Florida Office of Insurance Regulation Considers Castle Key Rate Increase Request
Jul 19, 2011
Today, July 19, 2011, the Florida Office of Insurance Regulation (“OIR”) held a public hearing on rate increase requests filed by Castle Key Insurance Company and Castle Key Indemnity (“Castle Key”) that average 31.2 percent and 35.7 percent, respectively.
OIR officials present at the hearing included Acting General Counsel Belinda Miller, Property and Casualty Product Review Director Richard Koon, Actuary Bob Lee, Assistant General Counsel Stephen Thomas and Assistant General Counsel Kenneth Tinkham.
Castle Key participants included Product Vice President Bonnie Gill, Senior Actuary Shantelle Thomas, Regional Counsel Robert Simmons and Associate Actuary Jamie Mills.
Actuary Steve Alexander and Florida Insurance Consumer Advocate Terry Butler represented the Office of the Florida Insurance Consumer Advocate.
Ms. Miller opened the hearing, stating that its purpose is to provide the opportunity for interested parties to discuss Castle Key’s rate filing. She added that the proceedings are not intended to be adversarial, and that holding a public hearing provides transparency in the filing process.
Ms. Gill provided an overview Castle Key and a brief history of its previous filings with the OIR. She stated the main reason for the companies’ rate increase request was due to the impact of the new AIR Worldwide Corporation v12.0.1 hurricane model, along with insurance costs. She explained that, if it is approved, Castle Key plans to effect the increase over the course of two years.
In regard to the rate increase request, Mr. Lee did not think the fixed expense provision in Castle Key’s filing matched the increases requested, which are between 16.7 percent and 68.3 percent per county, statewide. He did not indicate whether he felt the requested rate increase was appropriate, but asked the Castle Key representatives what rate changes they plan to make in light of the provisions of SB 408.
Ms. Gill stated that Castle Key is not sure whether there will be any rate increases pursuant to SB 408, but that, right now, the companies are working on changing their contract language. Castle Key is not sure if it will ask for any future rate increases.
Mr. Alexander’s presentation indicated that Castle Key and Castle Key Indemnity are two of the most efficient and highest rated insurance companies in the State, according to AM Best. He did not agree with Castle Key’s two percent contingency provision or its 1.4 percent debt provision. Instead, he believed that both of these should be zero.
He also added that, according to A.M. Best, Castle Key has a high risk of ruin at 3.41 percent. As a result, Mr. Alexander recommended a 23.7 percent rate increase and agreed with the suggested two-year phase-in plan.
Ms. Miller and her staff indicated that, in making their decision, they will review all testimony and facts presented today. She did not say how long the record would remain open.
The hearing agenda is attached for review.
Should you have any questions or comments, please do not hesitate to contact Colodny Fass.
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