ENROLLED
       2014 Legislature                           CS for CS for SB 1308
       
       
       
       
       
       
                                                             20141308er
    1  
    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 directly from the office. Neither the office nor any
  312  person who received documents, materials, or other information
  313  while acting under the authority of the office, or with whom
  314  such information is shared pursuant to s. 624.4212, may testify
  315  in a private civil action concerning such confidential
  316  information. However, the department or office may use the
  317  confidential and exempt information in the furtherance of any
  318  regulatory or legal action brought against an insurer as a part
  319  of the official duties of the department or office. No waiver of
  320  any other applicable claim of confidentiality or privilege may
  321  occur as a result of a disclosure to the office under this
  322  section or any other section of the insurance code. This
  323  paragraph does not apply to life and health insurers subject to
  324  s. 625.121(3) before the operative date of the valuation manual
  325  as defined in s. 625.1212(2), and does not apply to life and
  326  health insurers subject to s. 625.1212(4) on or after such
  327  operative date.
  328         (c) The commission may by rule require reports or filings
  329  required under the insurance code to be submitted by electronic
  330  means in a computer-readable form compatible with the electronic
  331  data processing equipment specified by the commission.
  332         (8)
  333         (e) The commission shall adopt rules to administer
  334  implement this subsection, which rules must be in substantial
  335  conformity with the 2006 Annual Financial Reporting Model
  336  Regulation 1998 Model Rule requiring annual audited financial
  337  reports adopted by the NAIC National Association of Insurance
  338  Commissioners or subsequent amendments, except where
  339  inconsistent with the requirements of this subsection. Any
  340  exception to, waiver of, or interpretation of accounting
  341  requirements of the commission must be in writing and signed by
  342  an authorized representative of the office. An No insurer may
  343  not raise an as a defense in any action, any exception to,
  344  waiver of, or interpretation of accounting requirements as a
  345  defense in an action, unless previously issued in writing by an
  346  authorized representative of the office.
  347         (11) Each insurer doing business in this state which
  348  reinsures through a captive insurance company as defined in s.
  349  628.901, but without regard to domiciliary status, shall, in
  350  conjunction with the annual financial statement required under
  351  paragraph (1)(a), file a report with the office containing
  352  financial information specific to reinsurance assumed by each
  353  captive.
  354         (a) The report shall be filed as a separate schedule
  355  designed to avoid duplication of disclosures required by the
  356  NAIC’s annual statement and instructions.
  357         (b) Insurers must:
  358         1. Identify the products ceded to the captive and whether
  359  the products are subject to rule 69O-164.020, Florida
  360  Administrative Code, the NAIC Valuation of Life Insurance
  361  Policies Regulation (Model #830), or the NAIC Actuarial
  362  Guideline XXXVIII (AG 38).
  363         2. Disclose the assets of the captive in the format
  364  prescribed in the NAIC annual statement schedules.
  365         3. Include a stand-alone actuarial opinion or certification
  366  identifying the differences between the assets the ceding
  367  company would be required to hold and the assets held by the
  368  captive.
  369         Section 6. Subsection (2), paragraphs (a) and (b) of
  370  subsection (3), subsection (5), paragraph (e) of subsection (6),
  371  and subsections (10), (11), and (12) of section 625.121, Florida
  372  Statutes, are amended to read:
  373         625.121 Standard Valuation Law; life insurance.—
  374         (2) ANNUAL VALUATION.—The office shall annually value, or
  375  cause to be valued, the reserves reserve liabilities,
  376  hereinafter called “reserves,” for all outstanding life
  377  insurance policies and annuity and pure endowment contracts of
  378  each every life insurer doing business in this state, and may
  379  certify the amount of any such reserves, specifying the
  380  mortality table or tables, rate or rates of interest, and
  381  methods, net-level premium method or others, used in the
  382  calculation of such reserves. In the case of an alien insurer,
  383  such valuation is shall be limited to its insurance transactions
  384  in the United States. In calculating such reserves, the office
  385  may use group methods and approximate averages for fractions of
  386  a year or otherwise, and. It may accept in its discretion the
  387  insurer’s calculation of such reserves. In lieu of the valuation
  388  of the reserves herein required of a any foreign or alien
  389  insurer, the office it may accept any valuation made or caused
  390  to be made by the insurance supervisory official of any state or
  391  other jurisdiction if the when such valuation complies with the
  392  minimum standard herein provided under this section and if the
  393  official of such state or jurisdiction accepts as sufficient and
  394  valid for all legal purposes the certificate of valuation of the
  395  office when such certificate states the valuation to have been
  396  made in a specified manner according to which the aggregate
  397  reserves would be at least as large as if they had been computed
  398  in the manner prescribed by the law of that state or
  399  jurisdiction. If a When any such valuation is made by the
  400  office, the office it may use its the actuary of the office or
  401  employ an actuary for that the purpose; and the reasonable
  402  compensation of the actuary, at a rate approved by the office,
  403  plus and reimbursement of travel expenses pursuant to s. 624.320
  404  upon demand by the office, supported by an itemized statement of
  405  such compensation and expenses, shall be paid by the insurer
  406  upon demand of the office. If When a domestic insurer furnishes
  407  the office with a valuation of its outstanding policies as
  408  computed by its own actuary or by an actuary deemed satisfactory
  409  for that the purpose by the office, the valuation shall be
  410  verified by the actuary of the office without cost to the
  411  insurer. This section applies to the calculation of reserves for
  412  policies and contracts not subject to s. 625.1212.
  413         (3) ACTUARIAL OPINION OF RESERVES.—
  414         (a)1. Each life insurer insurance company doing business in
  415  this state shall annually submit the opinion of a qualified
  416  actuary as to whether the reserves and related actuarial items
  417  held in support of the policies and contracts specified by the
  418  commission by rule are computed appropriately, are based on
  419  assumptions that which satisfy contractual provisions, are
  420  consistent with prior reported amounts, and comply with
  421  applicable laws of this state. The commission by rule shall
  422  define the specifics of this opinion and add any other items
  423  determined to be necessary to its scope.
  424         1.2. The opinion shall be submitted with the annual
  425  statement and must reflect reflecting the valuation of such
  426  reserve liabilities for each year ending on or before after
  427  December 31 of the year before the operative date of the
  428  valuation manual as defined in s. 625.1212(2), and in accordance
  429  with s. 625.1212(4) for each year thereafter, 1992.
  430         2.3. The opinion applies shall apply to all business in
  431  force, including individual and group health insurance plans, in
  432  the form and substance acceptable to the office as specified by
  433  rule of the commission.
  434         3.4. The commission may adopt rules providing the standards
  435  of the actuarial opinion consistent with standards adopted by
  436  the Actuarial Standards Board on December 31, 2013 2002, and
  437  subsequent revisions thereto if, provided that the standards
  438  remain substantially consistent.
  439         4.5.In the case of an opinion required to be submitted by
  440  a foreign or alien company, The office may accept an the opinion
  441  filed by a foreign or alien insurer that company with the
  442  insurance supervisory official of another state if the office
  443  determines that the opinion reasonably meets the requirements
  444  applicable to an insurer a company domiciled in this state.
  445         5.6.As used in For the purposes of this subsection, the
  446  term “qualified actuary” means a member in good standing of the
  447  American Academy of Actuaries who also meets the requirements
  448  specified by rule of the commission.
  449         6.7. Disciplinary action by the office against the insurer
  450  company or the qualified actuary shall be in accordance with the
  451  insurance code and related rules adopted by the commission.
  452         7.8. A memorandum in the form and substance specified by
  453  rule shall be prepared to support each actuarial opinion.
  454         8.9. If the insurer insurance company fails to provide a
  455  supporting memorandum at the request of the office within a
  456  period specified by rule of the commission, or if the office
  457  determines that the supporting memorandum provided by the
  458  insurer insurance company fails to meet the standards prescribed
  459  by rule of the commission, the office may engage a qualified
  460  actuary at the expense of the insurer company to review the
  461  opinion and the basis for the opinion and prepare such
  462  supporting memorandum as is required by the office.
  463         9.10. Except as otherwise provided in this subparagraph
  464  paragraph, any memorandum or other material in support of the
  465  opinion is confidential and exempt from the provisions of s.
  466  119.07(1) and is not subject to subpoena or discovery directly
  467  from the office; however, the memorandum or other material may
  468  be released by the office with the written consent of the
  469  insurer company, or to the American Academy of Actuaries upon
  470  request stating that the memorandum or other material is
  471  required for the purpose of professional disciplinary
  472  proceedings and setting forth procedures satisfactory to the
  473  office for preserving the confidentiality of the memorandum or
  474  other material. If any portion of the confidential memorandum is
  475  cited by the insurer company in its marketing, or is cited
  476  before any governmental agency other than a state insurance
  477  department, or is released by the insurer company to the news
  478  media, no portion of the memorandum is confidential. Neither the
  479  office nor any person who receives documents, materials, or
  480  other information while acting under the authority of the office
  481  or with whom such information is shared pursuant to this
  482  paragraph may testify in a private civil action concerning the
  483  confidential documents, materials, or information. However, the
  484  department or office may use the confidential and exempt
  485  information in the furtherance of any regulatory or legal action
  486  brought against an insurer as a part of the official duties of
  487  the department or office. A waiver of an applicable privilege or
  488  claim of confidentiality in the documents, materials, or
  489  information may not occur as a result of disclosure to the
  490  office under this section or any other section of the insurance
  491  code, or as a result of sharing as authorized under s. 624.4212.
  492         (b) In addition to the opinion required by paragraph (a)
  493  subparagraph (a)1., the office may, pursuant to commission rule,
  494  require an opinion of the same qualified actuary as to whether
  495  the reserves and related actuarial items held in support of the
  496  policies and contracts specified by the commission by rule, when
  497  considered in light of the assets held by the insurer company
  498  with respect to the reserves and related actuarial items,
  499  including, but not limited to, the investment earnings on the
  500  assets and considerations anticipated to be received and
  501  retained under the policies and contracts, make adequate
  502  provision for the insurer’s company’s obligations under the
  503  policies and contracts, including, but not limited to, the
  504  benefits under, and expenses associated with, the policies and
  505  contracts.
  506         (5) MINIMUM STANDARD FOR VALUATION OF POLICIES AND
  507  CONTRACTS ISSUED ON OR AFTER OPERATIVE DATE OF THE STANDARD
  508  NONFORFEITURE LAW.—Except as otherwise provided in paragraph (h)
  509  and subsections (6), (13) (11), and (14), the minimum standard
  510  for the valuation of all such policies and contracts issued on
  511  or after the operative date of s. 627.476 (Standard
  512  Nonforfeiture Law for Life Insurance) shall be the
  513  commissioners’ reserve valuation method defined in subsections
  514  (7), (11), and (14); 5 percent interest for group annuity and
  515  pure endowment contracts and 3.5 percent interest for all other
  516  such policies and contracts, or in the case of life insurance
  517  policies and contracts, other than annuity and pure endowment
  518  contracts, issued on or after July 1, 1973, 4 percent interest
  519  for such policies issued prior to October 1, 1979, and 4.5
  520  percent interest for such policies issued on or after October 1,
  521  1979; and the following tables:
  522         (a) For all ordinary policies of life insurance issued on
  523  the standard basis, excluding any disability and accidental
  524  death benefits in such policies:
  525         1. For policies issued before prior to the operative date
  526  of s. 627.476(9), the commissioners’ 1958 Commissioners Standard
  527  Ordinary (CSO) Mortality Table; except that, for any category of
  528  such policies issued on female risks, modified net premiums and
  529  present values, referred to in subsection (7), may be calculated
  530  according to an age up to not more than 6 years younger than the
  531  actual age of the insured.
  532         2. For policies issued on or after the operative date of s.
  533  627.476(9), the commissioners’ 1980 Commissioners Standard
  534  Ordinary Mortality Table or, at the election of the insurer for
  535  any one or more specified plans of life insurance, the
  536  commissioners’ 1980 Commissioners Standard Ordinary Mortality
  537  Table with Ten-Year Select Mortality Factors.
  538         3. For policies issued on or after July 1, 2004, ordinary
  539  mortality tables, adopted after 1980 by the NAIC National
  540  Association of Insurance Commissioners, adopted by rule by the
  541  commission for use in determining the minimum standard of
  542  valuation for such policies.
  543         (b) For all industrial life insurance policies issued on
  544  the standard basis, excluding any disability and accidental
  545  death benefits in such policies:
  546         1. For policies issued before prior to the first date to
  547  which the commissioners’ 1961 Commissioners Standard Industrial
  548  Mortality Table is applicable according to s. 627.476, the 1941
  549  Standard Industrial Mortality Table; and
  550         2. For such policies issued on or after that date, the
  551  commissioners’ 1961 Commissioners Standard Industrial Mortality
  552  Table; and
  553         3. For policies issued on or after October 1, 2014, a
  554  Commissioners Standard Industrial Mortality Table adopted by the
  555  NAIC after 1980 which is adopted by rule of the commission for
  556  use in determining the minimum standard of valuation for such
  557  policies.
  558         (c) For individual annuity and pure endowment contracts,
  559  excluding any disability and accidental death benefits in such
  560  policies, the 1937 Standard Annuity Mortality Table or, at the
  561  option of the insurer, the Annuity Mortality Table for 1949,
  562  Ultimate, or any modification of either of these tables approved
  563  by the office.
  564         (d) For group annuity and pure endowment contracts,
  565  excluding any disability and accidental death benefits in such
  566  policies, the Group Annuity Mortality Table for 1951; any
  567  modification of such table approved by the office; or, at the
  568  option of the insurer, any of the tables or modifications of
  569  tables specified for individual annuity and pure endowment
  570  contracts.
  571         (e) For total and permanent disability benefits in or
  572  supplementary to ordinary policies or contracts:
  573         1. For policies or contracts issued on or after January 1,
  574  1966, the tables of period 2 disablement rates and the 1930 to
  575  1950 termination rates of the 1952 disability study of the
  576  Society of Actuaries, with due regard to the type of benefit;
  577         2. For policies or contracts issued on or after January 1,
  578  1961, and before prior to January 1, 1966, either of the tables
  579  specified in subparagraph 1. those tables or, at the option of
  580  the insurer, the class three disability table (1926);
  581         3. For policies issued before prior to January 1, 1961, the
  582  class three disability table (1926); and
  583         4. For policies or contracts issued on or after July 1,
  584  2004, tables of disablement rates and termination rates adopted
  585  after 1980 by the NAIC National Association of Insurance
  586  Commissioners, adopted by rule by the commission for use in
  587  determining the minimum standard of valuation for those policies
  588  or contracts.
  589  
  590  Any such table for active lives shall be combined with a
  591  mortality table permitted for calculating the reserves for life
  592  insurance policies.
  593         (f) For accidental death benefits in or supplementary to
  594  policies:
  595         1. For policies issued on or after January 1, 1966, the
  596  1959 Accidental Death Benefits Table;
  597         2. For policies issued on or after January 1, 1961, and
  598  before prior to January 1, 1966, the 1959 Accidental Death
  599  Benefits either that Table or, at the option of the insurer, the
  600  Intercompany Double Indemnity Mortality Table;
  601         3. For policies issued before prior to January 1, 1961, the
  602  Intercompany Double Indemnity Mortality Table; and
  603         4. For policies issued on or after July 1, 2004, tables of
  604  accidental death benefits adopted after 1980 by the NAIC
  605  National Association of Insurance Commissioners, adopted by rule
  606  by the commission for use in determining the minimum standard of
  607  valuation for those policies.
  608  
  609  Either table shall be combined with a mortality table permitted
  610  for calculating the reserves for life insurance policies.
  611         (g) For group life insurance, life insurance issued on the
  612  substandard basis, and other special benefits, such tables as
  613  may be approved by the office as being sufficient with relation
  614  to the benefits provided by such policies.
  615         (h) Except as provided in subsection (6), the minimum
  616  standard for the valuation of all individual annuity and pure
  617  endowment contracts issued on or after the operative date of
  618  this paragraph and for all annuities and pure endowments
  619  purchased on or after such operative date under group annuity
  620  and pure endowment contracts shall be the commissioners’ reserve
  621  valuation method defined in subsection (7) and the following
  622  tables and interest rates:
  623         1. For individual annuity and pure endowment contracts
  624  issued before prior to October 1, 1979, excluding any disability
  625  and accidental death benefits in such contracts, the 1971
  626  Individual Annuity Mortality Table, or any modification of this
  627  table approved by the office, and 6 percent interest for single
  628  premium immediate annuity contracts and 4 percent interest for
  629  all other individual annuity and pure endowment contracts.
  630         2. For individual single-premium immediate annuity
  631  contracts issued on or after October 1, 1979, and before prior
  632  to October 1, 1986, excluding any disability and accidental
  633  death benefits in such contracts, the 1971 Individual Annuity
  634  Mortality Table, or any modification of this table approved by
  635  the office, and 7.5 percent interest. For such contracts issued
  636  on or after October 1, 1986, the 1983 Individual Annual
  637  Mortality Table, or any modification of such table approved by
  638  the office, and the applicable calendar year statutory valuation
  639  interest rate as described in subsection (6).
  640         3. For individual annuity and pure endowment contracts
  641  issued on or after October 1, 1979, and before prior to October
  642  1, 1986, other than single-premium immediate annuity contracts,
  643  excluding any disability and accidental death benefits in such
  644  contracts, the 1971 Individual Annuity Mortality Table, or any
  645  modification of this table approved by the office, and 5.5
  646  percent interest for single-premium deferred annuity and pure
  647  endowment contracts and 4.5 percent interest for all other such
  648  individual annuity and pure endowment contracts. For such
  649  contracts issued on or after October 1, 1986, the 1983
  650  Individual Annual Mortality Table, or any modification of such
  651  table approved by the office, and the applicable calendar year
  652  statutory valuation interest rate as described in subsection
  653  (6).
  654         4. For all annuities and pure endowments purchased before
  655  prior to October 1, 1979, under group annuity and pure endowment
  656  contracts, excluding any disability and accidental death
  657  benefits purchased under such contracts, the 1971 Group Annuity
  658  Mortality Table, or any modification of this table approved by
  659  the office, and 6 percent interest.
  660         5. For all annuities and pure endowments purchased on or
  661  after October 1, 1979, and before prior to October 1, 1986,
  662  under group annuity and pure endowment contracts, excluding any
  663  disability and accidental death benefits purchased under such
  664  contracts, the 1971 Group Annuity Mortality Table, or any
  665  modification of this table approved by the office, and 7.5
  666  percent interest. For such contracts purchased on or after
  667  October 1, 1986, the 1983 Group Annuity Mortality Table, or any
  668  modification of such table approved by the office, and the
  669  applicable calendar year statutory valuation interest rate as
  670  described in subsection (6).
  671  
  672  After July 1, 1973, an any insurer may have filed with the
  673  former Department of Insurance a written notice of its election
  674  to comply with the provisions of this paragraph after a
  675  specified date before January 1, 1979, which shall be the
  676  operative date of this paragraph for such insurer. However, an
  677  insurer may elect a different operative date for individual
  678  annuity and pure endowment contracts from that elected for group
  679  annuity and pure endowment contracts. If an insurer does not
  680  make makes no such election, the operative date of this
  681  paragraph for such insurer is shall be January 1, 1979.
  682         (i) In lieu of the mortality tables specified in this
  683  subsection, and subject to rules previously adopted by the
  684  former Department of Insurance, the insurance company may, at
  685  its option:
  686         1. Substitute the applicable 1958 CSO or CET Smoker and
  687  Nonsmoker Mortality Tables, in lieu of the 1980 CSO or CET
  688  mortality table standard, for policies issued on or after the
  689  operative date of s. 627.476(9) and before January 1, 1989.
  690         2. Substitute the applicable 1980 CSO or CET Smoker and
  691  Nonsmoker Mortality Tables in lieu of the 1980 CSO or CET
  692  mortality table standard.;
  693         3. Use the Annuity 2000 Mortality Table for determining the
  694  minimum standard of valuation for individual annuity and pure
  695  endowment contracts issued on or after January 1, 1998, and
  696  before July 1, 1998.
  697         4. Use the 1994 GAR Table for determining the minimum
  698  standard of valuation for annuities and pure endowments
  699  purchased on or after January 1, 1998, and before July 1, 1998,
  700  under group annuity and pure endowment contracts.
  701         (j) The commission may adopt by rule the model regulation
  702  for valuation of life insurance policies as approved by the NAIC
  703  National Association of Insurance Commissioners in March 1999,
  704  including tables of select mortality factors, and may make the
  705  regulation effective for policies issued on or after January 1,
  706  2000.
  707         (k) For individual annuity and pure endowment contracts
  708  issued on or after July 1, 2004, excluding any disability and
  709  accidental death benefits purchased under those contracts,
  710  individual annuity mortality tables adopted after 1980 by the
  711  NAIC National Association of Insurance Commissioners, adopted by
  712  rule by the commission for use in determining the minimum
  713  standard of valuation for those contracts.
  714         (l) For all annuities and pure endowments purchased on or
  715  after July 1, 2004, under group annuity and pure endowment
  716  contracts, excluding any disability and accidental death
  717  benefits purchased under those contracts, group annuity
  718  mortality tables adopted after 1980 by the NAIC National
  719  Association of Insurance Commissioners, adopted by rule by the
  720  commission for use in determining the minimum standard of
  721  valuation for those contracts.
  722         (6) MINIMUM STANDARD OF VALUATION.—
  723         (e) The interest rate index shall be the Moody’s Corporate
  724  Bond Yield Average-Monthly Average Corporates as published by
  725  Moody’s Investors Service, Inc., if the as long as this index is
  726  calculated by using substantially the same methodology as used
  727  by Moody’s it on January 1, 1981. If Moody’s corporate bond
  728  yield average ceases to be calculated in substantially the same
  729  this manner, the interest rate index shall be the index
  730  specified in the valuation manual, as applicable, as provided
  731  under s. 625.1212, or an index adopted by the NAIC and approved
  732  by rule adopted promulgated by the commission. The methodology
  733  used in determining the index approved by rule must shall be
  734  substantially the same as the methodology employed on January 1,
  735  1981, for determining Moody’s Corporate Bond Yield Average
  736  Monthly Average Corporates as published by Moody’s Investors
  737  Service, Inc.
  738         (10) LOWER VALUATIONS.—An insurer that which at any time
  739  had adopted a any standard of valuation producing greater
  740  aggregate reserves than those calculated according to the
  741  minimum standard herein provided under this section shall may,
  742  with the approval of the office, adopt a any lower standard of
  743  valuation, but not lower than the minimum herein provided;
  744  however, for the purposes of this subsection, the holding of
  745  additional reserves previously determined by an appointed a
  746  qualified actuary, as defined in s. 625.1212(2), to be necessary
  747  to render the opinion required by subsection (3) may shall not
  748  be deemed to be the adoption of a higher standard of valuation.
  749         (11) ADDITIONAL PREMIUM DEFICIENCY RESERVE.—If in any
  750  contract year the gross premium charged by a any life insurer on
  751  a any policy or contract is less than the valuation net premium
  752  for the policy or contract calculated by the method used in
  753  calculating the reserve thereon but using the minimum valuation
  754  standards of mortality and rate of interest, the minimum premium
  755  reserve required for the policy or contract shall be the greater
  756  of the reserve calculated according to the actual mortality
  757  table, rate of interest, and method used for the policy or
  758  contract, or the actual method used for the policy or contract
  759  but using the minimum valuation standards of mortality and rate
  760  of interest and replacing the valuation net premium by the
  761  actual gross premium in each contract year for which the
  762  valuation net premium exceeds the actual gross premium. The
  763  minimum valuation standards of mortality and rate of interest
  764  are those standards there shall be maintained on such policy or
  765  contract a deficiency reserve in addition to the reserve defined
  766  by subsections (4), (5), and (6) (7) and (12). For each such
  767  policy or contract, the deficiency reserve shall be the present
  768  value, according to the minimum valuation standards of mortality
  769  and rate of interest, of the differences between all such
  770  valuation net premiums and the corresponding premiums charged
  771  for such policy or contract during the remainder of the premium
  772  paying period. For any category of policies, contracts, or
  773  benefits specified in subsections (5) and (6), issued on or
  774  after the operative date of s. 627.476 (the Standard
  775  Nonforfeiture Law for Life Insurance), the aggregate deficiency
  776  reserves may be reduced by the amount, if any, by which the
  777  aggregate reserves actually calculated in accordance with
  778  subsection (9) exceed the minimum aggregate reserves prescribed
  779  by subsection (8). The minimum valuation standards of mortality
  780  and rate of interest referred to in this subsection are those
  781  standards stated in subsections (5) and (6). However, For any
  782  life insurance policy that which is issued on or after January
  783  1, 1985, for which the gross premium in the first policy year
  784  exceeds that of the second year and for which no comparable
  785  additional benefit is provided in the first year for such
  786  excess, and which provides an endowment benefit, a cash
  787  surrender value, or a combination thereof in an amount greater
  788  than such excess premium, the foregoing provisions of this
  789  subsection shall be applied as if the method actually used in
  790  calculating the reserve for such policy were the method
  791  described in subsection (7), the provisions of subparagraph
  792  (7)(a)2. being ignored. The minimum premium reserve amount of
  793  the deficiency reserve, if any, at each policy anniversary of
  794  such a policy is shall be the excess, if any, of the amount
  795  determined by the foregoing provisions of this subsection plus
  796  the reserve calculated by the method described in subsection
  797  (7), the provisions of subparagraph (7)(a)2. being ignored, over
  798  the reserve actually calculated by the method described in
  799  subsection (7), the provisions of subparagraph (7)(a)2. being
  800  taken into account.
  801         (12) RESERVE CALCULATION FOR INDETERMINATE PREMIUM PLANS
  802  ALTERNATE METHOD FOR DETERMINING RESERVES IN CERTAIN CASES.—In
  803  the case of a any plan of life insurance which provides for
  804  future premium determination, the amounts of which are to be
  805  determined by the insurer based on then estimates of future
  806  experience, or in the case of a any plan of life insurance or
  807  annuity for which is of such a nature that the minimum reserves
  808  cannot be determined by the methods described in subsections (7)
  809  and (11) subsection (7), the reserves that which are held under
  810  any such plan must shall:
  811         (a) Be appropriate in relation to the benefits and the
  812  pattern of premiums for that plan; and
  813         (b) Be computed by a method that which is consistent with
  814  the principles of this section, as determined by rules adopted
  815  promulgated by the commission.
  816         Section 7. Section 625.1212, Florida Statutes, is created
  817  to read:
  818         625.1212 Valuation of policies and contracts issued on or
  819  after the operative date of the valuation manual.—
  820         (1) APPLICABILITY.—This section applies to life insurance
  821  contracts, accident and health insurance contracts, and deposit
  822  type contracts issued on or after the operative date of the
  823  valuation manual unless the manual requires or permits an
  824  insurer to determine reserves according to the standards in
  825  effect before the operative date of the manual and rules adopted
  826  by the commission as provided under s. 625.121. Subsections (5)
  827  and (6) do not apply to policies and contracts subject to s.
  828  625.121.
  829         (2) DEFINITIONS.—As used in this section, the term:
  830         (a) “Accident and health insurance” means contracts that
  831  incorporate morbidity risk and provide protection against
  832  economic loss resulting from accident, sickness, or medical
  833  conditions and as may be specified in the valuation manual.
  834         (b) “Appointed actuary” means a qualified actuary who is
  835  appointed in accordance with the valuation manual to prepare the
  836  actuarial opinion required in subsection (4).
  837         (c) “Deposit-type contract” means contracts that do not
  838  incorporate mortality or morbidity risks and as may be specified
  839  in the valuation manual.
  840         (d) “Insurer” means a person engaged as an indemnitor,
  841  surety, or contractor in the business of entering into contracts
  842  of insurance or reinsurance.
  843         (e) “Life insurance” means policies or contracts that
  844  incorporate mortality risk, including annuity and pure endowment
  845  contracts, and as may be specified in the valuation manual.
  846         (f) “Operative date of the valuation manual” means the
  847  later of January 1, 2017, or the January 1 immediately following
  848  the July 1 that the Commissioner of the Office of Insurance
  849  Regulation certifies to the Financial Services Commission in
  850  writing that the following conditions occurred on or before July
  851  1:
  852         1. The valuation manual is adopted by the NAIC by an
  853  affirmative vote of at least 42 members of the NAIC or 75
  854  percent of members voting, whichever is greater;
  855         2. The Standard Valuation Law, as amended by the NAIC in
  856  2009, or substantially similar legislation, is enacted in states
  857  representing more than 75 percent of the direct premiums written
  858  as reported in the 2008 annual statements for life, accident and
  859  health, health, or fraternal society insurance; and
  860         3. The Standard Valuation Law as amended by the NAIC in
  861  2009, or substantially similar legislation, is enacted in at
  862  least 42 of the following 55 jurisdictions: the 50 states of the
  863  United States, the District of Columbia, American Samoa, the
  864  American Virgin Islands, Guam, and Puerto Rico.
  865         (g) “Policyholder behavior” means an action a policyholder,
  866  contract holder, or other person who has the right to elect
  867  options, such as a certificateholder, may take under a policy or
  868  contract subject to this section including, but not limited to,
  869  lapse, withdrawal, transfer, deposit, premium payment, loan,
  870  annuitization, or benefit elections prescribed by the policy or
  871  contract but excluding events of mortality or morbidity that
  872  result in benefits prescribed in their essential aspects by the
  873  terms of the policy or contract.
  874         (h) “Principle-based valuation” means a reserve valuation
  875  that uses one or more methods or assumptions determined by the
  876  insurer and must comply with subsection (6) as specified in the
  877  valuation manual.
  878         (i) “Qualified actuary” means an individual who is
  879  qualified to sign the applicable statement of actuarial opinion
  880  in accordance with the American Academy of Actuaries
  881  qualification standards for actuaries signing such statements
  882  and who meets the requirements specified in the valuation
  883  manual.
  884         (j) “Tail risk” means a risk that occurs when the frequency
  885  of low probability events is higher than expected under a normal
  886  probability distribution or when there are observed events of
  887  very significant size or magnitude.
  888         (k) “Valuation manual” means the manual of valuation
  889  instructions adopted by the NAIC, or as subsequently amended.
  890         (3)RESERVE VALUATION.—The office shall annually value, or
  891  cause to be valued, insurer reserves for all outstanding life
  892  insurance contracts, accident and health contracts, and deposit
  893  type contracts in this state. Insurers are subject to
  894  subsections (5) and (6) when calculating the reserves. In lieu
  895  of the reserve valuation for a foreign or alien insurer, the
  896  office may accept a valuation made, or caused to be made, by the
  897  insurance supervisory official of any state or other
  898  jurisdiction if the valuation complies with the minimum standard
  899  required in this section.
  900         (4) ACTUARIAL OPINION OF RESERVES.—
  901         (a) Each insurer that has outstanding life insurance
  902  contracts, accident and health insurance contracts, or deposit
  903  type contracts in this state which are subject to regulation by
  904  the office must annually submit the opinion of a qualified
  905  actuary as to whether the reserves and related actuarial items
  906  held in support of the policies and contracts are computed
  907  appropriately, are based on assumptions that satisfy contractual
  908  provisions, are consistent with prior reported amounts, and
  909  comply with applicable state law. The specifics of the opinion,
  910  including any items deemed necessary to its scope, must be as
  911  prescribed by the valuation manual.
  912         (b) Except as exempted in the valuation manual, each
  913  insurer that has outstanding life insurance contracts, accident
  914  and health insurance contracts, or deposit-type contracts in
  915  this state shall also annually include an opinion by the same
  916  appointed actuary as to whether the reserves and related
  917  actuarial items held in support of the policies and contracts
  918  specified in the valuation manual, when considered in light of
  919  the assets held by the insurer with respect to the reserves and
  920  related actuarial items, including, but not limited to, the
  921  investment earnings on the assets and the considerations
  922  anticipated to be received and retained under the policies and
  923  contracts, make adequate provision for the insurer’s obligations
  924  under the policies and contracts, including, but not limited to,
  925  the benefits under and expenses associated with the policies and
  926  contracts.
  927         (c) The insurer shall prepare a memorandum to support each
  928  actuarial opinion in such form and substance as specified in the
  929  valuation manual and acceptable to the office. If the insurer
  930  fails to provide a supporting memorandum within the period
  931  specified in the valuation manual, or if the office determines
  932  that the supporting memorandum fails to meet the standards
  933  required by the manual or is otherwise unacceptable to the
  934  office, the office may engage a qualified actuary at the expense
  935  of the insurer to review the opinion and the basis for the
  936  opinion and to prepare the supporting memorandum.
  937         (d) Each opinion subject to this subsection must be
  938  submitted with the annual statement in such form and substance
  939  as specified in the valuation manual and acceptable to the
  940  office, must reflect the valuation of the reserve liabilities
  941  for each year ending on or after the operative date of the
  942  valuation manual, and must apply to all policies and contracts
  943  subject to paragraph (b), plus other actuarial liabilities as
  944  may be specified in the valuation manual. The opinion must be
  945  based on standards adopted by the Actuarial Standards Board or
  946  its successor, and on such additional standards as may be
  947  prescribed in the valuation manual. For a foreign or alien
  948  insurer, the office may accept an opinion filed by the insurer
  949  with the insurance supervisory official of another state if the
  950  office determines that the opinion reasonably meets the
  951  requirements applicable to an insurer domiciled in this state.
  952         (e) Disciplinary action by the office against the insurer
  953  or the appointed actuary shall be in accordance with the laws of
  954  this state and related rules adopted by the commission.
  955         (5) MINIMUM STANDARD OF VALUATION.—
  956         (a) In accordance with this subsection and subsection (6),
  957  an insurer must apply the standard prescribed in the valuation
  958  manual as the minimum standard of valuation for contracts issued
  959  on or after the operative date of the valuation manual, except:
  960         1. For specific product forms or product lines exempted
  961  pursuant to paragraph (f); or
  962         2. That an insurer domiciled in a state that does not
  963  require the insurer to apply the standards prescribed in the
  964  valuation manual as the minimum standard of valuation, including
  965  the principle-based valuation of reserves, may not apply such
  966  standards in this state.
  967         (b) If, in the opinion of the office, there is no specific
  968  valuation requirement or a specific valuation requirement in the
  969  valuation manual is not in compliance with this section, the
  970  insurer shall comply with the minimum valuation standards
  971  prescribed by the commission by rule.
  972         (c) The office may engage a qualified actuary, at the
  973  insurer’s expense, to perform an actuarial examination of the
  974  insurer and to render an opinion as to the appropriateness of
  975  any reserve assumption or method, or computer model or modeling
  976  software used by the insurer, or to review and provide an
  977  opinion on the insurer’s compliance with the requirements of
  978  this section. In calculating and establishing reserves under
  979  this section, the insurer may rely on the modeling software and
  980  tools of a third-party vendor only if the vendor contractually
  981  agrees to allow the insurer to provide the office with access to
  982  the software or tools as necessary to replicate the results of
  983  the software or tools for the purpose of evaluating and
  984  validating reserve valuations. The office may rely upon the
  985  opinion of a qualified actuary employed by or under contract
  986  with the commissioner of another state, district, or territory
  987  of the United States with respect to this section.
  988         (d) The office may require an insurer to change any
  989  assumption or method that, in the opinion of the office, is
  990  necessary to comply with the valuation manual or this section.
  991  The insurer shall adjust the reserves as required by the office.
  992  The office may take other disciplinary action pursuant to
  993  applicable state law and rules.
  994         (e) The commission may adopt subsequent amendments to the
  995  valuation manual by rule if the methodology and standards remain
  996  substantially consistent with the valuation manual then in
  997  effect.
  998         (f)A domestic insurer licensed and doing business only in
  999  this state may exempt specific product forms or product lines
 1000  from the requirements of this subsection and subsection (6) if
 1001  the insurer computes reserves for the specific product forms or
 1002  product lines using assumptions and methods used before the
 1003  operative date of the valuation manual, and the amount of
 1004  insurance subject to the stochastic or deterministic reserve
 1005  requirement is immaterial. The requirements of s. 625.121 apply
 1006  to specific product forms and product lines exempted under this
 1007  paragraph.
 1008         (g) An insurer that adopted a standard of valuation
 1009  producing greater aggregate reserves than those calculated
 1010  according to the minimum standard provided under this section
 1011  may, with the approval of the office, adopt a lower standard of
 1012  valuation, but such standard may not be lower than the minimum
 1013  provided in this subsection. For purposes of this subsection,
 1014  holding additional reserves previously determined by an
 1015  appointed actuary to be necessary to render the opinion required
 1016  by subsection (3) may not be deemed to be the adoption of a
 1017  higher standard of valuation.
 1018         (6) REQUIREMENTS OF A PRINCIPLE-BASED VALUATION OF
 1019  RESERVES.—
 1020         (a) Insurers required to use a principle-based valuation of
 1021  reserves for specified product forms and product lines and
 1022  associated policies and contracts, pursuant to subparagraph
 1023  (5)(a)2., must:
 1024         1. Quantify the benefits and guarantees, and the funding
 1025  associated with the policies or contracts and their risks at a
 1026  level of conservatism that reflects conditions that:
 1027         a. Include unfavorable events that have a reasonable
 1028  probability of occurring during the lifetime of the policies or
 1029  contracts; and
 1030         b. Are appropriately adverse to quantifying the tail risk.
 1031         2. Incorporate assumptions, risk analysis methods, and
 1032  financial models and management techniques that are consistent
 1033  with, but not necessarily identical to, those used within the
 1034  insurer’s overall risk assessment process while recognizing
 1035  potential differences in financial reporting structures and any
 1036  prescribed assumptions or methods.
 1037         3. Incorporate assumptions that are derived in one of the
 1038  following manners:
 1039         a. The assumption is prescribed in the valuation manual.
 1040         b. For assumptions that are not prescribed, the assumptions
 1041  must:
 1042         (I) Be established using the insurer’s available
 1043  experience, to the extent that it is relevant and statistically
 1044  credible; or
 1045         (II) To the extent that insurer data is not available,
 1046  relevant, or statistically credible, be established using other
 1047  relevant, statistically credible experience.
 1048         4. Provide margins for uncertainty including adverse
 1049  deviation and estimation error, such that the greater the
 1050  uncertainty the larger the margin and resulting reserve.
 1051         (b) An insurer using a principle-based valuation for one or
 1052  more policies or contracts subject to this section as specified
 1053  in the valuation manual shall:
 1054         1. Establish procedures for corporate governance and
 1055  oversight of the actuarial valuation function consistent with
 1056  those prescribed in the valuation manual.
 1057         2. Submit an annual certification to the office and the
 1058  insurer’s board of directors of the effectiveness of internal
 1059  controls on the principle-based valuation. The internal controls
 1060  must be designed to assure that all material risks inherent in
 1061  the liabilities and associated assets subject to the valuation
 1062  are included in the valuation, and that valuations are made in
 1063  accordance with the valuation manual. The certification must be
 1064  based on controls in place as of the end of the preceding
 1065  calendar year.
 1066         3. Upon request, develop and file with the office a
 1067  principle-based valuation report that complies with standards
 1068  prescribed in the valuation manual.
 1069         (c) A principle-based valuation may include a prescribed
 1070  formulaic reserve component.
 1071         (7) EXPERIENCE REPORTING.—An insurer subject to the
 1072  requirements of paragraph (5)(d) shall submit mortality,
 1073  morbidity, policyholder behavior, or expense experience and
 1074  other data as prescribed in the valuation manual to the office.
 1075         (8) RULE ADOPTION.—The commission may adopt rules as
 1076  necessary to administer this section, including rules requiring
 1077  the use of the NAIC 2009 Standard Valuation Law and the NAIC
 1078  2012 Valuation Manual. The adoption of such rules is not subject
 1079  to s. 120.541(3), and the rules do not take effect until the
 1080  operative date of the valuation manual.
 1081         Section 8. Section 625.1214, Florida Statutes, is created
 1082  to read:
 1083         625.1214Use of confidential information.—
 1084         (1) Documents, reports, materials, and other information
 1085  created, produced, or obtained pursuant to ss. 625.121 and
 1086  625.1212 are privileged, confidential, and exempt as provided in
 1087  s. 624.4212, and are not subject to subpoena or discovery
 1088  directly from the office. However, the department or office may
 1089  use the confidential and exempt information in the furtherance
 1090  of any regulatory or legal action brought against an insurer as
 1091  a part of the official duties of the department or office. A
 1092  waiver of any other applicable claim of confidentiality or
 1093  privilege may not occur as a result of a disclosure to the
 1094  office under this section, any other section of the insurance
 1095  code, or as a result of sharing under s. 624.4212.
 1096         (2) Neither the office nor any person who received
 1097  confidential and exempt information while acting under the
 1098  authority of the office or with whom such information is shared
 1099  pursuant to s. 624.4212 may be permitted or required to testify
 1100  in a private civil action concerning any confidential and exempt
 1101  information subject to s. 624.4212. If any portion of the
 1102  confidential memorandum is cited by the insurer in its
 1103  marketing, is cited before a governmental agency other than a
 1104  state insurance department, or is released by the insurer to the
 1105  news media, no portion of the memorandum is confidential.
 1106         (3) A privilege established under the law of any state or
 1107  jurisdiction that is substantially similar to the privilege
 1108  established under subsection (1) shall be available and enforced
 1109  in any proceeding in and in any court of this state.
 1110         Section 9. Paragraphs (h) and (i) of subsection (9) and
 1111  subsection (14) of section 627.476, Florida Statutes, are
 1112  amended to read:
 1113         627.476 Standard Nonforfeiture Law for Life Insurance.—
 1114         (9) CALCULATION OF ADJUSTED PREMIUMS AND PRESENT VALUES FOR
 1115  POLICIES ISSUED AFTER OPERATIVE DATE OF THIS SUBSECTION.—
 1116         (h) All adjusted premiums and present values referred to in
 1117  this section shall, for all policies of ordinary insurance be
 1118  calculated on the basis of the Commissioners’ 1980 Standard
 1119  Ordinary Mortality Table adopted by the NAIC or, at the election
 1120  of the insurer for any one or more specified plans of life
 1121  insurance, the Commissioners’ 1980 Standard Ordinary Mortality
 1122  Table with Ten-Year Select Mortality Factors adopted by the
 1123  NAIC; shall for all policies of industrial insurance be
 1124  calculated on the basis of the Commissioners’ 1961 Standard
 1125  Industrial Mortality Table adopted by the NAIC; and shall for
 1126  all policies issued in a particular calendar year be calculated
 1127  on the basis of a rate of interest not exceeding the
 1128  nonforfeiture interest rate as defined in this subsection for
 1129  policies issued in that calendar year. However:
 1130         1. At the option of the insurer, calculations for all
 1131  policies issued in a particular calendar year may be made on the
 1132  basis of a rate of interest not exceeding the nonforfeiture
 1133  interest rate, as defined in this subsection, for policies
 1134  issued in the immediately preceding calendar year.
 1135         2. Under any paid-up nonforfeiture benefit, including any
 1136  paid-up dividend additions, any cash surrender value available,
 1137  whether or not required by subsection (2), shall be calculated
 1138  on the basis of the mortality table and rate of interest used in
 1139  determining the amount of such paid-up nonforfeiture benefit and
 1140  paid-up dividend additions, if any.
 1141         3. An insurer may calculate the amount of any guaranteed
 1142  paid-up nonforfeiture benefit, including any paid-up additions
 1143  under the policy, on the basis of an interest rate no lower than
 1144  that specified in the policy for calculating cash surrender
 1145  values.
 1146         4. In calculating the present value of any paid-up term
 1147  insurance with accompanying pure endowment, if any, offered as a
 1148  nonforfeiture benefit, the rates of mortality assumed may be not
 1149  more than those shown in the Commissioners’ 1980 Extended Term
 1150  Insurance Table adopted by the NAIC for policies of ordinary
 1151  insurance and not more than the Commissioners’ 1961 Industrial
 1152  Extended Term Insurance Table adopted by the NAIC for policies
 1153  of industrial insurance.
 1154         5. In lieu of the mortality tables specified in this
 1155  section, at the option of the insurance company and subject to
 1156  rules adopted by the commission, the insurance company may
 1157  substitute:
 1158         a. The 1958 CSO or CET Smoker and Nonsmoker Mortality
 1159  Tables, whichever is applicable, for policies issued on or after
 1160  the operative date of this subsection and before January 1,
 1161  1989;
 1162         b. The 1980 CSO or CET Smoker and Nonsmoker Mortality
 1163  Tables, whichever is applicable, for policies issued on or after
 1164  the operative date of this subsection;
 1165         c. A mortality table that is a blend of the sex-distinct
 1166  1980 CSO or CET mortality table standard, whichever is
 1167  applicable, or a mortality table that is a blend of the sex
 1168  distinct 1980 CSO or CET smoker and nonsmoker mortality table
 1169  standards, whichever is applicable, for policies that are
 1170  subject to the United States Supreme Court decision in Arizona
 1171  Governing Committee v. Norris to prevent unfair discrimination
 1172  in employment situations.
 1173         6. For policies issued:
 1174         a. Before the operative date of the valuation manual,
 1175  ordinary mortality tables, adopted after 1980 by the NAIC
 1176  National Association of Insurance Commissioners, adopted by rule
 1177  by the commission for use in determining the minimum
 1178  nonforfeiture standard may be substituted for the Commissioners’
 1179  1980 Standard Ordinary Mortality Table with or without Ten-Year
 1180  Select Mortality Factors or for the Commissioners’ 1980 Extended
 1181  Term Insurance Table adopted by the NAIC.
 1182         b. On or after the operative date of the valuation manual,
 1183  the valuation manual shall provide the Standard Mortality Table
 1184  for use in determining the minimum nonforfeiture standard that
 1185  may be substituted for:
 1186         (I) The 1980 Standard Ordinary Mortality Table with or
 1187  without 10-Year Select Mortality Factors or the 1980 Extended
 1188  Term Insurance Table adopted by the NAIC. If the commission
 1189  approves by rule a Standard Ordinary Mortality Table adopted by
 1190  the NAIC for use in determining the minimum nonforfeiture
 1191  standard for policies issued on or after the operative date of
 1192  the valuation manual, the minimum nonforfeiture standard
 1193  supersedes the minimum nonforfeiture standard provided by the
 1194  valuation manual.
 1195         (II) The 1961 Standard Industrial Mortality Table or 1961
 1196  Industrial Extended Term Insurance Table adopted by the NAIC. If
 1197  the commission approves by rule any Standard Industrial
 1198  Mortality Table adopted by the NAIC for use in determining the
 1199  minimum nonforfeiture standard for policies issued on or after
 1200  the operative date of the valuation manual, the minimum
 1201  nonforfeiture standard supersedes the minimum nonforfeiture
 1202  standard provided by the valuation manual.
 1203         7. For insurance issued on a substandard basis, the
 1204  calculation of any such adjusted premiums and present values may
 1205  be based on appropriate modifications of the aforementioned
 1206  tables.
 1207         (i) The nonforfeiture interest rate per year for a any
 1208  policy issued in a particular calendar year for policies issued:
 1209         1. Before the operative date of the valuation manual, shall
 1210  be equal to 125 percent of the calendar year statutory valuation
 1211  interest rate for such policy as defined in the Standard
 1212  Valuation Law, rounded to the nearest one-fourth of 1 percent;
 1213  however, the nonforfeiture interest rate may not be less than 4
 1214  percent.
 1215         2. On or after the operative date of the valuation manual,
 1216  shall be as provided by the valuation manual.
 1217         (14) OPERATIVE DATE.—
 1218         (a) After the effective date of this code, an any insurer
 1219  may file with the office a written notice or notices of its
 1220  election to comply with the provisions of this section on and
 1221  after a specified date or dates before January 1, 1966, as to
 1222  either or both of its policies of ordinary and industrial
 1223  insurance, in which case such specified date or dates shall be
 1224  the operative date of this section with respect to such
 1225  policies. The operative date of this section for policies of
 1226  both ordinary and industrial insurance shall be the earlier of
 1227  January 1, 1966, and any prior operative date or dates resulting
 1228  from such previously filed written notices. With respect to
 1229  policies of industrial insurance issued on and after the
 1230  operative date of this section for such policies but before
 1231  January 1, 1968, any insurer may file with the office written
 1232  notice of its election to have the Commissioners’ 1961 Standard
 1233  Industrial Mortality Table and the Commissioners’ 1961
 1234  Industrial Extended Term Insurance Table adopted by the NAIC
 1235  applicable with respect to subsection (8) for policies issued on
 1236  and after the date specified in such election.
 1237         (b) As used in subsection (9), the term “operative date of
 1238  the valuation manual” has the same meaning as provided in s.
 1239  625.1212(2).
 1240         Section 10. Subsections (1), (3), (10), (12), and (13) of
 1241  section 628.461, Florida Statutes, are amended to read:
 1242         628.461 Acquisition of controlling stock.—
 1243         (1) A person may not, individually or in conjunction with
 1244  any affiliated person of such person, acquire directly or
 1245  indirectly, conclude a tender offer or exchange offer for, enter
 1246  into any agreement to exchange securities for, or otherwise
 1247  finally acquire 10 5 percent or more of the outstanding voting
 1248  securities of a domestic stock insurer or of a controlling
 1249  company, unless:
 1250         (a) The person or affiliated person has filed with the
 1251  office and sent to the insurer and controlling company a letter
 1252  of notification regarding the transaction or proposed
 1253  transaction within no later than 5 days after any form of tender
 1254  offer or exchange offer is proposed, or within no later than 5
 1255  days after the acquisition of the securities if no tender offer
 1256  or exchange offer is involved. The notification must be provided
 1257  on forms prescribed by the commission containing information
 1258  determined necessary to understand the transaction and identify
 1259  all purchasers and owners involved;
 1260         (b) The person or affiliated person has filed with the
 1261  office the a statement as specified in subsection (3). The
 1262  statement must be completed and filed within 30 days after:
 1263         1. Any definitive acquisition agreement is entered;
 1264         2. Any form of tender offer or exchange offer is proposed;
 1265  or
 1266         3. The acquisition of the securities, if no definitive
 1267  acquisition agreement, tender offer, or exchange offer is
 1268  involved; and
 1269         (c) The office has approved the tender or exchange offer,
 1270  or acquisition if no tender offer or exchange offer is involved,
 1271  and approval is in effect.
 1272  
 1273  In lieu of a filing as required under this subsection, a party
 1274  acquiring less than 10 percent of the outstanding voting
 1275  securities of an insurer may file a disclaimer of affiliation
 1276  and control. The disclaimer shall fully disclose all material
 1277  relationships and basis for affiliation between the person and
 1278  the insurer as well as the basis for disclaiming the affiliation
 1279  and control. After a disclaimer has been filed, the insurer
 1280  shall be relieved of any duty to register or report under this
 1281  section which may arise out of the insurer’s relationship with
 1282  the person unless and until the office disallows the disclaimer.
 1283  The office shall disallow a disclaimer only after furnishing all
 1284  parties in interest with notice and opportunity to be heard and
 1285  after making specific findings of fact to support the
 1286  disallowance. A filing as required under this subsection must be
 1287  made for as to any acquisition that equals or exceeds 10 percent
 1288  of the outstanding voting securities.
 1289         (3) The statement to be filed with the office under
 1290  subsection (1) and furnished to the insurer and controlling
 1291  company must shall contain all the following information and any
 1292  additional information that as the office deems necessary to
 1293  determine the character, experience, ability, and other
 1294  qualifications of the person or affiliated person of such person
 1295  for the protection of the policyholders and shareholders of the
 1296  insurer and the public:
 1297         (a) The identity of, and the background information
 1298  specified in subsection (4) on, each natural person by whom, or
 1299  on whose behalf, the acquisition is to be made; and, if the
 1300  acquisition is to be made by, or on behalf of, a corporation,
 1301  association, or trust, as to the corporation, association, or
 1302  trust and as to any person who controls, either directly or
 1303  indirectly, the corporation, association, or trust, the identity
 1304  of, and the background information specified in subsection (4)
 1305  on, each director, officer, trustee, or other natural person
 1306  performing duties similar to those of a director, officer, or
 1307  trustee for the corporation, association, or trust.;
 1308         (b) The source and amount of the funds or other
 1309  consideration used, or to be used, in making the acquisition.;
 1310         (c) Any plans or proposals that which such persons may have
 1311  made to liquidate such insurer, to sell any of its assets or
 1312  merge or consolidate it with any person, or to make any other
 1313  major change in its business or corporate structure or
 1314  management; and any plans or proposals that which such persons
 1315  may have made to liquidate any controlling company of such
 1316  insurer, to sell any of its assets or merge or consolidate it
 1317  with any person, or to make any other major change in its
 1318  business or corporate structure or management.;
 1319         (d) The number of shares or other securities that which the
 1320  person or affiliated person of such person proposes to acquire,
 1321  the terms of the proposed acquisition, and the manner in which
 1322  the securities are to be acquired.; and
 1323         (e) Information as to any contract, arrangement, or
 1324  understanding with any party with respect to any of the
 1325  securities of the insurer or controlling company, including, but
 1326  not limited to, information relating to the transfer of any of
 1327  the securities, option arrangements, puts or calls, or the
 1328  giving or withholding of proxies, which information names the
 1329  party with whom the contract, arrangement, or understanding has
 1330  been entered into and gives the details thereof.
 1331         (f) Effective January 1, 2015, an agreement by the person
 1332  required to file the statement that the person will provide the
 1333  annual report specified in s. 628.801(2) if control exists.
 1334         (g) Effective January 1, 2015, an acknowledgement by the
 1335  person required to file the statement that the person and all
 1336  subsidiaries within the person’s control in the insurance
 1337  holding company system will provide, as necessary, information
 1338  to the office upon request to evaluate enterprise risk to the
 1339  insurer.
 1340         (10) Upon notification to the office by the domestic stock
 1341  insurer or a controlling company that any person or any
 1342  affiliated person of such person has acquired 10 5 percent or
 1343  more of the outstanding voting securities of the domestic stock
 1344  insurer or controlling company without complying with the
 1345  provisions of this section, the office shall order that the
 1346  person and any affiliated person of such person cease
 1347  acquisition of any further securities of the domestic stock
 1348  insurer or controlling company; however, the person or any
 1349  affiliated person of such person may request a proceeding, which
 1350  proceeding shall be convened within 7 days after the rendering
 1351  of the order for the sole purpose of determining whether the
 1352  person, individually or in connection with any affiliated person
 1353  of such person, has acquired 10 5 percent or more of the
 1354  outstanding voting securities of a domestic stock insurer or
 1355  controlling company. Upon the failure of the person or
 1356  affiliated person to request a hearing within 7 days, or upon a
 1357  determination at a hearing convened pursuant to this subsection
 1358  that the person or affiliated person has acquired voting
 1359  securities of a domestic stock insurer or controlling company in
 1360  violation of this section, the office may order the person and
 1361  affiliated person to divest themselves of any voting securities
 1362  so acquired.
 1363         (12)(a) A person may rebut a presumption of control by
 1364  filing a disclaimer of control with the office on a form
 1365  prescribed by the office. The disclaimer must fully disclose all
 1366  material relationships and bases for affiliation between the
 1367  person and the insurer as well as the basis for disclaiming the
 1368  affiliation. In lieu of such form, a person or acquiring party
 1369  may file with the office a copy of a Schedule 13G filed with the
 1370  Securities and Exchange Commission pursuant to rules 13d-1(b) or
 1371  13d-1(c) under the Securities Exchange Act of 1934, as amended.
 1372  After a disclaimer has been filed, the insurer is relieved of
 1373  any duty to register or report under this section which may
 1374  arise out of the insurer’s relationship with the person unless
 1375  the office disallows the disclaimer.
 1376         (b) A controlling person of a domestic insurer who seeks to
 1377  divest the person’s controlling interest in the domestic insurer
 1378  in any manner shall file with the office, with a copy provided
 1379  to the insurer, confidential notice, not subject to public
 1380  inspection as provided under s. 624.4212, of the person’s
 1381  proposed divestiture at least 30 days before the cessation of
 1382  control. The office shall determine those instances in which the
 1383  party seeking to divest or to acquire a controlling interest in
 1384  an insurer must file for and obtain approval of the transaction.
 1385  The information remains confidential until the conclusion of the
 1386  transaction unless the office, in its discretion, determines
 1387  that confidential treatment interferes with enforcement of this
 1388  section. If the statement referred to in subsection (1) is
 1389  otherwise filed, this paragraph does not apply For the purpose
 1390  of this section, the term “affiliated person” of another person
 1391  means:
 1392         1. The spouse of such other person;
 1393         2. The parents of such other person and their lineal
 1394  descendants and the parents of such other person’s spouse and
 1395  their lineal descendants;
 1396         3. Any person who directly or indirectly owns or controls,
 1397  or holds with power to vote, 5 percent or more of the
 1398  outstanding voting securities of such other person;
 1399         4. Any person 5 percent or more of the outstanding voting
 1400  securities of which are directly or indirectly owned or
 1401  controlled, or held with power to vote, by such other person;
 1402         5. Any person or group of persons who directly or
 1403  indirectly control, are controlled by, or are under common
 1404  control with such other person;
 1405         6. Any officer, director, partner, copartner, or employee
 1406  of such other person;
 1407         7. If such other person is an investment company, any
 1408  investment adviser of such company or any member of an advisory
 1409  board of such company;
 1410         8. If such other person is an unincorporated investment
 1411  company not having a board of directors, the depositor of such
 1412  company; or
 1413         9. Any person who has entered into an agreement, written or
 1414  unwritten, to act in concert with such other person in acquiring
 1415  or limiting the disposition of securities of a domestic stock
 1416  insurer or controlling company.
 1417         (b) For the purposes of this section, the term “controlling
 1418  company” means any corporation, trust, or association owning,
 1419  directly or indirectly, 25 percent or more of the voting
 1420  securities of one or more domestic stock insurance companies.
 1421         (13) The commission may adopt, amend, or repeal rules that
 1422  are necessary to administer implement the provisions of this
 1423  section, pursuant to chapter 120.
 1424         Section 11. Section 628.801, Florida Statutes, is amended
 1425  to read:
 1426         628.801 Insurance holding companies; registration;
 1427  regulation.—
 1428         (1) An Every insurer that is authorized to do business in
 1429  this state and that is a member of an insurance holding company
 1430  shall, on or before April 1 of each year, register with the
 1431  office and file a registration statement and be subject to
 1432  regulation with respect to its relationship to the holding
 1433  company as provided by law or rule or statute. The commission
 1434  shall adopt rules establishing the information and statement
 1435  form required for registration and the manner in which
 1436  registered insurers and their affiliates are regulated. The
 1437  rules apply to domestic insurers, foreign insurers, and
 1438  commercially domiciled insurers, except for a foreign insurers
 1439  insurer domiciled in states that are currently accredited by the
 1440  NAIC National Association of Insurance Commissioners by December
 1441  31, 1995. Except to the extent of any conflict with this code,
 1442  the rules must include all requirements and standards of ss. 4
 1443  and 5 of the Insurance Holding Company System Regulatory Act and
 1444  the Insurance Holding Company System Model Regulation of the
 1445  NAIC National Association of Insurance Commissioners, as adopted
 1446  in December 2010. The commission may adopt subsequent amendments
 1447  thereto if the methodology remains substantially consistent. The
 1448  rules Regulatory Act and the Model Regulation existed on
 1449  November 30, 2001, and may include a prohibition on oral
 1450  contracts between affiliated entities. Material transactions
 1451  between an insurer and its affiliates shall be filed with the
 1452  office as provided by rule Upon request, the office may waive
 1453  filing requirements under this section for a domestic insurer
 1454  that is the subsidiary of an insurer that is in full compliance
 1455  with the insurance holding company registration laws of its
 1456  state of domicile, which state is accredited by the National
 1457  Association of Insurance Commissioners.
 1458         (2) Effective January 1, 2015, the ultimate controlling
 1459  person of every insurer subject to registration shall also file
 1460  an annual enterprise risk report on or before April 1. As used
 1461  in this subsection, the term “ultimate controlling person” means
 1462  a person who is not controlled by any other person. The report,
 1463  to the best of the ultimate controlling person’s knowledge and
 1464  belief, must identify the material risks within the insurance
 1465  holding company system that could pose enterprise risk to the
 1466  insurer. The report shall be filed with the lead state office of
 1467  the insurance holding company system as determined by the
 1468  procedures within the Financial Analysis Handbook adopted by the
 1469  NAIC and is confidential and exempt from public disclosure as
 1470  provided in s. 624.4212.
 1471         (a) An insurer may satisfy this requirement by providing
 1472  the office with the most recently filed parent corporation
 1473  reports that have been filed with the Securities and Exchange
 1474  Commission which provide the appropriate enterprise risk
 1475  information.
 1476         (b) The term “enterprise risk” means an activity,
 1477  circumstance, event, or series of events involving one or more
 1478  affiliates of an insurer which, if not remedied promptly, are
 1479  likely to have a materially adverse effect upon the financial
 1480  condition or liquidity of the insurer or its insurance holding
 1481  company system as a whole, including anything that would cause
 1482  the insurer’s risk-based capital to fall into company action
 1483  level as set forth in s. 624.4085 or would cause the insurer to
 1484  be in a hazardous financial condition.
 1485         (3) Effective January 1, 2015, pursuant to chapter 624
 1486  relating to the examination of insurers, the office may examine
 1487  any insurer registered under this section and its affiliates to
 1488  ascertain the financial condition of the insurer, including the
 1489  enterprise risk to the insurer by the ultimate controlling
 1490  party, or by any entity or combination of entities within the
 1491  insurance holding company system, or by the insurance holding
 1492  company system on a consolidated basis.
 1493         (4) The filings and related documents filed pursuant to
 1494  this section are confidential and exempt as provided in s.
 1495  624.4212 and are not subject to subpoena or discovery directly
 1496  from the office. A waiver of any applicable privilege or claim
 1497  of confidentiality in the filings and related documents may not
 1498  occur as a result of any disclosure to the office under this
 1499  section or any other section of the insurance code as authorized
 1500  under s. 624.4212. Neither the office nor any person who
 1501  received the filings and related documents while acting under
 1502  the authority of the office or with whom such information is
 1503  shared pursuant to s. 624.4212 is permitted or required to
 1504  testify in any private civil action concerning any confidential
 1505  documents, materials, or information subject to s. 624.4212.
 1506  However, the department or office may use the confidential and
 1507  exempt information in the furtherance of any regulatory or legal
 1508  action brought against an insurer as a part of the official
 1509  duties of the department or office.
 1510         (5) Effective January 1, 2015, the failure to file a
 1511  registration statement, or a summary of the registration
 1512  statement, or the enterprise risk filing report required by this
 1513  section within the time specified for filing is a violation of
 1514  this section.
 1515         (6) Upon request, the office may waive the filing
 1516  requirements of this section:
 1517         (a) If the insurer is a domestic insurer that is the
 1518  subsidiary of an insurer that is in full compliance with the
 1519  insurance holding company registration laws of its state of
 1520  domicile, which state is accredited by the NAIC; or
 1521         (b) If the insurer is a domestic insurer that writes only
 1522  in this state and has annual direct written and assumed premium
 1523  of less than $300 million, excluding premiums reinsured with the
 1524  Federal Crop Insurance Corporation and Federal Flood Program,
 1525  and demonstrates that compliance with this section would not
 1526  provide substantial regulatory or consumer benefit. In
 1527  evaluating a waiver request made under this paragraph, the
 1528  office may consider various factors including, but not limited
 1529  to, the type of business entity, the volume of business written,
 1530  the ownership or organizational structure of the entity, or
 1531  whether the company is in run-off.
 1532  
 1533  A waiver granted pursuant to this subsection is valid for 2
 1534  years unless sooner withdrawn due to a change in the
 1535  circumstances under which the waiver was granted.
 1536         Section 12. Effective January 1, 2015, present subsection
 1537  (4) of section 628.803, Florida Statutes, is renumbered as
 1538  subsection (5), and a new subsection (4) is added to that
 1539  section, to read:
 1540         628.803 Sanctions.—
 1541         (4) If the office determines that any person violated s.
 1542  628.461 or s. 628.801, the violation may serve as an independent
 1543  basis for disapproving dividends or distributions and for
 1544  placing the insurer under an order of supervision in accordance
 1545  with part VI of chapter 624.
 1546         Section 13. Effective January 1, 2015, section 628.804,
 1547  Florida Statutes, is created to read:
 1548         628.804 Groupwide supervision for international insurance
 1549  groups.—
 1550         (1) As used in this section:
 1551         (a) “Groupwide supervisor” means the chief insurance
 1552  regulatory official for the jurisdiction who is determined by
 1553  the office to have significant contacts with the international
 1554  insurance group sufficient to conduct and coordinate groupwide
 1555  supervision activities.
 1556         (b) “International insurance group” means an insurance
 1557  group operating internationally which includes an insurer.
 1558         (2) The office may act as the groupwide supervisor for an
 1559  international insurance group in which the ultimate controlling
 1560  person of the group is domiciled in this state.
 1561         (3)(a) If the ultimate controlling person is domiciled
 1562  outside this state, the office, in cooperation with other
 1563  groupwide supervisors, may:
 1564         1. Determine that the office is the appropriate groupwide
 1565  supervisor for an international insurance group with substantial
 1566  operations concentrated in this state or in insurance operations
 1567  conducted by subsidiary insurance companies domiciled in this
 1568  state; or
 1569         2. Acknowledge that another chief insurance regulatory
 1570  official is the appropriate groupwide supervisor for the
 1571  international insurance group.
 1572         (b) Before issuing a determination, the office must notify
 1573  the insurer and the ultimate controlling person within the
 1574  international insurance group and provide the international
 1575  insurance group with at least 30 days to submit information
 1576  pertinent to the pending determination.
 1577         (4) The commission may adopt rules to administer this
 1578  section, including rules establishing the criteria for making a
 1579  determination under paragraph (3)(a), such as the extent of
 1580  insurance operations in this state and nation; the location of
 1581  the executive offices, assets and liabilities, and business
 1582  operations of the international insurance group; the domicile of
 1583  the ultimate controlling person of the international insurance
 1584  group; and the similarity of the regulatory systems of other
 1585  jurisdictions acting or seeking to act as lead groupwide
 1586  supervisor.
 1587         Section 14. Effective January 1, 2015, section 628.805,
 1588  Florida Statutes, is created to read:
 1589         628.805 Supervisory colleges.—In order to assess the
 1590  business strategy, financial position, legal and regulatory
 1591  position, risk exposure, risk management, and governance
 1592  processes, and as part of the examination of individual insurers
 1593  in accordance with ss. 624.316 and 628.801, the office may
 1594  participate in a supervisory college with other regulators
 1595  charged with supervision of the insurer or its affiliates,
 1596  including other state, federal, and international regulatory
 1597  agencies. In accordance with s. 624.4212 regarding confidential
 1598  information sharing, the office may enter into agreements that
 1599  provide the basis for cooperation between the office and the
 1600  other regulatory agencies and the activities of the supervisory
 1601  college. This section does not delegate to the supervisory
 1602  college the office’s authority to regulate or supervise the
 1603  insurer or its affiliates under its jurisdiction.
 1604         (1) With respect to participation in a supervisory college,
 1605  the office may:
 1606         (a) Initiate the establishment of a supervisory college.
 1607         (b) Clarify the membership and participation of other
 1608  supervisors in the supervisory college.
 1609         (c) Clarify the functions of the supervisory college and
 1610  the role of other regulators, including the establishment of a
 1611  groupwide supervisor.
 1612         (d) Coordinate the ongoing activities of the supervisory
 1613  college, including planning meetings, supervisory activities,
 1614  and processes for information sharing.
 1615         (e) Establish a crisis management plan.
 1616         (2) With respect to an insurer registered under s. 628.801,
 1617  and in accordance with this section, the office may participate
 1618  in a supervisory college for any domestic insurer that is part
 1619  of an insurance holding company system that has international
 1620  operations in order to determine the insurer’s compliance with
 1621  this chapter.
 1622         (3) Each registered insurer subject to this section is
 1623  liable for and shall pay reasonable expenses for the office’s
 1624  participation in a supervisory college, including reasonable
 1625  travel expenses. A supervisory college may be convened as a
 1626  temporary or permanent forum for communication and cooperation
 1627  between the regulators charged with the supervision of the
 1628  insurer or its affiliates, and the office may impose a regular
 1629  assessment on the insurer for the payment of these expenses.
 1630         Section 15. Effective January 1, 2015, subsection (3) is
 1631  added to section 636.045, Florida Statutes, to read:
 1632         636.045 Minimum surplus requirements.—
 1633         (3) A prepaid limited health service organization that is
 1634  authorized in this state and one or more other states,
 1635  jurisdictions, or countries is subject to ss. 624.4085 and
 1636  624.40851.
 1637         Section 16. Effective January 1, 2015, subsection (7) is
 1638  added to section 641.225, Florida Statutes, to read:
 1639         641.225 Surplus requirements.—
 1640         (7) A health maintenance organization that is authorized in
 1641  this state and one or more other states, jurisdictions, or
 1642  countries is subject to ss. 624.4085 and 624.40851.
 1643         Section 17. Effective January 1, 2015, subsection (3) is
 1644  added to section 641.255, Florida Statutes, to read:
 1645         641.255 Acquisition, merger, or consolidation.—
 1646         (3) A health maintenance organization that is a member of a
 1647  holding company system is subject to s. 628.461 but not s.
 1648  628.4615.
 1649         Section 18. Except as otherwise expressly provided in this
 1650  act, this act shall take effect October 1, 2014, if SB 1300 or
 1651  similar legislation is adopted in the same legislative session
 1652  or an extension thereof and becomes a law.