Insurers Beef With Fla. Over Exam Rule Change

Jun 27, 2008

National Underwriter--June 26, 2008
NU Online News Service

The Florida Office of Insurance Regulation’s proposal to eliminate insurers’ ability to critique and challenge their state conduct exams, before results are made public, has drawn criticism from the insurance industry.

Under the proposed regulatory change, the state would repeal the “informal conferences” rule allowing insurers to request an informal conference in the wake of a market conduct exam, but prior to the public release of the results, to raise concerns and request a formal hearing if those concerns are not assuaged.

The procedure set by the current rule “has well served both the OIR and the companies it regulates for nearly 14 years,” argued Liz Reynolds, Southeast state affairs manager for the National Association of Mutual Insurance Companies. “Nothing in the law or in practical application of the rule has emerged or changed to warrant its repeal.”

Ms. Reynolds noted that the OIR has said it will continue to allow the informal conferences, but the issue surrounding the right to request a formal meeting remains under a cloud.

Julie Pulliam, a spokesperson for the American Insurance Association, also noted that the OIR has claimed it is not necessarily getting rid of the informal conference process, but that “they don’t think the rule needs to be on the books.”

Ms. Pulliam said the AIA also spoke out to the OIR of their opposition to repealing the rule.

Ultimately, according to Ms. Reynolds, the rule change would appear to allow Florida regulators to release publicly negative information about an insurer collected during a market conduct exam, without giving that company the opportunity to question that information in a private setting.

“Indeed, such an attempt only further strengthens Florida’s reputation as an ever-shifting regulatory environment, a place where companies doing business can count on only one thing: tomorrow’s requirements will be different from today’s,” she said. “Unpredictability does not encourage companies to enter or stay in the Florida insurance market.

OIR spokesman Tom Zutell said the office “appreciates” the concerns raised by Ms. Reynolds and NAMIC, “and will take theirs into consideration as we do all others.”

However, Ms. Pulliam said the OIR has indicated that it intends to proceed with repealing the rule. “It looks like it’s full steam ahead for the OIR,” she said.

Other groups who appeared at a hearing to protest the move included the Florida Insurance Council and the Property Casualty Insurers Association of America. According to the AIA, the OIR did not answer questions at the hearing, but asked insurers to submit questions in writing by the close of business on July 11.