House Insurance, Business & Financial Affairs Policy Committee
Organizational Structure and Jurisdiction
Tuesday, January 13, 2009
Talking Points

Slide 1
Good morning, my name is Audrey Brown and I am the Chief of Staff for the Office of Insurance Regulation.

Slide 2
The Florida Legislature created the Office of Insurance Regulation in 2003 to be responsible for all activities concerning insurers and other risk bearing entities, including licensing, rates, policy forms, market conduct, claims, issuance of certificates of authority, solvency, viatical settlements, premium financing, and administrative supervision, as provided under the insurance code.

Slide 3
The mission of the Office is to ensure that insurance companies licensed to do business in Florida are financially viable; operating within the laws and regulations governing the insurance industry; and offering insurance products at fair and adequate rates which do not unfairly discriminate against the buying public.

Slide 4
The Insurance Commissioner is appointed by and reports to the Financial Services Commission.  The Commission is comprised of the Governor, the Attorney General, the Chief Financial Officer, and the Commissioner of Agriculture.  The Commission serves as agency head for purposes of rulemaking (Section 120.536-565, F.S.) Commission action is taken by majority vote.  The Insurance Commissioner is considered the agency head for purposes of final agency action for all areas within the regulatory authority delegated to the Office.

Slide 5
The Office is, for purposes of administrative, personnel, and technology support, housed within the Department of Financial Services.  It is important to note that pursuant to Section 20.121, F.S., the Office is not subject to control, supervision, or direction by the Department of Financial Services in any manner, including purchasing, transactions involving real or personal property, personnel, or budgetary matters.

Therefore, the Office develops and presents its budget requests directly to the Governor’s office and to the Legislature.  The Office has developed performance measures and standards to assess the performance of its activities in support of its budget requests.

With respect to the Office’s interaction with DFS in matters involving administrative support, the Office has inherited the responsibility to directly manage its personnel matters; to recruit, advertise and hire personnel, subject to DFS personnel office review for compliance with required state agency hiring and personnel procedures.

With respect to the Office’s interaction with DFS in matters involving information systems support, the Office seeks independent and project-specific appropriations for technology initiatives and upgrades.  The Office has a direct liaison with DFS technology support staff and it is the DFS Division of Information Systems that provides the Office with standard desktop, network, and programming assistance for integrated computer systems in use by both the Office and DFS.

Slide 6
Office funding is appropriated directly by the Legislature from the Insurance Regulatory Trust Fund or IRTF.  The IRTF is funded by:
•    Insurance Company licensing and renewal fees
•    Examination administration and expense reimbursement
•    Penalties and fines that may be levied for non-compliance with the Insurance Code
•    Costs of goods and services for providing copies of documents
•    A portion of premium tax paid by surplus lines carriers transacting insurance in this State.

The monies received and deposited in the IRTF are appropriated for use by DFS and the Office to defray the expenses of DFS and the Office in carrying out our administrative and regulatory duties.

Slide 7
Currently, the regulates almost 3900 insurance related entities and approximately $100 billion in premium with 314 full time employees and a budget of $25 million. 

Slide 8
The Office is separated into 2 budget entities.  The largest is Compliance and Enforcement with 277 FTE.  This service protects the public through regulatory oversight of company solvency, policy forms and rates, and market investigations performance.

The Budget entity includes:
•    Business Development and Market Research
•    Chief of Staff’s office
•    Life and Health Financial Oversight and Product Review units
•    Market Investigations
•    Property and Casualty Financial Oversight and Product Review units, and
•    Specialty Product Administration

Slide 9
The second budget entity is Executive Direction, which provides overall direction by the Commissioner and support staff in carrying out the Office’s statutory and administrative responsibilities.  This budget entity includes:
•    Commissioner’s office
•    Legal Services office
•    Office of the Inspector General

To summarize, the Office is responsible for monitoring the financial condition of all regulated entities through the use of internal financial analysis and on-site examinations.  During financial analysis and examinations of each regulated entity, a determination is made as to the quality of assets, adequacy of stated liabilities, general operating results to see if the condition of the company warrants continuation of its certificate of authority to operate in Florida. 

The Office is also responsible for the admissions process for new entities as well as those proposing to expand into additional lines of business.

The Office has responsibility for enforcing the provisions of the insurance code and applicable rules as they relate to the review of policy contracts and associated rates.  Filings are reviewed to determine compliance with applicable actuarial standards, statutory provisions, and administrative rules.

Additionally, the Office has responsibility in the area of policyholder treatment.  To fulfill this responsibility, the Market Investigation Unit investigates and analyzes market trends for the fair treatment of policyholders.  Examinations and investigations are conducted as required to address consumer issues and marketplace trends.

Slide 10
The Office participates in activities that are initiated and coordinated by the National Association of Insurance Commissioners (NAIC).  An important NAIC activity is accreditation; being accredited by the NAIC demonstrates Florida is meeting or exceeding national standards regarding the financial regulation of insurance entities.  In December 2008, the Office was recognized at the NAIC Winter National Meeting for renewal of its Financial Regulation Standards accreditation.
In 2008, the Office also participated in 60 NAIC Committees, Task Forces and Working Groups that develop national standards and model laws for insurance activities and regulation.

Also at the December meeting, Commissioner Kevin McCarty was elected to the position of secretary-treasurer for the NAIC, making Florida one of four officers elected by a majority vote of his peers across the country.  Commissioner McCarty’s new role places Florida in a leadership role nationally and internationally.

Slide 12
This concludes my presentation and I will be happy to take questions.  Thank you.