CS/CS/HB 1227

1	A bill to be entitled
2	An act relating to surplus lines insurance; amending s.
3	626.931, F.S.; requiring a surplus lines agent to file
4	quarterly on or before a specified time an affidavit
5	stating that all surplus lines insurance transacted during
6	the preceding quarter has been submitted to the Florida
7	Surplus Lines Service Office; amending s. 626.932, F.S.;
8	requiring the premium tax due on a surplus lines policy to
9	be computed on the gross premium under certain
10	circumstances; providing a limit on the tax; amending s.
11	626.9325, F.S.; revising payment dates for the service
12	fee; requiring the service fee on a surplus lines policy
13	to be computed on the gross premium under certain
14	circumstances; creating s. 626.9362, F.S.; authorizing the
15	Department of Financial Services and the Office of
16	Insurance Regulation to enter into a specified type of
17	agreement with other states pursuant to federal law for
18	the collection and allocation of certain nonadmitted
19	insurance taxes; providing terms that may be included in
20	the agreement; requiring the Florida Surplus Lines Service
21	Office to implement an agreement entered into by the
22	department and the Office of Insurance Regulation;
23	authorizing the department to adopt rules; providing for
24	application; requiring the Department of Financial
25	Services to submit an initial report to the Legislature by
26	a specified date if an agreement has been entered into
27	before that date; repealing this section effective on that
28	specified date, if no agreement has been entered into
29	before that date; repealing this section effective on a
30	specified date if the Legislature has not ratified any
31	agreement before that date; requiring annual reports;
32	providing requirements relating to the initial and each
33	subsequent annual report; amending s. 626.938, F.S.;
34	requiring certain insureds or self-insurers engaging in
35	specified insurance transactions with a foreign or alien
36	insurer to compute the premium tax and service fees based
37	on the gross premium under certain circumstances;
38	providing a limit on the tax; requiring such insureds or
39	self-insurers to pay the applicable premium tax to the
40	department and the service fee to the Florida Surplus
41	Lines Service Office on or before a specified time;
42	providing an effective date.
43
44	WHEREAS, the 111th Congress passed the Nonadmitted and
45	Reinsurance Reform Act of 2010 (NRRA), and
46	WHEREAS, the NRRA provides that no state other than the
47	home state of an insured may require any premium tax payment for
48	nonadmitted insurance and defines "home state" as the state in
49	which an insured maintains its principal place of business [15
50	U.S.C. s. 8206], and
51	WHEREAS, as a result of the NRRA, premium tax payments that
52	would otherwise be paid to Florida will be paid to other states,
53	and
54	WHEREAS, the NRRA allows states to enter into a compact or
55	otherwise establish procedures to allocate among the states the
56	premium taxes paid to an insured's home state, and
57	WHEREAS, the National Association of Insurance
58	Commissioners has adopted an agreement for states to use for
59	that purpose, NOW, THEREFORE,
60
61	Be It Enacted by the Legislature of the State of Florida:
62
63	Section 1.  Subsection (1) of section 626.931, Florida
64	Statutes, is amended to read:
65	626.931  Agent affidavit and insurer reporting
66	requirements.-
67	(1)  Each surplus lines agent shall on or before the 45th
68	day the end of the month next following each calendar quarter
69	file with the Florida Surplus Lines Service Office an affidavit,
70	on forms as prescribed and furnished by the Florida Surplus
71	Lines Service Office, stating that all surplus lines insurance
72	transacted by him or her during such calendar quarter has been
73	submitted to the Florida Surplus Lines Service Office as
74	required.
75	Section 2.  Subsection (3) of section 626.932, Florida
76	Statutes, is amended to read:
77	626.932  Surplus lines tax.-
78	(3)  If a surplus lines policy covers risks or exposures
79	only partially in this state and the state is the home state as
80	defined in the federal Nonadmitted and Reinsurance Reform Act of
81	2010 (NRRA), the tax payable shall be computed on the gross
82	portion of the premium which is properly allocable to the risks
83	or exposures located in this state. The tax must not exceed the
84	tax rate where the risk or exposure is located.
85	Section 3.  Subsections (2) and (3) of section 626.9325,
86	Florida Statutes, are amended to read:
87	626.9325  Service fee.-
88	(2)(a)  The surplus lines agent shall pay on or before the
89	45th day following each calendar quarter monthly to the Florida
90	Surplus Lines Service Office the fees related to all policies
91	reported during the previous calendar quarter month in
92	accordance with the plan of operation of the Florida Surplus
93	Lines Service Office.
94	(b)  The agent shall pay interest on the amount of any
95	delinquent fees due, at the rate of 9 percent per year,
96	compounded annually, beginning the day the amount becomes
97	delinquent.
98	(3)  If a surplus lines policy covers risks or exposures
99	only partially in this state and the state is the home state as
100	defined in the federal Nonadmitted and Reinsurance Reform Act of
101	2010 (NRRA), the fee payable shall be computed on the gross
102	portion of the premium which is properly allocable to the risks
103	or exposures located in this state.
104	Section 4.  Section 626.9362, Florida Statutes, is created
105	to read:
106	626.9362  Cooperative reciprocal agreement authorized for
107	collection and allocation of certain nonadmitted insurance
108	taxes.-
109	(1)  AUTHORIZATION OF AGREEMENTS.-The Department of
110	Financial Services and the Office of Insurance Regulation may
111	enter into a cooperative reciprocal agreement with another state
112	or group of states for the purpose of, but not limited to, the
113	collection and allocation of nonadmitted insurance taxes for
114	multistate risks pursuant to the federal Nonadmitted and
115	Reinsurance Reform Act of 2010 (NRRA) which was incorporated
116	into the Dodd-Frank Wall Street Reform and Consumer Protection
117	Act, Pub. L. No. 111-203, July 21, 2010.
118	(2)  AGREEMENT TERMS.-The terms of the agreement may
119	include, but are not limited to, the following:
120	(a)  Creating a clearinghouse for the purpose of
121	facilitating the receipt and disbursement of nonadmitted
122	insurance taxes.
123	(b)  Specifying requirements and time periods for
124	reporting.
125	(c)  Determining methods for the collection and forwarding
126	of nonadmitted insurance taxes to another state.
127	(d)  Specifying a premium tax allocation formula for
128	multistate risk nonadmitted insurance.
129	(e)  Providing for audits and the exchange of information.
130	(f)  Facilitating the administration of the cooperative
131	reciprocal agreement in a reasonable manner.
132	(g)  Providing for the collection of a service fee to fund
133	the operations and activities of the clearinghouse which shall
134	not exceed 0.3 percent of the gross premium on transactions
135	processed by the clearinghouse. The fee on gross premium
136	allocated to this state shall be taken from the premium taxes on
137	such premium and shall not be added to the premium taxes.
138	(h)  Providing for withdrawal of a participating state from
139	the agreement, without penalty, if the withdrawing state first
140	provides 60 days' written notice to all participating states.
141	(3)  AGREEMENT IMPLEMENTATION; TAX COLLECTION.-The Florida
142	Surplus Lines Service Office must implement any such agreement
143	entered into by the Department Of Financial Services and the
144	Office of Insurance Regulation under this section and has the
145	authority to collect the total tax imposed on a multistate risk
146	nonadmitted insurance premium under such agreement.
147	(4)  RULES.-The department may adopt rules for the
148	administration and enforcement of such agreement entered into
149	with another state or group of states under this section.
150	(5)  Notwithstanding any other provision of law to the
151	contrary, this section and any cooperative reciprocal agreement
152	entered into with another state or group of states under this
153	section control the collection and allocation of nonadmitted
154	insurance taxes for multistate risks.
155	(6)  INITIAL REPORT.-Following the negotiation and
156	execution of any cooperative reciprocal agreement entered into
157	by the Department of Financial Services and the Office of
158	Insurance Regulation with another state or group of states, the
159	department is directed to prepare and submit a report to the
160	President of the Senate and the Speaker of the House of
161	Representatives by January 1, 2012. In addition to describing in
162	detail the terms of any agreement entered into with another
163	state or group of states pursuant to this section, the report
164	shall include, but is not limited to, the following:
165	(a)  The actual and projected collections and allocation of
166	nonadmitted insurance premium taxes for multistate risk of each
167	state participating in the agreement;
168	(b)  A detailed description of the administrative structure
169	supporting any agreement, including any clearinghouse created by
170	an agreement and the fees charged to support administration of
171	the agreement;
172	(c)  The insurance tax rates of any state participating in
173	the agreement; and
174	(d)  The status of any other cooperative reciprocal
175	agreements established throughout the country, including a
176	state-by-state listing of passed or pending legislation
177	responding to changes made by the federal Nonadmitted and
178	Reinsurance Reform Act of 2010.
179	(7)  CONDITIONAL REPEAL.-This section is repealed effective
180	January 1, 2012, if before that date the Department of Financial
181	Services and the Office of Insurance Regulation have not entered
182	into any cooperative reciprocal agreement pursuant to this
183	section.
184	(8)  RATIFICATION; CONDITIONAL REPEAL.-This section is
185	repealed effective June 30, 2012, if any cooperative reciprocal
186	agreement entered into by the Department of Financial Services
187	and the Office of Insurance Regulation pursuant to this section
188	before January 1, 2012, is not ratified before June 30, 2012, by
189	both houses of the Legislature by a majority vote in each house
190	of those members present and voting. If the Legislature does not
191	ratify the agreement, the Chief Financial Officer and the Office
192	of Insurance Regulation shall withdraw from the agreement,
193	pursuant to any notice provisions required by the agreement.
194	(9)  ANNUAL REPORT.-Beginning in 2013, the Department of
195	Financial Services, in cooperation with the Office of Insurance
196	Regulation and the Florida Surplus Lines Office, shall by
197	January 1 of each year submit a report to the Governor, the
198	President of the Senate, and the Speaker of the House of
199	Representatives regarding any cooperative reciprocal agreement
200	entered into with another state or group of states under this
201	section. Each annual report shall include, but is not limited
202	to, actual and projected collections and allocation of
203	nonadmitted insurance premium taxes for multistate risk of each
204	state participating in the agreement; administrative costs and
205	fees of the agreement; the insurance tax rates of any state
206	participating in the agreement; the status of any other
207	cooperative reciprocal agreements established throughout the
208	country, including a state-by-state listing of passed or pending
209	legislation responding to changes made by the federal
210	Nonadmitted and Reinsurance Reform Act of 2010; and a detailed
211	discussion of any changes or proposed changes in the provisions
212	of the agreement or the rules under which the agreement
213	operates.
214	Section 5.  Subsection (3) of section 626.938, Florida
215	Statutes, is amended to read:
216	626.938  Report and tax of independently procured
217	coverages.-
218	(3)  For the general support of the government of this
219	state, there is levied upon the obligation, chose in action, or
220	right represented by the premium charged for such insurance a
221	tax at the rate of 5 percent of the gross amount of such premium
222	and a 0.3 percent service fee pursuant to s. 626.9325. If the
223	policy covers risks or exposures only partially in this state
224	and this state is the home state as defined by the federal
225	Nonadmitted and Reinsurance Reform Act of 2010 (NRRA), the tax
226	and service fee payable shall be computed on the gross premium.
227	The tax must not exceed the tax rate where the risk or exposure
228	is located. The insured shall withhold the amount of the tax and
229	service fee from the amount of premium charged by and otherwise
230	payable to the insurer for such insurance. On or before the 45th
231	day following each calendar quarter Within 30 days after the
232	insurance is procured, continued, or renewed, and simultaneously
233	with the filing of the report provided for in subsection (1)
234	with the Florida Surplus Lines Service Office, the insured shall
235	make payable to the department the amount of the tax and make
236	payable to the Florida Surplus Lines Service Office the amount
237	of the service fee. The insured shall remit the tax and the
238	service fee to the Florida Surplus Lines Service Office. The
239	Florida Surplus Lines Service Office shall forward to the
240	department the taxes, and any interest collected pursuant to
241	subsection (5), within 10 days after receipt.
242	Section 6.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.