Florida Senate - 2012                          SENATOR AMENDMENT
       Bill No. CS for CS for SB 1428
       
       
       
       
       
       
                                Barcode 703316                          
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
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                  Floor: WD            .                                
             03/09/2012 11:38 AM       .                                
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       Senator Smith moved the following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Effective July 1, 2013, subsection (9) of
    6  section 440.02, Florida Statutes, is amended to read:
    7         440.02 Definitions.—When used in this chapter, unless the
    8  context clearly requires otherwise, the following terms shall
    9  have the following meanings:
   10         (9) “Corporate officer” or “officer of a corporation” means
   11  any person who fills an office provided for in the corporate
   12  charter or articles of incorporation filed with the Division of
   13  Corporations of the Department of State or as permitted or
   14  required by chapter 607. As to persons engaged in the
   15  construction industry, The term “officer of a corporation”
   16  includes a member owning at least 10 percent of a limited
   17  liability company created and approved under chapter 608.
   18         Section 2. Paragraph (b) of subsection (15) of section
   19  440.02, Florida Statutes, is amended to read:
   20         440.02 Definitions.—When used in this chapter, unless the
   21  context clearly requires otherwise, the following terms shall
   22  have the following meanings:
   23         (15)
   24         (b) “Employee” includes any person who is an officer of a
   25  corporation and who performs services for remuneration for such
   26  corporation within this state, whether or not such services are
   27  continuous.
   28         1. Any officer of a corporation may elect to be exempt from
   29  this chapter by filing written notice of the election with the
   30  department as provided in s. 440.05.
   31         2. As to officers of a corporation who are engaged in the
   32  construction industry, no more than three officers of a
   33  corporation or of any group of affiliated corporations may elect
   34  to be exempt from this chapter by filing a written notice of the
   35  election with the department as provided in s. 440.05. Officers
   36  must be shareholders, each owning at least 10 percent of the
   37  stock of such corporation and listed as an officer of such
   38  corporation with the Division of Corporations of the Department
   39  of State, in order to elect exemptions under this chapter. For
   40  purposes of this subparagraph, the term “affiliated” means and
   41  includes one or more corporations or entities, any one of which
   42  is a corporation engaged in the construction industry, under the
   43  same or substantially the same control of a group of business
   44  entities which are connected or associated so that one entity
   45  controls or has the power to control each of the other business
   46  entities. The term “affiliated” includes, but is not limited to,
   47  the officers, directors, executives, shareholders active in
   48  management, employees, and agents of the affiliated corporation.
   49  The ownership by one business entity of a controlling interest
   50  in another business entity or a pooling of equipment or income
   51  among business entities shall be prima facie evidence that one
   52  business is affiliated with the other.
   53         3. An officer of a corporation who elects to be exempt from
   54  this chapter by filing a written notice of the election with the
   55  department as provided in s. 440.05 is not an employee.
   56  
   57  Services are presumed to have been rendered to the corporation
   58  if the officer is compensated by other than dividends upon
   59  shares of stock of the corporation which the officer owns.
   60         Section 3. Subsections (3) and (6) of section 440.05,
   61  Florida Statutes, are amended to read:
   62         440.05 Election of exemption; revocation of election;
   63  notice; certification.—
   64         (3) Each officer of a corporation who is engaged in the
   65  construction industry and who elects an exemption from this
   66  chapter or who, after electing such exemption, revokes that
   67  exemption, must submit mail a written notice to such effect to
   68  the department on a form prescribed by the department. The
   69  notice of election to be exempt from the provisions of this
   70  chapter must be notarized and under oath. The notice of election
   71  to be exempt which is electronically submitted to the department
   72  by the officer of a corporation who is allowed to claim an
   73  exemption as provided by this chapter must list the name,
   74  federal tax identification number, date of birth, Florida driver
   75  license number or Florida identification card number social
   76  security number, all certified or registered licenses issued
   77  pursuant to chapter 489 held by the person seeking the
   78  exemption, a copy of relevant documentation as to employment
   79  status filed with the Internal Revenue Service as specified by
   80  the department, a copy of the relevant occupational license in
   81  the primary jurisdiction of the business, and the registration
   82  number of the corporation filed with the Division of
   83  Corporations of the Department of State, and the percentage of
   84  ownership along with a copy of the stock certificate evidencing
   85  the required ownership under this chapter. The notice of
   86  election to be exempt must identify each corporation that
   87  employs the person electing the exemption and must list the
   88  social security number or federal tax identification number of
   89  each such employer and the additional documentation required by
   90  this section. In addition, the notice of election to be exempt
   91  must provide that the officer electing an exemption is not
   92  entitled to benefits under this chapter, must provide that the
   93  election does not exceed exemption limits for officers provided
   94  in s. 440.02, and must certify that any employees of the
   95  corporation whose officer elects an exemption are covered by
   96  workers’ compensation insurance. Upon receipt of the notice of
   97  the election to be exempt, receipt of all application fees, and
   98  a determination by the department that the notice meets the
   99  requirements of this subsection, the department shall issue a
  100  certification of the election to the officer, unless the
  101  department determines that the information contained in the
  102  notice is invalid. The department shall revoke a certificate of
  103  election to be exempt from coverage upon a determination by the
  104  department that the person does not meet the requirements for
  105  exemption or that the information contained in the notice of
  106  election to be exempt is invalid. The certificate of election
  107  must list the name of the corporation listed in the request for
  108  exemption. A new certificate of election must be obtained each
  109  time the person is employed by a new or different corporation
  110  that is not listed on the certificate of election. A copy of the
  111  certificate of election must be sent to each workers’
  112  compensation carrier identified in the request for exemption.
  113  Upon filing a notice of revocation of election, an officer who
  114  is a subcontractor or an officer of a corporate subcontractor
  115  must notify her or his contractor. Upon revocation of a
  116  certificate of election of exemption by the department, the
  117  department shall notify the workers’ compensation carriers
  118  identified in the request for exemption.
  119         (6) A construction industry certificate of election to be
  120  exempt which is issued in accordance with this section shall be
  121  valid for 2 years after the effective date stated thereon. Both
  122  the effective date and the expiration date must be listed on the
  123  face of the certificate by the department. The construction
  124  industry certificate must expire at midnight, 2 years from its
  125  issue date, as noted on the face of the exemption certificate. A
  126  construction industry certificate of election to be exempt may
  127  be revoked before its expiration by the officer for whom it was
  128  issued or by the department for the reasons stated in this
  129  section. At least 60 days before prior to the expiration date of
  130  a construction industry certificate of exemption issued after
  131  December 1, 1998, the department shall send notice of the
  132  expiration date and an application for renewal to the
  133  certificateholder at the address on the certificate or to the e
  134  mail address on file with the department.
  135         Section 4. Effective January 1, 2013, subsection (6) of
  136  section 440.05, Florida Statutes, as amended by this act, is
  137  amended to read:
  138         440.05 Election of exemption; revocation of election;
  139  notice; certification.—
  140         (6) A construction industry certificate of election to be
  141  exempt which is issued on or after January 1, 2013, in
  142  accordance with this section is shall be valid for 2 years after
  143  the effective date stated thereon. Both the effective date and
  144  the expiration date must be listed on the face of the
  145  certificate by the department. The construction industry
  146  certificate must expire at midnight, 2 years from its issue
  147  date, as noted on the face of the exemption certificate. A
  148  construction industry certificate of election to be exempt may
  149  be revoked before its expiration by the officer for whom it was
  150  issued or by the department for the reasons stated in this
  151  section. At least 60 days before the expiration date of a
  152  construction industry certificate of exemption, the department
  153  shall send notice of the expiration date to the
  154  certificateholder at the address on the certificate or to the e
  155  mail address on file with the department.
  156         Section 5. Subsection (15) is added to section 440.107,
  157  Florida Statutes, to read:
  158         440.107 Department powers to enforce employer compliance
  159  with coverage requirements.—
  160         (15) A limited liability company that is not engaged in the
  161  construction industry and that meets the definition of
  162  “employment” at any time between July 1, 2013, and December 31,
  163  2013, may not be issued a penalty pursuant to this section for
  164  failing to secure the payment of workers’ compensation.
  165         Section 6. Subsections (7) and (8) of section 624.307,
  166  Florida Statutes, are renumbered as subsections (8) and (9),
  167  respectively, and a new subsection (7) is added to that section,
  168  to read:
  169         624.307 General powers; duties.—
  170         (7) The office, within existing resources, may expend funds
  171  for the professional development of its employees, including,
  172  but not limited to, professional dues for employees who are
  173  required to be members of professional organizations;
  174  examinations leading to professional designations required for
  175  employment with the office; training courses and examinations
  176  provided through, and to ensure compliance with, the National
  177  Association of Insurance Commissioners; or other training
  178  courses related to the regulation of insurance.
  179         Section 7. Section 627.215, Florida Statutes, is amended to
  180  read:
  181         627.215 Excessive profits for workers’ compensation,
  182  employer’s liability, commercial property, and commercial
  183  casualty insurance prohibited.—
  184         (1)(a) Each insurer group writing workers’ compensation and
  185  employer’s liability insurance as defined in s. 624.605(1)(c),
  186  commercial property insurance as defined in s. 627.0625,
  187  commercial umbrella liability insurance as defined in s.
  188  627.0625, or commercial casualty insurance as defined in s.
  189  627.0625 shall file with the office before prior to July 1 of
  190  each year, on a form prescribed by the commission, the following
  191  data for the component types of such insurance as provided in
  192  the form:
  193         1. Calendar-year earned premium.
  194         2. Accident-year incurred losses and loss adjustment
  195  expenses.
  196         3. The administrative and selling expenses incurred in this
  197  state or allocated to this state for the calendar year.
  198         4. Policyholder dividends applicable to the calendar year.
  199  
  200  This paragraph does not Nothing herein is intended to prohibit
  201  an insurer from filing on a calendar-year basis.
  202         (b) The data filed for the group shall be a consolidation
  203  of the data of the individual insurers of the group. However, an
  204  insurer may elect to either consolidate commercial umbrella
  205  liability insurance data with commercial casualty insurance data
  206  or to separately file data for commercial umbrella liability
  207  insurance. Each insurer shall elect its method of filing
  208  commercial umbrella liability insurance at the time of filing
  209  data for accident year 1987 and shall thereafter continue filing
  210  under the same method. In the case of commercial umbrella
  211  liability insurance data reported separately, a separate
  212  excessive profits test shall be applied and the test period
  213  shall be 10 years. In the case of workers’ compensation and
  214  employer’s liability insurance, the final report for the test
  215  period including accident years 1984, 1985, and 1986 must be
  216  filed prior to July 1, 1988. In the case of commercial property
  217  and commercial casualty insurance, the final report for the test
  218  period including accident years 1987, 1988, and 1989 must be
  219  filed prior to July 1, 1991.
  220         (2) Each insurer group writing workers’ compensation and
  221  employer’s liability insurance shall also file a schedule of
  222  Florida loss and loss adjustment experience for each of the 3
  223  years previous to the most recent accident year. The incurred
  224  losses and loss adjustment expenses shall be valued as of
  225  December 31 of the first year following the latest accident year
  226  to be reported, developed to an ultimate basis, and at two 12
  227  month intervals thereafter, each developed to an ultimate basis,
  228  so that a total of three evaluations will be provided for each
  229  accident year. The first year to be so reported shall be
  230  accident year 1984, so that the reporting of 3 accident years
  231  under this revised evaluation will not take place until accident
  232  years 1985 and 1986 have become available. For reporting
  233  purposes unrelated to determining excessive profits, the loss
  234  and loss adjustment experience of each accident year shall
  235  continue to be reported until each accident year has been
  236  reported at eight stages of development.
  237         (2)(3)(a) Each insurer group writing commercial property
  238  insurance or commercial casualty insurance shall also file a
  239  schedule of Florida loss and loss adjustment experience for each
  240  of the 3 years previous to the most recent accident year. The
  241  incurred losses and loss adjustment expenses shall be valued as
  242  of December 31 of the first year following the latest accident
  243  year, developed to an ultimate basis, and at two 12-month
  244  intervals thereafter, each developed to an ultimate basis, so
  245  that a total of 3 evaluations will be provided for each accident
  246  year. The first year to be so reported shall be accident year
  247  1987, which shall first be reported on or before July 1, 1989,
  248  and the reporting of 3 accident years will not take place until
  249  accident years 1988 and 1989 have become available. For medical
  250  malpractice insurance, the first year to be so reported shall be
  251  accident year 1990, which shall first be reported on or before
  252  July 1, 1992, and the reporting of 3 accident years for full
  253  inclusion of medical malpractice experience in commercial
  254  casualty insurance will not take place until accident years 1991
  255  and 1992 become available. Accordingly, no medical malpractice
  256  insured shall be eligible for refunds or credits until the
  257  reporting period ending with calendar-accident year 1992. For
  258  reporting purposes unrelated to determining excess profits, the
  259  loss and loss adjustment experience of each accident year shall
  260  continue to be reported until each accident year has been
  261  reported at eight stages of development.
  262         (b) Each insurer group writing commercial umbrella
  263  liability insurance which elects to file separate data for such
  264  insurance shall also file a schedule of Florida loss and loss
  265  adjustment experience for each of the 10 years previous to the
  266  most recent accident year. The incurred losses and loss
  267  adjustment expenses shall be valued as of December 31 of the
  268  first year following the latest accident year, developed to an
  269  ultimate basis, and at nine 12-month intervals thereafter, each
  270  developed to an ultimate basis, so that a total of 10
  271  evaluations will be provided for each accident year. The first
  272  year to be so reported shall be accident year 1987, which shall
  273  first be reported on or before October 1, 1989, and the
  274  reporting of 10 accident years will not take place until
  275  accident year 1996 data is reported.
  276         (3)(4) Each insurer group’s underwriting gain or loss for
  277  each calendar-accident year shall be computed as follows: The
  278  sum of the accident-year incurred losses and loss adjustment
  279  expenses as of December 31 of the year, developed to an ultimate
  280  basis, plus the administrative and selling expenses incurred in
  281  the calendar year, plus policyholder dividends applicable to the
  282  calendar year, shall be subtracted from the calendar-year earned
  283  premium to determine the underwriting gain or loss.
  284         (4)(5) For the 3 most recent calendar-accident years for
  285  which data is to be filed under this section, the underwriting
  286  gain or loss shall be compared to the anticipated underwriting
  287  profit, except in the case of separately reported commercial
  288  umbrella liability insurance for which such comparison shall be
  289  made for the 10 most recent calendar-accident years.
  290         (6) For those insurer groups writing workers’ compensation
  291  and employer’s liability insurance during the years 1984, 1985,
  292  1986, 1987, and 1988, an excessive profit has been realized if
  293  underwriting gain is greater than the anticipated underwriting
  294  profit plus 5 percent of earned premiums for the 3 most recent
  295  calendar years for which data is to be filed under this section.
  296  Any excess profit of an insurance company offering workers’
  297  compensation or employer’s liability insurance during this
  298  period of time, shall be returned to policyholders in the form
  299  of a cash refund or a credit toward future purchase of
  300  insurance. The excessive amount shall be refunded on a pro rata
  301  basis in relation to the final compilation year earned premiums
  302  to the workers’ compensation policyholders of record of the
  303  insurer group on December 31 of the final compilation year.
  304         (5)(7)(a) Beginning with the July 1, 1991, report for
  305  workers’ compensation insurance, employer’s liability insurance,
  306  commercial property insurance, and commercial casualty
  307  insurance, an excessive profit has been realized if the net
  308  aggregate underwriting gain for all these lines combined is
  309  greater than the net aggregate anticipated underwriting profit
  310  for these lines plus 5 percent of earned premiums for the 3 most
  311  recent calendar years for which data is to be filed under this
  312  section. For calculation purposes commercial property insurance
  313  and commercial casualty insurance shall be broken down into
  314  sublines in order to ascertain the anticipated underwriting
  315  profit factor versus the actual underwriting gain for the given
  316  subline.
  317         (b) Beginning with the July 1, 1998, report for commercial
  318  umbrella liability insurance, if an insurer has elected to file
  319  data separately for such insurance, an excessive profit has been
  320  realized if the underwriting gain for such insurance is greater
  321  than the anticipated underwriting profit for such insurance plus
  322  5 percent of earned premiums for the 10 most recent calendar
  323  years for which data is to be filed under this section.
  324         (6)(8) As used in this section with respect to any 3-year
  325  period, or with respect to any 10-year period in the case of
  326  commercial umbrella liability insurance, “anticipated
  327  underwriting profit” means the sum of the dollar amounts
  328  obtained by multiplying, for each rate filing of the insurer
  329  group in effect during such period, the earned premiums
  330  applicable to such rate filing during such period by the
  331  percentage factor included in such rate filing for profit and
  332  contingencies, such percentage factor having been determined
  333  with due recognition to investment income from funds generated
  334  by Florida business, except that the anticipated underwriting
  335  profit for the purposes of this section shall be calculated
  336  using a profit and contingencies factor that is not less than
  337  zero. Separate calculations need not be made for consecutive
  338  rate filings containing the same percentage factor for profits
  339  and contingencies.
  340         (7)(9) If the insurer group has realized an excessive
  341  profit, the office shall order a return of the excessive amounts
  342  after affording the insurer group an opportunity for hearing and
  343  otherwise complying with the requirements of chapter 120. Such
  344  excessive amounts shall be refunded in all instances unless the
  345  insurer group affirmatively demonstrates to the office that the
  346  refund of the excessive amounts will render a member of the
  347  insurer group financially impaired or will render it insolvent
  348  under the provisions of the Florida Insurance Code.
  349         (8)(10) Any excess profit of an insurance company as
  350  determined on July 1, 1991, and thereafter shall be returned to
  351  policyholders in the form of a cash refund or a credit toward
  352  the future purchase of insurance. The excessive amount shall be
  353  refunded on a pro rata basis in relation to the final
  354  compilation year earned premiums to the policyholders of record
  355  of the insurer group on December 31 of the final compilation
  356  year.
  357         (9)(11)(a) Cash refunds to policyholders may be rounded to
  358  the nearest dollar.
  359         (b) Data in required reports to the office may be rounded
  360  to the nearest dollar.
  361         (c) Rounding, if elected by the insurer, shall be applied
  362  consistently.
  363         (10)(12)(a) Refunds shall be completed in one of the
  364  following ways:
  365         1. If the insurer group elects to make a cash refund, the
  366  refund shall be completed within 60 days after of entry of a
  367  final order indicating that excessive profits have been
  368  realized.
  369         2. If the insurer group elects to make refunds in the form
  370  of a credit to renewal policies, such credits shall be applied
  371  to policy renewal premium notices which are forwarded to
  372  insureds more than 60 calendar days after entry of a final order
  373  indicating that excessive profits have been realized. If an
  374  insurer group has made this election but an insured thereafter
  375  cancels her or his policy or otherwise allows the policy to
  376  terminate, the insurer group shall make a cash refund within not
  377  later than 60 days after termination of such coverage.
  378         (b) Upon completion of the renewal credits or refund
  379  payments, the insurer group shall immediately certify to the
  380  office that the refunds have been made.
  381         (11)(13) Any refund or renewal credit made pursuant to this
  382  section shall be treated as a policyholder dividend applicable
  383  to the year immediately succeeding the compilation period giving
  384  rise to the refund or credit, for purposes of reporting under
  385  this section for subsequent years.
  386         (12)(14) The application of this law to commercial property
  387  and commercial casualty insurance, which includes commercial
  388  umbrella liability insurance, ceases on January 1, 1997.
  389         Section 8. Subsection (8) is added to section 627.4133,
  390  Florida Statutes, to read:
  391         627.4133 Notice of cancellation, nonrenewal, or renewal
  392  premium.—
  393         (8) Upon expiration of the policy term, an insurer may
  394  transfer a commercial lines policy to another authorized insurer
  395  that is a member of the same group or owned by the same holding
  396  company as the transferring insurer. The transfer constitutes a
  397  renewal of the policy and may not be treated as a cancellation
  398  or a nonrenewal of the policy. The insurer must provide notice
  399  of its intent to transfer the policy at least 45 days before the
  400  effective date of the transfer along with the financial rating
  401  of the authorized insurer to which the policy is being
  402  transferred. Such notice may be provided in the notice of
  403  renewal premium. This subsection does not apply to a policy
  404  providing residential property insurance coverage, except for
  405  farmowners insurance and commercial general liability policies
  406  providing farm coverage or commercial property policies
  407  providing farm coverage.
  408         Section 9. Subsection (2) of section 627.442, Florida
  409  Statutes, is amended to read:
  410         627.442 Insurance contracts.—
  411         (2) Notwithstanding s. 440.381(3), an insurer having at
  412  least $200 million in surplus, or an insurer within an insurer
  413  group that has at least $400 million in surplus, as reflected in
  414  the combined annual statement filed by the insurer group with
  415  the office, is not required to perform physical onsite premium
  416  audits are not required for workers’ compensation coverage,
  417  other than an audit required by the insurance policy or an order
  418  of the office, or at least once each policy period, if requested
  419  by the insured.
  420         Section 10. Subsection (4) of section 628.6017, Florida
  421  Statutes, is amended to read:
  422         628.6017 Converting assessable mutual insurer.—
  423         (4) An assessable mutual insurer becoming a stock insurer
  424  or a nonassessable mutual insurer is shall not be subject to s.
  425  627.215 or s. 627.351(5) for 5 years following authorization of
  426  the conversion by the office. However, the converted stock
  427  insurer or nonassessable mutual insurer must shall file all
  428  necessary data required by s. 627.215. Such amounts otherwise
  429  subject to s. 627.215(8) must 627.215(10) shall be maintained as
  430  surplus as to policyholders and are not be available for
  431  dividends for a period of 5 years.
  432         Section 11. Except as otherwise expressly provided in this
  433  act, this act shall take effect July 1, 2012.
  434  
  435  ================= T I T L E  A M E N D M E N T ================
  436         And the title is amended as follows:
  437         Delete everything before the enacting clause
  438  and insert:
  439                        A bill to be entitled                      
  440         An act relating to insurance; amending s. 440.02,
  441         F.S.; redefining the terms “corporate officer” and
  442         “employee” for purposes of workers’ compensation;
  443         amending s. 440.05, F.S.; revising requirements for
  444         submitting a notice of election of exemption; revising
  445         duties of the Department of Financial Services
  446         relating to the expiration of certificates of
  447         exemption; expanding applicability of requirements
  448         relating to certificates of exemption; amending s.
  449         440.107, F.S.; exempting certain limited liability
  450         companies from penalties for failure to secure the
  451         payment of workers’ compensation; amending s. 624.307,
  452         F.S.; authorizing the Office of Insurance Regulation
  453         to expend funds for the professional development of
  454         its employees; amending s. 627.215, F.S.; removing
  455         workers’ compensation and employer’s liability
  456         insurance from those types of insurance that must
  457         report and refund excess profits; deleting obsolete
  458         provisions; amending s. 627.4133, F.S.; providing that
  459         the transfer of a policy to certain other insurers is
  460         considered a renewal of the policy rather than a
  461         cancellation or nonrenewal; requiring notice of such
  462         transfer; specifying which types of policies such
  463         transfer provisions apply to; amending s. 627.442,
  464         F.S.; exempting certain insurers from performing
  465         onsite premium audits for workers’ compensation
  466         insurance; amending s. 628.6017, F.S.; conforming a
  467         cross-reference; providing effective dates.