Meeting Packet - Insurance & Banking Subcommittee (February 3, 2021)
Summary
Meeting packet for the Insurance & Banking Subcommittee of the Commerce Committee, Wednesday, February 3, 2021, 4:30 PM - 6:00 PM, at Morris Hall (17 HOB). The agenda lists presentations on current financial regulatory issues impacting Florida businesses by Commissioner Weigel of the Office of Financial Regulation, and on consumer impacts and trends in property and motor vehicle insurance claims by Greg Thomas, Tasha Carter and David Altmaier. The Office of Financial Regulation slides report fiscal year 2019-20 figures of 354 employees, a $41.3 million budget and 462,575 registrants. The Department of Financial Services slides report 248,744 total calls handled in 2020 and 19,010 consumer service requests.
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Insurance & Banking Subcommittee
Wednesday, February 3, 2021
4:30 PM - 6:00 PM
Morris Hall (17 HOB)
Meeting Packet
Chris Sprowls Nick DiCeglie
Speaker Chair
The Florida House of Representatives
Commerce Committee
Insurance & Banking Subcommittee
Chris Sprowls Nick DiCeglie
Speaker Chair
Meeting Agenda
Wednesday, February 3, 2021
4:30 PM – 6:00 PM
Morris Hall (17 HOB)
I. Call to Order
II. Roll Call
III. Welcome and Opening Remarks
IV. Current Financial Regulatory Issues Impacting Florida Businesses
Russell C. Weigel, Commissioner, Office of Financial Regulation
Insurance Company Consumer Impacts and Trends in Property and Motor Vehicle
Insurance Claims
Greg Thomas, Director – Division of Insurance Agent & Agency Services and Director -
Division of Consumer Services, Florida Department of Financial Services
Tasha Carter, Florida’s Insurance Consumer Advocate, Florida Department of Financial
Services
David Altmaier, Commissioner, Office of Insurance Regulation
V. Closing Remarks
VI. Adjournment
303 House Office Building, 402 South Monroe Street, Tallahassee, FL 32399-1300
(850) 717-4870
Office of Financial Regulation
OFFICE OF FINANCIAL REGULATION
Current Financial Regulatory Issues
Impacting Florida Businesses
Commissioner Russell C. Weigel, III
1
Agency Overview
OFR is organized to regulate three financial sectors:
• Division of Financial Institutions
• Division of Consumer Finance
• Division of Securities
The Divisions oversee and regulate a wide range of financial enterprises and
individuals, such as banks, credit unions, mortgage loan originators, securities
industry participants, consumer finance companies, money transmitters, foreign
currency exchangers, and payday lenders.
2
Agency Overview
• Civil Enforcement:
– Each Division has examination staff who inspect
their licensees
– Office of the General Counsel conducts
administrative and civil litigation
• Criminal Enforcement:
– OFR’s Bureau of Financial Investigations has
analysts and investigators
3
Agency Overview
Reports to Financial Services Commission
• Governor
• Attorney General
• Chief Financial Officer
• Commissioner of Agriculture
Fiscal Year 2019-20:
• Employees: 354
• Budget: $41.3 million
• Registrants: 462,575
4
Mission
To protect Florida’s financial services consumers,
promote a safe and sound financial marketplace, and
contribute to the growth of Florida’s economy
through fair, innovative, and excellent regulation of
the financial services industry.
5
Division of Securities
GROWING FLORIDA’S ECONOMY BY
SPARKING A SMALL COMPANY ECO-SYSTEM
6
Lack of Capital Market
for Small Companies
Problem Why?
• Florida ranks #3 nationally • No capital market in Florida
in formation of new • Current system of in-state
companies securities offerings stifles
• But we rank in the bottom small company financings
10 in growth of companies • Crowdfunding and
• Therefore, job creation by registered offering laws are
startups is low too difficult and costly to
• Companies and Floridians comply with
leave the state • Therefore, entrepreneurs
bootstrap
7
Crowdfunding Applications
and Registrations
Applications
2015 2016 2017 2018 2019 2020
Intermediaries 0 0 1 1 1 0
Issuers 0 0 1 0 0 0
Registrations
2015 2016 2017 2018 2019 2020
Intermediaries 0 0 1 1 0 0
Issuers 0 0 0 0 0 0
8
Merit Review
Securities Offerings
2015 2016 2017 2018 2019 2020
Applications 4 6 9 5 4 4
Withdrawals 1 3 7 1 0 2
Approvals 2 3 2 2 3 2
9
Create Capital Market for
Small Businesses
Solution
• Stimulate a small company financial eco-
system to support entrepreneurial activity
– Incentivize networking of capital sources with
entrepreneurs
– Lower barriers to crowdfunding
– Lower barriers to registered securities offerings
10
Division of Consumer Finance
REGULATORY UNCERTAINTY POST-ESPINOZA
11
Division of Consumer Finance
Industry Issues
The Office of Financial Regulation has historically interpreted Ch.
560 to regulate intermediaries in money transmission only.
Problem
• A 3rd DCA opinion involving the sale of virtual currency expands
beyond intermediaries to include peer-to-peer transactions, thus
destabilizing Florida law.
• The Office has 11 petitions for a declaratory statement currently
pending that are awaiting legislative action to resolve this conflict.
Solution
• Legislative clarification of money transmitter definition.
12
Division of Consumer Finance
Industry Issues
Unnecessary Regulations:
• High School Education Requirement for
Mortgage Loan Originators
• Commercial Collection Agencies
13
Division of Financial Institutions
KEEPING FLORIDA’S FINANCIAL INSTITUTIONS
COMPETITIVE
14
Keeping Florida’s Financial
Institutions Competitive
Problem
Florida’s financial institutions face heavy competition from other out-of-state
and nationally chartered financial institutions. More significantly, they face
heavy competition from non-depository financial services entities that do not
have the same regulatory oversight or operating parameters.
Solution
Modernizing certain statutory provisions would greatly enhance Florida’s
financial institutions’ ability to compete, continue to modernize services and
grow in the marketplace.
Examples:
• Modification to New Commercial Bank Applications
• Modernizing Prospective Market Approach 15
Bureau of Financial Investigations
STRENGTHENING OFR’S
INVESTIGATIONS CAPACITY
16
Bureau of Financial Investigations
Problem
The traditional reactive methods in which our agency investigates financial
crimes is not in line with the updated technology criminals are currently using.
Solution
Modernizing our approach to proactively seeking and engaging bad actors in
cyberspace and elsewhere. This involves expanding our investigative
techniques and methods to ensure a safe financial marketplace, such as
expanding our ability to conduct blockchain analysis for cryptocurrency
crimes, growing our new Internet Surveillance Unit, and ensuring statewide
coverage of vulnerable investor populations.
17
Bureau of Financial Investigations
Reactive (Traditional) Investigative Posture
• Investigate complaints and tips made to OFR by:
– General public and news media
– Other law enforcement agencies
– Generated internally from OFR examination programs
• Support criminal and civil prosecutions
– Federal, state and local law enforcement agencies, and
prosecutors
– Department of Financial Services Division of Investigative and
Forensic Services
– Office of Attorney General
18
Bureau of Financial Investigations
Proactive Investigation Posture
• Using existing powers to get ahead of financial crime
– Informal cease and desist authority
– Internet surveillance unit
– Consensual monitoring activities
– Increased technology utilization (software licenses)
– Updated subpoena process
– Embedding telework investigators in vulnerable
communities
19
Bureau of Financial Investigations
In Process - Disposition of Open Cases
Open As Of 12/31/2020 Criminal, Civil
160 and/or Admin
60% Action
44
16%
Accepted for
Enforcement
57
24%
20
Office of Financial Regulation
Questions?
www.flofr.com
Alex Anderson, Legislative Affairs
(850) 410 - 9789
21
Department of Financial Services
Assisting Consumers with Auto
and Home Insurance Issues
House Insurance and Banking Subcommittee
February 3, 2021
Greg Thomas, FLMI, CPCU, CLU, CPM, ASLI, AIC, ACS
Director, Division of Consumer Services
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
How Consumer Services is Serving Floridians
• Proactively educate and assist Florida’s insurance and financial consumers
through responsive, professional, and innovative service and consumer
advocacy. (Section 624.307, Florida Statutes)
• Insurance Consumer Helpline: 1-877-MY-FL-CFO (1-877-693-5236)
• Consumer Service Requests
• Alternative Dispute Resolution
• Civil Remedy
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - . -
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Consumer Helpline
• Total Calls Handled in 2020: 248,744
• Portion Related to Auto or Home Insurance: 13,391 (5.4%)
• Other Call Types:
• Insurance Fraud Reporting (1,081);
• Rehab & Liquidation (14,891);
• Other Lines of Insurance (58,804);
• Unclaimed Property (51,597); and
• Licensing (108,980)
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - . -
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Consumer Service Requests (Complaints)
• Total Consumer Service Requests in 2020: 19,010
• Portion Related to Auto or Home Insurance: 7,319 (38.5%)
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - . -
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Hurricane Helpline Calls
• Hurricane Michael insurance-related calls:
• 42% general information and claim process questions
• 41% concerns with a delay in handling of claims, such as prolonged delays or no
follow-up or response from the company
• 9% policy coverage questions
• 7% claim denial, cancellation, or policy non-renewal issues
• Complaints against an insurance company:
• 59% complaints regarding claim handling/adjuster delay
• 39% complaints regarding claim denial, claim underpayment, or unsatisfactory
claim settlement offer
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - . -
5
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Hurricane Helpline Calls
• Hurricane Irma insurance-related calls:
• 51% general information and claim process questions
• 28% concerns with a delay in handling of claims, such as prolonged delays or no
follow-up or response from the company
• 9% policy coverage questions
• 12% claim denial, cancellation, or policy non-renewal issues
• Complaints against an insurance company:
• 29% complaints regarding claim handling/adjuster delay
• 69% complaints regarding claim denial, claim underpayment, or unsatisfactory
claim settlement offer
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - . -
6
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Alternative Dispute Resolution
• Alternative Dispute Resolution (Mediation & Neutral Evaluation)
• All Programs in 2020: 9,418
• Homeowners Mediation: 9,295 (98.6%)
• Sinkhole Neutral Evaluation: 56 (.6%)
• Auto Mediation: 46 (.5%)
• Other Programs: 21 (.2%)
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - . -
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Civil Remedy
• Civil Remedy – Section 624.155, Florida Statutes
• Notices Related to Homeowners Insurance in 2020: 27,369
• Notices Related to Automobile Insurance in 2020: 38,309
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - . -
i . = = = = = = = DEPARTMENT OF FINANCIAL SERVICES - - - - - - - .
Questions?
Meredith Brock Stanfield, Director of Cabinet and Legislative Affairs
DFS Legislative Affairs Office: (850) 413-2863
. . . _ - - - - - CFO JIMMY PATRONIS - - - - - - . -
9
Jimmy
Patron1s
,
Insurance Consumer Advocate
CONSUMER IMPACT AND TRENDS IN
PROPERTY AND AUTOMOBILE INSURANCE
HOUSE INSURANCE AND BANKING SUBCOMMITTEE
FEBRUARY 3, 2021
TASHA CARTER
Florida’s Insurance Consumer Advocate
1
INSURANCE CONSUMER ADVOCATE
CREATED BY FLORIDA LEGISLATURE IN 1992
• Section 627.0613, Florida Statutes
OVERSEEN BY THE CHIEF FINANCIAL OFFICER
• Appointed by Chief Financial Officer Jimmy Patronis
• Reports Directly to the Chief Financial Officer
• Works Independently from the Department of Financial Services
ROLE OF THE INSURANCE CONSUMER ADVOCATE
• Official Representative of FL’s Insurance Consumers
• Examine Rate and Form Filings Submitted to OIR
• Recommend Actions to the Legislature, Department and OIR
KEY FOCUS AREAS
BALANCING FLORIDA’S INSURANCE MARKET
• Via b le , Co m p e t it ive M a r k e t a n d Ac c e s s ib le , Affo r d a b le In s u r a n c e
IDENTIFYING TRENDS AND IMPROVING MARKET PRACTICES
• Ma rke t Re p o rt s
• Co n s u m e r Co m p la in t s
• In d u s t r y S t a k e h o ld e r s
INCREASING CONSUMER AWARENESS AND EDUCATION
• An In fo r m e d Co n s u m e r Ca n B e Th e ir O w n B e s t Ad vo c a t e
KE Y FO C U S AR E AS
ASSISTING CONSUMERS WITH INSURANCE - RELATED MATTERS
• O n e -o n -O n e As s is t a n c e
ENGAGING LEGISLATIVELY TO REPRESENT FLORIDA’S INSURANCE
CONSUMERS
• Florida Legislature • O ffic e o f In s u r a n c e R e g u la t io n
• Chief Financial Officer • D ivis io n o f Ad m in is t r a t ive H e a r in g s
• Department of Financial Services • Ap p o in t e d B o a r d s
Serving Floridians by actively engaging with consumers and working with stakeholders to
find consumer -focused solutions on all insurance matters.
FACTORS IMPACTING INSURANCE MARKET
INSURANCE FRAUD
• To t a l c o s t o f in s u r a n c e fr a u d (n o n -m e d ic a l) = $ 4 0 b illio n +
• Co s t s t h e a vg . fa m ily b e t w e e n $ 4 0 0 a n d $ 7 0 0 / ye a r o f in c r e a s e d p r e m iu m s
• O c c u r s in a p p r o x .10 % o f p r o p e r t y-c a s u a lt y c la im s
CONTRACTOR SOLICITATION FRAUD
• 3 6 % o f h o m e o w n e r s s a y fr a u d is o n e o f t h e ir b ig g e s t c o n c e r n s w h e n
h ir in g c o n t r a c t o r s
• Th e h ig h e s t n u m b e r o f c o m p la in t s r e la t e d t o r e s id e n t ia l p r o p e r t y
in s u r a n c e is h o m e im p r o ve m e n t / c o n s t r u c t io n
FACTORS IMPACTING INSURANCE MARKET
LOSSES FROM MULTIPLE HURRICANES
• H u r r ic a n e Ir m a - $ 17 b + e s t im a t e d in s u r e d lo s s e s ; 1m + c la im s
• H u r r ic a n e M ic h a e l - $ 9 b + e s t im a t e d in s u r e d lo s s e s ; n e a r ly 16 0 ,0 0 0 c la im s
INCREASED REINSURANCE COST
• 15 % in c r e a s e in p u r c h a s e s • Ca u s e s : c a t a s t r o p h e c la im s , w a t e r c la im s ,
• 5 7 % in c r e a s e in c o s t lo s s c r e e p
INCREASED LITIGATION
• 2 7 ,4 16 la w s u it s in 2 0 13 ; 8 5 ,0 0 7 in 2 0 2 0 (a ll c o m p a n ie s )
• 4 5 % o f la w s u it s w e r e file d in t h e t r i-c o u n t y a r e a (2 0 2 0 )
CONSUMER IMPACT
INCREASED
INCREASED LACK OF
MORTGAGE
INSURANCE RATES AVAILABILITY
PAYMENTS
• 3 r d h ig h e s t p r o p e r t y • S t r ic t e r Un d e r w r it in g • In s u r a n c e in c lu d e d in
in s u r a n c e p r e m iu m s in Gu id e lin e s m o r t g a g e p a ym e n t
c o u n t r y - $ 3 ,6 4 3 a vg . r e s u lt in g in a n o ve r a ll
p r e m iu m • R e d u c e d Ca p a c it y in c r e a s e
• R e p r e s e n t n e a r ly 8 % o f • R e t r e a t in g fr o m
p r e m iu m o f a ll p r e m iu m s H ig h -r is k Ar e a s
w r it t e n in t h e U.S .
CONSUMER STORIES
ORGANIZED CONTRACTOR SCHEME IN SW FLORIDA COMMUNITY
• 3 2 Cla im s ; 4 3 AO B ’s ; In vo ic e s t o t a lin g $ 8 16 ,0 0 0
ROOFING CONTRACTOR SOLICITATION IN THE VILLAGES
• D o o r -t o -D o o r S o lic it a t io n s ; 4 2 0 % in c r e a s e in r o o fin g p e r m it s
DIRECTION TO PAY AGREEMENT
• Gu t t e d h o m e ; Fa ile d t o c o m p le t e t h e w o r k ; File d $ 10 0 ,0 0 0 lie n a g a in s t t h e
in s u r e d p r o p e r t y
HOMEOWNER UNABLE TO FIND COVERAGE
• Livin g o n fix e d in c o m e ; 2 o p t io n s t h a t a r e u n a ffo r d a b le
OFFICE OF THE INSURANCE CONSUMER ADVOCATE
www.MyFloridaCFO.com/Division/ICA
Your FL Voice@MyFloridaCFO.com
850.413.5923
TASHA CARTER
FLORIDA’S INSURANCE CONSUMER ADVOCATE
@Your FL Voice
Office of Insurance Regulation
Market Regulation
FLORIDA OFFICE OF INSURANCE REGULATION
David Altmaier, Insurance Commissioner
February 3, 2021
Florida Office
of Insurance
Regulation
(OIR) Overview
OIR partners with
DFS to serve and
protect Florida’s
insurance
consumers.
Consumer Complaints
Division of OIR Market
Consumer Services Regulation
Market Regulation
OIR Market Regulation monitors the conduct of insurers in the marketplace, enforcing Florida Statutes
through remediation and administrative action.
OIR receives information from a variety of stakeholders and takes action to
identify issues and best protect consumers.
INQUIRY INVESTIGATION EXAMINATION
Contact Information
David Altmaier, Commissioner
David.Altmaier@floir.com
(850) 413-3849
Mike Yaworsky, Chief of Staff
Mike.Yaworsky@floir.com
(850) 413-5000
Allison Hess Sitte, Director of Government Affairs
Allison.Sitte@floir.com
(850) 413-5005
For more information visit www.floir.com.
FLORIDA OFFICE OF
INSURANCE REGULATION
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