House Bill 0541c1

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    Florida House of Representatives - 2000              CS/HB 541

        By the Committee on Insurance and Representative Goode






  1                      A bill to be entitled

  2         An act relating to life and health insurance;

  3         amending s. 284.33, F.S.; authorizing the

  4         Department of Insurance to directly purchase

  5         annuities for certain purposes; providing

  6         criteria and requirements; providing an

  7         exemption from certain competitive bidding

  8         requirements; amending s. 625.121, F.S.;

  9         deleting a requirement relating to calculating

10         a deficiency reserve; amending s. 626.99, F.S.;

11         updating a required buyer's guide reference;

12         creating s. 627.4785, F.S.; authorizing the

13         department to adopt a certain model regulation

14         for valuing life insurance policies; amending

15         s. 627.6487, F.S.; clarifying a definition;

16         providing an effective date.

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18  Be It Enacted by the Legislature of the State of Florida:

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20         Section 1.  Subsection (1) of section 284.33, Florida

21  Statutes, is amended to read:

22         284.33  Purchase of insurance, reinsurance, and

23  services.--

24         (1)  The Department of Insurance is authorized to

25  provide insurance, specific excess insurance, and aggregate

26  excess insurance through the Department of Management

27  Services, pursuant to the provisions of part I of chapter 287,

28  as necessary to provide insurance coverages authorized by this

29  part, consistent with market availability. However, the

30  department may directly purchase annuities through a

31  structured settlement insurance consultant selected by the

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    Florida House of Representatives - 2000              CS/HB 541

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  1  department to assist in settling claims by the Division of

  2  Risk Management. Consultant selection shall be accomplished

  3  through competitive sealed proposals. The consultant shall act

  4  as an agent of record for the department in procuring the best

  5  annuity products available to facilitate structured settlement

  6  of claims, considering price, insurer financial strength, and

  7  the best interest of the state risk management program.

  8  Purchase of annuities by the department using a structured

  9  settlement method is exempt from competitive sealed bidding or

10  proposal requirements.  The Department of Insurance is further

11  authorized to purchase such risk management services,

12  including, but not limited to, risk and claims control; safety

13  management; and legal, investigative, and adjustment services,

14  as may be required and pay claims. The department may contract

15  with a service organization for such services and advance

16  money to such service organization for deposit in a special

17  checking account for paying claims made against the state

18  under the provisions of this part.  The special checking

19  account shall be maintained in this state in a bank or savings

20  association organized under the laws of this state or of the

21  United States. The department may replenish such account as

22  often as necessary upon the presentation by the service

23  organization of documentation for payments of claims equal to

24  the amount of the requested reimbursement.

25         Section 2.  Subsection (11) of section 625.121, Florida

26  Statutes, is amended to read:

27         625.121  Standard Valuation Law; life insurance.--

28         (11)  DEFICIENCY RESERVE.--If in any contract year the

29  gross premium charged by any life insurer on any policy or

30  contract is less than the valuation net premium for the policy

31  or contract calculated by the method used in calculating the

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    Florida House of Representatives - 2000              CS/HB 541

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  1  reserve thereon but using the minimum valuation standards of

  2  mortality and rate of interest, there shall be maintained on

  3  such policy or contract a deficiency reserve in addition to

  4  the reserve defined by subsections (7) and (12).  For each

  5  such policy or contract, the deficiency reserve shall be the

  6  present value, according to the minimum valuation standards of

  7  mortality and rate of interest, of the differences between all

  8  such valuation net premiums and the corresponding premiums

  9  charged for such policy or contract during the remainder of

10  the premium-paying period.  As regards renewable term life

11  insurance, the policy reserve and foregoing deficiency reserve

12  shall be calculated using the current term period only. For

13  any category of policies, contracts, or benefits specified in

14  subsections (5) and (6), issued on or after the operative date

15  of s. 627.476 (the Standard Nonforfeiture Law for Life

16  Insurance), the aggregate deficiency reserves may be reduced

17  by the amount, if any, by which the aggregate reserves

18  actually calculated in accordance with subsection (9) exceed

19  the minimum aggregate reserves prescribed by subsection (8).

20  The minimum valuation standards of mortality and rate of

21  interest referred to in this subsection are those standards

22  stated in subsections (5) and (6). However, for any life

23  insurance policy which is issued on or after January 1, 1985,

24  for which the gross premium in the first policy year exceeds

25  that of the second year and for which no comparable additional

26  benefit is provided in the first year for such excess, and

27  which provides an endowment benefit, a cash surrender value,

28  or a combination thereof in an amount greater than such excess

29  premium, the foregoing provisions of this subsection shall be

30  applied as if the method actually used in calculating the

31  reserve for such policy were the method described in

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  1  subsection (7), the provisions of subparagraph (7)(a)2. being

  2  ignored.  The amount of the deficiency reserve, if any, at

  3  each policy anniversary of such a policy shall be the excess,

  4  if any, of the amount determined by the foregoing provisions

  5  of this subsection plus the reserve calculated by the method

  6  described in subsection (7), the provisions of subparagraph

  7  (7)(a)2. being ignored, over the reserve actually calculated

  8  by the method described in subsection (7), the provisions of

  9  subparagraph (7)(a)2. being taken into account.

10         Section 3.  Subsection (6) of section 626.99, Florida

11  Statutes, is amended to read:

12         626.99  Life insurance solicitation.--

13         (6)  ADOPTION OF BUYER'S GUIDE; REQUIREMENTS.--Any

14  insurer soliciting life insurance in this state on or after

15  October 1, 1980, shall adopt and use a buyer's guide, and the

16  adoption and use by an insurer of the buyer's guide adopted

17  October 1, 1996 May 4, 1976, by the National Association of

18  Insurance Commissioners in the NAIC Life Insurance

19  Solicitation Model Regulation shall be in compliance with the

20  requirements of this section.

21         Section 4.  Section 627.4785, Florida Statutes, is

22  created to read:

23         627.4785  Valuation of life insurance policies.--The

24  department may adopt by rule the model regulation for

25  valuation of life insurance policies as approved by the

26  National Association of Insurance Commissioners in March 1999,

27  including tables of select mortality factors, and may make the

28  regulation effective January 1, 2000.

29         Section 5.  Subsection (3) of section 627.6487, Florida

30  Statutes, is amended to read:

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    Florida House of Representatives - 2000              CS/HB 541

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  1         627.6487  Guaranteed availability of individual health

  2  insurance coverage to eligible individuals.--

  3         (3)  For the purposes of this section, the term

  4  "eligible individual" means an individual:

  5         (a)1.  For whom, as of the date on which the individual

  6  seeks coverage under this section, the aggregate of the

  7  periods of creditable coverage, as defined in s. 627.6561(5)

  8  and (6), is 18 or more months; and

  9         2.a.  Whose most recent prior creditable coverage was

10  under a group health plan, governmental plan, or church plan,

11  or health insurance coverage offered in connection with any

12  such plan; or

13         b.  Whose most recent prior creditable coverage was

14  under an individual plan issued in this state by a health

15  insurer or health maintenance organization, which coverage is

16  terminated due to the insurer or health maintenance

17  organization becoming insolvent or discontinuing the offering

18  of all individual coverage in this the state, or due to the

19  insured no longer living in the service area in this state of

20  the insurer or health maintenance organization that provides

21  coverage through a network plan in this state;

22         (b)  Who is not eligible for coverage under:

23         1.  A group health plan, as defined in s. 2791 of the

24  Public Health Service Act;

25         2.  A conversion policy or contract issued by an

26  authorized insurer or health maintenance organization under s.

27  627.6675 or s. 641.3921, respectively, offered to an

28  individual who is no longer eligible for coverage under either

29  an insured or self-insured employer plan;

30         3.  Part A or part B of Title XVIII of the Social

31  Security Act; or

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    Florida House of Representatives - 2000              CS/HB 541

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  1         4.  A state plan under Title XIX of such act, or any

  2  successor program, and does not have other health insurance

  3  coverage;

  4         (c)  With respect to whom the most recent coverage

  5  within the coverage period described in paragraph (a) was not

  6  terminated based on a factor described in s. 627.6571(2)(a) or

  7  (b), relating to nonpayment of premiums or fraud, unless such

  8  nonpayment of premiums or fraud was due to acts of an employer

  9  or person other than the individual;

10         (d)  Who, having been offered the option of

11  continuation coverage under a COBRA continuation provision or

12  under s. 627.6692, elected such coverage; and

13         (e)  Who, if the individual elected such continuation

14  provision, has exhausted such continuation coverage under such

15  provision or program.

16         Section 6.  This act shall take effect upon becoming a

17  law.

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