January 4, 2017 Newsletter




January 4, 2017

 2016-17 Legislative Session

Interim Committee Meeting Schedule


Tallahassee’s New Meeting Place!

We now have The Conference Room available for rental for all kinds of events.  Co-located with the offices of Lisa Miller & Associates, The Conference Room is an affordable and convenient venue for business, political or social events.


You can see photos and details on our website at http://lisamillerassociates.com/the-conference-room.  For more information, contact Roberta Courtney-Bailey at 850-222-1041, or via email at [email protected].  And feel free to come by and take a look!



A Fresh Start

As we launch into the New Year, please reflect with me for a few minutes on who we are and where we hope to go in the 12 months ahead.  I wanted to share my 15 NEW YEAR’S RESOLUTIONS for 2017:
— To appreciate my family, friends, and colleagues for who they are, what they mean to me and others, and to gracefully overlook some things they do (or don’t do!).  None of us is perfect and accepting that reality helps relationships flourish.
— To act upon wrongs that need righting, crass statements that require correction, and offenses that demand just responses.  We set a positive example by not accepting negativity in others.
— To be a valuable teammate and to trust others to do their best.  Each of us should know what position we play, and regularly practice our skills to be our personal best.

— To actively listen to the voices of children and elders. Accepting the wisdom of innocence and experience is both free and priceless.
— To accept that I don’t know everything. By collaborating with others who know much more, together we can create a great brain trust and blend expertise.
— To pleasantly surprise someone every day with a genuine smile and unexpected kindness in word and deed.  Life’s subtle gifts of compassion and concern are cherished.
— To respect and celebrate the diversity of faiths, feelings, and fashions. Differences are natural and honoring each other’s perspectives creates mutual admiration.
— To exercise artistic expression for its intrinsic value. The vitality of the instrumental, literary, dance, visual or vocal arts fuels the soul and expands the mind to new possibilities.
— To invest a thoughtful minute before I speak or act.  Regret is often preventable. Reversing harm is one of life’s most vexing challenges.
— To honor those who courageously sacrifice for us at home and abroad, care for our health, educate, protect us and perform the healing and helping arts so that our quality of life is improved.

— To share even if I think I don’t have enough. Setting an example by giving to others in need is one of the best lessons for children to observe.
— To protect, defend and advocate for people who rely on me. Give special attention to the needs of others of every stage of life who may not know how to find their own voice.

— To preserve natural environments for their beauty and bounty. Natural settings are home to plant life and species that are too often victims of our wants, not our needs.

— To never give up on a person or a cause, despite the challenges we face. Perseverance is an attitude that exemplifies leadership, attracts allies, and creates meaningful change.

— To speak truth to power, but to be both polite and persistent. There’s a fine line between persistence and pestilence. Resist aggressiveness, but advocate with assertion, confidence and commitment to the cause.  Advocating for prevention policies and programs that keep bad things from happening is the most important of all investments.

The new year is like a clean slate of sorts.  Let’s make the best of the year ahead!

NAIC December Meeting

In addition to choosing former Pennsylvania Insurance Commissioner Michael Consedine as its new CEO, the NAIC at its mid-December meeting in Miami also received important updates on NFIP reauthorization and tackled lessons in flood and fraud.

NAIC staff told the Catastrophe Insurance (C) Working Group that reauthorization will include proposed rulemaking for private flood provisions to the Biggert-Waters Flood Insurance Act of 2012 to require that lenders accept private flood insurance as an alternative to NFIP for federally-backed home mortgages.  When Congress convenes later this month, it’s expected to begin reviewing draft principles for an NFIP reauthorization bill recently approved by the House Financial Services Committee.  The GAO is also working on a report for the new Congress on how Write-Your-Own insurance companies are compensated by NFIP, the subject of a critical NPR/PBS Frontline investigative story last summer.

The Working Group also heard about the lessons learned and those still to be learned from the 2015 South Carolina flooding that caused $12 billion in total losses of which only $2 billion were insured.  Zurich’s report, Community Resilience – South Carolina Post Event Review Capability (PERC) Report among other interesting findings, recommends addressing misconceptions about flood risk and actual frequency of events; designing to enhance resilience and building back better; using FEMA funds to convert flood land to open space; and engaging local governments and policymakers on ways to increase accessibility and purchase of flood insurance.

The NAIC Antifraud (D) Task Force heard that baby boomers are increasingly committing fraud in retirement funds and real estate, in part due to their own financial insecurity as a group.  The Task Force heard from Matthew Smith of Smith, Rolfes & Skavdahl, based on the company’s previous presentation Portrait of Fraud: Are Insurers Properly Recognizing the Graying of America.  The average credit card debt of those 65+ are now second only to those in the 25-34 age group.  Smith advises insurers to be diligent: during these uncertain times of investment values, social security, and healthcare coverage, fraud is on the rise among older Americans.

Florida’s Workers’ Comp Medical Services The Low-Price Winner
The prices paid for medical services in Florida’s Workers’ Comp system were the lowest – at 31% below average – among the 31 states included in the recent WCRI Medical Price Index Study.  The annual study creates an index for the actual prices paid for professional services based on a market basket of commonly used services for treating injured workers.  The services selected represent about 42 percent of total workers’ comp medical costs.  The 31 states in the Index represent 85% of the country’s paid workers’ comp benefits.

The study found that higher prices were paid in states without fee schedules compared to those with them.  Kentucky, the only Index state with major fee schedule changes after June 2014, saw a major increase in prices.  Kentucky discontinued the use of relative values from Medicare’s resource-based relative value scale for its professional fee schedule.  As a result, overall prices for professional services in Kentucky increased 19% from 2013 to 2015.

Prices varied significantly across the states with Wisconsin 138% above the average and Florida taking the lowest spot at 31% below average.  In other words, overall prices paid in Wisconsin were three times that of Florida. The major surgery category saw the largest price drop in Florida – down 4% from 2014 to 2015 (see the breakdown in services costs on page 112 on the above link).  The overall price index in Florida went from a 13-year high of 123 in 2009 to 119 in 2015.  Florida’s workers’ comp premium was 2% below the Medicare fee schedule levels for Florida – the only state in the Index below the Medicare level.

As we know though, 2016 saw a 14.5% workers’ comp rate increase, not reflected in this report. Of that, 1.8% was a statewide average rate increase related to updates within the Florida Workers’ Compensation Health Care Provider Reimbursement Manual per SB 1402. The manual became effective this past July 1.

Florida Insurance Regulation Rates a “C” in New Report
The R Street is out with its annual Insurance Regulation Report Card,  which grades each state on how “effectively and efficiently they discharge their duties to monitor insurer solvency and to foster consumer choice and competitive, private insurance markets,” according to the free-market research think tank.  Florida this year received a “C” grade, up from the “D” it got last year.

For the third year in a row, Vermont had the best insurance regulatory system, receiving the only “A+” score.  Arizona, Idaho, Illinois, Kentucky, Maine, New Hampshire, Utah, and Wisconsin each received an “A” or A-“.  At the bottom of the pile was North Carolina for the second year in a row, with the only “F” grade.  Other poorly performing states were Alaska, California, Delaware, Hawaii, Louisiana, Massachusetts, Mississippi, Montana, North Dakota, and New York – each in the “D” range.

The report focuses mostly on P&C, particularly homeowners, auto, and workers’ comp, as these tend to be the most regulated lines, according to the report.

R Street noted Florida’s strengths as having no regulatory surplus, a competitive home insurance market, and a low tax and fee burden.  Florida actually has the least concentrated homeowners insurance market, with a Herfindahl-Hirschman Index score that was 2.2 standard deviations less than the average.  But the report noted Florida’s weaknesses of being behind on financial exams, a low homeowners loss ratio (which is an indication of high rates), and utilization of “desk drawer rules” – rules that regulators routinely apply but that are not contained in state statute, regulation, or rule.

In a rebuttal in the Insurance Journal, OIR insists its current on its exams, that Florida’s residual market has been dramatically reduced in recent years, and that a low homeowners loss ratio indicates insurers are earning a reasonable profit.  OIR claims ignorance of the “desk drawer rules” referenced.  Our newsletter readers will be reminded that on the health insurance side, Florida has likewise been criticized in the past for having a high Medical Loss Ratio (MLR), requiring insurers to provide rebates on amounts under the 80% MLR threshold to policyholders as required under ACA.

The R-Street report credited much of Florida’s improvement in recent years (it was in last place in 2012) to the continued shrinking of Citizens Property Insurance Corporation, which has dropped from 14.3% of the market in 2011 to just 5% of the market in 2015.

 Full Annual Data Calls to Continue Under Terrorism Risk Insurance Act
The US Treasury has released a final rule reflecting a list of changes – mostly housekeeping in nature – to the Terrorism Risk Insurance Act (TRIA) by its reauthorizing legislation.  Among the significant highlights:

  • Treasury plans no changes in current requirements that insurers disclose premiums charged for TRIA coverage.
  • Treasury declined industry calls to define a timeline for certifying “Acts of Terrorism”; rather, it will now provide a timeline for announcements when considering whether an act is eligible, beginning within 30 days of commencing a review of an incident and updates every 60 days until a decision is made to certify or not.   Industry groups noted that due to state laws on unfair claims practices, it may not be possible to await Treasury certification under TRIA before paying a claim.  Treasury has said that state laws allow for exceptions under such circumstances.
  • Full annual data calls will continue, despite requests by some insurers that Treasury utilize state regulators to secure some data through existing state data calls – a less administratively burdensome approach.
  • Likewise, Treasury will continue to define a “small insurer” as any whose policyholder surplus plus direct earned premium in TRIA lines from the preceding year is less than five times the Program Trigger for the current year.  Some insurers had questioned why surplus level was included, given that it’s not necessarily an indicator of a company’s size.
  • Companies must continue to provide notices disclosing the $100 billion cap at the time of purchase.

Most of the other changes involve removing obsolete language and requirements under previous authorizations dating back to TRIA’s 2002 inception. Click here to view the full Federal Rule.

Florida Medicaid Audit Finds $26 Million Paid to Deceased Persons
Last week the Miami Herald reported about the U.S. Department of Health and Human Services (HHS) audit findings that revealed Florida issued about $26 million in Medicaid payments over five years (from 2009-2014) for people who had already died.  The report cited a lack of collaboration among different agencies and stale database information as the root causes of the overpayments.  To put this overpayment audit finding in perspective, Florida’s Medicaid program is a $20 billion expenditure in Florida’s almost $80 billion budget and the Agency for Healthcare Administration (AHCA) which oversees Florida’s Medicaid program reported it recovered about $24 million of the overpayments, pending the federal government’s verification of the recovery exercise.

The federal government’s share of the overpayments amounts to just over $15 million and AHCA has put in place steps to halt the faulty payment practices including monthly database information review and methods to identify death information.  Of course this will remind our readers of how the life insurance industry verifies death information using the social security death master file – with some life insurers using it with some of its payment systems and not for others. You can read more about that in our previous newsletters.

Suffice to say that with any multi-billion dollar program  – public or private – mistakes are made.  It’s all a matter of degree!

Michigan’s Novel Idea at Auto Insurance Reform


Michigan, with the 6th highest auto insurance rates in the country (Florida is ranked #5 in the same III Report), came up with a novel idea this past fall to stem rising costs in their no-fault system: consumer choice.  Michigan is the only state in the USA that has guaranteed unlimited lifetime auto medical benefits, paid for in part by a $160 annual surcharge on policies.

Michigan Rep. Jason Sheppard sponsored HB 5951, which would let insurance consumers pick their own levels of medical coverage: $250,000, $500,000, $1 million, or unlimited coverage (what Michigan currently offers).  Doing so would save an average of 30% off auto insurance policies, per his estimates.  Those opposed fear that consumers would pick the lowest coverage and too many would end up under-insured as a result, with state Medicaid picking up the balance of their medical bills…and that insurance companies won’t promise it would lower rates (a familiar refrain, yes?)

Although Sheppard’s bill ultimately failed to pass (their legislature is pursuing an alternate bill to limit costs on certain procedures, similar to Florida’s own HB 119), it reinforces the mantra of consumer choice.  Even OIR’s final Pinnacle report outlines different consumer cost savings through choosing different medical payment levels.  Why can’t auto insurance consumers choose such limits just like they choose deductible limits on their homeowners policies?

As a point of editorial privilege: I think public policy should always be geared toward the greater good.  There will always be outliers who end up with catastrophic medical bills.  But a system that is based on consumer choice and cost accountability will surely bring down rates, reduce the continuing rampant fraud that we all pay for, and provide adequate coverage for the majority of Florida drivers.  What do you think?  We’d love to hear your feedback.

Florida Family Claims It Was Rooked by a Bird Rookery
When Tom and Molly Beyer bought a nine-acre island in the Florida Keys in 1970, they intended to hold it as an investment for their children.  But now the island – known as Bamboo Key – has seen development zoning change over the years from one house per acre, to one house per ten acres, and finally to a bird rookery allowing only primitive camping.

The couple has since passed away but their children are now asking the Florida Supreme Court to hear their appeal, saying the city of Marathon has effectively banned all future development of their property, amounting to an unconstitutional seizure without just compensation.

The family had previously appealed the bird rookery designation and showed their property value declined from the initial $70,000 investment to just $900.  Although a Special Master concluded “there is absolutely no allowable use” under city regulations, he awarded them 16 “ROGO” points.  ROGO, derived from the local “Rate of Growth Ordinance” is meant to control growth by allocating points toward possible purchase of one of the limited number of development permits available.

A trial court later ruled against the family as well, saying they unreasonably waited too long to make an initial claim, and didn’t present evidence they had a plan to develop the property when they bought it.  The 3rd DCA this past year upheld that decision, ruling that the ROGO points awarded provided adequate compensation and that the family had no reasonable investment-backed expectations for the property.  The family has continued to pay taxes and retain liability on the property, according to the Pacific Legal Foundation, which is representing the family at no charge.

As many of you are following the trends in the Supreme Court with opinions being released that are less conservative, it will be anyone’s guess what the court’s ruling will be in this case. We will keep you apprised.

The Capitol – A Safe Place ….Usually
Recently, I was in the capitol and as I often do, went to the Capitol Dining Room a/k/a Cafeteria for a salad and their homemade chicken salad! It was late on a Monday afternoon and I was greeted by a chorus of Capitol Police.  My favorite hostess who is one of the best short order chefs in Tallahassee said, “Sorry Lisa, we are closed right now,” and she shut the door abruptly.  As I walked away I saw officers headed toward the door – and eventually about a dozen of them were in force asking the other late lunchers to move back and away from the immediate area, with a suggestion that they leave the building or go the opposite side of the capitol building!  I did a little intel digging and coupled that with the bomb sniffing dog I saw that entered the dining room doors, I found out the culprit and cause for alarm was an unattended briefcase whose owner shall remain anonymous!  Oh the excitement–but I didn’t stick around for the episode’s conclusion.  Come visit Florida’s Capitol.  It’s a safe place, except for maybe when the legislature’s in session!
Pressing On
2016 was a year of daunting challenges and new responsibilities for many of us.  Life is about transitions, and as an incurable optimist, I believe the year ahead will open new doors and present valuable opportunities for all of us. I hope you agree.

Traditionally, New Year’s resolutions are about making a commitment to do something different in our lives, perhaps going in a new direction from that of the past. I’m thrilled to share my resolutions with you in the opening of this edition……you’re welcome to adopt a few as your own and offer a few of yours to me by reply e-mail.  Let’s talk soon!

Best wishes for a blessed 2017,

Your LMA Team