Amendment No. 480.

Senate Amendment to Senate Bill No. 75 (BDR 57-336)

Proposed by: Committee on Commerce and Labor

Amendment Box: Replaces Amendment No. 153.

Resolves Conflicts with: N/A

Amends: Summary: Title: Preamble: Joint Sponsorship:

ASSEMBLY ACTION Initial and Date | SENATE ACTION Initial and Date

Adopted Lost | Adopted Lost

Concurred In Not | Concurred In Not

Receded Not | Receded Not

Amend the bill as a whole by deleting sections 1 through 3 and adding new sections designated sections 1 through 3, following the enacting clause, to read as follows:

"Section 1. NRS 686B.050 is hereby amended to read as follows:

686B.050 1. Rates must not be excessive, inadequate or unfairly discriminatory, nor may an insurer charge any rate which if continued will have or tend to have the effect of destroying competition or creating a monopoly.

2. Competition shall be deemed to exist unless the commissioner specifically finds, after a hearing and a review of the structure, performance and conduct of the insurers in the market that:

(a) There is no reasonable degree of competition among the insurers; and

(b) The interaction among the insurers is not competitive.

A finding by the commissioner pursuant to this subsection that the market is not competitive expires 1 year after the date on which the finding is issued.

3. The commissioner may disapprove rates on the ground that the rates are excessive only if the commissioner determines that there is not a reasonable degree of price competition at the consumer level with respect to the class of business to which they apply [.] and that the rates are likely to produce a long-run profit that is unreasonably high in relation to the riskiness of the class of business, or if the expenses are unreasonably high in relation to the services rendered. In determining whether a reasonable degree of price competition exists, the commissioner shall consider all relevant tests, including:

(a) The number of insurers actively engaged in the class of business and their shares of the market;

(b) The existence of differentials in rates in that class of business;

(c) Whether long-run profitability for insurers generally of the class of business is unreasonably high in relation to its riskiness;

(d) Consumers’ knowledge in regard to the market in question; and

(e) Whether price competition is a result of the market or is artificial.

[If competition does not exist, rates are excessive if they are likely to produce a long-run profit that is unreasonably high in relation to the riskiness of the class of business, or if expenses are unreasonably high in relation to the services rendered.

3.] 4. Rates are inadequate if they are clearly insufficient, together with the income from investments attributable to them, to sustain projected losses and expenses in the class of business to which they apply.

[4.] 5. One rate is unfairly discriminatory in relation to another in the same class if it clearly fails to reflect equitably the differences in expected losses and expenses. Rates are not unfairly discriminatory because different premiums result for policyholders with similar exposure to loss but different expense factors, or similar expense factors but different exposure to loss, so long as the rates reflect the differences with reasonable accuracy. Rates are not unfairly discriminatory if they are averaged broadly among persons insured under a group, franchise or blanket policy.

Sec. 2. NRS 686B.070 is hereby amended to read as follows:

686B.070 1. Every authorized insurer and every rate service organization licensed under NRS 686B.130 which has been designated by any insurer for the filing of rates under subsection 2 of NRS 686B.090 shall file with the commissioner all:

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

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

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

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

made by it for use in this state.

2. Except as otherwise provided in this section and NRS 686B.110, unless the commissioner has determined that the market is not competitive, an insurer shall file the information required by subsection 1 on or before the date on which the changes are to become effective.

3. In a competitive market, if the commissioner determines that rates of an insurer require closer supervision by the commissioner because of the financial condition of the insurer or because the insurer has engaged in rating practices which are unfairly discriminatory, the commissioner may require the insurer to file supporting data pursuant to NRS 686B.100 or subject the rates to review pursuant to NRS 686B.110.

4. The commissioner shall review filings made pursuant to this section as soon as practicable to:

(a) Ensure the sufficiency of the financial condition of the insurer; and

(b) Determine if the insurer has engaged in rating practices which are unfairly discriminatory.

5. Rates for title insurance, surety insurance and liability insurance for medical malpractice must be approved before the insurer may use the rates. If the commissioner does not approve or disapprove a filing involving the rates for such insurance within 60 days after the date of the filing, the rates shall be deemed to be approved.

Sec. 3. NRS 686B.100 is hereby amended to read as follows:

686B.100 1. [By rule, the commissioner may require the filing of supporting data as to any or all kinds or lines of insurance or subdivisions thereof or classes of risks or combinations thereof as he deems necessary for the proper functioning of the process for monitoring and regulating rates.] If the commissioner determines that the market is not competitive, the commissioner shall require an insurer to file supporting data for its rates if the commissioner determines pursuant to NRS 686B.070 that the rates of the insurer require closer supervision.

2. The supporting data must include:

(a) The experience and judgment of the filer, and, to the extent it wishes or the commissioner requires, of other insurers or rate service organizations;

(b) Its interpretation of any statistical data relied upon;

(c) Descriptions of the actuarial and statistical methods employed in setting the rates; and

(d) Any other relevant matters required by the commissioner.

[2.] 3. Whenever a filing of a proposed increase in a rate is not accompanied by such information as the commissioner has required [under subsection 1,] pursuant to this section, he may so inform the insurer and the filing shall be deemed to be made when the information is furnished.".

Amend sec. 4, page 3, by deleting lines 22 and 23 and inserting:

"686B.110 1. [The] If the commissioner has determined that:

(a) Pursuant to NRS 686B.050, the market is not competitive;

(b) Pursuant to NRS 686B.180, essential insurance coverage is not readily available in a voluntary market; or

(c) Pursuant to NRS 686B.070, the rates of the insurer require closer supervision and that the rates are subject to review pursuant to this section,

the commissioner shall consider each proposed increase or decrease in the".

Amend sec. 4, page 3, line 29, by deleting "[4.] 5." and inserting "4.".

Amend sec. 4, page 3, by deleting lines 32 through 40 and inserting:

"2. Whenever an insurer has no legally effective rates as a result of the".

Amend sec. 4, page 4, line 6, by deleting "[3.] 4." and inserting "3.".

Amend sec. 4, page 4, line 18, by deleting "[4.] 5." and inserting "4.".

Amend sec. 4, page 4, between lines 25 and 26, by inserting:

"5. If, in a competitive market, the commissioner finds that a rate no longer meets the requirements of this chapter, the commissioner may order the discontinuance of the rate. An order for the discontinuance of a rate may be issued only after a hearing with at least 10 days’ notice for all insurers and rate organizations that would be affected by such an order. The order must be in writing and include, without limitation:

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

(b) The date on which the order to discontinue the rate becomes effective; and

(c) The date, within a reasonable time after the date on which the order becomes effective, on which the order will expire.

An order for the discontinuance of a rate does not affect any contract or policy made or issued before the date on which the order becomes effective.".

Amend the bill as a whole by deleting sec. 5 and the text of the repealed section.

Amend the title of the bill to read as follows:

"AN ACT relating to insurance; providing that a competitive market exists for certain types of insurance unless the commissioner of insurance specifically finds to the contrary; revising the provisions governing the filing and approval of rates of insurers in a competitive market; authorizing the commissioner to require certain insurers to file additional supporting data; providing for the issuance by the commissioner of orders to discontinue a rate; and providing other matters properly relating thereto.".