CS/HB 1563

1	A bill to be entitled
2	An act relating to commercial insurance rates; amending s.
3	627.062, F.S.; exempting certain categories or types of
4	insurance and types of commercial lines risks from certain
5	rate requirements; requiring insurers and rating
6	organizations to establish and use rates, rating
7	schedules, and rating manuals to allow insurers a
8	reasonable rate of return on certain commercial insurance
9	and risks; requiring insurers to notify the Office of
10	Insurance Regulation of changes to rates for certain
11	insurance and risks; providing notice requirements;
12	requiring certain information to be maintained by insurers
13	and subject to examination by the office; providing rate
14	factors and standards to be used in such examinations;
15	requiring rating organizations to notify the office of
16	changes to loss costs for certain insurance and risks;
17	providing requirements for such notification; requiring
18	certain information to be maintained by rating
19	organizations and subject to examination by the office;
20	providing rate factors and standards to be used in such
21	examination; authorizing the office to require certain
22	information be provided by insurers at the insurers'
23	expense for certain purposes; amending s. 627.0651, F.S.;
24	excluding certain commercial motor vehicle insurance from
25	certain motor vehicle insurance rate requirements;
26	prohibiting certain commercial motor vehicle insurance
27	from being excessive, inadequate, or unfairly
28	discriminatory; requiring insurers to establish and use
29	rates, rating schedules, and rating manuals to allow
30	insurers a reasonable rate of return on certain commercial
31	motor vehicle insurance; requiring insurers to notify the
32	office of changes to rates for certain types of insurance;
33	providing notice requirements; requiring certain
34	information to be maintained by insurers and subject to
35	examination by the office; providing rate factors and
36	standards to be used in such examinations; requiring
37	rating organizations to notify the office of changes to
38	loss costs for certain types of insurance; providing
39	requirements for such notification; requiring certain
40	information to be maintained by rating organizations and
41	subject to examination by the office; providing rate
42	factors and standards to be used in such examination;
43	authorizing the office to require certain information to
44	be provided by insurers at the insurers' expense for
45	certain purposes; providing an effective date.
46
47	Be It Enacted by the Legislature of the State of Florida:
48
49	Section 1.  Paragraph (d) is added to subsection (3) of
50	section 627.062, Florida Statutes, to read:
51	627.062  Rate standards.-
52	(3)
53	(d)1.  The following categories or kinds of insurance and
54	types of commercial lines risks are not subject to paragraph
55	(2)(a) or paragraph (2)(f):
56	a.  Excess or umbrella.
57	b.  Surety and fidelity.
58	c.  Boiler and machinery and leakage and fire extinguishing
59	equipment.
60	d.  Errors and omissions.
61	e.  Directors and officers, employment practices, and
62	management liability.
63	f.  Intellectual property and patent infringement
64	liability.
65	g.  Advertising injury and Internet liability insurance.
66	h.  Property risks rated under a highly protected risks
67	rating plan.
68	i.  Any other commercial lines categories or kinds of
69	insurance or types of commercial lines risks that the office
70	determines should not be subject to paragraph (2)(a) or
71	paragraph (2)(f) for reasons of the existence of a competitive
72	market for such insurance, similarity of such insurance to other
73	categories or kinds of insurance not subject to paragraph (2)(a)
74	or paragraph (2)(f), or to improve the general operational
75	efficiency of the office.
76	2.  Insurers or rating organizations shall establish and
77	use rates, rating schedules, or rating manuals to allow the
78	insurer a reasonable rate of return on insurance and risks
79	described in subparagraph 1. written in this state.
80	3.  An insurer shall notify the office of any changes to
81	rates for insurance and risks described in subparagraph 1. no
82	later than 30 days after the effective date of the change. The
83	notice must include the name of the insurer, the type or kind of
84	insurance subject to the rate change, total premium written
85	during the immediately preceding year by the insurer for the
86	type or kind of insurance subject to the rate change, and the
87	average statewide percentage change in rates. Underwriting
88	files, premiums, losses, and expense statistics with regard to
89	the kinds of insurance and types of risks described in
90	subparagraph 1. written by an insurer shall be maintained by the
91	insurer and subject to examination by the office. Upon
92	examination, the office shall, in accordance with generally
93	accepted and reasonable actuarial techniques, consider the rate
94	factors in paragraphs (2)(b)-(d) and the standards in paragraph
95	(2)(e) to determine if the rate is excessive, inadequate, or
96	unfairly discriminatory.
97	4.  A rating organization shall notify the office of any
98	changes to loss cost for insurance and risks described in
99	subparagraph 1. no later than 30 days after the effective date
100	of the change. The notice must include the name of the rating
101	organization, the type or kind of insurance subject to a loss
102	cost change, loss costs during the immediately preceding year
103	for the type or kind of insurance subject to the loss cost
104	change, and the average statewide percentage change in loss
105	cost. Loss and exposure statistics with regard to risks
106	applicable to loss costs for a rating organization not subject
107	to paragraph (2)(a) or paragraph (2)(f) shall be maintained by
108	the rating organization and are subject to examination by the
109	office. Upon examination, the office shall, in accordance with
110	generally accepted and reasonable actuarial techniques, consider
111	the rate factors in paragraphs (2)(b)-(d) and the standards in
112	paragraph (2)(e) to determine if the rate is excessive,
113	inadequate, or unfairly discriminatory.
114	5.  In reviewing a rate, the office may require the insurer
115	to provide at the insurer's expense all information necessary to
116	evaluate the condition of the company and the reasonableness of
117	the rate according to the applicable criteria enumerated in this
118	section.
119	Section 2.  Subsection (14) is added to section 627.0651,
120	Florida Statutes, to read:
121	627.0651  Making and use of rates for motor vehicle
122	insurance.-
123	(14)(a)  Commercial motor vehicle insurance covering a
124	fleet of five or more self-propelled vehicles is not subject to
125	subsection (1), subsection (2), or subsection (9) or s.
126	627.0645.
127	(b)  The rates for the insurance described in this
128	subsection may not be excessive, inadequate, or unfairly
129	discriminatory.
130	(c)  Insurers shall establish and use rates, rating
131	schedules, or rating manuals to allow the insurer a reasonable
132	rate of return on commercial motor vehicle insurance covering a
133	fleet of five or more self-propelled vehicles written in this
134	state.
135	(d)  An insurer shall notify the office of any changes to
136	rates for the type of insurance described in this subsection no
137	later than 30 days after the effective date of the change. The
138	notice must include the name of the insurer, the type or kind of
139	insurance subject to the rate change, total premium written
140	during the immediately preceding year by the insurer for the
141	type or kind of insurance subject to the rate change, and the
142	average statewide percentage change in rates. Underwriting
143	files, premiums, losses, and expense statistics for the type of
144	insurance described in this subsection shall be maintained by
145	the insurer and subject to examination by the office. Upon
146	examination, the office shall, in accordance with generally
147	accepted and reasonable actuarial techniques, consider the
148	factors in paragraphs (2)(a)-(l) and apply subsections (3)-(8)
149	to determine if the rate is excessive, inadequate, or unfairly
150	discriminatory.
151	(e)  A rating organization shall notify the office of any
152	changes to loss cost for the type of insurance described in this
153	subsection no later than 30 days after the effective date of the
154	change. The notice must include the name of the rating
155	organization, the type or kind of insurance subject to a loss
156	cost change, loss costs during the immediately preceding year
157	for the type or kind of insurance subject to the loss cost
158	change, and the average statewide percentage change in loss
159	cost. Loss and exposure statistics with regard to risks
160	applicable to loss costs for a rating organization not subject
161	to paragraph (2)(a) or paragraph (2)(f) shall be maintained by
162	the rating organization and are subject to examination by the
163	office. Upon examination, the office shall, in accordance with
164	generally accepted and reasonable actuarial techniques, consider
165	the rate factors in paragraphs (2)(a)-(l) and apply subsections
166	(3)-(8) to determine if the rate is excessive, inadequate, or
167	unfairly discriminatory.
168	(f)  In reviewing the rate, the office may require the
169	insurer to provide at the insurer's expense all information
170	necessary to evaluate the condition of the company and the
171	reasonableness of the rate according to the applicable criteria
172	enumerated in this subsection.
173	Section 3.  This act shall take effect January 1, 2011.

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