March 22, 2019
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       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.

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