Bill Text: FL S0496 | 2019 | Regular Session | Comm Sub

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Bill Title: Insurance Guaranty Associations

Spectrum: Slight Partisan Bill (Democrat 2-1)

Status: (Failed) 2019-05-03 - Died in Appropriations [S0496 Detail]

Download: Florida-2019-S0496-Comm_Sub.html

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       Florida Senate - 2019                              CS for SB 496
       
       
        
       By the Committee on Banking and Insurance; and Senator Rader
       
       
       
       
       
       597-02676-19                                           2019496c1
    1                        A bill to be entitled                      
    2         An act relating to insurance guaranty associations;
    3         creating s. 626.8621, F.S.; authorizing an employee of
    4         the Florida Insurance Guaranty Association or an
    5         employee of a guaranty association of another state to
    6         adjust losses for the Florida Insurance Guaranty
    7         Association if certain conditions are met; amending s.
    8         631.914, F.S.; revising requirements for the Office of
    9         Insurance Regulation in levying assessments on
   10         workers’ compensation insurers; requiring such
   11         insurers to recoup the assessments by applying a
   12         certain surcharge percentage to certain policies;
   13         providing that an insurer’s direct written premium may
   14         not be reduced by certain amounts for the purposes of
   15         determining insurer assessments or policyholder
   16         surcharges; authorizing the Florida Workers’
   17         Compensation Insurance Guaranty Association to audit
   18         certain reports; revising requirements for remitting
   19         policy surcharges and assessments; conforming cross
   20         references; providing that assessments paid by an
   21         insurer constitute advances of funds to the
   22         association under certain circumstances; revising
   23         requirements for insurers’ reconciliation reports to
   24         the association; revising construction; providing an
   25         effective date.
   26          
   27  Be It Enacted by the Legislature of the State of Florida:
   28  
   29         Section 1. Section 626.8621, Florida Statutes, is created
   30  to read:
   31         626.8621 Adjustments by guaranty association employees.—
   32         (1) An employee of the Florida Insurance Guaranty
   33  Association, created under part II of chapter 631, may adjust
   34  losses for the association if such employee holds, or has held
   35  within the past 10 years, licensure in this state which allows
   36  for the adjustment of such losses.
   37         (2) An employee of a guaranty association established by
   38  another state and whose insurance regulators are members of the
   39  National Association of Insurance Commissioners may adjust
   40  losses for the Florida Insurance Guaranty Association. The
   41  authorization for such employees to adjust losses must be
   42  included in a contract with the Florida Insurance Guaranty
   43  Association and the employee’s guarantee association or
   44  association’s authorized representative. The Florida Insurance
   45  Guaranty Association shall contract only for employees of other
   46  state guaranty associations who maintain the appropriate
   47  experience and training for adjusting such claims.
   48         Section 2. Subsections (1), (2), and (3) of section
   49  631.914, Florida Statutes, are amended to read:
   50         631.914 Assessments.—
   51         (1)(a) To the extent necessary to secure the funds for the
   52  payment of covered claims, and also to pay the reasonable costs
   53  to administer the same, the Office of Insurance Regulation, upon
   54  certification by the board, shall levy assessments on each
   55  insurer initially estimated in the proportion that the insurer’s
   56  net direct written premiums in this state bears to the total of
   57  said net direct written premiums received in this state by all
   58  such workers’ compensation insurers for the preceding calendar
   59  year. An insurer shall fully recoup assessments by applying the
   60  uniform surcharge percentage levied by the office to all
   61  policies of the same kind or line as were considered by the
   62  office in determining the assessment liability of the insurer.
   63  Assessments levied against insurers and self-insurance funds
   64  pursuant to this paragraph must be computed and levied on the
   65  basis of the full policy premium value on the net direct written
   66  premium amount as set forth in the state for workers’
   67  compensation insurance without consideration of any applicable
   68  discount or credit for deductibles. An insurer’s direct written
   69  premium calculated for the purposes of determining the insurer’s
   70  assessment or policyholder surcharge may not be reduced by any
   71  discount or credit for deductibles in a policy or by any premium
   72  adjustment to a retrospectively rated policy. Insurers and self
   73  insurance funds must report premiums in compliance with this
   74  paragraph, and the association may audit the reports.
   75  Assessments shall be remitted to and administered by the board
   76  of directors in the manner specified by the approved plan of
   77  operation and paragraph (d). Each assessment shall be a uniform
   78  percentage applicable to the net direct written premiums of each
   79  insurer writing workers’ compensation insurance. Assessments
   80  levied against insurers and self-insurance funds shall not
   81  exceed in any calendar year more than 2 percent of that
   82  insurer’s net direct written premiums in this state for workers’
   83  compensation insurance.
   84         (c)(b) The office shall levy the uniform surcharge
   85  percentage on all policies of the same kind or line as were
   86  considered by the office in determining the assessment liability
   87  of the insurer. Member insurers shall collect policyholder
   88  surcharges at a uniform percentage rate on new and renewal
   89  policies issued and effective during the period of 12 months
   90  beginning on January 1, April 1, July 1, or October 1, whichever
   91  is the first day of the following calendar quarter as specified
   92  in an order issued by the office directing insurers to pay an
   93  assessment to the association. The policyholder surcharge may
   94  not begin until 90 days after the board of directors certifies
   95  the assessment.
   96         (b)(c) If assessments otherwise authorized in paragraph (a)
   97  are insufficient to make all payments on reimbursements then
   98  owing to claimants in a calendar year, then upon certification
   99  by the board, the office shall levy additional assessments of up
  100  to 1.5 percent of the insurer’s net direct written premiums in
  101  this state.
  102         (d) The association may use an installment method to
  103  require the insurer to remit the policyholder surcharge
  104  assessment as premium is collected written or may require the
  105  insurer to remit the assessment to the association before
  106  collecting the policyholder surcharge. If the assessment is
  107  remitted before the surcharge is collected, the assessment
  108  remitted must be based on an estimate of the assessment due
  109  based on the proportion of each insurer’s net direct written
  110  premium in this state for the preceding calendar year as
  111  described in paragraph (a) and adjusted following the end of the
  112  12-month period during which the assessment is levied.
  113         1. If the association elects to use the installment method,
  114  the office may, in the order levying the assessment on insurers,
  115  specify that the policyholder surcharge assessment is due and
  116  payable quarterly as premium is collected written throughout the
  117  assessment year. Insurers shall collect policyholder surcharges
  118  at a uniform percentage rate specified by order as described in
  119  paragraph (c) (b). Insurers are not required to advance funds if
  120  the association and the office elect to use the installment
  121  option. Assessments levied under this subparagraph are paid
  122  after policyholder policy surcharges are collected, and the
  123  recognition of assets is based on actual premium collected
  124  written offset by the obligation to the association.
  125         2. If the association elects to require insurers to remit
  126  the assessment before surcharging the policyholder, the
  127  following shall apply:
  128         a. The assessment remitted must be based on an estimate of
  129  the assessment due based on the proportion of each insurer’s
  130  direct written premium in this state for the preceding calendar
  131  year as described in paragraph (a).
  132         b.a. The levy order shall provide each insurer so assessed
  133  at least 30 days’ written notice of the date the initial
  134  assessment payment is due and payable by the insurer.
  135         c.b. Insurers shall collect policyholder surcharges at a
  136  uniform percentage rate specified by the order, as described in
  137  paragraph (c) (b).
  138         d.c. Assessments levied under this subparagraph and are
  139  paid by an insurer constitute advances of funds from the insurer
  140  to the association before policy surcharges are billed and
  141  result in a receivable for policyholder policy surcharges to be
  142  billed in the future. The amount of billed policyholder
  143  surcharges, to the extent it is likely that it will be realized,
  144  meets the definition of an admissible asset as specified in the
  145  National Association of Insurance Commissioners’ Statement of
  146  Statutory Accounting Principles No. 4. The asset shall be
  147  established and recorded separately from the liability. If an
  148  insurer is unable to fully recoup the amount of the assessment,
  149  the amount recorded as an asset shall be reduced to the amount
  150  reasonably expected to be recouped.
  151         3. Insurers must submit a reconciliation report to the
  152  association within 120 days after the end of the 12-month
  153  assessment period and annually thereafter for a period of 3
  154  years. The report must indicate the amount of the initial
  155  payment or installment payments made to the association and the
  156  amount of policyholder surcharges collected written premium
  157  pursuant to paragraph (a) for the assessment year. If the
  158  insurer’s reconciled assessment obligation is more than the
  159  amount paid to the association, the insurer shall pay the excess
  160  policyholder surcharges collected to the association. If the
  161  insurer’s reconciled assessment obligation is less than the
  162  initial amount paid to the association, the association shall
  163  return the overpayment to the insurer.
  164         (2) Policyholder surcharges collected Assessments levied
  165  under this section are not premium and are not subject to any
  166  premium tax, fees, or commissions. Insurers shall treat the
  167  failure of an insured to pay policyholder assessment-related
  168  surcharges as a failure to pay premium. An insurer is not liable
  169  for any uncollectible policyholder assessment-related surcharges
  170  levied pursuant to this section.
  171         (3) Assessments levied under this section may be levied
  172  only upon insurers. This section does not create a cause of
  173  action by a policyholder with respect to the levying of an
  174  assessment or a policyholder’s duty to pay assessment-related
  175  policyholder surcharges.
  176         Section 3. This act shall take effect July 1, 2019.