Plus, potential rules on use of insurance drones
A memo from the Florida Office of Insurance Regulation (OIR) touts the benefits of recombining all insurance regulation under one agency, experts discuss the impact of tariffs on the insurance landscape, and the National Council of Insurance Legislators releases an updated aerial imagery model law and amendments for drone use. It’s all in this week’s Property Insurance News.
Florida Insurance Commissioner Michael Yaworsky, Courtesy, OIR
OIR Memo: OIR has produced a proposal for Florida legislative leaders, in a couple of memos reported by the Tampa Bay Times, that it says would streamline all aspects of insurance regulation under the Insurance Commissioner. Florida split apart the previous Department of Insurance in 2003, with OIR regulating insurance companies and the Department of Financial Services (DFS) under the state’s CFO regulating insurance agents, handling consumer complaints, and overseeing insolvent carriers. “This bifurcation has hindered the state’s ability to adequately protect consumers,” state the unsigned and undated memos. It reports that in an unspecified five-year period, DFS referred 5.2% of 52,160 property and casualty complaints to OIR for possible statutory violations, indicating “potential underreporting.”
Further “it has hindered the state’s ability to evaluate and regulate the entire insurance market…and has created unnecessary bureaucratic hurdles for OIR effectively operating.” The memo states that DFS is tasked with developing reports on the causes of insolvencies, while OIR is tasked with determining whether officers and directors of insolvent companies were a “significant contributing cause” of the insolvency. In order to do that, “OIR had to enter into a legal agreement with DFS to obtain information related to insolvencies and hire an outside firm to assist with a financial investigation already conducted by DFS in their duplicative duty.”
“I’m hoping that if there is discussion around this, whatever the outcome is, it leads to a really robust framework around ensuring that consumers are protected,” Insurance Commissioner Michael Yaworsky told the Times. Florida is the only state that splits insurance regulation between two agencies.
Not so fast, retorted DFS in an unsigned point-by-point response this past Friday, CFO Jimmy Patronis’ last day in office. “It is troubling that OIR, which is housed administratively within DFS, a Cabinet Agency, is making claims of inefficiency and mismanagement against DFS in an attempt to take over major parts of the overseeing Cabinet Agency with no justification, accurate data or consultation with the principals that oversee the Florida Cabinet, comprised of the Governor, the Chief Financial Officer, the Commissioner of Agriculture, and the Attorney General.” The DFS response goes on to state “DFS categorically rejects OIR’s unforeseen desire to remake Florida’s insurance regulatory system for its own institutional benefit…and seeks to collaborate with OIR to resolve legitimate issues.”
Port Miami Container Terminal. Courtesy, Port Miami
Tariffs and the Insurance Industry: While the insurance industry was not directly targeted in the President’s recent slew of tariffs, experts across the globe agree it will invariably bump costs up for insurance companies and consumers alike. Claims will see disruption on multiple fronts –including the auto insurance industry – where increase costs on imported car parts will cause the cost of cars, repairs, and claims to go up. “These tariffs are more sweeping than I would have anticipated,” said Robert P. Hartwig, a professor of finance and director of the Center for Risk and Uncertainty Management at the Darla Moore School of Business at the University of South Carolina. “It [could] be billions more additional dollars in commercial auto,” he said, commenting on the effects of driving up costs of business interruption claims. The more time taken to settle claims means more pressure on insurance supply chains, and if these culminate in canceled trade contracts, suddenly trade credit and political risk insurers could be in trouble too. When the market slows down like this, specialty coverages also see less demand – areas such as ocean marine coverage could also see a downtick in frequency. The interconnectedness of the insurance landscape means that tariffs at this scale will certainly make a big splash with waves reaching almost every corner of the market.
Aerial Imagery Model Law: The National Council of Insurance Legislators (NCOIL) recently released an updated draft of their Ariel Imagery Model Law, adding an amendment covering notification requirements. Debate has arisen over the concept of regulating insurance companies’ use of these technologies, spearheaded by United Policyholders, a nonprofit consumer advocacy group. In its latest iteration, the law saw changes and updates to definitions for consistency, removal of risk score details from the process, and doing away with compulsory policy renewal for carriers once aforementioned defects have been corrected. Property Casualty carriers would provide more disclosures regarding the use of drones, and a cure period so policyholders have time to bring their properties into compliance to provide clear communication and transparency in the entire process. Also new are exemptions for liability for insurers when using drones including capturing extraneous subjects in the recording process and failure to notify involved persons. As use of aerial imagery is likely to become a much larger part of the industry in the coming years, this text is expected to be discussed further at NCOIL’s spring meeting April 24-27 in Charleston, South Carolina.
LMA Newsletter of 4-7-25
