Florida Cabinet Meeting Report: July 28

The Florida Cabinet held a regularly scheduled meeting on July 28, 2009, during which the following insurance-related matters on the agenda were reviewed and acted upon:

 

Florida Office of Insurance Regulation (“OIR”)

Florida Insurance Commissioner Kevin McCarty presented the OIR agenda.  The following items were approved without discussion:

• Publication of Proposed Rule 69O-138.001; NAIC Financial Condition Examiners Handbook, Adopted
  • Florida Law requires the OIR to examine the affairs, transactions, accounts and records of authorized insurers. The law also allows the Florida Financial Services Commission (comprised of Cabinet Members) to adopt the National Association of Insurance Commissioners (“NAIC”)  Financial Condition Examiners Handbook by Rule in order to facilitate uniformity in examinations and reduce the “frictional” costs of doing business in Florida.  The proposed Rule would adopt the 2009 NAIC Handbook. The current Rule adopted the 2008 version

 

• Publication of 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 same form for financial statements that has been approved by the NAIC. Thus, the proposed Rule would adopt the 2009 NAIC manuals for annual and quarterly statements, along with the 2009 NAIC accounting practices and procedures manual. If adopted, the Rule would replace the 2008 version.

 

• Citizens Property Insurance Corporation  (“Citizens”) Plan of Operation
  • A Citizens representative was on hand to briefly explain minor legislative changes to Citizens’ operations that were passed within Senate Bill 2860 during the 2008 Legislative Session. (HB 1495 was not discussed.).  To view the Plan of Operation, click here (begins on Page 12).

 

Following the presentation and approval of the OIR agenda items, Florida Chief Financial Officer Alex Sink brought up a concern relating to new capital entering the Florida insurance market that had been expressed in a letter she had received from Senator Mike Bennett.  The letter and accompanying chart, which can be viewed by clicking here, addressed the $4 billion in new capital that has been infused into Florida by 40 different new insurers.  She noted that the letter also said that Florida domestic insurance companies are writing $328 million in new business and surplus lines insurers are writing over $3 billion.  CFO Sink requested Commissioner McCarty to return at next Cabinet meeting and further clarify the breakdown of new capital and report on whether it has been generated by commercial, commercial residential or residential policies.

 

Florida State Board of Administration (“SBA”)

SBA Executive Director Ash Williams presented his organization’s agenda items.  Of note, the SBA Board of Trustees (Governor Charlie Crist, CFO Sink and Attorney General Bill McCollum) approved the re-appointment of Randy Dumm, Ph.D as Chair of the Florida Commission on Hurricane Loss Projection Methodology for the 2009-2010 year.

Mr. Williams also updated the SBA on the status of the Florida Hurricane Catastrophe Fund (“FHCF”).  Partially as a result of a $2 billion reduction in the Temporary Increase in Coverage Limits layer from the 2009 passage of HB 1495 and a $5 billion increase in bonding capacity, the FHCF is $11 billion stronger than was first reported this year.

 

Florida Department of Revenue (“DOR”)

Among the regulations that were finalized and adopted as part of the DOR agenda were proposed Insurance Premium Tax Rules that administer 2007 and 2008 laws applying this tax to the self-insurance funds of not-for-profit corporations and public housing authorities.

 The finalized Insurance Premium Tax Rules also:

• Implement recent litigation providing that dividends used by a policyholder to buy more paid-up insurance are not taxable as additional gross receipts of the insurance company;
• Implement the statutory criteria that must be met by taxpayers in order to use the exceptions granted by law for the standard insurance premium tax salary credit;
• Add information about statutory credits associated with the Florida Life and Health Insurance Guaranty Association refund to the DOR;
• Explain that Florida law holds open the statute of limitations on insurance premium tax returns when there are subsequent changes to:
  • Assessments paid for unemployment compensation; and/or
  • Corporate income taxes paid (Rule 12B-8.001, F.A.C.).

 

To view the complete July 28 Cabinet agenda, click here.

The next Cabinet meeting is scheduled for August 11, 2009.

 

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

 

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