Florida Senate - 2019 CS for SB 496
By the Committee on Banking and Insurance; and Senator Rader
597-02676-19 2019496c1
1 A bill to be entitled
2 An act relating to insurance guaranty associations;
3 creating s. 626.8621, F.S.; authorizing an employee of
4 the Florida Insurance Guaranty Association or an
5 employee of a guaranty association of another state to
6 adjust losses for the Florida Insurance Guaranty
7 Association if certain conditions are met; amending s.
8 631.914, F.S.; revising requirements for the Office of
9 Insurance Regulation in levying assessments on
10 workers’ compensation insurers; requiring such
11 insurers to recoup the assessments by applying a
12 certain surcharge percentage to certain policies;
13 providing that an insurer’s direct written premium may
14 not be reduced by certain amounts for the purposes of
15 determining insurer assessments or policyholder
16 surcharges; authorizing the Florida Workers’
17 Compensation Insurance Guaranty Association to audit
18 certain reports; revising requirements for remitting
19 policy surcharges and assessments; conforming cross
20 references; providing that assessments paid by an
21 insurer constitute advances of funds to the
22 association under certain circumstances; revising
23 requirements for insurers’ reconciliation reports to
24 the association; revising construction; providing an
25 effective date.
26
27 Be It Enacted by the Legislature of the State of Florida:
28
29 Section 1. Section 626.8621, Florida Statutes, is created
30 to read:
31 626.8621 Adjustments by guaranty association employees.—
32 (1) An employee of the Florida Insurance Guaranty
33 Association, created under part II of chapter 631, may adjust
34 losses for the association if such employee holds, or has held
35 within the past 10 years, licensure in this state which allows
36 for the adjustment of such losses.
37 (2) An employee of a guaranty association established by
38 another state and whose insurance regulators are members of the
39 National Association of Insurance Commissioners may adjust
40 losses for the Florida Insurance Guaranty Association. The
41 authorization for such employees to adjust losses must be
42 included in a contract with the Florida Insurance Guaranty
43 Association and the employee’s guarantee association or
44 association’s authorized representative. The Florida Insurance
45 Guaranty Association shall contract only for employees of other
46 state guaranty associations who maintain the appropriate
47 experience and training for adjusting such claims.
48 Section 2. Subsections (1), (2), and (3) of section
49 631.914, Florida Statutes, are amended to read:
50 631.914 Assessments.—
51 (1)(a) To the extent necessary to secure the funds for the
52 payment of covered claims, and also to pay the reasonable costs
53 to administer the same, the Office of Insurance Regulation, upon
54 certification by the board, shall levy assessments on each
55 insurer initially estimated in the proportion that the insurer’s
56 net direct written premiums in this state bears to the total of
57 said net direct written premiums received in this state by all
58 such workers’ compensation insurers for the preceding calendar
59 year. An insurer shall fully recoup assessments by applying the
60 uniform surcharge percentage levied by the office to all
61 policies of the same kind or line as were considered by the
62 office in determining the assessment liability of the insurer.
63 Assessments levied against insurers and self-insurance funds
64 pursuant to this paragraph must be computed and levied on the
65 basis of the full policy premium value on the net direct written
66 premium amount as set forth in the state for workers’
67 compensation insurance without consideration of any applicable
68 discount or credit for deductibles. An insurer’s direct written
69 premium calculated for the purposes of determining the insurer’s
70 assessment or policyholder surcharge may not be reduced by any
71 discount or credit for deductibles in a policy or by any premium
72 adjustment to a retrospectively rated policy. Insurers and self
73 insurance funds must report premiums in compliance with this
74 paragraph, and the association may audit the reports.
75 Assessments shall be remitted to and administered by the board
76 of directors in the manner specified by the approved plan of
77 operation and paragraph (d). Each assessment shall be a uniform
78 percentage applicable to the net direct written premiums of each
79 insurer writing workers’ compensation insurance. Assessments
80 levied against insurers and self-insurance funds shall not
81 exceed in any calendar year more than 2 percent of that
82 insurer’s net direct written premiums in this state for workers’
83 compensation insurance.
84 (c)(b) The office shall levy the uniform surcharge
85 percentage on all policies of the same kind or line as were
86 considered by the office in determining the assessment liability
87 of the insurer. Member insurers shall collect policyholder
88 surcharges at a uniform percentage rate on new and renewal
89 policies issued and effective during the period of 12 months
90 beginning on January 1, April 1, July 1, or October 1, whichever
91 is the first day of the following calendar quarter as specified
92 in an order issued by the office directing insurers to pay an
93 assessment to the association. The policyholder surcharge may
94 not begin until 90 days after the board of directors certifies
95 the assessment.
96 (b)(c) If assessments otherwise authorized in paragraph (a)
97 are insufficient to make all payments on reimbursements then
98 owing to claimants in a calendar year, then upon certification
99 by the board, the office shall levy additional assessments of up
100 to 1.5 percent of the insurer’s net direct written premiums in
101 this state.
102 (d) The association may use an installment method to
103 require the insurer to remit the policyholder surcharge
104 assessment as premium is collected written or may require the
105 insurer to remit the assessment to the association before
106 collecting the policyholder surcharge. If the assessment is
107 remitted before the surcharge is collected, the assessment
108 remitted must be based on an estimate of the assessment due
109 based on the proportion of each insurer’s net direct written
110 premium in this state for the preceding calendar year as
111 described in paragraph (a) and adjusted following the end of the
112 12-month period during which the assessment is levied.
113 1. If the association elects to use the installment method,
114 the office may, in the order levying the assessment on insurers,
115 specify that the policyholder surcharge assessment is due and
116 payable quarterly as premium is collected written throughout the
117 assessment year. Insurers shall collect policyholder surcharges
118 at a uniform percentage rate specified by order as described in
119 paragraph (c) (b). Insurers are not required to advance funds if
120 the association and the office elect to use the installment
121 option. Assessments levied under this subparagraph are paid
122 after policyholder policy surcharges are collected, and the
123 recognition of assets is based on actual premium collected
124 written offset by the obligation to the association.
125 2. If the association elects to require insurers to remit
126 the assessment before surcharging the policyholder, the
127 following shall apply:
128 a. The assessment remitted must be based on an estimate of
129 the assessment due based on the proportion of each insurer’s
130 direct written premium in this state for the preceding calendar
131 year as described in paragraph (a).
132 b.a. The levy order shall provide each insurer so assessed
133 at least 30 days’ written notice of the date the initial
134 assessment payment is due and payable by the insurer.
135 c.b. Insurers shall collect policyholder surcharges at a
136 uniform percentage rate specified by the order, as described in
137 paragraph (c) (b).
138 d.c. Assessments levied under this subparagraph and are
139 paid by an insurer constitute advances of funds from the insurer
140 to the association before policy surcharges are billed and
141 result in a receivable for policyholder policy surcharges to be
142 billed in the future. The amount of billed policyholder
143 surcharges, to the extent it is likely that it will be realized,
144 meets the definition of an admissible asset as specified in the
145 National Association of Insurance Commissioners’ Statement of
146 Statutory Accounting Principles No. 4. The asset shall be
147 established and recorded separately from the liability. If an
148 insurer is unable to fully recoup the amount of the assessment,
149 the amount recorded as an asset shall be reduced to the amount
150 reasonably expected to be recouped.
151 3. Insurers must submit a reconciliation report to the
152 association within 120 days after the end of the 12-month
153 assessment period and annually thereafter for a period of 3
154 years. The report must indicate the amount of the initial
155 payment or installment payments made to the association and the
156 amount of policyholder surcharges collected written premium
157 pursuant to paragraph (a) for the assessment year. If the
158 insurer’s reconciled assessment obligation is more than the
159 amount paid to the association, the insurer shall pay the excess
160 policyholder surcharges collected to the association. If the
161 insurer’s reconciled assessment obligation is less than the
162 initial amount paid to the association, the association shall
163 return the overpayment to the insurer.
164 (2) Policyholder surcharges collected Assessments levied
165 under this section are not premium and are not subject to any
166 premium tax, fees, or commissions. Insurers shall treat the
167 failure of an insured to pay policyholder assessment-related
168 surcharges as a failure to pay premium. An insurer is not liable
169 for any uncollectible policyholder assessment-related surcharges
170 levied pursuant to this section.
171 (3) Assessments levied under this section may be levied
172 only upon insurers. This section does not create a cause of
173 action by a policyholder with respect to the levying of an
174 assessment or a policyholder’s duty to pay assessment-related
175 policyholder surcharges.
176 Section 3. This act shall take effect July 1, 2019.