Florida Senate - 2013                              CS for SB 324
       
       
       
       By the Committee on Banking and Insurance; and Senator Brandes
       
       
       
       
       597-03441-13                                           2013324c1
    1                        A bill to be entitled                      
    2         An act relating to the Florida Insurance Guaranty
    3         Association; reordering and amending s. 631.57, F.S.;
    4         revising the duties of the association; authorizing
    5         the association to collect regular assessments
    6         directly from policyholders; authorizing the
    7         association to collect emergency assessments from
    8         insurers under certain circumstances; making technical
    9         and grammatical corrections; providing an effective
   10         date.
   11  
   12  Be It Enacted by the Legislature of the State of Florida:
   13  
   14         Section 1. Subsection (2) of section 631.57, Florida
   15  Statutes, is amended, and subsection (3) of that section is
   16  reordered and amended, to read:
   17         631.57 Powers and duties of the association.—
   18         (2) The association may:
   19         (a) Employ or retain such persons as are necessary to
   20  handle claims and perform other duties of the association;
   21         (b) Borrow funds necessary to effect the purposes of this
   22  part in accord with the plan of operation, including borrowing
   23  necessary to ensure that its cash flow needs are timely met to
   24  pay covered claims when regular and emergency assessments are
   25  levied on policyholders under subsection (3);
   26         (c) Sue or be sued, provided that service of process is
   27  shall be made upon the person registered with the department as
   28  agent for the receipt of service of process; and
   29         (d) Negotiate and become a party to such contracts as are
   30  necessary to carry out the purpose of this part. Additionally,
   31  The association may also enter into such contracts with a
   32  municipality, a county, or a legal entity created pursuant to s.
   33  163.01(7)(g) as are necessary in order for the municipality,
   34  county, or legal entity to issue bonds under s. 631.695. In
   35  connection with the issuance of any such bonds and the entering
   36  into of any such necessary contracts, the association may agree
   37  to such terms and conditions as the association deems necessary
   38  and proper.
   39         (3)(a) To the extent necessary to secure the funds for the
   40  respective accounts paying for the payment of covered claims, to
   41  pay the reasonable costs to administer such accounts the same,
   42  and to the extent necessary to secure the funds for the account
   43  specified in s. 631.55(2)(b) or to retire indebtedness,
   44  including, without limitation, the principal, redemption
   45  premium, if any, and interest on, and related costs of issuance
   46  of, bonds issued under s. 631.695 and the funding of any
   47  reserves and other payments required under the bond resolution
   48  or trust indenture pursuant to which such bonds have been
   49  issued, the office, upon certification of the board of
   50  directors, shall levy regular assessments in the proportion that
   51  each insurer’s net direct written premiums in this state in the
   52  classes protected by the account bears to the total of the said
   53  net direct written premiums received in this state by all such
   54  insurers for the preceding calendar year for the kinds of
   55  insurance included within such account. Regular assessments
   56  shall be remitted to and administered by the board of directors
   57  in the manner specified by the approved plan. Each insurer so
   58  assessed has shall have at least 30 days’ written notice as to
   59  the date the assessment is due and payable. Every assessment
   60  shall be made as a uniform percentage applicable to the net
   61  direct written premiums of each insurer in the kinds of
   62  insurance included within the account in which the assessment is
   63  made. The regular assessments levied against an any insurer may
   64  shall not exceed in any one year exceed more than 2 percent of
   65  that insurer’s net direct written premiums in this state for the
   66  kinds of insurance included within such account during the
   67  calendar year next preceding the date of such assessments. The
   68  Legislature finds and declares that regular assessments paid by
   69  an insurer or insurer group as a result of a levy by the office
   70  constitute advances of funds from the insurer to the
   71  association. An insurer may fully recoup regular assessments
   72  levied against prior year premiums by applying a separate
   73  recoupment factor to the premium of policies of the same kind or
   74  line as were considered by the office in determining the
   75  assessment liability of the insurer or insurer group.
   76         (b) In lieu of collecting the regular assessment under
   77  paragraph (a) from insurers, the association may collect all or
   78  part of the assessment directly from policyholders. If the
   79  association elects to collect the assessment directly from
   80  policyholders, the office shall issue an order specifying the
   81  date the board requires the insurers to begin collecting the
   82  assessment, which must be at least 90 days after the date the
   83  office levies the assessment. The order must specify a uniform
   84  percentage determined by the board, and verified by the office,
   85  of the direct written premium for all lines of business in the
   86  applicable accounts. The assessment certified in any one
   87  calendar year may not exceed 2 percent of the premium. The
   88  insurers shall collect such assessments without being affected
   89  by any credit, limitation, exemption, or deferment. Assessments
   90  collected under this paragraph shall be transferred regularly to
   91  the association as set forth in the order levying the
   92  assessment.
   93         (e)(b) If sufficient funds from regular and emergency such
   94  assessments, together with funds previously raised, are not
   95  available in any one year in the respective account to make all
   96  the payments or reimbursements then owing to insurers, insureds,
   97  or claimants, the funds available shall be prorated and the
   98  unpaid portion shall be paid as soon thereafter as funds become
   99  available.
  100         (c) The Legislature finds and declares that all assessments
  101  paid by an insurer or insurer group as a result of a levy by the
  102  office, including assessments levied pursuant to paragraph (a)
  103  and emergency assessments, constitute advances of funds from the
  104  insurer to the association. An insurer may fully recoup such
  105  advances by applying a separate recoupment factor to the premium
  106  of policies of the same kind or line as were considered by the
  107  office in determining the assessment liability of the insurer or
  108  insurer group.
  109         (f)(d)No State funds may not of any kind shall be allocated
  110  or paid to the said association or any of its accounts.
  111         (c)(e)1.a. In addition to regular assessments otherwise
  112  authorized under in paragraph (a), and to the extent necessary
  113  to secure the funds for the account specified in s. 631.55(2)(b)
  114  for the direct payment of covered claims of insurers rendered
  115  insolvent by the effects of a hurricane and to pay the
  116  reasonable costs to administer such claims, or to retire
  117  indebtedness, including, without limitation, the principal,
  118  redemption premium, if any, and interest on, and related costs
  119  of issuance of, bonds issued under s. 631.695 and the funding of
  120  any reserves and other payments required under the bond
  121  resolution or trust indenture pursuant to which such bonds have
  122  been issued, the office, upon certification of the board of
  123  directors, shall levy emergency assessments directly upon
  124  policyholders, which shall be collected by insurers holding a
  125  certificate of authority. Pursuant to such levy, the office
  126  shall issue an order specifying the date the board requires the
  127  insurers to begin collecting the assessment, which must be at
  128  least 90 days after the date the office levies the assessment.
  129  The order must specify a uniform percentage determined by the
  130  board, and verified by the office, of the direct written premium
  131  for all lines of business in the applicable accounts. The
  132  assessment certified in any one calendar year collected may not
  133  exceed 2 percent of the premium. The insurers shall collect such
  134  assessments without being affected by any credit, limitation,
  135  exemption, or deferment. Assessments collected by insurers under
  136  this paragraph shall be transferred regularly to the association
  137  as set forth in the order levying the assessment.
  138         1. If, after consultation with its financial advisor, the
  139  board determines that it must immediately begin paying the
  140  covered claims of one or more insolvent insurers and financing
  141  is not reasonably available, it may certify the emergency
  142  assessment on insurers in the same manner as set forth in
  143  paragraph (a), except that an emergency assessment may be paid
  144  by the insurer in a single payment or, at the option of the
  145  association, in 12 monthly installments with the first
  146  installment being due and payable at the end of the month after
  147  the emergency assessment is levied and subsequent installments
  148  being due by the end of each succeeding month. The emergency
  149  assessments payable under this paragraph by any insurer shall
  150  not exceed in any single year more than 2 percent of that
  151  insurer’s direct written premiums, net of refunds, in this state
  152  during the preceding calendar year for the kinds of insurance
  153  within the account specified in s. 631.55(2)(b).
  154         2.b.Any Emergency assessments authorized under this
  155  paragraph shall be levied by the office only upon insurers
  156  referred to in sub-subparagraph a., upon certification as to the
  157  need for such assessments by the board of directors. If In the
  158  event the board of directors participates in the issuance of
  159  bonds in accordance with s. 631.695, emergency assessments shall
  160  be levied in each year that bonds issued under s. 631.695 and
  161  secured by such emergency assessments are outstanding, in such
  162  amounts up to such 2 percent 2-percent limit as required in
  163  order to provide for the full and timely payment of the
  164  principal of, redemption premium, if any, and interest on, and
  165  related costs of issuance of, such bonds. The emergency
  166  assessments provided for in this paragraph are assigned and
  167  pledged to the municipality, county, or legal entity issuing
  168  bonds under s. 631.695 for the benefit of the holders of such
  169  bonds, in order to enable such municipality, county, or legal
  170  entity to provide for the payment of the principal of,
  171  redemption premium, if any, and interest on such bonds, the cost
  172  of issuance of such bonds, and the funding of any reserves and
  173  other payments required under the bond resolution or trust
  174  indenture pursuant to which such bonds have been issued, without
  175  the necessity for of any further action by the association, the
  176  office, or any other party. If To the extent bonds are issued
  177  under s. 631.695 and the association secures determines to
  178  secure such bonds by a pledge of revenues received from the
  179  emergency assessments, such bonds, upon such pledge of revenues,
  180  shall be secured by and payable from the proceeds of such
  181  emergency assessments, and the proceeds of emergency assessments
  182  levied under this paragraph shall be remitted directly to and
  183  administered by the trustee or custodian appointed for the
  184  payment of such bonds.
  185         c. Emergency assessments under this paragraph may be
  186  payable in a single payment or, at the option of the
  187  association, may be payable in 12 monthly installments with the
  188  first installment being due and payable at the end of the month
  189  after an emergency assessment is levied and subsequent
  190  installments being due not later than the end of each succeeding
  191  month.
  192         3.d. If emergency assessments are imposed, the report
  193  required by s. 631.695(7) must shall include an analysis of the
  194  revenues generated from the emergency assessments imposed under
  195  this paragraph.
  196         4.e. If emergency assessments are imposed, the references
  197  in sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to
  198  regular assessments levied under paragraph (a) must shall
  199  include emergency assessments imposed under this paragraph.
  200         5.2. If the board of directors participates in the issuance
  201  of bonds in accordance with s. 631.695, an emergency annual
  202  assessment under this paragraph must shall continue while the
  203  bonds issued with respect to which the assessment was imposed
  204  are outstanding, including any bonds the proceeds of which were
  205  used to refund bonds issued pursuant to s. 631.695, unless
  206  adequate provision has been made for the payment of the bonds in
  207  the documents authorizing the issuance of such bonds.
  208         6.3. Emergency assessments under this paragraph are not
  209  premium and are not subject to the premium tax, to any fees, or
  210  to any commissions. An insurer is liable for all emergency
  211  assessments that the insurer collects and shall treat the
  212  failure of an insured to pay an emergency assessment as a
  213  failure to pay the premium. An insurer is not liable for
  214  uncollectible emergency assessments.
  215         (d)(f) The recoupment factor applied to policies in
  216  accordance with paragraph (a) or subparagraph (c)1. paragraph
  217  (c) shall be selected by the insurer or insurer group so as to
  218  provide for the probable recoupment of both assessments levied
  219  pursuant to paragraph (a) and emergency assessments over a
  220  period of 12 months, unless the insurer or insurer group, at its
  221  option, elects to recoup the assessment over a longer period.
  222  The recoupment factor applies shall apply to all policies of the
  223  same kind or line as were considered by the office in
  224  determining the assessment liability of the insurer or insurer
  225  group issued or renewed during a 12-month period.
  226         1. If the insurer or insurer group does not collect the
  227  full amount of the assessment during one 12-month period, the
  228  insurer or insurer group may apply recalculated recoupment
  229  factors to policies issued or renewed during one or more
  230  succeeding 12-month periods.
  231         2. If, at the end of a 12-month period, the insurer or
  232  insurer group has collected from the combined kinds or lines of
  233  policies subject to assessment more than the total amount of the
  234  assessment paid by the insurer or insurer group, the excess
  235  amount shall be disbursed as follows:
  236         a.1. If the excess amount does not exceed 15 percent of the
  237  total assessment paid by the insurer or insurer group, the
  238  excess amount shall be remitted to the association within 60
  239  days after the end of the 12-month period in which the excess
  240  recoupment charges were collected.
  241         b.2. If the excess amount exceeds 15 percent of the total
  242  assessment paid by the insurer or insurer group, the excess
  243  amount shall be returned to the insurer’s or insurer group’s
  244  current policyholders by refunds or premium credits. The
  245  association shall use any remitted excess recoupment amounts to
  246  reduce future assessments.
  247         3.(g) Amounts recouped pursuant to this paragraph
  248  subsection for assessments levied under paragraph (a) due to
  249  insolvencies on or after July 1, 2010, are considered premium
  250  solely for premium tax purposes and are not subject to fees or
  251  commissions. However, insurers shall treat the failure of an
  252  insured to pay a recoupment charge as a failure to pay the
  253  premium.
  254         4.(h) At least 15 days before applying the recoupment
  255  factor to any policies, the insurer or insurer group shall file
  256  with the office a statement for informational purposes only
  257  setting forth the amount of the recoupment factor and an
  258  explanation of how the recoupment factor will be applied. Such
  259  statement must shall include documentation of the assessment
  260  paid by the insurer or insurer group and the arithmetic
  261  calculations supporting the recoupment factor. The insurer or
  262  insurer group may use the recoupment factor at any time after
  263  the expiration of the 15-day period. The insurer or insurer
  264  group need submit only one informational statement for all lines
  265  of business using the same recoupment factor.
  266         5.(i)Within No later than 90 days after the insurer or
  267  insurer group has completed the recoupment process, the insurer
  268  or insurer group shall file with the office, for information
  269  purposes only, a final accounting report documenting the
  270  recoupment. The report must shall provide the amounts of
  271  assessments paid by the insurer or insurer group, the amounts
  272  and percentages recouped by year from each affected line of
  273  business, and the direct written premium subject to recoupment
  274  by year. The insurer or insurer group need submit only one
  275  report for all lines of business using the same recoupment
  276  factor.
  277         Section 2. This act shall take effect July 1, 2013, and
  278  shall apply to any assessment certified and levied after that
  279  date regardless of when the insolvency or insolvencies occurred.