Bill Text: FL S0324 | 2013 | Regular Session | Comm Sub
Bill Title: Florida Insurance Guaranty Association
Spectrum: Bipartisan Bill
Status: (Failed) 2013-05-03 - Died in Commerce and Tourism [S0324 Detail]
Download: Florida-2013-S0324-Comm_Sub.html
Florida Senate - 2013 CS for SB 324 By the Committee on Banking and Insurance; and Senator Brandes 597-03441-13 2013324c1 1 A bill to be entitled 2 An act relating to the Florida Insurance Guaranty 3 Association; reordering and amending s. 631.57, F.S.; 4 revising the duties of the association; authorizing 5 the association to collect regular assessments 6 directly from policyholders; authorizing the 7 association to collect emergency assessments from 8 insurers under certain circumstances; making technical 9 and grammatical corrections; providing an effective 10 date. 11 12 Be It Enacted by the Legislature of the State of Florida: 13 14 Section 1. Subsection (2) of section 631.57, Florida 15 Statutes, is amended, and subsection (3) of that section is 16 reordered and amended, to read: 17 631.57 Powers and duties of the association.— 18 (2) The association may: 19 (a) Employ or retain such persons as are necessary to 20 handle claims and perform other duties of the association; 21 (b) Borrow funds necessary to effect the purposes of this 22 part in accord with the plan of operation, including borrowing 23 necessary to ensure that its cash flow needs are timely met to 24 pay covered claims when regular and emergency assessments are 25 levied on policyholders under subsection (3); 26 (c) Sue or be sued, provided that service of process is 27shall bemade upon the person registered with the department as 28 agent for the receipt of service of process; and 29 (d) Negotiate and become a party to such contracts as are 30 necessary to carry out the purpose of this part.Additionally,31 The association may also enter into such contracts with a 32 municipality, a county, or a legal entity created pursuant to s. 33 163.01(7)(g)as are necessaryin order for the municipality, 34 county, or legal entity to issue bonds under s. 631.695. In 35 connection with the issuance ofanysuch bonds and the entering 36 into ofanysuchnecessarycontracts, the association may agree 37 to such terms and conditions as the association deems necessary 38 and proper. 39 (3)(a) To the extent necessary to securethefunds for the 40 respective accounts paying forthe payment ofcovered claims, to 41 pay the reasonable costs to administer such accountsthe same, 42 andto the extent necessaryto securethefunds for the account 43 specified in s. 631.55(2)(b) or to retire indebtedness, 44 including, without limitation, the principal, redemption 45 premium, if any, and interest on, and related costs of issuance 46 of, bonds issued under s. 631.695 and the funding of any 47 reserves and other payments required under the bond resolution 48 or trust indenture pursuant to which such bonds have been 49 issued, the office, upon certification of the board of 50 directors, shall levy regular assessments in the proportion that 51 each insurer’s net direct written premiums in this state in the 52 classes protected by the account bears to the total of thesaid53 net direct written premiums received in this state by all such 54 insurers for the preceding calendar year for the kinds of 55 insurance included within such account. Regular assessments 56 shall be remitted to and administered by the board of directors 57 in the manner specified by the approved plan. Each insurer so 58 assessed hasshall haveat least 30 days’ written notice as to 59 the date the assessment is due and payable.Every assessment60shall be made as a uniform percentage applicable to the net61direct written premiums of each insurer in the kinds of62insurance included within the account in which the assessment is63made.The regular assessments levied against ananyinsurer may 64shallnotexceedin any one year exceedmore than2 percent of 65 that insurer’s net direct written premiums in this state for the 66 kinds of insurance included within such account during the 67 calendar year next preceding the date of such assessments. The 68 Legislature finds and declares that regular assessments paid by 69 an insurer or insurer group as a result of a levy by the office 70 constitute advances of funds from the insurer to the 71 association. An insurer may fully recoup regular assessments 72 levied against prior year premiums by applying a separate 73 recoupment factor to the premium of policies of the same kind or 74 line as were considered by the office in determining the 75 assessment liability of the insurer or insurer group. 76 (b) In lieu of collecting the regular assessment under 77 paragraph (a) from insurers, the association may collect all or 78 part of the assessment directly from policyholders. If the 79 association elects to collect the assessment directly from 80 policyholders, the office shall issue an order specifying the 81 date the board requires the insurers to begin collecting the 82 assessment, which must be at least 90 days after the date the 83 office levies the assessment. The order must specify a uniform 84 percentage determined by the board, and verified by the office, 85 of the direct written premium for all lines of business in the 86 applicable accounts. The assessment certified in any one 87 calendar year may not exceed 2 percent of the premium. The 88 insurers shall collect such assessments without being affected 89 by any credit, limitation, exemption, or deferment. Assessments 90 collected under this paragraph shall be transferred regularly to 91 the association as set forth in the order levying the 92 assessment. 93 (e)(b)If sufficient funds from regular and emergencysuch94 assessments, together with funds previously raised, are not 95 available in any one year in the respective account to make all 96 the payments or reimbursementsthenowing to insurers, insureds, 97 or claimants, the funds available shall be prorated and the 98 unpaid portionshall bepaid as soonthereafteras funds become 99 available. 100(c) The Legislature finds and declares that all assessments101paid by an insurer or insurer group as a result of a levy by the102office, including assessments levied pursuant to paragraph (a)103and emergency assessments, constitute advances of funds from the104insurer to the association. An insurer may fully recoup such105advances by applying a separate recoupment factor to the premium106of policies of the same kind or line as were considered by the107office in determining the assessment liability of the insurer or108insurer group.109 (f)(d)NoState funds may notof any kind shallbe allocated 110 or paid to thesaidassociation or any of its accounts. 111 (c)(e)1.a.In addition to regular assessmentsotherwise112 authorized underinparagraph (a), and to the extent necessary 113 to securethefunds for the account specified in s. 631.55(2)(b) 114 for the direct payment of covered claims of insurers rendered 115 insolvent by the effects of a hurricane and to pay the 116 reasonable costs to administer such claims, or to retire 117 indebtedness, including, without limitation, the principal, 118 redemption premium, if any, and interest on, and related costs 119 of issuance of, bonds issued under s. 631.695 and the funding of 120 any reserves and other payments required under the bond 121 resolution or trust indenture pursuant to which such bonds have 122 been issued, the office, upon certification of the board of 123 directors, shall levy emergency assessments directly upon 124 policyholders, which shall be collected by insurers holding a 125 certificate of authority. Pursuant to such levy, the office 126 shall issue an order specifying the date the board requires the 127 insurers to begin collecting the assessment, which must be at 128 least 90 days after the date the office levies the assessment. 129 The order must specify a uniform percentage determined by the 130 board, and verified by the office, of the direct written premium 131 for all lines of business in the applicable accounts. The 132 assessment certified in any one calendar year collected may not 133 exceed 2 percent of the premium. The insurers shall collect such 134 assessments without being affected by any credit, limitation, 135 exemption, or deferment. Assessments collected by insurers under 136 this paragraph shall be transferred regularly to the association 137 as set forth in the order levying the assessment. 138 1. If, after consultation with its financial advisor, the 139 board determines that it must immediately begin paying the 140 covered claims of one or more insolvent insurers and financing 141 is not reasonably available, it may certify the emergency 142 assessment on insurers in the same manner as set forth in 143 paragraph (a), except that an emergency assessment may be paid 144 by the insurer in a single payment or, at the option of the 145 association, in 12 monthly installments with the first 146 installment being due and payable at the end of the month after 147 the emergency assessment is levied and subsequent installments 148 being due by the end of each succeeding month.The emergency149assessments payable under this paragraph by any insurer shall150not exceed in any single year more than 2 percent of that151insurer’s direct written premiums, net of refunds, in this state152during the preceding calendar year for the kinds of insurance153within the account specified in s.631.55(2)(b).154 2.b.AnyEmergency assessmentsauthorized under this155paragraphshall be levied by the office onlyupon insurers156referred to in sub-subparagraph a.,upon certification as to the 157 need for such assessments by the board of directors. IfIn the158eventthe boardof directorsparticipates in the issuance of 159 bonds in accordance with s. 631.695, emergency assessments shall 160 be levied in each year that bonds issued under s. 631.695 and 161 secured by such emergency assessments are outstanding,insuch162 amounts up to such 2 percent2-percentlimit as required in 163 order to provide for the full and timely payment of the 164 principal of, redemption premium, if any, and interest on, and 165 related costs of issuance of, such bonds. The emergency 166 assessmentsprovided for in this paragraphare assigned and 167 pledged to the municipality, county, or legal entity issuing 168 bonds under s. 631.695 for the benefit of the holders of such 169 bonds, in order to enable such municipality, county, or legal 170 entity to provide for the payment of the principal of, 171 redemption premium, if any, and interest on such bonds, the cost 172 of issuance of such bonds, and the funding of any reserves and 173 other payments required under the bond resolution or trust 174 indenture pursuant to which such bonds have been issued, without 175 the necessity forofany further action by the association, the 176 office, or any other party. IfTo the extentbonds are issued 177 under s. 631.695 and the association securesdetermines to178securesuch bonds by a pledge of revenues received from the 179 emergency assessments, such bonds, upon such pledge of revenues, 180 shall be secured by and payable from the proceeds of such 181 emergency assessments, and the proceeds of emergency assessments 182 levied under this paragraph shall be remitted directly to and 183 administered by the trustee or custodian appointed for the 184 payment of such bonds. 185c. Emergency assessments under this paragraph may be186payable in a single payment or, at the option of the187association, may be payable in 12 monthly installments with the188first installment being due and payable at the end of the month189after an emergency assessment is levied and subsequent190installments being due not later than the end of each succeeding191month.192 3.d.If emergency assessments are imposed, the report 193 required by s. 631.695(7) mustshallinclude an analysis of the 194 revenues generated from the emergency assessments imposed under 195 this paragraph. 196 4.e.If emergency assessments are imposed, the references 197 in sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to 198 regular assessments levied under paragraph (a) mustshall199 include emergency assessments imposed under this paragraph. 200 5.2.If the board of directors participates in the issuance 201 of bonds in accordance with s. 631.695, an emergencyannual202 assessment under this paragraph mustshallcontinue while the 203 bonds issued with respect to which the assessment was imposed 204 are outstanding, including any bonds the proceeds of which were 205 used to refund bonds issued pursuant to s. 631.695, unless 206 adequate provision has been made for the payment of the bonds in 207 the documents authorizing the issuance of such bonds. 208 6.3.Emergency assessments under this paragraph are not 209 premium and are not subject to the premium tax, to any fees, or 210 to any commissions. An insurer is liable for all emergency 211 assessments that the insurer collects and shall treat the 212 failure of an insured to pay an emergency assessment as a 213 failure to pay the premium. An insurer is not liable for 214 uncollectible emergency assessments. 215 (d)(f)The recoupment factor applied to policies in 216 accordance with paragraph (a) or subparagraph (c)1.paragraph217(c)shall be selected by the insurer or insurer groupso asto 218 provide for the probable recoupment ofboth assessments levied219pursuant to paragraph (a) and emergencyassessments over a 220 period of 12 months, unless the insurer or insurer group, at its 221 option, elects to recoup the assessment over a longer period. 222 The recoupment factor appliesshall applyto all policies of the 223 same kind or line as were considered by the office in 224 determining the assessment liability of the insurer or insurer 225 group issued or renewed during a 12-month period. 226 1. If the insurer or insurer group does not collect the 227 full amount of the assessment during one 12-month period, the 228 insurer or insurer group may apply recalculated recoupment 229 factors to policies issued or renewed during one or more 230 succeeding 12-month periods. 231 2. If, at the end of a 12-month period, the insurer or 232 insurer group has collected from the combined kinds or lines of 233 policies subject to assessment more than the total amount of the 234 assessment paid by the insurer or insurer group, the excess 235 amount shall be disbursed as follows: 236 a.1.If the excess amount does not exceed 15 percent of the 237 total assessment paid by the insurer or insurer group, the 238 excess amount shall be remitted to the association within 60 239 days after the end of the 12-month period in which the excess 240 recoupment charges were collected. 241 b.2.If the excess amount exceeds 15 percent of the total 242 assessment paid by the insurer or insurer group, the excess 243 amount shall be returned to the insurer’s or insurer group’s 244 current policyholders by refunds or premium credits. The 245 association shall use any remitted excess recoupment amounts to 246 reduce future assessments. 247 3.(g)Amounts recouped pursuant to this paragraph 248subsectionfor assessments levied under paragraph (a) due to 249 insolvencies on or after July 1, 2010, are considered premium 250 solely for premium tax purposes and are not subject to fees or 251 commissions. However, insurers shall treat the failure of an 252 insured to pay a recoupment charge as a failure to pay the 253 premium. 254 4.(h)At least 15 days before applying the recoupment 255 factor to any policies, the insurer or insurer group shall file 256 with the office a statement for informational purposes only 257 setting forth the amount of the recoupment factor and an 258 explanation of how the recoupment factor will be applied. Such 259 statement mustshallinclude documentation of the assessment 260 paid by the insurer or insurer group and the arithmetic 261 calculations supporting the recoupment factor. The insurer or 262 insurer group may use the recoupment factor at any time after 263 the expiration of the 15-day period. The insurer or insurer 264 group need submit only one informational statement for all lines 265 of business using the same recoupment factor. 266 5.(i)WithinNo later than90 days after the insurer or 267 insurer group has completed the recoupment process, the insurer 268 or insurer group shall file with the office, for information 269 purposes only, a final accounting report documenting the 270 recoupment. The report mustshallprovide the amounts of 271 assessments paid by the insurer or insurer group, the amounts 272 and percentages recouped by year from each affected line of 273 business, and the direct written premium subject to recoupment 274 by year. The insurer or insurer group need submit only one 275 report for all lines of business using the same recoupment 276 factor. 277 Section 2. This act shall take effect July 1, 2013, and 278 shall apply to any assessment certified and levied after that 279 date regardless of when the insolvency or insolvencies occurred.