Florida Senate - 2018                              CS for SB 784
       By the Committee on Banking and Insurance; and Senator Brandes
       597-02928-18                                           2018784c1
    1                        A bill to be entitled                      
    2         An act relating to insurance; amending s. 625.151,
    3         F.S.; providing that certain securities valuation
    4         limitations do not apply to certain stock of certain
    5         foreign insurers’ subsidiary corporations or related
    6         entities; amending s. 625.325, F.S.; providing that
    7         certain provisions relating to insurer investments in
    8         subsidiaries and related corporations do not apply to
    9         foreign insurers under certain circumstances; amending
   10         s. 626.221, F.S.; revising professional designations
   11         that exempt all-lines adjuster license applicants from
   12         an examination requirement; amending s. 626.914, F.S.;
   13         revising the definition of the term “diligent effort”
   14         to decrease the dwelling replacement cost threshold of
   15         a residential structure to which a different diligent
   16         effort requirement under the Surplus Lines Law
   17         applies; repealing s. 626.918(2)(a), F.S., relating to
   18         a certain condition before an unauthorized insurer may
   19         be or become an eligible surplus lines insurer;
   20         amending s. 626.932, F.S.; reducing the tax on surplus
   21         lines insurance; deleting a limitation on the tax rate
   22         for certain surplus lines policies; amending s.
   23         626.9651, F.S.; revising federal standards applicable
   24         to Department of Financial Services and Financial
   25         Services Commission rules governing the use of
   26         consumer nonpublic personal financial and health
   27         information; amending s. 627.416, F.S.; authorizing
   28         insurers to issue policies that are not executed by
   29         certain authorized persons; amending s. 627.43141,
   30         F.S.; specifying that a written notice of a change in
   31         policy terms must summarize the change; amending s.
   32         627.7015, F.S.; authorizing a third party, as assignee
   33         of the policy benefits, to request mediation for
   34         disputed property insurance claims; providing that
   35         insurers are not required to participate in such
   36         mediations; making technical changes; amending s.
   37         627.728, F.S.; adding certain proofs of mailing that
   38         an insurer may use to provide certain notices relating
   39         to cancellation and nonrenewals of policies to certain
   40         insureds; amending s. 627.756, F.S.; providing that
   41         certain attorney fee provisions apply to suits brought
   42         by contractors against surety insurers under payment
   43         or performance bonds for building or construction
   44         contracts; providing that contractors are deemed to be
   45         insureds or beneficiaries for the purposes of such
   46         provisions; providing applicability; amending s.
   47         628.4615, F.S.; revising the definition of the term
   48         “specialty insurer” to include viatical settlement
   49         providers; providing that a person may rebut a
   50         presumption of control by filing a specified
   51         disclaimer with the Office of Insurance Regulation;
   52         providing an alternative to a form prescribed by the
   53         commission; providing construction; conforming cross
   54         references; amending s. 628.8015, F.S.; deleting a
   55         condition that certain filings and documents relating
   56         to insurer own-risk and solvency assessments and
   57         corporate governance annual disclosures must be
   58         obtained from the office to be inadmissible in
   59         evidence in private civil actions; amending s.
   60         629.401, F.S.; revising unearned premium reserve
   61         requirements for insurance exchanges regulated by the
   62         office; defining the term “net written premiums”;
   63         amending s. 634.121, F.S.; revising requirements and
   64         procedures for the delivery of motor vehicle service
   65         agreements and certain forms by motor vehicle service
   66         agreement companies to agreement holders; defining
   67         terms; specifying requirements if a motor vehicle
   68         service agreement company elects to post service
   69         agreements on its website in lieu of mailing or
   70         delivering to agreement holders; amending s. 641.3107,
   71         F.S.; revising requirements and procedures for the
   72         delivery of health maintenance contracts and certain
   73         documents by health maintenance organizations to
   74         subscribers; defining terms; specifying requirements
   75         if a health maintenance organization elects to post
   76         health maintenance contracts on its website in lieu of
   77         mailing or delivering to subscribers or certain
   78         persons; providing an effective date.
   80  Be It Enacted by the Legislature of the State of Florida:
   82         Section 1. Paragraph (c) is added to subsection (3) of
   83  section 625.151, Florida Statutes, to read:
   84         625.151 Valuation of other securities.—
   85         (3) Stock of a subsidiary corporation of an insurer may
   86  shall not be valued at an amount in excess of the net value
   87  thereof as based upon those assets only of the subsidiary which
   88  would be eligible under part II for investment of the funds of
   89  the insurer directly.
   90         (c) This subsection does not apply to stock of a subsidiary
   91  corporation or related entities of a foreign insurer which is
   92  permissible under the laws of its state of domicile, if the
   93  state of domicile is a member of the National Association of
   94  Insurance Commissioners.
   95         Section 2. Subsection (7) is added to section 625.325,
   96  Florida Statutes, to read:
   97         625.325 Investments in subsidiaries and related
   98  corporations.—
   99         (7) APPLICABILITY.-This section does not apply to a foreign
  100  insurer’s investments in its subsidiaries or related
  101  corporations if:
  102         (a) The foreign insurer is domiciled in a state that is a
  103  member of the National Association of Insurance Commissioners
  104  (NAIC).
  105         (b) Such investments in the foreign insurer’s subsidiaries
  106  or related corporations are:
  107         1. Permitted under the laws of the foreign insurer’s state
  108  of domicile.
  109         2.a. Assigned a rating of 1, 2, or 3 by the NAIC’s
  110  Securities Valuation Office (SVO); or
  111         b. Qualify for the NAIC’s filing exemption rule and
  112  assigned a rating by a nationally recognized statistical rating
  113  organization which would be equivalent to a rating of 1, 2, or 3
  114  by the SVO.
  115         Section 3. Paragraph (j) of subsection (2) of section
  116  626.221, Florida Statutes, is amended to read:
  117         626.221 Examination requirement; exemptions.—
  118         (2) However, an examination is not necessary for any of the
  119  following:
  120         (j) An applicant for license as an all-lines adjuster who
  121  has the designation of Accredited Claims Adjuster (ACA) from a
  122  regionally accredited postsecondary institution in this state,
  123  Associate in Claims (AIC) from the Insurance Institute of
  124  America, Professional Claims Adjuster (PCA) from the
  125  Professional Career Institute, Professional Property Insurance
  126  Adjuster (PPIA) from the HurriClaim Training Academy, Certified
  127  Adjuster (CA) from ALL LINES Training, Certified Claims Adjuster
  128  (CCA) from AE21 Incorporated, Claims Adjuster Certified
  129  Professional (CACP) from WebCE, Inc., or Universal Claims
  130  Certification (UCC) from Claims and Litigation Management
  131  Alliance (CLM), or any similar designation from a similar entity
  132  whose curriculum has been approved by the department and which
  133  includes comprehensive analysis of basic property and casualty
  134  lines of insurance and testing at least equal to that of
  135  standard department testing for the all-lines adjuster license.
  136  The department shall adopt rules establishing standards for the
  137  approval of curriculum.
  138         Section 4. Subsection (4) of section 626.914, Florida
  139  Statutes, is amended to read:
  140         626.914 Definitions.—As used in this Surplus Lines Law, the
  141  term:
  142         (4) “Diligent effort” means seeking coverage from and
  143  having been rejected by at least three authorized insurers
  144  currently writing this type of coverage and documenting these
  145  rejections. However, if the residential structure has a dwelling
  146  replacement cost of $700,000 $1 million or more, the term means
  147  seeking coverage from and having been rejected by at least one
  148  authorized insurer currently writing this type of coverage and
  149  documenting this rejection.
  150         Section 5. Paragraph (a) of subsection (2) of section
  151  626.918, Florida Statutes, is repealed.
  152         Section 6. Subsections (1) and (3) of section 626.932,
  153  Florida Statutes, are amended to read:
  154         626.932 Surplus lines tax.—
  155         (1) The premiums charged for surplus lines coverages are
  156  subject to a premium receipts tax of 4.936 5 percent of all
  157  gross premiums charged for such insurance. The surplus lines
  158  agent shall collect from the insured the amount of the tax at
  159  the time of the delivery of the cover note, certificate of
  160  insurance, policy, or other initial confirmation of insurance,
  161  in addition to the full amount of the gross premium charged by
  162  the insurer for the insurance. The surplus lines agent is
  163  prohibited from absorbing such tax or, as an inducement for
  164  insurance or for any other reason, rebating all or any part of
  165  such tax or of his or her commission.
  166         (3) If a surplus lines policy covers risks or exposures
  167  only partially in this state and the state is the home state as
  168  defined in the federal Nonadmitted and Reinsurance Reform Act of
  169  2010 (NRRA), the tax payable must shall be computed on the gross
  170  premium. The tax must not exceed the tax rate where the risk or
  171  exposure is located.
  172         Section 7. Section 626.9651, Florida Statutes, is amended
  173  to read:
  174         626.9651 Privacy.—The department and commission shall each
  175  adopt rules consistent with other provisions of the Florida
  176  Insurance Code to govern the use of a consumer’s nonpublic
  177  personal financial and health information. These rules must be
  178  based on, consistent with, and not more restrictive than the
  179  Privacy of Consumer Financial and Health Information Regulation,
  180  adopted September 26, 2000, by the National Association of
  181  Insurance Commissioners; however, the rules must permit the use
  182  and disclosure of nonpublic personal health information for
  183  scientific, medical, or public policy research, in accordance
  184  with federal law. In addition, these rules must be consistent
  185  with, and not more restrictive than, the standards contained in
  186  Title V of the Gramm-Leach-Bliley Act of 1999, Pub. L. No. 106
  187  102, as amended in Title LXXV of the Fixing America’s Surface
  188  Transportation (FAST) Act, Pub. L. No. 114-94. If the office
  189  determines that a health insurer or health maintenance
  190  organization is in compliance with, or is actively undertaking
  191  compliance with, the consumer privacy protection rules adopted
  192  by the United States Department of Health and Human Services, in
  193  conformance with the Health Insurance Portability and
  194  Affordability Act, that health insurer or health maintenance
  195  organization is in compliance with this section.
  196         Section 8. Subsection (1) of section 627.416, Florida
  197  Statutes, is amended, and subsection (4) is added to that
  198  section, to read:
  199         627.416 Execution of policies.—
  200         (1) Except as set forth in subsection (4), every insurance
  201  policy must shall be executed in the name of and on behalf of
  202  the insurer by its officer, attorney in fact, employee, or
  203  representative duly authorized by the insurer.
  204         (4) An insurer may elect to issue an insurance policy that
  205  is not executed by an officer, attorney in fact, employee, or
  206  representative, provided that such policy may not be rendered
  207  invalid by reason of the lack of execution thereof.
  208         Section 9. Subsection (2) of section 627.43141, Florida
  209  Statutes, is amended to read:
  210         627.43141 Notice of change in policy terms.—
  211         (2) A renewal policy may contain a change in policy terms.
  212  If such change occurs, the insurer shall give the named insured
  213  advance written notice summarizing of the change, which may be
  214  enclosed along with the written notice of renewal premium
  215  required under ss. 627.4133 and 627.728 or sent separately
  216  within the timeframe required under the Florida Insurance Code
  217  for the provision of a notice of nonrenewal to the named insured
  218  for that line of insurance. The insurer must also provide a
  219  sample copy of the notice to the named insured’s insurance agent
  220  before or at the same time that notice is provided to the named
  221  insured. Such notice must shall be entitled “Notice of Change in
  222  Policy Terms.”
  223         Section 10. Subsections (1), (3), (6), and (9) of section
  224  627.7015, Florida Statutes, are amended to read:
  225         627.7015 Alternative procedure for resolution of disputed
  226  property insurance claims.—
  227         (1) This section sets forth a nonadversarial alternative
  228  dispute resolution procedure for a mediated claim resolution
  229  conference prompted by the need for effective, fair, and timely
  230  handling of property insurance claims. There is a particular
  231  need for an informal, nonthreatening forum for helping parties
  232  who elect this procedure to resolve their claims disputes
  233  because most homeowner and commercial residential insurance
  234  policies obligate policyholders to participate in a potentially
  235  expensive and time-consuming adversarial appraisal process
  236  before litigation. The procedure set forth in this section is
  237  designed to bring the parties together for a mediated claims
  238  settlement conference without any of the trappings or drawbacks
  239  of an adversarial process. Before resorting to these procedures,
  240  policyholders and insurers are encouraged to resolve claims as
  241  quickly and fairly as possible. This section is available with
  242  respect to claims under personal lines and commercial
  243  residential policies before commencing the appraisal process, or
  244  before commencing litigation. Mediation may be requested only by
  245  the policyholder, as a first-party claimant; a third party, as
  246  assignee of the policy benefits;, or the insurer. However, an
  247  insurer is not required to participate in any mediation
  248  requested by a third party assignee of policy benefits. If
  249  requested by the policyholder, participation by legal counsel is
  250  permitted. Mediation under this section is also available to
  251  litigants referred to the department by a county court or
  252  circuit court. This section does not apply to commercial
  253  coverages, to private passenger motor vehicle insurance
  254  coverages, or to disputes relating to liability coverages in
  255  policies of property insurance.
  256         (3) The costs of mediation must shall be reasonable, and
  257  the insurer shall bear all of the cost of conducting mediation
  258  conferences, except as otherwise provided in this section. If
  259  the policyholder an insured fails to appear at the conference,
  260  the conference must shall be rescheduled upon the policyholder’s
  261  insured’s payment of the costs of a rescheduled conference. If
  262  the insurer fails to appear at the conference, the insurer must
  263  shall pay the policyholder’s insured’s actual cash expenses
  264  incurred in attending the conference if the insurer’s failure to
  265  attend was not due to a good cause acceptable to the department.
  266  An insurer will be deemed to have failed to appear if the
  267  insurer’s representative lacks authority to settle the full
  268  value of the claim. The insurer shall incur an additional fee
  269  for a rescheduled conference necessitated by the insurer’s
  270  failure to appear at a scheduled conference. The fees assessed
  271  by the administrator must shall include a charge necessary to
  272  defray the expenses of the department related to its duties
  273  under this section and must shall be deposited in the Insurance
  274  Regulatory Trust Fund.
  275         (6) Mediation is nonbinding; however, if a written
  276  settlement is reached, the policyholder insured has 3 business
  277  days within which the policyholder insured may rescind the
  278  settlement unless the policyholder insured has cashed or
  279  deposited any check or draft disbursed to the policyholder
  280  insured for the disputed matters as a result of the conference.
  281  If a settlement agreement is reached and is not rescinded, it is
  282  shall be binding and acts act as a release of all specific
  283  claims that were presented in that mediation conference.
  284         (9) For purposes of this section, the term “claim” refers
  285  to any dispute between an insurer and a policyholder relating to
  286  a material issue of fact other than a dispute:
  287         (a) With respect to which the insurer has a reasonable
  288  basis to suspect fraud;
  289         (b) When Where, based on agreed-upon facts as to the cause
  290  of loss, there is no coverage under the policy;
  291         (c) With respect to which the insurer has a reasonable
  292  basis to believe that the policyholder has intentionally made a
  293  material misrepresentation of fact which is relevant to the
  294  claim, and the entire request for payment of a loss has been
  295  denied on the basis of the material misrepresentation;
  296         (d) With respect to which the amount in controversy is less
  297  than $500, unless the parties agree to mediate a dispute
  298  involving a lesser amount; or
  299         (e) With respect to a windstorm or hurricane loss that does
  300  not comply with s. 627.70132.
  301         Section 11. Subsection (5) of section 627.728, Florida
  302  Statutes, is amended to read:
  303         627.728 Cancellations; nonrenewals.—
  304         (5) United States postal proof of mailing, or certified or
  305  registered mailing, or other mailing using the Intelligent Mail
  306  barcode or other similar tracking method used or approved by the
  307  United States Postal Service of notice of cancellation, of
  308  intention not to renew, or of reasons for cancellation, or of
  309  the intention of the insurer to issue a policy by an insurer
  310  under the same ownership or management, to the first-named
  311  insured at the address shown in the policy is shall be
  312  sufficient proof of notice.
  313         Section 12. Subsection (1) of section 627.756, Florida
  314  Statutes, is amended to read:
  315         627.756 Bonds for construction contracts; attorney fees in
  316  case of suit.—
  317         (1) Section 627.428 applies to suits brought by owners,
  318  contractors, subcontractors, laborers, and materialmen against a
  319  surety insurer under payment or performance bonds written by the
  320  insurer under the laws of this state to indemnify against
  321  pecuniary loss by breach of a building or construction contract.
  322  Owners, contractors, subcontractors, laborers, and materialmen
  323  are shall be deemed to be insureds or beneficiaries for the
  324  purposes of this section.
  325         Section 13. The amendment made by this act to s. 627.756,
  326  Florida Statutes, applies only to payment or performance bonds
  327  issued on or after October 1, 2018.
  328         Section 14. Subsections (1) and (7) of section 628.4615,
  329  Florida Statutes, are amended, present subsections (11) through
  330  (14) of that section are redesignated as subsections (12)
  331  through (15), respectively, and a new subsection (11) is added
  332  to that section, to read:
  333         628.4615 Specialty insurers; acquisition of controlling
  334  stock, ownership interest, assets, or control; merger or
  335  consolidation.—
  336         (1) For the purposes of this section, the term “specialty
  337  insurer” means any person holding a license or certificate of
  338  authority as:
  339         (a) A motor vehicle service agreement company authorized to
  340  issue motor vehicle service agreements as those terms are
  341  defined in s. 634.011;
  342         (b) A home warranty association authorized to issue “home
  343  warranties” as those terms are defined in s. 634.301;
  344         (c) A service warranty association authorized to issue
  345  “service warranties” as those terms are defined in s.
  346  634.401(13) and (14);
  347         (d) A prepaid limited health service organization
  348  authorized to issue prepaid limited health service contracts, as
  349  those terms are defined in chapter 636;
  350         (e) An authorized health maintenance organization operating
  351  pursuant to s. 641.21;
  352         (f) An authorized prepaid health clinic operating pursuant
  353  to s. 641.405;
  354         (g) A legal expense insurance corporation authorized to
  355  engage in a legal expense insurance business pursuant to s.
  356  642.021;
  357         (h) A provider that is licensed to operate a facility that
  358  undertakes to provide continuing care as those terms are defined
  359  in s. 651.011;
  360         (i) A multiple-employer welfare arrangement operating
  361  pursuant to ss. 624.436-624.446;
  362         (j) A premium finance company authorized to finance
  363  insurance premiums pursuant to s. 627.828; or
  364         (k) A corporation authorized to accept donor annuity
  365  agreements pursuant to s. 627.481; or
  366         (l) A viatical settlement provider authorized to do
  367  business in this state under part X of chapter 626.
  368         (7) The office may disapprove any acquisition subject to
  369  the provisions of this section by any person or any affiliated
  370  person of such person who:
  371         (a) Willfully violates this section;
  372         (b) In violation of an order of the office issued pursuant
  373  to subsection (12) (11), fails to divest himself or herself of
  374  any stock or ownership interest obtained in violation of this
  375  section or fails to divest himself or herself of any direct or
  376  indirect control of such stock or ownership interest, within 25
  377  days after such order; or
  378         (c) In violation of an order issued by the office pursuant
  379  to subsection (12) (11), acquires an additional stock or
  380  ownership interest in a specialty insurer or controlling company
  381  or direct or indirect control of such stock or ownership
  382  interest, without complying with this section.
  383         (11) A person may rebut a presumption of control by filing
  384  a disclaimer of control with the office on a form prescribed by
  385  the commission. The disclaimer must fully disclose all material
  386  relationships and bases for affiliation between the person and
  387  the specialty insurer as well as the basis for disclaiming the
  388  affiliation. In lieu of such form, a person or acquiring party
  389  may file with the office a copy of a Schedule 13G filed with the
  390  Securities and Exchange Commission pursuant to Rule 13d-1(b) or
  391  (c), 17 C.F.R. s. 240.13d-1, under the Securities Exchange Act
  392  of 1934, as amended. After a disclaimer has been filed, the
  393  specialty insurer is relieved of any duty to register or report
  394  under this section which may arise out of the specialty
  395  insurer’s relationship with the person unless the office
  396  disallows the disclaimer.
  397         Section 15. Subsection (4) of section 628.8015, Florida
  398  Statutes, is amended to read:
  399         628.8015 Own-risk and solvency assessment; corporate
  400  governance annual disclosure.—
  401         (4) CONFIDENTIALITY.—The required filings and related
  402  documents submitted pursuant to subsections (2) and (3) are
  403  privileged such that they may not be produced in response to a
  404  subpoena or other discovery directed to the office, and any such
  405  filings and related documents, if obtained from the office, are
  406  not admissible in evidence in any private civil action. However,
  407  the department or office may use these filings and related
  408  documents in the furtherance of any regulatory or legal action
  409  brought against an insurer as part of the official duties of the
  410  department or office. A waiver of any applicable claim of
  411  privilege in these filings and related documents may not occur
  412  because of a disclosure to the office under this section,
  413  because of any other provision of the Insurance Code, or because
  414  of sharing under s. 624.4212. The office or a person receiving
  415  these filings and related documents, while acting under the
  416  authority of the office, or with whom such filings and related
  417  documents are shared pursuant to s. 624.4212, is not permitted
  418  or required to testify in any private civil action concerning
  419  any such filings or related documents.
  420         Section 16. Paragraph (b) of subsection (6) of section
  421  629.401, Florida Statutes, is amended to read:
  422         629.401 Insurance exchange.—
  423         (6)
  424         (b) In addition to the insurance laws specified in
  425  paragraph (a), the office shall regulate the exchange pursuant
  426  to the following powers, rights, and duties:
  427         1. General examination powers.—The office shall examine the
  428  affairs, transactions, accounts, records, and assets of any
  429  security fund, exchange, members, and associate brokers as often
  430  as it deems advisable. The examination may be conducted by the
  431  accredited examiners of the office at the offices of the entity
  432  or person being examined. The office shall examine in like
  433  manner each prospective member or associate broker applying for
  434  membership in an exchange.
  435         2. Office approval and applications of underwriting
  436  members.—No underwriting member shall commence operation without
  437  the approval of the office. Before commencing operation, an
  438  underwriting member shall provide a written application
  439  containing:
  440         a. Name, type, and purpose of the underwriting member.
  441         b. Name, residence address, business background, and
  442  qualifications of each person associated or to be associated in
  443  the formation or financing of the underwriting member.
  444         c. Full disclosure of the terms of all understandings and
  445  agreements existing or proposed among persons so associated
  446  relative to the underwriting member, or the formation or
  447  financing thereof, accompanied by a copy of each such agreement
  448  or understanding.
  449         d. Full disclosure of the terms of all understandings and
  450  agreements existing or proposed for management or exclusive
  451  agency contracts.
  452         3. Investigation of underwriting member applications.—In
  453  connection with any proposal to establish an underwriting
  454  member, the office shall make an investigation of:
  455         a. The character, reputation, financial standing, and
  456  motives of the organizers, incorporators, or subscribers
  457  organizing the proposed underwriting member.
  458         b. The character, financial responsibility, insurance
  459  experience, and business qualifications of its proposed
  460  officers.
  461         c. The character, financial responsibility, business
  462  experience, and standing of the proposed stockholders and
  463  directors, or owners.
  464         4. Notice of management changes.—An underwriting member
  465  shall promptly give the office written notice of any change
  466  among the directors or principal officers of the underwriting
  467  member within 30 days after such change. The office shall
  468  investigate the new directors or principal officers of the
  469  underwriting member. The office’s investigation shall include an
  470  investigation of the character, financial responsibility,
  471  insurance experience, and business qualifications of any new
  472  directors or principal officers. As a result of the
  473  investigation, the office may require the underwriting member to
  474  replace any new directors or principal officers.
  475         5. Alternate financial statement.—In lieu of any financial
  476  examination, the office may accept an audited financial
  477  statement.
  478         6. Correction and reconstruction of records.—If the office
  479  finds any accounts or records to be inadequate, or inadequately
  480  kept or posted, it may employ experts to reconstruct, rewrite,
  481  post, or balance them at the expense of the person or entity
  482  being examined if such person or entity has failed to maintain,
  483  complete, or correct such records or accounts after the office
  484  has given him or her or it notice and reasonable opportunity to
  485  do so.
  486         7. Obstruction of examinations.—Any person or entity who or
  487  which willfully obstructs the office or its examiner in an
  488  examination is guilty of a misdemeanor of the second degree,
  489  punishable as provided in s. 775.082 or s. 775.083.
  490         8. Filing of annual statement.—Each underwriting member
  491  shall file with the office a full and true statement of its
  492  financial condition, transactions, and affairs. The statement
  493  shall be filed on or before March 1 of each year, or within such
  494  extension of time as the office for good cause grants, and shall
  495  be for the preceding calendar year. The statement shall contain
  496  information generally included in insurer financial statements
  497  prepared in accordance with generally accepted insurance
  498  accounting principles and practices and in a form generally
  499  utilized by insurers for financial statements, sworn to by at
  500  least two executive officers of the underwriting member. The
  501  form of the financial statements shall be the approved form of
  502  the National Association of Insurance Commissioners or its
  503  successor organization. The commission may by rule require each
  504  insurer to submit any part of the information contained in the
  505  financial statement in a computer-readable form compatible with
  506  the office’s electronic data processing system. In addition to
  507  information furnished in connection with its annual statement,
  508  an underwriting member must furnish to the office as soon as
  509  reasonably possible such information about its transactions or
  510  affairs as the office requests in writing. All information
  511  furnished pursuant to the office’s request must be verified by
  512  the oath of two executive officers of the underwriting member.
  513         9. Record maintenance.—Each underwriting member shall have
  514  and maintain its principal place of business in this state and
  515  shall keep therein complete records of its assets, transactions,
  516  and affairs in accordance with such methods and systems as are
  517  customary for or suitable to the kind or kinds of insurance
  518  transacted.
  519         10. Examination of agents.—If the department has reason to
  520  believe that any agent, as defined in s. 626.015 or s. 626.914,
  521  has violated or is violating any provision of the insurance law,
  522  or upon receipt of a written complaint signed by any interested
  523  person indicating that any such violation may exist, the
  524  department shall conduct such examination as it deems necessary
  525  of the accounts, records, documents, and transactions pertaining
  526  to or affecting the insurance affairs of such agent.
  527         11. Written reports of office.—The office or its examiner
  528  shall make a full and true written report of any examination.
  529  The report shall contain only information obtained from
  530  examination of the records, accounts, files, and documents of or
  531  relative to the person or entity examined or from testimony of
  532  individuals under oath, together with relevant conclusions and
  533  recommendations of the examiner based thereon. The office shall
  534  furnish a copy of the report to the person or entity examined
  535  not less than 30 days prior to filing the report in its office.
  536  If such person or entity so requests in writing within such 30
  537  day period, the office shall grant a hearing with respect to the
  538  report and shall not file the report until after the hearing and
  539  after such modifications have been made therein as the office
  540  deems proper.
  541         12. Admissibility of reports.—The report of an examination
  542  when filed shall be admissible in evidence in any action or
  543  proceeding brought by the office against the person or entity
  544  examined, or against his or her or its officers, employees, or
  545  agents. The office or its examiners may at any time testify and
  546  offer other proper evidence as to information secured or matters
  547  discovered during the course of an examination, whether or not a
  548  written report of the examination has been either made,
  549  furnished, or filed in the office.
  550         13. Publication of reports.—After an examination report has
  551  been filed, the office may publish the results of any such
  552  examination in one or more newspapers published in this state
  553  whenever it deems it to be in the public interest.
  554         14. Consideration of examination reports by entity
  555  examined.—After the examination report of an underwriting member
  556  has been filed, an affidavit shall be filed with the office, not
  557  more than 30 days after the report has been filed, on a form
  558  furnished by the office and signed by the person or a
  559  representative of any entity examined, stating that the report
  560  has been read and that the recommendations made in the report
  561  will be considered within a reasonable time.
  562         15. Examination costs.—Each person or entity examined by
  563  the office shall pay to the office the expenses incurred in such
  564  examination.
  565         16. Exchange costs.—An exchange shall reimburse the office
  566  for any expenses incurred by it relating to the regulation of
  567  the exchange and its members, except as specified in
  568  subparagraph 15.
  569         17. Powers of examiners.—Any examiner appointed by the
  570  office, as to the subject of any examination, investigation, or
  571  hearing being conducted by him or her, may administer oaths,
  572  examine and cross-examine witnesses, and receive oral and
  573  documentary evidence, and shall have the power to subpoena
  574  witnesses, compel their attendance and testimony, and require by
  575  subpoena the production of books, papers, records, files,
  576  correspondence, documents, or other evidence which the examiner
  577  deems relevant to the inquiry. If any person refuses to comply
  578  with any such subpoena or to testify as to any matter concerning
  579  which he or she may be lawfully interrogated, the Circuit Court
  580  of Leon County or the circuit court of the county wherein such
  581  examination, investigation, or hearing is being conducted, or of
  582  the county wherein such person resides, on the office’s
  583  application may issue an order requiring such person to comply
  584  with the subpoena and to testify; and any failure to obey such
  585  an order of the court may be punished by the court as a contempt
  586  thereof. Subpoenas shall be served, and proof of such service
  587  made, in the same manner as if issued by a circuit court.
  588  Witness fees and mileage, if claimed, shall be allowed the same
  589  as for testimony in a circuit court.
  590         18. False testimony.—Any person willfully testifying
  591  falsely under oath as to any matter material to any examination,
  592  investigation, or hearing shall upon conviction thereof be
  593  guilty of perjury and shall be punished accordingly.
  594         19. Self-incrimination.—
  595         a. If any person asks to be excused from attending or
  596  testifying or from producing any books, papers, records,
  597  contracts, documents, or other evidence in connection with any
  598  examination, hearing, or investigation being conducted by the
  599  office or its examiner, on the ground that the testimony or
  600  evidence required of the person may tend to incriminate him or
  601  her or subject him or her to a penalty or forfeiture, and the
  602  person notwithstanding is directed to give such testimony or
  603  produce such evidence, he or she shall, if so directed by the
  604  office and the Department of Legal Affairs, nonetheless comply
  605  with such direction; but the person shall not thereafter be
  606  prosecuted or subjected to any penalty or forfeiture for or on
  607  account of any transaction, matter, or thing concerning which he
  608  or she may have so testified or produced evidence, and no
  609  testimony so given or evidence so produced shall be received
  610  against him or her upon any criminal action, investigation, or
  611  proceeding; except that no such person so testifying shall be
  612  exempt from prosecution or punishment for any perjury committed
  613  by him or her in such testimony, and the testimony or evidence
  614  so given or produced shall be admissible against him or her upon
  615  any criminal action, investigation, or proceeding concerning
  616  such perjury, nor shall he or she be exempt from the refusal,
  617  suspension, or revocation of any license, permission, or
  618  authority conferred, or to be conferred, pursuant to the
  619  insurance law.
  620         b. Any such individual may execute, acknowledge, and file
  621  with the office a statement expressly waiving such immunity or
  622  privilege in respect to any transaction, matter, or thing
  623  specified in such statement, and thereupon the testimony of such
  624  individual or such evidence in relation to such transaction,
  625  matter, or thing may be received or produced before any judge or
  626  justice, court, tribunal, grand jury, or otherwise; and if such
  627  testimony or evidence is so received or produced, such
  628  individual shall not be entitled to any immunity or privileges
  629  on account of any testimony so given or evidence so produced.
  630         20. Penalty for failure to testify.—Any person who refuses
  631  or fails, without lawful cause, to testify relative to the
  632  affairs of any member, associate broker, or other person when
  633  subpoenaed and requested by the office to so testify, as
  634  provided in subparagraph 17., shall, in addition to the penalty
  635  provided in subparagraph 17., be guilty of a misdemeanor of the
  636  second degree, punishable as provided in s. 775.082 or s.
  637  775.083.
  638         21. Name selection.—No underwriting member shall be formed
  639  or authorized to transact insurance in this state under a name
  640  which is the same as that of any authorized insurer or is so
  641  nearly similar thereto as to cause or tend to cause confusion or
  642  under a name which would tend to mislead as to the type of
  643  organization of the insurer. Before incorporating under or using
  644  any name, the underwriting syndicate or proposed underwriting
  645  syndicate shall submit its name or proposed name to the office
  646  for the approval of the office.
  647         22. Capitalization.—An underwriting member approved on or
  648  after July 2, 1987, shall provide an initial paid-in capital and
  649  surplus of $3 million and thereafter shall maintain a minimum
  650  policyholder surplus of $2 million in order to be permitted to
  651  write insurance. Underwriting members approved prior to July 2,
  652  1987, shall maintain a minimum policyholder surplus of $1
  653  million. After June 29, 1988, underwriting members approved
  654  prior to July 2, 1987, must maintain a minimum policyholder
  655  surplus of $1.5 million to write insurance. After June 29, 1989,
  656  underwriting members approved prior to July 2, 1987, must
  657  maintain a minimum policyholder surplus of $1.75 million to
  658  write insurance. After December 30, 1989, all underwriting
  659  members, regardless of the date they were approved, must
  660  maintain a minimum policyholder surplus of $2 million to write
  661  insurance. Except for that portion of the paid-in capital and
  662  surplus which shall be maintained in a security fund of an
  663  exchange, the paid-in capital and surplus shall be invested by
  664  an underwriting member in a manner consistent with ss. 625.301
  665  625.340. The portion of the paid-in capital and surplus in any
  666  security fund of an exchange shall be invested in a manner
  667  limited to investments for life insurance companies under the
  668  Florida insurance laws.
  669         23. Limitations on coverage written.—
  670         a. Limit of risk.—No underwriting member shall expose
  671  itself to any loss on any one risk in an amount exceeding 10
  672  percent of its surplus to policyholders. Any risk or portion of
  673  any risk which shall have been reinsured in an assuming
  674  reinsurer authorized or approved to do such business in this
  675  state shall be deducted in determining the limitation of risk
  676  prescribed in this section.
  677         b. Restrictions on premiums written.—If the office has
  678  reason to believe that the underwriting member’s ratio of actual
  679  or projected annual gross written premiums to policyholder
  680  surplus exceeds 8 to 1 or the underwriting member’s ratio of
  681  actual or projected annual net premiums to policyholder surplus
  682  exceeds 4 to 1, the office may establish maximum gross or net
  683  annual premiums to be written by the underwriting member
  684  consistent with maintaining the ratios specified in this sub
  685  subparagraph.
  686         (I) Projected annual net or gross premiums shall be based
  687  on the actual writings to date for the underwriting member’s
  688  current calendar year, its writings for the previous calendar
  689  year, or both. Ratios shall be computed on an annualized basis.
  690         (II) For purposes of this sub-subparagraph, the term “gross
  691  written premiums” means direct premiums written and reinsurance
  692  assumed.
  693         c. Surplus as to policyholders.—For the purpose of
  694  determining the limitation on coverage written, surplus as to
  695  policyholders shall be deemed to include any voluntary reserves,
  696  or any part thereof, which are not required by or pursuant to
  697  law and shall be determined from the last sworn statement of
  698  such underwriting member with the office, or by the last report
  699  or examination filed by the office, whichever is more recent at
  700  the time of assumption of such risk.
  701         24. Unearned premium reserves.—An underwriting member must
  702  at all times maintain an unearned premium reserve equal to 50
  703  percent of the net written premiums of the subscribers on
  704  policies having 1 year or less to run, and pro rata on those for
  705  longer periods, All unearned premium reserves for business
  706  written on the exchange shall be calculated on a monthly or more
  707  frequent basis or on such other basis as determined by the
  708  office; except that all premiums on any marine or transportation
  709  insurance trip risk shall be deemed unearned until the trip is
  710  terminated. For the purpose of this subparagraph, the term “net
  711  written premiums” means the premium payments made by subscribers
  712  plus the premiums due from subscribers, after deducting the
  713  amounts specifically provided in the subscribers’ agreements for
  714  expenses, including reinsurance costs and fees paid to the
  715  attorney in fact, provided that the power of attorney agreement
  716  contains an explicit provision requiring the attorney in fact to
  717  refund any unearned subscribers fees on a pro-rata basis for
  718  cancelled policies. If there is no such provision, the unearned
  719  premium reserves must be calculated without any adjustment for
  720  fees paid to the attorney in fact. If the unearned premium
  721  reserves at any time do not amount to $100,000, there must be
  722  maintained on deposit at the exchange at all times additional
  723  funds in cash or eligible securities, which, together with the
  724  unearned premium reserves, equal $100,000. In calculating the
  725  foregoing reserves, the amount of the attorney’s bond, as filed
  726  with the office and as required by s. 629.121, must be included
  727  in such reserves. If at any time the unearned premium reserves
  728  are less than the foregoing requirements, the subscribers or the
  729  attorney in fact shall advance funds to make up the deficiency.
  730  Such advances must be repaid only out of the surplus of the
  731  exchange and only after receiving written approval from the
  732  office.
  733         25. Loss reserves.—All underwriting members of an exchange
  734  shall maintain loss reserves, including a reserve for incurred
  735  but not reported claims. The reserves shall be subject to review
  736  by the office, and, if loss experience shows that an
  737  underwriting member’s loss reserves are inadequate, the office
  738  shall require the underwriting member to maintain loss reserves
  739  in such additional amount as is needed to make them adequate.
  740         26. Distribution of profits.—An underwriting member shall
  741  not distribute any profits in the form of cash or other assets
  742  to owners except out of that part of its available and
  743  accumulated surplus funds which is derived from realized net
  744  operating profits on its business and realized capital gains. In
  745  any one year such payments to owners shall not exceed 30 percent
  746  of such surplus as of December 31 of the immediately preceding
  747  year, unless otherwise approved by the office. No distribution
  748  of profits shall be made that would render an underwriting
  749  member either impaired or insolvent.
  750         27. Stock dividends.—A stock dividend may be paid by an
  751  underwriting member out of any available surplus funds in excess
  752  of the aggregate amount of surplus advanced to the underwriting
  753  member under subparagraph 29.
  754         28. Dividends from earned surplus.—A dividend otherwise
  755  lawful may be payable out of an underwriting member’s earned
  756  surplus even though the total surplus of the underwriting member
  757  is then less than the aggregate of its past contributed surplus
  758  resulting from issuance of its capital stock at a price in
  759  excess of the par value thereof.
  760         29. Borrowing of money by underwriting members.—
  761         a. An underwriting member may borrow money to defray the
  762  expenses of its organization, provide it with surplus funds, or
  763  for any purpose of its business, upon a written agreement that
  764  such money is required to be repaid only out of the underwriting
  765  member’s surplus in excess of that stipulated in such agreement.
  766  The agreement may provide for interest not exceeding 15 percent
  767  simple interest per annum. The interest shall or shall not
  768  constitute a liability of the underwriting member as to its
  769  funds other than such excess of surplus, as stipulated in the
  770  agreement. No commission or promotion expense shall be paid in
  771  connection with any such loan. The use of any surplus note and
  772  any repayments thereof shall be subject to the approval of the
  773  office.
  774         b. Money so borrowed, together with any interest thereon if
  775  so stipulated in the agreement, shall not form a part of the
  776  underwriting member’s legal liabilities except as to its surplus
  777  in excess of the amount thereof stipulated in the agreement, nor
  778  be the basis of any setoff; but until repayment, financial
  779  statements filed or published by an underwriting member shall
  780  show as a footnote thereto the amount thereof then unpaid,
  781  together with any interest thereon accrued but unpaid.
  782         30. Liquidation, rehabilitation, and restrictions.—The
  783  office, upon a showing that a member or associate broker of an
  784  exchange has met one or more of the grounds contained in part I
  785  of chapter 631, may restrict sales by type of risk, policy or
  786  contract limits, premium levels, or policy or contract
  787  provisions; increase surplus or capital requirements of
  788  underwriting members; issue cease and desist orders; suspend or
  789  restrict a member’s or associate broker’s right to transact
  790  business; place an underwriting member under conservatorship or
  791  rehabilitation; or seek an order of liquidation as authorized by
  792  part I of chapter 631.
  793         31. Prohibited conduct.—The following acts by a member,
  794  associate broker, or affiliated person shall constitute
  795  prohibited conduct:
  796         a. Fraud.
  797         b. Fraudulent or dishonest acts committed by a member or
  798  associate broker prior to admission to an exchange, if the facts
  799  and circumstances were not disclosed to the office upon
  800  application to become a member or associate broker.
  801         c. Conduct detrimental to the welfare of an exchange.
  802         d. Unethical or improper practices or conduct, inconsistent
  803  with just and equitable principles of trade as set forth in, but
  804  not limited to, ss. 626.951-626.9641 and 626.973.
  805         e. Failure to use due diligence to ascertain the insurance
  806  needs of a client or a principal.
  807         f. Misstatements made under oath or upon an application for
  808  membership on an exchange.
  809         g. Failure to testify or produce documents when requested
  810  by the office.
  811         h. Willful violation of any law of this state.
  812         i. Failure of an officer or principal to testify under oath
  813  concerning a member, associate broker, or other person’s affairs
  814  as they relate to the operation of an exchange.
  815         j. Violation of the constitution and bylaws of the
  816  exchange.
  817         32. Penalties for participating in prohibited conduct.—
  818         a. The office may order the suspension of further
  819  transaction of business on the exchange of any member or
  820  associate broker found to have engaged in prohibited conduct. In
  821  addition, any member or associate broker found to have engaged
  822  in prohibited conduct may be subject to reprimand, censure,
  823  and/or a fine not exceeding $25,000 imposed by the office.
  824         b. Any member which has an affiliated person who is found
  825  to have engaged in prohibited conduct shall be subject to
  826  involuntary withdrawal or in addition thereto may be subject to
  827  suspension, reprimand, censure, and/or a fine not exceeding
  828  $25,000.
  829         33. Reduction of penalties.—Any suspension, reprimand,
  830  censure, or fine may be remitted or reduced by the office on
  831  such terms and conditions as are deemed fair and equitable.
  832         34. Other offenses.—Any member or associate broker that is
  833  suspended shall be deprived, during the period of suspension, of
  834  all rights and privileges of a member or of an associate broker
  835  and may be proceeded against by the office for any offense
  836  committed either before or after the date of suspension.
  837         35. Reinstatement.—Any member or associate broker that is
  838  suspended may be reinstated at any time on such terms and
  839  conditions as the office may specify.
  840         36. Remittance of fines.—Fines imposed under this section
  841  shall be remitted to the office and shall be paid into the
  842  Insurance Regulatory Trust Fund.
  843         37. Failure to pay fines.—When a member or associate broker
  844  has failed to pay a fine for 15 days after it becomes payable,
  845  such member or associate broker shall be suspended, unless the
  846  office has granted an extension of time to pay such fine.
  847         38. Changes in ownership or assets.—In the event of a major
  848  change in the ownership or a major change in the assets of an
  849  underwriting member, the underwriting member shall report such
  850  change in writing to the office within 30 days of the effective
  851  date thereof. The report shall set forth the details of the
  852  change. Any change in ownership or assets of more than 5 percent
  853  shall be considered a major change.
  854         39. Retaliation.—
  855         a. When by or pursuant to the laws of any other state or
  856  foreign country any taxes, licenses, or other fees, in the
  857  aggregate, and any fines, penalties, deposit requirements, or
  858  other material obligations, prohibitions, or restrictions are or
  859  would be imposed upon an exchange or upon the agents or
  860  representatives of such exchange which are in excess of such
  861  taxes, licenses, and other fees, in the aggregate, or which are
  862  in excess of such fines, penalties, deposit requirements, or
  863  other obligations, prohibitions, or restrictions directly
  864  imposed upon similar exchanges or upon the agents or
  865  representatives of such exchanges of such other state or country
  866  under the statutes of this state, so long as such laws of such
  867  other state or country continue in force or are so applied, the
  868  same taxes, licenses, and other fees, in the aggregate, or
  869  fines, penalties, deposit requirements, or other material
  870  obligations, prohibitions, or restrictions of whatever kind
  871  shall be imposed by the office upon the exchanges, or upon the
  872  agents or representatives of such exchanges, of such other state
  873  or country doing business or seeking to do business in this
  874  state.
  875         b. Any tax, license, or other obligation imposed by any
  876  city, county, or other political subdivision or agency of a
  877  state, jurisdiction, or foreign country on an exchange, or on
  878  the agents or representatives on an exchange, shall be deemed to
  879  be imposed by such state, jurisdiction, or foreign country
  880  within the meaning of sub-subparagraph a.
  881         40. Agents.—
  882         a. Agents as defined in ss. 626.015 and 626.914 who are
  883  broker members or associate broker members of an exchange shall
  884  be allowed only to place on an exchange the same kind or kinds
  885  of business that the agent is licensed to place pursuant to
  886  Florida law. Direct Florida business as defined in s. 626.916 or
  887  s. 626.917 shall be written through a broker member who is a
  888  surplus lines agent as defined in s. 626.914. The activities of
  889  each broker member or associate broker with regard to an
  890  exchange shall be subject to all applicable provisions of the
  891  insurance laws of this state, and all such activities shall
  892  constitute transactions under his or her license as an insurance
  893  agent for purposes of the Florida insurance law.
  894         b. Premium payments and other requirements.—If an
  895  underwriting member has assumed the risk as to a surplus lines
  896  coverage and if the premium therefor has been received by the
  897  surplus lines agent who placed such insurance, then in all
  898  questions thereafter arising under the coverage as between the
  899  underwriting member and the insured, the underwriting member
  900  shall be deemed to have received the premium due to it for such
  901  coverage; and the underwriting member shall be liable to the
  902  insured as to losses covered by such insurance, and for unearned
  903  premiums which may become payable to the insured upon
  904  cancellation of such insurance, whether or not in fact the
  905  surplus lines agent is indebted to the underwriting member with
  906  respect to such insurance or for any other cause.
  907         41. Improperly issued contracts, riders, and endorsements.—
  908         a. Any insurance policy, rider, or endorsement issued by an
  909  underwriting member and otherwise valid which contains any
  910  condition or provision not in compliance with the requirements
  911  of this section shall not be thereby rendered invalid, except as
  912  provided in s. 627.415, but shall be construed and applied in
  913  accordance with such conditions and provisions as would have
  914  applied had such policy, rider, or endorsement been in full
  915  compliance with this section. In the event an underwriting
  916  member issues or delivers any policy for an amount which exceeds
  917  any limitations otherwise provided in this section, the
  918  underwriting member shall be liable to the insured or his or her
  919  beneficiary for the full amount stated in the policy in addition
  920  to any other penalties that may be imposed.
  921         b. Any insurance contract delivered or issued for delivery
  922  in this state governing a subject or subjects of insurance
  923  resident, located, or to be performed in this state which,
  924  pursuant to the provisions of this section, the underwriting
  925  member may not lawfully insure under such a contract shall be
  926  cancelable at any time by the underwriting member, any provision
  927  of the contract to the contrary notwithstanding; and the
  928  underwriting member shall promptly cancel the contract in
  929  accordance with the request of the office therefor. No such
  930  illegality or cancellation shall be deemed to relieve the
  931  underwriting syndicate of any liability incurred by it under the
  932  contract while in force or to prohibit the underwriting
  933  syndicate from retaining the pro rata earned premium thereon.
  934  This provision does not relieve the underwriting syndicate from
  935  any penalty otherwise incurred by the underwriting syndicate.
  936         42. Satisfaction of judgments.—
  937         a. Every judgment or decree for the recovery of money
  938  heretofore or hereafter entered in any court of competent
  939  jurisdiction against any underwriting member shall be fully
  940  satisfied within 60 days from and after the entry thereof or, in
  941  the case of an appeal from such judgment or decree, within 60
  942  days from and after the affirmance of the judgment or decree by
  943  the appellate court.
  944         b. If the judgment or decree is not satisfied as required
  945  under sub-subparagraph a., and proof of such failure to satisfy
  946  is made by filing with the office a certified transcript of the
  947  docket of the judgment or the decree together with a certificate
  948  by the clerk of the court wherein the judgment or decree remains
  949  unsatisfied, in whole or in part, after the time provided in
  950  sub-subparagraph a., the office shall forthwith prohibit the
  951  underwriting member from transacting business. The office shall
  952  not permit such underwriting member to write any new business
  953  until the judgment or decree is wholly paid and satisfied and
  954  proof thereof is filed with the office under the official
  955  certificate of the clerk of the court wherein the judgment was
  956  recovered, showing that the judgment or decree is satisfied of
  957  record, and until the expenses and fees incurred in the case are
  958  also paid by the underwriting syndicate.
  959         43. Tender and exchange offers.—No person shall conclude a
  960  tender offer or an exchange offer or otherwise acquire 5 percent
  961  or more of the outstanding voting securities of an underwriting
  962  member or controlling company or purchase 5 percent or more of
  963  the ownership of an underwriting member or controlling company
  964  unless such person has filed with, and obtained the approval of,
  965  the office and sent to such underwriting member a statement
  966  setting forth:
  967         a. The identity of, and background information on, each
  968  person by whom, or on whose behalf, the acquisition is to be
  969  made; and, if the acquisition is to be made by or on behalf of a
  970  corporation, association, or trust, the identity of and
  971  background information on each director, officer, trustee, or
  972  other natural person performing duties similar to those of a
  973  director, officer, or trustee for the corporation, association,
  974  or trust.
  975         b. The source and amount of the funds or other
  976  consideration used, or to be used, in making the acquisition.
  977         c. Any plans or proposals which such person may have to
  978  liquidate such member, to sell its assets, or to merge or
  979  consolidate it.
  980         d. The percentage of ownership which such person proposes
  981  to acquire and the terms of the offer or exchange, as the case
  982  may be.
  983         e. Information as to any contracts, arrangements, or
  984  understandings with any party with respect to any securities of
  985  such member or controlling company, including, but not limited
  986  to, information relating to the transfer of any securities,
  987  option arrangements, or puts or calls or the giving or
  988  withholding of proxies, naming the party with whom such
  989  contract, arrangements, or understandings have been entered and
  990  giving the details thereof.
  991         f. The office may disapprove any acquisition subject to the
  992  provisions of this subparagraph by any person or any affiliated
  993  person of such person who:
  994         (I) Willfully violates this subparagraph;
  995         (II) In violation of an order of the office issued pursuant
  996  to sub-subparagraph j., fails to divest himself or herself of
  997  any stock obtained in violation of this subparagraph, or fails
  998  to divest himself or herself of any direct or indirect control
  999  of such stock, within 25 days after such order; or
 1000         (III) In violation of an order issued by the office
 1001  pursuant to sub-subparagraph j., acquires additional stock of
 1002  the underwriting member or controlling company, or direct or
 1003  indirect control of such stock, without complying with this
 1004  subparagraph.
 1005         g. The person or persons filing the statement required by
 1006  this subparagraph have the burden of proof. The office shall
 1007  approve any such acquisition if it finds, on the basis of the
 1008  record made during any proceeding or on the basis of the filed
 1009  statement if no proceeding is conducted, that:
 1010         (I) Upon completion of the acquisition, the underwriting
 1011  member will be able to satisfy the requirements for the approval
 1012  to write the line or lines of insurance for which it is
 1013  presently approved;
 1014         (II) The financial condition of the acquiring person or
 1015  persons will not jeopardize the financial stability of the
 1016  underwriting member or prejudice the interests of its
 1017  policyholders or the public;
 1018         (III) Any plan or proposal which the acquiring person has,
 1019  or acquiring persons have, made:
 1020         (A) To liquidate the insurer, sell its assets, or merge or
 1021  consolidate it with any person, or to make any other major
 1022  change in its business or corporate structure or management; or
 1023         (B) To liquidate any controlling company, sell its assets,
 1024  or merge or consolidate it with any person, or to make any major
 1025  change in its business or corporate structure or management
 1026  which would have an effect upon the underwriting member
 1028  is fair and free of prejudice to the policyholders of the
 1029  underwriting member or to the public;
 1030         (IV) The competence, experience, and integrity of those
 1031  persons who will control directly or indirectly the operation of
 1032  the underwriting member indicate that the acquisition is in the
 1033  best interest of the policyholders of the underwriting member
 1034  and in the public interest;
 1035         (V) The natural persons for whom background information is
 1036  required to be furnished pursuant to this subparagraph have such
 1037  backgrounds as to indicate that it is in the best interests of
 1038  the policyholders of the underwriting member, and in the public
 1039  interest, to permit such persons to exercise control over such
 1040  underwriting member;
 1041         (VI) The officers and directors to be employed after the
 1042  acquisition have sufficient insurance experience and ability to
 1043  assure reasonable promise of successful operation;
 1044         (VII) The management of the underwriting member after the
 1045  acquisition will be competent and trustworthy and will possess
 1046  sufficient managerial experience so as to make the proposed
 1047  operation of the underwriting member not hazardous to the
 1048  insurance-buying public;
 1049         (VIII) The management of the underwriting member after the
 1050  acquisition will not include any person who has directly or
 1051  indirectly through ownership, control, reinsurance transactions,
 1052  or other insurance or business relations unlawfully manipulated
 1053  the assets, accounts, finances, or books of any insurer or
 1054  underwriting member or otherwise acted in bad faith with respect
 1055  thereto;
 1056         (IX) The acquisition is not likely to be hazardous or
 1057  prejudicial to the underwriting member’s policyholders or the
 1058  public; and
 1059         (X) The effect of the acquisition of control would not
 1060  substantially lessen competition in insurance in this state or
 1061  would not tend to create a monopoly therein.
 1062         h. No vote by the stockholder of record, or by any other
 1063  person, of any security acquired in contravention of the
 1064  provisions of this subparagraph is valid. Any acquisition of any
 1065  security contrary to the provisions of this subparagraph is
 1066  void. Upon the petition of the underwriting member or
 1067  controlling company, the circuit court for the county in which
 1068  the principal office of such underwriting member is located may,
 1069  without limiting the generality of its authority, order the
 1070  issuance or entry of an injunction or other order to enforce the
 1071  provisions of this subparagraph. There shall be a private right
 1072  of action in favor of the underwriting member or controlling
 1073  company to enforce the provisions of this subparagraph. No
 1074  demand upon the office that it perform its functions shall be
 1075  required as a prerequisite to any suit by the underwriting
 1076  member or controlling company against any other person, and in
 1077  no case shall the office be deemed a necessary party to any
 1078  action by such underwriting member or controlling company to
 1079  enforce the provisions of this subparagraph. Any person who
 1080  makes or proposes an acquisition requiring the filing of a
 1081  statement pursuant to this subparagraph, or who files such a
 1082  statement, shall be deemed to have thereby designated the Chief
 1083  Financial Officer as such person’s agent for service of process
 1084  under this subparagraph and shall thereby be deemed to have
 1085  submitted himself or herself to the administrative jurisdiction
 1086  of the office and to the jurisdiction of the circuit court.
 1087         i. Any approval by the office under this subparagraph does
 1088  not constitute a recommendation by the office for an
 1089  acquisition, tender offer, or exchange offer. It is unlawful for
 1090  a person to represent that the office’s approval constitutes a
 1091  recommendation. A person who violates the provisions of this
 1092  sub-subparagraph is guilty of a felony of the third degree,
 1093  punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
 1094  The statute-of-limitations period for the prosecution of an
 1095  offense committed under this sub-subparagraph is 5 years.
 1096         j. Upon notification to the office by the underwriting
 1097  member or a controlling company that any person or any
 1098  affiliated person of such person has acquired 5 percent or more
 1099  of the outstanding voting securities of the underwriting member
 1100  or controlling company without complying with the provisions of
 1101  this subparagraph, the office shall order that the person and
 1102  any affiliated person of such person cease acquisition of any
 1103  further securities of the underwriting member or controlling
 1104  company; however, the person or any affiliated person of such
 1105  person may request a proceeding, which proceeding shall be
 1106  convened within 7 days after the rendering of the order for the
 1107  sole purpose of determining whether the person, individually or
 1108  in connection with any affiliated person of such person, has
 1109  acquired 5 percent or more of the outstanding voting securities
 1110  of an underwriting member or controlling company. Upon the
 1111  failure of the person or affiliated person to request a hearing
 1112  within 7 days, or upon a determination at a hearing convened
 1113  pursuant to this sub-subparagraph that the person or affiliated
 1114  person has acquired voting securities of an underwriting member
 1115  or controlling company in violation of this subparagraph, the
 1116  office may order the person and affiliated person to divest
 1117  themselves of any voting securities so acquired.
 1118         k.(I) The office shall, if necessary to protect the public
 1119  interest, suspend or revoke the certificate of authority of any
 1120  underwriting member or controlling company:
 1121         (A) The control of which is acquired in violation of this
 1122  subparagraph;
 1123         (B) That is controlled, directly or indirectly, by any
 1124  person or any affiliated person of such person who, in violation
 1125  of this subparagraph, has obtained control of an underwriting
 1126  member or controlling company; or
 1127         (C) That is controlled, directly or indirectly, by any
 1128  person who, directly or indirectly, controls any other person
 1129  who, in violation of this subparagraph, acquires control of an
 1130  underwriting member or controlling company.
 1131         (II) If any underwriting member is subject to suspension or
 1132  revocation pursuant to sub-sub-subparagraph (I), the
 1133  underwriting member shall be deemed to be in such condition, or
 1134  to be using or to have been subject to such methods or practices
 1135  in the conduct of its business, as to render its further
 1136  transaction of insurance presently or prospectively hazardous to
 1137  its policyholders, creditors, or stockholders or to the public.
 1138         l.(I) For the purpose of this sub-sub-subparagraph, the
 1139  term “affiliated person” of another person means:
 1140         (A) The spouse of such other person;
 1141         (B) The parents of such other person and their lineal
 1142  descendants and the parents of such other person’s spouse and
 1143  their lineal descendants;
 1144         (C) Any person who directly or indirectly owns or controls,
 1145  or holds with power to vote, 5 percent or more of the
 1146  outstanding voting securities of such other person;
 1147         (D) Any person 5 percent or more of the outstanding voting
 1148  securities of which are directly or indirectly owned or
 1149  controlled, or held with power to vote, by such other person;
 1150         (E) Any person or group of persons who directly or
 1151  indirectly control, are controlled by, or are under common
 1152  control with such other person; or any officer, director,
 1153  partner, copartner, or employee of such other person;
 1154         (F) If such other person is an investment company, any
 1155  investment adviser of such company or any member of an advisory
 1156  board of such company;
 1157         (G) If such other person is an unincorporated investment
 1158  company not having a board of directors, the depositor of such
 1159  company; or
 1160         (H) Any person who has entered into an agreement, written
 1161  or unwritten, to act in concert with such other person in
 1162  acquiring or limiting the disposition of securities of an
 1163  underwriting member or controlling company.
 1164         (II) For the purposes of this section, the term
 1165  “controlling company” means any corporation, trust, or
 1166  association owning, directly or indirectly, 25 percent or more
 1167  of the voting securities of one or more underwriting members.
 1168         m. The commission may adopt, amend, or repeal rules that
 1169  are necessary to implement the provisions of this subparagraph,
 1170  pursuant to chapter 120.
 1171         44. Background information.—The information as to the
 1172  background and identity of each person about whom information is
 1173  required to be furnished pursuant to sub-subparagraph 43.a.
 1174  shall include, but shall not be limited to:
 1175         a. Such person’s occupations, positions of employment, and
 1176  offices held during the past 10 years.
 1177         b. The principal business and address of any business,
 1178  corporation, or other organization in which each such office was
 1179  held or in which such occupation or position of employment was
 1180  carried on.
 1181         c. Whether, at any time during such 10-year period, such
 1182  person was convicted of any crime other than a traffic
 1183  violation.
 1184         d. Whether, during such 10-year period, such person has
 1185  been the subject of any proceeding for the revocation of any
 1186  license and, if so, the nature of such proceeding and the
 1187  disposition thereof.
 1188         e. Whether, during such 10-year period, such person has
 1189  been the subject of any proceeding under the federal Bankruptcy
 1190  Act or whether, during such 10-year period, any corporation,
 1191  partnership, firm, trust, or association in which such person
 1192  was a director, officer, trustee, partner, or other official has
 1193  been subject to any such proceeding, either during the time in
 1194  which such person was a director, officer, trustee, partner, or
 1195  other official, or within 12 months thereafter.
 1196         f. Whether, during such 10-year period, such person has
 1197  been enjoined, either temporarily or permanently, by a court of
 1198  competent jurisdiction from violating any federal or state law
 1199  regulating the business of insurance, securities, or banking, or
 1200  from carrying out any particular practice or practices in the
 1201  course of the business of insurance, securities, or banking,
 1202  together with details of any such event.
 1203         45. Security fund.—All underwriting members shall be
 1204  members of the security fund of any exchange.
 1205         46. Underwriting member defined.—Whenever the term
 1206  “underwriting member” is used in this subsection, it shall be
 1207  construed to mean “underwriting syndicate.”
 1208         47. Offsets.—Any action, requirement, or constraint imposed
 1209  by the office shall reduce or offset similar actions,
 1210  requirements, or constraints of any exchange.
 1211         48. Restriction on member ownership.—
 1212         a. Investments existing prior to July 2, 1987.—The
 1213  investment in any member by brokers, agents, and intermediaries
 1214  transacting business on the exchange, and the investment in any
 1215  such broker, agent, or intermediary by any member, directly or
 1216  indirectly, shall in each case be limited in the aggregate to
 1217  less than 20 percent of the total investment in such member,
 1218  broker, agent, or intermediary, as the case may be. After
 1219  December 31, 1987, the aggregate percent of the total investment
 1220  in such member by any broker, agent, or intermediary and the
 1221  aggregate percent of the total investment in any such broker,
 1222  agent, or intermediary by any member, directly or indirectly,
 1223  shall not exceed 15 percent. After June 30, 1988, such aggregate
 1224  percent shall not exceed 10 percent and after December 31, 1988,
 1225  such aggregate percent shall not exceed 5 percent.
 1226         b. Investments arising on or after July 2, 1987.—The
 1227  investment in any underwriting member by brokers, agents, or
 1228  intermediaries transacting business on the exchange, and the
 1229  investment in any such broker, agent, or intermediary by any
 1230  underwriting member, directly or indirectly, shall in each case
 1231  be limited in the aggregate to less than 5 percent of the total
 1232  investment in such underwriting member, broker, agent, or
 1233  intermediary.
 1234         49. “Underwriting manager” defined.—“Underwriting manager”
 1235  as used in this subparagraph includes any person, partnership,
 1236  corporation, or organization providing any of the following
 1237  services to underwriting members of the exchange:
 1238         a. Office management and allied services, including
 1239  correspondence and secretarial services.
 1240         b. Accounting services, including bookkeeping and financial
 1241  report preparation.
 1242         c. Investment and banking consultations and services.
 1243         d. Underwriting functions and services including the
 1244  acceptance, rejection, placement, and marketing of risk.
 1245         50. Prohibition of underwriting manager investment.—Any
 1246  direct or indirect investment in any underwriting manager by a
 1247  broker member or any affiliated person of a broker member or any
 1248  direct or indirect investment in a broker member by an
 1249  underwriting manager or any affiliated person of an underwriting
 1250  manager is prohibited. “Affiliated person” for purposes of this
 1251  subparagraph is defined in subparagraph 43.
 1252         51. An underwriting member may not accept reinsurance on an
 1253  assumed basis from an affiliate or a controlling company, nor
 1254  may a broker member or management company place reinsurance from
 1255  an affiliate or controlling company of theirs with an
 1256  underwriting member. “Affiliate and controlling company” for
 1257  purposes of this subparagraph is defined in subparagraph 43.
 1258         52. Premium defined.—“Premium” is the consideration for
 1259  insurance, by whatever name called. Any “assessment” or any
 1260  “membership,” “policy,” “survey,” “inspection,” “service” fee or
 1261  charge or similar fee or charge in consideration for an
 1262  insurance contract is deemed part of the premium.
 1263         53. Rules.—The commission shall adopt rules necessary for
 1264  or as an aid to the effectuation of any provision of this
 1265  section.
 1266         Section 17. Subsection (6) of section 634.121, Florida
 1267  Statutes, is amended to read:
 1268         634.121 Forms, required procedures, provisions; delivery
 1269  and definitions.—
 1270         (6)(a) Each service agreement, which includes a copy of the
 1271  application form, must be mailed, delivered, or otherwise
 1272  provided electronically transmitted to the agreement holder as
 1273  provided in s. 627.421. As used in s. 627.421, the term:
 1274         1.“Insurance policies and endorsements,” “policy and
 1275  endorsement,” “policy,” or “policy form and endorsement form”
 1276  includes a motor vehicle service agreement and related
 1277  endorsement forms.
 1278         2.“Insured” includes a motor vehicle service agreement
 1279  holder.
 1280         3.“Insurer” includes a motor vehicle service agreement
 1281  company.
 1282         (b) Section 627.421(4) applies if the motor vehicle service
 1283  agreement company elects to post motor vehicle service
 1284  agreements on its Internet website in lieu of mailing or
 1285  delivery to agreement holders within 45 days after the date of
 1286  purchase. Electronic transmission of a service agreement
 1287  constitutes delivery to the agreement holder. The electronic
 1288  transmission must notify the agreement holder of his or her
 1289  right to receive the service agreement via United States mail
 1290  rather than electronic transmission. If the agreement holder
 1291  communicates to the service agreement company electronically or
 1292  in writing that he or she does not agree to receipt by
 1293  electronic transmission, a paper copy of the service agreement
 1294  shall be provided to the agreement holder.
 1295         Section 18. Section 641.3107, Florida Statutes, is amended
 1296  to read:
 1297         641.3107 Delivery of contract and certain documents;
 1298  definitions.—
 1299         (1)Unless delivered upon execution or issuance, A health
 1300  maintenance contract, certificate of coverage, endorsements and
 1301  riders, or member handbook must shall be mailed, or delivered,
 1302  or otherwise provided to the subscriber or, in the case of a
 1303  group health maintenance contract, to the employer or other
 1304  person who will hold the contract on behalf of the subscriber
 1305  group, as provided in s. 627.421.
 1306         (2)As used in s. 627.421, the term:
 1307         (a)“Insurance policies and endorsements,” “policy and
 1308  endorsement,” “policy,” or “policy form and endorsement form”
 1309  includes the health maintenance contract, endorsement and
 1310  riders, certificate of coverage, or member handbook.
 1311         (b)“Insured” includes a subscriber or, in the case of a
 1312  group health maintenance contract, to the employer or other
 1313  person who will hold the contract on behalf of the subscriber
 1314  group.
 1315         (c)“Insurer” includes a health maintenance organization.
 1316         (3)Section 627.421(4) applies if the health maintenance
 1317  organization elects to post health maintenance contracts on its
 1318  Internet website in lieu of mailing or delivery to subscribers
 1319  or the person who will hold the contract on behalf of a
 1320  subscriber group within 10 working days from approval of the
 1321  enrollment form by the health maintenance organization or by the
 1322  effective date of coverage, whichever occurs first. However, if
 1323  the employer or other person who will hold the contract on
 1324  behalf of the subscriber group requires retroactive enrollment
 1325  of a subscriber, the organization shall deliver the contract,
 1326  certificate, or member handbook to the subscriber within 10 days
 1327  after receiving notice from the employer of the retroactive
 1328  enrollment. This section does not apply to the delivery of those
 1329  contracts specified in s. 641.31(13).
 1330         Section 19. This act shall take effect upon becoming a law.