Florida Senate - 2010 CS for SB 2176
By the Committee on Banking and Insurance; and Senator Peaden
597-04417-10 20102176c1
1 A bill to be entitled
2 An act relating to commercial insurance rates;
3 amending s. 627.062, F.S.; exempting certain
4 categories or types of insurance and types of
5 commercial lines risks from certain rate requirements;
6 requiring that insurers or rating organizations
7 establish and use rates, rating schedules, or rating
8 manuals allowing for a reasonable rate of return on
9 certain insurance and risks; requiring that an insurer
10 notify the Office of Insurance Regulation of any
11 changes to rates for certain insurance and risks;
12 requiring that such notice contain certain
13 information; requiring that an insurer maintain
14 certain information; providing that such information
15 is subject to examination by the office; requiring
16 that the office consider certain rate factors and
17 standards when examining such information for the
18 purpose of determining whether the rate is excessive,
19 inadequate, or unfairly discriminatory; requiring that
20 a rating organization provide notice to the office of
21 any changes to loss cost for certain types of
22 insurance within a specified period after such change;
23 providing requirements for such notification;
24 requiring that a rating organization maintain certain
25 information; providing that such information is
26 subject to examination by the office; requiring that
27 specified rate factors and standards be used in such
28 examination; authorizing the office, when reviewing a
29 rate, to require that an insurer provide certain
30 information at the insurer’s expense; amending s.
31 627.0651, F.S.; exempting commercial motor vehicle
32 insurance from certain motor vehicle insurance rate
33 requirements; prohibiting certain insurance rates from
34 being excessive, inadequate, or unfairly
35 discriminatory; requiring that insurers or rating
36 organizations establish and use rates, rating
37 schedules, or rating manuals allowing for a reasonable
38 rate of return on certain insurance and risks;
39 requiring that an insurer notify the office of any
40 changes to rates for certain insurance and risks;
41 requiring that such notice contain certain
42 information; requiring that an insurer maintain
43 certain information; providing that such information
44 is subject to examination by the office; requiring
45 that the office consider certain rate factors and
46 standards when examining such information for the
47 purpose of determining whether the rate is excessive,
48 inadequate, or unfairly discriminatory; requiring that
49 a rating organization provide notice to the office of
50 any changes to loss cost for certain types of
51 insurance within a specified period after such change;
52 providing requirements for such notification;
53 requiring that a rating organization maintain certain
54 information; providing that such information is
55 subject to examination by the office; requiring that
56 specified rate factors and standards be used in such
57 examination; authorizing the office, when reviewing a
58 rate, to require that an insurer provide certain
59 information at the insurer’s expense; providing an
60 effective date.
61
62 Be It Enacted by the Legislature of the State of Florida:
63
64 Section 1. Paragraph (d) is added to subsection (3) of
65 section 627.062, Florida Statutes, to read:
66 627.062 Rate standards.—
67 (3)
68 (d)1. The following categories or kinds of insurance and
69 types of commercial lines risks are not subject to paragraph
70 (2)(a) or paragraph (2)(f):
71 a. Excess or umbrella.
72 b. Surety and fidelity.
73 c. Boiler and machinery and leakage and fire extinguishing
74 equipment.
75 d. Errors and omissions.
76 e. Directors and officers, employment practices, and
77 management liability.
78 f. Intellectual property and patent infringement liability.
79 g. Advertising injury and Internet liability insurance.
80 h. Property risks rated under a highly protected risks
81 rating plan.
82 i. Any other commercial lines categories or kinds of
83 insurance or types of commercial lines risks that the office
84 determines should not be subject to paragraph (2)(a) or
85 paragraph (2)(f) because of the existence of a competitive
86 market for such insurance, similarity of such insurance to other
87 categories or kinds of insurance not subject to paragraph (2)(a)
88 or paragraph (2)(f), or to improve the general operational
89 efficiency of the office.
90 2. Insurers or rating organizations shall establish and use
91 rates, rating schedules, or rating manuals to allow the insurer
92 a reasonable rate of return on insurance and risks described in
93 subparagraph 1. which are written in this state.
94 3. An insurer must notify the office of any changes to
95 rates for insurance and risks described in subparagraph 1. no
96 later than 30 days after the effective date of the change. The
97 notice must include the name of the insurer, the type or kind of
98 insurance subject to rate change, total premium written during
99 the immediately preceding year by the insurer for the type or
100 kind of insurance subject to the rate change, and the average
101 statewide percentage change in rates. Underwriting files,
102 premiums, losses, and expense statistics with regard to
103 insurance and risks described in subparagraph 1. written by an
104 insurer shall be maintained by the insurer and subject to
105 examination by the office. Upon examination, the office shall,
106 in accordance with generally accepted and reasonable actuarial
107 techniques, consider the rate factors in paragraphs (2)(b), (c),
108 and (d) and the standards in paragraph (2)(e) to determine if
109 the rate is excessive, inadequate, or unfairly discriminatory.
110 4. A rating organization must notify the office of any
111 changes to loss cost for insurance and risks described in
112 subparagraph 1. no later than 30 days after the effective date
113 of the change. The notice must include the name of the rating
114 organization, the type or kind of insurance subject to a loss
115 cost change, loss costs during the immediately preceding year
116 for the type or kind of insurance subject to the loss cost
117 change, and the average statewide percentage change in loss
118 cost. Loss and exposure statistics with regard to risks
119 applicable to loss costs for a rating organization not subject
120 to paragraph (2)(a) or paragraph (2)(f) shall be maintained by
121 the rating organization and are subject to examination by the
122 office. Upon examination, the office shall, in accordance with
123 generally accepted and reasonable actuarial techniques, consider
124 the rate factors in paragraphs (2)(b)-(d) and the standards in
125 paragraph (2)(e) to determine if the rate is excessive,
126 inadequate, or unfairly discriminatory.
127 5. In reviewing a rate, the office may require the insurer
128 to provide at the insurer’s expense all information necessary to
129 evaluate the condition of the company and the reasonableness of
130 the rate according to the applicable criteria described in this
131 section.
132 Section 2. Subsection (14) is added to section 627.0651,
133 Florida Statutes, to read:
134 627.0651 Making and use of rates for motor vehicle
135 insurance.—
136 (14)(a) Commercial motor vehicle insurance covering a fleet
137 of five or more self-propelled vehicles is not subject to
138 subsection (1), subsection (2), or subsection (9) or s.
139 627.0645.
140 (b) The rates for insurance described in this subsection
141 may not be excessive, inadequate, or unfairly discriminatory.
142 (c) Insurers shall establish and use rates, rating
143 schedules, or rating manuals to allow the insurer a reasonable
144 rate of return on commercial motor vehicle insurance written in
145 this state covering a fleet of five or more self-propelled
146 vehicles.
147 (d) An insurer must notify the office of any changes to
148 rates for type of insurance described in this subsection no
149 later than 30 days after the effective date of the change. The
150 notice shall include the name of the insurer, the type or kind
151 of insurance subject to rate change, total premium written
152 during the immediately preceding year by the insurer for the
153 type or kind of insurance subject to the rate change, and the
154 average statewide percentage change in rates. Underwriting
155 files, premiums, losses, and expense statistics for the type of
156 insurance described in this subsection shall be maintained by
157 the insurer and subject to examination by the office. 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. Loss and exposure statistics with regard to risks
172 applicable to loss costs for a rating organization not subject
173 to subsection (1), subsection (2), or subsection (9) shall be
174 maintained by the rating organization and are subject to
175 examination by the office. Upon examination, the office shall,
176 in accordance with generally accepted and reasonable actuarial
177 techniques, consider the rate factors in paragraphs (2)(a)-(l)
178 and apply subsections (3)-(8) to determine if the rate is
179 excessive, inadequate, or unfairly discriminatory.
180 (f) In reviewing the rate, the office may require the
181 insurer to provide at the insurer’s expense all information
182 necessary to evaluate the condition of the company and the
183 reasonableness of the rate according to the applicable criteria
184 described herein.
185 Section 3. This act shall take effect January 1, 2011.