Senate Bill sb2038c1
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Florida Senate - 2004 CS for SB 2038
By the Committee on Banking and Insurance; and Senator Fasano
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1 A bill to be entitled
2 An act relating to insurance; amending s.
3 20.121, F.S.; requiring the Division of
4 Consumer Services of the Department of
5 Financial Services to designate an employee as
6 primary contact for consumers on issues
7 involving sinkholes; amending s. 501.137, F.S.;
8 requiring an insurer to reinstate, under
9 certain circumstances, an insurance policy that
10 is cancelled due to failure of the lender to
11 pay a premium for which sufficient escrow funds
12 are on deposit; requiring that the lender
13 reimburse the property owner for any penalties
14 or fees paid for purposes of reinstating the
15 policy; requiring the lender to pay the
16 increased cost of insurance premiums for a
17 specified period of time under certain
18 conditions; amending s. 624.4622, F.S.;
19 providing that a local government
20 self-insurance fund comply with specified
21 provisions; amending s. 625.081, F.S.;
22 providing an exception; amending s. 625.121,
23 F.S.; providing for valuation of life insurance
24 policies; amending s. 626.321, F.S.; limiting
25 the types of business that may be transacted by
26 personal lines agents; amending s. 627.476,
27 F.S.; authorizing the use of certain mortality
28 tables for purposes of the Standard
29 Nonforfeiture Law for Life Insurance; creating
30 s. 625.9743, F.S., relating to claim settlement
31 practices for motor vehicle insurance;
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1 prescribing standards to be followed by
2 insurers; creating s. 626.9744, F.S., relating
3 to claim settlement practices for homeowners'
4 insurance; prescribing standards to be followed
5 by insurers; amending s. 627.4091, F.S.;
6 providing additional disclosure requirements
7 with respect to a refusal to insure; amending
8 s. 627.4133, F.S.; requiring property insurers
9 to reinstate a canceled policy as required by
10 s. 501.137, F.S.; restricting the use of
11 certain claims as a cause for cancellation or
12 nonrenewal; amending s. 627.7015, F.S.;
13 providing that arbitration clauses do not
14 preclude an insured from using the property
15 claim mediation program; creating 627.7077,
16 F.S.; providing for a feasibility study for a
17 proposed Florida Sinkhole Insurance Facility;
18 amending s. 627.838, F.S.; deleting a filing
19 fee; amending s. 627.848, F.S.; specifying
20 provisions for cancellation of insurance
21 contracts; amending s. 627.849, F.S., to
22 conform to the elimination of a filing fee;
23 repealing s. 625.131, F.S., relating to credit
24 life and disability policies; providing for
25 construction of the act; providing effective
26 dates.
27
28 Be It Enacted by the Legislature of the State of Florida:
29
30 Section 1. Paragraph (h) of subsection (2) of section
31 20.121, Florida Statutes, is amended to read:
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1 20.121 Department of Financial Services.--There is
2 created a Department of Financial Services.
3 (2) DIVISIONS.--The Department of Financial Services
4 shall consist of the following divisions:
5 (h) The Division of Consumer Services, which shall
6 include a Bureau of Funeral and Cemetery Services.
7 1. The Division of Consumer Services shall perform the
8 following functions concerning products or services regulated
9 by the Department of Financial Services or by either office of
10 the Financial Services Commission:
11 a. Receive inquiries and complaints from consumers.;
12 b. Prepare and disseminate such information as the
13 department deems appropriate to inform or assist consumers.;
14 c. Provide direct assistance and advocacy for
15 consumers who request such assistance or advocacy.;
16 d. With respect to apparent or potential violations of
17 law or applicable rules by a person or entity licensed by the
18 department or by either office of the commission, report such
19 apparent or potential violation to the appropriate division of
20 the department or office of the commission, which may take
21 such further action as it deems appropriate.
22 e. Designate an employee of the division as primary
23 contact for consumers on issues relating to sinkholes.
24 2. Any person licensed or issued a certificate of
25 authority by the department or by the Office of Insurance
26 Regulation shall respond, in writing, to the Division of
27 Consumer Services within 20 days after receipt of a written
28 request for information from the division concerning a
29 consumer complaint. The response must address the issues and
30 allegations raised in this complaint. The division may, in its
31 discretion, impose an administrative penalty for failure to
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1 comply with this subparagraph in an amount up to $2,500 per
2 violation upon any entity licensed by the department or the
3 Office of Insurance Regulation and $250 for the first
4 violation, $500 for the second violation and up to $1,000 per
5 violation thereafter upon any individual licensed by the
6 department or the Office of Insurance Regulation.
7 3. The department may adopt rules to implement the
8 provisions of this paragraph.
9 4. The powers, duties, and responsibilities expressed
10 or granted in this paragraph shall not limit the powers,
11 duties, and responsibilities of the Department of Financial
12 Services, the Financial Services Commission, the Office of
13 Insurance Regulation, or the Office of Financial Regulation
14 set forth elsewhere in the Florida Statutes.
15 Section 2. Section 501.137, Florida Statutes, is
16 amended to read:
17 501.137 Mortgage lenders; tax and insurance payments
18 from escrow accounts; duties.--
19 (1) Every lender of money, whether a natural person or
20 an artificial entity, whose loans are secured by a mortgage on
21 real estate located within the state and who receives funds
22 incidental thereto or in connection therewith for the payment
23 of property taxes or hazard insurance premiums when the such
24 funds are held in escrow by or on behalf of the lender, shall
25 promptly pay the such taxes or insurance premiums when the
26 such taxes or premiums become due and adequate escrow funds
27 are deposited, so that the maximum tax discount available may
28 be obtained with regard to the taxable property and so that
29 insurance coverage on the property does not lapse.
30 (2) If an escrow account for the such taxes or
31 insurance premiums is deficient, the lender shall notify the
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1 property owner within 15 days after the lender receives the
2 notification of taxes due from the county tax collector or
3 receives the notification from the insurer that a premium is
4 due.
5 (3)(a) If the lender, as a result of neglect, fails to
6 pay any tax or insurance premium when the tax or premium is
7 due and there are sufficient escrow funds on deposit to pay
8 the tax or premium, and if the property owner suffers a loss
9 as a result of this such failure, then the lender is will be
10 liable for the such loss; except, however, that with respect
11 to any loss which would otherwise have been insured, the
12 extent of the such liability shall not exceed the coverage
13 limits of any insurance policy which has lapsed.
14 (b) If the lender violates paragraph (a) and the
15 premium payment is not more than 90 days overdue, the insurer
16 shall reinstate the insurance policy, retroactive to the date
17 of cancellation, and the lender shall reimburse the property
18 owner for any penalty or fees imposed by the insurer and paid
19 by the property owner for purposes of reinstating the policy.
20 (c) If the lender violates paragraph (a) and the
21 premium payment is more than 90 days overdue or if the insurer
22 refuses to reinstate the insurance policy, the lender shall
23 pay the difference between the cost of the previous insurance
24 policy and a new, comparable insurance policy for a period of
25 2 years.
26 (4) At the expiration of the annual accounting period,
27 the lender shall issue to the property owner an annual
28 statement of the escrow account.
29 Section 3. Subsections (3) and (4) are added to
30 section 624.4622, Florida Statutes, to read:
31 624.4622 Local government self-insurance funds.--
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1 (3) Notwithstanding the provisions of subsection (2),
2 a local government self-insurance fund created under this
3 section after October 1, 2004, shall initially be organized as
4 a commercial self-insurance fund under s. 624.462 or a group
5 self-insurance fund under s. 624.4621 and, for the first 5
6 years of its existence, shall be subject to all the
7 requirements applied to commercial self-insurance funds or to
8 group self-insurance funds, respectively.
9 (4)(a) A local government self-insurance fund formed
10 after January 1, 2005, shall, for its first 5 fiscal years,
11 file with the office full and true statements of its financial
12 condition, transactions, and affairs. An annual statement
13 covering the preceding fiscal year shall be filed within 60
14 days after the end of the fund's fiscal year and quarterly
15 statements shall be filed within 45 days after each such date.
16 The office may, for good cause, grant an extension of time for
17 filing an annual or quarterly statement. The statements shall
18 contain information generally included in insurers' financial
19 statements prepared in accordance with generally accepted
20 insurance accounting principles and practices and in a form
21 generally used by insurers for financial statements, sworn to
22 by at least two executive officers of the self-insurance fund.
23 The form for financial statements shall be the form currently
24 approved by the National Association of Insurance
25 Commissioners for use by property and casualty insurers.
26 (b) Each annual statement shall contain a statement of
27 opinion on loss and loss adjustment expense reserves made by a
28 member of the American Academy of Actuaries. Workpapers in
29 support of the statement of opinion must be provided to the
30 office upon request.
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1 Section 4. Section 625.081, Florida Statutes, is
2 amended to read:
3 625.081 Reserve for health insurance.--For all health
4 insurance policies, the insurer shall maintain an active life
5 reserve which places a sound value on the insurer's
6 liabilities under such policies; is not less than the reserve
7 according to appropriate standards set forth in rules issued
8 by the commission; and, with the exception of credit
9 disability insurance, in no event, is less in the aggregate
10 than the pro rata gross unearned premiums for such policies.
11 Section 5. Paragraphs (a), (e), and (f) of subsection
12 (5) and subsection (13) of section 625.121, Florida Statutes,
13 are amended, and paragraphs (k) and (l) are added to
14 subsection (5) of that section, to read:
15 625.121 Standard Valuation Law; life insurance.--
16 (5) MINIMUM STANDARD FOR VALUATION OF POLICIES AND
17 CONTRACTS ISSUED ON OR AFTER OPERATIVE DATE OF STANDARD
18 NONFORFEITURE LAW.--Except as otherwise provided in paragraph
19 (h) and subsections (6), (11), and (14), the minimum standard
20 for the valuation of all such policies and contracts issued on
21 or after the operative date of s. 627.476 (Standard
22 Nonforfeiture Law for Life Insurance) shall be the
23 commissioners' reserve valuation method defined in subsections
24 (7), (11), and (14); 5 percent interest for group annuity and
25 pure endowment contracts and 3.5 percent interest for all
26 other such policies and contracts, or in the case of life
27 insurance policies and contracts, other than annuity and pure
28 endowment contracts, issued on or after July 1, 1973, 4
29 percent interest for such policies issued prior to October 1,
30 1979, and 4.5 percent interest for such policies issued on or
31 after October 1, 1979; and the following tables:
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1 (a) For all ordinary policies of life insurance issued
2 on the standard basis, excluding any disability and accidental
3 death benefits in such policies:
4 1. For policies issued prior to the operative date of
5 s. 627.476(9), the commissioners' 1958 Standard Ordinary
6 Mortality Table; except that, for any category of such
7 policies issued on female risks, modified net premiums and
8 present values, referred to in subsection (7), may be
9 calculated according to an age not more than 6 years younger
10 than the actual age of the insured.; and
11 2. For policies issued on or after the operative date
12 of s. 627.476(9), the commissioners' 1980 Standard Ordinary
13 Mortality Table or, at the election of the insurer for any one
14 or more specified plans of life insurance, the commissioners'
15 1980 Standard Ordinary Mortality Table with Ten-Year Select
16 Mortality Factors.
17 3. For policies issued on or after July 1, 2004,
18 ordinary mortality tables, adopted after 1980 by the National
19 Association of Insurance Commissioners, adopted by rule by the
20 commission for use in determining the minimum standard of
21 valuation for such policies.
22 (e) For total and permanent disability benefits in or
23 supplementary to ordinary policies or contracts:
24 1. For policies or contracts issued on or after
25 January 1, 1966, the tables of period 2 disablement rates and
26 the 1930 to 1950 termination rates of the 1952 disability
27 study of the Society of Actuaries, with due regard to the type
28 of benefit;
29 2. For policies or contracts issued on or after
30 January 1, 1961, and prior to January 1, 1966, either those
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1 tables or, at the option of the insurer, the class three
2 disability table (1926); and
3 3. For policies issued prior to January 1, 1961, the
4 class three disability table (1926); and.
5 4. For policies or contracts issued on or after July
6 1, 2004, tables of disablement rates and termination rates
7 adopted after 1980 by the National Association of Insurance
8 Commissioners, adopted by rule by the commission for use in
9 determining the minimum standard of valuation for those
10 policies or contracts.
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12 Any such table for active lives shall be combined with a
13 mortality table permitted for calculating the reserves for
14 life insurance policies.
15 (f) For accidental death benefits in or supplementary
16 to policies:
17 1. For policies issued on or after January 1, 1966,
18 the 1959 Accidental Death Benefits Table;
19 2. For policies issued on or after January 1, 1961,
20 and prior to January 1, 1966, either that table or, at the
21 option of the insurer, the Intercompany Double Indemnity
22 Mortality Table; and
23 3. For policies issued prior to January 1, 1961, the
24 Intercompany Double Indemnity Mortality Table; and.
25 4. For policies issued on or after July 1, 2004,
26 tables of accidental death benefits adopted after 1980 by the
27 National Association of Insurance Commissioners, adopted by
28 rule by the commission for use in determining the minimum
29 standard of valuation for those policies.
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1 Either table shall be combined with a mortality table
2 permitted for calculating the reserves for life insurance
3 policies.
4 (k) For individual annuity and pure endowment
5 contracts issued on or after July 1, 2004, excluding any
6 disability and accidental death benefits purchased under those
7 contracts, individual annuity mortality tables adopted after
8 1980 by the National Association of Insurance Commissioners,
9 adopted by rule by the commission for use in determining the
10 minimum standard of valuation for those contracts.
11 (l) For all annuities and pure endowments purchased on
12 or after July 1, 2004, under group annuity and pure endowment
13 contracts, excluding any disability and accidental death
14 benefits purchased under those contracts, group annuity
15 mortality tables adopted after 1980 by the National
16 Association of Insurance Commissioners, adopted by rule by the
17 commission for use in determining the minimum standard of
18 valuation for those contracts.
19 (13) APPLICABILITY TO CREDIT LIFE AND DISABILITY
20 INSURANCE POLICIES.--
21 (a) For policies issued prior to January 1, 2004:
22 1. The minimum reserve for single-premium credit
23 disability insurance, monthly premium credit life insurance
24 and monthly premium credit disability insurance shall be the
25 unearned gross premium.
26 2. As to single-premium credit life insurance
27 policies, the insurer shall establish and maintain reserves
28 that are not less than the value, at the valuation date, of
29 the risk for the unexpired portion of the period for which the
30 premium has been paid as computed on the basis of the
31 commissioners' 1980 Standard Ordinary Mortality Table and 3.5
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1 percent interest. At the discretion of the office, the insurer
2 may make a reasonable assumption as to the ages at which net
3 premiums are to be determined. In lieu of the foregoing basis,
4 reserves based upon unearned gross premiums may be used at the
5 option of the insurer.
6 (b) For policies issued on or after January 1, 2004:
7 1. The minimum reserve for single-premium credit
8 disability insurance shall be either:
9 a. The unearned gross premium, or
10 b. Based upon a morbidity table that is adopted by the
11 National Association of Insurance Commissioners and is
12 specified in a rule the commission adopts pursuant to
13 subsection (14).
14 2. The minimum reserve for monthly premium credit
15 disability insurance shall be the unearned gross premium.
16 3. The minimum reserve for monthly premium credit life
17 insurance shall be the unearned gross premium.
18 4. As to single-premium credit life insurance
19 policies, the insurer shall establish and maintain reserves
20 that are not less than the value, at the valuation date, of
21 the risk for the unexpired portion of the period for which the
22 premium has been paid as computed on the basis of the
23 commissioners' 1980 Standard Ordinary Mortality Table or any
24 ordinary mortality table, adopted after 1980 by the National
25 Association of Insurance Commissioners, that is approved by
26 rule adopted by the commission for use in determining the
27 minimum standard of valuation for such policies; and an
28 interest rate determined in accordance with subsection (6). At
29 the discretion of the office, the insurer may make a
30 reasonable assumption as to the ages at which net premiums are
31 to be determined. In lieu of the foregoing basis, reserves
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1 based upon unearned gross premiums may be used at the option
2 of the insurer. This section does not apply as to those credit
3 life insurance policies for which reserves are computed and
4 maintained as required under s. 625.131.
5 Section 6. Paragraph (d) of subsection (1) and
6 paragraph (a) of subsection (2) of section 626.321, Florida
7 Statutes, are amended to read:
8 626.321 Limited licenses.--
9 (1) The department shall issue to a qualified
10 individual, or a qualified individual or entity under
11 paragraphs (c), (d), (e), and (i), a license as agent
12 authorized to transact a limited class of business in any of
13 the following categories:
14 (d) Baggage and motor vehicle excess liability
15 insurance.--
16 1. License covering only insurance of personal effects
17 except as provided in subparagraph 2. The license may be
18 issued only:
19 a. To a full-time salaried employee of a common
20 carrier or a full-time salaried employee or owner of a
21 transportation ticket agency, which person is engaged in the
22 sale or handling of transportation of baggage and personal
23 effects of travelers, and may authorize the sale of such
24 insurance only in connection with such transportation; or
25 b. To the full-time salaried employee of a licensed
26 general lines agent, a full-time salaried employee of a
27 business which offers motor vehicles for rent or lease, or to
28 a business office of a business entity that which offers motor
29 vehicles for rent or lease if insurance sales activities
30 authorized by the license are in connection with and
31 incidental to the rental of a motor vehicle limited to
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1 full-time salaried employees. An entity applying for a license
2 under this subsection:
3 (I) Is required to submit only one application for a
4 license under s. 626.171. The requirements of s. 626.171(5)
5 shall apply only to the officers and directors of the entity
6 submitting the application.
7 (II) Is required to obtain a license for each office,
8 branch office, or place of business making use of the entity's
9 business name by applying to the department for the license on
10 a simplified application form developed by rule of the
11 department for this purpose.
12 (III) Is required to pay the applicable fees for a
13 license as prescribed in s. 624.501, be appointed under s.
14 626.112, and pay the prescribed appointment fee under s.
15 624.501. A licensed and appointed entity shall be directly
16 responsible and accountable for all acts of the licensee's
17 employees.
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19 The purchaser of baggage insurance shall be provided written
20 information disclosing that the insured's homeowner's policy
21 may provide coverage for loss of personal effects and that the
22 purchase of such insurance is not required in connection with
23 the purchase of tickets or in connection with the lease or
24 rental of a motor vehicle.
25 2. A business entity that office licensed pursuant to
26 subparagraph 1., or a person licensed pursuant to subparagraph
27 1. who is a full-time salaried employee of a business which
28 offers motor vehicles for rent or lease, may include lessees
29 under a master contract providing coverage to the lessor or
30 may transact excess motor vehicle liability insurance
31 providing coverage in excess of the standard liability limits
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1 provided by the lessor in its lease to a person renting or
2 leasing a motor vehicle from the licensee's employer for
3 liability arising in connection with the negligent operation
4 of the leased or rented motor vehicle, provided that the lease
5 or rental agreement is for not more than 30 days; that the
6 lessee is not provided coverage for more than 30 consecutive
7 days per lease period, and, if the lease is extended beyond 30
8 days, the coverage may be extended one time only for a period
9 not to exceed an additional 30 days; that the lessee is given
10 written notice that his or her personal insurance policy
11 providing coverage on an owned motor vehicle may provide
12 additional excess coverage; and that the purchase of the
13 insurance is not required in connection with the lease or
14 rental of a motor vehicle. The excess liability insurance may
15 be provided to the lessee as an additional insured on a policy
16 issued to the licensee's employer.
17 3. A business entity that office licensed pursuant to
18 subparagraph 1., or a person licensed pursuant to subparagraph
19 1. who is a full-time salaried employee of a business which
20 offers motor vehicles for rent or lease, may, as an agent of
21 an insurer, transact insurance that provides coverage for the
22 liability of the lessee to the lessor for damage to the leased
23 or rented motor vehicle if:
24 a. The lease or rental agreement is for not more than
25 30 days; or the lessee is not provided coverage for more than
26 30 consecutive days per lease period, but, if the lease is
27 extended beyond 30 days, the coverage may be extended one time
28 only for a period not to exceed an additional 30 days;
29 b. The lessee is given written notice that his or her
30 personal insurance policy that provides coverage on an owned
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1 motor vehicle may provide such coverage with or without a
2 deductible; and
3 c. The purchase of the insurance is not required in
4 connection with the lease or rental of a motor vehicle.
5 (2) An entity applying for a license under this
6 section is required to:
7 (a) Submit only one application for a license under s.
8 626.171. The requirements of s. 626.171(4) s. 626.171(5) shall
9 only apply to the officers and directors of the entity
10 submitting the application.
11 Section 7. Paragraph (h) of subsection (9) of section
12 627.476, Florida Statutes, is amended to read:
13 627.476 Standard Nonforfeiture Law for Life
14 Insurance.--
15 (9) CALCULATION OF ADJUSTED PREMIUMS AND PRESENT
16 VALUES FOR POLICIES ISSUED AFTER OPERATIVE DATE OF THIS
17 SUBSECTION.--
18 (h) All adjusted premiums and present values referred
19 to in this section shall for all policies of ordinary
20 insurance be calculated on the basis of the Commissioners'
21 1980 Standard Ordinary Mortality Table or, at the election of
22 the insurer for any one or more specified plans of life
23 insurance, the Commissioners' 1980 Standard Ordinary Mortality
24 Table with Ten-Year Select Mortality Factors; shall for all
25 policies of industrial insurance be calculated on the basis of
26 the Commissioners' 1961 Standard Industrial Mortality Table;
27 and shall for all policies issued in a particular calendar
28 year be calculated on the basis of a rate of interest not
29 exceeding the nonforfeiture interest rate as defined in this
30 subsection for policies issued in that calendar year. However:
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1 1. At the option of the insurer, calculations for all
2 policies issued in a particular calendar year may be made on
3 the basis of a rate of interest not exceeding the
4 nonforfeiture interest rate, as defined in this subsection,
5 for policies issued in the immediately preceding calendar
6 year.
7 2. Under any paid-up nonforfeiture benefit, including
8 any paid-up dividend additions, any cash surrender value
9 available, whether or not required by subsection (2), shall be
10 calculated on the basis of the mortality table and rate of
11 interest used in determining the amount of such paid-up
12 nonforfeiture benefit and paid-up dividend additions, if any.
13 3. An insurer may calculate the amount of any
14 guaranteed paid-up nonforfeiture benefit, including any
15 paid-up additions under the policy, on the basis of an
16 interest rate no lower than that specified in the policy for
17 calculating cash surrender values.
18 4. In calculating the present value of any paid-up
19 term insurance with accompanying pure endowment, if any,
20 offered as a nonforfeiture benefit, the rates of mortality
21 assumed may be not more than those shown in the Commissioners'
22 1980 Extended Term Insurance Table for policies of ordinary
23 insurance and not more than the Commissioners' 1961 Industrial
24 Extended Term Insurance Table for policies of industrial
25 insurance.
26 5. In lieu of the mortality tables specified in this
27 section, at the option of the insurance company and subject to
28 rules adopted by the commission, the insurance company may
29 substitute:
30 a. The 1958 CSO or CET Smoker and Nonsmoker Mortality
31 Tables, whichever is applicable, for policies issued on or
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1 after the operative date of this subsection and before January
2 1, 1989;
3 b. The 1980 CSO or CET Smoker and Nonsmoker Mortality
4 Tables, whichever is applicable, for policies issued on or
5 after the operative date of this subsection;
6 c. A mortality table that is a blend of the
7 sex-distinct 1980 CSO or CET mortality table standard,
8 whichever is applicable, or a mortality table that is a blend
9 of the sex-distinct 1980 CSO or CET smoker and nonsmoker
10 mortality table standards, whichever is applicable, for
11 policies that are subject to the United States Supreme Court
12 decision in Arizona Governing Committee v. Norris to prevent
13 unfair discrimination in employment situations.
14 6. Ordinary mortality tables, adopted after 1980 by
15 the National Association of Insurance Commissioners, adopted
16 by rule by the commission for use in determining the minimum
17 nonforfeiture standard may be substituted for the
18 Commissioners' 1980 Standard Ordinary Mortality Table with or
19 without Ten-Year Select Mortality Factors or for the
20 Commissioners' 1980 Extended Term Insurance Table.
21 7.6. For insurance issued on a substandard basis, the
22 calculation of any such adjusted premiums and present values
23 may be based on appropriate modifications of the
24 aforementioned tables.
25 Section 8. Section 626.9743, Florida Statutes, is
26 created to read:
27 626.9743 Claim settlement practices relating to motor
28 vehicle insurance.--
29 (1) This section shall apply to the adjustment and
30 settlement of personal and commercial motor vehicle insurance
31 claims.
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1 (2) An insurer may not, when liability and damages
2 owed under the policy are reasonably clear, recommend that a
3 third-party claimant make a claim under his or her own policy
4 solely to avoid paying the claim under the policy issued by
5 that insurer.
6 (3) An insurer that elects to repair a motor vehicle
7 and requires a specific repair shop for vehicle repairs shall
8 cause the damaged vehicle to be restored to its physical
9 condition as to performance and appearance prior to the loss
10 at no additional cost to the insured or third-party claimant
11 other than as stated in the policy.
12 (4) An insurer may not require the use of replacement
13 parts in the repair of a motor vehicle which are not at least
14 equal in kind and quality to the damaged parts prior to the
15 loss in terms of fit, appearance, and performance.
16 (5) When the insurance policy provides for the
17 adjustment and settlement of first-party motor vehicle total
18 losses on the basis of actual cash value or replacement with
19 another of like kind and quality, the insurer shall use one of
20 the following methods:
21 (a) The insurer may elect a cash settlement based upon
22 the actual cost to purchase a comparable motor vehicle,
23 including sales tax, if applicable pursuant to subsection (9).
24 Such cost may be derived from:
25 1. When comparable motor vehicles are available in the
26 local market area, the cost of two or more such comparable
27 motor vehicles available within the preceding 90 days;
28 2. The retail cost as determined from a generally
29 recognized source such as a guidebook or electronic database
30 that is generally available to the public; or
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1 3. The retail cost using two or more quotations
2 obtained by the insurer from two or more licensed dealers in
3 the local market area.
4 (b) The insurer may elect to offer a replacement motor
5 vehicle that is a specified comparable motor vehicle available
6 to the insured, including sales tax if applicable pursuant to
7 subsection (9), paid for by the insurer at no cost other than
8 any deductible provided in the policy and betterment as
9 provided in subsection (6). The offer must be documented in
10 the insurer's claim file. For purposes of this subsection, a
11 comparable motor vehicle is one that is made by the same
12 manufacturer, of the same or newer model year, and of similar
13 body type and that has similar options and mileage as the
14 insured vehicle. Additionally, a comparable motor vehicle must
15 be in as good or better overall condition than the insured
16 vehicle and available for inspection within a reasonable
17 distance of the insured's residence.
18 (c) When a motor vehicle total loss is adjusted or
19 settled on a basis that varies from the methods described in
20 paragraph (a) or paragraph (b), the determination of value
21 must be supported by documentation, and any deductions from
22 value must be itemized and specified in appropriate dollar
23 amounts. The basis for such settlement shall be explained to
24 the claimant in writing, if requested, and a copy of the
25 explanation shall be retained in the insurer's claim file.
26 (d) Any other method agreed to by the claimant.
27 (6) When the amount offered in settlement reflects a
28 reduction by the insurer because of betterment or
29 depreciation, information pertaining to the reduction shall be
30 maintained with the insurer's claim file. Deductions shall be
31 itemized and specific as to dollar amount and shall accurately
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1 reflect the value assigned to the betterment or depreciation.
2 The basis for any deduction shall be explained to the claimant
3 in writing, if requested, and a copy of the explanation shall
4 be maintained with the insurer's claim file.
5 (7) Every insurer shall, if partial losses are settled
6 on the basis of a written estimate prepared by or for the
7 insurer, supply the insured a copy of the estimate upon which
8 the settlement is based.
9 (8) Every insurer shall provide notice to an insured
10 before termination of payment for previously authorized
11 storage charges, and the notice shall provide 72 hours for the
12 insured to remove the vehicle from storage before terminating
13 payment of the storage charges.
14 (9) If sales tax will necessarily be incurred by a
15 claimant upon replacement of a total loss or upon repair of a
16 partial loss, the insurer may defer payment of the sales tax
17 unless and until the obligation has actually been incurred.
18 (10) Nothing in this section shall be construed to
19 preclude enforcement of policy provisions relating to
20 settlement disputes.
21 Section 9. Section 626.9744, Florida Statutes, is
22 created to read:
23 626.9744 Claim settlement practices relating to
24 property insurance.--Unless otherwise provided by the policy,
25 when a homeowner's insurance policy provides for the
26 adjustment and settlement of first-party losses based on
27 repair or replacement cost, the following requirements apply:
28 (1) When a loss requires repair or replacement of an
29 item or part, any physical damage incurred in making such
30 repair or replacement which is covered and not otherwise
31 excluded by the policy shall be included in the loss to the
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1 extent of any applicable limits. The insured may not be
2 required to pay for betterment required by ordinance or code
3 except for the applicable deductible, unless specifically
4 excluded or limited by the policy.
5 (2) When a loss requires replacement of items and the
6 replaced items do not match in quality, color, or size, the
7 insurer shall make reasonable repairs or replacement of items
8 in adjoining areas. In determining the extent of the repairs
9 or replacement of items in adjoining areas, the insurer may
10 consider the cost of repairing or replacing the undamaged
11 portions of the property, the degree of uniformity that can be
12 achieved without such cost, the remaining useful life of the
13 undamaged portion, and other relevant factors.
14 (3) This section shall not be construed to make the
15 insurer a warrantor of the repairs made pursuant to this
16 section.
17 (4) Nothing in this section shall be construed to
18 preclude enforcement of policy provisions relating to
19 settlement disputes.
20 Section 10. Subsection (5) is added to section
21 627.4091, Florida Statutes, to read:
22 627.4091 Specific reasons for denial, cancellation, or
23 nonrenewal.--
24 (5) When an insurer refuses to provide coverage to an
25 applicant due to adverse underwriting information, the insurer
26 shall:
27 (a) Provide to the applicant specific information
28 regarding the reasons for the refusal to insure.
29 (b) If the reason for the refusal to insure is based
30 on a loss underwriting history or report from a consumer
31 reporting agency, to the extent applicable identify the loss
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1 underwriting history and notify the applicant of his or her
2 right under the federal Fair and Accurate Credit Transactions
3 Act to obtain a copy of the report from the consumer reporting
4 agency.
5 Section 11. Effective upon this act becoming a law,
6 subsections (4) and (5) are added to section 627.4133, Florida
7 Statutes, to read:
8 627.4133 Notice of cancellation, nonrenewal, or
9 renewal premium.--
10 (4) An insurer that cancels a property insurance
11 policy on property secured by a mortgage due to the failure of
12 the lender to timely pay the premium when due shall reinstate
13 the policy as required by s. 501.137.
14 (5) A single claim on a property insurance policy
15 which is the result of water damage may not be used as the
16 sole cause for cancellation or nonrenewal unless the insurer
17 can demonstrate that the insured has failed to take action as
18 requested by the insurer to prevent a future similar
19 occurrence of damage to the insured property.
20 Section 12. Subsection (10) is added to section
21 627.7015, Florida Statutes, to read:
22 627.7015 Alternative procedure for resolution of
23 disputed property insurance claims.--
24 (10) An arbitration clause in an insurance policy
25 shall not preclude the insured from using the mediation
26 program under this section.
27 Section 13. Section 627.7077, Florida Statutes, is
28 created to read:
29 627.7077 Florida Sinkhole Insurance Facility and other
30 matters related to affordability and availability of sinkhole
31 insurance; feasibility study.--
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1 (1) The Florida State University College of Business
2 Department of Risk Management and Insurance shall, under the
3 direction of the office, conduct a feasibility and
4 cost-benefit study of a potential Florida Sinkhole Insurance
5 Facility and of other matters related to affordability and
6 availability of sinkhole insurance. The study shall be
7 conducted in consultation with the State Board of
8 Administration and the Florida Geological Survey. The
9 university shall provide a preliminary report of its analysis,
10 findings, and recommendations to the Financial Services
11 Commission and the presiding officers of the Legislature no
12 later than February 1, 2005, and shall provide a final report
13 no later than April 1, 2005.
14 (2) The potential functions of the facility to be
15 analyzed include:
16 (a) Serving as the direct insurer or the reinsurer for
17 all or some sinkhole losses.
18 (b) Providing training, communication, and other
19 educational services to the public, engineers, the
20 construction industry, insurance professionals, or others.
21 (c) Providing uniform standards for use by insurers in
22 evaluating sinkhole loss claims.
23 (d) Providing consulting services for insurers.
24 (e) Maintaining a public database of all confirmed
25 sinkholes and paid sinkhole loss claims, for use by consumers
26 and by the insurance, building construction, banking, and real
27 estate industries.
28 (3) The feasibility study shall, at a minimum, address
29 the following issues:
30 (a) Where the facility should be housed, including,
31 but not limited to, the options of creating a separate
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1 facility or using the Citizens Property Insurance Corporation
2 or the Florida Hurricane Catastrophe Fund.
3 (b) Federal income taxation implications.
4 (c) Funding options and costs associated with
5 operating the facility, including means of funding sinkhole
6 insurance through premiums that are adequate to fund covered
7 losses.
8 (d) Applicability of the experience of similar
9 facilities of other states.
10 (e) Other economic impact considerations pertinent to
11 a facility.
12 (f) Alternative dispute resolution mechanisms.
13 (g) The impact of all present requirements in the
14 Florida Insurance Code on affordability and availability of
15 sinkhole insurance and recommendations to address such
16 impacts.
17 (4) The study shall be funded from a budget of no more
18 than $300,000, which will be funded by assessments on insurers
19 issuing property insurance in this state. Such assessments
20 shall be collected by the office and shall be prorated among
21 such insurers according to a formula whereby each insurer
22 shall pay a fraction of such budget, the numerator of which
23 shall be such insurer's direct earned premiums for property
24 insurance in this state and the denominator of which shall be
25 the total direct earned premiums for property insurance in
26 this state for calendar year 2003.
27 Section 14. Section 627.838, Florida Statutes, is
28 amended to read:
29 627.838 Filing and approval of forms; service
30 charges.--
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1 (1) No premium finance agreement form or related form
2 shall be used in this state by a premium finance company
3 unless it has been filed with and approved by the office.
4 Every filing shall be made within 30 days of issuance or use.
5 (2) Each premium finance company shall file with the
6 office the service charge and interest rate plan, including
7 all modifications thereto, for informational purposes only.
8 Every filing shall be made within 30 days of its effective
9 date.
10 (3) Each filing shall be accompanied by the filing fee
11 specified in s. 627.849.
12 Section 15. Paragraph (e) of subsection (1) of section
13 627.848, Florida Statutes, is amended to read:
14 627.848 Cancellation of insurance contract upon
15 default.--
16 (1) When a premium finance agreement contains a power
17 of attorney or other authority enabling the premium finance
18 company to cancel any insurance contract listed in the
19 agreement, the insurance contract shall not be canceled unless
20 cancellation is in accordance with the following provisions:
21 (e) Whenever a financed an insurance contract is
22 canceled in accordance with this section, the insurer shall,
23 within 30 days of the requested cancellation date, promptly
24 return the unpaid balance due under the finance contract, up
25 to the gross amount available upon the cancellation of the
26 policy, to the premium finance company and any remaining
27 unearned premium to the agent or the insured, or both, for the
28 benefit of the insured or insureds. The insurer shall notify
29 the insured and the agent of the amount of unearned premium
30 returned to the premium finance company and the amount of
31 unearned commission held by the agent. The premium finance
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1 company shall either, within 30 days of the account being
2 overpaid, refund to the insured for the insured's benefit any
3 refund due on the account or, if the refund is sent or
4 credited to the agent within 15 days of the overpayment,
5 notify the insured of the refunded amount. within 15 days
6 shall notify the insured and the agent of the amount of
7 unearned premium. Within 15 days of receipt of notification
8 from the premium finance company, the agent shall return such
9 amount including any unearned commission to the insured or
10 with the written approval of the insured apply such amount to
11 the purchase of other insurance products regulated by the
12 office. The commission may adopt rules necessary to implement
13 the provisions of this subsection.
14 Section 16. Subsection (1) of section 627.849, Florida
15 Statutes, is amended to read:
16 627.849 Fees.--
17 (1) The office shall collect in advance, and the
18 persons so served shall pay to it in advance, the following
19 fees:
20 (a) Annual license fee............................$250
21 (b) Investigation fee..............................100
22 (c) Annual report filing fee........................25
23 (d) Form filing fee.................................10
24 Section 17. Section 625.131, Florida Statutes, is
25 repealed.
26 Section 18. Nothing in this act shall be construed to
27 create or be the basis of a civil action. Nothing in this act
28 shall be construed as limiting settlement or adjustment of
29 claims by methods that are otherwise permissible under Florida
30 law.
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1 Section 19. Except as otherwise expressly provided in
2 this act and except for this section, which shall take effect
3 upon becoming a law, this act shall take effect July 1, 2004.
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1 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
2 Senate Bill 2038
3
4 Deletes proposed change to unfair trade practices law for
refusal to insure based on past water damage or acts of God.
5
Removes the proposed ban on arbitration provisions in
6 insurance policies, instead stating arbitration does not
override a policyholder's right to mediation in a property
7 insurance dispute.
8 Deletes proposed requirement that insurers establish
comprehensive insurance coverage for residential property.
9
Requires insurers to notify policyholders denied coverage due
10 to adverse underwriting information of their right to obtain
the report relied on by the insurer from the consumer
11 reporting agency.
12 Exempts credit disability insurance from the requirement that
the insurer maintain an active life reserve that is less in
13 the aggregate than the pro rata gross unearned premiums for
such policies.
14
Allows insurers to use the minimum reserve requirements for
15 single-premium credit disability insurance, monthly premium
credit life insurance and monthly premium credit disability
16 insurance established by the National Association of Insurance
Commissioners.
17
Requires the F.S.U. Department of Risk Management and
18 Insurance to conduct a feasibility and cost-benefit study for
a potential Florida Sinkhole Insurance Facility and other
19 matters related to the affordability and availability of
sinkhole insurance.
20
Requires that new local government self-insurance trusts be
21 formed as a group or commercial self-insurance fund and comply
with applicable law for the first 5 years of existence.
22
Allows the Financial Services Commission to adopt the latest
23 revisions to the minimum standards for valuation of life
insurance policies, produced by the National Association of
24 Insurance Commissioners, by rule rather than having to do so
by legislation.
25
Allows insurers to use the minimum reserve requirements for
26 single-premium credit disability insurance, monthly premium
credit life insurance and monthly premium credit disability
27 insurance established by the National Association of Insurance
Commissioners.
28
Allows businesses that sell personal accident and motor
29 vehicle excess liability insurance to submit one application
to the Department in order to obtain licenses for each
30 location of the business.
31 Revises language regarding the settlement of automobile
insurance claims.
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1 Removes the authority for the Department of Financial Services
to adopt rules establishing requirements applicable to the
2 adjustment and settlement of motor vehicle insurance claims.
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