Senate Bill sb2782
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Florida Senate - 2007 SB 2782
By Senator Posey
24-1731A-07
1 A bill to be entitled
2 An act relating to examination of insurers;
3 amending s. 624.316, F.S.; extending the
4 interval at which insurers must be examined by
5 the Office of Insurance Regulation; deleting
6 provisions authorizing the office to accept an
7 audit report from a certified public accountant
8 in lieu of conducting its own examination;
9 providing for investment specialists and
10 information technology specialists to conduct
11 the examinations; revising the requirements for
12 rules governing the conduct of insurer
13 examinations; deleting certain examination
14 requirements; providing an effective date.
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16 Be It Enacted by the Legislature of the State of Florida:
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18 Section 1. Subsection (2) of section 624.316, Florida
19 Statutes, is amended to read:
20 624.316 Examination of insurers.--
21 (2)(a) Except as provided in paragraph (f), the office
22 may examine each insurer as often as may be warranted for the
23 protection of the policyholders and in the public interest,
24 and shall examine each domestic insurer not less frequently
25 than once every 5 3 years. The examination shall cover the
26 preceding 5 3 fiscal years of the insurer and shall be
27 commenced within 12 months after the end of the most recent
28 fiscal year being covered by the examination. The examination
29 may cover any period of the insurer's operations since the
30 last previous examination. The examination may include
31 examination of events subsequent to the end of the most recent
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Florida Senate - 2007 SB 2782
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1 fiscal year and the events of any prior period that affect the
2 present financial condition of the insurer. In lieu of making
3 its own examination, the office may accept an independent
4 certified public accountant's audit report prepared on a
5 statutory basis consistent with the Florida Insurance Code on
6 that specific company. The office may not accept the report in
7 lieu of the requirement imposed by paragraph (1)(b). When an
8 examination is conducted by the office for the sole purpose of
9 examining the 3 preceding fiscal years of the insurer within
10 12 months after the opinion date of an independent certified
11 public accountant's audit report prepared on a statutory basis
12 on that specific company consistent with the Florida Insurance
13 Code, the cost of the examination as charged to the insurer
14 pursuant to s. 624.320 shall be reduced by the cost to the
15 insurer of the independent certified public accountant's audit
16 reports. Requests for the reduction in cost of examination
17 must be submitted to the office in writing no later than 90
18 days after the conclusion of the examination and shall include
19 sufficient documentation to support the charges incurred for
20 the statutory audit performed by the independent certified
21 public accountant.
22 (b) The office shall examine each insurer applying for
23 an initial certificate of authority to transact insurance in
24 this state before granting the initial certificate.
25 (c) In lieu of making its own examination, the office
26 may accept a full report of the last recent examination of a
27 foreign insurer, certified to by the insurance supervisory
28 official of another state.
29 (d) The examination by the office of an alien insurer
30 shall be limited to the alien insurer's insurance transactions
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Florida Senate - 2007 SB 2782
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1 and affairs in the United States, except as otherwise required
2 by the office.
3 (e) The commission shall adopt rules providing that,
4 upon agreement between the office and the insurer, an
5 examination under this section may be conducted by independent
6 certified public accountants, actuaries, investment
7 specialists, information technology specialists meeting
8 criteria specified by rule, and reinsurance specialists
9 meeting criteria specified by rule. The rules shall provide:
10 1. That the agreement of the insurer is not required
11 if the office reasonably suspects criminal misconduct on the
12 part of the insurer.
13 2. That the office shall provide the insurer with a
14 list of three firms acceptable to the office, and that the
15 insurer shall select the firm to conduct the examination from
16 the list provided by the office.
17 1.3. That the insurer being examined must make payment
18 for the examination directly to the firm performing the
19 examination in accordance with the rates and terms established
20 agreed to by the office, the insurer, and the firm performing
21 the examination.
22 2. That the rates charged to the insurer being
23 examined are consistent with rates charged by other firms in a
24 similar profession and are comparable with the rates charged
25 for comparable examinations.
26 3. That the firm selected by the office to perform the
27 examination has no conflicts of interest which might affect
28 its ability to independently perform its responsibilities with
29 respect to the examination.
30 4. That if the examination is conducted without the
31 consent of the insurer, the insurer must pay all reasonable
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Florida Senate - 2007 SB 2782
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1 charges of the examining firm if the examination finds
2 impairment, insolvency, or criminal misconduct on the part of
3 the insurer.
4 (f)1.
5 a. An examination under this section must be conducted
6 at least once every year with respect to a domestic insurer
7 that has continuously held a certificate of authority for less
8 than 3 years. The examination must cover the preceding fiscal
9 year or the period since the last examination of the insurer.
10 The office may limit the scope of the examination.
11 b. The office may not accept an independent certified
12 public accountant's audit report in lieu of an examination
13 required by this subparagraph.
14 c. An insurer may not be required to pay more than
15 $25,000 to cover the costs of any one examination under this
16 subparagraph.
17 2. An examination under this section must be conducted
18 not less frequently than once every 5 years with respect to an
19 insurer that has continuously held a certificate of authority,
20 without a change in ownership subject to s. 624.4245 or s.
21 628.461, for more than 15 years. The examination must cover
22 the preceding 5 fiscal years of the insurer or the period
23 since the last examination of the insurer. This subparagraph
24 does not limit the ability of the office to conduct more
25 frequent examinations.
26 Section 2. This act shall take effect July 1, 2007.
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2 SENATE SUMMARY
3 Extends the interval at which insurers must be examined
by the Office of Insurance Regulation. Deletes provisions
4 allowing the office to accept an audit report from a
certified public accountant in lieu of conducting its own
5 examination. Provides for investment specialists and
information technology specialists to conduct the
6 examinations. Modifies rules for conducting insurer
examinations. Removes certain examination requirements.
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