HB 1549

1	A bill to be entitled
2	An act relating to examination of insurers; amending s.
3	624.316, F.S.; extending the interval at which insurers
4	must be examined by the Office of Insurance Regulation;
5	deleting provisions allowing the office to accept an audit
6	report from a certified public accountant in lieu of
7	conducting its own examination; revising guidelines for
8	conducting such examinations; providing an effective date.
9
10	Be It Enacted by the Legislature of the State of Florida:
11
12	Section 1.  Subsection (2) of section 624.316, Florida
13	Statutes, is amended to read:
14	624.316  Examination of insurers.--
15	(2)(a)  Except as provided in paragraph (f), the office may
16	examine each insurer as often as may be warranted for the
17	protection of the policyholders and in the public interest, and
18	shall examine each domestic insurer not less frequently than
19	once every 5 3 years. The examination shall cover the preceding
20	5 3 fiscal years of the insurer and shall be commenced within 12
21	months after the end of the most recent fiscal year being
22	covered by the examination. The examination may cover any period
23	of the insurer's operations since the last previous examination.
24	The examination may include examination of events subsequent to
25	the end of the most recent fiscal year and the events of any
26	prior period that affect the present financial condition of the
27	insurer. In lieu of making its own examination, the office may
28	accept an independent certified public accountant's audit report
29	prepared on a statutory basis consistent with the Florida
30	Insurance Code on that specific company. The office may not
31	accept the report in lieu of the requirement imposed by
32	paragraph (1)(b). When an examination is conducted by the office
33	for the sole purpose of examining the 3 preceding fiscal years
34	of the insurer within 12 months after the opinion date of an
35	independent certified public accountant's audit report prepared
36	on a statutory basis on that specific company consistent with
37	the Florida Insurance Code, the cost of the examination as
38	charged to the insurer pursuant to s. 624.320 shall be reduced
39	by the cost to the insurer of the independent certified public
40	accountant's audit reports. Requests for the reduction in cost
41	of examination must be submitted to the office in writing no
42	later than 90 days after the conclusion of the examination and
43	shall include sufficient documentation to support the charges
44	incurred for the statutory audit performed by the independent
45	certified public accountant.
46	(b)  The office shall examine each insurer applying for an
47	initial certificate of authority to transact insurance in this
48	state before granting the initial certificate.
49	(c)  In lieu of making its own examination, the office may
50	accept a full report of the last recent examination of a foreign
51	insurer, certified to by the insurance supervisory official of
52	another state.
53	(d)  The examination by the office of an alien insurer
54	shall be limited to the alien insurer's insurance transactions
55	and affairs in the United States, except as otherwise required
56	by the office.
57	(e)  The commission shall adopt rules providing that, upon
58	agreement between the office and the insurer, an examination
59	under this section may be conducted by independent certified
60	public accountants, actuaries, investment specialists,
61	information technology specialists meeting criteria specified by
62	rule, and reinsurance specialists meeting criteria specified by
63	rule. The rules shall provide:
64	1.  That the rates charged to the insurer being examined
65	are consistent with rates charged by other firms in a similar
66	profession agreement of the insurer is not required if the
67	office reasonably suspects criminal misconduct on the part of
68	the insurer.
69	2.  That the firm selected by the office to perform the
70	examination has no conflicts of interest that might affect its
71	ability to independently perform its responsibilities on the
72	examination office shall provide the insurer with a list of
73	three firms acceptable to the office, and that the insurer shall
74	select the firm to conduct the examination from the list
75	provided by the office.
76	3.  That the insurer being examined must make payment for
77	the examination directly to the firm performing the examination
78	in accordance with the rates and terms established agreed to by
79	the office, the insurer, and the firm performing the
80	examination.
81	4.  That if the examination is conducted without the
82	consent of the insurer, the insurer must pay all reasonable
83	charges of the examining firm if the examination finds
84	impairment, insolvency, or criminal misconduct on the part of
85	the insurer.
86	(f)1.a.  An examination under this section must be
87	conducted at least once every year with respect to a domestic
88	insurer that has continuously held a certificate of authority
89	for less than 3 years. The examination must cover the preceding
90	fiscal year or the period since the last examination of the
91	insurer. The office may limit the scope of the examination.
92	b.  The office may not accept an independent certified
93	public accountant's audit report in lieu of an examination
94	required by this subparagraph.
95	c.  An insurer may not be required to pay more than $25,000
96	to cover the costs of any one examination under this
97	subparagraph.
98	2.  An examination under this section must be conducted not
99	less frequently than once every 5 years with respect to an
100	insurer that has continuously held a certificate of authority,
101	without a change in ownership subject to s. 624.4245 or s.
102	628.461, for more than 15 years. The examination must cover the
103	preceding 5 fiscal years of the insurer or the period since the
104	last examination of the insurer. This subparagraph does not
105	limit the ability of the office to conduct more frequent
106	examinations.
107	Section 2.  This act shall take effect July 1, 2007.

CODING: Words stricken are deletions; words underlined are additions.