HB 471

1	A bill to be entitled
2	An act relating to health insurance; amending s. 627.410,
3	F.S.; establishing a minimum loss ratio for health
4	insurance forms; amending s. 627.411, F.S.; revising the
5	loss ratio for certain health insurance coverage; amending
6	s. 627.6745, F.S.; revising the loss ratio for Medicare
7	supplement policies issued on or after a certain date;
8	amending s. 627.9407, F.S.; establishing a minimum loss
9	ratio for long-term care insurance policies; providing an
10	effective date.
11
12	Be It Enacted by the Legislature of the State of Florida:
13
14	Section 1.  Paragraph (b) of subsection (6) and subsections
15	(7) and (8) of section 627.410, Florida Statutes, are amended to
16	read:
17	627.410  Filing, approval of forms.--
18	(6)
19	(b)  The commission may establish by rule:, for each type
20	of health insurance form,
21	1.  Establish procedures for to be used in ascertaining the
22	relationship between reasonableness of benefits in relation to
23	premium rates for each type of health insurance form, including
24	Medicare supplement policies as defined in s. 627.672, long-term
25	care policies as defined in s. 627.9404, and other policy forms
26	where more than 50 percent of the policies are issued to
27	individuals age 65 and older. and may, by rule,
28	2.  Exempt from any requirement of paragraph (a) any health
29	insurance policy form or type thereof (as specified in such
30	rule) to which form or type such requirements may not be
31	practically applied or to which form or type the application of
32	such requirements is not desirable or necessary for the
33	protection of the public. For With respect to any health
34	insurance policy form or type that thereof which is exempted by
35	rule from any requirement of paragraph (a), premium rates filed
36	pursuant to ss. 627.640 and 627.662 are shall be for
37	informational purposes.
38	(7)(a)  Each insurer subject to the requirements of
39	subsection (6) shall make an annual filing with the office
40	within no later than 12 months after its previous filing
41	supporting the, demonstrating the reasonableness of benefits in
42	relation to premium rates charged in relation to benefits for
43	each insurance form. Upon The office, after receiving a request
44	to be exempted from the provisions of this section, the office
45	may, for good cause due to insignificant numbers of policies in
46	force or insignificant premium volume, exempt a company, by line
47	of coverage, from filing rates or rate certification as required
48	by this section.
49	(a)(b)  The filing is required by this subsection shall be
50	satisfied by one of the following methods:
51	1.  A rate filing prepared by an actuary which contains
52	documentation supporting premium rates charged in relation to
53	benefits demonstrating the reasonableness of benefits in
54	relation to premiums charged in accordance with the applicable
55	rating laws and rules adopted promulgated by the commission.
56	2.  If no rate change is proposed, the a filing which
57	consists of a certification by an actuary supporting premium
58	rates charged in relation to benefits that benefits are
59	reasonable in relation to premiums currently charged in
60	accordance with applicable laws and rules adopted promulgated by
61	the commission.
62	(b)(c)  As used in this section, "actuary" means an
63	individual who is a member of the Society of Actuaries or the
64	American Academy of Actuaries. If an insurer does not employ or
65	otherwise retain the services of an actuary, the insurer's
66	certification must shall be prepared by insurer personnel or
67	consultants who have with a minimum of 5 years' experience in
68	insurance ratemaking. The chief executive officer of the insurer
69	must shall review and sign the certification indicating his or
70	her agreement with its conclusions.
71	(c)(d)  If at the time a filing is due required under this
72	section an insurer is in the process of completing a rate
73	review, the insurer may apply to the office for an extension of
74	up to an additional 30 days in which to make the filing. The
75	request for an extension must be received by the office by no
76	later than the date the filing is due.
77	(d)(e)  If an insurer fails to meet the filing requirements
78	of this subsection and does not submit the filing within 60 days
79	following the date the filing is due, the office may, in
80	addition to any other penalty authorized by law, order the
81	insurer to discontinue issuing the issuance of policies subject
82	to the filing for which the required filing was not made, until
83	such time as the office determines that the required filing is
84	properly submitted.
85	(8)(a)  For the purposes of subsections (6) and (7),
86	benefits of an individual accident and health insurance policy
87	form, including Medicare supplement policies as defined in s.
88	627.672, when authorized by rules adopted by the commission, and
89	excluding long-term care insurance policies as defined in s.
90	627.9404, and other policy forms under which more than 50
91	percent of the policies are issued to individuals age 65 and
92	over, are deemed to be reasonable in relation to premium rates
93	if the rates are filed pursuant to a loss ratio guarantee of at
94	least 85 percent and both the initial rates and the durational
95	and lifetime loss ratios have been approved by the office., and
96	Such benefits shall also continue to be deemed reasonable for
97	renewal rates if while the insurer complies with the loss ratio
98	such guarantee and, provided the currently expected lifetime
99	loss ratio is not more than 5 percent less than the filed
100	lifetime loss ratio as certified to by an actuary.
101	(a)  The office may shall have the right to bring an
102	administrative action if it determines should it deem that the
103	lifetime loss ratio will not be met. For Medicare supplement
104	filings, the office may withdraw a previously approved filing
105	which was made pursuant to a loss ratio guarantee if it
106	determines that the filing is not in compliance with ss.
107	627.671-627.675 or the currently expected lifetime loss ratio is
108	less than the filed lifetime loss ratio as certified by an
109	actuary in the initial guaranteed loss ratio filing. If this
110	section conflicts with ss. 627.671-627.675, ss. 627.671-627.675
111	shall control.
112	(b)  The renewal premium rates shall be deemed to be
113	approved upon filing with the office if the filing is
114	accompanied by a the most current approved loss ratio guarantee
115	of at least 85 percent. The loss ratio guarantee must shall be
116	in writing, shall be signed by an officer of the insurer, and
117	shall contain at least:
118	1.  A recitation of the anticipated lifetime and durational
119	target loss ratios contained in the actuarial memorandum filed
120	with the policy form when it was originally approved. The
121	durational target loss ratios shall be calculated for 1-year
122	experience periods. If statutory changes have rendered any
123	portion of the such actuarial memorandum obsolete, the loss
124	ratio guarantee shall also include an amendment to the actuarial
125	memorandum reflecting current law and containing new lifetime
126	and durational loss ratio targets.
127	2.  A guarantee that the applicable loss ratios for the
128	experience period in which the new rates will take effect, and
129	for each experience period thereafter until new rates are filed,
130	will meet the loss ratios referred to in subparagraph 1.
131	3.  A guarantee that the applicable loss ratio results for
132	the experience period will be independently audited at the
133	insurer's expense. The audit must shall be performed in the
134	second calendar quarter of the year following the end of the
135	experience period, and the audited results must shall be
136	reported to the office by no later than the end of such quarter.
137	The commission shall establish by rule the minimum information
138	reasonably necessary to be included in the report. The audit
139	must shall be done in accordance with accepted accounting and
140	actuarial principles.
141	4.  A guarantee that affected policyholders in this state
142	shall be issued a proportional refund, based on the premium
143	earned, of the amount necessary to bring the applicable
144	experience period loss ratio up to the durational target loss
145	ratio referred to in subparagraph 1. The refund shall be made to
146	all policyholders in this state who are insured under the
147	applicable policy form as of the last day of the experience
148	period, except that no refund need be made to a policyholder in
149	an amount less than $10. Refunds less than $10 shall be
150	aggregated and paid pro rata to the policyholders receiving
151	refunds. The refund shall include interest at the then-current
152	variable loan interest rate for life insurance policies
153	established by the National Association of Insurance
154	Commissioners, calculated from the end of the experience period
155	until the date of payment. Payments must shall be made during
156	the third calendar quarter of the year following the experience
157	period for which a refund is determined to be due. However, no
158	refunds shall be made until 60 days after the filing of the
159	audit report in order for that the office to have has adequate
160	time to review the report.
161	5.  A guarantee that if the applicable loss ratio exceeds
162	the durational target loss ratio for that experience period by
163	more than 20 percent and, provided there are at least 2,000
164	policyholders on the form nationwide or, if not, then
165	accumulated each calendar year until 2,000 policyholder years is
166	reached, the insurer, if directed by the office, shall withdraw
167	the policy form for the purposes of issuing new policies.
168	(c)  As used in this subsection:
169	1.  "Loss ratio" means the ratio of incurred claims to
170	earned premium.
171	2.  "Applicable loss ratio" means the loss ratio
172	attributable solely to this state if there are 2,000 or more
173	policyholders in the state. If there are 500 or more
174	policyholders in this state but less than 2,000, it is the
175	linear interpolation of the nationwide loss ratio and the loss
176	ratio for this state. If there are less than 500 policyholders
177	in this state, it is the nationwide loss ratio.
178	3.  "Experience period" means the period, ordinarily a
179	calendar year, for which a loss ratio guarantee is calculated.
180	Section 2.  Subsection (3) of section 627.411, Florida
181	Statutes, is amended to read:
182	627.411  Grounds for disapproval.--
183	(3)(a)  For health insurance coverage as described in s.
184	627.6561(5)(a)2., the minimum loss ratio standard of incurred
185	claims to earned premium for the form shall be 85 65 percent.
186	(b)  Incurred claims are claims occurring within a fixed
187	period, whether or not paid during the same period, under the
188	terms of the policy period.
189	(a)1.  Claims include scheduled benefit payments or
190	services provided by a provider or through a provider network
191	for dental, vision, disability, and similar health benefits.
192	(b)2.  Claims do not include state assessments, taxes,
193	company expenses, or any expense incurred by the company for the
194	cost of adjusting and settling a claim, including the review,
195	qualification, oversight, management, or monitoring of a claim
196	or incentives or compensation to providers for other than the
197	provisions of health care services.
198	(c)3.  A company may at its discretion include costs that
199	are demonstrated to reduce claims, such as fraud intervention
200	programs or case management costs, which are identified in each
201	filing, are demonstrated to reduce claims costs, and do not
202	result in increasing the experience period loss ratio by more
203	than 5 percent.
204	(d)4.  For scheduled claim payments, such as disability
205	income or long-term care, the incurred claims shall be the
206	present value of the benefit payments discounted for continuance
207	and interest.
208	Section 3.  Subsection (1) of section 627.6745, Florida
209	Statutes, is amended to read:
210	627.6745  Loss ratio standards; public rate hearings.--
211	(1)  Medicare supplement policies shall return the
212	following to policyholders in the form of aggregate benefits
213	under the policy, with respect to the lifetime of the policy, on
214	the basis of earned premiums and on the basis of incurred claims
215	experience or, if coverage is provided by a health maintenance
216	organization based on service rather than reimbursement,
217	incurred health care expenses, and in accordance with accepted
218	actuarial principles and practices:
219	(a)  At least 85 75 percent of the aggregate amount of
220	premiums earned in the case of group policies.
221	(b)  For individual policies issued or renewed before prior
222	to July 1, 1989, at least 60 percent of the aggregate amount of
223	premiums earned; and for individual policies issued or renewed
224	on or after July 1, 1989, but before October 1, 2009, at least
225	65 percent of the aggregate amount of premiums earned; and for
226	policies issued on or after October 1, 2009, at least 85 percent
227	of the aggregate amount of premiums earned. For the purposes of
228	this section, policies issued as a result of soliciting
229	solicitations of individuals through the mail or by mass media
230	advertising are shall be deemed to be individual policies.
231	Section 4.  Subsection (6) of section 627.9407, Florida
232	Statutes, is amended to read:
233	627.9407  Disclosure, advertising, and performance
234	standards for long-term care insurance.--
235	(6)  LOSS RATIO AND RESERVE STANDARDS.--The commission
236	shall adopt rules establishing loss ratio and reserve standards
237	for long-term care insurance policies. Such loss ratios may not
238	be less than 85 percent. The rules must contain a specific
239	reference to long-term care insurance policies. Such loss ratio
240	and reserve standards shall be established at levels at which
241	benefits are reasonable in relation to premiums and that provide
242	for adequate reserving of the long-term care insurance risk.
243	Section 5.  This act shall take effect July 1, 2009.

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