| 1 | A bill to be entitled |
| 2 | An act relating to title insurance; amending s. 627.783, |
| 3 | F.S.; revising requirements, criteria, and procedures for |
| 4 | and limitations on petitions for rate deviations or |
| 5 | special coverage; providing for determinations of whether |
| 6 | certain rates are excessive, inadequate, or unfairly |
| 7 | discriminatory; providing requirements and procedures for |
| 8 | approving or disapproving certain rates; providing for |
| 9 | arbitration; providing for effect of arbitration; |
| 10 | providing responsibilities of the Office of Insurance |
| 11 | Regulation and insurers; authorizing the Financial |
| 12 | Services Commission to adopt rules; providing an effective |
| 13 | date. |
| 14 |
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| 15 | Be It Enacted by the Legislature of the State of Florida: |
| 16 |
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| 17 | Section 1. Section 627.783, Florida Statutes, is amended |
| 18 | to read: |
| 19 | 627.783 Rate deviation.-- |
| 20 | (1) A title insurer or rating organization may petition |
| 21 | the office for an order authorizing a specific deviation from |
| 22 | the adopted premium, or for special coverage in addition to the |
| 23 | adopted premium, and a title insurer or title insurance agent |
| 24 | may petition the office for an order authorizing and permitting |
| 25 | a specific deviation above the reasonable charge for related |
| 26 | title services rendered specified in s. 627.782(1). The petition |
| 27 | shall be in writing and sworn to and shall set forth allegations |
| 28 | of fact upon which the petitioner will rely, including the |
| 29 | petitioner's reasons for requesting the deviation. If |
| 30 | appropriate, any related form shall be filed pursuant to s. |
| 31 | 627.777 and shall be reviewed concurrently with the petition. |
| 32 | Any authorized title insurer, agent, or agency may join in the |
| 33 | petition for like authority to deviate or may file a separate |
| 34 | petition praying for like authority or opposing the deviation. |
| 35 | The office shall rule on all such petitions simultaneously. The |
| 36 | rates and forms approved pursuant to this section shall be |
| 37 | available for an additional charge when a title policy or |
| 38 | policies are provided. |
| 39 | (2) If, in the judgment of the office, the requested |
| 40 | deviation is not justified, the office may enter an order |
| 41 | denying the petition. An order granting a petition constitutes |
| 42 | an amendment to the adopted premium as to the petitioners named |
| 43 | in the order, and is subject to s. 627.782. |
| 44 | (3) As to all such petitions for deviations or special |
| 45 | coverage: |
| 46 | (a) Insurers or rating organizations shall establish and |
| 47 | use rates, rating schedules, or rating manuals to allow the |
| 48 | insurer a reasonable rate of return on such deviations written |
| 49 | in this state. A copy of rates, rating schedules, rating manuals |
| 50 | and any changes to such rates, rating schedules, and rating |
| 51 | manuals shall be filed with the office using the following |
| 52 | procedure: |
| 53 | 1. The filing shall be made at least 90 days before the |
| 54 | proposed effective date, and the filing may not be implemented |
| 55 | during the office's review of the filing, any proceeding, and |
| 56 | judicial review. In such case, the office shall finalize its |
| 57 | review by issuance of a notice of intent to approve or a notice |
| 58 | of intent to disapprove within 90 days after receipt of the |
| 59 | filing. A notice of intent to approve and a notice of intent to |
| 60 | disapprove constitute agency action for purposes of the |
| 61 | Administrative Procedure Act. Requests for supporting |
| 62 | information, requests for mathematical or mechanical |
| 63 | corrections, or notification to the insurer by the office of its |
| 64 | preliminary findings shall not toll the 90-day period during any |
| 65 | such proceedings and subsequent judicial review. The rate shall |
| 66 | be deemed approved if the office does not issue a notice of |
| 67 | intent to approve or a notice of intent to disapprove within 90 |
| 68 | days after receipt of the filing. If the office issues a notice |
| 69 | of intent to disapprove, the notice shall state with specificity |
| 70 | the reasons for disapproval. |
| 71 | (b) Upon receiving a petition for deviation, the office |
| 72 | shall review the petition to determine if the deviation is |
| 73 | excessive, inadequate, or unfairly discriminatory. In making |
| 74 | that determination, the office shall, in accordance with |
| 75 | generally accepted and reasonable actuarial techniques, consider |
| 76 | the factors specified in s. 627.782(2). |
| 77 | (c) After consideration of the rate factors provided in |
| 78 | paragraph (b), a rate may be found by the office to be |
| 79 | excessive, inadequate, or unfairly discriminatory based upon the |
| 80 | following standards: |
| 81 | 1. A rate shall be deemed excessive if the rate is likely |
| 82 | to produce a profit from business in this state that is |
| 83 | unreasonably high in relation to the risk involved in the title |
| 84 | business or if expenses are unreasonably high in relation to |
| 85 | services rendered. |
| 86 | 2. A rate shall be deemed inadequate if the rate is |
| 87 | clearly insufficient, together with the investment income |
| 88 | attributable to the rate, to sustain projected losses and |
| 89 | expenses in the title business to which they apply. |
| 90 | (d) In reviewing a rate filing, the office may require the |
| 91 | insurer to provide at the insurer's expense all information |
| 92 | necessary to evaluate the condition of the company and the |
| 93 | reasonableness of the filing according to the criteria specified |
| 94 | in this section. |
| 95 | (e) The office may at any time review a rate, rating |
| 96 | schedule, rating manual, or rate change; the pertinent records |
| 97 | of the insurer; and market conditions. If the office finds on a |
| 98 | preliminary basis that a rate may be excessive, inadequate, or |
| 99 | unfairly discriminatory, the office shall initiate proceedings |
| 100 | to disapprove the rate and shall notify the insurer. However, |
| 101 | the office may not disapprove any rate as excessive for which |
| 102 | the office has given final approval or which has been deemed |
| 103 | approved for a period of 1 year after the effective date of the |
| 104 | filing unless the office finds that a material misrepresentation |
| 105 | or material error was made by the insurer or in the filing. Upon |
| 106 | being notified by the office, the insurer or rating organization |
| 107 | shall, within 60 days, file with the office all information |
| 108 | which, in the belief of the insurer or organization, proves the |
| 109 | reasonableness, adequacy, and fairness of the rate or rate |
| 110 | change. The office shall issue a notice of intent to approve or |
| 111 | a notice of intent to disapprove pursuant to the procedures of |
| 112 | paragraph (a) within 90 days after receipt of the insurer's |
| 113 | initial response. In such instances and in any administrative |
| 114 | proceeding relating to the legality of the rate, the insurer or |
| 115 | rating organization has the burden of proving by a preponderance |
| 116 | of the evidence that the rate is not excessive, inadequate, or |
| 117 | unfairly discriminatory. After the office notifies an insurer |
| 118 | that a rate may be excessive, inadequate, or unfairly |
| 119 | discriminatory, unless the office withdraws the notification, |
| 120 | the insurer shall not alter the rate except to conform with the |
| 121 | office's notice until the earlier of 120 days after the date the |
| 122 | notification was provided or 180 days after the date of the |
| 123 | implementation of the rate. The office may, subject to chapter |
| 124 | 120, disapprove without the 60-day notification any rate |
| 125 | increase filed by an insurer within the prohibited time period |
| 126 | or during the time the legality of the increased rate is being |
| 127 | contested. |
| 128 | (f) If the office finds that a rate or rate change is |
| 129 | excessive, inadequate, or unfairly discriminatory, the office |
| 130 | shall issue an order of disapproval specifying that a new rate |
| 131 | or rate schedule which responds to the findings of the office be |
| 132 | filed by the insurer. If the office finds that an insurer's rate |
| 133 | or rate change is inadequate, the new rate or rate schedule |
| 134 | filed with the office in response to such a finding shall be |
| 135 | applicable only to new or renewal business of the insurer |
| 136 | written on or after the effective date of the responsive filing. |
| 137 | (g) After any action with respect to a rate filing that |
| 138 | constitutes agency action for purposes of the Administrative |
| 139 | Procedure Act, an insurer may, in lieu of demanding a hearing |
| 140 | under s. 120.57, require arbitration of the rate filing. |
| 141 | Arbitration shall be conducted by a board of arbitrators |
| 142 | consisting of an arbitrator selected by the office, an |
| 143 | arbitrator selected by the insurer, and an arbitrator selected |
| 144 | jointly by the other two arbitrators. Each arbitrator must be |
| 145 | certified by the American Arbitration Association. A decision is |
| 146 | valid only upon the affirmative vote of at least two of the |
| 147 | arbitrators. No arbitrator may be an employee of any insurance |
| 148 | regulator or regulatory body or of any insurer, regardless of |
| 149 | whether or not the employing insurer does business in this |
| 150 | state. The office and the insurer shall treat the decision of |
| 151 | the arbitrators as the final approval of a rate filing. Costs of |
| 152 | arbitration shall be paid by the insurer. |
| 153 | 1. Arbitration under this subsection shall be conducted |
| 154 | pursuant to the procedures specified in ss. 682.06-682.10. |
| 155 | Either party may apply to the circuit court to vacate or modify |
| 156 | the decision pursuant to s. 682.13 or s. 682.14. The office |
| 157 | shall adopt rules for arbitration under this subsection, which |
| 158 | rules may not be inconsistent with the arbitration rules of the |
| 159 | American Arbitration Association as of January 1, 1996. |
| 160 | 2. Upon initiation of the arbitration process, the insurer |
| 161 | waives all rights to challenge the action of the office under |
| 162 | the Administrative Procedure Act or any other provision of law; |
| 163 | however, such rights are restored to the insurer if the |
| 164 | arbitrators fail to render a decision within 90 days after |
| 165 | initiation of the arbitration process |
| 166 | (4) The commission may adopt rules pursuant to ss. |
| 167 | 120.536(1) and 120.54 implementing the provisions of this |
| 168 | section and to protect the interests of insureds, title |
| 169 | insurers, title insurance agents, and the public. These rules |
| 170 | shall be in substantial compliance with American Land Title |
| 171 | Association approved policy and endorsement forms relating to |
| 172 | title insurance. |
| 173 | Section 2. This act shall take effect July 1, 2007. |