Florida Senate - 2018                        COMMITTEE AMENDMENT
       Bill No. SB 784
                              LEGISLATIVE ACTION                        
                    Senate             .             House              

       The Committee on Banking and Insurance (Brandes) recommended the
    1         Senate Amendment (with title amendment)
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Paragraph (c) is added to subsection (3) of
    6  section 625.151, Florida Statutes, to read:
    7         625.151 Valuation of other securities.—
    8         (3) Stock of a subsidiary corporation of an insurer may
    9  shall not be valued at an amount in excess of the net value
   10  thereof as based upon those assets only of the subsidiary which
   11  would be eligible under part II for investment of the funds of
   12  the insurer directly.
   13         (c) This subsection does not apply to stock of a subsidiary
   14  corporation or related entities of a foreign insurer which is
   15  permissible under the laws of its state of domicile, if the
   16  state of domicile is a member of the National Association of
   17  Insurance Commissioners.
   18         Section 2. Subsection (7) is added to section 625.325,
   19  Florida Statutes, to read:
   20         625.325 Investments in subsidiaries and related
   21  corporations.—
   22         (7) APPLICABILITY.-This section does not apply to a foreign
   23  insurer’s investments in its subsidiaries or related
   24  corporations if:
   25         (a) The foreign insurer is domiciled in a state that is a
   26  member of the National Association of Insurance Commissioners
   27  (NAIC).
   28         (b) Such investments in the foreign insurer’s subsidiaries
   29  or related corporations are:
   30         1. Permitted under the laws of the foreign insurer’s state
   31  of domicile.
   32         2.a. Assigned a rating of 1, 2, or 3 by the NAIC’s
   33  Securities Valuation Office (SVO); or
   34         b. Qualify for the NAIC’s filing exemption rule and
   35  assigned a rating by a nationally recognized statistical rating
   36  organization which would be equivalent to a rating of 1, 2, or 3
   37  by the SVO.
   38         Section 3. Paragraph (j) of subsection (2) of section
   39  626.221, Florida Statutes, is amended to read:
   40         626.221 Examination requirement; exemptions.—
   41         (2) However, an examination is not necessary for any of the
   42  following:
   43         (j) An applicant for license as an all-lines adjuster who
   44  has the designation of Accredited Claims Adjuster (ACA) from a
   45  regionally accredited postsecondary institution in this state,
   46  Associate in Claims (AIC) from the Insurance Institute of
   47  America, Professional Claims Adjuster (PCA) from the
   48  Professional Career Institute, Professional Property Insurance
   49  Adjuster (PPIA) from the HurriClaim Training Academy, Certified
   50  Adjuster (CA) from ALL LINES Training, Certified Claims Adjuster
   51  (CCA) from AE21 Incorporated, Claims Adjuster Certified
   52  Professional (CACP) from WebCE, Inc., or Universal Claims
   53  Certification (UCC) from Claims and Litigation Management
   54  Alliance (CLM) whose curriculum has been approved by the
   55  department and which includes comprehensive analysis of basic
   56  property and casualty lines of insurance and testing at least
   57  equal to that of standard department testing for the all-lines
   58  adjuster license. The department shall adopt rules establishing
   59  standards for the approval of curriculum.
   60         Section 4. Subsection (4) of section 626.914, Florida
   61  Statutes, is amended to read:
   62         626.914 Definitions.—As used in this Surplus Lines Law, the
   63  term:
   64         (4) “Diligent effort” means seeking coverage from and
   65  having been rejected by at least three authorized insurers
   66  currently writing this type of coverage and documenting these
   67  rejections. However, if the residential structure has a dwelling
   68  replacement cost of $700,000 $1 million or more, the term means
   69  seeking coverage from and having been rejected by at least one
   70  authorized insurer currently writing this type of coverage and
   71  documenting this rejection.
   72         Section 5. Paragraph (a) of subsection (2) of section
   73  626.918, Florida Statutes, is repealed.
   74         Section 6. Subsections (1) and (3) of section 626.932,
   75  Florida Statutes, are amended to read:
   76         626.932 Surplus lines tax.—
   77         (1) The premiums charged for surplus lines coverages are
   78  subject to a premium receipts tax of 4.936 5 percent of all
   79  gross premiums charged for such insurance. The surplus lines
   80  agent shall collect from the insured the amount of the tax at
   81  the time of the delivery of the cover note, certificate of
   82  insurance, policy, or other initial confirmation of insurance,
   83  in addition to the full amount of the gross premium charged by
   84  the insurer for the insurance. The surplus lines agent is
   85  prohibited from absorbing such tax or, as an inducement for
   86  insurance or for any other reason, rebating all or any part of
   87  such tax or of his or her commission.
   88         (3) If a surplus lines policy covers risks or exposures
   89  only partially in this state and the state is the home state as
   90  defined in the federal Nonadmitted and Reinsurance Reform Act of
   91  2010 (NRRA), the tax payable must shall be computed on the gross
   92  premium. The tax must not exceed the tax rate where the risk or
   93  exposure is located.
   94         Section 7. Section 626.9651, Florida Statutes, is amended
   95  to read:
   96         626.9651 Privacy.—The department and commission shall each
   97  adopt rules consistent with other provisions of the Florida
   98  Insurance Code to govern the use of a consumer’s nonpublic
   99  personal financial and health information. These rules must be
  100  based on, consistent with, and not more restrictive than the
  101  Privacy of Consumer Financial and Health Information Regulation,
  102  adopted September 26, 2000, by the National Association of
  103  Insurance Commissioners; however, the rules must permit the use
  104  and disclosure of nonpublic personal health information for
  105  scientific, medical, or public policy research, in accordance
  106  with federal law. In addition, these rules must be consistent
  107  with, and not more restrictive than, the standards contained in
  108  Title V of the Gramm-Leach-Bliley Act of 1999, Pub. L. No. 106
  109  102, as amended in Title LXXV of the Fixing America’s Surface
  110  Transportation (FAST) Act, Pub. L. No. 114-94. If the office
  111  determines that a health insurer or health maintenance
  112  organization is in compliance with, or is actively undertaking
  113  compliance with, the consumer privacy protection rules adopted
  114  by the United States Department of Health and Human Services, in
  115  conformance with the Health Insurance Portability and
  116  Affordability Act, that health insurer or health maintenance
  117  organization is in compliance with this section.
  118         Section 8. Subsection (1) of section 627.416, Florida
  119  Statutes, is amended, and subsection (4) is added to that
  120  section, to read:
  121         627.416 Execution of policies.—
  122         (1) Except as set forth in subsection (4), every insurance
  123  policy must shall be executed in the name of and on behalf of
  124  the insurer by its officer, attorney in fact, employee, or
  125  representative duly authorized by the insurer.
  126         (4) An insurer may elect to issue an insurance policy that
  127  is not executed by an officer, attorney in fact, employee, or
  128  representative, provided that such policy may not be rendered
  129  invalid by reason of the lack of execution thereof.
  130         Section 9. Subsection (2) of section 627.43141, Florida
  131  Statutes, is amended to read:
  132         627.43141 Notice of change in policy terms.—
  133         (2) A renewal policy may contain a change in policy terms.
  134  If such change occurs, the insurer shall give the named insured
  135  advance written notice summarizing of the change, which may be
  136  enclosed along with the written notice of renewal premium
  137  required under ss. 627.4133 and 627.728 or sent separately
  138  within the timeframe required under the Florida Insurance Code
  139  for the provision of a notice of nonrenewal to the named insured
  140  for that line of insurance. The insurer must also provide a
  141  sample copy of the notice to the named insured’s insurance agent
  142  before or at the same time that notice is provided to the named
  143  insured. Such notice must shall be entitled “Notice of Change in
  144  Policy Terms.”
  145         Section 10. Subsections (1), (3), (6), and (9) of section
  146  627.7015, Florida Statutes, are amended to read:
  147         627.7015 Alternative procedure for resolution of disputed
  148  property insurance claims.—
  149         (1) This section sets forth a nonadversarial alternative
  150  dispute resolution procedure for a mediated claim resolution
  151  conference prompted by the need for effective, fair, and timely
  152  handling of property insurance claims. There is a particular
  153  need for an informal, nonthreatening forum for helping parties
  154  who elect this procedure to resolve their claims disputes
  155  because most homeowner and commercial residential insurance
  156  policies obligate policyholders to participate in a potentially
  157  expensive and time-consuming adversarial appraisal process
  158  before litigation. The procedure set forth in this section is
  159  designed to bring the parties together for a mediated claims
  160  settlement conference without any of the trappings or drawbacks
  161  of an adversarial process. Before resorting to these procedures,
  162  policyholders and insurers are encouraged to resolve claims as
  163  quickly and fairly as possible. This section is available with
  164  respect to claims under personal lines and commercial
  165  residential policies before commencing the appraisal process, or
  166  before commencing litigation. Mediation may be requested only by
  167  the policyholder, as a first-party claimant; a third party, as
  168  assignee of the policy benefits;, or the insurer. However, an
  169  insurer is not required to participate in any mediation
  170  requested by a third party assignee of policy benefits. If
  171  requested by the policyholder, participation by legal counsel is
  172  permitted. Mediation under this section is also available to
  173  litigants referred to the department by a county court or
  174  circuit court. This section does not apply to commercial
  175  coverages, to private passenger motor vehicle insurance
  176  coverages, or to disputes relating to liability coverages in
  177  policies of property insurance.
  178         (3) The costs of mediation must shall be reasonable, and
  179  the insurer shall bear all of the cost of conducting mediation
  180  conferences, except as otherwise provided in this section. If
  181  the policyholder an insured fails to appear at the conference,
  182  the conference must shall be rescheduled upon the policyholder’s
  183  insured’s payment of the costs of a rescheduled conference. If
  184  the insurer fails to appear at the conference, the insurer must
  185  shall pay the policyholder’s insured’s actual cash expenses
  186  incurred in attending the conference if the insurer’s failure to
  187  attend was not due to a good cause acceptable to the department.
  188  An insurer will be deemed to have failed to appear if the
  189  insurer’s representative lacks authority to settle the full
  190  value of the claim. The insurer shall incur an additional fee
  191  for a rescheduled conference necessitated by the insurer’s
  192  failure to appear at a scheduled conference. The fees assessed
  193  by the administrator must shall include a charge necessary to
  194  defray the expenses of the department related to its duties
  195  under this section and must shall be deposited in the Insurance
  196  Regulatory Trust Fund.
  197         (6) Mediation is nonbinding; however, if a written
  198  settlement is reached, the policyholder insured has 3 business
  199  days within which the policyholder insured may rescind the
  200  settlement unless the policyholder insured has cashed or
  201  deposited any check or draft disbursed to the policyholder
  202  insured for the disputed matters as a result of the conference.
  203  If a settlement agreement is reached and is not rescinded, it is
  204  shall be binding and acts act as a release of all specific
  205  claims that were presented in that mediation conference.
  206         (9) For purposes of this section, the term “claim” refers
  207  to any dispute between an insurer and a policyholder relating to
  208  a material issue of fact other than a dispute:
  209         (a) With respect to which the insurer has a reasonable
  210  basis to suspect fraud;
  211         (b) When Where, based on agreed-upon facts as to the cause
  212  of loss, there is no coverage under the policy;
  213         (c) With respect to which the insurer has a reasonable
  214  basis to believe that the policyholder has intentionally made a
  215  material misrepresentation of fact which is relevant to the
  216  claim, and the entire request for payment of a loss has been
  217  denied on the basis of the material misrepresentation;
  218         (d) With respect to which the amount in controversy is less
  219  than $500, unless the parties agree to mediate a dispute
  220  involving a lesser amount; or
  221         (e) With respect to a windstorm or hurricane loss that does
  222  not comply with s. 627.70132.
  223         Section 11. Subsection (5) of section 627.728, Florida
  224  Statutes, is amended to read:
  225         627.728 Cancellations; nonrenewals.—
  226         (5) United States postal proof of mailing, or certified or
  227  registered mailing, or other mailing using the Intelligent Mail
  228  barcode or other similar tracking method used or approved by the
  229  United States Postal Service of notice of cancellation, of
  230  intention not to renew, or of reasons for cancellation, or of
  231  the intention of the insurer to issue a policy by an insurer
  232  under the same ownership or management, to the first-named
  233  insured at the address shown in the policy is shall be
  234  sufficient proof of notice.
  235         Section 12. Subsections (1) and (7) of section 628.4615,
  236  Florida Statutes, are amended, present subsections (11) through
  237  (14) of that section are redesignated as subsections (12)
  238  through (15), respectively, and a new subsection (11) is added
  239  to that section, to read:
  240         628.4615 Specialty insurers; acquisition of controlling
  241  stock, ownership interest, assets, or control; merger or
  242  consolidation.—
  243         (1) For the purposes of this section, the term “specialty
  244  insurer” means any person holding a license or certificate of
  245  authority as:
  246         (a) A motor vehicle service agreement company authorized to
  247  issue motor vehicle service agreements as those terms are
  248  defined in s. 634.011;
  249         (b) A home warranty association authorized to issue “home
  250  warranties” as those terms are defined in s. 634.301;
  251         (c) A service warranty association authorized to issue
  252  “service warranties” as those terms are defined in s.
  253  634.401(13) and (14);
  254         (d) A prepaid limited health service organization
  255  authorized to issue prepaid limited health service contracts, as
  256  those terms are defined in chapter 636;
  257         (e) An authorized health maintenance organization operating
  258  pursuant to s. 641.21;
  259         (f) An authorized prepaid health clinic operating pursuant
  260  to s. 641.405;
  261         (g) A legal expense insurance corporation authorized to
  262  engage in a legal expense insurance business pursuant to s.
  263  642.021;
  264         (h) A provider that is licensed to operate a facility that
  265  undertakes to provide continuing care as those terms are defined
  266  in s. 651.011;
  267         (i) A multiple-employer welfare arrangement operating
  268  pursuant to ss. 624.436-624.446;
  269         (j) A premium finance company authorized to finance
  270  insurance premiums pursuant to s. 627.828; or
  271         (k) A corporation authorized to accept donor annuity
  272  agreements pursuant to s. 627.481; or
  273         (l) A viatical settlement provider authorized to do
  274  business in this state under part X of chapter 626.
  275         (7) The office may disapprove any acquisition subject to
  276  the provisions of this section by any person or any affiliated
  277  person of such person who:
  278         (a) Willfully violates this section;
  279         (b) In violation of an order of the office issued pursuant
  280  to subsection (12) (11), fails to divest himself or herself of
  281  any stock or ownership interest obtained in violation of this
  282  section or fails to divest himself or herself of any direct or
  283  indirect control of such stock or ownership interest, within 25
  284  days after such order; or
  285         (c) In violation of an order issued by the office pursuant
  286  to subsection (12) (11), acquires an additional stock or
  287  ownership interest in a specialty insurer or controlling company
  288  or direct or indirect control of such stock or ownership
  289  interest, without complying with this section.
  290         (11) A person may rebut a presumption of control by filing
  291  a disclaimer of control with the office on a form prescribed by
  292  the commission. The disclaimer must fully disclose all material
  293  relationships and bases for affiliation between the person and
  294  the specialty insurer as well as the basis for disclaiming the
  295  affiliation. In lieu of such form, a person or acquiring party
  296  may file with the office a copy of a Schedule 13G filed with the
  297  Securities and Exchange Commission pursuant to Rule 13d-1(b) or
  298  (c), 17 C.F.R. s. 240.13d-1, under the Securities Exchange Act
  299  of 1934, as amended. After a disclaimer has been filed, the
  300  specialty insurer is relieved of any duty to register or report
  301  under this section which may arise out of the specialty
  302  insurer’s relationship with the person unless the office
  303  disallows the disclaimer.
  304         Section 13. Subsection (4) of section 628.8015, Florida
  305  Statutes, is amended to read:
  306         628.8015 Own-risk and solvency assessment; corporate
  307  governance annual disclosure.—
  308         (4) CONFIDENTIALITY.—The required filings and related
  309  documents submitted pursuant to subsections (2) and (3) are
  310  privileged such that they may not be produced in response to a
  311  subpoena or other discovery directed to the office, and any such
  312  filings and related documents, if obtained from the office, are
  313  not admissible in evidence in any private civil action. However,
  314  the department or office may use these filings and related
  315  documents in the furtherance of any regulatory or legal action
  316  brought against an insurer as part of the official duties of the
  317  department or office. A waiver of any applicable claim of
  318  privilege in these filings and related documents may not occur
  319  because of a disclosure to the office under this section,
  320  because of any other provision of the Insurance Code, or because
  321  of sharing under s. 624.4212. The office or a person receiving
  322  these filings and related documents, while acting under the
  323  authority of the office, or with whom such filings and related
  324  documents are shared pursuant to s. 624.4212, is not permitted
  325  or required to testify in any private civil action concerning
  326  any such filings or related documents.
  327         Section 14. Paragraph (b) of subsection (6) of section
  328  629.401, Florida Statutes, is amended to read:
  329         629.401 Insurance exchange.—
  330         (6)
  331         (b) In addition to the insurance laws specified in
  332  paragraph (a), the office shall regulate the exchange pursuant
  333  to the following powers, rights, and duties:
  334         1. General examination powers.—The office shall examine the
  335  affairs, transactions, accounts, records, and assets of any
  336  security fund, exchange, members, and associate brokers as often
  337  as it deems advisable. The examination may be conducted by the
  338  accredited examiners of the office at the offices of the entity
  339  or person being examined. The office shall examine in like
  340  manner each prospective member or associate broker applying for
  341  membership in an exchange.
  342         2. Office approval and applications of underwriting
  343  members.—No underwriting member shall commence operation without
  344  the approval of the office. Before commencing operation, an
  345  underwriting member shall provide a written application
  346  containing:
  347         a. Name, type, and purpose of the underwriting member.
  348         b. Name, residence address, business background, and
  349  qualifications of each person associated or to be associated in
  350  the formation or financing of the underwriting member.
  351         c. Full disclosure of the terms of all understandings and
  352  agreements existing or proposed among persons so associated
  353  relative to the underwriting member, or the formation or
  354  financing thereof, accompanied by a copy of each such agreement
  355  or understanding.
  356         d. Full disclosure of the terms of all understandings and
  357  agreements existing or proposed for management or exclusive
  358  agency contracts.
  359         3. Investigation of underwriting member applications.—In
  360  connection with any proposal to establish an underwriting
  361  member, the office shall make an investigation of:
  362         a. The character, reputation, financial standing, and
  363  motives of the organizers, incorporators, or subscribers
  364  organizing the proposed underwriting member.
  365         b. The character, financial responsibility, insurance
  366  experience, and business qualifications of its proposed
  367  officers.
  368         c. The character, financial responsibility, business
  369  experience, and standing of the proposed stockholders and
  370  directors, or owners.
  371         4. Notice of management changes.—An underwriting member
  372  shall promptly give the office written notice of any change
  373  among the directors or principal officers of the underwriting
  374  member within 30 days after such change. The office shall
  375  investigate the new directors or principal officers of the
  376  underwriting member. The office’s investigation shall include an
  377  investigation of the character, financial responsibility,
  378  insurance experience, and business qualifications of any new
  379  directors or principal officers. As a result of the
  380  investigation, the office may require the underwriting member to
  381  replace any new directors or principal officers.
  382         5. Alternate financial statement.—In lieu of any financial
  383  examination, the office may accept an audited financial
  384  statement.
  385         6. Correction and reconstruction of records.—If the office
  386  finds any accounts or records to be inadequate, or inadequately
  387  kept or posted, it may employ experts to reconstruct, rewrite,
  388  post, or balance them at the expense of the person or entity
  389  being examined if such person or entity has failed to maintain,
  390  complete, or correct such records or accounts after the office
  391  has given him or her or it notice and reasonable opportunity to
  392  do so.
  393         7. Obstruction of examinations.—Any person or entity who or
  394  which willfully obstructs the office or its examiner in an
  395  examination is guilty of a misdemeanor of the second degree,
  396  punishable as provided in s. 775.082 or s. 775.083.
  397         8. Filing of annual statement.—Each underwriting member
  398  shall file with the office a full and true statement of its
  399  financial condition, transactions, and affairs. The statement
  400  shall be filed on or before March 1 of each year, or within such
  401  extension of time as the office for good cause grants, and shall
  402  be for the preceding calendar year. The statement shall contain
  403  information generally included in insurer financial statements
  404  prepared in accordance with generally accepted insurance
  405  accounting principles and practices and in a form generally
  406  utilized by insurers for financial statements, sworn to by at
  407  least two executive officers of the underwriting member. The
  408  form of the financial statements shall be the approved form of
  409  the National Association of Insurance Commissioners or its
  410  successor organization. The commission may by rule require each
  411  insurer to submit any part of the information contained in the
  412  financial statement in a computer-readable form compatible with
  413  the office’s electronic data processing system. In addition to
  414  information furnished in connection with its annual statement,
  415  an underwriting member must furnish to the office as soon as
  416  reasonably possible such information about its transactions or
  417  affairs as the office requests in writing. All information
  418  furnished pursuant to the office’s request must be verified by
  419  the oath of two executive officers of the underwriting member.
  420         9. Record maintenance.—Each underwriting member shall have
  421  and maintain its principal place of business in this state and
  422  shall keep therein complete records of its assets, transactions,
  423  and affairs in accordance with such methods and systems as are
  424  customary for or suitable to the kind or kinds of insurance
  425  transacted.
  426         10. Examination of agents.—If the department has reason to
  427  believe that any agent, as defined in s. 626.015 or s. 626.914,
  428  has violated or is violating any provision of the insurance law,
  429  or upon receipt of a written complaint signed by any interested
  430  person indicating that any such violation may exist, the
  431  department shall conduct such examination as it deems necessary
  432  of the accounts, records, documents, and transactions pertaining
  433  to or affecting the insurance affairs of such agent.
  434         11. Written reports of office.—The office or its examiner
  435  shall make a full and true written report of any examination.
  436  The report shall contain only information obtained from
  437  examination of the records, accounts, files, and documents of or
  438  relative to the person or entity examined or from testimony of
  439  individuals under oath, together with relevant conclusions and
  440  recommendations of the examiner based thereon. The office shall
  441  furnish a copy of the report to the person or entity examined
  442  not less than 30 days prior to filing the report in its office.
  443  If such person or entity so requests in writing within such 30
  444  day period, the office shall grant a hearing with respect to the
  445  report and shall not file the report until after the hearing and
  446  after such modifications have been made therein as the office
  447  deems proper.
  448         12. Admissibility of reports.—The report of an examination
  449  when filed shall be admissible in evidence in any action or
  450  proceeding brought by the office against the person or entity
  451  examined, or against his or her or its officers, employees, or
  452  agents. The office or its examiners may at any time testify and
  453  offer other proper evidence as to information secured or matters
  454  discovered during the course of an examination, whether or not a
  455  written report of the examination has been either made,
  456  furnished, or filed in the office.
  457         13. Publication of reports.—After an examination report has
  458  been filed, the office may publish the results of any such
  459  examination in one or more newspapers published in this state
  460  whenever it deems it to be in the public interest.
  461         14. Consideration of examination reports by entity
  462  examined.—After the examination report of an underwriting member
  463  has been filed, an affidavit shall be filed with the office, not
  464  more than 30 days after the report has been filed, on a form
  465  furnished by the office and signed by the person or a
  466  representative of any entity examined, stating that the report
  467  has been read and that the recommendations made in the report
  468  will be considered within a reasonable time.
  469         15. Examination costs.—Each person or entity examined by
  470  the office shall pay to the office the expenses incurred in such
  471  examination.
  472         16. Exchange costs.—An exchange shall reimburse the office
  473  for any expenses incurred by it relating to the regulation of
  474  the exchange and its members, except as specified in
  475  subparagraph 15.
  476         17. Powers of examiners.—Any examiner appointed by the
  477  office, as to the subject of any examination, investigation, or
  478  hearing being conducted by him or her, may administer oaths,
  479  examine and cross-examine witnesses, and receive oral and
  480  documentary evidence, and shall have the power to subpoena
  481  witnesses, compel their attendance and testimony, and require by
  482  subpoena the production of books, papers, records, files,
  483  correspondence, documents, or other evidence which the examiner
  484  deems relevant to the inquiry. If any person refuses to comply
  485  with any such subpoena or to testify as to any matter concerning
  486  which he or she may be lawfully interrogated, the Circuit Court
  487  of Leon County or the circuit court of the county wherein such
  488  examination, investigation, or hearing is being conducted, or of
  489  the county wherein such person resides, on the office’s
  490  application may issue an order requiring such person to comply
  491  with the subpoena and to testify; and any failure to obey such
  492  an order of the court may be punished by the court as a contempt
  493  thereof. Subpoenas shall be served, and proof of such service
  494  made, in the same manner as if issued by a circuit court.
  495  Witness fees and mileage, if claimed, shall be allowed the same
  496  as for testimony in a circuit court.
  497         18. False testimony.—Any person willfully testifying
  498  falsely under oath as to any matter material to any examination,
  499  investigation, or hearing shall upon conviction thereof be
  500  guilty of perjury and shall be punished accordingly.
  501         19. Self-incrimination.—
  502         a. If any person asks to be excused from attending or
  503  testifying or from producing any books, papers, records,
  504  contracts, documents, or other evidence in connection with any
  505  examination, hearing, or investigation being conducted by the
  506  office or its examiner, on the ground that the testimony or
  507  evidence required of the person may tend to incriminate him or
  508  her or subject him or her to a penalty or forfeiture, and the
  509  person notwithstanding is directed to give such testimony or
  510  produce such evidence, he or she shall, if so directed by the
  511  office and the Department of Legal Affairs, nonetheless comply
  512  with such direction; but the person shall not thereafter be
  513  prosecuted or subjected to any penalty or forfeiture for or on
  514  account of any transaction, matter, or thing concerning which he
  515  or she may have so testified or produced evidence, and no
  516  testimony so given or evidence so produced shall be received
  517  against him or her upon any criminal action, investigation, or
  518  proceeding; except that no such person so testifying shall be
  519  exempt from prosecution or punishment for any perjury committed
  520  by him or her in such testimony, and the testimony or evidence
  521  so given or produced shall be admissible against him or her upon
  522  any criminal action, investigation, or proceeding concerning
  523  such perjury, nor shall he or she be exempt from the refusal,
  524  suspension, or revocation of any license, permission, or
  525  authority conferred, or to be conferred, pursuant to the
  526  insurance law.
  527         b. Any such individual may execute, acknowledge, and file
  528  with the office a statement expressly waiving such immunity or
  529  privilege in respect to any transaction, matter, or thing
  530  specified in such statement, and thereupon the testimony of such
  531  individual or such evidence in relation to such transaction,
  532  matter, or thing may be received or produced before any judge or
  533  justice, court, tribunal, grand jury, or otherwise; and if such
  534  testimony or evidence is so received or produced, such
  535  individual shall not be entitled to any immunity or privileges
  536  on account of any testimony so given or evidence so produced.
  537         20. Penalty for failure to testify.—Any person who refuses
  538  or fails, without lawful cause, to testify relative to the
  539  affairs of any member, associate broker, or other person when
  540  subpoenaed and requested by the office to so testify, as
  541  provided in subparagraph 17., shall, in addition to the penalty
  542  provided in subparagraph 17., be guilty of a misdemeanor of the
  543  second degree, punishable as provided in s. 775.082 or s.
  544  775.083.
  545         21. Name selection.—No underwriting member shall be formed
  546  or authorized to transact insurance in this state under a name
  547  which is the same as that of any authorized insurer or is so
  548  nearly similar thereto as to cause or tend to cause confusion or
  549  under a name which would tend to mislead as to the type of
  550  organization of the insurer. Before incorporating under or using
  551  any name, the underwriting syndicate or proposed underwriting
  552  syndicate shall submit its name or proposed name to the office
  553  for the approval of the office.
  554         22. Capitalization.—An underwriting member approved on or
  555  after July 2, 1987, shall provide an initial paid-in capital and
  556  surplus of $3 million and thereafter shall maintain a minimum
  557  policyholder surplus of $2 million in order to be permitted to
  558  write insurance. Underwriting members approved prior to July 2,
  559  1987, shall maintain a minimum policyholder surplus of $1
  560  million. After June 29, 1988, underwriting members approved
  561  prior to July 2, 1987, must maintain a minimum policyholder
  562  surplus of $1.5 million to write insurance. After June 29, 1989,
  563  underwriting members approved prior to July 2, 1987, must
  564  maintain a minimum policyholder surplus of $1.75 million to
  565  write insurance. After December 30, 1989, all underwriting
  566  members, regardless of the date they were approved, must
  567  maintain a minimum policyholder surplus of $2 million to write
  568  insurance. Except for that portion of the paid-in capital and
  569  surplus which shall be maintained in a security fund of an
  570  exchange, the paid-in capital and surplus shall be invested by
  571  an underwriting member in a manner consistent with ss. 625.301
  572  625.340. The portion of the paid-in capital and surplus in any
  573  security fund of an exchange shall be invested in a manner
  574  limited to investments for life insurance companies under the
  575  Florida insurance laws.
  576         23. Limitations on coverage written.—
  577         a. Limit of risk.—No underwriting member shall expose
  578  itself to any loss on any one risk in an amount exceeding 10
  579  percent of its surplus to policyholders. Any risk or portion of
  580  any risk which shall have been reinsured in an assuming
  581  reinsurer authorized or approved to do such business in this
  582  state shall be deducted in determining the limitation of risk
  583  prescribed in this section.
  584         b. Restrictions on premiums written.—If the office has
  585  reason to believe that the underwriting member’s ratio of actual
  586  or projected annual gross written premiums to policyholder
  587  surplus exceeds 8 to 1 or the underwriting member’s ratio of
  588  actual or projected annual net premiums to policyholder surplus
  589  exceeds 4 to 1, the office may establish maximum gross or net
  590  annual premiums to be written by the underwriting member
  591  consistent with maintaining the ratios specified in this sub
  592  subparagraph.
  593         (I) Projected annual net or gross premiums shall be based
  594  on the actual writings to date for the underwriting member’s
  595  current calendar year, its writings for the previous calendar
  596  year, or both. Ratios shall be computed on an annualized basis.
  597         (II) For purposes of this sub-subparagraph, the term “gross
  598  written premiums” means direct premiums written and reinsurance
  599  assumed.
  600         c. Surplus as to policyholders.—For the purpose of
  601  determining the limitation on coverage written, surplus as to
  602  policyholders shall be deemed to include any voluntary reserves,
  603  or any part thereof, which are not required by or pursuant to
  604  law and shall be determined from the last sworn statement of
  605  such underwriting member with the office, or by the last report
  606  or examination filed by the office, whichever is more recent at
  607  the time of assumption of such risk.
  608         24. Unearned premium reserves.—An underwriting member must
  609  at all times maintain an unearned premium reserve equal to 50
  610  percent of the net written premiums of the subscribers on
  611  policies having 1 year or less to run, and pro rata on those for
  612  longer periods, All unearned premium reserves for business
  613  written on the exchange shall be calculated on a monthly or more
  614  frequent basis or on such other basis as determined by the
  615  office; except that all premiums on any marine or transportation
  616  insurance trip risk shall be deemed unearned until the trip is
  617  terminated. For the purpose of this subparagraph, the term “net
  618  written premiums” means the premium payments made by subscribers
  619  plus the premiums due from subscribers, after deducting the
  620  amounts specifically provided in the subscribers’ agreements for
  621  expenses, including reinsurance costs and fees paid to the
  622  attorney in fact, provided that the power of attorney agreement
  623  contains an explicit provision requiring the attorney in fact to
  624  refund any unearned subscribers fees on a pro-rata basis for
  625  cancelled policies. If there is no such provision, the unearned
  626  premium reserves must be calculated without any adjustment for
  627  fees paid to the attorney in fact. If the unearned premium
  628  reserves at any time do not amount to $100,000, there must be
  629  maintained on deposit at the exchange at all times additional
  630  funds in cash or eligible securities, which, together with the
  631  unearned premium reserves, equal $100,000. In calculating the
  632  foregoing reserves, the amount of the attorney’s bond, as filed
  633  with the office and as required by s. 629.121, must be included
  634  in such reserves. If at any time the unearned premium reserves
  635  are less than the foregoing requirements, the subscribers or the
  636  attorney in fact shall advance funds to make up the deficiency.
  637  Such advances must be repaid only out of the surplus of the
  638  exchange and only after receiving written approval from the
  639  office.
  640         25. Loss reserves.—All underwriting members of an exchange
  641  shall maintain loss reserves, including a reserve for incurred
  642  but not reported claims. The reserves shall be subject to review
  643  by the office, and, if loss experience shows that an
  644  underwriting member’s loss reserves are inadequate, the office
  645  shall require the underwriting member to maintain loss reserves
  646  in such additional amount as is needed to make them adequate.
  647         26. Distribution of profits.—An underwriting member shall
  648  not distribute any profits in the form of cash or other assets
  649  to owners except out of that part of its available and
  650  accumulated surplus funds which is derived from realized net
  651  operating profits on its business and realized capital gains. In
  652  any one year such payments to owners shall not exceed 30 percent
  653  of such surplus as of December 31 of the immediately preceding
  654  year, unless otherwise approved by the office. No distribution
  655  of profits shall be made that would render an underwriting
  656  member either impaired or insolvent.
  657         27. Stock dividends.—A stock dividend may be paid by an
  658  underwriting member out of any available surplus funds in excess
  659  of the aggregate amount of surplus advanced to the underwriting
  660  member under subparagraph 29.
  661         28. Dividends from earned surplus.—A dividend otherwise
  662  lawful may be payable out of an underwriting member’s earned
  663  surplus even though the total surplus of the underwriting member
  664  is then less than the aggregate of its past contributed surplus
  665  resulting from issuance of its capital stock at a price in
  666  excess of the par value thereof.
  667         29. Borrowing of money by underwriting members.—
  668         a. An underwriting member may borrow money to defray the
  669  expenses of its organization, provide it with surplus funds, or
  670  for any purpose of its business, upon a written agreement that
  671  such money is required to be repaid only out of the underwriting
  672  member’s surplus in excess of that stipulated in such agreement.
  673  The agreement may provide for interest not exceeding 15 percent
  674  simple interest per annum. The interest shall or shall not
  675  constitute a liability of the underwriting member as to its
  676  funds other than such excess of surplus, as stipulated in the
  677  agreement. No commission or promotion expense shall be paid in
  678  connection with any such loan. The use of any surplus note and
  679  any repayments thereof shall be subject to the approval of the
  680  office.
  681         b. Money so borrowed, together with any interest thereon if
  682  so stipulated in the agreement, shall not form a part of the
  683  underwriting member’s legal liabilities except as to its surplus
  684  in excess of the amount thereof stipulated in the agreement, nor
  685  be the basis of any setoff; but until repayment, financial
  686  statements filed or published by an underwriting member shall
  687  show as a footnote thereto the amount thereof then unpaid,
  688  together with any interest thereon accrued but unpaid.
  689         30. Liquidation, rehabilitation, and restrictions.—The
  690  office, upon a showing that a member or associate broker of an
  691  exchange has met one or more of the grounds contained in part I
  692  of chapter 631, may restrict sales by type of risk, policy or
  693  contract limits, premium levels, or policy or contract
  694  provisions; increase surplus or capital requirements of
  695  underwriting members; issue cease and desist orders; suspend or
  696  restrict a member’s or associate broker’s right to transact
  697  business; place an underwriting member under conservatorship or
  698  rehabilitation; or seek an order of liquidation as authorized by
  699  part I of chapter 631.
  700         31. Prohibited conduct.—The following acts by a member,
  701  associate broker, or affiliated person shall constitute
  702  prohibited conduct:
  703         a. Fraud.
  704         b. Fraudulent or dishonest acts committed by a member or
  705  associate broker prior to admission to an exchange, if the facts
  706  and circumstances were not disclosed to the office upon
  707  application to become a member or associate broker.
  708         c. Conduct detrimental to the welfare of an exchange.
  709         d. Unethical or improper practices or conduct, inconsistent
  710  with just and equitable principles of trade as set forth in, but
  711  not limited to, ss. 626.951-626.9641 and 626.973.
  712         e. Failure to use due diligence to ascertain the insurance
  713  needs of a client or a principal.
  714         f. Misstatements made under oath or upon an application for
  715  membership on an exchange.
  716         g. Failure to testify or produce documents when requested
  717  by the office.
  718         h. Willful violation of any law of this state.
  719         i. Failure of an officer or principal to testify under oath
  720  concerning a member, associate broker, or other person’s affairs
  721  as they relate to the operation of an exchange.
  722         j. Violation of the constitution and bylaws of the
  723  exchange.
  724         32. Penalties for participating in prohibited conduct.—
  725         a. The office may order the suspension of further
  726  transaction of business on the exchange of any member or
  727  associate broker found to have engaged in prohibited conduct. In
  728  addition, any member or associate broker found to have engaged
  729  in prohibited conduct may be subject to reprimand, censure,
  730  and/or a fine not exceeding $25,000 imposed by the office.
  731         b. Any member which has an affiliated person who is found
  732  to have engaged in prohibited conduct shall be subject to
  733  involuntary withdrawal or in addition thereto may be subject to
  734  suspension, reprimand, censure, and/or a fine not exceeding
  735  $25,000.
  736         33. Reduction of penalties.—Any suspension, reprimand,
  737  censure, or fine may be remitted or reduced by the office on
  738  such terms and conditions as are deemed fair and equitable.
  739         34. Other offenses.—Any member or associate broker that is
  740  suspended shall be deprived, during the period of suspension, of
  741  all rights and privileges of a member or of an associate broker
  742  and may be proceeded against by the office for any offense
  743  committed either before or after the date of suspension.
  744         35. Reinstatement.—Any member or associate broker that is
  745  suspended may be reinstated at any time on such terms and
  746  conditions as the office may specify.
  747         36. Remittance of fines.—Fines imposed under this section
  748  shall be remitted to the office and shall be paid into the
  749  Insurance Regulatory Trust Fund.
  750         37. Failure to pay fines.—When a member or associate broker
  751  has failed to pay a fine for 15 days after it becomes payable,
  752  such member or associate broker shall be suspended, unless the
  753  office has granted an extension of time to pay such fine.
  754         38. Changes in ownership or assets.—In the event of a major
  755  change in the ownership or a major change in the assets of an
  756  underwriting member, the underwriting member shall report such
  757  change in writing to the office within 30 days of the effective
  758  date thereof. The report shall set forth the details of the
  759  change. Any change in ownership or assets of more than 5 percent
  760  shall be considered a major change.
  761         39. Retaliation.—
  762         a. When by or pursuant to the laws of any other state or
  763  foreign country any taxes, licenses, or other fees, in the
  764  aggregate, and any fines, penalties, deposit requirements, or
  765  other material obligations, prohibitions, or restrictions are or
  766  would be imposed upon an exchange or upon the agents or
  767  representatives of such exchange which are in excess of such
  768  taxes, licenses, and other fees, in the aggregate, or which are
  769  in excess of such fines, penalties, deposit requirements, or
  770  other obligations, prohibitions, or restrictions directly
  771  imposed upon similar exchanges or upon the agents or
  772  representatives of such exchanges of such other state or country
  773  under the statutes of this state, so long as such laws of such
  774  other state or country continue in force or are so applied, the
  775  same taxes, licenses, and other fees, in the aggregate, or
  776  fines, penalties, deposit requirements, or other material
  777  obligations, prohibitions, or restrictions of whatever kind
  778  shall be imposed by the office upon the exchanges, or upon the
  779  agents or representatives of such exchanges, of such other state
  780  or country doing business or seeking to do business in this
  781  state.
  782         b. Any tax, license, or other obligation imposed by any
  783  city, county, or other political subdivision or agency of a
  784  state, jurisdiction, or foreign country on an exchange, or on
  785  the agents or representatives on an exchange, shall be deemed to
  786  be imposed by such state, jurisdiction, or foreign country
  787  within the meaning of sub-subparagraph a.
  788         40. Agents.—
  789         a. Agents as defined in ss. 626.015 and 626.914 who are
  790  broker members or associate broker members of an exchange shall
  791  be allowed only to place on an exchange the same kind or kinds
  792  of business that the agent is licensed to place pursuant to
  793  Florida law. Direct Florida business as defined in s. 626.916 or
  794  s. 626.917 shall be written through a broker member who is a
  795  surplus lines agent as defined in s. 626.914. The activities of
  796  each broker member or associate broker with regard to an
  797  exchange shall be subject to all applicable provisions of the
  798  insurance laws of this state, and all such activities shall
  799  constitute transactions under his or her license as an insurance
  800  agent for purposes of the Florida insurance law.
  801         b. Premium payments and other requirements.—If an
  802  underwriting member has assumed the risk as to a surplus lines
  803  coverage and if the premium therefor has been received by the
  804  surplus lines agent who placed such insurance, then in all
  805  questions thereafter arising under the coverage as between the
  806  underwriting member and the insured, the underwriting member
  807  shall be deemed to have received the premium due to it for such
  808  coverage; and the underwriting member shall be liable to the
  809  insured as to losses covered by such insurance, and for unearned
  810  premiums which may become payable to the insured upon
  811  cancellation of such insurance, whether or not in fact the
  812  surplus lines agent is indebted to the underwriting member with
  813  respect to such insurance or for any other cause.
  814         41. Improperly issued contracts, riders, and endorsements.—
  815         a. Any insurance policy, rider, or endorsement issued by an
  816  underwriting member and otherwise valid which contains any
  817  condition or provision not in compliance with the requirements
  818  of this section shall not be thereby rendered invalid, except as
  819  provided in s. 627.415, but shall be construed and applied in
  820  accordance with such conditions and provisions as would have
  821  applied had such policy, rider, or endorsement been in full
  822  compliance with this section. In the event an underwriting
  823  member issues or delivers any policy for an amount which exceeds
  824  any limitations otherwise provided in this section, the
  825  underwriting member shall be liable to the insured or his or her
  826  beneficiary for the full amount stated in the policy in addition
  827  to any other penalties that may be imposed.
  828         b. Any insurance contract delivered or issued for delivery
  829  in this state governing a subject or subjects of insurance
  830  resident, located, or to be performed in this state which,
  831  pursuant to the provisions of this section, the underwriting
  832  member may not lawfully insure under such a contract shall be
  833  cancelable at any time by the underwriting member, any provision
  834  of the contract to the contrary notwithstanding; and the
  835  underwriting member shall promptly cancel the contract in
  836  accordance with the request of the office therefor. No such
  837  illegality or cancellation shall be deemed to relieve the
  838  underwriting syndicate of any liability incurred by it under the
  839  contract while in force or to prohibit the underwriting
  840  syndicate from retaining the pro rata earned premium thereon.
  841  This provision does not relieve the underwriting syndicate from
  842  any penalty otherwise incurred by the underwriting syndicate.
  843         42. Satisfaction of judgments.—
  844         a. Every judgment or decree for the recovery of money
  845  heretofore or hereafter entered in any court of competent
  846  jurisdiction against any underwriting member shall be fully
  847  satisfied within 60 days from and after the entry thereof or, in
  848  the case of an appeal from such judgment or decree, within 60
  849  days from and after the affirmance of the judgment or decree by
  850  the appellate court.
  851         b. If the judgment or decree is not satisfied as required
  852  under sub-subparagraph a., and proof of such failure to satisfy
  853  is made by filing with the office a certified transcript of the
  854  docket of the judgment or the decree together with a certificate
  855  by the clerk of the court wherein the judgment or decree remains
  856  unsatisfied, in whole or in part, after the time provided in
  857  sub-subparagraph a., the office shall forthwith prohibit the
  858  underwriting member from transacting business. The office shall
  859  not permit such underwriting member to write any new business
  860  until the judgment or decree is wholly paid and satisfied and
  861  proof thereof is filed with the office under the official
  862  certificate of the clerk of the court wherein the judgment was
  863  recovered, showing that the judgment or decree is satisfied of
  864  record, and until the expenses and fees incurred in the case are
  865  also paid by the underwriting syndicate.
  866         43. Tender and exchange offers.—No person shall conclude a
  867  tender offer or an exchange offer or otherwise acquire 5 percent
  868  or more of the outstanding voting securities of an underwriting
  869  member or controlling company or purchase 5 percent or more of
  870  the ownership of an underwriting member or controlling company
  871  unless such person has filed with, and obtained the approval of,
  872  the office and sent to such underwriting member a statement
  873  setting forth:
  874         a. The identity of, and background information on, each
  875  person by whom, or on whose behalf, the acquisition is to be
  876  made; and, if the acquisition is to be made by or on behalf of a
  877  corporation, association, or trust, the identity of and
  878  background information on each director, officer, trustee, or
  879  other natural person performing duties similar to those of a
  880  director, officer, or trustee for the corporation, association,
  881  or trust.
  882         b. The source and amount of the funds or other
  883  consideration used, or to be used, in making the acquisition.
  884         c. Any plans or proposals which such person may have to
  885  liquidate such member, to sell its assets, or to merge or
  886  consolidate it.
  887         d. The percentage of ownership which such person proposes
  888  to acquire and the terms of the offer or exchange, as the case
  889  may be.
  890         e. Information as to any contracts, arrangements, or
  891  understandings with any party with respect to any securities of
  892  such member or controlling company, including, but not limited
  893  to, information relating to the transfer of any securities,
  894  option arrangements, or puts or calls or the giving or
  895  withholding of proxies, naming the party with whom such
  896  contract, arrangements, or understandings have been entered and
  897  giving the details thereof.
  898         f. The office may disapprove any acquisition subject to the
  899  provisions of this subparagraph by any person or any affiliated
  900  person of such person who:
  901         (I) Willfully violates this subparagraph;
  902         (II) In violation of an order of the office issued pursuant
  903  to sub-subparagraph j., fails to divest himself or herself of
  904  any stock obtained in violation of this subparagraph, or fails
  905  to divest himself or herself of any direct or indirect control
  906  of such stock, within 25 days after such order; or
  907         (III) In violation of an order issued by the office
  908  pursuant to sub-subparagraph j., acquires additional stock of
  909  the underwriting member or controlling company, or direct or
  910  indirect control of such stock, without complying with this
  911  subparagraph.
  912         g. The person or persons filing the statement required by
  913  this subparagraph have the burden of proof. The office shall
  914  approve any such acquisition if it finds, on the basis of the
  915  record made during any proceeding or on the basis of the filed
  916  statement if no proceeding is conducted, that:
  917         (I) Upon completion of the acquisition, the underwriting
  918  member will be able to satisfy the requirements for the approval
  919  to write the line or lines of insurance for which it is
  920  presently approved;
  921         (II) The financial condition of the acquiring person or
  922  persons will not jeopardize the financial stability of the
  923  underwriting member or prejudice the interests of its
  924  policyholders or the public;
  925         (III) Any plan or proposal which the acquiring person has,
  926  or acquiring persons have, made:
  927         (A) To liquidate the insurer, sell its assets, or merge or
  928  consolidate it with any person, or to make any other major
  929  change in its business or corporate structure or management; or
  930         (B) To liquidate any controlling company, sell its assets,
  931  or merge or consolidate it with any person, or to make any major
  932  change in its business or corporate structure or management
  933  which would have an effect upon the underwriting member
  935  is fair and free of prejudice to the policyholders of the
  936  underwriting member or to the public;
  937         (IV) The competence, experience, and integrity of those
  938  persons who will control directly or indirectly the operation of
  939  the underwriting member indicate that the acquisition is in the
  940  best interest of the policyholders of the underwriting member
  941  and in the public interest;
  942         (V) The natural persons for whom background information is
  943  required to be furnished pursuant to this subparagraph have such
  944  backgrounds as to indicate that it is in the best interests of
  945  the policyholders of the underwriting member, and in the public
  946  interest, to permit such persons to exercise control over such
  947  underwriting member;
  948         (VI) The officers and directors to be employed after the
  949  acquisition have sufficient insurance experience and ability to
  950  assure reasonable promise of successful operation;
  951         (VII) The management of the underwriting member after the
  952  acquisition will be competent and trustworthy and will possess
  953  sufficient managerial experience so as to make the proposed
  954  operation of the underwriting member not hazardous to the
  955  insurance-buying public;
  956         (VIII) The management of the underwriting member after the
  957  acquisition will not include any person who has directly or
  958  indirectly through ownership, control, reinsurance transactions,
  959  or other insurance or business relations unlawfully manipulated
  960  the assets, accounts, finances, or books of any insurer or
  961  underwriting member or otherwise acted in bad faith with respect
  962  thereto;
  963         (IX) The acquisition is not likely to be hazardous or
  964  prejudicial to the underwriting member’s policyholders or the
  965  public; and
  966         (X) The effect of the acquisition of control would not
  967  substantially lessen competition in insurance in this state or
  968  would not tend to create a monopoly therein.
  969         h. No vote by the stockholder of record, or by any other
  970  person, of any security acquired in contravention of the
  971  provisions of this subparagraph is valid. Any acquisition of any
  972  security contrary to the provisions of this subparagraph is
  973  void. Upon the petition of the underwriting member or
  974  controlling company, the circuit court for the county in which
  975  the principal office of such underwriting member is located may,
  976  without limiting the generality of its authority, order the
  977  issuance or entry of an injunction or other order to enforce the
  978  provisions of this subparagraph. There shall be a private right
  979  of action in favor of the underwriting member or controlling
  980  company to enforce the provisions of this subparagraph. No
  981  demand upon the office that it perform its functions shall be
  982  required as a prerequisite to any suit by the underwriting
  983  member or controlling company against any other person, and in
  984  no case shall the office be deemed a necessary party to any
  985  action by such underwriting member or controlling company to
  986  enforce the provisions of this subparagraph. Any person who
  987  makes or proposes an acquisition requiring the filing of a
  988  statement pursuant to this subparagraph, or who files such a
  989  statement, shall be deemed to have thereby designated the Chief
  990  Financial Officer as such person’s agent for service of process
  991  under this subparagraph and shall thereby be deemed to have
  992  submitted himself or herself to the administrative jurisdiction
  993  of the office and to the jurisdiction of the circuit court.
  994         i. Any approval by the office under this subparagraph does
  995  not constitute a recommendation by the office for an
  996  acquisition, tender offer, or exchange offer. It is unlawful for
  997  a person to represent that the office’s approval constitutes a
  998  recommendation. A person who violates the provisions of this
  999  sub-subparagraph is guilty of a felony of the third degree,
 1000  punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
 1001  The statute-of-limitations period for the prosecution of an
 1002  offense committed under this sub-subparagraph is 5 years.
 1003         j. Upon notification to the office by the underwriting
 1004  member or a controlling company that any person or any
 1005  affiliated person of such person has acquired 5 percent or more
 1006  of the outstanding voting securities of the underwriting member
 1007  or controlling company without complying with the provisions of
 1008  this subparagraph, the office shall order that the person and
 1009  any affiliated person of such person cease acquisition of any
 1010  further securities of the underwriting member or controlling
 1011  company; however, the person or any affiliated person of such
 1012  person may request a proceeding, which proceeding shall be
 1013  convened within 7 days after the rendering of the order for the
 1014  sole purpose of determining whether the person, individually or
 1015  in connection with any affiliated person of such person, has
 1016  acquired 5 percent or more of the outstanding voting securities
 1017  of an underwriting member or controlling company. Upon the
 1018  failure of the person or affiliated person to request a hearing
 1019  within 7 days, or upon a determination at a hearing convened
 1020  pursuant to this sub-subparagraph that the person or affiliated
 1021  person has acquired voting securities of an underwriting member
 1022  or controlling company in violation of this subparagraph, the
 1023  office may order the person and affiliated person to divest
 1024  themselves of any voting securities so acquired.
 1025         k.(I) The office shall, if necessary to protect the public
 1026  interest, suspend or revoke the certificate of authority of any
 1027  underwriting member or controlling company:
 1028         (A) The control of which is acquired in violation of this
 1029  subparagraph;
 1030         (B) That is controlled, directly or indirectly, by any
 1031  person or any affiliated person of such person who, in violation
 1032  of this subparagraph, has obtained control of an underwriting
 1033  member or controlling company; or
 1034         (C) That is controlled, directly or indirectly, by any
 1035  person who, directly or indirectly, controls any other person
 1036  who, in violation of this subparagraph, acquires control of an
 1037  underwriting member or controlling company.
 1038         (II) If any underwriting member is subject to suspension or
 1039  revocation pursuant to sub-sub-subparagraph (I), the
 1040  underwriting member shall be deemed to be in such condition, or
 1041  to be using or to have been subject to such methods or practices
 1042  in the conduct of its business, as to render its further
 1043  transaction of insurance presently or prospectively hazardous to
 1044  its policyholders, creditors, or stockholders or to the public.
 1045         l.(I) For the purpose of this sub-sub-subparagraph, the
 1046  term “affiliated person” of another person means:
 1047         (A) The spouse of such other person;
 1048         (B) The parents of such other person and their lineal
 1049  descendants and the parents of such other person’s spouse and
 1050  their lineal descendants;
 1051         (C) Any person who directly or indirectly owns or controls,
 1052  or holds with power to vote, 5 percent or more of the
 1053  outstanding voting securities of such other person;
 1054         (D) Any person 5 percent or more of the outstanding voting
 1055  securities of which are directly or indirectly owned or
 1056  controlled, or held with power to vote, by such other person;
 1057         (E) Any person or group of persons who directly or
 1058  indirectly control, are controlled by, or are under common
 1059  control with such other person; or any officer, director,
 1060  partner, copartner, or employee of such other person;
 1061         (F) If such other person is an investment company, any
 1062  investment adviser of such company or any member of an advisory
 1063  board of such company;
 1064         (G) If such other person is an unincorporated investment
 1065  company not having a board of directors, the depositor of such
 1066  company; or
 1067         (H) Any person who has entered into an agreement, written
 1068  or unwritten, to act in concert with such other person in
 1069  acquiring or limiting the disposition of securities of an
 1070  underwriting member or controlling company.
 1071         (II) For the purposes of this section, the term
 1072  “controlling company” means any corporation, trust, or
 1073  association owning, directly or indirectly, 25 percent or more
 1074  of the voting securities of one or more underwriting members.
 1075         m. The commission may adopt, amend, or repeal rules that
 1076  are necessary to implement the provisions of this subparagraph,
 1077  pursuant to chapter 120.
 1078         44. Background information.—The information as to the
 1079  background and identity of each person about whom information is
 1080  required to be furnished pursuant to sub-subparagraph 43.a.
 1081  shall include, but shall not be limited to:
 1082         a. Such person’s occupations, positions of employment, and
 1083  offices held during the past 10 years.
 1084         b. The principal business and address of any business,
 1085  corporation, or other organization in which each such office was
 1086  held or in which such occupation or position of employment was
 1087  carried on.
 1088         c. Whether, at any time during such 10-year period, such
 1089  person was convicted of any crime other than a traffic
 1090  violation.
 1091         d. Whether, during such 10-year period, such person has
 1092  been the subject of any proceeding for the revocation of any
 1093  license and, if so, the nature of such proceeding and the
 1094  disposition thereof.
 1095         e. Whether, during such 10-year period, such person has
 1096  been the subject of any proceeding under the federal Bankruptcy
 1097  Act or whether, during such 10-year period, any corporation,
 1098  partnership, firm, trust, or association in which such person
 1099  was a director, officer, trustee, partner, or other official has
 1100  been subject to any such proceeding, either during the time in
 1101  which such person was a director, officer, trustee, partner, or
 1102  other official, or within 12 months thereafter.
 1103         f. Whether, during such 10-year period, such person has
 1104  been enjoined, either temporarily or permanently, by a court of
 1105  competent jurisdiction from violating any federal or state law
 1106  regulating the business of insurance, securities, or banking, or
 1107  from carrying out any particular practice or practices in the
 1108  course of the business of insurance, securities, or banking,
 1109  together with details of any such event.
 1110         45. Security fund.—All underwriting members shall be
 1111  members of the security fund of any exchange.
 1112         46. Underwriting member defined.—Whenever the term
 1113  “underwriting member” is used in this subsection, it shall be
 1114  construed to mean “underwriting syndicate.”
 1115         47. Offsets.—Any action, requirement, or constraint imposed
 1116  by the office shall reduce or offset similar actions,
 1117  requirements, or constraints of any exchange.
 1118         48. Restriction on member ownership.—
 1119         a. Investments existing prior to July 2, 1987.—The
 1120  investment in any member by brokers, agents, and intermediaries
 1121  transacting business on the exchange, and the investment in any
 1122  such broker, agent, or intermediary by any member, directly or
 1123  indirectly, shall in each case be limited in the aggregate to
 1124  less than 20 percent of the total investment in such member,
 1125  broker, agent, or intermediary, as the case may be. After
 1126  December 31, 1987, the aggregate percent of the total investment
 1127  in such member by any broker, agent, or intermediary and the
 1128  aggregate percent of the total investment in any such broker,
 1129  agent, or intermediary by any member, directly or indirectly,
 1130  shall not exceed 15 percent. After June 30, 1988, such aggregate
 1131  percent shall not exceed 10 percent and after December 31, 1988,
 1132  such aggregate percent shall not exceed 5 percent.
 1133         b. Investments arising on or after July 2, 1987.—The
 1134  investment in any underwriting member by brokers, agents, or
 1135  intermediaries transacting business on the exchange, and the
 1136  investment in any such broker, agent, or intermediary by any
 1137  underwriting member, directly or indirectly, shall in each case
 1138  be limited in the aggregate to less than 5 percent of the total
 1139  investment in such underwriting member, broker, agent, or
 1140  intermediary.
 1141         49. “Underwriting manager” defined.—“Underwriting manager”
 1142  as used in this subparagraph includes any person, partnership,
 1143  corporation, or organization providing any of the following
 1144  services to underwriting members of the exchange:
 1145         a. Office management and allied services, including
 1146  correspondence and secretarial services.
 1147         b. Accounting services, including bookkeeping and financial
 1148  report preparation.
 1149         c. Investment and banking consultations and services.
 1150         d. Underwriting functions and services including the
 1151  acceptance, rejection, placement, and marketing of risk.
 1152         50. Prohibition of underwriting manager investment.—Any
 1153  direct or indirect investment in any underwriting manager by a
 1154  broker member or any affiliated person of a broker member or any
 1155  direct or indirect investment in a broker member by an
 1156  underwriting manager or any affiliated person of an underwriting
 1157  manager is prohibited. “Affiliated person” for purposes of this
 1158  subparagraph is defined in subparagraph 43.
 1159         51. An underwriting member may not accept reinsurance on an
 1160  assumed basis from an affiliate or a controlling company, nor
 1161  may a broker member or management company place reinsurance from
 1162  an affiliate or controlling company of theirs with an
 1163  underwriting member. “Affiliate and controlling company” for
 1164  purposes of this subparagraph is defined in subparagraph 43.
 1165         52. Premium defined.—“Premium” is the consideration for
 1166  insurance, by whatever name called. Any “assessment” or any
 1167  “membership,” “policy,” “survey,” “inspection,” “service” fee or
 1168  charge or similar fee or charge in consideration for an
 1169  insurance contract is deemed part of the premium.
 1170         53. Rules.—The commission shall adopt rules necessary for
 1171  or as an aid to the effectuation of any provision of this
 1172  section.
 1173         Section 15. Subsection (6) of section 634.121, Florida
 1174  Statutes, is amended to read:
 1175         634.121 Forms, required procedures, provisions; delivery
 1176  and definitions.—
 1177         (6)(a) Each service agreement, which includes a copy of the
 1178  application form, must be mailed, delivered, or otherwise
 1179  provided electronically transmitted to the agreement holder as
 1180  provided in s. 627.421. As used in s. 627.421, the term:
 1181         1.“Insurance policies and endorsements,” “policy and
 1182  endorsement,” “policy,” or “policy form and endorsement form”
 1183  includes a motor vehicle service agreement and related
 1184  endorsement forms.
 1185         2.“Insured” includes a motor vehicle service agreement
 1186  holder.
 1187         3.“Insurer” includes a motor vehicle service agreement
 1188  company.
 1189         (b) Section 627.421(4) applies if the motor vehicle service
 1190  agreement company elects to post motor vehicle service
 1191  agreements on its Internet website in lieu of mailing or
 1192  delivery to agreement holders within 45 days after the date of
 1193  purchase. Electronic transmission of a service agreement
 1194  constitutes delivery to the agreement holder. The electronic
 1195  transmission must notify the agreement holder of his or her
 1196  right to receive the service agreement via United States mail
 1197  rather than electronic transmission. If the agreement holder
 1198  communicates to the service agreement company electronically or
 1199  in writing that he or she does not agree to receipt by
 1200  electronic transmission, a paper copy of the service agreement
 1201  shall be provided to the agreement holder.
 1202         Section 16. Section 641.3107, Florida Statutes, is amended
 1203  to read:
 1204         641.3107 Delivery of contract and certain documents;
 1205  definitions.—
 1206         (1)Unless delivered upon execution or issuance, A health
 1207  maintenance contract, certificate of coverage, endorsements and
 1208  riders, or member handbook must shall be mailed, or delivered,
 1209  or otherwise provided to the subscriber or, in the case of a
 1210  group health maintenance contract, to the employer or other
 1211  person who will hold the contract on behalf of the subscriber
 1212  group, as provided in s. 627.421.
 1213         (2)As used in s. 627.421, the term:
 1214         (a)“Insurance policies and endorsements,” “policy and
 1215  endorsement,” “policy,” or “policy form and endorsement form”
 1216  includes the health maintenance contract, endorsement and
 1217  riders, certificate of coverage, or member handbook.
 1218         (b)“Insured” includes a subscriber or, in the case of a
 1219  group health maintenance contract, to the employer or other
 1220  person who will hold the contract on behalf of the subscriber
 1221  group.
 1222         (c)“Insurer” includes a health maintenance organization.
 1223         (3)Section 627.421(4) applies if the health maintenance
 1224  organization elects to post health maintenance contracts on its
 1225  Internet website in lieu of mailing or delivery to subscribers
 1226  or the person who will hold the contract on behalf of a
 1227  subscriber group within 10 working days from approval of the
 1228  enrollment form by the health maintenance organization or by the
 1229  effective date of coverage, whichever occurs first. However, if
 1230  the employer or other person who will hold the contract on
 1231  behalf of the subscriber group requires retroactive enrollment
 1232  of a subscriber, the organization shall deliver the contract,
 1233  certificate, or member handbook to the subscriber within 10 days
 1234  after receiving notice from the employer of the retroactive
 1235  enrollment. This section does not apply to the delivery of those
 1236  contracts specified in s. 641.31(13).
 1237         Section 17. This act shall take effect upon becoming a law.
 1239  ================= T I T L E  A M E N D M E N T ================
 1240  And the title is amended as follows:
 1241         Delete everything before the enacting clause
 1242  and insert:
 1243                        A bill to be entitled                      
 1244         An act relating to insurance; amending s. 625.151,
 1245         F.S.; providing that certain securities valuation
 1246         limitations do not apply to certain stock of certain
 1247         foreign insurers’ subsidiary corporations or related
 1248         entities; amending s. 625.325, F.S.; providing that
 1249         certain provisions relating to insurer investments in
 1250         subsidiaries and related corporations do not apply to
 1251         foreign insurers under certain circumstances; amending
 1252         s. 626.221, F.S.; providing an exception from an
 1253         examination requirement for an all-lines adjuster
 1254         license applicant with a specified designation;
 1255         amending s. 626.914, F.S.; revising the definition of
 1256         the term “diligent effort” to decrease the dwelling
 1257         replacement cost threshold of a residential structure
 1258         to which a different diligent effort requirement under
 1259         the Surplus Lines Law applies; repealing s.
 1260         626.918(2)(a), F.S., relating to a certain condition
 1261         before an unauthorized insurer may be or become an
 1262         eligible surplus lines insurer; amending s. 626.932,
 1263         F.S.; reducing the tax on surplus lines insurance;
 1264         deleting a limitation on the tax rate for certain
 1265         surplus lines policies; amending s. 626.9651, F.S.;
 1266         revising federal standards applicable to Department of
 1267         Financial Services and Financial Services Commission
 1268         rules governing the use of consumer nonpublic personal
 1269         financial and health information; amending s. 627.416,
 1270         F.S.; authorizing insurers to issue policies that are
 1271         not executed by certain authorized persons; amending
 1272         s. 627.43141, F.S.; specifying that a written notice
 1273         of a change in policy terms must summarize the change;
 1274         amending s. 627.7015, F.S.; authorizing a third party,
 1275         as assignee of the policy benefits, to request
 1276         mediation for disputed property insurance claims;
 1277         providing that insurers are not required to
 1278         participate in such mediations; making technical
 1279         changes; amending s. 627.728, F.S.; adding certain
 1280         proofs of mailing that an insurer may use to provide
 1281         certain notices relating to cancellation and
 1282         nonrenewals of policies to certain insureds; amending
 1283         s. 628.4615, F.S.; revising the definition of the term
 1284         “specialty insurer” to include viatical settlement
 1285         providers; providing that a person may rebut a
 1286         presumption of control by filing a specified
 1287         disclaimer with the Office of Insurance Regulation;
 1288         providing an alternative to a form prescribed by the
 1289         commission; providing construction; conforming cross
 1290         references; amending s. 628.8015, F.S.; deleting a
 1291         condition that certain filings and documents relating
 1292         to insurer own-risk and solvency assessments and
 1293         corporate governance annual disclosures must be
 1294         obtained from the office to be inadmissible in
 1295         evidence in private civil actions; amending s.
 1296         629.401, F.S.; revising unearned premium reserve
 1297         requirements for insurance exchanges regulated by the
 1298         office; defining the term “net written premiums”;
 1299         amending s. 634.121, F.S.; revising requirements and
 1300         procedures for the delivery of motor vehicle service
 1301         agreements and certain forms by motor vehicle service
 1302         agreement companies to agreement holders; defining
 1303         terms; specifying requirements if a motor vehicle
 1304         service agreement company elects to post service
 1305         agreements on its website in lieu of mailing or
 1306         delivering to agreement holders; amending s. 641.3107,
 1307         F.S.; revising requirements and procedures for the
 1308         delivery of health maintenance contracts and certain
 1309         documents by health maintenance organizations to
 1310         subscribers; defining terms; specifying requirements
 1311         if a health maintenance organization elects to post
 1312         health maintenance contracts on its website in lieu of
 1313         mailing or delivering to subscribers or certain
 1314         persons; providing an effective date.