CS/CS/HB 1227

1	A bill to be entitled
2	An act relating to surplus lines insurance; amending s.
3	626.931, F.S.; requiring a surplus lines agent to file
4	quarterly on or before a specified time an affidavit
5	stating that all surplus lines insurance transacted during
6	the preceding quarter has been submitted to the Florida
7	Surplus Lines Service Office; amending s. 626.932, F.S.;
8	requiring the premium tax due on a surplus lines policy to
9	be computed on the gross premium under certain
10	circumstances; amending s. 626.9325, F.S.; revising
11	payment dates for the service fee; requiring the service
12	fee on a surplus lines policy to be computed on the gross
13	premium under certain circumstances; creating s. 626.9362,
14	F.S.; authorizing the Department of Financial Services and
15	the Office of Insurance Regulation to enter into a
16	specified type of agreement with other states pursuant to
17	federal law for the collection and allocation of certain
18	nonadmitted insurance taxes; providing terms that may be
19	included in the agreement; requiring the Florida Surplus
20	Lines Service Office to implement an agreement entered
21	into by the department and the Office of Insurance
22	Regulation; authorizing the department to adopt rules;
23	providing for application; requiring the Department of
24	Financial Services to submit an initial report to the
25	Legislature by a specified date if an agreement has been
26	entered into before that date; repealing this section
27	effective on that specified date, if no agreement has been
28	entered into before that date; repealing this section
29	effective on a specified date if the Legislature has not
30	ratified any agreement before that date; requiring annual
31	reports; providing requirements relating to the initial
32	and each subsequent annual report; amending s. 626.938,
33	F.S.; requiring certain insureds or self-insurers engaging
34	in specified insurance transactions with a foreign or
35	alien insurer to compute the premium tax and service fees
36	based on the gross premium under certain circumstances;
37	requiring such insureds or self-insurers to pay the
38	applicable premium tax to the department and the service
39	fee to the Florida Surplus Lines Service Office on or
40	before a specified time; providing an effective date.
41
42	WHEREAS, the 111th Congress passed the Nonadmitted and
43	Reinsurance Reform Act of 2010 (NRRA), and
44	WHEREAS, the NRRA provides that no state other than the
45	home state of an insured may require any premium tax payment for
46	nonadmitted insurance and defines "home state" as the state in
47	which an insured maintains its principal place of business [15
48	U.S.C. s. 8206], and
49	WHEREAS, as a result of the NRRA, premium tax payments that
50	would otherwise be paid to Florida will be paid to other states,
51	and
52	WHEREAS, the NRRA allows states to enter into a compact or
53	otherwise establish procedures to allocate among the states the
54	premium taxes paid to an insured's home state, and
55	WHEREAS, the National Association of Insurance
56	Commissioners has adopted an agreement for states to use for
57	that purpose, NOW, THEREFORE,
58
59	Be It Enacted by the Legislature of the State of Florida:
60
61	Section 1.  Subsection (1) of section 626.931, Florida
62	Statutes, is amended to read:
63	626.931  Agent affidavit and insurer reporting
64	requirements.-
65	(1)  Each surplus lines agent shall on or before the 45th
66	day the end of the month next following each calendar quarter
67	file with the Florida Surplus Lines Service Office an affidavit,
68	on forms as prescribed and furnished by the Florida Surplus
69	Lines Service Office, stating that all surplus lines insurance
70	transacted by him or her during such calendar quarter has been
71	submitted to the Florida Surplus Lines Service Office as
72	required.
73	Section 2.  Subsection (3) of section 626.932, Florida
74	Statutes, is amended to read:
75	626.932  Surplus lines tax.-
76	(3)  If a surplus lines policy covers risks or exposures
77	only partially in this state and the state is the home state as
78	defined in the federal Nonadmitted and Reinsurance Reform Act of
79	2010 (NRRA), the tax payable shall be computed on the gross
80	portion of the premium which is properly allocable to the risks
81	or exposures located in this state.
82	Section 3.  Subsections (2) and (3) of section 626.9325,
83	Florida Statutes, are amended to read:
84	626.9325  Service fee.-
85	(2)(a)  The surplus lines agent shall pay on or before the
86	45th day following each calendar quarter monthly to the Florida
87	Surplus Lines Service Office the fees related to all policies
88	reported during the previous calendar quarter month in
89	accordance with the plan of operation of the Florida Surplus
90	Lines Service Office.
91	(b)  The agent shall pay interest on the amount of any
92	delinquent fees due, at the rate of 9 percent per year,
93	compounded annually, beginning the day the amount becomes
94	delinquent.
95	(3)  If a surplus lines policy covers risks or exposures
96	only partially in this state and the state is the home state as
97	defined in the federal Nonadmitted and Reinsurance Reform Act of
98	2010 (NRRA), the fee payable shall be computed on the gross
99	portion of the premium which is properly allocable to the risks
100	or exposures located in this state.
101	Section 4.  Section 626.9362, Florida Statutes, is created
102	to read:
103	626.9362  Cooperative reciprocal agreement authorized for
104	collection and allocation of certain nonadmitted insurance
105	taxes.-
106	(1)  AUTHORIZATION OF AGREEMENTS.-The Department of
107	Financial Services and the Office of Insurance Regulation may
108	enter into a cooperative reciprocal agreement with another state
109	or group of states for the purpose of, but not limited to, the
110	collection and allocation of nonadmitted insurance taxes for
111	multistate risks pursuant to the federal Nonadmitted and
112	Reinsurance Reform Act of 2010 (NRRA) which was incorporated
113	into the Dodd-Frank Wall Street Reform and Consumer Protection
114	Act, Pub. L. No. 111-203, July 21, 2010.
115	(2)  AGREEMENT TERMS.-The terms of the agreement may
116	include, but are not limited to, the following:
117	(a)  Creating a clearinghouse for the purpose of
118	facilitating the receipt and disbursement of nonadmitted
119	insurance taxes.
120	(b)  Specifying requirements and time periods for
121	reporting.
122	(c)  Determining methods for the collection and forwarding
123	of nonadmitted insurance taxes to another state.
124	(d)  Specifying a premium tax allocation formula for
125	multistate risk nonadmitted insurance.
126	(e)  Providing for audits and the exchange of information.
127	(f)  Facilitating the administration of the cooperative
128	reciprocal agreement in a reasonable manner.
129	(g)  Providing for the collection of a service fee to fund
130	the operations and activities of the clearinghouse which shall
131	not exceed 0.3 percent of the gross premium on transactions
132	processed by the clearinghouse. The fee on gross premium
133	allocated to this state shall be taken from the premium taxes on
134	such premium and shall not be added to the premium taxes.
135	(h)  Providing for withdrawal of a participating state from
136	the agreement, without penalty, if the withdrawing state first
137	provides 60 days' written notice to all participating states.
138	(3)  AGREEMENT IMPLEMENTATION; TAX COLLECTION.-The Florida
139	Surplus Lines Service Office must implement any such agreement
140	entered into by the Department Of Financial Services and the
141	Office of Insurance Regulation under this section and has the
142	authority to collect the total tax imposed on a multistate risk
143	nonadmitted insurance premium under such agreement.
144	(4)  RULES.-The department may adopt rules for the
145	administration and enforcement of such agreement entered into
146	with another state or group of states under this section.
147	(5)  Notwithstanding any other provision of law to the
148	contrary, this section and any cooperative reciprocal agreement
149	entered into with another state or group of states under this
150	section control the collection and allocation of nonadmitted
151	insurance taxes for multistate risks.
152	(6)  INITIAL REPORT.-Following the negotiation and
153	execution of any cooperative reciprocal agreement entered into
154	by the Department of Financial Services and the Office of
155	Insurance Regulation with another state or group of states, the
156	department is directed to prepare and submit a report to the
157	President of the Senate and the Speaker of the House of
158	Representatives by January 1, 2012. In addition to describing in
159	detail the terms of any agreement entered into with another
160	state or group of states pursuant to this section, the report
161	shall include, but is not limited to, the following:
162	(a)  The actual and projected collections and allocation of
163	nonadmitted insurance premium taxes for multistate risk of each
164	state participating in the agreement;
165	(b)  A detailed description of the administrative structure
166	supporting any agreement, including any clearinghouse created by
167	an agreement and the fees charged to support administration of
168	the agreement;
169	(c)  The insurance tax rates of any state participating in
170	the agreement; and
171	(d)  The status of any other cooperative reciprocal
172	agreements established throughout the country, including a
173	state-by-state listing of passed or pending legislation
174	responding to changes made by the federal Nonadmitted and
175	Reinsurance Reform Act of 2010.
176	(7)  CONDITIONAL REPEAL.-This section is repealed effective
177	January 1, 2012, if before that date the Department of Financial
178	Services and the Office of Insurance Regulation have not entered
179	into any cooperative reciprocal agreement pursuant to this
180	section.
181	(8)  RATIFICATION; CONDITIONAL REPEAL.-This section is
182	repealed effective June 30, 2012, if any cooperative reciprocal
183	agreement entered into by the Department of Financial Services
184	and the Office of Insurance Regulation pursuant to this section
185	before January 1, 2012, is not ratified before June 30, 2012, by
186	both houses of the Legislature by a majority vote in each house
187	of those members present and voting. If the Legislature does not
188	ratify the agreement, the Chief Financial Officer and the Office
189	of Insurance Regulation shall withdraw from the agreement,
190	pursuant to any notice provisions required by the agreement.
191	(9)  ANNUAL REPORT.-Beginning in 2013, the Department of
192	Financial Services, in cooperation with the Office of Insurance
193	Regulation and the Florida Surplus Lines Office, shall by
194	January 1 of each year submit a report to the Governor, the
195	President of the Senate, and the Speaker of the House of
196	Representatives regarding any cooperative reciprocal agreement
197	entered into with another state or group of states under this
198	section. Each annual report shall include, but is not limited
199	to, actual and projected collections and allocation of
200	nonadmitted insurance premium taxes for multistate risk of each
201	state participating in the agreement; administrative costs and
202	fees of the agreement; the insurance tax rates of any state
203	participating in the agreement; the status of any other
204	cooperative reciprocal agreements established throughout the
205	country, including a state-by-state listing of passed or pending
206	legislation responding to changes made by the federal
207	Nonadmitted and Reinsurance Reform Act of 2010; and a detailed
208	discussion of any changes or proposed changes in the provisions
209	of the agreement or the rules under which the agreement
210	operates.
211	Section 5.  Subsection (3) of section 626.938, Florida
212	Statutes, is amended to read:
213	626.938  Report and tax of independently procured
214	coverages.-
215	(3)  For the general support of the government of this
216	state, there is levied upon the obligation, chose in action, or
217	right represented by the premium charged for such insurance a
218	tax at the rate of 5 percent of the gross amount of such premium
219	and a 0.3 percent service fee pursuant to s. 626.9325. If the
220	policy covers risks or exposures only partially in this state
221	and this state is the home state as defined by the federal
222	Nonadmitted and Reinsurance Reform Act of 2010 (NRRA), the tax
223	and service fee payable shall be computed on the gross premium.
224	The insured shall withhold the amount of the tax and service fee
225	from the amount of premium charged by and otherwise payable to
226	the insurer for such insurance. On or before the 45th day
227	following each calendar quarter Within 30 days after the
228	insurance is procured, continued, or renewed, and simultaneously
229	with the filing of the report provided for in subsection (1)
230	with the Florida Surplus Lines Service Office, the insured shall
231	make payable to the department the amount of the tax and make
232	payable to the Florida Surplus Lines Service Office the amount
233	of the service fee. The insured shall remit the tax and the
234	service fee to the Florida Surplus Lines Service Office. The
235	Florida Surplus Lines Service Office shall forward to the
236	department the taxes, and any interest collected pursuant to
237	subsection (5), within 10 days after receipt.
238	Section 6.  This act shall take effect upon becoming a law.

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