Florida Regulations 69O-170.0143: Ratemaking and Rate Filing Procedures for Liability Insurance for Medical Malpractice
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(1)(a) This rule shall apply to all medical malpractice insurance rates filed pursuant to Florida Statutes § 627.062,
(b) The information required by this rule shall be included as a required component of the filing made pursuant to subsection 69O-170.013(3), F.A.C.
(c) For purposes of this rule, reference to liability insurance for medical malpractice shall include insurance on the following types of risks:
1. Hospitals licensed under Florida Statutes Chapter 395;
2. Physicians licensed under Florida Statutes Chapter 458;
3. Osteopathic physicians licensed under Florida Statutes Chapter 459;
4. Podiatric physicians licensed under Florida Statutes Chapter 461;
5. Dentists licensed under Florida Statutes Chapter 466;
6. Chiropractic physicians licensed under Florida Statutes Chapter 460;
7. Naturopaths licensed under Florida Statutes Chapter 462;
8. Nurses licensed under Florida Statutes Chapter 464;
9. Midwives licensed under Florida Statutes Chapter 467;
10 Clinical laboratories registered under Florida Statutes Chapter 483;
11. Physician assistants licensed under Florida Statutes Chapter 458, or 459, F.S.;
12. Physical therapists and physical therapist assistants licensed under Florida Statutes Chapter 486;
13. Health maintenance organizations certificated under Part I of Florida Statutes Chapter 641;
14. Ambulatory surgical centers licensed under Florida Statutes Chapter 395;
15 Other medical facilities as defined in Section 627.351(4)(h)2., F.S.;
16. Individuals or facilities licensed under Florida Statutes Chapter 400;
17.a. Blood banks,
b. Plasma centers,
c. Industrial clinics, and
d. Renal dialysis facilities;
18.a. Professional associations,
b. Partnerships,
c. Corporations,
d. Joint ventures, or
e. Other associations for professional activity by health care providers; or
19. Any other liability insurance covering errors or omissions which may result in bodily injury.
(2) All filings shall contain:
(a) Either Form OIR-B1-583 (pages 1 and 2) or Form OIR-B1-595 as adopted in Fl. Admin. Code R. 69O-170.0155, as applicable.
(b)1. A list of each of the insurer’s programs or types of policies within the Medical Malpractice line of business and whether each program or policy type is provided on an occurrence basis, a claim-made basis, or on both bases.
2. A statement by the insurer as to:
a. Whether each program or policy type is subject to the annual rate filing required under Section 627.062(7)(f), F.S.; and
b. Whether that annual rate filing is being made under the current rate filing or has been made under a prior submission.
3. A list of the insurer’s programs or types of policies which are rated based on exposure units expressed in Physician Years.
(c) Adoption of Loss Costs Filed by a Rating Organization. A filing which adopts the prospective loss costs promulgated by a rating organization and approved for use by the Office shall include Form OIR-B1-583 (pages 1 and 2), “”Florida Expense Supplement Calculation of Insurer Loss Cost Multiplier”” as adopted in Fl. Admin. Code R. 69O-170.0155
(d) Rate Filings not involving the adoption of Loss Costs. Insurers shall provide the following:
1. Ratemaking Methodology:
a. The actuarial memorandum and the supporting exhibits define a standard ratemaking methodology. The proposed rates and/or rate changes should be the result of the ratemaking methodology operating on the insurer’s data.
b. An insurer shall establish a standard ratemaking methodology and utilize it consistently over time. However, an insurer may elect to change its standard ratemaking methodology. If an insurer does so, it shall thoroughly document the reasons for the change.
2. Judgment: An insurer may employ its judgment and elect to depart from its ratemaking methodology. If an insurer does so, it shall thoroughly document the reasons for the departure from its standard ratemaking methodology.
3. Loss Data:
a. Programs or policy types written on an occurrence basis shall present the following loss data on an accident year basis:
(I) Direct losses paid to date on reported claims;
(II) Case basis estimates of unpaid direct losses on reported claims;
(III) The total number of reported claims.
b. Programs or policy types written on a claims-made basis shall present the following loss data on a report year basis:
(I) Direct losses paid to date on reported claims.
(II) Case basis estimates of unpaid direct losses on reported claims.
(III) The total number of reported claims.
4. Allocated Loss Adjustment Expense Data: An insurer may, at its option:
a. Include direct paid and unpaid allocated loss adjustment expenses with direct paid and unpaid losses and indicate that the data includes both direct losses and direct allocated loss adjustment expenses; or
b. Present direct paid and unpaid allocated loss adjustment expenses separately from direct paid and unpaid losses.
5. Actuarial Adjustments to Losses and Allocated Loss Adjustment Expenses. Filings shall consider the following adjustments to losses and allocated loss adjustment expenses:
a. Loss Development;
b. Adjustment for known changes in claim costs and claim frequency;
c. Adjustment for anticipated future changes in claim costs and/or claim frequency;
d. Unallocated Loss Adjustment Expenses.
6. Premium and Exposure Data:
a. Filings which utilize a Loss Ratio approach to ratemaking shall provide collected direct written premium and collected direct earned premium;
b. Filings which utilize a Pure Premium approach to ratemaking shall provide direct earned exposure measured in Physician Years;
c. An insurer may also utilize other direct earned exposure units the insurer believes will support its proposed rate change.
7. Actuarial Adjustments to Premium and Exposure Data
a. Filings based on a Loss Ratio approach shall clearly demonstrate:
(I) How collected premium has been adjusted to the current rate level.
(II) That the losses utilized in the filing were generated by the earned premium considered in the filing.
b. Filings based on a Pure Premium approach shall clearly demonstrate:
(I) That base-equivalent exposures, if utilized, have been determined using the current rating plan.
(II) That the losses utilized in the filing were generated by the earned exposure utilized in the filing.
8. Expense (other than loss adjustment expenses) Data:
a. A rate filing, other than the adoption of loss costs, shall include Form OIR-B1-595, “”Florida Expense Supplement for Independent Rate Filings”” as adopted in Fl. Admin. Code R. 69O-170.0155
b. All expense data shall be presented on a direct basis:
(I) Commission/Brokerage expense ratios, Premium Tax ratios, and Other Tax ratios shall be determined as ratios to direct written premium.
(II) General Expense ratios and Other Acquisition Expense ratios shall be determined as ratios to direct earned premium.
9. Credibility: The filing shall contain a thorough explanation of how the concept of credibility, including the use of accident-year weights or report-year weights, has been incorporated into the filing.
(e)1. In addition to the direct ratemaking approach in subsection (5), an insurer may elect to include the costs of reinsurance in a rate filing.
2. Where the insurer elects to do so, the cost of reinsurance shall consider:
a. All reinsurance contracts related to the subject matter of the filing;
b. The amount to be paid to the reinsurer;
c. Ceding commissions to be paid to the insurer by the reinsurer;
d. Expected reinsurance recoveries; and
e. Other relevant information specifically relating to cost such as a retrospective profit sharing agreement between the insurer and the reinsurer.
(f) Actuarial Documentation Required.
1. The actuarial memorandum contained in the filing shall describe in detail how the proposed rates have been derived from the experience presented.
2. The filing shall also contain actuarial exhibits that provide the details of all the calculations involved. The exhibits shall provide adequate documentation and footnotes to facilitate a thorough review of the calculations by the Office.
Rulemaking Authority Florida Statutes § 624.308(1). Law Implemented 624.307, 627.062, 624.604, 624.605 FS. History-New 9-5-07.
(b) The information required by this rule shall be included as a required component of the filing made pursuant to subsection 69O-170.013(3), F.A.C.
(c) For purposes of this rule, reference to liability insurance for medical malpractice shall include insurance on the following types of risks:
1. Hospitals licensed under Florida Statutes Chapter 395;
2. Physicians licensed under Florida Statutes Chapter 458;
3. Osteopathic physicians licensed under Florida Statutes Chapter 459;
4. Podiatric physicians licensed under Florida Statutes Chapter 461;
5. Dentists licensed under Florida Statutes Chapter 466;
6. Chiropractic physicians licensed under Florida Statutes Chapter 460;
7. Naturopaths licensed under Florida Statutes Chapter 462;
8. Nurses licensed under Florida Statutes Chapter 464;
9. Midwives licensed under Florida Statutes Chapter 467;
10 Clinical laboratories registered under Florida Statutes Chapter 483;
11. Physician assistants licensed under Florida Statutes Chapter 458, or 459, F.S.;
12. Physical therapists and physical therapist assistants licensed under Florida Statutes Chapter 486;
13. Health maintenance organizations certificated under Part I of Florida Statutes Chapter 641;
14. Ambulatory surgical centers licensed under Florida Statutes Chapter 395;
15 Other medical facilities as defined in Section 627.351(4)(h)2., F.S.;
16. Individuals or facilities licensed under Florida Statutes Chapter 400;
17.a. Blood banks,
b. Plasma centers,
c. Industrial clinics, and
d. Renal dialysis facilities;
18.a. Professional associations,
b. Partnerships,
c. Corporations,
d. Joint ventures, or
e. Other associations for professional activity by health care providers; or
19. Any other liability insurance covering errors or omissions which may result in bodily injury.
(2) All filings shall contain:
(a) Either Form OIR-B1-583 (pages 1 and 2) or Form OIR-B1-595 as adopted in Fl. Admin. Code R. 69O-170.0155, as applicable.
(b)1. A list of each of the insurer’s programs or types of policies within the Medical Malpractice line of business and whether each program or policy type is provided on an occurrence basis, a claim-made basis, or on both bases.
2. A statement by the insurer as to:
a. Whether each program or policy type is subject to the annual rate filing required under Section 627.062(7)(f), F.S.; and
b. Whether that annual rate filing is being made under the current rate filing or has been made under a prior submission.
3. A list of the insurer’s programs or types of policies which are rated based on exposure units expressed in Physician Years.
(c) Adoption of Loss Costs Filed by a Rating Organization. A filing which adopts the prospective loss costs promulgated by a rating organization and approved for use by the Office shall include Form OIR-B1-583 (pages 1 and 2), “”Florida Expense Supplement Calculation of Insurer Loss Cost Multiplier”” as adopted in Fl. Admin. Code R. 69O-170.0155
(d) Rate Filings not involving the adoption of Loss Costs. Insurers shall provide the following:
1. Ratemaking Methodology:
a. The actuarial memorandum and the supporting exhibits define a standard ratemaking methodology. The proposed rates and/or rate changes should be the result of the ratemaking methodology operating on the insurer’s data.
b. An insurer shall establish a standard ratemaking methodology and utilize it consistently over time. However, an insurer may elect to change its standard ratemaking methodology. If an insurer does so, it shall thoroughly document the reasons for the change.
2. Judgment: An insurer may employ its judgment and elect to depart from its ratemaking methodology. If an insurer does so, it shall thoroughly document the reasons for the departure from its standard ratemaking methodology.
3. Loss Data:
a. Programs or policy types written on an occurrence basis shall present the following loss data on an accident year basis:
(I) Direct losses paid to date on reported claims;
(II) Case basis estimates of unpaid direct losses on reported claims;
(III) The total number of reported claims.
b. Programs or policy types written on a claims-made basis shall present the following loss data on a report year basis:
(I) Direct losses paid to date on reported claims.
(II) Case basis estimates of unpaid direct losses on reported claims.
(III) The total number of reported claims.
4. Allocated Loss Adjustment Expense Data: An insurer may, at its option:
a. Include direct paid and unpaid allocated loss adjustment expenses with direct paid and unpaid losses and indicate that the data includes both direct losses and direct allocated loss adjustment expenses; or
b. Present direct paid and unpaid allocated loss adjustment expenses separately from direct paid and unpaid losses.
5. Actuarial Adjustments to Losses and Allocated Loss Adjustment Expenses. Filings shall consider the following adjustments to losses and allocated loss adjustment expenses:
a. Loss Development;
b. Adjustment for known changes in claim costs and claim frequency;
c. Adjustment for anticipated future changes in claim costs and/or claim frequency;
d. Unallocated Loss Adjustment Expenses.
6. Premium and Exposure Data:
a. Filings which utilize a Loss Ratio approach to ratemaking shall provide collected direct written premium and collected direct earned premium;
b. Filings which utilize a Pure Premium approach to ratemaking shall provide direct earned exposure measured in Physician Years;
c. An insurer may also utilize other direct earned exposure units the insurer believes will support its proposed rate change.
7. Actuarial Adjustments to Premium and Exposure Data
a. Filings based on a Loss Ratio approach shall clearly demonstrate:
(I) How collected premium has been adjusted to the current rate level.
(II) That the losses utilized in the filing were generated by the earned premium considered in the filing.
b. Filings based on a Pure Premium approach shall clearly demonstrate:
(I) That base-equivalent exposures, if utilized, have been determined using the current rating plan.
(II) That the losses utilized in the filing were generated by the earned exposure utilized in the filing.
8. Expense (other than loss adjustment expenses) Data:
a. A rate filing, other than the adoption of loss costs, shall include Form OIR-B1-595, “”Florida Expense Supplement for Independent Rate Filings”” as adopted in Fl. Admin. Code R. 69O-170.0155
b. All expense data shall be presented on a direct basis:
(I) Commission/Brokerage expense ratios, Premium Tax ratios, and Other Tax ratios shall be determined as ratios to direct written premium.
(II) General Expense ratios and Other Acquisition Expense ratios shall be determined as ratios to direct earned premium.
9. Credibility: The filing shall contain a thorough explanation of how the concept of credibility, including the use of accident-year weights or report-year weights, has been incorporated into the filing.
(e)1. In addition to the direct ratemaking approach in subsection (5), an insurer may elect to include the costs of reinsurance in a rate filing.
2. Where the insurer elects to do so, the cost of reinsurance shall consider:
a. All reinsurance contracts related to the subject matter of the filing;
b. The amount to be paid to the reinsurer;
c. Ceding commissions to be paid to the insurer by the reinsurer;
d. Expected reinsurance recoveries; and
e. Other relevant information specifically relating to cost such as a retrospective profit sharing agreement between the insurer and the reinsurer.
(f) Actuarial Documentation Required.
1. The actuarial memorandum contained in the filing shall describe in detail how the proposed rates have been derived from the experience presented.
2. The filing shall also contain actuarial exhibits that provide the details of all the calculations involved. The exhibits shall provide adequate documentation and footnotes to facilitate a thorough review of the calculations by the Office.
Rulemaking Authority Florida Statutes § 624.308(1). Law Implemented 624.307, 627.062, 624.604, 624.605 FS. History-New 9-5-07.