Florida Senate - 2007 COMMITTEE AMENDMENT
Bill No. CS for CS for SB 1894
Barcode 672340
CHAMBER ACTION
Senate House
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04/13/2007 10:12 AM .
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11 The Committee on General Government Appropriations (Lawson)
12 recommended the following amendment:
13
14 Senate Amendment (with title amendment)
15 Delete everything after the enacting clause
16
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, Inc., a nonprofit entity. For the
26 purposes 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 who, which
21 shall be appointed by the commission from a list of five
22 nominees for each vacancy submitted elected by those 20
23 domestic insurers. The commission may reject all of the
24 nominees recommended for a position and request that the
25 insurers submit a new list of five different recommended
26 nominees for the position who have not previously been
27 recommended by the insurers;
28 2.3. Two representatives of the 20 foreign insurers as
29 defined in s. 624.06(2) having the largest voluntary direct
30 premiums written in this state for workers' compensation and
31 employer's liability insurance who, which shall be appointed
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1 by the commission from a list of five nominees for each
2 vacancy submitted elected by those 20 foreign insurers. The
3 commission may reject all of the nominees recommended for a
4 position and request that the insurers submit a new list of
5 five different recommended nominees for the position who have
6 not previously been recommended by the insurers;
7 3.4. One representative of person appointed by the
8 largest property and casualty insurance agents' association in
9 this state who shall be appointed by the commission from a
10 list of five nominees for each vacancy submitted by the
11 association. The commission may reject all of the nominees
12 recommended for a position and request that the association
13 submit a new list of five different recommended nominees for
14 the position who have not previously been recommended by the
15 association; and
16 4.5. The consumer advocate appointed under s. 627.0613
17 or the consumer advocate's designee; and.
18 5. Three other persons appointed by the commission.
19
20 Each board member shall be appointed to serve a 4-year term
21 and may be appointed to serve consecutive terms. A vacancy on
22 the board shall be filled in the same manner as the original
23 appointment for the unexpired portion of the term. The
24 Financial Services Commission shall designate a member of the
25 board to serve as chair. No board member shall be an insurer
26 which provides services to the plan or which has an affiliate
27 which provides services to the plan or which is serviced by a
28 service company or third-party administrator which provides
29 services to the plan or which has an affiliate which provides
30 services to the plan. The meetings and records minutes,
31 audits, and procedures of the board of governors and plan are
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1 subject to chapters chapter 119 and 286, unless otherwise
2 exempted by law.
3 (c) The operation of the plan shall be governed by a
4 plan of operation that is prepared at the direction of the
5 board of governors and approved by order of the office. The
6 plan is subject to continuous review by the office. The office
7 may, by order, withdraw approval of all or part of a plan if
8 the office determines that conditions have changed since
9 approval was granted and that the purposes of the plan require
10 changes in the plan. The plan of operation may be changed at
11 any time by the board of governors or upon request of the
12 office. The plan of operation and all changes thereto are
13 subject to the approval of the office. The plan of operation
14 shall:
15 1. Authorize the board to engage in the activities
16 necessary to implement this subsection, including, but not
17 limited to, borrowing money.
18 2. Develop criteria for eligibility for coverage by
19 the plan, including, but not limited to, documented rejection
20 by at least two insurers which reasonably assures that
21 insureds covered under the plan are unable to acquire coverage
22 in the voluntary market.
23 3. Require notice from the agent to the insured at the
24 time of the application for coverage that the application is
25 for coverage with the plan and that coverage may be available
26 through an insurer, group self-insurers' fund, commercial
27 self-insurance fund, or assessable mutual insurer through
28 another agent at a lower cost.
29 4. Establish programs to encourage insurers to provide
30 coverage to applicants of the plan in the voluntary market and
31 to insureds of the plan, including, but not limited to:
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1 a. Establishing procedures for an insurer to use in
2 notifying the plan of the insurer's desire to provide coverage
3 to applicants to the plan or existing insureds of the plan and
4 in describing the types of risks in which the insurer is
5 interested. The description of the desired risks must be on a
6 form developed by the plan.
7 b. Developing forms and procedures that provide an
8 insurer with the information necessary to determine whether
9 the insurer wants to write particular applicants to the plan
10 or insureds of the plan.
11 c. Developing procedures for notice to the plan and
12 the applicant to the plan or insured of the plan that an
13 insurer will insure the applicant or the insured of the plan,
14 and notice of the cost of the coverage offered; and developing
15 procedures for the selection of an insuring entity by the
16 applicant or insured of the plan.
17 d. Provide for a market-assistance plan to assist in
18 the placement of employers. All applications for coverage in
19 the plan received 45 days before the effective date for
20 coverage shall be processed through the market-assistance
21 plan. A market-assistance plan specifically designed to serve
22 the needs of small, good policyholders as defined by the board
23 must be reviewed and updated periodically finalized by January
24 1, 1994.
25 5. Provide for policy and claims services to the
26 insureds of the plan of the nature and quality provided for
27 insureds in the voluntary market.
28 6. Provide for the review of applications for coverage
29 with the plan for reasonableness and accuracy, using any
30 available historic information regarding the insured.
31 7. Provide for procedures for auditing insureds of the
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1 plan which are based on reasonable business judgment and are
2 designed to maximize the likelihood that the plan will collect
3 the appropriate premiums.
4 8. Authorize the plan to terminate the coverage of and
5 refuse future coverage for any insured that submits a
6 fraudulent application to the plan or provides fraudulent or
7 grossly erroneous records to the plan or to any service
8 provider of the plan in conjunction with the activities of the
9 plan.
10 9. Establish service standards for agents who submit
11 business to the plan.
12 10. Establish criteria and procedures to prohibit any
13 agent who does not adhere to the established service standards
14 from placing business with the plan or receiving, directly or
15 indirectly, any commissions for business placed with the plan.
16 11. Provide for the establishment of reasonable safety
17 programs for all insureds in the plan. All insureds of the
18 plan must participate in the safety program.
19 12. Authorize the plan to terminate the coverage of
20 and refuse future coverage to any insured who fails to pay
21 premiums or surcharges when due; who, at the time of
22 application, is delinquent in payments of workers'
23 compensation or employer's liability insurance premiums or
24 surcharges owed to an insurer, group self-insurers' fund,
25 commercial self-insurance fund, or assessable mutual insurer
26 licensed to write such coverage in this state; or who refuses
27 to substantially comply with any safety programs recommended
28 by the plan.
29 13. Authorize the board of governors to provide the
30 goods and services required by the plan through staff employed
31 by the plan, through reasonably compensated service providers
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1 who contract with the plan to provide services as specified by
2 the board of governors, or through a combination of employees
3 and service providers.
4 a. Purchases that equal or exceed $2,500 but are less
5 than or equal to $25,000, shall be made by receipt of written
6 quotes, telephone quotes, or informal bids, whenever
7 practical. The procurement of goods or services valued over
8 $25,000 are subject to competitive solicitation, except in
9 situations in which the goods or services are provided by a
10 sole source or are deemed an emergency purchase, or the
11 services are exempted from competitive-solicitation
12 requirements under s. 287.057(5)(f). Justification for the
13 sole-sourcing or emergency procurement must be documented.
14 Contracts for goods or services valued at or over $100,000 are
15 subject to board approval.
16 b. The board shall determine whether it is more
17 cost-effective and in the best interests of the plan to use
18 legal services provided by in-house attorneys employed by the
19 plan rather than contracting with outside counsel. In making
20 such determination, the board shall document its findings and
21 shall consider the expertise needed; whether time commitments
22 exceed in-house staff resources; whether local representation
23 is needed; the travel, lodging, and other costs associated
24 with in-house representation; and such other factors that the
25 board determines are relevant.
26 14. Provide for service standards for service
27 providers, methods of determining adherence to those service
28 standards, incentives and disincentives for service, and
29 procedures for terminating contracts for service providers
30 that fail to adhere to service standards.
31 15. Provide procedures for selecting service providers
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1 and standards for qualification as a service provider that
2 reasonably assure that any service provider selected will
3 continue to operate as an ongoing concern and is capable of
4 providing the specified services in the manner required.
5 16. Provide for reasonable accounting and
6 data-reporting practices.
7 17. Provide for annual review of costs associated with
8 the administration and servicing of the policies issued by the
9 plan to determine alternatives by which costs can be reduced.
10 18. Authorize the acquisition of such excess insurance
11 or reinsurance as is consistent with the purposes of the plan.
12 19. Provide for an annual report to the office on a
13 date specified by the office and containing such information
14 as the office reasonably requires.
15 20. Establish multiple rating plans for various
16 classifications of risk which reflect risk of loss, hazard
17 grade, actual losses, size of premium, and compliance with
18 loss control. At least one of such plans must be a
19 preferred-rating plan to accommodate small-premium
20 policyholders with good experience as defined in
21 sub-subparagraph 22.a.
22 21. Establish agent commission schedules.
23 22. For employers otherwise eligible for coverage
24 under the plan, establish three tiers of employers meeting the
25 criteria and subject to the rate limitations specified in this
26 subparagraph.
27 a. Tier One.--
28 (I) Criteria; rated employers.--An employer that has
29 an experience modification rating shall be included in Tier
30 One if the employer meets all of the following:
31 (A) The experience modification is below 1.00.
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1 (B) The employer had no lost-time claims subsequent to
2 the applicable experience modification rating period.
3 (C) The total of the employer's medical-only claims
4 subsequent to the applicable experience modification rating
5 period did not exceed 20 percent of premium.
6 (II) Criteria; non-rated employers.--An employer that
7 does not have an experience modification rating shall be
8 included in Tier One if the employer meets all of the
9 following:
10 (A) The employer had no lost-time claims for the
11 3-year period immediately preceding the inception date or
12 renewal date of the employer's coverage under the plan.
13 (B) The total of the employer's medical-only claims
14 for the 3-year period immediately preceding the inception date
15 or renewal date of the employer's coverage under the plan did
16 not exceed 20 percent of premium.
17 (C) The employer has secured workers' compensation
18 coverage for the entire 3-year period immediately preceding
19 the inception date or renewal date of the employer's coverage
20 under the plan.
21 (D) The employer is able to provide the plan with a
22 loss history generated by the employer's prior workers'
23 compensation insurer, except if the employer is not able to
24 produce a loss history due to the insolvency of an insurer,
25 the receiver shall provide to the plan, upon the request of
26 the employer or the employer's agent, a copy of the employer's
27 loss history from the records of the insolvent insurer if the
28 loss history is contained in records of the insurer which are
29 in the possession of the receiver. If the receiver is unable
30 to produce the loss history, the employer may, in lieu of the
31 loss history, submit an affidavit from the employer and the
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1 employer's insurance agent setting forth the loss history.
2 (E) The employer is not a new business.
3 (III) Premiums.--The premiums for Tier One insureds
4 shall be set at a premium level 25 percent above the
5 comparable voluntary market premiums until the plan has
6 sufficient experience as determined by the board to establish
7 an actuarially sound rate for Tier One, at which point the
8 board shall, subject to paragraph (e), adjust the rates, if
9 necessary, to produce actuarially sound rates, provided such
10 rate adjustment shall not take effect prior to January 1,
11 2007.
12 b. Tier Two.--
13 (I) Criteria; rated employers.--An employer that has
14 an experience modification rating shall be included in Tier
15 Two if the employer meets all of the following:
16 (A) The experience modification is equal to or greater
17 than 1.00 but not greater than 1.10.
18 (B) The employer had no lost-time claims subsequent to
19 the applicable experience modification rating period.
20 (C) The total of the employer's medical-only claims
21 subsequent to the applicable experience modification rating
22 period did not exceed 20 percent of premium.
23 (II) Criteria; non-rated employers.--An employer that
24 does not have any experience modification rating shall be
25 included in Tier Two if the employer is a new business. An
26 employer shall be included in Tier Two if the employer has
27 less than 3 years of loss experience in the 3-year period
28 immediately preceding the inception date or renewal date of
29 the employer's coverage under the plan and the employer meets
30 all of the following:
31 (A) The employer had no lost-time claims for the
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1 3-year period immediately preceding the inception date or
2 renewal date of the employer's coverage under the plan.
3 (B) The total of the employer's medical-only claims
4 for the 3-year period immediately preceding the inception date
5 or renewal date of the employer's coverage under the plan did
6 not exceed 20 percent of premium.
7 (C) The employer is able to provide the plan with a
8 loss history generated by the workers' compensation insurer
9 that provided coverage for the portion or portions of such
10 period during which the employer had secured workers'
11 compensation coverage, except if the employer is not able to
12 produce a loss history due to the insolvency of an insurer,
13 the receiver shall provide to the plan, upon the request of
14 the employer or the employer's agent, a copy of the employer's
15 loss history from the records of the insolvent insurer if the
16 loss history is contained in records of the insurer which are
17 in the possession of the receiver. If the receiver is unable
18 to produce the loss history, the employer may, in lieu of the
19 loss history, submit an affidavit from the employer and the
20 employer's insurance agent setting forth the loss history.
21 (III) Premiums.--The premiums for Tier Two insureds
22 shall be set at a rate level 50 percent above the comparable
23 voluntary market premiums until the plan has sufficient
24 experience as determined by the board to establish an
25 actuarially sound rate for Tier Two, at which point the board
26 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 c. Tier Three.--
31 (I) Eligibility.--An employer shall be included in
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1 Tier Three if the employer does not meet the criteria for Tier
2 One or Tier Two.
3 (II) Rates.--The board shall establish, subject to
4 paragraph (e), and the plan shall charge, actuarially sound
5 rates for Tier Three insureds.
6 23. For Tier One or Tier Two employers which employ no
7 nonexempt employees or which report payroll which is less than
8 the minimum wage hourly rate for one full-time employee for 1
9 year at 40 hours per week, the plan shall establish
10 actuarially sound premiums, provided, however, that the
11 premiums may not exceed $2,500. These premiums shall be in
12 addition to the fee specified in subparagraph 26. When the
13 plan establishes actuarially sound rates for all employers in
14 Tier One and Tier Two, the premiums for employers referred to
15 in this paragraph are no longer subject to the $2,500 cap.
16 24. Provide for a depopulation program to reduce the
17 number of insureds in the plan. If an employer insured through
18 the plan is offered coverage from a voluntary market carrier:
19 a. During the first 30 days of coverage under the
20 plan;
21 b. Before a policy is issued under the plan;
22 c. By issuance of a policy upon expiration or
23 cancellation of the policy under the plan; or
24 d. By assumption of the plan's obligation with respect
25 to an in-force policy,
26
27 that employer is no longer eligible for coverage through the
28 plan. The premium for risks assumed by the voluntary market
29 carrier must be no greater than the premium the insured would
30 have paid under the plan, and shall be adjusted upon renewal
31 to reflect changes in the plan rates and the tier for which
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1 the insured would qualify as of the time of renewal. The
2 insured may be charged such premiums only for the first 3
3 years of coverage in the voluntary market. A premium under
4 this subparagraph is deemed approved and is not an excess
5 premium for purposes of s. 627.171.
6 25. Require that policies issued and applications must
7 include a notice that the policy could be replaced by a policy
8 issued from a voluntary market carrier and that, if an offer
9 of coverage is obtained from a voluntary market carrier, the
10 policyholder is no longer eligible for coverage through the
11 plan. The notice must also specify that acceptance of coverage
12 under the plan creates a conclusive presumption that the
13 applicant or policyholder is aware of this potential.
14 26. Require that each application for coverage and
15 each renewal premium be accompanied by a nonrefundable fee of
16 $475 to cover costs of administration and fraud prevention.
17 The board may, with the prior approval of the office, increase
18 the amount of the fee pursuant to a rate filing to reflect
19 increased costs of administration and fraud prevention. The
20 fee is not subject to commission and is fully earned upon
21 commencement of coverage.
22 (d)1. The funding of the plan shall include premiums
23 as provided in subparagraph (c)22. and assessments as provided
24 in this paragraph.
25 2.a. If the board determines that a deficit exists in
26 Tier One or Tier Two or that there is any deficit remaining
27 attributable to any of the plan's former subplans and that the
28 deficit cannot be fully funded by using policyholder surplus
29 attributable to former subplan C or, if the surplus in the
30 former subplan C does not fully fund the deficit without the
31 use of deficit assessments, the board shall request the office
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1 to levy, by order, a deficit assessment against premiums
2 charged to insureds for workers' compensation insurance by
3 insurers as defined in s. 631.904(5). The office shall issue
4 the order after verifying the amount of the deficit. The
5 assessment shall be specified as a percentage of future
6 premium collections, as recommended by the board and approved
7 by the office. The same percentage shall apply to premiums on
8 all workers' compensation policies issued or renewed during
9 the 12-month period beginning on the effective date of the
10 assessment, as specified in the order.
11 b. With respect to each insurer collecting premiums
12 that are subject to the assessment, the insurer shall collect
13 the assessment at the same time as the insurer collects the
14 premium payment for each policy and shall remit the
15 assessments collected to the plan as provided in the order
16 issued by the office. The office shall verify the accurate and
17 timely collection and remittance of deficit assessments and
18 shall report such information to the board. Each insurer
19 collecting assessments shall provide such information with
20 respect to premiums and collections as may be required by the
21 office to enable the office to monitor and audit compliance
22 with this paragraph.
23 c. Deficit assessments are not considered part of an
24 insurer's rate, are not premium, and are not subject to the
25 premium tax, to the assessments under ss. 440.49 and 440.51,
26 to the surplus lines tax, to any fees, or to any commissions.
27 The deficit assessment imposed shall become plan funds at the
28 moment of collection and shall not constitute income to the
29 insurer for any purpose, including financial reporting on the
30 insurer's income statement. An insurer is liable for all
31 assessments that the insurer collects and must treat the
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1 failure of an insured to pay an assessment as a failure to pay
2 premium. An insurer is not liable for uncollectible
3 assessments.
4 d. When an insurer is required to return unearned
5 premium, the insurer shall also return any collected
6 assessments attributable to the unearned premium.
7 e. Deficit assessments as described in this
8 subparagraph shall not be levied after July 1, 2012 2007.
9 3.a. All policies issued to Tier Three insureds shall
10 be assessable. All Tier Three assessable policies must be
11 clearly identified as assessable by containing, in contrasting
12 color and in not less than 10-point type, the following
13 statement:
14
15 "This is an assessable policy. If the plan is
16 unable to pay its obligations, policyholders
17 will be required to contribute on a pro rata
18 earned premium basis the money necessary to
19 meet any assessment levied."
20
21 b. The board may from time to time assess Tier Three
22 insureds to whom the plan has issued assessable policies for
23 the purpose of funding plan deficits. Any such assessment
24 shall be based upon a reasonable actuarial estimate of the
25 amount of the deficit, taking into account the amount needed
26 to fund medical and indemnity reserves and reserves for
27 incurred but not reported claims, and allowing for general
28 administrative expenses, the cost of levying and collecting
29 the assessment, a reasonable allowance for estimated
30 uncollectible assessments, and allocated and unallocated loss
31 adjustment expenses.
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1 c. Each Tier Three insured's share of a deficit shall
2 be computed by applying to the premium earned on the insured's
3 policy or policies during the period to be covered by the
4 assessment the ratio of the total deficit to the total
5 premiums earned during such period upon all policies subject
6 to the assessment. If one or more Tier Three insureds fail to
7 pay an assessment, the other Tier Three insureds shall be
8 liable on a proportionate basis for additional assessments to
9 fund the deficit. The plan may compromise and settle
10 individual assessment claims without affecting the validity of
11 or amounts due on assessments levied against other insureds.
12 The plan may offer and accept discounted payments for
13 assessments which are promptly paid. The plan may offset the
14 amount of any unpaid assessment against unearned premiums
15 which may otherwise be due to an insured. The plan shall
16 institute legal action when necessary and appropriate to
17 collect the assessment from any insured who fails to pay an
18 assessment when due.
19 d. The venue of a proceeding to enforce or collect an
20 assessment or to contest the validity or amount of an
21 assessment shall be in the Circuit Court of Leon County.
22 e. If the board finds that a deficit in Tier Three
23 exists for any period and that an assessment is necessary, the
24 board shall certify to the office the need for an assessment.
25 No sooner than 30 days after the date of such certification,
26 the board shall notify in writing each insured who is to be
27 assessed that an assessment is being levied against the
28 insured, and informing the insured of the amount of the
29 assessment, the period for which the assessment is being
30 levied, and the date by which payment of the assessment is
31 due. The board shall establish a date by which payment of the
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1 assessment is due, which shall be no sooner than 30 days nor
2 later than 120 days after the date on which notice of the
3 assessment is mailed to the insured.
4 f. Whenever the board makes a determination that the
5 plan does not have a sufficient cash basis to meet 6 3 months
6 of projected cash needs due to a deficit in Tier Three, the
7 board may request the department to transfer funds from the
8 Workers' Compensation Administration Trust Fund to the plan in
9 an amount sufficient to fund the difference between the amount
10 available and the amount needed to meet a 6-month 3-month
11 projected cash need as determined by the board and verified by
12 the office, subject to the approval of the Legislative Budget
13 Commission. If the Legislative Budget Commission approves a
14 transfer of funds under this sub-subparagraph, the plan shall
15 report to the Legislature the transfer of funds and the
16 Legislature shall review the plan during the next legislative
17 session or the current legislative session, if the transfer
18 occurs during a legislative session. This sub-subparagraph
19 shall not apply until the plan determines and the office
20 verifies that assessments collected by the plan pursuant to
21 sub-subparagraph b. are insufficient to fund the deficit in
22 Tier Three and to meet 6 3 months of projected cash needs.
23 4. The plan may offer rating, dividend plans, and
24 other plans to encourage loss prevention programs.
25 (e) For rates and rating plans effective on or after
26 January 1, 2008, the plan shall establish and use its rates
27 and rating plans, and the plan may establish and use changes
28 in rating plans at any time, but no more frequently than two
29 times per any rating class for any calendar year. By December
30 1, 1993, and December 1 of each year thereafter, except as
31 provided in subparagraph (c)22., the board shall establish and
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1 use actuarially sound rates for use by the plan to assure that
2 the plan is self-funding while those rates are in effect. Such
3 rates and rating plans must be filed with the office within 30
4 calendar days after their effective dates, and shall be
5 considered a "use and file" filing. Any disapproval by the
6 office must have an effective date that is at least 60 days
7 from the date of disapproval of the rates and rating plan and
8 must have prospective effect only. The plan shall may not be
9 subject to any order by the office to return to policyholders
10 any portion of the rates disapproved by the office. The office
11 may not disapprove any rates or rating plans unless it
12 demonstrates that such rates and rating plans are excessive,
13 inadequate, or unfairly discriminatory.
14 (f) No later than June 1 of each year, the plan shall
15 obtain an independent actuarial certification of the results
16 of the operations of the plan for prior years, and shall
17 furnish a copy of the certification to the office. If, after
18 the effective date of the plan, the projected ultimate
19 incurred losses and expenses and dividends for prior years
20 exceed collected premiums, accrued net investment income, and
21 prior assessments for prior years, the certification is
22 subject to review and approval by the office before it becomes
23 final.
24 (g) Whenever a deficit exists, the plan shall, within
25 90 days, provide the office with a program to eliminate the
26 deficit within a reasonable time. The deficit may be funded
27 through increased premiums charged to insureds of the plan for
28 subsequent years, through the use of policyholder surplus
29 attributable to any year, including policyholder surplus in
30 former subplan C as authorized in subparagraph (d)2., through
31 the use of assessments as provided in subparagraph (d)2., and
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1 through assessments on assessable policies as provided in
2 subparagraph (d)3. Any entity that was a policyholder of
3 former subplan C is not subject to any assessments that are
4 attributable to deficits in former subplan C.
5 (h) Any premium or assessments collected by the plan
6 in excess of the amount necessary to fund projected ultimate
7 incurred losses and expenses of the plan and not paid to
8 insureds of the plan in conjunction with loss prevention or
9 dividend programs shall be retained by the plan for future
10 use. Any state funds received by the plan in excess of the
11 amount necessary to fund deficits in subplan D or any tier
12 shall be returned to the state.
13 (i) The decisions of the board of governors do not
14 constitute final agency action and are not subject to chapter
15 120.
16 (j) Policies for insureds shall be issued by the plan.
17 (k) The plan created under this subsection is liable
18 only for payment for losses arising under policies issued by
19 the plan with dates of accidents occurring on or after January
20 1, 1994.
21 (l) Plan losses are the sole and exclusive
22 responsibility of the plan, and payment for such losses must
23 be funded in accordance with this subsection and must not
24 come, directly or indirectly, from insurers or any guaranty
25 association for such insurers.
26 (m) Senior managers and officers, as defined in the
27 plan of operation, and members of the board of governors are
28 subject to the provisions of ss. 112.313, 112.3135, 112.3143,
29 112.3145, 112.316, and 112.317. Senior managers, officers, and
30 board members are also required to file such disclosures with
31 the Commission on Ethics and the Office of Insurance
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1 Regulation. The executive director of the plan or his or her
2 designee shall notify each newly appointed and existing
3 appointed member of the board of governors, senior manager,
4 and officer of their duty to comply with the reporting
5 requirements of s. 112.345. At least quarterly, the executive
6 director of the plan or his or her designee shall submit to
7 the Commission on Ethics a list of names of the senior
8 managers, officers, and members of the board of governors who
9 are subject to the public disclosure requirements under s.
10 112.3145. Notwithstanding s. 112.313, if a member of the board
11 of governors has been appointed by his or her appointing
12 officer because of demonstrated expertise in insurance, such
13 member may be an employee, officer, owner, or director of an
14 insurance agency or insurance company or other insurance
15 entity that has a contractual relationship with the
16 corporation. Notwithstanding s. 112.3143, such board member
17 may not participate in and vote on a matter if the insurance
18 entity would obtain a special or unique benefit that would not
19 apply to other similar insurance entities that have a
20 contractual relationship with the plan. Each joint
21 underwriting plan or association created under this section is
22 not a state agency, board, or commission. However, for the
23 purposes of s. 199.183(1) only, the joint underwriting plan is
24 a political subdivision of the state and is exempt from the
25 corporate income tax.
26 (n) On or before July 1 of each year, employees of the
27 plan shall sign and submit a statement to the plan attesting
28 that they do not have a conflict of interest as defined in
29 part III of chapter 112. As a condition of employment, all
30 prospective employees shall sign and submit a
31 conflict-of-interest statement to the plan. Each joint
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1 underwriting plan or association may elect to pay premium
2 taxes on the premiums received on its behalf or may elect to
3 have the member insurers to whom the premiums are allocated
4 pay the premium taxes if the member insurer had written the
5 policy. The joint underwriting plan or association shall
6 notify the member insurers and the Department of Revenue by
7 January 15 of each year of its election for the same year. As
8 used in this paragraph, the term "premiums received" means the
9 consideration for insurance, by whatever name called, but does
10 not include any policy assessment or surcharge received by the
11 joint underwriting association as a result of apportioning
12 losses or deficits of the association pursuant to this
13 section.
14 (o) Any senior manager or officer of the plan who is
15 employed by the plan as of January 1, 2008, regardless of the
16 date of hire, and who subsequently retires or terminates
17 employment may not represent another person or entity before
18 the plan for 2 years after retirement or termination of
19 employment from the plan.
20 (p) No part of the income of the plan may inure to the
21 benefit of any private person.
22 (q) Notwithstanding ss. 112.3148 and 112.3149 or other
23 provision of law, an employee or board member may not
24 knowingly accept, directly or indirectly, any expenditure or
25 gift from a person or entity, or an employee or representative
26 of such person or entity, which has a contractual relationship
27 with the plan or is under consideration for a contract. An
28 employee or board member who fails to comply with paragraph
29 (m) or this paragraph is subject to penalties provided under
30 s. 112.317.
31 (r) This section does not prohibit the plan from
21
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1 providing insurance coverage to any employer with whom a
2 former employee of the plan is affiliated or employing or
3 reemploying any former employee of the plan in a part-time,
4 full-time, temporary, or permanent capacity, so long as such
5 employment does not violate any provision of part III of
6 chapter 112.
7 (s)(o) Neither the plan nor any member of the board of
8 governors is liable for monetary damages to any person for any
9 statement, vote, decision, or failure to act, regarding the
10 management or policies of the plan, unless:
11 1. The member breached or failed to perform her or his
12 duties as a member; and
13 2. The member's breach of, or failure to perform,
14 duties constitutes:
15 a. A violation of the criminal law, unless the member
16 had reasonable cause to believe her or his conduct was not
17 unlawful. A judgment or other final adjudication against a
18 member in any criminal proceeding for violation of the
19 criminal law estops that member from contesting the fact that
20 her or his breach, or failure to perform, constitutes a
21 violation of the criminal law; but does not estop the member
22 from establishing that she or he had reasonable cause to
23 believe that her or his conduct was lawful or had no
24 reasonable cause to believe that her or his conduct was
25 unlawful;
26 b. A transaction from which the member derived an
27 improper personal benefit, either directly or indirectly; or
28 c. Recklessness or any act or omission that was
29 committed in bad faith or with malicious purpose or in a
30 manner exhibiting wanton and willful disregard of human
31 rights, safety, or property. For purposes of this
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1 sub-subparagraph, the term "recklessness" means the acting, or
2 omission to act, in conscious disregard of a risk:
3 (I) Known, or so obvious that it should have been
4 known, to the member; and
5 (II) Known to the member, or so obvious that it should
6 have been known, to be so great as to make it highly probable
7 that harm would follow from such act or omission.
8 (t)(p) No insurer shall provide workers' compensation
9 and employer's liability insurance to any person who is
10 delinquent in the payment of premiums, assessments, penalties,
11 or surcharges owed to the plan or to any person who is an
12 affiliated person of a person who is delinquent in the payment
13 of premiums, assessments, penalties, or surcharges owed to the
14 plan. For purposes of this paragraph, the term "affiliated
15 person" of another person means:
16 1. The spouse of such other natural person;
17 2. Any person who directly or indirectly owns or
18 controls, or holds with the power to vote, 5 percent or more
19 of the outstanding voting securities of such other person;
20 3. Any person who directly or indirectly owns 5
21 percent or more of the outstanding voting securities that are
22 directly or indirectly owned or controlled, or held with the
23 power to vote, by such other person;
24 4. Any person or group of persons who directly or
25 indirectly control, are controlled by, or are under common
26 control with such other person;
27 5. Any officer, director, trustee, partner, owner,
28 manager, joint venturer, or employee, or other person
29 performing duties similar to persons in those positions, of
30 such other persons; or
31 6. Any person who has an officer, director, trustee,
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1 partner, or joint venturer in common with such other person.
2 (u)(q) Effective July 1, 2004, the plan is exempt from
3 the premium tax under s. 624.509 and any assessments under ss.
4 440.49 and 440.51.
5 (v) The Office of Insurance Regulation shall perform a
6 comprehensive market conduct examination of the plan
7 periodically to determine compliance with its plan of
8 operation and internal operating policies and procedures.
9 (w) Upon dissolution, the assets of the plan shall be
10 applied first to pay all debts, liabilities, and obligations
11 of the plan, including the establishment of reasonable
12 reserves for any contingent liabilities or obligations, and
13 all remaining assets of the plan shall become property of the
14 state and shall be deposited in the Workers' Compensation
15 Administration Trust Fund. However, dissolution may not take
16 effect as long as the plan has financial obligations
17 outstanding unless adequate provision has been made for the
18 payment of financial obligations pursuant to the documents
19 authorizing the financial obligations.
20 (6) Each joint underwriting plan or association
21 created under this section is not a state agency, board, or
22 commission. However, for the purposes of s. 199.183(1) only,
23 the joint underwriting plan created under subsection (5) is a
24 political subdivision of the state and is exempt from the
25 corporate income tax.
26 (7) Each joint underwriting plan or association may
27 elect to pay premium taxes on the premiums received on its
28 behalf or may elect to have the member insurers to whom the
29 premiums are allocated pay the premium taxes if the member
30 insurer had written the policy. The joint underwriting plan or
31 association shall notify the member insurers and the
24
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1 Department of Revenue by January 15 of each year of its
2 election for the same year. As used in this paragraph, the
3 term "premiums received" means the consideration for
4 insurance, by whatever name called, but does not include any
5 policy assessment or surcharge received by the joint
6 underwriting association as a result of apportioning losses or
7 deficits of the association pursuant to this section.
8 (8)(6) As used in this section and ss. 215.555 and
9 627.351, the term "collateral protection insurance" means
10 commercial property insurance of which a creditor is the
11 primary beneficiary and policyholder and which protects or
12 covers an interest of the creditor arising out of a credit
13 transaction secured by real or personal property. Initiation
14 of such coverage is triggered by the mortgagor's failure to
15 maintain insurance coverage as required by the mortgage or
16 other lending document. Collateral protection insurance is not
17 residential coverage.
18 (9)(7)(a) The Florida Automobile Joint Underwriting
19 Association created under this section shall be deemed to have
20 appointed its general manager as its agent to receive service
21 of all legal process issued against the association in any
22 civil action or proceeding in this state. Process so served
23 shall be valid and binding upon the insurer.
24 (b) Service of process upon the association's general
25 manager as the association's agent pursuant to such an
26 appointment shall be the sole method of service of process
27 upon the association.
28 Section 2. No later than January 1, 2008, the Florida
29 Workers' Compensation Joint Underwriting Association, Inc.,
30 shall submit a request to the Internal Revenue Service for a
31 letter ruling or determination on the plan's eligibility as a
25
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1 tax-exempt entity.
2 Section 3. This act shall take effect July 1, 2007.
3
4
5 ================ T I T L E A M E N D M E N T ===============
6 And the title is amended as follows:
7 Delete everything before the enacting clause
8
9 and insert:
10 A bill to be entitled
11 An act relating to the Florida Workers'
12 Compensation Joint Underwriting Association,
13 Inc.; amending s. 627.311, F.S.; providing
14 requirements for the joint underwriting plan of
15 insurers which operates as the association;
16 revising the membership of the board of
17 governors that oversees operation of the joint
18 underwriting plan; providing for the continuous
19 review of the plan; requiring that the
20 market-assistance plan be periodically reviewed
21 and updated; providing guidelines for
22 procurement of goods and services, including
23 legal services; authorizing the use of surplus
24 funds of former plan C; requiring that excess
25 funds received by the plan be returned to the
26 state; providing for the applicability of
27 specified statutes regulating ethical
28 standards; requiring annual statements by plan
29 employees certifying that they do not have
30 conflicts of interest; prescribing limits on
31 representing persons or entities before the
26
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1 plan by former senior managers or officers of
2 the plan; prohibiting any part of the plan's
3 income from inuring to the benefit of a private
4 individual; prohibiting employees and board
5 members from accepting expenditures from a
6 person or an entity; providing applicability;
7 requiring periodic comprehensive market
8 examinations; prescribing the disposition of
9 assets of the plan upon dissolution; requiring
10 that the plan submit a request for an Internal
11 Revenue Service letter concerning the plan's
12 eligibility as a tax-exempt entity; providing
13 an effective date.
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