Bill Text: FL S1620 | 2012 | Regular Session | Comm Sub
Bill Title: Insurance
Spectrum: Slight Partisan Bill (? 2-1)
Status: (Introduced - Dead) 2012-03-08 - Laid on Table, refer to CS/CS/HB 1101 -SJ 1040 [S1620 Detail]
Download: Florida-2012-S1620-Comm_Sub.html
Florida Senate - 2012 CS for CS for SB 1620 By the Committees on Budget Subcommittee on General Government Appropriations; and Banking and Insurance; and Senator Richter 601-04257-12 20121620c2 1 A bill to be entitled 2 An act relating to insurance; amending s. 320.27, 3 F.S.; providing that a salvage motor vehicle dealer is 4 not required to carry certain insurance on vehicles 5 that cannot be legally operated on roads, highways, or 6 streets; amending s. 624.402, F.S.; revising a 7 provision exempting alien insurers from the 8 requirement to obtain a certificate of authority; 9 revising the definition of the term “nonresident”; 10 providing that a life insurance policy or annuity 11 contract may be issued by an insurer domiciled outside 12 the United States under certain conditions; specifying 13 the terms and conditions that must be satisfied before 14 an alien insured may issue a policy or contract; 15 authorizing the Office of Insurance Regulation to 16 conduct an examination of an alien insurer if the 17 office has reason to believe that the insurer is 18 insolvent or is in unsound financial condition; 19 providing that an alien insurer issuing policies or 20 contracts in this state is subject to the Unfair 21 Insurance Trade Practices Act; providing that policies 22 and contracts issued pursuant to the act are not 23 subject to the premium tax; requiring that an 24 application for a life insurance policy or an annuity 25 contract contain certain specified statements to 26 protect consumers; amending s. 624.4625, F.S.; 27 authorizing corporation not for profit self-insurance 28 funds that are required to maintain a continuing 29 program of excess insurance coverage and reserve 30 evaluation to purchase excess insurance from eligible 31 surplus lines insurers or reinsurers; authorizing 32 certain corporation not for profit self-insurance 33 funds to purchase certain group insurance coverage for 34 its members; providing requirements and conditions 35 relating to such purchases; amending s. 624.501, F.S.; 36 conforming a cross-reference; amending s. 624.610, 37 F.S.; revising provisions specifying which insurers 38 are not subject to certain filing requirements 39 relating to reinsurance; amending s. 626.261, F.S.; 40 authorizing the Department of Financial Services to 41 provide examinations in Spanish; amending s. 626.321, 42 F.S.; revising provisions relating to limited licenses 43 for travel insurance; providing that a full-time 44 salaried employee of a licensed general lines agent or 45 a business entity that offers travel planning services 46 may be issued such license under certain 47 circumstances; amending s. 626.7491, F.S.; clarifying 48 the definition of the term “licensed insurer” or 49 “insurer”; creating s. 626.8675, F.S.; providing that 50 provisions relating to insurance adjusters do not 51 apply to individuals who conduct data entry into an 52 automated claims adjustment system for portable 53 electronics insurance claims; amending s. 626.9201, 54 F.S.; providing certain exceptions to the notice of 55 cancellation or nonrenewal requirements; amending s. 56 626.9541, F.S.; adding the practice of knowingly 57 altering property and casualty certificates of 58 insurance to the list of unfair or deceptive acts or 59 practices; amending s. 627.351, F.S.; increasing the 60 amount of surplus required for an association to 61 qualify as a limited apportionment company; requiring 62 the corporation to offer certain types of basic 63 personal lines policies; providing valuation criteria 64 for establishing replacement costs for coverage on a 65 dwelling issued by the corporation; creating s. 66 627.6011, F.S.; providing that mandatory health 67 benefits apply only to certain health benefit plans; 68 amending s. 627.6699, F.S.; revising the definition of 69 “carrier”; amending s. 627.7015, F.S.; revising 70 provisions relating to alternative procedures for the 71 resolution of disputed property insurance claims; 72 amending s. 627.707, F.S.; defining the term “rebate”; 73 amending s. 627.7295, F.S.; revising provisions 74 relating to cancellation for nonpayment of premiums 75 for motor vehicle insurance; amending s. 627.736, 76 F.S.; clarifying provisions relating to the amount of 77 interest on overdue payments for personal injury 78 protection benefits; amending s. 627.7405, F.S.; 79 providing that certain owners or registrants are not 80 liable for an insurers’ right of reimbursement; 81 amending s. 628.901, F.S.; providing definitions; 82 repealing s. 628.903, F.S., relating to the definition 83 of the term “industrial insured captive insurer”; 84 amending s. 628.905, F.S.; expanding the kinds of 85 insurance for which a captive insurer may seek 86 licensure; limiting the risks that certain captive 87 insurers may insure; specifying requirements and 88 conditions relating to a captive insurer’s authority 89 to conduct business; requiring that before licensure 90 certain captive insurers must file or submit to the 91 Office of Insurance Regulation specified information, 92 documents, and statements; requiring a captive 93 insurance company to file specific evidence with the 94 office relating to the financial condition and quality 95 of management and operations of the company; 96 specifying certain fees to be paid by captive 97 insurance companies; authorizing a foreign or alien 98 captive insurance company to become a domestic captive 99 insurance company by complying with specified 100 requirements; authorizing the office to waive any 101 requirements for public hearings relating to the 102 redomestication of an alien captive insurance company; 103 creating s. 628.906, F.S.; requiring biographical 104 affidavits, background investigations, and fingerprint 105 cards for all officers and directors; providing 106 restrictions on officers and directors involved with 107 insolvent insurers under certain conditions; providing 108 restrictions on officers and directors that are found 109 guilty of, or have pleaded guilty or nolo contendere 110 to, any felony or crime involving moral turpitude, 111 including a crime of dishonesty or breach of trust; 112 amending s. 628.907, F.S.; revising capitalization 113 requirements for specified captive insurance 114 companies; requiring capital of specified captive 115 insurance companies to be held in certain forms; 116 requiring contributions to captive insurance companies 117 that are stock insurer corporations to be in a certain 118 form; authorizing the office to issue a captive 119 insurance company license conditioned upon certain 120 evidence relating to possession of specified capital; 121 authorizing revocation of a conditional license under 122 certain circumstances; authorizing the office to 123 prescribe certain additional capital and net asset 124 requirements; requiring such additional requirements 125 relating to capital and net assets to be held in 126 specified forms; requiring dividends or distributions 127 of capital or surplus to meet certain conditions and 128 be approved by the office; requiring certain 129 irrevocable letters of credit to meet certain 130 standards; creating s. 628.908, F.S.; prohibiting the 131 issuance of a license to specified captive insurance 132 companies unless such companies possess and maintain 133 certain levels of unimpaired surplus; authorizing the 134 office to condition issuance of a captive insurance 135 company license upon the provision of certain evidence 136 relating to the possession of a minimum amount of 137 unimpaired surplus; authorizing revocation of a 138 conditional license under certain circumstances; 139 requiring dividends or distributions of capital or 140 surplus to meet certain conditions and be approved by 141 the office; requiring certain irrevocable letters of 142 credit to meet certain standards; amending s. 628.909, 143 F.S.; providing for applicability of certain statutory 144 provisions to specified captive insurers; creating s. 145 628.910, F.S.; providing requirements, options, and 146 conditions relating to how a captive insurance company 147 may be incorporated or organized as a business; 148 amending s. 628.911, F.S.; providing reporting 149 requirements for specified captive insurance companies 150 and captive reinsurance companies; creating s. 151 628.912, F.S.; authorizing a captive reinsurance 152 company to discount specified losses subject to 153 certain conditions; amending s. 628.913, F.S.; 154 authorizing a captive reinsurance company to apply to 155 the office for licensure to write reinsurance covering 156 property and casualty insurance or reinsurance 157 contracts; authorizing the office to allow a captive 158 reinsurance company to write reinsurance contracts 159 covering risks in any state; specifying that a captive 160 reinsurance company is subject to specified 161 requirements and must meet specified conditions in 162 order to conduct business in this state; creating s. 163 628.914, F.S.; specifying requirements and conditions 164 relating to the capitalization or maintenance of 165 reserves by a captive reinsurance company; creating s. 166 628.9141, F.S.; specifying requirements and conditions 167 relating to the incorporation of a captive reinsurance 168 company; creating s. 628.9142, F.S.; providing for the 169 effect on reserves of certain actions taken by a 170 captive insurance company relating to providing 171 reinsurance for specified risks; creating s. 628.918, 172 F.S.; requiring a specified percentage of a captive 173 reinsurance company’s assets to be managed by an asset 174 manager domiciled in this state; creating s. 628.919, 175 F.S.; authorizing the Financial Services Commission to 176 adopt rules establishing certain standards for control 177 of an unaffiliated business by a parent or affiliated 178 company relating to coverage by a pure captive 179 insurance company; creating s. 628.920, F.S.; 180 requiring that a licensed captive insurance company 181 must be considered for issuance of a certificate of 182 authority as an insurer under certain circumstances; 183 amending s. 631.271, F.S.; providing for the order of 184 distribution for interest on allowed claims; providing 185 that if CS for SB 578 or similar legislation becomes 186 law, a surplus lines insurer removing policies from 187 the Citizens Property Insurance Corporation must 188 maintain a certain financial rating; providing 189 effective dates. 190 191 Be It Enacted by the Legislature of the State of Florida: 192 193 Section 1. Subsection (3) of section 320.27, Florida 194 Statutes, is amended to read: 195 320.27 Motor vehicle dealers.— 196 (3) APPLICATION AND FEE.—The application for the license 197 shall be in such form as may be prescribed by the department and 198 shall be subject to such rules with respect thereto as may be so 199 prescribed by it. Such application shall be verified by oath or 200 affirmation and shall contain a full statement of the name and 201 birth date of the person or persons applying therefor; the name 202 of the firm or copartnership, with the names and places of 203 residence of all members thereof, if such applicant is a firm or 204 copartnership; the names and places of residence of the 205 principal officers, if the applicant is a body corporate or 206 other artificial body; the name of the state under whose laws 207 the corporation is organized; the present and former place or 208 places of residence of the applicant; and prior business in 209 which the applicant has been engaged and the location thereof. 210 Such application shall describe the exact location of the place 211 of business and shall state whether the place of business is 212 owned by the applicant and when acquired, or, if leased, a true 213 copy of the lease shall be attached to the application. The 214 applicant shall certify that the location provides an adequately 215 equipped office and is not a residence; that the location 216 affords sufficient unoccupied space upon and within which 217 adequately to store all motor vehicles offered and displayed for 218 sale; and that the location is a suitable place where the 219 applicant can in good faith carry on such business and keep and 220 maintain books, records, and files necessary to conduct such 221 business, which will be available at all reasonable hours to 222 inspection by the department or any of its inspectors or other 223 employees. The applicant shall certify that the business of a 224 motor vehicle dealer is the principal business which shall be 225 conducted at that location. Such application shall contain a 226 statement that the applicant is either franchised by a 227 manufacturer of motor vehicles, in which case the name of each 228 motor vehicle that the applicant is franchised to sell shall be 229 included, or an independent (nonfranchised) motor vehicle 230 dealer. Such application shall contain such other relevant 231 information as may be required by the department, including 232 evidence that the applicant is insured under a garage liability 233 insurance policy or a general liability insurance policy coupled 234 with a business automobile policy, which shall include, at a 235 minimum, $25,000 combined single-limit liability coverage 236 including bodily injury and property damage protection and 237 $10,000 personal injury protection. However, a salvage motor 238 vehicle dealer as defined in subparagraph (1)(c)5. is exempt 239 from the requirements for garage liability insurance and 240 personal injury protection insurance on those vehicles that 241 cannot be legally operated on roads, highways, or streets in 242 this state. Franchise dealers must submit a garage liability 243 insurance policy, and all other dealers must submit a garage 244 liability insurance policy or a general liability insurance 245 policy coupled with a business automobile policy. Such policy 246 shall be for the license period, and evidence of a new or 247 continued policy shall be delivered to the department at the 248 beginning of each license period. Upon making initial 249 application, the applicant shall pay to the department a fee of 250 $300 in addition to any other fees now required by law; upon 251 making a subsequent renewal application, the applicant shall pay 252 to the department a fee of $75 in addition to any other fees now 253 required by law. Upon making an application for a change of 254 location, the person shall pay a fee of $50 in addition to any 255 other fees now required by law. The department shall, in the 256 case of every application for initial licensure, verify whether 257 certain facts set forth in the application are true. Each 258 applicant, general partner in the case of a partnership, or 259 corporate officer and director in the case of a corporate 260 applicant, must file a set of fingerprints with the department 261 for the purpose of determining any prior criminal record or any 262 outstanding warrants. The department shall submit the 263 fingerprints to the Department of Law Enforcement for state 264 processing and forwarding to the Federal Bureau of Investigation 265 for federal processing. The actual cost of state and federal 266 processing shall be borne by the applicant and is in addition to 267 the fee for licensure. The department may issue a license to an 268 applicant pending the results of the fingerprint investigation, 269 which license is fully revocable if the department subsequently 270 determines that any facts set forth in the application are not 271 true or correctly represented. 272 Section 2. Subsection (8) of section 624.402, Florida 273 Statutes, is amended, and subsection (9) is added to that 274 section, to read: 275 624.402 Exceptions, certificate of authority required.—A 276 certificate of authority shall not be required of an insurer 277 with respect to: 278 (8)(a) An insurer domiciled outside the United States 279 covering only persons who, at the time of issuance or renewal, 280 are nonresidents of the United States if: 281 1. The insureror any affiliated person as defined in s.282624.04under common ownership or control with the insurerdoes 283 not solicit, sell, or accept application for any insurance 284 policy or contract to be delivered or issued for delivery to any 285 person in any state; 286 2. The insurer registers with the office via a letter of 287 notification upon commencing business from this state; 288 3. The insurer provides the following information, in 289 English, to the office annually by March 1: 290 a. The name of the insurer; the country of domicile; the 291 address of the insurer’s principal office and office in this 292 state; the names of the owners of the insurer and their 293 percentage of ownership; the names of the officers and directors 294 of the insurer; the name, e-mail, and telephone number of a 295 contact person for the insurer; and the number of individuals 296 who are employed by the insurer or its affiliates in this state; 297 b. The lines of insurance and types of products offered by 298 the insurer; 299 c. A statement from the applicable regulatory body of the 300 insurer’s domicile certifying that the insurer is licensed or 301 registered for those lines of insurance and types of products in 302 that domicile; and 303 d. A copy of the filings required by the applicable 304 regulatory body of the insurer’s country of domicile in that 305 country’s official language or in English, if available; 306 4. All certificates, policies, or contracts issued in this 307 state showing coverage under the insurer’s policy include the 308 following statement in a contrasting color and at least 10-point 309 type: “The policy providing your coverage and the insurer 310 providing this policy have not been approved by the Florida 311 Office of Insurance Regulation”; and 312 5. IfIn the eventthe insurer ceases to do business from 313 this state, the insurer will provide written notification to the 314 office within 30 days after cessation. 315 (b) As used inFor purposes ofthis subsection, the term 316 “nonresident” means a trust or other entity organized and 317 domiciled under the laws of a country other than the United 318 States or a person who resides in and maintains a physical place 319 of domicile in a country other than the United States, which he 320 or she recognizes as and intends to maintain as his or her 321 permanent home. A nonresident does not include an unauthorized 322 immigrant present in the United States. Notwithstanding any 323 other provision of law, it is conclusively presumed, for 324 purposes of this subsection, that a person is a resident of the 325 United States if such person has: 326 1. Had his or her principal place of domicile in the United 327 States for 180 days or more in the 365 days beforeprior to328 issuance or renewal of the policy; 329 2. Registered to vote in any state; 330 3. Made a statement of domicile in any state; or 331 4. Filed for homestead tax exemption on property in any 332 state. 333 (c) Subject to the limitations provided in this subsection, 334 services, including those listed in s. 624.10, may be provided 335 by the insurer or an affiliated person as defined in s. 624.04 336 under common ownership or control with the insurer. 337 (d) An alien insurer transacting insurance in this state 338 without complying with this subsection isshallbe in violation 339 of this chapter and subject to the penalties provided in s. 340 624.15. 341 (9)(a) Life insurance policies or annuity contracts may be 342 solicited, sold, or issued in this state by an insurer domiciled 343 outside the United States covering only persons who, at the time 344 of issuance, are nonresidents of the United States if: 345 1. The insurer is an authorized insurer in the insurer’s 346 country of domicile of the kinds of insurance proposed to be 347 offered and has been an authorized insurer for at least the 348 immediately preceding 3 years, or is the wholly owned subsidiary 349 of an authorized insurer or the wholly owned subsidiary of an 350 already eligible authorized insurer for the kinds of insurance 351 proposed for at least the immediately preceding 3 years. The 352 office may waive the 3-year requirement if the insurer has 353 operated successfully for at least the immediately preceding 354 year and has capital and surplus of at least $25 million. 355 2. The insurer furnishes the office with an authenticated 356 copy of its current annual financial statement, in English, with 357 all monetary values therein expressed in United States dollars, 358 at an exchange rate that is current at the time and shown in the 359 statement, in the case of statements originally made in the 360 currencies of other countries, and with such additional 361 information relative to the insurer as the office may request. 362 3. The insurer has and maintains surplus as to 363 policyholders of at least $15 million. Such surplus must be 364 represented by investments consisting of eligible investments 365 for like funds of like domestic insurers under part II of 366 chapter 625. However, such surplus may be represented by 367 investments permitted by the domestic regulator of an alien 368 insurance company if the investments are substantially similar 369 in terms of quality, liquidity, and security to eligible 370 investments for like funds of like domestic insurers under part 371 II of chapter 625. 372 4. The insurer has a good reputation for providing service 373 to its policyholders and for the payment of losses and claims. 374 5. To maintain eligibility, the insurer furnishes the 375 office within the time period specified in s. 624.424(1) an 376 authenticated copy of its current annual and quarterly financial 377 statements, in English, with all monetary values therein 378 expressed in United States dollars, at an exchange rate that is 379 current at the time and shown in the statement, in the case of 380 statements originally made in the currencies of other countries, 381 and with such additional information relative to the insurer as 382 the office may request. 383 6. An insurer determined eligible under this subsection 384 agrees to make its books and records pertaining to its 385 operations in this state available for inspection during normal 386 business hours upon request of the office. 387 7. The insurer notifies the applicant in clear and 388 conspicuous language: 389 a. Of the date of the insurer’s organization. 390 b. Of the identity of and rating assigned by each 391 recognized insurance company rating organization that has rated 392 the insurer or, if applicable, that the insurer is unrated. 393 c. That the insurer does not hold a certificate of 394 authority issued in this state and that the office does not 395 exercise regulatory oversight over the insurer. 396 d. Of the identity and address of the regulatory authority 397 exercising oversight of the insurer. This sub-subparagraph does 398 not impose upon the office any duty or responsibility to 399 determine the actual financial condition or claims practices of 400 any unauthorized insurer, and the status of eligibility, if 401 granted by the office, indicates only that the insurer appears 402 to be financially sound and to have satisfactory claims 403 practices and that the office has no credible evidence to the 404 contrary. 405 (b) If the office has reason to believe that an insurer 406 issuing policies or contracts pursuant to this subsection is 407 insolvent or is in unsound financial condition, does not make 408 reasonable prompt payment of benefits, or is no longer eligible 409 under the conditions specified in this subsection, the office 410 may conduct an examination or investigation in accordance with 411 s. 624.316, s. 624.3161, or s. 624.320 and, if the findings of 412 the examination or investigation warrant, may withdraw the 413 eligibility of the insurer to issue policies or contracts 414 pursuant to this subsection without having a certificate of 415 authority issued by the office. 416 (c) This subsection does not provide an exception to the 417 agent licensure requirements of chapter 626. An insurer issuing 418 policies or contracts pursuant to this subsection shall appoint 419 the agents that the insurer uses to sell such policies or 420 contracts as provided in chapter 626. 421 (d) An insurer issuing policies or contracts pursuant to 422 this subsection is subject to part IX of chapter 626, the Unfair 423 Insurance Trade Practices Act, and the office may take such 424 actions against the insurer for a violation as are provided in 425 that part. 426 (e) Policies and contracts issued pursuant to this 427 subsection are not subject to the premium tax specified in s. 428 624.509. 429 (f) Applications for life insurance coverage offered under 430 this subsection must contain the following statement, in 431 contrasting color and at least 12-point type, on the same page 432 as the applicant’s signature: 433 434 This policy is primarily governed by the laws of a 435 foreign country. As a result, all of the rating and 436 underwriting laws applicable to policies filed in this 437 state do not apply to this coverage, which may result 438 in your premiums being higher than would be 439 permissible under a Florida-approved policy. A 440 purchase of individual life insurance should be 441 considered carefully, as future medical conditions may 442 make it impossible to qualify for another individual 443 life policy. If the insurer issuing your policy 444 becomes insolvent, this policy is not covered by the 445 Florida Life and Health Insurance Guaranty 446 Association. For information concerning individual 447 life coverage under a Florida-approved policy, consult 448 your agent or the Florida Department of Financial 449 Services. 450 451 (g) All life insurance policies and annuity contracts 452 issued pursuant to this subsection must contain on the first 453 page of the policy or contract the following statement, in 454 contrasting color and at least 10-point type: 455 456 The benefits of the policy providing your coverage are 457 governed primarily by the law of a country other than 458 the United States. 459 460 (h) All single-premium life insurance policies and single 461 premium annuity contracts issued to persons who are not 462 residents of the United States and are not nonresidents 463 illegally residing in the United States are subject to chapter 464 896. 465 (i) As used in this subsection, the term “nonresident” has 466 the same meaning as provided in subsection (8). 467 (j) An alien insurer transacting insurance in this state 468 without complying with this subsection is in violation of this 469 chapter and subject to the penalties provided in s. 624.15 and 470 must pay the fine required for each violation as prescribed by 471 s. 626.910. 472 Section 3. Paragraph (e) of subsection (1) of section 473 624.4625, Florida Statutes, is amended, present subsection (5) 474 of that section is renumbered as subsection (6), and a new 475 subsection (5) is added to that section, to read: 476 624.4625 Corporation not for profit self-insurance funds.— 477 (1) Notwithstanding any other provision of law, any two or 478 more corporations not for profit located in and organized under 479 the laws of this state may form a self-insurance fund for the 480 purpose of pooling and spreading liabilities of its group 481 members in any one or combination of property or casualty risk, 482 provided the corporation not for profit self-insurance fund that 483 is created: 484 (e) Maintains a continuing program of excess insurance 485 coverage and reserve evaluation to protect the financial 486 stability of the fund in an amount and manner determined by a 487 qualified actuary. At a minimum, this program must: 488 1. Purchase excess insurance from authorized insurance 489 carriers or eligible surplus lines insurers or reinsurers. 490 2. Retain a per-loss occurrence that does not exceed 491 $350,000. 492 (5) A corporation not for profit self-insurance fund formed 493 under this section, which is hereby deemed to be an association 494 in compliance with s. 627.654, may purchase for its members, on 495 a group basis, any one or more policies of health, accident, or 496 hospitalization coverage, if: 497 (a) An insurance policy purchased to provide coverage under 498 this subsection is purchased only from an authorized insurance 499 company that participates in the Florida Life and Health 500 Insurance Guaranty Association and the policy forms have been 501 filed with and approved by the office; 502 (b) The corporation not for profit self-insurance fund 503 retains no risk related to coverage provided under this 504 subsection; 505 (c) An insurance policy purchased to provide coverage under 506 this subsection is not subject to the restrictions relating to 507 the premium rates for small employer groups under chapter 627; 508 and 509 (d) The premium paid for an insurance policy purchased 510 pursuant to paragraph (a) does not count toward the $5 million 511 requirement in paragraph (1)(a). 512 513 An individual not-for-profit entity participating as a member of 514 the association for the purchase of a master health, accident, 515 or hospitalization policy by the association under this 516 subsection may retain its individual insurance agent and the 517 agent shall be deemed an additional agent of record for the 518 master policy issued to the association. 519 Section 4. Paragraph (b) of subsection (9) of section 520 624.501, Florida Statutes, is amended to read: 521 624.501 Filing, license, appointment, and miscellaneous 522 fees.—The department, commission, or office, as appropriate, 523 shall collect in advance, and persons so served shall pay to it 524 in advance, fees, licenses, and miscellaneous charges as 525 follows: 526 (9) 527 (b) For all limited appointments as agent, as providedfor528 in s. 626.321(1)(c) and (d)626.321(1)(d), the agent’s original 529 appointment and biennial renewal or continuation thereof for 530 each insurer isshall beequal to the number of offices, branch 531 offices, or places of business covered by the license multiplied 532 by the fees set forth in paragraph (a). 533 Section 5. Paragraph (c) of subsection (11) of section 534 624.610, Florida Statutes, is amended to read: 535 624.610 Reinsurance.— 536 (11) 537 (c) This subsection applies to cessions of directly written 538 risk or loss. This subsection does not apply to contracts of 539 facultative reinsurance or to any ceding insurer that has awith540 surplus as to policyholders whichthatexceeds $100 million as 541 of the immediately preceding December 31. AAdditionally, any542 ceding insurer otherwise subject to this section which hadwith543 less than $500,000 in direct premiums written in this state 544 during the preceding calendar year and no more than $250,000 in 545 direct premiums written in this state during the preceding 546 calendar quarter, and which had feweror with lessthan 1,000 547 policyholders at the end of the preceding calendar year, is 548 exempt fromthe requirements ofthis subsection.However, any549ceding insurer otherwise subject to this section with more than550$250,000 in direct premiums written in this state during the551preceding calendar quarter is not exempt from the requirements552of this subsection.553 Section 6. Subsection (5) is added to section 626.261, 554 Florida Statutes, to read: 555 626.261 Conduct of examination.— 556 (5) The department may provide licensure examinations in 557 Spanish. Applicants requesting examination or reexamination in 558 Spanish must bear the full cost of the department’s development, 559 preparation, administration, grading, and evaluation of the 560 Spanish-language examination. When determining whether it is in 561 the public interest to allow the examination to be translated 562 into and administered in Spanish, the department shall consider 563 the percentage of the population who speak Spanish. 564 Section 7. Paragraph (c) of subsection (1) of section 565 626.321, Florida Statutes, is amended to read: 566 626.321 Limited licenses.— 567 (1) The department shall issue to a qualified individual, 568 or a qualified individual or entity under paragraphs (c), (d), 569 (e), and (i), a license as agent authorized to transact a 570 limited class of business in any of the following categories: 571 (c) Travel insurance.—License covering only policies and 572 certificates of travel insurance, which are subject to review by 573 the officeunder s.624.605(1)(q). Policies and certificates of 574 travel insurance may provide coverage for risks incidental to 575 travel, planned travel, or accommodations while traveling, 576 including, but not limited to, accidental death and 577 dismemberment of a traveler; trip or event cancellation, 578 interruption, or delay; loss of or damage to personal effects or 579 travel documents; damages to travel accommodations; baggage 580 delay; emergency medical travel or evacuation of a traveler; or 581 medical, surgical, and hospital expenses related to an illness 582 or emergency of a traveler.AnySuch policy or certificate may 583 be issued for terms longer than 9060days, buteach policy or584certificate, other than a policy or certificate providing 585 coverage for air ambulatory services only, each policy or 586 certificate must be limited to coverage for travel or use of 587 accommodations of no longer than 9060days. The license may be 588 issued only: 589 1. To a full-time salaried employee of a common carrier or 590 a full-time salaried employee or owner of a transportation 591 ticket agency and may authorize the sale of such ticket policies 592 only in connection with the sale of transportation tickets, or 593 to the full-time salaried employee of such an agent.NoSuch 594 policy may notshallbe fora duration ofmore than 48 hours or 595 more thanforthe duration of a specified one-way trip or round 596 trip. 597 2. To an entity or individual that is: 598 a. The developer of a timeshare plan that is the subject of 599 an approved public offering statement under chapter 721; 600 b. An exchange company operating an exchange program 601 approved under chapter 721; 602 c. A managing entity operating a timeshare plan approved 603 under chapter 721; 604 d. A seller of travel as defined in chapter 559; or 605 e. A subsidiary or affiliate of any of the entities 606 described in sub-subparagraphs a.-d. 607 3. To a full-time salaried employee of a licensed general 608 lines agent or to a business entity that offers travel planning 609 services if insurance sales activities authorized by the license 610 are in connection with, and incidental to, travel. 611 a. A license issued to a business entity that offers travel 612 planning services must encompass each office, branch office, or 613 place of business making use of the entity’s business name in 614 order to offer, solicit, and sell insurance pursuant to this 615 paragraph. 616 b. The application for licensure must list the name, 617 address, and phone number for each office, branch office, or 618 place of business that is to be covered by the license. The 619 licensee shall notify the department of the name, address, and 620 phone number of any new location that is to be covered by the 621 license before the new office, branch office, or place of 622 business engages in the sale of insurance pursuant to this 623 paragraph. The licensee shall notify the department within 30 624 days after the closing or terminating of an office, branch 625 office, or place of business. Upon receipt of the notice, the 626 department shall delete the office, branch office, or place of 627 business from the license. 628 c. A licensed and appointed entity is directly responsible 629 and accountable for all acts of the licensee’s employees and 630 parties with whom the licensee has entered into a contractual 631 agreement to offer travel insurance. 632 633 A licensee shall require each individualemployeewho offers 634 policies or certificates under subparagraph 2. or subparagraph 635 3.this subparagraphto receive initial training from a general 636 lines agent or an insurer authorized under chapter 624 to 637 transact insurance within this state. For an entity applying for 638 a license as a travel insurance agent, the fingerprinting 639 requirement of this section applies only to the president, 640 secretary, and treasurer and to any other officer or person who 641 directs or controls the travel insurance operations of the 642 entity. 643 Section 8. Effective upon this act becoming a law, 644 paragraph (e) of subsection (2) of section 626.7491, Florida 645 Statutes, is amended to read: 646 626.7491 Business transacted with producer controlled 647 property and casualty insurer.— 648 (2) DEFINITIONS.—As used in this section: 649 (e) “Licensed insurer” or “insurer” means any person, firm, 650 association, or corporation licensed to transact a property or 651 casualty insurance business in this state. The following are not 652 licensed insurers for the purposes of this section: 653 1. Any risk retention group as defined in: 654 a. The Superfund Amendments Reauthorization Act of 1986, 655 Pub. L. No. 99-499, 100 Stat. 1613 (1986); 656 b. The Risk Retention Act, 15 U.S.C. ss. 3901 et seq. (1982 657 and Supp. 1986); or 658 c. Section 627.942(9). 659 2. Any residual market pool or joint underwriting authority 660 or association; and 661 3. Any captive insurance companyinsureras defined in s. 662 628.901. 663 Section 9. Effective January 1, 2013, section 626.8675, 664 Florida Statutes, is created to read: 665 626.8675 Portable electronics insurance claims employee 666 exemption.— 667 (1) This part does not apply to individuals who collect 668 claims information from, or furnish claims information to, 669 insureds or claimants, and who conduct data entry, including 670 entering data into an automated claims adjudication system, if 671 such individuals are employees of a business entity licensed 672 under this chapter, or its affiliate, where up to 25 such 673 individuals are under the supervision of a licensed independent 674 adjuster or licensed agent who is exempt from licensure pursuant 675 to s. 626.862. For purposes of this section, “automated claims 676 adjudication system” means a preprogrammed computer system 677 designed for the collection, data entry, calculation, and final 678 resolution of portable electronics insurance claims that: 679 (a) May be used only by a licensed independent adjuster, 680 licensed agent, or supervised individual operating pursuant to 681 this section; 682 (b) Must comply with all claims payment requirements of the 683 insurance code; and 684 (c) Must be certified as compliant with this section by a 685 licensed independent adjuster who is an officer of a licensed 686 business entity under this chapter. 687 (2) Notwithstanding any other provision of law, a resident 688 of Canada may not be licensed as a nonresident independent 689 adjuster for purposes of adjusting portable electronics 690 insurance claims unless that person has successfully obtained an 691 adjuster license in another state. 692 Section 10. Section 626.9201, Florida Statutes, is amended 693 to read: 694 626.9201 Notice of cancellation or nonrenewal.— 695 (1) An insurer issuing a policy providing coverage for 696 property, casualty, surety, or marine insurance mustshallgive 697 the named insured at least 45 days’ advance written notice of 698 nonrenewal. If the policy is not to be renewed, the written 699 notice shall state the reasonor reasonsas to why the policy is 700 not to be renewed. This subsection does not apply if: 701 (a) If the insurer has manifested its willingness to renew, 702 and the offer is not rescinded before the expiration of the 703 policy; or 704 (b) If a notice of cancellation for nonpayment of premium 705 is provided under subsection (2). 706 (2) An insurer issuing a policy providing coverage for 707 property, casualty, surety, or marine insurance mustshallgive 708 the named insured written notice of cancellation or termination 709 other than nonrenewal at least 45 days beforeprior tothe 710 effective date of the cancellation or termination, including in 711 the written notice the reasonor reasonsfor the cancellation or 712 termination, except that: 713 (a) IfWhencancellation is for nonpayment of premium,at714least 10 days’written notice of cancellation accompanied by the 715 reason for cancellation musttherefor shallbe given at least 10 716 days before the cancellation. As used in this paragraph, the 717 term “nonpayment of premium” means the failure of the named 718 insured to discharge when due any of his or her obligations in 719 connection with the payment of premiums on a policy or an 720 installment of such a premium, whether the premium or 721 installment is payable directly to the insurer or its agent or 722 indirectly under aanyplan for financing premiums or extension 723 of credit or the failure of the named insured to maintain 724 membership in an organization if such membership is a condition 725 precedent to insurance coverage. The term also includes the 726 failure of a financial institution to honor the check of an 727 applicant for insurance which was delivered to a licensed agent 728 for payment of a premium, even if the agent previously delivered 729 or transferred the premium to the insurer. If a correctly 730 dishonored check represents payment of the initial premium, the 731 contract and all contractual obligations are void ab initio 732 unless the nonpayment is cured within the earlier of 5 days 733 after actual notice by certified mail is received by the 734 applicant or 15 days after notice is sent to the applicant by 735 certified mail or registered mail, and, if the contract is void, 736 any premium received by the insurer from a third party shall be 737 refunded to that party in full; and 738 (b) IfWhen suchcancellation or termination occurs during 739 the first 90 days during which the insurance is in force and if 740 the insurance is canceled or terminated for reasons other than 741 nonpayment,at least 20 days’written notice of cancellation or 742 termination accompanied by the reason for cancellation or 743 termination musttherefor shallbe given at least 20 days before 744 cancellation or termination, except ifwherethere has been a 745 material misstatement or misrepresentation or failure to comply 746 with the underwriting requirements established by the insurer. 747 (3) If an insurer fails to provide the45-day or 20-day748 written notice required under this section, the coverage 749 provided to the named insured remainsshall remainin effect 750 until 45 days after the notice is given or until the effective 751 date of replacement coverage obtained by the named insured, 752 whichever occurs first. The premium for the coverage remains 753shall remainthe same during any such extension period. 754 Section 11. Paragraph (a) of subsection (1) of section 755 626.9541, Florida Statutes, is amended to read: 756 626.9541 Unfair methods of competition and unfair or 757 deceptive acts or practices defined.— 758 (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE 759 ACTS.—The following are defined as unfair methods of competition 760 and unfair or deceptive acts or practices: 761 (a) Misrepresentations and false advertising of insurance 762 policies.—Knowingly making, issuing, circulating, or causing to 763 be made, issued, or circulated, any estimate, illustration, 764 circular, statement, sales presentation, omission,or765 comparison, or property and casualty certificate of insurance 766 altered after being issued which: 767 1. Misrepresents the benefits, advantages, conditions, or 768 terms of any insurance policy. 769 2. Misrepresents the dividends or share of the surplus to 770 be received on any insurance policy. 771 3. Makes any false or misleading statements as to the 772 dividends or share of surplus previously paid on any insurance 773 policy. 774 4. Is misleading, or is a misrepresentation, as to the 775 financial condition of any person or as to the legal reserve 776 system upon which any life insurer operates. 777 5. Uses any name or title of any insurance policy or class 778 of insurance policies misrepresenting the true nature thereof. 779 6. Is a misrepresentation for the purpose of inducing, or 780 tending to induce, the lapse, forfeiture, exchange, conversion, 781 or surrender of any insurance policy. 782 7. Is a misrepresentation for the purpose of effecting a 783 pledge or assignment of, or effecting a loan against, any 784 insurance policy. 785 8. Misrepresents any insurance policy as being shares of 786 stock or misrepresents ownership interest in the company. 787 9. Uses any advertisement that would mislead or otherwise 788 cause a reasonable person to believe mistakenly that the state 789 or the Federal Government is responsible for the insurance sales 790 activities of any person or stands behind any person’s credit or 791 that any person, the state, or the Federal Government guarantees 792 any returns on insurance products or is a source of payment of 793 any insurance obligation of or sold by any person. 794 Section 12. Paragraph (b) of subsection (2) and paragraph 795 (c) of subsection (6) of section 627.351, Florida Statutes, are 796 amended, and paragraph (ff) is added to subsection (6) of that 797 section, to read: 798 627.351 Insurance risk apportionment plans.— 799 (2) WINDSTORM INSURANCE RISK APPORTIONMENT.— 800 (b) The department shall require all insurers holding a 801 certificate of authority to transact property insurance on a 802 direct basis in this state, other than joint underwriting 803 associations and other entities formed pursuant to this section, 804 to provide windstorm coverage to applicants from areas 805 determined to be eligible pursuant to paragraph (c) who in good 806 faith are entitled to, but are unable to procure, such coverage 807 through ordinary means; or it shall adopt a reasonable plan or 808 plans for the equitable apportionment or sharing among such 809 insurers of windstorm coverage, which may include formation of 810 an association for this purpose. As used in this subsection, the 811 term “property insurance” means insurance on real or personal 812 property, as defined in s. 624.604, including insurance for 813 fire, industrial fire, allied lines, farmowners multiperil, 814 homeowners’ multiperil, commercial multiperil, and mobile homes, 815 and including liability coverages on all such insurance, but 816 excluding inland marine as defined in s. 624.607(3) and 817 excluding vehicle insurance as defined in s. 624.605(1)(a) other 818 than insurance on mobile homes used as permanent dwellings. The 819 department shall adopt rules that provide a formula for the 820 recovery and repayment of any deferred assessments. 821 1. For the purpose of this section, properties eligible for 822 such windstorm coverage are defined as dwellings, buildings, and 823 other structures, including mobile homes which are used as 824 dwellings and which are tied down in compliance with mobile home 825 tie-down requirements prescribed by the Department of Highway 826 Safety and Motor Vehicles pursuant to s. 320.8325, and the 827 contents of all such properties. An applicant or policyholder is 828 eligible for coverage only if an offer of coverage cannot be 829 obtained by or for the applicant or policyholder from an 830 admitted insurer at approved rates. 831 2.a.(I) All insurers required to be members of such 832 association shall participate in its writings, expenses, and 833 losses. Surplus of the association shall be retained for the 834 payment of claims and shall not be distributed to the member 835 insurers. Such participation by member insurers shall be in the 836 proportion that the net direct premiums of each member insurer 837 written for property insurance in this state during the 838 preceding calendar year bear to the aggregate net direct 839 premiums for property insurance of all member insurers, as 840 reduced by any credits for voluntary writings, in this state 841 during the preceding calendar year. For the purposes of this 842 subsection, the term “net direct premiums” means direct written 843 premiums for property insurance, reduced by premium for 844 liability coverage and for the following if included in allied 845 lines: rain and hail on growing crops; livestock; association 846 direct premiums booked; National Flood Insurance Program direct 847 premiums; and similar deductions specifically authorized by the 848 plan of operation and approved by the department. A member’s 849 participation shall begin on the first day of the calendar year 850 following the year in which it is issued a certificate of 851 authority to transact property insurance in the state and shall 852 terminate 1 year after the end of the calendar year during which 853 it no longer holds a certificate of authority to transact 854 property insurance in the state. The commissioner, after review 855 of annual statements, other reports, and any other statistics 856 that the commissioner deems necessary, shall certify to the 857 association the aggregate direct premiums written for property 858 insurance in this state by all member insurers. 859 (II) Effective July 1, 2002, the association shall operate 860 subject to the supervision and approval of a board of governors 861 who are the same individuals that have been appointed by the 862 Treasurer to serve on the board of governors of the Citizens 863 Property Insurance Corporation. 864 (III) The plan of operation shall provide a formula whereby 865 a company voluntarily providing windstorm coverage in affected 866 areas will be relieved wholly or partially from apportionment of 867 a regular assessment pursuant to sub-sub-subparagraph d.(I) or 868 sub-sub-subparagraph d.(II). 869 (IV) A company which is a member of a group of companies 870 under common management may elect to have its credits applied on 871 a group basis, and any company or group may elect to have its 872 credits applied to any other company or group. 873 (V) There shall be no credits or relief from apportionment 874 to a company for emergency assessments collected from its 875 policyholders under sub-sub-subparagraph d.(III). 876 (VI) The plan of operation may also provide for the award 877 of credits, for a period not to exceed 3 years, from a regular 878 assessment pursuant to sub-sub-subparagraph d.(I) or sub-sub 879 subparagraph d.(II) as an incentive for taking policies out of 880 the Residential Property and Casualty Joint Underwriting 881 Association. In order to qualify for the exemption under this 882 sub-sub-subparagraph, the take-out plan must provide that at 883 least 40 percent of the policies removed from the Residential 884 Property and Casualty Joint Underwriting Association cover risks 885 located in Miami-Dade, Broward, and Palm Beach Counties or at 886 least 30 percent of the policies so removed cover risks located 887 in Miami-Dade, Broward, and Palm Beach Counties and an 888 additional 50 percent of the policies so removed cover risks 889 located in other coastal counties, and must also provide that no 890 more than 15 percent of the policies so removed may exclude 891 windstorm coverage. With the approval of the department, the 892 association may waive these geographic criteria for a take-out 893 plan that removes at least the lesser of 100,000 Residential 894 Property and Casualty Joint Underwriting Association policies or 895 15 percent of the total number of Residential Property and 896 Casualty Joint Underwriting Association policies, provided the 897 governing board of the Residential Property and Casualty Joint 898 Underwriting Association certifies that the take-out plan will 899 materially reduce the Residential Property and Casualty Joint 900 Underwriting Association’s 100-year probable maximum loss from 901 hurricanes. With the approval of the department, the board may 902 extend such credits for an additional year if the insurer 903 guarantees an additional year of renewability for all policies 904 removed from the Residential Property and Casualty Joint 905 Underwriting Association, or for 2 additional years if the 906 insurer guarantees 2 additional years of renewability for all 907 policies removed from the Residential Property and Casualty 908 Joint Underwriting Association. 909 b. Assessments to pay deficits in the association under 910 this subparagraph shall be included as an appropriate factor in 911 the making of rates as provided in s. 627.3512. 912 c. The Legislature finds that the potential for unlimited 913 deficit assessments under this subparagraph may induce insurers 914 to attempt to reduce their writings in the voluntary market, and 915 that such actions would worsen the availability problems that 916 the association was created to remedy. It is the intent of the 917 Legislature that insurers remain fully responsible for paying 918 regular assessments and collecting emergency assessments for any 919 deficits of the association; however, it is also the intent of 920 the Legislature to provide a means by which assessment 921 liabilities may be amortized over a period of years. 922 d.(I) When the deficit incurred in a particular calendar 923 year is 10 percent or less of the aggregate statewide direct 924 written premium for property insurance for the prior calendar 925 year for all member insurers, the association shall levy an 926 assessment on member insurers in an amount equal to the deficit. 927 (II) When the deficit incurred in a particular calendar 928 year exceeds 10 percent of the aggregate statewide direct 929 written premium for property insurance for the prior calendar 930 year for all member insurers, the association shall levy an 931 assessment on member insurers in an amount equal to the greater 932 of 10 percent of the deficit or 10 percent of the aggregate 933 statewide direct written premium for property insurance for the 934 prior calendar year for member insurers. Any remaining deficit 935 shall be recovered through emergency assessments under sub-sub 936 subparagraph (III). 937 (III) Upon a determination by the board of directors that a 938 deficit exceeds the amount that will be recovered through 939 regular assessments on member insurers, pursuant to sub-sub 940 subparagraph (I) or sub-sub-subparagraph (II), the board shall 941 levy, after verification by the department, emergency 942 assessments to be collected by member insurers and by 943 underwriting associations created pursuant to this section which 944 write property insurance, upon issuance or renewal of property 945 insurance policies other than National Flood Insurance policies 946 in the year or years following levy of the regular assessments. 947 The amount of the emergency assessment collected in a particular 948 year shall be a uniform percentage of that year’s direct written 949 premium for property insurance for all member insurers and 950 underwriting associations, excluding National Flood Insurance 951 policy premiums, as annually determined by the board and 952 verified by the department. The department shall verify the 953 arithmetic calculations involved in the board’s determination 954 within 30 days after receipt of the information on which the 955 determination was based. Notwithstanding any other provision of 956 law, each member insurer and each underwriting association 957 created pursuant to this section shall collect emergency 958 assessments from its policyholders without such obligation being 959 affected by any credit, limitation, exemption, or deferment. The 960 emergency assessments so collected shall be transferred directly 961 to the association on a periodic basis as determined by the 962 association. The aggregate amount of emergency assessments 963 levied under this sub-sub-subparagraph in any calendar year may 964 not exceed the greater of 10 percent of the amount needed to 965 cover the original deficit, plus interest, fees, commissions, 966 required reserves, and other costs associated with financing of 967 the original deficit, or 10 percent of the aggregate statewide 968 direct written premium for property insurance written by member 969 insurers and underwriting associations for the prior year, plus 970 interest, fees, commissions, required reserves, and other costs 971 associated with financing the original deficit. The board may 972 pledge the proceeds of the emergency assessments under this sub 973 sub-subparagraph as the source of revenue for bonds, to retire 974 any other debt incurred as a result of the deficit or events 975 giving rise to the deficit, or in any other way that the board 976 determines will efficiently recover the deficit. The emergency 977 assessments under this sub-sub-subparagraph shall continue as 978 long as any bonds issued or other indebtedness incurred with 979 respect to a deficit for which the assessment was imposed remain 980 outstanding, unless adequate provision has been made for the 981 payment of such bonds or other indebtedness pursuant to the 982 document governing such bonds or other indebtedness. Emergency 983 assessments collected under this sub-sub-subparagraph are not 984 part of an insurer’s rates, are not premium, and are not subject 985 to premium tax, fees, or commissions; however, failure to pay 986 the emergency assessment shall be treated as failure to pay 987 premium. 988 (IV) Each member insurer’s share of the total regular 989 assessments under sub-sub-subparagraph (I) or sub-sub 990 subparagraph (II) shall be in the proportion that the insurer’s 991 net direct premium for property insurance in this state, for the 992 year preceding the assessment bears to the aggregate statewide 993 net direct premium for property insurance of all member 994 insurers, as reduced by any credits for voluntary writings for 995 that year. 996 (V) If regular deficit assessments are made under sub-sub 997 subparagraph (I) or sub-sub-subparagraph (II), or by the 998 Residential Property and Casualty Joint Underwriting Association 999 under sub-subparagraph (6)(b)3.a.or sub-subparagraph1000(6)(b)3.b., the association shall levy upon the association’s 1001 policyholders, as part of its next rate filing, or by a separate 1002 rate filing solely for this purpose, a market equalization 1003 surcharge in a percentage equal to the total amount of such 1004 regular assessments divided by the aggregate statewide direct 1005 written premium for property insurance for member insurers for 1006 the prior calendar year. Market equalization surcharges under 1007 this sub-sub-subparagraph are not considered premium and are not 1008 subject to commissions, fees, or premium taxes; however, failure 1009 to pay a market equalization surcharge shall be treated as 1010 failure to pay premium. 1011 e. The governing body of any unit of local government, any 1012 residents of which are insured under the plan, may issue bonds 1013 as defined in s. 125.013 or s. 166.101 to fund an assistance 1014 program, in conjunction with the association, for the purpose of 1015 defraying deficits of the association. In order to avoid 1016 needless and indiscriminate proliferation, duplication, and 1017 fragmentation of such assistance programs, any unit of local 1018 government, any residents of which are insured by the 1019 association, may provide for the payment of losses, regardless 1020 of whether or not the losses occurred within or outside of the 1021 territorial jurisdiction of the local government. Revenue bonds 1022 may not be issued until validated pursuant to chapter 75, unless 1023 a state of emergency is declared by executive order or 1024 proclamation of the Governor pursuant to s. 252.36 making such 1025 findings as are necessary to determine that it is in the best 1026 interests of, and necessary for, the protection of the public 1027 health, safety, and general welfare of residents of this state 1028 and the protection and preservation of the economic stability of 1029 insurers operating in this state, and declaring it an essential 1030 public purpose to permit certain municipalities or counties to 1031 issue bonds as will provide relief to claimants and 1032 policyholders of the association and insurers responsible for 1033 apportionment of plan losses. Any such unit of local government 1034 may enter into such contracts with the association and with any 1035 other entity created pursuant to this subsection as are 1036 necessary to carry out this paragraph. Any bonds issued under 1037 this sub-subparagraph shall be payable from and secured by 1038 moneys received by the association from assessments under this 1039 subparagraph, and assigned and pledged to or on behalf of the 1040 unit of local government for the benefit of the holders of such 1041 bonds. The funds, credit, property, and taxing power of the 1042 state or of the unit of local government shall not be pledged 1043 for the payment of such bonds. If any of the bonds remain unsold 1044 60 days after issuance, the department shall require all 1045 insurers subject to assessment to purchase the bonds, which 1046 shall be treated as admitted assets; each insurer shall be 1047 required to purchase that percentage of the unsold portion of 1048 the bond issue that equals the insurer’s relative share of 1049 assessment liability under this subsection. An insurer shall not 1050 be required to purchase the bonds to the extent that the 1051 department determines that the purchase would endanger or impair 1052 the solvency of the insurer. The authority granted by this sub 1053 subparagraph is additional to any bonding authority granted by 1054 subparagraph 6. 1055 3. The plan shall also provide that any member with a 1056 surplus as to policyholders of $25$20million or less writing 1057 25 percent or more of its total countrywide property insurance 1058 premiums in this state may petition the department, within the 1059 first 90 days of each calendar year, to qualify as a limited 1060 apportionment company. The apportionment of such a member 1061 company in any calendar year for which it is qualified shall not 1062 exceed its gross participation, which shall not be affected by 1063 the formula for voluntary writings. In no event shall a limited 1064 apportionment company be required to participate in any 1065 apportionment of losses pursuant to sub-sub-subparagraph 2.d.(I) 1066 or sub-sub-subparagraph 2.d.(II) in the aggregate which exceeds 1067 $50 million after payment of available plan funds in any 1068 calendar year. However, a limited apportionment company shall 1069 collect from its policyholders any emergency assessment imposed 1070 under sub-sub-subparagraph 2.d.(III). The plan shall provide 1071 that, if the department determines that any regular assessment 1072 will result in an impairment of the surplus of a limited 1073 apportionment company, the department may direct that all or 1074 part of such assessment be deferred. However, there shall be no 1075 limitation or deferment of an emergency assessment to be 1076 collected from policyholders under sub-sub-subparagraph 1077 2.d.(III). 1078 4. The plan shall provide for the deferment, in whole or in 1079 part, of a regular assessment of a member insurer under sub-sub 1080 subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II), but not 1081 for an emergency assessment collected from policyholders under 1082 sub-sub-subparagraph 2.d.(III), if, in the opinion of the 1083 commissioner, payment of such regular assessment would endanger 1084 or impair the solvency of the member insurer. In the event a 1085 regular assessment against a member insurer is deferred in whole 1086 or in part, the amount by which such assessment is deferred may 1087 be assessed against the other member insurers in a manner 1088 consistent with the basis for assessments set forth in sub-sub 1089 subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II). 1090 5.a. The plan of operation may include deductibles and 1091 rules for classification of risks and rate modifications 1092 consistent with the objective of providing and maintaining funds 1093 sufficient to pay catastrophe losses. 1094 b. It is the intent of the Legislature that the rates for 1095 coverage provided by the association be actuarially sound and 1096 not competitive with approved rates charged in the admitted 1097 voluntary market such that the association functions as a 1098 residual market mechanism to provide insurance only when the 1099 insurance cannot be procured in the voluntary market. The plan 1100 of operation shall provide a mechanism to assure that, beginning 1101 no later than January 1, 1999, the rates charged by the 1102 association for each line of business are reflective of approved 1103 rates in the voluntary market for hurricane coverage for each 1104 line of business in the various areas eligible for association 1105 coverage. 1106 c. The association shall provide for windstorm coverage on 1107 residential properties in limits up to $10 million for 1108 commercial lines residential risks and up to $1 million for 1109 personal lines residential risks. If coverage with the 1110 association is sought for a residential risk valued in excess of 1111 these limits, coverage shall be available to the risk up to the 1112 replacement cost or actual cash value of the property, at the 1113 option of the insured, if coverage for the risk cannot be 1114 located in the authorized market. The association must accept a 1115 commercial lines residential risk with limits above $10 million 1116 or a personal lines residential risk with limits above $1 1117 million if coverage is not available in the authorized market. 1118 The association may write coverage above the limits specified in 1119 this subparagraph with or without facultative or other 1120 reinsurance coverage, as the association determines appropriate. 1121 d. The plan of operation must provide objective criteria 1122 and procedures, approved by the department, to be uniformly 1123 applied for all applicants in determining whether an individual 1124 risk is so hazardous as to be uninsurable. In making this 1125 determination and in establishing the criteria and procedures, 1126 the following shall be considered: 1127 (I) Whether the likelihood of a loss for the individual 1128 risk is substantially higher than for other risks of the same 1129 class; and 1130 (II) Whether the uncertainty associated with the individual 1131 risk is such that an appropriate premium cannot be determined. 1132 1133 The acceptance or rejection of a risk by the association 1134 pursuant to such criteria and procedures must be construed as 1135 the private placement of insurance, and the provisions of 1136 chapter 120 do not apply. 1137 e. If the risk accepts an offer of coverage through the 1138 market assistance program or through a mechanism established by 1139 the association, either before the policy is issued by the 1140 association or during the first 30 days of coverage by the 1141 association, and the producing agent who submitted the 1142 application to the association is not currently appointed by the 1143 insurer, the insurer shall: 1144 (I) Pay to the producing agent of record of the policy, for 1145 the first year, an amount that is the greater of the insurer’s 1146 usual and customary commission for the type of policy written or 1147 a fee equal to the usual and customary commission of the 1148 association; or 1149 (II) Offer to allow the producing agent of record of the 1150 policy to continue servicing the policy for a period of not less 1151 than 1 year and offer to pay the agent the greater of the 1152 insurer’s or the association’s usual and customary commission 1153 for the type of policy written. 1154 1155 If the producing agent is unwilling or unable to accept 1156 appointment, the new insurer shall pay the agent in accordance 1157 with sub-sub-subparagraph (I). Subject to the provisions of s. 1158 627.3517, the policies issued by the association must provide 1159 that if the association obtains an offer from an authorized 1160 insurer to cover the risk at its approved rates under either a 1161 standard policy including wind coverage or, if consistent with 1162 the insurer’s underwriting rules as filed with the department, a 1163 basic policy including wind coverage, the risk is no longer 1164 eligible for coverage through the association. Upon termination 1165 of eligibility, the association shall provide written notice to 1166 the policyholder and agent of record stating that the 1167 association policy must be canceled as of 60 days after the date 1168 of the notice because of the offer of coverage from an 1169 authorized insurer. Other provisions of the insurance code 1170 relating to cancellation and notice of cancellation do not apply 1171 to actions under this sub-subparagraph. 1172 f. When the association enters into a contractual agreement 1173 for a take-out plan, the producing agent of record of the 1174 association policy is entitled to retain any unearned commission 1175 on the policy, and the insurer shall: 1176 (I) Pay to the producing agent of record of the association 1177 policy, for the first year, an amount that is the greater of the 1178 insurer’s usual and customary commission for the type of policy 1179 written or a fee equal to the usual and customary commission of 1180 the association; or 1181 (II) Offer to allow the producing agent of record of the 1182 association policy to continue servicing the policy for a period 1183 of not less than 1 year and offer to pay the agent the greater 1184 of the insurer’s or the association’s usual and customary 1185 commission for the type of policy written. 1186 1187 If the producing agent is unwilling or unable to accept 1188 appointment, the new insurer shall pay the agent in accordance 1189 with sub-sub-subparagraph (I). 1190 6.a. The plan of operation may authorize the formation of a 1191 private nonprofit corporation, a private nonprofit 1192 unincorporated association, a partnership, a trust, a limited 1193 liability company, or a nonprofit mutual company which may be 1194 empowered, among other things, to borrow money by issuing bonds 1195 or by incurring other indebtedness and to accumulate reserves or 1196 funds to be used for the payment of insured catastrophe losses. 1197 The plan may authorize all actions necessary to facilitate the 1198 issuance of bonds, including the pledging of assessments or 1199 other revenues. 1200 b. Any entity created under this subsection, or any entity 1201 formed for the purposes of this subsection, may sue and be sued, 1202 may borrow money; issue bonds, notes, or debt instruments; 1203 pledge or sell assessments, market equalization surcharges and 1204 other surcharges, rights, premiums, contractual rights, 1205 projected recoveries from the Florida Hurricane Catastrophe 1206 Fund, other reinsurance recoverables, and other assets as 1207 security for such bonds, notes, or debt instruments; enter into 1208 any contracts or agreements necessary or proper to accomplish 1209 such borrowings; and take other actions necessary to carry out 1210 the purposes of this subsection. The association may issue bonds 1211 or incur other indebtedness, or have bonds issued on its behalf 1212 by a unit of local government pursuant to subparagraph (6)(q)2., 1213 in the absence of a hurricane or other weather-related event, 1214 upon a determination by the association subject to approval by 1215 the department that such action would enable it to efficiently 1216 meet the financial obligations of the association and that such 1217 financings are reasonably necessary to effectuate the 1218 requirements of this subsection. Any such entity may accumulate 1219 reserves and retain surpluses as of the end of any association 1220 year to provide for the payment of losses incurred by the 1221 association during that year or any future year. The association 1222 shall incorporate and continue the plan of operation and 1223 articles of agreement in effect on the effective date of chapter 1224 76-96, Laws of Florida, to the extent that it is not 1225 inconsistent with chapter 76-96, and as subsequently modified 1226 consistent with chapter 76-96. The board of directors and 1227 officers currently serving shall continue to serve until their 1228 successors are duly qualified as provided under the plan. The 1229 assets and obligations of the plan in effect immediately prior 1230 to the effective date of chapter 76-96 shall be construed to be 1231 the assets and obligations of the successor plan created herein. 1232 c. In recognition of s. 10, Art. I of the State 1233 Constitution, prohibiting the impairment of obligations of 1234 contracts, it is the intent of the Legislature that no action be 1235 taken whose purpose is to impair any bond indenture or financing 1236 agreement or any revenue source committed by contract to such 1237 bond or other indebtedness issued or incurred by the association 1238 or any other entity created under this subsection. 1239 7. On such coverage, an agent’s remuneration shall be that 1240 amount of money payable to the agent by the terms of his or her 1241 contract with the company with which the business is placed. 1242 However, no commission will be paid on that portion of the 1243 premium which is in excess of the standard premium of that 1244 company. 1245 8. Subject to approval by the department, the association 1246 may establish different eligibility requirements and operational 1247 procedures for any line or type of coverage for any specified 1248 eligible area or portion of an eligible area if the board 1249 determines that such changes to the eligibility requirements and 1250 operational procedures are justified due to the voluntary market 1251 being sufficiently stable and competitive in such area or for 1252 such line or type of coverage and that consumers who, in good 1253 faith, are unable to obtain insurance through the voluntary 1254 market through ordinary methods would continue to have access to 1255 coverage from the association. When coverage is sought in 1256 connection with a real property transfer, such requirements and 1257 procedures shall not provide for an effective date of coverage 1258 later than the date of the closing of the transfer as 1259 established by the transferor, the transferee, and, if 1260 applicable, the lender. 1261 9. Notwithstanding any other provision of law: 1262 a. The pledge or sale of, the lien upon, and the security 1263 interest in any rights, revenues, or other assets of the 1264 association created or purported to be created pursuant to any 1265 financing documents to secure any bonds or other indebtedness of 1266 the association shall be and remain valid and enforceable, 1267 notwithstanding the commencement of and during the continuation 1268 of, and after, any rehabilitation, insolvency, liquidation, 1269 bankruptcy, receivership, conservatorship, reorganization, or 1270 similar proceeding against the association under the laws of 1271 this state or any other applicable laws. 1272 b. No such proceeding shall relieve the association of its 1273 obligation, or otherwise affect its ability to perform its 1274 obligation, to continue to collect, or levy and collect, 1275 assessments, market equalization or other surcharges, projected 1276 recoveries from the Florida Hurricane Catastrophe Fund, 1277 reinsurance recoverables, or any other rights, revenues, or 1278 other assets of the association pledged. 1279 c. Each such pledge or sale of, lien upon, and security 1280 interest in, including the priority of such pledge, lien, or 1281 security interest, any such assessments, emergency assessments, 1282 market equalization or renewal surcharges, projected recoveries 1283 from the Florida Hurricane Catastrophe Fund, reinsurance 1284 recoverables, or other rights, revenues, or other assets which 1285 are collected, or levied and collected, after the commencement 1286 of and during the pendency of or after any such proceeding shall 1287 continue unaffected by such proceeding. 1288 d. As used in this subsection, the term “financing 1289 documents” means any agreement, instrument, or other document 1290 now existing or hereafter created evidencing any bonds or other 1291 indebtedness of the association or pursuant to which any such 1292 bonds or other indebtedness has been or may be issued and 1293 pursuant to which any rights, revenues, or other assets of the 1294 association are pledged or sold to secure the repayment of such 1295 bonds or indebtedness, together with the payment of interest on 1296 such bonds or such indebtedness, or the payment of any other 1297 obligation of the association related to such bonds or 1298 indebtedness. 1299 e. Any such pledge or sale of assessments, revenues, 1300 contract rights or other rights or assets of the association 1301 shall constitute a lien and security interest, or sale, as the 1302 case may be, that is immediately effective and attaches to such 1303 assessments, revenues, contract, or other rights or assets, 1304 whether or not imposed or collected at the time the pledge or 1305 sale is made. Any such pledge or sale is effective, valid, 1306 binding, and enforceable against the association or other entity 1307 making such pledge or sale, and valid and binding against and 1308 superior to any competing claims or obligations owed to any 1309 other person or entity, including policyholders in this state, 1310 asserting rights in any such assessments, revenues, contract, or 1311 other rights or assets to the extent set forth in and in 1312 accordance with the terms of the pledge or sale contained in the 1313 applicable financing documents, whether or not any such person 1314 or entity has notice of such pledge or sale and without the need 1315 for any physical delivery, recordation, filing, or other action. 1316 f. There shall be no liability on the part of, and no cause 1317 of action of any nature shall arise against, any member insurer 1318 or its agents or employees, agents or employees of the 1319 association, members of the board of directors of the 1320 association, or the department or its representatives, for any 1321 action taken by them in the performance of their duties or 1322 responsibilities under this subsection. Such immunity does not 1323 apply to actions for breach of any contract or agreement 1324 pertaining to insurance, or any willful tort. 1325 (6) CITIZENS PROPERTY INSURANCE CORPORATION.— 1326 (c) The corporation’s plan of operation: 1327 1. Must provide for adoption of residential property and 1328 casualty insurance policy forms and commercial residential and 1329 nonresidential property insurance forms, which must be approved 1330 by the office before use. The corporation shall adopt the 1331 following policy forms: 1332 a. Standard personal lines policy forms that are 1333 comprehensive multiperil policies providing full coverage of a 1334 residential property equivalent to the coverage provided in the 1335 private insurance market under an HO-3, HO-4, or HO-6 policy. 1336 b. Basic personal lines policy forms that are policies 1337 similar to an HO-8 policy or a dwelling fire policy that provide 1338 coverage meeting the requirements of the secondary mortgage 1339 market, but which is more limited than the coverage under a 1340 standard policy. 1341 c. Commercial lines residential and nonresidential policy 1342 forms that are generally similar to the basic perils of full 1343 coverage obtainable for commercial residential structures and 1344 commercial nonresidential structures in the admitted voluntary 1345 market. 1346 d. Personal lines and commercial lines residential property 1347 insurance forms that cover the peril of wind only. The forms are 1348 applicable only to residential properties located in areas 1349 eligible for coverage under the coastal account referred to in 1350 sub-subparagraph (b)2.a. 1351 e. Commercial lines nonresidential property insurance forms 1352 that cover the peril of wind only. The forms are applicable only 1353 to nonresidential properties located in areas eligible for 1354 coverage under the coastal account referred to in sub 1355 subparagraph (b)2.a. 1356 f. The corporation may adopt variations of the policy forms 1357 listed in sub-subparagraphs a.-e. which contain more restrictive 1358 coverage. 1359 g. Effective January 1, 2013, the corporation shall offer a 1360 basic personal lines policy similar to an HO-8 policy with 1361 dwelling repair based on common construction materials and 1362 methods. 1363 2. Must provide that the corporation adopt a program in 1364 which the corporation and authorized insurers enter into quota 1365 share primary insurance agreements for hurricane coverage, as 1366 defined in s. 627.4025(2)(a), for eligible risks, and adopt 1367 property insurance forms for eligible risks which cover the 1368 peril of wind only. 1369 a. As used in this subsection, the term: 1370 (I) “Quota share primary insurance” means an arrangement in 1371 which the primary hurricane coverage of an eligible risk is 1372 provided in specified percentages by the corporation and an 1373 authorized insurer. The corporation and authorized insurer are 1374 each solely responsible for a specified percentage of hurricane 1375 coverage of an eligible risk as set forth in a quota share 1376 primary insurance agreement between the corporation and an 1377 authorized insurer and the insurance contract. The 1378 responsibility of the corporation or authorized insurer to pay 1379 its specified percentage of hurricane losses of an eligible 1380 risk, as set forth in the agreement, may not be altered by the 1381 inability of the other party to pay its specified percentage of 1382 losses. Eligible risks that are provided hurricane coverage 1383 through a quota share primary insurance arrangement must be 1384 provided policy forms that set forth the obligations of the 1385 corporation and authorized insurer under the arrangement, 1386 clearly specify the percentages of quota share primary insurance 1387 provided by the corporation and authorized insurer, and 1388 conspicuously and clearly state that the authorized insurer and 1389 the corporation may not be held responsible beyond their 1390 specified percentage of coverage of hurricane losses. 1391 (II) “Eligible risks” means personal lines residential and 1392 commercial lines residential risks that meet the underwriting 1393 criteria of the corporation and are located in areas that were 1394 eligible for coverage by the Florida Windstorm Underwriting 1395 Association on January 1, 2002. 1396 b. The corporation may enter into quota share primary 1397 insurance agreements with authorized insurers at corporation 1398 coverage levels of 90 percent and 50 percent. 1399 c. If the corporation determines that additional coverage 1400 levels are necessary to maximize participation in quota share 1401 primary insurance agreements by authorized insurers, the 1402 corporation may establish additional coverage levels. However, 1403 the corporation’s quota share primary insurance coverage level 1404 may not exceed 90 percent. 1405 d. Any quota share primary insurance agreement entered into 1406 between an authorized insurer and the corporation must provide 1407 for a uniform specified percentage of coverage of hurricane 1408 losses, by county or territory as set forth by the corporation 1409 board, for all eligible risks of the authorized insurer covered 1410 under the agreement. 1411 e. Any quota share primary insurance agreement entered into 1412 between an authorized insurer and the corporation is subject to 1413 review and approval by the office. However, such agreement shall 1414 be authorized only as to insurance contracts entered into 1415 between an authorized insurer and an insured who is already 1416 insured by the corporation for wind coverage. 1417 f. For all eligible risks covered under quota share primary 1418 insurance agreements, the exposure and coverage levels for both 1419 the corporation and authorized insurers shall be reported by the 1420 corporation to the Florida Hurricane Catastrophe Fund. For all 1421 policies of eligible risks covered under such agreements, the 1422 corporation and the authorized insurer must maintain complete 1423 and accurate records for the purpose of exposure and loss 1424 reimbursement audits as required by fund rules. The corporation 1425 and the authorized insurer shall each maintain duplicate copies 1426 of policy declaration pages and supporting claims documents. 1427 g. The corporation board shall establish in its plan of 1428 operation standards for quota share agreements which ensure that 1429 there is no discriminatory application among insurers as to the 1430 terms of the agreements, pricing of the agreements, incentive 1431 provisions if any, and consideration paid for servicing policies 1432 or adjusting claims. 1433 h. The quota share primary insurance agreement between the 1434 corporation and an authorized insurer must set forth the 1435 specific terms under which coverage is provided, including, but 1436 not limited to, the sale and servicing of policies issued under 1437 the agreement by the insurance agent of the authorized insurer 1438 producing the business, the reporting of information concerning 1439 eligible risks, the payment of premium to the corporation, and 1440 arrangements for the adjustment and payment of hurricane claims 1441 incurred on eligible risks by the claims adjuster and personnel 1442 of the authorized insurer. Entering into a quota sharing 1443 insurance agreement between the corporation and an authorized 1444 insurer is voluntary and at the discretion of the authorized 1445 insurer. 1446 3.a. May provide that the corporation may employ or 1447 otherwise contract with individuals or other entities to provide 1448 administrative or professional services that may be appropriate 1449 to effectuate the plan. The corporation may borrow funds by 1450 issuing bonds or by incurring other indebtedness, and shall have 1451 other powers reasonably necessary to effectuate the requirements 1452 of this subsection, including, without limitation, the power to 1453 issue bonds and incur other indebtedness in order to refinance 1454 outstanding bonds or other indebtedness. The corporation may 1455 seek judicial validation of its bonds or other indebtedness 1456 under chapter 75. The corporation may issue bonds or incur other 1457 indebtedness, or have bonds issued on its behalf by a unit of 1458 local government pursuant to subparagraph (q)2. in the absence 1459 of a hurricane or other weather-related event, upon a 1460 determination by the corporation, subject to approval by the 1461 office, that such action would enable it to efficiently meet the 1462 financial obligations of the corporation and that such 1463 financings are reasonably necessary to effectuate the 1464 requirements of this subsection. The corporation may take all 1465 actions needed to facilitate tax-free status for such bonds or 1466 indebtedness, including formation of trusts or other affiliated 1467 entities. The corporation may pledge assessments, projected 1468 recoveries from the Florida Hurricane Catastrophe Fund, other 1469 reinsurance recoverables, market equalization and other 1470 surcharges, and other funds available to the corporation as 1471 security for bonds or other indebtedness. In recognition of s. 1472 10, Art. I of the State Constitution, prohibiting the impairment 1473 of obligations of contracts, it is the intent of the Legislature 1474 that no action be taken whose purpose is to impair any bond 1475 indenture or financing agreement or any revenue source committed 1476 by contract to such bond or other indebtedness. 1477 b. To ensure that the corporation is operating in an 1478 efficient and economic manner while providing quality service to 1479 policyholders, applicants, and agents, the board shall 1480 commission an independent third-party consultant having 1481 expertise in insurance company management or insurance company 1482 management consulting to prepare a report and make 1483 recommendations on the relative costs and benefits of 1484 outsourcing various policy issuance and service functions to 1485 private servicing carriers or entities performing similar 1486 functions in the private market for a fee, rather than 1487 performing such functions in-house. In making such 1488 recommendations, the consultant shall consider how other 1489 residual markets, both in this state and around the country, 1490 outsource appropriate functions or use servicing carriers to 1491 better match expenses with revenues that fluctuate based on a 1492 widely varying policy count. The report must be completed by 1493 July 1, 2012. Upon receiving the report, the board shall develop 1494 a plan to implement the report and submit the plan for review, 1495 modification, and approval to the Financial Services Commission. 1496 Upon the commission’s approval of the plan, the board shall 1497 begin implementing the plan by January 1, 2013. 1498 4. Must require that the corporation operate subject to the 1499 supervision and approval of a board of governors consisting of 1500 eight individuals who are residents of this state, from 1501 different geographical areas of this state. 1502 a. The Governor, the Chief Financial Officer, the President 1503 of the Senate, and the Speaker of the House of Representatives 1504 shall each appoint two members of the board. At least one of the 1505 two members appointed by each appointing officer must have 1506 demonstrated expertise in insurance and is deemed to be within 1507 the scope of the exemption provided in s. 112.313(7)(b). The 1508 Chief Financial Officer shall designate one of the appointees as 1509 chair. All board members serve at the pleasure of the appointing 1510 officer. All members of the board are subject to removal at will 1511 by the officers who appointed them. All board members, including 1512 the chair, must be appointed to serve for 3-year terms beginning 1513 annually on a date designated by the plan. However, for the 1514 first term beginning on or after July 1, 2009, each appointing 1515 officer shall appoint one member of the board for a 2-year term 1516 and one member for a 3-year term. A board vacancy shall be 1517 filled for the unexpired term by the appointing officer. The 1518 Chief Financial Officer shall appoint a technical advisory group 1519 to provide information and advice to the board in connection 1520 with the board’s duties under this subsection. The executive 1521 director and senior managers of the corporation shall be engaged 1522 by the board and serve at the pleasure of the board. Any 1523 executive director appointed on or after July 1, 2006, is 1524 subject to confirmation by the Senate. The executive director is 1525 responsible for employing other staff as the corporation may 1526 require, subject to review and concurrence by the board. 1527 b. The board shall create a Market Accountability Advisory 1528 Committee to assist the corporation in developing awareness of 1529 its rates and its customer and agent service levels in 1530 relationship to the voluntary market insurers writing similar 1531 coverage. 1532 (I) The members of the advisory committee consist of the 1533 following 11 persons, one of whom must be elected chair by the 1534 members of the committee: four representatives, one appointed by 1535 the Florida Association of Insurance Agents, one by the Florida 1536 Association of Insurance and Financial Advisors, one by the 1537 Professional Insurance Agents of Florida, and one by the Latin 1538 American Association of Insurance Agencies; three 1539 representatives appointed by the insurers with the three highest 1540 voluntary market share of residential property insurance 1541 business in the state; one representative from the Office of 1542 Insurance Regulation; one consumer appointed by the board who is 1543 insured by the corporation at the time of appointment to the 1544 committee; one representative appointed by the Florida 1545 Association of Realtors; and one representative appointed by the 1546 Florida Bankers Association. All members shall be appointed to 1547 3-year terms and may serve for consecutive terms. 1548 (II) The committee shall report to the corporation at each 1549 board meeting on insurance market issues which may include rates 1550 and rate competition with the voluntary market; service, 1551 including policy issuance, claims processing, and general 1552 responsiveness to policyholders, applicants, and agents; and 1553 matters relating to depopulation. 1554 5. Must provide a procedure for determining the eligibility 1555 of a risk for coverage, as follows: 1556 a. Subject to s. 627.3517, with respect to personal lines 1557 residential risks, if the risk is offered coverage from an 1558 authorized insurer at the insurer’s approved rate under a 1559 standard policy including wind coverage or, if consistent with 1560 the insurer’s underwriting rules as filed with the office, a 1561 basic policy including wind coverage, for a new application to 1562 the corporation for coverage, the risk is not eligible for any 1563 policy issued by the corporation unless the premium for coverage 1564 from the authorized insurer is more than 15 percent greater than 1565 the premium for comparable coverage from the corporation. If the 1566 risk is not able to obtain such offer, the risk is eligible for 1567 a standard policy including wind coverage or a basic policy 1568 including wind coverage issued by the corporation; however, if 1569 the risk could not be insured under a standard policy including 1570 wind coverage regardless of market conditions, the risk is 1571 eligible for a basic policy including wind coverage unless 1572 rejected under subparagraph 8. However, a policyholder of the 1573 corporation or a policyholder removed from the corporation 1574 through an assumption agreement until the end of the assumption 1575 period remains eligible for coverage from the corporation 1576 regardless of any offer of coverage from an authorized insurer 1577 or surplus lines insurer. The corporation shall determine the 1578 type of policy to be provided on the basis of objective 1579 standards specified in the underwriting manual and based on 1580 generally accepted underwriting practices. 1581 (I) If the risk accepts an offer of coverage through the 1582 market assistance plan or through a mechanism established by the 1583 corporation before a policy is issued to the risk by the 1584 corporation or during the first 30 days of coverage by the 1585 corporation, and the producing agent who submitted the 1586 application to the plan or to the corporation is not currently 1587 appointed by the insurer, the insurer shall: 1588 (A) Pay to the producing agent of record of the policy for 1589 the first year, an amount that is the greater of the insurer’s 1590 usual and customary commission for the type of policy written or 1591 a fee equal to the usual and customary commission of the 1592 corporation; or 1593 (B) Offer to allow the producing agent of record of the 1594 policy to continue servicing the policy for at least 1 year and 1595 offer to pay the agent the greater of the insurer’s or the 1596 corporation’s usual and customary commission for the type of 1597 policy written. 1598 1599 If the producing agent is unwilling or unable to accept 1600 appointment, the new insurer shall pay the agent in accordance 1601 with sub-sub-sub-subparagraph (A). 1602 (II) If the corporation enters into a contractual agreement 1603 for a take-out plan, the producing agent of record of the 1604 corporation policy is entitled to retain any unearned commission 1605 on the policy, and the insurer shall: 1606 (A) Pay to the producing agent of record, for the first 1607 year, an amount that is the greater of the insurer’s usual and 1608 customary commission for the type of policy written or a fee 1609 equal to the usual and customary commission of the corporation; 1610 or 1611 (B) Offer to allow the producing agent of record to 1612 continue servicing the policy for at least 1 year and offer to 1613 pay the agent the greater of the insurer’s or the corporation’s 1614 usual and customary commission for the type of policy written. 1615 1616 If the producing agent is unwilling or unable to accept 1617 appointment, the new insurer shall pay the agent in accordance 1618 with sub-sub-sub-subparagraph (A). 1619 b. With respect to commercial lines residential risks, for 1620 a new application to the corporation for coverage, if the risk 1621 is offered coverage under a policy including wind coverage from 1622 an authorized insurer at its approved rate, the risk is not 1623 eligible for a policy issued by the corporation unless the 1624 premium for coverage from the authorized insurer is more than 15 1625 percent greater than the premium for comparable coverage from 1626 the corporation. If the risk is not able to obtain any such 1627 offer, the risk is eligible for a policy including wind coverage 1628 issued by the corporation. However, a policyholder of the 1629 corporation or a policyholder removed from the corporation 1630 through an assumption agreement until the end of the assumption 1631 period remains eligible for coverage from the corporation 1632 regardless of an offer of coverage from an authorized insurer or 1633 surplus lines insurer. 1634 (I) If the risk accepts an offer of coverage through the 1635 market assistance plan or through a mechanism established by the 1636 corporation before a policy is issued to the risk by the 1637 corporation or during the first 30 days of coverage by the 1638 corporation, and the producing agent who submitted the 1639 application to the plan or the corporation is not currently 1640 appointed by the insurer, the insurer shall: 1641 (A) Pay to the producing agent of record of the policy, for 1642 the first year, an amount that is the greater of the insurer’s 1643 usual and customary commission for the type of policy written or 1644 a fee equal to the usual and customary commission of the 1645 corporation; or 1646 (B) Offer to allow the producing agent of record of the 1647 policy to continue servicing the policy for at least 1 year and 1648 offer to pay the agent the greater of the insurer’s or the 1649 corporation’s usual and customary commission for the type of 1650 policy written. 1651 1652 If the producing agent is unwilling or unable to accept 1653 appointment, the new insurer shall pay the agent in accordance 1654 with sub-sub-sub-subparagraph (A). 1655 (II) If the corporation enters into a contractual agreement 1656 for a take-out plan, the producing agent of record of the 1657 corporation policy is entitled to retain any unearned commission 1658 on the policy, and the insurer shall: 1659 (A) Pay to the producing agent of record, for the first 1660 year, an amount that is the greater of the insurer’s usual and 1661 customary commission for the type of policy written or a fee 1662 equal to the usual and customary commission of the corporation; 1663 or 1664 (B) Offer to allow the producing agent of record to 1665 continue servicing the policy for at least 1 year and offer to 1666 pay the agent the greater of the insurer’s or the corporation’s 1667 usual and customary commission for the type of policy written. 1668 1669 If the producing agent is unwilling or unable to accept 1670 appointment, the new insurer shall pay the agent in accordance 1671 with sub-sub-sub-subparagraph (A). 1672 c. For purposes of determining comparable coverage under 1673 sub-subparagraphs a. and b., the comparison must be based on 1674 those forms and coverages that are reasonably comparable. The 1675 corporation may rely on a determination of comparable coverage 1676 and premium made by the producing agent who submits the 1677 application to the corporation, made in the agent’s capacity as 1678 the corporation’s agent. A comparison may be made solely of the 1679 premium with respect to the main building or structure only on 1680 the following basis: the same coverage A or other building 1681 limits; the same percentage hurricane deductible that applies on 1682 an annual basis or that applies to each hurricane for commercial 1683 residential property; the same percentage of ordinance and law 1684 coverage, if the same limit is offered by both the corporation 1685 and the authorized insurer; the same mitigation credits, to the 1686 extent the same types of credits are offered both by the 1687 corporation and the authorized insurer; the same method for loss 1688 payment, such as replacement cost or actual cash value, if the 1689 same method is offered both by the corporation and the 1690 authorized insurer in accordance with underwriting rules; and 1691 any other form or coverage that is reasonably comparable as 1692 determined by the board. If an application is submitted to the 1693 corporation for wind-only coverage in the coastal account, the 1694 premium for the corporation’s wind-only policy plus the premium 1695 for the ex-wind policy that is offered by an authorized insurer 1696 to the applicant must be compared to the premium for multiperil 1697 coverage offered by an authorized insurer, subject to the 1698 standards for comparison specified in this subparagraph. If the 1699 corporation or the applicant requests from the authorized 1700 insurer a breakdown of the premium of the offer by types of 1701 coverage so that a comparison may be made by the corporation or 1702 its agent and the authorized insurer refuses or is unable to 1703 provide such information, the corporation may treat the offer as 1704 not being an offer of coverage from an authorized insurer at the 1705 insurer’s approved rate. 1706 6. Must include rules for classifications of risks and 1707 rates. 1708 7. Must provide that if premium and investment income for 1709 an account attributable to a particular calendar year are in 1710 excess of projected losses and expenses for the account 1711 attributable to that year, such excess shall be held in surplus 1712 in the account. Such surplus must be available to defray 1713 deficits in that account as to future years and used for that 1714 purpose before assessing assessable insurers and assessable 1715 insureds as to any calendar year. 1716 8. Must provide objective criteria and procedures to be 1717 uniformly applied to all applicants in determining whether an 1718 individual risk is so hazardous as to be uninsurable. In making 1719 this determination and in establishing the criteria and 1720 procedures, the following must be considered: 1721 a. Whether the likelihood of a loss for the individual risk 1722 is substantially higher than for other risks of the same class; 1723 and 1724 b. Whether the uncertainty associated with the individual 1725 risk is such that an appropriate premium cannot be determined. 1726 1727 The acceptance or rejection of a risk by the corporation shall 1728 be construed as the private placement of insurance, and the 1729 provisions of chapter 120 do not apply. 1730 9. Must provide that the corporation make its best efforts 1731 to procure catastrophe reinsurance at reasonable rates, to cover 1732 its projected 100-year probable maximum loss as determined by 1733 the board of governors. 1734 10. The policies issued by the corporation must provide 1735 that if the corporation or the market assistance plan obtains an 1736 offer from an authorized insurer to cover the risk at its 1737 approved rates, the risk is no longer eligible for renewal 1738 through the corporation, except as otherwise provided in this 1739 subsection. 1740 11. Corporation policies and applications must include a 1741 notice that the corporation policy could, under this section, be 1742 replaced with a policy issued by an authorized insurer which 1743 does not provide coverage identical to the coverage provided by 1744 the corporation. The notice must also specify that acceptance of 1745 corporation coverage creates a conclusive presumption that the 1746 applicant or policyholder is aware of this potential. 1747 12. May establish, subject to approval by the office, 1748 different eligibility requirements and operational procedures 1749 for any line or type of coverage for any specified county or 1750 area if the board determines that such changes are justified due 1751 to the voluntary market being sufficiently stable and 1752 competitive in such area or for such line or type of coverage 1753 and that consumers who, in good faith, are unable to obtain 1754 insurance through the voluntary market through ordinary methods 1755 continue to have access to coverage from the corporation. If 1756 coverage is sought in connection with a real property transfer, 1757 the requirements and procedures may not provide an effective 1758 date of coverage later than the date of the closing of the 1759 transfer as established by the transferor, the transferee, and, 1760 if applicable, the lender. 1761 13. Must provide that, with respect to the coastal account, 1762 any assessable insurer with a surplus as to policyholders of $25 1763 million or less writing 25 percent or more of its total 1764 countrywide property insurance premiums in this state may 1765 petition the office, within the first 90 days of each calendar 1766 year, to qualify as a limited apportionment company. A regular 1767 assessment levied by the corporation on a limited apportionment 1768 company for a deficit incurred by the corporation for the 1769 coastal account may be paid to the corporation on a monthly 1770 basis as the assessments are collected by the limited 1771 apportionment company from its insureds pursuant to s. 627.3512, 1772 but the regular assessment must be paid in full within 12 months 1773 after being levied by the corporation. A limited apportionment 1774 company shall collect from its policyholders any emergency 1775 assessment imposed under sub-subparagraph (b)3.d. The plan must 1776 provide that, if the office determines that any regular 1777 assessment will result in an impairment of the surplus of a 1778 limited apportionment company, the office may direct that all or 1779 part of such assessment be deferred as provided in subparagraph 1780 (q)4. However, an emergency assessment to be collected from 1781 policyholders under sub-subparagraph (b)3.d. may not be limited 1782 or deferred. 1783 14. Must provide that the corporation appoint as its 1784 licensed agents only those agents who also hold an appointment 1785 as defined in s. 626.015(3) with an insurer who at the time of 1786 the agent’s initial appointment by the corporation is authorized 1787 to write and is actually writing personal lines residential 1788 property coverage, commercial residential property coverage, or 1789 commercial nonresidential property coverage within the state. 1790 15. Must provide a premium payment plan option to its 1791 policyholders which, at a minimum, allows for quarterly and 1792 semiannual payment of premiums. A monthly payment plan may, but 1793 is not required to, be offered. 1794 16. Must limit coverage on mobile homes or manufactured 1795 homes built before 1994 to actual cash value of the dwelling 1796 rather than replacement costs of the dwelling. 1797 17. May provide such limits of coverage as the board 1798 determines, consistent with the requirements of this subsection. 1799 18. May require commercial property to meet specified 1800 hurricane mitigation construction features as a condition of 1801 eligibility for coverage. 1802 19. Must provide that new or renewal policies issued by the 1803 corporation on or after January 1, 2012, which cover sinkhole 1804 loss do not include coverage for any loss to appurtenant 1805 structures, driveways, sidewalks, decks, or patios that are 1806 directly or indirectly caused by sinkhole activity. The 1807 corporation shall exclude such coverage using a notice of 1808 coverage change, which may be included with the policy renewal, 1809 and not by issuance of a notice of nonrenewal of the excluded 1810 coverage upon renewal of the current policy. 1811 20. As of January 1, 2012, must require that the agent 1812 obtain from an applicant for coverage from the corporation an 1813 acknowledgement signed by the applicant, which includes, at a 1814 minimum, the following statement: 1815 1816 ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE 1817 AND ASSESSMENT LIABILITY: 1818 1819 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE 1820 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A 1821 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON, 1822 MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND 1823 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE 1824 POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT 1825 OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA 1826 LEGISLATURE. 1827 2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY 1828 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER 1829 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE 1830 FLORIDA LEGISLATURE. 1831 3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE 1832 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE 1833 STATE OF FLORIDA. 1834 1835 a. The corporation shall maintain, in electronic format or 1836 otherwise, a copy of the applicant’s signed acknowledgement and 1837 provide a copy of the statement to the policyholder as part of 1838 the first renewal after the effective date of this subparagraph. 1839 b. The signed acknowledgement form creates a conclusive 1840 presumption that the policyholder understood and accepted his or 1841 her potential surcharge and assessment liability as a 1842 policyholder of the corporation. 1843 (ff) In establishing replacement costs for coverage on a 1844 dwelling insured by the corporation, the corporation must accept 1845 a valuation from any of the following sources and must use the 1846 lowest valuation as the insured value of the dwelling, excluding 1847 land value, if the valuation was completed within the 12 months 1848 before the application or renewal date of coverage: 1849 1. A replacement cost valuation software that is 1850 specifically designed for use in establishing insurance 1851 replacement costs and that includes an itemized calculation of 1852 the cost of reconstruction; 1853 2. A replacement cost valuation prepared by a real estate 1854 appraiser certified or licensed under part II of chapter 475 1855 which is specifically formulated to establish insurance 1856 replacement cost, rather than market value, and which includes 1857 an itemized calculation of the cost of reconstruction; or 1858 3. A replacement cost valuation prepared by a general, 1859 building, or residential contractor licensed under s. 489.113, 1860 or a professional engineer licensed under s. 471.015, which 1861 includes an itemized calculation of the total price of 1862 reconstruction. 1863 Section 13. Section 627.6011, Florida Statutes, is created 1864 to read: 1865 627.6011 Mandated coverages.—Mandatory health benefits 1866 regulated under this chapter which must be covered by an insurer 1867 are not intended to apply to the types of health benefit plan 1868 listed in s. 627.6561(5)(b)-(e), issued in any market, unless 1869 specifically designated otherwise. For purposes of this section, 1870 the term “mandatory health benefits” means those benefits set 1871 forth in ss. 627.6401-627.64193 and any cross-references to 1872 these sections, and any other mandatory treatment or health 1873 coverages or benefits enacted on or after July 1, 2012. 1874 Section 14. Paragraph (d) of subsection (3) of section 1875 627.6699, Florida Statutes, is amended to read: 1876 627.6699 Employee Health Care Access Act.— 1877 (3) DEFINITIONS.—As used in this section, the term: 1878 (d) “Carrier” means a person who provides health benefit 1879 plans in this state, including an authorized insurer, a health 1880 maintenance organization, a multiple-employer welfare 1881 arrangement, or any other person providing a health benefit plan 1882 that is subject to insurance regulation in this state. However, 1883 the term does not include a multiple-employer welfare 1884 arrangement or voluntary employees’ beneficiary association, as 1885 defined under 26 U.S.C. s. 501(c)(9), whichmultiple-employer1886welfare arrangementoperates solely for the benefit of the 1887 members or the members and the employees of such members, is 1888 located in this state, and was in existence on January 1, 1992; 1889 or an authorized insurer or health maintenance organization that 1890 insures the members or the members and the employees of such 1891 members of a multiple-employer welfare arrangement or voluntary 1892 employees’ beneficiary association in existence on January 1, 1893 1992. 1894 Section 15. Subsections (1), (2), (7), and (9) of section 1895 627.7015, Florida Statutes, are amended to read: 1896 627.7015 Alternative procedure for resolution of disputed 1897 property insurance claims.— 1898 (1)PURPOSE AND SCOPE.—This section sets forth a 1899 nonadversarial alternative dispute resolution procedure for a 1900 mediated claim resolution conference prompted by the need for 1901 effective, fair, and timely handling of property insurance 1902 claims. There is a particular need for an informal, 1903 nonthreatening forum for helping parties who elect this 1904 procedure to resolve their claims disputes because most 1905 homeowner’s and commercial residential insurance policies 1906 obligate policyholdersinsuredsto participate in a potentially 1907 expensive and time-consuming adversarial appraisal process 1908 beforeprior tolitigation. The procedure set forth in this 1909 section is designed to bring the parties together for a mediated 1910 claims settlement conference without any of the trappings or 1911 drawbacks of an adversarial process. Before resorting to these 1912 procedures, policyholdersinsuredsand insurers are encouraged 1913 to resolve claims as quickly and fairly as possible. This 1914 section is available with respect to claims under personal lines 1915 and commercial residential policies beforefor all claimants and1916insurers prior tocommencing the appraisal process, or before 1917 commencing litigation. Mediation may be requested only by the 1918 policyholder, as a first-party claimant, or the insurer. If 1919 requested by the policyholderinsured, participation by legal 1920 counsel or any other person having relevant information isshall1921bepermitted. Mediation under this section is also available to 1922 litigants referred to the department by a county court or 1923 circuit court. This section does not apply to commercial 1924 coverages, to private passenger motor vehicle insurance 1925 coverages, or to disputes relating to liability coverages in 1926 policies of property insurance. 1927 (2) At the time a first-party claim within the scope of 1928 this section is filed by the policyholder, the insurer shall 1929 notify the policyholderall first-party claimantsof the 1930 policyholder’stheirright to participate in the mediation 1931 program under this section. The department shall prepare a 1932 consumer information pamphlet for distribution to persons 1933 participating in mediationunder this section. 1934 (7) If the insurer fails to comply with subsection (2) by 1935 failing to notify a policyholderfirst-party claimantof the 1936 policyholder’sitsright to participate in the mediation program 1937 under this section or if the insurer requests the mediation, and 1938 the mediation results are rejected by either party, the 1939 policyholder isinsured shallnotberequired to submit to or 1940 participate in any contractual loss appraisal process of the 1941 property loss damage as a precondition to legal action for 1942 breach of contract against the insurer for its failure to pay 1943 the policyholder’s claims covered by the policy. 1944 (9) For purposes of this section, the term “claim” refers 1945 to any dispute between an insurer and a policyholderan insured1946 relating to a material issue of fact other than a dispute: 1947 (a) With respect to which the insurer has a reasonable 1948 basis to suspect fraud; 1949 (b) Where, based on agreed-upon facts as to the cause of 1950 loss, there is no coverage under the policy; 1951 (c) With respect to which the insurer has a reasonable 1952 basis to believe that the policyholderclaimanthas 1953 intentionally made a material misrepresentation of fact which is 1954 relevant to the claim, and the entire request for payment of a 1955 loss has been denied on the basis of the material 1956 misrepresentation;or1957 (d) With respect to which the amount in controversy is less 1958 than $500, unless the parties agree to mediate a dispute 1959 involving a lesser amount; or 1960 (e) With respect to a windstorm or hurricane loss that does 1961 not comply with s. 627.70132. 1962 Section 16. Paragraph (e) of subsection (5) of section 1963 627.707, Florida Statutes, is amended, and paragraph (f) is 1964 added to that subsection, to read: 1965 627.707 Investigation of sinkhole claims; insurer payment; 1966 nonrenewals.—Upon receipt of a claim for a sinkhole loss to a 1967 covered building, an insurer must meet the following standards 1968 in investigating a claim: 1969 (5) If a sinkhole loss is verified, the insurer shall pay 1970 to stabilize the land and building and repair the foundation in 1971 accordance with the recommendations of the professional engineer 1972 retained pursuant to subsection (2), with notice to the 1973 policyholder, subject to the coverage and terms of the policy. 1974 The insurer shall pay for other repairs to the structure and 1975 contents in accordance with the terms of the policy. If a 1976 covered building suffers a sinkhole loss or a catastrophic 1977 ground cover collapse, the insured must repair such damage or 1978 loss in accordance with the insurer’s professional engineer’s 1979 recommended repairs. However, if the insurer’s professional 1980 engineer determines that the repair cannot be completed within 1981 policy limits, the insurer must pay to complete the repairs 1982 recommended by the insurer’s professional engineer or tender the 1983 policy limits to the policyholder. 1984 (e) Upon the insurer’s obtaining the written approval of 1985 any lienholder, the insurer may make payment directly to the 1986 persons selected by the policyholder to perform the land and 1987 building stabilization and foundation repairs. The decision by 1988 the insurer to make payment to such persons does not hold the 1989 insurer liable for the work performed. 1990 (f) The policyholder may not accept a rebate from any 1991 person performing the repairs specified in this section. If a 1992 policyholder does receive a rebate, coverage is void and the 1993 policyholder must refund the amount of the rebate to the 1994 insurer. Any person making the repairs specified in this section 1995 who offers a rebate commits insurance fraud punishable as a 1996 third-degreethird degreefelony as provided in s. 775.082, s. 1997 775.083, or s. 775.084. As used in this paragraph, the term 1998 “rebate” means a remuneration, payment, gift, discount, or 1999 transfer of any item of value to the policyholder by or on 2000 behalf of a person performing the repairs specified in this 2001 section as an incentive or inducement to obtain repairs 2002 performed by that person. 2003 Section 17. Effective upon this act becoming a law, 2004 subsection (4) of section 627.7295, Florida Statutes, is amended 2005 to read: 2006 627.7295 Motor vehicle insurance contracts.— 2007 (4)If subsection (7) does not apply,The insurer may 2008 cancel the policy in accordance with this code except that, 2009 notwithstanding s. 627.728, an insurer may not cancel a new 2010 policy or binder during the first 60 days immediately following 2011 the effective date of the policy or binderexceptfor nonpayment 2012 of premium unless the reason for the cancellation is the 2013 issuance of a check for the premium that is dishonored for any 2014 reason or any other type of premium payment that was 2015 subsequently determined to be rejected or invalid. 2016 Section 18. Effective upon this act becoming a law, 2017 paragraph (d) of subsection (4) of section 627.736, Florida 2018 Statutes, is amended to read: 2019 627.736 Required personal injury protection benefits; 2020 exclusions; priority; claims.— 2021 (4) BENEFITS; WHEN DUE.—Benefits due from an insurer under 2022 ss. 627.730-627.7405 shall be primary, except that benefits 2023 received under any workers’ compensation law shall be credited 2024 against the benefits provided by subsection (1) and shall be due 2025 and payable as loss accrues, upon receipt of reasonable proof of 2026 such loss and the amount of expenses and loss incurred which are 2027 covered by the policy issued under ss. 627.730-627.7405. When 2028 the Agency for Health Care Administration provides, pays, or 2029 becomes liable for medical assistance under the Medicaid program 2030 related to injury, sickness, disease, or death arising out of 2031 the ownership, maintenance, or use of a motor vehicle, benefits 2032 under ss. 627.730-627.7405 shall be subject to the provisions of 2033 the Medicaid program. 2034 (d) All overdue paymentsshallbear simple interest fixed 2035 at the rate established under s. 55.03 or the rate established 2036 in the insurance contract, whichever is greater, in effect on 2037 the datefor the year in whichthe payment became overdue, 2038 calculated from the date the insurer was furnished with written 2039 notice of the amount of covered loss. Interest isshall bedue 2040 at the time payment of the overdue claim is made. 2041 Section 19. Section 627.7405, Florida Statutes, is amended 2042 to read: 2043 627.7405 Insurers’ right of reimbursement.— 2044 (1) Notwithstanding any other provisions of ss. 627.730 2045 627.7405, any insurer providing personal injury protection 2046 benefits on a private passenger motor vehicle shall have, to the 2047 extent of any personal injury protection benefits paid to any 2048 person as a benefit arising out of such private passenger motor 2049 vehicle insurance, a right of reimbursement against the owner or 2050 the insurer of the owner of a commercial motor vehicle, if the 2051 benefits paid result from such person having been an occupant of 2052 the commercial motor vehicle or having been struck by the 2053 commercial motor vehicle while not an occupant of any self 2054 propelled vehicle. 2055 (2) For purposes of this section, an owner or registrant 2056 identified in s. 627.733(1)(b) is not liable for a right of 2057 reimbursement. 2058 Section 20. Effective upon this act becoming a law, section 2059 628.901, Florida Statutes, is amended to read: 2060 628.901 Definitions“Captive insurer” defined.—As used in 2061For the purposes ofthis part, the term:except as provided in2062s.628.903, a “captive insurer” is a domestic insurer2063established under part I to insure the risks of a specific2064corporation or group of corporations under common ownership2065owned by the corporation or corporations from which it accepts2066risk under a contract of insurance.2067 (1) “Affiliated company” means a company in the same 2068 corporate system as a parent, an industrial insured, or a member 2069 organization by virtue of common ownership, control, operation, 2070 or management. 2071 (2) “Captive insurance company” means a domestic insurer 2072 established under this part. A captive insurance company 2073 includes a pure captive insurance company, special purpose 2074 captive insurance company, or industrial insured captive 2075 insurance company formed and licensed under this part. 2076 (3) “Captive reinsurance company” means a reinsurance 2077 company that is formed and licensed under this part and is 2078 wholly owned by a qualifying reinsurance parent company. A 2079 captive reinsurance company is a stock corporation and may not 2080 directly insure risks. A captive reinsurance company may 2081 reinsure only risks. 2082 (4) “Consolidated debt to total capital ratio” means the 2083 ratio of the sum of all debts and hybrid capital instruments as 2084 described in paragraph (a) to total capital as described in 2085 paragraph (b). 2086 (a) Debts and hybrid capital instruments include, but are 2087 not limited to, all borrowings from banks, all senior debt, all 2088 subordinated debts, all trust preferred shares, and all other 2089 hybrid capital instruments that are not included in the 2090 determination of consolidated GAAP net worth issued and 2091 outstanding. 2092 (b) Total capital consists of all debts and hybrid capital 2093 instruments as described in paragraph (a) plus owners’ equity 2094 determined in accordance with GAAP for reporting to the United 2095 States Securities and Exchange Commission. 2096 (5) “Consolidated GAAP net worth” means the consolidated 2097 owners’ equity determined in accordance with generally accepted 2098 accounting principles for reporting to the United States 2099 Securities and Exchange Commission. 2100 (6) “Controlled unaffiliated business” means a company: 2101 (a) That is not in the corporate system of a parent and 2102 affiliated companies; 2103 (b) That has an existing contractual relationship with a 2104 parent or affiliated company; and 2105 (c) Whose risks are managed by a captive insurance company 2106 in accordance with s. 628.919. 2107 (7) “GAAP” means generally accepted accounting principles. 2108 (8) “Industrial insured” means an insured that: 2109 (a) Has gross assets in excess of $50 million; 2110 (b) Procures insurance through the use of a full-time 2111 employee of the insured who acts as an insurance manager or 2112 buyer or through the services of a person licensed as a property 2113 and casualty insurance agent, broker, or consultant in such 2114 person’s state of domicile; 2115 (c) Has at least 100 full-time employees; and 2116 (d) Pays annual premiums of at least $200,000 for each line 2117 of insurance purchased from the industrial insured captive 2118 insurer or at least $75,000 for any line of coverage in excess 2119 of at least $25 million in the annual aggregate. The purchase of 2120 umbrella or general liability coverage in excess of $25 million 2121 in the annual aggregate shall be deemed to be the purchase of a 2122 single line of insurance. 2123 (9) “Industrial insured captive insurance company” means a 2124 captive insurance company that provides insurance only to the 2125 industrial insureds that are its stockholders or members, and 2126 affiliates thereof, or to the stockholders, and affiliates 2127 thereof, of its parent corporation. An industrial insured 2128 captive insurance company can also provide reinsurance to 2129 insurers only on risks written by such insurers for the 2130 industrial insureds that are the stockholders or members, and 2131 affiliates thereof, of the industrial insured captive insurer, 2132 or the stockholders, and affiliates thereof, of the parent 2133 corporation of the industrial insured captive insurer. 2134 (10) “Office” means the Office of Insurance Regulation. 2135 (11) “Parent” means any corporation, limited liability 2136 company, partnership, or individual that directly or indirectly 2137 owns, controls, or holds with power to vote more than 50 percent 2138 of the outstanding voting interests of a captive insurance 2139 company. 2140 (12) “Pure captive insurance company” means a company that 2141 insures risks of its parent, affiliated companies, controlled 2142 unaffiliated businesses, or a combination thereof. 2143 (13) “Qualifying reinsurer parent company” means a 2144 reinsurer which currently holds a certificate of authority, 2145 letter of eligibility or is an accredited or a satisfactory non 2146 approved reinsurer in this state possessing a consolidated GAAP 2147 net worth of at least $500 million and a consolidated debt to 2148 total capital ratio of not greater than 0.50. 2149 (14) “Special purpose captive insurance company” means a 2150 captive insurance company that is formed or licensed under this 2151 chapter that does not meet the definition of any other type of 2152 captive insurance company defined in this section. 2153 (15) “Treasury rates” means the United States Treasury 2154 STRIPS asked yield as published in the Wall Street Journal as of 2155 a balance sheet date. 2156 Section 21. Effective upon this act becoming a law, section 2157 628.903, Florida Statutes, is repealed. 2158 Section 22. Effective upon this act becoming a law, section 2159 628.905, Florida Statutes, is amended to read: 2160 628.905 Licensing; authority.— 2161 (1) AAnycaptive insurer, ifwhenpermitted by its charter 2162 or articles of incorporation, may apply to the office for a 2163 license to do any and all insurance authorized under the 2164 insurance code,provide commercial property, commercial2165casualty, and commercial marine insurance coverageother than 2166 workers’ compensation and employer’s liability, life, health, 2167 personal motor vehicle, and personal residential property 2168 insurancecoverage, except that:an industrial insured captive2169insurer may apply for a license to provide workers’ compensation2170and employer’s liability insurance as set forth in subsection2171(6).2172 (a) A pure captive insurance company may not insure any 2173 risks other than those of its parent, affiliated companies, 2174 controlled unaffiliated businesses, or a combination thereof. 2175 (b) An industrial insured captive insurance company may not 2176 insure any risks other than those of the industrial insureds 2177 that comprise the industrial insured group and their affiliated 2178 companies. 2179 (c) A special purpose captive insurance company may insure 2180 only the risks of its parent. 2181 (d) A captive insurance company may not accept or cede 2182 reinsurance except as provided in this part. 2183 (2) To conduct insurance business in this state, aNo2184captive insurer, other than an industrial insuredcaptive 2185 insurer must:, shall insure or accept reinsurance on any risks2186other than those of its parent and affiliated companies.2187 (a) Obtain from the office a license authorizing it to 2188 conduct insurance business in this state; 2189 (b) Hold at least one board of directors’ meeting each year 2190 in this state; 2191 (c) Maintain its principal place of business in this state; 2192 and 2193 (d) Appoint a resident registered agent to accept service 2194 of process and to otherwise act on its behalf in this state. In 2195 the case of a captive insurance company formed as a corporation 2196 or a nonprofit corporation, if the registered agent cannot with 2197 reasonable diligence be found at the registered office of the 2198 captive insurance company, the Chief Financial Officer of this 2199 state must be an agent of the captive insurance company upon 2200 whom any process, notice, or demand may be served. 2201 (3) Before receiving a license, a captive insurance company 2202 formed as a corporation or a nonprofit corporation must file 2203 with the office a certified copy of its articles of 2204 incorporation and bylaws, a statement under oath of its 2205 president and secretary showing its financial condition, and any 2206 other statements or documents required by the office. In 2207 addition, an applicant captive insurance company must file with 2208 the office evidence of: 2209 (a) The amount and liquidity of the proposed captive 2210 insurance company’s assets relative to the risks to be assumed; 2211 (b) The adequacy of the expertise, experience, and 2212 character of the person or persons who will manage the company; 2213 (c) The overall soundness of the company’s plan of 2214 operation; 2215 (d) The adequacy of the loss prevention programs of the 2216 company’s parent, member organizations, or industrial insureds, 2217 as applicable; and 2218 (e) Any other factors considered relevant by the office in 2219 ascertaining whether the company will be able to meet its policy 2220 obligations.In addition to information otherwise required by2221this code, each applicant captive insurer shall file with the2222office evidence of the adequacy of the loss prevention program2223of its insureds.2224 (4) A captive insurance company or captive reinsurance 2225 company must pay to the office a nonrefundable fee of $1,500 for 2226 processing its application for license. 2227 (a) A captive insurance company or captive reinsurance 2228 company must also pay an annual renewal fee of $1,000. 2229 (b) The office may charge a fee of $5 for any document 2230 requiring certification of authenticity or the signature of the 2231 commissioner or his or her designee.An industrial insured2232captive insurer need not be incorporated in this state if it has2233been validly incorporated under the laws of another2234jurisdiction.2235 (5) If the commissioner is satisfied that the documents and 2236 statements filed by the captive insurance company comply with 2237 this chapter, the commissioner may grant a license authorizing 2238 the company to conduct insurance business in this state until 2239 the next succeeding March 1, at which time the license may be 2240 renewed.An industrial insured captive insurer is subject to all2241provisions of this part except as otherwise indicated.2242 (6) Upon approval of the office, a foreign or alien captive 2243 insurance company may become a domestic captive insurance 2244 company by complying with all of the requirements of law 2245 relative to the organization and licensing of a domestic captive 2246 insurance company of the same or equivalent type in this state 2247 and by filing with the Secretary of State its charter or other 2248 organizational documents, together with any appropriate 2249 amendments that have been adopted in accordance with the laws of 2250 this state to bring the charter or other organizational 2251 documents into compliance with the laws of this state, along 2252 with a certificate of good standing issued by the office. The 2253 captive insurance company is then entitled to the necessary or 2254 appropriate certificates and licenses to continue transacting 2255 business in this state and is subject to the authority and 2256 jurisdiction of this state. In connection with this 2257 redomestication, the office may waive any requirements for 2258 public hearings. It is not necessary for a captive insurance 2259 company redomesticating into this state to merge, consolidate, 2260 transfer assets, or otherwise engage in any other 2261 reorganization, other than as specified in this section.An2262industrial insured captive insurer may not provide workers’2263compensation and employer’s liability insurance except in excess2264of at least $25 million in the annual aggregate.2265 (7) An industrial insured captive insurance company need 2266 not be incorporated in this state if it has been validly 2267 incorporated under the laws of another jurisdiction. 2268 Section 23. Effective upon this act becoming a law, section 2269 628.906, Florida Statutes, is created to read: 2270 628.906 Application requirements; restrictions on 2271 eligibility of officers and directors.— 2272 (1) To evidence competence and trustworthiness of its 2273 officers and directors, the application for a license to act as 2274 a captive insurance company or captive reinsurance company shall 2275 include, but not be limited to, background investigations, 2276 biographical affidavits, and fingerprint cards for all officers 2277 and directors. Fingerprints must be taken by a law enforcement 2278 agency or other entity approved by the office, be accompanied by 2279 the fingerprint processing fee specified in s. 624.501, and 2280 processed in accordance with s. 624.34. 2281 (2) The office may deny, suspend, or revoke the license to 2282 transact captive insurance or captive reinsurance in this state 2283 if any person who was an officer or director of an insurer, 2284 reinsurer, captive insurance company, captive reinsurance 2285 company, financial institution, or financial services business 2286 doing business in the United States, any state, or under the law 2287 of any other country and who served in that capacity within the 2288 2-year period prior to the date the insurer, reinsurer, captive 2289 insurance company, captive reinsurance company, financial 2290 institution, or financial services business became insolvent, 2291 serves as an officer or director of a captive insurance company 2292 or officer or director of a captive reinsurance company licensed 2293 in this state unless the officer or director demonstrates that 2294 his or her personal actions or omissions were not a contributing 2295 cause to the insolvency or unless the officer or director is 2296 immediately removed from the captive insurance company or 2297 captive reinsurance company. 2298 (3) The office may deny, suspend, or revoke the license to 2299 transact insurance or reinsurance in this state of a captive 2300 insurance company or captive reinsurance company if any officer 2301 or director, any stockholder that owns 10 percent or more of the 2302 outstanding voting securities of the captive insurance company 2303 or captive reinsurance company, or incorporator has been found 2304 guilty of, or has pleaded guilty or nolo contendere to, any 2305 felony or crime involving moral turpitude, including a crime of 2306 dishonesty or breach of trust, punishable by imprisonment of 1 2307 year or more under the law of the United States or any state 2308 thereof or under the law of any other country without regard to 2309 whether a judgment of conviction has been entered by the court 2310 having jurisdiction in such case. However, in the case of a 2311 captive insurance company or captive reinsurance company 2312 operating under a subsisting license, the captive insurance 2313 company or captive reinsurance company shall remove any such 2314 person immediately upon discovery of the conditions set forth in 2315 this subsection when applicable to such person or upon the order 2316 of the office, and the failure to so act shall be grounds for 2317 revocation or suspension of the captive insurance company’s or 2318 captive reinsurance company’s license. 2319 Section 24. Effective upon this act becoming a law, section 2320 628.907, Florida Statutes, is amended to read: 2321 628.907 Minimum capital and net assets requirements; 2322 restriction on payment of dividendssurplus.— 2323 (1) ANocaptive insurer may notshallbe issued a license 2324 unless it possesses and thereafter maintains:2325(1)unimpaired paid-in capital of: 2326 (a) In the case of a pure captive insurance company, at 2327 least $100,000.$500,000; and2328 (b) In the case of an industrial insured captive insurance 2329 company incorporated as a stock insurer, at least $200,000. 2330 (c) In the case of a special purpose captive insurance 2331 company, an amount determined by the office after giving due 2332 consideration to the company’s business plan, feasibility study, 2333 and pro forma financial statements and projections, including 2334 the nature of the risks to be insured. 2335 (2) The office may not issue a license to a captive 2336 insurance company incorporated as a nonprofit corporation unless 2337 the company possesses and maintains unrestricted net assets of: 2338 (a) In the case of a pure captive insurance company, 2339Unimpaired surplus ofat least $250,000. 2340 (b) In the case of a special purpose captive insurance 2341 company, an amount determined by the office after giving due 2342 consideration to the company’s business plan, feasibility study, 2343 and pro forma financial statements and projections, including 2344 the nature of the risks to be insured. 2345 (3) Contributions to a captive insurance company 2346 incorporated as a nonprofit corporation must be in the form of 2347 cash, cash equivalent, or an irrevocable letter of credit issued 2348 by a bank chartered by this state or a member bank of the 2349 Federal Reserve System with a branch office in this state, or as 2350 approved by the office. 2351 (4) For purposes of this section, the office may issue a 2352 license expressly conditioned upon the captive insurance company 2353 providing to the office satisfactory evidence of possession of 2354 the minimum required unimpaired paid-in capital. Until this 2355 evidence is provided, the captive insurance company may not 2356 issue any policy, assume any liability, or otherwise provide 2357 coverage. The office may revoke the conditional license if 2358 satisfactory evidence of the required capital is not provided 2359 within a maximum period of time, not to exceed 1 year, to be 2360 established by the office at the time the conditional license is 2361 issued. 2362 (5) The office may prescribe additional capital or net 2363 assets based upon the type, volume, and nature of insurance 2364 business transacted. Contributions in connection with these 2365 prescribed additional net assets or capital must be in the form 2366 of: 2367 (a) Cash; 2368 (b) Cash equivalent; 2369 (c) An irrevocable letter of credit issued by a bank 2370 chartered by this state or a member bank of the Federal Reserve 2371 System with a branch office in this state, or as approved by the 2372 office; or 2373 (d) Securities invested as provided in part II of chapter 2374 625. 2375 (6) A captive insurance company may not pay a dividend out 2376 of, or other distribution with respect to, capital or surplus in 2377 excess of the limitations set forth in this chapter without the 2378 prior approval of the office. Approval of an ongoing plan for 2379 the payment of dividends or other distributions must be 2380 conditioned upon the retention, at the time of each payment, of 2381 capital or surplus in excess of amounts specified by, or 2382 determined in accordance with formulas approved by, the office. 2383 (7) An irrevocable letter of credit that is issued by a 2384 financial institution other than a bank chartered by this state 2385 or a member bank of the Federal Reserve System must meet the 2386 same standards as an irrevocable letter of credit that has been 2387 issued by a bank chartered by this state or a member bank of the 2388 Federal Reserve System. 2389 Section 25. Effective upon this act becoming a law, section 2390 628.908, Florida Statutes, is created to read: 2391 628.908 Surplus requirements; restriction on payment of 2392 dividends.— 2393 (1) The office may not issue a license to a captive 2394 insurance company unless the company possesses and maintains 2395 unimpaired surplus of: 2396 (a) In the case of a pure captive insurance company, at 2397 least $150,000. 2398 (b) In the case of an industrial insured captive insurance 2399 company incorporated as a stock insurer, at least $300,000. 2400 (c) In the case of an industrial insured captive insurance 2401 company incorporated as a mutual insurer, at least $500,000. 2402 (d) In the case of a special purpose captive insurance 2403 company, an amount determined by the office after giving due 2404 consideration to the company’s business plan, feasibility study, 2405 and pro forma financial statements and projections, including 2406 the nature of the risks to be insured. 2407 (2) For purposes of this section, the office may issue a 2408 license expressly conditioned upon the captive insurance company 2409 providing to the office satisfactory evidence of possession of 2410 the minimum required unimpaired surplus. Until this evidence is 2411 provided, the captive insurance company may not issue any 2412 policy, assume any liability, or otherwise provide coverage. The 2413 office may revoke the conditional license if satisfactory 2414 evidence of the required surplus is not provided within a 2415 maximum period of time, not to exceed 1 year, to be established 2416 by the office at the time the conditional license is issued. 2417 (3) A captive insurance company may not pay a dividend out 2418 of, or other distribution with respect to, capital or surplus in 2419 excess of the limitations set forth in this chapter without the 2420 prior approval of the office. Approval of an ongoing plan for 2421 the payment of dividends or other distribution must be 2422 conditioned upon the retention, at the time of each payment, of 2423 capital or surplus in excess of amounts specified by, or 2424 determined in accordance with formulas approved by, the office. 2425 (4) An irrevocable letter of credit that is issued by a 2426 financial institution other than a bank chartered by this state 2427 or a member bank of the Federal Reserve System must meet the 2428 same standards as an irrevocable letter of credit that has been 2429 issued by a bank chartered by this state or a member bank of the 2430 Federal Reserve System. 2431 Section 26. Effective upon this act becoming a law, section 2432 628.909, Florida Statutes, is amended to read: 2433 628.909 Applicability of other laws.— 2434 (1) The Florida Insurance Code doesshallnot apply to 2435 captive insurers or industrial insured captive insurers except 2436 as provided in this part and subsections (2) and (3). 2437 (2) The following provisions of the Florida Insurance Code 2438shallapply to captive insurers who are not industrial insured 2439 captive insurers to the extent that such provisions are not 2440 inconsistent with this part: 2441 (a) Chapter 624, except for ss. 624.407, 624.408, 624.4085, 2442 624.40851, 624.4095, 624.425, and 624.426. 2443 (b) Chapter 625, part II. 2444 (c) Chapter 626, part IX. 2445 (d) Sections 627.730-627.7405, when no-fault coverage is 2446 provided. 2447 (e) Chapter 628. 2448 (3) The following provisions of the Florida Insurance Code 2449shallapply to industrial insured captive insurers to the extent 2450 that such provisions are not inconsistent with this part: 2451 (a) Chapter 624, except for ss. 624.407, 624.408, 624.4085, 2452 624.40851, 624.4095, 624.425, 624.426, and 624.609(1). 2453 (b) Chapter 625, part II, if the industrial insured captive 2454 insurer is incorporated in this state. 2455 (c) Chapter 626, part IX. 2456 (d) Sections 627.730-627.7405 when no-fault coverage is 2457 provided. 2458 (e) Chapter 628, except for ss. 628.341, 628.351, and 2459 628.6018. 2460 Section 27. Effective upon this act becoming a law, section 2461 628.910, Florida Statutes, is created to read: 2462 628.910 Incorporation options and requirements.— 2463 (1) A pure captive insurance company may be: 2464 (a) Incorporated as a stock insurer with its capital 2465 divided into shares and held by the stockholders; or 2466 (b) Incorporated as a public benefit, mutual benefit, or 2467 religious nonprofit corporation with members in accordance with 2468 the Florida Not For Profit Corporation Act. 2469 (2) An industrial insured captive insurance company may be: 2470 (a) Incorporated as a stock insurer with its capital 2471 divided into shares and held by the stockholders; or 2472 (b) Incorporated as a mutual insurer without capital stock, 2473 the governing body of which is elected by its members. 2474 (3) A captive insurance company may not have fewer than 2475 three incorporators of whom not fewer than two must be residents 2476 of this state. 2477 (4) In the case of a captive insurance company formed as a 2478 corporation or a nonprofit corporation, before the articles of 2479 incorporation are transmitted to the Secretary of State, the 2480 incorporators shall file the articles of incorporation in 2481 triplicate with the office. The office shall promptly examine 2482 the articles of incorporation. If it finds that the articles of 2483 incorporation conform to law, it shall endorse its approval on 2484 each of the triplicate originals of the articles of 2485 incorporation, retain one copy for its files, and return the 2486 remaining copies to the incorporators for filing with the 2487 Department of State. 2488 (5) The articles of incorporation, the certificate issued 2489 pursuant to this section, and the organization fees required by 2490 the Florida Business Corporation Act or the Florida Not For 2491 Profit Corporation Act, as applicable, must be transmitted to 2492 the Secretary of State, who must record the articles of 2493 incorporation and the certificate. 2494 (6) The capital stock of a captive insurance company 2495 incorporated as a stock insurer must be issued at par value of 2496 not less than $1 or more than $100 per share. 2497 (7) In the case of a captive insurance company formed as a 2498 corporation or a nonprofit corporation, at least one of the 2499 members of the board of directors of a captive insurance company 2500 incorporated in this state must be a resident of this state. 2501 (8) A captive insurance company formed as a corporation or 2502 a nonprofit corporation, pursuant to the provisions of this 2503 chapter, has the privileges and is subject to the provisions of 2504 the general corporation law, including the Florida Not For 2505 Profit Corporation Act for nonprofit corporations, as 2506 applicable, as well as the applicable provisions contained in 2507 this chapter. If a conflict occurs between a provision of the 2508 general corporation law, including the Florida Not For Profit 2509 Corporation Act for nonprofit corporations, as applicable, and a 2510 provision of this chapter, the latter controls. The provisions 2511 of this title pertaining to mergers, consolidations, 2512 conversions, mutualizations, and redomestications apply in 2513 determining the procedures to be followed by a captive insurance 2514 company in carrying out any of the transactions described in 2515 such provisions, except that the office may waive or modify the 2516 requirements for public notice and hearing in accordance with 2517 rules the office may adopt addressing categories of 2518 transactions. If a notice of public hearing is required, but no 2519 one requests a hearing, the office may cancel the hearing. 2520 (9) The articles of incorporation or bylaws of a captive 2521 insurance company may authorize a quorum of a board of directors 2522 to consist of no fewer than one-third of the fixed or prescribed 2523 number of directors as provided for by the Florida Business 2524 Corporation Act or the Florida Not For Profit Corporation Act. 2525 Section 28. Effective upon this act becoming a law, section 2526 628.911, Florida Statutes, is amended to read: 2527 628.911 Reports and statements.— 2528 (1) A captive insurance company mayinsurer shallnot be 2529 required to make any annual report except as provided in this 2530 partsection. 2531 (2) Annually no later than March 1, a captive insurance 2532 company or a captive reinsurance companyinsurershall, within253360 days after the end of its fiscal year and as often as the2534office may deem necessary,submit to the office a report of its 2535 financial condition verified by oath of two of its executive 2536 officers. Except as provided in this part, a captive insurance 2537 company or a captive reinsurance company must report using 2538 generally accepted accounting principles, unless the office 2539 approves the use of statutory accounting principles, with useful 2540 or necessary modifications or adaptations required or approved 2541 or accepted by the office for the type of insurance and kinds of 2542 insurers to be reported upon, and as supplemented by additional 2543 information required by the office. The Financial Services 2544 Commission may adopt by rule the form in which captive insurance 2545 companiesinsurersshall report. 2546 (3) A captive insurance company may make written 2547 application for filing the required report on a fiscal year end 2548 that is consistent with the parent company’s fiscal year. If an 2549 alternative reporting date is granted, the annual report is due 2550 60 days after the fiscal year end. 2551 Section 29. Effective upon this act becoming a law, section 2552 628.912, Florida Statutes, is created to read: 2553 628.912 Discounting of loss and loss adjustment expense 2554 reserves.— 2555 (1) A captive reinsurance company may discount its loss and 2556 loss adjustment expense reserves at treasury rates applied to 2557 the applicable payments projected through the use of the 2558 expected payment pattern associated with the reserves. 2559 (2) A captive reinsurance company must file annually an 2560 actuarial opinion on loss and loss adjustment expense reserves 2561 provided by an independent actuary. The actuary may not be an 2562 employee of the captive reinsurance company or its affiliates. 2563 (3) The office may disallow the discounting of reserves if 2564 a captive reinsurance company violates a provision of this part. 2565 Section 30. Effective upon this act becoming a law, section 2566 628.913, Florida Statutes, is amended to read: 2567 (Substantial rewording of section. See 2568 s. 628.913, F.S., for present text.) 2569 628.913 Captive reinsurance companies.— 2570 (1) A captive reinsurance company, if permitted by its 2571 articles of incorporation or charter, may apply to the office 2572 for a license to write reinsurance covering property and 2573 casualty insurance or reinsurance contracts. A captive 2574 reinsurance company authorized by the office may write 2575 reinsurance contracts covering risks in any state; however, a 2576 captive reinsurance company authorized by the office may not 2577 directly insure risks. 2578 (2) To conduct business in this state, a captive 2579 reinsurance company must: 2580 (a) Obtain from the office a license authorizing it to 2581 conduct business as a captive reinsurance company in this state; 2582 (b) Hold at least one board of directors’ meeting each year 2583 in this state; 2584 (c) Maintain its principal place of business in this state; 2585 and 2586 (d) Appoint a registered agent to accept service of process 2587 and act otherwise on its behalf in this state. 2588 (3) Before receiving a license, a captive reinsurance 2589 company must file with the office: 2590 (a) A certified copy of its charter and bylaws; 2591 (b) A statement under oath of its president and secretary 2592 showing its financial condition; and 2593 (c) Other documents required by the office. 2594 (4) In addition to the information required by this 2595 section, the captive reinsurance company must file with the 2596 office evidence of: 2597 (a) The amount and liquidity of the captive reinsurance 2598 company’s assets relative to the risks to be assumed; 2599 (b) The adequacy of the expertise, experience, and 2600 character of the person who manages the company; 2601 (c) The overall soundness of the company’s plan of 2602 operation; and 2603 (d) Other overall factors considered relevant by the office 2604 in ascertaining if the company would be able to meet its policy 2605 obligations. 2606 Section 31. Effective upon this act becoming a law, section 2607 628.914, Florida Statutes, is created to read: 2608 628.914 Minimum capitalization or reserves for captive 2609 reinsurance companies.— 2610 (1) The office may not issue a license to a captive 2611 reinsurance company unless the company possesses and maintains 2612 capital or unimpaired surplus of at least the greater of $300 2613 million or 10 percent of reserves. The surplus may be in the 2614 form of cash or securities as permitted by part II of chapter 2615 625. 2616 (2) The office may prescribe additional capital or surplus 2617 based upon the type, volume, and nature of the insurance 2618 business transacted. 2619 (3) A captive reinsurance company may not pay a dividend 2620 out of, or other distribution with respect to, capital or 2621 surplus in excess of the limitations without the prior approval 2622 of the office. Approval of an ongoing plan for the payment of 2623 dividends or other distributions must be conditioned upon the 2624 retention, at the time of each payment, of capital or surplus in 2625 excess of amounts specified by, or determined in accordance with 2626 formulas approved by, the office. 2627 Section 32. Effective upon this act becoming a law, section 2628 628.9141, Florida Statutes, is created to read: 2629 628.9141 Incorporation of a captive reinsurance company.— 2630 (1) A captive reinsurance company must be incorporated as a 2631 stock insurer with its capital divided into shares and held by 2632 its shareholders. 2633 (2) A captive reinsurance company may not have fewer than 2634 three incorporators of whom at least two must be residents of 2635 this state. 2636 (3) Before the articles of incorporation are transmitted to 2637 the Secretary of State, the incorporators must comply with all 2638 the requirements of s. 628.091. 2639 (4) The capital stock of a captive reinsurance company must 2640 be issued at par value of not less than $1 or more than $100 per 2641 share. 2642 (5) At least one of the members of the board of directors 2643 of a captive reinsurance company incorporated in this state must 2644 be a resident of this state. 2645 Section 33. Effective upon this act becoming a law, section 2646 628.9142, Florida Statutes, is created to read: 2647 628.9142 Reinsurance; effect on reserves.— 2648 (1) A captive insurance company may provide reinsurance, as 2649 authorized in this part, on risks ceded by any other insurer. 2650 (2) A captive insurance company may take credit for 2651 reserves on risks or portions of risks ceded to authorized 2652 insurers or reinsurers and unauthorized insurers or reinsurers 2653 complying with s. 624.610. A captive insurer may not take credit 2654 for reserves on risks or portions of risks ceded to an 2655 unauthorized insurer or reinsurer if the insurer or reinsurer is 2656 not in compliance with s. 624.610. 2657 Section 34. Effective upon this act becoming a law, section 2658 628.918, Florida Statutes, is created to read: 2659 628.918 Management of assets of captive reinsurance 2660 company.—At least 35 percent of the assets of a captive 2661 reinsurance company must be managed by an asset manager 2662 domiciled in this state. 2663 Section 35. Effective upon this act becoming a law, section 2664 628.919, Florida Statutes, is created to read: 2665 628.919 Standards to ensure risk management control by 2666 parent company.—The Financial Services Commission shall adopt 2667 rules establishing standards to ensure that a parent or 2668 affiliated company is able to exercise control of the risk 2669 management function of any controlled unaffiliated business to 2670 be insured by the pure captive insurance company. 2671 Section 36. Effective upon this act becoming a law, section 2672 628.920, Florida Statutes, is created to read: 2673 628.920 Eligibility of licensed captive insurance company 2674 for certificate of authority to act as insurer.—A licensed 2675 captive insurance company that meets the necessary requirements 2676 of this part imposed upon an insurer must be considered for 2677 issuance of a certificate of authority to act as an insurer in 2678 this state. 2679 Section 37. Section 631.271, Florida Statutes, is amended 2680 to read: 2681 631.271 Priority of claims.— 2682 (1) The priority of distribution of claims from the 2683 insurer’s estate shall be in accordance with the order in which 2684 each class of claims is set forth in this subsection. Every 2685 claim in each class shall be paid in full or adequate funds 2686 shall be retained for such payment before the members of the 2687 next class may receive any payment. No subclasses may be 2688 established within any class. The order of distribution of 2689 claims shall be: 2690 (a) Class 1.— 2691 1. All of the receiver’s costs and expenses of 2692 administration. 2693 2. All of the expenses of a guaranty association or foreign 2694 guaranty association in handling claims. 2695 (b) Class 2.—All claims under policies for losses incurred, 2696 including third-party claims, all claims against the insurer for 2697 liability for bodily injury or for injury to or destruction of 2698 tangible property which claims are not under policies, and all 2699 claims of a guaranty association or foreign guaranty 2700 association. All claims under life insurance and annuity 2701 policies, whether for death proceeds, annuity proceeds, or 2702 investment values, shall be treated as loss claims. That portion 2703 of any loss, indemnification for which is provided by other 2704 benefits or advantages recovered by the claimant, may not be 2705 included in this class, other than benefits or advantages 2706 recovered or recoverable in discharge of familial obligations of 2707 support or by way of succession at death or as proceeds of life 2708 insurance, or as gratuities. No payment by an employer to her or 2709 his employee may be treated as a gratuity. 2710 (c) Class 3.—Claims under nonassessable policies for 2711 unearned premiums or premium refunds. 2712 (d) Class 4.—Claims of the Federal Government. 2713 (e) Class 5.—Debts due to employees for services performed, 2714 to the extent that the debts do not exceed $2,000 for each 2715 employee and represent payment for services performed within 6 2716 months before the filing of the petition for liquidation. 2717 Officers and directors are not entitled to the benefit of this 2718 priority. This priority is in lieu of any other similar priority 2719 that is authorized by law as to wages or compensation of 2720 employees. 2721 (f) Class 6.—Claims of general creditors. 2722 (g) Class 7.—Claims of any state or local government. 2723 Claims, including those of any state or local government for a 2724 penalty or forfeiture, shall be allowed in this class, but only 2725 to the extent of the pecuniary loss sustained from the act, 2726 transaction, or proceeding out of which the penalty or 2727 forfeiture arose, with reasonable and actual costs occasioned 2728 thereby. The remainder of such claims shall be postponed to the 2729 class of claims under paragraph (k)(j). 2730 (h) Class 8.—Claims filed after the time specified in s. 2731 631.181(3), except when ordered otherwise by the court to 2732 prevent manifest injustice, or any claims other than claims 2733 under paragraph (i) or under paragraph (k)(j). 2734 (i) Class 9.—Surplus or contribution notes, or similar 2735 obligations, and premium refunds on assessable policies. 2736 Payments to members of domestic mutual insurance companies shall 2737 be limited in accordance with law. 2738 (j) Class 10.—Interest on allowed claims of Classes 1 2739 through 9, according to the terms of a plan to pay interest on 2740 allowed claims proposed by the liquidator and approved by the 2741 receivership court. 2742 (k) Class 11.—The claims of shareholders or other owners. 2743 (2) In a liquidation proceeding involving one or more 2744 reciprocal states, the order of distribution of the domiciliary 2745 state shall control as to all claims of residents of this and 2746 reciprocal states. All claims of residents of reciprocal states 2747 shall be given equal priority of payment from general assets 2748 regardless of where such assets are located. 2749 Section 38. If CS for SB 578 or similar legislation is 2750 adopted in the same legislative session or an extension thereof 2751 and becomes law, a surplus lines insurer removing policies from 2752 the Citizens Property Insurance Corporation must, pursuant to s. 2753 627.351(6)(q)3.d.(II)(B), Florida Statutes, maintain an A.M. 2754 Best Financial Strength Rating of A- or better or, in the 2755 alternative, a Demotech Financial Stability Rating of A or 2756 better. 2757 Section 39. Except as otherwise expressly provided in this 2758 act and except for this section, which shall take effect upon 2759 this act becoming a law, this act shall take effect July 1, 2760 2012.