Florida Office of Insurance Regulation Annual Report 2014 Kevin M. McCarty Insurance Commissioner FINANCIAL SERVICES COMMISSION RICK SCOTT FINANCIAL SERVICES GOVERNOR COMMISSION JEFF ATWATER OFFICE OF INSURANCE REGULATION CHIEF FINANCIAL OFFICERRICK SCOTT GOVERNOR PAM BONDI ATTORNEY GENERAL JEFF ATWATER OFFICE OF INSURANCE REGULATION CHIEF FINANCIAL OFFICER KEVIN M. MCCARTY ADAM PUTNAM PAM BONDI OMMISSIONER COMMISSIONER OF C ATTORNEY GENERAL AGRICULTURE KEVIN M.JanuaryMCCARTY 2015 ADAM PUTNAM COMMISSIONER COMMISSIONER OF As Insurance Commissioner for the State of Florida, I am pleased to present the 2014 AGRICULTURE Annual Report of the Office of Insurance Regulation. I am also excited to report that Florida’s insurance market is robust across most lines. Companies and consumers are enjoying the fruits of increased competition, market stability, and regulatory innovation. New products are making it to market sooner. Consumers have more choices. In the homeowners market, rates are stabilizing and the residual market is shrinking. Our domestic property insurers are an economic development success story—strengthening their financial position and claims-paying ability, while expanding into other states. Florida employers are benefitting from workers’ compensation rates that remain at historic lows and among the most competitive nationally. Rates are 56 percent lower than in 2003. To remain competitive, Florida must be vigilant in responding to cost drivers affecting rates, including those affected by the outcome of several cases pending before the Florida Supreme Court. 2013 was not without challenges, however. Regulatory uncertainty out of Washington over federal health care reform and the move towards market-based rates under federal flood insurance legislation created enormous challenges for companies and policyholders. The Office worked with Florida’s elected leadership to preserve marketplace stability and foster the smoothest possible transition. In the year ahead, the Office will continue to promote Florida as an opportunity-rich destination for companies to conduct business and invest capital. We will explore new ways to further accelerate product speed-to-market. We will carefully scrutinize regulatory initiatives emanating from beyond Florida that have potential repercussions for our companies and policyholders. With the 12th largest market internationally, Florida must remain an active force in solvency modernization and standard-setting initiatives being discussed in Washington and Europe. We will do all of this while continuing to keep regulatory costs down. This report has been prepared pursuant to section 624.315, Florida Statutes. Please visit our website at www.floir.com to learn even more about the Office and the important work we do. If you have any questions or comments concerning this report, I encourage you to contact us. Sincerely, Kevin M. McCarty • • • Insurance CommissionerKEVIN M. MCCARTY • COMMISSIONER 200 EAST GAINES STREET • TALLAHASSEE, FLORIDA 32399-0305 • (850) 413-5914 • FAX (850) 488-3334 WEBSITE: WWW.FLOIR.COM • • • KEVIN M. MCCARTY • COMMISSIONER Affirmative Action / Equal Opportunity Employer 200 EAST GAINES STREET • TALLAHASSEE, FLORIDA 32399-0305 • (850) 413-5914 • FAX (850) 488-3334 WEBSITE: WWW.FLOIR.COM Affirmative Action / Equal Opportunity Employer TABLE OF CONTENTS Office Activities................................2 The Office of Insurance Regulation...............................................3 About the Office .......................................................................................3 Roles and Responsibilities .......................................................................3 Budget Appropriation, Fiscal Year 2013-2014 ......................................6 Activities and Accomplishments ............................................................7 Policy Leadership Beyond Florida...............................................12 National ...................................................................................................12 International ...........................................................................................13 Promoting Florida as a Place to do Business: The Insurance Industry and the Florida Economy.......................14 The State of the Florida Insurance Market ..................................15 Overall .....................................................................................................15 Life and Health Insurance .....................................................................16 Property and Casualty Insurance .........................................................17 Summary of Insurance Legislation..............................................20 Key Bills ...................................................................................................20 General Insurance ..................................................................................21 Life and Health Insurance .....................................................................21 Property and Casualty Insurance .........................................................21 Consumer Resources....................................................................22 Statutory Insurance Entities ........................................................24 Citations......................................................................................25 Company Activities ..........................27 Please note that all data contained in this report is for Calendar Year 2013, except where otherwise indicated. OFFICE ACTIVITIES Florida Office of Insurance Regulation, Annual Report 2014 2 The Office of Insurance Regulation About the Office The Insurance Commissioner is considered the The Office pursues its mission by: agency head for purposes of final agency action for all areas within the regulatory authority delegated • Licensing insurance companies and insurance- to the Office of Insurance Regulation (Office). related entities. The Insurance Commissioner is appointed by, and reports to, the Financial Services Commission • Reviewing forms and rates for insurers and (FSC). The FSC is comprised of the Governor, the insurance-related entities. Attorney General, the Chief Financial Officer, and the Commissioner of Agriculture. The FSC serves as • Monitoring the financial condition of insurers agency head for purposes of rulemaking. Commission and requiring corrective action when appropriate. action is taken by majority vote. • Enforcing insurer and insurance-related entity The duties of the Office include “all activities concerning insurers and other risk bearing entities, compliance with statutory market conduct including licensing, rates, policy forms, market requirements. conduct, claims, issuance of certificates of authority, Our Role solvency, viatical settlements, premium financing, • Working to attract and administrative supervision, as provided under the more insurance-related Licensing insurance 1 companies, jobs and insurance code or chapter 636.” entities capital to the Florida The Office is housed within the Department insurance market. Reviewing forms of Financial Services (DFS) for administrative, and rates personnel, and technology support, and funded • Engaging in national Monitoring financial entirely through legislative appropriations from the and global regulatory conditions Insurance Regulatory Trust Fund. For Fiscal Year (FY) policy formulation 2013-14, the Legislature appropriated $29.4 million and standard-setting Enforcing compliance and 288 full-time equivalent positions to the Office. affecting Florida. This included funding for financial examination Attracting new insurance entities outsourcing contracts and public hurricane model • Collecting and upgrades by Florida International University. analyzing insurance Engaging in regulatory data for use by the policy Roles and Responsibilities Office, policymakers, Analyzing insurance companies and The primary roles and responsibilities of the Office can data be summed up in the following mission statement: consumers. It is the mission of the Office to ensure that insurance For state budgetary purposes, the Office is organized companies licensed to do business in Florida are into two program areas: Executive Direction and financially viable; operating within the laws and Support Services, and Compliance and Enforcement. regulations governing the insurance industry; and The first, Executive Direction and Support Services, offering insurance products at fair and adequate rates provides overall direction in carrying out the which do not unfairly discriminate against the buying administrative and statutory responsibilities of the public.2 Office. Executive Direction and Support includes Florida Office of Insurance Regulation, Annual Report 2014 3 the Commissioner’s Office, Office of the Inspector Office of the Chief of Staff General, and Office of the General Counsel and Legal Services. The second, Compliance and Enforcement, The Office of the Chief of Staff is the senior executive provides regulatory oversight of company solvency, management branch of the Office and consists of the policy forms and rates, and market conduct. It includes Chief of Staff, Deputy Chief of Staff, Government the Office of the Chief of Staff, Office of the Deputy Affairs, Communications, and Market Research and Commissioner for Life and Health, Office of the Technology. The Chief of Staff provides overall staff Deputy Commissioner for Property and Casualty; and, leadership, as well as administrative