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.
79
80 Be It Enacted by the Legislature of the State of Florida:
81
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
1027
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.