Labor Day…What is it all about…Really

Our last “summer” holiday just passed us by on Monday, September 1 and for many of us it means the end of summer vacations, the beginning of a new school year and football season, and hopefully some cooler weather.  Few of us stop to celebrate Labor Day, other than a barbeque and just a day of rest.  With our curious minds always on alert, we stopped to do a little research for you as just a reminder of what that last holiday of summer is, or was, about.  The first Labor Day was held in 1882 and was originally organized to celebrate various labor associations’ contributions to the United States economy. It was specifically promoted by the Central Labor Union and the Knights of Labor, who organized the first parade in New York City. After the Haymarket Massacre (the aftermath of a bombing that took place at a labor demonstration on May 4, 1886, at Haymarket Square in Chicago), U.S. President Grover Cleveland feared that commemorating Labor Day on May 1 could become an opportunity to commemorate the affair. Thus, in 1887, it was established as an official holiday in September to support the Labor Day that the Knights favored. It was intended to be a day filled with parades to give the public an opportunity to show its appreciation for the work of the trade and labor organizations, with speeches by dignitaries and officials. The parades and speeches are seldom an event in these days, however, some of the old traditions of “labor day” are still held dear by a few;  one being the end of wearing white clothes or shoes after Labor Day.  Even this tradition is slowly dying out as more and more people now wear white all year round, rather than just in the summer. Similarly, it was once the custom to wear a straw cowboy hat from Memorial Day until Labor Day.  Never heard that one but it is very difficult for me to wear white shoes after Labor Day still!

We Must Share where our Heart has Been This Past Week

Last week was a week of prayers and hope for us at LMA as we held our hearts in our hands during the painful and frightening illness of our friend Bob Lotane.  Many of you know and love Bob as we do and are aware of his battle against a terrible enemy undermining his health. We have only just received a diagnosis for his struggles-the West Nile Virus.  We’ve been afraid…we are still afraid… and just had to share our love and concern for Bob, as well as our concerns for other friends who might find themselves prey to this vicious mosquito attack.  Bob has always been a soldier; whether in the valiant efforts he made during the illness and loss of his wife Robin to cancer or his dedication to the annual Labor Day Robin Lotane Memorial Hurricane Run. You also know him as a soldier for the business we all love, putting himself in every battle for the good of the industry and the citizens of our state.  Now he is in the battle for his life.  We will tell you that as of last Wednesday, September 3, he was resting comfortably despite the diagnosis and the best news is that the prognosis is good!  We have been at his side with his sweet wife Alissa giving support and love and saying many, many prayers for his recovery.  We will keep you updated on his condition and recovery. One request is for those of you that know him please send funny stories or pictures, etc. to:

Bob is in room 8269- but just put in that field at the above link where it asks for room number “neuro ICU” – they know who Bob Lotane is! It is Shands’ online email message system and they will print and take to Bob! You could write it, and send through regular mail to Bob’s house too as we are delivering mail to him twice a week. Please contact us directly and we will provide Bob’s address.

We Want YOU to be Aware of West Nile Virus in Florida

Yes, we are still afraid for our dear friend Bob and we are afraid for you also, so research began and we share what we found with you.  The West Nile virus comes from the bite of a mosquito, and current data tells us that West Nile carrying mosquitos are present in the yards of as many as 30 percent of the homes in one area along Florida’s east coast. The director of the Martin County Mosquito Control District is sharing how serious these cases are and the proliferation of the mosquitos breeding in his area. Once bitten, the virus (also known as break bone fever) attacks with excruciating joint pain and virulent flu-like symptoms.  As with Bob, the body temperature shoots up immediately, with a drastically dropping heart rate, and an unexplained paralysis. Further research told us that the virus was eradicated from the United States for 60 years with the onset of mosquito-control spraying and prevention campaigns. But since 2001, outbreaks in Hawaii, Texas and Florida’s Key West have signaled its return. What’s especially disconcerting is that in this recent batch of new cases the people acquired the disease locally — from an infected mosquito that could have bred in a teaspoon of water in tiny puddles, buckets or tires, even inside a lone bromeliad, a tropical flower. Dr. Amesh Adalja, senior associate at the University of Pittsburgh School of Medicine and an expert in bioterrorism and infectious diseases, stated,  “I think we’re seeing the tip of the iceberg in terms of cases reported in Florida.”  One reason the outbreak is spreading is that homes with the dengue mosquito vectors are still posing a risk. Crews are often finding mosquitoes at the same places every time because residents are not emptying containers that fill with rainwater where the mosquitoes breed. People need to be aware of this dangerous outbreak and do all they can by using repellents when outside and make sure any containers aren’t holding water.  We in the South, and certainly in Florida, are a bit desensitized to the presence of mosquitoes in our living areas, but what has happened to Bob and to other folks in Florida, should be taken very seriously!  Stop right now, and make sure your area isn’t a breeding ground for this deadly mosquito. We are concerned, and you should be too!

Office Approves Massive Citizens Take-Out by Fourteen Property Insurers

Removal of up to 427,584 Policies Possible

Thursday 9/4/14- Taking another huge step towards depopulation the Florida Office of Insurance Regulation (OIR or Office) has approved the removal of up to 425,357 personal residential policies and 2,227 commercial residential polices from Citizens Property Insurance Corporation bythe following 14 companies:

American Integrity Insurance Company of Florida – approved to remove up to 15,000 personal residential policies (14,637 Personal Lines Account (PLA)/363 Coastal Account (CA))

Avatar Property & Casualty Insurance Company – approved to remove up to 10,000 personal residential PLA policies

Capitol Preferred Insurance Company – approved to remove up to 30,000 personal residential PLA policies

Elements Property Insurance Company – approved to remove up to 60,000 personal residential policies (54,000 PLA/6,000 CA)

Heritage Property & Casualty Insurance Company – approved to remove up to 70,000 personal residential policies (62,500 PLA/7,500 CA) and up to 200 commercial residential Commercial Lines Account (CLA) policies

Mount Beacon Insurance Company – approved to remove up to 47,900 personal residential PLA policies

Olympus Insurance Company – approved to remove up to 30,000 personal residential policies (23,379 PLA/6,621 CA)

SafePoint Insurance Company – approved to remove up to 18,000 personal residential policies (15,000 PLA/3,000 CA)

Southern Fidelity Insurance Company – approved to remove up to 30,000 personal residential PLA policies

Southern Fidelity Property & Casualty Insurance Company – approved to remove up to 30,000 personal residential PLA policies

Southern Oak Insurance Company – approved to remove up to 10,000 personal residential policies (8,500 PLA/1,500 CA)

Tower Hill Signature Insurance Company – approved to remove up to 6,164 personal residential policies (4,931 PLA/1,233 CA)

United Property & Casualty Insurance Company – approved to remove up to 51,293 personal residential policies (42,573 PLA/8,720 CA) and up to 2,027 commercial residential policies (1,824 CLA/203 CA)

Universal Insurance Co. of North America – approved to remove up to 17,000 personal residential PLA policies

Citizen’s Personal Lines and Commercial Lines Accounts are mostly non-coastal properties and the Coastal Account is coastal properties. The take-out periods are November 18, 2014 for personal residential impacting both the PLA/CA policies and November 4, 2014 for commercial residential impacting both the CLA/CA policies. This announcement brings the total number of policies approved for take-outs this year to 894,156 and the actual number of policies removed from Citizens as of August 30, 2014 to 124,995. By statute, policyholders may choose to remain covered by Citizens; however, they risk higher assessments by not accepting take out company offers.

Citizens Rate Hearing Provides Crystal Clear Optimism for Floridians

Wednesday 8/27/14- In the Senate Office Building, Citizens CEO Barry Gilway and his executive team presented their rate analysis and other “state of the state of Citizens” material to the Office of Insurance Regulation.  The hearing, chaired by Commissioner Kevin McCarty, was a culmination of much of the news we have been reading about Citizens over the past 18 months.  In a nutshell, Barry Gilway rattled off the common statistics our readers know all too well:

•This is the 9th year without a storm.

•Citizens are in the best financial shape it has ever been.

•The private market is stronger than it ever has been and that point was underscored by a letter to the Palm Beach Post from Demotech’s CEO Joe Petrelli (Click HERE to read Petrelli’s letter)

•The private property insurance market stability has enabled Citizens to be more successful.

Barry Gilway then gave a historical perspective citing that in August of 2012 Citizens peaked at 1.5 million policies and half trillion dollars in exposure with a 26% market share in Citizens Personal Lines Account (PLA). He projected that Citizens will be well below 900k policies by the end of 2014 and will shed $1 billion in premium moving the corporation to being the 47th largest insurance company nationwide when 2 years ago they were one of 10 largest in the US.  The best news is that the assessment potential has dropped from $11 billion in 2011 to $2 billion today. “I see good news coming in terms of moving further assessments off the backs of Floridians,” said Gilway. “As a result of successful application of the legislatively mandated glide path, this is the first time in 5 or 6 years that we are offering a rate decrease.  It is a successful partnership between Citizens and OIR in moving the needle in rate decreases.”

For those of you who have been following recent Citizens meetings Gilway again referenced Demotech. The Citizens chief executive cited the August 25, 2014 letter from Demotech CEO Joe Petrelli to the Palm Beach Post.  “I would encourage anyone that has not read this to read Demotech’s letter to get a picture of the market.  Mr. Petrelli wrote that 46 of his rated companies now have primary protection of 1 in 127 – well over the 1 in 100 standard.  He has increased his financial criteria to 1 in 150 for a 2nd event,” said Gilway.

Citizens Chief Risk Officer John Rollins provided a crystal clear picture of the great news with some continuing disconcerting news.  One of the areas of concern is a familiar topic: What is the future of the sinkhole peril.  Rollins indicated that last year 4% of Citizens’ total claims were sinkhole yet those claims represent 50% of Citizens claims reserving and loss adjustment expense. “This issue is staggering to any organization,” said Rollins.  Interestingly, Citizens had 1500 sinkhole claims reported last year, but only about 300 so far this year. “There is an uncertain future and we are moving the pre-Senate Bill (SB) 408 claims off the books…we have 1675 sinkhole litigated cases pre-SB 408 and we moved into a global settlement agreement with 5 law firms for 755 claims and are in negotiations with 200 or 300 more,” said Rollins.  Citizens is bracing for a court challenge to SB 408 with 37 litigated cases under the new law.

Many of our readers know John Rollins and as such, you will not be surprised that he continues his incredible mix of common sense with actuarial acumen.  For example, he testified that the data is clear – sinkhole rates are inadequate but rather than recommending yet another wholesale rate increase in sinkhole prone areas across the board, he recommended to Citizens leadership that the uncertainty of SB 408’s future lends itself to “targeted” increases in only one county in particular – Hernando.  “Our recommendations are that all other counties but Hernando stay flat with rates and we are limiting our recommendation to 10% to comply with glide path although this rate category is not subject to it,” said Rollins. Rollins’ main focus was his and Citizens CFO Jennifer Montero’s work in securing Citizens risk transfer. “We took advantage of the ILS market at a pricing level that was unbelievable from last year to this year and we saved $233 million in costs as a result of successful risk transfer,” said Rollins.

Commissioner McCarty asked Gilway a series of questions with respect to Citizens’ claims paying ability, the clearinghouse, Gilway’s opinion about the future of the ILS market, whether Citizens mammoth risk transfer affects the private market and finally, Gilway’s opinion on additional risk transfer capital available for future Citizens transactions.  The meeting concluded with OIR actuaries presenting a series of questions to the Citizens actuaries along with Insurance Consumer Advocate asking questions about the rating impact of Citizens smaller books of business.

We would love to share the details of this exchange should you have an interest.  If so, please send me an email to [email protected] and I will forward you my notes.

NCCI Proposes 2.5% Statewide Average Rate Decrease to Workers’ Compensation Rates

Friday 8/22/14- The National Council on Compensation Insurance (NCCI) delivered its annual workers’ compensation insurance rate filing to the Florida Office of Insurance Regulation (OIR or Office). Based upon its review of the most recent data available, NCCI has proposed an overall average rate level decrease of 2.5%, effective January 1, 2015, the first decrease in four years. NCCI reports that fewer claims and a lower amount of loss are responsible for the proposed rate decrease.  The statewide average rate change is based on changes to five industry groups: Manufacturing, Contracting, Office and Clerical, Goods and Services, and Miscellaneous.  The OIR released a statement on August 22 regarding the filing stating that as is standard practice, the Office will review the filing to ensure the proposed changes are not excessive, inadequate, or unfairly discriminatory, as well as, evaluate its potential effects on the insurance marketplace and employers. A public hearing on the filing will be conducted in October with a rate order to follow afterwards. The OIR release also stated that Florida’s workers’ compensation market remains one of the most competitive, efficient, and affordable, thanks in large part to the 2003 legislative reforms.  Since that time, Florida’s rates have dropped from first- or second-highest in the nation to 29th. Workers’ compensation rates are 56% lower than they were in 2003.The market continues to expand, with four of the top 10 writers based in Florida.

Attorney General Files Appeal in Comp Exclusive Remedy Court Case

Tuesday 8/26/14- A recent Dade County Circuit Judge’s ruling calling Florida’s workers’ compensation law “unlawful, invalid and unconstitutional” is under appeal by the state’s top lawyer. Florida Attorney General Pam Bondi has filed a notice of appeal with the 3rd District Court of Appeal (DCA) taking issue with Dade County Circuit Judge Jorge E. Cueto’s ruling that the Florida workers’ compensation insurance statute as an exclusive remedy is unconstitutional. On August 22 the Attorney General’s Office filed a motion for rehearing with Judge Cueto; however, he denied that request a mere two hours later. Although many assume the 3rd DCA will entertain the appeal, questions remain regarding standing due to the manner in which the initial lawsuit developed. In Judge Cueto’s August 13 ruling he said that benefits for injured workers have become so eroded that there no longer is a constitutional basis to prohibit a tort liability lawsuit. “The benefits in the act have been so decimated,” Cueto wrote, “that it no longer provides a reasonable alternative” to filing suit in civil court. The case involved an account clerk who tripped in a walkway on Jan. 27, 2012, when a co-worker left boxes on the floor. Elsa Padgett, already at retirement age, fell on her hip, but sustained the most serious damage to her shoulder, records say. After shoulder replacement surgery, Padgett remained in significant pain and was eventually forced to retire. Although at the present time the ruling applies only to cases being handled by Judge Cueto, and not even to all of the cases in the Miami/Dade Judicial Circuit and certainly not state-wide, it remains a matter of keen interest to the workers’ comp insurance industry and employer trade groups. We will keep close tabs on the Attorney General’s appeal and bring you updates as developments occur.

A Must Attend for Insurance Industry CEO’s and CFO’s

“Hands down the best CPE event I have ever attended. So tailored to the insurance industry, which is refreshing”, stated Dawn Anderson, CPA and Assistant Controller for American Strategic Insurance Corporation. We here at LMA are excited to share this extraordinary annual conference with you.  In its fourth year, the Insurance Conference on Financial Reporting is a premier accounting and finance education conference in the Southeast. In addition to all the great knowledge you will receive from the conference, attendees can earn up to 15 hours of continuing professional education (CPE) credits. This year’s keynote address on Economic Forecasting will be presented by Dr. Steven N. Weisbart, Senior Vice President and Chief Economist of the Insurance Information Institute. In addition, some of this year’s outstanding sessions will include a regulator update from representatives of Georgia, Louisiana, South Carolina, and Texas; an industry update from various industry leaders; a discussion on the future of technology from IBM; and much, much more! We hope you’ll plan to attend and won’t wait another day to register for the conference which is being held in Winter Park, Florida on October 15 – 16 at the Alfond Inn.  The conference is hosted by Thomas Howell Ferguson P.A., a leading accounting firm within the insurance industry and The Florida State University, College of Business as well as the Florida Catastrophic Storm Risk Management Center. Guy Carpenter is the conference’s title sponsor for the fourth year in a row. We’ll be there and will be looking for you! To register for this year’s conference, please visit

Second Melbourne Police Officer Enters Plea in Insurance Case

Thursday 8/21/14- The second of two former Melbourne police officers accused of burning a boat to collect insurance money has pleaded guilty to a felony charge. Previously in March, Sgt. Brian Wical and James Hartman, a 12-year departmental veteran who left the force last year, were arrested by Florida Department of Law Enforcement agents. Investigators said the two men conspired to ignite Wical’s boat, a 2008 Stratas last September. Wical alleged that the vessel had been stolen from his Palm Bay home, and he later collected on a $45,067 insurance claim, FDLE agents said. But on August 21 Wical pleaded guilty to presenting a false/fraudulent insurance claim during a hearing at the Moore Justice Center in Viera. He was sentenced by the court to 10 years of probation, ordered to pay $45,067 in restitution, fined $7,436 and surrendered to the state his law enforcement certification. Wical, 38, joined the Melbourne Police Department in March 2003. He was placed on paid leave in late February, and he resigned in May, Cmdr. Vince Pryce said. Hartman, 41, pleaded guilty in May to burning to defraud an insurer, a felony. He was sentenced to five years of probation, surrendered his law enforcement certification, and agreed to pay $7,536 in investigative and prosecutorial costs.

Yes, summer is coming to A Close but…

We here in Florida are reminded that while we absolutely LOVE living here, we must be diligent to continuing working to keep our state a great place to live.  Whether working together to pass good laws and regulations that grow the industries that bring more business or protecting ourselves and our friends and families from the devastation of a little known and deadly mosquito-borne virus, it’s really up to us EVERY DAY to make a difference.  We covet your prayers for our friend and we urge your attention to everything that makes life wonderful!

Always watching out for you…Lisa