Florida Senate - 2014 CS for CS for SB 870
By the Committees on Rules; and Judiciary; and Senator Smith
595-04447-14 2014870c2
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. 627.902, F.S.;
8 providing that premium financing does not apply to
9 installment payment arrangements that do not involve
10 the advancement of funds; amending s. 627.94072, F.S.;
11 providing an alternative form of a nonforfeiture
12 provision for long-term care insurance; amending s.
13 629.271, F.S.; authorizing reciprocal insurers to
14 return a portion of unassigned funds to their
15 subscribers; amending s. 631.54, F.S.; defining the
16 term “assessment year”; amending s. 631.57, F.S.;
17 revising provisions relating to the levy of
18 assessments on insurers by the Florida Insurance
19 Guaranty Association; specifying the conditions under
20 which such assessments are paid; revising procedures
21 and timeframes for the levying of the assessments;
22 deleting the requirement that insurers file a final
23 accounting report documenting the recoupment; revising
24 an exemption for assessments; amending s. 631.64,
25 F.S.; requiring charges or recoupments to be displayed
26 separately on premium statements to policyholders and
27 prohibiting their inclusion in rates; amending ss.
28 627.727 and 631.55, F.S.; conforming cross-references;
29 providing an effective date.
30
31 Be It Enacted by the Legislature of the State of Florida:
32
33 Section 1. Subsection (1) of section 624.425, Florida
34 Statutes, is amended to read:
35 624.425 Agent countersignature required, property,
36 casualty, surety insurance.—
37 (1) Except as stated in s. 624.426, no authorized property,
38 casualty, or surety insurer shall assume direct liability as to
39 a subject of insurance resident, located, or to be performed in
40 this state unless the policy or contract of insurance is issued
41 by or through, and is countersigned by, an agent who is
42 regularly commissioned and licensed currently as an agent and
43 appointed as an agent for the insurer under this code. However,
44 the absence of a countersignature does not affect the validity
45 of the policy or contract. If two or more authorized insurers
46 issue a single policy of insurance against legal liability for
47 loss or damage to person or property caused by a the nuclear
48 energy hazard, or a single policy insuring against loss or
49 damage to property by radioactive contamination, whether or not
50 also insuring against one or more other perils that may be
51 insured proper to insure against in this state, such policy if
52 otherwise lawful may be countersigned on behalf of all of the
53 insurers by a licensed and appointed agent of the any insurer
54 appearing thereon. The producing agent shall receive on each
55 policy or contract the full and usual commission allowed and
56 paid by the insurer to its agents on business written or
57 transacted by them for the insurer.
58 Section 2. Section 627.7311, Florida Statutes, is amended
59 to read:
60 627.7311 Effect of law on personal injury protection
61 policies.—
62 (1) The provisions and procedures authorized in ss.
63 627.730-627.7405 shall be implemented by insurers offering
64 policies pursuant to the Florida Motor Vehicle No-Fault Law. The
65 Legislature intends that these provisions and procedures have
66 full force and effect regardless of their express inclusion in
67 an insurance policy form, and a specific provision or procedure
68 authorized in ss. 627.730-627.7405 shall control over general
69 provisions in an insurance policy form. An insurer is not
70 required to amend its policy form or to expressly notify
71 providers, claimants, or insureds in order to implement and
72 apply such provisions or procedures.
73 (2) Sections 627.730-627.7405 do not preclude a county from
74 enacting and enforcing an ordinance applicable to health care
75 clinics that receive reimbursement under the Florida Motor
76 Vehicle No-Fault Law.
77 Section 3. Subsection (2) of section 627.902, Florida
78 Statutes, is amended to read:
79 627.902 Premium financing by an insurer or subsidiary.—
80 (2) Nothing in This part or in part XV of this chapter does
81 not disallow disallows or otherwise apply applies to:
82 (a) Installment payment arrangements offered by an insurer
83 if such arrangements do not involve the advancement of funds
84 which would constitute financing and exceed the service charges
85 provided in 627.901; or
86 (b) A discount for an any insured who pays the entire
87 premium for the entire policy term at the inception of the term
88 if the discount is found to be actuarially justified by the
89 office and approved by the office pursuant to the provisions of
90 part I of this chapter. Such actuarially justified and approved
91 discount may shall not be deemed a component of or related to
92 premium financing.
93 Section 4. Subsection (2) of section 627.94072, Florida
94 Statutes, is amended to read:
95 627.94072 Mandatory offers.—
96 (2) An insurer that offers a long-term care insurance
97 policy, certificate, or rider in this state shall must offer a
98 nonforfeiture protection provision providing reduced paid-up
99 insurance, extended term, shortened benefit period, or any other
100 benefit benefits approved by the office if all or part of a
101 premium is not paid. A nonforfeiture provision may also be
102 offered in the form of a return of premium on the death of the
103 insured, or on the complete surrender or cancellation of the
104 policy or contract. Nonforfeiture benefits and any additional
105 premium for such benefits must be computed in an actuarially
106 sound manner, using a methodology that has been filed with and
107 approved by the office.
108 Section 5. Section 629.271, Florida Statutes, is amended to
109 read:
110 629.271 Distribution of savings.—
111 (1) A reciprocal insurer may from time to time return to
112 its subscribers any unused premiums, savings, or credits
113 accruing to their accounts. Any Such distribution may shall not
114 unfairly discriminate between classes of risks, or policies, or
115 between subscribers, but such distribution may vary as to
116 classes of subscribers based on upon the experience of such
117 classes.
118 (2) In addition to the option provided in subsection (1), a
119 domestic reciprocal insurer may, upon the prior written approval
120 of the office, pay to its subscribers a portion of unassigned
121 funds of up to 10 percent of surplus with distribution limited
122 to 50 percent of net income from the previous calendar year.
123 Such distribution may not unfairly discriminate between classes
124 of risks, or policies, or between subscribers, but may vary as
125 to classes of subscribers based on the experience of such
126 classes.
127 Section 6. Subsections (2) through (9) of section 631.54,
128 Florida Statutes, are renumbered as subsections (3) through
129 (10), respectively, and a new subsection (2) is added to that
130 section to read:
131 631.54 Definitions.—As used in this part, the term:
132 (2) “Assessment year” means the 12-month period, which may
133 begin on the first day of any calendar quarter, whether January
134 1, April 1, July 1, or October 1, as specified in an order
135 issued by the office directing insurers to pay an assessment to
136 the association. Upon entry of the order, insurers may begin
137 collecting assessments from policyholders for the assessment
138 year.
139 Section 7. Subsections (3) and (4) of section 631.57,
140 Florida Statutes, are amended to read:
141 631.57 Powers and duties of the association.—
142 (3)(a) To the extent necessary to secure the funds for the
143 respective accounts for the payment of covered claims, to pay
144 the reasonable costs to administer such accounts the same, and
145 to the extent necessary to secure the funds for the account
146 specified in s. 631.55(2)(b) or to retire indebtedness,
147 including, without limitation, the principal, redemption
148 premium, if any, and interest on, and related costs of issuance
149 of, bonds issued under s. 631.695 and the funding of any
150 reserves and other payments required under the bond resolution
151 or trust indenture pursuant to which such bonds have been
152 issued, the office, upon certification of the board of
153 directors, shall levy assessments initially estimated in the
154 proportion that each insurer’s net direct written premiums in
155 this state in the classes protected by the account bears to the
156 total of said net direct written premiums received in this state
157 by all such insurers for the preceding calendar year for the
158 kinds of insurance included within such account. Assessments
159 shall be remitted to and administered by the board of directors
160 in the manner specified by the approved plan and paragraph (f).
161 Each insurer so assessed shall have at least 30 days’ written
162 notice as to the date the initial assessment payment is due and
163 payable. Every assessment shall be made as a uniform percentage
164 applicable to the net direct written premiums of each insurer in
165 the kinds of insurance included within the account in which the
166 assessment is made. The assessments levied against any insurer
167 may shall not exceed in any one year more than 2 percent of that
168 insurer’s net direct written premiums in this state for the
169 kinds of insurance included within such account during the
170 calendar year next preceding the date of such assessments.
171 (b) If sufficient funds from such assessments, together
172 with funds previously raised, are not available in any one year
173 in the respective account to make all the payments or
174 reimbursements then owing to insurers, the funds available shall
175 be prorated and the unpaid portion shall be paid as soon
176 thereafter as funds become available.
177 (c) The Legislature finds and declares that all assessments
178 paid by an insurer or insurer group as a result of a levy by the
179 office, including assessments levied pursuant to paragraph (a)
180 and emergency assessments levied pursuant to paragraph (e),
181 constitute advances of funds from the insurer to the
182 association. An insurer may fully recoup such advances by
183 applying the uniform assessment percentage levied by the office
184 to all a separate recoupment factor to the premium of policies
185 of the same kind or line as were considered by the office in
186 determining the assessment liability of the insurer or insurer
187 group as set forth in paragraph (f).
188 1. Assessments levied under subparagraph (f)1. are paid
189 before policy surcharges are collected and result in a
190 receivable for policy surcharges collected in the future. This
191 amount, to the extent it is likely that it will be realized,
192 meets the definition of an admissible asset as specified in the
193 National Association of Insurance Commissioners’ Statement of
194 Statutory Accounting Principles No. 4. The asset shall be
195 established and recorded separately from the liability
196 regardless of whether it is based on a retrospective or
197 prospective premium-based assessment. If an insurer is unable to
198 fully recoup the amount of the assessment because of a reduction
199 in writings or withdrawal from the market, the amount recorded
200 as an asset shall be reduced to the amount reasonably expected
201 to be recouped.
202 2. Assessments levied under subparagraph (f)2. are paid
203 after policy surcharges are collected so that the recognition of
204 assets is based on actual premium written offset by the
205 obligation to the association.
206 (d) No State funds may not of any kind shall be allocated
207 or paid to the said association or any of its accounts.
208 (e)1.a. In addition to assessments otherwise authorized in
209 paragraph (a), and to the extent necessary to secure the funds
210 for the account specified in s. 631.55(2)(b) for the direct
211 payment of covered claims of insurers rendered insolvent by the
212 effects of a hurricane and to pay the reasonable costs to
213 administer such claims, or to retire indebtedness, including,
214 without limitation, the principal, redemption premium, if any,
215 and interest on, and related costs of issuance of, bonds issued
216 under s. 631.695 and the funding of any reserves and other
217 payments required under the bond resolution or trust indenture
218 pursuant to which such bonds have been issued, the office, upon
219 certification of the board of directors, shall levy emergency
220 assessments upon insurers holding a certificate of authority.
221 The emergency assessments payable under this paragraph by any
222 insurer may shall not exceed in any single year more than 2
223 percent of that insurer’s direct written premiums, net of
224 refunds, in this state during the preceding calendar year for
225 the kinds of insurance within the account specified in s.
226 631.55(2)(b).
227 2.b. Any Emergency assessments authorized under this
228 paragraph shall be levied by the office upon insurers referred
229 to in subparagraph 1. sub-subparagraph a., upon certification as
230 to the need for such assessments by the board of directors. If
231 In the event the board of directors participates in the issuance
232 of bonds in accordance with s. 631.695, emergency assessments
233 shall be levied in each year that bonds issued under s. 631.695
234 and secured by such emergency assessments are outstanding, in
235 such amounts up to such 2 percent 2-percent limit as required in
236 order to provide for the full and timely payment of the
237 principal of, redemption premium, if any, and interest on, and
238 related costs of issuance of, such bonds. The emergency
239 assessments provided for in this paragraph are assigned and
240 pledged to the municipality, county, or legal entity issuing
241 bonds under s. 631.695 for the benefit of the holders of such
242 bonds, in order to enable such municipality, county, or legal
243 entity to provide for the payment of the principal of,
244 redemption premium, if any, and interest on such bonds, the cost
245 of issuance of such bonds, and the funding of any reserves and
246 other payments required under the bond resolution or trust
247 indenture pursuant to which such bonds have been issued, without
248 the necessity of any further action by the association, the
249 office, or any other party. If To the extent bonds are issued
250 under s. 631.695 and the association determines to secure such
251 bonds by a pledge of revenues received from the emergency
252 assessments, such bonds, upon such pledge of revenues, shall be
253 secured by and payable from the proceeds of such emergency
254 assessments, and the proceeds of emergency assessments levied
255 under this paragraph shall be remitted directly to and
256 administered by the trustee or custodian appointed for such
257 bonds.
258 3.c. Emergency assessments used to defease bonds issued
259 under this part paragraph may be payable in a single payment or,
260 at the option of the association, may be payable in 12 monthly
261 installments with the first installment being due and payable at
262 the end of the month after an emergency assessment is levied and
263 subsequent installments being due by not later than the end of
264 each succeeding month.
265 4.d. If emergency assessments are imposed, the report
266 required by s. 631.695(7) must shall include an analysis of the
267 revenues generated from the emergency assessments imposed under
268 this paragraph.
269 5.e. If emergency assessments are imposed, the references
270 in sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to
271 assessments levied under paragraph (a) must shall include
272 emergency assessments imposed under this paragraph.
273 6.2. If the board of directors participates in the issuance
274 of bonds in accordance with s. 631.695, an annual assessment
275 under this paragraph shall continue while the bonds issued with
276 respect to which the assessment was imposed are outstanding,
277 including any bonds the proceeds of which were used to refund
278 bonds issued pursuant to s. 631.695, unless adequate provision
279 has been made for the payment of the bonds in the documents
280 authorizing the issuance of such bonds.
281 7.3. Emergency assessments under this paragraph are not
282 premium and are not subject to the premium tax, to any fees, or
283 to any commissions. An insurer is liable for all emergency
284 assessments that the insurer collects and shall treat the
285 failure of an insured to pay an emergency assessment as a
286 failure to pay the premium. An insurer is not liable for
287 uncollectible emergency assessments.
288 (f) The recoupment factor applied to policies in accordance
289 with paragraph (c) shall be selected by the insurer or insurer
290 group so as to provide for the probable recoupment of both
291 assessments levied pursuant to paragraph (a) and emergency
292 assessments over a period of 12 months, unless the insurer or
293 insurer group, at its option, elects to recoup the assessment
294 over a longer period. The recoupment factor shall apply to all
295 policies of the same kind or line as were considered by the
296 office in determining the assessment liability of the insurer or
297 insurer group issued or renewed during a 12-month period. If the
298 insurer or insurer group does not collect the full amount of the
299 assessment during one 12-month period, the insurer or insurer
300 group may apply recalculated recoupment factors to policies
301 issued or renewed during one or more succeeding 12-month
302 periods. If, at the end of a 12-month period, the insurer or
303 insurer group has collected from the combined kinds or lines of
304 policies subject to assessment more than the total amount of the
305 assessment paid by the insurer or insurer group, the excess
306 amount shall be disbursed as follows:
307 1. The association, office, and insurers remitting
308 assessments pursuant to paragraph (a) or paragraph (e) must
309 comply with the following:
310 a. In the order levying an assessment, the office shall
311 specify the actual percentage amount to be collected uniformly
312 from all the policyholders of insurers subject to the assessment
313 and the date on which the assessment year begins, which may not
314 begin until 90 days after the association board certifies such
315 an assessment.
316 b. Insurers shall make an initial payment to the
317 association before the beginning of the assessment year on or
318 before the date specified in the order of the office.
319 c. Insurers that have written insurance in the calendar
320 year before the year in which the assessment is certified by the
321 board shall make an initial payment based on the net direct
322 written premium amount from the prior calendar year as set forth
323 in the insurers’ annual statements, multiplied by the uniform
324 percentage of premium specified in the order issued by the
325 office. Insurers that have not written insurance in the prior
326 calendar year in any of the lines under the account which are
327 being assessed, but that are writing insurance as of, or after,
328 the date the board certifies the assessment to the office, shall
329 pay an amount based on a good faith estimate of the amount of
330 net direct written premium anticipated to be written in the
331 subject lines of business for the assessment year, multiplied by
332 the uniform percentage of premium specified in the order issued
333 by the office.
334 d. Insurers shall file a reconciliation report with the
335 association within 45 days after the end of the assessment year
336 which indicates the amount of the initial payment to the
337 association before the assessment year, whether such amount was
338 based on net direct written premium contained in a prior
339 calendar year annual statement or a good faith projection, the
340 amount actually collected during the assessment year, and such
341 other information contained on a form adopted by the association
342 and provided to the insurers in advance. If the insurer
343 collected from policyholders more than the amount initially
344 paid, the insurer shall pay the excess amount to the
345 association. If the insurer collected from policyholders an
346 amount which is less than the amount initially paid to the
347 association, the association shall credit the insurer that
348 amount against future assessments. Such payment reconciliation
349 report, and any payment of excess amounts collected from
350 policyholders, shall be completed and remitted to the
351 association within 90 days after the end of the assessment year.
352 The association shall send a final reconciliation report on all
353 insurers to the office within 120 days after each assessment
354 year.
355 e. Insurers remitting reconciliation reports to the
356 association under this paragraph are subject to s.
357 626.9541(1)(e). If the excess amount does not exceed 15 percent
358 of the total assessment paid by the insurer or insurer group,
359 the excess amount shall be remitted to the association within 60
360 days after the end of the 12-month period in which the excess
361 recoupment charges were collected.
362 2. The association may use a monthly installment method
363 instead of the method described in sub-subparagraphs 1.b. and c.
364 or in combination thereof based on the association’s projected
365 cash flow. If the association projects that it has cash on hand
366 for the payment of anticipated claims in the applicable account
367 for at least 6 months, the board may make an estimate of the
368 assessment needed and may recommend to the office the assessment
369 percentage that may be collected as a monthly assessment. The
370 office may, in the order levying the assessment on insurers,
371 specify that the assessment is due and payable monthly as the
372 funds are collected from insureds throughout the assessment
373 year, in which case the assessment shall be a uniform percentage
374 of premium collected during the assessment year and shall be
375 collected from all policyholders with policies in the classes
376 protected by the account. All insurers shall collect the
377 assessment without regard to whether the insurers reported
378 premium in the year preceding the assessment. Insurers are not
379 required to advance funds if the association and the office
380 elect to use the monthly installment option. All funds collected
381 shall be retained by the association for the payment of current
382 or future claims. This subparagraph does not alter the
383 obligation of an insurer to remit assessments levied pursuant to
384 this subsection to the association. If the excess amount exceeds
385 15 percent of the total assessment paid by the insurer or
386 insurer group, the excess amount shall be returned to the
387 insurer’s or insurer group’s current policyholders by refunds or
388 premium credits. The association shall use any remitted excess
389 recoupment amounts to reduce future assessments.
390 (g) Amounts recouped pursuant to this subsection for
391 assessments levied under paragraph (a) due to insolvencies on or
392 after July 1, 2010, are considered premium solely for premium
393 tax purposes and are not subject to fees or commissions.
394 However, insurers shall treat the failure of an insured to pay a
395 recoupment charge as a failure to pay the premium.
396 (h) At least 15 days before applying the recoupment factor
397 to any policies, the insurer or insurer group shall file with
398 the office a statement for informational purposes only setting
399 forth the amount of the recoupment factor and an explanation of
400 how the recoupment factor will be applied. Such statement shall
401 include documentation of the assessment paid by the insurer or
402 insurer group and the arithmetic calculations supporting the
403 recoupment factor. The insurer or insurer group may use the
404 recoupment factor at any time after the expiration of the 15-day
405 period. The insurer or insurer group need submit only one
406 informational statement for all lines of business using the same
407 recoupment factor.
408 (i) No later than 90 days after the insurer or insurer
409 group has completed the recoupment process, the insurer or
410 insurer group shall file with the office, for information
411 purposes only, a final accounting report documenting the
412 recoupment. The report shall provide the amounts of assessments
413 paid by the insurer or insurer group, the amounts and
414 percentages recouped by year from each affected line of
415 business, and the direct written premium subject to recoupment
416 by year. The insurer or insurer group need submit only one
417 report for all lines of business using the same recoupment
418 factor.
419 (h) Assessments levied under this subsection are levied
420 upon insurers. This subsection does not create a cause of action
421 by a policyholder with respect to the levying of, or a
422 policyholder’s duty to pay, such assessments.
423 (4) The office department may exempt or temporarily defer
424 any insurer from any regular or emergency assessment if the
425 office finds that the insurer is impaired or insolvent or if an
426 assessment would result in such insurer’s financial statement
427 reflecting an amount of capital or surplus less than the sum of
428 the minimum amount required by any jurisdiction in which the
429 insurer is authorized to transact insurance.
430 Section 8. Section 631.64, Florida Statutes, is amended to
431 read:
432 631.64 Recognition of assessments in rates.—Charges or
433 recoupments shall be separately displayed on premium statements
434 to enable policyholders to determine the amount charged for
435 association assessments but may not be included in rates filed
436 and approved by the office. The rates and premiums charged for
437 insurance policies to which this part applies may include
438 amounts sufficient to recoup a sum equal to the amounts paid to
439 the association by the member insurer less any amounts returned
440 to the member insurer by the association, and such rates shall
441 not be deemed excessive because they contain an amount
442 reasonably calculated to recoup assessments paid by the member
443 insurer.
444 Section 9. Subsection (5) of section 627.727, Florida
445 Statutes, is amended to read:
446 627.727 Motor vehicle insurance; uninsured and underinsured
447 vehicle coverage; insolvent insurer protection.—
448 (5) Any person having a claim against an insolvent insurer
449 as defined in s. 631.54(6) under the provisions of this section
450 shall present such claim for payment to the Florida Insurance
451 Guaranty Association only. In the event of a payment to a any
452 person in settlement of a claim arising under the provisions of
453 this section, the association is not subrogated or entitled to
454 any recovery against the claimant’s insurer. The association,
455 however, has the rights of recovery as set forth in chapter 631
456 in the proceeds recoverable from the assets of the insolvent
457 insurer.
458 Section 10. Subsection (1) of section 631.55, Florida
459 Statutes, is amended to read:
460 631.55 Creation of the association.—
461 (1) There is created a nonprofit corporation to be known as
462 the “Florida Insurance Guaranty Association, Incorporated.” All
463 insurers defined as member insurers in s. 631.54(7) shall be
464 members of the association as a condition of their authority to
465 transact insurance in this state, and, further, as a condition
466 of such authority, an insurer must shall agree to reimburse the
467 association for all claim payments the association makes on the
468 said insurer’s behalf if such insurer is subsequently
469 rehabilitated. The association shall perform its functions under
470 a plan of operation established and approved under s. 631.58 and
471 shall exercise its powers through a board of directors
472 established under s. 631.56. The corporation shall have all
473 those powers granted or permitted nonprofit corporations, as
474 provided in chapter 617.
475 Section 11. This act shall take effect July 1, 2014.