HB 1129 2003
1	A bill to be entitled
2	An act relating to insurance; amending s. 501.212, F.S.;
3	deleting an exclusion from application of deceptive and
4	unfair trade practices provisions to the Department of
5	Insurance; creating s. 624.156, F.S.; providing that
6	certain consumer protection laws apply to the business of
7	insurance; amending s. 627.041, F.S.; revising
8	definitions; amending s. 627.062, F.S.; specifying
9	nonapplication to professional medical malpractice
10	insurance; amending s. 627.314, F.S.; revising certain
11	authorized actions multiple insurers may engage in
12	together; prohibiting certain conduct on the part of
13	insurers; amending s. 627.357, F.S.; deleting a
14	prohibition against forming a medical malpractice self-
15	insurance fund; amending s. 627.4147, F.S.; revising
16	certain notification criteria; providing for application
17	of a discount or surcharge or alternative method based on
18	loss experience in determining the premium paid by a
19	health care provider; providing requirements; providing a
20	limitation; amending s. 627.912, F.S.; increases the limit
21	on a fine; requiring provision of certain financial
22	information to the Office of Insurance Regulation;
23	authorizing an administrative fine for failure to comply;
24	requiring the director of the office to prepare and submit
25	to the Governor and Legislature an annual report; creating
26	s. 627.41491, F.S.; requiring the Office of Insurance
27	Regulation to provide health care providers with a full
28	disclosure of certain rate comparison information each
29	year; creating s. 627.41493, F.S.; requiring a medical
30	malpractice insurance rate rollback; providing for
31	subsequent increases under certain circumstances;
32	requiring approval for use of certain medical malpractice
33	insurance rates; creating s. 627.41495, F.S.; providing
34	for consumer participation in review of medical
35	malpractice rate changes; providing for public inspection;
36	providing for adoption of rules by the Office of Insurance
37	Regulation; creating s. 627.41497, F.S.; requiring certain
38	medical malpractice insurance rates to be set by the
39	director of the Office of Insurance Regulation; providing
40	for approval of rate filings; requiring insurers to apply
41	for certain rates, schedules, and manuals; providing
42	procedures for application and review; providing review
43	criteria; providing approval standards; authorizing the
44	office to require certain additional information for
45	review; requiring adoption of certain rules; providing for
46	reports of certain information; requiring the office to
47	retain such reports for a time certain; requiring medical
48	malpractice insurers to file certain information with the
49	office; authorizing the office to review rates, schedules,
50	manuals, or rate changes at any time for certain purposes;
51	providing procedures; requiring the office to issue orders
52	for setting new rates; prohibiting the office from
53	prohibiting insurers from paying certain acquisition costs
54	for certain purposes; providing application; excluding
55	certain judgment or settlement amounts, taxable costs, and
56	attorney's fees from inclusion in an insurer's rate base;
57	authorizing the Office of Insurance Regulation to adopt
58	rules; providing an effective date.
59
60	Be It Enacted by the Legislature of the State of Florida:
61
62	Section 1. Subsection (4) of section 501.212, Florida
63	Statutes, is amended to read:
64	501.212 Application.--This part does not apply to:
65	(4) Any person or activity regulated under laws
66	administered by the Department of Insurance orBanks and savings
67	and loan associations regulated by the Department of Banking and
68	Finance or banks or savings and loan associations regulated by
69	federal agencies.
70	Section 2. Section 624.156, Florida Statutes, is created
71	to read:
72	624.156 Applicability of consumer protection laws to the
73	business of insurance.--
74	(1) Notwithstanding any provision of law to the contrary,
75	the business of insurance shall be subject to the laws of this
76	state applicable to any other business, including, but not
77	limited to, the Florida Civil Rights Act of 1992 set forth in
78	part I of chapter 760, the Florida Antitrust Act of 1980 set
79	forth in chapter 542, the Florida Deceptive and Unfair Trade
80	Practices Act set forth in part II of chapter 501, and the
81	consumer protection provisions contained in chapter 540. The
82	protections afforded consumers by chapters 501, 540, 542, and
83	760 shall apply to insurance consumers.
84	(2) Nothing in this section shall be construed to
85	prohibit:
86	(a) Any agreement to collect, compile, and disseminate
87	historical data on paid claims or reserves for reported claims,
88	provided such data is contemporaneously transmitted to the
89	Office of Insurance Regulation and made available for public
90	inspection.
91	(b) Participation in any joint arrangement established by
92	law or the Office of Insurance Regulation to assure availability
93	of insurance.
94	(c) Any agent or broker, representing one or more
95	insurers, from obtaining from any insurer such agent or broker
96	represents information relative to the premium for any policy or
97	risk to be underwritten by that insurer.
98	(d) Any agent or broker from disclosing to an insurer the
99	agent or broker represents any quoted rate or charge offered by
100	another insurer represented by that agent or broker for the
101	purpose of negotiating a lower rate, charge, or term from the
102	insurer to whom the disclosure is made.
103	(e) Any agents, brokers, or insurers from using, or
104	participating with multiple insurers or reinsurers for
105	underwriting, a single risk or group of risks.
106	Section 3. Subsections (3) and (4) of section 627.041,
107	Florida Statutes, are amended to read:
108	627.041 Definitions.--As used in this part:
109	(3) "Rating organization" means every person, other than
110	an authorized insurer, whether located within or outside this
111	state, who has as his or her object or purpose the collecting,
112	compiling, and disseminating historical data on paid claims or
113	reserves for reported claimsmaking of rates, rating plans, or
114	rating systems. Two or more authorized insurers that act in
115	concert for the purpose of collecting, compiling, and
116	disseminating historical data on paid claims or reserves for
117	reported claimsmaking rates, rating plans, or rating systems,
118	and that do not operate within the specific authorizations
119	contained in ss. 627.311, 627.314(2), (4),and 627.351, shall be
120	deemed to be a rating organization. No single insurer shall be
121	deemed to be a rating organization.
122	(4) "Advisory organization" means every group,
123	association, or other organization of insurers, whether located
124	within or outside this state, which prepares policy forms or
125	makes underwriting rules incident to but not including the
126	making of rates, rating plans, or rating systems or which
127	collects and furnishes to authorized insurers or rating
128	organizations loss or expense statistics or other statistical
129	information and data and acts in an advisory, as distinguished
130	from a ratemaking, capacity.
131	Section 4. Subsection (7) is added to section 627.062,
132	Florida Statutes, to read:
133	627.062 Rate standards.--
134	(7) This section shall not apply to professional medical
135	malpractice insurance.
136	Section 5. Section 627.314, Florida Statutes, is amended
137	to read:
138	627.314 Concerted action by two or more insurers.--
139	(1) Subject to and in compliance with the provisions of
140	this part authorizing insurers to be members or subscribers of
141	rating or advisory organizations or to engage in joint
142	underwriting or joint reinsurance, two or more insurers may act
143	in concert with each other and with others with respect to any
144	matters pertaining to:
145	(a) Collecting, compiling, and disseminating historical
146	data on paid claims or reserve for reported claimsThe making of
147	rates or rating systems except for private passenger automobile
148	insurance rates;
149	(b) The preparation or making of insurance policy or bond
150	forms, underwriting rules,surveys, inspections, and
151	investigations;
152	(c) The furnishing of loss or expense statistics or other
153	information and data;or
154	(c)(d)The carrying on of research.
155	(2) With respect to any matters pertaining to the making
156	of rates or rating systems; the preparation or making of
157	insurance policy or bond forms, underwriting rules, surveys,
158	inspections, and investigations; the furnishing of loss or
159	expense statistics or other information and data; or the
160	carrying on of research, two or more authorized insurers having
161	a common ownership or operating in the state under common
162	management or control are hereby authorized to act in concert
163	between or among themselves the same as if they constituted a
164	single insurer. To the extent that such matters relate to
165	cosurety bonds, two or more authorized insurers executing such
166	bonds are hereby authorized to act in concert between or among
167	themselves the same as if they constituted a single insurer.
168	(3)(a) Members and subscribers of rating or advisory
169	organizations may use the rates, rating systems, underwriting
170	rules, orpolicy or bond forms of such organizations, either
171	consistently or intermittently; but, except as provided in
172	subsection (2) and ss. 627.311 and 627.351, they shall not agree
173	with each other or rating organizations or others to adhere
174	thereto.
175	(b) The fact that two or more authorized insurers, whether
176	or not members or subscribers of a rating or advisory
177	organization, use, either consistently or intermittently, the
178	rates or rating systems made or adopted by a rating organization
179	or the underwriting rules or policy or bond forms prepared by a
180	rating or advisory organization shall not be sufficient in
181	itself to support a finding that an agreement to so adhere
182	exists, and may be used only for the purpose of supplementing or
183	explaining direct evidence of the existence of any such
184	agreement.
185	(b)(c)This subsection does not apply as to workers'
186	compensation and employer's liability insurances.
187	(4) Licensed rating organizations and authorized insurers
188	are authorized to exchange information and experience data with
189	rating organizations and insurers in this and other states and
190	may consult with them with respect to ratemaking and the
191	application of rating systems.
192	(4)(5)Upon compliance with the provisions of this part
193	applicable thereto, any rating organization or advisory
194	organization, and any group, association, or other organization
195	of authorized insurers which engages in joint underwriting or
196	joint reinsurance through such organization or by standing
197	agreement among the members thereof, may conduct operations in
198	this state. As respects insurance risks or operations in this
199	state, no insurer shall be a member or subscriber of any such
200	organization, group, or association that has not complied with
201	the provisions of this part applicable to it.
202	(5)(6)Notwithstanding any other provisions of this part,
203	insurers shall not participate directly or indirectly in the
204	deliberations or decisions of rating organizations on private
205	passenger automobile insurance. However, such rating
206	organizations shall, upon request of individual insurers, be
207	required to furnish at reasonable cost the rate indications
208	resulting from the loss and expense statistics gathered by them.
209	Individual insurers may modify the indications to reflect their
210	individual experience in determining their own rates. Such rates
211	shall be filed with the department for public inspection
212	whenever requested and shall be available for public
213	announcement only by the press, department, or insurer.
214	Section 6. Subsection (10) of section 627.357, Florida
215	Statutes, is amended to read:
216	627.357 Medical malpractice self-insurance.--
217	(10) A self-insurance fund may not be formed under this
218	section after October 1, 1992.
219	Section 7. Section 627.4147, Florida Statutes, is amended
220	to read:
221	627.4147 Medical malpractice insurance contracts.--
222	(1) In addition to any other requirements imposed by law,
223	each self-insurance policy as authorized under s. 627.357 or
224	insurance policy providing coverage for claims arising out of
225	the rendering of, or the failure to render, medical care or
226	services, including those of the Florida Medical Malpractice
227	Joint Underwriting Association, shall include:
228	(a) A clause requiring the insured to cooperate fully in
229	the review process prescribed under s. 766.106 if a notice of
230	intent to file a claim for medical malpractice is made against
231	the insured.
232	(b)1. Except as provided in subparagraph 2., a clause
233	authorizing the insurer or self-insurer to determine, to make,
234	and to conclude, without the permission of the insured, any
235	offer of admission of liability and for arbitration pursuant to
236	s. 766.106, settlement offer, or offer of judgment, if the offer
237	is within the policy limits. It is against public policy for any
238	insurance or self-insurance policy to contain a clause giving
239	the insured the exclusive right to veto any offer for admission
240	of liability and for arbitration made pursuant to s. 766.106,
241	settlement offer, or offer of judgment, when such offer is
242	within the policy limits. However, any offer of admission of
243	liability, settlement offer, or offer of judgment made by an
244	insurer or self-insurer shall be made in good faith and in the
245	best interests of the insured.
246	2.a. With respect to dentists licensed under chapter 466,
247	a clause clearly stating whether or not the insured has the
248	exclusive right to veto any offer of admission of liability and
249	for arbitration pursuant to s. 766.106, settlement offer, or
250	offer of judgment if the offer is within policy limits. An
251	insurer or self-insurer shall not make or conclude, without the
252	permission of the insured, any offer of admission of liability
253	and for arbitration pursuant to s. 766.106, settlement offer, or
254	offer of judgment, if such offer is outside the policy limits.
255	However, any offer for admission of liability and for
256	arbitration made under s. 766.106, settlement offer, or offer of
257	judgment made by an insurer or self-insurer shall be made in
258	good faith and in the best interest of the insured.
259	b. If the policy contains a clause stating the insured
260	does not have the exclusive right to veto any offer or admission
261	of liability and for arbitration made pursuant to s. 766.106,
262	settlement offer or offer of judgment, the insurer or self-
263	insurer shall provide to the insured or the insured's legal
264	representative by certified mail, return receipt requested, a
265	copy of the final offer of admission of liability and for
266	arbitration made pursuant to s. 766.106, settlement offer or
267	offer of judgment and at the same time such offer is provided to
268	the claimant. A copy of any final agreement reached between the
269	insurer and claimant shall also be provided to the insurer or
270	his or her legal representative by certified mail, return
271	receipt requested not more than 10 days after affecting such
272	agreement.
273	(c) A clause requiring the insurer or self-insurer to
274	notify the insured no less than 9060days prior to the
275	effective date of a rate increase orcancellation of the policy
276	or contract and, in the event of a determination by the insurer
277	or self-insurer not to renew the policy or contract, to notify
278	the insured no less than 9060days prior to the end of the
279	policy or contract period. If cancellation or nonrenewal is due
280	to nonpayment or loss of license, 10 days' notice is required.
281	(2) In determining the premium paid by any health care
282	provider, a medical malpractice insurer shall apply a discount
283	or surcharge based on the provider’s loss experience, including
284	state disciplinary action, or shall establish an alternative
285	method giving due consideration to the provider’s loss
286	experience. The insurer shall include a schedule of all such
287	discounts and surcharges or a description of such alternative
288	method in all filings the insurer makes with the director of the
289	Office of Insurance Regulation. Such schedule or description of
290	alternative method shall also be provided to policyholders or
291	prospective policyholders. No medical malpractice liability
292	insurer may use any rate or charge any premium unless the
293	insurer has filed such schedule or alternative method with the
294	director and the director has approved such schedule or
295	alternative method.Each insurer covered by this section may
296	require the insured to be a member in good standing, i.e., not
297	subject to expulsion or suspension, of a duly recognized state
298	or local professional society of health care providers which
299	maintains a medical review committee. No professional society
300	shall expel or suspend a member solely because he or she
301	participates in a health maintenance organization licensed under
302	part I of chapter 641.
303	(3) This section shall apply to all policies issued or
304	renewed after July 1, 2003October 1, 1985.
305	Section 8. Section 627.912, Florida Statutes, is amended
306	to read:
307	627.912 Professional liability claims and actions; reports
308	by insurers; annual reports.--
309	(1) Each self-insurer authorized under s. 627.357 and each
310	insurer or joint underwriting association providing professional
311	liability insurance to a practitioner of medicine licensed under
312	chapter 458, to a practitioner of osteopathic medicine licensed
313	under chapter 459, to a podiatric physician licensed under
314	chapter 461, to a dentist licensed under chapter 466, to a
315	hospital licensed under chapter 395, to a crisis stabilization
316	unit licensed under part IV of chapter 394, to a health
317	maintenance organization certificated under part I of chapter
318	641, to clinics included in chapter 390, to an ambulatory
319	surgical center as defined in s. 395.002, or to a member of The
320	Florida Bar shall report in duplicate to the Department of
321	Insurance any claim or action for damages for personal injuries
322	claimed to have been caused by error, omission, or negligence in
323	the performance of such insured's professional services or based
324	on a claimed performance of professional services without
325	consent, if the claim resulted in:
326	(a) A final judgment in any amount.
327	(b) A settlement in any amount.
328
329	Reports shall be filed with the department and, if the insured
330	party is licensed under chapter 458, chapter 459, chapter 461,
331	or chapter 466, with the Department of Health, no later than 30
332	days following the occurrence of any event listed in paragraph
333	(a) or paragraph (b). The Department of Health shall review each
334	report and determine whether any of the incidents that resulted
335	in the claim potentially involved conduct by the licensee that
336	is subject to disciplinary action, in which case the provisions
337	of s. 456.073 shall apply. The Department of Health, as part of
338	the annual report required by s. 456.026, shall publish annual
339	statistics, without identifying licensees, on the reports it
340	receives, including final action taken on such reports by the
341	Department of Health or the appropriate regulatory board.
342	(2) The reports required by subsection (1) shall contain:
343	(a) The name, address, and specialty coverage of the
344	insured.
345	(b) The insured's policy number.
346	(c) The date of the occurrence which created the claim.
347	(d) The date the claim was reported to the insurer or
348	self-insurer.
349	(e) The name and address of the injured person. This
350	information is confidential and exempt from the provisions of s.
351	119.07(1), and must not be disclosed by the department without
352	the injured person's consent, except for disclosure by the
353	department to the Department of Health. This information may be
354	used by the department for purposes of identifying multiple or
355	duplicate claims arising out of the same occurrence.
356	(f) The date of suit, if filed.
357	(g) The injured person's age and sex.
358	(h) The total number and names of all defendants involved
359	in the claim.
360	(i) The date and amount of judgment or settlement, if any,
361	including the itemization of the verdict, together with a copy
362	of the settlement or judgment.
363	(j) In the case of a settlement, such information as the
364	department may require with regard to the injured person's
365	incurred and anticipated medical expense, wage loss, and other
366	expenses.
367	(k) The loss adjustment expense paid to defense counsel,
368	and all other allocated loss adjustment expense paid.
369	(l) The date and reason for final disposition, if no
370	judgment or settlement.
371	(m) A summary of the occurrence which created the claim,
372	which shall include:
373	1. The name of the institution, if any, and the location
374	within the institution at which the injury occurred.
375	2. The final diagnosis for which treatment was sought or
376	rendered, including the patient's actual condition.
377	3. A description of the misdiagnosis made, if any, of the
378	patient's actual condition.
379	4. The operation, diagnostic, or treatment procedure
380	causing the injury.
381	5. A description of the principal injury giving rise to
382	the claim.
383	6. The safety management steps that have been taken by the
384	insured to make similar occurrences or injuries less likely in
385	the future.
386	(n) Any other information required by the department to
387	analyze and evaluate the nature, causes, location, cost, and
388	damages involved in professional liability cases.
389	(3) Upon request by the Department of Health, the
390	department shall provide the Department of Health with any
391	information received under this section related to persons
392	licensed under chapter 458, chapter 459, chapter 461, or chapter
393	466. For purposes of safety management, the department shall
394	annually provide the Department of Health with copies of the
395	reports in cases resulting in an indemnity being paid to the
396	claimants.
397	(4) There shall be no liability on the part of, and no
398	cause of action of any nature shall arise against, any insurer
399	reporting hereunder or its agents or employees or the department
400	or its employees for any action taken by them under this
401	section. The department may impose a fine of $250 per day per
402	case, but not to exceed a total of $10,000$1,000per case,
403	against an insurer that violates the requirements of this
404	section. This subsection applies to claims accruing on or after
405	October 1, 1997.
406	(5) Any self-insurance program established under s.
407	1004.24 shall report in duplicate to the Department of Insurance
408	any claim or action for damages for personal injuries claimed to
409	have been caused by error, omission, or negligence in the
410	performance of professional services provided by the state
411	university board of trustees through an employee or agent of the
412	state university board of trustees, including practitioners of
413	medicine licensed under chapter 458, practitioners of
414	osteopathic medicine licensed under chapter 459, podiatric
415	physicians licensed under chapter 461, and dentists licensed
416	under chapter 466, or based on a claimed performance of
417	professional services without consent if the claim resulted in a
418	final judgment in any amount, or a settlement in any amount. The
419	reports required by this subsection shall contain the
420	information required by subsection (3) and the name, address,
421	and specialty of the employee or agent of the state university
422	board of trustees whose performance or professional services is
423	alleged in the claim or action to have caused personal injury.
424	(6) Each entity required to report closed claims for the
425	classification of insurance set forth in subsection (1) shall
426	also provide to the Office of Insurance Regulation the following
427	financial information, specific to this state and countrywide,
428	if applicable, for the prior calendar year:
429	(a) Direct premiums written.
430	(b) Direct premiums earned.
431	(c) Incurred loss and loss expense developed according to
432	the formula A + B – C + D – E + F + G – H, for which A equals
433	the dollar amount of losses paid, B equals the reserves for
434	reported claims at the end of the current year, C equals the
435	reserves for reported claims at the end of the previous year, D
436	equals the reserves for incurred but not reported claims at the
437	end of the current year, E equals the reserves for incurred but
438	not reported claims at the end of the previous year, F equals
439	loss adjustment expenses paid, G equals the reserves for loss
440	adjustment expenses at the end of the current year, and H equals
441	the reserves for loss adjustment expenses at the end of the
442	previous year.
443	(d) Incurred expenses allocated separately to commissions,
444	other acquisition costs, general expenses, taxes, licenses, and
445	fees, using appropriate estimates when necessary.
446	(e) Policyholder dividends.
447	(f) Underwriting gain or loss.
448	(g) Net investment income, including net realized capital
449	gains and losses, using appropriate estimates where necessary.
450	(h) Federal income taxes.
451	(i) Net income.
452	(7) The director of the Office of Insurance Regulation may
453	levy an administrative fine of $1,000 per day against any
454	insurer failing to comply with the reporting requirements of
455	this section.
456	(8) The director of the Office of Insurance Regulation
457	shall prepare an annual report no later than July 1 that
458	summarizes the information submitted pursuant to this section.
459	Such summary shall be prepared on an aggregate basis. A copy of
460	the report shall be delivered to the Governor, the President of
461	the Senate, and the Speaker of the House of Representatives. The
462	first report submitted pursuant to this subsection shall be
463	delivered on or before October 1, 2003, for the calendar year
464	2002. Subsequent reports shall be filed on or before March 1 for
465	each prior year.
466	Section 9. Section 627.41491, Florida Statutes, is created
467	to read:
468	627.41491 Full disclosure of insurance information.--The
469	Office of Insurance Regulation shall provide health care
470	providers with a comparison of the rate in effect for each
471	medical malpractice insurer and self-insurer and the Florida
472	Medical Malpractice Joint Underwriting Association. Such rate
473	comparison chart shall be made available to the public through
474	the Internet and other commonly used means of distribution no
475	later than July 1 of each year.
476	Section 10. Section 627.41493, Florida Statutes, is
477	created to read:
478	627.41493 Insurance rate rollback.--
479	(1) For any coverage for medical malpractice insurance
480	subject to this chapter issued or renewed on or after July 1,
481	2003, every insurer shall reduce its charges to levels that are
482	at least 20 percent less than the charges for the same coverage
483	that were in effect on January 1, 2001.
484	(2) Between July 1, 2003, and July 1, 2004, rates and
485	premiums reduced pursuant to subsection (1) may only be
486	increased if the director of the Office of Insurance Regulation
487	finds, after a hearing, that an insurer or self-insurer or the
488	Florida Medical Malpractice Joint Underwriting Association is
489	substantially threatened with insolvency.
490	(3) Commencing July 1, 2003, insurance rates for medical
491	malpractice subject to this chapter must be approved by the
492	director of the Office of Insurance Regulation prior to being
493	used.
494	(4) Any separate affiliate of an insurer is subject to the
495	provisions of this section.
496	Section 11. Section 627.41495, Florida Statutes, is
497	created to read:
498	627.41495 Consumer participation in rate review.--
499	(1) Upon the filing of a proposed rate change by a medical
500	malpractice insurer, self-insurer, or risk retention group, the
501	director of the Office of Insurance Regulation shall require the
502	insurer, self-insurer, or risk retention group to give notice to
503	the public and to the insureds or associations of insureds of
504	the insurer, self-insurer, or risk retention group making the
505	filing.
506	(2) The rate filing shall be available for public
507	inspection. If any insureds or associations of insureds of the
508	insurer, self-insurer, or risk retention group filing the
509	proposed rate change request the director of the Office of
510	Insurance Regulation to hold a hearing within 30 days after the
511	mailing of the notification of the proposed rate changes to the
512	insureds, the director shall hold a hearing within 30 days after
513	such request. Any consumer may participate in such hearing, and
514	the office shall adopt rules governing such participation.
515	Section 12. Section 627.41497, Florida Statutes, is
516	created to read:
517	627.41497 Medical malpractice rate standards; prior
518	approval of rates.--
519	(1) In addition to any other requirements imposed by law,
520	the rates for each self-insurance policy as authorized under s.
521	627.357 or insurance policy providing coverage for claims
522	arising out of the rendering of, or the failure to render,
523	medical care or services shall be set by the director of the
524	Office of Insurance Regulation and shall not be excessive,
525	inadequate, or unfairly discriminatory.
526	(2) As to all rate filings subject to approval in
527	accordance with this section:
528	(a) Insurers or rating organizations shall apply for
529	rates, rating schedules, or rating manuals to allow the insurer
530	a reasonable rate of return on such classes of insurance written
531	in this state. A copy of rates, rating schedules, rating
532	manuals, premium credits, or discount schedules and surcharge
533	schedules, and changes to such rates, schedules, manuals, and
534	credits, shall be filed with the Office of Insurance Regulation.
535	The filing shall be made at least 180 days before the proposed
536	effective date and shall not be implemented during the review of
537	the filing by the Office of Insurance Regulation, any
538	proceeding, or judicial review.
539	(b) Upon receiving a rate filing and within a reasonable
540	time after such receipt, the Office of Insurance Regulation
541	shall review the rate filing and set a rate or rate schedule
542	that is not excessive, inadequate, or unfairly discriminatory.
543	In making such determination, the office shall, in accordance
544	with generally accepted and reasonable actuarial techniques, use
545	the following factors:
546	1. Past and prospective loss experience within and without
547	this state and the insurer's or self-insurer’s past and
548	prospective loss experience within this state, if applicable. A
549	medical malpractice insurer shall consider past and prospective
550	loss experience and catastrophic hazards, if any, solely within
551	this state. However, if there is insufficient experience within
552	this state upon which a rate can be based, the insurer may
553	consider experiences within any other state or states that have
554	a similar cost of claim and frequency of claim experience as
555	this state and, if insufficient experience is available, the
556	insurer may use nationwide experience. The insurer, in its rate
557	filing or in its records, shall expressly show the rate
558	experience it is using. In considering experience outside this
559	state, as much weight as possible shall be given to state
560	experience.
561	2. Past and prospective expenses.
562	3. Investment income reasonably expected by the insurer,
563	consistent with the insurer's investment practices, from
564	investable premiums anticipated in the filing, plus any other
565	expected income from currently invested assets representing the
566	amount expected on unearned premium reserves, loss reserves, and
567	surplus. The Office of Insurance Regulation may adopt rules
568	using reasonable techniques of actuarial science and economics
569	to specify the manner in which insurers shall calculate
570	investment income attributable to such classes of insurance
571	written in this state and the manner in which such investment
572	income shall be used in the calculation of insurance rates. The
573	profit and contingency factor as specified in the filing shall
574	be used in computing excess profits in conjunction with s.
575	627.215.
576	4. The reasonableness of the judgment reflected in the
577	filing.
578	5. Dividends, savings, or unabsorbed premium deposits
579	allowed or returned to policyholders, members, or subscribers in
580	this state.
581	6. The adequacy of loss reserves.
582	7. The cost of reinsurance.
583	8. Trend factors, including trends in actual losses per
584	insured unit for the insurer making the filing.
585	9. A reasonable margin for underwriting profit and
586	contingencies.
587	10. The cost of medical services.
588	11. Other relevant factors that impact upon the frequency
589	or severity of claims or upon expenses.
590	(c) After consideration of the rate factors provided in
591	paragraph (b), the Office of Insurance Regulation shall
592	determine and set the appropriate rate, so long as the rate is
593	not excessive, inadequate, or unfairly discriminatory based upon
594	the following standards:
595	1. Rates shall be deemed excessive if they are likely to
596	produce a profit from business in this state that is
597	unreasonably high in relation to the risk involved in the class
598	of business or if expenses are unreasonably high in relation to
599	services rendered.
600	2. Rates shall be deemed excessive if, among other things,
601	the rate structure established by a stock insurance company
602	provides for replenishment of reserves or surpluses from
603	premiums when the replenishment is attributable to investment
604	losses, the rate is unreasonably high for the insurance
605	provided, or expenses are unreasonably high in relation to
606	services rendered.
607	3. Rates shall be deemed inadequate if they are clearly
608	insufficient, together with the investment income attributable
609	to such rates, to sustain projected losses and expenses in the
610	class of business to which they apply and the continued use of
611	such rate endangers the solvency of the insurer using the rate.
612	4. A rating plan, including discounts, credits, or
613	surcharges, shall be deemed unfairly discriminatory if the plan
614	fails to clearly and equitably reflect consideration of the
615	policyholder's participation in a risk management program
616	adopted pursuant to s. 627.0625 or the policyholder’s individual
617	claims history or unless price differentials fail to reflect
618	equitably the differences in expected losses and experiences.
619	5. A rate shall be deemed inadequate as to the premium
620	charged to a risk or group of risks if discounts or credits are
621	allowed which exceed a reasonable reflection of expense savings
622	and reasonably expected loss experience from the risk or group
623	of risks.
624	6. A rate shall be deemed unfairly discriminatory as to a
625	risk or group of risks if the application of premium discounts,
626	credits, or surcharges among such risks does not bear a
627	reasonable relationship to the expected loss and expense
628	experience among the various risks.
629	(d) In reviewing a rate filing, the Office of Insurance
630	Regulation may require the insurer to provide at the insurer's
631	expense all information necessary to evaluate the condition of
632	the company and the reasonableness of the filing according to
633	the criteria enumerated in this section.
634	1. The Office of Insurance Regulation shall adopt rules
635	that shall require each medical malpractice insurer to record
636	and report its loss and expense experience and such other data,
637	including reserves, as may be necessary to determine whether
638	rates comply with the standards set forth in this section. Every
639	medical malpractice insurer shall provide such information in
640	such form as the director of the office may require.
641	2. The director shall require that the annual report and
642	any such supplemental report that contains information of a
643	company’s loss and loss adjustment reserves be accompanied by an
644	opinion signed and sworn to by a qualified and independent
645	actuary verifying that, within the 9 months prior to the
646	submission of the report, the actuary has conducted a review and
647	analysis of the insurance company’s loss and loss adjustment
648	reserves and the reserves are computed in accordance with
649	accepted loss reserving standards and are fairly stated in
650	accordance with sound loss reserving principles.
651	3. The director shall maintain for at least 10 years, by
652	carrier, all reports submitted by insurers pursuant to rules
653	adopted by the office under this section. The director shall
654	consider such reports in determining the appropriateness of
655	premium rates for medical malpractice insurance.
656	4. The director may examine and review the assignment and
657	assessment of risk for difference classifications for different
658	specialties or practices of medicine. The director may hold a
659	public hearing on any filing containing a risk assignment for
660	medical malpractice insurance to determine whether such risk
661	assignment is reasonable and may issue orders concerning such
662	risk assignment.
663	(3) With respect to the filing of rate information:
664	(a) Every medical malpractice insurer shall file with the
665	Office of Insurance Regulation every manual of classifications,
666	rules, and rates, every rating plan, and every modification of
667	any of the foregoing that the insurer proposes to use in this
668	state.
669	(b) The expense provisions included in the rates to be
670	used by a medical malpractice insurer shall reflect the
671	operating methods of the insurer and, so far as it is credible
672	and reasonable, the insurer’s own actual and anticipated expense
673	experience.
674	(c) The rates to be used by a medical malpractice insurer
675	shall contain provisions for contingencies and an allowance
676	permitting a reasonable rate of return. In determining a
677	reasonable rate of return, consideration shall be given to all
678	investment income reasonably attributable to medical malpractice
679	insurance.
680	(d) Every filing shall state the proposed effective date
681	of the filing, shall indicate the character and extent of the
682	coverage contemplated, and shall contain supporting information.
683	Such supporting information may include the experience or
684	judgment of the insurer making the filing, the insurer’s
685	interpretation of any statistical data the insurer relied upon,
686	the experience of other insurers, and any other factors the
687	insurer deems relevant.
688	(4) The Office of Insurance Regulation may at any time
689	review a rate, rating schedule, rating manual, or rate change,
690	the pertinent records of the insurer, and market conditions. If
691	the office finds on a preliminary basis that a rate may be
692	excessive, inadequate, or unfairly discriminatory, the office
693	shall initiate proceedings to set a new rate and shall so notify
694	the insurer. However, the office may not disapprove as excessive
695	any rate the office has set for a period of 1 year after the
696	effective date of the filing unless the office finds that a
697	material misrepresentation or material error was made by the
698	insurer or was contained in the filing. Upon being so notified,
699	the insurer or rating organization shall, within 60 days, file
700	with the office all information which, in the belief of the
701	insurer or organization, proves the reasonableness, adequacy,
702	and fairness of the rate or rate change. The office shall
703	determine and set an appropriate rate within a reasonable time
704	after receipt of the insurer’s initial response, pursuant to the
705	procedures of paragraphs (2)(b)-(d). In such instances and in
706	any administrative proceeding relating to the legality of any
707	rate, the insurer or rating organization shall carry the burden
708	of proof by a preponderance of the evidence to show that the
709	rate is not excessive, inadequate, or unfairly discriminatory.
710	(5) When the Office of Insurance Regulation sets a new
711	rate or rate schedule, the office shall issue an order
712	specifying the new rate or rate schedule and the findings of the
713	office. The order shall constitute agency action for purposes of
714	the Administrative Procedure Act.
715	(6) Except as otherwise specifically provided in this
716	chapter, the Office of Insurance Regulation shall not prohibit
717	any insurer, including any residual market plan or joint
718	underwriting association, from paying acquisition costs based on
719	the full amount of premium, as defined in s. 627.403, applicable
720	to any policy or prohibit any such insurer from including the
721	full amount of acquisition costs in a rate filing.
722	(7) The establishment or variation of any rate, rating
723	classification, rating plan, or rating schedule in violation of
724	part IX of chapter 626 is also a violation of this section.
725	(8) Any portion of a judgment entered as a result of a
726	statutory or common-law bad faith action and any portion of a
727	judgment entered that awards punitive damages against an insurer
728	shall not be included in the insurer's rate base and shall not
729	be used to justify a rate or rate change. Any portion of a
730	settlement entered as a result of a statutory or common-law bad
731	faith action identified as such and any portion of a settlement
732	in which an insurer agrees to pay specific punitive damages
733	shall not be used to justify a rate or rate change. The portion
734	of the taxable costs and attorney's fees that is identified as
735	being related to the bad faith and punitive damages in such
736	judgments and settlements shall not be included in the insurer's
737	rate base and shall not be used to justify a rate or rate
738	change.
739	Section 13. The Office of Insurance Regulation shall have
740	the authority to adopt rules to implement the provisions of this
741	act.
742	Section 14. This act shall take effect upon becoming a
743	law.