HB 1145

1	A bill to be entitled
2	An act relating to insurable interests; amending s.
3	627.404, F.S.; authorizing certain trusts, partnerships,
4	and limited liability companies to own or purchase life
5	insurance on an insured under certain circumstances;
6	providing requirements; requiring approval of the
7	Department of Financial Services; prohibiting assigning or
8	transferring, changing ownership or beneficiary
9	designation, or taking out a loan against such policies
10	under certain circumstances; providing for taking such
11	actions under a license; providing an effective date.
12
13	Be It Enacted by the Legislature of the State of Florida:
14
15	Section 1.  Subsections (3), (4), and (5) are added to
16	section 627.404, Florida Statutes, to read:
17	627.404  Insurable interest; personal insurance.--
18	(3)  Any trust, partnership, limited liability company, or
19	similar entity that is approved in writing by a public or
20	private university in this state that receives state funds, or
21	affiliated foundations of such university, and meets the
22	requirements of s. 501(c)(3) of the Internal Revenue Code of
23	1986, as amended, or by a public or private university in this
24	state that receives state funds, or the affiliated foundation of
25	such university, to which a charitable contribution could be
26	made under s. 170(c)(1), (2), or (3) of the Internal Revenue
27	Code of 1986, as amended, may own or purchase life insurance on
28	an insured who consents in writing to the ownership or purchase
29	of that insurance, subject to the following:
30	(a)  The approved trust, partnership, limited liability
31	company, or similar entity must be, in part, formed for the
32	purpose of generating funds for one or more designated public or
33	private universities in this state that receive state funds or
34	affiliated foundations of such universities.
35	(b)  The approved trust, partnership, limited liability
36	company, or similar entity must procure or cause to be procured
37	a combination of life insurance policies and annuity contracts
38	on the life of consenting individual insureds. Payments under
39	the annuity contracts shall be reasonably anticipated to fund
40	the premiums on the life insurance policies for the second and
41	succeeding years.
42	(c)  At least 99 percent of all funds used by the approved
43	trust, partnership, limited liability company, or similar entity
44	to procure the life insurance policies and annuity contracts
45	must be from qualified institutional buyers as defined by Rule
46	144A of the Federal Securities Act of 1933 or proceeds from
47	annuity contracts or other insurance policies procured with the
48	funds invested by qualified institutional buyers, and interest
49	income on such funds.
50	(d)  The investment in the approved trust, partnership,
51	limited liability company, or similar entity by qualified
52	institutional buyers shall be pursuant to a nonpublic offering
53	or a public offering through a registered broker or dealer under
54	the Securities Exchange Act of 1934.
55	(e)  No qualified institutional buyer may procure or hold
56	any direct interest in the life insurance policies or the
57	annuity contracts, or the benefits from such policies or
58	contracts, except as part of a securitized transaction, subject
59	to chapter 517 or federal securities laws.
60	(f)  The public or private university in this state that
61	receives state funds, or affiliated foundations of such
62	university, as designated by the individual insured, must, at
63	the time of the acquisition of the life insurance policies by
64	the approved trust, partnership, limited liability company, or
65	similar entity, reasonably anticipate receiving death benefit
66	proceeds of each life insurance policy on such individual
67	insured after the return of the amount invested and yield
68	accrued and payable to the qualified institutional buyers in
69	accordance with the securities offering or other disclosure
70	materials. The reasonably anticipated minimum percentage or
71	amount of the death benefit proceeds of the life insurance
72	policies to be ultimately received by such designated
73	university, or affiliated foundations of such university, must
74	be disclosed in the relevant securities offering or other
75	disclosure materials used in any offering.
76	(g)  The individual insured and each designated public or
77	private university in this state that receives state funds, or
78	affiliated foundations of such university, must be informed,
79	prior to the ownership or purchase of life insurance on the
80	individual insured by the approved trust, partnership, limited
81	liability company, or similar entity, of the minimum percentage
82	or amount of the proceeds of the life insurance policy that is
83	reasonably anticipated to be ultimately paid to the designated
84	organization.
85	(h)  The individual insured must provide an affidavit
86	stating that the individual insured, any relative of the
87	individual insured as defined in s. 112.312(21), and any entity
88	controlled by the individual insured or relative, other than a
89	public or private university in this state that receives state
90	funds, or affiliated foundations of such university, did not
91	receive any monetary remuneration in consideration for the
92	individual insured's consent to purchase the life insurance
93	policy, except third party expenses incurred in connection with
94	the grant of such consent.
95	(4)  Transactions involving the procurement or funding of
96	the procurement of a life insurance policy or annuity contract
97	pursuant to subsection (3) are prohibited without the prior
98	approval of the Department of Financial Services in consultation
99	with the Office of Financial Regulation and Office of Insurance
100	Regulation, which approval shall only be provided upon a
101	determination that the planned transaction meets the
102	requirements of subsection (3), is fiscally prudent, and is
103	determined to be in the best interest of the citizens of this
104	state. Upon approval, a trust, partnership, limited liability
105	company, or similar entity that meets the requirements of
106	subsection (3) has an insurable interest in the life of the
107	individual insured.
108	(5)  With respect to the approved trust, partnership,
109	limited liability company, or similar entity described in
110	subsection (3), except in the case of a material default of, or
111	commencement of a delinquency proceeding against, the life
112	insurer or annuity company or the life insurer or annuity
113	company exercising its right to contest the life insurance
114	policy or annuity contract:
115	(a)  The life insurance policies procured or caused to be
116	procured by such entity may not be assigned or transferred by
117	such entity;
118	(b)  The ownership or beneficiary designation in favor of
119	such entity of the life insurance policies procured or caused to
120	be procured by such entity may not be changed; or
121	(c)  A policy loan under the life insurance policies
122	procured or caused to be procured by such entity may not be
123	taken out by such entity,
124
125	unless such entity applies for and obtains a license pursuant to
126	the provisions of s. 626.9912 prior to transferring or assigning
127	the policy, changing the ownership or beneficiary designation of
128	the policy, or taking out a loan against the policy. All
129	transactions under s. 626.9912 are subject to chapter 571.
130	Section 2.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.