Florida Cabinet Meeting Report: Feb. 26

On Tuesday, February 26, 2008, the Florida Cabinet held a meeting and discussed several insurance-related matters. Following several special recognitions, which included “Prescribed Fire Awareness Week” by Florida Commissioner of Agriculture and Consumer Services Charles Bronson, the Cabinet proceeded directly to the agenda, a copy of which may be viewed by clicking here.

 

Florida Office of Insurance Regulation (“OIR”)

Florida Insurance Commissioner Kevin McCarty presented the following three items on behalf of the OIR for consideration by the Cabinet, which met as the Florida Financial Services Commission.

All OIR items were approved:

• Approval for publication to repeal Rule 69P-2.001, .002, Commercial Property JUA, Repeal, F.A.C. This Rule repeals the Plan of Operation of the Property and Casualty Joint Underwriting Association because it is obsolete.
• Approval for publication of Amendments to Rule 69O-157.302, .303, .304; Long-Term Care, Rates, F.A.C. Section 627.9407(7)(c), Florida Statutes, provides that rates charged to an insured for renewal of an existing long-term care insurance policy may not exceed the price the insurer charges for newly-issued policies with similar benefits. The problem this statute addresses relates to “closed blocks” of business. A closed block of business occurs when a particular type of policy is no longer being sold to new customers. This statute protects those insureds in that closed block from excessive rate hikes by precluding an insurer from having higher renewal rates for such closed blocks of business than the rates it charges for similar policies to new policyholders. For insurers that are not currently issuing new policies, the statute requires the OIR to establish and publish a “new business rate,” above which the renewals cannot be priced. The new business rate is published annually by the OIR and is determined by reviewing the past year’s premium of those carriers which represent 80 percent of the market share of carriers currently selling long-term care products. For example, this means that a carrier may not raise its rates on a policy first purchased in 1990 to a premium level that exceeds the cost of a similar policy which is purchased as a new product in 2007.
• Approval for publication of Amendments to Rule 69O-203.210; Forms Incorporated by Reference; DMPO; Annual Report; F.A.C. Pursuant to Section 636.218, Florida Statutes, each discount medical plan organization (“DMPO”) must file an annual report with the OIR within three months after the end of each fiscal year. Such reports must be filed on forms prescribed by the Financial Services Commission. The Rule adopts the form to be used by DMPOs in filing annual reports.

Florida Department of Highway Safety and Motor Vehicles (“DHSMV”)

An insurance-related discussion arose during the DHSMV agenda in response to a question by Florida Chief Financial Officer (CFO) Alex Sink regarding whether there were any issues following the repeal and re-enactment of Florida’s Motor Vehicle No-Fault statues.

DHSMV Executive Director Electra Bustle noted that her office has not experience any major problems. She also stated that the DHSMV suspended 24,000 licenses in January related to non-compliance with the new laws and it expects to effect approximately the same amount of suspensions during February.

 

Florida State Board of Administration (“SBA”)

Representatives from the SBA provided a brief update on the Local Government Investment Pool (“LGIP”). They reviewed a list of steps that the SBA is taking to ensure that the LGIP is not threatened as it was during late 2007. Those steps include: improved communications, total transparency, and continued State involvement.

The SBA Audit Committee reported that it selected a law firm and accounting firm to provide services for the LGIP. The Committee expects to have a draft audit report completed by April 15, 2008.

To view the SBA agenda, click here.

The Cabinet meeting adjourned following the SBA report.

 

Should you have any questions or comments, please feel free to contact this office.

 

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