Senate Bill sb1894er
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1
2 An act relating to the Florida Workers'
3 Compensation Joint Underwriting Association,
4 Inc.; amending s. 627.311, F.S.; providing
5 requirements for the joint underwriting plan of
6 insurers which operates as the association;
7 revising the membership of the board of
8 governors that oversees operation of the joint
9 underwriting plan; revising restrictions on who
10 may serve on the board; providing for the
11 continuous review of the plan; requiring that
12 the market-assistance plan be periodically
13 reviewed and updated; providing guidelines for
14 procurement of goods and services, including
15 legal services; authorizing the use of surplus
16 funds of former plan C; requiring that excess
17 funds received by the plan be returned to the
18 state; providing for the applicability of
19 specified statutes regulating ethical
20 standards; requiring annual statements by plan
21 employees certifying that they do not have
22 conflicts of interest; prescribing limits on
23 representing persons or entities before the
24 plan by former senior managers or officers of
25 the plan; prohibiting any part of the plan's
26 income from inuring to the benefit of a private
27 individual; prohibiting employees and board
28 members from accepting expenditures from a
29 person or an entity; providing applicability;
30 requiring periodic comprehensive market
31 examinations; prescribing the disposition of
1
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 assets of the plan upon dissolution; requiring
2 that the plan submit a request for an Internal
3 Revenue Service letter concerning the plan's
4 eligibility as a tax-exempt entity; providing
5 an effective date.
6
7 Be It Enacted by the Legislature of the State of Florida:
8
9 Section 1. Subsections (5), (6), and (7) of section
10 627.311, Florida Statutes, are amended to read:
11 627.311 Joint underwriters and joint reinsurers;
12 public records and public meetings exemptions.--
13 (5)(a) The office shall, after consultation with
14 insurers, approve a joint underwriting plan of insurers which
15 shall operate as the Florida Workers' Compensation Joint
16 Underwriting Association, Inc., a nonprofit entity. For the
17 purposes of this subsection, the term "insurer" includes group
18 self-insurance funds authorized by s. 624.4621, commercial
19 self-insurance funds authorized by s. 624.462, assessable
20 mutual insurers authorized under s. 628.6011, and insurers
21 licensed to write workers' compensation and employer's
22 liability insurance in this state. The purpose of the plan is
23 to provide workers' compensation and employer's liability
24 insurance to applicants who are required by law to maintain
25 workers' compensation and employer's liability insurance and
26 who are in good faith entitled to but who are unable to
27 procure such insurance through the voluntary market. Except as
28 provided herein, the plan must have actuarially sound rates
29 that ensure that the plan is self-supporting.
30 (b) The operation of the plan is subject to the
31 supervision of a 9-member board of governors. Each member
2
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 described in subparagraph 1., subparagraph 2., subparagraph
2 3., or subparagraph 5. shall be appointed by the Financial
3 Services Commission and shall serve at the pleasure of the
4 commission. The board of governors shall be comprised of:
5 1. Three members appointed by the Financial Services
6 Commission. Each member appointed by the commission shall
7 serve at the pleasure of the commission;
8 1.2. Two representatives of the 20 domestic insurers,
9 as defined in s. 624.06(1), having the largest voluntary
10 direct premiums written in this state for workers'
11 compensation and employer's liability insurance who, which
12 shall be appointed by the commission from a list of five
13 nominees for each vacancy submitted elected by those 20
14 domestic insurers. The commission may reject all of the
15 nominees recommended for a position and request that the
16 insurers submit a new list of five different recommended
17 nominees for the position who have not previously been
18 recommended by the insurers;
19 2.3. Two representatives of the 20 foreign insurers as
20 defined in s. 624.06(2) having the largest voluntary direct
21 premiums written in this state for workers' compensation and
22 employer's liability insurance who, which shall be appointed
23 by the commission from a list of five nominees for each
24 vacancy submitted elected by those 20 foreign insurers. The
25 commission may reject all of the nominees recommended for a
26 position and request that the insurers submit a new list of
27 five different recommended nominees for the position who have
28 not previously been recommended by the insurers;
29 3.4. One representative of person appointed by the
30 largest property and casualty insurance agents' association in
31 this state who shall be appointed by the commission from a
3
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 list of five nominees for each vacancy submitted by the
2 association. The commission may reject all of the nominees
3 recommended for a position and request that the association
4 submit a new list of five different recommended nominees for
5 the position who have not previously been recommended by the
6 association; and
7 4.5. The consumer advocate appointed under s. 627.0613
8 or the consumer advocate's designee; and.
9 5. Three other persons appointed by the commission.
10
11 Each board member shall be appointed to serve a 4-year term
12 and may be appointed to serve consecutive terms. A vacancy on
13 the board shall be filled in the same manner as the original
14 appointment for the unexpired portion of the term. The
15 Financial Services Commission shall designate a member of the
16 board to serve as chair. No board member shall be an insurer
17 which provides services to the plan or which has an affiliate
18 which provides services to the plan or which is serviced by a
19 service company or third-party administrator which provides
20 services to the plan or which has an affiliate which provides
21 services to the plan. The meetings and records minutes,
22 audits, and procedures of the board of governors and plan are
23 subject to chapters chapter 119 and 286, unless otherwise
24 exempted by law.
25 (c) The operation of the plan shall be governed by a
26 plan of operation that is prepared at the direction of the
27 board of governors and approved by order of the office. The
28 plan is subject to continuous review by the office. The office
29 may, by order, withdraw approval of all or part of a plan if
30 the office determines that conditions have changed since
31 approval was granted and that the purposes of the plan require
4
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 changes in the plan. The plan of operation may be changed at
2 any time by the board of governors or upon request of the
3 office. The plan of operation and all changes thereto are
4 subject to the approval of the office. The plan of operation
5 shall:
6 1. Authorize the board to engage in the activities
7 necessary to implement this subsection, including, but not
8 limited to, borrowing money.
9 2. Develop criteria for eligibility for coverage by
10 the plan, including, but not limited to, documented rejection
11 by at least two insurers which reasonably assures that
12 insureds covered under the plan are unable to acquire coverage
13 in the voluntary market.
14 3. Require notice from the agent to the insured at the
15 time of the application for coverage that the application is
16 for coverage with the plan and that coverage may be available
17 through an insurer, group self-insurers' fund, commercial
18 self-insurance fund, or assessable mutual insurer through
19 another agent at a lower cost.
20 4. Establish programs to encourage insurers to provide
21 coverage to applicants of the plan in the voluntary market and
22 to insureds of the plan, including, but not limited to:
23 a. Establishing procedures for an insurer to use in
24 notifying the plan of the insurer's desire to provide coverage
25 to applicants to the plan or existing insureds of the plan and
26 in describing the types of risks in which the insurer is
27 interested. The description of the desired risks must be on a
28 form developed by the plan.
29 b. Developing forms and procedures that provide an
30 insurer with the information necessary to determine whether
31
5
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 the insurer wants to write particular applicants to the plan
2 or insureds of the plan.
3 c. Developing procedures for notice to the plan and
4 the applicant to the plan or insured of the plan that an
5 insurer will insure the applicant or the insured of the plan,
6 and notice of the cost of the coverage offered; and developing
7 procedures for the selection of an insuring entity by the
8 applicant or insured of the plan.
9 d. Provide for a market-assistance plan to assist in
10 the placement of employers. All applications for coverage in
11 the plan received 45 days before the effective date for
12 coverage shall be processed through the market-assistance
13 plan. A market-assistance plan specifically designed to serve
14 the needs of small, good policyholders as defined by the board
15 must be reviewed and updated periodically finalized by January
16 1, 1994.
17 5. Provide for policy and claims services to the
18 insureds of the plan of the nature and quality provided for
19 insureds in the voluntary market.
20 6. Provide for the review of applications for coverage
21 with the plan for reasonableness and accuracy, using any
22 available historic information regarding the insured.
23 7. Provide for procedures for auditing insureds of the
24 plan which are based on reasonable business judgment and are
25 designed to maximize the likelihood that the plan will collect
26 the appropriate premiums.
27 8. Authorize the plan to terminate the coverage of and
28 refuse future coverage for any insured that submits a
29 fraudulent application to the plan or provides fraudulent or
30 grossly erroneous records to the plan or to any service
31
6
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 provider of the plan in conjunction with the activities of the
2 plan.
3 9. Establish service standards for agents who submit
4 business to the plan.
5 10. Establish criteria and procedures to prohibit any
6 agent who does not adhere to the established service standards
7 from placing business with the plan or receiving, directly or
8 indirectly, any commissions for business placed with the plan.
9 11. Provide for the establishment of reasonable safety
10 programs for all insureds in the plan. All insureds of the
11 plan must participate in the safety program.
12 12. Authorize the plan to terminate the coverage of
13 and refuse future coverage to any insured who fails to pay
14 premiums or surcharges when due; who, at the time of
15 application, is delinquent in payments of workers'
16 compensation or employer's liability insurance premiums or
17 surcharges owed to an insurer, group self-insurers' fund,
18 commercial self-insurance fund, or assessable mutual insurer
19 licensed to write such coverage in this state; or who refuses
20 to substantially comply with any safety programs recommended
21 by the plan.
22 13. Authorize the board of governors to provide the
23 goods and services required by the plan through staff employed
24 by the plan, through reasonably compensated service providers
25 who contract with the plan to provide services as specified by
26 the board of governors, or through a combination of employees
27 and service providers.
28 a. Purchases that equal or exceed $2,500 but are less
29 than or equal to $25,000, shall be made by receipt of written
30 quotes, telephone quotes, or informal bids, whenever
31 practical. The procurement of goods or services valued over
7
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 $25,000 are subject to competitive solicitation, except in
2 situations in which the goods or services are provided by a
3 sole source or are deemed an emergency purchase, or the
4 services are exempted from competitive-solicitation
5 requirements under s. 287.057(5)(f). Justification for the
6 sole-sourcing or emergency procurement must be documented.
7 Contracts for goods or services valued at or over $100,000 are
8 subject to board approval.
9 b. The board shall determine whether it is more
10 cost-effective and in the best interests of the plan to use
11 legal services provided by in-house attorneys employed by the
12 plan rather than contracting with outside counsel. In making
13 such determination, the board shall document its findings and
14 shall consider the expertise needed; whether time commitments
15 exceed in-house staff resources; whether local representation
16 is needed; the travel, lodging, and other costs associated
17 with in-house representation; and such other factors that the
18 board determines are relevant.
19 14. Provide for service standards for service
20 providers, methods of determining adherence to those service
21 standards, incentives and disincentives for service, and
22 procedures for terminating contracts for service providers
23 that fail to adhere to service standards.
24 15. Provide procedures for selecting service providers
25 and standards for qualification as a service provider that
26 reasonably assure that any service provider selected will
27 continue to operate as an ongoing concern and is capable of
28 providing the specified services in the manner required.
29 16. Provide for reasonable accounting and
30 data-reporting practices.
31
8
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 17. Provide for annual review of costs associated with
2 the administration and servicing of the policies issued by the
3 plan to determine alternatives by which costs can be reduced.
4 18. Authorize the acquisition of such excess insurance
5 or reinsurance as is consistent with the purposes of the plan.
6 19. Provide for an annual report to the office on a
7 date specified by the office and containing such information
8 as the office reasonably requires.
9 20. Establish multiple rating plans for various
10 classifications of risk which reflect risk of loss, hazard
11 grade, actual losses, size of premium, and compliance with
12 loss control. At least one of such plans must be a
13 preferred-rating plan to accommodate small-premium
14 policyholders with good experience as defined in
15 sub-subparagraph 22.a.
16 21. Establish agent commission schedules.
17 22. For employers otherwise eligible for coverage
18 under the plan, establish three tiers of employers meeting the
19 criteria and subject to the rate limitations specified in this
20 subparagraph.
21 a. Tier One.--
22 (I) Criteria; rated employers.--An employer that has
23 an experience modification rating shall be included in Tier
24 One if the employer meets all of the following:
25 (A) The experience modification is below 1.00.
26 (B) The employer had no lost-time claims subsequent to
27 the applicable experience modification rating period.
28 (C) The total of the employer's medical-only claims
29 subsequent to the applicable experience modification rating
30 period did not exceed 20 percent of premium.
31
9
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 (II) Criteria; non-rated employers.--An employer that
2 does not have an experience modification rating shall be
3 included in Tier One if the employer meets all of the
4 following:
5 (A) The employer had no lost-time claims for the
6 3-year period immediately preceding the inception date or
7 renewal date of the employer's coverage under the plan.
8 (B) The total of the employer's medical-only claims
9 for the 3-year period immediately preceding the inception date
10 or renewal date of the employer's coverage under the plan did
11 not exceed 20 percent of premium.
12 (C) The employer has secured workers' compensation
13 coverage for the entire 3-year period immediately preceding
14 the inception date or renewal date of the employer's coverage
15 under the plan.
16 (D) The employer is able to provide the plan with a
17 loss history generated by the employer's prior workers'
18 compensation insurer, except if the employer is not able to
19 produce a loss history due to the insolvency of an insurer,
20 the receiver shall provide to the plan, upon the request of
21 the employer or the employer's agent, a copy of the employer's
22 loss history from the records of the insolvent insurer if the
23 loss history is contained in records of the insurer which are
24 in the possession of the receiver. If the receiver is unable
25 to produce the loss history, the employer may, in lieu of the
26 loss history, submit an affidavit from the employer and the
27 employer's insurance agent setting forth the loss history.
28 (E) The employer is not a new business.
29 (III) Premiums.--The premiums for Tier One insureds
30 shall be set at a premium level 25 percent above the
31 comparable voluntary market premiums until the plan has
10
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 sufficient experience as determined by the board to establish
2 an actuarially sound rate for Tier One, at which point the
3 board shall, subject to paragraph (e), adjust the rates, if
4 necessary, to produce actuarially sound rates, provided such
5 rate adjustment shall not take effect prior to January 1,
6 2007.
7 b. Tier Two.--
8 (I) Criteria; rated employers.--An employer that has
9 an experience modification rating shall be included in Tier
10 Two if the employer meets all of the following:
11 (A) The experience modification is equal to or greater
12 than 1.00 but not greater than 1.10.
13 (B) The employer had no lost-time claims subsequent to
14 the applicable experience modification rating period.
15 (C) The total of the employer's medical-only claims
16 subsequent to the applicable experience modification rating
17 period did not exceed 20 percent of premium.
18 (II) Criteria; non-rated employers.--An employer that
19 does not have any experience modification rating shall be
20 included in Tier Two if the employer is a new business. An
21 employer shall be included in Tier Two if the employer has
22 less than 3 years of loss experience in the 3-year period
23 immediately preceding the inception date or renewal date of
24 the employer's coverage under the plan and the employer meets
25 all of the following:
26 (A) The employer had no lost-time claims for the
27 3-year period immediately preceding the inception date or
28 renewal date of the employer's coverage under the plan.
29 (B) The total of the employer's medical-only claims
30 for the 3-year period immediately preceding the inception date
31
11
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 or renewal date of the employer's coverage under the plan did
2 not exceed 20 percent of premium.
3 (C) The employer is able to provide the plan with a
4 loss history generated by the workers' compensation insurer
5 that provided coverage for the portion or portions of such
6 period during which the employer had secured workers'
7 compensation coverage, except if the employer is not able to
8 produce a loss history due to the insolvency of an insurer,
9 the receiver shall provide to the plan, upon the request of
10 the employer or the employer's agent, a copy of the employer's
11 loss history from the records of the insolvent insurer if the
12 loss history is contained in records of the insurer which are
13 in the possession of the receiver. If the receiver is unable
14 to produce the loss history, the employer may, in lieu of the
15 loss history, submit an affidavit from the employer and the
16 employer's insurance agent setting forth the loss history.
17 (III) Premiums.--The premiums for Tier Two insureds
18 shall be set at a rate level 50 percent above the comparable
19 voluntary market premiums until the plan has sufficient
20 experience as determined by the board to establish an
21 actuarially sound rate for Tier Two, at which point the board
22 shall, subject to paragraph (e), adjust the rates, if
23 necessary, to produce actuarially sound rates, provided such
24 rate adjustment shall not take effect prior to January 1,
25 2007.
26 c. Tier Three.--
27 (I) Eligibility.--An employer shall be included in
28 Tier Three if the employer does not meet the criteria for Tier
29 One or Tier Two.
30
31
12
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 (II) Rates.--The board shall establish, subject to
2 paragraph (e), and the plan shall charge, actuarially sound
3 rates for Tier Three insureds.
4 23. For Tier One or Tier Two employers which employ no
5 nonexempt employees or which report payroll which is less than
6 the minimum wage hourly rate for one full-time employee for 1
7 year at 40 hours per week, the plan shall establish
8 actuarially sound premiums, provided, however, that the
9 premiums may not exceed $2,500. These premiums shall be in
10 addition to the fee specified in subparagraph 26. When the
11 plan establishes actuarially sound rates for all employers in
12 Tier One and Tier Two, the premiums for employers referred to
13 in this paragraph are no longer subject to the $2,500 cap.
14 24. Provide for a depopulation program to reduce the
15 number of insureds in the plan. If an employer insured through
16 the plan is offered coverage from a voluntary market carrier:
17 a. During the first 30 days of coverage under the
18 plan;
19 b. Before a policy is issued under the plan;
20 c. By issuance of a policy upon expiration or
21 cancellation of the policy under the plan; or
22 d. By assumption of the plan's obligation with respect
23 to an in-force policy,
24
25 that employer is no longer eligible for coverage through the
26 plan. The premium for risks assumed by the voluntary market
27 carrier must be no greater than the premium the insured would
28 have paid under the plan, and shall be adjusted upon renewal
29 to reflect changes in the plan rates and the tier for which
30 the insured would qualify as of the time of renewal. The
31 insured may be charged such premiums only for the first 3
13
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 years of coverage in the voluntary market. A premium under
2 this subparagraph is deemed approved and is not an excess
3 premium for purposes of s. 627.171.
4 25. Require that policies issued and applications must
5 include a notice that the policy could be replaced by a policy
6 issued from a voluntary market carrier and that, if an offer
7 of coverage is obtained from a voluntary market carrier, the
8 policyholder is no longer eligible for coverage through the
9 plan. The notice must also specify that acceptance of coverage
10 under the plan creates a conclusive presumption that the
11 applicant or policyholder is aware of this potential.
12 26. Require that each application for coverage and
13 each renewal premium be accompanied by a nonrefundable fee of
14 $475 to cover costs of administration and fraud prevention.
15 The board may, with the prior approval of the office, increase
16 the amount of the fee pursuant to a rate filing to reflect
17 increased costs of administration and fraud prevention. The
18 fee is not subject to commission and is fully earned upon
19 commencement of coverage.
20 (d)1. The funding of the plan shall include premiums
21 as provided in subparagraph (c)22. and assessments as provided
22 in this paragraph.
23 2.a. If the board determines that a deficit exists in
24 Tier One or Tier Two or that there is any deficit remaining
25 attributable to any of the plan's former subplans and that the
26 deficit cannot be fully funded by using policyholder surplus
27 attributable to former subplan C or, if the surplus in the
28 former subplan C does not fully fund the deficit without the
29 use of deficit assessments, the board shall request the office
30 to levy, by order, a deficit assessment against premiums
31 charged to insureds for workers' compensation insurance by
14
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 insurers as defined in s. 631.904(5). The office shall issue
2 the order after verifying the amount of the deficit. The
3 assessment shall be specified as a percentage of future
4 premium collections, as recommended by the board and approved
5 by the office. The same percentage shall apply to premiums on
6 all workers' compensation policies issued or renewed during
7 the 12-month period beginning on the effective date of the
8 assessment, as specified in the order.
9 b. With respect to each insurer collecting premiums
10 that are subject to the assessment, the insurer shall collect
11 the assessment at the same time as the insurer collects the
12 premium payment for each policy and shall remit the
13 assessments collected to the plan as provided in the order
14 issued by the office. The office shall verify the accurate and
15 timely collection and remittance of deficit assessments and
16 shall report such information to the board. Each insurer
17 collecting assessments shall provide such information with
18 respect to premiums and collections as may be required by the
19 office to enable the office to monitor and audit compliance
20 with this paragraph.
21 c. Deficit assessments are not considered part of an
22 insurer's rate, are not premium, and are not subject to the
23 premium tax, to the assessments under ss. 440.49 and 440.51,
24 to the surplus lines tax, to any fees, or to any commissions.
25 The deficit assessment imposed shall become plan funds at the
26 moment of collection and shall not constitute income to the
27 insurer for any purpose, including financial reporting on the
28 insurer's income statement. An insurer is liable for all
29 assessments that the insurer collects and must treat the
30 failure of an insured to pay an assessment as a failure to pay
31
15
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 premium. An insurer is not liable for uncollectible
2 assessments.
3 d. When an insurer is required to return unearned
4 premium, the insurer shall also return any collected
5 assessments attributable to the unearned premium.
6 e. Deficit assessments as described in this
7 subparagraph shall not be levied after July 1, 2012 2007.
8 3.a. All policies issued to Tier Three insureds shall
9 be assessable. All Tier Three assessable policies must be
10 clearly identified as assessable by containing, in contrasting
11 color and in not less than 10-point type, the following
12 statement:
13
14 "This is an assessable policy. If the plan is
15 unable to pay its obligations, policyholders
16 will be required to contribute on a pro rata
17 earned premium basis the money necessary to
18 meet any assessment levied."
19
20 b. The board may from time to time assess Tier Three
21 insureds to whom the plan has issued assessable policies for
22 the purpose of funding plan deficits. Any such assessment
23 shall be based upon a reasonable actuarial estimate of the
24 amount of the deficit, taking into account the amount needed
25 to fund medical and indemnity reserves and reserves for
26 incurred but not reported claims, and allowing for general
27 administrative expenses, the cost of levying and collecting
28 the assessment, a reasonable allowance for estimated
29 uncollectible assessments, and allocated and unallocated loss
30 adjustment expenses.
31
16
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
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
17
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
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
18
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
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
19
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
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
20
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
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, an employee, officer,
11 owner, or director of an insurance agency, insurance company,
12 or other insurance entity may be a member of the board of
13 governors unless such employee, officer, owner, or director of
14 an insurance agency, insurance company, other insurance
15 entity, or an affiliate provides policy issuance, policy
16 administration, underwriting, claims handling, or payroll
17 audit services. Notwithstanding s. 112.3143, such board member
18 may not participate in or vote on a matter if the insurance
19 agency, insurance company, or other insurance entity would
20 obtain a special or unique benefit that would not apply to
21 other similarly situated insurance entities. Each joint
22 underwriting plan or association created under this section is
23 not a state agency, board, or commission. However, for the
24 purposes of s. 199.183(1) only, the joint underwriting plan is
25 a political subdivision of the state and is exempt from the
26 corporate income tax.
27 (n) On or before July 1 of each year, employees of the
28 plan shall sign and submit a statement to the plan attesting
29 that they do not have a conflict of interest as defined in
30 part III of chapter 112. As a condition of employment, all
31 prospective employees shall sign and submit a
21
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 conflict-of-interest statement to the plan. Each joint
2 underwriting plan or association may elect to pay premium
3 taxes on the premiums received on its behalf or may elect to
4 have the member insurers to whom the premiums are allocated
5 pay the premium taxes if the member insurer had written the
6 policy. The joint underwriting plan or association shall
7 notify the member insurers and the Department of Revenue by
8 January 15 of each year of its election for the same year. As
9 used in this paragraph, the term "premiums received" means the
10 consideration for insurance, by whatever name called, but does
11 not include any policy assessment or surcharge received by the
12 joint underwriting association as a result of apportioning
13 losses or deficits of the association pursuant to this
14 section.
15 (o) Any senior manager or officer of the plan who is
16 employed by the plan as of January 1, 2008, regardless of the
17 date of hire, and who subsequently retires or terminates
18 employment may not represent another person or entity before
19 the plan for 2 years after retirement or termination of
20 employment from the plan.
21 (p) No part of the income of the plan may inure to the
22 benefit of any private person.
23 (q) Notwithstanding ss. 112.3148 and 112.3149 or other
24 provision of law, an employee or board member may not
25 knowingly accept, directly or indirectly, any expenditure or
26 gift from a person or entity, or an employee or representative
27 of such person or entity, which has a contractual relationship
28 with the plan or is under consideration for a contract. An
29 employee or board member who fails to comply with paragraph
30 (m) or this paragraph is subject to penalties provided under
31 s. 112.317.
22
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 (r) This section does not prohibit the plan from
2 providing insurance coverage to any employer with whom a
3 former employee of the plan is affiliated or employing or
4 reemploying any former employee of the plan in a part-time,
5 full-time, temporary, or permanent capacity, so long as such
6 employment does not violate any provision of part III of
7 chapter 112.
8 (s)(o) Neither the plan nor any member of the board of
9 governors is liable for monetary damages to any person for any
10 statement, vote, decision, or failure to act, regarding the
11 management or policies of the plan, unless:
12 1. The member breached or failed to perform her or his
13 duties as a member; and
14 2. The member's breach of, or failure to perform,
15 duties constitutes:
16 a. A violation of the criminal law, unless the member
17 had reasonable cause to believe her or his conduct was not
18 unlawful. A judgment or other final adjudication against a
19 member in any criminal proceeding for violation of the
20 criminal law estops that member from contesting the fact that
21 her or his breach, or failure to perform, constitutes a
22 violation of the criminal law; but does not estop the member
23 from establishing that she or he had reasonable cause to
24 believe that her or his conduct was lawful or had no
25 reasonable cause to believe that her or his conduct was
26 unlawful;
27 b. A transaction from which the member derived an
28 improper personal benefit, either directly or indirectly; or
29 c. Recklessness or any act or omission that was
30 committed in bad faith or with malicious purpose or in a
31 manner exhibiting wanton and willful disregard of human
23
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 rights, safety, or property. For purposes of this
2 sub-subparagraph, the term "recklessness" means the acting, or
3 omission to act, in conscious disregard of a risk:
4 (I) Known, or so obvious that it should have been
5 known, to the member; and
6 (II) Known to the member, or so obvious that it should
7 have been known, to be so great as to make it highly probable
8 that harm would follow from such act or omission.
9 (t)(p) No insurer shall provide workers' compensation
10 and employer's liability insurance to any person who is
11 delinquent in the payment of premiums, assessments, penalties,
12 or surcharges owed to the plan or to any person who is an
13 affiliated person of a person who is delinquent in the payment
14 of premiums, assessments, penalties, or surcharges owed to the
15 plan. For purposes of this paragraph, the term "affiliated
16 person" of another person means:
17 1. The spouse of such other natural person;
18 2. Any person who directly or indirectly owns or
19 controls, or holds with the power to vote, 5 percent or more
20 of the outstanding voting securities of such other person;
21 3. Any person who directly or indirectly owns 5
22 percent or more of the outstanding voting securities that are
23 directly or indirectly owned or controlled, or held with the
24 power to vote, by such other person;
25 4. Any person or group of persons who directly or
26 indirectly control, are controlled by, or are under common
27 control with such other person;
28 5. Any officer, director, trustee, partner, owner,
29 manager, joint venturer, or employee, or other person
30 performing duties similar to persons in those positions, of
31 such other persons; or
24
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 6. Any person who has an officer, director, trustee,
2 partner, or joint venturer in common with such other person.
3 (u)(q) Effective July 1, 2004, the plan is exempt from
4 the premium tax under s. 624.509 and any assessments under ss.
5 440.49 and 440.51.
6 (v) The Office of Insurance Regulation shall perform a
7 comprehensive market conduct examination of the plan
8 periodically to determine compliance with its plan of
9 operation and internal operating policies and procedures.
10 (w) Upon dissolution, the assets of the plan shall be
11 applied first to pay all debts, liabilities, and obligations
12 of the plan, including the establishment of reasonable
13 reserves for any contingent liabilities or obligations, and
14 all remaining assets of the plan shall become property of the
15 state and shall be deposited in the Workers' Compensation
16 Administration Trust Fund. However, dissolution may not take
17 effect as long as the plan has financial obligations
18 outstanding unless adequate provision has been made for the
19 payment of financial obligations pursuant to the documents
20 authorizing the financial obligations.
21 (6) Each joint underwriting plan or association
22 created under this section is not a state agency, board, or
23 commission. However, for the purposes of s. 199.183(1) only,
24 the joint underwriting plan created under subsection (5) is a
25 political subdivision of the state and is exempt from the
26 corporate income tax.
27 (7) Each joint underwriting plan or association may
28 elect to pay premium taxes on the premiums received on its
29 behalf or may elect to have the member insurers to whom the
30 premiums are allocated pay the premium taxes if the member
31 insurer had written the policy. The joint underwriting plan or
25
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 association shall notify the member insurers and the
2 Department of Revenue by January 15 of each year of its
3 election for the same year. As used in this paragraph, the
4 term "premiums received" means the consideration for
5 insurance, by whatever name called, but does not include any
6 policy assessment or surcharge received by the joint
7 underwriting association as a result of apportioning losses or
8 deficits of the association pursuant to this section.
9 (8)(6) As used in this section and ss. 215.555 and
10 627.351, the term "collateral protection insurance" means
11 commercial property insurance of which a creditor is the
12 primary beneficiary and policyholder and which protects or
13 covers an interest of the creditor arising out of a credit
14 transaction secured by real or personal property. Initiation
15 of such coverage is triggered by the mortgagor's failure to
16 maintain insurance coverage as required by the mortgage or
17 other lending document. Collateral protection insurance is not
18 residential coverage.
19 (9)(7)(a) The Florida Automobile Joint Underwriting
20 Association created under this section shall be deemed to have
21 appointed its general manager as its agent to receive service
22 of all legal process issued against the association in any
23 civil action or proceeding in this state. Process so served
24 shall be valid and binding upon the insurer.
25 (b) Service of process upon the association's general
26 manager as the association's agent pursuant to such an
27 appointment shall be the sole method of service of process
28 upon the association.
29 Section 2. No later than January 1, 2008, the Florida
30 Workers' Compensation Joint Underwriting Association, Inc.,
31 shall submit a request to the Internal Revenue Service for a
26
CODING: Words stricken are deletions; words underlined are additions.
ENROLLED
2007 Legislature CS for CS for CS for SB 1894
1 letter ruling or determination on the plan's eligibility as a
2 tax-exempt entity.
3 Section 3. This act shall take effect July 1, 2007.
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
27
CODING: Words stricken are deletions; words underlined are additions.