Office of Insurance Regulation

Office of Insurance Regulation 

  • Also known as the OIR or the Office.


The Office of Insurance Regulation (also known as the OIR or Office) is responsible for all activities concerning insurers and other risk bearing entities.  These responsibilities include, 


The head of the Office of Insurance Regulation is the Director of the Office of Insurance Regulation, also known as the Commissioner of Insurance Regulation, to make things more difficult.


The Director of the OIR (Office of Insurance Regulation) is required to have,


  • At least five (5) years of “responsible private sector experience” working full time in areas relevant to the subject matter the Office of Insurance Regulation 


– OR –


  • At least 5 years of experience as a senior examiner or other senior employee of a state or federal agency having regulatory responsibility over insurers or insurance agencies.


The following are types of specific regulatory powers and responsibilities of the Office of Insurance Regulation as they pertain to the insurance industry such as,


  • types of investments made by insurance companies, 


  • the techniques used in valuing assets, 


  • examination of records


  • enforcement of the insurance code, 


  • conducting investigations pertaining violations & market conduct,


  • role in agent licensing, 


  • Rate-making supervision, 


  • Approval of policy forms, 
  • Issuing insurer certificates of authority, 


  • Assessing insurer solvency, 


  • Vatical settlements  


  • Premium financing arrangements, 


  • Administrative supervision & other powers.

OIR Consent Order – Capital Preferred Insurance Company

*CASE NO: 263348-20-CO


06.14.2020 – Sun Sentinel Frontpage worthy discussion.


When we discussed Jimmy Patronis (CFO) and the role of the Department of Financial Services, we focused on marketplace resources and pending or past insurance code (law) violations.  We didn’t address matters pertaining to insurers because, those are handled by the Office of Insurance Regulations (OIR).  


Insurers, as you know, are *RISKBearing entities and our conversation about the Office of Insurance Regulation switches our attention completely away from the intimate Agent/Client interactions and dives into the realm of State/Insurer relationships.  


  • [K, (, p. 402] If you’re following along in the Kaplan manual, underline – OIR is responsible for all activities – relating to the regulation of Insurers.


  In a nutshell, the OIR is responsible for attracting insurers to the Florida marketplace and keeping them accountable to the promises they make.  Recently, the Office of Insurance Regulations permitted the Capital Preferred Insurance Company, a *Domestic Insurer with a valid *Certificate of Authority, to terminate coverage for 27,500 policies with only a 45 -day notice.  


Crazy right?  


Before we talk about how these canceled policies PROTECTED Floridians, let’s “OK GOOGLE” some vocabulary to make sure this next story makes sense.

  • Vocabulary 
    1. Risk Bearing Entity – (OR) Insurer = The entities we consumers TRANSFER the extreme cost too when unexpected and unfortunate life events happen.  


  1. Domestic Insurer – An Insurance Company (Not Agency) who has a home office in the same as the state they conduct business in.  Think about a local Florida Insurer selling policies to local Floridians.
    1. A Foreign Insurer would be an entity based out of any state other than Florida who sells to Floridians.
    2. Alien Insurers are entities based outside of the United States, authorized to conduct business in Florida.

[K, (2.3.2), p. 23]


  1. Solvent – Financially Sound.
    1. Having *assets in excess of *liabilities.  
      • (2). Able to dissolve other substances – [Note] If you were to think of Solution as money and the thing being “dissolved” as Debt, even this 2nd definition works. 


  1. Assets = Something of value.  
    1. An asset could be a person however, for our Health Insurance related conversations, the something of value is money.  
    2. A “Key Person” for a business or a skill could also be an asset which is why both are *insurable.


  1. Liabilities = Something you’re responsible for by law – A Debt (OR) other type of financial obligation – The complete opposite of an asset.  
    1. Let’s reference the prior two definitions to clarify how I’d like you to think about a liability.  
      • IF, the person or business we’re discussing is *Solvent, they have MORE money (Assets), than they have Debt (Liabilities).


  1. Insolvent = Refers to a person or business (Insurer) who’s unable to pay their LIABILITIES.  
    1. Bankruptcy is a legal solution which basically declares an insolvent person or entity as financially incompetent.  


Given those vocabulary words, you’ve probably figured out we’re going to discuss the Office of Insurance Regulations Authority to evaluate the financial stability of the insurers Authorized to sell policies in Florida.  

Riddle me this… Does the Office of Insurance Regulations have the Authority to evaluate the financial stability of an insurer conducting business in Florida if, the insurer DOES NOT Have a Florida Certificate of Authority? – We’ll get back to this answer later.

In the case of the Capital Preferred Insurance Company, records indicate the insurer requested permission from the OIR to terminate 27,500 of their 108,870 total in-force policies because, another year of losses would have been unsustainable.


Capital Preferred Insurance Company Losses 

  • 2017 = $5,130,111
  • 2018 = $17,871,829
  • 2019 = $25,737,506


Nearly 50 Million Dollars in losses over the past three years is definitely a problem.  


This year, “TWENTY-TWENTY”, as if a pandemic lockdown, riots, and Murder Hornets weren’t enough, east coast storm season projections told us to prepare for to our seasonal extreme weather guest.  When the northern snowbirds fly back home, the hurricanes blow on in.  


In Florida, our hurricane seasons are so hectic, homeowners’ insurance companies are required by law, to work together.  To explain how insurers, work together, we’re going to flashback to day one of Pre-Licensing 101, when we discussed Risk Transference as the most effective way to manage RISK.   


Like us consumers with our healthcare, insurance companies also have a need to mitigate their exposure to massive financial losses.  In this instance with think of the potential cost to insurers associated with rebuilding after a catastrophe.  To reduce their exposure to catastrophic losses from storm claims, insurers *TRANSFER a portion of the potential risk they’ve accepted via insurance policies issued off to *Reinsurers.


  • This niche of insurers who “Sell insurance to Insurers” and help reduce their exposure to losses are called *Re-Insurance companies (OR) #Reinsurers.  


As with us consumers and our health insurance, insurers who want to transfer risk to Reinsurers are subject to underwriting guidelines.  Since underwriting guidelines are primarily based on an analysis of historical expenses and losses, 50 Million Dollars in losses over three (3) years obviously poses a problem when it’s time to offload a percentage of your potential liabilities.  


This year, the cost of mitigating the Capital Preferred Insurance Company’s book of business was going to increase to unsustainable levels.  Reducing the insurers minimum reserve requirements so they could be within a tolerable range wasn’t an option either.  Today, August 17th we have two storms forming in the Atlantic.  If a devastating hurricane or a Godzilla attack were to actually happen, the Capital Preferred Insurance Company may not have been able to pay claims (liabilities).


It should be noted the termination of the Capital Preferred Insurance Company’s troubled book of business wasn’t the only suggested remedy.  


Prior to approving the insurers request to terminate over 27 thousand policies, the OIR required financial projections which illustrated the overall financial impact associated with not granting the proposed remedy.  

The insurers original proposal, a 47% *Rate increase was later amended down to 36.5%.  The rate increase would have only been applied to homeowners living in the high-risk coastal regions where the 50 Million dollars in losses over the past three years occurred.  


After the OIR evaluated the proposed rate increase, they determined even with a 36.5% increase, the insurer wouldn’t have been able to last another year if 2020 storm season projections come true.  I live on Fort Lauderdale Beach and last year, we could literally see Hurricane Michael’s black clouds stalled offshore.  Our weather was eerily beautiful all week, while the Bahamas was being destroyed.


To say we dodged a bullet would be an understatement.  


  • 2020 repairs from storm damage is projected to be approximately 3.4 Billion within the first few weeks following a disaster.  When the trailing claims are factored into the equation   rebuilding estimates are expected to be in the ballpark of 7.9 Billion Dollars after 2 months.  As I write this course, two storms are picking up strength in the Atlantic.


If this were our Property & Casualty course, we’d continue discussing how Floridian homeowners in coastal cities are slowly being forced into state backed insurers as a last resort…  It isn’t so, let’s wrap it up with this last “Did You Know” about the OIR and the CFO for that matter.  


  • Our required Florida Law and Professional Ethics courses focus so much on rules and regulations, some forget to address other, not so obvious marketplace responsibilities.  

For instance, did you know the Office of Insurance Regulation is also responsible for attracting new insurers to the Florida marketplace?  It’s TRUE.  The OIR calls these campaigns “outreach programs” however, since they use traditional Marketing tactics – Let’s call it what it is, Recruiting 101.   


A marketplace must attract both consumers and vendors or else the system would be unbalanced and eventually collapse.  I used this homeowner’s insurance example because, it’s NON-VIOLATION.  Our OIR discussion was consumer protection focused because, the Florida Insurance Code exist to protect us Floridians.  


In a nutshell, when exposure to RISK is poorly addressed, financial consequences can easily reach catastrophic and unsustainable levels.  That’s why the State of Florida imposes minimum financial requirements onto health insurers and all other insurers selling insurance to Floridians.  


Like homeowners and their risk of storm damage, individuals are also exposed to catastrophic storms… We just call them “Pandemics” instead of “Hurricanes”.  


  • “Riddle me this” Answer – No reason to audit the financial reserves of an Un-Authorized Entity because, they’re operating illegally.  We’d prosecute them.