Florida Senate - 2020                              CS for SB 898
       By the Committee on Banking and Insurance; and Senators Gruters
       and Broxson
       597-02277-20                                           2020898c1
    1                        A bill to be entitled                      
    2         An act relating to insurance guaranty associations;
    3         amending s. 631.57, F.S.; increasing the obligation of
    4         the Florida Insurance Guaranty Association,
    5         Incorporated, for certain claims under policies
    6         covering certain condominium associations and
    7         homeowners’ associations; increasing the percentage
    8         limit of certain insurer net written premiums up to
    9         which the Office of Insurance Regulation may levy
   10         certain emergency assessments upon insurers; providing
   11         an effective date.
   13  Be It Enacted by the Legislature of the State of Florida:
   15         Section 1. Paragraph (a) of subsection (1) and paragraph
   16  (e) of subsection (3) of section 631.57, Florida Statutes, are
   17  amended to read:
   18         631.57 Powers and duties of the association.—
   19         (1) The association shall:
   20         (a)1. Be obligated to the extent of the covered claims
   21  existing:
   22         a. Prior to adjudication of insolvency and arising within
   23  30 days after the determination of insolvency;
   24         b. Before the policy expiration date if less than 30 days
   25  after the determination; or
   26         c. Before the insured replaces the policy or causes its
   27  cancellation, if she or he does so within 30 days of the
   28  determination.
   29         2. The obligation under subparagraph 1. includes only the
   30  amount of each covered claim which is in excess of $100 and is
   31  less than $300,000, except that policies providing coverage for
   32  homeowner’s insurance shall provide for an additional $200,000
   33  for the portion of a covered claim which relates only to the
   34  damage to the structure and contents.
   35         3.a. Notwithstanding subparagraph 2., the obligation under
   36  subparagraph 1. for policies covering condominium associations
   37  or homeowners’ associations, which associations have a
   38  responsibility to provide insurance coverage on residential
   39  units within the association, shall include that amount of each
   40  covered property insurance claim which is less than $200,000
   41  $100,000 multiplied by the number of condominium units or other
   42  residential units; however, as to homeowners’ associations, this
   43  sub-subparagraph applies only to claims for damage or loss to
   44  residential units and structures attached to residential units.
   45         b. Notwithstanding sub-subparagraph a., the association has
   46  no obligation to pay covered claims that are to be paid from the
   47  proceeds of bonds issued under s. 631.695. However, the
   48  association shall assign and pledge the first available moneys
   49  from all or part of the assessments to be made under paragraph
   50  (3)(a) to or on behalf of the issuer of such bonds for the
   51  benefit of the holders of such bonds. The association shall
   52  administer any such covered claims and present valid covered
   53  claims for payment in accordance with the provisions of the
   54  assistance program in connection with which such bonds have been
   55  issued.
   56         4. In no event shall the association be obligated to a
   57  policyholder or claimant in an amount in excess of the
   58  obligation of the insolvent insurer under the policy from which
   59  the claim arises.
   60         (3)
   61         (e)1. In addition to assessments authorized in paragraph
   62  (a), and to the extent necessary to secure the funds for the
   63  account specified in s. 631.55(2)(b) for the direct payment of
   64  covered claims of insurers rendered insolvent by the effects of
   65  a hurricane and to pay the reasonable costs to administer such
   66  claims, or to retire indebtedness, including, without
   67  limitation, the principal, redemption premium, if any, and
   68  interest on, and related costs of issuance of, bonds issued
   69  under s. 631.695 and the funding of any reserves and other
   70  payments required under the bond resolution or trust indenture
   71  pursuant to which such bonds have been issued, the office, upon
   72  certification of the board of directors, shall levy emergency
   73  assessments upon insurers holding a certificate of authority.
   74  The emergency assessments levied against any insurer may not
   75  exceed in any one calendar year more than 4 2 percent of that
   76  insurer’s net written premiums in this state for the kinds of
   77  insurance within the account specified in s. 631.55(2)(b).
   78         2. Emergency assessments authorized under this paragraph
   79  shall be levied by the office upon insurers in accordance with
   80  paragraph (f), upon certification as to the need for such
   81  assessments by the board of directors. If the board participates
   82  in the issuance of bonds in accordance with s. 631.695,
   83  emergency assessments shall be levied in each year that bonds
   84  issued under s. 631.695 and secured by such emergency
   85  assessments are outstanding in amounts up to such 4-percent 2
   86  percent limit as required in order to provide for the full and
   87  timely payment of the principal of, redemption premium, if any,
   88  and interest on, and related costs of issuance of, such bonds.
   89  The emergency assessments are assigned and pledged to the
   90  municipality, county, or legal entity issuing bonds under s.
   91  631.695 for the benefit of the holders of such bonds in order to
   92  provide for the payment of the principal of, redemption premium,
   93  if any, and interest on such bonds, the cost of issuance of such
   94  bonds, and the funding of any reserves and other payments
   95  required under the bond resolution or trust indenture pursuant
   96  to which such bonds have been issued, without further action by
   97  the association, the office, or any other party. If bonds are
   98  issued under s. 631.695 and the association determines to secure
   99  such bonds by a pledge of revenues received from the emergency
  100  assessments, such bonds, upon such pledge of revenues, shall be
  101  secured by and payable from the proceeds of such emergency
  102  assessments, and the proceeds of emergency assessments levied
  103  under this paragraph shall be remitted directly to and
  104  administered by the trustee or custodian appointed for such
  105  bonds.
  106         3. Emergency assessments used to defease bonds issued under
  107  this part may be payable in a single payment or, at the option
  108  of the association, may be payable in 12 monthly installments
  109  with the first installment being due and payable at the end of
  110  the month after an emergency assessment is levied and subsequent
  111  installments being due by the end of each succeeding month.
  112         4. If emergency assessments are imposed, the report
  113  required by s. 631.695(7) must include an analysis of the
  114  revenues generated from the emergency assessments imposed under
  115  this paragraph.
  116         5. If emergency assessments are imposed, the references in
  117  sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to
  118  assessments levied under paragraph (a) must include emergency
  119  assessments imposed under this paragraph.
  120         6. If the board of directors participates in the issuance
  121  of bonds in accordance with s. 631.695, an annual assessment
  122  under this paragraph shall continue while the bonds issued with
  123  respect to which the assessment was imposed are outstanding,
  124  including any bonds the proceeds of which were used to refund
  125  bonds issued pursuant to s. 631.695, unless adequate provision
  126  has been made for the payment of the bonds in the documents
  127  authorizing the issuance of such bonds.
  128         Section 2. This act shall take effect July 1, 2020.