Florida Senate - 2022                        COMMITTEE AMENDMENT
       Bill No. SB 2-D
       
       
       
       
       
       
                                Ì698794fÎ698794                         
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  05/23/2022           .                                
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       The Committee on Appropriations (Boyd) recommended the
       following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete lines 1295 - 1499
    4  and insert:
    5         (1)A property insurer stability unit is created within the
    6  office to aid in the detection and prevention of insurer
    7  insolvencies in the homeowners’ and condominium unit owners’
    8  insurance market. The following responsibilities are limited
    9  only to matters related to homeowners’ and condominium unit
   10  owners’ insurance.
   11         (2)The insurer stability unit shall provide enhanced
   12  monitoring whenever the office identifies significant concerns
   13  about an insurer’s solvency, rates, proposed contracts,
   14  underwriting rules, market practices, claims handling, consumer
   15  complaints, litigation practices and outcomes, and any other
   16  issue related to compliance with the insurance code.
   17         (3)The insurer stability unit shall, at a minimum:
   18         (a)Conduct a target market exam when there is reason to
   19  believe that an insurer’s claims practices, rate requirements,
   20  investment activities, or financial statements suggest that the
   21  insurer may be in an unsound financial condition.
   22         (b)Closely monitor all risk-based capital reports, own
   23  risk solvency assessments, reinsurance agreements, and financial
   24  statements filed by insurers selling homeowners’ and condominium
   25  unit owners’ insurance policies in this state.
   26         (c)Have primary responsibility to conduct annual
   27  catastrophe stress tests of all domestic insurers and insurers
   28  that are commercially domiciled in this state.
   29         1.The insurer stability unit shall cooperate with the
   30  Florida Commission on Hurricane Loss Projection Methodology to
   31  select the hurricane scenarios that are used in the annual
   32  catastrophe stress test.
   33         2.Catastrophe stress testing must determine:
   34         a.Whether an individual insurer can survive a one in 130
   35  year probable maximum loss (PML), and a second event 50-year
   36  return PML following a first event that exceeds a 100-year
   37  return PML; and
   38         b.The impact of the selected hurricane scenarios on the
   39  Citizens Property Insurance Corporation, the Florida Hurricane
   40  Catastrophe Fund, the Florida Insurance Guaranty Association,
   41  and taxpayers.
   42         (d)Update wind mitigation credits required by s. 627.711
   43  and associated rules.
   44         (e)Review the causes of insolvency and business practices
   45  of insurers that have been referred to the department’s Division
   46  of Rehabilitation and Liquidation and make recommendations to
   47  prevent similar failures in the future.
   48         (f)On January 1 and July 1 of each year, provide a report
   49  on the status of the homeowners’ and condominium unit owners’
   50  insurance market to the Governor, the President of the Senate,
   51  the Speaker of the House of Representatives, the Minority Leader
   52  of the Senate, the Minority Leader of the House of
   53  Representatives, and the chairs of the legislative committees
   54  with jurisdiction over matters of insurance showing:
   55         1.Litigation practices and outcomes of insurance
   56  companies.
   57         2.Percentage of homeowners and condominium unit owners who
   58  obtain insurance in the voluntary market.
   59         3.Percentage of homeowners and condominium unit owners who
   60  obtain insurance from the Citizens Property Insurance
   61  Corporation.
   62         4.Profitability of the homeowners’ and condominium unit
   63  owners’ lines of insurance in this state, including a comparison
   64  with similar lines of insurance in other hurricane-prone states
   65  and with the national average.
   66         5.Average premiums charged for homeowners’ and condominium
   67  unit owners’ insurance in each of the 67 counties in this state.
   68         6.Results of the latest annual catastrophe stress tests of
   69  all domestic insurers and insurers that are commercially
   70  domiciled in this state.
   71         7.The availability of reinsurance in the personal lines
   72  insurance market.
   73         8.The number of property and casualty insurance carriers
   74  referred to the insurer stability unit for enhanced monitoring,
   75  including the reason for the referral.
   76         9.The number of referrals to the insurer stability unit
   77  which were deemed appropriate for enhanced monitoring, including
   78  the reason for the monitoring.
   79         10.The name of any insurer against which delinquency
   80  proceedings were instituted, including the grounds for
   81  rehabilitation pursuant to s. 631.051 and the date that each
   82  insurer was deemed impaired of capital or surplus, as the terms
   83  impairment of capital and impairment of surplus are defined in
   84  s. 631.011, or insolvent, as the term insolvency is defined in
   85  s. 631.011; a concise statement of the circumstances that led to
   86  the insurer’s delinquency; and a summary of the actions taken by
   87  the insurer and the office to avoid delinquency.
   88         11.Recommendations for improvements to the regulation of
   89  homeowners and condominium unit owners’ insurance market and an
   90  indication of whether such improvements require any change to
   91  existing laws or rules.
   92         12.Identification of any trends that may warrant attention
   93  in the future.
   94         (4)Any of the following events must trigger a referral to
   95  the insurer stability unit:
   96         (a)Consumer complaints related to homeowners’ insurance or
   97  condominium unit owners’ insurance under s. 624.307(10), if the
   98  complaints, in the aggregate, suggest a trend within the
   99  marketplace and are not an isolated incident.
  100         (b)There is reason to believe that an insurer who is
  101  authorized to sell homeowners’ or condominium unit owners’
  102  insurance in this state has engaged in an unfair trade practice
  103  under part IX of chapter 626.
  104         (c)A market conduct examination determines that an insurer
  105  has exhibited a pattern or practice of willful violations of an
  106  unfair insurance trade practice related to claims-handling which
  107  caused harm to policyholders, as prohibited by s.
  108  626.9541(1)(i).
  109         (d)An insurer authorized to sell homeowners’ or
  110  condominium unit owners’ insurance in this state requests a rate
  111  increase that exceeds 15 percent, in accordance with s.
  112  627.0629(6).
  113         (e)An insurer authorized to sell homeowners’ or
  114  condominium unit owners’ insurance in this state violates the
  115  ratio of actual or projected annual written premiums required by
  116  s. 624.4095(4)(a).
  117         (f)An insurer authorized to sell homeowners’ or
  118  condominium unit owners’ insurance in this state files a notice
  119  pursuant to s. 624.4305 advising the office that it intends to
  120  nonrenew more than 10,000 residential property insurance
  121  policies in this state within a 12-month period.
  122         (g)A quarterly or annual financial statement required by
  123  ss. 624.424 and 627.915 demonstrates that an insurer authorized
  124  to sell homeowners’ or condominium unit owners’ insurance in
  125  this state is in an unsound condition, as defined in s.
  126  624.80(2); has exceeded its powers in a manner as described in
  127  s. 624.80(3); is impaired, as defined in s. 631.011(12) or (13);
  128  or is insolvent, as defined in s. 631.011.
  129         (h)An insurer authorized to sell homeowners’ or
  130  condominium unit owners’ insurance in this state files a
  131  quarterly or annual financial statement required by ss. 624.424
  132  and 627.915 which is misleading or contains material errors.
  133         (i)An insurer authorized to sell homeowners’ or
  134  condominium unit owners’ insurance in this state fails to timely
  135  file a quarterly or annual financial statement required by ss.
  136  624.424 and 627.915.
  137         (j)An insurer authorized to sell homeowners’ or
  138  condominium unit owners’ insurance in this state files a risk
  139  based capital report that triggers a company action level event,
  140  regulatory action level event, authorized control level event,
  141  or mandatory control level event, as those terms are defined in
  142  s. 624.4085.
  143         (k)An insurer selling homeowners’ or condominium unit
  144  owners’ insurance in this state that is subject to the own-risk
  145  solvency assessment requirement of s. 628.8015, and fails to
  146  timely file the own-risk solvency assessment.
  147         (l)A reinsurance agreement creates a substantial risk of
  148  insolvency for an insurer authorized to sell homeowners’ or
  149  condominium unit owners’ insurance in this state, pursuant to s.
  150  624.610(13).
  151         (m)An insurer authorized to sell homeowners’ or
  152  condominium unit owners’ insurance in this state is party to a
  153  reinsurance agreement that does not create a meaningful transfer
  154  of risk of loss to the reinsurer, pursuant to s. 624.610(14).
  155         (n)Citizens Property Insurance Corporation is required to
  156  absorb policies from an insurer that participated in the
  157  corporation’s depopulation program authorized by s. 627.3511
  158  within 3 years after the insurer takes policies out of the
  159  corporation.
  160  
  161  The insurer stability unit’s supervisors shall review all
  162  referrals triggered by the statutory provisions to determine
  163  whether enhanced scrutiny of the insurer is appropriate.
  164         (5)Expenses of the insurer stability unit shall be paid
  165  from moneys allocated to the Insurance Regulatory Trust Fund.
  166  However, if the unit recommends that a market conduct exam or
  167  targeted market exam be conducted, the reasonable cost of the
  168  examination shall be paid by the person examined, in accordance
  169  with s. 624.3161.
  170         Section 20. Subsection (1) of section 631.031, Florida
  171  Statutes, is amended to read:
  172         631.031 Initiation and commencement of delinquency
  173  proceeding.—
  174         (1) Upon a determination by the office that one or more
  175  grounds for the initiation of delinquency proceedings exist
  176  pursuant to this chapter and that delinquency proceedings must
  177  be initiated, the Director of the Office of Insurance Regulation
  178  shall notify the department of such determination and shall
  179  provide the department with all necessary documentation and
  180  evidence. If the director must notify the department of a
  181  determination regarding a property insurer, the notification
  182  must include an affidavit that identifies the grounds for
  183  rehabilitation pursuant to s. 631.051; the date that each
  184  insurer was deemed impaired of capital or surplus, as the terms
  185  impairment of capital and impairment of surplus are defined in
  186  s. 631.011, or insolvent, as the term insolvency is defined in
  187  s. 631.011; a concise statement of the circumstances that led to
  188  the insurer’s delinquency; and a summary of the actions taken by
  189  the insurer and the office to avoid delinquency. The department
  190  shall then initiate such delinquency proceedings.
  191         Section 21. Subsection (3) of section 631.398, Florida
  192  Statutes, is amended to read:
  193         631.398 Prevention of insolvencies.—To aid in the detection
  194  and prevention of insurer insolvencies or impairments:
  195         (3)(a) The department shall, no later than the conclusion
  196  of any domestic insurer insolvency proceeding, prepare a summary
  197  report containing such information as is in its possession
  198  relating to the history and causes of such insolvency, including
  199  a statement of the business practices of such insurer which led
  200  to such insolvency.
  201         (b)For an insolvency involving a domestic property
  202  insurer, the department shall:
  203         1.Begin an analysis of the history and causes of the
  204  insolvency once the department is appointed by the court as
  205  receiver.
  206         2.Submit an initial report analyzing the history and
  207  causes of the insolvency to the Governor, the President of the
  208  Senate, the Speaker of the House of Representatives, and the
  209  office. The initial report must be submitted no later than 4
  210  months after the department is appointed as receiver. The
  211  initial report shall be updated at least annually until the
  212  submission of the final report. The report may not be used as
  213  evidence in any proceeding brought by the department or others
  214  to recover assets on behalf of the receivership estate as part
  215  of its duties under s. 631.141(8). The submission of a report
  216  under this subparagraph shall not be considered a waiver of any
  217  evidentiary privilege the department may assert under state or
  218  federal law.
  219  
  220  ================= T I T L E  A M E N D M E N T ================
  221  And the title is amended as follows:
  222         Delete lines 143 - 153
  223  and insert:
  224         627.7154, F.S.; creating a property insurer stability
  225         unit within the office for a specified purpose;
  226         specifying the duties of the unit; requiring the unit
  227         to provide a specified report biannually; specifying
  228         requirements for such report; specifying events that
  229         trigger referrals to the unit; requiring the unit’s
  230         supervisors to review such referrals for a certain
  231         determination; requiring unit expenses be paid from a
  232         specified fund; requiring costs of examinations to be
  233         paid by examined persons in a specified circumstance;
  234         amending s. 631.031, F.S.; requiring certain
  235         notifications by