HOUSE AMENDMENT Bill No. HB 1713
1	CHAMBER ACTION
2	Senate House
3	.
4	.
5	.
6
7
8
9
10
11
12	Representatives Berfield, Harrell and Homan offered the
13	following:
14
15	Amendment (with directory and title amendments)
16	Between lines 772 and 773, insert:
17	Section 21. Section 627.0662, Florida Statutes, is created
18	to read:
19	627.0662 Excessive profits for medical liability insurance
20	prohibited.--
21	(1) As used in this section:
22	(a) “Medical liability insurance” means insurance that is
23	written on a professional liability insurance policy issued to a
24	health care practitioner or on a liability insurance policy
25	covering medical malpractice claims issued to a health care
26	facility.
27	(b) “Medical liability insurer” means any insurance
28	company or group of insurance companies writing medical
29	liability insurance in this state and does not include any self-
30	insurance fund or other nonprofit entity writing such insurance.
31	(2) Each medical liability insurer shall file with the
32	Office of Insurance Regulation, prior to July 1 of each year on
33	forms prescribed by the office, the following data for medical
34	liability insurance business in this state. The data shall
35	include both voluntary and joint underwriting association
36	business, as follows:
37	(a) Calendar-year earned premium.
38	(b) Accident-year incurred losses and loss adjustment
39	expenses.
40	(c) The administrative and selling expenses incurred in
41	this state or allocated to this state for the calendar year.
42	(d) Policyholder dividends incurred during the applicable
43	calendar year.
44	(3)(a) Excessive profit has been realized if there has
45	been an underwriting gain for the 3 most recent calendar-
46	accident years combined which is greater than the anticipated
47	underwriting profit plus 5 percent of earned premiums for those
48	calendar-accident years.
49	(b) As used in this subsection with respect to any 3-year
50	period, “anticipated underwriting profit” means the sum of the
51	dollar amounts obtained by multiplying, for each rate filing of
52	the insurer group in effect during such period, the earned
53	premiums applicable to such rate filing during such period by
54	the percentage factor included in such rate filing for profit
55	and contingencies, such percentage factor having been determined
56	with due recognition to investment income from funds generated
57	by business in this state. Separate calculations need not be
58	made for consecutive rate filings containing the same percentage
59	factor for profits and contingencies.
60	(4) Each medical liability insurer shall also file a
61	schedule of medical liability insurance loss in this state and
62	loss adjustment experience for each of the 3 most recent
63	accident years. The incurred losses and loss adjustment expenses
64	shall be valued as of March 31 of the year following the close
65	of the accident year, developed to an ultimate basis, and at two
66	12-month intervals thereafter, each developed to an ultimate
67	basis, to the extent that a total of three evaluations is
68	provided for each accident year. The first year to be so
69	reported shall be accident year 2004, such that the reporting of
70	3 accident years will not take place until accident years 2005
71	and 2006 have become available.
72	(5) Each insurer group's underwriting gain or loss for
73	each calendar-accident year shall be computed as follows: the
74	sum of the accident-year incurred losses and loss adjustment
75	expenses as of March 31 of the following year, developed to an
76	ultimate basis, plus the administrative and selling expenses
77	incurred in the calendar year, plus policyholder dividends
78	applicable to the calendar year, shall be subtracted from the
79	calendar-year earned premium to determine the underwriting gain
80	or loss.
81	(6) For the 3 most recent calendar-accident years, the
82	underwriting gain or loss shall be compared to the anticipated
83	underwriting profit.
84	(7) If the medical liability insurer has realized an
85	excessive profit, the office shall order a return of the
86	excessive amounts to policyholders after affording the insurer
87	an opportunity for hearing and otherwise complying with the
88	requirements of chapter 120. Such excessive amounts shall be
89	refunded to policyholders in all instances unless the insurer
90	affirmatively demonstrates to the office that the refund of the
91	excessive amounts will render the insurer or a member of the
92	insurer group financially impaired or will render it insolvent.
93	(8) The excessive amount shall be refunded to
94	policyholders on a pro rata basis in relation to the final
95	compilation year earned premiums to the voluntary medical
96	liability insurance policyholders of record of the insurer group
97	on December 31 of the final compilation year.
98	(9) Any return of excessive profits to policyholders under
99	this section shall be provided in the form of a cash refund or a
100	credit towards the future purchase of insurance.
101	(10)(a) Cash refunds to policyholders may be rounded to
102	the nearest dollar.
103	(b) Data in required reports to the office may be rounded
104	to the nearest dollar.
105	(c) Rounding, if elected by the insurer group, shall be
106	applied consistently.
107	(11)(a) Refunds to policyholders shall be completed as
108	follows:
109	1. If the insurer elects to make a cash refund, the refund
110	shall be completed within 60 days after entry of a final order
111	determining that excessive profits have been realized; or
112	2. If the insurer elects to make refunds in the form of a
113	credit to renewal policies, such credits shall be applied to
114	policy renewal premium notices which are forwarded to insureds
115	more than 60 calendar days after entry of a final order
116	determining that excessive profits have been realized. If an
117	insurer has made this election but an insured thereafter cancels
118	his or her policy or otherwise allows the policy to terminate,
119	the insurer group shall make a cash refund not later than 60
120	days after termination of such coverage.
121	(b) Upon completion of the renewal credits or refund
122	payments, the insurer shall immediately certify to the office
123	that the refunds have been made.
124	(12) Any refund or renewal credit made pursuant to this
125	section shall be treated as a policyholder dividend applicable
126	to the year in which it is incurred, for purposes of reporting
127	under this section for subsequent years.
128
129
130	================= T I T L E A M E N D M E N T =================
131	Remove line(s) 48, and insert:
132	filings; creating s. 627.0662, F.S.; providing definitions;
133	requiring each medical liability insurer to report certain
134	information to the Office of Insurance Regulation; providing for
135	determination of whether excessive profit has been realized;
136	requiring return of excessive amounts; amending s. 627.357,
137	F.S.; deleting the
138