Senate Bill No. 12–Committee on Commerce and Labor

 

Prefiled January 24, 2003

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Referred to  Committee on Commerce and Labor

 

SUMMARY—Makes various changes regarding insurance. (BDR 57‑99)

 

FISCAL NOTE:  Effect on Local Government: No.

                           Effect on the State: No.

 

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to insurance; revising the provisions governing the filing and approval of rates of insurers in a competitive market; authorizing certain insurers in a competitive market to change rates under certain circumstances without prior review by the Commissioner of Insurance; requiring the Commissioner to review and approve certain rates before the rates become effective; providing for the issuance by the Commissioner of orders to discontinue a rate; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1  Section 1. NRS 686B.070 is hereby amended to read as

1-2  follows:

1-3  686B.070  1.  Every authorized insurer and every rate service

1-4  organization licensed under NRS 686B.130 which has been

1-5  designated by any insurer for the filing of rates under subsection 2

1-6  of NRS 686B.090 shall file with the Commissioner all:

1-7  [1.] (a) Rates and proposed increases thereto;

1-8  [2.] (b) Forms of policies to which the rates apply;

1-9  [3.] (c) Supplementary rate information; and

1-10      [4.] (d) Changes and amendments thereof,

1-11  made by it for use in this state.

1-12      2.  Except as otherwise provided in this section and NRS

1-13  686B.110, if a proposed increase or decrease in the rate of any

2-1  kind or line of insurance does not change by more than 7 percent

2-2  the total average premium required to be paid by persons insured

2-3  by the insurer for that particular line or kind of insurance during

2-4  the 12 months immediately preceding the proposed increase or

2-5  decrease, the insurer shall file the information required by

2-6  subsection 1 and the supporting data required to be filed pursuant

2-7  to NRS 686B.100 on or before the date on which the changes are

2-8  to become effective. The provisions of this subsection do not apply

2-9  if the Commissioner has determined that the market is not

2-10  competitive or if the Commissioner has made any of the other

2-11  determinations described in subsection 1 of NRS 686B.110.

2-12      3.  In a competitive market, if the Commissioner determines

2-13  that the rates of an insurer require closer supervision by the

2-14  Commissioner because of the financial condition of the insurer or

2-15  because the insurer has engaged in rating practices which are

2-16  unfairly discriminatory, the Commissioner may require the

2-17  insurer to file the information required by subsection 1 and the

2-18  supporting data required to be filed pursuant to NRS 686B.100 at

2-19  least 60 days before the rates become effective or may subject the

2-20  rates to review pursuant to NRS 686B.110.

2-21      4.  The Commissioner shall review filings made pursuant to

2-22  this section as soon as practicable to:

2-23      (a) Ensure the sufficiency of the financial condition of the

2-24  insurer; and

2-25      (b) Determine whether the insurer has engaged in rating

2-26  practices which are unfairly discriminatory.

2-27      5.  Rates for title insurance, surety insurance and liability

2-28  insurance for medical malpractice must be approved by the

2-29  Commissioner pursuant to NRS 686B.110 before the insurer may

2-30  use the rates.

2-31      Sec. 2.  NRS 686B.110 is hereby amended to read as follows:

2-32      686B.110  1.  [The] If the Commissioner has determined

2-33  that:

2-34      (a) The market is not competitive;

2-35      (b) Pursuant to NRS 686B.180, essential insurance coverage is

2-36  not readily available in a voluntary market;

2-37      (c) Pursuant to NRS 686B.070, the rates of the insurer require

2-38  closer supervision and that the rates are subject to review pursuant

2-39  to this section;

2-40      (d) A proposed increase or decrease in the rate of any kind or

2-41  line of insurance changes by more than 7 percent the total average

2-42  premium required to be paid by persons insured by the insurer for

2-43  that particular line or kind of insurance during the 12 months

2-44  immediately preceding the proposed increase or decrease; or

3-1  (e) The rate is for title insurance, surety insurance or liability

3-2  insurance for medical malpractice,

3-3  the Commissioner shall consider each proposed increase or decrease

3-4  in the rate of any kind or line of insurance or subdivision thereof

3-5  filed with him pursuant to NRS 686B.070. If the Commissioner

3-6  finds that a proposed increase will result in a rate which is not in

3-7  compliance with NRS 686B.050, he shall disapprove the proposal.

3-8  The Commissioner shall approve or disapprove each proposal [no]

3-9  not later than 60 days after it is determined by him to be complete

3-10  pursuant to subsection 4. If the Commissioner fails to approve or

3-11  disapprove the proposal within that period, the proposal shall be

3-12  deemed approved.

3-13      2.  Whenever an insurer has no legally effective rates as a result

3-14  of the Commissioner’s disapproval of rates or other act, the

3-15  Commissioner shall on request specify interim rates for the insurer

3-16  that are high enough to protect the interests of all parties and may

3-17  order that a specified portion of the premiums be placed in an

3-18  escrow account approved by him. When new rates become legally

3-19  effective, the Commissioner shall order the escrowed [funds] money

3-20  or any overcharge in the interim rates to be distributed

3-21  appropriately, except that refunds to policyholders that are de

3-22  minimis must not be required.

3-23      3.  If the Commissioner disapproves a proposed rate and an

3-24  insurer requests a hearing to determine the validity of his action, the

3-25  insurer has the burden of showing compliance with the applicable

3-26  standards for rates established in NRS 686B.010 to 686B.1799,

3-27  inclusive. Any such hearing must be held:

3-28      (a) Within 30 days after the request for a hearing has been

3-29  submitted to the Commissioner; or

3-30      (b) Within a period agreed upon by the insurer and the

3-31  Commissioner.

3-32  If the hearing is not held within the period specified in paragraph (a)

3-33  or (b), or if the Commissioner fails to issue an order concerning the

3-34  proposed rate for which the hearing is held within 45 days after the

3-35  hearing, the proposed rate shall be deemed approved.

3-36      4.  The Commissioner shall by regulation specify the

3-37  documents or any other information which must be included in a

3-38  proposal to increase or decrease a rate submitted to him pursuant to

3-39  [subsection 1.] NRS 686B.070. Each such proposal shall be deemed

3-40  complete upon its filing with the Commissioner, unless the

3-41  Commissioner, within 15 business days after the proposal is filed

3-42  with him, determines that the proposal is incomplete because the

3-43  proposal does not comply with the regulations adopted by him

3-44  pursuant to this subsection.

4-1  5.  If the Commissioner finds that a rate no longer meets the

4-2  requirements of this chapter, the Commissioner may order the

4-3  discontinuance of the rate. An order for the discontinuance of a

4-4  rate may be issued only after a hearing with at least 10 days’

4-5  notice for all insurers and rate organizations that would be

4-6  affected by such an order. The order must be in writing and

4-7  include, without limitation:

4-8  (a) The grounds pursuant to which the order was issued;

4-9  (b) The date on which the order to discontinue the rate

4-10  becomes effective; and

4-11      (c) The date, within a reasonable time after the date on which

4-12  the order becomes effective, on which the order will expire.

4-13  An order for the discontinuance of a rate does not affect any

4-14  contract or policy made or issued before the date on which the

4-15  order becomes effective.

 

4-16  H