HB 1455

1	A bill to be entitled
2	An act relating to title insurance; amending s. 627.780,
3	F.S.; specifying Office of Insurance Regulation approval
4	of premium rather than Financial Services Commission
5	adoption of premium; creating 627.7805, F.S.; requiring
6	title insurers to make annual rate filings with the
7	office; requiring the office to review rate filings for
8	certain purposes; providing factors for review; providing
9	standards for determining whether rates are excessive,
10	inadequate, or unfairly discriminatory; authorizing the
11	office to require insurers to provide information;
12	providing requirements and procedures for approving or
13	disapproving certain rates; providing for effect of rate
14	disapprovals; providing methods for rate filings;
15	providing a definition; providing for extensions of time
16	for certain rate filings; authorizing the office to exempt
17	certain insurers from rate filings or rate certification
18	under certain circumstances; authorizing the office to
19	order an insurer to discontinue issuing policies under
20	certain circumstances; authorizing the commission to adopt
21	rules; repealing s. 627.782, F.S., relating to adoption of
22	rates; repealing s. 627.783, F.S., relating to rate
23	deviations; providing an effective date.
24
25	Be It Enacted by the Legislature of the State of Florida:
26
27	Section 1.  Section 627.780, Florida Statutes, is amended
28	to read:
29	627.780  Illegal dealings in risk premium.--
30	(1)  A person may not knowingly quote, charge, accept,
31	collect, or receive a premium for title insurance other than the
32	premium approved by the office adopted by the commission.
33	(2)  A title insurer may not knowingly accept, collect, or
34	receive any sum as premium for title insurance, if the title
35	insurance is not then provided or is not to be provided, subject
36	to acceptance of the risk, in due course, unless the title
37	insurer promptly enters the sum on its books of account as
38	premium collected in advance.
39	Section 2.  Section 627.7805, Florida Statutes, is created
40	to read:
41	627.7805  Rate filings.--
42	(1)  Each title insurer shall make an annual rate filing
43	with the office no later than 12 months after its previous
44	filing, demonstrating that the rate is actuarially sound. Rates
45	for the required filing shall include the charges for primary
46	title services and related title services as defined in s.
47	627.7711.
48	(2)  Upon receiving a rate filing, the office shall review
49	the rate filing to determine whether a rate is excessive,
50	inadequate, or unfairly discriminatory. In making that
51	determination, the office shall, in accordance with generally
52	accepted and reasonable actuarial techniques, consider the
53	following factors:
54	(a)  The insurer's past and prospective loss experience
55	within and without this state.
56	(b)  The insurer's loss experience and prospective loss
57	experience under closing protection letters and policy
58	liabilities.
59	(c)  A reasonable margin for underwriting profit and
60	contingencies, including contingent liability under s. 627.7865,
61	sufficient to allow insurers, agents, and agencies to earn a
62	rate of return on capital that will attract and retain adequate
63	capital investment in the title insurance business and maintain
64	an efficient title insurance delivery system.
65	(d)  The insurer's past expenses and prospective expenses
66	for administration and handling of risks.
67	(e)  The insurer's liability for defalcation.
68	(f)  The degree of competition among insurers for the risk
69	insured.
70	(g)1.  The investment income reasonably expected by the
71	insurer, consistent with the insurer's investment practices,
72	from investable premiums anticipated in the filing, plus any
73	other expected income from currently invested assets
74	representing the amount expected on unearned premium reserves
75	and loss reserves.
76	2.  The commission may adopt rules using reasonable
77	techniques of actuarial science and economics to specify the
78	manner in which insurers shall calculate investment income
79	attributable to such classes of insurance written in this state
80	and the manner in which such investment income shall be used in
81	the calculation of insurance rates. Such manner shall
82	contemplate allowances for an underwriting profit factor and
83	full consideration of investment income that produce a
84	reasonable rate of return; however, investment income from
85	invested surplus shall not be considered.
86	(h)  The reasonableness of the judgment reflected in the
87	filing.
88	(i)  The dividends, savings, or unabsorbed premium deposits
89	allowed or returned to policyholders, members, or subscribers in
90	this state.
91	(j)  The adequacy of loss reserves.
92	(k)  The cost of reinsurance.
93	(l)  Trend factors, including trends in actual losses per
94	insured unit for the insurer making the filing.
95	(m)  Conflagration and catastrophe hazards, if applicable.
96	(n)  A reasonable margin for underwriting profit and
97	contingencies.
98	(o)  Other relevant factors that impact the frequency or
99	severity of claims or expenses.
100	(3)  After consideration of the rate factors provided in
101	subsection (2), a rate may be found by the office to be
102	excessive, inadequate, or unfairly discriminatory based upon the
103	following standards:
104	(a)  A rate shall be deemed excessive if:
105	1.  The rate is likely to produce a profit from business in
106	this state that is unreasonably high in relation to the risk
107	involved in the class of business or if expenses are
108	unreasonably high in relation to services rendered.
109	2.  Among other things, the rate structure established by a
110	stock insurance company provides for replenishment of surpluses
111	from premiums when the replenishment is attributable to
112	investment losses.
113	(b)  A rate shall be deemed inadequate:
114	1.  If the rate is clearly insufficient, together with the
115	investment income attributable to such rate, to sustain
116	projected losses and expenses in the class of business to which
117	it applies.
118	2.  As to the premium charged to a risk or group of risks,
119	if discounts or credits are allowed that exceed a reasonable
120	reflection of expense savings and reasonably expected loss
121	experience from the risk or group of risks.
122	(c)  A rate shall be deemed unfairly discriminatory as to a
123	risk or group of risks if the application of premium discounts,
124	credits, or surcharges among such risks does not bear a
125	reasonable relationship to the expected loss and expense
126	experience among the various risks.
127	(4)  In reviewing a rate filing, the office may require the
128	insurer to provide at the insurer's expense all information
129	necessary to evaluate the condition of the company and the
130	reasonableness of the filing according to the criteria
131	enumerated in this section.
132	(5)  The office may at any time review a rate, rating
133	schedule, rating manual, or rate change; the pertinent records
134	of the insurer; and market conditions. If the office finds on a
135	preliminary basis that a rate may be excessive, inadequate, or
136	unfairly discriminatory, the office shall initiate proceedings
137	to disapprove the rate and shall so notify the insurer. However,
138	the office may not disapprove as excessive any rate for which it
139	has given final approval or that has been deemed approved for a
140	period of 1 year after the effective date of the filing unless
141	the office finds that a material misrepresentation or material
142	error was made by the insurer or was contained in the filing.
143	Upon being so notified, the insurer or rating organization
144	shall, within 60 days, file with the office all information
145	that, in the belief of the insurer or organization, proves the
146	reasonableness, adequacy, and fairness of the rate or rate
147	change. The office shall issue a notice of intent to approve or
148	a notice of intent to disapprove pursuant to subsection (2)
149	within 90 days after receipt of the insurer's initial response.
150	In such instances and in any administrative proceeding relating
151	to the legality of the rate, the insurer or rating organization
152	has the burden of proving by a preponderance of the evidence
153	that the rate is not excessive, inadequate, or unfairly
154	discriminatory. After the office notifies an insurer that a rate
155	may be excessive, inadequate, or unfairly discriminatory, unless
156	the office withdraws the notification, the insurer shall not
157	alter the rate except to conform with the office's notice until
158	the earlier of 120 days after the date the notification was
159	provided or 180 days after the date of the implementation of the
160	rate. The office may, subject to chapter 120, disapprove without
161	the 60-day notification any rate increase filed by an insurer
162	within the prohibited time period or during the time that the
163	legality of the increased rate is being contested.
164	(6)  If the office finds that a rate or rate change is
165	excessive, inadequate, or unfairly discriminatory, the office
166	shall issue an order of disapproval specifying that a new rate
167	or rate schedule that responds to the findings of the office be
168	filed by the insurer. The office shall further order that
169	premiums charged each policyholder constituting the portion of
170	the rate above that which was actuarially justified be returned
171	to such policyholder in the form of a credit or refund. If the
172	office finds that an insurer's rate or rate change is
173	inadequate, the new rate or rate schedule filed with the office
174	in response to such a finding shall be applicable only to new or
175	renewal business of the insurer written on or after the
176	effective date of the responsive filing.
177	(7)  A rate filing required by this section shall be
178	satisfied by one of the following methods:
179	(a)  A rate filing prepared by an actuary that contains
180	documentation demonstrating that the rate is actuarially sound
181	in accordance with the applicable rating laws and rules adopted
182	by the commission.
183	(b)  If no rate change is proposed, a filing that consists
184	of a certification by an actuary that the rates are actuarially
185	sound in accordance with applicable laws and rules adopted by
186	the commission.
187
188	As used in this subsection, the term "actuary" means an
189	individual who is a member of the Society of Actuaries or the
190	American Academy of Actuaries. The chief executive officer of
191	the insurer shall review and sign the certification indicating
192	his or her agreement with its conclusions.
193	(8)  If, at the time a filing is required under this
194	section, an insurer is in the process of completing a rate
195	review, the insurer may apply to the office for an extension of
196	up to 30 days in which to make the filing. The request for
197	extension must be received by the office no later than the date
198	the filing is due.
199	(9)  The office, after receiving a request to be exempted
200	from the provisions of this section before the filing is due,
201	may, for good cause due to insignificant numbers of policies in
202	force or insignificant premium volume, exempt a company from
203	filing rates or rate certification as required by this section.
204	(10)  If an insurer fails to meet the filing requirements
205	of this section and does not submit the filing within 60 days
206	following the date the filing is due, the office may, in
207	addition to any other penalty authorized by law, order the
208	insurer to discontinue the issuance of policies for which the
209	required filing was not made until such time as the office
210	determines that the required filing is properly submitted.
211	(11)  The commission may establish by rule procedures for
212	required filings.
213	Section 3.  Sections 627.782 and 627.783, Florida Statutes,
214	are repealed.
215	Section 4.  This act shall take effect January 1, 2008.

CODING: Words stricken are deletions; words underlined are additions.