Florida Senate - 2016                                     SB 638
       By Senator Lee
       24-00480C-16                                           2016638__
    1                        A bill to be entitled                      
    2         An act relating to health maintenance organization
    3         solvency; amending s. 624.4085, F.S.; redefining the
    4         term “life and health insurer” to include health
    5         maintenance organizations authorized only in this
    6         state; providing an exception from the definition;
    7         defining terms; creating s. 641.224, F.S.; specifying
    8         a limitation on the premium to surplus ratio of a
    9         health maintenance organization; providing formulas
   10         for calculation; specifying requirements for a
   11         projected annual gross written premium; defining the
   12         term “gross written premium”; requiring the Office of
   13         Insurance Regulation to take certain actions with
   14         respect to a health maintenance organization if a
   15         specified premium to surplus ratio is exceeded;
   16         providing an exception; providing applicability;
   17         providing a directive to the Division of Law Revision
   18         and Information; providing an effective date.
   20  Be It Enacted by the Legislature of the State of Florida:
   22         Section 1. Paragraph (g) of subsection (1) of section
   23  624.4085, Florida Statutes, is amended to read:
   24         624.4085 Risk-based capital requirements for insurers.—
   25         (1) As used in this section, the term:
   26         (g) “Life and health insurer” means an insurer authorized
   27  or eligible under the Florida Insurance Code to underwrite life
   28  or health insurance. The term also includes:
   29         1. A property and casualty insurer writing that writes
   30  accident and health insurance only.
   31         2.Effective January 1, 2015, the term also includes A
   32  health maintenance organization that is authorized in this state
   33  and one or more other states, jurisdictions, or countries and a
   34  prepaid limited health service organization that is authorized
   35  in this state, except that: and one or more other states,
   36  jurisdictions, or countries
   37         a. The term does not include a prepaid limited health
   38  service organization authorized in this state, but not
   39  authorized in any other state, jurisdiction, or country; and
   40         b. Until January 1, 2019, the term does not include a
   41  health maintenance organization holding a certificate of
   42  authority in this state before the effective date of this act,
   43  but that is not authorized in any other state, jurisdiction, or
   44  country.
   46  As used in this paragraph, the term “health maintenance
   47  organization” has the same meaning as in s. 641.19, and the term
   48  “prepaid limited health service organization” has the same
   49  meaning as in s. 636.003.
   50         Section 2. Section 641.224, Florida Statutes, is created to
   51  read:
   52         641.224 Premium to surplus ratio; limitations.—
   53         (1) The premium to surplus ratio of a health maintenance
   54  organization may not exceed 10 to 1. The ratio shall be
   55  calculated by dividing premium by the current or projected
   56  surplus. Premium shall be calculated as the product of the sum
   57  of actual or projected gross written premium and actual or
   58  projected risk revenue multiplied by 0.80. The ratio shall be
   59  computed on an annualized basis. As used in this section, the
   60  term “gross written premium” means the sum of direct premium
   61  written and reinsurance assumed.
   62         (2) A health maintenance organization shall base the
   63  projected annual gross written premium on its actual writings to
   64  date for the current calendar year, writings for the immediately
   65  preceding calendar year, or both.
   66         (3) If a health maintenance organization exceeds the
   67  premium to surplus ratio in subsection (1), the office must
   68  either suspend the certificate of authority of the health
   69  maintenance organization or establish by order the maximum
   70  annual gross premium the health maintenance organization may
   71  write to maintain the ratio, unless the health maintenance
   72  organization demonstrates to the satisfaction of the office that
   73  exceeding the ratio does not endanger its financial condition or
   74  policyholder interests.
   75         (4) A health maintenance organization with a surplus
   76  exceeding $40 million and written health maintenance contracts
   77  in each of the immediately preceding 5 calendar years is not
   78  subject to the requirements of this section.
   79         (5) A health maintenance organization holding a certificate
   80  of authority before the effective date of this act is not
   81  subject to this section until January 1, 2019.
   82         Section 3. The Division of Law Revision and Information is
   83  directed to replace the phrase “the effective date of this act”
   84  where it occurs in this act with the date the act becomes a law.
   85         Section 4. This act shall take effect upon becoming a law.