Meeting Notice — Insurance & Banking Subcommittee, House of Representatives (November 6, 2019)
Summary
Meeting packet for the Insurance & Banking Subcommittee of the Florida House of Representatives Commerce Committee, Wednesday, November 6, 2019, 3:30 pm - 5:30 pm, in Sumner Hall (404 HOB), chaired by Byron Donalds with Jose Oliva as Speaker. The agenda lists HB 269 Loss Run Statements by Perez and HB 329 Insurance Guaranty Associations by Smith, D. The staff analysis of HB 269 says an insurer would have to provide a loss run statement within 15 calendar days after a written request, covering five continuous years of history, and could not charge for the first statement an insured requests each year. The analysis gives an effective date of January 1, 2021. The packet also includes the text of HB 329.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Meeting Notice — Insurance & Banking Subcommittee, House of Representatives (November 6, 2019).”
Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2019-11-06-3013-insurance-banking-subcommittee-meeting-packets-mtg1235-1007394f60/
, SHA-256 8537965fd89bc78363b2f23743b329d2349611039191431ca281e977a598370f.Full text
Insurance & Banking
Subcommittee
Wednesday, November 6, 2019
3:30 pm - 5:30 pm
Sumner Hall (404 HOB)
Jose Oliva Byron Donalds
Speaker Chair
Committee Meeting Notice
HOUSE OF REPRESENTATIVES
Insurance & Banking Subcommittee
Start Date and Time: Wednesday, November 06, 2019 03:30 pm
End Date and Time: Wednesday, November 06, 2019 05:30 pm
Location: Sumner Hall (404 HOB)
Duration: 2.00 hrs
Consideration of the following bill(s):
HB 269 Loss Run Statements by Perez
HB 329 Insurance Guaranty Associations by Smith, D.
Pursuant to rule 7 .11, the deadline for amendments to bills on the agenda by non-appointed members shall
be 6:00 p.m., Tuesday, November 5, 2019.
By Request of Chair Donalds, all Insurance & Banking Subcommittee members are asked to have
amendments to bills on the agenda submitted to staff by 6:00 p.m., Tuesday, November 5, 2019.
NOTICE FINALIZED on 10/30/2019 3:47PM by Harrell.Lindsey
10/ 30/ 2019 3 :47 :22PM Leagis ® Page 1 of 1
The Florida House of Representatives
Commerce Committee
Insurance & Banking Subcommittee
Jose R. Oliva Byron Donalds
Speaker Chair
AGENDA
November 6, 2019
404 House Office Building
3:30 PM - 5:30 PM
I. Call to Order & Roll Call
II. Consideration of the following bills:
A. HB 269 Loss Run Statements by Perez
B. HB 329 Insurance Guaranty Associations by Smith, D.
Ill. Adjournment
303 House Office Building, 402 South Monroe Street, Tallahassee, Florida 32399-1300
(850) 717-4871 Fax: (850) 413-0419
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL#: HB 269 Loss Run Statements
SPONSOR(S): Perez
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fortenber
2) Government Operations & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
A loss run statement is a report from an insurer that shows how many claims a specific insured has filed under
that insured's policy during a particular period of time. It may be provided to a prospective insurer when an
insured is shopping for a new insurance policy so that the prospective insurer can determine whether write a
policy for the prospective insured and what premium to charge for that policy. Loss run statements typically
contain claims history for three to five years .
While insureds may request loss run statements for any line of insurance, insureds seeking new general
commercial line policies often request these statement to shop for new insurance. Some insurers have
existing loss runs systems that allow their insureds to log into a portal and to obtain their own detailed reports
on claims . However, other insurers, may provide insureds with loss run statements that they have created
upon request or direct the insureds to obtain such statements from their agents of record .
Often , personal lines loss history can be obtained from public sources, but these publicly available reports may
not be completely accurate. Additionally, commercial and health insurance data are not readily available from
public sources. While insurers routinely provide loss run information to insureds, Florida has no existing
statutory framework regarding when or how insurers much provide this information to insureds. Approximately
11 other states currently have statutory requirements for insurers providing loss run statements to insureds.
The overall effect of the bill is to establish a statutory framework for an insurance practice that routinely occurs.
The bill defines "loss run statement" as a report generated and maintained by an insurer that shows the history
of insurance claims by an insured during a particular policy period . The bill defines "provide" as electronically
sending a document, or allowing access through an electronic portal to review or generate a document.
The bill provides that, for all lines of insurance, an insurer shall provide a loss run statement to an insured
within 15 calendar days after receipt of a written request. The loss run statement provided must be a five-year
loss run history for five continuous years before the year in which the insured makes the request, or the
complete loss run history if it is less than five years . The bill requires that the insurer notify the insured 's agent
of record that it provided the loss run statement to the insured at the time that the insurer provided it. The bill
also prohibits an insurer from charging an insured for the first loss run statement that an insured requests each
year. The bill imposes identical requirements to provide loss run statements to insureds whether the insurers
are authorized insurers, eligible surplus lines insurers, or unauthorized insurers permitted to issue policies.
The bill has no impact on state or local government revenues and expenditures. It also may have a positive
direct economic impact on the private sector.
This bill has an effective date of January 1, 2021.
This document does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0269.IBS .DOCX
DATE: 11/1/2019
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A EFFECT OF PROPOSED CHANGES:
Background
A loss run statement 1 is a report from an insurer that shows how many claims a specific insured has
filed under that insured's policy during a particular period of time. 2 This report can be provided to a
prospective insurer when an insured is shopping for a new insurance policy. 3 The prospective insurer
can use the loss run statement to review the types, frequency, and dollar value of prior claims in order
to determine whether write a policy for the prospective insured and what premium to charge for that
policy. 4 Prospective insurers often want to review loss run statements showing a loss run history from
three to five years to make decisions about writing insurance policies. 5
While insureds may request loss run statements for any line of insurance, insureds seeking new
general liability, business owner's, commercial property, commercial auto insurance, or workers'
compensation insurance, often request them to shop for new insurance6 upon cancelation or
nonrenewal of a policy by an insurer or when the insured chooses to shop for new insurance at the time
a policy is up for renewal. Some insurers, especially those providing commercial lines coverage or
workers' compensation insurance, have existing loss runs systems that allow their insureds to log into a
portal and to obtain their own detailed reports on claims .7 However, other insurers, in these and other
lines of insurance, may provide insureds with loss run statements that they have created upon request
or direct the insureds to obtain such statements from their agents of record .
Often, personal lines loss history can be obtained from public sources. A Comprehensive Loss
Underwriting Exchange, or CLUE, report is a claims report generated by the consumer-reporting
agency, LexisNexis.8 A CLUE report contains claims information reported by insurers for all personal
auto and personal property claims in which they pay money, set up a file for a possible claim, or deny a
claim .9 Yet, CLUE reports and other publicly available reports, may not be completely accurate. 10
Additionally, commercial and health insurance data are not readily available from public sources.
While insurers routinely provide loss run information to insureds, Florida has no existing statutory
framework regarding when or how insurers much provide this information to insureds. Approximately
11 other states currently have statutory requirements for insurers providing loss run statements to
insureds .11
I
Loss run statements are also referred to as loss runs or loss run reports.
2
Insureon, https: //www.insureon.com/ insurance-glossary/loss-runs (last visited Oct. 31, 2019).
3 Id.
4 Id.
s Id.
6 Id.
7
See, e.g., MSIG Loss Runs, https://www.msigusa.com/loss-runs/ and StarStone,
http://myaccount.starstoneworkcomp.com/index.htm (last visited Oct. 31 , 2019).
8
Office of the Insurance Commissioner Washington State, https://www.insurance.wa.gov/clue-comprehensive-loss-underwriting-
exchange (last visited Oct. 3 I, 2019).
9 Id.
10
Information reported by Florida Association oflnsurance Agents, which is a nonprofit trade association and a proponent of this bill.
11
See, e.g., Okla. Stat. Ann . 36, § 1204. 1, which provides that loss runs or claims history must be made available within 30 days of a
written request, and Ky. Rev. Stat. Ann. §304.20-100, which provides that a five-year loss run history must be made available within
20 days following a written request.
STORAGE NAME: h0269.IBS.DOCX PAGE: 2
DATE: 11/1/2019
Effect of the Bill
The overall effect of the bill is to establish a statutory framework for a practice that routinely occurs in
the insurance industry. The bill defines "loss run statement" as a report that is generated and
maintained by an insurer, and shows the history of insurance claims by an insured during a particular
policy period. The bill defines "provide" as electronically sending a document, or allowing access
through an electronic portal to review or generate a document.
The bill provides that, for all lines of insurance, an insurer shall provide a loss run statement to an
insured within 15 calendar days after receipt of a written request from that insured . The loss run
statement that the insurer provides must be a five-year loss run history for five continuous years before
the year in which the insured makes the request, or the complete loss run history if it is less than five
years. The bill requires that the insurer notify the insured's agent of record that it provided the loss run
statement to the insured at the time that the insurer provided it. The bill also prohibits an insurer from
charging an insured for the first loss run statement that an insured requests each year.
The bill imposes identical requirements on insurers to provide loss run statements to insureds
regardless of whether the insurers are authorized insurers 12 , eligible surplus lines insurers 13 , or
unauthorized insurers permitted by the Florida Office of Insurance Regulation (OIR) to issue insurers
policies under certain circumstances 14 .
B. SECTION DIRECTORY:
Section 1. Creates s. 626.9202, F.S., relating to loss run statements for all lines of insurance.
Section 2. Creates s. 627.4605, F.S. , relating to loss run statements for all lines of insurance.
Section 3. Provides an effective date of January 1, 2021 .
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues :
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues :
None.
2. Expenditures:
None.
12
An authorized insurer is one authorized by a certificate of authority issued by OIR to transact insurance business in Florida. S.
624.09, F.S.
13
Chapter 626, part VIII , F.S., sets forth the criteria under which surplus lines carriers may write insurance policies in Florida.
14
Section 626.918(5) and (6), F.S. , establishes the circumstances under which an otherwise unauthorized insurer may issue an
insurance policy in Florida.
STORAGE NAME h0269.IBS .DOCX PAGE: 3
DATE: 11/1/2019
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
Because most insurers likely already provide loss run statements to insureds upon request or via an
electronic portal , or they can easily create them, the bill codifies an existing practice and should not
place a financial burden upon insurers. The bill may benefit consumers as they may be able to obtain
premium discounts if they are able to use loss run statements to show prospective insurers that they
have no claim history for a certain period of time .
D. FISCAL COMMENTS:
None.
Ill. COMMENTS
A CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision :
Not applicable. This bill does not appear to affect county or municipal governments .
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking .
C. DRAFTING ISSUES OR OTHER COMMENTS:
OIR has pointed out in its analysis of the bill that "provide" is defined only to include electronic access
or delivery. 15 Because s. 627.421(1) , F.S., allows insureds to receive "policy documents" via mail , the
bill may conflict with existing law if loss run statements are considered "policy documents ."
OIR also pointed out that, under s. 627.291 , F.S., a workers' compensation insurer is permitted to
charge a "reasonable charge" to provide an insured with "pertinent information" requested .16 OIR
interprets "pertinent information" under this section to include a loss run statement. 17 Therefore , the
prohibition in the bill against charging an insured for the first loss run statement requested within a year
may conflict with this statute if an insured requests a loss run statement for a workers' compensation
insurance policy.
Lines 33 and 60 of the bill contain the phrase "loss run history," which is not a defined term within the
statutes created by the bill. Perhaps a better phrase might be "claims history" because statement is
defined to be a history of claims .18
Lines 42 and 67 of the bill contain the phrase "per year." It is unclear whether this means per calendar
year or on a rolling 12-month basis beginning when an insured makes a request for a loss run
statement.
In its analysis, OIR further noted thats . 627.4605, F.S., one of the statutes created by the bill , is
proposed to be placed in ch . 627, part 11, F.S., which pertains the insurance contract. 19 OIR suggests
15
Florida Office of Insurance Regulation, Agency Analysis of2020 House Bill 269, p. 5 (Oct. 31 , 201 9).
16 Id.
11 Id.
1s Id.
STORAGE NAME: h0269.IBS.DOCX PAGE : 4
DATE : 11/1/2019
that the statute created might be more appropriately placed in ch. 627 , part I, F.S ., which pertains to
rates and rating organizations, because loss run statements are used for rating purposes.20
IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES
19 Id.
20 Id.
STORAGE NAME: h0269.IBS.DOCX PAGE : 5
DATE: 11/1/2019
FLORIDA H O U S E O F REPRESENTATIVES
HB 269 2020
1 A bill to be entitled
2 An act relating to loss run statements; creating ss.
3 626 .9202 and 627.4065 , F.S.; providing definiti ons ;
4 requiring eligible surplus lines insurers, specified
5 unauthorized insurers, and authorized insurers to
6 provide loss run statements to insureds within a
7 specified timeframe; providing the loss run statement
8 history requirements; providing notifi cat i on
9 requirements; prohibiting fees under certain
10 circumstances; providing applicability; providing an
11 effective date.
12
13 Be It Enacted by the Legislature of the State of Florida:
14
15 Sect ion 1. Section 626.9202, Fl or ida Statutes, is created
16 to read:
17 626.9202 Loss run statements for all lines of insurance.-
18 ( 1) As used in this section, the term:
19 (a) "Loss run statement" means a report that:
20 1. Is generated and maintained by an insurer; and
21 2. Shows the history of insurance claims that an insured
22 has had during an insurance policy period.
23 (b) "Provide" means to electronically send a document, or
24 to allow access thro ugh an electronic portal to view or generate
25 a document.
Page 1 of 3
CODING: Words stricken are deletions; words underlined are additions.
hb0269-00
FLORIDA H O U S E O F REPRESENTATIVES
HB 269 2020
26 (2) (a) Notwithstanding any other provision of law, an
27 eligible surplus lines insurer or an unauthorized insurer
28 permitted by the office to issue an insurance policy under s.
29 626.918(5) and (6) shall provide a loss run statement to an
30 insured within 15 calendar days after receipt of the insured's
31 written request.
32 (b) The loss run statement provided under paragraph (a)
33 must be a 5-year loss run history for 5 continuous years before
34 the year in which the request is made or, if the history is less
35 than 5 years, a complete loss run history.
36 (3) At the time the loss run statement is provided, the
37 eligible surplus lines insurer or unauthorized insurer shall
38 also notify the surplus lines agent of record that the loss run
39 statement was provided to the insured.
40 (4) The eligible surplus lines insurer or unauthorized
41 insurer may not charge a fee to prepare and provide one loss run
42 statement per year in accordance with subsection (2) .
43 (5) This section applies to all lines of insuran ce .
44 Sect ion 2. Section 627.4065, Florida Statutes, is created
45 to read:
46 627.4065 Loss run statements for all lines of insurance.-
47 (1) As used in this section, the term:
48 (a) "Loss run statement" means a report that:
49 1. Is generated and maintained by an insurer; and
50 2. Shows the history of insurance claims that an insured
Page 2 of 3
CODING: Words stricken are deletions; words underlined are additions.
hb0269-00
FLORIDA H O U S E O F R E P R E S E N T A T I V E S
HB 269 2020
51 has had during an insurance policy period.
52 (b ) "Provide" means to electronically send a document, or
53 to allow access through an electronic portal to view or generate
54 a document.
55 ( 2) (a) Notwithstanding any other provision of law, an
56 authorized insurer shall provide a loss run statement to an
57 insured within 15 calendar days after receipt of the insured's
58 written request.
59 (b) The loss run statement provided under paragraph (a)
60 must be a 5-year loss run history for 5 continuous years before
61 the year in which the request is made or, if the history is less
62 than 5 years, a complete loss run hist o ry.
63 (3 ) At the time the loss run statement is provided, the
64 insurer shall also notify the agent of record that the loss run
65 statement was provided to the insured.
66 ( 4) The insurer may not charge a fee to prepare and
67 provide one loss run statement per year in accordance with
68 subs e ct ion ( 2 ) .
69 (5 ) This section applies to all lines of insurance.
70 Section 3. This act shall take effect January 1, 2021.
Page 3 of 3
CODING: Words stricken are deletions; words underlined are additions.
hb0269-00
INSURANCE & BANKING SUBCOMMITTEE
HB 269 by Rep. Perez
Loss Run Statements
AMENDMENT SUMMARY
November 6, 2019
Amendment 1 by Rep. Perez (strike-all): The strike-all amendment:
• Maintains the intent of the current version of the bill and makes the following modifications
and clarifications:
• Changes the definition of "loss run statement" so that it more precisely defines what
must be included in a loss run statement. In addition, it specifies what is not included.
• Establishes that any insurer is only required to provide an insured with a loss run
statement once per policy period .
• Establishes that no insurer shall be required to provide loss reserve information as part
of a loss run statement.
• Places provisions relating to authorized insurers in a different location in statutes than
the bill.
• Makes various formatting and technical changes.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 269 (2020)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/0 OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Perez offered the following:
4
5 Amendment (with title amendment)
6 Remove everything after the enacting clause and insert:
7 Section 1. Section 626. 9202, Florida Statutes, is created to
8 read:
9 626.9202 Loss run statements for all lines of insurance.-
10 (1) As used in this section, the term:
11 (a) "Loss run statement" means a report that contains the
12 policy number, the period of coverage, the number of claims, the
13 paid losses on all claims, and the date of each loss. The term
14 does not include supporting claim file documentation, including,
15 but not limited to, copies of claim files, investigation
538749 - h0269-strike.docx
Published On: 11/5/2019 5:18:42 PM
Page 1 of 4
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 269 (2020)
Amendment No. 1
16 reports, evaluation statements, insureds' statements, and
17 documents protected by a common law or statutory privilege.
18 (b) "Provide" means to electronically send a document, or
19 to allow access through an electronic portal to view or generate
20 a document.
21 (2) Notwithstanding any other law, an insurer shall
22 provide a loss run statement to an insured within 15 calendar
23 days after receipt of the insured's written request, but in no
24 event more frequently than once per policy period.
25 (3) At the time the loss run statement is provided to the
26 insured, the insurer shall notify the agent of record that the
27 loss run statement was provided to the insured.
28 (4) A loss run statement provided pursuant to this section
29 must contain a claims history with the insurer for the preceding
30 5 years or, if the claims history is less than 5 years, a
31 complete claims history with the insurer.
32 (5) Notwithstanding any other provision of this section,
33 an insurer may not be required to provide loss reserve
34 information.
35 (6) Notwithstanding any other law, an insurer may not
36 charge any fee to prepare and provide annually one loss run
37 statement in accordance with this section.
38 Section 2. Section 627.0622, Florida Statutes, is created
39 to read:
40 627.0622 Loss run statements for all lines of insurance.-
538749 - h0269-strike.docx
Published On: 11/5/2019 5:18:42 PM
Page 2 of 4
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 269 (2020)
Amendment No. 1
41 ( 1) As used in this section, the term:
42 (a) "Loss run statement" means a report that contains the
43 policy number, the period of coverage, the number of claims, the
44 paid losses on all claims, and the date of each loss. The term
45 does not include supporting claim file documentation, including,
46 but not limited to, copies of claim files, investigation
47 reports, evaluation statements, insureds' statements, and
48 documents protected by a common law or statutory privilege.
49 (b) "Provide" means to electronically send a document, or
50 to allow access through an electronic portal to view or generate
51 a document.
52 (2) Notwithstanding any other law, an insurer shall
53 provide a loss run statement to an insured within 15 calendar
54 days after receipt of the insured's written request, but in no
55 event more frequently than once per policy period.
56 (3) At the time the loss run statement is provided to the
57 insured, the insurer shall notify the agent of record that the
58 loss run statement was provided to the insured.
59 (4) A loss run statement provided pursuant to this section
60 must contain a claims history with the insurer for the preceding
61 5 years or, if the claims history is less than 5 years, a
62 complete claims history with the insurer.
63 (5) Notwithstanding any other provision of this section,
64 an insurer may not be required to provide loss reserve
65 information.
538749 - h0269-strike.docx
Published On: 11/5/2019 5:18:42 PM
Page 3 of 4
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 269 (2020)
Amendment No. 1
66 (6) Notwithstanding any other law, an insurer may not
67 charge any fee to prepare and provide annually one loss run
68 statement in accordance with this section.
69 Section 3. This act shall take effect January 1, 2021.
70
71
72 T I T L E A ME N D ME N T
73 Remove everything before the enacting clause and insert:
74 A bill to be entitled
75 An act relating to loss run statements; creating ss.
76 626.9202 and 627.0622, F.S.; providing definitions;
77 requiring insurers to provide loss run statements to
78 insureds within a specified timeframe; providing
79 notification requirements; providing claims history
80 requirements for loss run statements; prohibiting
81 insurers from being required to provide loss reserve
82 information; prohibiting fees under certain
83 circumstances; providing an effective date.
538749 - h0269-strike.docx
Published On: 11/5/2019 5:18:42 PM
Page 4 of 4
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL#: HB 329 Insurance Guaranty Associations
SPONSOR($): Smith , D.
TIED BILLS: IDEN./SIM. BILLS: SB 540
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fortenber
2) Government Operations & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
Florida law provides for guaranty associations to ensure policyholders of insolvent insurers are protected with
respect to insurance premiums paid and settlement of outstanding claims . Florida has four guaranty
associations including the Florida Insurance Guaranty Association (FIGA) and the Florida Workers'
Compensation Insurance Guaranty Association (FWCIGA).
FIGA assumes the rights and duties of insolvent Florida insurers, including claims adjusting. Claims filed with
a liquidated foreign insurer are referred to that state's guaranty association for handling. FIGA handles claims
involving insolvent Florida insurers and claims on Florida policies issued by liquidated foreign insurers. It may
be efficient for the employees of another state's guaranty association to be involved in adjusting a Florida
claim . The bill allows those employees to adjust Florida claims without being licensed adjusters, if authorized
by the contract between FIGA and the other state's guaranty association . It also allows FIGA employees to
adjust claims without being licensed adjusters.
If an insurer's assets are insufficient to pay all claims , FIGA can issue post-insolvency assessments against
property and casualty insurers to obtain funds to pay the remaining claims. The bill clarifies that the
assessment due from member insurers will be a uniform percentage of premium collected instead of based on
a proportion of the total net direct written premium for the prior calendar year. The bill establishes that
assessment installment payments made by FIGA members may be made quarterly rather than monthly.
FWCIGA assumes the right and duties of the insolvent Florida workers' compensation insurers or self-
insurance funds and pays the claims of its policyholders. FWCIGA is funded through the liquidation of
insolvent insurers, potentially including a portion of the estates of insolvent insurers in other states. FWCIGA
has the authority to levy assessments on workers' compensation insurers if insolvent insurers' estates are
insufficient to pay claims . This bill provides additional changes to the assessment methods that were amended
significantly in 2016 to conform them to workers' compensation industry standards.
The bill clarifies the method by which assessments are levied against insurers and collected by FWCIGA
related to policy deductibles and to retrospectively rated policies. The bill provides the authority for FWCIGA to
audit reports from insurers regarding the payments made to FWCIGA and the amounts collected from
policyholders. It provides that assessments paid that are required to be remitted by the insurer prior to
surcharging policyholders constitute advances of funds to FWCIGA to allow for proper accounting treatment.
The bill also makes other technical and structural changes to the statutes controlling FIGA and FWCIGA.
This bill does not impact local or state government revenues or expenditures. It has positive and negative
direct economic impacts on the private sector.
This bill has an effective date of July 1, 2020.
This document does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0329.IBS.DOCX
DATE: 11/4/2019
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Guaranty Associations
Under federal law, insurance companies cannot file for bankruptcy. 1 Instead , they are either
rehabilitated or liquidated by their state of domicile. Florida law establishes the system for the
treatment of impaired or insolvent insurers 2 in Florida and sets up guaranty payments where
necessary. 3 Florida law provides for guaranty associations to ensure policyholders of insolvent
insurers are protected with respect to insurance premiums paid and settlement of outstanding claims ,
up to limits provided by law.4 A guaranty association is a not-for-profit corporation created by law and
directed to protect policyholders from financial losses and delays in claims payment and settlements
due to the insolvency of an insurer. 5 Insurers are required to participate in the guaranty associations as
a condition of transacting insurance business in Florida. Florida operates four guaranty associations
including the Florida Insurance Guaranty Association (FIGA) 6 and the Florida Workers' Compensation
Insurance Guaranty Association (FWCIGA)7.
Florida Insurance Guaranty Association
FIGA provides a "mechanism for the payment of covered claims under certain insurance policies to
avoid" delay and financial loss due to the financial insolvency of an insurer. 8 It issues guaranty fund
payments and provides related services for all lines of property and casualty insurance with certain
exceptions.9 When a Florida property and casualty insurer becomes insolvent, FIGA takes over the
claims of that insurer and pays the claims of its policyholders, ensuring that policyholders are not left
with unpaid claims . FIGA obtains funds to pay the claims of insolvent insurers located in Florida from
the liquidation of the assets of insolvent insurers by the Division of Rehabilitation and Liquidation (the
Division) in the Florida Department of Financial Services (DFS) and from the liquidation of assets of
insolvent insurers located outside Florida that transact insurance business in Florida.10
If an insurer's assets are insufficient to pay all claims, FIGA can also issue post-insolvency
assessments against property and casualty insurers to obtain funds to pay the remaining claims. 11
Currently, the Florida statute setting forth FIGA's duties and powers states that assessments on
members of FIGA are "initially estimated in the proportion that each insurer's net direct written
premiums [in Florida] in the classes protected by the account bears to the total of said net direct written
premiums received [in Florida] by all such insurers for the preceding calendar year for the kinds of
insurance included in such account." 12 Furthermore, each insurer assessed must be provided with at
1
11 U.S.C . § 109(b)(2).
2 An " insolvent insurer" means an insurer that was authorized to transact insurance in thi s state, either at the time the policy was issued
or when the insured event occurred, and against which an order of liquidation with a finding of insolvency has been entered by a court
of competent jurisdiction if such order has become final by the exhaustion of appellate review. S. 631 .904(4), F.S.
3
Ch. 631 , F.S.
4 Id.
5 See e.g. , ss. 631.51 and 631.902, F.S.
6
Ch. 631 , part II , F.S.
7
Ch. 631 , part V, F.S.
8
S. 631.51 , F.S.
9
S. 631 .52, F.S.
10
Sees. 631 .061 , F.S. for grounds for liquidation. Sees. 631 .025, F.S., for an overview of persons subject to proceedings initiated by
the Division.
I I S. 631.57, F.S.
12 S. 63 I .57(3)(a), F.S. Stated differently, an insurer's assessment amount would be estimated by determining its part of the whole of
the premium written for the prior year for the kinds of insurance included in a certain account and multiplying that proportion by the
entire assessment amount to be collected. For example, if FIGA was assessing its auto insurance account, an auto insurer's
STORAGE NAME: h0329.IBS.DOCX PAGE : 2
DATE: 11/4/2019
least 30 days' written notice as to the date the initial assessment payment is due.13 When FIGA issues
an assessment, it has the option to require that member insurers pay the assessment in a single
payment or to allow the member insurers to pay assessment payments in monthly installments, with the
first installment being due at the end of the monthly following the levy of an assessment. 14
When an insolvent insurer is liquidated in Florida, FIGA assumes the claims and is "deemed the insurer
to the extent of its obligation on ...covered claims, and, ... shall have all rights , duties, defenses, and
obligations of the insolvent insurer as if the insurer had not become insolvent." 15 Additionally, FIGA has
the right to employ the necessary staff to handle claims and perform other duties for the association .16
In general, when an insolvent insurer located in another state is liquidated, the claims in that state are
referred to its guaranty association for claims handling. However, FIGA handles claims that exist on
policies issued in Florida by insolvent foreign insurers. 17 Due to the nature of the claims process and
the involvement of more than one state's guaranty association in these claims, it may be appropriate
and efficient for an employee of another state's guaranty association to adjust a Florida claim .
Effect of the Bill
Adjusting
The bill allows employees of FIGA to adjust losses for FIGA if those employees hold a license in Florida
that allows them to adjust losses or if they held such a license within the last ten years. 18 It also allows
FIGA to authorize employees of any state guaranty association whose insurance regulators are
members of the National Association of Insurance Commissioners to adjust Florida claims for FIGA. 19
While the bill does not require that the employee adjusting losses be a licensed insurance adjuster in
Florida, the employee must maintain appropriate experience and training to adjust claims , and the
authorization for the state guaranty association's employee to adjust losses must be included in the
contract between FIGA and the state guaranty association whose employee is doing the adjusting . This
provision of the bill will allow FIGA and other states' guaranty associations to efficiently provide
continuity of claims handling and adjusting claims within Florida and when claims cross state lines.
Assessments
The bill removes the word "net" from "net direct written premium" to use the more common industry
terminology of "direct written premium ." It also eliminates dividends paid or credited to policyholders
from being subtracted from the premium amount when direct written premiums are calculated . To
simplify the explanation of the way in which a FIGA member insurer's assessment amount is
calculated, the bill eliminates the language from s. 631 .57(3)(a), F.S., that requires a determination of
each insurer's proportion of net direct written premiums to the total of net direct written premiums
received during the preceding calendar year for the kinds of insurance included within an account.
Instead, the assessment due will be a uniform percentage of premium collected .
assessment would be estimated by determining its share of the entire auto insurance premium written during the prior year and
multiplying that by the total assessment amount to be collected.
13
S. 63 I .57(3)(a), F.S.
14
S. 63 I .57(3)(e)3 and (t)2 , F.S.
15
S. 631 .57, F.S.
16 Id.
17
A foreign insurer is one formed under the laws of any state, district, territory, or commonwealth of the United States other than
Florida. S. 624.06, F.S.
18
DFS has indicated that the licensure status of the person determining the amount of loss (i.e., adjusting a claim) has no bearing on
the contractual obligations of the insurer from a regulatory standpoint. Therefore, an insured whose claim is being handled by FIGA
by virtue of an insurer insolvency and whose claim was adjusted by an unlicensed employee of FIGA or another state 's guaranty
association does not lose any rights or remedies should that insured dispute the amount of loss as determined by the adjuster. Email
from Greg Thomas, Director Division of Agents and Agency Services, Department of Financial Services, RE: HB 429 (Feb. 14,
2019).
19 Id.
STORAGE NAME: h0329.IBS.DOCX PAGE : 3
DATE : 11/4/2019
For clarity, the bill moves the portion of s. 631 .57(3)(a), F.S., which requires that FIGA provide each
insurer with at least 30 days' written notice as to the date the initial assessment payment is due to s.
631 .57(3)(f)1 .b, F.S. Notice of an initial payment due date would not apply when the assessment is
being paid in a single payment. The bill establishes that when FIGA allows for assessments to be paid
in installments, those payments maybe be made in quarterly, rather than monthly installments . The bill
also provides for other technical and structural changes and conforms statutory cross-references as
needed .
Florida Workers' Compensation Insurance Guaranty Association
FWCIGA "provides a mechanism for the payment of covered claims under chapter 440 to avoid" delay
and financial loss to claimants due to the insolvency of a workers' compensation insurer.20 FWCIGA
services workers' compensation claims against insolvent workers' compensation insurers 21 and self-
insurance funds .22 When a workers' compensation insurer or self-insurance fund becomes insolvent,
FWCIGA takes over the claims of that insurer and pays the claims of its policyholders, ensuring that
policyholders are not left with unpaid claims . Like FIGA, FWCIGA is funded through the liquidation of
insolvent insurers, including a portion of the estates of insolvent insurers in other states. If the assets
of the liquidated insurer are insufficient to pay claims , FWCIGA in conjunction with the Office of
Insurance Regulation (OIR) , may order assessments of workers' compensation insurers and self-
insurance funds writing workers' compensation coverage in Florida.23 FWCIGA levied assessments
from its inception in 1998 through 2005.24 On June 18, 2019, the FWCIGA Board of Directors certified
the need for a 1.0% assessment on its member insurers.25 Subsequently, OIR issued a 1.0%
assessment levy on all new and renewal workers' compensation policies with effective dates beginning
January 1, 2020, through December 31, 2020.26 These assessment payments will be due to FWCIGA
quarterly after applying and collecting a 1.0% surcharge to all workers' compensation and excess
workers' compensation policies.27
Method of Assessment
In 2016, the method of assessment for FWCIGA was amended to be more consistent with the methods
used to levy assessments on the other Florida guaranty associations.28 Since the 2016 amendments,
the law has provided for two methods by which FWCIGA can collect assessments from workers'
compensation insurers and self-insurance funds .29 FWCIGA may choose to fund an assessment by
either of the following methods: 30
20
S. 631.902, F.S.
21
Insurer' means an insurance carrier or self-insurance fund authorized to insure under chapter 440. For purposes of this act,
"'
" insurer" does not include a qualified local government self-insurance fund, as defined in s. 624.4622, or an individual self-insurer as
defined ins. 440.385 ." S. 631 .904(5), F.S.
22
'" Self-insurance fund' means a group self-insurance fund authorized under s. 624.4621 , a commercial self-insurance fund writing
workers' compensation insurance authorized under s. 624.462, or an assessable mutual insurer authorized under s.628.6011 . For
purposes of this act, the term "self-insurance fund" does not include a qualified local government self-insurance fund, as defined in s.
624.4622, an independent educational institution self-insurance fund as defined in s. 624.4623 , an electric cooperative self-insurance
fund as described ins. 624.4626, or an individual self-insurer as defined ins. 440.385 ." S. 631 .904(6), F.S.
23
S. 631.914, F.S.
24
Florida Workers ' Compensation Insurance Guaranty Association, Assessments, https://fwciga.org/assessments (last visited Oct. 30,
2019).
25
Id. Pursuant to s. 63 l.914(4)(a), F.S., an insurer may be exempted from an assessment if, in the opinion ofOIR, the assessment
would impair the solvency of the insurer.
26 Id.
21 Id.
28
Ch. 16-170, Laws of Fla.
29
Sees. 631.914, F.S.
30
See id.
STORAGE NAME: h0329.IBS.DOCX PAGE : 4
DATE : 11/4/2019
• Single payment, subject to true-up (pay and recover) 31 - under this method, the insurer pays the
assessment to the FWCIGA and then recovers its payment from its insureds through policy
surcharges. The assessment payment is due and payable no earlier than 30 days following
written notice of the assessment order. For accounting purposes, the billed surcharges are a
receivable and an asset for the purposes of the National Association of Insurance
Commissioners' Statement of Statutory Accounting Principles Number 4 32 and would be
recorded separately from the liability for OIR reports.
• Installment (collect and remit) - under this method, the insurer would bill the insured for the
surcharge as policies are written and remit the collected surcharges to the FWCIGA quarterly.33
The insurer is required to submit a reconciliation report within 120 days following the end of the 12
month assessment recovery period showing the amount initially paid and the amount of the surcharge
collected. 34 This results in a "true-up" of the actual assessment amount if the initial calculation and
payment was too low or too high.35
Calculation of Insurer Assessment Amount
OIR, upon certification of need by FWCIGA, levies assessments on each insurer "initially estimated in
the proportion that the insurer's net direct written premiums" in Florida bear to the total net direct
premiums received in Florida by all workers' compensation insurers during the previous calendar
year. 36 The assessments levied against insurers and self-insurance funds are computed based upon
the net direct written premium amounts set forth in Florida for workers' compensation insurance without
consideration for any discount in premium or credit for deductibles. 37
The assessment is limited to 2 percent of an insurer's or self-insurance fund's net direct written
premium in any given calendar year.38 If the assessment is insufficient to meet FWCIGA's funding
need for payments owing to claimants in a calendar year, then, upon certification by FWCIGA, OIR
shall levy assessments of up to an additional 1.5 percent of the insurer's net direct written premiums in
Florida .39 Insurers and self-insurance funds must report to FWCIGA the amount of initial payment or
installment payments made to FWCIGA and the amount collected from policyholders. 40 The reporting
must occur within 120 days after the 12-month assessment period and annually thereafter for 3 years .41
Effect of the Bill
The bill clarifies the method by which assessments are levied against insurers and collected by
FWCIGA, by providing that OIR shall levy the uniform surcharge percentage on all policies of the same
kind or line as it considered in determining an insurer's assessment liability, along with an insurer using
this method to fully recoup assessments from policyholders.
The bill clarifies that no insurer's direct written premium calculated for the purposes of determining its
premium subject to surcharge will be reduced by any discount or credit for deductibles in any policy.
31
S. 631.914(I)(d), F.S.
32
See National Association of Insurance Commissioners & The Center for Insurance Policy and Research, Statutory Accounting
Principles, http ://www.naic.org/cipr topics/topic statutory accounting principles.htm (last visited Oct. 30, 2019).
33
S. 631.914(l)(d), F.S.
34
S. 631.914(1)(d)3., F.S.
35 Id.
36
S. 631.914(l)(a), F.S.
31 Id.
3s Id.
39
S. 631.914(l)(c), F.S .
4
o S. 63 l.914(1)(a)d.3., F.S.
4 1 Id.
STORAGE NAME h0329.IBS.DOCX PAGE: 5
DATE : 11/4/2019
It also does not reduce an insurer's direct written premium calculated for the purposes of determining
the insurer's premium subject to surcharge for any premium adjustment on retrospectively rated
policies.42
The bill provides the authority for FWCIGA to audit the reports from insurers regarding the payments
made to FWCIGA and the amounts collected from policyholders. It provides that assessments paid by
workers' compensation insurers constitute advances of funds to FWCIGA under certain circumstances
to allow for proper accounting treatment.
The bill removes the word "net" from "net direct written premium" to use the more common industry
terminology of "direct written premium. " The bill provides for other technical and structural changes
and conforms statutory cross-references as needed .
B. SECTION DIRECTORY:
Section 1. Creates s. 626.8621 , F.S., relating to adjustments by guaranty association employees.
Section 2. Amends s. 631 .54, F.S. , relating to definitions.
Section 3. Amends s. 631 .57 , F.S. , relating to powers and duties of the association.
Section 4. Amends s. 625 .012 , F.S., relating to "assets" defined .
Section 5. Amends s. 631 .59, F.S., relating to duties and powers of department and office.
Section 6. Amends s. 631 .59, F.S., relating to board of directors.
Section 7. Amends s. 631 .914, F.S., relating to assessments.
Section 8. Provides an effective date of July 1, 2020.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues :
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
42
A retrospectively rated policy in one with a rating plan that adjusts the premium to reflect current loss experience of an insured.
IRMI , Retrospective Rating, https://www.irrni.com/terrn/insurance-definitions/retrospective-rating (last visited Oct. 30, 2019).
STORAGE NAME h0329 .IBS.DOCX PAGE: 6
DATE : 11/4/2019
Changing the method by which FWCIGA calculates assessments may increase costs for certain
employers and decrease costs for others based on the changes to treatment of premium discounts and
credits, or premium adjustments in calculating assessments. However, the modification to the
calculation does not change the total amount assessed by FWCIGA.
D. FISCAL COMMENTS:
None.
Ill. COMMENTS
A CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking .
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES
STORAGE NAME h0329.IBS.DOCX PAGE : 7
DATE 11 /4/2019
F L O R D A H O U S E O F R E P R E S E N T A T V E S
HB 329 2020
1 A bill to be entitled
2 An act relating to insurance guaranty associations ;
3 creating s . 626.8621, F . S .; authorizing an employee of
4 the Florida Insur ance Guaranty Association or an
5 employee of a guaranty association of another state to
6 adjust losses for the Florida Insurance Guaranty
7 Association if certain conditions are met ; amending s .
8 631 . 54 , F.S .; defining the term "direc t written
9 premiums" rather than the term "net direct written
10 premiums "; amending s . 631.57, F . S.; deleting a
11 provision specifying the manner in which the Office of
12 Insurance Regulation init ially estimates assessments
13 levied on in surers; deleting a provision specifying
14 the timeline to address notices of such assessments ;
15 conforming provisions to changes made by the act;
16 requiring certain assessments to be made quarterly
17 rather than monthly; revising the calculation of
18 insurers' initial payments to the association;
19 amending ss. 625.012 , 631.59 , and 631.912 , F.S.;
20 conforming provisions to changes made by the act;
21 amending s. 631.914 , F.S. ; revising requirements for
22 the office in levying workers' compensation insurers;
23 providing that an insur er's direct written premium may
24 not be reduced by certain amounts for the purposes of
25 determining insurer asse ssments or policy surcharges;
Page 1 of 17
CODING: Words strioken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F R E P R E S E N T A T I V E S
HB 329 2020
26 authorizing the Florida Workers ' Compensation
27 Insurance Guaranty Association to audit certain
28 reports ; revising requirements for remitting po licy
29 surcharges and assessments ; providing that assessments
30 paid by an insurer con stitute advances of funds to the
31 association under certain circumstances ; revising the
32 requirements for the insurers ' reconciliation reports
33 to the Florida Workers ' Compensation Insurance
34 Guaranty Association ; revising construction ; providing
35 an effective date .
36
37 Be It Enacted by the Legislature of the State of Florida :
38
39 Section 1 . Section 626 . 8621 , Florida Statutes , is created
40 to read :
41 626 . 8621 Adjustments by guaranty association employees . -
42 (1) An employee o f the Florida Insurance Guaranty
43 Association , created unde r part II of chapter 631 , may adj us t
44 losses for the association if such employee hold s, or has held
45 within the past 10 years , licensure in this state which allows
46 for the adjustment of such losses .
47 ( 2) An employee of a guaranty association established by
48 another state and whose insurance regulators are members of the
49 National Association of Insurance Commiss i oners may adjust
50 losse s for the Florida Insuranc e Guaranty Association . The
Page 2 of 17
CODING: Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F R E P R E S E N T A T I V E S
HB 329 2020
51 authorization for such employees to adjust losses must be
52 included in a contract with the Florida Insurance Guaranty
53 Association and the employee ' s guaranty association or
54 association ' s authorized representative . The Florida In surance
55 Guaranty Association shall contrac t only for employees of other
56 state guaranty associations who maintain the appropriate
57 experience and training for adjusting such claims .
58 Section 2 . Subsection ( 9) of section 631 . 54 , Florida
59 Statutes, is amended to read :
60 631 . 54 Definitions.-As used in this part :
61 (9) " N-€4:- Direct written premiums " means direct gross
62 premiums written in this state on in suran ce policies to which
63 this part applies , less return premiums thereon and dividends
64 paid or credited to policyholders on such direct business . The
65 term " Net direct written preFRiuFRs " does not include premiums on
66 contracts between insurers or reinsurers .
67 Section 3 . Paragraphs (a) , ( e) , and ( f) of subsection ( 3)
68 of section 631 . 57 , Florida Statutes , are amended to read :
69 631.57 Powers and duties of the association.-
70 ( 3) (a) To the extent necessary to secure funds for the
71 respective accounts for the payment of covered claims , to pay
72 the reasonable costs to administer such accounts , and to secure
73 funds for the account specified in s . 631 . 55 ( 2) (b) or to retire
74 indebtedness , including , without limitation , the principal ,
75 redemption premium , if any , and interest on , and related costs
Page 3 of 17
CODING: Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F R E P R E S E N T A T I V E S
HB 329 2020
76 of issuance of , bonds issued under s . 631.695 and the funding of
77 reserves and other payments required under the bond resolution
78 or trust indenture pursuant to which such bonds have been
79 issued , the office, upon certification of the board of
80 directors , shall levy assessments , in accordance with
81 subparagraph (f)l . or subparagraph (f)2 ., initially estimated in
82 the proportion that each insurer ' s net direct written premiums
83 in this state in the classes protected by the account bears to
84 the total of said net direct written premiums received in this
85 state by all such insurers for the preceding calendar year for
86 the kinds of insurance included within such account . Assessments
87 shall be remitted to and administered by the board of directors
88 in the manner specified by the approved plan and paragraph (f)
89 Each insurer so assessed shall have at least 30 days' written
90 notice as to the date the initial assessment payment is due and
91 payable. Every assessment shall be a uniform percentage . The
92 assessments levied against any insurer may not exceed in any one
93 calendar year more than 2 percent of that insurer's fte4:- direct
94 written premiums in this state for the kinds of insurance
95 included within such account .
96 (e) 1. In addition to assessments authorized in paragraph
97 (a), and to the extent necessary to secure the funds for the
98 account specified in s . 631 . 55 ( 2) (b) for the direct payment of
99 covered claims of insurers rendered insolvent by the effects of
100 a hurricane and to pay the reasonable costs to administer such
Page 4 of 17
CODING: Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F R E P R E S E N T A T V E S
HS 329 2020
101 claims , or to retire indebtedness , including , without
102 limitation , the principal , redemption premium , if any , and
103 interest on , and related costs of issuance of , bonds issued
104 under s . 631 . 695 and the funding of any reserves and other
105 payments required unde r the bond resolution or trust indenture
106 pursuant to which such bonds have been issued , the office , upon
107 certification of the board of directors , shall levy emergency
108 assessments upon insurers holding a certificate of authority .
109 The emergency assessments levied against any insurer may not
110 exceed in any one calendar year more than 2 percent of that
111 insurer ' s fie'!:- written premiums in this state for the kinds of
112 insurance within the account specified ins . 631.55(2) (b) .
113 2. Emergency assessments authorized under this paragraph
114 shall be levied by the office upon insurers in accordance with
115 paragraph ( f) , upon certification as to the need for such
116 assessments by the board of directors. If the board participates
117 in the issuance of bond s in accordance withs . 631 . 695 ,
118 emergency assessments sh a ll be levied in each year that bon ds
119 issued under s . 631 . 695 and secured by such emergency
120 assessments are outstanding in amounts up to such 2 - percent
121 limit as required in order to provide for the full and timely
122 payment of the principal of , redemption premium , if any , and
123 interest on , and related costs of issuance of , such bonds . The
124 emergency assessments are assigned and pledged to the
125 municipality , county , or legal entity issuing bonds under s.
Page 5 of 17
CODING: Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F R E P R E S E N T A T I V E S
HB 329 2020
126 631 . 695 for the benefit of the holders of such bonds in order to
127 provide for the payment of the principal of , redemption premium ,
128 if any , and interest on such bonds , the cost of issuance of such
129 bonds , and the funding of any reserves and other payments
130 required under the bond resolution or trust indenture pursuant
131 to which such bonds have been issued , without further action by
132 the association , the office , or any other party . If bonds are
133 issued under s . 631 . 695 and the association determines to secure
134 such bonds by a pledge of revenues received from the emergency
135 assessments , such bonds , upon such pledge of revenues , shall be
136 secured by and payable from the proceeds of such emergency
137 assessments , and the proceeds of emergency assessments levied
138 under this paragraph shall be remitted directly to and
139 administered by the trustee or custodian appointed for such
140 bonds .
141 3. Emergency asse s sments used to defease bonds issued
142 under this part may be p a yable in a single payment or , at th e
143 option of the association , may be payable in quarterly ~
144 ffionthly installments with the first installment being due and
145 payable at the end of the month after an emergency assessment is
146 levied and subsequent installments being due by the end of each
147 succeeding month .
148 4. If emergency assessments are imposed , the report
149 required bys . 631.695(7) must include an analysis of the
150 revenues generated from the emergency assessments imposed under
Page 6 of 17
CODING: Words strioken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F R E P R E S E N T A T V E S
HB 329 2020
151 this paragraph .
152 5. If emergency assessments are imposed , the references in
153 sub-subparagraph (1) (a)3 . b . ands . 631.695(2) and (7) to
154 assessments levied under paragraph (a) must include emergency
155 assessments imposed under this paragraph .
156 6. If the board of directors participates in the is suance
157 of bonds in accordance withs . 631 .695 , an annual assessment
158 under this paragraph shall continue while the bonds issued with
159 respect to which the assessment was imposed are outstanding ,
160 including any bonds the proceeds of which were used to refund
161 bonds issued pursuant to s . 631 . 695 , unless adequate provision
162 has been made for the payment of the bonds in the documents
163 authorizing the issuance of such bonds.
164 (f)l . The association , office , and insurers remitting
165 assessments pursuant to paragraph (a) or paragraph (e) must
166 comply with the following :
167 a. In the order levying an assessment, the office shall
168 specify the actual percentage amount to be collected uniformly
169 from all the policyholders of insurer s subject to the assessment
170 and the date on which the assessme nt year begins , which may not
171 begin before 90 days after the association board certifies such
172 an assess ment .
173 b. Insurers shall make an initial payment to the
174 association before the beginning of the assessme nt year on or
175 before the date specified in the order of the office . Each
Page 7 of 17
CODING: Words strisken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F R E P R E S E N T A T I V E S
HB 329 2020
176 insurer shall have at least 30 days ' written notice as to the
177 date on which the initial assessment payment is due and payable .
178 c. Insurers that have written insurance in the calendar
179 year before the year in which the assessment is certified by the
180 board shall make an initial payment based on the fi€4::- direct
181 written premium in this state for the classes protected by the
182 account affiount from the previous calendar year as set forth in
183 the insurer's annual statement , multiplied by the uniform
184 percentage of premium specified in the order issued by the
185 office . Insurers that have not written insurance in the previous
186 calendar year in any of the lines under the account which are
187 being assessed, but which are writing insurance as of , or after,
188 the date the board certifies the assessment to the office, shall
189 pay an amount based on a good faith estimate of the amount of
190 fi€4::- direct written premium anticipated to be written in the
191 subject lines of business for the assessment year, multiplied by
192 the uniform percentage of premium specified in the order issued
193 by the office .
194 d. Insurers shall file a reconciliation report with the
195 association which indicates the amount of the initial payment to
196 the association before the assessment year , whether such amount
197 was based on fi€4::- direct written premium contained in a previous
198 calendar year annual statement or a good faith projection , the
199 amount actually collected during the assessment year, and such
200 other information contained on a form adopted by the association
Page 8 of 17
CODING: Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F REPRESENTATIVES
HB 329 2020
201 and provided to the insurers in advance. If the insurer
202 collected from policyholders more than the amount initially
203 paid, the insurer shall pay the excess amount to the
204 association . If the insurer collected from policyholders an
205 amount which is less than the amount initially paid to the
206 association, the association shall credit the insurer that
207 amount against future assessments. Such payment reconciliation
208 report , and any payment of excess amounts collected from
209 policyholders, shall be completed and remitted to the
210 association within 90 days after the end of the assessment year.
211 The association shall send a final reconciliation report on al l
212 insurers to the office within 120 days after each assessment
213 year .
214 e. Insurers remitting reconciliation reports under this
215 paragraph to the association are subject to s . 62 6. 9541 ( 1) ( e) .
216 2. For assessments required under paragraph (a) or
217 paragraph (e) , the association may use a quarterly monthly
218 installment method instead of the method described in sub -
219 subparagraphs l . b. and c. or in combination ther eof based on the
220 assoc iation 's projected cash flow . If the association projects
221 that it has cash on hand for the payment of anticipated claims
222 in the applicable account for at least 6 months, the board may
223 make an estimate of the assessment needed and may recommend to
224 the office the assessment percentage that may be collected as a
225 quarterly monthly assessment . The office may, in the order
Page 9 of 17
COD ING: Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F R E P R E S E N T A T V E S
HB 329 2020
226 levying the assessment on insurers , specify that the assessment
227 is due and payable quarterly mo n t h ly as the funds are collected
228 from insureds throughout the assessment year , in which case the
229 assessment shall be a uniform percentage of premium collected
230 during the assessment year and shall be collected from all
231 policyholders with policies in the classes protected by the
232 account . All insurers shall collect the assessment without
233 regard to whether the insurers reported premium in the year
234 preceding the assessment . Insurers are not required to advance
235 funds if the association and the office elect to use the
236 quarterly monthly installment option . All funds collected shall
237 be retained by the association for the payment of current or
238 future claims . This subparagraph does not alter the obligation
239 of an insurer to remit assessments levied pursuant to this
240 subsection to the association .
241 Section 4. Paragraph (b) of subsection (15) of section
242 625 . 012 , Florida Statute s, is amended to read :
243 625 . 012 " As s ets " defined . -In any determination of the
244 financial condition of an insurer , there shall be allowed as
245 " assets " only such assets as are owned by the insurer and which
246 consist of :
247 (15)
248 (b) Assessments levied as monthl y installments pursuant to
249 s. 631.57(3) (e)3 . ors . 631.914 which are paid after policy
250 surcharges are collected so that the recognition of assets is
Page 10 of 17
CODING: Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F R E P R E S E N T A T V E S
HB 329 2020
251 based on actual premium written offset by the obligation to the
252 Florida Insurance Guaranty Association or the Florida Workers'
253 Compensation Insurance Guaranty Association , Incorporated .
254 Section 5. Subsection (3) of section 631 . 59, Florida
255 Statutes, is amended to read :
256 631 . 59 Duties and powers of department and office.-
257 (3) The office shall , upon request of the board of
258 directors, provide the association with a statement of the rte'l::-
259 d irect written premiums of each member insurer .
260 Section 6 . Subsection (1) of section 631.912, Florida
261 Statutes , is amended to read :
262 631.912 Board of directors. -
263 (1) The board of directors of the corporation shall
264 consist of 11 persons, 1 of whom is the insurance consumer
265 advocate appointed under s. 627.0613 or designee and 1 of whom
266 is designated by the Chief Financial Officer . The department
267 shall appoint to the board 6 persons selected by private
268 carriers from among the 20 workers ' compensation insurers with
269 the largest amount of rte-t:- direct written premium as determined
270 by the department , and 2 persons selected by the self-insurance
271 funds . The Governor shall appoint one person who has commercial
272 insurance experience. At least two of the private carriers shall
273 be foreign carriers authorized to do business in this state. The
274 board shall elect a chairperson from among its members. The
275 Chief Financial Officer may remove any board member for cause .
Page 11 of 17
CODING : Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F R E P R E S E N T A T I V E S
HB 329 2020
276 Each board member shall be appointed to serve a 4- year term and
277 may be reappointed. A vacancy on the board shall be filled for
278 the remaining period of the term in the same manner by which the
279 original appointment was made .
280 Section 7. Subsections ( 1) , ( 2) , and ( 3) of section
281 631 . 914 , Florida Statutes , are amended to read:
282 631 . 914 Assessments.-
283 ( 1) (a) To the extent necessary to secure the funds for the
284 payment of covered claims , and also to pay the reasonable costs
285 to administer the same, the Office of Insurance Regulation, upon
286 certification by the board , shall levy assessments on each
287 insurer initially estimated in the proportion that the insurer ' s
288 net direct written premiums in this state bears to the total of
289 said net direct written premiums received in this state by all
2 90 such workers ' compensation insurers for the preceding calendar
291 ye-a-r- . Assessments levied against insurers and self-insurance
292 funds pursuant to this paragraph must be computed and levied on
293 the basis of the fu l l p o licy premi um value on the R-e-t- direct
294 written premium amount as set forth in the state for workers '
295 compensation insurance without consideration of any applicable
296 discount or credit for deductibles . An insurer ' s direct written
297 premium calculated for the purposes of determining the insurer's
298 assessment or policy surcharge may not be reduced by any
299 discount or credit for deductibles in a policy or by any premium
300 adjustment to a retrospectively rated policy . Insurers and self -
Page 12 of 17
CODING: Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F R E P R E S E N T A T V E S
HB 329 2020
301 insurance funds must report premiums in compliance with this
302 paragraph , and the association may audit the reports.
303 Assessments shall be remitted to and administered by the board
304 of directors in the manner specified by the approved plan of
305 operation and paragraph (d) . Each assessment shall be a uniform
306 percentage applicable to the net direct written premiums of each
307 insurer writing workers ' compensation insurance . Assessments
308 levied against insurers and self-insurance funds shall not
309 exceed in any calendar year more than 2 percent of that
310 insurer's fte-t- direct written premiums in this state for workers '
311 compensation insurance.
312 (c)--f-b+- The office shall levy the uniform surcharge
313 percentage on all policies of the same kind or line as were
314 considered by the office in determining the assessment liability
315 of the insurer. Member insurers shall collect policy surcharges
316 at a uniform percentage rate on new and renewal policies issued
317 and effective during the period of 12 months beginning on
318 January 1, April 1 , July 1 , or October 1 , whichever is the first
319 day of the following calendar quarter as specified in an order
320 issued by the office directing insurers to pay an assessment to
321 the association. The policy surcharge may not begin until 90
322 days after the board of directors certifies the assessment.
323 J..Ql+e+ If assessments otherwise authorized in paragraph
324 (a) ar e insufficient to make all payments on reimbursements then
325 owing to claimants in a calendar year , then upon certification
Page 13 of 17
CODING: Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F REPRESENTAT I VES
HB 329 2020
326 by the board, the office shall levy additional assessments of up
327 to 1 . 5 percent of the insurer ' s fte-t:- direct written premiums in
328 this state.
329 (d) The association may use an installment method to
330 require the insur er to remit the policy surcharge assessment as
331 collected premium is written or may require the insurer to remit
332 the assessment to the association before collecting the policy
333 policyholder surcharge. If the assessment is remitted before the
334 surcharge is collected, the assessment remitted must be based on
335 an estimate of the assessment due based on the proportion of
33 6 each insurer ' s net direct written premium in this state for the
337 prece d ing calendar year as described in paragraph (a) and
338 adjusted following the end of the 12 month period during which
339 the assessment is levied.
340 1. If the association elects to use the installment
341 method , the office may, in the order levying the assessment on
342 insurers , specify that the policy surcharge assessment is due
343 and payable quarterly as collected premium is written throughout
344 the assessment year . Insurers shall collect policy surcharges at
345 a uniform percentage rate specified by order as described in
346 paragraph (c) -fb+. Insurers are not required to advance funds if
347 the association and the office elect to use the installment
348 option . Assessments levied under this subparagraph are paid
349 after policy surcharges are collected , and the recognition of
350 assets is based on actual policy surcharges collected premium
Page 14 of 17
CODING: Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F REPRESENTATIVES
HB 329 2020
351 written offset by the obligation to the associat i on .
352 2. If the association elects to require insurers to remit
353 the assessment before surcharging the policy policyholder , the
354 following shall apply :
355 a. On or before the date specified in the order of the
356 office , insurers shall make an initial payment to the
357 association of the percentage specified in the order multiplied
358 by the insurer ' s direct written premiums received in this state
359 for the preceding calendar year for the kinds of insurance
360 included within such account before the beginni n g of the
361 assessment year .
362 b . a-. The levy order shall provide each insurer so assessed
363 at least 30 days ' written notice of the date the initial
364 assessment payment is due and payable by the insurer .
365 c . fr.- Insurers shall collect policy surcharges at a uniform
366 percentage rate specified by the order , as described in
367 paragraph (c) -fe+ .
368 d. €-7 Assessments levied under this subparagraph and a-r-e
369 paid by an insurer constitute advances of funds from the insurer
370 to the association before policy surcharges are billed and
371 result in a receivable for policy surcharges to be billed in the
372 future . The amount of billed policy surcharges , to the extent it
373 is likely that it will be realized , meets the definition of an
374 admissible asset as specified in the National Association of
375 Insurance Commissioners ' Statement of Statutory Accounting
Page 15 of 17
CODING: Words stricken are deletions; words underlined are additions.
hb0329-00
F L O R D A H O U S E O F REPRESENTATIVES
HB 329 2020
376 Principles No. 4 . The asset shall be established and recorded
377 separately from the liability. If an insurer is unable to fully
378 recoup the amount of the assessment , the amount recorded as an
379 asset shall be reduced to the amount reasonably expected to be
380 recouped.
381 3. Insurers must submit a reconciliation report to the
382 association within 120 days after the end of the 12-month
383 assessment period and annually thereafter for a period of 3
384 years. The report must indicate the amount of the initial
385 payment or installment payments made to the association and the
386 amou nt of policy surcharges collected written premium pursuant
387 to paragraph (a) for the assessment year. If the insurer 's
388 reconciled assessment obligation is more than the amount paid to
389 the association, the insurer shall pay the excess policy
390 surcharges collected to the association. If the insurer ' s
391 reconciled assessment obligation is less than the initial amount
392 paid to the association , the association shall return the
393 overpayment to the insurer .
394 (2) Policy surcharges collected Assessments levied under
395 this section are not premium and are not subject to any premium
396 tax , fees , or commissions . Insurers shall treat the failure of
397 an insured to pay policy assessment related surcharges as a
398 failure to pay premium . An insurer is not liable for any
399 unco llectibl e policy assessment related surcharges levied
400 pursuant to this section .
Page 16 of 17
CODING: Words stricken are deletions; words underlined are additions.
hb0329-00
FLOR I DA H O U S E O F REPRESENTATIVES
HB 329 2020
401 (3) Assessments levied under this section may be levied
402 only upon insurers. This section does not create a cause of
403 action by a policyholder with respect to the levying of an
404 assessment or a policyholder ' s duty to pay assessment - related
405 policy surcharges .
406 Section 8 . This act shal l take effect July 1 , 2020 .
Page 17 of 17
CODING: Words strioken are deletions; words underlined are additions.
hb0329-00
File and source
- File
- 2019-11-06_3013_insurance-banking-subcommittee_meeting-packets_mtg12350.pdf
- Size
- 14,647,102 bytes
- SHA-256
- 8537965fd89bc78363b2f23743b329d2349611039191431ca281e977a598370f
- Original
- No public link identified.