Florida Senate - 2014                              CS for SB 870
       By the Committee on Judiciary; and Senator Smith
       590-03520-14                                           2014870c1
    1                        A bill to be entitled                      
    2         An act relating to insurance; amending s. 624.425,
    3         F.S.; providing that the absence of a countersignature
    4         does not affect the validity of a policy or contract;
    5         amending s. 627.7311, F.S.; providing that a county
    6         may enact and enforce ordinances applicable to certain
    7         health care clinics; amending s. 627.94072, F.S.;
    8         providing an alternative form of a nonforfeiture
    9         provision for long-term care insurance; amending s.
   10         629.271, F.S.; authorizing reciprocal insurers to
   11         return a portion of unassigned funds to their
   12         subscribers; amending s. 631.54, F.S.; defining the
   13         term “assessment year”; amending s. 631.57, F.S.;
   14         revising provisions relating to the levy of
   15         assessments on insurers by the Florida Insurance
   16         Guaranty Association; specifying the conditions under
   17         which such assessments are paid; revising procedures
   18         and timeframes for the levying of the assessments;
   19         deleting the requirement that insurers file a final
   20         accounting report documenting the recoupment; revising
   21         an exemption for assessments; amending s. 631.64,
   22         F.S.; requiring charges or recoupments to be displayed
   23         separately on premium statements to policyholders and
   24         prohibiting their inclusion in rates; amending ss.
   25         627.727 and 631.55, F.S.; conforming cross-references;
   26         providing an effective date.
   28  Be It Enacted by the Legislature of the State of Florida:
   30         Section 1. Subsection (1) of section 624.425, Florida
   31  Statutes, is amended to read:
   32         624.425 Agent countersignature required, property,
   33  casualty, surety insurance.—
   34         (1) Except as stated in s. 624.426, no authorized property,
   35  casualty, or surety insurer shall assume direct liability as to
   36  a subject of insurance resident, located, or to be performed in
   37  this state unless the policy or contract of insurance is issued
   38  by or through, and is countersigned by, an agent who is
   39  regularly commissioned and licensed currently as an agent and
   40  appointed as an agent for the insurer under this code. However,
   41  the absence of a countersignature does not affect the validity
   42  of the policy or contract. If two or more authorized insurers
   43  issue a single policy of insurance against legal liability for
   44  loss or damage to person or property caused by a the nuclear
   45  energy hazard, or a single policy insuring against loss or
   46  damage to property by radioactive contamination, whether or not
   47  also insuring against one or more other perils that may be
   48  insured proper to insure against in this state, such policy if
   49  otherwise lawful may be countersigned on behalf of all of the
   50  insurers by a licensed and appointed agent of the any insurer
   51  appearing thereon. The producing agent shall receive on each
   52  policy or contract the full and usual commission allowed and
   53  paid by the insurer to its agents on business written or
   54  transacted by them for the insurer.
   55         Section 2. Section 627.7311, Florida Statutes, is amended
   56  to read:
   57         627.7311 Effect of law on personal injury protection
   58  policies.—
   59         (1) The provisions and procedures authorized in ss.
   60  627.730-627.7405 shall be implemented by insurers offering
   61  policies pursuant to the Florida Motor Vehicle No-Fault Law. The
   62  Legislature intends that these provisions and procedures have
   63  full force and effect regardless of their express inclusion in
   64  an insurance policy form, and a specific provision or procedure
   65  authorized in ss. 627.730-627.7405 shall control over general
   66  provisions in an insurance policy form. An insurer is not
   67  required to amend its policy form or to expressly notify
   68  providers, claimants, or insureds in order to implement and
   69  apply such provisions or procedures.
   70         (2) Sections 627.730-627.7405 do not preclude a county from
   71  enacting and enforcing an ordinance applicable to health care
   72  clinics that receive reimbursement under the Florida Motor
   73  Vehicle No-Fault Law.
   74         Section 3. Subsection (2) of section 627.94072, Florida
   75  Statutes, is amended to read:
   76         627.94072 Mandatory offers.—
   77         (2) An insurer that offers a long-term care insurance
   78  policy, certificate, or rider in this state shall must offer a
   79  nonforfeiture protection provision providing reduced paid-up
   80  insurance, extended term, shortened benefit period, or any other
   81  benefit benefits approved by the office if all or part of a
   82  premium is not paid. A nonforfeiture provision may also be
   83  offered in the form of a return of premium on the death of the
   84  insured, or on the complete surrender or cancellation of the
   85  policy or contract. Nonforfeiture benefits and any additional
   86  premium for such benefits must be computed in an actuarially
   87  sound manner, using a methodology that has been filed with and
   88  approved by the office.
   89         Section 4. Section 629.271, Florida Statutes, is amended to
   90  read:
   91         629.271 Distribution of savings.—A reciprocal insurer may
   92  from time to time return to its subscribers any unused premiums,
   93  savings, or credits accruing to their accounts. Upon the prior
   94  written approval of the office, a reciprocal insurer may return
   95  to its subscribers a portion of unassigned funds of up to 10
   96  percent of surplus with distribution limited to 50 percent of
   97  net income from the previous calendar year. Any Such
   98  distribution may shall not unfairly discriminate between classes
   99  of risks, or policies, or between subscribers, but such
  100  distribution may vary as to classes of subscribers based on upon
  101  the experience of such classes.
  102         Section 5. Subsections (2) through (9) of section 631.54,
  103  Florida Statutes, are renumbered as subsections (3) through
  104  (10), respectively, and a new subsection (2) is added to that
  105  section to read:
  106         631.54 Definitions.—As used in this part, the term:
  107         (2) “Assessment year” means the 12-month period, which may
  108  begin on the first day of any calendar quarter, whether January
  109  1, April 1, July 1, or October 1, as specified in an order
  110  issued by the office directing insurers to pay an assessment to
  111  the association. Upon entry of the order, insurers may begin
  112  collecting assessments from policyholders for the assessment
  113  year.
  114         Section 6. Subsections (3) and (4) of section 631.57,
  115  Florida Statutes, are amended to read:
  116         631.57 Powers and duties of the association.—
  117         (3)(a) To the extent necessary to secure the funds for the
  118  respective accounts for the payment of covered claims, to pay
  119  the reasonable costs to administer such accounts the same, and
  120  to the extent necessary to secure the funds for the account
  121  specified in s. 631.55(2)(b) or to retire indebtedness,
  122  including, without limitation, the principal, redemption
  123  premium, if any, and interest on, and related costs of issuance
  124  of, bonds issued under s. 631.695 and the funding of any
  125  reserves and other payments required under the bond resolution
  126  or trust indenture pursuant to which such bonds have been
  127  issued, the office, upon certification of the board of
  128  directors, shall levy assessments initially estimated in the
  129  proportion that each insurer’s net direct written premiums in
  130  this state in the classes protected by the account bears to the
  131  total of said net direct written premiums received in this state
  132  by all such insurers for the preceding calendar year for the
  133  kinds of insurance included within such account. Assessments
  134  shall be remitted to and administered by the board of directors
  135  in the manner specified by the approved plan and paragraph (f).
  136  Each insurer so assessed shall have at least 30 days’ written
  137  notice as to the date the initial assessment payment is due and
  138  payable. Every assessment shall be made as a uniform percentage
  139  applicable to the net direct written premiums of each insurer in
  140  the kinds of insurance included within the account in which the
  141  assessment is made. The assessments levied against any insurer
  142  may shall not exceed in any one year more than 2 percent of that
  143  insurer’s net direct written premiums in this state for the
  144  kinds of insurance included within such account during the
  145  calendar year next preceding the date of such assessments.
  146         (b) If sufficient funds from such assessments, together
  147  with funds previously raised, are not available in any one year
  148  in the respective account to make all the payments or
  149  reimbursements then owing to insurers, the funds available shall
  150  be prorated and the unpaid portion shall be paid as soon
  151  thereafter as funds become available.
  152         (c) The Legislature finds and declares that all assessments
  153  paid by an insurer or insurer group as a result of a levy by the
  154  office, including assessments levied pursuant to paragraph (a)
  155  and emergency assessments levied pursuant to paragraph (e),
  156  constitute advances of funds from the insurer to the
  157  association. An insurer may fully recoup such advances by
  158  applying the uniform assessment percentage levied by the office
  159  to all a separate recoupment factor to the premium of policies
  160  of the same kind or line as were considered by the office in
  161  determining the assessment liability of the insurer or insurer
  162  group as set forth in paragraph (f).
  163         1. Assessments levied under subparagraph (f)1. are paid
  164  before policy surcharges are collected and result in a
  165  receivable for policy surcharges collected in the future. This
  166  amount, to the extent it is likely that it will be realized,
  167  meets the definition of an admissible asset as specified in the
  168  National Association of Insurance Commissioners’ Statement of
  169  Statutory Accounting Principles No. 4. The asset shall be
  170  established and recorded separately from the liability
  171  regardless of whether it is based on a retrospective or
  172  prospective premium-based assessment. If an insurer is unable to
  173  fully recoup the amount of the assessment because of a reduction
  174  in writings or withdrawal from the market, the amount recorded
  175  as an asset shall be reduced to the amount reasonably expected
  176  to be recouped.
  177         2. Assessments levied under subparagraph (f)2. are paid
  178  after policy surcharges are collected so that the recognition of
  179  assets is based on actual premium written offset by the
  180  obligation to the association.
  181         (d) No State funds may not of any kind shall be allocated
  182  or paid to the said association or any of its accounts.
  183         (e)1.a. In addition to assessments otherwise authorized in
  184  paragraph (a), and to the extent necessary to secure the funds
  185  for the account specified in s. 631.55(2)(b) for the direct
  186  payment of covered claims of insurers rendered insolvent by the
  187  effects of a hurricane and to pay the reasonable costs to
  188  administer such claims, or to retire indebtedness, including,
  189  without limitation, the principal, redemption premium, if any,
  190  and interest on, and related costs of issuance of, bonds issued
  191  under s. 631.695 and the funding of any reserves and other
  192  payments required under the bond resolution or trust indenture
  193  pursuant to which such bonds have been issued, the office, upon
  194  certification of the board of directors, shall levy emergency
  195  assessments upon insurers holding a certificate of authority.
  196  The emergency assessments payable under this paragraph by any
  197  insurer may shall not exceed in any single year more than 2
  198  percent of that insurer’s direct written premiums, net of
  199  refunds, in this state during the preceding calendar year for
  200  the kinds of insurance within the account specified in s.
  201  631.55(2)(b).
  202         2.b.Any Emergency assessments authorized under this
  203  paragraph shall be levied by the office upon insurers referred
  204  to in subparagraph 1. sub-subparagraph a., upon certification as
  205  to the need for such assessments by the board of directors. If
  206  In the event the board of directors participates in the issuance
  207  of bonds in accordance with s. 631.695, emergency assessments
  208  shall be levied in each year that bonds issued under s. 631.695
  209  and secured by such emergency assessments are outstanding, in
  210  such amounts up to such 2 percent 2-percent limit as required in
  211  order to provide for the full and timely payment of the
  212  principal of, redemption premium, if any, and interest on, and
  213  related costs of issuance of, such bonds. The emergency
  214  assessments provided for in this paragraph are assigned and
  215  pledged to the municipality, county, or legal entity issuing
  216  bonds under s. 631.695 for the benefit of the holders of such
  217  bonds, in order to enable such municipality, county, or legal
  218  entity to provide for the payment of the principal of,
  219  redemption premium, if any, and interest on such bonds, the cost
  220  of issuance of such bonds, and the funding of any reserves and
  221  other payments required under the bond resolution or trust
  222  indenture pursuant to which such bonds have been issued, without
  223  the necessity of any further action by the association, the
  224  office, or any other party. If To the extent bonds are issued
  225  under s. 631.695 and the association determines to secure such
  226  bonds by a pledge of revenues received from the emergency
  227  assessments, such bonds, upon such pledge of revenues, shall be
  228  secured by and payable from the proceeds of such emergency
  229  assessments, and the proceeds of emergency assessments levied
  230  under this paragraph shall be remitted directly to and
  231  administered by the trustee or custodian appointed for such
  232  bonds.
  233         3.c. Emergency assessments used to defease bonds issued
  234  under this part paragraph may be payable in a single payment or,
  235  at the option of the association, may be payable in 12 monthly
  236  installments with the first installment being due and payable at
  237  the end of the month after an emergency assessment is levied and
  238  subsequent installments being due by not later than the end of
  239  each succeeding month.
  240         4.d. If emergency assessments are imposed, the report
  241  required by s. 631.695(7) must shall include an analysis of the
  242  revenues generated from the emergency assessments imposed under
  243  this paragraph.
  244         5.e. If emergency assessments are imposed, the references
  245  in sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to
  246  assessments levied under paragraph (a) must shall include
  247  emergency assessments imposed under this paragraph.
  248         6.2. If the board of directors participates in the issuance
  249  of bonds in accordance with s. 631.695, an annual assessment
  250  under this paragraph shall continue while the bonds issued with
  251  respect to which the assessment was imposed are outstanding,
  252  including any bonds the proceeds of which were used to refund
  253  bonds issued pursuant to s. 631.695, unless adequate provision
  254  has been made for the payment of the bonds in the documents
  255  authorizing the issuance of such bonds.
  256         7.3. Emergency assessments under this paragraph are not
  257  premium and are not subject to the premium tax, to any fees, or
  258  to any commissions. An insurer is liable for all emergency
  259  assessments that the insurer collects and shall treat the
  260  failure of an insured to pay an emergency assessment as a
  261  failure to pay the premium. An insurer is not liable for
  262  uncollectible emergency assessments.
  263         (f) The recoupment factor applied to policies in accordance
  264  with paragraph (c) shall be selected by the insurer or insurer
  265  group so as to provide for the probable recoupment of both
  266  assessments levied pursuant to paragraph (a) and emergency
  267  assessments over a period of 12 months, unless the insurer or
  268  insurer group, at its option, elects to recoup the assessment
  269  over a longer period. The recoupment factor shall apply to all
  270  policies of the same kind or line as were considered by the
  271  office in determining the assessment liability of the insurer or
  272  insurer group issued or renewed during a 12-month period. If the
  273  insurer or insurer group does not collect the full amount of the
  274  assessment during one 12-month period, the insurer or insurer
  275  group may apply recalculated recoupment factors to policies
  276  issued or renewed during one or more succeeding 12-month
  277  periods. If, at the end of a 12-month period, the insurer or
  278  insurer group has collected from the combined kinds or lines of
  279  policies subject to assessment more than the total amount of the
  280  assessment paid by the insurer or insurer group, the excess
  281  amount shall be disbursed as follows:
  282         1. The association, office, and insurers remitting
  283  assessments pursuant to paragraph (a) or paragraph (e) must
  284  comply with the following:
  285         a. In the order levying an assessment, the office shall
  286  specify the actual percentage amount to be collected uniformly
  287  from all the policyholders of insurers subject to the assessment
  288  and the date on which the assessment year begins, which may not
  289  begin until 90 days after the association board certifies such
  290  an assessment.
  291         b. Insurers shall make an initial payment to the
  292  association before the beginning of the assessment year on or
  293  before the date specified in the order of the office.
  294         c. Insurers that have written insurance in the calendar
  295  year before the year in which the assessment is certified by the
  296  board shall make an initial payment based on the net direct
  297  written premium amount from the prior calendar year as set forth
  298  in the insurers’ annual statements, multiplied by the uniform
  299  percentage of premium specified in the order issued by the
  300  office. Insurers that have not written insurance in the prior
  301  calendar year in any of the lines under the account which are
  302  being assessed, but that are writing insurance as of, or after,
  303  the date the board certifies the assessment to the office, shall
  304  pay an amount based on a good faith estimate of the amount of
  305  net direct written premium anticipated to be written in the
  306  subject lines of business for the assessment year, multiplied by
  307  the uniform percentage of premium specified in the order issued
  308  by the office.
  309         d. Insurers shall file a reconciliation report with the
  310  association within 45 days after the end of the assessment year
  311  which indicates the amount of the initial payment to the
  312  association before the assessment year, whether such amount was
  313  based on net direct written premium contained in a prior
  314  calendar year annual statement or a good faith projection, the
  315  amount actually collected during the assessment year, and such
  316  other information contained on a form adopted by the association
  317  and provided to the insurers in advance. If the insurer
  318  collected from policyholders more than the amount initially
  319  paid, the insurer shall pay the excess amount to the
  320  association. If the insurer collected from policyholders an
  321  amount which is less than the amount initially paid to the
  322  association, the association shall credit the insurer that
  323  amount against future assessments. Such payment reconciliation
  324  report, and any payment of excess amounts collected from
  325  policyholders, shall be completed and remitted to the
  326  association within 90 days after the end of the assessment year.
  327  The association shall send a final reconciliation report on all
  328  insurers to the office within 120 days after each assessment
  329  year.
  330         e. Insurers remitting reconciliation reports to the
  331  association under this paragraph are subject to s.
  332  626.9541(1)(e). If the excess amount does not exceed 15 percent
  333  of the total assessment paid by the insurer or insurer group,
  334  the excess amount shall be remitted to the association within 60
  335  days after the end of the 12-month period in which the excess
  336  recoupment charges were collected.
  337         2. The association may use a monthly installment method
  338  instead of the method described in sub-subparagraphs 1.b. and c.
  339  or in combination thereof based on the association’s projected
  340  cash flow. If the association projects that it has cash on hand
  341  for the payment of anticipated claims in the applicable account
  342  for at least 6 months, the board may make an estimate of the
  343  assessment needed and may recommend to the office the assessment
  344  percentage that may be collected as a monthly assessment. The
  345  office may, in the order levying the assessment on insurers,
  346  specify that the assessment is due and payable monthly as the
  347  funds are collected from insureds throughout the assessment
  348  year, in which case the assessment shall be a uniform percentage
  349  of premium collected during the assessment year and shall be
  350  collected from all policyholders with policies in the classes
  351  protected by the account. All insurers shall collect the
  352  assessment without regard to whether the insurers reported
  353  premium in the year preceding the assessment. Insurers are not
  354  required to advance funds if the association and the office
  355  elect to use the monthly installment option. All funds collected
  356  shall be retained by the association for the payment of current
  357  or future claims. This subparagraph does not alter the
  358  obligation of an insurer to remit assessments levied pursuant to
  359  this subsection to the association. If the excess amount exceeds
  360  15 percent of the total assessment paid by the insurer or
  361  insurer group, the excess amount shall be returned to the
  362  insurer’s or insurer group’s current policyholders by refunds or
  363  premium credits. The association shall use any remitted excess
  364  recoupment amounts to reduce future assessments.
  365         (g) Amounts recouped pursuant to this subsection for
  366  assessments levied under paragraph (a) due to insolvencies on or
  367  after July 1, 2010, are considered premium solely for premium
  368  tax purposes and are not subject to fees or commissions.
  369  However, insurers shall treat the failure of an insured to pay a
  370  recoupment charge as a failure to pay the premium.
  371         (h) At least 15 days before applying the recoupment factor
  372  to any policies, the insurer or insurer group shall file with
  373  the office a statement for informational purposes only setting
  374  forth the amount of the recoupment factor and an explanation of
  375  how the recoupment factor will be applied. Such statement shall
  376  include documentation of the assessment paid by the insurer or
  377  insurer group and the arithmetic calculations supporting the
  378  recoupment factor. The insurer or insurer group may use the
  379  recoupment factor at any time after the expiration of the 15-day
  380  period. The insurer or insurer group need submit only one
  381  informational statement for all lines of business using the same
  382  recoupment factor.
  383         (i)No later than 90 days after the insurer or insurer
  384  group has completed the recoupment process, the insurer or
  385  insurer group shall file with the office, for information
  386  purposes only, a final accounting report documenting the
  387  recoupment. The report shall provide the amounts of assessments
  388  paid by the insurer or insurer group, the amounts and
  389  percentages recouped by year from each affected line of
  390  business, and the direct written premium subject to recoupment
  391  by year. The insurer or insurer group need submit only one
  392  report for all lines of business using the same recoupment
  393  factor.
  394         (h) Assessments levied under this subsection are levied
  395  upon insurers. This subsection does not create a cause of action
  396  by a policyholder with respect to the levying of, or a
  397  policyholder’s duty to pay, such assessments.
  398         (4) The office department may exempt or temporarily defer
  399  any insurer from any regular or emergency assessment if the
  400  office finds that the insurer is impaired or insolvent or if an
  401  assessment would result in such insurer’s financial statement
  402  reflecting an amount of capital or surplus less than the sum of
  403  the minimum amount required by any jurisdiction in which the
  404  insurer is authorized to transact insurance.
  405         Section 7. Section 631.64, Florida Statutes, is amended to
  406  read:
  407         631.64 Recognition of assessments in rates.—Charges or
  408  recoupments shall be separately displayed on premium statements
  409  to enable policyholders to determine the amount charged for
  410  association assessments but may not be included in rates filed
  411  and approved by the office. The rates and premiums charged for
  412  insurance policies to which this part applies may include
  413  amounts sufficient to recoup a sum equal to the amounts paid to
  414  the association by the member insurer less any amounts returned
  415  to the member insurer by the association, and such rates shall
  416  not be deemed excessive because they contain an amount
  417  reasonably calculated to recoup assessments paid by the member
  418  insurer.
  419         Section 8. Subsection (5) of section 627.727, Florida
  420  Statutes, is amended to read:
  421         627.727 Motor vehicle insurance; uninsured and underinsured
  422  vehicle coverage; insolvent insurer protection.—
  423         (5) Any person having a claim against an insolvent insurer
  424  as defined in s. 631.54(6) under the provisions of this section
  425  shall present such claim for payment to the Florida Insurance
  426  Guaranty Association only. In the event of a payment to a any
  427  person in settlement of a claim arising under the provisions of
  428  this section, the association is not subrogated or entitled to
  429  any recovery against the claimant’s insurer. The association,
  430  however, has the rights of recovery as set forth in chapter 631
  431  in the proceeds recoverable from the assets of the insolvent
  432  insurer.
  433         Section 9. Subsection (1) of section 631.55, Florida
  434  Statutes, is amended to read:
  435         631.55 Creation of the association.—
  436         (1) There is created a nonprofit corporation to be known as
  437  the “Florida Insurance Guaranty Association, Incorporated.” All
  438  insurers defined as member insurers in s. 631.54(7) shall be
  439  members of the association as a condition of their authority to
  440  transact insurance in this state, and, further, as a condition
  441  of such authority, an insurer must shall agree to reimburse the
  442  association for all claim payments the association makes on the
  443  said insurer’s behalf if such insurer is subsequently
  444  rehabilitated. The association shall perform its functions under
  445  a plan of operation established and approved under s. 631.58 and
  446  shall exercise its powers through a board of directors
  447  established under s. 631.56. The corporation shall have all
  448  those powers granted or permitted nonprofit corporations, as
  449  provided in chapter 617.
  450         Section 10. This act shall take effect July 1, 2014.