Florida Senate - 2014 SB 1308
By Senator Simmons
10-01163A-14 20141308__
1 A bill to be entitled
2 An act relating to insurer solvency; amending s.
3 624.10, F.S.; providing additional definitions
4 applicable to the Florida Insurance Code; amending s.
5 624.319, F.S.; clarifying that production of documents
6 does not waive the attorney-client or work-product
7 privileges; amending s. 624.402, F.S.; conforming a
8 cross-reference; amending s. 624.4085, F.S.; revising
9 a definition; providing additional calculations for
10 determining whether an insurer has a company action
11 level event; revising provisions relating to mandatory
12 control level events; amending s. 624.424, F.S.;
13 requiring an insurer’s annual statement to include an
14 actuarial opinion summary; providing criteria for such
15 summary; providing an exception for life and health
16 insurers; updating provisions; requiring insurers
17 reinsuring through a captive insurance company to file
18 a report containing certain information; amending s.
19 625.121, F.S.; revising the Standard Valuation Law;
20 distinguishing the provisions from valuations done
21 pursuant to the National Association of Insurance
22 Commissioner’s (NAIC) valuation manual and
23 incorporating certain provisions included in the
24 manual; exempting certain documents from civil
25 proceedings; revising the methods for evaluating the
26 valuation of industrial life insurance policies;
27 revising provisions relating to calculating additional
28 premium; updating provisions relating to reserve
29 calculations for indeterminate premium plans; creating
30 s. 625.1212, F.S.; providing for the valuation of
31 policies and contracts after the adoption of the
32 NAIC’s valuation manual; providing applicability;
33 defining terms; requiring the office to value insurer
34 reserves; requiring actuarial opinions of the reserves
35 and a supporting memorandum to the opinions; requiring
36 the insurer to apply the standard prescribed in the
37 valuation manual; providing exceptions; providing
38 requirements for a principle-based valuation of
39 reserves; requiring an insurer to submit certain data
40 to the office; directing the Financial Services
41 Commission to adopt rules; creating s. 625.1214, F.S.;
42 providing for the use of confidential information;
43 prohibiting the use of such information in private
44 civil actions; amending s. 627.476, F.S.; revising the
45 Standard Nonforfeiture Law; distinguishing provisions
46 subject to the valuation manual and providing for the
47 application of tables found in the manual; amending s.
48 628.461, F.S.; revising the amount of outstanding
49 voting securities of a domestic stock insurer or a
50 controlling company which a person is prohibited from
51 acquiring unless certain requirements have been met;
52 deleting a provision authorizing an insurer to file a
53 disclaimer of affiliation and control in lieu of a
54 letter notifying the Office of Insurance Regulation of
55 the Financial Services Commission of the acquisition
56 of the voting securities of a domestic stock company
57 under certain circumstances; requiring the statement
58 notifying the office to include additional
59 information; conforming a provision to changes made by
60 the act; providing that control is presumed to exist
61 under certain conditions; specifying how control may
62 be rebutted and how a controlling interest may be
63 divested; deleting definitions; amending s. 628.801,
64 F.S.; requiring an insurer to annually file a
65 registration statement by a specified date; revising
66 the requirements and standards for the rules
67 establishing the information and statement form for
68 the registration; requiring an insurer to file an
69 annual enterprise risk report; authorizing the office
70 to conduct examinations to determine the financial
71 condition of registrants; providing that failure to
72 file a registration or report is a violation of the
73 section; providing additional grounds, requirements,
74 and conditions with respect to a waiver from the
75 registration requirements; amending s. 628.803, F.S.;
76 providing sanctions for persons who violate certain
77 provisions relating to the acquisition of controlling
78 stock; creating s. 628.804, F.S.; providing for the
79 groupwide supervision of international insurance
80 groups; defining terms; providing for the selection of
81 a groupwide supervisor; authorizing the commission to
82 adopt rules; creating s. 628.805, F.S.; authorizing
83 the office to participate in supervisory colleges;
84 authorizing the office to assess fees on insurers for
85 participation; amending ss. 636.045 and 641.225, F.S.;
86 applying certain statutes related to solvency to
87 prepaid limited health service organizations and
88 health maintenance organizations; amending s. 641.255,
89 F.S.; providing for applicability of specified
90 provisions to a health maintenance organization that
91 is a member of a holding company; providing effective
92 dates and a contingent effective date.
93
94 Be It Enacted by the Legislature of the State of Florida:
95
96 Section 1. Section 624.10, Florida Statutes, is amended to
97 read:
98 624.10 Other definitions Transacting insurance.—As used in
99 the Florida Insurance Code, the term:
100 (1) “Affiliate” means an entity that exercises control over
101 or is directly or indirectly controlled by the insurer through:
102 (a) Equity ownership of voting securities;
103 (b) Common managerial control; or
104 (c) Collusive participation by the management of the
105 insurer and affiliate in the management of the insurer or the
106 affiliate.
107 (2) “Affiliated person” of another person means:
108 (a) The spouse of the other person;
109 (b) The parents of the other person and their lineal
110 descendants, or the parents of the other person’s spouse and
111 their lineal descendants;
112 (c) A person who directly or indirectly owns or controls,
113 or holds with the power to vote, 10 percent or more of the
114 outstanding voting securities of the other person;
115 (d) A person, 10 percent or more of whose outstanding
116 voting securities are directly or indirectly owned or
117 controlled, or held with power to vote, by the other person;
118 (e) A person or group of persons who directly or indirectly
119 control, are controlled by, or are under common control with the
120 other person;
121 (f) An officer, director, partner, copartner, or employee
122 of the other person;
123 (g) If the other person is an investment company, an
124 investment adviser of such company, or a member of an advisory
125 board of such company;
126 (h) If the other person is an unincorporated investment
127 company not having a board of directors, the depositor of such
128 company; or
129 (i) A person who has entered into a written or unwritten
130 agreement to act in concert with the other person in acquiring
131 or limiting the disposition of securities of a domestic stock
132 insurer or controlling company.
133 (3) “Control,” including the terms “controlling,”
134 “controlled by,” and “under common control with,” means the
135 direct or indirect possession of the power to direct or cause
136 the direction of the management and policies of a person,
137 whether through the ownership of voting securities, by contract
138 other than a commercial contract for goods or nonmanagement
139 services, or otherwise. Control is presumed to exist if a
140 person, directly or indirectly, owns, controls, holds with the
141 power to vote, or holds proxies representing 10 percent or more
142 of the voting securities of another person.
143 (4) “NAIC” means the National Association of Insurance
144 Commissioners.
145 (5) “Transact” with respect to insurance includes any of
146 the following, in addition to other applicable provisions of
147 this code:
148 (a)(1) Solicitation or inducement.
149 (b)(2) Preliminary negotiations.
150 (c)(3) Effectuation of a contract of insurance.
151 (d)(4) Transaction of matters subsequent to effectuation of
152 a contract of insurance and arising out of it.
153 Section 2. Subsection (2) of section 624.319, Florida
154 Statutes, is amended to read:
155 624.319 Examination and investigation reports.—
156 (2) The examination report when so filed is shall be
157 admissible in evidence in any action or proceeding brought by
158 the department or office against the person examined, or against
159 its officers, employees, or agents. In all other proceedings,
160 the admissibility of the examination report is governed by the
161 evidence code. The department or office or its examiners may at
162 any time testify and offer other proper evidence as to
163 information secured or matters discovered during the course of
164 an examination, regardless of whether or not a written report of
165 the examination has been either made, furnished, or filed in the
166 department or office. The production of documents during the
167 course of an examination or investigation does not constitute a
168 waiver of the attorney-client or work-product privileges.
169 Section 3. Paragraph (c) of subsection (8) of section
170 624.402, Florida Statutes, is amended to read:
171 624.402 Exceptions, certificate of authority required.—A
172 certificate of authority shall not be required of an insurer
173 with respect to:
174 (8)
175 (c) Subject to the limitations provided in this subsection,
176 services, including those listed in the definition of the term
177 “transact” in s. 624.10, may be provided by the insurer or an
178 affiliated person as defined in s. 624.04 under common ownership
179 or control with the insurer.
180 Section 4. Paragraph (g) of subsection (1), paragraph (a)
181 of subsection (3), and paragraph (b) of subsection (6) of
182 section 624.4085, Florida Statutes, are amended to read:
183 624.4085 Risk-based capital requirements for insurers.—
184 (1) As used in this section, the term:
185 (g) “Life and health insurer” means an any insurer
186 authorized or eligible under the Florida Insurance Code to
187 underwrite life or health insurance. The term includes a
188 property and casualty insurer that writes accident and health
189 insurance only. Effective January 1, 2015, the term also
190 includes a health maintenance organization that is authorized in
191 this state and one or more other states, jurisdictions, or
192 countries and a prepaid limited health service organization that
193 is authorized in this state and one or more other states,
194 jurisdictions, or countries.
195 (3)(a) A company action level event includes:
196 1. The filing of a risk-based capital report by an insurer
197 which indicates that:
198 a. The insurer’s total adjusted capital is greater than or
199 equal to its regulatory action level risk-based capital but less
200 than its company action level risk-based capital; or
201 b. If a life and health insurer reports using the life and
202 health annual statement instructions, the insurer has total
203 adjusted capital that is greater than or equal to its company
204 action level risk-based capital, but is less than the product of
205 its authorized control level risk-based capital and 3.0 2.5, and
206 has a negative trend;
207 c. Effective January 1, 2015, if a life and health or
208 property and casualty insurer reports using the health annual
209 statement instructions, the insurer or organization has total
210 adjusted capital that is greater than or equal to its company
211 action level risk-based capital, but is less than the product of
212 its authorized control level risk-based capital and 3.0, and
213 triggers the trend test determined in accordance with the trend
214 test calculation included in the Risk-Based Capital Forecasting
215 and Instructions, Health, updated annually by the NAIC; or
216 d. If a property and casualty insurer reports using the
217 property and casualty annual statement instructions, the insurer
218 has total adjusted capital that is greater than or equal to its
219 company action level risk-based capital, but less than the
220 product of its authorized control level risk-based capital and
221 3.0, and triggers the trend test determined in accordance with
222 the trend test calculation included in the Risk-Based Capital
223 Forecasting and Instructions, Property/Casualty, updated
224 annually by the NAIC;
225 2. The notification by the office to the insurer of an
226 adjusted risk-based capital report that indicates an event in
227 subparagraph 1., unless the insurer challenges the adjusted
228 risk-based capital report under subsection (7); or
229 3. If, under subsection (7), an insurer challenges an
230 adjusted risk-based capital report that indicates an event in
231 subparagraph 1., the notification by the office to the insurer
232 that the office has, after a hearing, rejected the insurer’s
233 challenge.
234 (6)
235 (b) If a mandatory control level event occurs:
236 1. With respect to a life and health insurer, the office
237 shall, after due consideration of s. 624.408, and effective
238 January 1, 2015, ss. 636.045 and 641.225, take any action
239 necessary to place the insurer under regulatory control,
240 including any remedy available under chapter 631. A mandatory
241 control level event is sufficient ground for the department to
242 be appointed as receiver as provided in chapter 631. The office
243 may forego taking action for up to 90 days after the mandatory
244 control level event if the office finds there is a reasonable
245 expectation that the mandatory control level event may be
246 eliminated within the 90-day period.
247 2. With respect to a property and casualty insurer, the
248 office shall, after due consideration of s. 624.408, take any
249 action necessary to place the insurer under regulatory control,
250 including any remedy available under chapter 631, or, in the
251 case of an insurer that is not writing new business, may allow
252 the insurer to continue to operate under the supervision of the
253 office. In either case, the mandatory control level event is
254 sufficient ground for the department to be appointed as receiver
255 as provided in chapter 631. The office may forego taking action
256 for up to 90 days after the mandatory control level event if the
257 office finds there is a reasonable expectation that the
258 mandatory control level event may will be eliminated within the
259 90-day period.
260 Section 5. Subsection (1) and paragraph (e) of subsection
261 (8) of section 624.424, Florida Statutes, are amended, and
262 subsection (11) is added to that section, to read:
263 624.424 Annual statement and other information.—
264 (1)(a) Each authorized insurer shall file with the office
265 full and true statements of its financial condition,
266 transactions, and affairs. An annual statement covering the
267 preceding calendar year shall be filed on or before March 1, and
268 quarterly statements covering the periods ending on March 31,
269 June 30, and September 30 shall be filed within 45 days after
270 each such date. The office may, for good cause, grant an
271 extension of time for filing of an annual or quarterly
272 statement. The statements must shall contain information
273 generally included in insurers’ financial statements prepared in
274 accordance with generally accepted insurance accounting
275 principles and practices and in a form generally used utilized
276 by insurers for financial statements, sworn to by at least two
277 executive officers of the insurer or, if a reciprocal insurer,
278 by the oath of the attorney in fact or its like officer if a
279 corporation. To facilitate uniformity in financial statements
280 and to facilitate office analysis, the commission may by rule
281 adopt the form and instructions for financial statements
282 approved by the NAIC in 2014 National Association of Insurance
283 Commissioners in 2002, and may adopt subsequent amendments
284 thereto if the methodology remains substantially consistent, and
285 may by rule require each insurer to submit to the office, or
286 such organization as the office may designate, all or part of
287 the information contained in the financial statement in a
288 computer-readable form compatible with the electronic data
289 processing system specified by the office.
290 (b) Each insurer’s annual statement must contain:
291 1. A statement of opinion on loss and loss adjustment
292 expense reserves made by a member of the American Academy of
293 Actuaries or by a qualified loss reserve specialist, pursuant to
294 under criteria established by rule of the commission. In
295 adopting the rule, the commission shall must consider any
296 criteria established by the NAIC National Association of
297 Insurance Commissioners. The office may require semiannual
298 updates of the annual statement of opinion for as to a
299 particular insurer if the office has reasonable cause to believe
300 that such reserves are understated to the extent of materially
301 misstating the financial position of the insurer. Workpapers in
302 support of the statement of opinion must be provided to the
303 office upon request. This paragraph does not apply to life
304 insurance, health insurance, or title insurance.
305 2. An actuarial opinion summary written by the insurer’s
306 appointed actuary. The summary must be filed in accordance with
307 the appropriate NAIC property and casualty annual statement
308 instructions. Proprietary business information contained in the
309 summary is confidential and exempt under s. 624.4212, and the
310 summary and related information are not subject to subpoena or
311 discovery or admissible in evidence in a private civil action.
312 Neither the office nor any person who received documents,
313 materials, or other information while acting under the authority
314 of the office, or with whom such information is shared pursuant
315 to s. 624.4212, may testify in a private civil action concerning
316 such confidential information. However, the department or office
317 may use the confidential and exempt information in the
318 furtherance of any regulatory or legal action brought against an
319 insurer as a part of the official duties of the department or
320 office. No waiver of any other applicable claim of
321 confidentiality or privilege may occur as a result of a
322 disclosure to the office under this section or any other section
323 of the insurance code. This paragraph does not apply to life and
324 health insurers subject to s. 625.121(3).
325 (c) The commission may by rule require reports or filings
326 required under the insurance code to be submitted by electronic
327 means in a computer-readable form compatible with the electronic
328 data processing equipment specified by the commission.
329 (8)
330 (e) The commission shall adopt rules to administer
331 implement this subsection, which rules must be in substantial
332 conformity with the 2006 Annual Financial Reporting Model
333 Regulation 1998 Model Rule requiring annual audited financial
334 reports adopted by the NAIC National Association of Insurance
335 Commissioners or subsequent amendments, except where
336 inconsistent with the requirements of this subsection. Any
337 exception to, waiver of, or interpretation of accounting
338 requirements of the commission must be in writing and signed by
339 an authorized representative of the office. An No insurer may
340 not raise an as a defense in any action, any exception to,
341 waiver of, or interpretation of accounting requirements as a
342 defense in an action, unless previously issued in writing by an
343 authorized representative of the office.
344 (11) Each insurer doing business in this state which
345 reinsures through a captive insurance company as defined in s.
346 628.901, but without regard to domiciliary status, shall, in
347 conjunction with the annual financial statement required under
348 paragraph (1)(a), file a report with the office containing
349 financial information specific to reinsurance assumed by each
350 captive.
351 (a) The report shall be filed as a separate schedule
352 designed to avoid duplication of disclosures required by the
353 NAIC’s annual statement and instructions.
354 (b) Insurers must:
355 1. Identify the products ceded to the captive and whether
356 the products are subject to rule 69O-164.020, Florida
357 Administrative Code, the NAIC Valuation of Life Insurance
358 Policies Regulation (Model #830), or the NAIC Actuarial
359 Guideline XXXVIII (AG 38).
360 2. Disclose the assets of the captive in the format
361 prescribed in the NAIC annual statement schedules.
362 3. Include a stand-alone actuarial opinion or certification
363 identifying the differences between the assets the ceding
364 company would be required to hold and the assets held by the
365 captive.
366 Section 6. Subsection (2), paragraphs (a) and (b) of
367 subsection (3), subsection (5), paragraph (e) of subsection (6),
368 and subsections (10), (11), and (12) of section 625.121, Florida
369 Statutes, are amended to read:
370 625.121 Standard Valuation Law; life insurance.—
371 (2) ANNUAL VALUATION.—The office shall annually value, or
372 cause to be valued, the reserves reserve liabilities,
373 hereinafter called “reserves,” for all outstanding life
374 insurance policies and annuity and pure endowment contracts of
375 each every life insurer doing business in this state, and may
376 certify the amount of any such reserves, specifying the
377 mortality table or tables, rate or rates of interest, and
378 methods, net-level premium method or others, used in the
379 calculation of such reserves. In the case of an alien insurer,
380 such valuation is shall be limited to its insurance transactions
381 in the United States. In calculating such reserves, the office
382 may use group methods and approximate averages for fractions of
383 a year or otherwise, and. It may accept in its discretion the
384 insurer’s calculation of such reserves. In lieu of the valuation
385 of the reserves herein required of a any foreign or alien
386 insurer, the office it may accept any valuation made or caused
387 to be made by the insurance supervisory official of any state or
388 other jurisdiction if the when such valuation complies with the
389 minimum standard herein provided under this section and if the
390 official of such state or jurisdiction accepts as sufficient and
391 valid for all legal purposes the certificate of valuation of the
392 office when such certificate states the valuation to have been
393 made in a specified manner according to which the aggregate
394 reserves would be at least as large as if they had been computed
395 in the manner prescribed by the law of that state or
396 jurisdiction. If a When any such valuation is made by the
397 office, the office it may use its the actuary of the office or
398 employ an actuary for that the purpose; and the reasonable
399 compensation of the actuary, at a rate approved by the office,
400 plus and reimbursement of travel expenses pursuant to s. 624.320
401 upon demand by the office, supported by an itemized statement of
402 such compensation and expenses, shall be paid by the insurer
403 upon demand of the office. If When a domestic insurer furnishes
404 the office with a valuation of its outstanding policies as
405 computed by its own actuary or by an actuary deemed satisfactory
406 for that the purpose by the office, the valuation shall be
407 verified by the actuary of the office without cost to the
408 insurer. This section applies to the calculation of reserves for
409 policies and contracts not subject to s. 625.1212.
410 (3) ACTUARIAL OPINION OF RESERVES.—
411 (a)1. Each life insurer insurance company doing business in
412 this state shall annually submit the opinion of a qualified
413 actuary as to whether the reserves and related actuarial items
414 held in support of the policies and contracts specified by the
415 commission by rule are computed appropriately, are based on
416 assumptions that which satisfy contractual provisions, are
417 consistent with prior reported amounts, and comply with
418 applicable laws of this state. The commission by rule shall
419 define the specifics of this opinion and add any other items
420 determined to be necessary to its scope.
421 1.2. The opinion shall be submitted with the annual
422 statement and must reflect reflecting the valuation of such
423 reserve liabilities for each year ending on or before after
424 December 31 of the year before the operative date of the
425 valuation manual as defined in s. 625.1212(2), and in accordance
426 with s. 625.1212(4) for each year thereafter, 1992.
427 2.3. The opinion applies shall apply to all business in
428 force, including individual and group health insurance plans, in
429 the form and substance acceptable to the office as specified by
430 rule of the commission.
431 3.4. The commission may adopt rules providing the standards
432 of the actuarial opinion consistent with standards adopted by
433 the Actuarial Standards Board on December 31, 2013 2002, and
434 subsequent revisions thereto if, provided that the standards
435 remain substantially consistent.
436 4.5. In the case of an opinion required to be submitted by
437 a foreign or alien company, The office may accept an the opinion
438 filed by a foreign or alien insurer that company with the
439 insurance supervisory official of another state if the office
440 determines that the opinion reasonably meets the requirements
441 applicable to an insurer a company domiciled in this state.
442 5.6. As used in For the purposes of this subsection, the
443 term “qualified actuary” means a member in good standing of the
444 American Academy of Actuaries who also meets the requirements
445 specified by rule of the commission.
446 6.7. Disciplinary action by the office against the insurer
447 company or the qualified actuary shall be in accordance with the
448 insurance code and related rules adopted by the commission.
449 7.8. A memorandum in the form and substance specified by
450 rule shall be prepared to support each actuarial opinion.
451 8.9. If the insurer insurance company fails to provide a
452 supporting memorandum at the request of the office within a
453 period specified by rule of the commission, or if the office
454 determines that the supporting memorandum provided by the
455 insurer insurance company fails to meet the standards prescribed
456 by rule of the commission, the office may engage a qualified
457 actuary at the expense of the insurer company to review the
458 opinion and the basis for the opinion and prepare such
459 supporting memorandum as is required by the office.
460 9.10. Except as otherwise provided in this subparagraph
461 paragraph, any memorandum or other material in support of the
462 opinion is confidential and exempt from the provisions of s.
463 119.07(1) and is not subject to subpoena or discovery or
464 admissible in evidence in any private civil action; however, the
465 memorandum or other material may be released by the office with
466 the written consent of the insurer company, or to the American
467 Academy of Actuaries upon request stating that the memorandum or
468 other material is required for the purpose of professional
469 disciplinary proceedings and setting forth procedures
470 satisfactory to the office for preserving the confidentiality of
471 the memorandum or other material. If any portion of the
472 confidential memorandum is cited by the insurer company in its
473 marketing, or is cited before any governmental agency other than
474 a state insurance department, or is released by the insurer
475 company to the news media, no portion of the memorandum is
476 confidential. Neither the office nor any person who receives
477 documents, materials, or other information while acting under
478 the authority of the office or with whom such information is
479 shared pursuant to this paragraph may testify in a private civil
480 action concerning the confidential documents, materials, or
481 information. However, the department or office may use the
482 confidential and exempt information in the furtherance of any
483 regulatory or legal action brought against an insurer as a part
484 of the official duties of the department or office. A waiver of
485 an applicable privilege or claim of confidentiality in the
486 documents, materials, or information may not occur as a result
487 of disclosure to the office under this section or any other
488 section of the insurance code, or as a result of sharing as
489 authorized under s. 624.4212.
490 (b) In addition to the opinion required by paragraph (a)
491 subparagraph (a)1., the office may, pursuant to commission rule,
492 require an opinion of the same qualified actuary as to whether
493 the reserves and related actuarial items held in support of the
494 policies and contracts specified by the commission by rule, when
495 considered in light of the assets held by the insurer company
496 with respect to the reserves and related actuarial items,
497 including, but not limited to, the investment earnings on the
498 assets and considerations anticipated to be received and
499 retained under the policies and contracts, make adequate
500 provision for the insurer’s company’s obligations under the
501 policies and contracts, including, but not limited to, the
502 benefits under, and expenses associated with, the policies and
503 contracts.
504 (5) MINIMUM STANDARD FOR VALUATION OF POLICIES AND
505 CONTRACTS ISSUED ON OR AFTER OPERATIVE DATE OF THE STANDARD
506 NONFORFEITURE LAW.—Except as otherwise provided in paragraph (h)
507 and subsections (6), (13) (11), and (14), the minimum standard
508 for the valuation of all such policies and contracts issued on
509 or after the operative date of s. 627.476 (Standard
510 Nonforfeiture Law for Life Insurance) shall be the
511 commissioners’ reserve valuation method defined in subsections
512 (7), (11), and (14); 5 percent interest for group annuity and
513 pure endowment contracts and 3.5 percent interest for all other
514 such policies and contracts, or in the case of life insurance
515 policies and contracts, other than annuity and pure endowment
516 contracts, issued on or after July 1, 1973, 4 percent interest
517 for such policies issued prior to October 1, 1979, and 4.5
518 percent interest for such policies issued on or after October 1,
519 1979; and the following tables:
520 (a) For all ordinary policies of life insurance issued on
521 the standard basis, excluding any disability and accidental
522 death benefits in such policies:
523 1. For policies issued before prior to the operative date
524 of s. 627.476(9), the commissioners’ 1958 Standard Ordinary
525 Mortality Table; except that, for any category of such policies
526 issued on female risks, modified net premiums and present
527 values, referred to in subsection (7), may be calculated
528 according to an age up to not more than 6 years younger than the
529 actual age of the insured.
530 2. For policies issued on or after the operative date of s.
531 627.476(9), the commissioners’ 1980 Standard Ordinary Mortality
532 Table adopted by the NAIC or, at the election of the insurer for
533 any one or more specified plans of life insurance, the
534 commissioners’ 1980 Standard Ordinary Mortality Table with Ten
535 Year Select Mortality Factors adopted by the NAIC.
536 3. For policies issued on or after July 1, 2004, ordinary
537 mortality tables, adopted after 1980 by the NAIC National
538 Association of Insurance Commissioners, adopted by rule by the
539 commission for use in determining the minimum standard of
540 valuation for such policies.
541 (b) For all industrial life insurance policies issued on
542 the standard basis, excluding any disability and accidental
543 death benefits in such policies:
544 1. For policies issued before prior to the first date to
545 which the commissioners’ 1961 Standard Industrial Mortality
546 Table adopted by the NAIC is applicable according to s. 627.476,
547 the 1941 Standard Industrial Mortality Table; and
548 2. For such policies issued on or after that date, the
549 commissioners’ 1961 Standard Industrial Mortality Table adopted
550 by the NAIC; and.
551 3. For policies issued on or after October 1, 2014, an
552 Industrial Mortality Table adopted after 1980 by the NAIC which
553 is adopted by rule of the commission for use in determining the
554 minimum standard of valuation for such policies.
555 (c) For individual annuity and pure endowment contracts,
556 excluding any disability and accidental death benefits in such
557 policies, the 1937 Standard Annuity Mortality Table or, at the
558 option of the insurer, the Annuity Mortality Table for 1949,
559 Ultimate, or any modification of either of these tables approved
560 by the office.
561 (d) For group annuity and pure endowment contracts,
562 excluding any disability and accidental death benefits in such
563 policies, the Group Annuity Mortality Table for 1951; any
564 modification of such table approved by the office; or, at the
565 option of the insurer, any of the tables or modifications of
566 tables specified for individual annuity and pure endowment
567 contracts.
568 (e) For total and permanent disability benefits in or
569 supplementary to ordinary policies or contracts:
570 1. For policies or contracts issued on or after January 1,
571 1966, the tables of period 2 disablement rates and the 1930 to
572 1950 termination rates of the 1952 disability study of the
573 Society of Actuaries, with due regard to the type of benefit;
574 2. For policies or contracts issued on or after January 1,
575 1961, and before prior to January 1, 1966, either of the tables
576 specified in subparagraph 1. those tables or, at the option of
577 the insurer, the class three disability table (1926);
578 3. For policies issued before prior to January 1, 1961, the
579 class three disability table (1926); and
580 4. For policies or contracts issued on or after July 1,
581 2004, tables of disablement rates and termination rates adopted
582 after 1980 by the NAIC National Association of Insurance
583 Commissioners, adopted by rule by the commission for use in
584 determining the minimum standard of valuation for those policies
585 or contracts.
586
587 Any such table for active lives shall be combined with a
588 mortality table permitted for calculating the reserves for life
589 insurance policies.
590 (f) For accidental death benefits in or supplementary to
591 policies:
592 1. For policies issued on or after January 1, 1966, the
593 1959 Accidental Death Benefits Table;
594 2. For policies issued on or after January 1, 1961, and
595 before prior to January 1, 1966, the 1959 Accidental Death
596 Benefits either that Table or, at the option of the insurer, the
597 Intercompany Double Indemnity Mortality Table;
598 3. For policies issued before prior to January 1, 1961, the
599 Intercompany Double Indemnity Mortality Table; and
600 4. For policies issued on or after July 1, 2004, tables of
601 accidental death benefits adopted after 1980 by the NAIC
602 National Association of Insurance Commissioners, adopted by rule
603 by the commission for use in determining the minimum standard of
604 valuation for those policies.
605
606 Either table shall be combined with a mortality table permitted
607 for calculating the reserves for life insurance policies.
608 (g) For group life insurance, life insurance issued on the
609 substandard basis, and other special benefits, such tables as
610 may be approved by the office as being sufficient with relation
611 to the benefits provided by such policies.
612 (h) Except as provided in subsection (6), the minimum
613 standard for the valuation of all individual annuity and pure
614 endowment contracts issued on or after the operative date of
615 this paragraph and for all annuities and pure endowments
616 purchased on or after such operative date under group annuity
617 and pure endowment contracts shall be the commissioners’ reserve
618 valuation method defined in subsection (7) and the following
619 tables and interest rates:
620 1. For individual annuity and pure endowment contracts
621 issued before prior to October 1, 1979, excluding any disability
622 and accidental death benefits in such contracts, the 1971
623 Individual Annuity Mortality Table, or any modification of this
624 table approved by the office, and 6 percent interest for single
625 premium immediate annuity contracts and 4 percent interest for
626 all other individual annuity and pure endowment contracts.
627 2. For individual single-premium immediate annuity
628 contracts issued on or after October 1, 1979, and before prior
629 to October 1, 1986, excluding any disability and accidental
630 death benefits in such contracts, the 1971 Individual Annuity
631 Mortality Table, or any modification of this table approved by
632 the office, and 7.5 percent interest. For such contracts issued
633 on or after October 1, 1986, the 1983 Individual Annual
634 Mortality Table, or any modification of such table approved by
635 the office, and the applicable calendar year statutory valuation
636 interest rate as described in subsection (6).
637 3. For individual annuity and pure endowment contracts
638 issued on or after October 1, 1979, and before prior to October
639 1, 1986, other than single-premium immediate annuity contracts,
640 excluding any disability and accidental death benefits in such
641 contracts, the 1971 Individual Annuity Mortality Table, or any
642 modification of this table approved by the office, and 5.5
643 percent interest for single-premium deferred annuity and pure
644 endowment contracts and 4.5 percent interest for all other such
645 individual annuity and pure endowment contracts. For such
646 contracts issued on or after October 1, 1986, the 1983
647 Individual Annual Mortality Table, or any modification of such
648 table approved by the office, and the applicable calendar year
649 statutory valuation interest rate as described in subsection
650 (6).
651 4. For all annuities and pure endowments purchased before
652 prior to October 1, 1979, under group annuity and pure endowment
653 contracts, excluding any disability and accidental death
654 benefits purchased under such contracts, the 1971 Group Annuity
655 Mortality Table, or any modification of this table approved by
656 the office, and 6 percent interest.
657 5. For all annuities and pure endowments purchased on or
658 after October 1, 1979, and before prior to October 1, 1986,
659 under group annuity and pure endowment contracts, excluding any
660 disability and accidental death benefits purchased under such
661 contracts, the 1971 Group Annuity Mortality Table, or any
662 modification of this table approved by the office, and 7.5
663 percent interest. For such contracts purchased on or after
664 October 1, 1986, the 1983 Group Annuity Mortality Table, or any
665 modification of such table approved by the office, and the
666 applicable calendar year statutory valuation interest rate as
667 described in subsection (6).
668
669 After July 1, 1973, an any insurer may have filed with the
670 former Department of Insurance a written notice of its election
671 to comply with the provisions of this paragraph after a
672 specified date before January 1, 1979, which shall be the
673 operative date of this paragraph for such insurer. However, an
674 insurer may elect a different operative date for individual
675 annuity and pure endowment contracts from that elected for group
676 annuity and pure endowment contracts. If an insurer does not
677 make makes no such election, the operative date of this
678 paragraph for such insurer is shall be January 1, 1979.
679 (i) In lieu of the mortality tables specified in this
680 subsection, and subject to rules previously adopted by the
681 former Department of Insurance, the insurance company may, at
682 its option:
683 1. Substitute the applicable 1958 CSO or CET Smoker and
684 Nonsmoker Mortality Tables, in lieu of the 1980 CSO or CET
685 mortality table standard, for policies issued on or after the
686 operative date of s. 627.476(9) and before January 1, 1989.
687 2. Substitute the applicable 1980 CSO or CET Smoker and
688 Nonsmoker Mortality Tables in lieu of the 1980 CSO or CET
689 mortality table standard.;
690 3. Use the Annuity 2000 Mortality Table for determining the
691 minimum standard of valuation for individual annuity and pure
692 endowment contracts issued on or after January 1, 1998, and
693 before July 1, 1998.
694 4. Use the 1994 GAR Table for determining the minimum
695 standard of valuation for annuities and pure endowments
696 purchased on or after January 1, 1998, and before July 1, 1998,
697 under group annuity and pure endowment contracts.
698 (j) The commission may adopt by rule the model regulation
699 for valuation of life insurance policies as approved by the NAIC
700 National Association of Insurance Commissioners in March 1999,
701 including tables of select mortality factors, and may make the
702 regulation effective for policies issued on or after January 1,
703 2000.
704 (k) For individual annuity and pure endowment contracts
705 issued on or after July 1, 2004, excluding any disability and
706 accidental death benefits purchased under those contracts,
707 individual annuity mortality tables adopted after 1980 by the
708 NAIC National Association of Insurance Commissioners, adopted by
709 rule by the commission for use in determining the minimum
710 standard of valuation for those contracts.
711 (l) For all annuities and pure endowments purchased on or
712 after July 1, 2004, under group annuity and pure endowment
713 contracts, excluding any disability and accidental death
714 benefits purchased under those contracts, group annuity
715 mortality tables adopted after 1980 by the NAIC National
716 Association of Insurance Commissioners, adopted by rule by the
717 commission for use in determining the minimum standard of
718 valuation for those contracts.
719 (6) MINIMUM STANDARD OF VALUATION.—
720 (e) The interest rate index shall be the Moody’s Corporate
721 Bond Yield Average-Monthly Average Corporates as published by
722 Moody’s Investors Service, Inc., if the as long as this index is
723 calculated by using substantially the same methodology as used
724 by Moody’s it on January 1, 1981. If Moody’s corporate bond
725 yield average ceases to be calculated in substantially the same
726 this manner, the interest rate index shall be the index
727 specified in the valuation manual, as applicable, as provided
728 under s. 625.1212, or an index adopted by the NAIC and approved
729 by rule adopted promulgated by the commission. The methodology
730 used in determining the index approved by rule must shall be
731 substantially the same as the methodology employed on January 1,
732 1981, for determining Moody’s Corporate Bond Yield Average
733 Monthly Average Corporates as published by Moody’s Investors
734 Service, Inc.
735 (10) LOWER VALUATIONS.—An insurer that which at any time
736 had adopted a any standard of valuation producing greater
737 aggregate reserves than those calculated according to the
738 minimum standard herein provided under this section shall may,
739 with the approval of the office, adopt a any lower standard of
740 valuation, but not lower than the minimum herein provided;
741 however, for the purposes of this subsection, the holding of
742 additional reserves previously determined by an appointed a
743 qualified actuary, as defined in s. 625.1212(2), to be necessary
744 to render the opinion required by subsection (3) may shall not
745 be deemed to be the adoption of a higher standard of valuation.
746 (11) ADDITIONAL PREMIUM DEFICIENCY RESERVE.—If in any
747 contract year the gross premium charged by a any life insurer on
748 a any policy or contract is less than the valuation net premium
749 for the policy or contract calculated by the method used in
750 calculating the reserve thereon but using the minimum valuation
751 standards of mortality and rate of interest, the minimum premium
752 reserve required for the policy or contract shall be the greater
753 of the reserve calculated according to the actual mortality
754 table, rate of interest, and method used for the policy or
755 contract, or the actual method used for the policy or contract
756 but using the minimum valuation standards of mortality and rate
757 of interest and replacing the valuation net premium by the
758 actual gross premium in each contract year for which the
759 valuation net premium exceeds the actual gross premium. The
760 minimum valuation standards of mortality and rate of interest
761 are those standards there shall be maintained on such policy or
762 contract a deficiency reserve in addition to the reserve defined
763 by subsections (4), (5), and (6) (7) and (12). For each such
764 policy or contract, the deficiency reserve shall be the present
765 value, according to the minimum valuation standards of mortality
766 and rate of interest, of the differences between all such
767 valuation net premiums and the corresponding premiums charged
768 for such policy or contract during the remainder of the premium
769 paying period. For any category of policies, contracts, or
770 benefits specified in subsections (5) and (6), issued on or
771 after the operative date of s. 627.476 (the Standard
772 Nonforfeiture Law for Life Insurance), the aggregate deficiency
773 reserves may be reduced by the amount, if any, by which the
774 aggregate reserves actually calculated in accordance with
775 subsection (9) exceed the minimum aggregate reserves prescribed
776 by subsection (8). The minimum valuation standards of mortality
777 and rate of interest referred to in this subsection are those
778 standards stated in subsections (5) and (6). However, For any
779 life insurance policy that which is issued on or after January
780 1, 1985, for which the gross premium in the first policy year
781 exceeds that of the second year and for which no comparable
782 additional benefit is provided in the first year for such
783 excess, and which provides an endowment benefit, a cash
784 surrender value, or a combination thereof in an amount greater
785 than such excess premium, the foregoing provisions of this
786 subsection shall be applied as if the method actually used in
787 calculating the reserve for such policy were the method
788 described in subsection (7), the provisions of subparagraph
789 (7)(a)2. being ignored. The minimum premium reserve amount of
790 the deficiency reserve, if any, at each policy anniversary of
791 such a policy is shall be the excess, if any, of the amount
792 determined by the foregoing provisions of this subsection plus
793 the reserve calculated by the method described in subsection
794 (7), the provisions of subparagraph (7)(a)2. being ignored, over
795 the reserve actually calculated by the method described in
796 subsection (7), the provisions of subparagraph (7)(a)2. being
797 taken into account.
798 (12) RESERVE CALCULATION FOR INDETERMINATE PREMIUM PLANS
799 ALTERNATE METHOD FOR DETERMINING RESERVES IN CERTAIN CASES.—In
800 the case of a any plan of life insurance which provides for
801 future premium determination, the amounts of which are to be
802 determined by the insurer based on then estimates of future
803 experience, or in the case of a any plan of life insurance or
804 annuity for which is of such a nature that the minimum reserves
805 cannot be determined by the methods described in subsections (7)
806 and (11) subsection (7), the reserves that which are held under
807 any such plan must shall:
808 (a) Be appropriate in relation to the benefits and the
809 pattern of premiums for that plan; and
810 (b) Be computed by a method that which is consistent with
811 the principles of this section, as determined by rules adopted
812 promulgated by the commission.
813 Section 7. Section 625.1212, Florida Statutes, is created
814 to read:
815 625.1212 Valuation of policies and contracts issued on or
816 after the operative date of the valuation manual.—
817 (1) APPLICABILITY.—This section applies to life insurance
818 contracts, accident and health insurance contracts, and deposit
819 type contracts issued on or after the operative date of the
820 valuation manual unless the manual requires or permits an
821 insurer to determine reserves according to the standards in
822 effect before the operative date of the manual and rules adopted
823 by the commission as provided under s. 625.121. Subsections (5)
824 and (6) do not apply to policies and contracts subject to s.
825 625.121.
826 (2) DEFINITIONS.—As used in this section, the term:
827 (a) “Accident and health insurance” means contracts that
828 incorporate morbidity risk and provide protection against
829 economic loss resulting from accident, sickness, or medical
830 conditions and as may be specified in the valuation manual.
831 (b) “Appointed actuary” means a qualified actuary who is
832 appointed in accordance with the valuation manual to prepare the
833 actuarial opinion required in subsection (4).
834 (c) “Deposit-type contract” means contracts that do not
835 incorporate mortality or morbidity risks and as may be specified
836 in the valuation manual.
837 (d) “Insurer” means a person engaged as an indemnitor,
838 surety, or contractor in the business of entering into contracts
839 of insurance or reinsurance.
840 (e) “Life insurance” means policies or contracts that
841 incorporate mortality risk, including annuity and pure endowment
842 contracts, and as may be specified in the valuation manual.
843 (f) “Operative date of the valuation manual” means the
844 latter of January 1, 2017, or the first January 1 following the
845 first July 1 that the Commissioner of the Office of Insurance
846 Regulation certifies to the Financial Services Commission in
847 writing that:
848 1. The valuation manual is adopted by the NAIC by an
849 affirmative vote of at least 42 members of the NAIC or 75
850 percent of members voting, whichever is greater;
851 2. The Standard Valuation Law, as amended by the NAIC in
852 2009, or substantially similar legislation, is enacted in states
853 representing more than 75 percent of the direct premiums written
854 as reported in the 2008 annual statements for life, accident and
855 health, health, or fraternal society insurance; and
856 3. The Standard Valuation Law as amended by the NAIC in
857 2009, or substantially similar legislation, is enacted in at
858 least 42 of the following 55 jurisdictions: the 50 states of the
859 United States, the District of Columbia, American Samoa, the
860 American Virgin Islands, Guam, and Puerto Rico.
861 (g) “Policyholder behavior” means an action a policyholder,
862 contract holder, or other person who has the right to elect
863 options, such as a certificateholder, may take under a policy or
864 contract subject to this section including, but not limited to,
865 lapse, withdrawal, transfer, deposit, premium payment, loan,
866 annuitization, or benefit elections prescribed by the policy or
867 contract but excluding events of mortality or morbidity that
868 result in benefits prescribed in their essential aspects by the
869 terms of the policy or contract.
870 (h) “Principle-based valuation” means a reserve valuation
871 that uses one or more methods or assumptions determined by the
872 insurer and must comply with subsection (6) as specified in the
873 valuation manual.
874 (i) “Qualified actuary” means an individual who is
875 qualified to sign the applicable statement of actuarial opinion
876 in accordance with the American Academy of Actuaries
877 qualification standards for actuaries signing such statements
878 and who meets the requirements specified in the valuation
879 manual.
880 (j) “Tail risk” means a risk that occurs when the frequency
881 of low probability events is higher than expected under a normal
882 probability distribution or when there are observed events of
883 very significant size or magnitude.
884 (k) “Valuation manual” means the manual of valuation
885 instructions adopted by the NAIC, or as subsequently amended.
886 (3) RESERVE VALUATION.—The office shall annually value, or
887 cause to be valued, insurer reserves for all outstanding life
888 insurance contracts, accident and health contracts, and deposit
889 type contracts in this state. Insurers are subject to
890 subsections (5) and (6) when calculating the reserves. In lieu
891 of the reserve valuation for a foreign or alien insurer, the
892 office may accept a valuation made, or caused to be made, by the
893 insurance supervisory official of any state or other
894 jurisdiction if the valuation complies with the minimum standard
895 required in this section.
896 (4) ACTUARIAL OPINION OF RESERVES.—
897 (a) Each insurer that has outstanding life insurance
898 contracts, accident and health insurance contracts, or deposit
899 type contracts in this state which are subject to regulation by
900 the office must annually submit the opinion of a qualified
901 actuary as to whether the reserves and related actuarial items
902 held in support of the policies and contracts are computed
903 appropriately, are based on assumptions that satisfy contractual
904 provisions, are consistent with prior reported amounts, and
905 comply with applicable state law. The specifics of the opinion,
906 including any items deemed necessary to its scope, must be as
907 prescribed by the valuation manual.
908 (b) Except as exempted in the valuation manual, each
909 insurer that has outstanding life insurance contracts, accident
910 and health insurance contracts, or deposit-type contracts in
911 this state shall also annually include an opinion by the same
912 appointed actuary as to whether the reserves and related
913 actuarial items held in support of the policies and contracts
914 specified in the valuation manual, when considered in light of
915 the assets held by the insurer with respect to the reserves and
916 related actuarial items, including, but not limited to, the
917 investment earnings on the assets and the considerations
918 anticipated to be received and retained under the policies and
919 contracts, make adequate provision for the insurer’s obligations
920 under the policies and contracts, including, but not limited to,
921 the benefits under and expenses associated with the policies and
922 contracts.
923 (c) The insurer shall prepare a memorandum to support each
924 actuarial opinion in such form and substance as specified in the
925 valuation manual and acceptable to the office. If the insurer
926 fails to provide a supporting memorandum within the period
927 specified in the valuation manual, or if the office determines
928 that the supporting memorandum fails to meet the standards
929 required by the manual or is otherwise unacceptable to the
930 office, the office may engage a qualified actuary at the expense
931 of the insurer to review the opinion and the basis for the
932 opinion and to prepare the supporting memorandum.
933 (d) Each opinion subject to this subsection must be
934 submitted with the annual statement in such form and substance
935 as specified in the valuation manual and acceptable to the
936 office, must reflect the valuation of the reserve liabilities
937 for each year ending on or after the operative date of the
938 valuation manual, and must apply to all policies and contracts
939 subject to paragraph (b), plus other actuarial liabilities as
940 may be specified in the valuation manual. The opinion must be
941 based on standards adopted by the Actuarial Standards Board or
942 its successor, and on such additional standards as may be
943 prescribed in the valuation manual. For a foreign or alien
944 insurer, the office may accept an opinion filed by the insurer
945 with the insurance supervisory official of another state if the
946 office determines that the opinion reasonably meets the
947 requirements applicable to an insurer domiciled in this state.
948 (e) Disciplinary action by the office against the insurer
949 or the appointed actuary shall be in accordance with the laws of
950 this state and related rules adopted by the commission.
951 (5) MINIMUM STANDARD OF VALUATION.—
952 (a) In accordance with this subsection and subsection (6),
953 an insurer must apply the standard prescribed in the valuation
954 manual as the minimum standard of valuation for contracts issued
955 on or after the operative date of the valuation manual, except:
956 1. For specific product forms or product lines exempted
957 pursuant to paragraph (f); or
958 2. That an insurer domiciled in a state that does not
959 require the insurer to apply the standards prescribed in the
960 valuation manual as the minimum standard of valuation, including
961 the principle-based valuation of reserves, may not apply such
962 standards in this state.
963 (b) If, in the opinion of the office, there is no specific
964 valuation requirement or a specific valuation requirement in the
965 valuation manual is not in compliance with this section, the
966 insurer shall comply with the minimum valuation standards
967 prescribed by the commission by rule.
968 (c) The office may engage a qualified actuary, at the
969 insurer’s expense, to perform an actuarial examination of the
970 insurer and to render an opinion as to the appropriateness of
971 any reserve assumption or method, or computer model or modeling
972 software used by the insurer, or to review and provide an
973 opinion on the insurer’s compliance with the requirements of
974 this section. In calculating and establishing reserves under
975 this section, the insurer may rely on the modeling software and
976 tools of a third-party vendor only if the vendor contractually
977 agrees to allow the insurer to provide the office with access to
978 the software or tools as necessary to replicate the results of
979 the software or tools for the purpose of evaluating and
980 validating reserve valuations. The office may rely upon the
981 opinion of a qualified actuary employed by or under contract
982 with the commissioner of another state, district, or territory
983 of the United States with respect to this section.
984 (d) The office may require an insurer to change any
985 assumption or method that, in the opinion of the office, is
986 necessary to comply with the valuation manual or this section.
987 The insurer shall adjust the reserves as required by the office.
988 The office may take other disciplinary action pursuant to
989 applicable state law and rules.
990 (e) The commission may adopt subsequent amendments to the
991 valuation manual by rule if the methodology and standards remain
992 substantially consistent with the valuation manual then in
993 effect.
994 (f) A domestic insurer licensed and doing business only in
995 this state may exempt specific product forms or product lines
996 from the requirements of this subsection and subsection (6) if
997 the insurer computes reserves for the specific product forms or
998 product lines using assumptions and methods used before the
999 operative date of the valuation manual, and the amount of
1000 insurance subject to the stochastic or deterministic reserve
1001 requirement is immaterial. The requirements of s. 625.121 apply
1002 to specific product forms and product lines exempted under this
1003 paragraph.
1004 (g) An insurer that adopted a standard of valuation
1005 producing greater aggregate reserves than those calculated
1006 according to the minimum standard provided under this section
1007 may, with the approval of the office, adopt a lower standard of
1008 valuation, but such standard may not be lower than the minimum
1009 provided in this subsection. For purposes of this subsection,
1010 holding additional reserves previously determined by an
1011 appointed actuary to be necessary to render the opinion required
1012 by subsection (3) may not be deemed to be the adoption of a
1013 higher standard of valuation.
1014 (6) REQUIREMENTS OF A PRINCIPLE-BASED VALUATION OF
1015 RESERVES.—
1016 (a) Insurers required to use a principle-based valuation of
1017 reserves for specified product forms and product lines and
1018 associated policies and contracts, pursuant to subparagraph
1019 (5)(a)2., must:
1020 1. Quantify the benefits and guarantees, and the funding
1021 associated with the policies or contracts and their risks at a
1022 level of conservatism that reflects conditions that:
1023 a. Include unfavorable events that have a reasonable
1024 probability of occurring during the lifetime of the policies or
1025 contracts; and
1026 b. Are appropriately adverse to quantifying the tail risk.
1027 2. Incorporate assumptions, risk analysis methods, and
1028 financial models and management techniques that are consistent
1029 with, but not necessarily identical to, those used within the
1030 insurer’s overall risk assessment process while recognizing
1031 potential differences in financial reporting structures and any
1032 prescribed assumptions or methods.
1033 3. Incorporate assumptions that are derived in one of the
1034 following manners:
1035 a. The assumption is prescribed in the valuation manual.
1036 b. For assumptions that are not prescribed, the assumptions
1037 must:
1038 (I) Be established using the insurer’s available
1039 experience, to the extent that it is relevant and statistically
1040 credible; or
1041 (II) To the extent that insurer data is not available,
1042 relevant, or statistically credible, be established using other
1043 relevant, statistically credible experience.
1044 4. Provide margins for uncertainty including adverse
1045 deviation and estimation error, such that the greater the
1046 uncertainty the larger the margin and resulting reserve.
1047 (b) An insurer using a principle-based valuation for one or
1048 more policies or contracts subject to this section as specified
1049 in the valuation manual shall:
1050 1. Establish procedures for corporate governance and
1051 oversight of the actuarial valuation function consistent with
1052 those prescribed in the valuation manual.
1053 2. Submit an annual certification to the office and the
1054 insurer’s board of directors of the effectiveness of internal
1055 controls on the principle-based valuation. The internal controls
1056 must be designed to assure that all material risks inherent in
1057 the liabilities and associated assets subject to the valuation
1058 are included in the valuation, and that valuations are made in
1059 accordance with the valuation manual. The certification must be
1060 based on controls in place as of the end of the preceding
1061 calendar year.
1062 3. Upon request, develop and file with the office a
1063 principle-based valuation report that complies with standards
1064 prescribed in the valuation manual.
1065 (c) A principle-based valuation may include a prescribed
1066 formulaic reserve component.
1067 (7) EXPERIENCE REPORTING.—An insurer subject to the
1068 requirements of paragraph (5)(d) shall submit mortality,
1069 morbidity, policyholder behavior, or expense experience and
1070 other data as prescribed in the valuation manual to the office.
1071 (8) RULE ADOPTION.—The commission may adopt rules as
1072 necessary to administer this section, including rules requiring
1073 the use of the NAIC 2009 Standard Valuation Law and the NAIC
1074 2012 Valuation Manual. The adoption of such rules is not subject
1075 to s. 120.541(3), and the rules do not take effect until the
1076 operative date of the valuation manual.
1077 Section 8. Section 625.1214, Florida Statutes, is created
1078 to read:
1079 625.1214 Use of confidential information.—
1080 (1) Documents, reports, materials, and other information
1081 created, produced, or obtained pursuant to ss. 625.121 and
1082 625.1212 are privileged, confidential, and exempt as provided in
1083 s. 624.4212, and are not subject to subpoena or discovery, or
1084 admissible in evidence in any private civil action. However, the
1085 department or office may use the confidential and exempt
1086 information in the furtherance of any regulatory or legal action
1087 brought against an insurer as a part of the official duties of
1088 the department or office. A waiver of any other applicable claim
1089 of confidentiality or privilege may not occur as a result of a
1090 disclosure to the office under this section, any other section
1091 of the insurance code, or as a result of sharing under s.
1092 624.4212.
1093 (2) Neither the office nor any person who received
1094 confidential and exempt information while acting under the
1095 authority of the office or with whom such information is shared
1096 pursuant to s. 624.4212 may be permitted or required to testify
1097 in a private civil action concerning any confidential and exempt
1098 information subject to s. 624.4212. If any portion of the
1099 confidential memorandum is cited by the insurer in its
1100 marketing, is cited before a governmental agency other than a
1101 state insurance department, or is released by the insurer to the
1102 news media, no portion of the memorandum is confidential.
1103 (3) A privilege established under the law of any state or
1104 jurisdiction that is substantially similar to the privilege
1105 established under subsection (1) shall be available and enforced
1106 in any proceeding in and in any court of this state.
1107 Section 9. Paragraphs (h) and (i) of subsection (9) and
1108 subsection (14) of section 627.476, Florida Statutes, are
1109 amended to read:
1110 627.476 Standard Nonforfeiture Law for Life Insurance.—
1111 (9) CALCULATION OF ADJUSTED PREMIUMS AND PRESENT VALUES FOR
1112 POLICIES ISSUED AFTER OPERATIVE DATE OF THIS SUBSECTION.—
1113 (h) All adjusted premiums and present values referred to in
1114 this section shall, for all policies of ordinary insurance be
1115 calculated on the basis of the Commissioners’ 1980 Standard
1116 Ordinary Mortality Table adopted by the NAIC or, at the election
1117 of the insurer for any one or more specified plans of life
1118 insurance, the Commissioners’ 1980 Standard Ordinary Mortality
1119 Table with Ten-Year Select Mortality Factors adopted by the
1120 NAIC; shall for all policies of industrial insurance be
1121 calculated on the basis of the Commissioners’ 1961 Standard
1122 Industrial Mortality Table adopted by the NAIC; and shall for
1123 all policies issued in a particular calendar year be calculated
1124 on the basis of a rate of interest not exceeding the
1125 nonforfeiture interest rate as defined in this subsection for
1126 policies issued in that calendar year. However:
1127 1. At the option of the insurer, calculations for all
1128 policies issued in a particular calendar year may be made on the
1129 basis of a rate of interest not exceeding the nonforfeiture
1130 interest rate, as defined in this subsection, for policies
1131 issued in the immediately preceding calendar year.
1132 2. Under any paid-up nonforfeiture benefit, including any
1133 paid-up dividend additions, any cash surrender value available,
1134 whether or not required by subsection (2), shall be calculated
1135 on the basis of the mortality table and rate of interest used in
1136 determining the amount of such paid-up nonforfeiture benefit and
1137 paid-up dividend additions, if any.
1138 3. An insurer may calculate the amount of any guaranteed
1139 paid-up nonforfeiture benefit, including any paid-up additions
1140 under the policy, on the basis of an interest rate no lower than
1141 that specified in the policy for calculating cash surrender
1142 values.
1143 4. In calculating the present value of any paid-up term
1144 insurance with accompanying pure endowment, if any, offered as a
1145 nonforfeiture benefit, the rates of mortality assumed may be not
1146 more than those shown in the Commissioners’ 1980 Extended Term
1147 Insurance Table adopted by the NAIC for policies of ordinary
1148 insurance and not more than the Commissioners’ 1961 Industrial
1149 Extended Term Insurance Table adopted by the NAIC for policies
1150 of industrial insurance.
1151 5. In lieu of the mortality tables specified in this
1152 section, at the option of the insurance company and subject to
1153 rules adopted by the commission, the insurance company may
1154 substitute:
1155 a. The 1958 CSO or CET Smoker and Nonsmoker Mortality
1156 Tables, whichever is applicable, for policies issued on or after
1157 the operative date of this subsection and before January 1,
1158 1989;
1159 b. The 1980 CSO or CET Smoker and Nonsmoker Mortality
1160 Tables, whichever is applicable, for policies issued on or after
1161 the operative date of this subsection;
1162 c. A mortality table that is a blend of the sex-distinct
1163 1980 CSO or CET mortality table standard, whichever is
1164 applicable, or a mortality table that is a blend of the sex
1165 distinct 1980 CSO or CET smoker and nonsmoker mortality table
1166 standards, whichever is applicable, for policies that are
1167 subject to the United States Supreme Court decision in Arizona
1168 Governing Committee v. Norris to prevent unfair discrimination
1169 in employment situations.
1170 6. For policies issued:
1171 a. Before the operative date of the valuation manual,
1172 ordinary mortality tables, adopted after 1980 by the NAIC
1173 National Association of Insurance Commissioners, adopted by rule
1174 by the commission for use in determining the minimum
1175 nonforfeiture standard may be substituted for the Commissioners’
1176 1980 Standard Ordinary Mortality Table with or without Ten-Year
1177 Select Mortality Factors or for the Commissioners’ 1980 Extended
1178 Term Insurance Table adopted by the NAIC.
1179 b. On or after the operative date of the valuation manual,
1180 the valuation manual shall provide the Standard Mortality Table
1181 for use in determining the minimum nonforfeiture standard that
1182 may be substituted for:
1183 (I) The 1980 Standard Ordinary Mortality Table with or
1184 without 10-Year Select Mortality Factors or the 1980 Extended
1185 Term Insurance Table adopted by the NAIC. If the commission
1186 approves by rule a Standard Ordinary Mortality Table adopted by
1187 the NAIC for use in determining the minimum nonforfeiture
1188 standard for policies issued on or after the operative date of
1189 the valuation manual, the minimum nonforfeiture standard
1190 supersedes the minimum nonforfeiture standard provided by the
1191 valuation manual.
1192 (II) The 1961 Standard Industrial Mortality Table or 1961
1193 Industrial Extended Term Insurance Table adopted by the NAIC. If
1194 the commission approves by rule any Standard Industrial
1195 Mortality Table adopted by the NAIC for use in determining the
1196 minimum nonforfeiture standard for policies issued on or after
1197 the operative date of the valuation manual, the minimum
1198 nonforfeiture standard supersedes the minimum nonforfeiture
1199 standard provided by the valuation manual.
1200 7. For insurance issued on a substandard basis, the
1201 calculation of any such adjusted premiums and present values may
1202 be based on appropriate modifications of the aforementioned
1203 tables.
1204 (i) The nonforfeiture interest rate per year for a any
1205 policy issued in a particular calendar year for policies issued:
1206 1. Before the operative date of the valuation manual, shall
1207 be equal to 125 percent of the calendar year statutory valuation
1208 interest rate for such policy as defined in the Standard
1209 Valuation Law, rounded to the nearest one-fourth of 1 percent;
1210 however, the nonforfeiture interest rate may not be less than 4
1211 percent.
1212 2. On or after the operative date of the valuation manual,
1213 shall be as provided by the valuation manual.
1214 (14) OPERATIVE DATE.—
1215 (a) After the effective date of this code, an any insurer
1216 may file with the office a written notice or notices of its
1217 election to comply with the provisions of this section on and
1218 after a specified date or dates before January 1, 1966, as to
1219 either or both of its policies of ordinary and industrial
1220 insurance, in which case such specified date or dates shall be
1221 the operative date of this section with respect to such
1222 policies. The operative date of this section for policies of
1223 both ordinary and industrial insurance shall be the earlier of
1224 January 1, 1966, and any prior operative date or dates resulting
1225 from such previously filed written notices. With respect to
1226 policies of industrial insurance issued on and after the
1227 operative date of this section for such policies but before
1228 January 1, 1968, any insurer may file with the office written
1229 notice of its election to have the Commissioners’ 1961 Standard
1230 Industrial Mortality Table and the Commissioners’ 1961
1231 Industrial Extended Term Insurance Table adopted by the NAIC
1232 applicable with respect to subsection (8) for policies issued on
1233 and after the date specified in such election.
1234 (b) As used in subsection (9), the term “operative date of
1235 the valuation manual” has the same meaning as provided in s.
1236 625.1212(2).
1237 Section 10. Subsections (1), (3), (10), (12), and (13) of
1238 section 628.461, Florida Statutes, are amended to read:
1239 628.461 Acquisition of controlling stock.—
1240 (1) A person may not, individually or in conjunction with
1241 any affiliated person of such person, acquire directly or
1242 indirectly, conclude a tender offer or exchange offer for, enter
1243 into any agreement to exchange securities for, or otherwise
1244 finally acquire 10 5 percent or more of the outstanding voting
1245 securities of a domestic stock insurer or of a controlling
1246 company, unless:
1247 (a) The person or affiliated person has filed with the
1248 office and sent to the insurer and controlling company a letter
1249 of notification regarding the transaction or proposed
1250 transaction within no later than 5 days after any form of tender
1251 offer or exchange offer is proposed, or within no later than 5
1252 days after the acquisition of the securities if no tender offer
1253 or exchange offer is involved. The notification must be provided
1254 on forms prescribed by the commission containing information
1255 determined necessary to understand the transaction and identify
1256 all purchasers and owners involved;
1257 (b) The person or affiliated person has filed with the
1258 office the a statement as specified in subsection (3). The
1259 statement must be completed and filed within 30 days after:
1260 1. Any definitive acquisition agreement is entered;
1261 2. Any form of tender offer or exchange offer is proposed;
1262 or
1263 3. The acquisition of the securities, if no definitive
1264 acquisition agreement, tender offer, or exchange offer is
1265 involved; and
1266 (c) The office has approved the tender or exchange offer,
1267 or acquisition if no tender offer or exchange offer is involved,
1268 and approval is in effect.
1269
1270 In lieu of a filing as required under this subsection, a party
1271 acquiring less than 10 percent of the outstanding voting
1272 securities of an insurer may file a disclaimer of affiliation
1273 and control. The disclaimer shall fully disclose all material
1274 relationships and basis for affiliation between the person and
1275 the insurer as well as the basis for disclaiming the affiliation
1276 and control. After a disclaimer has been filed, the insurer
1277 shall be relieved of any duty to register or report under this
1278 section which may arise out of the insurer’s relationship with
1279 the person unless and until the office disallows the disclaimer.
1280 The office shall disallow a disclaimer only after furnishing all
1281 parties in interest with notice and opportunity to be heard and
1282 after making specific findings of fact to support the
1283 disallowance. A filing as required under this subsection must be
1284 made for as to any acquisition that equals or exceeds 10 percent
1285 of the outstanding voting securities.
1286 (3) The statement to be filed with the office under
1287 subsection (1) and furnished to the insurer and controlling
1288 company must shall contain all the following information and any
1289 additional information that as the office deems necessary to
1290 determine the character, experience, ability, and other
1291 qualifications of the person or affiliated person of such person
1292 for the protection of the policyholders and shareholders of the
1293 insurer and the public:
1294 (a) The identity of, and the background information
1295 specified in subsection (4) on, each natural person by whom, or
1296 on whose behalf, the acquisition is to be made; and, if the
1297 acquisition is to be made by, or on behalf of, a corporation,
1298 association, or trust, as to the corporation, association, or
1299 trust and as to any person who controls, either directly or
1300 indirectly, the corporation, association, or trust, the identity
1301 of, and the background information specified in subsection (4)
1302 on, each director, officer, trustee, or other natural person
1303 performing duties similar to those of a director, officer, or
1304 trustee for the corporation, association, or trust.;
1305 (b) The source and amount of the funds or other
1306 consideration used, or to be used, in making the acquisition.;
1307 (c) Any plans or proposals that which such persons may have
1308 made to liquidate such insurer, to sell any of its assets or
1309 merge or consolidate it with any person, or to make any other
1310 major change in its business or corporate structure or
1311 management; and any plans or proposals that which such persons
1312 may have made to liquidate any controlling company of such
1313 insurer, to sell any of its assets or merge or consolidate it
1314 with any person, or to make any other major change in its
1315 business or corporate structure or management.;
1316 (d) The number of shares or other securities that which the
1317 person or affiliated person of such person proposes to acquire,
1318 the terms of the proposed acquisition, and the manner in which
1319 the securities are to be acquired.; and
1320 (e) Information as to any contract, arrangement, or
1321 understanding with any party with respect to any of the
1322 securities of the insurer or controlling company, including, but
1323 not limited to, information relating to the transfer of any of
1324 the securities, option arrangements, puts or calls, or the
1325 giving or withholding of proxies, which information names the
1326 party with whom the contract, arrangement, or understanding has
1327 been entered into and gives the details thereof.
1328 (f) Effective January 1, 2015, an agreement by the person
1329 required to file the statement that the person will provide the
1330 annual report specified in s. 628.801(2) if control exists.
1331 (g) Effective January 1, 2015, an acknowledgement by the
1332 person required to file the statement that the person and all
1333 subsidiaries within the person’s control in the insurance
1334 holding company system will provide, as necessary, information
1335 to the office upon request to evaluate enterprise risk to the
1336 insurer.
1337 (10) Upon notification to the office by the domestic stock
1338 insurer or a controlling company that any person or any
1339 affiliated person of such person has acquired 10 5 percent or
1340 more of the outstanding voting securities of the domestic stock
1341 insurer or controlling company without complying with the
1342 provisions of this section, the office shall order that the
1343 person and any affiliated person of such person cease
1344 acquisition of any further securities of the domestic stock
1345 insurer or controlling company; however, the person or any
1346 affiliated person of such person may request a proceeding, which
1347 proceeding shall be convened within 7 days after the rendering
1348 of the order for the sole purpose of determining whether the
1349 person, individually or in connection with any affiliated person
1350 of such person, has acquired 10 5 percent or more of the
1351 outstanding voting securities of a domestic stock insurer or
1352 controlling company. Upon the failure of the person or
1353 affiliated person to request a hearing within 7 days, or upon a
1354 determination at a hearing convened pursuant to this subsection
1355 that the person or affiliated person has acquired voting
1356 securities of a domestic stock insurer or controlling company in
1357 violation of this section, the office may order the person and
1358 affiliated person to divest themselves of any voting securities
1359 so acquired.
1360 (12)(a) The disclaimer must fully disclose all material
1361 relationships and bases for affiliation between the person and
1362 the insurer as well as the basis for disclaiming the
1363 affiliation. The disclaimer of control shall be filed on a form
1364 prescribed by the office. A person or acquiring party may file a
1365 disclaimer of control by filing with the office a copy of a
1366 Schedule 13G filed with the Securities and Exchange Commission
1367 pursuant to rules 13d-1(b) or 13d-1(c) under the Securities
1368 Exchange Act of 1934, as amended. After a disclaimer has been
1369 filed, the insurer is relieved of any duty to register or report
1370 under this section which may arise out of the insurer’s
1371 relationship with the person unless the office disallows the
1372 disclaimer.
1373 (b) A controlling person of a domestic insurer who seeks to
1374 divest the person’s controlling interest in the domestic insurer
1375 in any manner shall file with the office, with a copy provided
1376 to the insurer, confidential notice, not subject to public
1377 inspection as provided under s. 624.4212, of the person’s
1378 proposed divestiture at least 30 days before the cessation of
1379 control. The office shall determine those instances in which the
1380 party seeking to divest or to acquire a controlling interest in
1381 an insurer must file for and obtain approval of the transaction.
1382 The information remains confidential until the conclusion of the
1383 transaction unless the office, in its discretion, determines
1384 that confidential treatment interferes with enforcement of this
1385 section. If the statement referred to in subsection (1) is
1386 otherwise filed, this paragraph does not apply For the purpose
1387 of this section, the term “affiliated person” of another person
1388 means:
1389 1. The spouse of such other person;
1390 2. The parents of such other person and their lineal
1391 descendants and the parents of such other person’s spouse and
1392 their lineal descendants;
1393 3. Any person who directly or indirectly owns or controls,
1394 or holds with power to vote, 5 percent or more of the
1395 outstanding voting securities of such other person;
1396 4. Any person 5 percent or more of the outstanding voting
1397 securities of which are directly or indirectly owned or
1398 controlled, or held with power to vote, by such other person;
1399 5. Any person or group of persons who directly or
1400 indirectly control, are controlled by, or are under common
1401 control with such other person;
1402 6. Any officer, director, partner, copartner, or employee
1403 of such other person;
1404 7. If such other person is an investment company, any
1405 investment adviser of such company or any member of an advisory
1406 board of such company;
1407 8. If such other person is an unincorporated investment
1408 company not having a board of directors, the depositor of such
1409 company; or
1410 9. Any person who has entered into an agreement, written or
1411 unwritten, to act in concert with such other person in acquiring
1412 or limiting the disposition of securities of a domestic stock
1413 insurer or controlling company.
1414 (b) For the purposes of this section, the term “controlling
1415 company” means any corporation, trust, or association owning,
1416 directly or indirectly, 25 percent or more of the voting
1417 securities of one or more domestic stock insurance companies.
1418 (13) The commission may adopt, amend, or repeal rules that
1419 are necessary to administer implement the provisions of this
1420 section, pursuant to chapter 120.
1421 Section 11. Section 628.801, Florida Statutes, is amended
1422 to read:
1423 628.801 Insurance holding companies; registration;
1424 regulation.—
1425 (1) An Every insurer that is authorized to do business in
1426 this state and that is a member of an insurance holding company
1427 shall, on or before April 1 of each year, register with the
1428 office and file a registration statement and be subject to
1429 regulation with respect to its relationship to the holding
1430 company as provided by law or rule or statute. The commission
1431 shall adopt rules establishing the information and statement
1432 form required for registration and the manner in which
1433 registered insurers and their affiliates are regulated. The
1434 rules apply to domestic insurers, foreign insurers, and
1435 commercially domiciled insurers, except for a foreign insurer
1436 domiciled in states that were are accredited by the NAIC
1437 National Association of Insurance Commissioners by December 31,
1438 1995. Except to the extent of any conflict with this code, the
1439 rules must include all requirements and standards of ss. 4 and 5
1440 of the Insurance Holding Company System Regulatory Act and the
1441 Insurance Holding Company System Model Regulation of the NAIC
1442 National Association of Insurance Commissioners, as adopted in
1443 December 2010. The commission may adopt subsequent amendments
1444 thereto if the methodology remains substantially consistent. The
1445 rules Regulatory Act and the Model Regulation existed on
1446 November 30, 2001, and may include a prohibition on oral
1447 contracts between affiliated entities. Material transactions
1448 between an insurer and its affiliates shall be filed with the
1449 office as provided by rule Upon request, the office may waive
1450 filing requirements under this section for a domestic insurer
1451 that is the subsidiary of an insurer that is in full compliance
1452 with the insurance holding company registration laws of its
1453 state of domicile, which state is accredited by the National
1454 Association of Insurance Commissioners.
1455 (2) Effective January 1, 2015, the ultimate controlling
1456 person of every insurer subject to registration shall also file
1457 an annual enterprise risk report on or before April 1. As used
1458 in this subsection, the term “ultimate controlling person” means
1459 a person who is not controlled by any other person. The report,
1460 to the best of the ultimate controlling person’s knowledge and
1461 belief, must identify the material risks within the insurance
1462 holding company system that could pose enterprise risk to the
1463 insurer. The report shall be filed with the lead state office of
1464 the insurance holding company system as determined by the
1465 procedures within the Financial Analysis Handbook adopted by the
1466 NAIC and is confidential and exempt from public disclosure as
1467 provided in s. 624.4212.
1468 (a) An insurer may satisfy this requirement by providing
1469 the office with the most recently filed parent corporation
1470 reports that have been filed with the Securities and Exchange
1471 Commission which provide the appropriate enterprise risk
1472 information.
1473 (b) The term “enterprise risk” means an activity,
1474 circumstance, event, or series of events involving one or more
1475 affiliates of an insurer which, if not remedied promptly, are
1476 likely to have a materially adverse effect upon the financial
1477 condition or liquidity of the insurer or its insurance holding
1478 company system as a whole, including anything that would cause
1479 the insurer’s risk-based capital to fall into company action
1480 level as set forth in s. 624.4085 or would cause the insurer to
1481 be in a hazardous financial condition.
1482 (3) Effective January 1, 2015, pursuant to chapter 624
1483 relating to the examination of insurers, the office may examine
1484 any insurer registered under this section and its affiliates to
1485 ascertain the financial condition of the insurer, including the
1486 enterprise risk to the insurer by the ultimate controlling
1487 party, or by any entity or combination of entities within the
1488 insurance holding company system, or by the insurance holding
1489 company system on a consolidated basis.
1490 (4) The filings and related documents filed pursuant to
1491 this section are confidential and exempt as provided in s.
1492 624.4212 and are not subject to subpoena or discovery or
1493 admissible in evidence in any private civil action. A waiver of
1494 any applicable privilege or claim of confidentiality in the
1495 filings and related documents may not occur as a result of any
1496 disclosure to the office under this section or any other section
1497 of the insurance code as authorized under s. 624.4212. Neither
1498 the office nor any person who received the filings and related
1499 documents while acting under the authority of the office or with
1500 whom such information is shared pursuant to s. 624.4212 is
1501 permitted or required to testify in any private civil action
1502 concerning any confidential documents, materials, or information
1503 subject to s. 624.4212. However, the department or office may
1504 use the confidential and exempt information in the furtherance
1505 of any regulatory or legal action brought against an insurer as
1506 a part of the official duties of the department or office.
1507 (5) Effective January 1, 2015, the failure to file a
1508 registration statement, or a summary of the registration
1509 statement, or the enterprise risk filing report required by this
1510 section within the time specified for filing is a violation of
1511 this section.
1512 (6) Upon request, the office may waive the filing
1513 requirements of this section:
1514 (a) If the insurer is a domestic insurer that is the
1515 subsidiary of an insurer that is in full compliance with the
1516 insurance holding company registration laws of its state of
1517 domicile, which state is accredited by the NAIC; or
1518 (b) If the insurer is a domestic insurer that writes only
1519 in this state and has annual direct written and assumed premium
1520 of less than $300 million, excluding premiums reinsured with the
1521 Federal Crop Insurance Corporation and Federal Flood Program,
1522 and demonstrates that compliance with this section would not
1523 provide substantial regulatory or consumer benefit. In
1524 evaluating a waiver request made under this paragraph, the
1525 office may consider various factors including, but not limited
1526 to, the type of business entity, the volume of business written,
1527 the ownership or organizational structure of the entity, or
1528 whether the company is in run-off.
1529
1530 A waiver granted pursuant to this subsection is valid for 2
1531 years unless sooner withdrawn due to a change in the
1532 circumstances under which the waiver was granted.
1533 Section 12. Effective January 1, 2015, present subsection
1534 (4) of section 628.803, Florida Statutes, is renumbered as
1535 subsection (5), and a new subsection (4) is added to that
1536 section, to read:
1537 628.803 Sanctions.—
1538 (4) If the office determines that any person violated s.
1539 628.461 or s. 628.801, the violation may serve as an independent
1540 basis for disapproving dividends or distributions and for
1541 placing the insurer under an order of supervision in accordance
1542 with part VI of chapter 624.
1543 Section 13. Effective January 1, 2015, section 628.804,
1544 Florida Statutes, is created to read:
1545 628.804 Groupwide supervision for international insurance
1546 groups.—
1547 (1) As used in this section:
1548 (a) “Groupwide supervisor” means the chief insurance
1549 regulatory official for the jurisdiction who is determined by
1550 the office to have significant contacts with the international
1551 insurance group sufficient to conduct and coordinate groupwide
1552 supervision activities.
1553 (b) “International insurance group” means an insurance
1554 group operating internationally which includes an insurer.
1555 (2) The office may act as the groupwide supervisor for an
1556 international insurance group in which the ultimate controlling
1557 person of the group is domiciled in this state.
1558 (3)(a) If the ultimate controlling person is domiciled
1559 outside this state, the office, in cooperation with other
1560 groupwide supervisors, may:
1561 1. Determine that the office is the appropriate groupwide
1562 supervisor for an international insurance group with substantial
1563 operations concentrated in this state or in insurance operations
1564 conducted by subsidiary insurance companies domiciled in this
1565 state; or
1566 2. Acknowledge that another chief insurance regulatory
1567 official is the appropriate groupwide supervisor for the
1568 international insurance group.
1569 (b) Before issuing a determination, the office must notify
1570 the insurer and the ultimate controlling person within the
1571 international insurance group and provide the international
1572 insurance group with at least 30 days to submit information
1573 pertinent to the pending determination.
1574 (4) The commission may adopt rules to administer this
1575 section, including rules establishing the criteria for making a
1576 determination under paragraph (3)(a), such as the extent of
1577 insurance operations in this state and nation; the location of
1578 the executive offices, assets and liabilities, and business
1579 operations of the international insurance group; the domicile of
1580 the ultimate controlling person of the international insurance
1581 group; and the similarity of the regulatory systems of other
1582 jurisdictions acting or seeking to act as lead groupwide
1583 supervisor.
1584 Section 14. Effective January 1, 2015, section 628.805,
1585 Florida Statutes, is created to read:
1586 628.805 Supervisory colleges.—In order to assess the
1587 business strategy, financial position, legal and regulatory
1588 position, risk exposure, risk management, and governance
1589 processes, and as part of the examination of individual insurers
1590 in accordance with ss. 624.316 and 628.801, the office may
1591 participate in a supervisory college with other regulators
1592 charged with supervision of the insurer or its affiliates,
1593 including other state, federal, and international regulatory
1594 agencies. In accordance with s. 624.4212 regarding confidential
1595 information sharing, the office may enter into agreements that
1596 provide the basis for cooperation between the office and the
1597 other regulatory agencies and the activities of the supervisory
1598 college. This section does not delegate to the supervisory
1599 college the office’s authority to regulate or supervise the
1600 insurer or its affiliates under its jurisdiction.
1601 (1) With respect to participation in a supervisory college,
1602 the office may:
1603 (a) Initiate the establishment of a supervisory college.
1604 (b) Clarify the membership and participation of other
1605 supervisors in the supervisory college.
1606 (c) Clarify the functions of the supervisory college and
1607 the role of other regulators, including the establishment of a
1608 groupwide supervisor.
1609 (d) Coordinate the ongoing activities of the supervisory
1610 college, including planning meetings, supervisory activities,
1611 and processes for information sharing.
1612 (e) Establish a crisis management plan.
1613 (2) With respect to an insurer registered under s. 628.801,
1614 and in accordance with this section, the office may participate
1615 in a supervisory college for any domestic insurer that is part
1616 of an insurance holding company system that has international
1617 operations in order to determine the insurer’s compliance with
1618 this chapter.
1619 (3) Each registered insurer subject to this section is
1620 liable for and shall pay reasonable expenses for the office’s
1621 participation in a supervisory college, including reasonable
1622 travel expenses. A supervisory college may be convened as a
1623 temporary or permanent forum for communication and cooperation
1624 between the regulators charged with the supervision of the
1625 insurer or its affiliates, and the office may impose a regular
1626 assessment on the insurer for the payment of these expenses.
1627 Section 15. Effective January 1, 2015, subsection (3) is
1628 added to section 636.045, Florida Statutes, to read:
1629 636.045 Minimum surplus requirements.—
1630 (3) A prepaid limited health service organization that is
1631 authorized in this state and one or more other states,
1632 jurisdictions, or countries is subject to ss. 624.4085 and
1633 624.40851.
1634 Section 16. Effective January 1, 2015, subsection (7) is
1635 added to section 641.225, Florida Statutes, to read:
1636 641.225 Surplus requirements.—
1637 (7) A health maintenance organization that is authorized in
1638 this state and one or more other states, jurisdictions, or
1639 countries is subject to ss. 624.4085 and 624.40851.
1640 Section 17. Effective January 1, 2015, subsection (3) is
1641 added to section 641.255, Florida Statutes, to read:
1642 641.255 Acquisition, merger, or consolidation.—
1643 (3) A health maintenance organization that is a member of a
1644 holding company system is subject to s. 628.461 but not s.
1645 628.4615.
1646 Section 18. Except as otherwise expressly provided in this
1647 act, this act shall take effect October 1, 2014, if SB ____ or
1648 similar legislation is adopted in the same legislative session
1649 or an extension thereof and becomes a law.