| Monday, September 21, 2015 |
| 2016 Legislative Session Committee Meetings Begin |
| Last Wednesday, September 16, brought our legislators back to Tallahassee for the first of committee weeks as they and we prepare for the start of the 2016 Regular Legislative Session. The official start of the 2016 Session is January 12. Of course we were there last week, visiting with the folks that are charged with considering changes to the laws or the creation of new that impact the industries where we serve our customers and make our livings. We were there last Wednesday in the House Office Building as the ever professional and well prepared Insurance & Banking Subcommittee Chairman John Wood conducted an information packed meeting regarding topics extremely important to our industry. Perhaps not so ironic, a rather large segment of the meeting focused on issues surrounding Citizens Property Insurance Corporation, this while we are just moving in to the most active and perhaps treacherous portion of the 2015 Hurricane Season. There’s much more to come below regarding the House Insurance & Banking Subcommittee meeting as well as coverage of other issues making headlines since our last edition. |
| More on Pre-2016 Legislative Committee Meetings |
| During last week’s Legislative committee meetings, the Senate Banking and Insurance Committee decided to not hold a meeting but as noted above, the House Insurance and Banking Subcommittee did. The Subcommittee’s meeting ran for about an hour and was full of information about Citizens. There was discussion about the 2015 Regular Session’s HB 1087 (the Citizens Depopulation Reform bill) and the Governor’s veto of the measure. Governor Scott was not happy about doing anything that might jeopardize the current nimble pace and success of the takeout/depopulation process and perceived that HB 1087 would do just that. Committee Chairman John Wood did an excellent job of addressing the veto and asking Citizens where they stood on the provisions of the bill. For example, there was discussion about consumers receiving multiple takeout letters, which seemed to be a bigger problem than it really is, with Citizens citing that less than 500 consumers (out of over half million or so) had received 4 or more takeout letters. HB 1087 also provided consumers the same rate protection for takeouts through the depopulation program as they presently receive for takeouts at renewal through the Clearinghouse and the Governor’s written veto statement cited his disagreement with this provision saying, ” The second issue with this legislation is in regards to the provision that creates a process where a policyholder returns to Citizens even though they are currently insured by a private market insurer. This perpetuates reliance on Citizens, which increases the potential for burdensome assessments on Florida families.” Several of the members had questions regarding the makeup of new business that is coming through Citizens’ door – about 10,000 a month. In addition to the Citizens presentation, Florida’s new Insurance Consumer Advocate Sha’ron James discussed her legislative platform, which has two major components – eliminating balance billing in the healthcare arena and tackling Assignment of Benefit Reform. When asked how she determines what issues to pursue, she said she relies on consumer engagement and data about consumer complaints. One of the Subcommittee members asked what the solutions were for her legislative priorities and she said she wanted to think through that since she has only been in office less than two months. On October 15th she will host a symposium on balance billing. For more information about the House Banking & Insurance Subcommittee meeting you may review the meeting packet by clicking HERE. We will continue to follow all of the issues covered during the meeting and bring you updates as developments occur.
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| FHCF to Implement Proposed Changes to Reimbursement Contract for 2016-2017 Storm Season |
| This past Tuesday (9/15/2015) the Advisory Council for the Florida Hurricane Catastrophe Fund (FHCF) gave the Fund its blessing to proceed with implementing a revised reimbursement contract for the 2016-2017 storm season.
A proposed new contract must be formally adopted by February 1, 2016, to be effective June 1, 2016 through May 31, 2017. In order to meet the February 1st effective date, the FHCF must now file notice regarding an administrative rule to adopt the new contract. If, based on the rulemaking notice, no rule hearing is requested the Catastrophe Fund may immediately thereafter file notice of formal adoption of the rule. The proposed major changes to the 2016-2017 contract include Cat Fund coverage for structures that possess a mixture of commercial habitational and commercial non-habitational occupancies, CAT Fund coverage exclusion for policies covering personal property of a collectible nature, and elimination of the form that allowed insurance companies to change selections made in the reimbursement contract. Please click HERE if you would like to review the packet of information for the September 15th FHCF Advisory Council Meeting. A copy of the proposed revised contract can be found in the packet with important information being located on page 5 and pages 9-41.
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| Speaking of Meetings |
| We all know that “meetings” are a part of the American way of doing business and wanted to share some insight we recently had while reading some excerpts from the book, “The Real Life MBA.” The concern is that too many meetings equal wasted time and money. Here is what we found: 1) Yes, meetings can be boring, there are usually too many of them, too often, that are too long and yes, they are often circular in nature, i.e., conclusion-less. Everyone hates meetings, unless it was you who called the meeting. 2) Complaining about meetings is an enervating exercise that serves no useful purpose and will do nothing but hurt your career. So what can and should you do about meetings? Change your attitude. And do it fast. While it may be tempting to tune out and just go through the motions, every time you have a meeting, you have an opportunity to elevate the conversation. You can’t get cynical about it. You can’t go in these meetings with, “Let’s see how it flies.” You have to come in ready to own it, with a clear picture of why you’re there, what you’re trying to deliver and where you stand on the outcome. If you come in fully prepared to add value, with a positive attitude and the data to take the discourse in the meeting to a new level, you’ll see that the meeting no longer feels like an exercise in clock-watching or multi-tasking. After the meeting, give yourself a mirror-test appraisal where you ask:
* Was my attitude energizing or flat and my body language positive? * Did I ask great questions and generate ideas? * Did I use data to make a point and listen to others to help build their ideas? * Did I truly contribute in a positive way and leave everyone in the meeting feeling good about my participation and attitude? Think hard about your performance and give yourself a grade (from A-F). If it’s too difficult to evaluate yourself on your own, you might also ask a colleague or two for feedback, “How did I do in the meeting? What could I do better?” Meetings are a fact of life and since we have to spend our precious time in meetings, let’s make our time valuable to both the group and ourselves. Give it a try.
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| Thomas Howell Ferguson, P.A. Announces Annual Insurance Conference on Financial Reporting, and Christopher Howell to lead Tampa practice |
| Thomas Howell Ferguson P.A., (THF) a professional accounting, assurance, and tax services firm headquartered in Tallahassee who is the CPA firm of choice for many of Florida’s finest property insurance companies recently announced The Insurance Conference on Financial Reporting to be held at the beautiful Alfond Inn in Winter Park, Florida. The conference is Wednesday, October 7 through Thursday, October 8 and last year it was attended by approximately 100 CEOs, CFOs, and Controllers from insurance companies around the nation. We encourage you or representatives from your company to attend this insightful meeting on Insurance Financial Reporting. Please see click Insurance Conference on Financial Reporting, for details on the conference. We’ll look for you there.
In addition, THF announced that Christopher Howell, CPA, will be relocating to Tampa to assume the role of Market Leader for the THF Tampa office. Bill Ferguson, Shareholder at Thomas Howell Ferguson and the firm’s Insurance Practice Leader, states, “With the growth and expansion of the insurance, SEC, and not-for-profit industries in the Tampa metro area, we recognize the importance to be actively engaged with our clients in that market on a consistent basis. As we focus on growing our insurance, SEC, and not-for-profit practices, Christopher’s leadership in our Tampa office is an important step for our client-centric service that we have provided to our clients for the past 22 years.”
Since 1997, Chris has been a hands-on with the strategic planning and growth of the insurance team, as well as the planning and scheduling for the assurance services department. In addition to his licensure as a CPA, Christopher has earned the designation of Certified Internal Auditor (CIA), a Certification in Risk Management Assurance (CRMA) from the Institute of Internal Auditors (IIA), and the Chartered Global Management Accountant (CGMA) designation from the American Institute of Certified Public Accountants. Christopher has passed the first of three examinations to earn an Associate in Risk Management (ARM) from the American Institute for Chartered Property Casualty Underwriters (AICPCU) and has served as a speaker on Enterprise Risk Management (ERM). Christopher also serves on the AICPA/NAIC task force, which provides input on financial reporting model regulations from the National Association of Insurance Commissioners (NAIC).
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| Citizens Insurance Creates Special
Water Claims Team |
| Citizens Property Insurance Corporation reported last week that a special team is being created to help crack down on fraudulent water claims. While the team was actually created in March of this year, the state-run insurer plans to continue to grow the team as the water-loss claims continue to grow. President Barry Gilway stated, “There will actually be additional new hires during the course of this year and in 2016 to fill out the water team.” The team receives special training on non-weather related water claims. President Gilway says having a specific group of people responsible for reviewing those cases is helping to tackle the issue of fraudulent claims, many of which he says come from South Florida. You all know how hard we have been fighting the AOB issue, which is directly related to the outrageous growth in water claims. We are very pleased to see this continued effort by Citizens.
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| Agent Prevails in Attorney Fees Case Against DFS |
| In a somewhat protracted course of litigation spanning the Department of Financial Services, Division of Administrative Hearings and the Fifth District Court of Appeal (5th DCA), a Florida licensed insurance agent in late August prevailed in a suit he filed against DFS to recover attorney fees. Agent William McCloskey of Melbourne, as the prevailing party in an underlying licensing enforcement action, argued in his law suit against DFS that he was entitled to fees because DFS failed to establish, through competent and substantial evidence, a substantial justification to file the administrative complaint against him. An Administrative Complaint is the formal charging document DFS serves upon its licensees when the agency intends to take formal disciplinary action for allegedly violating the Insurance Code, including the suspension or revocation of licensure.
In 2003 and 2004, Mr. McCloskey held life, health, property, casualty, and variable annuity licenses in Florida. In late 2003, McCloskey supposedly began selling viatical settlement purchase agreements. He was informed by his principal, Mutual Benefits Corporation, that viaticals were an insurance product. McCloskey called the agency regulating insurance in Florida, now known as the Office of Insurance Regulation (“OIR”), and was told that viaticals were regulated as insurance. Using forms that were approved by OIR, McCloskey sold three viaticals in December 2003 and March 2004. On June 7, 2011, DFS filed a three-count administrative complaint, alleging, among other things, that McCloskey sold unregistered securities, which DFS believed were required to be registered under chapter 517, Florida Statutes (2003), namely, viaticals, without a securities license, in violation of section 626.611(16), Florida Statutes (2003). After a formal hearing, the Administrative Law Judge determined that McCloskey sold viaticals without the required license and recommended a six-month suspension of his insurance licenses.
However, upon appeal it was determined by the 5th DCA that the viatical purchase agreements allegedly sold by Agent McCloskey were done so before case law considered them securities and before the Florida Legislature enacted statutory amendments in 2005 which explicitly classified them as securities. As a result, the case against McCloskey has been remanded back to DFS and the Department must now enter an alternate Final Order addressing his request for attorney fees. if you would like to read the entire order entered by the 5th DCA, click here: 5th DCA Decision. |
| MARKET AND INDUSTRY NEWS |
| P/C Insurers Among Fortune’s Fastest Growing Companies.
We were interested to read that five property and casualty insurers made the top 25 of Fortune’s 100 fastest growing companies published late last month. Federated National Holdings, is in fact, ranked No. 3 on Fortune’s list, right behind a generic drug maker pharmaceutical company (Lannett) and a marketer of beauty and nutritional supplements (Natural Health Trends). Like Federated National Holdings (formerly known as 21st Century Holding Company), four of five P/C insurers among Fortune’s top growers are primarily Florida homeowners insurers. The other is AmTrust Financial Services, a specialty commercial insurer.
The other P/C insurance companies that Carrier Management spotted on the Fortune list ranked between 26th and 45th place.
So how did they make the list? According to Fortune, companies that meet certain criteria are ranked by three measures of growth: revenue growth rate; EPS growth rate; and three-year annualized total return for the period ended June 30, 2015. To qualify, a domestic or foreign company must be trading on a major U.S. stock exchange-and have been trading continuously since June 30, 2012. The company also must report data in U.S. dollars, file quarterly reports with the Securities and Exchange Commission, and have a minimum market capitalization of $250 million and a stock price of at least $5 on June 30, 2015. The companies also must have posted an annualized growth in revenue and earnings per share of at least 15 percent annually over the three years ended on or before April 30, 2015. Other criteria specify that time periods over which the companies must have revenue and net income, as well as minimum amounts.
Prepared Holdings, LLC, Plans Merger with Meridian Insurance Holdings, Inc. Prepared Holdings, LLC, the holding company for Prepared Insurance Co., has entered into a definitive merger agreement with Meridian Insurance Holdings, Inc., a private investment group, under which Prepared will be acquired by Meridian. It is anticipated that Meridian will pay a total all-cash purchase price of approximately $35.7 million, assuming a GAAP book value of Prepared of approximately $20.58 million at closing. The purchase price will be reduced if the book value is less, with a minimum purchase price of $34.47 million if book value is $19.45 million at closing. If the book value drops below such amount, either party may terminate the transaction.
It’s All Good We LOVE the Fall weather that we are anxiously longing for these days. An end to the lazy, hazy days of summer can’t get here fast enough for us. Yes, the summer days certainly were hazy and HOT, but lazy isn’t a word we recognize at LMA. Summer means travel – constantly -and we love doing it. We are ready, however, to get started with all things legislative as we prepare ourselves to “Be There So You Don’t Have To”. In the coming newsletter publications, we will share those issues that we see as important to our clients, friends and fellow Floridians. And, as always, we LOVE to hear from you, so please call, email, text or come on by for a visit. We can’t wait to hear from you.
Lisa and the Team |
