Florida Office of Insurance Regulation Considers Fidelity National Property and Casualty Insurance Company Rate Increase Request

 

An average statewide rate increase filing of 28.1 percent by Fidelity National Property and Casualty Insurance Company (“Fidelity”) for its homeowners program was the subject of a public rate hearing held by the Florida Office of Insurance Regulation (“OIR”) today, May 30, 2013.

OIR officials presiding at the hearing were Property and Casualty Product Review Deputy Director Michelle Brewer, Actuary Ken Ritzenthaler and Assistant General Counsel Kenneth Tinkham. 

In opening the hearing, Ms. Brewer noted that its purpose is fact gathering, and that the proceedings are not intended to be adversarial, nor conclude in a determination on the filing.  

Following her comments, Fidelity representatives provided opening remarks, explaining that the company is interested in growing its participation in Florida.  In order to achieve this goal, Fidelity is requesting the rate increase to achieve actuarial soundness.  The increase, the representatives explained, is based on several factors, including sinkhole issues, updated model uses, managing general agency (“MGA”) fees, and others.

Mr. Ritzenthaler asked the Fidelity representatives a series of questions, to which the following information was ascertained:

• Fidelity’s filing includes a MGA fee of $25.00 per policy. Currently, Florida is the only state in which Fidelity does not charge an MGA fee. The company is paid 2.5 percent from the MGA fee to account for premium taxes expense on just the MGA fee, the need for which is to handle property inspections done by the MGA. Fidelity would not be able to eliminate the MGA fee from the filing.
• Fidelity’s mitigation credit data was noted to be trending downward. Mr. Ritzenthaler asked for it to be updated to include 2012 data.
• Fidelity’s annual loss trends were projected upward. Mr. Ritzenthaler noted that this seemed high and asked for updated data.
• Fidelity’s non-hurricane catastrophe factor was 3.9 percent. Fidelity representatives indicated that the ISO benchmark was used.
• Fidelity’s Florida Hurricane Catastrophe Fund (“FHCF”) reinsurance costs were established using premium charged by FHCF and model factors.
• Fidelity’s filing included a cap of 50 percent on any rate increase and 35 percent on any rate decreases for the wind portion of the filing.

Florida Insurance Consumer Advocate Robin Westcott was on hand to provide comments on Fidelity’s filing.  The company’s loss experience in Florida is improving overall based on fast-track data, she said.  Therefore, any rate filing would include these factors.  

Ms. Westcott expressed concerns with Fidelity’s additional MGA fee in the filing and its lack of transparency.   Further, reinsurance pricing is decreasing, so this should lead to a stabilization of rates.  This point does not appear to be reflected in the filing, she said.

The hearing adjourned following Ms. Westcott’s comments. 

The OIR advised that interested parties may review the details of the filing through its I-File Forms & Rates Filing Search by using the file-log # 13-07023.

To view the hearing agenda, click here.

 

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