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

NOTE: There are more recent revisions of this legislation. Read Latest Draft
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 SB 836
       
       
       
       By the Committee on Banking and Insurance; and Senator Simmons
       
       
       
       
       597-03485-13                                           2013836c1
    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 a contingent effective
   57         date.
   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; a health
  118  maintenance organization that is authorized in this state and
  119  one or more other states, jurisdictions, or countries; and a
  120  prepaid health service organization that is authorized in this
  121  state and one or more other states, jurisdictions, or countries.
  122         (3)(a) A company action level event includes:
  123         1. The filing of a risk-based capital report by an insurer
  124  which indicates that:
  125         a. The insurer’s total adjusted capital is greater than or
  126  equal to its regulatory action level risk-based capital but less
  127  than its company action level risk-based capital; or
  128         b. If a life and health insurer that reports using the life
  129  and health annual statement instructions, the insurer has total
  130  adjusted capital that is greater than or equal to its company
  131  action level risk-based capital, but is less than the product of
  132  its authorized control level risk-based capital and 3.0 2.5, and
  133  has a negative trend;
  134         c. If a life and health or property and casualty insurer
  135  that reports using the health annual statement instructions, the
  136  insurer or organization has total adjusted capital that is
  137  greater than or equal to its company action level risk-based
  138  capital, but is less than the product of its authorized control
  139  level risk-based capital and 3.0, and triggers the trend test
  140  determined in accordance with the trend test calculation
  141  included in the Risk-Based Capital Forecasting and Instructions,
  142  Health, updated annually by the National Association of
  143  Insurance Commissioners; or
  144         d. If a property and casualty insurer that reports using
  145  the property and casualty annual statement instructions, the
  146  insurer has total adjusted capital that is greater than or equal
  147  to its company action level risk-based capital, but is less than
  148  the product of its authorized control level risk-based capital
  149  and 3.0, and triggers the trend test determined in accordance
  150  with the trend test calculation included in the Risk-Based
  151  Capital Forecasting and Instructions, Property/Casualty, updated
  152  annually by the National Association of Insurance Commissioners;
  153         2. The notification by the office to the insurer of an
  154  adjusted risk-based capital report that indicates an event in
  155  subparagraph 1., unless the insurer challenges the adjusted
  156  risk-based capital report under subsection (7); or
  157         3. If, under subsection (7), an insurer challenges an
  158  adjusted risk-based capital report that indicates an event in
  159  subparagraph 1., the notification by the office to the insurer
  160  that the office has, after a hearing, rejected the insurer’s
  161  challenge.
  162         (6)
  163         (b) If a mandatory control level event occurs:
  164         1. With respect to a life and health insurer, the office
  165  shall, after due consideration of s. 624.408, take any action
  166  necessary to place the insurer under regulatory control,
  167  including any remedy available under chapter 631. A mandatory
  168  control level event is sufficient ground for the department to
  169  be appointed as receiver as provided in chapter 631. The office
  170  may forego taking action for up to 90 days after the mandatory
  171  control level event if the office finds there is a reasonable
  172  expectation that the mandatory control level event may be
  173  eliminated within the 90-day period.
  174         2. With respect to a property and casualty insurer, the
  175  office shall, after due consideration of s. 624.408, s. 641.225
  176  for a health maintenance organization, or s. 636.045 for a
  177  prepaid limited health service organization, take any action
  178  necessary to place the insurer under regulatory control,
  179  including any remedy available under chapter 631, or, in the
  180  case of an insurer that is not writing new business, may allow
  181  the insurer to continue to operate under the supervision of the
  182  office. In either case, the mandatory control level event is
  183  sufficient ground for the department to be appointed as receiver
  184  as provided in chapter 631. The office may forego taking action
  185  for up to 90 days after the mandatory control level event if the
  186  office finds there is a reasonable expectation that the
  187  mandatory control level event may will be eliminated within the
  188  90-day period.
  189         Section 3. Subsection (1) and paragraph (e) of subsection
  190  (8) of section 624.424, Florida Statutes, are amended to read:
  191         624.424 Annual statement and other information.—
  192         (1)(a) Each authorized insurer shall file with the office
  193  full and true statements of its financial condition,
  194  transactions, and affairs. An annual statement covering the
  195  preceding calendar year shall be filed on or before March 1, and
  196  quarterly statements covering the periods ending on March 31,
  197  June 30, and September 30 shall be filed within 45 days after
  198  each such date. The office may, for good cause, grant an
  199  extension of time for filing of an annual or quarterly
  200  statement. The statements must shall contain information
  201  generally included in insurers’ financial statements prepared in
  202  accordance with generally accepted insurance accounting
  203  principles and practices and in a form generally used utilized
  204  by insurers for financial statements, sworn to by at least two
  205  executive officers of the insurer or, if a reciprocal insurer,
  206  by the oath of the attorney in fact or its like officer if a
  207  corporation. To facilitate uniformity in financial statements
  208  and to facilitate office analysis, the commission may by rule
  209  adopt the form for financial statements approved by the National
  210  Association of Insurance Commissioners in 2002, and may adopt
  211  subsequent amendments thereto if the methodology remains
  212  substantially consistent, and may by rule require each insurer
  213  to submit to the office, or such organization as the office may
  214  designate, all or part of the information contained in the
  215  financial statement in a computer-readable form compatible with
  216  the electronic data processing system specified by the office.
  217         (b) Each insurer’s annual statement must contain:
  218         1. A statement of opinion on loss and loss adjustment
  219  expense reserves made by a member of the American Academy of
  220  Actuaries or by a qualified loss reserve specialist, pursuant to
  221  under criteria established by rule of the commission. In
  222  adopting the rule, the commission shall must consider any
  223  criteria established by the National Association of Insurance
  224  Commissioners. The office may require semiannual updates of the
  225  annual statement of opinion for as to a particular insurer if
  226  the office has reasonable cause to believe that such reserves
  227  are understated to the extent of materially misstating the
  228  financial position of the insurer. Workpapers in support of the
  229  statement of opinion must be provided to the office upon
  230  request. This paragraph does not apply to life insurance, health
  231  insurance, or title insurance.
  232         2. An actuarial opinion summary written by the insurer’s
  233  appointed actuary. The summary must be filed in accordance with
  234  the appropriate National Association of Insurance Commissioners
  235  property and casualty annual statement instructions. Proprietary
  236  business information contained in the summary is confidential
  237  and exempt under s. 624.4212, and the summary and related
  238  information are not subject to subpoena or discovery or
  239  admissible in evidence in any private civil action. Neither the
  240  office nor any person who received documents, materials, or any
  241  other information while acting under the authority of the office
  242  or with whom such information is shared pursuant to s. 624.4212
  243  may testify in a private civil action concerning such
  244  confidential information. A waiver of any other applicable claim
  245  of confidentiality or privilege may not occur as a result of a
  246  disclosure to the office under this section or any other section
  247  of the insurance code. This paragraph does not apply to life and
  248  health insurers subject to s. 625.121(3).
  249         (c) The commission may by rule require reports or filings
  250  required under the insurance code to be submitted by electronic
  251  means in a computer-readable form compatible with the electronic
  252  data processing equipment specified by the commission.
  253         (8)
  254         (e) The commission shall adopt rules to administer
  255  implement this subsection, which rules must be in substantial
  256  conformity with the 2006 Annual Financial Reporting Model
  257  Regulation 1998 Model Rule requiring annual audited financial
  258  reports adopted by the National Association of Insurance
  259  Commissioners or subsequent amendments, except where
  260  inconsistent with the requirements of this subsection. Any
  261  exception to, waiver of, or interpretation of accounting
  262  requirements of the commission must be in writing and signed by
  263  an authorized representative of the office. An No insurer may
  264  not raise as a defense in any action, any exception to, waiver
  265  of, or interpretation of accounting requirements as a defense in
  266  an action, unless previously issued in writing by an authorized
  267  representative of the office.
  268         Section 4. Paragraphs (a) and (b) of subsection (3) of
  269  section 625.121, Florida Statutes, are amended to read:
  270         625.121 Standard Valuation Law; life insurance.—
  271         (3) ACTUARIAL OPINION OF RESERVES.—
  272         (a)1. Each life insurance company doing business in this
  273  state shall annually submit the opinion of a qualified actuary
  274  as to whether the reserves and related actuarial items held in
  275  support of the policies and contracts specified by the
  276  commission by rule are computed appropriately, are based on
  277  assumptions that which satisfy contractual provisions, are
  278  consistent with prior reported amounts, and comply with
  279  applicable laws of this state. The commission by rule shall
  280  define the specifics of this opinion and add any other items
  281  determined to be necessary to its scope.
  282         1.2. The opinion shall be submitted with the annual
  283  statement reflecting the valuation of such reserve liabilities
  284  for each year ending on or after December 31, 1992.
  285         2.3. The opinion applies shall apply to all business in
  286  force, including individual and group health insurance plans, in
  287  the form and substance acceptable to the office as specified by
  288  rule of the commission.
  289         3.4. The commission may adopt rules providing the standards
  290  of the actuarial opinion consistent with standards adopted by
  291  the Actuarial Standards Board on December 31, 2002, and
  292  subsequent revisions thereto, if provided that the standards
  293  remain substantially consistent.
  294         4.5. In the case of an opinion required to be submitted by
  295  a foreign or alien company, The office may accept an the opinion
  296  filed by a foreign or alien that company with the insurance
  297  supervisory official of another state if the office determines
  298  that the opinion reasonably meets the requirements applicable to
  299  a company domiciled in this state.
  300         5.6.As used in For the purposes of this subsection, the
  301  term “qualified actuary” means a member in good standing of the
  302  American Academy of Actuaries who also meets the requirements
  303  specified by rule of the commission.
  304         6.7. Disciplinary action by the office against the company
  305  or the qualified actuary shall be in accordance with the
  306  insurance code and related rules adopted by the commission.
  307         7.8. A memorandum in the form and substance specified by
  308  rule shall be prepared to support each actuarial opinion.
  309         8.9. If the insurance company fails to provide a supporting
  310  memorandum at the request of the office within a period
  311  specified by rule of the commission, or if the office determines
  312  that the supporting memorandum provided by the insurance company
  313  fails to meet the standards prescribed by rule of the
  314  commission, the office may engage a qualified actuary at the
  315  expense of the company to review the opinion and the basis for
  316  the opinion and prepare such supporting memorandum as is
  317  required by the office.
  318         9.10. Except as otherwise provided in this paragraph, any
  319  memorandum or other material in support of the opinion is
  320  confidential and exempt from the provisions of s. 119.07(1) and
  321  is not subject to subpoena or discovery or admissible in
  322  evidence in any private civil action; however, the memorandum or
  323  other material may be released by the office with the written
  324  consent of the company, or to the American Academy of Actuaries
  325  upon request stating that the memorandum or other material is
  326  required for the purpose of professional disciplinary
  327  proceedings and setting forth procedures satisfactory to the
  328  office for preserving the confidentiality of the memorandum or
  329  other material. If any portion of the confidential memorandum is
  330  cited by the company in its marketing, or is cited before any
  331  governmental agency other than a state insurance department, or
  332  is released by the company to the news media, no portion of the
  333  memorandum is confidential. Neither the office nor any person
  334  who received documents, materials, or any other information
  335  while acting under the authority of the office or with whom such
  336  information is shared pursuant to this paragraph may testify in
  337  any private civil action concerning the confidential documents,
  338  materials, or information. A waiver of any applicable privilege
  339  or claim of confidentiality in the documents, materials, or
  340  information may not occur as a result of disclosure to the
  341  office under this section or any other section of the insurance
  342  code, or as a result of sharing as authorized under s. 624.4212.
  343         (b) In addition to the opinion required by paragraph (a)
  344  subparagraph (a)1., the office may, pursuant to commission rule,
  345  require an opinion of the same qualified actuary as to whether
  346  the reserves and related actuarial items held in support of the
  347  policies and contracts specified by the commission by rule, when
  348  considered in light of the assets held by the company with
  349  respect to the reserves and related actuarial items, including,
  350  but not limited to, the investment earnings on the assets and
  351  considerations anticipated to be received and retained under the
  352  policies and contracts, make adequate provision for the
  353  company’s obligations under the policies and contracts,
  354  including, but not limited to, the benefits under, and expenses
  355  associated with, the policies and contracts.
  356         Section 5. Subsections (1), (3), (10), (12), and (13) of
  357  section 628.461, Florida Statutes, are amended to read:
  358         628.461 Acquisition of controlling stock.—
  359         (1) A person may not, individually or in conjunction with
  360  any affiliated person of such person, acquire directly or
  361  indirectly, conclude a tender offer or exchange offer for, enter
  362  into any agreement to exchange securities for, or otherwise
  363  finally acquire 10 5 percent or more of the outstanding voting
  364  securities of a domestic stock insurer or of a controlling
  365  company, unless:
  366         (a) The person or affiliated person has filed with the
  367  office and sent to the insurer and controlling company a letter
  368  of notification regarding the transaction or proposed
  369  transaction within no later than 5 days after any form of tender
  370  offer or exchange offer is proposed, or within no later than 5
  371  days after the acquisition of the securities if no tender offer
  372  or exchange offer is involved. The notification must be provided
  373  on forms prescribed by the commission containing information
  374  determined necessary to understand the transaction and identify
  375  all purchasers and owners involved;
  376         (b) The person or affiliated person has filed with the
  377  office the a statement as specified in subsection (3). The
  378  statement must be completed and filed within 30 days after:
  379         1. Any definitive acquisition agreement is entered;
  380         2. Any form of tender offer or exchange offer is proposed;
  381  or
  382         3. The acquisition of the securities, if no definitive
  383  acquisition agreement, tender offer, or exchange offer is
  384  involved; and
  385         (c) The office has approved the tender or exchange offer,
  386  or acquisition if no tender offer or exchange offer is involved,
  387  and approval is in effect.
  388  
  389         In lieu of a filing as required under this subsection, a
  390  party acquiring less than 10 percent of the outstanding voting
  391  securities of an insurer may file a disclaimer of affiliation
  392  and control. The disclaimer shall fully disclose all material
  393  relationships and basis for affiliation between the person and
  394  the insurer as well as the basis for disclaiming the affiliation
  395  and control. After a disclaimer has been filed, the insurer
  396  shall be relieved of any duty to register or report under this
  397  section which may arise out of the insurer’s relationship with
  398  the person unless and until the office disallows the disclaimer.
  399  The office shall disallow a disclaimer only after furnishing all
  400  parties in interest with notice and opportunity to be heard and
  401  after making specific findings of fact to support the
  402  disallowance. A filing as required under this subsection must be
  403  made for as to any acquisition that equals or exceeds 10 percent
  404  of the outstanding voting securities.
  405         (3) The statement to be filed with the office under
  406  subsection (1) and furnished to the insurer and controlling
  407  company must shall contain all the following information and any
  408  additional information that as the office deems necessary to
  409  determine the character, experience, ability, and other
  410  qualifications of the person or affiliated person of such person
  411  for the protection of the policyholders and shareholders of the
  412  insurer and the public:
  413         (a) The identity of, and the background information
  414  specified in subsection (4) on, each natural person by whom, or
  415  on whose behalf, the acquisition is to be made; and, if the
  416  acquisition is to be made by, or on behalf of, a corporation,
  417  association, or trust, as to the corporation, association, or
  418  trust and as to any person who controls, either directly or
  419  indirectly, the corporation, association, or trust, the identity
  420  of, and the background information specified in subsection (4)
  421  on, each director, officer, trustee, or other natural person
  422  performing duties similar to those of a director, officer, or
  423  trustee for the corporation, association, or trust.;
  424         (b) The source and amount of the funds or other
  425  consideration used, or to be used, in making the acquisition.;
  426         (c) Any plans or proposals that which such persons may have
  427  made to liquidate such insurer, to sell any of its assets or
  428  merge or consolidate it with any person, or to make any other
  429  major change in its business or corporate structure or
  430  management; and any plans or proposals that which such persons
  431  may have made to liquidate any controlling company of such
  432  insurer, to sell any of its assets or merge or consolidate it
  433  with any person, or to make any other major change in its
  434  business or corporate structure or management.;
  435         (d) The number of shares or other securities that which the
  436  person or affiliated person of such person proposes to acquire,
  437  the terms of the proposed acquisition, and the manner in which
  438  the securities are to be acquired.; and
  439         (e) Information as to any contract, arrangement, or
  440  understanding with any party with respect to any of the
  441  securities of the insurer or controlling company, including, but
  442  not limited to, information relating to the transfer of any of
  443  the securities, option arrangements, puts or calls, or the
  444  giving or withholding of proxies, which information names the
  445  party with whom the contract, arrangement, or understanding has
  446  been entered into and gives the details thereof.
  447         (f) An agreement by the person required to file the
  448  statement that the person will provide the annual report
  449  specified in s. 628.801(2) if control exists.
  450         (g) An acknowledgement by the person required to file the
  451  statement that the person and all subsidiaries within the
  452  person’s control in the insurance holding company system will
  453  provide, as necessary, information to the office upon request to
  454  evaluate enterprise risk to the insurer.
  455         (10) Upon notification to the office by the domestic stock
  456  insurer or a controlling company that any person or any
  457  affiliated person of such person has acquired 10 5 percent or
  458  more of the outstanding voting securities of the domestic stock
  459  insurer or controlling company without complying with the
  460  provisions of this section, the office shall order that the
  461  person and any affiliated person of such person cease
  462  acquisition of any further securities of the domestic stock
  463  insurer or controlling company; however, the person or any
  464  affiliated person of such person may request a proceeding, which
  465  proceeding shall be convened within 7 days after the rendering
  466  of the order for the sole purpose of determining whether the
  467  person, individually or in connection with any affiliated person
  468  of such person, has acquired 10 5 percent or more of the
  469  outstanding voting securities of a domestic stock insurer or
  470  controlling company. Upon the failure of the person or
  471  affiliated person to request a hearing within 7 days, or upon a
  472  determination at a hearing convened pursuant to this subsection
  473  that the person or affiliated person has acquired voting
  474  securities of a domestic stock insurer or controlling company in
  475  violation of this section, the office may order the person and
  476  affiliated person to divest themselves of any voting securities
  477  so acquired.
  478         (12)(a) A presumption of control may be rebutted by filing
  479  a disclaimer of control. Any person may file a disclaimer of
  480  control with the office. The disclaimer must fully disclose all
  481  material relationships and bases for affiliation between the
  482  person and the insurer as well as the basis for disclaiming the
  483  affiliation. After a disclaimer has been filed, the insurer is
  484  relieved of any duty to register or report under this section
  485  that may arise out of the insurer’s relationship with the person
  486  unless the office disallows the disclaimer.
  487         (b) Any controlling person of a domestic insurer who seeks
  488  to divest the person’s controlling interest in the domestic
  489  insurer in any manner shall file with the office, with a copy to
  490  the insurer, confidential notice, not subject to public
  491  inspection as provided under s. 624.4212, of the person’s
  492  proposed divestiture at least 30 days before the cessation of
  493  control. The office shall determine those instances in which the
  494  party seeking to divest or to acquire a controlling interest in
  495  an insurer must file for and obtain approval of the transaction.
  496  The information remains confidential until the conclusion of the
  497  transaction unless the office, in its discretion, determines
  498  that confidential treatment interferes with enforcement of this
  499  section. If the statement referred to in subsection (1) is
  500  otherwise filed, this paragraph does not apply. For the purpose
  501  of this section, the term “affiliated person” of another person
  502  means:
  503         1. The spouse of such other person;
  504         2. The parents of such other person and their lineal
  505  descendants and the parents of such other person’s spouse and
  506  their lineal descendants;
  507         3. Any person who directly or indirectly owns or controls,
  508  or holds with power to vote, 5 percent or more of the
  509  outstanding voting securities of such other person;
  510         4. Any person 5 percent or more of the outstanding voting
  511  securities of which are directly or indirectly owned or
  512  controlled, or held with power to vote, by such other person;
  513         5. Any person or group of persons who directly or
  514  indirectly control, are controlled by, or are under common
  515  control with such other person;
  516         6. Any officer, director, partner, copartner, or employee
  517  of such other person;
  518         7. If such other person is an investment company, any
  519  investment adviser of such company or any member of an advisory
  520  board of such company;
  521         8. If such other person is an unincorporated investment
  522  company not having a board of directors, the depositor of such
  523  company; or
  524         9. Any person who has entered into an agreement, written or
  525  unwritten, to act in concert with such other person in acquiring
  526  or limiting the disposition of securities of a domestic stock
  527  insurer or controlling company.
  528         (c)(b) For the purposes of this section, the term
  529  “controlling company” means any corporation, trust, or
  530  association owning, directly or indirectly, 25 percent or more
  531  of the voting securities of one or more domestic stock insurance
  532  companies.
  533         (13) The commission may adopt, amend, or repeal rules that
  534  are necessary to administer implement the provisions of this
  535  section, pursuant to chapter 120.
  536         Section 6. Section 628.801, Florida Statutes, is amended to
  537  read:
  538         628.801 Insurance holding companies; registration;
  539  regulation.—
  540         (1) An Every insurer that is authorized to do business in
  541  this state and that is a member of an insurance holding company
  542  shall, on or before April 1 of each year, register with the
  543  office and file a registration statement and be subject to
  544  regulation with respect to its relationship to the holding
  545  company as provided by law or rule or statute. The commission
  546  shall adopt rules establishing the information and statement
  547  form required for registration and the manner in which
  548  registered insurers and their affiliates are regulated. The
  549  rules apply to domestic insurers, foreign insurers, and
  550  commercially domiciled insurers, except for a foreign insurer
  551  domiciled in states that were are accredited by the National
  552  Association of Insurance Commissioners by December 31, 1995.
  553  Except to the extent of any conflict with this code, the rules
  554  must include all requirements and standards of ss. 4 and 5 of
  555  the Insurance Holding Company System Regulatory Act and the
  556  Insurance Holding Company System Model Regulation of the
  557  National Association of Insurance Commissioners, as adopted on
  558  December 2010. The commission may adopt subsequent amendments
  559  thereto if the methodology remains substantially consistent. The
  560  rules Regulatory Act and the Model Regulation existed on
  561  November 30, 2001, and may include a prohibition on oral
  562  contracts between affiliated entities. Material transactions
  563  between an insurer and its affiliates shall be filed with the
  564  office as provided by rule Upon request, the office may waive
  565  filing requirements under this section for a domestic insurer
  566  that is the subsidiary of an insurer that is in full compliance
  567  with the insurance holding company registration laws of its
  568  state of domicile, which state is accredited by the National
  569  Association of Insurance Commissioners.
  570         (2) The ultimate controlling person of every insurer
  571  subject to registration must also file an annual enterprise risk
  572  report on or before April 1. As used in this subsection, the
  573  term “ultimate controlling person” means a person who is not
  574  controlled by any other person. The report, to the best of the
  575  ultimate controlling person’s knowledge and belief, must
  576  identify the material risks within the insurance holding company
  577  system that could pose enterprise risk to the insurer. The
  578  report shall be filed with the lead state office of the
  579  insurance holding company system as determined by the procedures
  580  within the Financial Analysis Handbook adopted by the National
  581  Association of Insurance Commissioners and is confidential and
  582  exempt from public disclosure as provided in s. 624.4212.
  583         (a) An insurer may satisfy this requirement by providing
  584  the office with the most recently filed parent corporation
  585  reports that have been filed with the Securities and Exchange
  586  Commission which provide the appropriate enterprise risk
  587  information.
  588         (b) The term “enterprise risk” means any activity,
  589  circumstance, event, or series of events involving one or more
  590  affiliates of an insurer which, if not remedied promptly, is
  591  likely to have a materially adverse effect upon the financial
  592  condition or liquidity of the insurer or its insurance holding
  593  company system as a whole, including anything that would cause
  594  the insurer’s risk-based capital to fall into company action
  595  level as set forth in s. 624.4085 or would cause the insurer to
  596  be in hazardous financial condition.
  597         (3) Pursuant to chapter 624 relating to the examination of
  598  insurers, the office may examine any insurer registered under
  599  this section and its affiliates to ascertain the financial
  600  condition of the insurer, including the enterprise risk to the
  601  insurer by the ultimate controlling party, or by any entity or
  602  combination of entities within the insurance holding company
  603  system, or by the insurance holding company system on a
  604  consolidated basis.
  605         (4) The filings and related documents filed pursuant to
  606  this section are confidential and exempt as provided in s.
  607  624.4212 and are not subject to subpoena or discovery, or
  608  admissible in evidence in any private civil action. A waiver of
  609  any applicable privilege or claim of confidentiality in the
  610  filings and related documents may not occur as a result of any
  611  disclosure to the office under this section or any other section
  612  of the insurance code as authorized under s. 624.4212. Neither
  613  the office nor any person who received the filings and related
  614  documents while acting under the authority of the office or with
  615  whom such information is shared pursuant to s. 624.4212 is
  616  permitted or required to testify in any private civil action
  617  concerning any confidential documents, materials, or information
  618  subject to s. 624.4212.
  619         (5) The failure to file a registration statement, or a
  620  summary of the registration statement, or the enterprise risk
  621  filing report required by this section within the time specified
  622  for filing is a violation of this section.
  623         (6) Upon request, the office may waive the filing
  624  requirements of this section:
  625         (a) If the insurer is a domestic insurer that is the
  626  subsidiary of an insurer that is in full compliance with the
  627  insurance holding company registration laws of its state of
  628  domicile, which state is accredited by the National Association
  629  of Insurance Commissioners; or
  630         (b) If the insurer is a domestic insurer that writes only
  631  in this state and has annual direct written and assumed premium
  632  of less than $300 million, excluding premiums reinsured with the
  633  Federal Crop Insurance Corporation and Federal Flood Program,
  634  and demonstrates that compliance with this section would not
  635  provide substantial regulatory or consumer benefit. In
  636  evaluating a waiver request made under this paragraph, the
  637  office may consider various factors including, but not limited
  638  to, the type of business entity, the volume of business written,
  639  the ownership or organizational structure of the entity, or
  640  whether the company is in run-off.
  641  
  642  A waiver granted pursuant to this subsection is valid for 2
  643  years unless sooner withdrawn due to a change in the
  644  circumstances under which the waiver was granted.
  645         Section 7. Subsection (4) of section 628.803, Florida
  646  Statutes, is renumbered as subsection (5), and a new subsection
  647  (4) is added to that section to read:
  648         628.803 Sanctions.—
  649         (4) If the office determines that any person committed a
  650  violation of s. 628.461 or s. 628.801, the violation may serve
  651  as an independent basis for disapproving dividends or
  652  distributions and for placing the insurer under an order of
  653  supervision in accordance with part VI of chapter 624.
  654         Section 8. Section 628.805, Florida Statutes, is created to
  655  read:
  656         628.805 Supervisory colleges.—In order to assess the
  657  business strategy, financial position, legal and regulatory
  658  position, risk exposure, risk management, and governance
  659  processes, and as part of the examination of individual insurers
  660  in accordance with ss. 628.801 and 624.316, the office may
  661  participate in a supervisory college with other regulators
  662  charged with supervision of the insurer or its affiliates,
  663  including other state, federal, and international regulatory
  664  agencies. In accordance with s. 624.4212 regarding confidential
  665  information sharing, the office may enter into agreements that
  666  provide the basis for cooperation between the office and the
  667  other regulatory agencies and the activities of the supervisory
  668  college. This section does not delegate to the supervisory
  669  college the office’s authority to regulate or supervise the
  670  insurer or its affiliates under its jurisdiction.
  671         (1) With respect to participation in a supervisory college,
  672  the office may:
  673         (a) Initiate the establishment of a supervisory college.
  674         (b) Clarify the membership and participation of other
  675  supervisors in the supervisory college.
  676         (c) Clarify the functions of the supervisory college and
  677  the role of other regulators, including the establishment of a
  678  group-wide supervisor.
  679         (d) Coordinate the ongoing activities of the supervisory
  680  college, including planning meetings, supervisory activities,
  681  and processes for information sharing.
  682         (e) Establish a crisis management plan.
  683         (2) With respect to an insurer registered under s. 628.801,
  684  and in accordance with this section, the office may participate
  685  in a supervisory college for any domestic insurer that is part
  686  of an insurance holding company system that has international
  687  operations in order to determine the insurer’s compliance with
  688  this chapter.
  689         (3) Each registered insurer subject to this section is
  690  liable for and shall pay reasonable expenses for the office’s
  691  participation in a supervisory college, including reasonable
  692  travel expenses. A supervisory college may be convened as a
  693  temporary or permanent forum for communication and cooperation
  694  between the regulators charged with the supervision of the
  695  insurer or its affiliates, and the office may impose a regular
  696  assessment on the insurer for the payment of these expenses.
  697         Section 9. Subsection (3) is added to section 636.045,
  698  Florida Statutes, to read:
  699         636.045 Minimum surplus requirements.—
  700         (3) A prepaid limited health service organization that is
  701  authorized in this state and one or more other states,
  702  jurisdictions, or countries is subject to ss. 624.4085 and
  703  624.40851.
  704         Section 10. Subsection (7) is added to section 641.225,
  705  Florida Statutes, to read:
  706         641.225 Surplus requirements.—
  707         (7) A health maintenance organization that is authorized in
  708  this state and one or more other states, jurisdictions, or
  709  countries is subject to ss. 624.4085 and 624.40851.
  710         Section 11. Subsection (3) is added to section 641.255,
  711  Florida Statutes, to read:
  712         641.255 Acquisition, merger, or consolidation.—
  713         (3) A health maintenance organization that is a member of a
  714  holding company system is subject to s. 628.461 but not s.
  715  628.4615.
  716         Section 12. This act shall take effect October 1, 2013, if
  717  SB 834 or similar legislation is adopted in the same legislative
  718  session or an extension thereof and becomes law.

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