To adopt the annual report card to be used by the Office of the Consumer Advocate, as required by Section 627.0613, Florida Statutes.

 

DEPARTMENT OF FINANCIAL SERVICES
OIR – Insurance Regulation

RULE NO: RULE TITLE
69O-236.001: Annual Report Card
69O-236.002: Definitions
69O-236.003: Methodology
69O-236.004: Limitations and Exclusions
69O-236.005: Data Sources
PURPOSE AND EFFECT: To adopt the annual report card to be used by the Office of the Consumer Advocate, as required by Section 627.0613, Florida Statutes.
SUMMARY: Section 627.0613(4), Florida Statutes, requires the Consumer Advocate’s office to prepare an annual report card for each authorized personal residential property (homeowners) insurer, on a form and using a letter-grade scale developed by the Commission. The rule being proposed sets out the procedure by which the insurers would be graded and adopts the form by which the results are presented.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: No Statement of Estimated 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: 627.0613 FS.
LAW IMPLEMENTED: 627.0613 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: January 4, 2010, 9:30 a.m.
PLACE: 116 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 workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Debra Seymour, Office of Insurance Regulation, E-mail [e-mail]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Debra Seymour, Office of Insurance Regulation, E-mail [e-mail]

THE FULL TEXT OF THE PROPOSED RULE IS:

69O-236.001 Purpose.

The purpose of the rules is to establish procedures to be used by the Office of the Insurance Consumer Advocate in preparing an annual report card for each personal residential property insurer. The rules do not apply to eligible surplus lines insurers or to insurers that do not write any homeowner's, mobile home owner’s, dwelling, tenant's, condominium unit owner's, cooperative unit owner’s, or similar personal residential property insurance.

Rulemaking Authority 624.308(1), 627.0613(4) FS. Law Implemented 627.0613(4) FS. History–New________.

 

69O-236.002 Definitions.

(1) “Complaint” means any written communication that expresses dissatisfaction with a specific personal residential property insurer subject to regulation under Florida’s insurance laws. An oral communication which is subsequently converted to a written form meets the definition of a complaint for this purpose.

(2) “Division” means the Division of Consumer Services of the Department of Financial Services.

(3) “Experience period” means the latest five calendar years for the purpose of evaluating complaints and the latest five calendar-accident years for the purpose of evaluating time to pay claims.

(4) “Personal residential property insurer” means an insurer that writes personal residential property insurance such as homeowner's, mobile home owner's, dwelling, tenant's, condominium unit owner's, cooperative unit owner's and similar policies and includes an insurer that, in addition to writing personal residential property insurance policies, also writes commercial residential property insurance policies such as condominium association, cooperative association, apartment building and similar policies.

(5) “Qualifying premium” means a personal residential property insurer’s total direct written personal and commercial residential property insurance premiums in this state during the experience period excluding the latest year’s premium.

Rulemaking Authority 624.308(1), 627.0613(4) FS. Law Implemented 627.0613(4) FS. History–New________.

 

69O-236.003 Methodology.

(1) The Division currently divides complaints into numerous specific categories. For the purposes of the Insurer Report Card, complaints received by the Division will be grouped as follows: premium related complaints, loss related complaints and valid complaints. Premium related complaints and loss related complaints are mutually exclusive. Valid complaints are a subset of premium related complaints and loss related complaints.

(2) A complaint is not valid if the disposition is categorized by the Division as one of the following:

(a) Agent Position Upheld;

(b) Company Position Upheld;

(c) Complaint Withdrawn;

(d) Contractual Provision;

(e) Coverage Explained;

(f) F-map Information;

(g) Information Provided;

(h) Insufficient Information;

(i) Missing;

(j) No Jurisdiction;

(k) Not Eligible for Mediation;

(l) Pamphlet Request;

(m) Referred To FIGA;

(n) Referred To Proper Agency;

(o) Sent To Proper Agency.

(3) For the first annual Insurer Report Card, each insurer will receive a separate grade for each year in the experience period and for the 5-year experience period overall. The grade will be based on a percentage rank in accordance with subsections (4) and (5). The percentage rank will be determined for each insurer for each year in the experience period and for the 5-year experience period overall based on the following four factors:

(a) The insurer’s market share of all premium related complaints (valid and invalid) compared to its market share of in-force policies on a calendar year basis;

(b) The insurer’s market share of all loss related complaints (valid and invalid) compared to its share of the prior year’s in-force policies on a calendar year basis;

(c) The insurer’s market share of valid complaints compared to its share of the average of the latest year’s and the prior year’s in-force policies on a calendar year basis; and

(d) The insurer’s average number of months to pay claims compared to the median number of months to pay claims of all insurers on a calendar-accident year basis.

(4) Based on the insurer’s percentage rank, each insurer will receive a letter grade in accordance with the following:

(a) A grade of A if the insurer’s percentage rank is in the top 15%;

(b) A grade of B if the insurer’s percentage rank is in the next 20%;

(c) A grade of C if the insurer’s percentage rank is in the next 30%;

(d) A grade of D if the insurer’s percentage rank is in the next 20%; and

(e) A grade of E if the insurer’s percentage rank is in the last 15%.

(5) Each insurer is assigned an overall grade based upon a weighted average determined as follows:

(a) 10% weight to premium related complaints grade;

(b) 10% weight to loss related complaints grade;

(c) 30% weight to valid complaints grade; and

(d) 50% weight to average number of months to pay claims grade.

(6) To provide appropriate incentives for the second and subsequent years’ annual Insurer Report Cards, each insurer will be graded on absolute scales developed from the first annual Insurer Report Card experience period. Absolute grading scales will reflect higher expected complaint ratios in hurricane years.

(7) The Office of the Insurance Consumer Advocate will issue an annual report card on a form that provides the name of each insurer followed by a letter grade for:

(a) Overall score;

(b) Premium related complaint score;

(c) Loss related complaint score;

(d) Valid complaint score; and

(e) Score for time to pay claims.

(8) Form CA-01, “Annual Report Card of the Insurance Consumer Advocate of Residential Property Insurers” is incorporated herein and adopted.

Rulemaking Authority 624.308(1), 627.0613(4) FS. Law Implemented 627.0613(4) FS. History–New________.

 

69O-236.004 Limitations and Exclusions.

(1) Complaints are classified as loss related, premium related and valid based upon an objective evaluation of the reason and disposition descriptions given to each complaint. Complaints will be evaluated based on the reason and disposition descriptions in the complaint files as of April 1 of the year following the experience period that is being graded.

(2) All complaints for which the complete insurer name is missing from the complaint file are excluded.

(3) Open complaint files or complaints for which the complaint disposition description is missing are treated as invalid complaints, except for complaints for which the reason description is judged to describe a valid complaint.

(4) Missing complaint reason descriptions are treated as premium related complaints.

(5) All flood complaints are excluded.

(6) Claims are assumed to be paid on average in the middle of the calendar year in which they close.

(7) For calendar-accident years in which a company had fewer than 50 paid claims as of the end of the latest calendar year, such claims are assumed to have been paid in the industry average number of months.

(8) Insurers with less than $30 million in qualifying premium are graded on each of the four factors but are given an overall grade of “I” for “insufficient complaint history” due to a lack of actuarial credibility.

(9) Insurers with less than 5 years of experience are only graded for those years for which they had experience.

(10) Insurers with less than $100,000 in qualifying premium in the latest calendar year will not be graded.

Rulemaking Authority 624.308(1), 627.0613(4) FS. Law Implemented 627.0613(4) FS. History–New_________.

 

69O-236.005 Data Sources.

The insurer report card will be based on data obtained from the following sources:

(1) Complaint data from the Division of Consumer Services, Florida Department of Financial Services;

(2) Paid claim data from the Statutory Annual Statements, Schedule P, Part 5A, Section 1, filed by insurers with the Office of Insurance Regulation; and

(3) In-force policy and direct written premium data from the Quarterly Summary Reports (QSR) of the Florida Office of Insurance Regulation.

Rulemaking Authority 624.308(1), 627.0613(4) FS. Law Implemented 627.0613(4) FS. History–New_________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Debra Seymour, Office of Insurance Regulation, E-mail [e-mail]

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: The Financial Services Commission

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: November 17, 2009

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: July 17, 2009