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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 insurance; amending s. 624.424, 2
F.S.; requiring insurers and insurer groups in the 3
state to file certain supplemental reports monthly, 4
rather than quarterly; revising the information 5
required to be included in such reports; amending s. 6
624.4305, F.S.; providing rulemaking authority; 7
amending s. 626.9201, F.S.; prohibiting insurers from 8
cancelling and nonrenewing certain personal 9
residential and commercial residential property 10
insurance policies for a specified period under 11
certain circumstances; providing exceptions; providing 12
construction; providing rulemaking authority; 13
authorizing orders to be issued for a specified 14
purpose; amending s. 627.062, F.S.; providing 15
requirements for averaged models if such models are 16
used for insurance rates ; amending s. 627.351, F.S.; 17
revising the property insurance policies issued by 18
Citizens Property Insurance Corporation which are not 19
subject to rate increase limitations; amending s. 20
628.011, F.S.; revising the scope of provisions 21
relating to insurance st ock insurers, mutual insurers, 22
and captive insurers; amending s. 628.061, F.S.; 23
revising the circumstances under which the Office of 24
Insurance Regulation investigate certain entities; 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
amending s. 628.801, F.S.; updating the source for 26
requirement and stand ards for certain insurance 27
registration and regulation rules; removing obsolete 28
dates; providing rulemaking authority; creating part I 29
of ch. 629, F.S., entitled "Reciprocal Insurers"; 30
amending s. 629.011, F.S.; providing definitions; 31
repealing s. 629.021, F.S., relating to the definition 32
of "reciprocal insurer"; amending s. 629.051, F.S.; 33
removing a nonapplicability provision; repealing s. 34
629.061, F.S., relating to attorney in fact of 35
reciprocal insurers; amending s. 629.071, F.S.; 36
providing requirements for surplus for reciprocal 37
insurers, rather than requirements for surplus for 38
domestic reciprocal insurers; amending s. 629.081, 39
F.S.; providing requirements for applications to 40
organize domestic reciprocal insurers; requiring the 41
office to review such app lications in accordance with 42
specified provisions; authorizing a minimum number of 43
people to apply for a reciprocal certificate of 44
authority under certain circumstances; revising the 45
requirements for the declarations for such 46
applications; requiring applic ation fees; amending s. 47
629.091, F.S.; requiring that reciprocal certificates 48
of authority, rather than certificates of authority, 49
be issued to certain entities; amending s. 629.101, 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
F.S.; providing additional information that certain 51
powers of attorney mu st provide; amending s. 629.111, 52
F.S.; conforming a provision to changes made by the 53
act; amending s. 629.121, F.S.; conforming a provision 54
to changes made by the act; increasing the amount of 55
bond that attorneys of reciprocal insurers must file 56
with the office; amending s. 629.161, F.S.; 57
authorizing reciprocal insurers to borrow money for 58
specified purposes; providing construction for loan 59
interests; prohibiting such loans and interests from 60
forming a part of the insurers' legal liabilities; 61
requiring such loans and interests to be shown in 62
financial statements; requiring such loans to be 63
approved by the office; providing requirements for the 64
approval process; requiring the office to disapprove 65
proposed loans and agreements under certain 66
circumstances; providing circumstances under which 67
such loans must be repaid; requiring such repayments 68
to be approved by the office; providing 69
nonapplicability; removing provisions relating to 70
attorneys and other parties advancing funds to 71
domestic reciprocal insurers; amen ding s. 629.171, 72
F.S.; providing requirements for annual statements of 73
reciprocal insurers to be made and filed; amending s. 74
629.191, F.S.; providing that rights for certain 75
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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
applications, contracts, and memberships are for 76
reciprocal insurers, rather than domestic, foreign and 77
alien reciprocal insurers; amending s. 629.201, F.S.; 78
conforming a provision to changes made by the act; 79
creating s. 629.225, F.S.; prohibiting specified 80
acquisitions of certain voting securities under 81
certain circumstances; providing exceptions; providing 82
requirements for acquisition notices and applications 83
with the office; prohibiting acquiring persons from 84
making material changes during the pendency of the 85
office's review; authorizing requests for proceedings; 86
providing circumstanc es under which the office may 87
disapprove or approve acquisitions; providing that 88
votes in contravention of specified provisions are not 89
valid; providing that acquisitions contrary to 90
specified provisions are void; authorizing circuit 91
courts to enforce spec ified provisions under certain 92
circumstances; providing that certain entities are 93
deemed to have submit themselves to the administrative 94
jurisdiction of the office and the jurisdiction of the 95
circuit court under certain circumstances; providing 96
construction; authorizing filing of disclaimers of 97
control; authorizing the office to order certain 98
persons to cease acquisition and divest themselves of 99
stocks and ownership interests under certain 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
circumstances; providing penalties; creating s. 101
629.227, F.S.; provi ding requirements for background 102
information for applications with the office to 103
organize domestic reciprocal insurers or to request 104
approval for securities acquisitions; amending s. 105
629.231, F.S.; conforming provisions to changes made 106
by the act; authoriz ing the office to revoke the 107
authorization for assessable reciprocal insurers to 108
convert to nonassessable reciprocal insurers; amending 109
ss. 629.241, 629.251, 629.271, and 629.281; conforming 110
provisions to changes made by the act; amending s. 111
629.291, F.S.; conforming provisions to changes made 112
by the act; prohibiting domestic stock insurers from 113
converting to reciprocal insurers; requiring certain 114
merging and conversion plans to be filed on forms 115
adopted by the office; authorizing assessable 116
reciprocal insurers to convert to nonassessable 117
reciprocal insurers under certain circumstances; 118
prohibiting insurers from issuing nonassessable 119
policies and converting assessable policies to 120
nonassessable policies under a specified circumstance; 121
providing applicability; amending s. 629.301, F.S.; 122
conforming a provision to changes made by the act; 123
providing that certain insurers are proceeded against 124
in a specified manner under certain circumstances; 125
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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
repealing ss. 629.401 and 629.520, F.S., relating to 126
insurance exchange and authority of limited reciprocal 127
insurer, respectively; creating s. 629.525, F.S.; 128
providing rulemaking authority; creating part II of 129
ch. 629, F.S., entitled "Insurance Exchanges"; 130
creating s. 629.601, F.S.; providing purposes for the 131
creation of one or more insurance exchanges; creating 132
s. 629.602, F.S.; providing definitions; creating s. 133
629.603, F.S.; requiring a committee to be appointed 134
for a specified purpose; providing membership and 135
duties of the committee; creating s. 629.604, F.S.; 136
providing initial Board of Governors and subsequent 137
Board of Governors; providing memberships; creating s. 138
629.605, F.S.; providing the constitution and bylaws 139
of the exchange; providing the establishment of a 140
security fund; providing requirements for the security 141
fund; providing construction; requiring that any 142
amendments to the constitution and bylaws of the 143
exchange be approved by the office; creating s. 144
629.606, F.S.; providing that certain insurance 145
exchanges are not subject to taxation; providing 146
exceptions; creating s. 629.607, F.S.; requiring the 147
exchange to reimburse the office for certain expenses; 148
requiring the office and the department to conduct 149
certain examinations under certain circumstances; 150
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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
providing penalties; creating s. 629.608, F.S.; 151
providing authority of examiners appointed by the 152
office for specified purposes; providing penalties for 153
refusing or failing to testify or for falsely 154
testifying under certain circumstances; providing that 155
certain persons are not exempt from certain 156
prosecution and pena lties; authorizing certain persons 157
to expressly waive certain immunity and privilege; 158
providing manners of serving subpoenas service and 159
making proof of service; providing witness fees and 160
mileage; amending s. 629.609, F.S.; requiring the 161
office and its examiners to make written reports of 162
examinations; providing requirements for such reports; 163
requiring that such reports be admissible in evidence; 164
authorizing the office to publish examinations results 165
under certain circumstances; requiring underwriting 166
members to file with the office certain affidavit; 167
providing requirements for such affidavits; creating 168
s. 629.611, F.S.; authorizing the office to employ 169
experts to reconstruct, rewrite, post, and balance 170
accounts and records of examined persons and entities 171
under certain circumstances; creating s. 629.612, 172
F.S.; providing applicability; requiring underwriting 173
members to maintain a minimum policyholder surplus; 174
providing investment requirements for paid -in capitals 175
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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
and such surpluses; requiring underwriting me mbers to 176
be members of the security fund of an exchange; 177
creating s. 629.613, F.S.; providing requirements for 178
the establishment and operation of underwriting 179
members; creating s. 629.614, F.S.; providing 180
requirements for notices of changes in management, 181
ownerships, and assets of underwriting members; 182
providing duties of the office relating to such 183
changes; creating s. 629.615, F.S.; providing 184
requirements for recordkeeping and annual reports for 185
underwriting members; creating s. 629.616, F.S.; 186
providing limitations on coverage written by 187
underwriting members; authorizing the office to 188
establish maximum gross and net annual premiums to be 189
written by underwriting members under certain 190
circumstances; providing a definition; providing 191
construction; creating s. 629.617, F.S.; providing 192
requirements for reserves of underwriting members; 193
providing a definition; creating s. 629.618, F.S.; 194
prohibiting underwriting members from distributing 195
profits in the form of cash or other assets; providing 196
an exception; providin g limits on such payments; 197
authorizing payments of stock dividends and lawful 198
dividends under certain circumstances; creating s. 199
629.619, F.S.; authorizing underwriters to borrow 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
money for specified purposes; authorizing limits on 201
interests; prohibiting pa yments for commission and 202
promotion expenses in connection with the loans; 203
requiring the office's approval of use of surplus nots 204
and repayments; prohibiting such loans and interests 205
to form a part of the underwriting members' legal 206
liabilities; providing an exception; requiring such 207
loans and interests to be included in financial 208
statements; creating s. 629.6201, F.S.; providing 209
construction and applicability of improperly issued 210
policies, riders, endorsements, and contracts; 211
creating s. 629.621, F.S.; pro viding timeframes for 212
the satisfaction of court judgments and decrees for 213
the recovery of money against underwriting members; 214
authorizing the office to prohibiting underwriting 215
members from transacting business under certain 216
circumstances; providing requir ements for proof of 217
satisfaction of court judgments and decrees; creating 218
s. 629.622, F.S.; providing actions that the office 219
may take in cases of insurer insolvency or for 220
rehabilitation and liquidation; creating s. 629.623, 221
F.S.; prohibiting members, ass ociated brokers, and 222
affiliated persons from engaging in certain conduct; 223
providing penalties and fines; providing terms and 224
conditions of such penalties and fines; creating s. 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
629.624, F.S.; providing disposition of fines; 226
requiring members and associate brokers to be 227
suspended under certain circumstances; creating s. 228
629.625, F.S.; requiring suspended members and 229
associate brokers to be deprived of all rights and 230
privileges; authorizing the office to proceed against 231
such persons for offenses committed or to reinstate 232
such persons; creating s. 629.626, F.S.; requiring the 233
office to impose the same material obligations, 234
prohibitions, and restrictions as those imposed by 235
other states, jurisdictions, and countries upon the 236
exchanges and the agents and represen tatives of 237
exchanges from such states, jurisdictions, and 238
countries; creating s. 629.627, F.S.; providing 239
applicability of certain state laws on specified 240
agents; providing construction and liability for 241
underwriting members that have assumed risks as to 242
surplus lines coverage; creating s. 629.628, F.S.; 243
providing requirements for background information for 244
notices of changes in management, ownership, or assets 245
of underwriting members; creating s. 628.629, F.S.; 246
requiring that actions, requirements, and con straints 247
imposed by the office reduce and offset similar 248
actions, requirements, and constraints of exchanges; 249
creating s. 629.6301, F.S.; restricting member 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
ownerships; creating s. 629.631, F.S.; prohibiting 251
investments in underwriting managers by certain 252
persons; creating s. 629.632, F.S.; prohibiting 253
underwriting members from accepting reinsurance on an 254
assumed basis from certain entities; prohibiting 255
broker members and management companies from placing 256
reinsurance from such entities with underwriting 257
members; creating s. 629.633, F.S.; providing 258
rulemaking authority; creating 629.634, F.S.; 259
prohibiting Florida state security and guaranty funds 260
from covering the performance of the contractual 261
obligations of exchanges and their members; amending 262
ss. 163.01, 624.45, and 626.9531, F.S.; conforming 263
cross-references; providing effective dates for 264
certain provisions relating to reciprocal insurer 265
surpluses and attorney bonds; providing an effective 266
date. 267
268
Be It Enacted by the Legislature of the State of Flori da: 269
270
Section 1. Paragraph (a) of subsection (10) of section 271
624.424, Florida Statutes, is amended to read: 272
624.424 Annual statement and other information. — 273
(10)(a) Each insurer or insurer group doing business in 274
this state shall file on a monthly quarterly basis in 275
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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
conjunction with financial reports required by paragraph (1)(a) 276
a supplemental report on an individual and group basis on a form 277
prescribed by the commission with information on personal lines 278
and commercial lines residential property ins urance policies in 279
this state. The supplemental report shall include separate 280
information for personal lines property policies and for 281
commercial lines property policies and totals for each item 282
specified, including premiums written for each of the propert y 283
lines of business as described in ss. 215.555(2)(c) and 284
627.351(6)(a). The report shall include the following 285
information for each zip code county on a monthly basis : 286
1. Total number of policies in force at the end of each 287
month. 288
2. Total number of p olicies canceled. 289
3. Total number of policies nonrenewed. 290
4. Number of policies canceled due to hurricane risk. 291
5. Number of policies nonrenewed due to hurricane risk. 292
6. Number of new policies written. 293
7. Total dollar value of structure exposure under policies 294
that include wind coverage. 295
8. Number of policies that exclude wind coverage. 296
9. Number of claims open each month. 297
10. Number of claims closed each month. 298
11. Number of claims pending each month. 299
12. Number of claims in which either the insurer or 300
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insured invoked any form of alternative dispute resolution, and 301
specifying which form of alternative dispute resolution was 302
used. 303
Section 2. Section 624.4305, Florida Statutes, is amended 304
to read: 305
624.4305 Nonrenewal of residential property insurance 306
policies.—Any insurer planning to nonrenew more than 10,000 307
residential property insurance policies in this state within a 308
12-month period shall give notice in writing to the Office of 309
Insurance Regulation for informational purposes 90 days before 310
the issuance of any notices of nonrenewal. The notice provided 311
to the office must set forth the insurer's reasons for such 312
action, the effective dates of nonrenewal, and any arrangements 313
made for other insurers to offer coverage to affected 314
policyholders. The commission may adopt rules to administer this 315
section. 316
Section 3. Subsection (2) of section 626.9201, Florida 317
Statutes, is amended to read: 318
626.9201 Notice of cancellation or nonrenewal. — 319
(2) An insurer issuing a policy providing coverage for 320
property, casualty, surety, or marine insurance must give the 321
named insured written notice of cancellation or termination 322
other than nonrenewal at least 45 days before the effective date 323
of the cancellation or t ermination, including in the written 324
notice the reasons for the cancellation or termination, except 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
that: 326
(a) If cancellation is for nonpayment of premium, at least 327
10 days' written notice of cancellation accompanied by the 328
reason for cancellation must b e given. As used in this 329
paragraph, the term "nonpayment of premium" means the failure of 330
the named insured to discharge when due any of his or her 331
obligations in connection with the payment of premiums on a 332
policy or an installment of such a premium, whet her the premium 333
or installment is payable directly to the insurer or its agent 334
or indirectly under any plan for financing premiums or extension 335
of credit or the failure of the named insured to maintain 336
membership in an organization if such membership is a condition 337
precedent to insurance coverage. The term also includes the 338
failure of a financial institution to honor the check of an 339
applicant for insurance which was delivered to a licensed agent 340
for payment of a premium, even if the agent previously deliver ed 341
or transferred the premium to the insurer. If a correctly 342
dishonored check represents payment of the initial premium, the 343
contract and all contractual obligations are void ab initio 344
unless the nonpayment is cured within the earlier of 5 days 345
after actual notice by certified mail is received by the 346
applicant or 15 days after notice is sent to the applicant by 347
certified mail or registered mail, and, if the contract is void, 348
any premium received by the insurer from a third party shall be 349
refunded to that party in full; and 350
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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
(b) If cancellation or termination occurs during the first 351
90 days during which the insurance is in force and if the 352
insurance is canceled or terminated for reasons other than 353
nonpayment, at least 20 days' written notice of cancellation or 354
termination accompanied by the reason for cancellation or 355
termination must be given, except if there has been a material 356
misstatement or misrepresentation or failure to comply with the 357
underwriting requirements established by the insurer ; and. 358
(c)1. Upon a declaration of an emergency pursuant to s. 359
252.36 and the filing of an order by the Commissioner of 360
Insurance Regulation, an insurer may not cancel or nonrenew a 361
personal residential or commercial residential property 362
insurance policy covering a dwel ling or residential property 363
located in the state which has been damaged as a result of a 364
hurricane or wind loss that is the subject of the declaration of 365
emergency for 90 days after the dwelling or residential property 366
has been repaired. A dwelling or res idential property is deemed 367
to be repaired when substantially completed and restored to the 368
extent that the dwelling or residential property is insurable by 369
another insurer that is writing policies in the state. 370
2. However, an insurer or agent may cancel or nonrenew 371
such a policy before the repair of the dwelling or residential 372
property: 373
a. Upon 10 days' notice for nonpayment of premium; or 374
b. Upon 45 days' notice: 375
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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
(I) For a material misstatement or fraud related to the 376
claim; 377
(II) If the insurer determines that the insured has 378
unreasonably caused a delay in the repair of the dwelling or 379
residential property; or 380
(III) If the insurer has paid policy limits. 381
3. If the insurer elects to nonrenew a policy covering a 382
property that has been damaged, the insurer shall provide at 383
least 90 days' notice to the insured that the insurer intends to 384
nonrenew the policy 90 days after the dwelling or residential 385
property has been repaired. 386
4. This paragraph does not prevent the insurer from 387
canceling or nonrenewing the policy 90 days after the repair is 388
completed for the same reasons the insurer would otherwise have 389
canceled or nonrenewed the policy but for the limitations of 390
subparagraph 1. 391
5. The Financial Services Commission may adopt rules, and 392
the Commissioner of Insurance Regulation may issue orders, 393
necessary to implement this paragraph. 394
Section 4. Paragraph (j) of subsection (2) of section 395
627.062, Florida Statutes, is amended to read: 396
627.062 Rate standards. — 397
(2) As to all such classes of in surance: 398
(j) With respect to residential property insurance rate 399
filings, the rate filing: 400
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1. Must account for mitigation measures undertaken by 401
policyholders to reduce hurricane losses and windstorm losses. 402
2. May use a modeling indication that is t he weighted or 403
straight average of two or more hurricane loss projection models 404
found by the Florida Commission on Hurricane Loss Projection 405
Methodology to be accurate or reliable pursuant to s. 627.0628. 406
If an averaged model is used under the authority of this 407
section: 408
a. The same averaged model must be used throughout the 409
state; and 410
b. If a weighted average is used, the insurer must provide 411
the office with a justification for using the weighted average 412
which shows that the weighted average results in a rate that is 413
reasonable, adequate, and fair. 414
415
The provisions of this subsection do not apply to workers' 416
compensation, employer's liability insurance, and motor vehicle 417
insurance. 418
Section 5. Paragraph (n) of subsection (6) of section 419
627.351, Florida Statutes, is amended to read: 420
627.351 Insurance risk apportionment plans. — 421
(6) CITIZENS PROPERTY INSURANCE CORPORATION. — 422
(n)1. Rates for coverage provided by the corporation must 423
be actuarially sound pursuant to s. 627.062 and not competitive 424
with approved rates charged in the admitted voluntary market so 425
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that the corporation functions as a residual market mechanism to 426
provide insurance only when insurance cannot be procured in the 427
voluntary market, except as otherwise provided in this 428
paragraph. The office shall provide the corporation such 429
information as would be necessary to determine whether rates are 430
competitive. The corporation shall file its recommended rates 431
with the office at least annually. The corporation shall provide 432
any additional information regarding the rates which the office 433
requires. The office shall consider the recommendations of the 434
board and issue a final order establishing the rates for the 435
corporation within 45 days after the recommended rates are 436
filed. The corporation may not pursue an administrative 437
challenge or judicial review of the final order of the office. 438
2. In addition to the rates otherwise determined pursuant 439
to this paragraph, the corporation shall impose and collect an 440
amount equal to the premium tax provi ded in s. 624.509 to 441
augment the financial resources of the corporation. 442
3. After the public hurricane loss -projection model under 443
s. 627.06281 has been found to be accurate and reliable by the 444
Florida Commission on Hurricane Loss Projection Methodology, the 445
model shall be considered when establishing the windstorm 446
portion of the corporation's rates. The corporation may use the 447
public model results in combination with the results of private 448
models to calculate rates for the windstorm portion of the 449
corporation's rates. This subparagraph does not require or allow 450
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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
the corporation to adopt rates lower than the rates otherwise 451
required or allowed by this paragraph. 452
4. The corporation must make a recommended actuarially 453
sound rate filing for each personal and commercial line of 454
business it writes. 455
5. Notwithstanding the board's recommended rates and the 456
office's final order regarding the corporation's filed rates 457
under subparagraph 1., the corporation shall annually implement 458
a rate increase which, except fo r sinkhole coverage, does not 459
exceed the following for any single policy issued by the 460
corporation, excluding coverage changes and surcharges: 461
a. Twelve percent for 2023. 462
b. Thirteen percent for 2024. 463
c. Fourteen percent for 2025. 464
d. Fifteen percent for 2026 and all subsequent years. 465
6. The corporation may also implement an increase to 466
reflect the effect on the corporation of the cash buildup factor 467
pursuant to s. 215.555(5)(b). 468
7. The corporation's implementation of rates as prescribed 469
in subparagraphs 5. and 8. shall cease for any line of business 470
written by the corporation upon the corporation's implementation 471
of actuarially sound rates. Thereafter, the corporation shall 472
annually make a recommended actuarially sound rate filing that 473
is not competitive with approved rates in the admitted voluntary 474
market for each commercial and personal line of business the 475
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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
corporation writes. 476
8. The following new or renewal personal lines policies 477
written on or after November 1, 2023, which do not cover a 478
primary residence are not subject to the rate increase 479
limitations in subparagraph 5., but may not be charged more than 480
50 percent above, nor less than, the prior year's established 481
rate for the corporation .: 482
a. Policies that do not cover a primary residenc e; 483
b. New policies under which the coverage for the insured 484
risk, before the date of application with the corporation, was 485
last provided by an insurer determined by the office to be 486
unsound or an insurer placed in receivership under chapter 631; 487
or 488
c. Subsequent renewals of those policies, including the 489
new policies in sub-subparagraph b., under which the coverage 490
for the insured risk, before the date of application with the 491
corporation, was last provided by an insurer determined by the 492
office to be unsound or an insurer placed in receivership under 493
chapter 631. 494
9. As used in this paragraph, the term "primary residence" 495
means the dwelling that is the policyholder's primary home or is 496
a rental property that is the primary home of the tenant, and 497
which the policyholder or tenant occupies for more than 9 months 498
of each year. 499
Section 6. Section 628.011, Florida Statutes, is amended 500
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to read: 501
628.011 Scope of part. —This part applies only to domestic 502
stock insurers, mutual insurers, and captive insurers, except 503
that s. 628.341(2) applies also as to foreign and alien 504
insurers. 505
Section 7. Section 628.061, Florida Statutes, is amended 506
to read: 507
628.061 Investigation of proposed organization. —In 508
connection with any proposal to organize incorporate a domestic 509
insurer, the office shall make an investigation of: 510
(1) The character, reputation, financial standing, and 511
motives of the organizers, incorporators, and subscribers 512
organizing the proposed insurer. 513
(2) The character, financial responsibility, insu rance 514
experience, and business qualifications of its proposed 515
officers. 516
(3) The character, financial responsibility, business 517
experience, and standing of the proposed stockholders and 518
directors. 519
Section 8. Subsections (1), (2), and (5) of section 520
628.801, Florida Statutes, are amended to read: 521
628.801 Insurance holding companies; registration; 522
regulation.— 523
(1) An insurer that is authorized to do business in this 524
state and that is a member of an insurance holding company 525
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shall, on or before April 1 of each year, register with the 526
office and file a registration statement and be subject to 527
regulation with respect to its relationship to the holding 528
company as provided by law or rule. The commission shall adopt 529
rules establishing the information and sta tement form required 530
for registration and the manner in which registered insurers and 531
their affiliates are regulated. The rules apply to domestic 532
insurers, foreign insurers, and commercially domiciled insurers, 533
except for foreign insurers domiciled in stat es that are 534
currently accredited by the NAIC. Except to the extent of any 535
conflict with this code, the rules must include all requirements 536
and standards of the Insurance Holding Company System Model 537
Regulation and ss. 4 and 5 of the Insurance Holding Compa ny 538
System Regulatory Act and the Insurance Holding Company System 539
Model Regulation of the NAIC, as adopted in December 2020 2010. 540
The commission may adopt subsequent amendments thereto if the 541
methodology remains substantially consistent. The rules may 542
include a prohibition on oral contracts between affiliated 543
entities. Material transactions between an insurer and its 544
affiliates shall be filed with the office as provided by rule. 545
(2) Effective January 1, 2015, The ultimate controlling 546
person of every insurer subject to registration shall also file 547
an annual enterprise risk report on or before April 1. As used 548
in this subsection, the term "ultimate controlling person" means 549
a person who is not controlled by any other person. The report, 550
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to the best of the ultimate controlling person's knowledge and 551
belief, must identify the material risks within the insurance 552
holding company system that could pose enterprise risk to the 553
insurer. The report shall be filed with the lead state office of 554
the insurance holding company system as determined by the 555
procedures within the Financial Analysis Handbook adopted by the 556
NAIC and is confidential and exempt from public disclosure as 557
provided in s. 624.4212. 558
(a) An insurer may sat isfy this requirement by providing 559
the office with the most recently filed parent corporation 560
reports that have been filed with the Securities and Exchange 561
Commission which provide the appropriate enterprise risk 562
information. 563
(b) The term "enterprise ris k" means an activity, 564
circumstance, event, or series of events involving one or more 565
affiliates of an insurer which, if not remedied promptly, are 566
likely to have a materially adverse effect upon the financial 567
condition or liquidity of the insurer or its in surance holding 568
company system as a whole, including anything that would cause 569
the insurer's risk-based capital to fall into company action 570
level as set forth in s. 624.4085 or would cause the insurer to 571
be in a hazardous financial condition. 572
(c) The office may adopt rules for filing the annual 573
enterprise risk report in accordance with the Insurance Holding 574
Company System Regulatory Act and the Insurance Holding Company 575
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System Model Regulation of the NAIC, as adopted in December 576
2020. 577
(5) Effective January 1, 2015, The failure to file a 578
registration statement, or a summary of the registration 579
statement, or the enterprise risk filing report required by this 580
section within the time specified for filing is a violation of 581
this section. 582
Section 9. Part I of chapter 629, Florida Statutes, 583
consisting of sections 629.011, 629.051, 629.081, 629.091, 584
629.111, 629.121, 629.161, 629.171, 629.201, 629.225, 629.227, 585
629.231, 629.241, 629.251, 629.261, 629.281, 629.291, 629.301, 586
and 629.525. Florida Statutes, is cre ated and entitled 587
"Reciprocal Insurers." 588
Section 10. Section 629.011, Florida Statutes, is amended 589
to read: 590
629.011 Definitions "Reciprocal insurance" defined .—As 591
used in this part, the term: 592
(1) "Affiliated person" of another person means: 593
(a) The spouse of the other person; 594
(b) The parents of the other person, and their lineal 595
descendants, and the parents of the other person's spouse, and 596
their lineal descendants; 597
(c) A person who directly or indirectly owns or controls, 598
or holds with power to vote, 10 percent or more of the 599
outstanding voting securities of the other person; 600
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(d) A person who directly or indirectly owns 10 percent or 601
more of the outstanding voting securities that are directly or 602
indirectly owned or controlled, or held with p ower to vote, by 603
the other person; 604
(e) A person or group of persons who directly or 605
indirectly control, are controlled by, or are under common 606
control with the other person; 607
(f) A director, officer, trustee, partner, owner, manager, 608
joint venturer, employee, or other person performing duties 609
similar to those of persons in such positions, of the other 610
person; 611
(g) If the other person is an investment company, any 612
investment adviser of such company or any member of an advisory 613
board of such company; 614
(h) If the other person is an unincorporated investment 615
company not having a board of directors, the depositor of such 616
company; or 617
(i) A person who has entered into an agreement, written or 618
unwritten, to act in concert with the other person in acquiring, 619
or limiting the disposition of: 620
1. Securities of an attorney or controlling company that 621
is a stock corporation; or 622
2. An ownership interest of an attorney or controlling 623
company that is not a stock corporation. 624
(2) "Attorney" the attorney in fact of a reciprocal 625
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insurer. The attorney may be an individual, corporation, or 626
other person. 627
(3) "Controlling company" means a person, corporation, 628
trust, limited liability company, association, or other entity 629
owning, directly or indirectly, 10 percent or mor e of the voting 630
securities of one or more attorneys that are stock corporations, 631
or 10 percent or more of the ownership interest of one or more 632
attorneys that are not stock corporations. 633
(4) "Reciprocal insurance" is that resulting from an 634
interexchange among persons, known as "subscribers," of 635
reciprocal agreements of indemnity, the interexchange being 636
effectuated through an "attorney in fact" common to all such 637
persons. 638
(5) "Reciprocal insurer" means a domestic insurer that is 639
an unincorporated aggreg ation of subscribers domiciled in the 640
state operating individually and collectively through an 641
attorney in fact to provide reciprocal insurance among 642
themselves. The term does not include foreign or alien 643
reciprocal insurers that are licensed and operating in the state 644
under chapter 624. All reciprocal insurers must be licensed as 645
an assessable or nonassessable reciprocal insurer. 646
(a) An assessable reciprocal insurer may require that its 647
subscribers make up any shortfall in capital and surplus to 648
cover claims and expenses, jointly or severally. 649
(b) A nonassessable reciprocal insurer has no recourse 650
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against subscribers for any shortfall in capital and surplus to 651
cover claims and expenses. 652
Section 11. Section 629.021, Florida Statutes, is 653
repealed. 654
Section 12. Subsection (1) of section 629.051, Florida 655
Statutes, is amended to read: 656
629.051 Name; suits. —A reciprocal insurer shall: 657
(1) Have and use a business name. The name shall include 658
the word "reciprocal," or "interinsurer," or "interinsurance," 659
or "exchange," or "underwriters," or "underwriting .," but this 660
requirement shall not apply as to any insurer holding a 661
certificate of authority to transact insurance in this state 662
immediately prior to the effective date of this code. 663
Section 13. Section 629.061, Florida Statutes, is 664
repealed. 665
Section 14. Section 629.071, Florida Statutes, is amended 666
to read: 667
629.071 Surplus funds required. —The surplus required of a 668
reciprocal insurer shall be as required in s. 624.407 as to the 669
kind or kinds of insurance so proposed. 670
(1) A domestic reciprocal insurer hereunder formed, if it 671
has otherwise complied with the applicable provisions of this 672
code, may be authorized to transact insurance if it has and 673
thereafter maintains surplus funds of not less than $250,000 . 674
(2) In addition to the surplus required to be maintained 675
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under subsection (1), the insurer shall have, when first so 676
authorized, an expendable surplus of not less than $750,000. 677
Section 15. Section 629.081, Florida Statutes , is amended 678
to read: 679
629.081 Organization of reciprocal insurer. — 680
(1) Twenty-five or more persons domiciled in this state 681
may file an application with the office for approval to organize 682
a domestic reciprocal insurer and make application to the office 683
pursuant to s. 628.051. The application shall be reviewed in 684
accordance with ss. 628.061 and 628.071 and other relevant 685
provisions of the insurance code for a certificate of authority 686
to transact insurance . 687
(2) Twenty-five or more persons domiciled in t his state 688
who have a valid permit pursuant to this section may file an 689
application with the office for a reciprocal certificate of 690
authority pursuant to s. 624.413. 691
(3)(2) When applying for a reciprocal certificate of 692
authority pursuant to s. 624.413, the proposed attorney shall 693
fulfill the requirements of and shall execute and file with the 694
office, when applying for a certificate of authority, a 695
notarized declaration setting forth: 696
(a) The name of the insurer; 697
(b) The location of the insurer's pri ncipal office, which 698
shall be the same as that of the attorney and shall be 699
maintained within this state; 700
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(c) The kinds of insurance proposed to be transacted; 701
(d) The names and addresses of the original subscribers; 702
(e) The designation and appointme nt of the proposed 703
attorney and a copy of the power of attorney; 704
(f) The names and addresses of the officers and directors 705
of the attorney, if a corporation, or of its members, if other 706
than a corporation; 707
(g) The powers of the subscribers' advisory co mmittee, and 708
the names and terms of office of the members thereof; 709
(h) That all moneys paid to the reciprocal shall, after 710
deducting therefrom any sum payable to the attorney, be held in 711
the name of the insurer and for the purposes specified in the 712
subscribers' agreement; 713
(i) A copy of the subscribers' agreement; 714
(j) A statement that each of the original subscribers has 715
in good faith applied for insurance of a kind proposed to be 716
transacted, and that , upon approval form the office to transact 717
insurance, the insurer will receive has received from each such 718
subscriber the full premium or premium deposit required for the 719
policy applied for, for a term of not less than 6 months at an 720
adequate rate to be theretofore filed with and approved by the 721
office; 722
(k) A statement of the financial condition of the insurer, 723
a schedule of its assets, and a statement that the surplus as 724
required by s. 629.071 is on hand; and 725
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(l) A copy of each policy, endorsement, and application 726
form it then proposes to issue or use. 727
(m) A copy of the bond required under s. 629.121. 728
(3) The filing must be accompanied by the application fee 729
required under s. 624.501(1)(a). 730
731
Such declaration shall be acknowledged by the attorney before an 732
officer authorized to take acknowledgments. 733
Section 16. Section 629.091, Florida Statutes, is amended 734
to read: 735
629.091 Reciprocal certificate of authority. —The 736
reciprocal certificate of authority of a reciprocal insurer 737
shall be issued to its attorney in the name of the reciprocal 738
insurer to its attorney. 739
Section 17. Paragraphs (c), (d), and (e) of subsection (2) 740
of section 629.101, Florida Statutes, are redesignated as 741
paragraphs (d), (e), and (f), respectively, and a new paragraph 742
(c) is added to subsection (2) of that section to read: 743
629.101 Power of attorney. — 744
(2) The power of attorney must set forth: 745
(c) The place at which the office of the attorney shall be 746
maintained; 747
Section 18. Section 629.111, Florida Statutes, is amended 748
to read: 749
629.111 Modifications. —Modifications of the terms of the 750
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subscribers' agreement or of the power of attorney of a domestic 751
reciprocal insurer shall be made jointly by the attorney and the 752
subscribers' advisory committee. No such modification shall be 753
effective retroactively, nor as to any insur ance contract issued 754
prior thereto. 755
Section 19. Subsections (1) and (2) of section 629.121, 756
Florida Statutes, are amended to read: 757
629.121 Attorney's bond. — 758
(1) Concurrently with the filing of the declaration 759
provided for in s. 629.081, the attorne y of a domestic 760
reciprocal insurer shall file with the office a bond in favor of 761
this state for the benefit of all persons damaged as a result of 762
breach by the attorney of the conditions of his or her bond as 763
set forth in subsection (2). The bond shall be executed by the 764
attorney and by an authorized corporate surety and shall be 765
subject to the approval of the office. 766
(2) The bond shall be in the sum of $300,000 $100,000, 767
aggregate in form, the bond conditioned that the attorney will 768
faithfully account fo r all moneys and other property of the 769
insurer coming into his or her hands, and that he or she will 770
not withdraw or appropriate to his or her own use from the funds 771
of the insurer any moneys or property to which he or she is not 772
entitled under the power o f attorney. 773
Section 20. Section 629.161, Florida Statutes, is amended 774
to read: 775
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629.161 Contributions to insurer. — 776
(1) A reciprocal insurer may borrow money to defray the 777
expenses of its organization, to provide itself with surplus 778
funds, or for any purpose of its business, upon a written 779
agreement that such money is required to be repaid only out of 780
the insurer's surplus in excess of that stipulated in the 781
agreement. Any interest provided for shall or shall not 782
constitute a liability of the insurer as to its funds other than 783
such excess of surplus, as stipulated in the agreement. A 784
commission or promotion expense may not be paid in connection 785
with any such loan. 786
(2) Money so borrowed, together with the interest thereon 787
if so stipulated in the agree ment, may not form a part of the 788
insurer's legal liabilities, except as to its surplus in excess 789
of the amount thereof stipulated in the agreement, or be the 790
basis of any setoff; but until repaid, financial statements 791
filed or published by the insurer must show as a footnote 792
thereto the amount thereof then unpaid together with any 793
interest thereon accrued but unpaid. 794
(3) Any such loan to a reciprocal insurer is subject to 795
the approval of the office for the issue and the rate of 796
interest to be paid. The re ciprocal insurer must, in advance of 797
the loan, file with the office a statement of the purpose of the 798
loan and a copy of the proposed loan agreement. The office shall 799
disapprove any proposed loan or agreement if it finds that the 800
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loan is unnecessary or exc essive for the purpose intended; that 801
the terms of the loan agreement are not fair and equitable to 802
the parties and to other similar lenders, if any, to the 803
reciprocal insurer; or that the information so filed by the 804
reciprocal insurer is inadequate. 805
(4) Any such loan to a reciprocal insurer, or a 806
substantial portion thereof, shall be repaid by the reciprocal 807
insurer when no longer reasonably necessary for the purpose 808
originally intended. A repayment of such a loan may not be made 809
by a reciprocal insurer unless approved in advance by the 810
office. 811
(5) This section does not apply to loans obtained by the 812
reciprocal insurer in the ordinary course of business from banks 813
and other financial institutions, nor to loans secured by pledge 814
or mortgage of assets The attorney or other parties may advance 815
to a domestic reciprocal insurer upon reasonable terms such 816
funds as it may require from time to time in its operations. 817
Sums so advanced shall not be treated as a liability of the 818
insurer and, except upon liquidation of the insurer, shall not 819
be withdrawn or repaid except out of the insurer's realized 820
earned surplus in excess of its minimum required surplus. No 821
such withdrawal or repayment shall be made without the advance 822
approval of the office. This section does not apply as to bank 823
loans or to loans made upon security . 824
Section 21. Subsection (1) of section 629.171, Florida 825
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Statutes, is amended to read: 826
629.171 Annual statement. — 827
(1) The annual statement of a reciprocal insurer shall be 828
made and filed by its attorney in the same manner as domestic 829
stock insurers under s. 624.424 . 830
Section 22. Section 629.191, Florida Statutes, is amended 831
to read: 832
629.191 Who may be subscribers. —Individuals, partnerships, 833
and corporations of this state may make application s for, enter 834
into agreements for, and hold policies or contracts in or with, 835
and be subscribers of, any domestic, foreign, or alien 836
reciprocal insurer. 837
Section 23. Subsection (1) of section 629.201, Florida 838
Statutes, is amended to read: 839
629.201 Subscribers' advisory committee. — 840
(1) The advisory committee of a domestic reciprocal 841
insurer exercising the subscribers' rights shall be selected 842
under such rules as the subscribers adopt. 843
Section 24. Section 629.225, Florida Statutes, is created 844
to read: 845
629.225 Acquisitions. — 846
(1) A person may not, individually or in conjunction with 847
any affiliated person of such person, directly or indirectly, 848
conclude a tender offer or exchange offer for, enter into any 849
agreement to exchange securities for, or othe rwise finally 850
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acquire, 10 percent or more of the outstanding voting securities 851
of an attorney which is a stock corporation or of a controlling 852
company of an attorney which is a stock corporation; or conclude 853
an acquisition of, or otherwise finally acquire, 10 percent or 854
more of the ownership interest of an attorney which is not a 855
stock corporation or of a controlling company of an attorney 856
which is not a stock corporation, unless: 857
(a) The person or affiliated person has filed with the 858
office and sent to t he principal office of the attorney, and any 859
controlling company of the attorney, a reciprocal a letter of 860
notification regarding the transaction or proposed transaction 861
no later than 5 days after any form of tender offer or exchange 862
offer is proposed, or no later than 5 days after the acquisition 863
of the securities or ownership interest if a tender offer or 864
exchange offer is not involved. The notification must be 865
provided on forms prescribed by the commission containing 866
information determined necessary to u nderstand the transaction 867
and identify all purchasers and owners involved; 868
(b) The person or affiliated person has filed with the 869
office an application signed under oath and prepared on forms 870
prescribed by the commission which contains the information 871
specified in subsection (3). The application must be completed 872
and filed within 30 days after any form of tender offer or 873
exchange offer is proposed, or after the acquisition of the 874
securities if a tender offer or exchange offer is not involved; 875
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and 876
(c) The office has approved the tender offer or exchange 877
offer, or acquisition if a tender offer or exchange offer is not 878
involved. 879
(2) The person or affiliated person filing the required 880
notice in paragraph (1)(a) may additionally request the office 881
to waive the requirements of paragraph (1)(b), provided that 882
there is no change in the ultimate controlling shareholders, and 883
no change in the ownership percentages of the ultimate 884
controlling shareholders, and no unaffiliated parties acquire 885
any direct or indirect interest in the attorney. The office may 886
waive the filing required in par agraph (1)(b) if it determines 887
that in fact there is no change in the ultimate controlling 888
shareholders, and no change in the ownership percentages of the 889
ultimate controlling shareholders, and no unaffiliated parties 890
will acquire any direct or indirect in terest in the attorney. 891
(3) The application to be filed with the office and 892
furnished to the attorney must contain the following information 893
and any additional information as the office deems necessary to 894
determine the character, experience, ability, and other 895
qualifications of the person or affiliated person of such person 896
for the protection of the insureds of the insurer and of the 897
public: 898
(a) The identity and background information specified in 899
s. 629.221, of: 900
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1. Each person by whom, or on whose be half, the 901
acquisition is to be made; and 902
2. Any person who controls, directly or indirectly, such 903
other person, including each director, officer, trustee, 904
partner, owner, manager, or joint venturer, or other person 905
performing duties similar to those of p ersons in such positions, 906
for the person. 907
(b) The source and amount of the funds or other 908
consideration used, or to be used, in making the acquisition. 909
(c) Any plans or proposals which such persons may have 910
made to liquidate the attorney or controlling company, to sell 911
any of their assets or merge or consolidate them with any 912
person, or to make any other major change in their business or 913
corporate structure or management, and any plans or proposals 914
which such persons may have made to liquidate any contr olling 915
company of the attorney, to sell any of its assets or merge or 916
consolidate it with any person, or to make any other major 917
change in its business or corporate structure or management. 918
(d) The nature and the extent of the controlling interest 919
which the person or affiliated person of such person proposes to 920
acquire, the terms of the proposed acquisition, and the manner 921
in which the controlling interest is to be acquired of an 922
attorney or controlling company which is not a stock 923
corporation. 924
(e) The number of shares or other securities which the 925
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person or affiliated person of such person proposes to acquire, 926
the terms of the proposed acquisition, and the manner in which 927
the securities are to be acquired. 928
(f) Information as to any contract, arrangeme nt, or 929
understanding with any party with respect to any of the 930
securities of the attorney or controlling company, including, 931
but not limited to, information relating to the transfer of any 932
of the securities, option arrangements, puts or calls, or the 933
giving or withholding of proxies, which information names the 934
party with whom the contract, arrangement, or understanding has 935
been entered into and gives the details thereof. 936
937
The filing must be accompanied by the fee required under s. 938
624.501(1)(a). 939
(4) If any material change occurs in the facts provided in 940
the application filed with the office pursuant to this section 941
or the background information required under s. 629.227, an 942
amendment specifying such changes shall be filed immediately 943
with the office, and a copy of the amendment shall be sent to 944
the principal office of the attorney and to the principal office 945
of the controlling company. 946
(5)(a) The acquisition application shall be reviewed in 947
accordance with chapter 120. The office may on its own initiate, 948
or, if requested to do so in writing by a substantially affected 949
person, shall conduct, a proceeding to consider the 950
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appropriateness of the proposed filing. Time periods for 951
purposes of chapter 120 shall be tolled during the pendency of 952
the proceeding. Any written request for a proceeding must be 953
filed with the office within 10 days of the date notice of the 954
filing is given. During the pendency of the proceeding or review 955
period by the office, any person or affiliated person complying 956
with the filing requi rements of this section may proceed and 957
take all steps necessary to conclude the acquisition so long as 958
the acquisition becoming final is conditioned upon obtaining 959
office approval. The office shall, however, at any time it finds 960
an immediate danger to the public health, safety, and welfare of 961
the insureds exists, immediately order, pursuant to s. 962
120.569(2)(n), the proposed acquisition disapproved and any 963
further steps to conclude the acquisition ceased. 964
(b) During the pendency of the office's review of any 965
acquisition subject to the provisions of this section, the 966
acquiring person may not make any material change in the 967
operation of the attorney or controlling company unless the 968
office has specifically approved the change, nor shall the 969
acquiring person make any material change in the management of 970
the attorney unless advance written notice of the change in 971
management is furnished to the office. A material change in the 972
operation of the attorney is a transaction which disposes of or 973
obligates 5 percent or more of the capital and surplus of the 974
attorney. A material change in the management of the attorney is 975
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any change in management involving officers or directors of the 976
attorney or any person of the attorney or controlling company 977
having authority to dispo se of or obligate 5 percent or more of 978
the attorney's capital or surplus. The office shall approve a 979
material change in operations if it finds the applicable 980
provisions of subsection (7) have been met. The office may 981
disapprove a material change in managem ent if it finds that the 982
applicable provisions of subsection (7) have not been met and in 983
such case the attorney shall promptly change management as 984
acceptable to the office. 985
(c) If a request for a proceeding is filed, the proceeding 986
shall be conducted w ithin 60 days after the date the written 987
request for a proceeding is received by the office. A 988
recommended order shall be issued within 20 days after the date 989
of the close of the proceedings. A final order shall be issued 990
within 20 days after the date of t he recommended order or, if 991
exceptions to the recommended order are filed, within 20 days 992
after the date the exceptions are filed. 993
(6) The office may disapprove any acquisition subject to 994
this section by any person or any affiliated person of such 995
person who: 996
(a) Willfully violates this section; 997
(b) In violation of an order of the office issued pursuant 998
to subsection (11), fails to divest himself or herself of any 999
stock or ownership interest obtained in violation of this 1000
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section or fails to divest him self or herself of any direct or 1001
indirect control of such stock or ownership interest, within 25 1002
days after such order; or 1003
(c) In violation of an order issued by the office pursuant 1004
to subsection (11), acquires an additional stock or ownership 1005
interest in an attorney or controlling company or direct or 1006
indirect control of such stock or ownership interest, without 1007
complying with this section. 1008
(7) The person or persons filing the application required 1009
by this section have the burden of proof. The office sh all 1010
approve any such acquisition if it finds, on the basis of the 1011
record made during any proceeding or on the basis of the filed 1012
application if no proceeding is conducted, that: 1013
(a) The financial condition of the acquiring person or 1014
persons will not jeop ardize the financial stability of the 1015
attorney or prejudice the interests of the reciprocal insurer's 1016
subscribers or the public. 1017
(b) Any plan or proposal which the acquiring person has, 1018
or acquiring persons have, made: 1019
1. To liquidate the attorney, sel l its assets, or merge or 1020
consolidate it with any person, or to make any other major 1021
change in its business or corporate structure or management; or 1022
2. To liquidate any controlling company, sell its assets, 1023
or merge or consolidate it with any person, or to make any major 1024
change in its business or corporate structure or management 1025
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which would have an effect upon the attorney, 1026
1027
is fair and free of prejudice to the reciprocal insurer's 1028
subscribers or to the public. 1029
(c) The competence, experience, and integrity of those 1030
persons who will control directly or indirectly the operation of 1031
the attorney indicate that the acquisition is in the best 1032
interest of the reciprocal insurer's subscribers and in the 1033
public interest. 1034
(d) The natural persons for whom ba ckground information is 1035
required to be furnished pursuant to this section have such 1036
backgrounds as to indicate that it is in the best interests of 1037
the reciprocal insurer's subscribers and in the public interest 1038
to permit such persons to exercise control ov er the attorney. 1039
(e) The directors and officers, if such attorney or 1040
controlling company is a stock corporation, or the trustees, 1041
partners, owners, managers, joint venturers, or other persons 1042
performing duties similar to those of persons in such position s, 1043
if such attorney or controlling company is not a stock 1044
corporation, to be employed after the acquisition have 1045
sufficient insurance experience and ability to assure reasonable 1046
promise of successful operation. 1047
(f) The management of the attorney after th e acquisition 1048
will be competent, trustworthy, and will possess sufficient 1049
managerial experience so as to make the proposed operation of 1050
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the attorney not hazardous to the insurance -buying public. 1051
(g) The management of the attorney after the acquisition 1052
shall not include any person who has directly or indirectly 1053
through ownership, control, reinsurance transactions, or other 1054
insurance or business relations unlawfully manipulated the 1055
assets, accounts, finances, or books of any insurer or otherwise 1056
acted in bad faith with respect thereto. 1057
(h) The acquisition is not likely to be hazardous or 1058
prejudicial to the reciprocal insurer's subscribers or to the 1059
public. 1060
(i) The effect of the acquisition would not substantially 1061
lessen competition in the line of insuran ce for which the 1062
reciprocal insurer is licensed or certified in this state or 1063
would not tend to create a monopoly therein. 1064
(8) A vote by the stockholder of record, or by any other 1065
person, of any security acquired in contravention of this 1066
section is not valid. Any acquisition contrary to this section 1067
is void. Upon the petition of the attorney, any or the 1068
controlling company, or the reciprocal insurer the circuit court 1069
for the county in which the principal office of the attorney is 1070
located may, without lim iting the generality of its authority, 1071
order the issuance or entry of an injunction or other order to 1072
enforce this section. There shall be a private right of action 1073
in favor of the attorney, or controlling company, to enforce 1074
this section. A demand upon th e office that it performs its 1075
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functions may not be required as a prerequisite to any suit by 1076
the attorney or controlling company against any other person, 1077
and in no case shall the office be deemed a necessary party to 1078
any action by the attorney or controll ing company to enforce 1079
this section. Any person who makes or proposes an acquisition 1080
requiring the filing of an application pursuant to this section, 1081
or who files such an application, shall be deemed to have 1082
thereby designated the Chief Financial Officer, or his or her 1083
assistant or deputy or another person in charge of his or her 1084
office, as such person's agent for service of process under this 1085
section and shall thereby be deemed to have submitted himself or 1086
herself to the administrative jurisdiction of the office and to 1087
the jurisdiction of the circuit court. 1088
(9) Any approval by the office under this section does not 1089
constitute a recommendation by the office of the tender offer or 1090
exchange offer, or acquisition, if no tender offer or exchange 1091
offer is involved. It is unlawful for a person to represent that 1092
the office's approval constitutes a recommendation. A person who 1093
violates this subsection commits a felony of the third degree, 1094
punishable as provided in s. 775.082, s. 775.083, or s. 775.084. 1095
The statute-of-limitations period for the prosecution of an 1096
offense committed under this subsection is 5 years. 1097
(10) A person may rebut a presumption of control by filing 1098
a disclaimer of control with the office on a form prescribed by 1099
the commission. The disclaimer must fully disclose all material 1100
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relationships and bases for affiliation between the person and 1101
the attorney as well as the basis for disclaiming the 1102
affiliation. In lieu of such form, a person or acquiring party 1103
may file with the office a copy of a Sched ule 13G filed with the 1104
Securities and Exchange Commission pursuant to Rule 13d -1(b) or 1105
(c), 17 C.F.R. s. 240.13d -1, under the Securities Exchange Act 1106
of 1934, as amended. After a disclaimer has been filed, the 1107
attorney is relieved of any duty to register o r report under 1108
this section which may arise out of the attorney's relationship 1109
with the person unless the office disallows the disclaimer. 1110
(11) If the office determines that any person or any 1111
affiliated person of such person has acquired 10 percent or mo re 1112
of the outstanding voting securities of an attorney or 1113
controlling company which is a stock corporation, or 10 percent 1114
or more of the ownership interest of an attorney or controlling 1115
company which is not a stock corporation, without complying with 1116
this section, the office may order that the person and any 1117
affiliated person of such person cease acquisition of the 1118
attorney or controlling company and, if appropriate, divest 1119
itself of any stock or ownership interest acquired in violation 1120
of this section. 1121
(12)(a) The office shall, if necessary to protect the 1122
public interest, suspend or revoke the reciprocal certificate of 1123
authority of the reciprocal insurer whose attorney or 1124
controlling company is acquired in violation of this section. 1125
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(b) If any reciproca l insurer is subject to suspension or 1126
revocation pursuant to paragraph (a), the attorney shall be 1127
deemed to be in such condition, or to be using or to have been 1128
subject to such methods or practices in the conduct of its 1129
business, as to render its further t ransaction of insurance 1130
presently or prospectively hazardous to its insureds, creditors, 1131
or stockholders or to the public. In such case, the office may 1132
offer the reciprocal insurer, through its subscriber 1133
representatives, the ability to cure any suspension or 1134
revocation by procuring another attorney acceptable to the 1135
office. 1136
Section 25. Section 629.227, Florida Statutes, is created 1137
to read: 1138
629.227 Background information. —The information as to the 1139
background and identity of each person about whom info rmation is 1140
required to be furnished pursuant to s. 629.081 or s. 629.225 1141
must include, but need not be limited to: 1142
(1) Occupations, positions of employment, and offices held 1143
during the past 10 years, including the principal business and 1144
address of any business, corporation, or organization where each 1145
occupation, position of employment, or office occurred. 1146
(2) Whether the person was, at any time during such 10 -1147
year period, convicted of any crime other than a traffic 1148
violation. 1149
(3) Whether the person ha s been, during such 10 -year 1150
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period, the subject of any proceeding for the revocation of any 1151
license and, if so, the nature of the proceeding and the 1152
disposition of the proceeding. 1153
(4) Whether, during such 10 -year period, the person has 1154
been the subject of any proceeding under the federal Bankruptcy 1155
Act. 1156
(5) Whether, during such 10 -year period, any person or 1157
other business or organization in which the person was a 1158
director, officer, trustee, partner, owner, manager, or other 1159
official has been subject of any proceeding under the federal 1160
Bankruptcy Act, either during the time of that person's tenure 1161
with the business or organization or within 12 months 1162
thereafter. 1163
(6) Whether, during such 10 -year period, the person has 1164
been enjoined, temporarily or perman ently, by a court of 1165
competent jurisdiction from violating any federal or state law 1166
regulating the business of insurance, securities, or banking, or 1167
from carrying out any particular practice or practices in the 1168
course of the business of insurance, securiti es, or banking, 1169
together with details as to any such event. 1170
(7) Fingerprints of each person. 1171
(8) Any additional information as the office deems 1172
necessary to determine the character, experience, ability, and 1173
other qualifications of the person or affiliated person of such 1174
person for the protection of the insureds of the insurer and of 1175
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the public. 1176
Section 26. Subsection (1) of section 629.231, Florida 1177
Statutes, is amended, and subsection (5) is added to that 1178
section, to read: 1179
629.231 Assessments. — 1180
(1) Assessments may from time to time be levied upon 1181
subscribers of an assessable a domestic reciprocal insurer who 1182
are liable therefor under the terms of their policies by the 1183
attorney. Any such assessment must have been approved upon 1184
approval in advance by the subscribers' advisory committee and 1185
the office, or by the department as receiver of the i nsurer. 1186
(5) Upon impairment of surplus of a nonassessable 1187
reciprocal insurer, the office shall revoke the authorization 1188
issued under s. 629.291(5). Such revocation shall not render 1189
subject to contingent liability any policy then in force and for 1190
the remainder of the period for which the premium has 1191
theretofore been paid; but, after such revocation, a policy may 1192
not be issued or renewed without providing for contingent 1193
assessment liability of the subscriber. 1194
Section 27. Section 629.241, Florida Statute s, is amended 1195
to read: 1196
629.241 Time limit for assessments. —Every subscriber of a 1197
domestic reciprocal insurer having contingent liability shall be 1198
liable for, and shall pay his or her share of, any assessment, 1199
as computed and limited in accordance with th is chapter, if: 1200
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(1) While his or her policy is in force or within 4 years 1201
after its termination, the subscriber is notified by either the 1202
attorney or the office of its intentions to levy such 1203
assessment; or 1204
(2) An order to show cause why a receiver, conservator, 1205
rehabilitator, or liquidator of the insurer should not be 1206
appointed is issued while the subscriber's policy is in force or 1207
within 4 years after its termination. 1208
Section 28. Section 629.251, Florida Statutes, is amended 1209
to read: 1210
629.251 Aggregate liability.—No one policy or subscriber 1211
as to such policy shall be assessed or charged with an aggregate 1212
of contingent liability as to obligations incurred by a domestic 1213
reciprocal insurer in any one calendar year in excess of the 1214
amount provided for in the power of attorney or in the 1215
subscribers' agreement, computed solely upon premium earned on 1216
such policy during that year. 1217
Section 29. Subsection (2) of section 629.271, Florida 1218
Statutes, is amended to read: 1219
629.271 Distribution of savings. — 1220
(2) In addition to the option provided in subsection (1), 1221
a domestic reciprocal insurer may, upon the prior written 1222
approval of the office, pay to its subscribers a portion of 1223
unassigned funds of up to 10 percent of surplus, with 1224
distribution limited to 50 percent of net income from the 1225
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previous calendar year. Such distribution may not unfairly 1226
discriminate between classes of risks or policies, or between 1227
subscribers, but may vary as to classes of subscribers based on 1228
the experience of the classes. 1229
Section 30. Section 629.281, Florida Statutes, is amended 1230
to read: 1231
629.281 Subscribers' share in assets. —Upon the liquidation 1232
of an assessable a domestic reciprocal insurer, its assets 1233
remaining after discharge of its indebtedness and policy 1234
obligations, the return of any contributions of the attorney or 1235
other persons to its surplus made as provided in s. 629.161, and 1236
the return of any unused premium, savings, or credits then 1237
standing on subscribers' accounts shall be distributed to its 1238
subscribers who were such within the 12 months prior to the last 1239
termination of its reciprocal certificate of authority, 1240
according to such reasonable formula as the office approves. 1241
Section 31. Section 629.291, Florida Statutes, is amended 1242
to read: 1243
629.291 Merger or con version.— 1244
(1) A domestic reciprocal insurer, upon affirmative vote 1245
of not less than two -thirds of its subscribers who vote on such 1246
merger pursuant to due notice , and subject to the approval by of 1247
the office of the terms therefor, may merge with another 1248
reciprocal insurer or be converted to a stock or mutual insurer , 1249
to be thereafter governed by the applicable sections of the 1250
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insurance code. However, a domestic stock insurer may not 1251
convert to a reciprocal insurer . 1252
(2) A plan to merge a reciprocal insure r with another 1253
reciprocal insurer or for conversion of the reciprocal insurer 1254
to a stock or mutual insurer shall be filed on forms adopted by 1255
the office Such a stock or mutual insurer shall be subject to 1256
the same capital or surplus requirements and shall h ave the same 1257
rights as a like domestic insurer transacting like kinds of 1258
insurance. 1259
(3) The office shall not approve any plan for such merger 1260
or conversion which is inequitable to subscribers or which, if 1261
for conversion to a stock insurer, does not give each subscriber 1262
preferential right to acquire stock of the proposed insurer 1263
proportionate to his or her interest in the reciprocal insurer, 1264
as determined in accordance with s. 629.281, and a reasonable 1265
length of time within which to exercise such right. 1266
(4) Reinsurance of all or substantially all of the 1267
insurance in force of a domestic reciprocal insurer in another 1268
insurer shall be deemed to be a merger for the purposes of this 1269
section. 1270
(5)(a) An assessable reciprocal insurer may convert to a 1271
nonassessable reciprocal insurer if: 1272
1. The subscriber's advisory committee approves the 1273
application for conversion; 1274
2. The attorney submits the application on the required 1275
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application form; and 1276
3. The office finds that the application meets the minimum 1277
statutory requirements. 1278
(b) If the office approves the application, the assessable 1279
reciprocal insurer may convert to a nonassessable reciprocal 1280
insurer by: 1281
1. Extinguishing the contingent liability of subscribers 1282
under all policies then in force in this stat e; 1283
2. Omitting contingent liability provisions in all 1284
policies delivered or issued in this state after the conversion; 1285
and 1286
3. Otherwise extinguishing the contingent liability of all 1287
of its subscribers. However, if the reciprocal insurer is 1288
transacting insurance as an authorized insurer in another state 1289
and that state's laws require the insurer to issue policies with 1290
contingent liability provisions, the insurer may issue 1291
contingent liability policies in that other state. 1292
(c) If the surplus of the reci procal insurer becomes 1293
impaired, the insurer may no longer issue nonassessable policies 1294
or convert assessable policies to nonassessable policies, and 1295
the provisions of s. 629.301 shall apply. 1296
Section 32. Subsections (1) and (2) of section 629.301, 1297
Florida Statutes, are amended to read: 1298
629.301 Impaired reciprocal insurers. — 1299
(1) If the assets of a domestic reciprocal insurer are at 1300
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any time insufficient to discharge its liabilities, other than 1301
any liability on account of funds contributed by the atto rney or 1302
others, and to maintain the required surplus, its attorney shall 1303
forthwith make up the deficiency or levy an assessment upon the 1304
subscribers for the amount needed to make up the deficiency, but 1305
subject to the limitation set forth in the power of at torney or 1306
policy. 1307
(2) If the attorney fails to make up such deficiency or to 1308
make the assessment within 30 days after the office orders him 1309
or her to do so, or if the deficiency is not fully made up 1310
within 60 days after the date the assessment was made, the 1311
insurer shall be deemed insolvent and shall be proceeded against 1312
in the same manner as any other domestic insurer under chapter 1313
631 and the insurance as authorized by this code. 1314
Section 33. Section 629.401, Florida Statutes, is 1315
repealed. 1316
Section 34. Section 629.520, Florida Statutes, is 1317
repealed. 1318
Section 35. Section 629.525, Florida Statutes, is created 1319
to read: 1320
629.525 Rulemaking authority. —The commission shall adopt, 1321
amend, or repeal rules necessary to implement this part. 1322
Section 36. Part II of chapter 629, Florida Statutes, 1323
consisting of sections 629.601, 629.602, 629.603, 629.604, 1324
629.605, 629.606, 629.607, 629.608, 629.609, 629.611, 629.612, 1325
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629.613, 629.614, 629.615, 629.616, 629.617, 629.618, 629.619, 1326
629.6201, 629.621, 629.622, 629.623, 629.624, 629.625, 629.626, 1327
629.627, 629.628, 629.629, 629.6301, 629.631, 629.632, 629.633, 1328
and 629.634, Florida Statutes, is created and entitled 1329
"Insurance Exchanges." 1330
Section 37. Section 629.601, Florida Statutes, is created 1331
to read: 1332
629.601 Purposes.— 1333
(1) There may be created one or more insurance exchanges, 1334
with one or more offices each, subject to such rules as are 1335
adopted by the commission. For the purposes of this part, the 1336
term "exchange" applies to any such insurance ex change proposed 1337
or created under this part. The purposes of the exchange are: 1338
(a) To provide a facility for the underwriting of: 1339
1. Reinsurance of all kinds of insurance. 1340
2. Direct insurance of all kinds on risks located entirely 1341
outside the United S tates. 1342
3. Surplus lines insurance for risks located in this state 1343
eligible for export under s. 626.916 or s. 626.917 and placed 1344
through a licensed Florida surplus lines agent subject to 1345
compliance with the provisions of ss. 626.921, 626.922, 626.923, 1346
626.924, 626.929, 626.9295, 626.930, and 626.931. With respect 1347
to compliance with s. 626.924, the required legend may refer to 1348
any coverage provided for by a security fund. 1349
4. Surplus lines insurance in any other state subject to 1350
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the applicable surplus line s laws of such other state for risks 1351
located entirely outside of this state. 1352
(b) To manage the facility authorized by this section, in 1353
accordance with rules adopted by the commission. 1354
(2) In no event shall the exchange be considered to be an 1355
underwriter or broker with respect to any contract of insurance 1356
or reinsurance written by a member of the exchange, and the 1357
exchange may not incur any liability therefor. 1358
Section 38. Section 629.602, Florida Statutes, is created 1359
to read: 1360
629.602 Definitions. —As used in this part, the term: 1361
(1) "Affiliated person" of another person has the same 1362
meaning as in s. 629.011. 1363
(2) "Controlling company" means a corporation, trust, or 1364
association owning, directly or indirectly, 25 percent or more 1365
of the voting securi ties of one or more underwriting members. 1366
(3) "Premium" means the consideration for insurance, by 1367
whatever name called. The term includes an assessment or a 1368
membership, policy, survey, inspection, service fee or charge, 1369
or similar fee or charge in consid eration for an insurance 1370
contract. 1371
(4) "Underwriting manager" means a person, partnership, 1372
corporation, or organization providing any of the following 1373
services to underwriting members of the exchange: 1374
(a) Office management and allied services, includin g 1375
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correspondence and secretarial services. 1376
(b) Accounting services, including bookkeeping and 1377
financial report preparation. 1378
(c) Investment and banking consultations and services. 1379
(d) Underwriting functions and services, including the 1380
acceptance, rejection, placement, and marketing of risk. 1381
(5) "Underwriting member" means any entity that is a 1382
member of the exchange and is licensed or authorized to 1383
underwrite insurance, including, but not limited to, domestic, 1384
foreign, and alien insurers. The term in cludes underwriting 1385
syndicates. 1386
Section 39. Section 629.603, Florida Statutes, is created 1387
to read: 1388
629.603 Formation of exchanges. — 1389
(1) The operation of this part becomes effective with 1390
respect to any exchange only after a determination by the offi ce 1391
that the exchange may operate in an economic and beneficial 1392
manner. A committee shall be appointed to write the constitution 1393
and bylaws of the proposed exchange, to make such other 1394
recommendations as may be necessary to ensure maximum 1395
coordination of the operations of the exchange with existing 1396
insurance industry operations, and to ensure maximum economic 1397
benefits to the state from the operations of the exchange. 1398
(2) The committee shall consist of 13 members, 6 to be 1399
appointed by the Chief Financial Of ficer, 2 each to be appointed 1400
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by the Speaker of the House of Representatives and the President 1401
of the Senate, 1 each to be appointed by the Minority Leader of 1402
the House of Representatives and the Minority Leader of the 1403
Senate, and 1 to be appointed the Chi ef Financial Officer or his 1404
or her designated representative. The chair shall be elected by 1405
a majority of the committee. 1406
(3) The committee shall transmit such proposed 1407
constitution and bylaws and such other recommendations to the 1408
office and to the Legislature no later than 5 days before the 1409
adjournment of a regular annual legislative session or no later 1410
than 5 days before the commencement of any special or 1411
organizational legislative session. Subject to the disapproval 1412
of the constitution and bylaws by either house of the 1413
Legislature by resolution before the end of such legislative 1414
session, the exchange shall have full authority to function 1415
pursuant to its constitution and bylaws 60 days after the end of 1416
the session. 1417
Section 40. Section 629.604, F lorida Statutes, is created 1418
to read: 1419
629.604 Board of Governors of the exchange. — 1420
(1) The initial Board of Governors of the exchange shall 1421
consist of 14 members, 3 of whom shall be appointed by the Chief 1422
Financial Officer, 3 by the Speaker of the House of 1423
Representatives, 3 by the President of the Senate, 1 by the 1424
Minority Leader of the House of Representatives, 1 by the 1425
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Minority Leader of the Senate, and 3 by the Governor, to serve 1426
until the first election pursuant to the constitution or bylaws. 1427
These appointments shall be made no later than 30 days after the 1428
end of the legislative session referenced in s. 629.603(3). 1429
(2) All subsequent Boards of Governors shall consist of 13 1430
members: 1431
(a) Seven of whom shall be appointed by and serve at the 1432
pleasure of the Chief Financial Officer. Of these members: 1433
1. Five must not be members of the exchange. 1434
2. One of the two remaining members must be a broker 1435
member, and the other must be a representative of an 1436
underwriting member. 1437
(b) Six of whom shall be el ected by the members of the 1438
exchange in accordance with the constitution and bylaws, except 1439
that at least five members shall be elected by the underwriting 1440
members of the exchange. 1441
Section 41. Section 629.605, Florida Statutes, is created 1442
to read: 1443
629.605 Constitution and bylaws of the exchange. —The 1444
constitution and bylaws of the exchange shall provide for, but 1445
shall not be limited to: 1446
(1) The selection and election of 13 governors, as 1447
required by s. 629.604(2). 1448
(2) The location of the principal o ffices of the exchange 1449
and the principal offices of its members to be within this state 1450
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for the purpose of the transaction of the type of business 1451
described in s. 629.601. A principal office shall be one where 1452
officers and qualified personnel who are engag ed in the 1453
administration, underwriting, claims, policyholders' service, 1454
marketing, accounting, recordkeeping, and all supportive 1455
services shall be located. 1456
(3) The submission by members and all applicants for 1457
membership on the exchange of such financial information as may 1458
be required by the office. 1459
(4) The establishment by the exchange of a security fund 1460
in such form and amount as approved by the office. With respect 1461
to contracts of insurance written or renewed on or after July 2, 1462
1987: 1463
(a) The security fund shall pay that amount of each 1464
covered claim which is determined to be payable in accordance 1465
with the constitution and bylaws and is in excess of $300 and 1466
less than $750,000 except that the fund shall not be obligated 1467
to a policyholder or claimant i n an amount in excess of the 1468
obligation of the insolvent underwriting member under the policy 1469
from which the claim arises. 1470
(b) The security fund shall have no obligation and shall 1471
make no payment of any obligation arising under any such 1472
contract or with respect to any contract of reinsurance written 1473
or renewed on or after July 2, 1987, to the extent the payment 1474
or payments exceed, either individually or in the aggregate, 10 1475
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percent of the insolvent underwriting member's surplus as to 1476
policyholders as refl ected on the most recent sworn annual 1477
statement of the insolvent underwriting member filed with the 1478
office prior to issuance of such contract. 1479
(c) For the purposes of this subsection, each reinsurance 1480
treaty and each contract of insurance inuring to the benefit of 1481
multiple parties shall constitute only one contract, and covered 1482
claims include unpaid claims, including claims of unearned 1483
premiums, which arise out of and are within the coverage and are 1484
not in excess of the applicable limits of an insurance policy 1485
issued by an insolvent underwriting member through the 1486
facilities of the exchange. 1487
(5) The voting power of underwriting members. 1488
(6) The voting power and other rights granted under the 1489
provisions of the not -for-profit corporation law, chapter 61 7, 1490
to participate in the conduct and management of the affairs of 1491
the exchange, by brokers, agents, and intermediaries transacting 1492
business on the exchange, each of whom shall be considered 1493
members only under the provisions of such law. 1494
(7) The rights and duties of exchange members, which may 1495
include, but shall not be limited to, the manner and form of 1496
conducting business, financial stability, dues, membership fees, 1497
mandatory arbitration, and all other matters necessary or 1498
appropriate to conduct any busin ess permitted herein. 1499
1500
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Any amendments to the constitution and bylaws are subject to the 1501
approval of the office. 1502
Section 42. Section 629.606, Florida Statutes, is created 1503
to read: 1504
629.606 Taxation.—Any insurance exchange formed under this 1505
part is not subject to any state or local taxes or fees measured 1506
by income, premiums, or gross receipts; except that for purposes 1507
of taxation under s. 624.509, direct premiums written, procured, 1508
or received by a member or members through the exchange on risks 1509
located in this state shall be construed to be written, 1510
procured, or received by the exchange, and the premium tax due 1511
on said premium shall be reported and paid by the exchange. 1512
Section 43. Section 629.607, Florida Statutes, is created 1513
to read: 1514
629.607 Expenses.—The exchange shall reimburse the office 1515
for any expenses incurred by the office relating to the 1516
regulation of the exchange and its members. Each person or 1517
entity examined by the office shall pay the exchange for the 1518
expenses incurred in such examinat ion. 1519
(1) The office shall examine the affairs, transactions, 1520
accounts, records, and assets of any security fund, exchange, 1521
members, and associate brokers as often as it deems advisable. 1522
The examination may be conducted by the accredited examiners of 1523
the office at the offices of the entity or person being 1524
examined. The office shall examine in like manner each 1525
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prospective member or associate broker applying for membership 1526
in an exchange. 1527
(2) If the department has reason to believe that any 1528
agent, as defined in s. 626.015 or s. 626.914, has violated or 1529
is violating any provision of the insurance law, or upon receipt 1530
of a written complaint signed by any interested person 1531
indicating that any such violation may exist, the department 1532
shall conduct such examinat ion as it deems necessary of the 1533
accounts, records, documents, and transactions pertaining to or 1534
affecting the insurance affairs of such agent. 1535
(3) Any person or entity that willfully obstructs the 1536
office or its examiner in an examination commits a misdemeanor 1537
of the second degree, punishable as provided in s. 775.082 or s. 1538
775.083. 1539
Section 44. Section 629.608, Florida Statutes, is created 1540
to read: 1541
629.608 Powers of examiners; subpoenas and testimony. — 1542
(1) Any examiner appointed by the office , as to the 1543
subject of any examination, investigation, or hearing being 1544
conducted by him or her, may administer oaths, examine and 1545
cross-examine witnesses, and receive oral and documentary 1546
evidence, and shall have the power to subpoena witnesses, compel 1547
their attendance and testimony, and require by subpoena the 1548
production of books, papers, records, files, correspondence, 1549
documents, or other evidence which the examiner deems relevant 1550
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to the inquiry. If any person refuses to comply with any such 1551
subpoena or to testify as to any matter concerning which he or 1552
she may be lawfully interrogated, the Circuit Court of Leon 1553
County or the circuit court of the county wherein such 1554
examination, investigation, or hearing is being conducted, or of 1555
the county wherein such p erson resides, on the office's 1556
application may issue an order requiring such person to comply 1557
with the subpoena and to testify; and any failure to obey such 1558
an order of the court may be punished by the court as a contempt 1559
thereof. 1560
(2) Any person who refu ses or fails, without lawful cause, 1561
to testify relative to the affairs of a member, associate 1562
broker, or other person when subpoenaed and requested by the 1563
office to so testify, as provided in subsection (1), commits a 1564
misdemeanor of the second degree, puni shable as provided in s. 1565
775.082 or s. 775.083, in addition to the penalty provided in 1566
subsection (1). 1567
(3) Any person willfully testifying falsely under oath as 1568
to any matter material to any examination, investigation, or 1569
hearing shall upon conviction th ereof be guilty of perjury and 1570
shall be punished accordingly. 1571
(4)(a) If any person asks to be excused from attending or 1572
testifying or from producing any books, papers, records, 1573
contracts, documents, or other evidence in connection with any 1574
examination, hearing, or investigation being conducted by the 1575
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office or its examiner, on the ground that the testimony or 1576
evidence required of the person may tend to incriminate him or 1577
her or subject him or her to a penalty or forfeiture, and the 1578
person notwithstanding is directed to give such testimony or 1579
produce such evidence, he or she shall, if so directed by the 1580
office and the Department of Legal Affairs, nonetheless comply 1581
with such direction; but the person may not thereafter be 1582
prosecuted or subjected to any pen alty or forfeiture for or on 1583
account of any transaction, matter, or thing concerning which he 1584
or she may have so testified or produced evidence, and no 1585
testimony so given or evidence so produced shall be received 1586
against him or her upon any criminal action , investigation, or 1587
proceeding; except that such person so testifying is not exempt 1588
from prosecution or punishment for any perjury committed by him 1589
or her in such testimony, and the testimony or evidence so given 1590
or produced shall be admissible against him or her upon any 1591
criminal action, investigation, or proceeding concerning such 1592
perjury, nor shall he or she be exempt from the refusal, 1593
suspension, or revocation of any license, permission, or 1594
authority conferred, or to be conferred, pursuant to the 1595
insurance law. 1596
(b) Any such individual may execute, acknowledge, and file 1597
with the office a statement expressly waiving such immunity or 1598
privilege in respect to any transaction, matter, or thing 1599
specified in such statement, and thereupon the testimony of such 1600
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individual or such evidence in relation to such transaction, 1601
matter, or thing may be received or produced before any judge or 1602
justice, court, tribunal, grand jury, or otherwise; and if such 1603
testimony or evidence is so received or produced, such 1604
individual shall not be entitled to any immunity or privileges 1605
on account of any testimony so given or evidence so produced. 1606
(5) Subpoenas shall be served, and proof of such service 1607
made, in the same manner as if issued by a circuit court. 1608
(6) Witness fees and mi leage, if claimed, shall be allowed 1609
the same as for testimony in a circuit court. 1610
Section 45. Section 629.609, Florida Statutes, is created 1611
to read: 1612
629.609 Written examination reports. — 1613
(1) The office or its examiner shall make a full and true 1614
written report of any examination. The report must contain only 1615
information obtained from examination of the records, accounts, 1616
files, and documents of or relative to the person or entity 1617
examined or from testimony of individuals under oath, together 1618
with relevant conclusions and recommendations of the examiner 1619
based thereon. The office shall furnish a copy of the report to 1620
the person or entity examined not less than 30 days prior to 1621
filing the report in its office. If such person or entity so 1622
requests in writing within such 30-day period, the office shall 1623
grant a hearing with respect to the report and shall not file 1624
the report until after the hearing and after such modifications 1625
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have been made therein as the office deems proper. 1626
(2) The report of an examinat ion when filed shall be 1627
admissible in evidence in any action or proceeding brought by 1628
the office against the person or entity examined, or against his 1629
or her or its officers, employees, or agents. The office or its 1630
examiners may at any time testify and off er other proper 1631
evidence as to information secured or matters discovered during 1632
the course of an examination, whether or not a written report of 1633
the examination has been either made, furnished, or filed in the 1634
office. 1635
(3) After an examination report has been filed, the office 1636
may publish the results of any such examination in one or more 1637
newspapers published in this state, or on its website, whenever 1638
it deems it to be in the public interest. 1639
(4) After the examination report of an underwriting member 1640
has been filed, an affidavit shall be filed with the office, not 1641
more than 30 days after the report has been filed, on a form 1642
furnished by the office and signed by the person or a 1643
representative of any entity examined, stating that the report 1644
has been read and that the recommendations made in the report 1645
will be considered within a reasonable time. 1646
Section 46. Section 629.611, Florida Statutes, is created 1647
to read: 1648
629.611 Correction and reconstruction of records. —If the 1649
office finds any accounts or record s to be inadequate, or 1650
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inadequately kept or posted, it may employ experts to 1651
reconstruct, rewrite, post, or balance them at the expense of 1652
the person or entity being examined if such person or entity has 1653
failed to maintain, complete, or correct such record s or 1654
accounts after the office has given him or her or it notice and 1655
reasonable opportunity to do so. 1656
Section 47. Section 629.612, Florida Statutes, is created 1657
to read: 1658
629.612 Underwriting members of the exchange. - 1659
(1) The provisions of ss. 625.0 12, 625.031, and 625.302 -1660
625.338 shall be applicable to the underwriting members of an 1661
exchange in the same manner as those sections apply to domestic 1662
insurers authorized to do business in this state. 1663
(2) All underwriting members must maintain a minimum 1664
policyholder surplus of $5 million to write insurance. Except 1665
for that portion of the paid -in capital and surplus which shall 1666
be maintained in a security fund of an exchange, the paid -in 1667
capital and surplus shall be invested by an underwriting member 1668
in a manner consistent with ss. 625.301 -625.340. The portion of 1669
the paid-in capital and surplus in any security fund of an 1670
exchange shall be invested in a manner limited to investments 1671
for life insurance companies under the Florida insurance laws. 1672
(3) All underwriting members must be members of the 1673
security fund of any exchange. 1674
Section 48. Section 629.613, Florida Statutes, is created 1675
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to read: 1676
629.613 Establishment of underwriting members. — 1677
(1) An underwriting member may not commence operation 1678
without the approval of the office. Before commencing operation, 1679
an underwriting member must provide a written application on a 1680
form adopted by the commission which contains: 1681
(a) The name, type, and purpose of the underwriting 1682
member. An underwriting member m ay not be formed or authorized 1683
to transact insurance in this state under a name that is the 1684
same as that of any authorized insurer or is so nearly similar 1685
thereto as to cause or tend to cause confusion or under a name 1686
that would tend to mislead as to the t ype of organization of the 1687
insurer. Before incorporating under or using any name, the 1688
underwriting syndicate or proposed underwriting syndicate must 1689
submit its name or proposed name to the office for the approval 1690
of the office. 1691
(b) The name, residence ad dress, business background, and 1692
qualifications of each person associated or to be associated in 1693
the formation or financing of the underwriting member. 1694
(c) A full disclosure of the terms of all understandings 1695
and agreements existing or proposed among pers ons so associated 1696
relative to the underwriting member, or the formation or 1697
financing thereof, accompanied by a copy of each such agreement 1698
or understanding. 1699
(d) A full disclosure of the terms of all understandings 1700
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and agreements existing or proposed for management or exclusive 1701
agency contracts. 1702
(2) In connection with any proposal to establish an 1703
underwriting member, the office shall investigate: 1704
(a) The character, reputation, financial standing, and 1705
motives of the organizers, incorporators, or subscri bers 1706
organizing the proposed underwriting member. 1707
(b) The character, financial responsibility, insurance 1708
experience, and business qualifications of its proposed 1709
officers. 1710
(c) The character, financial responsibility, business 1711
experience, and standing of the proposed stockholders and 1712
directors, or owners. 1713
Section 49. Section 629.614, Florida Statutes, is created 1714
to read: 1715
629.614 Notice of changes in management, ownership, or 1716
assets.— 1717
(1) An underwriting member shall promptly give the office 1718
written notice of any change among the directors or principal 1719
officers of the underwriting member within 30 days after such 1720
change. The office shall investigate the new directors or 1721
principal officers of the underwriting member. The office's 1722
investigation shall include an investigation of the character, 1723
financial responsibility, insurance experience, and business 1724
qualifications of any new directors or principal officers. As a 1725
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result of the investigation, the office may require the 1726
underwriting member to replace a ny new directors or principal 1727
officers. 1728
(2) A person may not conclude a tender offer or an 1729
exchange offer or otherwise acquire 5 percent or more of the 1730
outstanding voting securities of an underwriting member or 1731
controlling company or purchase 5 percent o r more of the 1732
ownership of an underwriting member or controlling company 1733
unless such person has filed with, and obtained the approval of, 1734
the office and sent to such underwriting member a statement, on 1735
a form adopted by the commission, providing: 1736
(a) The identity of, and background information on, each 1737
person by whom, or on whose behalf, the acquisition is to be 1738
made; and, if the acquisition is to be made by or on behalf of a 1739
corporation, association, or trust, the identity of and 1740
background information o n each director, officer, trustee, or 1741
other natural person performing duties similar to those of a 1742
director, officer, or trustee for the corporation, association, 1743
or trust. 1744
(b) The source and amount of the funds or other 1745
consideration used, or to be used , in making the acquisition. 1746
(c) Any plan or proposal which such person may have to 1747
liquidate such member, to sell its assets, or to merge or 1748
consolidate it. 1749
(d) The percentage of ownership which such person proposes 1750
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to acquire and the terms of the off er or exchange, as the case 1751
may be. 1752
(e) Information as to any contracts, arrangements, or 1753
understandings with any party with respect to any securities of 1754
such member or controlling company, including, but not limited 1755
to, information relating to the trans fer of any securities, 1756
option arrangements, or puts or calls or the giving or 1757
withholding of proxies, naming the party with whom such 1758
contract, arrangements, or understandings have been entered and 1759
giving the details thereof. 1760
(3) The office may disapprov e any acquisition subject to 1761
this section by any person or any affiliated person of such 1762
person who: 1763
(a) Willfully violates this section; 1764
(b) In violation of an order of the office issued pursuant 1765
to (8), fails to divest himself or herself of any stock obtained 1766
in violation of this section, or fails to divest himself or 1767
herself of any direct or indirect control of such stock, within 1768
25 days after such order; or 1769
(c) In violation of an order issued by the office pursuant 1770
to (8), acquires additional stoc k of the underwriting member or 1771
controlling company, or direct or indirect control of such 1772
stock, without complying with this subsection. 1773
(4) The person or persons filing the statements required 1774
by this section have the burden of proof. 1775
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(5) The office shall approve any such acquisition if it 1776
finds, on the basis of the record made during any proceeding or 1777
on the basis of the filed statement if no proceeding is 1778
conducted, that: 1779
(a) Upon completion of the acquisition, the underwriting 1780
member will be able to satisfy the requirements for the approval 1781
to write the line or lines of insurance for which it is 1782
presently approved; 1783
(b) The financial condition of the acquiring person or 1784
persons will not jeopardize the financial stability of the 1785
underwriting member or prejudice the interests of its 1786
policyholders or the public; 1787
(c) Any plan or proposal of the acquiring party is fair 1788
and free of prejudice to the policyholders of the underwriting 1789
member and the public, if the plan or proposal will: 1790
1. Liquidate the insurer, sell its assets, or merge or 1791
consolidate it with any person, or to make any other major 1792
change in its business or corporate structure or management; or 1793
2. Liquidate any controlling company, sell its assets, or 1794
merge or consolidate it with any person, or to make any major 1795
change in its business or corporate structure or management 1796
which would have an effect upon the underwriting member; 1797
(d) The competence, experience, and integrity of those 1798
persons who will control directly or indirectly the o peration of 1799
the underwriting member indicate that the acquisition is in the 1800
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best interest of the policyholders of the underwriting member 1801
and in the public interest; 1802
(e) The natural persons for whom background information is 1803
required to be furnished purs uant to this section have such 1804
backgrounds as to indicate that it is in the best interests of 1805
the policyholders of the underwriting member, and in the public 1806
interest, to permit such persons to exercise control over such 1807
underwriting member; 1808
(f) The officers and directors to be employed after the 1809
acquisition have sufficient insurance experience and ability to 1810
assure reasonable promise of successful operation; 1811
(g) The management of the underwriting member after the 1812
acquisition will be competent and trust worthy and will possess 1813
sufficient managerial experience so as to make the proposed 1814
operation of the underwriting member not hazardous to the 1815
insurance-buying public; 1816
(h) The management of the underwriting member after the 1817
acquisition will not include any person who has directly or 1818
indirectly through ownership, control, reinsurance transactions, 1819
or other insurance or business relations unlawfully manipulated 1820
the assets, accounts, finances, or books of any insurer or 1821
underwriting member or otherwise acte d in bad faith with respect 1822
thereto; 1823
(i) The acquisition is not likely to be hazardous or 1824
prejudicial to the underwriting member's policyholders or the 1825
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public; and 1826
(j) The effect of the acquisition of control would not 1827
substantially lessen competition in insurance in this state or 1828
would not tend to create a monopoly therein. 1829
(6) A vote by the stockholder of record, or by any other 1830
person, of any security acquired in contravention of this 1831
section is not valid. Any acquisition of any security contrary 1832
to this section is void. Upon the petition of the underwriting 1833
member or controlling company, the circuit court for the county 1834
in which the principal office of such underwriting member is 1835
located may, without limiting the generality of its authority, 1836
order the issuance or entry of an injunction or other order to 1837
enforce this section. There shall be a private right of action 1838
in favor of the underwriting member or controlling company to 1839
enforce this subsection. A demand upon the office that it 1840
performs its functions may not be required as a prerequisite to 1841
any suit by the underwriting member or controlling company 1842
against any other person, and in no case shall the office be 1843
deemed a necessary party to any action by such underwriting 1844
member or controlling compa ny to enforce this section. Any 1845
person who makes or proposes an acquisition requiring the filing 1846
of a statement pursuant to this section, or who files such a 1847
statement, shall be deemed to have thereby designated the Chief 1848
Financial Officer as such person's agent for service of process 1849
under this section and shall thereby be deemed to have submitted 1850
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himself or herself to the administrative jurisdiction of the 1851
office and to the jurisdiction of the circuit court. 1852
(7) Any approval by the office under this sec tion does not 1853
constitute a recommendation by the office for an acquisition, 1854
tender offer, or exchange offer. It is unlawful for a person to 1855
represent that the office's approval constitutes a 1856
recommendation. A person who violates the provisions of this 1857
section commits a felony of the third degree, punishable as 1858
provided in s. 775.082, s. 775.083, or s. 775.084. The statute -1859
of-limitations period for the prosecution of an offense 1860
committed under this section is 5 years. 1861
(8) Upon notification to the office by the underwriting 1862
member or a controlling company that any person or any 1863
affiliated person of such person has acquired 5 percent or more 1864
of the outstanding voting securities of the underwriting member 1865
or controlling company without complying with this sect ion, the 1866
office shall order that the person and any affiliated person of 1867
such person cease acquisition of any further securities of the 1868
underwriting member or controlling company; however, the person 1869
or any affiliated person of such person may request a 1870
proceeding, which proceeding shall be convened within 7 days 1871
after the rendering of the order for the sole purpose of 1872
determining whether the person, individually or in connection 1873
with any affiliated person of such person, has acquired 5 1874
percent or more of t he outstanding voting securities of an 1875
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underwriting member or controlling company. Upon the failure of 1876
the person or affiliated person to request a hearing within 7 1877
days, or upon a determination at a hearing convened pursuant to 1878
this subsection that the pe rson or affiliated person has 1879
acquired voting securities of an underwriting member or 1880
controlling company in violation of this section, the office may 1881
order the person and affiliated person to divest themselves of 1882
any voting securities so acquired. 1883
(9) The office shall, if necessary to protect the public 1884
interest, suspend or revoke the certificate of authority of any 1885
underwriting member or controlling company: 1886
(a) The control of which is acquired in violation of this 1887
section; 1888
(b) That is controlled, directly or indirectly, by any 1889
person or any affiliated person of such person who, in violation 1890
of this section, has obtained control of an underwriting member 1891
or controlling company; or 1892
(c) That is controlled, directly or indirectly, by any 1893
person who, directly or indirectly, controls any other person 1894
who, in violation of this section, acquires control of an 1895
underwriting member or controlling company. 1896
(10) If any underwriting member is subject to suspension 1897
or revocation pursuant to subsection (9), the underwriting 1898
member shall be deemed to be in such condition, or to be using 1899
or to have been subject to such methods or practices in the 1900
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conduct of its business, as to render its further transaction of 1901
insurance presently or prospectively hazardous to its 1902
policyholders, creditors, or stockholders or to the public. 1903
Section 50. Section 629.615, Florida Statutes, is created 1904
to read: 1905
629.615 Recordkeeping and annual report. — 1906
(1) Each underwriting member shall have and maintain its 1907
principal place of bus iness in this state and shall keep therein 1908
complete records of its assets, transactions, and affairs in 1909
accordance with such methods and systems as are customary for or 1910
suitable to the kind or kinds of insurance transacted. 1911
(2) Each underwriting member s hall file with the office a 1912
full and true statement of its financial condition, 1913
transactions, and affairs. The statement shall be filed on or 1914
before March 1 of each year, or within such extension of time as 1915
the office for good cause grants and shall be for the preceding 1916
calendar year. The statement shall contain information generally 1917
included in insurer financial statements prepared in accordance 1918
with generally accepted insurance accounting principles and 1919
practices and in a form generally used by insurers f or financial 1920
statements, sworn to by at least two executive officers of the 1921
underwriting member. The form of the financial statements shall 1922
be the approved form of the National Association of Insurance 1923
Commissioners or its successor organization. The commi ssion may 1924
by rule require each insurer to submit any part of the 1925
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information contained in the financial statement in a computer -1926
readable form compatible with the office's electronic data 1927
processing system. In addition to information furnished in 1928
connection with its annual statement, an underwriting member 1929
must furnish to the office as soon as reasonably possible such 1930
information about its transactions or affairs as the office 1931
requests in writing. All information furnished pursuant to the 1932
office's request must be verified by the oath of two executive 1933
officers of the underwriting member. 1934
Section 51. Section 629.616, Florida Statutes, is created 1935
to read: 1936
629.616 Limitations on coverage written by underwriting 1937
members.— 1938
(1) An underwriting member may not expose itself to any 1939
loss on any one risk in an amount exceeding 10 percent of its 1940
surplus to policyholders. Any risk or portion of any risk which 1941
shall have been reinsured in an assuming reinsurer authorized or 1942
approved to do such business in this state shall be deducted in 1943
determining the limitation of risk prescribed in this section. 1944
(2) If the office has reason to believe that the 1945
underwriting member's ratio of actual or projected annual gross 1946
written premiums to policyholder surplus exceeds 8 to 1 o r the 1947
underwriting member's ratio of actual or projected annual net 1948
premiums to policyholder surplus exceeds 4 to 1, the office may 1949
establish maximum gross or net annual premiums to be written by 1950
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the underwriting member consistent with maintaining the rati os 1951
specified in this sub -subparagraph. 1952
(a) Projected annual net or gross premiums shall be based 1953
on the actual writings to date for the underwriting member's 1954
current calendar year, its writings for the previous calendar 1955
year, or both. Ratios shall be com puted on an annualized basis. 1956
(b) For purposes of this subsection, the term "gross 1957
written premiums" means direct premiums written and reinsurance 1958
assumed. 1959
(3) For the purpose of determining the limitation on 1960
coverage written, surplus as to policyholde rs shall be deemed to 1961
include any voluntary reserves, or any part thereof, which are 1962
not required by or pursuant to law and shall be determined from 1963
the last sworn statement of such underwriting member with the 1964
office, or by the last report or examination filed by the 1965
office, whichever is more recent at the time of assumption of 1966
such risk. 1967
Section 52. Section 629.617, Florida Statutes, is created 1968
to read: 1969
629.617 Reserves of underwriting members. — 1970
(1) An underwriting member must at all times maintai n an 1971
unearned premium reserve equal to 50 percent of the net written 1972
premiums of the subscribers on policies having 1 year or less to 1973
run, and pro rata on those for longer periods, except that all 1974
premiums on any marine or transportation insurance trip ris k 1975
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shall be deemed unearned until the trip is terminated. For the 1976
purpose of this subparagraph, the term "net written premiums" 1977
means the premium payments made by subscribers plus the premiums 1978
due from subscribers, after deducting the amounts specifically 1979
provided in the subscribers' agreements for expenses, including 1980
reinsurance costs and fees paid to the attorney in fact, 1981
provided that the power of attorney agreement contains an 1982
explicit provision requiring the attorney in fact to refund any 1983
unearned subscribers fees on a pro -rata basis for canceled 1984
policies. If there is no such provision, the unearned premium 1985
reserve shall be calculated without any adjustment for fees paid 1986
to the attorney in fact. If the unearned premium reserves at any 1987
time do not amount to $100,000, there shall be maintained on 1988
deposit at the exchange at all times additional funds in cash or 1989
eligible securities which, together with the unearned premium 1990
reserves, equal $100,000. In calculating the foregoing reserves, 1991
the amount of the atto rney's bond, as filed with the office and 1992
as required by s. 629.121, shall be included in such reserves. 1993
If at any time the unearned premium reserves are less than the 1994
foregoing requirements, the subscribers, or the attorney in 1995
fact, shall advance funds to make up the deficiency. Such 1996
advances shall only be repaid out of the surplus of the exchange 1997
and only after receiving written approval from the office. 1998
(2) All underwriting members of an exchange shall maintain 1999
loss reserves, including a reserve for incurred but not reported 2000
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claims. The reserves shall be subject to review by the office, 2001
and, if loss experience shows that an underwriting member's loss 2002
reserves are inadequate, the office shall require the 2003
underwriting member to maintain loss reserves in such additional 2004
amount as is needed to make them adequate. 2005
Section 53. Section 629.618, Florida Statutes, is created 2006
to read: 2007
629.618 Dividends and profits. — 2008
(1) An underwriting member may not distribute any profits 2009
in the form of cash or other as sets to owners except out of that 2010
part of its available and accumulated surplus funds which is 2011
derived from realized net operating profits on its business and 2012
realized capital gains. In any one year such payments to owners 2013
may not exceed 30 percent of such surplus as of December 31 of 2014
the immediately preceding year, unless otherwise approved by the 2015
office. No distribution of profits shall be made that would 2016
render an underwriting member impaired or insolvent. 2017
(2) A stock dividend may be paid by an underwriting member 2018
out of any available surplus funds in excess of the aggregate 2019
amount of surplus advanced to the underwriting member under s. 2020
629.619. 2021
(3) A dividend otherwise lawful may be payable out of an 2022
underwriting member's earned surplus even t hough the total 2023
surplus of the underwriting member is then less than the 2024
aggregate of its past contributed surplus resulting from 2025
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issuance of its capital stock at a price in excess of the par 2026
value thereof. 2027
Section 54. Section 629.619, Florida Statutes , is created 2028
to read: 2029
629.619 Borrowing of money by underwriting members. — 2030
(1) An underwriting member may borrow money to defray the 2031
expenses of its organization, provide it with surplus funds, or 2032
for any purpose of its business, upon a written agreeme nt that 2033
such money is required to be repaid only out of the underwriting 2034
member's surplus in excess of that stipulated in such agreement. 2035
The agreement may provide for interest not exceeding 15 percent 2036
simple interest per annum. The interest shall or shall not 2037
constitute a liability of the underwriting member as to its 2038
funds other than such excess of surplus, as stipulated in the 2039
agreement. A commission or promotion expense may not be paid in 2040
connection with any such loan. The use of any surplus note and 2041
any repayments thereof shall be subject to the approval of the 2042
office. 2043
(2) Money so borrowed, together with any interest thereon 2044
if so stipulated in the agreement, may not form a part of the 2045
underwriting member's legal liabilities except as to its surplus 2046
in excess of the amount thereof stipulated in the agreement, nor 2047
be the basis of any setoff; but until repayment, financial 2048
statements filed or published by an underwriting member shall 2049
show as a footnote thereto the amount thereof then unpaid, 2050
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together with any interest thereon accrued but unpaid. 2051
Section 55. Section 62 9.6201, Florida Statutes, is created 2052
to read: 2053
629.6201 Improperly issued contracts, riders, and 2054
endorsements.— 2055
(1) Any insurance policy, rider, or endorsement issued by 2056
an underwriting member and otherwise valid which contains any 2057
condition or provisio n not in compliance with the requirements 2058
of this part may not be thereby rendered invalid, except as 2059
provided in s. 627.415, but shall be construed and applied in 2060
accordance with such conditions and provisions as would have 2061
applied had such policy, rider, or endorsement been in full 2062
compliance with this part. In the event an underwriting member 2063
issues or delivers any policy for an amount which exceeds any 2064
limitations otherwise provided in this part, the underwriting 2065
member shall be liable to the insured or his or her beneficiary 2066
for the full amount stated in the policy in addition to any 2067
other penalties that may be imposed. 2068
(2) Any insurance contract delivered or issued for 2069
delivery in this state governing a subject or subjects of 2070
insurance resident, loca ted, or to be performed in this state 2071
which, pursuant to the provisions of this part, the underwriting 2072
member may not lawfully insure under such a contract shall be 2073
cancelable at any time by the underwriting member, any provision 2074
of the contract to the con trary notwithstanding; and the 2075
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underwriting member shall promptly cancel the contract in 2076
accordance with the request of the office therefor. No such 2077
illegality or cancellation shall be deemed to relieve the 2078
underwriting syndicate of any liability incurred by it under the 2079
contract while in force or to prohibit the underwriting 2080
syndicate from retaining the pro rata earned premium thereon. 2081
This provision does not relieve the underwriting syndicate from 2082
any penalty otherwise incurred by the underwriting syndica te. 2083
Section 56. Section 629.621, Florida Statutes, is created 2084
to read: 2085
629.621 Satisfaction of judgments. — 2086
(1) Every judgment or decree for the recovery of money 2087
heretofore or hereafter entered in any court of competent 2088
jurisdiction against any und erwriting member shall be fully 2089
satisfied within 60 days from and after the entry thereof or, in 2090
the case of an appeal from such judgment or decree, within 60 2091
days from and after the affirmance of the judgment or decree by 2092
the appellate court. 2093
(2) If the judgment or decree is not satisfied as required 2094
under subsection (1) and the office has received official 2095
documentation of that failure to satisfy the judgement or 2096
decree, the office shall forthwith prohibit the underwriting 2097
member from transacting busine ss. The office may not permit such 2098
underwriting member to write any new business until the judgment 2099
or decree, as well as any associated expenses and fees, is 2100
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wholly paid and satisfied and proof thereof is filed. The proof 2101
filed must include official docum entation from the clerk of the 2102
court where the judgment was entered, showing that the judgment 2103
or decree, expenses, and fees are satisfied. 2104
Section 57. Section 629.622, Florida Statutes, is created 2105
to read: 2106
629.622 Liquidation, rehabilitation, and re strictions.—The 2107
office, upon a showing that a member or associate broker of an 2108
exchange has met one or more of the grounds contained in part I 2109
of chapter 631, may restrict sales by type of risk, policy or 2110
contract limits, premium levels, or policy or contr act 2111
provisions; increase surplus or capital requirements of 2112
underwriting members; issue cease and desist orders; suspend or 2113
restrict a member's or associate broker's right to transact 2114
business; place an underwriting member under conservatorship or 2115
rehabilitation; or seek an order of liquidation as authorized by 2116
part I of chapter 631. 2117
Section 58. Section 629.623, Florida Statutes, is created 2118
to read: 2119
629.623 Prohibited conduct; penalties. — 2120
(1) The following acts by a member, associate broker, or 2121
affiliated person constitute prohibited conduct: 2122
(a) Fraud. 2123
(b) Fraudulent or dishonest acts committed by a member or 2124
associate broker before admission to an exchange, if the facts 2125
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and circumstances were not disclosed to the office upon 2126
application to become a member or associate broker. 2127
(c) Conduct detrimental to the welfare of an exchange. 2128
(d) Unethical or improper practices or conduct, 2129
inconsistent with just and equitable principles of trade as set 2130
forth in, but not limited to, ss. 626.951 -626.9641 and 626.973. 2131
(e) Failure to use due diligence to ascertain the 2132
insurance needs of a client or a principal. 2133
(f) Misstatements made under oath or upon an application 2134
for membership on an exchange. 2135
(g) Failure to testify or produce documents when request ed 2136
by the office. 2137
(h) Willful violation of any law of this state. 2138
(i) Failure of an officer or principal to testify under 2139
oath concerning a member, associate broker, or other person's 2140
affairs as they relate to the operation of an exchange. 2141
(j) Violation of the constitution and bylaws of the 2142
exchange. 2143
(2)(a) The office may order the suspension of further 2144
transaction of business on the exchange of any member or 2145
associate broker found to have engaged in prohibited conduct. In 2146
addition, any member or associate broker found to have engaged 2147
in prohibited conduct may be subject to reprimand, censure, or a 2148
fine not exceeding $75,000 imposed by the office. 2149
(b) Any member that has an affiliated person who is found 2150
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to have engaged in prohibited conduct shal l be subject to 2151
involuntary withdrawal or in addition thereto may be subject to 2152
suspension, reprimand, censure, or a fine not exceeding $75,000. 2153
(3) Any suspension, reprimand, censure, or fine may be 2154
remitted or reduced by the office on such terms and conditions 2155
as are deemed fair and equitable. 2156
Section 59. Section 629.624, Florida Statutes, is created 2157
to read: 2158
629.624 Fines.– 2159
(1) Fines imposed under this part shall be remitted to the 2160
office and shall be deposited into the Insurance Regulatory 2161
Trust Fund. 2162
(2) When a member or associate broker has failed to pay a 2163
fine for 15 days after the fine becomes payable, the member or 2164
associate broker shall be suspended, unless the office has 2165
granted an extension of time to pay the fine. 2166
Section 60. Section 629.625, Florida Statutes, is created 2167
to read: 2168
629.625 Suspension. — 2169
(1) A member or associate broker that is suspended shall 2170
be deprived, during the period of suspension, of all rights and 2171
privileges of a member or of an associate broker and ma y be 2172
proceeded against by the office for any offense committed before 2173
or after the date of suspension. 2174
(2) A member or associate broker that is suspended may be 2175
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reinstated at any time on such terms and conditions as the 2176
office may specify. 2177
Section 61. Section 629.626, Florida Statutes, is created 2178
to read: 2179
629.626 Retaliation. — 2180
(1) When by or pursuant to the laws of any other state or 2181
foreign country any taxes, licenses, or other fees, in the 2182
aggregate, and any fines, penalties, deposit requiremen ts, or 2183
other material obligations, prohibitions, or restrictions are or 2184
would be imposed upon an exchange or upon the agents or 2185
representatives of such exchange which are in excess of such 2186
taxes, licenses, and other fees, in the aggregate, or which are 2187
in excess of such fines, penalties, deposit requirements, or 2188
other obligations, prohibitions, or restrictions directly 2189
imposed upon similar exchanges or upon the agents or 2190
representatives of such exchanges of such other state or country 2191
under the statutes of this state, so long as such laws of such 2192
other state or country continue in force or are so applied, the 2193
same taxes, licenses, and other fees, in the aggregate, or 2194
fines, penalties, deposit requirements, or other material 2195
obligations, prohibitions, or rest rictions of whatever kind 2196
shall be imposed by the office upon the exchanges, or upon the 2197
agents or representatives of such exchanges, of such other state 2198
or country doing business or seeking to do business in this 2199
state. 2200
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(2) Any tax, license, or other ob ligation imposed by any 2201
city, county, or other political subdivision or agency of a 2202
state, jurisdiction, or foreign country on an exchange, or on 2203
the agents or representatives on an exchange, shall be deemed to 2204
be imposed by such state, jurisdiction, or fo reign country 2205
within the meaning of subsection (1). 2206
Section 62. Section 629.627, Florida Statutes, is created 2207
to read: 2208
629.627 Agents.— 2209
(1) Agents as defined in ss. 626.015 and 626.914 who are 2210
broker members or associate broker members of an exchan ge shall 2211
be allowed only to place on an exchange the same kind or kinds 2212
of business that the agent is licensed to place pursuant to 2213
Florida law. Direct Florida business as defined in s. 626.916 or 2214
s. 626.917 shall be written through a broker member who is a 2215
surplus lines agent as defined in s. 626.914. The activities of 2216
each broker member or associate broker with regard to an 2217
exchange shall be subject to all applicable provisions of the 2218
insurance laws of this state, and all such activities shall 2219
constitute transactions under his or her license as an insurance 2220
agent for purposes of the Florida insurance law. 2221
(2) If an underwriting member has assumed the risk as to a 2222
surplus lines coverage and if the premium therefor has been 2223
received by the surplus lines ag ent who placed such insurance, 2224
then in all questions thereafter arising under the coverage as 2225
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between the underwriting member and the insured, the 2226
underwriting member shall be deemed to have received the premium 2227
due to it for such coverage; and the underwr iting member shall 2228
be liable to the insured as to losses covered by such insurance, 2229
and for unearned premiums which may become payable to the 2230
insured upon cancellation of such insurance, whether or not in 2231
fact the surplus lines agent is indebted to the und erwriting 2232
member with respect to such insurance or for any other cause. 2233
Section 63. Section 629.628, Florida Statutes, is created 2234
to read: 2235
629.628 Background information. —The information as to the 2236
background and identity of each person about whom inf ormation is 2237
required to be furnished pursuant to s. 629.614 must include, 2238
but need not be limited to: 2239
(1) Such person's occupations, positions of employment, 2240
and offices held during the past 10 years. 2241
(2) The principal business and address of any busin ess, 2242
corporation, or other organization in which each such office was 2243
held or in which such occupation or position of employment was 2244
carried on. 2245
(3) Whether, at any time during such 10 -year period, such 2246
person was convicted of any crime other than a traf fic 2247
violation. 2248
(4) Whether, during such 10 -year period, such person has 2249
been the subject of any proceeding for the revocation of any 2250
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license and, if so, the nature of such proceeding and the 2251
disposition thereof. 2252
(5) Whether, during such 10 -year period, such person has 2253
been the subject of any proceeding under the federal Bankruptcy 2254
Act or whether, during such 10 -year period, any corporation, 2255
partnership, firm, trust, or association in which such person 2256
was a director, officer, trustee, partner, or other official has 2257
been subject to any such proceeding, either during the time in 2258
which such person was a director, officer, trustee, partner, or 2259
other official, or within 12 months thereafter. 2260
(6) Whether, during such 10 -year period, such person has 2261
been enjoined, temporarily or permanently, by a court of 2262
competent jurisdiction from violating any federal or state law 2263
regulating the business of insurance, securities, or banking, or 2264
from carrying out any particular practice or practices in the 2265
course of the business of insurance, securities, or banking, 2266
together with details of any such event. 2267
Section 64. Section 628.629, Florida Statutes, is created 2268
to read: 2269
628.629 Offsets.—Any action, requirement, or constraint 2270
imposed by the office shall reduce or offset similar actions, 2271
requirements, or constraints of any exchange. 2272
Section 65. Section 629.6301, Florida Statutes, is created 2273
to read: 2274
629.6301 Restriction on member ownership. —The investment 2275
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in any underwriting member by brokers, agents, or intermediaries 2276
transacting business on the exchange, and the investment in any 2277
such broker, agent, or intermediary by any underwriting member, 2278
directly or indirectly, shall in each case be limited in the 2279
aggregate to less than 5 percent of the total invest ment in such 2280
underwriting member, broker, agent, or intermediary. 2281
Section 66. Section 629.631, Florida Statutes, is created 2282
to read: 2283
629.631 Prohibition of underwriting manager investment. —2284
Any direct or indirect investment in any underwriting manager by 2285
a broker member or any affiliated person of a broker member or 2286
any direct or indirect investment in a broker member by an 2287
underwriting manager or any affiliated person of an underwriting 2288
manager is prohibited. 2289
Section 67. Section 629.632, Florida S tatutes, is created 2290
to read: 2291
629.632 Limitations on reinsurance. —An underwriting member 2292
may not accept reinsurance on an assumed basis from an affiliate 2293
or a controlling company, nor may a broker member or management 2294
company place reinsurance from its af filiate or controlling 2295
company with an underwriting member. 2296
Section 68. Section 629.633, Florida Statutes, is created 2297
to read: 2298
629.633 Rulemaking authority. —The commission shall adopt, 2299
amend, or repeal rules necessary to implement this part. 2300
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Section 69. Section 629.634, Florida Statutes, is created 2301
to read: 2302
629.634 Liability.—The performance of the contractual 2303
obligations of the exchange or its members entered into pursuant 2304
to this part may not be covered by any of the Florida state 2305
security or guaranty funds. 2306
Section 70. Paragraph (h) of subsection (3) of section 2307
163.01, Florida Statutes, is amended to read: 2308
163.01 Florida Interlocal Cooperation Act of 1969. — 2309
(3) As used in this section: 2310
(h) "Local government liability pool" means a r eciprocal 2311
insurer as defined in s. 629.011 s. 629.021 or any self-2312
insurance program created pursuant to s. 768.28(16), formed and 2313
controlled by counties or municipalities of this state to 2314
provide liability insurance coverage for counties, 2315
municipalities, or other public agencies of this state, which 2316
pool may contract with other parties for the purpose of 2317
providing claims administration, processing, accounting, and 2318
other administrative facilities. 2319
Section 71. Subsection (2) of section 624.45, Florida 2320
Statutes, is amended to read: 2321
624.45 Participation of financial institutions in 2322
reinsurance and in insurance exchanges. —Subject to applicable 2323
laws relating to financial institutions and to any other 2324
applicable provision of the Florida Insurance Code, any 2325
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financial institution or aggregation of such institutions may: 2326
(2) Participate, directly or indirectly, as an 2327
underwriting member or as an investor in an underwriting member 2328
of any insurance exchange authorized in accordance with s. 2329
629.401, which underwriting member transacts only aggregate or 2330
specific excess insurance over underlying self -insurance 2331
coverage for self-insurance organizations authorized under the 2332
Florida Insurance Code, for multiple -employer welfare 2333
arrangements, or for workers' compensation self-insurance 2334
trusts, in addition to any reinsurance the underwriting member 2335
may transact. 2336
2337
Nothing in this section shall be deemed to prohibit a financial 2338
institution from engaging in any presently authorized insurance 2339
activity. 2340
Section 72. Subsecti on (3) of section 626.9531, Florida 2341
Statutes, is amended to read: 2342
626.9531 Identification of insurers, agents, and insurance 2343
contracts.— 2344
(3) For the purposes of this section, the term "risk 2345
bearing entity" means a reciprocal insurer as defined in s. 2346
629.011 s. 629.021, a commercial self-insurance fund as defined 2347
in s. 624.462, a group self -insurance fund as defined in s. 2348
624.4621, a local government self -insurance fund as defined in 2349
s. 624.4622, a self-insured public utility as defined in s. 2350
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624.46225, or an independent educational institution self -2351
insurance fund as defined in s. 624.4623. For the purposes of 2352
this section, the term "risk bearing entity" does not include an 2353
authorized insurer as defined in s. 624.09. 2354
Section 73. Reciprocal insurers li censed before July 1, 2355
2025, shall have until January 1, 2026, to increase their 2356
required surpluses as required by the changes to s. 629.071, 2357
Florida Statutes. The attorneys of reciprocal insurers licensed 2358
before July 1, 2025, shall have until January 1, 20 26, to 2359
increase their bonds, or deposits in lieu of bonds, as required 2360
by the changes to ss. 629.121 and 629.131, Florida Statutes. 2361
Section 74. This act shall take effect July 1, 2025. 2362