Florida Senate - 2014                       CS for CS for SB 870
       By the Committees on Rules; and Judiciary; and Senator Smith
       595-04447-14                                           2014870c2
    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. 627.902, F.S.;
    8         providing that premium financing does not apply to
    9         installment payment arrangements that do not involve
   10         the advancement of funds; amending s. 627.94072, F.S.;
   11         providing an alternative form of a nonforfeiture
   12         provision for long-term care insurance; amending s.
   13         629.271, F.S.; authorizing reciprocal insurers to
   14         return a portion of unassigned funds to their
   15         subscribers; amending s. 631.54, F.S.; defining the
   16         term “assessment year”; amending s. 631.57, F.S.;
   17         revising provisions relating to the levy of
   18         assessments on insurers by the Florida Insurance
   19         Guaranty Association; specifying the conditions under
   20         which such assessments are paid; revising procedures
   21         and timeframes for the levying of the assessments;
   22         deleting the requirement that insurers file a final
   23         accounting report documenting the recoupment; revising
   24         an exemption for assessments; amending s. 631.64,
   25         F.S.; requiring charges or recoupments to be displayed
   26         separately on premium statements to policyholders and
   27         prohibiting their inclusion in rates; amending ss.
   28         627.727 and 631.55, F.S.; conforming cross-references;
   29         providing an effective date.
   31  Be It Enacted by the Legislature of the State of Florida:
   33         Section 1. Subsection (1) of section 624.425, Florida
   34  Statutes, is amended to read:
   35         624.425 Agent countersignature required, property,
   36  casualty, surety insurance.—
   37         (1) Except as stated in s. 624.426, no authorized property,
   38  casualty, or surety insurer shall assume direct liability as to
   39  a subject of insurance resident, located, or to be performed in
   40  this state unless the policy or contract of insurance is issued
   41  by or through, and is countersigned by, an agent who is
   42  regularly commissioned and licensed currently as an agent and
   43  appointed as an agent for the insurer under this code. However,
   44  the absence of a countersignature does not affect the validity
   45  of the policy or contract. If two or more authorized insurers
   46  issue a single policy of insurance against legal liability for
   47  loss or damage to person or property caused by a the nuclear
   48  energy hazard, or a single policy insuring against loss or
   49  damage to property by radioactive contamination, whether or not
   50  also insuring against one or more other perils that may be
   51  insured proper to insure against in this state, such policy if
   52  otherwise lawful may be countersigned on behalf of all of the
   53  insurers by a licensed and appointed agent of the any insurer
   54  appearing thereon. The producing agent shall receive on each
   55  policy or contract the full and usual commission allowed and
   56  paid by the insurer to its agents on business written or
   57  transacted by them for the insurer.
   58         Section 2. Section 627.7311, Florida Statutes, is amended
   59  to read:
   60         627.7311 Effect of law on personal injury protection
   61  policies.—
   62         (1) The provisions and procedures authorized in ss.
   63  627.730-627.7405 shall be implemented by insurers offering
   64  policies pursuant to the Florida Motor Vehicle No-Fault Law. The
   65  Legislature intends that these provisions and procedures have
   66  full force and effect regardless of their express inclusion in
   67  an insurance policy form, and a specific provision or procedure
   68  authorized in ss. 627.730-627.7405 shall control over general
   69  provisions in an insurance policy form. An insurer is not
   70  required to amend its policy form or to expressly notify
   71  providers, claimants, or insureds in order to implement and
   72  apply such provisions or procedures.
   73         (2) Sections 627.730-627.7405 do not preclude a county from
   74  enacting and enforcing an ordinance applicable to health care
   75  clinics that receive reimbursement under the Florida Motor
   76  Vehicle No-Fault Law.
   77         Section 3. Subsection (2) of section 627.902, Florida
   78  Statutes, is amended to read:
   79         627.902 Premium financing by an insurer or subsidiary.—
   80         (2) Nothing in This part or in part XV of this chapter does
   81  not disallow disallows or otherwise apply applies to:
   82         (a) Installment payment arrangements offered by an insurer
   83  if such arrangements do not involve the advancement of funds
   84  which would constitute financing and exceed the service charges
   85  provided in 627.901; or
   86         (b) A discount for an any insured who pays the entire
   87  premium for the entire policy term at the inception of the term
   88  if the discount is found to be actuarially justified by the
   89  office and approved by the office pursuant to the provisions of
   90  part I of this chapter. Such actuarially justified and approved
   91  discount may shall not be deemed a component of or related to
   92  premium financing.
   93         Section 4. Subsection (2) of section 627.94072, Florida
   94  Statutes, is amended to read:
   95         627.94072 Mandatory offers.—
   96         (2) An insurer that offers a long-term care insurance
   97  policy, certificate, or rider in this state shall must offer a
   98  nonforfeiture protection provision providing reduced paid-up
   99  insurance, extended term, shortened benefit period, or any other
  100  benefit benefits approved by the office if all or part of a
  101  premium is not paid. A nonforfeiture provision may also be
  102  offered in the form of a return of premium on the death of the
  103  insured, or on the complete surrender or cancellation of the
  104  policy or contract. Nonforfeiture benefits and any additional
  105  premium for such benefits must be computed in an actuarially
  106  sound manner, using a methodology that has been filed with and
  107  approved by the office.
  108         Section 5. Section 629.271, Florida Statutes, is amended to
  109  read:
  110         629.271 Distribution of savings.—
  111         (1) A reciprocal insurer may from time to time return to
  112  its subscribers any unused premiums, savings, or credits
  113  accruing to their accounts. Any Such distribution may shall not
  114  unfairly discriminate between classes of risks, or policies, or
  115  between subscribers, but such distribution may vary as to
  116  classes of subscribers based on upon the experience of such
  117  classes.
  118         (2) In addition to the option provided in subsection (1), a
  119  domestic reciprocal insurer may, upon the prior written approval
  120  of the office, pay to its subscribers a portion of unassigned
  121  funds of up to 10 percent of surplus with distribution limited
  122  to 50 percent of net income from the previous calendar year.
  123  Such distribution may not unfairly discriminate between classes
  124  of risks, or policies, or between subscribers, but may vary as
  125  to classes of subscribers based on the experience of such
  126  classes.
  127         Section 6. Subsections (2) through (9) of section 631.54,
  128  Florida Statutes, are renumbered as subsections (3) through
  129  (10), respectively, and a new subsection (2) is added to that
  130  section to read:
  131         631.54 Definitions.—As used in this part, the term:
  132         (2) “Assessment year” means the 12-month period, which may
  133  begin on the first day of any calendar quarter, whether January
  134  1, April 1, July 1, or October 1, as specified in an order
  135  issued by the office directing insurers to pay an assessment to
  136  the association. Upon entry of the order, insurers may begin
  137  collecting assessments from policyholders for the assessment
  138  year.
  139         Section 7. Subsections (3) and (4) of section 631.57,
  140  Florida Statutes, are amended to read:
  141         631.57 Powers and duties of the association.—
  142         (3)(a) To the extent necessary to secure the funds for the
  143  respective accounts for the payment of covered claims, to pay
  144  the reasonable costs to administer such accounts the same, and
  145  to the extent necessary to secure the funds for the account
  146  specified in s. 631.55(2)(b) or to retire indebtedness,
  147  including, without limitation, the principal, redemption
  148  premium, if any, and interest on, and related costs of issuance
  149  of, bonds issued under s. 631.695 and the funding of any
  150  reserves and other payments required under the bond resolution
  151  or trust indenture pursuant to which such bonds have been
  152  issued, the office, upon certification of the board of
  153  directors, shall levy assessments initially estimated in the
  154  proportion that each insurer’s net direct written premiums in
  155  this state in the classes protected by the account bears to the
  156  total of said net direct written premiums received in this state
  157  by all such insurers for the preceding calendar year for the
  158  kinds of insurance included within such account. Assessments
  159  shall be remitted to and administered by the board of directors
  160  in the manner specified by the approved plan and paragraph (f).
  161  Each insurer so assessed shall have at least 30 days’ written
  162  notice as to the date the initial assessment payment is due and
  163  payable. Every assessment shall be made as a uniform percentage
  164  applicable to the net direct written premiums of each insurer in
  165  the kinds of insurance included within the account in which the
  166  assessment is made. The assessments levied against any insurer
  167  may shall not exceed in any one year more than 2 percent of that
  168  insurer’s net direct written premiums in this state for the
  169  kinds of insurance included within such account during the
  170  calendar year next preceding the date of such assessments.
  171         (b) If sufficient funds from such assessments, together
  172  with funds previously raised, are not available in any one year
  173  in the respective account to make all the payments or
  174  reimbursements then owing to insurers, the funds available shall
  175  be prorated and the unpaid portion shall be paid as soon
  176  thereafter as funds become available.
  177         (c) The Legislature finds and declares that all assessments
  178  paid by an insurer or insurer group as a result of a levy by the
  179  office, including assessments levied pursuant to paragraph (a)
  180  and emergency assessments levied pursuant to paragraph (e),
  181  constitute advances of funds from the insurer to the
  182  association. An insurer may fully recoup such advances by
  183  applying the uniform assessment percentage levied by the office
  184  to all a separate recoupment factor to the premium of policies
  185  of the same kind or line as were considered by the office in
  186  determining the assessment liability of the insurer or insurer
  187  group as set forth in paragraph (f).
  188         1. Assessments levied under subparagraph (f)1. are paid
  189  before policy surcharges are collected and result in a
  190  receivable for policy surcharges collected in the future. This
  191  amount, to the extent it is likely that it will be realized,
  192  meets the definition of an admissible asset as specified in the
  193  National Association of Insurance Commissioners’ Statement of
  194  Statutory Accounting Principles No. 4. The asset shall be
  195  established and recorded separately from the liability
  196  regardless of whether it is based on a retrospective or
  197  prospective premium-based assessment. If an insurer is unable to
  198  fully recoup the amount of the assessment because of a reduction
  199  in writings or withdrawal from the market, the amount recorded
  200  as an asset shall be reduced to the amount reasonably expected
  201  to be recouped.
  202         2. Assessments levied under subparagraph (f)2. are paid
  203  after policy surcharges are collected so that the recognition of
  204  assets is based on actual premium written offset by the
  205  obligation to the association.
  206         (d) No State funds may not of any kind shall be allocated
  207  or paid to the said association or any of its accounts.
  208         (e)1.a. In addition to assessments otherwise authorized in
  209  paragraph (a), and to the extent necessary to secure the funds
  210  for the account specified in s. 631.55(2)(b) for the direct
  211  payment of covered claims of insurers rendered insolvent by the
  212  effects of a hurricane and to pay the reasonable costs to
  213  administer such claims, or to retire indebtedness, including,
  214  without limitation, the principal, redemption premium, if any,
  215  and interest on, and related costs of issuance of, bonds issued
  216  under s. 631.695 and the funding of any reserves and other
  217  payments required under the bond resolution or trust indenture
  218  pursuant to which such bonds have been issued, the office, upon
  219  certification of the board of directors, shall levy emergency
  220  assessments upon insurers holding a certificate of authority.
  221  The emergency assessments payable under this paragraph by any
  222  insurer may shall not exceed in any single year more than 2
  223  percent of that insurer’s direct written premiums, net of
  224  refunds, in this state during the preceding calendar year for
  225  the kinds of insurance within the account specified in s.
  226  631.55(2)(b).
  227         2.b.Any Emergency assessments authorized under this
  228  paragraph shall be levied by the office upon insurers referred
  229  to in subparagraph 1. sub-subparagraph a., upon certification as
  230  to the need for such assessments by the board of directors. If
  231  In the event the board of directors participates in the issuance
  232  of bonds in accordance with s. 631.695, emergency assessments
  233  shall be levied in each year that bonds issued under s. 631.695
  234  and secured by such emergency assessments are outstanding, in
  235  such amounts up to such 2 percent 2-percent limit as required in
  236  order to provide for the full and timely payment of the
  237  principal of, redemption premium, if any, and interest on, and
  238  related costs of issuance of, such bonds. The emergency
  239  assessments provided for in this paragraph are assigned and
  240  pledged to the municipality, county, or legal entity issuing
  241  bonds under s. 631.695 for the benefit of the holders of such
  242  bonds, in order to enable such municipality, county, or legal
  243  entity to provide for the payment of the principal of,
  244  redemption premium, if any, and interest on such bonds, the cost
  245  of issuance of such bonds, and the funding of any reserves and
  246  other payments required under the bond resolution or trust
  247  indenture pursuant to which such bonds have been issued, without
  248  the necessity of any further action by the association, the
  249  office, or any other party. If To the extent bonds are issued
  250  under s. 631.695 and the association determines to secure such
  251  bonds by a pledge of revenues received from the emergency
  252  assessments, such bonds, upon such pledge of revenues, shall be
  253  secured by and payable from the proceeds of such emergency
  254  assessments, and the proceeds of emergency assessments levied
  255  under this paragraph shall be remitted directly to and
  256  administered by the trustee or custodian appointed for such
  257  bonds.
  258         3.c. Emergency assessments used to defease bonds issued
  259  under this part paragraph may be payable in a single payment or,
  260  at the option of the association, may be payable in 12 monthly
  261  installments with the first installment being due and payable at
  262  the end of the month after an emergency assessment is levied and
  263  subsequent installments being due by not later than the end of
  264  each succeeding month.
  265         4.d. If emergency assessments are imposed, the report
  266  required by s. 631.695(7) must shall include an analysis of the
  267  revenues generated from the emergency assessments imposed under
  268  this paragraph.
  269         5.e. If emergency assessments are imposed, the references
  270  in sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to
  271  assessments levied under paragraph (a) must shall include
  272  emergency assessments imposed under this paragraph.
  273         6.2. If the board of directors participates in the issuance
  274  of bonds in accordance with s. 631.695, an annual assessment
  275  under this paragraph shall continue while the bonds issued with
  276  respect to which the assessment was imposed are outstanding,
  277  including any bonds the proceeds of which were used to refund
  278  bonds issued pursuant to s. 631.695, unless adequate provision
  279  has been made for the payment of the bonds in the documents
  280  authorizing the issuance of such bonds.
  281         7.3. Emergency assessments under this paragraph are not
  282  premium and are not subject to the premium tax, to any fees, or
  283  to any commissions. An insurer is liable for all emergency
  284  assessments that the insurer collects and shall treat the
  285  failure of an insured to pay an emergency assessment as a
  286  failure to pay the premium. An insurer is not liable for
  287  uncollectible emergency assessments.
  288         (f) The recoupment factor applied to policies in accordance
  289  with paragraph (c) shall be selected by the insurer or insurer
  290  group so as to provide for the probable recoupment of both
  291  assessments levied pursuant to paragraph (a) and emergency
  292  assessments over a period of 12 months, unless the insurer or
  293  insurer group, at its option, elects to recoup the assessment
  294  over a longer period. The recoupment factor shall apply to all
  295  policies of the same kind or line as were considered by the
  296  office in determining the assessment liability of the insurer or
  297  insurer group issued or renewed during a 12-month period. If the
  298  insurer or insurer group does not collect the full amount of the
  299  assessment during one 12-month period, the insurer or insurer
  300  group may apply recalculated recoupment factors to policies
  301  issued or renewed during one or more succeeding 12-month
  302  periods. If, at the end of a 12-month period, the insurer or
  303  insurer group has collected from the combined kinds or lines of
  304  policies subject to assessment more than the total amount of the
  305  assessment paid by the insurer or insurer group, the excess
  306  amount shall be disbursed as follows:
  307         1. The association, office, and insurers remitting
  308  assessments pursuant to paragraph (a) or paragraph (e) must
  309  comply with the following:
  310         a. In the order levying an assessment, the office shall
  311  specify the actual percentage amount to be collected uniformly
  312  from all the policyholders of insurers subject to the assessment
  313  and the date on which the assessment year begins, which may not
  314  begin until 90 days after the association board certifies such
  315  an assessment.
  316         b. Insurers shall make an initial payment to the
  317  association before the beginning of the assessment year on or
  318  before the date specified in the order of the office.
  319         c. Insurers that have written insurance in the calendar
  320  year before the year in which the assessment is certified by the
  321  board shall make an initial payment based on the net direct
  322  written premium amount from the prior calendar year as set forth
  323  in the insurers’ annual statements, multiplied by the uniform
  324  percentage of premium specified in the order issued by the
  325  office. Insurers that have not written insurance in the prior
  326  calendar year in any of the lines under the account which are
  327  being assessed, but that are writing insurance as of, or after,
  328  the date the board certifies the assessment to the office, shall
  329  pay an amount based on a good faith estimate of the amount of
  330  net direct written premium anticipated to be written in the
  331  subject lines of business for the assessment year, multiplied by
  332  the uniform percentage of premium specified in the order issued
  333  by the office.
  334         d. Insurers shall file a reconciliation report with the
  335  association within 45 days after the end of the assessment year
  336  which indicates the amount of the initial payment to the
  337  association before the assessment year, whether such amount was
  338  based on net direct written premium contained in a prior
  339  calendar year annual statement or a good faith projection, the
  340  amount actually collected during the assessment year, and such
  341  other information contained on a form adopted by the association
  342  and provided to the insurers in advance. If the insurer
  343  collected from policyholders more than the amount initially
  344  paid, the insurer shall pay the excess amount to the
  345  association. If the insurer collected from policyholders an
  346  amount which is less than the amount initially paid to the
  347  association, the association shall credit the insurer that
  348  amount against future assessments. Such payment reconciliation
  349  report, and any payment of excess amounts collected from
  350  policyholders, shall be completed and remitted to the
  351  association within 90 days after the end of the assessment year.
  352  The association shall send a final reconciliation report on all
  353  insurers to the office within 120 days after each assessment
  354  year.
  355         e. Insurers remitting reconciliation reports to the
  356  association under this paragraph are subject to s.
  357  626.9541(1)(e). If the excess amount does not exceed 15 percent
  358  of the total assessment paid by the insurer or insurer group,
  359  the excess amount shall be remitted to the association within 60
  360  days after the end of the 12-month period in which the excess
  361  recoupment charges were collected.
  362         2. The association may use a monthly installment method
  363  instead of the method described in sub-subparagraphs 1.b. and c.
  364  or in combination thereof based on the association’s projected
  365  cash flow. If the association projects that it has cash on hand
  366  for the payment of anticipated claims in the applicable account
  367  for at least 6 months, the board may make an estimate of the
  368  assessment needed and may recommend to the office the assessment
  369  percentage that may be collected as a monthly assessment. The
  370  office may, in the order levying the assessment on insurers,
  371  specify that the assessment is due and payable monthly as the
  372  funds are collected from insureds throughout the assessment
  373  year, in which case the assessment shall be a uniform percentage
  374  of premium collected during the assessment year and shall be
  375  collected from all policyholders with policies in the classes
  376  protected by the account. All insurers shall collect the
  377  assessment without regard to whether the insurers reported
  378  premium in the year preceding the assessment. Insurers are not
  379  required to advance funds if the association and the office
  380  elect to use the monthly installment option. All funds collected
  381  shall be retained by the association for the payment of current
  382  or future claims. This subparagraph does not alter the
  383  obligation of an insurer to remit assessments levied pursuant to
  384  this subsection to the association. If the excess amount exceeds
  385  15 percent of the total assessment paid by the insurer or
  386  insurer group, the excess amount shall be returned to the
  387  insurer’s or insurer group’s current policyholders by refunds or
  388  premium credits. The association shall use any remitted excess
  389  recoupment amounts to reduce future assessments.
  390         (g) Amounts recouped pursuant to this subsection for
  391  assessments levied under paragraph (a) due to insolvencies on or
  392  after July 1, 2010, are considered premium solely for premium
  393  tax purposes and are not subject to fees or commissions.
  394  However, insurers shall treat the failure of an insured to pay a
  395  recoupment charge as a failure to pay the premium.
  396         (h) At least 15 days before applying the recoupment factor
  397  to any policies, the insurer or insurer group shall file with
  398  the office a statement for informational purposes only setting
  399  forth the amount of the recoupment factor and an explanation of
  400  how the recoupment factor will be applied. Such statement shall
  401  include documentation of the assessment paid by the insurer or
  402  insurer group and the arithmetic calculations supporting the
  403  recoupment factor. The insurer or insurer group may use the
  404  recoupment factor at any time after the expiration of the 15-day
  405  period. The insurer or insurer group need submit only one
  406  informational statement for all lines of business using the same
  407  recoupment factor.
  408         (i)No later than 90 days after the insurer or insurer
  409  group has completed the recoupment process, the insurer or
  410  insurer group shall file with the office, for information
  411  purposes only, a final accounting report documenting the
  412  recoupment. The report shall provide the amounts of assessments
  413  paid by the insurer or insurer group, the amounts and
  414  percentages recouped by year from each affected line of
  415  business, and the direct written premium subject to recoupment
  416  by year. The insurer or insurer group need submit only one
  417  report for all lines of business using the same recoupment
  418  factor.
  419         (h) Assessments levied under this subsection are levied
  420  upon insurers. This subsection does not create a cause of action
  421  by a policyholder with respect to the levying of, or a
  422  policyholder’s duty to pay, such assessments.
  423         (4) The office department may exempt or temporarily defer
  424  any insurer from any regular or emergency assessment if the
  425  office finds that the insurer is impaired or insolvent or if an
  426  assessment would result in such insurer’s financial statement
  427  reflecting an amount of capital or surplus less than the sum of
  428  the minimum amount required by any jurisdiction in which the
  429  insurer is authorized to transact insurance.
  430         Section 8. Section 631.64, Florida Statutes, is amended to
  431  read:
  432         631.64 Recognition of assessments in rates.—Charges or
  433  recoupments shall be separately displayed on premium statements
  434  to enable policyholders to determine the amount charged for
  435  association assessments but may not be included in rates filed
  436  and approved by the office. The rates and premiums charged for
  437  insurance policies to which this part applies may include
  438  amounts sufficient to recoup a sum equal to the amounts paid to
  439  the association by the member insurer less any amounts returned
  440  to the member insurer by the association, and such rates shall
  441  not be deemed excessive because they contain an amount
  442  reasonably calculated to recoup assessments paid by the member
  443  insurer.
  444         Section 9. Subsection (5) of section 627.727, Florida
  445  Statutes, is amended to read:
  446         627.727 Motor vehicle insurance; uninsured and underinsured
  447  vehicle coverage; insolvent insurer protection.—
  448         (5) Any person having a claim against an insolvent insurer
  449  as defined in s. 631.54(6) under the provisions of this section
  450  shall present such claim for payment to the Florida Insurance
  451  Guaranty Association only. In the event of a payment to a any
  452  person in settlement of a claim arising under the provisions of
  453  this section, the association is not subrogated or entitled to
  454  any recovery against the claimant’s insurer. The association,
  455  however, has the rights of recovery as set forth in chapter 631
  456  in the proceeds recoverable from the assets of the insolvent
  457  insurer.
  458         Section 10. Subsection (1) of section 631.55, Florida
  459  Statutes, is amended to read:
  460         631.55 Creation of the association.—
  461         (1) There is created a nonprofit corporation to be known as
  462  the “Florida Insurance Guaranty Association, Incorporated.” All
  463  insurers defined as member insurers in s. 631.54(7) shall be
  464  members of the association as a condition of their authority to
  465  transact insurance in this state, and, further, as a condition
  466  of such authority, an insurer must shall agree to reimburse the
  467  association for all claim payments the association makes on the
  468  said insurer’s behalf if such insurer is subsequently
  469  rehabilitated. The association shall perform its functions under
  470  a plan of operation established and approved under s. 631.58 and
  471  shall exercise its powers through a board of directors
  472  established under s. 631.56. The corporation shall have all
  473  those powers granted or permitted nonprofit corporations, as
  474  provided in chapter 617.
  475         Section 11. This act shall take effect July 1, 2014.