CODING: Words stricken are deletions; words underlined are additions.
SENATE AMENDMENT
Bill No. SB 1982
Amendment No.
CHAMBER ACTION
Senate House
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11 Senator Geller moved the following amendment:
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13 Senate Amendment (with title amendment)
14 Delete everything after the enacting clause
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16 and insert:
17 Section 1. Section 625.111, Florida Statutes, is
18 amended to read:
19 (Substantial rewording of section. See
20 s. 625.111, F.S., for present text.)
21 625.111 Title insurance reserve.--In addition to an
22 adequate reserve as to outstanding losses relating to known
23 claims, as required under s. 625.041, a title insurer shall
24 establish, segregate, and maintain a guaranty fund or unearned
25 premium reserve as provided in this section. The sums required
26 under this section to be reserved for unearned premiums on
27 title guarantees and policies at all times and for all
28 purposes shall be considered and constitute unearned portions
29 of the original premiums and shall be charged as a reserve
30 liability of such insurer in determining its financial
31 condition. While such sums are so reserved, they shall be
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1 withdrawn from the use of the insurer for its general
2 purposes, impressed with a trust in favor of the holders of
3 title guarantees and policies, and held available for
4 reinsurance of the title guarantees and policies in the event
5 of the insolvency of the insurer. Nothing contained in this
6 section shall preclude such insurer from investing such
7 reserve in investments authorized by law for such an insurer
8 and the income from such invested reserve shall be included in
9 the general income of the insurer to be used by such insurer
10 for any lawful purpose.
11 (1) For unearned premium reserves established on or
12 after July 1, 1999, such unearned premium reserve shall
13 consist of not less than an amount equal to the sum of:
14 (a) A reserve with respect to unearned premiums for
15 policies written or title liability assumed in reinsurance
16 before July 1, 1999, equal to the reserve established on June
17 30, 1999, for those unearned premiums with such reserve being
18 subsequently released as provided in subsection (2). For
19 domestic title insurers subject to this section, such amounts
20 shall be calculated in accordance with provisions of law of
21 this state in effect at the time the associated premiums were
22 written or assumed and as amended prior to July 1, 1999.
23 (b) A total amount equal to 30 cents for each $1,000
24 of net retained liability for policies written or title
25 liability assumed in reinsurance on or after July 1, 1999,
26 with such reserve being subsequently released as provided in
27 subsection (2). For the purpose of calculating this reserve,
28 the total of the net retained liability for all simultaneous
29 issue policies covering a single risk shall be equal to the
30 liability for the policy with the highest limit covering that
31 single risk, net of any liability ceded in reinsurance.
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1 (c) An additional amount, if deemed necessary by a
2 qualified actuary, which shall be subsequently released as
3 provided in subsection (2). Using financial results as of
4 December 31 of each year, all domestic title insurers shall
5 obtain a Statement of Actuarial Opinion from a qualified
6 actuary regarding the insurer's loss and loss adjustment
7 expense reserves, including reserves for known claims, adverse
8 development on known claims, incurred but not reported claims,
9 and unallocated loss adjustment expenses. The actuarial
10 opinion shall conform to the annual statement instructions for
11 title insurers adopted by the National Association of
12 Insurance Commissioners and shall include the actuary's
13 professional opinion of the insurer's reserves as of the date
14 of the annual statement. If the amount of the reserve stated
15 in the opinion and displayed in Schedule P of the annual
16 statement for that reporting date is greater than the sum of
17 the known claim reserve and unearned premium reserve as
18 calculated under this section, as of the same reporting date
19 and including any previous actuarial provisions added at
20 earlier dates, the insurer shall add to the insurer's unearned
21 premium reserve an actuarial amount equal to the reserve shown
22 in the actuarial opinion, minus the known claim reserve and
23 the unearned premium reserve, as of the current reporting date
24 and calculated in accordance with this section, but in no
25 event calculated as of any date prior to December 31, 1999.
26 The comparison shall be made using that line on Schedule P
27 displaying the Total Net Loss and Loss Adjustment Expense
28 which is comprised of the Known Claim Reserve, and any
29 associated Adverse Development Reserve, the reserve for
30 Incurred But Not Reported Losses, and Unallocated Loss
31 Adjustment Expenses.
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1 (2)(a) With respect to the reserve established in
2 accordance with paragraph (1)(a), the domestic title insurer
3 shall release the reserve over a period of 20 subsequent years
4 as provided in this paragraph. The insurer shall release 30
5 percent of the initial aggregate sum during 1999, with one
6 quarter of that amount being released on March 31, June 30,
7 September 30, and December 31, 1999, with the March 31 and
8 June 30 releases to be retroactive and reflected on the
9 September 30 financial statements. Thereafter, the insurer
10 shall release, on the same quarterly basis as specified for
11 reserves released during 1999, a percentage of the initial
12 aggregate sum as follows: 15 percent during calendar year
13 2000, 10 percent during each of calendar years 2001 and 2002,
14 5 percent during each of calendar years 2003 and 2004, 3
15 percent during each of calendar years 2005 and 2006, 2 percent
16 during each of calendar years 2007-2013, and 1 percent during
17 each of calendar years 2014-2018.
18 (b) With respect to reserves established in accordance
19 with paragraph (1)(b), the unearned premium for policies
20 written or title liability assumed during a particular
21 calendar year shall be earned, and released from reserve, over
22 a period of 20 subsequent years as provided in this paragraph.
23 The insurer shall release 30 percent of the initial sum during
24 the year next succeeding the year the premium was written or
25 assumed, with one quarter of that amount being released on
26 March 31, June 30, September 30, and December 31 of such year.
27 Thereafter, the insurer shall release, on the same quarterly
28 basis as specified for reserves released during the year first
29 succeeding the year the premium was written or assumed, a
30 percentage of the initial sum as follows: 15 percent during
31 the next succeeding year, 10 percent during each of the next
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1 succeeding 2 years, 5 percent during each of the next
2 succeeding 2 years, 3 percent during each of the next
3 succeeding 2 years, 2 percent during each of the next
4 succeeding 7 years, and 1 percent during each of the next
5 succeeding 5 years.
6 (c) With respect to reserves established in accordance
7 with paragraph (1)(c), the actuarial provision established in
8 any calendar year shall be released in the years subsequent to
9 its establishment as provided in paragraph (b), with the
10 timing and percentage of releases being in all respects
11 identical to those of unearned premium reserves that are
12 calculated as provided in paragraph (b) and established with
13 regard to premiums written or liability assumed in reinsurance
14 in the same year as the year in which the actuarial provision
15 was originally established.
16 (3) At any reporting date, the amount of the required
17 releases or existing unearned premium reserves under
18 subsection (2) shall be calculated and deducted from the total
19 unearned premium reserve before the actuarial provision is
20 established for the current calendar year in accordance with
21 the provisions of paragraph (1)(c).
22 (4) As used in this section:
23 (a) "Net retained liability" means the total liability
24 retained by a title insurer for a single risk, after taking
25 into account the deduction for ceded liability, if any.
26 (b) "Qualified actuary" means a person who is, as
27 detailed in the the National Association of Insurance
28 Commissioners' Annual Statement Instructions:
29 1. A member in good standing of the Casualty Actuarial
30 Society;
31 2. A member in good standing of the American Academy
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1 of Actuaries who has been approved as qualified for signing
2 casualty loss reserve opinions by the Casualty Practice
3 Counsel of the American Academy of Actuaries; or
4 3. A person who otherwise has competency in loss
5 reserve evaluation as demonstrated to the satisfaction of the
6 insurance regulatory official of the domiciliary state. In
7 such case, at least 90 days prior to the filing of its annual
8 statement, the insurer must request approval that the person
9 be deemed qualified and that request must be approved or
10 denied. The request must include the National Association of
11 Insurance Commissioners' Biographical Form and a list of all
12 loss reserve opinions issued in the last 3 years by this
13 person.
14 (c) "Single risk" means the insured amount of any
15 title insurance policy, except that where two or more title
16 insurance policies are issued simultaneously covering
17 different estates in the same real property, "single risk"
18 means the sum of the insured amounts of all such title
19 insurance policies. Any title insurance policy insuring a
20 mortgage interest a claim payment under which reduces the
21 insured amount of a fee or leasehold title insurance policy
22 shall be excluded in computing the amount of a single risk to
23 the extent that the insured amount of the mortgage title
24 insurance policy does not exceed the insured amount of the fee
25 or leasehold title insurance policy.
26 Section 2. This act shall take effect July 1, 1999.
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30 And the title is amended as follows:
31 Delete everything before the enacting clause
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1 and insert:
2 A bill to be entitled
3 An act relating to title insurance reserve;
4 amending s. 625.111, F.S.; specifying the
5 components of unearned premium reserve for
6 certain financial statements; providing a
7 formula for releasing unearned premium reserve
8 over a period of years; providing definitions;
9 providing an effective date.
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