NU Online News Service, Aug. 6, 3:12 p.m. EDT
Florida's top insurance regulator vowed to do more financial reviews of the state's insurers like the ones his office performed at the start the of the year.
Those reviews led to some disciplinary actions for various reasons against the likes of Olympus Insurance Company, Homeowners Choice Property & Casualty Insurance Company, Southern Oak Insurance Company and Hillcrest Insurance Company.
In the case of Olympus, the Office of Insurance Regulation (OIR) threatened in April to suspend the company because regulators felt the insurer was writing business above levels of what it could support.
To satisfy regulators, Olympus outlined a reinsurance plan (http://www.property-casualty.com/News/2010/6/Pages/Olympus-Satisfies-Fla-Regulator-Solvency-Concerns-.aspx?k=olympus) in which the company has a $6 million retention for a 1-in-92 year storm and a 1-in-70 year storm.
Companies are expected to take part in their own risk assessments. Traditionally insurers are asked to model for a 100-year event.
But Florida Insurance Commissioner Kevin McCarty told NU Online News Service that in Florida, the 100-year event modeling is short-sighted. "The frequency of storms is what could bankrupt companies," he said.
Commissioner McCarty said the reviews conducted by his office have had a "sentinel effect" on the industry, prompting insurers to do more intensive internal reviews in order to self-identify troubles.
Most of the disciplinary actions taken as a result of the OIR reviews had to do with insurers' transactions with affiliated companies.
A bill, S.B. 2004, passed this year by the Florida Legislature, would have given the OIR additional oversight into such questionable transfers from insurers to affiliated holding companies, managing general agents and reinsurers.
The bill was vetoed by Gov. Charlie Crist.
Still, even with the veto, Commissioner McCarty said the OIR is "not without statutory authority to look at those transactions."
The vetoed legislation would have also required insurers to carry $15 million in minimum capital and surplus instead of the current $5 million, which Commissioner McCarty has insisted is too low.
"We felt as though we had bi-partisan support and worked with consumer groups to come up with a balanced piece of legislation that ensured the solvency of companies, protected consumers and was positive for the market environment in Florida."
With that legislation dead, Commissioner McCarty said he'll keep up the oversight on a market he said is in good financial shape.
"It'll just be a bit more labor-intensive on our part," he said.
A more detailed look at the Florida insurance market, and its preparations for and potential impact of catastrophes appears in the Aug. 9 edition of National Underwriter. Click here to read the story.
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