| 1 | The Commerce Council recommends the following: |
| 2 |
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| 3 | Council/Committee Substitute |
| 4 | Remove the entire bill and insert: |
| 5 | A bill to be entitled |
| 6 | An act relating to self-insurance funds; amending s. |
| 7 | 624.4622, F.S.; authorizing local government self- |
| 8 | insurance funds to insure or self-insure real or personal |
| 9 | property against loss or damage; amending s. 624.4623, |
| 10 | F.S.; prohibiting requiring participation of independent |
| 11 | educational institution self-insurance funds in or |
| 12 | entitlement to coverage under certain guaranty |
| 13 | associations; creating s. 624.4624, F.S.; authorizing two |
| 14 | or more corporations not for profit to form a self- |
| 15 | insurance fund for certain purposes; providing specific |
| 16 | requirements; providing a definition; providing |
| 17 | limitations; providing for application of certain |
| 18 | provisions to certain premiums, contributions, and |
| 19 | assessments; providing for payment of insurance premium |
| 20 | tax at a reduced rate by corporation not for profit self- |
| 21 | insurance funds; subjecting a corporation not for profit |
| 22 | self-insurance fund to certain group self-insurance fund |
| 23 | provisions under certain circumstances; creating s. |
| 24 | 627.443, F.S.; prohibiting rejecting certain workers' |
| 25 | compensation insurance policies by certain persons on |
| 26 | certain grounds; providing an effective date. |
| 27 |
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| 28 | Be It Enacted by the Legislature of the State of Florida: |
| 29 |
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| 30 | Section 1. Subsection (1) of section 624.4622, Florida |
| 31 | Statutes, is amended to read: |
| 32 | 624.4622 Local government self-insurance funds.-- |
| 33 | (1) Any two or more local governmental entities may enter |
| 34 | into interlocal agreements for the purpose of securing the |
| 35 | payment of benefits under chapter 440, or insuring or self- |
| 36 | insuring real or personal property of every kind and every |
| 37 | interest in such property against loss or damage from any hazard |
| 38 | or cause and against any loss consequential to such loss or |
| 39 | damage, provided the local government self-insurance fund that |
| 40 | is created must: |
| 41 | (a) Have annual normal premiums in excess of $5 million; |
| 42 | (b) Maintain a continuing program of excess insurance |
| 43 | coverage and reserve evaluation to protect the financial |
| 44 | stability of the fund in an amount and manner determined by a |
| 45 | qualified and independent actuary; |
| 46 | (c) Submit annually an audited fiscal year-end financial |
| 47 | statement by an independent certified public accountant within 6 |
| 48 | months after the end of the fiscal year to the office; and |
| 49 | (d) Have a governing body which is comprised entirely of |
| 50 | local elected officials. |
| 51 | Section 2. Subsection (3) is added to section 624.4623, |
| 52 | Florida Statutes, to read: |
| 53 | 624.4623 Independent Educational Institution Self- |
| 54 | Insurance Funds.-- |
| 55 | (3) An independent educational institution self-insurance |
| 56 | fund may not be required to participate in, or be entitled to |
| 57 | coverage under, any guaranty association created pursuant to |
| 58 | part II or part V of chapter 631. |
| 59 | Section 3. Section 624.4624, Florida Statutes, is created |
| 60 | to read: |
| 61 | 624.4624 Corporation not for profit self-insurance |
| 62 | funds.-- |
| 63 | (1) Notwithstanding any other provision of law, any two or |
| 64 | more corporations not for profit located in and organized under |
| 65 | the laws of this state may form a self-insurance fund for the |
| 66 | purpose of pooling and spreading liabilities of its group |
| 67 | members in any one or combination of property or casualty risk |
| 68 | or surety insurance or securing the payment of benefits under |
| 69 | chapter 440, provided the corporation not for profit self- |
| 70 | insurance fund that is created: |
| 71 | (a) Has annual normal premiums in excess of $5 million. |
| 72 | (b) Requires for qualification that each participating |
| 73 | member receive at least 75 percent of its revenues from local, |
| 74 | state, or federal governmental sources or a combination of such |
| 75 | sources. |
| 76 | (c) Uses a qualified actuary to determine rates using |
| 77 | accepted actuarial principles and annually submits to the office |
| 78 | a certification by the actuary that the rates are actuarially |
| 79 | sound and are not inadequate, as defined in s. 627.062. |
| 80 | (d) Uses a qualified actuary to establish reserves for |
| 81 | loss and loss adjustment expenses and annually submits to the |
| 82 | office a certification by the actuary that the loss and loss |
| 83 | adjustment expense reserves are adequate. If the actuary |
| 84 | determines that reserves are not adequate, the fund shall file |
| 85 | with the office a remedial plan for increasing the reserves or |
| 86 | otherwise addressing the financial condition of the fund, |
| 87 | subject to a determination by the office that the fund will |
| 88 | operate on an actuarially sound basis and the fund does not pose |
| 89 | a significant risk of insolvency. |
| 90 | (e) Maintains a continuing program of excess insurance |
| 91 | coverage and reserve evaluation to protect the financial |
| 92 | stability of the fund in an amount and manner determined by a |
| 93 | qualified actuary. At a minimum, this program must: |
| 94 | 1. Purchase excess insurance from authorized insurance |
| 95 | carriers. |
| 96 | 2. Retain a per-loss occurrence that does not exceed |
| 97 | $350,000. |
| 98 | (f) Submits to the office annually an audited fiscal year- |
| 99 | end financial statement by an independent certified public |
| 100 | accountant within 6 months after the end of the fiscal year. |
| 101 | (g) Has a governing body that is comprised entirely of |
| 102 | officials from corporations not for profit that are members of |
| 103 | the corporation not for profit self-insurance fund. |
| 104 | (h) Uses knowledgeable persons or business entities to |
| 105 | administer or service the fund in the areas of claims |
| 106 | administration, claims adjusting, underwriting, risk management, |
| 107 | loss control, policy administration, financial audit, and legal |
| 108 | areas. Such persons must meet all applicable requirements of law |
| 109 | for state licensure and must have at least 5 years' experience |
| 110 | with commercial self-insurance funds formed under s. 624.462, |
| 111 | self-insurance funds formed under s. 624.4622, or domestic |
| 112 | insurers. |
| 113 | (i) Submits to the office copies of contracts used for its |
| 114 | members which clearly establish the liability of each member for |
| 115 | the obligations of the fund. |
| 116 | (j) Annually submits to the office a certification by the |
| 117 | governing body of the fund that, to the best of its knowledge, |
| 118 | the requirements of this section are met. |
| 119 | (2) As used in this section, the term "qualified actuary" |
| 120 | means an actuary that is a member of the Casualty Actuarial |
| 121 | Society or the American Academy of Actuaries. |
| 122 | (3) A corporation not for profit self-insurance fund that |
| 123 | meets the requirements of this section is not: |
| 124 | (a) An insurer for purposes of participation in or |
| 125 | coverage by any insurance guaranty association established by |
| 126 | chapter 631; or |
| 127 | (b) Subject to s. 624.4621 and is not required to file any |
| 128 | report with the department under s. 440.38(2)(b) which is |
| 129 | uniquely required of group self-insurer funds qualified under s. |
| 130 | 624.4621. |
| 131 | (4) Premiums, contributions, and assessments received by a |
| 132 | corporation not for profit self-insurance fund are subject to |
| 133 | ss. 624.509(1) and (2) and 624.5092, except that the tax rate |
| 134 | shall be 1.6 percent of the gross amount of such premiums, |
| 135 | contributions, and assessments. |
| 136 | (5) If any of the requirements of subsection (1) are not |
| 137 | met, a corporation not for profit self-insurance fund is subject |
| 138 | to the requirements of s. 624.4621 if the fund provides only |
| 139 | workers' compensation coverage or is subject to the requirements |
| 140 | of ss. 624.460-624.488 if the fund provides coverage for other |
| 141 | property, casualty, or surety risks. |
| 142 | Section 4. Section 627.443, Florida Statutes, is created |
| 143 | to read: |
| 144 | 627.443 Workers' compensation insurance policy |
| 145 | limitation.--Notwithstanding any other provision in this |
| 146 | chapter, a workers' compensation insurance policy issued by a |
| 147 | self-insurance fund that is subject to part V of chapter 631 may |
| 148 | not be rejected by any person requiring a workers' compensation |
| 149 | insurance policy pursuant to a construction contract, if such |
| 150 | rejection is because the self-insurance fund is not rated by a |
| 151 | nationally-recognized insurance rating service. |
| 152 | Section 5. This act shall take effect July 1, 2006. |