FLORIDA PROPERTY & CASUALTY ASSOCIATION
HOMEOWNERS DIVISION
Minutes for January 14, 2011
A General Meeting of the Florida Property and Casualty Association’s (FPCA)
Homeowners Division was held at 1:00 p.m. on January 14, 2011 at the Waldorf Astoria
Orlando.
I.
Call to Order
Chairman Grimsley called the meeting to order. The following Members were in
attendance:
Chuck Grimsley
Tom Jerger
John Jerger
Gordon Jennings
Stacey Giulianti
Maria Moller
Kevin Stokes
Bryan McCahill
Tony Loughman
Ray Blacklidge
Andy Martinez
Reid Edwards
Michael Young
Jesse Boehm
Locke Burt
Werner Kruck
Melissa Burt
Jorge Gomez
Argus Fire & Casualty
Modern USA (by phone)
American Traditions
Federated National
Florida Peninsula
Frontline Homeowners Insurance
Guy Carpenter
Homeowners Choice
Southern Oak
Modern USA
Modern USA
RMS
RMS
RMS
Security First Insurance
Security First Insurance
Security First Insurance
Universal North America
The following special guests were in attendance:
Dr. Jack Nicholson
Robin Westcott
Susan Patschak
Dennis Ruppel
Florida Hurricane Catastrophe Fund
Office of Insurance Regulation
Canopius Underwriting Bermuda Ltd
Ark Royal Ins. Co.
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Also in attendance were Katie Webb, Maria Abate, Megan Grant, Rich Fidei, Sandy Fay,
Andromeda Monroe and Trevor Mask, of Colodny, Fass, Talenfeld, Karlinsky and Abate, P.A.
(CFTKA) and Don Silver and Michelle Friedman of Boardroom Communications.
II.
Antitrust Statement
Chairman Grimsley read the antitrust statement, which was heard by all present.
III.
Guest Speakers
A.
Dr. Jack Nicholson, COO, Florida Hurricane Catastrophe Fund
Dr. Nicholson began by first addressing the FHCF litigation with Sunshine State, noting
that the Circuit Court yesterday ruled in the FHCF’s favor that Sunshine State’s issue must first
be considered by the Florida Division of Administrative Hearings (DOAH). With respect to the
issues involved, Dr. Nicholson explained that he does not believe the FHCF has the authority to
pay attorney fees and public adjuster fees given the way the law is currently written. It is his
belief that the definition of direct incurred losses relates to damages caused by the peril.
Ms. Webb informed Dr. Nicholson that the FPCA will be supporting legislation to clarify
the issue. Dr. Nicholson indicated the FHCF also was drafting proposed legislation regarding
this issue. Mr. Burt and Dr. Nicholson agreed that the best place for the proposed legislation
would be as an amendment to SB 408.
Dr. Nicholson addressed concerns regarding the upcoming Rule hearing, asserting that it
is not the FHCF's intention to create an additional burden to insurers by increasing their costs of
record-keeping. He maintained that the FHCF is simply asking for information, but
acknowledged insurer concerns by stating that if that is a problem, they will remove the
requirement. He noted, however, that insurers will still be required to prove their losses. Ms.
Webb reiterated insurers' concern that capturing the requested information would be
problematic and costly.
Dr. Nicholson explained that in reviewing claims, they are only looking for significant
errors that require correction. He noted that if errors don't meet a certain threshold, there is
no action taken.
Chairman Grimsley thanked Dr. Nicholson for addressing the group.
B.
Ms. Susan Patschak, CEO, Canopius Underwriting Bermuda Limited
Ms. Patschak stated she was pleased to be able to join the meeting and hoped it would
help establish communication. Chairman Grimsley inquired if there was additional data that
would be helpful to Canopius. Ms. Patschak noted that Florida already has some of the best
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data regarding exposures. The Members and Ms. Patschak generally discussed reinsurance
industry trends and consistency.
C.
Ms. Robin Westcott, Director, Property and Casualty Financial Oversight,
Florida Office of Insurance Regulation
Ms. Westcott acknowledged that there are several difficult issues in the market at this
time. In particular, Ms. Westcott noted the sinkhole issue and that the OIR issued the data call
last fall to provide the legislature with information on the situation. The OIR is working on draft
legislation to address the sinkhole issue.
Ms. Westcott informed the Members that OIR is trying to streamline its reporting
systems to make them more efficient. She further noted that the reinsurance data call this year
should be through the new system, which will make the effort less labor intensive.
Ms. Westcott went on to say that she believes the new Cabinet will want to hear from
Commissioner McCarty on pressing insurance issues, particularly the loss cost drivers.
The Members and Ms. Westcott discussed Citizens and the need to adopt long term
strategies. It was noted that the House recognizes that the private sector would have to absorb
business gradually. It was also acknowledged that one of Governor Scott's priorities is to return
Citizens to its intended role as insurer of last resort. The Members and Ms. Westcott also
discussed actual cash value (ACV) and the desire to return the law to where it was. Ultimately,
the goal is to make Florida an attractive market again.
Chairman Grimsley thanked Ms. Westcott for addressing the group.
IV.
Approval of Meeting Minutes
A.
December 6, 2010
The minutes of the December 6, 2010 general meeting were approved without
discussion.
B.
January 3, 2011
The minutes of the January 3, 2011 general meeting were approved without discussion.
V.
Old Business
A.
SERC Challenge & Hearing on Proposed Rules 19.8-029 & 19-8.030
Ms. Webb reported that the FPCA filed a challenge to the Statement of Estimated
Regulatory Costs (SERC), including an alternative proposal. She noted Dr. Nicholson's receptive
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attitude toward the objections the FPCA asserted and believes he is willing to work with us
toward an acceptable compromise. Ms. Webb recognized the outstanding work of Ms. Erdelyi
in preparing a very persuasive SERC challenge and alternative.
B.
Sinkhole Study
A general discussion regarding sinkholes ensued as this continues to be a principal issue
plaguing the industry with no acceptable remedy in sight.
Ms. Webb reported that while the legislators seem to realize the Catch 22 nature of the
situation, none of them seem willing to agree to a repair facility, which they perceive as more
government, despite the fact that the Senate report proposed a facility as one possible
solution.
Different options were discussed, one being a facility which would collect a premium on
sinkhole and would pay for repairs rather than writing a check to an insured. It was noted that
even if the Legislature approved a facility "fix," there may be constitutional ramifications.
Another suggestion was the use of a private engineering firm rather than a quasi-governmental
facility, possibly with minimal government oversight.
There was further general discussion and agreement that the legislation being proposed
by Senator Richter will greatly relieve the sinkhole burden going forward, but there still remains
the challenge of the "tail."
Mr. Blacklidge and Mr. Jerger informed the group that John Rollins is working with the
sinkhole data to quantify the “tail” issue and to substantiate the claims of escalated costs and
claims related to sinkholes. Mr. Rollins has agreed to compile the data and perform the
actuarial analysis.
The Members moved to have CFTKA enter into a services agreement with John Rollins
on behalf of the FPCA to perform the analysis, and to authorize Chairman Grimsley, on behalf of
the FPCA, to enter into a confidentiality agreement with John Rollins. The motion was
seconded, and the Members voted unanimously to approve the motion.
VI.
New Business
A.
Political Update
Ms. Webb reported that the political atmosphere seems to be one of restraint and she
does not expect many bills to pass this Session. In addition, Committee chairs and SubCommittee members were asked not to file bills over which their Committees had jurisdiction,
so Senator Nelson will not be filing any insurance legislation. Ms. Webb further stated that an
aspect that could work either for or against the FPCA is the fact that there are quite a few
freshman legislators, with many of the "experts" now taken out of the mix.
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Ms. Webb also informed Members that there are new Senate rules in play, including the
requirement that all bills have three committee references and that no bills may be withdrawn.
Ms. Webb predicts under these rules, many bills will die in committee.
B.
Regulatory Update
Ms. Webb reported that the OIR is working on a proposed bill aimed at "fixing" Citizens
and is seeking a sponsor for such legislation.
C.
Legislative Priorities
There was extensive analysis and discussion regarding Senator Richter's proposed
legislation, SB 408, which is basically a rewrite of SB 2044. Ms. Webb reported that SB 408
contains most of the aspects that were favorable in SB 2044, and eliminates most that were
not. She added that at this point, it is difficult to predict exactly what the bill will contain by the
time it is actually presented, but feels it will be a definite benefit to the industry.
Ms. Webb went on to state that SB 408 proposes some sinkhole fixes, the most
significant of which is making sinkhole coverage optional. There is also a deadline for reporting
claims, which will certainly garner strong opposition from public adjusters and trial lawyers.
Ms. Abate reported on her research regarding both U.S. and Florida constitutional law,
and her analyses of cases on point. She outlined three particularly relevant cases, noting that
each case appears to exist in a vacuum with no clearly reliable case law as a result. Ms. Abate
cautioned that there will probably be constitutionality challenges to proposed legislation. She
added that there is currently a case before the Florida Supreme Court that may provide more
authoritative case law.
Ms. Webb reported that Senator Richter basically mirrored the language of SB 2044
relating to ACV/RCV. She informed the group that any proposed revisions to SB 408 should be
sent directly to her and she will provide them to Senator Richter. She requested comments and
proposed revisions be sent as soon as possible because the Senate Banking and Insurance
Committee is meeting next week.
Mr. Kruck inquired regarding bad faith legislation. Ms. Webb reported that the
proposed legislation regarding bad faith was in a state of flux and changing daily. Mr. Burt
requested that an amount be specified as a requirement for civil remedy notices.
VII.
Other Matters
A.
Membership Update
There was no membership update.
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B.
Public Relations Update
There was no public relations update.
VIII.
Upcoming Meetings & Events
A.
Demotech call/webinar February 3, 2011, 3 p.m.
Ms. Grant informed the Members that several Members submitted topics for the
Demotech meeting. The Members agreed to review a list of topics submitted and discuss prior
to submission to Demotech.
VII.
Adjourn
Hearing no further business, the meeting was adjourned.
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