Legislative Budget Commission Authorizes OIR Direct Payment to Third-Party Examiners

To address an increased workload of insurer financial examinations and enable the transition to a risk assessment approach as required for National Association of Insurance Commissioners accreditation, the Florida Office of Insurance Regulation (“OIR”) requested increased budget authority in the Insurance Regulatory Trust Fund from Florida’s Legislative Budget Commission at its meeting on September 10, 2008.

The recommendation from the Office of Florida Governor Charlie Crist, which was to increase OIR budget authority by $4,701,763 in the Insurance Regulatory Trust Fund ($4,651,763 in Property and Casualty Examinations, and $50,000 in Life and Health Examinations), was approved.

As part of this transition, the OIR’s Compliance and Enforcement Division will pay third-party vendors for financial examination services.

Prior to the 2007 Legislative Session, the OIR was required to obtain consent from an insurer prior to contracting with audit staff to perform an examination. The insurer reimbursed OIR for examinations conducted by OIR staff.  For contracted examinations, the insurer paid the contracted firm directly.

New legislation passed in 2007 now authorizes the OIR to contract directly for examinations and requires the insurer to remit payment for the contracted examination directly to the OIR instead of the contracted firm.

This change is expected to eliminate potential conflict of interest issues and directs the flow of cash through the State Treasury.  Inasmuch as the funds are deposited into the Insurance Regulatory Trust Fund, the OIR requires budget authority to remit payment to contracted examination firms.

The request was made as an interim measure to allow the OIR to address an increased examination workload.

 

Should you have any comments or questions, please do not hesitate to contact Colodny Fass.

 

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