Florida Senate - 2012                          SENATOR AMENDMENT
       Bill No. SB 676
       
       
       
       
       
       
                                Barcode 741106                          
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                                       .                                
                                       .                                
                                       .                                
                  Floor: WD            .                                
             03/08/2012 05:14 PM       .                                
       —————————————————————————————————————————————————————————————————




       —————————————————————————————————————————————————————————————————
       Senator Smith moved the following:
       
    1         Senate Amendment to Amendment (917396) (with title
    2  amendment)
    3  
    4         Between lines 164 and 165
    5  insert:
    6         Section 6. Section 627.215, Florida Statutes, is amended to
    7  read:
    8         627.215 Excessive profits for workers’ compensation,
    9  employer’s liability, commercial property, and commercial
   10  casualty insurance prohibited.—
   11         (1)(a) Each insurer group writing workers’ compensation and
   12  employer’s liability insurance as defined in s. 624.605(1)(c),
   13  commercial property insurance as defined in s. 627.0625,
   14  commercial umbrella liability insurance as defined in s.
   15  627.0625, or commercial casualty insurance as defined in s.
   16  627.0625 shall file with the office before prior to July 1 of
   17  each year, on a form prescribed by the commission, the following
   18  data for the component types of such insurance as provided in
   19  the form:
   20         1. Calendar-year earned premium.
   21         2. Accident-year incurred losses and loss adjustment
   22  expenses.
   23         3. The administrative and selling expenses incurred in this
   24  state or allocated to this state for the calendar year.
   25         4. Policyholder dividends applicable to the calendar year.
   26  
   27  This does not Nothing herein is intended to prohibit an insurer
   28  from filing on a calendar-year basis.
   29         (b) The data filed for the group shall be a consolidation
   30  of the data of the individual insurers of the group. However, an
   31  insurer may elect to either consolidate commercial umbrella
   32  liability insurance data with commercial casualty insurance data
   33  or to separately file data for commercial umbrella liability
   34  insurance. Each insurer shall elect its method of filing
   35  commercial umbrella liability insurance at the time of filing
   36  data for accident year 1987 and shall thereafter continue filing
   37  under the same method. In the case of commercial umbrella
   38  liability insurance data reported separately, a separate
   39  excessive profits test shall be applied and the test period
   40  shall be 10 years. In the case of workers’ compensation and
   41  employer’s liability insurance, the final report for the test
   42  period including accident years 1984, 1985, and 1986 must be
   43  filed prior to July 1, 1988. In the case of commercial property
   44  and commercial casualty insurance, the final report for the test
   45  period including accident years 1987, 1988, and 1989 must be
   46  filed prior to July 1, 1991.
   47         (2) Each insurer group writing workers’ compensation and
   48  employer’s liability insurance shall also file a schedule of
   49  Florida loss and loss adjustment experience for each of the 3
   50  years previous to the most recent accident year. The incurred
   51  losses and loss adjustment expenses shall be valued as of
   52  December 31 of the first year following the latest accident year
   53  to be reported, developed to an ultimate basis, and at two 12
   54  month intervals thereafter, each developed to an ultimate basis,
   55  so that a total of three evaluations will be provided for each
   56  accident year. The first year to be so reported shall be
   57  accident year 1984, so that the reporting of 3 accident years
   58  under this revised evaluation will not take place until accident
   59  years 1985 and 1986 have become available. For reporting
   60  purposes unrelated to determining excessive profits, the loss
   61  and loss adjustment experience of each accident year shall
   62  continue to be reported until each accident year has been
   63  reported at eight stages of development.
   64         (2)(3)(a) Each insurer group writing commercial property
   65  insurance or commercial casualty insurance shall also file a
   66  schedule of Florida loss and loss adjustment experience for each
   67  of the 3 years previous to the most recent accident year. The
   68  incurred losses and loss adjustment expenses shall be valued as
   69  of December 31 of the first year following the latest accident
   70  year, developed to an ultimate basis, and at two 12-month
   71  intervals thereafter, each developed to an ultimate basis, so
   72  that a total of 3 evaluations will be provided for each accident
   73  year. The first year to be so reported shall be accident year
   74  1987, which shall first be reported on or before July 1, 1989,
   75  and the reporting of 3 accident years will not take place until
   76  accident years 1988 and 1989 have become available. For medical
   77  malpractice insurance, the first year to be so reported shall be
   78  accident year 1990, which shall first be reported on or before
   79  July 1, 1992, and the reporting of 3 accident years for full
   80  inclusion of medical malpractice experience in commercial
   81  casualty insurance will not take place until accident years 1991
   82  and 1992 become available. Accordingly, no medical malpractice
   83  insured shall be eligible for refunds or credits until the
   84  reporting period ending with calendar-accident year 1992. For
   85  reporting purposes unrelated to determining excess profits, the
   86  loss and loss adjustment experience of each accident year shall
   87  continue to be reported until each accident year has been
   88  reported at eight stages of development.
   89         (b) Each insurer group writing commercial umbrella
   90  liability insurance which elects to file separate data for such
   91  insurance shall also file a schedule of Florida loss and loss
   92  adjustment experience for each of the 10 years previous to the
   93  most recent accident year. The incurred losses and loss
   94  adjustment expenses shall be valued as of December 31 of the
   95  first year following the latest accident year, developed to an
   96  ultimate basis, and at nine 12-month intervals thereafter, each
   97  developed to an ultimate basis, so that a total of 10
   98  evaluations will be provided for each accident year. The first
   99  year to be so reported shall be accident year 1987, which shall
  100  first be reported on or before October 1, 1989, and the
  101  reporting of 10 accident years will not take place until
  102  accident year 1996 data is reported.
  103         (3)(4) Each insurer group’s underwriting gain or loss for
  104  each calendar-accident year shall be computed as follows: The
  105  sum of the accident-year incurred losses and loss adjustment
  106  expenses as of December 31 of the year, developed to an ultimate
  107  basis, plus the administrative and selling expenses incurred in
  108  the calendar year, plus policyholder dividends applicable to the
  109  calendar year, shall be subtracted from the calendar-year earned
  110  premium to determine the underwriting gain or loss.
  111         (4)(5) For the 3 most recent calendar-accident years for
  112  which data is to be filed under this section, the underwriting
  113  gain or loss shall be compared to the anticipated underwriting
  114  profit, except in the case of separately reported commercial
  115  umbrella liability insurance for which such comparison shall be
  116  made for the 10 most recent calendar-accident years.
  117         (6) For those insurer groups writing workers’ compensation
  118  and employer’s liability insurance during the years 1984, 1985,
  119  1986, 1987, and 1988, an excessive profit has been realized if
  120  underwriting gain is greater than the anticipated underwriting
  121  profit plus 5 percent of earned premiums for the 3 most recent
  122  calendar years for which data is to be filed under this section.
  123  Any excess profit of an insurance company offering workers’
  124  compensation or employer’s liability insurance during this
  125  period of time, shall be returned to policyholders in the form
  126  of a cash refund or a credit toward future purchase of
  127  insurance. The excessive amount shall be refunded on a pro rata
  128  basis in relation to the final compilation year earned premiums
  129  to the workers’ compensation policyholders of record of the
  130  insurer group on December 31 of the final compilation year.
  131         (5)(7)(a) Beginning with the July 1, 1991, report for
  132  workers’ compensation insurance, employer’s liability insurance,
  133  commercial property insurance, and commercial casualty
  134  insurance, an excessive profit has been realized if the net
  135  aggregate underwriting gain for all these lines combined is
  136  greater than the net aggregate anticipated underwriting profit
  137  for these lines plus 5 percent of earned premiums for the 3 most
  138  recent calendar years for which data is to be filed under this
  139  section. For calculation purposes commercial property insurance
  140  and commercial casualty insurance shall be broken down into
  141  sublines in order to ascertain the anticipated underwriting
  142  profit factor versus the actual underwriting gain for the given
  143  subline.
  144         (b) Beginning with the July 1, 1998, report for commercial
  145  umbrella liability insurance, if an insurer has elected to file
  146  data separately for such insurance, an excessive profit has been
  147  realized if the underwriting gain for such insurance is greater
  148  than the anticipated underwriting profit for such insurance plus
  149  5 percent of earned premiums for the 10 most recent calendar
  150  years for which data is to be filed under this section.
  151         (6)(8) As used in this section with respect to any 3-year
  152  period, or with respect to any 10-year period in the case of
  153  commercial umbrella liability insurance, “anticipated
  154  underwriting profit” means the sum of the dollar amounts
  155  obtained by multiplying, for each rate filing of the insurer
  156  group in effect during such period, the earned premiums
  157  applicable to such rate filing during such period by the
  158  percentage factor included in such rate filing for profit and
  159  contingencies, such percentage factor having been determined
  160  with due recognition to investment income from funds generated
  161  by Florida business, except that the anticipated underwriting
  162  profit for the purposes of this section shall be calculated
  163  using a profit and contingencies factor that is not less than
  164  zero. Separate calculations need not be made for consecutive
  165  rate filings containing the same percentage factor for profits
  166  and contingencies.
  167         (7)(9) If the insurer group has realized an excessive
  168  profit, the office shall order a return of the excessive amounts
  169  after affording the insurer group an opportunity for hearing and
  170  otherwise complying with the requirements of chapter 120. Such
  171  excessive amounts shall be refunded in all instances unless the
  172  insurer group affirmatively demonstrates to the office that the
  173  refund of the excessive amounts will render a member of the
  174  insurer group financially impaired or will render it insolvent
  175  under the provisions of the Florida Insurance Code.
  176         (8)(10) Any excess profit of an insurance company as
  177  determined on July 1, 1991, and thereafter shall be returned to
  178  policyholders in the form of a cash refund or a credit toward
  179  the future purchase of insurance. The excessive amount shall be
  180  refunded on a pro rata basis in relation to the final
  181  compilation year earned premiums to the policyholders of record
  182  of the insurer group on December 31 of the final compilation
  183  year.
  184         (9)(11)(a) Cash refunds to policyholders may be rounded to
  185  the nearest dollar.
  186         (b) Data in required reports to the office may be rounded
  187  to the nearest dollar.
  188         (c) Rounding, if elected by the insurer, shall be applied
  189  consistently.
  190         (10)(12)(a) Refunds shall be completed in one of the
  191  following ways:
  192         1. If the insurer group elects to make a cash refund, the
  193  refund shall be completed within 60 days after of entry of a
  194  final order indicating that excessive profits have been
  195  realized.
  196         2. If the insurer group elects to make refunds in the form
  197  of a credit to renewal policies, such credits shall be applied
  198  to policy renewal premium notices which are forwarded to
  199  insureds more than 60 calendar days after entry of a final order
  200  indicating that excessive profits have been realized. If an
  201  insurer group has made this election but an insured thereafter
  202  cancels her or his policy or otherwise allows the policy to
  203  terminate, the insurer group shall make a cash refund within not
  204  later than 60 days after termination of such coverage.
  205         (b) Upon completion of the renewal credits or refund
  206  payments, the insurer group shall immediately certify to the
  207  office that the refunds have been made.
  208         (11)(13) Any refund or renewal credit made pursuant to this
  209  section shall be treated as a policyholder dividend applicable
  210  to the year immediately succeeding the compilation period giving
  211  rise to the refund or credit, for purposes of reporting under
  212  this section for subsequent years.
  213         (12)(14) The application of this law to commercial property
  214  and commercial casualty insurance, which includes commercial
  215  umbrella liability insurance, ceases on January 1, 1997.
  216         Section 7. Subsection (4) of section 628.6017, Florida
  217  Statutes, is amended to read:
  218         628.6017 Converting assessable mutual insurer.—
  219         (4) An assessable mutual insurer becoming a stock insurer
  220  or a nonassessable mutual insurer is shall not be subject to s.
  221  627.215 or s. 627.351(5) for 5 years following authorization of
  222  the conversion by the office. However, the converted stock
  223  insurer or nonassessable mutual insurer must shall file all
  224  necessary data required by s. 627.215. Such amounts otherwise
  225  subject to s. 627.215(8) must 627.215(10) shall be maintained as
  226  surplus as to policyholders and are not be available for
  227  dividends for a period of 5 years.
  228  
  229  ================= T I T L E  A M E N D M E N T ================
  230         And the title is amended as follows:
  231         Delete line 182
  232  and insert:
  233         payment of workers’ compensation; amending s. 627.215,
  234         F.S.; removing workers’ compensation and employer’s
  235         liability insurance from those types of insurance that
  236         must report and refund excess profits; deleting
  237         obsolete provisions; amending s. 628.6017, F.S.;
  238         conforming a cross-reference;