Monday September 16, 2013
Things Have Been So Busy In Our World…..We Just Had To Update You!
As most of you know, for the past three months or so we’ve been publishing your newsletter about every two weeks. It’s been summertime, a period when things in the Capital City have traditionally slowed down a little, especially around the Legislature and Capitol Complex. No sooner could we get Labor Day under our belts and football season underway did our industry return to its normal break neck, always exciting pace! So many important issues have developed since we published the last newsletter exactly a week ago today; we felt it highly important to brief you on a number of them. So, with that said, lets jump right into the thick of things…..
DFS Abruptly Withdraws Proposed Rules Addressing Public Adjusters-Why?
It appears Friday the 13th’s tradition of bringing disturbing news is still around because on Friday, September 13, after the close of business for LMA and other interested parties who receive government notices of rule and statutory issues, the Department of Financial Services (DFS), Division of Agent & Agency Services announced that it was withdrawing from consideration proposed rules impacting the conduct of public adjusters, public adjuster apprentices and to a lesser extent, all-lines adjusters. The Division has been working on these rule revisions for almost two years. Our team has worked diligently to keep you apprised of developments and convey your comments and concerns about the rules to DFS. Although the Department’s notice failed to contain the reasoning behind the withdrawal, we have contacted the Division and requested an explanation. Hopefully, at some point in the near future the Department will re-file the rules and move forward to adoption. Regardless, we will keep you apprised of developments and share with you what we learn from DFS. Please click HERE to view the department’s withdrawal notice.
Insurers Have Tough Decision Regarding Pending PIP Cases And EUO Disputes-Can the decision affect other coverages?
In our July 15th newsletter edition we briefed you regarding a Florida Supreme Court decision siding with an insured who refused to attend an examination under oath requested by her insurer. On September 11th Florida’s 4th District Court of Appeals (DCA), relying in part on the recent Supreme Court decision, ruled in favor of Natalie Lewis and against her auto insurer, Liberty Mutual, when Lewis refused to honor Liberty Mutual’s request that she submit to an examination under oath concerning an automobile accident. When Lewis was injured in a Broward County auto accident she filed a claim seeking PIP and uninsured motorist benefits from her insurer, Liberty Mutual. When the insurer requested that Lewis attend a EUO, she refused to cooperate unless the EUO was held in her attorney’s office. Lewis thereafter filed suit against the insurer and on Wednesday the 4th DCA overturned a circuit court decision that had determined that the EUO was a valid condition. During the Florida Legislature’s 2012 Regular Session, significant reforms were made to the state’s PIP statutes including an amendment allowing auto policies to require insureds’ attendance for EUOs. However, in the Supreme Court’s June 27th ruling the court said the EUO requirement does not apply to cases that began before the new PIP laws took effect January 1, 2013. At this juncture it appears auto insurers have some tough decisions to make regarding whether to continue litigating EUO refusals which started prior the effective date of the new law or move to settle such cases in order to reduce costs. We will be anxious to hear your feedback from those who specialize and offer other coverages to see if this case holds any pearls of wisdom for you and of course, offer our assistance and thoughts at any time.
Homeowners Rates Going Down
Many of you who follow insurer regulatory filing trends in the property insurance market have sent our office information on various form and rate changes. You will recall that during the summer, state policymakers have discussed in the media and at town hall meetings throughout the state, for example, what would happen to insurance rates now that reinsurance costs have gone down for the 2013-2014 hurricane season. To keep you up to date, American Strategic Insurance Company (ASI) was the first to release an average rate decrease of 7.8% with others announcing single digit rate increases within a few days of ASI’s filing in OIR’s I-File system? Security First Insurance Company recently announced its reduction in homeowners’ rates by an average of 9.3 percent statewide. Under the “use and file” method utilized by insurance companies, policyholders will begin benefiting from these new rates before the end of this year. We routinely monitor the filings in the I-File system and, the primary reason for the rate reductions is the reduction in reinsurance costs and improved experience with non-catastrophe losses. Others mentioned the effects of improved legislation over the past couple years. Many of the insurance companies announcing these decreases are LMA clients and are ones that are actively involved in the legislative and regulatory process. It is their diligent efforts over the past several years working with state policymakers to improve the overall property insurance market in Florida that is partly responsible for these significant rate reductions and we applaud our clients for standing beside the LMA team to improve Florida’s property insurance market!
DFS Continues Work to Amend Rules Governing Neutral Evaluation Process & Procedures
The Department of Financial Services (DFS) is continuing its efforts to promulgate significant amendments to the administrative rules prescribing neutral evaluation processes and procedures, Rule Chapter 69J-8, Florida Administrative Code. The purpose of the rule amendments is to conform the rule chapter with the current wording of Section 627.7074, Florida Statutes, relating to the neutral evaluation process for disputed sinkhole claims. The proposed amendments will address a number of issues including, DFS’s maintenance of the list of approved neutral evaluators; selection of a neutral evaluator; the evaluation process; the selection of a DFS employee for consultation for policyholders not represented by legal counsel; and the neutral evaluator’s report. On September 11th the Director of DFS’s Division of Consumer Services, Tasha Carter, provided LMA with a copy of the agency’s latest proposed rule amendments and noted that a Rule Hearing will be held in Room 116 of the J. Edwin Larson Building on Wednesday, October 2, 2013 at 9:30 a.m., if requested in writing by September 27th. Please click HERE to read or print a copy of DFS’s latest proposed rules.
Ms. Carter requested that any comments or questions about the proposed rule amendments be sent to her. Comments or questions as well as requests to go forward with the hearing scheduled for October 2 should be made in writing and sent to Ms. Tasha Carter, Director, Division of Consumer Services, Department of Financial Services, 200 E. Gaines Street, Tallahassee, FL 32301 or to [email protected] ; Ms. Carter can also be reached at (850) 413-5800.
Key Staff Appointments Announced By Citizens – Congratulations to John Rollins and Jennifer Montero
Citizens Property Insurance Corporation announced it has filled a pair of key positions to enhance its financial and risk oversight capabilities. Citizens’ President and CEO, Barry Gilway said in his release that former Citizens Board of Governors member John Rollins will become Citizens Chief Risk Officer. Rollins, appointed by Gov. Rick Scott in 2011, was required to resign from the board to fill the position and, the decision marks Rollins’ return to Citizens, where he served as director of analytics from 2006 to 2007. Gilway also announced that Jennifer Montero will become Citizens’ Chief Financial Officer. Montero, a 1994 graduate of Florida State University (accounting) and a certified public accountant who has served as interim CFO since June, has been with Citizens and its predecessor organizations in various capacities since 1999. “Jennifer and John are known quantities with deep knowledge of Citizens operations and the direction we are taking going forward,” Gilway said. “They will be immediate contributors to our efforts to become a smaller and more efficient insurer.” Among her new duties, Ms. Montero will oversee Citizen Risk transfer program, which has successfully transferred $1.85 billion in risk to private investors and off the backs of Citizens policyholders and all Floridians who insure their homes, automobiles, boats and other assets. Likewise, Rollins will oversee Citizens’ enterprise risk management, actuarial, analytics and product development when he begins his duties Oct. 14. The newly created position comes in response to an ongoing organizational review by KPMG commissioned by Citizens Board of Governor’s last year. Most recently, Rollins was president of Rollins Analytics Inc. and vice president for public risk services at AIR Worldwide Corp, a global provider of risk modeling and consulting services. A 1990 graduate of Duke University (mathematics), Rollins earned a master’s degree in economics from the University of Florida. He is longstanding member of state and national actuarial associations. We wish Jennifer and John the best as they take on these important responsibilities on behalf of all Floridians.
Senate Committee to Shine Bright Light On Citizens Property Insurance Corporation’s Non-Resident Policies
When the 2014 Regular Session kicks off in early March, the Citizens Clearinghouse program will be about eight weeks old, hardly long enough to gauge whether the program and other Citizens reforms passed last session have met with success. For this reason, many thought that perhaps the Senate and House insurance committees would focus their attention away from Citizens and on to other insurance priorities. Think again. It has already been made clear that the Senate Banking and Insurance Committee will focus to some degree on a report revealing that two-thirds of the Corporation’s policies cover rental properties or vacation homes, including approximately 200,000 owned by insureds living in other states or foreign countries. Senator David Simmons (R-Seminole, Volusia), Chair of the upper chamber’s Banking and Insurance Committee said to the Miami Herald recently that his staff is in the process of drafting legislation to mandate that policies covering homes owned by non-residents be charged actuarially sound, non-subsidized rates. Simmons’ comments to the Herald were prompted by the release of a report from the Stronger Safer Florida Coalition focusing on the number of Citizens covered homes which are likely not primary residences, including a significant number in the coastal account being charged largely inadequate rates. Chairman Simmons characterized the situation for the Herald as a “real issue” and “grossly unfair.” The Coalition, whose membership includes the Florida Chamber, Associated Industries of Florida (AIF) and the Florida Wildlife Federation, performed research which determined that when the corporation mails billing invoices, only 31 % of them go to the physical address of the insured property. The balances of invoices are addressed to other locations in Florida and international locations. The study further indicated that almost 27,000 billing statements are sent to New York addresses, 12,000 to New Jersey addresses, 19,000 to Canadian addresses and several hundred to residents of France, Germany and England. In summary, the study found that Citizens is providing insurance coverage to 22,775 property owners who live in other countries and to about 176,465 insureds living in states other than Florida. When spoken to recently by the Miami Herald, Manley Fuller, President of the Florida Wildlife Federation and a member of the Stronger Safer Florida Coalition said, ” It is bad public policy to continue to allow public subsidies for wealthy, out-of-state homeowners.” In a related response to the Coalition’s study, Associated Industries of Florida President Tom Feeney said, “Floridians should not be financially responsible for the property insurance needs of homeowners who live out of the state or country. To continue to require all Floridians, including Florida’s business community, to subsidize homeowners property insurance for these individuals is unfair and unjust. The 2014 Legislative Session is an opportune time for the Florida Legislature to continue on the path of reform and make changes that eliminate the financial risk associated with allowing non-Floridians to purchase insurance from the state’s ‘insurer of last resort.” This issue promises to continue drawing significant attention from the Legislature as well as media and we’ll stay well on top of each development. Stay tuned for updates!
Citizens Committees to Meet Throughout the Day Thursday (Sept 19, 2013) in Jacksonville
This Thursday (September 19) beginning at 10:00 a.m. through 4:30 p.m. three of Citizens’ standing committees will meet in order to receive important program updates from corporation managers and address issues that must be deliberated by board members. Interested parties may listen to the committee meetings via conference call by calling (866) 361-7525 at the scheduled time of the meeting and entering the conference call ID numbers provided below. The Market Accountability Advisory Committee will meet from 10:00 a.m. to 12:00 p.m., EST. The ID number for this meeting is 7849939192# and the meeting agenda/reference materials will be available HERE. The Audit Committee is scheduled to meet from 1:00 p.m. to 2:30 p.m., EST and the ID number for this meeting is 3877541849#. The meeting agenda/reference materials will be available HERE. The Finance and Investment Committee will meet from 3:30 p.m. to 4:30 p.m., EST and the ID number for this meeting is 2478401990#. The meeting agenda/reference materials will be available HERE. LMA representatives will, of course, attend these meetings on behalf of our clients and provide a thorough update in an upcoming newsletter.
Commission on Hurricane Loss Projection Methodology Meets September 24 & 25
The Florida Commission on Hurricane Loss Projection Methodology will meet all day on September 24th and 25th beginning at 9:00 a.m. and concluding at 4:00 p.m. each day. The two day meeting will take place in the Hermitage Conference Room, Hermitage Centre, and 1801 Hermitage Boulevard, Tallahassee, Florida 32308. A conference call number has been established for those who cannot attend the meetings and the number is (888) 670-3525 (US and Canada) or (770) 389-1212 (International). The Conference Code Number is 7135858151. Please click HERE to view or print a copy of the official agenda. Of particular note on the agenda is AIR Worldwide’s Request for Acceptability of Atlantic Tropical Cyclone Model v14.0.1 as implemented in Touchstone 1.5.0 and 1.5.1, respectively. If you have any questions about the upcoming two-day meeting or agenda please contact Donna Sirmons at (850) 413-1349.
Vehicle Registration Fee Reductions Back For 2014 Session
In a not so surprising move this past Thursday; Senate Appropriations Chair Joe Negron (R-Indian River, Martin, Palm Beach, and St. Lucie) filed a bill (SB 156) for the 2014 Session to reduce vehicle registration and drivers’ license fees from their increase in 2009. However, the bill does not fund the proposed fee reductions by repealing the insurer premium tax salary credit, an effort certain senators proposed during the 2013 Regular Session. In its current form, SB 156 would offset the fee reductions using funds from state general revenue. Many will recall the back and forth chess game played last session with Negron and Senate President Don Gaetz on one side and key House members on the other. Negron’s senate bill last session (SB 1832) was ultimately approved by the Senate with a unanimous vote which triggered a strong reaction from insurance and business interests. Opponents often asserted that repealing the insurer employee salary tax credit would stymie job growth in the insurance industry and make Florida less attractive for insurance investment capital. The House ultimately refused to go along with Negron’s legislation and maintained the salary credit. When discussing his bill on Thursday, however, Negron made no promises and stated that the Legislature would still need to review legacy programs in the budget to make room for new spending and tax cut priorities. He added that ending tax breaks for favored industries would also be a part of budget talks this year. We will keep a keen eye on this issue and let you know important developments.
Workers’ Comp Division Sets Reimbursement Manual Rule Workshop For September 19
The DFS Division of Workers’ Compensation submitted a Notice of Development of Rulemaking for Rule 69L-7.501, F.A.C., Florida Workers’ Compensation Reimbursement Manual for Hospitals. The Notice, which appeared in the August 30, 2013 edition of the Florida Administrative Register (FAR), provided that, if requested in writing and not deemed unnecessary by the agency head, a rule development workshop would be held on Thursday, September 19, 2013 at 10:00 a.m., eastern daylight time (EDT) at 2012 Capital Circle, SE, Room 102, Hartman Building. The Division has received a request for the workshop; therefore, a rule development workshop will take place on the above date at the stated time and location. A draft version of the Florida Workers’ Compensation Reimbursement Manual for Hospitals, 2014 Edition, is available for review. The official Notice of Rulemaking appeared in Volume 39, Number 170, of the FAR. If you have questions about the proposed rules or scheduled workshop, please contact Eric Lloyd, Program Administrator, Office of Medical Services, and Bureau of Monitoring & Audit, Division of Workers’ Compensation, at (850) 413-1689 or [email protected]
Compliance Reminder: Licensed and Appointed Agents Must Be Involved In Life & Health Sales
In our July 15th compliance reminder we addressed the current countersignature laws for property & casualty insurance and the requirement that licensed and appointed general lines agents be involved in the application and policy issuance process. We received many questions resulting from our article that asked whether an officer of a life insurer could, alone, solicit and complete applications for life insurance without being licensed and appointed as an agent in Florida. The answer is no. Section 626.112(6), Florida Statutes, clearly indicates that an officer or other salaried employee of a life insurer may solicit and effect contracts of life insurance without being licensed as an agent, when and only when he or she is accompanied by and solicits on behalf of a licensed and appointed agent. A companion provision of Florida’s Insurance Code exists which addresses the taking of applications and issuance of contracts concerning life insurance, annuities and health insurance policies. Section 624.428(1), Florida Statutes, states, ” No insurer shall deliver or issue for delivery in this state any policy of life insurance, master group life insurance contract, master credit life policy or agreement, annuity contract, or contract or policy of health insurance, unless the application for such policy or contract is taken by, and the delivery of such policy or contract is made through, a resident or nonresident insurance agent of the insurer duly licensed and appointed under the law of this state, who shall receive the usual commission due to an agent from such insurer.” We hope this compliance reminder has helped our readers become more familiar with Florida’s Insurance Code. Please contact us if you have any questions about this topic or other Code provisions of interest.
And the Beat Goes On!
Tracking regulatory rules, watching Citizens happenings, maintaining compliance with laws, and keeping the insurance industry thriving in our state is a full time job with a loud and strong drumbeat. We promise to make sure you know all the news as the beat goes on but more importantly, represent your interests as the drumbeat gets louder and louder. Thank you for all you do everyday and for your support of our work so we all can keep up the beat!
My best, Lisa
