Bill Text: FL S1012 | 2017 | Regular Session | Comm Sub
Bill Title: Insurance Fraud
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2017-05-05 - Laid on Table, companion bill(s) passed, see CS/CS/CS/HB 1007 (Ch. 2017-178), CS/HB 1009 (Ch. 2017-179) [S1012 Detail]
Download: Florida-2017-S1012-Comm_Sub.html
Florida Senate - 2017 CS for CS for SB 1012 By the Committees on Appropriations; and Banking and Insurance; and Senators Brandes and Young 576-04389-17 20171012c2 1 A bill to be entitled 2 An act relating to insurance fraud; reordering and 3 amending s. 626.9891, F.S.; defining and revising 4 definitions; requiring every insurer to designate at 5 least one primary anti-fraud employee for certain 6 purposes; requiring insurers to adopt an anti-fraud 7 plan; revising insurer requirements in providing anti 8 fraud information to the Department of Financial 9 Services; requiring specified information to be filed 10 annually with the department; revising the information 11 to be provided by insurers who write workers’ 12 compensation insurance; requiring each insurer to 13 provide annual anti-fraud education and training; 14 requiring insurers who submit an application for a 15 certificate of authority after a specified date to 16 comply with the section; providing penalties for the 17 failure to comply with requirements of the section; 18 requiring the Division of Investigative and Forensic 19 Services of the department to create, by a specified 20 date, a report detailing best practices for the 21 detection, investigation, prevention, and reporting of 22 insurance fraud and other fraudulent insurance acts; 23 requiring such report to be updated at certain 24 intervals; specifying required information in the 25 report; requiring the department to adopt rules 26 relating to insurers’ annual reporting of certain 27 data; creating s. 626.9896, F.S.; providing 28 legislative intent; creating a grant program to fund 29 the Insurance Fraud Dedicated Prosecutor Program 30 within the department; requiring moneys that are 31 appropriated for the program be used to fund specific 32 attorney and paralegal positions; specifying 33 procedures to be used by state attorneys’ offices when 34 applying for biennial grants; specifying that grants 35 are for 2 years but authorizing the division to renew 36 the grants; specifying procedures to be used by the 37 department in awarding grant funds; requiring the 38 Division of Investigative and Forensic Services to 39 provide an annual report to the Executive Office of 40 the Governor, the Speaker of the House of 41 Representatives, and the Senate President; specifying 42 information to be contained in the report; authorizing 43 the department to adopt rules to administer and 44 implement the insurance fraud dedicated prosecutor 45 program; amending s. 626.9911, F.S.; defining the 46 terms “fraudulent viatical settlement act” and 47 “stranger-originated life insurance practice” for 48 purposes of provisions relating to the Viatical 49 Settlement Act; amending ss. 626.9924 and 626.99245, 50 F.S.; conforming cross-references; amending s. 51 626.99275, F.S.; providing additional prohibited acts 52 related to viatical settlement contracts; amending s. 53 626.99287, F.S.; providing that a viatical settlement 54 contract is void and unenforceable by either party if 55 the viatical settlement policy is subject, within a 56 specified timeframe, to a loan secured by an interest 57 in the policy; revising conditions and requirements in 58 which viatical settlement contracts entered into 59 within specified timeframes are valid and enforceable; 60 deleting provisions related to the transfer of 61 insurance policies or certificates to viatical 62 settlement providers; creating s. 626.99289, F.S.; 63 providing that certain contracts, agreements, 64 arrangements, or transactions relating to stranger 65 originated life insurance practices are void and 66 unenforceable; creating s. 626.99291, F.S.; 67 authorizing a life insurer to contest policies 68 obtained through such practices; creating s. 69 626.99292, F.S.; requiring life insurers to provide a 70 specified statement to individual life insurance 71 policyholders; authorizing such statements to 72 accompany or be included in notices or mailings 73 provided to the policyholders; requiring such 74 statements to include contact information; amending s. 75 627.744, F.S.; deleting a provision that provides 76 construction; authorizing insurers to opt out of the 77 preinsurance inspection requirements for private 78 passenger motor vehicles; requiring insurers opting 79 out to file a certain manual rule with the Office of 80 Insurance Regulation; authorizing such insurers to 81 establish their own preinsurance inspection 82 requirements, which must be included in the filed 83 manual rule; prohibiting such insurers from requiring 84 applicants to pay for the cost of inspections; 85 deleting an obsolete provision; amending s. 641.3915, 86 F.S.; deleting obsolete provisions; providing 87 effective dates. 88 89 Be It Enacted by the Legislature of the State of Florida: 90 91 Section 1. Effective September 1, 2017, section 626.9891, 92 Florida Statutes, is reordered and amended to read: 93 626.9891 Insurer anti-fraud investigative units; reporting 94 requirements; penalties for noncompliance.— 95 (1)(5)As used inFor purposes ofthis section, the term: 96 (a) “Anti-fraud investigative unit” means the designated 97 anti-fraud unit or division, or contractor authorized under 98 subparagraph (2)(a)2. 99 (b) “Designated anti-fraud unit or division” includes a 100 distinct unit or division or a unit or division made up ofthe101assignment of fraud investigation toemployees whose principal 102 responsibilities are the investigation and disposition of claims 103 who are also assigned investigation of fraud.If an insurer104creates a distinct unit or division, hires additional employees,105or contracts with another entity to fulfill the requirements of106this section, the additional cost incurred must be included as107an administrative expense for ratemaking purposes.108 (2)(1)By December 31, 2017, every insurer admitted to do 109 business in this statewho in the previous calendar year, at any110time during that year, had $10 million or more in direct111premiums writtenshall: 112 (a)1. Establish and maintain a designated anti-fraud unit 113 or division within the company to investigate and report 114 possible fraudulent insurance actsclaimsby insureds or by 115 persons making claims for services or repairs against policies 116 held by insureds; or 117 2.(b)Contract with others to investigate and report 118 possible fraudulent insurance acts by insureds or by persons 119 making claims for services or repairs against policies held by 120 insureds. 121 (b) Adopt an anti-fraud plan. 122 (c) Designate at least one employee with primary 123 responsibility for implementing the requirements of this 124 section. 125 (d) ElectronicallyAn insurer subject to this subsection126shallfile with the Division of Investigative and Forensic 127 Services of the department, and annually thereafteron or before128July 1, 1996, a detailed description of the designated anti 129 fraud unit or divisionestablished pursuant to paragraph (a)or 130 a copy of the contract executed under subparagraph (a)2., as 131 applicable, a copy of the anti-fraud plan, and the name of the 132 employee designated under paragraph (c)and related documents133required by paragraph (b). 134 135 An insurer must include the additional cost incurred in creating 136 a distinct unit or division, hiring additional employees, or 137 contracting with another entity to fulfill the requirements of 138 this section, as an administrative expense for ratemaking 139 purposes. 140(2)Every insurer admitted to do business in this state,141which in the previous calendar year had less than $10 million in142direct premiums written, must adopt an anti-fraud plan and file143it with the Division of Investigative and Forensic Services of144the department on or before July 1, 1996. An insurer may, in145lieu of adopting and filing an anti-fraud plan, comply with the146provisions of subsection (1).147 (3) Eachinsurersanti-fraud plan mustplans shallinclude: 148 (a) An acknowledgement that the insurer has established 149 procedures for detecting and investigating possible fraudulent 150 insurance acts relating to the different types of insurance by 151 that insurerA description of the insurer’s procedures for152detecting and investigating possible fraudulent insurance acts; 153 (b) An acknowledgment that the insurer has establishedA154description of the insurer’sprocedures for the mandatory 155 reporting of possible fraudulent insurance acts to the Division 156 of Investigative and Forensic Services of the department; 157 (c) An acknowledgement that the insurer provides theA158description of the insurer’s plan foranti-fraud education and 159 training required by this section to the anti-fraud 160 investigative unitof its claims adjusters or other personnel; 161and162 (d) A description of the required anti-fraud education and 163 training; 164 (e) Awrittendescription or chartoutliningthe165organizational arrangementof the insurer’s anti-fraud 166 investigative unit, including the position titles and 167 descriptions of staffing; andpersonnel who are responsible for168the investigation and reporting of possible fraudulent insurance169acts170 (f) The rationale for the level of staffing and resources 171 being provided for the anti-fraud investigative unit which may 172 include objective criteria, such as the number of policies 173 written, the number of claims received on an annual basis, the 174 volume of suspected fraudulent claims detected on an annual 175 basis, an assessment of the optimal caseload that one 176 investigator can handle on an annual basis, and other factors. 177 (4) By December 31, 2018, each insurer shall provide staff 178 of the anti-fraud investigative unit at least 2 hours of initial 179 anti-fraud training that is designed to assist in identifying 180 and evaluating instances of suspected fraudulent insurance acts 181 in underwriting or claims activities. Annually thereafter, an 182 insurer shall provide such employees a 1-hour course that 183 addresses detection, referral, investigation, and reporting of 184 possible fraudulent insurance acts for the types of insurance 185 lines written by the insurer. 186 (5) Each insurer is required to report data related to 187 fraud for each identified line of business written by the 188 insurer during the prior calendar year. The data shall be 189 reported to the department by March 1, 2019, and annually 190 thereafter, and must include, at a minimum: 191 (a) The number of policies in effect; 192 (b) The amount of premiums written for policies; 193 (c) The number of claims received; 194 (d) The number of claims referred to the anti-fraud 195 investigative unit; 196 (e) The number of other insurance fraud matters referred to 197 the anti-fraud investigative unit that were not claim related; 198 (f) The number of claims investigated or accepted by the 199 anti-fraud investigative unit; 200 (g) The number of other insurance fraud matters 201 investigated or accepted by the anti-fraud investigative unit 202 that were not claim related; 203 (h) The number of cases referred to the Division of 204 Investigative and Forensic Services; 205 (i) The number of cases referred to other law enforcement 206 agencies; 207 (j) The number of cases referred to other entities; and 208 (k) The estimated dollar amount or range of damages on 209 cases referred to the Division of Investigative and Forensic 210 Services or other agencies. 211 (6) In addition to providing information required under 212 subsections (2), (4), and (5), each insurer writing workers’ 213 compensation insurance shall also report the following 214 information to the department, on or before March 1, 2019, and 215 annually thereafterAugust 1 of each year, on its experience in216implementing and maintaining an anti-fraud investigative unit or217an anti-fraud plan. The report must include, at a minimum: 218 (a) The estimated dollar amount of losses attributable to 219 workers’ compensation fraud delineated by the type of fraud, 220 including claimant, employer, provider, agent, or other type. 221 (b) The estimated dollar amount of recoveries attributable 222 to workers’ compensation fraud delineated by the type of fraud, 223 including claimant, employer, provider, agent, or other type. 224 (c) The number of cases referred to the Division of 225 Investigative and Forensic Services, delineated by the type of 226 fraud, including claimant, employer, provider, agent, or other 227 type. 228(a)The dollar amount of recoveries and losses attributable229to workers’ compensation fraud delineated by the type of fraud:230claimant, employer, provider, agent, or other.231(b)The number of referrals to the Bureau of Workers’232Compensation Fraud for the prior year.233(c)A description of the organization of the anti-fraud234investigative unit, if applicable, including the position titles235and descriptions of staffing.236(d)The rationale for the level of staffing and resources237being provided for the anti-fraud investigative unit, which may238include objective criteria such as number of policies written,239number of claims received on an annual basis, volume of240suspected fraudulent claims currently being detected, other241factors, and an assessment of optimal caseload that can be242handled by an investigator on an annual basis.243(e)The inservice education and training provided to244underwriting and claims personnel to assist in identifying and245evaluating instances of suspected fraudulent activity in246underwriting or claims activities.247(f)A description of a public awareness program focused on248the costs and frequency of insurance fraud and methods by which249the public can prevent it. 250 (7)(4)AnAnyinsurer who obtains a certificate of 251 authority has 6after July 1, 1995, shall have 18months in 252 which to comply with subsection (2), and one calendar year 253 thereafter, to comply with subsections (4), (5), and (6)the254requirements of this section. 255 (8)(7)If an insurer failsto timely submit a final256acceptable anti-fraud plan or anti-fraud investigative unit257description, fails to implement the provisions of a plan or an258anti-fraud investigative unit description,or otherwise refuses 259 to comply with the provisions of this section, the department, 260 office, or commission may: 261 (a) Impose an administrative fine of not more than $2,000 262 per day for such failureby an insurer to submit an acceptable263anti-fraud plan or anti-fraud investigative unit description,264 until the department, office, or commission deems the insurer to 265 be in compliance; 266 (b) Impose an administrative fine for failure by an insurer 267 to implement or follow the provisions of an anti-fraud plan or 268 anti-fraud investigative unit description; or 269 (c) Impose the provisions of both paragraphs (a) and (b). 270 (9) On or before December 31, 2018, the Division of 271 Investigative and Forensic Services shall create a report 272 detailing best practices for the detection, investigation, 273 prevention, and reporting of insurance fraud and other 274 fraudulent insurance acts. The report must be updated as 275 necessary but at least every 2 years. The report must provide: 276 (a) Information on the best practices for the establishment 277 of anti-fraud investigative units within insurers; 278 (b) Information on the best practices and methods for 279 detecting and investigating insurance fraud and other fraudulent 280 insurance acts; 281 (c) Information on appropriate anti-fraud education and 282 training of insurer personnel; 283 (d) Information on the best practices for reporting 284 insurance fraud and other fraudulent insurance acts to the 285 Division of Investigative and Forensic Services and to other law 286 enforcement agencies; 287 (e) Information regarding the appropriate level of staffing 288 and resources for anti-fraud investigative units within 289 insurers; 290 (f) Information detailing statistics and data relating to 291 insurance fraud which insurers should maintain; and 292 (g) Other information as determined by the Division of 293 Investigative and Forensic Services. 294 (10)(8)The department may adopt rules to administer this 295 section, except that it shall adopt rules to administer 296 subsection (5). 297 Section 2. Effective September 1, 2017, section 626.9896, 298 Florida Statutes, is created to read: 299 626.9896 Insurance Fraud Dedicated Prosecutor Program.— 300 (1) LEGISLATIVE INTENT.—The Legislature recognizes the 301 increasing problem of insurance fraud, the need to adequately 302 investigate and prosecute insurance fraud, and the need to 303 create a program dedicated to the prosecution of insurance 304 fraud. The Legislature recognizes that the Division of 305 Investigative and Forensic Services of the department can 306 efficiently and effectively implement and monitor such a 307 program, and can direct and reallocate resources as insurance 308 fraud trends change and demand for prosecutorial resources shift 309 between judicial circuits. 310 (2) ESTABLISHMENT OF THE INSURANCE FRAUD DEDICATED 311 PROSECUTOR PROGRAM.—There is created within the department a 312 grant program to fund the Insurance Fraud Dedicated Prosecutor 313 Program. The purpose of the program is to provide grants to 314 state attorneys’ offices to fund attorney and paralegal 315 positions that are dedicated exclusively to the prosecution of 316 insurance fraud. The program shall consist only of funds 317 appropriated by the state specifically for this program. 318 (3) GRANT APPLICATIONS.—Beginning in 2018, a state 319 attorney’s office seeking grant funds must submit an application 320 to the Division of Investigative and Forensic Services detailing 321 the proposed number of dedicated prosecutors and paralegals 322 requested for the prosecution of insurance fraud. Applications 323 must be received by July 1 of each even-numbered year and shall 324 identify funding needs for 2 years. Grant awards are contingent 325 upon legislative appropriation in the Insurance Regulatory Trust 326 Fund and Workers’ Compensation Administration Trust Fund and 327 subject to renewal by the department. The division must compile 328 and review the timely submitted applications to establish its 329 legislative budget request for the program for the upcoming two 330 years. 331 (4) AWARD OF GRANTS.—The division is authorized to award 332 grants to state attorneys’ offices using a formula adopted by 333 rule of the department and based on metrics and data compiled by 334 the division which allocates funds to the judicial circuits 335 based on trends in insurance fraud and the performance and 336 output measures reported as required by this section. A grant 337 awarded to a state attorney’s office may only be used to fund 338 attorney and paralegal positions that are dedicated exclusively 339 to the prosecution of insurance fraud. Grants are subject to the 340 provisions of s. 215.971. The division shall establish the 341 annual maximum grant amount, based on funds appropriated to the 342 department for funding the Insurance Fraud Dedicated Prosecutor 343 Program. 344 (5) REPORTING.—The division must track and report on the 345 effectiveness and efficiency of each state attorney’s office’s 346 use of the awarded grant funds. To help complete the report, 347 each state attorney’s office that is awarded a grant under this 348 section must submit performance and output information as 349 determined by the division. The report must be provided to the 350 Executive Office of the Governor, the Speaker of the House of 351 Representatives, and the President of the Senate by September 1, 352 2020, and annually thereafter. The report must include, but is 353 not limited to, the following: 354 (a) The amount of grant funds received and expended by each 355 state attorney’s office; 356 (b) A description of the purposes for which the funds were 357 expended, including payment of salaries, expenses, and any other 358 costs needed to support the delivery of services; 359 (c) The results achieved from the expenditures made, 360 including the number of complaints filed, the number of 361 investigations initiated, the number of arrests made, the number 362 of convictions, and the amount of restitution or fines paid as a 363 result of the cases presented for prosecution. 364 (6) RULES.—The department may adopt rules pursuant to ss. 365 120.536(1) and 120.54 for the administration and implementation 366 of the Insurance Fraud Dedicated Prosecutor Program. Such rules 367 may establish procedures for the Insurance Fraud Dedicated 368 Prosecutor Program, including forms to be used by the state 369 attorney’s offices. The department may establish a formula for 370 allocating grant funds, eligibility criteria, renewal 371 requirements, and standards for evaluating the effectiveness and 372 efficiency of expended funds. 373 Section 3. Present subsections (2) through (7) of section 374 626.9911, Florida Statutes, are renumbered as subsections (3) 375 through (8), respectively, present subsections (8) through (14) 376 of that section are renumbered as subsections (10) through (16), 377 respectively, and new subsections (2) and (9) are added to that 378 section, to read: 379 626.9911 Definitions.—As used in this act, the term: 380 (2) “Fraudulent viatical settlement act” means an act or 381 omission committed by a person who knowingly, or with intent to 382 defraud for the purpose of depriving another of property or for 383 pecuniary gain, commits or allows an employee or agent to commit 384 any of the following acts: 385 (a) Presenting, causing to be presented, or preparing with 386 the knowledge or belief that it will be presented to or by 387 another person, false or concealed material information as part 388 of, in support of, or concerning a fact material to: 389 1. An application for the issuance of a viatical settlement 390 contract or a life insurance policy; 391 2. The underwriting of a viatical settlement contract or a 392 life insurance policy; 393 3. A claim for payment or benefit pursuant to a viatical 394 settlement contract or a life insurance policy; 395 4. Premiums paid on a life insurance policy; 396 5. Payments and changes in ownership or beneficiary made in 397 accordance with the terms of a viatical settlement contract or a 398 life insurance policy; 399 6. The reinstatement or conversion of a life insurance 400 policy; 401 7. The solicitation, offer, effectuation, or sale of a 402 viatical settlement contract or a life insurance policy; 403 8. The issuance of written evidence of a viatical 404 settlement contract or a life insurance policy; or 405 9. A financing transaction for a viatical settlement 406 contract or life insurance policy. 407 (b) Employing a plan, financial structure, device, scheme, 408 or artifice relating to viaticated policies for the purpose of 409 perpetrating fraud. 410 (c) Engaging in a stranger-originated life insurance 411 practice. 412 (d) Failing to disclose, upon request by an insurer, that 413 the prospective insured has undergone a life expectancy 414 evaluation by a person other than the insurer or its authorized 415 representatives in connection with the issuance of the life 416 insurance policy. 417 (e) Perpetuating a fraud or preventing the detection of a 418 fraud by: 419 1. Removing, concealing, altering, destroying, or 420 sequestering from the office the assets or records of a licensee 421 or other person engaged in the business of viatical settlements; 422 2. Misrepresenting or concealing the financial condition of 423 a licensee, financing entity, insurer, or other person; 424 3. Transacting in the business of viatical settlements in 425 violation of laws requiring a license, certificate of authority, 426 or other legal authority to transact such business; or 427 4. Filing with the office or the equivalent chief insurance 428 regulatory official of another jurisdiction a document that 429 contains false information or conceals information about a 430 material fact from the office or other regulatory official. 431 (f) Embezzlement, theft, misappropriation, or conversion of 432 moneys, funds, premiums, credits, or other property of a 433 viatical settlement provider, insurer, insured, viator, 434 insurance policyowner, or other person engaged in the business 435 of viatical settlements or life insurance. 436 (g) Entering into, negotiating, brokering, or otherwise 437 dealing in a viatical settlement contract, the subject of which 438 is a life insurance policy that was obtained based on 439 information that was falsified or concealed for the purpose of 440 defrauding the policy’s issuer, viatical settlement provider, or 441 viator. 442 (h) Facilitating the viator’s change of residency state to 443 avoid the provisions of this act. 444 (i) Facilitating or causing the creation of a trust with a 445 non-Florida or other nonresident entity for the purpose of 446 owning a life insurance policy covering a Florida resident to 447 avoid the provisions of this act. 448 (j) Facilitating or causing the transfer of the ownership 449 of an insurance policy covering a Florida resident to a trust 450 with a situs outside this state or to another nonresident entity 451 to avoid the provisions of this act. 452 (k) Applying for or obtaining a loan that is secured 453 directly or indirectly by an interest in a life insurance policy 454 with intent to defraud, for the purpose of depriving another of 455 property or for pecuniary gain. 456 (l) Attempting to commit, assisting, aiding, or abetting in 457 the commission of, or conspiring to commit, an act or omission 458 specified in this subsection. 459 (9) “Stranger-originated life insurance practice” means an 460 act, practice, arrangement, or agreement to initiate a life 461 insurance policy for the benefit of a third-party investor who, 462 at the time of policy origination, has no insurable interest in 463 the insured. Stranger-originated life insurance practices 464 include, but are not limited to: 465 (a) The purchase of a life insurance policy with resources 466 or guarantees from or through a person who, at the time of such 467 policy’s inception, could not lawfully initiate the policy and 468 the execution of a verbal or written arrangement or agreement to 469 directly or indirectly transfer the ownership of such policy or 470 policy benefits to a third party. 471 (b) The creation of a trust or other entity that has the 472 appearance of an insurable interest in order to initiate 473 policies for investors, in violation of insurable interest laws 474 and the prohibition against wagering on life. 475 Section 4. Subsection (7) of section 626.9924, Florida 476 Statutes, is amended to read: 477 626.9924 Viatical settlement contracts; procedures; 478 rescission.— 479 (7) At any time during the contestable period, within 20 480 days after a viator executes documents necessary to transfer 481 rights under an insurance policy or within 20 days of any 482 agreement, option, promise, or any other form of understanding, 483 express or implied, to viaticate the policy, the provider must 484 give notice to the insurer of the policy that the policy has or 485 will become a viaticated policy. The notice must be accompanied 486 by the documents required by s. 626.99287626.99287(5)(a) in487their entirety. 488 Section 5. Subsection (2) of section 626.99245, Florida 489 Statutes, is amended to read: 490 626.99245 Conflict of regulation of viaticals.— 491 (2) This section does not affect the requirement of ss. 492 626.9911(14)626.9911(12)and 626.9912(1) that a viatical 493 settlement provider doing business from this state must obtain a 494 viatical settlement license from the office. As used in this 495 subsection, the term “doing business from this state” includes 496 effectuating viatical settlement contracts from offices in this 497 state, regardless of the state of residence of the viator. 498 Section 6. Subsection (1) of section 626.99275, Florida 499 Statutes, is amended to read: 500 626.99275 Prohibited practices; penalties.— 501 (1) It is unlawful for aanyperson to: 502 (a)ToKnowingly enter into, broker, or otherwise deal in a 503 viatical settlement contract the subject of which is a life 504 insurance policy, knowing that the policy was obtained by 505 presenting materially false information concerning any fact 506 material to the policy or by concealing, for the purpose of 507 misleading another, information concerning any fact material to 508 the policy, where the viator or the viator’s agent intended to 509 defraud the policy’s issuer. 510 (b)ToKnowingly or with the intent to defraud, for the 511 purpose of depriving another of property or for pecuniary gain, 512 issue or use a pattern of false, misleading, or deceptive life 513 expectancies. 514 (c)ToKnowingly engage in any transaction, practice, or 515 course of business intending thereby to avoid the notice 516 requirements of s. 626.9924(7). 517 (d)ToKnowingly or intentionally facilitate the change of 518 state of residency of a viator to avoid the provisions of this 519 chapter. 520 (e) Knowingly enter into a viatical settlement contract 521 before the application for or issuance of a life insurance 522 policy that is the subject of a viatical settlement contract or 523 during an applicable period specified in s. 626.99287(1) or (2), 524 unless the viator provides a sworn affidavit and accompanying 525 independent evidentiary documentation in accordance with s. 526 626.99287. 527 (f) Engage in a fraudulent viatical settlement act, as 528 defined in s. 626.9911. 529 (g) Knowingly issue, solicit, market, or otherwise promote 530 the purchase of a life insurance policy for the purpose of or 531 with an emphasis on selling the policy to a third party. 532 (h) Engage in a stranger-originated life insurance 533 practice, as defined in s. 626.9911. 534 Section 7. Section 626.99287, Florida Statutes, is amended 535 to read: 536 626.99287 Contestability of viaticated policies.— 537 (1) Except as hereinafter provided, if a viatical 538 settlement contract is entered into within the 2-year period 539 commencing with the date of issuance of the insurance policy or 540 certificate to be acquired, the viatical settlement contract is 541 void and unenforceable by either party. 542 (2) Except as hereinafter provided, if a viatical 543 settlement policy is subject to a loan secured directly or 544 indirectly by an interest in the policy within a 5-year period 545 commencing on the date of issuance of the policy or certificate, 546 the viatical settlement contract is void and unenforceable by 547 either party. 548 (3) Notwithstanding the limitations in subsections (1) and 549 (2)this limitation, such a viatical settlement contract is not 550 void and unenforceable if the viator provides a sworn affidavit 551 and accompanying independent evidentiary documentation 552 certifying to the viatical settlement provider that one or more 553 of the following conditions were met during the periods 554 applicable to the viaticated policy as stated in subsections (1) 555 or (2): 556 (a)(1)The policy was issued upon the owner’s exercise of 557 conversion rights arising out of a group or term policy, if the 558 total time covered under the prior policy is at least 60 months. 559 The time covered under a group policy must be calculated without 560 regard to any change in insurance carriers, provided the 561 coverage has been continuous and under the same group 562 sponsorship.;563 (b)(2)The owner of the policy is a charitable organization 564 exempt from taxation under 26 U.S.C. s. 501(c)(3).;565(3) The owner of the policy is not a natural person;566(4) The viatical settlement contract was entered into567before July 1, 2000;568 (c)(5)The viator certifies by producing independent 569 evidence to the viatical settlement provider that one or more of 570 the following conditions werehave beenmetwithin the 2-year571period: 572(a)1. The viator or insured is terminally or chronically 573 illdiagnosed with an illness or condition that is either:574a. Catastrophic or life threatening; or575b. Requires a course of treatment for a period of at least5763 years of long-term care or home health care;and 5772.the condition was not known to the insured at the time 578 the life insurance contract was entered into;.579 2.(b)The viator’s spouse dies; 580 3.(c)The viator divorces his or her spouse; 581 4.(d)The viator retires from full-time employment; 582 5.(e)The viator becomes physically or mentally disabled 583 and a physician determines that the disability prevents the 584 viator from maintaining full-time employment; 585 6.(f)The owner of the policy was the insured’s employer at 586 the time the policy or certificate was issued and the employment 587 relationship terminated; 588 7.(g)A final order, judgment, or decree is entered by a 589 court of competent jurisdiction, on the application of a 590 creditor of the viator, adjudicating the viator bankrupt or 591 insolvent, or approving a petition seeking reorganization of the 592 viator or appointing a receiver, trustee, or liquidator to all 593 or a substantial part of the viator’s assets; or 594 8.(h)The viator experiences a significant decrease in 595 income which is unexpected by the viator and which impairs his 596 or her reasonable ability to pay the policy premium. 597 (d) The viator entered into a viatical settlement contract 598 more than 2 years after the policy’s issuance date and, with 599 respect to the policy, at all times before the date that is 2 600 years after policy issuance, each of the following conditions is 601 met: 602 1. Policy premiums have been funded exclusively with 603 unencumbered assets, including an interest in the life insurance 604 policy being financed only to the extent of its net cash 605 surrender value, provided by, or fully recourse liability 606 incurred by, the insured; 607 2. There is no agreement or understanding with any other 608 person to guarantee any such liability or to purchase, or stand 609 ready to purchase, the policy, including through an assumption 610 or forgiveness of the loan; and 611 3. Neither the insured or the policy has been evaluated for 612 settlement. 613 614If the viatical settlement provider submits to the insurer a615copy of the viator’s or owner’s certification described above,616then the provider submits a request to the insurer to effect the617transfer of the policy or certificate to the viatical settlement618provider, the viatical settlement agreement shall not be void or619unenforceable by operation of this section. The insurer shall620timely respond to such request. Nothing in this section shall621prohibit an insurer from exercising its right during the622contestability period to contest the validity of any policy on623grounds of fraud.624 Section 8. Section 626.99289, Florida Statutes, is created 625 to read: 626 626.99289 Void and unenforceable contracts, agreements, 627 arrangements, and transactions.—Notwithstanding s. 627.455, a 628 contract, agreement, arrangement, or transaction, including, but 629 not limited to, a financing agreement or any other arrangement 630 or understanding entered into, whether written or verbal, for 631 the furtherance or aid of a stranger-originated life insurance 632 practice is void and unenforceable. 633 Section 9. Section 626.99291, Florida Statutes, is created 634 to read: 635 626.99291 Contestability of life insurance policies. 636 Notwithstanding s. 627.455, a life insurer may contest a life 637 insurance policy if the policy was obtained by a stranger 638 originated life insurance practice, as defined in s. 626.9911. 639 Section 10. Section 626.99292, Florida Statutes, is created 640 to read: 641 626.99292 Notice to insureds.— 642 (1) A life insurer shall provide an individual life 643 insurance policyholder with a statement informing him or her 644 that if he or she is considering making changes in the status of 645 his or her policy, he or she should consult with a licensed 646 insurance or financial advisor. The statement may accompany or 647 be included in notices or mailings otherwise provided to the 648 policyholder. 649 (2) The statement must also advise the policyholder that he 650 or she may contact the office for more information and include a 651 website address or other location or manner by which the 652 policyholder may contact the office. 653 Section 11. Effective January 1, 2019, section 627.744, 654 Florida Statutes, is amended to read: 655 627.744RequiredPreinsurance inspection of private 656 passenger motor vehicles.— 657 (1) A private passenger motor vehicle insurance policy 658 providing physical damage coverage, including collision or 659 comprehensive coverage, may not be issued in this state unless 660 the insurer has inspected the motor vehicle in accordance with 661 this section. 662 (2) This section does not apply: 663 (a) To a policy for a policyholder who has been insured for 664 2 years or longer, without interruption, under a private 665 passenger motor vehicle policy that provides physical damage 666 coverage for any vehicle if the agent of the insurer verifies 667 the previous coverage. 668 (b) To a new, unused motor vehicle purchased or leased from 669 a licensed motor vehicle dealer or leasing company. The insurer 670 may require: 671 1. A bill of sale, buyer’s order, or lease agreement that 672 contains a full description of the motor vehicle; or 673 2. A copy of the title or registration that establishes 674 transfer of ownership from the dealer or leasing company to the 675 customer and a copy of the window sticker. 676 677 For the purposes of this paragraph, the physical damage coverage 678 on the motor vehicle may not be suspended during the term of the 679 policy due to the applicant’s failure to provide or the 680 insurer’s option not to require the documents. However, if the 681 insurer requires a document under this paragraph at the time the 682 policy is issued, payment of a claim may be conditioned upon the 683 receipt by the insurer of the required documents, and no 684 physical damage loss occurring after the effective date of the 685 coverage may be payable until the documents are provided to the 686 insurer. 687 (c) To a temporary substitute motor vehicle. 688 (d) To a motor vehicle which is leased for less than 6 689 months, if the insurer receives the lease or rental agreement 690 containing a description of the leased motor vehicle, including 691 its condition. Payment of a physical damage claim is conditioned 692 upon receipt of the lease or rental agreement. 693 (e) To a vehicle that is 10 years old or older, as 694 determined by reference to the model year. 695 (f) To any renewal policy. 696 (g) To a motor vehicle policy issued in a county with a 697 1988 estimated population of less than 500,000. 698 (h) To any other vehicle or policy exempted by rule of the 699 commission. The commission may base a rule under this paragraph 700 only on a determination that the likelihood of a fraudulent 701 physical damage claim is remote or that the inspection would 702 cause a serious hardship to the insurer or the applicant. 703 (i) When the insurer’s authorized inspection service has no 704 inspection facility either in the municipality in which the 705 automobile is principally garaged or within 10 miles of such 706 municipality. 707 (j) When the insured vehicle is insured under a 708 commercially rated policy that insures five or more vehicles. 709 (k) When an insurance producer is transferring a book of 710 business from one insurer to another. 711 (l) When an individual insured’s coverage is being 712 transferred and initiated by a producer to a new insurer. 713(3) This subsection does not prohibit an insurer from714requiring a preinsurance inspection of any motor vehicle as a715condition of issuance of physical damage coverage.716 (3)(4)The inspection required by this section shall be 717 provided by the insurer or by a person or organization 718 authorized by the insurer. The applicant may be required to pay 719 the cost of the inspection, not to exceed $5. The inspection 720 shall be recorded on a form prescribed by the commission, and 721 the form or a copy shall be retained by the insurer with its 722 policy records for the insured. The insurer shall provide a copy 723 of the form to the insured upon request. Any inspection fee paid 724 directly by the applicant may not be considered part of the 725 premium. However, an insurer that provides the inspection at no 726 cost to the applicant may include the expense of the inspection 727 within a rate filing. 728 (4)(5)The inspection shall include at least the following: 729 (a) Taking a physical imprint of the vehicle identification 730 number of the vehicle or otherwise recording the vehicle 731 identification number in a manner prescribed by the commission. 732 (b) Recording the presence of accessories required by the 733 commission to be recorded. 734 (c) Recording the locations of and a description of 735 existing damage to the vehicle. 736 (5)(6)An insurer may defer an inspection for 30 calendar 737 days following the effective date of coverage for a new policy, 738 but not for a renewal policy, and for additional or replacement 739 vehicles to an existing policy, if an inspection at the time of 740 the request for coverage would create a serious inconvenience 741 for the applicant and such hardship is documented in the 742 insured’s policy record. 743 (6)(7)The commission may, by rule, establish such 744 procedures and notice requirements that it finds necessary to 745 implement this section. 746 (7) Notwithstanding any other provision of this section, an 747 insurer may opt out of the inspection requirements of this 748 section. An insurer opting out of the inspection must file a 749 manual rule with the office indicating that the insurer will not 750 participate in the inspection program under this section. An 751 insurer that files such a manual rule with the office may 752 establish its own preinsurance inspection requirements as a 753 condition to issuing a private passenger motor vehicle insurance 754 policy. The insurer’s preinsurance inspection requirements must 755 be included in the manual rule filed with the office. An insurer 756 opting out of the inspection requirements of this section may 757 not require an applicant to pay for the cost of an inspection. 758(8) The Division of Insurance Fraud of the Department of759Financial Services shall provide a report of data from the760required preinsurance inspection of motor vehicles to the761Governor, the President of the Senate, and the Speaker of the762House of Representatives by December 1, 2016.763(a) The data must include, but need not be limited to:7641. A written estimate of the total cost incurred by765insurers and policyholders in order to comply with the766inspections.7672. A written estimate of the total cost incurred by768insurers to have their motor vehicles inspected.7693. Documentation regarding the total premium savings for770policyholders as a result of the inspections.7714. Documentation of the total number of inspected motor772vehicles that had a preexisting condition.7735. Documentation regarding the potential fraud in motor774vehicle claims incurred within the first 125 days after issuance775of a new policy.7766. Documentation of the total number of referrals of777fraudulent acts to the National Insurance Crime Bureau by778preinsurance inspectors during the past 5 years.779(b) The Legislature may use the report data in determining780the future public necessity for this section.781 Section 12. Effective September 1, 2017, section 641.3915, 782 Florida Statutes, is amended to read: 783 641.3915 Health maintenance organization anti-fraud plans 784 and investigative units.—Each authorized health maintenance 785 organization and applicant for a certificate of authority shall 786 comply with the provisions of ss. 626.989 and 626.9891 as though 787 such organization or applicant were an authorized insurer.For788purposes of this section, the reference to the year 1996 in s.789626.9891 means the year 2000 and the reference to the year 1995790means the year 1999.791 Section 13. Except as otherwise expressly provided in this 792 act, this act shall take effect upon becoming a law.