HB 7241

1	A bill to be entitled
2	An act relating to the Florida Workers' Compensation Joint
3	Underwriting Association; amending s. 627.311, F.S.;
4	requiring the joint underwriting plan of insurers to
5	operate as the Florida Workers' Compensation Joint
6	Underwriting Association; revising the membership and
7	duties of the board of governors relating to the operation
8	of the joint underwriting plan; providing for continuous
9	review of the plan; authorizing the Office of Insurance
10	Regulation to withdraw approval of the plan under certain
11	circumstances; requiring the periodic review and update of
12	the market-assistance plan; providing requirements and
13	procedures for procurement of goods and services;
14	prohibiting the retention of certain lobbyist services;
15	providing requirements for legal services; authorizing
16	certain employees to provide lobbyist services;
17	authorizing the use of certain subplan surplus funds;
18	extending the deadline to levy deficit assessments;
19	requiring the board to request the transfer of funds from
20	the Workers' Compensation Administration Trust Fund under
21	certain circumstances; requiring that the plan be subject
22	to certain filing and approval rates and rating plan
23	requirements; deleting certain provisions limiting the
24	disapproval of rates by the Office of Insurance
25	Regulation; requiring that excess funds received by the
26	plan be returned to the state; providing applicability of
27	specified statutes regulating ethical standards; requiring
28	certain disclosure statements for plan employees;
29	prescribing limits on certain representation by former
30	plan employees; prohibiting a private individual's ability
31	to benefit from the plan's income; prohibiting employees
32	and board members from accepting lobbyist expenditures;
33	providing applicability; requiring the Office of Insurance
34	Regulation to perform periodic comprehensive market
35	examinations; prescribing disposition of assets of the
36	plan upon dissolution; providing exemption from the
37	corporate income tax; providing for the payment of premium
38	taxes; amending s. 2 of ch. 2004-266, Laws of Florida;
39	extending the period for maintaining the contingency
40	reserve and projecting current cash needs; requiring the
41	plan to submit a request for an Internal Revenue Service
42	letter determining the plan's eligibility as a tax-exempt
43	organization; providing an effective date.
44
45	Be It Enacted by the Legislature of the State of Florida:
46
47	Section 1.  Subsections (5), (6), and (7) of section
48	627.311, Florida Statutes, are amended to read:
49	627.311  Joint underwriters and joint reinsurers; public
50	records and public meetings exemptions.--
51	(5)(a)  The office shall, after consultation with insurers,
52	approve a joint underwriting plan of insurers which shall
53	operate as the Florida Workers' Compensation Joint Underwriting
54	Association, a nonprofit entity. For the purposes of this
55	subsection, the term "insurer" includes group self-insurance
56	funds authorized by s. 624.4621, commercial self-insurance funds
57	authorized by s. 624.462, assessable mutual insurers authorized
58	under s. 628.6011, and insurers licensed to write workers'
59	compensation and employer's liability insurance in this state.
60	The purpose of the plan is to provide workers' compensation and
61	employer's liability insurance to applicants who are required by
62	law to maintain workers' compensation and employer's liability
63	insurance and who are in good faith entitled to but who are
64	unable to procure such insurance through the voluntary market.
65	Except as provided herein, the plan must have actuarially sound
66	rates that ensure that the plan is self-supporting.
67	(b)  The operation of the plan is subject to the
68	supervision of a 9-member board of governors. Each member
69	described in subparagraph 1., subparagraph 2., subparagraph 3.,
70	or subparagraph 5. shall be appointed by the Financial Services
71	Commission and shall serve at the pleasure of the commission.
72	The board of governors shall be comprised of:
73	1.  Three members appointed by the Financial Services
74	Commission. Each member appointed by the commission shall serve
75	at the pleasure of the commission;
76	1.2.  Two representatives of the 20 domestic insurers, as
77	defined in s. 624.06(1), having the largest voluntary direct
78	premiums written in this state for workers' compensation and
79	employer's liability insurance, which shall be elected by those
80	20 domestic insurers;
81	2.3.  Two representatives of the 20 foreign insurers as
82	defined in s. 624.06(2) having the largest voluntary direct
83	premiums written in this state for workers' compensation and
84	employer's liability insurance, which shall be elected by those
85	20 foreign insurers;
86	3.4.  One representative of person appointed by the largest
87	property and casualty insurance agents' association in this
88	state; and
89	4.5.  The consumer advocate appointed under s. 627.0613 or
90	the consumer advocate's designee; and.
91	5.  Three other persons appointed by the commission.
92
93	Each board member shall be appointed to serve a 4-year term and
94	may be appointed to serve consecutive terms. A vacancy on the
95	board shall be filled in the same manner as the original
96	appointment for the unexpired portion of the term. The Financial
97	Services Commission shall designate a member of the board to
98	serve as chair. No board member shall be an insurer which
99	provides services to the plan or which has an affiliate which
100	provides services to the plan or which is serviced by a service
101	company or third-party administrator which provides services to
102	the plan or which has an affiliate which provides services to
103	the plan. The meetings and records minutes, audits, and
104	procedures of the board of governors and the plan are subject to
105	chapters chapter 119 and 286, unless otherwise exempted by law.
106	(c)  The operation of the plan shall be governed by a plan
107	of operation that is prepared at the direction of the board of
108	governors and approved by order of the office. The plan is
109	subject to continuous review by the office. The office may, by
110	order, withdraw approval of all or part of a plan if the office
111	determines that conditions have changed since approval was
112	granted and that the purposes of the plan require changes in the
113	plan. The plan of operation may be changed at any time by the
114	board of governors or upon request of the office. The plan of
115	operation and all changes thereto are subject to the approval of
116	the office. The plan of operation shall:
117	1.  Authorize the board to engage in the activities
118	necessary to implement this subsection, including, but not
119	limited to, borrowing money.
120	2.  Develop criteria for eligibility for coverage by the
121	plan, including, but not limited to, documented rejection by at
122	least two insurers which reasonably assures that insureds
123	covered under the plan are unable to acquire coverage in the
124	voluntary market.
125	3.  Require notice from the agent to the insured at the
126	time of the application for coverage that the application is for
127	coverage with the plan and that coverage may be available
128	through an insurer, group self-insurers' fund, commercial self-
129	insurance fund, or assessable mutual insurer through another
130	agent at a lower cost.
131	4.  Establish programs to encourage insurers to provide
132	coverage to applicants of the plan in the voluntary market and
133	to insureds of the plan, including, but not limited to:
134	a.  Establishing procedures for an insurer to use in
135	notifying the plan of the insurer's desire to provide coverage
136	to applicants to the plan or existing insureds of the plan and
137	in describing the types of risks in which the insurer is
138	interested. The description of the desired risks must be on a
139	form developed by the plan.
140	b.  Developing forms and procedures that provide an insurer
141	with the information necessary to determine whether the insurer
142	wants to write particular applicants to the plan or insureds of
143	the plan.
144	c.  Developing procedures for notice to the plan and the
145	applicant to the plan or insured of the plan that an insurer
146	will insure the applicant or the insured of the plan, and notice
147	of the cost of the coverage offered; and developing procedures
148	for the selection of an insuring entity by the applicant or
149	insured of the plan.
150	d.  Provide for a market-assistance plan to assist in the
151	placement of employers. All applications for coverage in the
152	plan received 45 days before the effective date for coverage
153	shall be processed through the market-assistance plan. A market-
154	assistance plan specifically designed to serve the needs of
155	small, good policyholders as defined by the board must be
156	reviewed and updated periodically finalized by January 1, 1994.
157	5.  Provide for policy and claims services to the insureds
158	of the plan of the nature and quality provided for insureds in
159	the voluntary market.
160	6.  Provide for the review of applications for coverage
161	with the plan for reasonableness and accuracy, using any
162	available historic information regarding the insured.
163	7.  Provide for procedures for auditing insureds of the
164	plan which are based on reasonable business judgment and are
165	designed to maximize the likelihood that the plan will collect
166	the appropriate premiums.
167	8.  Authorize the plan to terminate the coverage of and
168	refuse future coverage for any insured that submits a fraudulent
169	application to the plan or provides fraudulent or grossly
170	erroneous records to the plan or to any service provider of the
171	plan in conjunction with the activities of the plan.
172	9.  Establish service standards for agents who submit
173	business to the plan.
174	10.  Establish criteria and procedures to prohibit any
175	agent who does not adhere to the established service standards
176	from placing business with the plan or receiving, directly or
177	indirectly, any commissions for business placed with the plan.
178	11.  Provide for the establishment of reasonable safety
179	programs for all insureds in the plan. All insureds of the plan
180	must participate in the safety program.
181	12.  Authorize the plan to terminate the coverage of and
182	refuse future coverage to any insured who fails to pay premiums
183	or surcharges when due; who, at the time of application, is
184	delinquent in payments of workers' compensation or employer's
185	liability insurance premiums or surcharges owed to an insurer,
186	group self-insurers' fund, commercial self-insurance fund, or
187	assessable mutual insurer licensed to write such coverage in
188	this state; or who refuses to substantially comply with any
189	safety programs recommended by the plan.
190	13.  Authorize the board of governors to provide the goods
191	and services required by the plan through staff employed by the
192	plan, through reasonably compensated service providers who
193	contract with the plan to provide services as specified by the
194	board of governors, or through a combination of employees and
195	service providers.
196	a.  The procurement of goods with a value of less than
197	$2,500 shall be carried out using good purchasing practices,
198	such as the receipt of written quotes or written records of
199	telephone quotes. Purchases that equal or exceed $2,500 but are
200	less than or equal to $25,000 may be made by using good
201	purchasing practices, such as receipt of written quotes, written
202	records of telephone quotes, or informal bids, whenever
203	practical. The procurement of goods or services valued over
204	$25,000 are subject to competitive solicitation, except in
205	situations in which the goods or services are provided by a sole
206	source or are deemed an emergency purchase, or the services are
207	exempted from competitive solicitation requirements under s.
208	287.057(5)(f). Justification for the sole-sourcing or emergency
209	procurement must be documented. Contracts for goods or services
210	valued at or over $100,000 are subject to board approval.
211	b.  In determining whether legal services should be
212	provided by staff attorneys or outsourced to private attorneys,
213	the plan shall consider the following factors:
214	(I)  The nature of the attorney services to be provided and
215	the issues involved.
216	(II)  The need for private attorneys rather than staff
217	attorneys, using the criteria provided in sub-subparagraph 13.c.
218	(III)  The criteria by which the plan selected the private
219	attorney or law firm it proposes to employ, using the criteria
220	provided in sub-subparagraph 13.c.
221	(IV)  Competitive fees for similar attorney services.
222	(V)  The plan's analysis estimating the number of hours for
223	attorney services, the costs, the total contract amount, and,
224	when appropriate, a risk or cost-benefit analysis.
225	(VI)  Which partners, associates, paralegals, research
226	associates, or other personnel will be used and how their time
227	will be billed to the plan.
228	(VII)  Any other information that the plan deems
229	appropriate for the proper evaluation of the need for such
230	private attorney services.
231	c.  The plan shall use the following criteria when
232	selecting outside firms for attorney services:
233	(I)  The magnitude or complexity of the case.
234	(II)  The firm's rating and certifications.
235	(III)  The firm's minority status.
236	(IV)  The firm's physical proximity to the case and the
237	plan.
238	(V)  The firm's prior experience with the plan.
239	(VI)  The firm's prior experience with similar cases or
240	issues.
241	(VII)  The firm's billing methodology and proposed rate.
242	(VIII)  The firm's current or past adversarial position or
243	conflict of interest with the plan.
244	(IX)  The firm's willingness to use resources of the plan
245	to minimize costs.
246	d.  The plan may not retain a lobbyist to represent it
247	before the legislative or executive branch. However, full-time
248	employees of the plan may register as lobbyists and represent
249	that employer before the legislative or executive branch.
250	14.  Provide for service standards for service providers,
251	methods of determining adherence to those service standards,
252	incentives and disincentives for service, and procedures for
253	terminating contracts for service providers that fail to adhere
254	to service standards.
255	15.  Provide procedures for selecting service providers and
256	standards for qualification as a service provider that
257	reasonably assure that any service provider selected will
258	continue to operate as an ongoing concern and is capable of
259	providing the specified services in the manner required.
260	16.  Provide for reasonable accounting and data-reporting
261	practices.
262	17.  Provide for annual review of costs associated with the
263	administration and servicing of the policies issued by the plan
264	to determine alternatives by which costs can be reduced.
265	18.  Authorize the acquisition of such excess insurance or
266	reinsurance as is consistent with the purposes of the plan.
267	19.  Provide for an annual report to the office on a date
268	specified by the office and containing such information as the
269	office reasonably requires.
270	20.  Establish multiple rating plans for various
271	classifications of risk which reflect risk of loss, hazard
272	grade, actual losses, size of premium, and compliance with loss
273	control. At least one of such plans must be a preferred-rating
274	plan to accommodate small-premium policyholders with good
275	experience as defined in sub-subparagraph 22.a.
276	21.  Establish agent commission schedules.
277	22.  For employers otherwise eligible for coverage under
278	the plan, establish three tiers of employers meeting the
279	criteria and subject to the rate limitations specified in this
280	subparagraph.
281	a.  Tier One.--
282	(I)  Criteria; rated employers.--An employer that has an
283	experience modification rating shall be included in Tier One if
284	the employer meets all of the following:
285	(A)  The experience modification is below 1.00.
286	(B)  The employer had no lost-time claims subsequent to the
287	applicable experience modification rating period.
288	(C)  The total of the employer's medical-only claims
289	subsequent to the applicable experience modification rating
290	period did not exceed 20 percent of premium.
291	(II)  Criteria; non-rated employers.--An employer that does
292	not have an experience modification rating shall be included in
293	Tier One if the employer meets all of the following:
294	(A)  The employer had no lost-time claims for the 3-year
295	period immediately preceding the inception date or renewal date
296	of the employer's coverage under the plan.
297	(B)  The total of the employer's medical-only claims for
298	the 3-year period immediately preceding the inception date or
299	renewal date of the employer's coverage under the plan did not
300	exceed 20 percent of premium.
301	(C)  The employer has secured workers' compensation
302	coverage for the entire 3-year period immediately preceding the
303	inception date or renewal date of the employer's coverage under
304	the plan.
305	(D)  The employer is able to provide the plan with a loss
306	history generated by the employer's prior workers' compensation
307	insurer, except if the employer is not able to produce a loss
308	history due to the insolvency of an insurer, the receiver shall
309	provide to the plan, upon the request of the employer or the
310	employer's agent, a copy of the employer's loss history from the
311	records of the insolvent insurer if the loss history is
312	contained in records of the insurer which are in the possession
313	of the receiver. If the receiver is unable to produce the loss
314	history, the employer may, in lieu of the loss history, submit
315	an affidavit from the employer and the employer's insurance
316	agent setting forth the loss history.
317	(E)  The employer is not a new business.
318	(III)  Premiums.--The premiums for Tier One insureds shall
319	be set at a premium level 25 percent above the comparable
320	voluntary market premiums until the plan has sufficient
321	experience as determined by the board to establish an
322	actuarially sound rate for Tier One, at which point the board
323	shall, subject to paragraph (e), adjust the rates, if necessary,
324	to produce actuarially sound rates, provided such rate
325	adjustment shall not take effect prior to January 1, 2007.
326	b.  Tier Two.--
327	(I)  Criteria; rated employers.--An employer that has an
328	experience modification rating shall be included in Tier Two if
329	the employer meets all of the following:
330	(A)  The experience modification is equal to or greater
331	than 1.00 but not greater than 1.10.
332	(B)  The employer had no lost-time claims subsequent to the
333	applicable experience modification rating period.
334	(C)  The total of the employer's medical-only claims
335	subsequent to the applicable experience modification rating
336	period did not exceed 20 percent of premium.
337	(II)  Criteria; non-rated employers.--An employer that does
338	not have any experience modification rating shall be included in
339	Tier Two if the employer is a new business. An employer shall be
340	included in Tier Two if the employer has less than 3 years of
341	loss experience in the 3-year period immediately preceding the
342	inception date or renewal date of the employer's coverage under
343	the plan and the employer meets all of the following:
344	(A)  The employer had no lost-time claims for the 3-year
345	period immediately preceding the inception date or renewal date
346	of the employer's coverage under the plan.
347	(B)  The total of the employer's medical-only claims for
348	the 3-year period immediately preceding the inception date or
349	renewal date of the employer's coverage under the plan did not
350	exceed 20 percent of premium.
351	(C)  The employer is able to provide the plan with a loss
352	history generated by the workers' compensation insurer that
353	provided coverage for the portion or portions of such period
354	during which the employer had secured workers' compensation
355	coverage, except if the employer is not able to produce a loss
356	history due to the insolvency of an insurer, the receiver shall
357	provide to the plan, upon the request of the employer or the
358	employer's agent, a copy of the employer's loss history from the
359	records of the insolvent insurer if the loss history is
360	contained in records of the insurer which are in the possession
361	of the receiver. If the receiver is unable to produce the loss
362	history, the employer may, in lieu of the loss history, submit
363	an affidavit from the employer and the employer's insurance
364	agent setting forth the loss history.
365	(III)  Premiums.--The premiums for Tier Two insureds shall
366	be set at a rate level 50 percent above the comparable voluntary
367	market premiums until the plan has sufficient experience as
368	determined by the board to establish an actuarially sound rate
369	for Tier Two, at which point the board shall, subject to
370	paragraph (e), adjust the rates, if necessary, to produce
371	actuarially sound rates, provided such rate adjustment shall not
372	take effect prior to January 1, 2007.
373	c.  Tier Three.--
374	(I)  Eligibility.--An employer shall be included in Tier
375	Three if the employer does not meet the criteria for Tier One or
376	Tier Two.
377	(II)  Rates.--The board shall establish, subject to
378	paragraph (e), and the plan shall charge, actuarially sound
379	rates for Tier Three insureds.
380	23.  For Tier One or Tier Two employers which employ no
381	nonexempt employees or which report payroll which is less than
382	the minimum wage hourly rate for one full-time employee for 1
383	year at 40 hours per week, the plan shall establish actuarially
384	sound premiums, provided, however, that the premiums may not
385	exceed $2,500. These premiums shall be in addition to the fee
386	specified in subparagraph 26. When the plan establishes
387	actuarially sound rates for all employers in Tier One and Tier
388	Two, the premiums for employers referred to in this paragraph
389	are no longer subject to the $2,500 cap.
390	24.  Provide for a depopulation program to reduce the
391	number of insureds in the plan. If an employer insured through
392	the plan is offered coverage from a voluntary market carrier:
393	a.  During the first 30 days of coverage under the plan;
394	b.  Before a policy is issued under the plan;
395	c.  By issuance of a policy upon expiration or cancellation
396	of the policy under the plan; or
397	d.  By assumption of the plan's obligation with respect to
398	an in-force policy, that employer is no longer eligible for
399	coverage through the plan. The premium for risks assumed by the
400	voluntary market carrier must be no greater than the premium the
401	insured would have paid under the plan, and shall be adjusted
402	upon renewal to reflect changes in the plan rates and the tier
403	for which the insured would qualify as of the time of renewal.
404	The insured may be charged such premiums only for the first 3
405	years of coverage in the voluntary market. A premium under this
406	subparagraph is deemed approved and is not an excess premium for
407	purposes of s. 627.171.
408	25.  Require that policies issued and applications must
409	include a notice that the policy could be replaced by a policy
410	issued from a voluntary market carrier and that, if an offer of
411	coverage is obtained from a voluntary market carrier, the
412	policyholder is no longer eligible for coverage through the
413	plan. The notice must also specify that acceptance of coverage
414	under the plan creates a conclusive presumption that the
415	applicant or policyholder is aware of this potential.
416	26.  Require that each application for coverage and each
417	renewal premium be accompanied by a nonrefundable fee of $475 to
418	cover costs of administration and fraud prevention. The board
419	may, with the prior approval of the office, increase the amount
420	of the fee pursuant to a rate filing to reflect increased costs
421	of administration and fraud prevention. The fee is not subject
422	to commission and is fully earned upon commencement of coverage.
423	(d)1.  The funding of the plan shall include premiums as
424	provided in subparagraph (c)22. and assessments as provided in
425	this paragraph.
426	2.a.  If the board determines that a deficit exists in Tier
427	One or Tier Two or that there is any deficit remaining
428	attributable to any of the plan's former subplans and that the
429	deficit cannot be fully funded by using policyholder surplus
430	attributable to former subplan C or, if the surplus in the
431	former subplan C does not fully fund the deficit and the deficit
432	cannot be fully funded by using any remaining funds in the
433	contingency reserve without the use of deficit assessments, the
434	board shall request the office to levy, by order, a deficit
435	assessment against premiums charged to insureds for workers'
436	compensation insurance by insurers as defined in s. 631.904(5).
437	The office shall issue the order after verifying the amount of
438	the deficit. The assessment shall be specified as a percentage
439	of future premium collections, as recommended by the board and
440	approved by the office. The same percentage shall apply to
441	premiums on all workers' compensation policies issued or renewed
442	during the 12-month period beginning on the effective date of
443	the assessment, as specified in the order.
444	b.  With respect to each insurer collecting premiums that
445	are subject to the assessment, the insurer shall collect the
446	assessment at the same time as the insurer collects the premium
447	payment for each policy and shall remit the assessments
448	collected to the plan as provided in the order issued by the
449	office. The office shall verify the accurate and timely
450	collection and remittance of deficit assessments and shall
451	report such information to the board. Each insurer collecting
452	assessments shall provide such information with respect to
453	premiums and collections as may be required by the office to
454	enable the office to monitor and audit compliance with this
455	paragraph.
456	c.  Deficit assessments are not considered part of an
457	insurer's rate, are not premium, and are not subject to the
458	premium tax, to the assessments under ss. 440.49 and 440.51, to
459	the surplus lines tax, to any fees, or to any commissions. The
460	deficit assessment imposed shall become plan funds at the moment
461	of collection and shall not constitute income to the insurer for
462	any purpose, including financial reporting on the insurer's
463	income statement. An insurer is liable for all assessments that
464	the insurer collects and must treat the failure of an insured to
465	pay an assessment as a failure to pay premium. An insurer is not
466	liable for uncollectible assessments.
467	d.  When an insurer is required to return unearned premium,
468	the insurer shall also return any collected assessments
469	attributable to the unearned premium.
470	e.  Deficit assessments as described in this subparagraph
471	shall not be levied after July 1, 2011 2007.
472	3.a.  All policies issued to Tier Three insureds shall be
473	assessable. All Tier Three assessable policies must be clearly
474	identified as assessable by containing, in contrasting color and
475	in not less than 10-point type, the following statement:
476	"This is an assessable policy. If the plan is unable to pay its
477	obligations, policyholders will be required to contribute on a
478	pro rata earned premium basis the money necessary to meet any
479	assessment levied."
480	b.  The board may from time to time assess Tier Three
481	insureds to whom the plan has issued assessable policies for the
482	purpose of funding plan deficits. Any such assessment shall be
483	based upon a reasonable actuarial estimate of the amount of the
484	deficit, taking into account the amount needed to fund medical
485	and indemnity reserves and reserves for incurred but not
486	reported claims, and allowing for general administrative
487	expenses, the cost of levying and collecting the assessment, a
488	reasonable allowance for estimated uncollectible assessments,
489	and allocated and unallocated loss adjustment expenses.
490	c.  Each Tier Three insured's share of a deficit shall be
491	computed by applying to the premium earned on the insured's
492	policy or policies during the period to be covered by the
493	assessment the ratio of the total deficit to the total premiums
494	earned during such period upon all policies subject to the
495	assessment. If one or more Tier Three insureds fail to pay an
496	assessment, the other Tier Three insureds shall be liable on a
497	proportionate basis for additional assessments to fund the
498	deficit. The plan may compromise and settle individual
499	assessment claims without affecting the validity of or amounts
500	due on assessments levied against other insureds. The plan may
501	offer and accept discounted payments for assessments which are
502	promptly paid. The plan may offset the amount of any unpaid
503	assessment against unearned premiums which may otherwise be due
504	to an insured. The plan shall institute legal action when
505	necessary and appropriate to collect the assessment from any
506	insured who fails to pay an assessment when due.
507	d.  The venue of a proceeding to enforce or collect an
508	assessment or to contest the validity or amount of an assessment
509	shall be in the Circuit Court of Leon County.
510	e.  If the board finds that a deficit in Tier Three exists
511	for any period and that an assessment is necessary, the board
512	shall certify to the office the need for an assessment. No
513	sooner than 30 days after the date of such certification, the
514	board shall notify in writing each insured who is to be assessed
515	that an assessment is being levied against the insured, and
516	informing the insured of the amount of the assessment, the
517	period for which the assessment is being levied, and the date by
518	which payment of the assessment is due. The board shall
519	establish a date by which payment of the assessment is due,
520	which shall be no sooner than 30 days nor later than 120 days
521	after the date on which notice of the assessment is mailed to
522	the insured.
523	f.  Whenever the board makes a determination that the plan
524	does not have a sufficient cash basis to meet 6 3 months of
525	projected cash needs due to a deficit in Tier Three, the board
526	may request the department to transfer funds from the Workers'
527	Compensation Administration Trust Fund to the plan in an amount
528	sufficient to fund the difference between the amount available
529	and the amount needed to meet a 6-month 3-month projected cash
530	need as determined by the board and verified by the office,
531	subject to the approval of the Legislative Budget Commission. If
532	the Legislative Budget Commission approves a transfer of funds
533	under this sub-subparagraph, the plan shall report to the
534	Legislature the transfer of funds and the Legislature shall
535	review the plan during the next legislative session or the
536	current legislative session, if the transfer occurs during a
537	legislative session. This sub-subparagraph shall not apply until
538	the plan determines and the office verifies that assessments
539	collected by the plan pursuant to sub-subparagraph b. are
540	insufficient to fund the deficit in Tier Three and to meet 6 3
541	months of projected cash needs.
542	4.  The plan may offer rating, dividend plans, and other
543	plans to encourage loss prevention programs.
544	(e)  For rates and rating plans effective on or after
545	January 1, 2007, the plan shall be subject to the same
546	requirements of this part for the filing and approval of its
547	rates and rating plans as apply to workers' compensation
548	insurers, except as otherwise provided establish and use its
549	rates and rating plans, and the plan may establish and use
550	changes in rating plans at any time, but no more frequently than
551	two times per any rating class for any calendar year. By
552	December 1, 1993, and December 1 of each year thereafter, except
553	as provided in subparagraph (c)22., the board shall establish
554	and use actuarially sound rates for use by the plan to assure
555	that the plan is self-funding while those rates are in effect.
556	Such rates and rating plans must be filed with the office within
557	30 calendar days after their effective dates, and shall be
558	considered a "use and file" filing. Any disapproval by the
559	office must have an effective date that is at least 60 days from
560	the date of disapproval of the rates and rating plan and must
561	have prospective effect only. The plan may not be subject to any
562	order by the office to return to policyholders any portion of
563	the rates disapproved by the office. The office may not
564	disapprove any rates or rating plans unless it demonstrates that
565	such rates and rating plans are excessive, inadequate, or
566	unfairly discriminatory.
567	(f)  No later than June 1 of each year, the plan shall
568	obtain an independent actuarial certification of the results of
569	the operations of the plan for prior years, and shall furnish a
570	copy of the certification to the office. If, after the effective
571	date of the plan, the projected ultimate incurred losses and
572	expenses and dividends for prior years exceed collected
573	premiums, accrued net investment income, and prior assessments
574	for prior years, the certification is subject to review and
575	approval by the office before it becomes final.
576	(g)  Whenever a deficit exists, the plan shall, within 90
577	days, provide the office with a program to eliminate the deficit
578	within a reasonable time. The deficit may be funded through
579	increased premiums charged to insureds of the plan for
580	subsequent years, through the use of policyholder surplus
581	attributable to any year, including policyholder surplus in
582	former subplan C as authorized in subparagraph (d)2., through
583	the use of assessments as provided in subparagraph (d)2., and
584	through assessments on assessable policies as provided in
585	subparagraph (d)3. Policyholders in former subplan C shall not
586	be subject to any assessments.
587	(h)  Any premium or assessments collected by the plan in
588	excess of the amount necessary to fund projected ultimate
589	incurred losses and expenses of the plan and not paid to
590	insureds of the plan in conjunction with loss prevention or
591	dividend programs shall be retained by the plan for future use.
592	Any state funds received by the plan in excess of the amount
593	necessary to fund deficits in subplan D or any tier shall be
594	returned to the state.
595	(i)  The decisions of the board of governors do not
596	constitute final agency action and are not subject to chapter
597	120.
598	(j)  Policies for insureds shall be issued by the plan.
599	(k)  The plan created under this subsection is liable only
600	for payment for losses arising under policies issued by the plan
601	with dates of accidents occurring on or after January 1, 1994.
602	(l)  Plan losses are the sole and exclusive responsibility
603	of the plan, and payment for such losses must be funded in
604	accordance with this subsection and must not come, directly or
605	indirectly, from insurers or any guaranty association for such
606	insurers.
607	(m)  Senior managers and officers, as defined in the plan
608	of operation, and members of the board of governors shall be
609	subject to part III of chapter 112, including, but not limited
610	to, the code of ethics and public disclosure and reporting of
611	financial interests under s. 112.3145. Senior managers,
612	officers, and board members are also required to file such
613	disclosures with the Office of Insurance Regulation. The
614	executive director of the plan or his or her designee shall
615	notify  newly appointed and existing appointed members of the
616	board of governors, senior managers, and officers of their duty
617	to comply with the reporting requirements of part III of chapter
618	112. At least quarterly, the executive director of the plan or
619	his or her designee shall submit to the Commission on Ethics a
620	list of names of the senior managers, officers, and members of
621	the board of governors that are subject to the public disclosure
622	requirements under s. 112.3145 Each joint underwriting plan or
623	association created under this section is not a state agency,
624	board, or commission. However, for the purposes of s. 199.183(1)
625	only, the joint underwriting plan is a political subdivision of
626	the state and is exempt from the corporate income tax.
627	(n)  On or before July 1 of each year, employees of the
628	plan are required to sign and submit a statement to the plan
629	attesting that they do not have a conflict of interest, as
630	defined in part III of chapter 112. As a condition of
631	employment, all prospective employees are required to sign and
632	submit a conflict-of-interest statement to the plan Each joint
633	underwriting plan or association may elect to pay premium taxes
634	on the premiums received on its behalf or may elect to have the
635	member insurers to whom the premiums are allocated pay the
636	premium taxes if the member insurer had written the policy. The
637	joint underwriting plan or association shall notify the member
638	insurers and the Department of Revenue by January 15 of each
639	year of its election for the same year. As used in this
640	paragraph, the term "premiums received" means the consideration
641	for insurance, by whatever name called, but does not include any
642	policy assessment or surcharge received by the joint
643	underwriting association as a result of apportioning losses or
644	deficits of the association pursuant to this section.
645	(o)  Any senior manager or officer of the plan who is
646	employed by the plan as of January 1, 2007, regardless of the
647	date of hire, and who subsequently retires or terminates
648	employment is prohibited from representing another person or
649	entity before the plan for 2 years after retirement or
650	termination of employment from the plan.
651	(p)  No part of the income of the plan may inure to the
652	benefit of any private person.
653	(q)  Notwithstanding ss. 112.3148 and 112.3149 or other
654	provisions of law, an employee or board member may not knowingly
655	accept, directly or indirectly, any expenditure from a lobbyist
656	or his or her principal. An employee or board member that fails
657	to comply with this paragraph is subject to penalties provided
658	under ss. 112.317 and 112.3173.
659	(r)  Nothing contained in this section shall be construed
660	as barring the plan from providing insurance coverage to any
661	employer with whom a former employee of the plan is affiliated
662	or employing or reemploying any former employee of the plan in a
663	part-time, full-time, temporary, or permanent capacity, so long
664	as such employment does not violate any provision of part III of
665	chapter 112.
666	(s)(o)  Neither the plan nor any member of the board of
667	governors is liable for monetary damages to any person for any
668	statement, vote, decision, or failure to act, regarding the
669	management or policies of the plan, unless:
670	1.  The member breached or failed to perform her or his
671	duties as a member; and
672	2.  The member's breach of, or failure to perform, duties
673	constitutes:
674	a.  A violation of the criminal law, unless the member had
675	reasonable cause to believe her or his conduct was not unlawful.
676	A judgment or other final adjudication against a member in any
677	criminal proceeding for violation of the criminal law estops
678	that member from contesting the fact that her or his breach, or
679	failure to perform, constitutes a violation of the criminal law;
680	but does not estop the member from establishing that she or he
681	had reasonable cause to believe that her or his conduct was
682	lawful or had no reasonable cause to believe that her or his
683	conduct was unlawful;
684	b.  A transaction from which the member derived an improper
685	personal benefit, either directly or indirectly; or
686	c.  Recklessness or any act or omission that was committed
687	in bad faith or with malicious purpose or in a manner exhibiting
688	wanton and willful disregard of human rights, safety, or
689	property. For purposes of this sub-subparagraph, the term
690	"recklessness" means the acting, or omission to act, in
691	conscious disregard of a risk:
692	(I)  Known, or so obvious that it should have been known,
693	to the member; and
694	(II)  Known to the member, or so obvious that it should
695	have been known, to be so great as to make it highly probable
696	that harm would follow from such act or omission.
697	(t)(p)  No insurer shall provide workers' compensation and
698	employer's liability insurance to any person who is delinquent
699	in the payment of premiums, assessments, penalties, or
700	surcharges owed to the plan or to any person who is an
701	affiliated person of a person who is delinquent in the payment
702	of premiums, assessments, penalties, or surcharges owed to the
703	plan. For purposes of this paragraph, the term "affiliated
704	person" of another person means:
705	1.  The spouse of such other natural person;
706	2.  Any person who directly or indirectly owns or controls,
707	or holds with the power to vote, 5 percent or more of the
708	outstanding voting securities of such other person;
709	3.  Any person who directly or indirectly owns 5 percent or
710	more of the outstanding voting securities that are directly or
711	indirectly owned or controlled, or held with the power to vote,
712	by such other person;
713	4.  Any person or group of persons who directly or
714	indirectly control, are controlled by, or are under common
715	control with such other person;
716	5.  Any officer, director, trustee, partner, owner,
717	manager, joint venturer, or employee, or other person performing
718	duties similar to persons in those positions, of such other
719	persons; or
720	6.  Any person who has an officer, director, trustee,
721	partner, or joint venturer in common with such other person.
722	(u)(q)  Effective July 1, 2004, the plan is exempt from the
723	premium tax under s. 624.509 and any assessments under ss.
724	440.49 and 440.51.
725	(v)  The Office of Insurance Regulation shall periodically
726	perform a comprehensive market conduct examination of the plan
727	to determine compliance with its plan of operation and internal
728	operating policies and procedures.
729	(w)  Upon dissolution of a plan, the assets of the plan
730	shall be applied first to pay all debts, liabilities, and
731	obligations of the plan, including the establishment of
732	reasonable reserves for any contingent liabilities or
733	obligations, and all remaining assets of the plan shall become
734	property of the state and shall be deposited in the Workers'
735	Compensation Administration Trust Fund. However, dissolution
736	shall not take effect as long as the plan has financial
737	obligations outstanding unless adequate provision has been made
738	for the payment of financial obligations pursuant to the
739	documents authorizing the financial obligations.
740	(6)  Each joint underwriting plan or association created
741	under this section is not a state agency, board, or commission.
742	However, for the purposes of s. 199.183(1) only, the joint
743	underwriting plan created under subsection (5) is a political
744	subdivision of the state and is exempt from the corporate income
745	tax.
746	(7)  Each joint underwriting plan or association may elect
747	to pay premium taxes on the premiums received on its behalf or
748	may elect to have the member insurers to whom the premiums are
749	allocated pay the premium taxes if the member insurer had
750	written the policy. The joint underwriting plan or association
751	shall notify the member insurers and the Department of Revenue
752	by January 15 of each year of its election for the same year. As
753	used in this paragraph, the term "premiums received" means the
754	consideration for insurance, by whatever name called, but does
755	not include any policy assessment or surcharge received by the
756	joint underwriting association as a result of apportioning
757	losses or deficits of the association under this section.
758	(8)(6)  As used in this section and ss. 215.555 and
759	627.351, the term "collateral protection insurance" means
760	commercial property insurance of which a creditor is the primary
761	beneficiary and policyholder and which protects or covers an
762	interest of the creditor arising out of a credit transaction
763	secured by real or personal property. Initiation of such
764	coverage is triggered by the mortgagor's failure to maintain
765	insurance coverage as required by the mortgage or other lending
766	document. Collateral protection insurance is not residential
767	coverage.
768	(9)(7)(a)  The Florida Automobile Joint Underwriting
769	Association created under this section shall be deemed to have
770	appointed its general manager as its agent to receive service of
771	all legal process issued against the association in any civil
772	action or proceeding in this state. Process so served shall be
773	valid and binding upon the insurer.
774	(b)  Service of process upon the association's general
775	manager as the association's agent pursuant to such an
776	appointment shall be the sole method of service of process upon
777	the association.
778	Section 2.  Section 2 of chapter 2004-266, Laws of Florida,
779	is amended to read:
780	Section 2.  Notwithstanding the provisions of ss. 440.50
781	and 440.51, Florida Statutes, subject to the following
782	procedures and approval, the Department of Financial Services
783	may request transfer funds from the Workers' Compensation
784	Administration Trust Fund within the Department of Financial
785	Services to the workers' compensation joint underwriting plan
786	provided in s. 627.311(5), Florida Statutes.
787	(1)  The department shall establish a contingency reserve
788	within the Workers' Compensation Administration Trust Fund, from
789	which the department is authorized to expend funds as provided
790	in the subsection, in an amount not to exceed $15 million to be
791	released only upon the approval of a budget amendment presented
792	to the Legislative Budget Commission. For actuarial deficits
793	projected for policyholders, based on actuarial best estimates,
794	covered in subplan D "D" prior to July 1, 2004, and upon
795	verification by the Office of Insurance Regulation, the plan is
796	authorized to request and the department is authorized to submit
797	a budget amendment in an amount not to exceed $15 million for
798	the purpose of funding deficits in subplan D "D".
799	(2)  After the contingency reserve is established, whenever
800	the board determines subplan D "D" does not have a sufficient
801	cash basis to meet a 6-month period 3 months of projected cash
802	needs due to any deficit in subplan D "D," remaining after
803	accessing any policyholder surplus attributable to former
804	subplan C, the board is authorized to request the department to
805	transfer funds from the contingency reserve fund within the
806	Workers' Compensation Administration Trust Fund to the plan in
807	an amount sufficient to fund the difference between the amount
808	available and the amount needed to meet subplan D's "D"'s
809	projected cash need for the subsequent 6-month 3-month period.
810	The board and the office must first certify to the Department of
811	Financial Services that there is not sufficient cash within
812	subplan D "D" to meet the projected cash needs in subplan D "D"
813	within the subsequent 6-month period 3 months. The amount
814	requested for transfer to subplan D "D" may not exceed the
815	difference between the amount available within subplan D "D" and
816	the amount needed to meet subplan D's "D"'s projected cash need
817	for the subsequent 6-month 3-month period, as jointly certified
818	by the board and the Office of Insurance Regulation to the
819	Department of Financial Services, attributable to the former
820	subplan D "D" policyholders. The Department of Financial
821	Services may submit a budget amendment to request release of
822	funds from the Workers' Compensation Administration Trust Fund,
823	subject to the approval of the Legislative Budget Commission.
824	The board will provide, for review of the Legislative Budget
825	Commission, information on the reasonableness of the plan's
826	administration, including, but not limited to, the plan of
827	operations and costs, claims costs, claims administration costs,
828	overhead costs, claims reserves, and the latest report submitted
829	on administration cost reduction alternatives as required in s.
830	627.311(5)(c)17., Florida Statutes.
831	(3)  This section expires July 1, 2011 2007.
832	Section 3.  No later than January 1, 2007, the workers'
833	compensation joint underwriting plan provided for in s.
834	627.311(5), Florida Statutes, shall submit a request to the
835	Internal Revenue Service for a letter ruling or determination on
836	the plan's eligibility as a tax-exempt organization under s.
837	501(c)(3) of the Internal Revenue Code.
838	Section 4.  This act shall take effect July 1, 2006.

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