FLORIDA PROPERTY AND CASUALTY ASSOCIATION HOMEOWNERS’ DIVISION MEMBER FEEDBACK REQUESTED ON STATEMENT OF ESTIMATED REGULATORY COSTS
Dec 29, 2010
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Attorney-Client Communication
FLORIDA PROPERTY AND CASUALTY ASSOCIATION (“FPCA”) HOMEOWNERS’ DIVISION MEMBER FEEDBACK REQUESTED ON STATEMENT OF ESTIMATED REGULATORY COSTS
The Florida State Board of Administration “(SBA”) has proposed the following Rules relating to the Florida Hurricane Catastrophe Fund (“FHCF”):
- Rule 19-8.029: Insurer Reporting Requirements – adopts the 2011/2012 Data Call and the 2011/2012 Interim and Proof of Loss Report forms.
- Rule 19-8.030: Insurer Responsibilities – adopts the 2011/2012 Interim and Proof of Loss Report forms and the 2011/2012 Exposure and Loss Examination Advance Preparation Instructions.
Among other changes, these forms have been amended to require that, for purposes of a Loss Reimbursement Examination, the 172 participating FHCF insurers include documentation of the following information in their claim files:
- Amount of policyholder’s legal fees and/or public adjuster fees paid, if applicable;
- Payment history screen prints;
- All adjuster reports, including public adjuster reports, with estimate of losses.
This information must be available to the FHCF examiner, on site in either electronic or hard copy format, and must retained until the FHCF has completed its examination of the insurer and commutation for the contract year has been concluded (if applicable). Some insurers have indicated that the regulatory costs of complying with these new requirements, including programming expenses and workflow changes in claims processing, may be substantial.
The FPCA has requested a hearing regarding the proposed rules, which will be held on January 25, 2011. In addition, the FPCA may submit a challenge to the Statement of Estimated Regulatory Costs (“SERC”) that was prepared by the SBA for proposed Rule 19-8.029. This response would need to be submitted to the SBA by January 7, 2011.
Among other reasons, a Florida state agency must prepare a SERC for a proposed rule that is likely to directly or indirectly increase regulatory costs in excess of $200,000 in the aggregate within one year after its implementation. In addition, among other information, a SERC must indicate whether the proposed rule is likely to increase regulatory costs in excess of $1 million in the aggregate within five years after the implementation of the rule. If so, the rule must be submitted to the President of the Senate and Speaker of the House of Representatives at least thirty days prior to the next regular legislative session, and the rule must be ratified by the Legislature.
The SBA determined that no SERC was required for proposed Rule 19-8.030, so therefore, the SBA does not expect the regulatory costs for this proposed Rule to exceed $200,000 in the aggregate within one year of its implementation.
The SBA prepared a SERC for Rule 19-8.029 “in an abundance of caution” because it concluded that due to “minor programming changes” required by the amendments to the Data Call form, regulatory costs to the 172 participating insurers could potentially exceed $1,162 each, resulting in the $200,000 threshold being met. The Proof of Loss form and the Loss Examination Advance Preparation Instructions — not the Data Call form — implement the required documentation changes discussed above, so it appears that the SBA attributed no regulatory costs at all to compliance therewith.
Florida law permits a substantially affected person to submit, within 21 days of publication of the proposed rule notice, “a good faith written proposal for a lower cost regulatory alternative to a proposed rule which substantially accomplishes the objectives of the law being implemented. The proposal may include the alternative of not adopting any rule if, the proposal explains how the lower costs and objectives of the law will be achieved by not adopting any rule.”
In order to submit a timely, coordinated response on behalf of the FPCA, the following feedback must be provided to Katie Webb (kwebb@cftlw.com) as soon as possible (latest by Wednesday, January 6, 2011):
1) Anticipated regulatory costs to comply with Rule 19-8.029 and Rule 19-8.030 and
2) Alternative proposals that substantially accomplish the objectives of law being implemented, which is Florida Statutes section 215.555(2), (3), (4), (5), (6), (7), (10), (16), (17).
Upon the submission of the lower cost regulatory alternative, the SBA must revise its prior SERC and adopt the alternative or provide a statement of the reasons for rejecting the alternative in favor of the proposed rule. At least 45 days before filing the rule for adoption, an agency required to revise its SERC must provide the SERC to the person who submitted the lower cost regulatory alternative, among others. A substantially affected person may then seek an administrative determination of the invalidity of a proposed rule within 44 days after the revised SERC is made available.
Copies of the proposed rules and forms, and section 215.555, F.S. are attached. Please contact Katie Webb for additional information or assistance regarding this matter.
A conference call will be held to discuss this important matter on Monday, January 3, 2011 at 2:30 p.m. Please mark your calendars – call-in information to follow.
