Florida Regulations 69O-170.019: Individually Rated Risks
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(1) The purpose of this rule is to clarify what types of risks may be individually rated under Florida Statutes § 627.062(3), and the reporting requirements for those individually rated risks.
(2) This rule applies to all lines of property, casualty, and surety insurance except private passenger automobile, homeowners, and workers compensation.
(3) Within the context of this rule:
(a) The term “”individual risk”” shall mean the insurable interests of a single entity, i.e., a natural person, partnership, corporation, or unincorporated association;
(b) The term “”individually rated risk”” shall mean an individual risk for which an insurer provides coverage and which has not been rated in accordance with the insurer’s rates, rating schedules, rating manuals, underwriting rules, and rating plans filed with the Office;
(c) The terms “”refer to company,”” “”(a)-rate,”” and “”a-rate”” shall all mean the act of individually rating a risk by an insurer in a manner not in accordance with the insurer’s rates, rating schedules, rating manuals, underwriting rules, and rating plans filed with the Office; and
(d) The term “”large commercial risk”” shall mean a risk which meets any two or more of the following conditions:
1. Employs at least 500 full-time employees or their equivalent.
2. Generates net revenue of at least $100 million in the latest fiscal year as reported in audited financial statements.
3. Has a net worth of at least $50 million in the latest fiscal year as reported in audited financial statements.
4. Pays annual property/casualty insurance premiums of at least $500,000 in total for the following types of insurance:
a. Commercial property including allied lines,
b. Commercial auto,
c. Commercial general liability.
5. Procures insurance through a certified risk manager who shall have at least one of the following credentials: ARM, CPCU, CRM, FRM, BA or higher degree in risk management, or has at least seven years of experience in risk financing, claims administration, loss prevention, or risk and insurance coverage analysis.
6. Is a public entity with a population in excess of 50,000.
7. Is a nonprofit organization or a public entity with minimum annual budget of $45 million.
(4) For individually rated risks, that are not large commercial risks as defined in paragraph (3)(d) of this rule, an insurer shall:
(a) Maintain documentation which identifies the named insured, the policy number, the annual statement line, the classification of the risk, any special characteristics of the risk, the reasons why the risk is being individually rated, and justification for the individual rate, including any modifications to existing approved policy forms used on the risk; the insurer shall maintain these records for a period of at least five years after the effective date of the policy; and
(b) Complete quarterly reports in accordance with Fl. Admin. Code R. 69O-137.008
(5) The characteristics of a large commercial risk shall be deemed sufficient for it to be eligible for individual risk rating. For large commercial risks which are individually rated, the insurer shall:
(a) Maintain documentation to show that the risk meets the definition of a large commercial risk as defined in paragraph (2)(d) of this rule. This documentation must be maintained for a period of at least five years from the effective date of the policy and is in lieu of the documentation required in paragraph (4)(a) of this rule; and
(b) Complete quarterly reports in accordance with Fl. Admin. Code R. 69O-137.008
(6) The number of employees, net revenue, net worth, annual property/casualty premiums, population, or budget of a group of individual risks shall not be combined for the purposes of meeting the definition of a large commercial risk.
Rulemaking Authority Florida Statutes § 624.308(1). Law Implemented 624.307(1), 624.418(2), 624.4211, 627.062(3) FS. History-New 8-2-00, Formerly 4-170.019.
Terms Used In Florida Regulations 69O-170.019
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
(3) Within the context of this rule:
(a) The term “”individual risk”” shall mean the insurable interests of a single entity, i.e., a natural person, partnership, corporation, or unincorporated association;
(b) The term “”individually rated risk”” shall mean an individual risk for which an insurer provides coverage and which has not been rated in accordance with the insurer’s rates, rating schedules, rating manuals, underwriting rules, and rating plans filed with the Office;
(c) The terms “”refer to company,”” “”(a)-rate,”” and “”a-rate”” shall all mean the act of individually rating a risk by an insurer in a manner not in accordance with the insurer’s rates, rating schedules, rating manuals, underwriting rules, and rating plans filed with the Office; and
(d) The term “”large commercial risk”” shall mean a risk which meets any two or more of the following conditions:
1. Employs at least 500 full-time employees or their equivalent.
2. Generates net revenue of at least $100 million in the latest fiscal year as reported in audited financial statements.
3. Has a net worth of at least $50 million in the latest fiscal year as reported in audited financial statements.
4. Pays annual property/casualty insurance premiums of at least $500,000 in total for the following types of insurance:
a. Commercial property including allied lines,
b. Commercial auto,
c. Commercial general liability.
5. Procures insurance through a certified risk manager who shall have at least one of the following credentials: ARM, CPCU, CRM, FRM, BA or higher degree in risk management, or has at least seven years of experience in risk financing, claims administration, loss prevention, or risk and insurance coverage analysis.
6. Is a public entity with a population in excess of 50,000.
7. Is a nonprofit organization or a public entity with minimum annual budget of $45 million.
(4) For individually rated risks, that are not large commercial risks as defined in paragraph (3)(d) of this rule, an insurer shall:
(a) Maintain documentation which identifies the named insured, the policy number, the annual statement line, the classification of the risk, any special characteristics of the risk, the reasons why the risk is being individually rated, and justification for the individual rate, including any modifications to existing approved policy forms used on the risk; the insurer shall maintain these records for a period of at least five years after the effective date of the policy; and
(b) Complete quarterly reports in accordance with Fl. Admin. Code R. 69O-137.008
(5) The characteristics of a large commercial risk shall be deemed sufficient for it to be eligible for individual risk rating. For large commercial risks which are individually rated, the insurer shall:
(a) Maintain documentation to show that the risk meets the definition of a large commercial risk as defined in paragraph (2)(d) of this rule. This documentation must be maintained for a period of at least five years from the effective date of the policy and is in lieu of the documentation required in paragraph (4)(a) of this rule; and
(b) Complete quarterly reports in accordance with Fl. Admin. Code R. 69O-137.008
(6) The number of employees, net revenue, net worth, annual property/casualty premiums, population, or budget of a group of individual risks shall not be combined for the purposes of meeting the definition of a large commercial risk.
Rulemaking Authority Florida Statutes § 624.308(1). Law Implemented 624.307(1), 624.418(2), 624.4211, 627.062(3) FS. History-New 8-2-00, Formerly 4-170.019.