To establish criteria to be utilized by the Office of Insurance Regulation to determine whether a reasonable degree of competition exists for personal lines residential policies in Monroe County.

 

FINANCIAL SERVICES COMMISSION

Office of Insurance Regulation

RULE NO.: RULE TITLE:

69O-170.020 Purpose

PURPOSE, EFFECT AND SUMMARY: To establish criteria to be utilized by the Office of Insurance Regulation to determine whether a reasonable degree of competition exists for personal lines residential policies in Monroe County.

SUMMARY OF ESTIMATED REGULATORY COSTS: No Statement of Regulatory Cost was prepared.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

SPECIFIC AUTHORITY: 624.308(1) FS., 627.351(6)(d)4. FS.

LAW IMPLEMENTED: 627.351(6)(d)4. FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW (IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):

DATE AND TIME: February 27, 2006, 10:00 a.m.

PLACE: Room 142, Larson Building, 200 East Gaines Street, Tallahassee, Florida

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this program, please advise the Office at least 5 calendar days before the program by contacting the person listed below.

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Dr. Ray Spudeck, Business Development and Market Research, Office of Insurance Regulation, e-mail: [e-mail]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69O-170.020 Reasonable Degree of Competition Criteria - Monroe County.

(1) For purposes of determining whether there is a reasonable degree of competition in the personal residential property market in Monroe County, the Office shall:

(a) Review the respective market share of all insurers, including Citizens Property Insurance Corporation using the number of policies issued for each line of personal residential insurance policies as most recently reported pursuant to Section 624.424(1), F.S.;

(b) Calculate a Herfindahl Index for Monroe County.

1. If the Herfindahl Index exceeds 1000 , the Office shall consider the Herfindahl Index to be a significant indication of a noncompetitive market in that county. The formula for this index is: H = (%S1)2 + (%S2)2 + (%S3)2 +….(%Sn)2. %S stands for the percentages of the market owned by each of the larger companies, so that %S1 is the percentage owned by the largest company, %S2 by the second, and so on. n stands for the total number of companies you are counting.

2.The Herfindahl Index gives added weight to the biggest companies. The higher the index, the more concentration and (within limits) the less open market competition. A monopoly, for example, would have an H index of S12 or 1002, or 10,000. By definition, that's the maximum score. By contrast, an industry with 100 competitors that each has 1% of the market would have a score of 12 + 12 + 12+ ...12 or a total of 100. A 1,000-1,800 value generally indicates moderate concentration. Anything over 1,800 is taken to betoken acute concentration; and

(c) Review any other information related to and associated with evaluating market competition for that county.

(2) Upon finding that Monroe County has a noncompetitive market for any line of personal residential property insurance, the Office shall request Citizens Property Insurance Corporation to make a rate filing that is applicable to that line of business and that is actuarially sound and not excessive, inadequate, or unfairly discriminatory and is in compliance with Section 627.062, F.S., and the applicable provisions of Section 627.351(6), F.S.

Specific Authority 624.308(1), 627.351(6)(d)4. FS. Law Implemented 627.351(6)(d)4. FS. History–New ________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Ray Spudeck, Business Development and Market Research, Office of Insurance Regulation

NAME OF SUPERVISOR OR PERSON WHO APPROVED THE PROPOSED RULE: Sharon Binnun, Deputy Commissioner, Office of Insurance Regulation

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: January 24, 2006

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: December 9, 2005