Florida Senate - 2006 COMMITTEE AMENDMENT
Bill No. SB 2118
Barcode 091992
CHAMBER ACTION
Senate House
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03/27/2006 01:45 PM .
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11 The Committee on Banking and Insurance (Garcia) recommended
12 the following amendment:
13
14 Senate Amendment (with title amendment)
15 Delete everything after the enacting clause
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17 and insert:
18 Section 1. Subsections (5), (6), and (7) of section
19 627.311, Florida Statutes, are amended to read:
20 627.311 Joint underwriters and joint reinsurers;
21 public records and public meetings exemptions.--
22 (5)(a) The office shall, after consultation with
23 insurers, approve a joint underwriting plan of insurers which
24 shall operate as the Florida Workers' Compensation Joint
25 Underwriting Association, a nonprofit entity. For the purposes
26 of this subsection, the term "insurer" includes group
27 self-insurance funds authorized by s. 624.4621, commercial
28 self-insurance funds authorized by s. 624.462, assessable
29 mutual insurers authorized under s. 628.6011, and insurers
30 licensed to write workers' compensation and employer's
31 liability insurance in this state. The purpose of the plan is
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1 to provide workers' compensation and employer's liability
2 insurance to applicants who are required by law to maintain
3 workers' compensation and employer's liability insurance and
4 who are in good faith entitled to but who are unable to
5 procure such insurance through the voluntary market. Except as
6 provided herein, the plan must have actuarially sound rates
7 that ensure that the plan is self-supporting.
8 (b) The operation of the plan is subject to the
9 supervision of a 9-member board of governors. Each member
10 described in subparagraph 1., subparagraph 2., subparagraph
11 3., or subparagraph 5. shall be appointed by the Financial
12 Services Commission and shall serve at the pleasure of the
13 commission. The board of governors shall be comprised of:
14 1. Three members appointed by the Financial Services
15 Commission. Each member appointed by the commission shall
16 serve at the pleasure of the commission;
17 1.2. Two representatives of the 20 domestic insurers,
18 as defined in s. 624.06(1), having the largest voluntary
19 direct premiums written in this state for workers'
20 compensation and employer's liability insurance, which shall
21 be elected by those 20 domestic insurers;
22 2.3. Two representatives of the 20 foreign insurers as
23 defined in s. 624.06(2) having the largest voluntary direct
24 premiums written in this state for workers' compensation and
25 employer's liability insurance, which shall be elected by
26 those 20 foreign insurers;
27 3.4. One representative of person appointed by the
28 largest property and casualty insurance agents' association in
29 this state; and
30 4.5. The consumer advocate appointed under s. 627.0613
31 or the consumer advocate's designee; and.
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1 5. Three other persons appointed by the commission.
2
3 Each board member shall be appointed to serve a 4-year term
4 and may be appointed to serve consecutive terms. A vacancy on
5 the board shall be filled in the same manner as the original
6 appointment for the unexpired portion of the term. The
7 Financial Services Commission shall designate a member of the
8 board to serve as chair. No board member shall be an insurer
9 which provides services to the plan or which has an affiliate
10 which provides services to the plan or which is serviced by a
11 service company or third-party administrator which provides
12 services to the plan or which has an affiliate which provides
13 services to the plan. The meetings and records minutes,
14 audits, and procedures of the board of governors and plan are
15 subject to chapters chapter 119 and 286, unless otherwise
16 exempted by law.
17 (c) The operation of the plan shall be governed by a
18 plan of operation that is prepared at the direction of the
19 board of governors and approved by order of the office. The
20 plan is subject to continuous review by the office. The office
21 may, by order, withdraw approval of all or part of a plan if
22 the office determines that conditions have changed since
23 approval was granted and that the purposes of the plan require
24 changes in the plan. The plan of operation may be changed at
25 any time by the board of governors or upon request of the
26 office. The plan of operation and all changes thereto are
27 subject to the approval of the office. The plan of operation
28 shall:
29 1. Authorize the board to engage in the activities
30 necessary to implement this subsection, including, but not
31 limited to, borrowing money.
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1 2. Develop criteria for eligibility for coverage by
2 the plan, including, but not limited to, documented rejection
3 by at least two insurers which reasonably assures that
4 insureds covered under the plan are unable to acquire coverage
5 in the voluntary market.
6 3. Require notice from the agent to the insured at the
7 time of the application for coverage that the application is
8 for coverage with the plan and that coverage may be available
9 through an insurer, group self-insurers' fund, commercial
10 self-insurance fund, or assessable mutual insurer through
11 another agent at a lower cost.
12 4. Establish programs to encourage insurers to provide
13 coverage to applicants of the plan in the voluntary market and
14 to insureds of the plan, including, but not limited to:
15 a. Establishing procedures for an insurer to use in
16 notifying the plan of the insurer's desire to provide coverage
17 to applicants to the plan or existing insureds of the plan and
18 in describing the types of risks in which the insurer is
19 interested. The description of the desired risks must be on a
20 form developed by the plan.
21 b. Developing forms and procedures that provide an
22 insurer with the information necessary to determine whether
23 the insurer wants to write particular applicants to the plan
24 or insureds of the plan.
25 c. Developing procedures for notice to the plan and
26 the applicant to the plan or insured of the plan that an
27 insurer will insure the applicant or the insured of the plan,
28 and notice of the cost of the coverage offered; and developing
29 procedures for the selection of an insuring entity by the
30 applicant or insured of the plan.
31 d. Provide for a market-assistance plan to assist in
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1 the placement of employers. All applications for coverage in
2 the plan received 45 days before the effective date for
3 coverage shall be processed through the market-assistance
4 plan. A market-assistance plan specifically designed to serve
5 the needs of small, good policyholders as defined by the board
6 must be reviewed and updated periodically finalized by January
7 1, 1994.
8 5. Provide for policy and claims services to the
9 insureds of the plan of the nature and quality provided for
10 insureds in the voluntary market.
11 6. Provide for the review of applications for coverage
12 with the plan for reasonableness and accuracy, using any
13 available historic information regarding the insured.
14 7. Provide for procedures for auditing insureds of the
15 plan which are based on reasonable business judgment and are
16 designed to maximize the likelihood that the plan will collect
17 the appropriate premiums.
18 8. Authorize the plan to terminate the coverage of and
19 refuse future coverage for any insured that submits a
20 fraudulent application to the plan or provides fraudulent or
21 grossly erroneous records to the plan or to any service
22 provider of the plan in conjunction with the activities of the
23 plan.
24 9. Establish service standards for agents who submit
25 business to the plan.
26 10. Establish criteria and procedures to prohibit any
27 agent who does not adhere to the established service standards
28 from placing business with the plan or receiving, directly or
29 indirectly, any commissions for business placed with the plan.
30 11. Provide for the establishment of reasonable safety
31 programs for all insureds in the plan. All insureds of the
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1 plan must participate in the safety program.
2 12. Authorize the plan to terminate the coverage of
3 and refuse future coverage to any insured who fails to pay
4 premiums or surcharges when due; who, at the time of
5 application, is delinquent in payments of workers'
6 compensation or employer's liability insurance premiums or
7 surcharges owed to an insurer, group self-insurers' fund,
8 commercial self-insurance fund, or assessable mutual insurer
9 licensed to write such coverage in this state; or who refuses
10 to substantially comply with any safety programs recommended
11 by the plan.
12 13. Authorize the board of governors to provide the
13 goods and services required by the plan through staff employed
14 by the plan, through reasonably compensated service providers
15 who contract with the plan to provide services as specified by
16 the board of governors, or through a combination of employees
17 and service providers.
18 9. The procurement of goods with a value of less than
19 $2,500 shall be carried out using good purchasing practices,
20 such as the receipt of written quotes or written records of
21 telephone quotes. Purchases that equal or exceed $2,500 but
22 are less than or equal to $25,000, may be made by using best
23 purchasing practices, such as receipt of written quotes,
24 written record of telephone quotes, or informal bids, whenever
25 practical. The procurement of goods or services valued over
26 $25,000 are subject to competitive solicitation, except in
27 situations in which the goods or services are provided by a
28 sole source or are deemed an emergency purchase, or the
29 services are exempted from competitive solicitation
30 requirements under s. 287.057(5)(f). Justification for the
31 sole-sourcing or emergency procurement must be documented.
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1 Contracts for goods or services valued at or over $100,000 are
2 subject to board approval.
3 b. In determining whether legal services should be
4 provided by staff attorneys or outsourced to private
5 attorneys, the plan shall consider the following factors:
6 (I) The nature of the attorney services to be provided
7 and the issues involved.
8 (II) The need for use of private attorneys, rather
9 than staff attorneys, using the criteria provided in
10 sub-subparagraph c.
11 (III) The criteria by which the plan selected the
12 private attorney or law firm it proposes to employ, using the
13 criteria provided in sub-subparagraph c.
14 (IV) Competitive fees for similar attorney services.
15 (V) The plan's analysis estimating the number of hours
16 for attorney services, the costs, the total contract amount,
17 and, when appropriate, a risk or cost-benefit analysis.
18 (VI) Which partners, associates, paralegals, research
19 associates, or other personnel will be used and how their time
20 will be billed to the plan.
21 (VII) Any other information that the plan deems
22 appropriate for the proper evaluation of the need for such
23 private attorney services.
24 c. The plan shall use the following criteria when
25 selecting outside firms for attorney services:
26 (I) The magnitude or complexity of the case.
27 (II) The firm's rating and certifications.
28 (III) The firm's minority status.
29 (IV) The firm's physical proximity to the case and the
30 plan.
31 (V) The firm's prior experience with the plan.
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1 (VI) The firm's prior experience with similar cases or
2 issues.
3 (VII) The firm's billing methodology and proposed
4 rate.
5 (VIII) The firm's current or past adversarial
6 position, or conflict of interest, with the plan.
7 (IX) The firm's willingness to use resources of the
8 plan to minimize costs.
9 d. The plan may not retain a lobbyist to represent it
10 before the legislative or executive branch. However, full-time
11 employees of the plan may register as lobbyists and represent
12 that employer before the legislative or executive branch.
13 14. Provide for service standards for service
14 providers, methods of determining adherence to those service
15 standards, incentives and disincentives for service, and
16 procedures for terminating contracts for service providers
17 that fail to adhere to service standards.
18 15. Provide procedures for selecting service providers
19 and standards for qualification as a service provider that
20 reasonably assure that any service provider selected will
21 continue to operate as an ongoing concern and is capable of
22 providing the specified services in the manner required.
23 16. Provide for reasonable accounting and
24 data-reporting practices.
25 17. Provide for annual review of costs associated with
26 the administration and servicing of the policies issued by the
27 plan to determine alternatives by which costs can be reduced.
28 18. Authorize the acquisition of such excess insurance
29 or reinsurance as is consistent with the purposes of the plan.
30 19. Provide for an annual report to the office on a
31 date specified by the office and containing such information
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1 as the office reasonably requires.
2 20. Establish multiple rating plans for various
3 classifications of risk which reflect risk of loss, hazard
4 grade, actual losses, size of premium, and compliance with
5 loss control. At least one of such plans must be a
6 preferred-rating plan to accommodate small-premium
7 policyholders with good experience as defined in
8 sub-subparagraph 22.a.
9 21. Establish agent commission schedules.
10 22. For employers otherwise eligible for coverage
11 under the plan, establish three tiers of employers meeting the
12 criteria and subject to the rate limitations specified in this
13 subparagraph.
14 a. Tier One.--
15 (I) Criteria; rated employers.--An employer that has
16 an experience modification rating shall be included in Tier
17 One if the employer meets all of the following:
18 (A) The experience modification is below 1.00.
19 (B) The employer had no lost-time claims subsequent to
20 the applicable experience modification rating period.
21 (C) The total of the employer's medical-only claims
22 subsequent to the applicable experience modification rating
23 period did not exceed 20 percent of premium.
24 (II) Criteria; non-rated employers.--An employer that
25 does not have an experience modification rating shall be
26 included in Tier One if the employer meets all of the
27 following:
28 (A) The employer had no lost-time claims for the
29 3-year period immediately preceding the inception date or
30 renewal date of the employer's coverage under the plan.
31 (B) The total of the employer's medical-only claims
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1 for the 3-year period immediately preceding the inception date
2 or renewal date of the employer's coverage under the plan did
3 not exceed 20 percent of premium.
4 (C) The employer has secured workers' compensation
5 coverage for the entire 3-year period immediately preceding
6 the inception date or renewal date of the employer's coverage
7 under the plan.
8 (D) The employer is able to provide the plan with a
9 loss history generated by the employer's prior workers'
10 compensation insurer, except if the employer is not able to
11 produce a loss history due to the insolvency of an insurer,
12 the receiver shall provide to the plan, upon the request of
13 the employer or the employer's agent, a copy of the employer's
14 loss history from the records of the insolvent insurer if the
15 loss history is contained in records of the insurer which are
16 in the possession of the receiver. If the receiver is unable
17 to produce the loss history, the employer may, in lieu of the
18 loss history, submit an affidavit from the employer and the
19 employer's insurance agent setting forth the loss history.
20 (E) The employer is not a new business.
21 (III) Premiums.--The premiums for Tier One insureds
22 shall be set at a premium level 25 percent above the
23 comparable voluntary market premiums until the plan has
24 sufficient experience as determined by the board to establish
25 an actuarially sound rate for Tier One, at which point the
26 board shall, subject to paragraph (e), adjust the rates, if
27 necessary, to produce actuarially sound rates, provided such
28 rate adjustment shall not take effect prior to January 1,
29 2007.
30 b. Tier Two.--
31 (I) Criteria; rated employers.--An employer that has
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1 an experience modification rating shall be included in Tier
2 Two if the employer meets all of the following:
3 (A) The experience modification is equal to or greater
4 than 1.00 but not greater than 1.10.
5 (B) The employer had no lost-time claims subsequent to
6 the applicable experience modification rating period.
7 (C) The total of the employer's medical-only claims
8 subsequent to the applicable experience modification rating
9 period did not exceed 20 percent of premium.
10 (II) Criteria; non-rated employers.--An employer that
11 does not have any experience modification rating shall be
12 included in Tier Two if the employer is a new business. An
13 employer shall be included in Tier Two if the employer has
14 less than 3 years of loss experience in the 3-year period
15 immediately preceding the inception date or renewal date of
16 the employer's coverage under the plan and the employer meets
17 all of the following:
18 (A) The employer had no lost-time claims for the
19 3-year period immediately preceding the inception date or
20 renewal date of the employer's coverage under the plan.
21 (B) The total of the employer's medical-only claims
22 for the 3-year period immediately preceding the inception date
23 or renewal date of the employer's coverage under the plan did
24 not exceed 20 percent of premium.
25 (C) The employer is able to provide the plan with a
26 loss history generated by the workers' compensation insurer
27 that provided coverage for the portion or portions of such
28 period during which the employer had secured workers'
29 compensation coverage, except if the employer is not able to
30 produce a loss history due to the insolvency of an insurer,
31 the receiver shall provide to the plan, upon the request of
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1 the employer or the employer's agent, a copy of the employer's
2 loss history from the records of the insolvent insurer if the
3 loss history is contained in records of the insurer which are
4 in the possession of the receiver. If the receiver is unable
5 to produce the loss history, the employer may, in lieu of the
6 loss history, submit an affidavit from the employer and the
7 employer's insurance agent setting forth the loss history.
8 (III) Premiums.--The premiums for Tier Two insureds
9 shall be set at a rate level 50 percent above the comparable
10 voluntary market premiums until the plan has sufficient
11 experience as determined by the board to establish an
12 actuarially sound rate for Tier Two, at which point the board
13 shall, subject to paragraph (e), adjust the rates, if
14 necessary, to produce actuarially sound rates, provided such
15 rate adjustment shall not take effect prior to January 1,
16 2007.
17 c. Tier Three.--
18 (I) Eligibility.--An employer shall be included in
19 Tier Three if the employer does not meet the criteria for Tier
20 One or Tier Two.
21 (II) Rates.--The board shall establish, subject to
22 paragraph (e), and the plan shall charge, actuarially sound
23 rates for Tier Three insureds.
24 23. For Tier One or Tier Two employers which employ no
25 nonexempt employees or which report payroll which is less than
26 the minimum wage hourly rate for one full-time employee for 1
27 year at 40 hours per week, the plan shall establish
28 actuarially sound premiums, provided, however, that the
29 premiums may not exceed $2,500. These premiums shall be in
30 addition to the fee specified in subparagraph 26. When the
31 plan establishes actuarially sound rates for all employers in
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1 Tier One and Tier Two, the premiums for employers referred to
2 in this paragraph are no longer subject to the $2,500 cap.
3 24. Provide for a depopulation program to reduce the
4 number of insureds in the plan. If an employer insured through
5 the plan is offered coverage from a voluntary market carrier:
6 a. During the first 30 days of coverage under the
7 plan;
8 b. Before a policy is issued under the plan;
9 c. By issuance of a policy upon expiration or
10 cancellation of the policy under the plan; or
11 d. By assumption of the plan's obligation with respect
12 to an in-force policy,
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14 that employer is no longer eligible for coverage through the
15 plan. The premium for risks assumed by the voluntary market
16 carrier must be no greater than the premium the insured would
17 have paid under the plan, and shall be adjusted upon renewal
18 to reflect changes in the plan rates and the tier for which
19 the insured would qualify as of the time of renewal. The
20 insured may be charged such premiums only for the first 3
21 years of coverage in the voluntary market. A premium under
22 this subparagraph is deemed approved and is not an excess
23 premium for purposes of s. 627.171.
24 25. Require that policies issued and applications must
25 include a notice that the policy could be replaced by a policy
26 issued from a voluntary market carrier and that, if an offer
27 of coverage is obtained from a voluntary market carrier, the
28 policyholder is no longer eligible for coverage through the
29 plan. The notice must also specify that acceptance of coverage
30 under the plan creates a conclusive presumption that the
31 applicant or policyholder is aware of this potential.
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1 26. Require that each application for coverage and
2 each renewal premium be accompanied by a nonrefundable fee of
3 $475 to cover costs of administration and fraud prevention.
4 The board may, with the prior approval of the office, increase
5 the amount of the fee pursuant to a rate filing to reflect
6 increased costs of administration and fraud prevention. The
7 fee is not subject to commission and is fully earned upon
8 commencement of coverage.
9 (d)1. The funding of the plan shall include premiums
10 as provided in subparagraph (c)22. and assessments as provided
11 in this paragraph.
12 2.a. If the board determines that a deficit exists in
13 Tier One or Tier Two or that there is any deficit remaining
14 attributable to any of the plan's former subplans and that the
15 deficit cannot be fully funded by using policyholder surplus
16 attributable to former subplan C or, if the surplus in the
17 former subplan C does not fully fund the deficit and the
18 deficit cannot be fully funded by using any remaining funds in
19 the contingency reserve without the use of deficit
20 assessments, the board shall request the office to levy, by
21 order, a deficit assessment against premiums charged to
22 insureds for workers' compensation insurance by insurers as
23 defined in s. 631.904(5). The office shall issue the order
24 after verifying the amount of the deficit. The assessment
25 shall be specified as a percentage of future premium
26 collections, as recommended by the board and approved by the
27 office. The same percentage shall apply to premiums on all
28 workers' compensation policies issued or renewed during the
29 12-month period beginning on the effective date of the
30 assessment, as specified in the order.
31 b. With respect to each insurer collecting premiums
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1 that are subject to the assessment, the insurer shall collect
2 the assessment at the same time as the insurer collects the
3 premium payment for each policy and shall remit the
4 assessments collected to the plan as provided in the order
5 issued by the office. The office shall verify the accurate and
6 timely collection and remittance of deficit assessments and
7 shall report such information to the board. Each insurer
8 collecting assessments shall provide such information with
9 respect to premiums and collections as may be required by the
10 office to enable the office to monitor and audit compliance
11 with this paragraph.
12 c. Deficit assessments are not considered part of an
13 insurer's rate, are not premium, and are not subject to the
14 premium tax, to the assessments under ss. 440.49 and 440.51,
15 to the surplus lines tax, to any fees, or to any commissions.
16 The deficit assessment imposed shall become plan funds at the
17 moment of collection and shall not constitute income to the
18 insurer for any purpose, including financial reporting on the
19 insurer's income statement. An insurer is liable for all
20 assessments that the insurer collects and must treat the
21 failure of an insured to pay an assessment as a failure to pay
22 premium. An insurer is not liable for uncollectible
23 assessments.
24 d. When an insurer is required to return unearned
25 premium, the insurer shall also return any collected
26 assessments attributable to the unearned premium.
27 e. Deficit assessments as described in this
28 subparagraph shall not be levied after July 1, 2011 2007.
29 3.a. All policies issued to Tier Three insureds shall
30 be assessable. All Tier Three assessable policies must be
31 clearly identified as assessable by containing, in contrasting
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1 color and in not less than 10-point type, the following
2 statement:
3
4 "This is an assessable policy. If the plan is
5 unable to pay its obligations, policyholders
6 will be required to contribute on a pro rata
7 earned premium basis the money necessary to
8 meet any assessment levied."
9
10 b. The board may from time to time assess Tier Three
11 insureds to whom the plan has issued assessable policies for
12 the purpose of funding plan deficits. Any such assessment
13 shall be based upon a reasonable actuarial estimate of the
14 amount of the deficit, taking into account the amount needed
15 to fund medical and indemnity reserves and reserves for
16 incurred but not reported claims, and allowing for general
17 administrative expenses, the cost of levying and collecting
18 the assessment, a reasonable allowance for estimated
19 uncollectible assessments, and allocated and unallocated loss
20 adjustment expenses.
21 c. Each Tier Three insured's share of a deficit shall
22 be computed by applying to the premium earned on the insured's
23 policy or policies during the period to be covered by the
24 assessment the ratio of the total deficit to the total
25 premiums earned during such period upon all policies subject
26 to the assessment. If one or more Tier Three insureds fail to
27 pay an assessment, the other Tier Three insureds shall be
28 liable on a proportionate basis for additional assessments to
29 fund the deficit. The plan may compromise and settle
30 individual assessment claims without affecting the validity of
31 or amounts due on assessments levied against other insureds.
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1 The plan may offer and accept discounted payments for
2 assessments which are promptly paid. The plan may offset the
3 amount of any unpaid assessment against unearned premiums
4 which may otherwise be due to an insured. The plan shall
5 institute legal action when necessary and appropriate to
6 collect the assessment from any insured who fails to pay an
7 assessment when due.
8 d. The venue of a proceeding to enforce or collect an
9 assessment or to contest the validity or amount of an
10 assessment shall be in the Circuit Court of Leon County.
11 e. If the board finds that a deficit in Tier Three
12 exists for any period and that an assessment is necessary, the
13 board shall certify to the office the need for an assessment.
14 No sooner than 30 days after the date of such certification,
15 the board shall notify in writing each insured who is to be
16 assessed that an assessment is being levied against the
17 insured, and informing the insured of the amount of the
18 assessment, the period for which the assessment is being
19 levied, and the date by which payment of the assessment is
20 due. The board shall establish a date by which payment of the
21 assessment is due, which shall be no sooner than 30 days nor
22 later than 120 days after the date on which notice of the
23 assessment is mailed to the insured.
24 f. Whenever the board makes a determination that the
25 plan does not have a sufficient cash basis to meet 6 3 months
26 of projected cash needs due to a deficit in Tier Three, the
27 board may request the department to transfer funds from the
28 Workers' Compensation Administration Trust Fund to the plan in
29 an amount sufficient to fund the difference between the amount
30 available and the amount needed to meet a 6-month 3-month
31 projected cash need as determined by the board and verified by
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1 the office, subject to the approval of the Legislative Budget
2 Commission. If the Legislative Budget Commission approves a
3 transfer of funds under this sub-subparagraph, the plan shall
4 report to the Legislature the transfer of funds and the
5 Legislature shall review the plan during the next legislative
6 session or the current legislative session, if the transfer
7 occurs during a legislative session. This sub-subparagraph
8 shall not apply until the plan determines and the office
9 verifies that assessments collected by the plan pursuant to
10 sub-subparagraph b. are insufficient to fund the deficit in
11 Tier Three and to meet 6 3 months of projected cash needs.
12 4. The plan may offer rating, dividend plans, and
13 other plans to encourage loss prevention programs.
14 (e) For rates and rating plans effective on or after
15 January 1, 2007, the plan shall be subject to the same
16 requirements of this part for the filing and approval of its
17 rates and rating plans as apply to workers' compensation
18 insurers, except as otherwise provided. establish and use its
19 rates and rating plans, and the plan may establish and use
20 changes in rating plans at any time, but no more frequently
21 than two times per any rating class for any calendar year. By
22 December 1, 1993, and December 1 of each year thereafter,
23 except as provided in subparagraph (c)22., the board shall
24 establish and use actuarially sound rates for use by the plan
25 to assure that the plan is self-funding while those rates are
26 in effect. Such rates and rating plans must be filed with the
27 office within 30 calendar days after their effective dates,
28 and shall be considered a "use and file" filing. Any
29 disapproval by the office must have an effective date that is
30 at least 60 days from the date of disapproval of the rates and
31 rating plan and must have prospective effect only. The plan
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1 may not be subject to any order by the office to return to
2 policyholders any portion of the rates disapproved by the
3 office. The office may not disapprove any rates or rating
4 plans unless it demonstrates that such rates and rating plans
5 are excessive, inadequate, or unfairly discriminatory.
6 (f) No later than June 1 of each year, the plan shall
7 obtain an independent actuarial certification of the results
8 of the operations of the plan for prior years, and shall
9 furnish a copy of the certification to the office. If, after
10 the effective date of the plan, the projected ultimate
11 incurred losses and expenses and dividends for prior years
12 exceed collected premiums, accrued net investment income, and
13 prior assessments for prior years, the certification is
14 subject to review and approval by the office before it becomes
15 final.
16 (g) Whenever a deficit exists, the plan shall, within
17 90 days, provide the office with a program to eliminate the
18 deficit within a reasonable time. The deficit may be funded
19 through increased premiums charged to insureds of the plan for
20 subsequent years, through the use of policyholder surplus
21 attributable to any year, including policyholder surplus in
22 former subplan C as authorized in subparagraph (d)2., through
23 the use of assessments as provided in subparagraph (d)2., and
24 through assessments on assessable policies as provided in
25 subparagraph (d)3. Policyholders in former subplan C shall not
26 be subject to any assessments.
27 (h) Any premium or assessments collected by the plan
28 in excess of the amount necessary to fund projected ultimate
29 incurred losses and expenses of the plan and not paid to
30 insureds of the plan in conjunction with loss prevention or
31 dividend programs shall be retained by the plan for future
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1 use. Any state funds received by the plan in excess of the
2 amount necessary to fund deficits in subplan D or any tier
3 shall be returned to the state.
4 (i) The decisions of the board of governors do not
5 constitute final agency action and are not subject to chapter
6 120.
7 (j) Policies for insureds shall be issued by the plan.
8 (k) The plan created under this subsection is liable
9 only for payment for losses arising under policies issued by
10 the plan with dates of accidents occurring on or after January
11 1, 1994.
12 (l) Plan losses are the sole and exclusive
13 responsibility of the plan, and payment for such losses must
14 be funded in accordance with this subsection and must not
15 come, directly or indirectly, from insurers or any guaranty
16 association for such insurers.
17 (m) Senior managers and officers, as defined in the
18 plan of operation, and members of the board of governors shall
19 be subject to part III of ch. 112, including, but not limited
20 to, the code of ethics and public disclosure and reporting of
21 financial interests, pursuant to s. 112.3145. Senior managers,
22 officers, and board members are also required to file such
23 disclosures with the Office of Insurance Regulation. The
24 executive director of the plan or his or her designee shall
25 notify each newly appointed and existing appointed member of
26 the board of governors, senior manager and officer of their
27 duty to comply with the reporting requirements of part III of
28 ch. 112. At least quarterly, the executive director of the
29 plan or his or her designee shall submit to the Commission on
30 Ethics a list of names of the senior managers, officers,
31 members of the board of governors that are subject to the
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1 public disclosure requirements under s. 112.3145. Each joint
2 underwriting plan or association created under this section is
3 not a state agency, board, or commission. However, for the
4 purposes of s. 199.183(1) only, the joint underwriting plan is
5 a political subdivision of the state and is exempt from the
6 corporate income tax.
7 (n) On or before July 1 of each year, employees of the
8 plan are required to sign and submit a statement to the plan
9 attesting that they do not have a conflict of interest, as
10 defined in part III of ch. 112. As a condition of employment,
11 all prospective employees are required to sign and submit a
12 conflict-of-interest statement to the plan. Each joint
13 underwriting plan or association may elect to pay premium
14 taxes on the premiums received on its behalf or may elect to
15 have the member insurers to whom the premiums are allocated
16 pay the premium taxes if the member insurer had written the
17 policy. The joint underwriting plan or association shall
18 notify the member insurers and the Department of Revenue by
19 January 15 of each year of its election for the same year. As
20 used in this paragraph, the term "premiums received" means the
21 consideration for insurance, by whatever name called, but does
22 not include any policy assessment or surcharge received by the
23 joint underwriting association as a result of apportioning
24 losses or deficits of the association pursuant to this
25 section.
26 (o) Any senior manager or officer of the plan who is
27 employed by the plan as of January 1, 2007, regardless of the
28 date of hire, and who subsequently retires or terminates
29 employment is prohibited from representing another person or
30 entity before the plan for 2 years after retirement or
31 termination of employment from the plan.
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1 (p) No part of the income of the plan may inure to the
2 benefit of any private person.
3 (q) Notwithstanding ss. 112.3148 and 112.3149 or other
4 provision of law, an employee or board member may not
5 knowingly accept, directly or indirectly, any expenditure from
6 a lobbyist or his or her principal. An employee or board
7 member that fails to comply with this paragraph is subject to
8 penalties provided under ss. 112.317 and 112.3173.
9 (r) Nothing contained in this section shall be
10 construed as barring the plan from providing insurance
11 coverage to any employer with whom a former employee of the
12 plan is affiliated or employing or reemploying any former
13 employee of the plan in a part-time, full-time, temporary, or
14 permanent capacity, so long as such employment does not
15 violate any provision of part III of ch. 112.
16 (s)(o) Neither the plan nor any member of the board of
17 governors is liable for monetary damages to any person for any
18 statement, vote, decision, or failure to act, regarding the
19 management or policies of the plan, unless:
20 1. The member breached or failed to perform her or his
21 duties as a member; and
22 2. The member's breach of, or failure to perform,
23 duties constitutes:
24 a. A violation of the criminal law, unless the member
25 had reasonable cause to believe her or his conduct was not
26 unlawful. A judgment or other final adjudication against a
27 member in any criminal proceeding for violation of the
28 criminal law estops that member from contesting the fact that
29 her or his breach, or failure to perform, constitutes a
30 violation of the criminal law; but does not estop the member
31 from establishing that she or he had reasonable cause to
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1 believe that her or his conduct was lawful or had no
2 reasonable cause to believe that her or his conduct was
3 unlawful;
4 b. A transaction from which the member derived an
5 improper personal benefit, either directly or indirectly; or
6 c. Recklessness or any act or omission that was
7 committed in bad faith or with malicious purpose or in a
8 manner exhibiting wanton and willful disregard of human
9 rights, safety, or property. For purposes of this
10 sub-subparagraph, the term "recklessness" means the acting, or
11 omission to act, in conscious disregard of a risk:
12 (I) Known, or so obvious that it should have been
13 known, to the member; and
14 (II) Known to the member, or so obvious that it should
15 have been known, to be so great as to make it highly probable
16 that harm would follow from such act or omission.
17 (t)(p) No insurer shall provide workers' compensation
18 and employer's liability insurance to any person who is
19 delinquent in the payment of premiums, assessments, penalties,
20 or surcharges owed to the plan or to any person who is an
21 affiliated person of a person who is delinquent in the payment
22 of premiums, assessments, penalties, or surcharges owed to the
23 plan. For purposes of this paragraph, the term "affiliated
24 person" of another person means:
25 1. The spouse of such other natural person;
26 2. Any person who directly or indirectly owns or
27 controls, or holds with the power to vote, 5 percent or more
28 of the outstanding voting securities of such other person;
29 3. Any person who directly or indirectly owns 5
30 percent or more of the outstanding voting securities that are
31 directly or indirectly owned or controlled, or held with the
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1 power to vote, by such other person;
2 4. Any person or group of persons who directly or
3 indirectly control, are controlled by, or are under common
4 control with such other person;
5 5. Any officer, director, trustee, partner, owner,
6 manager, joint venturer, or employee, or other person
7 performing duties similar to persons in those positions, of
8 such other persons; or
9 6. Any person who has an officer, director, trustee,
10 partner, or joint venturer in common with such other person.
11 (u)(q) 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 (v) The Office of Insurance Regulation shall perform a
15 comprehensive market conduct examination of the plan
16 periodically to determine compliance with its plan of
17 operation and internal operating policies and procedures.
18 (w) Upon dissolution, the assets of the plan shall be
19 applied first to pay all debts, liabilities, and obligations
20 of the plan, including the establishment of reasonable
21 reserves for any contingent liabilities or obligations, and
22 all remaining assets of the plan shall become property of the
23 state and shall be deposited in the Workers' Compensation
24 Administration Trust Fund. However, dissolution shall not take
25 effect as long as the plan has financial obligations
26 outstanding unless adequate provision has been made for the
27 payment of financial obligations pursuant to the documents
28 authorizing the financial obligations.
29 (6) Each joint underwriting plan or association
30 created under this section is not a state agency, board, or
31 commission. However, for the purposes of s. 199.183(1) only,
24
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1 the joint underwriting plan created under subsection (5) is a
2 political subdivision of the state and is exempt from the
3 corporate income tax.
4 (7) Each joint underwriting plan or association may
5 elect to pay premium taxes on the premiums received on its
6 behalf or may elect to have the member insurers to whom the
7 premiums are allocated pay the premium taxes if the member
8 insurer had written the policy. The joint underwriting plan or
9 association shall notify the member insurers and the
10 Department of Revenue by January 15 of each year of its
11 election for the same year. As used in this paragraph, the
12 term "premiums received" means the consideration for
13 insurance, by whatever name called, but does not include any
14 policy assessment or surcharge received by the joint
15 underwriting association as a result of apportioning losses or
16 deficits of the association pursuant to this section.
17 (8)(6) As used in this section and ss. 215.555 and
18 627.351, the term "collateral protection insurance" means
19 commercial property insurance of which a creditor is the
20 primary beneficiary and policyholder and which protects or
21 covers an interest of the creditor arising out of a credit
22 transaction secured by real or personal property. Initiation
23 of such coverage is triggered by the mortgagor's failure to
24 maintain insurance coverage as required by the mortgage or
25 other lending document. Collateral protection insurance is not
26 residential coverage.
27 (9)(7)(a) The Florida Automobile Joint Underwriting
28 Association created under this section shall be deemed to have
29 appointed its general manager as its agent to receive service
30 of all legal process issued against the association in any
31 civil action or proceeding in this state. Process so served
25
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1 shall be valid and binding upon the insurer.
2 (b) Service of process upon the association's general
3 manager as the association's agent pursuant to such an
4 appointment shall be the sole method of service of process
5 upon the association.
6 Section 2. Section 2 of chapter 2004-266, Laws of
7 Florida, appearing as a footnote to section 627.311, Florida
8 Statutes, is amended to read:
9 Notwithstanding the provisions of ss. 440.50 and
10 440.51, Florida Statutes, subject to the following procedures
11 and approval, the Department of Financial Services may request
12 transfer funds from the Workers' Compensation Administration
13 Trust Fund within the Department of Financial Services to the
14 workers' compensation joint underwriting plan provided in s.
15 627.311(5), Florida Statutes.
16 (1) The department shall establish a contingency
17 reserve within the Workers' Compensation Administration Trust
18 Fund, from which the department is authorized to expend funds
19 as provided in the subsection, in an amount not to exceed $15
20 million to be released only upon the approval of a budget
21 amendment presented to the Legislative Budget Commission. For
22 actuarial deficits projected for policyholders, based on
23 actuarial best estimates, covered in subplan "D" prior to July
24 1, 2004, and upon verification by the Office of Insurance
25 Regulation, the plan is authorized to request and the
26 department is authorized to submit a budget amendment in an
27 amount not to exceed $15 million for the purpose of funding
28 deficits in subplan "D".
29 (2) After the contingency reserve is established,
30 whenever the board determines subplan "D" does not have a
31 sufficient cash basis to meet a 6-month period 3 months of
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1 projected cash needs due to any deficit in subplan "D,"
2 remaining after accessing any policyholder surplus
3 attributable to former subplan C, the board is authorized to
4 request the department to transfer funds from the contingency
5 reserve fund within the Workers' Compensation Administration
6 Trust Fund to the plan in an amount sufficient to fund the
7 difference between the amount available and the amount needed
8 to meet subplan "D"'s projected cash need for the subsequent
9 6-month 3-month period. The board and the office must first
10 certify to the Department of Financial Services that there is
11 not sufficient cash within subplan "D" to meet the projected
12 cash needs in subplan "D" within the subsequent 6-month period
13 3 months. The amount requested for transfer to subplan "D" may
14 not exceed the difference between the amount available within
15 subplan "D" and the amount needed to meet subplan "D"'s
16 projected cash need for the subsequent 6-month 3-month period,
17 as jointly certified by the board and the Office of Insurance
18 Regulation to the Department of Financial Services,
19 attributable to the former subplan "D" policyholders. The
20 Department of Financial Services may submit a budget amendment
21 to request release of funds from the Workers' Compensation
22 Administration Trust Fund, subject to the approval of the
23 Legislative Budget Commission. The board will provide, for
24 review of the Legislative Budget Commission, information on
25 the reasonableness of the plan's administration, including,
26 but not limited to, the plan of operations and costs, claims
27 costs, claims administration costs, overhead costs, claims
28 reserves, and the latest report submitted on administration
29 cost reduction alternatives as required in s.
30 627.311(5)(c)17., Florida Statutes.
31 (3) This section expires July 1, 2011 2007.
27
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1 Section 3. No later than January 1, 2007, the plan
2 shall submit a request to the Internal Revenue Service for a
3 letter ruling or determination on the plan's eligibility as a
4 section 501(c)(3) tax-exempt organization.
5 Section 4. Except as otherwise expressly provided in
6 this act, this act shall take effect July 1, 2006.
7
8
9 ================ T I T L E A M E N D M E N T ===============
10 And the title is amended as follows:
11 Delete everything before the enacting clause
12
13 and insert:
14 A bill to be entitled
15 An act relating to the Florida Workers'
16 Compensation Joint Underwriting Association;
17 amending s. 627.311, F.S.; providing
18 requirements for the joint underwriting plan of
19 insurers which operates as the association;
20 revising the membership of the board of
21 governors that oversees operation of the joint
22 underwriting plan; providing for continuous
23 review of the plan; requiring that the
24 market-assistance plan be periodically reviewed
25 and updated; providing guidelines for
26 procurement of goods and services, including
27 legal services; prohibiting hiring an outside
28 lobbyist; authorizing the use of surplus funds
29 of former plan C; extending the deadline to
30 access contingency reserves; authorizing the
31 board of the association to request a transfer
28
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1 of funds from the Workers' Compensation
2 Administration Trust Fund under certain
3 circumstances; providing that the plan is
4 subject to the same requirements for filing and
5 approval of rating plans as workers'
6 compensation insurers; deleting certain
7 provisions limiting the disapproval of rates by
8 the Office of Insurance Regulation; requiring
9 that excess funds received by the plan be
10 returned to the state; providing applicability
11 of specified statutes regulating ethical
12 standards; requiring annual statements by plan
13 employees that they do not have conflicts of
14 interest; prescribing limits on representing
15 persons or entities before the plan by former
16 senior managers or officers of the plan;
17 prohibiting any part of the plan's income from
18 inuring to the benefit of a private individual;
19 prohibiting employees and board members from
20 accepting expenditures from a lobbyist or a
21 lobbyist's principal; providing applicability;
22 requiring periodic comprehensive market
23 examinations; prescribing disposition of assets
24 of the plan upon dissolution; amending s. 2 of
25 ch. 2004-266, Laws of Florida; extending the
26 period for maintaining the contingency reserve
27 and the period for projecting current cash
28 needs; requiring the plan to submit a request
29 for an Internal Revenue Service letter
30 concerning the plan's eligibility as a
31 tax-exempt organization; providing an effective
29
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