Bill Text: FL H1007 | 2011 | Regular Session | Comm Sub

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Insurer Insolvency

Spectrum: Slight Partisan Bill (Democrat 4-1-1)

Status: (Engrossed - Dead) 2011-05-02 - Ordered enrolled -HJ 1004 [H1007 Detail]

Download: Florida-2011-H1007-Comm_Sub.html

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CS/HB 1007

1	A bill to be entitled
2	An act relating to insurer insolvency; amending s.
3	631.152, F.S.; authorizing the Department of Financial
4	Services to request appointment as ancillary receiver if
5	necessary for obtaining records to adjudicate covered
6	claims; providing for the reimbursement of specified costs
7	associated with ancillary delinquency proceedings;
8	creating s. 631.2715, F.S.; providing for State Risk
9	Management Trust Fund coverage for specified officers,
10	employees, agents, and other representatives of the
11	Department of Financial Services for liability under
12	specified federal laws relating to receiverships; amending
13	s. 631.391, F.S.; providing liability to persons who fail
14	to cooperate in the providing of records; amending s.
15	631.54, F.S.; providing that a covered claim for purposes
16	of specified guaranty provisions does not include a claim
17	rejected or denied by another state's guaranty fund based
18	upon that state's statutory exclusions; amending s.
19	631.56, F.S.; providing that any board member of the
20	Florida Insurance Guaranty Association representing an
21	insurer in receivership shall be terminated as a board
22	member; specifying a termination date; amending s.
23	631.904, F.S.; providing that a covered claim for purposes
24	of specified guaranty provisions does not include a claim
25	rejected or denied by another state's guaranty fund based
26	upon that state's statutory exclusions; amending s.
27	631.912, F.S.; providing that any board member of the
28	Florida Workers' Compensation Insurance Guaranty
29	Association who is employed by, or has a material
30	relationship with, an insurer in receivership shall be
31	terminated as a board member; specifying a termination
32	date; providing an effective date.
33
34	Be It Enacted by the Legislature of the State of Florida:
35
36	Section 1.  Section 631.152, Florida Statutes, is amended
37	to read:
38	631.152  Conduct of delinquency proceeding; foreign
39	insurers.-
40	(1)  Whenever under this chapter an ancillary receiver is
41	to be appointed in a delinquency proceeding for an insurer not
42	domiciled in this state, the court shall appoint the department
43	as ancillary receiver. The department shall file a petition
44	requesting the appointment on the grounds set forth in s.
45	631.091:
46	(a)  If it finds that there are sufficient assets of the
47	insurer located in this state to justify the appointment of an
48	ancillary receiver;, or
49	(b)  If 10 or more persons resident in this state having
50	claims against such insurer file a petition with the department
51	or office requesting the appointment of such ancillary receiver;
52	or.
53	(c)  If it finds it is necessary to obtain records to
54	adjudicate the covered claims of Florida policyholders.
55	(2)  The domiciliary receiver for the purpose of
56	liquidating an insurer domiciled in a reciprocal state shall be
57	vested by operation of law with the title to all of the property
58	(except statutory deposits, special statutory deposits, and
59	property located in this state subject to a security interest),
60	contracts, and rights of action, and all of the books and
61	records of the insurer located in this state, and it shall have
62	the immediate right to recover balances due from local agents
63	and to obtain possession of any books and records of the insurer
64	found in this state. It shall also be entitled to recover the
65	property subject to a security interest, statutory deposits, and
66	special statutory deposits of the insurer located in this state,
67	except that upon the appointment of an ancillary receiver in
68	this state, the ancillary receiver shall during the ancillary
69	receivership proceeding have the sole right to recover such
70	other assets. The ancillary receiver shall, as soon as
71	practicable, liquidate from their respective securities those
72	special deposit claims and secured claims which are proved and
73	allowed in the ancillary proceeding in this state, and shall pay
74	the necessary expenses of the proceeding. All remaining assets
75	it shall promptly transfer to the domiciliary receiver. Subject
76	to the foregoing provisions, the ancillary receiver and its
77	agents shall have the same powers and be subject to the same
78	duties with respect to the administration of such assets as a
79	receiver of an insurer domiciled in this state.
80	(3)  The domiciliary receiver of an insurer domiciled in a
81	reciprocal state may sue in this state to recover any assets of
82	such insurer to which it may be entitled under the laws of this
83	state.
84	(4)  Section 631.141(7)(b) applies to ancillary delinquency
85	proceedings opened for the purpose of obtaining records
86	necessary to adjudicate the covered claims of Florida
87	policyholders.
88	Section 2.  Section 631.2715, Florida Statutes, is created
89	to read:
90	631.2715  Liability under federal priority of claims law.-
91	The State Risk Management Trust Fund shall cover department
92	officers, employees, agents, and other representatives for any
93	liability under the federal act relating to priority of claims,
94	31 U.S.C. s. 3713, for any action taken by them in the
95	performance of their powers and duties under this chapter.
96	Section 3.  Subsection (6) is added to section 631.391,
97	Florida Statutes, to read:
98	631.391  Cooperation of officers and employees.-
99	(6)  Any person referred to in subsection (1) who refuses
100	to cooperate in providing records upon the request of the
101	department or office is liable for any penalties, fines, or
102	other costs assessed against the guaranty association or the
103	receiver that result from the refusal or delay to provide
104	records.
105	Section 4.  Subsection (3) of section 631.54, Florida
106	Statutes, is amended to read:
107	631.54  Definitions.-As used in this part:
108	(3)  "Covered claim" means an unpaid claim, including one
109	of unearned premiums, which arises out of, and is within the
110	coverage, and not in excess of, the applicable limits of an
111	insurance policy to which this part applies, issued by an
112	insurer, if such insurer becomes an insolvent insurer and the
113	claimant or insured is a resident of this state at the time of
114	the insured event or the property from which the claim arises is
115	permanently located in this state. For entities other than
116	individuals, the residence of a claimant, insured, or
117	policyholder is the state in which the entity's principal place
118	of business is located at the time of the insured event.
119	"Covered claim" does shall not include:
120	(a)  Any amount due any reinsurer, insurer, insurance pool,
121	or underwriting association, sought directly or indirectly
122	through a third party, as subrogation, contribution,
123	indemnification, or otherwise; or
124	(b)  Any claim that would otherwise be a covered claim
125	under this part that has been rejected or denied by any other
126	state guaranty fund based upon that state's statutory
127	exclusions, including, but not limited to, those based on
128	coverage, policy type, or an insured's net worth on the grounds
129	that an insured's net worth is greater than that allowed under
130	that state's guaranty law. Member insurers shall have no right
131	of subrogation, contribution, indemnification, or otherwise,
132	sought directly or indirectly through a third party, against the
133	insured of any insolvent member.
134	Section 5.  Subsection (4) is added to section 631.56,
135	Florida Statutes, to read:
136	631.56  Board of directors.-
137	(4)  Any board member representing an insurer in
138	receivership shall be terminated as a board member, effective as
139	of the date of the entry of the order of receivership.
140	Section 6.  Subsection (2) of section 631.904, Florida
141	Statutes, is amended to read:
142	631.904  Definitions.-As used in this part, the term:
143	(2)  "Covered claim" means an unpaid claim, including a
144	claim for return of unearned premiums, which arises out of, is
145	within the coverage of, and is not in excess of the applicable
146	limits of, an insurance policy to which this part applies, which
147	policy was issued by an insurer and which claim is made on
148	behalf of a claimant or insured who was a resident of this state
149	at the time of the injury. The term "covered claim" includes
150	unpaid claims under any employer liability coverage of a
151	workers' compensation policy limited to the lesser of $300,000
152	or the limits of the policy. The term "covered claim" does not
153	include any amount sought as a return of premium under any
154	retrospective rating plan; any amount due any reinsurer,
155	insurer, insurance pool, or underwriting association, as
156	subrogation recoveries or otherwise; any claim that would
157	otherwise be a covered claim that has been rejected or denied by
158	any other state guaranty fund based upon that state's statutory
159	exclusions, including, but not limited to, those based on
160	coverage, policy type, or an insured's net worth on the grounds
161	that the insured's net worth is greater than that allowed under
162	that state's guaranty fund or liquidation law, except this
163	exclusion from the definition of covered claim does shall not
164	apply to employers who, prior to April 30, 2004, entered into an
165	agreement with the corporation preserving the employer's right
166	to seek coverage of claims rejected by another state's guaranty
167	fund; or any return of premium resulting from a policy that was
168	not in force on the date of the final order of liquidation.
169	Member insurers have no right of subrogation against the insured
170	of any insolvent insurer. This provision applies shall be
171	applied retroactively to cover claims of an insolvent self-
172	insurance fund resulting from accidents or losses incurred prior
173	to January 1, 1994, regardless of the date the petition in
174	circuit court was filed alleging insolvency and the date the
175	court entered an order appointing a receiver.
176	Section 7.  Subsection (3) is added to section 631.912,
177	Florida Statutes, to read:
178	631.912  Board of directors.-
179	(3)  Any board member who is employed by, or has a material
180	relationship with, an insurer in receivership shall be
181	terminated as a board member, effective as of the date of the
182	entry of the order of receivership.
183	Section 8.  This act shall take effect July 1, 2011.

CODING: Words stricken are deletions; words underlined are additions.