(1) If a domestic insurer is an impaired insurer, the association may, subject to the approval of the impaired insurer and the department:
(a) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, any or all of the covered policies of the impaired insurer;
(b) Provide such moneys, pledges, notes, guarantees, or other means as are proper to effectuate paragraph (a) and assure payment of the contractual obligations of the impaired insurer pending action under paragraph (a); and
(c) Loan money to the impaired insurer.
1(2) If a domestic insurer is an insolvent insurer, the association shall, subject to the approval of the department:
(a) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, the covered policies of persons referred to in s. 631.713(2); and
(b) Provide moneys, pledges, notes, guarantees, or other means that are proper and reasonably necessary to implement paragraph (a) in order to assure payment of the contractual obligations of the insolvent insurer with regard to persons referred to in s. 631.713(2).
1(3) If a foreign or alien insurer is an insolvent insurer, the association shall, subject to the approval of the department:
(a) Guarantee, assume, reissue, or reinsure, or cause to be guaranteed, assumed, reissued, or reinsured, the covered policies of residents of this state; and
(b) Provide moneys, pledges, notes, guarantees, or other means that are proper and reasonably necessary to implement paragraph (a) in order to assure payment of the contractual obligations of the insolvent insurer with regard to persons referred to in s. 631.713(2).
However, this subsection does not apply when the department has determined that the foreign or alien insurer’s domiciliary jurisdiction or state of entry provides, by statute, protection substantially similar to that provided by this part for residents of this state.
(4)(a) In carrying out its duties under the provisions of subsections (2) and (3), the association may impose a lien on the premiums of any permanent policy or contract in connection with any guarantee, assumption, or reinsurance agreement made by it. Such lien may be enforced by a court of competent jurisdiction if the court:
1. Finds that the amounts which may be assessed under this part are less than the amounts needed to assure full and prompt performance of the insolvent insurer’s contractual obligations, or that the economic or financial conditions as they affect member insurers are sufficiently adverse to render the imposition of policy or contract liens, to be in the public interest; and
2. Approves the specific policy liens or contract liens to be used.
(b) Before becoming obligated under the provisions of subsections (2) and (3), the association may request that temporary moratoria or liens be imposed on payments of cash values and policy loans in addition to any contractual provisions for deferral of cash or policy loan values. Such temporary moratoria and liens may be imposed if they are approved by a court of competent jurisdiction.
(5) If the association fails to act within a reasonable period of time as provided in subsections (2) and (3), the department shall have the powers and duties of the association under this part with respect to insolvent insurers.
(6) The association may assist and advise the department, upon its request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of any impaired or insolvent insurer. The association may also assist and advise departments of insurance of other states; other guaranty associations; and conservators, rehabilitators, and receivers appointed or acting in regard to any member insured wherever located, for the purpose of developing plans to coordinate protection of policyholders. Costs of such activities may be charged against the health insurance account, the life insurance account, or the annuity account created by s. 631.715, at the discretion of the board of directors, notwithstanding any other provision of this part.
(7) The association shall have standing to appear before any court in this state which has jurisdiction over an impaired or insolvent insurer to which the association is or may become obligated under this part. Such standing shall extend to all matters germane to the powers and duties of the association, including but not limited to, proposals for reinsuring, reissuing, modifying, or guaranteeing the covered policies of the impaired or insolvent insurer and the determination of the covered policies and contractual obligations. The association also has the right to appear or intervene before a court or agency in another state which has jurisdiction over:
(a) An impaired or insolvent insurer for which the association is or may become obligated; or
(b) A person or property against whom the association may have rights through subrogation or otherwise.
(8)(a) Any person receiving benefits under this part shall be deemed to have assigned her or his rights under the covered policy to the association to the extent of the benefits received, whether the benefits are payments of contractual obligations or continuations of coverages. The association may require an assignment to it of such rights by any payee, policy or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of any rights or benefits conferred by this part upon such person. The association shall have subrogation rights against the assets of any insolvent insurer.
(b) The subrogation rights of the association under this subsection shall have the same priority against the assets of the insolvent insurer as those possessed by the person entitled to receive benefits under this part.
1(9) For purposes of this part, benefits provided by a long-term care rider to a life insurance policy or annuity contract are considered the same type of benefits as the base life insurance policy or annuity contract to which the rider relates.
1(10) In the event of a potential long-term care insurer impairment or insolvency, the association shall coordinate its activities with the Florida Health Maintenance Organization Consumer Assistance Plan, including the development of any plan for handling the administration of the impairment or insolvency.
1(11) The association shall share information, including data, with and assist, as applicable, the board of directors of the Florida Health Maintenance Organization Consumer Assistance Plan with the administration and collection of member health maintenance organization assessments for long-term care insurer impairments or insolvencies pursuant to ss. 631.715(2)(a)1., 631.718(3)(b), 631.818(2), and 631.819(2)(c).
(12) The association’s liability for the contractual obligations of the insolvent insurer must be as great as, but no greater than, the contractual obligations of the insurer in the absence of such insolvency, unless such obligations are reduced as permitted by subsection (4), but the aggregate liability of the association with respect to one life shall not exceed the following:
(a) For life insurance, $100,000 in net cash surrender and net cash withdrawal values.
(b) For deferred annuity contracts, $250,000 in net cash surrender and net cash withdrawal values.
1(c) For all other benefits, including in long-term care policies, $300,000, including cash values, except as provided in paragraph (d).
(d) Effective January 1, 2020, for basic hospital expense health insurance policies, basic medical-surgical health insurance policies, or major medical expense health insurance policies, but not including long-term care policies, $500,000.
In no event is the association liable for any penalties or interest.
(13) The association may:
(a) Enter into such contracts as are necessary or proper to carry out the provisions and purposes of this part.
(b) Sue or be sued, including the taking of any legal actions necessary or proper for the recovery of any unpaid assessments under s. 631.718, provided that service of process shall be made upon the person registered with the department as agent for receipt of service of process.
(c) Borrow money to effect the purposes of this part. Any notes or other evidence of indebtedness of the association not in default shall be legal investments for domestic insurers and may be carried as admitted assets.
(d) Employ or retain such persons as are necessary to handle the financial transactions of the association and to perform such other functions as become necessary or proper under this part.
(e) Negotiate and contract with any liquidator, rehabilitator, conservator, or ancillary receiver to carry out the powers and duties of the association.
(f) Take such legal action as may be necessary to avoid or recover payment of improper claims.
(g) Exercise, for the purposes of this part and to the extent approved by the department, the powers of a domestic life or health insurer, but in no case may the association issue insurance policies or annuity contracts other than those issued to satisfy the contractual obligations of the impaired or insolvent insurer.
(h) Join an organization of other state guaranty associations to further the purposes and to carry out the powers and duties of the association.
(14) The association is not liable for any civil action under s. 624.155 arising from any acts alleged to have been committed by a member insurer before its liquidation.
(15)(a) The association, when dealing only with life and health insurance policies under subsections (2) and (3), may make substitute coverage on an individual or group basis available to each known insured, or owner if other than the insured, or to an individual who is insured under a group policy as of the date the association became obligated and who is not eligible for replacement group coverage. When providing the substitute coverage, the association may offer either to reissue the terminated policy or to issue an alternative policy without requiring evidence of insurability or any waiting period or exclusion that would not have applied under the terminated policy.
(b) The association may reinsure any alternative or reissued policy under this subsection.
(c) Alternative or reissued policies adopted by the association are subject to the approval of the department upon terms and conditions the department considers appropriate, given the function and special purpose of the association. The association may adopt alternative policies of various types for future issuance without regard to any particular impairment or insolvency.
(d) Alternative or reissued policies must contain at least the minimum statutory provisions required under this code and provide benefits that are reasonable with respect to the premium charged. The association shall set the premium in accordance with a table of rates adopted by the association. The premium must reflect the amount of insurance to be provided and the age and class of risk of each insured, but may not reflect any changes in the health of the insured occurring since the original policy was last underwritten.
(e) Alternative policies issued by the association must provide coverage of a type generally similar to that of the policy issued by the impaired or insolvent insurer, as determined by the association.
(f) The association’s obligations with respect to coverage under any policy of the impaired or insolvent insurer or under any reissued or alternative policy must cease on the date that the coverage is replaced by another similar policy by the association. Any reissued, reinsured, or alternative policy must, however, be subject to association coverage if the replacement insurer becomes impaired or insolvent as otherwise provided for in this part.
1(g) In carrying out its duties in connection with guaranteeing, assuming, reissuing, or reinsuring policies or contracts under subsections (2) and (3), the association may, subject to approval of the department, issue an alternative policy or contract to substitute coverage for a policy or contract providing an interest rate, crediting rate, or similar factor that was determined by use of an index or other external reference stated in the policy or contract and employed in calculating returns or changes in value. In lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract must provide for a fixed interest rate, payment of dividends with minimum guarantees, or a different method for calculating interest or changes in value. In such case:
1. There is no requirement for evidence of insurability, waiting period, or other exclusion that would not have applied under the replaced policy or contract.
2. The alternative policy or contract shall be substantially similar to the replaced policy or contract in all other material terms.
1(h) In accordance with the terms and conditions of the policy or contract, the board may directly file for actuarially justified rate or premium increases for any policy or contract for which it provides coverage under this part.
History.—s. 7, ch. 79-189; s. 809(1st), ch. 82-243; s. 10, ch. 85-339; ss. 99, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 12, ch. 92-328; s. 4, ch. 95-213; s. 414, ch. 97-102; s. 7, ch. 2010-49; s. 12, ch. 2011-226; s. 2, ch. 2015-167; s. 2, ch. 2017-131; s. 3, ch. 2019-83; s. 2, ch. 2021-109.
1Note.—Section 12, ch. 2019-83, provides that “[s]ection 631.738, Florida Statutes, as created by this act, and the amendments made to ss. 631.713, 631.717, 631.718, 631.721, 631.818, 631.819, and 631.820, Florida Statutes, by this act apply only to long-term care insurer impairment and insolvency assessments that result from an insurer being adjudged insolvent by a court of competent jurisdiction or being determined by the office to be impaired on or after [June 7, 2019].”
