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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
A bill to be entitled 1
An act relating to domestic surplus lines insurers; 2
amending s. 626.914, F.S.; revising the definition of 3
the term "eligible surplus lines insurer" to include 4
domestic surplus lines insurers; defining the term 5
"domestic surplus line insurer"; creating s. 6
626.91805, F.S.; defining the term "nonadmitted 7
insurer"; authorizing specified nonadmitted insurers 8
to transact insurance as domestic surplus lines 9
insurers under certain circumstances; authorizing such 10
insurers to write surplus lines insurance in any 11
jurisdiction; providing that such authorization is not 12
contingent on the existence of a certificate of 13
authority; requiring domestic surplus lines insurers 14
to be deemed eligible surplus lines insurers and to be 15
included in the list of eligible surplus lines 16
insurers; authorizing such insurers to write certain 17
kinds of insurance; requiring domestic surplus lines 18
insurers to be considered unauthorized insurers for 19
specified purposes; requiring domestic surplus lines 20
insurers to be considered nonadmitted insurers for 21
specified purposes; authorizing domestic surplus lines 22
insurers to write only surplus lines insurance; 23
limiting the circumstances under which such insurers 24
may write surplus lines insurance; providing 25
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
applicability of specified financial and solvency 26
requirements to domestic surplus lines insurers; 27
providing an exception; providing an exemption from a 28
specified law for domestic surplus lines insurers; 29
providing exemptions from specified requirements for 30
surplus lines insurance policies issued by such 31
insurers; providing that such policies are subject to 32
specified taxes but are not subject to certain other 33
taxes; providing that such policies are not subject to 34
the protections and requirements of specified acts; 35
amending ss. 458.320, 459.0085, and 464.0123 , F.S.; 36
conforming cross-references; amending s. 629.401, 37
F.S.; specifying cross -references; providing an 38
effective date. 39
40
Be It Enacted by the Legislature of the State of Florida: 41
42
Section 1. Section 626.914, Florida Statutes, is amended 43
to read: 44
626.914 Definitions. —As used in this Surplus Lines Law, 45
the term: 46
(1)(4) "Diligent effort" means seeking coverage from and 47
having been rejected by at least three authorized insurers 48
currently writing this type of coverage and documenting these 49
rejections. However, if the residential structure has a dwelling 50
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
replacement cost of $700,000 or more, the term means seeking 51
coverage from and having been rejected by at least one 52
authorized insurer currently writing this type of coverage and 53
documenting this rej ection. 54
(2) "Domestic surplus lines insurer" means a nonadmitted 55
insurer domiciled in this state that has been authorized by the 56
office to write surplus lines insurance. 57
(3)(2) "Eligible surplus lines insurer" means : 58
(a) An unauthorized insurer that which has been made 59
eligible by the office to issue insurance coverage under this 60
Surplus Lines Law; or 61
(b) A domestic surplus lines insurer . 62
(4)(3) "Export" "To export" means to place, in an 63
unauthorized insurer under this Surplus Lines Law, insurance 64
covering a subject of insurance resident, located, or to be 65
performed in this state. 66
(5)(1) "Surplus lines agent" means an individual licensed 67
as provided in this part to handle the placement of insurance 68
coverages with unauthorized insurers and to plac e such coverages 69
with authorized insurers as to which the licensee is not 70
licensed as an agent. 71
Section 2. Section 626.91805, Florida Statutes, is created 72
to read: 73
626.91805 Domestic surplus lines insurers. — 74
(1) As used in this section, the term "n onadmitted 75
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insurer" has the same meaning as provided in the federal 76
Nonadmitted and Reinsurance Reform Act of 2010. 77
(2) Notwithstanding any other law, a nonadmitted insurer 78
possessing a policyholder surplus of at least $15 million may, 79
under a resolution by its board of directors and with the 80
written approval of the office, be authorized to transact 81
insurance as a domestic surplus lines insurer. Such insurers are 82
authorized to write surplus lines insurance in any jurisdiction, 83
including this state, and su ch authorization is not contingent 84
on the company's holding of an existing certificate of 85
authority. 86
(3) Notwithstanding s. 626.918(2), a domestic surplus 87
lines insurer shall be deemed an eligible surplus lines insurer 88
and shall be included in the list o f eligible surplus lines 89
insurers required by s. 626.918(3). Eligible surplus lines 90
insurers listed in s. 626.918(3) may write any kind of insurance 91
that an unauthorized insurer not domiciled in this state is 92
eligible to write. 93
(4) For purposes of writin g surplus lines insurance 94
pursuant to the Surplus Lines Law, a domestic surplus lines 95
insurer shall be considered an unauthorized insurer. 96
(5) For purposes of the federal Nonadmitted and 97
Reinsurance Reform Act of 2010, a domestic surplus lines insurer 98
shall be considered a nonadmitted insurer. 99
(6) A domestic surplus lines insurer may write only 100
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
surplus lines insurance in this state and only if procured from 101
a surplus lines agent pursuant to the Surplus Lines Law. 102
(7) All financial and solvency require ments imposed by 103
this state's laws on admitted domestic insurers apply to 104
domestic surplus lines insurers unless domestic surplus lines 105
insurers are otherwise specifically exempted. 106
(8) A domestic surplus lines insurer is exempt from s. 107
624.408. 108
(9) A surplus lines insurance policy issued by a domestic 109
surplus lines insurer is exempt from all statutory requirements 110
relating to insurance rating and rating plans; policy forms; 111
premiums charged to insureds; policy cancellation, nonrenewal, 112
and renewal; and other statutory requirements in the same manner 113
and to the same extent as surplus lines policies issued by a 114
surplus lines insurer domiciled in another state. 115
(10) Notwithstanding any other law, a policy issued by a 116
domestic surplus lines insurer is sub ject to taxes assessed upon 117
surplus lines policies issued by nonadmitted insurers, including 118
surplus lines premium taxes, but is not subject to other taxes 119
levied upon admitted insurers, whether domestic or foreign. 120
(11) A policy issued by a domestic sur plus lines insurer 121
is not subject to the protections or requirements of the Florida 122
Insurance Guaranty Association Act, the Florida Life and Health 123
Insurance Guaranty Association Act, or the Florida Workers' 124
Compensation Insurance Guaranty Association Act. 125
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Section 3. Paragraph (b) of subsection (1) and paragraph 126
(b) of subsection (2) of section 458.320, Florida Statutes, are 127
amended to read: 128
458.320 Financial responsibility. — 129
(1) As a condition of licensing and maintaining an active 130
license, and prior to the issuance or renewal of an active 131
license or reactivation of an inactive license for the practice 132
of medicine, an applicant must by one of the following methods 133
demonstrate to the satisfaction of the board and the department 134
financial responsibili ty to pay claims and costs ancillary 135
thereto arising out of the rendering of, or the failure to 136
render, medical care or services: 137
(b) Obtaining and maintaining professional liability 138
coverage in an amount not less than $100,000 per claim, with a 139
minimum annual aggregate of not less than $300,000, from an 140
authorized insurer as defined under s. 624.09, from a surplus 141
lines insurer as defined under s. 626.914 s. 626.914(2), from a 142
risk retention group as defined under s. 627.942, from the Joint 143
Underwriting Association established under s. 627.351(4), or 144
through a plan of self -insurance as provided in s. 627.357. The 145
required coverage amount set forth in this paragraph may not be 146
used for litigation costs or attorney's fees for the defense of 147
any medical malpractice claim. 148
(2) Physicians who perform surgery in an ambulatory 149
surgical center licensed under chapter 395 and, as a continuing 150
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condition of hospital staff privileges, physicians who have 151
staff privileges must also establish financial responsibility b y 152
one of the following methods: 153
(b) Obtaining and maintaining professional liability 154
coverage in an amount not less than $250,000 per claim, with a 155
minimum annual aggregate of not less than $750,000 from an 156
authorized insurer as defined under s. 624.09, from a surplus 157
lines insurer as defined under s. 626.914 s. 626.914(2), from a 158
risk retention group as defined under s. 627.942, from the Joint 159
Underwriting Association established under s. 627.351(4), 160
through a plan of self -insurance as provided in s. 627 .357, or 161
through a plan of self -insurance which meets the conditions 162
specified for satisfying financial responsibility in s. 766.110. 163
The required coverage amount set forth in this paragraph may not 164
be used for litigation costs or attorney's fees for the d efense 165
of any medical malpractice claim. 166
167
This subsection shall be inclusive of the coverage in subsection 168
(1). 169
Section 4. Paragraph (b) of subsection (1) and paragraph 170
(b) of subsection (2) of section 459.0085, Florida Statutes, are 171
amended to read: 172
459.0085 Financial responsibility. — 173
(1) As a condition of licensing and maintaining an active 174
license, and prior to the issuance or renewal of an active 175
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license or reactivation of an inactive license for the practice 176
of osteopathic medicine, an applican t must by one of the 177
following methods demonstrate to the satisfaction of the board 178
and the department financial responsibility to pay claims and 179
costs ancillary thereto arising out of the rendering of, or the 180
failure to render, medical care or services: 181
(b) Obtaining and maintaining professional liability 182
coverage in an amount not less than $100,000 per claim, with a 183
minimum annual aggregate of not less than $300,000, from an 184
authorized insurer as defined under s. 624.09, from a surplus 185
lines insurer as defined under s. 626.914 s. 626.914(2), from a 186
risk retention group as defined under s. 627.942, from the Joint 187
Underwriting Association established under s. 627.351(4), or 188
through a plan of self -insurance as provided in s. 627.357. The 189
required coverage amount set forth in this paragraph may not be 190
used for litigation costs or attorney's fees for the defense of 191
any medical malpractice claim. 192
(2) Osteopathic physicians who perform surgery in an 193
ambulatory surgical center licensed under chapter 395 and, as a 194
continuing condition of hospital staff privileges, osteopathic 195
physicians who have staff privileges must also establish 196
financial responsibility by one of the following methods: 197
(b) Obtaining and maintaining professional liability 198
coverage in an amoun t not less than $250,000 per claim, with a 199
minimum annual aggregate of not less than $750,000 from an 200
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
authorized insurer as defined under s. 624.09, from a surplus 201
lines insurer as defined under s. 626.914 s. 626.914(2), from a 202
risk retention group as defi ned under s. 627.942, from the Joint 203
Underwriting Association established under s. 627.351(4), 204
through a plan of self -insurance as provided in s. 627.357, or 205
through a plan of self -insurance that meets the conditions 206
specified for satisfying financial resp onsibility in s. 766.110. 207
The required coverage amount set forth in this paragraph may not 208
be used for litigation costs or attorney's fees for the defense 209
of any medical malpractice claim. 210
211
This subsection shall be inclusive of the coverage in subsection 212
(1). 213
Section 5. Paragraph (a) of subsection (2) of section 214
464.0123, Florida Statutes, is amended to read: 215
464.0123 Autonomous practice by an advanced practice 216
registered nurse.— 217
(2) FINANCIAL RESPONSIBILITY. — 218
(a) An advanced practice registered nurse registered under 219
this section must, by one of the following methods, demonstrate 220
to the satisfaction of the board and the department financial 221
responsibility to pay claims and costs ancillary thereto arising 222
out of the rendering of, or the failure to render, nursing care, 223
treatment, or services: 224
1. Obtaining and maintaining professional liability 225
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
coverage in an amount not less than $100,000 per claim, with a 226
minimum annual aggregate of not less than $300,000, from an 227
authorized insurer as defined in s. 624.09, from a surplus lines 228
insurer as defined in s. 626.914 s. 626.914(2), from a risk 229
retention group as defined in s. 627.942, from the Joint 230
Underwriting Association established under s. 627.351(4), or 231
through a plan of self -insurance as provided in s. 627.357; or 232
2. Obtaining and maintaining an unexpired, irrevocable 233
letter of credit, established pursuant to chapter 675, in an 234
amount of not less than $100,000 per claim, with a minimum 235
aggregate availability of credit of not less than $300,000. T he 236
letter of credit must be payable to the advanced practice 237
registered nurse as beneficiary upon presentment of a final 238
judgment indicating liability and awarding damages to be paid by 239
the advanced practice registered nurse or upon presentment of a 240
settlement agreement signed by all parties to such agreement 241
when such final judgment or settlement is a result of a claim 242
arising out of the rendering of, or the failure to render, 243
nursing care and services. 244
Section 6. Paragraph (b) of subsection (6) of sec tion 245
629.401, Florida Statutes, is amended to read: 246
629.401 Insurance exchange. — 247
(6) 248
(b) In addition to the insurance laws specified in 249
paragraph (a), the office shall regulate the exchange pursuant 250
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
to the following powers, rights, and duties: 251
1. General examination powers. —The office shall examine 252
the affairs, transactions, accounts, records, and assets of any 253
security fund, exchange, members, and associate brokers as often 254
as it deems advisable. The examination may be conducted by the 255
accredited examiners of the office at the offices of the entity 256
or person being examined. The office shall examine in like 257
manner each prospective member or associate broker applying for 258
membership in an exchange. 259
2. Office approval and applications of underwriting 260
members.—No underwriting member shall commence operation without 261
the approval of the office. Before commencing operation, an 262
underwriting member shall provide a written application 263
containing: 264
a. Name, type, and purpose of the underwriting member. 265
b. Name, residence address, business background, and 266
qualifications of each person associated or to be associated in 267
the formation or financing of the underwriting member. 268
c. Full disclosure of the terms of all understandings and 269
agreements existing or propos ed among persons so associated 270
relative to the underwriting member, or the formation or 271
financing thereof, accompanied by a copy of each such agreement 272
or understanding. 273
d. Full disclosure of the terms of all understandings and 274
agreements existing or pro posed for management or exclusive 275
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agency contracts. 276
3. Investigation of underwriting member applications. —In 277
connection with any proposal to establish an underwriting 278
member, the office shall make an investigation of: 279
a. The character, reputation, fina ncial standing, and 280
motives of the organizers, incorporators, or subscribers 281
organizing the proposed underwriting member. 282
b. The character, financial responsibility, insurance 283
experience, and business qualifications of its proposed 284
officers. 285
c. The character, financial responsibility, business 286
experience, and standing of the proposed stockholders and 287
directors, or owners. 288
4. Notice of management changes. —An underwriting member 289
shall promptly give the office written notice of any change 290
among the directors or principal officers of the underwriting 291
member within 30 days after such change. The office shall 292
investigate the new directors or principal officers of the 293
underwriting member. The office's investigation shall include an 294
investigation of the charac ter, financial responsibility, 295
insurance experience, and business qualifications of any new 296
directors or principal officers. As a result of the 297
investigation, the office may require the underwriting member to 298
replace any new directors or principal officers . 299
5. Alternate financial statement. —In lieu of any financial 300
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examination, the office may accept an audited financial 301
statement. 302
6. Correction and reconstruction of records. —If the office 303
finds any accounts or records to be inadequate, or inadequately 304
kept or posted, it may employ experts to reconstruct, rewrite, 305
post, or balance them at the expense of the person or entity 306
being examined if such person or entity has failed to maintain, 307
complete, or correct such records or accounts after the office 308
has given him or her or it notice and reasonable opportunity to 309
do so. 310
7. Obstruction of examinations. —Any person or entity who 311
or which willfully obstructs the office or its examiner in an 312
examination is guilty of a misdemeanor of the second degree, 313
punishable as provided in s. 775.082 or s. 775.083. 314
8. Filing of annual statement. —Each underwriting member 315
shall file with the office a full and true statement of its 316
financial condition, transactions, and affairs. The statement 317
shall be filed on or before March 1 of each year, or within such 318
extension of time as the office for good cause grants, and shall 319
be for the preceding calendar year. The statement shall contain 320
information generally included in insurer financial statements 321
prepared in accordance with gene rally accepted insurance 322
accounting principles and practices and in a form generally 323
utilized by insurers for financial statements, sworn to by at 324
least two executive officers of the underwriting member. The 325
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
form of the financial statements shall be the ap proved form of 326
the National Association of Insurance Commissioners or its 327
successor organization. The commission may by rule require each 328
insurer to submit any part of the information contained in the 329
financial statement in a computer -readable form compati ble with 330
the office's electronic data processing system. In addition to 331
information furnished in connection with its annual statement, 332
an underwriting member must furnish to the office as soon as 333
reasonably possible such information about its transactions or 334
affairs as the office requests in writing. All information 335
furnished pursuant to the office's request must be verified by 336
the oath of two executive officers of the underwriting member. 337
9. Record maintenance. —Each underwriting member shall have 338
and maintain its principal place of business in this state and 339
shall keep therein complete records of its assets, transactions, 340
and affairs in accordance with such methods and systems as are 341
customary for or suitable to the kind or kinds of insurance 342
transacted. 343
10. Examination of agents. —If the department has reason to 344
believe that any agent, as defined in s. 626.015 or s. 345
626.914(5) s. 626.914, has violated or is violating any 346
provision of the insurance law, or upon receipt of a written 347
complaint signed by any interested person indicating that any 348
such violation may exist, the department shall conduct such 349
examination as it deems necessary of the accounts, records, 350
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documents, and transactions pertaining to or affecting the 351
insurance affairs of such agent. 352
11. Written reports of office. —The office or its examiner 353
shall make a full and true written report of any examination. 354
The report shall contain only information obtained from 355
examination of the records, accounts, files, and documents of or 356
relative to the person or entity examined or from testimony of 357
individuals under oath, together with relevant conclusions and 358
recommendations of the examiner based thereon. The office shall 359
furnish a copy of the report to the person or entity examined 360
not less than 30 days prior to filing the report in its office. 361
If such person or entity so requests in writing within such 30 -362
day period, the office shall grant a hearing with respect to the 363
report and shall not file the report until after the hearing and 364
after such modificati ons have been made therein as the office 365
deems proper. 366
12. Admissibility of reports. —The report of an examination 367
when filed shall be admissible in evidence in any action or 368
proceeding brought by the office against the person or entity 369
examined, or against his or her or its officers, employees, or 370
agents. The office or its examiners may at any time testify and 371
offer other proper evidence as to information secured or matters 372
discovered during the course of an examination, whether or not a 373
written report of the examination has been either made, 374
furnished, or filed in the office. 375
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13. Publication of reports. —After an examination report 376
has been filed, the office may publish the results of any such 377
examination in one or more newspapers published in this state 378
whenever it deems it to be in the public interest. 379
14. Consideration of examination reports by entity 380
examined.—After the examination report of an underwriting member 381
has been filed, an affidavit shall be filed with the office, not 382
more than 30 days aft er the report has been filed, on a form 383
furnished by the office and signed by the person or a 384
representative of any entity examined, stating that the report 385
has been read and that the recommendations made in the report 386
will be considered within a reasonabl e time. 387
15. Examination costs. —Each person or entity examined by 388
the office shall pay to the office the expenses incurred in such 389
examination. 390
16. Exchange costs. —An exchange shall reimburse the office 391
for any expenses incurred by it relating to the regulation of 392
the exchange and its members, except as specified in 393
subparagraph 15. 394
17. Powers of examiners. —Any examiner appointed by the 395
office, as to the subject of any examination, investigation, or 396
hearing being conducted by him or her, may administ er oaths, 397
examine and cross-examine witnesses, and receive oral and 398
documentary evidence, and shall have the power to subpoena 399
witnesses, compel their attendance and testimony, and require by 400
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subpoena the production of books, papers, records, files, 401
correspondence, documents, or other evidence which the examiner 402
deems relevant to the inquiry. If any person refuses to comply 403
with any such subpoena or to testify as to any matter concerning 404
which he or she may be lawfully interrogated, the Circuit Court 405
of Leon County or the circuit court of the county wherein such 406
examination, investigation, or hearing is being conducted, or of 407
the county wherein such person resides, on the office's 408
application may issue an order requiring such person to comply 409
with the subpoena and to testify; and any failure to obey such 410
an order of the court may be punished by the court as a contempt 411
thereof. Subpoenas shall be served, and proof of such service 412
made, in the same manner as if issued by a circuit court. 413
Witness fees and mileag e, if claimed, shall be allowed the same 414
as for testimony in a circuit court. 415
18. False testimony. —Any person willfully testifying 416
falsely under oath as to any matter material to any examination, 417
investigation, or hearing shall upon conviction thereof be 418
guilty of perjury and shall be punished accordingly. 419
19. Self-incrimination.— 420
a. If any person asks to be excused from attending or 421
testifying or from producing any books, papers, records, 422
contracts, documents, or other evidence in connection with any 423
examination, hearing, or investigation being conducted by the 424
office or its examiner, on the ground that the testimony or 425
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evidence required of the person may tend to incriminate him or 426
her or subject him or her to a penalty or forfeiture, and the 427
person notwithstanding is directed to give such testimony or 428
produce such evidence, he or she shall, if so directed by the 429
office and the Department of Legal Affairs, nonetheless comply 430
with such direction; but the person shall not thereafter be 431
prosecuted or subjected to any penalty or forfeiture for or on 432
account of any transaction, matter, or thing concerning which he 433
or she may have so testified or produced evidence, and no 434
testimony so given or evidence so produced shall be received 435
against him or her upon any criminal action, investigation, or 436
proceeding; except that no such person so testifying shall be 437
exempt from prosecution or punishment for any perjury committed 438
by him or her in such testimony, and the testimony or evidence 439
so given or produced shall be a dmissible against him or her upon 440
any criminal action, investigation, or proceeding concerning 441
such perjury, nor shall he or she be exempt from the refusal, 442
suspension, or revocation of any license, permission, or 443
authority conferred, or to be conferred, p ursuant to the 444
insurance law. 445
b. Any such individual may execute, acknowledge, and file 446
with the office a statement expressly waiving such immunity or 447
privilege in respect to any transaction, matter, or thing 448
specified in such statement, and thereupon th e testimony of such 449
individual or such evidence in relation to such transaction, 450
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matter, or thing may be received or produced before any judge or 451
justice, court, tribunal, grand jury, or otherwise; and if such 452
testimony or evidence is so received or produc ed, such 453
individual shall not be entitled to any immunity or privileges 454
on account of any testimony so given or evidence so produced. 455
20. Penalty for failure to testify. —Any person who refuses 456
or fails, without lawful cause, to testify relative to the 457
affairs of any member, associate broker, or other person when 458
subpoenaed and requested by the office to so testify, as 459
provided in subparagraph 17., shall, in addition to the penalty 460
provided in subparagraph 17., be guilty of a misdemeanor of the 461
second degree, punishable as provided in s. 775.082 or s. 462
775.083. 463
21. Name selection. —No underwriting member shall be formed 464
or authorized to transact insurance in this state under a name 465
which is the same as that of any authorized insurer or is so 466
nearly similar thereto as to cause or tend to cause confusion or 467
under a name which would tend to mislead as to the type of 468
organization of the insurer. Before incorporating under or using 469
any name, the underwriting syndicate or proposed underwriting 470
syndicate shall subm it its name or proposed name to the office 471
for the approval of the office. 472
22. Capitalization. —An underwriting member approved on or 473
after July 2, 1987, shall provide an initial paid -in capital and 474
surplus of $3 million and thereafter shall maintain a mi nimum 475
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policyholder surplus of $2 million in order to be permitted to 476
write insurance. Underwriting members approved prior to July 2, 477
1987, shall maintain a minimum policyholder surplus of $1 478
million. After June 29, 1988, underwriting members approved 479
prior to July 2, 1987, must maintain a minimum policyholder 480
surplus of $1.5 million to write insurance. After June 29, 1989, 481
underwriting members approved prior to July 2, 1987, must 482
maintain a minimum policyholder surplus of $1.75 million to 483
write insurance. After December 30, 1989, all underwriting 484
members, regardless of the date they were approved, must 485
maintain a minimum policyholder surplus of $2 million to write 486
insurance. Except for that portion of the paid -in capital and 487
surplus which shall be maintained in a security fund of an 488
exchange, the paid-in capital and surplus shall be invested by 489
an underwriting member in a manner consistent with ss. 625.301 -490
625.340. The portion of the paid -in capital and surplus in any 491
security fund of an exchange shall be inv ested in a manner 492
limited to investments for life insurance companies under the 493
Florida insurance laws. 494
23. Limitations on coverage written. — 495
a. Limit of risk.—No underwriting member shall expose 496
itself to any loss on any one risk in an amount exceedin g 10 497
percent of its surplus to policyholders. Any risk or portion of 498
any risk which shall have been reinsured in an assuming 499
reinsurer authorized or approved to do such business in this 500
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state shall be deducted in determining the limitation of risk 501
prescribed in this section. 502
b. Restrictions on premiums written. —If the office has 503
reason to believe that the underwriting member's ratio of actual 504
or projected annual gross written premiums to policyholder 505
surplus exceeds 8 to 1 or the underwriting member's rat io of 506
actual or projected annual net premiums to policyholder surplus 507
exceeds 4 to 1, the office may establish maximum gross or net 508
annual premiums to be written by the underwriting member 509
consistent with maintaining the ratios specified in this sub -510
subparagraph. 511
(I) Projected annual net or gross premiums shall be based 512
on the actual writings to date for the underwriting member's 513
current calendar year, its writings for the previous calendar 514
year, or both. Ratios shall be computed on an annualized basis. 515
(II) For purposes of this sub -subparagraph, the term 516
"gross written premiums" means direct premiums written and 517
reinsurance assumed. 518
c. Surplus as to policyholders. —For the purpose of 519
determining the limitation on coverage written, surplus as to 520
policyholders shall be deemed to include any voluntary reserves, 521
or any part thereof, which are not required by or pursuant to 522
law and shall be determined from the last sworn statement of 523
such underwriting member with the office, or by the last report 524
or examination filed by the office, whichever is more recent at 525
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the time of assumption of such risk. 526
24. Unearned premium reserves. —An underwriting member must 527
at all times maintain an unearned premium reserve equal to 50 528
percent of the net written premiums of the subscribers on 529
policies having 1 year or less to run, and pro rata on those for 530
longer periods, except that all premiums on any marine or 531
transportation insurance trip risk shall be deemed unearned 532
until the trip is terminated. For the purpose of this 533
subparagraph, the term "net written premiums" means the premium 534
payments made by subscribers plus the premiums due from 535
subscribers, after deducting the amounts specifically provided 536
in the subscribers' agreements for expenses, including 537
reinsurance costs and fees paid to the attorney in fact, 538
provided that the power of attorney agreement contains an 539
explicit provision requiring the attorney in fact to refund any 540
unearned subscribers fees on a pro -rata basis for canceled 541
policies. If there is no such provision, the unearned premium 542
reserve shall be calculated without any adjustment for fees paid 543
to the attorney in fact. If the unearned premium reserves at any 544
time do not amount to $100,000, there shall be maintained on 545
deposit at the exchange at all times additi onal funds in cash or 546
eligible securities which, together with the unearned premium 547
reserves, equal $100,000. In calculating the foregoing reserves, 548
the amount of the attorney's bond, as filed with the office and 549
as required by s. 629.121, shall be include d in such reserves. 550
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If at any time the unearned premium reserves are less than the 551
foregoing requirements, the subscribers, or the attorney in 552
fact, shall advance funds to make up the deficiency. Such 553
advances shall only be repaid out of the surplus of the exchange 554
and only after receiving written approval from the office. 555
25. Loss reserves.—All underwriting members of an exchange 556
shall maintain loss reserves, including a reserve for incurred 557
but not reported claims. The reserves shall be subject to revie w 558
by the office, and, if loss experience shows that an 559
underwriting member's loss reserves are inadequate, the office 560
shall require the underwriting member to maintain loss reserves 561
in such additional amount as is needed to make them adequate. 562
26. Distribution of profits.—An underwriting member shall 563
not distribute any profits in the form of cash or other assets 564
to owners except out of that part of its available and 565
accumulated surplus funds which is derived from realized net 566
operating profits on its busi ness and realized capital gains. In 567
any one year such payments to owners shall not exceed 30 percent 568
of such surplus as of December 31 of the immediately preceding 569
year, unless otherwise approved by the office. No distribution 570
of profits shall be made that would render an underwriting 571
member either impaired or insolvent. 572
27. Stock dividends. —A stock dividend may be paid by an 573
underwriting member out of any available surplus funds in excess 574
of the aggregate amount of surplus advanced to the underwriting 575
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member under subparagraph 29. 576
28. Dividends from earned surplus. —A dividend otherwise 577
lawful may be payable out of an underwriting member's earned 578
surplus even though the total surplus of the underwriting member 579
is then less than the aggregate of its past contributed surplus 580
resulting from issuance of its capital stock at a price in 581
excess of the par value thereof. 582
29. Borrowing of money by underwriting members. — 583
a. An underwriting member may borrow money to defray the 584
expenses of its organization, prov ide it with surplus funds, or 585
for any purpose of its business, upon a written agreement that 586
such money is required to be repaid only out of the underwriting 587
member's surplus in excess of that stipulated in such agreement. 588
The agreement may provide for int erest not exceeding 15 percent 589
simple interest per annum. The interest shall or shall not 590
constitute a liability of the underwriting member as to its 591
funds other than such excess of surplus, as stipulated in the 592
agreement. No commission or promotion expens e shall be paid in 593
connection with any such loan. The use of any surplus note and 594
any repayments thereof shall be subject to the approval of the 595
office. 596
b. Money so borrowed, together with any interest thereon 597
if so stipulated in the agreement, shall not form a part of the 598
underwriting member's legal liabilities except as to its surplus 599
in excess of the amount thereof stipulated in the agreement, nor 600
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be the basis of any setoff; but until repayment, financial 601
statements filed or published by an underwritin g member shall 602
show as a footnote thereto the amount thereof then unpaid, 603
together with any interest thereon accrued but unpaid. 604
30. Liquidation, rehabilitation, and restrictions. —The 605
office, upon a showing that a member or associate broker of an 606
exchange has met one or more of the grounds contained in part I 607
of chapter 631, may restrict sales by type of risk, policy or 608
contract limits, premium levels, or policy or contract 609
provisions; increase surplus or capital requirements of 610
underwriting members; issu e cease and desist orders; suspend or 611
restrict a member's or associate broker's right to transact 612
business; place an underwriting member under conservatorship or 613
rehabilitation; or seek an order of liquidation as authorized by 614
part I of chapter 631. 615
31. Prohibited conduct.—The following acts by a member, 616
associate broker, or affiliated person shall constitute 617
prohibited conduct: 618
a. Fraud. 619
b. Fraudulent or dishonest acts committed by a member or 620
associate broker prior to admission to an exchange, if th e facts 621
and circumstances were not disclosed to the office upon 622
application to become a member or associate broker. 623
c. Conduct detrimental to the welfare of an exchange. 624
d. Unethical or improper practices or conduct, 625
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inconsistent with just and equitabl e principles of trade as set 626
forth in, but not limited to, ss. 626.951 -626.9641 and 626.973. 627
e. Failure to use due diligence to ascertain the insurance 628
needs of a client or a principal. 629
f. Misstatements made under oath or upon an application 630
for membership on an exchange. 631
g. Failure to testify or produce documents when requested 632
by the office. 633
h. Willful violation of any law of this state. 634
i. Failure of an officer or principal to testify under 635
oath concerning a member, associate broker, or o ther person's 636
affairs as they relate to the operation of an exchange. 637
j. Violation of the constitution and bylaws of the 638
exchange. 639
32. Penalties for participating in prohibited conduct. — 640
a. The office may order the suspension of further 641
transaction of business on the exchange of any member or 642
associate broker found to have engaged in prohibited conduct. In 643
addition, any member or associate broker found to have engaged 644
in prohibited conduct may be subject to reprimand, censure, 645
and/or a fine not exceed ing $25,000 imposed by the office. 646
b. Any member which has an affiliated person who is found 647
to have engaged in prohibited conduct shall be subject to 648
involuntary withdrawal or in addition thereto may be subject to 649
suspension, reprimand, censure, and/or a fine not exceeding 650
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$25,000. 651
33. Reduction of penalties. —Any suspension, reprimand, 652
censure, or fine may be remitted or reduced by the office on 653
such terms and conditions as are deemed fair and equitable. 654
34. Other offenses. —Any member or associate br oker that is 655
suspended shall be deprived, during the period of suspension, of 656
all rights and privileges of a member or of an associate broker 657
and may be proceeded against by the office for any offense 658
committed either before or after the date of suspension . 659
35. Reinstatement.—Any member or associate broker that is 660
suspended may be reinstated at any time on such terms and 661
conditions as the office may specify. 662
36. Remittance of fines. —Fines imposed under this section 663
shall be remitted to the office and sh all be paid into the 664
Insurance Regulatory Trust Fund. 665
37. Failure to pay fines. —When a member or associate 666
broker has failed to pay a fine for 15 days after it becomes 667
payable, such member or associate broker shall be suspended, 668
unless the office has gra nted an extension of time to pay such 669
fine. 670
38. Changes in ownership or assets. —In the event of a 671
major change in the ownership or a major change in the assets of 672
an underwriting member, the underwriting member shall report 673
such change in writing to the office within 30 days of the 674
effective date thereof. The report shall set forth the details 675
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of the change. Any change in ownership or assets of more than 5 676
percent shall be considered a major change. 677
39. Retaliation.— 678
a. When by or pursuant to the laws of any other state or 679
foreign country any taxes, licenses, or other fees, in the 680
aggregate, and any fines, penalties, deposit requirements, or 681
other material obligations, prohibitions, or restrictions are or 682
would be imposed upon an exchange or upon the a gents or 683
representatives of such exchange which are in excess of such 684
taxes, licenses, and other fees, in the aggregate, or which are 685
in excess of such fines, penalties, deposit requirements, or 686
other obligations, prohibitions, or restrictions directly 687
imposed upon similar exchanges or upon the agents or 688
representatives of such exchanges of such other state or country 689
under the statutes of this state, so long as such laws of such 690
other state or country continue in force or are so applied, the 691
same taxes, licenses, and other fees, in the aggregate, or 692
fines, penalties, deposit requirements, or other material 693
obligations, prohibitions, or restrictions of whatever kind 694
shall be imposed by the office upon the exchanges, or upon the 695
agents or representatives of s uch exchanges, of such other state 696
or country doing business or seeking to do business in this 697
state. 698
b. Any tax, license, or other obligation imposed by any 699
city, county, or other political subdivision or agency of a 700
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state, jurisdiction, or foreign coun try on an exchange, or on 701
the agents or representatives on an exchange, shall be deemed to 702
be imposed by such state, jurisdiction, or foreign country 703
within the meaning of sub -subparagraph a. 704
40. Agents.— 705
a. Agents as defined in ss. 626.015 and 626.914(5) 626.914 706
who are broker members or associate broker members of an 707
exchange shall be allowed only to place on an exchange the same 708
kind or kinds of business that the agent is licensed to place 709
pursuant to Florida law. Direct Florida business as defined i n 710
s. 626.916 or s. 626.917 shall be written through a broker 711
member who is a surplus lines agent as defined in s. 626.914. 712
The activities of each broker member or associate broker with 713
regard to an exchange shall be subject to all applicable 714
provisions of the insurance laws of this state, and all such 715
activities shall constitute transactions under his or her 716
license as an insurance agent for purposes of the Florida 717
insurance law. 718
b. Premium payments and other requirements. —If an 719
underwriting member has as sumed the risk as to a surplus lines 720
coverage and if the premium therefor has been received by the 721
surplus lines agent who placed such insurance, then in all 722
questions thereafter arising under the coverage as between the 723
underwriting member and the insured , the underwriting member 724
shall be deemed to have received the premium due to it for such 725
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coverage; and the underwriting member shall be liable to the 726
insured as to losses covered by such insurance, and for unearned 727
premiums which may become payable to the insured upon 728
cancellation of such insurance, whether or not in fact the 729
surplus lines agent is indebted to the underwriting member with 730
respect to such insurance or for any other cause. 731
41. Improperly issued contracts, riders, and 732
endorsements.— 733
a. Any insurance policy, rider, or endorsement issued by 734
an underwriting member and otherwise valid which contains any 735
condition or provision not in compliance with the requirements 736
of this section shall not be thereby rendered invalid, except as 737
provided in s. 627.415, but shall be construed and applied in 738
accordance with such conditions and provisions as would have 739
applied had such policy, rider, or endorsement been in full 740
compliance with this section. In the event an underwriting 741
member issues or delivers an y policy for an amount which exceeds 742
any limitations otherwise provided in this section, the 743
underwriting member shall be liable to the insured or his or her 744
beneficiary for the full amount stated in the policy in addition 745
to any other penalties that may b e imposed. 746
b. Any insurance contract delivered or issued for delivery 747
in this state governing a subject or subjects of insurance 748
resident, located, or to be performed in this state which, 749
pursuant to the provisions of this section, the underwriting 750
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member may not lawfully insure under such a contract shall be 751
cancelable at any time by the underwriting member, any provision 752
of the contract to the contrary notwithstanding; and the 753
underwriting member shall promptly cancel the contract in 754
accordance with the request of the office therefor. No such 755
illegality or cancellation shall be deemed to relieve the 756
underwriting syndicate of any liability incurred by it under the 757
contract while in force or to prohibit the underwriting 758
syndicate from retaining the pro rat a earned premium thereon. 759
This provision does not relieve the underwriting syndicate from 760
any penalty otherwise incurred by the underwriting syndicate. 761
42. Satisfaction of judgments. — 762
a. Every judgment or decree for the recovery of money 763
heretofore or hereafter entered in any court of competent 764
jurisdiction against any underwriting member shall be fully 765
satisfied within 60 days from and after the entry thereof or, in 766
the case of an appeal from such judgment or decree, within 60 767
days from and after the a ffirmance of the judgment or decree by 768
the appellate court. 769
b. If the judgment or decree is not satisfied as required 770
under sub-subparagraph a., and proof of such failure to satisfy 771
is made by filing with the office a certified transcript of the 772
docket of the judgment or the decree together with a certificate 773
by the clerk of the court wherein the judgment or decree remains 774
unsatisfied, in whole or in part, after the time provided in 775
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sub-subparagraph a., the office shall forthwith prohibit the 776
underwriting member from transacting business. The office shall 777
not permit such underwriting member to write any new business 778
until the judgment or decree is wholly paid and satisfied and 779
proof thereof is filed with the office under the official 780
certificate of the cle rk of the court wherein the judgment was 781
recovered, showing that the judgment or decree is satisfied of 782
record, and until the expenses and fees incurred in the case are 783
also paid by the underwriting syndicate. 784
43. Tender and exchange offers. —No person shall conclude a 785
tender offer or an exchange offer or otherwise acquire 5 percent 786
or more of the outstanding voting securities of an underwriting 787
member or controlling company or purchase 5 percent or more of 788
the ownership of an underwriting member or contro lling company 789
unless such person has filed with, and obtained the approval of, 790
the office and sent to such underwriting member a statement 791
setting forth: 792
a. The identity of, and background information on, each 793
person by whom, or on whose behalf, the acqu isition is to be 794
made; and, if the acquisition is to be made by or on behalf of a 795
corporation, association, or trust, the identity of and 796
background information on each director, officer, trustee, or 797
other natural person performing duties similar to those of a 798
director, officer, or trustee for the corporation, association, 799
or trust. 800
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b. The source and amount of the funds or other 801
consideration used, or to be used, in making the acquisition. 802
c. Any plans or proposals which such person may have to 803
liquidate such member, to sell its assets, or to merge or 804
consolidate it. 805
d. The percentage of ownership which such person proposes 806
to acquire and the terms of the offer or exchange, as the case 807
may be. 808
e. Information as to any contracts, arrangements, or 809
understandings with any party with respect to any securities of 810
such member or controlling company, including, but not limited 811
to, information relating to the transfer of any securities, 812
option arrangements, or puts or calls or the giving or 813
withholding of proxies, naming the party with whom such 814
contract, arrangements, or understandings have been entered and 815
giving the details thereof. 816
f. The office may disapprove any acquisition subject to 817
the provisions of this subparagraph by any person or any 818
affiliated person of such person who: 819
(I) Willfully violates this subparagraph; 820
(II) In violation of an order of the office issued 821
pursuant to sub-subparagraph j., fails to divest himself or 822
herself of any stock obtained in violation of this subparagraph, 823
or fails to divest himself or herself of any direct or indirect 824
control of such stock, within 25 days after such order; or 825
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(III) In violation of an order issued by the office 826
pursuant to sub-subparagraph j., acquires additional stock of 827
the underwriting member or controlling company, or direct or 828
indirect control of such stock, without complying with this 829
subparagraph. 830
g. The person or persons filing the statement required by 831
this subparagraph have the burden of proof. The office shall 832
approve any such acquisition if it finds, on the basis of the 833
record made during any proceeding or on the basis of the filed 834
statement if no proceeding is conducted, that: 835
(I) Upon completion of the acquisition, the underwriting 836
member will be able to satisfy the requir ements for the approval 837
to write the line or lines of insurance for which it is 838
presently approved; 839
(II) The financial condition of the acquiring person or 840
persons will not jeopardize the financial stability of the 841
underwriting member or prejudice the in terests of its 842
policyholders or the public; 843
(III) Any plan or proposal which the acquiring person has, 844
or acquiring persons have, made: 845
(A) To liquidate the insurer, sell its assets, or merge or 846
consolidate it with any person, or to make any other majo r 847
change in its business or corporate structure or management; or 848
(B) To liquidate any controlling company, sell its assets, 849
or merge or consolidate it with any person, or to make any major 850
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change in its business or corporate structure or management 851
which would have an effect upon the underwriting member 852
853
is fair and free of prejudice to the policyholders of the 854
underwriting member or to the public; 855
(IV) The competence, experience, and integrity of those 856
persons who will control directly or indirectly t he operation of 857
the underwriting member indicate that the acquisition is in the 858
best interest of the policyholders of the underwriting member 859
and in the public interest; 860
(V) The natural persons for whom background information is 861
required to be furnished pursuant to this subparagraph have such 862
backgrounds as to indicate that it is in the best interests of 863
the policyholders of the underwriting member, and in the public 864
interest, to permit such persons to exercise control over such 865
underwriting member; 866
(VI) The officers and directors to be employed after the 867
acquisition have sufficient insurance experience and ability to 868
assure reasonable promise of successful operation; 869
(VII) The management of the underwriting member after the 870
acquisition will be compete nt and trustworthy and will possess 871
sufficient managerial experience so as to make the proposed 872
operation of the underwriting member not hazardous to the 873
insurance-buying public; 874
(VIII) The management of the underwriting member after the 875
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acquisition will not include any person who has directly or 876
indirectly through ownership, control, reinsurance transactions, 877
or other insurance or business relations unlawfully manipulated 878
the assets, accounts, finances, or books of any insurer or 879
underwriting member or o therwise acted in bad faith with respect 880
thereto; 881
(IX) The acquisition is not likely to be hazardous or 882
prejudicial to the underwriting member's policyholders or the 883
public; and 884
(X) The effect of the acquisition of control would not 885
substantially lessen competition in insurance in this state or 886
would not tend to create a monopoly therein. 887
h. No vote by the stockholder of record, or by any other 888
person, of any security acquired in contravention of the 889
provisions of this subparagraph is valid. Any acqui sition of any 890
security contrary to the provisions of this subparagraph is 891
void. Upon the petition of the underwriting member or 892
controlling company, the circuit court for the county in which 893
the principal office of such underwriting member is located may, 894
without limiting the generality of its authority, order the 895
issuance or entry of an injunction or other order to enforce the 896
provisions of this subparagraph. There shall be a private right 897
of action in favor of the underwriting member or controlling 898
company to enforce the provisions of this subparagraph. No 899
demand upon the office that it perform its functions shall be 900
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required as a prerequisite to any suit by the underwriting 901
member or controlling company against any other person, and in 902
no case shall the office be deemed a necessary party to any 903
action by such underwriting member or controlling company to 904
enforce the provisions of this subparagraph. Any person who 905
makes or proposes an acquisition requiring the filing of a 906
statement pursuant to this subparag raph, or who files such a 907
statement, shall be deemed to have thereby designated the Chief 908
Financial Officer as such person's agent for service of process 909
under this subparagraph and shall thereby be deemed to have 910
submitted himself or herself to the admini strative jurisdiction 911
of the office and to the jurisdiction of the circuit court. 912
i. Any approval by the office under this subparagraph does 913
not constitute a recommendation by the office for an 914
acquisition, tender offer, or exchange offer. It is unlawful for 915
a person to represent that the office's approval constitutes a 916
recommendation. A person who violates the provisions of this 917
sub-subparagraph is guilty of a felony of the third degree, 918
punishable as provided in s. 775.082, s. 775.083, or s. 775.084. 919
The statute-of-limitations period for the prosecution of an 920
offense committed under this sub -subparagraph is 5 years. 921
j. Upon notification to the office by the underwriting 922
member or a controlling company that any person or any 923
affiliated person of such pe rson has acquired 5 percent or more 924
of the outstanding voting securities of the underwriting member 925
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or controlling company without complying with the provisions of 926
this subparagraph, the office shall order that the person and 927
any affiliated person of such person cease acquisition of any 928
further securities of the underwriting member or controlling 929
company; however, the person or any affiliated person of such 930
person may request a proceeding, which proceeding shall be 931
convened within 7 days after the rendering of the order for the 932
sole purpose of determining whether the person, individually or 933
in connection with any affiliated person of such person, has 934
acquired 5 percent or more of the outstanding voting securities 935
of an underwriting member or controlling comp any. Upon the 936
failure of the person or affiliated person to request a hearing 937
within 7 days, or upon a determination at a hearing convened 938
pursuant to this sub -subparagraph that the person or affiliated 939
person has acquired voting securities of an underwrit ing member 940
or controlling company in violation of this subparagraph, the 941
office may order the person and affiliated person to divest 942
themselves of any voting securities so acquired. 943
k.(I) The office shall, if necessary to protect the public 944
interest, suspend or revoke the certificate of authority of any 945
underwriting member or controlling company: 946
(A) The control of which is acquired in violation of this 947
subparagraph; 948
(B) That is controlled, directly or indirectly, by any 949
person or any affiliated perso n of such person who, in violation 950
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of this subparagraph, has obtained control of an underwriting 951
member or controlling company; or 952
(C) That is controlled, directly or indirectly, by any 953
person who, directly or indirectly, controls any other person 954
who, in violation of this subparagraph, acquires control of an 955
underwriting member or controlling company. 956
(II) If any underwriting member is subject to suspension 957
or revocation pursuant to sub -sub-subparagraph (I), the 958
underwriting member shall be deemed to be in such condition, or 959
to be using or to have been subject to such methods or practices 960
in the conduct of its business, as to render its further 961
transaction of insurance presently or prospectively hazardous to 962
its policyholders, creditors, or stockholder s or to the public. 963
l.(I) For the purpose of this sub -sub-subparagraph, the 964
term "affiliated person" of another person means: 965
(A) The spouse of such other person; 966
(B) The parents of such other person and their lineal 967
descendants and the parents of su ch other person's spouse and 968
their lineal descendants; 969
(C) Any person who directly or indirectly owns or 970
controls, or holds with power to vote, 5 percent or more of the 971
outstanding voting securities of such other person; 972
(D) Any person 5 percent or mor e of the outstanding voting 973
securities of which are directly or indirectly owned or 974
controlled, or held with power to vote, by such other person; 975
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(E) Any person or group of persons who directly or 976
indirectly control, are controlled by, or are under commo n 977
control with such other person; or any officer, director, 978
partner, copartner, or employee of such other person; 979
(F) If such other person is an investment company, any 980
investment adviser of such company or any member of an advisory 981
board of such company ; 982
(G) If such other person is an unincorporated investment 983
company not having a board of directors, the depositor of such 984
company; or 985
(H) Any person who has entered into an agreement, written 986
or unwritten, to act in concert with such other person in 987
acquiring or limiting the disposition of securities of an 988
underwriting member or controlling company. 989
(II) For the purposes of this section, the term 990
"controlling company" means any corporation, trust, or 991
association owning, directly or indirectly, 25 perc ent or more 992
of the voting securities of one or more underwriting members. 993
m. The commission may adopt, amend, or repeal rules that 994
are necessary to implement the provisions of this subparagraph, 995
pursuant to chapter 120. 996
44. Background information. —The information as to the 997
background and identity of each person about whom information is 998
required to be furnished pursuant to sub -subparagraph 43.a. 999
shall include, but shall not be limited to: 1000
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a. Such person's occupations, positions of employment, and 1001
offices held during the past 10 years. 1002
b. The principal business and address of any business, 1003
corporation, or other organization in which each such office was 1004
held or in which such occupation or position of employment was 1005
carried on. 1006
c. Whether, at any tim e during such 10-year period, such 1007
person was convicted of any crime other than a traffic 1008
violation. 1009
d. Whether, during such 10 -year period, such person has 1010
been the subject of any proceeding for the revocation of any 1011
license and, if so, the nature of su ch proceeding and the 1012
disposition thereof. 1013
e. Whether, during such 10 -year period, such person has 1014
been the subject of any proceeding under the federal Bankruptcy 1015
Act or whether, during such 10 -year period, any corporation, 1016
partnership, firm, trust, or a ssociation in which such person 1017
was a director, officer, trustee, partner, or other official has 1018
been subject to any such proceeding, either during the time in 1019
which such person was a director, officer, trustee, partner, or 1020
other official, or within 12 mon ths thereafter. 1021
f. Whether, during such 10 -year period, such person has 1022
been enjoined, either temporarily or permanently, by a court of 1023
competent jurisdiction from violating any federal or state law 1024
regulating the business of insurance, securities, or ba nking, or 1025
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from carrying out any particular practice or practices in the 1026
course of the business of insurance, securities, or banking, 1027
together with details of any such event. 1028
45. Security fund.—All underwriting members shall be 1029
members of the security fun d of any exchange. 1030
46. Underwriting member defined. —Whenever the term 1031
"underwriting member" is used in this subsection, it shall be 1032
construed to mean "underwriting syndicate." 1033
47. Offsets.—Any action, requirement, or constraint 1034
imposed by the office sh all reduce or offset similar actions, 1035
requirements, or constraints of any exchange. 1036
48. Restriction on member ownership. — 1037
a. Investments existing prior to July 2, 1987. —The 1038
investment in any member by brokers, agents, and intermediaries 1039
transacting business on the exchange, and the investment in any 1040
such broker, agent, or intermediary by any member, directly or 1041
indirectly, shall in each case be limited in the aggregate to 1042
less than 20 percent of the total investment in such member, 1043
broker, agent, or int ermediary, as the case may be. After 1044
December 31, 1987, the aggregate percent of the total investment 1045
in such member by any broker, agent, or intermediary and the 1046
aggregate percent of the total investment in any such broker, 1047
agent, or intermediary by any m ember, directly or indirectly, 1048
shall not exceed 15 percent. After June 30, 1988, such aggregate 1049
percent shall not exceed 10 percent and after December 31, 1988, 1050
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such aggregate percent shall not exceed 5 percent. 1051
b. Investments arising on or after July 2, 1987.—The 1052
investment in any underwriting member by brokers, agents, or 1053
intermediaries transacting business on the exchange, and the 1054
investment in any such broker, agent, or intermediary by any 1055
underwriting member, directly or indirectly, shall in each cas e 1056
be limited in the aggregate to less than 5 percent of the total 1057
investment in such underwriting member, broker, agent, or 1058
intermediary. 1059
49. "Underwriting manager" defined. —"Underwriting manager" 1060
as used in this subparagraph includes any person, partner ship, 1061
corporation, or organization providing any of the following 1062
services to underwriting members of the exchange: 1063
a. Office management and allied services, including 1064
correspondence and secretarial services. 1065
b. Accounting services, including bookkeepi ng and 1066
financial report preparation. 1067
c. Investment and banking consultations and services. 1068
d. Underwriting functions and services including the 1069
acceptance, rejection, placement, and marketing of risk. 1070
50. Prohibition of underwriting manager investment. —Any 1071
direct or indirect investment in any underwriting manager by a 1072
broker member or any affiliated person of a broker member or any 1073
direct or indirect investment in a broker member by an 1074
underwriting manager or any affiliated person of an underwriting 1075
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manager is prohibited. "Affiliated person" for purposes of this 1076
subparagraph is defined in subparagraph 43. 1077
51. An underwriting member may not accept reinsurance on 1078
an assumed basis from an affiliate or a controlling company, nor 1079
may a broker member or management company place reinsurance from 1080
an affiliate or controlling company of theirs with an 1081
underwriting member. "Affiliate and controlling company" for 1082
purposes of this subparagraph is defined in subpara graph 43. 1083
52. Premium defined. —"Premium" is the consideration for 1084
insurance, by whatever name called. Any "assessment" or any 1085
"membership," "policy," "survey," "inspection," "service" fee or 1086
charge or similar fee or charge in consideration for an 1087
insurance contract is deemed part of the premium. 1088
53. Rules.—The commission shall adopt rules necessary for 1089
or as an aid to the effectuation of any provision of this 1090
section. 1091
Section 7. This act shall take effect July 1, 2022. 1092