Revision Draft Issued for Insurer Financial Examination Rule
Dec 30, 2008
A Notice of Change has been issued for proposed Rule 690-138.005 (4) “Examination of Insurers” subsequent to public testimony at a Florida Office of Insurance Regulation (“OIR”) public hearing on November 12, 2008 and concerns previously raised by the Joint Administrative Procedures Committee (“JAPC”).
To view a draft of the amended Rule, click here.
Pursuant to 2007 legislation, insurer financial examinations can be performed by OIR employees or by contracted outside entities. Before the 2007 change, contract terms with a third party could be negotiated by the OIR and the insurer under examination. Under the new law, 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. Remuneration also is specified.
After a December 15, 2008 JAPC letter to the OIR advising that objections to the Rule could be raised, the OIR responded with a December 17, 2008 letter outlining specific Rule changes. To read the OIR’s letter, click here.