The Office of Insurance Regulation has prepared a list of Frequently Asked Questions to assist in answering questions relating to Emergency Rule 69OER07-1 Relating to Residential Property Insurance Rate Filings, that was approved by the Financial Services Commission two weeks ago.  

Here is the list of questions and answers:

1. What is the effective date of Emergency Rule 69OER07-1(Emergency Rule)?

Answer:    January 31, 2007

2. Does the Emergency Rule apply to Commercial Residential policies, such as condominium association policies or rental property policies?

Answer: An insurance company will be prohibited from making a rate filing for a rate increase for all types of residential properties, which includes personal residential AND commercial residential (condo association) policies until they make the required rate filing reflecting the presumed factor. 

However, the prohibition on cancellations and nonrenewals ONLY applies to personal residential policies.

What is a rate filing?: All admitted property and casualty insurers with a Certificate of Authority to do business in Florida must have their rates and forms approved by the Office of Insurance Regulation.  Periodically, the company must make a filing with the Office in order to adjust its rates.  This is what is known as a “rate filing.”

What is the presumed factor?  House Bill 1A, passed during the 2007A Special Session requires the Office of Insurance Regulation to calculate a presumed factor (or series of factors) for use by the insurance companies in their rate filings to reflect the savings resulting from changes made in the bill.  The presumed factor is a number expressed as a percentage which every admitted property and casualty insurance company will be required to use in calculating their mandatory rate decreases. 

What is the difference between a commercial residential policy and a personal residential policy?  A commercial residential insurance policy provides coverage for risks such as condominium associations (not including the condo unit owners) or apartment buildings.  A personal residential insurance policy provides coverage for risks including individual homeowners, condo unit owners, and mobile homeowners.

3. Does the rule apply to a mobile homeowner’s insurance policy?

Answer: Yes

4.  I received a Notice of Cancellation or Nonrenewal prior to January 31, 2007 which becomes effective on or after January 31, 2007. Does the rule require the Notice to be withdrawn or rescinded?

Answer: Yes. Cancellations and non-renewals, on personal residential properties, which were to take effect on or after the effective date of the Emergency Rule pursuant to notices of cancellation and non-renewal issued prior to the effective date of the rule, are prohibited and must be withdrawn.

What is a Notice of Cancellation or Nonrenewal?:  This is a letter from your insurance company notifying you that either they will be terminating your policy before the renewal date (cancellation) or that they will not offer you a new policy after your current policy expires (nonrenewal).  If the company sends a Notice of Cancellation, they must specify the date upon which the policy will become ineffective. 

5.  Does the Emergency Rule prohibit the issuance of Notices of Cancellation or Nonrenwal on or after January 31?

Answer: Yes. No new Notices of Cancellation or Nonrenewal shall be issued until a rate filing reflecting the presumed factor is made. However, the insurer may cancel a policy upon proper notice for failure to pay premiums, fraud, or material misrepresentation.

6. May an insurer send a Notice of Cancellation or Nonrenewal now to take effect after June 1, 2007?

Answer: No. No new Notices of Cancellation or Non-renewal shall be issued until a rate filing reflecting the presumed factor is made.

7.  Many companies have previously announced upcoming non-renewals. Will these be stopped by the new rule? Also, as a result of the Emergency Rule does that mean that nobody can be non-renewed for 100 more days after the required rate filing is made?

Answer: Yes, the Emergency Rule applies to previously announced nonrenewals. Once a company has made the required rate filing reflecting the presumed factor, they must give 100 days notice if they wish to nonrenew a policy.  For nonrenewals that will become effective during hurricane season (June 1-Nov 30), the company must give notice 100 days prior to the effective date of the nonrenewal or by June 1, whichever is earlier.  [Example:  Once the company has made the required rate filing, for a policy which will be nonrenewed or cancelled effective August 31, 2007, it must give the policyholder a Notice of Nonrenewal or Cancellation no later than May 24, 2007, which is 100 days notice.  For a policy which will be nonrenewed or cancelled effective October 31, 2007, the company must give the policyholder notice no later than June 1, 2007.]

8. Allstate has announced over 100,000 non-renewals. Will they be exempt from the new rule since they have made arrangements to transfer the policies to Royal Palm Insurance Company?

Answer: No. Allstate is not exempt. They must withdraw any Notices of Cancellation or Nonrenewal that are effective on or after January 31 and may not issue any new notices of nonrenewal until after the required rate filing is made.

9.  Does the Emergency Rule allow insurers to just stop writing new business?

Answer: The Emergency Rule does not prohibit insurers from refusing to write new policies.

10. My policy was nonrenewed or cancelled after January 31. I purchased insurance with Citizens or another insurer. What are my options?

Answer: The insurer that nonrenewed or cancelled your previous policy must offer you a reinstatement or extension of the policy. It is your decision whether or not to accept that offer. You will need to check with your new insurer as to what refund you would be entitled to in the event you decide to cancel the new policy and accept the reinstatement of your old policy.  It is up to you to decide which is the better economic option for you.

11. I received a renewal premium notice and my premium is much higher than last year. I thought rates could not be increased until the insurer made a rate filing to reduce rates as required by the Emergency Rule. Is this allowed?

Answer: Any rate that was in effect or approved prior to January 31 may be applied to renewals and new policies. The rule prohibits the Office of Insurance Regulation from approving any pending rate filings until the insurer has made the required rate filing reflecting the presumed factor. The increased premium on your renewal notice may be the effect of a rate increase that was approved for your insurer last year.  In addition, your premium may reflect recoupments and/or assessments for the Florida Insurance Guaranty Association, the Florida Hurricane Catastrophe Fund, and Citizens Property Insurance Corporation.

12. How do we tell which rate changes are valid or not valid under the new rule?

Answer: You should check with your agent to determine whether you have been charged the correct rate or you can contact the Department of Financial Services Consumer Helpline at 1-800-342-2762 for assistance.

13. Does the Emergency Rule apply to an insurer which is withdrawing from the state and has in place a plan approved by the Office of Insurance Regulation to nonrenew policies?

Answer: Yes. The insurer is not exempt and must comply with the Emergency Rule.

14. Will the Florida Select policies that are being cancelled mid-term by court order during the coming 90 days be reinstated? They are being offered a replacement policy from Southern Fidelity at a much higher rate.

Answer: The rule does not apply to insurers that are subject to receivership proceedings.

15. Does the Emergency Rule apply to surplus lines companies? 

Answer: No. Surplus Lines insurers do not file rates or forms for approval and therefore are not subject to the Emergency Rule.

How do I know whether my insurer is a surplus lines company?  You can go to the Office of Insurance Regulation Company Search website at http://www.fldfs.com/data/CompanySearch/

and type in the name of your company.  If your company is a surplus lines company, next to “Company Type,” it will say “Surplus Lines.”  

16. I purchased a new policy recently and I have been informed by the insurer that I do not meet the underwriting guidelines and was sent a notice of cancellation. Is this permitted under the Emergency Rule?

Answer:  No.  The Emergency Rule does not allow the cancellation or a notice to be sent on or after January 31. After the required rate filing is made, the insurer may then send you a Notice of Cancellation.

17. May an insurer make a rate filing to reduce rates?

Answer: Yes.

18. I have a binder for my homeowners insurance, but have not been issued a policy. Does the rule prohibit the insurer from cancelling the binder?

Answer: No. The Emergency Rule does not apply to binders.

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