‘Open Rating’ Bill Passes Senate 27-9; HB 1171 Ready For Governor’s Approval

HB 1171, which authorizes certain insurers to use a rate in excess of an otherwise-applicable filed rate and prohibits the consideration of certain policies by insurers when making a specified calculation, was passed by the Florida Senate with a vote of 27-9 on third reading today, May 1, 2009. 

The Senate had previously substituted HB 1171 for CS/SB 2036 during second reading yesterday (April 30).  With today’s vote, the bills are now identical and ready to be sent to Florida Governor Charlie Crist for approval.

HB 1171, also known as the “open rating” bill because it contains deregulation provisions for large insurers, also would preserve the Florida Office of Insurance Regulation’s authority to disapprove rates as inadequate, or disapprove a rate filing for using an unlawful rating factor.

The bill would create a new section of Florida law that permits property insurers to offer residential property insurance policies covering the perils of windstorm or hurricane to use a rate in excess of the insurer’s filed rate, if, among other provisions, the following apply:

• The insurer is authorized to write property insurance in Florida;
• The insurer has, at the time of policy issuance or first renewal: (i) a surplus as to policyholders equal or greater than $500 million; (ii) a surplus of $200 million and a ratio of the insurer’s net written premium to surplus that does not exceed two to one; or (iii) a surplus of at least $150 million and a primary purpose of offering insurance as a service or benefit to members of a nonprofit corporation; and
• The insurer does not purchase Temporary Increase in Coverage Limit coverage pursuant to s. 215.555(17), F.S., from the Florida Hurricane Catastrophe Fund.

For additional information on Florida’s legislative process and terminology, click here.

Should you have any questions or comments, please contact Colodny Fass.

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