Florida Senate - 2012 SENATOR AMENDMENT
Bill No. HB 307
Barcode 149120
LEGISLATIVE ACTION
Senate . House
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Floor: 2b/RE/2R .
03/08/2012 07:17 PM .
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Senator Smith moved the following:
1 Senate Amendment to Amendment (487606) (with title
2 amendment)
3
4 Between lines 165 and 166
5 insert:
6 Section 6. Section 627.215, Florida Statutes, is amended to
7 read:
8 627.215 Excessive profits for workers’ compensation,
9 employer’s liability, commercial property, and commercial
10 casualty insurance prohibited.—
11 (1)(a) Each insurer group writing workers’ compensation and
12 employer’s liability insurance as defined in s. 624.605(1)(c),
13 commercial property insurance as defined in s. 627.0625,
14 commercial umbrella liability insurance as defined in s.
15 627.0625, or commercial casualty insurance as defined in s.
16 627.0625 shall file with the office before prior to July 1 of
17 each year, on a form prescribed by the commission, the following
18 data for the component types of such insurance as provided in
19 the form:
20 1. Calendar-year earned premium.
21 2. Accident-year incurred losses and loss adjustment
22 expenses.
23 3. The administrative and selling expenses incurred in this
24 state or allocated to this state for the calendar year.
25 4. Policyholder dividends applicable to the calendar year.
26
27 This does not Nothing herein is intended to prohibit an insurer
28 from filing on a calendar-year basis.
29 (b) The data filed for the group shall be a consolidation
30 of the data of the individual insurers of the group. However, an
31 insurer may elect to either consolidate commercial umbrella
32 liability insurance data with commercial casualty insurance data
33 or to separately file data for commercial umbrella liability
34 insurance. Each insurer shall elect its method of filing
35 commercial umbrella liability insurance at the time of filing
36 data for accident year 1987 and shall thereafter continue filing
37 under the same method. In the case of commercial umbrella
38 liability insurance data reported separately, a separate
39 excessive profits test shall be applied and the test period
40 shall be 10 years. In the case of workers’ compensation and
41 employer’s liability insurance, the final report for the test
42 period including accident years 1984, 1985, and 1986 must be
43 filed prior to July 1, 1988. In the case of commercial property
44 and commercial casualty insurance, the final report for the test
45 period including accident years 1987, 1988, and 1989 must be
46 filed prior to July 1, 1991.
47 (2) Each insurer group writing workers’ compensation and
48 employer’s liability insurance shall also file a schedule of
49 Florida loss and loss adjustment experience for each of the 3
50 years previous to the most recent accident year. The incurred
51 losses and loss adjustment expenses shall be valued as of
52 December 31 of the first year following the latest accident year
53 to be reported, developed to an ultimate basis, and at two 12
54 month intervals thereafter, each developed to an ultimate basis,
55 so that a total of three evaluations will be provided for each
56 accident year. The first year to be so reported shall be
57 accident year 1984, so that the reporting of 3 accident years
58 under this revised evaluation will not take place until accident
59 years 1985 and 1986 have become available. For reporting
60 purposes unrelated to determining excessive profits, the loss
61 and loss adjustment experience of each accident year shall
62 continue to be reported until each accident year has been
63 reported at eight stages of development.
64 (2)(3)(a) Each insurer group writing commercial property
65 insurance or commercial casualty insurance shall also file a
66 schedule of Florida loss and loss adjustment experience for each
67 of the 3 years previous to the most recent accident year. The
68 incurred losses and loss adjustment expenses shall be valued as
69 of December 31 of the first year following the latest accident
70 year, developed to an ultimate basis, and at two 12-month
71 intervals thereafter, each developed to an ultimate basis, so
72 that a total of 3 evaluations will be provided for each accident
73 year. The first year to be so reported shall be accident year
74 1987, which shall first be reported on or before July 1, 1989,
75 and the reporting of 3 accident years will not take place until
76 accident years 1988 and 1989 have become available. For medical
77 malpractice insurance, the first year to be so reported shall be
78 accident year 1990, which shall first be reported on or before
79 July 1, 1992, and the reporting of 3 accident years for full
80 inclusion of medical malpractice experience in commercial
81 casualty insurance will not take place until accident years 1991
82 and 1992 become available. Accordingly, no medical malpractice
83 insured shall be eligible for refunds or credits until the
84 reporting period ending with calendar-accident year 1992. For
85 reporting purposes unrelated to determining excess profits, the
86 loss and loss adjustment experience of each accident year shall
87 continue to be reported until each accident year has been
88 reported at eight stages of development.
89 (b) Each insurer group writing commercial umbrella
90 liability insurance which elects to file separate data for such
91 insurance shall also file a schedule of Florida loss and loss
92 adjustment experience for each of the 10 years previous to the
93 most recent accident year. The incurred losses and loss
94 adjustment expenses shall be valued as of December 31 of the
95 first year following the latest accident year, developed to an
96 ultimate basis, and at nine 12-month intervals thereafter, each
97 developed to an ultimate basis, so that a total of 10
98 evaluations will be provided for each accident year. The first
99 year to be so reported shall be accident year 1987, which shall
100 first be reported on or before October 1, 1989, and the
101 reporting of 10 accident years will not take place until
102 accident year 1996 data is reported.
103 (3)(4) Each insurer group’s underwriting gain or loss for
104 each calendar-accident year shall be computed as follows: The
105 sum of the accident-year incurred losses and loss adjustment
106 expenses as of December 31 of the year, developed to an ultimate
107 basis, plus the administrative and selling expenses incurred in
108 the calendar year, plus policyholder dividends applicable to the
109 calendar year, shall be subtracted from the calendar-year earned
110 premium to determine the underwriting gain or loss.
111 (4)(5) For the 3 most recent calendar-accident years for
112 which data is to be filed under this section, the underwriting
113 gain or loss shall be compared to the anticipated underwriting
114 profit, except in the case of separately reported commercial
115 umbrella liability insurance for which such comparison shall be
116 made for the 10 most recent calendar-accident years.
117 (6) For those insurer groups writing workers’ compensation
118 and employer’s liability insurance during the years 1984, 1985,
119 1986, 1987, and 1988, an excessive profit has been realized if
120 underwriting gain is greater than the anticipated underwriting
121 profit plus 5 percent of earned premiums for the 3 most recent
122 calendar years for which data is to be filed under this section.
123 Any excess profit of an insurance company offering workers’
124 compensation or employer’s liability insurance during this
125 period of time, shall be returned to policyholders in the form
126 of a cash refund or a credit toward future purchase of
127 insurance. The excessive amount shall be refunded on a pro rata
128 basis in relation to the final compilation year earned premiums
129 to the workers’ compensation policyholders of record of the
130 insurer group on December 31 of the final compilation year.
131 (5)(7)(a) Beginning with the July 1, 1991, report for
132 workers’ compensation insurance, employer’s liability insurance,
133 commercial property insurance, and commercial casualty
134 insurance, an excessive profit has been realized if the net
135 aggregate underwriting gain for all these lines combined is
136 greater than the net aggregate anticipated underwriting profit
137 for these lines plus 5 percent of earned premiums for the 3 most
138 recent calendar years for which data is to be filed under this
139 section. For calculation purposes commercial property insurance
140 and commercial casualty insurance shall be broken down into
141 sublines in order to ascertain the anticipated underwriting
142 profit factor versus the actual underwriting gain for the given
143 subline.
144 (b) Beginning with the July 1, 1998, report for commercial
145 umbrella liability insurance, if an insurer has elected to file
146 data separately for such insurance, an excessive profit has been
147 realized if the underwriting gain for such insurance is greater
148 than the anticipated underwriting profit for such insurance plus
149 5 percent of earned premiums for the 10 most recent calendar
150 years for which data is to be filed under this section.
151 (6)(8) As used in this section with respect to any 3-year
152 period, or with respect to any 10-year period in the case of
153 commercial umbrella liability insurance, “anticipated
154 underwriting profit” means the sum of the dollar amounts
155 obtained by multiplying, for each rate filing of the insurer
156 group in effect during such period, the earned premiums
157 applicable to such rate filing during such period by the
158 percentage factor included in such rate filing for profit and
159 contingencies, such percentage factor having been determined
160 with due recognition to investment income from funds generated
161 by Florida business, except that the anticipated underwriting
162 profit for the purposes of this section shall be calculated
163 using a profit and contingencies factor that is not less than
164 zero. Separate calculations need not be made for consecutive
165 rate filings containing the same percentage factor for profits
166 and contingencies.
167 (7)(9) If the insurer group has realized an excessive
168 profit, the office shall order a return of the excessive amounts
169 after affording the insurer group an opportunity for hearing and
170 otherwise complying with the requirements of chapter 120. Such
171 excessive amounts shall be refunded in all instances unless the
172 insurer group affirmatively demonstrates to the office that the
173 refund of the excessive amounts will render a member of the
174 insurer group financially impaired or will render it insolvent
175 under the provisions of the Florida Insurance Code.
176 (8)(10) Any excess profit of an insurance company as
177 determined on July 1, 1991, and thereafter shall be returned to
178 policyholders in the form of a cash refund or a credit toward
179 the future purchase of insurance. The excessive amount shall be
180 refunded on a pro rata basis in relation to the final
181 compilation year earned premiums to the policyholders of record
182 of the insurer group on December 31 of the final compilation
183 year.
184 (9)(11)(a) Cash refunds to policyholders may be rounded to
185 the nearest dollar.
186 (b) Data in required reports to the office may be rounded
187 to the nearest dollar.
188 (c) Rounding, if elected by the insurer, shall be applied
189 consistently.
190 (10)(12)(a) Refunds shall be completed in one of the
191 following ways:
192 1. If the insurer group elects to make a cash refund, the
193 refund shall be completed within 60 days after of entry of a
194 final order indicating that excessive profits have been
195 realized.
196 2. If the insurer group elects to make refunds in the form
197 of a credit to renewal policies, such credits shall be applied
198 to policy renewal premium notices which are forwarded to
199 insureds more than 60 calendar days after entry of a final order
200 indicating that excessive profits have been realized. If an
201 insurer group has made this election but an insured thereafter
202 cancels her or his policy or otherwise allows the policy to
203 terminate, the insurer group shall make a cash refund within not
204 later than 60 days after termination of such coverage.
205 (b) Upon completion of the renewal credits or refund
206 payments, the insurer group shall immediately certify to the
207 office that the refunds have been made.
208 (11)(13) Any refund or renewal credit made pursuant to this
209 section shall be treated as a policyholder dividend applicable
210 to the year immediately succeeding the compilation period giving
211 rise to the refund or credit, for purposes of reporting under
212 this section for subsequent years.
213 (12)(14) The application of this law to commercial property
214 and commercial casualty insurance, which includes commercial
215 umbrella liability insurance, ceases on January 1, 1997.
216 Section 7. Subsection (4) of section 628.6017, Florida
217 Statutes, is amended to read:
218 628.6017 Converting assessable mutual insurer.—
219 (4) An assessable mutual insurer becoming a stock insurer
220 or a nonassessable mutual insurer is shall not be subject to s.
221 627.215 or s. 627.351(5) for 5 years following authorization of
222 the conversion by the office. However, the converted stock
223 insurer or nonassessable mutual insurer must shall file all
224 necessary data required by s. 627.215. Such amounts otherwise
225 subject to s. 627.215(8) must 627.215(10) shall be maintained as
226 surplus as to policyholders and are not be available for
227 dividends for a period of 5 years.
228
229 ================= T I T L E A M E N D M E N T ================
230 And the title is amended as follows:
231 Delete line 184
232 and insert:
233 payment of workers’ compensation; amending s. 627.215,
234 F.S.; removing workers’ compensation and employer’s
235 liability insurance from those types of insurance that
236 must report and refund excess profits; deleting
237 obsolete provisions; amending s. 628.6017, F.S.;
238 conforming a cross-reference;