Florida Cabinet Approves Actuarial, Life Insurance-Related Rulemaking; Citizens Property Insurance Updates On Assessment Potential
Jun 16, 2011
The Florida Cabinet meeting today, June 16, 2011, began with an update on wildfires proliferating in the State from Adam Putnam, Commissioner of Agriculture and Consumer Services. Due to dry conditions, he explained, the fires are growing and crews are working around the clock in an attempt to contain them.
At the beginning of the meeting, Commissioner Putnam brought forward a resolution recognizing recipients of the Prudential Davis Productivity Award, which was presented by Lieutenant Governor Jennifer Carroll. Sponsored by Florida Tax Watch, the Prudential Davis award is given to state workers who demonstrate outstanding productivity.
CFO Jeff Atwater then presented a resolution recognizing Joe Licandro as National Fraud Prosecutor of the Year. Mr. Licandro was described as a dedicated insurance fraud prosecutor from Jacksonville.
Continuing the agenda, the Florida Office of Financial Regulation requested approval to publish a Notice of Proposed Rule for Rule Chapter 69V-180, which relates to consumer debt collection. The proposed Rules revise a consumer complaint form to conform to statutory requirements, set forth books and records requirements, and establish guidelines for imposing administrative penalties. The Cabinet approved the Notice of Proposed Rule to be published.
As part of its agenda, the Florida Office of Insurance Regulation (“OIR”) requested approval to publish Notice of proposed amendments to the following Rules:
1. 69O-138.047: Description of Actuarial Memorandum including an Asset Adequacy Analysis and Regulatory Asset Adequacy Issues Summary
2. 69O-162.203: Adoption of 2001 Commissioners Standard Ordinary (CSO) Preferred Mortality Tables for Determining Reserve Liabilities for Ordinary Life Insurance
3. 69O-164.020: Valuation of Life Insurance Policies.
The Cabinet approved publication of the Rule amendments Notice.
Susanne Murphy, Citizens Property Insurance Company’s (“Citizens”) Chief Administration Officer, then provided the Cabinet with a brief presentation on the potential for assessments by Citizens after a storm. She began by stating that Citizens currently holds resources that will allow it to pay claims of up to $15.8 billion.
She further explained that all insurance policies in Florida, not just those of Citizens policyholders, are subject to assessment from each of Citizens’ three accounts. The Citizens policyholder surcharge can be up to 15 percent for each account, for a potential total assessment of 45 percent.
Assessments for non-Citizens policyholders are levied through insurers and can be up to six percent for each of Citizens’ three accounts, or a potential total of 18 percent. Additionally, all policies in the State are subject to an emergency assessment of up to four percent. Ms. Murphy indicated that Citizens would not need to trigger assessments unless a 1-in-50 year event occurs.
All of the Cabinet members were troubled by this potential and expressed skepticism of Citizens’ ability to pay claims after less severe events.
Florida Governor Rick Scott asked about the impact of sinkhole activity on Citizens. Florida Chief Financial Officer Jeff Atwater responded that Citizens collected about $20 million in premium for sinkhole coverage, but paid out over $80 million in related claims.
Florida Attorney General Pam Bondi then asked how the State can shrink Citizens. Ms. Murphy responded that the only way to do that is to attract new private insurers to Florida.
To access the complete Cabinet agenda, click here.
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