– Lisa Miller Associates

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First Things First
Before we get started with the various articles for your reading pleasure, let us take a moment to remind you that TODAY, July 28, is the deadline to register to vote in the August 26 primary. In Tallahassee, the Leon County Supervisor of Elections Office is making outreach efforts to make registration as easy as possible by staffing members of the elections office in various retail locations around town, as well as at the Elections Office. In addition, for those who choose to mail their voter registration forms, they MUST be postmarked no later than July 28. We urge you to check your local area for voter registration outlets for today and PLEASE make it a priority to register to vote if you haven’t already. We are blessed to have recently celebrated our independence and should never miss an opportunity to speak through our vote!
Core Values…What Are They and What Do They Really Mean in Our Lives?
At the heart of everyone’s personality is that person’s core value(s). And those values are also at the heart of every successful business or organization. When doing some research on “core values,” we found lots of good definitions from many aspects of life; however, they all tell the same story. Core values are the “core” of who we are as humans. Here is just a snapshot of what we found: “Core values are the intangible, absolute non-negotiable that govern the unique way we think, speak and act. They reflect our innermost beliefs and can be discovered by observing our self-talk, our conversations with others, our behavior and how we spend our time and money.” Another definition tells us that they are the “underlying priorities and belief systems that direct us without our conscious attention.” When we apply our core values to our business practices, we begin to find those same principles reflected by staff members who share the same commitments to the success of the business as we do. In other words, strong core values will produce a strong corporate culture and identity! Let’s consider a possible example of a corporate CEO who demonstrated core values and created a strong corporate culture. David Neeleman, if you don’t know him, is a Brazilian-American who has founded three commercial airlines, Morris Air, JetBlue Airways and Azul Brazilian Airlines. He attended school in Cottonwood Heights, Utah, and attended the University of Utah and served in the mission field for two years in The Church of Jesus Christ of Latter-day Saints in the Northeast Region of Brazil. His corporate life began when he co-founded Morris Air (which was later acquired by Southwest Airlines). He subsequently became the CEO of Open Skies, a touch screen airline reservation and check-in systems company (later acquired by Hewlett-Packard), and established WestJet/JetBlue airlines. During the course of Mr. Neeleman’s business successes, his core values were his driving force. One of the often spoken of demonstrations of those values occurred when he donated his entire salary to the JetBlue Crewmember Crisis Fund, which was established for JetBlue employees who had fallen on hard times. In the early years of JetBlue, Neeleman always sat in the last row of each Airbus A320 aircraft when flying on his company’s airplanes, to demonstrate that pleasing the customer is more important than pleasing the CEO. Currently, Mr. Neeleman lives with his family in Connecticut and is the father of nine children. He speaks fluent Portuguese and holds both U.S. and Brazilian citizenship. If you take a very close look at his life, you will see that the traits and behaviors that form the basis of Mr. Neeleman’s leadership style were learned young in his life while he fulfilled his two-year mission work. We also saw Mr. Neeleman’s demise almost 10 years ago as JetBlue’s CEO where his board said he was a visionary entrepreneur but not an operations person.

Certainly within our insurance industry world, we have many insurance leaders who demonstrate their core values each and every day and have created successful and prosperous businesses due to those values. So many of these standout insurance executives are visionary entrepreneurs AND operations geniuses. They know it takes both and have proven that year after year. These executives often “sit in the back row” of their companies, work side-by-side with their staff, and consider no job too small or insignificant for them. If you would like us to “spotlight” a current or former insurance executive in an upcoming newsletter, please share the story with us. We are proud of the core values that are in our industry and look forward to hearing from you about who you think personifies solid core values.
Some Media Accounts of Florida’s Property Market Disputed by McCarty
Wednesday 7/23/14- Rebutting the characterization of Florida’s property insurance market by some in the media, Insurance Commissioner Kevin McCarty this past week was given the opportunity to pen a guest column for the Sarasota Herald-Tribune and in doing so, painted a much stronger picture. The following is Commissioner McCarty’s column:

The Florida homeowner’s insurance market is the strongest it has been in 10 years. Florida companies, which make up a majority of this market, have built $4.5 billion in surplus, $16 billion in reinsurance capacity, and renewed profitability that has created new competition in the market. As a result, Florida consumers now have more options and choices for homeowner’s coverage. Yet, recent news coverage paints a different picture, one that requires clarification on the recent failure of Sunshine State Insurance Co., an insurer with 37,684 of the approximately 6.1 million residential property policies in Florida. These failures do not happen as frequently as claimed. Over the past 10 years, 12 homeowners insurance companies have failed in Florida — eight of them had assumed policies from the state-backed Citizens Property Insurance Corp. or its predecessor. This is in a universe today of 119 companies with homeowners policies in Florida.

There were indeed no hurricanes during the more recent period when four of those eight failed. But there were sinkholes. According to our data, companies have lost billions of dollars in sinkhole claims in recent years. It wasn’t a hurricane catastrophe, but it was nevertheless a claims catastrophe, which the Legislature subsequently — and successfully — addressed. The industry endured one of the worst economic periods since the Great Depression and has only returned to profitability in the past few years. Nor is anyone lax in monitoring these insurance companies, as some coverage has suggested. We have toughened the rules and procedures over the past three years and continue to evaluate our efforts. Private insurers must have a minimum of $15 million in surplus, up from $5 million previously required. The Office of Insurance Regulation does a critical analysis of companies that participate in the Citizens Depopulation program. We challenge their business plans and marketing assumptions. We look at whether the insurer employs viable business strategies for underwriting, policy selection, geographic distribution of risk and the selection of rates. We also run stress tests — based on current and potential scenarios — to determine a company’s tolerance to changing market conditions. We work to ensure that the policies they take out, they can actually keep. This spring the Legislature gave us additional tools to aid in the ongoing supervision of insurance holding companies. New solvency standards make fundamental changes in the way insurance companies and their affiliates are supervised by the Office. Yet, companies do fail; it happens in any business. In the finance, insurance, and real estate sector, only 58 percent of startups are still operating after four years, according to Statistic Brain Research Institute. Sometimes, insurers fail because of mismanagement or fraud. Some insurers have filed false financial statements or made misrepresentations to regulators as to the health of the company. But we live in a competitive system and that involves failures — and successes. A number of startup companies that began with $5 million in surplus a few years ago now have tens of millions of dollars or more in surplus. They employ thousands of people and some have expanded their operations beyond Florida. The Florida Office of Insurance Regulation will continue its diligence to ensure that insurance companies licensed to do business in Florida are financially viable, operating within the laws and regulations governing the insurance industry, and offering insurance policy products at fair and adequate rates which do not unfairly discriminate against the buying public.
Early Payoff of Bonds Equals Termination of Certain Emergency Assessments
OIR SAYS NO RATE FILING NECESSARY
Tuesday 7/22/14- The Florida Office of Insurance Regulation (OIR) has issued Orders to insurance companies terminating a 1.3% assessment on most property insurance policies that have been used to pay off past hurricane claims. The assessment will be eliminated on policies issued or renewed on or after January 1, 2015 – 18 months ahead of schedule, due to an early payoff of the bonds used to pay the claims. LMA asked OIR If a rate filing was required to remove the assessment from premium statements and OIR’s Director of P&C Product Review Sandra Starnes said, “No (rate filing needed)… there is no filing requirement for the FHCF emergency assessment. It was a pass-through so insurers could charge it without it being in their manuals. Some insurers wanted to include it in the rating manuals, which we allowed as long as there was language that said the assessment was not subject to the review and approval of the Office. If an insurer did include it in the manual, they could make a filing to remove it if they so choose.”

The Florida Hurricane Catastrophe Fund (Cat Fund) emergency assessment applied to all premiums on property and casualty insurance policies in Florida, including surplus lines, but excluded those lines specifically exempted by law. The charge began at 1% in 2007 and was increased to 1.3% in 2011. The $2.9 billion collected through May 31, 2014 was used to reimburse insurance companies for claims from the series of eight hurricanes that hit Florida in 2004 and 2005. The Cat Fund currently has almost $13 billion available: $2 billion in pre-event bonds and the rest in the bank projected at 2014’s end.

Both Orders, one to <a href=”http://origin.library.constantcontact.com/download/get/file/1112374130762-63/2014CATFundEmergAssessmentPC154708-14-O.pdf”>property and casualty insurers </a>and the second, to the <a href=”http://origin.library.constantcontact.com/download/get/file/1112374130762-64/2014CATFundEmergAssessmentSurplusLines156729-14-O%5B1%5D.pdf”>Florida Surplus Lines Service Office (FSLSO) and surplus lines agents </a>give specific guidance as to the types of insurance affected and related information on reporting requirements. An <a href=”http://origin.library.constantcontact.com/download/get/file/1112374130762-65/OIR-14-04M.pdf”>Informational Memoranda</a> was also issued, providing further guidance. Pursuant to the Orders, all policies issued or renewed on or after January 1, 2015, will no longer be subject to the Cat Fund emergency assessment. The assessment will continue to apply to the direct written premium on all related transactions including, but not limited to, endorsements, policy cancellations, and audit premiums related to policies issued or renewed prior to January 1, 2015 at the applicable percentage below:

•Policies issued or renewed on or after January 1, 2015: emergency assessment is 0%

•Policies issued or renewed January 1, 2011 – December 31, 2014: emergency assessment is 1.3%

•Policies issued or renewed January 1, 2007 – December 31, 2011: emergency assessment is 1%

•Policies issued or renewed prior to January 1, 2007: emergency assessment is 0%

Please contact LMA if you have any questions concerning OIR’s Orders or need guidance in complying with their requirements.

AOB Battle On-Going in the Courts-Industry Continues Making Legal Headway
Tuesday 7/22/12- An attorney with the Central Florida law firm of Groelle & Salmon who represents a number of Florida property insurers has successfully obtained another Dismissal with Prejudice of an Assignment of Benefits suit. Roland Bernal of Groelle & Salmon’s Vero Beach office secured an order granting defendant insurer’s Motion to Dismiss Plaintiff’s Second Amended Complaint with prejudice filed by a water damage mitigation company claiming to hold an assignment of benefits. The water extraction company’s Complaint alleged one count for breach of contract. The Court referenced the following reasons to support the dismissal with prejudice: (1) Plaintiff lacked standing to sue defendant insurer as the assignment was a nullity because the policy contained an anti-assignment clause and because plaintiff had not alleged that there was an amount due and owing at the time the assignment was entered into; (2) Plaintiff failed to allege an insurable interest as required by Section 627.405; (3) the assignment was unenforceable as it was contrary to Sections 626.854(1) and Section 626.854(16); (4) the purported assignment was unenforceable as it lacked an essential price term; and (5) because the named insured was an indispensable party to the suit and had not been named as a party to the suit. Regarding the insured as an indispensable party, the Court elaborated in the order stating:

The Plaintiff has clearly represented that [the named insured] will not be included in their pleadings. This reflects additional “agreements” between the Plaintiff and the “assignor” which are also lacking in the purported assignment and the pleadings. Here, the “assignor”, pursuant to the contract with the Defendant has an interest in the controversy of such a nature that a judgment could not be made without affecting that interest. An indispensable party is a constitutional matter, not a back-room agreement nor an ambiguous poorly written “assignment.”

LMA congratulates attorney Roland Bernal and Florida Peninsula Insurance Company in winning this latest legal battle against abusive practices surrounding the use of AOBs in property insurance claims.
Gaetz Appoints Jim Henderson to Citizens Board of Governors
Tuesday 7/15/14- Senate President Don Gaetz (R-Okaloosa) has announced his appointment of Jim Henderson to the Citizens Property Insurance Corporation’s Board of Governors. In making the appointment President Gaetz noted, “Jim Henderson is one of Florida’s most experienced leaders in the field of insurance.” “He will bring a solid understanding of the often complex aspects of the industry, including reinsurance, to the Citizens board.” Gaetz further said that, as a Senate appointee, Henderson will support ongoing action to reduce Florida residents’ liability for losses sustained by Citizens in a major storm. Henderson, CEO of Assured Partners in Lake Mary, FL, is a 35-year veteran of the insurance industry. He began his career as an audit supervisor in the health insurance practice at Ernst & Whinney. Since then, he has served as CFO, Senior Vice President, and treasurer of Ormond Reinsurance Group and vice chairman and COO of Brown & Brown. Additionally, Mr. Henderson is vice-chairman of the Board of Trustees of Embry-Riddle Aeronautical University and has served as a member of the Board of the School of Business Administration of Stetson University, the Council of Insurance Agents and Brokers and the Florida Hurricane Catastrophe Fund. He previously served as co-chairman of the Insurance Accounting and Systems Association’s Property & Casualty Committee, president of the Central Florida Chapter of Financial Executives International, and as a member of the Board of Directors of United Way of Volusia/Flagler Counties and the Ronald McDonald House. He is appointed to the board for a term beginning August 1, 2014, and ending July 31, 2017.
Citizens Strikes Deal with Law Firm to Resolve Some 300 Sinkhole Claims
Earlier this month (July 17th) Citizens Property Insurance Corporation announced that it had reached an agreement with the Florida-based law firm Thompson Trial Group, P.A. to finally resolve approximately 300 pending sinkhole claims. Under the agreement the sinkhole claimants will receive settlement offers to end litigation and make critical repairs to their homes. Local communities and future buyers also will benefit through increased property values and the knowledge that professional repairs have been completed. As part of the settlement, Citizens will pay for below-ground repairs recommended by a professional engineer, who also will monitor repair work and direct any additional necessary below-ground repairs. Policyholders will choose their below-ground repair contractor from a pre-approved list. Once those repairs have been completed, Citizens will pay for any additional related above-ground damages. Importantly, each homeowner who participates in this settlement will receive a 5-year warranty from the contractor who performs the below ground repairs. “Citizens’ number one priority has always been to ensure the safety of our policyholders by making timely, appropriate repairs to their homes,” said Chris Gardner, chairman of Citizens’ Board of Governors. “This settlement allows us to do just that, providing much needed closure for homeowners on their most valuable investment.” In addition to making the repairs necessary to secure the affected homes, the agreement allows Citizens to avoid millions of dollars in additional litigation expenses.
 What a Tangled Web, uh I, mean Map, We Weave
The beat goes on in the debate about the state’s congressional districts. You will recall that Florida Circuit Judge Terry Lewis recently found that the Legislature broke the law when it drew up political maps in 2012 and rejected arguments from legislators that they had “done nothing wrong.” Subsequently, Judge Lewis was told that this is no practical way to redraw the state’s congressional districts prior to this year’s elections and while the republican leaders don’t plan to appeal his ruling, they want Judge Lewis to allow them to do the “re-drawing” after the November elections. Voting-rights groups have asked Judge Lewis to delay the state’s congressional elections while the judge searches deeper into how the maps should be drawn. The state and elections officials have argued that overhauling the maps now would create “chaos.” Raoul Cantero, a former state Supreme Court justice representing the Senate on the case stated, “The fundamental problem is, we could have a new map tomorrow, and we still don’t have time to make it for this election, because people have already returned their ballots and voted.” So, we wait to see if there will be an appeal of Judge Lewis’ ruling — depending on what the Judge decides-and we will keep you informed.
Tropical Depression #2 May be Moving Our Way
Day 58 of the 2014 Atlantic Hurricane Season is giving us another tropical depression coming out of the central Atlantic Basin. Presently it is moving toward the west-northwest and is southeast of Miami. Tropical Depression #2 (TD-2) was located in the Central Atlantic Ocean east of the Lesser Antilles, southeast of Miami. Forecasters from the National Hurricane Center expect TD-2 to degenerate into a tropical wave or dissipate completely. Hopefully, the forecasters will be correct and Florida will fortuitously miss another hit.
Medicaid Marketing Events Banned
Florida is banning health insurance companies from marketing directly to Medicaid recipients, as our state rolls out its health insurance program for low-income and disabled individuals. Only with prior approval from the state, can private companies (that have contracts with the state to provide care to Medicaid patients) market to consumers. Under the Medicaid privatization plan, the state gives insurance companies a set amount between $300 and $428 a month to care for 3 million plus patients, with half of that number being children. The insurance companies determine patient care, what doctors can be used, and what treatment can be prescribed, while consumers choose among the insurance companies that have state contracts to offer the coverage. The Agency for Health Care Administration (AHCA) says the ban is because officials are focusing on enrollment and making sure patients don’t have lapses in their care during the transition. The new Medicaid enrollment began in May of this year and ends in August for the general population. Those who are 65 or older and those who live in nursing homes (long-term care population) have already completed enrollments.
Politics at its Best and Worst – Our Own House of Cards
Many of you follow one of the more popular television series on Netflix, “House of Cards.” It is an intriguing political drama that takes place in the nation’s capital, and stars Kevin Spacey and Robin Wright. While it is intriguing and a bit “addictive” to those of us who have been involved closely in the political comings and goings of our government processes, it’s also just a bit scary. We know that our government is made up of many, many hardworking, dedicated folks, who have the people’s best interest at heart. We also watch many of the issues that are batted about to and fro and think, wow, this could be an episode of “House of Cards.” We work very hard at LMA to do what is best for the citizens of our great state and we are also very aware of the times when the best for our citizens is not being advanced. Those are the times we really put on our boxing gloves and stay strong. You can count on us always to be watching and working all the time and keep our state from becoming a house of cards.

Taking care of business……Lisa

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