OIR Seeks to Repeal Penalty Guidelines
Florida’s administrative rule providing guidelines for insurer penalties might go by the wayside under a proposal by the Office of Insurance Regulation. The agenda for today’s Cabinet meeting indicates that the OIR will seek authority to repeal the existing rule, 69O-142.011. The rule has been in effect since November 6, 1994.
The repeal of this rule shows the pros and cons of efforts to reduce administrative rulemaking. In recent years, the executive branch and the legislature have emphasized reducing the number of rules in effect because administrative rules are characterized as burdensome and as impediments to economic development. In the case of the penay guideline rule, the statutory authority relating to insurer fines has changed since the rule’s adoption, and several of the substantive provisions referenced in the rule probably have changed too.
On the other hand, an often-overlooked aspect of regulatory rulemaking is that agencies’ rules provide guidance and predictability to those governed by them. The penalty guidelines rule categorizes various types of insurer conduct, ranging from the most severe, even willful, violations to minor or technical violations. The rule also discusses the potential impact of aggravating and mitigating factors and the effect of corrective measures. The rule plainly incentives insurers to cooperate in identifying potential concerns and correcting them. Admittedly, the incentive to mitigate errors should exist without the rule, and the OIR can exercise discretion and take these factors into account when it identifies deficiencies. However, gone will be the benefit of a rule that tries to create a predictable framework for both the OIR and the companies it regulates.