CFO Sink Asks Commissioner McCarty for Information on Florida Insurers in Preparation for Hurricane Season
FOR IMMEDIATE RELEASE: April 26, 2010
CONTACT: Kevin Cate, (850) 413-2842
CFO ALEX SINK ASKS COMMISSIONER MCCARTY FOR INFORMATION ON FLORIDA INSURERS IN PREPARATION FOR HURRICANE SEASON
TALLAHASSEE —Florida CFO Alex Sink today released a letter to OIR Commissioner Kevin McCarty inquiring whether any additional actions may be necessary by OIR prior to hurricane season to ensure authorized property insurers are financially capable of meeting their obligations through the course of the 2010 hurricane season. A copy of the letter follows below:
April 23, 2010
Commissioner Kevin McCarty
Office of Insurance Regulation
200 East Gaines Street
Tallahassee, Florida 32399
Dear Commissioner McCarty:
Thank you for briefing the Financial Services Commission on March 23, 2010, regarding the state of Florida’s domestic property insurance market. Recently, there have been a series of actions by the Office of Insurance Regulation with regard to Florida’s property insurance market that merit further explanation by the Office:
On April 1, 2010, OIR issued an Order doing away with the requirement that certain insurers provide three years of continuous coverage for policies removed from Citizens Property Insurance Corporation;
On April 7, 2010, OIR found that Northern Capital Insurance Company was insolvent, and requested the initiation of receivership proceedings;
OIR is monitoring the unsound financial condition of Magnolia Insurance Company in administrative supervision. The company continues to have homeowners’ policies in force in Florida, and there is limited time between now and hurricane season for OIR to protect these policyholders.
On April 12, 2010, OIR issued an Informational Memorandum doing away with the requirements for property insurers to purchase a specific level of catastrophe reinsurance. According to the Memorandum, OIR no longer requires any specific level of catastrophe reinsurance such as the 1 in 100 year probable maximum loss level.
Many of these actions by OIR appear to represent a fundamental shift in strategy with regard to the regulation of property insurance companies. In light of the recent insolvency of Northern Capital, the unsound financial condition of Magnolia, and these other strategic changes announced by OIR, I would appreciate your detailed written response to the following questions:
1. Is there any authorized property insurer in the State of Florida that has been found by OIR to be impaired or insolvent in the past year that OIR has allowed to write new policies or to renew policies? If so, please provide me with the name of the company, and the rationale behind OIR’s decision to permit any company to continue writing or renewing policies while impaired or insolvent.
2. The OIR’s Informational Memorandum dated April 12, 2010, states that OIR is not requiring any specific level of catastrophic reinsurance such as the 1 in 100 year probable maximum loss level.
a) Given this statement, is there a uniform standard which all authorized Florida property insurers are required to meet with regard to hurricane exposure? If so, what is this uniform standard?
b) Why is OIR doing away with the requirement for property insurers to maintain a specific level of catastrophe reinsurance?
3. In an Order dated April 1, 2010, OIR released certain take-out insurers from their contractual obligation to retain take-out policies for at least three years.
a) How many policies will be affected by OIR releasing the take-out insurers from this three-year obligation?
b) What actions is OIR taking to facilitate placing these policies in the private market?
c) This three-year standard was in place to provide a commitment by insurers to their policyholders, and to provide stability in our property insurance marketplace. What public policy interests are advanced by releasing these take-out insurers from their obligation to retain take-out policies?
4. Pursuant to Section 624.82, Florida Statutes, OIR can disclose information relating to the supervision of an insurer if the Office finds that it is in the best interest of the public, the insurer in supervision, or its insureds. What information at this time does OIR believe should be disclosed with regard to companies presently in supervision to serve the best interests of the public or its insureds?
5. What further action does OIR believe needs to occur prior to hurricane season to ensure that authorized property insurers are financially capable of meeting their obligations through the course of the 2010 hurricane season?
I appreciate your written response to these questions on or before April 29th so that the members of the Financial Services Commission can review your responses in advance of our next meeting. If in addition to your written responses you include any type of chart with data in your response, please be sure to thoroughly explain the chart or data so we can follow your analysis.
cc: Governor Charlie Crist
Attorney General Bill McCollum
Commissioner Charles Bronson
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As a statewide elected officer of the Florida Cabinet, CFO Alex Sink oversees the Department of Financial Services. A successful business leader with nearly three decades of experience in the private sector, Sink is serving her first term as Florida's CFO. CFO Sink's priorities include using her business experience to cut wasteful spending, holding government accountable to Florida’s taxpayers, and cracking down on financial and insurance fraud.