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Florida’s Outgoing Insurance Commissioner Reflects On Job

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
The Florida Channel
Kevin McCarty.

Kevin McCarty, Florida's longtime insurance commissioner, is leaving the Office of Insurance Regulation during the first week of July.

McCarty oversaw the insurance industry through the unprecedented 2004 and 2005 hurricane seasons and a global recession. But a year ago, he was one of three agency heads targeted for removal by Gov. Rick Scott.

McCarty remained as commissioner, before announcing in January he would leave to "pursue other career opportunities of interest that have recently come to my attention."

In April, Scott and the Florida Cabinet agreed to retain McCarty for a couple of extra months to help transition new Commissioner David Altmaier into the high-profile job.

The News Service of Florida has five questions for Kevin McCarty:

Q: Looking at your years running OIR, what decision can you look back on and say, "This is something we should have done different and this is what we should have done?"

McCARTY: As insurance commissioner, you know, you make hundreds of decisions a day that affect a huge number of people in the state of Florida. People underestimate the impact of decisions made in the Office of Insurance Regulation on the daily lives of everyday people and businesses. You do try to make the best decisions … given the information and the resources you have at that time. In the fullness of time, you can come back and reflect, and say, "Well, I could have done differently" as the facts have changed and you have new information. With that as background, if I was to look at one incident, there was a period of time a couple of years ago where we embarked on a program of self-certifying homeowners' policies for companies doing business in Florida.

The thought process behind that was that with the changes that had occurred in the PIP (auto insurance) law and homeowners' law, and a number of other things, had precipitated thousands of new filings. We had the same resource restrictions or resource limitation in trying to process a significant increase in workflow. So as a consequence of that, we experimented with a provision in statutes that allowed us to suspend a review of filings for a period of time. It was necessary for them, and we thought that the companies would judiciously review that and use that for an opportunity to get their products to market and at the same time be consistent with Florida statutes. And then we renewed that for an additional six-month period.

I think in hindsight, one of the lessons learned, I think for me and for some of my colleagues in the office, it was a window of opportunity for some potential filings that were not filed consistent with Florida law. That was an opportunity for some companies to game the system, if you will, and actually file things that had been disapproved previously. We had hoped that companies that had been advised that something was in violation of Florida statutes wouldn't turn around and file that very same thing. Although reasonable people can disagree, that was an unfortunate turn of events. And the part I regret is extending it the six months.

We were successful, however, in securing additional resources from the Legislature, which we were very grateful for, which we were able to then deploy and we're now in a situation where we're back to prior approval.

It was well-intended, but not the results we had intended.

Q: What advice are you giving Commissioner Altmaier in how to approach workers' compensation insurance now that the Florida Supreme Court has struck down a limit on attorney's fees?

McCARTY: The thing about workers' comp is that is it has many, many stakeholders, as is any line of insurance. Perhaps no one area brings more people to the table than workers' compensation. It is probably one of the most important lines of business, certainly for the economic engine of Florida. The cost of workers' comp is one of the key component issues that employers review in contemplation of establishing businesses or moving businesses into the Sunshine State. And David has been an integral part of our management team for a number of years, so he's familiar with our philosophy, which is to embrace our stakeholders, and that's exactly what he's doing.

He is working on a hearing for the final NCCI (National Council on Compensation Insurance) rate case, which reflects a little over 15 percent, relating to the (attorney's fee) case, the Castellanos case, that is of course the first year's impact. That doesn't mean it's the full impact.

Just like in 2003, when the council suggested a 15 percent decrease --- that was the first year's impact (of a 2003 overhaul of the workers' compensation system) --- knowing that in the fullness of time that decrease actually was realized at over 60 percent. … So it's hard for us to calibrate what the impact is going to be. And NCCI was very direct in their filing and when we met with them shared with Commissioner Altmaier that it's very hard for them to calibrate changes in human behavior. And by that I mean how many cases (will result from the Supreme Court ruling). They can calibrate the difference between a case with a lawyer and a case without a lawyer, but they can't calibrate how many cases will have lawyers as a result of the change. And I think that's an important component. … I think it's important for us to try to see what range of options are out there and ultimately what can be done to assure, in my view, the most important thing, which is prompt, quality medical care to the injured worker and getting that person back to work.

Q: Last year, you suggested it may be time to move on from no-fault auto insurance. Where does Florida need to go with the future of affordable auto insurance that has a system with the chance for less fraud?

McCARTY: I think one of the things we've learned through our various reforms of the PIP (personal-injury protection) system is that fraud is rampant in our system. I have suggested on previous occasions, certainly prior to our last reform, that it may be time to kind of jettison the system, squeeze the fraud out of it and then once the fraud had been squeezed out of the pipeline, it might be an opportunity for us to look at other options, either a reformed PIP program or a reformed PIP concept, or looking at a mandatory BI (bodily injury coverage). We did a herculean effort to fix the last PIP system. We have seen increases in that. We have commissioned a study to look at the PIP system, to try to figure out where the money is going and how can we formulate a public policy or make a range of options available to the Legislature to determine what fits best for the people of Florida in terms of replacing PIP or just eliminating PIP and not replacing it with anything, which is also an option.

Q: What impacts on staff did you see or hear as your employment was in the headlines, and what was the moment you decided it was time to move on?

McCARTY: I moved on at the time when I thought was the opportune time to move on. There had been a number of projects that I've been working on over the last couple of years that I wanted to see to conclusion or at least far enough to conclusion where I felt comfortable leaving the office. Certainly bringing closure to the investigation regarding a series of examinations on life insurance practices, and ultimately returning a half billion dollars all across the country, it was very important to me to bring that to closure. And then we passed a law (on the life insurance issue) in the past session. So I feel comfortable now in that work having been completed. Of course, that is being challenged, but I feel comfortable in the constitutionality of the law and that this will be a harbinger of things to come and a template for the rest of the country.

Q: And finally, you haven't appeared to be in a rush to move on to the next stage in your life or professional career. There's been talk of you heading to the federal government's National Flood Insurance Program or the National Association of Insurance Commissioners, hooking up with a lobbying firm or just heading to the beach. What do you want or plan to do once your time with OIR is done?

McCARTY: I do have designs on a particular area.

There are opportunities out there that I thought would coincide with my departure, and I'm still exploring those opportunities that I think give me opportunities to use my years of experience, not only in the domestic market and in the international market, where I think that I could benefit consumers of Florida and also help U.S. markets and U.S. insurance companies. And there are a few opportunities out there that I'm going to pursue.