FLORIDA INSURANCE REPORT Volume 8, Issue 8 Keeping You Informed About Florida September, 2010
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FLORIDA INSURANCE REPORT Volume 8, Issue 8 Keeping You Informed About Florida September, 2010 DFS Holds ing, along with an insurance agent and would be deemed unfair trade practices. Hearing on other insurer representatives. The “Inducement” American Insurance Association (AIA) Various examples of “discounts” and and the American Council of Life “services” were discussed. Many of the Rule Insurers (ACLI) speaking on behalf of examples are routine types of business By: Bert Combs their member insurers opposed the transactions and services between insur- The Department of broadly worded proposed rule. Repre- ers, agents, and policyholders such as loss Financial Services (DFS) held a rule hear- sentatives of the Florida Association of control programs that result in discounts, ing in connection with the adoption of Insurance Agents (FAIA) and the Florida customer service benefits, website sup- proposed rule 69B-210.005, entitled, Association of Insurance and Financial port and portals, risk assessments, and “Unlawful Inducements, Generally.” Advisors (FAIFA) likewise opposed the claims adjusting services. DFS suggested The purpose of the proposed rule is to proposed rule. The consensus is that the that it was not focused on these types of define the term “unlawful inducement” rule as drafted does not clarify what ac- inducements, but stopped short of au- and also to provide examples of acts and tions constitute an unlawful inducement thorizing these incidental or “value added practices that are unlawful inducements and instead only causes everyday prac- services.” DFS did say that agents could to purchase insurance as prohibited by tices to either be a violation of the rule or for example order a termite inspection as section 626.9541(1)(h), F.S. perceived to be a violation. The industry a service to the insured, but DFS did not made clear that the rule as drafted would specifically elaborate on what other sorts Representatives of both insurer and agent have unintended consequences, espe- of agent services were permissible. trade associations attended the rule hear- cially because these types of violations Cont. on Page 8 OIR Issues Data Call on to obtain information about the types of Sinkhole Claims claims being filed, the testing procedures used to verify sinkholes, the costs of in- By: Travis Miller spections, locations of claims, the costs The Office of Insurance Regulation has associated with attorneys and public ad- heard reports of increased frequency for justers, and the amounts of claims attrib- Inside this issue: sinkhole claims, particularly in areas of utable to structural damage. Get To Know... Florida that are not usually identified with 2 sinkhole problems. Mounting sinkhole The OIR data call is being conducted as Report Card Raises Public Policy 3 losses for Citizens Property Insurance the Senate Banking and Insurance Issues Corporation and admitted market insur- Committee continues to conduct an Industry Appointments 4 ers have prompted the OIR to send a interim project on sinkhole losses. The data call to insurers to develop more combination of the Senate committee’s Appellate Updates 5 information from which to study con- review of sinkhole issues and the OIR’s cerns with the frequency and severity of development of claims data undoubtedly Future Financial Services 6 Commission Picture Taking Shape sinkhole claims. will lead to legislative consideration of the sinkhole problem in the 2011 session. Scott Campaign Releases Insurance The OIR's data call asks insurers to re- 7 White Paper port various information about their sink- Hold the Date... hole claims since 2006. The OIR hopes 8 GET TO KNOW… ments; and, recognizing employees for their accomplishments. In a nutshell, helping make government work better. By Karen Asher-Cohen What are the biggest challenges facing DFS, and specifically NANCY ROWELL, Director, Division of your Division, these days? Agent & Agency Services, Department of For my division, three areas: 1) Regulating to the level re- Financial Services (DFS). Nancy Rowell is quested by the public and the industry with the resources a native Floridian from Panama City who available. While much of our work is to protect consumers, graduated from the University of West Florida and began her much of it is also to keep the aforementioned playing field professional career with the Florida House of Representatives level for insurance agents. At a time that many are saying gov- as an analyst working with prison, criminal justice, economic ernment should be smaller, we continue to be asked to regu- development and energy issues. In Sarasota, she served as the late more. 2) The broad spectrum of different license types Administrative Services Director for the Sarasota County Tax and laws challenges our employees to be knowledgeable and Collector and was the Deputy City Auditor and Clerk for the sharp at all times. 3) Funding for, and in-house knowledge City of Sarasota. She re-entered state government when she of, the latest technology. In any organization, this is always a accepted a position with the Florida Department of Revenue challenge, and more so for government. In order to keep serv- in Tallahassee. She served as the Communications Process ing the consumers and the industry, we have to have excellent, Manager for 13 years, and came to the Department of Finan- cutting-edge technology. For DFS, I think the challenge has cial Services in February of 2007 as the Director of the Divi- always been to be responsible for such diverse government sion of Agent and Agency Services. Insurance agent, adjuster functions (accounting, auditing, fire safety, workers’ compen- and agency licensing and investigation, technology, budget, sation, treasury and insurance agent and adjuster regulation, as legislation, human resources and strategic planning issues examples) and to be able to bring the agency team together keep her busy. under a unified mission. How do you view your role as Director of Agent & Agency What would you still like to accomplish at DFS? Services? Improved communication channels with the insurance agents; I have three roles, really. First, as leader of a team of employ- a better and more self-service web portal for license applicants ees who do the real work. I am responsible for motivating, and insurance agents; increased e-mail communication op- supporting, encouraging, training and removing administra- tions for agents’ questions and our answers; clean up and sim- tive barriers for them to do their jobs serving the regulated plification of some insurance statutes, particularly bail bond industry and consumers. I am proud of my team! Second, as and title insurance; increased continuing education compli- the “face” of the division working with insurance industry rep- ance rates for agents; and, swifter case work and administrative resentatives. As the director, I set the tone for our relation- action for insurance code violations. ship with the industry. My approach is to regulate fairly and What is the worst part of your job? consistently, while constantly listening to those regulated and make changes when necessary. Most of the time, government Yearly, or more often, sitting down with my licensing and in- and industry can be partners in improving and streamlining vestigative employees to tell them that their positions had to regulation. Government regulation should be sufficient to be offered to meet the legislative demand for budget cuts. ensure compliance with law, no more and no less, and the Then asking them to do more with less while they anxiously ability to comply shouldn’t be hampered by bureaucracy. wait to see if the cuts will occur. Third, my role is to advise Florida’s Chief Financial Officer How do you get away from it all? on issues specific to licensing and investigation of insurance agents and agencies, through the Deputy Chief of Staff. I am fortunate to still have my parents. At 90, they are in their own home in Panama City and I go over frequently to visit What is the best part of your job? and handle their business. While it’s non-stop caregiving Leading employees to see, and make, process improvements while I’m there, it certainly takes my mind completely off my that change their workplace and the industry’s “playing field” work in Tallahassee! I am also an avid reader, gardener, and for the better; seeing technology changes, reduction of proce- laundress. dural steps and law changes reduce government burden on the regulated and improve our employees’ work environ- Page 2 Commissioner McCarty, OIR Insurance and Managed Care (B) Committee, instructing the Move to Implement NAIC to continue to work on other methods, possibly through a Healthcare Law model law or statute, that will retain the role of health insurance agents within the framework of the federal law, and within the By: Travis Miller framework of the MLR definition. The Office of Insurance Regulation continues to evaluate federal healthcare legislation and make In May 2010, the Office, along with the Florida Health the necessary state regulatory changes. According to a recent Insurance Advisory Board, conducted a public hearing in OIR release, Florida Insurance Commissioner Kevin McCarty Orlando on the MLR issue. The OIR has scheduled another joined regulators from other states who voted unanimously to hearing on this issue for September 24 in Tallahassee. The OIR approve the NAIC’s recommended language for the Medical intends to use the information gathered at these hearings to de- Loss Ratio (MLR) definition under the federal Affordable Care velop legislation preserving the role of health insurance agents in Act. Due to the definition of medical expenses, health insurance Florida. agent premiums were not included in the definition of medical losses. The OIR points out that the process of implementing the health- care law is ongoing. Although the NAIC has adopted recom- Commissioner McCarty has expressed concern that an mended MLR language, the OIR believes the implementation immediate adoption of the MLR ratios without accommodating date is a more pivotal issue than the language itself.