Florida Senate - 2011                       CS for CS for SB 178
       
       
       
       By the Committees on Commerce and Tourism; and Banking and
       Insurance; and Senator Oelrich
       
       
       
       577-02602-11                                           2011178c2
    1                        A bill to be entitled                      
    2         An act relating to commercial insurance rates;
    3         amending s. 627.062, F.S.; exempting certain liability
    4         and property insurance lines from specific rate
    5         standards and filing requirements; revising certain
    6         reporting and recordkeeping requirements for such
    7         exempt insurers and certain rating organizations
    8         regarding rate changes; requiring such entities to pay
    9         certain examination costs; deleting a provision that
   10         permits the Office of Insurance Regulation of the
   11         Financial Services Commission to require such insurers
   12         to provide certain information regarding rates at the
   13         insurer’s expense; requiring such entities to pay
   14         certain examination costs; amending s. 627.0651, F.S.;
   15         exempting certain commercial motor vehicle insurance
   16         from specific rate standards and filing requirements;
   17         revising certain reporting and recordkeeping
   18         requirements for such exempt insurers and certain
   19         rating organizations regarding rate changes; requiring
   20         such entities to pay certain examination costs;
   21         deleting a provision that permits the Office of
   22         Insurance Regulation of the Financial Services
   23         Commission to require such insurers to provide certain
   24         information regarding rates at the insurer’s expense;
   25         providing an effective date.
   26  
   27  Be It Enacted by the Legislature of the State of Florida:
   28  
   29         Section 1. Subsection (3) of section 627.062, Florida
   30  Statutes, is amended to read:
   31         627.062 Rate standards.—
   32         (3)(a) For individual risks that are not rated in
   33  accordance with the insurer’s rates, rating schedules, rating
   34  manuals, and underwriting rules filed with the office and which
   35  have been submitted to the insurer for individual rating, the
   36  insurer must maintain documentation on each risk subject to
   37  individual risk rating. The documentation must identify the
   38  named insured and specify the characteristics and classification
   39  of the risk supporting the reason for the risk being
   40  individually risk rated, including any modifications to existing
   41  approved forms to be used on the risk. The insurer must maintain
   42  these records for a period of at least 5 years after the
   43  effective date of the policy.
   44         (b) Individual risk rates and modifications to existing
   45  approved forms are not subject to this part or part II, except
   46  for paragraph (a) and ss. 627.402, 627.403, 627.4035, 627.404,
   47  627.405, 627.406, 627.407, 627.4085, 627.409, 627.4132,
   48  627.4133, 627.415, 627.416, 627.417, 627.419, 627.425, 627.426,
   49  627.4265, 627.427, and 627.428, but are subject to all other
   50  applicable provisions of this code and rules adopted thereunder.
   51         (c) This subsection does not apply to private passenger
   52  motor vehicle insurance.
   53         (d)1. The following categories or kinds of insurance and
   54  types of commercial lines risks are not subject to paragraph
   55  (2)(a) or paragraph (2)(f):
   56         a. Excess or umbrella.
   57         b. Surety and fidelity.
   58         c. Boiler and machinery and leakage and fire extinguishing
   59  equipment.
   60         d. Errors and omissions.
   61         e. Directors and officers, employment practices, fiduciary
   62  liability, and management liability.
   63         f. Intellectual property and patent infringement liability.
   64         g. Advertising injury and Internet liability insurance.
   65         h. Property risks rated under a highly protected risks
   66  rating plan.
   67         i. General liability.
   68         j. Nonresidential property, except for collateral
   69  protection insurance, as defined in s. 624.6085.
   70         k. Nonresidential multiperil.
   71         l. Excess property.
   72         m. Burglary and theft.
   73         n.i. Any other commercial lines categories or kinds of
   74  insurance or types of commercial lines risks that the office
   75  determines should not be subject to paragraph (2)(a) or
   76  paragraph (2)(f) because of the existence of a competitive
   77  market for such insurance, similarity of such insurance to other
   78  categories or kinds of insurance not subject to paragraph (2)(a)
   79  or paragraph (2)(f), or to improve the general operational
   80  efficiency of the office.
   81         2. Insurers or rating organizations shall establish and use
   82  rates, rating schedules, or rating manuals to allow the insurer
   83  a reasonable rate of return on insurance and risks described in
   84  subparagraph 1. which are written in this state.
   85         3. An insurer must notify the office of any changes to
   86  rates for insurance and risks described in subparagraph 1. no
   87  later than 30 days after the effective date of the change. The
   88  notice must include the name of the insurer, the type or kind of
   89  insurance subject to rate change, total premium written during
   90  the immediately preceding year by the insurer for the type or
   91  kind of insurance subject to the rate change, and the average
   92  statewide percentage change in rates. Actuarial data
   93  Underwriting files, premiums, losses, and expense statistics
   94  with regard to rates for insurance and risks described in
   95  subparagraph 1. written by an insurer shall be maintained by the
   96  insurer for 2 years after the effective date of changes to rates
   97  and are subject to examination by the office. The office may
   98  require the insurer to pay the costs associated with an
   99  examination. Upon examination, the office shall, in accordance
  100  with generally accepted and reasonable actuarial techniques,
  101  consider the rate factors in paragraphs (2)(b), (c), and (d) and
  102  the standards in paragraph (2)(e) to determine if the rate is
  103  excessive, inadequate, or unfairly discriminatory.
  104         4. A rating organization must notify the office of any
  105  changes to loss cost for insurance and risks described in
  106  subparagraph 1. no later than 30 days after the effective date
  107  of the change. The notice must include the name of the rating
  108  organization, the type or kind of insurance subject to a loss
  109  cost change, loss costs during the immediately preceding year
  110  for the type or kind of insurance subject to the loss cost
  111  change, and the average statewide percentage change in loss
  112  cost. Actuarial data Loss and exposure statistics with regard to
  113  changes to loss cost for risks applicable to loss costs for a
  114  rating organization not subject to paragraph (2)(a) or paragraph
  115  (2)(f) shall be maintained by the rating organization for 2
  116  years after the effective date of the change and are subject to
  117  examination by the office. The office may require the rating
  118  organization to pay the costs associated with an examination.
  119  Upon examination, the office shall, in accordance with generally
  120  accepted and reasonable actuarial techniques, consider the rate
  121  factors in paragraphs (2)(b)-(d) and the standards in paragraph
  122  (2)(e) to determine if the rate is excessive, inadequate, or
  123  unfairly discriminatory.
  124         5. In reviewing a rate, the office may require the insurer
  125  to provide at the insurer’s expense all information necessary to
  126  evaluate the condition of the company and the reasonableness of
  127  the rate according to the applicable criteria described in this
  128  section.
  129         Section 2. Subsection (14) of section 627.0651, Florida
  130  Statutes, is amended to read:
  131         627.0651 Making and use of rates for motor vehicle
  132  insurance.—
  133         (14)(a) Commercial motor vehicle insurance covering a fleet
  134  of 20 or more self-propelled vehicles is not subject to
  135  subsection (1), subsection (2), or subsection (9) or s.
  136  627.0645.
  137         (b) The rates for insurance described in this subsection
  138  may not be excessive, inadequate, or unfairly discriminatory.
  139         (c) Insurers shall establish and use rates, rating
  140  schedules, or rating manuals to allow the insurer a reasonable
  141  rate of return on commercial motor vehicle insurance written in
  142  this state covering a fleet of 20 or more self-propelled
  143  vehicles.
  144         (d) An insurer must notify the office of any changes to
  145  rates for type of insurance described in this subsection no
  146  later than 30 days after the effective date of the change. The
  147  notice shall include the name of the insurer, the type or kind
  148  of insurance subject to rate change, total premium written
  149  during the immediately preceding year by the insurer for the
  150  type or kind of insurance subject to the rate change, and the
  151  average statewide percentage change in rates. Actuarial data
  152  with regard to rates for risks Underwriting files, premiums,
  153  losses, and expense statistics for the type of insurance
  154  described in this subsection shall be maintained by the insurer
  155  for 2 years after the effective date of changes to rates and are
  156  subject to examination by the office. The office may require an
  157  insurer to pay the costs associated with an examination. Upon
  158  examination, the office shall, in accordance with generally
  159  accepted and reasonable actuarial techniques, consider the
  160  factors in paragraphs (2)(a)–(l) and apply subsections (3)-(8)
  161  to determine if the rate is excessive, inadequate, or unfairly
  162  discriminatory.
  163         (e) A rating organization must notify the office of any
  164  changes to loss cost for the type of insurance described in this
  165  subsection no later than 30 days after the effective date of the
  166  change. The notice shall include the name of the rating
  167  organization, the type or kind of insurance subject to a loss
  168  cost change, loss costs during the immediately preceding year
  169  for the type or kind of insurance subject to the loss cost
  170  change, and the average statewide percentage change in loss
  171  cost. Actuarial data Loss and exposure statistics with regard to
  172  changes to loss cost for risks applicable to loss costs for a
  173  rating organization not subject to subsection (1), subsection
  174  (2), or subsection (9) shall be maintained by the rating
  175  organization for 2 years after the effective date of the change
  176  and are subject to examination by the office. The office may
  177  require the rating organization to pay the costs associated with
  178  an examination. Upon examination, the office shall, in
  179  accordance with generally accepted and reasonable actuarial
  180  techniques, consider the rate factors in paragraphs (2)(a)-(l)
  181  and apply subsections (3)-(8) to determine if the rate is
  182  excessive, inadequate, or unfairly discriminatory.
  183         (f) In reviewing the rate, the office may require the
  184  insurer to provide at the insurer’s expense all information
  185  necessary to evaluate the condition of the company and the
  186  reasonableness of the rate according to the applicable criteria
  187  described herein.
  188         Section 3. This act shall take effect July 1, 2011.