Florida Senate - 2006                        SENATOR AMENDMENT
    Bill No. CS for CS for SB 1980
                        Barcode 062456
                            CHAMBER ACTION
              Senate                               House
 1                                 .                    
 2                                 .                    
 3         Floor: WD/2R            .                    
       05/05/2006 12:39 PM         .                    
 4  ______________________________________________________________
10  ______________________________________________________________
11  Senators Klein, Smith, Geller, and Campbell moved the
12  following amendment to amendment (021596):
14         Senate Amendment (with title amendment) 
15         On page 28, line 29, through
16            page 30, line 22, delete those lines
18  and insert:  
19         Section 7.  Effective July 1, 2006, paragraphs (a),
20  (b), and (h) of subsection (2) of section 627.062, Florida
21  Statutes, are amended, and subsection (9) is added to that
22  section, to read:
23         627.062  Rate standards.--
24         (2)  As to all such classes of insurance:
25         (a)  Insurers or rating organizations shall establish
26  and use rates, rating schedules, or rating manuals to allow
27  the insurer a reasonable rate of return on such classes of
28  insurance written in this state.  A copy of rates, rating
29  schedules, rating manuals, premium credits or discount
30  schedules, and surcharge schedules, and changes thereto, shall
31  be filed with the office under one of the following
    11:26 AM   05/05/06                            s1980c2c-30-23r

Florida Senate - 2006 SENATOR AMENDMENT Bill No. CS for CS for SB 1980 Barcode 062456 1 procedures: 2 1. If the filing is made at least 90 days before the 3 proposed effective date. and The filing may is not be 4 implemented during the office's review of the filing and any 5 proceeding and judicial review., then Such filing is shall be 6 considered a "file and use" filing. In such case, The office 7 shall finalize its review by issuance of a notice of intent to 8 approve or a notice of intent to disapprove within 90 days 9 after receipt of the filing. The notice of intent to approve 10 and the notice of intent to disapprove constitute agency 11 action for purposes of the Administrative Procedure Act. 12 Requests for supporting information, requests for mathematical 13 or mechanical corrections, or notification to the insurer by 14 the office of its preliminary findings shall not toll the 15 90-day period during any such proceedings and subsequent 16 judicial review. The rate shall be deemed approved if the 17 office does not issue a notice of intent to approve or a 18 notice of intent to disapprove within 90 days after receipt of 19 the filing. 20 2. If the filing is not made in accordance with the 21 provisions of subparagraph 1., such filing shall be made as 22 soon as practicable, but no later than 30 days after the 23 effective date, and shall be considered a "use and file" 24 filing. An insurer making a "use and file" filing is 25 potentially subject to an order by the office to return to 26 policyholders portions of rates found to be excessive, as 27 provided in paragraph (h). 28 (b) Upon receiving a rate filing, the office shall 29 review the rate filing to determine if a rate is excessive, 30 inadequate, or unfairly discriminatory. In making that 31 determination, the office shall, in accordance with generally 2 11:26 AM 05/05/06 s1980c2c-30-23r
Florida Senate - 2006 SENATOR AMENDMENT Bill No. CS for CS for SB 1980 Barcode 062456 1 accepted and reasonable actuarial techniques, consider the 2 following factors: 3 1. Past and prospective loss experience within and 4 without this state. 5 2. Past and prospective expenses. 6 3. The degree of competition among insurers for the 7 risk insured. 8 4. Investment income reasonably expected by the 9 insurer, consistent with the insurer's investment practices, 10 from investable premiums anticipated in the filing, plus any 11 other expected income from currently invested assets 12 representing the amount expected on unearned premium reserves 13 and loss reserves. The commission may adopt rules utilizing 14 reasonable techniques of actuarial science and economics to 15 specify the manner in which insurers shall calculate 16 investment income attributable to such classes of insurance 17 written in this state and the manner in which such investment 18 income shall be used in the calculation of insurance rates. 19 Such manner shall contemplate allowances for an underwriting 20 profit factor and full consideration of investment income 21 which produce a reasonable rate of return; however, investment 22 income from invested surplus shall not be considered. 23 5. The reasonableness of the judgment reflected in the 24 filing. 25 6. Dividends, savings, or unabsorbed premium deposits 26 allowed or returned to Florida policyholders, members, or 27 subscribers. 28 7. The adequacy of loss reserves. 29 8. The cost of reinsurance. 30 9. Trend factors, including trends in actual losses 31 per insured unit for the insurer making the filing. 3 11:26 AM 05/05/06 s1980c2c-30-23r
Florida Senate - 2006 SENATOR AMENDMENT Bill No. CS for CS for SB 1980 Barcode 062456 1 10. Conflagration and catastrophe hazards, if 2 applicable. 3 11. A reasonable margin for underwriting profit and 4 contingencies. For that portion of the rate covering the risk 5 of hurricanes and other catastrophic losses for which the 6 insurer has not purchased reinsurance and has exposed its 7 capital and surplus to such risk, the office must approve a 8 rating factor that provides the insurer a reasonable rate of 9 return that is commensurate with such risk. 10 12. The cost of medical services, if applicable. 11 13. Other relevant factors which impact upon the 12 frequency or severity of claims or upon expenses. 13 (h) If In the event the office finds that a rate or 14 rate change is excessive, inadequate, or unfairly 15 discriminatory, the office shall issue an order of disapproval 16 specifying that a new rate or rate schedule which responds to 17 the findings of the office be filed by the insurer. The office 18 shall further order, for any "use and file" filing made in 19 accordance with subparagraph (a)2., that premiums charged each 20 policyholder constituting the portion of the rate above that 21 which was actuarially justified be returned to such 22 policyholder in the form of a credit or refund. If the office 23 finds that an insurer's rate or rate change is inadequate, the 24 new rate or rate schedule filed with the office in response to 25 such a finding shall be applicable only to new or renewal 26 business of the insurer written on or after the effective date 27 of the responsive filing. 28 29 The provisions of this subsection shall not apply to workers' 30 compensation and employer's liability insurance and to motor 31 vehicle insurance. 4 11:26 AM 05/05/06 s1980c2c-30-23r
Florida Senate - 2006 SENATOR AMENDMENT Bill No. CS for CS for SB 1980 Barcode 062456 1 ================ T I T L E A M E N D M E N T =============== 2 And the title is amended as follows: 3 On page 131, lines 3-7, delete those lines 4 5 and insert: 6 revising procedures governing certain rate 7 filings; removing provisions authorizing a "use 8 and file" filing and providing for a credit or 9 refund for certain premiums charged for such a 10 filing; revising factors to be used in 11 reviewing rate filings; providing that, in 12 considering a rate filing, the burden is on the 13 Office of Insurance Regulation to establish 14 that costs of reinsurance are excessive; 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 5 11:26 AM 05/05/06 s1980c2c-30-23r