Recap: IDS Property & Casualty Public Rate Hearing

 

On Tuesday, November 06, 2007, a member of this Firm attended a public rate hearing by the Florida Office of Insurance Regulation (“OIR”) for IDS Property and Casualty Insurance Company (“IDS”).  Mike Milnes, OIR Deputy Director of Property and Casualty, presided over the hearing.  Also present from the OIR was Ken Ritzenthaler, Actuary and Rhoda Johnson, Senior Attorney. 

IDS requested a rate filing reflecting a 25.9 percent statewide average decrease.  This hearing was a true-up filing by IDS as required by House Bill 1A, using the presumed factors that were previously adopted by the OIR.  Mr. Milnes noted that the purpose of the presumed factors is to reduce rates.  He also noted that the actual filing is the basis by which a determination on the rates will be made, but public comment would still be taken.
           
Following opening remarks by Mr. Milnes, Larry Frazier, IDS Chief Financial Officer, provided the OIR panel with a history of IDS, explaining that IDS was previously a part of American Express.  IDS is the 42nd largest automobile writer in the U.S. and the 72nd largest homeowners writer.  The company currently writes in 43 states.  Following the passage of House Bill 1A, IDS was able to re-negotiate its reinsurance contracts and did so in a manner that reduced its costs.  Admittedly, the re-negotiation was unusual and not the industry norm.

Next, the OIR panel began a series of questions regarding the IDS filing.  Through the line of questioning, IDS testified that the HO-3 and HO-6 are the policies affected by the true-up filing.  The company also stated that it did not use the most current circular data for the filing.  Further, IDS did not include all of the analysis of its model formula.  This prompted the OIR panel to state that the filing may be inadequate. 

IDS testified that it is currently not writing any new business in Florida, but it may do so if this filing is approved.  The OIR panel expressed concerns because IDS also testified that certain expenses in the filing were for new business, even though it had testified to not writing new business.

The next line of questioning was related to reinsurance.  The OIR panel sought additional facts to justify the numbers that IDS provided in the filing.  The panel was also concerned because IDS used two different models, one for premiums and another for expected loses.

Another concern raised during the hearing was that the filing included significant rate increases in certain territories.

Ultimately, the OIR panel was alarmed that the filing was not in compliance with all of the new statutory changes and therefore, incomplete.

Finally, a representative from the Office of the Consumer Advocate testified in support of the OIR’s close scrutiny of the rate filing and indicated that it will continue to monitor the activities of this case.

There was no other public testimony during the hearing.

There being no further testimony, the meeting adjourned.  The record was closed, but the OIR will continue to take comments via e-mail at ratehearings@fldfs.com. 

 

For your review, we have attached a copy of the hearing agenda.

 

 

 

 

Should you have any questions or comments regarding this information, please feel free to contact this office.