A little more than a year ago, the Florida Office of Insurance Regulation issued an order allowing commercial property insurance companies to use new forms without first obtaining the OIR's approval. The "fast-track" process will become state law on July 1.
Policyholders may not have noticed the change at all. Rate and form approval happen behind the scenes and should not have an effect on purchasing or renewing coverage or filing a claim. The fast-track process, though, could cause some confusion down the road if regulators find flaws in forms that are already in use.
Policyholders may not realize that the insurance industry and insurance regulators use the term "form" a little differently from the rest of us. These are not fill-in-the-blank forms, like credit card applications or even tax returns. Rather, an insurance form details the terms and conditions of the policy in standardized language. The form includes all the boilerplate provisions that are the same from one policy to the next. The part of an insurance policy that makes it unique is the "declarations" page, generally a one-page summary that lists the policyholder's name and address, premium, coverage limits and effective dates.
It is the form that contains the nuts and bolts of coverage, things like definitions and exclusions, even the anti-concurrent causation clause we discussed recently. That is why consumer advocates expressed dismay when the OIR first allowed commercial property carriers to use forms that had not been reviewed by the state; without regulatory review, what recourse would policyholders have?
The "file and use" method of approving forms is not entirely without regulatory review, though.
We'll continue this in our next post.
Source: The Florida Current, "Fast-track coverage changes for commercial property insurers to continue," Gray Rohrer, June 11, 2013