Florida Insurer Annual Report Card Proposed Rules Draw Concern
Feb 10, 2010
Proposed Rules for an annual report card to be used by the Office of the Florida Insurance Consumer Advocate in grading authorized personal residential property (homeowners) insurers was the subject of a Florida Department of Financial Services (“DFS”) hearing on February 9, 2010. The report card would be presented on a form and use a letter-grade scale.
At the hearing, substantial concerns were raised by insurance industry representatives about various aspects of the proposed Rules. The primary focus of the concerns centered on the methodology for calculating the “grade” of an insurer and the possibility of invalid consumer complaints being included in that calculation.
Industry representatives stated that, in the grade calculation, not only would it be fundamentally unfair to include a complaint that could later be deemed as meritless, but that these complaints could be generated and used by unscrupulous attorneys in future litigation.
DFS representatives stated that the possibility of invalid complaints was factored in creating the grade calculation methodology, partly because the existence of these types of complaints was considered to be an indication of issues having reached a certain level of frustration, as well as a reflection of a company’s responsiveness to customers.
Additionally, the DFS officials stated that a provision in one of the proposed Rules that made clarifications about commercial residential insurers appeared to have been omitted from the most recent draft. It was promised that this matter would be revisited.
Other general objections to the proposed Rules included comments that the grading system they established was misleading, because an insurer could be totally compliant with Florida law, yet receive a “C,” or even a “D” grade. Additionally, since new policyholders generally have more questions and concerns, it was feared that insurers writing new business could receive a disproportionate number of complaints, compared with insurers that are mainly renewing policies.
The DFS plans to keep the record open for comments until February 19, 2010.
To view the proposed Rules and related information, click here.
Should you wish to submit comments to the DFS for the record, please contact Katie Webb (kwebb@cftlaw.com) at Colodny Fass.
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