Florida Senate - 2011 CS for CS for SB 1836
By the Committees on Budget Subcommittee on General Government
Appropriations; and Banking and Insurance; and Senator Diaz de
1 A bill to be entitled
2 An act relating to insurance; amending s. 624.402,
3 F.S.; revising provisions relating to certain insurers
4 serving nonresidents domiciled outside the United
5 States who are exempt from requirements to obtain a
6 certificate of authority; amending s. 628.901, F.S.;
7 providing definitions; repealing s. 628.903, F.S.,
8 relating to the definition of the term “industrial
9 insured captive insurer”; amending s. 628.905, F.S.;
10 requiring a captive insurer to obtain a license and to
11 file evidence that a person or firm with whom it
12 intends to conduct business is reputable; providing
13 that a certificate of insurance for an association
14 captive insurer does not exceed the total funds of the
15 association members; creating s. 628.908, F.S.;
16 requiring a licensed captive insurer to maintain its
17 principal place of business in this state and hold an
18 annual meeting in this state; amending s. 628.909,
19 F.S.; applying additional provisions of the insurance
20 code to captive insurers; providing an effective date.
22 Be It Enacted by the Legislature of the State of Florida:
24 Section 1. Subsection (8) of section 624.402, Florida
25 Statutes, is amended to read:
26 624.402 Exceptions, certificate of authority required.—A
27 certificate of authority shall not be required of an insurer
28 with respect to:
29 (8) An insurer domiciled outside the United States covering
30 only persons who, at the time of issuance or renewal, are
31 nonresidents of the United States.
32 (a) In order to qualify for this exemption, the insurer:
33 1. Must register with the office via a letter of
34 notification upon commencing business from this state.
35 2. Must provide the following information to the office
36 annually by March 1:
37 a. The name of the insurer; the country of domicile; the
38 address of the insurer’s principal office and office in this
39 state; the names of the owners of the insurer and their
40 percentage of ownership; the names of the officers and directors
41 of the insurer; the name, e-mail, and telephone number of a
42 contact person for the insurer; and the number of individuals
43 who are employed by the insurer or its affiliates in this state;
44 b. The type of products offered by the insurer;
45 c. A statement from the applicable regulatory body of the
46 insurer’s domicile certifying that the insurer is licensed or
47 registered in that domicile; and
48 d. A copy of the filings required by the applicable
49 regulatory body of the insurer’s domicile.
50 3. Or any affiliated person as defined in s. 624.04 under
51 common ownership or control with the insurer, may not solicit,
52 sell, or accept an application for any insurance policy or
53 contract to be delivered or issued for delivery to any
54 individual other than a nonresident.
55 (b) All policies or certificates delivered to nonresidents
56 in this state must include the following statement in a
57 contrasting color and at least 10-point type: “The policy
58 providing your coverage and the insurer providing this policy
59 have not been approved by the Florida Office of Insurance
61 (c) If the insurer ceases to do business from this state,
62 the insurer must agree to provide written notification to the
63 office within 30 days after cessation.
64 (d) Subject to the limitations contained in this
65 subsection, services, including those listed in s. 624.10, may
66 be provided by the insurer or an affiliated person as defined in
67 s. 624.04 under common ownership or control with the insurer.
68 (e) An alien insurer transacting insurance in this state
69 without complying with this subsection is in violation of this
70 chapter and subject to the penalties under s. 624.15.
71 (f) An insurer that holds a certificate of authority in
72 this state may issue and deliver policies to nonresidents at
73 temporary or secondary addresses in this state, along with a
74 notice that the policy form and rate is not subject to the
75 approval of the Office of Insurance Regulation.
76 (g) The term “nonresident” means an individual who resides
77 in and maintains a physical place of domicile in a country other
78 than the United States, which he or she recognizes as and
79 intends to maintain as his or her permanent home. The term does
80 not include an unauthorized immigrant present in the United
81 States. Notwithstanding any other provision of law, it is
82 conclusively presumed that an individual is a resident of the
83 United States if such individual:
84 1. Has had his or her principal place of domicile in the
85 United States for 180 days or more in the 365 days before
86 issuance or renewal the policy;
87 2. Has registered to vote in any state;
88 3. Has made a statement of domicile in any state; or
89 4. Has filed for homestead tax exemption on property in any
(a) Life insurance policies or annuity contracts issued by
92 an insurer domiciled outside the United States covering only
93 persons who, at the time of issuance, are not residents of the
94 United States and are not nonresidents illegally residing in the
95 United States, provided:
96 1. The insurer must currently be an authorized insurer in
97 its country of domicile as to the kind or kinds of insurance
98 proposed to be offered and must have been such an insurer for
99 not fewer than the immediately preceding 3 years, or must be the
100 wholly owned subsidiary of such authorized insurer or must be
101 the wholly owned subsidiary of an already eligible authorized
102 insurer as to the kind or kinds of insurance proposed for a
103 period of not fewer than the immediately preceding 3 years.
104 However, the office may waive the 3-year requirement if the
105 insurer has operated successfully for a period of at least the
106 immediately preceding year and has capital and surplus of not
107 less than $25 million.
108 2. Before the office may grant eligibility, the requesting
109 insurer shall furnish the office with a duly authenticated copy
110 of its current annual financial statement, in English, and with
111 all monetary values therein expressed in United States dollars,
112 at an exchange rate then-current and shown in the statement, in
113 the case of statements originally made in the currencies of
114 other countries, and with such additional information relative
115 to the insurer as the office may request.
116 3. The insurer must have and maintain surplus as to
117 policyholders of not less than $15 million. Any such surplus as
118 to policyholders shall be represented by investments consisting
119 of eligible investments for like funds of like domestic insurers
120 under part II of chapter 625; however, any such surplus as to
121 policyholders may be represented by investments permitted by the
122 domestic regulator of such alien insurance company if such
123 investments are substantially similar in terms of quality,
124 liquidity, and security to eligible investments for like funds
125 of like domestic insurers under part II of chapter 625.
126 4. The insurer must be of good reputation as to the
127 providing of service to its policyholders and the payment of
128 losses and claims.
129 5. To maintain eligibility, the insurer shall furnish the
130 office within the time period specified in s. 624.424 (1)(a) a
131 duly authenticated copy of its current annual and quarterly
132 financial statements, in English, and with all monetary values
133 therein expressed in United States dollars, at an exchange rate
134 then-current and shown in the statement, in the case of
135 statements originally made in the currencies of other countries,
136 and with such additional information relative to the insurer as
137 the office may request.
138 6. An insurer receiving eligibility under this subsection
139 shall agree to make its books and records pertaining to its
140 operations in this state available for inspection during normal
141 business hours upon request of the office.
142 7. The insurer shall provide to the applicant for the
143 policy or contract a copy of the most recent quarterly financial
144 statements of the insurer providing, in clear and conspicuous
146 a. The date of organization of the insurer.
147 b. The identity of and rating assigned by each recognized
148 insurance company rating organization that has rated the insurer
149 or, if applicable, that the insurer is unrated.
150 c. That the insurer does not hold a certificate of
151 authority issued in this state and that the office does not
152 exercise regulatory oversight over the insurer.
153 d. The identity and address of the regulatory authority
154 exercising oversight of the insurer.
156 This paragraph does not impose upon the office any duty or
157 responsibility to determine the actual financial condition or
158 claims practices of any unauthorized insurer, and the status of
159 eligibility, if granted by the office, indicates only that the
160 insurer appears to be financially sound and to have satisfactory
161 claims practices and that the office has no credible evidence to
162 the contrary.
163 (b) If at any time the office has reason to believe that an
164 insurer issuing policies or contracts pursuant to this
165 subsection is insolvent or is in unsound financial condition,
166 does not make reasonable prompt payment of benefits, or is no
167 longer eligible under the conditions specified in this
168 subsection, the office may conduct an examination or
169 investigation in accordance with s. 624.316 , s. 624.3161 , or s.
170 624.320 and, if the findings of such examination or
171 investigation warrant, may withdraw the eligibility of the
172 insurer to issue policies or contracts pursuant to this
173 subsection without having a certificate of authority issued by
174 the office.
175 (c) This subsection does not provide an exception to the
176 agent licensure requirements of chapter 626. Any insurer issuing
177 policies or contracts pursuant to this subsection shall appoint
178 the agents that the insurer uses to sell such policies or
179 contracts as provided in chapter 626.
180 (d) An insurer issuing policies or contracts pursuant to
181 this subsection is subject to part IX of chapter 626, Unfair
182 Insurance Trade Practices, and the office may take such actions
183 against the insurer for a violation as are provided in that
185 (e) Policies and contracts issued pursuant to this
186 subsection are not subject to the premium tax specified in s.
187 624.509 .
188 (f) Applications for life insurance coverage offered under
189 this subsection must contain, in contrasting color and not less
190 than 12-point type, the following statement on the same page as
191 the applicant’s signature:
193 This policy is primarily governed by the laws of a
194 foreign country. As a result, all of the rating and
195 underwriting laws applicable to policies filed in this
196 state do not apply to this coverage, which may result
197 in your premiums being higher than would be
198 permissible under a Florida-approved policy. Any
199 purchase of individual life insurance should be
200 considered carefully, as future medical conditions may
201 make it impossible to qualify for another individual
202 life policy. If the insurer issuing your policy
203 becomes insolvent, this policy is not covered by the
204 Florida Life and Health Insurance Guaranty
205 Association. For information concerning individual
206 life coverage under a Florida-approved policy, consult
207 your agent or the Florida Department of Financial
210 (g) All life insurance policies and annuity contracts
211 issued pursuant to this subsection must contain on the first
212 page of the policy or contract, in contrasting color and not
213 less than 10-point type, the following statement:
215 The benefits of the policy providing your coverage are
216 governed primarily by the law of a country other than
217 the United States.
219 (h) All single-premium life insurance policies and single
220 premium annuity contracts issued to persons who are not
221 residents of the United States and are not nonresidents
222 illegally residing in the United States pursuant to this
223 subsection shall be subject to the provisions of chapter 896.
224 Section 2. Section 628.901, Florida Statutes, is amended to
226 628.901 Definitions “Captive insurer” defined.—As used in
227 For the purposes of this part, the term: except as provided in
228 s. 628.903 , a “captive insurer” is a domestic insurer
229 established under part I to insure the risks of a specific
230 corporation or group of corporations under common ownership
231 owned by the corporation or corporations from which it accepts
232 risk under a contract of insurance.
233 (1) “Association” means a legal association of nursing
234 homes, hospitals, skilled nursing facilities, assisted living
235 facilities, or continuing care retirement communities.
236 (2) “Association captive insurer” means a company that
237 insures risks of the member organizations of the association and
238 their affiliated companies.
239 (3) “Captive insurer” means a pure captive insurer or an
240 association captive insurer domiciled in this state and formed
241 or licensed under this part.
242 (4) “Industrial insured” means an insured that:
243 (a) Has gross assets in excess of $50 million;
244 (b) Procures insurance through the use of a full-time
245 employee of the insured who acts as an insurance manager or
246 buyer or through the services of a person licensed as a property
247 and casualty insurance agent, broker, or consultant in such
248 person’s state of domicile;
249 (c) Has at least 100 full-time employees; and
250 (d) Pays annual premiums of at least $200,000 for each line
251 of insurance purchased from the industrial insured captive
252 insurer, or at least $75,000 for any line of coverage in excess
253 of at least $25 million in the annual aggregate. The purchase of
254 umbrella or general liability coverage in excess of $25 million
255 in the annual aggregate is deemed to be the purchase of a single
256 line of insurance.
257 (5) “Industrial insured captive insurer” is a captive
258 insurer that:
259 (a) Has as its stockholders or members only industrial
260 insureds that the captive insurer insures, or has as its sole
261 stockholder a corporation whose sole stockholders are industrial
262 insureds that the captive insurer insures; and
263 1. Provides insurance only to the industrial insureds that
264 are its stockholders or members, and affiliates thereof, or to
265 the stockholders, and affiliates thereof, of its parent
266 corporation; or
267 2. Provides reinsurance only on risks written by insurers
268 of industrial insureds who are the stockholders or members, and
269 affiliates thereof, of the captive insurer, or the stockholders,
270 and affiliates thereof, of the parent corporation of the captive
272 (b) Maintains unimpaired capital and surplus of at least
273 $20 million; and
274 (c) If licensed in this state before December 31, 1999, or
275 if any subsidiary formed by the licensed insurer on or after
276 December 31, 1999, has:
277 1. Gross assets in excess of $10 million and procures
278 insurance through the use of a full-time employee of the insured
279 who acts as an insurance manager or buyer or through the
280 services of a person licensed as a property and casualty
281 insurance agent, broker, or consultant in such person’s state of
283 2. At least 25 full-time employees; and
284 3. Annual aggregate premiums for all insurance risks which
285 total at least $100,000.
287 As used in this subsection, the term “affiliate” means a person
288 that directly or indirectly, through one or more intermediaries,
289 controls, is controlled by, or is under common control with one
290 or more of the stockholders or members of an industrial insured
291 captive insurer or one or more of the stockholders of the parent
292 corporation of an industrial insured captive insurer.
293 (6) “Pure captive insurer” means a company that insures the
294 risks of its parent, affiliated companies, controlled
295 unaffiliated businesses, or a combination thereof.
296 Section 3. Section 628.903, Florida Statutes, is repealed.
297 Section 4. Section 628.905, Florida Statutes, is amended to
299 628.905 Licensing; authority.—In order to conduct insurance
300 business in this state, a captive insurer must obtain a license
301 from the office.
302 (1) A Any captive insurer, if when permitted by its charter
303 or articles of incorporation, may apply to the office for a
304 license to provide commercial property, commercial casualty, and
305 commercial marine insurance. coverage other than workers’
306 compensation and employer’s liability insurance coverage, except
307 that An industrial insured captive insurer may also apply for a
308 license to provide workers’ compensation and employer’s
309 liability insurance as set forth in subsection (5) (6).
310 (2) A No captive insurer, other than an industrial insured
311 captive insurer, may not shall insure or accept reinsurance on
312 any risks other than those of its parent and affiliated
314 (3) In addition to information otherwise required by this
315 code, each applicant captive insurer shall file with the office
317 (a) Of the adequacy of the loss prevention program of its
319 (b) That it intends to employ or contract with a reputable
320 person or firm that possesses the appropriate expertise,
321 experience, and character to manage the association captive
323 (4) If an association captive insurer operates with
324 separate cells or segregated accounts, a certificate of
325 insurance used to satisfy financial responsibility laws shall be
326 issued in an amount not exceeding the total funds in the
327 segregated accounts or separate cells of each member
328 organization of the association.
329 (5) (4) An industrial insured captive insurer:
330 (a) Need not be incorporated in this state if it has been
331 validly incorporated under the laws of another jurisdiction; .
332 (b) (5) An industrial insured captive insurer Is subject to
333 all provisions of this part except as otherwise indicated; and .
334 (c) (6) An industrial insured captive insurer May not
335 provide workers’ compensation and employer’s liability insurance
336 except in excess of at least $25 million in the annual
338 Section 5. Section 628.908, Florida Statutes, is created to
340 628.908 Principal place of business; annual meeting.—In
341 order to conduct insurance business in this state, a licensed
342 captive insurer must:
343 (1) Maintain its principal place of business in this state;
345 (2) Annually hold in this state at least one board of
346 directors’ meeting; or, in the case of a reciprocal insurer, one
347 subscriber’s advisory committee meeting; or, in the case of a
348 limited liability company, one managing board’s meeting.
349 Section 6. Paragraph (a) of subsection (2) and paragraph
350 (a) of subsection (3) of section 628.909, Florida Statutes, are
351 amended to read:
352 628.909 Applicability of other laws.—
353 (2) The following provisions of the Florida Insurance Code
354 shall apply to captive insurers who are not industrial insured
355 captive insurers to the extent that such provisions are not
356 inconsistent with this part:
357 (a) Chapter 624, except for ss. 624.407, 624.408, 624.4085,
358 624.40851, 624.4095, 624.425, and 624.426.
359 (3) The following provisions of the Florida Insurance Code
360 shall apply to industrial insured captive insurers to the extent
361 that such provisions are not inconsistent with this part:
362 (a) Chapter 624, except for ss. 624.407, 624.408, 624.4085,
363 624.40851, 624.4095, 624.425, 624.426, and 624.609(1).
364 Section 7. This act shall take effect July 1, 2011.