History of the Division

The need for a specialized program to handle the duties of a receiver for troubled insurance companies began to emerge in 1957.  In November of that year, Alabama General Insurance Company, a fire and casualty insurance company, was found to be insolvent and a state agent was needed to act as receiver to protect the assets of all parties who had interests in the estate.  For the next ten years, the duties of receiver for troubled and insolvent insurance companies fell on five employees under the direction of the General Counsel at the Florida Department of Insurance (DOI).

During those ten years, DOI was named Receiver for 15 more insurance companies.  As the trend of insurance companies entering receivership continued to grow, Insurance Commissioner Broward Williams asked the 1967 Legislature for additional staff to manage the receiverships.  The legislature approved 13 new positions, one of which was an attorney position.  The addition of the attorney position paved the way for the staff to be separated from the Office of the General Counsel.  Commissioner Williams administratively created the Division of Rehabilitation and Liquidation in 1967 as recorded in the Florida Administrative Code, Chapter 4-38.13.  It has operated as a separate division since September 1967. Tom Waddell became the Division’s first Director effective September 1, 1967 (see Table A for a listing of all Division Directors).  The Division was initially housed in the Dorian Building on the corner of South Monroe and Pensacola streets in Tallahassee, the current location of the Leon County Courthouse.  Chapter 4-38.003 of the Florida Administrative Code officially provided for the Division of Rehabilitation and Liquidation in 1975.  The Division’s Miami Office was established in 1989 primarily as a result of the liquidation of Southeastern Casualty and its sister company, Southeastern Reinsurance.

Table A
Directors of the Division of Rehabilitation and Liquidation

A receivership employment system was developed in the early years of the Division to provide managers with greater flexibility in staffing according to workload and better control over receivership assets than would exist if the Division had to rely solely on either state employees or contract vendors. Receivership employment is contractual in nature, and decreases in staffing primarily have been accomplished by not filling vacancies that occur through attrition.  Administrative costs to maintain a receivership staff were funded, as today, from the assets of the insolvent estates. The Division’s state employee staff has been reduced over the years to the current nine positions, of which only one is Career Service.  State positions are often used on receiverships that involve companies with insufficient or no available assets since funding is otherwise not available to pay for the costs of administering these receiverships.

The Receiver joined the state retirement plan with enactment of Chapter 94-259, Laws of Florida. All employees of the Receiver as of the effective date of that act were enrolled as members of the Florida Retirement System (FRS).  The Receiver did not pay into FRS for past service and receivership employees did not receive credit in FRS for receivership employment prior to the effective date of the act.  Before joining FRS, the Receiver provided retirement benefits in the form of an IRA made payable jointly to the receivership employee and the financial institution where the employee chose to deposit the IRA. 

The 1970 legislature created the first of four guaranty associations, which are separate from state government, to ensure that money is available to pay outstanding claims when an insurance company no longer can meet its contractual obligations.  Chapter 631, Florida Statutes, mandates examination and regulatory oversight of each guaranty association by the Department.  Please see Appendices B through E of this report for the name, purpose, and contact information of all guaranty associations in Florida.  Under current state law, only the Receivership Court’s Order of Liquidation triggers action by the guaranty associations.  There is no guaranty association intervention under a court’s Order of Rehabilitation. Please refer to Appendix H, Summary of Rehabilitation v. Liquidation, for more information about activities that occur whenever an insurance company is in rehabilitation and in liquidation.  Most insurance companies are covered by one of the guaranty associations.  Some exceptions are title insurance companies, warranty companies, life care facilities, multiple employer welfare arrangements (MEWAs), and bond companies.The Receiver and the guaranty associations work closely to protect the insurance consumers of Florida.

The total number of companies in receivership has fluctuated between 16 and slightly more than 100 since 1967, but has not dropped below 50 since 1986.