(LATE FILED)	Amendment
Bill No. 0001A

Amendment No. 505233

CHAMBER ACTION
Senate		House
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1	Representative(s) Saunders offered the following:
2
3	Amendment (with title amendment)
4	Remove line(s) 202-312 and insert:
5	Section 8.  Section 627.062, Florida Statutes, is amended
6	to read:
7	627.062  Rate standards.--
8	(1)  The rates for all classes of insurance to which the
9	provisions of this part are applicable shall not be excessive,
10	inadequate, or unfairly discriminatory.
11	(2)  As to all such classes of insurance:
12	(a)  Insurers or rating organizations shall establish and
13	use rates, rating schedules, or rating manuals to allow the
14	insurer a reasonable rate of return on such classes of insurance
15	written in this state.  A copy of rates, rating schedules,
16	rating manuals, premium credits or discount schedules, and
17	surcharge schedules, and changes thereto, shall be filed with
18	the office under one of the following procedures:
19	1.  If the filing is made at least 90 days before the
20	proposed effective date and the filing may not be is not
21	implemented during the office's review of the filing and any
22	proceeding and judicial review, then such filing shall be
23	considered a "file and use" filing.  In such case, The office
24	shall finalize its review by issuance of a notice of intent to
25	approve or a notice of intent to disapprove within 90 days after
26	receipt of the filing. The notice of intent to approve and the
27	notice of intent to disapprove constitute agency action for
28	purposes of the Administrative Procedure Act. Requests for
29	supporting information, requests for mathematical or mechanical
30	corrections, or notification to the insurer by the office of its
31	preliminary findings shall not toll the 90-day period during any
32	such proceedings and subsequent judicial review. The rate shall
33	be deemed approved if the office does not issue a notice of
34	intent to approve or a notice of intent to disapprove within 90
35	days after receipt of the filing.
36	2.  If the filing is not made in accordance with the
37	provisions of subparagraph 1., such filing shall be made as soon
38	as practicable, but no later than 30 days after the effective
39	date, and shall be considered a "use and file" filing.  An
40	insurer making a "use and file" filing is potentially subject to
41	an order by the office to return to policyholders portions of
42	rates found to be excessive, as provided in paragraph (h).
43	(b)  Upon receiving a rate filing, the office shall review
44	the rate filing to determine if a rate is excessive, inadequate,
45	or unfairly discriminatory.  In making that determination, the
46	office shall, in accordance with generally accepted and
47	reasonable actuarial techniques, consider the following factors:
48	1.  Past and prospective loss experience within and without
49	this state.
50	2.  Past and prospective expenses.
51	3.  The degree of competition among insurers for the risk
52	insured.
53	4.  Investment income reasonably expected by the insurer,
54	consistent with the insurer's investment practices, from
55	investable premiums anticipated in the filing, plus any other
56	expected income from currently invested assets representing the
57	amount expected on unearned premium reserves and loss reserves.
58	The commission may adopt rules utilizing reasonable techniques
59	of actuarial science and economics to specify the manner in
60	which insurers shall calculate investment income attributable to
61	such classes of insurance written in this state and the manner
62	in which such investment income shall be used in the calculation
63	of insurance rates.  Such manner shall contemplate allowances
64	for an underwriting profit factor and full consideration of
65	investment income which produce a reasonable rate of return;
66	however, investment income from invested surplus shall not be
67	considered.
68	5.  The reasonableness of the judgment reflected in the
69	filing.
70	6.  Dividends, savings, or unabsorbed premium deposits
71	allowed or returned to Florida policyholders, members, or
72	subscribers.
73	7.  The adequacy of loss reserves.
74	8.  The cost of reinsurance.
75	9.  Trend factors, including trends in actual losses per
76	insured unit for the insurer making the filing.
77	10.  Conflagration and catastrophe hazards, if applicable.
78	11.  A reasonable margin for underwriting profit and
79	contingencies. For that portion of the rate covering the risk of
80	hurricanes and other catastrophic losses for which the insurer
81	has not purchased reinsurance and has exposed its capital and
82	surplus to such risk, the office must approve a rating factor
83	that provides the insurer a reasonable rate of return that is
84	commensurate with such risk.
85	12.  The cost of medical services, if applicable.
86	13.  Other relevant factors which impact upon the frequency
87	or severity of claims or upon expenses.
88	(c)  In the case of fire insurance rates, consideration
89	shall be given to the availability of water supplies and the
90	experience of the fire insurance business during a period of not
91	less than the most recent 5-year period for which such
92	experience is available.
93	(d)  If conflagration or catastrophe hazards are given
94	consideration by an insurer in its rates or rating plan,
95	including surcharges and discounts, the insurer shall establish
96	a reserve for that portion of the premium allocated to such
97	hazard and shall maintain the premium in a catastrophe reserve.
98	Any removal of such premiums from the reserve for purposes other
99	than paying claims associated with a catastrophe or purchasing
100	reinsurance for catastrophes shall be subject to approval of the
101	office.  Any ceding commission received by an insurer purchasing
102	reinsurance for catastrophes shall be placed in the catastrophe
103	reserve.
104	(e)  After consideration of the rate factors provided in
105	paragraphs (b), (c), and (d), a rate may be found by the office
106	to be excessive, inadequate, or unfairly discriminatory based
107	upon the following standards:
108	1.  Rates shall be deemed excessive if they are likely to
109	produce a profit from Florida business that is unreasonably high
110	in relation to the risk involved in the class of business or if
111	expenses are unreasonably high in relation to services rendered.
112	2.  Rates shall be deemed excessive if, among other things,
113	the rate structure established by a stock insurance company
114	provides for replenishment of surpluses from premiums, when the
115	replenishment is attributable to investment losses.
116	3.  Rates shall be deemed inadequate if they are clearly
117	insufficient, together with the investment income attributable
118	to them, to sustain projected losses and expenses in the class
119	of business to which they apply.
120	4.  A rating plan, including discounts, credits, or
121	surcharges, shall be deemed unfairly discriminatory if it fails
122	to clearly and equitably reflect consideration of the
123	policyholder's participation in a risk management program
124	adopted pursuant to s. 627.0625.
125	5.  A rate shall be deemed inadequate as to the premium
126	charged to a risk or group of risks if discounts or credits are
127	allowed which exceed a reasonable reflection of expense savings
128	and reasonably expected loss experience from the risk or group
129	of risks.
130	6.  A rate shall be deemed unfairly discriminatory as to a
131	risk or group of risks if the application of premium discounts,
132	credits, or surcharges among such risks does not bear a
133	reasonable relationship to the expected loss and expense
134	experience among the various risks.
135	(f)  In reviewing a rate filing, the office may require the
136	insurer to provide at the insurer's expense all information
137	necessary to evaluate the condition of the company and the
138	reasonableness of the filing according to the criteria
139	enumerated in this section.
140	(g)  The office may at any time review a rate, rating
141	schedule, rating manual, or rate change; the pertinent records
142	of the insurer; and market conditions.  If the office finds on a
143	preliminary basis that a rate may be excessive, inadequate, or
144	unfairly discriminatory, the office shall initiate proceedings
145	to disapprove the rate and shall so notify the insurer. However,
146	the office may not disapprove as excessive any rate for which it
147	has given final approval or which has been deemed approved for a
148	period of 1 year after the effective date of the filing unless
149	the office finds that a material misrepresentation or material
150	error was made by the insurer or was contained in the filing.
151	Upon being so notified, the insurer or rating organization
152	shall, within 60 days, file with the office all information
153	which, in the belief of the insurer or organization, proves the
154	reasonableness, adequacy, and fairness of the rate or rate
155	change.  The office shall issue a notice of intent to approve or
156	a notice of intent to disapprove pursuant to the procedures of
157	paragraph (a) within 90 days after receipt of the insurer's
158	initial response.  In such instances and in any administrative
159	proceeding relating to the legality of the rate, the insurer or
160	rating organization shall carry the burden of proof by a
161	preponderance of the evidence to show that the rate is not
162	excessive, inadequate, or unfairly discriminatory.  After the
163	office notifies an insurer that a rate may be excessive,
164	inadequate, or unfairly discriminatory, unless the office
165	withdraws the notification, the insurer shall not alter the rate
166	except to conform with the office's notice until the earlier of
167	120 days after the date the notification was provided or 180
168	days after the date of the implementation of the rate.  The
169	office may, subject to chapter 120, disapprove without the 60-
170	day notification any rate increase filed by an insurer within
171	the prohibited time period or during the time that the legality
172	of the increased rate is being contested.
173	(h)  In the event the office finds that a rate or rate
174	change is excessive, inadequate, or unfairly discriminatory, the
175	office shall issue an order of disapproval specifying that a new
176	rate or rate schedule which responds to the findings of the
177	office be filed by the insurer.  The office shall further order,
178	for any "use and file" filing made in accordance with
179	subparagraph (a)2., that premiums charged each policyholder
180	constituting the portion of the rate above that which was
181	actuarially justified be returned to such policyholder in the
182	form of a credit or refund. If the office finds that an
183	insurer's rate or rate change is inadequate, the new rate or
184	rate schedule filed with the office in response to such a
185	finding shall be applicable only to new or renewal business of
186	the insurer written on or after the effective date of the
187	responsive filing.
188
189	======= T I T L E  A M E N D M E N T =======
190	Remove line(s) 17-23 and insert:
191	F.S.; deleting provisions allowing property and casualty
192	insurers to use and file rates; amending s. 627.0629, F.S.;
193	providing legislative

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