October 15, 2019
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       Florida Senate - 2010                                    SB 1122
       By Senator Justice
       16-00165-10                                           20101122__
    1                        A bill to be entitled                      
    2         An act relating to health insurance; amending s.
    3         627.410, F.S.; establishing a minimum loss ratio for
    4         health insurance forms; amending s. 627.411, F.S.;
    5         revising the loss ratio for certain health insurance
    6         coverage; amending s. 627.6745, F.S.; revising the
    7         loss ratio for Medicare supplement policies issued on
    8         or after a certain date; amending s. 627.9407, F.S.;
    9         establishing a minimum loss ratio for long-term care
   10         insurance policies; providing an effective date.
   12  Be It Enacted by the Legislature of the State of Florida:
   14         Section 1. Paragraph (b) of subsection (6) and subsections
   15  (7) and (8) of section 627.410, Florida Statutes, are amended to
   16  read:
   17         627.410 Filing, approval of forms.—
   18         (6)
   19         (b) The commission may establish by rule:, for each type of
   20  health insurance form,
   21         1.Establish procedures for to be used in ascertaining the
   22  relationship between reasonableness of benefits in relation to
   23  premium rates for each type of health insurance form, including
   24  Medicare supplement policies as defined in s. 627.672, long-term
   25  care policies as defined in s. 627.9404, and other policy forms
   26  where more than 50 percent of the policies are issued to
   27  individuals age 65 and older. and may, by rule,
   28         2. Exempt from any requirement of paragraph (a) any health
   29  insurance policy form or type thereof (as specified in such
   30  rule) to which form or type such requirements may not be
   31  practically applied or to which form or type the application of
   32  such requirements is not desirable or necessary for the
   33  protection of the public. For With respect to any health
   34  insurance policy form or type that thereof which is exempted by
   35  rule from any requirement of paragraph (a), premium rates filed
   36  pursuant to ss. 627.640 and 627.662 shall be for informational
   37  purposes.
   38         (7)(a) Each insurer subject to the requirements of
   39  subsection (6) shall make an annual filing with the office
   40  within no later than 12 months after its previous filing
   41  supporting the, demonstrating the reasonableness of benefits in
   42  relation to premium rates charged in relation to benefits for
   43  each insurance form. Upon The office, after receiving a request
   44  to be exempted from the provisions of this section, the office
   45  may, for good cause due to insignificant numbers of policies in
   46  force or insignificant premium volume, exempt a company, by line
   47  of coverage, from filing rates or rate certification as required
   48  by this section.
   49         (a)(b) The filing is required by this subsection shall be
   50  satisfied by one of the following methods:
   51         1. A rate filing prepared by an actuary which contains
   52  documentation supporting premium rates charged in relation to
   53  benefits demonstrating the reasonableness of benefits in
   54  relation to premiums charged in accordance with the applicable
   55  rating laws and rules adopted promulgated by the commission.
   56         2. If no rate change is proposed, a filing that which
   57  consists of a certification by an actuary supporting premium
   58  rates charged in relation to benefits that benefits are
   59  reasonable in relation to premiums currently charged in
   60  accordance with applicable laws and rules adopted promulgated by
   61  the commission.
   62         (b)(c) As used in this section, “actuary” means an
   63  individual who is a member of the Society of Actuaries or the
   64  American Academy of Actuaries. If an insurer does not employ or
   65  otherwise retain the services of an actuary, the insurer’s
   66  certification must shall be prepared by insurer personnel or
   67  consultants who have with a minimum of 5 years’ experience in
   68  insurance ratemaking. The chief executive officer of the insurer
   69  must shall review and sign the certification indicating his or
   70  her agreement with its conclusions.
   71         (c)(d) If at the time a filing is due required under this
   72  section an insurer is in the process of completing a rate
   73  review, the insurer may apply to the office for an extension of
   74  up to an additional 30 days in which to make the filing. The
   75  request for an extension must be received by the office by no
   76  later than the date the filing is due.
   77         (d)(e) If an insurer fails to meet the filing requirements
   78  of this subsection and does not submit the filing within 60 days
   79  following the date the filing is due, the office may, in
   80  addition to any other penalty authorized by law, order the
   81  insurer to discontinue issuing the issuance of policies subject
   82  to the filing for which the required filing was not made, until
   83  such time as the office determines that the required filing is
   84  properly submitted.
   85         (8)(a) For the purposes of subsections (6) and (7),
   86  benefits of an individual accident and health insurance policy
   87  form, including Medicare supplement policies as defined in s.
   88  627.672, when authorized by rules adopted by the commission, and
   89  excluding long-term care insurance policies as defined in s.
   90  627.9404, and other policy forms under which more than 50
   91  percent of the policies are issued to individuals age 65 and
   92  over, are deemed to be reasonable in relation to premium rates
   93  if the rates are filed pursuant to a loss ratio guarantee of at
   94  least 85 percent and both the initial rates and the durational
   95  and lifetime loss ratios have been approved by the office., and
   96  Such benefits shall also continue to be deemed reasonable for
   97  renewal rates if while the insurer complies with the loss ratio
   98  such guarantee and, provided the currently expected lifetime
   99  loss ratio is not more than 5 percent less than the filed
  100  lifetime loss ratio as certified to by an actuary.
  101         (a) The office may shall have the right to bring an
  102  administrative action if it determines should it deem that the
  103  lifetime loss ratio will not be met. For Medicare supplement
  104  filings, the office may withdraw a previously approved filing
  105  which was made pursuant to a loss ratio guarantee if it
  106  determines that the filing is not in compliance with ss.
  107  627.671-627.675 or the currently expected lifetime loss ratio is
  108  less than the filed lifetime loss ratio as certified by an
  109  actuary in the initial guaranteed loss ratio filing. If this
  110  section conflicts with ss. 627.671-627.675, ss. 627.671-627.675
  111  shall control.
  112         (b) The renewal premium rates shall be deemed to be
  113  approved upon filing with the office if the filing is
  114  accompanied by a the most current approved loss ratio guarantee
  115  of at least 85 percent. The loss ratio guarantee must shall be
  116  in writing, shall be signed by an officer of the insurer, and
  117  shall contain at least:
  118         1. A recitation of the anticipated lifetime and durational
  119  target loss ratios contained in the actuarial memorandum filed
  120  with the policy form when it was originally approved. The
  121  durational target loss ratios shall be calculated for 1-year
  122  experience periods. If statutory changes have rendered any
  123  portion of the such actuarial memorandum obsolete, the loss
  124  ratio guarantee shall also include an amendment to the actuarial
  125  memorandum reflecting current law and containing new lifetime
  126  and durational loss ratio targets.
  127         2. A guarantee that the applicable loss ratios for the
  128  experience period in which the new rates will take effect, and
  129  for each experience period thereafter until new rates are filed,
  130  will meet the loss ratios referred to in subparagraph 1.
  131         3. A guarantee that the applicable loss ratio results for
  132  the experience period will be independently audited at the
  133  insurer’s expense. The audit must shall be performed in the
  134  second calendar quarter of the year following the end of the
  135  experience period, and the audited results must shall be
  136  reported to the office by no later than the end of such quarter.
  137  The commission shall establish by rule the minimum information
  138  reasonably necessary to be included in the report. The audit
  139  must shall be done in accordance with accepted accounting and
  140  actuarial principles.
  141         4. A guarantee that affected policyholders in this state
  142  shall be issued a proportional refund, based on the premium
  143  earned, of the amount necessary to bring the applicable
  144  experience period loss ratio up to the durational target loss
  145  ratio referred to in subparagraph 1. The refund shall be made to
  146  all policyholders in this state who are insured under the
  147  applicable policy form as of the last day of the experience
  148  period, except that no refund need be made to a policyholder in
  149  an amount less than $10. Refunds less than $10 shall be
  150  aggregated and paid pro rata to the policyholders receiving
  151  refunds. The refund shall include interest at the then-current
  152  variable loan interest rate for life insurance policies
  153  established by the National Association of Insurance
  154  Commissioners, calculated from the end of the experience period
  155  until the date of payment. Payments must shall be made during
  156  the third calendar quarter of the year following the experience
  157  period for which a refund is determined to be due. However, no
  158  refunds shall be made until 60 days after the filing of the
  159  audit report in order for that the office to have has adequate
  160  time to review the report.
  161         5. A guarantee that if the applicable loss ratio exceeds
  162  the durational target loss ratio for that experience period by
  163  more than 20 percent and, provided there are at least 2,000
  164  policyholders on the form nationwide or, if not, then
  165  accumulated each calendar year until 2,000 policyholder years is
  166  reached, the insurer, if directed by the office, shall withdraw
  167  the policy form for the purposes of issuing new policies.
  168         (c) As used in this subsection:
  169         1. “Loss ratio” means the ratio of incurred claims to
  170  earned premium.
  171         2. “Applicable loss ratio” means the loss ratio
  172  attributable solely to this state if there are 2,000 or more
  173  policyholders in the state. If there are 500 or more
  174  policyholders in this state but fewer less than 2,000, it is the
  175  linear interpolation of the nationwide loss ratio and the loss
  176  ratio for this state. If there are fewer less than 500
  177  policyholders in this state, it is the nationwide loss ratio.
  178         3. “Experience period” means the period, ordinarily a
  179  calendar year, for which a loss ratio guarantee is calculated.
  180         Section 2. Subsection (3) of section 627.411, Florida
  181  Statutes, is amended to read:
  182         627.411 Grounds for disapproval.—
  183         (3)(a) For health insurance coverage as described in s.
  184  627.6561(5)(a)2., the minimum loss ratio standard of incurred
  185  claims to earned premium for the form shall be 85 65 percent.
  186         (b) Incurred claims are claims occurring within a fixed
  187  period, whether or not paid during the same period, under the
  188  terms of the policy period.
  189         (a)1. Claims include scheduled benefit payments or services
  190  provided by a provider or through a provider network for dental,
  191  vision, disability, and similar health benefits.
  192         (b)2. Claims do not include state assessments, taxes,
  193  company expenses, or any expense incurred by the company for the
  194  cost of adjusting and settling a claim, including the review,
  195  qualification, oversight, management, or monitoring of a claim
  196  or incentives or compensation to providers for other than the
  197  provisions of health care services.
  198         (c)3. A company may at its discretion include costs that
  199  are demonstrated to reduce claims, such as fraud intervention
  200  programs or case management costs, which are identified in each
  201  filing, are demonstrated to reduce claims costs, and do not
  202  result in increasing the experience period loss ratio by more
  203  than 5 percent.
  204         (d)4. For scheduled claim payments, such as disability
  205  income or long-term care, the incurred claims shall be the
  206  present value of the benefit payments discounted for continuance
  207  and interest.
  208         Section 3. Subsection (1) of section 627.6745, Florida
  209  Statutes, is amended to read:
  210         627.6745 Loss ratio standards; public rate hearings.—
  211         (1) Medicare supplement policies shall return the following
  212  to policyholders in the form of aggregate benefits under the
  213  policy, with respect to the lifetime of the policy, on the basis
  214  of earned premiums and on the basis of incurred claims
  215  experience or, if coverage is provided by a health maintenance
  216  organization based on service rather than reimbursement,
  217  incurred health care expenses, and in accordance with accepted
  218  actuarial principles and practices:
  219         (a) At least 85 75 percent of the aggregate amount of
  220  premiums earned in the case of group policies.
  221         (b) For individual policies issued or renewed before prior
  222  to July 1, 1989, at least 60 percent of the aggregate amount of
  223  premiums earned; and for individual policies issued or renewed
  224  on or after July 1, 1989, but before October 1, 2010, at least
  225  65 percent of the aggregate amount of premiums earned; and for
  226  policies issued on or after October 1, 2010, at least 85 percent
  227  of the aggregate amount of premiums earned. For the purposes of
  228  this section, policies issued as a result of soliciting
  229  solicitations of individuals through the mail or by mass media
  230  advertising are shall be deemed to be individual policies.
  231         Section 4. Subsection (6) of section 627.9407, Florida
  232  Statutes, is amended to read:
  233         627.9407 Disclosure, advertising, and performance standards
  234  for long-term care insurance.—
  235         (6) LOSS RATIO AND RESERVE STANDARDS.—The commission shall
  236  adopt rules establishing loss ratio and reserve standards for
  237  long-term care insurance policies. Such loss ratios may not be
  238  less than 85 percent. The rules must contain a specific
  239  reference to long-term care insurance policies. Such loss ratio
  240  and reserve standards shall be established at levels at which
  241  benefits are reasonable in relation to premiums and which that
  242  provide for adequate reserving of the long-term care insurance
  243  risk.
  244         Section 5. This act shall take effect July 1, 2010.

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