HOUSE AMENDMENT Bill No. HB 25A
1	CHAMBER ACTION
2	Senate House
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12	Representatives Brown, Berfield, Clarke, Goodlette, and Ross
13	offered the following:
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15	Amendment (with title amendment)
16	Remove line(s) 4914-5108, and insert:
17	Section 34. Effective July, 1, 2003, paragraphs (b), (c),
18	and (d) of subsection (4) of section 627.311, Florida Statutes,
19	are amended to read
20	627.311 Joint underwriters and joint reinsurers.--
21	(4)
22	(b) The operation of the plan is subject to the
23	supervision of a 9-member13-memberboard of governors. The
24	board of governors shall be comprised of:
25	1. Three members appointed by the Financial Services
26	Commission. Each member appointed by the commission shall serve
27	at the pleasure of the commission;
28	2.1.TwoFiveof the 20 domestic insurers, as defined in
29	s. 624.06(1), having the largest voluntary direct premiums
30	written in this state for workers' compensation and employer's
31	liability insurance, which shall be elected by those 20 domestic
32	insurers;
33	3.2.TwoFiveof the 20 foreign insurers as defined in s.
34	624.06(2) having the largest voluntary direct premiums written
35	in this state for workers' compensation and employer's liability
36	insurance, which shall be elected by those 20 foreign insurers;
37	3. One person, who shall serve as the chair, appointed by
38	the Insurance Commissioner;
39	4. One person appointed by the largest property and
40	casualty insurance agents' association in this state; and
41	5. The consumer advocate appointed under s. 627.0613 or
42	the consumer advocate's designee.
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44	Each board member shall serve a 4-year term and may serve
45	consecutive terms. A vacancy on the board shall be filled in the
46	same manner as the original appointment for the unexpired
47	portion of the term. The Financial Services Commission shall
48	designate a member of the board to serve as chair.No board
49	member shall be an insurer which provides service to the plan or
50	which has an affiliate which provides services to the plan or
51	which is serviced by a service company or third-party
52	administrator which provides services to the plan or which has
53	an affiliate which provides services to the plan. The minutes,
54	audits, and procedures of the board of governors are subject to
55	chapter 119.
56	(c) The operation of the plan shall be governed by a plan
57	of operation that is prepared at the direction of the board of
58	governors. The plan of operation may be changed at any time by
59	the board of governors or upon request of the department. The
60	plan of operation and all changes thereto are subject to the
61	approval of the department. The plan of operation shall:
62	1. Authorize the board to engage in the activities
63	necessary to implement this subsection, including, but not
64	limited to, borrowing money.
65	2. Develop criteria for eligibility for coverage by the
66	plan, including, but not limited to, documented rejection by at
67	least two insurers which reasonably assures that insureds
68	covered under the plan are unable to acquire coverage in the
69	voluntary market. Any insured may voluntarily elect to accept
70	coverage from an insurer for a premium equal to or greater than
71	the plan premium if the insurer writing the coverage adheres to
72	the provisions of s. 627.171.
73	3. Require notice from the agent to the insured at the
74	time of the application for coverage that the application is for
75	coverage with the plan and that coverage may be available
76	through an insurer, group self-insurers' fund, commercial self-
77	insurance fund, or assessable mutual insurer through another
78	agent at a lower cost.
79	4. Establish programs to encourage insurers to provide
80	coverage to applicants of the plan in the voluntary market and
81	to insureds of the plan, including, but not limited to:
82	a. Establishing procedures for an insurer to use in
83	notifying the plan of the insurer's desire to provide coverage
84	to applicants to the plan or existing insureds of the plan and
85	in describing the types of risks in which the insurer is
86	interested. The description of the desired risks must be on a
87	form developed by the plan.
88	b. Developing forms and procedures that provide an insurer
89	with the information necessary to determine whether the insurer
90	wants to write particular applicants to the plan or insureds of
91	the plan.
92	c. Developing procedures for notice to the plan and the
93	applicant to the plan or insured of the plan that an insurer
94	will insure the applicant or the insured of the plan, and notice
95	of the cost of the coverage offered; and developing procedures
96	for the selection of an insuring entity by the applicant or
97	insured of the plan.
98	d. Provide for a market-assistance plan to assist in the
99	placement of employers. All applications for coverage in the
100	plan received 45 days before the effective date for coverage
101	shall be processed through the market-assistance plan. A market-
102	assistance plan specifically designed to serve the needs of
103	small good policyholders as defined by the board must be
104	finalized by January 1, 1994.
105	5. Provide for policy and claims services to the insureds
106	of the plan of the nature and quality provided for insureds in
107	the voluntary market.
108	6. Provide for the review of applications for coverage
109	with the plan for reasonableness and accuracy, using any
110	available historic information regarding the insured.
111	7. Provide for procedures for auditing insureds of the
112	plan which are based on reasonable business judgment and are
113	designed to maximize the likelihood that the plan will collect
114	the appropriate premiums.
115	8. Authorize the plan to terminate the coverage of and
116	refuse future coverage for any insured that submits a fraudulent
117	application to the plan or provides fraudulent or grossly
118	erroneous records to the plan or to any service provider of the
119	plan in conjunction with the activities of the plan.
120	9. Establish service standards for agents who submit
121	business to the plan.
122	10. Establish criteria and procedures to prohibit any
123	agent who does not adhere to the established service standards
124	from placing business with the plan or receiving, directly or
125	indirectly, any commissions for business placed with the plan.
126	11. Provide for the establishment of reasonable safety
127	programs for all insureds in the plan. All insureds of the plan
128	must participate in the safety program.
129	12. Authorize the plan to terminate the coverage of and
130	refuse future coverage to any insured who fails to pay premiums
131	or surcharges when due; who, at the time of application, is
132	delinquent in payments of workers' compensation or employer's
133	liability insurance premiums or surcharges owed to an insurer,
134	group self-insurers' fund, commercial self-insurance fund, or
135	assessable mutual insurer licensed to write such coverage in
136	this state; or who refuses to substantially comply with any
137	safety programs recommended by the plan.
138	13. Authorize the board of governors to provide the
139	services required by the plan through staff employed by the
140	plan, through reasonably compensated service providers who
141	contract with the plan to provide services as specified by the
142	board of governors, or through a combination of employees and
143	service providers.
144	14. Provide for service standards for service providers,
145	methods of determining adherence to those service standards,
146	incentives and disincentives for service, and procedures for
147	terminating contracts for service providers that fail to adhere
148	to service standards.
149	15. Provide procedures for selecting service providers and
150	standards for qualification as a service provider that
151	reasonably assure that any service provider selected will
152	continue to operate as an ongoing concern and is capable of
153	providing the specified services in the manner required.
154	16. Provide for reasonable accounting and data-reporting
155	practices.
156	17. Provide for annual review of costs associated with the
157	administration and servicing of the policies issued by the plan
158	to determine alternatives by which costs can be reduced.
159	18. Authorize the acquisition of such excess insurance or
160	reinsurance as is consistent with the purposes of the plan.
161	19. Provide for an annual report to the department on a
162	date specified by the department and containing such information
163	as the department reasonably requires.
164	20. Establish multiple rating plans for various
165	classifications of risk which reflect risk of loss, hazard
166	grade, actual losses, size of premium, and compliance with loss
167	control. At least one of such plans must be a preferred-rating
168	plan to accommodate small-premium policyholders with good
169	experience as defined in sub-subparagraph 22.a.
170	21. Establish agent commission schedules.
171	22. Establish fourthreesubplans as follows:
172	a. Subplan "A" must include those insureds whose annual
173	premium does not exceed $2,500 and who have neither incurred any
174	lost-time claims nor incurred medical-only claims exceeding 50
175	percent of their premium for the immediate 2 years.
176	b. Subplan "B" must include insureds that are employers
177	identified by the board of governors as high-risk employers due
178	solely to the nature of the operations being performed by those
179	insureds and for whom no market exists in the voluntary market,
180	and whose experience modifications are less than 1.00.
181	c. Subplan "C" must include all otherinsureds within the
182	plan that are not eligible for subplan "A," subplan "B," or
183	subplan "D."
184	d. Subplan "D" must include any employer, regardless of
185	the length of time for which it has conducted business
186	operations, which has an experience modification factor of 1.10
187	or less and either employs 15 or fewer employees or is an
188	organization that is exempt from federal income tax pursuant to
189	s. 501(c)(3) of the Internal Revenue Code and receives more than
190	50 percent of its funding from gifts, grants, endowments, or
191	federal or state contracts. The rate plan for subplan "D" shall
192	be the same rate plan as the plan approved under ss. 627.091-
193	627.151 and each participant in subplan "D" shall pay the
194	premium determined under such rate plan, plus a surcharge
195	determined by the board to be sufficient to ensure that the plan
196	does not compete with the voluntary market rate for any
197	participant, but not to exceed 25 percent. However, the
198	surcharge shall not exceed 10 percent for an organization that
199	is exempt from federal income tax pursuant to s. 501(c)(3) of
200	the Internal Revenue Code.
201	23. Provide for a depopulation program to reduce the
202	number of insureds in subplan "D." If an employer insured
203	through subplan "D" is offered coverage from a voluntary market
204	carrier:
205	a. During the first 30 days of coverage under the subplan;
206	b. Before a policy is issued under the subplan;
207	c. By issuance of a policy upon expiration or cancellation
208	of the policy under the subplan; or
209	d. By assumption of the subplan's obligation with respect
210	to an in-force policy,
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212	that employer is no longer eligible for coverage through the
213	plan. The premium for risks assumed by the voluntary market
214	carrier must be the same premium plus, for the first 2 years,
215	the surcharge as determined in sub-subparagraph 22.d. A premium
216	under this subparagraph, including surcharge, is deemed approved
217	and is not an excess premium for purposes of s. 627.171.
218	24. Require that policies issued under subplan "D" and
219	applications for such policies must include a notice that the
220	policy issued under subplan "D" could be replaced by a policy
221	issued from a voluntary market carrier and that, if an offer of
222	coverage is obtained from a voluntary market carrier, the
223	policyholder is no longer eligible for coverage through subplan
224	"D." The notice must also specify that acceptance of coverage
225	under subplan "D" creates a conclusive presumption that the
226	applicant or policyholder is aware of this potential.
227	(d)1.The plan must be funded through actuarially sound
228	premiums charged to insureds of the plan.
229	2.The plan may issue assessable policies only to those
230	insureds in subplan "C." and subplan "D." Subject to
231	verification by the department, the board may levy assessments
232	against insureds in subplan "C" or subplan "D," on a pro rata
233	earned premium basis, to fund any deficits that exist in those
234	subplans. Assessments levied against subplan "C" participants
235	shall cover only the deficits attributable to subplan "C," and
236	assessments levied against subplan "D" participants shall cover
237	only the deficits attributable to subplan "D." In no event may
238	the plan levy assessments against any person or entity, except
239	as authorized by this paragraph.Those assessable policies must
240	be clearly identified as assessable by containing, in
241	contrasting color and in not less than 10-point type, the
242	following statements: "This is an assessable policy. If the plan
243	is unable to pay its obligations, policyholders will be required
244	to contribute on a pro rata earned premium basis the money
245	necessary to meet any assessment levied."
246	3.The plan may issue assessable policies with differing
247	terms and conditions to different groups within subplans "C" and
248	"D"the planwhen a reasonable basis exists for the
249	differentiation.
250	4.The plan may offer rating, dividend plans, and other
251	plans to encourage loss prevention programs.
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253	================= T I T L E A M E N D M E N T =================
254	Remove line(s) 92, and insert:
255	F.S.; revising membership of the board of governors of the
256	workers’ compensation joint underwriting plan; requiring
257	participation in safety programs;
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