Report Card Rule to Move Forward
The Florida Office of Insurance Regulation announced in late 2010 that it was withdrawing the insurer report card rule. This announcement was viewed favorably by many members of the industry because they had commented throughout the workshop and hearing process that the grading formula presents serious concerns. Although the OIR indicated at the time it announced the withdrawal that rulemaking would continue in the future, the industry at least would have additional time to consider the rule’s impact and work to correct the problems identified.
Now, however, the Office of Insurance Regulation reports that its earlier indication that it would withdraw the rule was in error. The OIR instead intends to file a notice of correction changing the agency adopting the rule to the Financial Services Commission and changing the rule number. This is because the statute providing for an insurer grading system indicates that the Insurance Consumer Advocate, and not OIR, is responsible for the grading system.
The Insurance Consumer Adovocate held hearings last year to give interested parties an opportunity to comment on the rule. Several industry representatives expressed concern about the possible implications of the rule, particularly because the industry has not seen preliminary results from using the scoring methodology. Among the primary concerns, the draft rule set forth a letter grade system that would label 2/3 of the industry at the “C” level or below. In addition, the grading system takes into account certain service requests filed by consumers with the state even if the state determines those requests are invalid. The rule also has a rudimentary method of measuring claims handling speed when Florida statutes separately govern the timeliness of claims payments, and a fast claims payment system is not always indicative of sound system.
The Financial Services Commission intends to hold a public hearing on February 9 to discuss the revised rule. The FSC then will be in a position to move forward with adopting the rule later this spring.
The Insurance Consumer Advocate has indicated that he will be proposing legislation for the 2010 session addressing issues relating to the grading system. According to current timelines, it appears that the regulator prefers to move forward with adopting the grading system before the outcome of the 2010 session is known, which ultimately would result in additional rulemaking if the legislature makes changes this year.