Florida Cabinet Meeting Review

On Thursday, January 31, 2008, a member of this Firm attended a meeting of the Florida Cabinet where several insurance-related matters were considered.

Below is a review of the relevant activities and actions that took place during the meeting.

Office of Financial Regulation

The Cabinet approved for Final Adoption amendments to Rule Chapter 69V-40, F.A.C., relating to mortgage brokering and lending. The Proposed Rule implements and reflects statutory changes, as well as clarifies and streamlines the Rule. Following the adoption of this Rule, Alex Sink, Florida’s Chief Financial Officer (“CFO”) discussed current federal investigations relating to the subprime mortgage lending crisis and queried Bill McCollum, Florida’s Attorney General (“AG”) about his related investigation activities. AG McCollum noted that his office has 21 open cases relating to fraudulent foreclosure methods used by some unscrupulous companies. The AG also has subpoenaed several records from Countrywide regarding potentially misleading statements made by the company. The AG also stated that more subpoenas will be forthcoming.

Office of Insurance Regulation

The Cabinet approved for Final Adoption one Rule presented by Florida Office of Insurance Regulation (“OIR”) Commissioner Kevin McCarty relating to health care provider forms. The Rule adopts the Personal Injury Protection Health Care Provider Certification of Eligibility Form as required by amendments to Section 627.736 F.S. This Form will be used by specified health care providers in connection with Personal Injury Protection claims effective January 1, 2008.

State Board of Administration

Following discussion and debate, the Cabinet approved several items related to requests for an interest rate exemption on tax-exempt bonds. Florida Statutes set a maximum rate (bond buyer index plus three percent) at which certain bonds may be sold. However, the market may require these bonds to be sold above the statutory maximum level. This practice has been used in the past, at which Governor Charlie Crist expressed concern, inasmuch as selling bonds above the statutory maximum rate could make the purchasing of land more expensive. The AG and CFO spoke favorably on a waiver to enable necessary community development projects to move forward without undue delay.

The Cabinet approved a request for authority to file a Notice of Proposed Rulemaking for the five Florida Hurricane Catastrophe Fund (“FHCF”) Rules listed below:

• 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 Proposed Rules provide for an increase in re-submission fees from $1,000 to $2,000 that insurance companies are required to pay when they need to amend FHCF submissions.

Governor Crist asked a series of questions regarding the use of the increased revenue that would be generated.

Senior FHCF Officer Jack Nicholson stated that the fee increase is necessary to cover the costs of staff time as well as act as a deterrent to insurance companies so that they will file accurate submissions the first time.

The Cabinet was provided with an update on the Local Government Investment Pool (“LGIP”). The Invitation to Negotiate for Money Market Investment Services is moving forward. Pending approval from SBA Interim Executive Director General Bob Milligan, Federated was selected. Ultimately, Federated was selected because it provided the lowest fee structure. The permanent SBA Executive Director search is also moving forward. A search firm has been selected and it will submit five names for the Search Committee to consider. Then, the Search Committee will submit two names for the SBA to consider. It is anticipated that the position will be filled in approximately five months.

Finally, the Cabinet was briefed on the activities of the SBA Audit Committee, which has started the process of procuring an independent firm to audit the SBA activities. The scope of the audit will include the LGIP, FHCF, Citizens Insurance Corporation, the Pension Fund, and others. A complete report is anticipated on March 31, 2008.

Following the presentations by the SBA, the Cabinet Meeting concluded.

To view a copy of the Cabinet Meeting Agenda, click here.

To view a copy of the Office of Financial Regulation Agenda, click here.

To view a copy of the Office of Insurance Regulation Agenda, click here.

To view a copy of the SBA Agenda, click here.

Should you have any questions regarding the above information, please feel free to contact this office.

 

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