Senate Bill 1226

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    Florida Senate - 2000                                  SB 1226

    By Senator Holzendorf





    2-428-00

  1                      A bill to be entitled

  2         An act relating to insurance; amending s.

  3         284.33, F.S.; authorizing the Department of

  4         Insurance to directly purchase annuities

  5         through a structured settlement insurance

  6         services consultant; providing procedures and

  7         requirements; amending s. 625.121, F.S.;

  8         deleting a reference to deficiency reserves for

  9         certain term life insurance policies; amending

10         s. 626.99, F.S.; revising a reference to a more

11         current edition of a cited buyer's guide;

12         creating s. 627.4785, F.S.; authorizing the

13         Department of Insurance to adopt a certain

14         valuation of life insurance policies model

15         regulation; amending s. 627.6487, F.S.;

16         clarifying that creditable coverage must have

17         been in effect in this state; providing an

18         effective date.

19

20  Be It Enacted by the Legislature of the State of Florida:

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22         Section 1.  Subsection (1) of section 284.33, Florida

23  Statutes, is amended to read:

24         284.33  Purchase of insurance, reinsurance, and

25  services.--

26         (1)  The Department of Insurance is authorized to

27  provide insurance, specific excess insurance, and aggregate

28  excess insurance through the Department of Management

29  Services, pursuant to the provisions of part I of chapter 287,

30  as necessary to provide insurance coverages authorized by this

31  part, consistent with market availability.  However, the

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    Florida Senate - 2000                                  SB 1226
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  1  Department of Insurance may directly purchase annuities by

  2  using a structured settlement insurance consulting firm

  3  selected by the department to assist in the settlement of

  4  claims being handled by the Division of Risk Management. The

  5  selection of the structured settlement insurance services

  6  consultant shall be made by using competitive sealed

  7  proposals. The consulting firm shall act as an agent of record

  8  for the department in procuring the best annuity products

  9  available to facilitate structured settlement of claims,

10  considering price, insurer financial strength, and the best

11  interests of the state risk management program. Purchase of

12  annuities by the department using a structured settlement

13  method is excepted from competitive sealed bidding or proposal

14  requirements. The Department of Insurance is further

15  authorized to purchase such risk management services,

16  including, but not limited to, risk and claims control; safety

17  management; and legal, investigative, and adjustment services,

18  as may be required and pay claims. The department may contract

19  with a service organization for such services and advance

20  money to such service organization for deposit in a special

21  checking account for paying claims made against the state

22  under the provisions of this part.  The special checking

23  account shall be maintained in this state in a bank or savings

24  association organized under the laws of this state or of the

25  United States. The department may replenish such account as

26  often as necessary upon the presentation by the service

27  organization of documentation for payments of claims equal to

28  the amount of the requested reimbursement.

29         Section 2.  Subsection (11) of section 625.121, Florida

30  Statutes, is amended to read:

31         625.121  Standard Valuation Law; life insurance.--

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    Florida Senate - 2000                                  SB 1226
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  1         (11)  DEFICIENCY RESERVE.--If in any contract year the

  2  gross premium charged by any life insurer on any policy or

  3  contract is less than the valuation net premium for the policy

  4  or contract calculated by the method used in calculating the

  5  reserve thereon but using the minimum valuation standards of

  6  mortality and rate of interest, there shall be maintained on

  7  such policy or contract a deficiency reserve in addition to

  8  the reserve defined by subsections (7) and (12).  For each

  9  such policy or contract, the deficiency reserve shall be the

10  present value, according to the minimum valuation standards of

11  mortality and rate of interest, of the differences between all

12  such valuation net premiums and the corresponding premiums

13  charged for such policy or contract during the remainder of

14  the premium-paying period.  As regards renewable term life

15  insurance, the policy reserve and foregoing deficiency reserve

16  shall be calculated using the current term period only. For

17  any category of policies, contracts, or benefits specified in

18  subsections (5) and (6), issued on or after the operative date

19  of s. 627.476 (the Standard Nonforfeiture Law for Life

20  Insurance), the aggregate deficiency reserves may be reduced

21  by the amount, if any, by which the aggregate reserves

22  actually calculated in accordance with subsection (9) exceed

23  the minimum aggregate reserves prescribed by subsection (8).

24  The minimum valuation standards of mortality and rate of

25  interest referred to in this subsection are those standards

26  stated in subsections (5) and (6). However, for any life

27  insurance policy which is issued on or after January 1, 1985,

28  for which the gross premium in the first policy year exceeds

29  that of the second year and for which no comparable additional

30  benefit is provided in the first year for such excess, and

31  which provides an endowment benefit, a cash surrender value,

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    Florida Senate - 2000                                  SB 1226
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  1  or a combination thereof in an amount greater than such excess

  2  premium, the foregoing provisions of this subsection shall be

  3  applied as if the method actually used in calculating the

  4  reserve for such policy were the method described in

  5  subsection (7), the provisions of subparagraph (7)(a)2. being

  6  ignored.  The amount of the deficiency reserve, if any, at

  7  each policy anniversary of such a policy shall be the excess,

  8  if any, of the amount determined by the foregoing provisions

  9  of this subsection plus the reserve calculated by the method

10  described in subsection (7), the provisions of subparagraph

11  (7)(a)2. being ignored, over the reserve actually calculated

12  by the method described in subsection (7), the provisions of

13  subparagraph (7)(a)2. being taken into account.

14         Section 3.  Subsection (6) of section 626.99, Florida

15  Statutes, is amended to read:

16         626.99  Life insurance solicitation.--

17         (6)  ADOPTION OF BUYER'S GUIDE; REQUIREMENTS.--Any

18  insurer soliciting life insurance in this state on or after

19  October 1, 1980, shall adopt and use a buyer's guide, and the

20  adoption and use by an insurer of the buyer's guide adopted

21  October 1, 1996, May 4, 1976, by the National Association of

22  Insurance Commissioners in the NAIC Life Insurance

23  Solicitation Model Regulation shall be in compliance with the

24  requirements of this section.

25         Section 4.  Section 627.4785, Florida Statutes, is

26  created to read:

27         627.4785  Valuation of life insurance policies.--The

28  department may adopt by rule the valuation of life insurance

29  policies model regulation as approved by the National

30  Association of Insurance Commissioners in March 1999,

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  1  including tables of select mortality factors, and may make the

  2  regulation effective January 1, 2000.

  3         Section 5.  Subsection (3) of section 627.6487, Florida

  4  Statutes, is amended to read:

  5         627.6487  Guaranteed availability of individual health

  6  insurance coverage to eligible individuals.--

  7         (3)  For the purposes of this section, the term

  8  "eligible individual" means an individual:

  9         (a)1.  For whom, as of the date on which the individual

10  seeks coverage under this section, the aggregate of the

11  periods of creditable coverage, as defined in s. 627.6561(5)

12  and (6), is 18 or more months; and

13         2.a.  Whose most recent prior creditable coverage was

14  provided in this state under a group health plan, governmental

15  plan, or church plan in effect in this state, or health

16  insurance coverage issued in this state and offered in

17  connection with any such plan; or

18         b.  Whose most recent prior creditable coverage was

19  under an individual plan issued in this state by a health

20  insurer or health maintenance organization, which coverage is

21  terminated due to the insurer or health maintenance

22  organization becoming insolvent or discontinuing the offering

23  of all individual coverage in the State of Florida, or due to

24  the insured no longer living in the service area in the State

25  of Florida of the insurer or health maintenance organization

26  that provides coverage through a network plan in the State of

27  Florida;

28         (b)  Who is not eligible for coverage under:

29         1.  A group health plan, as defined in s. 2791 of the

30  Public Health Service Act;

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  1         2.  A conversion policy or contract issued by an

  2  authorized insurer or health maintenance organization under s.

  3  627.6675 or s. 641.3921, respectively, offered to an

  4  individual who is no longer eligible for coverage under either

  5  an insured or self-insured employer plan;

  6         3.  Part A or part B of Title XVIII of the Social

  7  Security Act; or

  8         4.  A state plan under Title XIX of such act, or any

  9  successor program, and does not have other health insurance

10  coverage;

11         (c)  With respect to whom the most recent coverage

12  within the coverage period described in paragraph (a) was not

13  terminated based on a factor described in s. 627.6571(2)(a) or

14  (b), relating to nonpayment of premiums or fraud, unless such

15  nonpayment of premiums or fraud was due to acts of an employer

16  or person other than the individual;

17         (d)  Who, having been offered the option of

18  continuation coverage under a COBRA continuation provision or

19  under s. 627.6692, elected such coverage; and

20         (e)  Who, if the individual elected such continuation

21  provision, has exhausted such continuation coverage under such

22  provision or program.

23         Section 6.  This act shall take effect upon becoming a

24  law.

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    Florida Senate - 2000                                  SB 1226
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  2                          SENATE SUMMARY

  3    Authorizes the Department of Insurance to purchase
      annuities directly by using a structured settlement
  4    insurance consulting firm to assist in the settlement of
      claims handled by the Division of Risk Management.
  5    Provides procedures and requirements. Deletes a
      requirement that, for renewable term life insurance, the
  6    policy reserve and deficiency reserve must be calculated
      by using the current term period only. Updates the
  7    buyer's guide edition adopted by the National Association
      of Insurance Commissioners in the Life Insurance
  8    Solicitation Model Regulation. Authorizes the department
      to adopt the valuation of life insurance policies model
  9    regulation approved by the National Association of
      Insurance Commissioners in March 1999, and to make it
10    effective January 1, 2000. Clarifies that for purposes of
      guaranteed availability of individual health insurance
11    coverage to eligible individuals, the term "eligible
      individual" means an individual whose most recent prior
12    creditable coverage was provided and in effect in this
      state.
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