Florida Senate - 2017 CS for CS for SB 1012
By the Committees on Appropriations; and Banking and Insurance;
and Senators Brandes and Young
576-04389-17 20171012c2
1 A bill to be entitled
2 An act relating to insurance fraud; reordering and
3 amending s. 626.9891, F.S.; defining and revising
4 definitions; requiring every insurer to designate at
5 least one primary anti-fraud employee for certain
6 purposes; requiring insurers to adopt an anti-fraud
7 plan; revising insurer requirements in providing anti
8 fraud information to the Department of Financial
9 Services; requiring specified information to be filed
10 annually with the department; revising the information
11 to be provided by insurers who write workers’
12 compensation insurance; requiring each insurer to
13 provide annual anti-fraud education and training;
14 requiring insurers who submit an application for a
15 certificate of authority after a specified date to
16 comply with the section; providing penalties for the
17 failure to comply with requirements of the section;
18 requiring the Division of Investigative and Forensic
19 Services of the department to create, by a specified
20 date, a report detailing best practices for the
21 detection, investigation, prevention, and reporting of
22 insurance fraud and other fraudulent insurance acts;
23 requiring such report to be updated at certain
24 intervals; specifying required information in the
25 report; requiring the department to adopt rules
26 relating to insurers’ annual reporting of certain
27 data; creating s. 626.9896, F.S.; providing
28 legislative intent; creating a grant program to fund
29 the Insurance Fraud Dedicated Prosecutor Program
30 within the department; requiring moneys that are
31 appropriated for the program be used to fund specific
32 attorney and paralegal positions; specifying
33 procedures to be used by state attorneys’ offices when
34 applying for biennial grants; specifying that grants
35 are for 2 years but authorizing the division to renew
36 the grants; specifying procedures to be used by the
37 department in awarding grant funds; requiring the
38 Division of Investigative and Forensic Services to
39 provide an annual report to the Executive Office of
40 the Governor, the Speaker of the House of
41 Representatives, and the Senate President; specifying
42 information to be contained in the report; authorizing
43 the department to adopt rules to administer and
44 implement the insurance fraud dedicated prosecutor
45 program; amending s. 626.9911, F.S.; defining the
46 terms “fraudulent viatical settlement act” and
47 “stranger-originated life insurance practice” for
48 purposes of provisions relating to the Viatical
49 Settlement Act; amending ss. 626.9924 and 626.99245,
50 F.S.; conforming cross-references; amending s.
51 626.99275, F.S.; providing additional prohibited acts
52 related to viatical settlement contracts; amending s.
53 626.99287, F.S.; providing that a viatical settlement
54 contract is void and unenforceable by either party if
55 the viatical settlement policy is subject, within a
56 specified timeframe, to a loan secured by an interest
57 in the policy; revising conditions and requirements in
58 which viatical settlement contracts entered into
59 within specified timeframes are valid and enforceable;
60 deleting provisions related to the transfer of
61 insurance policies or certificates to viatical
62 settlement providers; creating s. 626.99289, F.S.;
63 providing that certain contracts, agreements,
64 arrangements, or transactions relating to stranger
65 originated life insurance practices are void and
66 unenforceable; creating s. 626.99291, F.S.;
67 authorizing a life insurer to contest policies
68 obtained through such practices; creating s.
69 626.99292, F.S.; requiring life insurers to provide a
70 specified statement to individual life insurance
71 policyholders; authorizing such statements to
72 accompany or be included in notices or mailings
73 provided to the policyholders; requiring such
74 statements to include contact information; amending s.
75 627.744, F.S.; deleting a provision that provides
76 construction; authorizing insurers to opt out of the
77 preinsurance inspection requirements for private
78 passenger motor vehicles; requiring insurers opting
79 out to file a certain manual rule with the Office of
80 Insurance Regulation; authorizing such insurers to
81 establish their own preinsurance inspection
82 requirements, which must be included in the filed
83 manual rule; prohibiting such insurers from requiring
84 applicants to pay for the cost of inspections;
85 deleting an obsolete provision; amending s. 641.3915,
86 F.S.; deleting obsolete provisions; providing
87 effective dates.
88
89 Be It Enacted by the Legislature of the State of Florida:
90
91 Section 1. Effective September 1, 2017, section 626.9891,
92 Florida Statutes, is reordered and amended to read:
93 626.9891 Insurer anti-fraud investigative units; reporting
94 requirements; penalties for noncompliance.—
95 (1)(5) As used in For purposes of this section, the term:
96 (a) “Anti-fraud investigative unit” means the designated
97 anti-fraud unit or division, or contractor authorized under
98 subparagraph (2)(a)2.
99 (b) “Designated anti-fraud unit or division” includes a
100 distinct unit or division or a unit or division made up of the
101 assignment of fraud investigation to employees whose principal
102 responsibilities are the investigation and disposition of claims
103 who are also assigned investigation of fraud. If an insurer
104 creates a distinct unit or division, hires additional employees,
105 or contracts with another entity to fulfill the requirements of
106 this section, the additional cost incurred must be included as
107 an administrative expense for ratemaking purposes.
108 (2)(1) By December 31, 2017, every insurer admitted to do
109 business in this state who in the previous calendar year, at any
110 time during that year, had $10 million or more in direct
111 premiums written shall:
112 (a)1. Establish and maintain a designated anti-fraud unit
113 or division within the company to investigate and report
114 possible fraudulent insurance acts claims by insureds or by
115 persons making claims for services or repairs against policies
116 held by insureds; or
117 2.(b) Contract with others to investigate and report
118 possible fraudulent insurance acts by insureds or by persons
119 making claims for services or repairs against policies held by
120 insureds.
121 (b) Adopt an anti-fraud plan.
122 (c) Designate at least one employee with primary
123 responsibility for implementing the requirements of this
124 section.
125 (d) Electronically An insurer subject to this subsection
126 shall file with the Division of Investigative and Forensic
127 Services of the department, and annually thereafter on or before
128 July 1, 1996, a detailed description of the designated anti
129 fraud unit or division established pursuant to paragraph (a) or
130 a copy of the contract executed under subparagraph (a)2., as
131 applicable, a copy of the anti-fraud plan, and the name of the
132 employee designated under paragraph (c) and related documents
133 required by paragraph (b).
134
135 An insurer must include the additional cost incurred in creating
136 a distinct unit or division, hiring additional employees, or
137 contracting with another entity to fulfill the requirements of
138 this section, as an administrative expense for ratemaking
139 purposes.
140 (2) Every insurer admitted to do business in this state,
141 which in the previous calendar year had less than $10 million in
142 direct premiums written, must adopt an anti-fraud plan and file
143 it with the Division of Investigative and Forensic Services of
144 the department on or before July 1, 1996. An insurer may, in
145 lieu of adopting and filing an anti-fraud plan, comply with the
146 provisions of subsection (1).
147 (3) Each insurers anti-fraud plan must plans shall include:
148 (a) An acknowledgement that the insurer has established
149 procedures for detecting and investigating possible fraudulent
150 insurance acts relating to the different types of insurance by
151 that insurer A description of the insurer’s procedures for
152 detecting and investigating possible fraudulent insurance acts;
153 (b) An acknowledgment that the insurer has established A
154 description of the insurer’s procedures for the mandatory
155 reporting of possible fraudulent insurance acts to the Division
156 of Investigative and Forensic Services of the department;
157 (c) An acknowledgement that the insurer provides the A
158 description of the insurer’s plan for anti-fraud education and
159 training required by this section to the anti-fraud
160 investigative unit of its claims adjusters or other personnel;
161 and
162 (d) A description of the required anti-fraud education and
163 training;
164 (e) A written description or chart outlining the
165 organizational arrangement of the insurer’s anti-fraud
166 investigative unit, including the position titles and
167 descriptions of staffing; and personnel who are responsible for
168 the investigation and reporting of possible fraudulent insurance
169 acts
170 (f) The rationale for the level of staffing and resources
171 being provided for the anti-fraud investigative unit which may
172 include objective criteria, such as the number of policies
173 written, the number of claims received on an annual basis, the
174 volume of suspected fraudulent claims detected on an annual
175 basis, an assessment of the optimal caseload that one
176 investigator can handle on an annual basis, and other factors.
177 (4) By December 31, 2018, each insurer shall provide staff
178 of the anti-fraud investigative unit at least 2 hours of initial
179 anti-fraud training that is designed to assist in identifying
180 and evaluating instances of suspected fraudulent insurance acts
181 in underwriting or claims activities. Annually thereafter, an
182 insurer shall provide such employees a 1-hour course that
183 addresses detection, referral, investigation, and reporting of
184 possible fraudulent insurance acts for the types of insurance
185 lines written by the insurer.
186 (5) Each insurer is required to report data related to
187 fraud for each identified line of business written by the
188 insurer during the prior calendar year. The data shall be
189 reported to the department by March 1, 2019, and annually
190 thereafter, and must include, at a minimum:
191 (a) The number of policies in effect;
192 (b) The amount of premiums written for policies;
193 (c) The number of claims received;
194 (d) The number of claims referred to the anti-fraud
195 investigative unit;
196 (e) The number of other insurance fraud matters referred to
197 the anti-fraud investigative unit that were not claim related;
198 (f) The number of claims investigated or accepted by the
199 anti-fraud investigative unit;
200 (g) The number of other insurance fraud matters
201 investigated or accepted by the anti-fraud investigative unit
202 that were not claim related;
203 (h) The number of cases referred to the Division of
204 Investigative and Forensic Services;
205 (i) The number of cases referred to other law enforcement
206 agencies;
207 (j) The number of cases referred to other entities; and
208 (k) The estimated dollar amount or range of damages on
209 cases referred to the Division of Investigative and Forensic
210 Services or other agencies.
211 (6) In addition to providing information required under
212 subsections (2), (4), and (5), each insurer writing workers’
213 compensation insurance shall also report the following
214 information to the department, on or before March 1, 2019, and
215 annually thereafter August 1 of each year, on its experience in
216 implementing and maintaining an anti-fraud investigative unit or
217 an anti-fraud plan. The report must include, at a minimum:
218 (a) The estimated dollar amount of losses attributable to
219 workers’ compensation fraud delineated by the type of fraud,
220 including claimant, employer, provider, agent, or other type.
221 (b) The estimated dollar amount of recoveries attributable
222 to workers’ compensation fraud delineated by the type of fraud,
223 including claimant, employer, provider, agent, or other type.
224 (c) The number of cases referred to the Division of
225 Investigative and Forensic Services, delineated by the type of
226 fraud, including claimant, employer, provider, agent, or other
227 type.
228 (a) The dollar amount of recoveries and losses attributable
229 to workers’ compensation fraud delineated by the type of fraud:
230 claimant, employer, provider, agent, or other.
231 (b) The number of referrals to the Bureau of Workers’
232 Compensation Fraud for the prior year.
233 (c) A description of the organization of the anti-fraud
234 investigative unit, if applicable, including the position titles
235 and descriptions of staffing.
236 (d) The rationale for the level of staffing and resources
237 being provided for the anti-fraud investigative unit, which may
238 include objective criteria such as number of policies written,
239 number of claims received on an annual basis, volume of
240 suspected fraudulent claims currently being detected, other
241 factors, and an assessment of optimal caseload that can be
242 handled by an investigator on an annual basis.
243 (e) The inservice education and training provided to
244 underwriting and claims personnel to assist in identifying and
245 evaluating instances of suspected fraudulent activity in
246 underwriting or claims activities.
247 (f) A description of a public awareness program focused on
248 the costs and frequency of insurance fraud and methods by which
249 the public can prevent it.
250 (7)(4) An Any insurer who obtains a certificate of
251 authority has 6 after July 1, 1995, shall have 18 months in
252 which to comply with subsection (2), and one calendar year
253 thereafter, to comply with subsections (4), (5), and (6) the
254 requirements of this section.
255 (8)(7) If an insurer fails to timely submit a final
256 acceptable anti-fraud plan or anti-fraud investigative unit
257 description, fails to implement the provisions of a plan or an
258 anti-fraud investigative unit description, or otherwise refuses
259 to comply with the provisions of this section, the department,
260 office, or commission may:
261 (a) Impose an administrative fine of not more than $2,000
262 per day for such failure by an insurer to submit an acceptable
263 anti-fraud plan or anti-fraud investigative unit description,
264 until the department, office, or commission deems the insurer to
265 be in compliance;
266 (b) Impose an administrative fine for failure by an insurer
267 to implement or follow the provisions of an anti-fraud plan or
268 anti-fraud investigative unit description; or
269 (c) Impose the provisions of both paragraphs (a) and (b).
270 (9) On or before December 31, 2018, the Division of
271 Investigative and Forensic Services shall create a report
272 detailing best practices for the detection, investigation,
273 prevention, and reporting of insurance fraud and other
274 fraudulent insurance acts. The report must be updated as
275 necessary but at least every 2 years. The report must provide:
276 (a) Information on the best practices for the establishment
277 of anti-fraud investigative units within insurers;
278 (b) Information on the best practices and methods for
279 detecting and investigating insurance fraud and other fraudulent
280 insurance acts;
281 (c) Information on appropriate anti-fraud education and
282 training of insurer personnel;
283 (d) Information on the best practices for reporting
284 insurance fraud and other fraudulent insurance acts to the
285 Division of Investigative and Forensic Services and to other law
286 enforcement agencies;
287 (e) Information regarding the appropriate level of staffing
288 and resources for anti-fraud investigative units within
289 insurers;
290 (f) Information detailing statistics and data relating to
291 insurance fraud which insurers should maintain; and
292 (g) Other information as determined by the Division of
293 Investigative and Forensic Services.
294 (10)(8) The department may adopt rules to administer this
295 section, except that it shall adopt rules to administer
296 subsection (5).
297 Section 2. Effective September 1, 2017, section 626.9896,
298 Florida Statutes, is created to read:
299 626.9896 Insurance Fraud Dedicated Prosecutor Program.—
300 (1) LEGISLATIVE INTENT.—The Legislature recognizes the
301 increasing problem of insurance fraud, the need to adequately
302 investigate and prosecute insurance fraud, and the need to
303 create a program dedicated to the prosecution of insurance
304 fraud. The Legislature recognizes that the Division of
305 Investigative and Forensic Services of the department can
306 efficiently and effectively implement and monitor such a
307 program, and can direct and reallocate resources as insurance
308 fraud trends change and demand for prosecutorial resources shift
309 between judicial circuits.
310 (2) ESTABLISHMENT OF THE INSURANCE FRAUD DEDICATED
311 PROSECUTOR PROGRAM.—There is created within the department a
312 grant program to fund the Insurance Fraud Dedicated Prosecutor
313 Program. The purpose of the program is to provide grants to
314 state attorneys’ offices to fund attorney and paralegal
315 positions that are dedicated exclusively to the prosecution of
316 insurance fraud. The program shall consist only of funds
317 appropriated by the state specifically for this program.
318 (3) GRANT APPLICATIONS.—Beginning in 2018, a state
319 attorney’s office seeking grant funds must submit an application
320 to the Division of Investigative and Forensic Services detailing
321 the proposed number of dedicated prosecutors and paralegals
322 requested for the prosecution of insurance fraud. Applications
323 must be received by July 1 of each even-numbered year and shall
324 identify funding needs for 2 years. Grant awards are contingent
325 upon legislative appropriation in the Insurance Regulatory Trust
326 Fund and Workers’ Compensation Administration Trust Fund and
327 subject to renewal by the department. The division must compile
328 and review the timely submitted applications to establish its
329 legislative budget request for the program for the upcoming two
330 years.
331 (4) AWARD OF GRANTS.—The division is authorized to award
332 grants to state attorneys’ offices using a formula adopted by
333 rule of the department and based on metrics and data compiled by
334 the division which allocates funds to the judicial circuits
335 based on trends in insurance fraud and the performance and
336 output measures reported as required by this section. A grant
337 awarded to a state attorney’s office may only be used to fund
338 attorney and paralegal positions that are dedicated exclusively
339 to the prosecution of insurance fraud. Grants are subject to the
340 provisions of s. 215.971. The division shall establish the
341 annual maximum grant amount, based on funds appropriated to the
342 department for funding the Insurance Fraud Dedicated Prosecutor
343 Program.
344 (5) REPORTING.—The division must track and report on the
345 effectiveness and efficiency of each state attorney’s office’s
346 use of the awarded grant funds. To help complete the report,
347 each state attorney’s office that is awarded a grant under this
348 section must submit performance and output information as
349 determined by the division. The report must be provided to the
350 Executive Office of the Governor, the Speaker of the House of
351 Representatives, and the President of the Senate by September 1,
352 2020, and annually thereafter. The report must include, but is
353 not limited to, the following:
354 (a) The amount of grant funds received and expended by each
355 state attorney’s office;
356 (b) A description of the purposes for which the funds were
357 expended, including payment of salaries, expenses, and any other
358 costs needed to support the delivery of services;
359 (c) The results achieved from the expenditures made,
360 including the number of complaints filed, the number of
361 investigations initiated, the number of arrests made, the number
362 of convictions, and the amount of restitution or fines paid as a
363 result of the cases presented for prosecution.
364 (6) RULES.—The department may adopt rules pursuant to ss.
365 120.536(1) and 120.54 for the administration and implementation
366 of the Insurance Fraud Dedicated Prosecutor Program. Such rules
367 may establish procedures for the Insurance Fraud Dedicated
368 Prosecutor Program, including forms to be used by the state
369 attorney’s offices. The department may establish a formula for
370 allocating grant funds, eligibility criteria, renewal
371 requirements, and standards for evaluating the effectiveness and
372 efficiency of expended funds.
373 Section 3. Present subsections (2) through (7) of section
374 626.9911, Florida Statutes, are renumbered as subsections (3)
375 through (8), respectively, present subsections (8) through (14)
376 of that section are renumbered as subsections (10) through (16),
377 respectively, and new subsections (2) and (9) are added to that
378 section, to read:
379 626.9911 Definitions.—As used in this act, the term:
380 (2) “Fraudulent viatical settlement act” means an act or
381 omission committed by a person who knowingly, or with intent to
382 defraud for the purpose of depriving another of property or for
383 pecuniary gain, commits or allows an employee or agent to commit
384 any of the following acts:
385 (a) Presenting, causing to be presented, or preparing with
386 the knowledge or belief that it will be presented to or by
387 another person, false or concealed material information as part
388 of, in support of, or concerning a fact material to:
389 1. An application for the issuance of a viatical settlement
390 contract or a life insurance policy;
391 2. The underwriting of a viatical settlement contract or a
392 life insurance policy;
393 3. A claim for payment or benefit pursuant to a viatical
394 settlement contract or a life insurance policy;
395 4. Premiums paid on a life insurance policy;
396 5. Payments and changes in ownership or beneficiary made in
397 accordance with the terms of a viatical settlement contract or a
398 life insurance policy;
399 6. The reinstatement or conversion of a life insurance
400 policy;
401 7. The solicitation, offer, effectuation, or sale of a
402 viatical settlement contract or a life insurance policy;
403 8. The issuance of written evidence of a viatical
404 settlement contract or a life insurance policy; or
405 9. A financing transaction for a viatical settlement
406 contract or life insurance policy.
407 (b) Employing a plan, financial structure, device, scheme,
408 or artifice relating to viaticated policies for the purpose of
409 perpetrating fraud.
410 (c) Engaging in a stranger-originated life insurance
411 practice.
412 (d) Failing to disclose, upon request by an insurer, that
413 the prospective insured has undergone a life expectancy
414 evaluation by a person other than the insurer or its authorized
415 representatives in connection with the issuance of the life
416 insurance policy.
417 (e) Perpetuating a fraud or preventing the detection of a
418 fraud by:
419 1. Removing, concealing, altering, destroying, or
420 sequestering from the office the assets or records of a licensee
421 or other person engaged in the business of viatical settlements;
422 2. Misrepresenting or concealing the financial condition of
423 a licensee, financing entity, insurer, or other person;
424 3. Transacting in the business of viatical settlements in
425 violation of laws requiring a license, certificate of authority,
426 or other legal authority to transact such business; or
427 4. Filing with the office or the equivalent chief insurance
428 regulatory official of another jurisdiction a document that
429 contains false information or conceals information about a
430 material fact from the office or other regulatory official.
431 (f) Embezzlement, theft, misappropriation, or conversion of
432 moneys, funds, premiums, credits, or other property of a
433 viatical settlement provider, insurer, insured, viator,
434 insurance policyowner, or other person engaged in the business
435 of viatical settlements or life insurance.
436 (g) Entering into, negotiating, brokering, or otherwise
437 dealing in a viatical settlement contract, the subject of which
438 is a life insurance policy that was obtained based on
439 information that was falsified or concealed for the purpose of
440 defrauding the policy’s issuer, viatical settlement provider, or
441 viator.
442 (h) Facilitating the viator’s change of residency state to
443 avoid the provisions of this act.
444 (i) Facilitating or causing the creation of a trust with a
445 non-Florida or other nonresident entity for the purpose of
446 owning a life insurance policy covering a Florida resident to
447 avoid the provisions of this act.
448 (j) Facilitating or causing the transfer of the ownership
449 of an insurance policy covering a Florida resident to a trust
450 with a situs outside this state or to another nonresident entity
451 to avoid the provisions of this act.
452 (k) Applying for or obtaining a loan that is secured
453 directly or indirectly by an interest in a life insurance policy
454 with intent to defraud, for the purpose of depriving another of
455 property or for pecuniary gain.
456 (l) Attempting to commit, assisting, aiding, or abetting in
457 the commission of, or conspiring to commit, an act or omission
458 specified in this subsection.
459 (9) “Stranger-originated life insurance practice” means an
460 act, practice, arrangement, or agreement to initiate a life
461 insurance policy for the benefit of a third-party investor who,
462 at the time of policy origination, has no insurable interest in
463 the insured. Stranger-originated life insurance practices
464 include, but are not limited to:
465 (a) The purchase of a life insurance policy with resources
466 or guarantees from or through a person who, at the time of such
467 policy’s inception, could not lawfully initiate the policy and
468 the execution of a verbal or written arrangement or agreement to
469 directly or indirectly transfer the ownership of such policy or
470 policy benefits to a third party.
471 (b) The creation of a trust or other entity that has the
472 appearance of an insurable interest in order to initiate
473 policies for investors, in violation of insurable interest laws
474 and the prohibition against wagering on life.
475 Section 4. Subsection (7) of section 626.9924, Florida
476 Statutes, is amended to read:
477 626.9924 Viatical settlement contracts; procedures;
478 rescission.—
479 (7) At any time during the contestable period, within 20
480 days after a viator executes documents necessary to transfer
481 rights under an insurance policy or within 20 days of any
482 agreement, option, promise, or any other form of understanding,
483 express or implied, to viaticate the policy, the provider must
484 give notice to the insurer of the policy that the policy has or
485 will become a viaticated policy. The notice must be accompanied
486 by the documents required by s. 626.99287 626.99287(5)(a) in
487 their entirety.
488 Section 5. Subsection (2) of section 626.99245, Florida
489 Statutes, is amended to read:
490 626.99245 Conflict of regulation of viaticals.—
491 (2) This section does not affect the requirement of ss.
492 626.9911(14) 626.9911(12) and 626.9912(1) that a viatical
493 settlement provider doing business from this state must obtain a
494 viatical settlement license from the office. As used in this
495 subsection, the term “doing business from this state” includes
496 effectuating viatical settlement contracts from offices in this
497 state, regardless of the state of residence of the viator.
498 Section 6. Subsection (1) of section 626.99275, Florida
499 Statutes, is amended to read:
500 626.99275 Prohibited practices; penalties.—
501 (1) It is unlawful for a any person to:
502 (a) To Knowingly enter into, broker, or otherwise deal in a
503 viatical settlement contract the subject of which is a life
504 insurance policy, knowing that the policy was obtained by
505 presenting materially false information concerning any fact
506 material to the policy or by concealing, for the purpose of
507 misleading another, information concerning any fact material to
508 the policy, where the viator or the viator’s agent intended to
509 defraud the policy’s issuer.
510 (b) To Knowingly or with the intent to defraud, for the
511 purpose of depriving another of property or for pecuniary gain,
512 issue or use a pattern of false, misleading, or deceptive life
513 expectancies.
514 (c) To Knowingly engage in any transaction, practice, or
515 course of business intending thereby to avoid the notice
516 requirements of s. 626.9924(7).
517 (d) To Knowingly or intentionally facilitate the change of
518 state of residency of a viator to avoid the provisions of this
519 chapter.
520 (e) Knowingly enter into a viatical settlement contract
521 before the application for or issuance of a life insurance
522 policy that is the subject of a viatical settlement contract or
523 during an applicable period specified in s. 626.99287(1) or (2),
524 unless the viator provides a sworn affidavit and accompanying
525 independent evidentiary documentation in accordance with s.
526 626.99287.
527 (f) Engage in a fraudulent viatical settlement act, as
528 defined in s. 626.9911.
529 (g) Knowingly issue, solicit, market, or otherwise promote
530 the purchase of a life insurance policy for the purpose of or
531 with an emphasis on selling the policy to a third party.
532 (h) Engage in a stranger-originated life insurance
533 practice, as defined in s. 626.9911.
534 Section 7. Section 626.99287, Florida Statutes, is amended
535 to read:
536 626.99287 Contestability of viaticated policies.—
537 (1) Except as hereinafter provided, if a viatical
538 settlement contract is entered into within the 2-year period
539 commencing with the date of issuance of the insurance policy or
540 certificate to be acquired, the viatical settlement contract is
541 void and unenforceable by either party.
542 (2) Except as hereinafter provided, if a viatical
543 settlement policy is subject to a loan secured directly or
544 indirectly by an interest in the policy within a 5-year period
545 commencing on the date of issuance of the policy or certificate,
546 the viatical settlement contract is void and unenforceable by
547 either party.
548 (3) Notwithstanding the limitations in subsections (1) and
549 (2) this limitation, such a viatical settlement contract is not
550 void and unenforceable if the viator provides a sworn affidavit
551 and accompanying independent evidentiary documentation
552 certifying to the viatical settlement provider that one or more
553 of the following conditions were met during the periods
554 applicable to the viaticated policy as stated in subsections (1)
555 or (2):
556 (a)(1) The policy was issued upon the owner’s exercise of
557 conversion rights arising out of a group or term policy, if the
558 total time covered under the prior policy is at least 60 months.
559 The time covered under a group policy must be calculated without
560 regard to any change in insurance carriers, provided the
561 coverage has been continuous and under the same group
562 sponsorship.;
563 (b)(2) The owner of the policy is a charitable organization
564 exempt from taxation under 26 U.S.C. s. 501(c)(3).;
565 (3) The owner of the policy is not a natural person;
566 (4) The viatical settlement contract was entered into
567 before July 1, 2000;
568 (c)(5) The viator certifies by producing independent
569 evidence to the viatical settlement provider that one or more of
570 the following conditions were have been met within the 2-year
571 period:
572 (a)1. The viator or insured is terminally or chronically
573 ill diagnosed with an illness or condition that is either:
574 a. Catastrophic or life threatening; or
575 b. Requires a course of treatment for a period of at least
576 3 years of long-term care or home health care; and
577 2. the condition was not known to the insured at the time
578 the life insurance contract was entered into;.
579 2.(b) The viator’s spouse dies;
580 3.(c) The viator divorces his or her spouse;
581 4.(d) The viator retires from full-time employment;
582 5.(e) The viator becomes physically or mentally disabled
583 and a physician determines that the disability prevents the
584 viator from maintaining full-time employment;
585 6.(f) The owner of the policy was the insured’s employer at
586 the time the policy or certificate was issued and the employment
587 relationship terminated;
588 7.(g) A final order, judgment, or decree is entered by a
589 court of competent jurisdiction, on the application of a
590 creditor of the viator, adjudicating the viator bankrupt or
591 insolvent, or approving a petition seeking reorganization of the
592 viator or appointing a receiver, trustee, or liquidator to all
593 or a substantial part of the viator’s assets; or
594 8.(h) The viator experiences a significant decrease in
595 income which is unexpected by the viator and which impairs his
596 or her reasonable ability to pay the policy premium.
597 (d) The viator entered into a viatical settlement contract
598 more than 2 years after the policy’s issuance date and, with
599 respect to the policy, at all times before the date that is 2
600 years after policy issuance, each of the following conditions is
601 met:
602 1. Policy premiums have been funded exclusively with
603 unencumbered assets, including an interest in the life insurance
604 policy being financed only to the extent of its net cash
605 surrender value, provided by, or fully recourse liability
606 incurred by, the insured;
607 2. There is no agreement or understanding with any other
608 person to guarantee any such liability or to purchase, or stand
609 ready to purchase, the policy, including through an assumption
610 or forgiveness of the loan; and
611 3. Neither the insured or the policy has been evaluated for
612 settlement.
613
614 If the viatical settlement provider submits to the insurer a
615 copy of the viator’s or owner’s certification described above,
616 then the provider submits a request to the insurer to effect the
617 transfer of the policy or certificate to the viatical settlement
618 provider, the viatical settlement agreement shall not be void or
619 unenforceable by operation of this section. The insurer shall
620 timely respond to such request. Nothing in this section shall
621 prohibit an insurer from exercising its right during the
622 contestability period to contest the validity of any policy on
623 grounds of fraud.
624 Section 8. Section 626.99289, Florida Statutes, is created
625 to read:
626 626.99289 Void and unenforceable contracts, agreements,
627 arrangements, and transactions.—Notwithstanding s. 627.455, a
628 contract, agreement, arrangement, or transaction, including, but
629 not limited to, a financing agreement or any other arrangement
630 or understanding entered into, whether written or verbal, for
631 the furtherance or aid of a stranger-originated life insurance
632 practice is void and unenforceable.
633 Section 9. Section 626.99291, Florida Statutes, is created
634 to read:
635 626.99291 Contestability of life insurance policies.
636 Notwithstanding s. 627.455, a life insurer may contest a life
637 insurance policy if the policy was obtained by a stranger
638 originated life insurance practice, as defined in s. 626.9911.
639 Section 10. Section 626.99292, Florida Statutes, is created
640 to read:
641 626.99292 Notice to insureds.—
642 (1) A life insurer shall provide an individual life
643 insurance policyholder with a statement informing him or her
644 that if he or she is considering making changes in the status of
645 his or her policy, he or she should consult with a licensed
646 insurance or financial advisor. The statement may accompany or
647 be included in notices or mailings otherwise provided to the
648 policyholder.
649 (2) The statement must also advise the policyholder that he
650 or she may contact the office for more information and include a
651 website address or other location or manner by which the
652 policyholder may contact the office.
653 Section 11. Effective January 1, 2019, section 627.744,
654 Florida Statutes, is amended to read:
655 627.744 Required Preinsurance inspection of private
656 passenger motor vehicles.—
657 (1) A private passenger motor vehicle insurance policy
658 providing physical damage coverage, including collision or
659 comprehensive coverage, may not be issued in this state unless
660 the insurer has inspected the motor vehicle in accordance with
661 this section.
662 (2) This section does not apply:
663 (a) To a policy for a policyholder who has been insured for
664 2 years or longer, without interruption, under a private
665 passenger motor vehicle policy that provides physical damage
666 coverage for any vehicle if the agent of the insurer verifies
667 the previous coverage.
668 (b) To a new, unused motor vehicle purchased or leased from
669 a licensed motor vehicle dealer or leasing company. The insurer
670 may require:
671 1. A bill of sale, buyer’s order, or lease agreement that
672 contains a full description of the motor vehicle; or
673 2. A copy of the title or registration that establishes
674 transfer of ownership from the dealer or leasing company to the
675 customer and a copy of the window sticker.
676
677 For the purposes of this paragraph, the physical damage coverage
678 on the motor vehicle may not be suspended during the term of the
679 policy due to the applicant’s failure to provide or the
680 insurer’s option not to require the documents. However, if the
681 insurer requires a document under this paragraph at the time the
682 policy is issued, payment of a claim may be conditioned upon the
683 receipt by the insurer of the required documents, and no
684 physical damage loss occurring after the effective date of the
685 coverage may be payable until the documents are provided to the
686 insurer.
687 (c) To a temporary substitute motor vehicle.
688 (d) To a motor vehicle which is leased for less than 6
689 months, if the insurer receives the lease or rental agreement
690 containing a description of the leased motor vehicle, including
691 its condition. Payment of a physical damage claim is conditioned
692 upon receipt of the lease or rental agreement.
693 (e) To a vehicle that is 10 years old or older, as
694 determined by reference to the model year.
695 (f) To any renewal policy.
696 (g) To a motor vehicle policy issued in a county with a
697 1988 estimated population of less than 500,000.
698 (h) To any other vehicle or policy exempted by rule of the
699 commission. The commission may base a rule under this paragraph
700 only on a determination that the likelihood of a fraudulent
701 physical damage claim is remote or that the inspection would
702 cause a serious hardship to the insurer or the applicant.
703 (i) When the insurer’s authorized inspection service has no
704 inspection facility either in the municipality in which the
705 automobile is principally garaged or within 10 miles of such
706 municipality.
707 (j) When the insured vehicle is insured under a
708 commercially rated policy that insures five or more vehicles.
709 (k) When an insurance producer is transferring a book of
710 business from one insurer to another.
711 (l) When an individual insured’s coverage is being
712 transferred and initiated by a producer to a new insurer.
713 (3) This subsection does not prohibit an insurer from
714 requiring a preinsurance inspection of any motor vehicle as a
715 condition of issuance of physical damage coverage.
716 (3)(4) The inspection required by this section shall be
717 provided by the insurer or by a person or organization
718 authorized by the insurer. The applicant may be required to pay
719 the cost of the inspection, not to exceed $5. The inspection
720 shall be recorded on a form prescribed by the commission, and
721 the form or a copy shall be retained by the insurer with its
722 policy records for the insured. The insurer shall provide a copy
723 of the form to the insured upon request. Any inspection fee paid
724 directly by the applicant may not be considered part of the
725 premium. However, an insurer that provides the inspection at no
726 cost to the applicant may include the expense of the inspection
727 within a rate filing.
728 (4)(5) The inspection shall include at least the following:
729 (a) Taking a physical imprint of the vehicle identification
730 number of the vehicle or otherwise recording the vehicle
731 identification number in a manner prescribed by the commission.
732 (b) Recording the presence of accessories required by the
733 commission to be recorded.
734 (c) Recording the locations of and a description of
735 existing damage to the vehicle.
736 (5)(6) An insurer may defer an inspection for 30 calendar
737 days following the effective date of coverage for a new policy,
738 but not for a renewal policy, and for additional or replacement
739 vehicles to an existing policy, if an inspection at the time of
740 the request for coverage would create a serious inconvenience
741 for the applicant and such hardship is documented in the
742 insured’s policy record.
743 (6)(7) The commission may, by rule, establish such
744 procedures and notice requirements that it finds necessary to
745 implement this section.
746 (7) Notwithstanding any other provision of this section, an
747 insurer may opt out of the inspection requirements of this
748 section. An insurer opting out of the inspection must file a
749 manual rule with the office indicating that the insurer will not
750 participate in the inspection program under this section. An
751 insurer that files such a manual rule with the office may
752 establish its own preinsurance inspection requirements as a
753 condition to issuing a private passenger motor vehicle insurance
754 policy. The insurer’s preinsurance inspection requirements must
755 be included in the manual rule filed with the office. An insurer
756 opting out of the inspection requirements of this section may
757 not require an applicant to pay for the cost of an inspection.
758 (8) The Division of Insurance Fraud of the Department of
759 Financial Services shall provide a report of data from the
760 required preinsurance inspection of motor vehicles to the
761 Governor, the President of the Senate, and the Speaker of the
762 House of Representatives by December 1, 2016.
763 (a) The data must include, but need not be limited to:
764 1. A written estimate of the total cost incurred by
765 insurers and policyholders in order to comply with the
766 inspections.
767 2. A written estimate of the total cost incurred by
768 insurers to have their motor vehicles inspected.
769 3. Documentation regarding the total premium savings for
770 policyholders as a result of the inspections.
771 4. Documentation of the total number of inspected motor
772 vehicles that had a preexisting condition.
773 5. Documentation regarding the potential fraud in motor
774 vehicle claims incurred within the first 125 days after issuance
775 of a new policy.
776 6. Documentation of the total number of referrals of
777 fraudulent acts to the National Insurance Crime Bureau by
778 preinsurance inspectors during the past 5 years.
779 (b) The Legislature may use the report data in determining
780 the future public necessity for this section.
781 Section 12. Effective September 1, 2017, section 641.3915,
782 Florida Statutes, is amended to read:
783 641.3915 Health maintenance organization anti-fraud plans
784 and investigative units.—Each authorized health maintenance
785 organization and applicant for a certificate of authority shall
786 comply with the provisions of ss. 626.989 and 626.9891 as though
787 such organization or applicant were an authorized insurer. For
788 purposes of this section, the reference to the year 1996 in s.
789 626.9891 means the year 2000 and the reference to the year 1995
790 means the year 1999.
791 Section 13. Except as otherwise expressly provided in this
792 act, this act shall take effect upon becoming a law.