OIR Rule Hearing Report: Insurer Exams by Non-Employees
Nov 12, 2008
On Wednesday, November 12, 2008 the Florida Office of Insurance Regulation (“OIR”) held a public hearing on proposed Rule 690-138.005 (4) entitled “Exams by Non-Employees.”
OIR Director of Property and Casualty Financial Oversight Robin Westcott and Assistant General Counsel Bob Prentiss presided over the hearing.
The OIR is promulgating this Rule pursuant to Florida law regarding examinations of licensees to confirm compliance with the Insurance Code and related regulations. Pursuant to 2007 legislation, these examinations can be performed by OIR employees or by contracted outside entities.
Before the 2007 change, the contract terms with the contracted third party company could be negotiated by the OIR and insurer under examination. Under the new law, the examinations are to be contracted only between the third party examiner and OIR. The insurer no longer plays a role in contract negotiation.
Florida law further states that the Financial Services Commission shall adopt Rules providing that examination of an insurer may be conducted by independent (non-employee) certified public accountants, actuaries, investment specialists, information technology specialists, and reinsurance specialists meeting criteria specified by the Rule.
The Rule provides that the rates must be consistent with those charged in the industry, that the firm selected by the OIR to conduct the examination must not have any conflict of interest, and that the insurer being examined must make payment for the examination in accordance with the rates and terms established by the OIR and examination firm.
The proposed Rule includes criteria for reinsurance specialists and the application process for companies that want to perform examinations. The Rule also specifies remuneration.
OIR representatives indicated that amendments to the Rule are being proposed to address concerns raised by the Joint Administrative Procedures Committee. After the proposed Rule is amended, a Notice of Change will be issued. Based on comments received at the hearing, OIR representatives expect the amended proposed Rule to be published in approximately three weeks. Following publication, an opportunity for interested parties to provide additional comments will be given.
The OIR’s most recent version of the proposed Rule is attached for your review. However, this will not be the final Rule draft, inasmuch as the amendments have not yet been made.
Colodny Fass will continue to monitor the issue and provide additional information as soon as it becomes available.
Please feel free to contact Colodny Fass if you have any questions or would like additional information regarding this matter.
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