Bill Text: FL S0178 | 2011 | Regular Session | Comm Sub
Bill Title: Commercial Insurance Rates
Spectrum: Slight Partisan Bill (? 2-1)
Status: (Introduced - Dead) 2011-04-29 - Read 2nd time -SJ 603 [S0178 Detail]
Download: Florida-2011-S0178-Comm_Sub.html
Florida Senate - 2011 CS for CS for SB 178
By the Committees on Commerce and Tourism; and Banking and
Insurance; and Senator Oelrich
577-02602-11 2011178c2
1 A bill to be entitled
2 An act relating to commercial insurance rates;
3 amending s. 627.062, F.S.; exempting certain liability
4 and property insurance lines from specific rate
5 standards and filing requirements; revising certain
6 reporting and recordkeeping requirements for such
7 exempt insurers and certain rating organizations
8 regarding rate changes; requiring such entities to pay
9 certain examination costs; deleting a provision that
10 permits the Office of Insurance Regulation of the
11 Financial Services Commission to require such insurers
12 to provide certain information regarding rates at the
13 insurer’s expense; requiring such entities to pay
14 certain examination costs; amending s. 627.0651, F.S.;
15 exempting certain commercial motor vehicle insurance
16 from specific rate standards and filing requirements;
17 revising certain reporting and recordkeeping
18 requirements for such exempt insurers and certain
19 rating organizations regarding rate changes; requiring
20 such entities to pay certain examination costs;
21 deleting a provision that permits the Office of
22 Insurance Regulation of the Financial Services
23 Commission to require such insurers to provide certain
24 information regarding rates at the insurer’s expense;
25 providing an effective date.
26
27 Be It Enacted by the Legislature of the State of Florida:
28
29 Section 1. Subsection (3) of section 627.062, Florida
30 Statutes, is amended to read:
31 627.062 Rate standards.—
32 (3)(a) For individual risks that are not rated in
33 accordance with the insurer’s rates, rating schedules, rating
34 manuals, and underwriting rules filed with the office and which
35 have been submitted to the insurer for individual rating, the
36 insurer must maintain documentation on each risk subject to
37 individual risk rating. The documentation must identify the
38 named insured and specify the characteristics and classification
39 of the risk supporting the reason for the risk being
40 individually risk rated, including any modifications to existing
41 approved forms to be used on the risk. The insurer must maintain
42 these records for a period of at least 5 years after the
43 effective date of the policy.
44 (b) Individual risk rates and modifications to existing
45 approved forms are not subject to this part or part II, except
46 for paragraph (a) and ss. 627.402, 627.403, 627.4035, 627.404,
47 627.405, 627.406, 627.407, 627.4085, 627.409, 627.4132,
48 627.4133, 627.415, 627.416, 627.417, 627.419, 627.425, 627.426,
49 627.4265, 627.427, and 627.428, but are subject to all other
50 applicable provisions of this code and rules adopted thereunder.
51 (c) This subsection does not apply to private passenger
52 motor vehicle insurance.
53 (d)1. The following categories or kinds of insurance and
54 types of commercial lines risks are not subject to paragraph
55 (2)(a) or paragraph (2)(f):
56 a. Excess or umbrella.
57 b. Surety and fidelity.
58 c. Boiler and machinery and leakage and fire extinguishing
59 equipment.
60 d. Errors and omissions.
61 e. Directors and officers, employment practices, fiduciary
62 liability, and management liability.
63 f. Intellectual property and patent infringement liability.
64 g. Advertising injury and Internet liability insurance.
65 h. Property risks rated under a highly protected risks
66 rating plan.
67 i. General liability.
68 j. Nonresidential property, except for collateral
69 protection insurance, as defined in s. 624.6085.
70 k. Nonresidential multiperil.
71 l. Excess property.
72 m. Burglary and theft.
73 n.i. Any other commercial lines categories or kinds of
74 insurance or types of commercial lines risks that the office
75 determines should not be subject to paragraph (2)(a) or
76 paragraph (2)(f) because of the existence of a competitive
77 market for such insurance, similarity of such insurance to other
78 categories or kinds of insurance not subject to paragraph (2)(a)
79 or paragraph (2)(f), or to improve the general operational
80 efficiency of the office.
81 2. Insurers or rating organizations shall establish and use
82 rates, rating schedules, or rating manuals to allow the insurer
83 a reasonable rate of return on insurance and risks described in
84 subparagraph 1. which are written in this state.
85 3. An insurer must notify the office of any changes to
86 rates for insurance and risks described in subparagraph 1. no
87 later than 30 days after the effective date of the change. The
88 notice must include the name of the insurer, the type or kind of
89 insurance subject to rate change, total premium written during
90 the immediately preceding year by the insurer for the type or
91 kind of insurance subject to the rate change, and the average
92 statewide percentage change in rates. Actuarial data
93 Underwriting files, premiums, losses, and expense statistics
94 with regard to rates for insurance and risks described in
95 subparagraph 1. written by an insurer shall be maintained by the
96 insurer for 2 years after the effective date of changes to rates
97 and are subject to examination by the office. The office may
98 require the insurer to pay the costs associated with an
99 examination. Upon examination, the office shall, in accordance
100 with generally accepted and reasonable actuarial techniques,
101 consider the rate factors in paragraphs (2)(b), (c), and (d) and
102 the standards in paragraph (2)(e) to determine if the rate is
103 excessive, inadequate, or unfairly discriminatory.
104 4. A rating organization must notify the office of any
105 changes to loss cost for insurance and risks described in
106 subparagraph 1. no later than 30 days after the effective date
107 of the change. The notice must include the name of the rating
108 organization, the type or kind of insurance subject to a loss
109 cost change, loss costs during the immediately preceding year
110 for the type or kind of insurance subject to the loss cost
111 change, and the average statewide percentage change in loss
112 cost. Actuarial data Loss and exposure statistics with regard to
113 changes to loss cost for risks applicable to loss costs for a
114 rating organization not subject to paragraph (2)(a) or paragraph
115 (2)(f) shall be maintained by the rating organization for 2
116 years after the effective date of the change and are subject to
117 examination by the office. The office may require the rating
118 organization to pay the costs associated with an examination.
119 Upon examination, the office shall, in accordance with generally
120 accepted and reasonable actuarial techniques, consider the rate
121 factors in paragraphs (2)(b)-(d) and the standards in paragraph
122 (2)(e) to determine if the rate is excessive, inadequate, or
123 unfairly discriminatory.
124 5. In reviewing a rate, the office may require the insurer
125 to provide at the insurer’s expense all information necessary to
126 evaluate the condition of the company and the reasonableness of
127 the rate according to the applicable criteria described in this
128 section.
129 Section 2. Subsection (14) of section 627.0651, Florida
130 Statutes, is amended to read:
131 627.0651 Making and use of rates for motor vehicle
132 insurance.—
133 (14)(a) Commercial motor vehicle insurance covering a fleet
134 of 20 or more self-propelled vehicles is not subject to
135 subsection (1), subsection (2), or subsection (9) or s.
136 627.0645.
137 (b) The rates for insurance described in this subsection
138 may not be excessive, inadequate, or unfairly discriminatory.
139 (c) Insurers shall establish and use rates, rating
140 schedules, or rating manuals to allow the insurer a reasonable
141 rate of return on commercial motor vehicle insurance written in
142 this state covering a fleet of 20 or more self-propelled
143 vehicles.
144 (d) An insurer must notify the office of any changes to
145 rates for type of insurance described in this subsection no
146 later than 30 days after the effective date of the change. The
147 notice shall include the name of the insurer, the type or kind
148 of insurance subject to rate change, total premium written
149 during the immediately preceding year by the insurer for the
150 type or kind of insurance subject to the rate change, and the
151 average statewide percentage change in rates. Actuarial data
152 with regard to rates for risks Underwriting files, premiums,
153 losses, and expense statistics for the type of insurance
154 described in this subsection shall be maintained by the insurer
155 for 2 years after the effective date of changes to rates and are
156 subject to examination by the office. The office may require an
157 insurer to pay the costs associated with an examination. 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. Actuarial data Loss and exposure statistics with regard to
172 changes to loss cost for risks applicable to loss costs for a
173 rating organization not subject to subsection (1), subsection
174 (2), or subsection (9) shall be maintained by the rating
175 organization for 2 years after the effective date of the change
176 and are subject to examination by the office. The office may
177 require the rating organization to pay the costs associated with
178 an examination. Upon examination, the office shall, in
179 accordance with generally accepted and reasonable actuarial
180 techniques, consider the rate factors in paragraphs (2)(a)-(l)
181 and apply subsections (3)-(8) to determine if the rate is
182 excessive, inadequate, or unfairly discriminatory.
183 (f) In reviewing the rate, the office may require the
184 insurer to provide at the insurer’s expense all information
185 necessary to evaluate the condition of the company and the
186 reasonableness of the rate according to the applicable criteria
187 described herein.
188 Section 3. This act shall take effect July 1, 2011.
