The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Banking and Insurance
BILL: CS/SB 1622
INTRODUCER: Banking and Insurance Committee and Senator Trumbull
SUBJECT: Insurance
DATE: January 30, 2024
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Thomas Knudson BI Fav/CS
2. AEG
3. FP
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 1622 revises provisions relating to the Office of Insurance Regulation (OIR).
Specifically, the bill:
Requires each insurer and insurer group to file the required supplemental reports monthly,
rather than quarterly, and to provide such information broken down by zip code;
Provides the Financial Services Commission authority to adopt rules to administer certain
provisions;
Revises financial requirements for a public housing self-insurance fund;
Provides that, upon a declaration of an emergency, and the filing of an order by the
Commissioner of Insurance Regulation, a surplus lines insurer may not cancel or nonrenew a
personal residential or commercial residential property insurance policy covering a
residential property that has been damaged as a result of a hurricane or wind loss until 90
days after the residential property has been repaired;
Repeals current law allowing an insurer, with respect to residential property insurance rate
filings, to use a modeling indication that is the weighted or straight average of two or more
hurricane loss projection models found by the Florida Commission on Hurricane Loss
Projection Methodology to be accurate or reliable;
Repeals provisions providing that certain coverage under the Citizens Property Insurance
Corporation is not subject to its rate limitations; and
Provides a substantial rewrite of provisions regulating reciprocal insurers.
The bill does not appear to have a significant fiscal impact on state or local government.
REVISED: BILL: CS/SB 1622 Page 2
The bill takes effect July 1, 2024.
II. Present Situation:
Regulation of Insurance in Florida
The Office of Insurance Regulation (OIR) regulates specified insurance products, insurers and
other risk bearing entities in Florida.
1
As part of its regulatory oversight, the OIR may suspend or
revoke an insurer’s certificate of authority under certain conditions.
2
Financial Examinations
The OIR is responsible for examining the affairs, transactions, accounts, records, and assets of
each insurer that holds a certificate of authority to transact insurance business in Florida.
3
As part
of the examination process, all persons being examined must make available to the OIR the
accounts, records, documents, files, information, assets, and matters in their possession or control
that relate to the subject of the examination.
4
The OIR is charged with conducting an exam once
every three years for high-risk insurers and once every five years for low-risk insurers.
5
However, a domestic insurer that has held a certificate of authority for less than three years must
be examined on an annual basis.
6
The OIR is required to examine an insurer applying for an
initial certificate of authority prior to issuing the certificate of authority.
7
Market Conduct Exams
The OIR is authorized, as often as it deems necessary, to perform a market conduct examination
of, among other entities, any authorized insurer, to determine compliance with applicable
provisions of the workers’ compensation law and the Insurance Code.
8
The costs of the
examination are to be paid by the subject entity.
9
Section 624.3161, F.S., authorizes the OIR to
subject any authorized insurer to a market conduct examination after a hurricane if the insurer, at
any time more than 90 days after the end of the hurricane, is among the top 20 percent of insurers
based upon a calculation of the ratio of hurricane-related property insurance claims filed to the
number of property insurance policies in force.
10
The OIR must subject any authorized insurer to a market conduct examination after a hurricane
if the insurer, at any time more than 90 days after the end of the hurricane:
1
Section 20.121(3)(a), F.S. The Financial Services Commission, composed of the Governor, the Attorney General, the Chief
Financial Officer, and the Commissioner of Agriculture, serves as agency head of the OIR for purposes of rulemaking.
Further, the Commission appoints the commissioner of the OIR.
2
Section 624.418, F.S.
3
Section 624.316(1)(a), F.S.
4
Section 624.318(2), F.S.
5
Section 624.316(2)(a), F.S.
6
Section 624.316(2)(f), F.S.
7
Section 624.316(2)(b), F.S.
8
Section 624.3161(1), F.S.
9
Section 624.3161(4), F.S.
10
Section 624.3161(7)(a), F.S. BILL: CS/SB 1622 Page 3
Is among the top 20 percent of insurers based upon a calculation of the ratio of consumer
complaints made to the DFS to hurricane-related claims;
Is among the top 20 percent of insurers based upon a calculation of the ratio of hurricane
claims closed without payment to the insurer’s total number of hurricane claims on policies
providing wind or windstorm coverage;
Has made significant payments to its managing general agent since the hurricane; or
Is identified by the OIR as necessitating a market conduct exam for any other reason.
11
The relevant criteria under ss. 624.3161 and s. 624.316, F.S., are to be applied to the market
conduct examination after a hurricane.
12
Such market conduct examination, if any, must be
started within 18 months after the landfall of the related hurricane.
13
The insurer’s managing
general agent must be included in the market conduct examination as if it were the insurer.
14
If a market conduct examination reveals that the “insurer has exhibited a pattern or practice of
willful violations of an unfair insurance trade practice related to claims-handling which caused
harm to policyholders,” the OIR may order the insurer to file its claims-handling practices and
procedures with the OIR for review and inspection.
15
The practices and procedures are to be held
by the OIR for 36 months and are considered public records, not trade secrets, during the 36-
month period.
16
The term “claims-handling practices and procedures” is defined as “any policies,
guidelines, rules, protocols, standard operating procedures, instructions, or directives that govern
or guide how and the manner in which an insured’s claims for benefits under any policy will be
processed.”
17
Annual Statement and Other Information
All insurers with a Florida certificate of authority to transact insurance business must file
quarterly and annual reports with the OIR containing various financial data, including audited
financial statements, actuarial opinions, and certain claims data.
18
Each year, insurers must file
an annual statement covering the preceding calendar year on or before March 1.
19
Quarterly
statements covering each period ending on March 31, June 30, and September 30 must be filed
within 45 days after each such date.
20
In 2021, the Legislature enacted legislation
21
to assist the OIR and the Legislature in identifying
current and emerging property insurance litigation trends that are cost drivers adversely affecting
insurance rates. As of January 1, 2022, each authorized insurer or insurer group issuing personal
lines or commercial lines residential property insurance policies in this state must provide
11
Section 624.3161(7)(b), F.S.
12
Section 624.3161(7), F.S.
13
Id.
14
Id.
15
Section 624.3161(6), F.S.
16
Id.
17
Id.
18
Section 624.424, F.S.
19
Section 624.424(1)(a), F.S.
20
Id.
21
Chapter 2021-77, L.O.F. BILL: CS/SB 1622 Page 4
specific pieces of data regarding closed claims to the OIR on an annual basis.
22
The report must
include, excluding liability only claims, the following information on a per claim basis:
Claim identification number;
Type of policy;
Date, location, and type of loss;
Name and type of vendors utilized for mitigation, repair, or replacement;
Dates of when the claim was made; initially closed; most recently reopened, if applicable;
when a supplemental claim was made, if applicable; and most recently closed, if different
from the initial date the claim was closed;
Name of the public adjuster, if any;
Name and Florida Bar number of the claimant’s attorney, if any;
Total amounts that the insurer paid for indemnity, loss adjustment expenses,
23
and insured’s
attorney fees, including any contingency risk multiplier
24
requested by the attorney; and
Any other information deemed necessary by the Financial Services Commission to provide
the OIR with the ability to track litigation and claims trends occurring in the property
market.
25
Section 624.424(10), F.S., requires insurers and insurer groups doing business in Florida to file
quarterly reports with the OIR. These reports, also known as QUASR reports, must include the
following information for each county in Florida, compiled on a quarterly basis:
The total number of policies in force at the end of each month;
The total number of policies canceled;
The total number of policies nonrenewed;
The number of policies canceled due to hurricane risk;
The number of policies nonrenewed due to hurricane risk;
The number of new policies written;
The total dollar value of structure exposure under policies that include wind coverage;
The number of policies that exclude wind coverage;
Number of claims open each month;
Number of claims closed each month;
Number of claims pending each month; and
Number of claims in which either the insurer or insured invoked any form of alternative
dispute resolution, and specifying which form of alternative dispute resolution was used.
The OIR must aggregate on a statewide basis the data submitted make such data publicly
available on the OIR website within 1 month after each quarterly and annual filing.
26
The
information must be published on the OIR website within one month after each quarterly and
22
Section 624.424(11), F.S.
23
Loss adjustment expenses are the costs associated with investigating and adjusting losses or insurance claims. IRMI,
https://www.irmi.com/term/insurance-definitions/loss-adjustment-expense (last visited January 25, 2024).
24
A contingency risk multiplier is a multiplier applied to attorney fees that reflects the risk of attorneys accepting, on a
contingency fee basis, cases that may be difficult to win. See e.g., Joyce v. Federated Nat'l Ins. Co., 228 So.3d 1122 (Fla.
2017).
25
Section 624.424(11, F.S.
26
Section 624.424(10)(b), F.S. BILL: CS/SB 1622 Page 5
annual filing.
27
This information is not a trade secret as defined in s. 688.002(4), F.S., or s.
812.081, F.S., and is not subject to the public records exemption for trade secrets provided in s.
119.0715, F.S.
28
Nonrenewal of Residential Property Insurance Policies
An insurer that plans to nonrenew more than 10,000 residential property insurance policies
within a 12-month period must give written notice to the OIR for informational purposes 90 days
before the issuance of such notices of nonrenewal.
29
The notice provided to the OIR must set
forth the insurer’s reasons for such action, the effective dates of nonrenewal, and any
arrangements made for other insurers to offer coverage to affected policyholders.
30
Public Housing Authorities Self-Insurance Funds
Two or more public housing authorities may form a self-insurance fund as to any one or more
risks. Such self-insurance fund that is created must:
Have annual normal premiums in excess of $5 million;
Use a qualified actuary to determine rates and annually submit to the OIR a certification by
the actuary that the rates are actuarially sound and are not inadequate;
Use a qualified actuary to establish reserves for loss and loss adjustment expenses and
annually submit to the OIR a certification by the actuary that the loss and loss adjustment
expense reserves are adequate;
Maintain a continuing program of excess insurance coverage and reserve evaluation to
protect the financial stability of the fund in an amount and manner determined by a qualified
and independent actuary. At a minimum, the program must:
o Purchase excess insurance from authorized insurance carriers or eligible surplus lines
insurers;
o Retain a per-loss occurrence that does not exceed $350,000;
Submit to the OIR annually an audited fiscal year-end financial statement by an independent
certified public accountant;
Have a governing body which is comprised entirely of commissioners of public housing
authorities that are members of the fund or persons appointed by the commissioners;
Use knowledgeable persons to administer the fund in the areas of claims administration,
claims adjusting, underwriting, risk management, loss control, policy administration,
financial audit, and legal areas;
Submit to the OIR copies of contracts used for its members that clearly establish the liability
of each member for the obligations of the fund; and
Annually submit to the OIR a certification by the governing body of the fund that, to the best
of its knowledge, the requirements of this section are met.
A business entity in which a public housing authority holds an ownership interest or participates
in its governance may join a self-insurance fund solely to insure risks related to public housing.
27
Id.
28
Id.
29
Section 624.4305, F.S.
30
Id. BILL: CS/SB 1622 Page 6
Surplus Lines Insurance
Surplus lines insurance refers to a category of insurance for which the admitted market is unable
or unwilling to provide coverage.
31
There are three basic categories of surplus lines risks:
Specialty risks that have unusual underwriting characteristics or underwriting characteristics
that admitted insurers view as undesirable;
Niche risks for which admitted carriers do not have a filed policy form or rate; and
Capacity risks that are risks where an insured needs higher coverage limits than those that are
available in the admitted market.
Surplus lines insurers are not “authorized” insurers as defined in the Florida Insurance Code,
which means they do not obtain a certificate of authority from the OIR to transact insurance in
Florida.
32
Rather, surplus lines insurers are “unauthorized” insurers,
33
but may transact surplus
lines insurance if they are made “eligible” by the OIR. Except as specifically stated as
applicable, surplus lines insurers are not subject to regulation under ch. 627, F.S., of the Florida
Insurance Code, which includes, in part, provisions related to ratings standard, contracts, and
attorney fees for authorized insurers.
34
Notice of Cancellation, Nonrenewal, or Renewal of Insurance Policies
The requirements for an authorized insurer to provide notice of cancellation, nonrenewal, or
renewal premium are set forth in s. 627.4133, F.S. The specific notice depends on the type of
insurance provided and the particular circumstances of the subject policy.
For an authorized insurer writing personal lines residential or commercial lines residential
property insurance policies are generally subject to the following requirements:
The insurer must give written notice of cancellation, nonrenewal, or termination at least 120
days prior to the effective date of the cancellation, nonrenewal, or termination and the notice
is required to include the reason for nonrenewal, cancellation, or termination;
35
and
The insurer must give written notice of renewal premium at least 45 days prior to the renewal
premium
36
and the notice of renewal premium must specify certain information, including
the dollar amount of any premium increase that is due to an approved rate increase and the
total dollar amount that is due to coverage changes.
37
An authorized insurer may not cancel or nonrenew a personal residential or commercial
residential property insurance policy covering a dwelling or residential property located in this
state:
31
The admitted market is comprised of insurance companies licensed to transact insurance in Florida. The administration of surplus lines
insurance business is managed by the Florida Surplus Lines Service Office. Section 626.921, F.S.
32
Section 624.09(1), F.S.
33
Section 624.09(2), F.S.
34
Section 626.913(4), F.S.
35
Section 627.4133(2)(b), F.S.
36
Section 627.4133(2)(a), F.S.
37
Section 627.4133(7), F.S. BILL: CS/SB 1622 Page 7
For a period of 90 days after the property has been repaired, if such property has been
damaged as a result of a hurricane or wind loss that is the subject of the declaration of
emergency and the filing of an order by the Commissioner of Insurance Regulation;
38
and
Until the earlier of when property has been repaired or 1 year after the insurer issues the final
claim payment, if such property was damaged by any covered peril, but was not damaged as
a result of a hurricane or wind loss that is the subject of the declaration of emergency and the
filing of an order by the Commissioner of Insurance Regulation.
39
The requirements for a surplus lines insurer to provide notice of cancellation, nonrenewal, or
renewal premium are set forth in s. 626.9201, F.S. A surplus lines insurer issuing a policy
providing coverage for property insurance must give the insured at least 45 days’ advance
written notice of nonrenewal that includes the reasons why the policy is not to be renewed.
40
A surplus lines insurer issuing a policy providing coverage for property insurance must give the
named insured written notice of cancellation or termination other than nonrenewal at least 45
days before the effective date of the cancellation or termination, including in the written notice
the reasons for the cancellation or termination, except that:
If cancellation is for nonpayment of premium, at least 10 days’ written notice of
cancellation;
41
and
If cancellation or termination occurs during the first 90 days during which the
insurance is in force and if the insurance is canceled or terminated for reasons other
than nonpayment, at least 20 days’ written notice of cancellation or termination
accompanied by the reason for cancellation or termination must be given.
42
Rate Standards
Part I of ch. 627, F.S., the Rating Law,
43
governs property, casualty, and surety insurance
covering the subjects of insurance resident, located, or to be performed in this state.
44
The rating
law provides that the rates for all classes of insurance it governs may not be excessive,
inadequate, or unfairly discriminatory.
45
Though the terms “rate” and “premium” are often used
interchangeably, the rating law specifies that “rate” is the unit charge that is multiplied by the
measure of exposure or amount of insurance specified in the policy to determine the premium,
which is the consideration paid by the consumer.
46
All insurers or rating organizations must file rates with the OIR either 90 days before the
proposed effective date of a new rate, which is considered a “file and use” rate filing, or within
30 days after the effective date of a new rate, which is considered a “use and file” rate filing.
47
38
Section 627.4133(2)(e)1.a., F.S.
39
Section 627.4133(2)(e)1.b., F.S.
40
Section 626.9201(1), F.S.
41
Section 626.9201(2)(a), F.S.
42
Section 626.9201(2)(b), F.S.
43
Section 627.011, F.S.
44
Section 627.021(1), F.S.
45
Section 627.062(1), F.S.
46
Section 627.041, F.S.
47
Section 627.062, F.S. BILL: CS/SB 1622 Page 8
Upon receiving a rate filing, the OIR reviews the filing to determine if the rate is excessive,
inadequate, or unfairly discriminatory. The OIR makes that determination in accordance with
generally acceptable actuarial techniques and considers the following:
Past and prospective loss experience;
Past and prospective expenses;
The degree of competition among insurers for the risk insured;
Investment income reasonably expected by the insurer;
The reasonableness of the judgment reflected in the rate filing;
Dividends, savings, or unabsorbed premium deposits returned to policyholders;
The adequacy of loss reserves;
The cost of reinsurance;
Trend factors, including trends in actual losses per insured unit for the insurer;
Conflagration and catastrophe hazards;
Projected hurricane losses;
Projected flood losses, if the policy covers the risk of flood;
The cost of medical services, if applicable;
A reasonable margin for underwriting profit and contingencies; and
Other relevant factors that affect the frequency or severity of claims or expenses.
48
Citizens Property Insurance Corporation
Citizens Property Insurance Corporation (Citizens) is a state-created, not-for-profit, tax-exempt
governmental entity whose public purpose is to provide property insurance coverage to those
unable to find affordable coverage in the voluntary admitted market.
49
Citizens is not a private
insurance company.
50
Citizens was statutorily created in 2002 when the Florida Legislature
combined the state’s two insurers of last resort, the Florida Residential Property and Casualty
Joint Underwriting Association (RPCJUA) and the Florida Windstorm Underwriting Association
(FWUA).
51
Citizens operates in accordance with the provisions in s. 627.351(6), F.S., and is governed by a
nine member Board of Governors that administers its Plan of Operations. The Plan of Operations
is reviewed and approved by the Financial Services Commission.
52
The Governor, President of
the Senate, Speaker of the House of Representatives, and Chief Financial Officer each appoint
two members to the board.
53
The Governor appoints an additional member who serves solely to
advocate on behalf of the consumer.
54
48
Section 627.062(2)(b), F.S.
49
The term “admitted market” means insurance companies licensed to transact insurance in Florida.
50
Section 627.351(6)(a)1., F.S.
51
Section 2, ch. 2002-240, L.O.F.
52
Section 627.351(6)(a)2., F.S.
53
Section 627.351(6)(c)4.a., F.S.
54
Section 627.351(6)(c)4., F.S. BILL: CS/SB 1622 Page 9
Citizens “Glidepath” Rates
From 2007 until 2010, Citizens’ rates were frozen by statute at the level that had been
established in 2006.
55
In 2010, the Legislature established a “glidepath” to impose annual rate
increases up to a level that is actuarially sound. Under the original established glidepath, Citizens
had to implement an annual rate increase which, except for sinkhole coverage, does not exceed
10 percent above the previous year for any individual policyholder, adjusted for coverage
changes and surcharges.
56
In 2021, the Legislature revised this glidepath to increase it one
percent per year to up to 15 percent, as follows:
11 percent for 2022;
12 percent for 2023;
13 percent for 2024;
14 percent for 2025; and
15 percent for 2026 and all subsequent years.
57
The implementation of these increases cease when Citizens has achieved actuarially sound
rates.
58
In addition to the overall glidepath rate increase, Citizens may increase its rates to
recover the additional reimbursement premium it incurs as a result of the annual cash build-up
factor added to the price of the mandatory layer of the Florida Hurricane Catastrophe Fund
coverage, pursuant to s. 215.555(5)(b), F.S.
59
The glidepath does not apply to policies written on
or after November 1, 2023, that:
Do not cover a primary residence;
Are new policies under which the coverage for the insured risk, before the date of application
with the corporation, was last provided by an insurer determined by the OIR to be unsound or
an insurer placed in receivership under chapter 631; or
Are subsequent renewals of those policies.
60
Instead, the rate standard for such policies prohibits a rate lower than the previous year’s rate
charged by Citizens and allows a rate increase of greater than 50 percent.
Insurance Holding Companies; Registration; Regulation
An authorized insurer that is a member of an insurance holding company must register and file a
registration statement with the OIR each year.
61
The Financial Services Commission has
authority to adopt rules establishing the information and manner in which such registered
insurers and their affiliates are regulated.
62
The rules do not apply to foreign insurers domiciled
in states that are currently accredited by the National Association of Insurance Commissioners
(NAIC).
63
The rules must include all requirements and standards of ss. 4 and 5 of the Insurance
Holding Company System Regulatory Act and the Insurance Holding Company System Model
Regulation of the NAIC, as adopted in December 2010.
55
Section 15, ch. 2006-12, L.O.F.
56
Section 10, ch. 2009-87, L.O.F.
57
Section 627.351(6)(n)5., F.S.
58
Section 627.351(6)(n)7., F.S.
59
Section 627.351(6)(n)6., F.S.
60
Section 627.351(6)(n)8., F.S.
61
Section 628.801(1), F.S.
62
Id.
63
Id. BILL: CS/SB 1622 Page 10
NAIC Model Acts
The NAIC is a voluntary association of insurance regulators from all 50 states.
64
The NAIC
coordinates regulation and examination of multistate insurers, provides a forum for addressing
major insurance issues, and promotes uniform model laws among the states.
65
Model Holding Company Act and Regulation
The NAIC has adopted the Insurance Holding Company System Regulatory Model Act
66
and the
Insurance Holding Company Model Regulation with Reporting Forms and Instructions.
67
The
provisions of the model acts provide insurance regulators access to information of an insurer and
its affiliates to ascertain the financial condition of the insurer, including the enterprise risk to the
insurer by the ultimate controlling party. The regulator may require any insurer registered as a
controlled insurer to produce information not in the possession of the insurer if the insurer can
obtain access to such. If the insurer fails to obtain the requested information, the insurer is
required to provide an explanation of such failure. If the regulator determines that the
explanation is without merit, the regulator may require the insurer to pay a penalty for each day’s
delay, or may suspend or revoke the insurer’s certificate of authority.
68
Reciprocal Insurers
A reciprocal insurance exchange is a form of insurance organization in which individuals and
businesses exchange insurance contracts and spread the risks associated with those contracts
among themselves.
69
Policyholders of a reciprocal insurance exchange are referred to as
subscribers.
70
In Florida, reciprocal insurers are regulated pursuant to ch. 629, F.S. Florida law
provides that a “reciprocal insurer” is “an unincorporated aggregation of subscribers operating
individually and collectively through an attorney in fact to provide reciprocal insurance among
themselves”
71
and:
“Reciprocal insurance” is that resulting from an interexchange among persons, known as
“subscribers,” of reciprocal agreements of indemnity, the interexchange being effectuated
through an “attorney in fact” common to all such persons.
72
A reciprocal insurer may transact any kind of insurance other than life insurance or title
insurance.
73
A domestic reciprocal insurer must maintain surplus funds of not less than $250,000
and must, when first authorized, have an expendable surplus of not less than $750,000.
74
A
64
Frequently Asked Questions, National Association of Insurance Commissioners, about-faq.pdf (naic.org) (last visited
January 25, 2024).
65
Id.
66
https://content.naic.org/sites/default/files/MO440_0.pdf (last visited January 25, 2024).
67
https://content.naic.org/sites/default/files/MO450_0.pdf (last visited January 25, 2024).
68
Section 6B of the NAIC Insurance Holding Company System Regulatory Act.
69
What Is a Reciprocal Insurance Exchange? Investopedia https://www.investopedia.com/terms/r/reciprocal-insurance-
exchange (last visited January 25, 2024).
70
Id.
71
Section 629.021, F.S.
72
Section 629.011, F.S.
73
Section 629.041, F.S.
74
Section 629.071, F.S. BILL: CS/SB 1622 Page 11
domestic reciprocal insurer may organize with twenty-five or more persons domiciled in Florida
making application to the OIR for a certificate of authority to transact insurance and file a
declaration setting forth:
The name of the insurer;
The location of the insurer’s principal office, which must be the same as that of the attorney
and must be maintained within this state;
The kinds of insurance proposed to be transacted;
The names and addresses of the original subscribers;
The designation and appointment of the proposed attorney and a copy of the power of
attorney;
The names and addresses of the officers and directors of the attorney, if a corporation, or of
its members, if other than a corporation;
The powers of the subscribers’ advisory committee, and the names and terms of office of its
members;
That all moneys paid to the reciprocal must, after deducting therefrom any sum payable to
the attorney, be held in the name of the insurer and for the purposes specified in the
subscribers’ agreement;
A copy of the subscribers’ agreement;
A statement that each of the original subscribers has in good faith applied for insurance of a
kind proposed to be transacted, and that the insurer has received from each such subscriber
the full premium or premium deposit required for the policy applied for, for a term of not less
than 6 months at an adequate approved rate;
A statement of the financial condition of the insurer, a schedule of its assets, and a statement
that the required surplus is on hand; and
A copy of each policy, endorsement, and application form it proposes to use.
When the declaration is filed, the attorney must file a $100,000 bond in favor of the state for the
benefit of all persons damaged as a result of a breach by the attorney of the conditions of his or
her bond.
75
Each domestic reciprocal insurer must have a subscribers’ advisory committee. The advisory
committee exercising the subscribers’ rights must be selected under such rules as the subscribers
adopt.
76
Not less than two-thirds of such committee must be subscribers other than the attorney,
or any person employed by, representing, or having a financial interest in the attorney.
77
The
committee must:
Supervise the finances of the insurer;
Supervise the insurer’s operations to assure conformity with the subscribers’ agreement and
power of attorney;
Procure the audit of the accounts and records of the insurer and of the attorney at the expense
of the insurer; and
Have such additional powers and functions as may be conferred by the subscribers’
agreement.
78
75
Section 629.121, F.S.
76
Section 629.201(1), F.S.
77
Section 629.201(2), F.S.
78
Section 629.201(3), F.S. BILL: CS/SB 1622 Page 12
III. Effect of Proposed Changes:
Market Conduct Examinations
Section 1 amends s. 624.3161, F.S., to authorize the OIR to conduct market conduct
examinations of the attorney in fact of each reciprocal insurer.
Annual Statement and Other Information
Section 2 amends s. 624.424, F.S., to require each insurer and insurer group to file the required
supplemental reports on personal lines and commercial lines property insurance monthly, rather
than quarterly. Requires such information to be broken down by zip code, rather than by county.
Nonrenewal of Residential Property Insurance Policies
Section 3 amends s. 624.4305. F.S., to provide the Financial Services Commission the authority
to adopt rules to administer this section. The section requires any insurer planning to nonrenew
more than 10,000 residential property insurance policies in this state within a 12-month period to
give the OIR at least 90 days written notice before issuing notices of nonrenewal.
Public Housing Authorities Self-Insurance Funds
Section 4 amends s. 624.46226, F.S., to revise financial requirements for a public housing self-
insurance fund to:
Specify that reinsurance may be used as part of its program to protect the financial stability
of the fund;
Require the fund’s continuing program of excess insurance coverage and reinsurance be
certified by a qualified and independent actuary as to the program’s adequacy;
Require a net retention in an amount and manner selected by the administrator, ratified by the
governing body, and certified by a qualified actuary; and
Eliminate the requirement to retain a per-loss occurrence that does not exceed $350,000.
Notice of cancellation or nonrenewal by Surplus Lines Insurers
Section 5 amends s. 626.9201, F.S., to provide that, upon a declaration of an emergency, and the
filing of an order by the Commissioner of Insurance Regulation, a surplus lines insurer may not
cancel or nonrenew a personal residential or commercial residential property insurance policy
covering a dwelling or residential property which has been damaged as a result of a hurricane or
wind loss that is the subject of the declaration of emergency for a period of 90 days after the
dwelling or residential property has been repaired. The bill provides the following exceptions,
allowing the surplus lines insurer to cancel the policy:
Upon 10 days’ notice for nonpayment of premium.
Upon 45 days’ notice:
o For a material misstatement or fraud;
o If the insurer determines the insured has unreasonably caused a delay in repairs;
o If the insurer or its agent makes a reasonable written inquiry to the insured as to the status
of repairs, and the insured fails within 30 calendar days to provide a response; or BILL: CS/SB 1622 Page 13
o If the insurer has paid policy limits.
The bill provides that the Commission may adopt rules, and the Commissioner of Insurance
Regulation may issue orders, necessary to implement this requirement.
Rate Standards
Section 6 amends s. 627.062, F.S, to repeal current law allowing an insurer, with respect to
residential property insurance rate filings, to use a modeling indication that is the weighted or
straight average of two or more hurricane loss projection models found by the Florida
Commission on Hurricane Loss Projection Methodology to be accurate or reliable.
Citizens Property Insurance Corporation
Section 7 amends s. 627.351, F.S., to repeal provisions adopted last legislative session that allow
the Citizens Property Insurance Corporation to apply a different methodology to polices which,
immediately prior to being insured by Citizens, were insured by an insurer determined by OIR to
be unsound or that was placed in receivership. Rates for such policies, if they cover a primary
residence, will be subject to the Citizens rate “glidepath” which will restrict rate increases to 13
percent for 2024, rather than a prohibition on rate decreases and a limit of 50 percent on rate
increases at issuance at renewal. If such policies do not cover a primary residence, the
prohibition on rate decreases and the 50 percent limit on rate increases will apply.
Insurance Holding Companies; Registration; Regulation
Section 10 amends s. 628.801, F.S., to provide that the Financial Services Commission may
adopt rules for the filing of the annual enterprise risk report in accordance with the Insurance
Holding Company System Regulatory Act and the Insurance Holding Company System Model
Regulation of the NAIC, as adopted in December 2020.
Reciprocal Insurers
Definitions
Section 11 amends s. 629.011, F.S., to add definitions for the terms “affiliated person,” “attorney
in fact,” “controlling company,” and “reciprocal insurer.”
“Reciprocal insurer” is defined as an unincorporated aggregation of subscribers operating
individually and collectively through an attorney in fact to provide reciprocal insurance among
themselves.
“Reciprocal Insurer” Defined
Section 12 repeals s. 629.021, F.S., defining “reciprocal insurer.”
Attorney
Section 13 repeals s. 629.061, F.S., providing requirements related to the attorney in fact. BILL: CS/SB 1622 Page 14
Organization of Reciprocal Insurer
Section 14 amends s. 629.081, F.S., to provide for the application by those domiciled in this state
who wish to organize as a domestic reciprocal insurer. Such application must include the
required background information for all officers, directors, managers, and those in equivalent
positions of the proposed attorney in fact, as well as, for any person with an ownership interest of
10 percent or more in the proposed attorney in fact. The application must include the proposed
charter, a copy of the proposed subscribers’ agreement, and the required application fee. A
domestic reciprocal insurer may not be formed unless the persons so proposing have first
received a permit from the OIR.
Certificate of Authority
Section 15 amends s. 629.091, F.S., to provide the application requirements for a certificate of
authority as a domestic reciprocal insurer. A domestic reciprocal insurer may seek a certificate of
authority only after obtaining a permit. Such application must include:
Executed copies of any proposed or draft documents required as part of the permit
application;
A statement affirming that all moneys paid to the reciprocal insurer must, after deducting any
sum payable to the attorney in fact, be held in the name of the insurer and for the purposes
specified in the subscribers’ agreement;
A statement that each of the original subscribers has in good faith applied for insurance of a
kind proposed to be transacted, and that the insurer has received from each such subscriber
the full premium or premium deposit required for the policy applied for, for a term of not less
than 6 months at the rate that was filed with and approved by the OIR;
A copy of the required bond;
A statement of the financial condition of the insurer, a schedule of its assets, and a statement
that the required surplus is on hand; and
Such other pertinent information or documents as reasonably requested by the OIR.
If the reciprocal insurer intends to issue nonassessable policies under the certificate of authority,
and the reciprocal insurer becomes impaired, the insurer may no longer issue or renew
nonassessable policies or convert assessable policies to nonassessable policies.
Continued Eligibility for Certificate of Authority
Section 16 creates s. 629.094, F.S., to provide that in order to maintain its eligibility for a
certificate of authority, a domestic reciprocal insurer must continue to meet all conditions
required under the chapter and the rules for the initial applications for a permit and certificate of
authority.
Power of Attorney
Section 17 amends s. 629.101, F.S., to provide that the attorney in fact has a fiduciary duty to the
subscribers of the reciprocal insurer.
BILL: CS/SB 1622 Page 15
Acquisitions
Section 18 creates s. 629.225, F.S., to provide requirements regarding the acquisition of 10
percent or more of a reciprocal insurer. To complete such an acquisition, the person seeking to
obtain such ownership interest must provide notice of the attorney in fact of the reciprocal
insurer within certain time frames, file an application with the OIR containing detailed
information about the offer and the person making the offer which will be reviewed pursuant to
ch. 120, F.S., and receive OIR approval of the acquisition. The OIR must approve the acquisition
if the applicant proves that the acquisition will not jeopardize the financial stability of the
attorney in fact or harm the reciprocal insurer’s subscribers or public. The bill provides that:
A person may not acquire, 10 percent or more of the outstanding voting securities of an
attorney in fact unless:
o The person has filed with the OIR and sent to the reciprocal insurer and other specified
parties a letter of notification regarding the transaction no later than 5 days after any offer
is proposed, or no later than 5 days after the acquisition of the securities or ownership
interest if a tender offer or exchange offer is not involved;
o The subscribers’ advisory committee has provided the notification letting the subscribers
know of the filing deadlines for objecting to the acquisition;
o The person has filed with the OIR an application which contains the required information
within 30 days after any offer is proposed, or after the acquisition of the securities if a
tender offer or exchange offer is not involved; and
o The office has approved the tender offer or exchange offer, or acquisition if a tender offer
or exchange offer is not involved;
This section does not apply to any acquisition of voting securities or ownership interest of an
attorney in fact or of a controlling company by any person who is the owner of a majority of
the voting securities or ownership interest with the approval of the OIR.
The OIR may waive or person filing the notice may request that the OIR waive the
requirement that the subscribers’ advisory committee provide notice to subscribers of the
proposed acquisition, if there is no change in ultimate controlling shareholders and their
ownership percentages and no unaffiliated parties acquire any interest in the attorney in fact.
The application must contain the following information:
o The identity and background information specified each person on whose behalf the
acquisition is to be made and any person who controls such other person;
o The source and amount of the funds to be used in making the acquisition;
o Any plans made to liquidate the attorney in fact or controlling company, to sell any of
their assets or merge or consolidate them with any person, or to make any other major
change in their business or corporate structure or management;
o The nature and the extent of the controlling interest which the person proposes to acquire,
the terms of the proposed acquisition, and the manner in which the controlling interest is
to be acquired of an attorney in fact or controlling company which is not a stock
corporation;
o The number of shares or other securities which the person proposes to acquire, the terms
of the proposed acquisition, and the manner in which the securities are to be acquired;
o Information as to any arrangement with any party with respect to any of the securities of
the attorney in fact or controlling company; and
o The required fee. BILL: CS/SB 1622 Page 16
An amendment to the application must be filed with the OIR detailing any changes in facts or
the background information detailed in the application.
The acquisition application must be reviewed pursuant to ch. 120, F.S., the Administrative
Procedure Act.
The OIR may disapprove any acquisition by any person or affiliated person who willfully
violates this section or violates OIR orders related to divestiture or the acquisition of
specified additional stock or ownership interest without complying with this section.
The applicant has the burden of proof.
The bill provides criteria for the OIR approval of an acquisition, which generally must be
given if the OIR finds that the acquisition will not jeopardize the financial stability of the
attorney in fact or prejudice the interests of the reciprocal insurer’s subscribers or harm the
public.
Any acquisition contrary to this section is void, as is any vote by a stockholder of record or
any other person of any security so acquired.
OIR approval of an offer or acquisition does not constitute a recommendation by the OIR.
A presumption of control may be rebutted by filing a valid disclaimer of control with the
OIR.
Authorizes the OIR to order divesture by a person who acquires 10 percent or more of voting
securities of an attorney in fact or a controlling company without complying with this
section.
Authorizes the OIR to suspend or revoke the certificate of authority of the reciprocal insurer
whose attorney in fact or controlling company is acquired in violation of this section.
Background Information
Section 19 creates s. 629.227, F.S., to provide the required background information that must be
submitted on officers, directors, managers, and those in equivalent positions of the proposed
attorney in fact, as well as, for any person with an ownership interest of 10 percent or more. The
background information must include a sworn biographical statement providing detailed
information of the person’s business history over the last 20 years. The information must detail
any criminal convictions, license revocation proceedings, bankruptcies, and other specified
proceedings that have occurred in the last 10 years. Fingerprints must also be submitted.
Attorney in Fact
Section 20 creates s. 629.2297, F.S., to provide that any person who served as an attorney in fact,
or as an officer, director, or manager of an attorney in fact, any member of a subscribers’
advisory committee of a reciprocal insurer doing business in this state, or an officer or director of
any other insurer doing business in this state, and who served in that capacity within the 2-year
period before the date the insurer or reciprocal insurer became insolvent, for any insolvency that
occurs on or after July 1, 2024, may not, unless the individual demonstrates that his or her
personal actions or omissions were not a significant contributing cause to the insolvency:
Serve as an attorney in fact, or as an officer, director, or manager of an attorney in fact, or a
member of a subscribers advisory committee of a reciprocal insurer doing business in this
state, or an officer or director of any other insurer doing business in this state; or BILL: CS/SB 1622 Page 17
Have direct or indirect control over the selection or appointment of an attorney in fact, or of
an officer, director, or manager of an attorney in fact, or a member of the subscribers
committee of a reciprocal insurer doing business in this state, or an officer or director of any
insurer doing business in this state, through contract, trust, or by operation of law,
Nonassessable Policies
Section 21 amends s. 629.261, F.S., to provide that upon impairment of the surplus of a
nonassessable reciprocal insurer, the OIR must revoke its authorization.
Merger or conversion
Section 22 amends s. 629.291, F.S., to provide requirements for mergers and conversions. The
bill provides that a domestic stock insurer may not be converted to a reciprocal insurer. The bill
provides that any plan to merge a reciprocal insurer with another reciprocal insurer or for
conversion of the reciprocal insurer to a stock or mutual insurer must be filed with the OIR on
forms adopted by the Financial Services Commission and must contain such information as the
OIR reasonably requires to evaluate the transaction.
The bill provides that an assessable reciprocal insurer may be converted to a nonassessable
reciprocal insurer if the subscriber’s advisory committee approves, the attorney in fact submits
the required application, and the OIR approves.
Rulemaking Authority
Section 23 creates s. 629.525, F.S., to grant rulemaking authority to the Financial Services
Commission to adopt, amend, or repeal rules necessary to implement the chapter.
Conforming Changes
Sections 8, 9, 24, and 25 amend ss. 628.011 (Scope of Part), 628.061 (Investigation of Proposed
Organization), 163.01 (Florida Interlocal Cooperation Act of 1969), and 626.9531 (Identification
of Insurers, Agents, and Insurance Contracts), F.S., to conform those sections based on changes
made by the bill.
Effective Date
Section 26 provides that the bill becomes effective on July 1, 2024.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None. BILL: CS/SB 1622 Page 18
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
The bill is intended to have a positive impact on consumers. Insurers will need to revise
current procedures in order to comply.
C. Government Sector Impact:
The bill makes numerous changes that will require systems and process changes in the
Office of Insurance Regulation.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 624.3161, 624.424,
624.4305, 624.46226, 626.9201, 627.062, 627.351, 628.011, 628.061, 628.801, 629.011,
629.081, 629.091, 629.101, 629.261, 629.291, 163.01, and 626.9531.
This bill creates the following sections of the Florida Statutes: 629.094, 629.225, 629.227,
629.229, and 629.525.
This bill repeals the following sections of the Florida Statutes: 629.021 and 629.061. BILL: CS/SB 1622 Page 19
IX. Additional Information:
A. Committee Substitute – Statement of Substantial Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS by Banking and Insurance Committee on January 29, 2024:
The committee substitute removed the entire substance of the bill made numerous
changes to the wording and organization of the bill and:
Revised the provision in section 5 of the bill regarding cancellation or nonrenewal by
a surplus lines insurer after a hurricane, to include damage that is the result of wind
loss;
Repealed current law allowing an insurer, with respect to residential property
insurance rate filings, to use a modeling indication that is the weighted or straight
average of two or more hurricane loss projection models found by the Florida
Commission on Hurricane Loss Projection Methodology to be accurate or reliable;
Created a new section of statute, s. 629.229, F.S., providing for regulation of the
attorney in fact, officers, and directors;
Removed sections 13, 14, 15, 17, 22, 23, 24, 25, 26, 27, 28, 29, 32, 33, 34, 36, 37, 39,
40, 41, 44, 45, and 47 from the bill; and
Changed the effective date from July 1, 2025 to July 1, 2024.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.