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Insurance Consumer Advocate

Sha'Ron James

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Tallahassee, FL 32399-0308

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Florida's McCarty: Assignment of Benefits Issue Undermines Progress on Rates

News Article

May 03, 2016

Best's News Service

Tampa, Fla. - Florida Office of Insurance Regulation Commissioner Kevin McCarty said Florida insurers should gain better access to inspecting damaged properties and third-party firms are filing higher claims on behalf of policyholders, McCarty spoke with A.M. BestTV at the Florida Association for Insurance Reform conference in Tampa. McCarty is stepping down from his long-time post as commissioner, and is being succeeded by David Altmaier, an OIR deputy commissioner. The Florida Cabinet asked McCarty to stay on for 60 days to help ensure a smooth transition. Following is an edited transcript of the interview.

Q: What do you see as the major issues facing the Florida market?

A: We are in a very strong position today. We’re in the strongest position we have been in a decade. We, of course, have record amounts of capital and surplus but the big challenge we’re seeing is coming from the assignment of benefits. Water damage, roof damages, that has begun to be evidenced most recently in the Citizens’ filing and most recently in our data call. We’re deeply concerned about the ramifications that might have and challenges to the marketplace. Floridians, for the last three years, have had reductions in their rates because of the growth in the reinsurance market. We’ve had great growth in the reinsurance market. We’ve had a great increase in the amount of the ILS market and the alternative reinsurance market. Just as we’re beginning to turn the corner and get some rate relief — we’re now being saddled by rate increases that we’re beginning to see as a result of these water damages. We need to address that both on an administrative level, policy form changes, that don’t affect the policyholder benefits but give insurance companies the opportunity to inspect the property before the wholesale repairs are made to a home. That’s only a fair thing to do because that’s a right the insurance company has under the terms and conditions of the policy.

Q: You’ve recently announced that you’ll be stepping down as commissioner. Tell us about some of your accomplishments over your tenure.

A: It’s been a labor of love to be the insurance commissioner of the state of Florida. Florida has been in the center of the vortex of many of the crises at times, whether it’s in property and casualty or in life and health. I’ve had a lot of challenges over the years. Obviously, the 2004-2005 hurricane season, how the market was decimated and now the recovery after that. Seeing Citizens go from 1.6 million policies down to less than 500,000; 485,000 policies as of April. That’s been a huge achievement. It’s not been mine but it’s been a collective one of the legislature and the interested parties and stakeholders working together to show what Florida can do, which has been an amazing task. So many of our indigenous companies are now doing business in other states. Florida has been an incubator of innovative ideas, whether it’s in mitigation, development of surplus notes, of hardening homes, of building code enforcement. Florida has been the forefront and is exporting those ideas. I’m very proud to have been playing a part of that. Of course one of the great things we’ve seen is our recent interview on “60 Minutes,” working to get $7 billion returned to policyholders who have been cheated out of their benefits. We’re very proud of the collective work we’ve done around the country with our CFO and with other states to investigate life insurance companies to make sure that policyholders got the benefit of their policies.

Q: What is next for you?

A: I have a few opportunities on the table. I’ve been exploring some other opportunities but right now I’m focused on continuing my work as the insurance commissioner and my service to the people of Florida.