Florida Public Model Access Fee Increase Rule Hearing Report

The Florida Office of Insurance Regulation (“OIR”) held a Rule Development Workshop on August 20, 2009 regarding proposed Rule 690-170.0144, entitled “Public Hurricane Loss Projection Model Fee Schedule.”  

OIR Attorney Laura Parsons presided over the Workshop and provided brief opening comments before recognizing Florida International University Hurricane Center Director Dr. Shahid Hamid, who explained the proposed Rule.   Florida law affords access and use of the Florida Public Hurricane Loss Model (“Public Model”) to residential property insurers for the purpose of calculating rate indications in a rate filing, as well as for analytical purposes, including any analysis or evaluation of the Public Model required under actuarial standards of practice. The law also provides for the OIR to establish a related fee schedule for this access and use.

The proposed Rule would increase this fee, which is currently set at a base rate of $2,400 and augmented by a multiplier of .03 (3 cents for every 1,000 policies) for companies with up to 200,000 policies; .01 (1 cent for every 1,000 policies) for companies with an amount of policies between 200,000 and 400,000; and .005 (1/2 cent for every 1,000 policies) for companies with over 400,000 policies. 

The proposed new schedule would increase the base rate fee to $3,600 and add a multiplier of .04 for companies with up to 200,000 policies and .01 for companies with policies in excess of 200,000. 

For example, a company with 10,000 policies is paying $2,700 under the current fee schedule, but would pay $4,000 under the proposed fee schedule.  A company with 100,000 policies is paying $5,400 under the current schedule and would pay $7,600 under the new schedule. 

Dr. Hamid explained that the current fee schedule was based on assumptions, whereas the proposed fee schedule is based on actual experience.  The current fee schedule does not account for Public Model overhead, such as utility costs, legal expenses and other administrative costs.  Dr. Hamid noted that Florida International University cannot continue to subsidize Public Model runs in their current financial situation.

Following Dr. Hamid’s presentation, the Workshop concluded.  

The record will remain open through August 31, 2009 at 5:00 p.m. for written comments.  While a copy of the proposed Rule is not available at this time, the meeting notice, which includes hyperlinks to the previous Rule text, can be viewed by clicking here.   

An additional workshop or hearing is expected to be scheduled.

Should you have any questions or comments, please contact Colodny Fass.

To unsubscribe from this newsletter, please send an email to ccochran@cftlaw.com.