Bill Text: FL S1430 | 2022 | Regular Session | Introduced

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

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Bill Title: Insolvent Insurers

Spectrum: Slight Partisan Bill (? 2-1)

Status: (Introduced - Dead) 2022-03-04 - Laid on Table, refer to CS/HB 1023 [S1430 Detail]

Download: Florida-2022-S1430-Introduced.html

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       Florida Senate - 2022                                    SB 1430
       
       
        
       By Senator Burgess
       
       
       
       
       
       20-00793B-22                                          20221430__
    1                        A bill to be entitled                      
    2         An act relating to insolvent insurers; amending s.
    3         627.072, F.S.; providing required factors to be used
    4         in the determination and fixing of rates for premiums
    5         paid to insolvent insurers for specified coverages;
    6         amending s. 631.57, F.S.; authorizing insurers
    7         remitting assessments to the Florida Insurance
    8         Guaranty Association, Incorporated, to elect not to
    9         recoup advances; revising a requirement for
   10         information regarding assessment percentages which
   11         must be specified by the Office of Insurance
   12         Regulation in orders levying assessments; authorizing
   13         the association to request that orders levying
   14         assessments issued by the office authorize a certain
   15         installment frequency for the remittance of advance
   16         payments by insurers; revising the requirement that
   17         certain insurers make payments, rather than initial
   18         payments, on a certain basis; revising insurer
   19         reconciliation reporting requirements; providing
   20         reconciliation requirements for surcharges collected
   21         from policyholders; requiring insurers to treat the
   22         failure of an insured to pay a surcharge, rather than
   23         a recoupment charge, as a failure to pay the premium;
   24         revising construction; amending s. 631.914, F.S.;
   25         revising provisions relating to insurers’ collection
   26         of surcharges and payments of assessments to the
   27         Florida Workers’ Compensation Insurance Guaranty
   28         Association, Incorporated; providing an effective
   29         date.
   30          
   31  Be It Enacted by the Legislature of the State of Florida:
   32  
   33         Section 1. Subsection (1) of section 627.072, Florida
   34  Statutes, is amended to read:
   35         627.072 Making and use of rates.—
   36         (1) As to workers’ compensation and employer’s liability
   37  insurance, the following factors must shall be used in the
   38  determination and fixing of rates:
   39         (a) The past loss experience and prospective loss
   40  experience within and outside this state;
   41         (b) The impact resulting from the past loss experience and
   42  prospective loss experience for insurers whose data are missing
   43  from statewide experience due to insolvency. Prior reported data
   44  for such insurers and all other relevant information may be used
   45  to assess the impact on rates;
   46         (c) The conflagration and catastrophe hazards;
   47         (d)(c) A reasonable margin for underwriting profit and
   48  contingencies;
   49         (e)(d) Dividends, savings, or unabsorbed premium deposits
   50  allowed or returned by insurers to their policyholders, members,
   51  or subscribers;
   52         (f)(e) Investment income on unearned premium reserves and
   53  loss reserves;
   54         (g)(f) Past expenses and prospective expenses, both those
   55  countrywide and those specifically applicable to this state; and
   56         (h)(g) All other relevant factors, including judgment
   57  factors, within and outside this state.
   58         Section 2. Paragraphs (c) and (f) through (i) of subsection
   59  (3) of section 631.57, Florida Statutes, are amended to read:
   60         631.57 Powers and duties of the association.—
   61         (3)
   62         (c) The Legislature finds and declares that all assessments
   63  paid by an insurer or insurer group as a result of a levy by the
   64  office, including assessments levied pursuant to paragraph (a)
   65  and emergency assessments levied pursuant to paragraph (e),
   66  constitute advances of funds from the insurer to the
   67  association. An insurer may fully recoup such advances by
   68  applying the uniform assessment percentage levied by the office
   69  to all policies of the same kind or line as were considered by
   70  the office in determining the assessment liability of the
   71  insurer or insurer group as set forth in paragraph (f). An
   72  insurer remitting an assessment to the association as required
   73  by subparagraph (f)1. or subparagraph (f)2. may elect not to
   74  recoup advances.
   75         1. Assessments levied under subparagraph (f)1. are paid
   76  before policy surcharges are collected and result in a
   77  receivable for policy surcharges collected in the future. This
   78  amount, to the extent it is likely that it will be realized,
   79  meets the definition of an admissible asset as specified in the
   80  National Association of Insurance Commissioners’ Statement of
   81  Statutory Accounting Principles No. 4. The asset must shall be
   82  established and recorded separately from the liability
   83  regardless of whether it is based on a retrospective or
   84  prospective premium-based assessment. If an insurer is unable to
   85  fully recoup the amount of the assessment because of a reduction
   86  in writings or withdrawal from the market, the amount recorded
   87  as an asset must shall be reduced to the amount reasonably
   88  expected to be recouped.
   89         2. Assessments levied under subparagraph (f)2. are paid
   90  after policy surcharges are collected so that the recognition of
   91  assets is based on actual premium written offset by the
   92  obligation to the association.
   93         (f)1. The association, office, and insurers remitting
   94  assessments pursuant to paragraph (a) or paragraph (e) must
   95  comply with the following:
   96         a. In the order levying an assessment, the office shall
   97  specify the actual percentage amount to be advanced to the
   98  association and thereafter collected uniformly from all the
   99  policyholders of insurers subject to the assessment and the date
  100  on which the assessment year begins, which may not begin before
  101  90 days after the association board certifies such an
  102  assessment.
  103         b. Insurers shall make an initial payment to the
  104  association before the beginning of the assessment year on or
  105  before the date specified in the order of the office. Each
  106  insurer shall have at least 30 days’ written notice as to the
  107  date on which the initial assessment payment is due and payable.
  108  The association may request that the order issued by the office
  109  authorize insurers to remit the advance payments in four
  110  quarterly installments throughout the assessment year.
  111         c. Insurers that have written insurance in the calendar
  112  year before the year in which the assessment is certified by the
  113  board shall make payments an initial payment based on the direct
  114  written premium in this state for the classes protected by the
  115  account from the previous calendar year as set forth in the
  116  insurer’s annual statement, multiplied by the uniform percentage
  117  of premium specified in the order issued by the office. Insurers
  118  that have not written insurance in the previous calendar year in
  119  any of the lines under the account which are being assessed, but
  120  which are writing insurance as of, or after, the date the board
  121  certifies the assessment to the office, shall pay an amount
  122  based on a good faith estimate of the amount of direct written
  123  premium anticipated to be written in the subject lines of
  124  business for the assessment year, multiplied by the uniform
  125  percentage of premium specified in the order issued by the
  126  office.
  127         d. Insurers shall file one or more a reconciliation reports
  128  report with the association which indicate indicates the amount
  129  of the initial payment to the association before the assessment
  130  year, whether such amount was based on direct written premium
  131  contained in a previous calendar year annual statement or a good
  132  faith projection, the amount actually collected during the
  133  assessment year, and such other information contained on a form
  134  and schedule adopted by the association and provided to the
  135  insurers in advance. If the insurer collected from policyholders
  136  more surcharges than the amount initially paid, the insurer
  137  shall pay the excess amount to the association. If the insurer
  138  collected surcharges from policyholders in an amount that which
  139  is less than the amount initially paid to the association, the
  140  association shall credit the insurer that amount against future
  141  assessments. Such payment reconciliation report, and any payment
  142  of excess amounts collected from policyholders, shall be
  143  completed and remitted to the association within 90 days after
  144  the end of the assessment year. The association shall send a
  145  final reconciliation report on all insurers to the office within
  146  120 days after each assessment year.
  147         e. Insurers remitting reconciliation reports under this
  148  paragraph to the association are subject to s. 626.9541(1)(e).
  149         2. For assessments required under paragraph (a) or
  150  paragraph (e), the association may use a quarterly installment
  151  method instead of the method described in sub-subparagraphs 1.b.
  152  and c. or in combination thereof based on the association’s
  153  projected cash flow. If the association projects that it has
  154  cash on hand for the payment of anticipated claims in the
  155  applicable account for at least 6 months, the board may make an
  156  estimate of the assessment needed and may recommend to the
  157  office the assessment percentage that may be collected as a
  158  quarterly assessment. The office may, in the order levying the
  159  assessment on insurers, specify that the assessment is due and
  160  payable quarterly as the funds are collected from insureds
  161  throughout the assessment year, in which case the assessment
  162  shall be a uniform percentage of premium collected during the
  163  assessment year and shall be collected from all policyholders
  164  with policies in the classes protected by the account. All
  165  insurers shall collect the assessment without regard to whether
  166  the insurers reported premium in the year preceding the
  167  assessment. Insurers are not required to advance funds if the
  168  association and the office elect to use the quarterly
  169  installment option. All funds collected shall be retained by the
  170  association for the payment of current or future claims. This
  171  subparagraph does not alter the obligation of an insurer to
  172  remit assessments levied pursuant to this subsection to the
  173  association. Insurers shall file one or more reconciliation
  174  reports with the association which indicate the amount actually
  175  collected during the assessment year and such other information
  176  using a form and schedule adopted by the association and
  177  provided to the insurers in advance.
  178         (g) Insurers shall treat the failure of an insured to pay a
  179  surcharge recoupment charge as a failure to pay the premium.
  180         (h) Assessments levied under this subsection are levied
  181  upon insurers. This subsection does not create a cause of action
  182  by a policyholder with respect to the levying of, or a
  183  policyholder’s duty to pay, such assessments and related
  184  surcharges.
  185         (i) Assessments levied under this subsection are not
  186  premium and are not subject to the premium tax, to any fees, or
  187  to any commissions. An insurer is liable for any surcharges
  188  emergency assessments that the insurer collects and shall treat
  189  the failure of an insured to pay an emergency assessment as a
  190  failure to pay the premium. An insurer is not liable for
  191  uncollectible surcharges emergency assessments.
  192         Section 3. Paragraphs (c) and (d) of subsection (1) and
  193  paragraph (c) of subsection (4) of section 631.914, Florida
  194  Statutes, are amended to read:
  195         631.914 Assessments.—
  196         (1)
  197         (c) The office shall levy the uniform surcharge percentage
  198  on all policies of the same kind or line as were considered by
  199  the office in determining the assessment liability of the
  200  insurer. Member insurers shall collect policy surcharges at a
  201  uniform percentage rate on new and renewal policies issued and
  202  effective during the assessment year period of 12 months
  203  beginning on January 1, April 1, July 1, or October 1, whichever
  204  is the first day of the following calendar quarter as specified
  205  in an order issued by the office. The policy surcharge may not
  206  begin until 90 days after the board of directors certifies the
  207  assessment.
  208         (d) The association may use a pass-through an installment
  209  method to require the insurer to remit the policy surcharge as
  210  collected or may require the insurer to remit the assessment to
  211  the association before collecting the policy surcharge.
  212         1. If the association elects to use the pass-through
  213  installment method, the office may, in the order levying the
  214  assessment on insurers, specify that the policy surcharge is due
  215  and payable quarterly as collected throughout the assessment
  216  year. Insurers shall collect policy surcharges at a uniform
  217  percentage rate specified by order as described in paragraph
  218  (c). Insurers are not required to advance funds if the
  219  association and the office elect to use the pass-through
  220  installment option. Assessments levied under this subparagraph
  221  are paid after policy surcharges are collected, and the
  222  recognition of assets is based on actual policy surcharges
  223  collected offset by the obligation to the association.
  224         2. If the association elects to require insurers to remit
  225  the assessment before surcharging the policy, the following
  226  shall apply:
  227         a. On or before the date specified in the order of the
  228  office, insurers shall make an initial advance payment to the
  229  association of the percentage specified in the order multiplied
  230  by the insurer’s direct written premiums received in this state
  231  for the preceding calendar year for the kinds of insurance
  232  included within such account before the beginning of the
  233  assessment year. The board may authorize an insurer to pay an
  234  assessment in a single payment or on a quarterly basis, based on
  235  cash-flow needs.
  236         b. The levy order shall provide each insurer so assessed at
  237  least 30 days’ written notice of the date the initial assessment
  238  payment is due and payable by the insurer.
  239         c. Insurers shall collect policy surcharges at a uniform
  240  percentage rate specified by the order, as described in
  241  paragraph (c).
  242         d. Assessments levied under this subparagraph and paid by
  243  an insurer constitute advances of funds from the insurer to the
  244  association and result in a receivable for policy surcharges to
  245  be billed in the future. The amount of billed policy surcharges,
  246  to the extent it is likely that it will be realized, meets the
  247  definition of an admissible asset as specified in the National
  248  Association of Insurance Commissioners’ Statement of Statutory
  249  Accounting Principles No. 4. The asset shall be established and
  250  recorded separately from the liability. If an insurer is unable
  251  to fully recoup the amount of the assessment, the amount
  252  recorded as an asset shall be reduced to the amount reasonably
  253  expected to be recouped.
  254         3. Insurers must submit a reconciliation report to the
  255  association within 120 days after the end of the 12-month
  256  assessment year period and annually thereafter for a period of 2
  257  3 years. The report must indicate the amount of the initial
  258  payment or installment payments made to the association and the
  259  amount of policy surcharges collected for the assessment year.
  260  If the insurer’s reconciled obligation is more than the amount
  261  paid to the association, the insurer shall pay the excess policy
  262  surcharges collected to the association. If the insurer’s
  263  reconciled obligation is less than the initial amount paid to
  264  the association, the association shall return the overpayment to
  265  the insurer.
  266         (4)
  267         (c) The board may allow an insurer to pay an assessment on
  268  a quarterly basis.
  269         Section 4. This act shall take effect July 1, 2022.