Florida Senate - 2013                                     SB 324
       
       
       
       By Senator Brandes
       
       
       
       
       22-00190A-13                                           2013324__
    1                        A bill to be entitled                      
    2         An act relating to the Florida Insurance Guaranty
    3         Association; amending s. 631.52, F.S.; revising the
    4         list of kinds of insurance exempted from the guarantee
    5         of payments; reordering and amending s. 631.57, F.S.;
    6         revising the duties of the association; authorizing
    7         the association to collect regular assessments
    8         directly from policyholders; authorizing the
    9         association to collect emergency assessments from
   10         insurers under certain circumstances; making technical
   11         and grammatical corrections; providing an effective
   12         date.
   13  
   14  Be It Enacted by the Legislature of the State of Florida:
   15  
   16         Section 1. Section 631.52, Florida Statutes, is amended to
   17  read:
   18         631.52 Scope.—This part shall apply to all kinds of direct
   19  insurance, except for any of the following:
   20         (1) Life, annuity, health, or disability insurance.;
   21         (2) Mortgage guaranty, financial guaranty, or other forms
   22  of insurance offering protection against investment risks.;
   23         (3) Fidelity or surety bonds, or any other bonding
   24  obligations.;
   25         (4) Credit insurance, vendors’ single interest insurance,
   26  or collateral protection insurance or any similar insurance
   27  protecting the interests of a creditor arising out of a
   28  creditor-debtor transaction.;
   29         (5) Warranty, including motor vehicle service, home
   30  warranty, or service warranty.;
   31         (6) Ambulance service, health care service, or preneed
   32  funeral merchandise or service.;
   33         (7) Optometric service plan, pharmaceutical service plan,
   34  or dental service plan.;
   35         (8) Legal expense.;
   36         (9) Health maintenance, prepaid health clinic, or
   37  continuing care.;
   38         (10) Ocean marine or wet marine insurance.;
   39         (11) Self-insurance and any kind of self-insurance fund,
   40  liability pool, or risk management fund.;
   41         (12) Title insurance.;
   42         (13) Surplus lines.;
   43         (14) Workers’ compensation, including claims under employer
   44  liability coverage.;
   45         (15) Any transaction or combination of transactions between
   46  a person, including affiliates of such person, and an insurer,
   47  including affiliates of such insurer, which involves the
   48  transfer of investment or credit risk unaccompanied by the
   49  transfer of insurance risk.; or
   50         (16) Any insurance provided by or guaranteed by government,
   51  including policies issued by risk apportionment plans under s.
   52  627.351.
   53         Section 2. Subsection (2) of section 631.57, Florida
   54  Statutes, is amended, and subsection (3) of that section is
   55  reordered and amended, to read:
   56         631.57 Powers and duties of the association.—
   57         (2) The association may:
   58         (a) Employ or retain such persons as are necessary to
   59  handle claims and perform other duties of the association;
   60         (b) Borrow funds necessary to effect the purposes of this
   61  part in accord with the plan of operation, including borrowing
   62  necessary to ensure that its cash flow needs are timely met to
   63  pay covered claims when regular and emergency assessments are
   64  levied on policyholders under subsection (3);
   65         (c) Sue or be sued, provided that service of process is
   66  shall be made upon the person registered with the department as
   67  agent for the receipt of service of process; and
   68         (d) Negotiate and become a party to such contracts as are
   69  necessary to carry out the purpose of this part. Additionally,
   70  The association may also enter into such contracts with a
   71  municipality, a county, or a legal entity created pursuant to s.
   72  163.01(7)(g) as are necessary in order for the municipality,
   73  county, or legal entity to issue bonds under s. 631.695. In
   74  connection with the issuance of any such bonds and the entering
   75  into of any such necessary contracts, the association may agree
   76  to such terms and conditions as the association deems necessary
   77  and proper.
   78         (3)(a) To the extent necessary to secure the funds for the
   79  respective accounts paying for the payment of covered claims, to
   80  pay the reasonable costs to administer such accounts the same,
   81  and to the extent necessary to secure the funds for the account
   82  specified in s. 631.55(2)(b) or to retire indebtedness,
   83  including, without limitation, the principal, redemption
   84  premium, if any, and interest on, and related costs of issuance
   85  of, bonds issued under s. 631.695 and the funding of any
   86  reserves and other payments required under the bond resolution
   87  or trust indenture pursuant to which such bonds have been
   88  issued, the office, upon certification of the board of
   89  directors, shall levy regular assessments in the proportion that
   90  each insurer’s net direct written premiums in this state in the
   91  classes protected by the account bears to the total of the said
   92  net direct written premiums received in this state by all such
   93  insurers for the preceding calendar year for the kinds of
   94  insurance included within such account. Regular assessments
   95  shall be remitted to and administered by the board of directors
   96  in the manner specified by the approved plan. Each insurer so
   97  assessed has shall have at least 30 days’ written notice as to
   98  the date the assessment is due and payable. Every assessment
   99  shall be made as a uniform percentage applicable to the net
  100  direct written premiums of each insurer in the kinds of
  101  insurance included within the account in which the assessment is
  102  made. The regular assessments levied against an any insurer may
  103  shall not exceed in any one year exceed more than 2 percent of
  104  that insurer’s net direct written premiums in this state for the
  105  kinds of insurance included within such account during the
  106  calendar year next preceding the date of such assessments. An
  107  insurer may fully recoup regular assessments levied against
  108  prior year premiums by applying a separate recoupment factor to
  109  the premium of policies of the same kind or line as were
  110  considered by the office in determining the assessment liability
  111  of the insurer or insurer group.
  112         (b) In lieu of collecting the regular assessment under
  113  paragraph (a) from insurers, the association may collect all or
  114  part of the assessment directly from policyholders. If the
  115  association elects to collect the assessment directly from
  116  policyholders, the office shall issue an order specifying the
  117  date the board requires the insurers to begin collecting the
  118  assessment, which must be at least 90 days after the date the
  119  board levies the assessment. The order must specify a uniform
  120  percentage determined by the board, and verified by the office,
  121  of the direct written premium for all lines of business in the
  122  applicable accounts. The assessment collected may not exceed 2
  123  percent of the premium in any single year. The insurers shall
  124  collect such assessments without being affected by any credit,
  125  limitation, exemption, or deferment. Assessments collected under
  126  this paragraph shall be transferred regularly to the association
  127  as set forth in the order levying the assessment.
  128         (e)(b) If sufficient funds from regular and emergency such
  129  assessments, together with funds previously raised, are not
  130  available in any one year in the respective account to make all
  131  the payments or reimbursements then owing to insurers, the funds
  132  available shall be prorated and the unpaid portion shall be paid
  133  as soon thereafter as funds become available.
  134         (c) The Legislature finds and declares that all assessments
  135  paid by an insurer or insurer group as a result of a levy by the
  136  office, including assessments levied pursuant to paragraph (a)
  137  and emergency assessments, constitute advances of funds from the
  138  insurer to the association. An insurer may fully recoup such
  139  advances by applying a separate recoupment factor to the premium
  140  of policies of the same kind or line as were considered by the
  141  office in determining the assessment liability of the insurer or
  142  insurer group.
  143         (f)(d)No State funds may not of any kind shall be
  144  allocated or paid to the said association or any of its
  145  accounts.
  146         (c)(e)1.a. In addition to regular assessments otherwise
  147  authorized under in paragraph (a), and to the extent necessary
  148  to secure the funds for the account specified in s. 631.55(2)(b)
  149  for the direct payment of covered claims of insurers rendered
  150  insolvent by the effects of a hurricane and to pay the
  151  reasonable costs to administer such claims, or to retire
  152  indebtedness, including, without limitation, the principal,
  153  redemption premium, if any, and interest on, and related costs
  154  of issuance of, bonds issued under s. 631.695 and the funding of
  155  any reserves and other payments required under the bond
  156  resolution or trust indenture pursuant to which such bonds have
  157  been issued, the association office, upon certification of the
  158  board of directors, shall levy emergency assessments directly
  159  upon policyholders, which shall be collected by insurers holding
  160  a certificate of authority. Pursuant to such levy, the office
  161  shall issue an order specifying the date the board requires the
  162  insurers to begin collecting the assessment, which must be at
  163  least 90 days after the date the board levies the assessment.
  164  The order must specify a uniform percentage determined by the
  165  board, and verified by the office, of the direct written premium
  166  for all lines of business in the applicable accounts. The
  167  assessment collected may not exceed 2 percent of the premium in
  168  any single year. The insurers shall collect such assessments
  169  without being affected by any credit, limitation, exemption, or
  170  deferment. Assessments collected by insurers under this
  171  paragraph shall be transferred regularly to the association as
  172  set forth in the order levying the assessment.
  173         1. If, after consultation with its financial advisor, the
  174  board determines that it must immediately begin paying the
  175  covered claims of one or more insolvent insurers and financing
  176  is not reasonably available, it may levy the emergency
  177  assessment on insurers in the same manner as set forth in
  178  paragraph (a), except that an emergency assessment may be paid
  179  by the insurer in a single payment or, at the option of the
  180  association, in 12 monthly installments with the first
  181  installment being due and payable at the end of the month after
  182  the emergency assessment is levied and subsequent installments
  183  being due by the end of each succeeding month. The emergency
  184  assessments payable under this paragraph by any insurer shall
  185  not exceed in any single year more than 2 percent of that
  186  insurer’s direct written premiums, net of refunds, in this state
  187  during the preceding calendar year for the kinds of insurance
  188  within the account specified in s. 631.55(2)(b).
  189         2.b.Any Emergency assessments authorized under this
  190  paragraph shall be levied by the office upon insurers referred
  191  to in sub-subparagraph a., only upon certification as to the
  192  need for such assessments by the board of directors. If In the
  193  event the board of directors participates in the issuance of
  194  bonds in accordance with s. 631.695, emergency assessments shall
  195  be levied in each year that bonds issued under s. 631.695 and
  196  secured by such emergency assessments are outstanding, in such
  197  amounts up to such 2 percent 2-percent limit as required in
  198  order to provide for the full and timely payment of the
  199  principal of, redemption premium, if any, and interest on, and
  200  related costs of issuance of, such bonds. The emergency
  201  assessments provided for in this paragraph are assigned and
  202  pledged to the municipality, county, or legal entity issuing
  203  bonds under s. 631.695 for the benefit of the holders of such
  204  bonds, in order to enable such municipality, county, or legal
  205  entity to provide for the payment of the principal of,
  206  redemption premium, if any, and interest on such bonds, the cost
  207  of issuance of such bonds, and the funding of any reserves and
  208  other payments required under the bond resolution or trust
  209  indenture pursuant to which such bonds have been issued, without
  210  the necessity for of any further action by the association, the
  211  office, or any other party. If To the extent bonds are issued
  212  under s. 631.695 and the association secures determines to
  213  secure such bonds by a pledge of revenues received from the
  214  emergency assessments, such bonds, upon such pledge of revenues,
  215  shall be secured by and payable from the proceeds of such
  216  emergency assessments, and the proceeds of emergency assessments
  217  levied under this paragraph shall be remitted directly to and
  218  administered by the trustee or custodian appointed for the
  219  payment of such bonds.
  220         c. Emergency assessments under this paragraph may be
  221  payable in a single payment or, at the option of the
  222  association, may be payable in 12 monthly installments with the
  223  first installment being due and payable at the end of the month
  224  after an emergency assessment is levied and subsequent
  225  installments being due not later than the end of each succeeding
  226  month.
  227         3.d. If emergency assessments are imposed, the report
  228  required by s. 631.695(7) must shall include an analysis of the
  229  revenues generated from the emergency assessments imposed under
  230  this paragraph.
  231         4.e. If emergency assessments are imposed, the references
  232  in sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to
  233  regular assessments levied under paragraph (a) must shall
  234  include emergency assessments imposed under this paragraph.
  235         5.2. If the board of directors participates in the issuance
  236  of bonds in accordance with s. 631.695, an emergency annual
  237  assessment under this paragraph must shall continue while the
  238  bonds issued with respect to which the assessment was imposed
  239  are outstanding, including any bonds the proceeds of which were
  240  used to refund bonds issued pursuant to s. 631.695, unless
  241  adequate provision has been made for the payment of the bonds in
  242  the documents authorizing the issuance of such bonds.
  243         6.3. Emergency assessments under this paragraph are not
  244  premium and are not subject to the premium tax, to any fees, or
  245  to any commissions. An insurer is liable for all emergency
  246  assessments that the insurer collects and shall treat the
  247  failure of an insured to pay an emergency assessment as a
  248  failure to pay the premium. An insurer is not liable for
  249  uncollectible emergency assessments.
  250         (d)(f) The recoupment factor applied to policies in
  251  accordance with paragraph (a) or subparagraph (c)1. paragraph
  252  (c) shall be selected by the insurer or insurer group so as to
  253  provide for the probable recoupment of both assessments levied
  254  pursuant to paragraph (a) and emergency assessments over a
  255  period of 12 months, unless the insurer or insurer group, at its
  256  option, elects to recoup the assessment over a longer period.
  257  The recoupment factor applies shall apply to all policies of the
  258  same kind or line as were considered by the office in
  259  determining the assessment liability of the insurer or insurer
  260  group issued or renewed during a 12-month period.
  261         1. If the insurer or insurer group does not collect the
  262  full amount of the assessment during one 12-month period, the
  263  insurer or insurer group may apply recalculated recoupment
  264  factors to policies issued or renewed during one or more
  265  succeeding 12-month periods.
  266         2. If, at the end of a 12-month period, the insurer or
  267  insurer group has collected from the combined kinds or lines of
  268  policies subject to assessment more than the total amount of the
  269  assessment paid by the insurer or insurer group, the excess
  270  amount shall be disbursed as follows:
  271         a.1. If the excess amount does not exceed 15 percent of the
  272  total assessment paid by the insurer or insurer group, the
  273  excess amount shall be remitted to the association within 60
  274  days after the end of the 12-month period in which the excess
  275  recoupment charges were collected.
  276         b.2. If the excess amount exceeds 15 percent of the total
  277  assessment paid by the insurer or insurer group, the excess
  278  amount shall be returned to the insurer’s or insurer group’s
  279  current policyholders by refunds or premium credits. The
  280  association shall use any remitted excess recoupment amounts to
  281  reduce future assessments.
  282         3.(g) Amounts recouped pursuant to this paragraph
  283  subsection for regular assessments levied under paragraph (a)
  284  due to insolvencies on or after July 1, 2010, are considered
  285  premium solely for premium tax purposes and are not subject to
  286  fees or commissions. However, insurers shall treat the failure
  287  of an insured to pay a recoupment charge as a failure to pay the
  288  premium.
  289         4.(h) At least 15 days before applying the recoupment
  290  factor to any policies, the insurer or insurer group shall file
  291  with the office a statement for informational purposes only
  292  setting forth the amount of the recoupment factor and an
  293  explanation of how the recoupment factor will be applied. Such
  294  statement must shall include documentation of the assessment
  295  paid by the insurer or insurer group and the arithmetic
  296  calculations supporting the recoupment factor. The insurer or
  297  insurer group may use the recoupment factor at any time after
  298  the expiration of the 15-day period. The insurer or insurer
  299  group need submit only one informational statement for all lines
  300  of business using the same recoupment factor.
  301         5.(i)Within No later than 90 days after the insurer or
  302  insurer group has completed the recoupment process, the insurer
  303  or insurer group shall file with the office, for information
  304  purposes only, a final accounting report documenting the
  305  recoupment. The report must shall provide the amounts of
  306  assessments paid by the insurer or insurer group, the amounts
  307  and percentages recouped by year from each affected line of
  308  business, and the direct written premium subject to recoupment
  309  by year. The insurer or insurer group need submit only one
  310  report for all lines of business using the same recoupment
  311  factor.
  312         Section 3. This act shall take effect July 1, 2013.