1. Update from the Office HB 99 and SB 408

2. Personal Residential Approved Filings 2 Number of 2010 Base Rate Filings Increase above overall rate requested26 Overall rate requested within 1%79 Lower overall rate than requested22 Total base rate filings approved127 Note: Only base rate filings are shown. Miscellaneous rate filings not included above. This represents a small sample of the total rate filings.

3. “408 Form Filings” Many filings contain changes related to SB 408, but are not identified as “408 filings” when they arrive. Keywords are applied to filings as they are closed. So the office will be able to tell how many “408” filings were done after they are reviewed. Below is a breakdown of the closed form filings that were keyworded with “408” as of Nov 15, 2011: Withdrawn 4 Disapproved 2 Approved 87 3

4. Quote from Company XYZ “It takes my company 6 months to get a rate file through the Office.” 4

5. Filing Statistics for Company XYZ 5 Type of Filings Number of Filings Average # of Days Open Rate1037 Other1231 Total2234 Longest Review 93 days – Shortest Review 7 days

6. Number of Form and Rate Filings 6 Note: Filings may contain multiple companies.

7. Miscellaneous Form Issues Prominent display of the company name Incorrect references when amending sections of the policy Cancellation language Forms filed in the wrong line of business (sub-line) Certificates ISO membership – Filing requirements Uninsured Motorist (Automobile policies) “Me too” – not really OFAC 7

8. Statutory Changes 8

9. HB 99 – Effective October 1, 2011 Adds lines of business for which the filing requirements for rate/rule filings is reduced. It is NOT a deregulation of the commercial lines. The programs are still subject to all of the same requirements as any other line of business. For example,: – Rates may not be excessive, inadequate or unfairly discriminatory – Specific rates must be filed and ranges of rates are not allowed – All subjective rating must comply with the requirements of Rule 69O-170.004, F.A.C. 9

10. HB 99 – Lines of Business Excess or umbrella Surety and fidelity Boiler and machinery and leakage and fire extinguishing equipment Errors and omissions (Professional Liability) Directors and officers, employment practices, fiduciary liability, and management liability Intellectual property and patent infringement liability Advertising injury and Internet liability insurance Property risks rated under a highly protected risks rating plan General liability Nonresidential property, except for collateral protection insurance Nonresidential multi-peril Excess property Burglary and theft Commercial Auto 10

11. HB 99 – Required Information Filing must be submitted within 30 days of the proposed effective date Information required to be in the filing: – Name of the insurer – Type or kind of insurance – Average statewide percentage change in rates – Manual pages for proposed changes Actuarial data with regards to the proposed change must be maintained by the insurer for 2 years after the effective date and is subject to examination by the Office. 11

12. SB 408 Statute of Limitations (Property) - Lines 247-249 – s. 95.11 - Effective upon becoming law (5/17/11) Public Adjusters/Others Acting on Behalf of Insurers (Property and Casualty) – Lines 680-725 – s. 626.854 - Effective 1/1/2012 – Requires a company employee adjuster, independent adjuster, attorney, investigator or any other persons acting on behalf of an insurer to provide at least 48 hours' notice to the insured or claimant before scheduling a meeting with the claimant or onsite inspection of the insured property. 12

13. 13 95.11 Limitations other than for the recovery of real property.—Actions other than for recovery of real property shall be commenced as follows: (1) WITHIN TWENTY YEARS.—An action on a judgment or decree of a court of record in this state. (2) WITHIN FIVE YEARS.— (a) An action on a judgment or decree of any court, not of record, of this state or any court of the United States, any other state or territory in the United States, or a foreign country. (b) A legal or equitable action on a contract, obligation, or liability founded on a written instrument, except for an action to enforce a claim against a payment bond, which shall be governed by the applicable provisions of ss. 255.05(10) and 713.23(1)(e). (c) An action to foreclose a mortgage. (d) An action alleging a willful violation of s. 448.110. (e) Notwithstanding paragraph (b), an action for breach of a property insurance contract, with the period running from the date of loss. Statute of Limitations

14. SB 408 Notice of Cancellation and Nonrenewal (Residential Property) – Line 2690 – s. 627.4133 - Effective upon becoming law – The required minimum of 180 days' prior notice has been changed to at least 120 days' prior notice. 14 Time Limit on Windstorm and Hurricane Claim (Property) – Lines 772-787 – s. 626.70132 - Effective 6/1/2011 – Requires claim notice to insurer within 3 years after hurricane first made landfall or the windstorm caused the covered damage.

15. SB 408 Early Cancellation and Nonrenewal (Residential Property) – Lines 2757-2769 – s. 627.4133 - Effective upon becoming law – The Office may reduce the cancellation or nonrenewal notice requirements to 45 days if necessary to protect the best interests of the public. Nonrenewal of Home/Auto Combo Policies (Farmers, AAA, Encompass?) – Lines 2770-2772 – s. 627.4133 - Effective upon becoming law - Nonrenewal allowed for any applicable reason after providing 90 days' notice. 15

16. SB 408 Change in Policy Terms (Property and Casualty) - Lines 2775 - 2824 – s. 627.43141 - Effective upon becoming law – Allows an insurer to change policy terms upon renewal in lieu of non- renewing the policy and offering a new contract. To do so, the insurer must give the policyholder a written notice entitled "Notice of Change in Policy Terms." This is not to be used as a blank endorsement. This is a notice and should be filed like a nonrenewal, cancellation, and renewal notice. It is not the form that will change the policy terms. There should be a contractual form that changes the policy terms. 16

17. SB 408 Holdback on Dwelling Loss Payment (Homeowners) – Lines 2888- 2895 - s. 627.7011 - Effective upon becoming law – For a partial Coverage A loss settled on a replacement cost basis, an insurer may initially limit payment to ACV and then pay any remaining amounts as the work is performed and expenses are incurred. If a total dwelling loss occurs, the insurer shall pay the replacement cost coverage without holdback, pursuant to s. 627.702. 17

18. SB 408 Replacement Cost on Personal Property (Homeowners) - Lines 2896-2913 – s. 627.7011 - Effective upon becoming law – An insurer must offer replacement cost coverage on contents in which the insurer is obligated to pay replacement cost without holdback, whether or not the insured replaces the property. The insurer may also offer replacement cost coverage on contents in which the insurer may initially limit payment to ACV and then pay any remaining amounts as the receipts are received for the replacement of the property. A credit or discount must be provided. For this optional holdback version of the coverage, the insurer must provide "clear notice" of the process by which the claim will be paid before the policy is bound. 18

19. SB 408 Timing of Claim Payment (Residential Property) - Lines 2961- 2982 – s. 627.70131 - Effective upon becoming law – In general, the statute was clarified to indicate "an initial, reopened, or supplemental" property insurance claim shall be paid or denied within 90 days of receiving the claim notice. Optional Restriction of CGCC and Sinkhole Coverage (Property) – Lines 3036-3038 – s. 627.706 - Effective upon becoming law – The insurer may restrict CGCC and sinkhole loss coverage to the principal building, as defined in the applicable policy. Under this restriction, contents coverage and ALE remain when tied to the principal building – see line 3072. 19

20. SB 408 Changes to Existing CGCC and Sinkhole Related Definitions (Property) – Lines 3047-3095 – s. 627.706 - Effective upon becoming law - Various definitions were revised. New Sinkhole Related Definitions (Property) – Lines 3096-3135 – s. 627.706 – Effective upon becoming law – New definitions were added: "structural damage," "primary structural member," and "primary structural system." 20

21. SB 408 Pasco and Hernando County (Property) – Lines 3155-3156 - s. 627.706 - Effective upon becoming law – Pasco County and Hernando County stricken from specific sinkhole provision. Time Limit on Sinkhole Claim (Property) - Lines 3177-3182 - s. 627.706 - Effective upon becoming law – Notice of sinkhole claim must be given to the insurer in accordance with the terms of the policy within 2 years after the policyholder knew or reasonably should have known about the sinkhole loss. 21

22. SB 408 Written Notice to Policyholder after Initial Inspection for Sinkhole Loss (Property) – Line 3219 – s. 627.707 - We understand this required notice is claim related and not subject to our review and approval. Policyholder Demand for Sinkhole Testing (Property) – Lines 3239- 3248 - s. 627.707 - Effective upon becoming law - The policyholder's demand for sinkhole testing must be communicated to the insurer in writing within 60 days after the policyholder's receipt of the denial of the claim. The policyholder shall pay 50% of the actual costs of analysis and services as specified. The insurer shall reimburse the policyholder for the costs if sinkhole loss is certified as specified in the bill. 22

23. SB 408 Basic Sinkhole Language (Property) – Lines 3249-3254 - s. 627.707 - Effective upon becoming law – Basic coverage language was changed, including "in consultation with policyholder" language revised to instead indicate "with notice to policyholder." No amendment to current language necessary unless insurer wishes to change practice. CGCC Repair Language (Property) – Lines 3257-3265 - s. 627.707 - Effective upon becoming law – Language suggests the insurer must repair CGCC damage, however, it is still our understanding a CGCC is a total loss because the repair cannot be completed within the policy limits. 23

24. SB 408 Time Limit to Enter Sinkhole Contract (Property) – Lines 3274-3281 - s. 627.707 - Effective upon becoming law – The policyholder must enter into a contract for the performance of building stabilization and foundation repairs within 90 days after the insurer confirms coverage for the sinkhole loss and notifies the policyholder of such confirmation. The time period is tolled as specified if either party invokes the neutral evaluation process. Time Limit to Complete Sinkhole Repair (Property) – Lines 3295- 3304 - s. 627.707 - Effective upon becoming law – Stabilization and all other repairs to the structure and contents must be completed within 12 months after entering into the contract subject to the specified exceptions. 24

25. SB 408 Rebate Related to Repair – (Property) – Lines 3311-3318 - s. 627.707 - Effective upon becoming law – The policyholder may not accept a rebate from any person performing the repairs specified in s. 627.707. If the policyholder does receive a rebate, coverage (not the whole policy) is void and the policyholder must refund the amount of the rebate to the insurer. Sinkhole Nonrenewal Language (Property) - Lines 3338-3348 - s. 627.707 - Effective upon becoming law - The bill changed the existing sinkhole damage/clay nonrenewal provision. 25

26. SB 408 Policyholder Must File Sinkhole Report (Property) – Lines 3417-3422 - s. 627.7073 - Effective upon becoming law – As a precondition to accepting payment for a sinkhole loss, the policyholder must file a copy of any sinkhole report regarding the insured property which was prepared on behalf or at the request of the policyholder with the county clerk of court. Neutral Evaluation – Lines 3453-3661 – s. 627.7074 - Effective upon becoming law - Various provisions were revised. Appraisal for Disputed Sinkhole Claims (Property) – Lines 3483-3485 – s. 627.7074 - Effective upon becoming law – Neutral evaluation supersedes mediation, but no longer invalidates the appraisal clause of the insurance policy. 26

27. FLORIDA INSURED RESIDENTIAL PROPERTY EXPOSURE Source: FHCF ratemaking reports

28. Questions? 28