Senate Bill sb1822er

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  2         An act relating to insurance; amending s.

  3         627.351, F.S.; revising provisions governing

  4         financing arrangements and dissolutions;

  5         providing legislative intent; amending s.

  6         215.555, F.S.; redefining the term "covered

  7         policy"; amending ss. 324.031, 324.032, F.S.,

  8         specifying manner of proving financial

  9         responsibility; amending s. 631.904, F.S.;

10         redefining the term "covered claim"; amending

11         s. 625.041, F.S.; revising the liabilities that

12         a workers' compensation insurer must include on

13         its financial statements; providing retroactive

14         application; amending s. 626.926, F.S.;

15         providing circumstances under which a surplus

16         lines insurer may cancel a policy; amending s.

17         641.35, F.S.; authorizing investment of funds

18         of a health maintenance organization in excess

19         of certain reserves and surplus under certain

20         circumstances; providing a limitation; amending

21         s. 624.4072, F.S.; extending the term of the

22         exemption from taxes and assessments on

23         minority-owned property and casualty insurers;

24         postponing the scheduled repeal of the law;

25         providing effective dates.

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27  Be It Enacted by the Legislature of the State of Florida:

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29         Section 1.  Paragraph (c) of subsection (2) of section

30  215.555, Florida Statutes, is amended to read:

31         215.555  Florida Hurricane Catastrophe Fund.--


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  1         (2)  DEFINITIONS.--As used in this section:

  2         (c)  "Covered policy" means any insurance policy

  3  covering residential property in this state, including, but

  4  not limited to, any homeowner's, mobile home owner's, farm

  5  owner's, condominium association, condominium unit owner's,

  6  tenant's, or apartment building policy, or any other policy

  7  covering a residential structure or its contents issued by any

  8  authorized insurer, including any joint underwriting

  9  association or similar entity created pursuant to law. The

10  term "covered policy" includes any collateral protection

11  insurance policy covering personal residences which protects

12  both the borrower's and the lender's financial interests, in

13  an amount at least equal to the coverage for the dwelling in

14  place under the lapsed homeowner's policy, if such policy can

15  be accurately reported as required in subsection (5).

16  Additionally, covered policies include policies covering the

17  peril of wind removed from the Florida Residential Property

18  and Casualty Joint Underwriting Association, created pursuant

19  to s. 627.351(6), or from the Florida Windstorm Underwriting

20  Association, created pursuant to s. 627.351(2), by an

21  authorized insurer under the terms and conditions of an

22  executed assumption agreement between the authorized insurer

23  and either such association. Each assumption agreement between

24  either association and such authorized insurer must be

25  approved by the Florida Department of Insurance prior to the

26  effective date of the assumption, and the Department of

27  Insurance must provide written notification to the board

28  within 15 working days after such approval. "Covered policy"

29  does not include any policy that excludes wind coverage or

30  hurricane coverage or any reinsurance agreement and does not

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  1  include any policy otherwise meeting this definition which is

  2  issued by a surplus lines insurer or a reinsurer.

  3         Section 2.  Section 324.031, Florida Statutes, is

  4  amended to read:

  5         324.031  Manner of proving financial

  6  responsibility.--The owner or operator of a taxicab,

  7  limousine, jitney, or any other for-hire passenger

  8  transportation vehicle may prove financial responsibility by

  9  providing satisfactory evidence of holding a motor vehicle

10  liability policy as defined in s. 324.021(8) or s. 324.151,

11  which policy is issued by an insurance carrier which is a

12  member of the Florida Insurance Guaranty Association. The

13  operator or owner of any other vehicle may prove his or her

14  financial responsibility by:

15         (1)  Furnishing satisfactory evidence of holding a

16  motor vehicle liability policy as defined in ss. 324.021(8)

17  and 324.151;

18         (2)  Posting with the department a satisfactory bond of

19  a surety company authorized to do business in this state,

20  conditioned for payment of the amount specified in s.

21  324.021(7);

22         (3)  Furnishing a certificate of the department showing

23  a deposit of cash or securities in accordance with s. 324.161;

24  or

25         (4)  Furnishing a certificate of self-insurance issued

26  by the department in accordance with s. 324.171.

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28  Any person, including any firm, partnership, association,

29  corporation, or other person, other than a natural person,

30  electing to use the method of proof specified in subsection

31  (2) or subsection (3) shall post a bond or deposit equal to


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  1  the number of vehicles owned times $30,000, to a maximum of

  2  $120,000; in addition, any such person, other than a natural

  3  person, shall maintain insurance providing coverage in excess

  4  of limits of $10,000/20,000/10,000 or $30,000 combined single

  5  limits, and such excess insurance shall provide minimum limits

  6  of $125,000/250,000/50,000 $50,000/100,000/50,000 or $300,000

  7  $150,000 combined single limits.  These increased limits shall

  8  not affect the requirements for proving financial

  9  responsibility under s. 324.032(1).

10         Section 3.  Subsection (1) of section 324.032, Florida

11  Statutes, is amended to read:

12         324.032  Manner of proving financial responsibility;

13  for-hire passenger transportation vehicles.--

14         (1)  Notwithstanding the provisions of s. 324.031, a

15  person who is either the owner or a lessee required to

16  maintain insurance under s. 324.021(9)(b) and who operates at

17  least 300 taxicabs, limousines, jitneys, or any other for-hire

18  passenger transportation vehicles may prove financial

19  responsibility by satisfying the following:

20         (a)  Furnishing satisfactory evidence of holding a

21  motor vehicle liability policy as defined in s. 324.031; or

22         (b)  Complying with the provisions of s. 324.171, such

23  compliance to be demonstrated by maintaining at its principal

24  place of business an audited financial statement, prepared in

25  accordance with generally accepted accounting principles, and

26  providing to the department a certification issued by a

27  certified public accountant that the applicant's net worth is

28  at least equal to the requirements of s. 324.171 as determined

29  by the Department of Insurance, including claims liabilities

30  in an amount certified as adequate by a Fellow of the Casualty

31  Actuarial Society.


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  2  Upon request by the department, the applicant must provide the

  3  department at the applicant's principal place of business in

  4  this state access to the applicant's underlying financial

  5  information and financial statements that provide the basis of

  6  the certified public accountant's certification.  The

  7  applicant shall reimburse the requesting department for all

  8  reasonable costs incurred by it in reviewing the supporting

  9  information.  The maximum amount of self-insurance permissible

10  under this subsection is $300,000 $100,000 and must be stated

11  on a per-occurrence basis, and the applicant shall maintain

12  adequate excess insurance issued by an authorized or eligible

13  insurer licensed or approved by the Department of Insurance.

14  All risks self-insured shall remain with the owner or lessee

15  providing it, and the risks are not transferable to any other

16  person, unless a policy complying with paragraph (a) is

17  obtained.

18         Section 4.  Subsection (2) of section 631.904, Florida

19  Statutes, is amended to read:

20         631.904  Definitions.--As used in this part, the term:

21         (2)  "Covered claim" means an unpaid claim, including a

22  claim for return of unearned premiums, which arises out of, is

23  within the coverage of, and is not in excess of the applicable

24  limits of, an insurance policy to which this part applies,

25  which policy was issued by an insurer and which claim is made

26  on behalf of a claimant or insured who was a resident of this

27  state at the time of the injury. The term "covered claim" does

28  not include any amount sought as a return of premium under any

29  retrospective rating plan; any amount due any reinsurer,

30  insurer, insurance pool, or underwriting association, as

31  subrogation recoveries or otherwise; or any return of premium


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  1  resulting from a policy that was not in force on the date of

  2  the final order of liquidation. Member insurers have no right

  3  of subrogation against the insured of any insolvent insurer.

  4  This provision shall be applied retroactively to cover claims

  5  of an insolvent self-insurance fund resulting from accidents

  6  or losses incurred prior to January 1, 1994, regardless of the

  7  date the Department of Insurance filed a petition in circuit

  8  court alleging insolvency and the date the court entered an

  9  order appointing a receiver.

10         Section 5.  Effective upon becoming a law and operating

11  retroactively to January 1, 2002, subsection (5) is added to

12  section 625.041, Florida Statutes, to read:

13         625.041  Liabilities, in general.--In any determination

14  of the financial condition of an insurer, liabilities to be

15  charged against its assets shall include:

16         (5)  Any insurer in this state which writes workers'

17  compensation insurance shall accrue a liability on its

18  financial statements for all Special Disability Trust Fund

19  assessments that are due within the current calendar year. In

20  addition, such insurers shall also disclose in the notes to

21  the financial statements required to be filed pursuant to s.

22  624.424 an estimate of future Special Disability Trust Fund

23  assessments, if such assessments are likely to occur and can

24  be estimated with reasonable certainty.

25         Section 6.  Section 626.926, Florida Statutes, is

26  amended to read:

27         626.926 Liability of insurer as to losses and unearned

28  premiums.--

29         (1)  If an unauthorized insurer or a person authorized

30  by it has bound the risk as to a surplus lines coverage placed

31  under this Surplus Lines Law, and if the premium therefor has


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  1  been received by the surplus lines agent or originating agent

  2  who placed such insurance, then in all questions thereafter

  3  arising under the coverage as between the insurer and the

  4  insured, the insurer shall be deemed to have received the

  5  premium due to it for such coverage; and the insurer shall be

  6  liable to the insured as to losses covered by such insurance,

  7  and for unearned premiums which may become payable to the

  8  insured upon cancellation of such insurance, whether or not in

  9  fact the surplus lines agent is indebted to the insurer with

10  respect to such insurance or for any other cause.  However, if

11  the premium is financed and the surplus lines insurer or the

12  surplus lines agent does not receive the premium, the surplus

13  lines insurer may cancel the policy pursuant to s. 626.9201.

14         (2)  Each unauthorized insurer assuming a surplus lines

15  direct risk under this Surplus Lines Law shall be deemed

16  thereby to have subjected itself to the terms of this section.

17         Section 7.  Subsection (15) of section 641.35, Florida

18  Statutes, is amended to read:

19         641.35  Assets, liabilities, and investments.--

20         (15)  SPECIAL CONSENT INVESTMENT OF EXCESS FUNDS.--

21         (a)  After satisfying the requirements of this part,

22  any funds of a health maintenance organization in excess of

23  its statutorily required reserves and surplus may be invested:

24         1.  Without limitation in any investments otherwise

25  authorized by this part; or

26         2.  In such other investments not specifically

27  authorized by this part provided such investments do not

28  exceed the lesser 5 percent of the health maintenance

29  organization's admitted assets or 25 percent of the amount by

30  which a health maintenance organization's surplus exceeds its

31  statutorily required minimum surplus. A health maintenance


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  1  organization may exceed the limitations of this subparagraph

  2  only with the prior written approval of the department.

  3         (b)  Nothing in this subsection authorizes a health

  4  maintenance organization to:

  5         1.  Invest any funds in excess of the amount by which

  6  its actual surplus exceeds its statutorily required minimum

  7  surplus; or

  8         2.  Make any investment prohibited by this code Any

  9  investment of the health maintenance organization's funds not

10  enumerated in this part requires the prior approval of the

11  department.

12         Section 8.  Section 624.4072, Florida Statutes, is

13  amended to read:

14         624.4072  Minority-owned property and casualty

15  insurers; limited exemption for taxation and assessments.--

16         (1)  A minority business that is at least 51 percent

17  owned by minority persons, as defined in s. 288.703(3),

18  initially issued a certificate of authority in this state as

19  an authorized insurer after May 1, 1998, and before January 1,

20  2002, to write property and casualty insurance shall be

21  exempt, for a period not to exceed 10 5 years from the date of

22  receiving its certificate of authority, from the following

23  taxes and assessments:

24         (a)  Taxes imposed under ss. 175.101, 185.08, and

25  624.509;

26         (b)  Assessments by the Florida Residential Property

27  and Casualty Joint Underwriting Association or by the Florida

28  Windstorm Underwriting Association, as provided under s.

29  627.351, except for emergency assessments collected from

30  policyholders pursuant to s. 627.351(2)(b)2.d.(III) and

31  (6)(b)3.d. Any such insurer shall be a member insurer of the


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  1  Florida Windstorm Underwriting Association and the Florida

  2  Residential Property and Casualty Joint Underwriting

  3  Association. The premiums of such insurer shall be included in

  4  determining, for the Florida Windstorm Underwriting

  5  Association, the aggregate statewide direct written premium

  6  for property insurance and in determining, for the Florida

  7  Residential Property and Casualty Joint Underwriting

  8  Association, the aggregate statewide direct written premium

  9  for the subject lines of business for all member insurers.

10         (2)  Subsection (1) applies only to personal lines and

11  commercial lines residential property insurance policies as

12  defined in s. 627.4025, and applies only to an insurer that

13  has employees in this state and has a home office or a

14  regional office in this state.  With respect to any tax year

15  or assessment year, the exemptions provided by subsection (1)

16  apply only if during the year an average of at least 10

17  percent of the insurer's Florida residential property policies

18  in force covered properties located in enterprise zones

19  designated pursuant to s. 290.0065.

20         (3)  The provision of the definition of "minority

21  person" in s. 288.703(3) that requires residency in Florida

22  shall not apply to the term "minority person" as used in this

23  section or s. 627.3511.

24         (4)  This section is repealed effective December 31,

25  2010 July 1, 2003, and the tax and assessment exemptions

26  authorized by this section shall terminate on such date.

27         Section 9.  Effective July 1, 2002, and contingent upon

28  SB 1418 becoming a law, paragraph (k) of subsection (6) of

29  section 627.351, Florida Statutes, is amended and paragraph

30  (p) is added to that subsection, to read:

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  1         (6)  CITIZENS RESIDENTIAL PROPERTY INSURANCE

  2  CORPORATION AND CASUALTY JOINT UNDERWRITING ASSOCIATION.--

  3         (k)  Upon a determination by the department board of

  4  governors that the conditions giving rise to the establishment

  5  and activation of the corporation association no longer exist,

  6  and upon the consent thereto by order of the department, the

  7  corporation association is dissolved. Upon dissolution, the

  8  assets of the association shall be applied first to pay all

  9  debts, liabilities, and obligations of the corporation

10  association, including the establishment of reasonable

11  reserves for any contingent liabilities or obligations, and

12  all remaining assets of the corporation association shall

13  become property of the state and deposited in the Florida

14  Hurricane Catastrophe Fund. However, no dissolution shall take

15  effect as long as the corporation has bonds or other financial

16  obligations outstanding unless adequate provision has been

17  made for the payment of the bonds or other financial

18  obligations pursuant to the documents authorizing the issuance

19  of the bonds or other financial obligations.

20         (p)  In enacting the provisions of this section, the

21  Legislature recognizes that both the Florida Windstorm

22  Underwriting Association and the Residential Property and

23  Casualty Joint Underwriting Association have entered into

24  financing arrangements that obligate each entity to service

25  its debts and maintain the capacity to repay funds secured

26  under these financing arrangements. It is the intent of the

27  Legislature that nothing in this section be construed to

28  compromise, diminish, or interfere with the rights of

29  creditors under such financing arrangements. It is further the

30  intent of the Legislature to preserve the obligations of the

31  Florida Windstorm Underwriting Association and Residential


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  1  Property and Casualty Joint Underwriting Association with

  2  regard to outstanding financing arrangements, with such

  3  obligations passing entirely and unchanged to the corporation

  4  and, specifically, to the applicable account of the

  5  corporation. So long as any bonds, notes, indebtedness, or

  6  other financing obligations of the Florida Windstorm

  7  Underwriting Association or the Residential Property and

  8  Casualty Joint Underwriting Association are outstanding, under

  9  the terms of the financing documents pertaining to them, the

10  governing board of the corporation shall have and shall

11  exercise the authority to levy, charge, collect, and receive

12  all premiums, assessments, surcharges, charges, revenues and

13  receipts that the associations had authority to levy, charge,

14  collect, or receive under the provisions of subsection (2) and

15  subsection (6), respectively, as they existed on January 1,

16  2002, to provide moneys, without exercise of the authority

17  provided by this subsection, in at least the amounts, and by

18  the times, as would be provided under those former provisions

19  of subsection (2) or subsection (6), respectively, so that the

20  value, amount, and collectability of any assets, revenues, or

21  revenue source pledged or committed to, or any lien thereon

22  securing such outstanding bonds, notes, indebtedness, or other

23  financing obligations will not be diminished, impaired, or

24  adversely affected by the amendments made by this act and to

25  permit compliance with all provisions of financing documents

26  pertaining to such bonds, notes, indebtedness, or other

27  financing obligations, or the security or credit enhancement

28  for them, and any reference in this subsection to bonds,

29  notes, indebtedness, financing obligations, or similar

30  obligations, of the corporation shall include like instruments

31  or contracts of the Florida Windstorm Underwriting Association


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  1  and the Residential Property and Casualty Joint Underwriting

  2  Association to the extent not inconsistent with the provisions

  3  of the financing documents pertaining to them.

  4         Section 10.  The amendments to section 627.351, Florida

  5  Statutes, in this act prevail over any conflicting amendments

  6  to that section contained in SB 1418.

  7         Section 11.  Except as otherwise expressly provided in

  8  this act, this act shall take effect July 1, 2002.

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