Florida Senate - 2017 SB 1684
By Senator Farmer
34-01474-17 20171684__
1 A bill to be entitled
2 An act relating to insurance rates; amending s.
3 627.062, F.S.; providing that certain attorney fees,
4 costs, and expenses may not be considered expenses by
5 the Office of Insurance Regulation when the office is
6 determining whether a rate is excessive, inadequate,
7 or unfairly discriminatory; providing that certain
8 attorney fees, costs, and expenses may not be included
9 in an insurer’s rate base and may not be used to
10 justify a rate or rate change; amending s. 627.0651,
11 F.S.; providing that certain attorney fees, costs, and
12 expenses may not be included in a motor vehicle
13 insurer’s rate base and may not be used to justify a
14 rate or rate change; amending s. 627.072, F.S.;
15 providing that as to workers’ compensation and
16 employer’s liability insurance, certain attorney fees,
17 costs, and expenses may not be included in an
18 insurer’s rate base and may not be used to justify a
19 rate or rate change; amending s. 627.410, F.S.;
20 providing that certain attorney fees, costs, and
21 expenses may not be included in an insurer’s rate base
22 and may not be used to justify a rate or rate change;
23 amending s. 627.428, F.S.; providing that certain
24 attorney fees, costs, and expenses may not be included
25 in an insurer’s rate base and may not be used to
26 justify a rate or rate change; amending s. 627.640,
27 F.S.; providing that certain attorney fees, costs, and
28 expenses may not be included in an insurer’s rate;
29 providing an effective date.
30
31 Be It Enacted by the Legislature of the State of Florida:
32
33 Section 1. Paragraph (b) of subsection (2) of section
34 627.062, Florida Statutes, is amended, and subsection (11) is
35 added to that section, to read:
36 627.062 Rate standards.—
37 (2) As to all such classes of insurance:
38 (b) Upon receiving a rate filing, the office shall review
39 the filing to determine if a rate is excessive, inadequate, or
40 unfairly discriminatory. In making that determination, the
41 office shall, in accordance with generally accepted and
42 reasonable actuarial techniques, consider the following factors:
43 1. Past and prospective loss experience within and without
44 this state.
45 2. Past and prospective expenses. Attorney fees, costs, and
46 expenses associated with any adversarial proceeding against an
47 insured or named beneficiary may not be considered as expenses.
48 3. The degree of competition among insurers for the risk
49 insured.
50 4. Investment income reasonably expected by the insurer,
51 consistent with the insurer’s investment practices, from
52 investable premiums anticipated in the filing, plus any other
53 expected income from currently invested assets representing the
54 amount expected on unearned premium reserves and loss reserves.
55 The commission may adopt rules using reasonable techniques of
56 actuarial science and economics to specify the manner in which
57 insurers calculate investment income attributable to classes of
58 insurance written in this state and the manner in which
59 investment income is used to calculate insurance rates. Such
60 manner must contemplate allowances for an underwriting profit
61 factor and full consideration of investment income that produces
62 a reasonable rate of return; however, investment income from
63 invested surplus may not be considered.
64 5. The reasonableness of the judgment reflected in the
65 filing.
66 6. Dividends, savings, or unabsorbed premium deposits
67 allowed or returned to policyholders, members, or subscribers in
68 this state.
69 7. The adequacy of loss reserves.
70 8. The cost of reinsurance. The office may not disapprove a
71 rate as excessive solely due to the insurer having obtained
72 catastrophic reinsurance to cover the insurer’s estimated 250
73 year probable maximum loss or any lower level of loss.
74 9. Trend factors, including trends in actual losses per
75 insured unit for the insurer making the filing.
76 10. Conflagration and catastrophe hazards, if applicable.
77 11. Projected hurricane losses, if applicable, which must
78 be estimated using a model or method found to be acceptable or
79 reliable by the Florida Commission on Hurricane Loss Projection
80 Methodology, and as further provided in s. 627.0628.
81 12. Projected flood losses for personal residential
82 property insurance, if applicable, which may be estimated using
83 a model or method, or a straight average of model results or
84 output ranges, independently found to be acceptable or reliable
85 by the Florida Commission on Hurricane Loss Projection
86 Methodology and as further provided in s. 627.0628.
87 13. A reasonable margin for underwriting profit and
88 contingencies.
89 14. The cost of medical services, if applicable.
90 15. Other relevant factors that affect the frequency or
91 severity of claims or expenses.
92
93 The provisions of this subsection do not apply to workers’
94 compensation, employer’s liability insurance, and motor vehicle
95 insurance.
96 (11) Attorney fees, costs, and expenses associated with any
97 adversarial proceeding against an insured or named beneficiary
98 may not be included in the insurer’s rate base and may not be
99 used to justify a rate or rate change.
100 Section 2. Subsection (15) is added to section 627.0651,
101 Florida Statutes, to read:
102 627.0651 Making and use of rates for motor vehicle
103 insurance.—
104 (15) Attorney fees, costs, and expenses associated with any
105 adversarial proceeding against an insured or named beneficiary
106 may not be included in the insurer’s rate base and may not be
107 used to justify a rate or rate change.
108 Section 3. Subsection (6) is added to section 627.072,
109 Florida Statutes, to read:
110 627.072 Making and use of rates.—
111 (6) Attorney fees, costs, and expenses associated with any
112 adversarial proceeding against a claimant may not be included in
113 an insurer’s rate base and may not be used to justify a rate or
114 rate change.
115 Section 4. Subsection (9) is added to section 627.410,
116 Florida Statutes, to read:
117 627.410 Filing, approval of forms.—
118 (9) Attorney fees, costs, and expenses associated with any
119 adversarial proceeding against an insured or named beneficiary
120 may not be used to justify a rate or rate change.
121 Section 5. Section 627.428, Florida Statutes, is amended to
122 read:
123 627.428 Attorney Attorney’s fee.—
124 (1) Upon the rendition of a judgment or decree by any of
125 the courts of this state against an insurer and in favor of any
126 named or omnibus insured or the named beneficiary under a policy
127 or contract executed by the insurer, the trial court or, in the
128 event of an appeal in which the insured or beneficiary prevails,
129 the appellate court shall adjudge or decree against the insurer
130 and in favor of the insured or beneficiary a reasonable sum as
131 fees or compensation for the insured’s or beneficiary’s attorney
132 prosecuting the suit in which the recovery is had.
133 (2) As to suits based on claims arising under life
134 insurance policies or annuity contracts, no such attorney fees
135 attorney’s fee shall be allowed if such suit was commenced prior
136 to expiration of 60 days after proof of the claim was duly filed
137 with the insurer.
138 (3) When so awarded, compensation or fees of the attorney
139 shall be included in the judgment or decree rendered in the
140 case.
141 (4) Attorney fees paid pursuant to this section may not be
142 included in the insurer’s rate base and may not be used to
143 justify a rate or rate change.
144 (5) Attorney fees paid by an insurer to its attorneys for
145 prosecuting or defending an action that could cause attorney
146 fees to be awarded pursuant to this section may not be included
147 in the insurer’s rate base and may not be used to justify a rate
148 or rate change.
149 Section 6. Section 627.640, Florida Statutes, is amended to
150 read:
151 627.640 Filing of classifications and rates.—
152 (1) An insurer shall not deliver or issue for delivery in
153 this state any health insurance policy until it has filed with
154 the office a copy of any applicable classification of risks and
155 premium rates.
156 (2) Attorney fees, costs, and expenses associated with any
157 adversarial proceeding against an insured or named beneficiary
158 may not be included in the insurer’s rate.
159 Section 7. This act shall take effect July 1, 2017.