History of the Division Division Overview Accounting Section Administrative Services Section Asset Recovery and Management Section Claims Section Estate Management Section Legal Services Section Information Technology Services Section Legislative Update 2007 Appendices

Executive Summary

The role of the Division of Rehabilitation and Liquidation is to perform the Department of Financial Services’ duties as court-appointed Receiver of financially impaired or insolvent insurance companies and to protect consumer interests.  In this capacity, the Division as Receiver administers the affairs of a company placed into receivership by the Receivership Court’s conservation order, rehabilitation order, or liquidation order, pursuant to Chapter 631, Florida Statutes.  Insurance companies are exempted from federal bankruptcy jurisdiction and are instead subject to state law regarding receivership.  Under Florida law, the Second Judicial Circuit Court in Leon County, Florida, (hereafter referred to as the Receivership Court) has oversight jurisdiction in insurance company receivership matters.  The 2007 Division Annual Report provides a brief look at the historical and current role of the Division of Rehabilitation and Liquidation (which is interchangeably referred to as the Receiver) and the overall receivership process (see Figure 1). 

The glossary at the end of this report contains definitions of conservation, rehabilitation, and liquidation proceedings, but a brief elaboration on these legal proceedings may be useful at this point.  Major tasks associated with a conservation order include taking control of and protecting the property of the insurer, which is the primary purpose of a conservation proceeding.

Major tasks associated with a rehabilitation order include taking control of and protecting the property and assets of the insurer, conducting the business of the insurer, and formulating a plan to remove the causes and conditions necessitating the rehabilitation.  The rehabilitation is successful when the insurance company meets the solvency criteria set forth in Chapter 624, Florida Statutes, and the Receivership Court issues an order to discharge the Receiver from its duties and close the rehabilitation receivership. 

When a liquidation order is issued, the insurance company is closed, all outstanding policies are cancelled, and the process of collecting and selling the company’s assets begins.  The goal of liquidation is to use the money acquired from selling the company’s assets to pay off the company’s debts and outstanding insurance claims.  Major tasks associated with a liquidation order include marshaling and liquidating insurer assets; identifying and paying claims; distributing assets to claimants; and responding to consumer inquiries about the receivership process. 

Figure 1
Roles of the State and Circuit Court in Receiverships

In the 2006-2007 Fiscal Year, one property and casualty insurance company and one Health Maintenance Organization were placed into receivership. The Receiver was discharged from its duties in six receiverships, which were closed. (Please refer to Appendix G for a listing of insurance company receiverships for the period July 1, 2006, to June 30, 2007.)  Distributions totaling over $37,000,000 were made to the claimants in 7 receiverships.  The Receiver made early access payments of over $349,000,000 from various receiverships to the Florida Insurance Guaranty Association and the Florida Workers’ Compensation Insurance Guaranty Association.  “Early access” is a process by which the guaranty association recovers from the Receiver a portion of the loss amounts and/or administrative expenses incurred by the guaranty association in paying claims prior to the final distribution of an estate’s assets.  

The Division Strategic Plan for the 2004-2009 fiscal years was updated in March 2006.  During the past fiscal year, the Division continued implementation of goals set forth in the Division Strategic Plan relating to information systems design, records management, and work processes.    

During the 2006-2007 Fiscal Year, the Division participated in a number of National Association of Insurance Commissioners (NAIC) working groups. Each of these working groups is charged with developing tools and making recommendations that will improve the receivership process. NAIC activities during the last year have included the following:

  • Continued to enhance the Division’s information technology infrastructure to securely interact with the NAIC ClaimNet software, which is a Web-based Proof of Claims system. The availability of ClaimNet will streamline the claims process for consumers and vendors of liquidated insurance companies by allowing them to complete and submit an interactive proof-of-claim form to the Receiver, to view the status of a claim, and to submit an objection to the Receiver’s claims evaluation recommendation.
  • Participated in an NAIC work group to develop an updated draft of the NAIC Property and Casualty Guaranty Association Model Act.
  • Chaired the NAIC Receivership Technology and Administration Working Group and the Receivership Internet Use Subgroup, in addition to serving on six other work groups and subgroups. 
  • Participated in revising the Insurer Receivership Model Act that was adopted by the NAIC to address many issues involved in the administration of an impaired or insolvent insurer during the stages from conservation and rehabilitation to liquidation and discharging a receivership estate.  Changes were made to the model in several areas including intervention of state guaranty associations, receiver financial reporting requirements, jurisdiction of the receivership court, priority of guaranty association expenses and settlement of reinsurance balances.
  • Worked closely with the NAIC staff to continue development of the Global Receivership Information Database (GRID) application.  Completed the input of pertinent Florida receivership data, enabling Florida to be the first state to populate the GRID database.

Many other activities yielded great benefit in terms of increasing efficiency while reducing costs for both current and future receiverships.  Receivership staff created the Receivership On-Site Assistance Directing Management, Assets, and Personnel or ROADMAP or general guide for receivership employees or vendors new to on-site operations; developed standards to evaluate reinsurance recovery consultants for efficiency and cost-effectiveness; developed on-site documentation checklists and tolls for better accountability and record keeping for on-site activities; finalized and implemented alterations to the IT infrastructure for improved network security; selected providers to create a Division-wide electronic management system and to provide formalized disaster recovery for critical Division servers; created an Employee Time Entry and Approval system to provide a single point of entry for employee time and leave and estate-related time allocation; closed the Hialeah warehouse and the Iron Mountain/Miamirecords management account; obtained judgments and settlements in several highly contested cases; and developed an in-house management training program.

Listed below are some additional accomplishments of the Division during the 2006-2007 Fiscal Year.  These and other tasks are discussed in greater detail within each section’s overview. 

  • Provided daily investment management for $256,000,000 in receivership cash assets.
  • Collected more than $19,000 in refunds for past taxes paid by companies in receivership.
  • Processed more than $424,000,000 in cash receipts and $433,000,000 in cash disbursements.
  • Enhanced links to the Division’s forms, procedures, master file documents, provider information, and planning information on the Division’s intranet site, allowing employees easier and more efficient access to relevant information.
  • Developed and delivered a new version of OLCP-SQL, the Division’s internal claims processing system that supports claims reserving.
  • Enhanced communication with the Florida guaranty associations and the National Association of Insurance Commissioners through continued efforts to automate key receivership processes.
  • Jointly developed, with the Florida Insurance Guaranty Association (FIGA), a methodology to implement paperless work initiatives, enabling the first transfer of electronic claims records to FIGA from a receivership with a fully developed paperless work environment.
  • Implemented NAIC-recommended Uniform Data Standard (UDS) updates that enable the Receiver to report more detailed historical claims information to affected guaranty associations.
  • Fully accomplished the rehabilitation of Underwriters Guarantee Insurance Company by virtue of the sale of the company.

You can learn more about the Receiver and its activities, including updated information about the current insurance receiverships, by browsing our website at www.floridainsurancereceiver.org.