CHAPTER 627

627.011 Short title. This part of this chapter may be referred to as the “Rating Law.” History. — s. 412, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386; s. 114, ch. 92-318. 627.021 Scope of this part. (1) This part of this chapter applies only to property, casualty, and surety insurances on subjects of insurance resident, located, or to be performed in this state. (2) This part does not apply to: (a) Reinsurance, except joint reinsurance as provided in s. 627.311. (b) Insurance against loss of or damage to aircraft, their hulls, accessories, or equipment, or against liability, other than workers’ compensation and employer’s liability, arising out of the ownership, maintenance, or use of aircraft. (c) Insurance of vessels or craft, their cargoes, marine builders’ risks, marine protection and indemnity, or other risks commonly insured under marine insurance policies. (d) Commercial inland marine insurance. (e) Surplus lines insurance placed under the provisions of ss. 626.913-626.937. (3) For the purposes of this part, all motor vehicle insurance shall be deemed to be casualty insurance only. (4) This part does not apply to health insurance. History. — s. 413, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 92, ch. 79-40; ss. 2, 3, ch. 81-318; ss. 337, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386; s. 2, ch. 88-166; s. 114, ch. 92-318; s. 1, ch. 98-173; s. 147, ch. 2020-2. 627.031 Purposes of this part; interpretation. (1) The purposes of this part are: (a) To promote the public welfare by regulating insurance rates as herein provided to the end that they shall not be excessive, inadequate, or unfairly discriminatory; (b) To encourage independent action by, and reasonable price competition among, insurers; (c) To authorize the existence and operation of qualified rating organizations and advisory organizations and to require that specified rating services of such rating organizations be generally available to all authorized insurers; and (d) To authorize cooperation between insurers in ratemaking and other related matters. (2) It is the purpose of this part to protect policyholders and the public against the adverse effects of excessive, inadequate, or unfairly discriminatory insurance rates, and to authorize the office to regulate such rates. If at any time the office has reason to believe any such rate is excessive, inadequate, or unfairly discriminatory under the law, it is directed to take the necessary action to cause such rate to comply with the laws of this state. (3) Nothing in this part shall be construed to repeal or modify the provisions of part IX of chapter 626, relating to unfair trade practices. History. — s. 411, ch. 59-205; s. 1, ch. 67-9; ss. 13, 35, ch. 69-106; s. 1, ch. 71-3(B); s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 338, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386; s. 28, ch. 87-228; s. 114, ch. 92-318; s. 54, ch. 2001-63; s. 1061, ch. 2003-261. 627.041 Definitions. As used in this part: (1) “Rate” means the unit charge by which the measure of exposure or the amount of insurance specified in a policy of insurance or covered thereunder is multiplied to determine the premium. (2) “Premium” means the consideration paid or to be paid to an insurer for the issuance and delivery of any binder or policy of insurance. (3) “Rating organization” means every person, other than an authorized insurer, whether located within or outside this state, who has as his or her object or purpose the making of rates, rating plans, or rating systems. Two or more authorized insurers that act in concert for the purpose of making rates, rating plans, or rating systems, and that do not operate within the specific authorizations contained in ss. 627.311, 627.314(2), (4), and 627.351, shall be deemed to be a rating organization. No single insurer shall be deemed to be a rating organization. (4) “Advisory organization” means every group, association, or other organization of insurers, whether located within or outside this state, which prepares policy forms or makes underwriting rules incident to but not including the making of rates, rating plans, or rating systems or which collects and furnishes to authorized insurers or rating organizations loss or expense statistics or other statistical information and data and acts in an advisory, as distinguished from a ratemaking, capacity. (5) “Member” means an insurer who participates in or is entitled to participate in the management of a rating, advisory, or other organization. (6) “Subscriber” means an insurer which is furnished at its request: (a) With rates and rating manuals by a rating organization of which it is not a member; or (b) With advisory services by an advisory organization of which it is not a member. (7) “Willful” or “willfully” in relation to an act or omission which constitutes a violation of this part means with actual knowledge or belief that such act or omission constitutes such violation and with specific intent nevertheless to commit such act or omission. (8) “Motor vehicle insurance” means a policy of motor vehicle insurance delivered or issued for delivery in the state by an authorized insurer: (a) Insuring a natural person as the named insured or one or more related individuals resident of the same household, or both; and (b) Insuring a motor vehicle of the private passenger type or station wagon type, which motor vehicle is not used as public or livery conveyance for passengers or rented to others, or insuring any other four-wheeled motor vehicle having a capacity of 1,500 pounds or less which is not used in the occupation, profession, or business of the insured, other than farming; other than any policy issued under an automobile insurance risk apportionment plan or other than any policy covering garage, automobile sales agency, repair shop, service station, or public parking place operation hazards. (9) “Insurer,” for purposes of ss. 627.091, 627.096, 627.101, 627.111, 627.141, 627.171, 627.191, 627.211, and 627.291, includes a commercial self-insurance fund as defined in s. 624.462 and a group self-insurance fund as defined in s. 624.4621. History. — s. 414, ch. 59-205; s. 2, ch. 67-9; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 340, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386; s. 3, ch. 87-124; s. 114, ch. 92-318; s. 93, ch. 93-415; s. 315, ch. 97-102; s. 1, ch. 2015-158. 627.0612 Administrative proceedings in rating determinations. (1) In any proceeding to determine whether rates, rating plans, or other matters governed by this part comply with the law, the appellate court shall set aside a final order of the office if the office has violated s. 120.57(1)(k) by substituting its findings of fact for findings of an administrative law judge which were supported by competent substantial evidence. (2) In an administrative hearing to determine whether an insurer’s rates, rating schedules, rating manuals, premium credits, discount schedules, surcharge schedules, or changes thereto, for property insurance comply with the law, in addition to any other findings of fact, findings on the following matters shall be considered findings of fact: (a) Whether a factor or factors used in a rate filing or applied by the office are consistent with standard actuarial techniques or practices or are otherwise based on reasonable actuarial judgment. (b) Whether a factor for underwriting profit and contingencies is reasonable or excessive. (c) Whether the cost of reinsurance is reasonable or excessive. (3) In an administrative hearing to determine whether an insurer’s rates, rating schedules, rating manuals, premium credits, discount schedules, surcharge schedules, or changes thereto, for property insurance comply with the law, a recommended order may be entered that approves, modifies, or rejects the requested change. A recommended order modifying the requested rate change shall recommend such change as is supported by the record in the case. History. — s. 7, ch. 86-160; s. 2, ch. 87-50; s. 114, ch. 92-318; s. 272, ch. 96-410; s. 27, ch. 99-3; s. 1062, ch. 2003-261; s. 9, ch. 2008-66. 627.0613 Consumer advocate. The Chief Financial Officer must appoint a consumer advocate who must represent the general public of the state before the department and the office. The consumer advocate must report directly to the Chief Financial Officer, but is not otherwise under the authority of the department or of any employee of the department. The consumer advocate has such powers as are necessary to carry out the duties of the office of consumer advocate, including, but not limited to, the powers to: (1) Recommend to the department or office, by petition, the commencement of any proceeding or action; appear in any proceeding or action before the department or office; or appear in any proceeding before the Division of Administrative Hearings relating to subject matter under the jurisdiction of the department or office. (2) Have access to and use of all files, records, and data of the department or office. (3) Examine rate and form filings submitted to the office, hire consultants as necessary to aid in the review process, and recommend to the department or office any position deemed by the consumer advocate to be in the public interest. (4) Prepare an annual budget for presentation to the Legislature by the department, which budget must be adequate to carry out the duties of the office of consumer advocate. History. — s. 18, ch. 92-318; s. 1063, ch. 2003-261; s. 8, ch. 2006-12; s. 17, ch. 2007-1; s. 8, ch. 2007-90; s. 24, ch. 2008-66; s. 11, ch. 2011-39. 627.062 Rate standards. (1) The rates for all classes of insurance to which the provisions of this part are applicable may not be excessive, inadequate, or unfairly discriminatory. (2) As to all such classes of insurance: (a) Insurers or rating organizations shall establish and use rates, rating schedules, or rating manuals that allow the insurer a reasonable rate of return on the classes of insurance written in this state. A copy of rates, rating schedules, rating manuals, premium credits or discount schedules, and surcharge schedules, and changes thereto, must be filed with the office under one of the following procedures: 1. If the filing is made at least 90 days before the proposed effective date and is not implemented during the office’s review of the filing and any proceeding and judicial review, such filing is considered a “file and use” filing. In such case, the office shall finalize its review by issuance of a notice of intent to approve or a notice of intent to disapprove within 90 days after receipt of the filing. If the 90-day period ends on a weekend or a holiday under s. 110.117(1)(a)-(i), it must be extended until the conclusion of the next business day. The notice of intent to approve and the notice of intent to disapprove constitute agency action for purposes of the Administrative Procedure Act. Requests for supporting information, requests for mathematical or mechanical corrections, or notification to the insurer by the office of its preliminary findings does not toll the 90-day period during any such proceedings and subsequent judicial review. The rate shall be deemed approved if the office does not issue a notice of intent to approve or a notice of intent to disapprove within 90 days after receipt of the filing. 2. If the filing is not made in accordance with subparagraph 1., such filing must be made as soon as practicable, but within 30 days after the effective date, and is considered a “use and file” filing. An insurer making a “use and file” filing is potentially subject to an order by the office to return to policyholders those portions of rates found to be excessive, as provided in paragraph (h). 3. For all property insurance filings made or submitted after January 25, 2007, but before May 1, 2012, an insurer seeking a rate that is greater than the rate most recently approved by the office shall make a “file and use” filing. For purposes of this subparagraph, motor vehicle collision and comprehensive coverages are not considered property coverages. (b) Upon receiving a rate filing, the office shall review the filing to determine if a rate is excessive, inadequate, or unfairly discriminatory. In making that determination, the office shall, in accordance with generally accepted and reasonable actuarial techniques, consider the following factors: 1. Past and prospective loss experience within and without this state. 2. Past and prospective expenses. 3. The degree of competition among insurers for the risk insured. 4. Investment income reasonably expected by the insurer, consistent with the insurer’s investment practices, from investable premiums anticipated in the filing, plus any other expected income from currently invested assets representing the amount expected on unearned premium reserves and loss reserves. The commission may adopt rules using reasonable techniques of actuarial science and economics to specify the manner in which insurers calculate investment income attributable to classes of insurance written in this state and the manner in which investment income is used to calculate insurance rates. Such manner must contemplate allowances for an underwriting profit factor and full consideration of investment income that produces a reasonable rate of return; however, investment income from invested surplus may not be considered. 5. The reasonableness of the judgment reflected in the filing. 6. Dividends, savings, or unabsorbed premium deposits allowed or returned to policyholders, members, or subscribers in this state. 7. The adequacy of loss reserves. 8. The cost of reinsurance. The office may not disapprove a rate as excessive solely due to the insurer having obtained catastrophic reinsurance to cover the insurer’s estimated 250-year probable maximum loss or any lower level of loss. 9. Trend factors, including trends in actual losses per insured unit for the insurer making the filing. 10. Conflagration and catastrophe hazards, if applicable. 11. Projected hurricane losses, if applicable, which must be estimated using a model or method found to be acceptable or reliable by the Florida Commission on Hurricane Loss Projection Methodology, and as further provided in s. 627.0628. 12. Projected flood losses for personal residential property insurance, if applicable, which may be estimated using a model or method, or a straight average of model results or output ranges, independently found to be acceptable or reliable by the Florida Commission on Hurricane Loss Projection Methodology and as further provided in s. 627.0628. 13. A reasonable margin for underwriting profit and contingencies. 14. The cost of medical services, if applicable. 15. Other relevant factors that affect the frequency or severity of claims or expenses. (c) In the case of fire insurance rates, consideration must be given to the availability of water supplies and the experience of the fire insurance business during a period of not less than the most recent 5-year period for which such experience is available. (d) If conflagration or catastrophe hazards are considered by an insurer in its rates or rating plan, including surcharges and discounts, the insurer shall establish a reserve for that portion of the premium allocated to such hazard and maintain the premium in a catastrophe reserve. Removal of such premiums from the reserve for purposes other than paying claims associated with a catastrophe or purchasing reinsurance for catastrophes must be approved by the office. Any ceding commission received by an insurer purchasing reinsurance for catastrophes must be placed in the catastrophe reserve. (e) After consideration of the rate factors provided in paragraphs (b), (c), and (d), the office may find a rate to be excessive, inadequate, or unfairly discriminatory based upon the following standards: 1. Rates shall be deemed excessive if they are likely to produce a profit from Florida business which is unreasonably high in relation to the risk involved in the class of business or if expenses are unreasonably high in relation to services rendered. 2. Rates shall be deemed excessive if, among other things, the rate structure established by a stock insurance company provides for replenishment of surpluses from premiums, if the replenishment is attributable to investment losses. 3. Rates shall be deemed inadequate if they are clearly insufficient, together with the investment income attributable to them, to sustain projected losses and expenses in the class of business to which they apply. 4. A rating plan, including discounts, credits, or surcharges, shall be deemed unfairly discriminatory if it fails to clearly and equitably reflect consideration of the policyholder’s participation in a risk management program adopted pursuant to s. 627.0625. 5. A rate shall be deemed inadequate as to the premium charged to a risk or group of risks if discounts or credits are allowed which exceed a reasonable reflection of expense savings and reasonably expected loss experience from the risk or group of risks. 6. A rate shall be deemed unfairly discriminatory as to a risk or group of risks if the application of premium discounts, credits, or surcharges among such risks does not bear a reasonable relationship to the expected loss and expense experience among the various risks. (f) In reviewing a rate filing, the office may require the insurer to provide, at the insurer’s expense, all information necessary to evaluate the condition of the company and the reasonableness of the filing according to the criteria enumerated in this section. (g) The office may at any time review a rate, rating schedule, rating manual, or rate change; the pertinent records of the insurer; and market conditions. If the office finds on a preliminary basis that a rate may be excessive, inadequate, or unfairly discriminatory, the office shall initiate proceedings to disapprove the rate and shall so notify the insurer. However, the office may not disapprove as excessive any rate for which it has given final approval or which has been deemed approved for 1 year after the effective date of the filing unless the office finds that a material misrepresentation or material error was made by the insurer or was contained in the filing. Upon being notified, the insurer or rating organization shall, within 60 days, file with the office all information that, in the belief of the insurer or organization, proves the reasonableness, adequacy, and fairness of the rate or rate change. The office shall issue a notice of intent to approve or a notice of intent to disapprove pursuant to paragraph (a) within 90 days after receipt of the insurer’s initial response. In such instances and in any administrative proceeding relating to the legality of the rate, the insurer or rating organization shall carry the burden of proof by a preponderance of the evidence to show that the rate is not excessive, inadequate, or unfairly discriminatory. After the office notifies an insurer that a rate may be excessive, inadequate, or unfairly discriminatory, unless the office withdraws the notification, the insurer may not alter the rate except to conform to the office’s notice until the earlier of 120 days after the date the notification was provided or 180 days after the date of implementing the rate. The office, subject to chapter 120, may disapprove without the 60-day notification any rate increase filed by an insurer within the prohibited time period or during the time that the legality of the increased rate is being contested. (h) If the office finds that a rate or rate change is excessive, inadequate, or unfairly discriminatory, the office shall issue an order of disapproval specifying that a new rate or rate schedule, which responds to the findings of the office, be filed by the insurer. The office shall further order, for any “use and file” filing made in accordance with subparagraph (a)2., that premiums charged each policyholder constituting the portion of the rate above that which was actuarially justified be returned to the policyholder in the form of a credit or refund. If the office finds that an insurer’s rate or rate change is inadequate, the new rate or rate schedule filed with the office in response to such a finding is applicable only to new or renewal business of the insurer written on or after the effective date of the responsive filing. (i) Except as otherwise specifically provided in this chapter, for property and casualty insurance the office may not directly or indirectly: 1. Prohibit any insurer, including any residual market plan or joint underwriting association, from paying acquisition costs based on the full amount of premium, as defined in s. 627.403, applicable to any policy, or prohibit any such insurer from including the full amount of acquisition costs in a rate filing; or 2. Impede, abridge, or otherwise compromise an insurer’s right to acquire policyholders, advertise, or appoint agents, including the calculation, manner, or amount of such agent commissions, if any. (j) With respect to residential property insurance rate filings, the rate filing: 1. Must account for mitigation measures undertaken by policyholders to reduce hurricane losses and windstorm losses. 2. May use a modeling indication that is the weighted or straight average of two or more hurricane loss projection models found by the Florida Commission on Hurricane Loss Projection Methodology to be accurate or reliable pursuant to s. 627.0628. If an averaged model is used under this section, the same averaged model must be used throughout this state. If a weighted average is used, the insurer must provide the office with an actuarial justification for using the weighted average which shows that the weighted average results in a rate that is reasonable, adequate, and fair. (k)1. A residential property insurer may make a separate filing limited solely to an adjustment of its rates for reinsurance, the cost of financing products used as a replacement for reinsurance, financing costs incurred in the purchase of reinsurance, and the actual cost paid due to the application of the cash build-up factor pursuant to s. 215.555(5)(b) if the insurer: a. Elects to purchase financing products such as a liquidity instrument or line of credit, in which case the cost included in filing for the liquidity instrument or line of credit may not result in a premium increase exceeding 3 percent for any individual policyholder. All costs contained in the filing may not result in an overall premium increase of more than 15 percent for any individual policyholder. b. Includes in the filing a copy of all of its reinsurance, liquidity instrument, or line of credit contracts; proof of the billing or payment for the contracts; and the calculation upon which the proposed rate change is based demonstrating that the costs meet the criteria of this section. 2. An insurer that purchases reinsurance or financing products from an affiliated company may make a separate filing only if the costs for such reinsurance or financing products are charged at or below charges made for comparable coverage by nonaffiliated reinsurers or financial entities making such coverage or financing products available in this state. 3. An insurer may make only one filing per 12-month period under this paragraph. 4. An insurer that elects to implement a rate change under this paragraph must file its rate filing with the office at least 45 days before the effective date of the rate change. After an insurer submits a complete filing that meets all of the requirements of this paragraph, the office has 45 days after the date of the filing to review the rate filing and determine if the rate is excessive, inadequate, or unfairly discriminatory. The provisions of this subsection do not apply to workers’ compensation, employer’s liability insurance, and motor vehicle insurance. (3)(a) For individual risks that are not rated in accordance with the insurer’s rates, rating schedules, rating manuals, and underwriting rules filed with the office and that have been submitted to the insurer for individual rating, the insurer must maintain documentation on each risk subject to individual risk rating. The documentation must identify the named insured and specify the characteristics and classification of the risk supporting the reason for the risk being individually risk rated, including any modifications to existing approved forms to be used on the risk. The insurer must maintain these records for at least 5 years after the effective date of the policy. (b) Individual risk rates and modifications to existing approved forms are not subject to this part or part II, except for paragraph (a) and ss. 627.402, 627.403, 627.4035, 627.404, 627.405, 627.406, 627.407, 627.4085, 627.409, 627.4132, 627.4133, 627.415, 627.416, 627.417, 627.419, 627.425, 627.426, 627.4265, and 627.427, but are subject to all other applicable provisions of this code and rules adopted thereunder. (c) This subsection does not apply to private passenger motor vehicle insurance. (d)1. The following categories or kinds of insurance and types of commercial lines risks are not subject to paragraph (2)(a) or paragraph (2)(f): a. Excess or umbrella. b. Surety and fidelity. c. Boiler and machinery and leakage and fire extinguishing equipment. d. Errors and omissions. e. Directors and officers, employment practices, fiduciary liability, and management liability. f. Intellectual property and patent infringement liability. g. Advertising injury and Internet liability insurance. h. Property risks rated under a highly protected risks rating plan. i. General liability. j. Nonresidential property, except for collateral protection insurance as defined in s. 624.6085. k. Nonresidential multiperil. l. Excess property. m. Burglary and theft. n. Travel insurance, if issued as a master group policy with a situs in another state where each certificateholder pays less than $30 in premium for each covered trip and where the insurer has written less than $1 million in annual written premiums in the travel insurance product in this state during the most recent calendar year. o. Medical malpractice for a facility that is not a hospital licensed under chapter 395, a nursing home licensed under part II of chapter 400, or an assisted living facility licensed under part I of chapter 429. p. Medical malpractice for a health care practitioner who is not a dentist licensed under chapter 466, a physician licensed under chapter 458, an osteopathic physician licensed under chapter 459, a chiropractic physician licensed under chapter 460, a podiatric physician licensed under chapter 461, a pharmacist licensed under chapter 465, or a pharmacy technician registered under chapter 465. q. Any other commercial lines categories or kinds of insurance or types of commercial lines risks that the office determines should not be subject to paragraph (2)(a) or paragraph (2)(f) because of the existence of a competitive market for such insurance or similarity of such insurance to other categories or kinds of insurance not subject to paragraph (2)(a) or paragraph (2)(f), or to improve the general operational efficiency of the office. 2. Insurers or rating organizations shall establish and use rates, rating schedules, or rating manuals to allow the insurer a reasonable rate of return on insurance and risks described in subparagraph 1. which are written in this state. 3. An insurer shall notify the office of any changes to rates for insurance and risks described in subparagraph 1. within 30 days after the effective date of the change. The notice must include the name of the insurer, the type or kind of insurance subject to rate change, and the average statewide percentage change in rates. Actuarial data with regard to rates for such risks must be maintained by the insurer for 2 years after the effective date of changes to those rates and are subject to examination by the office. The office may require the insurer to incur the costs associated with an examination. Upon examination, the office, in accordance with generally accepted and reasonable actuarial techniques, shall consider the rate factors in paragraphs (2)(b), (c), and (d) and the standards in paragraph (2)(e) to determine if the rate is excessive, inadequate, or unfairly discriminatory. 4. A rating organization shall notify the office of any changes to loss cost for insurance and risks described in subparagraph 1. within 30 days after the effective date of the change. The notice must include the name of the rating organization, the type or kind of insurance subject to a loss cost change, loss costs during the immediately preceding year for the type or kind of insurance subject to the loss cost change, and the average statewide percentage change in loss cost. Actuarial data with regard to changes to loss cost for risks not subject to paragraph (2)(a) or paragraph (2)(f) must be maintained by the rating organization for 2 years after the effective date of the change and are subject to examination by the office. The office may require the rating organization to incur the costs associated with an examination. Upon examination, the office, in accordance with generally accepted and reasonable actuarial techniques, shall consider the rate factors in paragraphs (2)(b)-(d) and the standards in paragraph (2)(e) to determine if the rate is excessive, inadequate, or unfairly discriminatory. (4) The establishment of any rate, rating classification, rating plan or schedule, or variation thereof in violation of part IX of chapter 626 is also in violation of this section. (5) With respect to a rate filing involving coverage of the type for which the insurer is required to pay a reimbursement premium to the Florida Hurricane Catastrophe Fund, the insurer may fully recoup in its property insurance premiums any reimbursement premiums paid to the fund, together with reasonable costs of other reinsurance; however, except as otherwise provided in this section, the insurer may not recoup reinsurance costs that duplicate coverage provided by the fund. An insurer may not recoup more than 1 year of reimbursement premium at a time. Any under-recoupment from the prior year may be added to the following year’s reimbursement premium, and any over-recoupment must be subtracted from the following year’s reimbursement premium. (6)(a) If an insurer requests an administrative hearing pursuant to s. 120.57 related to a rate filing under this section, the director of the Division of Administrative Hearings shall expedite the hearing and assign an administrative law judge who shall commence the hearing within 30 days after the receipt of the formal request and enter a recommended order within 30 days after the hearing or within 30 days after receipt of the hearing transcript by the administrative law judge, whichever is later. Each party shall have 10 days in which to submit written exceptions to the recommended order. The office shall enter a final order within 30 days after the entry of the recommended order. The provisions of this paragraph may be waived upon stipulation of all parties. (b) Upon entry of a final order, the insurer may request an expedited appellate review pursuant to the Florida Rules of Appellate Procedure. It is the intent of the Legislature that the First District Court of Appeal grant an insurer’s request for an expedited appellate review. (7) The provisions of this subsection apply only to rates for medical malpractice insurance and control to the extent of any conflict with other provisions of this section. (a) Any portion of a judgment entered or settlement paid as a result of a statutory or common-law bad faith action and any portion of a judgment entered which awards punitive damages against an insurer may not be included in the insurer’s rate base and used to justify a rate or rate change. Any common-law bad faith action identified as such, any portion of a settlement entered as a result of a statutory or common-law action, or any portion of a settlement wherein an insurer agrees to pay specific punitive damages may not be used to justify a rate or rate change. The portion of the taxable costs and attorney’s fees which is identified as being related to the bad faith and punitive damages may not be included in the insurer’s rate base and used to justify a rate or rate change. (b) Upon reviewing a rate filing and determining whether the rate is excessive, inadequate, or unfairly discriminatory, the office shall consider, in accordance with generally accepted and reasonable actuarial techniques, past and present prospective loss experience, using loss experience solely for this state or giving greater credibility to this state’s loss data after applying actuarially sound methods of assigning credibility to such data. (c) Rates shall be deemed excessive if, among other standards established by this section, the rate structure provides for replenishment of reserves or surpluses from premiums when the replenishment is attributable to investment losses. (d) The insurer must apply a discount or surcharge based on the health care provider’s loss experience or establish an alternative method giving due consideration to the provider’s loss experience. The insurer must include in the filing a copy of the surcharge or discount schedule or a description of the alternative method used, and provide a copy, as approved by the office, to policyholders at the time of renewal and to prospective policyholders at the time of application for coverage. (e) For medical malpractice rates subject to paragraph (2)(a), the medical malpractice insurer shall make an annual base rate filing in accordance with s. 627.0645, sworn to by at least two executive officers of the insurer. (8)(a) The chief executive officer or chief financial officer of a property insurer and the chief actuary of a property insurer must certify under oath and subject to the penalty of perjury, on a form approved by the commission, the following information, which must accompany a property rate filing subject to paragraph (2)(a): 1. The signing officer and actuary have reviewed the rate filing; 2. Based on the signing officer’s and actuary’s knowledge, the rate filing does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading; 3. Based on the signing officer’s and actuary’s knowledge, the information and other factors described in paragraph (2)(b), including, but not limited to, investment income, fairly present in all material respects the basis of the rate filing for the periods presented in the filing; and 4. Based on the signing officer’s and actuary’s knowledge, the rate filing reflects all premium savings that are reasonably expected to result from legislative enactments and are in accordance with generally accepted and reasonable actuarial techniques. (b) A signing officer or actuary who knowingly makes a false certification under this subsection commits a violation of s. 626.9541(1)(e) and is subject to the penalties under s. 626.9521. (c) Failure to provide such certification by the officer and actuary shall result in the rate filing being disapproved without prejudice to be refiled. (d) The certification made pursuant to paragraph (a) is not rendered false if, after making the subject rate filing, the insurer provides the office with additional or supplementary information pursuant to a formal or informal request from the office. However, the actuary who is primarily responsible for preparing and submitting such information must certify the information in accordance with the certification required under paragraph (a) and the penalties in paragraph (b), except that the chief executive officer, chief financial officer, or chief actuary need not certify the additional or supplementary information. (e) The commission may adopt rules and forms to administer this subsection. (9) The burden is on the office to establish that rates are excessive for personal lines residential coverage with a dwelling replacement cost of $1 million or more or for a single condominium unit with a combined dwelling and contents replacement cost of $1 million or more. Upon request of the office, the insurer shall provide such loss and expense information as the office reasonably needs to meet this burden. (10) Any interest paid pursuant to s. 627.70131(7) may not be included in the insurer’s rate base and may not be used to justify a rate or rate change. History. — s. 3, ch. 67-9; s. 3, ch. 71-3(B); s. 3, ch. 76-168; s. 21, ch. 77-468; s. 1, ch. 77-457; s. 93, ch. 79-40; ss. 2, 3, ch. 81-318; ss. 341, 357, 809(2nd), ch. 82-243; ss. 45, 49, 79, ch. 82-386; s. 93, ch. 83-216; s. 9, ch. 86-160; ss. 19, 114, ch. 92-318; s. 8, ch. 92-328; s. 5, ch. 95-276; s. 4, ch. 96-194; s. 7, ch. 96-377; s. 8, ch. 2000-370; s. 55, ch. 2001-63; s. 1064, ch. 2003-261; ss. 40, 84, ch. 2003-416; s. 3, ch. 2005-111; s. 11, ch. 2006-12; s. 18, ch. 2007-1; s. 9, ch. 2007-90; s. 10, ch. 2008-66; s. 7, ch. 2009-87; s. 120, ch. 2010-5; s. 4, ch. 2010-175; s. 12, ch. 2011-39; s. 1, ch. 2011-160; s. 2, ch. 2013-66; s. 1, ch. 2014-80; s. 78, ch. 2015-2; s. 1, ch. 2015-135; s. 28, ch. 2016-132; s. 9, ch. 2017-132; s. 9, ch. 2020-63; s. 16, ch. 2021-104; s. 18, ch. 2023-15; s. 1, ch. 2023-175; s. 3, ch. 2023-217; s. 6, ch. 2024-182. 627.0621 Transparency in rate regulation. (1) DEFINITIONS. — As used in this section, the term: (a) “Rate filing” means any original or amended rate residential property insurance filing. (b) “Recommendation” means any proposed, preliminary, or final recommendation from an office actuary reviewing a rate filing with respect to the issue of approval or disapproval of the rate filing or with respect to rate indications that the office would consider acceptable. (2) WEBSITE FOR PUBLIC ACCESS TO RATE FILING INFORMATION. — (a) With respect to any residential property rate filing, the office shall provide the following information on a publicly accessible Internet website: 1. The overall rate change requested by the insurer. 2. The rate change approved by the office along with all of the actuary’s assumptions and recommendations forming the basis of the office’s decision. 3. Certification by the office’s actuary that, based on the actuary’s knowledge, his or her recommendations are consistent with accepted actuarial principles. (b) For any rate filing, whether or not the filing is subject to a public hearing, the office shall provide on its website a means for any policyholder who may be affected by a proposed rate change to send an e-mail regarding the proposed rate change. Such e-mail must be accessible to the actuary assigned to review the rate filing. History. — s. 22, ch. 2008-66; s. 82, ch. 2009-21; s. 8, ch. 2009-87. 627.0625 Commercial property and casualty risk management plans. (1) For the purposes of this section, the term: (a) “Commercial property insurance” means insurance as defined in s. 624.604, but limited to coverage of commercial risks, excluding windstorm coverage, flood insurance, federal crop insurance, crop hail insurance, the Pollution Liability Insurance Association, and other federal governmental pools and associations. If separate rates and supporting experience data are not filed and justified for windstorm coverage, the insurer shall, using generally accepted actuarial and economic principles and techniques, identify and justify the premiums, losses, reserves, and associated data for the windstorm coverage excluded from commercial property insurance. (b) “Commercial casualty insurance” means insurance as defined in s. 624.605, other than workers’ compensation and employer’s liability insurance, but limited to coverage of commercial risks. (c) “Commercial umbrella liability insurance” means insurance as defined in s. 624.605 but limited to any policy or endorsement which provides coverage in the amount of $300,000 or more in excess of an underlying policy providing $300,000 liability or equivalent limits of insurance, on a specific insured vehicle, location, business operation, or other specific commercial risk. (2) This section shall apply only to commercial property insurance and to commercial casualty insurance as those terms are defined in subsection (1), or any combination thereof. (3) Each insurer or insurer group offering commercial casualty insurance or commercial property insurance covering risks located in this state shall develop and make available to insureds guidelines for risk management plans. The risk management program shall include the following: (a) Safety measures, including, as applicable, the following areas: 1. Pollution and environmental hazards; 2. Disease hazards; 3. Accidental occurrences; 4. Fire hazards and fire prevention and detection; 5. Liability for acts from the course of business; 6. Slip and fall hazards; 7. Product injury; and 8. Hazards unique to a particular class or category of insureds. (b) Training to insureds in safety management techniques. (c) Safety management counseling services. There shall be no civil cause of action against any insurer or its agents or employees for acts or omissions in any way connected with the requirements of this subsection. This shall not limit the authority for the office to enforce the provisions of this subsection. History. — s. 10, ch. 86-160; s. 2, ch. 87-50; s. 2, ch. 88-390; s. 18, ch. 89-167; s. 1, ch. 89-225; s. 114, ch. 92-318; s. 1065, ch. 2003-261. 627.0628 Florida Commission on Hurricane Loss Projection Methodology; public meetings exemption. (1) LEGISLATIVE FINDINGS AND INTENT. — (a) Reliable projections of hurricane losses are necessary in order to assure that rates for residential property insurance meet the statutory requirement that rates be neither excessive nor inadequate. The ability to accurately project hurricane losses has been enhanced greatly in recent years through the use of computer modeling. It is the public policy of this state to encourage the use of the most sophisticated actuarial methods to assure that consumers are charged lawful rates for residential property insurance coverage. (b) The Legislature recognizes the need for expert evaluation of computer models and other recently developed or improved actuarial methodologies for projecting hurricane losses, in order to resolve conflicts among actuarial professionals, and in order to provide both immediate and continuing improvement in the sophistication of actuarial methods used to set rates charged to consumers. (c) It is the intent of the Legislature to create the Florida Commission on Hurricane Loss Projection Methodology as a panel of experts to provide the most actuarially sophisticated guidelines and standards for projection of hurricane losses possible, given the current state of actuarial science. It is the further intent of the Legislature that such standards and guidelines must be used by the State Board of Administration in developing reimbursement premium rates for the Florida Hurricane Catastrophe Fund, and, subject to paragraph (3)(d), must be used by insurers in rate filings under s. 627.062 unless the way in which such standards and guidelines were applied by the insurer was erroneous, as shown by a preponderance of the evidence. (d) It is the intent of the Legislature that such standards and guidelines be employed as soon as possible, and that they be subject to continuing review thereafter. (e) The Legislature finds that the authority to take final agency action with respect to insurance ratemaking is vested in the Office of Insurance Regulation and the Financial Services Commission, and that the processes, standards, and guidelines of the Florida Commission on Hurricane Loss Projection Methodology do not constitute final agency action or statements of general applicability that implement, interpret, or prescribe law or policy; accordingly, chapter 120 does not apply to the processes, standards, and guidelines of the Florida Commission on Hurricane Loss Projection Methodology. (2) COMMISSION CREATED. — (a) There is created the Florida Commission on Hurricane Loss Projection Methodology, which is assigned to the State Board of Administration. For the purposes of this section, the term “commission” means the Florida Commission on Hurricane Loss Projection Methodology. The commission shall be administratively housed within the State Board of Administration, but it shall independently exercise the powers and duties specified in this section. (b) The commission shall be composed of the following 12 members: 1. The insurance consumer advocate. 2. The senior employee of the State Board of Administration responsible for operations of the Florida Hurricane Catastrophe Fund. 3. The Executive Director of the Citizens Property Insurance Corporation or the executive director’s designee. The executive director’s designee must be a full-time employee of the corporation and have actuarial science experience. 4. The Director of the Division of Emergency Management or the director’s designee. The director’s designee must be a full-time employee of the division. 5. The actuary member of the Florida Hurricane Catastrophe Fund Advisory Council. 6. An employee of the office who is an actuary responsible for property insurance rate filings and who is appointed by the director of the office. 7. Five members appointed by the Chief Financial Officer, as follows: a. An actuary who is employed full time by a property and casualty insurer that was responsible for at least 1 percent of the aggregate statewide direct written premium for homeowner insurance in the calendar year preceding the member’s appointment to the commission. b. An expert in insurance finance who is a full-time member of the faculty of the State University System and who has a background in actuarial science. c. An expert in statistics who is a full-time member of the faculty of the State University System and who has a background in insurance. d. An expert in computer system design who is a full-time member of the faculty of the State University System. e. An expert in meteorology who is a full-time member of the faculty of the State University System and who specializes in hurricanes. 8. A licensed professional structural engineer who is a full-time faculty member in the State University System and who has expertise in wind mitigation techniques. This appointment shall be made by the Governor. (c) Members designated under subparagraphs (b)1.-5. shall serve on the commission as long as they maintain the respective offices designated in subparagraphs (b)1.-5. The member appointed by the director of the office under subparagraph (b)6. shall serve on the commission until the end of the term of office of the director who appointed him or her, unless removed earlier by the director for cause. Members appointed by the Chief Financial Officer under subparagraph (b)7. shall serve on the commission until the end of the term of office of the Chief Financial Officer who appointed them, unless earlier removed by the Chief Financial Officer for cause. Vacancies on the commission shall be filled in the same manner as the original appointment. (d) The State Board of Administration shall annually appoint one of the members of the commission to serve as chair. (e) Members of the commission shall serve without compensation, but shall be reimbursed for per diem and travel expenses pursuant to s. 112.061. (f) The State Board of Administration shall, as a cost of administration of the Florida Hurricane Catastrophe Fund, provide for travel, expenses, and staff support for the commission. (g) There shall be no liability on the part of, and no cause of action of any nature shall arise against, any member of the commission, any member of the State Board of Administration, or any employee of the State Board of Administration for any action taken in the performance of their duties under this section. In addition, the commission may, in writing, waive any potential cause of action for negligence of a consultant, contractor, or contract employee engaged to assist the commission. (3) ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES. — (a) The commission shall consider any actuarial methods, principles, standards, models, or output ranges that have the potential for improving the accuracy of or reliability of the hurricane loss projections used in residential property insurance rate filings and flood loss projections used in rate filings for personal lines residential flood insurance coverage. The commission shall, from time to time, adopt findings as to the accuracy or reliability of particular methods, principles, standards, models, or output ranges. (b) The commission shall consider any actuarial methods, principles, standards, or models that have the potential for improving the accuracy of or reliability of projecting probable maximum loss levels. The commission shall adopt findings as to the accuracy or reliability of particular methods, principles, standards, or models related to probable maximum loss calculations. (c) In establishing reimbursement premiums for the Florida Hurricane Catastrophe Fund, the State Board of Administration must, to the extent feasible, employ actuarial methods, principles, standards, models, or output ranges found by the commission to be accurate or reliable. (d) With respect to a rate filing under s. 627.062, an insurer shall employ and may not modify or adjust actuarial methods, principles, standards, models, or output ranges found by the commission to be accurate or reliable in determining hurricane loss factors and probable maximum loss levels for use in a rate filing under s. 627.062. An insurer may employ a model in a rate filing until 120 days after the expiration of the commission’s acceptance of that model and may not modify or adjust models found by the commission to be accurate or reliable in determining probable maximum loss levels. This paragraph does not prohibit an insurer from using a straight average of model results or output ranges for the purposes of a rate filing for personal lines residential flood insurance coverage under s. 627.062. (e) The commission shall adopt actuarial methods, principles, standards, models, or output ranges for personal lines residential flood loss no later than July 1, 2017. (f) The commission shall revise previously adopted actuarial methods, principles, standards, models, or output ranges every odd-numbered year for hurricane loss projections. The commission shall revise previously adopted actuarial methods, principles, standards, models, or output ranges no less than every 4 years for flood loss projections. (g)1. That portion of a meeting of the commission or of a rate proceeding on an insurer’s rate filing at which a trade secret as defined in s. 688.002, which is used in designing and constructing a hurricane or flood loss model and which is provided pursuant to this section by a private company to the commission, office, or consumer advocate appointed pursuant to s. 627.0613, is discussed is exempt from s. 286.011 and s. 24(b), Art. I of the State Constitution. The closed meeting must be recorded, and no portion of the closed meeting may be off the record. 2. The recording of a closed portion of a meeting is exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution. History. — s. 6, ch. 95-276; s. 6, ch. 96-194; s. 3, ch. 97-55; s. 4, ch. 2000-333; s. 1066, ch. 2003-261; s. 79, ch. 2004-390; s. 4, ch. 2005-111; s. 3, ch. 2005-264; s. 12, ch. 2006-12; s. 145, ch. 2008-4; s. 11, ch. 2008-66; s. 83, ch. 2009-21; s. 10, ch. 2009-70; s. 16, ch. 2009-87; s. 1, ch. 2010-89; s. 431, ch. 2011-142; s. 76, ch. 2012-5; s. 5, ch. 2013-60; s. 2, ch. 2014-80; s. 1, ch. 2014-98; s. 2, ch. 2015-135; s. 1, ch. 2017-142; s. 1, ch. 2019-35; s. 4, ch. 2023-217; s. 17, ch. 2026-52. 627.06281 Public hurricane loss projection model; reporting of data by insurers. (1) Within 30 days after a written request for loss data and associated exposure data by the office or the Florida International University center established to study mitigation, residential property insurers and licensed rating and advisory organizations that compile residential property insurance loss data shall provide loss data and associated exposure data for residential property insurance policies to the office or the Florida International University center established to study mitigation, as directed by the office, for the purposes of developing, maintaining, and updating a public model for hurricane loss projections. The loss data and associated exposure data provided shall be in writing. (2) The public model must be submitted to the Florida Commission on Hurricane Loss Projection Methodology for review under s. 627.0628 by March 1, 2007. The office may continue to use the model for its review of rate filings pursuant to ss. 627.062 and 627.351 until such time as the Florida Commission on Hurricane Loss Projection Methodology determines that the public model is not accurate or reliable pursuant to the same process and standards as the commission uses for the review of other hurricane loss projection models. (3)(a) A residential property insurer may have access to and use the public hurricane loss projection model, including all assumptions and factors and all detailed loss results, for the purpose of calculating rate indications in a rate filing and for analytical purposes, including any analysis or evaluation of the model required under actuarial standards of practice. (b) The fees charged for private sector access and use of the model shall be the reasonable costs associated with the operation and maintenance of the model by the office. Such fees do not apply to access and use of the model by the office. History. — s. 6, ch. 2005-111; s. 13, ch. 2006-12; s. 59, ch. 2007-217; s. 18, ch. 2008-66; s. 13, ch. 2011-39. 627.0629 Residential property insurance; rate filings. (1) It is the intent of the Legislature that insurers provide savings to consumers who install or implement windstorm damage mitigation techniques, alterations, or solutions to their properties to prevent windstorm losses. A rate filing for residential property insurance must include actuarially reasonable discounts, credits, or other rate differentials, or appropriate reductions in deductibles, for properties on which fixtures or construction techniques demonstrated to reduce the amount of loss in a windstorm have been installed or implemented. The fixtures or construction techniques must include, but are not limited to, fixtures or construction techniques that enhance wind uplift prevention, roof strength, roof covering performance, roof-to-wall strength, wall-to-floor-to-foundation strength, opening protection, and window, door, and skylight strength. Credits, discounts, or other rate differentials, or appropriate reductions in deductibles, for fixtures and construction techniques that meet the minimum requirements of the Florida Building Code must be included in the rate filing. The office shall determine the discounts, credits, other rate differentials, and appropriate reductions in deductibles that reflect the full actuarial value of such revaluation, which may be used by insurers in rate filings. Effective October 1, 2023, each insurer subject to the requirements of this section must provide information on the insurer’s website describing the hurricane mitigation discounts available to policyholders. Such information must be accessible on, or through a hyperlink located on, the home page of the insurer’s website or the primary page of the insurer’s website for property insurance policyholders or applicants for such coverage in this state. On or before January 1, 2025, and every 5 years thereafter, the office shall reevaluate and update the fixtures or construction techniques demonstrated to reduce the amount of loss in a windstorm and the discounts, credits, other rate differentials, and appropriate reductions in deductibles that reflect the full actuarial value of such fixtures or construction techniques. The office shall adopt rules and forms necessitated by such reevaluation. (2)(a) A rate filing for residential property insurance made on or before the implementation of paragraph (b) may include rate factors that reflect the manner in which building code enforcement in a particular jurisdiction addresses the risk of wind damage; however, such a rate filing must also provide for variations from such rate factors on an individual basis based on an inspection of a particular structure by a licensed home inspector, which inspection may be at the cost of the insured. (b) A rate filing for residential property insurance made more than 150 days after approval by the office of a building code rating factor plan submitted by a statewide rating organization shall include positive and negative rate factors that reflect the manner in which building code enforcement in a particular jurisdiction addresses risk of wind damage. The rate filing shall include variations from standard rate factors on an individual basis based on inspection of a particular structure by a licensed home inspector. If an inspection is requested by the insured, the insurer may require the insured to pay the reasonable cost of the inspection. This paragraph applies to structures constructed or renovated after the implementation of this paragraph. (c) The premium notice shall specify the amount by which the rate has been adjusted as a result of this subsection and shall also specify the maximum possible positive and negative adjustments that are approved for use by the insurer under this subsection. (3) A rate filing for mobile home owner insurance must include appropriate discounts, credits, or other rate differentials for mobile homes constructed to comply with American Society of Civil Engineers Standard ANSI/ASCE 7-88, adopted by the United States Department of Housing and Urban Development on July 13, 1994, and that also comply with all applicable tie-down requirements provided by state law. (4) The Legislature finds that separate consideration and notice of hurricane insurance premiums will assist consumers by providing greater assurance that hurricane premiums are lawful and by providing more complete information regarding the components of property insurance premiums. A rate filing for residential property insurance shall be separated into two components, rates for hurricane coverage and rates for all other coverages. A premium notice reflecting a rate implemented on the basis of such a filing shall separately indicate the premium for hurricane coverage and the premium for all other coverages. (5) In order to provide an appropriate transition period, an insurer may implement an approved rate filing for residential property insurance over a period of years. Such insurer must provide an informational notice to the office setting out its schedule for implementation of the phased-in rate filing. (6) Any rate filing that is based in whole or part on data from a computer model may not exceed 15 percent unless there is a public hearing. (7) An insurer may implement appropriate discounts or other rate differentials of up to 10 percent of the annual premium to mobile home owners who provide to the insurer evidence of a current inspection of tie-downs for the mobile home, certifying that the tie-downs have been properly installed and are in good condition. (8) A property insurance rate filing that includes any adjustments related to premiums paid to the Florida Hurri