Florida Office Of Insurance Regulation Officials Meet With FPCA Members on SB 408 Implementation

Jun 15, 2011


Yesterday, June 14, 2011, members of the Florida Property and Casualty Association met with Rich Koon, Belinda Miller, Ken Ritzenthaler, Bob Lee and Al Wills from the Florida Office of Insurance Regulation (“OIR) regarding the implementation of various provisions in Senate Bill 408. 

Using the attached numbered list of discussion items, Mr. Koon reviewed sections of the bill impacting policy form changes that the OIR expects companies to implement immediately.  At the outset, he suggested that if a company’s filing is coming up on the deemer date, it should waive the deemer for at least 30 days, since short waivers are impractical for the OIR to handle.

Mr. Koon also recommended that the changes reflected in discussion items 3, 12, 13, 15, 16, 18, 20, 23, 24, 25, and 26 should be filed with the OIR as soon as possible.  He also noted existing filings should be amended to incorporate the statutory changes in these items.  Generally, he noted that policy changes should closely, if not identically, reflect the statutory language. 

Below are some guidelines that Mr. Koon suggested related to the discussion items noted above:

Item 3:  Include statutory language regarding three-year claim filing deadline from the date of loss

Item 12:  Include replacement cost coverage on personal property.  The option to limit the initial payment to the actual cash value of the loss may be included.

Item 13:  Include the specific terms in the statute (ie: “initial, reopened or supplemental”) regarding the timing of claim payment

Items 15 and 16:  Include changes to the definitions in section 627.706, F.S. relating to sinkholes and catastrophic ground cover collapse  

Item 18:  Include two-year limit on filing a sinkhole claim.

Item 20:  Include the provisions relating obligations of the policyholder when the policyholder demands sinkhole testing and 60 days and tolling provisions in section 627.707, F.S.

Item 23:  Include time limits on sinkhole contracts such as the 90 day repair clause and neutral evaluation clause

Item 24:  Include the 12-month time limit to complete sinkhole repairs clause

Item 25:  Include clause voiding sinkhole coverage if an insured accepted a repair rebate   

Item 26:  Include clause requiring policyholder to file a sinkhole report with the clerk of courts office   


Notice of Change in Policy Terms

Mr. Koon noted that the OIR position on notice of change in policy terms created in section 18 of SB 408 is that it should be treated like a notice, despite its broad language.  The section merely authorizes a “notice” that may be given to policyholders AT RENEWAL to advise them of any differences in the policy terms – it is NOT intended to provide a mechanism to change or modify a contract, change coverage mid-term, or change a policy before a policy form has been approved by OIR.


Expedited Reinsurance Filing

Mr. Lee stated that I-File has a system in place now for the expedited rate filings for reinsurance costs.  He also stated these filings can include expense and profit load.  However, he noted a full rate filing cannot include expense and profit for Temporary Increase in Coverage Limits replacement coverage.  Ms. Miller stated this was a glitch in the law and should be addressed in the future. 


Other Rate Issues

The OIR officials noted that insurers do not have sufficient data to make rate filings for most of the other coverage changes that they may include in a form filing.  The rates filings will have to be based on future data.  However, insurers may use a potential rate change if they have a reasonable basis to support it with underwriting guidelines matching the changes in SB 408 that are implemented.

Also attached is the OIR’s written response to inquiries made by actuaries about SB 408 implementation. 


Should you have any questions or comments, please contact Katie Webb (kwebb@cftlaw.com) at Colodny Fass.