Bill Text: FL S0828 | 2016 | Regular Session | Enrolled

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Bill Title: Insurance Guaranty Association Assessments

Spectrum: Slight Partisan Bill (? 2-1)

Status: (Passed) 2016-04-01 - Chapter No. 2016-170 [S0828 Detail]

Download: Florida-2016-S0828-Enrolled.html

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       ENROLLED
       2016 Legislature                            CS for CS for SB 828
       
       
       
       
       
       
                                                              2016828er
    1  
    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.
   14          
   15  Be It Enacted by the Legislature of the State of Florida:
   16  
   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 on new and renewal policies issued and effective
   51  during the period of 12 months beginning on January 1, April 1,
   52  July 1, or October 1, whichever is the first day of the
   53  following calendar quarter as specified in an order issued by
   54  the office directing insurers to pay an assessment to the
   55  association. The surcharge may not begin until 90 days after the
   56  board of directors certifies the assessment.
   57         2. Beginning July 1, 1997, assessments levied against self
   58  insurance funds shall not exceed in any calendar year more than
   59  1.50 percent of that self-insurance fund’s net direct written
   60  premiums in this state for workers’ compensation insurance
   61  during the calendar year next preceding the date of such
   62  assessments.
   63         3. Beginning July 1, 2003, assessments levied against
   64  insurers and self-insurance funds pursuant to this paragraph are
   65  computed and levied on the basis of the full policy premium
   66  value on the net direct premiums written in the state for
   67  workers’ compensation insurance during the calendar year next
   68  preceding the date of the assessment without taking into account
   69  any applicable discount or credit for deductibles. Insurers and
   70  self-insurance funds must report premiums in compliance with
   71  this subparagraph.
   72         (b) Assessments shall be included as an appropriate factor
   73  in the making of rates.
   74         (c)1. Effective July 1, 1999, If assessments otherwise
   75  authorized in paragraph (a) are insufficient to make all
   76  payments on reimbursements then owing to claimants in a calendar
   77  year, then upon certification by the board, the office
   78  department shall levy additional assessments of up to 1.5
   79  percent of the insurer’s net direct written premiums in this
   80  state during the calendar year next preceding the date of such
   81  assessments against insurers to secure the necessary funds.
   82         (d) The association may use an installment method to
   83  require the insurer to remit the assessment as premium is
   84  written or may require the insurer to remit the assessment to
   85  the association before collecting the policyholder surcharge. If
   86  the assessment is remitted before the surcharge is collected,
   87  the assessment remitted must be based on an estimate of the
   88  assessment due based on the proportion of each insurer’s net
   89  direct written premium in this state for the preceding calendar
   90  year as described in paragraph (a) and adjusted following the
   91  end of the 12-month period during which the assessment is
   92  levied.
   93         1. If the association elects to use the installment method,
   94  the office may, in the order levying the assessment on insurers,
   95  specify that the assessment is due and payable quarterly as
   96  premium is written throughout the assessment year. Insurers
   97  shall collect surcharges at a uniform percentage rate specified
   98  by order as described in paragraph (b). Insurers are not
   99  required to advance funds if the association and the office
  100  elect to use the installment option. Assessments levied under
  101  this subparagraph are paid after policy surcharges are
  102  collected, and the recognition of assets is based on actual
  103  premium written offset by the obligation to the association.
  104         2. If the association elects to require insurers to remit
  105  the assessment before surcharging the policyholder, the
  106  following shall apply:
  107         a. The levy order shall provide each insurer so assessed at
  108  least 30 days written notice of the date the initial assessment
  109  payment is due and payable by the insurer.
  110         b. Insurers shall collect surcharges at a uniform
  111  percentage rate specified by the order, as described in
  112  paragraph (b).
  113         c. Assessments levied under this subparagraph are paid
  114  before policy surcharges are billed and result in a receivable
  115  for policy surcharges to be billed in the future. The amount of
  116  billed surcharges, to the extent it is likely that it will be
  117  realized, meets the definition of an admissible asset as
  118  specified in the National Association of Insurance
  119  Commissioners’ Statement of Statutory Accounting Principles No.
  120  4. The asset shall be established and recorded separately from
  121  the liability. If an insurer is unable to fully recoup the
  122  amount of the assessment, the amount recorded as an asset shall
  123  be reduced to the amount reasonably expected to be recouped.
  124         3. Insurers must submit a reconciliation report to the
  125  association within 120 days after the end of the 12-month
  126  assessment period and annually thereafter for a period of three
  127  years. The report must indicate the amount of the initial
  128  payment or installment payments made to the association and the
  129  amount of written premium pursuant to paragraph (a) for the
  130  assessment year. If the insurer’s reconciled assessment
  131  obligation is more than the amount paid to the association, the
  132  insurer shall pay the excess surcharges collected to the
  133  association. If the insurer’s reconciled assessment obligation
  134  is less than the initial amount paid to the association, the
  135  association shall return the overpayment to the insurer.
  136         (2) Assessments levied under this section are not premium
  137  and are not subject to any premium tax, fees, or commissions.
  138  Insurers shall treat the failure of an insured to pay
  139  assessment-related surcharges as a failure to pay premium. An
  140  insurer is not liable for any uncollectible assessment-related
  141  surcharges.
  142         (3) Assessments levied under this section may be levied
  143  only upon insurers. This section does not create a cause of
  144  action by a policyholder with respect to the levying of an
  145  assessment or a policyholder’s duty to pay assessment-related
  146  surcharges.
  147         2. To assure that insurers paying assessments levied under
  148  this paragraph continue to charge rates that are neither
  149  inadequate nor excessive, each insurer that is to be assessed
  150  pursuant to this paragraph, or a licensed rating organization to
  151  which the insurer subscribes, may make, within 90 days after
  152  being notified of such assessments, a rate filing for workers’
  153  compensation coverage pursuant to ss. 627.072 and 627.091. If
  154  the filing reflects a percentage rate change equal to the
  155  difference between the rate of such assessment and the rate of
  156  the previous year’s assessment under this paragraph, the filing
  157  shall consist of a certification so stating and shall be deemed
  158  approved when made. Any rate change of a different percentage
  159  shall be subject to the standards and procedures of ss. 627.072
  160  and 627.091.
  161         (4)(2)(a) The board may exempt any insurer from an
  162  assessment if, in the opinion of the office department, an
  163  assessment would result in such insurer’s financial statement
  164  reflecting an amount of capital or surplus less than the minimum
  165  amount required by any jurisdiction in which the insurer is
  166  authorized to transact insurance.
  167         (b) The board may temporarily defer, in whole or in part,
  168  assessments against an insurer if, in the opinion of the office
  169  department, payment of the assessment would endanger the ability
  170  of the insurer to fulfill its contractual obligations. In the
  171  case of a self-insurance fund, the trustees of the fund
  172  determined to be endangered must immediately levy an assessment
  173  upon the members of that self-insurance fund in an amount
  174  sufficient to pay the assessments to the corporation.
  175         (c) The board may allow an insurer to pay an assessment on
  176  a quarterly basis.
  177         Section 2. This act shall take effect July 1, 2016.