Florida Senate - 2020 SB 898 By Senator Gruters 23-00985-20 2020898__ 1 A bill to be entitled 2 An act relating to insurance guaranty associations; 3 amending s. 631.57, F.S.; increasing the obligation of 4 the Florida Insurance Guaranty Association, 5 Incorporated, for certain claims under policies 6 covering certain condominium associations and 7 homeowners’ associations; increasing the percentage 8 limit of certain insurer net written premiums up to 9 which the Office of Insurance Regulation may levy 10 certain emergency assessments against insurers; 11 providing an effective date. 12 13 Be It Enacted by the Legislature of the State of Florida: 14 15 Section 1. Paragraph (a) of subsection (1) and paragraph 16 (e) of subsection (3) of section 631.57, Florida Statutes, are 17 amended to read: 18 631.57 Powers and duties of the association.— 19 (1) The association shall: 20 (a)1. Be obligated to the extent of the covered claims 21 existing: 22 a. Prior to adjudication of insolvency and arising within 23 30 days after the determination of insolvency; 24 b. Before the policy expiration date if less than 30 days 25 after the determination; or 26 c. Before the insured replaces the policy or causes its 27 cancellation, if she or he does so within 30 days of the 28 determination. 29 2. The obligation under subparagraph 1. includes only the 30 amount of each covered claim which is in excess of $100 and is 31 less than $300,000, except that policies providing coverage for 32 homeowner’s insurance shall provide for an additional $200,000 33 for the portion of a covered claim which relates only to the 34 damage to the structure and contents. 35 3.a. Notwithstanding subparagraph 2., the obligation under 36 subparagraph 1. for policies covering condominium associations 37 or homeowners’ associations, which associations have a 38 responsibility to provide insurance coverage on residential 39 units within the association, shall include that amount of each 40 covered property insurance claim which is less than $200,000 41
$100,000multiplied by the number of condominium units or other 42 residential units; however, as to homeowners’ associations, this 43 sub-subparagraph applies only to claims for damage or loss to 44 residential units and structures attached to residential units. 45 b. Notwithstanding sub-subparagraph a., the association has 46 no obligation to pay covered claims that are to be paid from the 47 proceeds of bonds issued under s. 631.695. However, the 48 association shall assign and pledge the first available moneys 49 from all or part of the assessments to be made under paragraph 50 (3)(a) to or on behalf of the issuer of such bonds for the 51 benefit of the holders of such bonds. The association shall 52 administer any such covered claims and present valid covered 53 claims for payment in accordance with the provisions of the 54 assistance program in connection with which such bonds have been 55 issued. 56 4. In no event shall the association be obligated to a 57 policyholder or claimant in an amount in excess of the 58 obligation of the insolvent insurer under the policy from which 59 the claim arises. 60 (3) 61 (e)1. In addition to assessments authorized in paragraph 62 (a), and to the extent necessary to secure the funds for the 63 account specified in s. 631.55(2)(b) for the direct payment of 64 covered claims of insurers rendered insolvent by the effects of 65 a hurricane and to pay the reasonable costs to administer such 66 claims, or to retire indebtedness, including, without 67 limitation, the principal, redemption premium, if any, and 68 interest on, and related costs of issuance of, bonds issued 69 under s. 631.695 and the funding of any reserves and other 70 payments required under the bond resolution or trust indenture 71 pursuant to which such bonds have been issued, the office, upon 72 certification of the board of directors, shall levy emergency 73 assessments upon insurers holding a certificate of authority. 74 The emergency assessments levied against any insurer may not 75 exceed in any one calendar year more than 4 2percent of that 76 insurer’s net written premiums in this state for the kinds of 77 insurance within the account specified in s. 631.55(2)(b). 78 2. Emergency assessments authorized under this paragraph 79 shall be levied by the office upon insurers in accordance with 80 paragraph (f), upon certification as to the need for such 81 assessments by the board of directors. If the board participates 82 in the issuance of bonds in accordance with s. 631.695, 83 emergency assessments shall be levied in each year that bonds 84 issued under s. 631.695 and secured by such emergency 85 assessments are outstanding in amounts up to such 2-percent 86 limit as required in order to provide for the full and timely 87 payment of the principal of, redemption premium, if any, and 88 interest on, and related costs of issuance of, such bonds. The 89 emergency assessments are assigned and pledged to the 90 municipality, county, or legal entity issuing bonds under s. 91 631.695 for the benefit of the holders of such bonds in order to 92 provide for the payment of the principal of, redemption premium, 93 if any, and interest on such bonds, the cost of issuance of such 94 bonds, and the funding of any reserves and other payments 95 required under the bond resolution or trust indenture pursuant 96 to which such bonds have been issued, without further action by 97 the association, the office, or any other party. If bonds are 98 issued under s. 631.695 and the association determines to secure 99 such bonds by a pledge of revenues received from the emergency 100 assessments, such bonds, upon such pledge of revenues, shall be 101 secured by and payable from the proceeds of such emergency 102 assessments, and the proceeds of emergency assessments levied 103 under this paragraph shall be remitted directly to and 104 administered by the trustee or custodian appointed for such 105 bonds. 106 3. Emergency assessments used to defease bonds issued under 107 this part may be payable in a single payment or, at the option 108 of the association, may be payable in 12 monthly installments 109 with the first installment being due and payable at the end of 110 the month after an emergency assessment is levied and subsequent 111 installments being due by the end of each succeeding month. 112 4. If emergency assessments are imposed, the report 113 required by s. 631.695(7) must include an analysis of the 114 revenues generated from the emergency assessments imposed under 115 this paragraph. 116 5. If emergency assessments are imposed, the references in 117 sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to 118 assessments levied under paragraph (a) must include emergency 119 assessments imposed under this paragraph. 120 6. If the board of directors participates in the issuance 121 of bonds in accordance with s. 631.695, an annual assessment 122 under this paragraph shall continue while the bonds issued with 123 respect to which the assessment was imposed are outstanding, 124 including any bonds the proceeds of which were used to refund 125 bonds issued pursuant to s. 631.695, unless adequate provision 126 has been made for the payment of the bonds in the documents 127 authorizing the issuance of such bonds. 128 Section 2. This act shall take effect July 1, 2020.