INSURANCE GUARANTY ASSOCIATION ACT
631.50.
Title
This part shall be known and may be cited as the "Florida Insurance
Guaranty Association Act."
§ 1, ch. 70-20; §
809(1st), ch. 82-243; §§187, 188, ch. 91-108; § 4, ch.
91-429.
631.51.
Purposes
The purposes of this part are to:
(1) Provide a mechanism for the payment of covered claims under certain
insurance policies to avoid excessive delay in payment and to avoid financial
loss to claimants or policyholders because of the insolvency of an
insurer;
(2) Assist in the detection and prevention of insurer
insolvencies;
(3) Create a nonprofit corporation to administer and supervise the
operation of such association; and
(4) Assess the cost of such protection among
insurers.
§ 2, ch. 70-20; §
809(1st), ch. 82-243; §§187, 188, ch. 91-108; § 4, ch.
91-429.
631.52
Scope
This part shall apply to all kinds of direct insurance,
except;
(1) Life, annuity,
health, or disability insurance;
(2) Mortgage guaranty, financial guaranty, or other forms of insurance
offering protection against investment risks;
(3) Fidelity or surety
bonds, or any other bonding obligations;
(4) Credit insurance, vendors' single interest insurance, or collateral protection insurance or
any similar insurance protecting the interests of a creditor arising out of a
creditor-debtor transaction;
(5) Warranty, including motor vehicle service, home warranty, or service
warranty;
(6) Ambulance service, health care service, or preneed funeral
merchandise or service;
(7) Optometric service plan, pharmaceutical service plan, or dental
service plan;
(8) Legal expense;
(9) Health maintenance, prepaid health clinic, or continuing care;
(10) Ocean marine or wet marine insurance;
(11) Self-insurance;
(12) Title insurance;
(13) Surplus lines;
(14) Workers’ compensation;
(15) Any transaction or combination of transactions between a person,
including affiliates of such person, and an insurer, including affiliates of
such insurer, which involves the transfer of investment or credit risk
unaccompanied by the transfer of insurance risk; or
(16) Any insurance provided by or guaranteed by
government.
§ 3, ch. 70-20; § 1,
ch. 77-227; § 1, ch. 80-26; § 809(1st), ch. 82-243; § 3, ch. 85-321; § 4, ch.
87-350; §§ 187, 188, ch. 91-108; § 4, ch. 91-429; § 16, ch. 97-262, eff.
631.53
Construction
This part shall be liberally construed to effect the purposes set forth
in s. 631.51, which shall constitute an aid and guide to
interpretation.
§ 4, ch. 70-20; §
809(1st), ch. 82-243; §§187,188, ch. 91-108; § 4, ch.
91-429.
631.54
Definitions
As used in this part:
(1) "Account" means any one of the three accounts created by s.
631.55.
(2) "Association" means the Florida Insurance Guaranty Association,
Incorporated.
(3) "Covered claim" means an unpaid claim, including one of unearned
premiums, which arises out of, and is within the coverage, and not in excess of,
the applicable limits of an insurance policy to which this part applies, issued
by an insurer, if such insurer becomes an insolvent insurer after October 1,
1970, and the claimant or insured is a resident of this state at the time of the
insured event or the property from which the claim arises is permanently located
in this state. "Covered claim"
shall not include any amount due any reinsurer, insurer, insurance pool, or
underwriting association, as subrogation, contribution, indemnification, or
otherwise. Member insurers shall
have no right of subrogation against the insured of any insolvent
member.
(4) "Expenses in handling claims" means allocated and unallocated
expenses, including, but not limited to, general administrative expenses and
those expenses which relate to the investigation, adjustment, defense, or
settlement of specific claims under, or arising out of, a specific
policy.
(5) "Insolvent insurer" means a member insurer authorized to transact
insurance in this 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.
(6) "Member insurer" means any person who writes any kind of insurance to
which this part applies under s. 631.52, including the exchange of reciprocal or
interinsurance contracts, and is licensed to transact insurance in this
state.
(7) "Net direct written premiums" means direct gross premiums written in
this state on insurance policies to which this part applies, less return
premiums thereon and dividends paid or credited to policyholders on such direct
business. "Net direct written
premiums" does not include premiums on contracts between insurers or reinsurers.
(8) "Person" means individuals, children, firms, associations, joint
ventures, partnerships, estates, trusts, business trusts, syndicates,
fiduciaries, corporations, and all other groups or
combinations.
§ 5, ch. 70-20; §§ 2,
4, ch. 77-227; § 1, ch. 79-55; § 809(1st), ch. 82-243; § 30, ch. 83-38; §§ 187,
188, ch. 91-108; § 4, ch. 91-429; § 17, ch. 97-262, eff.
631.55 Creation of the
association
(1) There is created a nonprofit corporation to be known as the "Florida
Insurance Guaranty Association, Incorporated." All insurers defined as member insurers
in s. 631.54 (6) shall be members of the association as a condition of their
authority to transact insurance in this state, and, further, as a condition of
such authority, an insurer shall agree to reimburse the association for all
claim payments the association makes on said insurer's behalf if such insurer is
subsequently rehabilitated. The
association shall perform its functions under a plan of operation established
and approved under s. 631.58 and shall exercise its powers through a board of
directors established under s. 631.56.
The corporation shall have all those powers granted or permitted
nonprofit corporations, as provided in chapter 617.
(2) For the purposes of administration and assessment, the association
shall be divided into three separate accounts:
(a) The auto liability account;
(b) The auto physical damage account; and
(c) The account for all other insurance to which this part
applies.
§ 6, ch. 70-20; §117,
ch. 79-40; § 809(1st), ch. 82-243; § 14, ch. 89-360; §§ 187, 188, ch. 91-108; §
4, ch. 91-429; § 4, ch. 92-345; § 18, ch. 97-262, eff.
631.56 Board of
directors
(1) The board of directors of the association shall consist of not less
than five or more than nine persons serving terms as established in the plan of
operation. The department shall
approve and appoint to the board persons recommended by the member
insurers. In the event the
department finds that any recommended person does not meet the qualifications
for service on the board, the department shall request the member insurers to
recommend another person. Each
member shall serve for a 4-year term and may be reappointed. Vacancies on the board shall be filled
for the remaining period of the term in the same manner as initial
appointments.
(2) In appointing members to the board, the department shall consider
among other things whether all areas of insurance covered by this part are
fairly represented.
(3) Members of the board may be reimbursed from the assets of the
association for expenses incurred by them as members of the board of
directors.
§ 7, ch. 70-20; §
809(1st), ch. 82-243; §§ 187, 188, ch. 91-108; § 4, ch. 91-429; Laws 2003, c.
2003-261, § 1354, eff.
631.57 Powers and
duties of the association
(1) The association shall:
(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.
(b) Be deemed the insurer to the extent of its obligation on the covered
claims, and, to such extent, shall have all rights, duties, defenses, 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) The association may:
(a) Employ or retain such persons as are necessary to handle claims and
perform other duties of the association;
(b) Borrow funds necessary to effect the purposes of this part in accord
with the plan of operation;
(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
(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 section
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) (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 office, 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.
(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.
(c) Assessments shall be included as an appropriate factor in the making
of rates.
(d) No state funds of any kind shall be allocated or paid to said
association or any of its accounts.
(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) 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) 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.
§ 8, ch. 70-20; § 1,
ch. 70-439; § 3, ch. 77-227; § 118, ch. 79-40; §809(1st), ch. 82-243; § 9, ch.
85-339; § 5, ch. 87-350; §§ 187, 188, ch. 91-108; § 4, ch. 91-429; § 5, ch.
92-345; § 6, ch. 93-401; § 411, ch. 97-102, eff. 7-1-97; § 19, ch. 97-262, eff.
10-1-97; Laws 1999, § 47, ch. 99-3, eff. June 29, 1999; Laws 2002, c. 2002-25, §
16, eff. July 1, 2002; Laws 2003, c. 2003-261, § 1355, eff. June 26,
2003.
631.575. Repealed by Laws 1987, c. 87-350, § 9,
eff.
631.58 Plan of
operation
(1) (a) The association shall submit to the department a proposed plan of
operation and any amendments thereto necessary or suitable to assure the fair,
reasonable, and equitable administration of the association. The plan of operation and any amendments
thereto shall become effective upon approval in writing by the
department.
(b) If the association fails to submit a suitable proposed plan of
operation by
(2) All member insurers shall comply with the plan of
operation.
(3) The plan of operation shall:
(a) Establish the procedures whereby all the powers and duties of the
association under s. 631.57 will be performed;
(b) Establish procedures for handling assets of the
association;
(c) Establish the amount and method of reimbursing members of the board
of directors under s. 631.56;
(d) Establish procedures by which claims may be filed with the
association and acceptable forms of proof of covered claims. Notice of claims to the receiver or
liquidator of the insolvent insurer shall be deemed notice to the association or
its agent, and a list of such claims shall be periodically submitted to the
association or similar organization in another state by the receiver or
liquidator;
(e) Establish regular places and times for meetings of the board of
directors;
(f) Establish procedures for records to be kept of all financial
transactions of the association, its agents and the board of
directors;
(g) Provide that any member insurer aggrieved by any final action or
decision of the association may appeal to the department within 30 days after
the action or decision;
(h) Establish the procedures whereby recommendations for the board of
directors will be submitted to the department; and
(i) Contain additional provisions necessary or proper for the execution
of the powers and duties of the association.
(4) The plan of operation may provide that any or all powers and duties
of the association, except those under s. 631.57 (2) (b) and (c), are delegated
to a corporation, association, or other organization which performs or will
perform functions similar to those of this association or its equivalent in two
or more states. Such a corporation,
association, or organization shall be reimbursed as a servicing facility would
be reimbursed and shall be paid for its performance of any other functions of
the association. A delegation under
this subsection shall take effect only with the approval of both the board of
directors and the department, and may be made only to a corporation,
association, or organization which extends protection not substantially less
favorable and effective than that provided by this part.
§ 9, ch. 70-20; § 163,
ch. 71-355; § 21, ch. 78-95; § 809(1st), ch. 82-243; §§ 187, 188, ch. 91-108; §
4, ch. 91-429.
631.59. Duties and
powers of department and office
(1) The department shall
notify the association of the existence of an insolvent insurer not later
than 3 days after it receives notice of the determination of the
insolvency.
(2) The department may
require that the association notify the insureds of the insolvent insurer
and any other interested parties of the determination of insolvency and of their
rights under this part. Such
notification shall be by mail at their last known addresses, when available, but
if sufficient information for notification by mail is not available, notice by
publication in a newspaper of general circulation shall be
sufficient.
(3) The office shall, upon request of the board of directors, provide the
association with a statement of the net direct written premiums of each member
insurer.
(4) The office may:
(a) Suspend or revoke the certificate of authority to transact insurance
in this state of any member insurer which fails to pay an assessment when due or
fails to comply with the plan of operation. As an alternative, the office may levy a
fine on any member insurer which fails to pay an assessment when due. Such fine may not exceed 5 percent of
the unpaid assessment per month, except that no fine shall be less than $100 per
month.
(b) Revoke the designation of any servicing facility if it finds claims
are being handled unsatisfactorily.
§ 10, ch. 70-20; § 21,
ch. 78-95; § 809(1st), ch. 82-243; §§ 187, 188, ch. 91-108; § 4, ch. 91-429;
Laws 2003, c. 2003-261, § 1356, eff.
631.60 Effect of paid
claims
(1) Any person recovering under this part shall be deemed to have
assigned her or his rights under the policy to the association to the extent of
the person’s recovery from the association, regardless of whether such recovery
is received directly from the association or through payments made from the
proceeds of bonds issued under section 166.111(2). Every insured or claimant seeking the
protection of this part shall cooperate with the association to the same extent
as such person would have been required to cooperate with the insolvent
insurer. The association shall have
no cause of action against the insured of the insolvent insurer for any sums it
has paid out except such causes of action as the insolvent insurer would have
had if such sums had been paid by the insolvent insurer. In the case of an insolvent insurer
operating on a plan with assessment liability, payments of claims of the
association shall not operate to reduce the liability of insureds to the
receiver, liquidator, or statutory successor for unpaid
assessments.
(2) The receiver, liquidator, or statutory successor of an insolvent
insurer shall be bound by settlements of covered claims by the association or a
similar organization in another state.
The court having jurisdiction shall grant such claims priority equal to
that to which the claimant would have been entitled in the absence of this part
against the assets of the insolvent insurer. The expenses of the association or
similar organization in handling claims shall be accorded the same priority as
the liquidator's expenses.
(3) The association shall periodically file with the receiver or
liquidator of the insolvent insurer statements of the covered claims paid by the
association and estimates of anticipated claims on the association which shall
preserve the rights of the association against the assets of the insolvent
insurer.
(4) Any release of the association and its insured must clearly state
whether or not any claim filed with the receiver in excess of the liability of
the association under s. 631.57 is waived.
§ 11, ch. 70-20; § 11,
ch. 71-970; § 809(1st), ch. 82-243; § 31, ch. 83-38; §§ 187, 188, ch. 91-108; §
4, ch. 91-429; § 6, ch. 92-345; § 412, ch. 97-102, eff.
631.61. Nonduplication
of recovery
(1) Any person having a claim against an insurer under any provision in
an insurance policy other than a policy of an insolvent insurer which is also a
covered claim, shall not be required to exhaust first her or his rights under
such a policy. Any amount payable
on a covered claim under this part shall be reduced by the amount of any
recovery under such insurance policy.
(2) Any person having a claim which may be recovered under more than one
insurance guaranty association or its equivalent shall seek recovery first from
the association of the place of residence of the insured, except that if it is a
first-party claim for damage to property with a permanent location, the person
shall seek recovery first from the association of the location of the property,
and if it is a workers' compensation plan, the person shall seek recovery first
from the association of the residence of the claimant. Any recovery under this part shall be
reduced by the amount of recovery from any other insurance guaranty association
or its equivalent.
§ 12, ch. 70-20; § 119,
ch. 79-40; § 809(1st), ch. 82-243; §§ 187, 188, ch. 91-108; § 4, ch. 91-429; §
413, ch. 97-102, eff.
631.62. Prevention of
insolvencies
To aid in the detection and prevention of insurer
insolvencies:
(1) It shall be the duty of the board of directors, upon majority vote,
to notify the office of any information indicating any member insurer may be
insolvent or in a financial condition hazardous to the policyholders or the
public.
(2) The board of directors may, upon majority vote, request that the
office order an examination of any member insurer which the board in good faith
believes may be in a financial condition hazardous to the policyholders or the
public. Within 30 days of the
receipt of such request, the office shall begin such examination. The examination may be conducted as a
National Association of Insurance Commissioners examination or may be conducted
by such persons as the office designates.
The cost of such examination shall be paid by the association and the
examination report shall be treated as are other examination reports pursuant to
s. 624.319. In no event shall such
examination report be released to the board of directors prior to its release to
the public. The office shall notify
the board of directors when the examination is completed. The request for an examination shall be
kept on file by the office; such request is confidential and exempt from the
provisions of s. 119.07(1) until the examination report is released to the
public.
(3) The board of directors may, upon majority vote, make reports and
recommendations to the department or office upon any matter germane to the
solvency, liquidation, rehabilitation, or conservation of any member
insurer. Such reports and
recommendations are confidential and exempt from the provisions of s. 119.07(1)
until the termination of a delinquency proceeding.
(4) The board of directors may, upon majority vote, make recommendations
to the office for the detection and prevention of insurer
insolvencies.
§ 13, ch. 70-20; §
809(1st), ch. 82-243; § 32, ch. 83-38; § 38, ch. 87-226; §§ 187, 188, ch.
91-108; § 4, ch. 91-429; § 3, ch. 93-118; § 386, ch. 96-406, eff.
631.63. Examination of
the association
The association shall be
subject to examination and regulation by the department. The board of directors shall submit, not
later than March 30 of each year, a financial report for the preceding calendar
year in a form approved by the department.
§ 14, ch. 70-20; §
809(1st), ch. 82-243; §§ 187,188, ch. 91-108; § 4, ch.
91-429.
631.64. Recognition of
assessments in rates
The rates and premiums charged for insurance policies to which this part
applies may include amounts sufficient to recoup a sum equal to the amounts paid
to the association by the member insurer less any amounts returned to the member
insurer by the association, and such rates shall not be deemed excessive because
they contain an amount reasonably calculated to recoup assessments paid by the
member insurer.
§ 15, ch. 70-20; §
809(1st), ch. 82-243; §§ 187, 188, ch. 91-108; § 4, ch.
91-429.
631.65. Prohibited
advertisement or solicitation
No person shall make, publish, disseminate, circulate, or place before
the public, or cause, directly or indirectly, to be made, published,
disseminated, circulated, or placed before the public, in a newspaper, magazine,
or other publication, or in the form of a notice, circular, pamphlet, letter, or
poster, or over any radio station or television station, or in any other way,
any advertisement, announcement, or statement which uses the existence of the
insurance guaranty association for the purpose of sales, solicitation, or
inducement to purchase any form of insurance covered under this
part.
§ 16, ch. 70-20;
§809(1st), ch. 82-243; §§ 187, 188, ch. 91-108; § 4, ch.
91-429.
631.66.
Immunity
There shall be no liability on the part of, and no cause of action of any
nature shall arise against, any member insurer, the association or its agents or
employees, the board of directors, the Chief Financial Officer, or the
department or office or their representatives for any action taken by them in
the performance of their powers and duties under this part. Such immunity shall extend to the
participation in any organization of one or more other state associations of
similar purposes and to any such organization and its agents or
employees.
§ 17, ch. 70-20; §
809(1st), ch. 82-243; §§ 96, 187, 188, ch. 91-108; § 4, ch. 91-429; Laws 2003,
c. 2003-261, § 1358, eff.
631.67. Stay of
proceedings; reopening of default judgments
All proceedings in which the insolvent insurer is a party or is obligated
to defend a party in any court or before any quasi-judicial body or
administrative board in this state shall be stayed for 6 months, or such
additional period from the date the insolvency is adjudicated, by a court of
competent jurisdiction to permit proper defense by the association of all
pending causes of action as to any covered claims; provided that such stay may
be extended for a period of time greater than 6 months upon proper application
to a court of competent jurisdiction.
The association, either on its own behalf or on behalf of such insured,
may apply to have any judgment, order, decision, verdict, or finding based on
the default of the insolvent insurer or its failure to defend an insured set
aside by the same court or administrator that made such judgment, order,
decision, verdict, or finding and shall be permitted to defend against such
claim on the merits. If request is
made by the association, the stay of proceedings may be shortened or
waived.
§ 18, ch. 70-20; § 18,
ch. 71-970; § 5, ch.77-227; § 2, ch. 80-26; § 809(1st), ch. 82-243; §§ 187, 188,
ch. 91-108, § 4; ch. 91-429.
631.68. Limitation;
certain actions
A covered claim as defined herein with respect to which settlement is not
effected and suit is not instituted against the insured of an insolvent insurer
or the association within 1 year after the deadline for filing claims, or any
extension thereof, with the receiver of the insolvent insurer shall thenceforth
be barred as a claim against the association and the
insured.
§ 19, ch. 71-970; § 6,
ch. 77-227; § 809(1st), ch. 82-243; § 33, ch. 83-38; §§ 187, 188, ch. 91-108; §
4, ch. 91-429.
631.70. Attorney's
fee
The provisions of s. 627.428 providing for an attorney's fee shall not be
applicable to any claim presented to the association under the provisions of
this part, except when the association denies by affirmative action, other than
delay, a covered claim or a portion thereof.
§ 7, ch. 77-227; §
809(1st), ch. 82-243; §§ 187, 188, ch. 91-108; § 4,
91-429.
631.705. Repealed. Laws
1990, ch. 90-32, § 94; 1995, ch. 95-145, § 26, eff.