Senate Bill sb2270c2
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Florida Senate - 2004 CS for CS for SB 2270
By the Committees on Appropriations; and Banking and Insurance
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1 A bill to be entitled
2 An act relating to workers' compensation;
3 amending s. 627.311, F.S.; establishing three
4 tiers of employers eligible for coverage under
5 the plan; providing for criteria and rates for
6 each tier; deleting references to subplans;
7 providing for assessments to cover deficits in
8 tiers one and two; providing procedures to
9 collect the assessment; exempting the plan from
10 specified premium tax and assessments;
11 appropriating moneys from the Workers'
12 Compensation Administration Trust Fund to fund
13 plan deficits; providing transitional
14 provisions to subplan "D" policies; providing
15 legislative intent to create a state workers'
16 compensation mutual fund under certain
17 conditions; establishing the Workers'
18 Compensation Insurance Market Evaluation
19 Committee; providing for appointment of
20 members; requiring the committee to monitor and
21 report; requiring the Office of Insurance
22 Regulation and workers' compensation insurers
23 to report certain information; specifying
24 meeting dates and interim reports for the
25 committee; providing for reimbursement for
26 travel and per diem; providing legislative
27 intent as to the type of mutual fund it intends
28 to create; prohibiting insurers from providing
29 coverage to any person who is an affiliated
30 person of a person who is delinquent in the
31 payment of premiums, assessments, penalties, or
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1 surcharges owed to the plan; providing
2 effective dates.
3
4 Be It Enacted by the Legislature of the State of Florida:
5
6 Section 1. Subsection (5) of section 627.311, Florida
7 Statutes, is amended to read:
8 627.311 Joint underwriters and joint reinsurers;
9 public records and public meetings exemptions.--
10 (5)(a) The office shall, after consultation with
11 insurers, approve a joint underwriting plan of insurers which
12 shall operate as a nonprofit entity. For the purposes of this
13 subsection, the term "insurer" includes group self-insurance
14 funds authorized by s. 624.4621, commercial self-insurance
15 funds authorized by s. 624.462, assessable mutual insurers
16 authorized under s. 628.6011, and insurers licensed to write
17 workers' compensation and employer's liability insurance in
18 this state. The purpose of the plan is to provide workers'
19 compensation and employer's liability insurance to applicants
20 who are required by law to maintain workers' compensation and
21 employer's liability insurance and who are in good faith
22 entitled to but who are unable to procure purchase such
23 insurance through the voluntary market. The plan must have
24 actuarially sound rates that are not competitive with approved
25 voluntary market rates so that the plan functions as a
26 residual market mechanism assure that the plan is
27 self-supporting.
28 (b) The operation of the plan is subject to the
29 supervision of a 9-member board of governors. The board of
30 governors shall be comprised of:
31
2
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1 1. Three members appointed by the Financial Services
2 Commission. Each member appointed by the commission shall
3 serve at the pleasure of the commission;
4 2. Two of the 20 domestic insurers, as defined in s.
5 624.06(1), having the largest voluntary direct premiums
6 written in this state for workers' compensation and employer's
7 liability insurance, which shall be elected by those 20
8 domestic insurers;
9 3. Two of the 20 foreign insurers as defined in s.
10 624.06(2) having the largest voluntary direct premiums written
11 in this state for workers' compensation and employer's
12 liability insurance, which shall be elected by those 20
13 foreign insurers;
14 4. One person appointed by the largest property and
15 casualty insurance agents' association in this state; and
16 5. The consumer advocate appointed under s. 627.0613
17 or the consumer advocate's designee.
18
19 Each board member shall serve a 4-year term and may serve
20 consecutive terms. A vacancy on the board shall be filled in
21 the same manner as the original appointment for the unexpired
22 portion of the term. The Financial Services Commission shall
23 designate a member of the board to serve as chair. No board
24 member shall be an insurer which provides services to the plan
25 or which has an affiliate which provides services to the plan
26 or which is serviced by a service company or third-party
27 administrator which provides services to the plan or which has
28 an affiliate which provides services to the plan. The minutes,
29 audits, and procedures of the board of governors are subject
30 to chapter 119.
31
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1 (c) The operation of the plan shall be governed by a
2 plan of operation that is prepared at the direction of the
3 board of governors. The plan of operation may be changed at
4 any time by the board of governors or upon request of the
5 office. The plan of operation and all changes thereto are
6 subject to the approval of the office. The plan of operation
7 shall:
8 1. Authorize the board to engage in the activities
9 necessary to implement this subsection, including, but not
10 limited to, borrowing money.
11 2. Develop criteria for eligibility for coverage by
12 the plan, including, but not limited to, documented rejection
13 by at least two insurers which reasonably assures that
14 insureds covered under the plan are unable to acquire coverage
15 in the voluntary market. Any insured may voluntarily elect to
16 accept coverage from an insurer for a premium equal to or
17 greater than the plan premium if the insurer writing the
18 coverage adheres to the provisions of s. 627.171.
19 3. Require notice from the agent to the insured at the
20 time of the application for coverage that the application is
21 for coverage with the plan and that coverage may be available
22 through an insurer, group self-insurers' fund, commercial
23 self-insurance fund, or assessable mutual insurer through
24 another agent at a lower cost.
25 4. Establish programs to encourage insurers to provide
26 coverage to applicants of the plan in the voluntary market and
27 to insureds of the plan, including, but not limited to:
28 a. Establishing procedures for an insurer to use in
29 notifying the plan of the insurer's desire to provide coverage
30 to applicants to the plan or existing insureds of the plan and
31 in describing the types of risks in which the insurer is
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1 interested. The description of the desired risks must be on a
2 form developed by the plan.
3 b. Developing forms and procedures that provide an
4 insurer with the information necessary to determine whether
5 the insurer wants to write particular applicants to the plan
6 or insureds of the plan.
7 c. Developing procedures for notice to the plan and
8 the applicant to the plan or insured of the plan that an
9 insurer will insure the applicant or the insured of the plan,
10 and notice of the cost of the coverage offered; and developing
11 procedures for the selection of an insuring entity by the
12 applicant or insured of the plan.
13 d. Provide for a market-assistance plan to assist in
14 the placement of employers. All applications for coverage in
15 the plan received 45 days before the effective date for
16 coverage shall be processed through the market-assistance
17 plan. A market-assistance plan specifically designed to serve
18 the needs of small, good policyholders as defined by the board
19 must be finalized by January 1, 1994.
20 5. Provide for policy and claims services to the
21 insureds of the plan of the nature and quality provided for
22 insureds in the voluntary market.
23 6. Provide for the review of applications for coverage
24 with the plan for reasonableness and accuracy, using any
25 available historic information regarding the insured.
26 7. Provide for procedures for auditing insureds of the
27 plan which are based on reasonable business judgment and are
28 designed to maximize the likelihood that the plan will collect
29 the appropriate premiums.
30 8. Authorize the plan to terminate the coverage of and
31 refuse future coverage for any insured that submits a
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1 fraudulent application to the plan or provides fraudulent or
2 grossly erroneous records to the plan or to any service
3 provider of the plan in conjunction with the activities of the
4 plan.
5 9. Establish service standards for agents who submit
6 business to the plan.
7 10. Establish criteria and procedures to prohibit any
8 agent who does not adhere to the established service standards
9 from placing business with the plan or receiving, directly or
10 indirectly, any commissions for business placed with the plan.
11 11. Provide for the establishment of reasonable safety
12 programs for all insureds in the plan. All insureds of the
13 plan must participate in the safety program.
14 12. Authorize the plan to terminate the coverage of
15 and refuse future coverage to any insured who fails to pay
16 premiums or surcharges when due; who, at the time of
17 application, is delinquent in payments of workers'
18 compensation or employer's liability insurance premiums or
19 surcharges owed to an insurer, group self-insurers' fund,
20 commercial self-insurance fund, or assessable mutual insurer
21 licensed to write such coverage in this state; or who refuses
22 to substantially comply with any safety programs recommended
23 by the plan.
24 13. Authorize the board of governors to provide the
25 services required by the plan through staff employed by the
26 plan, through reasonably compensated service providers who
27 contract with the plan to provide services as specified by the
28 board of governors, or through a combination of employees and
29 service providers.
30 14. Provide for service standards for service
31 providers, methods of determining adherence to those service
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1 standards, incentives and disincentives for service, and
2 procedures for terminating contracts for service providers
3 that fail to adhere to service standards.
4 15. Provide procedures for selecting service providers
5 and standards for qualification as a service provider that
6 reasonably assure that any service provider selected will
7 continue to operate as an ongoing concern and is capable of
8 providing the specified services in the manner required.
9 16. Provide for reasonable accounting and
10 data-reporting practices.
11 17. Provide for annual review of costs associated with
12 the administration and servicing of the policies issued by the
13 plan to determine alternatives by which costs can be reduced.
14 18. Authorize the acquisition of such excess insurance
15 or reinsurance as is consistent with the purposes of the plan.
16 19. Provide for an annual report to the office on a
17 date specified by the office and containing such information
18 as the office reasonably requires.
19 20. Establish multiple rating plans for various
20 classifications of risk which reflect risk of loss, hazard
21 grade, actual losses, size of premium, and compliance with
22 loss control. At least one of such plans must be a
23 preferred-rating plan to accommodate small-premium
24 policyholders with good experience as defined in
25 sub-subparagraph 22.a.
26 21. Establish agent commission schedules.
27 22. For employers otherwise eligible for coverage
28 under the plan, establish three tiers of employers meeting the
29 criteria and subject to the rate limitations specified in this
30 subparagraph.
31 a. Tier One.--
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1 (I) Criteria, rated employers.--An employer that has
2 an experience modification rating shall be included in Tier
3 One if it meets all of the following:
4 (A) The experience modification is below 1.00;
5 (B) The employer had no lost-time claims subsequent to
6 the applicable experience modification rating period; and
7 (C) The total of the employer's medical-only claims
8 subsequent to the applicable experience modification rating
9 period did not exceed 20 percent of premium.
10 (II) Criteria, nonrated employers.--An employer that
11 does not have an experience modification rating shall be
12 included in Tier One if it meets all of the following:
13 (A) The employer had no lost-time claims for the
14 3-year period immediately preceding the inception date or
15 renewal date of its coverage under the plan;
16 (B) The total of the employer's medical-only claims
17 for the 3-year period immediately preceding the inception date
18 or renewal date of its coverage under the plan did not exceed
19 20 percent of premium;
20 (C) It has secured workers' compensation coverage for
21 the entire three-year period immediately preceding the
22 inception date or renewal date of its coverage under the plan;
23 (D) It is able to provide the plan with a loss history
24 generated by its prior workers' compensation insurer, except
25 that if the employer is not able to produce a loss history due
26 to the insolvency of an insurer, the employer may, in lieu of
27 the loss history, submit an affidavit from the employer and
28 the employer's insurance agent setting forth the loss history;
29 and
30 (E) It is not a new business.
31
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1 (III) Premiums.--The premiums for Tier One insureds
2 shall be set at a premium level 25 percent above the
3 comparable voluntary market premiums until the plan has
4 sufficient, credible experience as determined by the board to
5 establish an actuarially sound rate for Tier One, at which
6 point the board shall, subject to paragraph (e), adjust the
7 rate, if necessary, to produce actuarially sound rates;
8 provided the rate adjustment does not take effect until
9 January 1, 2007.
10 b. Tier Two.--
11 (I) Criteria, rated employers.--An employer that has
12 an experience modification rating shall be included in Tier
13 Two if it meets all of the following:
14 (A) The experience modification is equal to or greater
15 than 1.00 but not greater than 1.10;
16 (B) The employer had no lost-time claims subsequent to
17 the applicable experience modification rating period; and
18 (C) The total of the employer's medical-only claims
19 subsequent to the applicable experience modification rating
20 period did not exceed 20 percent of premium.
21 (II) Criteria, non-rated employers.--An employer that
22 does not have any experience modification rating shall be
23 included in Tier Two if it is a new business. An employer
24 shall be included in Tier Two if it has less than 3 years of
25 loss experience in the 3-year period immediately preceding the
26 inception date or renewal date of its coverage under the plan
27 and it meets all of the following:
28 (A) The employer had no lost-time claims for the
29 3-year period immediately preceding the inception date or
30 renewal date of its coverage under the plan;
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1 (B) The total of the employer's medical-only claims
2 for the 3-year period immediately preceding the inception date
3 or renewal date of its coverage under the plan did not exceed
4 20 percent of premium; and
5 (C) It is able to provide the plan with a loss history
6 generated by the workers' compensation insurer that provided
7 coverage for the portion or portions of such period during
8 which the employer had secured workers' compensation coverage.
9 If the employer is not able to produce a loss history due to
10 the insolvency of an insurer, the employer may, in lieu of the
11 loss history, submit an affidavit from the employer and the
12 employer's insurance agent setting forth the loss history.
13 (IV) Premiums.--The premiums for Tier Two insureds
14 shall be set at a premium level 50 percent above the
15 comparable voluntary market premiums until the plan has
16 sufficient, credible experience as determined by the board to
17 establish an actuarially sound rate for Tier Two, at which
18 point the board shall, subject to paragraph (e), adjust the
19 rate, if necessary, to produce actuarially sound rates;
20 provided the rate adjustment does not take effect until
21 January 1, 2007.
22 c. Tier Three.--
23 (I) Eligibility.--An employer shall be included in
24 Tier Three if it does not meet the criteria for Tier One or
25 Tier Two.
26 (II) Rates.--The board shall establish, subject to
27 paragraph (e), and the plan shall charge actuarially sound
28 rates for the Tier Three insureds. Establish four subplans as
29 follows:
30 a. Subplan "A" must include those insureds whose
31 annual premium does not exceed $2,500 and who have neither
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1 incurred any lost-time claims nor incurred medical-only claims
2 exceeding 50 percent of their premium for the immediate 2
3 years.
4 b. Subplan "B" must include insureds that are
5 employers identified by the board of governors as high-risk
6 employers due solely to the nature of the operations being
7 performed by those insureds and for whom no market exists in
8 the voluntary market, and whose experience modifications are
9 less than 1.00.
10 c. Subplan "C" must include all insureds within the
11 plan that are not eligible for subplan "A," subplan "B," or
12 subplan "D."
13 d. Subplan "D" must include any employer, regardless
14 of the length of time for which it has conducted business
15 operations, which has an experience modification factor of
16 1.10 or less and either employs 15 or fewer employees or is an
17 organization that is exempt from federal income tax pursuant
18 to s. 501(c)(3) of the Internal Revenue Code and receives more
19 than 50 percent of its funding from gifts, grants, endowments,
20 or federal or state contracts. The rate plan for subplan "D"
21 shall be the same rate plan as the plan approved under ss.
22 627.091-627.151, and each participant in subplan "D" shall pay
23 the premium determined under such rate plan, plus a surcharge
24 determined by the board to be sufficient to ensure that the
25 plan does not compete with the voluntary market rate for any
26 participant, but not to exceed 25 percent. However, the
27 surcharge shall not exceed 10 percent for an organization that
28 is exempt from federal income tax pursuant to s. 501(c)(3) of
29 the Internal Revenue Code.
30 23. For Tier One or Tier Two employers which employ no
31 nonexempt employees or which report payroll which is less than
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1 the minimum wage hourly rate for one full-time employee for
2 one year at 40 hours per week, the plan shall establish
3 actuarially sound premiums, provided, however, that the
4 premiums may not exceed $2,500. These premiums shall be in
5 addition to the fee specified in subparagraph 26. When the
6 plan establishes actuarially sound rates for all employers in
7 Tier One and Tier Two, the premiums for employers referred to
8 in this paragraph are no longer subject to the $2,500 cap.
9 24.23. Provide for a depopulation program to reduce
10 the number of insureds in the plan. subplan "D." If an
11 employer insured through the plan subplan "D" is offered
12 coverage from a voluntary market carrier:
13 a. During the first 30 days of coverage under the plan
14 subplan;
15 b. Before a policy is issued under the plan subplan;
16 c. By issuance of a policy upon expiration or
17 cancellation of the policy under the plan subplan; or
18 d. By assumption of the plan's subplan's obligation
19 with respect to an in-force policy,
20
21 that employer is no longer eligible for coverage through the
22 plan. The premium for risks assumed by the voluntary market
23 carrier must be no greater than the same premium the insured
24 would have paid under the plan, and shall be adjusted upon
25 renewal to reflect changes in the plan rates and the tier for
26 which the insured would qualify as of the time of renewal. The
27 insured may be charged such premiums only for the first 2
28 years of coverage in the voluntary market plus, for the first
29 2 years, the surcharge as determined in sub-subparagraph 22.d.
30 A premium under this subparagraph, including surcharge, is
31
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1 deemed approved and is not an excess premium for purposes of
2 s. 627.171.
3 25.24. Require that policies issued under subplan "D"
4 and applications for such policies must include a notice that
5 the policy issued under subplan "D" could be replaced by a
6 policy issued from a voluntary market carrier and that, if an
7 offer of coverage is obtained from a voluntary market carrier,
8 the policyholder is no longer eligible for coverage through
9 the plan. subplan "D." The notice must also specify that
10 acceptance of coverage under the plan subplan "D" creates a
11 conclusive presumption that the applicant or policyholder is
12 aware of this potential.
13 26. Require that each application for coverage and
14 each renewal premium be accompanied by a nonrefundable fee of
15 $475 to cover costs of administration and fraud prevention.
16 The board may, with the approval of the office, increase the
17 amount of the fee pursuant to a rate filing to reflect
18 increased costs of administration and fraud prevention. The
19 fee is not subject to commission and is fully earned upon
20 commencement of coverage.
21 (d)1. The funding of the plan shall include premiums
22 as provided in subparagraph (c)22. and assessments as provided
23 in this paragraph.
24 2.a. If the board determines that a deficit exists in
25 Tier One or Tier Two or that there is any deficit remaining
26 attributable to the former subplan "D" and that the deficit
27 cannot reasonably be funded without the use of deficit
28 assessments, the board shall request the Office of Insurance
29 Regulation to levy, by order, a deficit assessment against
30 premiums charged to insureds for workers' compensation
31 insurance by insurers as defined in s. 631.904(5). The office
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1 shall issue the order after verifying the amount of the
2 deficit. The assessment shall be specified as a percentage of
3 future premium collections, as recommended by the board and
4 approved by the office. The same percentage shall apply to
5 premiums on all workers' compensation policies issued or
6 renewed during the 12-month period beginning on the effective
7 date of the assessment, as specified in the order.
8 b. With respect to each insurer collecting premiums
9 that are subject to the assessment, the insurer shall collect
10 the assessment at the same time as it collects the premium
11 payment for each policy and shall remit the assessments
12 collected to the plan as provided in the order issued by the
13 Office of Insurance Regulation. The office shall verify the
14 accurate and timely collection and remittance of deficit
15 assessments and shall report the information to the board.
16 Each insurer collecting assessments shall provide the
17 information with respect to premiums and collections as may be
18 required by the office to enable the office to monitor and
19 audit compliance with this paragraph.
20 c. Deficit assessments are not considered a part of an
21 insurer's rate, are not premium and are not subject to the
22 premium tax, to the assessments under ss. 440.49 and 440.51,
23 to the surplus lines tax, to any fees, or to any commissions.
24 The deficit assessment imposed becomes plan funds at the
25 moment of collection and does not constitute income for any
26 purpose, including financial reporting on the insurer's income
27 statement. An insurer is liable for all assessments that it
28 collects and must treat the failure of an insured to pay an
29 assessment as a failure to pay premium. An insurer is not
30 liable for uncollectible assessments.
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1 d. When an insurer is required to return unearned
2 premium, it shall also return any collected assessments
3 attributable to the unearned premium.
4 3.a. All policies issued to Tier Three insureds shall
5 be assessable. All Tier Three assessable policies must be
6 clearly identified as assessable by containing, in contrasting
7 color and in not less than 10-point type, the following
8 statements: "This is an assessable policy. If the plan is
9 unable to pay its obligations, policyholders will be required
10 to contribute on a pro rata earned premium basis the money
11 necessary to meet any assessment levied."
12 b. The board may from time to time assess Tier Three
13 insureds to whom the plan has issued assessable policies for
14 the purpose of funding plan deficits. Any assessment shall be
15 based upon a reasonable actuarial estimate of the amount of
16 the deficit, taking into account the amount needed to fund
17 medical and indemnity reserves and reserves for incurred but
18 not reported claims, and allowing for general administrative
19 expenses, the cost of levying and collecting the assessment, a
20 reasonable allowance for estimated uncollectible assessments,
21 and both allocated and unallocated loss adjustment expenses.
22 c. Each Tier Three insured's share of a deficit shall
23 be computed by applying to the premium earned on the insured's
24 policy or policies during the period to be covered by the
25 assessment the ratio of the total deficit to the total
26 premiums earned during the period upon all policies subject to
27 the assessment. In the event one or more Tier Three insureds
28 fail to pay an assessment, the other Tier Three insureds shall
29 be liable on a proportionate basis for additional assessments
30 to fund the deficit. The plan may compromise and settle
31 individual assessment claims without affecting the validity of
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1 or amounts due on assessments levied against other insureds.
2 The plan may offer and accept discounted payments for
3 assessments which are promptly paid. The plan may offset the
4 amount of any unpaid assessment against unearned premiums
5 which may otherwise be due to an insured. The plan shall
6 institute legal action when necessary and appropriate to
7 collect the assessment from any insured who fails to pay an
8 assessment when due.
9 d. The venue of a proceeding to enforce or collect an
10 assessment or to contest the validity or amount of an
11 assessment shall be in the Circuit Court of Leon County.
12 e. If the board finds that a deficit in Tier Three
13 exists for any period and that an assessment is necessary, it
14 shall certify to the office the need for an assessment. No
15 sooner than 30 days after the date of the certification, the
16 board shall notify in writing each insured who is to be
17 assessed that an assessment is being levied against the
18 insured, and informing the insured of the amount of the
19 assessment, the period for which the assessment is being
20 levied, and the date by which payment of the assessment is
21 due. The board shall establish a date by which payment of the
22 assessment is due, which may not be sooner than 30 days or
23 later than 120 days after the date on which notice of the
24 assessment is mailed to the insured. The plan must be funded
25 through actuarially sound premiums charged to insureds of the
26 plan.
27 2. The plan may issue assessable policies only to
28 those insureds in subplans "C" and "D." Subject to
29 verification by the department, the board may levy assessments
30 against insureds in subplan "C" or subplan "D," on a pro rata
31 earned premium basis, to fund any deficits that exist in those
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1 subplans. Assessments levied against subplan "C" participants
2 shall cover only the deficits attributable to subplan "C," and
3 assessments levied against subplan "D" participants shall
4 cover only the deficits attributable to subplan "D." In no
5 event may the plan levy assessments against any person or
6 entity, except as authorized by this paragraph. Those
7 assessable policies must be clearly identified as assessable
8 by containing, in contrasting color and in not less than
9 10-point type, the following statements: "This is an
10 assessable policy. If the plan is unable to pay its
11 obligations, policyholders will be required to contribute on a
12 pro rata earned premium basis the money necessary to meet any
13 assessment levied."
14 3. The plan may issue assessable policies with
15 differing terms and conditions to different groups within
16 subplans "C" and "D" when a reasonable basis exists for the
17 differentiation.
18 4. The plan may offer rating, dividend plans, and
19 other plans to encourage loss prevention programs.
20 (e) The plan shall establish and use its rates and
21 rating plans, and the plan may establish and use changes in
22 rating plans at any time, but no more frequently than two
23 times per any rating class for any calendar year. By December
24 1, 1993, and December 1 of each year thereafter, the board
25 shall, except as provided in subparagraph (c)22., establish
26 and use actuarially sound rates for use by the plan to assure
27 that the plan is self-funding while those rates are in effect.
28 Such rates and rating plans must be filed with the office
29 within 30 calendar days after their effective dates, and shall
30 be considered a "use and file" filing. Any disapproval by the
31 office must have an effective date that is at least 60 days
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1 from the date of disapproval of the rates and rating plan and
2 must have prospective effect only. The plan may not be subject
3 to any order by the office to return to policyholders any
4 portion of the rates disapproved by the office. The office may
5 not disapprove any rates or rating plans unless it
6 demonstrates that such rates and rating plans are excessive,
7 inadequate, or unfairly discriminatory.
8 (f) No later than June 1 of each year, the plan shall
9 obtain an independent actuarial certification of the results
10 of the operations of the plan for prior years, and shall
11 furnish a copy of the certification to the office. If, after
12 the effective date of the plan, the projected ultimate
13 incurred losses and expenses and dividends for prior years
14 exceed collected premiums, accrued net investment income, and
15 prior assessments for prior years, the certification is
16 subject to review and approval by the office before it becomes
17 final.
18 (g) Whenever a deficit exists, the plan shall, within
19 90 days, provide the office with a program to eliminate the
20 deficit within a reasonable time. The deficit may be funded
21 through increased premiums charged to insureds of the plan for
22 subsequent years, through the use of policyholder surplus
23 attributable to any year, through the use of assessments as
24 provided in subparagraph (d)2., and through assessments on
25 insureds in the plan if the plan uses assessable policies as
26 provided in subparagraph (d)3.
27 (h) Any premium or assessments collected by the plan
28 in excess of the amount necessary to fund projected ultimate
29 incurred losses and expenses of the plan and not paid to
30 insureds of the plan in conjunction with loss prevention or
31
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1 dividend programs shall be retained by the plan for future
2 use.
3 (i) The decisions of the board of governors do not
4 constitute final agency action and are not subject to chapter
5 120.
6 (j) Policies for insureds shall be issued by the plan.
7 (k) The plan created under this subsection is liable
8 only for payment for losses arising under policies issued by
9 the plan with dates of accidents occurring on or after January
10 1, 1994.
11 (l) Plan losses are the sole and exclusive
12 responsibility of the plan, and payment for such losses must
13 be funded in accordance with this subsection and must not
14 come, directly or indirectly, from insurers or any guaranty
15 association for such insurers.
16 (m) Each joint underwriting plan or association
17 created under this section is not a state agency, board, or
18 commission. However, for the purposes of s. 199.183(1) only,
19 the joint underwriting plan is a political subdivision of the
20 state and is exempt from the corporate income tax.
21 (n) Each joint underwriting plan or association may
22 elect to pay premium taxes on the premiums received on its
23 behalf or may elect to have the member insurers to whom the
24 premiums are allocated pay the premium taxes if the member
25 insurer had written the policy. The joint underwriting plan or
26 association shall notify the member insurers and the
27 Department of Revenue by January 15 of each year of its
28 election for the same year. As used in this paragraph, the
29 term "premiums received" means the consideration for
30 insurance, by whatever name called, but does not include any
31 policy assessment or surcharge received by the joint
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1 underwriting association as a result of apportioning losses or
2 deficits of the association pursuant to this section.
3 (o) Neither the plan nor any member of the board of
4 governors is liable for monetary damages to any person for any
5 statement, vote, decision, or failure to act, regarding the
6 management or policies of the plan, unless:
7 1. The member breached or failed to perform her or his
8 duties as a member; and
9 2. The member's breach of, or failure to perform,
10 duties constitutes:
11 a. A violation of the criminal law, unless the member
12 had reasonable cause to believe her or his conduct was not
13 unlawful. A judgment or other final adjudication against a
14 member in any criminal proceeding for violation of the
15 criminal law estops that member from contesting the fact that
16 her or his breach, or failure to perform, constitutes a
17 violation of the criminal law; but does not estop the member
18 from establishing that she or he had reasonable cause to
19 believe that her or his conduct was lawful or had no
20 reasonable cause to believe that her or his conduct was
21 unlawful;
22 b. A transaction from which the member derived an
23 improper personal benefit, either directly or indirectly; or
24 c. Recklessness or any act or omission that was
25 committed in bad faith or with malicious purpose or in a
26 manner exhibiting wanton and willful disregard of human
27 rights, safety, or property. For purposes of this
28 sub-subparagraph, the term "recklessness" means the acting, or
29 omission to act, in conscious disregard of a risk:
30 (I) Known, or so obvious that it should have been
31 known, to the member; and
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1 (II) Known to the member, or so obvious that it should
2 have been known, to be so great as to make it highly probable
3 that harm would follow from such act or omission.
4 (p) No insurer shall provide workers' compensation and
5 employer's liability insurance to any person who is delinquent
6 in the payment of premiums, assessments, penalties, or
7 surcharges owed to the plan or to any person who is an
8 affiliated person of a person who is delinquent in the payment
9 of premiums, assessments, penalties, or surcharges owed to the
10 plan. For the purposes of this paragraph, the term "affiliated
11 person" of another person means:
12 1. The spouse of such other natural person;
13 2. Any person who directly or indirectly owns or
14 controls, or holds with the power to vote, 5 percent or more
15 of the outstanding voting securities of such other person;
16 3. Any person who directly or indirectly owns 5
17 percent or more of the outstanding voting securities that are
18 directly or indirectly owned or controlled, or held with the
19 power to vote, by such other person;
20 4. Any person or group of persons who directly or
21 indirectly control, are controlled by, or are under common
22 control with such other person;
23 5. Any officer, director, trustee, partner, owner,
24 manager, joint venturer, or employee, or other person
25 performing duties similar to persons in those positions, of
26 such other person; or
27 6. Any person who has an officer, director, trustee,
28 partner, or joint venturer in common with such other person.
29 (q) Effective July 1, 2004, the plan is exempt from
30 the premium tax under s. 624.509 and any assessments under ss.
31 440.49 and 440.51.
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1 Section 2. Notwithstanding the provisions of sections
2 440.50 and 440.51, Florida Statutes, for the 2004-2005 fiscal
3 year:
4 (1) The sum of $25 million is appropriated from the
5 Workers' Compensation Administration Trust Fund in the
6 Department of Financial Services for transfer to the workers'
7 compensation joint underwriting plan provided in section
8 627.311(5), Florida Statutes, as a capital contribution to
9 fund any deficit in the plan. The Chief Financial Officer
10 shall transfer the funds to the plan no later than July 31,
11 2004.
12 (2) The workers' compensation joint underwriting plan
13 set forth in section 627.311(5), Florida Statutes, may request
14 the Department of Financial Services to transfer an amount not
15 to exceed $10 million from the Workers' Compensation
16 Administration Trust Fund to the plan subject to the approval
17 of the Legislative Budget Commission under sections 216.181
18 and 216.292, Florida Statutes. The workers' compensation joint
19 underwriting plan board of governors and the Office of
20 Insurance Regulation must first certify to the Department of
21 Financial Services that a deficit exists in the workers'
22 compensation joint underwriting plan. The amount requested for
23 transfer to the plan may not exceed the deficit amount jointly
24 certified by the board of governors and the Office of
25 Insurance Regulation to exist in Tier One or Tier Two or for
26 any deficit remaining attributable to the former subplan "D"
27 which cannot be funded without the use of deficit assessments
28 as authorized by section 627.351(5)(d), Florida Statutes.
29 Section 3. Transitional provisions.--Effective upon
30 this act becoming a law:
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1 (1) Notwithstanding section 627.311(5), Florida
2 Statutes, to the contrary, no policy in subplan "D" of the
3 Florida Workers' Compensation Joint Underwriting Association
4 is subject to an assessment for the purpose of funding a
5 deficit.
6 (2) Any policy issued by the Florida Workers'
7 Compensation Joint Underwriting Association with an effective
8 date between the date on which this act becomes a law and June
9 30, 2004, shall be rerated and placed in the appropriate tier
10 provided in section 627.311(5), Florida Statues, as amended
11 effective July 1, 2004, and shall be subject to the premiums
12 and charges provided for in that section as amended.
13 Section 4. Effective upon this act becoming a law:
14 (1) The Legislature intends to create a state workers'
15 compensation mutual fund if workers' compensation coverage is
16 not generally available and affordable to small employers in
17 Florida by October 1, 2005. In order to make this
18 determination, there is established the Workers' Compensation
19 Insurance Market Evaluation Committee which shall consist of
20 one member appointed by the Governor, who shall serve as
21 chair; two members appointed by the President of the Senate;
22 and two members appointed by the Speaker of the House of
23 Representatives. The committee shall monitor and report on the
24 number of insurers actively writing workers' compensation
25 insurance in this state for small employers, the number of
26 policies issued, premium volume written, types of underwriting
27 restrictions utilized, and the extent to which actual premiums
28 charged vary from standard rates, such as the use of excess
29 rates pursuant to section 627.171, Florida Statutes, and rate
30 deviations pursuant to section 627.211, Florida Statutes. The
31 Office of Insurance Regulation shall provide such related
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1 information to the committee as is requested, and workers'
2 compensation insurers shall report such information to the
3 office in the manner and format specified by the office.
4 (2) The committee shall meet once each month,
5 beginning in August 2004, and shall provide interim reports to
6 the appointing officers on October 1, 2004, December 1, 2004,
7 and March 1, 2005, and at such additional times as the
8 President of the Senate and the Speaker of the House of
9 Representatives jointly require. Members of the committee
10 shall be entitled to reimbursement for travel and per diem
11 pursuant to section 112.061, Florida Statutes.
12 (3) If the Legislature determines that workers'
13 compensation coverage is not generally available and
14 affordable to small employers in Florida, the Legislature
15 intends to create a state mutual fund as a nonprofit entity
16 for the benefit of its small employer policyholders. The state
17 mutual fund would compete with private carriers and would be
18 charged with the public mission of customer service, quality
19 loss prevention, timely claims management, active fighting of
20 fraud, and compassionate care for injured workers, at the
21 lowest cost consistent with actuarial sound rates. The fund
22 should primarily rely on an in-house staff of professional
23 employees, rather than contracting with servicing carriers. It
24 is further intended that the state appropriate adequate
25 initial capitalization for the fund and that the fund be
26 subject to the same financial and other requirements as apply
27 to an authorized insurer.
28 Section 5. Except as otherwise expressly provided in
29 this act, and except for this section, which shall take effect
30 upon becoming a law, this act shall take effect July 1, 2004.
31
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1 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
2 CS for SB 2270
3
4 The committee substitute:
5 (1) Restructures the current workers' compensation joint
underwriting plan (JUA), s. 627.311(5), F.S., by eliminating
6 the current subplans and creating Tiers One, Two and Three.
7 (2) Provides employers in Tiers One and Two who have no
employees or a payroll that is less than the minimum wage for
8 one full-time non-exempt employee access to purchase minimum
premium policies not to exceed $2,500, plus a $475 annual
9 administrative fee.
10 (3) Provides a one time appropriation of $25 million from the
Workers' Compensation Administration Trust Fund to the
11 Department of Financial Services for transfer to the JUA to
fund the deficit incurred for subplan D policies.
12
(4) Provides authority to the JUA to request transfer from the
13 Department of Financial Services an amount not to exceed $10
million from the Workers' Compensation Administration Trust
14 Fund to fund deficits anticipated to occur in Fiscal Year
2004-2005. The transfer amount is subject to approval by the
15 Legislative Budget Commission and may not exceed the deficit
amount jointly certified by the JUA board of governors and the
16 Office of Insurance Regulation.
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