Bill Text: FL S0836 | 2013 | Regular Session | Comm Sub


Bill Title: Insurer Solvency

Spectrum: Slight Partisan Bill (? 2-1)

Status: (Failed) 2013-05-03 - Died in Messages [S0836 Detail]

Download: Florida-2013-S0836-Comm_Sub.html
       Florida Senate - 2013                       CS for CS for SB 836
       
       
       
       By the Committees on Rules; and Banking and Insurance; and
       Senator Simmons
       
       
       
       595-04844-13                                           2013836c2
    1                        A bill to be entitled                      
    2         An act relating to insurer solvency; creating s.
    3         624.085, F.S.; providing definitions applicable to the
    4         Florida Insurance Code; amending s. 624.4085, F.S.;
    5         revising a definition; providing additional
    6         calculations for determining whether an insurer has a
    7         company action level event; revising provisions
    8         relating to mandatory control level events; amending
    9         s. 624.424, F.S.; requiring an insurer’s annual
   10         statement to include an actuarial opinion summary;
   11         providing criteria for such summary; providing an
   12         exception for life and health insurers; updating
   13         provisions; amending s. 625.121, F.S.; protecting
   14         material supporting an insurer’s annual actuarial
   15         opinion from subpoena, discovery, or admissibility in
   16         a civil action; amending s. 628.461, F.S.; revising
   17         the amount of outstanding voting securities of a
   18         domestic stock insurer or a controlling company that a
   19         person is prohibited from acquiring unless certain
   20         requirements have been met; deleting a provision
   21         authorizing an insurer to file a disclaimer of
   22         affiliation and control in lieu of a letter notifying
   23         the Office of Insurance Regulation of the Financial
   24         Services Commission of the acquisition of the voting
   25         securities of a domestic stock company under certain
   26         circumstances; requiring the statement notifying the
   27         office to include additional information; conforming a
   28         provision to changes made by the act; providing that
   29         control is presumed to exist under certain conditions;
   30         specifying how control may be rebutted and how a
   31         controlling interest may be divested; deleting
   32         definitions; amending s. 628.801, F.S.; requiring an
   33         insurer to file annually by a specified date a
   34         registration statement; revising the requirements and
   35         standards for the rules establishing the information
   36         and statement form for the registration; requiring an
   37         insurer to file an annual enterprise risk report;
   38         authorizing the office to conduct examinations to
   39         determine the financial condition of registrants;
   40         providing that failure to file a registration or
   41         report is a violation of the section; providing
   42         additional grounds, requirements, and conditions with
   43         respect to a waiver from the registration
   44         requirements; amending s. 628.803, F.S.; providing for
   45         sanctions for persons who violate s. 628.461, F.S.,
   46         relating to the acquisition of controlling stock;
   47         creating s. 628.805, F.S.; authorizing the office to
   48         participate in supervisory colleges; authorizing the
   49         office to assess fees on insurers for participation;
   50         amending ss. 636.045 and 641.225, F.S.; applying
   51         certain statutes related to solvency to prepaid
   52         limited health service organizations and health
   53         maintenance organizations; amending s. 641.255, F.S.;
   54         providing for applicability of specified provisions to
   55         a health maintenance organization that is a member of
   56         a holding company; providing contingent effective
   57         dates.
   58  
   59  Be It Enacted by the Legislature of the State of Florida:
   60  
   61         Section 1. Section 624.085, Florida Statutes, is created to
   62  read:
   63         624.085 Other definitions.—As used in the Florida Insurance
   64  Code, the term:
   65         (1) “Affiliate” means any entity that exercises control
   66  over or is controlled by the insurer, directly or indirectly,
   67  through:
   68         (a) Equity ownership of voting securities;
   69         (b) Common managerial control; or
   70         (c) Collusive participation by the management of the
   71  insurer and affiliate in the management of the insurer or the
   72  affiliate.
   73         (2) “Affiliated person” of another person means:
   74         (a) The spouse of such other person;
   75         (b) The parents of such other person and their lineal
   76  descendants, or the parents of such other person’s spouse and
   77  their lineal descendants;
   78         (c) Any person who directly or indirectly owns or controls,
   79  or holds with the power to vote, 10 percent or more of the
   80  outstanding voting securities of such other person;
   81         (d) Any person 10 percent or more of whose outstanding
   82  voting securities are directly or indirectly owned or
   83  controlled, or held with power to vote, by such other person;
   84         (e) Any person or group of persons who directly or
   85  indirectly control, are controlled by, or are under common
   86  control with such other person;
   87         (f) Any officer, director, partner, copartner, or employee
   88  of such other person;
   89         (g) If such other person is an investment company, any
   90  investment adviser of such company, or any member of an advisory
   91  board of such company;
   92         (h) If such other person is an unincorporated investment
   93  company not having a board of directors, the depositor of such
   94  company; or
   95         (i) Any person who has entered into an agreement, written
   96  or unwritten, to act in concert with such other person in
   97  acquiring or limiting the disposition of securities of a
   98  domestic stock insurer or controlling company.
   99         (3) “Control,” including the terms “controlling,”
  100  “controlled by,” and “under common control with,” means the
  101  possession, direct or indirect, of the power to direct or cause
  102  the direction of the management and policies of a person,
  103  whether through the ownership of voting securities, by contract
  104  other than a commercial contract for goods or nonmanagement
  105  services, or otherwise. Control is presumed to exist if any
  106  person, directly or indirectly, owns, controls, holds with the
  107  power to vote, or holds proxies representing 10 percent or more
  108  of the voting securities of any other person.
  109         Section 2. Paragraph (g) of subsection (1), paragraph (a)
  110  of subsection (3), and paragraph (b) of subsection (6) of
  111  section 624.4085, Florida Statutes, are amended to read:
  112         624.4085 Risk-based capital requirements for insurers.—
  113         (1) As used in this section, the term:
  114         (g) “Life and health insurer” means any insurer authorized
  115  or eligible under the Florida Insurance Code to underwrite life
  116  or health insurance. The term includes a property and casualty
  117  insurer that writes accident and health insurance only.
  118  Effective January 1, 2015, the term also includes a health
  119  maintenance organization that is authorized in this state and
  120  one or more other states, jurisdictions, or countries; and a
  121  prepaid limited health service organization that is authorized
  122  in this state and one or more other states, jurisdictions, or
  123  countries.
  124         (3)(a) A company action level event includes:
  125         1. The filing of a risk-based capital report by an insurer
  126  which indicates that:
  127         a. The insurer’s total adjusted capital is greater than or
  128  equal to its regulatory action level risk-based capital but less
  129  than its company action level risk-based capital; or
  130         b. If a life and health insurer that reports using the life
  131  and health annual statement instructions, the insurer has total
  132  adjusted capital that is greater than or equal to its company
  133  action level risk-based capital, but is less than the product of
  134  its authorized control level risk-based capital and 3.0 2.5, and
  135  has a negative trend;
  136         c. Effective January, 1, 2015, if a life and health or
  137  property and casualty insurer that reports using the health
  138  annual statement instructions, the insurer or organization has
  139  total adjusted capital that is greater than or equal to its
  140  company action level risk-based capital, but is less than the
  141  product of its authorized control level risk-based capital and
  142  3.0, and triggers the trend test determined in accordance with
  143  the trend test calculation included in the Risk-Based Capital
  144  Forecasting and Instructions, Health, updated annually by the
  145  National Association of Insurance Commissioners; or
  146         d. If a property and casualty insurer that reports using
  147  the property and casualty annual statement instructions, the
  148  insurer has total adjusted capital that is greater than or equal
  149  to its company action level risk-based capital, but is less than
  150  the product of its authorized control level risk-based capital
  151  and 3.0, and triggers the trend test determined in accordance
  152  with the trend test calculation included in the Risk-Based
  153  Capital Forecasting and Instructions, Property/Casualty, updated
  154  annually by the National Association of Insurance Commissioners;
  155         2. The notification by the office to the insurer of an
  156  adjusted risk-based capital report that indicates an event in
  157  subparagraph 1., unless the insurer challenges the adjusted
  158  risk-based capital report under subsection (7); or
  159         3. If, under subsection (7), an insurer challenges an
  160  adjusted risk-based capital report that indicates an event in
  161  subparagraph 1., the notification by the office to the insurer
  162  that the office has, after a hearing, rejected the insurer’s
  163  challenge.
  164         (6)
  165         (b) If a mandatory control level event occurs:
  166         1. With respect to a life and health insurer, the office
  167  shall, after due consideration of s. 624.408, and effective
  168  January 1, 2015, ss. 641.225 and 636.045, take any action
  169  necessary to place the insurer under regulatory control,
  170  including any remedy available under chapter 631. A mandatory
  171  control level event is sufficient ground for the department to
  172  be appointed as receiver as provided in chapter 631. The office
  173  may forego taking action for up to 90 days after the mandatory
  174  control level event if the office finds there is a reasonable
  175  expectation that the mandatory control level event may be
  176  eliminated within the 90-day period.
  177         2. With respect to a property and casualty insurer, the
  178  office shall, after due consideration of s. 624.408, take any
  179  action necessary to place the insurer under regulatory control,
  180  including any remedy available under chapter 631, or, in the
  181  case of an insurer that is not writing new business, may allow
  182  the insurer to continue to operate under the supervision of the
  183  office. In either case, the mandatory control level event is
  184  sufficient ground for the department to be appointed as receiver
  185  as provided in chapter 631. The office may forego taking action
  186  for up to 90 days after the mandatory control level event if the
  187  office finds there is a reasonable expectation that the
  188  mandatory control level event may will be eliminated within the
  189  90-day period.
  190         Section 3. Subsection (1) and paragraph (e) of subsection
  191  (8) of section 624.424, Florida Statutes, are amended to read:
  192         624.424 Annual statement and other information.—
  193         (1)(a) Each authorized insurer shall file with the office
  194  full and true statements of its financial condition,
  195  transactions, and affairs. An annual statement covering the
  196  preceding calendar year shall be filed on or before March 1, and
  197  quarterly statements covering the periods ending on March 31,
  198  June 30, and September 30 shall be filed within 45 days after
  199  each such date. The office may, for good cause, grant an
  200  extension of time for filing of an annual or quarterly
  201  statement. The statements must shall contain information
  202  generally included in insurers’ financial statements prepared in
  203  accordance with generally accepted insurance accounting
  204  principles and practices and in a form generally used utilized
  205  by insurers for financial statements, sworn to by at least two
  206  executive officers of the insurer or, if a reciprocal insurer,
  207  by the oath of the attorney in fact or its like officer if a
  208  corporation. To facilitate uniformity in financial statements
  209  and to facilitate office analysis, the commission may by rule
  210  adopt the form for financial statements approved by the National
  211  Association of Insurance Commissioners in 2002, and may adopt
  212  subsequent amendments thereto if the methodology remains
  213  substantially consistent, and may by rule require each insurer
  214  to submit to the office, or such organization as the office may
  215  designate, all or part of the information contained in the
  216  financial statement in a computer-readable form compatible with
  217  the electronic data processing system specified by the office.
  218         (b) Each insurer’s annual statement must contain:
  219         1. A statement of opinion on loss and loss adjustment
  220  expense reserves made by a member of the American Academy of
  221  Actuaries or by a qualified loss reserve specialist, pursuant to
  222  under criteria established by rule of the commission. In
  223  adopting the rule, the commission shall must consider any
  224  criteria established by the National Association of Insurance
  225  Commissioners. The office may require semiannual updates of the
  226  annual statement of opinion for as to a particular insurer if
  227  the office has reasonable cause to believe that such reserves
  228  are understated to the extent of materially misstating the
  229  financial position of the insurer. Workpapers in support of the
  230  statement of opinion must be provided to the office upon
  231  request. This paragraph does not apply to life insurance, health
  232  insurance, or title insurance.
  233         2. An actuarial opinion summary written by the insurer’s
  234  appointed actuary. The summary must be filed in accordance with
  235  the appropriate National Association of Insurance Commissioners
  236  property and casualty annual statement instructions. Proprietary
  237  business information contained in the summary is confidential
  238  and exempt under s. 624.4212, and the summary and related
  239  information are not subject to subpoena or discovery or
  240  admissible in evidence in any private civil action. Neither the
  241  office nor any person who received documents, materials, or any
  242  other information while acting under the authority of the office
  243  or with whom such information is shared pursuant to s. 624.4212
  244  may testify in a private civil action concerning such
  245  confidential information. A waiver of any other applicable claim
  246  of confidentiality or privilege may not occur as a result of a
  247  disclosure to the office under this section or any other section
  248  of the insurance code. This paragraph does not apply to life and
  249  health insurers subject to s. 625.121(3).
  250         (c) The commission may by rule require reports or filings
  251  required under the insurance code to be submitted by electronic
  252  means in a computer-readable form compatible with the electronic
  253  data processing equipment specified by the commission.
  254         (8)
  255         (e) The commission shall adopt rules to administer
  256  implement this subsection, which rules must be in substantial
  257  conformity with the 2006 Annual Financial Reporting Model
  258  Regulation 1998 Model Rule requiring annual audited financial
  259  reports adopted by the National Association of Insurance
  260  Commissioners or subsequent amendments, except where
  261  inconsistent with the requirements of this subsection. Any
  262  exception to, waiver of, or interpretation of accounting
  263  requirements of the commission must be in writing and signed by
  264  an authorized representative of the office. An No insurer may
  265  not raise as a defense in any action, any exception to, waiver
  266  of, or interpretation of accounting requirements as a defense in
  267  an action, unless previously issued in writing by an authorized
  268  representative of the office.
  269         Section 4. Paragraphs (a) and (b) of subsection (3) of
  270  section 625.121, Florida Statutes, are amended to read:
  271         625.121 Standard Valuation Law; life insurance.—
  272         (3) ACTUARIAL OPINION OF RESERVES.—
  273         (a)1. Each life insurance company doing business in this
  274  state shall annually submit the opinion of a qualified actuary
  275  as to whether the reserves and related actuarial items held in
  276  support of the policies and contracts specified by the
  277  commission by rule are computed appropriately, are based on
  278  assumptions that which satisfy contractual provisions, are
  279  consistent with prior reported amounts, and comply with
  280  applicable laws of this state. The commission by rule shall
  281  define the specifics of this opinion and add any other items
  282  determined to be necessary to its scope.
  283         1.2. The opinion shall be submitted with the annual
  284  statement reflecting the valuation of such reserve liabilities
  285  for each year ending on or after December 31, 1992.
  286         2.3. The opinion applies shall apply to all business in
  287  force, including individual and group health insurance plans, in
  288  the form and substance acceptable to the office as specified by
  289  rule of the commission.
  290         3.4. The commission may adopt rules providing the standards
  291  of the actuarial opinion consistent with standards adopted by
  292  the Actuarial Standards Board on December 31, 2002, and
  293  subsequent revisions thereto, if provided that the standards
  294  remain substantially consistent.
  295         4.5. In the case of an opinion required to be submitted by
  296  a foreign or alien company, The office may accept an the opinion
  297  filed by a foreign or alien that company with the insurance
  298  supervisory official of another state if the office determines
  299  that the opinion reasonably meets the requirements applicable to
  300  a company domiciled in this state.
  301         5.6.As used in For the purposes of this subsection, the
  302  term “qualified actuary” means a member in good standing of the
  303  American Academy of Actuaries who also meets the requirements
  304  specified by rule of the commission.
  305         6.7. Disciplinary action by the office against the company
  306  or the qualified actuary shall be in accordance with the
  307  insurance code and related rules adopted by the commission.
  308         7.8. A memorandum in the form and substance specified by
  309  rule shall be prepared to support each actuarial opinion.
  310         8.9. If the insurance company fails to provide a supporting
  311  memorandum at the request of the office within a period
  312  specified by rule of the commission, or if the office determines
  313  that the supporting memorandum provided by the insurance company
  314  fails to meet the standards prescribed by rule of the
  315  commission, the office may engage a qualified actuary at the
  316  expense of the company to review the opinion and the basis for
  317  the opinion and prepare such supporting memorandum as is
  318  required by the office.
  319         9.10. Except as otherwise provided in this paragraph, any
  320  memorandum or other material in support of the opinion is
  321  confidential and exempt from the provisions of s. 119.07(1) and
  322  is not subject to subpoena or discovery or admissible in
  323  evidence in any private civil action; however, the memorandum or
  324  other material may be released by the office with the written
  325  consent of the company, or to the American Academy of Actuaries
  326  upon request stating that the memorandum or other material is
  327  required for the purpose of professional disciplinary
  328  proceedings and setting forth procedures satisfactory to the
  329  office for preserving the confidentiality of the memorandum or
  330  other material. If any portion of the confidential memorandum is
  331  cited by the company in its marketing, or is cited before any
  332  governmental agency other than a state insurance department, or
  333  is released by the company to the news media, no portion of the
  334  memorandum is confidential. Neither the office nor any person
  335  who received documents, materials, or any other information
  336  while acting under the authority of the office or with whom such
  337  information is shared pursuant to this paragraph may testify in
  338  any private civil action concerning the confidential documents,
  339  materials, or information. A waiver of any applicable privilege
  340  or claim of confidentiality in the documents, materials, or
  341  information may not occur as a result of disclosure to the
  342  office under this section or any other section of the insurance
  343  code, or as a result of sharing as authorized under s. 624.4212.
  344         (b) In addition to the opinion required by paragraph (a)
  345  subparagraph (a)1., the office may, pursuant to commission rule,
  346  require an opinion of the same qualified actuary as to whether
  347  the reserves and related actuarial items held in support of the
  348  policies and contracts specified by the commission by rule, when
  349  considered in light of the assets held by the company with
  350  respect to the reserves and related actuarial items, including,
  351  but not limited to, the investment earnings on the assets and
  352  considerations anticipated to be received and retained under the
  353  policies and contracts, make adequate provision for the
  354  company’s obligations under the policies and contracts,
  355  including, but not limited to, the benefits under, and expenses
  356  associated with, the policies and contracts.
  357         Section 5. Subsections (1), (3), (10), (12), and (13) of
  358  section 628.461, Florida Statutes, are amended to read:
  359         628.461 Acquisition of controlling stock.—
  360         (1) A person may not, individually or in conjunction with
  361  any affiliated person of such person, acquire directly or
  362  indirectly, conclude a tender offer or exchange offer for, enter
  363  into any agreement to exchange securities for, or otherwise
  364  finally acquire 10 5 percent or more of the outstanding voting
  365  securities of a domestic stock insurer or of a controlling
  366  company, unless:
  367         (a) The person or affiliated person has filed with the
  368  office and sent to the insurer and controlling company a letter
  369  of notification regarding the transaction or proposed
  370  transaction within no later than 5 days after any form of tender
  371  offer or exchange offer is proposed, or within no later than 5
  372  days after the acquisition of the securities if no tender offer
  373  or exchange offer is involved. The notification must be provided
  374  on forms prescribed by the commission containing information
  375  determined necessary to understand the transaction and identify
  376  all purchasers and owners involved;
  377         (b) The person or affiliated person has filed with the
  378  office the a statement as specified in subsection (3). The
  379  statement must be completed and filed within 30 days after:
  380         1. Any definitive acquisition agreement is entered;
  381         2. Any form of tender offer or exchange offer is proposed;
  382  or
  383         3. The acquisition of the securities, if no definitive
  384  acquisition agreement, tender offer, or exchange offer is
  385  involved; and
  386         (c) The office has approved the tender or exchange offer,
  387  or acquisition if no tender offer or exchange offer is involved,
  388  and approval is in effect.
  389  
  390  In lieu of a filing as required under this subsection, a party
  391  acquiring less than 10 percent of the outstanding voting
  392  securities of an insurer may file a disclaimer of affiliation
  393  and control. The disclaimer shall fully disclose all material
  394  relationships and basis for affiliation between the person and
  395  the insurer as well as the basis for disclaiming the affiliation
  396  and control. After a disclaimer has been filed, the insurer
  397  shall be relieved of any duty to register or report under this
  398  section which may arise out of the insurer’s relationship with
  399  the person unless and until the office disallows the disclaimer.
  400  The office shall disallow a disclaimer only after furnishing all
  401  parties in interest with notice and opportunity to be heard and
  402  after making specific findings of fact to support the
  403  disallowance. A filing as required under this subsection must be
  404  made for as to any acquisition that equals or exceeds 10 percent
  405  of the outstanding voting securities.
  406         (3) The statement to be filed with the office under
  407  subsection (1) and furnished to the insurer and controlling
  408  company must shall contain all the following information and any
  409  additional information that as the office deems necessary to
  410  determine the character, experience, ability, and other
  411  qualifications of the person or affiliated person of such person
  412  for the protection of the policyholders and shareholders of the
  413  insurer and the public:
  414         (a) The identity of, and the background information
  415  specified in subsection (4) on, each natural person by whom, or
  416  on whose behalf, the acquisition is to be made; and, if the
  417  acquisition is to be made by, or on behalf of, a corporation,
  418  association, or trust, as to the corporation, association, or
  419  trust and as to any person who controls, either directly or
  420  indirectly, the corporation, association, or trust, the identity
  421  of, and the background information specified in subsection (4)
  422  on, each director, officer, trustee, or other natural person
  423  performing duties similar to those of a director, officer, or
  424  trustee for the corporation, association, or trust.;
  425         (b) The source and amount of the funds or other
  426  consideration used, or to be used, in making the acquisition.;
  427         (c) Any plans or proposals that which such persons may have
  428  made to liquidate such insurer, to sell any of its assets or
  429  merge or consolidate it with any person, or to make any other
  430  major change in its business or corporate structure or
  431  management; and any plans or proposals that which such persons
  432  may have made to liquidate any controlling company of such
  433  insurer, to sell any of its assets or merge or consolidate it
  434  with any person, or to make any other major change in its
  435  business or corporate structure or management.;
  436         (d) The number of shares or other securities that which the
  437  person or affiliated person of such person proposes to acquire,
  438  the terms of the proposed acquisition, and the manner in which
  439  the securities are to be acquired.; and
  440         (e) Information as to any contract, arrangement, or
  441  understanding with any party with respect to any of the
  442  securities of the insurer or controlling company, including, but
  443  not limited to, information relating to the transfer of any of
  444  the securities, option arrangements, puts or calls, or the
  445  giving or withholding of proxies, which information names the
  446  party with whom the contract, arrangement, or understanding has
  447  been entered into and gives the details thereof.
  448         (f) Effective January 1, 2015, an agreement by the person
  449  required to file the statement that the person will provide the
  450  annual report specified in s. 628.801(2) if control exists.
  451         (g) Effective January 1, 2015, an acknowledgement by the
  452  person required to file the statement that the person and all
  453  subsidiaries within the person’s control in the insurance
  454  holding company system will provide, as necessary, information
  455  to the office upon request to evaluate enterprise risk to the
  456  insurer.
  457         (10) Upon notification to the office by the domestic stock
  458  insurer or a controlling company that any person or any
  459  affiliated person of such person has acquired 10 5 percent or
  460  more of the outstanding voting securities of the domestic stock
  461  insurer or controlling company without complying with the
  462  provisions of this section, the office shall order that the
  463  person and any affiliated person of such person cease
  464  acquisition of any further securities of the domestic stock
  465  insurer or controlling company; however, the person or any
  466  affiliated person of such person may request a proceeding, which
  467  proceeding shall be convened within 7 days after the rendering
  468  of the order for the sole purpose of determining whether the
  469  person, individually or in connection with any affiliated person
  470  of such person, has acquired 10 5 percent or more of the
  471  outstanding voting securities of a domestic stock insurer or
  472  controlling company. Upon the failure of the person or
  473  affiliated person to request a hearing within 7 days, or upon a
  474  determination at a hearing convened pursuant to this subsection
  475  that the person or affiliated person has acquired voting
  476  securities of a domestic stock insurer or controlling company in
  477  violation of this section, the office may order the person and
  478  affiliated person to divest themselves of any voting securities
  479  so acquired.
  480         (12)(a) A presumption of control may be rebutted by filing
  481  a disclaimer of control. Any person may file a disclaimer of
  482  control with the office. The disclaimer must fully disclose all
  483  material relationships and bases for affiliation between the
  484  person and the insurer as well as the basis for disclaiming the
  485  affiliation. After a disclaimer has been filed, the insurer is
  486  relieved of any duty to register or report under this section
  487  that may arise out of the insurer’s relationship with the person
  488  unless the office disallows the disclaimer.
  489         (b) Any controlling person of a domestic insurer who seeks
  490  to divest the person’s controlling interest in the domestic
  491  insurer in any manner shall file with the office, with a copy to
  492  the insurer, confidential notice, not subject to public
  493  inspection as provided under s. 624.4212, of the person’s
  494  proposed divestiture at least 30 days before the cessation of
  495  control. The office shall determine those instances in which the
  496  party seeking to divest or to acquire a controlling interest in
  497  an insurer must file for and obtain approval of the transaction.
  498  The information remains confidential until the conclusion of the
  499  transaction unless the office, in its discretion, determines
  500  that confidential treatment interferes with enforcement of this
  501  section. If the statement referred to in subsection (1) is
  502  otherwise filed, this paragraph does not apply. For the purpose
  503  of this section, the term “affiliated person” of another person
  504  means:
  505         1. The spouse of such other person;
  506         2. The parents of such other person and their lineal
  507  descendants and the parents of such other person’s spouse and
  508  their lineal descendants;
  509         3. Any person who directly or indirectly owns or controls,
  510  or holds with power to vote, 5 percent or more of the
  511  outstanding voting securities of such other person;
  512         4. Any person 5 percent or more of the outstanding voting
  513  securities of which are directly or indirectly owned or
  514  controlled, or held with power to vote, by such other person;
  515         5. Any person or group of persons who directly or
  516  indirectly control, are controlled by, or are under common
  517  control with such other person;
  518         6. Any officer, director, partner, copartner, or employee
  519  of such other person;
  520         7. If such other person is an investment company, any
  521  investment adviser of such company or any member of an advisory
  522  board of such company;
  523         8. If such other person is an unincorporated investment
  524  company not having a board of directors, the depositor of such
  525  company; or
  526         9. Any person who has entered into an agreement, written or
  527  unwritten, to act in concert with such other person in acquiring
  528  or limiting the disposition of securities of a domestic stock
  529  insurer or controlling company.
  530         (c)(b) For the purposes of this section, the term
  531  “controlling company” means any corporation, trust, or
  532  association owning, directly or indirectly, 25 percent or more
  533  of the voting securities of one or more domestic stock insurance
  534  companies.
  535         (13) The commission may adopt, amend, or repeal rules that
  536  are necessary to administer implement the provisions of this
  537  section, pursuant to chapter 120.
  538         Section 6. Section 628.801, Florida Statutes, is amended to
  539  read:
  540         628.801 Insurance holding companies; registration;
  541  regulation.—
  542         (1) An Every insurer that is authorized to do business in
  543  this state and that is a member of an insurance holding company
  544  shall, on or before April 1 of each year, register with the
  545  office and file a registration statement and be subject to
  546  regulation with respect to its relationship to the holding
  547  company as provided by law or rule or statute. The commission
  548  shall adopt rules establishing the information and statement
  549  form required for registration and the manner in which
  550  registered insurers and their affiliates are regulated. The
  551  rules apply to domestic insurers, foreign insurers, and
  552  commercially domiciled insurers, except for a foreign insurer
  553  domiciled in states that were are accredited by the National
  554  Association of Insurance Commissioners by December 31, 1995.
  555  Except to the extent of any conflict with this code, the rules
  556  must include all requirements and standards of ss. 4 and 5 of
  557  the Insurance Holding Company System Regulatory Act and the
  558  Insurance Holding Company System Model Regulation of the
  559  National Association of Insurance Commissioners, as adopted on
  560  December 2010. The commission may adopt subsequent amendments
  561  thereto if the methodology remains substantially consistent. The
  562  rules Regulatory Act and the Model Regulation existed on
  563  November 30, 2001, and may include a prohibition on oral
  564  contracts between affiliated entities. Material transactions
  565  between an insurer and its affiliates shall be filed with the
  566  office as provided by rule Upon request, the office may waive
  567  filing requirements under this section for a domestic insurer
  568  that is the subsidiary of an insurer that is in full compliance
  569  with the insurance holding company registration laws of its
  570  state of domicile, which state is accredited by the National
  571  Association of Insurance Commissioners.
  572         (2) Effective January 1, 2015, the ultimate controlling
  573  person of every insurer subject to registration must also file
  574  an annual enterprise risk report on or before April 1. As used
  575  in this subsection, the term “ultimate controlling person” means
  576  a person who is not controlled by any other person. The report,
  577  to the best of the ultimate controlling person’s knowledge and
  578  belief, must identify the material risks within the insurance
  579  holding company system that could pose enterprise risk to the
  580  insurer. The report shall be filed with the lead state office of
  581  the insurance holding company system as determined by the
  582  procedures within the Financial Analysis Handbook adopted by the
  583  National Association of Insurance Commissioners and is
  584  confidential and exempt from public disclosure as provided in s.
  585  624.4212.
  586         (a) An insurer may satisfy this requirement by providing
  587  the office with the most recently filed parent corporation
  588  reports that have been filed with the Securities and Exchange
  589  Commission which provide the appropriate enterprise risk
  590  information.
  591         (b) The term “enterprise risk” means any activity,
  592  circumstance, event, or series of events involving one or more
  593  affiliates of an insurer which, if not remedied promptly, is
  594  likely to have a materially adverse effect upon the financial
  595  condition or liquidity of the insurer or its insurance holding
  596  company system as a whole, including anything that would cause
  597  the insurer’s risk-based capital to fall into company action
  598  level as set forth in s. 624.4085 or would cause the insurer to
  599  be in hazardous financial condition.
  600         (3) Effective January 1, 2015, pursuant to chapter 624
  601  relating to the examination of insurers, the office may examine
  602  any insurer registered under this section and its affiliates to
  603  ascertain the financial condition of the insurer, including the
  604  enterprise risk to the insurer by the ultimate controlling
  605  party, or by any entity or combination of entities within the
  606  insurance holding company system, or by the insurance holding
  607  company system on a consolidated basis.
  608         (4) The filings and related documents filed pursuant to
  609  this section are confidential and exempt as provided in s.
  610  624.4212 and are not subject to subpoena or discovery, or
  611  admissible in evidence in any private civil action. A waiver of
  612  any applicable privilege or claim of confidentiality in the
  613  filings and related documents may not occur as a result of any
  614  disclosure to the office under this section or any other section
  615  of the insurance code as authorized under s. 624.4212. Neither
  616  the office nor any person who received the filings and related
  617  documents while acting under the authority of the office or with
  618  whom such information is shared pursuant to s. 624.4212 is
  619  permitted or required to testify in any private civil action
  620  concerning any confidential documents, materials, or information
  621  subject to s. 624.4212.
  622         (5) Effective January 1, 2015, the failure to file a
  623  registration statement, or a summary of the registration
  624  statement, or the enterprise risk filing report required by this
  625  section within the time specified for filing is a violation of
  626  this section.
  627         (6) Upon request, the office may waive the filing
  628  requirements of this section:
  629         (a) If the insurer is a domestic insurer that is the
  630  subsidiary of an insurer that is in full compliance with the
  631  insurance holding company registration laws of its state of
  632  domicile, which state is accredited by the National Association
  633  of Insurance Commissioners; or
  634         (b) If the insurer is a domestic insurer that writes only
  635  in this state and has annual direct written and assumed premium
  636  of less than $300 million, excluding premiums reinsured with the
  637  Federal Crop Insurance Corporation and Federal Flood Program,
  638  and demonstrates that compliance with this section would not
  639  provide substantial regulatory or consumer benefit. In
  640  evaluating a waiver request made under this paragraph, the
  641  office may consider various factors including, but not limited
  642  to, the type of business entity, the volume of business written,
  643  the ownership or organizational structure of the entity, or
  644  whether the company is in run-off.
  645  
  646  A waiver granted pursuant to this subsection is valid for 2
  647  years unless sooner withdrawn due to a change in the
  648  circumstances under which the waiver was granted.
  649         Section 7. Effective January 1, 2015, subsection (4) of
  650  section 628.803, Florida Statutes, is renumbered as subsection
  651  (5), and a new subsection (4) is added to that section to read:
  652         628.803 Sanctions.—
  653         (4) If the office determines that any person committed a
  654  violation of s. 628.461 or s. 628.801, the violation may serve
  655  as an independent basis for disapproving dividends or
  656  distributions and for placing the insurer under an order of
  657  supervision in accordance with part VI of chapter 624.
  658         Section 8. Effective January 1, 2015, section 628.805,
  659  Florida Statutes, is created to read:
  660         628.805 Supervisory colleges.—In order to assess the
  661  business strategy, financial position, legal and regulatory
  662  position, risk exposure, risk management, and governance
  663  processes, and as part of the examination of individual insurers
  664  in accordance with ss. 628.801 and 624.316, the office may
  665  participate in a supervisory college with other regulators
  666  charged with supervision of the insurer or its affiliates,
  667  including other state, federal, and international regulatory
  668  agencies. In accordance with s. 624.4212 regarding confidential
  669  information sharing, the office may enter into agreements that
  670  provide the basis for cooperation between the office and the
  671  other regulatory agencies and the activities of the supervisory
  672  college. This section does not delegate to the supervisory
  673  college the office’s authority to regulate or supervise the
  674  insurer or its affiliates under its jurisdiction.
  675         (1) With respect to participation in a supervisory college,
  676  the office may:
  677         (a) Initiate the establishment of a supervisory college.
  678         (b) Clarify the membership and participation of other
  679  supervisors in the supervisory college.
  680         (c) Clarify the functions of the supervisory college and
  681  the role of other regulators, including the establishment of a
  682  group-wide supervisor.
  683         (d) Coordinate the ongoing activities of the supervisory
  684  college, including planning meetings, supervisory activities,
  685  and processes for information sharing.
  686         (e) Establish a crisis management plan.
  687         (2) With respect to an insurer registered under s. 628.801,
  688  and in accordance with this section, the office may participate
  689  in a supervisory college for any domestic insurer that is part
  690  of an insurance holding company system that has international
  691  operations in order to determine the insurer’s compliance with
  692  this chapter.
  693         (3) Each registered insurer subject to this section is
  694  liable for and shall pay reasonable expenses for the office’s
  695  participation in a supervisory college, including reasonable
  696  travel expenses. A supervisory college may be convened as a
  697  temporary or permanent forum for communication and cooperation
  698  between the regulators charged with the supervision of the
  699  insurer or its affiliates, and the office may impose a regular
  700  assessment on the insurer for the payment of these expenses.
  701         Section 9. Effective January 1, 2015, subsection (3) is
  702  added to section 636.045, Florida Statutes, to read:
  703         636.045 Minimum surplus requirements.—
  704         (3) A prepaid limited health service organization that is
  705  authorized in this state and one or more other states,
  706  jurisdictions, or countries is subject to ss. 624.4085 and
  707  624.40851.
  708         Section 10. Effective January 1, 2015, subsection (7) is
  709  added to section 641.225, Florida Statutes, to read:
  710         641.225 Surplus requirements.—
  711         (7) A health maintenance organization that is authorized in
  712  this state and one or more other states, jurisdictions, or
  713  countries is subject to ss. 624.4085 and 624.40851.
  714         Section 11. Effective January 1, 2015, subsection (3) is
  715  added to section 641.255, Florida Statutes, to read:
  716         641.255 Acquisition, merger, or consolidation.—
  717         (3) A health maintenance organization that is a member of a
  718  holding company system is subject to s. 628.461 but not s.
  719  628.4615.
  720         Section 12. Except as otherwise expressly provided in this
  721  act, this act shall take effect October 1, 2013, if SB 834 or
  722  similar legislation is adopted in the same legislative session
  723  or an extension thereof and becomes law.

feedback