House Bill 2295
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Florida House of Representatives - 2000 HB 2295
By Representative Jones
1 A bill to be entitled
2 An act relating to credit and mortgage guaranty
3 insurance; amending s. 624.408, F.S.;
4 specifying minimum surplus for mortgage
5 guaranty insurers; amending s. 626.321, F.S.;
6 authorizing individuals and entities holding a
7 credit life or disability insurance license to
8 sell credit insurance; modifying requirements
9 for licensure; amending s. 627.679, F.S.;
10 requiring certain disclosures to be made within
11 a specified time upon the sale of credit life
12 insurance; allowing a borrower a specified time
13 from the date of such disclosures to rescind
14 the coverage; amending s. 635.042, F.S.;
15 revising limits on total liability and exposure
16 to losses for mortgage guaranty insurers;
17 requiring certain audited financial reports to
18 include certain information; authorizing the
19 Department of Insurance to take certain actions
20 against certain mortgage guaranty insurers;
21 providing an effective date.
22
23 Be It Enacted by the Legislature of the State of Florida:
24
25 Section 1. Paragraph (a) of subsection (1) of section
26 624.408, Florida Statutes, is amended, and subsection (4) is
27 added to said section, to read:
28 624.408 Surplus as to policyholders required; new and
29 existing insurers.--
30 (1)(a) To maintain a certificate of authority to
31 transact any one kind or combinations of kinds of insurance,
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1 as defined in part V of this chapter, an insurer in this state
2 shall at all times maintain surplus as to policyholders not
3 less than the greater of:
4 1. Except as provided in subparagraph 5. and paragraph
5 (b), $1.5 million;
6 2. For life insurers, 4 percent of the insurer's total
7 liabilities;
8 3. For life and health insurers, 4 percent of the
9 insurer's total liabilities plus 6 percent of the insurer's
10 liabilities relative to health insurance; or
11 4. For all insurers other than mortgage guaranty
12 insurers, life insurers, and life and health insurers, 10
13 percent of the insurer's total liabilities.
14 5. For property and casualty insurers, $4 million.
15 (4) Mortgage guaranty insurers shall have and maintain
16 a minimum surplus as required by s. 635.042.
17 Section 2. Paragraph (e) of subsection (1) of section
18 626.321, Florida Statutes, is amended to read:
19 626.321 Limited licenses.--
20 (1) The department shall issue to a qualified
21 individual, or a qualified individual or entity under
22 paragraphs (c), (d), and (e), a license as agent authorized to
23 transact a limited class of business in any of the following
24 categories:
25 (e) Credit life or disability insurance.--License
26 covering only credit life or disability insurance. The license
27 may be issued only to an individual employed by a life or
28 health insurer as an officer or other salaried or commissioned
29 representative, or to an individual employed by or associated
30 with a lending or financing institution or creditor, and may
31 authorize the sale of such insurance only with respect to
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1 borrowers or debtors of such lending or financing institution
2 or creditor. However, only the individual or entity whose tax
3 identification number is used in receiving or is credited with
4 receiving the commission from the sale of such insurance shall
5 be the licensed agent of the insurer. No individual while so
6 licensed shall hold a license as an agent or solicitor as to
7 any other or additional kind or class of life or health
8 insurance coverage. An entity other than a lending or
9 financial institution defined in s. 655.005(1)(g), (h), or (p)
10 holding a limited license under this paragraph is shall also
11 be authorized to sell credit insurance and credit property
12 insurance. An entity applying for a license under this
13 section:
14 1. Is required to submit only one application for a
15 license under s. 626.171, excluding the requirements of s.
16 626.171(5), provided that the entity is regulated by any of
17 the following federal or state agencies: Office of the
18 Comptroller of the Currency; the Securities and Exchange
19 Commission; or the Department of Banking and Finance.
20 2. Is not required to obtain a license or appointment
21 for each office, branch office, or place of business making
22 use of the entity's business name by applying to the
23 department for the license on a simplified form developed by
24 rule of the department for this purpose. However, the licensed
25 entity shall file with the department the address and
26 telephone number of each place of business at which credit
27 insurance is being marketed or sold. This information must be
28 filed annually by January 1 in an electronic format as
29 specified by the department by rule. The licensee is required
30 to file with the department, in the same specified electronic
31 format, any changes, additions, or deletions regarding each
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1 place of business marketing or selling credit insurance within
2 30 days after such change.
3 3. Is not required to pay any additional application
4 fees for a license issued to the offices or places of business
5 referenced in subsection (2), but is required to pay the
6 license fee as prescribed in s. 624.501, be appointed under s.
7 626.112, and pay the prescribed appointment fee under s.
8 624.501. Shall post a copy of the license obtained under this
9 paragraph shall be posted at each the business location at for
10 which employees are selling insurance authorized under the
11 entity license it was issued so as to be readily visible to
12 prospective purchasers of such coverage.
13 Section 3. Subsection (1) of section 627.679, Florida
14 Statutes, is amended to read:
15 627.679 Amount of insurance; disclosure.--
16 (1)(a) The amount of credit life insurance written
17 under one or more policies shall not exceed by more than $5
18 the total of the payments of the specific contracts of
19 indebtedness in connection with which it is written, when the
20 indebtedness is repayable in substantially equal installments
21 or in one installment or a single payment.
22 (b) The total amount of credit life insurance on the
23 life of any debtor with respect to any loan or loans covered
24 in one or more insurance policies shall at no time exceed
25 $50,000 with any one creditor, except that loans not exceeding
26 1 year's duration shall not be subject to such limits, and on
27 such loans not exceeding 1 year's duration, the limits of
28 coverage shall not exceed $50,000 with any one insurer.
29 (c) Before any credit life insurance may be sold, the
30 creditor agent or agent shall obtain a separate written
31 acknowledgment with respect to each of the following:
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1 1. That the borrower understands that he or she has
2 the option of assigning any other policy or policies the
3 borrower owns or may procure for the purpose of covering such
4 loan and that the policy need not be purchased from the
5 creditor agent in order to obtain the loan.
6 2. That the borrower understands that the credit life
7 coverage may be deferred if, at the time of application, the
8 borrower is unable to engage in employment or unable to
9 perform normal activities of a person of like age and sex, if
10 the proposed credit life insurance policy contains this
11 restriction.
12 3. That the borrower understands that the benefits
13 under the policy will terminate when the borrower reaches a
14 certain age and that the borrower's age is accurately
15 represented on the application or policy.
16
17 Notwithstanding the required disclosures set forth in this
18 paragraph, if the sale of credit life insurance is solicited
19 or consummated telephonically, the creditor or agent shall
20 provide the foregoing disclosures to the borrower within 30
21 days after the date the coverage takes effect. The borrower
22 shall be notified that he or she has 30 days from the date the
23 disclosures are received to rescind the credit life insurance
24 coverage.
25 Section 4. Section 635.042, Florida Statutes, is
26 amended to read:
27 635.042 Minimum surplus requirement Limitation on
28 outstanding liability.--
29 (1) A mortgage guaranty insurer must have and maintain
30 a minimum surplus of not less than the greater of $4 million
31 or 10 percent of the insurer's total outstanding liabilities
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1 other than the required contingency reserve. No insurer shall
2 be required under this subsection to have a surplus as to
3 policyholders greater than $100 million.
4 (2) A mortgage guaranty insurer shall also possess
5 sufficient capital and surplus so that the total outstanding
6 aggregate exposure net of reinsurance under mortgage guaranty
7 policies written by the insurer does not exceed 25 times its
8 paid-in capital, surplus, and contingency reserve combined.
9 The audited financial reports required pursuant to s.
10 624.424(8) shall disclose the total aggregate exposure net of
11 reinsurance under mortgage guaranty policies written by the
12 insurer.
13 (3) If a mortgage guaranty insurer is not in
14 compliance with this section, the department may take any
15 action against such insurer that the department may take
16 against an insurer that is not in compliance with s. 624.408.
17 No mortgage guaranty insurer may at any time have outstanding
18 a total liability net of reinsurance, under its aggregate
19 mortgage guaranty insurance policies, exceeding 25 times its
20 paid-in capital, surplus, and contingency reserve combined.
21 Section 5. This act shall take effect July 1, 2000.
22
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24 HOUSE SUMMARY
25
Revises minimum surplus requirements for mortgage
26 guaranty insurers, revises limits on total liability and
exposure to losses for such insurers, requires audited
27 financial reports to include specified information, and
authorizes the Department of Insurance to take
28 enforcement actions against noncomplying mortgage
guaranty insurers. Authorizes individuals and entities
29 holding a credit life or disability insurance license to
sell credit insurance. Modifies the requirements for
30 licensure. Requires certain disclosures to be made within
a specified time upon the sale of credit life insurance.
31 Allows a borrower a specified time from the date of such
disclosure to rescind coverage.
6