Sept. 19 Florida Cabinet Meeting Recap

On September 19, 2007, this office attended a meeting of the Florida Cabinet (Governor, Charlie Crist; Chief Financial Officer, Alex Sink; Attorney General, Bill McCollum; and Agriculture Commissioner, Charles Bronson) in Tallahassee, Florida. 

The Cabinet heard from several government organizations within its jurisdiction and discussed and acted upon many insurance-related items. 

Below is a review of the pertinent discussions and actions that occurred the meeting.

Florida Department of Financial Services-Office of Insurance Regulation (“OIR”)

There were several insurance-related issues addressed on the agenda.  All were approved by the Cabinet with the exception of agenda item number six:  Approval for Final Adoption of Amendments to Rule 690-137.013; Catastrophe Fund Assessment Information Gathering, which was withdrawn from consideration.

The following agenda items were approved by the Cabinet with little discussion:

Item 1: The minutes of the Financial Service Commission meeting on July 31, 2007.

Item 2: Approval for Final Adoption of amendments to Rule 690-142.200; Military Sales Practices Related to Insurers.  (Please click here to view the OIR press release on this matter.)

Item 3: Approval for Final Adoption of amendment to Rule 690-203.202; Standards for Discount Medical Plans.

Item 4: Approval for Final Adoption of amendments to Rule 690-125.003; Unfair Discrimination Because of Travel Plans.

Item 5: Approval for Final Adoption of amendments to Rule 690-167.015; Uniform Home Grading Scale. 

Item 7: Approval for Final Adoption of amendments to Rule 690-157.301, .302, .303, .304; Rate Increase Standards (Long-Term Care Insurance).

Item 8: Approval to Publish Rules 690-143.041, .042; Domestic Insurers; Custody Agreements.

Item 9: Approval to Publish the Repeal of Rule 690-186.017; Certificate of Mortgage Release.

Item 10: Approval to Publish Rules 690-137.001; Annual and Quarterly Reporting Requirements.

Item 11: Approval to Publish Rules 690-138.001; NAIC Financial Condition Examiners Handbook Adopted.

 

Following the actions on the above agenda items, Belinda Miller, Deputy Insurance Commissioner, and Bob Hunter, a representative from the Office of the Florida Insurance Consumer Advocate, provided an update on the Presumed Factor Property Insurance Rate Filings. 

Ms. Miller indicated that the average statewide property insurance premium rate reduction was 12% for filings made prior to July 1, 2007, but they vary dramatically among individual companies.  She also stated that the OIR is reviewing the mandatory true-up filings, which are due on September 30, 2007. 

Mr. Hunter applauded the OIR for the passage of House Bill 1A and noted that a competitive state insurer such as Citizens Property Insurance Corporation is a good idea.  He stood behind his previous analysis that consumers should receive a statewide average 24% premium rate reduction from the policies established in House Bill 1A. 

Mr. Hunter also noted two “legitimate” reasons that an insurance company may not be able to lower rates by 24%: an insurance company may not purchase all of the additional $12 Billion Florida Hurricane Catastrophe Fund (“FHCF”) coverage and reinsurance rates could increase. 

During the update, each of the Cabinet Members engaged in a dialogue regarding insurance company rate filings with the presenters.  Specifically, Governor Crist questioned whether the law requires a reduction of rates.  Ms. Miller responded that it does, as required in House Bill 1A. 

The Governor also asked if the OIR is going to subpoena insurance company records.  The response was that the OIR will indeed subpoena the records. 

Cabinet members Sink, Bronson, and McCollum expressed concerns about the varying rate filings and asked for reasons why many insurance companies are raising rates.   Specifically, CFO Sink noted that either insurance companies are not passing on savings to consumers or the 24% rate reduction cited by Mr. Hunter was established through flawed analysis.

CFO Sink also raised the issue that rating agencies are arguing that the FHCF is not as good as private reinsurance.  On this point, the Governor asked, “who pays for the services of rating agenies?”  Mr. Hunter responded that primarily insurance companies pay for those services to which the Governor expressed concern.

The Governor concluded the discussion by noting that insurance companies in Florida  made over $150 billion in profits during the last three years and he referenced a 1991 California news article citing insurance industry collusion.

 

Florida State Board of Administration (“SBA”)

The SBA considered two insurance-related items:

First, it approved to file Rule 19-15.001, Insurance Capital Build-Up Incentive Program for Notice of Proposed Rulemaking.   This Rule is intended to streamline the administration of the Insurance Capital Build-Up Incentive Program.  The SBA proposed to amend Form 15-3, Quarterly Net Premium Report to request that participants provide an explanation along with their quarterly report when their surplus falls below the minimum surplus required by Florida law. 

Next, the SBA approved the appointment of David Walker as consumer representative, to the Advisory Council of the Florida Hurricane Catastrophe Fund.

The meeting concluded following the consideration of the SBA agenda items. 

To view the Cabinet Meeting agenda and other relevant agency agendas that were provided at the meeting, click here. 

The next meeting of the Florida Cabinet is scheduled for October 2, 2007.

Please note that the material above is a brief summary of the discussion and events that took place during Cabinet Meeting.  It is not intended to be a comprehensive review of any particular issues relating to the policies and/or programs discussed.  Further, this report should not be relied upon for making any specific decisions. 

Should you have any questions about any of the above matters, please do not hesitate to contact this office.