Bill Text: FL H1235 | 2011 | Regular Session | Introduced
Bill Title: Captive Insurance
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2011-05-07 - Indefinitely postponed and withdrawn from consideration [H1235 Detail]
Download: Florida-2011-H1235-Introduced.html
HB 1235 |
1 | |
2 | An act relating to captive insurance; amending s. 628.901, |
3 | F.S.; providing definitions; amending s. 628.905, F.S.; |
4 | expanding the kinds of insurance for which a captive |
5 | insurer may seek licensure; limiting the risks that |
6 | certain captive insurers may insure; specifying |
7 | requirements and conditions relating to a captive |
8 | insurer's authority to conduct business; requiring that |
9 | before licensure certain captive insurers must file or |
10 | submit to the Commissioner of Insurance Regulation |
11 | specified information, documents, and statements; |
12 | requiring a captive insurance company to file specific |
13 | evidence with the commissioner relating to the financial |
14 | condition and quality of management and operations of the |
15 | company; requiring an applicant-sponsored captive insurer |
16 | to file with the commissioner a business plan, certain |
17 | statements, sample contracts, and certain evidence |
18 | relating to expenses; requiring a captive insurance |
19 | company to pay certain fees and costs relating to an |
20 | application for licensure and renewal; authorizing initial |
21 | licensure until a date certain and requiring annual |
22 | renewal thereafter on such date; authorizing a foreign or |
23 | alien captive insurance company to become a domestic |
24 | captive insurance company by complying with specified |
25 | requirements; authorizing the commissioner to waive any |
26 | requirements for public hearings relating to the |
27 | redomestication of an alien captive insurance company; |
28 | amending s. 628.907, F.S.; revising capitalization and |
29 | security requirements for specified captive insurance |
30 | companies; requiring capital of specified captive |
31 | insurance companies to be held in certain forms; requiring |
32 | contributions to captive insurance companies that are |
33 | nonprofit corporations to be in a certain form; |
34 | authorizing the commission to issue a captive insurance |
35 | company license conditioned upon certain evidence relating |
36 | to possession of specified capital; authorizing revocation |
37 | of a conditional license under certain circumstances; |
38 | authorizing the commissioner to prescribe certain |
39 | additional capital and net asset requirements; requiring |
40 | such additional requirements relating to capital and net |
41 | assets to be held in specified forms; requiring certain |
42 | security of a branch captive insurance company to be trust |
43 | funded by specified types of assets made payable to |
44 | certain policyholders and insurers; providing limitations |
45 | on the payment of dividends by a captive insurance |
46 | company; prohibiting distributions by a captive insurance |
47 | company that is a nonprofit corporation without |
48 | commissioner approval; requiring certain irrevocable |
49 | letters of credit to meet certain standards; creating s. |
50 | 628.908, F.S.; prohibiting the issuance of a license to |
51 | specified captive insurance companies unless such |
52 | companies possess and maintain certain levels of |
53 | unimpaired surplus; requiring unimpaired surplus to be in |
54 | specified forms; authorizing a sponsored captive insurance |
55 | company that does not assume risk to maintain unimpaired |
56 | surplus in certain securities approved by the |
57 | commissioner; requiring a captive insurance company that |
58 | is organized as a reciprocal insurer to maintain a |
59 | specified amount of unimpaired surplus; authorizing the |
60 | commissioner to condition issuance of a captive insurance |
61 | company license upon the provision of certain evidence |
62 | relating to the possession of a minimum amount of |
63 | unimpaired surplus; authorizing revocation of a |
64 | conditional license under certain circumstances; |
65 | authorizing the commissioner to require additional surplus |
66 | in specified forms; requiring dividends or distributions |
67 | of capital or surplus to meet certain conditions and be |
68 | approved by the commissioner; requiring certain letters of |
69 | credit to meet certain standards; amending s. 628.909, |
70 | F.S.; providing for applicability of certain statutory |
71 | provisions to specified captive insurers; creating s. |
72 | 628.910, F.S.; providing requirements, options, and |
73 | conditions relating to how a pure captive insurance |
74 | company or a sponsored captive insurance company may be |
75 | incorporated or organized as a business; amending s. |
76 | 628.911, F.S.; providing reporting requirements for |
77 | specified captive insurance companies and captive |
78 | reinsurance companies; creating s. 628.912, F.S.; |
79 | authorizing a sponsored captive insurance company and a |
80 | captive reinsurance company to discount specified losses |
81 | subject to certain conditions; amending s. 628.913, F.S.; |
82 | authorizing a captive reinsurance company to apply to the |
83 | commission for licensure to write reinsurance covering |
84 | property and casualty insurance or reinsurance contracts; |
85 | authorizing the commissioner to allow a captive |
86 | reinsurance company to write reinsurance contracts |
87 | covering risks in any state; specifying that a captive |
88 | reinsurance company is subject to specified requirements |
89 | and must meet specified conditions to conduct business in |
90 | this state; creating s. 628.914, F.S.; specifying |
91 | requirements and conditions relating to the capitalization |
92 | or maintenance of reserves by a captive reinsurance |
93 | company; creating s. 628.9141, F.S.; specifying |
94 | requirements and conditions relating to the incorporation |
95 | of a captive reinsurance company; creating s. 628.9142, |
96 | F.S.; providing for the effect on reserves of certain |
97 | actions taken by a captive insurance company relating to |
98 | providing reinsurance for specified risks; creating s. |
99 | 628.9143, F.S.; requiring a captive reinsurance company to |
100 | annually pay a specified tax amount; prohibiting any other |
101 | taxation of a captive reinsurance company other than an |
102 | occupation tax and certain ad valorem taxes; subjecting a |
103 | captive reinsurance company to sanctions for failures |
104 | relating to the payment of taxes; creating s. 628.918, |
105 | F.S.; requiring a specified percentage of a captive |
106 | reinsurance company's assets to be managed by an asset |
107 | manager domiciled in this state; creating s. 628.919, |
108 | F.S.; authorizing the Financial Services Commission to |
109 | adopt rules establishing certain standards for control of |
110 | an unaffiliated business by a parent or affiliated company |
111 | relating to coverage by a pure captive insurance company; |
112 | creating s. 628.920, F.S.; providing for the conversion of |
113 | certain stock, mutual corporations, or limited liability |
114 | companies into reciprocal insurers; requiring a specified |
115 | plan for such conversions or mergers; specifying |
116 | requirements and conditions for the approval of a |
117 | conversion or merger plan by the commissioner; creating s. |
118 | 628.921, F.S.; providing requirements and conditions |
119 | relating to the formation of a sponsored captive insurance |
120 | company and the establishment of protected cells; creating |
121 | s. 628.922, F.S.; providing requirements and conditions |
122 | applicable to a sponsor of a sponsored captive insurance |
123 | company; creating s. 628.923, F.S.; authorizing specified |
124 | entities to be participants in sponsored captive insurance |
125 | companies under certain circumstances; creating s. |
126 | 628.924, F.S.; requiring that a licensed captive insurance |
127 | company must be considered for issuance of a certificate |
128 | of authority as an insurer under certain circumstances; |
129 | providing an effective date. |
130 | |
131 | Be It Enacted by the Legislature of the State of Florida: |
132 | |
133 | Section 1. Section 628.901, Florida Statutes, is amended |
134 | to read: |
135 | 628.901 Definitions |
136 | |
137 | otherwise: |
138 | |
139 | |
140 | |
141 | |
142 | (1) "Affiliated company" means a company in the same |
143 | corporate system as a parent, an industrial insured, or a member |
144 | organization by virtue of common ownership, control, operation, |
145 | or management. |
146 | (2) "Alien captive insurance company" means an insurance |
147 | company formed to write insurance business for its parents and |
148 | affiliates and licensed under the laws of an alien jurisdiction |
149 | which imposes statutory or regulatory standards in a form |
150 | acceptable to the commissioner on companies transacting the |
151 | business of insurance in the alien jurisdiction. |
152 | (3) "Association" means a legal association of |
153 | individuals, corporations, limited liability companies, |
154 | partnerships, political subdivisions, or associations that has |
155 | been in continuous existence for at least 1 year: |
156 | (a) The member organizations of which collectively, or |
157 | which does itself: |
158 | 1. Own, control, or hold with power to vote all of the |
159 | outstanding voting securities of an association captive |
160 | insurance company incorporated as a stock insurer or organized |
161 | as a limited liability company; or |
162 | 2. Have complete voting control over an association |
163 | captive insurance company organized as a mutual insurer; or |
164 | (b) The member organizations of which collectively |
165 | constitute all of the subscribers of an association captive |
166 | insurance company formed as a reciprocal insurer. |
167 | (4) "Association captive insurance company" means a |
168 | company that insures risks of the member organizations of the |
169 | association and their affiliated companies. |
170 | (5) "Branch business" means any insurance business |
171 | transacted by a branch captive insurance company in this state. |
172 | (6) "Branch captive insurance company" means an alien |
173 | captive insurance company licensed by the commissioner to |
174 | transact the business of insurance in this state through a |
175 | business unit with a principal place of business in this state. |
176 | (7) "Branch operations" means any business operations of a |
177 | branch captive insurance company in this state. |
178 | (8) "Captive insurance company" means a pure captive |
179 | insurance company, association captive insurance company, |
180 | captive reinsurance company, sponsored captive insurance |
181 | company, special purpose captive insurance company, or |
182 | industrial insured captive insurance company formed or licensed |
183 | under this chapter. For purposes of this chapter, a branch |
184 | captive insurance company must be a pure captive insurance |
185 | company with respect to operations in this state, unless |
186 | otherwise permitted by the commissioner. |
187 | (9) "Captive reinsurance company" means a reinsurance |
188 | company that is formed or licensed under this chapter and is |
189 | wholly owned by a qualifying reinsurance parent company. A |
190 | captive reinsurance company is a stock corporation. |
191 | (10) "Commissioner" means the Commissioner of the Office |
192 | of Insurance Regulation or the commissioner's designee. |
193 | (11) "Consolidated debt to total capital ratio" means the |
194 | ratio of the sum of all debts and hybrid capital instruments as |
195 | described in paragraph (a) to total capital as described in |
196 | paragraph (b). |
197 | (a) Debts and hybrid capital instruments include, but are |
198 | not limited to, all borrowings from banks, all senior debt, all |
199 | subordinated debts, all trust preferred shares, and all other |
200 | hybrid capital instruments that are not included in the |
201 | determination of consolidated GAAP net worth issued and |
202 | outstanding. |
203 | (b) Total capital consists of all debts and hybrid capital |
204 | instruments as described in paragraph (a) plus owners' equity |
205 | determined in accordance with GAAP for reporting to the United |
206 | States Securities and Exchange Commission. |
207 | (12) "Consolidated GAAP net worth" means the consolidated |
208 | owners' equity determined in accordance with generally accepted |
209 | accounting principles for reporting to the United States |
210 | Securities and Exchange Commission. |
211 | (13) "Controlled unaffiliated business" means a company: |
212 | (a) That is not in the corporate system of a parent and |
213 | affiliated companies; |
214 | (b) That has an existing contractual relationship with a |
215 | parent or affiliated company; and |
216 | (c) Whose risks are managed by a captive insurance company |
217 | in accordance with s. 628.919. |
218 | (14) "GAAP" means generally accepted accounting |
219 | principles. |
220 | (15) "Industrial insured" means an insured as defined in |
221 | s. 628.903(1). |
222 | (16) "Industrial insured captive insurance company" means |
223 | a company that insures risks of the industrial insureds that |
224 | comprise the industrial insured group and their affiliated |
225 | companies. |
226 | (17) "Industrial insured group" means a group that meets |
227 | either of the following criteria: |
228 | (a) A group of industrial insureds that collectively: |
229 | 1. Own, control, or hold with power to vote all of the |
230 | outstanding voting securities of an industrial insured captive |
231 | insurance company incorporated as a stock insurer or limited |
232 | liability company; or |
233 | 2. Have complete voting control over an industrial insured |
234 | captive insurance company incorporated as a mutual insurer; or |
235 | (b) A group which is created under the Liability Risk |
236 | Retention Act of 1986, 15 U.S.C. s. 3901, et seq., as amended, |
237 | and a corporation or other limited liability association taxable |
238 | as a stock insurance company or a mutual insurer under the |
239 | insurance code. |
240 | (18) "Member organization" means any individual, |
241 | corporation, limited liability company, partnership, or |
242 | association that belongs to an association. |
243 | (19) "Office" means the Office of Insurance Regulation. |
244 | (20) "Parent" means any corporation, limited liability |
245 | company, partnership, or individual that directly or indirectly |
246 | owns, controls, or holds with power to vote more than 50 percent |
247 | of the outstanding voting interests of a captive insurance |
248 | company. |
249 | (21) "Participant" means an entity as defined in s. |
250 | 628.923, and any affiliates of that entity, that are insured by |
251 | a sponsored captive insurance company, where the losses of the |
252 | participant are limited through a participant contract to the |
253 | assets of a protected cell. |
254 | (22) "Participant contract" means a contract by which a |
255 | sponsored captive insurance company insures the risks of a |
256 | participant and limits the losses of the participant to the |
257 | assets of a protected cell. |
258 | (23) "Protected cell" means a separate account established |
259 | and maintained by a sponsored captive insurance company for one |
260 | participant. |
261 | (24) "Pure captive insurance company" means a company that |
262 | insures risks of its parent, affiliated companies, controlled |
263 | unaffiliated business, or a combination thereof. |
264 | (25) "Qualifying reinsurer parent company" means a |
265 | reinsurer authorized to write reinsurance by this state and that |
266 | has a consolidated GAAP net worth of not less than $500 million |
267 | and a consolidated debt to total capital ratio of not greater |
268 | than 0.50. |
269 | (26) "Special purpose captive insurance company" means a |
270 | captive insurance company that is formed or licensed under this |
271 | chapter that does not meet the definition of any other type of |
272 | captive insurance company defined in this section. |
273 | (27) "Sponsor" means an entity that meets the requirements |
274 | of s. 628.922, and is approved by the commissioner to provide |
275 | all or part of the capital and surplus required by applicable |
276 | law and to organize and operate a sponsored captive insurance |
277 | company. |
278 | (28) "Sponsored captive insurance company" means a captive |
279 | insurance company: |
280 | (a) In which the minimum capital and surplus required by |
281 | applicable law is provided by one or more sponsors; |
282 | (b) That is formed or licensed under this chapter; |
283 | (c) That insures the risks of separate participants |
284 | through the contract; and |
285 | (d) That segregates each participant's liability through |
286 | one or more protected cells. |
287 | (29) "Treasury rates" means the United States Treasury |
288 | strips asked yield as published in the Wall Street Journal as of |
289 | a balance sheet date. |
290 | Section 2. Section 628.905, Florida Statutes, is amended |
291 | to read: |
292 | 628.905 Licensing; authority.- |
293 | (1) Any captive insurer, when permitted by its charter or |
294 | articles of incorporation, may apply to the commissioner |
295 | for a license to do any and all insurance authorized under the |
296 | insurance code, |
297 | |
298 | workers' compensation |
299 | that: |
300 | |
301 | |
302 | |
303 | (a) A pure captive insurance company may not insure any |
304 | risks other than those of its parent, affiliated companies, |
305 | controlled unaffiliated businesses, or a combination thereof. |
306 | (b) An association captive insurance company may not |
307 | insure any risks other than those of the member organizations of |
308 | its association and their affiliated companies. |
309 | (c) An industrial insured captive insurance company may |
310 | not insure any risks other than those of the industrial insureds |
311 | that comprise the industrial insured group and their affiliated |
312 | companies. |
313 | (d) In general, a special purpose captive insurance |
314 | company may only insure the risks of its parent. Notwithstanding |
315 | any other provisions of this chapter, a special purpose captive |
316 | insurance company may provide insurance or reinsurance, or both, |
317 | for risks as approved by the commissioner. |
318 | (e) A captive insurance company may not provide personal |
319 | motor vehicle or homeowners' insurance coverage or any component |
320 | of such coverages. |
321 | (f) A captive insurance company may not accept or cede |
322 | reinsurance except as provided in this part. |
323 | (2) To conduct insurance business in this state, a |
324 | |
325 | insurer |
326 | |
327 | (a) Obtain from the commissioner a license authorizing it |
328 | to conduct insurance business in this state; |
329 | (b) Hold at least one board of directors' meeting or, in |
330 | the case of a reciprocal insurer, a subscriber's advisory |
331 | committee meeting or, in the case of a limited liability |
332 | company, a meeting of the managing board each year in this |
333 | state; |
334 | (c) Maintain its principal place of business in this state |
335 | or, in the case of a branch captive insurance company, maintain |
336 | the principal place of business for its branch operations in |
337 | this state; and |
338 | (d) Appoint a resident registered agent to accept service |
339 | of process and to otherwise act on its behalf in this state. In |
340 | the case of a captive insurance company: |
341 | 1. Formed as a corporation, a nonprofit corporation, or a |
342 | limited liability company, whenever the registered agent cannot |
343 | with reasonable diligence be found at the registered office of |
344 | the captive insurance company, the Chief Financial Officer of |
345 | this state must be an agent of the captive insurance company |
346 | upon whom any process, notice, or demand may be served. |
347 | 2. Formed as a reciprocal insurer, whenever the registered |
348 | agent cannot with reasonable diligence be found at the |
349 | registered office of the captive insurance company, the Chief |
350 | Financial Officer of this state must be an agent of the captive |
351 | insurance company upon whom any process, notice, or demand may |
352 | be served. |
353 | (3)(a) Before receiving a license, a captive insurance |
354 | company: |
355 | 1. Formed as a corporation or a nonprofit corporation must |
356 | file with the commissioner a certified copy of its articles of |
357 | incorporation and bylaws, a statement under oath of its |
358 | president and secretary showing its financial condition, and any |
359 | other statements or documents required by the commissioner. |
360 | 2. Formed as a limited liability company must file with |
361 | the commissioner a certified copy of its articles of |
362 | organization and operating agreement, a statement under oath by |
363 | its managers showing its financial condition, and any other |
364 | statements or documents required by the commissioner. |
365 | 3. Formed as a reciprocal must: |
366 | a. File with the commissioner a certified copy of the |
367 | power of attorney of its attorney-in-fact, a certified copy of |
368 | its subscribers' agreement, a statement under oath of its |
369 | attorney-in-fact showing its financial condition, and any other |
370 | statements or documents required by the commissioner; and |
371 | b. Submit to the commissioner for approval a description |
372 | of the coverages, deductibles, coverage limits, and rates and |
373 | any other information the commissioner may reasonably require. |
374 | If there is a subsequent material change in an item in the |
375 | description, the reciprocal captive insurance company must |
376 | submit to the commissioner for approval an appropriate revision |
377 | and may not offer any additional kinds of insurance until a |
378 | revision of the description is approved by the commissioner. The |
379 | reciprocal captive insurance company must inform the |
380 | commissioner of any material change in rates within 30 days |
381 | after the adoption of the change. |
382 | (b) In addition to the information required by paragraph |
383 | (a), an applicant captive insurance company must file with the |
384 | commissioner evidence of: |
385 | 1. The amount and liquidity of the proposed captive |
386 | insurance company's assets relative to the risks to be assumed; |
387 | 2. The adequacy of the expertise, experience, and |
388 | character of the person or persons who will manage the company; |
389 | 3. The overall soundness of the company's plan of |
390 | operation; |
391 | 4. The adequacy of the loss prevention programs of the |
392 | company's parent, member organizations, or industrial insureds, |
393 | as applicable; and |
394 | 5. Any other factors considered relevant by the |
395 | commissioner in ascertaining whether the company will be able to |
396 | meet its policy obligations. |
397 | (c) In addition to the information required by paragraphs |
398 | (a) and (b), an applicant-sponsored captive insurance company |
399 | must file with the commissioner: |
400 | 1. A business plan demonstrating how the applicant will |
401 | account for the loss and expense experience of each protected |
402 | cell at a level of detail found to be sufficient by the |
403 | commissioner and how the applicant will report the experience to |
404 | the commissioner; |
405 | 2. A statement acknowledging that all financial records of |
406 | the sponsored captive insurance company, including records |
407 | pertaining to any protected cells, must be made available for |
408 | inspection or examination by the commissioner; |
409 | 3. All contracts or sample contracts between the sponsored |
410 | captive insurance company and any participants; and |
411 | 4. Evidence that expenses will be allocated to each |
412 | protected cell in an equitable manner |
413 | |
414 | |
415 | |
416 | (4)(a) A captive insurance company must pay to the office |
417 | a nonrefundable fee of $200 for processing its application for |
418 | license. In addition, the commissioner may retain legal, |
419 | financial, and examination services from outside the office to |
420 | examine and investigate the application, the reasonable cost of |
421 | which may be charged against the applicant, or the commissioner |
422 | may use internal resources to examine and investigate the |
423 | application for a fee of $2,400. |
424 | (b) In addition, a captive insurance company must pay a |
425 | license fee of $300 for 1 year of registration and an annual |
426 | renewal fee of $500. |
427 | (c) The office may charge a fee of $15 for any document |
428 | requiring certification of authenticity or the signature of the |
429 | commissioner or his or her designee |
430 | |
431 | |
432 | |
433 | (5) If the commissioner is satisfied that the documents |
434 | and statements filed by the captive insurance company comply |
435 | with the provisions of this chapter, the commissioner may grant |
436 | a license authorizing the company to conduct insurance business |
437 | in this state until the next succeeding March 1, at which time |
438 | the license may be renewed |
439 | |
440 | |
441 | (6) Upon approval of the commissioner or his or her |
442 | designee, a foreign or alien captive insurance company may |
443 | become a domestic captive insurance company by complying with |
444 | all of the requirements of law relative to the organization and |
445 | licensing of a domestic captive insurance company of the same or |
446 | equivalent type in this state and by filing with the Secretary |
447 | of State its articles of association, charter, or other |
448 | organizational documents, together with any appropriate |
449 | amendments that have been adopted in accordance with the laws of |
450 | this state to bring those articles of association, charter, or |
451 | other organizational documents into compliance with the laws of |
452 | this state, along with a certificate of good standing issued by |
453 | the commissioner. After this is accomplished, the captive |
454 | insurance company is entitled to the necessary or appropriate |
455 | certificates and licenses to continue transacting business in |
456 | this state and is subject to the authority and jurisdiction of |
457 | this state. In connection with this redomestication, the |
458 | commissioner may waive any requirements for public hearings. It |
459 | is not necessary for a company redomesticating into this state |
460 | to merge, consolidate, transfer assets, or otherwise engage in |
461 | any other reorganization, other than as specified in this |
462 | section |
463 | |
464 | |
465 | Section 3. Section 628.907, Florida Statutes, is amended |
466 | to read: |
467 | 628.907 Capitalization requirements; security requirements |
468 | for branch captive insurance companies; restriction on payment |
469 | of dividends |
470 | (1) A |
471 | unless it possesses and thereafter maintains unimpaired paid-in |
472 | capital of: |
473 | (a) |
474 | not less than $100,000. |
475 | |
476 | (b) |
477 | company incorporated as a stock insurer or organized as a |
478 | limited liability company, not less than $400,000. |
479 | |
480 | (c) In the case of an industrial insured captive insurance |
481 | company incorporated as a stock insurer or organized as a |
482 | limited liability company, not less than $200,000. |
483 | (d) In the case of a sponsored captive insurance company, |
484 | not less than $500,000. However, if the sponsored captive |
485 | insurance company does not assume any risk, the risks insured by |
486 | the protected cells are homogeneous, and there are no more than |
487 | 10 cells, the commissioner may reduce this amount to an amount |
488 | not less than $150,000. |
489 | (e) In the case of a special purpose captive insurance |
490 | company, an amount determined by the commissioner after giving |
491 | due consideration to the company's business plan, feasibility |
492 | study, and pro forma financial statements and projections, |
493 | including the nature of the risks to be insured. |
494 | (2)(a) Except for a sponsored captive insurance company |
495 | that does not assume any risk, the capital must be in the form |
496 | of cash, cash equivalent, or an irrevocable letter of credit |
497 | issued by a bank chartered by this state or a member bank of the |
498 | Federal Reserve System with a branch office in this state, or as |
499 | approved by the commissioner. |
500 | (b) For a sponsored captive insurance company that does |
501 | not assume any risk, the capital may also be in the form of |
502 | other high-quality securities as approved by the commissioner. |
503 | (3) The commissioner may not issue a license to a captive |
504 | insurance company incorporated as a nonprofit corporation unless |
505 | the company possesses and maintains unrestricted net assets of: |
506 | (a) In the case of a pure captive insurance company, not |
507 | less than $250,000. |
508 | (b) In the case of a special purpose captive insurance |
509 | company, an amount determined by the commissioner after giving |
510 | due consideration to the company's business plan, feasibility |
511 | study, and pro forma financial statements and projections, |
512 | including the nature of the risks to be insured. |
513 | (4) Contributions to a captive insurance company |
514 | incorporated as a nonprofit corporation must be in the form of |
515 | cash, cash equivalent, or an irrevocable letter of credit issued |
516 | by a bank chartered by this state or a member bank of the |
517 | Federal Reserve System with a branch office in this state, or as |
518 | approved by the commissioner. |
519 | (5) For purposes of this section, the commissioner may |
520 | issue a license expressly conditioned upon the captive insurance |
521 | company providing to the commissioner satisfactory evidence of |
522 | possession of the minimum required unimpaired paid-in capital. |
523 | Until this evidence is provided, the captive insurance company |
524 | may not issue any policy, assume any liability, or otherwise |
525 | provide coverage. The commissioner may revoke the conditional |
526 | license without legal recourse by the company if satisfactory |
527 | evidence of the required capital is not provided within a |
528 | maximum period of time, not to exceed 1 year, to be established |
529 | by the commissioner at the time the conditional license is |
530 | issued. |
531 | (6) The commissioner may prescribe additional capital or |
532 | net assets based upon the type, volume, and nature of insurance |
533 | business transacted. Contributions in connection with these |
534 | prescribed additional net assets or capital must be in the form |
535 | of: |
536 | (a) Cash; |
537 | (b) Cash equivalent; |
538 | (c) An irrevocable letter of credit issued by a bank |
539 | chartered by this state or a member bank of the Federal Reserve |
540 | System with a branch office in this state, or as approved by the |
541 | commissioner; or |
542 | (d) Securities invested as provided in part II of chapter |
543 | 625. |
544 | (7) In the case of a branch captive insurance company, as |
545 | security for the payment of liabilities attributable to branch |
546 | operations, the commissioner must require that a trust fund, |
547 | funded by an irrevocable letter of credit or other acceptable |
548 | asset, be established and maintained in the United States for |
549 | the benefit of United States policyholders and United States |
550 | ceding insurers under insurance policies issued or reinsurance |
551 | contracts issued or assumed, by the branch captive insurance |
552 | company through its branch operations. The amount of the |
553 | security may be no less than the capital and surplus required by |
554 | this chapter and the reserves on these insurance policies or |
555 | reinsurance contracts, including reserves for losses, allocated |
556 | loss adjustment expenses, incurred but not reported losses, and |
557 | unearned premiums with regard to business written through branch |
558 | operations. However, the commissioner may permit a branch |
559 | captive insurance company that is required to post security for |
560 | loss reserves on branch business by its reinsurer to reduce the |
561 | funds in the trust account required by this section by the same |
562 | amount as long as the security remains posted with the |
563 | reinsurer. If the form of security selected is a letter of |
564 | credit, the letter of credit must be established by, or issued |
565 | or confirmed by, a bank chartered in this state or a member bank |
566 | of the Federal Reserve System. |
567 | (8)(a) A captive insurance company may not pay a dividend |
568 | out of, or other distribution with respect to, capital or |
569 | surplus in excess of the limitations set forth in this chapter |
570 | without the prior approval of the commissioner. Approval of an |
571 | ongoing plan for the payment of dividends or other distributions |
572 | must be conditioned upon the retention, at the time of each |
573 | payment, of capital or surplus in excess of amounts specified |
574 | by, or determined in accordance with formulas approved by, the |
575 | commissioner. |
576 | (b) A captive insurance company incorporated as a |
577 | nonprofit corporation may not make any distributions without the |
578 | prior approval of the commissioner. |
579 | (9) An irrevocable letter of credit, which is issued by a |
580 | financial institution other than a bank chartered by this state |
581 | or a member bank of the Federal Reserve System, must meet the |
582 | same standards as an irrevocable letter of credit which has been |
583 | issued by a bank chartered by this state or a member bank of the |
584 | Federal Reserve System. |
585 | Section 4. Section 628.908, Florida Statutes, is created |
586 | to read: |
587 | 628.908 Surplus requirements; restriction on payment of |
588 | dividends.- |
589 | (1) The commissioner may not issue a license to a captive |
590 | insurance company unless the company possesses and maintains |
591 | unimpaired surplus of: |
592 | (a) In the case of a pure captive insurance company, not |
593 | less than $150,000. |
594 | (b) In the case of an association captive insurance |
595 | company incorporated as a stock insurer or organized as a |
596 | limited liability company, not less than $350,000. |
597 | (c) In the case of an industrial insured captive insurance |
598 | company incorporated as a stock insurer or organized as a |
599 | limited liability company, not less than $300,000. |
600 | (d) In the case of an association captive insurance |
601 | company incorporated as a mutual insurer, not less than |
602 | $750,000. |
603 | (e) In the case of an industrial insured captive insurance |
604 | company incorporated as a mutual insurer, not less than |
605 | $500,000. |
606 | (f) In the case of a sponsored captive insurance company, |
607 | not less than $500,000. However, if the sponsored captive |
608 | insurance company does not assume any risk, the risks insured by |
609 | the protected cells are homogeneous, and there are no more than |
610 | 10 cells, the commissioner may reduce this amount to an amount |
611 | not less than $150,000. |
612 | (g) In the case of a special purpose captive insurance |
613 | company, an amount determined by the commissioner after giving |
614 | due consideration to the company's business plan, feasibility |
615 | study, and pro forma financial statements and projections, |
616 | including the nature of the risks to be insured. |
617 | (2)(a) Except for a sponsored captive insurance company |
618 | that does not assume any risk, the surplus must be in the form |
619 | of cash, cash equivalent, or an irrevocable letter of credit |
620 | issued by a bank chartered by this state or a member bank of the |
621 | Federal Reserve System with the branch office in this state and |
622 | approved by the commissioner. |
623 | (b) For a sponsored captive insurance company that does |
624 | not assume any risk, the surplus may also be in the form of |
625 | other high-quality securities, as approved by the commissioner. |
626 | (3) Notwithstanding the requirements of this section, a |
627 | captive insurance company organized as a reciprocal insurer |
628 | under this chapter may not be issued a license unless it |
629 | possesses and thereafter maintains unimpaired surplus of $1 |
630 | million. |
631 | (4) For purposes of subsections (1) and (2), the |
632 | commissioner may issue a license expressly conditioned upon the |
633 | captive insurance company providing to the commissioner |
634 | satisfactory evidence of possession of the minimum required |
635 | unimpaired surplus. Until this evidence is provided, the captive |
636 | insurance company may not issue any policy, assume any |
637 | liability, or otherwise provide coverage. The commissioner may |
638 | revoke the conditional license without legal recourse by the |
639 | company if satisfactory evidence of the required capital is not |
640 | provided within a maximum period of time, not to exceed 1 year, |
641 | to be established by the commissioner at the time the |
642 | conditional license is issued. |
643 | (5) A captive insurance company may not pay a dividend out |
644 | of, or other distribution with respect to, capital or surplus in |
645 | excess of the limitations set forth in this chapter without the |
646 | prior approval of the commissioner. Approval of an ongoing plan |
647 | for the payment of dividends or other distribution must be |
648 | conditioned upon the retention, at the time of each payment, of |
649 | capital or surplus in excess of amounts specified by, or |
650 | determined in accordance with formulas approved by, the |
651 | commissioner. |
652 | (6) An irrevocable letter of credit, which is issued by a |
653 | financial institution other than a bank chartered by this state |
654 | or a member bank of the Federal Reserve System, must meet the |
655 | same standards as an irrevocable letter of credit which has been |
656 | issued by a bank chartered by this state or a member bank of the |
657 | Federal Reserve System. |
658 | Section 5. Section 628.909, Florida Statutes, is amended |
659 | to read: |
660 | 628.909 Applicability of other laws.- |
661 | (1) The Florida Insurance Code shall not apply to captive |
662 | insurers or industrial insured captive insurers except as |
663 | provided in this part and subsections (2) and (3). |
664 | (2) The following provisions of the Florida Insurance Code |
665 | shall apply to captive insurers who are not industrial insured |
666 | captive insurers to the extent that such provisions are not |
667 | inconsistent with this part: |
668 | (a) Chapter 624, except for ss. 624.407, 624.408, |
669 | 624.4085, 624.40851, 624.4095, 624.425, and 624.426. |
670 | (b) Chapter 625, part II. |
671 | (c) Chapter 626, part IX. |
672 | (d) Sections 627.730-627.7405, when no-fault coverage is |
673 | provided. |
674 | (e) Chapter 628. |
675 | (3) The following provisions of the Florida Insurance Code |
676 | shall apply to industrial insured captive insurers to the extent |
677 | that such provisions are not inconsistent with this part: |
678 | (a) Chapter 624, except for ss. 624.407, 624.408, |
679 | 624.4085, 624.40851, 624.4095, 624.425, 624.426, and 624.609(1). |
680 | (b) Chapter 625, part II, if the industrial insured |
681 | captive insurer is incorporated in this state. |
682 | (c) Chapter 626, part IX. |
683 | (d) Sections 627.730-627.7405 when no-fault coverage is |
684 | provided. |
685 | (e) Chapter 628, except for ss. 628.341, 628.351, and |
686 | 628.6018. |
687 | Section 6. Section 628.910, Florida Statutes, is created |
688 | to read: |
689 | 628.910 Incorporation options and requirements.- |
690 | (1) A pure captive insurance company or a sponsored |
691 | captive insurance company may be: |
692 | (a) Incorporated as a stock insurer with its capital |
693 | divided into shares and held by the stockholders; |
694 | (b) Incorporated as a public benefit, mutual benefit, or |
695 | religious nonprofit corporation with members in accordance with |
696 | the Florida Not For Profit Corporation Act; or |
697 | (c) Organized as a limited liability company with its |
698 | capital divided into capital accounts and held by its members. |
699 | (2) An association captive insurance company or an |
700 | industrial insured captive insurance company may be: |
701 | (a) Incorporated as a stock insurer with its capital |
702 | divided into shares and held by the stockholders; |
703 | (b) Organized as a limited liability company with its |
704 | capital divided into capital accounts and held by its members; |
705 | (c) Incorporated as a mutual insurer without capital |
706 | stock, the governing body of which is elected by the member |
707 | organizations of its association; or |
708 | (d) Organized as a reciprocal insurer in accordance with |
709 | chapter 629. |
710 | (3) A captive insurance company may not have fewer than |
711 | three incorporators or organizers of whom not fewer than two |
712 | must be residents of this state. |
713 | (4) In the case of a captive insurance company formed as a |
714 | corporation, a nonprofit corporation, or a limited liability |
715 | company, before the articles of incorporation or articles of |
716 | organization are transmitted to the Secretary of State, the |
717 | incorporators or organizers shall petition the commissioner to |
718 | issue a certificate setting forth a finding that the |
719 | establishment and maintenance of the proposed entity will |
720 | promote the general good of the state. In arriving at this |
721 | finding, the commissioner must consider: |
722 | (a) The character, reputation, financial standing, and |
723 | purposes of the incorporators or organizers; |
724 | (b) The character, reputation, financial responsibility, |
725 | insurance experience, and business qualifications of the |
726 | officers and directors or managers; and |
727 | (c) Other aspects as the commissioner considers advisable. |
728 | (5) The articles of incorporation or articles of |
729 | organization, the certificate issued pursuant to this section, |
730 | and the organization fees required by the Florida Business |
731 | Corporation Act or the Florida Not For Profit Corporation Act, |
732 | as applicable, must be transmitted to the Secretary of State, |
733 | who must record both the articles of incorporation or articles |
734 | of organization and the certificate. |
735 | (6) In the case of a captive insurance company formed as a |
736 | reciprocal insurer, the organizers must petition the |
737 | commissioner to issue a certificate setting forth the |
738 | commissioner's finding that the establishment and maintenance of |
739 | the proposed association will promote the general good of the |
740 | state. In arriving at this finding, the commissioner must |
741 | consider: |
742 | (a) The character, reputation, financial standing, and |
743 | purposes of the incorporators or organizers; |
744 | (b) The character, reputation, financial responsibility, |
745 | insurance experience, and business qualifications of the |
746 | officers and directors or managers; and |
747 | (c) Other aspects the commissioner considers advisable. |
748 | (7) In the case of a captive insurance company licensed as |
749 | a branch captive insurance company, the alien captive insurance |
750 | company must petition the commissioner to issue a certificate |
751 | setting forth the commissioner's finding that, after considering |
752 | the character, reputation, financial responsibility, insurance |
753 | experience, and business qualifications of the officers and |
754 | directors or managers of the alien captive insurance company, |
755 | the licensing and maintenance of the branch operations will |
756 | promote the general good of the state. The alien captive |
757 | insurance company may register to do business in this state |
758 | after the commissioner's certificate has been issued. |
759 | (8) The capital stock or membership interests of a captive |
760 | insurance company incorporated as a stock insurer or limited |
761 | liability company must be issued at not less than par value. |
762 | (9) In the case of a captive insurance company formed as a |
763 | corporation or a nonprofit corporation, at least one of the |
764 | members of the board of directors of a captive insurance company |
765 | incorporated in this state must be a resident of this state. |
766 | (10) In the case of a captive insurance company formed as |
767 | a limited liability company, at least one of the managers of the |
768 | captive insurance company must be a resident of this state. |
769 | (11) In the case of a captive insurance company formed as |
770 | a reciprocal insurer, at least one of the members of the |
771 | subscribers' advisory committee must be a resident of this |
772 | state. |
773 | (12) A captive insurance company formed as a corporation, |
774 | a nonprofit corporation, or a limited liability company, |
775 | pursuant to the provisions of this chapter, has the privileges |
776 | and is subject to the provisions of the general corporation law, |
777 | including the Florida Not For Profit Corporation Act for |
778 | nonprofit corporations and the Florida Limited Liability Company |
779 | Act for limited liability companies, as applicable, as well as |
780 | the applicable provisions contained in this chapter. If a |
781 | conflict occurs between a provision of the general corporation |
782 | law, including the Florida Not For Profit Corporation Act for |
783 | nonprofit corporations and the Florida Limited Liability Company |
784 | Act for limited liability companies, as applicable, and a |
785 | provision of this chapter, the latter controls. The provisions |
786 | of this title pertaining to mergers, consolidations, |
787 | conversions, mutualizations, and redomestications apply in |
788 | determining the procedures to be followed by a captive insurance |
789 | company in carrying out any of the transactions described in |
790 | such provisions, except the commissioner may waive or modify the |
791 | requirements for public notice and hearing in accordance with |
792 | regulations which the commissioner may adopt addressing |
793 | categories of transactions. If a notice of public hearing is |
794 | required, but no one requests a hearing, the commissioner may |
795 | cancel the hearing. |
796 | (13) A captive insurance company formed as a reciprocal |
797 | insurer pursuant to the provisions of this chapter has the |
798 | privileges and is subject to chapter 629 in addition to the |
799 | applicable provisions of this part. If a conflict occurs between |
800 | the provisions of chapter 629 and the provisions of this part, |
801 | the latter controls. To the extent a reciprocal insurer is made |
802 | subject to other provisions of this title pursuant to chapter |
803 | 629, the provisions are not applicable to a reciprocal insurer |
804 | formed pursuant to the provisions of this chapter unless the |
805 | provisions are expressly made applicable to a captive insurance |
806 | company pursuant to the provisions of this chapter. |
807 | (14) The articles of incorporation or bylaws of a captive |
808 | insurance company may authorize a quorum of a board of directors |
809 | to consist of no fewer than one-third of the fixed or prescribed |
810 | number of directors as provided for by the Florida Business |
811 | Corporation Act or the Florida Not For Profit Corporation Act. |
812 | In the case of a limited liability company, the articles of |
813 | organization or operating agreement of a captive insurance |
814 | company may authorize a quorum to consist of no fewer than one- |
815 | third of the managers required by the articles of organization |
816 | or the operating agreement. |
817 | Section 7. Section 628.911, Florida Statutes, is amended |
818 | to read: |
819 | 628.911 Reports and statements.- |
820 | (1) A captive insurance company may |
821 | required to make any annual report except as provided in this |
822 | part |
823 | (2) Annually before March 1, a captive insurance company |
824 | or a captive reinsurance company |
825 | |
826 | |
827 | its financial condition verified by oath of two of its executive |
828 | officers. Except as provided in this part, a captive insurance |
829 | company or a captive reinsurance company must report using |
830 | generally accepted accounting principles, unless the |
831 | commissioner approves the use of statutory accounting |
832 | principles, with useful or necessary modifications or |
833 | adaptations required or approved or accepted by the commissioner |
834 | for the type of insurance and kinds of insurers to be reported |
835 | upon, and as supplemented by additional information required by |
836 | the commissioner. The Financial Services Commission may adopt by |
837 | rule the form in which captive insurance companies |
838 | shall report. |
839 | (3)(a) A pure captive insurance company may make written |
840 | application for filing the required report on a fiscal year-end |
841 | that is consistent with the parent company's fiscal year. If an |
842 | alternative reporting date is granted, the annual report is due |
843 | 60 days after the fiscal year-end. |
844 | (b) In order to provide sufficient detail to support the |
845 | premium tax return, the pure captive insurance company must file |
846 | before March 1 of each year for each calendar year-end pages 1-7 |
847 | of the NAIC Annual Statement, verified by oath of two of its |
848 | executive officers. |
849 | (4) Sixty days after the fiscal year end, a branch captive |
850 | insurance company must file with the commissioner a copy of all |
851 | reports and statements required to be filed under the laws of |
852 | the jurisdiction in which the alien captive insurance company is |
853 | formed, verified by oath by two of its executive officers. If |
854 | the commissioner is satisfied that the annual report filed by |
855 | the alien captive insurance company in its domiciliary |
856 | jurisdiction provides adequate information concerning the |
857 | financial condition of the alien captive insurance company, the |
858 | commissioner may waive the requirement for completion of the |
859 | captive annual statement for business written in the alien |
860 | jurisdiction. Such waiver must be in writing and subject to |
861 | public inspection. |
862 | Section 8. Section 628.912, Florida Statutes, is created |
863 | to read: |
864 | 628.912 Discounting of loss and loss adjustment expense |
865 | reserves.- |
866 | (1) A sponsored captive insurance company and a captive |
867 | reinsurance company may discount its loss and loss adjustment |
868 | expense reserves at treasury rates applied to the applicable |
869 | payments projected through the use of the expected payment |
870 | pattern associated with the reserves. |
871 | (2) A sponsored captive insurance company and a captive |
872 | reinsurance company must file annually an actuarial opinion on |
873 | loss and loss adjustment expense reserves provided by an |
874 | independent actuary. The actuary may not be an employee of the |
875 | captive company or its affiliates. |
876 | (3) The commissioner may disallow the discounting of |
877 | reserves if a sponsored captive insurance company or a captive |
878 | reinsurance company violates a provision of this part. |
879 | Section 9. Section 628.913, Florida Statutes, is amended |
880 | to read: |
881 | (Substantial rewording of section. See |
882 | s. 628.913, F.S., for present text.) |
883 | 628.913 Captive reinsurance companies.- |
884 | (1) A captive reinsurance company, if permitted by its |
885 | articles of incorporation or charter, may apply to the |
886 | commissioner for a license to write reinsurance covering |
887 | property and casualty insurance or reinsurance contracts. A |
888 | captive reinsurance company authorized by the commissioner may |
889 | write reinsurance contracts covering risks in any state. |
890 | (2) To conduct business in this state, a captive |
891 | reinsurance company must: |
892 | (a) Obtain from the commissioner a license authorizing it |
893 | to conduct business as a captive reinsurance company in this |
894 | state; |
895 | (b) Hold at least one board of directors' meeting each |
896 | year in this state; |
897 | (c) Maintain its principal place of business in this |
898 | state; and |
899 | (d) Appoint a registered agent to accept service of |
900 | process and act otherwise on its behalf in this state. |
901 | (3) Before receiving a license, a captive reinsurance |
902 | company must file with the commissioner: |
903 | (a) A certified copy of its charter and bylaws; |
904 | (b) A statement under oath of its president and secretary |
905 | showing its financial condition; and |
906 | (c) Other documents required by the commissioner. |
907 | (4) In addition to the information required by this |
908 | section, the captive reinsurance company must file with the |
909 | commissioner evidence of: |
910 | (a) The amount and liquidity of the captive reinsurance |
911 | company's assets relative to the risks to be assumed; |
912 | (b) The adequacy of the expertise, experience, and |
913 | character of the person who manages the company; |
914 | (c) The overall soundness of the company's plan of |
915 | operation; and |
916 | (d) Other overall factors considered relevant by the |
917 | commissioner in ascertaining if the company would be able to |
918 | meet its policy obligations. |
919 | Section 10. Section 628.914, Florida Statutes, is created |
920 | to read: |
921 | 628.914 Minimum capitalization or reserves for captive |
922 | reinsurance companies.- |
923 | (1) The commissioner may not issue a license to a captive |
924 | reinsurance company unless the company possesses and maintains |
925 | capital or unimpaired surplus of not less than the greater of |
926 | $300 million or 10 percent of reserves. The surplus may be in |
927 | the form of cash or securities. |
928 | (2) The commissioner may prescribe additional capital or |
929 | surplus based upon the type, volume, and nature of the insurance |
930 | business transacted. |
931 | (3) A captive reinsurance company may not pay a dividend |
932 | out of, or other distribution with respect to, capital or |
933 | surplus in excess of the limitations without the prior approval |
934 | of the commissioner. Approval of an ongoing plan for the payment |
935 | of dividends or other distributions must be conditioned upon the |
936 | retention, at the time of each payment, of capital or surplus in |
937 | excess of amounts specified by, or determined in accordance with |
938 | formulas approved by, the commissioner. |
939 | Section 11. Section 628.9141, Florida Statutes, is created |
940 | to read: |
941 | 628.9141 Incorporation of a captive reinsurance company.- |
942 | (1) A captive reinsurance company must be incorporated as |
943 | a stock insurer with its capital divided into shares and held by |
944 | its shareholders. |
945 | (2) A captive reinsurance company may not have fewer than |
946 | three incorporators of whom at least two must be residents of |
947 | this state. |
948 | (3) Before the articles of incorporation are transmitted |
949 | to the Secretary of State, the incorporators shall petition the |
950 | commissioner to issue a certificate finding that the |
951 | establishment and maintenance of the proposed corporation |
952 | promotes the general good of this state. In arriving at this |
953 | finding, the commissioner must consider: |
954 | (a) The character, reputation, financial standing, and |
955 | purposes of the incorporators; |
956 | (b) The character, reputation, financial responsibility, |
957 | insurance experience, and business qualifications of the |
958 | officers and directors; and |
959 | (c) Other factors the commissioner considers advisable. |
960 | (4) The capital stock of a captive reinsurance company |
961 | must be issued at par value or greater. |
962 | (5) At least one of the members of the board of directors |
963 | of a captive reinsurance company incorporated in this state must |
964 | be a resident of this state. |
965 | Section 12. Section 628.9142, Florida Statutes, is created |
966 | to read: |
967 | 628.9142 Reinsurance; effect on reserves.- |
968 | (1) A captive insurance company may provide reinsurance, |
969 | as authorized in this part, on risks ceded by any other insurer. |
970 | (2) A captive insurance company may take credit for |
971 | reserves on risks or portions of risks ceded to authorized |
972 | insurers or reinsurers and unauthorized insurers or reinsurers |
973 | complying with the provisions of s. 624.610. A captive insurer |
974 | may not take credit for reserves on risks or portions of risks |
975 | ceded to an unauthorized insurer or reinsurer if the insurer or |
976 | reinsurer is not in compliance with s. 624.610. |
977 | Section 13. Section 628.9143, Florida Statutes, is created |
978 | to read: |
979 | 628.9143 Annual captive reinsurance tax.- |
980 | (1) A captive reinsurance company must pay to the office |
981 | by March 1 of each year a captive reinsurance tax of $5,000. |
982 | (2) The tax provided in this section is the only tax |
983 | collectible under the laws of this state from a captive |
984 | reinsurance company, and no tax on reinsurance premiums, other |
985 | than occupation tax, nor any other taxes, except ad valorem |
986 | taxes on real and personal property used in the production of |
987 | income, may be levied or collected from a captive reinsurance |
988 | company by the state or a county, city, or municipality within |
989 | this state. |
990 | (3) A captive reinsurance company failing to make returns |
991 | or to pay all taxes required by this section is subject to |
992 | sanctions provided in this part. |
993 | Section 14. Section 628.918, Florida Statutes, is created |
994 | to read: |
995 | 628.918 Management of assets of captive reinsurance |
996 | company.-At least 35 percent of the assets of a captive |
997 | reinsurance company must be managed by an asset manager |
998 | domiciled in this state. |
999 | Section 15. Section 628.919, Florida Statutes, is created |
1000 | to read: |
1001 | 628.919 Regulations establishing standards to ensure risk |
1002 | management control by parent company.-The Financial Services |
1003 | Commission shall adopt rules establishing standards to ensure |
1004 | that a parent or affiliated company is able to exercise control |
1005 | of the risk management function of any controlled unaffiliated |
1006 | business to be insured by the pure captive insurance company. |
1007 | Section 16. Section 628.920, Florida Statutes, is created |
1008 | to read: |
1009 | 628.920 Conversion of certain stock, mutual corporations, |
1010 | or limited liability companies into reciprocal insurers; plan |
1011 | for conversion.- |
1012 | (1) An association captive insurance company or industrial |
1013 | insured group formed as a stock or mutual corporation or a |
1014 | limited liability company may be converted to or merged with and |
1015 | into a reciprocal insurer in accordance with a plan and the |
1016 | provisions of this section. |
1017 | (2) A plan for this conversion or merger: |
1018 | (a) Must be fair and equitable to the: |
1019 | 1. Shareholders, in the case of a stock insurer; |
1020 | 2. Members, in the case of a limited liability company; or |
1021 | 3. Policyholders, in the case of a mutual insurer; and |
1022 | (b) Must provide for the purchase of the shares of any |
1023 | nonconsenting shareholder of a stock insurer, of the member |
1024 | interest of any nonconsenting member of a limited liability |
1025 | company, of the policyholder interest of any nonconsenting |
1026 | policyholder of a mutual insurer in substantially the same |
1027 | manner and subject to the same rights and conditions as are |
1028 | accorded a dissenting shareholder, dissenting member, or a |
1029 | dissenting policyholder pursuant to the provisions of this |
1030 | chapter, provided the merger of a limited liability company |
1031 | requires the consent of all members unless waived in an |
1032 | operating agreement signed by all of the members of the limited |
1033 | liability company. |
1034 | (3) In the case of a conversion authorized under this |
1035 | section: |
1036 | (a) The conversion must be accomplished under a reasonable |
1037 | plan and procedure as may be approved by the commissioner. |
1038 | However, the commissioner may not approve the plan of conversion |
1039 | unless the plan: |
1040 | 1. Satisfies the provisions of this section; |
1041 | 2. Provides for a hearing, of which notice has been given |
1042 | to the insurer, its directors, officers, and stockholders, in |
1043 | the case of a stock insurer; members and managers, in the case |
1044 | of a limited liability company; or policyholders, in the case of |
1045 | a mutual insurer, all of whom have the right to appear at the |
1046 | hearing, except that the director may waive or modify the |
1047 | requirements for the hearing. However, if a notice of hearing is |
1048 | required, but no hearing is requested, the commissioner may |
1049 | cancel the hearing; |
1050 | 3. Provides for the conversion of existing stockholder, |
1051 | member, or policyholder interests into subscriber interests in |
1052 | the resulting reciprocal insurer, proportionate to stockholder, |
1053 | member, or policyholder interests in the stock or mutual insurer |
1054 | or limited liability company; and |
1055 | 4. Is approved: |
1056 | a. In the case of a stock insurer or limited liability |
1057 | company, by a majority of the shares or interests entitled to |
1058 | vote represented in person or by proxy at a duly called regular |
1059 | or special meeting at which a quorum is present; |
1060 | b. In the case of a mutual insurer, by a majority of the |
1061 | voting interests of policyholders represented in person or by |
1062 | proxy at a duly called regular or special meeting at which a |
1063 | quorum is present; |
1064 | (b) The commissioner shall approve the plan of conversion |
1065 | if the commissioner finds that the conversion will promote the |
1066 | general good of the state in conformity with those standards |
1067 | provided in this part; |
1068 | (c) If the commissioner approves the plan, the |
1069 | commissioner must amend the converting insurer's certificate of |
1070 | authority to reflect conversion to a reciprocal insurer and |
1071 | issue the amended certificate of authority to the company's |
1072 | attorney-in-fact; |
1073 | (d) Upon issuance of an amended certificate of authority |
1074 | of a reciprocal insurer by the commissioner, the conversion is |
1075 | effective; and |
1076 | (e) Upon the effectiveness of the conversion, the |
1077 | corporate existence of the converting insurer must cease and the |
1078 | resulting reciprocal insurer must notify the Secretary of State |
1079 | of the conversion. |
1080 | (4) A merger authorized pursuant to the provisions of this |
1081 | section must be accomplished substantially in accordance with |
1082 | the procedures provided in this part, except that, only for |
1083 | purposes of the merger: |
1084 | (a) The plan or merger must satisfy the requirements of |
1085 | subsection (2); |
1086 | (b) The subscribers' advisory committee of a reciprocal |
1087 | insurer must be equivalent to the board of directors of a stock |
1088 | or mutual insurance company or the managers of a limited |
1089 | liability company; |
1090 | (c) The subscribers of a reciprocal insurer must be the |
1091 | equivalent of the policyholders of a mutual insurance company; |
1092 | (d) If a subscribers' advisory committee does not have a |
1093 | president or secretary, the officers of the committee having |
1094 | substantially equivalent duties are considered the president and |
1095 | secretary of the committee; |
1096 | (e) The commissioner must approve the articles of merger |
1097 | if the commissioner finds that the merger will promote the |
1098 | general good of the state in conformity with those standards |
1099 | provided in this part. If the commissioner approves the articles |
1100 | of merger, the commissioner must endorse his or her approval on |
1101 | the articles and the surviving insurer must present the |
1102 | endorsement of the commissioner to the Secretary of State at the |
1103 | Secretary of State's office; |
1104 | (f) Notwithstanding the provisions of this part, the |
1105 | commissioner may permit the formation, without surplus, of a |
1106 | captive insurance company organized as a reciprocal insurer, |
1107 | into which an existing captive insurance company may be merged |
1108 | for the purpose of facilitating a transaction provided for in |
1109 | this section. However, there may be no more than one authorized |
1110 | insurance company surviving the merger; and |
1111 | (g) An alien insurer may be a party to a merger authorized |
1112 | pursuant to the provisions of subsection (1) if the requirements |
1113 | for the merger between a domestic and a foreign insurer pursuant |
1114 | to the provisions of this chapter apply to a merger between a |
1115 | domestic and an alien insurer provided by this subsection. The |
1116 | alien insurer must be treated as a foreign insurer pursuant to |
1117 | the provisions of this chapter and other jurisdictions must be |
1118 | the equivalent of a state. |
1119 | Section 17. Section 628.921, Florida Statutes, is created |
1120 | to read: |
1121 | 628.921 Formation of sponsored captive insurance company; |
1122 | establishing protected cells.- |
1123 | (1) One or more sponsors may form a sponsored captive |
1124 | insurance company under this part. |
1125 | (2) A sponsored captive insurance company formed or |
1126 | licensed under this part may establish and maintain one or more |
1127 | protected cells to insure risks of one or more participants, |
1128 | subject to the following conditions: |
1129 | (a) The shareholders of a sponsored captive insurance |
1130 | company must be limited to its participants and sponsors; |
1131 | (b) Each protected cell must be accounted for separately |
1132 | on the books and records of the sponsored captive insurance |
1133 | company to reflect the financial condition and results of |
1134 | operations of the protected cell, net income or loss, dividends |
1135 | or other distributions to participants, and other factors that |
1136 | may be provided in the participant contract or required by the |
1137 | commissioner; |
1138 | (c) The assets of a protected cell must not be chargeable |
1139 | with liabilities arising out of any other insurance business the |
1140 | sponsored captive insurance company may conduct; |
1141 | (d) Sale, exchange, or other transfer of assets may not be |
1142 | made by the sponsored captive insurance company between or among |
1143 | any of its protected cells without the consent of the protected |
1144 | cells; |
1145 | (e) Sale, exchange, transfer of assets, dividend, or |
1146 | distribution may not be made from a protected cell to a sponsor |
1147 | or participant without the commissioner's approval, nor may the |
1148 | approval be given if the sale, exchange, transfer, dividend, or |
1149 | distribution would result in insolvency or impairment with |
1150 | respect to a protected cell; |
1151 | (f) A sponsored captive insurance company must annually |
1152 | file with the commissioner financial reports the commissioner |
1153 | requires, which must include, but are not limited to, accounting |
1154 | statements detailing the financial experience of each protected |
1155 | cell; |
1156 | (g) A sponsored captive insurance company must notify the |
1157 | commissioner in writing within 10 business days after a |
1158 | protected cell becomes insolvent or otherwise unable to meet its |
1159 | claim or expense obligations; and |
1160 | (h) A participant contract may not take effect without the |
1161 | commissioner's prior written approval, and the addition of each |
1162 | new protected cell and withdrawal of any participant of any |
1163 | existing protected cell constitutes a change in the business |
1164 | plan, which requires the commissioner's prior written approval. |
1165 | Section 18. Section 628.922, Florida Statutes, is created |
1166 | to read: |
1167 | 628.922 Requirements applicable to sponsors.-A sponsor of |
1168 | a sponsored captive insurance company must be an insurer |
1169 | licensed pursuant to the laws of a state, an insurance holding |
1170 | company that controls an insurer licensed under the laws of any |
1171 | state and subject to registration under the insurance holding |
1172 | company system laws of the state of domicile of the insurer, a |
1173 | reinsurer authorized or approved under the laws of a state, or a |
1174 | captive insurance company formed or licensed under this chapter. |
1175 | A risk retention group may not be either a sponsor or a |
1176 | participant of a sponsored captive insurance company. The |
1177 | business written by a sponsored captive insurance company with |
1178 | respect to each protected cell must be: |
1179 | (1) Fronted by an insurance company licensed under the |
1180 | laws of: |
1181 | (a) Any state; or |
1182 | (b) Any jurisdiction if the insurance company is a wholly |
1183 | owned subsidiary of an insurance company licensed under the laws |
1184 | of any state; |
1185 | (2) Reinsured by a reinsurer authorized or approved by |
1186 | this state; or |
1187 | (3) Secured by a trust fund in the United States for the |
1188 | benefit of policyholders and claimants funded by an irrevocable |
1189 | letter of credit or other asset acceptable to the commissioner. |
1190 | The amount of security provided by the trust fund may not be |
1191 | less than the reserves associated with those liabilities, |
1192 | including reserves for losses, allocated loss adjustment |
1193 | expenses, incurred but unreported losses, and unearned premiums |
1194 | for business written through the participant's protected cell. |
1195 | The commissioner may require the sponsored captive to increase |
1196 | the funding of a trust established under this subsection. If the |
1197 | form of security in the trust is a letter of credit, the letter |
1198 | of credit must be established, issued, or confirmed by a bank |
1199 | chartered in this state, a member of the Federal Reserve System, |
1200 | or a bank chartered by another state if that state-chartered |
1201 | bank is acceptable to the commissioner. A trust and trust |
1202 | instrument maintained under this subsection must be in a form |
1203 | and upon terms approved by the commissioner. |
1204 | Section 19. Section 628.923, Florida Statutes, is created |
1205 | to read: |
1206 | 628.923 Participants in sponsored captive insurance |
1207 | companies.- |
1208 | (1) An association, a corporation, a limited liability |
1209 | company, a partnership, a trust, or another business entity may |
1210 | be a participant in a sponsored captive insurance company formed |
1211 | or licensed under this part. |
1212 | (2) A sponsor may be a participant in a sponsored captive |
1213 | insurance company. |
1214 | (3) A participant need not be a shareholder of the |
1215 | sponsored captive insurance company or an affiliate of the |
1216 | company. |
1217 | (4) A participant may insure only its own risks through a |
1218 | sponsored captive insurance company, unless otherwise approved |
1219 | by the commissioner. |
1220 | Section 20. Section 628.924, Florida Statutes, is created |
1221 | to read: |
1222 | 628.924 Eligibility of licensed captive insurance company |
1223 | for certificate of authority to act as insurer.-A licensed |
1224 | captive insurance company that meets the necessary requirements |
1225 | of this part imposed upon an insurer must be considered for |
1226 | issuance of a certificate of authority to act as an insurer in |
1227 | this state. |
1228 | Section 21. This act shall take effect July 1, 2011. |
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