Florida Regulators Mulling New Rules on Market Conduct Exams, Reporting

Florida regulators are considering three rule changes, one on how market-conduct examinations are triggered, one on an expanded claims-dispute mediation system, and one that would require certain quarterly reports even when the insurer has not engaged in the type of risk or policy.

Insurance company advocates and lobbyists said they are compiling comments from carriers across the state on how the rules should be tempered or rewritten.

Here’s a look:

Mediation

First, the good news. The Florida Department of Financial Services has all but given final approval to a plan to modernize its dispute resolution program and add auto and commercial residential claims disputes to mediation.

DFS has offered mediation for a number of years for homeowner disputes up to $500,000 in value. Expanding the program to condominium and auto makes sense, said Paul Handerhan, a longtime Florida insurance consultant who represents carriers and others in the industry. The idea is to streamline some dispute resolutions and keep them out of the court system.

“It’s a great idea,” especially the part about modernizing mediation proceedings, Handerhan said.

Until now, rules called for parties to bring paper files to a hearing. Under the new regulations, a laptop will suffice. The rule can be seen here.

Market Conduct Exam Triggers

The Florida Office of Insurance Regulation is accepting comments on its proposed methodology changes to what may trigger a carrier examination by the office. The rule would include new factors that would raise red flags, including:

• A disproportionate number of claims-handling complaints, a status defined in the new rules as having a sustained elevation in the number of complaints, such as 1.5 in three of the last four quarters or 15 or more complaints in at least two quarters.
• When a carrier has a high ratio of complaints-to-claims after a hurricane or tropical storm.

Handerhan and others in the Florida industry said the proposal needs some work. For starters, how would the OIR make sure that complaints are, in fact, disproportionate?

“A larger carrier will have more claims and more complaints,” he noted.

A hearing has been scheduled for July 23 at 9 a.m. at the Larson Building on East Gaines Street in Tallahassee. To join the meeting by phone, call (850)328-4354 and enter conference ID#745 610 100. Written comments can be emailed to Kama.Monroe@floir.com.

Quarterly Reporting on Individually Rated Risks

Rule 69O-137.008 would be changed to require some property insurers to file quarterly reports on individually rated risks or risks subject to excess rates, even if none of the above have been written during the quarter.

Individually rated risks are considered those for which a carrier does not charge the amount dictated by a formula or rating manual, but something that is determined by an underwriter, according to the rules and Patriot Select Insurance CEO John Rollins. The approach is commonly used in excess and surplus lines, but can be utilized only on a limited basis by admitted carriers

Information about the rule, comments and a public hearing is available by emailing Ryan.Orbe@floir.com. The proposed rule text is here.