Senate Insurance Accountability Committee Issues Requests for Executives’ Appearance, Statement of Target Criteria

The Senate Select Committee on Property Insurance Accountability (“Committee”) today issued the following documents:

• A list of insurance companies and their respective representatives requested to testify before the Senate Select Committee on Property Insurance Accountability
• A letter requesting the presence of the aforementioned companies and representatives in Tallahassee on February 4, 2008, and February 5, 2008, to provide sworn testimony before the Committee.
• A list of the objective criteria that were used to make the selections.

The Committee is scheduled to meet on Tuesday, January 22, 2008, at 3:30 p.m., in room 412 Knott Building.

The Committee will hear presentations from the Office of Insurance Regulation and from Mr. J. Robert Hunter, Actuary and Consumer Advocate. With the addition of this meeting, there are now a total of three hearings scheduled.  It was noted that the Committee has not ruled out scheduling additional meetings or issuing additional invitations to insurance companies in the future.

 

List of insurance companies and their respective representatives requested to testify before Committee:

Mr. Michael Dury, Chief Financial Officer
Hartford Insurance Company of the Midwest and the Hartford Group
One Hartford Plaza
Mail Stop HO-1-01
Hartford, CT  06155

Mr. John F. Auer, Chief Executive Officer
American Strategic Insurance Corporation
805 Executive Center Drive West   Suite 300
St. Petersburg, FL  33702

Mr. William G. Jurgensen, Chief Executive Officer
Nationwide Insurance Company of Florida
One Nationwide Plaza
Columbus, OH  43215

Mr. Michael Hill, Vice President of Finance/Chief Financial Officer
Florida Farm Bureau General Insurance Company and Florida Farm Bureau Casualty Insurance Company
5700 S.W. 34th Street
Gainesville, FL  32608

Mr. Joseph Richardson, Jr., Chief Executive Officer
Allstate Floridian Indemnity Company and Allstate Floridian Insurance Company
2775 Sanders Road  Suite F6
Northbrook, IL  60062

 

Criteria for Selecting Companies to Appear Before the Select Committee:
 
The Senate started with two categories:

1)  companies that received a notice of intent (NOI) to disapprove by the Office of Insurance Regulation, based on their rate filings for homeowners policies; and

2)  companies that made homeowners rate filings that have been approved by the Office of Insurance Regulation.

For the companies that received a notice of intent (NOI) to disapprove by the Office of Insurance Regulation, based on their rate filings for homeowners policies:

a)  rank the companies by the percent rate increase (adding the approved presumed factor rate filing and the proposed true-up filing); and

b)  from the companies with the highest percent rate increases, select the 3 companies with the largest market shares (based on number of policies written).

* Without changing the results, ensure that the companies chosen made rate filings using rate factors questioned by the Office of Insurance Regulation, including:
            using an unapproved short form model;
            using a risk load for the first time (never used in previous filings);
using a substantially higher profit contingency factor than in previous filings; and
purchasing additional reinsurance (to a higher Probable Maximum Loss PML).
 

For the companies that made homeowners rate filings that have been approved by the Office of Insurance Regulation:

a)  rank the companies by the approved percent rate reduction (adding the approved presumed factor rate filing and the proposed true-up filing); and

b)  of those companies with the greatest approved percentage rate reductions, select the 2 companies with the largest market shares.

* Without changing the results, ensure that the companies chosen:
           are currently writing significant numbers of new policies; and
            do not rely on another insurer’s rate filing.

 

Letter requesting insurance companies and respective executives’ appearance at hearings: 

January 15, 2008

Dear _____________                               :

The availability and affordability of property and casualty insurance is a matter of paramount personal and economic importance to the citizens of the State of Florida.  For this reason, the Florida Legislature convened in special session in January 2007 to enact comprehensive legislation designed to enhance the property insurance market in this state.

One year later, significant concerns remain about the extent to which homeowners are experiencing the insurance savings anticipated under the new law, CS/HB 1-A (Chapter 2007 1, Laws of Florida).  Consequently, Senate President Ken Pruitt on January 10 appointed the Senate Select Committee on Property Insurance Accountability to take testimony – under oath – from property and casualty insurance company executives and other insurance experts about pricing practices and profits associated with escalating rates.

The Committee will begin its work by receiving testimony from actuary and consumer advocate J. Robert Hunter during a public hearing at 3:30 p.m. on Tuesday, January 22, in Tallahassee, Florida.  As Co-Chairs, we are requesting that you appear before the Committee to give testimony under oath during the course of two full days of public hearings scheduled for:

10 a.m. on Monday, February 4, through 6 p.m. on Tuesday, February 5,
Room 412, Knott Building, Tallahassee, Florida.

We recognize that your schedule is busy and that you may not be able to be present for the full two days of hearings.  Thus, when you contact the Senate to confirm your appearance and discuss your schedule, we will provide an approximate time range for your particular testimony before the Committee.  However, it is our expectation that, in addition to your testimony, a senior member of your management team will attend the full two days of meetings in order to hear all of the testimony and answer additional questions Senators may have for your company after others testify.  The Senate may schedule additional meetings beyond these dates as the needs of the Committee dictate.

The purpose of your appearance is to answer questions about practices and experiences in complying with the new law, particularly your company’s or group of companies’ rate filings with the state Office of Insurance Regulation and the factors used to justify those filings.  Please plan to make an opening statement regarding those issues and be prepared to answer questions.  Representatives of the Office of Insurance Regulation will be among those participating in the hearings, as well.  Ultimately, the goal of the Committee is to have an informative and productive dialogue on lessons learned in implementing CS/HB 1-A and to identify opportunities to enhance the property insurance market and promote the safety and security of homeowners in this state.

Please confirm whether you will attend the hearings and appear before the Committee by faxing a written response to this letter to Mr. Brian Deffenbaugh, Staff Director of the Committee, at 850-410-0072, before the close of business on Tuesday, January 22.  Questions about the Committee and the hearings may be addressed to Mr. Deffenbaugh, as well.  The Committee is authorized under Section 11.143, Florida Statutes, to issue subpoena and other necessary process to compel the attendance of witnesses.

We look forward to your appearance before the Committee and thank you in advance for sharing your expertise on this important public policy issue.

Sincerely,

Jeffrey H. “Jeff” Atwater 
Co-Chair  

Steven A. Geller
Co-Chair 

     

Should you have any questions or comments, please do not hesitate to contact this office.

 

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