All residential insurers in Florida must make a filing containing new rates by March 15 to become effective for new or renewal policies beginning June 1 and thereafter on the renewal date of the policy.
Insurers are also required to make a second filing which will “true up” the savings used by the insurer in the initial filing to reflect actual reinsurance savings. That filing can be made over the summer, but no later than Sept. 30.
Legislation passed during the recent Special Session of the Florida Legislature required the Office of Insurance Regulation to calculate the ‘Presumed Factors’ which establish how much savings the insurance reforms should yield for policyholders in various regions around the state.
On March 1, Florida Insurance Commissioner Kevin McCarty released the property insurance discounts that insurers are required to pass along to policyholders.
The Presumed Factor savings that insurance companies must file with the OIR are to be applied to the hurricane premium and not to the entire premium of the policy. In many parts of the state the hurricane portion of the premium represents a substantial or even the majority percentage of the total policy premium.
For homeowners policies the discounts in region 1, which contains some zip codes in North Florida and the Panhandle, will be decreased by 10.2 percent of the total policy premium. The discounts will range to a decrease of 52.8 percent of the total policy premium in region 25, which contains some zip codes in Miami-Dade.
Similar rate savings were released by the OIR for manufactured homes, condominium units, apartment and condominium buildings and for renters’ insurance policies.
McCarty said the public needs to be aware that these are average savings. Policyholders could see differing savings for a variety of reasons. These include the insurer already having an approved rate increase in the pipeline that will not appear until the policy’s renewal date. Also, some insurers have capped increases in some territories and do not have all costs reflected in current pricing. Rate information can be found at www.floir.com.
McCarty also said he is concerned that based on some of the reports and/or editorials published since his Presumed Factor Order (Case No. 89321-07), on February 19th, there appeared to be some confusion about Emergency Rule Number 690ER07-1, about the Commissioner’s letter to the Financial Services Commission interpreting the rule, and/or about CS/HB 1A. He provided the following explanation of the issues surrounding these communications to help clarify any misunderstanding or misreporting.
The non-renewal provisions contained in Emergency Rule Number 690ER07-1 stated:
Until an insurer makes a rate filing reflecting the effects of CS/HB 1A and the presumed factor calculated by the Office, an insurer may not non-renew a personal residential insurance policy covering property in Florida,
The Emergency Rule did not say that non-renewals were prohibited for 90 days, and it did not say that non-renewals were prohibited for the 2007 hurricane season. It clearly stated that any non-renewals are only prohibited until an insurer makes a presumed factor rate filing.
Commissioner McCarty’s February 7, 2007, letter to the Governor and members of the Financial Services Commisssion interpreting Emergency Rule Number 690ER07-1 said
1. Cancellations and non-renewals which were to take effect on or after the adoption of the Emergency Rule pursuant to notices of cancellation and non-renewal issued prior to the adoption of the rule, are prohibited;
2. Cancellations and non-renewals which were to take affect after the adoption of the Emergency Rule pursuant to notices of cancellation and non-renewal issued on or after the adoption of the rule, are likewise prohibited; and
And Commissioner McCarty restated the non-renewal provisions contained in Emergency Rule Number 690ER07-1:
3. No new notices of cancellation or non-renewal shall be issued until a rate filing reflecting the presumed factor is made.
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