Florida Senate - 2019                                     SB 496
       By Senator Rader
       29-01191-19                                            2019496__
    1                        A bill to be entitled                      
    2         An act relating to insurance guaranty associations;
    3         creating s. 631.576, F.S.; authorizing the Florida
    4         Insurance Guaranty Association to authorize certain
    5         employees to adjust losses for the association;
    6         requiring such authorization to be included in a
    7         contract; amending s. 631.914, F.S.; revising the
    8         assessments levied by the Office of Insurance
    9         Regulation on workers’ compensation insurers;
   10         requiring such insurers to recoup the assessments by
   11         applying a certain surcharge percentage to certain
   12         policies; authorizing the Florida Workers’
   13         Compensation Insurance Guaranty Association to audit
   14         certain reports; revising requirements for remitting
   15         assessments; conforming cross-references; providing
   16         that assessments paid by an insurer constitute
   17         advances of funds to the association under certain
   18         circumstances; revising the requirements for the
   19         insurers’ reconciliation reports to the Florida
   20         Workers’ Compensation Insurance Guaranty Association;
   21         revising construction; providing an effective date.
   23  Be It Enacted by the Legislature of the State of Florida:
   25         Section 1. Section 631.576, Florida Statutes, is created to
   26  read:
   27         631.576Guaranty association employees; loss adjustment.
   28  The Florida Insurance Guaranty Association may authorize an
   29  employee of any state guaranty association to adjust losses for
   30  the Florida Insurance Guaranty Association pursuant to this
   31  part. The guaranty association’s employee is not required to be
   32  licensed as an adjuster; however, the authorization for the
   33  guaranty association’s employee to adjust losses must be
   34  included in a contract between the Florida Insurance Guaranty
   35  Association and the guaranty association or the guaranty
   36  association’s authorized representative.
   37         Section 2. Subsections (1), (2), and (3) of section
   38  631.914, Florida Statutes, are amended to read:
   39         631.914 Assessments.—
   40         (1)(a) To the extent necessary to secure the funds for the
   41  payment of covered claims, and also to pay the reasonable costs
   42  to administer the same, the Office of Insurance Regulation, upon
   43  certification by the board, shall levy assessments on each
   44  insurer initially estimated in the proportion that the insurer’s
   45  net direct written premiums in this state bears to the total of
   46  said net direct written premiums received in this state by all
   47  such workers’ compensation insurers for the preceding calendar
   48  year. An insurer shall fully recoup assessments by applying the
   49  uniform surcharge percentage levied by the office to all
   50  policies of the same kind or line as were considered by the
   51  office in determining the assessment liability of the insurer.
   52  Assessments levied against insurers and self-insurance funds
   53  pursuant to this paragraph must be computed and levied on the
   54  basis of the full policy premium value on the net direct written
   55  premium amount as set forth in the state for workers’
   56  compensation insurance without consideration of any applicable
   57  discount or credit for large deductibles or retrospectively
   58  rated policies. Insurers and self-insurance funds must report
   59  premiums in compliance with this paragraph, and the association
   60  may audit the reports. Assessments shall be remitted to and
   61  administered by the board of directors in the manner specified
   62  by the approved plan of operation and paragraph (d). Each
   63  assessment shall be a uniform percentage applicable to the net
   64  direct written premiums of each insurer writing workers’
   65  compensation insurance. Assessments levied against insurers and
   66  self-insurance funds shall not exceed in any calendar year more
   67  than 2 percent of that insurer’s net direct written premiums in
   68  this state for workers’ compensation insurance.
   69         (c)(b) Member insurers shall collect policyholder
   70  surcharges at a uniform percentage rate on new and renewal
   71  policies issued and effective during the period of 12 months
   72  beginning on January 1, April 1, July 1, or October 1, whichever
   73  is the first day of the following calendar quarter as specified
   74  in an order issued by the office directing insurers to pay an
   75  assessment to the association. The policyholder surcharge may
   76  not begin until 90 days after the board of directors certifies
   77  the assessment.
   78         (b)(c) If assessments otherwise authorized in paragraph (a)
   79  are insufficient to make all payments on reimbursements then
   80  owing to claimants in a calendar year, then upon certification
   81  by the board, the office shall levy additional assessments of up
   82  to 1.5 percent of the insurer’s net direct written premiums in
   83  this state.
   84         (d) The association may use an installment method to
   85  require the insurer to remit the policyholder surcharge
   86  assessment as premium is collected written or may require the
   87  insurer to remit the assessment to the association before
   88  collecting the policyholder surcharge. If the assessment is
   89  remitted before the surcharge is collected, the assessment
   90  remitted must be based on an estimate of the assessment due
   91  based on the proportion of each insurer’s net direct written
   92  premium in this state for the preceding calendar year as
   93  described in paragraph (a) and adjusted following the end of the
   94  12-month period during which the assessment is levied.
   95         1. If the association elects to use the installment method,
   96  the office may, in the order levying the assessment on insurers,
   97  specify that the policyholder surcharge assessment is due and
   98  payable quarterly as premium is collected written throughout the
   99  assessment year. Insurers shall collect policyholder surcharges
  100  at a uniform percentage rate specified by order as described in
  101  paragraph (c) (b). Insurers are not required to advance funds if
  102  the association and the office elect to use the installment
  103  option. Assessments levied under this subparagraph are paid
  104  after policyholder policy surcharges are collected, and the
  105  recognition of assets is based on actual premium collected
  106  written offset by the obligation to the association.
  107         2. If the association elects to require insurers to remit
  108  the assessment before surcharging the policyholder, the
  109  following shall apply:
  110         a.The assessment remitted must be based on an estimate of
  111  the assessment due based on the proportion of each insurer’s
  112  direct written premium in this state for the preceding calendar
  113  year as described in paragraph (a).
  114         b.a. The levy order shall provide each insurer so assessed
  115  at least 30 days’ written notice of the date the initial
  116  assessment payment is due and payable by the insurer.
  117         c.b. Insurers shall collect policyholder surcharges at a
  118  uniform percentage rate specified by the order, as described in
  119  paragraph (c) (b).
  120         d.c. Assessments levied under this subparagraph and are
  121  paid by an insurer constitute advances of funds from the insurer
  122  to the association before policy surcharges are billed and
  123  result in a receivable for policyholder policy surcharges to be
  124  billed in the future. The amount of billed policyholder
  125  surcharges, to the extent it is likely that it will be realized,
  126  meets the definition of an admissible asset as specified in the
  127  National Association of Insurance Commissioners’ Statement of
  128  Statutory Accounting Principles No. 4. The asset shall be
  129  established and recorded separately from the liability. If an
  130  insurer is unable to fully recoup the amount of the assessment,
  131  the amount recorded as an asset shall be reduced to the amount
  132  reasonably expected to be recouped.
  133         3. Insurers must submit a reconciliation report to the
  134  association within 120 days after the end of the 12-month
  135  assessment period and annually thereafter for a period of 2 3
  136  years. The report must indicate the amount of the initial
  137  payment or installment payments made to the association and the
  138  amount of policyholder surcharges collected written premium
  139  pursuant to paragraph (a) for the assessment year. If the
  140  insurer’s reconciled assessment obligation is more than the
  141  amount paid to the association, the insurer shall pay the excess
  142  policyholder surcharges collected to the association. If the
  143  insurer’s reconciled assessment obligation is less than the
  144  initial amount paid to the association, the association shall
  145  return the overpayment to the insurer.
  146         (2) Policyholder surcharges collected Assessments levied
  147  under this section are not premium and are not subject to any
  148  premium tax, fees, or commissions. Insurers shall treat the
  149  failure of an insured to pay policyholder assessment-related
  150  surcharges as a failure to pay premium. An insurer is not liable
  151  for any uncollectible policyholder assessment-related surcharges
  152  levied pursuant to this section.
  153         (3) Assessments levied under this section may be levied
  154  only upon insurers. This section does not create a cause of
  155  action by a policyholder with respect to the levying of an
  156  assessment or a policyholder’s duty to pay assessment-related
  157  policyholder surcharges.
  158         Section 3. This act shall take effect July 1, 2019.