Bill Text: FL S0828 | 2016 | Regular Session | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
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-Comm_Sub.html
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-Comm_Sub.html
Florida Senate - 2016 CS for CS for SB 828 By the Committees on Finance and Tax; and Banking and Insurance; and Senator Bean 593-02546-16 2016828c2 1 A bill to be entitled 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 23department, 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 insurer39so assessed at least 30 days’ written notice of the date the40assessment 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. 431. Beginning July 1, 1997,Assessments levied against 44 insurers and, other thanself-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 insuranceduring the calendar year next preceding the date of48such 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. 572. Beginning July 1, 1997, assessments levied against self58insurance funds shall not exceed in any calendar year more than591.50 percent of that self-insurance fund’s net direct written60premiums in this state for workers’ compensation insurance61during the calendar year next preceding the date of such62assessments.633. Beginning July 1, 2003, assessments levied against64insurers and self-insurance funds pursuant to this paragraph are65computed and levied on the basis of the full policy premium66value on the net direct premiums written in the state for67workers’ compensation insurance during the calendar year next68preceding the date of the assessment without taking into account69any applicable discount or credit for deductibles. Insurers and70self-insurance funds must report premiums in compliance with71this subparagraph.72(b) Assessments shall be included as an appropriate factor73in 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 78departmentshall levy additional assessments of up to 1.5 79 percent of the insurer’s net direct written premiums in this 80 stateduring the calendar year next preceding the date of such81assessments 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. 1472. To assure that insurers paying assessments levied under148this paragraph continue to charge rates that are neither149inadequate nor excessive, each insurer that is to be assessed150pursuant to this paragraph, or a licensed rating organization to151which the insurer subscribes, may make, within 90 days after152being notified of such assessments, a rate filing for workers’153compensation coverage pursuant to ss. 627.072 and 627.091. If154the filing reflects a percentage rate change equal to the155difference between the rate of such assessment and the rate of156the previous year’s assessment under this paragraph, the filing157shall consist of a certification so stating and shall be deemed158approved when made. Any rate change of a different percentage159shall be subject to the standards and procedures of ss. 627.072160and 627.091.161 (4)(2)(a) The board may exempt any insurer from an 162 assessment if, in the opinion of the officedepartment, 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 169department, 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.