Florida Cabinet Meeting Report: August 11

Aug 11, 2009


The Florida Cabinet met today, August 11, 2009 and considered matters presented by the Florida Office of Insurance Regulation (“OIR”), among other agenda items.  Florida Commissioner of Agriculture and Consumer Services Charlie Bronson was absent from the meeting. 

Following is brief review of the insurance-related matters that were considered, along with a recap of significant discussions regarding new capital in the Florida insurance market.

At the beginning of the meeting, Florida Chief Financial Officer Alex Sink moved the appointment of Jay Thomas (“Tom”) Cardwell as Commissioner of the Florida Office of Financial Regulation.  Mr. Cardwell, who formerly served as General Counsel to the Florida Bankers Association for 24 years, was approved unanimously.

The OIR agenda was presented by Florida Insurance Commissioner Kevin McCarty, who highlighted a report that previously had been requested by CFO Sink regarding new capital, companies and lines of business entering Florida. 

Prefacing his comments that the information contained within the report is perpetually changing, Commissioner McCarty focused on the specific time period of January 1, 2006 through July 1, 2009 in regard to illustrating the infusion of new capital into the Florida insurance market.  The report comprises three categories:  1) new companies, 2) companies already licensed in Florida, but now writing new business, and 3) surplus lines companies. 

To view a copy of the report, click here.

During the referenced time period, 29 new admitted insurance companies have infused $607 million in new capital into the Florida market, which includes $97 million appropriated by the State Board of Administration pursuant to the Insurance Capital Buildup Incentive Program. In addition, 18 new surplus lines companies have provided the State with $4.37 billion in new capacity.  Commissioner McCarty noted that the surplus lines carriers are important, especially in keeping policies out of Citizens Property Insurance Corporation, and he further indicated that their greatest capital investment has been in the commercial multi-peril line of business.

Fourteen insurers have expanded their lines of business, however, this was not included by Commissioner McCarty as new capital.

CFO Sink expressed her displeasure that the report had been presented to her just prior to the beginning of today’s Cabinet meeting. Also, she noted the vast majority of new capital was generated from unregulated surplus lines carriers.

Florida Attorney General Bill McCullom asked Commissioner McCarty some general questions regarding surplus lines companies.  Expressing disappointment at the lack of additional capital from admitted carriers, he nevertheless rated the overall report as positive.

CFO Sink asked how much capital was needed to absorb State Farm Florida’s proposed withdrawal from the Florida property insurance market.  Commissioner McCarty said that approximately $500 million more is needed-preferably from the private sector. 

In response to Attorney General McCollum’s questions on the new capital plan, Commissioner McCarty explained that State Farm must effect its withdrawal in a way that is not hazardous to Floridians by removing their policies from the market during a two-year period.  Ultimately, if a catastrophic hurricane occurs, a federal backstop could be required. 

Governor Crist expressed his satisfaction with the report and asked about rate reductions.  Commissioner McCarty noted that lower rates and premiums have occurred from discounts based on damage mitigation measures taken by property owners.

The following proposed Rules for final adoption on the OIR agenda were approved with no discussion: 

  • Proposed Rule 69O-164.040: Determining Reserve Liabilities for Preneed Life Insurance

This Rule conforms Florida with the National Association of Insurance Commissioners (“NAIC”) guidelines relating to reserve liability for Preneed Life Insurance policies.  Preneed Life Insurance is a product that is purchased by consumers who seek to pre-fund funeral services before their death. This insurance is typically bought in anticipation of impending death, on a guaranteed-issue basis with no underwriting and differs from “regular” life insurance, in which underwriting is an important factor in determining premiums and whether coverage will be issued at all.  This Rule will help ensure that companies selling this product have adequate reserves to pay for funeral services for their consumers. By conforming the Florida Administrative Code to the NAIC standards for preneed life insurance products, this Rule align Florida policy with that of other states and thereby reduce the frictional costs of doing business in Florida.


  • Proposed Rule 69O-163.0075,.009,.011;Credit Life and Credit Disability

Two major revisions have been made to these Rules in order to comply with recent legislative changes made by House Bill 343, which was passed in 2008.  Before the passage of this bill, the term of both credit life insurance and credit disability insurance was not to exceed ten years. However, because of a change to section 627.681(2), Florida Statutes, this prohibition now only applies to credit life insurance and no longer applies to credit disability insurance. The proposed Rule reflects that in the language added to what was subsection (1).  What was formerly subsection (2) in existing Rule 69O-163.0075 has been stricken by the proposed Rule because HB 343 deleted the language that had been the basis for this subsection.


To view the complete August 10 Cabinet agenda, which includes a hyperlink to the OIR agenda, click here.



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