July 31 Florida Cabinet Meeting Recap
Jul 31, 2007
On Tuesday, July 31, 2007, this office attended the Florida Cabinet Meeting held in Tallahassee, Florida.Â The Cabinet heard from several government organizations within its jurisdiction, andÂ discussed and acted upon many insurance-related items.Â Below is a review of the pertinent discussions and actions that occurred duringÂ the meeting.
Department of Financial Services-Office of Insurance Regulation
Florida Insurance Commissioner Kevin McCarty reported on certain activities at the Office of Insurance Regulation (“OIR”).Â In addition to the agenda items, there was significant discussion among the Cabinet members and the Insurance Commissioner regarding insurance rates and reinsurance.Â
Commissioner McCarty was asked by Governor Charlie Crist to discuss the status of property insurance rate reductions as intended through the passage of House Bill 1A.Â Commissioner McCarty noted that of the 335 filings his office has received, the average rate reductions were not as high as expected due in part because some insurance companies were using the savings from the expanded Florida Hurricane Catastrophe Fund (“FHCF”) to purchase additional reinsurance rather than pass on those savings to their policyholders.Â
Commissioner McCarty noted that policyholders of Citizens Property Insurance Corporation, Inc., which insures approximately 25% of Floridians, are receiving rate reductions due to the Legislatureâ€™s actions in House Bill 1A.
Governor Crist made it very clear that he was dissatisfied with the private insurance industry and the practice of not passing savings realized through the increased FHCF to consumers.Â Governor Crist also queried Commissioner McCarty as to whether insurance companies were acting â€œin concertâ€ as to avoid the legislative intent of House Bill 1A.Â Commissioner McCarty responded by stating that he felt the companies were acting in good faith, but many of the trade associations would like to see the intent House Bill 1A fail.Â He also stated that OIR would vigorously investigate the actions of insurance companies and they would not approve rates that did not reflect the savings intended in House Bill 1A.Â Governor Crist encouraged consumers to shop around if they were unhappy with their insurance rates.
Next, discussion ensued regarding reinsurance in Florida.Â Attorney General Bill McCollum asked Commissioner McCarty about his views on a proper amount of reinsurance for an insurance company.Â Commissioner McCarty stated that the amount of coverage needed would differ among the companies, but reinsurance coverage for a 1 in 100 storm is generally adequate.Â Agriculture Commissioner Charles Bronson stated that he would like to ensure that the public will be paid in full in the event of a catastrophe.Â Chief Financial Office Alex Sink indicated that it may be a good idea to remove the increased FHCF coverage if insurance companies are not passing those savings on to consumers.Â Governor Crist acknowledged that may be a good option.Â Another option, according to Governor Crist, is to ensure that insurance companies are adhering to the law passed in House Bill 1A, which is for insurance companies to pass on the savings from the increased FHCF to consumers.Â
Commissioner McCarty next discussed the agenda itemsÂ to be approved and published.Â All were approved or adopted by the Cabinet with the exception of agenda item two relating to Rule 69O-149.002., adoption of the recent National Association of Insurance Commissioners (NAIC) interstate compact standard for defining accelerated death benefits.Â This item was withdrawn to allow the department to work out technicalities.Â
The following items were approved by the Cabinet:
- Approved for final adoption: Proposed amendments to Rule 69O-170; Part I, Filing Procedures for Property and Casualty Insurance Rates, Rules, Underwriting Guidelines, F.A.C.Â Â
- Approved for publication: Proposed amendment to Rule 690-171.002; Reporting Requirements, F.A.C.
- Approved for publication: Rule 69O-204.010, Viatical Settlements, F.A.C.
- Approved: Annual Performance Contract for the Office of Insurance Regulation for Fiscal Year 2007-2008.Â
â€œPIP Discussionâ€ Department of Highway Safety and Motor Vehicles (“DHSMV”)
During the presentation by the DHSMV, CFO Sink asked how it was preparing for the expiration of the Florida Motor Vehicle No-Fault (â€œPIPâ€) laws.Â Electra Bustle, DHSMV Executive Director, stated that the Department would go before the Legislative Budget Commission seeking to acquire $25 million in funding that was appropriated by the Legislature to fund any losses from PIP fees as a result of the sunset.Â
There was a discussion among the Cabinet members on how a post-PIP environment would impact Florida, specifically regarding law enforcement and court costs.Â Commissioner Bronson noted that law enforcement would need to spend more time on accident reports and assessing fault in a given accident.Â He further indicated that they would be spending more time in court when disputes occur.Â
At the conclusion of the discussion, Governor Crist stated that he spoke with Representative Ellyn Bogdanoff (R-Fort Lauderdale) this morning and she reported that the House and Senate are close to an agreement, but that “time will tell.”Â Representative Bogdanoff is the lead PIP negotiator in the Florida House.Â Senator Bill Posey (R-Rockledge) is the lead PIP negotiator in the Florida SenateÂ
State Board of Administration (“SBA”)
A representative from the SBA presented the final report on the Insurance Capital Incentive Build-Up Program.Â She noted that the program was very successful and that $247.5 million dollars was loaned to 13 insurers allowing them to write policies in Florida.Â The program totaled $250 million, but $2.5 million was withheld for expenses.Â Governor Crist and the other Cabinet members noted that this is a good program and they will encourage the Legislature to continue funding it.
Florida Hurricane Catastrophe Fund Finance Corporation (â€œCorporationâ€)
With limited discussion, the Cabinet approved a request by the Corporation that its Board of Directors adopt a resolution authorizing the negotiation of a pre-event financing–through the issuance of floating rate notes–to expand the Florida Hurricane Catastrophe Fundâ€™s liquidity program.
The meeting concluded following the Corporationâ€™s presentation.Â For your review, we have included a copy of the Cabinet Meeting agenda and other relevant agency agendas that were provided at the meeting.Â The next meeting of the Florida Cabinet is scheduled for August 14, 2007.
Please note that the material above is a brief summary of the discussion and events that took place during Cabinet Meeting.Â It is not intended to be a comprehensive review of any particular issues relating to the policies and/or programs discussed.Â Further, this report should not be relied upon for making any specific decisions.Â
To view the entire July 31 Florida Cabinet Agenda, click here.
To view the Financial Services Commission, Office of Insurance RegulationÂ agenda, click here.
To view the DHSMV agenda, click here.
To view the State Board of Administration Agenda, click here.
To view the FHCF Finance Corporation Agenda, click here.
Should you have any questions about any of the above matters, please do not hesitate to contact this office.