HB 0693 2003
1	A bill to be entitled
2	An act relating to the Florida Workers’ Compensation
3	Insurance Guaranty Association, Incorporated; amending s.
4	631.904, F.S.; revising definitions; amending s. 631.913,
5	F.S.; limiting the corporation’s obligation for a covered
6	claim for return of unearned premium; amending s. 631.923,
7	F.S.; authorizing the corporation to recover the amount of
8	certain covered claims; amending s. 631.924, F.S.;
9	including insolvent insurers under provisions for a stay
10	of proceedings; creating s. 631.933, F.S.; providing
11	severability; providing an effective date.
12
13	Be It Enacted by the Legislature of the State of Florida:
14
15	Section 1. Section 631.904, Florida Statutes, is amended
16	to read:
17	631.904 Definitions.--As used in this part, the term:
18	(1) “Affiliate” means a person who directly, or indirectly
19	through one or more intermediaries, controls, is controlled by,
20	or is under common control with a specified person on December
21	31 of the year prior to the year in which the insurer becomes an
22	insolvent insurer.
23	(2) “Control” means the possession, direct or indirect, of
24	the power to direct or cause the direction of the management and
25	policies of a person, whether through the ownership of voting
26	securities, the holding of proxies by contract other than a
27	commercial contract for goods or nonmanagement services, or
28	otherwise, unless the power is solely the result of an official
29	position with or corporate office held by the person. Control
30	shall be presumed to exist if a person, directly or indirectly,
31	owns, controls, holds with the power to vote, or holds proxies
32	representing 10 percent or more of the voting securities or
33	voting power of any other person. This presumption may be
34	rebutted by a showing that control does not exist in fact.
35	(3)(1)"Corporation" means the Florida Workers'
36	Compensation Insurance Guaranty Association, Incorporated.
37	(4)(2)"Covered claim" means an unpaid claim, including a
38	claim for return of unearned premiums, which arises out of, is
39	within the coverage of, and is not in excess of the applicable
40	limits of, an insurance policy to which this part applies, which
41	policy was issued by an insurer and which claim is made on
42	behalf of a claimant or insured who was a resident of this state
43	at the time of the injury. The term "covered claim" does not
44	include:
45	(a)Any amount sought as a return of premium under any
46	retrospective rating plan;
47	(b)Any amount due any reinsurer, insurer, insurance pool,
48	or underwriting association, as subrogation recoveries or
49	otherwise; or
50	(c)Any return of premium resulting from a policy that was
51	not in force on the date of the final order of liquidation; or
52	(d) Any claim by or against an insured whose net worth
53	exceeds $25 million on December 31 of the year prior to the year
54	in which the insurer becomes an insolvent insurer, provided an
55	insured’s net worth on that date shall be deemed to include the
56	aggregate net worth of the insured and all of its subsidiaries
57	and affiliates as calculated on a consolidated basis. However,
58	the exclusion under this paragraph shall not apply to claims
59	against an insured that is a governmental entity or an insured
60	if:
61	1. The insured has:
62	a. Applied for or consented to the appointment of a
63	receiver, trustee, or liquidator for all or a substantial part
64	of its assets;
65	b. Filed a voluntary petition in bankruptcy; or
66	c. Filed a petition or an answer seeking reorganization or
67	arrangement with creditors or to take advantage of any
68	insolvency law; or
69	2. An order, judgment, or decree is entered by a court of
70	competent jurisdiction, on the application of a creditor,
71	adjudicating the insured bankrupt or insolvent or approving a
72	petition seeking reorganization of the insured or all or a
73	substantial part of its assets.
74
75	Member insurers have no right of subrogation against the insured
76	of any insolvent insurer. This provision shall be applied
77	retroactively to cover claims of an insolvent self-insurance
78	fund resulting from accidents or losses incurred prior to
79	January 1, 1994, regardless of the date the Department of
80	Insurance filed a petition in circuit court alleging insolvency
81	and the date the court entered an order appointing a receiver.
82	(5)(3)"Department" means the Department of Insurance.
83	(6) “Governmental entity” means any state, county,
84	municipality, or special district or any subdivision or agency
85	of a state, county, or municipality.
86	(7)(4)"Insolvency" means that condition in which all of
87	the assets of the insurer, if made immediately available, would
88	not be sufficient to discharge all of its liabilities or that
89	condition in which the insurer is unable to pay its debts as
90	they become due in the usual course of business. When the
91	context of any provision of this part so indicates, insolvency
92	also includes impairment of surplus or impairment of capital.
93	(8)(5)"Insolvent insurer" means an insurer that was
94	authorized to transact insurance in this state, either at the
95	time the policy was issued or when the insured event occurred,
96	and against which an order of liquidation with a finding of
97	insolvency has been entered by a court of competent jurisdiction
98	if such order has become final by the exhaustion of appellate
99	review.
100	(9)(6)"Insurer" means an insurance carrier or self-
101	insurance fund authorized to insure under chapter 440. For
102	purposes of this act, "insurer" does not include a qualified
103	local government self-insurance fund, as defined in s. 624.4622,
104	or an individual self-insurer as defined in s. 440.385.
105	(10)(7)"Self-insurance fund" means a group self-insurance
106	fund authorized under s. 624.4621, a commercial self-insurance
107	fund writing workers' compensation insurance authorized under s.
108	624.462, or an assessable mutual insurer authorized under s.
109	628.6011. For purposes of this act, "self-insurance fund" does
110	not include a qualified local government self-insurance fund, as
111	defined in s. 624.4622, or an individual self-insurer as defined
112	in s. 440.385.
113	Section 2. Subsection (1) of section 631.913, Florida
114	Statutes, is amended to read:
115	631.913 Powers and duties of the corporation.--
116	(1) The corporation is obligated to the extent of the full
117	amount of the covered claims:
118	(a) Existing before the adjudication of insolvency and
119	arising within 30 days after the determination of insolvency;
120	(b) Existing before the policy expiration date if less
121	than 30 days after the determination of insolvency; or
122	(c) Existing before the insured replaces the policy or
123	causes its cancellation, if the insured does so within 30 days
124	after the determination of insolvency.
125
126	Notwithstanding such criteria, the corporation’s obligation for
127	a covered claim for the return of unearned premium shall not
128	exceed $50,000 per policy. In addition,the corporation is not
129	obligated to a policyholder or claimant in an amount in excess
130	of the obligation of the insolvent insurer under the policy from
131	which the claim arises.
132	Section 3. Subsection (5) is added to section 631.923,
133	Florida Statutes, to read:
134	631.923 Effect of paid claims.--
135	(5) The corporation shall have the right to recover the
136	amount of any covered claim paid on behalf of:
137	(a) An insured whose net worth exceeds $25 million on
138	December 31 of the year prior to the year in which the insurer
139	becomes an insolvent insurer, provided an insured’s net worth on
140	that date shall be deemed to include the aggregate net worth of
141	the insured and all of its subsidiaries and affiliates, as
142	calculated on a consolidated basis; or
143	(b) Any person who is an affiliate of the insolvent
144	insurer,
145
146	and whose liability obligations to other persons are satisfied
147	in whole or in part by payments made pursuant to this part.
148	Section 4. Section 631.924, Florida Statutes, is amended
149	to read:
150	631.924 Stay of proceedings; reopening of default
151	judgments.--All proceedings in which the insolvent insurer or
152	self-insurance fund is a party or is obligated to defend a party
153	in any court or before any quasi-judicial body or administrative
154	board in this state must be stayed for 6 months, or such
155	additional period from the date the insolvency is adjudicated,
156	by a court of competent jurisdiction to allow proper defense by
157	the association of all pending causes of action as to any
158	covered claims. The stay may be extended for a period of time
159	greater than 6 months upon proper application to a court of
160	competent jurisdiction. The association, either on its own
161	behalf or on behalf of the insured, may apply to have any
162	judgment, order, decision, verdict, or finding based on the
163	default of the insolvent insurer orself-insurance fund or its
164	failure to defend an insured set aside by the same court or
165	administrator that made the judgment, order, decision, verdict,
166	or finding and may defend against the claim on the merits. If
167	the association so requests, the stay of proceedings may be
168	shortened or waived.
169	Section 5. Section 631.933, Florida Statutes, is created
170	to read:
171	631.933 Severability.--If any provision of this part or the
172	application thereof to any person or circumstance is held invalid,
173	such invalidity does not affect other provisions or applications of
174	this part which can be given effect without the invalid application
175	or provision, and to this end the provisions of this part are
176	declared severable.
177	Section 6. This act shall take effect upon becoming a law.