Florida Senate - 2013 CS for SB 836
By the Committee on Banking and Insurance; and Senator Simmons
597-03485-13 2013836c1
1 A bill to be entitled
2 An act relating to insurer solvency; creating s.
3 624.085, F.S.; providing definitions applicable to the
4 Florida Insurance Code; amending s. 624.4085, F.S.;
5 revising a definition; providing additional
6 calculations for determining whether an insurer has a
7 company action level event; revising provisions
8 relating to mandatory control level events; amending
9 s. 624.424, F.S.; requiring an insurer’s annual
10 statement to include an actuarial opinion summary;
11 providing criteria for such summary; providing an
12 exception for life and health insurers; updating
13 provisions; amending s. 625.121, F.S.; protecting
14 material supporting an insurer’s annual actuarial
15 opinion from subpoena, discovery, or admissibility in
16 a civil action; amending s. 628.461, F.S.; revising
17 the amount of outstanding voting securities of a
18 domestic stock insurer or a controlling company that a
19 person is prohibited from acquiring unless certain
20 requirements have been met; deleting a provision
21 authorizing an insurer to file a disclaimer of
22 affiliation and control in lieu of a letter notifying
23 the Office of Insurance Regulation of the Financial
24 Services Commission of the acquisition of the voting
25 securities of a domestic stock company under certain
26 circumstances; requiring the statement notifying the
27 office to include additional information; conforming a
28 provision to changes made by the act; providing that
29 control is presumed to exist under certain conditions;
30 specifying how control may be rebutted and how a
31 controlling interest may be divested; deleting
32 definitions; amending s. 628.801, F.S.; requiring an
33 insurer to file annually by a specified date a
34 registration statement; revising the requirements and
35 standards for the rules establishing the information
36 and statement form for the registration; requiring an
37 insurer to file an annual enterprise risk report;
38 authorizing the office to conduct examinations to
39 determine the financial condition of registrants;
40 providing that failure to file a registration or
41 report is a violation of the section; providing
42 additional grounds, requirements, and conditions with
43 respect to a waiver from the registration
44 requirements; amending s. 628.803, F.S.; providing for
45 sanctions for persons who violate s. 628.461, F.S.,
46 relating to the acquisition of controlling stock;
47 creating s. 628.805, F.S.; authorizing the office to
48 participate in supervisory colleges; authorizing the
49 office to assess fees on insurers for participation;
50 amending ss. 636.045 and 641.225, F.S.; applying
51 certain statutes related to solvency to prepaid
52 limited health service organizations and health
53 maintenance organizations; amending s. 641.255, F.S.;
54 providing for applicability of specified provisions to
55 a health maintenance organization that is a member of
56 a holding company; providing a contingent effective
57 date.
58
59 Be It Enacted by the Legislature of the State of Florida:
60
61 Section 1. Section 624.085, Florida Statutes, is created to
62 read:
63 624.085 Other definitions.—As used in the Florida Insurance
64 Code, the term:
65 (1) “Affiliate” means any entity that exercises control
66 over or is controlled by the insurer, directly or indirectly,
67 through:
68 (a) Equity ownership of voting securities;
69 (b) Common managerial control; or
70 (c) Collusive participation by the management of the
71 insurer and affiliate in the management of the insurer or the
72 affiliate.
73 (2) “Affiliated person” of another person means:
74 (a) The spouse of such other person;
75 (b) The parents of such other person and their lineal
76 descendants, or the parents of such other person’s spouse and
77 their lineal descendants;
78 (c) Any person who directly or indirectly owns or controls,
79 or holds with the power to vote, 10 percent or more of the
80 outstanding voting securities of such other person;
81 (d) Any person 10 percent or more of whose outstanding
82 voting securities are directly or indirectly owned or
83 controlled, or held with power to vote, by such other person;
84 (e) Any person or group of persons who directly or
85 indirectly control, are controlled by, or are under common
86 control with such other person;
87 (f) Any officer, director, partner, copartner, or employee
88 of such other person;
89 (g) If such other person is an investment company, any
90 investment adviser of such company, or any member of an advisory
91 board of such company;
92 (h) If such other person is an unincorporated investment
93 company not having a board of directors, the depositor of such
94 company; or
95 (i) Any person who has entered into an agreement, written
96 or unwritten, to act in concert with such other person in
97 acquiring or limiting the disposition of securities of a
98 domestic stock insurer or controlling company.
99 (3) “Control,” including the terms “controlling,”
100 “controlled by,” and “under common control with,” means the
101 possession, direct or indirect, of the power to direct or cause
102 the direction of the management and policies of a person,
103 whether through the ownership of voting securities, by contract
104 other than a commercial contract for goods or nonmanagement
105 services, or otherwise. Control is presumed to exist if any
106 person, directly or indirectly, owns, controls, holds with the
107 power to vote, or holds proxies representing 10 percent or more
108 of the voting securities of any other person.
109 Section 2. Paragraph (g) of subsection (1), paragraph (a)
110 of subsection (3), and paragraph (b) of subsection (6) of
111 section 624.4085, Florida Statutes, are amended to read:
112 624.4085 Risk-based capital requirements for insurers.—
113 (1) As used in this section, the term:
114 (g) “Life and health insurer” means any insurer authorized
115 or eligible under the Florida Insurance Code to underwrite life
116 or health insurance. The term includes a property and casualty
117 insurer that writes accident and health insurance only; a health
118 maintenance organization that is authorized in this state and
119 one or more other states, jurisdictions, or countries; and a
120 prepaid health service organization that is authorized in this
121 state and one or more other states, jurisdictions, or countries.
122 (3)(a) A company action level event includes:
123 1. The filing of a risk-based capital report by an insurer
124 which indicates that:
125 a. The insurer’s total adjusted capital is greater than or
126 equal to its regulatory action level risk-based capital but less
127 than its company action level risk-based capital; or
128 b. If a life and health insurer that reports using the life
129 and health annual statement instructions, the insurer has total
130 adjusted capital that is greater than or equal to its company
131 action level risk-based capital, but is less than the product of
132 its authorized control level risk-based capital and 3.0 2.5, and
133 has a negative trend;
134 c. If a life and health or property and casualty insurer
135 that reports using the health annual statement instructions, the
136 insurer or organization has total adjusted capital that is
137 greater than or equal to its company action level risk-based
138 capital, but is less than the product of its authorized control
139 level risk-based capital and 3.0, and triggers the trend test
140 determined in accordance with the trend test calculation
141 included in the Risk-Based Capital Forecasting and Instructions,
142 Health, updated annually by the National Association of
143 Insurance Commissioners; or
144 d. If a property and casualty insurer that reports using
145 the property and casualty annual statement instructions, the
146 insurer has total adjusted capital that is greater than or equal
147 to its company action level risk-based capital, but is less than
148 the product of its authorized control level risk-based capital
149 and 3.0, and triggers the trend test determined in accordance
150 with the trend test calculation included in the Risk-Based
151 Capital Forecasting and Instructions, Property/Casualty, updated
152 annually by the National Association of Insurance Commissioners;
153 2. The notification by the office to the insurer of an
154 adjusted risk-based capital report that indicates an event in
155 subparagraph 1., unless the insurer challenges the adjusted
156 risk-based capital report under subsection (7); or
157 3. If, under subsection (7), an insurer challenges an
158 adjusted risk-based capital report that indicates an event in
159 subparagraph 1., the notification by the office to the insurer
160 that the office has, after a hearing, rejected the insurer’s
161 challenge.
162 (6)
163 (b) If a mandatory control level event occurs:
164 1. With respect to a life and health insurer, the office
165 shall, after due consideration of s. 624.408, take any action
166 necessary to place the insurer under regulatory control,
167 including any remedy available under chapter 631. A mandatory
168 control level event is sufficient ground for the department to
169 be appointed as receiver as provided in chapter 631. The office
170 may forego taking action for up to 90 days after the mandatory
171 control level event if the office finds there is a reasonable
172 expectation that the mandatory control level event may be
173 eliminated within the 90-day period.
174 2. With respect to a property and casualty insurer, the
175 office shall, after due consideration of s. 624.408, s. 641.225
176 for a health maintenance organization, or s. 636.045 for a
177 prepaid limited health service organization, take any action
178 necessary to place the insurer under regulatory control,
179 including any remedy available under chapter 631, or, in the
180 case of an insurer that is not writing new business, may allow
181 the insurer to continue to operate under the supervision of the
182 office. In either case, the mandatory control level event is
183 sufficient ground for the department to be appointed as receiver
184 as provided in chapter 631. The office may forego taking action
185 for up to 90 days after the mandatory control level event if the
186 office finds there is a reasonable expectation that the
187 mandatory control level event may will be eliminated within the
188 90-day period.
189 Section 3. Subsection (1) and paragraph (e) of subsection
190 (8) of section 624.424, Florida Statutes, are amended to read:
191 624.424 Annual statement and other information.—
192 (1)(a) Each authorized insurer shall file with the office
193 full and true statements of its financial condition,
194 transactions, and affairs. An annual statement covering the
195 preceding calendar year shall be filed on or before March 1, and
196 quarterly statements covering the periods ending on March 31,
197 June 30, and September 30 shall be filed within 45 days after
198 each such date. The office may, for good cause, grant an
199 extension of time for filing of an annual or quarterly
200 statement. The statements must shall contain information
201 generally included in insurers’ financial statements prepared in
202 accordance with generally accepted insurance accounting
203 principles and practices and in a form generally used utilized
204 by insurers for financial statements, sworn to by at least two
205 executive officers of the insurer or, if a reciprocal insurer,
206 by the oath of the attorney in fact or its like officer if a
207 corporation. To facilitate uniformity in financial statements
208 and to facilitate office analysis, the commission may by rule
209 adopt the form for financial statements approved by the National
210 Association of Insurance Commissioners in 2002, and may adopt
211 subsequent amendments thereto if the methodology remains
212 substantially consistent, and may by rule require each insurer
213 to submit to the office, or such organization as the office may
214 designate, all or part of the information contained in the
215 financial statement in a computer-readable form compatible with
216 the electronic data processing system specified by the office.
217 (b) Each insurer’s annual statement must contain:
218 1. A statement of opinion on loss and loss adjustment
219 expense reserves made by a member of the American Academy of
220 Actuaries or by a qualified loss reserve specialist, pursuant to
221 under criteria established by rule of the commission. In
222 adopting the rule, the commission shall must consider any
223 criteria established by the National Association of Insurance
224 Commissioners. The office may require semiannual updates of the
225 annual statement of opinion for as to a particular insurer if
226 the office has reasonable cause to believe that such reserves
227 are understated to the extent of materially misstating the
228 financial position of the insurer. Workpapers in support of the
229 statement of opinion must be provided to the office upon
230 request. This paragraph does not apply to life insurance, health
231 insurance, or title insurance.
232 2. An actuarial opinion summary written by the insurer’s
233 appointed actuary. The summary must be filed in accordance with
234 the appropriate National Association of Insurance Commissioners
235 property and casualty annual statement instructions. Proprietary
236 business information contained in the summary is confidential
237 and exempt under s. 624.4212, and the summary and related
238 information are not subject to subpoena or discovery or
239 admissible in evidence in any private civil action. Neither the
240 office nor any person who received documents, materials, or any
241 other information while acting under the authority of the office
242 or with whom such information is shared pursuant to s. 624.4212
243 may testify in a private civil action concerning such
244 confidential information. A waiver of any other applicable claim
245 of confidentiality or privilege may not occur as a result of a
246 disclosure to the office under this section or any other section
247 of the insurance code. This paragraph does not apply to life and
248 health insurers subject to s. 625.121(3).
249 (c) The commission may by rule require reports or filings
250 required under the insurance code to be submitted by electronic
251 means in a computer-readable form compatible with the electronic
252 data processing equipment specified by the commission.
253 (8)
254 (e) The commission shall adopt rules to administer
255 implement this subsection, which rules must be in substantial
256 conformity with the 2006 Annual Financial Reporting Model
257 Regulation 1998 Model Rule requiring annual audited financial
258 reports adopted by the National Association of Insurance
259 Commissioners or subsequent amendments, except where
260 inconsistent with the requirements of this subsection. Any
261 exception to, waiver of, or interpretation of accounting
262 requirements of the commission must be in writing and signed by
263 an authorized representative of the office. An No insurer may
264 not raise as a defense in any action, any exception to, waiver
265 of, or interpretation of accounting requirements as a defense in
266 an action, unless previously issued in writing by an authorized
267 representative of the office.
268 Section 4. Paragraphs (a) and (b) of subsection (3) of
269 section 625.121, Florida Statutes, are amended to read:
270 625.121 Standard Valuation Law; life insurance.—
271 (3) ACTUARIAL OPINION OF RESERVES.—
272 (a)1. Each life insurance company doing business in this
273 state shall annually submit the opinion of a qualified actuary
274 as to whether the reserves and related actuarial items held in
275 support of the policies and contracts specified by the
276 commission by rule are computed appropriately, are based on
277 assumptions that which satisfy contractual provisions, are
278 consistent with prior reported amounts, and comply with
279 applicable laws of this state. The commission by rule shall
280 define the specifics of this opinion and add any other items
281 determined to be necessary to its scope.
282 1.2. The opinion shall be submitted with the annual
283 statement reflecting the valuation of such reserve liabilities
284 for each year ending on or after December 31, 1992.
285 2.3. The opinion applies shall apply to all business in
286 force, including individual and group health insurance plans, in
287 the form and substance acceptable to the office as specified by
288 rule of the commission.
289 3.4. The commission may adopt rules providing the standards
290 of the actuarial opinion consistent with standards adopted by
291 the Actuarial Standards Board on December 31, 2002, and
292 subsequent revisions thereto, if provided that the standards
293 remain substantially consistent.
294 4.5. In the case of an opinion required to be submitted by
295 a foreign or alien company, The office may accept an the opinion
296 filed by a foreign or alien that company with the insurance
297 supervisory official of another state if the office determines
298 that the opinion reasonably meets the requirements applicable to
299 a company domiciled in this state.
300 5.6. As used in For the purposes of this subsection, the
301 term “qualified actuary” means a member in good standing of the
302 American Academy of Actuaries who also meets the requirements
303 specified by rule of the commission.
304 6.7. Disciplinary action by the office against the company
305 or the qualified actuary shall be in accordance with the
306 insurance code and related rules adopted by the commission.
307 7.8. A memorandum in the form and substance specified by
308 rule shall be prepared to support each actuarial opinion.
309 8.9. If the insurance company fails to provide a supporting
310 memorandum at the request of the office within a period
311 specified by rule of the commission, or if the office determines
312 that the supporting memorandum provided by the insurance company
313 fails to meet the standards prescribed by rule of the
314 commission, the office may engage a qualified actuary at the
315 expense of the company to review the opinion and the basis for
316 the opinion and prepare such supporting memorandum as is
317 required by the office.
318 9.10. Except as otherwise provided in this paragraph, any
319 memorandum or other material in support of the opinion is
320 confidential and exempt from the provisions of s. 119.07(1) and
321 is not subject to subpoena or discovery or admissible in
322 evidence in any private civil action; however, the memorandum or
323 other material may be released by the office with the written
324 consent of the company, or to the American Academy of Actuaries
325 upon request stating that the memorandum or other material is
326 required for the purpose of professional disciplinary
327 proceedings and setting forth procedures satisfactory to the
328 office for preserving the confidentiality of the memorandum or
329 other material. If any portion of the confidential memorandum is
330 cited by the company in its marketing, or is cited before any
331 governmental agency other than a state insurance department, or
332 is released by the company to the news media, no portion of the
333 memorandum is confidential. Neither the office nor any person
334 who received documents, materials, or any other information
335 while acting under the authority of the office or with whom such
336 information is shared pursuant to this paragraph may testify in
337 any private civil action concerning the confidential documents,
338 materials, or information. A waiver of any applicable privilege
339 or claim of confidentiality in the documents, materials, or
340 information may not occur as a result of disclosure to the
341 office under this section or any other section of the insurance
342 code, or as a result of sharing as authorized under s. 624.4212.
343 (b) In addition to the opinion required by paragraph (a)
344 subparagraph (a)1., the office may, pursuant to commission rule,
345 require an opinion of the same qualified actuary as to whether
346 the reserves and related actuarial items held in support of the
347 policies and contracts specified by the commission by rule, when
348 considered in light of the assets held by the company with
349 respect to the reserves and related actuarial items, including,
350 but not limited to, the investment earnings on the assets and
351 considerations anticipated to be received and retained under the
352 policies and contracts, make adequate provision for the
353 company’s obligations under the policies and contracts,
354 including, but not limited to, the benefits under, and expenses
355 associated with, the policies and contracts.
356 Section 5. Subsections (1), (3), (10), (12), and (13) of
357 section 628.461, Florida Statutes, are amended to read:
358 628.461 Acquisition of controlling stock.—
359 (1) A person may not, individually or in conjunction with
360 any affiliated person of such person, acquire directly or
361 indirectly, conclude a tender offer or exchange offer for, enter
362 into any agreement to exchange securities for, or otherwise
363 finally acquire 10 5 percent or more of the outstanding voting
364 securities of a domestic stock insurer or of a controlling
365 company, unless:
366 (a) The person or affiliated person has filed with the
367 office and sent to the insurer and controlling company a letter
368 of notification regarding the transaction or proposed
369 transaction within no later than 5 days after any form of tender
370 offer or exchange offer is proposed, or within no later than 5
371 days after the acquisition of the securities if no tender offer
372 or exchange offer is involved. The notification must be provided
373 on forms prescribed by the commission containing information
374 determined necessary to understand the transaction and identify
375 all purchasers and owners involved;
376 (b) The person or affiliated person has filed with the
377 office the a statement as specified in subsection (3). The
378 statement must be completed and filed within 30 days after:
379 1. Any definitive acquisition agreement is entered;
380 2. Any form of tender offer or exchange offer is proposed;
381 or
382 3. The acquisition of the securities, if no definitive
383 acquisition agreement, tender offer, or exchange offer is
384 involved; and
385 (c) The office has approved the tender or exchange offer,
386 or acquisition if no tender offer or exchange offer is involved,
387 and approval is in effect.
388
389 In lieu of a filing as required under this subsection, a
390 party acquiring less than 10 percent of the outstanding voting
391 securities of an insurer may file a disclaimer of affiliation
392 and control. The disclaimer shall fully disclose all material
393 relationships and basis for affiliation between the person and
394 the insurer as well as the basis for disclaiming the affiliation
395 and control. After a disclaimer has been filed, the insurer
396 shall be relieved of any duty to register or report under this
397 section which may arise out of the insurer’s relationship with
398 the person unless and until the office disallows the disclaimer.
399 The office shall disallow a disclaimer only after furnishing all
400 parties in interest with notice and opportunity to be heard and
401 after making specific findings of fact to support the
402 disallowance. A filing as required under this subsection must be
403 made for as to any acquisition that equals or exceeds 10 percent
404 of the outstanding voting securities.
405 (3) The statement to be filed with the office under
406 subsection (1) and furnished to the insurer and controlling
407 company must shall contain all the following information and any
408 additional information that as the office deems necessary to
409 determine the character, experience, ability, and other
410 qualifications of the person or affiliated person of such person
411 for the protection of the policyholders and shareholders of the
412 insurer and the public:
413 (a) The identity of, and the background information
414 specified in subsection (4) on, each natural person by whom, or
415 on whose behalf, the acquisition is to be made; and, if the
416 acquisition is to be made by, or on behalf of, a corporation,
417 association, or trust, as to the corporation, association, or
418 trust and as to any person who controls, either directly or
419 indirectly, the corporation, association, or trust, the identity
420 of, and the background information specified in subsection (4)
421 on, each director, officer, trustee, or other natural person
422 performing duties similar to those of a director, officer, or
423 trustee for the corporation, association, or trust.;
424 (b) The source and amount of the funds or other
425 consideration used, or to be used, in making the acquisition.;
426 (c) Any plans or proposals that which such persons may have
427 made to liquidate such insurer, to sell any of its assets or
428 merge or consolidate it with any person, or to make any other
429 major change in its business or corporate structure or
430 management; and any plans or proposals that which such persons
431 may have made to liquidate any controlling company of such
432 insurer, to sell any of its assets or merge or consolidate it
433 with any person, or to make any other major change in its
434 business or corporate structure or management.;
435 (d) The number of shares or other securities that which the
436 person or affiliated person of such person proposes to acquire,
437 the terms of the proposed acquisition, and the manner in which
438 the securities are to be acquired.; and
439 (e) Information as to any contract, arrangement, or
440 understanding with any party with respect to any of the
441 securities of the insurer or controlling company, including, but
442 not limited to, information relating to the transfer of any of
443 the securities, option arrangements, puts or calls, or the
444 giving or withholding of proxies, which information names the
445 party with whom the contract, arrangement, or understanding has
446 been entered into and gives the details thereof.
447 (f) An agreement by the person required to file the
448 statement that the person will provide the annual report
449 specified in s. 628.801(2) if control exists.
450 (g) An acknowledgement by the person required to file the
451 statement that the person and all subsidiaries within the
452 person’s control in the insurance holding company system will
453 provide, as necessary, information to the office upon request to
454 evaluate enterprise risk to the insurer.
455 (10) Upon notification to the office by the domestic stock
456 insurer or a controlling company that any person or any
457 affiliated person of such person has acquired 10 5 percent or
458 more of the outstanding voting securities of the domestic stock
459 insurer or controlling company without complying with the
460 provisions of this section, the office shall order that the
461 person and any affiliated person of such person cease
462 acquisition of any further securities of the domestic stock
463 insurer or controlling company; however, the person or any
464 affiliated person of such person may request a proceeding, which
465 proceeding shall be convened within 7 days after the rendering
466 of the order for the sole purpose of determining whether the
467 person, individually or in connection with any affiliated person
468 of such person, has acquired 10 5 percent or more of the
469 outstanding voting securities of a domestic stock insurer or
470 controlling company. Upon the failure of the person or
471 affiliated person to request a hearing within 7 days, or upon a
472 determination at a hearing convened pursuant to this subsection
473 that the person or affiliated person has acquired voting
474 securities of a domestic stock insurer or controlling company in
475 violation of this section, the office may order the person and
476 affiliated person to divest themselves of any voting securities
477 so acquired.
478 (12)(a) A presumption of control may be rebutted by filing
479 a disclaimer of control. Any person may file a disclaimer of
480 control with the office. The disclaimer must fully disclose all
481 material relationships and bases for affiliation between the
482 person and the insurer as well as the basis for disclaiming the
483 affiliation. After a disclaimer has been filed, the insurer is
484 relieved of any duty to register or report under this section
485 that may arise out of the insurer’s relationship with the person
486 unless the office disallows the disclaimer.
487 (b) Any controlling person of a domestic insurer who seeks
488 to divest the person’s controlling interest in the domestic
489 insurer in any manner shall file with the office, with a copy to
490 the insurer, confidential notice, not subject to public
491 inspection as provided under s. 624.4212, of the person’s
492 proposed divestiture at least 30 days before the cessation of
493 control. The office shall determine those instances in which the
494 party seeking to divest or to acquire a controlling interest in
495 an insurer must file for and obtain approval of the transaction.
496 The information remains confidential until the conclusion of the
497 transaction unless the office, in its discretion, determines
498 that confidential treatment interferes with enforcement of this
499 section. If the statement referred to in subsection (1) is
500 otherwise filed, this paragraph does not apply. For the purpose
501 of this section, the term “affiliated person” of another person
502 means:
503 1. The spouse of such other person;
504 2. The parents of such other person and their lineal
505 descendants and the parents of such other person’s spouse and
506 their lineal descendants;
507 3. Any person who directly or indirectly owns or controls,
508 or holds with power to vote, 5 percent or more of the
509 outstanding voting securities of such other person;
510 4. Any person 5 percent or more of the outstanding voting
511 securities of which are directly or indirectly owned or
512 controlled, or held with power to vote, by such other person;
513 5. Any person or group of persons who directly or
514 indirectly control, are controlled by, or are under common
515 control with such other person;
516 6. Any officer, director, partner, copartner, or employee
517 of such other person;
518 7. If such other person is an investment company, any
519 investment adviser of such company or any member of an advisory
520 board of such company;
521 8. If such other person is an unincorporated investment
522 company not having a board of directors, the depositor of such
523 company; or
524 9. Any person who has entered into an agreement, written or
525 unwritten, to act in concert with such other person in acquiring
526 or limiting the disposition of securities of a domestic stock
527 insurer or controlling company.
528 (c)(b) For the purposes of this section, the term
529 “controlling company” means any corporation, trust, or
530 association owning, directly or indirectly, 25 percent or more
531 of the voting securities of one or more domestic stock insurance
532 companies.
533 (13) The commission may adopt, amend, or repeal rules that
534 are necessary to administer implement the provisions of this
535 section, pursuant to chapter 120.
536 Section 6. Section 628.801, Florida Statutes, is amended to
537 read:
538 628.801 Insurance holding companies; registration;
539 regulation.—
540 (1) An Every insurer that is authorized to do business in
541 this state and that is a member of an insurance holding company
542 shall, on or before April 1 of each year, register with the
543 office and file a registration statement and be subject to
544 regulation with respect to its relationship to the holding
545 company as provided by law or rule or statute. The commission
546 shall adopt rules establishing the information and statement
547 form required for registration and the manner in which
548 registered insurers and their affiliates are regulated. The
549 rules apply to domestic insurers, foreign insurers, and
550 commercially domiciled insurers, except for a foreign insurer
551 domiciled in states that were are accredited by the National
552 Association of Insurance Commissioners by December 31, 1995.
553 Except to the extent of any conflict with this code, the rules
554 must include all requirements and standards of ss. 4 and 5 of
555 the Insurance Holding Company System Regulatory Act and the
556 Insurance Holding Company System Model Regulation of the
557 National Association of Insurance Commissioners, as adopted on
558 December 2010. The commission may adopt subsequent amendments
559 thereto if the methodology remains substantially consistent. The
560 rules Regulatory Act and the Model Regulation existed on
561 November 30, 2001, and may include a prohibition on oral
562 contracts between affiliated entities. Material transactions
563 between an insurer and its affiliates shall be filed with the
564 office as provided by rule Upon request, the office may waive
565 filing requirements under this section for a domestic insurer
566 that is the subsidiary of an insurer that is in full compliance
567 with the insurance holding company registration laws of its
568 state of domicile, which state is accredited by the National
569 Association of Insurance Commissioners.
570 (2) The ultimate controlling person of every insurer
571 subject to registration must also file an annual enterprise risk
572 report on or before April 1. As used in this subsection, the
573 term “ultimate controlling person” means a person who is not
574 controlled by any other person. The report, to the best of the
575 ultimate controlling person’s knowledge and belief, must
576 identify the material risks within the insurance holding company
577 system that could pose enterprise risk to the insurer. The
578 report shall be filed with the lead state office of the
579 insurance holding company system as determined by the procedures
580 within the Financial Analysis Handbook adopted by the National
581 Association of Insurance Commissioners and is confidential and
582 exempt from public disclosure as provided in s. 624.4212.
583 (a) An insurer may satisfy this requirement by providing
584 the office with the most recently filed parent corporation
585 reports that have been filed with the Securities and Exchange
586 Commission which provide the appropriate enterprise risk
587 information.
588 (b) The term “enterprise risk” means any activity,
589 circumstance, event, or series of events involving one or more
590 affiliates of an insurer which, if not remedied promptly, is
591 likely to have a materially adverse effect upon the financial
592 condition or liquidity of the insurer or its insurance holding
593 company system as a whole, including anything that would cause
594 the insurer’s risk-based capital to fall into company action
595 level as set forth in s. 624.4085 or would cause the insurer to
596 be in hazardous financial condition.
597 (3) Pursuant to chapter 624 relating to the examination of
598 insurers, the office may examine any insurer registered under
599 this section and its affiliates to ascertain the financial
600 condition of the insurer, including the enterprise risk to the
601 insurer by the ultimate controlling party, or by any entity or
602 combination of entities within the insurance holding company
603 system, or by the insurance holding company system on a
604 consolidated basis.
605 (4) The filings and related documents filed pursuant to
606 this section are confidential and exempt as provided in s.
607 624.4212 and are not subject to subpoena or discovery, or
608 admissible in evidence in any private civil action. A waiver of
609 any applicable privilege or claim of confidentiality in the
610 filings and related documents may not occur as a result of any
611 disclosure to the office under this section or any other section
612 of the insurance code as authorized under s. 624.4212. Neither
613 the office nor any person who received the filings and related
614 documents while acting under the authority of the office or with
615 whom such information is shared pursuant to s. 624.4212 is
616 permitted or required to testify in any private civil action
617 concerning any confidential documents, materials, or information
618 subject to s. 624.4212.
619 (5) The failure to file a registration statement, or a
620 summary of the registration statement, or the enterprise risk
621 filing report required by this section within the time specified
622 for filing is a violation of this section.
623 (6) Upon request, the office may waive the filing
624 requirements of this section:
625 (a) If the insurer is a domestic insurer that is the
626 subsidiary of an insurer that is in full compliance with the
627 insurance holding company registration laws of its state of
628 domicile, which state is accredited by the National Association
629 of Insurance Commissioners; or
630 (b) If the insurer is a domestic insurer that writes only
631 in this state and has annual direct written and assumed premium
632 of less than $300 million, excluding premiums reinsured with the
633 Federal Crop Insurance Corporation and Federal Flood Program,
634 and demonstrates that compliance with this section would not
635 provide substantial regulatory or consumer benefit. In
636 evaluating a waiver request made under this paragraph, the
637 office may consider various factors including, but not limited
638 to, the type of business entity, the volume of business written,
639 the ownership or organizational structure of the entity, or
640 whether the company is in run-off.
641
642 A waiver granted pursuant to this subsection is valid for 2
643 years unless sooner withdrawn due to a change in the
644 circumstances under which the waiver was granted.
645 Section 7. Subsection (4) of section 628.803, Florida
646 Statutes, is renumbered as subsection (5), and a new subsection
647 (4) is added to that section to read:
648 628.803 Sanctions.—
649 (4) If the office determines that any person committed a
650 violation of s. 628.461 or s. 628.801, the violation may serve
651 as an independent basis for disapproving dividends or
652 distributions and for placing the insurer under an order of
653 supervision in accordance with part VI of chapter 624.
654 Section 8. Section 628.805, Florida Statutes, is created to
655 read:
656 628.805 Supervisory colleges.—In order to assess the
657 business strategy, financial position, legal and regulatory
658 position, risk exposure, risk management, and governance
659 processes, and as part of the examination of individual insurers
660 in accordance with ss. 628.801 and 624.316, the office may
661 participate in a supervisory college with other regulators
662 charged with supervision of the insurer or its affiliates,
663 including other state, federal, and international regulatory
664 agencies. In accordance with s. 624.4212 regarding confidential
665 information sharing, the office may enter into agreements that
666 provide the basis for cooperation between the office and the
667 other regulatory agencies and the activities of the supervisory
668 college. This section does not delegate to the supervisory
669 college the office’s authority to regulate or supervise the
670 insurer or its affiliates under its jurisdiction.
671 (1) With respect to participation in a supervisory college,
672 the office may:
673 (a) Initiate the establishment of a supervisory college.
674 (b) Clarify the membership and participation of other
675 supervisors in the supervisory college.
676 (c) Clarify the functions of the supervisory college and
677 the role of other regulators, including the establishment of a
678 group-wide supervisor.
679 (d) Coordinate the ongoing activities of the supervisory
680 college, including planning meetings, supervisory activities,
681 and processes for information sharing.
682 (e) Establish a crisis management plan.
683 (2) With respect to an insurer registered under s. 628.801,
684 and in accordance with this section, the office may participate
685 in a supervisory college for any domestic insurer that is part
686 of an insurance holding company system that has international
687 operations in order to determine the insurer’s compliance with
688 this chapter.
689 (3) Each registered insurer subject to this section is
690 liable for and shall pay reasonable expenses for the office’s
691 participation in a supervisory college, including reasonable
692 travel expenses. A supervisory college may be convened as a
693 temporary or permanent forum for communication and cooperation
694 between the regulators charged with the supervision of the
695 insurer or its affiliates, and the office may impose a regular
696 assessment on the insurer for the payment of these expenses.
697 Section 9. Subsection (3) is added to section 636.045,
698 Florida Statutes, to read:
699 636.045 Minimum surplus requirements.—
700 (3) A prepaid limited health service organization that is
701 authorized in this state and one or more other states,
702 jurisdictions, or countries is subject to ss. 624.4085 and
703 624.40851.
704 Section 10. Subsection (7) is added to section 641.225,
705 Florida Statutes, to read:
706 641.225 Surplus requirements.—
707 (7) A health maintenance organization that is authorized in
708 this state and one or more other states, jurisdictions, or
709 countries is subject to ss. 624.4085 and 624.40851.
710 Section 11. Subsection (3) is added to section 641.255,
711 Florida Statutes, to read:
712 641.255 Acquisition, merger, or consolidation.—
713 (3) A health maintenance organization that is a member of a
714 holding company system is subject to s. 628.461 but not s.
715 628.4615.
716 Section 12. This act shall take effect October 1, 2013, if
717 SB 834 or similar legislation is adopted in the same legislative
718 session or an extension thereof and becomes law.