Florida Senate - 2014 COMMITTEE AMENDMENT
Bill No. SB 346
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LEGISLATIVE ACTION
Senate . House
Comm: RCS .
02/18/2014 .
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following:
1 Senate Amendment (with title amendment)
2
3 Delete everything after the enacting clause
4 and insert:
5 Section 1. Present subsections (2) through (9) of section
6 631.54, Florida Statutes, are renumbered as subsections (3)
7 through (10), respectively, and a new subsection (2) is added to
8 that section, to read:
9 631.54 Definitions.—As used in this part:
10 (2) “Assessment year” means the 12-month period specified
11 in an order issued by the office directing insurers to pay an
12 assessment to the association. Upon entry of the order, insurers
13 may begin collecting assessments from policyholders for the
14 assessment year. The assessment year begins on the first day of
15 each quarter, beginning January 1.
16 Section 2. Subsection (3) of section 631.57, Florida
17 Statutes, is amended to read:
18 631.57 Powers and duties of the association.—
19 (3)(a) To the extent necessary to secure the funds for the
20 respective accounts for the payment of covered claims, to pay
21 the reasonable costs to administer such accounts the same, and
22 to the extent necessary to secure the funds for the account
23 specified in s. 631.55(2)(b) or to retire indebtedness,
24 including, without limitation, the principal, redemption
25 premium, if any, and interest on, and related costs of issuance
26 of, bonds issued under s. 631.695 and the funding of any
27 reserves and other payments required under the bond resolution
28 or trust indenture pursuant to which such bonds have been
29 issued, the office, upon certification of the board of
30 directors, shall levy assessments initially estimated in the
31 proportion that each insurer’s net direct written premiums in
32 this state in the classes protected by the account bears to the
33 total of said net direct written premiums received in this state
34 by all such insurers for the preceding calendar year for the
35 kinds of insurance included within such account. Assessments
36 shall be remitted to and administered by the board of directors
37 in the manner specified by the approved plan and paragraph (f).
38 Each insurer so assessed shall have at least 30 days’ written
39 notice as to the date the initial assessment payment is due and
40 payable. Every assessment shall be made as a uniform percentage
41 applicable to the net direct written premiums of each insurer in
42 the kinds of insurance included within the account in which the
43 assessment is made. The assessments levied against any insurer
44 may shall not exceed in any one year more than 2 percent of that
45 insurer’s net direct written premiums in this state for the
46 kinds of insurance included within such account during the
47 calendar year next preceding the date of such assessments.
48 (b) If sufficient funds from such assessments, together
49 with funds previously raised, are not available in any one year
50 in the respective account to make all the payments or
51 reimbursements then owing to insurers, the funds available shall
52 be prorated and the unpaid portion shall be paid as soon
53 thereafter as funds become available.
54 (c) The Legislature finds and declares that all assessments
55 paid by an insurer or insurer group as a result of a levy by the
56 office, including assessments levied pursuant to paragraph (a)
57 and emergency assessments levied pursuant to paragraph (e),
58 constitute advances of funds from the insurer to the
59 association. An insurer may fully recoup such advances by
60 applying the uniform assessment percentage levied by the office
61 to all a separate recoupment factor to the premium of policies
62 of the same kind or line as were considered by the office in
63 determining the assessment liability of the insurer or insurer
64 group as set forth in paragraph (f).
65 1. Assessments levied under subparagraph (f)1. are paid
66 before policy surcharges are collected and result in a
67 receivable for policy surcharges collected in the future. This
68 amount, to the extent it is likely that it will be realized,
69 meets the definition of an admissible asset as specified in the
70 National Association of Insurance Commissioners’ Statement of
71 Statutory Accounting Principles No. 4. The asset shall be
72 established and recorded separately from the liability
73 regardless of whether it is based on a retrospective or
74 prospective premium-based assessment. If an insurer is unable to
75 fully recoup the amount of the assessment because of a reduction
76 in writings or withdrawal from the market, the amount recorded
77 as an asset shall be reduced to the amount reasonably expected
78 to be recouped.
79 2. Assessments levied under subparagraph (f)2. are paid
80 after policy surcharges are collected so that the recognition of
81 assets is based on actual premium written offset by the
82 obligation to the association.
83 (d) No State funds may not of any kind shall be allocated
84 or paid to the said association or any of its accounts.
85 (e)1.a. In addition to assessments otherwise authorized in
86 paragraph (a), and to the extent necessary to secure the funds
87 for the account specified in s. 631.55(2)(b) for the direct
88 payment of covered claims of insurers rendered insolvent by the
89 effects of a hurricane and to pay the reasonable costs to
90 administer such claims, or to retire indebtedness, including,
91 without limitation, the principal, redemption premium, if any,
92 and interest on, and related costs of issuance of, bonds issued
93 under s. 631.695 and the funding of any reserves and other
94 payments required under the bond resolution or trust indenture
95 pursuant to which such bonds have been issued, the office, upon
96 certification of the board of directors, shall levy emergency
97 assessments upon insurers holding a certificate of authority.
98 The emergency assessments payable under this paragraph by any
99 insurer may shall not exceed in any single year more than 2
100 percent of that insurer’s direct written premiums, net of
101 refunds, in this state during the preceding calendar year for
102 the kinds of insurance within the account specified in s.
103 631.55(2)(b).
104 2.b. Any Emergency assessments authorized under this
105 paragraph shall be levied by the office upon insurers referred
106 to in subparagraph 1. sub-subparagraph a., upon certification as
107 to the need for such assessments by the board of directors. If
108 In the event the board of directors participates in the issuance
109 of bonds in accordance with s. 631.695, emergency assessments
110 shall be levied in each year that bonds issued under s. 631.695
111 and secured by such emergency assessments are outstanding, in
112 such amounts up to such 2-percent limit as required in order to
113 provide for the full and timely payment of the principal of,
114 redemption premium, if any, and interest on, and related costs
115 of issuance of, such bonds. The emergency assessments provided
116 for in this paragraph are assigned and pledged to the
117 municipality, county, or legal entity issuing bonds under s.
118 631.695 for the benefit of the holders of such bonds, in order
119 to enable such municipality, county, or legal entity to provide
120 for the payment of the principal of, redemption premium, if any,
121 and interest on such bonds, the cost of issuance of such bonds,
122 and the funding of any reserves and other payments required
123 under the bond resolution or trust indenture pursuant to which
124 such bonds have been issued, without the necessity of any
125 further action by the association, the office, or any other
126 party. If To the extent bonds are issued under s. 631.695 and
127 the association determines to secure such bonds by a pledge of
128 revenues received from the emergency assessments, such bonds,
129 upon such pledge of revenues, shall be secured by and payable
130 from the proceeds of such emergency assessments, and the
131 proceeds of emergency assessments levied under this paragraph
132 shall be remitted directly to and administered by the trustee or
133 custodian appointed for such bonds.
134 3.c. Emergency assessments used to defease bonds issued
135 under this part paragraph may be payable in a single payment or,
136 at the option of the association, may be payable in 12 monthly
137 installments with the first installment being due and payable at
138 the end of the month after an emergency assessment is levied and
139 subsequent installments being due by not later than the end of
140 each succeeding month.
141 4.d. If emergency assessments are imposed, the report
142 required by s. 631.695(7) must shall include an analysis of the
143 revenues generated from the emergency assessments imposed under
144 this paragraph.
145 5.e. If emergency assessments are imposed, the references
146 in sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to
147 assessments levied under paragraph (a) must shall include
148 emergency assessments imposed under this paragraph.
149 6.2. If the board of directors participates in the issuance
150 of bonds in accordance with s. 631.695, an annual assessment
151 under this paragraph shall continue while the bonds issued with
152 respect to which the assessment was imposed are outstanding,
153 including any bonds the proceeds of which were used to refund
154 bonds issued pursuant to s. 631.695, unless adequate provision
155 has been made for the payment of the bonds in the documents
156 authorizing the issuance of such bonds.
157 7.3. Emergency assessments under this paragraph are not
158 premium and are not subject to the premium tax, to any fees, or
159 to any commissions. An insurer is liable for all emergency
160 assessments that the insurer collects and shall treat the
161 failure of an insured to pay an emergency assessment as a
162 failure to pay the premium. An insurer is not liable for
163 uncollectible emergency assessments.
164 (f) The recoupment factor applied to policies in accordance
165 with paragraph (c) shall be selected by the insurer or insurer
166 group so as to provide for the probable recoupment of both
167 assessments levied pursuant to paragraph (a) and emergency
168 assessments over a period of 12 months, unless the insurer or
169 insurer group, at its option, elects to recoup the assessment
170 over a longer period. The recoupment factor shall apply to all
171 policies of the same kind or line as were considered by the
172 office in determining the assessment liability of the insurer or
173 insurer group issued or renewed during a 12-month period. If the
174 insurer or insurer group does not collect the full amount of the
175 assessment during one 12-month period, the insurer or insurer
176 group may apply recalculated recoupment factors to policies
177 issued or renewed during one or more succeeding 12-month
178 periods. If, at the end of a 12-month period, the insurer or
179 insurer group has collected from the combined kinds or lines of
180 policies subject to assessment more than the total amount of the
181 assessment paid by the insurer or insurer group, the excess
182 amount shall be disbursed as follows:
183 1. The association, office, and insurers remitting
184 assessments pursuant to paragraph (a) or (e) must comply with
185 the following:
186 a. In the order levying an assessment, the office shall
187 specify the actual percentage amount to be collected uniformly
188 from all the policyholders of insurers subject to the assessment
189 and the date on which the assessment year begins, which may not
190 begin before 90 days after the association board certifies such
191 an assessment.
192 b. Insurers shall make an initial payment to the
193 association before the beginning of the assessment year, on or
194 before the date specified in the order of the office.
195 c. Insurers that have written insurance in the calendar
196 year before the year in which the assessment is certified by the
197 board shall make an initial payment based on the net direct
198 written premium amount from the prior calendar year as set forth
199 in the insurers annual statement, multiplied by the uniform
200 percentage of premium specified in the order issued by the
201 office. Insurers that have not written insurance in the prior
202 calendar year in any of the lines under the account which are
203 being assessed, but which are writing insurance as of, or after,
204 the date the board certifies the assessment to the office, shall
205 pay an amount based on a good faith estimate of the amount of
206 net direct written premium anticipated to be written in the
207 subject lines of business for the assessment year, multiplied by
208 the uniform percentage of premium specified in the order issued
209 by the office.
210 d. Insurers shall file a reconciliation report with the
211 association within 45 days after the end of the assessment year
212 which indicates the amount of the initial payment to the
213 association before the assessment year, whether such amount was
214 based on net direct written premium contained in a prior
215 calendar year annual statement or a good faith projection, the
216 amount actually collected during the assessment year, and such
217 other information contained on a form adopted by the association
218 and provided to the insurers in advance. If the insurer
219 collected from policyholders more than the amount initially
220 paid, the insurer shall pay the excess amount to the
221 association. If the insurer collected from policyholders an
222 amount which is less than the amount initially paid to the
223 association, the association shall credit the insurer that
224 amount against future assessments. Such payment reconciliation
225 report, and any payment of excess amounts collected from
226 policyholders, shall be completed and remitted to the
227 association within 90 days after the end of the assessment year.
228 The association shall send a final reconciliation report on all
229 insurers to the office within 120 days after each assessment
230 year.
231 e. Insurers remitting reconciliation reports under this
232 paragraph to the association are subject to s. 626.9541(1)(e).
233 f. Assessments levied under this subsection are levied upon
234 insurers. This subsection does not create a cause of action by a
235 policyholder with respect to the levying of, or a policyholder’s
236 duty to pay, such assessments. If the excess amount does not
237 exceed 15 percent of the total assessment paid by the insurer or
238 insurer group, the excess amount shall be remitted to the
239 association within 60 days after the end of the 12-month period
240 in which the excess recoupment charges were collected.
241 2. The association may use a monthly installment method
242 instead of the method described in sub-subparagraphs (f)1.b and
243 c. or in combination thereof based on the association’s
244 projected cash flow. If the association projects that it has
245 cash on hand for the payment of anticipated claims in the
246 applicable account for at least 6 months, the board may make an
247 estimate of the assessment needed and may recommend to the
248 office the assessment percentage that may be collected as a
249 monthly assessment. The office may, in the order levying the
250 assessment on insurers, specify that the assessment is due and
251 payable monthly as the funds are collected from insureds
252 throughout the assessment year, in which case the assessment
253 shall be a uniform percentage of premium collected during the
254 assessment year and shall be collected from all policyholders
255 with policies in the classes protected by the account. All
256 insurers shall collect the assessment without regard to whether
257 the insurers reported premium in the year preceding the
258 assessment. Insurers are not required to advance funds if the
259 association and the office elect to use the monthly installment
260 option. All funds collected shall be retained by the association
261 for the payment of current or future claims. If the excess
262 amount exceeds 15 percent of the total assessment paid by the
263 insurer or insurer group, the excess amount shall be returned to
264 the insurer’s or insurer group’s current policyholders by
265 refunds or premium credits. The association shall use any
266 remitted excess recoupment amounts to reduce future assessments.
267 (g) Amounts recouped pursuant to this subsection for
268 assessments levied under paragraph (a) due to insolvencies on or
269 after July 1, 2010, are considered premium solely for premium
270 tax purposes and are not subject to fees or commissions.
271 However, insurers shall treat the failure of an insured to pay a
272 recoupment charge as a failure to pay the premium.
273 (h) At least 15 days before applying the recoupment factor
274 to any policies, the insurer or insurer group shall file with
275 the office a statement for informational purposes only setting
276 forth the amount of the recoupment factor and an explanation of
277 how the recoupment factor will be applied. Such statement shall
278 include documentation of the assessment paid by the insurer or
279 insurer group and the arithmetic calculations supporting the
280 recoupment factor. The insurer or insurer group may use the
281 recoupment factor at any time after the expiration of the 15-day
282 period. The insurer or insurer group need submit only one
283 informational statement for all lines of business using the same
284 recoupment factor.
285 (h)(i) Within No later than 90 days after the insurer or
286 insurer group has completed the recoupment process, the insurer
287 or insurer group shall file with the office, for information
288 purposes only, a final accounting report documenting the
289 recoupment. The report must shall provide the amounts of
290 assessments paid by the insurer or insurer group, the amounts
291 and percentages recouped by year from each affected line of
292 business, and the direct written premium subject to recoupment
293 by year. The insurer or insurer group need submit only one
294 report for all lines of business using the same recoupment
295 factor.
296 Section 3. Section 631.64, Florida Statutes, is amended to
297 read:
298 631.64 Recognition of assessments in rates.—The rates and
299 premiums charged for insurance policies to which this part
300 applies may include separate amounts sufficient to recoup a sum
301 equal to the amounts paid or payable to the association by the
302 member insurer less any amounts returned to the member insurer
303 by the association, and such rates may shall not be deemed
304 excessive because they contain an amount reasonably calculated
305 to recoup assessments paid by the member insurer. Charges or
306 recoupments shall be separately displayed on premium bills to
307 enable policyholders to determine the amount charged for
308 association assessments, and may not be included in rates filed
309 and approved by the office.
310 Section 4. Subsection (5) of section 627.727, Florida
311 Statutes, is amended to read:
312 627.727 Motor vehicle insurance; uninsured and underinsured
313 vehicle coverage; insolvent insurer protection.—
314 (5) Any person having a claim against an insolvent insurer
315 as defined in s. 631.54(6) under the provisions of this section
316 shall present such claim for payment to the Florida Insurance
317 Guaranty Association only. In the event of a payment to a any
318 person in settlement of a claim arising under the provisions of
319 this section, the association is not subrogated or entitled to
320 any recovery against the claimant’s insurer. The association,
321 however, has the rights of recovery as set forth in chapter 631
322 in the proceeds recoverable from the assets of the insolvent
323 insurer.
324 Section 5. Subsection (1) of section 631.55, Florida
325 Statutes, is amended to read:
326 631.55 Creation of the association.—
327 (1) There is created a nonprofit corporation to be known as
328 the “Florida Insurance Guaranty Association, Incorporated.” All
329 insurers defined as member insurers in s. 631.54(7) shall be
330 members of the association as a condition of their authority to
331 transact insurance in this state, and, further, as a condition
332 of such authority, an insurer must shall agree to reimburse the
333 association for all claim payments the association makes on the
334 said insurer’s behalf if such insurer is subsequently
335 rehabilitated. The association shall perform its functions under
336 a plan of operation established and approved under s. 631.58 and
337 shall exercise its powers through a board of directors
338 established under s. 631.56. The corporation shall have all
339 those powers granted or permitted nonprofit corporations, as
340 provided in chapter 617.
341 Section 6. This act shall take effect July 1, 2014.
342
343
344 ================= T I T L E A M E N D M E N T ================
345 And the title is amended as follows:
346 Delete everything before the enacting clause
347 and insert:
348 A bill to be entitled
349 An act relating to the Florida Insurance Guaranty
350 Association; amending s. 631.54, F.S.; defining the
351 term “assessment year”; amending s. 631.57, F.S.;
352 revising provisions relating to the levying of
353 assessments on insurers; specifying the conditions
354 under which such assessments are paid; revising
355 procedures and timeframes for levying the assessments;
356 amending s. 631.64, F.S.; requiring charges or
357 recoupments to be displayed separately on premium
358 bills to policyholders and prohibiting their inclusion
359 in rates; amending ss. 627.727 and 631.55, F.S.;
360 conforming cross-references; providing an effective
361 date.