Florida Senate - 2014 CS for SB 870
By the Committee on Judiciary; and Senator Smith
590-03520-14 2014870c1
1 A bill to be entitled
2 An act relating to insurance; amending s. 624.425,
3 F.S.; providing that the absence of a countersignature
4 does not affect the validity of a policy or contract;
5 amending s. 627.7311, F.S.; providing that a county
6 may enact and enforce ordinances applicable to certain
7 health care clinics; amending s. 627.94072, F.S.;
8 providing an alternative form of a nonforfeiture
9 provision for long-term care insurance; amending s.
10 629.271, F.S.; authorizing reciprocal insurers to
11 return a portion of unassigned funds to their
12 subscribers; amending s. 631.54, F.S.; defining the
13 term “assessment year”; amending s. 631.57, F.S.;
14 revising provisions relating to the levy of
15 assessments on insurers by the Florida Insurance
16 Guaranty Association; specifying the conditions under
17 which such assessments are paid; revising procedures
18 and timeframes for the levying of the assessments;
19 deleting the requirement that insurers file a final
20 accounting report documenting the recoupment; revising
21 an exemption for assessments; amending s. 631.64,
22 F.S.; requiring charges or recoupments to be displayed
23 separately on premium statements to policyholders and
24 prohibiting their inclusion in rates; amending ss.
25 627.727 and 631.55, F.S.; conforming cross-references;
26 providing an effective date.
27
28 Be It Enacted by the Legislature of the State of Florida:
29
30 Section 1. Subsection (1) of section 624.425, Florida
31 Statutes, is amended to read:
32 624.425 Agent countersignature required, property,
33 casualty, surety insurance.—
34 (1) Except as stated in s. 624.426, no authorized property,
35 casualty, or surety insurer shall assume direct liability as to
36 a subject of insurance resident, located, or to be performed in
37 this state unless the policy or contract of insurance is issued
38 by or through, and is countersigned by, an agent who is
39 regularly commissioned and licensed currently as an agent and
40 appointed as an agent for the insurer under this code. However,
41 the absence of a countersignature does not affect the validity
42 of the policy or contract. If two or more authorized insurers
43 issue a single policy of insurance against legal liability for
44 loss or damage to person or property caused by a the nuclear
45 energy hazard, or a single policy insuring against loss or
46 damage to property by radioactive contamination, whether or not
47 also insuring against one or more other perils that may be
48 insured proper to insure against in this state, such policy if
49 otherwise lawful may be countersigned on behalf of all of the
50 insurers by a licensed and appointed agent of the any insurer
51 appearing thereon. The producing agent shall receive on each
52 policy or contract the full and usual commission allowed and
53 paid by the insurer to its agents on business written or
54 transacted by them for the insurer.
55 Section 2. Section 627.7311, Florida Statutes, is amended
56 to read:
57 627.7311 Effect of law on personal injury protection
58 policies.—
59 (1) The provisions and procedures authorized in ss.
60 627.730-627.7405 shall be implemented by insurers offering
61 policies pursuant to the Florida Motor Vehicle No-Fault Law. The
62 Legislature intends that these provisions and procedures have
63 full force and effect regardless of their express inclusion in
64 an insurance policy form, and a specific provision or procedure
65 authorized in ss. 627.730-627.7405 shall control over general
66 provisions in an insurance policy form. An insurer is not
67 required to amend its policy form or to expressly notify
68 providers, claimants, or insureds in order to implement and
69 apply such provisions or procedures.
70 (2) Sections 627.730-627.7405 do not preclude a county from
71 enacting and enforcing an ordinance applicable to health care
72 clinics that receive reimbursement under the Florida Motor
73 Vehicle No-Fault Law.
74 Section 3. Subsection (2) of section 627.94072, Florida
75 Statutes, is amended to read:
76 627.94072 Mandatory offers.—
77 (2) An insurer that offers a long-term care insurance
78 policy, certificate, or rider in this state shall must offer a
79 nonforfeiture protection provision providing reduced paid-up
80 insurance, extended term, shortened benefit period, or any other
81 benefit benefits approved by the office if all or part of a
82 premium is not paid. A nonforfeiture provision may also be
83 offered in the form of a return of premium on the death of the
84 insured, or on the complete surrender or cancellation of the
85 policy or contract. Nonforfeiture benefits and any additional
86 premium for such benefits must be computed in an actuarially
87 sound manner, using a methodology that has been filed with and
88 approved by the office.
89 Section 4. Section 629.271, Florida Statutes, is amended to
90 read:
91 629.271 Distribution of savings.—A reciprocal insurer may
92 from time to time return to its subscribers any unused premiums,
93 savings, or credits accruing to their accounts. Upon the prior
94 written approval of the office, a reciprocal insurer may return
95 to its subscribers a portion of unassigned funds of up to 10
96 percent of surplus with distribution limited to 50 percent of
97 net income from the previous calendar year. Any Such
98 distribution may shall not unfairly discriminate between classes
99 of risks, or policies, or between subscribers, but such
100 distribution may vary as to classes of subscribers based on upon
101 the experience of such classes.
102 Section 5. Subsections (2) through (9) of section 631.54,
103 Florida Statutes, are renumbered as subsections (3) through
104 (10), respectively, and a new subsection (2) is added to that
105 section to read:
106 631.54 Definitions.—As used in this part, the term:
107 (2) “Assessment year” means the 12-month period, which may
108 begin on the first day of any calendar quarter, whether January
109 1, April 1, July 1, or October 1, as specified in an order
110 issued by the office directing insurers to pay an assessment to
111 the association. Upon entry of the order, insurers may begin
112 collecting assessments from policyholders for the assessment
113 year.
114 Section 6. Subsections (3) and (4) of section 631.57,
115 Florida Statutes, are amended to read:
116 631.57 Powers and duties of the association.—
117 (3)(a) To the extent necessary to secure the funds for the
118 respective accounts for the payment of covered claims, to pay
119 the reasonable costs to administer such accounts the same, and
120 to the extent necessary to secure the funds for the account
121 specified in s. 631.55(2)(b) or to retire indebtedness,
122 including, without limitation, the principal, redemption
123 premium, if any, and interest on, and related costs of issuance
124 of, bonds issued under s. 631.695 and the funding of any
125 reserves and other payments required under the bond resolution
126 or trust indenture pursuant to which such bonds have been
127 issued, the office, upon certification of the board of
128 directors, shall levy assessments initially estimated in the
129 proportion that each insurer’s net direct written premiums in
130 this state in the classes protected by the account bears to the
131 total of said net direct written premiums received in this state
132 by all such insurers for the preceding calendar year for the
133 kinds of insurance included within such account. Assessments
134 shall be remitted to and administered by the board of directors
135 in the manner specified by the approved plan and paragraph (f).
136 Each insurer so assessed shall have at least 30 days’ written
137 notice as to the date the initial assessment payment is due and
138 payable. Every assessment shall be made as a uniform percentage
139 applicable to the net direct written premiums of each insurer in
140 the kinds of insurance included within the account in which the
141 assessment is made. The assessments levied against any insurer
142 may shall not exceed in any one year more than 2 percent of that
143 insurer’s net direct written premiums in this state for the
144 kinds of insurance included within such account during the
145 calendar year next preceding the date of such assessments.
146 (b) If sufficient funds from such assessments, together
147 with funds previously raised, are not available in any one year
148 in the respective account to make all the payments or
149 reimbursements then owing to insurers, the funds available shall
150 be prorated and the unpaid portion shall be paid as soon
151 thereafter as funds become available.
152 (c) The Legislature finds and declares that all assessments
153 paid by an insurer or insurer group as a result of a levy by the
154 office, including assessments levied pursuant to paragraph (a)
155 and emergency assessments levied pursuant to paragraph (e),
156 constitute advances of funds from the insurer to the
157 association. An insurer may fully recoup such advances by
158 applying the uniform assessment percentage levied by the office
159 to all a separate recoupment factor to the premium of policies
160 of the same kind or line as were considered by the office in
161 determining the assessment liability of the insurer or insurer
162 group as set forth in paragraph (f).
163 1. Assessments levied under subparagraph (f)1. are paid
164 before policy surcharges are collected and result in a
165 receivable for policy surcharges collected in the future. This
166 amount, to the extent it is likely that it will be realized,
167 meets the definition of an admissible asset as specified in the
168 National Association of Insurance Commissioners’ Statement of
169 Statutory Accounting Principles No. 4. The asset shall be
170 established and recorded separately from the liability
171 regardless of whether it is based on a retrospective or
172 prospective premium-based assessment. If an insurer is unable to
173 fully recoup the amount of the assessment because of a reduction
174 in writings or withdrawal from the market, the amount recorded
175 as an asset shall be reduced to the amount reasonably expected
176 to be recouped.
177 2. Assessments levied under subparagraph (f)2. are paid
178 after policy surcharges are collected so that the recognition of
179 assets is based on actual premium written offset by the
180 obligation to the association.
181 (d) No State funds may not of any kind shall be allocated
182 or paid to the said association or any of its accounts.
183 (e)1.a. In addition to assessments otherwise authorized in
184 paragraph (a), and to the extent necessary to secure the funds
185 for the account specified in s. 631.55(2)(b) for the direct
186 payment of covered claims of insurers rendered insolvent by the
187 effects of a hurricane and to pay the reasonable costs to
188 administer such claims, or to retire indebtedness, including,
189 without limitation, the principal, redemption premium, if any,
190 and interest on, and related costs of issuance of, bonds issued
191 under s. 631.695 and the funding of any reserves and other
192 payments required under the bond resolution or trust indenture
193 pursuant to which such bonds have been issued, the office, upon
194 certification of the board of directors, shall levy emergency
195 assessments upon insurers holding a certificate of authority.
196 The emergency assessments payable under this paragraph by any
197 insurer may shall not exceed in any single year more than 2
198 percent of that insurer’s direct written premiums, net of
199 refunds, in this state during the preceding calendar year for
200 the kinds of insurance within the account specified in s.
201 631.55(2)(b).
202 2.b. Any Emergency assessments authorized under this
203 paragraph shall be levied by the office upon insurers referred
204 to in subparagraph 1. sub-subparagraph a., upon certification as
205 to the need for such assessments by the board of directors. If
206 In the event the board of directors participates in the issuance
207 of bonds in accordance with s. 631.695, emergency assessments
208 shall be levied in each year that bonds issued under s. 631.695
209 and secured by such emergency assessments are outstanding, in
210 such amounts up to such 2 percent 2-percent limit as required in
211 order to provide for the full and timely payment of the
212 principal of, redemption premium, if any, and interest on, and
213 related costs of issuance of, such bonds. The emergency
214 assessments provided for in this paragraph are assigned and
215 pledged to the municipality, county, or legal entity issuing
216 bonds under s. 631.695 for the benefit of the holders of such
217 bonds, in order to enable such municipality, county, or legal
218 entity to provide for the payment of the principal of,
219 redemption premium, if any, and interest on such bonds, the cost
220 of issuance of such bonds, and the funding of any reserves and
221 other payments required under the bond resolution or trust
222 indenture pursuant to which such bonds have been issued, without
223 the necessity of any further action by the association, the
224 office, or any other party. If To the extent bonds are issued
225 under s. 631.695 and the association determines to secure such
226 bonds by a pledge of revenues received from the emergency
227 assessments, such bonds, upon such pledge of revenues, shall be
228 secured by and payable from the proceeds of such emergency
229 assessments, and the proceeds of emergency assessments levied
230 under this paragraph shall be remitted directly to and
231 administered by the trustee or custodian appointed for such
232 bonds.
233 3.c. Emergency assessments used to defease bonds issued
234 under this part paragraph may be payable in a single payment or,
235 at the option of the association, may be payable in 12 monthly
236 installments with the first installment being due and payable at
237 the end of the month after an emergency assessment is levied and
238 subsequent installments being due by not later than the end of
239 each succeeding month.
240 4.d. If emergency assessments are imposed, the report
241 required by s. 631.695(7) must shall include an analysis of the
242 revenues generated from the emergency assessments imposed under
243 this paragraph.
244 5.e. If emergency assessments are imposed, the references
245 in sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to
246 assessments levied under paragraph (a) must shall include
247 emergency assessments imposed under this paragraph.
248 6.2. If the board of directors participates in the issuance
249 of bonds in accordance with s. 631.695, an annual assessment
250 under this paragraph shall continue while the bonds issued with
251 respect to which the assessment was imposed are outstanding,
252 including any bonds the proceeds of which were used to refund
253 bonds issued pursuant to s. 631.695, unless adequate provision
254 has been made for the payment of the bonds in the documents
255 authorizing the issuance of such bonds.
256 7.3. Emergency assessments under this paragraph are not
257 premium and are not subject to the premium tax, to any fees, or
258 to any commissions. An insurer is liable for all emergency
259 assessments that the insurer collects and shall treat the
260 failure of an insured to pay an emergency assessment as a
261 failure to pay the premium. An insurer is not liable for
262 uncollectible emergency assessments.
263 (f) The recoupment factor applied to policies in accordance
264 with paragraph (c) shall be selected by the insurer or insurer
265 group so as to provide for the probable recoupment of both
266 assessments levied pursuant to paragraph (a) and emergency
267 assessments over a period of 12 months, unless the insurer or
268 insurer group, at its option, elects to recoup the assessment
269 over a longer period. The recoupment factor shall apply to all
270 policies of the same kind or line as were considered by the
271 office in determining the assessment liability of the insurer or
272 insurer group issued or renewed during a 12-month period. If the
273 insurer or insurer group does not collect the full amount of the
274 assessment during one 12-month period, the insurer or insurer
275 group may apply recalculated recoupment factors to policies
276 issued or renewed during one or more succeeding 12-month
277 periods. If, at the end of a 12-month period, the insurer or
278 insurer group has collected from the combined kinds or lines of
279 policies subject to assessment more than the total amount of the
280 assessment paid by the insurer or insurer group, the excess
281 amount shall be disbursed as follows:
282 1. The association, office, and insurers remitting
283 assessments pursuant to paragraph (a) or paragraph (e) must
284 comply with the following:
285 a. In the order levying an assessment, the office shall
286 specify the actual percentage amount to be collected uniformly
287 from all the policyholders of insurers subject to the assessment
288 and the date on which the assessment year begins, which may not
289 begin until 90 days after the association board certifies such
290 an assessment.
291 b. Insurers shall make an initial payment to the
292 association before the beginning of the assessment year on or
293 before the date specified in the order of the office.
294 c. Insurers that have written insurance in the calendar
295 year before the year in which the assessment is certified by the
296 board shall make an initial payment based on the net direct
297 written premium amount from the prior calendar year as set forth
298 in the insurers’ annual statements, multiplied by the uniform
299 percentage of premium specified in the order issued by the
300 office. Insurers that have not written insurance in the prior
301 calendar year in any of the lines under the account which are
302 being assessed, but that are writing insurance as of, or after,
303 the date the board certifies the assessment to the office, shall
304 pay an amount based on a good faith estimate of the amount of
305 net direct written premium anticipated to be written in the
306 subject lines of business for the assessment year, multiplied by
307 the uniform percentage of premium specified in the order issued
308 by the office.
309 d. Insurers shall file a reconciliation report with the
310 association within 45 days after the end of the assessment year
311 which indicates the amount of the initial payment to the
312 association before the assessment year, whether such amount was
313 based on net direct written premium contained in a prior
314 calendar year annual statement or a good faith projection, the
315 amount actually collected during the assessment year, and such
316 other information contained on a form adopted by the association
317 and provided to the insurers in advance. If the insurer
318 collected from policyholders more than the amount initially
319 paid, the insurer shall pay the excess amount to the
320 association. If the insurer collected from policyholders an
321 amount which is less than the amount initially paid to the
322 association, the association shall credit the insurer that
323 amount against future assessments. Such payment reconciliation
324 report, and any payment of excess amounts collected from
325 policyholders, shall be completed and remitted to the
326 association within 90 days after the end of the assessment year.
327 The association shall send a final reconciliation report on all
328 insurers to the office within 120 days after each assessment
329 year.
330 e. Insurers remitting reconciliation reports to the
331 association under this paragraph are subject to s.
332 626.9541(1)(e). If the excess amount does not exceed 15 percent
333 of the total assessment paid by the insurer or insurer group,
334 the excess amount shall be remitted to the association within 60
335 days after the end of the 12-month period in which the excess
336 recoupment charges were collected.
337 2. The association may use a monthly installment method
338 instead of the method described in sub-subparagraphs 1.b. and c.
339 or in combination thereof based on the association’s projected
340 cash flow. If the association projects that it has cash on hand
341 for the payment of anticipated claims in the applicable account
342 for at least 6 months, the board may make an estimate of the
343 assessment needed and may recommend to the office the assessment
344 percentage that may be collected as a monthly assessment. The
345 office may, in the order levying the assessment on insurers,
346 specify that the assessment is due and payable monthly as the
347 funds are collected from insureds throughout the assessment
348 year, in which case the assessment shall be a uniform percentage
349 of premium collected during the assessment year and shall be
350 collected from all policyholders with policies in the classes
351 protected by the account. All insurers shall collect the
352 assessment without regard to whether the insurers reported
353 premium in the year preceding the assessment. Insurers are not
354 required to advance funds if the association and the office
355 elect to use the monthly installment option. All funds collected
356 shall be retained by the association for the payment of current
357 or future claims. This subparagraph does not alter the
358 obligation of an insurer to remit assessments levied pursuant to
359 this subsection to the association. If the excess amount exceeds
360 15 percent of the total assessment paid by the insurer or
361 insurer group, the excess amount shall be returned to the
362 insurer’s or insurer group’s current policyholders by refunds or
363 premium credits. The association shall use any remitted excess
364 recoupment amounts to reduce future assessments.
365 (g) Amounts recouped pursuant to this subsection for
366 assessments levied under paragraph (a) due to insolvencies on or
367 after July 1, 2010, are considered premium solely for premium
368 tax purposes and are not subject to fees or commissions.
369 However, insurers shall treat the failure of an insured to pay a
370 recoupment charge as a failure to pay the premium.
371 (h) At least 15 days before applying the recoupment factor
372 to any policies, the insurer or insurer group shall file with
373 the office a statement for informational purposes only setting
374 forth the amount of the recoupment factor and an explanation of
375 how the recoupment factor will be applied. Such statement shall
376 include documentation of the assessment paid by the insurer or
377 insurer group and the arithmetic calculations supporting the
378 recoupment factor. The insurer or insurer group may use the
379 recoupment factor at any time after the expiration of the 15-day
380 period. The insurer or insurer group need submit only one
381 informational statement for all lines of business using the same
382 recoupment factor.
383 (i) No later than 90 days after the insurer or insurer
384 group has completed the recoupment process, the insurer or
385 insurer group shall file with the office, for information
386 purposes only, a final accounting report documenting the
387 recoupment. The report shall provide the amounts of assessments
388 paid by the insurer or insurer group, the amounts and
389 percentages recouped by year from each affected line of
390 business, and the direct written premium subject to recoupment
391 by year. The insurer or insurer group need submit only one
392 report for all lines of business using the same recoupment
393 factor.
394 (h) Assessments levied under this subsection are levied
395 upon insurers. This subsection does not create a cause of action
396 by a policyholder with respect to the levying of, or a
397 policyholder’s duty to pay, such assessments.
398 (4) The office department may exempt or temporarily defer
399 any insurer from any regular or emergency assessment if the
400 office finds that the insurer is impaired or insolvent or if an
401 assessment would result in such insurer’s financial statement
402 reflecting an amount of capital or surplus less than the sum of
403 the minimum amount required by any jurisdiction in which the
404 insurer is authorized to transact insurance.
405 Section 7. Section 631.64, Florida Statutes, is amended to
406 read:
407 631.64 Recognition of assessments in rates.—Charges or
408 recoupments shall be separately displayed on premium statements
409 to enable policyholders to determine the amount charged for
410 association assessments but may not be included in rates filed
411 and approved by the office. The rates and premiums charged for
412 insurance policies to which this part applies may include
413 amounts sufficient to recoup a sum equal to the amounts paid to
414 the association by the member insurer less any amounts returned
415 to the member insurer by the association, and such rates shall
416 not be deemed excessive because they contain an amount
417 reasonably calculated to recoup assessments paid by the member
418 insurer.
419 Section 8. Subsection (5) of section 627.727, Florida
420 Statutes, is amended to read:
421 627.727 Motor vehicle insurance; uninsured and underinsured
422 vehicle coverage; insolvent insurer protection.—
423 (5) Any person having a claim against an insolvent insurer
424 as defined in s. 631.54(6) under the provisions of this section
425 shall present such claim for payment to the Florida Insurance
426 Guaranty Association only. In the event of a payment to a any
427 person in settlement of a claim arising under the provisions of
428 this section, the association is not subrogated or entitled to
429 any recovery against the claimant’s insurer. The association,
430 however, has the rights of recovery as set forth in chapter 631
431 in the proceeds recoverable from the assets of the insolvent
432 insurer.
433 Section 9. Subsection (1) of section 631.55, Florida
434 Statutes, is amended to read:
435 631.55 Creation of the association.—
436 (1) There is created a nonprofit corporation to be known as
437 the “Florida Insurance Guaranty Association, Incorporated.” All
438 insurers defined as member insurers in s. 631.54(7) shall be
439 members of the association as a condition of their authority to
440 transact insurance in this state, and, further, as a condition
441 of such authority, an insurer must shall agree to reimburse the
442 association for all claim payments the association makes on the
443 said insurer’s behalf if such insurer is subsequently
444 rehabilitated. The association shall perform its functions under
445 a plan of operation established and approved under s. 631.58 and
446 shall exercise its powers through a board of directors
447 established under s. 631.56. The corporation shall have all
448 those powers granted or permitted nonprofit corporations, as
449 provided in chapter 617.
450 Section 10. This act shall take effect July 1, 2014.