1998 Florida Code
TITLE XXXVII INSURANCE
Chapter 627 Insurance Rates And Contracts  
PART I RATES AND RATING ORGANIZATIONS (ss. 627.011-627.381)
627.072   Making and use of rates.

627.072  Making and use of rates.--

(1)  As to workers' compensation and employer's liability insurance, the following factors shall be used in the determination and fixing of rates:

(a)  The past loss experience and prospective loss experience within and outside this state;

(b)  The conflagration and catastrophe hazards;

(c)  A reasonable margin for underwriting profit and contingencies;

(d)  Dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers;

(e)  Investment income on unearned premium reserves and loss reserves;

(f)  Past expenses and prospective expenses, both those countrywide and those specifically applicable to this state; and

(g)  All other relevant factors, including judgment factors, within and outside this state.

(2)  As to all rates which are subject to this part, the systems of expense provisions included in the rates for use by an insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any such insurer or group with respect to any kind of insurance or with respect to any subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable.

(3)  As to all rates which are subject to this part, risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any difference among risks that can be demonstrated to have a probable effect upon losses or expenses. Such classifications and modifications shall apply to all risks under the same or substantially the same circumstances or conditions.

(4)(a)  In the case of workers' compensation and employer's liability insurance, the department shall consider utilizing the following methodology in rate determinations: Premiums, expenses, and expected claim costs would be discounted to a common point of time, such as the initial point of a policy year, in the determination of rates; the cash-flow pattern of premiums, expenses, and claim costs would be determined initially by using data from 8 to 10 of the largest insurers writing workers' compensation insurance in the state; such insurers may be selected for their statistical ability to report the data on an accident-year basis and in accordance with subparagraphs (b)1., 2., and 3., for at least 21/2 years; such a cash-flow pattern would be modified when necessary in accordance with the data and whenever a radical change in the payout pattern is expected in the policy year under consideration.

(b)  If the methodology set forth in paragraph (a) is utilized, to facilitate the determination of such a cash-flow pattern methodology:

1.  Each insurer shall include in its statistical reporting to the rating bureau and the department the accident year by calendar quarter data for paid-claim costs;

2.  Each insurer shall submit financial reports to the rating bureau and the department which shall include total incurred claim amounts and paid-claim amounts by policy year and by injury types as of December 31 of each calendar year; and

3.  Each insurer shall submit to the rating bureau and the department paid-premium data on an individual risk basis in which risks are to be subdivided by premium size as follows:


Number of Risks in
  Premium Range

Standard Premium Size

 (to be filled in by carrier) 

$300--999

 (to be filled in by carrier) 

1,000--4,999

 (to be filled in by carrier) 

5,000--49,999

 (to be filled in by carrier) 

50,000--99,999

 (to be filled in by carrier) 

100,000 or more

Total:

4.  Each insurer which does not have the capability of reporting in accordance with subparagraphs 1., 2., and 3. shall be required to commence such reporting procedures as of January 1, 1980.

(c)  The Insurance Commissioner is directed to consider using the methodology specified in paragraph (a) prior to March 31, 1980; and, in the event the Insurance Commissioner decides not to use this methodology, she or he shall report such decision and the reasons therefor to the committees of substance in the area of insurance in each house of the Legislature by March 31, 1980.

History.--s. 4, ch. 67-9; s. 1, ch. 70-179; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 24, ch. 77-468; s. 94, ch. 79-40; ss. 2, 3, ch. 81-318; ss. 344, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386; s. 11, ch. 86-160; s. 114, ch. 92-318; s. 317, ch. 97-102.