Florida Legislature Approves Commercial Rate Deregulation Bill
Commercial insurers in Florida will have more leeway in setting rates on a number of lines of insurance under a bill approved today by state lawmakers.
The Florida legislature approved CS/HB 99 that expands the list of commercial lines policies that insurers could set rates without seeking prior approval from the state’s Office of Insurance Regulation. The bill will now be sent to the Governor Rick Scott who is expected to sign the bill into law, which is scheduled to take effect October 1.
The bill builds on a law enacted last year that allowed insurers marketing commercial motor vehicle coverage for fleets of 20 or more vehicles to set rates without seeking regulatory approval. The rationale behind the change was that the market was competitive and that buyers would consist of large employers sophisticated enough to understand and negotiate for the coverage.
This year’s bill would extend the motor vehicle rate exemption to fleets with less than 20 vehicles. It would also exempt fiduciary and general liability, non-residential property and non-residential multi-peril, excess property and burglary and theft policies. Commercial insurers would still have to give notice to regulators of any rate change within 30 days. The OIR would still have the authority to sign-off on forms and conduct market exams to determine whether a company has the resources to pay claims.
The type of data required to be retained by the insurer or rating organization to support the rate charged for commercial insurance not subject to a rate filing is also revised under the bill. Insurers would be required to retain actuarial data about the commercial risk, but no longer underwriting files, premiums, losses and expense statistics. The actuarial data would have to be retained for two years and the insurer would bear the cost for an examination of the data by regulators.
American Insurance Association Southeast regional Vice President Ray Farmer praised lawmakers who unanimously approved the bill. “Florida’s lawmakers deserve credit for passing meaningful legislation that will benefit businesses and insurers alike,” he said. “This legislation will enable insurers to better serve the commercial insurance needs of Florida’s businesses.”
Liz Reynolds, Southeast region state affairs manager for the National Association of Mutual Insurance Companies, said “Florida lawmakers understand that rate modernization can and does work to regulate rates in an open marketplace for commercial insurance. Perhaps they soon will transfer that thinking to personal lines.”
Added William Stander, the Property Casualty Insurers Association of America assistant vice president and regional manager for Florida: “This bill makes Florida a much more attractive place for commercial insurers to do business and create jobs. We commend the legislation and ask Gov. Scott to sign it and enact it into law.”