Florida Senate - 2012                        COMMITTEE AMENDMENT
       Bill No. SB 1094
       
       
       
       
       
       
                                Barcode 711530                          
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
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       The Committee on Budget Subcommittee on General Government
       Appropriations (Hays) recommended the following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Between lines 26 and 27
    4  insert:
    5         Section 2. Section 627.215, Florida Statutes, is amended to
    6  read:
    7         627.215 Excessive profits for workers’ compensation,
    8  employer’s liability, commercial property, and commercial
    9  casualty insurance prohibited.—
   10         (1)(a) Each insurer group writing workers’ compensation and
   11  employer’s liability insurance as defined in s. 624.605(1)(c),
   12  commercial property insurance as defined in s. 627.0625,
   13  commercial umbrella liability insurance as defined in s.
   14  627.0625, or commercial casualty insurance as defined in s.
   15  627.0625 shall annually file with the office before prior to
   16  July 1 of each year, on a form prescribed by the commission, the
   17  following data for the component types of such insurance as
   18  provided in the form:
   19         1. Calendar-year earned premium.
   20         2. Accident-year incurred losses and loss adjustment
   21  expenses.
   22         3. The administrative and selling expenses incurred in this
   23  state or allocated to this state for the calendar year.
   24         4. Policyholder dividends applicable to the calendar year.
   25  
   26  This paragraph does not Nothing herein is intended to prohibit
   27  an insurer from filing on a calendar-year basis.
   28         (b) The data filed for the group shall be a consolidation
   29  of the data of the individual insurers of the group. However, an
   30  insurer may elect to either consolidate commercial umbrella
   31  liability insurance data with commercial casualty insurance data
   32  or to separately file data for commercial umbrella liability
   33  insurance. Each insurer shall elect its method of filing
   34  commercial umbrella liability insurance at the time of filing
   35  data for accident year 1987 and shall thereafter continue filing
   36  under the same method. In the case of commercial umbrella
   37  liability insurance data reported separately, a separate
   38  excessive profits test shall be applied and the test period
   39  shall be 10 years. In the case of workers’ compensation and
   40  employer’s liability insurance, the final report for the test
   41  period including accident years 1984, 1985, and 1986 must be
   42  filed prior to July 1, 1988. In the case of commercial property
   43  and commercial casualty insurance, the final report for the test
   44  period including accident years 1987, 1988, and 1989 must be
   45  filed prior to July 1, 1991.
   46         (2) Each insurer group writing workers’ compensation and
   47  employer’s liability insurance shall also file a schedule of
   48  Florida loss and loss adjustment experience for each of the 3
   49  years previous to the most recent accident year. The incurred
   50  losses and loss adjustment expenses shall be valued as of
   51  December 31 of the first year following the latest accident year
   52  to be reported, developed to an ultimate basis, and at two 12
   53  month intervals thereafter, each developed to an ultimate basis,
   54  so that a total of three evaluations will be provided for each
   55  accident year. The first year to be so reported shall be
   56  accident year 1984, so that the reporting of 3 accident years
   57  under this revised evaluation will not take place until accident
   58  years 1985 and 1986 have become available. For reporting
   59  purposes unrelated to determining excessive profits, the loss
   60  and loss adjustment experience of each accident year shall
   61  continue to be reported until each accident year has been
   62  reported at eight stages of development.
   63         (2)(3)(a) Each insurer group writing commercial property
   64  insurance or commercial casualty insurance shall also file a
   65  schedule of Florida loss and loss adjustment experience for each
   66  of the 3 years previous to the most recent accident year. The
   67  incurred losses and loss adjustment expenses shall be valued as
   68  of December 31 of the first year following the latest accident
   69  year, developed to an ultimate basis, and at two 12-month
   70  intervals thereafter, each developed to an ultimate basis, so
   71  that a total of three 3 evaluations are will be provided for
   72  each accident year. The first year to be so reported shall be
   73  accident year 1987, which shall first be reported on or before
   74  July 1, 1989, and the reporting of 3 accident years will not
   75  take place until accident years 1988 and 1989 have become
   76  available. For medical malpractice insurance, the first year to
   77  be so reported shall be accident year 1990, which shall first be
   78  reported on or before July 1, 1992, and the reporting of 3
   79  accident years for full inclusion of medical malpractice
   80  experience in commercial casualty insurance will not take place
   81  until accident years 1991 and 1992 become available.
   82  Accordingly, no medical malpractice insured shall be eligible
   83  for refunds or credits until the reporting period ending with
   84  calendar-accident year 1992. For reporting purposes unrelated to
   85  determining excess profits, the loss and loss adjustment
   86  experience of each accident year shall continue to be reported
   87  until each accident year has been reported at eight stages of
   88  development.
   89         (b) Each insurer group writing commercial umbrella
   90  liability insurance which elects to file separate data for such
   91  insurance shall also file a schedule of Florida loss and loss
   92  adjustment experience for each of the 10 years previous to the
   93  most recent accident year. The incurred losses and loss
   94  adjustment expenses shall be valued as of December 31 of the
   95  first year following the latest accident year, developed to an
   96  ultimate basis, and at nine 12-month intervals thereafter, each
   97  developed to an ultimate basis, so that a total of 10
   98  evaluations will be provided for each accident year. The first
   99  year to be so reported shall be accident year 1987, which shall
  100  first be reported on or before October 1, 1989, and the
  101  reporting of 10 accident years will not take place until
  102  accident year 1996 data is reported.
  103         (3)(4) Each insurer group’s underwriting gain or loss for
  104  each calendar-accident year shall be computed as follows: The
  105  sum of the accident-year incurred losses and loss adjustment
  106  expenses as of December 31 of the year, developed to an ultimate
  107  basis, plus the administrative and selling expenses incurred in
  108  the calendar year, plus policyholder dividends applicable to the
  109  calendar year, shall be subtracted from the calendar-year earned
  110  premium to determine the underwriting gain or loss.
  111         (4)(5) For the 3 most recent calendar-accident years for
  112  which data is to be filed under this section, the underwriting
  113  gain or loss shall be compared to the anticipated underwriting
  114  profit, except in the case of separately reported commercial
  115  umbrella liability insurance for which such comparison shall be
  116  made for the 10 most recent calendar-accident years.
  117         (6) For those insurer groups writing workers’ compensation
  118  and employer’s liability insurance during the years 1984, 1985,
  119  1986, 1987, and 1988, an excessive profit has been realized if
  120  underwriting gain is greater than the anticipated underwriting
  121  profit plus 5 percent of earned premiums for the 3 most recent
  122  calendar years for which data is to be filed under this section.
  123  Any excess profit of an insurance company offering workers’
  124  compensation or employer’s liability insurance during this
  125  period of time, shall be returned to policyholders in the form
  126  of a cash refund or a credit toward future purchase of
  127  insurance. The excessive amount shall be refunded on a pro rata
  128  basis in relation to the final compilation year earned premiums
  129  to the workers’ compensation policyholders of record of the
  130  insurer group on December 31 of the final compilation year.
  131         (5)(7)(a) With respect to the Beginning with the July 1,
  132  1991, report for workers’ compensation insurance, employer’s
  133  liability insurance, commercial property insurance, and
  134  commercial casualty insurance, an excessive profit has been
  135  realized if the combined net aggregate underwriting gain for all
  136  these lines combined is greater than the net aggregate
  137  anticipated underwriting profit for these lines plus 5 percent
  138  of earned premiums for the 3 most recent calendar years for
  139  which data is to be filed under this section. For calculation
  140  purposes commercial property insurance and commercial casualty
  141  insurance shall be broken down into sublines in order to
  142  ascertain the anticipated underwriting profit factor versus the
  143  actual underwriting gain for the given subline.
  144         (b) Beginning with the July 1, 1998, report for commercial
  145  umbrella liability insurance, if an insurer has elected to file
  146  data separately for such insurance, an excessive profit has been
  147  realized if the underwriting gain for such insurance is greater
  148  than the anticipated underwriting profit for such insurance plus
  149  5 percent of earned premiums for the 10 most recent calendar
  150  years for which data is to be filed under this section.
  151         (6)(8) As used in this section with respect to any 3-year
  152  period, or with respect to any 10-year period in the case of
  153  commercial umbrella liability insurance, “anticipated
  154  underwriting profit” means the sum of the dollar amounts
  155  obtained by multiplying, for each rate filing of the insurer
  156  group in effect during such period, the earned premiums
  157  applicable to such rate filing during such period by the
  158  percentage factor included in such rate filing for profit and
  159  contingencies, such percentage factor having been determined
  160  with due recognition to investment income from funds generated
  161  by Florida business, except that the anticipated underwriting
  162  profit for the purposes of this section shall be calculated
  163  using a profit and contingencies factor that is not less than
  164  zero. Separate calculations need not be made for consecutive
  165  rate filings containing the same percentage factor for profits
  166  and contingencies.
  167         (7)(9) If the insurer group has realized an excessive
  168  profit, the office shall order a return of the excessive amounts
  169  after affording the insurer group an opportunity for hearing and
  170  otherwise complying with the requirements of chapter 120. Such
  171  excessive amounts shall be refunded in all instances unless the
  172  insurer group affirmatively demonstrates to the office that the
  173  refund of the excessive amounts will render a member of the
  174  insurer group financially impaired or will render it insolvent
  175  under the provisions of the Florida Insurance Code.
  176         (8)(10) Any excess profit of an insurance company as
  177  determined on July 1, 1991, and thereafter shall be returned to
  178  policyholders in the form of a cash refund or a credit toward
  179  the future purchase of insurance. The excessive amount shall be
  180  refunded on a pro rata basis in relation to the final
  181  compilation year earned premiums to the policyholders of record
  182  of the insurer group on December 31 of the final compilation
  183  year.
  184         (9)(11)(a) Cash refunds to policyholders may be rounded to
  185  the nearest dollar.
  186         (b) Data in required reports to the office may be rounded
  187  to the nearest dollar.
  188         (c) Rounding, if elected by the insurer, must shall be
  189  applied consistently.
  190         (10)(12)(a) Refunds shall be completed in one of the
  191  following ways:
  192         1. If the insurer group elects to make a cash refund, the
  193  refund must shall be completed within 60 days after of entry of
  194  a final order indicating that excessive profits have been
  195  realized.
  196         2. If the insurer group elects to make refunds in the form
  197  of a credit to renewal policies, such credits must shall be
  198  applied to policy renewal premium notices that which are
  199  forwarded to insureds more than 60 calendar days after entry of
  200  a final order indicating that excessive profits have been
  201  realized. If an insurer group has made this election but an
  202  insured thereafter cancels her or his policy or otherwise allows
  203  the policy to terminate, the insurer group must shall make a
  204  cash refund within not later than 60 days after termination of
  205  such coverage.
  206         (b) Upon completion of the renewal credits or refund
  207  payments, the insurer group shall immediately certify to the
  208  office that the refunds have been made.
  209         (11)(13) Any refund or renewal credit made pursuant to this
  210  section shall be treated as a policyholder dividend applicable
  211  to the year immediately succeeding the compilation period giving
  212  rise to the refund or credit, for purposes of reporting under
  213  this section for subsequent years.
  214         (12)(14) The application of this law to commercial property
  215  and commercial casualty insurance, which includes commercial
  216  umbrella liability insurance, ceases on January 1, 1997.
  217         Section 3. Subsection (4) of section 628.6017, Florida
  218  Statutes, is amended to read:
  219         628.6017 Converting assessable mutual insurer.—
  220         (4) An assessable mutual insurer becoming a stock insurer
  221  or a nonassessable mutual insurer is shall not be subject to s.
  222  627.215 or s. 627.351(5) for 5 years following authorization of
  223  the conversion by the office. However, the converted stock
  224  insurer or nonassessable mutual insurer shall file all necessary
  225  data required by s. 627.215. Such amounts otherwise subject to
  226  s. 627.215(8) 627.215(10) shall be maintained as surplus as to
  227  policyholders and not be available for dividends for a period of
  228  5 years.
  229  
  230  ================= T I T L E  A M E N D M E N T ================
  231         And the title is amended as follows:
  232         Delete line 5
  233  and insert:
  234         compensation as required; amending s. 627.215, F.S.;
  235         deleting the prohibition against excessive profits for
  236         workers’ compensation and employer’s liability
  237         insurance; deleting obsolete provisions; amending s.
  238         628.6017, F.S.; conforming a cross-reference;
  239         providing an effective date.