Florida Senate - 2016                                     SB 828
       By Senator Bean
       4-00944-16                                             2016828__
    1                        A bill to be entitled                      
    2         An act relating to insurance guaranty association
    3         assessments; amending s. 631.914, F.S.; requiring the
    4         Office of Insurance Regulation to levy assessments for
    5         certain purposes; revising and providing requirements
    6         for the levy of assessments; requiring insurers and
    7         self-insurance funds to report certain premiums;
    8         requiring insurers to collect policy surcharges and
    9         pay assessments to the association; revising
   10         requirements for reporting premium for assessment
   11         calculations; revising and providing requirements and
   12         limitations for remittance of assessments to the
   13         association; providing an effective date.
   15  Be It Enacted by the Legislature of the State of Florida:
   17         Section 1. Section 631.914, Florida Statutes, is amended to
   18  read:
   19         631.914 Assessments.—
   20         (1)(a) To the extent necessary to secure the funds for the
   21  payment of covered claims, and also to pay the reasonable costs
   22  to administer the same, the Office of Insurance Regulation
   23  department, upon certification by the board, shall levy
   24  assessments on each insurer initially estimated in the
   25  proportion that the insurer’s net direct written premiums in
   26  this state bears to the total of said net direct written
   27  premiums received in this state by all such workers’
   28  compensation insurers for the preceding calendar year.
   29  Assessments levied against insurers and self-insurance funds
   30  pursuant to this paragraph must be computed and levied on the
   31  basis of the full policy premium value on the net direct written
   32  premium amount as set forth in the state for workers’
   33  compensation insurance without consideration of any applicable
   34  discount or credit for deductibles. Insurers and self-insurance
   35  funds must report premiums in compliance with this paragraph.
   36  Assessments shall be remitted to and administered by the board
   37  of directors in the manner specified by the approved plan of
   38  operation and paragraph (d). The board shall give each insurer
   39  so assessed at least 30 days’ written notice of the date the
   40  assessment is due and payable. Each assessment shall be a
   41  uniform percentage applicable to the net direct written premiums
   42  of each insurer writing workers’ compensation insurance.
   43         1. Beginning July 1, 1997, Assessments levied against
   44  insurers and, other than self-insurance funds, shall not exceed
   45  in any calendar year more than 2 percent of that insurer’s net
   46  direct written premiums in this state for workers’ compensation
   47  insurance during the calendar year next preceding the date of
   48  such assessments.
   49         (b) Member insurers shall collect surcharges at a uniform
   50  percentage rate for a period of 12 months beginning on January
   51  1, April 1, July 1, or October 1, whichever is the first day of
   52  the following calendar quarter as specified in an order issued
   53  by the office directing insurers to pay an assessment to the
   54  association. The surcharge may not begin until 90 days after the
   55  board of directors certifies the assessment.
   56         2. Beginning July 1, 1997, assessments levied against self
   57  insurance funds shall not exceed in any calendar year more than
   58  1.50 percent of that self-insurance fund’s net direct written
   59  premiums in this state for workers’ compensation insurance
   60  during the calendar year next preceding the date of such
   61  assessments.
   62         3. Beginning July 1, 2003, assessments levied against
   63  insurers and self-insurance funds pursuant to this paragraph are
   64  computed and levied on the basis of the full policy premium
   65  value on the net direct premiums written in the state for
   66  workers’ compensation insurance during the calendar year next
   67  preceding the date of the assessment without taking into account
   68  any applicable discount or credit for deductibles. Insurers and
   69  self-insurance funds must report premiums in compliance with
   70  this subparagraph.
   71         (b) Assessments shall be included as an appropriate factor
   72  in the making of rates.
   73         (c)1.Effective July 1, 1999, If assessments otherwise
   74  authorized in paragraph (a) are insufficient to make all
   75  payments on reimbursements then owing to claimants in a calendar
   76  year, then upon certification by the board, the office
   77  department shall levy additional assessments of up to 1.5
   78  percent of the insurer’s net direct written premiums in this
   79  state during the calendar year next preceding the date of such
   80  assessments against insurers to secure the necessary funds.
   81         (d) The association may use an installment method to
   82  require the insurer to remit the assessment as written or may
   83  require the insurer to remit the assessment to the association
   84  before collecting the policyholder surcharge. If the assessment
   85  is remitted before the surcharge is collected, the assessment
   86  remitted must be based on an estimate of the assessment due
   87  based on the proportion of each insurer’s net direct written
   88  premium in this state for the preceding calendar year as
   89  described in paragraph (a) and adjusted following the end of the
   90  12-month period during which the assessment is levied.
   91         1. If the association elects to use the installment method,
   92  the office may, in the order levying the assessment on insurers,
   93  specify that the assessment is due and payable quarterly as
   94  premium is written throughout the assessment year. Insurers
   95  shall collect surcharges at a uniform percentage rate specified
   96  by order as described in paragraph (b). Insurers are not
   97  required to advance funds if the association and the office
   98  elect to use the installment option. Assessments levied under
   99  this subparagraph are paid after policy surcharges are billed,
  100  and the recognition of assets is based on actual premium written
  101  offset by the obligation to the association.
  102         2. If the association elects to require insurers to remit
  103  the assessment prior to surcharging the policyholder, the
  104  following shall apply:
  105         a. The levy order shall provide each insurer so assessed at
  106  least 30 days written notice of the date the initial assessment
  107  payment is due and payable by the insurer.
  108         b. Insurers shall collect surcharges at a uniform
  109  percentage rate specified by the order, as described in
  110  paragraph (b).
  111         c. Insurers must submit a reconciliation report to the
  112  association within 120 days after the end of the 12-month
  113  assessment period. The report must indicate the amount of the
  114  initial payment made to the association and the amount of
  115  written premium pursuant to paragraph (a) for the assessment
  116  year. If the insurer’s calculated assessment is more than the
  117  amount initially paid to the association, the insurer shall pay
  118  the excess amount to the association. If the insurer’s
  119  calculated assessment is less than the initial amount paid to
  120  the association, the association shall credit the insurer that
  121  amount against future assessments.
  122         d. An insurer is not liable for any uncollectible
  123  assessments.
  124         e. Assessments levied under this subparagraph are paid
  125  before policy surcharges are billed and result in a receivable
  126  for policy surcharges to be billed in the future. This amount,
  127  to the extent it is likely that it will be realized, meets the
  128  definition of an admissible asset as specified in the National
  129  Association of Insurance Commissioners’ Statement of Statutory
  130  Accounting Principles No. 4. The asset shall be established and
  131  recorded separately from the liability. If an insurer is unable
  132  to fully recoup the amount of the assessment, the amount
  133  recorded as an asset shall be reduced to the amount reasonably
  134  expected to be recouped.
  135         (2) Assessments levied under this section are not premium
  136  and are not subject to any premium tax, fees, or commissions.
  137  Insurers shall treat the failure of an insured to pay an
  138  assessment surcharge or the recoupment of an assessment
  139  surcharge as a failure to pay the premium.
  140         (3) Assessments levied under this section may only be
  141  levied upon insurers. This section does not create a cause of
  142  action by a policyholder with respect to the levying of, or a
  143  policyholder’s duty to pay, assessments.
  144         2. To assure that insurers paying assessments levied under
  145  this paragraph continue to charge rates that are neither
  146  inadequate nor excessive, each insurer that is to be assessed
  147  pursuant to this paragraph, or a licensed rating organization to
  148  which the insurer subscribes, may make, within 90 days after
  149  being notified of such assessments, a rate filing for workers’
  150  compensation coverage pursuant to ss. 627.072 and 627.091. If
  151  the filing reflects a percentage rate change equal to the
  152  difference between the rate of such assessment and the rate of
  153  the previous year’s assessment under this paragraph, the filing
  154  shall consist of a certification so stating and shall be deemed
  155  approved when made. Any rate change of a different percentage
  156  shall be subject to the standards and procedures of ss. 627.072
  157  and 627.091.
  158         (4)(2)(a) The board may exempt any insurer from an
  159  assessment if, in the opinion of the office department, an
  160  assessment would result in such insurer’s financial statement
  161  reflecting an amount of capital or surplus less than the minimum
  162  amount required by any jurisdiction in which the insurer is
  163  authorized to transact insurance.
  164         (b) The board may temporarily defer, in whole or in part,
  165  assessments against an insurer if, in the opinion of the office
  166  department, payment of the assessment would endanger the ability
  167  of the insurer to fulfill its contractual obligations. In the
  168  case of a self-insurance fund, the trustees of the fund
  169  determined to be endangered must immediately levy an assessment
  170  upon the members of that self-insurance fund in an amount
  171  sufficient to pay the assessments to the corporation.
  172         (c) The board may allow an insurer to pay an assessment on
  173  a quarterly basis.
  174         Section 2. This act shall take effect July 1, 2016.