An act relating to insurance; amending s. 627.062, F.S.;
deleting the requirement for the Office of Insurance
Regulation to approve a rating factor that provides an
insurer a reasonable rate of return for covering
catastrophic losses not covered by reinsurance; providing
Be It Enacted by the Legislature of the State of Florida:
Section 1. Paragraph (b) of subsection (2) of section
627.062, Florida Statutes, is amended to read:
(2) As to all such classes of insurance:
(b) Upon receiving a rate filing, the office shall review
the rate filing to determine if a rate is excessive, inadequate,
or unfairly discriminatory. In making that determination, the
office shall, in accordance with generally accepted and
reasonable actuarial techniques, consider the following factors:
1. Past and prospective loss experience within and without
2. Past and prospective expenses.
3. The degree of competition among insurers for the risk
4. Investment income reasonably expected by the insurer,
consistent with the insurer's investment practices, from
investable premiums anticipated in the filing, plus any other
expected income from currently invested assets representing the
amount expected on unearned premium reserves and loss reserves.
The commission may adopt rules using utilizing reasonable
techniques of actuarial science and economics to specify the
manner in which insurers shall calculate investment income
attributable to such classes of insurance written in this state
and the manner in which such investment income shall be used to
calculate in the calculation of insurance rates. Such manner
shall contemplate allowances for an underwriting profit factor
and full consideration of investment income which produce a
reasonable rate of return; however, investment income from
invested surplus may shall not be considered.
5. The reasonableness of the judgment reflected in the
6. Dividends, savings, or unabsorbed premium deposits
allowed or returned to Florida policyholders, members, or
7. The adequacy of loss reserves.
8. The cost of reinsurance.
9. Trend factors, including trends in actual losses per
insured unit for the insurer making the filing.
10. Conflagration and catastrophe hazards, if applicable.
11. A reasonable margin for underwriting profit and
contingencies. For that portion of the rate covering the risk of
hurricanes and other catastrophic losses for which the insurer
has not purchased reinsurance and has exposed its capital and
surplus to such risk, the office must approve a rating factor
that provides the insurer a reasonable rate of return that is
commensurate with such risk.
12. The cost of medical services, if applicable.
13. Other relevant factors which impact upon the frequency
or severity of claims or upon expenses.
The provisions of this subsection shall not apply to workers'
compensation and employer's liability insurance and to motor
Section 2. This act shall take effect July 1, 2008.