Bill Text: FL S1836 | 2011 | Regular Session | Comm Sub
Bill Title: Insurance
Spectrum: Slight Partisan Bill (? 2-1)
Status: (Introduced - Dead) 2011-05-07 - Indefinitely postponed and withdrawn from consideration [S1836 Detail]
Download: Florida-2011-S1836-Comm_Sub.html
Florida Senate - 2011 CS for CS for SB 1836 By the Committees on Budget Subcommittee on General Government Appropriations; and Banking and Insurance; and Senator Diaz de la Portilla 601-04519-11 20111836c2 1 A bill to be entitled 2 An act relating to insurance; amending s. 624.402, 3 F.S.; revising provisions relating to certain insurers 4 serving nonresidents domiciled outside the United 5 States who are exempt from requirements to obtain a 6 certificate of authority; amending s. 628.901, F.S.; 7 providing definitions; repealing s. 628.903, F.S., 8 relating to the definition of the term “industrial 9 insured captive insurer”; amending s. 628.905, F.S.; 10 requiring a captive insurer to obtain a license and to 11 file evidence that a person or firm with whom it 12 intends to conduct business is reputable; providing 13 that a certificate of insurance for an association 14 captive insurer does not exceed the total funds of the 15 association members; creating s. 628.908, F.S.; 16 requiring a licensed captive insurer to maintain its 17 principal place of business in this state and hold an 18 annual meeting in this state; amending s. 628.909, 19 F.S.; applying additional provisions of the insurance 20 code to captive insurers; providing an effective date. 21 22 Be It Enacted by the Legislature of the State of Florida: 23 24 Section 1. Subsection (8) of section 624.402, Florida 25 Statutes, is amended to read: 26 624.402 Exceptions, certificate of authority required.—A 27 certificate of authority shall not be required of an insurer 28 with respect to: 29 (8) An insurer domiciled outside the United States covering 30 only persons who, at the time of issuance or renewal, are 31 nonresidents of the United States. 32 (a) In order to qualify for this exemption, the insurer: 33 1. Must register with the office via a letter of 34 notification upon commencing business from this state. 35 2. Must provide the following information to the office 36 annually by March 1: 37 a. The name of the insurer; the country of domicile; the 38 address of the insurer’s principal office and office in this 39 state; the names of the owners of the insurer and their 40 percentage of ownership; the names of the officers and directors 41 of the insurer; the name, e-mail, and telephone number of a 42 contact person for the insurer; and the number of individuals 43 who are employed by the insurer or its affiliates in this state; 44 b. The type of products offered by the insurer; 45 c. A statement from the applicable regulatory body of the 46 insurer’s domicile certifying that the insurer is licensed or 47 registered in that domicile; and 48 d. A copy of the filings required by the applicable 49 regulatory body of the insurer’s domicile. 50 3. Or any affiliated person as defined in s. 624.04 under 51 common ownership or control with the insurer, may not solicit, 52 sell, or accept an application for any insurance policy or 53 contract to be delivered or issued for delivery to any 54 individual other than a nonresident. 55 (b) All policies or certificates delivered to nonresidents 56 in this state must include the following statement in a 57 contrasting color and at least 10-point type: “The policy 58 providing your coverage and the insurer providing this policy 59 have not been approved by the Florida Office of Insurance 60 Regulation”. 61 (c) If the insurer ceases to do business from this state, 62 the insurer must agree to provide written notification to the 63 office within 30 days after cessation. 64 (d) Subject to the limitations contained in this 65 subsection, services, including those listed in s. 624.10, may 66 be provided by the insurer or an affiliated person as defined in 67 s. 624.04 under common ownership or control with the insurer. 68 (e) An alien insurer transacting insurance in this state 69 without complying with this subsection is in violation of this 70 chapter and subject to the penalties under s. 624.15. 71 (f) An insurer that holds a certificate of authority in 72 this state may issue and deliver policies to nonresidents at 73 temporary or secondary addresses in this state, along with a 74 notice that the policy form and rate is not subject to the 75 approval of the Office of Insurance Regulation. 76 (g) The term “nonresident” means an individual who resides 77 in and maintains a physical place of domicile in a country other 78 than the United States, which he or she recognizes as and 79 intends to maintain as his or her permanent home. The term does 80 not include an unauthorized immigrant present in the United 81 States. Notwithstanding any other provision of law, it is 82 conclusively presumed that an individual is a resident of the 83 United States if such individual: 84 1. Has had his or her principal place of domicile in the 85 United States for 180 days or more in the 365 days before 86 issuance or renewal the policy; 87 2. Has registered to vote in any state; 88 3. Has made a statement of domicile in any state; or 89 4. Has filed for homestead tax exemption on property in any 90 state. 91(a) Life insurance policies or annuity contracts issued by92an insurer domiciled outside the United States covering only93persons who, at the time of issuance, are not residents of the94United States and are not nonresidents illegally residing in the95United States, provided:961. The insurer must currently be an authorized insurer in97its country of domicile as to the kind or kinds of insurance98proposed to be offered and must have been such an insurer for99not fewer than the immediately preceding 3 years, or must be the100wholly owned subsidiary of such authorized insurer or must be101the wholly owned subsidiary of an already eligible authorized102insurer as to the kind or kinds of insurance proposed for a103period of not fewer than the immediately preceding 3 years.104However, the office may waive the 3-year requirement if the105insurer has operated successfully for a period of at least the106immediately preceding year and has capital and surplus of not107less than $25 million.1082. Before the office may grant eligibility, the requesting109insurer shall furnish the office with a duly authenticated copy110of its current annual financial statement, in English, and with111all monetary values therein expressed in United States dollars,112at an exchange rate then-current and shown in the statement, in113the case of statements originally made in the currencies of114other countries, and with such additional information relative115to the insurer as the office may request.1163. The insurer must have and maintain surplus as to117policyholders of not less than $15 million. Any such surplus as118to policyholders shall be represented by investments consisting119of eligible investments for like funds of like domestic insurers120under part II of chapter 625; however, any such surplus as to121policyholders may be represented by investments permitted by the122domestic regulator of such alien insurance company if such123investments are substantially similar in terms of quality,124liquidity, and security to eligible investments for like funds125of like domestic insurers under part II of chapter 625.1264. The insurer must be of good reputation as to the127providing of service to its policyholders and the payment of128losses and claims.1295. To maintain eligibility, the insurer shall furnish the130office within the time period specified in s.624.424(1)(a) a131duly authenticated copy of its current annual and quarterly132financial statements, in English, and with all monetary values133therein expressed in United States dollars, at an exchange rate134then-current and shown in the statement, in the case of135statements originally made in the currencies of other countries,136and with such additional information relative to the insurer as137the office may request.1386. An insurer receiving eligibility under this subsection139shall agree to make its books and records pertaining to its140operations in this state available for inspection during normal141business hours upon request of the office.1427. The insurer shall provide to the applicant for the143policy or contract a copy of the most recent quarterly financial144statements of the insurer providing, in clear and conspicuous145language:146a. The date of organization of the insurer.147b. The identity of and rating assigned by each recognized148insurance company rating organization that has rated the insurer149or, if applicable, that the insurer is unrated.150c. That the insurer does not hold a certificate of151authority issued in this state and that the office does not152exercise regulatory oversight over the insurer.153d. The identity and address of the regulatory authority154exercising oversight of the insurer.155 156This paragraph does not impose upon the office any duty or157responsibility to determine the actual financial condition or158claims practices of any unauthorized insurer, and the status of159eligibility, if granted by the office, indicates only that the160insurer appears to be financially sound and to have satisfactory161claims practices and that the office has no credible evidence to162the contrary.163(b) If at any time the office has reason to believe that an164insurer issuing policies or contracts pursuant to this165subsection is insolvent or is in unsound financial condition,166does not make reasonable prompt payment of benefits, or is no167longer eligible under the conditions specified in this168subsection, the office may conduct an examination or169investigation in accordance with s.624.316, s.624.3161, or s.170624.320and, if the findings of such examination or171investigation warrant, may withdraw the eligibility of the172insurer to issue policies or contracts pursuant to this173subsection without having a certificate of authority issued by174the office.175(c) This subsection does not provide an exception to the176agent licensure requirements of chapter 626. Any insurer issuing177policies or contracts pursuant to this subsection shall appoint178the agents that the insurer uses to sell such policies or179contracts as provided in chapter 626.180(d) An insurer issuing policies or contracts pursuant to181this subsection is subject to part IX of chapter 626, Unfair182Insurance Trade Practices, and the office may take such actions183against the insurer for a violation as are provided in that184part.185(e) Policies and contracts issued pursuant to this186subsection are not subject to the premium tax specified in s.187624.509.188(f) Applications for life insurance coverage offered under189this subsection must contain, in contrasting color and not less190than 12-point type, the following statement on the same page as191the applicant’s signature:192 193This policy is primarily governed by the laws of a194foreign country. As a result, all of the rating and195underwriting laws applicable to policies filed in this196state do not apply to this coverage, which may result197in your premiums being higher than would be198permissible under a Florida-approved policy. Any199purchase of individual life insurance should be200considered carefully, as future medical conditions may201make it impossible to qualify for another individual202life policy. If the insurer issuing your policy203becomes insolvent, this policy is not covered by the204Florida Life and Health Insurance Guaranty205Association. For information concerning individual206life coverage under a Florida-approved policy, consult207your agent or the Florida Department of Financial208Services.209 210(g) All life insurance policies and annuity contracts211issued pursuant to this subsection must contain on the first212page of the policy or contract, in contrasting color and not213less than 10-point type, the following statement:214 215The benefits of the policy providing your coverage are216governed primarily by the law of a country other than217the United States.218 219(h) All single-premium life insurance policies and single220premium annuity contracts issued to persons who are not221residents of the United States and are not nonresidents222illegally residing in the United States pursuant to this223subsection shall be subject to the provisions of chapter 896.224 Section 2. Section 628.901, Florida Statutes, is amended to 225 read: 226 628.901 Definitions“Captive insurer” defined.—As used in 227For the purposes ofthis part, the term:except as provided in228s.628.903, a “captive insurer” is a domestic insurer229established under part I to insure the risks of a specific230corporation or group of corporations under common ownership231owned by the corporation or corporations from which it accepts232risk under a contract of insurance.233 (1) “Association” means a legal association of nursing 234 homes, hospitals, skilled nursing facilities, assisted living 235 facilities, or continuing care retirement communities. 236 (2) “Association captive insurer” means a company that 237 insures risks of the member organizations of the association and 238 their affiliated companies. 239 (3) “Captive insurer” means a pure captive insurer or an 240 association captive insurer domiciled in this state and formed 241 or licensed under this part. 242 (4) “Industrial insured” means an insured that: 243 (a) Has gross assets in excess of $50 million; 244 (b) Procures insurance through the use of a full-time 245 employee of the insured who acts as an insurance manager or 246 buyer or through the services of a person licensed as a property 247 and casualty insurance agent, broker, or consultant in such 248 person’s state of domicile; 249 (c) Has at least 100 full-time employees; and 250 (d) Pays annual premiums of at least $200,000 for each line 251 of insurance purchased from the industrial insured captive 252 insurer, or at least $75,000 for any line of coverage in excess 253 of at least $25 million in the annual aggregate. The purchase of 254 umbrella or general liability coverage in excess of $25 million 255 in the annual aggregate is deemed to be the purchase of a single 256 line of insurance. 257 (5) “Industrial insured captive insurer” is a captive 258 insurer that: 259 (a) Has as its stockholders or members only industrial 260 insureds that the captive insurer insures, or has as its sole 261 stockholder a corporation whose sole stockholders are industrial 262 insureds that the captive insurer insures; and 263 1. Provides insurance only to the industrial insureds that 264 are its stockholders or members, and affiliates thereof, or to 265 the stockholders, and affiliates thereof, of its parent 266 corporation; or 267 2. Provides reinsurance only on risks written by insurers 268 of industrial insureds who are the stockholders or members, and 269 affiliates thereof, of the captive insurer, or the stockholders, 270 and affiliates thereof, of the parent corporation of the captive 271 insurer; 272 (b) Maintains unimpaired capital and surplus of at least 273 $20 million; and 274 (c) If licensed in this state before December 31, 1999, or 275 if any subsidiary formed by the licensed insurer on or after 276 December 31, 1999, has: 277 1. Gross assets in excess of $10 million and procures 278 insurance through the use of a full-time employee of the insured 279 who acts as an insurance manager or buyer or through the 280 services of a person licensed as a property and casualty 281 insurance agent, broker, or consultant in such person’s state of 282 domicile; 283 2. At least 25 full-time employees; and 284 3. Annual aggregate premiums for all insurance risks which 285 total at least $100,000. 286 287 As used in this subsection, the term “affiliate” means a person 288 that directly or indirectly, through one or more intermediaries, 289 controls, is controlled by, or is under common control with one 290 or more of the stockholders or members of an industrial insured 291 captive insurer or one or more of the stockholders of the parent 292 corporation of an industrial insured captive insurer. 293 (6) “Pure captive insurer” means a company that insures the 294 risks of its parent, affiliated companies, controlled 295 unaffiliated businesses, or a combination thereof. 296 Section 3. Section 628.903, Florida Statutes, is repealed. 297 Section 4. Section 628.905, Florida Statutes, is amended to 298 read: 299 628.905 Licensing; authority.—In order to conduct insurance 300 business in this state, a captive insurer must obtain a license 301 from the office. 302 (1) AAnycaptive insurer, ifwhenpermitted by its charter 303 or articles of incorporation, may apply to the office for a 304 license to provide commercial property, commercial casualty, and 305 commercial marine insurance.coverage other than workers’306compensation and employer’s liability insurance coverage, except307thatAn industrial insured captive insurer may also apply for a 308 license to provide workers’ compensation and employer’s 309 liability insurance as set forth in subsection (5)(6). 310 (2) ANocaptive insurer, other than an industrial insured 311 captive insurer, may notshallinsure or accept reinsurance on 312 any risks other than those of its parent and affiliated 313 companies. 314 (3) In addition to information otherwise required by this 315 code, each applicant captive insurer shall file with the office 316 evidence: 317 (a) Of the adequacy of the loss prevention program of its 318 insureds. 319 (b) That it intends to employ or contract with a reputable 320 person or firm that possesses the appropriate expertise, 321 experience, and character to manage the association captive 322 insurer. 323 (4) If an association captive insurer operates with 324 separate cells or segregated accounts, a certificate of 325 insurance used to satisfy financial responsibility laws shall be 326 issued in an amount not exceeding the total funds in the 327 segregated accounts or separate cells of each member 328 organization of the association. 329 (5)(4)An industrial insured captive insurer: 330 (a) Need not be incorporated in this state if it has been 331 validly incorporated under the laws of another jurisdiction;.332 (b)(5)An industrial insured captive insurerIs subject to 333 all provisions of this part except as otherwise indicated; and.334 (c)(6)An industrial insured captive insurerMay not 335 provide workers’ compensation and employer’s liability insurance 336 except in excess of at least $25 million in the annual 337 aggregate. 338 Section 5. Section 628.908, Florida Statutes, is created to 339 read: 340 628.908 Principal place of business; annual meeting.—In 341 order to conduct insurance business in this state, a licensed 342 captive insurer must: 343 (1) Maintain its principal place of business in this state; 344 and 345 (2) Annually hold in this state at least one board of 346 directors’ meeting; or, in the case of a reciprocal insurer, one 347 subscriber’s advisory committee meeting; or, in the case of a 348 limited liability company, one managing board’s meeting. 349 Section 6. Paragraph (a) of subsection (2) and paragraph 350 (a) of subsection (3) of section 628.909, Florida Statutes, are 351 amended to read: 352 628.909 Applicability of other laws.— 353 (2) The following provisions of the Florida Insurance Code 354 shall apply to captive insurers who are not industrial insured 355 captive insurers to the extent that such provisions are not 356 inconsistent with this part: 357 (a) Chapter 624, except for ss. 624.407, 624.408, 624.4085, 358 624.40851, 624.4095, 624.425, and 624.426. 359 (3) The following provisions of the Florida Insurance Code 360 shall apply to industrial insured captive insurers to the extent 361 that such provisions are not inconsistent with this part: 362 (a) Chapter 624, except for ss. 624.407, 624.408, 624.4085, 363 624.40851, 624.4095, 624.425, 624.426, and 624.609(1). 364 Section 7. This act shall take effect July 1, 2011.