SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
CHAMBER ACTION
Senate House
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11 Senators Clary and Atwater moved the following amendment:
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13 Senate Amendment
14 On lines 4864-5045, delete those lines
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16 and insert:
17 (4)(a) Effective upon this act becoming a law, the
18 department shall, after consultation with insurers, approve a
19 joint underwriting plan of insurers which shall operate as a
20 nonprofit entity. For the purposes of this subsection, the
21 term "insurer" includes group self-insurance funds authorized
22 by s. 624.4621, commercial self-insurance funds authorized by
23 s. 624.462, assessable mutual insurers authorized under s.
24 628.6011, and insurers licensed to write workers' compensation
25 and employer's liability insurance in this state. The purpose
26 of the plan is to provide workers' compensation and employer's
27 liability insurance to applicants who are required by law to
28 maintain workers' compensation and employer's liability
29 insurance and who are in good faith entitled to but who are
30 unable to procure purchase such insurance through the
31 voluntary market. It is the intent of the Legislature that the
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 plan rates for workers' compensation and employer's liability
2 insurance be actuarially sound and that such rates not be
3 competitive with approved voluntary market rates, so that the
4 plan functions as a residual market mechanism. The joint
5 underwriting plan shall issue policies beginning January 1,
6 1994. The plan must have actuarially sound rates that assure
7 that the plan is self-supporting.
8 (b) The operation of the plan is subject to the
9 supervision of a 7-member 13-member board of governors
10 appointed by the Chief Financial Officer. The board of
11 governors shall be comprised of:
12 1. Three representatives of workers' compensation
13 insurers, at least one of which represents a domestic workers'
14 compensation insurer Five of the 20 domestic insurers, as
15 defined in s. 624.06(1), having the largest voluntary direct
16 premiums written in this state for workers' compensation and
17 employer's liability insurance, which shall be elected by
18 those 20 domestic insurers;
19 2. Three representatives of employers Five of the 20
20 foreign insurers as defined in s. 624.06(2) having the largest
21 voluntary direct premiums written in this state for workers'
22 compensation and employer's liability insurance, which shall
23 be elected by those 20 foreign insurers; and
24 3. One person, who shall serve as the chair, appointed
25 by the Insurance Commissioner;
26 4. One person appointed by the largest property and
27 casualty insurance agents' association in this state; and
28 3.5. The consumer advocate appointed under s. 627.0613
29 or the consumer advocate's designee.
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31 Each board member shall serve at the pleasure of the Chief
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 Financial Officer, shall be appointed to a 3-year 4-year term,
2 and may serve consecutive terms. The Chief Financial Officer
3 shall designate one of the appointees as chair. The Chief
4 Financial Officer shall fill any board vacancy for the
5 remaining portion of an unexpired term. No board member shall
6 be an insurer which provides service to the plan or which has
7 an affiliate which provides services to the plan or which is
8 serviced by a service company or third-party administrator
9 which provides services to the plan or which has an affiliate
10 which provides services to the plan. The minutes, audits, and
11 procedures of the board of governors are subject to chapter
12 119, and the meetings of the board are subject to chapter 286.
13 (c) The operation of the plan shall be governed by a
14 plan of operation that is prepared at the direction of the
15 board of governors. The plan of operation may be changed at
16 any time by the board of governors or upon request of the
17 department. The plan of operation and all changes thereto are
18 subject to the approval of the department. The plan of
19 operation shall:
20 1. Authorize the board to engage in the activities
21 necessary to implement this subsection, including, but not
22 limited to, borrowing money.
23 2. Develop criteria for eligibility for coverage by
24 the plan, including, but not limited to, take-out and keep-out
25 provisions, as established in this subsection. For purposes of
26 determining eligibility for coverage by the plan, a valid
27 offer of coverage pursuant to the take-out and keep-out
28 provisions of this paragraph shall be deemed to be an offer of
29 coverage in this voluntary market. documented rejection by at
30 least two insurers which reasonably assures that insureds
31 covered under the plan are unable to acquire coverage in the
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 voluntary market. Any insured may voluntarily elect to accept
2 coverage from an insurer for a premium equal to or greater
3 than the plan premium if the insurer writing the coverage
4 adheres to the provisions of s. 627.171.
5 3. Require notice from the producer agent to the
6 insured at the time of the application for coverage that the
7 application is for coverage with the plan and that coverage
8 may be available through an insurer, group self-insurers'
9 fund, commercial self-insurance fund, or assessable mutual
10 insurer through another insurance agent at a lower cost. As
11 used in this subsection, "producer" means a person who is
12 licensed by the department as a general lines agent, as
13 defined by s. 626.015(7), and who has entered into a valid
14 producer agreement with the plan.
15 4. Establish a market-assistance plan to facilitate
16 depopulation of the plan by assisting employers that apply for
17 coverage, or that are insured by the plan, in obtaining
18 coverage in the voluntary market programs to encourage
19 insurers to provide coverage to applicants of the plan in the
20 voluntary market and to insureds of the plan, including, but
21 not limited to:
22 a. Providing that all employers that apply for
23 coverage or that are insured by the plan participate in the
24 market-assistance plan.
25 b. Establishing procedures for an insurer to use in
26 notifying the plan of the insurer's desire to participate in
27 the market-assistance plan provide coverage to applicants to
28 the plan or existing insureds of the plan and in describing
29 the types of risks in which the insurer is interested. The
30 description of the desired risks must be on a form developed
31 by the plan.
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 c.b. Developing forms and procedures for the
2 market-assistance plan to promptly that provide participating
3 insurers with account profiles, which include, but are not
4 limited to, the employer's name and federal employer
5 identification number; the effective date reserved for
6 in-process applications or the effective date of the plan
7 policy; the governing class code; business description of the
8 employer; the total number of employees estimated to be
9 covered under the policy; the total estimated annual payroll,
10 including corporate officers, partners, and sole proprietors;
11 the total estimated annual premium for the employer; the
12 employer's experience modification factor; the employer's
13 physical or mailing address; and the mailing address of the
14 applicable producer of record an insurer with the information
15 necessary to determine whether the insurer wants to write
16 particular applicants to the plan or insureds of the plan.
17 d.c. Establishing procedures whereby an insurer can
18 keep out or take out an employer eligible for the Tier One
19 Rating Plan or the Tier Two Rating Plan, not to exceed 125
20 percent of the approved voluntary market manual rate for that
21 insured. An insurer keeping out or taking out an eligible
22 employer under this paragraph shall not be required to make an
23 additional rate or form filing with the Office of Insurance
24 Regulation, and such take out or keep out shall not invoke the
25 provision of s. 627.171. An employer that is the subject of a
26 take-out or keep-out under this paragraph may be charged by
27 the insurer taking out or keeping out the employer a premium
28 not to exceed 125 percent of the effective voluntary market
29 manual rate for no more than 3 years, after which time the
30 employer shall be rated on voluntary market premiums and
31 rules. An employer who is offered coverage under a take-out or
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 keep-out offer shall be ineligible for coverage in the plan.
2 Developing procedures for notice to the plan and the applicant
3 to the plan or insured of the plan that an insurer will insure
4 the applicant or the insured of the plan, and notice of the
5 cost of the coverage offered; and developing procedures for
6 the selection of an insuring entity by the applicant or
7 insured of the plan.
8 e.d. Establishing procedures by which participating
9 insurers promptly notify the market assistance plan of the
10 identity of an employer whose insurance business it intends to
11 take out or keep out and the identity of any employer to whom
12 the insurer provides coverage, including the premium charged
13 for such coverage. Provide for a market-assistance plan to
14 assist in the placement of employers. All applications for
15 coverage in the plan received 45 days before the effective
16 date for coverage shall be processed through the
17 market-assistance plan. A market-assistance plan specifically
18 designed to serve the needs of small good policyholders as
19 defined by the board must be finalized by January 1, 1994.
20 f. Establishing procedures by which the
21 market-assistance plan will make available to participating
22 insurers monthly depopulation reports, which include the
23 account profiles of employers for whom the plan bound coverage
24 in the preceding month and employers covered by the plan whose
25 coverage is due to expire within the following 3 months.
26 5. Provide for policy and claims services to the
27 insureds of the plan of the nature and quality provided for
28 insureds in the voluntary market.
29 6. Provide for the review of applications for coverage
30 with the plan for reasonableness and accuracy, using any
31 available historic information regarding the applicant
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 insured.
2 7. Provide for procedures for auditing insureds of the
3 plan which are based on reasonable business judgment and are
4 designed to maximize the likelihood that the plan will collect
5 the appropriate premiums.
6 8. Authorize the plan to terminate the coverage of and
7 refuse future coverage for any insured that submits a
8 fraudulent application to the plan or provides fraudulent or
9 grossly erroneous records to the plan or to any service
10 provider of the plan in conjunction with the activities of the
11 plan.
12 9. Establish service standards for producers agents
13 who submit business to the plan.
14 10. Establish criteria and procedures to prohibit any
15 producer agent who does not adhere to the established service
16 standards from placing business with the plan or receiving,
17 directly or indirectly, any commissions for business placed
18 with the plan. All insureds of the plan must participate in
19 the safety program.
20 11. Provide for the establishment of reasonable safety
21 programs for all insureds in the plan.
22 12. Authorize the plan to terminate the coverage of
23 and refuse future coverage to any insured who fails to pay
24 premiums or surcharges when due; who, at the time of
25 application, is delinquent in payments of workers'
26 compensation or employer's liability insurance premiums or
27 surcharges owed to an insurer, group self-insurers' fund,
28 commercial self-insurance fund, or assessable mutual insurer
29 licensed to write such coverage in this state; or who refuses
30 to substantially comply with any safety programs recommended
31 by the plan.
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 13. Authorize the board of governors to provide the
2 services required by the plan through staff employed by the
3 plan, through reasonably compensated service providers who
4 contract with the plan to provide services as specified by the
5 board of governors, or through a combination of employees and
6 service providers.
7 14. Provide for service standards for service
8 providers, methods of determining adherence to those service
9 standards, incentives and disincentives for service, and
10 procedures for terminating contracts for service providers
11 that fail to adhere to service standards.
12 15. Provide procedures for selecting service providers
13 and standards for qualification as a service provider that
14 reasonably assure that any service provider selected will
15 continue to operate as an ongoing concern and is capable of
16 providing the specified services in the manner required.
17 16. Provide for reasonable accounting and
18 data-reporting practices.
19 17. Provide for annual review of costs associated with
20 the administration and servicing of the policies issued by the
21 plan to determine alternatives by which costs can be reduced.
22 18. Authorize the acquisition of such excess insurance
23 or reinsurance as is consistent with the purposes of the plan.
24 19. Provide for an annual report to the department on
25 a date specified by the department and containing such
26 information as the department reasonably requires.
27 20. Establish multiple rating plans for various
28 classifications of risk which reflect risk of loss, hazard
29 grade, actual losses, size of premium, and compliance with
30 loss control. At least one of such plans must be a
31 preferred-rating plan to accommodate small-premium
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 policyholders with good experience as defined in
2 sub-subparagraph 22.a.
3 20.21. Establish producer agent commission schedules.
4 21.22. Establish a three-tier rating plan effective
5 July 1, 2003, three subplans as follows:
6 a. Tier One must include those employers whose premium
7 does not exceed $20,000 at the time of application who have
8 neither incurred any lost-time claims nor incurred
9 medical-only claims exceeding 50 percent of the premium in the
10 immediately preceding 2 years prior to the expiration or
11 cancellation date of the current plan policy. Subplan "A" must
12 include those insureds whose annual premium does not exceed
13 $2,500 and who have neither incurred any lost-time claims nor
14 incurred medical-only claims exceeding 50 percent of their
15 premium for the immediate 2 years.
16 b. Tier Two must include those employers in the plan
17 who are unable to procure in the voluntary market, but have an
18 experience modification factor of 1.05 or less, and employers
19 that are charitable and nonprofit organizations. For purposes
20 of this sub-subparagraph the term "charitable and nonprofit
21 organization" means an organization that is exempt from
22 federal income tax pursuant to section 501(c)(3) of the
23 Internal Revenue Code and receives 50 percent or more of its
24 funding from gifts, grants, endowments, or federal or state
25 contracts. Subplan "B" must include insureds that are
26 employers identified by the board of governors as high-risk
27 employers due solely to the nature of the operations being
28 performed by those insureds and for whom no market exists in
29 the voluntary market, and whose experience modifications are
30 less than 1.00.
31 c. Tier Three must include all other employers of the
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 plan, and may include multiple subrating plans for various
2 classifications of insureds which reflect the risk of loss,
3 hazard grade, actual losses, size of premium, compliance with
4 loss control, and other reasonable actuarial factors. Subplan
5 "C" must include all other insureds within the plan.
6 d. For purposes of this subparagraph, the term
7 "employer" includes all affiliated entities of the employer.
8 The term "affiliated" means and includes one or more
9 corporations or entities under the same or substantially the
10 same control of a group of business entities that are
11 connected or associated so that one entity controls or has the
12 power to control each of the other business entities.
13 (d) The premiums for Tier One and Tier Two insureds
14 shall be 125 percent of the premium for that insured using the
15 approved voluntary market manual rates. The premium for Tier
16 Three shall be actuarially sound to assure that Tier Three is
17 self-supporting. The plan must be funded through actuarially
18 sound premiums charged to insureds of the plan. The plan may
19 issue assessable policies only to those insureds in Tier Three
20 subplan "C." If the plan issues assessable policies to
21 insureds in Tier Three, such insureds shall be liable on a pro
22 rata earned premium basis for any deficits incurred in Tier
23 Three. Those assessable policies must be clearly identified
24 as assessable by containing, in contrasting color and in not
25 less than 10-point type, the following statements: "This is an
26 assessable policy. If the plan is unable to pay its
27 obligations, policyholders will be required to contribute on a
28 pro rata earned premium basis the money necessary to meet any
29 assessment levied." The plan may issue assessable policies
30 with differing terms and conditions to different groups within
31 the plan when a reasonable basis exists for the
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 differentiation. The plan may offer rating, dividend plans,
2 and other plans to encourage loss prevention programs.
3 (e) The plan shall establish and use its rates and
4 rating plans, and the plan may establish and use changes in
5 rating plans at any time, but no more frequently than two
6 times per any rating class for any calendar year. By December
7 1, 1993, and December 1 of each year thereafter, the board
8 shall establish and use actuarially sound rates for use by the
9 plan to assure that the plan is self-funding while those rates
10 are in effect. Such Plan rates and rating plans must be filed
11 with the department within 30 calendar days after their
12 effective dates, and shall be considered a "use and file"
13 filing. Any disapproval by the department must have an
14 effective date that is at least 60 days from the date of
15 disapproval of the rates and rating plan and must have
16 prospective effect only. The plan may not be subject to any
17 order by the department to return to policyholders any portion
18 of the rates disapproved by the department. The department may
19 not disapprove any rates or rating plans unless it
20 demonstrates that such rates and rating plans are excessive,
21 inadequate, or unfairly discriminatory.
22 (f) No later than June 1 of each year, the plan shall
23 obtain an independent actuarial certification of the results
24 of the operations of the plan for prior years, and shall
25 furnish a copy of the certification to the department. If,
26 after the effective date of the plan, the projected ultimate
27 incurred losses and expenses and dividends for prior years
28 exceed collected premiums, accrued net investment income, and
29 prior assessments for prior years, the certification is
30 subject to review and approval by the department before it
31 becomes final.
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 (g) Before July 1 of each year, the plan shall notify
2 the department when a deficit occurs in Tier One or Tier Two
3 in the prior fiscal year. After verification by the
4 department, the department shall transfer to the plan, subject
5 to appropriation by the Legislature, a one time allocation of
6 an amount not to exceed $5 million. The plan shall levy an
7 assessment for any deficit remaining after the transfer.
8 Subject to verification by the department, the plan shall levy
9 an assessment on Florida Workers' Compensation policyholders,
10 which assessment shall not exceed 2 percent of each
11 policyholder's annual premium in any calendar year. Such
12 assessments shall be collected from Florida policyholders by
13 insurers writing workers' compensation insurance as a separate
14 line item, in addition to the premiums charged by the
15 insurers, and remitted by the insurers to the plan. Whenever a
16 deficit exists in Tier Three, the plan shall, within 90 days,
17 provide the department with a program to eliminate the deficit
18 within a reasonable time. The Tier-Three deficit may be funded
19 through increased premiums charged to insureds of the plan for
20 subsequent years, through the use of policyholder surplus
21 attributable to any year, and through assessments on insureds
22 in the plan if the plan uses assessable policies. The
23 department shall adopt by rule insurer reporting requirements
24 for the collection and remittence of collection and remittence
25 of assessments under this paragraph. For purposes of plan
26 record-keeping, reporting, and accounting, including
27 determining whether any deficit has incurred in Tier One, Tier
28 Two, or Tier Three, all policyholder surplus of the plan which
29 exists as of the effective date of this law shall be
30 attributed to Tier Three.
31 (h) Any premium or assessments collected by the plan
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 in excess of the amount necessary to fund projected ultimate
2 incurred losses and expenses of the plan and not paid to
3 insureds of the plan in conjunction with loss prevention or
4 dividend programs shall be retained by the plan for future
5 use.
6 (i) The decisions of the board of governors do not
7 constitute final agency action and are not subject to chapter
8 120.
9 (j) Policies for insureds shall be issued by the plan.
10 (k) The plan created under this subsection is liable
11 only for payment for losses arising under policies issued by
12 the plan with dates of accidents occurring on or after January
13 1, 1994.
14 (l) Plan losses are the sole and exclusive
15 responsibility of the plan, and payment for such losses must
16 be funded in accordance with this subsection and must not
17 come, directly or indirectly, from insurers or any guaranty
18 association for such insurers.
19 (l)(m) Each joint underwriting plan or association
20 created under this section is not a state agency, board, or
21 commission. However, for the purposes of s. 199.183(1) only,
22 the joint underwriting plan is a political subdivision of the
23 state and is exempt from the corporate income tax.
24 (n) Each joint underwriting plan or association may
25 elect to pay premium taxes on the premiums received on its
26 behalf or may elect to have the member insurers to whom the
27 premiums are allocated pay the premium taxes if the member
28 insurer had written the policy. The joint underwriting plan or
29 association shall notify the member insurers and the
30 Department of Revenue by January 15 of each year of its
31 election for the same year. As used in this paragraph, the
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SENATE AMENDMENT
Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 term "premiums received" means the consideration for
2 insurance, by whatever name called, but does not include any
3 policy assessment or surcharge received by the joint
4 underwriting association as a result of apportioning losses or
5 deficits of the association pursuant to this section.
6 (m)(o) Neither the plan nor any member of the board of
7 governors is liable for monetary damages to any person for any
8 statement, vote, decision, or failure to act, regarding the
9 management or policies of the plan, unless:
10 1. The member breached or failed to perform her or his
11 duties as a member; and
12 2. The member's breach of, or failure to perform,
13 duties constitutes:
14 a. A violation of the criminal law, unless the member
15 had reasonable cause to believe her or his conduct was not
16 unlawful. A judgment or other final adjudication against a
17 member in any criminal proceeding for violation of the
18 criminal law estops that member from contesting the fact that
19 her or his breach, or failure to perform, constitutes a
20 violation of the criminal law; but does not estop the member
21 from establishing that she or he had reasonable cause to
22 believe that her or his conduct was lawful or had no
23 reasonable cause to believe that her or his conduct was
24 unlawful;
25 b. A transaction from which the member derived an
26 improper personal benefit, either directly or indirectly; or
27 c. Recklessness or any act or omission that was
28 committed in bad faith or with malicious purpose or in a
29 manner exhibiting wanton and willful disregard of human
30 rights, safety, or property. For purposes of this
31 sub-subparagraph, the term "recklessness" means the acting, or
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Bill No. HB 1837, 2nd Eng.
Amendment No. ___ Barcode 952954
1 omission to act, in conscious disregard of a risk:
2 (I) Known, or so obvious that it should have been
3 known, to the member; and
4 (II) Known to the member, or so obvious that it should
5 have been known, to be so great as to make it highly probable
6 that harm would follow from such act or omission.
7 (n)(p) No insurer shall provide workers' compensation
8 and employer's liability insurance to any person who is
9 delinquent in the payment of premiums, assessments, penalties,
10 or surcharges owed to the plan.
11 (o) The plan and any premiums, assessments, penalties,
12 fees, and surcharges of the plan are exempt from premium
13 taxation, and are exempt from any assessments under ss. 440.49
14 and 440.51.
15 (p) The operational activities of the plan shall be
16 maintained in the same city in which the plan was located as
17 of January 1, 2003.
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