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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.; defining the term "domestic 3
surplus lines insurer"; revising the definition of the 4
term "eligible surplus lines insurer" to include 5
domestic surplus lines insurers; 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; requiring 10
domestic surplus lines insurers to maintain a minimum 11
surplus amount; requiring such insurers to be deemed 12
eligible surplus lines insurers and to be included in 13
the list of eligible surplus lines insurers; 14
authorizing such insurers to write certain kinds of 15
insurance; requiring such insurers to be considered 16
unauthorized insurers for specified purposes; 17
requiring such insurers to be considered nonadmitted 18
insurers for specified purposes; authorizing domestic 19
surplus lines insurers to write only surplus lines 20
insurance under a specified circumstance; prohibiting 21
such insurers from simultaneously holding any 22
certificate of authority to operate as admitted 23
insurers; authorizing such insurers to write surplus 24
lines insurance in any jurisdiction if specified 25
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requirements are met; providing applicability of 26
specified requirements of the Florida Insurance Code 27
to such insurers; providing an exception; providing an 28
exemption from a specified law for such 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 and 35
a specified fund; prohibiting such insurers from 36
issuing certain homeowners' policies under a specified 37
circumstance; providing nonapplicability; prohibiting 38
such insurers from issuing certain policies to satisfy 39
specified laws; amending ss. 458.320, 459.0085, and 40
464.0123, F.S.; conforming cross -references; amending 41
s. 629.401, F.S.; specifying cross -references; 42
providing an effective date. 43
44
Be It Enacted by the Legislature of the State of Florida: 45
46
Section 1. Section 626.914, Florida Statutes, is amended 47
to read: 48
626.914 Definitions. —As used in this Surplus Lines Law, 49
the term: 50
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(1)(4) "Diligent effort" means seeking coverage from and 51
having been rejected by at least three authorized insurers 52
currently writing this type of coverage and documenting these 53
rejections. However, if the residential s tructure has a dwelling 54
replacement cost of $700,000 or more, the term means seeking 55
coverage from and having been rejected by at least one 56
authorized insurer currently writing this type of coverage and 57
documenting this rejection. 58
(2) "Domestic surplus l ines insurer" means a nonadmitted 59
insurer domiciled in this state that: 60
(a) Has been deemed eligible and authorized by the office 61
to write surplus lines insurance; and 62
(b) May write surplus lines insurance in any jurisdiction, 63
including this state. The authorization to write surplus lines 64
insurance is not contingent on the company's holding of an 65
existing certificate of authority. 66
67
The term does not include an authorized insurer as defined in s. 68
624.09. 69
(3)(2) "Eligible surplus lines insurer" means : 70
(a) An unauthorized insurer that which has been made 71
eligible by the office to issue insurance coverage under this 72
Surplus Lines Law; or 73
(b) A domestic surplus lines insurer . 74
(4)(3) "Export" "To export" means to place, in an 75
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unauthorized insurer under this Surplus Lines Law, insurance 76
covering a subject of insurance resident, located, or to be 77
performed in this state. 78
(5)(1) "Surplus lines agent" means an individual licensed 79
as provided in this part to handle the placement of insurance 80
coverages with unauthorized insurers and to place such coverages 81
with authorized insurers as to which the licensee is not 82
licensed as an agent. 83
Section 2. Section 626.91805, Florida Statutes, is created 84
to read: 85
626.91805 Domestic surplus lines insurers. — 86
(1) As used in this section, the term "nonadmitted 87
insurer" has the same meaning as provided in the federal 88
Nonadmitted and Reinsurance Reform Act of 2010. 89
(2) Notwithstanding any other law, a nonadmitted insurer 90
possessing a policyholder surplus of at least $ 15 million may, 91
under a resolution by its board of directors and with the 92
written approval of the office, be eligible to transact 93
insurance as a domestic surplus lines insurer. A domestic 94
surplus lines insurer must maintain surplus of at least $15 95
million at all times. 96
(3) Notwithstanding s. 626.918(2), a domestic surplus 97
lines insurer shall be deemed an eligible surplus lines insurer 98
and shall be included in the list of eligible surplus lines 99
insurers required by s. 626.918(3). Eligible surplus lines 100
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insurers listed in s. 626.918(3) may write any kind of insurance 101
that an unauthorized insurer not domiciled in this state is 102
eligible to write. 103
(4) For purposes of writing surplus lines insurance 104
pursuant to the Surplus Lines Law, a domestic surplus lines 105
insurer shall be considered an unauthorized insurer. 106
(5) For purposes of the federal Nonadmitted and 107
Reinsurance Reform Act of 2010, a domestic surplus lines insurer 108
shall be considered a nonadmitted insurer. 109
(6) A domestic surplus lines insurer may wri te only 110
surplus lines insurance in this state which is procured from a 111
surplus lines agent pursuant to the Surplus Lines Law. Such 112
insurer may not simultaneously hold any certificate of authority 113
authorizing it to operate as an admitted insurer. 114
(7) A domestic surplus lines insurer may write surplus 115
lines insurance in any jurisdiction if such insurer complies 116
with the requirements of that jurisdiction. 117
(8) All requirements imposed by the Florida Insurance Code 118
on admitted domestic insurers apply to dome stic surplus lines 119
insurers unless otherwise exempted in this section. 120
(9) A domestic surplus lines insurer is exempt from s. 121
624.408. 122
(10) A surplus lines insurance policy issued by a domestic 123
surplus lines insurer is exempt from all statutory require ments 124
relating to insurance rating and rating plans; policy forms; 125
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premiums charged to insureds; policy cancellation, nonrenewal, 126
and renewal; and other statutory requirements in the same manner 127
and to the same extent as surplus lines policies issued by a 128
surplus lines insurer domiciled in another state. 129
(11) Notwithstanding any other law, a policy issued by a 130
domestic surplus lines insurer is subject to taxes assessed upon 131
surplus lines policies issued by nonadmitted insurers, including 132
surplus lines premium taxes, but is not subject to other taxes 133
levied upon admitted insurers, whether domestic or foreign. 134
(12) A policy issued by a domestic surplus lines insurer 135
is not subject to the protections or requirements of the Florida 136
Insurance Guaranty Associa tion Act, the Florida Life and Health 137
Insurance Guaranty Association Act, the Florida Workers' 138
Compensation Insurance Guaranty Association Act, or the Florida 139
Hurricane Catastrophe Fund. 140
(13) A domestic surplus lines insurer may not issue a 141
homeowner's policy covering a personal residential property 142
located in this state within 12 months after the effective date 143
of a nonrenewal or cancellation of a previous policy if the 144
nonrenewal or cancellation of the previous policy was initiated 145
by an affiliate of an admitted insurer. This restriction does 146
not apply to a nonrenewal or cancellation provided at the 147
insured's request. A domestic surplus lines insurer may not 148
issue a policy designed to satisfy the motor vehicle financial 149
responsibility requirements of thi s state under chapter 324, the 150
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Workers' Compensation Law under chapter 440, or any other law of 151
this state mandating insurance coverage by an admitted insurer. 152
Section 3. Paragraph (b) of subsection (1) and paragraph 153
(b) of subsection (2) of section 45 8.320, Florida Statutes, are 154
amended to read: 155
458.320 Financial responsibility. — 156
(1) As a condition of licensing and maintaining an active 157
license, and prior to the issuance or renewal of an active 158
license or reactivation of an inactive license for the practice 159
of medicine, an applicant must by one of the following methods 160
demonstrate to the satisfaction of the board and the department 161
financial responsibility to pay claims and costs ancillary 162
thereto arising out of the rendering of, or the failure to 163
render, medical care or services: 164
(b) Obtaining and maintaining professional liability 165
coverage in an amount not less than $100,000 per claim, with a 166
minimum annual aggregate of not less than $300,000, from an 167
authorized insurer as defined under s. 624.09 , from a surplus 168
lines insurer as defined under s. 626.914 s. 626.914(2), from a 169
risk retention group as defined under s. 627.942, from the Joint 170
Underwriting Association established under s. 627.351(4), or 171
through a plan of self -insurance as provided in s . 627.357. The 172
required coverage amount set forth in this paragraph may not be 173
used for litigation costs or attorney's fees for the defense of 174
any medical malpractice claim. 175
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(2) Physicians who perform surgery in an ambulatory 176
surgical center licensed und er chapter 395 and, as a continuing 177
condition of hospital staff privileges, physicians who have 178
staff privileges must also establish financial responsibility by 179
one of the following methods: 180
(b) Obtaining and maintaining professional liability 181
coverage in an amount not less than $250,000 per claim, with a 182
minimum annual aggregate of not less than $750,000 from an 183
authorized insurer as defined under s. 624.09, from a surplus 184
lines insurer as defined under s. 626.914 s. 626.914(2), from a 185
risk retention group as defined under s. 627.942, from the Joint 186
Underwriting Association established under s. 627.351(4), 187
through a plan of self -insurance as provided in s. 627.357, or 188
through a plan of self -insurance which meets the conditions 189
specified for satisfying fin ancial responsibility in s. 766.110. 190
The required coverage amount set forth in this paragraph may not 191
be used for litigation costs or attorney attorney's fees for the 192
defense of any medical malpractice claim. 193
194
This subsection shall be inclusive of the coverage in subsection 195
(1). 196
Section 4. Paragraph (b) of subsection (1) and paragraph 197
(b) of subsection (2) of section 459.0085, Florida Statutes, are 198
amended to read: 199
459.0085 Financial responsibility. — 200
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(1) As a condition of licensing and maintaini ng an active 201
license, and prior to the issuance or renewal of an active 202
license or reactivation of an inactive license for the practice 203
of osteopathic medicine, an applicant must by one of the 204
following methods demonstrate to the satisfaction of the board 205
and the department financial responsibility to pay claims and 206
costs ancillary thereto arising out of the rendering of, or the 207
failure to render, medical care or services: 208
(b) Obtaining and maintaining professional liability 209
coverage in an amount not less than $100,000 per claim, with a 210
minimum annual aggregate of not less than $300,000, from an 211
authorized insurer as defined under s. 624.09, from a surplus 212
lines insurer as defined under s. 626.914 s. 626.914(2), from a 213
risk retention group as defined under s. 627.942, from the Joint 214
Underwriting Association established under s. 627.351(4), or 215
through a plan of self -insurance as provided in s. 627.357. The 216
required coverage amount set forth in this paragraph may not be 217
used for litigation costs or attorney's fees for the defense of 218
any medical malpractice claim. 219
(2) Osteopathic physicians who perform surgery in an 220
ambulatory surgical center licensed under chapter 395 and, as a 221
continuing condition of hospital staff privileges, osteopathic 222
physicians who have staff privileges must also establish 223
financial responsibility by one of the following methods: 224
(b) Obtaining and maintaining professional liability 225
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coverage in an amount not less than $250,000 per claim, with a 226
minimum annual aggregate of not less than $750,000 from an 227
authorized insurer as defined under s. 624.09, from a surplus 228
lines insurer as defined under s. 626.914 s. 626.914(2), from a 229
risk retention group as defined under s. 627.942, from the Joint 230
Underwriting Association established under s. 6 27.351(4), 231
through a plan of self -insurance as provided in s. 627.357, or 232
through a plan of self -insurance that meets the conditions 233
specified for satisfying financial responsibility in s. 766.110. 234
The required coverage amount set forth in this paragraph m ay not 235
be used for litigation costs or attorney's fees for the defense 236
of any medical malpractice claim. 237
238
This subsection shall be inclusive of the coverage in subsection 239
(1). 240
Section 5. Paragraph (a) of subsection (2) of section 241
464.0123, Florida Statutes, is amended to read: 242
464.0123 Autonomous practice by an advanced practice 243
registered nurse.— 244
(2) FINANCIAL RESPONSIBILITY. — 245
(a) An advanced practice registered nurse registered under 246
this section must, by one of the following methods, demons trate 247
to the satisfaction of the board and the department financial 248
responsibility to pay claims and costs ancillary thereto arising 249
out of the rendering of, or the failure to render, nursing care, 250
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treatment, or services: 251
1. Obtaining and maintaining pro fessional liability 252
coverage in an amount not less than $100,000 per claim, with a 253
minimum annual aggregate of not less than $300,000, from an 254
authorized insurer as defined in s. 624.09, from a surplus lines 255
insurer as defined in s. 626.914(3) s. 626.914(2), from a risk 256
retention group as defined in s. 627.942, from the Joint 257
Underwriting Association established under s. 627.351(4), or 258
through a plan of self -insurance as provided in s. 627.357; or 259
2. Obtaining and maintaining an unexpired, irrevocable 260
letter of credit, established pursuant to chapter 675, in an 261
amount of not less than $100,000 per claim, with a minimum 262
aggregate availability of credit of not less than $300,000. The 263
letter of credit must be payable to the advanced practice 264
registered nurse as beneficiary upon presentment of a final 265
judgment indicating liability and awarding damages to be paid by 266
the advanced practice registered nurse or upon presentment of a 267
settlement agreement signed by all parties to such agreement 268
when such final judgmen t or settlement is a result of a claim 269
arising out of the rendering of, or the failure to render, 270
nursing care and services. 271
Section 6. Paragraph (b) of subsection (6) of section 272
629.401, Florida Statutes, is amended to read: 273
629.401 Insurance exchan ge.— 274
(6) 275
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(b) In addition to the insurance laws specified in 276
paragraph (a), the office shall regulate the exchange pursuant 277
to the following powers, rights, and duties: 278
1. General examination powers. —The office shall examine 279
the affairs, transactions, accounts, records, and assets of any 280
security fund, exchange, members, and associate brokers as often 281
as it deems advisable. The examination may be conducted by the 282
accredited examiners of the office at the offices of the entity 283
or person being examined. T he office shall examine in like 284
manner each prospective member or associate broker applying for 285
membership in an exchange. 286
2. Office approval and applications of underwriting 287
members.—No underwriting member shall commence operation without 288
the approval of the office. Before commencing operation, an 289
underwriting member shall provide a written application 290
containing: 291
a. Name, type, and purpose of the underwriting member. 292
b. Name, residence address, business background, and 293
qualifications of each person associated or to be associated in 294
the formation or financing of the underwriting member. 295
c. Full disclosure of the terms of all understandings and 296
agreements existing or proposed among persons so associated 297
relative to the underwriting member, or the for mation or 298
financing thereof, accompanied by a copy of each such agreement 299
or understanding. 300
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d. Full disclosure of the terms of all understandings and 301
agreements existing or proposed for management or exclusive 302
agency contracts. 303
3. Investigation of unde rwriting member applications. —In 304
connection with any proposal to establish an underwriting 305
member, the office shall make an investigation of: 306
a. The character, reputation, financial standing, and 307
motives of the organizers, incorporators, or subscribers 308
organizing the proposed underwriting member. 309
b. The character, financial responsibility, insurance 310
experience, and business qualifications of its proposed 311
officers. 312
c. The character, financial responsibility, business 313
experience, and standing of the pro posed stockholders and 314
directors, or owners. 315
4. Notice of management changes. —An underwriting member 316
shall promptly give the office written notice of any change 317
among the directors or principal officers of the underwriting 318
member within 30 days after suc h change. The office shall 319
investigate the new directors or principal officers of the 320
underwriting member. The office's investigation shall include an 321
investigation of the character, financial responsibility, 322
insurance experience, and business qualificatio ns of any new 323
directors or principal officers. As a result of the 324
investigation, the office may require the underwriting member to 325
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replace any new directors or principal officers. 326
5. Alternate financial statement. —In lieu of any financial 327
examination, the office may accept an audited financial 328
statement. 329
6. Correction and reconstruction of records. —If the office 330
finds any accounts or records to be inadequate, or inadequately 331
kept or posted, it may employ experts to reconstruct, rewrite, 332
post, or balance them at the expense of the person or entity 333
being examined if such person or entity has failed to maintain, 334
complete, or correct such records or accounts after the office 335
has given him or her or it notice and reasonable opportunity to 336
do so. 337
7. Obstruction of examinations. —Any person or entity who 338
or which willfully obstructs the office or its examiner in an 339
examination is guilty of a misdemeanor of the second degree, 340
punishable as provided in s. 775.082 or s. 775.083. 341
8. Filing of annual statement. —Each underwriting member 342
shall file with the office a full and true statement of its 343
financial condition, transactions, and affairs. The statement 344
shall be filed on or before March 1 of each year, or within such 345
extension of time as the office for good cause grants, and shall 346
be for the preceding calendar year. The statement shall contain 347
information generally included in insurer financial statements 348
prepared in accordance with generally accepted insurance 349
accounting principles and practices and in a form gen erally 350
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utilized by insurers for financial statements, sworn to by at 351
least two executive officers of the underwriting member. The 352
form of the financial statements shall be the approved form of 353
the National Association of Insurance Commissioners or its 354
successor organization. The commission may by rule require each 355
insurer to submit any part of the information contained in the 356
financial statement in a computer -readable form compatible with 357
the office's electronic data processing system. In addition to 358
information furnished in connection with its annual statement, 359
an underwriting member must furnish to the office as soon as 360
reasonably possible such information about its transactions or 361
affairs as the office requests in writing. All information 362
furnished pursuant to the office's request must be verified by 363
the oath of two executive officers of the underwriting member. 364
9. Record maintenance. —Each underwriting member shall have 365
and maintain its principal place of business in this state and 366
shall keep therein com plete records of its assets, transactions, 367
and affairs in accordance with such methods and systems as are 368
customary for or suitable to the kind or kinds of insurance 369
transacted. 370
10. Examination of agents. —If the department has reason to 371
believe that any agent, as defined in s. 626.015 or s. 372
626.914(5) s. 626.914, has violated or is violating any 373
provision of the insurance law, or upon receipt of a written 374
complaint signed by any interested person indicating that any 375
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such violation may exist, the departmen t shall conduct such 376
examination as it deems necessary of the accounts, records, 377
documents, and transactions pertaining to or affecting the 378
insurance affairs of such agent. 379
11. Written reports of office. —The office or its examiner 380
shall make a full and true written report of any examination. 381
The report shall contain only information obtained from 382
examination of the records, accounts, files, and documents of or 383
relative to the person or entity examined or from testimony of 384
individuals under oath, together with relevant conclusions and 385
recommendations of the examiner based thereon. The office shall 386
furnish a copy of the report to the person or entity examined 387
not less than 30 days prior to filing the report in its office. 388
If such person or entity so request s in writing within such 30 -389
day period, the office shall grant a hearing with respect to the 390
report and shall not file the report until after the hearing and 391
after such modifications have been made therein as the office 392
deems proper. 393
12. Admissibility of reports.—The report of an examination 394
when filed shall be admissible in evidence in any action or 395
proceeding brought by the office against the person or entity 396
examined, or against his or her or its officers, employees, or 397
agents. The office or its examin ers may at any time testify and 398
offer other proper evidence as to information secured or matters 399
discovered during the course of an examination, whether or not a 400
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written report of the examination has been either made, 401
furnished, or filed in the office. 402
13. Publication of reports. —After an examination report 403
has been filed, the office may publish the results of any such 404
examination in one or more newspapers published in this state 405
whenever it deems it to be in the public interest. 406
14. Consideration of ex amination reports by entity 407
examined.—After the examination report of an underwriting member 408
has been filed, an affidavit shall be filed with the office, not 409
more than 30 days after the report has been filed, on a form 410
furnished by the office and signed by the person or a 411
representative of any entity examined, stating that the report 412
has been read and that the recommendations made in the report 413
will be considered within a reasonable time. 414
15. Examination costs. —Each person or entity examined by 415
the office shall pay to the office the expenses incurred in such 416
examination. 417
16. Exchange costs. —An exchange shall reimburse the office 418
for any expenses incurred by it relating to the regulation of 419
the exchange and its members, except as specified in 420
subparagraph 15. 421
17. Powers of examiners. —Any examiner appointed by the 422
office, as to the subject of any examination, investigation, or 423
hearing being conducted by him or her, may administer oaths, 424
examine and cross-examine witnesses, and receive oral and 425
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documentary evidence, and shall have the power to subpoena 426
witnesses, compel their attendance and testimony, and require by 427
subpoena the production of books, papers, records, files, 428
correspondence, documents, or other evidence which the examiner 429
deems relevant to the inquiry. If any person refuses to comply 430
with any such subpoena or to testify as to any matter concerning 431
which he or she may be lawfully interrogated, the Circuit Court 432
of Leon County or the circuit court of the county wherein such 433
examination, investiga tion, or hearing is being conducted, or of 434
the county wherein such person resides, on the office's 435
application may issue an order requiring such person to comply 436
with the subpoena and to testify; and any failure to obey such 437
an order of the court may be pu nished by the court as a contempt 438
thereof. Subpoenas shall be served, and proof of such service 439
made, in the same manner as if issued by a circuit court. 440
Witness fees and mileage, if claimed, shall be allowed the same 441
as for testimony in a circuit court. 442
18. False testimony. —Any person willfully testifying 443
falsely under oath as to any matter material to any examination, 444
investigation, or hearing shall upon conviction thereof be 445
guilty of perjury and shall be punished accordingly. 446
19. Self-incrimination.— 447
a. If any person asks to be excused from attending or 448
testifying or from producing any books, papers, records, 449
contracts, documents, or other evidence in connection with any 450
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examination, hearing, or investigation being conducted by the 451
office or its examiner, on the ground that the testimony or 452
evidence required of the person may tend to incriminate him or 453
her or subject him or her to a penalty or forfeiture, and the 454
person notwithstanding is directed to give such testimony or 455
produce such evidence, he or she shall, if so directed by the 456
office and the Department of Legal Affairs, nonetheless comply 457
with such direction; but the person shall not thereafter be 458
prosecuted or subjected to any penalty or forfeiture for or on 459
account of any transaction, matter , or thing concerning which he 460
or she may have so testified or produced evidence, and no 461
testimony so given or evidence so produced shall be received 462
against him or her upon any criminal action, investigation, or 463
proceeding; except that no such person so t estifying shall be 464
exempt from prosecution or punishment for any perjury committed 465
by him or her in such testimony, and the testimony or evidence 466
so given or produced shall be admissible against him or her upon 467
any criminal action, investigation, or procee ding concerning 468
such perjury, nor shall he or she be exempt from the refusal, 469
suspension, or revocation of any license, permission, or 470
authority conferred, or to be conferred, pursuant to the 471
insurance law. 472
b. Any such individual may execute, acknowledge , and file 473
with the office a statement expressly waiving such immunity or 474
privilege in respect to any transaction, matter, or thing 475
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specified in such statement, and thereupon the testimony of such 476
individual or such evidence in relation to such transaction , 477
matter, or thing may be received or produced before any judge or 478
justice, court, tribunal, grand jury, or otherwise; and if such 479
testimony or evidence is so received or produced, such 480
individual shall not be entitled to any immunity or privileges 481
on account of any testimony so given or evidence so produced. 482
20. Penalty for failure to testify. —Any person who refuses 483
or fails, without lawful cause, to testify relative to the 484
affairs of any member, associate broker, or other person when 485
subpoenaed and requested by the office to so testify, as 486
provided in subparagraph 17., shall, in addition to the penalty 487
provided in subparagraph 17., be guilty of a misdemeanor of the 488
second degree, punishable as provided in s. 775.082 or s. 489
775.083. 490
21. Name selection. —No underwriting member shall be formed 491
or authorized to transact insurance in this state under a name 492
which is the same as that of any authorized insurer or is so 493
nearly similar thereto as to cause or tend to cause confusion or 494
under a name which would tend to mislead as to the type of 495
organization of the insurer. Before incorporating under or using 496
any name, the underwriting syndicate or proposed underwriting 497
syndicate shall submit its name or proposed name to the office 498
for the approval of the office. 499
22. Capitalization.—An underwriting member approved on or 500
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after July 2, 1987, shall provide an initial paid -in capital and 501
surplus of $3 million and thereafter shall maintain a minimum 502
policyholder surplus of $2 million in order to be permitted to 503
write insurance. Underwriting members approved prior to July 2, 504
1987, shall maintain a minimum policyholder surplus of $1 505
million. After June 29, 1988, underwriting members approved 506
prior to July 2, 1987, must maintain a minimum policyholder 507
surplus of $1.5 million to write insurance. After June 29, 1989, 508
underwriting members approved prior to July 2, 1987, must 509
maintain a minimum policyholder surplus of $1.75 million to 510
write insurance. After December 30, 1989, all underwriting 511
members, regardless of the date they w ere approved, must 512
maintain a minimum policyholder surplus of $2 million to write 513
insurance. Except for that portion of the paid -in capital and 514
surplus which shall be maintained in a security fund of an 515
exchange, the paid-in capital and surplus shall be in vested by 516
an underwriting member in a manner consistent with ss. 625.301 -517
625.340. The portion of the paid -in capital and surplus in any 518
security fund of an exchange shall be invested in a manner 519
limited to investments for life insurance companies under the 520
Florida insurance laws. 521
23. Limitations on coverage written. — 522
a. Limit of risk.—No underwriting member shall expose 523
itself to any loss on any one risk in an amount exceeding 10 524
percent of its surplus to policyholders. Any risk or portion of 525
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any risk which shall have been reinsured in an assuming 526
reinsurer authorized or approved to do such business in this 527
state shall be deducted in determining the limitation of risk 528
prescribed in this section. 529
b. Restrictions on premiums written. —If the office has 530
reason to believe that the underwriting member's ratio of actual 531
or projected annual gross written premiums to policyholder 532
surplus exceeds 8 to 1 or the underwriting member's ratio of 533
actual or projected annual net premiums to policyholder surplus 534
exceeds 4 to 1, the office may establish maximum gross or net 535
annual premiums to be written by the underwriting member 536
consistent with maintaining the ratios specified in this sub -537
subparagraph. 538
(I) Projected annual net or gross premiums shall be based 539
on the actual writings to date for the underwriting member's 540
current calendar year, its writings for the previous calendar 541
year, or both. Ratios shall be computed on an annualized basis. 542
(II) For purposes of this sub -subparagraph, the term 543
"gross written premiums" means direct premiums written and 544
reinsurance assumed. 545
c. Surplus as to policyholders. —For the purpose of 546
determining the limitation on coverage written, surplus as to 547
policyholders shall be deemed to include any voluntary reserves, 548
or any part thereof, which are not required by or pursuant to 549
law and shall be determined from the last sworn statement of 550
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such underwriting member with the office, or by the last report 551
or examination filed by the office, whichever is more recent at 552
the time of assumption of such risk. 553
24. Unearned premium reserves. —An underwriting member must 554
at all times maintain an unearned premium reserve equal to 50 555
percent of the net written premiums of the subscribers on 556
policies having 1 year or less to run, and pro rata on those for 557
longer periods, except that all premiums on any marine or 558
transportation insurance trip risk shall be deemed unearned 559
until the trip is terminated. For the purpose of this 560
subparagraph, the term "net written premiums" means the premium 561
payments made by subscribers plus the premiums due from 562
subscribers, after deducting the amounts specifically provided 563
in the subscribers' agreements for expenses, including 564
reinsurance costs and fees paid to the attorney in fact, 565
provided that the power of attorney agreemen t contains an 566
explicit provision requiring the attorney in fact to refund any 567
unearned subscribers fees on a pro -rata basis for canceled 568
policies. If there is no such provision, the unearned premium 569
reserve shall be calculated without any adjustment for fe es paid 570
to the attorney in fact. If the unearned premium reserves at any 571
time do not amount to $100,000, there shall be maintained on 572
deposit at the exchange at all times additional funds in cash or 573
eligible securities which, together with the unearned pre mium 574
reserves, equal $100,000. In calculating the foregoing reserves, 575
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the amount of the attorney's bond, as filed with the office and 576
as required by s. 629.121, shall be included in such reserves. 577
If at any time the unearned premium reserves are less than the 578
foregoing requirements, the subscribers, or the attorney in 579
fact, shall advance funds to make up the deficiency. Such 580
advances shall only be repaid out of the surplus of the exchange 581
and only after receiving written approval from the office. 582
25. Loss reserves.—All underwriting members of an exchange 583
shall maintain loss reserves, including a reserve for incurred 584
but not reported claims. The reserves shall be subject to review 585
by the office, and, if loss experience shows that an 586
underwriting member's lo ss reserves are inadequate, the office 587
shall require the underwriting member to maintain loss reserves 588
in such additional amount as is needed to make them adequate. 589
26. Distribution of profits. —An underwriting member shall 590
not distribute any profits in t he form of cash or other assets 591
to owners except out of that part of its available and 592
accumulated surplus funds which is derived from realized net 593
operating profits on its business and realized capital gains. In 594
any one year such payments to owners shall not exceed 30 percent 595
of such surplus as of December 31 of the immediately preceding 596
year, unless otherwise approved by the office. No distribution 597
of profits shall be made that would render an underwriting 598
member either impaired or insolvent. 599
27. Stock dividends.—A stock dividend may be paid by an 600
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underwriting member out of any available surplus funds in excess 601
of the aggregate amount of surplus advanced to the underwriting 602
member under subparagraph 29. 603
28. Dividends from earned surplus. —A dividend otherwise 604
lawful may be payable out of an underwriting member's earned 605
surplus even though the total surplus of the underwriting member 606
is then less than the aggregate of its past contributed surplus 607
resulting from issuance of its capital stock at a price in 608
excess of the par value thereof. 609
29. Borrowing of money by underwriting members. — 610
a. An underwriting member may borrow money to defray the 611
expenses of its organization, provide it with surplus funds, or 612
for any purpose of its business, upon a written a greement that 613
such money is required to be repaid only out of the underwriting 614
member's surplus in excess of that stipulated in such agreement. 615
The agreement may provide for interest not exceeding 15 percent 616
simple interest per annum. The interest shall or shall not 617
constitute a liability of the underwriting member as to its 618
funds other than such excess of surplus, as stipulated in the 619
agreement. No commission or promotion expense shall be paid in 620
connection with any such loan. The use of any surplus note a nd 621
any repayments thereof shall be subject to the approval of the 622
office. 623
b. Money so borrowed, together with any interest thereon 624
if so stipulated in the agreement, shall not form a part of the 625
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underwriting member's legal liabilities except as to its su rplus 626
in excess of the amount thereof stipulated in the agreement, nor 627
be the basis of any setoff; but until repayment, financial 628
statements filed or published by an underwriting member shall 629
show as a footnote thereto the amount thereof then unpaid, 630
together with any interest thereon accrued but unpaid. 631
30. Liquidation, rehabilitation, and restrictions. —The 632
office, upon a showing that a member or associate broker of an 633
exchange has met one or more of the grounds contained in part I 634
of chapter 631, may re strict sales by type of risk, policy or 635
contract limits, premium levels, or policy or contract 636
provisions; increase surplus or capital requirements of 637
underwriting members; issue cease and desist orders; suspend or 638
restrict a member's or associate broker's right to transact 639
business; place an underwriting member under conservatorship or 640
rehabilitation; or seek an order of liquidation as authorized by 641
part I of chapter 631. 642
31. Prohibited conduct. —The following acts by a member, 643
associate broker, or affiliated person shall constitute 644
prohibited conduct: 645
a. Fraud. 646
b. Fraudulent or dishonest acts committed by a member or 647
associate broker prior to admission to an exchange, if the facts 648
and circumstances were not disclosed to the office upon 649
application to become a member or associate broker. 650
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c. Conduct detrimental to the welfare of an exchange. 651
d. Unethical or improper practices or conduct, 652
inconsistent with just and equitable principles of trade as set 653
forth in, but not limited to, ss. 626.951 -626.9641 and 626.973. 654
e. Failure to use due diligence to ascertain the insurance 655
needs of a client or a principal. 656
f. Misstatements made under oath or upon an application 657
for membership on an exchange. 658
g. Failure to testify or produce documents when re quested 659
by the office. 660
h. Willful violation of any law of this state. 661
i. Failure of an officer or principal to testify under 662
oath concerning a member, associate broker, or other person's 663
affairs as they relate to the operation of an exchange. 664
j. Violation of the constitution and bylaws of the 665
exchange. 666
32. Penalties for participating in prohibited conduct. — 667
a. The office may order the suspension of further 668
transaction of business on the exchange of any member or 669
associate broker found to have enga ged in prohibited conduct. In 670
addition, any member or associate broker found to have engaged 671
in prohibited conduct may be subject to reprimand, censure, 672
and/or a fine not exceeding $25,000 imposed by the office. 673
b. Any member which has an affiliated pers on who is found 674
to have engaged in prohibited conduct shall be subject to 675
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involuntary withdrawal or in addition thereto may be subject to 676
suspension, reprimand, censure, and/or a fine not exceeding 677
$25,000. 678
33. Reduction of penalties. —Any suspension, reprimand, 679
censure, or fine may be remitted or reduced by the office on 680
such terms and conditions as are deemed fair and equitable. 681
34. Other offenses. —Any member or associate broker that is 682
suspended shall be deprived, during the period of suspension, of 683
all rights and privileges of a member or of an associate broker 684
and may be proceeded against by the office for any offense 685
committed either before or after the date of suspension. 686
35. Reinstatement.—Any member or associate broker that is 687
suspended may be reinstated at any time on such terms and 688
conditions as the office may specify. 689
36. Remittance of fines. —Fines imposed under this section 690
shall be remitted to the office and shall be paid into the 691
Insurance Regulatory Trust Fund. 692
37. Failure to pay fine s.—When a member or associate 693
broker has failed to pay a fine for 15 days after it becomes 694
payable, such member or associate broker shall be suspended, 695
unless the office has granted an extension of time to pay such 696
fine. 697
38. Changes in ownership or asset s.—In the event of a 698
major change in the ownership or a major change in the assets of 699
an underwriting member, the underwriting member shall report 700
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such change in writing to the office within 30 days of the 701
effective date thereof. The report shall set forth the details 702
of the change. Any change in ownership or assets of more than 5 703
percent shall be considered a major change. 704
39. Retaliation.— 705
a. When by or pursuant to the laws of any other state or 706
foreign country any taxes, licenses, or other fees, in t he 707
aggregate, and any fines, penalties, deposit requirements, or 708
other material obligations, prohibitions, or restrictions are or 709
would be imposed upon an exchange or upon the agents or 710
representatives of such exchange which are in excess of such 711
taxes, licenses, and other fees, in the aggregate, or which are 712
in excess of such fines, penalties, deposit requirements, or 713
other obligations, prohibitions, or restrictions directly 714
imposed upon similar exchanges or upon the agents or 715
representatives of such excha nges of such other state or country 716
under the statutes of this state, so long as such laws of such 717
other state or country continue in force or are so applied, the 718
same taxes, licenses, and other fees, in the aggregate, or 719
fines, penalties, deposit requirem ents, or other material 720
obligations, prohibitions, or restrictions of whatever kind 721
shall be imposed by the office upon the exchanges, or upon the 722
agents or representatives of such exchanges, of such other state 723
or country doing business or seeking to do b usiness in this 724
state. 725
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b. Any tax, license, or other obligation imposed by any 726
city, county, or other political subdivision or agency of a 727
state, jurisdiction, or foreign country on an exchange, or on 728
the agents or representatives on an exchange, shall b e deemed to 729
be imposed by such state, jurisdiction, or foreign country 730
within the meaning of sub -subparagraph a. 731
40. Agents.— 732
a. Agents as defined in ss. 626.015 and 626.914(5) 626.914 733
who are broker members or associate broker members of an 734
exchange shall be allowed only to place on an exchange the same 735
kind or kinds of business that the agent is licensed to place 736
pursuant to Florida law. Direct Florida business as defined in 737
s. 626.916 or s. 626.917 shall be written through a broker 738
member who is a surplus lines agent as defined in s. 626.914. 739
The activities of each broker member or associate broker with 740
regard to an exchange shall be subject to all applicable 741
provisions of the insurance laws of this state, and all such 742
activities shall constitute tran sactions under his or her 743
license as an insurance agent for purposes of the Florida 744
insurance law. 745
b. Premium payments and other requirements. —If an 746
underwriting member has assumed the risk as to a surplus lines 747
coverage and if the premium therefor has b een received by the 748
surplus lines agent who placed such insurance, then in all 749
questions thereafter arising under the coverage as between the 750
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underwriting member and the insured, the underwriting member 751
shall be deemed to have received the premium due to i t for such 752
coverage; and the underwriting member shall be liable to the 753
insured as to losses covered by such insurance, and for unearned 754
premiums which may become payable to the insured upon 755
cancellation of such insurance, whether or not in fact the 756
surplus lines agent is indebted to the underwriting member with 757
respect to such insurance or for any other cause. 758
41. Improperly issued contracts, riders, and 759
endorsements.— 760
a. Any insurance policy, rider, or endorsement issued by 761
an underwriting member and otherwise valid which contains any 762
condition or provision not in compliance with the requirements 763
of this section shall not be thereby rendered invalid, except as 764
provided in s. 627.415, but shall be construed and applied in 765
accordance with such conditions and provisions as would have 766
applied had such policy, rider, or endorsement been in full 767
compliance with this section. In the event an underwriting 768
member issues or delivers any policy for an amount which exceeds 769
any limitations otherwise provided in this section, the 770
underwriting member shall be liable to the insured or his or her 771
beneficiary for the full amount stated in the policy in addition 772
to any other penalties that may be imposed. 773
b. Any insurance contract delivered or issued for delivery 774
in this state governing a subject or subjects of insurance 775
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resident, located, or to be performed in this state which, 776
pursuant to the provisions of this section, the underwriting 777
member may not lawfully insure under such a contract shall be 778
cancelable at any time by the underwriting member, any provision 779
of the contract to the contrary notwithstanding; and the 780
underwriting member shall promptly cancel the contract in 781
accordance with the request of the office therefor. No such 782
illegality or cancellation shall be de emed to relieve the 783
underwriting syndicate of any liability incurred by it under the 784
contract while in force or to prohibit the underwriting 785
syndicate from retaining the pro rata earned premium thereon. 786
This provision does not relieve the underwriting synd icate from 787
any penalty otherwise incurred by the underwriting syndicate. 788
42. Satisfaction of judgments. — 789
a. Every judgment or decree for the recovery of money 790
heretofore or hereafter entered in any court of competent 791
jurisdiction against any underwriting member shall be fully 792
satisfied within 60 days from and after the entry thereof or, in 793
the case of an appeal from such judgment or decree, within 60 794
days from and after the affirmance of the judgment or decree by 795
the appellate court. 796
b. If the judgment or decree is not satisfied as required 797
under sub-subparagraph a., and proof of such failure to satisfy 798
is made by filing with the office a certified transcript of the 799
docket of the judgment or the decree together with a certificate 800
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by the clerk of the court wherein the judgment or decree remains 801
unsatisfied, in whole or in part, after the time provided in 802
sub-subparagraph a., the office shall forthwith prohibit the 803
underwriting member from transacting business. The office shall 804
not permit such underwriting member to write any new business 805
until the judgment or decree is wholly paid and satisfied and 806
proof thereof is filed with the office under the official 807
certificate of the clerk of the court wherein the judgment was 808
recovered, showing that the judgment or decree is satisfied of 809
record, and until the expenses and fees incurred in the case are 810
also paid by the underwriting syndicate. 811
43. Tender and exchange offers. —No person shall conclude a 812
tender offer or an exchange offer or otherwise acquire 5 percent 813
or more of the outstanding voting securities of an underwriting 814
member or controlling company or purchase 5 percent or more of 815
the ownership of an underwriting member or controlling company 816
unless such person has filed with, and obtained the app roval of, 817
the office and sent to such underwriting member a statement 818
setting forth: 819
a. The identity of, and background information on, each 820
person by whom, or on whose behalf, the acquisition is to be 821
made; and, if the acquisition is to be made by or on behalf of a 822
corporation, association, or trust, the identity of and 823
background information on each director, officer, trustee, or 824
other natural person performing duties similar to those of a 825
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director, officer, or trustee for the corporation, association, 826
or trust. 827
b. The source and amount of the funds or other 828
consideration used, or to be used, in making the acquisition. 829
c. Any plans or proposals which such person may have to 830
liquidate such member, to sell its assets, or to merge or 831
consolidate it. 832
d. The percentage of ownership which such person proposes 833
to acquire and the terms of the offer or exchange, as the case 834
may be. 835
e. Information as to any contracts, arrangements, or 836
understandings with any party with respect to any securities of 837
such member or controlling company, including, but not limited 838
to, information relating to the transfer of any securities, 839
option arrangements, or puts or calls or the giving or 840
withholding of proxies, naming the party with whom such 841
contract, arrangements, or unde rstandings have been entered and 842
giving the details thereof. 843
f. The office may disapprove any acquisition subject to 844
the provisions of this subparagraph by any person or any 845
affiliated person of such person who: 846
(I) Willfully violates this subparagraph ; 847
(II) In violation of an order of the office issued 848
pursuant to sub-subparagraph j., fails to divest himself or 849
herself of any stock obtained in violation of this subparagraph, 850
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or fails to divest himself or herself of any direct or indirect 851
control of such stock, within 25 days after such order; or 852
(III) In violation of an order issued by the office 853
pursuant to sub-subparagraph j., acquires additional stock of 854
the underwriting member or controlling company, or direct or 855
indirect control of such stock, without complying with this 856
subparagraph. 857
g. The person or persons filing the statement required by 858
this subparagraph have the burden of proof. The office shall 859
approve any such acquisition if it finds, on the basis of the 860
record made during any proceedi ng or on the basis of the filed 861
statement if no proceeding is conducted, that: 862
(I) Upon completion of the acquisition, the underwriting 863
member will be able to satisfy the requirements for the approval 864
to write the line or lines of insurance for which it is 865
presently approved; 866
(II) The financial condition of the acquiring person or 867
persons will not jeopardize the financial stability of the 868
underwriting member or prejudice the interests of its 869
policyholders or the public; 870
(III) Any plan or proposal whic h the acquiring person has, 871
or acquiring persons have, made: 872
(A) To liquidate the insurer, sell its assets, or merge or 873
consolidate it with any person, or to make any other major 874
change in its business or corporate structure or management; or 875
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(B) To liquidate any controlling company, sell its assets, 876
or merge or consolidate it with any person, or to make any major 877
change in its business or corporate structure or management 878
which would have an effect upon the underwriting member 879
880
is fair and free of prej udice to the policyholders of the 881
underwriting member or to the public; 882
(IV) The competence, experience, and integrity of those 883
persons who will control directly or indirectly the operation of 884
the underwriting member indicate that the acquisition is in t he 885
best interest of the policyholders of the underwriting member 886
and in the public interest; 887
(V) The natural persons for whom background information is 888
required to be furnished pursuant to this subparagraph have such 889
backgrounds as to indicate that it is in the best interests of 890
the policyholders of the underwriting member, and in the public 891
interest, to permit such persons to exercise control over such 892
underwriting member; 893
(VI) The officers and directors to be employed after the 894
acquisition have suffic ient insurance experience and ability to 895
assure reasonable promise of successful operation; 896
(VII) The management of the underwriting member after the 897
acquisition will be competent and trustworthy and will possess 898
sufficient managerial experience so as to make the proposed 899
operation of the underwriting member not hazardous to the 900
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insurance-buying public; 901
(VIII) The management of the underwriting member after the 902
acquisition will not include any person who has directly or 903
indirectly through ownership, con trol, reinsurance transactions, 904
or other insurance or business relations unlawfully manipulated 905
the assets, accounts, finances, or books of any insurer or 906
underwriting member or otherwise acted in bad faith with respect 907
thereto; 908
(IX) The acquisition is n ot likely to be hazardous or 909
prejudicial to the underwriting member's policyholders or the 910
public; and 911
(X) The effect of the acquisition of control would not 912
substantially lessen competition in insurance in this state or 913
would not tend to create a monopo ly therein. 914
h. No vote by the stockholder of record, or by any other 915
person, of any security acquired in contravention of the 916
provisions of this subparagraph is valid. Any acquisition of any 917
security contrary to the provisions of this subparagraph is 918
void. Upon the petition of the underwriting member or 919
controlling company, the circuit court for the county in which 920
the principal office of such underwriting member is located may, 921
without limiting the generality of its authority, order the 922
issuance or entry of an injunction or other order to enforce the 923
provisions of this subparagraph. There shall be a private right 924
of action in favor of the underwriting member or controlling 925
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company to enforce the provisions of this subparagraph. No 926
demand upon the office t hat it perform its functions shall be 927
required as a prerequisite to any suit by the underwriting 928
member or controlling company against any other person, and in 929
no case shall the office be deemed a necessary party to any 930
action by such underwriting member o r controlling company to 931
enforce the provisions of this subparagraph. Any person who 932
makes or proposes an acquisition requiring the filing of a 933
statement pursuant to this subparagraph, or who files such a 934
statement, shall be deemed to have thereby designat ed the Chief 935
Financial Officer as such person's agent for service of process 936
under this subparagraph and shall thereby be deemed to have 937
submitted himself or herself to the administrative jurisdiction 938
of the office and to the jurisdiction of the circuit co urt. 939
i. Any approval by the office under this subparagraph does 940
not constitute a recommendation by the office for an 941
acquisition, tender offer, or exchange offer. It is unlawful for 942
a person to represent that the office's approval constitutes a 943
recommendation. A person who violates the provisions of this 944
sub-subparagraph is guilty of a felony of the third degree, 945
punishable as provided in s. 775.082, s. 775.083, or s. 775.084. 946
The statute-of-limitations period for the prosecution of an 947
offense committed under this sub -subparagraph is 5 years. 948
j. Upon notification to the office by the underwriting 949
member or a controlling company that any person or any 950
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affiliated person of such person has acquired 5 percent or more 951
of the outstanding voting securi ties of the underwriting member 952
or controlling company without complying with the provisions of 953
this subparagraph, the office shall order that the person and 954
any affiliated person of such person cease acquisition of any 955
further securities of the underwriti ng member or controlling 956
company; however, the person or any affiliated person of such 957
person may request a proceeding, which proceeding shall be 958
convened within 7 days after the rendering of the order for the 959
sole purpose of determining whether the person , individually or 960
in connection with any affiliated person of such person, has 961
acquired 5 percent or more of the outstanding voting securities 962
of an underwriting member or controlling company. Upon the 963
failure of the person or affiliated person to request a hearing 964
within 7 days, or upon a determination at a hearing convened 965
pursuant to this sub -subparagraph that the person or affiliated 966
person has acquired voting securities of an underwriting member 967
or controlling company in violation of this subparagraph, the 968
office may order the person and affiliated person to divest 969
themselves of any voting securities so acquired. 970
k.(I) The office shall, if necessary to protect the public 971
interest, suspend or revoke the certificate of authority of any 972
underwriting member or controlling company: 973
(A) The control of which is acquired in violation of this 974
subparagraph; 975
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(B) That is controlled, directly or indirectly, by any 976
person or any affiliated person of such person who, in violation 977
of this subparagraph, has obtaine d control of an underwriting 978
member or controlling company; or 979
(C) That is controlled, directly or indirectly, by any 980
person who, directly or indirectly, controls any other person 981
who, in violation of this subparagraph, acquires control of an 982
underwriting member or controlling company. 983
(II) If any underwriting member is subject to suspension 984
or revocation pursuant to sub -sub-subparagraph (I), the 985
underwriting member shall be deemed to be in such condition, or 986
to be using or to have been subject to such methods or practices 987
in the conduct of its business, as to render its further 988
transaction of insurance presently or prospectively hazardous to 989
its policyholders, creditors, or stockholders or to the public. 990
l.(I) For the purpose of this sub -sub-subparagraph, the 991
term "affiliated person" of another person means: 992
(A) The spouse of such other person; 993
(B) The parents of such other person and their lineal 994
descendants and the parents of such other person's spouse and 995
their lineal descendants; 996
(C) Any person who directly or indirectly owns or 997
controls, or holds with power to vote, 5 percent or more of the 998
outstanding voting securities of such other person; 999
(D) Any person 5 percent or more of the outstanding voting 1000
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securities of which are directly or indir ectly owned or 1001
controlled, or held with power to vote, by such other person; 1002
(E) Any person or group of persons who directly or 1003
indirectly control, are controlled by, or are under common 1004
control with such other person; or any officer, director, 1005
partner, copartner, or employee of such other person; 1006
(F) If such other person is an investment company, any 1007
investment adviser of such company or any member of an advisory 1008
board of such company; 1009
(G) If such other person is an unincorporated investment 1010
company not having a board of directors, the depositor of such 1011
company; or 1012
(H) Any person who has entered into an agreement, written 1013
or unwritten, to act in concert with such other person in 1014
acquiring or limiting the disposition of securities of an 1015
underwriting member or controlling company. 1016
(II) For the purposes of this section, the term 1017
"controlling company" means any corporation, trust, or 1018
association owning, directly or indirectly, 25 percent or more 1019
of the voting securities of one or more underwriting memb ers. 1020
m. The commission may adopt, amend, or repeal rules that 1021
are necessary to implement the provisions of this subparagraph, 1022
pursuant to chapter 120. 1023
44. Background information. —The information as to the 1024
background and identity of each person about wh om information is 1025
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required to be furnished pursuant to sub -subparagraph 43.a. 1026
shall include, but shall not be limited to: 1027
a. Such person's occupations, positions of employment, and 1028
offices held during the past 10 years. 1029
b. The principal business and ad dress of any business, 1030
corporation, or other organization in which each such office was 1031
held or in which such occupation or position of employment was 1032
carried on. 1033
c. Whether, at any time during such 10 -year period, such 1034
person was convicted of any crime other than a traffic 1035
violation. 1036
d. Whether, during such 10 -year period, such person has 1037
been the subject of any proceeding for the revocation of any 1038
license and, if so, the nature of such proceeding and the 1039
disposition thereof. 1040
e. Whether, during such 10-year period, such person has 1041
been the subject of any proceeding under the federal Bankruptcy 1042
Act or whether, during such 10 -year period, any corporation, 1043
partnership, firm, trust, or association in which such person 1044
was a director, officer, trustee, par tner, or other official has 1045
been subject to any such proceeding, either during the time in 1046
which such person was a director, officer, trustee, partner, or 1047
other official, or within 12 months thereafter. 1048
f. Whether, during such 10 -year period, such person has 1049
been enjoined, either temporarily or permanently, by a court of 1050
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competent jurisdiction from violating any federal or state law 1051
regulating the business of insurance, securities, or banking, or 1052
from carrying out any particular practice or practices in t he 1053
course of the business of insurance, securities, or banking, 1054
together with details of any such event. 1055
45. Security fund.—All underwriting members shall be 1056
members of the security fund of any exchange. 1057
46. Underwriting member defined. —Whenever the term 1058
"underwriting member" is used in this subsection, it shall be 1059
construed to mean "underwriting syndicate." 1060
47. Offsets.—Any action, requirement, or constraint 1061
imposed by the office shall reduce or offset similar actions, 1062
requirements, or constraints of any exchange. 1063
48. Restriction on member ownership. — 1064
a. Investments existing prior to July 2, 1987. —The 1065
investment in any member by brokers, agents, and intermediaries 1066
transacting business on the exchange, and the investment in any 1067
such broker, agent, or intermediary by any member, directly or 1068
indirectly, shall in each case be limited in the aggregate to 1069
less than 20 percent of the total investment in such member, 1070
broker, agent, or intermediary, as the case may be. After 1071
December 31, 1987, the aggregate percent of the total investment 1072
in such member by any b roker, agent, or intermediary and the 1073
aggregate percent of the total investment in any such broker, 1074
agent, or intermediary by any member, directly or indirectly, 1075
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shall not exceed 15 percent. After June 30, 1988, such aggregate 1076
percent shall not exceed 10 p ercent and after December 31, 1988, 1077
such aggregate percent shall not exceed 5 percent. 1078
b. Investments arising on or after July 2, 1987. —The 1079
investment in any underwriting member by brokers, agents, or 1080
intermediaries transacting business on the exchange, and the 1081
investment in any such broker, agent, or intermediary by any 1082
underwriting member, directly or indirectly, shall in each case 1083
be limited in the aggregate to less than 5 percent of the total 1084
investment in such underwriting member, broker, agent, or 1085
intermediary. 1086
49. "Underwriting manager" defined. —"Underwriting manager" 1087
as used in this subparagraph includes any person, partnership, 1088
corporation, or organization providing any of the following 1089
services to underwriting members of the exchange: 1090
a. Office management and allied services, including 1091
correspondence and secretarial services. 1092
b. Accounting services, including bookkeeping and 1093
financial report preparation. 1094
c. Investment and banking consultations and services. 1095
d. Underwriting functions and services including the 1096
acceptance, rejection, placement, and marketing of risk. 1097
50. Prohibition of underwriting manager investment. —Any 1098
direct or indirect investment in any underwriting manager by a 1099
broker member or any affiliated person of a broker memb er or any 1100
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direct or indirect investment in a broker member by an 1101
underwriting manager or any affiliated person of an underwriting 1102
manager is prohibited. "Affiliated person" for purposes of this 1103
subparagraph is defined in subparagraph 43. 1104
51. An underwriting member may not accept reinsurance on 1105
an assumed basis from an affiliate or a controlling company, nor 1106
may a broker member or management company place reinsurance from 1107
an affiliate or controlling company of theirs with an 1108
underwriting member. "Affiliate and controlling company" for 1109
purposes of this subparagraph is defined in subparagraph 43. 1110
52. Premium defined. —"Premium" is the consideration for 1111
insurance, by whatever name called. Any "assessment" or any 1112
"membership," "policy," "survey," "inspection," "service" fee or 1113
charge or similar fee or charge in consideration for an 1114
insurance contract is deemed part of the premium. 1115
53. Rules.—The commission shall adopt rules necessary for 1116
or as an aid to the effectuation of any provision of this 1117
section. 1118
Section 7. This act shall take effect July 1, 2022. 1119