HB 1451

1
A bill to be entitled
2An act relating to insurance; amending s. 626.321, F.S.;
3including service warranty agreement sales covering
4communications equipment under certain limited licensing
5provisions; providing for additional appointment authority
6for certain licensed branch locations of a communications
7equipment retail vendor; revising certain application,
8appointment, and licensing requirements for certain
9entities; providing for payment of appointment fees;
10providing an exception; requiring renewals of
11appointments; providing for a renewal fee; amending s.
12626.731, F.S.; revising a qualification for licensure as a
13general lines agent; creating s. 624.1275, F.S.;
14proscribing state agencies and political subdivisions from
15prohibiting or excluding licensed insurance agents from
16competing or negotiating for certain insurance products or
17plans; providing a definition; amending s. 636.044, F.S.;
18authorizing certain persons to engage in the solicitation
19and sale of certain insurance relating to air ambulance
20transportation costs; providing requirements and
21limitations; amending s. 627.64872, F.S.; redefining the
22term "health insurance" for purposes of determining
23assessments under the Florida Health Insurance Plan;
24amending s. 943.135, F.S.; authorizing certain employing
25agencies to require law enforcement officers and
26correctional officers to pass certain physical
27examinations for certain purposes; providing criteria,
28requirements, and limitations; authorizing certain
29employing agencies to set tobacco use standards for law
30enforcement officers and correctional officers employed by
31local governments; amending s. 631.181, F.S.; providing an
32exception to certain requirements for a signed statement
33for certain claims; providing requirements; creating s.
34631.1915, F.S.; providing requirements for policyholder
35collateral, deductible reimbursements, and other
36policyholder obligations; specifying that certain
37collateral held by an insurer or a receiver to secure
38policyholder obligations under a deductible agreement are
39not an estate asset; requiring use of such collateral to
40secure policyholder obligations under such agreement;
41requiring a receiver to use such collateral to pay
42noncovered claims under certain circumstances; providing
43for certain claims to be claims against an insurer's
44estate under certain circumstances; requiring a receiver
45to allocate collateral among certain obligations and
46administer such collateral; authorizing a receiver to
47continue and enforce certain alternative policyholder
48claim funding contractual agreements; specifying certain
49actions as a bar to certain claims and an extinguishment
50of certain obligations; requiring a guaranty association
51to bill a policyholder for certain reimbursement amounts
52for certain claims; specifying policyholder obligation for
53certain amounts; prohibiting certain defenses; requiring a
54receiver to use certain collateral for certain purposes;
55requiring a receiver to prorate certain funds of an estate
56under certain circumstances; authorizing a guaranty
57association to deduct certain expenses; requiring a
58guaranty association to provide a complete accounting of
59certain billing and collection activities; authorizing a
60guaranty association to contract for certain collections;
61providing for claims against an insolvent insurer's estate
62for certain unreimbursed claims payments; requiring a
63receiver to periodically adjust collateral held pursuant
64to a deductible agreement; specifying jurisdiction of a
65state court to resolve disputes; preserving rights of a
66guaranty association to reimbursement for certain claims;
67providing application to certain orders of liquidation;
68providing definitions; providing for nonapplication to
69certain claims; amending s. 631.54, F.S.; revising a
70definition; amending s. 631.56, F.S.; revising the
71membership of the board of directors of the Florida
72Insurance Guaranty Association, Inc.; amending s. 631.57,
73F.S.; revising requirements and limitations for
74obligations of the association for covered claims;
75authorizing the association to contract with counties and
76municipalities to issue revenue bonds for certain
77purposes; creating s. 631.695, F.S.; providing legislative
78findings and purposes; providing for issuance of revenue
79bonds through counties and municipalities to fund
80assistance programs for paying covered claims for
81hurricane damage; providing procedures, requirements, and
82limitations for counties, municipalities, and the Florida
83Insurance Guaranty Association, Inc., relating to issuance
84and validation of such bonds; providing for payments on
85and retirement of such bonds from certain assessments;
86prohibiting pledging the funds, credit, property, and
87taxing power of the state, counties, and municipalities
88for payment of bonds; specifying authorized uses of bond
89proceeds; limiting the term of bonds; specifying a state
90covenant to protect bondholders from adverse actions
91relating to such bonds; specifying exemptions for bonds,
92notes, and other obligations of counties and
93municipalities from certain taxes or assessments on
94property and revenues; authorizing counties and
95municipalities to create a legal entity to exercise
96certain powers; requiring the association to issue an
97annual report on the status of certain uses of bond
98proceeds; providing report requirements; requiring the
99association to provide a copy of the report to the
100Legislature and Chief Financial Officer; prohibiting
101repeal of certain provisions relating to certain bonds
102under certain circumstances; providing severability;
103providing an effective date.
104
105Be It Enacted by the Legislature of the State of Florida:
106
107     Section 1.  Paragraph (i) of subsection (1) of section
108626.321, Florida Statutes, is amended to read:
109     626.321  Limited licenses.--
110     (1)  The department shall issue to a qualified individual,
111or a qualified individual or entity under paragraphs (c), (d),
112(e), and (i), a license as agent authorized to transact a
113limited class of business in any of the following categories:
114     (i)  In-transit and storage personal property insurance;
115communications equipment property insurance, or communications
116equipment inland marine insurance, and communications equipment
117service warranty agreement sales.--
118     1.  A license covering only the insurance of personal
119property not held for resale, covering the risks of
120transportation or storage in rented or leased motor vehicles,
121trailers, or self-service storage facilities, as the latter are
122defined in s. 83.803, may be issued, without examination, only
123to employees or authorized representatives of lessors who rent
124or lease motor vehicles, trailers, or self-service storage
125facilities and who are authorized by an insurer to issue
126certificates or other evidences of insurance to lessees of such
127motor vehicles, trailers, or self-service storage facilities
128under an insurance policy issued to the lessor. A person
129licensed under this paragraph shall give a prospective purchaser
130of in-transit or storage personal property insurance written
131notice that his or her homeowner's policy may provide coverage
132for the loss of personal property and that the purchase of such
133insurance is not required under the lease terms.
134     2.  A license covering only communications equipment, for
135the loss, theft, mechanical failure, malfunction of or damage
136to, communications equipment. The license may be issued only to:
137     a.  Employees or authorized representatives of a licensed
138general lines agent;
139     b.  The lead Each business location of a retail vendor of
140communications equipment and its branch locations; or
141     c.  Employees, agents, or authorized representatives of a
142retail vendor of communications equipment.
143
144The license authorizes the sale of such policies, or
145certificates under a group master policy, only with respect to
146the sale of, or provision of communications service for,
147communications equipment. A general lines agent is not required
148to obtain a license under this subparagraph to offer or sell
149communications equipment property insurance or communication
150equipment inland marine insurance. The license also authorizes
151sales of service warranty agreements covering only
152communications equipment to the same extent as if licensed under
153s. 634.419 or s. 634.420. The provisions of this chapter
154requiring submission of fingerprints do not apply to
155communications equipment licenses issued to qualified entities
156under this subparagraph. Licensees offering policies under this
157subparagraph must receive initial training from, and have a
158contractual relationship with, a general lines agent. For the
159purposes of this subparagraph, the term "communications
160equipment" means handsets, pagers, personal digital assistants,
161portable computers, automatic answering devices, and other
162devices or accessories used to originate or receive
163communications signals or service, and includes services related
164to the use of such devices, such as consumer access to a
165wireless network; however, the term does not include
166telecommunications switching equipment, transmission wires, cell
167site transceiver equipment, or other equipment and systems used
168by telecommunications companies to provide telecommunications
169service to consumers. A branch location of a retail vendor of
170communications equipment licensed pursuant to paragraph (2)(b)
171may, in lieu of obtaining an appointment from an insurer or
172warranty association as provided in paragraph (2)(c), obtain a
173single appointment from the associated lead business location
174licensee licensed under paragraph (2)(a) and pay the prescribed
175appointment fee under s. 624.501, provided the lead business
176location has a single appointment from each insurer or warranty
177association represented and such appointment provides that it
178applies to the lead business location and all of its branch
179locations. Any branch location individually appointed by an
180insurer under paragraph (2)(c) prior to January 1, 2006, may
181replace its appointments with an appointment from its lead
182location at no charge. Branch location appointments shall be
183renewed on the first annual anniversary of licensure of the lead
184business location occurring more than 24 months after the
185initial appointment date and every 24 months thereafter.
186Notwithstanding s. 624.501, after July 1, 2006, the renewal fee
187applicable to such branch location appointments shall be $30 per
188appointment.
189     Section 2.  Paragraph (f) of subsection (1) of section
190626.731, Florida Statutes, is amended to read:
191     626.731  Qualifications for general lines agent's
192license.--
193     (1)  The department shall not grant or issue a license as
194general lines agent to any individual found by it to be
195untrustworthy or incompetent or who does not meet each of the
196following qualifications:
197     (f)  The applicant is not a service representative, a
198managing general agent licensed in this state, or a special
199agent or similar service representative of a health insurer
200which also transacts property, casualty, or surety insurance;
201except that the president, vice president, secretary, or
202treasurer, including a member of the board of directors, of a
203corporate insurer, if otherwise qualified under and meeting the
204requirements of this part, may be licensed and appointed as a
205local resident agent.
206     Section 3.  Section 624.1275, Florida Statutes, is created
207to read:
208     624.1275  Insurance agents; prohibited exclusion from
209public bidding and negotiations.--A licensed insurance agent may
210not be prohibited or excluded from competing or negotiating for
211any insurance product or plan purchased, provided, or endorsed
212by a state agency or any political subdivision of this state on
213the basis of the compensation or contractual or employment
214arrangement granted to the agent by an employer, insurer, or
215licensed agency. The term "political subdivision" has the same
216meaning set forth in s. 1.01.
217     Section 4.  Subsection (5) is added to section 636.044,
218Florida Statutes, to read:
219     636.044  Agent licensing.--
220     (5)  Notwithstanding the provisions of this section, a
221person registered in accordance with part XI of chapter 559 as a
222seller of travel may engage in the solicitation and sale of
223insurance covering the cost of transportation by air ambulance,
224as defined in s. 401.23(4), that is provided by an air ambulance
225service licensed pursuant to s. 401.251. The insurance policy
226providing this coverage is subject to all applicable provisions
227of this chapter. A seller of travel may solicit and sell such
228insurance only in connection with the sale of transportation
229tickets. No such policy shall be in effect for a duration of
230more than 48 hours or for the duration of a specified one-way or
231round-trip travel event.
232     Section 5.  Paragraph (b) of subsection (20) of section
233627.64872, Florida Statutes, is amended to read:
234     627.64872  Florida Health Insurance Plan.--
235     (20)  COMBINING MEMBERSHIP OF THE FLORIDA COMPREHENSIVE
236HEALTH ASSOCIATION; ASSESSMENT.--
237     (b)1.  As a condition of doing business in this state, an
238insurer shall pay an assessment to the board in the amount
239prescribed by this section. For operating losses incurred on or
240after July 1, 2004, by persons enrolled in the Florida
241Comprehensive Health Association, each insurer shall annually be
242assessed by the board in the following calendar year a portion
243of such incurred operating losses of the plan. Such portion
244shall be determined by multiplying such operating losses by a
245fraction, the numerator of which equals the insurer's earned
246premium pertaining to direct writings of health insurance in the
247state during the calendar year preceding that for which the
248assessment is levied, and the denominator of which equals the
249total of all such premiums earned by insurers in the state
250during such calendar year.
251     2.  The total of all assessments under this paragraph upon
252an insurer shall not exceed 1 percent of such insurer's health
253insurance premium earned in this state during the calendar year
254preceding the year for which the assessments were levied.
255     3.  For the purposes of determining assessments under this
256subsection, the term "health insurance" means any hospital and
257medical expense incurred policy, minimum premium plan, stop-loss
258coverage, health maintenance organization contract, prepaid
259health clinic contract, multiple-employer welfare arrangement
260contract, or fraternal benefit society health benefits contract,
261whether sold as an individual or group policy or contract. The
262term does not include a policy covering medical payment coverage
263or personal injury protection coverage in a motor vehicle
264policy, coverage issued as a supplement to liability insurance,
265or workers' compensation.
266     4.3.  All rights, title, and interest in the assessment
267funds collected under this paragraph shall vest in this state.
268However, all of such funds and interest earned shall be used by
269the plan to pay claims and administrative expenses.
270     Section 6.  Subsections (5) and (6) are added to section
271943.135, Florida Statutes, to read:
272     943.135  Requirements for continued employment.--
273     (5)  An employing agency as defined in s. 943.10(4) may
274require a law enforcement officer and correctional officer as
275defined in s. 943.10(1), (2), or (3) to successfully pass a
276physical examination in order to be eligible for the presumption
277set forth in s. 112.18. The employing agency shall have the
278physical examination performed prior to or immediately upon
279employment of the officer. This provision shall not affect the
280applicability of the presumption set forth in s. 112.18 for law
281enforcement officers or correctional officers who are currently
282employed by an employing agency.
283     (6)  An employing agency as defined in s. 943.10(4) may set
284tobacco use standards for law enforcement officers and
285correctional officers as defined in s. 943.10(1), (2), or (3)
286employed by a municipality, county, or political subdivision of
287the state or any agent of the political subdivision who has
288constitutional authority or statutory authority to employ or
289appoint an officer.
290     Section 7.  Paragraph (f) is added to subsection (2) of
291section 631.181, Florida Statutes, to read:
292     631.181  Filing and proof of claim.--
293     (2)
294     (f)  The signed statement required by this section shall
295not be required on claims for which adequate claims file
296documentation exists within the records of the insolvent
297insurer. Claims for payment of unearned premium shall not be
298required to use the signed statement required by this section if
299the receiver certifies to the guaranty fund that the records of
300the insolvent insurer are sufficient to determine the amount of
301unearned premium owed to each policyholder of the insurer and
302such information is remitted to the guaranty fund by the
303receiver in electronic or other mutually agreed upon format.
304     Section 8.  Section 631.1915, Florida Statutes, is created
305to read:
306     631.1915  Policyholder collateral; deductible
307reimbursements; other policyholder obligations.--
308     (1)  Any collateral held by or for the benefit of, or
309assigned to, the insurer or subsequently the receiver in order
310to secure the obligations of a policyholder under a deductible
311agreement shall not be considered an asset of the estate and
312shall be maintained and administered by the receiver as provided
313in this section, notwithstanding any other provision of law or
314contract to the contrary.
315     (2)  If the collateral is being held by or for the benefit
316of, or assigned to, the insurer or subsequently the receiver to
317secure obligations under a deductible agreement with a
318policyholder subject to the provisions of this section, the
319collateral shall be used to secure the policyholder's obligation
320to fund or reimburse claims payments within the agreed
321deductible amount.
322     (3)  If a claim is subject to a deductible agreement and
323secured by collateral and is not covered by any guaranty
324association, the receiver shall adjust and pay the noncovered
325claim using the collateral, but only to the extent of the
326available collateral. A claim against the collateral by a third-
327party claimant is not a claim against the insolvent insurer's
328estate for purposes of s. 631.193. If the collateral is
329exhausted and the insured is not able to provide funds to pay
330the remaining claims within the deductible, the remaining claims
331shall be claims against the insurer's estate subject to
332complying with other provisions in this part for the filing and
333allowance of such claims.
334     (4)  To the extent the receiver is holding collateral
335provided by a policyholder that was obtained to secure a
336deductible agreement and to secure other obligations of the
337policyholder, the receiver shall equitably allocate the
338collateral among such obligations and administer the collateral
339allocated to the deductible agreement pursuant to this section.
340The receiver shall inform the guaranty associations of the
341method and details of all the foregoing allocations.
342     (5)  Regardless of whether there is collateral, if the
343insurer has contractually agreed to allow the policyholder to
344fund its own claims within the deductible amount pursuant to a
345deductible agreement, through the policyholder's own
346administration of its claims or through the policyholder
347providing funds directly to a third-party administrator who
348administers the claims, the receiver may allow such funding
349arrangement to continue and, where applicable, shall enforce
350such arrangements. The funding of such claims by the
351policyholder within the deductible amount acts as a bar to any
352claim for such amount in the liquidation proceeding, including,
353but not limited to, any such claim by the policyholder or the
354third-party claimant. The funding extinguishes both the
355obligation, if any, of any guaranty association to pay such
356claims within the deductible amount and the obligations, if any,
357of the policyholder or third-party administrator to reimburse
358the guaranty association. No charge of any kind shall be made
359against any guaranty association on the basis of the
360policyholder's funding of claims payment made pursuant to the
361mechanism set forth in this subsection.
362     (6)  If the insurer has not contractually agreed to allow
363the policyholder to fund the policyholder's own claims within
364the deductible amount, to the extent a guaranty association is
365required by applicable state law to pay any claims for which the
366insurer would have been entitled to reimbursement from the
367policyholder under the terms of the deductible agreement and to
368the extent the claims have not been paid by a policyholder or
369third party, the guaranty association shall bill the
370policyholder for such reimbursement and the policyholder is
371obligated to pay such amount to the guaranty association for the
372benefit of the guaranty associations who paid such claims.
373Neither the insolvency of the insurer nor its inability to
374perform any of its obligations under the deductible agreement
375shall be a defense to the policyholder's reimbursement
376obligation under the deductible agreement. If the policyholder
377fails to pay the amounts due within 60 days after the bill for
378such reimbursements is due, the receiver shall use the
379collateral to the extent necessary to reimburse the guaranty
380association and, at the same time, the guaranty association may
381pursue other collection efforts against the policyholder. If
382more than one guaranty association has a claim against the same
383collateral and the available collateral, after allocation under
384subsection (4), together with billing and collection efforts,
385are together insufficient to pay each guaranty association in
386full, the receiver shall prorate payments to each guaranty
387association based upon the relationship the amount of claims
388each guaranty association has paid bears to the total of all
389claims paid by such guaranty associations.
390     (7)(a)  The guaranty association is entitled to deduct from
391collateral to be returned to a policyholder reasonable actual
392expenses incurred in fulfilling the responsibilities under this
393provision.
394     (b)  With respect to claims payments made by any guaranty
395association, the guaranty association shall provide any other
396guaranty associations and the receiver with a complete
397accounting of the guaranty association's deductible billing and
398collection activities, including copies of the policyholder
399billings when rendered and the reimbursements collected. The
400cost of reports required pursuant to this subsection shall be
401considered part of the expenses of the guaranty association.
402     (c)  The guaranty association may contract with the
403receiver for the direct collection from the policyholders on the
404same basis as the guaranty association and with the same rights
405and remedies. If so assigned, the receiver shall report any
406amounts so collected from each policyholder to the guaranty
407association.
408     (d)  To the extent that guaranty associations pay claims
409within the deductible amount but are not reimbursed by the
410receiver under this section or by policyholder payments from the
411guaranty associations' own collection efforts, the guaranty
412association shall have a claim on the insolvent insurer's estate
413for such unreimbursed claims payments. The priority of such
414claim shall depend upon the nature of the payment that should
415have been reimbursed.
416     (e)  Periodically, but not more than annually, the receiver
417shall adjust the collateral being held pursuant to the
418deductible agreement. The receiver shall maintain adequate
419collateral to secure 110 percent of the entire estimated
420obligation of the policyholder. The receiver shall provide a
421copy of its collateral review to any obligated guaranty
422association. Once all claims covered by the collateral have been
423paid and the receiver is satisfied that no new claims can be
424presented, the receiver may release any remaining collateral.
425     (8)  The state court that has jurisdiction over the
426liquidation proceedings shall have jurisdiction to resolve
427disputes arising under this section.
428     (9)  Nothing in this section limits or adversely affects
429any right the guaranty associations may have under applicable
430state law to obtain reimbursement from certain classes of
431policyholders for claims payments made by such guaranty
432associations under policies of the insolvent insurer or for
433related expenses the guaranty associations incur.
434     (10)  This section applies to all liquidations for which an
435order is entered after July 1, 2005.
436     (11)  For purposes of this section, the term:
437     (a)  "Deductible agreement" means any combination of one or
438more policies, endorsements, contracts, or security agreements
439that provide for the policyholder to bear the risk of loss
440within a specified amount per claim or occurrence covered under
441a policy of insurance and that may be subject to aggregate limit
442of policyholder reimbursement obligations.
443     (b)  "Noncovered claim" means a claim that is subject to a
444deductible agreement, may be secured by collateral, and is not
445covered by a guaranty association.
446     (12)  This section does not apply to first-party claims.
447     Section 9.  Subsection (3) of section 631.54, Florida
448Statutes, is amended to read:
449     631.54  Definitions.--As used in this part:
450     (3)  "Covered claim" means an unpaid claim, including one
451of unearned premiums, which arises out of, and is within the
452coverage, and not in excess of, the applicable limits of an
453insurance policy to which this part applies, issued by an
454insurer, if such insurer becomes an insolvent insurer and the
455claimant or insured is a resident of this state at the time of
456the insured event or the property from which the claim arises is
457permanently located in this state. For entities other than
458individuals, the residence of a claimant, insured, or
459policyholder is the state in which the entity's principal place
460of business is located at the time of the insured event.
461"Covered claim" shall not include:
462     (a)  Any amount due any reinsurer, insurer, insurance pool,
463or underwriting association, sought directly or indirectly
464through a third party, as subrogation, contribution,
465indemnification, or otherwise; or
466     (b)  Any claim that would otherwise be a covered claim
467under this part that has been rejected by any other state
468guaranty fund on the grounds that an insured's net worth is
469greater than that allowed under that state's guaranty law.
470Member insurers shall have no right of subrogation,
471contribution, indemnification, or otherwise, sought directly or
472indirectly through a third party, against the insured of any
473insolvent member.
474     Section 10.  Subsection (1) of section 631.56, Florida
475Statutes, is amended to read:
476     631.56  Board of directors.--
477     (1)  The board of directors of the association shall
478consist of not less than six five or more than ten nine persons
479serving terms as established in the plan of operation. The
480department shall approve and appoint to the board up to nine
481persons recommended by the member insurers. The department shall
482select one Florida-licensed insurance agent to serve as a
483nonvoting member. In the event the department finds that any
484recommended person does not meet the qualifications for service
485on the board, the department shall request the member insurers
486to recommend another person. Each member shall serve for a 4-
487year term and may be reappointed. Vacancies on the board shall
488be filled for the remaining period of the term in the same
489manner as initial appointments.
490     Section 11.  Paragraph (a) of subsection (1), paragraph (d)
491of subsection (2), and paragraph (a) of subsection (3) of
492section 631.57, Florida Statutes, are amended to read:
493     631.57  Powers and duties of the association.--
494     (1)  The association shall:
495     (a)1.  Be obligated to the extent of the covered claims
496existing:
497     a.  Prior to adjudication of insolvency and arising within
49830 days after the determination of insolvency;
499     b.  Before the policy expiration date if less than 30 days
500after the determination; or
501     c.  Before the insured replaces the policy or causes its
502cancellation, if she or he does so within 30 days of the
503determination.
504     2.a.  The obligation under subparagraph 1. shall include
505only that amount of each covered claim which is in excess of
506$100 and is less than $300,000, except with respect to policies
507covering condominium associations or homeowners' associations,
508which associations have a responsibility to provide insurance
509coverage on residential units within the association, the
510obligation shall include that amount of each covered property
511insurance claim which is less than $100,000 multiplied by the
512number of condominium units or other residential units; however,
513as to homeowners' associations, this sub-subparagraph
514subparagraph applies only to claims for damage or loss to
515residential units and structures attached to residential units.
516     b.  Notwithstanding sub-subparagraph a., the association
517has no obligation to pay covered claims that are to be paid from
518the proceeds of bonds issued under s. 631.695. However, the
519association shall assign and pledge the first available moneys
520from all or part of the assessments to be made under paragraph
521(3)(a) to or on behalf of the issuer of such bonds for the
522benefit of the holders of such bonds. The association shall
523administer any such covered claims and present valid covered
524claims for payment in accordance with the provisions of the
525assistance program in connection with which such bonds have been
526issued.
527     3.  In no event shall the association be obligated to a
528policyholder or claimant in an amount in excess of the
529obligation of the insolvent insurer under the policy from which
530the claim arises.
531     (2)  The association may:
532     (d)  Negotiate and become a party to such contracts as are
533necessary to carry out the purpose of this part. Additionally,
534the association may enter into such contracts with a
535municipality or county or such legal entity created pursuant to
536s. 163.01(7)(g) as are necessary in order for the municipality
537or county or such legal entity to issue bonds under s. 631.695.
538In connection with the issuance of any such bonds and the
539entering into of any such necessary contracts, the association
540may agree to such terms and conditions as the association deems
541necessary and proper.
542     (3)(a)  To the extent necessary to secure the funds for the
543respective accounts for the payment of covered claims, and also
544to pay the reasonable costs to administer the same, and to the
545extent necessary to secure the funds for the account specified
546in s. 631.55(2)(c), or to retire indebtedness, including,
547without limitation, the principal, redemption premium, if any,
548and interest on, and related costs of issuance of, bonds issued
549under s. 631.695, and the funding of any reserves and other
550payments required under the bond resolution or trust indenture
551pursuant to which such bonds have been issued, the office, upon
552certification of the board of directors, shall levy assessments
553in the proportion that each insurer's net direct written
554premiums in this state in the classes protected by the account
555bears to the total of said net direct written premiums received
556in this state by all such insurers for the preceding calendar
557year for the kinds of insurance included within such account.
558Assessments shall be remitted to and administered by the board
559of directors in the manner specified by the approved plan. Each
560insurer so assessed shall have at least 30 days' written notice
561as to the date the assessment is due and payable. Every
562assessment shall be made as a uniform percentage applicable to
563the net direct written premiums of each insurer in the kinds of
564insurance included within the account in which the assessment is
565made. The assessments levied against any insurer shall not
566exceed in any one year more than 2 percent of that insurer's net
567direct written premiums in this state for the kinds of insurance
568included within such account during the calendar year next
569preceding the date of such assessments.
570     Section 12.  Section 631.695, Florida Statutes, is created
571to read:
572     631.695  Revenue bond issuance through counties or
573municipalities.--
574     (1)  The Legislature finds:
575     (a)  The potential for widespread and massive damage to
576persons and property caused by hurricanes making landfall in
577this state can generate insurance claims of such a number as to
578render numerous insurers operating within this state insolvent
579and therefore unable to satisfy covered claims.
580     (b)  The inability of insureds within this state to receive
581payment of covered claims or to timely receive such payment
582creates financial and other hardships for such insureds and
583places undue burdens on the state, the affected units of local
584government, and the community at large.
585     (c)  In addition, the failure of insurers to pay covered
586claims or to timely pay such claims due to the insolvency of
587such insurers can undermine the public's confidence in insurers
588operating within this state, thereby adversely affecting the
589stability of the insurance industry in this state.
590     (d)  The state has previously taken action to address these
591problems by adopting the Florida Insurance Guaranty Association
592Act, which, among other things, provides a mechanism for the
593payment of covered claims under certain insurance policies to
594avoid excessive delay in payment and to avoid financial loss to
595claimants or policyholders because of the insolvency of an
596insurer.
597     (e)  In the wake of the unprecedented destruction caused by
598various hurricanes that have made landfall in this state, the
599resultant covered claims, and the number of insurers rendered
600insolvent thereby, it is evident that alternative programs must
601be developed to allow the Florida Insurance Guaranty
602Association, Inc., to more expeditiously and effectively provide
603for the payment of covered claims.
604     (f)  It is therefore determined to be in the best interests
605of, and necessary for, the protection of the public health,
606safety, and general welfare of the residents of this state, and
607for the protection and preservation of the economic stability of
608insurers operating in this state, and it is declared to be an
609essential public purpose, to permit certain municipalities and
610counties to take such actions as will provide relief to
611claimants and policyholders having covered claims against
612insolvent insurers operating in this state by expediting the
613handling and payment of covered claims.
614     (g)  To achieve the foregoing purposes, it is proper to
615authorize municipalities and counties of this state
616substantially affected by the landfall of a category 1 or
617greater hurricane to issue bonds to assist the Florida Insurance
618Guaranty Association, Inc., in expediting the handling and
619payment of covered claims of insolvent insurers.
620     (h)  In order to avoid the needless and indiscriminate
621proliferation, duplication, and fragmentation of such assistance
622programs, it is in the best interests of the residents of this
623state to authorize municipalities and counties severely affected
624by a category 1 or greater hurricane to provide for the payment
625of covered claims beyond their territorial limits in the
626implementation of such programs.
627     (i)  It is a paramount public purpose for municipalities
628and counties substantially affected by the landfall of a
629category 1 or greater hurricane to be able to issue bonds for
630the purposes described in this section. Such issuance shall
631provide assistance to residents of those municipalities and
632counties as well as to other residents of this state.
633     (2)  The governing body of any municipality or county the
634residents of which have been substantially affected by a
635category 1 or greater hurricane may issue bonds to fund an
636assistance program in conjunction with, and with the consent of,
637the Florida Insurance Guaranty Association, Inc., for the
638purpose of paying claimants' or policyholders' covered claims as
639defined in s. 631.54 arising through the insolvency of an
640insurer, which insolvency is determined by the Florida Insurance
641Guaranty Association, Inc., to have been a result of a category
6421 or greater hurricane, regardless of whether such claimants or
643policyholders are residents of such municipality or county or
644the property to which such claim relates is located within or
645outside the territorial jurisdiction of such municipality or
646county. The power of a municipality or county to issue bonds as
647described in this section is in addition to any powers granted
648by law and may not be abrogated or restricted by any provisions
649in such municipality's or county's charter. A municipality or
650county issuing bonds for this purpose shall enter into such
651contracts with the Florida Insurance Guaranty Association, Inc.,
652or any entity acting on behalf of the Florida Insurance Guaranty
653Association, Inc., as are necessary to implement the assistance
654program. Any bonds issued by a municipality or county or
655combination thereof under this subsection shall be payable from
656and secured by moneys received by or on behalf of the
657municipality or county from assessments levied under s.
658631.57(3)(a) and assigned and pledged to or on behalf of the
659municipality or county for the benefit of the holders of such
660bonds in connection with such assistance program. The funds,
661credit, property, and taxing power of the state or any
662municipality or county shall not be pledged for the payment of
663such bonds.
664     (3)  Bonds may be validated by such municipality or county
665pursuant to chapter 75. The proceeds of such bonds may be used
666to pay covered claims of insolvent insurers; to refinance or
667replace previously existing borrowings or financial
668arrangements; to pay interest on bonds; to fund reserves for the
669bonds; to pay expenses incident to the issuance or sale of any
670bond issued under this section, including costs of validating,
671printing, and delivering the bonds, costs of printing the
672official statement, costs of publishing notices of sale of the
673bonds, costs of obtaining credit enhancement or liquidity
674support, and related administrative expenses; or for such other
675purposes related to the financial obligations of the fund as the
676association may determine. The term of the bonds may not exceed
67730 years.
678     (4)  The state covenants with holders of bonds of the
679assistance program that the state will not take any action which
680will have a material adverse affect on such holders and will not
681repeal or abrogate the power of the board of directors of the
682association to direct the Office of Insurance Regulation to levy
683the assessments and to collect the proceeds of the revenues
684pledged to the payment of such bonds as long as any such bonds
685remain outstanding unless adequate provision has been made for
686the payment of such bonds pursuant to the documents authorizing
687the issuance of such bonds.
688     (5)  The accomplishment of the authorized purposes of such
689municipality or county under this section is in all respects for
690the benefit of the people of the state, for the increase of
691their commerce and prosperity, and for the improvement of their
692health and living conditions. Such municipality or county, in
693performing essential governmental functions in accomplishing its
694purposes, is not required to pay any taxes or assessments of any
695kind whatsoever upon any property acquired or used by the county
696or municipality for such purposes or upon any revenues at any
697time received by the county or municipality. The bonds, notes,
698and other obligations of such municipality or county, and the
699transfer of and income from such bonds, notes, and other
700obligations, including any profits made on the sale of such
701bonds, notes, and other obligations, are exempt from taxation of
702any kind by the state or by any political subdivision or other
703agency or instrumentality of the state. The exemption granted in
704this subsection is not applicable to any tax imposed by chapter
705220 on interest, income, or profits on debt obligations owned by
706corporations.
707     (6)  Two or more municipalities or counties the residents
708of which have been substantially affected by a category 1 or
709greater hurricane may create a legal entity pursuant to s.
710163.01(7)(g) to exercise the powers described in this section as
711well as those powers granted in s. 163.01(7)(g). Reference in
712this section to a municipality or county includes such legal
713entity.
714     (7)  The association shall issue an annual report on the
715status of the use of bond proceeds as related to insolvencies
716caused by hurricanes. The report must contain the number and
717amount of claims paid. The association shall also include an
718analysis of the revenue generated from the assessment levied
719under s. 631.57(3)(a) to pay such bonds. The association shall
720submit a copy of the report to the President of the Senate, the
721Speaker of the House of Representatives, and the Chief Financial
722Officer within 90 days after the end of each calendar year in
723which bonds were outstanding.
724     Section 13.  No provision of s. 631.57 or s. 631.695,
725Florida Statutes, shall be repealed until such time as the
726principal, redemption premium, if any, and interest on all bonds
727issued under s. 631.695, Florida Statutes, payable and secured
728from assessments levied under s. 631.57(3)(a), Florida Statutes,
729have been paid in full or adequate provision for such payment
730has been made in accordance with the bond resolution or trust
731indenture pursuant to which such bonds were issued.
732     Section 14.  If any provision of this act or the
733application thereof to any person or circumstance is held
734invalid, the invalidity shall not affect other provisions or
735applications of the act which can be given effect without the
736invalid provision or application, and to this end the provisions
737of this act are declared severable.
738     Section 15.  This act shall take effect upon becoming a
739law.


CODING: Words stricken are deletions; words underlined are additions.