Hearing to Address Proposed Penalty Rule Repeal
A hearing will take place today on the Office of Insurance Regulation’s proposed repeal of administrative rule 69O-142.011, sometimes called the “penalty rule.” The rule classifies many types of violations of the insurance codes into categories, ranging from the most severe to the relatively minor. The rule then sets forth ranges of potential penalties based on the severity of the violations and other factors.
The OIR intends to repeal the rule because it believes the rule is outdated. Statutes setting forth insurer penalties have been amended since the rule was adopted, generally increasing the potential fines. However, some insurers are concerned with the proposed repeal because it would eliminate useful provisions of the rule. The existing rule encourages self-evaluation and corrective measures by insurers because it specifies penalties will not be imposed on these internal efforts. The rule also identifies mitigating factors that insurers should employ to lessen the impact of potential violations, and as a result to reduce the applicable fines.