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With all the discussion about minimum wages that has been in the news lately, we’ve been thinking a bit about what it takes to make a living that is well above the minimum wage. Please don’t misunderstand. We respect and appreciate everyone who is out there every day doing their best to support themselves and their families. And it is true that sometimes a person’s compensation barely provides the basics of life. We, like you, only want the best for everyone and with that, it seems the place to begin the process of learning what we need to make the best living possible is to teach our children about money at the very simplest level. Preparing children for future financial success must start when they are young. On Sunday, April 24, America celebrated National Teach Children to Save Day. You may have missed that celebration, so we’re sharing a few ideas to help you teach your children about how to manage and grow their money.
1) Making Saving Fun – This can be as simple as creating a container with a picture of something your child wants glued to the front and how much money they need to save to purchase the item. Or create an even bigger challenge for your child, and the rest of the family, by planning a trip to a favorite amusement park. Make a container and place a picture of the park and an estimate of the cost for the family to make the trip on the outside of the container. Then all the members of the family can save for the trip together. Saving and teamwork…it’s a good thing.
2) Visit A Bank – It’s always a good idea for children to open their own personal savings account. A visit to the bank allows a child to speak with bank associate, tour the bank, and open the savings account “all by themselves.”
3) Reward Savings – There are lots of ways to do this, depending of the age of the child, but one sure fire way is to match every dollar they save. The children get to watch their account balances grow quickly. Of course, those matching dollars can always be a reward for those chores we try so hard to get them to accomplish.
4) Make a Budget – Again, this has to be done according to a child’s age but there is a simple formula using three categories: spend – save – give. With every dollar they receive, they can put a portion into each category. This helps children to prioritize their money into spending and saving, and most importantly, learning to help other by giving to others.
Just something to think about as we prepare our children, grandchildren or any other children in your life, to learn the fundamentals of money management. Give it a try and watch them learn and grow.
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New Insurance Commissioner Announced…And An Interesting History Lesson For All!
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We have spent the past few weeks following the Insurance Commissioner selection process, and on Friday morning 4.29.16, the governor and Cabinet finally made a selection: 34 year old Deputy Insurance Commissioner David Altmaier. Altmaier began his career with OIR in 2008 as an examiner in the P&C financial oversight unit. He became chief analyst in 2012, Director in 2014, and Deputy Commissioner in 2014 replacing Richard Koon. Prior to joining OIR, he was a math teacher and then spent two years working at a Tallahassee insurance agency. At OIR, he oversaw a revamp of the Office’s stress test for homeowners carriers to ensure they have proper reserves and claims payment capabilities heading into hurricane season. He has served on several NAIC committees, including as chair of the P/C Risk-Capital Working Group and the Capital Adequacy Task Force.
You may not recall how we as a state got to the point where the governor and CFO became locked in a tough stalemate that has finally thawed. Kevin McCarty is the only insurance commissioner to hold the office since the requirement was instituted that the governor and CFO would have to agree on the appointment. How that requirement was formulated is explained here.
Now that we finally have a new commissioner in place, let’s cross our fingers that our dry hurricane spell continues. We’ve had enough stormy weather to last awhile. Welcome, Commissioner Altmaier!
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McCarty Provides Farewell Look at Florida’s Insurance Markets
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Outgoing Florida Insurance Commissioner Kevin McCarty last week made his last appearance before his bosses, the Florida Cabinet, sitting as the Financial Services Commission, with a presentation on the future opportunities and challenges in Florida’s insurance markets. But the Commissioner was upstaged at the same dais later in the day by his own General Counsel, Belinda Miller, who was among the applicants to replace him.Miller, in discussing how Assignment of Benefits (AOB) in roof and water damage claims is driving rate increases in the homeowners market, said the issue is broader than AOB. “The real issue here is what’s driving increased losses? It’s not that we’ve had a huge influx of water. It’s that you have litigation incentives that give people the wrong incentive. It gives them the incentive to bring cases where they might not otherwise do it. So I think you have to look at the Bad Faith law,” Miller said.
Readers please note: Belinda Miller’s remarks mark the first time that an OIR official has ever publicly spoken of the need to reform Florida’s Bad Faith law. But Miller didn’t mention F.S. 627.428 which is the one-way attorney fee statute, which we know is another driver of the exploding number of lawsuits.
Our team did some research and found that in just one Florida circuit (there are 20 circuits) in one day, one insurance company received seven filed lawsuits. We have 60 Florida-based homeowners insurance companies at ever greater risk of exploitation due to Bad Faith law abuses. But at least Miller talked about one of the drivers of rampant lawsuits – the current Bad Faith law. (Here’s video of her remarks, beginning at timecode 24:44: http://thefloridachannel.org/videos/42616-florida-cabinet-meeting-part-2/).
Here’s Commissioner McCarty’s views of what lies ahead in Florida’s markets:
· Affordable Care Act: The feds “3 R’s” (Risk Adjustment, Risk Corridor, and Reinsurance) are in fact causing a great deal of rate instability in terms of marketing planning, especially for companies with a limited amount of capital basis to begin with. He pointed to failed HMO Preferred Medical as “a casualty of that market volatility.”
· Long Term Care: One way to lessen the Medicaid burden is to encourage employers and individuals to purchase long term care and encourage companies to offer life policies that can be converted.
· HMO Laws: Our HMO laws need to be re-visited, as we don’t have the risk-based tools we do in healthcare lines. “Not only is there a capital challenge, but a structural one, too.”
· P&C Market: Citizens’ depopulation has led to a “good market…and (we) look for a successful future” yet OIR’s recent data call shows the AOB problem has extended beyond South Florida. Although OIR is allowing Citizens to change its forms so it can review repairs before they happen (and now helping private companies do likewise) the Office has done all it can on the policy side “but are encouraged these policies will help create lasting changes”.
· PIP: Although we’ve seen a 13% increase in the past year, “the fact is people are driving more and so there are more accidents”. McCarty said OIR is working with Senator Brandes on potential PIP alternative.
· Private Flood Insurance: We’ve met with NFIP to better understand how federal flood rates are set and eliminate the burdens the feds have placed on the private market that discourage growth of the private market.
McCarty ended by thanking the Cabinet for “the great ride that it’s been to be insurance commissioner of this great state”. He will remain in a support role to new insurance commissioner David Altmaier for the next 60 days. He has not announced his future plans beyond that.
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Last Thursday’s Supreme Court Comp Case Ruling May Shock Marketplace
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Last Thursday (4/28/16) the Florida Supreme Court finally issued its much anticipated ruling in the Castellanos v. Next Door Company workers’ compensation case questioning the constitutional adequacy of the capped attorney fees that were placed in statute when the law was passed in 2003 and significantly amended in 2008. The caps applied to plaintiffs’ attorneys and were set at 20 percent for cases less than $5,000, 15 percent in cases between $5,000 and $10,000 and 10 percent in cases greater than $10,000. The Supreme Court ruled in its decision that the fee caps in current law violate both the Florida and U.S. constitutions. Those heavily reliant upon an accessible and affordable workers’ compensation insurance marketplace have been waiting for the Supreme Court’s ruling since November 2014, when the court heard arguments from the participants in the case. Many comp experts and other knowledgeable observers have been saying since then that if the state’s highest court ruled as it did last Thursday, the decision would parlay into rate increases for policy purchasers, often significant rate increases. Although the long-term impact of this decision is yet to be known, reaction from regulators and the NCCI came swiftly. In his court decision press release Commissioner Kevin McCarty stated that a legislative remedy would be required to prevent significant increases in rates. The commissioner also made it clear that until the legislature can take action in response to the decision, attorney fees will be evaluated under the “reasonable” award standard articulated in the Murray v. Mariner Health decision. Like most of our colleagues who work in and around the insurance industry, those of us here at LMA continue to carefully digest the full impact of the Supreme Court’s ruling and we’ll bring you updates as the ripples move outward in the lake. To review the ruling, click here.
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Supreme Court Ready to Hear Arguments in PIP Care Cost Dispute Case
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On Wednesday (5/4/2016) of this week the state’s highest court will hear arguments from attorneys representing State Farm Mutual Auto Insurance and UF Health Jacksonville (formerly Shands Jacksonville Medical Center) in a major dispute over State Farm’s request for access to the hospital’s contracts with health insurance companies. At the heart of the underlying dispute between the state’s largest PIP insurer and UF Health Jacksonville is State Farm’s assertion that it gets billed at significantly higher rates in PIP claims than Medicare pays for patient care at the hospital. A provision in Florida’s PIP statute mandates that health care providers share with auto insurance companies information regarding treatment and costs associated with caring for PIP beneficiaries. However, the auto insurer has argued that it is unable to ascertain from the information currently provided whether given charges are reasonable and this is why State Farm is seeking contracts and related information between health insurers and UF Health Jacksonville. The auto insurer maintains that the requested information could show whether the hospital is charging excessive amounts for PIP-related care.
For its part and since litigation in the case began, UF Health Jacksonville has steadfastly held that its contracts with health insurers and related information are confidential and should not be provided to State Farm. In one of its filings with the Court the hospital went further saying that state law does not “vest PIP insurers with a right to obtain, on demand, copies of confidential and proprietary third party payer contracts, and related discount information, from every hospital (or other health care provider) in the state based only on the suggestion that such confidential contracts may be useful to PIP insurers in evaluating billed charges.” Earlier in the case, however, a circuit court sided with State Farm and ordered the hospital to turn over 37 contracts. The order didn’t stand long before it was stayed by the First District Court of Appeal’s agreement to hear an appeal filed by UF Health Jacksonville.
For State Farm, an overarching issue in this case is what happens to PIP insureds when inappropriate amounts are paid under PIP medical treatments provided? The insurer has argued in its Supreme Court brief that “Paying more than a reasonable amount prematurely depletes the insured’s limited PIP benefits, potentially leaving the insured without sufficient PIP benefits to pay for other medical care or lost wages. Paying less than the billed amount based on limited information is likely to result in litigation, increased claim expenses, and ultimately higher premiums to all insureds”. This case could, depending on its ultimate outcome, deal another major blow to the reformed PIP system being closely monitored by the Florida Legislature and other state leaders. We’ll continue monitoring this case closely and brief you as significant developments occur.
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Florida Drops Out of NIMA
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Florida has withdrawn as a member the Nonadmitted Insurance Multi-State Agreement (NIMA). NIMA is an interstate agreement among a handful of states designed to streamline the reporting, payment, collection and allocation of premium taxes for surplus lines insurance and share those taxes that otherwise would go to the insured’s home state.Florida Insurance Commissioner McCarty made the decision to pull-out because the anticipated growth in NIMA, especially among large state, just didn’t materialize (and with it, the revenue sharing), according to his spokesperson in published reports.
NIMA was created by the McCarty-led NAIC back in 2011 as an alternative way of complying with the Dodd-Frank Nonadmitted and Reinsurance Reform Act (NRRA), which ceded oversight of surplus lines taxation, regulation, and licensing to its home states. Florida was among the first of 12 states to sign-on that first year – together they represented 22% of the surplus lines market. A year later, that number had shrunk to six and with Florida’s withdrawal, only four states will remain full-members, along with two associate member states.
Commissioner McCarty remained a strong supporter of NIMA’s its innovative effort to bring enhanced revenue and greater savings efficiencies to member states. In fact, the NIMA webpage is housed by OIR. NIMA has faced continued opposition for years from competitor the National Association of Surplus Lines Offices (NAPSLO).
All multistate policies issued or renewed on or after June 1, 2016, and any subsequent endorsements to those policies, for which Florida is the home of the insured will now be filed with the Florida Surplus Lines Office (FSLSO) and not through the Surplus Lines Clearinghouse, according to this FSLSO Bulletin. Florida will continue to tax premium exposures for multistate policies at the rate of the state in which the risk or exposure is located.
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What a debate we as a country continue to have on whether minimum wages should be raised. Really?? Yes, maybe it is complicated when we take into account the cost of living and purchasing power. Maybe it has a serious impact on a small company’s financial health. But if we don’t raise the minimum wages, don’t the needs of working moms, dads, seniors and others who work multiple low-paid jobs, fall even harder on the backs of all society? Here’s the truth. According to the Bureau of Labor Statistics-five of the ten fastest growing job areas pay less than $11 an hour. These job areas include folks who provide services we use and need all the time, i.e., restaurant workers, retail salespeople, service workers, personal care and health aides. Don’t we want the people who take care of our homebound parents to make a decent living? This is a heartbreaking state of life and a heartbreaking debate. It’s unfair to judge anyone unless we’ve work in that person’s shoes, so let’s think deeply and carefully before we form an opinion on this important issue. Just saying…
Until next time –
Lisa and the LMA Team |
Inaugural FloodPCA Conference
April 5, 2016
Tampa Airport Marriott
Tampa, Florida
FAIR Catastrophe Reinsurance Conference
April 28, 2016
Tampa, Florida
30th Annual Governor’s Hurricane Conference
May 8-13, 2016
Rosen Shingle Creek
Orlando, Florida
National Flood Conference
May 17-20, 2016
Washington, DC
FHCF 16th Annual Participating Insurers Workshop
May 18-19, 2016
Disney’s Coronado Springs Resort
Lake Buena Vista, Florida |
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