CS for CS for SB 2176                            First Engrossed
       
       
       
       
       
       
       
       
       20102176e1
       
    1                        A bill to be entitled                      
    2         An act relating to insurance; creating s. 624.46223,
    3         F.S.; prohibiting an association, fund, or pool
    4         created for the purpose of forming or managing a risk
    5         management mechanism or providing self-insurance for a
    6         public entity from requiring its members to give more
    7         than 60 days’ notice of the member’s intention to
    8         withdraw from the association, fund, or pool; amending
    9         s. 627.062, F.S.; exempting certain categories or
   10         types of insurance and types of commercial lines risks
   11         from certain rate requirements; requiring that
   12         insurers or rating organizations establish and use
   13         rates, rating schedules, or rating manuals allowing
   14         for a reasonable rate of return on certain insurance
   15         and risks; requiring that an insurer notify the Office
   16         of Insurance Regulation of any changes to rates for
   17         certain insurance and risks; requiring that such
   18         notice contain certain information; requiring that an
   19         insurer maintain certain information; providing that
   20         such information is subject to examination by the
   21         office; requiring that the office consider certain
   22         rate factors and standards when examining such
   23         information for the purpose of determining whether the
   24         rate is excessive, inadequate, or unfairly
   25         discriminatory; requiring that a rating organization
   26         provide notice to the office of any changes to loss
   27         cost for certain types of insurance within a specified
   28         period after such change; providing requirements for
   29         such notification; requiring that a rating
   30         organization maintain certain information; providing
   31         that such information is subject to examination by the
   32         office; requiring that specified rate factors and
   33         standards be used in such examination; authorizing the
   34         office, when reviewing a rate, to require that an
   35         insurer provide certain information at the insurer’s
   36         expense; amending s. 627.0651, F.S.; exempting
   37         commercial motor vehicle insurance from certain motor
   38         vehicle insurance rate requirements; prohibiting
   39         certain insurance rates from being excessive,
   40         inadequate, or unfairly discriminatory; requiring that
   41         insurers or rating organizations establish and use
   42         rates, rating schedules, or rating manuals allowing
   43         for a reasonable rate of return on certain insurance
   44         and risks; requiring that an insurer notify the office
   45         of any changes to rates for certain insurance and
   46         risks; requiring that such notice contain certain
   47         information; requiring that an insurer maintain
   48         certain information; providing that such information
   49         is subject to examination by the office; requiring
   50         that the office consider certain rate factors and
   51         standards when examining such information for the
   52         purpose of determining whether the rate is excessive,
   53         inadequate, or unfairly discriminatory; requiring that
   54         a rating organization provide notice to the office of
   55         any changes to loss cost for certain types of
   56         insurance within a specified period after such change;
   57         providing requirements for such notification;
   58         requiring that a rating organization maintain certain
   59         information; providing that such information is
   60         subject to examination by the office; requiring that
   61         specified rate factors and standards be used in such
   62         examination; authorizing the office, when reviewing a
   63         rate, to require that an insurer provide certain
   64         information at the insurer’s expense; providing an
   65         effective date.
   66  
   67  Be It Enacted by the Legislature of the State of Florida:
   68  
   69         Section 1. Section 624.46223, Florida Statutes, is created
   70  to read:
   71         624.46223 Notice of intent to withdraw.—An association,
   72  fund, or pool authorized under Florida law and created for the
   73  purpose of forming or managing a risk management mechanism or
   74  providing self-insurance for a public entity in this state may
   75  not require its members, as a prerequisite for withdrawing from
   76  the association, fund, or pool, to give more than 60 days’
   77  notice of the member’s intention to withdraw from the
   78  association, fund, or pool.
   79         Section 2. Paragraph (d) is added to subsection (3) of
   80  section 627.062, Florida Statutes, to read:
   81         627.062 Rate standards.—
   82         (3)
   83         (d)1. The following categories or kinds of insurance and
   84  types of commercial lines risks are not subject to paragraph
   85  (2)(a) or paragraph (2)(f):
   86         a. Excess or umbrella.
   87         b. Surety and fidelity.
   88         c. Boiler and machinery and leakage and fire extinguishing
   89  equipment.
   90         d. Errors and omissions.
   91         e. Directors and officers, employment practices, and
   92  management liability.
   93         f. Intellectual property and patent infringement liability.
   94         g. Advertising injury and Internet liability insurance.
   95         h. Property risks rated under a highly protected risks
   96  rating plan.
   97         i. Any other commercial lines categories or kinds of
   98  insurance or types of commercial lines risks that the office
   99  determines should not be subject to paragraph (2)(a) or
  100  paragraph (2)(f) because of the existence of a competitive
  101  market for such insurance, similarity of such insurance to other
  102  categories or kinds of insurance not subject to paragraph (2)(a)
  103  or paragraph (2)(f), or to improve the general operational
  104  efficiency of the office.
  105         2. Insurers or rating organizations shall establish and use
  106  rates, rating schedules, or rating manuals to allow the insurer
  107  a reasonable rate of return on insurance and risks described in
  108  subparagraph 1. which are written in this state.
  109         3. An insurer must notify the office of any changes to
  110  rates for insurance and risks described in subparagraph 1. no
  111  later than 30 days after the effective date of the change. The
  112  notice must include the name of the insurer, the type or kind of
  113  insurance subject to rate change, total premium written during
  114  the immediately preceding year by the insurer for the type or
  115  kind of insurance subject to the rate change, and the average
  116  statewide percentage change in rates. Underwriting files,
  117  premiums, losses, and expense statistics with regard to
  118  insurance and risks described in subparagraph 1. written by an
  119  insurer shall be maintained by the insurer and subject to
  120  examination by the office. Upon examination, the office shall,
  121  in accordance with generally accepted and reasonable actuarial
  122  techniques, consider the rate factors in paragraphs (2)(b), (c),
  123  and (d) and the standards in paragraph (2)(e) to determine if
  124  the rate is excessive, inadequate, or unfairly discriminatory.
  125         4. A rating organization must notify the office of any
  126  changes to loss cost for insurance and risks described in
  127  subparagraph 1. no later than 30 days after the effective date
  128  of the change. The notice must include the name of the rating
  129  organization, the type or kind of insurance subject to a loss
  130  cost change, loss costs during the immediately preceding year
  131  for the type or kind of insurance subject to the loss cost
  132  change, and the average statewide percentage change in loss
  133  cost. Loss and exposure statistics with regard to risks
  134  applicable to loss costs for a rating organization not subject
  135  to paragraph (2)(a) or paragraph (2)(f) shall be maintained by
  136  the rating organization and are subject to examination by the
  137  office. Upon examination, the office shall, in accordance with
  138  generally accepted and reasonable actuarial techniques, consider
  139  the rate factors in paragraphs (2)(b)-(d) and the standards in
  140  paragraph (2)(e) to determine if the rate is excessive,
  141  inadequate, or unfairly discriminatory.
  142         5. In reviewing a rate, the office may require the insurer
  143  to provide at the insurer’s expense all information necessary to
  144  evaluate the condition of the company and the reasonableness of
  145  the rate according to the applicable criteria described in this
  146  section.
  147         Section 3. Subsection (14) is added to section 627.0651,
  148  Florida Statutes, to read:
  149         627.0651 Making and use of rates for motor vehicle
  150  insurance.—
  151         (14)(a) Commercial motor vehicle insurance covering a fleet
  152  of 20 or more self-propelled vehicles is not subject to
  153  subsection (1), subsection (2), or subsection (9) or s.
  154  627.0645.
  155         (b) The rates for insurance described in this subsection
  156  may not be excessive, inadequate, or unfairly discriminatory.
  157         (c) Insurers shall establish and use rates, rating
  158  schedules, or rating manuals to allow the insurer a reasonable
  159  rate of return on commercial motor vehicle insurance written in
  160  this state covering a fleet of 20 or more self-propelled
  161  vehicles.
  162         (d) An insurer must notify the office of any changes to
  163  rates for type of insurance described in this subsection no
  164  later than 30 days after the effective date of the change. The
  165  notice shall include the name of the insurer, the type or kind
  166  of insurance subject to rate change, total premium written
  167  during the immediately preceding year by the insurer for the
  168  type or kind of insurance subject to the rate change, and the
  169  average statewide percentage change in rates. Underwriting
  170  files, premiums, losses, and expense statistics for the type of
  171  insurance described in this subsection shall be maintained by
  172  the insurer and subject to examination by the office. Upon
  173  examination, the office shall, in accordance with generally
  174  accepted and reasonable actuarial techniques, consider the
  175  factors in paragraphs (2)(a)–(l) and apply subsections (3)-(8)
  176  to determine if the rate is excessive, inadequate, or unfairly
  177  discriminatory.
  178         (e) A rating organization must notify the office of any
  179  changes to loss cost for the type of insurance described in this
  180  subsection no later than 30 days after the effective date of the
  181  change. The notice shall include the name of the rating
  182  organization, the type or kind of insurance subject to a loss
  183  cost change, loss costs during the immediately preceding year
  184  for the type or kind of insurance subject to the loss cost
  185  change, and the average statewide percentage change in loss
  186  cost. Loss and exposure statistics with regard to risks
  187  applicable to loss costs for a rating organization not subject
  188  to subsection (1), subsection (2), or subsection (9) shall be
  189  maintained by the rating organization and are subject to
  190  examination by the office. Upon examination, the office shall,
  191  in accordance with generally accepted and reasonable actuarial
  192  techniques, consider the rate factors in paragraphs (2)(a)-(l)
  193  and apply subsections (3)-(8) to determine if the rate is
  194  excessive, inadequate, or unfairly discriminatory.
  195         (f) In reviewing the rate, the office may require the
  196  insurer to provide at the insurer’s expense all information
  197  necessary to evaluate the condition of the company and the
  198  reasonableness of the rate according to the applicable criteria
  199  described herein.
  200         Section 4. This act shall take effect January 1, 2011.