Senate Bill sb7058pb
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Florida Senate - 2005 (PROPOSED COMMITTEE BILL) SPB 7058
FOR CONSIDERATION By the Committee on Banking and Insurance
597-1386-05
1 A bill to be entitled
2 An act relating to the solvency of insurers;
3 amending s. 624.316, F.S.; revising
4 requirements for the periodic examination of
5 insurers by the Office of Insurance Regulation
6 of the Financial Services Commission;
7 increasing the period between examinations for
8 insurers that maintain a risk-based capital
9 level of a specified percentage; creating s.
10 624.4087, F.S.; requiring property insurers to
11 maintain surplus and reinsurance adequate to
12 cover the 100-year probable maximum loss from
13 hurricanes; providing requirements for
14 determining the probable maximum loss; amending
15 s. 624.424, F.S.; authorizing the office to
16 require that an insurer submit an actuarial
17 certification by an independent actuary;
18 amending s. 628.801, F.S.; revising a reference
19 with respect to registration requirements for
20 insurance holding companies; providing an
21 effective date.
22
23 Be It Enacted by the Legislature of the State of Florida:
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25 Section 1. Paragraph (a) of subsection (2) of section
26 624.316, Florida Statutes, is amended to read:
27 624.316 Examination of insurers.--
28 (2)(a) Except as provided in paragraph (f), the office
29 may examine each insurer as often as may be warranted for the
30 protection of the policyholders and in the public interest,
31 and shall examine each domestic insurer not less frequently
1
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Florida Senate - 2005 (PROPOSED COMMITTEE BILL) SPB 7058
597-1386-05
1 than once every 3 years, or once every 5 years if the office
2 determines in accordance with s. 624.4085 that the insurer has
3 maintained a risk-based capital level of 250 percent or higher
4 for each completed fiscal year since the most recent previous
5 examination of the insurer. The examination shall cover the
6 preceding 3 fiscal years of the insurer since the most recent
7 examination and shall be commenced within 12 months after the
8 end of the most recent fiscal year being covered by the
9 examination. The examination may cover any period of the
10 insurer's operations since the last previous examination. The
11 examination may include examination of events subsequent to
12 the end of the most recent fiscal year and the events of any
13 prior period that affect the present financial condition of
14 the insurer. In lieu of making its own examination, the office
15 may accept an independent certified public accountant's audit
16 report prepared on a statutory basis consistent with the
17 Florida Insurance Code on that specific company. The office
18 may not accept the report in lieu of the requirement imposed
19 by paragraph (1)(b). When an examination is conducted by the
20 office for the sole purpose of examining the 3 preceding
21 fiscal years of the insurer since the most recent examination
22 within 12 months after the opinion date of an independent
23 certified public accountant's audit report prepared on a
24 statutory basis on that specific company consistent with the
25 Florida Insurance Code, the cost of the examination as charged
26 to the insurer pursuant to s. 624.320 shall be reduced by the
27 cost to the insurer of the independent certified public
28 accountant's audit reports. Requests for the reduction in cost
29 of examination must be submitted to the office in writing no
30 later than 90 days after the conclusion of the examination and
31 shall include sufficient documentation to support the charges
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Florida Senate - 2005 (PROPOSED COMMITTEE BILL) SPB 7058
597-1386-05
1 incurred for the statutory audit performed by the independent
2 certified public accountant.
3 Section 2. Section 624.4087, Florida Statutes, is
4 created to read:
5 624.4087 Surplus and reinsurance requirements.--An
6 authorized property insurer must maintain surplus and
7 reinsurance adequate to cover its 100-year probable maximum
8 loss from hurricanes. The determination of the 100-year
9 probable maximum loss is presumed to be accurate if the
10 insurer uses actuarial methods, principles, standards, models,
11 and output ranges that are in conformance with the standards
12 adopted by the Florida Commission on Hurricane Loss Projection
13 Methodology pursuant to s. 627.0628.
14 Section 3. Paragraph (b) of subsection (1) of section
15 624.424, Florida Statutes, is amended to read:
16 624.424 Annual statement and other information.--
17 (1)
18 (b) Each insurer's annual statement must contain a
19 statement of opinion on loss and loss adjustment expense
20 reserves made by a member of the American Academy of Actuaries
21 or by a qualified loss reserve specialist, under criteria
22 established by rule of the commission. In adopting the rule,
23 the commission must consider any criteria established by the
24 National Association of Insurance Commissioners. The office
25 may require an insurer to submit an actuarial certification
26 prepared by an independent actuary and semiannual updates of
27 the annual statement of opinion as to a particular insurer if
28 the office has reasonable cause to believe that such reserves
29 are understated to the extent of materially misstating the
30 financial position of the insurer. Workpapers in support of
31 the statement of opinion must be provided to the office upon
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Florida Senate - 2005 (PROPOSED COMMITTEE BILL) SPB 7058
597-1386-05
1 request. This paragraph does not apply to life insurance or
2 title insurance.
3 Section 4. Section 628.801, Florida Statutes, is
4 amended to read:
5 628.801 Insurance holding companies; registration;
6 regulation.--Every insurer which is authorized to do business
7 in this state and which is a member of an insurance holding
8 company shall register with the office and be subject to
9 regulation with respect to its relationship to such holding
10 company as provided by rule or statute. The commission shall
11 adopt rules establishing the information and form required for
12 registration and the manner in which registered insurers and
13 their affiliates shall be regulated. The rules shall apply to
14 domestic insurers, foreign insurers, and commercially
15 domiciled insurers, except a foreign insurer domiciled in
16 states that are accredited by the National Association of
17 Insurance Commissioners by December 31, 1995. Except to the
18 extent of any conflict with this code, the rules must include
19 all requirements and standards of ss. 4 and 5 of the Insurance
20 Holding Company System Regulatory Act and the Insurance
21 Holding Company System Model Regulation of the National
22 Association of Insurance Commissioners, as the Regulatory Act
23 and the Model Regulation existed on January 1, 2005 1997, and
24 may include a prohibition on oral contracts between affiliated
25 entities. Upon request, the office may waive filing
26 requirements under this section for a domestic insurer that is
27 the subsidiary of an insurer that is in full compliance with
28 the insurance holding company registration laws of its state
29 of domicile, which state is accredited by the National
30 Association of Insurance Commissioners.
31 Section 5. This act shall take effect January 1, 2006.
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Florida Senate - 2005 (PROPOSED COMMITTEE BILL) SPB 7058
597-1386-05
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2 SENATE SUMMARY
3 Provides for 5-year rather than 3-year examinations by
the Office of Insurance Regulation for insurers that
4 maintain a risk-based capital level of 250 percent.
Requires property insurers to maintain surplus and
5 reinsurance adequate to cover the 100-year probable
maximum loss from hurricanes. Authorizes the office to
6 require that an insurer submit an actuarial certification
by an independent actuary. (See bill for details.)
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