Senate Bill sb2270c1
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Florida Senate - 2004 CS for SB 2270
By the Committee on Banking and Insurance
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1 A bill to be entitled
2 An act relating to workers' compensation;
3 amending s. 627.311, F.S.; revising standards
4 for coverage in subplans "A," "C," and "D" of
5 the plan; providing surcharges and other
6 incentives for depopulation from subplan "D";
7 providing for an administration fee; providing
8 minimum standards for issuance of a policy;
9 providing for assessments against policyholders
10 to fund deficits in subplan "D"; exempting the
11 plan from specified premium tax and
12 assessments; appropriating moneys from the
13 Workers' Compensation Administration Trust Fund
14 to fund subplan "D"; providing legislative
15 intent to create a state workers' compensation
16 mutual fund under certain conditions;
17 establishing the Workers' Compensation
18 Insurance Market Evaluation Committee;
19 providing for appointment of members; requiring
20 the committee to monitor and report; requiring
21 the Office of Insurance Regulation and workers'
22 compensation insurers to report certain
23 information; specifying meeting dates and
24 interim reports for the committee; providing
25 for reimbursement for travel and per diem;
26 providing legislative intent as to the type of
27 mutual fund it intends to create; prohibiting
28 insurers from providing coverage to any person
29 who is an affiliated person of a person who is
30 delinquent in the payment of premiums,
31
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1 assessments, penalties, or surcharges owed to
2 the plan; providing an effective date.
3
4 Be It Enacted by the Legislature of the State of Florida:
5
6 Section 1. Subsection (5) of section 627.311, Florida
7 Statutes, is amended to read:
8 627.311 Joint underwriters and joint reinsurers;
9 public records and public meetings exemptions.--
10 (5)(a) The office shall, after consultation with
11 insurers, approve a joint underwriting plan of insurers which
12 shall operate as a nonprofit entity. For the purposes of this
13 subsection, the term "insurer" includes group self-insurance
14 funds authorized by s. 624.4621, commercial self-insurance
15 funds authorized by s. 624.462, assessable mutual insurers
16 authorized under s. 628.6011, and insurers licensed to write
17 workers' compensation and employer's liability insurance in
18 this state. The purpose of the plan is to provide workers'
19 compensation and employer's liability insurance to applicants
20 who are required by law to maintain workers' compensation and
21 employer's liability insurance and who are in good faith
22 entitled to but who are unable to purchase such insurance
23 through the voluntary market. The plan must have actuarially
24 sound rates that assure that the plan is self-supporting,
25 except as otherwise provided.
26 (b) The operation of the plan is subject to the
27 supervision of a 9-member board of governors. The board of
28 governors shall be comprised of:
29 1. Three members appointed by the Financial Services
30 Commission. Each member appointed by the commission shall
31 serve at the pleasure of the commission;
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1 2. Two of the 20 domestic insurers, as defined in s.
2 624.06(1), having the largest voluntary direct premiums
3 written in this state for workers' compensation and employer's
4 liability insurance, which shall be elected by those 20
5 domestic insurers;
6 3. Two of the 20 foreign insurers as defined in s.
7 624.06(2) having the largest voluntary direct premiums written
8 in this state for workers' compensation and employer's
9 liability insurance, which shall be elected by those 20
10 foreign insurers;
11 4. One person appointed by the largest property and
12 casualty insurance agents' association in this state; and
13 5. The consumer advocate appointed under s. 627.0613
14 or the consumer advocate's designee.
15
16 Each board member shall serve a 4-year term and may serve
17 consecutive terms. A vacancy on the board shall be filled in
18 the same manner as the original appointment for the unexpired
19 portion of the term. The Financial Services Commission shall
20 designate a member of the board to serve as chair. No board
21 member shall be an insurer which provides services to the plan
22 or which has an affiliate which provides services to the plan
23 or which is serviced by a service company or third-party
24 administrator which provides services to the plan or which has
25 an affiliate which provides services to the plan. The minutes,
26 audits, and procedures of the board of governors are subject
27 to chapter 119.
28 (c) The operation of the plan shall be governed by a
29 plan of operation that is prepared at the direction of the
30 board of governors. The plan of operation may be changed at
31 any time by the board of governors or upon request of the
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1 office. The plan of operation and all changes thereto are
2 subject to the approval of the office. The plan of operation
3 shall:
4 1. Authorize the board to engage in the activities
5 necessary to implement this subsection, including, but not
6 limited to, borrowing money.
7 2. Develop criteria for eligibility for coverage by
8 the plan, including, but not limited to, documented rejection
9 by at least two insurers which reasonably assures that
10 insureds covered under the plan are unable to acquire coverage
11 in the voluntary market. Any insured may voluntarily elect to
12 accept coverage from an insurer for a premium equal to or
13 greater than the plan premium if the insurer writing the
14 coverage adheres to the provisions of s. 627.171.
15 3. Require notice from the agent to the insured at the
16 time of the application for coverage that the application is
17 for coverage with the plan and that coverage may be available
18 through an insurer, group self-insurers' fund, commercial
19 self-insurance fund, or assessable mutual insurer through
20 another agent at a lower cost.
21 4. Establish programs to encourage insurers to provide
22 coverage to applicants of the plan in the voluntary market and
23 to insureds of the plan, including, but not limited to:
24 a. Establishing procedures for an insurer to use in
25 notifying the plan of the insurer's desire to provide coverage
26 to applicants to the plan or existing insureds of the plan and
27 in describing the types of risks in which the insurer is
28 interested. The description of the desired risks must be on a
29 form developed by the plan.
30 b. Developing forms and procedures that provide an
31 insurer with the information necessary to determine whether
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1 the insurer wants to write particular applicants to the plan
2 or insureds of the plan.
3 c. Developing procedures for notice to the plan and
4 the applicant to the plan or insured of the plan that an
5 insurer will insure the applicant or the insured of the plan,
6 and notice of the cost of the coverage offered; and developing
7 procedures for the selection of an insuring entity by the
8 applicant or insured of the plan.
9 d. Provide for a market-assistance plan to assist in
10 the placement of employers. All applications for coverage in
11 the plan received 45 days before the effective date for
12 coverage shall be processed through the market-assistance
13 plan. A market-assistance plan specifically designed to serve
14 the needs of small, good policyholders as defined by the board
15 must be finalized by January 1, 1994.
16 5. Provide for policy and claims services to the
17 insureds of the plan of the nature and quality provided for
18 insureds in the voluntary market.
19 6. Provide for the review of applications for coverage
20 with the plan for reasonableness and accuracy, using any
21 available historic information regarding the insured.
22 7. Provide for procedures for auditing insureds of the
23 plan which are based on reasonable business judgment and are
24 designed to maximize the likelihood that the plan will collect
25 the appropriate premiums.
26 8. Authorize the plan to terminate the coverage of and
27 refuse future coverage for any insured that submits a
28 fraudulent application to the plan or provides fraudulent or
29 grossly erroneous records to the plan or to any service
30 provider of the plan in conjunction with the activities of the
31 plan.
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1 9. Establish service standards for agents who submit
2 business to the plan.
3 10. Establish criteria and procedures to prohibit any
4 agent who does not adhere to the established service standards
5 from placing business with the plan or receiving, directly or
6 indirectly, any commissions for business placed with the plan.
7 11. Provide for the establishment of reasonable safety
8 programs for all insureds in the plan. All insureds of the
9 plan must participate in the safety program.
10 12. Authorize the plan to terminate the coverage of
11 and refuse future coverage to any insured who fails to pay
12 premiums or surcharges when due; who, at the time of
13 application, is delinquent in payments of workers'
14 compensation or employer's liability insurance premiums or
15 surcharges owed to an insurer, group self-insurers' fund,
16 commercial self-insurance fund, or assessable mutual insurer
17 licensed to write such coverage in this state; or who refuses
18 to substantially comply with any safety programs recommended
19 by the plan.
20 13. Authorize the board of governors to provide the
21 services required by the plan through staff employed by the
22 plan, through reasonably compensated service providers who
23 contract with the plan to provide services as specified by the
24 board of governors, or through a combination of employees and
25 service providers.
26 14. Provide for service standards for service
27 providers, methods of determining adherence to those service
28 standards, incentives and disincentives for service, and
29 procedures for terminating contracts for service providers
30 that fail to adhere to service standards.
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1 15. Provide procedures for selecting service providers
2 and standards for qualification as a service provider that
3 reasonably assure that any service provider selected will
4 continue to operate as an ongoing concern and is capable of
5 providing the specified services in the manner required.
6 16. Provide for reasonable accounting and
7 data-reporting practices.
8 17. Provide for annual review of costs associated with
9 the administration and servicing of the policies issued by the
10 plan to determine alternatives by which costs can be reduced.
11 18. Authorize the acquisition of such excess insurance
12 or reinsurance as is consistent with the purposes of the plan.
13 19. Provide for an annual report to the office on a
14 date specified by the office and containing such information
15 as the office reasonably requires.
16 20. Establish multiple rating plans for various
17 classifications of risk which reflect risk of loss, hazard
18 grade, actual losses, size of premium, and compliance with
19 loss control. At least one of such plans must be a
20 preferred-rating plan to accommodate small-premium
21 policyholders with good experience as defined in
22 sub-subparagraph 22.a.
23 21. Establish agent commission schedules.
24 22. Establish four subplans as follows:
25 a. Subplan "A" must include those insureds whose
26 annual premium does not exceed $2,500 and who have neither
27 incurred any lost-time claims nor incurred medical-only claims
28 exceeding 50 percent of their premium for the immediately
29 preceding immediate 2 years or any indemnity claims for the
30 immediately preceding 2 years.
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1 b. Subplan "B" must include insureds that are
2 employers identified by the board of governors as high-risk
3 employers due solely to the nature of the operations being
4 performed by those insureds and for whom no market exists in
5 the voluntary market, and whose experience modifications are
6 less than 1.00.
7 c. Subplan "C" must include all insureds within the
8 plan that are not eligible for or elect not to be covered in
9 subplan "A," subplan "B," or subplan "D."
10 d.(I) Subplan "D" must include any insured employer,
11 regardless of the length of time for which it has conducted
12 business operations, which has an experience modification
13 factor of 1.10 or less and either employs 15 or fewer
14 employees or is an organization that is exempt from federal
15 income tax pursuant to s. 501(c)(3) of the Internal Revenue
16 Code and receives more than 50 percent of its funding from
17 gifts, grants, endowments, or federal or state contracts.
18 (II) The rate plan for subplan "D" shall be the same
19 rate plan as the plan approved under ss. 627.091-627.151, and
20 each participant in subplan "D" shall pay the premium
21 determined under such rate plan, plus a surcharge determined
22 by the board to be sufficient to ensure that the plan does not
23 compete with the voluntary market rate for any participant,
24 but not to exceed maximum limits specified in
25 sub-sub-subparagraph (III) 25 percent.
26 (III) For the insured's first 3 years of coverage,
27 whether continuous or not, under subplan "D," the surcharge
28 shall not exceed 25 percent. However, the surcharge for the
29 first 3 years of coverage shall not exceed 10 percent for an
30 organization that is exempt from federal income tax pursuant
31 to s. 501(c)(3) of the Internal Revenue Code. As a means of
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1 encouraging depopulation, the board shall apply higher
2 surcharges upon renewal of any insured in subplan "D" as
3 follows:
4 (A) Upon the insured's fourth renewal in subplan "D,"
5 the surcharge may not exceed 40 percent.
6 (B) Upon the insured's fifth renewal in subplan "D,"
7 the surcharge may not exceed 60 percent.
8 (C) Upon the insured's sixth renewal in subplan "D,"
9 the surcharge not not exceed 80 percent.
10 (D) Upon the insured's seventh or subsequent renewal
11 in subplan "D," the surcharge may not exceed 100 percent.
12 (E) This paragraph shall not be construed to limit the
13 policyholder's selection of the subplan in which the
14 policyholder chooses to be placed if the policyholder
15 qualifies for acceptance into more than one subplan.
16 (IV) A subplan "D" policyholder that, during any
17 2-year period, incurred two or more indemnity or medical
18 claims and incurred losses greater than $5,000 is not eligible
19 for continuation or renewal of coverage in subplan "D" and
20 remains ineligible until it has 3 years of loss history with
21 no indemnity and no medical claims exceeding 50 percent of
22 premium. The policyholder may be placed in another subplan
23 other than subplan "D," provided that the policyholder meets
24 eligibility criteria for such other subplan.
25 23. Provide for a depopulation program to reduce the
26 number of insureds in subplan "D." If an employer insured
27 through subplan "D" is offered coverage from a voluntary
28 market carrier:
29 a. During the first 30 days of coverage under the
30 subplan;
31 b. Before a policy is issued under the subplan;
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1 c. By issuance of a policy upon expiration or
2 cancellation of the policy under the subplan; or
3 d. By assumption of the subplan's obligation with
4 respect to an in-force policy,
5
6 that employer is no longer eligible for coverage through the
7 plan. The premium for risks assumed by the voluntary market
8 carrier must be the same premium plus, for the first 2 years,
9 the surcharge as determined in sub-subparagraph 22.d. A
10 premium under this subparagraph, including surcharge, is
11 deemed approved and is not an excess premium for purposes of
12 s. 627.171.
13 24. Require that policies issued under subplan "D" and
14 applications for such policies must include a notice that the
15 policy issued under subplan "D" could be replaced by a policy
16 issued from a voluntary market carrier and that, if an offer
17 of coverage is obtained from a voluntary market carrier, the
18 policyholder is no longer eligible for coverage through
19 subplan "D." The notice must also specify that acceptance of
20 coverage under subplan "D" creates a conclusive presumption
21 that the applicant or policyholder is aware of this potential.
22 25. Require that each application for coverage and
23 each renewal premium be accompanied by a nonrefundable fee of
24 $475 to cover costs of administration and fraud prevention.
25 The board may, with the approval of the office, increase the
26 amount of the fee pursuant to a rate filing to reflect
27 increased costs of administration and fraud prevention. The
28 fee is not subject to commission and is fully earned upon
29 commencement of coverage.
30 26. Not issue a subplan "D" policy to an employer
31 unless the employer has at least one nonexempt full-time
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1 employee in the governing class code and has payroll at least
2 equal to the minimum wage hourly rate for one employee for 1
3 year at 40 hours a week.
4 (d)1. The plan must be funded through actuarially
5 sound premiums charged to insureds of the plan.
6 2. The plan may issue assessable policies only to
7 those insureds in subplan subplans "C" and "D." Subject to
8 verification by the department, the board may levy assessments
9 against insureds in subplan "C" or subplan "D," on a pro rata
10 earned premium basis, to fund any deficits that exist in that
11 subplan those subplans. Assessments levied against subplan "C"
12 participants shall cover only the deficits attributable to
13 subplan "C," and assessments levied against subplan "D"
14 participants shall cover only the deficits attributable to
15 subplan "D." In no event may the plan levy assessments against
16 any person or entity, except as authorized by this paragraph.
17 Those assessable policies must be clearly identified as
18 assessable by containing, in contrasting color and in not less
19 than 10-point type, the following statements: "This is an
20 assessable policy. If the plan is unable to pay its
21 obligations, policyholders will be required to contribute on a
22 pro rata earned premium basis the money necessary to meet any
23 assessment levied."
24 3. The plan may issue assessable policies with
25 differing terms and conditions to different groups within
26 subplan subplans "C" and "D" when a reasonable basis exists
27 for the differentiation.
28 4. The plan may offer rating, dividend plans, and
29 other plans to encourage loss prevention programs.
30 (e) The plan shall establish and use its rates and
31 rating plans, and the plan may establish and use changes in
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1 rating plans at any time, but no more frequently than two
2 times per any rating class for any calendar year. By December
3 1, 1993, and December 1 of each year thereafter, the board
4 shall establish and use actuarially sound rates for use by the
5 plan to assure that the plan is self-funding while those rates
6 are in effect. Such rates and rating plans must be filed with
7 the office within 30 calendar days after their effective
8 dates, and shall be considered a "use and file" filing. Any
9 disapproval by the office must have an effective date that is
10 at least 60 days from the date of disapproval of the rates and
11 rating plan and must have prospective effect only. The plan
12 may not be subject to any order by the office to return to
13 policyholders any portion of the rates disapproved by the
14 office. The office may not disapprove any rates or rating
15 plans unless it demonstrates that such rates and rating plans
16 are excessive, inadequate, or unfairly discriminatory.
17 (f) No later than June 1 of each year, the plan shall
18 obtain an independent actuarial certification of the results
19 of the operations of the plan for prior years, and shall
20 furnish a copy of the certification to the office. If, after
21 the effective date of the plan, the projected ultimate
22 incurred losses and expenses and dividends for prior years
23 exceed collected premiums, accrued net investment income, and
24 prior assessments for prior years, the certification is
25 subject to review and approval by the office before it becomes
26 final.
27 (g)1. Whenever a deficit exists, the plan shall,
28 within 90 days, provide the office with a program to eliminate
29 the deficit within a reasonable time. The deficit may be
30 funded through increased premiums charged to insureds of the
31 plan for subsequent years, through the use of policyholder
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1 surplus attributable to any year, and through assessments on
2 insureds in the plan if the plan uses assessable policies.
3 2. Whenever a deficit exists for subplan "D" for any
4 calendar year, the board shall request the Office Of Insurance
5 Regulation to levy, by order, after verification by the
6 office, assessments against direct premiums paid by insureds
7 to insurers, as defined in s. 631.904(5). The amount of the
8 deficit assessment shall be a uniform percentage not to exceed
9 1 percent of net direct workers' compensation premiums written
10 in the state by all workers' compensation insurers.
11 Assessments shall be remitted to and administered by the board
12 in the manner specified by the order. The assessments shall be
13 collected by insurers upon issuance and renewal of policies
14 for the 1 year following the effective date of the assessment.
15 Assessments collected shall be transferred directly to the
16 plan on a periodic basis as specified by the order.
17 Assessments are not premiums and are not subject to the
18 premium tax, to the surplus lines, to any fees, or to any
19 commissions. An insurer is liable for all assessments that it
20 collects and must treat the failure of an insured to pay an
21 assessment as a failure to pay the premium. An insurer is not
22 liable for uncollectable assessments.
23 (h) Any premium or assessments collected by the plan
24 in excess of the amount necessary to fund projected ultimate
25 incurred losses and expenses of the plan and not paid to
26 insureds of the plan in conjunction with loss prevention or
27 dividend programs shall be retained by the plan for future
28 use.
29 (i) The decisions of the board of governors do not
30 constitute final agency action and are not subject to chapter
31 120.
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1 (j) Policies for insureds shall be issued by the plan.
2 (k) The plan created under this subsection is liable
3 only for payment for losses arising under policies issued by
4 the plan with dates of accidents occurring on or after January
5 1, 1994.
6 (l) Except as otherwise provided, plan losses are the
7 sole and exclusive responsibility of the plan, and payment for
8 such losses must be funded in accordance with this subsection
9 and must not come, directly or indirectly, from insurers or
10 any guaranty association for such insurers.
11 (m) Effective July 1, 2004, the plan is exempt from
12 the premium tax under s. 624.509 and any assessments under ss.
13 440.49 and 440.51.
14 (n)(m) Each joint underwriting plan or association
15 created under this section is not a state agency, board, or
16 commission. However, for the purposes of s. 199.183(1) only,
17 the joint underwriting plan is a political subdivision of the
18 state and is exempt from the corporate income tax.
19 (o)(n) Each joint underwriting plan or association may
20 elect to pay premium taxes on the premiums received on its
21 behalf or may elect to have the member insurers to whom the
22 premiums are allocated pay the premium taxes if the member
23 insurer had written the policy. The joint underwriting plan or
24 association shall notify the member insurers and the
25 Department of Revenue by January 15 of each year of its
26 election for the same year. As used in this paragraph, the
27 term "premiums received" means the consideration for
28 insurance, by whatever name called, but does not include any
29 policy assessment or surcharge received by the joint
30 underwriting association as a result of apportioning losses or
31 deficits of the association pursuant to this section.
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1 (p)(o) Neither the plan nor any member of the board of
2 governors is liable for monetary damages to any person for any
3 statement, vote, decision, or failure to act, regarding the
4 management or policies of the plan, unless:
5 1. The member breached or failed to perform her or his
6 duties as a member; and
7 2. The member's breach of, or failure to perform,
8 duties constitutes:
9 a. A violation of the criminal law, unless the member
10 had reasonable cause to believe her or his conduct was not
11 unlawful. A judgment or other final adjudication against a
12 member in any criminal proceeding for violation of the
13 criminal law estops that member from contesting the fact that
14 her or his breach, or failure to perform, constitutes a
15 violation of the criminal law; but does not estop the member
16 from establishing that she or he had reasonable cause to
17 believe that her or his conduct was lawful or had no
18 reasonable cause to believe that her or his conduct was
19 unlawful;
20 b. A transaction from which the member derived an
21 improper personal benefit, either directly or indirectly; or
22 c. Recklessness or any act or omission that was
23 committed in bad faith or with malicious purpose or in a
24 manner exhibiting wanton and willful disregard of human
25 rights, safety, or property. For purposes of this
26 sub-subparagraph, the term "recklessness" means the acting, or
27 omission to act, in conscious disregard of a risk:
28 (I) Known, or so obvious that it should have been
29 known, to the member; and
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1 (II) Known to the member, or so obvious that it should
2 have been known, to be so great as to make it highly probable
3 that harm would follow from such act or omission.
4 (q)(p) No insurer shall provide workers' compensation
5 and employer's liability insurance to any person who is
6 delinquent in the payment of premiums, assessments, penalties,
7 or surcharges owed to the plan or to any person who is an
8 affiliated person of a person who is delinquent in the payment
9 of premiums, assessments, penalties, or surcharges owed to the
10 plan. For the purposes of this paragraph, the term "affiliated
11 person" of another person means:
12 1. The spouse of such other natural person;
13 2. Any person who directly or indirectly owns or
14 controls, or holds with the power to vote, 5 percent or more
15 of the outstanding voting securities of such other person;
16 3. Any person who directly or indirectly owns 5
17 percent or more of the outstanding voting securities that are
18 directly or indirectly owned or controlled, or held with the
19 power to vote, by such other person;
20 4. Any person or group of persons who directly or
21 indirectly control, are controlled by, or are under common
22 control with such other person;
23 5. Any officer, director, trustee, partner, owner,
24 manager, joint venturer, or employee, or other person
25 performing duties similar to persons in those positions, of
26 such other person; or
27 6. Any person who has an officer, director, trustee,
28 partner, or joint venturer in common with such other person.
29 Section 2. Notwithstanding the provisions of sections
30 440.50 and 440.51, Florida Statutes, for the 2004-2005 fiscal
31 year the sum of $35 million is appropriated from the Workers'
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1 Compensation Administration Trust Fund in the Department of
2 Financial Services for transfer to the workers' compensation
3 joint underwriting plan provided in section 627.311(5),
4 Florida Statutes, to be used exclusively for funding subplan
5 "D" of the plan, as established in section 627.311(5)(c)22.d.,
6 Florida Statutes. The Chief Financial Officer shall transfer
7 such funds to the plan no later than July 31, 2004.
8 Section 3. (1) The Legislature intends to create a
9 state workers' compensation mutual fund if workers'
10 compensation coverage is not generally available and
11 affordable to small employers in Florida by October 1, 2005.
12 In order to make this determination, there is established the
13 Workers' Compensation Insurance Market Evaluation Committee
14 which shall consist of one member appointed by the Governor,
15 who shall serve as chair; two members appointed by the
16 President of the Senate; and two members appointed by the
17 Speaker of the House of Representatives. The committee shall
18 monitor and report on the number of insurers actively writing
19 workers' compensation insurance in this state for small
20 employers, the number of policies issued, premium volume
21 written, types of underwriting restrictions utilized, and the
22 extent to which actual premiums charged vary from standard
23 rates, such as the use of excess rates pursuant to section
24 627.171, Florida Statutes, and rate deviations pursuant to
25 section 627.211, Florida Statutes. The Office of Insurance
26 Regulation shall provide such related information to the
27 committee as is requested, and workers' compensation insurers
28 shall report such information to the office in the manner and
29 format specified by the office.
30 (2) The committee shall meet once each month,
31 beginning in August 2004, and shall provide interim reports to
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1 the appointing officers on October 1, 2004, December 1, 2004,
2 and March 1, 2005, and at such additional times as the
3 President of the Senate and the Speaker of the House of
4 Representatives jointly require. Members of the committee
5 shall be entitled to reimbursement for travel and per diem
6 pursuant to section 112.061, Florida Statutes.
7 (3) If the Legislature determines that workers'
8 compensation coverage is not generally available and
9 affordable to small employers in Florida, the Legislature
10 intends to create a state mutual fund as a nonprofit entity
11 for the benefit of its small employer policyholders. The state
12 mutual fund would compete with private carriers and would be
13 charged with the public mission of customer service, quality
14 loss prevention, timely claims management, active fighting of
15 fraud, and compassionate care for injured workers, at the
16 lowest cost consistent with actuarial sound rates. The fund
17 should primarily rely on an in-house staff of professional
18 employees, rather than contracting with servicing carriers. It
19 is further intended that the state appropriate adequate
20 initial capitalization for the fund and that the fund be
21 subject to the same financial and other requirements as apply
22 to an authorized insurer.
23 Section 4. This act shall take effect upon becoming a
24 law.
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CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2004 CS for SB 2270
311-2440-04
1 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
2 Senate Bill 2270
3
4
1. Appropriates $35 million from the Workers' Compensation
5 Administration Trust Fund in the Department of Financial
Services to the Workers' Compensation Joint Underwriting
6 Association (JUA) to provide funding for the deficit in
subplan D.
7
2. Exempts the JUA from premium tax under s. 624.509, F.S.,
8 and assessments for the Workers' Compensation
Administration Trust Fund and the Special Disability
9 Trust Fund under ss. 440.51 and 440.491, F.S.,
respectively.
10
3. Requires the JUA to charge policyholders in subplan D an
11 annual $475 fee to cover costs of administration and
fraud prevention.
12
4. Prohibits the JUA from issuing a subplan D policy to an
13 employer unless the employer has at least one non-exempt
employee in the governing class code and has payroll at
14 least equal to the minimum hourly wage for one year at 40
hours per week.
15
5. Provides that a policyholder is no longer eligible for
16 subplan D if during any 2-year period, it incurs two or
more indemnity or medical claims and incurred losses
17 greater than $5,000. The employer remains ineligible for
subplan D until it has 3 years of loss history with no
18 indemnity and no medical claims exceeding 50 percent of
premium.
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6. Maintains the current caps on subplan D surcharges over
20 voluntary market premium for the first three years an
employer is in subplan D. However, the surcharge is
21 increased for subsequent renewals.
22 7. Provides that an employer may elect coverage in any
subplan of the JUA for which the employer is eligible.
23
8. Provides that in the event a deficit occurs in Subplan D,
24 subplan D policyholders would not be subject to
assessment for an additional premium. Any deficit would
25 be funded through an assessment, not to exceed 1 percent
of workers' compensation premium written in Florida.
26
9. Provides that an affiliated person of any person who is
27 delinquent in the payment of premiums, assessments,
penalties, or surcharges to the JUA is ineligible for
28 coverage in the voluntary market.
29 10. Provides legislative intent to create a state workers'
compensation mutual fund if workers' compensation
30 coverage is not generally available and affordable to
small employers by October 1, 2005. This establishes the
31 Workers' Compensation Insurance Market Evaluation
Committee.
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CODING: Words stricken are deletions; words underlined are additions.