Florida Senate - 2013                        COMMITTEE AMENDMENT
       Bill No. SB 324
       
       
       
       
       
       
                                Barcode 484256                          
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  04/02/2013           .                                
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       The Committee on Banking and Insurance (Hays) recommended the
       following:
       
    1         Senate Amendment (with title amendment)
    2  
    3  
    4         Delete everything after the enacting clause
    5  and insert:
    6         Section 1. Subsection (2) of section 631.57, Florida
    7  Statutes, is amended, and subsection (3) of that section is
    8  reordered and amended, to read:
    9         631.57 Powers and duties of the association.—
   10         (2) The association may:
   11         (a) Employ or retain such persons as are necessary to
   12  handle claims and perform other duties of the association;
   13         (b) Borrow funds necessary to effect the purposes of this
   14  part in accord with the plan of operation, including borrowing
   15  necessary to ensure that its cash flow needs are timely met to
   16  pay covered claims when regular and emergency assessments are
   17  levied on policyholders under subsection (3);
   18         (c) Sue or be sued, provided that service of process is
   19  shall be made upon the person registered with the department as
   20  agent for the receipt of service of process; and
   21         (d) Negotiate and become a party to such contracts as are
   22  necessary to carry out the purpose of this part. Additionally,
   23  The association may also enter into such contracts with a
   24  municipality, a county, or a legal entity created pursuant to s.
   25  163.01(7)(g) as are necessary in order for the municipality,
   26  county, or legal entity to issue bonds under s. 631.695. In
   27  connection with the issuance of any such bonds and the entering
   28  into of any such necessary contracts, the association may agree
   29  to such terms and conditions as the association deems necessary
   30  and proper.
   31         (3)(a) To the extent necessary to secure the funds for the
   32  respective accounts paying for the payment of covered claims, to
   33  pay the reasonable costs to administer such accounts the same,
   34  and to the extent necessary to secure the funds for the account
   35  specified in s. 631.55(2)(b) or to retire indebtedness,
   36  including, without limitation, the principal, redemption
   37  premium, if any, and interest on, and related costs of issuance
   38  of, bonds issued under s. 631.695 and the funding of any
   39  reserves and other payments required under the bond resolution
   40  or trust indenture pursuant to which such bonds have been
   41  issued, the office, upon certification of the board of
   42  directors, shall levy regular assessments in the proportion that
   43  each insurer’s net direct written premiums in this state in the
   44  classes protected by the account bears to the total of the said
   45  net direct written premiums received in this state by all such
   46  insurers for the preceding calendar year for the kinds of
   47  insurance included within such account. Regular assessments
   48  shall be remitted to and administered by the board of directors
   49  in the manner specified by the approved plan. Each insurer so
   50  assessed has shall have at least 30 days’ written notice as to
   51  the date the assessment is due and payable. Every assessment
   52  shall be made as a uniform percentage applicable to the net
   53  direct written premiums of each insurer in the kinds of
   54  insurance included within the account in which the assessment is
   55  made. The regular assessments levied against an any insurer may
   56  shall not exceed in any one year exceed more than 2 percent of
   57  that insurer’s net direct written premiums in this state for the
   58  kinds of insurance included within such account during the
   59  calendar year next preceding the date of such assessments. The
   60  Legislature finds and declares that regular assessments paid by
   61  an insurer or insurer group as a result of a levy by the office
   62  constitute advances of funds from the insurer to the
   63  association. An insurer may fully recoup regular assessments
   64  levied against prior year premiums by applying a separate
   65  recoupment factor to the premium of policies of the same kind or
   66  line as were considered by the office in determining the
   67  assessment liability of the insurer or insurer group.
   68         (b) In lieu of collecting the regular assessment under
   69  paragraph (a) from insurers, the association may collect all or
   70  part of the assessment directly from policyholders. If the
   71  association elects to collect the assessment directly from
   72  policyholders, the office shall issue an order specifying the
   73  date the board requires the insurers to begin collecting the
   74  assessment, which must be at least 90 days after the date the
   75  board certifies the assessment. The order must specify a uniform
   76  percentage determined by the board, and verified by the office,
   77  of the direct written premium for all lines of business in the
   78  applicable accounts. The assessment certified in any one
   79  calendar year may not exceed 2 percent of the premium. The
   80  insurers shall collect such assessments without being affected
   81  by any credit, limitation, exemption, or deferment. Assessments
   82  collected under this paragraph shall be transferred regularly to
   83  the association as set forth in the order levying the
   84  assessment.
   85         (e)(b) If sufficient funds from regular and emergency such
   86  assessments, together with funds previously raised, are not
   87  available in any one year in the respective account to make all
   88  the payments or reimbursements then owing to insurers, insureds,
   89  or claimants, the funds available shall be prorated and the
   90  unpaid portion shall be paid as soon thereafter as funds become
   91  available.
   92         (c) The Legislature finds and declares that all assessments
   93  paid by an insurer or insurer group as a result of a levy by the
   94  office, including assessments levied pursuant to paragraph (a)
   95  and emergency assessments, constitute advances of funds from the
   96  insurer to the association. An insurer may fully recoup such
   97  advances by applying a separate recoupment factor to the premium
   98  of policies of the same kind or line as were considered by the
   99  office in determining the assessment liability of the insurer or
  100  insurer group.
  101         (f)(d)No State funds may not of any kind shall be allocated
  102  or paid to the said association or any of its accounts.
  103         (c)(e)1.a. In addition to regular assessments otherwise
  104  authorized under in paragraph (a), and to the extent necessary
  105  to secure the funds for the account specified in s. 631.55(2)(b)
  106  for the direct payment of covered claims of insurers rendered
  107  insolvent by the effects of a hurricane and to pay the
  108  reasonable costs to administer such claims, or to retire
  109  indebtedness, including, without limitation, the principal,
  110  redemption premium, if any, and interest on, and related costs
  111  of issuance of, bonds issued under s. 631.695 and the funding of
  112  any reserves and other payments required under the bond
  113  resolution or trust indenture pursuant to which such bonds have
  114  been issued, the office, upon certification of the board of
  115  directors, shall levy emergency assessments directly upon
  116  policyholders, which shall be collected by insurers holding a
  117  certificate of authority. Pursuant to such levy, the office
  118  shall issue an order specifying the date the board requires the
  119  insurers to begin collecting the assessment, which must be at
  120  least 90 days after the date the office levies the assessment.
  121  The order must specify a uniform percentage determined by the
  122  board, and verified by the office, of the direct written premium
  123  for all lines of business in the applicable accounts. The
  124  assessment certified in any one calendar year collected may not
  125  exceed 2 percent of the premium. The insurers shall collect such
  126  assessments without being affected by any credit, limitation,
  127  exemption, or deferment. Assessments collected by insurers under
  128  this paragraph shall be transferred regularly to the association
  129  as set forth in the order levying the assessment.
  130         1. If, after consultation with its financial advisor, the
  131  board determines that it must immediately begin paying the
  132  covered claims of one or more insolvent insurers and financing
  133  is not reasonably available, it may certify the emergency
  134  assessment on insurers in the same manner as set forth in
  135  paragraph (a), except that an emergency assessment may be paid
  136  by the insurer in a single payment or, at the option of the
  137  association, in 12 monthly installments with the first
  138  installment being due and payable at the end of the month after
  139  the emergency assessment is levied and subsequent installments
  140  being due by the end of each succeeding month. The emergency
  141  assessments payable under this paragraph by any insurer shall
  142  not exceed in any single year more than 2 percent of that
  143  insurer’s direct written premiums, net of refunds, in this state
  144  during the preceding calendar year for the kinds of insurance
  145  within the account specified in s. 631.55(2)(b).
  146         2.b.Any Emergency assessments authorized under this
  147  paragraph shall be levied by the office only upon insurers
  148  referred to in sub-subparagraph a., upon certification as to the
  149  need for such assessments by the board of directors. If In the
  150  event the board of directors participates in the issuance of
  151  bonds in accordance with s. 631.695, emergency assessments shall
  152  be levied in each year that bonds issued under s. 631.695 and
  153  secured by such emergency assessments are outstanding, in such
  154  amounts up to such 2 percent 2-percent limit as required in
  155  order to provide for the full and timely payment of the
  156  principal of, redemption premium, if any, and interest on, and
  157  related costs of issuance of, such bonds. The emergency
  158  assessments provided for in this paragraph are assigned and
  159  pledged to the municipality, county, or legal entity issuing
  160  bonds under s. 631.695 for the benefit of the holders of such
  161  bonds, in order to enable such municipality, county, or legal
  162  entity to provide for the payment of the principal of,
  163  redemption premium, if any, and interest on such bonds, the cost
  164  of issuance of such bonds, and the funding of any reserves and
  165  other payments required under the bond resolution or trust
  166  indenture pursuant to which such bonds have been issued, without
  167  the necessity for of any further action by the association, the
  168  office, or any other party. If To the extent bonds are issued
  169  under s. 631.695 and the association secures determines to
  170  secure such bonds by a pledge of revenues received from the
  171  emergency assessments, such bonds, upon such pledge of revenues,
  172  shall be secured by and payable from the proceeds of such
  173  emergency assessments, and the proceeds of emergency assessments
  174  levied under this paragraph shall be remitted directly to and
  175  administered by the trustee or custodian appointed for the
  176  payment of such bonds.
  177         c. Emergency assessments under this paragraph may be
  178  payable in a single payment or, at the option of the
  179  association, may be payable in 12 monthly installments with the
  180  first installment being due and payable at the end of the month
  181  after an emergency assessment is levied and subsequent
  182  installments being due not later than the end of each succeeding
  183  month.
  184         3.d. If emergency assessments are imposed, the report
  185  required by s. 631.695(7) must shall include an analysis of the
  186  revenues generated from the emergency assessments imposed under
  187  this paragraph.
  188         4.e. If emergency assessments are imposed, the references
  189  in sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to
  190  regular assessments levied under paragraph (a) must shall
  191  include emergency assessments imposed under this paragraph.
  192         5.2. If the board of directors participates in the issuance
  193  of bonds in accordance with s. 631.695, an emergency annual
  194  assessment under this paragraph must shall continue while the
  195  bonds issued with respect to which the assessment was imposed
  196  are outstanding, including any bonds the proceeds of which were
  197  used to refund bonds issued pursuant to s. 631.695, unless
  198  adequate provision has been made for the payment of the bonds in
  199  the documents authorizing the issuance of such bonds.
  200         6.3. Emergency assessments under this paragraph are not
  201  premium and are not subject to the premium tax, to any fees, or
  202  to any commissions. An insurer is liable for all emergency
  203  assessments that the insurer collects and shall treat the
  204  failure of an insured to pay an emergency assessment as a
  205  failure to pay the premium. An insurer is not liable for
  206  uncollectible emergency assessments.
  207         (d)(f) The recoupment factor applied to policies in
  208  accordance with paragraph (a) or subparagraph (c)1. paragraph
  209  (c) shall be selected by the insurer or insurer group so as to
  210  provide for the probable recoupment of both assessments levied
  211  pursuant to paragraph (a) and emergency assessments over a
  212  period of 12 months, unless the insurer or insurer group, at its
  213  option, elects to recoup the assessment over a longer period.
  214  The recoupment factor applies shall apply to all policies of the
  215  same kind or line as were considered by the office in
  216  determining the assessment liability of the insurer or insurer
  217  group issued or renewed during a 12-month period.
  218         1. If the insurer or insurer group does not collect the
  219  full amount of the assessment during one 12-month period, the
  220  insurer or insurer group may apply recalculated recoupment
  221  factors to policies issued or renewed during one or more
  222  succeeding 12-month periods.
  223         2. If, at the end of a 12-month period, the insurer or
  224  insurer group has collected from the combined kinds or lines of
  225  policies subject to assessment more than the total amount of the
  226  assessment paid by the insurer or insurer group, the excess
  227  amount shall be disbursed as follows:
  228         a.1. If the excess amount does not exceed 15 percent of the
  229  total assessment paid by the insurer or insurer group, the
  230  excess amount shall be remitted to the association within 60
  231  days after the end of the 12-month period in which the excess
  232  recoupment charges were collected.
  233         b.2. If the excess amount exceeds 15 percent of the total
  234  assessment paid by the insurer or insurer group, the excess
  235  amount shall be returned to the insurer’s or insurer group’s
  236  current policyholders by refunds or premium credits. The
  237  association shall use any remitted excess recoupment amounts to
  238  reduce future assessments.
  239         3.(g) Amounts recouped pursuant to this paragraph
  240  subsection for assessments levied under paragraph (a) due to
  241  insolvencies on or after July 1, 2010, are considered premium
  242  solely for premium tax purposes and are not subject to fees or
  243  commissions. However, insurers shall treat the failure of an
  244  insured to pay a recoupment charge as a failure to pay the
  245  premium.
  246         4.(h) At least 15 days before applying the recoupment
  247  factor to any policies, the insurer or insurer group shall file
  248  with the office a statement for informational purposes only
  249  setting forth the amount of the recoupment factor and an
  250  explanation of how the recoupment factor will be applied. Such
  251  statement must shall include documentation of the assessment
  252  paid by the insurer or insurer group and the arithmetic
  253  calculations supporting the recoupment factor. The insurer or
  254  insurer group may use the recoupment factor at any time after
  255  the expiration of the 15-day period. The insurer or insurer
  256  group need submit only one informational statement for all lines
  257  of business using the same recoupment factor.
  258         5.(i)Within No later than 90 days after the insurer or
  259  insurer group has completed the recoupment process, the insurer
  260  or insurer group shall file with the office, for information
  261  purposes only, a final accounting report documenting the
  262  recoupment. The report must shall provide the amounts of
  263  assessments paid by the insurer or insurer group, the amounts
  264  and percentages recouped by year from each affected line of
  265  business, and the direct written premium subject to recoupment
  266  by year. The insurer or insurer group need submit only one
  267  report for all lines of business using the same recoupment
  268  factor.
  269         Section 2. This act shall take effect July 1, 2013, and
  270  shall apply to any assessment certified and levied after that
  271  date regardless of when the insolvency or insolvencies occurred.
  272  
  273  ================= T I T L E  A M E N D M E N T ================
  274         And the title is amended as follows:
  275         Delete everything before the enacting clause
  276  and insert:
  277                        A bill to be entitled                      
  278         An act relating to the Florida Insurance Guaranty
  279         Association; reordering and amending s. 631.57, F.S.;
  280         revising the duties of the association; authorizing
  281         the association to collect regular assessments
  282         directly from policyholders; authorizing the
  283         association to collect emergency assessments from
  284         insurers under certain circumstances; making technical
  285         and grammatical corrections; providing an effective
  286         date.