Homeowners & Dwelling/Fire Rate Filings & Rate Collection System

Transcription

1 2014 Industry Conference Navigating the Changing Insurance Environment Homeowners & Dwelling/Fire Rate Filings & Rate Collection System Robert Lee, Actuary, Property Casualty Product Review Kayne Smith, Actuary, Property & Casualty Product Review October 30, 2014

2 Common Issues and Mistakes Found in Homeowners, Mobile Homeowners, and Dwelling Fire Rate Filings Plus timely things you need to know 2

3 Rule Filing vs. Rate Filing See Definitions in I-File (click here on page where Filing Type is selected) Rules Only filing does not affect the premium charged to any existing or prospective policyholder Rates Only filing affects the premium charged to any existing or prospective policyholder 3

4 Document Names in I-File I-File will assign a default name if you do not provide one (e.g., Support 1, Support 2, Support 3 ) Instead of the default, use names that help the reviewer navigate the filing with ease (e.g., names corresponding to references in the filing or names specifying the contents) 4

5 Additional OIR-B (Certification) Form Certification by the actuary Include with all responses where additional or supplemental information has been requested by the Office 5

6 Rate Collection System (RCS) Verification Instructions revised requests that you provide an exhibit showing which terrain was used in the selection of the windstorm loss mitigation factor for each territory Reminder - if a territory is in two terrains, the one with the lower credit should be selected for this purpose 6

7 RCS Rate Level Effect Forms If providing separate hurricane and non-hurricane rate level effect forms, check to ensure the following two items for hurricane are not greater than what is listed for non-hurricane by territory or county (depending on the territory definitions): total amount of insurance earned house years 7

8 Managing General Agent (MGA) Fees MGA Fees should be included in the Earned Premium at Current Rate Level reported in the RCS s Rate Level Effect forms Note: The rate effect on the MGA fee portion of the premium is zero MGA Fees should not be included in the Earned Premium on the Rate Indication Form (in the Standardized Rate Indications Workbook) 8

9 Citizens Emergency Assessment The Office anticipates issuing an Order to terminate the Citizens Emergency Assessment of 1% as of June 1, 2015 Since this factor was not required to be filed with the Office, it does not appear in every manual If it is included in your manual, update the manual in your next filing effective on or after June 1,

10 Florida Hurricane Catastrophe Fund (FHCF) Emergency Assessment Terminated by the Office on July 22, 2014 Applied to all premiums on property and casualty insurance policies in Florida, including surplus lines, but excluding lines exempted by law Effective for policies issued or renewed on or after January 1, 2015 Since this factor was not required to be filed with the Office, it does not appear in every manual If it is included in your manual, update the manual in your next filing effective on or after January 1,

11 FHCF Reinsurance Expense The Office uses a worksheet to determine the FHCF reinsurance expense The calculations are based on the FHCF Ratemaking Report Specifically, the worksheet uses the loss and LAE recovery ratios that the FHCF used to determine rates based on industry data - the Office uses this basis since it is more reliable The worksheet is available upon request 11

12 Temporary Increase in Coverage Limit (TICL) Replacement The cost of reinsurance to replace available TICL Coverage including the TICL Reduction on line (59A) of the Rate Indication Form should continue to include the cost for $12B of TICL coverage The Office has a worksheet to calculate the TICL limits; it is available upon request 12

13 Hurricane Catastrophe Model Support The questionnaire is being revised Feedback and suggestions for changes from the industry will be considered Deadline: December 31,

14 Credibility of Hurricane Catastrophe Model Results In both statewide and territorial indications, some filers attribute 100% credibility to the results of the hurricane model, even when the number of exposures input into the model is very low Support is needed for justification of these results Stating all model results are fully credible is not sufficient support 14

15 Other Rating Factor Changes I-File Document is being revised to note that rating factors applied to hurricane premium need to be supported by a hurricane catastrophe model or by a competitor If a Generalized Linear Model is being used as support, contact the Office for the required questionnaire 15

16 Actuarial Judgment as Support In rate filings: Any actuarial judgment must be reasonable per Section , Florida Statutes An explanation as to how this judgment was determined along with supporting data is required 16

17 Senate Bill 408 Adjustments to Rate Indications Sinkhole damage is required to be structural damage Coverage is restricted to the primary dwelling Actual Cash Value (ACV) payments are completed up-front Replacement Cost Value (RCV) payments are completed at a later date with qualifying documentation 17

18 Citizens Take-Out Filings Citizens take-out filings have quick turnaround times because there is less than a month from the time of the take-out application to when the Office needs to approve rates Rate filings need to support the expected cost, which includes specifying the take-out criteria and supporting both losses and expenses Competitiveness with Citizens has to be considered 18

19 Pre-Filing Rate Reviews Property rate filings submitted as a certification must be complete as filed If the Office requests it, additional support/information can be provided with the actuary certification At the request of either the Office s management or the assigned actuary, complex filings can be discussed prior to submission to eliminate any uncertainty regarding the required support 19

20 Questions? Robert Lee Kayne Smith (850) (850)