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Fair Insurance Rates In Monroe, Inc. v. Office of Insurance Regulation

Florida Court of Appeals, First District

April 30, 2018

Fair Insurance Rates in Monroe, Inc., Appellant,
v.
Office of Insurance Regulation and Citizens Property Insurance Corporation, Appellees.

         Not final until disposition of any timely and authorized motion under Fla. R. App. P. 9.330 or 9.331.

          On appeal from the Office of Insurance Regulation. David Altmaier, Commissioner.

          Kenneth G. Oertel, Timothy J. Perry and Sidney C. Bigham, III, of Oertel, Fernandez, Bryant & Atkinson P.A., Tallahassee, for Appellant.

          Shaw P. Stiller, Chief Assistant General Counsel, Alyssa S. Lathrop, Assistant General Counsel, Office of Insurance Regulation, Tallahassee, for Appellee Office of Insurance Regulation.

          Timothy W. Volpe and Thomas P. White of Adams and Reese LLP, Jacksonville, for Appellee Citizens Property Insurance Corporation.

          B.L. Thomas, C.J.

         Appellant, Fair Insurance Rates in Monroe, Inc., appeals a final order from the Office of Insurance Regulation (OIR) denying its request for a formal administrative hearing regarding windstorm insurance rates established by OIR for Citizens Property Insurance Corporation. We affirm.

         I. Background and Procedural History

         Citizens was created in 2002 by the Florida Legislature to provide insurance coverage to property owners who are unable to procure insurance in the private market. See § 627.351(6), Fla. Stat. Citizens is statutorily required to submit proposed rates at least annually to OIR, which in turn establishes Citizens' rates by final order after consideration of the proposal. See § 627.351(6)(n)1., Fla. Stat. Appellant is a corporation whose stated purpose is "to advocate for . . . the promulgation of fair, impartial, and actuarially-sound windstorm insurance rates [for residential and commercial property owners] in Monroe County, Florida."

         In July and August 2016, Citizens submitted to OIR its proposed windstorm insurance rates for residential and commercial properties in all Florida counties, including Monroe County, to take effect February 1, 2017. OIR accepted public comments, and on August 18, 2016, it conducted a public hearing on the proposed rate increases. At the hearing, representatives from Citizens explained the reasoning and methodology behind the rate proposals, and individuals, including Appellant's representatives, were able to comment. Appellant's representatives expressed concern that the four hurricane models used for assessing risk returned highly divergent results for Monroe County, and contended that the rate increases were not justified in light of Monroe County's geographical characteristics, building standards, and history of premiums in excess of claims. Representatives from Citizens acknowledged these issues and indicated that Citizens would be eager to get additional guidance from the Florida Commission on Hurricane Loss Projection Methodology about an improved approach for wind ratemaking in Monroe County.

         OIR approved Citizens' proposed windstorm insurance rates, including those for Monroe County, and issued Order 195073-16 (establishing residential rates) and Order 197820-16 (establishing commercial rates) on September 16 and 30, 2016, respectively. However, in recognition of the divergent hurricane model results for Monroe County, OIR indicated that it would request a review by the Florida Commission on Hurricane Loss Projection Methodology and noted that, at Appellant's request, Citizens had agreed to fund a study to evaluate the rates in light of Monroe County's higher building code standards. OIR stated that it would require Citizens to submit an additional rate filing based on these additional studies, if appropriate.

         Following OIR's approval of the rates, Appellant sent a letter to Citizens, requesting relief under section 627.371(1), Florida Statutes.[1] The letter stated that Appellant and its Citizens policyholder members were "aggrieved by the rating plan, rating system, and regulated underwriting rules followed or adopted . . . by Citizens and [OIR] that [led] to the orders issued." Appellant asserted that the rates were excessive, unfairly discriminatory, and not actuarially sound, and that they violated "both the spirit and substance of chapter 627, Florida Statutes." Appellant requested that Citizens recalculate the rates for Monroe County, giving greatest consideration to the projections of the RMS model (the hurricane model showing the lowest risk for Monroe County), and reevaluating several factors, including the county's geography, its construction standards, and its premium-versus-loss history. Appellant requested, in the alternative, that Citizens suspend the effective date of the new rates until after completion of the two studies discussed in the rate orders.

         Citizens responded to the letter, stating that it could not provide relief, because OIR established the rates, not Citizens. Citizens further noted that section 627.371(1), Florida Statutes, allows a challenge to a rate, rate plan, or rule that has been applied, but does not address challenges to the establishment of a rate.

         Appellant then filed a complaint with OIR under section 627.371(1), asserting that its members were "aggrieved by the rating plan, rating system and related underwriting rules" that led to the two rate orders. Appellant asserted that the rates for Monroe County were selected using widely divergent models, leading to excessive, discriminatory, non-actuarially sound, and unaffordable rates. Appellant requested that Citizens be ordered to ...


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