The Florida Senate

631.001  Title, construction, and purpose.

631.011  Definitions.

631.015  Reciprocity; treatment of policyholders.

631.021  Jurisdiction of delinquency proceeding; venue; change of venue; exclusiveness of remedy; appeal.

631.025  Persons subject to this part.

631.031  Commencement of delinquency proceeding.

631.041  Automatic stay; relief from stay; injunctions.

631.042  Extension of time.

631.051  Grounds for rehabilitation; domestic insurers.

631.0515  Appointment of receiver; insurance holding company.

631.061  Grounds for liquidation.

631.071  Grounds for conservation; foreign insurers.

631.081  Grounds for conservation; alien insurers.

631.091  Grounds for ancillary liquidation; foreign insurers.

631.101  Order of rehabilitation; termination.

631.111  Order of liquidation; domestic insurers.

631.112  Subordination of claims for noncooperation.

631.121  Order of liquidation; alien insurers.

631.131  Order of conservation or ancillary liquidation of foreign or alien insurers.

631.141  Conduct of delinquency proceeding; domestic and alien insurers.

631.152  Conduct of delinquency proceeding; foreign insurers.

631.153  Intervention; exclusiveness of claims procedure.

631.154  Funds, assets, or other property in the possession of third person.

631.155  Agents' balances; premiums and unearned commissions.

631.156  Investigation by the department; scope of authority; sharing of materials.

631.157  Civil action by the receiver.

631.161  Claims of nonresidents against insurers domiciled in this state.

631.171  Claims of residents against insurers domiciled in reciprocal states.

631.181  Filing and proof of claim.

631.182  Receiver claims report and claimants objections procedure.

631.191  Special deposit claims and secured claims.

631.192  Allowance of certain claims.

631.193  Releases.

631.201  Attachment and garnishment of assets.

631.205  Reinsurance proceeds.

631.221  Deposit of moneys collected.

631.231  Exemption from fees.

631.241  Borrowing on pledge of assets.

631.251  Date rights fixed on liquidation.

631.252  Continuation of coverage.

631.261  Voidable transfers.

631.262  Transfers prior to petition.

631.263  Transfers after petition.

631.271  Priority of claims.

631.281  Offsets.

631.311  Report and petition for assessment.

631.321  Order and levy of assessment.

631.331  Assessment prima facie correct; notice; payment; proceeding to collect.

631.341  Notice of insolvency to policyholders by insurer, general agent, or agent.

631.361  Seizure under court order.

631.371  Seizure under order of the department.

631.391  Cooperation of officers and employees.

631.3915  Actions for damages.

631.392  Immunity.

631.395  Guaranty fund; orders of court.

631.397  Use of certain marshaled assets.

631.398  Prevention of insolvencies.

631.399  Receiver's right to recover distributions made to affiliate.

631.001  Title, construction, and purpose.--

(1)  This part constitutes and may be cited as the "Insurers Rehabilitation and Liquidation Act."

(2)  This part shall be liberally construed to effect the purposes of this part.

(3)  The purposes of this part, which are integral elements of the regulation of the business of insurance and are of vital public interest and concern, are to:

(a)  Protect the interests of policyholders, creditors, and other claimants and the public.

(b)  Provide a comprehensive scheme for administering insurer receiverships.

(c)  Detect any potentially dangerous condition in an insurer and promptly apply appropriate corrective measures.

(d)  Implement improved methods for rehabilitating insurers, which methods involve the cooperation and management expertise of the insurance industry.

(e)  Enhance the efficiency and economy of the liquidation process by clarifying the law to minimize legal uncertainty and litigation.

(f)  Establish a system to equitably apportion any unavoidable loss.

(g)  Administer insurer receiverships more efficiently on an interstate and international basis by facilitating cooperation between states and by extending the scope of personal jurisdiction over debtors of the insurer outside this state.

(h)  Maximize recovery of assets for the benefit of the insurer's estate; policyholders, creditors, and other claimants; and the public.

History.--s. 737, ch. 59-205; s. 1, ch. 70-27; s. 1, ch. 70-439; s. 809(1st), ch. 82-243; s. 1, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 3, ch. 2002-25.

Note.--Consolidation of s. 631.001 and former s. 631.211.

631.011  Definitions.--For the purpose of this part, the term:

(1)  "Affiliate" means any entity which exercises control over or is controlled by the insurer, directly or indirectly through:

(a)  Equity ownership of voting securities;

(b)  Common managerial control; or

(c)  Collusive participation by the management of the insurer and affiliate in the management of the insurer or the affiliate.

(2)  "Ancillary state" means, any state other than a domiciliary state.

(3)  "Assets," as used in this section, means only allowed assets as defined in chapter 625.

(4)  "Bona fide holder for value" means a person who, while not possessing information that would lead a reasonable person similarly situated to believe that the insurer is insolvent or is experiencing an impairment of capital or an impairment of surplus and while unaware of the imminence or pendency of any receivership proceeding against the insurer, has, in the exercise of reasonable business judgment, exchanged his or her own funds, assets, or property for funds, assets, or property of the insurer having an equivalent market value.

(5)  "Court" refers to the circuit court in which the receivership proceeding is pending.

(6)  "Delinquency proceeding" means any proceeding commenced against an insurer pursuant to this chapter for the purpose of liquidating, rehabilitating, reorganizing, or conserving such insurer.

(7)  "Domiciliary state" means the state in which an insurer is incorporated or organized or, in the case of an insurer incorporated or organized in a foreign country, the state in which such insurer, having become authorized to do business in such state, has, at the commencement of a delinquency proceeding, the largest amount of its assets held in trust and assets held on deposit for the benefit of its policyholders or policyholders and creditors in the United States; and any such insurer is deemed to be domiciled in such state.

(8)  "Fair consideration" means that consideration which is given for property or assets of an insurer when, in exchange for the funds, assets, or property and in good faith, property is conveyed, services are rendered, or an enforceable obligation not invalidated by the receivership proceedings is created having a value to the insurer of not less than the value of the funds, assets, or property given in exchange.

(9)  "Foreign country" means territory not in any state.

(10)  "General assets" means all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited, or otherwise encumbered for the security or benefit of specified persons or a limited class or classes of persons, and as to such specifically encumbered property the term includes all such property or its proceeds in excess of the amount necessary to discharge the sum or sums secured thereby. Assets held in trust and assets held on deposit for the security or benefit of all policyholders or all policyholders and creditors in the United States shall be deemed general assets.

(11)  "Good faith," as used in ss. 631.262 and 631.263, means honesty in fact, including, but not limited to, the exercise of reasonable business judgment, in the conduct or transaction concerned, together with the absence of information that would lead a reasonable person in the same position to know that the insurer is insolvent or is experiencing an impairment of capital or an impairment of surplus and together with the absence of knowledge regarding the imminence or pendency of any receivership proceeding against the insurer.

(12)  "Impairment of capital" means that the minimum surplus required to be maintained in s. 624.408 has been dissipated and the insurer is not possessed of assets at least equal to all its liabilities together with its total issued and outstanding capital stock, if a stock insurer, or the minimum surplus or net trust fund required by s. 624.407, if a mutual, reciprocal, or business trust insurer.

(13)  "Impairment of surplus" means that the surplus of a stock insurer, the additional surplus of a mutual or reciprocal insurer, or the additional net trust fund of a business trust insurer does not comply with the requirements of s. 624.408.

(14)  "Insolvency" means that all the assets of the insurer, if made immediately available, would not be sufficient to discharge all its liabilities or that the insurer is unable to pay its debts as they become due in the usual course of business. When the context of any provision of this code so indicates, insolvency also includes and is defined as "impairment of surplus," as defined in subsection (13), and "impairment of capital," as defined in subsection (12).

(15)  "Insurer," in addition to persons so defined under s. 624.03, also includes persons purporting to be insurers or organizing, or holding themselves out as organizing, in this state for the purpose of becoming insurers and all insurers who have policyholders resident in this state.

(16)  "Liabilities," as used in subsections (12) and (14), means all liabilities, including those specifically required in s. 625.041.

(17)  "Property" includes:

(a)  All right, title, and interest of the insolvent entity, whether legal or equitable, tangible or intangible, or choate or inchoate, and includes choses in action, contract rights, and any other interest recognized under the laws of this state.

(b)  Entitlements that existed prior to the entry of an order of conservation, rehabilitation, or liquidation and entitlements that may arise by operation of the provisions of this part or other provisions of law allowing the department to avoid prior transfers or assert other rights in its capacity as receiver.

(c)  All records and data that are otherwise the property of the insolvent insurer, in whatever form maintained, including, but not limited to, claims and claim files, application files, litigation files, premium records, rate books, underwriting manuals, personnel records, or financial records, or similar records within the possession, custody, or control of a managing general agent, third-party administrator, management company, accountant, attorney, affiliate, or other person.

(18)  "Receiver" means a receiver, liquidator, rehabilitator, reorganizer, or conservator, as the context may require.

(19)  "Receivership" means the placement of an insurer under the control of a receiver pursuant to a delinquency proceeding under this part.

(20)  "Reciprocal state" means any state other than this state in which in substance and effect the provisions of the Insurers Rehabilitation and Liquidation Act are in force, including the provisions requiring that the commissioner of insurance or equivalent insurance supervisory official be the receiver of a delinquent insurer.

(21)  "Secured claim" means any claim secured by mortgage, trust deed, pledge, deposit as security, escrow, or otherwise but does not include a special deposit claim, a claim against general assets, or a claim based on mere possession. The term also includes a claim which more than 4 months before the commencement of a delinquency proceeding in the state of the insurer's domicile has become a lien upon specific assets by reason of judicial process.

(22)  "Special deposit claim" means any claim secured by a deposit made pursuant to statute for the security or benefit of a limited class or classes of persons, but not including any general assets.

(23)  "State" is as defined in s. 624.08.

History.--s. 717, ch. 59-205; ss. 13, 35, ch. 69-106; s. 2, ch. 70-27; s. 1, ch. 70-439; s. 809(1st), ch. 82-243; s. 2, ch. 83-38; s. 1, ch. 87-350; s. 5, ch. 89-360; ss. 82, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 26, ch. 93-410; s. 4, ch. 2002-25.

631.015  Reciprocity; treatment of policyholders.--Reciprocity in the treatment of policyholders in receivership is extended to those states which, in substance and effect, enact the National Association of Insurance Commissioners Rehabilitation and Liquidation Model Act or the Uniform Insurers Liquidation Act.

History.--s. 5, ch. 2002-25.

631.021  Jurisdiction of delinquency proceeding; venue; change of venue; exclusiveness of remedy; appeal.--

(1)  The circuit court shall have original jurisdiction of any delinquency proceeding under this chapter, and any court with jurisdiction is authorized to make all necessary or proper orders to carry out the purposes of this chapter. Any delinquency proceeding in this chapter is in equity.

(2)  The venue of a delinquency proceeding or summary proceeding against a domestic, foreign, or alien insurer shall be in the Circuit Court of Leon County.

(3)  A delinquency proceeding pursuant to this chapter constitutes the sole and exclusive method of liquidating, rehabilitating, reorganizing, or conserving an insurer. No court shall entertain a petition for the commencement of such a proceeding unless the petition has been filed in the name of the state on the relation of the department. The Florida Insurance Guaranty Association, Incorporated, the Florida Workers' Compensation Insurance Guaranty Association, Incorporated, and the Florida Life and Health Guaranty Association, Incorporated, shall be given reasonable written notice by the department of all hearings which pertain to an adjudication of insolvency of a member insurer.

(4)  An appeal shall lie to the District Court of Appeal, First District, from an order granting or refusing rehabilitation, liquidation, or conservation and from every order in a delinquency proceeding having the character of a final order as to the particular portion of the proceeding embraced therein.

History.--s. 718, ch. 59-205; s. 29, ch. 63-559; ss. 13, 35, ch. 69-106; s. 8, ch. 77-227; s. 809(1st), ch. 82-243; s. 3, ch. 83-38; s. 1, ch. 85-339; s. 6, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 11, ch. 97-262.

631.025  Persons subject to this part.--Delinquency proceedings authorized by this part may be initiated against any insurer, as defined in s. 631.011(15), if the statutory grounds are present as to that insurer, and the court may exercise jurisdiction over any person required to cooperate with the department pursuant to s. 631.391 and over all persons made subject to the court's jurisdiction by other provisions of law. Such persons include, but are not limited to:

(1)  A person transacting, or that has transacted, insurance business in or from this state and against whom claims arising from that business may exist now or in the future.

(2)  A person purporting to transact an insurance business in this state and any person who acts as an insurer, transacts insurance, or otherwise engages in insurance activities in or from this state, with or without a certificate of authority or proper authority from the department, against whom claims arising from that business may exist now or in the future.

(3)  An insurer with policyholders resident in this state.

(4)  All other persons organized or in the process of organizing with the intent to transact an insurance business in this state.

History.--s. 6, ch. 2002-25.

631.031  Commencement of delinquency proceeding.--The department may commence any such proceeding by application to the court for an order directing the insurer to show cause why the department should not have the relief prayed for. On the return of such order to show cause, and after a full hearing, the court shall either deny the application or grant the application, together with such other relief as the nature of the case and the interests of the policyholders, creditors, stockholders, members, subscribers, or public may require. The department may also commence any such proceeding by application to the court by petition for the entry of a consent order of conservation, rehabilitation, or liquidation.

History.--s. 719, ch. 59-205; ss. 13, 35, ch. 69-106; s. 213, ch. 77-104; s. 809(1st), ch. 82-243; s. 38, ch. 88-166; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.041  Automatic stay; relief from stay; injunctions.--

(1)  An application or petition under s. 631.031 operates as a matter of law as an automatic stay applicable to all persons and entities, other than the receiver, which shall be permanent and survive the entry of an order of conservation, rehabilitation, or liquidation, and which shall prohibit:

(a)  The commencement or continuation of judicial, administrative, or other action or proceeding against the insurer or against its assets or any part thereof;

(b)  The enforcement of a judgment against the insurer or an affiliate obtained either before or after the commencement of the delinquency proceeding;

(c)  Any act to obtain possession of property of the insurer;

(d)  Any act to create, perfect, or enforce a lien against property of the insurer, except that a secured claim as defined in s. 631.011(21) may proceed under s. 631.191 after the order of liquidation is entered;

(e)  Any act to collect, assess, or recover a claim against the insurer, except claims as provided for under this chapter; and

(f)  The setoff or offset of any debt owing to the insurer, except offsets as provided in s. 631.281.

(2)  Upon written request of a person or entity subject to the stay against obtaining or enforcing a judgment against an insurer or affiliate provided in paragraph (1)(b) the court, with notice to the department and upon hearing, may grant relief from the stay provided the movant, who has the burden of proof, establishes by clear and convincing evidence that the judgment is not voidable or void by a receiver and that property from which the judgment would be satisfied does not constitute premium funds or another asset which belongs to the insurer.

(3)  Upon application by the department pursuant to this part for an order to show cause or upon petition, or at any time thereafter, the court may without notice issue an injunction restraining the insurer and its officers, directors, stockholders, members, subscribers, and agents and all other persons from the transaction of its business or the waste or disposition of its property until the further order of the court.

(4)  The court may without notice at any time during a proceeding under this chapter issue such other injunctions or orders as may be deemed necessary to prevent interference with the department or the proceeding; waste of the assets of the insurer; the commencement or prosecution of any actions; the obtaining of preferences, judgments, attachments, or other liens; or the making of any levy against the insurer or against its assets or any part thereof.

(5)  Notwithstanding any other provision of law, no bond shall be required of the department as a prerequisite for the issuance of any injunction or restraining order pursuant to this section.

History.--s. 720, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; s. 4, ch. 83-38; s. 39, ch. 88-166; ss. 83, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 7, ch. 2002-25.

631.042  Extension of time.--

(1)  With respect to any action by or against an insurer, no statute of limitations or defense of laches shall run between the date the department files a petition for a delinquency proceeding against an insurer and the date the court enters an order granting or denying that petition. If the petition is denied, any action against the insurer that might have been commenced when the petition was filed may be commenced no later than 60 days after the order denying such relief or the remaining unexpired time under the applicable statute of limitations or defense of laches that was available on the day the petition was filed, whichever is longer.

(2)  The running of any unexpired statute of limitations, as to any claims brought by the administrator, a receiver, or an official or agency exercising powers pursuant to this chapter seeking damages or other recoveries on behalf of an insurer, its policyholders, its creditors, or its estate, shall be tolled for a period of 4 years from the date the court enters an order placing the insurer in receivership. If the delinquency proceedings against the insurer terminate in fewer than 4 years, tolling shall cease at the time the proceedings are final, including all appeals.

(3)  A cause of action does not accrue, and the limitations period for any such action does not run, during the time the insurer is controlled by parties acting contrary to the company's interests or when facts giving rise to the claim are concealed fraudulently from regulatory authorities or from any members of company management. The provisions of chapter 95 shall be construed to be consistent with the provisions of this section. The receiver may institute any action or proceeding authorized under this part while any statute of limitation is tolled pursuant to this section. This tolling provision shall be in addition to any other applicable tolling provision.

(4)  For actions not covered by subsection (2), if any unexpired time period is fixed by any agreement or in any proceeding for doing any act for the benefit of the estate, the receiver shall have 180 days, or for good cause shown more than 180 days as allowed by the court, from the date the court enters the order granting the department's petition for a delinquency proceeding.

History.--s. 8, ch. 2002-25.

631.051  Grounds for rehabilitation; domestic insurers.--The department may petition for an order directing it to rehabilitate a domestic insurer or an alien insurer domiciled in this state on any one or more of the following grounds, that the insurer:

(1)  Is impaired or insolvent;

(2)  Has failed to comply with an order of the department to make good an impairment of capital or surplus or both;

(3)  Is found by the department to be in such condition or is using or has been subject to such methods or practices in the conduct of its business, as to render its further transaction of insurance presently or prospectively hazardous to its policyholders, creditors, stockholders, or the public;

(4)  Has failed, or its parent corporation, subsidiary, or affiliated person controlled by either the insurer or the parent corporation has failed, to submit its books, documents, accounts, records, and affairs pertaining to the insurer to the reasonable inspection or examination of the department or its authorized representative; or any individual exercising any executive authority in the affairs of the insurer, or parent corporation, or subsidiary, or affiliated person has refused to be examined under oath by the department or its authorized representative, whether within this state or otherwise, concerning the pertinent affairs of the insurer, or parent corporation or subsidiary or affiliated person; or if examined under oath refuses to divulge pertinent information reasonably known to her or him; or officers, directors, agents, employees, or other representatives of the insurer or parent corporation, subsidiary, or affiliated person have failed to comply promptly with the reasonable requests of the department or its authorized representative for the purposes of, and during the conduct of, any such examination;

(5)  Has concealed or removed records or assets or otherwise violated s. 628.271 or s. 628.281;

(6)  Through its board of directors or governing body is deadlocked in the management of the insurer's affairs and that the members of a mutual, reciprocal, or any other type of organization or stockholders are unable to break the deadlock and that irreparable injury to the insurer, its creditors, its policyholders, its members or subscribers, or the public is threatened by reason thereof;

(7)  Has transferred or attempted to transfer substantially its entire property or business, or has entered into any transaction the effect of which is to merge substantially its entire property or business into that of any other insurer or entity without having first obtained the written approval of the department under the provisions of s. 628.451, s. 628.461, or s. 628.4615, as the case may be;

(8)  Has willfully violated its charter or certificate of incorporation or any law of this state;

(9)  Is in such a position that control of it, whether by stock ownership or otherwise, and whether direct or indirect, is in one or more persons found by the department after notice and hearing to be dishonest or untrustworthy; or that the insurer has failed, upon order of the department and expiration of such reasonable time for such removal as the department shall specify in the order, to remove any person who in fact has executive authority, directly or indirectly, in the insurer, whether as an officer, director, manager, agent, employee, or otherwise, and if such person has been found by the department after notice and hearing, to be incompetent, dishonest, untrustworthy, or so lacking in insurance company managerial experience as to be hazardous to the insurance-buying public;

(10)  Has been or is the subject of an application for the appointment of a receiver, trustee, custodian, or sequestrator of the insurer or its property otherwise than pursuant to the provisions of this code, but only if such an appointment has been made or is imminent;

(11)  Has consented to such an order through a majority of its directors, stockholders, members, or subscribers;

(12)  Has failed to pay a final judgment rendered against it in this state upon any insurance contract issued or assumed by it, within 60 days after the judgment became final, within 60 days after the time for taking an appeal has expired, or within 30 days after dismissal of an appeal before final determination, whichever date is the later;

(13)  Has been the victim of embezzlement, wrongful sequestration, conversion, diversion, or encumbering of its assets; forgery or fraud affecting it; or other illegal conduct in, by, or with respect to it, which if established would threaten its solvency; or that the department has reasonable cause to so believe any of the foregoing has occurred or may occur;

(14)  Is engaging in a systematic practice of reaching settlements with and obtaining releases from policyholders or third-party claimants and then unreasonably delaying payment of, or failing to pay, the agreed-upon settlements; or

(15)  Within the previous 12 months has systematically attempted to compromise with creditors on the ground that it is financially unable to pay its claims in full.

History.--s. 721, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 70-27; s. 1, ch. 70-439; s. 809(1st), ch. 82-243; ss. 3, 17, ch. 86-250; s. 4, ch. 87-50; s. 10, ch. 90-248; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 397, ch. 97-102.

631.0515  Appointment of receiver; insurance holding company.--A delinquency proceeding pursuant to this chapter constitutes the sole and exclusive method of dissolving, liquidating, rehabilitating, reorganizing, conserving, or appointing a receiver of a Florida corporation which is not insolvent as defined by s. 607.01401(16); which through its shareholders, board of directors, or governing body is deadlocked in the management of its affairs; and which directly or indirectly owns all of the stock of a Florida domestic insurer. The department may petition for an order directing it to rehabilitate such corporation if the interests of policyholders or the public will be harmed as a result of the deadlock. The department shall use due diligence to resolve the deadlock. Whether or not the department petitions for an order, the circuit court shall not have jurisdiction pursuant to ¹s. 607.271, ¹s. 607.274, or ¹s. 607.277 to dissolve, liquidate, or appoint receivers with respect to, a Florida corporation which directly or indirectly owns all of the stock of a Florida domestic insurer and which is not insolvent as defined by s. 607.01401(16).

History.--s. 2, ch. 86-86; s. 2, ch. 87-50; s. 181, ch. 90-179; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 45, ch. 99-3; s. 83, ch. 2000-154.

¹Note.--Repealed by s. 189, ch. 90-179.

631.061  Grounds for liquidation.--The department may apply to the court for an order appointing it as receiver (if its appointment as receiver is not then in effect) and directing it to liquidate the business of a domestic insurer or of the United States branch of an alien insurer having trusteed assets in this state, regardless of whether or not there has been a prior order directing it to rehabilitate such insurer, upon any of the grounds specified in s. 631.051, or if such insurer:

(1)  Is or is about to become insolvent.

(2)  Is an insolvent insurer and has commenced or is attempting to commence voluntary liquidation or dissolution except under this code.

(3)  Has not completed its organization and obtained a certificate of authority as an insurer within the time allowed therefor under any applicable law.

History.--s. 722, ch. 59-205; ss. 13, 35, ch. 69-106; s. 4, ch. 70-27; s. 809(1st), ch. 82-243; s. 5, ch. 83-38; ss. 184, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.071  Grounds for conservation; foreign insurers.--The department may apply to the court for an order appointing it as receiver or ancillary receiver, and directing it to conserve the assets within this state, of a foreign insurer upon any of the following grounds:

(1)  Upon any of the grounds specified in s. 631.051 or s. 631.061, or

(2)  Upon the ground that its property has been sequestrated in its domiciliary sovereignty or in any other sovereignty.

History.--s. 723, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; ss. 184, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.081  Grounds for conservation; alien insurers.--The department may apply to the court for an order appointing it as receiver or ancillary receiver, and directing it to conserve the assets within this state, of any alien insurer upon any of the following grounds:

(1)  Upon any of the grounds specified in s. 631.051 or s. 631.061;

(2)  Upon the ground that the insurer has failed to comply, within the time designated by the department, with an order made by it to make good an impairment of its trusteed funds; or

(3)  Upon the ground that the property of the insurer has been sequestrated in its domiciliary sovereignty or elsewhere.

History.--s. 724, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; ss. 184, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.091  Grounds for ancillary liquidation; foreign insurers.--The department may apply to the circuit court for an order appointing it as ancillary receiver of, and directing it to liquidate the business and assets of, a foreign insurer which has assets, business, or claims in this state upon the appointment in the domiciliary state of such insurer of a receiver, liquidator, conservator, rehabilitator, or other officer by whatever name called for the purpose of liquidating the business of such insurer.

History.--s. 725, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; s. 6, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.101  Order of rehabilitation; termination.--

(1)  An order to rehabilitate a domestic insurer shall direct the department forthwith to take possession of the property of the insurer and to conduct the business thereof, and to take such steps toward removal of the causes and conditions which have made rehabilitation necessary as the court may direct.

(2)  If at any time the department deems that further efforts to rehabilitate the insurer would be useless, it may apply to the court for an order of liquidation.

(3)  The department, or any interested person upon due notice to the department, at any time may apply to the court for an order terminating the rehabilitation proceedings and permitting the insurer to resume possession of its property and the conduct of its business, but no such order shall be made or entered except when, after a hearing, the court has determined that the purposes of the proceeding have been fully accomplished.

History.--s. 726, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.111  Order of liquidation; domestic insurers.--

(1)  An order to liquidate the business of a domestic insurer shall direct the department forthwith to take immediate possession of the property of the insurer, to marshal all the assets of the insurer, to liquidate its business, to deal with the insurer's property and business in its own name or in the name of the insurer, as the court may direct, and to give notice to all creditors who may have claims against the insurer to present such claims, as the court may direct.

(2)  The order of liquidation shall authorize and direct the department to take immediate possession of all the property, assets, and estate, including, but not limited to, all offices maintained by the insurer and all rights of action, books, documents, papers, evidences of debt, and all other property of every kind whatsoever and wheresoever located belonging to the insurer, including, but not limited to, all bank accounts, stocks, bonds, debentures, mortgages, all premiums collected by premium finance companies or any person otherwise engaged in premium financing, agents, subagents, producing agents, brokers, solicitors, service representatives, or others and not paid to the insurer, furniture, fixtures, equipment, office supplies, and all real property of the insurer and to hold all such assets pending further orders of the court.

(3)  The department may apply for and secure an order dissolving the corporate existence of a domestic insurer upon its application for an order of liquidation of such insurer or at any time after such order has been granted.

History.--s. 727, ch. 59-205; ss. 13, 35, ch. 69-106; s. 5, ch. 70-27; s. 1, ch. 70-439; s. 809(1st), ch. 82-243; s. 7, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.112  Subordination of claims for noncooperation.--If an ancillary receiver or another person performing the duties associated with an ancillary receiver in another state or foreign country fails to transfer to the domiciliary liquidator in this state any assets within her or his control other than special deposits, diminished only by the expenses of the ancillary receivership, if any, the claims filed in the ancillary receivership, other than special deposit claims or secured claims, shall be deemed class 9 claims as defined in s. 631.271(1)(i).

History.--ss. 84, 188, ch. 91-108; s. 4, ch. 91-429; s. 398, ch. 97-102; s. 46, ch. 99-3.

631.121  Order of liquidation; alien insurers.--An order to liquidate the business of a United States branch of an alien insurer having trusteed assets in this state shall be in the same terms as those prescribed for domestic insurers, save and except only that the assets of the business of such United States branch shall be the only assets included therein.

History.--s. 728, ch. 59-205; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.131  Order of conservation or ancillary liquidation of foreign or alien insurers.--

(1)  An order to conserve the assets of a foreign or alien insurer shall require the department forthwith to take possession of the property of the insurer within this state and to conserve it, subject to the further direction of the court.

(2)  An order to liquidate the assets in this state of a foreign insurer shall require the department forthwith to take possession of the property of the insurer within this state, to take all steps necessary to prevent wasting of the assets, to marshal all assets in accordance with s. 631.111(2), insofar as that subsection does not conflict with the rights of the domiciliary receiver, and to liquidate it subject to the orders of the court and with due regard to the rights and powers of the domiciliary receiver as provided in this chapter.

History.--s. 729, ch. 59-205; ss. 13, 35, ch. 69-106; s. 6, ch. 70-27; s. 1, ch. 70-439; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.141  Conduct of delinquency proceeding; domestic and alien insurers.--

(1)  Whenever under this chapter a receiver is to be appointed in a delinquency proceeding for a domestic or alien insurer, the court shall appoint the department as such receiver. The court shall order the department forthwith to take possession of the assets of the insurer and to administer the same under the orders of the court.

(2)  As a domiciliary receiver, the department is vested by operation of law with the title to all of the property, contracts, and rights of action, and all of the books and records, of the insurer, wherever located, as of the date of entry of the order directing it to rehabilitate or liquidate a domestic insurer or to liquidate the United States branch of an alien insurer domiciled in this state; and it shall have the right to recover the same and reduce the same to possession; except that ancillary receivers in reciprocal states shall have, as to assets located in their respective states, the rights and powers which are herein prescribed for ancillary receivers appointed in this state as to assets located in this state.

(3)  The filing or recording of the order directing possession to be taken, or a certified copy thereof, in any office where instruments affecting title to property are required to be filed or recorded imparts the same notice as would be imparted by a deed, bill of sale, or other evidence of title duly filed or recorded.

(4)  The department as domiciliary receiver is responsible for the proper administration of all assets coming into its possession or control. The court may at any time require a bond from it or its agents if deemed desirable for the protection of such assets.

(5)  Upon taking possession of the assets of an insurer, the domiciliary receiver shall, subject to the direction of the court, immediately proceed to conduct the business of the insurer or to take such steps as are authorized by this chapter for the purpose of rehabilitating, liquidating, or conserving the affairs or assets of the insurer.

(6)  The department may assert all rights belonging to third parties, including, but not limited to, policyholders, creditors, and other claimants, except to the extent an individual claim is personal and unique to the claimant and could not inure to the benefit of the estate or to policyholders, creditors, or other claimants.

(7)  In connection with a delinquency proceeding, the department may appoint one or more special agents to act for it, and it may employ such counsel, clerks, and assistants as it deems necessary. The compensation of the special agents, counsel, clerks, or assistants and all expenses of taking possession of the insurer and of conducting the proceeding shall be fixed by the receiver, subject to the approval of the court, and shall be paid out of the funds or assets of the insurer. Within the limits of duties imposed upon them, special agents shall possess all the powers given to and, in the exercise of those powers, shall be subject to all duties imposed upon the receiver with respect to such proceeding.

(8)  The department as domiciliary receiver may take such action as it deems necessary or appropriate to reform and revitalize the insurer. The department shall have all the powers of the directors, officers, and managers, whose authority shall be suspended, except as they are redelegated by the receiver. The receiver shall have full power to direct and manage the affairs of the insurer, to hire and discharge employees, and to deal with the property and business of the insurer.

(9)  If the department as domiciliary receiver determines that reorganization, consolidation, conversion, reinsurance, merger, or other transformation of the insurer is appropriate, it shall prepare a plan to effect such changes. Upon application of the receiver for approval of the plan, and after such notice and hearings as the court may prescribe, the court may either approve or disapprove the plan proposed or may modify it and approve it as modified. Any plan approved under this section must be, in the judgment of the court, fair and equitable to all parties concerned. If the plan is approved, the receiver shall carry out the plan.

(10)  Records created by the entity in receivership shall be disposed of in accordance with the order of the court at such time as the receiver determines that the records are not needed for the administration of the estate.

History.--s. 730, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; s. 8, ch. 83-38; ss. 85, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 9, ch. 2002-25.

631.152  Conduct of delinquency proceeding; foreign insurers.--

(1)  Whenever under this chapter an ancillary receiver is to be appointed in a delinquency proceeding for an insurer not domiciled in this state, the court shall appoint the department as ancillary receiver. The department shall file a petition requesting the appointment on the grounds set forth in s. 631.091:

(a)  If it finds that there are sufficient assets of the insurer located in this state to justify the appointment of an ancillary receiver, or

(b)  If 10 or more persons resident in this state having claims against such insurer file a petition with the department requesting the appointment of such ancillary receiver.

(2)  The domiciliary receiver for the purpose of liquidating an insurer domiciled in a reciprocal state shall be vested by operation of law with the title to all of the property (except statutory deposits, special statutory deposits, and property located in this state subject to a security interest), contracts, and rights of action, and all of the books and records of the insurer located in this state, and it shall have the immediate right to recover balances due from local agents and to obtain possession of any books and records of the insurer found in this state. It shall also be entitled to recover the property subject to a security interest, statutory deposits, and special statutory deposits of the insurer located in this state, except that upon the appointment of an ancillary receiver in this state, the ancillary receiver shall during the ancillary receivership proceeding have the sole right to recover such other assets. The ancillary receiver shall, as soon as practicable, liquidate from their respective securities those special deposit claims and secured claims which are proved and allowed in the ancillary proceeding in this state, and shall pay the necessary expenses of the proceeding. All remaining assets it shall promptly transfer to the domiciliary receiver. Subject to the foregoing provisions, the ancillary receiver and its agents shall have the same powers and be subject to the same duties with respect to the administration of such assets as a receiver of an insurer domiciled in this state.

(3)  The domiciliary receiver of an insurer domiciled in a reciprocal state may sue in this state to recover any assets of such insurer to which it may be entitled under the laws of this state.

History.--s. 731, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; ss. 86, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.153  Intervention; exclusiveness of claims procedure.--No person shall be allowed to intervene in any delinquency proceeding in this state brought under this chapter for the purpose of seeking or obtaining payment of any judgment, lien, or other claim of any kind. The claims procedure set out in ss. 631.161, 631.171, 631.181, 631.182, 631.191, 631.192, and 631.193 constitutes the exclusive means for obtaining payment of claims from the receivership estate.

History.--s. 2, ch. 85-339; s. 1, ch. 86-286; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.154  Funds, assets, or other property in the possession of third person.--

(1)  If the receiver determines that funds, assets, or property in the possession of another person are rightfully the property of the estate, the receiver shall deliver to such person a written demand for immediate delivery of the funds, assets, or property to the receiver, referencing this section by number, referencing the court and docket number of the receivership action, and notifying the person that any claim of right to the funds, assets, or property by her or him must be presented to the court within 20 days after the date of the written demand. Any person who holds funds, assets, or other property belonging to an entity placed in receivership under this chapter shall deliver the funds, assets, or other property to the receiver on demand. Should the person allege any right to retain the funds, assets, or other property pursuant to s. 631.155, s. 631.191, s. 631.261, s. 631.262, s. 631.263, or s. 631.281, a pleading setting out the right shall be filed with the court within 20 days after the receipt of the receiver's demand that the funds, assets, or property be delivered to the receiver. The person shall serve a copy of the pleading on the receiver. The pleading of the person shall inform the court as to the nature of the claim to the property, the alleged value of the assets or property, or the amount of funds held, and what action has been taken by the person to preserve and protect the assets or property or to preserve any funds pending determination of the dispute.

(2)  If requested by the receiver, a hearing shall be held to determine where and under what conditions the property, assets, or funds shall be held by the person pending determination of the dispute. The court may impose conditions as it may deem necessary or appropriate for the preservation of the property until the court can determine the validity of the person's claim to the property, assets, or funds. If any property, assets, or funds are allowed to remain in the possession of the person after demand made by the receiver, that person shall be strictly liable for any waste, loss, or damage of the property, assets, or funds retained.

(3)  If a person has filed a pleading alleging any right to retain funds, assets, or property, the court shall hold a subsequent hearing to determine entitlement to the funds, assets, or property claimed by the receiver.

(4)  If a person fails to file the pleading required by subsection (1) within the 20-day period, the court may, upon petition of the receiver and upon a copy of the petition being served by the petitioner to such person, issue its summary order directing the immediate delivery of the funds, assets, or property to the receiver and finding that the person has waived all claims of right to the funds, assets, or property.

(5)  This section shall apply to all proceedings brought by the receiver to recover funds, assets, or property believed by the receiver under this chapter to be assets of the entity subject to an order of conservation, rehabilitation, or liquidation. The receiver shall be exempt from the provisions of s. 57.111.

(6)  Should the receiver be successful in establishing its claim or any part thereof, the receiver shall be entitled to recover judgment for the following:

(a)  The property or its cash value as of the date of the order of conservation, rehabilitation, or liquidation, whichever is applicable.

(b)  Rental for the use of the property to run from the date of the order of conservation, rehabilitation, or liquidation, whichever is applicable, to the date the property is delivered to the receiver.

(c)  In the case of funds, interest at the statutory rate to run from the date of the order of conservation, rehabilitation, or liquidation, whichever is applicable, to the date the funds are delivered to the receiver.

(d)  All costs, investigative and other expenses, including, but not limited to, those for department staff, incurred in the recovery of the property, assets, or funds, and reasonable attorney's fees. Department staff costs and expenses include staff salaries.

It is the intent of this section that a person found to be holding receivership assets fully reimburse the receiver for any and all efforts made to recover those assets.

History.--s. 7, ch. 89-360; s. 1, ch. 90-192; ss. 87, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 399, ch. 97-102; s. 10, ch. 2002-25.

631.155  Agents' balances; premiums and unearned commissions.--Premiums and unearned commissions which have been collected on behalf of an insurer by an agent, agency, or other entity or person constitute an asset of the insurer for which the agent, agency, or other entity or person has a duty to account to the receiver and to pay over amounts as may be due. The duty to account to the receiver shall encompass all persons or entities involved in the handling and transmittal of premium funds. An accounting shall be provided to the receiver within 20 days after receipt of a written demand for an accounting. If there is a dispute regarding the accounting, the court shall hear and decide the matter upon petition of the receiver. Compliance with this section and payment of sums determined to be owed by the court within 30 days of judgment, or within other payment terms approved by the court, shall constitute requirements for continued licensure of a person holding a license under the Florida Insurance Code, and failure to comply with this section shall be sufficient grounds for the license revocation.

History.--s. 8, ch. 89-360; s. 1, ch. 90-192; ss. 88, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 67, ch. 2002-206.

631.156  Investigation by the department; scope of authority; sharing of materials.--

(1)  The department may, under the direction and supervision of the receivership court, conduct an investigation to determine the causes of the insolvency, including whether false statements filed with the department contributed to the insolvency and if any laws of this state, any other state, or the Federal Government relating to the solvency of the insurer were violated; to discover assets for recovery; and to determine the location of assets and their manner of recovery. The department may take statements under oath and examine and review the books, records, and documents of the insurer or any affiliate, controlling person, officer, director, manager, trustee, agent, adjuster, employee, or independent contractor of any insurer or affiliate and any other person possessing any executive authority over, or exercising or having exercised any control over, any segment of the affairs of the insurer or affiliate. Contracts of reinsurance between an insurer and a reinsurer do not constitute the exercise of control by the reinsurer over the insurer for purposes of this section.

(2)  The department may provide documents, books, and records; other investigative products, work product, and analysis; and copies of any or all of such materials to the Division of Insurance Fraud or any other appropriate government agency. The sharing of these materials shall not waive any work product or other privilege otherwise applicable under law.

(3)  The receivership court, upon motion of the department, shall enter an order expediting compliance with the requirements of subsection (1). The court may impose appropriate penalties and sanctions for noncompliance with such order, including penalties and sanctions for the loss, destruction, or spoliation of any evidence that occurs after entry of such order.

History.--s. 11, ch. 2002-25.

631.157  Civil action by the receiver.--

(1)  Any person who is engaged in the business of insurance, is or acts as an officer, director, agent, or employee of any person engaged in the business of insurance, or is involved in a transaction relating to the conduct of affairs of such a business, other than as an insured or beneficiary under a policy of insurance, and who willfully obtains or uses, as defined in s. 812.012(3), any funds, assets, or property, including, but not limited to, moneys, funds, premiums, credits, or other property of an insurer, shall be liable to the department as receiver for the use and benefit of an insolvent insurer's estate, claimants, creditors, and policyholders, as follows:

(a)  If the funds, assets, or property obtained or used did not jeopardize the safety and soundness of an insurer and was not a significant cause of such insurer being placed in receivership, the person shall be liable only for the full amount of any funds, assets, or property obtained or used, plus prejudgment interest provided by law.

(b)  If the funds, assets, or property obtained or used jeopardized the safety and soundness of an insurer or was a significant cause of the insurer being placed in receivership, the person shall be liable for triple the full amount of any funds, assets, or property obtained or used, plus prejudgment interest provided by law on the original amount.

(2)(a)  Any person who:

1.  Is engaged in the business of insurance, is or acts as an officer, director, agent, or employee of any person engaged in the business of insurance, or is involved in a transaction relating to the conduct of affairs of such a business, other than as an insured or beneficiary under a policy of insurance;

2.  Has actual knowledge or such constructive knowledge as should have been obtained through reasonable inquiry by a person in that position; and

3.  Misreports a material fact in any book, report, or statement of an insurer

with the intent to deceive the insurer, including any officer, employee, or agent of the insurer, the department, or any agent or examiner appointed by the department to examine the affairs of the person or insurer, concerning the financial condition or solvency of such business is liable to the department as receiver for the use and benefit of the insolvent insurer's estate, creditors, and policyholders, as provided in paragraph (b).

(b)1.  If the misreporting did not jeopardize the safety and soundness of an insurer and was not a significant cause of the insurer being placed in receivership, the person shall be liable only for the full amount of any asset misreported.

2.  If the misreporting jeopardized the safety and soundness of an insurer or was a significant cause of the insurer being placed in receivership, the person shall be liable for triple the full amount of any asset misreported.

(3)  If the asset or property that has been obtained or used was reported to the department as being available to the insurer as an admitted asset and such asset is unavailable to the receiver for payment of the obligations of the insurer at the time a receivership proceeding is instituted, the obtaining or using shall be presumed to have jeopardized the safety and soundness of the insurer and to have been a significant cause of the insurer's being placed in conservation, rehabilitation, or liquidation, with the burden of proof on the defendants to show otherwise.

(4)  If the receiver is successful in establishing a claim under this section, the receiver shall be entitled to recover all of its costs; investigative and other expenses, which shall include the department's in-house staff and staff attorney's expenses, costs, and salaries, expended in the prosecution of the action; and reasonable attorney's fees. The receiver shall be exempt from the provisions of s. 57.111.

(5)  An action under this section may be brought at any time before the expiration of 4 years after the entry of the initial order of rehabilitation or liquidation under this part but shall be filed before the time the receivership proceeding is closed or dismissed.

History.--s. 12, ch. 2002-25.

631.161  Claims of nonresidents against insurers domiciled in this state.--

(1)  In a liquidation proceeding begun in this state against an insurer domiciled in this state, claimants residing in foreign countries or in states which are not reciprocal must file claims in this state, and claimants residing in reciprocal states may file claims either with the ancillary receivers, if any, in their respective states or with the domiciliary receiver. Claims must be filed on or before the last date fixed for the filing of claims in the domiciliary liquidation proceeding.

(2)  Claims belonging to claimants residing in reciprocal states may be proved either in the liquidation proceeding in this state as provided in this part or in ancillary proceedings, if any, in the reciprocal states. If notice of the claims and opportunity to appear and be heard is afforded the domiciliary receiver of this state as provided in s. 631.171(2) with respect to ancillary proceedings, the final allowance of claims by the courts in ancillary proceedings in reciprocal states shall be conclusive as to amount and as to priority of special deposit or secured claims arising in an ancillary state but shall not be conclusive with respect to priorities against general assets under s. 631.271.

History.--s. 732, ch. 59-205; s. 809(1st), ch. 82-243; s. 9, ch. 83-38; s. 127, ch. 83-216; ss. 187, 188, ch. 91-108.; s. 4, ch. 91-429.

631.171  Claims of residents against insurers domiciled in reciprocal states.--

(1)  In a liquidation proceeding in a reciprocal state against an insurer domiciled in that state, if a notice to file claims has been issued by the Florida receiver pursuant to s. 631.181(3), claimants against the insurer who reside within this state may file claims either with the ancillary receiver, if any, in this state or with the domiciliary receiver. Claims must be filed on or before the last date fixed for the filing of claims in the domiciliary liquidation proceeding.

(2)  If a notice to file claims has been issued by the Florida receiver pursuant to s. 631.181(3), claims belonging to claimants residing in this state may be proved either in the domiciliary state under the law of that state or in the ancillary proceeding, if any, in this state. If a claimant elects to prove her or his claim in this state, the claimant shall file her or his claim with the receiver in the manner provided in s. 631.181(1) and (2). The ancillary receiver shall make its recommendation to the court as under s. 631.182(2), shall arrange a date for hearing if necessary under s. 631.182(1), and shall give notice to the liquidator in the domiciliary state, either by certified mail or by personal service at least 40 days prior to the date set for hearing. If the domiciliary liquidator, within 30 days after the giving of such notice, gives notice in writing to the ancillary receiver and to the claimant, either by certified mail or by personal service, of her or his intention to contest the claim, she or he is entitled to appear or to be represented in any proceeding in this state involving the adjudication of the claim.

(3)  If a notice to file claims has not been issued by the Florida receiver pursuant to s. 631.181(3), claims shall be proved and filed before the domiciliary receiver.

(4)  The final allowance of the claim by the courts of this state shall be accepted as conclusive as to amount and as to priority against special deposits or other security located in this state.

History.--s. 733, ch. 59-205; s. 809(1st), ch. 82-243; s. 10, ch. 83-38; s. 3, ch. 85-339; ss. 89, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 400, ch. 97-102.

631.181  Filing and proof of claim.--

(1)(a)  Proof of a claim shall be filed with the receiver in the form required by subsection (2) on or before the last day for filing specified in the notice required under subsection (3), except that proof of claim for cash surrender values or other investment values in life insurance and annuities need not be filed unless the receiver expressly so requires. Claims filed after the deadline may not share in distributions from the estate except to the extent allowed by exceptions specified in this section.

(b)  The court may permit a claimant making a late filing to share in distributions, whether past or future, as if the claimant were not late, to prevent manifest injustice to the extent that any such payment will not prejudice the orderly administration of the liquidation, under any of the following circumstances:

1.  The existence of the claim was not known to the claimant and the claimant filed her or his claim as promptly thereafter as reasonably possible after learning of it.

2.  A transfer to the claimant was avoided under ss. 631.261 and 631.262.

3.  The valuation under s. 631.191 of security held by a secured creditor shows a deficiency, which is filed within 30 days after the valuation.

(c)  The court shall permit late-filed claims to share in distributions, whether past or future, as if they were not late, if such claims are claims of a guaranty association or foreign guaranty association for reimbursement of covered claims paid or expenses incurred, or both, subsequent to the last day for filing when such payments were made and expenses incurred as provided by law.

(d)  The court may consider any claim filed late which is not covered by paragraph (b) and permit it to receive distributions which are subsequently declared on any claims of a lower priority if the payment does not prejudice the orderly administration of the liquidation. The late-filing claimant shall receive, at each distribution, the same percentage of the amount allowed on her or his claim as is then being paid to claimants of any lower priority. This payment of percentages shall continue until her or his claim has been paid in full.

(2)(a)  Proof of a claim shall consist of a statement signed by the claimant that includes all of the following information which is applicable:

1.  The particulars of the claim, including the consideration given for it.

2.  The identity and amount of the security on the claim.

3.  The payments made on the debt, if any.

4.  A statement that the sum claimed is justly owing and that there is no setoff, counterclaim, or defense to the claim.

5.  Any right of priority of payment or other specific right asserted by the claimants.

6.  A copy of the written instrument which is the foundation of the claim.

7.  The name and address of the claimant and the attorney who represents her or him, if any.

(b)  No claim need be considered or allowed if it does not contain all the information in paragraph (a) which is applicable. The receiver may require that a prescribed form be used, that other information and documents be included, and that the proof of claim be verified by an affidavit of the claimant.

(c)  At any time, the receiver may request the claimant to present information or evidence supplementary to that required under paragraph (a) and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence.

(d)  No judgment or order against an insured or the insurer entered after the date of filing of a successful petition for liquidation, and no judgment or order against an insured or the insurer entered at any time by default or by collusion, need be considered as evidence of liability or of the quantum of damages. No judgment or order against an insured or the insurer entered within 4 months before the filing of the petition need be considered as evidence of liability or of the quantum of damages.

(e)  All claims of a guaranty association or foreign guaranty association shall be in such form and contain such substantiation as may be agreed to by the association and the receiver.

(3)  After the entry of the order of liquidation against a Florida-domiciled insurer, regardless of any prior notice that may have been given to creditors, the receiver shall notify all persons who may have claims against the insurer that they must file such claims with it at a place and within the time specified in the notice, or else such claims will be forever barred. The Florida receiver need not give such notice in ancillary proceedings if the receiver obtains an order from the court authorizing the receiver to not send out such notices, which order the court shall issue upon satisfactory evidence that the domiciliary receiver will be sending out similar notices and will accept and evaluate claims from Florida residents, that Florida residents may have objections to evaluations heard in Florida, and that there are reasonable assurances that Florida policyholders and claimants will be treated fairly and equally as compared to residents of the domicile state. The time specified in the notice shall be as fixed by the court for filing of claims and shall be not less than 6 months after the entry of the order of insolvency. The notice shall be given in such manner and for such reasonable period of time as may be ordered by the court.

History.--s. 734, ch. 59-205; ss. 13, 35, ch. 69-106; s. 7, ch. 70-27; s. 809(1st), ch. 82-243; s. 11, ch. 83-38; ss. 90, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 401, ch. 97-102.

631.182  Receiver claims report and claimants objections procedure.--

(1)  As soon as it has evaluated claims filed in the delinquency proceeding, the receiver shall report the claims to the circuit court, specifying in the report its recommendations with respect to the actions to be taken thereon. Upon receipt of the report, the court shall enter an order approving the claims so reported, unless an objection is filed thereto within a deadline set by the court. The court shall direct the receiver to provide notice to each claimant of the amount recommended on the claim and the deadline for filing objections to the receiver's report. The receiver shall resolve objections to the satisfaction of the claimant or schedule a hearing before the court on objections filed to its report, and shall provide reasonable written notice of hearing to each claimant for which a hearing is scheduled.

(2)  At the hearing, any interested person is entitled to appear. The hearing shall not be de novo but shall be limited to the record as described in s. 631.181(2). The court shall enter an order allowing, allowing in part, or disallowing the claim. Any such order is deemed to be an appealable order. In the interests of judicial economy, the court may appoint a special master to resolve objections or to perform any particular service required by the court. This subsection shall apply to receivership proceedings commencing prior to, or subsequent to, July 1, 1997.

History.--ss. 12, 39, ch. 83-38; ss. 91, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 12, ch. 97-262.

631.191  Special deposit claims and secured claims.--

(1)  The owners of special deposit claims against an insurer against which a liquidation order has been entered in this or any other state shall be given priority against their several special deposits in accordance with the provisions of the statutes governing the creation and maintenance of such deposits. If there is a deficiency in any such deposit so that the claims secured thereby are not fully discharged therefrom, the claimants may share in the general assets, but such sharing shall be deferred until general creditors, and also claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit.

(2)(a)  The owner of a secured claim against an insurer against which a liquidation order has been entered in this or any other state may surrender her or his security and file her or his claim as a general creditor, or the claim may be discharged by resort to the security, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors. If the amount of the deficiency has been adjudicated in ancillary proceedings as provided in this chapter, or if it has been adjudicated by a court of competent jurisdiction in a proceeding in which the domiciliary receiver has had notice and an opportunity to be heard, such amount shall be conclusive; otherwise the amount shall be determined in the delinquency proceeding in the domiciliary state.

(b)  The value of any security held by a secured creditor shall be determined under supervision of the court by:

1.  Converting the same into money according to the terms of the agreement pursuant to which the security was delivered to such creditor; or

2.  If no such agreement exists, the court shall determine the value in the event the creditor and the receiver cannot agree upon same.

History.--s. 735, ch. 59-205; s. 809(1st), ch. 82-243; s. 13, ch. 83-38; s. 9, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 402, ch. 97-102.

631.192  Allowance of certain claims.--

(1)  No claim based upon a contract of insurance, suretyship, or indemnity may be allowed or paid from the assets of an insurer in process of liquidation unless the event causing the loss to, or creating the liability of, the obligee of the contract occurred prior to the order of liquidation or pursuant to the provisions of s. 631.252.

(2)(a)  Claims not covered by the provisions of subsection (1) may not be allowed or paid from the assets of an insurer in the process of liquidation unless:

1.  The event, whether an act or omission, occurred prior to the date of the order of liquidation;

2.  The goods were delivered or services were rendered prior to the order of liquidation; or

3.  The duty to perform under a contract matured prior to the order of liquidation.

(b)  Nothing in this subsection shall be deemed to extinguish or limit any right the receiver may otherwise have to cancel any contract or part thereof by virtue of any contractual provision or law of this state. It is the duty of every claimant under this subsection to mitigate and minimize any damage suffered as a result of a breach of contract upon entry of the order of liquidation. Recovery by any claimant under this subsection is limited to the actual damages suffered by virtue of a breach.

(3)  A claim of a third party shall not be deemed contingent, but shall be fairly evaluated even though liability has not been established by the date set forth in subsection (1), if:

(a)  It may be reasonably inferred from the proof presented upon such claim that such person would be able to obtain a judgment upon such cause of action against such insured; and

(b)  The claimant furnishes suitable proof, unless the court for good cause shown otherwise directs, that no further valid claim against such insurer arising out of the claimant's cause of action other than those claims already presented can be made.

(4)  The total liability of such insurer to all claimants arising out of the same act of its insured may be no greater than its maximum liability would be if it were not in liquidation.

History.--ss. 14, 39, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.193  Releases.--The filing of a claim constitutes a release of the insured from liability to the claimant to the extent of the coverage or policy limits provided by the insolvent insurer. The release is conditioned upon the cooperation of the insured with the receiver and the Florida Insurance Guaranty Association and any other guaranty association in defense of the claim. This release does not operate to discharge the Florida Insurance Guaranty Association or any other guaranty association from any of its responsibilities and duties set out in this chapter.

History.--ss. 15, 39, ch. 83-38; s. 4, ch. 85-339; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.201  Attachment and garnishment of assets.--During the pendency of a delinquency proceeding in this or any reciprocal state, no action or proceeding in the nature of an attachment, garnishment, or execution shall be commenced or maintained in the courts of this state against the delinquent insurer or its assets. Any lien obtained by any such action or proceeding within 4 months prior to the commencement of any such delinquency proceeding or at any time thereafter shall be void as against any rights arising in such delinquency proceeding.

History.--s. 736, ch. 59-205; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.205  Reinsurance proceeds.--All reinsurance proceeds payable under a contract of reinsurance to which the insolvent insurer is a party are to be paid directly to the domiciliary receiver as general assets of the receivership estate unless the reinsurance contract contains a clause which specifically names the insolvent insurer's insured as a direct beneficiary of the reinsurance contract.

History.--ss. 16, 39, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.221  Deposit of moneys collected.--The moneys collected by the department in a proceeding under this chapter shall be deposited in a qualified public depository as defined in s. 280.02, which depository with regards to such funds shall conform to and be bound by all the provisions of chapter 280, or invested with the State Treasurer pursuant to chapter 18. For the purpose of accounting for the assets and transactions of the estate, the receiver shall use such accounting books, records, and systems as the court directs after it hears and considers the recommendations of the receiver.

History.--s. 738, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; s. 17, ch. 83-38; s. 90, ch. 89-360; ss. 92, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.231  Exemption from fees.--The department shall not be required to pay any fee to any public officer in this state for filing, recording, issuing a transcript or certificate, or authenticating any paper or instrument pertaining to the exercise by the department of any of the powers or duties conferred upon it under this chapter, whether or not such paper or instrument be executed by the department or its employees or attorneys of record and whether or not it is connected with the commencement of any action or proceeding by or against the department, or with the subsequent conduct of such action or proceeding.

History.--s. 739, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.241  Borrowing on pledge of assets.--For the purpose of facilitating the rehabilitation, liquidation, conservation, or dissolution of an insurer pursuant to this chapter, the department may, subject to the approval of the court, borrow money and execute, acknowledge, and deliver notes or other evidences of indebtedness therefor and secure the repayment of the same by the mortgage, pledge, assignment, transfer in trust, or hypothecation of any or all of the property, whether real, personal, or mixed, of such insurer; and the department, subject to the approval of the court, shall have power to take any and all other action necessary and proper to consummate any such loan and to provide for the repayment thereof. The department shall be under no obligation in its official capacity to repay any loan made pursuant to this section.

History.--s. 740, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.251  Date rights fixed on liquidation.--Except as provided in ss. 631.192 and 631.252, the rights and liabilities of the insurer and its creditors, policyholders, stockholders, members, and subscribers and all other persons interested in its estate shall, unless otherwise directed by the court, be fixed as of the date on which the order directing the liquidation of the insurer is filed in the office of the clerk of the court which made the order, subject to the provisions of this chapter with respect to the rights of claimants holding contingent claims. No offset shall be allowed in favor of any person unless the claim of offset is fully mature, or, in the case of a reinsurance agreement, the insurer's obligation is incurred, as of the date on which the order directing the liquidation of the insurer is filed in the office of the clerk of the court which made the order, and a claim of offset shall not create a secured claim to any funds or property in the possession of the person claiming offset.

History.--s. 741, ch. 59-205; s. 9, ch. 70-27; s. 809(1st), ch. 82-243; s. 18, ch. 83-38; s. 10, ch. 89-360; s. 6, ch. 90-248; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.252  Continuation of coverage.--

(1)  All insurance policies or similar contracts of coverage, other than coverages defined in s. 631.713 or health maintenance organization coverage under part IV, issued by the insurer shall be canceled upon the earliest to occur of the following:

(a)  The date of entry of the liquidation or, if the court so provides in its order, the expiration of 30 days from the date of entry of the liquidation order;

(b)  The normal expiration of the policy or contract coverage;

(c)  The replacement of the coverage by the insured, or the replacement of the policy or contract of coverage, with a policy or contract acceptable to the insured by the receiver with another insurer; or

(d)  The termination of the coverage by the insured.

(2)  A claim arising during continuation of coverage under paragraph (1)(a) shall be treated as if it arose immediately before the order of liquidation.

(3)  The 30-day coverage continuation period provided in paragraph (1)(a) may in no event be extended; and failure of actual notice to the policyholder of the insolvency of the insurer, of commencement of a delinquency proceeding, or of expiration of the extension period does not affect such expiration.

(4)  Benefits under policies of life or health insurance or annuities and other coverages as defined in s. 631.713 shall continue in force for such period as provided for by s. 631.717 or any applicable law governing a foreign guaranty association.

(5)  Benefits under membership in a health maintenance organization shall continue in force for such period as provided in part IV.

History.--s. 10, ch. 70-27; s. 809(1st), ch. 82-243; s. 19, ch. 83-38; s. 5, ch. 85-339; ss. 93, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.261  Voidable transfers.--

(1)  Any transfer of, or lien upon, the property of an insurer or affiliate which is made or created within 4 months prior to the commencement of any delinquency proceeding under this chapter with the intent of giving to any creditor of the insurer a preference or of enabling the creditor to obtain a greater percentage of her or his debt than any other creditor of the same class, and which is accepted by such creditor having reasonable cause to believe that such preference will occur, shall be voidable.

(2)  Every director, officer, employee, stockholder, member, subscriber, and any other person acting on behalf of such insurer who shall be concerned in any such act or deed and every person receiving thereby any property of such insurer or affiliate or the benefit thereof shall be personally liable therefor and shall be bound to account to the department.

(3)  The department as receiver in any proceeding under this chapter may avoid any transfer of, or lien upon, the property of an insurer which any creditor, stockholder, subscriber, or member of such insurer or affiliate might have avoided and may recover the property so transferred unless such person was a bona fide holder for value prior to the date of commencement of a delinquency proceeding under this chapter. Such property or its value may be recovered from anyone who has received it except a bona fide holder for value as herein specified.

History.--s. 742, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; s. 11, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 403, ch. 97-102.

631.262  Transfers prior to petition.--

(1)  Every transfer made or suffered and every obligation incurred by an insurer or affiliate within 1 year prior to the filing of a successful petition in any delinquency proceeding under this chapter, upon a showing by the receiver that the same was incurred without fair consideration, or with actual intent to hinder, delay, or defraud either then-existing or future creditors of the insurer, shall be fraudulent and voidable. However, every such transfer or obligation incurred or suffered within 6 months prior to the filing of the above petition shall be presumed void and fraudulent, with the burden of proof upon the obligee or transferee to show otherwise. This subsection shall not apply to a person who in good faith is a purchaser, lienor, or obligee, for a present fair equivalent value, but any purchaser, lienor, or obligee who in good faith has given a valuable consideration less than fair for such transfer, lien, or obligation may retain the property, lien, or obligation as a security for repayment. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate, and in that event the receiver shall succeed to and may enforce the rights of the purchaser, lienor, or obligee.

(2)  Transfers shall be deemed to have been made or suffered, or obligations incurred, when perfected according to the following criteria:

(a)  A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee;

(b)  A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the insurer could obtain rights superior to the rights of the transferee;

(c)  A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created;

(d)  Any transfer not perfected prior to the filing of a petition in a delinquency proceeding shall be deemed to be made immediately before the filing of a successful petition;

(e)  Paragraphs (a)-(d) apply whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers.

(3)  The transferor or obligor insurer shall record and preserve adequate official memoranda by corporate minutes which shall fully reflect all transactions involving transfers as contemplated by this section of real property or securities of any type and, in the case of all other property or assets, any transfer out of the insurer's ordinary course of business. Any person, firm, or corporation, or any officer, director, or employee thereof, who shall violate this provision shall be guilty of a misdemeanor of the first degree, punishable as provided in s. 775.082 or by a fine of not more than $5,000. Each instance of such violation shall be considered a separate offense.

(4)  The personal liability of the officers or directors of an insolvent insurer shall be subject to the provisions of chapter 607 and the penalties provided therein.

(5)  Every transaction of the insurer with a reinsurer within 1 year prior to the filing of the petition shall be voidable upon a showing that such transaction was made without fair consideration or with intent to hinder, delay, or defraud either then-existing or future creditors, notwithstanding the provisions of subsection (1).

History.--s. 11, ch. 70-27; s. 654, ch. 71-136; s. 13, ch. 79-9; s. 809(1st), ch. 82-243; s. 12, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.263  Transfers after petition.--

(1)  After the original petition is filed in any delinquency proceeding, a transfer of any of the real property of the insurer made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred. The recording of a copy of the petition for, or order in, any delinquency proceeding with the clerk of the circuit court in the county where any real property in question is located is constructive notice of the commencement of a delinquency proceeding. The exercise by a court of the United States or any state with jurisdiction to authorize or effect a judicial sale of real property of the insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the copy is recorded in the county prior to the consummation of the judicial sale.

(2)  After the original petition for a delinquency proceeding has been filed and before an order of conservation, rehabilitation, or liquidation is granted:

(a)  A transfer of any of the property of the insurer, other than real property, made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred.

(b)  A person indebted to the insurer or holding property of the insurer may, if acting in good faith, pay the indebtedness or deliver the property or any part thereof to the insurer or upon her or his order, with the same effect as if the petition were not pending.

(3)  A person having actual knowledge of the pending delinquency proceeding shall be deemed not to act in good faith.

(4)  A person asserting the validity of a transfer under this section has the burden of proof. Except as elsewhere provided in this section, any transfer by or in behalf of the insurer after the date of filing of the original petition in any delinquency proceeding requesting the appointment of a receiver, as defined in s. 631.011, by any person other than the receiver is not valid against the receiver.

(5)  Nothing in this section shall impair the negotiability of currency or negotiable instruments.

History.--s. 12, ch. 70-27; s. 809(1st), ch. 82-243; s. 20, ch. 83-38; s. 6, ch. 85-339; s. 2, ch. 87-350; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 404, ch. 97-102.

631.271  Priority of claims.--

(1)  The priority of distribution of claims from the insurer's estate shall be in accordance with the order in which each class of claims is set forth in this subsection. Every claim in each class shall be paid in full or adequate funds shall be retained for such payment before the members of the next class may receive any payment. No subclasses may be established within any class. The order of distribution of claims shall be:

(a)  Class 1.--

1.  All of the receiver's costs and expenses of administration.

2.  All of the expenses of a guaranty association or foreign guaranty association in handling claims.

(b)  Class 2.--All claims under policies for losses incurred, including third-party claims, all claims against the insurer for liability for bodily injury or for injury to or destruction of tangible property which claims are not under policies, and all claims of a guaranty association or foreign guaranty association. All claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds, or investment values, shall be treated as loss claims. That portion of any loss, indemnification for which is provided by other benefits or advantages recovered by the claimant, may not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment by an employer to her or his employee may be treated as a gratuity.

(c)  Class 3.--Claims under nonassessable policies for unearned premiums or premium refunds.

(d)  Class 4.--Claims of the Federal Government.

(e)  Class 5.--Debts due to employees for services performed, to the extent that the debts do not exceed $2,000 for each employee and represent payment for services performed within 6 months before the filing of the petition for liquidation. Officers and directors are not entitled to the benefit of this priority. This priority is in lieu of any other similar priority that is authorized by law as to wages or compensation of employees.

(f)  Class 6.--Claims of general creditors.

(g)  Class 7.--Claims of any state or local government. Claims, including those of any state or local government for a penalty or forfeiture, shall be allowed in this class, but only to the extent of the pecuniary loss sustained from the act, transaction, or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to the class of claims under paragraph (j).

(h)  Class 8.--Claims filed after the time specified in s. 631.181(3), except when ordered otherwise by the court to prevent manifest injustice, or any claims other than claims under paragraph (i) or under paragraph (j).

(i)  Class 9.--Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Payments to members of domestic mutual insurance companies shall be limited in accordance with law.

(j)  Class 10.--The claims of shareholders or other owners.

(2)  In a liquidation proceeding involving one or more reciprocal states, the order of distribution of the domiciliary state shall control as to all claims of residents of this and reciprocal states. All claims of residents of reciprocal states shall be given equal priority of payment from general assets regardless of where such assets are located.

History.--s. 743, ch. 59-205; ss. 13, 35, ch. 69-106; s. 13, ch. 70-27; s. 1, ch. 70-439; s. 809(1st), ch. 82-243; s. 21, ch. 83-38; s. 7, ch. 85-63; s. 40, ch. 88-166; ss. 94, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1, ch. 95-213; s. 405, ch. 97-102.

631.281  Offsets.--

(1)  In all cases of mutual debts or mutual credits between the insurer and another person in connection with any action or proceeding under this chapter, such credits and debts shall be set off and the balance only shall be allowed or paid, except as provided in subsection (2).

(2)  No offset shall be allowed in favor of any such person where:

(a)  The obligation of the insurer to such person would not at the date of the entry of any liquidation order or otherwise, as provided in s. 631.251, entitle her or him to share as a claimant in the assets of the insurer. Any such obligation must be fully vested and mature as of the date of the order of liquidation and in no way contingent upon any future event or condition precedent to allow an offset. In the case of a reinsurance agreement, the insurer's obligation must be incurred as of the date of the order of liquidation to allow an offset.

(b)  The obligation of the insurer to such person was purchased by or transferred to such person with a view of its being used as an offset.

(c)  The obligation of such person is to pay an assessment levied against the members of a mutual insurer, or against the subscribers of a reciprocal insurer, or is to pay a balance upon the subscription to the capital stock of a stock insurer.

(3)  An agent who voluntarily pays the unearned portion of a premium to a policyholder shall succeed to the interest of the policyholder as an assignee of the policyholder's claim against the receiver for the unearned portion of the premium as of the effective date of cancellation of the policy.

(4)  No claim of offset shall operate to create a secured claim.

History.--s. 744, ch. 59-205; s. 809(1st), ch. 82-243; s. 22, ch. 83-38; s. 41, ch. 88-166; s. 7, ch. 90-248; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 406, ch. 97-102.

631.311  Report and petition for assessment.--Within 3 years after the date of the entry of an order of rehabilitation or liquidation of a domestic mutual insurer or a domestic reciprocal insurer, the department may make and file its report and petition to the court setting forth:

(1)  The reasonable value of the assets of the insurer;

(2)  The liabilities of the insurer to the extent thus far ascertained by the department;

(3)  The aggregate amount of the assessment, if any, which the department deems reasonably necessary to pay all claims, the costs and expenses of the collection of the assessments, and the costs and expenses of the delinquency proceeding in full;

(4)  Any other information relative to the affairs or property of the insurer that the department deems material.

History.--s. 747, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.321  Order and levy of assessment.--

(1)  Upon the filing and reading of the report and petition provided for in s. 631.311, the court, ex parte, may order the department to assess all members or subscribers of the insurer who may be subject to such an assessment, in such an aggregate amount as the court finds reasonably necessary to pay all valid claims as may be timely filed and proved in the delinquency proceeding, together with the costs and expenses of levying and collecting assessments and the costs and expenses of the delinquency proceeding in full. Any such order shall require the department to assess each such member or subscriber for her or his proportion of the aggregate assessment, according to such reasonable classification of such members or subscribers and formula as may be made by the department and approved by the court.

(2)  The court may order additional assessments upon the filing and reading of any amendment or supplement to the report and petition referred to in subsection (1), if such amendment or supplement is filed within 3 years after the date of the entry of the order of rehabilitation or liquidation.

(3)  After the entry of the order to levy an assessment upon members or subscribers of an insurer referred to in subsection (1) or subsection (2), the department shall levy an assessment upon such members or subscribers in accordance with the order.

(4)  The total of all assessments against any member or subscriber with respect to any policy, whether levied pursuant to this chapter or pursuant to any other provision of this code, shall be for no greater amount than that specified in the policy or policies of the member or subscriber and as limited under this code; except as to any policy which was issued at a rate of premium below the minimum rate lawfully permitted for the risk insured, in which event the assessment against any such policyholder shall be upon the basis of the minimum rate for such risk.

(5)  No assessment shall be levied against any member or subscriber with respect to any nonassessable policy issued in accordance with this code.

History.--s. 748, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 407, ch. 97-102.

631.331  Assessment prima facie correct; notice; payment; proceeding to collect.--

(1)  Any assessment of a subscriber or member of an insurer made by the department pursuant to the order of court fixing the aggregate amount of the assessment against all members or subscribers and approving the classification and formula made by the department under s. 631.321(1) shall be prima facie correct.

(2)  Each member or subscriber shall be notified of the amount of assessment to be paid by her or him by written notice mailed to the address of the member or subscriber last of record with the insurer. Failure of the member or subscriber to receive the notice so mailed, within the time specified therein or at all, shall be no defense in any proceeding to collect the assessment.

(3)  If any such member or subscriber fails to pay the assessment within the period specified in the notice, which period shall not be less than 20 days after mailing, the department may obtain an order in the delinquency proceeding requiring the member or subscriber to show cause at a time and place fixed by the court why judgment should not be entered against such member or subscriber for the amount of the assessment together with all costs, and a copy of the order and a copy of the petition therefor shall be served upon the member or subscriber within the time and in the manner designated in the order.

(4)  If the subscriber or member after due service of a copy of the order and petition referred to in subsection (3) is made upon her or him:

(a)  Fails to appear at the time and place specified in the order, judgment shall be entered against her or him as prayed for in the petition; or

(b)  Appears in the manner and form required by law in response to the order, the court shall hear and determine the matter and enter a judgment in accordance with its decision. In the interests of judicial economy, the court may appoint a special master to resolve objections or to perform any particular service required by the court. This paragraph shall apply to receivership proceedings commencing prior to, or subsequent to, July 1, 1997.

(5)  The department may collect any such assessment through any other lawful means.

History.--s. 749, ch. 59-205; ss. 13, 35, ch. 69-106; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 408, ch. 97-102; s. 13, ch. 97-262.

631.341  Notice of insolvency to policyholders by insurer, general agent, or agent.--

(1)  The receiver shall, immediately after appointment in any delinquency proceeding against an insurer in which the policies have been canceled, give written notice of such proceeding to each general agent and licensed agent of the insurer in this state. Each general agent and licensed agent of the insurer in this state shall forthwith give written notice of such proceeding to all subagents, producing agents, brokers, and service representatives writing business through such general agent or licensed agent, whether or not such subagents, producing agents, brokers, and servicing representatives are licensed or permitted by the insurer and whether or not they are operating under a written agency contract.

(2)  Unless, within 15 days subsequent to the date of such notice, all agents referred to in subsection (1) have either replaced or reinsured in a solvent authorized insurer the insurance coverages placed by or through such agent in the delinquent insurer, such agents shall then, by registered or certified mail, send to the last known address of any policyholder a written notice of the insolvency of the delinquent insurer.

(3)  The license, permit, or certificate of authority of any person, firm, or corporation which fails to comply with the provisions of this section is subject to revocation as otherwise provided by law.

(4)  If such person, firm, or corporation is not licensed or permitted or the holder of a certificate of authority under any section of this code, such person, firm, or corporation, or the officers and directors thereof, are, upon failure to comply with the provisions of this section, guilty of a misdemeanor of the first degree, punishable as provided in s. 775.082 or by a fine of not more than $5,000.

History.--s. 750, ch. 59-205; s. 15, ch. 70-27; s. 809(1st), ch. 82-243; s. 24, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 68, ch. 2002-206.

631.361  Seizure under court order.--

(1)  Upon filing by the department in the circuit court in and for Leon County of its verified petition alleging any ground for a formal delinquency proceeding against an insurer under this chapter, alleging that the interests of the insurer's policyholders, claimants, or creditors or the public will be endangered or jeopardized by delay, and setting forth the order deemed necessary by the department, the court may, ex parte and without notice or hearing, issue forthwith the requested order. The requested order may:

(a)  Direct the department to take possession and control of all or part of the property, books, documents, accounts, and other records of the insurer and the premises occupied by it for transaction of its business and premium funds and other property of the insurer held by an affiliate; and

(b)  Until further order of court, enjoin the insurer and any affiliate and their officers, directors, managers, agents, and employees from removal, concealment, or other disposition of the insurer's property, books, records, or accounts and from transaction of the insurer's business except with the department's written consent.

(2)  The court's order shall be for such duration specified in the order as the court deems necessary to enable the department to ascertain the insurer's condition. Upon motion of any party or affected person, or upon its own motion, the court may hold such hearings as it deems desirable, after such notice as it deems appropriate, and may extend, shorten, or modify the terms of the order. The court shall vacate the seizure order if the department fails to commence a formal proceeding under this chapter after having had a reasonable opportunity to do so, and a seizure order is automatically vacated by issuance of the court's order pursuant to a formal delinquency proceeding under this chapter.

(3)  Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the insurer.

History.--s. 17, ch. 70-27; s. 1, ch. 70-439; s. 809(1st), ch. 82-243; s. 7, ch. 85-339; s. 3, ch. 87-350; s. 13, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.371  Seizure under order of the department.--

(1)  Upon the department filing a verified petition with any circuit judge of the proper judicial circuit as required by s. 631.021(2), which states that it believes that the interest of policyholders, the insurer, claimants, creditors, or the public will be endangered or jeopardized and that prima facie grounds exist for rehabilitation, liquidation, or conservation of an insurer under s. 631.051, s. 631.061, or s. 631.131, the department may request a seizure order and shall be entitled to an ex parte hearing forthwith and an appropriate seizure order from the judge or court in the interest of protecting the public and such insurer and its policyholders, claimants, or creditors. After a diligent effort is made to be heard by the judges of the circuit and such judges or the court fails or refuses to hear such petition for any reason, the department shall then file a duplicate original of said petition and exhibits, if any, in the Circuit Court of Leon County along with an affidavit which shall state that a diligent effort was made to obtain such initial hearing in the judicial circuit where such hearing was sought and that the request to be heard was refused or that a hearing was not granted and the reasons therefor, if known. Upon compliance with the above and if said affidavit further states that the department believes that irreparable harm will result to the public and the insurer and its policyholders, creditors, or claimants as a result of further delay, it may thereafter issue a seizure order on any ground that would justify court seizure under s. 631.361. Such seizure order may contain any or all the provisions of s. 631.361(1). The department shall retain possession and control until the order is vacated or is replaced by an order of court pursuant to subsection (2) or subsection (3) or pursuant to a formal delinquency proceeding under this chapter.

(2)  The department may, at any time after seizure under its order, report its actions to the proper court; and, in the event that the insurer, for any reason, fails to avail itself of the judicial review provided for by law, then the department shall forthwith report its actions to the proper court. The department may request the court to substitute its order for the department's or it may seek any other order which it deems appropriate.

(3)  Every law enforcement officer of this state authorized by law shall assist the department in making and enforcing any such seizure, and every such officer shall furnish it with such deputies, patrolmen, patrolwomen, or officers as are necessary to assist it in execution of its order.

(4)  Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the insurer.

History.--s. 18, ch. 70-27; s. 1, ch. 70-439; s. 21, ch. 78-95; s. 809(1st), ch. 82-243; ss. 184, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 409, ch. 97-102.

631.391  Cooperation of officers and employees.--

(1)  Any officer, director, manager, trustee, agent, adjuster, employee, or independent contractor of any insurer or affiliate and any other person who possesses any executive authority over, or who exercises any control over, any segment of the affairs of the insurer or affiliate shall fully cooperate with the department in any proceeding under this chapter or any investigation preliminary or incidental to the proceeding. An order of rehabilitation or liquidation which results in the discharge or suspension of any of the persons listed above does not operate to release such person from the duty to cooperate with the department as set out herein. To "cooperate" includes, but is not limited to, the following:

(a)  To reply promptly in writing to any inquiry from the department requesting such a reply;

(b)  Promptly to make available and deliver to the department any books, accounts, documents, other records, information, data processing software, or property of or pertaining to the insurer and in her or his possession, custody, or control; or

(c)  Promptly to provide access to all data processing records in hard copy and in electronic form and to data processing facilities and services.

(2)  No person shall obstruct or interfere with the department in the conduct of any delinquency proceeding or any investigation preliminary or incidental thereto.

(3)  This section does not prohibit any person from seeking legal relief from a court when aggrieved by the petition for liquidation or other delinquency proceeding or by other orders.

(4)  Any person referred to in subsection (1) who fails to cooperate with the department, or any other person who obstructs or interferes with the department, in the conduct of any delinquency proceeding or any investigation preliminary or incidental thereto, is guilty of a misdemeanor of the first degree, punishable as provided in s. 775.082 or by fine of not more than $10,000.

(5)  Refusal by any person referred to in subsection (1) to provide records upon the request of the department is grounds for revocation of any insurance-related license, including, but not limited to, agent and third-party administrator licenses.

History.--s. 19, ch. 70-27; s. 1, ch. 70-439; s. 655, ch. 71-136; s. 809(1st), ch. 82-243; s. 26, ch. 83-38; s. 8, ch. 85-339; ss. 95, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 410, ch. 97-102; s. 14, ch. 97-262.

631.3915  Actions for damages.--The department, in its capacity as administrator, receiver, or similar capacity, may pursue any actions for damages or other recoveries on behalf of the insurer's estate and the insurer's policyholders, creditors, and other claimants.

History.--s. 14, ch. 2002-25.

631.392  Immunity.--There shall be no liability on the part of, and no cause of action of any nature shall arise against, the Insurance Commissioner or the department or its employees or agents for any action taken by them in the performance of their powers and duties under this chapter.

History.--ss. 42, 66, ch. 88-166; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.395  Guaranty fund; orders of court.--Any order of liquidation issued pursuant to s. 631.111 or s. 631.131 shall authorize and direct the department as receiver to coordinate the operation of the receivership with the operation of any insurance guaranty fund authorized to operate in this state and may authorize the department to provide data processing services for any appropriate guaranty fund. Such authorization shall include, but not be limited to, release of copies of any of the following:

(1)  Claims files, records, or documents pertaining to claims on file with the insolvent insurer; and

(2)  Insurance claims filed with the receiver.

History.--s. 20, ch. 70-27; s. 1, ch. 70-439; s. 809(1st), ch. 82-243; s. 27, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.397  Use of certain marshaled assets.--

(1)  Within 120 days of a final determination of insolvency of an insurer by a court of competent jurisdiction of this state, the department, as receiver, shall apply to the court for approval of a proposal to disburse assets out of such insurer's marshaled assets, as such assets become available, to each association entitled thereto or, if there are no assets available for such disbursement, then for approval of such proposal as the receiver deems appropriate. For the purposes of this section, the term "association" includes the Florida Insurance Guaranty Association, Incorporated, the Florida Workers' Compensation Insurance Guaranty Association, and any entity or person performing a function in another state similar to that performed in this state by the Florida Insurance Guaranty Association, Incorporated, or the Florida Workers' Compensation Insurance Guaranty Association, provided the Florida Insurance Guaranty Association, Incorporated, or the Florida Workers' Compensation Insurance Guaranty Association, is entitled to like payment under the laws of the association's state of domicile in respect to insolvent companies doing business in that state.

(2)  Such proposal shall at least include provisions for:

(a)  Reserving amounts for the payment of expenses of administration, the payment of claims of secured creditors to the extent of the value of the security held, and the payment of claims falling within the priorities established in this part.

(b)  Disbursement of the other assets marshaled to date and subsequent disbursements of assets as they become available.

(c)  Equitable allocation of disbursements to each association entitled thereto.

(d)  The securing by the receiver, from each association entitled to disbursements pursuant to this section, of an agreement to return to the receiver such assets previously disbursed as may be required to pay claims of secured creditors and claims falling within the priorities established in this part, in accordance with such priorities; however, no bond shall be required of any such association.

(e)  A full report to be made by each association to the receiver, which report shall account for all assets so disbursed to the association, all disbursements made therefrom, any interest earned by the association on such assets, and any other matter as the court may direct.

(3)  The department's proposal shall provide for disbursements to each association in amounts at least equal to the claim payments made, and estimated to be made, by such association for which such association could assert a claim against the receiver, and shall provide that if the assets available for disbursement from time to time do not equal or exceed the amount of such claim payments made, or to be made, by each such association, then disbursements shall be in the amount of available assets.

(4)  Notice of such application shall be given by the department to the associations in, and to the commissioners of insurance of, each of the states to which disbursement may be made. Such notice shall be made by certified mail, first-class postage prepaid, at least 15 days prior to submission of such application to the court. Such notice shall be deemed to have been made when deposited in the mail.

(5)  Action on the application may be taken by the court if notice has been given pursuant to subsection (4) and the department's proposal complies with subsection (2).

History.--s. 1, ch. 77-100; s. 241, ch. 79-400; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 15, ch. 97-262.

631.398  Prevention of insolvencies.--To aid in the detection and prevention of insurer insolvencies or impairments:

(1)  Any member insurer; agent, employee, or member of the board of directors; or representative of any insurance guaranty association may make reports and recommendations to the department upon any matter germane to the solvency, liquidation, rehabilitation, or conservation of any member insurer or germane to the solvency of any company seeking to do an insurance business in this state. Such reports and recommendations are confidential and exempt from the provisions of s. 119.07(1) until the termination of a delinquency proceeding.

(2)  The department shall:

(a)  Report to the board of directors of the appropriate insurance guaranty association when it has reasonable cause to believe from any examination, whether completed or in process, of any member insurer that such insurer may be an impaired or insolvent insurer.

(b)  Seek the advice and recommendations of the board of directors of the appropriate insurance guaranty association concerning any matter affecting the duties and responsibilities of the department in relation to the financial condition of member companies and companies seeking admission to transact insurance business in this state.

(3)  The department shall, no later than the conclusion of any domestic insurer insolvency proceeding, prepare a summary report containing such information as is in its possession relating to the history and causes of such insolvency, including a statement of the business practices of such insurer which led to such insolvency.

History.--ss. 28, 39, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; ss. 2, 6, ch. 93-118; s. 385, ch. 96-406.

631.399  Receiver's right to recover distributions made to affiliate.--

(1)  If an order for liquidation or rehabilitation of an insurer domiciled in this state has been entered, the receiver appointed under such order has a right to recover on behalf of the insurer, from any affiliate, the amount or value of distributions, other than stock dividends paid by the insurer on its capital stock, made at any time during the 5 years preceding the petition for liquidation or rehabilitation, subject to the limitations of subsections (2), (3), and (4).

(2)  The distributions shall be recoverable unless the affiliate shows that the distributions were lawful and reasonable and that the insurer did not know and could not reasonably have known that the distributions might adversely affect the ability of the insurer to fulfill its contractual obligations.

(3)  Any affiliate at the time the distributions were made is liable up to the amount or value of distributions it received.

(4)  The maximum amount recoverable under this section is the amount needed in excess of all other available assets of the insolvent insurer to pay the contractual obligations of the insolvent insurer.

(5)  If any affiliate liable under subsection (3) is insolvent, all of its affiliates are jointly and severally liable for any resulting deficiency in the amount recovered from the insolvent affiliate.

History.--s. 13, ch. 79-189; s. 809(1st), ch. 82-243; s. 29, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

Note.--Former s. 631.732.

631.50  Title.

631.51  Purposes.

631.52  Scope.

631.53  Construction.

631.54  Definitions.

631.55  Creation of the association.

631.56  Board of directors.

631.57  Powers and duties of the association.

631.58  Plan of operation.

631.59  Duties and powers of Department of Insurance.

631.60  Effect of paid claims.

631.61  Nonduplication of recovery.

631.62  Prevention of insolvencies.

631.63  Examination of the association.

631.64  Recognition of assessments in rates.

631.65  Prohibited advertisement or solicitation.

631.66  Immunity.

631.67  Stay of proceedings; reopening of default judgments.

631.68  Limitation; certain actions.

631.70  Attorney's fee.

631.50  Title.--This part shall be known and may be cited as the "Florida Insurance Guaranty Association Act."

History.--s. 1, ch. 70-20; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.51  Purposes.--The purposes of this part are to:

(1)  Provide a mechanism for the payment of covered claims under certain insurance policies to avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer;

(2)  Assist in the detection and prevention of insurer insolvencies;

(3)  Create a nonprofit corporation to administer and supervise the operation of such association; and

(4)  Assess the cost of such protection among insurers.

History.--s. 2, ch. 70-20; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.52  Scope.--This part shall apply to all kinds of direct insurance, except:

(1)  Life, annuity, health, or disability insurance;

(2)  Mortgage guaranty, financial guaranty, or other forms of insurance offering protection against investment risks;

(3)  Fidelity or surety bonds, or any other bonding obligations;

(4)  Credit insurance, vendors' single interest insurance, or collateral protection insurance or any similar insurance protecting the interests of a creditor arising out of a creditor-debtor transaction;

(5)  Warranty, including motor vehicle service, home warranty, or service warranty;

(6)  Ambulance service, health care service, or preneed funeral merchandise or service;

(7)  Optometric service plan, pharmaceutical service plan, or dental service plan;

(8)  Legal expense;

(9)  Health maintenance, prepaid health clinic, or continuing care;

(10)  Ocean marine or wet marine insurance;

(11)  Self-insurance;

(12)  Title insurance;

(13)  Surplus lines;

(14)  Workers' compensation;

(15)  Any transaction or combination of transactions between a person, including affiliates of such person, and an insurer, including affiliates of such insurer, which involves the transfer of investment or credit risk unaccompanied by the transfer of insurance risk; or

(16)  Any insurance provided by or guaranteed by government.

History.--s. 3, ch. 70-20; s. 1, ch. 77-227; s. 1, ch. 80-26; s. 809(1st), ch. 82-243; s. 3, ch. 85-321; s. 4, ch. 87-350; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 16, ch. 97-262.

631.53  Construction.--This part shall be liberally construed to effect the purposes set forth in s. 631.51, which shall constitute an aid and guide to interpretation.

History.--s. 4, ch. 70-20; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.54  Definitions.--As used in this part:

(1)  "Account" means any one of the three accounts created by s. 631.55.

(2)  "Association" means the Florida Insurance Guaranty Association, Incorporated.

(3)  "Covered claim" means an unpaid claim, including one of unearned premiums, which arises out of, and is within the coverage, and not in excess of, the applicable limits of an insurance policy to which this part applies, issued by an insurer, if such insurer becomes an insolvent insurer after October 1, 1970, and the claimant or insured is a resident of this state at the time of the insured event or the property from which the claim arises is permanently located in this state. "Covered claim" shall not include any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation, contribution, indemnification, or otherwise. Member insurers shall have no right of subrogation against the insured of any insolvent member.

(4)  "Department" means the Department of Insurance.

(5)  "Expenses in handling claims" means allocated and unallocated expenses, including, but not limited to, general administrative expenses and those expenses which relate to the investigation, adjustment, defense, or settlement of specific claims under, or arising out of, a specific policy.

(6)  "Insolvent insurer" means a member insurer authorized to transact insurance in this state, either at the time the policy was issued or when the insured event occurred, and against which an order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction if such order has become final by the exhaustion of appellate review.

(7)  "Member insurer" means any person who writes any kind of insurance to which this part applies under s. 631.52, including the exchange of reciprocal or interinsurance contracts, and is licensed to transact insurance in this state.

(8)  "Net direct written premiums" means direct gross premiums written in this state on insurance policies to which this part applies, less return premiums thereon and dividends paid or credited to policyholders on such direct business. "Net direct written premiums" does not include premiums on contracts between insurers or reinsurers.

(9)  "Person" means individuals, children, firms, associations, joint ventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations.

History.--s. 5, ch. 70-20; ss. 2, 4, ch. 77-227; s. 1, ch. 79-55; s. 809(1st), ch. 82-243; s. 30, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 17, ch. 97-262; s. 15, ch. 2002-25.

631.55  Creation of the association.--

(1)  There is created a nonprofit corporation to be known as the "Florida Insurance Guaranty Association, Incorporated." All insurers defined as member insurers in s. 631.54(7) shall be members of the association as a condition of their authority to transact insurance in this state, and, further, as a condition of such authority, an insurer shall agree to reimburse the association for all claim payments the association makes on said insurer's behalf if such insurer is subsequently rehabilitated. The association shall perform its functions under a plan of operation established and approved under s. 631.58 and shall exercise its powers through a board of directors established under s. 631.56. The corporation shall have all those powers granted or permitted nonprofit corporations, as provided in chapter 617.

(2)  For the purposes of administration and assessment, the association shall be divided into three separate accounts:

(a)  The auto liability account;

(b)  The auto physical damage account; and

(c)  The account for all other insurance to which this part applies.

History.--s. 6, ch. 70-20; s. 117, ch. 79-40; s. 809(1st), ch. 82-243; s. 14, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 4, ch. 92-345; s. 18, ch. 97-262.

631.56  Board of directors.--

(1)  The board of directors of the association shall consist of not less than five or more than nine persons serving terms as established in the plan of operation. The department shall approve and appoint to the board persons recommended by the member insurers. In the event the department finds that any recommended person does not meet the qualifications for service on the board, the department shall request the member insurers to recommend another person. Each member shall serve for a 4-year term and may be reappointed. Vacancies on the board shall be filled for the remaining period of the term in the same manner as initial appointments. If no members are selected by November 30, 1970, the department may appoint the initial members of the board of directors.

(2)  In appointing members to the board, the department shall consider among other things whether all areas of insurance covered by this part are fairly represented.

(3)  Members of the board may be reimbursed from the assets of the association for expenses incurred by them as members of the board of directors.

History.--s. 7, ch. 70-20; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

¹631.57  Powers and duties of the association.--

(1)  The association shall:

(a)1.  Be obligated to the extent of the covered claims existing:

a.  Prior to adjudication of insolvency and arising within 30 days after the determination of insolvency;

b.  Before the policy expiration date if less than 30 days after the determination; or

c.  Before the insured replaces the policy or causes its cancellation, if she or he does so within 30 days of the determination.

2.  The obligation under subparagraph 1. shall include only that amount of each covered claim which is in excess of $100 and is less than $300,000, except with respect to policies covering condominium associations or homeowners' associations, which associations have a responsibility to provide insurance coverage on residential units within the association, the obligation shall include that amount of each covered property insurance claim which is less than $100,000 multiplied by the number of condominium units or other residential units; however, as to homeowners' associations, this subparagraph applies only to claims for damage or loss to residential units and structures attached to residential units.

3.  In no event shall the association be obligated to a policyholder or claimant in an amount in excess of the obligation of the insolvent insurer under the policy from which the claim arises.

The foregoing notwithstanding, the association shall have no obligation to pay covered claims to be paid from the proceeds of bonds issued under s. 166.111(2). However, the association shall cause assessments to be made under paragraph (3)(e) for such covered claims, and such assessments shall be assigned and pledged under paragraph (3)(e) to or on behalf of the issuer of such bonds for the benefit of the holders of such bonds. The association shall administer any such covered claims and present valid covered claims for payment in accordance with the provisions of the assistance program in connection with which such bonds have been issued.

(b)  Be deemed the insurer to the extent of its obligation on the covered claims, and, to such extent, shall have all rights, duties, defenses, and obligations of the insolvent insurer as if the insurer had not become insolvent. In no event shall the association be liable for any penalties or interest.

(2)  The association may:

(a)  Employ or retain such persons as are necessary to handle claims and perform other duties of the association;

(b)  Borrow funds necessary to effect the purposes of this part in accord with the plan of operation;

(c)  Sue or be sued, provided that service of process shall be made upon the person registered with the department as agent for the receipt of service of process; and

(d)  Negotiate and become a party to such contracts as are necessary to carry out the purpose of this part. Without limiting the generality of the foregoing, the association may enter into such contracts with a municipality as are necessary in order for the municipality to issue bonds under s. 166.111(2). In connection with the issuance of such bonds and the entering into of the necessary contracts, the association may agree to such terms and conditions as it deems necessary and proper.

(3)(a)  To the extent necessary to secure the funds for the respective accounts for the payment of covered claims and also to pay the reasonable costs to administer the same, the department, upon certification of the board of directors, shall levy assessments in the proportion that each insurer's net direct written premiums in this state in the classes protected by the account bears to the total of said net direct written premiums received in this state by all such insurers for the preceding calendar year for the kinds of insurance included within such account. Assessments shall be remitted to and administered by the board of directors in the manner specified by the approved plan. Each insurer so assessed shall have at least 30 days' written notice as to the date the assessment is due and payable. Every assessment shall be made as a uniform percentage applicable to the net direct written premiums of each insurer in the kinds of insurance included within the account in which the assessment is made. The assessments levied against any insurer shall not exceed in any one year more than 2 percent of that insurer's net direct written premiums in this state for the kinds of insurance included within such account during the calendar year next preceding the date of such assessments.

(b)  If sufficient funds from such assessments, together with funds previously raised, are not available in any one year in the respective account to make all the payments or reimbursements then owing to insurers, the funds available shall be prorated and the unpaid portion shall be paid as soon thereafter as funds become available.

(c)  Assessments shall be included as an appropriate factor in the making of rates.

(d)  No state funds of any kind shall be allocated or paid to said association or any of its accounts.

(e)1.a.  In addition to assessments otherwise authorized in paragraph (a), as a temporary measure related to insolvencies caused by Hurricane Andrew, and to the extent necessary to secure the funds for the account specified in s. 631.55(2)(c), or to retire indebtedness, including, without limitation, the principal, redemption premium, if any, and interest on, and related costs of issuance of, bonds issued under s. 166.111(2), and the funding of any reserves and other payments required under the bond resolution or trust indenture pursuant to which such bonds have been issued, the department, upon certification of the board of directors, shall levy assessments upon insurers holding a certificate of authority as follows:

(I)  Except as provided in sub-sub-subparagraph (II), the assessments payable under this paragraph by any insurer shall not exceed in any 1 year more than 2 percent of that insurer's direct written premiums, net of refunds, in this state during the preceding calendar year for the kinds of insurance within the account specified in s. 631.55(2)(c).

(II)  If the amount levied under sub-sub-subparagraph (I) is less than 2 percent of the insurer's direct written premiums, net of refunds, in this state during calendar year 1991 for the kinds of insurance within the account specified in s. 631.55(2)(c), in addition to and separate from such assessment, the assessment shall also include the difference between the amount calculated based on calendar year 1991 and the amount determined under sub-sub-subparagraph (I). If this sub-sub-subparagraph is held invalid, the invalidity shall not affect other provisions of this section, and to this end the provisions of this section are declared severable.

(III)  In addition to any other insurers subject to this subparagraph, this subparagraph also applies to any insurer that held a certificate of authority on August 24, 1992. If this sub-sub-subparagraph is held invalid, the invalidity shall not affect other provisions of this section, and to this end the provisions of this section are declared severable.

b.  Any assessments authorized under this paragraph shall be levied by the department upon insurers referred to in sub-subparagraph a., upon certification as to the need therefor by the board of directors, in 1992 and in each year that bonds issued under s. 166.111(2) are outstanding, in such amounts up to such 2 percent limit as required in order to provide for the full and timely payment of the principal of, redemption premium, if any, and interest on, and related costs of, issuance of bonds issued under s. 166.111(2). The assessments provided for in this paragraph are hereby assigned and pledged to a municipality issuing bonds under s. 166.111(2)(b), for the benefit of the holders of such bonds, in order to enable such municipality to provide for the payment of the principal of, redemption premium, if any, and interest on such bonds, the cost of issuance of such bonds, and the funding of any reserves and other payments required under the bond resolution or trust indenture pursuant to which such bonds have been issued, without the necessity of any further action by the association, the department, or any other party. To the extent that bonds are issued under s. 166.111(2), the proceeds of assessments levied under this paragraph shall be remitted directly to and administered by the trustee appointed for such bonds.

c.  Assessments under this paragraph shall be payable in 12 monthly installments with the first installment being due and payable at the end of the month after an assessment is levied, and subsequent installments being due not later than the end of each succeeding month.

d.  The association shall issue a monthly report on the status of the use of the bond proceeds as related to insolvencies caused by Hurricane Andrew. The report must contain the number of claims paid and the amount of claims paid. The association shall also include an analysis of the revenue generated from the additional assessment levied under this subsection. The report must be sent to the Legislature and the Insurance Commissioner monthly.

2.  In order to assure that insurers paying assessments levied under this paragraph continue to charge rates that are neither inadequate nor excessive, within 90 days after being notified of such assessments, each insurer that is to be assessed pursuant to this paragraph shall make a rate filing for coverage included within the account specified in s. 631.55(2)(c) and for which rates are required to be filed under s. 627.062. If the filing reflects a rate change that, as a percentage, is equal to the difference between the rate of such assessment and the rate of the previous year's assessment under this paragraph, the filing shall consist of a certification so stating and shall be deemed approved when made, subject to the department's continuing authority to require actuarial justification as to the adequacy of any rate at any time. Any rate change of a different percentage shall be subject to the standards and procedures of s. 627.062.

(4)  The department may exempt any insurer from an assessment if an assessment would result in such insurer's financial statement reflecting an amount of capital or surplus less than the sum of the minimum amount required by any jurisdiction in which the insurer is authorized to transact insurance.

(5)  Any necessary and proper expenses incurred by an insurer in the investigation, adjustment, compromise, settlement, denial, or handling of claims assigned to it shall, upon proper verification under the rules of the association, entitle the insurer to reimbursement. Any insurer whose employee serves on the staff of the association may set off from its assessment any necessary and proper expenses incurred by the insurer resulting from said service of its employee. An insurer which ceases to engage in the business of writing property or casualty insurance policies in this state shall have no right to a refund of any assessment previously remitted.

(6)  The association may extend the time limits specified in paragraph (1)(a) by up to an additional 60 days or waive the applicability of the $100 deductible specified in paragraph (1)(a) if the board determines that either or both such actions are necessary to facilitate the bulk assumption of obligations.

History.--s. 8, ch. 70-20; s. 1, ch. 70-439; s. 3, ch. 77-227; s. 118, ch. 79-40; s. 809(1st), ch. 82-243; s. 9, ch. 85-339; s. 5, ch. 87-350; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 5, ch. 92-345; s. 6, ch. 93-401; s. 411, ch. 97-102; s. 19, ch. 97-262; s. 47, ch. 99-3; s. 16, ch. 2002-25.

¹Note.--Section 7, ch. 92-345, provides that "[n]o provision of section 631.57 or s. 166.111(2), Florida Statutes, shall be repealed until such time as the principal of, redemption premium, if any, and interest on all bonds issued under s. 166.111(2), Florida Statutes, payable and secured from assessments levied under s. 631.57(3)(e), Florida Statutes, have been paid in full or adequate provision for such payment has been made in accordance with the bond resolution or trust indenture pursuant to which such bonds were issued."

631.58  Plan of operation.--

(1)(a)  The association shall submit to the department a proposed plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The plan of operation and any amendments thereto shall become effective upon approval in writing by the department.

(b)  If the association fails to submit a suitable proposed plan of operation by December 30, 1970, or if at any time thereafter the association fails to submit suitable amendments to the plan, the department shall adopt and promulgate such reasonable rules as are necessary or advisable to effectuate the provisions of this part. Such rules shall continue in force until modified by the department or superseded by a plan submitted by the association and approved by the department.

(2)  All member insurers shall comply with the plan of operation.

(3)  The plan of operation shall:

(a)  Establish the procedures whereby all the powers and duties of the association under s. 631.57 will be performed;

(b)  Establish procedures for handling assets of the association;

(c)  Establish the amount and method of reimbursing members of the board of directors under s. 631.56;

(d)  Establish procedures by which claims may be filed with the association and acceptable forms of proof of covered claims. Notice of claims to the receiver or liquidator of the insolvent insurer shall be deemed notice to the association or its agent, and a list of such claims shall be periodically submitted to the association or similar organization in another state by the receiver or liquidator;

(e)  Establish regular places and times for meetings of the board of directors;

(f)  Establish procedures for records to be kept of all financial transactions of the association, its agents, and the board of directors;

(g)  Provide that any member insurer aggrieved by any final action or decision of the association may appeal to the department within 30 days after the action or decision;

(h)  Establish the procedures whereby recommendations for the board of directors will be submitted to the department; and

(i)  Contain additional provisions necessary or proper for the execution of the powers and duties of the association.

(4)  The plan of operation may provide that any or all powers and duties of the association, except those under s. 631.57(2)(b) and (c), are delegated to a corporation, association, or other organization which performs or will perform functions similar to those of this association or its equivalent in two or more states. Such a corporation, association, or organization shall be reimbursed as a servicing facility would be reimbursed and shall be paid for its performance of any other functions of the association. A delegation under this subsection shall take effect only with the approval of both the board of directors and the department, and may be made only to a corporation, association, or organization which extends protection not substantially less favorable and effective than that provided by this part.

History.--s. 9, ch. 70-20; s. 163, ch. 71-355; s. 21, ch. 78-95; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.59  Duties and powers of Department of Insurance.--

(1)  The department shall:

(a)  Notify the association of the existence of an insolvent insurer not later than 3 days after it receives notice of the determination of the insolvency; and

(b)  Upon request of the board of directors, provide the association with a statement of the net direct written premiums of each member insurer.

(2)  The department may:

(a)  Require that the association notify the insureds of the insolvent insurer and any other interested parties of the determination of insolvency and of their rights under this part. Such notification shall be by mail at their last known addresses, when available, but if sufficient information for notification by mail is not available, notice by publication in a newspaper of general circulation shall be sufficient.

(b)  Suspend or revoke the certificate of authority to transact insurance in this state of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the department may levy a fine on any member insurer which fails to pay an assessment when due. Such fine may not exceed 5 percent of the unpaid assessment per month, except that no fine shall be less than $100 per month.

(c)  Revoke the designation of any servicing facility if it finds claims are being handled unsatisfactorily.

History.--s. 10, ch. 70-20; s. 21, ch. 78-95; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.60  Effect of paid claims.--

(1)  Any person recovering under this part shall be deemed to have assigned her or his rights under the policy to the association to the extent of the person's recovery from the association, regardless of whether such recovery is received directly from the association or through payments made from the proceeds of bonds issued under s. 166.111(2). Every insured or claimant seeking the protection of this part shall cooperate with the association to the same extent as such person would have been required to cooperate with the insolvent insurer. The association shall have no cause of action against the insured of the insolvent insurer for any sums it has paid out except such causes of action as the insolvent insurer would have had if such sums had been paid by the insolvent insurer. In the case of an insolvent insurer operating on a plan with assessment liability, payments of claims of the association shall not operate to reduce the liability of insureds to the receiver, liquidator, or statutory successor for unpaid assessments.

(2)  The receiver, liquidator, or statutory successor of an insolvent insurer shall be bound by settlements of covered claims by the association or a similar organization in another state. The court having jurisdiction shall grant such claims priority equal to that to which the claimant would have been entitled in the absence of this part against the assets of the insolvent insurer. The expenses of the association or similar organization in handling claims shall be accorded the same priority as the liquidator's expenses.

(3)  The association shall periodically file with the receiver or liquidator of the insolvent insurer statements of the covered claims paid by the association and estimates of anticipated claims on the association which shall preserve the rights of the association against the assets of the insolvent insurer.

(4)  Any release of the association and its insured must clearly state whether or not any claim filed with the receiver in excess of the liability of the association under s. 631.57 is waived.

History.--s. 11, ch. 70-20; s. 11, ch. 71-970; s. 809(1st), ch. 82-243; s. 31, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 6, ch. 92-345; s. 412, ch. 97-102.

631.61  Nonduplication of recovery.--

(1)  Any person having a claim against an insurer under any provision in an insurance policy other than a policy of an insolvent insurer which is also a covered claim, shall not be required to exhaust first her or his rights under such a policy. Any amount payable on a covered claim under this part shall be reduced by the amount of any recovery under such insurance policy.

(2)  Any person having a claim which may be recovered under more than one insurance guaranty association or its equivalent shall seek recovery first from the association of the place of residence of the insured, except that if it is a first-party claim for damage to property with a permanent location, the person shall seek recovery first from the association of the location of the property, and if it is a workers' compensation plan, the person shall seek recovery first from the association of the residence of the claimant. Any recovery under this part shall be reduced by the amount of recovery from any other insurance guaranty association or its equivalent.

History.--s. 12, ch. 70-20; s. 119, ch. 79-40; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 413, ch. 97-102.

631.62  Prevention of insolvencies.--To aid in the detection and prevention of insurer insolvencies:

(1)  It shall be the duty of the board of directors, upon majority vote, to notify the department of any information indicating any member insurer may be insolvent or in a financial condition hazardous to the policyholders or the public.

(2)  The board of directors may, upon majority vote, request that the department order an examination of any member insurer which the board in good faith believes may be in a financial condition hazardous to the policyholders or the public. Within 30 days of the receipt of such request, the department shall begin such examination. The examination may be conducted as a National Association of Insurance Commissioners examination or may be conducted by such persons as the department designates. The cost of such examination shall be paid by the association and the examination report shall be treated as are other examination reports pursuant to s. 624.319. In no event shall such examination report be released to the board of directors prior to its release to the public. The department shall notify the board of directors when the examination is completed. The request for an examination shall be kept on file by the department; such request is confidential and exempt from the provisions of s. 119.07(1) until the examination report is released to the public.

(3)  The board of directors may, upon majority vote, make reports and recommendations to the department upon any matter germane to the solvency, liquidation, rehabilitation, or conservation of any member insurer. Such reports and recommendations are confidential and exempt from the provisions of s. 119.07(1) until the termination of a delinquency proceeding.

(4)  The board of directors may, upon majority vote, make recommendations to the department for the detection and prevention of insurer insolvencies.

History.--s. 13, ch. 70-20; s. 809(1st), ch. 82-243; s. 32, ch. 83-38; s. 38, ch. 87-226; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 3, ch. 93-118; s. 386, ch. 96-406.

631.63  Examination of the association.--The association shall be subject to examination and regulation by the department. The board of directors shall submit, not later than March 30 of each year, a financial report for the preceding calendar year in a form approved by the department.

History.--s. 14, ch. 70-20; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.64  Recognition of assessments in rates.--The rates and premiums charged for insurance policies to which this part applies may include amounts sufficient to recoup a sum equal to the amounts paid to the association by the member insurer less any amounts returned to the member insurer by the association, and such rates shall not be deemed excessive because they contain an amount reasonably calculated to recoup assessments paid by the member insurer.

History.--s. 15, ch. 70-20; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.65  Prohibited advertisement or solicitation.--No person shall make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station or television station, or in any other way, any advertisement, announcement, or statement which uses the existence of the insurance guaranty association for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered under this part.

History.--s. 16, ch. 70-20; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.66  Immunity.--There shall be no liability on the part of, and no cause of action of any nature shall arise against, any member insurer, the association or its agents or employees, the board of directors, or the department or its representatives for any action taken by them in the performance of their powers and duties under this part. Such immunity shall extend to the participation in any organization of one or more other state associations of similar purposes and to any such organization and its agents or employees.

History.--s. 17, ch. 70-20; s. 809(1st), ch. 82-243; ss. 96, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.67  Stay of proceedings; reopening of default judgments.--All proceedings in which the insolvent insurer is a party or is obligated to defend a party in any court or before any quasi-judicial body or administrative board in this state shall be stayed for 6 months, or such additional period from the date the insolvency is adjudicated, by a court of competent jurisdiction to permit proper defense by the association of all pending causes of action as to any covered claims; provided that such stay may be extended for a period of time greater than 6 months upon proper application to a court of competent jurisdiction. The association, either on its own behalf or on behalf of such insured, may apply to have any judgment, order, decision, verdict, or finding based on the default of the insolvent insurer or its failure to defend an insured set aside by the same court or administrator that made such judgment, order, decision, verdict, or finding and shall be permitted to defend against such claim on the merits. If request is made by the association, the stay of proceedings may be shortened or waived.

History.--s. 18, ch. 70-20; s. 18, ch. 71-970; s. 5, ch. 77-227; s. 2, ch. 80-26; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.68  Limitation; certain actions.--A covered claim as defined herein with respect to which settlement is not effected and suit is not instituted against the insured of an insolvent insurer or the association within 1 year after the deadline for filing claims, or any extension thereof, with the receiver of the insolvent insurer shall thenceforth be barred as a claim against the association and the insured.

History.--s. 19, ch. 71-970; s. 6, ch. 77-227; s. 809(1st), ch. 82-243; s. 33, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.70  Attorney's fee.--The provisions of s. 627.428 providing for an attorney's fee shall not be applicable to any claim presented to the association under the provisions of this part, except when the association denies by affirmative action, other than delay, a covered claim or a portion thereof.

History.--s. 7, ch. 77-227; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.711  Short title.

631.712  Purpose; construction.

631.713  Application of part.

631.714  Definitions.

631.715  Florida Life and Health Insurance Guaranty Association.

631.716  Board of directors.

631.717  Powers and duties of the association.

631.718  Assessments.

631.72  Premium or income tax credits for assessments paid.

631.721  Plan of operation.

631.722  Powers and duties of department.

631.723  Prevention of insolvencies.

631.724  Records and meetings of association.

631.725  Examination of the association; annual report.

631.726  Tax exemptions.

631.727  Immunity.

631.728  Extent of liability of association.

631.729  Liability of insureds for unpaid assessments.

631.731  Liquidation, rehabilitation, or conservation proceedings; distributions.

631.733  Stay of proceedings.

631.734  Reopening default judgments.

631.735  Prohibited advertisement of Florida Life and Health Insurance Guaranty Association Act in sale of insurance.

631.737  Rescission and review generally.

631.711  Short title.--This part may be cited as the "Florida Life and Health Insurance Guaranty Association Act."

History.--s. 1, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.712  Purpose; construction.--The purpose of this part is to protect policyowners, insureds, beneficiaries, annuitants, payees, and assignees of life insurance policies, health insurance policies, annuity contracts, and supplemental contracts, subject to certain limitations, against the failure of an insurer issuing such policies or contracts to perform its contractual obligations due to its impairment or insolvency; and this part shall be liberally construed to carry out its purpose.

History.--s. 2, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.713  Application of part.--

(1)  This part shall apply to direct life insurance policies, health insurance policies, annuity contracts, and supplemental contracts with or without life contingencies issued by persons licensed to transact such insurance in this state.

(2)  Coverage under this part shall be provided to:

(a)  Persons who, regardless of where they reside, except for nonresident certificateholders under group policies or contracts, are the beneficiaries, assignees, or payees of the persons covered under paragraph (b); and

(b)  Persons who are owners of or certificateholders under such policies or contracts, and who:

1.  Are residents of this state; or

2.  Are residents of other states, but only if:

a.  The insurers which issued such policies or contracts are domiciled in this state;

b.  Such insurers never held a license or certificate of authority in the states in which such persons reside;

c.  Such other states have associations similar to the association created by this part; and

d.  Such persons are not eligible for coverage by such associations.

(3)  This part does not apply to:

(a)  That portion or part of a variable life insurance contract or variable annuity contract not guaranteed by an insurer.

(b)  That portion or part of any policy or contract under which the risk is borne by the policyholder.

(c)  Any policy or contract or part thereof assumed by the impaired or insolvent insurer under a contract of reinsurance, other than reinsurance for which assumption certificates have been issued.

(d)  Fraternal benefit societies as defined in s. 632.601.

(e)  Health maintenance insurance.

(f)  Dental service plan insurance.

(g)  Pharmaceutical service plan insurance.

(h)  Optometric service plan insurance.

(i)  Ambulance service association insurance.

(j)  Preneed funeral merchandise or service contract insurance.

(k)  Prepaid health clinic insurance.

(l)  Any annuity contract or group annuity contract that is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed directly and not through an intermediary to an individual by an insurer under such contract or certificate. This paragraph applies to every insolvency regardless of its date of inception, and an assessment base may not include premiums for such excluded products.

(m)  Any federal employees' group policy or contract that, under 5 U.S.C. s. 8909(f), is prohibited from being subject to an assessment under s. 631.718.

(4)  This part shall only apply to those delinquency proceedings occurring on or after October 1, 1979.

History.--ss. 3, 21, ch. 79-189; s. 809(1st), ch. 82-243; s. 4, ch. 85-321; s. 7, ch. 87-350; ss. 97, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 3, ch. 95-213.

631.714  Definitions.--As used in this part:

(1)  "Account" means any of the three accounts created in s. 631.715.

(2)  "Association" means the Florida Life and Health Insurance Guaranty Association created in s. 631.715.

(3)  "Contractual obligation" means any obligation under covered policies.

(4)  "Covered policy" means any policy or contract set out in s. 631.713 and reduced to written, printed, or other tangible form.

(5)  "Department" means the Department of Insurance.

(6)  "Impaired insurer" means a member insurer deemed by the department to be potentially unable to fulfill its contractual obligations and not an insolvent insurer.

(7)  "Insolvent insurer" means a member insurer authorized to transact insurance in this state, either at the time the policy was issued or when the insured event occurred, and against which an order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction, if such order has become final by the exhaustion of appellate review.

(8)  "Member insurer" means any person licensed to transact in this state any kind of insurance as set out in s. 631.713.

(9)  "Premium" means any direct gross insurance premium and any annuity consideration written on covered policies, less return premium and consideration thereon and dividends paid or credited to policyholders on such direct business. "Premium" does not include premium and consideration on contracts between insurers and reinsurers.

(10)  "Person" means any individual, corporation, partnership, association, or voluntary organization.

(11)  "Resident" means any person who resides in this state at the time a member insurer is determined to be an impaired or insolvent insurer and to whom contractual obligations are owed by such impaired or insolvent member insurer.

History.--s. 4, ch. 79-189; s. 809(1st), ch. 82-243; ss. 98, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.715  Florida Life and Health Insurance Guaranty Association.--

(1)  There is created a nonprofit legal entity to be known as the Florida Life and Health Insurance Guaranty Association. All member insurers shall be and remain members of the association as a condition of their authority to transact insurance in this state, and, further, as a condition of such authority, an insurer shall agree to reimburse the association for all claim payments the association makes on said insurer's behalf if such insurer is subsequently rehabilitated. The association shall perform its functions under the plan of operation established and approved under the provisions of s. 631.721 and shall exercise its powers through a board of directors established under the provisions of s. 631.716.

(2)(a)  For purposes of administration and assessment, the association shall maintain three accounts:

1.  The health insurance account;

2.  The life insurance account; and

3.  The annuity account.

(b)  Borrowing between accounts for payment of policyholder and contract holder claims and other obligations of the association is authorized at the discretion of the board of directors, provided that the amounts so borrowed are restored to the appropriate accounts not less than annually.

(3)  The association shall come under the immediate supervision of the department and shall be subject to the applicable provisions of the insurance laws of this state.

History.--s. 5, ch. 79-189; s. 433, ch. 81-259; s. 809(1st), ch. 82-243; s. 15, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 11, ch. 92-328.

631.716  Board of directors.--

(1)  The board of directors of the association shall be comprised of not fewer than five nor more than nine member insurers, serving terms as established in the plan of operation. At all times at least one member of the board shall be a domestic insurer as defined in s. 624.06(1). The members of the board shall be elected by member insurers subject to the approval of the department. A vacancy on the board shall be filled for the remaining period of the term by a majority vote of the remaining board members, subject to the approval of the department. Prior to the selection of the initial board of directors and the organization of the association, the department shall give notice to all member insurers of the time and place of the organizational meeting. At the organizational meeting, each member insurer shall be entitled to one vote, in person or by proxy. If the board of directors is not elected within 60 days after notice of the organizational meeting, the department may appoint the initial members.

(2)  In approving the election of members to the board, or in appointing members to the board, the department shall consider, among other things, whether all member insurers are fairly represented.

(3)  Members of the board may be reimbursed from the assets of the association for expenses incurred by them as members of the board of directors, but members of the board shall not otherwise be compensated by the association for their services.

History.--s. 6, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.717  Powers and duties of the association.--

(1)  If a domestic insurer is an impaired insurer, the association may, subject to the approval of the impaired insurer and the department:

(a)  Guarantee or reinsure, or cause to be guaranteed, assumed, or reinsured, any or all of the covered policies of the impaired insurer;

(b)  Provide such moneys, pledges, notes, guarantees, or other means as are proper to effectuate paragraph (a) and assure payment of the contractual obligations of the impaired insurer pending action under paragraph (a); and

(c)  Loan money to the impaired insurer.

(2)  If a domestic insurer is an insolvent insurer, the association shall, subject to the approval of the department:

(a)  Guarantee, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured, the covered policies of persons referred to in s. 631.713(2); and

(b)  Provide moneys, pledges, notes, guarantees, or other means that are proper and reasonably necessary to implement paragraph (a) in order to assure payment of the contractual obligations of the insolvent insurer with regard to persons referred to in s. 631.713(2).

(3)  If a foreign or alien insurer is an insolvent insurer, the association shall, subject to the approval of the department:

(a)  Guarantee, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured, the covered policies of residents of this state; and

(b)  Provide moneys, pledges, notes, guarantees, or other means that are proper and reasonably necessary to implement paragraph (a) in order to assure payment of the contractual obligations of the insolvent insurer with regard to persons referred to in s. 631.713(2).

However, this subsection does not apply when the department has determined that the foreign or alien insurer's domiciliary jurisdiction or state of entry provides, by statute, protection substantially similar to that provided by this part for residents of this state.

(4)(a)  In carrying out its duties under the provisions of subsections (2) and (3), the association may impose a lien on the premiums of any permanent policy or contract in connection with any guarantee, assumption, or reinsurance agreement made by it. Such lien may be enforced by a court of competent jurisdiction if the court:

1.  Finds that the amounts which may be assessed under this part are less than the amounts needed to assure full and prompt performance of the insolvent insurer's contractual obligations, or that the economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of policy or contract liens, to be in the public interest; and

2.  Approves the specific policy liens or contract liens to be used.

(b)  Before becoming obligated under the provisions of subsections (2) and (3), the association may request that temporary moratoria or liens be imposed on payments of cash values and policy loans in addition to any contractual provisions for deferral of cash or policy loan values. Such temporary moratoria and liens may be imposed if they are approved by a court of competent jurisdiction.

(5)  If the association fails to act within a reasonable period of time as provided in subsections (2) and (3), the department shall have the powers and duties of the association under this part with respect to insolvent insurers.

(6)  The association may assist and advise the department, upon its request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of any impaired or insolvent insurer. The association may also assist and advise departments of insurance of other states; other guaranty associations; and conservators, rehabilitators, and receivers appointed or acting in regard to any member insured wherever located, for the purpose of developing plans to coordinate protection of policyholders. Costs of such activities may be charged against the health insurance account, the life insurance account, or the annuity account created by s. 631.715, at the discretion of the board of directors, notwithstanding any other provision of this part.

(7)  The association shall have standing to appear before any court in this state which has jurisdiction over an impaired or insolvent insurer to which the association is or may become obligated under this part. Such standing shall extend to all matters germane to the powers and duties of the association, including but not limited to, proposals for reinsuring or guaranteeing the covered policies of the impaired or insolvent insurer and the determination of the covered policies and contractual obligations.

(8)(a)  Any person receiving benefits under this part shall be deemed to have assigned her or his rights under the covered policy to the association to the extent of the benefits received, whether the benefits are payments of contractual obligations or continuations of coverages. The association may require an assignment to it of such rights by any payee, policy or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of any rights or benefits conferred by this part upon such person. The association shall have subrogation rights against the assets of any insolvent insurer.

(b)  The subrogation rights of the association under this subsection shall have the same priority against the assets of the insolvent insurer as those possessed by the person entitled to receive benefits under this part.

(9)  The association's liability for the contractual obligations of the insolvent insurer shall be as great as, but no greater than, the contractual obligations of the insurer in the absence of such insolvency, unless such obligations are reduced as permitted by subsection (4), but the aggregate liability of the association shall not exceed $100,000 in cash values, or $300,000 for all benefits including cash values, with respect to any one life. In no event shall the association be liable for any penalties or interest.

(10)  The association may:

(a)  Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this part.

(b)  Sue or be sued, including the taking of any legal actions necessary or proper for the recovery of any unpaid assessments under s. 631.718, provided that service of process shall be made upon the person registered with the department as agent for receipt of service of process.

(c)  Borrow money to effect the purposes of this part. Any notes or other evidence of indebtedness of the association not in default shall be legal investments for domestic insurers and may be carried as admitted assets.

(d)  Employ or retain such persons as are necessary to handle the financial transactions of the association and to perform such other functions as become necessary or proper under this part.

(e)  Negotiate and contract with any liquidator, rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the association.

(f)  Take such legal action as may be necessary to avoid payment of improper claims.

(g)  Exercise, for the purposes of this part and to the extent approved by the department, the powers of a domestic life or health insurer, but in no case may the association issue insurance policies or annuity contracts other than those issued to satisfy the contractual obligations of the impaired or insolvent insurer.

(11)  The association shall not be liable for any civil action under s. 624.155 arising from any acts alleged to have been committed by a member insurer prior to its liquidation; however, this subsection does not affect the association's obligation to pay valid claims presented to it.

(12)(a)  The association, when dealing only with life and health insurance policies under subsections (2) and (3), may make substitute coverage on an individual or group basis available to each known insured, or owner if other than the insured, or to an individual who is insured under a group policy as of the date the association became obligated and who is not eligible for replacement group coverage. When providing the substitute coverage, the association may offer either to reissue the terminated policy or to issue an alternative policy without requiring evidence of insurability or any waiting period or exclusion that would not have applied under the terminated policy.

(b)  The association may reinsure any alternative or reissued policy under this subsection.

(c)  Alternative or reissued policies adopted by the association are subject to the approval of the department upon terms and conditions the department considers appropriate, given the function and special purpose of the association. The association may adopt alternative policies of various types for future issuance without regard to any particular impairment or insolvency.

(d)  Alternative or reissued policies must contain at least the minimum statutory provisions required under this code and provide benefits that are reasonable with respect to the premium charged. The association shall set the premium in accordance with a table of rates adopted by the association. The premium must reflect the amount of insurance to be provided and the age and class of risk of each insured, but may not reflect any changes in the health of the insured occurring since the original policy was last underwritten.

(e)  Alternative policies issued by the association must provide coverage of a type generally similar to that of the policy issued by the impaired or insolvent insurer, as determined by the association.

(f)  The association's obligations with respect to coverage under any policy of the impaired or insolvent insurer or under any reissued or alternative policy must cease on the date that the coverage is replaced by another similar policy by the association. Any reissued, reinsured, or alternative policy must, however, be subject to association coverage if the replacement insurer becomes impaired or insolvent as otherwise provided for in this part.

History.--s. 7, ch. 79-189; s. 809(1st), ch. 82-243; s. 10, ch. 85-339; ss. 99, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 12, ch. 92-328; s. 4, ch. 95-213; s. 414, ch. 97-102.

631.718  Assessments.--

(1)  For the purpose of providing the funds necessary to carry out the powers and duties of the association, the board of directors shall assess the member insurers separately, for each of the accounts referred to in s. 631.715 at such time and for such amounts as the board finds necessary. Assessments shall be due not less than 30 days after written notice to the member insurers.

(2)  There shall be two classes of assessments, as follows:

(a)  Class A assessments shall be made by the board of directors for the purpose of meeting administrative costs and other general expenses and for examinations conducted under the authority of s. 631.723(3) which are not related to a particular impaired or insolvent insurer.

(b)  Class B assessments shall be made by the board of directors for the purpose of carrying out the powers and duties of the association under s. 631.717 relating to an impaired or insolvent domestic, foreign, or alien insurer.

(3)(a)  The amount of any Class A assessment shall be determined by the board and may be made on a non-pro rata basis. The assessment may not be credited against future insolvency assessments and may not exceed $250 per member insurer in any one calendar year.

(b)  The amount of any Class B assessment shall be allocated for assessment purposes among the accounts pursuant to an allocation formula, which may be based on the premiums or reserves of the impaired or insolvent insurer.

(c)  Class B assessments against member insurers for each account must be based upon the premiums received on business in this state by each assessed member insurer on policies or contracts covered by each account for the 3 most recent calendar years for which information is available preceding the year of the assessment in proportion to premiums received on business in this state for those calendar years by all assessed member insurers. If the most recent 3 years of premium information is not available for each member insurer, the board of directors may use the premium information that is reasonably available.

(d)  Assessments for funds to meet the requirements of the association with respect to an impaired or insolvent insurer may not be made until necessary to implement the purposes of this part.

(e)  Classification of assessments under subsection (2) and computation of assessments under this subsection must be made with a reasonable degree of accuracy, recognizing that exact determinations are not always possible.

(4)  The association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event an assessment against a member insurer is abated, or deferred in whole or in part, the amount by which such assessment is abated or deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments set forth in this section.

(5)(a)  The total of all assessments upon a member insurer for each account may not in any one calendar year exceed 1 percent of the sum of the insurer's premiums written in this state regarding business covered by the account received during the 3 calendar years preceding the year in which the assessment is made, divided by three. If premium information for the 3-year period is not reasonably available for each member insurer, the association may use any reasonably available premium information.

(b)  The provisions of this subsection apply to any assessments made on or after October 1, 1995, without regard to the date of the impairment or insolvency.

(c)  If the maximum assessment, together with the other assets of the association in its nonadministrative accounts, does not provide in any one year in any account an amount sufficient to carry out the responsibilities of the association, the necessary additional funds must be assessed as soon thereafter as permitted by this part.

(6)  The board may, by an equitable method as established in the plan of operation, refund to member insurers, in proportion to the contribution of each insurer to an account, the amount by which the assets of such account exceed the amount the board finds is necessary to carry out during the coming year the obligations of the association with regard to that account, including assets accruing from net realized gains and income from investments. A reasonable amount may be retained in any account to provide funds for the continuing expenses of the association and for future losses if refunds are impractical.

(7)  It shall be proper for any member insurer, in determining its premium rates and policyowner dividends as to any kind of insurance within the scope of this part, to consider the amount reasonably necessary to meet its assessment obligations under this part.

(8)  The association shall issue to each insurer paying an assessment under this part, other than a Class A assessment, a certificate of contribution, in a form prescribed by the department, for the amount of the assessment so paid. All outstanding certificates are of equal dignity and priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the insurer in its financial statement as an asset in such form and for such amount, if any, and period of time as the department approves. However, any amount offset pursuant to s. 631.72 may not be shown as an asset of the insurer on any of its financial statements.

(9)  Notwithstanding any provision to the contrary, no member insurer that is a nonprofit insurance company which issues annuity contracts or group annuity contracts pursuant to s. 121.35, or for the benefit of employees of educational institutions situated in this state may be assessed in any one calendar year an amount greater than the amount which it paid to this state in the previous year as premium tax and corporate tax on the business to which this part applies or 0.1 percent of written premium on such business in this state, whichever is greater.

History.--s. 8, ch. 79-189; s. 434, ch. 81-259; s. 809(1st), ch. 82-243; s. 35, ch. 83-38; s. 16, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 13, ch. 92-328; s. 6, ch. 93-149; s. 5, ch. 95-213; s. 2, ch. 96-346; s. 68, ch. 2001-63.

631.72  Premium or income tax credits for assessments paid.--

(1)  A member insurer may offset against either its premium tax liabilities imposed under s. 624.509 or its corporate income tax liabilities imposed under s. 220.11 any assessment described in s. 631.718(8) as follows:

(a)  For each assessment levied before January 1, 1997, 0.1 percent of the amount of such assessment, less any refunds received pursuant to s. 631.718(6), for each year following the year in which such assessment was paid until such time as the total of all offsets claimed for a given year's assessment, whether pursuant to this section or pursuant to prior law, equals the amount of the assessment originally paid in that year.

(b)  For each assessment levied and paid after December 31, 1996, 5 percent of the amount of the assessment, less any refunds received pursuant to s. 631.718(6), for each of the 20 calendar years following the year in which the assessment was paid.

(c)  An insurer may not offset both its premium tax and corporate income tax liabilities for the same assessment amount. An insurer may only offset its tax liability for one tax to the extent that the offset has not already been used to offset its tax liability for the other tax.

(d)  The first tax return on which a member insurer may claim a credit provided in this section is the tax return filed in 1998, covering tax year 1997.

(2)  If a member insurer ceases doing business in this state and surrenders to the department its certificate of authority to transact insurance in this state, all uncredited assessments may be credited as provided in this section against either its premium or corporate income tax liabilities imposed pursuant to ss. 624.509 and 220.11 for the year it ceases doing business.

(3)  Any sums acquired by refund pursuant to s. 631.718(6) from the association which have theretofore been written off by contributing insurers and offset against premium or corporate income taxes as provided in subsection (1) and which are not needed for purposes of this part shall be paid by the insurer to the Department of Revenue for deposit with the Treasurer to the credit of the General Revenue Fund.

History.--s. 1, ch. 96-346.

631.721  Plan of operation.--

(1)(a)  The association shall submit to the department a proposed plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the association. The proposed plan of operation and any amendments thereto shall become effective upon approval in writing by the department.

(b)  If the association fails to submit a suitable proposed plan of operation within 180 days following October 1, 1979, or if at any time thereafter the association fails to submit suitable amendments to the plan, the department shall, after notice and hearing, adopt such reasonable rules as are necessary to effectuate the provisions of this part. Such rules shall continue in force until modified by the department or superseded by a proposed plan submitted by the association and approved by the department.

(2)  All member insurers shall comply with the approved plan of operation.

(3)  The plan of operation shall, in addition to requirements enumerated elsewhere in this part:

(a)  Establish procedures for handling the assets of the association.

(b)  Establish the amount and method of reimbursing members of the board of directors under s. 631.716.

(c)  Establish regular places and times for meetings of the board of directors.

(d)  Establish procedures for keeping records of all financial transactions of the association, its agents, and the board of directors.

(e)  Establish procedures whereby selections for the board of directors shall be made and submitted to the department.

(f)  Establish any additional procedures for assessments under s. 631.718.

(g)  Contain additional provisions necessary or proper for the execution of the powers and duties of the association.

(4)  The plan of operation may provide that any or all powers and duties of the association, except those under ss. 631.717(10)(c) and 631.718, are delegated to a corporation, association, or other organization which performs or will perform functions similar to those of this association, or its equivalent, in two or more states. Such a corporation, association, or organization shall be reimbursed for any payments made on behalf of the association and shall be paid for its performance of any function of the association. A delegation under this subsection shall take effect only with the approval of both the board of directors and the department and may be made only to a corporation, association, or organization which extends protection not substantially less favorable and effective than that provided by this part.

History.--s. 10, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.722  Powers and duties of department.--

(1)  The department shall:

(a)  Upon request of the board of directors, provide the association with a statement of the premiums in each of the appropriate states for each member insurer.

(b)  When an impairment is declared and the amount of the impairment is determined, serve a demand upon the impaired insurer to make good the impairment within a reasonable time. Notice to the impaired insurer shall constitute notice to its shareholders, if any. The failure of the insurer to promptly comply with such demand shall not excuse the association from the performance of its powers and duties under this part.

(c)  In any liquidation or rehabilitation proceeding involving a domestic insurer, be appointed as the liquidator or rehabilitator. If a foreign or alien member insurer is subject to a liquidation proceeding in its domiciliary jurisdiction or state of entry, the department shall be appointed conservator.

(2)  The department may suspend or revoke, after notice and hearing, the certificate of authority to transact insurance in this state of any member insurer that fails to pay an assessment when due or fails to comply with the approved plan of operation of the association. As an alternative, the department may levy a forfeiture on any member insurer that fails to pay an assessment when due. Such forfeiture shall not exceed 5 percent of the unpaid assessment per month, but no forfeiture shall be less than $100 per month.

(3)  Any action of the board of directors or of the association may be appealed to the department by any member insurer if such appeal is taken within 30 days of the action being appealed. If a member company is appealing an assessment, the amount assessed shall be paid to the association and available to meet association obligations during the pendency of the appeal. If the appeal on the assessment is upheld, the amount paid in error or excess shall be returned to the member company. Any final action or order of the department shall be subject to judicial review in a court of competent jurisdiction.

(4)  The liquidator, rehabilitator, or conservator of any impaired insurer may notify all interested persons of the effect of this part.

History.--s. 11, ch. 79-189; s. 809(1st), ch. 82-243; ss. 100, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.723  Prevention of insolvencies.--To aid in the detection and prevention of insurer insolvencies or impairments:

(1)  The board of directors may, upon majority vote, make reports and recommendations to the department upon any matter germane to the solvency, liquidation, rehabilitation, or conservation of any member insurer or germane to the solvency of any company seeking to do an insurance business in this state. Such reports and recommendations are confidential and exempt from the provisions of s. 119.07(1) until the termination of a delinquency proceeding.

(2)  It is the duty of the board of directors, upon a majority vote, to notify the department of any information indicating that any member insurer may be an impaired or insolvent insurer.

(3)  The board of directors may, upon majority vote, request that the department order an examination of any member insurer which the board in good faith believes may be an impaired or insolvent insurer. Within 30 days of the receipt of such a request, the department shall begin such an examination. The examination may be conducted as a National Association of Insurance Commissioners examination or may be conducted by such persons as the Insurance Commissioner designates. The cost of such examination shall be paid by the association, and the examination report shall be treated in a manner similar to other examination reports pursuant to s. 624.319. In no event may such examination report be released to the board of directors before its release to the public, but this does not preclude the department from complying with s. 631.398(2). The department shall notify the board of directors when the examination is completed. The request for an examination shall be kept on file by the department; such request is confidential and exempt from the provisions of s. 119.07(1) until the examination report is released to the public.

(4)  The board of directors may, upon majority vote, make recommendations to the department for the detection and prevention of insurer insolvencies.

History.--s. 12, ch. 79-189; s. 809(1st), ch. 82-243; s. 36, ch. 83-38; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 4, ch. 93-118; s. 387, ch. 96-406.

631.724  Records and meetings of association.--Records shall be kept of all negotiations and meetings in which the association or its representatives discuss the activities of the association in carrying out its powers and duties under s. 631.717. Such negotiations or meetings are exempt from the provisions of s. 286.011, and any records of such negotiations or meetings are confidential and exempt from the provisions of s. 119.07(1) until the termination of a delinquency proceeding. Nothing in this section shall limit the duty of the association to render a report of its activities under s. 631.725.

History.--s. 13, ch. 79-189; s. 435, ch. 81-259; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 5, ch. 93-118; s. 388, ch. 96-406.

631.725  Examination of the association; annual report.--The association shall be subject to examination and regulation by the department. The board of directors shall submit to the department, not later than May 1 of each year, a financial report for the preceding calendar year in a form approved by the department and a report of its activities during the preceding calendar year.

History.--s. 14, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.726  Tax exemptions.--The association shall be exempt from payment of all fees and all taxes levied by this state or any of its subdivisions, except taxes levied on real property.

History.--s. 15, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.727  Immunity.--There shall be no liability on the part of, and no cause of action of any nature shall arise against, any member insurer or its agents or employees, the association or its agents or employees, members of the board of directors, or the department or its representatives for any action taken by them in the performance of their powers and duties under this part. Such immunity shall extend to the participation in any organization of one or more other state associations of similar purposes and to any such organization and its agents or employees.

History.--s. 16, ch. 79-189; s. 809(1st), ch. 82-243; ss. 101, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.728  Extent of liability of association.--For the purpose of carrying out its obligations under this part, the association shall be deemed to be a creditor of the impaired or insolvent insurer to the extent of assets attributable to covered policies reduced by any amounts to which the association is entitled as subrogee pursuant to s. 631.717(8). Assets of the impaired or insolvent insurer attributable to covered policies shall be used to continue all covered policies and pay all contractual obligations of the impaired or insolvent insurer as required by this part. An asset attributable to covered policies, as used in this section, is that proportion of the assets which the reserves that should have been established for such policies bear to the reserves that should have been established for all policies of insurance written by the impaired or insolvent insurer.

History.--s. 13, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.729  Liability of insureds for unpaid assessments.--No provision of this part shall be construed to reduce the liability for unpaid assessments of the insureds of an impaired or insolvent insurer operating under a plan with assessment liability.

History.--s. 13, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.731  Liquidation, rehabilitation, or conservation proceedings; distributions.--

(1)  Prior to the termination of any liquidation, rehabilitation, or conservation proceeding, the court may take into consideration the contributions of the respective parties, including the association, the shareholders and policyowners of the insolvent insurer, and any other party with a bona fide interest, in making an equitable distribution of the ownership rights of such insolvent insurer. In such a determination, consideration shall be given to the welfare of the policyholders of the continuing or successor insurer.

(2)  No distribution to stockholders, if any, of an impaired or insolvent insurer shall be made until and unless the total amount of valid claims of the association for funds expended in carrying out its powers and duties under s. 631.717 with respect to such insurer has been fully recovered by the association.

History.--s. 13, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.733  Stay of proceedings.--All proceedings in which the insolvent insurer is a party in any court in this state shall be stayed 60 days from the date an order of liquidation, rehabilitation, or conservation is final to permit proper legal action by the association on any matters germane to its powers or duties.

History.--s. 17, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.734  Reopening default judgments.--As to judgment under any decision, order, verdict, or finding based on default, the association may apply to have such judgment set aside by the same court that made such judgment and shall be permitted to defend against such suit on the merits.

History.--s. 18, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.735  Prohibited advertisement of Florida Life and Health Insurance Guaranty Association Act in sale of insurance.--No person shall make, publish, disseminate, circulate, or place before the public, or cause directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in any newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station or television station, or in any other way, any advertisement, announcement, or statement which uses the existence of the Insurance Guaranty Association of this state for the purpose of sales, solicitation, or inducement to purchase any form of insurance covered by the Florida Life and Health Insurance Guaranty Association Act. However, this section shall not apply to the Florida Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance.

History.--s. 19, ch. 79-189; s. 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.737  Rescission and review generally.--The association shall review claims and matters regarding covered policies based upon the record available to it on and after the date of liquidation. Notwithstanding any other provision of this part, to allow for orderly claims administration by the association, entry of a liquidation order by a court of competent jurisdiction shall be deemed to toll for 1 year any rescission or noncontestable period allowed by the contract, the policy, or by law.

History.--ss. 102, 188, ch. 91-108; s. 4, ch. 91-429.

631.811  Short title.

631.812  Purpose; construction.

631.813  Application of part.

631.814  Definitions.

631.815  Florida Health Maintenance Organization Consumer Assistance Plan.

631.816  Board of directors.

631.817  Eligibility.

631.818  Powers and duties of the plan.

631.819  Assessments.

631.820  Plan of operation.

631.821  Powers and duties of the department.

631.822  Records of plan.

631.823  Examination of the plan; annual report.

631.824  Tax exemptions.

631.825  Immunity.

631.826  Extent of liability of plan.

631.827  Prohibited advertisement.

631.828  Assessments against member HMOs; income tax credit for assessments paid.

631.811  Short title.--This part may be cited as the "Florida Health Maintenance Organization Consumer Assistance Plan."

History.--ss. 1, 23, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.812  Purpose; construction.--The purpose of this part is to protect the subscribers of HMOs, subject to certain limitations, against the failure of the HMO to perform its contractual obligations due to its insolvency. This part shall be liberally interpreted to carry out its purpose.

History.--ss. 1, 23, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.813  Application of part.--This part shall apply to HMO contractual obligations to residents of Florida by HMOs possessing a valid certificate of authority issued by the Florida Department of Insurance as provided by part I of chapter 641. The provisions of this part shall not apply to persons participating in medical assistance programs under the Medicaid program.

History.--ss. 1, 23, ch. 88-388; ss. 187, 188, ch. 91-108; s. 67, ch. 91-282; s. 4, ch. 91-429; s. 34, ch. 95-211.

631.814  Definitions.--As used in this part:

(1)  "Plan" means the Florida Health Maintenance Organization Consumer Assistance Plan created by this part.

(2)  "Board" means the board of directors of the plan.

(3)  "Contractual obligations" means any obligation under covered health care policies.

(4)  "Covered policy" means any policy or contract issued by an HMO for health care services.

(5)  "Date of insolvency" means the effective date of an order of liquidation entered by a court of competent jurisdiction.

(6)  "Department" means the Florida Department of Insurance.

(7)  "Health care services" means comprehensive health care services as defined in s. 641.19.

(8)  "HMO" means a health maintenance organization possessing a valid certificate of authority issued by the department pursuant to part I of chapter 641.

(9)  "Insolvent HMO" means an HMO against which an order of rehabilitation or liquidation has been entered by a court of competent jurisdiction, with the department appointed as receiver, even if such order has not become final by the exhaustion of appellate reviews.

(10)  "Person" means any individual, corporation, partnership, association, or voluntary organization.

(11)  "Subscriber" means any resident of this state who is enrolled for benefits provided by an HMO and who makes premium payments or for whom premium payments are made.

History.--ss. 1, 23, ch. 88-388; ss. 103, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 35, ch. 95-211.

631.815  Florida Health Maintenance Organization Consumer Assistance Plan.--There is created a nonprofit legal entity to be known as the Florida Health Maintenance Organization Consumer Assistance Plan. All HMOs shall be and must remain members of the plan as a condition of their authority to transact business in this state as an HMO. The plan shall perform its functions under the plan of operations established and approved under the provisions of this part and shall exercise its powers through a board of directors established under the provisions of this part. The plan shall come under the immediate supervision of the department and shall be subject to the applicable laws of this state, except it shall be excluded from the requirements of possessing a certificate of authority or a health care provider certificate as set forth in parts I and III of chapter 641, respectively.

History.--ss. 1, 23, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 36, ch. 95-211.

631.816  Board of directors.--

(1)  The board of directors of the plan shall consist of not less than five or more than nine persons serving terms as established in the plan of operation. The department shall approve and appoint to the board persons recommended by the member HMOs. In the event the department finds that any recommended person does not meet the qualifications for service on the board, the department shall request the member HMOs to recommend another person. Each member shall serve for a 4-year term and may be reappointed, except that terms may be staggered as defined in the plan of operation. Vacancies on the board shall be filled for the remaining period of the term in the same manner as initial appointments. In determining voting rights, each HMO is entitled to vote on the basis of cumulative weighted voting based on the net written premium for non-Medicare and non-Medicaid policies.

(2)  In appointing members to the board, the department shall consider, among other things, whether all member HMOs are fairly represented.

(3)  Members of the board may be reimbursed from the assets of the plan for expenses incurred by them as members of the board of directors, but members of the board shall not otherwise be compensated by the plan for their services.

(4)  The board of directors shall elect one of its members as chair.

(5)  The board may contract with an administrator to carry out the provisions of this part; however, this shall not relieve the board of its duties and obligations under this part.

(6)  The board shall collect assessments from all HMOs as set forth in this part.

History.--ss. 1, 23, ch. 88-388; ss. 104, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 415, ch. 97-102.

631.817  Eligibility.--

(1)  Except as provided in subsection (2), any person of this state who has lost their health care coverage provided in an HMO due to insolvency shall be eligible to obtain coverage as provided herein. Eligible persons include all persons who were eligible to receive health care services under that subscriber's contract with the HMO.

(2)(a)  A person shall cease to be covered by the plan after the plan has provided $300,000 in covered benefits for that person.

(b)  A person shall cease to be covered by the plan upon failure to pay, or failure to have paid on their behalf, premiums as set by the board. Coverage shall cease following a reasonable grace period as set by the board.

(c)  A person shall cease to be covered by the plan 6 months after the date of insolvency; however, if, at the time the plan's responsibility would otherwise cease under this paragraph, the person is under treatment for an injury that occurred or an illness that was diagnosed while the person was covered by the insolvent HMO or the plan, the plan shall remain responsible for treatment of such injury or illness until treatment has been completed or until the conditions specified in paragraph (a) or paragraph (b) have been met.

History.--ss. 1, 23, ch. 88-388; ss. 105, 187, 188, ch. 91-108; s. 5, ch. 91-110; s. 4, ch. 91-429.

631.818  Powers and duties of the plan.--

(1)  In the event that an HMO is insolvent, the plan shall:

(a)  Guarantee, reinsure, assume, or provide coverage for or cause to be guaranteed, reinsured, assumed, or covered all of the subscriber contracts of the insolvent HMO subject to the terms and limitations provided in this part.

(b)  Cover all services that would have been covered by the subscribers' contracts with the insolvent HMO during any period from the date of insolvency until the effective date of the replacement coverage with another HMO or other entity that provides health care services or reimbursement or with a product determined by the plan and approved by the department.

(c)  Defend any claim filed contrary to the provisions of s. 641.315 or s. 641.3154 against a subscriber of an insolvent HMO asserted by a health care provider for services covered by the HMO contract. In the event that a provider obtains a judgment despite the provisions of s. 641.315 or s. 641.3154, the plan shall pay the judgment. If a provider fails to obtain a judgment as to such claim, the plan shall be entitled to recover its reasonable costs and attorney's fees incurred in defending the claim.

(d)  Levy and collect assessments from HMOs pursuant to s. 631.819.

(2)  The plan may appoint one or more HMOs in the same geographical area as defined in s. 641.19 to provide health care services, subject to all of the following conditions:

(a)  The plan must pay for the cost of all medical services provided by an HMO involuntarily appointed to provide services that exceed the amount of premium or contribution paid by the subscribers. Medical services cost may include a reasonable amount for administrative and other services as determined by the board.

(b)  Once enrolled, an eligible subscriber may not be terminated from coverage by the HMO for a period of 6 months following the date of insolvency except for one of the following reasons:

1.  Nonpayment of premiums.

2.  Attainment of Medicare or Medicaid eligibility.

3.  Nonresidency in the service area.

4.  Abusive and disruptive behavior.

5.  Fraud.

6.  Termination of eligibility.

(c)  The plan shall consider the premium, services, benefits, and exclusions to be provided to each eligible person in designating the contract of the appointed HMO to be used to provide services.

(d)  Such coverage shall not exclude a preexisting condition not excluded by the policy of the insolvent HMO.

(3)  If the plan fails to act within a reasonable period of time as provided in this section, the department shall have the powers and duties of the plan under this part.

(4)  The plan may render assistance and advice to the department, at the department's request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of any HMO subject to a delinquency proceeding or a proceeding under ¹s. 624.90.

(5)  The plan shall have standing to appear before any court in this state which has jurisdiction over an insolvent HMO to which the plan is or may become obligated under this part. Such standing shall extend to all matters germane to the powers and duties of the plan, including, but not limited to, proposals for reinsuring or guaranteeing the covered policies of the insolvent HMO and the determination of the covered policies and contractual obligations.

(6)  The plan may:

(a)  Enter into such contracts or perform such other actions as are necessary or proper to carry out the provisions and purposes of this part.

(b)  Sue or be sued, including the taking of any legal actions necessary or proper for the recovery of any unpaid assessments under this part.

(c)  Borrow money to effect the purposes of this part. Any notes or other evidence of indebtedness of the plan not in default shall be legal investments for domestic insurers or HMOs and may be carried as admitted assets.

(d)  Employ or retain such persons as are necessary to handle the financial transactions of the plan and to perform such other functions as become necessary or proper under this part.

(e)  Negotiate and contract with any liquidator, rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the plan.

(f)  Take such legal action as may be necessary to avoid payment of improper claims.

History.--ss. 1, 23, ch. 88-388; ss. 106, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 10, ch. 2000-252.

¹Note.--The referenced section does not exist.

631.819  Assessments.--

(1)  For the purposes of providing the funds necessary to carry out the powers and duties of the plan, the board of directors shall assess the member HMOs at such time and for such amounts as the board finds necessary. Assessments shall be due not less than 30 days after written notice to the member insurers.

(2)  Assessments for funds to meet the requirements of the plan with respect to an insolvent HMO shall not be made until necessary to implement the purposes of this part. In order to carry out its duties and powers under this part, upon the insolvency of an HMO, the plan shall levy and collect assessments as follows:

(a)  Each HMO, prior to receiving a certificate of authority after July 1, 1989, shall pay an assessment of $25,000 to the plan.

(b)  If the funds provided under paragraph (a) are insufficient to carry out the powers and duties of the plan, the plan shall levy an assessment directly against all HMOs.

(3)  All assessments against HMOs shall be levied as a percentage of annual earned premium revenue for non-Medicare and non-Medicaid contracts. In no event may the plan assess in any calendar year more than 0.5 percent of each HMO's annual earned premium revenue for non-Medicare and non-Medicaid contracts.

(4)  The plan may temporarily defer, in whole or in part, the assessment of a member HMO, if, in the opinion of the board, payment of the assessment would endanger the ability of the HMO to fulfill its contractual obligations.

(5)  It shall be proper for any member HMO, in determining its premium rates, to consider the amount reasonably necessary to meet its assessment obligations under this part.

History.--ss. 1, 23, ch. 88-388; ss. 107, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.820  Plan of operation.--

(1)  The plan shall submit to the department a proposed plan of operation and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the plan. The proposed plan of operation and any amendments thereto shall become effective upon approval in writing by the department.

(2)  All member HMOs shall comply with the approved plan of operation.

(3)  The plan of operation shall, in addition to requirements enumerated elsewhere in this part:

(a)  Establish procedures for handling the assets of the plan.

(b)  Establish the amount and method of reimbursing members of the board of directors.

(c)  Establish regular places and times for meetings of the board of directors.

(d)  Establish procedures for keeping records of all financial transactions of the plan, its agents, and the board of directors.

(e)  Establish procedures whereby selections for the board of directors shall be made and submitted to the department.

(f)  Establish any additional procedures for assessments under this part.

(g)  Contain additional provisions necessary or proper for the execution of the powers and duties of the plan.

(4)(a)  The plan of operation may provide that any or all powers and duties of the plan, except those under ss. 631.818(6)(b) and (c) and 631.819, are delegated to an administrator which may be a corporation, association, or other organization which performs or will perform functions similar to those of this plan, or its equivalent.

(b)  The board may select an administrator through a competitive bidding process to administer the plan. The board shall evaluate bids submitted under this subsection based on criteria established by the board, which criteria shall include:

1.  The administrator's proven ability to manage large group health insurance plans and HMOs.

2.  The efficiency of the administrator's claims-paying procedures.

3.  An estimate of total charges for administering the plan.

4.  Any other reasonable factors as set by the board.

(c)  The administrator shall be reimbursed for any payments made on behalf of the plan and shall be paid for its performance of any function of the plan.

(d)  A delegation under this subsection shall take effect only with the approval of both the board of directors and the department and may be made only to an administrator which extends protection not substantially less favorable and effective than that provided by this part.

History.--ss. 1, 23, ch. 88-388; ss. 108, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.821  Powers and duties of the department.--

(1)  The department may suspend or revoke, after notice and hearing, the certificate of authority of a member HMO that fails to pay an assessment when due, fails to comply with the approved plan of operation of the plan, or fails either to timely comply with or to timely appeal pursuant to subsection (2) its appointment under s. 631.818(2).

(2)  Any action of the board of directors of the plan may be appealed to the department by any member HMO if such appeal is taken within 21 days of the action being appealed; however, the HMO must comply with such action pending exhaustion of appeal under ¹s. 631.818(2). Any appeal shall be promptly determined by the department, and final action or order of the department shall be subject to judicial review in a court of competent jurisdiction.

(3)  The department may:

(a)  Require that the plan notify the subscriber of the insolvent HMO and any other interested parties of the determination of insolvency and of their rights under this part. Such notification shall be by mail at their last known addresses, when available, but if sufficient information for notification by mail is not available, notice by publication in a newspaper of general circulation shall be sufficient.

(b)  Revoke the designation of any servicing facility or administrator if it finds claims are being handled unsatisfactorily.

History.--ss. 1, 23, ch. 88-388; ss. 109, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 6, ch. 95-213.

¹Note.--Section 631.818(2) does not relate to appeals.

631.822  Records of plan.--Records shall be kept of all meetings of the board and transactions under which the plan or its representatives carry out the plan's powers and duties. Records of such meetings or transactions shall be made public upon the termination of a liquidation, rehabilitation, or revocation proceeding involving the insolvent HMO.

History.--ss. 1, 23, ch. 88-388; ss. 110, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.823  Examination of the plan; annual report.--The plan shall be subject to examination and regulation by the department. The board of directors shall submit to the department, not later than May 1 of each year, a financial report for the preceding calendar year in a form approved by the department and a report of its activities during the preceding calendar year.

History.--ss. 1, 23, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.824  Tax exemptions.--The plan shall be exempt from payment of all fees and all taxes levied by this state or any of its subdivisions, except taxes levied on real property.

History.--ss. 1, 23, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.825  Immunity.--There shall be no liability on the part of, and no cause of action of any nature shall arise against, any member HMO or its agents or employees, the plan or its agents or employees, members of the board of directors, or the department or its representatives for any action taken by them in the performance of their powers and duties under this part.

History.--ss. 1, 23, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.826  Extent of liability of plan.--For the purpose of carrying out its obligations under this part, the plan shall be deemed to be a priority creditor of the insolvent HMO. Assets of the insolvent HMO shall be used to continue all covered policies of the insolvent HMO as permitted by this part, to the extent such assets are available. If an HMO is rehabilitated, the HMO shall repay to the plan such funds expended by the association for or on behalf of that HMO, together with interest at 12 percent per year. Such repayment terms shall be as reasonably set by the board.

History.--ss. 1, 23, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.827  Prohibited advertisement.--No person, including an HMO, agent, or affiliate of an HMO shall make, publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in any newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio station or television station, or in any other way, any advertisement, announcement, or statement which uses the existence of the Health Maintenance Organization Consumer Assistance Plan of this state for the purpose of solicitation of subscribers in health maintenance organizations; provided, however, that this section shall not apply to the Florida Health Maintenance Organization Consumer Assistance Plan.

History.--ss. 1, 23, ch. 88-388; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.828  Assessments against member HMOs; income tax credit for assessments paid.--Any provisions of the law to the contrary notwithstanding, a member HMO may offset against its corporate income tax liability or other liabilities, on an individual or consolidated basis, as applicable, any assessment described in s. 631.819 to the extent of 20 percent of the amount of such assessment for each of the 5 calendar years following the year in which such assessment was paid.

History.--ss. 1, 23, ch. 88-388; ss. 184, 187, 188, ch. 91-108; s. 4, ch. 91-429.

631.901  Title.

631.902  Purposes.

631.903  Construction.

631.904  Definitions.

631.911  Creation of the Florida Workers' Compensation Insurance Guaranty Association, Incorporated; merger; effect of merger.

631.912  Board of directors.

631.913  Powers and duties of the corporation.

631.914  Assessments.

631.916  Plan of operation.

631.917  Prevention of insolvencies.

631.918  Immunity.

631.919  Prohibited advertisement of solicitation.

631.921  Department powers.

631.922  Liability of members of an impaired self-insurance fund for unpaid claims.

631.923  Effect of paid claims.

631.924  Stay of proceedings; reopening of default judgments.

631.926  Attorney's fees.

631.927  Assumption of liability.

631.928  Florida Workers' Compensation Insurance Guaranty Association Account.

631.929  Election of remedies.

631.931  Reports and recommendations by board; public records exemption.

631.932  Negotiations; public meetings and records exemptions.

631.901  Title.--This part may be cited as the "Florida Workers' Compensation Insurance Guaranty Association Act."

History.--s. 20, ch. 97-262.

631.902  Purposes.--The purposes of this part are to:

(1)  Create a not-for-profit Florida Workers' Compensation Insurance Guaranty Association, Incorporated, to provide a mechanism for the payment of covered claims under chapter 440 to avoid excessive delay in payment and to avoid financial loss to claimants because of the insolvency of a member insurer.

(2)  Assist in the detection and prevention of insurer insolvencies.

(3)  Allocate the cost of such protection among the insurers.

(4)  Provide for the prompt payment by the corporation of workers' compensation claims incurred by insolvent insurers.

History.--s. 20, ch. 97-262.

631.903  Construction.--The statutes controlling the corporation shall be construed liberally to achieve the purposes stated in s. 631.902. The corporation shall perform its functions under a plan of operation established by its board of directors and approved by the department.

History.--s. 20, ch. 97-262.

631.904  Definitions.--As used in this part, the term:

(1)  "Corporation" means the Florida Workers' Compensation Insurance Guaranty Association, Incorporated.

(2)  "Covered claim" means an unpaid claim, including a claim for return of unearned premiums, which arises out of, is within the coverage of, and is not in excess of the applicable limits of, an insurance policy to which this part applies, which policy was issued by an insurer and which claim is made on behalf of a claimant or insured who was a resident of this state at the time of the injury. The term "covered claim" does not include any amount sought as a return of premium under any retrospective rating plan; any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise; or any return of premium resulting from a policy that was not in force on the date of the final order of liquidation. Member insurers have no right of subrogation against the insured of any insolvent insurer. This provision shall be applied retroactively to cover claims of an insolvent self-insurance fund resulting from accidents or losses incurred prior to January 1, 1994, regardless of the date the Department of Insurance filed a petition in circuit court alleging insolvency and the date the court entered an order appointing a receiver.

(3)  "Department" means the Department of Insurance.

(4)  "Insolvency" means that condition in which all of the assets of the insurer, if made immediately available, would not be sufficient to discharge all of its liabilities or that condition in which the insurer is unable to pay its debts as they become due in the usual course of business. When the context of any provision of this part so indicates, insolvency also includes impairment of surplus or impairment of capital.

(5)  "Insolvent insurer" means an insurer that was authorized to transact insurance in this state, either at the time the policy was issued or when the insured event occurred, and against which an order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction if such order has become final by the exhaustion of appellate review.

(6)  "Insurer" means an insurance carrier or self-insurance fund authorized to insure under chapter 440. For purposes of this act, "insurer" does not include a qualified local government self-insurance fund, as defined in s. 624.4622, or an individual self-insurer as defined in s. 440.385.

(7)  "Self-insurance fund" means a group self-insurance fund authorized under s. 624.4621, a commercial self-insurance fund writing workers' compensation insurance authorized under s. 624.462, or an assessable mutual insurer authorized under s. 628.6011. For purposes of this act, "self-insurance fund" does not include a qualified local government self-insurance fund, as defined in s. 624.4622, or an individual self-insurer as defined in s. 440.385.

History.--s. 20, ch. 97-262; s. 17, ch. 2002-25; s. 10, ch. 2002-282.

631.911  Creation of the Florida Workers' Compensation Insurance Guaranty Association, Incorporated; merger; effect of merger.--

(1)(a)  The Florida Self-Insurance Fund Guaranty Association established in former part V of chapter 631 and the workers' compensation insurance account, which includes excess workers' compensation insurance, established in former s. 631.55(2)(a) shall be merged, effective October 1, 1997, or as provided in paragraph (b), in accordance with the plan of operation adopted by the interim board of directors. The successor nonprofit corporation shall be known as the "Florida Workers' Compensation Insurance Guaranty Association, Incorporated."

(b)  The merger may be effected prior to October 1, 1997, if:

1.  The interim board of directors of the Workers' Compensation Insurance Guaranty Association provides the Department of Insurance with written notice of its intent to effectuate the merger as of a date certain and its functional readiness to initiate operations, such notice setting forth the plan or summary thereof for effecting the merger; and,

2.  The department, upon review of the plan or summary thereof, determines the Workers' Compensation Insurance Guaranty Association is functionally ready to initiate operations and so certifies to the interim board of directors.

(c)  Prior to the effective date of the merger, the Florida Self-Insurance Fund Guaranty Association shall be the entity responsible for the claims of insolvent self-insurance funds resulting from accidents or losses incurred prior to January 1, 1994, regardless of the date the Department of Insurance filed a petition in circuit court alleging insolvency and the date the court entered an order appointing a receiver.

(d)  Upon the effective date of the merger:

1.  The Florida Self-Insurance Fund Guaranty Association and the workers' compensation insurance account within the Florida Insurance Guaranty Association cease to exist and are succeeded by the Florida Workers' Compensation Insurance Guaranty Association.

2.  Title to all assets of any description, all real estate and other property, or any interest therein, owned by each party to the merger is vested in the successor corporation without reversion or impairment.

3.  The successor corporation shall be responsible and liable for all the liabilities and obligations of each party to the merger.

4.  Any claim existing or action or proceeding pending by or against any party to the merger may be continued as if the merger did not occur or the successor corporation may be substituted in the proceeding for the corporation or account which ceased existence.

5.  Neither the rights of creditors nor any liens upon the property of any party to the merger shall be impaired by such merger.

6.  Outstanding assessments levied by the Florida Self-Insurance Guaranty Association or the Florida Insurance Guaranty Association on behalf of the workers' compensation insurance account remain in full force and effect and shall be paid when due.

(2)  All insurers must be members of the corporation as a condition of their authority to offer workers' compensation coverage in this state. An insurer must reimburse the corporation for all funds advanced to the insurer and all claim payments the insurer makes on the insured's behalf if the insurer, having been placed in rehabilitation receivership, is subsequently rehabilitated.

(3)  The corporation shall perform its functions under a plan of operation and shall exercise its powers through a board of directors. Upon adoption of a plan of operation for the corporation, the board shall manage the Florida Workers' Compensation Insurance Guaranty Association Account.

(4)  The corporation has all powers granted or allowed to not-for-profit corporations under chapter 617, in addition to other powers granted in this section.

History.--s. 20, ch. 97-262; s. 84, ch. 2000-154; s. 69, ch. 2001-63.

631.912  Board of directors.--

(1)  The board of directors of the corporation shall consist of 11 persons, 1 of whom is the insurance consumer advocate appointed under s. 627.0613 or designee and 1 of whom is designated by the Insurance Commissioner. The department shall appoint to the board 6 persons selected by private carriers from among the 20 workers' compensation insurers with the largest amount of net direct written premium as determined by the department, and 3 persons selected by the self-insurance funds. At least two of the private carriers shall be foreign carriers authorized to do business in this state. The board shall elect a chairperson from among its members. The commissioner may remove any board member for cause. Each board member shall serve for a 4-year term and may be reappointed, except that four members of the initial board shall have 2-year terms so as to stagger the periods of service. A vacancy on the board shall be filled for the remaining period of the term in the same manner by which the original appointment was made.

(2)  Members of the board may be reimbursed from the assets of the corporation for actual and reasonable out-of-pocket expenses incurred by them as members of the board of directors; however, members of the board may not otherwise be compensated by the corporation for their services.

(3)  Effective upon this act becoming a law, the persons on the board of directors created pursuant to s. 627.311(4)(a) who evidence a willingness to serve in writing, shall serve as an interim board of directors of the corporation until the initial board of directors has been appointed for the corporation in accordance with the provisions of subsection (1). The interim board of directors shall serve for a period not to exceed 6 months. The initial meeting shall be called by the commissioner within 30 days after this act becomes a law. The interim board of directors shall establish a process for the selection of persons to serve on the board of the Florida Workers' Compensation Insurance Guaranty Association in accordance with the terms of subsection (1). The board of directors shall adopt an interim plan of operation to effect the merger in s. 631.911 and avoid any interruption of benefit payments to injured workers. When necessary and upon approval of the chairs of their respective board of directors, the Florida Self-Insurance Fund Guaranty Association and the Florida Insurance Guaranty Association shall provide staff support to the interim board of directors. The board shall submit the interim plan to the commissioner, who shall approve or disapprove the plan within 30 days after receipt.

History.--s. 20, ch. 97-262.

631.913  Powers and duties of the corporation.--

(1)  The corporation is obligated to the extent of the full amount of the covered claims:

(a)  Existing before the adjudication of insolvency and arising within 30 days after the determination of insolvency;

(b)  Existing before the policy expiration date if less than 30 days after the determination of insolvency; or

(c)  Existing before the insured replaces the policy or causes its cancellation, if the insured does so within 30 days after the determination of insolvency.

The corporation is not obligated to a policyholder or claimant in an amount in excess of the obligation of the insolvent insurer under the policy from which the claim arises.

(2)  The corporation is considered to be the insurer to the extent of its obligation on the covered claims, and, to such extent, has all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent. The corporation is not liable for any penalties or interest.

(3)  The corporation may:

(a)  Employ or retain such persons as are necessary to handle claims and perform other duties of the corporation.

(b)  Borrow funds necessary to effect the purposes of this part in accordance with the plan of operation.

(c)  Sue or be sued. Service of process in such legal actions must be made upon the person registered with the department as agent for the receipt of service of process.

(d)  Enter into such contracts as are necessary to carry out the purpose of this part.

(4)  The corporation may assist and advise the department, when appropriate, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of any impaired or insolvent insurer. The corporation may also assist and advise departments of insurance of other states; other guaranty associations; and conservators, rehabilitators, and receivers appointed or acting in regard to any member insured wherever located, for the purpose of developing plans to coordinate protection of policyholders. Costs of such activities may be charged against the Florida Workers' Compensation Insurance Guaranty Association Account at the discretion of the board of directors, notwithstanding any other provision of this act.

(5)  The corporation shall have standing to appear before any court in this state which has jurisdiction over an impaired or insolvent insurer to which the corporation is or may become obligated under this act. Such standing shall extend to all matters germane to the powers and duties of the corporation, including but not limited to, proposals for reinsuring or guaranteeing the covered policies of the impaired or insolvent insurer and the determination of the covered policies and contractual obligations.

(6)  State funds may not be allocated or paid to the corporation.

History.--s. 20, ch. 97-262.

631.914  Assessments.--

(1)(a)  To the extent necessary to secure the funds for the payment of covered claims, and also to pay the reasonable costs to administer the same, the department, upon certification by the board, shall levy assessments on each insurer in the proportion that the insurer's net direct written premiums in this state bears to the total of said net direct written premiums received in this state by all such workers' compensation insurers for the preceding calendar year. Assessments shall be remitted to and administered by the board of directors in the manner specified by the approved plan of operation. The board shall give each insurer so assessed at least 30 days' written notice of the date the assessment is due and payable. Each assessment shall be a uniform percentage applicable to the net direct written premiums of each insurer writing workers' compensation insurance.

1.  Beginning July 1, 1997, assessments levied against insurers, other than self-insurance funds, shall not exceed in any calendar year more than 2 percent of that insurer's net direct written premiums in this state for workers' compensation insurance during the calendar year next preceding the date of such assessments.

2.  Beginning July 1, 1997, assessments levied against self-insurance funds shall not exceed in any calendar year more than 1.50 percent of that self-insurance fund's net direct written premiums in this state for workers' compensation insurance during the calendar year next preceding the date of such assessments.

(b)  Assessments shall be included as an appropriate factor in the making of rates.

(c)1.  Effective July 1, 1999, if assessments otherwise authorized in paragraph (a) are insufficient to make all payments on reimbursements then owing to claimants in a calendar year, then upon certification by the board, the department shall levy additional assessments of up to 1.5 percent of the insurer's net direct written premiums in this state during the calendar year next preceding the date of such assessments against insurers to secure the necessary funds.

2.  To assure that insurers paying assessments levied under this paragraph continue to charge rates that are neither inadequate nor excessive, each insurer that is to be assessed pursuant to this paragraph, or a licensed rating organization to which the insurer subscribes, may make, within 90 days after being notified of such assessments, a rate filing for workers' compensation coverage pursuant to ss. 627.072 and 627.091. If the filing reflects a percentage rate change equal to the difference between the rate of such assessment and the rate of the previous year's assessment under this paragraph, the filing shall consist of a certification so stating and shall be deemed approved when made. Any rate change of a different percentage shall be subject to the standards and procedures of ss. 627.072 and 627.091.

(2)(a)  The board may exempt any insurer from an assessment if, in the opinion of the department, an assessment would result in such insurer's financial statement reflecting an amount of capital or surplus less than the minimum amount required by any jurisdiction in which the insurer is authorized to transact insurance.

(b)  The board may temporarily defer, in whole or in part, assessments against an insurer if, in the opinion of the department, payment of the assessment would endanger the ability of the insurer to fulfill its contractual obligations. In the case of a self-insurance fund, the trustees of the fund determined to be endangered must immediately levy an assessment upon the members of that self-insurance fund in an amount sufficient to pay the assessments to the corporation.

(c)  The board may allow an insurer to pay an assessment on a quarterly basis.

History.--s. 20, ch. 97-262; s. 48, ch. 99-3.

631.916  Plan of operation.--The board of directors shall prepare and submit to the department a plan of operation and any amendments to the plan which are necessary or suitable to assure the fair, reasonable, and equitable administration of the corporation. The plan of operation and any amendments to the plan shall become effective unless disapproved in writing by the department within 30 days after receipt. If the corporation fails to submit a plan of operation within 90 days after the appointment of the new board, the department shall implement a plan of operation which will be effective until the board submits a plan of operation. The plan of operation prepared by the board is subject to periodic review by the department. All member insurers shall comply with the approved plan of operation. The plan of operation must, in addition to the requirements enumerated elsewhere in this part:

(1)  Establish procedures for handling the assets of the corporation.

(2)  Establish regular places and times for meetings of the board of directors.

(3)  Establish procedures for keeping records of all financial transactions of the corporation, its agents, and the board of directors.

(4)  Establish procedures for levying and collecting assessments and deficiency surcharges.

(5)  Establish procedures to allow injured workers to make claims and to adjust and pay such claims.

(6)  Establish additional provisions necessary or proper for executing the powers and duties of the association.

History.--s. 20, ch. 97-262.

631.917  Prevention of insolvencies.--To aid in the detection and prevention of insolvencies or impairments:

(1)(a)  The board may make reasonable and lawful investigation into the practices of any third-party administrator or service company for a self-insurance fund declared insolvent by the court.

(b)  If the results of an investigation reasonably lead to a finding that certain actions taken or not taken by those handling, processing, or preparing covered claims for payment or other benefit pursuant to any workers' compensation insurance policy contributed to the insolvency of an insurer, such information may, in the discretion of the board, be provided to the department in an expedited manner.

(2)  The board of directors may make reports and recommendations to the department upon any matter germane to the solvency, liquidation, rehabilitation, or conservation of any member insurer or germane to the solvency of any insurer seeking to do insurance business in this state.

(3)  The board of directors, in its discretion, may notify the department of any information indicating that any member insurer may be an impaired or insolvent insurer.

(4)  The board of directors, in its discretion, may request that the department order an examination of any member insurer which the board in good faith believes may be an impaired or insolvent insurer. Within 30 days after receipt of such a request, the department shall begin such an examination. The examination may be conducted as a National Association of Insurance Commissioners examination or may be conducted by such persons as the Insurance Commissioner designates. The cost of such examination shall be paid by the corporation, and the examination report shall be treated in a manner similar to other examination reports pursuant to s. 624.319. In no event may such examination report be released to the board of directors before its release to the public, but this requirement does not preclude the department from complying with s. 631.398(2). The department shall notify the board of directors when the examination is completed. The request for an examination shall be kept on file by the department.

(5)  The board is authorized to assist and aid the department, in any manner consistent with existing laws and this chapter, in the department's investigation or referral for prosecution of those whose action or inaction may have contributed to the impairment or insolvency of the insurer.

(6)  The board may make recommendations to the department for the detection and prevention of insurer insolvencies.

History.--s. 20, ch. 97-262.

631.918  Immunity.--There is no liability on the part of, and a cause of action may not arise against, the corporation, its agents or employees, or members of its board of directors, or the department or its agents or employees, for any action taken by them in the performance of their powers and duties under this section, unless such action is found to be a violation of antitrust laws, was in bad faith, or was undertaken with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.

History.--s. 20, ch. 97-262.

631.919  Prohibited advertisement of solicitation.--A person may not make, publish, disseminate, advertise, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in any print, television, or broadcast media, or in any circular, letter, pamphlet, or publication of any kind, a statement or announcement that uses the existence of the Florida Workers' Compensation Insurance Guaranty Association, Incorporated, to induce an employer to purchase membership in or insurance from a member insurer.

History.--s. 20, ch. 97-262.

631.921  Department powers.--The corporation shall be subject to examination by the department. By March 1 of each year, the board of directors shall cause a financial report to be filed with the department for the immediately preceding calendar year in a form approved by the department.

History.--s. 20, ch. 97-262.

631.922  Liability of members of an impaired self-insurance fund for unpaid claims.--This act may not be construed to reduce the liability of a member of an impaired self-insurance fund for the member's liability under s. 624.4621 or s. 624.476.

History.--s. 20, ch. 97-262.

631.923  Effect of paid claims.--

(1)  Any person who recovers under this part is considered to have assigned his or her rights under the policy to the corporation to the extent of his or her recovery from the corporation. Every insured or claimant seeking the protection of this part shall cooperate with the corporation to the same extent as the insured or claimant would have been required to cooperate with the insolvent insurer. The corporation has no cause of action against the insured of the insolvent insurer for any sums the insured has paid out except such causes of action as the insolvent insurer would have had if the sums had been paid by the insolvent insurer.

(2)  The receiver, liquidator, or statutory successor of an insolvent insurer is bound by settlements of covered claims by the corporation. The court having jurisdiction shall grant such claims priority equal to that to which the claimant would have been entitled, in the absence of this part, against the assets of the insolvent insurer. The expenses of the association or similar organization in handling claims must be accorded the same priority as the liquidator's expenses.

(3)  The corporation shall periodically file with the receiver or liquidator of the insolvent insurer statements of the covered claims paid by the corporation and estimates of anticipated claims on the corporation, which shall preserve the rights of the corporation against the assets of the insolvent insurer.

(4)  Any release of the corporation and its insured must clearly state whether or not any claim filed with the receiver in excess of the liability of the corporation under s. 631.57 is waived.

History.--s. 20, ch. 97-262.

631.924  Stay of proceedings; reopening of default judgments.--All proceedings in which the insolvent self-insurance fund is a party or is obligated to defend a party in any court or before any quasi-judicial body or administrative board in this state must be stayed for 6 months, or such additional period from the date the insolvency is adjudicated, by a court of competent jurisdiction to allow proper defense by the association of all pending causes of action as to any covered claims. The stay may be extended for a period of time greater than 6 months upon proper application to a court of competent jurisdiction. The association, either on its own behalf or on behalf of the insured, may apply to have any judgment, order, decision, verdict, or finding based on the default of the insolvent self-insurance fund or its failure to defend an insured set aside by the same court or administrator that made the judgment, order, decision, verdict, or finding and may defend against the claim on the merits. If the association so requests, the stay of proceedings may be shortened or waived.

History.--s. 20, ch. 97-262.

631.926  Attorney's fees.--The provisions of s. 627.428 providing for an attorney's fee are inapplicable to any claim presented to the corporation under this part, unless the corporation denies, by affirmative action other than delay, a covered claim or a portion thereof.

History.--s. 20, ch. 97-262.

631.927  Assumption of liability.--Notwithstanding s. 631.913, the corporation shall assume the liability for the payment of the workers' compensation indemnity and medical benefits that are due to claimants covered by the Certified Pulpwood Dealers Self-Insurers Fund. The corporation shall assess the former members of the Certified Pulpwood Dealers Self-Insurers Fund pursuant to the provisions of this act.

History.--s. 20, ch. 97-262.

631.928  Florida Workers' Compensation Insurance Guaranty Association Account.--Notwithstanding the provisions of s. 215.3207, the Florida Workers' Compensation Insurance Guaranty Association Account is hereby created, to be managed by the Florida Workers' Compensation Insurance Guaranty Association. Funds shall be credited to the fund as provided in chapter 93-415, Laws of Florida, or similar legislation, to be used for the purposes set forth therein.

History.--s. 1, ch. 93-424; s. 23, ch. 97-262.

Note.--Former s. 631.996.

631.929  Election of remedies.--An injured worker who has a date of accident which occurred before January 1, 1994, and is not receiving benefits due under chapter 440 due to the insolvency of a self-insurance fund or its successors, regardless of the date declared insolvent by the court, may elect to seek medical care, treatment, and attendance, and compensation required under ss. 440.15 and 440.16 from the corporation and forego the remedy to seek benefits from his or her employer or the insolvent self-insurance fund. An employee who so elects may be required to obtain medical care, treatment, and attendance through a managed care plan comporting with the requirement of s. 440.134 if the plan of operation so provides. An injured worker has 60 days to seek benefits from the corporation upon ratification by the corporation of his or her right to elect a remedy under this part. If the injured worker elects to pursue his or her remedy under the provisions of this part, the corporation may, with the agreement of the injured employee, pay a lump-sum payment in exchange for the corporation's and employer's release from liability for future medical and compensation expenses, as well as any other benefit provided under chapter 440. However, there shall be no entitlement to attorney's fees, penalties, interest, or costs to be paid on any claim presented to the corporation under this part. This section shall not create any cause of action against any employer who purchased workers' compensation insurance coverage pursuant to s. 440.38.

History.--s. 24, ch. 97-262; s. 45, ch. 99-7.

631.931  Reports and recommendations by board; public records exemption.--Reports and recommendations made by the Board of Directors of the Florida Workers' Compensation Insurance Guaranty Association to the Department of Insurance under s. 631.917 upon any matter germane to the solvency, liquidation, rehabilitation, or conservation of any member insurer are confidential and exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I of the State Constitution until the termination of a delinquency proceeding.

History.--s. 1, ch. 93-423; s. 389, ch. 96-406; ss. 25, 27, ch. 97-262.

Note.--Former s. 631.997.

631.932  Negotiations; public meetings and records exemptions.--Negotiations held between an insurer and the Florida Workers' Compensation Insurance Guaranty Association are exempt from the provisions of s. 286.011 and s. 24(b), Art. I of the State Constitution. Documents related to such negotiations that reveal identifiable payroll and loss and individual claim information are confidential and exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I of the State Constitution.

History.--s. 2, ch. 93-423; s. 390, ch. 96-406; ss. 26, 27, ch. 97-262.

Note.--Former s. 631.998.