing date for participation in the optional level of FHCF coverage at June 1 of each year, and increasing the fee for resubmitted data to $2,000

The proposed Rule changes were approved by the Cabinet.

Concern was expressed by Cabinet members regarding whether the changes to Rule 19-8.030: Insurer Responsibilities would require the FHCF to hire more employees to deal with the increased resubmission fees, and whether current employees would receive a raise due to these increased fees. General Milligan responded that the resubmission fee change is intended to lower the number of data resubmissions received by the FHCF, and thus would not require more staff members.

General Milligan also requested approval of the proposed 2008/2009 Reimbursement Premium Formula and proposed 2008 Rates, which were approved by the Cabinet after lengthy discussion.

Concern was expressed by Governor Charlie Crist and other Cabinet members about the proposed 1.29 percent increase in rates for the mandatory layer of FHCF coverage. Senior FHCF Officer Jack Nicholson stated the increase was due to the overall increased risk rate for the State of Florida and the addition of a fifth rating model used this year. The fifth model, the Florida Public Hurricane Loss Model, does not take into consideration commercial residential buildings like condominiums.

General Milligan requested authority to file a Notice of Proposed Rulemaking for Rule 19-8.028: Reimbursement Premium Formula, and approval of the Rule if a hearing is not requested. The Cabinet approved the Notice and Rule with no discussion.

General Milligan requested authority to amend the approved Fiscal Year 2007-2008 SBA operating budget to include an increase of $400,000 to cover local government investment pool dealings. The amendment was approved with no discussion.

General Milligan gave an Interim Executive Director Update. The SBA has received a draft copy of a performance audit completed by an independent company. Most of the issues uncovered by the audit relate to compliance, and the SBA is working to correct those issues.

The SBA also is working to investigate companies that sell insurance to the State of Florida, but no subpoenas have yet been submitted. Governor Crist urged General Milligan to use the SBA’s subpoena power if needed to gain information originally requested in December, 2007.

The meeting was then adjourned.

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