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. 19 20 Be It Enacted by the Legislature of the State of Florida: 21 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 writes30 accident and health insurance only. 31 2. Effective January 1, 2015, the term also includesA 32 health maintenance organization that is authorized in this state33 and one or more other states, jurisdictions, or countriesand a 34 prepaid limited health service organization that isauthorized 35 in this state, except that: and one or more other states,36 jurisdictions, or countries37 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. 45 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.