Fla. Senate Makes Recommendations on Property Insurance Accountability
Southeast News • March 14, 2008
The Florida Senate Select Committee on Property Insurance Accountability wants to restrict reinsurance costs in rates and strengthen the excess profits law among other things.
Co-chaired by Sen. ...
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Subject: Answers and Comments
Posted On: March 17, 2008, 11:34 am CDT
Posted By: Actuary
Comment:
Posted By: Steve
Comment:
One question regarding their position on the excess profits law - Over what time horizon would excess profits be calculated?
The property lines excess profits law uses a 10 year threshold.
Posted By: two cents worth
Comment:
Make all make all multi line insurers provide property insurance including windstorm to all Florida risks proportionally to all lines of their P & C writings in the state and prohibit them from redlining any coastal regions.
The property market is already screwed up by government intervention. Why ruin other markets as well?
Posted By: caffiend
Comment:
"Require rates be based on hurricane loss models approved by Commission on Hurricane Loss Projection Methodology"
So WHOM is on this commission? And how are they going to develop these models? Using what data?
The Commission is actually a tough, but fair, reviewer of catastrophe models. It is made up of representatives from several related fields, such as insurance, engineering, and meteorology. Representatives are from government and quasi-government agencies (Citizens, FHCF, OIR), Florida universities, "consumer advocates", and private insurers. Findings of the Commission are ignored by the Office of Insurance Regulation in reviewing rate filings, because otherwise rate increases would appear justified.
Posted By: caffiend
Comment:
"Require or authorize the FOIR to adopt rules establishing standards for allowable profit and contingency factors in rate filings"
Exactly what do they define as allowable profit? WHOM will be doing the determining? and what will be defined as excess profit?
The OIR already determines a required profit provision, but the law was changed a couple of years ago to allow companies a rate of return on retained cat exposure commensurate with such risk. The insurance committee is suggesting repeal of that law.
Posted On: March 14, 2008, 1:47 pm CDT
Posted By: caffiend
Comment:
As an addendum to the excess profit question: If they claim that a company has earned excess profits, what will happen to that money? Will the state try to take it or force a return of premium to policyholders?
The law requires premium refunds to policyholders.
Posted On: March 17, 2008, 7:49 am CDT
Posted By: Ratemaker
Comment:
Florida already has an excess profits law in place for Auto and Work Comp. The current law for auto forces a refund to policyholders if an insurer's 3-year profit exceeds the profit & contingecy factor in the rate filing by more than 5%.
I'm curious what for the recommended "strengthening" would take.
There is already an excess profits law for property as well. It is based on a 10-year 10% threshold. The law applies only to companies with surplus exceeding their 250-year PML. The committee is suggesting removing that requirement, so that under-capitalized companies can be forced to return "excess" profits as well.
Subject: Answers and Comments
Comment:
One question regarding their position on the excess profits law - Over what time horizon would excess profits be calculated?
The property lines excess profits law uses a 10 year threshold.
Posted By: two cents worth
Comment:
Make all make all multi line insurers provide property insurance including windstorm to all Florida risks proportionally to all lines of their P & C writings in the state and prohibit them from redlining any coastal regions.
The property market is already screwed up by government intervention. Why ruin other markets as well?
Posted By: caffiend
Comment:
"Require rates be based on hurricane loss models approved by Commission on Hurricane Loss Projection Methodology"
So WHOM is on this commission? And how are they going to develop these models? Using what data?
The Commission is actually a tough, but fair, reviewer of catastrophe models. It is made up of representatives from several related fields, such as insurance, engineering, and meteorology. Representatives are from government and quasi-government agencies (Citizens, FHCF, OIR), Florida universities, "consumer advocates", and private insurers. Findings of the Commission are ignored by the Office of Insurance Regulation in reviewing rate filings, because otherwise rate increases would appear justified.
Posted By: caffiend
Comment:
"Require or authorize the FOIR to adopt rules establishing standards for allowable profit and contingency factors in rate filings"
Exactly what do they define as allowable profit? WHOM will be doing the determining? and what will be defined as excess profit?
The OIR already determines a required profit provision, but the law was changed a couple of years ago to allow companies a rate of return on retained cat exposure commensurate with such risk. The insurance committee is suggesting repeal of that law.
Posted On: March 14, 2008, 1:47 pm CDT
Posted By: caffiend
Comment:
As an addendum to the excess profit question: If they claim that a company has earned excess profits, what will happen to that money? Will the state try to take it or force a return of premium to policyholders?
The law requires premium refunds to policyholders.
Posted On: March 17, 2008, 7:49 am CDT
Posted By: Ratemaker
Comment:
Florida already has an excess profits law in place for Auto and Work Comp. The current law for auto forces a refund to policyholders if an insurer's 3-year profit exceeds the profit & contingecy factor in the rate filing by more than 5%.
I'm curious what for the recommended "strengthening" would take.
There is already an excess profits law for property as well. It is based on a 10-year 10% threshold. The law applies only to companies with surplus exceeding their 250-year PML. The committee is suggesting removing that requirement, so that under-capitalized companies can be forced to return "excess" profits as well.