Florida’s Royal Palm Insurance seeking 21.7 percent rate increase for dwelling fire line

Aug 6, 2010


At a public rate hearing on August 5, 2010, Royal Palm Insurance Company (“Royal Palm”) presented its request for a 21.7 percent rate increase on its dwelling fire program to the Florida Office of Insurance Regulation (“OIR”). 

OIR officials in attendance at the hearing included Deputy Insurance Commissioner Belinda Miler, Property and Casualty Deputy Director Mike Milnes, Actuary Bob Lee and Assistant General Counsel Rhoda Johnson.

Speaking on behalf of Royal Palm, Joel Curran stated that the rate increase at issue for the dwelling fire program would affect approximately 16,000 policies. 

Mr. Lee expressed the following concerns with Royal Palm’s rate filing:

  • Royal Palm made no rate filing in 2009
  • The company had loss trend data of 9.8 percent
  • The filing contained a calculation error relating to Florida Hurricane Catastrophe Fund expenses being charged twice, despite Royal Palm’s representatives being aware of having made this mistake in the past
  • Territorial data provided in the filing only had a one-year indication, whereas statewide data had a two-year indication

In his testimony, Florida Insurance Consumer Advocate Actuary Steve Alexander stated that he did not recommend approving a Royal Palm rate increase for two reasons:

  • Royal Palm’s underwriting profit provision should be at 1.77 percent, not the 3.40 percent that its filing indicated
  • The offset for certain estimated covered hurricane losses requires further computation to adequately address its impact

Mr. Alexander stated Royal Palm has a Demotech “A-exceptional,” which equates to a three percent default risk and a five percent risk of default in the event of a 1-in-20 year hurricane.  Ultimately, the Office of the Florida Insurance Consumer Advocate concluded that this equates to a 10.14 percent return on surplus.

Royal Palm representatives did not respond to Mr. Alexander’s remarks.

With no additional remarks made by hearing participants, or any public testimony given, the OIR officials concluded the meeting by stating that they will carefully review and consider the comments from the hearing and related materials provided.  The record will not remain open.


To view the hearing agenda, click here.


Should you have any comments or questions regarding this matter, please contact Colodny Fass



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