¹631.57 Powers and duties of the association.--

1. (1) The association shall:

   1. (a) 1. Be obligated to the extent of the covered claims existing:

      a. Prior to adjudication of insolvency and arising within 30 days after the determination of insolvency;

      b. Before the policy expiration date if less than 30 days after the determination; or

      c. Before the insured replaces the policy or causes its cancellation, if she or he does so within 30 days of the determination.

      2. The obligation under subparagraph 1. shall include only that amount of each covered claim which is in excess of $100 and is less than $300,000, except with respect to policies covering condominium associations or homeowners' associations, which associations have a responsibility to provide insurance coverage on residential units within the association, the obligation shall include that amount of each covered property insurance claim which is less than $100,000 multiplied by the number of condominium units or other residential units; however, as to homeowners' associations, this subparagraph applies only to claims for damage or loss to residential units and structures attached to residential units.

      3. In no event shall the association be obligated to a policyholder or claimant in an amount in excess of the obligation of the insolvent insurer under the policy from which the claim arises. The foregoing notwithstanding, the association shall have no obligation to pay covered claims to be paid from the proceeds of bonds issued under s. 166.111(2). However, the association shall cause assessments to be made under paragraph (3)(e) for such covered claims, and such assessments shall be assigned and pledged under paragraph (3)(e) to or on behalf of the issuer of such bonds for the benefit of the holders of such bonds. The association shall administer any such covered claims and present valid covered claims for payment in accordance with the provisions of the assistance program in connection with which such bonds have been issued.

   2. (b) Be deemed the insurer to the extent of its obligation on the covered claims, and, to such extent, shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent. In no event shall the association be liable for any penalties or interest.

2. (2) The association may:

   1. (a) Employ or retain such persons as are necessary to handle claims and perform other duties of the association;
   2. (b) Borrow funds necessary to effect the purposes of this part in accord with the plan of operation;
   3. (c) Sue or be sued, provided that service of process shall be made upon the person registered with the department as agent for the receipt of service of process; and
   4. (d) Negotiate and become a party to such contracts as are necessary to carry out the purpose of this part. Without limiting the generality of the foregoing, the association may enter into such contracts with a municipality as are necessary in order for the municipality to issue bonds under s. 166.111(2). In connection with the issuance of such bonds and the entering into of the necessary contracts, the association may agree to such terms and conditions as it deems necessary and proper.
3. (3) (a) To the extent necessary to secure the funds for the respective accounts for the payment of covered claims and also to pay the reasonable costs to administer the same, the department, upon certification of the board of directors, shall levy assessments in the proportion that each insurer's net direct written premiums in this state in the classes protected by the account bears to the total of said net direct written premiums received in this state by all such insurers for the preceding calendar year for the kinds of insurance included within such account. Assessments shall be remitted to and administered by the board of directors in the manner specified by the approved plan. Each insurer so assessed shall have at least 30 days' written notice as to the date the assessment is due and payable. Every assessment shall be made as a uniform percentage applicable to the net direct written premiums of each insurer in the kinds of insurance included within the account in which the assessment is made. The assessments levied against any insurer shall not exceed in any one year more than 2 percent of that insurer's net direct written premiums in this state for the kinds of insurance included within such account during the calendar year next preceding the date of such assessments.
4. (b) If sufficient funds from such assessments, together with funds previously raised, are not available in any one year in the respective account to make all the payments or reimbursements then owing to insurers, the funds available shall be prorated and the unpaid portion shall be paid as soon thereafter as funds become available.
5. (c) Assessments shall be included as an appropriate factor in the making of rates.
6. (d) No state funds of any kind shall be allocated or paid to said association or any of its accounts.

7. (e) 1.a. In addition to assessments otherwise authorized in paragraph (a), as a temporary measure related to insolvencies caused by Hurricane Andrew, and to the extent necessary to secure the funds for the account specified in s. 631.55(2)(c), or to retire indebtedness, including, without limitation, the principal, redemption premium, if any, and interest on, and related costs of issuance of, bonds issued under s. 166.111(2), and the funding of any reserves and other payments required under the bond resolution or trust indenture pursuant to which such bonds have been issued, the department, upon certification of the board of directors, shall levy assessments upon insurers holding a certificate of authority as follows:

   1. (I) Except as provided in sub-sub-subparagraph (II), the assessments payable under this paragraph by any insurer shall not exceed in any 1 year more than 2 percent of that insurer's direct written premiums, net of refunds, in this state during the preceding calendar year for the kinds of insurance within the account specified in s. 631.55(2)(c).
   2. (II) If the amount levied under sub-sub-subparagraph (I) is less than 2 percent of the insurer's direct written premiums, net of refunds, in this state during calendar year 1991 for the kinds of insurance within the account specified in s. 631.55(2)(c), in addition to and separate from such assessment, the assessment shall also include the difference between the amount calculated based on calendar year 1991 and the amount determined under sub-sub-subparagraph (I). If this sub-sub-subparagraph is held invalid, the invalidity shall not affect other provisions of this section, and to this end the provisions of this section are declared severable.

   3. (III) In addition to any other insurers subject to this subparagraph, this subparagraph also applies to any insurer that held a certificate of authority on August 24, 1992. If this sub-sub-subparagraph is held invalid, the invalidity shall not affect other provisions of this section, and to this end the provisions of this section are declared severable.

      b. Any assessments authorized under this paragraph shall be levied by the department upon insurers referred to in sub-subparagraph a., upon certification as to the need therefor by the board of directors, in 1992 and in each year that bonds issued under s. 166.111(2) are outstanding, in such amounts up to such 2 percent limit as required in order to provide for the full and timely payment of the principal of, redemption premium, if any, and interest on, and related costs of, issuance of bonds issued under s. 166.111(2). The assessments provided for in this paragraph are hereby assigned and pledged to a municipality issuing bonds under s. 166.111(2)(b), for the benefit of the holders of such bonds, in order to enable such municipality to provide for the payment of the principal of, redemption premium, if any, and interest on such bonds, the cost of issuance of such bonds, and the funding of any reserves and other payments required under the bond resolution or trust indenture pursuant to which such bonds have been issued, without the necessity of any further action by the association, the department, or any other party. To the extent that bonds are issued under s. 166.111(2), the proceeds of assessments levied under this paragraph shall be remitted directly to and administered by the trustee appointed for such bonds.

      c. Assessments under this paragraph shall be payable in 12 monthly installments with the first installment being due and payable at the end of the month after an assessment is levied, and subsequent installments being due not later than the end of each succeeding month.

      d. The association shall issue a monthly report on the status of the use of the bond proceeds as related to insolvencies caused by Hurricane Andrew. The report must contain the number of claims paid and the amount of claims paid. The association shall also include an analysis of the revenue generated from the additional assessment levied under this subsection. The report must be sent to the Legislature and the Insurance Commissioner monthly.

      2. In order to assure that insurers paying assessments levied under this paragraph continue to charge rates that are neither inadequate nor excessive, within 90 days after being notified of such assessments, each insurer that is to be assessed pursuant to this paragraph shall make a rate filing for coverage included within the account specified in s. 631.55(2)(c) and for which rates are required to be filed under s. 627.062. If the filing reflects a rate change that, as a percentage, is equal to the difference between the rate of such assessment and the rate of the previous year's assessment under this paragraph, the filing shall consist of a certification so stating and shall be deemed approved when made, subject to the department's continuing authority to require actuarial justification as to the adequacy of any rate at any time. Any rate change of a different percentage shall be subject to the standards and procedures of s. 627.062.

   4. (4) The department may exempt any insurer from an assessment if an assessment would result in such insurer's financial statement reflecting an amount of capital or surplus less than the sum of the minimum amount required by any jurisdiction in which the insurer is authorized to transact insurance.
   5. (5) Any necessary and proper expenses incurred by an insurer in the investigation, adjustment, compromise, settlement, denial, or handling of claims assigned to it shall, upon proper verification under the rules of the association, entitle the insurer to reimbursement. Any insurer whose employee serves on the staff of the association may set off from its assessment any necessary and proper expenses incurred by the insurer resulting from said service of its employee. An insurer which ceases to engage in the business of writing property or casualty insurance policies in this state shall have no right to a refund of any assessment previously remitted.

   6. (6) The association may extend the time limits specified in paragraph (1)(a) by up to an additional 60 days or waive the applicability of the $100 deductible specified in paragraph (1)(a) if the board determines that either or both such actions are necessary to facilitate the bulk assumption of obligations.

      ¹Note.--Section 7, ch. 92-345, provides that "[n]o provision of section 631.57 or s. 166.111(2), Florida Statutes, shall be repealed until such time as the principal of, redemption premium, if any, and interest on all bonds issued under s. 166.111(2), Florida Statutes, payable and secured from assessments levied under s. 631.57(3)(e), Florida Statutes, have been paid in full or adequate provision for such payment has been made in accordance with the bond resolution or trust indenture pursuant to which such bonds were issued."

History.--s. 8, ch. 70-20; s. 1, ch. 70-439; s. 3, ch. 77-227; s. 118, ch. 79-40; s. 809(1st), ch. 82-243; s. 9, ch. 85-339; s. 5, ch. 87-350; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 5, ch. 92-345; s. 6, ch. 93-401; s. 411, ch. 97-102; s. 19, ch. 97-262; s. 47, ch. 99-3.