SB 485 - This act defines four types of assessments for chapter 383 assessable malpractice associations: initial assessments, regular assessments, operating assessments, and special assessments. This act also specifies how each of the assessment types shall apply to former and current members of the assessable associations under the articles of association and bylaws of the associations and that a copy of those articles of association and bylaws shall be attached to the policy when issued. Under this act, special assessments made by an association after the fifth anniversary of the termination date of a former member's coverage under the association's policy shall not apply to the former member.
This act subjects the assessable associations to various auditing and financial reporting insurance laws and requires the associations to maintain a policyholder's surplus of at least six hundred thousand dollars. An assessable association licensed as of February 9, 2015, may renew its license, if all other conditions have been met, by maintaining a policyholder's surplus of lower amounts specified in the act over a three year period that increase each year until the six hundred thousand dollar minimum is reached. The act also requires assessable associations to maintain a ratio of premiums written to surplus held not to exceed 3 to 1 without approval of the director. Assessable associations licensed as of February 9, 2015, may renew their licenses with higher ratios over a three year period until the 3 to 1 ratio is reached. Failure to comply with the surplus or premiums written/surplus ratio requirements constitutes grounds for revocation of an association's license. However, any assessable association that cedes reinsurance in compliance with Section 375.426, for the term of all policies written by the association and with an annual cap of not less than 250% of the associations's annual net written premium, shall be exempt from the surplus and premiums written/surplus ratio provisions, if such reinsurance covers the association's per claim risk on such policies in at least the percentages set forth in the act.
This act also repeals a provision of law which currently provides that assessable malpractice association rates shall not be excessive or inadequate, nor shall they be unfairly discriminatory.
Under current law, medical malpractice insurers are prohibited from issuing medical malpractice policies in which the rates are excessive, inadequate, or unfairly discriminatory. A determination of whether a base rate is excessive, inadequate, or unfairly discriminatory is determined by the director. This act requires the director to hold a hearing before making such a finding and that the director must base the decision on competent and substantial evidence on the whole record rather than competent and compelling evidence.
Assessable associations operating under the 383 malpractice association laws prior to August 28, 2015, shall have 180 days following such date to come into compliance with the requirements of the modified provisions and to file their articles of association and bylaws conforming to the modified provisions or the director may suspend the assessable association's certificate of authority or issue a cease and desist order prohibiting the assessable association from writing new business.
This act is substantially similar to SB 886 (2012), SB 440 (2012), and SB 302 (2011).