daniel c. brownVs.elenita gomez|Department of Financial Serv... -- eLawyers

Petitioner: AIU INSURANCE COMPANY, AMERICAN HOME ASSURANCE COMPANY, AMERICAN INTERNATIONAL SOUTH INSURANCE COMPANY, ET AL.
Respondent: DEPARTMENT OF FINANCIAL SERVICES, OFFICE OF INSURANCE REGULATION
Judges: SUZANNE F. HOOD
Agency: Department of Financial Services
Locations: Tallahassee, Florida
Filed: Apr. 22, 2004
Status: Closed
DOAH Final Order on Wednesday, May 11, 2005.
Latest Update: May 15, 2006
Summary: Whether proposed Rule 69O-170.013(7), Florida Administrative Code, involving insurance coverage by property and casualty insurers under the Terrorism Risk Insurance Act of 2002, meets all procedural and substantive requirements so as to be a valid exercise of delegated legislative authority.Proposed Rule 690-17O.013(7), Florida Administrative Code, is invalid pursuant to Sections 120.52(8)(a), 120.52(8)(b), 120.52(8)(d), and 120.52(8)(e), Florida Statutes.

04-1540.PDF

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AIU INSURANCE COMPANY, AMERICAN ) HOME ASSURANCE COMPANY, ) AMERICAN INTERNATIONAL SOUTH ) INSURANCE COMPANY, ET AL., )

)

Petitioners, )

)

vs. )

)

DEPARTMENT OF FINANCIAL ) SERVICES, OFFICE OF INSURANCE ) REGULATION, )

)

Respondent. )

Case No. 04-1540RP

)

FINAL ORDER

A final hearing was conducted in this case on March 2-3, 2005, in Tallahassee, Florida, before Suzanne F. Hood, Administrative Law Judge with the Division of Administrative

Hearings.

APPEARANCES

For Petitioners: Daniel C. Brown, Esquire

Kelly A. Cruz-Brown, Esquire Robert W. Pass, Esquire Carlton Fields, P.A.

Post Office Box 190

Tallahassee, Florida 32302-0190

For Respondent: S. Marc Herskovitz, Esquire

Elenita Gomez, Esquire Jim L. Bennett, Esquire

Department of Financial Services 612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-4206

STATEMENT OF THE ISSUE

Whether proposed Rule 69O-170.013(7), Florida Administrative Code, involving insurance coverage by property and casualty insurers under the Terrorism Risk Insurance Act of 2002, meets all procedural and substantive requirements so as to be a valid exercise of delegated legislative authority.

PRELIMINARY STATEMENT

On April 22, 2004, Petitioners AIU Insurance Company, American Home Assurance Company, American International South Insurance Company, Audubon Insurance Company, Birmingham Fire Insurance Company of Pennsylvania, Commerce and Industry Insurance Company, Granite State Insurance Company, Illinois National Insurance Company, The Insurance Company of the State of Pennsylvania, National Union Fire Insurance Company of Pittsburgh, PA., and New Hampshire Insurance Company (Petitioners) filed a Petition to Determine the Invalidity of Proposed Rule 69O-170.013(7), Florida Administrative Code (proposed rule). The Petition alleged that the proposed rule was an "invalid exercise of delegated legislative authority" pursuant to Sections 120.52(8) and 120.56, Florida Statutes.

On April 27, 2004, the Division of Administrative Hearings (DOAH) assigned the case to the undersigned. In a Notice of

Hearing dated April 30,2004, the undersigned scheduled the hearing for May 25, 2004.

On May 3, 2004, Petitioners and the Department of Financial Services, Office of Insurance Regulation (Respondent), filed a Joint Motion to Stay the proceedings. On May 6, 2004, the undersigned issued an Order Granting Continuance and Placing Case in Abeyance. Thereafter, the undersigned granted several joint motions to continue the case in abeyance.

On November 16, 2004, Petitioners filed an Amended Status Report and Motion for Omnibus Case Management Conference. On November 16, 2004, Respondent filed a Status Report. On November 17, 2004, Respondent filed a Response to Petitioners' Amended Status Report and Motion for Omnibus Case Management Conference and Motion for Attorneys' Fees and Costs. On November 22, 2004, Petitioner filed a reply to Respondent's response. On December 1, 2004, the undersigned denied both motions.

On December 6, 2004, the parties filed a Joint Response to Division Order. On December 7, 2004, the undersigned issued a second Notice of Hearing, setting the hearing for March 2-3, 2005.

On December 9, 2004, Petitioners filed motions to amend their petition and consolidate this proceeding with DOAH Case No. 03-4477RU. On December 16, 2004, Respondent filed a

response to the motions. On December 20, 2004, the undersigned denied Petitioners' request to consolidate the cases and granted their request to amend the petition.

On December 22, 2004, Petitioners filed their First Amended Petition to Determine the Invalidity of Proposed Rule 69O- 170.013(7), Florida Administrative Code (First Amended Petition).

On February 3, 2005, Respondent filed a Notice of Filing Change to Proposed Rule 69O-170.013(7), Florida Administrative Code.

On February 8, 2005, Petitioners moved to amend the First Amended Petition. On February 17, 2005, the undersigned granted the motion. That same day, Petitioners filed their Second Amended Petition to Determine Invalidity of Proposed Rule 69O- 170.013(7), Florida Administrative Code (Second Amended Petition).

During the hearing, the parties offered two joint exhibits, JE1 and JE2. The joint exhibits were accepted as evidence.

Petitioners presented the testimony of two witnesses: Michael L. Toothman, an expert in actuarial science; and Adam Reed, Petitioners' corporate representative. Petitioners also offered to present the testimony of Jack Swisher, an actuary employed by Respondent. Mr. Swisher testified briefly about his background. However, after determining that he was not a fact

witness and that Petitioners had not listed him as an expert witness, the undersigned dismissed Mr. Swisher.

Petitioners offered 18 exhibits (P1-P17 and P20), which were accepted as evidence. The undersigned reserved ruling on five of Petitioners' exhibits (P18-P19 and P21-P23), which are hereby excluded on grounds of relevance. Petitioners tendered one exhibit (P24) as a proffer of Mr. Swisher's deposition testimony.

Respondent presented the testimony of two witnesses.

Respondent's first witness was Frank Dino, Respondent's Chief Actuary. Respondent's second witness was Steven H. Parton, Respondent's General Counsel, who also served as Respondent's agency representative during the hearing.

Respondent offered ten exhibits (R1-R4 and R6-R11), which were accepted as evidence. The undersigned reserved ruling on one of Respondent's exhibits (R5). In a post-hearing Order dated April 6, 2005, the undersigned ruled that specific portions of Exhibit No. R5 were accepted as evidence.

Respondent withdrew its offer of one exhibit (R12).

During the hearing, the issue of whether the proposed rule applied to the workers' compensation line arose for the first time. Rather than require Petitioners to amend their Second Amended Petition, the undersigned instructed the parties to address the issue in their proposed final orders.

Petitioners filed a copy of the Transcript on April 4, 2005. The parties filed their Proposed Final Orders on April 8, 2005.

All citations hereinafter shall be to Florida Statutes (2004) unless otherwise specified.

FINDINGS OF FACT

Petitioners are property and casualty insurance companies licensed by Respondent to write various commercial insurance lines in the State of Florida.
On November 26, 2002, the United States Congress enacted the Terrorism Risk Insurance Act of 2002, Public Law 101-297, 116 U.S.C. 2322 (TRIA). The stated purpose of TRIA is to establish a temporary federal program that provides for a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism, in order accomplish the following: (a) to protect consumers by addressing market disruptions and ensure the continued widespread availability and affordability of property and casualty insurance for terrorism risk; and (b) to allow for a transitional period for the private markets to stabilize, resume pricing of such insurance, and build capacity to absorb any future losses, while preserving state insurance regulation and consumer protections.
TRIA provides a federal reinsurance backstop for three
1. years and gives the federal government authority to recoup federal payments made through policy-holder surcharges up to a maximum annual limit in the event of a "certified loss." As a condition for any federal payment, clear and conspicuous disclosures must be provided to policyholders for the premium charged for insured losses covered by TRIA and the federal share of compensation for insured losses under TRIA.
TRIA expressly preempts any state requirement for insurers to seek prior approval before using a terrorism coverage rate. However, TRIA does not affect the ability of a state to invalidate a rate filing that is determined to be excessive, inadequate, or unfairly discriminatory.
On November 27, 2002, the Florida Department of Insurance (Respondent's predecessor) issued a bulletin discussing TRIA and its impact on the state regulatory scheme. The bulletin made it clear that TRIA "preserved the Department's authority to disapprove any rates pertaining to such losses if it finds them to be excessive, inadequate or unfairly discriminatory."
Effective January 7, 2003, Section 20.121(3), Florida Statutes, created the Financial Services Commission (FSC), composed of the Governor, the Attorney General, the Chief Financial Officer, and the Commissioner of Agriculture.
Respondent is one of the major structural units of the FSC. The only other major structural unit is the Office of Financial Regulation (OFR).
The FSC has no employees aside from persons employed directly by the individually elected officials and those employed directly by the respective structural units.
On February 25, 2003, the newly created FSC met to discuss the proposed delegation or authorization of preliminary rulemaking authority to Respondent and OFR. The discussion was set forth in Agenda Item 2 of that meeting.
At the February 25, 2003, meeting, the FSC approved the proposed delegation for the Directors of Respondent and OFR, or their respective designees, to act on behalf of FSC, within their respective jurisdictions, with regard to all aspects of the rulemaking process, with the exceptions of the following:
On May 13, 2003, the FSC approved the minutes of the February 25, 2003, FSC meeting. It is undisputed that the FSC did not specifically approve the proposed rule at any time before or after Respondent published its intent to develop the proposed rule in the Florida Administrative Weekly.
On February 4, 2004, Respondent forwarded a "Notice of Proposed Rule Development Pursuant to Section 120.56(4)(e)2." to the Florida Administrative Weekly. On February 13, 2004, this notice, along with the preliminary text of the proposed rule, was published in Section I of the Florida Administrative Weekly.
The title of the proposed rule was "Filing Procedures for Property and Casualty Insurance Rates, Rules, Underwriting Guidelines, and Forms." The stated purpose was "[t]o develop rules to adopt procedures and standards for the review and approval of rates for terrorism insurance coverage in accordance with the Terrorism Risk Insurance Act of 2002."
During the hearing, Respondent presented another purpose for the development of the proposed rule. That purpose was to respond to an alleged non-rule policy in DOAH Case No.03- 4486RU in accordance with Section 120.56(4)(e)2., Florida Statutes.
The announced subject to be addressed by the proposed rule was "[t]errorism insurance endorsements and rates." The specific authority cited for the proposed rule was Section
624.308, Florida Statutes. The laws to be implemented by the proposed rule included Sections 624.307(1), 624.604, 624.605,
627.062, 627.0645, and 627.0651, Florida Statutes. The rule development notice also indicated that a rule development workshop would be held on March 2, 2004, if requested in writing.
The February 13, 2004, iteration of the rule stated as follows:
(7) This rule applies to that portion of a rate filing relating to terrorism coverage required under the Terrorism Risk Insurance Act of 2002. The Office recognizes the difficulty facing an individual insurer in demonstrating that its rates related to terrorism are not excessive, inadequate, or unfairly discriminatory. An insurer is free to use any generally accepted and reasonable actuarial technique in its filing which it believes demonstrates that the rates requested or implemented are in compliance with Section 627.062, Florida Statutes. If an insurer is unable to demonstrate through its own methodology that the rate requested or implemented complies with Section 627.062, Florida Statutes, then the insurer may, at its option, adopt the methodology, data, and rates of another insurer, as appropriate, that have been previously approved by the Office.
By letter dated February 24, 2004, Petitioners requested that Respondent conduct a workshop on the date and time specified in the notice. That workshop was conducted as scheduled.
March 12, 2004, was the deadline for submitting written comments with respect to the February 13, 2004, iteration of the proposed rule. On that date, Respondent received a written comment from Stephen Zielezienski, Vice President and General Counsel for the American Insurance Association (AIA). AIA is a national trade association that represents over 400 property and casualty insurers. On behalf of AIA, Mr. Zielezienski commented that allowing an individual insurer to adopt previously approved terrorism risk methodologies, data, and rates of other companies, such as rating/advisory organizations, would be an improvement over the language in the text of the proposed rule.
In consideration of the comments made at the workshop and in subsequent written comments, Respondent forwarded a "Notice of Proposed Rulemaking" to the Florida Administrative Weekly on March 24, 2004. The notice, along with an amended text of the proposed rule was published in Section II of the Florida Administrative Weekly on April 2, 2004.
The text of the second iteration of the proposed rule, as published on April 2, 2004, states as follows:
(7) This rule applies to that portion of a rate filing relating to terrorism coverage required under the Terrorism Risk Insurance Act of 2002. The Office recognizes the difficulty facing an individual insurer in demonstrating that its rates related to terrorism are not
excessive, inadequate, or unfairly discriminatory. An insurer is free to use any generally accepted and reasonable actuarial technique in its filing which it believes demonstrates that the rates requested or implemented are in compliance with Section 627.062, Florida Statutes. If an insurer is unable to demonstrate through its own methodology that the rate requested or implemented complies with Section 627.062, Florida Statutes, then the insurer may, at its option, adopt the methodology, data, and rates of another insurer or rating or advisory organization, as appropriate, that have been previously approved by the Office.
In addition to the notice, Respondent provided the Joint Administrative Procedures Committee (JAPC) with copies of documents required by Section 120.54(3)(a)4., Florida Statutes. The documents included, inter alia, the text of the proposed rule, a "Statement Relating to Federal Standards or Rule With Reference to Rule Chapter 69O-170 Property and Casualty Insurance Rating," and a "Summary of the Proposed Rule."
On April 26, 2004, Respondent received a letter from John Rosner, Chief Attorney for JAPC. Mr. Rosner's letter stated as follows in relevant part:
The proposed change provides in part that an insurer may adopt "the methodology, data, and rates of another insurer or rating or advisory organization, as appropriate, that have been previously approved by the Office." Has such approval been memorialized by rule? If not, the rule should be amended to disclose the criteria pursuant to which the Office renders approval of "the methodology, data, and
rates of another insurer or rating or advisory organization."
In a letter dated August 2, 2004, Steve Fredrickson, Respondent's Assistant General Counsel, responded to
Mr. Rosner's letter as follows in relevant part:

Specifically, the rule language "methodology, data, and rates of another insurer or rating or advisory organization, as appropriate, that have been approved by the Office" is a reference to other approved filings which have been submitted by other insurers. Section 627.062 and 627.065, Florida Statutes, provide the specific criteria that the Office uses to approve or disapprove a rate filing. The reference above acknowledges that if the specific methodology, data, and rates have previously been approved, we will accept them in another insurer's rate filings.
Although the April 2, 2004, notice reflected a possible second public hearing to be held on April 27, 2004, Respondent did not receive a request for another workshop. Nevertheless, in response to issues raised by Petitioners in this case, Respondent reviewed the April 2, 2004, iteration of the proposed rule and ultimately made changes to its text. Specifically, the term "generally accepted and reasonable actuarial technique" in the proposed rule appeared to place an impermissible burden on insurers that was not required by statute. Additionally, the term "as appropriate" was removed and "similar risks" was inserted in the third iteration of the proposed rule.
On February 2, 2005, Respondent provided Petitioners with a copy of a Notice of Change. On February 3, 2005, Respondent advised JAPC that it was changing the text of the proposed rule. On February 18, 2005, a Notice of Change was published in Section III of the Florida Administrative Weekly. The text of the third iteration of the proposed rule, and the version that is at issue here, states as follows:
(7) This rule applies to that portion of a rate filing relating to terrorism coverage required under the Terrorism Risk Insurance Act of 2002. The Office recognizes the difficulty facing an individual insurer in demonstrating that its rates related to terrorism are not excessive, inadequate, or unfairly discriminatory. An insurer is free to use any methodology the insurer believes demonstrates that the rates requested or implemented are in compliance with Section 627.062, Florida Statutes. If an insurer is unable to demonstrate through its own methodology that the rate requested or implemented complies with Section 627.062, Florida Statutes, then the insurer may, at its option, adopt the methodology, data, and/or rates or loss costs of another insurer or rating or advisory organization that have been previously approved by the Office for similar risks.
Petitioners have three (3) terrorism rate filings pending before Respondent in the following lines of business: commercial property, general liability, and surety. Petitioners also have several cases involving terrorism rate filings for other property and casualty lines of business pending before
DOAH because Respondent has issued notices of its intent to disapprove each filing. Petitioners are free to make any additional rate filings for terrorism rates in any line of insurance covered by TRIA. Therefore, Petitioners have standing in this case.
As stated above, the proposed rule was drafted, at least in part, in response to Petitioners' allegations that Respondent had implemented an invalid non-rule policy in regard to approval or disapproval of terrorism rate filings under TRIA. Respondent was also concerned that others might believe that it was using a non-rule policy. The alleged non-rule policy consisted of Respondent's applying a one percent rate cap for commercial property and casualty terrorism rate filings based upon the terrorism rate filings Respondent approved for use by the Insurance Services Offices (ISO) and the American Association of Insurance Services (AAIS).
The record as a whole indicates that Respondent did not draft the February 18, 2005, iteration of the proposed rule to codify the substance of the alleged non-rule policy. In fact, the preponderance of the evidence indicates that the so- called non-rule policy played no role in the development of the proposed rule other than to provide some motivation to initiate the rulemaking process.
Instead of imposing a cap on rates, the proposed rule provides Petitioners with several options: (a) an insurer may utilize any methodology, data and/or rates that the insurer believes will demonstrate compliance with Section 626.062, Florida Statutes; (b) an insurer may adopt the previously approved methodology, data, and/or rates or loss costs of another insurer for similar risks; (c) an insurer may adopt the previously approved methodology, data, and/or rates or loss costs of a rating organization for similar risks; and (d) an insurer may adopt the previously approved methodology, data, and/or rates or loss costs of an advisory organization for similar risks.
The proposed rule makes it clear to Petitioners and Respondent's staff that an insurer is not required to adopt the previously approved TRIA rate for any rating organization or any other entity. Neither the plain meaning nor the effect of the proposed rule imposes a cap for terrorism rates.
Respondent presented testimony at hearing that it intends for insurers to use the term "methodology" in the third sentence of the proposed rule in its broadest sense. As an indication of how broadly Respondent construes the term "methodology" in the proposed rule, Steve Parton, Respondent's General Counsel and the principal author of the proposed rule,
testified that an insurer's use of "no methodology" would be considered a methodology.
Respondent presented testimony that there is no actuarial component associated with the term "methodology." Despite this testimony, the proposed rule refers to Section 627.062, Florida Statutes, which is the only guide that insurers have in making a decision regarding their terrorism rate methodology. Section 627.062, Florida Statutes, provides as follows in relevant part:
627.062 Rate Standards.--
1. The rates for all classes of insurance to which the provisions of this part are applicable shall not be excessive, inadequate, or unfairly discriminatory.
2. As to all such classes of insurance:
* * *
According to Mr. Parton, Respondent considered TRIA and other publications and documentation, indicating that data for terrorism risks is not as predominate as data for other insurance risks. One such publication is a March 4, 2003, report, prepared by the Property/Casualty Extreme Events Committee of the American Academy of Actuaries (AAA) for the National Association of Insurance Commissioners (NAIC), entitled Report to NAIC Terrorism Insurance Implementation Working Group
on Ratemaking Issues Related to the Terrorism Risk Insurance Act, which states as follows in relevant part:
Introduction

For the vast majority of U.S. insurance policy holders, the risk of foreign terrorism first became a real concern with the disastrous events of Sept. 11, 2002.
Before that date, insurers in the United States had little or no historical information on losses from acts of foreign terrorism. That lack of information has precluded the use of traditional ratemaking methodology.

Catastrophe modeling firms have responded to the information gap by developing computer models that help quantify the financial effect of terrorism on policyholders, insurers, and reinsurers. The development of those terrorism models is comparable to the development of natural catastrophe models in the late 1980s. But a major difference between the terrorism models and the natural catastrophe models is the substantial role that the judgment of experts plays in terrorism models. Such judgment is necessary because of the inherent differences between the risks of terrorism and natural catastrophes.

Perhaps the most important of those differences is the human element of terrorism. Because the losses result from intentionally destructive human behavior, and because that behavior can vary with changing human motivations, measurement of expected losses, particularly claim frequency--is difficult to estimate.

Nevertheless, the Terrorism Risk Insurance Act of 2002 (TRIA) requires insurers to offer coverage for acts of foreign terrorism to all commercial risks. As part of the offer, insurers must provide a premium quote
if there is any additional charge for the coverage. Therefore, insurers must develop rates regardless of the lack of experience and the inherent uncertainly of the peril. The law requires insurers to provide the coverage when accepted by the policyholder.

* * * Claim Frequency Issues
There is minimal historical data on the frequency of incidents of foreign terrorism in the United States. And the risk of foreign terrorism probably fluctuates with changing world politics. The possibility of war with Iraq, the Palestinian-Israeli situation, tensions with North Korea, and other world crisis may influence the frequency of terrorist attacks.

The judgment of experts plays a major role in forecasting the frequency of terrorism. While various techniques (the Delphi method, game theory, and others) can put a structure around the reliance on expert opinion, the fundamentals of modeling are subjective.

Because of the high level of uncertainty, insurers may develop many different estimates of the frequency of foreign terrorism. As a result, the range of reasonable estimates may be broad.

Claim Severity Issues

Like claim frequency, claim severity for foreign terrorism, is difficult to forecast. Again, there is minimal historical data.
Modeling for terrorism severity can build on existing modeling and data developed for governments and others in response to the threat of weapons of mass destruction. The possible severity of a nuclear, biological, chemical, or radiological event dwarfs the severity of even the World Trade Center losses.
Again, because of the high level of uncertainty, insurers may develop many different estimates for the severity of losses for terrorist attacks. As a result, the range of reasonable estimates may be broad.

Ratemaking

The lack of historical experience and the unpredictable nature of terrorism losses preclude traditional experience-based methods of determining rates.

Insurers generally make rates separately by state and line. However, under the TRIA, an insurer's retentions (exposures) will depend upon its nationwide commercial lines premium. For purposes of ratemaking, insurers will have to allocate their retentions by line or develop an all-lines rate for each policy.

Some insurers may consider nontraditional ratemaking approaches, such of the following:
- Develop an appropriate rate for risk of
  foreign terrorism through a probability-of-ruin approach or some similar technique
- Analyze terrorism-related exposures to determine a Probable Maximum Loss (PML), concentration of exposures, or other relevant quantifications
- Use the cost of funding terrorism
  exposures through reinsurance or other mechanisms
  These are also generally accepted approaches for pricing low frequency, high severity exposures, such as catastrophes.
  
  Net vs. Direct
  
  Insurers generally make rates on a direct basis, before reinsurance consideration. However, the TRIA presents a unique situation because its reinsurance provisions
  apply to all foreign terrorism coverage provided by insurers. Consequently, many insurers may make rates net of expected recoveries under the TRIA.
  
  Some insurers may provide coverage for domestic terrorism, which the TRIA does not address. . . .
  
  Modeling
  
  Hurricanes Hugo in 1989 and Andrew and Iniki in 1992 convinced most property insurers of the importance of using computer models in ratemaking and in managing the risk of natural catastrophes in the insurance portfolios. Insurers came to realize that historical data on hurricane losses is not sufficient for ratemaking. The number of historical losses for foreign terrorism in the United States is even smaller. With exception of the disastrous events of September 11, 2001, and the 1993 attack on the World Trade Center, there have been no other significant foreign terrorist attacks on U.S. soil. The terrorism models provide a way of quantifying the terrorism exposure for purposes of ratemaking and risk management.
  
  Because the models are relatively new, it is likely that they (like other catastrophe models) will evolve by responding to a growing knowledge base (future events, better intelligence of terrorist organizations, and the like). Refinements will likely lead to significant changes in the modeling results. The likelihood that results will change in the future does not mean that a new model is inappropriate. The comparison is not between a future version of a model and the current versions, but between the available models and no model at all.
  Multiple Models
  
  The existence of multiple terrorism models generates competition in the market place to develop the best possible models. Because of the lack of terrorism data, modelers have had to access alternative information sources for their models. With different data sources and different methodology, the various models may generate substantially different results. The unusually broad range of reasonable estimates of expected terrorism losses suggests that many terrorism models may be valid even though they generate a broad range of results.
  
  Confidentiality/Proprietary Modeling The capital expenditure to develop a new computer model may be substantial. Without protection of their intellectual property, modelers would not make such investments. While insures and regulators need to review the results of the models for reasonableness, the modelers must be able to protect the details of their methodologies and data as trade secrets.
  
  * * *
  
  Judgment
  
  Since traditional ratemaking methods will not work for developing rates for the risk of foreign terrorism, insurers must rely on their own judgment and that of terrorism experts to develop rates. In fact, judgment, including judgment about the selection of historical data, is a critical part of all ratemaking. But because of the limited amount of data available for terrorism ratemaking, judgment becomes the overriding factor.
  . . . Underwriters, engineers, general insurance practitioners, attorneys, accountants, financial analysts, actuaries, security agents, and state and federal regulators will all need to contribute their knowledge and creativity.
  
  Other Rating/Classification Issues Individual Risk Rating Plans
  Some insurers and/or policyholders may want to use individual risk rating (IRR) in pricing and/or underwriting an insurance contract providing terrorism coverage. The provisions of these plans can include deductibles, experience rating, retrospective rating, claims-free bonuses, reinstatement premium, premium modification plans, and the like. The actuarial issues involved in designing and implementing such provisions include:
  
  Effects on Experience Rating
  Any large single loss - such as a loss from a terrorist attack that affects a policyholder can significantly change the premium for any policy that uses the policyholder's experience.
  
  Underwriting Judgment
  Insureds' exposure to terrorism risk varies across many coverages
  - property, business interruption, liability, workers compensation, life, and accident and health. In addition, individual insureds may employ a variety of security measures to guard against terrorist attacks. Any single rating and classification structure may not have sufficient data or model credibility to reflect completely all variables affecting exposure to loss. As a result, the rating structure may
  need to provide relatively wide ranges for underwriting judgment.
  
  Territories
  
  The specific attributes of a building, its location and the nature of neighboring buildings (such as major landmarks, government holdings, monuments, and the like) can have a substantial effect on the exposure to risk of terrorism. Therefore, territory is an important classification factor for pricing terrorism coverage.
  Territory is also important in measuring and monitoring an insurer's concentration of exposures. However, the unique nature of the terrorism exposure may mean that none of the existing territorial rating factors used in property/casualty lines of insurance apply to pricing terrorism coverage.
  Insurers may need to develop new territory definitions and/or employ significant underwriting judgment to modify existing territory definitions.
  
  * * * Identification of Relevant ASOPS
  Three Actuarial Standards of Practice (ASOPs) directly address issues related to the rating of terrorism exposures. . . .
  They are ASOP No. 9, Documentation and Disclosure in Property and Casualty Insurance Ratemaking, Loss Reserving, and Valuations (Doc. No. 027), especially Appendix 1 - Statement of Principles Regarding Property and Casualty Ratemaking. The purpose of the Statement of Principles is to "identify and describe principles applicable to the determination and review of property and casualty insurance rates."
  
  ASOP No. 39, Treatment of Catastrophe Losses in Property/Casualty Insurance Ratemaking (Doc. No. 072). This standard refers to the Statement of Principles in ASOP No. 9 and
  provides guidance in evaluating catastrophe exposure and in determining a provision for catastrophe losses and loss adjustment expenses in property/casualty insurance ratemaking.
  
  ASOP No. 38, Using Models Outside the Actuary's Area of Expertise (Property and Casualty)(Doc. No. 071). This standard provides guidance in reviewing and using models as well as requiring documentation when an actuary uses models outside his or her area of expertise.
  
  The Actuarial Standards Board adopted all three of these standards before terrorism became a significant component of insurance rates. The Casualty Committee of the Actuarial Standards Board is determining the need for revision in ASOP No. 9 and may develop proposals for consideration in 2003. It is unlikely that the Actuarial Standards Board will review the other two standards for any necessary revision. It is also possible that the Board could develop a new standard or that the profession may address the issue through another mechanism.
During the hearing, Michael L. Toothman, Petitioner's expert in actuarial science, confirmed that computer simulation modeling to predict terrorism losses is in its infancy. Unlike the modeling used to predict the frequency and severity of natural catastrophes like hurricanes and earthquakes, terrorism modeling has no historic experience base. Therefore, terrorism modeling, which is based in large part on the subjective judgment of various experts, cannot be validated or tested for reasonableness using traditional methods.
According to Mr. Toothman, catastrophe modeling for terrorism events may be a useful tool making damage estimates if one knows the location and the nature of a terror attack, i.e. a biological attack involving anthrax in downtown Manhattan. However, such modeling is not as useful in determining the likelihood or frequency of a particular attack occurring, both in terms of location and nature.
Mr. Toothman testified that the companies that create and own the terrorism computer models consider them to be intellectual property. The companies do not provide insurers with all the details underlying the model. For example, the models reveal very little information about the experts who provide input for the models, and little or no information about the way the experts arrive at their individual or collective opinions. Therefore, an insurer has no way to evaluate the reasonableness of the process used to generate the models' predictive output.
Mr. Toothman was familiar with three companies that have developed catastrophe models for terrorism since 2001: (a) Applied Insurance Research; (b) Risk Management Solutions; and
The proposed rule does not refer to any of the actuarial literature, like the AAA's March 4, 2003, NAIC report. The report itself discusses several methodologies that insurers might use, and repeatedly emphasizes the judgment that insurers must exercise, in developing terrorism rates. Therefore, actuarial publications like the report do not provide a source of guidance for insurers to consider in deciding on a specific methodology that Respondent's staff will accept in reviewing terrorism rate filings.
In developing the third sentence in the proposed rule, Respondent considered the Actuarial Standards Board's (ASB) Actuarial Standards of Practice (ASOP) Nos. 9 and 38. These ASOPs relate to the methods used for property and casualty insurance ratemaking that the actuarial community approved before September 11, 2001. The proposed rule does not mention or cite to the ASOPs or the methods described therein. The ASOPs do not on their face discuss terrorism ratemaking. Thus, even if the ASOPs "directly address issues related to the rating of terrorism exposures," they provide little if any guidance to insurers in determining the methodology to use in developing terrorism rates pursuant to the proposed rule.
As stated above, the proposed rule refers insurers to Section 627.062, Florida Statutes. Section 627.062(2)(b), Florida Statutes, requires Respondent's staff to review rate
filings in accordance with undefined "generally accepted and reasonable actuarial techniques" with regard to 13 factors. The problem is that there is no consensus in the actuarial community regarding generally-accepted actuarial techniques for terrorism ratemaking that an insurer could apply to the statutory factors, including but not limited to the following: (a) past and prospective loss experience within and without the State of Florida; (b) investment income reasonably expected by the insurer; (c) the degree of competition among insurers for the risk insured; and (d) the reasonableness of the judgment reflected in the filing.
An insurer cannot predict the frequency and severity of future terrorism events using traditional actuarial techniques because there is no historical data or credible experience base. It follows that insurers cannot predict the associated terrorism losses for ratemaking purposes using generally accepted actuarial techniques. The inability to predict past and prospective terrorism losses makes it difficult, if not impossible, for insurers to show compliance with other factors set forth in Section 627.062(2)(b), Florida Statutes.
Under these new and exceptional circumstances, simply stating that insurers may use any methodology they believe complies with Section 627.062, Florida Statutes, provides no
standards or criteria for insurers to derive a terrorism rate that Respondent will consider reasonable and appropriate.
Finally, Mr. Toothman provided persuasive testimony that the term "methodology" is unclear from the rule. His testimony demonstrated that a "methodology," as contemplated by the rule, consisted of more than merely selecting a rate, multiplying the rate by the underlying premium, and adding the resulting product to the premium. Such a mathematical process is a methodology on how to "calculate" the total premium, but does nothing to explain or justify the rate itself.
Mr. Toothman's testimony undermines Respondent's assertion that an insurer could comply with the proposed rule's broad grant of discretion to use "any methodology" by using "no methodology."
The fourth sentence in the proposed rule allows insurers to adopt previously approved "methodology, data, and/or rates or loss costs" of other entities "for similar risks." During the hearing, Frank Dino, Respondent's Chief Actuary, testified that he suggested the substitution of the term "similar risks" in the proposed rule for the term "as appropriate" to provide guidance to Respondent's actuary in reviewing the filing.
Mr. Dino testified at hearing that the term "similar risks" means a risk that has similar expectation of loss and is a phrase used throughout the insurance industry and actuarial
profession. To Mr. Dino, the term "similar risks" as used by the general insurance industry relates to insurance coverage that is substantially similar to another insurance coverage where the expectations of losses are reasonably similar.
Mr. Dino also testified that the term "similar risks" in the actuarial community has a similar but more technical definition.
According to Mr. Dino, the proposed rule's option to adopt the previously approved rate of another entity for similar risks may or may not mean that an insurer in one line of business can merely adopt the previously approved rate of another insurer in the same line of business. Rather, it is the burden of an insurer to justify its decision that its terrorism risks are similar to the other company's risks. Mr. Dino also admitted that it might be important to compare the concentration of risks and/or the limits of coverage between two entities in order to determine whether they have "similar risks." Mr. Dino did not know whether the size of two companies and the amount of premium they write is necessary to determine the similarity of risks.
Mr. Dino considered ASOP Nos. 9 and 12 when he suggested the term "similar risks" for the proposed rule. ASOP No. 9, adopted by ASB in January 1991, discusses documentation and disclosure in property and casualty insurance ratemaking, loss reserving, and valuation. Specifically, Mr. Dino
considered Appendix 1 to ASOP No. 9, which provides as follows in relevant part:
II Principles

Ratemaking is prospective because the property and casualty insurance rate must be developed prior to the transfer of risk.

* * *

Principle 2: A rate provides for all costs associated with the transfer of risk.

Ratemaking should provide for the costs of an individual risk transfer so that equity among insureds is maintained. When the experience of an individual risk does not provide a credible basis for estimating these costs, it is appropriate to consider the aggregate experience of similar risks. A rate estimated from such experience is an estimate of the costs of the risk transfer for each individual in the class. (Emphasis added)

ASOP No. 9 does not provide a definition of the term "similar risks" in any context, including terrorism ratemaking.
ASOP No. 12, adopted by the ASB in October 1989, discusses risk classification. ASOP No. 12 states as follows in pertinent part:
2.8 Risk Classification--The process of grouping risks with similar risk characteristics so that differences in costs may be recognized.

ASOP No. 12 does not define the term "similar risk characteristics" in the context of terrorism ratemaking or otherwise.
The AAA's Committee on Risk Classification has published a booklet entitled Risk Classification Statement of
Principles. The booklet is attached to ASOP No. 12 as an appendix. The Summary of the of the booklet states that "[t]he grouping of risks with similar risk characteristics for the purpose of setting prices is a fundamental precept of any workable private, voluntary insurance system." The booklet does not define "similar risk characteristics."
Section 624.02, Florida Statutes, defines insurance as "a contract whereby one undertakes to indemnify another, or pay or allow a specified amount for a determinable benefit upon determinable contingencies." Record evidence indicates that one element of insurance is a general scheme to distribute the loss among a larger group of person bearing similar risks. However, there is no definition of the term "similar risks" in the statutes, in the existing administrative rules, or in any other publication.
The proposed rule does not provide any guidance as to the meaning of the term "similar risks." Mr. Toothman provided persuasive testimony that the term is not a term of art in the actuarial industry and that its meaning as used in the proposed rule is not clear. According to Mr. Toothman, the term "similar risk" does not have a defined meaning, but rather is left to the judgment of the actuary in terms of what is appropriate for a
particular situation. He provided credible testimony that the meaning of the term "similar risks" in the context of the proposed rule did not have a standard interpretation and could mean different things to different people. Thus, when Respondent's staff reviews a terrorism rate filing, they are free to chose any meaning or connotation of the phrase in deciding whether an insurer may adopt the rates or rate methodology of another entity.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding pursuant to Section 120.56, Florida Statutes.
Regarding the burden of proof in this proceeding, Section 120.56(2)(a), Florida Statutes, states as follows in pertinent part:
. . . The petitioner has the burden of going forward. The agency has the burden to prove by a preponderance of the evidence that the proposed rule is not an invalid exercise of delegated legislative authority as to the objections raised.
Section 120.56(1)(a), Florida Statutes, provides that any person substantially affected by a rule or a proposed rule may seek an administrative determination of the invalidity of the rule on the ground that the rule is an invalid exercise of delegated legislative authority. In order to prove that they
are "substantially affected" in this case, Petitioners must show the following: (a) their interest is arguably within the zone of interest to be protected or regulated by the proposed rule; and (b) the application of the proposed rule will result in a real and sufficiently immediate injury in fact. See Florida Board of Medicine v. Florida Academy of Cosmetic Surgery, Inc., 808 So. 2d 243 (Fla. 1st DCA 2002).
Petitioners have terrorism rate filings pending before Respondent. They also have cases pending before DOAH that involve the denial of their terrorism rate filings. Respondent was motivated to initiate rulemaking, in large part, based on Petitioner's allegations regarding Respondent's non-rule policy in those cases. Petitioners are free to make additional terrorism rate filings for lines of insurance covered by TRIA, which mandates terrorism coverage. For all of these reasons, Petitioners have met both prongs of the test for standing.
Section 120.52(8), Florida Statutes, states as follows in relevant part:
. . . A proposed rule is an invalid exercise of delegated legislative authority if any one of the following applies:
1. The agency has materially failed to follow the applicable rulemaking procedures or requirements set forth in this chapter;
2. The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(3)(a)1.;
3. The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by s. 120.54(3)(a)1.;
4. The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency;
5. The rule is arbitrary or capricious. A rule is arbitrary if it is not supported by logic or the necessary facts; a rule is capricious if it is adopted without thought or reason or is irrational;
* * *

A grant of rulemaking authority is necessary but not sufficient to allow an agency to adopt a rule; a specific law to be implemented is also required. An agency may adopt only rules that implement or interpret the specific powers and duties granted by the enabling statute. No agency shall have authority to adopt a rule only because it is reasonably related to the purpose of the enabling legislation and is not arbitrary and capricious or is within the agency's class of powers and duties, nor shall an agency have the authority to implement statutory provisions setting forth general legislative intent or policy. Statutory language granting rulemaking authority or generally describing the powers and functions of an agency shall be construed to extend no further than implementing or interpreting the specific powers and duties conferred by the same statute.
Section 120.536(1), Florida Statutes, states as follows:
(1) A grant of rulemaking authority is necessary but not sufficient to allow an agency to adopt a rule; a specific law to be implemented is also required. An agency may adopt only rules that implement or interpret
the specific powers and duties granted by the enabling statute. No agency shall have authority to adopt a rule only because it is reasonably related to the purpose of the enabling legislation and is not arbitrary and capricious or is within the agency's class of powers and duties, nor shall an agency have the authority to implement statutory provisions setting forth general legislative intent or policy. Statutory language granting rulemaking authority or generally describing the powers and functions of an agency shall be construed to extend no further than implementing or interpreting the specific powers and duties conferred by the same statute.
In this case, Petitioners challenge the proposed rule based on Sections 120.52(8)(a) through 120.52(8)(e), Florida Statutes. Each of these potential reasons for invaliding the proposed rule is addressed below.
Section 120.52(8)(a), Florida Statutes
Sections 120.536-120.565, Florida Statutes, govern an agency's ability to adopt administrative rules. Section 120.54(3), Florida Statutes, provides as follows in relevant part:
1. Adoption Procedures.--
  1. Notices.--
    1. Prior to the adoption, amendment, or repeal of any rule other than an emergency rule, an agency, upon approval of the agency head, shall give notice of its intended action, setting forth a short, plain explanation of the purpose and effect of the proposed action; the full text of the proposed rule or amendment and a summary thereof; a reference to the specific rulemaking authority pursuant to which the
      rule is adopted; and a reference to the section or subsection of the Florida Statutes or the Laws of Florida being implemented, interpreted, or made specific. (Emphasis Added)
Respondent argues that FSC delegated authority to it to take all preliminary rulemaking steps. In making this argument, Respondent relies on Section 20.05(1)(b), Florida Statutes. However, that statutory provision, pertaining to departments within the executive branch, must be read in pari materia with Section 20.05(1)(e), Florida Statutes, which describes the power to adopt rules. Section 20.05, Florida Statutes, states as follows in pertinent part:
20.05 Heads of departments; powers and duties.--
(1) Each head of a department, except as otherwise provided by law, must:

* * *
Section 624.05, Florida Statutes, provides that, as used in the Florida Insurance Code, "Department" refers to the Department of Financial Services, "Commission" refers to FSC, and "Office" refers to Respondent. The exercise of existing authority to adopt rules as described in Section 20.05(1)(e), Florida Statutes, is limited to the Department of Financial Services and FSC in accordance with Section 624.308(1), Florida Statutes, which states as follows:
(1) The department and the commission may each adopt rules pursuant to ss. 120.536(1) and 120.54 to implement provisions of law conferring duties upon the department or the commission respectively.

No mention is made to rulemaking authority on the part of Respondent.
Section 20.121(3), Florida Statutes, created FSC, with Respondent as a major structural unit. Section 20.121(3), Florida Statutes, states as follows in relevant part:
(3) FINANCIAL SERVICES COMMISSION.-- Effective January 7, 2003, there is created within the Department of Financial Services the Financial Services Commission, composed of the Governor, the Attorney General, the Chief Financial Officer, and the Commissioner of Agriculture, which shall for purposes of this section be referred to as the commission. Commission members shall serve as agency head of the Financial Services Commission. The commission shall be a separate budget entity and shall be exempt from the provisions of s. 20.052.
Commission action shall be by majority vote consisting of at least three affirmative votes. The commission shall not be subject to control, supervision, or direction by the Department of Financial Services in any manner, including purchasing, transactions involving real or personal property, personnel, or budgetary matters.
(a) Structure.--The major structural
unit of the commission is the office. Each office shall be headed by a director. The following offices are established:
1. The Office of Insurance Regulation, which shall be responsible for all activities concerning insurers and other risk bearing entities, including licensing, rates, policy forms, market conduct, claims, issuance of certificates of authority, solvency, viatical settlements, premium financing, and administrative supervision, as provided under the insurance code or chapter 636. The head of the Office of Insurance Regulation is the Director of the Office of Insurance Regulation, who may also be known as the Commissioner of Insurance Regulation.

* * *

(c) Powers.--The commission members shall serve as agency head for purposes of rulemaking under ss. 120.536-120.565 by the commission and all subunits of the commission. Each director is agency head for purposes of final agency action under chapter 120 for all areas within the regulatory authority delegated to the director's office. (Emphasis Added)

The authority for FSC to adopt rules is conferred by Section 20.121(3)(c), Florida Statutes, but Respondent may act only in regulatory matters calling for final agency action aside from the rule adoption process.
In summary, reading Sections 20.05(1)(b), 20.05(1)(e), 20.121(3)(c), 120.54(3), 624.05 and 624.308(1), Florida Statutes, together makes the following clear: (a) FSC and the Department of Financial Services are agency heads for purposes of rulemaking under Sections 120.536(1) and 120.54, Florida Statutes; (b) Respondent's authority under Chapter 120, Florida Statutes, is limited to acting as agency head for purposes of final agency action under Section 120.57, Florida Statutes; and
The above-referenced statutes do not prevent FSC from giving Respondent instructions to assist in the development of a rule, but FSC must review and approve the content of a proposed rule before providing notice of its adoption. Such adoption might require no more than FSC's approval of an agenda item regarding the essential details of an intended rule adoption. FSC cannot give a blanket delegation of authority to Respondent, through an agenda item, to independently develop and give notice of adoption of proposed rules.
The Legislature expressly made a decision to require FSC to consider and approve proposed rules, the present proposed rule included, before a notice of intended agency action is published. It is not placing form over substance to require
FSC, as agency head, to comply with these non-delegable rulemaking procedures. Therefore, the proposed rule is invalid pursuant to Section 120.52(8)(a), Florida Statutes, because it was noticed for adoption without being approved by FSC.
Section 120.52(8)(b), Florida Statutes
The proposed rule cites Section 624.308, Florida Statutes, as its specific authority.
Respondent has no rulemaking authority under the provision cited in the proposed rule. It is well established that an agency has no jurisdiction to proceed beyond that granted to it by statute. See Dep't. of Revenue v. Novoa, 745 So. 2d 378, 380 (Fla. 1st DCA 1999); §§ 120.52(8), 120.536(1), and 120.54(3)(a)1., Fla. Stat.
Under Section 624.308, Florida Statutes, FSC, not the Respondent, has specific legislative authority to engage in rulemaking procedures. For this reason, the process undertaken here exceeds the specific grant of rulemaking authority that is cited in the proposed rule. Accordingly, the proposed rule is invalid pursuant to Section 120.52(8)(b), Florida Statutes.
Assuming, but not concluding, that Respondent followed the applicable rulemaking procedures and had basic authority to engage in rulemaking, further analysis is offered to determine whether the rule is a valid exercise of delegated legislative authority upon the remaining grounds for challenge.
Section 120.52(8)(c), Florida Statutes
The proposed rule cites several statutory provisions as laws implemented. The April 2004 iteration of the proposed rule cites Sections 624.307(1), 624.604, 624.605, 627.062, 627.0645, and 627.0651, Florida Statutes, as laws implemented. The February 2005 iteration adds Section 627.314, Florida Statutes, as an additional law implemented.
Section 624.307(1), Florida Statutes, states as follows:
(1) The department and the office shall enforce the provision of this code and shall execute the duties imposed upon them by this code, within the respective jurisdiction of each as provided by law.
Section 624.604, Florida Statutes, defines property insurance.
Section 624.605, Florida Statutes, defines casualty insurance as including, but not limited to, vehicle insurance, liability insurance, workers' compensation and employer's liability insurance, and burglary and theft insurance.
Section 627.062, Florida Statutes, provides as follows in relevant part:
627.062 Rate Standards.--
1. The rates for all classes of insurance to which the provisions of this part are applicable shall not be excessive, inadequate, or unfairly discriminatory.
2. As to all such classes of insurance:
* * *

(b) Upon receiving a rate filing, the office shall review the rate filing to determine if a rate is excessive, inadequate, or unfairly discriminatory. In making that determination, the office shall, in accordance with generally accepted and reasonable actuarial techniques, consider the following factors:
1. Past and prospective loss experience within and without this state.
2. Past and prospective expenses.
3. The degree of competition among insurers for the risk insured.
4. Investment income reasonably expected by the insurer, consistent with the insurer's investment practices, from investable premiums anticipated in the filing, plus any other expected income from currently invested assets representing the amount expected on unearned premium reserves and loss reserves. . . .
5. The reasonableness of the judgment reflected in the filing.
6. Dividends, savings, or unabsorbed premium deposits allowed or returned to Florida policyholders, members, or subscribers.
7. The adequacy of loss reserves.
8. The cost of reinsurance.
9. Trend factors, including trends in actual losses per insured unit for the insurer making the filing.
10. Conflagration and catastrophe hazards, if applicable.
11. A reasonable margin for underwriting profit and contingencies.
12. The cost of medical services, if applicable.
13. Other relevant factors which impact upon the frequency or severity of claims or upon expenses.
* * *
The provisions of this subsection shall not apply to workers' compensation and employer's liability insurance and to motor vehicle insurance.

* * *
1. After consideration of the rate factors provided in paragraphs (b), (c), and (d), a rate may be found by the office to be excessive, inadequate, or unfairly discriminatory based upon the following standards:
  1. Rates shall be deemed excessive if they are likely to produce a profit from Florida business that is unreasonably high in relation to the risk involved in the class ob business or if expenses are unreasonably high in relation to services rendered.
  2. Rates shall be deemed excessive if, among other things, the rate structure established by a stock insurance company provides for replenishment of surpluses from premiums, when the replenishment is attributable to investment losses.
  3. Rates shall be deemed inadequate if they are clearly insufficient, together with the investment income attributable to them, to sustain projected losses and expenses in the class of business to which they apply.
  4. A rating plan, including discounts, credits, or surcharges, shall be deemed unfairly discriminatory if it fails to clearly and equitably reflect consideration of the policyholder's participation in a risk management program adopted pursuant to s. 627.0625.
  5. a rate shall be seemed inadequate as to the premium charged to a risk or group of risks if discounts or credits area allowed which exceed a reasonable reflection of expense savings and reasonably expected loss experience from the risk or group of risks.
  6. A rate shall be deemed unfairly discriminatory as to a risk or group of
  risks if the application of premium discounts, credits, or surcharges among such risks does not bear a reasonable relationship to the expected loss and expense experience among the various risks.
2. In reviewing a rate filing, the office may require the insurer to provide at the insurer's expense all information necessary to evaluate the condition of the company and the reasonableness of the filing according to the criteria enumerated in this section. (Emphasis Added)
Section 627.0645, Florida Statutes, states as follows in pertinent part:
1. Each rating organization filing rates for, and each insurer writing, any line of property or casualty insurance to which this part applies, except:
  1. Workers' compensation and employer's liability insurance; or
  2. Commercial property and casualty insurance as defined in s. 627.0625(1) other than commercial multiple line and commercial motor vehicle, shall make an annual base rate filing for each such line with the office no later than 12 months after its previous base rate filing, demonstrating that its rates are not inadequate.
    (2)(a) Deviations filed by an insurer to any rating organization's base rate filing are not subject to this section.
    
    * * *
    1. The filing requirements of this section shall be satisfied by one of the following methods:
      1. A rate filing prepared by an actuary which contain documentation demonstrating that the proposed rates are not excessive, inadequate, or unfairly discriminatory pursuant to the applicable rating law and pursuant to rules of the commission.
      2. If no rate change is proposed, a filing which consists of a certification by an actuary that the existing rate level produces rates which are actuarially sound and which are not inadequate, as defined in s. 627.062.
    2. An insurer may satisfy the annual filing requirement of this section by being a member or subscriber of a licensed rating organization which complies with the requirements of this section.
    3. If an insurer does not employ or otherwise retain the services of an actuary, the insurer's rate filing or certification that rates are actuarially sound shall be prepared by insurer personnel or consultants
    . . . .
    
    * * *
    1. Nothing in this section limits the office's authority to review rates at any time or to find that a rate or rate change is excessive, inadequate, or unfairly discriminatory pursuant to s. 627.062.
    2. As used in this section, the term "actuary" means an individual who is a member of the Casualty Actuarial Society.
Section 627.0651, Florida Statutes, sets forth requirements for making and use of rates for motor vehicle insurance. Respondent concedes in its Proposed Final Order that this statute is unnecessary to support the proposed rule.
Section 627.314, Florida Statutes, states as follows in relevant part:
627.314 Concerted action by two or more insurers.--
1. Subject to and in compliance with the provisions of this part authorizing insurers to be members or subscribers of rating or advisory organizations or to
  engage in joint underwriting or joint reinsurance, two or more insures may act in concert with each other and with others with respect to any matters pertaining to:
  1. The making of rates or rating systems except for private passenger automobile insurance rates;
  2. The preparations or making of insurance policy or bond forms, underwriting rules, surveys, inspections, and investigations;
  3. The furnishing of loss or expense statistics or other information and data; or
  4. The carrying on of research.
2. With respect to any matters pertaining to the making of rates or rating systems; the preparation or making of insurance policy of bond forms, underwriting rules, surveys, inspections, and investigations; the furnishing of loss or expense statistics or other information and data; or the carrying on of research, two or more authorized insurers having a common ownership or operating in the state under common management or control are hereby authorized to act in concert between or among themselves the same as if they constituted a single insurer. To the extent that such matters relate to cosurety bonds, two or more authorized insurers executing such bonds are hereby authorized to act in concert between or among themselves the same as if they constituted a single insurer.
(3)(a) Members and subscribers of rating or advisory organizations may use the rates, rating systems, underwriting rules, or policy or bond forms of such organizations, either consistently or intermittently; but, except as provided in subsection 2 and ss. 627.31 and 627.351, they shall not agree with each other or rating organizations or others to adhere thereto.

* * *
(4) Licensed rating organizations and authorized insurers are authorized to exchange information and experience data with rating organization and insurers in this and other states and may consult with them with respect to ratemaking and the application of rating systems.
Petitioner argues that the proposed rule enlarges or contravenes the laws to be implemented because it codifies Respondent's alleged non-rule policy by imposing an unauthorized cap for terrorism rates. However, the proposed rule reflects, and the record describing the adoption process indicates, that Respondent did not develop the rule to establish any previously approved rate as a de facto benchmark for terrorism rates or as a presumptive reasonable rate. Therefore, the proposed rule does not enlarge, modify, or contravene the law to be implemented on the basis of the alleged non-rule policy, placing a cap for terrorism rates.
Additionally, one of the laws implemented by the proposed rule allows insurers and rating/advisory organizations to act in concert with each other and with other insurers and rating/advisory organizations in making rates. Specifically, Section 627.314, Florida Statutes, makes it clear that two insurers, regardless of whether they are members or subscribers
of a rating or advisory organization, may use the rates made or adopted by a rating organization.
Consistent with Section 627.314, Florida Statutes, Section 627.031, Florida Statutes, states that the rating law includes, inter alia, the following purposes: (a) requiring that the services of rating organizations be generally available to all insurers; and (b) authorizing cooperation between insurers in ratemaking and other related matters. For these reasons, the proposed rule does not violate Section 120.52(8)(c), Florida Statutes.
Section 120.52(8)(d), Florida Statutes
Petitioner correctly argues that the proposed rule is vague, fails to establish adequate standards for agency decisions, and vests unbridled discretion in Respondent. The proposed rule contains no standards, criteria, or guidelines by which an insurer may determine that its methodology demonstrates compliance with Section 627.062, Florida Statutes. Certainly, Respondent's position that "any methodology," even "no methodology," would demonstrate compliance with the proposed rule indicates that the proposed rule is vague. This is especially true where neither Respondent nor the actuarial community has reached a consensus of opinion regarding appropriate methodologies for terrorism ratemaking.
Section 627.062(2)(b), Florida Statutes, requires Respondent to evaluate the rate in accordance with "generally accepted and reasonable actuarial techniques." However, there are no generally accepted actuarial techniques for terrorism rates.
The proposed rule does not cite to any actuarial literature, like AAA's March 4, 2003, report. Similarly, the proposed rule does not reference the ASOPs that Respondent considered during rule development. Thus, these documents provide no guidance to insurers in deciding what Respondent might consider to be "reasonable actuarial techniques."
Finally, the proposed rule purports to permit an insurer to adopt the previously approved methodology, data, and/or rates or loss costs of another insurer or rating/advisory organization for "similar risks." In providing this option, the proposed rule contains no guidelines, criteria, or standards as to what Respondent regards as a "similar risk."
Respondent's argument that the term "similar risk," though undefined by statute or administrative rule, is a familiar one within the insurance industry, is unpersuasive. The greater weight of the evidence indicates that the term "similar risk" has many different meanings, depending upon the context in which it is used.
The proposed rule vests unbridled discretion in Respondent's staff as to the methods of ratemaking that will be acceptable to demonstrate compliance with Section 627.062, Florida Statues, and as to the types of risks that will be sufficiently similar to justify the adoption of the previously approved rates of another entity. For these reasons, the proposed rule is invalid pursuant to Section 120.52(8)(d), Florida Statutes.
Section 120.52(8)(e), Florida Statutes
The proposed rule purports to offer an insurer choices in reaching an appropriate terrorism rate: (a) choose a methodology that the insurer believes demonstrates compliance with Section 627.062, Florida Statutes; and (b) adopt the previously approved rate of another insurer or rating/advisory organization for similar risks. Under either choice, Respondent will determine whether the rate meets the requirements of Section 627.062, Florida Statutes.
Regarding an insurer's first option, there are no generally accepted actuarial techniques for estimating risk and making terrorism rates, and the rule provides no guidance as to the actuarial techniques that Respondent will consider as reasonable. The second option requires an insurer to risk its capital by adopting the previously approved rates of other entities or organizations, even though the insurer has no means
to assess their similarity of risks or their adequacy, either in general or as applied to a particular insurer.
Respondent and insurers face a difficult task in making sure that terrorism rates in Florida comply with TRIA and Section 627.062, Florida Statutes. The Florida Statutes are silent with regard to the unique circumstances involved in making terrorism rates.
Considering the record as a whole, the proposed rule is arbitrary and capricious; it is not supported by logic and is irrational. The proposed rule is therefore invalid under Section 120.52(8)(e), Florida Statutes.
Workers' Compensation
During the hearing, the parties raised the issue of whether the proposed rule applies to workers' compensation and employer's liability insurance (workers' comp). Petitioners argued the question in the affirmative. Respondent asserted the negative. The parties were directed to address this issue in their Proposed Final Orders instead of requiring Petitioners to amend their Second Amended Petition to allege that the proposed rule was arbitrary and capricious if it does not apply to workers' comp.
The threshold issue is whether the proposed rule applies to workers' comp. In making that determination, one must examine the following statutes cited in the proposed rule
as "law implemented": (a) Section 624.307(1), Florida Statutes, which sets forth Respondent's general powers and duties; (b) Section 624.604, Florida Statutes, which defines property insurance and does not apply to workers' comp; (c) Section 624.605, Florida Statutes, which includes workers' comp within the definition of casualty insurance; (d) Section 627.062(1), Florida Statutes, which prohibits excessive, inadequate, or unfairly discriminatory rates and which both parties agree applies to workers' comp; (e) Section 627.062(2), Florida Statutes, which specifically excludes workers' comp in its discussion of rate standards; (f) Section 627.0645, Florida Statutes, which specifically excludes workers' comp in its discussion of annual filings; (g) Section 627.0651, Florida Statutes, which relates only to the making and use of rates for motor vehicles; and (h) Section 627.314, Florida Statutes, which discusses concerted action by two or more insurers, specifically excluding workers' comp.
One must also consider the following relevant statutes, which relate to workers' comp but which the proposed rule does not cite as law implemented: (a) Section 627.072, Florida Statutes, regarding the making and use of workers' comp rates; (b) Section 627.091, Florida Statutes, pertaining specifically to workers' comp rate filings; (c) Section 627.151, Florida Statutes, requiring Respondent to consider the
applicable standards and factors in Sections 627.062 and 627.072, Florida Statutes, in reviewing workers' comp filings; and (d) Section 627.211, Florida Statutes, mandating that members or subscribers to a workers' comp rating organization adhere to the filings made their behalf by such organization unless the workers' comp insurer makes a deviation filing.
Reading the above-referenced statutes together leaves no doubt that the proposed rule does not apply to workers' comp. Additionally, the proposed rule is located in Chapter 69Q-170, Florida Administrative Code. Florida Administrative Code Rule 69Q-170.002 sets forth the scope of the rule chapter, stating as follows:
The rules in this part apply to rates filed or reviewed pursuant to Section 627.062, F.S. These rules shall not apply to workers' compensation and employer's liability insurance, or to motor vehicle insurance as defined in Section 627.041(8), F.S.

On the other hand, Florida Administrative Code Chapter 69O-189 applies specifically to workers' comp.
Having decided that the proposed rule does not apply to workers' comp, the next issue is whether the proposed rule is invalid under Section 120.52(8)(e), Florida Statutes, because it fails to include workers' comp. In making that decision, it is clear from the statutes and administrative rules that insurers
have sufficient notice that the proposed rule does not apply to workers' comp.
It is true that workers' comp is a major line of insurance that is required to comply with TRIA. It is also true that the proposed rule purports to provide guidance in as to the review and approval of terrorism rate. However, there is no requirement for the proposed rule to encompass workers' comp, the rates of which are controlled by separate ratemaking and rate filing processes in the statutes and administrative rules than the property and casualty insurance terrorism rates at issue here. Therefore, the proposed rule is not invalid because it fails to include workers' comp.
Section 120.595(2), Florida Statutes
Regarding Petitioners' request for attorneys' fees pursuant to Section 120.595(2), Florida Statutes, that statute provides as follows:
(2) If the court or administrative law judge declares a rule or portion of a rule invalid pursuant to s. 129.56(2), a judgment or order shall be rendered against the agency for reasonable costs and reasonable attorney's fees, unless the agency demonstrates that its actions were substantially justified or special circumstances exist which would make the award unjust. An agency's actions are "substantially justified" if there was a reasonable basis in law and fact at the time the actions were taken by the agency. If the agency prevails in the proceedings, the court or administrative law judge shall
award reasonable costs and reasonable attorney's fees against a party if the court or administrative law judge determines that a party participated in the proceedings for an improper purpose as defined by paragraph (1)(e). No award of attorney's fees as provided by this subsection shall exceed
$15,000.
The difficulty in drafting a rule that complies with the requirements of TRIA and Section 120.062, Florida Statutes, creates special circumstances that make an award of attorneys' fees in this case unjust. Accordingly, Petitioners are not entitled to attorneys' fees.

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is

ORDERED:

Proposed Rule 69O-170.013(7), Florida Administrative Code, is an invalid exercise of delegated legislative authority.

DONE AND ORDERED this 11th day of May, 2005, in Tallahassee, Leon County, Florida.

SUZANNE F. HOOD

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 11th day of May, 2005.

COPIES FURNISHED:

Daniel C. Brown, Esquire Kelly A. Cruz-Brown, Esquire Robert W. Pass, Esquire Carlton Fields, P.A.

Post Office Box 190 Tallahassee, Florida 32302-0190

S. Marc Herskovitz, Esquire Elenita Gomez, Esquire

Jim L. Bennett, Esquire Department of Financial Services 612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-4206

Honorable Tom Gallagher Chief Financial Officer

Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

Carlos G. Muniz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original notice of appeal with the Clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.

Docket for Case No: 04-001540RP

Issue Date	Proceedings
May 15, 2006	Corrected Mandate filed.
May 11, 2006	Mandate filed.
Apr. 25, 2006	Opinion filed.
Aug. 30, 2005	Index, Record, and Certificate of Record sent to the District Court of Appeal.
Aug. 15, 2005	Amended Index (of the Record) sent to the parties of record.
Aug. 12, 2005	Joint Stipulation and Motion for Inclusion of Petitioners` Hearing Exhibits in Record on Appeal filed.
Jul. 18, 2005	Directions to the Clerk filed.
Jul. 07, 2005	Statement of Service Preparation of Record filed.
Jul. 07, 2005	Index (of the Record) sent to the parties of record.
May 17, 2005	Letter to Ann Cole from Jon Wheeler, acknowledging receipt of Notice of Appeal, DCA Case No. 1D05-2273.
May 13, 2005	Certified Copy of Notice of Administrative Appeal sent to the District Court.
May 12, 2005	Notice of Administrative Appeal filed.
May 11, 2005	Final Order (hearing held , 2006). CASE CLOSED.
May 11, 2005	Final Order (hearing held March 2-3, 2005). CASE CLOSED.
Apr. 13, 2005	Letter to Judge Hood from K. Cruz-Brown enclosing disk copy of Petitioners` Proposed Final Order filed.
Apr. 12, 2005	Order (Respondent`s Motion Requesting Reconsideration to Admit Pages 30-32 and 33-34 into Evidence denied).
Apr. 11, 2005	Respondent`s Motion Requesting Reconsideration to Admit Pages 30-32 and 33-34 into Evidence filed.
Apr. 08, 2005	Petitioner`s Proposed Final Order filed.
Apr. 08, 2005	Petitioners` Notice of Filing Proposed Final Order filed.
Apr. 08, 2005	Respondent`s Proposed Final Order filed.
Apr. 06, 2005	Order on the Admissibility of Respondent`s Exhibit No. 5.
Apr. 04, 2005	Transcript (Volumes I-III) filed.
Apr. 04, 2005	Notice of Filing Transcripts filed.
Mar. 16, 2005	Notice of Filing Certification Letter Regarding Respondent`s Exhibit No. 5 (filed by E. Gomez).
Mar. 16, 2005	Petitioners` Response and Objection to Respondents Notice of Authority for Respondents Exhibit No 5 filed.
Mar. 11, 2005	Notice of Authority for Respondent Exhibit No. 5 filed.
Mar. 04, 2005	Notice of Filing Corrections to Deposition of Frank Dino filed.
Mar. 04, 2005	Notice of Filing Corrections to Deposition of Steven Parton filed.
Mar. 03, 2005	Deposition filed.
Mar. 03, 2005	Notice of Filing Deposition (J. Warford) filed.
Mar. 02, 2005	CASE STATUS: Hearing Held.
Mar. 01, 2005	Notice of Filing Deposition (J. Swisher) filed.
Mar. 01, 2005	Deposition filed.
Mar. 01, 2005	Transcript (February 23, 2005, Telephonic Hearing) filed.
Mar. 01, 2005	Notice of Filing Transcripts of Proceedings (filed by Respondent).
Mar. 01, 2005	Respondent`s Unilateral Pre-hearing Stipulation filed.
Mar. 01, 2005	Notice of Correction.
Mar. 01, 2005	Deposition (3) filed.
Mar. 01, 2005	Notice of Filing Deposition (3) filed.
Mar. 01, 2005	Petitioner`s Memorandum of Law Regarding Failure to Follow Applicable Rulemaking Procedures.
Mar. 01, 2005	Petitioners` Corrected Unilateral Prehearing Statement.
Feb. 28, 2005	Petitioners` Unilateral Prehearing Statement.
Feb. 28, 2005	Deposition filed.
Feb. 28, 2005	Petitioners` Notice of Filing Deposition filed.
Feb. 28, 2005	Petitioners` Motion to Disqualify Counsel filed.
Feb. 23, 2005	Notice of Serving Petitioners` Supplemental Answers to Interrogatory No. 2C of Respondent`s First Interrogatories.
Feb. 23, 2005	Order (Petitioners` objections to paragraph A of the amended notice, paragraph B of the amended notice are sustained).
Feb. 22, 2005	Amended Notice of Taking Deposition Duces Tecum filed.
Feb. 21, 2005	Respondent`s Supplemental Response to Petitioners` Motion to Quash Respondent`s Notice of Taking Deposition Duces Tecum, Protective Order, and for Expedited Telephonic Hearing filed.
Feb. 21, 2005	Order (Respondent shall make its designees available for deposition at a time and place convenient for the parties, Petitioner`s request for sanctions asociated with prosecuting the motion is denied).
Feb. 21, 2005	Respondent`s Response to Petitioners` Motion to Quash Respondent`s Notice of Taking Deposition Duces Tecum, Protective Order, and for Expedited Telephonic Hearing filed.
Feb. 21, 2005	Petitioners Supplmental Emergency Motion to Quash Respondents Notice of Taking Deposition Duces Tecum Protective Order and for an Expedited Telephonic Hearing
Feb. 21, 2005	Petitioners Objections to Respondents Amended Notice of Taking Deposition Duces Tecum
Feb. 18, 2005	Amended Notice of Taking Deposition Duces Tecum.
Feb. 18, 2005	Notice of Canceling Deposition Duces Tecum.
Feb. 17, 2005	Respondent`s Response to Motion to Compel Respondent to Designate a Knowledgeable Designee Under Rule 1.310(b)(6) and for Associated Sanctions filed.
Feb. 17, 2005	Second Amended Petition to Determine the Invalidity of Proposed Rule 690-170.013(7) Florida Administrative Code.
Feb. 17, 2005	Order (Motion to Amend First Amended Petition to Determine the Invalidity of Propossed Rule 690-170.013, Florida Administrative Code granted).
Feb. 16, 2005	Petitioners` Emergency Motion to Quash Respondent`s Notice of Taking Deposition Duces Tecum, Protective Order, and for an Expedited Telephonic Hearing.
Feb. 16, 2005	Notice of Taking Deposition Duces Tecum (R. Lee).
Feb. 16, 2005	Notice of Taking Deposition Duces Tecum (L. Steinert).
Feb. 16, 2005	Order (the undersigned shall maintain the subject documents under seal until a final order is issued, the undersigned will return the documents to Respondent after an appeal of the final order).
Feb. 16, 2005	Petitioners` Motion to Compel Respondent to Designate a Knowledgeable Designee under Rule 1.310 (b)(6) and for Associated Sanctions filed.
Feb. 16, 2005	Respondent`s Notice of Production of Documents in Response to Petitioners` First, Second, Third and Fourth Requests for Production of Documents filed.
Feb. 16, 2005	Respondent`s Notice of Compliance with Order of February 10, 2005 filed.
Feb. 16, 2005	Respondent`s Notice of Filing Documents Under Seal for in Camera Inspection filed.
Feb. 16, 2005	Petitioners` Motion to Compel Respondent to Designate a Knowledgeable Designee under Rule 1.310(b)(6) and for Associated Sanctions filed.
Feb. 15, 2005	Respondent`s Notice of Filing Documents Under Seal for in Camera Inspection filed.
Feb. 15, 2005	Amended Notice of Deposition Duces Tecum (J. Swisher).
Feb. 15, 2005	Amended Notice of Deposition Duces Tecum (J. Watford).
Feb. 14, 2005	Respondent`s Amended Answers to Petitioners` First Interrogatories filed.
Feb. 14, 2005	Notice of Filing Respondent`s Amended Answers to Petitioners` First Interrogatories filed.
Feb. 10, 2005	Notice of Appearance as Additional Counsel (filed by S. Herskovitz, Esquire).
Feb. 10, 2005	Order (undersigned reserves ruling on Petitioners` Motion to Compel Answers to Petitioners` First and Second Request for Production of Documents as it relates to documents that may be protected as work product or by the attorney-client privilege).
Feb. 10, 2005	Order (on or before February 15, 2005, Respondent shall file, under seal for an in camera inspection, documents identified in the Privelege Log by Nos. 1, 14, 21-24, and 26; documents identified in the log are protected by the work product doctrine and/or the attorney-client privelege, and therefore, are not discoverable).
Feb. 10, 2005	Respondent`s Response to Petitioners` Motion to Compel Answers to Petitioners First and Second Request for Production of Documents filed.
Feb. 10, 2005	Respondent`s Notice of Service of Answers to Petitioners` First Interrogatories filed.
Feb. 09, 2005	Petitioners` Motion to Require In Camera Inspection of Documents Contained in Respondent`s Privilege Log filed.
Feb. 09, 2005	Respondent`s Second Response to Petitioners` First Request for Admissions to Respondent filed.
Feb. 09, 2005	Corrected Amended Notice of Deposition Duces Tecum.
Feb. 08, 2005	Respondent`s Notice of Filing Privelege Log filed.
Feb. 08, 2005	Petitioners` Fourth Request for Production of Documents to Respondent.
Feb. 08, 2005	Amended Notice of Deposition Duces Tecum.
Feb. 08, 2005	Petitioners` Motion to Amend First Amended Petition to Determine the Invalidity of Proposed Rule 690-170.013 (7) Florida Administrative Code.
Feb. 08, 2005	Stipulation filed.
Feb. 04, 2005	Petitioners` Motion to Compel Answers to Petitioners` First and Second Request for Production of Documents filed.
Feb. 04, 2005	Order (ruling on Motion in Limine will be made at hearing after the record is sufficiently developed for the undersigned to determine the relevance of Mr. Ramanujam`s testimony).
Feb. 03, 2005	Order. (Petitioners` Motion to Overrule Respondent`s Objections and Compel Respondent to Answer Petitioners` First Set of Interrogatories is granted in part)
Feb. 03, 2005	Order. (Joint Request for Emergency Hearing and Oral Argument on Pending Discovery Motion is denied)
Feb. 03, 2005	Respondent`s Notice of Filing Change to Proposed Rule 690-170.013, Florida Administrative Code filed.
Feb. 03, 2005	Respondent`s Response to Petitioners` Motion in Limine for Order Allowing the Introduction of Deposition Testimony of Sri Ramanujam filed.
Feb. 02, 2005	Petitioners` Response Opposing Respondent`s Motion for Protective Order Regarding Petitioners` First Set of Interrogatories filed.
Feb. 02, 2005	Petitioner`s Response Opposing Respondent`s Motion for Protective Order regarding Petitioners` First Set of Admissions filed.
Feb. 02, 2005	Respondent`s Response to Petitioners` Third Request for Production of Documents filed.
Feb. 02, 2005	Parties Joint Request for Emergency Hearing and Oral Argument on Pending Discovery Motions (via efiling by Daniel Brown).
Feb. 02, 2005	Order (Petitioner`s Motion to Compel is Granted, Respondent`s Motion for Protective Order is Denied and Requests for costs and Attorney`s fees is denied).
Feb. 01, 2005	Notice of Filing Exhibts to Respondent`s Emergency Motion to Quash Subpoenas and Request for Oral Argument filed.
Feb. 01, 2005	Notice of Unavailability of James Watford filed.
Feb. 01, 2005	Correction to Respondent`s Response to Petitioners` Motion to Overrule Respondent`s Objections and Compel Respondent to Answer Petitioners` First Set of Interrogatories and Motion for Protective Order filed.
Feb. 01, 2005	Respondent`s Response to Petitioners` Motion to Compel Respondent to Admit or Deny Petitioners` First Request for Admissions and Respondent`s Motion for Protective Order and Request for Oral Argument filed.
Jan. 31, 2005	Notice of Correction as to Paragraph 21 of Petitioners` Motion to Overrule Respondent`s Objections and Compel Respondent to Answer Petitioners` First Set of Interrogatories filed.
Jan. 31, 2005	Notice of Correction as to Paragraph 3 of Petitioner`s Motion to Overrule Respondent`s Objections and Compel Respondent to Admit or Deny Petitioners` First Request for Admissions filed.
Jan. 31, 2005	Respondent`s Response to Petitioner`s Motion to Overrule Respondent`s Objections and Compel Respondent to Answer Petitioners` First Set of Interrogatories and Motion for Protective Order filed.
Jan. 31, 2005	Respondent`s Emergency Motion to Quash Subpoenas and Request for Oral Argument filed.
Jan. 31, 2005	Respondent`s Response to Petitioners` Second Request for Production of Documents filed.
Jan. 31, 2005	Respondent`s Response to Petitioners` First Request for Production of Documents filed.
Jan. 28, 2005	Petitioners` Motion in Limine for Order Allowing the Introduction in Evidence in this Case of Deposition Testimony by Mr. Sri Ramanujam Given in Division of Administrative Hearings Case No. 03-4477 filed.
Jan. 28, 2005	Petitioners` Third Request for Production of Documents (via efiling by Daniel Brown).
Jan. 28, 2005	Notice of Unavailability of Sri Ramanujam (filed by Respondent).
Jan. 27, 2005	Notice of Deposition - Shirley Kerns (via efiling by Daniel Brown).
Jan. 26, 2005	Petitioners Motion to Overrule Respondents Objections and Compel Respondent to Answer Petitioners First Set of Interrogatories (via efiling by Daniel Brown).
Jan. 26, 2005	Corrected Notice of Deposition Duces Tecum (via efiling by Daniel Brown).
Jan. 25, 2005	Petitioners` Motion to Compel Respondent to Admit or Deny Petitioners` First Request for Admissions filed.
Jan. 25, 2005	Notice of Deposition Duces Tecum (4) filed.
Jan. 25, 2005	Notice of Deposition (5) filed.
Jan. 25, 2005	Petitioners` Second Request for Production of Documents (via efiling by Daniel Brown).
Jan. 24, 2005	Notice of Serving Petitioenrs` Supplemental Answers to Interrogatories 1 and 2 of Respondent`s First Interrogatories filed.
Jan. 24, 2005	Petitioners` Supplemental Answers to Interrogatories 1 and 2 of Respondent`s First Interrogatories filed.
Jan. 24, 2005	Notice of Serving Petitioners` Supplemental Answers to Interrogatories 1 and 2 of Respondent`s First Interrogatories (via efiling by Daniel Brown).
Jan. 24, 2005	Respondent`s Answers to Petitioners` First Interrogatories filed.
Jan. 24, 2005	Respondent`s Response to Petitioners` First Request for Admissions to Respondent filed.
Jan. 12, 2005	Order (motion to compel granted in part and denied in part).
Jan. 12, 2005	Order (request for in-person hearing and oral argument denied).
Jan. 12, 2005	Order (Petitioners` first request for official recognition granted).
Jan. 12, 2005	Order (motion to compel denied; motion to enlarge response time filed on December 28, 2004, granted).
Jan. 12, 2005	Order (motion to compel denied; motion to enlarge response time filed on December 30, 2004, granted).
Jan. 07, 2005	Order (Petitioners` Motion to Enlarge the Number of Requests for Admissions is granted).
Jan. 06, 2005	Notice of Substitution of Counsel filed.
Jan. 05, 2005	Respondent`s Response to Petitioners` Motion to Compel Answers to Petitioners` First Request for Production of Documents and Motion to Enlarge Time within which to Respond to Petitioners` First Request for Production of Documents or in the Alternative, Motion for Protective Order filed.
Jan. 04, 2005	Petitioners` Request for In-person Hearing and Oral Argument on Petitioners` Motion to Compel Responses to Petitioners` First Document Production Request, Petitioners` First Interrogatories, and on Petitioners` Motion to Enlarge the Number of Requests for Admissions filed.
Jan. 03, 2005	Petitioners` Response to Respondent`s Motion to Compel Responses to Respondent`s First Request for Interrogatories filed.
Jan. 03, 2005	Petitioners` First Request for Official Recognition filed.
Dec. 30, 2004	Respondent`s Response to Petitioners` Motion to Compel Answers to Petitioners` First Interrogatories and Alternative Motion to Enlarge the Number of Interrogatories filed.
Dec. 30, 2004	Respondent`s Response to Petitioners` Motion to Enlarge the Number of Requests for Admissions, or Overrule Respondent`s Objection to Petitioners` First Request for Admissions and to Require Respondent to Promptly Answer Petitioners` First etc. filed.
Dec. 30, 2004	Motion to Compel Responses to Respondent`s First Request for Interrogatories filed.
Dec. 30, 2004	Petitioners` Motion to Compel Answers to Petitioners` First Request for Production of Documents filed.
Dec. 29, 2004	Respondent`s Objections to Discovery filed.
Dec. 29, 2004	Petitioners` Motion to Enlarge the Number of Requests for Admissions, to Overrule Respondent`s Objections to Petitioners` First Request for Admissions and to Require Respondent to Promptly Answer Petitioners` First Request for Admissions filed.
Dec. 29, 2004	Respondent`s Amended Notice of Service of First Set of Interrogatories to Petitioner filed.
Dec. 28, 2004	Petitioners` Motion to Compel Answers to Petitioners` First Interrogatories and Alternative Motion to Enlarge the Number of Interrogatories filed.
Dec. 27, 2004	Respondent`s Notice of Service of Objections to Petitioners` First Request for Admissions to Respondent, Petitioners` First Request for Production of Documents to Respondent, and Petitioners` First Interrogatories to Respondent filed.
Dec. 27, 2004	Notice of Service of Petitioners` Responses to Respondent`s First Interrogatories filed.
Dec. 23, 2004	Respondent`s Notice of Service of First Set of Interrogatories to Petitioner filed.
Dec. 22, 2004	First Amended Petition to Determine the Invalidity of Proposed Rule 69O-170.013(7), Florida Administrative Code filed.
Dec. 21, 2004	Petitioners` First Request for Admissions to Respondent filed.
Dec. 21, 2004	Exhibits to Petitioners` First Request for Admissions to Respondent filed.
Dec. 21, 2004	Notice of Service of Petitiones` First Interrogatories to Respondent filed.
Dec. 21, 2004	Petitioners` First Request for Production of Documents to Respondent filed.
Dec. 20, 2004	Order (Motion to Consolidate denied; Motion to Amend Petition to Determine the Invalidity of Proposed Rule 690-170.013(7) is granted; Petitioner`s request in a footnote for official recognition is denied).
Dec. 16, 2004	Respondent`s Response Opposing Petitioners` Motion to Consolidate this Case with Division Case No. 03-4486RU filed.
Dec. 16, 2004	Response to Petitioner`s Motion to Amend Petition to Determine the Invalidity of Proposed Rule 69O-170.013(7), Florida Administrative Code filed.
Dec. 09, 2004	Petitioners` Motion to Amend Petition to Determine the Invalidity of Proposed Rule 690-170.013(7), Florida Administrative Code filed.
Dec. 09, 2004	Petitioner`s Motion to Consolidate this Case with Division Case No. 03-4486RU filed.
Dec. 07, 2004	Order of Pre-hearing Instructions.
Dec. 07, 2004	Order of Pre-hearing Instructions.
Dec. 07, 2004	Notice of Hearing (hearing set for March 2 and 3, 2005; 10:00 a.m.; Tallahassee, FL).
Dec. 06, 2004	Joint Written Response to Division Order filed.
Dec. 01, 2004	Order (Petitioners` Motion and Amended Motion for Omnibus Case Management Conference is denied).
Nov. 22, 2004	Letter to Judge Cohen from D. Brown in response to statements made in a letter from Ms. Gomez of November 17, 2004 filed.
Nov. 22, 2004	Petitioners` Reply to Respondent`s Response Petitioners` Status Report and Motion for Omnibus Case Management and Response to Petitioners` Motion for Attorneys` Fees (filed via facsimile).
Nov. 17, 2004	Respondent`s Response to Petitioners` Status Report and Motion for Omnibus Case Management Conference and Motion for Attorneys` Fees and Costs filed.
Nov. 17, 2004	Letter to Judge Cohen from Respondent in response to Petitioners` Status Report and Motion for Omnibus Case Management Conference filed.
Nov. 16, 2004	Petitioners` Amended Status Report and Motion for Omnibus Case Management Conference filed.
Nov. 16, 2004	Certificate of Service of Petitioners` Status Report and Motion for Omnibus Case Management Conference filed.
Nov. 16, 2004	Letter to Judge Cohen from R. Pass regarding a request to set an Omnibus case management conference filed.
Nov. 16, 2004	Petitioners` Status Report and Motion for Omnibus Case Management Conference filed.
Nov. 16, 2004	Status Report (filed by Respondent via facsimile).
Oct. 25, 2004	Order Continuing Case in Abeyance (parties to advise status by November 15, 2004).
Oct. 22, 2004	Status Report and Joint Motion to Extend Stay (filed via facsimile).
Oct. 11, 2004	Order Continuing Case in Abeyance (parties to advise status by October 22, 2004).
Oct. 08, 2004	Status Report and Joint Motion to Extend Stay (via efiling by Daniel Brown).
Oct. 04, 2004	Order Continuing Case in Abeyance (parties to advise status by October 8, 2004).
Sep. 30, 2004	Joint Motion for Extension of Time (via efiling by Daniel Brown).
Aug. 26, 2004	Order Continuing Case in Abeyance (parties to advise status by September 30, 2004).
Aug. 24, 2004	Joint Motion for Extension of Time (efiling by Daniel Brown).
Jun. 25, 2004	Order Continuing Case in Abeyance (parties to advise status by August 24, 2004).
Jun. 24, 2004	(Joint) Status Report (via efiling by Daniel Brown).
May 06, 2004	Order Granting Continuance and Placing Case in Abeyance (parties to advise status by July 6, 2004).
May 03, 2004	Joint Motion to Stay filed.
Apr. 30, 2004	Order of Pre-hearing Instructions.
Apr. 30, 2004	Notice of Hearing (hearing set for May 25, 2004; 10:00 a.m.; Tallahassee, FL).
Apr. 27, 2004	Order of Assignment.
Apr. 27, 2004	Rule Challenge transmittal letter to Liz Cloud from Ann Cole copying Scott Boyd and the Agency General Counsel.
Apr. 22, 2004	Petition to Determine the Invalidity of Proposed Rule 690-170.013(7), Florida Administrative Code filed.

Orders for Case No: 04-001540RP

Issue Date	Document	Summary
May 12, 2006	Mandate
Apr. 24, 2006	Opinion
Apr. 24, 2006	Mandate
Oct. 31, 2005	Agency Final Order
May 11, 2005	DOAH Final Order	Proposed Rule 690-17O.013(7), Florida Administrative Code, is invalid pursuant to Sections 120.52(8)(a), 120.52(8)(b), 120.52(8)(d), and 120.52(8)(e), Florida Statutes.

Source: Florida - Division of Administrative Hearings

AIU INSURANCE COMPANY, AMERICAN HOME ASSURANCE COMPANY, AMERICAN INTERNATIONAL SOUTH INSURANCE COMPANY, ET AL. vs DEPARTMENT OF FINANCIAL SERVICES, OFFICE OF INSURANCE REGULATION, 04-001540RP (2004)

Docket for Case No: 04-001540RP

Orders for Case No: 04-001540RP

Jeff Goodman

Kelly A Cruz-Brown

Robert Wayne Pass

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AIU INSURANCE COMPANY, AMERICAN HOME ASSURANCE COMPANY, AMERICAN INTERNATIONAL SOUTH INSURANCE COMPANY, ET AL. vs DEPARTMENT OF FINANCIAL SERVICES, OFFICE OF INSURANCE REGULATION, 04-001540RP (2004)

Docket for Case No: 04-001540RP

Orders for Case No: 04-001540RP

Lawyers who claimed

Jeff Goodman

Kelly A Cruz-Brown

Robert Wayne Pass

Counsels

Cites

USC (1)

Florida Laws (30)

Authorities (2)

Cited By (2)

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