HB 1167

1	A bill to be entitled
2	An act relating to insurance; amending s. 628.461, F.S.,
3	relating to acquisition of controlling stock with respect
4	to stock and mutual insurers; including prepaid limited
5	health service organizations, health maintenance
6	organizations, prepaid health clinics, continuing care
7	providers, and multiple-employer welfare arrangements
8	within the definition of "insurer"; providing that a
9	person may not acquire a domestic stock insurer or a
10	controlling company unless such person has filed with the
11	commissioner and sent to the insurer a statement
12	containing specified information and the offer, request,
13	invitation, agreement, or acquisition has been approved by
14	the Commissioner of Insurance; requiring a controlling
15	person of a domestic insurer seeking to divest its
16	controlling interest in the domestic insurer to file
17	notice of the proposed divestiture; requiring the filing
18	of a preacquisition notification; providing for contents
19	of statement; providing for alternative filing materials
20	under specified circumstances; providing for approval or
21	disapproval by the commissioner of any merger or
22	acquisition of control after a public hearing; providing
23	procedures and requirements, including notice
24	requirements, with respect to such hearings; providing for
25	hearings on a consolidated basis; authorizing the
26	commissioner to retain attorneys and experts in reviewing
27	the proposed acquisition of control; providing
28	nonapplicability; providing that failure to file any
29	required statement, amendment, or other material or the
30	effectuation or attempted effectuation of an acquisition
31	of control of, divestiture of, or merger with a domestic
32	insurer without approval of the commissioner constitutes a
33	violation of the section; providing for jurisdiction of
34	courts with respect to violations and service of process;
35	authorizing the commissioner to enter an order under
36	specified circumstances; defining terms; providing
37	criteria and establishing formulae for competitive
38	standards; providing that the burden of showing prima
39	facie evidence of violation of the competitive standard
40	rests with the commissioner; authorizing the commissioner
41	to issue specified orders if an acquisition violates
42	required standards; requiring hearings; requiring an order
43	to be accompanied by a written decision of the
44	commissioner; authorizing penalties for violation of a
45	cease and desist order of the commissioner; providing a
46	fine for failure to make required filings and failure to
47	demonstrate a good faith effort to comply with any filing
48	requirement; specifying acquisitions and purchase of
49	securities that are exempt from the section; providing
50	procedures and requirements with respect to approval or
51	disapproval of the acquisition of voting securities;
52	amending s. 628.4615, F.S., relating to specialty
53	insurers, the  acquisition of controlling stock, ownership
54	interest, assets, or control thereof, and the merger or
55	consolidation of such insurers; removing prepaid limited
56	health service organizations, health maintenance
57	organizations, prepaid health clinics, continuing care
58	providers, and multiple-employer welfare arrangements from
59	the definition of specialty insurer; revising procedures
60	and requirements with respect to the acquisition of a
61	specialty insurer; requiring specified background
62	information with respect to new officers, directors,
63	trustees, partners, owners, or managers of a specialty
64	insurer that is the subject of an acquisition; eliminating
65	provisions relating to review of acquisition applications,
66	prohibited material change in the operation of a specialty
67	insurer or controlling company by an acquiring person,
68	acquisition proceedings, approval and disapproval of
69	acquisitions, burden of proof, validity of acquisitions,
70	and unlawful representation of approval by the office,
71	penalties therefor, and statute of limitations thereon;
72	creating s. 628.800, F.S.; providing definitions with
73	respect to pt. IV, ch. 628, F.S., relating to insurance
74	holding companies; amending s. 628.801, F.S.;
75	substantially rewording provisions relating to
76	registration of members of an insurance holding company
77	system; providing procedures and requirements with respect
78	to such registration; requiring reporting of dividends and
79	other distributions to shareholders; providing for
80	termination of registration; providing for filing of
81	consolidated registration statements; authorizing
82	specified insurers to register on behalf of an affiliated
83	insurer; providing inapplicability; providing for filing
84	of a disclaimer of affiliation and procedures and
85	requirements with respect thereto; requiring the filing of
86	an annual enterprise risk report; providing that failure
87	timely to file a registration statement or summary thereof
88	or an enterprise risk filing constitutes a violation of
89	the section; creating s. 628.8011, F.S.; providing
90	procedures and requirements with respect to standards and
91	management of an insurer within an insurance holding
92	company system; establishing standards for transactions
93	within an insurance holding company system; precluding
94	specified transactions involving a domestic insurer and
95	any person in its insurance holding company system;
96	providing exceptions; providing for review of
97	transactions; requiring notice with respect to specified
98	investments; providing procedures and requirements with
99	respect to payment of extraordinary dividends or the
100	making of extraordinary distributions by a domestic
101	insurer; providing requirements with respect to management
102	of domestic insurers; providing factors to be considered
103	in determining adequacy of an insurer's surplus; creating
104	628.8012, F.S.; providing for the establishment of and
105	participation in a supervisory college; specifying powers
106	of the Commissioner of Insurance with respect thereto;
107	providing for payment of expenses of the college; creating
108	s. 628.8013, F.S.; providing rulemaking authority of the
109	commissioner; creating s. 628.8014, providing restrictions
110	on voting of securities; amending s. 628.802, F.S.;
111	providing for injunctions against specified violations;
112	substantially revising provisions relating to the voting
113	of securities; substantially revising provisions relating
114	to the seizure or sequestration of voting securities;
115	amending s. 628.803, F.S.; providing a penalty for failure
116	to file a registration statement; providing for deposit of
117	funds derived therefrom; providing a penalty for knowing
118	violation, participation in, or assent to specified
119	violative transactions or the making of investments by a
120	director or officer of an insurance holding company
121	system; authorizing the issuance of cease and desist
122	orders with respect to specified transactions or
123	contracts; providing penalties for willful violation of
124	pt. IV of ch. 628, F.S., by an insurer or any director,
125	officer, employee, or agent thereof; providing a penalty
126	for knowingly making false statements, false reports, or
127	false filings with the intent to deceive in the
128	performance duties as an officer, director, or employee of
129	an insurance holding company system; providing that a
130	violation of ch. 628, F.S., which prevents full
131	understanding of an enterprise risk may serve as an
132	independent basis for disapproving dividends or
133	distributions and for placing the insurer under an order
134	of supervision; amending ss. 636.05, 641.255, 641.416, and
135	651.024, F.S.; conforming cross-references; reenacting s.
136	48.151(3), F.S., relating to service of process by the
137	Chief Financial Officer on specified insurers, to
138	incorporate the amendment to s. 628.461, F.S., in a
139	reference thereto; reenacting s. 624.310(1)(a), F.S.,
140	relating to the definitions of "affiliated party," to
141	incorporate the amendments to ss. 628.461 and 628.4615,
142	F.S., in references thereto; reenacting s. 625.765, F.S.,
143	relating to exemptions from specified provisions of pt.
144	IV, ch. 625, F.S., relating to domestic stock insurers and
145	equity securities, to incorporate the amendment to s.
146	628.461, F.S., in a reference thereto; reenacting s.
147	628.705(2), F.S., relating to prohibition of stock
148	transfers, to incorporate the amendment to s. 628.461,
149	F.S., in a reference thereto; reenacting s. 631.051(7),
150	F.S., relating to grounds for rehabilitation of a domestic
151	insurer or alien insurer, to incorporate the amendments to
152	ss. 628.461 and 628.4615, F.S., in references thereto;
153	reenacting s. 409.912(20), F.S., relating to cost-
154	effective purchasing of health care, to incorporate the
155	amendment to s. 628.4615, F.S., in a reference thereto;
156	reenacting s. 624.80(1)(b), F.S., relating to the
157	definition of "insurer," to incorporate the amendment to
158	s. 628.4615, F.S., in a reference thereto; reenacting s.
159	626.9928, F.S., relating to acquisition of interest in a
160	viatical settlement provider, to incorporate the amendment
161	to s. 628.4615, F.S., in a reference thereto; reenacting
162	s. 634.252, F.S., relating to acquisition requirements
163	with respect to motor vehicle service agreement companies,
164	to incorporate the amendment to s. 628.4615, F.S., in a
165	reference thereto; reenacting s. 634.3073, F.S., relating
166	to acquisition requirements with respect to home warranty
167	associations, to incorporate the amendment to s. 628.4615,
168	F.S., in a reference thereto; reenacting s. 634.4085,
169	F.S., relating to acquisition requirements with respect to
170	service warranty associations, to incorporate the
171	amendment to s. 628.4615, F.S., in a reference thereto;
172	reenacting s. 636.065, F.S., relating to acquisition
173	requirements with respect to prepaid limited health
174	service organizations, to incorporate the amendment to s.
175	628.4615, F.S., in a reference thereto; reenacting s.
176	642.032(5), F.S., relating to provisions of general
177	insurance law applicable to legal expense insurance
178	corporations, to incorporate the amendment to s. 628.4615,
179	F.S., in a reference thereto; reenacting s.
180	626.7492(6)(b), (8)(f), and (9)(f), F.S., relating to
181	duties of insurers using the services of a reinsurance
182	intermediary broker or manager, to incorporate the
183	amendments to s. 628.801, F.S., in references thereto;
184	reenacting s. 626.918(2)(d), F.S., relating to conditions
185	of eligibility for surplus lines insurers, to incorporate
186	the amendment to s. 628.801, F.S., in a reference thereto;
187	providing an effective date.
188
189	Be It Enacted by the Legislature of the State of Florida:
190
191	Section 1.  Section 628.461, Florida Statutes, is amended
192	to read:
193	(Substantial rewording of section. See
194	s. 628.461, F.S., for present text.)
195	628.461  Acquisition of controlling stock.-
196	(1)  DEFINITIONS.-As used in this section, the term
197	"insurer" includes any:
198	(a)  Multiple-employer welfare arrangements operating
199	pursuant to chapter 624.
200	(b)  Prepaid limited health service organizations operating
201	under a certificate of authority issued under part I of chapter
202	636.
203	(c)  Health maintenance organizations operating under a
204	certificate of authority issued under part I of chapter 641.
205	(d)  Prepaid health clinics operating under a certificate
206	of authority issued under part II of chapter 641.
207	(e)  Provider of continuing care operating under a
208	certificate of authority or provisional certificate of authority
209	issued under chapter 651.
210	(2) FILING REQUIREMENTS.-A person may not, individually or
211	in conjunction with any affiliated person of such person,
212	acquire directly or indirectly, conclude a tender offer or
213	exchange offer for, enter into any agreement to exchange
214	securities for, or otherwise finally acquire 10 percent or more
215	of the outstanding voting securities of a domestic stock insurer
216	or of a controlling company, unless at the time the offer,
217	request, or invitation is made or the agreement is entered into,
218	or prior to the acquisition of the securities if no offer or
219	agreement is involved, such person has filed with the
220	commissioner and has sent to the insurer, a statement containing
221	the information required by this section and the offer, request,
222	invitation, agreement, or acquisition has been approved by the
223	commissioner in the manner prescribed in this section.
224	(a)  For purposes of this section, any controlling person
225	of a domestic insurer seeking to divest its controlling interest
226	in the domestic insurer in any manner shall file with the
227	commissioner, with a copy provided to the insurer, notice of its
228	proposed divestiture at least 30 days prior to the cessation of
229	control. The commissioner shall determine those instances in
230	which the party or parties seeking to divest a controlling
231	interest in an insurer will be required to file for and obtain
232	approval of the transaction.
233	(b)  With respect to a transaction subject to this
234	subsection, the acquiring person must also file a preacquisition
235	notification with the commissioner within 5 days of execution of
236	an agreement, which shall contain the information as prescribed
237	by the National Association of Insurance Commissioners relating
238	to those markets which cause the acquisition not to be exempted
239	from the provisions of this section. The commissioner may
240	require such additional material and information as deemed
241	necessary to determine whether the proposed acquisition, if
242	consummated, would violate the competitive standard set forth in
243	subsection (8). Failure to file the notification may subject the
244	violator to penalties specified in subsection (9). The waiting
245	period required begins on the date of receipt by the
246	commissioner of a preacquisition notification and ends on the
247	earlier of the 30th day after the date of receipt of
248	notification or termination of the waiting period by the
249	commissioner. Prior to the end of the waiting period, the
250	commissioner, on a one-time basis, may require the submission of
251	additional needed information relevant to the proposed
252	acquisition, in which event the waiting period shall end on the
253	earlier of the 30th day after receipt of the additional
254	information by the commissioner or termination of the waiting
255	period by the commissioner.
256	(c)  For purposes of this section, a "domestic insurer"
257	includes any person controlling a domestic insurer unless the
258	person, as determined by the commissioner, is either directly or
259	through its affiliates primarily engaged in business other than
260	the business of insurance. For the purposes of this section,
261	"person" does not include any securities broker that holds, in
262	the usual and customary broker's function, less than 20 percent
263	of the voting securities of an insurance company or of any
264	person who controls an insurance company.
265	(3)  CONTENT OF STATEMENT.-
266	(a)  The statement to be filed with the office and
267	furnished to the insurer and controlling company shall be made
268	under oath and contain the following information and any
269	additional information as the office deems necessary to
270	determine the character, experience, ability, and other
271	qualifications of the person or affiliated person of such person
272	for the protection of the policyholders and shareholders of the
273	insurer and the public:
274	1.  The name and address of each person by whom or on whose
275	behalf the merger or other acquisition of control referred to in
276	subsection (2) is to be effected, hereinafter referred to as the
277	"acquiring party," the background information on each natural
278	person by whom, or on whose behalf, the acquisition is to be
279	made, and, if the acquisition is to be made by or on behalf of a
280	corporation, association, or trust, the identity of, and the
281	background information specified in this section on, each
282	director, officer, trustee, or other natural person performing
283	duties similar to those of a director, officer, or trustee for
284	the corporation, association, or trust or any person who
285	controls, either directly or indirectly, the corporation,
286	association, or trust, and:
287	a.  If the person is an individual, his or her principal
288	occupation and all offices and positions held during the past 10
289	years, and any conviction of crimes other than minor traffic
290	violations during the past 10 years.
291	b.  Whether, during such 10-year period, the person has
292	been the subject of any proceeding for the revocation of any
293	license and, if so, the nature of the proceeding and the
294	disposition of the proceeding.
295	c.  Whether, during the 10-year period, the person has been
296	the subject of any proceeding under the Federal Bankruptcy Code
297	or whether, during the 10-year period, any corporation,
298	partnership, firm, trust, or association in which the person was
299	a director, officer, trustee, partner, or other official has
300	been subject to any such proceeding, either during the time in
301	which the person was a director, officer, trustee, partner, or
302	other official or within 12 months thereafter.
303	d.  Whether, during the 10-year period, the person has been
304	enjoined, either temporarily or permanently, by a court of
305	competent jurisdiction from violating any federal or state law
306	regulating the business of insurance, securities, or banking, or
307	from carrying out any particular practice or practices in the
308	course of the business of insurance, securities, or banking,
309	together with details as to any such event.
310	e.  If the person is not an individual, a report of the
311	nature of its business operations during the past 5 years or for
312	the period of time that the person and any predecessors have
313	been in existence, whichever is less, an informative description
314	of the business intended to be conducted by the person and the
315	person's subsidiaries, and a list of all individuals who are or
316	who have been selected to become directors, trustees, or
317	executive officers of the person, or who perform or will perform
318	functions appropriate to such positions. The list must include
319	for each individual the information required under subparagraph
320	(a)1.
321	2.  The source, nature, and amount of the consideration
322	used or to be used in effecting the merger or other acquisition
323	of control, a description of any transaction where funds were or
324	are to be obtained for any such purpose, including any pledge of
325	the insurer's stock or the stock of any of its subsidiaries or
326	controlling affiliates, and the identity of persons furnishing
327	consideration.
328	3.  Fully audited financial information as to the earnings
329	and financial condition of each acquiring party for the
330	preceding 5 fiscal years of each acquiring party, or for the
331	period the acquiring party and any predecessors have been in
332	existence, whichever is less, and similar unaudited information
333	as of a date not earlier than 90 days prior to the filing of the
334	statement.
335	4.  Any plans or proposals which each acquiring party may
336	have to liquidate the insurer, to sell its assets or merge or
337	consolidate it with any person, or to make any other material
338	change in its business or corporate structure or management.
339	5.  The number and class of shares of any security referred
340	to in subsection (2) that each acquiring party proposes to
341	acquire, the terms of the offer, request, invitation, agreement
342	or acquisition referred to in subsection (2), and a statement as
343	to the method used to determine the fairness of the proposal.
344	6.  The amount of each class of any security referred to in
345	subsection (2) which is beneficially owned or concerning which
346	there is a right to acquire beneficial ownership by each
347	acquiring party.
348	7.  A full description of any contracts, arrangement, or
349	understandings with respect to any security referred to in
350	subsection (2) in which any acquiring party is involved,
351	including, but not limited to, transfer of any of the
352	securities, joint ventures, loan or option arrangements, puts or
353	calls, guarantees of loans, guarantees against loss or
354	guarantees of profits, division of losses or profits, or the
355	giving or withholding of proxies. The description must identify
356	the persons with whom the contracts, arrangements, or
357	understandings have been entered into.
358	8.  A description of the purchase of any security referred
359	to in subsection (2) during the 12 calendar months preceding the
360	filing of the statement by any acquiring party, including the
361	dates of purchase, names of the purchasers, and consideration
362	paid or agreed to be paid.
363	9.  A description of any recommendations to purchase any
364	security referred to in subsection (2), made during the 12
365	calendar months preceding the filing of the statement by any
366	acquiring party or by anyone based upon interviews or at the
367	suggestion of the acquiring party.
368	10.  Copies of all tender offers for, requests or
369	invitations for tenders of, exchange offers for, and agreements
370	to acquire or exchange any securities referred to in subsection
371	(2), and, if distributed, copies of additional soliciting
372	material relating to them.
373	11.  The term of any agreement, contract, or understanding
374	made with or proposed to be made with any broker-dealer as to
375	solicitation of securities referred to in subsection (2) for
376	tender, and the amount of any fees, commissions, or other
377	compensation to be paid to broker-dealers with regard thereto.
378	12.  An agreement by the person required to file the
379	statement referred to in subsection (2) that he or she will
380	provide the annual enterprise risk report, if applicable,
381	specified in s. 628.801, for so long as control exists.
382	13.  An acknowledgement by the person required to file the
383	statement referred to in subsection (2) that the person and all
384	subsidiaries within its control in the insurance holding company
385	system will provide information to the commissioner upon request
386	as necessary to evaluate enterprise risk to the insurer.
387	14.  Such additional information as the commissioner may by
388	rule or regulation prescribe as necessary or appropriate for the
389	protection of policyholders of the insurer or in the public
390	interest.
391	(b)  If the person required to file the statement referred
392	to in subsection (2) is a partnership, limited partnership,
393	syndicate, or other group, the commissioner may require that the
394	information required by paragraph (a) be given with respect to
395	each partner of the partnership or limited partnership, each
396	member of the syndicate or group, and each person who controls
397	the partner or member. If any partner, member, or person is a
398	corporation or if the person required to file the statement
399	referred to in subsection (2) is a corporation, the commissioner
400	may require that the information required by paragraph (a) be
401	given with respect to the corporation, each officer and director
402	of the corporation, and each person who is directly or
403	indirectly the beneficial owner of more than 10 percent of the
404	outstanding voting securities of the corporation.
405	(c)  If any material change occurs in the facts set forth
406	in the statement filed with the commissioner and sent to the
407	insurer pursuant to this section, an amendment setting forth the
408	change, together with copies of all documents and other material
409	relevant to the change, shall be filed with the commissioner and
410	sent to the insurer within 2 business days after the person
411	learns of the change. A material change in the operation of the
412	insurer is a transaction which disposes of or obligates 5
413	percent or more of the capital and surplus of the insurer. A
414	material change in the management of the insurer is any change
415	in management involving officers or directors of the insurer or
416	any person of the insurer or controlling company having
417	authority to dispose of or obligate 5 percent or more of the
418	insurer's capital or surplus.
419	(3)  ALTERNATIVE FILING MATERIALS.-If any offer, request,
420	invitation, agreement, or acquisition referred to in subsection
421	(2) is proposed to be made by means of a registration statement
422	under the Securities Act of 1933, or in circumstances requiring
423	the disclosure of similar information under the Securities
424	Exchange Act of 1934, or under a state law requiring similar
425	registration or disclosure, the person required to file the
426	statement referred to in subsection (2) may utilize the
427	documents in furnishing the information called for by that
428	statement.
429	(4)  APPROVAL BY COMMISSIONER; HEARINGS.-
430	(a)  The commissioner shall approve any merger or other
431	acquisition of control under subsection (2) unless, after a
432	public hearing, the commissioner finds that:
433	1.  After the change of control, the domestic insurer
434	referred to in subsection (2) would not be able to satisfy the
435	requirements for the issuance of a license to write the line or
436	lines of insurance for which it is presently licensed;
437	2.  The effect of the merger or other acquisition of
438	control would be substantially to lessen competition in
439	insurance in this state or tend to create a monopoly. In
440	applying the competitive standard in this subparagraph:
441	a.  The informational requirements of subsection (2) and
442	the standards of subsection (8) shall apply;
443	b.  The merger or other acquisition shall not be
444	disapproved if the commissioner finds that any of the situations
445	meeting the criteria provided by subsection (8) exist; and
446	c.  The commissioner may condition the approval of the
447	merger or other acquisition on the removal of the basis of
448	disapproval within a specified period of time;
449	3.  The financial condition of any acquiring party is such
450	that it might jeopardize the financial stability of the insurer,
451	or prejudice the interest of its policyholders;
452	4.  The plans or proposals which the acquiring party has to
453	liquidate the insurer or controlling company, sell its assets,
454	consolidate or merge it with any person, or make any other
455	material change in its business or corporate structure or
456	management are unfair and unreasonable to policyholders of the
457	insurer and not in the public interest;
458	5.  The competence, experience, and integrity of those
459	persons who would control the operation of the insurer are such
460	that it would not be in the interest of policyholders of the
461	insurer and of the public to permit the merger or other
462	acquisition of control;
463	6.  The natural persons for whom background information is
464	required to be furnished pursuant to this section have
465	backgrounds which indicate that it is in the best interests of
466	the policyholders of the domestic stock insurer and in the
467	public interest to permit such persons to exercise control over
468	such domestic stock insurer;
469	7.  The officers and directors to be employed after the
470	acquisition have sufficient insurance experience and ability to
471	assure reasonable promise of successful operation;
472	8.  The management of the insurer after the acquisition
473	will be competent and trustworthy and will possess sufficient
474	managerial experience to make the proposed operation of the
475	insurer not hazardous to the insurance-buying public;
476	9.  The management of the insurer after the acquisition
477	will not include any person who has, directly or indirectly,
478	through ownership, control, reinsurance transactions, or other
479	insurance or business relations, unlawfully manipulated the
480	assets, accounts, finances, or books of any insurer or otherwise
481	acted in bad faith with respect thereto; or
482	10.  The acquisition is likely to be hazardous or
483	prejudicial to the insurance-buying public.
484	(b)  The public hearing under paragraph (a) shall be held
485	within 30 days after the filing of the statement required by
486	subsection (2), and at least 20 days' notice shall be given by
487	the commissioner to the person filing the statement. Not less
488	than 7 days' notice of the public hearing shall be given by the
489	person filing the statement to the insurer and to such other
490	persons as may be designated by the commissioner. The
491	commissioner shall make a determination within the 60-day period
492	preceding the effective date of the proposed transaction. At the
493	hearing, the person filing the statement, the insurer, any
494	person to whom notice of hearing was sent, and any other person
495	whose interest may be affected shall have the right to present
496	evidence, examine and cross-examine witnesses, and offer oral
497	and written arguments and in connection therewith shall be
498	entitled to conduct discovery proceedings in the same manner as
499	is presently allowed in the circuit courts of this state. All
500	discovery proceedings shall be concluded not later than 3 days
501	prior to the commencement of the public hearing.
502	(c)  If the proposed acquisition of control will require
503	the approval of more than one commissioner, the public hearing
504	referred to in paragraph (b) may be held on a consolidated basis
505	upon request of the person filing the statement referred to in
506	subsection (2). Such person shall file the statement with the
507	National Association of Insurance Commissioners within 5 days of
508	making the request for a public hearing. A commissioner may opt
509	out of a consolidated hearing and shall provide notice to the
510	applicant of the decision to do so within 10 days of the receipt
511	of the statement. A hearing conducted on a consolidated basis
512	shall be public and shall be held within the United States
513	before the commissioners of the states in which the insurers are
514	domiciled. At such hearing the commissioners shall hear and
515	receive evidence. A commissioner may attend such hearing in
516	person or by telecommunication.
517	(d)  In connection with a change of control of a domestic
518	insurer, any determination by the commissioner that the person
519	acquiring control of the insurer shall be required to maintain
520	or restore the capital of the insurer to the level required by
521	the laws and regulations of this state must be made not later
522	than 60 days after the date of notification of the change in
523	control submitted pursuant to subsection (2).
524	(e)  The commissioner may retain, at the acquiring person's
525	expense, any attorneys, actuaries, accountants, and other
526	experts not otherwise a part of the commissioner's staff as may
527	be reasonably necessary to assist the commissioner in reviewing
528	the proposed acquisition of control.
529	(5)  NONAPPLICABILITY.-The provisions of this section do
530	not apply to:
531	(a)  Any offer, request, invitation, agreement or
532	acquisition which the commissioner, by order or by letter,
533	exempts as not having been made or entered into for the purpose
534	of, and not having the effect of, changing or influencing the
535	control of a domestic insurer.
536	(6)  VIOLATIONS.-The following constitute violations of
537	this section:
538	(a)  The failure to file any statement, amendment, or other
539	material required to be filed pursuant to subsection (2) or
540	subsection (3); or
541	(b)  The effectuation or any attempted effectuation of an
542	acquisition of control of, divestiture of, or merger with a
543	domestic insurer unless the commissioner has given approval.
544	(7)  JURISDICTION; CONSENT TO SERVICE OF PROCESS.-The
545	courts of this state are hereby vested with jurisdiction over
546	every person not resident, domiciled, or authorized to do
547	business in this state who files a statement with the
548	commissioner under this section, and overall actions involving
549	such person arising out of violations of this section. Each such
550	person shall be deemed to have performed acts equivalent to and
551	constituting an appointment by the person of the commissioner to
552	be his true and lawful attorney upon whom may be served all
553	lawful process in any action, suit, or proceeding arising out of
554	violations of this section. Copies of all lawful process shall
555	be served on the commissioner and transmitted by registered or
556	certified mail by the commissioner to the person at his last
557	known address.
558	(8)  COMPETITIVE STANDARD.-
559	(a)  As used in this subsection:
560	1.  The term "insurer" includes any company or group of
561	companies under common management, ownership, or control.
562	2.  The term "market" means the relevant product and
563	geographical markets. In determining the relevant product and
564	geographical markets, the commissioner shall give due
565	consideration to, among other things, the definitions or
566	guidelines, if any, promulgated by the National Association of
567	Insurance Commissioners and to information, if any, submitted by
568	parties to the acquisition. In the absence of sufficient
569	information to the contrary, the relevant product market is
570	assumed to be the direct written insurance premium for a line of
571	business, such line being that used in the annual statement
572	required to be filed by insurers doing business in this state,
573	and the relevant geographical market is assumed to be this
574	state.
575	(b)  The commissioner may enter an order or may send a
576	letter under subsection (9) with respect to an acquisition if
577	there is substantial evidence that the effect of the acquisition
578	may be substantially to lessen competition in any line of
579	insurance in this state or to tend to create a monopoly, or if
580	the insurer fails to file adequate information in compliance
581	with the preacquisition notification required by this section.
582	(c)  In determining whether a proposed acquisition would
583	violate the competitive standard, the commissioner shall
584	consider the following:
585	1.  Any acquisition covered under subsection (11) involving
586	two or more insurers competing in the same market is prima facie
587	evidence of violation of the competitive standards.
588	a.  If the market is highly concentrated and the involved
589	insurers possess the following shares of the market:
590
591	Insurer A     Insurer B
592
593	4%          4% or more
594	10%          2% or more
595	15%          1% or more
596
597	b.  Or, if the market is not highly concentrated and the
598	involved insurers possess the following shares of the market:
599
600	Insurer A     Insurer B
601
602	5%          5% or more
603	10%          4% or more
604	15%          3% or more
605	19%          1% or more
606
607	A highly concentrated market is one in which the share of the
608	four largest insurers is 75 percent or more of the market.
609	Percentages not shown in the tables are interpolated
610	proportionately to the percentages that are shown. If more than
611	two insurers are involved, exceeding the total of the two
612	columns in the table is prima facie evidence of violation of the
613	competitive standard in this subsection. For the purposes of
614	this paragraph, the insurer with the largest share of the market
615	is deemed to be Insurer A.
616	2.  There is a significant trend toward increased
617	concentration when the aggregate market share of any grouping of
618	the largest insurers in the market, from the two largest to the
619	eighth largest, has increased by 7 percent or more of the market
620	over a period of time extending from any base year 5 to 10 years
621	prior to the acquisition up to the time of the acquisition. Any
622	acquisition or merger covered under this section involving two
623	or more insurers competing in the same market is prima facie
624	evidence of violation of the competitive standard in this
625	subsection if:
626	a.  There is a significant trend toward increased
627	concentration in the market;
628	b.  One of the insurers involved is one of the insurers in
629	a grouping of large insurers showing the requisite increase in
630	the market share; and
631	c.  Another involved insurer's market is 2 percent or more.
632	(d)1.  The burden of showing prima facie evidence of
633	violation of the competitive standard rests upon the
634	commissioner.
635	2.  Even though an acquisition is not prima facie evidence
636	of violation of the competitive standard under this subsection,
637	the commissioner may establish the requisite anticompetitive
638	effect based upon other substantial evidence and a party may
639	establish the absence of the requisite anticompetitive effect
640	based upon other substantial evidence. Relevant factors in
641	making a determination under this subsection include, but are
642	not limited to, the following:
643	a.  Market shares.
644	b.  Volatility of ranking of market leaders.
645	c.  Number of competitors.
646	d.  Concentration.
647	e.  Trend of concentration in the industry.
648	f.  Ease of entry into and exit from the market.
649	(e)  An order denying the acquisition may not be entered
650	if:
651	1.  The acquisition will yield substantial economies of
652	scale or economies in resource utilization that cannot be
653	feasibly achieved in any other way, and the public benefits
654	which would arise from such economies exceed the public benefits
655	which would arise from not lessening competition; or
656	2.  The acquisition will substantially increase the
657	availability of insurance, and the public benefits of the
658	increase exceed the public benefits which would arise from not
659	lessening competition.
660	(9)  ORDERS AND PENALTIES.-
661	(a)  If an acquisition violates the standards of this
662	section, the commissioner may enter an order:
663	1.  Requiring an involved insurer to cease and desist from
664	doing business in this state with respect to the line or lines
665	of insurance involved in the violation; or
666	2.  Denying the application of an acquired or acquiring
667	insurer for a license to do business in this state.
668	(b)  Such an order shall not be entered unless:
669	1.  There is a hearing;
670	2.  Notice of the hearing is issued prior to the end of the
671	waiting period and not less than 15 days prior to the hearing;
672	and
673	3.  The hearing is concluded and the order is issued no
674	later than 60 days after the date of the filing of the
675	preacquisition notification with the commissioner. This deadline
676	may be waived by the parties.
677
678	Every order shall be accompanied by a written decision of the
679	commissioner setting forth findings of fact and conclusions of
680	law.
681	(c)  An order pursuant to this section does not apply if
682	the acquisition is not consummated.
683	(d)  Any person who violates a cease and desist order of
684	the commissioner under this section while the order is in effect
685	may, after notice and hearing and upon order of the
686	commissioner, be subject at the discretion of the commissioner
687	to one or more of the following:
688	1.  A monetary penalty of not more than $10,000 for every
689	day of violation; or
690	2.  Suspension or revocation of the person's license.
691	(e)  Any insurer or other person who fails to make any
692	filing required by this section and who also fails to
693	demonstrate a good faith effort to comply with any filing
694	requirement shall be subject to a fine of not more than $50,000.
695	(10)  EXEMPTIONS.-This section does not apply to the
696	following:
697	(a)  A purchase of securities solely for investment
698	purposes so long as the securities are not used by voting or
699	otherwise to cause or attempt to cause the substantial lessening
700	of competition in any insurance market in this state. If a
701	purchase of securities results in a presumption of control it is
702	not solely for investment purposes unless the commissioner of
703	the insurer's state of domicile accepts a disclaimer of control
704	or affirmatively finds that control does not exist and the
705	disclaimer action or affirmative finding is communicated by the
706	domiciliary commissioner to the commissioner of this state.
707	(b)  The acquisition of a person by another person when
708	both persons are neither directly nor through affiliates
709	primarily engaged in the business of insurance, if
710	preacquisition notification is filed with the commissioner in
711	accordance with this section 30 days prior to the proposed
712	effective date of the acquisition. However, such preacquisition
713	notification is not required for exclusion from this section if
714	the acquisition would otherwise be excluded from this section.
715	(c)  The acquisition of already affiliated persons.
716	(d)  An acquisition if, as an immediate result of the
717	acquisition:
718	1.  In no market would the combined market share of the
719	involved insurers exceed 5 percent of the total market;
720	2.  There would be no increase in any market share; or
721	3.  In no market would:
722	a.  The combined market share of the involved insurers
723	exceed 12 percent of the total market; and
724	b.  The market share increase by more than 2 percent of the
725	total market.
726
727	As used in this paragraph, a "market" means direct written
728	insurance premium in this state for a line of business as
729	contained in the annual statement required to be filed by
730	insurers licensed to do business in this state.
731	(e)  An acquisition for which a preacquisition notification
732	would be required pursuant to this section due solely to the
733	resulting effect on the ocean marine insurance line of business.
734	(f)  An acquisition of an insurer whose domiciliary
735	commissioner affirmatively finds that:
736	1.  The insurer is in failing condition;
737	2.  There is a lack of feasible alternative to improving
738	such condition;
739	3.  The public benefits of improving the insurer's
740	condition through the acquisition exceed the public benefits
741	that would arise from not lessening competition; and
742	4.  The findings are communicated by the domiciliary
743	commissioner to the commissioner of this state.
744	(g)  Acquisitions subject to s. 628.4615.
745	(11)  APPROVAL; CONCLUSION OF ACQUISITION; DISAPPROVAL.-The
746	acquisition of voting securities shall be deemed approved unless
747	the office disapproves the proposed acquisition within 90 days
748	after the statement required by subsection (2) has been filed.
749	The office may on its own initiate or, if requested to do so in
750	writing by a substantially affected party, shall conduct a
751	proceeding to consider the appropriateness of the proposed
752	filing. The 90-day time period shall be tolled during the
753	pendency of the proceeding. Any written request for a proceeding
754	must be filed with the office within 10 days of the date on
755	which notice of the filing is given. During the pendency of the
756	proceeding or review period by the office, any person or
757	affiliated person complying with the filing requirements of this
758	section may proceed and take all steps necessary to conclude the
759	acquisition so long as the acquisition becoming final is
760	conditioned upon obtaining office approval. The office shall,
761	however, at any time that it finds an immediate danger to the
762	public health, safety, and welfare of the domestic policyholders
763	exists, immediately order, pursuant to s. 120.569(2)(n), the
764	proposed acquisition temporarily disapproved and any further
765	steps to conclude the acquisition ceased.
766	Section 2.  Section 628.4615, Florida Statutes, is amended
767	to read:
768	628.4615  Specialty insurers; acquisition of controlling
769	stock, ownership interest, assets, or control; merger or
770	consolidation.-
771	(1)  For the purposes of this section, the term "specialty
772	insurer" means any person holding a license or certificate of
773	authority as:
774	(a)  A motor vehicle service agreement company authorized
775	to issue motor vehicle service agreements as those terms are
776	defined in s. 634.011;
777	(b)  A home warranty association authorized to issue "home
778	warranties" as those terms are defined in s. 634.301;
779	(c)  A service warranty association authorized to issue
780	"service warranties" as those terms are defined in s.
781	634.401(13) and (14);
782	(d)  A prepaid limited health service organization
783	authorized to issue prepaid limited health service contracts, as
784	those terms are defined in chapter 636;
785	(e)  An authorized health maintenance organization
786	operating pursuant to s. 641.21;
787	(f)  An authorized prepaid health clinic operating pursuant
788	to s. 641.405;
789	(d)(g)  A legal expense insurance corporation authorized to
790	engage in a legal expense insurance business pursuant to s.
791	642.021;
792	(h)  A provider that is licensed to operate a facility that
793	undertakes to provide continuing care as those terms are defined
794	in s. 651.011;
795	(i)  A multiple-employer welfare arrangement operating
796	pursuant to ss. 624.436-624.446;
797	(e)(j)  A premium finance company authorized to finance
798	insurance premiums pursuant to s. 627.828; or
799	(f)(k)  A corporation authorized to accept donor annuity
800	agreements pursuant to s. 627.481.
801	(2)  A person may not, individually or in conjunction with
802	any affiliated person of such person, directly or indirectly,
803	conclude a tender offer or exchange offer for, enter into any
804	agreement to exchange securities for, or otherwise finally
805	acquire, 10 percent or more of the outstanding voting securities
806	of a specialty insurer which is a stock corporation or of a
807	controlling company of a specialty insurer which is a stock
808	corporation; or conclude an acquisition of, or otherwise finally
809	acquire, 10 percent or more of the ownership interest of a
810	specialty insurer which is not a stock corporation or of a
811	controlling company of a specialty insurer which is not a stock
812	corporation, unless:
813	(a)  the person or affiliated person has filed with the
814	office and sent by registered mail to the principal office of
815	the specialty insurer and controlling company a letter of
816	notification regarding the transaction or proposed transaction
817	no later than 5 days after any form of tender offer or exchange
818	offer is proposed, or no later than 5 days after the acquisition
819	of the securities or ownership interest if no tender offer or
820	exchange offer is involved. The notification must be provided on
821	forms prescribed by the commission containing information
822	determined necessary to understand the transaction and identify
823	all purchasers and owners involved.;
824	(b)  The person or affiliated person has filed with the
825	office an application signed under oath and prepared on forms
826	prescribed by the commission which contains the information
827	specified in subsection (4). The application must be completed
828	and filed within 30 days after any form of tender offer or
829	exchange offer is proposed, or after the acquisition of the
830	securities if no tender offer or exchange offer is involved; and
831	(c)  The office has approved the tender offer or exchange
832	offer, or acquisition if no tender offer or exchange offer is
833	involved.
834	(3)  This section does not apply to any acquisition of
835	voting securities or ownership interest of a specialty insurer
836	or of a controlling company by any person who, on July 9, 1986,
837	is the owner of a majority of such voting securities or
838	ownership interest or who, on or after July 9, 1986, becomes the
839	owner of a majority of such voting securities or ownership
840	interest with the approval of the office under this section. The
841	person or affiliated person filing the required notice in
842	paragraph (2)(a) may request the office to waive the
843	requirements of paragraph (2)(b) if there is no change in the
844	ultimate controlling shareholder or ownership percentages of the
845	ultimate controlling shareholders and no unaffiliated parties
846	acquire any direct or indirect interest in the specialty
847	insurer. The office may waive the filing if it determines that
848	in fact there is no change in the ultimate controlling
849	shareholder or ownership percentages of the ultimate controlling
850	shareholders and no unaffiliated parties will acquire any direct
851	or indirect interest in the specialty insurer.
852	(3)(a)(4)  Within 30 days of the tender offer or exchange
853	offer, the party or affiliated party shall provide to the office
854	the background information for any new officers, directors,
855	trustees, partners, owners, managers, or joint venturers, or
856	other persons performing duties similar to those of persons in
857	such positions, of the specialty insurer as a result of the
858	acquisition The application to be filed with the office and
859	furnished to the specialty insurer and controlling company shall
860	contain the following information and any additional information
861	as the office deems necessary to determine the character,
862	experience, ability, and other qualifications of the specialty
863	insurer's management person or affiliated person of such person
864	for the protection of the insureds of the specialty insurer and
865	of the public. The information as to the background and identity
866	of each such natural person shall include:
867	(a)1.  The identity of, and the background information
868	specified in subsection (5) on, each natural person by whom, or
869	on whose behalf, the acquisition is to be made; and,
870	2.  If the acquisition is to be made by, or on behalf of, a
871	person other than a natural person and as to any person who
872	controls, either directly or indirectly, such other person, the
873	identity of, and the background information specified in
874	subsection (5) on:
875	a.  Each director, officer, or trustee, if a corporation,
876	or
877	b.  Each partner, owner, manager, or joint venturer, or
878	other person performing duties similar to those of persons in
879	the aforementioned positions, if not a corporation,
880
881	for the person.
882	(b)  The source and amount of the funds or other
883	consideration used, or to be used, in making the acquisition.
884	(c)  Any plans or proposals which such persons may have
885	made to liquidate the specialty insurer, to sell any of its
886	assets or merge or consolidate it with any person, or to make
887	any other major change in its business or corporate structure or
888	management; and any plans or proposals which such persons may
889	have made to liquidate any controlling company of the specialty
890	insurer, to sell any of its assets or merge or consolidate it
891	with any person, or to make any other major change in its
892	business or corporate structure or management.
893	(d)  The nature and the extent of the controlling interest
894	which the person or affiliated person of such person proposes to
895	acquire, the terms of the proposed acquisition, and the manner
896	in which the controlling interest is to be acquired of a
897	specialty insurer or controlling company which is not a stock
898	corporation.
899	(e)  The number of shares or other securities which the
900	person or affiliated person of such person proposes to acquire,
901	the terms of the proposed acquisition, and the manner in which
902	the securities are to be acquired.
903	(f)  Information as to any contract, arrangement, or
904	understanding with any party with respect to any of the
905	securities of the specialty insurer or controlling company,
906	including, but not limited to, information relating to the
907	transfer of any of the securities, option arrangements, puts or
908	calls, or the giving or withholding of proxies, which
909	information names the party with whom the contract, arrangement,
910	or understanding has been entered into and gives the details
911	thereof.
912	(5)(a)  The information as to the background and identity
913	of each natural person, which information is required to be
914	furnished pursuant to paragraph (4)(a), shall include:
915	1.  The natural person's occupations, positions of
916	employment, and offices held during the past 10 years.
917	2.  The principal business and address of any business,
918	corporation, or organization in which each such office of the
919	natural person was held, or in which each such occupation or
920	position of employment was carried on.
921	3.  Whether the natural person was, at any time during such
922	10-year period, convicted of any crime other than a traffic
923	violation.
924	4.  Whether the natural person has been, during such 10-
925	year period, the subject of any proceeding for the revocation of
926	any license and, if so, the nature of the proceeding and the
927	disposition of the proceeding.
928	5.  Whether, during the 10-year period, the natural person
929	has been the subject of any proceeding under the federal
930	Bankruptcy Act; or whether, during the 10-year period, any
931	person or other business or organization in which the natural
932	person was a director, officer, trustee, partner, owner,
933	manager, or other official has been subject to any such
934	proceeding, either during the time in which the natural person
935	was a director, officer, or trustee, if a corporation, or a
936	partner, owner, manager, joint venturer, or other official, if
937	not a corporation, or within 12 months thereafter.
938	6.  Whether, during the 10-year period, the natural person
939	has been enjoined, either temporarily or permanently, by a court
940	of competent jurisdiction from violating any federal or state
941	law regulating the business of insurance, securities, or
942	banking, or from carrying out any particular practice or
943	practices in the course of the business of insurance,
944	securities, or banking, together with details as to any such
945	event.
946	7.  Fingerprints of each person referred to in this section
947	subsection (4).
948	(b)  Any person filing the statement required by this
949	section shall give all required information that is within the
950	knowledge of:
951	1.  The directors, officers, or trustees, if a corporation,
952	or
953	2.  The partners, owners, managers, or joint venturers, or
954	others performing functions similar to those of a director,
955	officer, or trustee, if not a corporation,
956
957	of the person making the filing and of any person controlling
958	either directly or indirectly such person. If any material
959	change occurs in the facts set forth in the application filed
960	with the office pursuant to this section, an amendment setting
961	forth such changes shall be filed immediately with the office,
962	and a copy of the amendment shall be sent by registered mail to
963	the principal office of the specialty insurer and to the
964	principal office of the controlling company.
965	(6)(a)  The acquisition application shall be reviewed in
966	accordance with chapter 120. The office may on its own initiate,
967	or, if requested to do so in writing by a substantially affected
968	person, shall conduct, a proceeding to consider the
969	appropriateness of the proposed filing. Time periods for
970	purposes of chapter 120 shall be tolled during the pendency of
971	the proceeding. Any written request for a proceeding must be
972	filed with the office within 10 days of the date notice of the
973	filing is given. During the pendency of the proceeding or review
974	period by the office, any person or affiliated person complying
975	with the filing requirements of this section may proceed and
976	take all steps necessary to conclude the acquisition so long as
977	the acquisition becoming final is conditioned upon obtaining
978	office approval. The office shall, however, at any time it finds
979	an immediate danger to the public health, safety, and welfare of
980	the insureds exists, immediately order, pursuant to s.
981	120.569(2)(n), the proposed acquisition disapproved and any
982	further steps to conclude the acquisition ceased.
983	(b)  During the pendency of the office's review of any
984	acquisition subject to the provisions of this section, the
985	acquiring person shall not make any material change in the
986	operation of the specialty insurer or controlling company unless
987	the office has specifically approved the change nor shall the
988	acquiring person make any material change in the management of
989	the specialty insurer unless advance written notice of the
990	change in management is furnished to the office. A material
991	change in the operation of the specialty insurer is a
992	transaction which disposes of or obligates 5 percent or more of
993	the capital and surplus of the specialty insurer. A material
994	change in the management of the specialty insurer is any change
995	in management involving officers or directors of the specialty
996	insurer or any person of the specialty insurer or controlling
997	company having authority to dispose of or obligate 5 percent or
998	more of the specialty insurer's capital or surplus. The office
999	shall approve a material change in operations if it finds the
1000	applicable provisions of subsection (8) have been met. The
1001	office may disapprove a material change in management if it
1002	finds that the applicable provisions of subsection (8) have not
1003	been met and in such case the specialty insurer shall promptly
1004	change management as acceptable to the office.
1005	(c)  If a request for a proceeding is filed, the proceeding
1006	shall be conducted within 60 days after the date the written
1007	request for a proceeding is received by the office. A
1008	recommended order shall be issued within 20 days of the date of
1009	the close of the proceedings. A final order shall be issued
1010	within 20 days of the date of the recommended order or, if
1011	exceptions to the recommended order are filed, within 20 days of
1012	the date the exceptions are filed.
1013	(7)  The office may disapprove any acquisition subject to
1014	the provisions of this section by any person or any affiliated
1015	person of such person who:
1016	(a)  Willfully violates this section;
1017	(b)  In violation of an order of the office issued pursuant
1018	to subsection (11), fails to divest himself or herself of any
1019	stock or ownership interest obtained in violation of this
1020	section or fails to divest himself or herself of any direct or
1021	indirect control of such stock or ownership interest, within 25
1022	days after such order; or
1023	(c)  In violation of an order issued by the office pursuant
1024	to subsection (11), acquires an additional stock or ownership
1025	interest in a specialty insurer or controlling company or direct
1026	or indirect control of such stock or ownership interest, without
1027	complying with this section.
1028	(8)  The person or persons filing the application required
1029	by subsection (2) shall have the burden of proof. The office
1030	shall approve any such acquisition if it finds, on the basis of
1031	the record made during any proceeding or on the basis of the
1032	filed application if no proceeding is conducted, that:
1033	(a)  Upon completion of the acquisition, the specialty
1034	insurer will be able to satisfy the requirements for the
1035	issuance of a license or certificate to write the line of
1036	insurance for which it is presently licensed or certificated.
1037	(b)  The financial condition of the acquiring person or
1038	persons will not jeopardize the financial stability of the
1039	specialty insurer or prejudice the interests of its insureds or
1040	the public.
1041	(c)  Any plan or proposal which the acquiring person has,
1042	or acquiring persons have, made:
1043	1.  To liquidate the specialty insurer, sell its assets, or
1044	merge or consolidate it with any person, or to make any other
1045	major change in its business or corporate structure or
1046	management, or
1047	2.  To liquidate any controlling company, sell its assets,
1048	or merge or consolidate it with any person, or to make any major
1049	change in its business or corporate structure or management
1050	which would have an effect upon the specialty insurer,
1051
1052	is fair and free of prejudice to the insureds of the specialty
1053	insurer or to the public.
1054	(d)  The competence, experience, and integrity of those
1055	persons who will control directly or indirectly the operation of
1056	the specialty insurer indicate that the acquisition is in the
1057	best interest of the insureds of the insurer and in the public
1058	interest.
1059	(e)  The natural persons for whom background information is
1060	required to be furnished pursuant to this section have such
1061	backgrounds as to indicate that it is in the best interests of
1062	the insureds of the specialty insurer and in the public interest
1063	to permit such persons to exercise control over the specialty
1064	insurer.
1065	(f)  The directors and officers, if such specialty insurer
1066	or controlling company is a stock corporation, or the trustees,
1067	partners, owners, managers, or joint venturers or other persons
1068	performing duties similar to those of persons in the
1069	aforementioned positions, if such specialty insurer or
1070	controlling company is not a stock corporation, to be employed
1071	after the acquisition have sufficient insurance experience and
1072	ability to assure reasonable promise of successful operation.
1073	(g)  The management of the specialty insurer after the
1074	acquisition will be competent and trustworthy, and will possess
1075	sufficient managerial experience so as to make the proposed
1076	operation of the specialty insurer not hazardous to the
1077	insurance-buying public.
1078	(h)  The management of the specialty insurer after the
1079	acquisition shall not include any person who has directly or
1080	indirectly through ownership, control, reinsurance transactions,
1081	or other insurance or business relations unlawfully manipulated
1082	the assets, accounts, finances, or books of any insurer or
1083	otherwise acted in bad faith with respect thereto.
1084	(i)  The acquisition is not likely to be hazardous or
1085	prejudicial to the insureds of the insurer or to the public.
1086	(j)  The effect of the acquisition would not substantially
1087	lessen competition in the line of insurance for which the
1088	specialty insurer is licensed or certified in this state or
1089	would not tend to create a monopoly therein.
1090	(9)  No vote by the stockholder of record, or by any other
1091	person, of any security acquired in contravention of the
1092	provisions of this section is valid. Any acquisition contrary to
1093	the provisions of this section is void. Upon the petition of the
1094	specialty insurer or the controlling company, the circuit court
1095	for the county in which the principal office of the specialty
1096	insurer is located may, without limiting the generality of its
1097	authority, order the issuance or entry of an injunction or other
1098	order to enforce the provisions of this section. There shall be
1099	a private right of action in favor of the specialty insurer or
1100	controlling company to enforce the provisions of this section.
1101	No demand upon the office that it perform its functions shall be
1102	required as a prerequisite to any suit by the specialty insurer
1103	or controlling company against any other person, and in no case
1104	shall the office be deemed a necessary party to any action by
1105	the specialty insurer or controlling company to enforce the
1106	provisions of this section. Any person who makes or proposes an
1107	acquisition requiring the filing of an application pursuant to
1108	this section, or who files such an application, shall be deemed
1109	to have thereby designated the Chief Financial Officer, or his
1110	or her assistant or deputy or another person in charge of his or
1111	her office, as such person's agent for service of process under
1112	this section and shall thereby be deemed to have submitted
1113	himself or herself to the administrative jurisdiction of the
1114	office and to the jurisdiction of the circuit court.
1115	(10)  Any approval by the office under this section does
1116	not constitute a recommendation by the office of the tender
1117	offer or exchange offer, or acquisition, if no tender offer or
1118	exchange offer is involved. It is unlawful for a person to
1119	represent that the office's approval constitutes a
1120	recommendation. A person who violates the provisions of this
1121	subsection commits a felony of the third degree, punishable as
1122	provided in s. 775.082, s. 775.083, or s. 775.084. The statute-
1123	of-limitations period for the prosecution of an offense
1124	committed under this subsection is 5 years.
1125	(4)(11)  If the office determines that any person or any
1126	affiliated person of such person has acquired 10 percent or more
1127	of the outstanding voting securities of a specialty insurer or
1128	controlling company which is a stock corporation, or 10 percent
1129	or more of the ownership interest of a specialty insurer or
1130	controlling company which is not a stock corporation, without
1131	complying with the provisions of this section, the office may
1132	order that the person and any affiliated person of such person
1133	cease acquisition of the specialty insurer or controlling
1134	company and, if appropriate, divest itself of any stock or
1135	ownership interest acquired in violation of this section.
1136	(5)(12)(a)  The office shall, if necessary to protect the
1137	public interest, suspend or revoke the certificate of authority
1138	of any specialty insurer or controlling company acquired in
1139	violation of this section.
1140	(b)  If any specialty insurer is subject to suspension or
1141	revocation pursuant to this section paragraph (a), the specialty
1142	insurer shall be deemed to be in such condition, or to be using
1143	or to have been subject to such methods or practices in the
1144	conduct of its business, as to render its further transaction of
1145	insurance presently or prospectively hazardous to its insureds,
1146	creditors, or stockholders or to the public.
1147	(6)(13)(a)  For the purpose of this section, the term
1148	"acquisition" includes:
1149	1.  A tender offer or exchange offer for securities,
1150	assets, or other ownership interest;
1151	2.  An agreement to exchange securities for other
1152	securities, assets, or other ownership interest;
1153	3.  A merger of a person or affiliated person into a
1154	specialty insurer or a merger of any person with a specialty
1155	insurer;
1156	4.  A consolidation; or
1157	5.  Any other form of change of control
1158
1159	whereby any person or affiliated person acquires or attempts to
1160	acquire, directly or indirectly, 10 percent or more of the
1161	ownership interest or assets of a specialty insurer or of a
1162	controlling company. However, in the case of a health
1163	maintenance organization organized as a for-profit corporation,
1164	the provisions of s. 628.451 shall govern with respect to any
1165	merger or consolidation, and, in the case of a health
1166	maintenance organization organized as a not-for-profit
1167	corporation, the provisions of s. 628.471 shall govern with
1168	respect to any merger or consolidation.
1169	(b)  For the purpose of this section, the term "affiliated
1170	person" of another person includes:
1171	1.  The spouse of such other natural person;
1172	2.  The parents of such other natural person and their
1173	lineal descendants and the parents of such other natural
1174	person's spouse and their lineal descendants;
1175	3.  Any person who directly or indirectly owns or controls,
1176	or holds with power to vote, 10 percent or more of the
1177	outstanding voting securities of such other person;
1178	4.  Any person who directly or indirectly owns 10 percent
1179	or more of the outstanding voting securities which are directly
1180	or indirectly owned or controlled, or held with power to vote,
1181	by such other person;
1182	5.  Any person or group of persons who directly or
1183	indirectly control, are controlled by, or are under common
1184	control with such other person;
1185	6.  Any director, officer, trustee, partner, owner,
1186	manager, joint venturer, or employee, or other person performing
1187	duties similar to those of persons in the aforementioned
1188	positions, of such other person;
1189	7.  If such other person is an investment company, any
1190	investment adviser of such company or any member of an advisory
1191	board of such company;
1192	8.  If such other person is an unincorporated investment
1193	company not having a board of directors, the depositor of such
1194	company; or
1195	9.  Any person who has entered into an agreement, written
1196	or unwritten, to act in concert with such other person in
1197	acquiring, or limiting the disposition of, securities of a
1198	specialty insurer or controlling company which is a stock
1199	corporation or in acquiring, or limiting the disposition of, an
1200	ownership interest of a specialty insurer or controlling company
1201	which is not a stock corporation.
1202	(c)  For the purposes of this section, the term
1203	"controlling company" means any corporation, trust, or
1204	association owning, directly or indirectly, 25 percent or more
1205	of the voting securities of one or more specialty insurance
1206	companies which are stock corporations, or 25 percent or more of
1207	the ownership interest of one or more specialty insurance
1208	companies which are not stock corporations.
1209	(d)  For the purpose of this section, the term "natural
1210	person" means an individual.
1211	(e)  For the purpose of this section, the term "person"
1212	includes a natural person, corporation, association, trust,
1213	general partnership, limited partnership, joint venture, firm,
1214	proprietorship, or any other entity which may hold a license or
1215	certificate as a specialty insurer.
1216	(7)(14)  The commission may adopt, amend, or repeal rules
1217	that are necessary to implement the provisions of this section,
1218	pursuant to chapter 120.
1219	Section 3.  Section 628.800, Florida Statutes, is created
1220	to read:
1221	628.800  Definitions.-As used in this part, unless the
1222	context otherwise requires:
1223	(1)  "Affiliate" means a person that, directly or
1224	indirectly, through one or more intermediaries, controls or is
1225	controlled by, or is under common control with, the person
1226	specified.
1227	(2)  "Control" means the possession, whether direct or
1228	indirect, of the power to direct or cause the direction of the
1229	management and policies of a person, whether through the
1230	ownership of voting securities, by contract other than a
1231	commercial contract for goods or nonmanagement services, or
1232	otherwise, unless the power is the result of an official
1233	position with, or corporate office held by, the person. Control
1234	shall be presumed to exist if any person, directly or
1235	indirectly, owns, controls, holds with the power to vote, or
1236	holds proxies representing 10 percent or more of the voting
1237	securities of any other person. To disclaim control or
1238	affiliation, any person may file with the commissioner a
1239	disclaimer of control or affiliation with any authorized
1240	insurer, or a disclaimer of control or affiliation may be filed
1241	by the insurer or any member of an insurance holding company
1242	system. The disclaimer shall fully disclose all material
1243	relationships and bases for control or affiliation between the
1244	person and the insurer, as well as the basis for disclaiming the
1245	control or affiliation. A disclaimer of control or affiliation
1246	shall be deemed to have been granted unless the commissioner,
1247	within 30 days following receipt of a complete disclaimer,
1248	notifies the filing party that the disclaimer is disallowed. In
1249	the event of disallowance, the disclaiming party may request an
1250	administrative hearing, which shall be granted. The disclaiming
1251	party shall be relieved of its duty to register under this
1252	section if approval of the disclaimer has been granted by the
1253	commissioner or if the disclaimer is deemed to have been
1254	approved. The commissioner may determine, after furnishing all
1255	persons in interest notice and opportunity to be heard and
1256	making specific findings of fact to support such determination,
1257	that control exists in fact, notwithstanding the absence of a
1258	presumption to that effect.
1259	(3)  "Insurance holding company system" consists of two or
1260	more affiliated persons, one or more of which is an insurer.
1261	(4)  "Insurer" has the same meaning as set forth in s.
1262	624.03, except that it shall not include:
1263	(a)  Agencies, authorities, or instrumentalities of the
1264	United States, its possessions and territories, the Commonwealth
1265	of Puerto Rico, the District of Columbia, or a state or
1266	political subdivision of a state;
1267	(b)  Fraternal benefit societies;
1268	(c)  Nonprofit medical and hospital service associations;
1269	or
1270	(d)  Business trusts.
1271	(5)  "Commissioner" means the Commissioner of Insurance
1272	Regulation as designated under ss. 20.121 and 624.05, his or her
1273	deputies and assistants, or the Office of Insurance Regulation,
1274	as appropriate.
1275	(6)  "Person" means an individual, a corporation, a
1276	partnership, an association, a business trust, an insurer, a
1277	company, an organization, Lloyds insurer, a society, a
1278	reciprocal insurer or interinsurance exchange, a syndicate, an
1279	agent, a general agent, a broker, a solicitor, a service
1280	representative, an adjuster, every legal entity, a joint stock
1281	company, an unincorporated organization, or any similar entity
1282	or combination acting in concert, but does not include any
1283	securities broker performing no more than the usual and
1284	customary broker's function.
1285	(7)  "Securityholder" of a specified person means one who
1286	owns any security of such person, including common stock,
1287	preferred stock, debt obligation, and any other security
1288	convertible into or evidencing the right to acquire any of the
1289	foregoing.
1290	(8)  "Subsidiary" of a specified person means an affiliate
1291	controlled by such person, directly or indirectly, through one
1292	or more intermediaries.
1293	(9)  "Voting security" means any security convertible into
1294	or evidencing a right to acquire a voting security.
1295	Section 4.  Section 628.801, Florida Statutes, is amended
1296	to read:
1297	(Substantial rewording of section. See s. 628.801, F.S.,
1298	for present text.)
1299	628.801  Insurance holding companies; registration;
1300	regulation.-
1301	(1)  REGISTRATION.-Every insurer authorized to do business
1302	in this state that is a member of an insurance holding company
1303	system must register with the commissioner, except a foreign
1304	insurer subject to registration requirements and standards
1305	adopted by statute or regulation in the jurisdiction of its
1306	domicile which are substantially similar to those contained
1307	chapter 624.
1308	(a)  Each registered insurer shall keep current the
1309	information required to be disclosed in its registration
1310	statement by reporting all material changes or additions within
1311	15 days after the end of the month in which it learns of each
1312	change or addition. Any insurer that is subject to registration
1313	under this section shall register within 15 days after it
1314	becomes subject to registration, and annually thereafter by June
1315	1 of each year for the previous calendar year, unless the
1316	commissioner for good cause shown extends the time for
1317	registration, in which case the insurer shall register within
1318	the extended registration period. The commissioner may require
1319	any insurer authorized to do business in the state that is a
1320	member of an insurance holding company system and that is not
1321	subject to registration under this section to furnish a copy of
1322	the registration statement, the report specified in subsection
1323	(9), or other information filed by the insurance company with
1324	the insurance regulatory authority of its domiciliary
1325	jurisdiction.
1326	(b)  Every insurer subject to registration shall file the
1327	registration statement with the commissioner on a form and in a
1328	format prescribed by the National Association of Insurance
1329	Commissioners, which shall contain the following current
1330	information:
1331	1.  The capital structure, general financial condition,
1332	ownership, and management of the insurer and any person
1333	controlling the insurer.
1334	2.  The identity and relationship of every member of the
1335	insurance holding company system.
1336	3.  The following agreements in force and transactions
1337	currently outstanding or that have occurred during the last
1338	calendar year between the insurer and its affiliates:
1339	a.  Loans, other investments, or purchases, sales, or
1340	exchanges of securities of the affiliates by the insurer or of
1341	the insurer by its affiliates.
1342	b.  Purchases, sales, or exchange of assets.
1343	c.  Transactions not in the ordinary course of business.
1344	d.  Guarantees or undertakings for the benefit of an
1345	affiliate which result in an actual contingent exposure of the
1346	insurer's assets to liability, other than insurance contracts
1347	entered into in the ordinary course of the insurer's business.
1348	e.  All management agreements, service contracts, and all
1349	cost-sharing arrangements.
1350	f.  Reinsurance agreements.
1351	g.  Dividends and other distributions to shareholders.
1352	h.  Consolidated tax allocation agreements.
1353	4.  Any pledge of the insurer's stock, including stock of
1354	any subsidiary or controlling affiliate, for a loan made to any
1355	member of the insurance holding company system.
1356	5.  If requested by the commissioner, financial statements
1357	of or within an insurance holding company system, including all
1358	affiliates. Financial statements may include, but are not
1359	limited to, annual audited financial statements filed with the
1360	United States Securities and Exchange Commission pursuant to the
1361	Securities Act of 1933, as amended, or the Securities Exchange
1362	Act of 1934, as amended. An insurer required to file financial
1363	statements pursuant to this paragraph may satisfy the request by
1364	providing the commissioner with the most recently filed parent
1365	corporation financial statements that have been filed with the
1366	United States Securities and Exchange Commission.
1367	6.  Other matters concerning transactions between
1368	registered insurers and any affiliates as may be included from
1369	time to time in any registration forms adopted or approved by
1370	the commissioner.
1371	7.  Statements attesting that the insurer's board of
1372	directors oversees corporate governance and internal controls
1373	and that the insurer's officers or senior management have
1374	approved, implemented, and continue to maintain and monitor
1375	corporate governance and internal control procedures.
1376	8.  Any other information required by the commissioner by
1377	rule or regulation.
1378	(c)  All registration statements must contain a summary
1379	outlining all items in the current registration statement
1380	representing changes from the prior registration statement.
1381	(d)  Information need not be disclosed on the registration
1382	statement filed pursuant to this section that is not material
1383	for the purposes of this section. Unless the commissioner by
1384	rule, regulation, or order provides otherwise, sales, purchases,
1385	exchanges, loans, or extensions of credit, investments, or
1386	guarantees involving .5 percent or less of an insurer's admitted
1387	assets as of the 31st day of December next preceding shall not
1388	be deemed material for purposes of this section.
1389	(2)  REPORTING OF DIVIDENDS TO SHAREHOLDERS.-Subject to the
1390	requirements of this section, each registered insurer shall
1391	report to the commissioner all dividends and other distributions
1392	to shareholders within 15 business days following the
1393	declaration thereof.
1394	(3)  INFORMATION OF INSURERS.-Any person within an
1395	insurance holding company system subject to registration shall
1396	be required to provide complete and accurate information to an
1397	insurer, where the information is reasonably necessary to enable
1398	the insurer to comply with the provisions of this section.
1399	(4)  TERMINATION OF REGISTRATION.-The commissioner shall
1400	terminate the registration of any insurer that demonstrates that
1401	it no longer is a member of an insurance holding company system.
1402	(5)  CONSOLIDATED FILING.-The commissioner may require or
1403	allow two or more affiliated insurers subject to registration to
1404	file a consolidated registration statement.
1405	(6)  ALTERNATIVE REGISTRATION.-The commissioner may allow
1406	an insurer authorized to do business in this state and that is
1407	part of an insurance holding company system to register on
1408	behalf of any affiliated insurer required to register under this
1409	section and to file all information and material required to be
1410	filed under this section.
1411	(7)  EXEMPTIONS.-This section does not apply to any
1412	insurer, information, or transaction if, and to the extent that,
1413	the commissioner by rule, regulation, or order exempts the
1414	insurer, information, or transaction from the provisions of this
1415	section.
1416	(8)  DISCLAIMER.-Any person may file with the commissioner
1417	a disclaimer of affiliation with any authorized insurer, or a
1418	disclaimer may be filed by the insurer or any member of an
1419	insurance holding company system. The disclaimer shall fully
1420	disclose all material relationships and bases for affiliation
1421	between the person and the insurer as well as the basis for
1422	disclaiming the affiliation. A disclaimer of affiliation shall
1423	be deemed to have been granted unless the commissioner, within
1424	30 days following receipt of a complete disclaimer, notifies the
1425	filing party that the disclaimer is disallowed. In the event of
1426	disallowance, the disclaiming party may request an
1427	administrative hearing, which shall be granted. The disclaiming
1428	party shall be relieved of its duty to register under this
1429	section if approval of the disclaimer has been granted by the
1430	commissioner or if the disclaimer is deemed to have been
1431	approved.
1432	(9)  ENTERPRISE RISK FILING.-The ultimate controlling
1433	person of every insurer subject to registration shall also file
1434	an annual enterprise risk report. The report shall, to the best
1435	of the ultimate controlling person's knowledge and belief,
1436	identify the material risks within the insurance holding company
1437	system that could pose enterprise risk to the insurer. The
1438	report shall be filed with the lead state commissioner of the
1439	insurance holding company system as determined by the procedures
1440	within the Financial Analysis Handbook adopted by the National
1441	Association of Insurance Commissioners.
1442	(10)  VIOLATIONS.-Failure to file a registration statement
1443	or any summary of the registration statement or enterprise risk
1444	filing required by this section within the time specified for
1445	filing constitutes a violation of this section.
1446	Section 5.  Section 628.8011, Florida Statues, is created
1447	to read:
1448	628.8011  Standards and management of an insurer within an
1449	insurance holding company system.-
1450	(1)  STANDARDS.-Transactions within an insurance holding
1451	company system to which an insurer subject to registration is a
1452	party shall be subject to the following standards:
1453	(a)  The terms shall be fair and reasonable.
1454	(b)  Agreements for cost-sharing services and management
1455	shall include such provisions as required by rule and regulation
1456	issued by the commissioner.
1457	(c)  Charges or fees for services performed shall be
1458	reasonable.
1459	(d)  Contracts or agreements with affiliates for the
1460	management or servicing of the business written by an insurer
1461	shall contain provisions providing that, if the combined ratio
1462	for the insurer exceeds 100 percent, then the fees paid to any
1463	affiliates for such services shall be decreased to bring the
1464	combined ratio down to 100 percent.
1465	(e)  Expenses incurred and payment received shall be
1466	allocated to the insurer in conformity with customary insurance
1467	accounting practices consistently applied.
1468	(f)  The books, accounts, and records of each party to all
1469	such transactions shall be so maintained as to clearly and
1470	accurately disclose the nature and details of the transactions,
1471	including such accounting information as is necessary to support
1472	the reasonableness of the charges or fees to the respective
1473	parties.
1474	(g)  The insurer's surplus as regards policyholders
1475	following any dividends or distributions to shareholder
1476	affiliates shall be reasonable in relation to the insurer's
1477	outstanding liabilities and adequate to meet its financial
1478	needs.
1479	(2)  PRECLUDED TRANSACTIONS.-The following transactions
1480	involving a domestic insurer and any person in its insurance
1481	holding company system, including amendments or modifications of
1482	affiliate agreements previously filed pursuant to this section,
1483	that are subject to any materiality standards contained in
1484	subsection (1), may not be entered into unless the insurer has
1485	notified the commissioner in writing of its intention to enter
1486	into the transaction at least 30 days prior thereto, or such
1487	shorter period as the commissioner may permit, and the
1488	commissioner has not disapproved the transaction within that
1489	period. The notice for amendments or modifications shall include
1490	the reasons for the change and the financial impact on the
1491	domestic insurer. Informal notice shall be reported, within 30
1492	days after a termination of a previously filed agreement, to the
1493	commissioner for determination of the type of filing required,
1494	if any.
1495	(a)  Sales, purchases, exchanges, loans, extensions of
1496	credit, or investments, provided the transactions are equal to
1497	or exceed:
1498	1.  With respect to nonlife insurers, the lesser of 3
1499	percent of the insurer's admitted assets or 25 percent of
1500	surplus as regards policyholders as of the 31st day of December
1501	next preceding.
1502	2.  With respect to life insurers, 3 percent of the
1503	insurer's admitted assets as of the 31st day of December next
1504	preceding.
1505	(b)  Loans or extensions of credit to any person who is not
1506	an affiliate, where the insurer makes loans or extensions of
1507	credit with the agreement or understanding that the proceeds of
1508	the transactions, in whole or in substantial part, are to be
1509	used to make loans or extensions of credit to, purchase assets
1510	of, or make investments in any affiliate of the insurer making
1511	the loans or extensions of credit, provided the transactions are
1512	equal to or exceed:
1513	1.  With respect to nonlife insurers, the lesser of 3
1514	percent of the insurer's admitted assets or 25 percent of
1515	surplus as regards policyholders as of the 31st day of December
1516	next preceding; or
1517	2.  With respect to life insurers, 3 percent of the
1518	insurer's admitted assets as of the 31st day of December next
1519	preceding.
1520	(c)  Reinsurance agreements or modifications thereto,
1521	including:
1522	1.  All reinsurance pooling agreements.
1523	2.  Agreements in which the reinsurance premium or a change
1524	in the insurer's liabilities, or the projected reinsurance
1525	premium or a change in the insurer's liabilities in any of the
1526	next 3 years, equals or exceeds 5 percent of the insurer's
1527	surplus as regards policyholders, as of the 31st day of December
1528	next preceding, including those agreements which may require as
1529	consideration the transfer of assets from an insurer to a
1530	nonaffiliate, if an agreement or understanding exists between
1531	the insurer and nonaffiliate that any portion of the assets will
1532	be transferred to one or more affiliates of the insurer.
1533	(d)  All management agreements, service contracts, tax
1534	allocation agreements, guarantees, and all cost-sharing
1535	arrangements.
1536	(e)  Guarantees when made by a domestic insurer. Provided,
1537	however, that a guarantee which is quantifiable as to amount is
1538	not subject to the notice requirements of this paragraph unless
1539	it exceeds the lesser of .5 percent of the insurer's admitted
1540	assets or 10 percent of surplus as regards policyholders as of
1541	the 31st day of December next preceding. Further, all guarantees
1542	which are not quantifiable as to amount are subject to the
1543	notice requirements of this paragraph.
1544	(f)  Direct or indirect acquisitions or investments in a
1545	person that controls the insurer or in an affiliate of the
1546	insurer in an amount which, together with its present holdings
1547	in such investments, exceeds 2.5 percent of the insurer's
1548	surplus to policyholders. Direct or indirect acquisitions or
1549	investments in subsidiaries acquired pursuant to s. 628.461, or
1550	in nonsubsidiary insurance affiliates that are subject to the
1551	provisions of this part, are exempt from this requirement.
1552	(g)  Any material transactions, specified by regulation,
1553	which the commissioner determines may adversely affect the
1554	interests of the insurer's policyholders.
1555
1556	Nothing in this subsection shall be deemed to authorize or
1557	permit any transactions which, in the case of an insurer that is
1558	not a member of the same insurance holding company system, would
1559	otherwise be contrary to law.
1560	(3)  ADDITIONAL PRECLUDED TRANSACTION.-A domestic insurer
1561	may not enter into transactions that are part of a plan or
1562	series of like transactions with persons within the insurance
1563	holding company system if the purpose of those separate
1564	transactions is to avoid the statutory threshold amount and thus
1565	avoid the review that would occur otherwise. If the commissioner
1566	determines that separate transactions were entered into over any
1567	12-month period for that purpose, the commissioner may exercise
1568	his or her authority under the Insurance Code or s. 628.803.
1569	(4)  REVIEW OF TRANSACTIONS.-The commissioner, in reviewing
1570	transactions pursuant to this section, shall consider whether
1571	the transactions comply with the standards set forth in this
1572	section and whether they may adversely affect the interests of
1573	policyholders.
1574	(5)  NOTIFICAITON.-The commissioner shall be notified
1575	within 30 days of any investment of the domestic insurer in any
1576	one corporation if the total investment in the corporation by
1577	the insurance holding company system exceeds 10 percent of the
1578	corporation's voting securities.
1579	(6)  DIVIDENDS AND OTHER DISTRIBUTIONS.-
1580	(a)  No domestic insurer shall pay any extraordinary
1581	dividend or make any other extraordinary distribution to its
1582	shareholders until 30 days after the commissioner has received
1583	notice of the declaration thereof and has not within that period
1584	disapproved the payment, or until the commissioner has approved
1585	the payment within the 30-day period.
1586	(b)  For purposes of this section, an extraordinary
1587	dividend or distribution includes any dividend or distribution
1588	of cash or other property, whose fair market value together with
1589	that of other dividends or distributions made within the
1590	preceding 12 months exceeds the lesser of:
1591	1.  Ten percent of the insurer's surplus as regards
1592	policyholders as of the 31st day of December next preceding; or
1593	2.  The net gain after taxes from operations of the
1594	insurer, if the insurer is a life insurer, or the net income
1595	after taxes, if the insurer is not a life insurer, not including
1596	realized capital gains, for the 12-month period ending the 31st
1597	day of December next preceding, excluding pro rata distributions
1598	of any class of the insurer's own securities.
1599	(c)  In determining whether a dividend or distribution is
1600	extraordinary, an insurer other than a life insurer may carry
1601	forward net income from the previous 2 calendar years that has
1602	not already been paid out as dividends. This carryforward shall
1603	be computed by taking the net income from the second and third
1604	preceding calendar years, not including realized capital gains,
1605	less dividends paid in the second and immediate preceding
1606	calendar years.
1607	(d)  Notwithstanding any other provision of law, an insurer
1608	may declare an extraordinary dividend or distribution which is
1609	conditional upon the commissioner's approval, and the
1610	declaration shall confer no rights upon shareholders until:
1611	1.  The commissioner has approved the payment of the
1612	dividend or distribution; or
1613	2.  The commissioner has not disapproved payment within the
1614	30-day period provided for in this subsection.
1615	(7)  MANAGEMENT OF DOMESTIC INSURERS SUBJECT TO
1616	REGISTRATION.-
1617	(a)  Notwithstanding the control of a domestic insurer by
1618	any person, the officers and directors of the insurer may not
1619	thereby be relieved of any obligation or liability to which they
1620	would otherwise be subject by law, and the insurer shall be
1621	managed so as to assure its separate operating identity
1622	consistent with this section.
1623	(b)  Nothing in this section shall preclude a domestic
1624	insurer from having or sharing a common management or
1625	cooperative or joint use of personnel, property, or services
1626	with one or more other persons under arrangements meeting the
1627	standards of this section.
1628	(c)  Not less than one-third of the directors of a domestic
1629	insurer and not less than one-third of the members of each
1630	committee of the board of directors of any domestic insurer
1631	shall be persons who are not officers or employees of the
1632	insurer or of any entity controlling, controlled by, or under
1633	common control with the insurer and who are not beneficial
1634	owners of a controlling interest in the voting stock of the
1635	insurer or entity. At least one such person must be included in
1636	any quorum for the transaction of business at any meeting of the
1637	board of directors or any committee thereof.
1638	(d)  The board of directors of a domestic insurer shall
1639	establish one or more committees comprised solely of directors
1640	who are not officers or employees of the insurer or of any
1641	entity controlling, controlled by, or under common control with
1642	the insurer and who are not beneficial owners of a controlling
1643	interest in the voting stock of the insurer or any such entity.
1644	The committee or committees shall have responsibility for
1645	nominating candidates for director for election by shareholders
1646	or policyholders, evaluating the performance of officers deemed
1647	to be principal officers of the insurer, and recommending to the
1648	board of directors the selection and compensation of the
1649	principal officers.
1650	(e)  The provisions of paragraphs (c) and (d) do not apply
1651	to a domestic insurer if the person controlling the insurer,
1652	such as an insurer, a mutual insurance holding company, or a
1653	publicly held corporation, has a board of directors and
1654	committees thereof that meet the requirements of paragraphs (c)
1655	and (d) with respect to such controlling entity.
1656	(f)  An insurer may make application to the commissioner
1657	for a waiver from the requirements of this subsection, if the
1658	insurer's annual direct written and assumed premium, excluding
1659	premiums reinsured with the Federal Crop Insurance Corporation
1660	and the federal flood insurance program, is less than $300
1661	million. An insurer may also make application to the
1662	commissioner for a waiver from the requirements of this
1663	subsection based on unique circumstances. The commissioner may
1664	consider various factors including, but not limited to, the type
1665	of business entity, volume of business written, availability of
1666	qualified board members, or the ownership or organizational
1667	structure of the entity.
1668	(8)  ADEQUACY OF SURPLUS.-For purposes of this section, in
1669	determining whether an insurer's surplus as regards
1670	policyholders is reasonable in relation to the insurer's
1671	outstanding liabilities and adequate to meet its financial
1672	needs, the following factors, among others, shall be considered:
1673	(a)  The size of the insurer as measured by its assets,
1674	capital and surplus, reserves, premium writings, insurance in
1675	force, and other appropriate criteria.
1676	(b)  The extent to which the insurer's business is
1677	diversified among several lines of insurance.
1678	(c)  The number and size of risks insured in each line of
1679	business.
1680	(d)  The extent of the geographical dispersion of the
1681	insurer's insured risks.
1682	(e)  The nature and extent of the insurer's reinsurance
1683	program.
1684	(f)  The quality, diversification, and liquidity of the
1685	insurer's investment portfolio.
1686	(g)  The recent past and projected future trend in the size
1687	of the insurer's investment portfolio.
1688	(h)  The surplus as regards policyholders maintained by
1689	other comparable insurers.
1690	(i)  The adequacy of the insurer's reserves.
1691	(j)  The quality and liquidity of investments in
1692	affiliates. The commissioner may treat any such investment as a
1693	disallowed asset for purposes of determining the adequacy of
1694	surplus as regards policyholders whenever in the judgment of the
1695	commissioner the investment so warrants.
1696	Section 6.  Section 628.8012, Florida Statutes, is created
1697	to read:
1698	628.8012  Supervisory colleges.-
1699	(1)  POWER OF COMMISSIONER.-With respect to any insurer
1700	registered under this part and in accordance with subsection
1701	(3), the commissioner shall have the power to participate in a
1702	supervisory college for any domestic insurer that is part of an
1703	insurance holding company system with international operations
1704	in order to determine compliance by the insurer with this part.
1705	The powers of the commissioner with respect to supervisory
1706	colleges include, but are not limited to, the following:
1707	(a)  Initiating the establishment of a supervisory college.
1708	(b)  Clarifying the membership and participation of other
1709	supervisors in the supervisory college.
1710	(c)  Clarifying the functions of the supervisory college
1711	and the role of other regulators, including the establishment of
1712	a group-wide supervisor.
1713	(d)  Coordinating the ongoing activities of the supervisory
1714	college, including planning meetings, supervisory activities,
1715	and processes for information sharing.
1716	(e)  Establishing a crisis management plan.
1717	(2)  EXPENSES.-Each registered insurer subject to this
1718	section shall be liable for and shall pay the reasonable
1719	expenses of the commissioner's participation in a supervisory
1720	college in accordance with subsection (3), including reasonable
1721	travel expenses. For purposes of this section, a supervisory
1722	college may be convened as either a temporary or permanent forum
1723	for communication and cooperation between the regulators charged
1724	with the supervision of the insurer or its affiliates, and the
1725	commissioner may establish a regular assessment to the insurer
1726	for the payment of these expenses.
1727	(3)  SUPERVISORY COLLEGE.-In order to assess the business
1728	strategy, financial position, legal and regulatory position,
1729	risk exposure, risk management, and governance processes, and as
1730	part of the examination of individual insurers, the commissioner
1731	may participate in a supervisory college with other regulators
1732	charged with supervision of the insurer or its affiliates,
1733	including other state, federal, and international regulatory
1734	agencies. The commissioner may enter into agreements in
1735	accordance with this chapter, providing the basis for
1736	cooperation between the commissioner, other regulatory agencies,
1737	and the supervisory college. Nothing in this section shall
1738	delegate to the supervisory college the authority of the
1739	commissioner to regulate or supervise the insurer or its
1740	affiliates within its jurisdiction.
1741	Section 7.  Section 628.8013, Florida Statutes, is created
1742	to read:
1743	628.8013  Rules and regulations.-The commissioner may, upon
1744	notice and opportunity for all interested persons to be heard,
1745	issue such rules, regulations, and orders necessary to carry out
1746	the provisions of this part.
1747	Section 8.  Section 628.8014, Florida Statutes, is created
1748	to read:
1749	628.8014  Voting of securities.-A security which is the
1750	subject of any agreement or arrangement regarding acquisition,
1751	or which is acquired or to be acquired, in contravention of any
1752	statute or rule adopted thereunder, may not be voted at any
1753	shareholder's meeting or counted for quorum purposes, and any
1754	action of shareholders requiring the affirmative vote of a
1755	percentage of shares may be taken as though such securities were
1756	not issued and outstanding. However, an action taken at any such
1757	meeting may not be invalidated by the voting of such securities
1758	unless the action would materially affect the control of the
1759	insurer or unless a court of competent jurisdiction has so
1760	ordered. If the office has reason to believe that any security
1761	of the insurer has been or is about to be acquired in
1762	contravention of s. 628.461, or this chapter, the office may
1763	pursue its remedies pursuant to ss. 628.802 and 628.803.
1764	Section 9.  Section 628.802, Florida Statutes, is amended
1765	to read:
1766	(Substantial rewording of section. See
1767	s. 628.802, F.S., for present text.)
1768	628.802  Injunctions; prohibitions against voting
1769	securities; sequestration of voting securities.-
1770	(1)  INJUNCTIONS.-Whenever it appears to the commissioner
1771	that any insurer or any director, officer, employee, or agent
1772	thereof has committed or is about to commit a violation of this
1773	part or of any rule, regulation, or order issued by the
1774	commissioner thereunder, the commissioner may apply to the
1775	circuit court for the county in which the principal officer of
1776	the insurer is located or, if the insurer has no office in this
1777	state, to the Circuit Court for Leon County for an order
1778	enjoining the insurer or director, officer, employee or agent
1779	thereof from violating or continuing to violate this part or any
1780	rule, regulation or order, and for such other equitable relief
1781	as the nature of the case and the interest of the insurer's
1782	policyholders, creditors, and shareholders or the public may
1783	require.
1784	(2)  VOTING OF SECURITIES; WHEN PROHIBITED.-No security
1785	which is the subject of any agreement or arrangement regarding
1786	acquisition, or which is acquired or to be acquired, in
1787	contravention of the provisions of this part or of any rule,
1788	regulation, or order issued by the commissioner thereunder may
1789	be voted at any shareholder's meeting, or may be counted for
1790	quorum purposes, and any action of shareholders requiring the
1791	affirmative vote of a percentage of shares may be taken as
1792	though the securities were not issued and outstanding. However,
1793	no action taken at any such meeting shall be invalidated by the
1794	voting of the securities, unless the action would materially
1795	affect control of the insurer or unless the courts of this state
1796	have so ordered. If an insurer or the commissioner has reason to
1797	believe that any security of the insurer has been or is about to
1798	be acquired in contravention of the provisions of this part or
1799	of any rule, regulation, or order issued by the commissioner
1800	hereunder, the insurer or the commissioner may apply to the
1801	circuit court for the county in which the insurer has its
1802	principal place of business to enjoin any offer, request,
1803	invitation, agreement, or acquisition made in contravention of
1804	s. 628.461 or any rule, regulation, or order issued by the
1805	commissioner thereunder to enjoin the voting of any security so
1806	acquired, to void any vote of the security already cast at any
1807	meeting of shareholders, and for such other equitable relief as
1808	the nature of the case and the interest of the insurer's
1809	policyholders, creditors, and shareholders or the public may
1810	require.
1811	(3)  SEQUESTRATION OF VOTING SECURITIES.-In any case where
1812	a person has acquired or is proposing to acquire any voting
1813	securities in violation of this part or any rule, regulation, or
1814	order issued by the commissioner hereunder, the circuit court
1815	for Leon County or the circuit court for the county in which the
1816	insurer has its principal place of business may, on such notice
1817	as the court deems appropriate, upon the application of the
1818	insurer or the commissioner, seize or sequester any voting
1819	securities of the insurer owned directly or indirectly by the
1820	person, and issue such order as may be appropriate to effectuate
1821	the provisions of this part.
1822	(4)  SITUS OF OWNERSHIP.-Notwithstanding any other
1823	provisions of law, for the purposes of this part, the situs of
1824	the ownership of the securities of domestic insurers shall be
1825	deemed to be in this state.
1826	Section 10.  Section 628.803, Florida Statutes, is amended
1827	to read:
1828	(Substantial rewording of section. See
1829	s. 628.803, F.S., for present text.)
1830	628.803  Sanctions.-
1831	(1)  Any insurer failing, without just cause, to file any
1832	registration statement as required under this part shall be
1833	required, after notice and hearing, to pay a penalty of $1,000
1834	for each day's delay, to be recovered by the commissioner.
1835	Penalties so recovered shall be paid into the General Revenue
1836	Fund. The maximum penalty under this section is $500,000. The
1837	commissioner may reduce the penalty if the insurer demonstrates
1838	to the commissioner that the imposition of the penalty would
1839	constitute a financial hardship to the insurer.
1840	(2)  Every director or officer of an insurance holding
1841	company system who knowingly violates, participates in, or
1842	assents to, or who knowingly permits any of the officers or
1843	agents of the insurer to engage in, transactions or the making
1844	of investments which have not been properly reported or
1845	submitted pursuant to the Insurance Code or which violate this
1846	act, shall, in their individual capacity, pay a civil forfeiture
1847	of not more than $1,000 per violation after notice and hearing
1848	before the commissioner. In determining the amount of the civil
1849	forfeiture, the commissioner shall take into account the
1850	appropriateness of the forfeiture with respect to the gravity of
1851	the violation, the history of previous violations, and such
1852	other matters as justice may require.
1853	(3)  Whenever it appears to the commissioner that any
1854	insurer subject to this part or any director, officer, employee,
1855	or agent thereof has engaged in any transaction or entered into
1856	a contract which is subject to s. 628.8011 and which would not
1857	have been approved had approval been requested, the commissioner
1858	may order the insurer to cease and desist immediately from any
1859	further activity under that transaction or contract. After
1860	notice and hearing, the commissioner may also order the insurer
1861	to void any contracts and restore the status quo if the action
1862	is in the best interests of the policyholders, creditors, or the
1863	public.
1864	(4)  Whenever it appears to the commissioner that any
1865	insurer or any director, officer, employee, or agent thereof has
1866	committed a willful violation of this part, the commissioner may
1867	cause criminal proceedings to be instituted by the circuit court
1868	for the county in which the principal office of the insurer is
1869	located or, if the insurer has no office in this state, by the
1870	circuit court for Leon County against the insurer or the
1871	responsible director, officer, employee, or agent thereof. Any
1872	insurer which willfully violates this part may be fined not more
1873	than $1 million. Any individual who willfully violates this part
1874	may be fined in his or her individual capacity not more than
1875	$500,000 or be imprisoned for not more than one to 3 years, or
1876	both.
1877	(5)  Any officer, director, or employee of an insurance
1878	holding company system who willfully and knowingly subscribes to
1879	or makes or causes to be made any false statements or false
1880	reports or false filings with the intent to deceive the
1881	commissioner in the performance of his or her duties under this
1882	part, upon conviction shall be imprisoned for not more than 3
1883	years or fined $500,000 or both. Any fines imposed shall be paid
1884	by the officer, director, or employee in his or her individual
1885	capacity.
1886	(6)  Whenever it appears to the commissioner that any
1887	person has committed a violation of chapter 628, which violation
1888	prevents the full understanding of the enterprise risk to the
1889	insurer by affiliates or by the insurance holding company
1890	system, the violation may serve as an independent basis for
1891	disapproving dividends or distributions and for placing the
1892	insurer under an order of supervision in accordance with part VI
1893	of chapter 624.
1894	Section 11.  Section 636.065, Florida Statutes, is amended
1895	to read:
1896	636.065  Acquisitions.-Each prepaid limited health service
1897	organization is subject to the provisions of s. 628.461
1898	628.4615.
1899	Section 12.  Section 641.255, Florida Statutes, is amended
1900	to read:
1901	641.255  Acquisition, merger, or consolidation.-
1902	(1)  Every acquisition of a health maintenance organization
1903	shall be subject to the provisions of s. 628.461 628.4615.
1904	However, in the case of a health maintenance organization
1905	organized as a for-profit corporation, the provisions of s.
1906	628.451 govern with respect to any merger or consolidation; and,
1907	in the case of a health maintenance organization organized as a
1908	not-for-profit corporation, the provisions of s. 628.471 govern
1909	with respect to any merger or consolidation.
1910	(2)  In addition to the requirements set forth in ss.
1911	628.451, 628.461 628.4615, and 628.471, each party to any
1912	transaction involving any licensee which, as indicated in its
1913	most recent quarterly or annual statement, derives income from
1914	Medicaid funds shall in the filing made with the office
1915	identify:
1916	(a)  Any person who has received any payment from either
1917	party or any person on that party's behalf; or
1918	(b)  The existence of any agreement entered into by either
1919	party or by any person on that party's behalf to pay a
1920	consultant fee, a broker fee, a commission, or other fee or
1921	charge,
1922
1923	which in any way relates to the acquisition, merger, or
1924	consolidation. The commission may adopt a form to be made part
1925	of the application which is to be sworn to by an officer of the
1926	entity which made or will make the payment. The form shall
1927	include the name of the person or entity paying the fee; the
1928	name of the person or entity receiving the fee; the date of
1929	payment; and a brief description of the work performed.
1930	Section 13.  Section 641.416, Florida Statutes, is amended
1931	to read:
1932	641.416  Acquisition.-Every prepaid health clinic shall be
1933	subject to the provisions of s. 628.461 628.4615.
1934	Section 14.  Section 651.024, Florida Statutes, is amended
1935	to read:
1936	651.024  Acquisition.-A person issued a certificate of
1937	authority to operate a continuing care facility or a provisional
1938	certificate of authority shall be subject to the provisions of
1939	s. 628.461 628.4615.
1940	Section 15.  For the purpose of incorporating the amendment
1941	made by this act to section 628.461, Florida Statutes, in a
1942	reference thereto, subsection (3) of section 48.151, Florida
1943	Statutes, is reenacted to read:
1944	48.151  Service on statutory agents for certain persons.-
1945	(3)  The Chief Financial Officer or his or her assistant or
1946	deputy or another person in charge of the office is the agent
1947	for service of process on all insurers applying for authority to
1948	transact insurance in this state, all licensed nonresident
1949	insurance agents, all nonresident disability insurance agents
1950	licensed pursuant to s. 626.835, any unauthorized insurer under
1951	s. 626.906 or s. 626.937, domestic reciprocal insurers,
1952	fraternal benefit societies under chapter 632, warranty
1953	associations under chapter 634, prepaid limited health service
1954	organizations under chapter 636, and persons required to file
1955	statements under s. 628.461.
1956	Section 16.  For the purpose of incorporating the
1957	amendments made by this act to sections 628.461 and 628.4615,
1958	Florida Statutes, in references thereto, paragraph (a) of
1959	subsection (1) of section 624.310, Florida Statutes, is
1960	reenacted to read:
1961	624.310  Enforcement; cease and desist orders; removal of
1962	certain persons; fines.-
1963	(1)  DEFINITIONS.-For the purposes of this section, the
1964	term:
1965	(a)  "Affiliated party" means any person who directs or
1966	participates in the conduct of the affairs of a licensee and who
1967	is:
1968	1.  A director, officer, employee, trustee, committee
1969	member, or controlling stockholder of a licensee or a subsidiary
1970	or service corporation of the licensee, other than a controlling
1971	stockholder which is a holding company, or an agent of a
1972	licensee or a subsidiary or service corporation of the licensee;
1973	2.  A person who has filed or is required to file a
1974	statement or any other information required to be filed under s.
1975	628.461 or s. 628.4615;
1976	3.  A stockholder, other than a stockholder that is a
1977	holding company of the licensee, who participates in the conduct
1978	of the affairs of the licensee;
1979	4.  An independent contractor who:
1980	a.  Renders a written opinion required by the laws of this
1981	state under her or his professional credentials on behalf of the
1982	licensee, which opinion is reasonably relied on by the
1983	department or office in the performance of its duties; or
1984	b.  Affirmatively and knowingly conceals facts, through a
1985	written misrepresentation to the department or office, with
1986	knowledge that such misrepresentation:
1987	(I)  Constitutes a violation of the insurance code or a
1988	lawful rule or order of the department, commission, or office;
1989	and
1990	(II)  Directly and materially endangers the ability of the
1991	licensee to meet its obligations to policyholders; or
1992	5.  A third-party marketer who aids or abets a licensee in
1993	a violation of the insurance code relating to the sale of an
1994	annuity to a person 65 years of age or older.
1995
1996	For the purposes of this subparagraph, any representation of
1997	fact made by an independent contractor on behalf of a licensee,
1998	affirmatively communicated as a representation of the licensee
1999	to the independent contractor, shall not be considered a
2000	misrepresentation by the independent contractor.
2001	Section 17.  For the purpose of incorporating the amendment
2002	made by this act to section 628.461, Florida Statutes, in a
2003	reference thereto, section 625.765, Florida Statutes, is
2004	reenacted to read:
2005	625.765  Exemptions from ss. 625.75 and 625.76.-The
2006	commission may adopt by rule exemptions from ss. 625.75 and
2007	625.76 for transactions that are not subject to s. 628.461 and
2008	that are the result of proceedings in probate, incompetency, or
2009	bankruptcy; sales of securities by odd-lot securities dealers;
2010	small transactions by gift which do not exceed $3,000 over any
2011	6-month period; transactions that are effected in connection
2012	with the distribution of a substantial block of securities;
2013	acquisitions of shares of stock and stock options under a stock
2014	bonus plan, stock option plan, or similar plan; securities
2015	acquired by redeeming other securities by an insurer;
2016	consolidations or mergers of insurers that hold over 85 percent
2017	of the companies being merged or consolidated; acquisitions or
2018	dispositions of an equity security involved in the deposit of
2019	the security under, or the withdrawal of the security from, a
2020	voting trust or deposit agreement; and conversions of an
2021	insurer's equity securities into another equity security of the
2022	same insurer. The commission may limit by rule the scope of
2023	exemptions and provide conditions for exemptions as necessary to
2024	maintain the purpose and intent of ss. 625.75 and 625.76 and
2025	prevent the circumvention of ss. 625.75 and 625.76.
2026	Section 18.  For the purpose of incorporating the amendment
2027	made by this act to section 628.461, Florida Statutes, in a
2028	reference thereto, subsection (2) of section 628.705, Florida
2029	Statutes, is reenacted to read:
2030	628.705  Prohibition of stock transfers.-
2031	(2)  Voting shares of the capital stock of a subsidiary
2032	insurance company or the intermediate holding company may not be
2033	acquired by any affiliated member of the holding company system
2034	except where the affiliated member of the mutual holding company
2035	system is the majority shareholder. A number of shares equal to
2036	5 percent of the outstanding voting shares of the capital stock
2037	of one corporate member of the Mutual Insurance Holding Company
2038	System selected by the mutual insurance holding company may be
2039	issued or sold to directors and officers as part of a plan of
2040	compensation, and such shares shall not be considered part of
2041	the majority shares to be owned by the mutual insurance company
2042	under subsection (1). A number of shares equal to an additional
2043	5 percent of the outstanding voting shares of the capital stock
2044	of one corporate member of the Mutual Insurance Holding Company
2045	System selected by the mutual insurance holding company may be
2046	issued or sold to employees, which may not include any officer
2047	or director, as part of an employee stock dividend or benefit
2048	plan, and such shares shall not be considered part of the
2049	majority shares to be owned by the mutual insurance company
2050	under subsection (1). Prior to issuance of shares in excess of
2051	the authorized 5 percent to either officers and directors or
2052	employees, pursuant to this section, a fairness opinion shall be
2053	rendered by an independent authority acceptable to the office to
2054	assure that the long term interests of the shareholders and
2055	policyholders are adequately protected. The office shall approve
2056	or disapprove the transaction within 30 days after receipt of
2057	the fairness opinion. Nothing in this section prohibits any
2058	officer or director from purchasing shares of stock at market
2059	value which are not part of a plan of compensation, in
2060	accordance with the requirements of s. 628.461, and, if such
2061	stock is not regularly traded on a national stock exchange, the
2062	officer or director purchasing the shares of stock is
2063	responsible for establishing its market value.
2064	Section 19.  For the purpose of incorporating the amendment
2065	made by this act to sections 628.461 and 628.4615, Florida
2066	Statutes, in references thereto, subsection (7) of section
2067	631.051, Florida Statutes, is reenacted to read:
2068	631.051  Grounds for rehabilitation; domestic insurers.-The
2069	department may petition for an order directing it to
2070	rehabilitate a domestic insurer or an alien insurer domiciled in
2071	this state on any one or more of the following grounds, that the
2072	insurer:
2073	(7)  Has transferred or attempted to transfer substantially
2074	its entire property or business, or has entered into any
2075	transaction the effect of which is to merge substantially its
2076	entire property or business into that of any other insurer or
2077	entity without having first obtained the written approval of the
2078	office under the provisions of s. 628.451, s. 628.461, or s.
2079	628.4615, as the case may be;
2080	Section 20.  For the purpose of incorporating the amendment
2081	made by this act to section 628.4615, Florida Statutes, in a
2082	reference thereto, subsection (20) of section 409.912, Florida
2083	Statutes, is reenacted to read:
2084	409.912  Cost-effective purchasing of health care.-The
2085	agency shall purchase goods and services for Medicaid recipients
2086	in the most cost-effective manner consistent with the delivery
2087	of quality medical care. To ensure that medical services are
2088	effectively utilized, the agency may, in any case, require a
2089	confirmation or second physician's opinion of the correct
2090	diagnosis for purposes of authorizing future services under the
2091	Medicaid program. This section does not restrict access to
2092	emergency services or poststabilization care services as defined
2093	in 42 C.F.R. part 438.114. Such confirmation or second opinion
2094	shall be rendered in a manner approved by the agency. The agency
2095	shall maximize the use of prepaid per capita and prepaid
2096	aggregate fixed-sum basis services when appropriate and other
2097	alternative service delivery and reimbursement methodologies,
2098	including competitive bidding pursuant to s. 287.057, designed
2099	to facilitate the cost-effective purchase of a case-managed
2100	continuum of care. The agency shall also require providers to
2101	minimize the exposure of recipients to the need for acute
2102	inpatient, custodial, and other institutional care and the
2103	inappropriate or unnecessary use of high-cost services. The
2104	agency shall contract with a vendor to monitor and evaluate the
2105	clinical practice patterns of providers in order to identify
2106	trends that are outside the normal practice patterns of a
2107	provider's professional peers or the national guidelines of a
2108	provider's professional association. The vendor must be able to
2109	provide information and counseling to a provider whose practice
2110	patterns are outside the norms, in consultation with the agency,
2111	to improve patient care and reduce inappropriate utilization.
2112	The agency may mandate prior authorization, drug therapy
2113	management, or disease management participation for certain
2114	populations of Medicaid beneficiaries, certain drug classes, or
2115	particular drugs to prevent fraud, abuse, overuse, and possible
2116	dangerous drug interactions. The Pharmaceutical and Therapeutics
2117	Committee shall make recommendations to the agency on drugs for
2118	which prior authorization is required. The agency shall inform
2119	the Pharmaceutical and Therapeutics Committee of its decisions
2120	regarding drugs subject to prior authorization. The agency is
2121	authorized to limit the entities it contracts with or enrolls as
2122	Medicaid providers by developing a provider network through
2123	provider credentialing. The agency may competitively bid single-
2124	source-provider contracts if procurement of goods or services
2125	results in demonstrated cost savings to the state without
2126	limiting access to care. The agency may limit its network based
2127	on the assessment of beneficiary access to care, provider
2128	availability, provider quality standards, time and distance
2129	standards for access to care, the cultural competence of the
2130	provider network, demographic characteristics of Medicaid
2131	beneficiaries, practice and provider-to-beneficiary standards,
2132	appointment wait times, beneficiary use of services, provider
2133	turnover, provider profiling, provider licensure history,
2134	previous program integrity investigations and findings, peer
2135	review, provider Medicaid policy and billing compliance records,
2136	clinical and medical record audits, and other factors. Providers
2137	shall not be entitled to enrollment in the Medicaid provider
2138	network. The agency shall determine instances in which allowing
2139	Medicaid beneficiaries to purchase durable medical equipment and
2140	other goods is less expensive to the Medicaid program than long-
2141	term rental of the equipment or goods. The agency may establish
2142	rules to facilitate purchases in lieu of long-term rentals in
2143	order to protect against fraud and abuse in the Medicaid program
2144	as defined in s. 409.913. The agency may seek federal waivers
2145	necessary to administer these policies.
2146	(20)  When a merger or acquisition of a Medicaid prepaid
2147	contractor has been approved by the Office of Insurance
2148	Regulation pursuant to s. 628.4615, the agency shall approve the
2149	assignment or transfer of the appropriate Medicaid prepaid
2150	contract upon request of the surviving entity of the merger or
2151	acquisition if the contractor and the other entity have been in
2152	good standing with the agency for the most recent 12-month
2153	period, unless the agency determines that the assignment or
2154	transfer would be detrimental to the Medicaid recipients or the
2155	Medicaid program. To be in good standing, an entity must not
2156	have failed accreditation or committed any material violation of
2157	the requirements of s. 641.52 and must meet the Medicaid
2158	contract requirements. For purposes of this section, a merger or
2159	acquisition means a change in controlling interest of an entity,
2160	including an asset or stock purchase.
2161	Section 21.  For the purpose of incorporating the amendment
2162	made by this act to section 628.4615, Florida Statutes, in a
2163	reference thereto, paragraph (b) of subsection (1) of section
2164	624.80, Florida Statutes, is reenacted to read:
2165	624.80  Definitions.-As used in this part:
2166	(1)  "Insurer" means and includes every person as defined
2167	in s. 624.03 as limited to:
2168	(b)  Any specialty insurer as that term is defined in s.
2169	628.4615.
2170	Section 22.  For the purpose of incorporating the amendment
2171	made by this act to section 628.4615, Florida Statutes, in a
2172	reference thereto, section 626.9928, Florida Statutes, is
2173	reenacted to read:
2174	626.9928  Acquisitions.-Acquisition of interest in a
2175	viatical settlement provider is subject to s. 628.4615.
2176	Section 23.  For the purpose of incorporating the amendment
2177	made by this act to section 628.4615, Florida Statutes, in a
2178	reference thereto, section 634.252, Florida Statutes, is
2179	reenacted to read:
2180	634.252  Acquisition.-Every motor vehicle service agreement
2181	company shall be subject to the provisions of s. 628.4615.
2182	Section 24.  For the purpose of incorporating the amendment
2183	made by this act to section 628.4615, Florida Statutes, in a
2184	reference thereto, section 634.3073, Florida Statutes, is
2185	reenacted to read:
2186	634.3073  Acquisition.-Every home warranty association
2187	shall be subject to the provisions of s. 628.4615.
2188	Section 25.  For the purpose of incorporating the amendment
2189	made by this act to section 628.4615, Florida Statutes, in a
2190	reference thereto, section 634.4085, Florida Statutes, is
2191	reenacted to read:
2192	634.4085  Acquisition.-Except for manufacturers as defined
2193	in this part, every service warranty association shall be
2194	subject to the provisions of s. 628.4615.
2195	Section 26.  For the purpose of incorporating the amendment
2196	made by this act to section 628.4615, Florida Statutes, in a
2197	reference thereto, section 636.065, Florida Statutes, is
2198	reenacted to read:
2199	636.065  Acquisitions.-Each prepaid limited health service
2200	organization is subject to the provisions of s. 628.4615.
2201	Section 27.  For the purpose of incorporating the amendment
2202	made by this act to section 628.4615, Florida Statutes, in a
2203	reference thereto, subsection (5) of section 642.032, Florida
2204	Statutes, is reenacted to read:
2205	642.032  Provisions of general insurance law applicable to
2206	legal expense insurance corporations.-The following provisions
2207	of the Florida Insurance Code shall apply to legal expense
2208	insurance corporations, to the extent that they are not
2209	inconsistent with the provisions of ss. 642.011-642.049:
2210	(5)  Section 628.4615, specialty insurers; acquisition of
2211	controlling stock, ownership interest, assets, or control;
2212	merger or consolidation.
2213	Section 28.  For the purpose of incorporating the amendment
2214	made by this act to section 628.801, Florida Statutes, in a
2215	reference thereto, paragraph (b) of subsection (6), paragraph
2216	(f) of subsection (8), and paragraph (f) of subsection (9) of
2217	section 626.7492, Florida Statutes, is reenacted to read:
2218	626.7492  Reinsurance intermediaries.-
2219	(6)  DUTIES OF INSURERS USING THE SERVICES OF A REINSURANCE
2220	INTERMEDIARY BROKER.-
2221	(b)  An insurer may not employ an individual who is
2222	employed by a reinsurance intermediary broker with which it
2223	transacts business, unless the reinsurance intermediary broker
2224	is under common control with the insurer and subject to ss.
2225	628.801, 628.802, and 628.803.
2226	(8)  PROHIBITED ACTS.-The reinsurance intermediary manager
2227	shall not:
2228	(f)  Jointly employ an individual who is employed by the
2229	reinsurer, unless such reinsurance intermediary manager is under
2230	common control with the reinsurer subject to ss. 628.801,
2231	628.802, and 628.803.
2232	(9)  DUTIES OF REINSURERS USING THE SERVICES OF A
2233	REINSURANCE INTERMEDIARY MANAGER.-
2234	(f)  A reinsurer shall not appoint to its board of
2235	directors any officer, director, employee, controlling
2236	shareholder, or subproducer of its reinsurance intermediary
2237	manager. This paragraph shall not apply to relationships
2238	governed by ss. 628.801, 628.802, and 628.803 or, if applicable,
2239	this section.
2240	Section 29.  For the purpose of incorporating the amendment
2241	made by this act to section 628.801, Florida Statutes, in a
2242	reference thereto, paragraph (d) of subsection (2) of section
2243	626.918, Florida Statutes, is reenacted to read:
2244	626.918  Eligible surplus lines insurers.-
2245	(2)  An unauthorized insurer may not be or become an
2246	eligible surplus lines insurer unless made eligible by the
2247	office in accordance with the following conditions:
2248	(d)1.a.  The insurer must have and maintain surplus as to
2249	policyholders of not less than $15 million; in addition, an
2250	alien insurer must also have and maintain in the United States a
2251	trust fund for the protection of all its policyholders in the
2252	United States under terms deemed by the office to be reasonably
2253	adequate, in an amount not less than $5.4 million. Any such
2254	surplus as to policyholders or trust fund shall be represented
2255	by investments consisting of eligible investments for like funds
2256	of like domestic insurers under part II of chapter 625 provided,
2257	however, that in the case of an alien insurance company, any
2258	such surplus as to policyholders may be represented by
2259	investments permitted by the domestic regulator of such alien
2260	insurance company if such investments are substantially similar
2261	in terms of quality, liquidity, and security to eligible
2262	investments for like funds of like domestic insurers under part
2263	II of chapter 625. Clean, irrevocable, unconditional, and
2264	evergreen letters of credit issued or confirmed by a qualified
2265	United States financial institution, as defined in subparagraph
2266	2., may be used to fund the trust.
2267	b.  For those surplus lines insurers that were eligible on
2268	January 1, 1994, and that maintained their eligibility
2269	thereafter, the required surplus as to policyholders shall be:
2270	(I)  On December 31, 1994, and until December 30, 1995,
2271	$2.5 million.
2272	(II)  On December 31, 1995, and until December 30, 1996,
2273	$3.5 million.
2274	(III)  On December 31, 1996, and until December 30, 1997,
2275	$4.5 million.
2276	(IV)  On December 31, 1997, and until December 30, 1998,
2277	$5.5 million.
2278	(V)  On December 31, 1998, and until December 30, 1999,
2279	$6.5 million.
2280	(VI)  On December 31, 1999, and until December 30, 2000, $8
2281	million.
2282	(VII)  On December 31, 2000, and until December 30, 2001,
2283	$9.5 million.
2284	(VIII)  On December 31, 2001, and until December 30, 2002,
2285	$11 million.
2286	(IX)  On December 31, 2002, and until December 30, 2003,
2287	$13 million.
2288	(X)  On December 31, 2003, and thereafter, $15 million.
2289	c.  The capital and surplus requirements as set forth in
2290	sub-subparagraph b. do not apply in the case of an insurance
2291	exchange created by the laws of individual states, where the
2292	exchange maintains capital and surplus pursuant to the
2293	requirements of that state, or maintains capital and surplus in
2294	an amount not less than $50 million in the aggregate. For an
2295	insurance exchange which maintains funds in the amount of at
2296	least $12 million for the protection of all insurance exchange
2297	policyholders, each individual syndicate shall maintain minimum
2298	capital and surplus in an amount not less than $3 million. If
2299	the insurance exchange does not maintain funds in the amount of
2300	at least $12 million for the protection of all insurance
2301	exchange policyholders, each individual syndicate shall meet the
2302	minimum capital and surplus requirements set forth in sub-
2303	subparagraph b.
2304	d.  A surplus lines insurer which is a member of an
2305	insurance holding company that includes a member which is a
2306	Florida domestic insurer as set forth in its holding company
2307	registration statement, as set forth in s. 628.801 and rules
2308	adopted thereunder, may elect to maintain surplus as to
2309	policyholders in an amount equal to the requirements of s.
2310	624.408, subject to the requirement that the surplus lines
2311	insurer shall at all times be in compliance with the
2312	requirements of chapter 625.
2313
2314	The election shall be submitted to the office and shall be
2315	effective upon the office's being satisfied that the
2316	requirements of sub-subparagraph d. have been met. The initial
2317	date of election shall be the date of office approval. The
2318	election approval application shall be on a form adopted by
2319	commission rule. The office may approve an election form
2320	submitted pursuant to sub-subparagraph d. only if it was on file
2321	with the former Department of Insurance before February 28,
2322	1998.
2323	2.  For purposes of letters of credit under subparagraph
2324	1., the term "qualified United States financial institution"
2325	means an institution that:
2326	a.  Is organized or, in the case of a United States office
2327	of a foreign banking organization, is licensed under the laws of
2328	the United States or any state.
2329	b.  Is regulated, supervised, and examined by authorities
2330	of the United States or any state having regulatory authority
2331	over banks and trust companies.
2332	c.  Has been determined by the office or the Securities
2333	Valuation Office of the National Association of Insurance
2334	Commissioners to meet such standards of financial condition and
2335	standing as are considered necessary and appropriate to regulate
2336	the quality of financial institutions whose letters of credit
2337	are acceptable to the office.
2338	Section 30.  This act shall take effect July 1, 2011.

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