HB 0235 2003
1	CHAMBER ACTION
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6	The Committee on Insurance recommends the following:
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8	Committee Substitute
9	Remove the entire bill and insert:
10	A bill to be entitled
11	An act relating to mutual insurance holding companies;
12	amending s. 628.703, F.S.; providing a definition;
13	amending ss. 628.709 and 628.727, F.S.; revising
14	membership criteria of mutual insurance holding companies;
15	amending ss. 628.729, 628.730, and 628.733, F.S.;
16	specifying basis of distributive shares and corporate
17	equity of members under certain circumstances; providing
18	an effective date.
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20	Be It Enacted by the Legislature of the State of Florida:
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22	Section 1. Subsection (4) is added to section 628.703,
23	Florida Statutes, to read:
24	628.703 Definitions.--For purposes of this part:
25	(4) "Paid premiums” means all premiums paid for insurance
26	by a member of a mutual insurance holding company to a
27	subsidiary insurance company.
28	Section 2. Subsection (2) of section 628.709, Florida
29	Statutes, is amended to read:
30	628.709 Formation of a mutual insurance holding company.--
31	(2) All of the initial shares of the capital stock of the
32	insurance company which reorganized as a subsidiary insurance
33	company shall be issued either to the mutual insurance holding
34	company, or to an intermediate holding company which is wholly
35	owned by the mutual insurance holding company. This restriction
36	does not preclude the subsequent issuance of additional shares
37	of stock by the subsidiary insurance company so long as the
38	mutual insurance holding company at all times owns directly or
39	through one or more intermediate holding companies, a majority
40	of the voting shares of the capital stock of the subsidiary
41	insurance company. The membership interests of the policyholders
42	of the subsidiary insurance company shall become membership
43	interests in the mutual insurance holding company. Policyholders
44	of the subsidiary insurance company which was formerly the
45	mutual insurer shall be members of the mutual insurance holding
46	company in accordance with the articles of incorporation and
47	bylaws of the mutual insurance holding company. At the time of
48	formation,policyholders of any other subsidiary insurance
49	company of the mutual insurance holding company shall not be
50	members of the mutual insurance holding company unless they are
51	policyholders of a subsidiary which was a mutual insurer which
52	merged with the holding company pursuant to s. 628.715.
53	Subsequent to formation, membership shall be governed by s.
54	628.727.
55	Section 3. Subsection (1) of section 628.727, Florida
56	Statutes, is amended to read:
57	628.727 Membership.--
58	(1) Membership in a mutual insurance holding company shall
59	be determined in accordance with the mutual insurance holding
60	company's articles of incorporation and bylaws and shall be
61	based upon each member holding a policy of insurance with a
62	subsidiary insurance company or a health maintenance contract
63	with a subsidiary health maintenance organizationservice
64	corporation. Group certificateholders may also be members of the
65	mutual insurance holding company if specified in the bylaws.
66	Section 4. Subsection (2) of section 628.729, Florida
67	Statutes, is amended to read:
68	628.729 Member's share of assets on voluntary
69	dissolution.--
70	(1) Upon any voluntary dissolution of a domestic mutual
71	insurance holding company, its assets remaining after discharge
72	of its indebtedness, if any, and expenses of administration,
73	shall be distributed to existing persons who were its members at
74	any time within the 3-year period preceding the date such
75	liquidation was authorized or ordered, or date of last
76	termination of the insurer's certificate of authority, whichever
77	date is earlier; except, if the department has reason to believe
78	that those in charge of the management of the mutual insurance
79	holding company have caused or encouraged the reduction of the
80	number of members of the insurer in anticipation of liquidation
81	and for the purpose of reducing thereby the number of persons
82	who may be entitled to share in distribution of the insurer's
83	assets, the department may enlarge the 3-year qualification
84	period by such additional time as the department may deem to be
85	reasonable.
86	(2) The distributive share of each such member shall be
87	determined:
88	(a) For domestic mutual insurance holding companies owning
89	solely life and health insurance subsidiaries,by a formula
90	based upon such reasonable classifications of members as the
91	department may approve.
92	(b) For all other domestic insurance holding companies,
93	based upon the ratio that the total amount of paid premiums paid
94	by such member for policies of insurance during the 3-year
95	period or part of such period specified in subsection (1) during
96	which such recipient was a member bears to the total amount of
97	paid premiums paid by all members entitled to receive a
98	distributive share as a result of such dissolution during such
99	entire 3-year period and upon such reasonable classifications of
100	members as the department may approve, unless the domestic
101	mutual insurance holding company submits another fair formula
102	that is approved by the department.
103	Section 5. Subsection (2) of section 628.730, Florida
104	Statutes, is amended to read:
105	628.730 Merger with intermediate holding company.--
106	(2) The distributive share of each such member shall be
107	determined:
108	(a) For domestic mutual insurance holding companies owning
109	solely life and health insurance subsidiaries,by a formula
110	based upon such reasonable classifications of members as the
111	department may approve.
112	(b) For all other domestic insurance holding companies,
113	based upon the ratio that the total amount of paid premiums paid
114	by such member for policies of insurance during the 3-year
115	period or part of such period preceding the date of such merger
116	during which such recipient was a member bears to the total
117	amount of paid premiums paid by all members entitled to receive
118	a distributive share as a result of such merger during such
119	entire 3-year period and upon such reasonable classifications of
120	members as the department may approve, unless the domestic
121	mutual insurance holding company submits another fair formula
122	that is approved by the department.
123	Section 6. Paragraph (b) of subsection (2) of section
124	628.733, Florida Statutes, is amended to read:
125	628.733 Converting mutual insurance holding company.--
126	(2) The department shall not approve any such plan and
127	procedure unless:
128	(b) The corporate equity of each member is determinable:
129	1. For domestic mutual insurance holding companies owning
130	solely life and health insurance subsidiaries,under a fair
131	formula approved by the department, which equity shall be based
132	upon not more than the company's net assets.
133	2. For all other domestic insurance holding companies,
134	based upon the ratio that the total amount of paid premiums paid
135	by such member for policies of insurance during the 3-year
136	period or part of such period specified in paragraph (c) during
137	which such recipient was a member bears to the total amount of
138	premiums paid by all members entitled to receive equity as a
139	result of such conversion during such entire 3-year period and
140	upon such reasonable classifications of members as the
141	department may approve, unless the domestic mutual insurance
142	holding company submits another fair formula that is approved by
143	the department. Such equity shall be based upon not more than
144	the company’s net assets.
145	(c) The persons entitled to participate in the
146	distribution of stock shall include all current members and all
147	existing persons who had been members within 3 years prior to
148	the date such plan was submitted to the department.
149	Section 7. This act shall take effect upon becoming a law.