Bill Text: FL S0870 | 2014 | Regular Session | Comm Sub
Bill Title: Insurance
Spectrum: Slight Partisan Bill (? 2-1)
Status: (Failed) 2014-04-24 - Laid on Table [S0870 Detail]
Download: Florida-2014-S0870-Comm_Sub.html
Florida Senate - 2014 CS for CS for SB 870 By the Committees on Rules; and Judiciary; and Senator Smith 595-04447-14 2014870c2 1 A bill to be entitled 2 An act relating to insurance; amending s. 624.425, 3 F.S.; providing that the absence of a countersignature 4 does not affect the validity of a policy or contract; 5 amending s. 627.7311, F.S.; providing that a county 6 may enact and enforce ordinances applicable to certain 7 health care clinics; amending s. 627.902, F.S.; 8 providing that premium financing does not apply to 9 installment payment arrangements that do not involve 10 the advancement of funds; amending s. 627.94072, F.S.; 11 providing an alternative form of a nonforfeiture 12 provision for long-term care insurance; amending s. 13 629.271, F.S.; authorizing reciprocal insurers to 14 return a portion of unassigned funds to their 15 subscribers; amending s. 631.54, F.S.; defining the 16 term “assessment year”; amending s. 631.57, F.S.; 17 revising provisions relating to the levy of 18 assessments on insurers by the Florida Insurance 19 Guaranty Association; specifying the conditions under 20 which such assessments are paid; revising procedures 21 and timeframes for the levying of the assessments; 22 deleting the requirement that insurers file a final 23 accounting report documenting the recoupment; revising 24 an exemption for assessments; amending s. 631.64, 25 F.S.; requiring charges or recoupments to be displayed 26 separately on premium statements to policyholders and 27 prohibiting their inclusion in rates; amending ss. 28 627.727 and 631.55, F.S.; conforming cross-references; 29 providing an effective date. 30 31 Be It Enacted by the Legislature of the State of Florida: 32 33 Section 1. Subsection (1) of section 624.425, Florida 34 Statutes, is amended to read: 35 624.425 Agent countersignature required, property, 36 casualty, surety insurance.— 37 (1) Except as stated in s. 624.426, no authorized property, 38 casualty, or surety insurer shall assume direct liability as to 39 a subject of insurance resident, located, or to be performed in 40 this state unless the policy or contract of insurance is issued 41 by or through, and is countersigned by, an agent who is 42 regularly commissioned and licensed currently as an agent and 43 appointed as an agent for the insurer under this code. However, 44 the absence of a countersignature does not affect the validity 45 of the policy or contract. If two or more authorized insurers 46 issue a single policy of insurance against legal liability for 47 loss or damage to person or property caused by athenuclear 48 energy hazard, or a single policy insuring against loss or 49 damage to property by radioactive contamination, whether or not 50 also insuring against one or more other perils that may be 51 insuredproper to insureagainst in this state, such policy if 52 otherwise lawful may be countersigned on behalf of all of the 53 insurers by a licensed and appointed agent of theanyinsurer 54 appearing thereon. The producing agent shall receive on each 55 policy or contract the full and usual commission allowed and 56 paid by the insurer to its agents on business written or 57 transacted by them for the insurer. 58 Section 2. Section 627.7311, Florida Statutes, is amended 59 to read: 60 627.7311 Effect of lawon personal injury protection61policies.— 62 (1) The provisions and procedures authorized in ss. 63 627.730-627.7405 shall be implemented by insurers offering 64 policies pursuant to the Florida Motor Vehicle No-Fault Law. The 65 Legislature intends that these provisions and procedures have 66 full force and effect regardless of their express inclusion in 67 an insurance policy form, and a specific provision or procedure 68 authorized in ss. 627.730-627.7405 shall control over general 69 provisions in an insurance policy form. An insurer is not 70 required to amend its policy form or to expressly notify 71 providers, claimants, or insureds in order to implement and 72 apply such provisions or procedures. 73 (2) Sections 627.730-627.7405 do not preclude a county from 74 enacting and enforcing an ordinance applicable to health care 75 clinics that receive reimbursement under the Florida Motor 76 Vehicle No-Fault Law. 77 Section 3. Subsection (2) of section 627.902, Florida 78 Statutes, is amended to read: 79 627.902 Premium financing by an insurer or subsidiary.— 80 (2)Nothing inThis part orinpart XV of this chapter does 81 not disallowdisallowsor otherwise applyappliesto: 82 (a) Installment payment arrangements offered by an insurer 83 if such arrangements do not involve the advancement of funds 84 which would constitute financing and exceed the service charges 85 provided in 627.901; or 86 (b) A discount for ananyinsured who pays the entire 87 premium for the entire policy term at the inception of the term 88 if the discount is found to be actuarially justified by the 89 office and approved by the office pursuant tothe provisions of90 part I of this chapter. Such actuarially justified and approved 91 discount mayshallnot be deemed a component of or related to 92 premium financing. 93 Section 4. Subsection (2) of section 627.94072, Florida 94 Statutes, is amended to read: 95 627.94072 Mandatory offers.— 96 (2) An insurer that offers a long-term care insurance 97 policy, certificate, or rider in this state shallmustoffer a 98 nonforfeiture protection provision providing reduced paid-up 99 insurance, extended term, shortened benefit period, oranyother 100 benefitbenefitsapproved by the office if all or part of a 101 premium is not paid. A nonforfeiture provision may also be 102 offered in the form of a return of premium on the death of the 103 insured, or on the complete surrender or cancellation of the 104 policy or contract. Nonforfeiture benefits and any additional 105 premium for such benefits must be computed in an actuarially 106 sound manner,using a methodology that has been filed with and 107 approved by the office. 108 Section 5. Section 629.271, Florida Statutes, is amended to 109 read: 110 629.271 Distribution of savings.— 111 (1) A reciprocal insurer mayfrom time to timereturn to 112 its subscribers any unused premiums, savings, or credits 113 accruing to their accounts.AnySuch distribution mayshallnot 114 unfairly discriminate between classes of risks, or policies, or 115 between subscribers, butsuch distributionmay vary as to 116 classes of subscribers based onuponthe experience of such 117 classes. 118 (2) In addition to the option provided in subsection (1), a 119 domestic reciprocal insurer may, upon the prior written approval 120 of the office, pay to its subscribers a portion of unassigned 121 funds of up to 10 percent of surplus with distribution limited 122 to 50 percent of net income from the previous calendar year. 123 Such distribution may not unfairly discriminate between classes 124 of risks, or policies, or between subscribers, but may vary as 125 to classes of subscribers based on the experience of such 126 classes. 127 Section 6. Subsections (2) through (9) of section 631.54, 128 Florida Statutes, are renumbered as subsections (3) through 129 (10), respectively, and a new subsection (2) is added to that 130 section to read: 131 631.54 Definitions.—As used in this part, the term: 132 (2) “Assessment year” means the 12-month period, which may 133 begin on the first day of any calendar quarter, whether January 134 1, April 1, July 1, or October 1, as specified in an order 135 issued by the office directing insurers to pay an assessment to 136 the association. Upon entry of the order, insurers may begin 137 collecting assessments from policyholders for the assessment 138 year. 139 Section 7. Subsections (3) and (4) of section 631.57, 140 Florida Statutes, are amended to read: 141 631.57 Powers and duties of the association.— 142 (3)(a) To the extent necessary to securethefunds for the 143 respective accounts for the payment of covered claims, to pay 144 the reasonable costs to administer such accountsthe same, and 145to the extent necessaryto securethefunds for the account 146 specified in s. 631.55(2)(b) or to retire indebtedness, 147 including, without limitation, the principal, redemption 148 premium, if any, and interest on, and related costs of issuance 149 of, bonds issued under s. 631.695 and the funding ofany150 reserves and other payments required under the bond resolution 151 or trust indenture pursuant to which such bonds have been 152 issued, the office, upon certification of the board of 153 directors, shall levy assessments initially estimated in the 154 proportion that each insurer’s net direct written premiums in 155 this state in the classes protected by the account bears to the 156 total of said net direct written premiums received in this state 157 by all such insurers for the preceding calendar year for the 158 kinds of insurance included within such account. Assessments 159 shall be remitted to and administered by the board of directors 160 in the manner specified by the approved plan and paragraph (f). 161 Each insurer so assessed shall have at least 30 days’ written 162 notice as to the date the initial assessment payment is due and 163 payable. Every assessment shall bemade asa uniform percentage 164 applicable to the net direct written premiums of each insurer in 165 the kinds of insurance included within the account in which the 166 assessment is made. The assessments levied against any insurer 167 mayshallnot exceed in any one year more than 2 percent of that 168 insurer’s net direct written premiums in this state for the 169 kinds of insurance included within such account during the 170 calendar year next preceding the date of such assessments. 171 (b) If sufficient funds from such assessments, together 172 with funds previously raised, are not available in any one year 173 in the respective account to make all the payments or 174 reimbursements then owing to insurers, the funds available shall 175 be prorated and the unpaid portionshall bepaid as soon 176thereafteras funds become available. 177 (c) The Legislature finds and declares that all assessments 178 paid by an insurer or insurer group as a result of a levy by the 179 office, including assessments levied pursuant to paragraph (a) 180 and emergency assessments levied pursuant to paragraph (e), 181 constitute advances of funds from the insurer to the 182 association. An insurer may fully recoup such advances by 183 applying the uniform assessment percentage levied by the office 184 to alla separate recoupment factor to the premium ofpolicies 185 of the same kind or line as were considered by the office in 186 determining the assessment liability of the insurer or insurer 187 group as set forth in paragraph (f). 188 1. Assessments levied under subparagraph (f)1. are paid 189 before policy surcharges are collected and result in a 190 receivable for policy surcharges collected in the future. This 191 amount, to the extent it is likely that it will be realized, 192 meets the definition of an admissible asset as specified in the 193 National Association of Insurance Commissioners’ Statement of 194 Statutory Accounting Principles No. 4. The asset shall be 195 established and recorded separately from the liability 196 regardless of whether it is based on a retrospective or 197 prospective premium-based assessment. If an insurer is unable to 198 fully recoup the amount of the assessment because of a reduction 199 in writings or withdrawal from the market, the amount recorded 200 as an asset shall be reduced to the amount reasonably expected 201 to be recouped. 202 2. Assessments levied under subparagraph (f)2. are paid 203 after policy surcharges are collected so that the recognition of 204 assets is based on actual premium written offset by the 205 obligation to the association. 206 (d)NoState funds may notof any kind shallbe allocated 207 or paid to thesaidassociation or any of its accounts. 208 (e)1.a.In addition to assessmentsotherwiseauthorized in 209 paragraph (a), and to the extent necessary to secure the funds 210 for the account specified in s. 631.55(2)(b) for the direct 211 payment of covered claims of insurers rendered insolvent by the 212 effects of a hurricane and to pay the reasonable costs to 213 administer such claims, or to retire indebtedness, including, 214 without limitation, the principal, redemption premium, if any, 215 and interest on, and related costs of issuance of, bonds issued 216 under s. 631.695 and the funding of any reserves and other 217 payments required under the bond resolution or trust indenture 218 pursuant to which such bonds have been issued, the office, upon 219 certification of the board of directors, shall levy emergency 220 assessments upon insurers holding a certificate of authority. 221 The emergency assessments payable under this paragraph by any 222 insurer mayshallnot exceed in any single year more than 2 223 percent of that insurer’s direct written premiums, net of 224 refunds, in this state during the preceding calendar year for 225 the kinds of insurance within the account specified in s. 226 631.55(2)(b). 227 2.b.AnyEmergency assessments authorized under this 228 paragraph shall be levied by the office upon insurers referred 229 to in subparagraph 1.sub-subparagraph a., upon certification as 230 to the need for such assessments by the board of directors. If 231In the eventthe boardof directorsparticipates in the issuance 232 of bonds in accordance with s. 631.695, emergency assessments 233 shall be levied in each year that bonds issued under s. 631.695 234 and secured by such emergency assessments are outstanding,in 235suchamounts up to such 2 percent2-percentlimit as required in 236 order to provide for the full and timely payment of the 237 principal of, redemption premium, if any, and interest on, and 238 related costs of issuance of, such bonds. The emergency 239 assessmentsprovided for in this paragraphare assigned and 240 pledged to the municipality, county, or legal entity issuing 241 bonds under s. 631.695 for the benefit of the holders of such 242 bonds,in orderto enable such municipality, county, or legal243entityto provide for the payment of the principal of, 244 redemption premium, if any, and interest on such bonds, the cost 245 of issuance of such bonds, and the funding of any reserves and 246 other payments required under the bond resolution or trust 247 indenture pursuant to which such bonds have been issued, without 248the necessity of anyfurther action by the association, the 249 office, or any other party. IfTo the extentbonds are issued 250 under s. 631.695 and the association determines to secure such 251 bonds by a pledge of revenues received from the emergency 252 assessments, such bonds, upon such pledge of revenues, shall be 253 secured by and payable from the proceeds of such emergency 254 assessments, and the proceeds of emergency assessments levied 255 under this paragraph shall be remitted directly to and 256 administered by the trustee or custodian appointed for such 257 bonds. 258 3.c.Emergency assessments used to defease bonds issued 259 under this partparagraphmay be payable in a single payment or, 260 at the option of the association, may be payable in 12 monthly 261 installments with the first installment being due and payable at 262 the end of the month after an emergency assessment is levied and 263 subsequent installments being due bynot later thanthe end of 264 each succeeding month. 265 4.d.If emergency assessments are imposed, the report 266 required by s. 631.695(7) mustshallinclude an analysis of the 267 revenues generated from the emergency assessments imposed under 268 this paragraph. 269 5.e.If emergency assessments are imposed, the references 270 in sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to 271 assessments levied under paragraph (a) mustshallinclude 272 emergency assessments imposed under this paragraph. 273 6.2.If the board of directors participates in the issuance 274 of bonds in accordance with s. 631.695, an annual assessment 275 under this paragraph shall continue while the bonds issued with 276 respect to which the assessment was imposed are outstanding, 277 including any bonds the proceeds of which were used to refund 278 bonds issued pursuant to s. 631.695, unless adequate provision 279 has been made for the payment of the bonds in the documents 280 authorizing the issuance of such bonds. 281 7.3.Emergency assessments under this paragraph are not 282 premium and are not subject to the premium tax, to any fees, or 283 to any commissions. An insurer is liable for all emergency 284 assessments that the insurer collects and shall treat the 285 failure of an insured to pay an emergency assessment as a 286 failure to pay the premium. An insurer is not liable for 287 uncollectible emergency assessments. 288 (f)The recoupment factor applied to policies in accordance289with paragraph (c) shall be selected by the insurer or insurer290group so as to provide for the probable recoupment of both291assessments levied pursuant to paragraph (a) and emergency292assessments over a period of 12 months, unless the insurer or293insurer group, at its option, elects to recoup the assessment294over a longer period. The recoupment factor shall apply to all295policies of the same kind or line as were considered by the296office in determining the assessment liability of the insurer or297insurer group issued or renewed during a 12-month period. If the298insurer or insurer group does not collect the full amount of the299assessment during one 12-month period, the insurer or insurer300group may apply recalculated recoupment factors to policies301issued or renewed during one or more succeeding 12-month302periods. If, at the end of a 12-month period, the insurer or303insurer group has collected from the combined kinds or lines of304policies subject to assessment more than the total amount of the305assessment paid by the insurer or insurer group, the excess306amount shall be disbursed as follows:307 1. The association, office, and insurers remitting 308 assessments pursuant to paragraph (a) or paragraph (e) must 309 comply with the following: 310 a. In the order levying an assessment, the office shall 311 specify the actual percentage amount to be collected uniformly 312 from all the policyholders of insurers subject to the assessment 313 and the date on which the assessment year begins, which may not 314 begin until 90 days after the association board certifies such 315 an assessment. 316 b. Insurers shall make an initial payment to the 317 association before the beginning of the assessment year on or 318 before the date specified in the order of the office. 319 c. Insurers that have written insurance in the calendar 320 year before the year in which the assessment is certified by the 321 board shall make an initial payment based on the net direct 322 written premium amount from the prior calendar year as set forth 323 in the insurers’ annual statements, multiplied by the uniform 324 percentage of premium specified in the order issued by the 325 office. Insurers that have not written insurance in the prior 326 calendar year in any of the lines under the account which are 327 being assessed, but that are writing insurance as of, or after, 328 the date the board certifies the assessment to the office, shall 329 pay an amount based on a good faith estimate of the amount of 330 net direct written premium anticipated to be written in the 331 subject lines of business for the assessment year, multiplied by 332 the uniform percentage of premium specified in the order issued 333 by the office. 334 d. Insurers shall file a reconciliation report with the 335 association within 45 days after the end of the assessment year 336 which indicates the amount of the initial payment to the 337 association before the assessment year, whether such amount was 338 based on net direct written premium contained in a prior 339 calendar year annual statement or a good faith projection, the 340 amount actually collected during the assessment year, and such 341 other information contained on a form adopted by the association 342 and provided to the insurers in advance. If the insurer 343 collected from policyholders more than the amount initially 344 paid, the insurer shall pay the excess amount to the 345 association. If the insurer collected from policyholders an 346 amount which is less than the amount initially paid to the 347 association, the association shall credit the insurer that 348 amount against future assessments. Such payment reconciliation 349 report, and any payment of excess amounts collected from 350 policyholders, shall be completed and remitted to the 351 association within 90 days after the end of the assessment year. 352 The association shall send a final reconciliation report on all 353 insurers to the office within 120 days after each assessment 354 year. 355 e. Insurers remitting reconciliation reports to the 356 association under this paragraph are subject to s. 357 626.9541(1)(e).If the excess amount does not exceed 15 percent358of the total assessment paid by the insurer or insurer group,359the excess amount shall be remitted to the association within 60360days after the end of the 12-month period in which the excess361recoupment charges were collected.362 2. The association may use a monthly installment method 363 instead of the method described in sub-subparagraphs 1.b. and c. 364 or in combination thereof based on the association’s projected 365 cash flow. If the association projects that it has cash on hand 366 for the payment of anticipated claims in the applicable account 367 for at least 6 months, the board may make an estimate of the 368 assessment needed and may recommend to the office the assessment 369 percentage that may be collected as a monthly assessment. The 370 office may, in the order levying the assessment on insurers, 371 specify that the assessment is due and payable monthly as the 372 funds are collected from insureds throughout the assessment 373 year, in which case the assessment shall be a uniform percentage 374 of premium collected during the assessment year and shall be 375 collected from all policyholders with policies in the classes 376 protected by the account. All insurers shall collect the 377 assessment without regard to whether the insurers reported 378 premium in the year preceding the assessment. Insurers are not 379 required to advance funds if the association and the office 380 elect to use the monthly installment option. All funds collected 381 shall be retained by the association for the payment of current 382 or future claims. This subparagraph does not alter the 383 obligation of an insurer to remit assessments levied pursuant to 384 this subsection to the association.If the excess amount exceeds38515 percent of the total assessment paid by the insurer or386insurer group, the excess amount shall be returned to the387insurer’s or insurer group’s current policyholders by refunds or388premium credits. The association shall use any remitted excess389recoupment amounts to reduce future assessments.390 (g) Amounts recouped pursuant to this subsection for 391 assessments levied under paragraph (a) due to insolvencies on or 392 after July 1, 2010, are considered premium solely for premium 393 tax purposes and are not subject to fees or commissions. 394 However, insurers shall treat the failure of an insured to pay a 395 recoupment charge as a failure to pay the premium. 396(h) At least 15 days before applying the recoupment factor397to any policies, the insurer or insurer group shall file with398the office a statement for informational purposes only setting399forth the amount of the recoupment factor and an explanation of400how the recoupment factor will be applied. Such statement shall401include documentation of the assessment paid by the insurer or402insurer group and the arithmetic calculations supporting the403recoupment factor. The insurer or insurer group may use the404recoupment factor at any time after the expiration of the 15-day405period. The insurer or insurer group need submit only one406informational statement for all lines of business using the same407recoupment factor.408(i)No later than 90 days after the insurer or insurer409group has completed the recoupment process, the insurer or410insurer group shall file with the office, for information411purposes only, a final accounting report documenting the412recoupment. The report shall provide the amounts of assessments413paid by the insurer or insurer group, the amounts and414percentages recouped by year from each affected line of415business, and the direct written premium subject to recoupment416by year. The insurer or insurer group need submit only one417report for all lines of business using the same recoupment418factor.419 (h) Assessments levied under this subsection are levied 420 upon insurers. This subsection does not create a cause of action 421 by a policyholder with respect to the levying of, or a 422 policyholder’s duty to pay, such assessments. 423 (4) The officedepartmentmay exempt or temporarily defer 424 any insurer from any regular or emergency assessment if the 425 office finds that the insurer is impaired or insolvent or if an 426 assessment would result in such insurer’s financial statement 427 reflecting an amount of capital or surplus less than the sum of 428 the minimum amount required by any jurisdiction in which the 429 insurer is authorized to transact insurance. 430 Section 8. Section 631.64, Florida Statutes, is amended to 431 read: 432 631.64 Recognition of assessmentsin rates.—Charges or 433 recoupments shall be separately displayed on premium statements 434 to enable policyholders to determine the amount charged for 435 association assessments but may not be included in rates filed 436 and approved by the office.The rates and premiums charged for437insurance policies to which this part applies may include438amounts sufficient to recoup a sum equal to the amounts paid to439the association by the member insurer less any amounts returned440to the member insurer by the association, and such rates shall441not be deemed excessive because they contain an amount442reasonably calculated to recoup assessments paid by the member443insurer.444 Section 9. Subsection (5) of section 627.727, Florida 445 Statutes, is amended to read: 446 627.727 Motor vehicle insurance; uninsured and underinsured 447 vehicle coverage; insolvent insurer protection.— 448 (5) Any person having a claim against an insolvent insurer 449 as defined in s. 631.54(6)underthe provisions ofthis section 450 shall present such claim for payment to the Florida Insurance 451 Guaranty Association only. In the event of a payment to aany452 person in settlement of a claim arising underthe provisions of453 this section, the association is not subrogated or entitled to 454anyrecovery against the claimant’s insurer. The association, 455 however, has the rights of recovery as set forth in chapter 631 456 in the proceeds recoverable from the assets of the insolvent 457 insurer. 458 Section 10. Subsection (1) of section 631.55, Florida 459 Statutes, is amended to read: 460 631.55 Creation of the association.— 461 (1) There is created a nonprofit corporation to be known as 462 the “Florida Insurance Guaranty Association, Incorporated.” All 463 insurers defined as member insurers in s. 631.54(7)shall be 464 members of the association as a condition of their authority to 465 transact insurance in this state, and, further, as a condition 466 of such authority, an insurer mustshallagree to reimburse the 467 association for all claim payments the association makes on the 468saidinsurer’s behalf if such insurer is subsequently 469 rehabilitated. The association shall perform its functions under 470 a plan of operation established and approved under s. 631.58 and 471 shall exercise its powers through a board of directors 472 established under s. 631.56. The corporation shall have all 473 those powers granted or permitted nonprofit corporations, as 474 provided in chapter 617. 475 Section 11. This act shall take effect July 1, 2014.