Florida Senate - 2017              PROPOSED COMMITTEE SUBSTITUTE
       Bill No. CS for SB 454
       Proposed Committee Substitute by the Committee on Appropriations
       (Appropriations Subcommittee on General Government)
    1                        A bill to be entitled                      
    2         An act relating to the regulation of insurance
    3         companies; amending s. 215.555, F.S.; deleting a
    4         future repeal of an exemption of medical malpractice
    5         insurance premiums from certain emergency assessments
    6         by the State Board of Administration relating to the
    7         Florida Hurricane Catastrophe Fund; amending s.
    8         624.407, F.S.; specifying the minimum surplus as to
    9         policyholders for insurers that only transact in
   10         specified forms of residential property insurance;
   11         amending s. 625.012, F.S.; revising the allowable
   12         assets of insurers relating to specified levied
   13         assessments; amending s. 627.062, F.S.; revising
   14         requirements for certain rate filings by medical
   15         malpractice insurers; amending s. 627.0645, F.S.;
   16         adding certain medical malpractice insurance to
   17         casualty insurance excluded from an annual base rate
   18         filing requirement for rating organizations; amending
   19         s. 627.4035, F.S.; revising the methods of paying
   20         premiums for insurance contracts; authorizing an
   21         insurer to impose a specified insufficient funds fee
   22         if certain premium payment methods are returned, are
   23         declined, or cannot be processed; providing an
   24         exception; amending s. 627.421, F.S.; providing that
   25         an electronically delivered document in an insurance
   26         policy meets formatting requirements for printed
   27         documents under certain conditions; amending s.
   28         627.7295, F.S.; conforming provisions to changes made
   29         by the act; providing an effective date.
   31  Be It Enacted by the Legislature of the State of Florida:
   33         Section 1. Paragraph (b) of subsection (6) of section
   34  215.555, Florida Statutes, is amended to read:
   35         215.555 Florida Hurricane Catastrophe Fund.—
   36         (6) REVENUE BONDS.—
   37         (b) Emergency assessments.—
   38         1. If the board determines that the amount of revenue
   39  produced under subsection (5) is insufficient to fund the
   40  obligations, costs, and expenses of the fund and the
   41  corporation, including repayment of revenue bonds and that
   42  portion of the debt service coverage not met by reimbursement
   43  premiums, the board shall direct the Office of Insurance
   44  Regulation to levy, by order, an emergency assessment on direct
   45  premiums for all property and casualty lines of business in this
   46  state, including property and casualty business of surplus lines
   47  insurers regulated under part VIII of chapter 626, but not
   48  including any workers’ compensation premiums or medical
   49  malpractice premiums. As used in this subsection, the term
   50  “property and casualty business” includes all lines of business
   51  identified on Form 2, Exhibit of Premiums and Losses, in the
   52  annual statement required of authorized insurers by s. 624.424
   53  and any rule adopted under this section, except for those lines
   54  identified as accident and health insurance and except for
   55  policies written under the National Flood Insurance Program. The
   56  assessment shall be specified as a percentage of direct written
   57  premium and is subject to annual adjustments by the board in
   58  order to meet debt obligations. The same percentage applies to
   59  all policies in lines of business subject to the assessment
   60  issued or renewed during the 12-month period beginning on the
   61  effective date of the assessment.
   62         2. A premium is not subject to an annual assessment under
   63  this paragraph in excess of 6 percent of premium with respect to
   64  obligations arising out of losses attributable to any one
   65  contract year, and a premium is not subject to an aggregate
   66  annual assessment under this paragraph in excess of 10 percent
   67  of premium. An annual assessment under this paragraph continues
   68  as long as the revenue bonds issued with respect to which the
   69  assessment was imposed are outstanding, including any bonds the
   70  proceeds of which were used to refund the revenue bonds, unless
   71  adequate provision has been made for the payment of the bonds
   72  under the documents authorizing issuance of the bonds.
   73         3. Emergency assessments shall be collected from
   74  policyholders. Emergency assessments shall be remitted by
   75  insurers as a percentage of direct written premium for the
   76  preceding calendar quarter as specified in the order from the
   77  Office of Insurance Regulation. The office shall verify the
   78  accurate and timely collection and remittance of emergency
   79  assessments and shall report the information to the board in a
   80  form and at a time specified by the board. Each insurer
   81  collecting assessments shall provide the information with
   82  respect to premiums and collections as may be required by the
   83  office to enable the office to monitor and verify compliance
   84  with this paragraph.
   85         4. With respect to assessments of surplus lines premiums,
   86  each surplus lines agent shall collect the assessment at the
   87  same time as the agent collects the surplus lines tax required
   88  by s. 626.932, and the surplus lines agent shall remit the
   89  assessment to the Florida Surplus Lines Service Office created
   90  by s. 626.921 at the same time as the agent remits the surplus
   91  lines tax to the Florida Surplus Lines Service Office. The
   92  emergency assessment on each insured procuring coverage and
   93  filing under s. 626.938 shall be remitted by the insured to the
   94  Florida Surplus Lines Service Office at the time the insured
   95  pays the surplus lines tax to the Florida Surplus Lines Service
   96  Office. The Florida Surplus Lines Service Office shall remit the
   97  collected assessments to the fund or corporation as provided in
   98  the order levied by the Office of Insurance Regulation. The
   99  Florida Surplus Lines Service Office shall verify the proper
  100  application of such emergency assessments and shall assist the
  101  board in ensuring the accurate and timely collection and
  102  remittance of assessments as required by the board. The Florida
  103  Surplus Lines Service Office shall annually calculate the
  104  aggregate written premium on property and casualty business,
  105  other than workers’ compensation and medical malpractice,
  106  procured through surplus lines agents and insureds procuring
  107  coverage and filing under s. 626.938 and shall report the
  108  information to the board in a form and at a time specified by
  109  the board.
  110         5. Any assessment authority not used for a particular
  111  contract year may be used for a subsequent contract year. If,
  112  for a subsequent contract year, the board determines that the
  113  amount of revenue produced under subsection (5) is insufficient
  114  to fund the obligations, costs, and expenses of the fund and the
  115  corporation, including repayment of revenue bonds and that
  116  portion of the debt service coverage not met by reimbursement
  117  premiums, the board shall direct the Office of Insurance
  118  Regulation to levy an emergency assessment up to an amount not
  119  exceeding the amount of unused assessment authority from a
  120  previous contract year or years, plus an additional 4 percent
  121  provided that the assessments in the aggregate do not exceed the
  122  limits specified in subparagraph 2.
  123         6. The assessments otherwise payable to the corporation
  124  under this paragraph shall be paid to the fund unless the Office
  125  of Insurance Regulation and the Florida Surplus Lines Service
  126  Office received a notice from the corporation and the fund,
  127  which shall be conclusive and upon which they may rely without
  128  further inquiry, that the corporation has issued bonds and the
  129  fund has no agreements in effect with local governments under
  130  paragraph (c). On or after the date of the notice and until the
  131  date the corporation has no bonds outstanding, the fund shall
  132  have no right, title, or interest in or to the assessments,
  133  except as provided in the fund’s agreement with the corporation.
  134         7. Emergency assessments are not premium and are not
  135  subject to the premium tax, to the surplus lines tax, to any
  136  fees, or to any commissions. An insurer is liable for all
  137  assessments that it collects and must treat the failure of an
  138  insured to pay an assessment as a failure to pay the premium. An
  139  insurer is not liable for uncollectible assessments.
  140         8. If an insurer is required to return an unearned premium,
  141  it shall also return any collected assessment attributable to
  142  the unearned premium. A credit adjustment to the collected
  143  assessment may be made by the insurer with regard to future
  144  remittances that are payable to the fund or corporation, but the
  145  insurer is not entitled to a refund.
  146         9. If a surplus lines insured or an insured who has
  147  procured coverage and filed under s. 626.938 is entitled to the
  148  return of an unearned premium, the Florida Surplus Lines Service
  149  Office shall provide a credit or refund to the agent or such
  150  insured for the collected assessment attributable to the
  151  unearned premium before remitting the emergency assessment
  152  collected to the fund or corporation.
  153         10. The exemption of medical malpractice insurance premiums
  154  from emergency assessments under this paragraph is repealed May
  155  31, 2019, and medical malpractice insurance premiums shall be
  156  subject to emergency assessments attributable to loss events
  157  occurring in the contract years commencing on June 1, 2019.
  158         Section 2. Subsection (1) of section 624.407, Florida
  159  Statutes, is amended to read:
  160         624.407 Surplus required; new insurers.—
  161         (1) To receive authority to transact any one kind or
  162  combinations of kinds of insurance, as defined in part V of this
  163  chapter, an insurer applying for its original certificate of
  164  authority in this state shall possess surplus as to
  165  policyholders at least the greater of:
  166         (a) For a property and casualty insurer, $5 million, or
  167  $2.5 million for any other insurer;
  168         (b) For life insurers, 4 percent of the insurer’s total
  169  liabilities;
  170         (c) For life and health insurers, 4 percent of the
  171  insurer’s total liabilities, plus 6 percent of the insurer’s
  172  liabilities relative to health insurance;
  173         (d) For all insurers other than life insurers and life and
  174  health insurers, 10 percent of the insurer’s total liabilities;
  175         (e) Notwithstanding paragraph (a) or paragraph (d), for a
  176  domestic insurer that transacts residential property insurance
  177  and is:
  178         1. Not a wholly owned subsidiary of an insurer domiciled in
  179  any other state, $15 million.
  180         2. A wholly owned subsidiary of an insurer domiciled in any
  181  other state, $50 million; or
  182         (f) Notwithstanding paragraphs (a), (d), and (e), for a
  183  domestic insurer that only transacts limited sinkhole coverage
  184  insurance for personal lines residential property pursuant to s.
  185  627.7151, $7.5 million; or
  186         (g) Notwithstanding paragraphs (a), (b), and (e), for an
  187  insurer that only transacts residential property insurance in
  188  the form of renter’s insurance, tenant’s coverage, cooperative
  189  unit owner insurance, or any combination thereof, $10 million.
  190         Section 3. Subsection (15) of section 625.012, Florida
  191  Statutes, is amended to read:
  192         625.012 “Assets” defined.—In any determination of the
  193  financial condition of an insurer, there shall be allowed as
  194  “assets” only such assets as are owned by the insurer and which
  195  consist of:
  196         (15)(a) Assessments levied pursuant to s. 631.57(3)(a) and
  197  (e) or s. 631.914 which that are paid before policy surcharges
  198  are collected and result in a receivable for policy surcharges
  199  to be collected in the future. This amount, to the extent it is
  200  likely that it will be realized, meets the definition of an
  201  admissible asset as specified in the National Association of
  202  Insurance Commissioners’ Statement of Statutory Accounting
  203  Principles No. 4. The asset shall be established and recorded
  204  separately from the liability regardless of whether it is based
  205  on a retrospective or prospective premium-based assessment. If
  206  an insurer is unable to fully recoup the amount of the
  207  assessment because of a reduction in writings or withdrawal from
  208  the market, the amount recorded as an asset shall be reduced to
  209  the amount reasonably expected to be recouped.
  210         (b) Assessments levied as monthly installments pursuant to
  211  s. 631.57(3)(e)3. or s. 631.914 which that are paid after policy
  212  surcharges are collected so that the recognition of assets is
  213  based on actual premium written offset by the obligation to the
  214  Florida Insurance Guaranty Association or the Florida Workers’
  215  Compensation Insurance Guaranty Association, Incorporated.
  216         Section 4. Paragraph (e) of subsection (7) of section
  217  627.062, Florida Statutes, is amended to read:
  218         627.062 Rate standards.—
  219         (7) The provisions of this subsection apply only to rates
  220  for medical malpractice insurance and control to the extent of
  221  any conflict with other provisions of this section.
  222         (e) For medical malpractice rates subject to paragraph
  223  (2)(a), the medical malpractice insurer shall make an annual
  224  base a rate filing in accordance with s. 627.0645 under this
  225  section, sworn to by at least two executive officers of the
  226  insurer, at least once each calendar year.
  227         Section 5. Subsection (1) of section 627.0645, Florida
  228  Statutes, is amended to read:
  229         627.0645 Annual filings.—
  230         (1) Each rating organization filing rates for, and each
  231  insurer writing, any line of property or casualty insurance to
  232  which this part applies, except:
  233         (a) Workers’ compensation and employer’s liability
  234  insurance;
  235         (b) Insurance as defined in ss. 624.604 and 624.605,
  236  limited to coverage of commercial risks other than commercial
  237  residential multiperil and medical malpractice insurance that is
  238  subject to s. 627.062(2)(a) and (f); or
  239         (c) Travel insurance, if issued as a master group policy
  240  with a situs in another state where each certificateholder pays
  241  less than $30 in premium for each covered trip and where the
  242  insurer has written less than $1 million in annual written
  243  premiums in the travel insurance product in this state during
  244  the most recent calendar year,
  246  shall make an annual base rate filing for each such line with
  247  the office no later than 12 months after its previous base rate
  248  filing, demonstrating that its rates are not inadequate.
  249         Section 6. Section 627.4035, Florida Statutes, is amended
  250  to read:
  251         627.4035 Cash Payment of premiums; claims.—
  252         (1)(a) The premiums for insurance contracts issued in this
  253  state or covering risk located in this state must shall be paid
  254  in cash consisting of coins, currency, checks, electronic
  255  checks, drafts, or money orders or by using a debit card, credit
  256  card, automatic electronic funds transfer, or payroll deduction
  257  plan. By July 1, 2007, Insurers issuing personal lines
  258  residential and commercial property policies shall provide a
  259  premium payment plan option to their policyholders which allows
  260  for a minimum of quarterly and semiannual payment of premiums.
  261  Insurers may, but are not required to, offer monthly payment
  262  plans. Insurers issuing such policies must submit their premium
  263  payment plan option to the office for approval before use.
  264         (b) If, due to insufficient funds, a payment of premium
  265  under this subsection by debit card, credit card, electronic
  266  funds transfer, or electronic check is returned, is declined, or
  267  cannot be processed, the insurer may impose an insufficient
  268  funds fee of up to $15 per occurrence pursuant to the policy
  269  terms. However, the insurer may not charge the policyholder an
  270  insufficient funds fee if the failure in payment resulted from
  271  fraud or misuse on the policyholder’s account from which the
  272  payment was made and such fraud or misuse was not attributed to
  273  the policyholder.
  274         (2) Subsection (1) is not applicable to:
  275         (a) Reinsurance agreements;
  276         (b) Pension plans;
  277         (c) Premium loans, whether or not subject to an automatic
  278  provision;
  279         (d) Dividends, whether to purchase additional paid-up
  280  insurance or to shorten the dividend payment period;
  281         (e) Salary deduction plans;
  282         (f) Preauthorized check plans;
  283         (g) Waivers of premiums on disability;
  284         (h) Nonforfeiture provisions affording benefits under
  285  supplementary contracts; or
  286         (i) Such other methods of paying for life insurance as may
  287  be permitted by the commission pursuant to rule or regulation.
  288         (3) All payments of claims made in this state under any
  289  contract of insurance shall be paid:
  290         (a) In cash consisting of coins, currency, checks, drafts,
  291  or money orders and, if by check or draft, shall be in such form
  292  as will comply with the standards for cash items adopted by the
  293  Federal Reserve System to facilitate the sorting, routing, and
  294  mechanized processing of such items; or
  295         (b) If authorized in writing by the recipient or the
  296  recipient’s representative, by debit card or any other form of
  297  electronic transfer. Any fees or costs to be charged against the
  298  recipient must be disclosed in writing to the recipient or the
  299  recipient’s representative at the time of written authorization.
  300  However, the written authorization requirement may be waived by
  301  the recipient or the recipient’s representative if the insurer
  302  verifies the identity of the insured or the insured’s recipient
  303  and does not charge a fee for the transaction. If the funds are
  304  misdirected, the insurer remains liable for the payment of the
  305  claim.
  306         Section 7. Subsection (5) is added to section 627.421,
  307  Florida Statutes, to read:
  308         627.421 Delivery of policy.—
  309         (5)An electronically delivered document satisfies any
  310  font, size, color, spacing, or other formatting requirement for
  311  printed documents if the format in the electronically delivered
  312  document has reasonably similar proportions or emphasis of the
  313  characters relative to the rest of the electronic document or is
  314  otherwise displayed in a reasonably conspicuous manner.
  315         Section 8. Subsection (9) of section 627.7295, Florida
  316  Statutes, is amended to read:
  317         627.7295 Motor vehicle insurance contracts.—
  318         (9)(a) In addition to the methods provided in s.
  319  627.4035(1), premium for motor vehicle insurance contracts
  320  issued in this state or covering risk located in this state may
  321  be paid in cash in the form of a draft or drafts.
  322         (b) If, due to insufficient funds, payment of premium under
  323  this subsection by debit card, credit card, electronic funds
  324  transfer, or electronic check is returned, is declined, or
  325  cannot be processed, the insurer may impose an insufficient
  326  funds fee of up to $15 per occurrence pursuant to the policy
  327  terms.
  328         Section 9. This act shall take effect upon becoming a law.