Rule No.: RULE TITLE
69M-236.001: Purpose
69M-236.002: Definitions
69M-236.003: Methodology
69M-236.004: Limitations and Exclusions
69M-236.005: Data Sources
69M-236.001 Purpose.
The purpose of the rules is to establish procedures to be used by the Office of the Insurance Consumer Advocate in preparing an annual report card to grade personal residential property insurers on their complaint history and the timeliness of paying claims for each personal residential property insurer. The grades will be restricted to each personal residential property insurer’s complaints and paid claims involving homeowners, mobile home owners, dwelling, tenants, condominium unit owners, cooperative unit owners, or similar personal residential property insurance policies. This rule does not apply to eligible surplus lines insurers or to insurers that do not write any homeowners, mobile home owners, dwelling, tenants, condominium unit owners, cooperative unit owners, or similar personal residential property insurance.
Rulemaking Authority 624.308(1), 627.0613(4) FS. Law Implemented 627.0613(4) FS. History–New_________.
69M-236.002 Definitions.
(1) “Complaint” means any written communication, or oral communication subsequently converted to a written form, received by the Division that expresses dissatisfaction with a specific personal residential property insurer and requires the Division of Consumer Services to contact the personal residential property insurer in order to address the dissatisfaction expressed in the communication subject to regulation under Florida’s insurance laws. Communications received by the Division that are determined by the Division to be an inquiry that do not require contact with a particular insurer do not constitute a complaint. An oral communication which is subsequently converted to a written form meets the definition of a complaint for this purpose.
(2) through (3) No change.
(4) “Qualifying Premium” means the total personal residential direct written premium for the Experience Period. “Personal residential property insurer” means an insurer that writes personal residential property insurance such as homeowner’s, mobile home owner’s, dwelling, tenant’s, condominium unit owner’s, cooperative unit owner’s and similar policies and includes an insurer that, in addition to writing personal residential property insurance policies, also writes commercial residential property insurance policies such as condominium association, cooperative association, apartment building and similar policies.
Rulemaking Authority 624.308(1), 627.0613(4) FS. Law Implemented 627.0613(4) FS. History–New_________.
69M-236.003 Methodology.
All language in proposed subsections (1) through (5) has been deleted and will be replaced by the following subsections (1) through (6):
(1) The complaint grade for each insurer will be based on its average complaint ratio determined as follows: the average of the calendar year ratios of the insurer’s market share of personal residential policy-related complaints compared to its market share of personal residential average in-force policies.
(2) Each insurer will receive a complaint grade in accordance with the following:
(a) A grade of A if the average compliant ratio is less than 50%;
(b) A grade of B if the average complaint ratio is between 51% and 85%;
(c) A grade of C if the average complaint ratio is between 86% and 115%;
(d) A grade of D if the average complaint ratio is between 116% and 149%;
(e) A grade of E if the average complaint ratio is greater than 150%.
(3) Each insurer’s grade for timeliness of claim payment will be determined based upon the proximity of each insurer’s average number of months to pay homeowners claims to the median number of months to pay homeowners claims of all personal residential property insurers. The calculation will be done for each calendar-accident year and then averaged for all calendar-accident years.
(4) Each insurer will receive a timeliness of claim payment letter grade based on the following:
(a) A grade of A if the insurer’s average number of months to pay claims is more than one month less than the industry median;
(b) A grade of B if the insurer’s average number of months to pay claims is between one and one half of a month less than the industry median;
(c) A grade of C if the insurer’s average number of months to pay claims is within one half of a month of the industry median;
(d) A grade of D if the insurer’s average number of months to pay claims is between one half of a month and one month more than the industry median; and
(e) A grade of E if the insurer’s average number of months to pay claims is more than one month greater than the industry median.
(5) Each insurer is assigned an overall grade for the five year experience period based upon a weighted average determined as follows:
(a) 50% weight to complaints grade; and
(b) 50% weight to claims payment timeliness grade.
(6) If an insurer’s overall grade falls between two grades, it will receive the higher grade.
(7)(6) To provide appropriate incentives for the second and subsequent years’ annual Insurer Report Cards, each insurer will be graded on absolute scales developed from the 2004 through 2009 calendar years’ complaints history and 2004 through 2009 calendar-accident years’ paid claims experience the first annual Insurer Report Card experience period. Absolute grading scales will reflect higher expected complaint ratios in hurricane years.
Rulemaking Authority 624.308(1), 627.0613(4) FS. Law Implemented 627.0613(4) FS. History–New_________.
69M-236.004 Limitations and Exclusions.
(1) Complaints are classified as loss related, premium related and valid based upon an objective evaluation of the reason and disposition descriptions given to each complaint. Complaints will be evaluated on or after based on the reason and disposition descriptions in the complaint files as April 1 of the year following the experience period that is being graded.
(2) No change.
(3) Open complaint files or complaints for which the complaint disposition description is missing are treated as invalid complaints, except for complaints for which the reason description is judged to describe a valid complaint.
(4) Missing complaint reason descriptions are treated as premium related complaints.
(3)(5) All flood complaints are excluded.
(4) The maximum complaint ratio in any one calendar year for any insurer will be limited to 350%.
(5)(6) Claims are assumed to be paid on average in the middle of the calendar year in which they close.
(6)(7) For calendar-accident years in which a company had fewer than 50 paid claims as of the end of the latest calendar year, such claims are assumed to have been paid in the industry median number of months for payment by all personal residential property insurers.
(7)(8) Insurers with less than $30 million in qualifying direct written personal residential premium are included in the grading process but are given grades in this state during the experience period, excluding the latest year, are graded on each of the four factors but are given an overall grade of “I” for “insufficient complaint history” due to a lack of actuarial credibility.”
(8)(9) Insurers with less than 5 years of experience are only graded for those years for which they had experience.
(9)(10) Insurers with less than $100,000 in direct written personal residential premium in the latest calendar year will not be graded.
Rulemaking Authority 624.308(1), 627.0613(4) FS. Law Implemented 627.0613(4) FS. History–New_________.
69M-236.005 Data Sources.
The insurer report card will be based on data obtained from the following sources:
(1) Complaint data from the Division of Consumer Services, Florida Department of Financial Services;
(2) Paid homeowners claim data from the Statutory Annual Statements, Schedule P, Part 5A, Section 1, filed by insurers with the Office of Insurance Regulation; and
(3) In-force policy and direct written premium data from the Quarterly Summary Reports (QSR) of the Florida Office of Insurance Regulation.
Rulemaking Authority 624.308(1), 627.0613(4) FS. Law Implemented 627.0613(4) FS. History–New_________.