Insurers to be allowed to raise rates first and pay refunds later if regulators reject them
From the News Service of Florida:
Insurance companies will continue to be allowed to raise rates before final state approval is given under an order signed Monday by Florida Insurance Commissioner Kevin McCarty.
With a number of recent changes in state insurance laws leading to an unusually high number of filings, regulators don't have the ability to go through all the filings quickly enough. In such a circumstance, the law allows regulators to approve rate requests in certain circumstances, and follow-up with a full review later.
State lawmakers last year approved legislation that allows companies to get approval for higher premiums before a full review as long as their chief officers sign affidavits that the information in their formal filing is correct, in compliance with Florida law and "diligently reviewed."
The office is unable to keep up with all the filings mainly because a number of changes in state property insurance law recently have required changes to forms that have to be filed, leading to a higher than usual number of filings, McCarty's order said.
"This current volume of form filings has taxed the office's review resources and resulted in a lengthier period of review for many filings," McCarty's order states. "Due to the current volume of filings and the agency's resource limitations, the office finds the review and approval of policy forms … is not practicable where the form at issue has been diligently and thoroughly reviewed by the company..."
McCarty issued a similar order last June and Monday's order continues the policy.
Under Monday's order, which expires June 24, OIR can order companies to rebate the higher premiums to customers if it finds the rates unjustified.
OIR officials released the order shortly before 5 p.m. on Monday and an OIR spokeswoman declined further comment until Tuesday morning. The order drew criticism from Sean Shaw, a former Florida insurance consumer advocate who now works with a Tampa law firm that handles policyholder claims.
He criticized the "use and file" that over the years has gained support in the Republican-led Legislature.
"It's a dangerous day in Florida when the Office of Insurance Regulation turns into the office of blind trust because they lack the resources to independently verify form filings from insurance companies," Shaw said in a statement.