OIR Proposes “Report Card Rule” for Workshop
By: David Yon
The OIR has distributed a copy of proposed rule 69O-236.01 to “establish procedures to be used by the Office of the Insurance Consumer Advocate in preparing an annual report card for personal residential property insurers.” A workshop will be held August 6, 2009 at 2:00 p.m. The Division of Consumer Services will divide complaints into two categories for purposes of the report card – premium related complaints and loss related complaints. To be included in the grading system a complaint must be “valid.” The rule identifies numerous complaints considered “not valid.” Among the examples the rule lists as a “not valid” complaint are where the company’s position is upheld. The Consumer Advocate will determine a numerical score for each insurer based on the following four factors:
(a) The insurer’s market share of premium related complaints compared to its market share of in-force policies on a calendar year basis;
(b) The insurer’s share of loss related complaints compared to its share of the prior year’s in-force policies on a calendar year
basis;
(c) The insurer’s share of valid complaints compared to its share of the average of the latest year’s and the prior year’s in-force policies on a calendar year basis; and
(d) The insurer’s average number of months to pay claims compared to the median number of months to pay claims of all insurers on a calendar-accident year basis.
Grades will then be assigned as follows:
(a) A grade of A if the insurer’s score is in the top 15% of the total number of scores;
(b) A grade of B if the insurer’s score is in the next 20% of the total number of scores;
(c) A grade of C if the insurer’s score is in the next 30% of the total number of scores;
(d) A grade of D if the insurer’s score is in the next 20% of the total number of scores; and
(e) A grade of E if the insurer’s score is in the last 15% of the total number of scores.
A weighted average is then applied to each category to derive an overall grade.
For more information and a copy of the draft rule please contact anyone on our Insurance Team.