Florida Cabinet Meeting Report: June 8, 2010
Jun 9, 2010
The Florida Cabinet and the State Board of Administration met in Tallahassee on June 8, 2010 and considered several matters under their purview. To view the complete Cabinet agenda, click here.
The following is a brief summary of the insurance-related items that were addressed:
Cabinet Meeting
The Cabinet members spent a majority of the meeting discussing the Deepwater Horizon Gulf oil spill. Florida Department of Environmental Protection (“DEP”) Secretary Mike Sole updated the Cabinet members on recent spill developments and Florida’s response. The DEP has been designated as the lead state agency for responding to the spill’s potential impacts along Florida’s shoreline.
All the Cabinet members expressed concerns and frustrations with the response from the federal government and British Petroleum (“BP”). Updates on the oil spill and its impact on Florida can be found at http://www.dep.state.fl.us/deepwaterhorizon/default.htm.
BP Senior Vice President Bob Fryar briefed the Cabinet on the spill-related claims process, noting that BP’s focus is on paying claims to individuals and small businesses first. To date, BP has paid $50 million in Florida-based claims. Over 38,000 claims have been filed, mostly for lost income. Mr. Fryar noted that BP would be paying an additional $25 million in compensation in the near future. The Cabinet members asked a series of questions regarding BP’s crisis response and expressed additional concerns and frustrations with BP’s efforts.
Florida Office of Insurance Regulation (“OIR”)
Florida Insurance Commissioner Kevin McCarty presented several items, all of which were approved by the Cabinet in its capacity as the Financial Services Commission (“FSC”):
Approval for Final Adoption of Amendments to Proposed Rule 69O-157.302,.303,.304; Long Term Care, New Business Rates
This Rule pertains to Facility-Only Rates, Home Health Care-Only Rates and Comprehensive-Only Rates, respectively, and provides for the publication of new business rates that will be effective for 2010. Section 627.9407(7)(c), F.S. relating to long-term care insurance requires that any premium increase for existing consumers not result in a cost that exceeds the premium charged on a newly issued policy. This statute further provides that, if the insurer is not issuing new coverage, the new business rate shall be as published by the OIR, at the rate representing the new business rate of insurers representing 80 percent of the carriers currently offering policies with similar coverage as determined by the prior calendar year earned premium.
Approval for Publication of Amendments to Proposed Rule 69O-137.001; Annual and Quarterly Financial Reporting Requirements
Section 624.424, F.S. requires insurers to file quarterly and annual financial reports with the OIR. The statute further provides that, to facilitate state-to-state uniformity, the FSC may adopt the financial statements adopted by the National Association of Insurance Commissioners (“NAIC”). The FSC does this every year. Thus, this Rule adopts the 2010 versions of the NAIC manuals.
Approval for Publication of Amendments to Proposed Rule 69O-138.001; NAIC Financial Condition Examiners Handbook
Section 624.316, F.S. requires the OIR to examine insurers’ financial condition using generally accepted accounting procedures. This statute also allows the OIR to adopt the NAIC Financial Condition Examiners Handbook (“Handbook”) to facilitate these exams. By adopting the newest version of the Handbook, the proposed Rule ensures that the procedures used by the OIR to examine insurers are the current generally accepted accounting practices.
Approval for Publication of Amendments to Proposed Rule 69O-200.004,.005,.006,.009,.014,.015,.016; Motor Vehicle Manufacturers
In 2008, the Florida Legislature created a new category of Motor Vehicle Service Agreement Companies called “Motor Vehicle Manufacturers.” These amendments address the legislative mandate to modify the Rules to incorporate this new category. Additional changes are made to clarify existing language.
Approval for Publication of Amendments to Proposed Rule 69O-167.024; Rate Filings for Inland Marine Insurance
The Legislature changed the numbering within section 627.021. Consequently, this Rule needs to be changed to reflect the renumbering. There is no substantive change in the proposed Rule.
State Board of Administration (“SBA”) Quarterly Meeting
During its quarterly meeting, the SBA heard reports and took action on several items under its purview. In his opening report, SBA Executive Director and Chief Investment Officer Ash Williams stated that the SBA will seek an investment strategy with low risk and a diversified portfolio. Mr. Williams reported that SBA officials also had heard reports on investment performances and major projects relating to the Florida Retirement System Pension Plan, Local Government Surplus Funds Trust Fund and the Florida Hurricane Catastrophe Fund.
The following insurance-related discussion and actions also took place during the SBA meeting:
The Florida Hurricane Catastrophe Fund (“FHCF”)
The SBA officials reported that the FHCF investment returns are above their short-term benchmarks.
Mr. Williams noted that the FHCF has $9.5 billion in liquid assets and $16 billion in bonding capacity. Florida Chief Financial Officer Alex Sink asked about participation in the FHCF’s Temporary Increase in Coverage Limits (“TICL”) layer. Mr. Williams stated he would provide that information in the near future. However, based upon comments previously made by FHCF officials, it does not appear that the entire $8 billion in TICL coverage will be purchased by Florida eligible insurers for the 2010-2011 Contract Year.
For the five Rules listed below, the SBA also approved notices for proposed Rule for publication. If, after the notice period, no member of the public requests a Rule hearing, then a request for approval to file these Rules for adoption will be made, along with the forms incorporated therein.
- 19-8.010 Reimbursement Contract
- 19-8.012 Procedures to Determine Ineligibility for Participation in the FHCF and to Determine Exemption from Participation in the FHCF due to Limited Exposure
- 19-8.013 Revenue Bonds Issued Pursuant to Section 215.555(6), F.S.
- 19-8.029 Insurer Reporting Requirements
- 19-8.030 Insurer Responsibilities
The SBA also approved its proposed Fiscal Year 2010-2011 budgets, as well as corresponding budgets for the Public Employee Optional Retirement Program, the FHCF, the Division of Bond Finance and the Florida Prepaid College Board.
With no further business before the SBA, the meeting adjourned.
Should you have any questions or comments, please contact Colodny Fass.
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