HB 1145

CS

CHAMBER ACTION

1	The Insurance Committee recommends the following:
2
3	Council/Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to insurable interests; amending s.
7	627.404, F.S.; authorizing certain trusts, partnerships,
8	and limited liability companies to own or purchase life
9	insurance on an insured under certain circumstances;
10	providing requirements; requiring approval of the
11	Department of Financial Services; prohibiting assigning or
12	transferring, changing ownership or beneficiary
13	designation, or taking out a loan against such policies
14	under certain circumstances; providing for taking such
15	actions under a license; providing an effective date.
16
17	Be It Enacted by the Legislature of the State of Florida:
18
19	Section 1.  Subsections (3), (4), and (5) are added to
20	section 627.404, Florida Statutes, to read:
21	627.404  Insurable interest; personal insurance.--
22	(3)  Any trust, partnership, limited liability company, or
23	similar entity that is approved in writing by a public or
24	private university in this state that receives state funds, or
25	affiliated foundations of such university, and meets the
26	requirements of s. 501(c)(3) of the Internal Revenue Code of
27	1986, as amended, or by a public or private university in this
28	state that receives state funds, or the affiliated foundation of
29	such university, to which a charitable contribution could be
30	made under s. 170(c)(1), (2), or (3) of the Internal Revenue
31	Code of 1986, as amended, may own or purchase life insurance on
32	an insured who consents in writing to the ownership or purchase
33	of that insurance, subject to the following:
34	(a)  The approved trust, partnership, limited liability
35	company, or similar entity must be, in part, formed for the
36	purpose of generating funds for one or more designated public or
37	private universities in this state that receive state funds or
38	affiliated foundations of such universities.
39	(b)  The approved trust, partnership, limited liability
40	company, or similar entity must procure or cause to be procured
41	a combination of life insurance policies and annuity contracts
42	on the life of consenting individual insureds. Payments under
43	the annuity contracts shall be reasonably anticipated to fund
44	the premiums on the life insurance policies for the second and
45	succeeding years.
46	(c)  At least 99 percent of all funds used by the approved
47	trust, partnership, limited liability company, or similar entity
48	to procure the life insurance policies and annuity contracts
49	must be from qualified institutional buyers as defined by Rule
50	144A of the Federal Securities Act of 1933 or proceeds from
51	annuity contracts or other insurance policies procured with the
52	funds invested by qualified institutional buyers, and interest
53	income on such funds.
54	(d)  The investment in the approved trust, partnership,
55	limited liability company, or similar entity by qualified
56	institutional buyers shall be pursuant to a nonpublic offering
57	or a public offering through a registered broker or dealer under
58	the Securities Exchange Act of 1934.
59	(e)  No qualified institutional buyer may procure or hold
60	any direct interest in the life insurance policies or the
61	annuity contracts, or the benefits from such policies or
62	contracts, except as part of a securitized transaction, subject
63	to chapter 517 or federal securities laws.
64	(f)  The public or private university in this state that
65	receives state funds, or affiliated foundations of such
66	university, as designated by the individual insured, must, at
67	the time of the acquisition of the life insurance policies by
68	the approved trust, partnership, limited liability company, or
69	similar entity, reasonably anticipate receiving death benefit
70	proceeds of each life insurance policy on such individual
71	insured after the return of the amount invested and yield
72	accrued and payable to the qualified institutional buyers in
73	accordance with the securities offering or other disclosure
74	materials. The reasonably anticipated minimum percentage or
75	amount of the death benefit proceeds of the life insurance
76	policies to be ultimately received by such designated
77	university, or affiliated foundations of such university, must
78	be disclosed in the relevant securities offering or other
79	disclosure materials used in any offering.
80	(g)  The individual insured and each designated public or
81	private university in this state that receives state funds, or
82	affiliated foundations of such university, must be informed,
83	prior to the ownership or purchase of life insurance on the
84	individual insured by the approved trust, partnership, limited
85	liability company, or similar entity, of the minimum percentage
86	or amount of the proceeds of the life insurance policy that is
87	reasonably anticipated to be ultimately paid to the designated
88	organization.
89	(h)  The individual insured must provide an affidavit
90	stating that the individual insured, any relative of the
91	individual insured as defined in s. 112.312(21), and any entity
92	controlled by the individual insured or relative, other than a
93	public or private university in this state that receives state
94	funds, or affiliated foundations of such university, did not
95	receive any monetary remuneration in consideration for the
96	individual insured's consent to purchase the life insurance
97	policy, except third party expenses incurred in connection with
98	the grant of such consent.
99	(i)  All insurance and annuity products purchased in
100	conjunction with a transaction authorized by this subsection
101	shall be purchased through a licensed Florida agent.
102	(j)  At the time of the transaction, the insured must have
103	a minimum net worth of $5 million.
104	(4)  Transactions involving the procurement or funding of
105	the procurement of a life insurance policy or annuity contract
106	pursuant to subsection (3) are prohibited without the prior
107	approval of the Department of Financial Services in consultation
108	with the Office of Financial Regulation and Office of Insurance
109	Regulation, which approval shall only be provided upon a
110	determination that the planned transaction meets the
111	requirements of subsection (3), is fiscally prudent, and is
112	determined to be in the best interest of the citizens of this
113	state. Upon approval, a trust, partnership, limited liability
114	company, or similar entity that meets the requirements of
115	subsection (3) has an insurable interest in the life of the
116	individual insured.
117	(5)  With respect to the approved trust, partnership,
118	limited liability company, or similar entity described in
119	subsection (3), except in the case of a material default of, or
120	commencement of a delinquency proceeding against, the life
121	insurer or annuity company or the life insurer or annuity
122	company exercising its right to contest the life insurance
123	policy or annuity contract:
124	(a)  The life insurance policies procured or caused to be
125	procured by such entity may not be assigned or transferred by
126	such entity;
127	(b)  The ownership or beneficiary designation in favor of
128	such entity of the life insurance policies procured or caused to
129	be procured by such entity may not be changed; or
130	(c)  A policy loan under the life insurance policies
131	procured or caused to be procured by such entity may not be
132	taken out by such entity,
133
134	unless such entity applies for and obtains a license pursuant to
135	the provisions of s. 626.9912 prior to transferring or assigning
136	the policy, changing the ownership or beneficiary designation of
137	the policy, or taking out a loan against the policy. All
138	transactions under s. 626.9912 are subject to chapter 517.
139	Section 2.  This act shall take effect upon becoming a law.

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