Bill Text: FL S0784 | 2018 | Regular Session | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Insurance
Spectrum: Slight Partisan Bill (? 2-1)
Status: (Introduced - Dead) 2018-03-08 - Laid on Table, refer to CS/CS/HB 465 [S0784 Detail]
Download: Florida-2018-S0784-Comm_Sub.html
Bill Title: Insurance
Spectrum: Slight Partisan Bill (? 2-1)
Status: (Introduced - Dead) 2018-03-08 - Laid on Table, refer to CS/CS/HB 465 [S0784 Detail]
Download: Florida-2018-S0784-Comm_Sub.html
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 86shallnot 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.,orUniversal 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 millionor 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 4.9365percent 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 mustshallbe computed on the gross 170 premium.The tax must not exceed the tax rate where the risk or171exposure 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 mustshallbe 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 summarizingofthe 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 mustshallbe 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 mustshallbe 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 policyholderan insuredfails to appear at the conference, 260 the conference mustshallbe rescheduled upon the policyholder’s 261insured’spayment of the costs of a rescheduled conference. If 262 the insurer fails to appear at the conference, the insurer must 263shallpay the policyholder’sinsured’sactual 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 mustshallinclude a charge necessary to 272 defray the expenses of the department related to its duties 273 under this section and mustshallbe deposited in the Insurance 274 Regulatory Trust Fund. 275 (6) Mediation is nonbinding; however, if a written 276 settlement is reached, the policyholderinsuredhas 3 business 277 days within which the policyholderinsuredmay rescind the 278 settlement unless the policyholderinsuredhas cashed or 279 deposited any check or draft disbursed to the policyholder 280insuredfor the disputed matters as a result of the conference. 281 If a settlement agreement is reached and is not rescinded, it is 282shall bebinding and actsactas 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) WhenWhere, 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,orcertified 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 isshall be312 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 areshall bedeemed 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;or364 (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 369the provisions ofthis 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 business706written on the exchange shall be calculated on a monthly or more707frequent basis or on such other basis as determined by the708office;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 electronicallytransmittedto 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 holderswithin 45 days after the date of1286purchase.Electronic transmission of a service agreement1287constitutes delivery to the agreement holder.The electronic1288transmission must notify the agreement holder of his or her1289right to receive the service agreement via United States mail1290rather than electronic transmission. If the agreement holder1291communicates to the service agreement company electronically or1292in writing that he or she does not agree to receipt by1293electronic transmission, a paper copy of the service agreement1294shall 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 mustshallbe mailed,ordelivered, 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 groupwithin 10 working days from approval of the1321enrollment form by the health maintenance organization or by the1322effective date of coverage, whichever occurs first.However, if1323the employer or other person who will hold the contract on1324behalf of the subscriber group requires retroactive enrollment1325of a subscriber, the organization shall deliver the contract,1326certificate, or member handbook to the subscriber within 10 days1327after receiving notice from the employer of the retroactive1328enrollment.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.