2010 Annual Report - Office of Insurance Regulation

2010 Annual Report

OFFICE OF INSURANCE REGULATION

KEVIN M. MCCARTY

COMMISSIONER

FINANCIAL SERVICES COMMISSION

CHARLIE CRIST GOVERNOR

ALEX SINK CHIEF FINANCIAL OFFICER

BILL MCCOLLUM ATTORNEY GENERAL

CHARLES BRONSON COMMISSIONER OF AGRICULTURE

February 2011

Dear Floridians:

I am pleased to submit the 2010 Annual Report of the Florida Office of Insurance Regulation for the 2009 Calendar Year, in compliance with Section 624.315, Florida Statutes.

I am filing this copy simultaneously with the Speaker and Minority Leader of the House of Representatives, the President and Minority Leader of the Senate, the chairs of the legislative committees with jurisdiction over matters of insurance, and the Governor. Anyone with Internet access may also view the report and similar associated information on the Office's website, .

This report contains all of the information the Office is required by statute to publish annually, and each section indicates the specific statutory reference. Please note the Office's website contains a myriad of insurance industry information and links to other insurance related websites. If you have any questions about the contents of this report or the affairs of the Florida Office of Insurance Regulation, please do not hesitate to contact my office.

Sincerely,

Kevin M. McCarty

? ? ? KEVIN M. MCCARTY ? COMMISSIONER 200 EAST GAINES STREET ? TALLAHASSEE, FLORIDA 32399-0305 ? (850) 413-5914 ? FAX (850) 488-3334

WEBSITE: WWW.

Affirmative Action / Equal Opportunity Employer

Table of Contents

Office Activities

Vision ...........................................................................................................................................................................1 Mission Statement ..................................................................................................................................................1 Insurance Regulation and the Department of Financial Services..............................................................1 Administrative Overview........................................................................................................................................1 Legislative Achievements ......................................................................................................................................2

Property Insurance Reform ...................................................................................................................2 Life and Health Insurance Reform ......................................................................................................4 Technology Initiatives ............................................................................................................................................5 Oracle 10G Upgrade ................................................................................................................................5 QUASRng Goes Live for Insurance Company Filings .....................................................................6 Quarterly and Supplemental Reporting System Next Generation .............................................6 Disaster Recovery Testing for QUASRng and Data Collection Modules ..................................6 Portable Document Format (PDF) Solutions Project ......................................................................6 Systems Overview ....................................................................................................................................7 Market Research/Data COllection Procedures Manual.................................................................7 Florida's National Leadership Role .....................................................................................................................7 The National Association of Insurance Commissioners (NAIC) .................................................7 National Conference of Insurance Legislators (NCOIL) ................................................................8 Business Units of the Office of Insurance Regulation ..................................................................................9 Office of the Commissioner ..................................................................................................................9 Office of the Chief of Staff .................................................................................................................11 Office of the Deputy Commissioner, Property and Casualty Insurers ...........................................................................................................................14 Office of the Deputy Commissioner, Life and Health Insurers/Specialty Insurers..................................................................................................................15 Insuring Entities Created by Statute................................................................................................................18 An Analysis of the Impact of the Insurance Industry on the Economy of the State in 2009 ...................................................................................................................19

Company Activities

Florida Property and Casualty Insurance Calendar Year Experience ......................................................21 Top 10 Carriers by Line of Business..................................................................................................................24 Licensed Title Companies by Market Share for Calendar Year 2009 ......................................................35 Top 25 Carriers by Line of Business .................................................................................................................36 Financial Statement Abstracts ..........................................................................................................................39 Companies Discontinuing Operations in Florida During Calendar Year 2009 ...................................109 Consumer Complaint Ratios for CY2009 ......................................................................................................111 Summary of Officers and Directors' Liability Claims ................................................................................182 Summary of Workers' Compensation Insurance Experience ..................................................................183 Summary of Florida Motor Vehicle Service Agreements .........................................................................183 Florida Voluntary Private Passenger Automobile Experience .................................................................184 Medical Loss Ratios for Florida Health Maintenance Organizations ...................................................185

Budget

Budget Appropriation and Expenditures FY 09-10 ...................................................................................186

Office Activities

This section is a brief summary of major activities and accomplishments of the Office of Insurance Regulation during the 2009 Calendar Year.

THE OFFICE OF INSURANCE REGULATION

The Florida Legislature created the Office of Insurance Regulation (Office) in 2003:

"The Office of Insurance Regulation, which shall be responsible for all activities concerning insurers and other risk bearing entities, including licensing, rates, policy forms, market conduct, claims, issuance of certificates of authority, solvency, viatical settlements, premium financing, and administrative supervision, as provided under the insurance code or chapter 636. The head of the Office of Insurance Regulation is the Director of the Office of Insurance Regulation, who may also be known as the Commissioner of Insurance Regulation." --Section 20.121(3)(a)1, Florida Statutes

The Insurance Commissioner is appointed by, and reports to, the Financial Services Commission. The Commission is comprised of the Governor, the Attorney General, the Chief Financial Officer, and the Commissioner of Agriculture. The Commission serves as agency head for purposes of rulemaking pursuant to Sections 120.536 and 120.565, Florida Statutes. Commission action is taken by majority vote. The Commissioner of Insurance Regulation is considered the agency head for purposes of final agency action for all areas within the regulatory authority delegated to the Office.

The Office is, for purposes of administrative, personnel, and technology support, housed within the Department of Financial Services (DFS). Office funding is appropriated directly by the Legislature from the Insurance Regulatory Trust Fund, funded by insurance company licensing fees, fines that may be levied for non-compliance with provisions of the Insurance Code, and a portion of premium tax paid by surplus lines carriers transacting insurance in this State.

Vision

The Florida Office of Insurance Regulation envisions a robust and competitive insurance market that provides protection for the Florida insurance-buying public.

Mission Statement

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 products at fair and adequate rates which do not unfairly discriminate against the buying public.

Insurance Regulation and the Department of Financial Services

The Office's interaction with the insurance regulatory responsibilities assigned to DFS occurs in several instances: Consumer complaints received by the DFS Division of Consumer Services may constitute patterns of company practices in violation of the Insurance Code and are referred to the Office's Market Investigation unit for investigation. In turn, Market Investigation examinations may discover potential fraudulent actions that are referred to and worked with the law enforcement personnel of the DFS Division of Insurance Fraud. In some instances, such investigations involve insurance agents licensed by the DFS Division of Agent and Agency Services and Office staff will work with the DFS to assist in making cases with the Division's Bureau of Agent Investigations. In instances where an insurance company's financial condition has significantly deteriorated to the point of insolvency, the Office may refer a company to the DFS Division of Rehabilitation and Liquidation.

Administrative Overview

As previously noted, the Office is administratively housed within DFS. In statute, that relationship is expressed in this excerpt of Section 20.121, Florida Statutes, emphasis provided:

Page 1

Section 20.121 Department of Financial Services.--

(3) FINANCIAL SERVICES COMMISSION.--Effective January 7, 2003, there is created within the Department of Financial Services the Financial Services Commission, composed of the Governor, the Attorney General, the Chief Financial Officer, and the Commissioner of Agriculture, which shall for purposes of this section be referred to as the commission. Commission members shall serve as agency head of the Financial Services Commission. The commission shall be a separate budget entity and shall be exempt from the provisions of Section 20.052, Florida Statutes. Commission action shall be by majority vote consisting of at least three affirmative votes. The commission shall not be subject to control, supervision, or direction by the Department of Financial Services in any manner, including purchasing, transactions involving real or personal property, personnel, or budgetary matters.

(e) Administrative support.--The offices shall have a sufficient number of attorneys, examiners, investigators, other professional personnel to carry out their responsibilities and administrative personnel as determined annually in the appropriations process. The Department of Financial Services shall provide administrative and information systems support to the offices.

Pursuant to this provision, the Office develops and presents its budget requests directly to the Executive Office of the Governor and the Florida Legislature. The Office has developed performance measures and standards to assess the performance of its activities in support of its budget requests.

With respect to the Office's interaction with DFS in matters involving administrative support, the Office has inherited the responsibility to directly manage its personnel matters ? i.e., to recruit, advertise, and hire personnel -- subject to DFS personnel office review for compliance with required state agency hiring and personnel policies and procedures.

With respect to the Office's interaction with DFS in matters involving information systems support, the Office seeks independent and project-specific appropriations for technology initiatives and upgrades. The Office has direct liaison with DFS technology support staff; and it is the DFS Division of Information Systems that provides the Office with standard desktop, network, and programming assistance for integrated computer systems in use by both the Office and DFS.

Legislative Achievements

Property Insurance Reform ? 2009

The 2009 Florida Legislature enacted property insurance reform legislation that made wide-ranging changes to the regulation of property insurance, including:

HB 1495 Citizens Property Insurance Corporation ("Citizens")

? Implements a rate "glide path" capped at 10 percent per year for Citizens' policyholders until rates are actuarially sound. This provision will go into effect on or after January 1, 2010. The incremental rate increase was a recommendation of the Citizens Mission Review Task Force.

? Allows Citizens to increase its rates to pay the Florida Hurricane Catastrophe Fund's (FHCF) cash build up program for five years.

? Staggers the terms of office for members of the Board of Governors. Insurers may offer exwind policies to homeowners within the boundaries of the HRA (high risk account) area who are no longer eligible for coverage by Citizens because the replacement value of the home exceeds $2 million or because the replacement value of the home exceeds $750,000, but the home does not have hurricane shutters.

Page 2

? Deletes the provision that required on January 1, 2010, a seller of a home which is insured by Citizens and located in the wind-borne debris region, with an insured value of $500,000 or more, to disclose in writing to the prospective purchaser its windstorm mitigation rating based on the uniform home grading scale, prior to sale.

? Extends from February 1, 2010 to December 1, 2010, the requirement that Citizens reduce its HRA area boundaries in order to lower its 100-year probable maximum loss.

Florida Hurricane Catastrophe Fund ? Implements provisions to reduce the FHCF's exposure and increase its cash reserves. Phases out the Temporary Increase in Coverage Limit (TICL) layer of coverage over a six-year period at a rate of $2 billion per year.

? Increases the price of the TICL layer by an additional multiple each year until TICL is eliminated in six years.

? Authorizes the Fund to implement a "cash build up" factor which would increase the reimbursement premiums that the Fund charges property insurers for the mandatory layer of coverage provided by the Fund. The cash build up factor is based on a five percent annual increase which will be phased in over a five-year period, at which time the increase will be 25 percent.

? Allows small insurers to continue to purchase an additional amount of FHCF reimbursement coverage up to $10 million until December 31, 2011.

? Establishes the contract period for the Fund to be the calendar year (January through December). Previously the contract year began on June 1.

My Safe Florida Homes Program ("MSFH") ? Adds mitigation improvements relating to roof hardening to help facilitate the MSFH program to access federal "weatherization" stimulus money and FEMA grant money.

? Clarifies that the MSFH program should provide grants rather than participate in a nointerest loan program.

? Authorizes the Department of Financial Services to adopt by rule the maximum grant allowances for mitigation improvements.

? Revises the threshold for grant and contract review by the Legislative Budget Commission.

Insurance Rate Filings ? Allows insurers to make a separate expedited rate filing limited solely to an adjustment of its rates for reinsurance or financing costs relating to the purchase of reinsurance or financing products to replace or finance the payment of the amount covered by the Fund's TICL layer, including replacement reinsurance for the TICL reductions, as well as the cash build up factor and the increase in the price for the remaining TICL layers.

? Mandates all costs contained in this filing are capped at 10 percent per policyholder; however, financing products such as a liquidity instrument or line of credit may not result in an overall premium increase exceeding three percent.

? Provides that insurers purchasing this reinsurance do so at a price no higher than would be paid in an "arms-length" transaction.

? Provides an insurer may make only one filing under this provision in any 12-month period.

? Prohibits "use and file" rate filings until December 31, 2010.

Page 3

Public Adjusters ? Prohibits public adjusters, public adjuster apprentices and persons acting on behalf of public adjusters or apprentices from accepting referrals of business from any person with whom the public adjuster conducts business.

? Prohibits a public adjuster from compensating any person, except for another public adjuster, for the purpose of referring business to the public adjuster.

? Requires an applicant for a public adjuster apprentice license to pass a written examination prior to licensure and receive a specified designation.

? Limits the number of public adjuster apprentices that are maintained by public adjusting firms.

? Requires OPPAGA to review the claims practices and laws relating to public adjusters and submit a report to the Governor, President of the Senate, Speaker of the House of Representatives, the CFO, and the Insurance Commissioner by February 1, 2010.

Other Provisions ? Authorizes the Florida Hurricane Loss Projection Methodology Commission to study and issue a report on mitigation credits, discounts and deductibles.

? Provides that premium discounts resulting from the home grading scale (due in 2011 from the Office) will supersede the current mitigation discounts approved by the Office.

? Authorizes reinsurers to issue coverage directly to a self-insuring public housing authority.

? Allows an insurer to repair damaged property in compliance with its policy.

? Allows insurance agents to explain the applicability of Florida Insurance Guaranty Association to consumers.

? Repeals the statute that prevents Office attorneys from asserting attorney-client privilege or work-product confidentiality on certain communications with other Office personnel.

? Changes recoupment by insurers for Citizens assessments, eliminating the need to receive prior OIR approval before recouping costs from policyholders. Instead, the Office would review the final accounting report of the recoupment after it has been completed.

For complete and detailed summary of the 2009 legislation, visit 2009 OIR Legislative Summary.

Life & Health Insurance Reform ? 2009

The 2009 Florida Legislature enacted other pieces of legislation, directly related to life and health insurance issues that will benefit Florida's consumers and enhance the insurance market:

HB 0185: Access to Health Care ? Adds a representative from the dental community to the Florida Healthy Kids Corporation board of directors. The member will be appointed by the Governor from three candidates who are nominated by the Florida Dental Association.

? Creates two new provider contract prohibitions for prepaid limited health service organization (PLHSO) contracts entered into on or after July 1, 2009:

? Contracts between a PLHSO and a provider of limited health services may not contain provisions that prohibit or restrict the provider from contracting with other PLHSOs.

Page 4

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download