Florida Farm Bureau Rate Hearing Report: July 30

On Wednesday, July 30, 2008, the Florida Office of Insurance Regulation (“OIR”) held a public rate hearing regarding a 28.4 percent overall statewide rate increase requested by the Florida Farm Bureau Casualty and General Insurance Companies (“FFB”). 

The officials present from the OIR were Steve Parton, General Counsel; Belinda Miller, Deputy Commissioner; Bob Lee, Actuary; and Stephen Thomas, Assistant General Counsel.  FFB officials providing testimony were FFB Vice President of Finance, Michael Hill, and Missy Shelley, an Actuary.

FFB was questioned on its use of short-term models in determining the requested rate increase.  FFB indicated that models not approved or considered by the Florida Commission on Hurricane Loss Projection Methodology were used as factors in determining FFB rates.

Mr. Lee asked a series of questions about reinsurance, including FFB’s use of the Florida Hurricane Catastrophe Fund (“FHCF”) coverage.  The OIR officials were concerned about FFB’s procedures and decisions regarding the purchasing of reinsurance and the effect of these decisions on FFB’s requested rate increase.  Additional inquiries were made about specific provisions in the FFB filing, including model adjustments in factoring deposit premiums. 

Filing discrepancies and inconsistencies also were pointed out by the OIR.   Ms. Shelley responded on several occasions that she needed documentation to justify the numbers, which she did not have at the hearing. 

Mr. Lee also asked about several rule requirements applicable to the filing.  Ms. Shelley noted that she would have to review the rules to confirm the filing contained all of the necessary information.

Mr. Parton interrogated FFB regarding savings that “should have been passed on to consumers.”  He noted that this hearing, “was déjà vu all over again,” in reference to FFB’s requested rate increase filed approximately one year ago.  That request was denied by the OIR. 

Citing concern about judgments used and subjectivities that led to the requested rate increase, Mr. Parton also expressed concern with the use of short-term models.  Ms. Shelley noted that the use of the FHCF coverage and savings presumed by the increased FHCF coverage availability was used in this rate filing, but that other factors necessitate the requested rate filing.           

Consumer Advocate and Actuary Steve Alexander asked FFB officials a series of questions regarding potential impacts on agent commissions, underwriting philosophies, model usage, reinsurance and surplus share treaties if the rate filing were not to be approved.  Further discussion included FFB’s decision making process in purchasing reinsurance, the differences in casualty and general company underwriting guidelines, and modeling procedures. 

Ms. Miller provided closing remarks and noted that the record will be closed on this matter. 

 

Should you have any questions, please feel free to contact Colodny Fass.

 

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