Bill Text: FL S0830 | 2015 | Regular Session | Comm Sub

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Bill Title: Regulation of Corporation Not for Profit Self-insurance Funds

Spectrum: Bipartisan Bill

Status: (Failed) 2015-05-01 - Died in Commerce and Tourism [S0830 Detail]

Download: Florida-2015-S0830-Comm_Sub.html

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       Florida Senate - 2015                              CS for SB 830
       
       
        
       By the Committee on Banking and Insurance; and Senator Simmons
       
       
       
       
       
       597-02743-15                                           2015830c1
    1                        A bill to be entitled                      
    2         An act relating to the regulation of corporation not
    3         for profit self-insurance funds; amending s. 624.4625,
    4         F.S.; revising the requirements to form a corporation
    5         not for profit self-insurance fund; limiting the
    6         authorization to form such fund to corporations not
    7         for profit located in and organized under the laws of
    8         this state before a specified date; authorizing
    9         certain publicly supported organizations to be a
   10         participating member of a corporation not for profit
   11         self-insurance fund; specifying requirements for such
   12         members; requiring the Office of Insurance Regulation
   13         to review and take specified action against funds that
   14         do not meet certain requirements; requiring funds to
   15         purchase excess insurance from specified entities that
   16         have at least a certain rating; providing an effective
   17         date.
   18          
   19  Be It Enacted by the Legislature of the State of Florida:
   20  
   21         Section 1. Subsection (1) of section 624.4625, Florida
   22  Statutes, is amended to read:
   23         624.4625 Corporation not for profit self-insurance funds.—
   24         (1) Notwithstanding any other provision of law, any two or
   25  more corporations not for profit located in and organized under
   26  the laws of this state before July 1, 2015, are authorized to
   27  may form a self-insurance fund for the purpose of pooling and
   28  spreading liabilities of its group members in any one or
   29  combination of property or casualty risk, provided the
   30  corporation not for profit self-insurance fund that is created:
   31         (a) Has annual normal premiums in excess of $5 million.
   32         (b) Requires for qualification that each participating
   33  member receive at least 75 percent of its revenues from:
   34         1. Local, state, or federal governmental sources or a
   35  combination of such sources; or.
   36         2. The public as evidenced on the organization’s most
   37  recent Internal Revenue Service Form 990 or Form 990-EX and
   38  Schedule A. The fund must be a publicly supported organization
   39  under s. 501(c)(3) of the Internal Revenue Code.
   40         (c) Uses a qualified actuary to determine rates using
   41  accepted actuarial principles and annually submits to the office
   42  a certification by the actuary that the rates are actuarially
   43  sound and are not inadequate, as defined in s. 627.062.
   44         (d) Uses a qualified actuary to establish reserves for loss
   45  and loss adjustment expenses and annually submits to the office
   46  a certification by the actuary that the loss and loss adjustment
   47  expense reserves are adequate. If the actuary determines that
   48  reserves are not adequate, the fund shall file with the office a
   49  remedial plan for increasing the reserves or otherwise
   50  addressing the financial condition of the fund, subject to a
   51  determination by the office that the fund will operate on an
   52  actuarially sound basis and the fund does not pose a significant
   53  risk of insolvency.
   54         (e)1.a. A fund with participating members permitted under
   55  subparagraph (b)2. may only be authorized if the qualified
   56  actuary required under paragraph (d) has first certified that
   57  the fund is able to establish and maintain total assets solely
   58  for the account authorized in subparagraph (b)2., in an amount
   59  at least equal to or greater than the loss and loss adjustment
   60  expense reserves for such assets at the 80 percent confidence
   61  level for the fund authorized in subparagraph (b)2. A fund may
   62  not operate in accordance with subparagraph (b)2. until the
   63  actuarial certification required under this paragraph is
   64  submitted to the office.
   65         b. A fund with participating members under subparagraph
   66  (b)1. which does not maintain loss or loss adjustment expense
   67  reserves at the 80 percent confidence level, as certified by a
   68  qualified actuary, must file with the office a remedial plan for
   69  increasing the fund’s reserves or otherwise addressing the
   70  financial condition of the fund. Beginning on the date the
   71  remedial plan is received by the office, the fund shall, within
   72  5 years, submit a filing with the office which is certified by a
   73  qualified actuary under paragraph (d) indicating that the fund
   74  has loss or loss adjustment expense reserves at the 80 percent
   75  confidence level. The remedial filing required by paragraph (b)
   76  shall be subject to a determination by the office that the fund
   77  is operating on an actuarially sound basis and does not pose a
   78  significant risk of insolvency. The office may issue a cease and
   79  desist order to a fund that maintains total assets in an amount
   80  less than the loss and loss adjustment expense reserves at the
   81  70 percent confidence level as of the end of the fiscal year as
   82  determined by the qualified actuary required under paragraph
   83  (d).
   84         2. A fund must prohibit the inclusion of participating
   85  members under subparagraph (b)2. until it is in compliance with
   86  this paragraph.
   87         3. Notwithstanding subparagraph (e)1., the office may at
   88  any time order remedial action and issue a cease and desist
   89  order to a fund if the office finds that the fund is not
   90  operating on an actuarially sound basis and poses a significant
   91  risk of insolvency.
   92         (f) Maintains a continuing program of excess insurance
   93  coverage and reserve evaluation to protect the financial
   94  stability of the fund in an amount and manner determined by a
   95  qualified actuary. At a minimum, this program must:
   96         1. Purchase excess insurance from an authorized insurance
   97  carrier carriers or eligible surplus lines insurer insurers or
   98  reinsurer that is rated A- or higher by a rating agency that is
   99  approved by the office reinsurers.
  100         2. Retain a per-loss occurrence that does not exceed
  101  $350,000.
  102         (g)(f) Submit to the office annually an audited fiscal
  103  year-end financial statement by an independent certified public
  104  accountant within 6 months after the end of the fiscal year.
  105         (h)(g) Have a governing body that is comprised entirely of
  106  officials from corporations not for profit that are members of
  107  the corporation not for profit self-insurance fund.
  108         (i)(h) Use knowledgeable persons or business entities to
  109  administer or service the fund in the areas of claims
  110  administration, claims adjusting, underwriting, risk management,
  111  loss control, policy administration, financial audit, and legal
  112  areas. Such persons must meet all applicable requirements of law
  113  for state licensure and must have at least 5 years’ experience
  114  with commercial self-insurance funds formed under s. 624.462,
  115  self-insurance funds formed under s. 624.4622, or domestic
  116  insurers.
  117         (j)(i) Submit to the office copies of contracts used for
  118  its members that clearly establish the liability of each member
  119  for the obligations of the fund.
  120         (k)(j) Annually submit to the office a certification by the
  121  governing body of the fund that, to the best of its knowledge,
  122  the requirements of this section are met.
  123         Section 2. This act shall take effect July 1, 2015.