Florida Senate - 2005 COMMITTEE AMENDMENT
Bill No. SB 2330
Barcode 634284
CHAMBER ACTION
Senate House
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11 The Committee on Banking and Insurance (Alexander) recommended
12 the following amendment:
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14 Senate Amendment (with title amendment)
15 On page 8, between lines 27 and 28,
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17 insert:
18 Section 7. Section 626.918, Florida Statutes, is
19 amended to read:
20 626.918 Eligible surplus lines insurers.--
21 (1) A No surplus lines agent may not shall place any
22 coverage with any unauthorized insurer which is not then an
23 eligible surplus lines insurer, except as permitted under
24 subsections (6) (5) and (7) (6).
25 (2) An No unauthorized insurer may not shall be or
26 become an eligible surplus lines insurer unless made eligible
27 by the office in accordance with the following conditions:
28 (a) Eligibility of the insurer must be requested in
29 writing by the Florida Surplus Lines Service Office;
30 (b) The insurer must be currently an authorized
31 insurer in the state or country of its domicile as to the kind
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1 or kinds of insurance proposed to be so placed and must have
2 been such an insurer for not less than the 3 years next
3 preceding or must be the wholly owned subsidiary of such
4 authorized insurer or must be the wholly owned subsidiary of
5 an already eligible surplus lines insurer as to the kind or
6 kinds of insurance proposed for a period of not less than the
7 3 years next preceding. However, the office may waive the
8 3-year requirement if the insurer provides a product or
9 service not readily available to the consumers of this state
10 or has operated successfully for a period of at least 1 year
11 next preceding and has capital and surplus of not less than
12 $25 million;
13 (c) Before granting eligibility, the requesting
14 surplus lines agent or the insurer shall furnish the office
15 with a duly authenticated copy of its current annual financial
16 statement in the English language and with all monetary values
17 therein expressed in United States dollars, at an exchange
18 rate (in the case of statements originally made in the
19 currencies of other countries) then-current and shown in the
20 statement, and with such additional information relative to
21 the insurer as the office may request;
22 (d)1. The insurer must have and maintain surplus as to
23 policyholders of not less than $15 million; in addition, an
24 alien insurer must also have and maintain in the United States
25 a trust fund for the protection of all its policyholders in
26 the United States under terms deemed by the office to be
27 reasonably adequate, in an amount not less than $5.4 million.
28 Any such surplus as to policyholders or trust fund shall be
29 represented by investments consisting of eligible investments
30 for like funds of like domestic insurers under part II of
31 chapter 625 provided, however, that in the case of an alien
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1 insurance company, any such surplus as to policyholders may be
2 represented by investments permitted by the domestic regulator
3 of such alien insurance company if such investments are
4 substantially similar in terms of quality, liquidity, and
5 security to eligible investments for like funds of like
6 domestic insurers under part II of chapter 625. Clean,
7 irrevocable, unconditional, and evergreen letters of credit
8 issued or confirmed by a qualified United States financial
9 institution, as defined in subsection (3), may be used to fund
10 the trust;
11 2. For those surplus lines insurers that were eligible
12 on January 1, 1994, and that maintained their eligibility
13 thereafter, the required surplus as to policyholders shall be:
14 a. On December 31, 1994, and until December 30, 1995,
15 $2.5 million.
16 b. On December 31, 1995, and until December 30, 1996,
17 $3.5 million.
18 c. On December 31, 1996, and until December 30, 1997,
19 $4.5 million.
20 d. On December 31, 1997, and until December 30, 1998,
21 $5.5 million.
22 e. On December 31, 1998, and until December 30, 1999,
23 $6.5 million.
24 f. On December 31, 1999, and until December 30, 2000,
25 $8 million.
26 g. On December 31, 2000, and until December 30, 2001,
27 $9.5 million.
28 h. On December 31, 2001, and until December 30, 2002,
29 $11 million.
30 i. On December 31, 2002, and until December 30, 2003,
31 $13 million.
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1 j. On December 31, 2003, and thereafter, $15 million.
2 3. The capital and surplus requirements as set forth
3 in subparagraph 2. do not apply in the case of an insurance
4 exchange created by the laws of individual states, where the
5 exchange maintains capital and surplus pursuant to the
6 requirements of that state, or maintains capital and surplus
7 in an amount not less than $50 million in the aggregate. For
8 an insurance exchange which maintains funds in the amount of
9 at least $12 million for the protection of all insurance
10 exchange policyholders, each individual syndicate shall
11 maintain minimum capital and surplus in an amount not less
12 than $3 million. If the insurance exchange does not maintain
13 funds in the amount of at least $12 million for the protection
14 of all insurance exchange policyholders, each individual
15 syndicate shall meet the minimum capital and surplus
16 requirements set forth in subparagraph 2.;
17 4. A surplus lines insurer which is a member of an
18 insurance holding company that includes a member which is a
19 Florida domestic insurer as set forth in its holding company
20 registration statement, as set forth in s. 628.801 and rules
21 adopted thereunder, may elect to maintain surplus as to
22 policyholders in an amount equal to the requirements of s.
23 624.408, subject to the requirement that the surplus lines
24 insurer shall at all times be in compliance with the
25 requirements of chapter 625.
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27 The election shall be submitted to the office and shall be
28 effective upon the office's being satisfied that the
29 requirements of subparagraph 4. have been met. The initial
30 date of election shall be the date of office approval. The
31 election approval application shall be on a form adopted by
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1 commission rule. The office may approve an election form
2 submitted pursuant to subparagraph 4. only if it was on file
3 with the former Department of Insurance before February 28,
4 1998;
5 (e) The insurer must be of good reputation as to the
6 providing of service to its policyholders and the payment of
7 losses and claims;
8 (f) The insurer must be eligible, as for authority to
9 transact insurance in this state, under s. 624.404(3); and
10 (g) This subsection does not apply as to unauthorized
11 insurers made eligible under s. 626.917 as to wet marine and
12 aviation risks.
13 (3) For purposes of subsection (2) regarding letters
14 of credit, "qualified United States financial institution"
15 means an institution that:
16 (a) Is organized or, in the case of a United States
17 office of a foreign banking organization, is licensed under
18 the laws of the United States or any state thereof;
19 (b) Is regulated, supervised, and examined by United
20 States or state authorities having regulatory authority over
21 banks and trust companies; and
22 (c) Has been determined by the office or the
23 Securities Valuation Office of the National Association of
24 Insurance Commissioners to meet such standards of financial
25 condition and standing as are considered necessary and
26 appropriate to regulate the quality of financial institutions
27 whose letters of credit are acceptable to the office.
28 (4)(3) The office shall from time to time publish a
29 list of all currently eligible surplus lines insurers and
30 shall mail a copy thereof to each licensed surplus lines agent
31 at his or her office of record with the office.
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1 (5)(4) This section shall not be deemed to cast upon
2 the office any duty or responsibility to determine the actual
3 financial condition or claims practices of any unauthorized
4 insurer; and the status of eligibility, if granted by the
5 office, shall indicate only that the insurer appears to be
6 sound financially and to have satisfactory claims practices
7 and that the office has no credible evidence to the contrary.
8 (6)(5) When it appears that any particular insurance
9 risk which is eligible for export, but on which insurance
10 coverage, in whole or in part, is not procurable from the
11 eligible surplus lines insurers, after a search of eligible
12 surplus lines insurers, then the surplus lines agent may file
13 a supplemental signed statement setting forth such facts and
14 advising the office that such part of the risk as shall be
15 unprocurable, as aforesaid, is being placed with named
16 unauthorized insurers, in the amounts and percentages set
17 forth in the statement. Such named unauthorized insurer
18 shall, however, before accepting any risk in this state,
19 deposit with the department cash or securities acceptable to
20 the office and department of the market value of $50,000 for
21 each individual risk, contract, or certificate, which deposit
22 shall be held by the department for the benefit of Florida
23 policyholders only; and the surplus lines agent shall procure
24 from such unauthorized insurer and file with the office a
25 certified copy of its statement of condition as of the close
26 of the last calendar year. If such statement reveals,
27 including both capital and surplus, net assets of at least
28 that amount required for licensure of a domestic insurer, then
29 the surplus lines agent may proceed to consummate such
30 contract of insurance. Whenever any insurance risk, or any
31 part thereof, is placed with an unauthorized insurer, as
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1 provided herein, the policy, binder, or cover note shall
2 contain a statement signed by the insured and the agent with
3 the following notation: "The insured is aware that certain
4 insurers participating in this risk have not been approved to
5 transact business in Florida nor have they been declared
6 eligible as surplus lines insurers by the Office of Insurance
7 Regulation of Florida. The placing of such insurance by a duly
8 licensed surplus lines agent in Florida shall not be construed
9 as approval of such insurer by the Office of Insurance
10 Regulation of Florida. Consequently, the insured is aware that
11 the insured has severely limited the assistance available
12 under the insurance laws of Florida. The insured is further
13 aware that he or she may be charged a reasonable per policy
14 fee, as provided in s. 626.916(4), Florida Statutes, for each
15 policy certified for export." All other provisions of this
16 code shall apply to such placement the same as if such risks
17 were placed with an eligible surplus lines insurer.
18 (7)(6) When any particular insurance risk subject to
19 subsection (6) (5) is eligible for placement with an
20 unauthorized insurer and not more than 12.5 percent of the
21 risk is so subject, the office may, at its discretion, permit
22 the agent to obtain from the insured a signed statement as
23 indicated in subsection (6) (5). All other provisions of this
24 code apply to such placement the same as if such risks were
25 placed with an eligible surplus lines insurer.
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27 (Redesignate subsequent sections.)
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30 ================ T I T L E A M E N D M E N T ===============
31 And the title is amended as follows:
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Florida Senate - 2005 COMMITTEE AMENDMENT
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1 On page 1, line 27, after the semicolon,
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3 insert:
4 amending s. 626.918, F.S.; providing that
5 certain letters of credit issued or confirmed
6 by a qualified United States financial
7 institution may be used to fund a trust
8 established and maintained by an alien insurer
9 for the protection of policyholders in the
10 United States; defining the term "qualified
11 United States financial institution";
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