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.
   89  Be It Enacted by the Legislature of the State of Florida:
   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).
  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         626.9896Insurance 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.
  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.
  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         626.99291Contestability 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.
  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.