Florida Financial Services Commission Approves Emergency Rule Prohibiting Rate Increases, Cancellations and Non-Renewals
In an effort to address a residential property insurance market that is “in crisis,” the Financial Services Commission (FSC) today approved an emergency rule sought by Florida Governor Charlie Crist. The rule freezes residential property insurance rates and prohibits an insurer from non-renewing or canceling its existing personal residential property policies until the insurer makes a rate filing reflecting the effects of newly-enacted House Bill CS/HB 1A (the Property Bill) and a presumed rate reduction factor calculated by the Florida Office of Insurance Regulation (OIR).
Rule 69OER07-1 was adopted to prevent insurers from taking certain actions the FSC and OIR contend would frustrate the Legislative purpose and intent of the Property Bill, which was enacted on January 25, 2007, in a Special Session of the Florida Legislature. Among the major provisions of the Property Bill is a requirement that every residential property insurer make a rate filing with the OIR pursuant to the “file and use” provisions of §627.062(2)(a)1, Florida Statutes, which reflects the savings or reductions in loss exposure due to the increased capacity of the Florida Hurricane Catastrophe Fund. Prior to such filing, however, the OIR is required to calculate the presumed rate reduction factor by March 15, 2007, which each insurer must incorporate into its filing. In describing the specific reasons for issuing this emergency rule, the FSC and OIR determined that allowing insurers to conduct rate filings that do not incorporate the criteria and standards of the Property Bill and permitting insurers to non-renew and cancel their policies during this interim period, would “destabilize the market and further limit the availability of affordable residential property insurance” in Florida.
The enactment of the Property Bill by the Florida Legislature and today’s adoption of Rule 69OER07-1 by the FSC substantially affects the rights of property insurers conducting insurance business in the state of Florida. Christopher Karo, counsel in our Lexington office, is a former Senior Attorney with the Florida Department of Insurance and licensed to practice law in Florida. If you have any questions regarding the affect of these provisions on your company, please contact Mr. Karo at (859) 244-7555 or email@example.com for additional information.