The Issue Whether State Farm Fire and Casualty Company and State Farm General Insurance Company ("State Farm") made a material misrepresentation or material error in connection with the rate filing that is the subject of this proceeding. For the purpose of this proceeding, a misrepresentation or error would be material if it resulted in the Department approving "ex-wind" (meaning without windstorm coverage) homeowners insurance rates that are excessive for policyholders whose wind coverage is being non-renewed in Dade, Broward and Pinellas Counties.
Findings Of Fact The parties in this proceeding have stipulated to the following findings of fact. Based upon a review of the record in this case, these stipulated facts appear to be accurate and are adopted. In December 1995, State Farm submitted a homeowners insurance rate filing effective April 1, 1996, for new business, and May 1, 1996, for renewal business. With regard to the December 1995, homeowners rate filing, the Department of Insurance approved a 13.8 percent statewide rate increase on February 12, 1996. On February 18, 1996, State Farm formally announced that it would non- renew over three years the wind coverage for 62,000 policies in Dade, Broward, and Pinellas Counties in Florida Windstorm Underwriting Association eligible areas. On February 22, 1996, the Department issued a Notice of Withdrawal of Rate Approval ("Notice") to State Farm with regard to homeowner rates approved for Dade, Broward and Pinellas Counties. Subsequent to the issuance of the Notice, the Department requested that State Farm submit to the Department actuarial information giving further consideration to the proposed non-renewal of wind coverage to policyholders in Dade, Broward and Pinellas Counties. The evidence adduced in this matter consisted of an affidavit of Douglas S. Haseltine, a Department actuary, on behalf of the Department, and of pre-filed testimony of Mark Brannon, a State Farm actuary, and of the rate filing that is the subject of this litigation and of certain actuarial information that had been provided by State Farm to the Department pursuant to the request described in paragraph 5 above. The record in this matter otherwise includes the Request For Formal Proceedings filed in this matter by State Farm, with attachments, which include the Notice, and the stipulation filed by the parties on May 31, 1996. The Haseltine affidavit provides in pertinent part that: "For policyholder whose wind coverage is non-renewed, their remaining premium for coverage ex-wind is not excessive." The Brannon testimony and the attachments to it establish the methodology by which State Farm establishes rates for policyholders in different territories throughout Florida for homeowners insurance, including both homeowners insurance policies that included wind coverage and policies that excluded wind coverage (hereinafter "ex-wind policies"). The Brannon testimony also provided that the rate filing did not reflect the distributional changes that would result from the non-renewal plan that was subsequently announced on February 20, 1996. Mr. Brannon further testified that, in his expert opinion, the failure to point out this non-renewal program did not constitute a material error or material misrepresentation because when the filing was made the decision to initiate these non-renewals had not been made, and because: Even if the non-renewal program had been announced prior to December 15, 1995, it would not have changed the rate request. State Farm's original rate request was a 24 percent increase. The approved rate request included a 40 percent wind or hail exclusion discount. This discount applied to the FWUA eligible areas of Dade, Broward and Pinellas Counties. The amount of this discount was not changed by the non-renewal program. Thus, the non-renewal program would not have had a material effect on the filing, even if I had known of the program at the time the filing was made. Mr. Brannon further testified that the rates proposed in the filing are not excessive or unfairly discriminatory, stating: Q: Are the rates you have proposed in this filing excessive or unfairly discriminatory? A: It is my expert opinion that the proposed rates are reasonable and are not excessive or unfairly discriminatory. Specifically, the proposed rates for both those policies which exclude windstorm or hail coverage, and the rates for those policies which include wind- storm or hail coverage, meet the statutory requirements and are not excessive or unfairly discriminatory. It appears that there is no misrepresentation or error in the rate filing itself, because the decision that the Department contends should have been disclosed had, as a matter of fact, not yet been made at the time of the filing. Moreover, if State Farm had an obligation to disclose this decision to the Department prior to the Department's approval of the rate filing, any misrepresentation or error flowing from the failure to disclose would not be material to the filing because the data subsequently provided to the Department and other evidence in this matter show that: Policyholders whose wind coverage will be non-renewed will receive a discount that is actuarially sound and commensurate with the reduction in coverage: and hence, Policyholders whose coverage will be renewed "ex-wind" will not be charged rates that are excessive.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered: (1) finding that there was not a material misrepresentation or material error made by the insurer or contained in the rate filing; and (2) dismissing the Notice. DONE and ENTERED this 18th day of June, 1996, in Tallahassee, Florida. JAMES W. YORK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of June, 1996. COPIES FURNISHED: Vincent J. Rio, III, Esquire TAYLOR, DAY & RIO Suite 206 311 South Calhoun Street Tallahassee, Florida 32301-1807 Daniel Y. Sumner, Esquire General Counsel Department of Insurance The Larson Building 200 East Gaines Street Tallahassee, Florida 32399-1300 Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue The issue in this case is whether Petitioners' rate filing numbered FCP 07-08928 should be approved.
Findings Of Fact FFB Casualty and FFB General are both stock insurance companies which are domiciled in Florida. FFB General is a wholly-owned subsidiary of FFB Casualty, which in turn is a wholly-owned subsidiary of Southern Farm Bureau Casualty Insurance Company of Jackson, Mississippi (SFB Casualty). FFB is headquartered in Gainesville, Florida, and its insurance products are sold exclusively in Florida. FFB only insures members of the Florida Farm Bureau Federation, a non-profit organization. On June 8, 2006, FFB made a rate filing for their homeowners' line of business seeking a significant rate increase with an effective date of December 1, 2006, in OIR file number 06-07515. Due to the size of the requested rate increase a public hearing was held on August 16, 2006, in Gainesville, Florida, in accordance with the requirement of Section 627.0629, Florida Statutes (2006), which provides that "[a]ny rate filing that is based in whole or in part on data from a computer model may not exceed 15 percent unless there is a public hearing." § 627.0629(7), Fla. Stat. (2006). At the public hearing, Burt Gindy, FFB's vice president of Government Affairs and Compliance, commenced the presentation of FFB by stating: "Okay, then, simply put, this filing is all about catastrophe reinsurance cost." Later in the public hearing, Mr. Gindy stated: "The homeowners' rate filings before you, FCP 06-07515, seeks to recognize the increase in profit catastrophe reinsurance costs that have escalated due to increasing hurricane activity." Mr. Gindy talked about the typical amount of reinsurance sought by FFB, stating: "We typically insure to a 250 year event, this year we've only been able to insure capacity and cost wise to about 160 year capacity. We know AM Best looks at that and we want to keep our AM Best ratings." Insurers, including FFB, generally measure and evaluate their potential losses from hurricanes and other extreme events in terms of probable maximum loss (PML), an estimate of the dollar amount of losses that an insurer will experience at a given probability. For example, a one-percent probability of experiencing a loss greater than a certain amount equals a 100 year or one-in-100 year PML. This does not mean that the insurer is expected to incur the 100 year PML only once every 100 years; it means that in any given year there is a one-percent chance of the insurer incurring a loss of that magnitude. When Mr. Gindy indicated that FFB had typically insured to a 250 year event, he meant that FFB insured for a 0.25 percent chance of loss of a certain magnitude occurring in any given year. On September 25, 2006, the Office approved a rate increase for FFB of +43.8 percent with an effective date of December 1, 2006. Because rate filings are prospective, the rate increase, with an effective date of December 1, 2006, appeared calculated to pay for FFB's 2007 reinsurance program. Since the mid-1990's, FFB has purchased a portion of its reinsurance coverage from the Florida Hurricane Catastrophe Fund (CAT Fund), as required by law.1/ The CAT Fund is a public entity which provides a statutorily specified layer of reinsurance at a substantially lower cost than the private market because of the CAT Fund's non-profit structure and tax exempt status. The effective date of CAT Fund coverage is June 1. FFB normally purchased the remainder of its reinsurance from private reinsurers for one-year terms, which are generally effective on January 1. Through 2006, FFB purchased a significant portion of its reinsurance from its parent company, SFB Casualty, and purchased other layers of coverage from American Ag. Starting in 2007, SFB Casualty no longer provided reinsurance for FFB, and FFB purchased coverage in the global market with the assistance of AON with whom FFB had worked for many years as SFB Casualty's broker. FFB generally begins planning in the summer for its purchase of reinsurance to be effective for the next January 1 by gathering FFB's exposure date (i.e., how many houses FFB insured, where they are located and how much they cost, etc.), which data FFB runs through its own and Alliance Insurance Research (AIR) computer models to estimate FFB's anticipated hurricane losses and PML's. FFB then determines its desired reinsurance structure, including its retention (i.e., amount of losses that could be absorbed by FFB), and sends this information to reinsurance markets in the Fall. After receiving and vetting quotes seeking the most advantageous terms, FFB negotiates its reinsurance program, and most of its reinsurance agreements are bound by December for a January 1 effective date. FFB sometimes makes adjustments to its reinsurance program after January 1 to obtain additional coverage at more favorable prices, subject to market conditions, or to make adjustments due to changes in the CAT Fund. However, the general goal of the company is to always place the lion's share of the reinsurance program by the beginning of the year. By January 1, 2007, FFB had placed the majority of its reinsurance program for 2007. The cost for FFB private reinsurance in January 2007 was $65,984,426. Recognizing a crisis in homeowners' insurance premiums, on January 9, 2007, the Florida Legislature issued a Joint Proclamation to convene a special session pursuant to Article III, Section (3)(c), Florida Constitution, and Section 11.011, Florida Statutes (2006), to commence on January 16, 2007, for the "sole and exclusive purpose" to consider the following: Legislation to reduce current property insurance premiums in Florida; Legislation to reduce the future growth of property insurance premiums in Florida; Legislation to improve availability and stability of property insurance in Florida; Legislation relating to building codes in Florida. The special session convened on January 16, 2007, and on January 22, 2007, the Legislature enacted Chapter 2007, Laws of Florida (Chapter 2007-1), which was signed into law by the Governor on January 25, 2007. One of the primary features of the legislation was a massive expansion of the CAT Fund. Prior to the enactment of Chapter 2007-1, the CAT Fund had an industry-wide capacity of approximately $16 billion for those carriers writing property insurance in the State of Florida. As a result of the enactment of Chapter 2007-1 and the expansion of the CAT Fund, industry-wide coverage went from approximately $16 billion to approximately $28 billion. It was the intent of the Legislature that the expansion of the CAT Fund would result in a rate filing that reflected "savings or reduction in loss exposure to the insurer." Chapter 2007-1 required the Office to issue an order specifying the date or dates on which the required rate filings were to be made and be effective "in order to provide rate relief to policyholders as soon as practicable." By March 15, 2007, the Office was required to calculate a presumed factor or factors to be used in the rate filings required by Chapter 2007-1 to reflect the impact to rates based on the changes to the CAT Fund. The Office issued Informational Memorandum OIR-07-06M, which describes the procedure for the rate filings required by Chapter 2007-1 and provides in relevant part: The purpose of this memorandum is to provide guidance regarding filing procedures for the "Presumed Factors" filing and the subsequent "True-Up" filing. During the 2007 Special Session, the Florida Legislature passed House Bill 1A (HB 1A) requiring every residential property insurer to make a filing with the Office of Insurance Regulation (Office) to reflect the savings or reduction in loss exposure to the insurer. On February 19, the Office issued an order advising residential insurers to make rate filings to include the new discount factors mandated by HB 1A. The new discount factors required in HB 1A have been calculated by the Office and all residential property insurers must make a rate filing incorporating the new savings on or before March 15, 2007. Information related to the presumed factors can be found at http://www.floir.com/HotTopics.htm. The procedure for submitting the "Presumed Factors" filing as prescribed in Section 3 of HB 1A and the True-Up" filing as prescribed in the Office's "Presumed Factors" order can be found in the applicable attachments and are summarized below. A filing adopting the Office's "Presumed Factors" (Short Form). This filing shall reflect the effects of the "Presumed Factors" on the rates currently in effect and shall be made on a "file and use" basis. The filing shall be limited to the effects of the "Presumed Factors" on rates currently in effect, and the elimination of the 25% rapid cash buildup portion of the insurer's Florida Hurricane Catastrophe Fund premium.[2/] The procedures for submitting this type of "Presumed Factors" filing can be found in Attachment A. A filing that uses, but does not strictly adopt the "Presumed Factors" (Long Form). A "Presumed Factors" filing that uses the factors to reflect a rate decrease to take into account the "Presumed Factors" shall be made on a "use and file" basis and shall provide all the information used in preparing the filing including copies of all reinsurance treaties. Such a filing is subject to credits and refunds if the rate reductions are determined inadequate. This type of filing shall also be limited to the effects of the "Presumed Factors" on the rates currently in effect and the elimination of the 25% rapid cash buildup portion of the insurer's Florida Hurricane Catastrophe Fund premium and must be accompanied by a sworn statement from the chief executive officer or chief financial officer and actuary responsible for preparing the filing. The procedures for submitting this type of "Presumed Factors" filing can be found in Attachment B. A "True-Up" Filing as required by the Office's "Presumed Factors" order. After making the "Presumed Factors" filing, insurers shall make a "True-Up" filing pursuant to the "file and use" provisions of s. 627.062(2)(a)1, Florida Statutes, that is a complete rate filing to reflect the savings or reductions in loss exposure to the insurer due to all the provisions of HB 1A and the anticipated 2007 reinsurance program. The procedure for submitting the "True Up" filing is identical to the annual rate filing procedures in I-file, except the appropriate selections now read as "Rates Only Including 'True Up' Filings Pursuant to the 'Presumed Factors' Order" or "Rate & Rule Including 'True Up' Filings Pursuant to the 'Presumed Factors' Order." On March 1, 2007, the Office issued its "Presumed Rating Factors" report, which estimated an overall statewide savings of 24.3 percent attributed to the changes to the CAT Fund made in Section 2 of Chapter 2007-1. The Presumed Factors included the savings from the new reinsurance made available to insurers under Chapter 2007-1 and the savings due to the elimination of the 25 percent rapid cash buildup provision of prior law. On March 15, 2007, FFB made their Presumed Factors filing using the "short form" process described in Informational Memorandum OIR-07-06M. FFB requested and received approval of an overall homeowners' insurance rate decrease of -24.5 percent. The effective date of the filings was to be June 1, 2007. On May 9, 2007, FFB made their "True Up" filing, which is at issue in this case. The first filing sought a rate increase of +26.8 percent, which when combined with the Presumed Factor filing would have resulted in a rate decrease for their policyholders of -3.6 percent. The effective date selected by FFB for their "True-Up" filing was October 1, 2007. On May 14, 2007, the Office acknowledged receipt of FFB's rate filing. In return, the Office asked 51 questions seeking catastrophe model support information in accordance with Section 627.0628, Florida Statutes (2006). The Office also requested that FFB update its statewide rate indications. On May 21, 2007, FFB responded to the Office's May 14, 2007, request by providing a document prepared by Applied Insurance Research (AIR) concerning the AIR model, which FFB had used in its calculations supporting its rate filing. On May 25, 2007, FFB updated the statewide indications and further amended their filing to divide the HO forms and the HXL Form 9. On June 22, 2007, FFB revised the May 9, 2007, filing, claiming that the revision had resulted from the "delay of Florida Farm Bureau Filing 07-15 (OIR Filing FCP 07-03807), the renegotiation of [their] 2007 reinsurance program, a systems restraint not previously accounted for, and to follow up after the March 15, 2004, effective rate filing." The effect of the amendment was that FFB was now seeking a +30.3 percent rate increase, which when combined with their Presumed Factor filing would have resulted in a rate decrease for their policyholders of -1.6 percent. Following its review of the amended filing, the Office asked a number of questions on July 2, 2007. FFB provided additional information in response to the questions on July 8, 2007. On July 10, 2007, a public hearing was held in Tallahassee, Florida, in accordance with Section 627.0629, Florida Statutes (2007),3/ to discuss the rate increase requested by FFB. By letter dated July 17, 2007, and forwarded to FFB on July 19, 2007, the Office issued its Notice of Intent to Disapprove the filing of FFB. The Office listed 12 deficiencies as its grounds for denying the rate filing. The parties have stipulated that items 7, 8, 11, and 12 of the NOI are no longer in issue. The remaining reasons for denial are listed below: The rate filing and requested rate fail to reflect a reduction in policyholder premiums consistent with the expansion of the Florida Hurricane Catastrophe Fund coverage contrary to the intent and requirements of HB1A. Company has not provided sufficient support that the reinsurance cost in the filing reflecting coverage levels, reinsurance premium amounts and expected recoveries does not result in excessive reinsurance cost related to services rendered not permitted per Section 627.062, F.S. Company has not provided sufficient support that Florida Hurricane Catastrophe Fund cost filing is consistent with tax exempt status of the fund. Company failed to completely respond to the Office questions for required disclosure of all assumptions and factors used by the Hurricane model as required by Section 627.0628, F.S. Company has failed to support use of model for Catastrophe losses other than hurricane. Company has failed to support that loss trend is not excessive. * * * Company has failed to support the trend procedure used to adjust hurricane model losses is appropriate and consistent with premium trending in the indications. Company has failed to support the allocation of reinsurance cost to territory in their territorial indications. DEFICIENCY 1: FAILURE TO REFLECT A REDUCTION IN POLICYHOLDER PREMIUMS CONSISTENT WITH THE EXPANSION OF THE CAT FUND FFB received a healthy rate increase in December 2006, ostensibly to alleviate the industry-wide increase in the reinsurance premiums. FFB had the majority of its reinsurance coverage in place by January 2007, and the reinsurance placed FFB at a one-in-190 year PML. FFB had intended to purchase additional reinsurance during 2007 in order to get the PML level closer to the one-in-250 year PML, which had been its goal in previous years. In January 2007, FFB had reinsurance with the CAT Fund, American Ag, and other private reinsurance providers brokered through AON. Chapter 2007-1 provided that the rate change had to consider the available coverage options provided by the expansion of the CAT Fund and provided that any additional cost for private reinsurance that duplicates the coverages offered by the CAT Fund could not be factored in determining the change in the rate. FFB estimates that $25,127,526 of its January 1, 2007, reinsurance premium duplicated the less expensive coverage available from the newly expanded CAT Fund. The estimated premiums for the CAT Fund coverage available after the enactment of Chapter 2007-1 were $7,555,058. The reinsurance treaty between FFB and American Ag contained a provision which allowed FFB to essentially cancel coverage which was duplicative of coverage provided by the CAT Fund as a result of legislative changes. FFB did not have such a provision in its treaties with its other private reinsurers. FFB's Third Master layer of reinsurance was placed with American Ag who, in turn, reinsured that coverage in the private reinsurance market. FFB was able to renegotiate the Third Master layer to remove the CAT Fund overlap because the contract required American Ag's reinsurers to amend the contract if the CAT Fund was amended. The First High reinsurance layer was placed through FFB's broker, AON, with a number of other private reinsurers. Since the treaties with these private reinsurers did not contain a provision similar to the American Ag treaty, these private insurers were unwilling to reduce the coverage with FFB to eliminate duplication from the CAT Fund. FFB had contracted to pay $15,750,000 for it First High coverage. The CAT Fund coverage would have eliminated all but $1.75 million of that premium. FFB had already paid a portion of the $15.75-million premium to it private insurers, and the reinsurers were resisting refunding the premium. FFB offered to purchase a third event coverage for the First High and to add a new top layer of $50 million coverage in return for a reduction of First High premium of several million dollars. The effective date of the renegotiated First High and the new Third High reinsurance contracts were made retroactive to January 1, 2007. FFB purchased a $30 million aggregate following the enactment of Chapter 2007-1 and the renegotiation of their reinsurance program. The increased reinsurance coverage resulting from the renegotiations with the private reinsurers brought FFB's PML more in line with its one-in-250 year goal. In order to determine the amount of reinsurance to purchase to bring it to its one-in-250 year goal, FFB used a near term sensitivity analyses on the AIR model "as a benchmark for its PML determinations and reinsurance program purchases." The near term sensitivity analysis was used in "response to requirements from rating agencies, such as A.M. Best." According to FFB, the use of the near sensitivity analyses "exceeds that of the normal '10K standard' event set and is used in preparation for A.M. Best's annual rating agency review, as required." FFB "believe[d] the version 8.2 representation of near term sensitivity to be overstated, but use[d] this analysis as required by A.M. Best." The use of the near term sensitivity model would result in an increase of the amount of reinsurance needed to reach the one-in-250 year PML. The increase in reinsurance coverage is being borne by the policyholders. As stated by Mark Crawshaw, FFB's expert witness: Generally, the more reinsurance FFB buys, the greater financial security FFB offers its policyholders. However, this greater security comes at a cost of greater reinsurance premiums which are passed on to the policyholders. In other words, there is a trade-off between the level of financial security and the cost of that security to policyholders. The Best's Financial Strength Ratings provide an objective basis for quantifying and evaluating this trade- off. FFB has failed to comply with the intent of the Legislature in Chapter 2007-1. It has failed to reflect in its rate filing the savings in the form of reduction in premiums to the policyholders that would be realized from the expansion of the CAT Fund and the reduction in CAT Fund premiums. DEFICIENCY 2: FAILURE TO PROVIDE SUPPORT THAT REINSURANCE COSTS DOES NOT RESULT IN EXCESSIVE REINSURANCE COST Item 2 addresses the Office's assertion that FFB has not provided sufficient support that the reinsurance cost in the rate filing reflecting coverage levels, premium amounts and expected recoveries does not result in excessive reinsurance cost related to services rendered. In reviewing the rate filing of FFB, the Office determined that FFB's reinsurance costs were significantly higher than the rest of the market. More significantly, the amount of catastrophe recoveries was both unsupported and understated. FFB's support for recoveries in the filing was reliance upon the AIR model, with the only information based on FFB's data for one month. Although believing that a recovery percentage of less than ten percent was an inadequate return given the cost of the reinsurance, the actuary for the Office was unable to independently verify the recoveries. FFB has failed to demonstrate that its reinsurance costs are not excessive related to the services rendered by the reinsurers. DEFICIENCY 3: FAILURE TO PROVIDE SUPPORT THAT THE CAT FUND COST IN THE FILING IS CONSISTENT WITH THE TAX EXEMPT STATUS OF THE CAT FUND Item 3 addresses the Office's assertion that FFB has not provided sufficient support to show that the CAT Fund cost is consistent with the tax exempt status of the CAT Fund. The CAT Fund makes no profit and as a tax exempt entity, has a very large investment income credit. The result is that the CAT Fund will basically pay more for losses to the insurance companies than they will collect in reinsurance premiums. In its rate filing, FFB did not consider the larger recoveries from the CAT Fund that would result from the CAT Fund's tax exempt status and did not provide sufficient support why the tax exempt status of the CAT Fund was not considered. DEFICIENCY 4: FAILURE TO DISCLOSE ALL ASSUMPTIONS AND FACTORS RELATING TO THE USE OF THE AIR MODEL Item 4 addresses the Office's assertion that FFB failed to provide access to all assumptions and factors in the AIR model which FFB used in its rate filing. Section 627.0628, Florida Statutes, provides that an insurer may use a model in a rating filing to determine hurricane loss factors when the model has been determined by the Florida Commission on Hurricane Loss Projection Methodology (Commission) to be accurate and reliable to determine hurricane loss factors, and the Office and the Consumer Advocate appointed, pursuant to Section 627.0613, Florida Statutes, have "access to all the assumptions and factors that were used in developing the . . . model . . . and are not precluded from disclosing such information in a rate proceeding." The AIR model 8.0 used by FFB has been determined acceptable by the Commission for projecting hurricane loss costs in rate filings. Thus, the issue remaining is whether the Office and the Consumer Advocate had access to the assumptions and factors used in developing the model. On May 14, 2007, after the Office received FFB's initial rate filing, the Office sent FFB a standard questionnaire consisting of 51 questions concerning the AIR model which FFB utilized. The same questionnaire is sent to all insurers who use models in their rate filings. As of the final hearing, no insurer has ever answered all the questions to the satisfaction of the Office. In other words, no insurer has physically given the Office all the assumptions and factors that were used in developing the model. This information is proprietary and is not given to the insurer by the company providing the model. The information is available only from the company providing the model. FFB asked AIR to respond to the questions. FFB provided the response prepared by AIR to the Office on May 24, 2007. Some of the responses provided that AIR would make the information available to the Office for review and would work with the Office to provide the information in an acceptable format. Because much of the information is proprietary and confidential, AIR was not willing to relinquish possession of the information to the Office. AIR has an office in Tallahassee, and staff of the Office could review the materials at the Tallahassee Office. By letter dated July 3, 2007, the Office advised FFB that the responses to the catastrophe model questionnaire were incomplete. On July 9, 2007, FFB provided the following response concerning the catastrophe model information requested: Florida Farm Bureau has provided the Office with all the formulas and functions available to us by AIR Worldwide, Inc. The catastrophe models are proprietary by their very nature and require extreme care in disclosure. The AIR model used in this filing was reviewed and accepted by the Florida Commission on Hurricane Loss Projection Methodology (Commission). Additionally, the AIR models are widely used and accepted in the insurance, reinsurance, and capital markets. Reasonability measures are taken and maintained by AIR and Florida Farm Bureau as explained in the IFILE Catastrophe Model Questionnaire. AIR Worldwide, Inc. has worked with and will continue to work with and will continue to be available to the Office regarding their catastrophe models. In complete cooperation with the Office, AIR has extended the availability of their personnel and models to the Office for review, including all formulas and functions, at their Tallahassee office. It is not the intent of AIR or Florida Farm Bureau to conceal any relevant or necessary information from the Office; the proprietary nature of the information simply demands that all protections are in place to keep trade secret information inside the AIR office and out of the public domain. Florida Farm Bureau has submitted its exposure data as requested by the Office to run in the public hurricane model. Although we do not have access to the inner workings of this model and cannot validate its results or methodologies, the Office seems comfortable with its results and has used its results as a reasonability check versus our results in past filings. The Office takes the position that making the information available at the Tallahassee office of AIR is not sufficient and does not provide access to the assumptions and factors requested by the Office. Thus, the Office did not avail itself of the opportunity to go to the AIR office in Tallahassee and review the information. The Office takes the position that FFB did not provide to the Consumer Advocate access to the assumptions and factors used in developing the AIR model. There was no evidence presented that the Consumer Advocate requested such information. In past filings, where no insurer has supplied the requested proprietary information concerning the catastrophe models used, the Office has used the Public Model to test the reasonability of the losses projected by the insurer using a vendor model such as AIR. In the instant case, the Office did submit the data provided by FFB to be inputted in the Public Model. The results of the Public Model showed approximately $5 million more in potential losses than FFB indicated in its rate filing based on the AIR Model. DEFICIENCY 5: FAILURE TO SUPPORT USE OF MODEL FOR CATASTROPHE LOSSES OTHER THAN HURRICANE The Office objected to the modeled figures used by FFB as support for its non-hurricane losses. The expert for FFB provided an analysis for non-hurricane catastrophe losses using FFB's actual historical losses without relying on the results of the model. The actuary for the Office conceded that FFB's expert used a reasonable analysis and the more common method of supporting the non-hurricane catastrophe losses. FFB has provided support through its expert at final hearing for the non-hurricane catastrophe losses. Therefore, the fifth deficiency is not viable and cannot serve as a basis for disapproving the rate filing. DEFICIENCY 6: FAILURE TO SUPPORT THAT LOSS TREND IS NOT EXCESSIVE In its Proposed Recommended Order the Office conceded that the methodology used by FFB's expert at the final hearing with respect to the loss trend was appropriate. Therefore, FFB has provided support that its loss trend is not excessive. DEFICIENCY 9: FAILURE TO SUPPORT THAT THE TREND PROCEDURE USED TO ADJUST HURRICANE MODEL LOSSES IS APPROPRIATE AND CONSISTENT WITH PREMIUM TRENDING IN INDICATIONS In its Proposed Recommended Order, the Office conceded that the methodology used by FFB's expert at the final hearing with respect to premium trending was appropriate. Therefore, FFB has provided support for a zero-percent loss ratio trend by assuming that the hurricane loss trend and the reinsurance premium trend were equal. DEFICIENCY 10: FAILURE TO SUPPORT THE ALLOCATION OF REINSURANCE COST TO TERRITORY IN TERRITORIAL INDICATIONS The tenth deficiency deals with FFB's allocation of the cost of reinsurance on a county-by-county basis. FFB allocated their cost of reinsurance by using the largest 200 storms in their model, rather than the entire 10,000 storm set. The 200 largest storms would invariably be in the more coastal counties and could lead to the coastal counties subsidizing the inland counties, which would be unfair discrimination. The use of the 200 largest storms as opposed to the 10,000 storm set does not support FFB's allocation of reinsurance cost to territory in their indications. In its Amended Petition, FFB alleges that the Office relied on an unadopted rule as a basis to support the NOI. Specifically, FFB alleges that the Office is interpreting Chapter 2007-1 [T]o essentially freeze insurers' reinsurance coverage levels and costs at whatever was already filed and approved for such insurers at the time HB 1A became effective (essentially the reinsurance coverage levels and costs for 2006), unless the change in 2007 reinsurance coverage levels or costs would result in a rate decrease. The Office does not interpret Chapter 2007-1 in the manner asserted by FFB. Chapter 2007-1 does not prohibit an insurer from having a greater amount of reinsurance in 2007 than it did in 2006, but Chapter 2007-1 does require that any savings that resulted from the expansion of the CAT Fund and reduced premiums of the CAT Fund be passed along to the policyholders.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered disapproving FFB's rate filing. DONE AND ENTERED this 1st day of April, 2008, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL 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 1st day of April, 2008.
Findings Of Fact C & W Sales, Inc., was licensed as a dealer in agricultural products under license No. 1367 and was so licensed at all times here relevant. At the time of the incorporation of C & W Sales, Inc., Henry T. Watson was listed as an officer (President) and director of the company. The company was run by Philip A. Roberts, the brother-in-law of Watson. Roberts applied on behalf of C & W Sales, Inc., to FFB for an agriculture bond in the amount of $20,000 for the period 5/19/79 until 5/19/80 (Exhibit 1) . As a condition for issuing this bond FFB required and obtained a general agreement of indemnity from Roberts and Watson and their wives (Exhibit 2) which was executed on 2 May 1979. In addition to agreeing to save Florida Farm Bureau harmless from all claims arising out of the bond paragraph 14 provided: That this indemnity is continuing and will apply to any and all bonds, as provided in the opening paragraph of this Agreement which the Company may have executed or procured the execution of from time to time, and over an indefinite period of years; however, any Indemnitor may by written notice to the Company at its Home Office, Gainesville, Florida disavow his liability as to bond(s) which may be executed by the Company subsequent to fifteen days after receipt by the Company of such notice. Agriculture bond (Exhibit 4) was issued on 5/19/79 for one year and upon expiration on 5/19/80 the bond was renewed for an additional period of one year (Exhibit 5). Subsequent to the expiration of the 1979-80 bond (Exhibit 4) and reissuance of the 1980-81 bond (Exhibit 5) but within the prescribed time for submitting a claim against the agriculture dealer and his bond, John T. Brantley, Jr., filed a claim against C & W Sales in the amount of $8,317.05 for payment owed on a transaction which occurred during the 1979-80 period. When C & W Sales failed to pay or respond to the Commissioner of Agriculture's demands for payment, claim was made on the 1979-80 bond and FFB remitted to the Commissioner of Agriculture a check for the Brantley claim (Exhibit 6). Around February 1980 Watson became disenchanted with Roberts' running of C & W Sales, Inc. and wanted out. He told Roberts to get someone to buy his (Watson) stock and to get his name out of the company. Roberts said he would. Watson never advised FFB that he would no longer be an indemnitor under the bond. During the period covered by the bond year beginning 5/19/80 claims against C & W Sales, Inc., were submitted to the Commissioner of Agriculture by Henry L. Watson in the amount of $32,326.50; Hugh D. Martin in the amount of $1,932.80; Jesse J. Wilson in the amount of $1,490.00; John T. Brantley, Jr., in the amount of $15,024.40; and Philip Dean and Willie Bass in the amount of $4,919.13, for a total of $55,692.83. The Commissioner of Agriculture notified C & W Sales of these claims and advised them of the opportunity to contest the validity of the claims. No response was received from C & W Sales and Roberts appears to have departed the area to parts unknown. An order demanding payment was submitted to C & W Sales and when payment of these claims was not made, FFB, as surety on the bond, was notified by the department of its surety on the bond, was notified by the department of its obligation under the bond and a demand for payment of $20,000 to the department was made. There is no dispute regarding the accuracy or validly of the claims against C & W Sales contained in Finding 7 above. Nor does FFB contest its liability under the agriculture bond it issued for the 1980-81 bond year. However, FFB claimed an equitable setoff for the percentage of the $20,000 that would go to Watson. This setoff is claimed by virtue of Watson's indemnity agreement. By the stipulation the parties have agreed that the FFB is entitled to the pro rata share of the $20,000 to Watson.
Findings Of Fact Introduction At all times relevant hereto, respondent, Florence Mounts Williams (Williams or respondent), was licensed as an insurance agent by petitioner, Department of Insurance and Treasurer (Department or petitioner). When the events herein occurred, Williams was an officer and director of Mr. Auto Insurance of Okeechobee, Inc. (Mr. Auto), an incorporated general lines insurance agency located in Okeechobee, Florida. She was also an officer and director of Florida Insurance Agency, Inc. (FIA), an insurance agency doing business in the same city. Respondent sold insurance to the public through both businesses. Williams is charged with violating the Florida Insurance Code while dealing with nine customers during the period between 1984 and 1986. These business transactions were made either through Mr. Auto or FIA, and, with certain exceptions, generally relate to Williams accepting a premium for a policy and then failing to procure a policy for the customer, or falling to refund the premium after the customer cancelled the policy. Some of these customers eventually filed complaints with the Department, and after an investigation was conducted, the administrative complaint, as amended, was issued. That prompted this proceeding. The State of the Industry and Williams in 1984-86 Before discussing the specific charges, it is appropriate to describe the industry conditions and practices as they existed in 1984-86. These were established without contradiction by expert witness Beverly. It is within this broad framework that Williams operated when the transactions in question occurred. The expert's bottom line conclusion, after reviewing the nine customers' files, was that no impropriety had occurred. The agent-customer interface normally begins when a customer visits an insurance agent to purchase a policy. The agent will generally get a rate quotation by telephone from a managing general agent (MGA) who brokers policies on behalf of various insurance companies. An MGA may more accurately be described as a branch office of the insurance company under contract. If the rate quoted by the MGA to the agent is acceptable to a customer, the agent has the applicant complete an application and pay the quoted premium, or at least make a down payment on the same. The application and premium are then forwarded by the agent to the MGA for risk review to determine if the applicant meets underwriting requirements. At the same time, the agent will issue a binder to the customer which evidences temporary coverage until the application is accepted or rejected by the insurance company. In the event coverage is later declined, industry practice dictates that the agent obtain coverage with another company as soon as possible since the agent has the responsibility to maintain coverage on a customer. However, what constitutes a reasonable period of time to do so was not disclosed. In obtaining new coverage, the agent need not have the customer execute a new application since the validity of the original application is not affected. The customer should, however, be notified at the earliest convenient time that coverage is with a different company. In some cases, a customer may choose to finance his premium through a premium finance company. If he does, the finance company pays the entire premium to the MGA or insurer when application is made, and the customer pays the amount owed (plus a finance charge) to the finance company through installment payments over an agreed period of time. If for some reason an application is not accepted by the insurer, it is the responsibility of the MGA or insurer to so notify the premium finance company and return the money. The finance company must then refund any money paid by the insured. When the events herein occurred, it was established through expert testimony that the Florida insurance marketplace was in a "chaotic" condition and could be described as a "zoo." During this time, a small agent such as Williams might find herself doing business with as many as fifteen different MGAs, each with a different set of rules. Thus, it was common for an agent to be confused as to her binding authority with a particular MGA and whether the proper amount of coverage was obtained. Moreover, because of the chaotic marketplace, it became increasingly difficult to find companies who would write coverage on certain types of policies. It was further established that in 1984-1986 the MGAs were "overflowed with work" thereby causing delays of up to "months" for an agent to learn from an MGA if the risk had been accepted and a policy issued. Applications and checks were also lost or misplaced by the MGA and carrier during this time period. Consequently, the agent would think that coverage had been obtained, and so advise the customer, but would later learn that the application had been rejected, or the company had no record of one ever being filed. There were also lengthy delays in MGAs and insurance companies returning unearned premiums to the agent for repayment to the customers. According to industry practice, once a refund is received by an agent, checks to customers would typically be issued only once a month. In Williams' case, she made refunds on the twenty-fifth day of each month. A further prohibition on an agent is that a refund can be paid to a customer only after the agent receives the refund check from the insurance company or MGA. In other words, refunds from an agent's own funds are prohibited. As a result of this confusion, the number of occasions when an agent was cited for an error or omission (E&O) went up "astronomically." Indeed, industry statistics tell us that one in six insurance agents has a claim filed against his E&O policy for failure to provide coverage as promised. For this reason, no reasonable agent, including Williams, would do business without an E&O policy. When the policies in question were sold, Williams had approximately 4,000 active and inactive files in her office. Her office help was mainly persons with no prior training in insurance, and who only stayed on the job for a matter of weeks or months. Consequently, there was some confusion and disarray in her two offices. Even so, Williams was responsible for the conduct of her employees. At the same time, however, it was not unreasonable for Williams to assume that, due to the overload of work on the MOAs, an agent could expect no action on an application to be taken by an MGA or carrier for many months, and that applications and checks might be misplaced or lost. Count I This count involves an allegation that Williams violated nine sections of the Insurance Code in conjunction with the sale of a boat insurance policy to David and Margaret Copeland on September 19, 1984. The evidence reflects that Margaret Copeland applied for insurance on her boat with Mr. Auto on or about September 19, 1984. Copeland had previously been turned down for insurance by several other local agents. After Williams received a telephonic quote of $168 per year from an MGA, and relayed this advice to Copeland, Copeland gave a $30 check as a down payment on her policy. The remaining premium was paid by two partial payments made on October 6 and November 7, 1984, respectively. Copeland was issued a binder to evidence her insurance coverage, and a receipt for the $30 down payment. The binder indicated that Barnett Bank was the loss payee and that coverage was with "Professional." In actuality, "Professional" was Professional Underwriters Insurance Agency, Inc. (Professional), an MOA in Altamonte Springs for various insurance companies doing business in the state. According to Williams, the application and check were forwarded to Professional shortly after the application was executed. Because the boat was being financed with Barnett Bank, and the lender required evidence of insurance, Copeland instructed Mr. Auto to furnish a copy of the policy to the bank. A copy of the binder was furnished by Williams to the bank on November 19, 1984, and again on December 7, 1984. However, after Margaret Copeland did not receive a copy of a policy, she contacted Mr. Auto on several occasions to obtain a copy but was given "excuses" why one had not been issued. At this point Williams simply believed Professional was "dragging its feet" since past experience had taught her Professional typically took three to four months to forward a copy of the policy. Nonetheless, in response to Copeland's requests, Williams wrote Professional on December 3, 1984, asking that it "please check on the (Copelands') boat policy which was written 9-19-84" because the lienholder needed a copy. Professional did not respond to Williams' request. After no policy was received, Margaret Copeland contacted Professional's office in Altamonte Springs by telephone and learned no policy had been issued by that firm. The Copelands then requested Mr. Auto to cancel their policy on March 12, 1985, and demanded a full refund of their premium. After having the Copelands execute a notice of cancellation, the same was forwarded by Williams to Professional with a note reading "Karen, check this out and see what is happening," together with a copy of her previous request that Professional check on the whereabouts of the policy. Again, Professional did not respond to this inquiry. Williams then telephoned Professional and spoke to its office manager seeking advice on the amount of refund due the Copelands. She was told to make a proration. On May 19, 1985, Williams offered David Copeland a partial refund ($89) of his premium but he declined. This amount of refund was based on Williams' belief that coverage existed from September 18, 1984, when she received a quotation, until March 12, 1985, or for approximately six months, and $59 represented the remaining unearned premium. Given the climate of the industry at that time, it was reasonable for Williams to make such an assumption. After Copeland declined her offer, Williams wrote Professional seeking further assistance and stating that "Insured was in here today, wanted his refund. I tried to prorate it and give it to him." Again, Williams received no formal reply from the MGA. To date, a policy has not been produced. Williams eventually refunded the entire premium to the Copelands in February 1987. Through testimony from a Professional representative, it was established that Williams had no binding authority with Professional except on homeowners and dwelling fire policies. On all others, including the type the Copelands desired, it was necessary for the agent to first telephone Professional and receive a "telephone bind" from a Professional representative. In a letter to petitioner dated August 7, 1985, Professional acknowledged that there was "a possibility this risk may have been quoted," but it could find no record of an application having been filed or verification of coverage bound through a binder number or cashed check. It did acknowledge receiving the Copelands' request to cancel their policy in March 1985. If a binder had been authorized, it would have been recorded in a binder book with a number assigned to that binder unless the company lost the policy or otherwise inadvertently failed to record this information. The representative also confirmed that Professional routinely brokered this type of policy in 1984, and that it binds several thousand policies per year. Given this volume of work, the representative acknowledged it was possible that Williams or an employee of her firm may have been given a telephone quote for the Copeland policy, or that the application could have been misplaced. C. Count III On June 19, 1985, William C. Norton, a retired railroad conductor, went to Mr. Auto to purchase an insurance policy for two automobiles. After being quoted an annual premium of $315 by an MGA (Jergen & Roberts), Williams gave this advice to Norton who then gave her a check in that amount. Norton was given a receipt and a binder to evidence his coverage. The binder reflected Norton's application had been placed with "Foremost," which is Foremost Insurance Company (Foremost) in Grand Rapids, Michigan. Williams forwarded the application to the MGA but it was later returned unbound because of several traffic violations by Norton. She then "shopped" the application around and was able to procure a policy from Orion Insurance Company (Orion) through Standard Underwriters, an MGA, at an estimated cost of $528.70 instead of the previously quoted rate of $315 per year. It should be noted that during this period of time, Norton was covered through binders executed by Williams. After Williams paid the amount ($528.70) due the MGA, a policy number (PA-102390) was issued. However, through "neglect" Williams never billed Norton for the difference between the originally quoted premium and the $528. After Orion reviewed Norton's driving record, it increased the annual premium to $622. When Williams received a bill for $622 per year, she sent Norton a notice on October 24, 1985, requesting an additional $144. 2/ When he refused, the policy was cancelled by the company for nonpayment in February 1986. By this time, Norton had gone to another company to obtain coverage. He had also requested from Williams a copy of his policy on four or five occasions but one was never produced. Norton also demanded a full refund of his money even though he had been covered by binders and a policy from June 1985 until February 1986, and was not entitled to a refund. When Williams refused, Norton filed an action in small claims court in February 1986, and won an uncontested judgment for $315. Williams stated she did not contest the matter because of several stressful events then occurring (e.g., a divorce and an employee theft) and the expense of hiring legal counsel. Mobile Home Division of Florida (MHD) is an MGA in Fort Lauderdale that reviews applications for automobile insurance with Foremost (and others), and determines if the applicant meets Foremost's underwriting requirements. It is one of five MGAs in the State representing Foremost. A representative of MHD reviewed his firm's records, and found no evidence of having received the Norton application. However, this was not surprising since Williams had not used MHD to obtain Norton's policy. Count VI Terryl J. Wisener is a college student with numerous traffic violations on his record. Because of this, he was forced to obtain automobile insurance through the Florida Joint Underwriters Association (FJUA), a small group of companies who write policies for high risk drivers such as Wisener. Insurance agents are "assigned" to one of the companies writing policies, even though they are not a regular agent of that company. Allstate Insurance Company (Allstate) happened to be a servicing carrier for FJUA in 1986, and Williams accordingly filed FJUA applications with that carrier when seeking insurance for high-risk customers. Under then existing rules, Williams could temporarily "bind" Allstate by writing a binder on a policy, but approval of the application and issuance of permanent coverage rested with Allstate. Until the application was rejected by Allstate, the driver was insured through the binder. During this same time period, it was "commonplace" for an FJUA carrier to return an application because of an "insignificant error" to avoid having to write a policy on a high-risk customer. On December 30, 1985, Wisener purchased a six-month automobile insurance policy through Williams. When the policy was due to expire on June 30, 1986, he returned seeking a renewal. Williams attempted to place the liability coverage with Allstate and the physical damage coverage through "Coastal," an MGA for Adriatic Insurance Company. She was quoted premiums of $996.70 and $814.70, respectively, for the two policies. After accepting a down payment of $552 from Wisener, she issued a binder and mailed the application to Allstate and Coastal with drafts for the entire premiums due. Because Wisener's Chevrolet Camaro was an eight-cylinder automobile, Coastal rejected the application in October 1986. Williams then attempted to replace the physical damage coverage with Allstate in November 1986. By virtue of Williams' binding authority, Wisener had coverage with Allstate until it rejected his application. The application, along with about fifty or sixty others, was eventually rejected by Allstate on February 27, 1987, because of a lack of "information." Until this occurred, Williams properly assumed that Wisener was covered and that Allstate was reviewing his application. In the meantime, and apparently without advising Williams, Wisener decided in October 1986 to purchase a policy through his parents' Allstate insurance agent in Port St. Lucie. He did so because he "believed" he had no insurance. However, he never made inquiry with Williams to confirm or deny this, or asked for a refund of his money. A representative of Allstate searched his firm's records and could find no evidence that a policy was ever written for Wisener through Williams. The company does acknowledge that it received Wisener's application and that it eventually returned the same "unbound" almost four months later. It gave no explanation for the delay. Although Wisener had not received a refund as of the time of hearing, this responsibility rests with Allstate (and not Williams) since it has never refunded to Williams the money paid by her for Wisener's policy. Count VII This count concerns a mobile home insurance policy purchased by Samuel and Mary Jo Moore in June 1985 from FIA. On June 25, 1985, Mary Jo Moore made application to renew her insurance policy on the mobile home. The policy had been in force for some ten years. Moore paid Williams $118 by check which was deposited and cashed by Williams. A check for $23 was also paid at a later date due to a premium increase. Williams issued Moore a binder evidencing coverage with Mobile Home Insurance Association (MHIA), an MGA in Gainesville, Florida. Shortly afterward, Williams learned from the MGA that the Moores' previous carrier, American Pioneer, had gone bankrupt and that there was a limited market for the Moores' application. Williams thereafter forwarded the application to another MGA, Jerger & Sons, Inc. (Jerger), in early August 1985. Temporary coverage was eventually issued by Jerger on August 23, 1985. However, the application was deemed to be incomplete because information regarding the number of spaces in the Moores' trailer park was lacking. This was not surprising since the Moores lived on private property and not in a trailer park. The application was returned to Williams with a reminder that unless the missing information was submitted to Jerger by September 6, 1985, coverage would be terminated. When no information was filed by that date, Jerger cancelled its coverage and returned the unbound policy on September 12, 1985. The Moores were not notified of this lapse in coverage. By allowing the coverage to lapse, and not notifying the Moores, Williams was negligent in her duties as an agent. After Jerger returned the application to Williams in late August 1985, Williams attempted to get the Moores to furnish photographs of the trailer site, and to sign the new application. Because both worked at jobs during business hours, Williams claimed she was unable to reach them prior to September 6, 1985. Williams continued her efforts to place the insurance and eventually filed the application with Foremost in March 1986. Although Williams concedes a lapse in coverage did occur, there is no evidence that this was an intentional or debilitate act on her part. After having the application returned twice, coverage was finally obtained for $201 in July 1986, or almost a year after the Moores first approached her concerning a renewal of their policy. This policy is effective through July 1987. Williams paid out of her own funds the difference between the original premium ($141) and the $201. In view of the original premium being applied to the 1986-87 premium, the Moores are not due a refund. On October 31, 1985, a tornado struck in the Okeechobee area causing damage to the Moores' trailer. The Moores contacted respondent who, at her own expense, had an adjuster from Vero Beach survey the damage in November. The adjuster learned no coverage was in force. The Moores then contacted respondent who, for some reason, had Jerger search for a policy. As might be expected, none was found, and Jerger would not agree to cover the loss. Williams instructed the Copelands to proceed against her E&O carrier for payment of their claim. At the time of final hearing, the claim had not yet been resolved. Count VIII On or about February 19, 1986, William A. McClellan, a retiree, purchased an automobile insurance policy from FIA. He paid $201 by check to Williams and received from her a receipt and binder evidencing coverage with "AIB" (Associated Insurance Brokers), the MGA for Balboa Insurance Company in Newport Beach, California. After the application was forwarded to AIB, it was initially returned because the agency check was drawn on insufficient funds. Thereafter, the check was made good (with no lapse in coverage) and Williams subsequently received a bill from Balboa for $247, or $46 more than she had previously quoted McClellan. When McClellan was presented the bill for an additional premium on May 1, 1986, McClellan told Williams to cancel his policy and to refund the unearned premium. She relayed this request to AIB and coverage was cancelled effective June 13, 1986. Thereafter, McClellan visited Williams' office at least seven or eight times seeking his refund, but was always told it was still being processed. This was a correct representation by Williams since AIB was less than diligent in processing a refund check. McClellan also filed a complaint with petitioner. Upon inquiry by petitioner, Williams advised the Department that McClellan would be paid as soon as AIB issued her a check. On or about July 29, 1986, AIB finally cut a check in the amount of $91.22 payable to Williams, and eventually issued a second check in the amount of $25.38 on October 1, 1986. The delay in issuing the checks was attributable to AIB and not Williams. After Williams received the first check, she offered McClellan a partial refund of $91.22 but he declined the offer. On October 10, 1986, or the day after Williams received the second check by mail, a representative of AIB flew by private plane to Okeechobee and obtained $133 in cash from Williams, who by then had received the second check from AIB. 3/ The representative paid McClellan the same day. Count IX On or about March 16, 1985, Luther B. Starnes purchased an insurance policy for his two automobiles from Mr. Auto for which he paid $473 by four installments over the next few months. After Williams received a telephone bind, Starnes was issued a binder evidencing insurance with a company called "Integrity." He also received a "Florida Vehicle Identification Card" evidencing PIP and liability coverage on his vehicles. In this case, Williams placed the coverage by telephone with AIB, the MGA for Integrity, which authorized her to temporarily bind the coverage. The application and check were thereafter sent by Williams to the MGA. After not receiving a policy by the fall of 1985, Starnes telephoned a district office of Integrity and learned his name was not on its computer. However, he did not contact Williams after that, or ask for a refund of his premium. Despite the accusation that Williams had no basis to believe that a policy had ever been issued by Integrity, an AIB representative confirmed at hearing that Starnes' application and premium had been received by AIB, and that AIB had issued a policy number covering Starnes. Indeed, respondent's exhibit 10 reflects that Integrity cashed the check, and simultaneously placed a sticker on the check which read "Integrity Insurance Co. Private Passenger Auto 100-FAB- 0206809." This indicated that AIB had assigned a policy number on behalf of Integrity and that Starnes' coverage was in effect. Indeed, Williams properly relied upon her cancelled check in believing that Starnes was insured. Moreover, it was appropriate for Starnes to pay for this coverage until Integrity formally rejected his application. Although Starnes never received a copy of a policy, the responsibility to issue one rested upon MGA or Integrity, but not Williams. Count X On or about July 11, 1986, David and Carolyn Douglas purchased an insurance policy for two trucks owned by David. The policy cost $1300 per year and Carolyn paid Williams this amount by check. A binder was given to Carolyn reflecting coverage through Dana Roerig and Associates (Roerig), an MGA in St. Petersburg for Canal Insurance Company (Canal). Under the MGA's then existing policy, it was necessary for Williams to forward the application to Roerig and request a rate quotation. After receipt of the application Roerig would normally telephone the agent, quote a rate, and then bind if the rate was acceptable. In this case, the quoted rate was unsatisfactory, and Roerig returned the application unbound on August 10, 1986. Williams then attempted to place the coverage through an MGA in Lakeland (E&S Agency). However, Williams was quoted a rate on September 25 which she knew was too expensive. After obtaining the second excessive quote, Williams immediately bound coverage with Allstate and forwarded the Douglas application to that carrier with an agency check on September 25, 1986. Because Allstate accepted only money orders or cashiers checks, and the application was undated, the application and check were returned by Allstate to Williams on October 7. Williams then sent Allstate a dated application and a money order in the amount of $1500, or $200 more than the original Douglas policy required. Although Allstate did not formally issue a policy, it assigned the Douglas application a policy number on December 15, 1986, and simultaneously issued a refund check for $121 to Douglas, since the policy cost $1,179 and not $1,300 as had been originally quoted to Carolyn Douglas. Therefore, at that point the coverage remained in effect. On December 23 Allstate issued another refund check to Douglas in the amount of $776 and advised it was cancelling coverage effective February 6, 1987. Allstate later returned the remainder of the $1,300 owed David and Carolyn Douglas. Therefore, even though they had coverage for some six months through various binders and the policy itself, the Douglases paid no premium. Although Carolyn Douglas made several attempts to obtain a copy of the policy, Williams could not produce one since the two MGAs and Allstate had held the application almost continuously for six months. It is noted that Allstate has never repaid Williams the $1500 sent by her with the Douglas application in October, 1986. Count XI Francis Carr is a locktender on Lake Okeechobee whose duties require him to open and close the locks. The job is subject to bids, and all bidders must have evidence of general liability insurance. Desiring to submit a bid, Carr purchased a one-year general liability policy from Mr. Auto on September 20, 1985, and paid Williams $540.75 for the coverage. Carr received a copy of a policy from Scottsdale Insurance Company (Scottsdale) on a later date. On April 15, 1986, Carr asked that his policy be cancelled. This was done the next day. Carr was due a $181 refund as unearned premium. Through no fault of Williams, the refund check was not issued by Scottsdale until October 21, 1986, or some six months later. Williams later endorsed the check without recourse to a local dress shop. In July 1986, Carr again bid on the locktender job, and, through his wife, made application on July 7 for a new policy so that he could submit a bid. Although the annual premium had now increased to approximately $1,500 per year, Mrs. Carr paid only a $215 down payment. Under this type of policy, Carr was responsible for thirty-five percent of the entire year's premium even if he cancelled the policy after one day. Therefore, the policy had a minimum cost of $525 regardless of its term. Because he had not paid this minimum amount, Williams applied Carr's $181 refund check from the prior year to the minimum amount owed. This was consistent with the industry practice of agents applying credit refunds to new policies of this nature. She also paid $85 from her own funds in early October 1986 to meet the thirty-five percent threshold amount. By then, however, Carr had instructed another employee to cancel his policy since his bid had not been accepted. When he didn't get a refund from the prior year, Carr filed a complaint with petitioner. However, Carr is not entitled to a refund from either year since he still owes Williams $85 for the 1986-87 policy, even after the 1985-86 refund is applied to the second policy. I. Count XII Frank I. Henry and Margaret J. Henry (no relation) lived together in a rented mobile home in 1984. Margaret purchased a policy on the mobile home contents from Mr. Auto in July 1984. She paid Williams a $40 premium, and then made three payments of $47.28 each to Envoy Finance Corporation (Envoy), a Deerfield Beach finance company which financed the balance of the amount owed. Margaret received a binder from Williams reflecting coverage with Mobile Homes Division (MHD), an MGA in Fort Lauderdale Envoy submitted a check for $118.50 to MHD on July 16, 1984, reflecting full payment for the policy. After forwarding the application to MHD, Williams assumed Henry had coverage through American Fidelity Company (AFC), a company which later went out of business that fall. According to MHD, however, the application should have been returned to Williams a few days after it was received because it had no insurance company writing those types of policies. Williams denied receiving the application, and MHD had no record of the application being returned. Williams' version is corroborated by the fact that MHD never advised Envoy that the policy had been returned, something MHD should have done if coverage was rejected. Moreover, MHD has never refunded the $118.50 paid by Envoy in July 1984. According to uncontradicted expert testimony, it is the responsibility of the MGA or carrier to advise the finance company of a coverage denial, and to make a refund to the finance company, which then makes a refund to the customer. Therefore, MHD or AFC, but not Williams, is at fault for not refunding Henry's money. Around April 20, 1985, Frank's mobile home was damaged by a fire. His claim was rejected by MHD since it had no record of coverage. Prior to this time, no request for a copy of the policy had been made by Henry, and Williams properly assumed that Henry's coverage was in effect. Williams has since notified her E&O carrier of a possible liability. As of the time of hearing, Henry's claim was still unpaid and he has not received a refund of his premium from MHD, AFC or Envoy.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of a single violation of Subsection 626.621(6), Florida Statutes (1985), and that all other charges be dismissed. Respondent should be given a reprimand for this violation. DONE AND ORDERED this 29th day of May 1987, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of May 1987.
Findings Of Fact At all pertinent times, respondent Beach Landscaping, Inc. d/b/a Landscape Technologies or Landscape Technologies, Inc. or as Land Tech (Beach) operated as a dealer in agricultural products under license No. 2889 issued by the Department of Agriculture and Consumer Services (DACS). On Beach's behalf, respondent Regency Insurance Company posted a surety bond with DACS, No. SF00356 in the amount of $3,000, effective September 24, 1988, through September 23, 1989, to secure payment for Florida agricultural products. Testimony of Brooks. On August 30, 1989, Beach took delivery from petitioners of seven live oak trees petitioners grew near Chiefland, Florida, agreeing to pay $125 for each which, with sales tax, aggregated $927.50. Petitioners's Exhibit No. 1, Inv. No. 716280. Testimony of Cochran. Having earlier made a deposit of $637.50, Beach took delivery from petitioners on September 18, 1989, of 15 Florida-grown live oak trees, agreeing to pay $170 for each. With sales tax (but less the deposit) Beach owed petitioners $2,065.50 on account of this transaction. Petitioners's Exhibit No. 1, Inv. No. 716788. Testimony of Cochran. The next day Beach took delivery from petitioners of 15 more Florida- grown trees again agreeing to pay $170 for each. Again with sales tax and less an earlier deposit, indebtedness on account of the transaction aggregated $2,065.50. Petitioners's Exhibit No. 1, Inv. No. 716790. Testimony of Cochran. Finally, on September 20, 1989, Beach took delivery from petitioners of 16 Florida-grown live oak trees, agreeing to pay $170 for each, which with sales tax and less an earlier deposit, amounted to $2,203.20. Petitioners's Exhibit No. 1, Inv. No. 716791. Testimony of Cochran. On March 3, 1990, Beach or Landscape Technologies, Inc. paid petitioners $1,000, thereby reducing indebtedness to petitioners on account of the foregoing transactions from $7,261.70 to $6,261.70. Petitioners applied a check in the amount of $1,500 to reduce the indebtedness to $4,761.70, even though the check purported to be in payment of another invoice. In the answer it filed with DACS, Landscape Technologies, Inc., admitted indebtedness of $4,661.10.
Recommendation It is, accordingly, RECOMMENDED: That DACS order Beach to pay petitioners four thousand seven hundred sixty-one dollars and seventy cents ($4,761.70) within fifteen (15) days of the final order. That, in the event Beach fails to pay petitioners four thousand seven hundred sixty-one dollars and seventy cents ($4,761.70) within fifteen (15) days of the final order, DACS order Regency Insurance Company to pay three thousand dollars ($3,000) or such lesser sum as satisfies the requirements of Section 604.21(8), Florida Statutes (1989), for disbursal to petitioners. DONE and ENTERED this 19th day of April, 1991, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of April, 1991. COPIES FURNISHED TO: CHRISTOPHER B. PHILLIPS LANDSCAPE TECHNOLOGIES, INC. 523 LAKEVIEW ROAD CLEARWATER, FL 34616 REGENCY INSURANCE COMPANY POST OFFICE BOX 190 HALLANDALE, FL 33009-0190 CLINTON H. COULTER, JR., ESQUIRE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES TALLAHASSEE, FL 32399-0800 J. COCHRAN & RUSSELL STRANGE C & S TREE FARM ROUTE 1, BOX 738 CHIEFLAND, FL 32626 HONORABLE BOB CRAWFORD COMMISSIONER OF AGRICULTURE DEPARTMENT OF AGRICULTURAL AND CONSUMER SERVICES THE CAPITOL, PL-10 TALLAHASSEE, FL 32399-0810 RICHARD TRITSCHLER, GENERAL COUNSEL DEPARTMENT OF AGRICULTURAL AND CONSUMER SERVICES 515 MAYO BUILDING TALLAHASSEE, FL 32399-0800
The Issue The issues to be resolved in this proceeding concern whether the Respondent, Above All Lawn Care & Landscaping, Inc. (Above All), should be required to pay the sum of $7,129.05 to the Petitioner for landscape plants and materials allegedly purchased by the Respondent from the Petitioner, and, with regard to the Hartford Fire Insurance Company, whether it should be obligated for the payment of the plants and materials in question to the extent of its surety bond number 2 1BSBBU 6765 (the Bond), in the bonded amount of $4,999.00.
Findings Of Fact The Petitioner, Skinner Nurseries, Inc. (Skinner), is a corporation whose address is 2970 Hartley Road, Suite 302, Jacksonville, Florida. The Respondent Above All is a corporation whose address is Post Office Box 2772, Ocala, Florida. The Respondent was licensed as a dealer in agriculture products at times pertinent hereto and was supported by surety bond number 2 1BSBBU 6765, in the amount of $4,999.00. The surety bond was issued by the co- Respondent, Hardford Fire Insurance Company, as surety. The conditions and provisions of the bond were to assure proper accounting and payment to producers, their agents or representatives for agricultural products purchased by the Respondent, Above All. On July 23, 2003 through August 1, 2003, Skinner Nurseries, Inc. sold the Respondent certain nursery plants as an agent for Florida producers, totaling $7,129.05. That amount remains unpaid to Skinner. The subject complaint was filed with the Department within six months of the dates of sale. The only response to the complaint by the Respondent was that to the effect that it agreed that amounts were owed to Skinner, but it disagreed with the amounts Skinner was claiming. The testimony of Chris Diaz establishes that invoices in the amount of $7,129.05 represent the number of trees, shrubs, and various nursery stock or materials sold and shipped to the Respondent. The Petitioner sent statements on a monthly basis, as well as certified letters, to the Respondent and received no payment at all in return, not even as to an undisputed amount. The amount of $7,079.05 referenced in the Administrative Complaint does not include freight charges. The goods and materials in question were shipped from the Bunnell nursery site of Skinner to the Respondent's location in Ocala, Florida. The Respondent did not appear at either hearing scheduled and presented no testimony or evidence. The facts that are established by the Petitioner are thus undisputed. The Respondent has never paid any of the amounts represented by the subject invoices contained in Petitioner's Composite Exhibit 1 in evidence.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the candor and demeanor of the witness, it is, therefore, RECOMMENDED that a final order be entered by the Department of Agriculture and Consumer Services requiring that Above All Law Care & Landscaping, Inc., pay the complainant Skinner Nurseries, Inc., the amount of $7,129.05, to be paid within fifteen days from the date of entry of a final order in this matter. In the event that the Respondent does not comply with that order then the surety, Hartford Fire Insurance Company, should be ordered to provide payment under the conditions and provisions of the applicable bond. DONE AND ENTERED this 27th day of December, 2004, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF 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 27th day of December, 2004. COPIES FURNISHED: Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 01 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 01 Tallahassee, Florida 32399-0810 Brenda D. Hyatt, Bureau Chief Department of Agriculture and Consumer Services Bureau of License and Bond 407 South Calhoun Street, Mayo Building Tallahassee, Florida 32399-0800 Daniel I. Lawrence, President Above All Landscaping Post Office Box 2772 Ocala, Florida 34471 Chris Diaz Skinner Nurseries, Inc. 2970 Hartley Road, Suite 302 Jacksonville, Florida 32257 Scott Cochrane Hartford Insurance Company Hartford Plaza, T-4 Hartford, Connecticut 06115
The Issue Whether respondents owe petitioner money on account of sales of potatoes?
Findings Of Fact In order to finance his 1991 crops, petitioner Daniel Methvin of Hastings, had to borrow money at the end of the year before. To do that, he was told, he needed to execute contracts for the sale of the potatoes he intended to grow. He had been glad to have future contracts for the 1990 season, when a glut of potatoes pushed the price below three dollars a hundredweight (cwt). Respondent J.P. Mach Agri-Marketing, Inc. (or the company of which it is a subsidiary) had honored those contracts and paid considerably more than the market price for potatoes then. On November 24, 1990, Mr. Methvin executed a contract entitled "Sales Confirmation" agreeing to sell 10,000 cwt of "REPACK REDS", Petitioner's Exhibit No. 1 ("92% US #1 INCH AND 1/2 MIN. AT LEAST 95% SKIN, Id.) to J.P. Mach, Inc. during the period April 28 to May 31, 1991, at $6.50 per cwt. Petitioner's Exhibit No. 1. Consolidating smaller, earlier agreements, Mr. Methvin executed another contract entitled "Sales Confirmation" agreeing to sell 45,000 cwt of Atlantics ("85% U.S. #1") to J.P. Mach, Inc. during the period April 28 to May 31, 1991, at $5.75 per cwt, guaranteeing the potatoes would be suitable for chips. Petitioner's Exhibit No. 2. With these contracts (or, as to the chipping potatoes, their predecessors) as collateral, Mr. Methvin raised the funds necessary to plant. Both contracts between Mr. Methvin and J.P. Mach, Inc. had "act of god clauses" excusing Mr. Methvin's nondelivery of potatoes he failed to harvest on account of, among other things, tornadoes or hail. As it happened, tornadoes and hail prevented Mr. Methvin's reaping all he had sown. Petitioner only harvested 6,300 cwt of red potatoes and approximately 43,000 cwt of Atlantic potatoes. Another result of the bad weather was extremely high market prices, at some times exceeding $20 per cwt. On April 27, 1991, J.P. Mach visited Mr. Methvin's farm and the two men discussed incentives to keep Mr. Methvin from "jumping his contract," i.e., selling his potatoes to others at the market price. In the course of their conversation, Mr. Methvin said he needed to realize $450,000 from that year's potatoes; and Mr. Mach replied, "I will help you out", and "I will keep you in business." There was general talk of incentives and bonuses. Eventually, Mr. Mach said he would pay a premium over the contract price if Mr. Methvin fulfilled the original contracts to the fullest extent possible, by delivering all the potatoes he had; and Mr. Mach began remitting premium prices, as promised. On June 1, 1991, however, Mr. Methvin advised Mr. Mach of his intention to sell what remained of his harvest, some 1100 cwt of Atlantics, on the open market. When he carried through on this, Mr. Methvin realized approximately $200,000. Even at that, he lost $40,000 that season. Meanwhile Mr. Mach and his companies were sued for $550,000 for failure to deliver potatoes; and were not paid another $172,000 for potatoes they shipped to chip plants and others to whom they had promised still more potatoes. (Mr. Methvin was not the only grower who defaulted on contracts to ship potatoes to J.P. Mach, Inc.) As of June 1, 1991, Mr. Mach, his companies or his agents had paid Mr. Methvin "about $200,000," which was more than the contract price of the potatoes Mr. Methvin had loaded. Neither Mr. Mach nor his companies paid Mr. Methvin anything after June 1, 1991. At hearing, Mr. Methvin calculated the value of the loads as to which nothing had been remitted as of June 1, 1991, as "a few hundred more than $36,000," assuming the contract price plus the premium. But Mr. Mach and his companies or employees recalculated the price of the loads he had paid for by eliminating the premium, since Mr. Methvin had not, as promised on his side, delivered all his potatoes. J.P. Mach, Inc. was duly licensed during the 1990 season. After its license lapsed, a new license was issued to J.P. Mach Agri-Marketing, Inc. on April 24, 1991. A $50,000 certificate of deposit was filed with First Performance Bank as a condition of licensure.
Recommendation It is, accordingly, RECOMMENDED: That petitioner's complaint be denied. DONE and ENTERED this 3rd day of April, 1992, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of April, 1992. COPIES FURNISHED: Daniel Methvin Route 1, Box 92 Palatka, Florida 32131 Jeffrey P. Mach, President J. P. Mach Agri-Marketing, Inc. P.O. Box 7 Plover, Wisconsin 54467 Brenda Hyatt, Chief Bureau of Licensing & Bond Department of Agricutlure 508 Mayo Building Tallahassee, Florida 32399-0800 Richard Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, PL-10 Tallahassee, Florida 32399-0810
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following facts are found: At all times relevant to this proceeding, the respondent Frank Cimino, Jr. was licensed as an ordinary life, ordinary life including disability and dental health plan insurance agent. Respondent was also the president and incorporator of National Consumer Investment Counselors, Inc., a Florida corporation doing business at Post Office Box 1520, Brandon, Florida. Charles R. Ritzi is an insurance salesman employed at National Consumer Investment Counselors, Inc., and respondent is his supervisor. On or about November 2, 1979, Mr. Ritzi went to the home of Edward Kimball for the purpose of discussing insurance with him. He received from Mr. Kimball his other existing insurance policies and took them back to his office to analyze and compare their benefits, costs and terms with a policy which could be provided by respondent's corporation. Among the policies taken was Mr. Kimball's State Farm Insurance Company "IRA" annuity policy number 4,664,836. Several days later, Mr. Ritzi and respondent returned to Mr. Kimball's residence. Mr. Kimball made a decision to purchase an insurance Policy from respondent and numerous forms were signed by Mr. Kimball. These forms were then taken back to respondent's office and processed. Mr. Kimball did not sign a cash surrender form for his State Farm "IRA" annuity policy and he did not intend for that policy to be cancelled. On December 6, 1979, the offices of State Farm Life Insurance Company received in the mail a cash surrender request form on Edward Kimball' s "IRA" annuity policy number 4,664,836. Mr. Kimball's name appeared on the signature line of the form. The form also contained a change of mailing address section in which had been written the respondent's business address. The form constitutes a request for a withdrawal of dividends and surrender of the policy. By the terms of the policy, only the owner of the policy may make such a request. The "IRA" annuity policy funds a retirement plan. If the request form had been processed, there would have been a penalty imposed by the Internal Revenue Service for a premature distribution of funds and the funds distributed would have been treated as ordinary income for tax purposes. State Farm sent a service agent to Mr. Kimball's residence and it was discovered that Mr. Kimball did not desire to give up his "IRA" policy number 4,664,836, and that he did not sign the cash surrender request form. A handwriting expert confirmed that the handwriting appearing on the line entitled "Signature of Policyowner" was not the signature of Mr. Kimball. It is concluded as an ultimate finding of fact that respondent or an employee acting under his supervision signed the name of Edward Kimball, Jr. appearing on the State Farm cash surrender form and transmitted sold form to State Farm without the knowledge or consent of Mr. Kimball, the policy owner. In February of 1980, respondent placed an advertisement in the East Hillsborough Edition of The Tampa Tribune, a newspaper with a circulation of approximately 36,000. The advertisement guaranteed the reader that: "...if you are insurable and own any personal, ordinary life insurance, regardless of the company, we can show you a method of rearranging your program in a way that will: Increase the amount of money which would be paid to your beneficiary in the event of your death. 2. Increase the amount of cash available for retirement [sic], 3. Retain all of your existing guarantees and benefits and 4. We can do all this with no increase in premium." The four guarantees mentioned in the advertisement may not be capable of performance in all life insurance policies. However, it is possible for a qualified agent to accomplish the four guarantees in personal ordinary cash value life insurance policies. The guarantees are made to those persons who are insurable and who own personal, ordinary life insurance.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED THAT: The charges in the Administrative Complaint relating to a Penn Mutual Life Insurance Whole Life Policy be dismissed; Count II of the Administrative Complaint relating to an advertisement appearing in The Tampa Tribune be dismissed; Respondent be found guilty of violating Florida Statutes, Sections 626.611(4),(5),(7),(9), and (13) and 626.9541(1)(f); and Pursuant to Section 626.611, Florida Statutes, the insurance licenses presently held by the respondent be suspended for a period of one (1) year. Respectfully submitted and entered this 6th day of February, 1981, in Tallahassee, Florida. DIANE D. TERMOR Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of February, 1981. COPIES FURNISHED: Richard P. Harris, Esquire Department of Insurance 428-A Larson Building Tallahassee, Florida 32301 Frank Cimino, Jr. Post Office Box 1520 Brandon, Florida 33511 Honorable Bill Gunter Office of Treasurer Insurance Commissioner The Capitol Tallahassee, Florida 32301
The Issue The issue is whether, as provided by the relevant statutes, Respondents owe Petitioner money for the sale of agricultural products.
Findings Of Fact At all material times, Petitioner, which is located in Homestead, Florida, has been a producer of agricultural products. At all material times, Respondent Small Indian Corporation (Respondent) has been a dealer in agricultural products. Respondent Cumberland Casualty and Surety Company, as surety (Surety), issued a bond to Respondent, as principal, in the amount of $27,600 for the period, November 26, 1999, through November 25, 2000. Surety also issued a bond to Respondent in the same amount for the following bond year. During the periods covered by this case, Petitioner sold to Respondent numerous avocados, limes, and papayas. The shipments were timely and conformed in quality and quantity to the orders. Petitioner timely issued invoices to Respondent for the sales of these agricultural products, but Respondent never paid any portion of these invoices. On May 25, 2001, Petitioner filed a complaint with the Department of Agriculture and Consumer Services (Department) for the period from November 22, 2000, through February 5, 2001. The Department required Petitioner to file separate complaints by bond year. Thus, Petitioner filed an amended complaint for $1190 for the bond year ending November 25, 2000, and an amended complaint for $54,591.25 for the bond year ending November 25, 2001. The date of the lone invoice within the bond year ending November 25, 2000, was November 22, 2000. The amended complaint concerning the bond year ending November 25, 2000, commenced DOAH Case No. 01-3320, and the amended complaint concerning the bond year ending November 25, 2001, commenced DOAH Case No. 01-3321. The allegations as to dates and amounts of invoices are all correct.
Recommendation It is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order dismissing the amended complaint in DOAH Case No. 01-3320 and finding Respondent liable to Petitioner in DOAH Case No. 01-3321 for the sum of $54,591.25. DONE AND ENTERED this 5th day of November, 2001, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 5th day of November, 2001. COPIES FURNISHED: Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Tritschler General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Brenda D. Hyatt Bureau Chief Bureau of License and Bond Department of Agriculture 514 East Tennessee Street India Building Tallahassee, Florida 32308 Carolann Swanson General Counsel Brooks Tropical, Inc. Post Office Box 900160 Homestead, Florida 33090 W. Sam Holland Hinshaw and Culbertson 200 South Biscayne Boulevard Suite 800 First Union Financial Center Miami, Florida 33131 Deborah A. Meek Cumberland Casualty and Surety Company 4311 West Waters Avenue, Suite 401 Tampa, Florida 33614
