Bill Text: FL S0346 | 2014 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Florida Insurance Guaranty Association
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Failed) 2014-05-02 - Died in Commerce and Tourism [S0346 Detail]
Download: Florida-2014-S0346-Introduced.html
Bill Title: Florida Insurance Guaranty Association
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Failed) 2014-05-02 - Died in Commerce and Tourism [S0346 Detail]
Download: Florida-2014-S0346-Introduced.html
Florida Senate - 2014 SB 346 By Senator Lee 24-00322-14 2014346__ 1 A bill to be entitled 2 An act relating to the Florida Insurance Guaranty 3 Association; amending s. 631.57, F.S.; revising the 4 duties of the association; authorizing the association 5 to collect regular and emergency assessments directly 6 from policyholders; clarifying that assessments are 7 not considered premium for premium tax purposes; 8 making technical and grammatical corrections; 9 providing an effective date. 10 11 Be It Enacted by the Legislature of the State of Florida: 12 13 Section 1. Subsections (2) and (3) of section 631.57, 14 Florida Statutes, are reordered and amended to read: 15 631.57 Powers and duties of the association.— 16 (2) The association may: 17 (a) Employ or retain such persons as are necessary to 18 handle claims and perform other duties of the association; 19 (b) Borrow funds necessary to effect the purposes of this 20 part in accord with the plan of operation, including borrowing 21 funds necessary to ensure that its cash flow needs are timely 22 met to pay covered claims when regular and emergency assessments 23 are levied on policyholders under subsection (3); 24 (c) Sue or be sued, provided that service of process is 25shall bemade upon the person registered with the department as 26 agent for the receipt of service of process; and 27 (d) Negotiate and become a party to such contracts as are 28 necessary to carry out the purpose of this part.Additionally,29 The association may also enter into such contracts with a 30 municipality, a county, or a legal entity created pursuant to s. 31 163.01(7)(g)as are necessaryin order for the municipality, 32 county, or legal entity to issue bonds under s. 631.695. In 33 connection with the issuance ofanysuch bonds and the entering 34 into ofanysuchnecessarycontracts, the association may agree 35 to such terms and conditions as the association deems necessary 36 and proper. 37 (3)(a) To the extent necessary to securethefunds for the 38 respective accounts paying forthe payment ofcovered claims, to 39 pay the reasonable costs to administer such accountsthe same, 40 andto the extent necessaryto securethefunds for the account 41 specified in s. 631.55(2)(b) or to retire indebtedness, 42 including, without limitation, the principal, redemption 43 premium, if any, and interest on, and related costs of issuance 44 of, bonds issued under s. 631.695 and the funding of any 45 reserves and other payments required under the bond resolution 46 or trust indenture pursuant to which such bonds have been 47 issued, the office, upon certification of the board of 48 directors, shall levy regular assessments directly upon 49 policyholders, which shall be collected by insurers holding a 50 certificate of authority. 51 1. The office shall issue an order specifying the date that 52 the board requires such insurers to begin collecting the 53 assessment, which must be at least 90 days after the date that 54 the board certifies the assessment. 55 2. The order must specify a uniform percentage of the 56 direct written premium for all lines of business in the 57 applicable accounts, which may not exceed 2 percent of the 58 premium in any one year. Such percentage shall be determined by 59 the board and verified by the office. 60 3. The insurers shall collect such assessments without 61 being affected by any credit, limitation, exemption, or 62 deferment. 63 4. Assessments collected by insurers shall be transferred 64 regularly to the association as set forth in the order levying 65 the assessmentin the proportion that each insurer’s net direct66written premiums in this state in the classes protected by the67account bears to the total of said net direct written premiums68received in this state by all such insurers for the preceding69calendar year for the kinds of insurance included within such70account.Assessments shall be remitted to and administered by71the board of directors in the manner specified by the approved72plan. Each insurer so assessed shall have at least 30 days’73written notice as to the date the assessment is due and payable.74Every assessment shall be made as a uniform percentage75applicable to the net direct written premiums of each insurer in76the kinds of insurance included within the account in which the77assessment is made. The assessments levied against any insurer78shall not exceed in any one year more than 2 percent of that79insurer’s net direct written premiums in this state for the80kinds of insurance included within such account during the81calendar year next preceding the date of such assessments.82 (f)(b)If sufficient funds from regular and emergencysuch83 assessments, together with funds previously raised, are not 84 available in any one year in the respective account to make all 85 the payments or reimbursements then owing to insurers, the funds 86 available shall be prorated and the unpaid portionshall bepaid 87 as soonthereafteras funds become available. 88(c) The Legislature finds and declares that all assessments89paid by an insurer or insurer group as a result of a levy by the90office, including assessments levied pursuant to paragraph (a)91and emergency assessments, constitute advances of funds from the92insurer to the association. An insurer may fully recoup such93advances by applying a separate recoupment factor to the premium94of policies of the same kind or line as were considered by the95office in determining the assessment liability of the insurer or96insurer group.97 (e)(d)NoState funds may notof any kind shallbe 98 allocated or paid to thesaidassociation or any of its 99 accounts. 100 (b)(e)1.a.In addition to regular assessmentsotherwise101 authorized underinparagraph (a), and to the extent necessary 102 to securethefunds for the account specified in s. 631.55(2)(b) 103 for the direct payment of covered claims of insurers rendered 104 insolvent by the effects of a hurricane and to pay the 105 reasonable costs to administer such claims, or to retire 106 indebtedness, including, without limitation, the principal, 107 redemption premium, if any, and interest on, and related costs 108 of issuance of, bonds issued under s. 631.695 and the funding of 109 any reserves and other payments required under the bond 110 resolution or trust indenture pursuant to which such bonds have 111 been issued, the office, upon certification of the board of112directors,shall levy emergency assessments directly upon 113 policyholders, which shall be collected by insurers holding a 114 certificate of authority. 115 1. The office shall issue an order specifying the date on 116 which the board will require such insurers to begin collecting 117 the assessment, which must be at least 90 days after the date on 118 which the board certifies the assessment. The order must specify 119 a uniform percentage of the direct written premium for all lines 120 of business in the applicable accounts, which may not exceed 2 121 percent of the premium in any one year. Such percentage shall be 122 determined by the board and verified by the office. The insurers 123 shall collect such assessments without being affected by any 124 credit, limitation, exemption, or deferment. Assessments 125 collected shall be transferred regularly to the association as 126 specified in the order levying the assessmentThe emergency127assessments payable under this paragraph by any insurer shall128not exceed in any single year more than 2 percent of that129insurer’s direct written premiums, net of refunds, in this state130during the preceding calendar year for the kinds of insurance131within the account specified in s. 631.55(2)(b). 132 2.b.AnyEmergency assessmentsauthorized under this133paragraphshall be levied by the office onlyupon insurers134referred to in sub-subparagraph a.,upon certification as to the 135 need for such assessments by the board of directors. IfIn the136eventthe boardof directorsparticipates in the issuance of 137 bonds in accordance with s. 631.695, emergency assessments shall 138 be levied in each year that bonds issued under s. 631.695 and 139 secured by such emergency assessments are outstanding,insuch140 amounts up to such 2-percent limit as required in order to 141 provide for the full and timely payment of the principal of, 142 redemption premium, if any, and interest on, and related costs 143 of issuance of, such bonds. The emergency assessmentsprovided144for in this paragraphare assigned and pledged to the 145 municipality, county, or legal entity issuing bonds under s. 146 631.695 for the benefit of the holders of such bonds,in order147to enable such municipality, county, or legal entityto provide 148 for the payment of the principal of, redemption premium, if any, 149 and interest on such bonds, the cost of issuance of such bonds, 150 and the funding of any reserves and other payments required 151 under the bond resolution or trust indenture pursuant to which 152 such bonds have been issued, withoutthe necessityofany153 further action by the association, the office, or any other 154 party. IfTo the extentbonds are issued under s. 631.695 and 155 the association securesdetermines to securesuch bonds by a 156 pledge of revenues received from the emergency assessments,such157bonds, upon such pledge of revenues, shall be secured by and158payable from the proceeds of such emergency assessments, andthe 159 proceeds of emergency assessments levied under this paragraph 160 shall be remitted directly to and administered by the trustee or 161 custodian appointed for the payment of such bonds. 162c. Emergency assessments under this paragraph may be163payable in a single payment or, at the option of the164association, may be payable in 12 monthly installments with the165first installment being due and payable at the end of the month166after an emergency assessment is levied and subsequent167installments being due not later than the end of each succeeding168month.169 3.d.If emergency assessments are imposed, the report 170 required underbys. 631.695(7) mustshallinclude an analysis 171 of the revenues generated from the emergency assessments imposed 172 under this paragraph. 173 4.e.If emergency assessments are imposed, the references 174 in sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to 175 regular assessments levied under paragraph (a) mustshall176 include emergency assessments imposed under this paragraph. 177 5.2.If the board of directors participates in the issuance 178 of bonds in accordance with s. 631.695, an emergencyannual179 assessment under this paragraph mustshallcontinue while the 180 bonds issued with respect to which the assessment was imposed 181 are outstanding, including any bonds the proceeds of which were 182 used to refund bonds issued pursuant to s. 631.695, unless 183 adequate provision has been made for the payment of the bonds in 184 the documents authorizing the issuance of such bonds. 185 (c)3.EmergencyAssessments under this subsectionparagraph186 are not premium and are not subject to the premium tax, to any 187 fees, or to any commissions. An insurer is liable for all 188emergencyassessments that the insurer collects and shall treat 189 the failure of an insured to pay anemergencyassessment as a 190 failure to pay the premium. An insurer is not liable for 191 uncollectibleemergencyassessments. 192 (d)(f)The recoupment factor applied to policies in 193 accordance with paragraph (a) or paragraph (b)(c)shall be 194 selected by the board and verified by the officeinsurer or195insurer group so as to provide for the probable recoupment of196both assessments levied pursuant to paragraph (a) and emergency197assessments over a period of 12 months, unless the insurer or198insurer group, at its option, elects to recoup the assessment199over a longer period. The recoupment factor appliesshall apply200 to all policies of the same kind or line as were considered by 201 the office in determining the assessment liabilityof the202insurer or insurer group issued or renewed during a 12-month203period. 204 1. If the recoupment factorinsurer or insurer groupdoes 205 not collect the full amount neededof the assessmentduring one 206 12-month period, the boardinsurer or insurer groupmay apply 207 recalculated recoupment factors to policies issued or renewed 208 during one or more succeeding 12-month periods. 209 2. If, at the end of a 12-month period, the association 210insurer or insurer grouphas collected from the combined kinds 211 or lines of policies subject to assessment more than the total 212 amount of the assessment needed,paid by the insurer or insurer213group, the excess amount shall be disbursed as follows:2141. If the excess amount does not exceed 15 percent of the215total assessment paid by the insurer or insurer group, the216excess amount shall be remitted to the association within 60217days after the end of the 12-month period in which the excess218recoupment charges were collected.2192. If the excess amount exceeds 15 percent of the total220assessment paid by the insurer or insurer group, the excess221amount shall be returned to the insurer’s or insurer group’s222current policyholders by refunds or premium credits.the 223 association shall use any remitted excess recoupment amounts to 224 reduce future assessments. 225(g) Amounts recouped pursuant to this subsection for226assessments levied under paragraph (a) due to insolvencies on or227after July 1, 2010, are considered premium solely for premium228tax purposes and are not subject to fees or commissions.229However, insurers shall treat the failure of an insured to pay a230recoupment charge as a failure to pay the premium.231(h) At least 15 days before applying the recoupment factor232to any policies, the insurer or insurer group shall file with233the office a statement for informational purposes only setting234forth the amount of the recoupment factor and an explanation of235how the recoupment factor will be applied. Such statement shall236include documentation of the assessment paid by the insurer or237insurer group and the arithmetic calculations supporting the238recoupment factor. The insurer or insurer group may use the239recoupment factor at any time after the expiration of the 15-day240period. The insurer or insurer group need submit only one241informational statement for all lines of business using the same242recoupment factor.243(i) No later than 90 days after the insurer or insurer244group has completed the recoupment process, the insurer or245insurer group shall file with the office, for information246purposes only, a final accounting report documenting the247recoupment. The report shall provide the amounts of assessments248paid by the insurer or insurer group, the amounts and249percentages recouped by year from each affected line of250business, and the direct written premium subject to recoupment251by year. The insurer or insurer group need submit only one252report for all lines of business using the same recoupment253factor.254 Section 2. This act shall take effect July 1, 2014.