HB 1149

1	A bill to be entitled
2	An act relating to insurance administrators; amending s.
3	626.88, F.S.; revising the definition of "administrator";
4	providing additional definitions; amending s. 626.8805,
5	F.S.; requiring additional documents from administrators
6	applying for a certificate of authority; amending s.
7	626.8817, F.S.; specifying duties and responsibilities of
8	insurers and administrators in administering coverage;
9	amending s. 626.89, F.S.; requiring an audited financial
10	statement; providing requirements; authorizing the
11	Financial Services Commission to require submittal of
12	reports or filings electronically; creating s. 626.8991,
13	F.S.; authorizing the commission to adopt certain rules;
14	providing an effective date.
15
16	Be It Enacted by the Legislature of the State of Florida:
17
18	Section 1.  Paragraph (a) of subsection (1) and subsection
19	(2) of section 626.88, Florida Statutes, are amended, and
20	paragraphs (q), (r), and (s) are added to subsection (1) of said
21	section, to read:
22	626.88  Definitions of "administrator" and "insurer".--
23	(1)  For the purposes of this part, an "administrator" is
24	any person who directly or indirectly solicits or effects
25	coverage of, collects charges or premiums from, or adjusts or
26	settles claims on residents of this state in connection with
27	authorized commercial self-insurance funds or with insured or
28	self-insured programs which provide life or health insurance
29	coverage or coverage of any other expenses described in s.
30	624.33(1) or any person who, through a health care risk contract
31	as defined in s. 641.234 with an insurer or health maintenance
32	organization, provides billing and collection services to health
33	insurers and health maintenance organizations on behalf of
34	health care providers, other than any of the following persons:
35	(a)  An employer, or wholly owned direct or indirect
36	subsidiary of an employer, on behalf of such employer's
37	employees or the employees of one or more subsidiary or
38	affiliated corporations of such employer.
39	(q)  An entity which is affiliated with an insurer and
40	which only performs the contractual duties, between the
41	administrator and the insurer, of an administrator for the
42	direct and assumed insurance business of the affiliated insurer.
43	The insurer is responsible for the acts of the administrator and
44	is responsible for providing all of the administrator's books
45	and records to the office upon request. For purposes of this
46	paragraph, the term "insurer" means a licensed insurance
47	company, health maintenance organization, prepaid limited health
48	service organization, or prepaid health clinic.
49	(r)  A nonresident entity licensed in the entity's state of
50	domicile as an administrator if the entity's duties in this
51	state are limited to the administration of a group policy or
52	plan of insurance and no more than a total of 100 lives for all
53	plans residing in this state.
54	(s)  A person licensed as a managing general agent in this
55	state whose activities are limited exclusively to the scope of
56	activities conveyed under such license.
57
58	A person who provides billing and collection services to health
59	insurers and health maintenance organizations on behalf of
60	health care providers shall comply with the provisions of ss.
61	627.6131, 641.3155, and 641.51(4).
62	(2)  For the purposes of this part:
63	(a)  "Affiliate" or "affiliated" means an entity or person
64	who directly or indirectly through one or more intermediaries
65	controls, is controlled by, or is under common control with a
66	specified entity or person.
67	(b)  "Control," including the words "controlling,"
68	"controlled by," and "under common control with," means the
69	possession, direct or indirect, of the power to direct or cause
70	the direction of the management and policies of a person,
71	through the ownership of voting securities, by contract other
72	than a commercial contract for goods or nonmanagement services,
73	or otherwise, unless the power is the result of an official
74	position with or corporate office held by the person. Control is
75	presumed to exist if any person directly or indirectly owns,
76	controls, holds with the power to vote, or holds proxies
77	representing 10 percent or more of the voting securities of any
78	other person.
79	(c)  "Generally accepted accounting principles" or "GAAP"
80	means United States generally accepted accounting principles
81	consistently applied.
82	(d), an "Insurer" includes an authorized commercial self-
83	insurance fund and includes any person undertaking to provide
84	life or health insurance coverage or coverage of any of the
85	other expenses described in s. 624.33(1).
86	Section 2.  Paragraph (d) of subsection (2) of section
87	626.8805, Florida Statutes, is amended, paragraph (e) of said
88	subsection is renumbered as paragraph (f), and new paragraph (e)
89	is added to said subsection, to read:
90	626.8805  Certificate of authority to act as
91	administrator.--
92	(2)  The administrator shall file with the office an
93	application for a certificate of authority upon a form to be
94	adopted by the commission and furnished by the office, which
95	application shall include or have attached the following
96	information and documents:
97	(d)  Audited annual financial statements for the most
98	recent 2 fiscal years which prove that the applicant has a
99	positive net worth. If the applicant has been in existence for
100	less than 2 fiscal years, the application shall include
101	financial statements or reports, certified by an officer of the
102	applicant and prepared in accordance with generally accepted
103	accounting principles, for any completed fiscal years and for
104	any month during the current fiscal year for which such
105	financial statements or reports have been completed. An audited
106	financial statement or report prepared on a consolidated basis
107	shall include a columnar consolidating or combining worksheet
108	that shall be filed with the report, and shall comply with the
109	following:
110	1.  Amounts shown on the consolidated audited financial
111	report shall be shown on the worksheet.
112	2.  Amounts for each entity shall be stated separately.
113	3.  Explanations of consolidating and eliminating entries
114	shall be included.
115
116	The applicant shall also include such other information as the
117	office requires in order to review the current financial
118	condition of the applicant.
119	(e)  A statement describing the business plan, including
120	information on staffing levels and activities proposed in this
121	state and nationwide. The plan shall provide details setting
122	forth the applicant's capability for providing a sufficient
123	number of experienced and qualified personnel in the areas of
124	claims processing, recordkeeping, and underwriting Annual
125	statements or reports for the 3 most recent years, or such other
126	information as the office may require in order to review the
127	current financial condition of the applicant.
128	Section 3.  Section 626.8817, Florida Statutes, is amended
129	to read:
130	626.8817  Responsibilities of insurance company with
131	respect to administration of coverage insured.--
132	(1)  If an insurer uses the services of an administrator,
133	the insurer shall be responsible for determining the benefits,
134	premium rates, underwriting criteria, and claims payment
135	procedures applicable to the coverage and for securing
136	reinsurance, if any. The rules pertaining to these matters shall
137	be provided, in writing, by the insurer to the administrator.
138	The responsibilities of the administrator as to any of these
139	matters shall be set forth in the written agreement between the
140	administrator and the insurer.
141	(2)  It is the sole responsibility of the insurer to
142	provide for competent administration of its programs.
143	(3)  In cases in which an administrator administers
144	benefits for more than 100 certificateholders on behalf of an
145	insurer, the insurer shall, at least semiannually, conduct a
146	review of the operations of the administrator. At least one such
147	review must be an onsite audit of the operations of the
148	administrator.
149	(4)  For purposes of this section, the term "insurer" means
150	a licensed insurance company, health maintenance organization,
151	prepaid limited health service organization, or prepaid health
152	clinic As to the administration of coverage insured by an
153	insurance company, the insurance company, and not the
154	administrator, shall be responsible for determining the
155	benefits, rates, underwriting criteria, and claims payment
156	procedures applicable to such coverage and for securing
157	reinsurance, if any.
158	Section 4.  Subsections (2) and (3) of section 626.89,
159	Florida Statutes, are renumbered as subsections (3) and (4),
160	respectively, and new subsections (2) and (5) are added to said
161	section, to read:
162	626.89  Annual financial statement and filing fee; notice
163	of change of ownership.--
164	(2)  Each authorized administrator shall also file with the
165	office, on or before June 1 for the preceding calendar year
166	ending December 31, an audited financial statement performed by
167	an independent certified public accountant. An audited financial
168	statement prepared on a consolidated basis shall include a
169	columnar consolidating or combining worksheet that shall be
170	filed with the statement, and shall comply with the following:
171	(a)  Amounts shown on the consolidated audited financial
172	statement shall be shown on the worksheet.
173	(b)  Amounts for each entity shall be stated separately.
174	(c)  Explanations of consolidating and eliminating entries
175	shall be included.
176	(5)  The commission may by rule require all or part of the
177	reports or filings required under this section to be submitted
178	by electronic means in a computer-readable form compatible with
179	the electronic data format specified by the commission.
180	Section 5.  Section 626.8991, Florida Statutes, is created
181	to read:
182	626.8991  Adoption of rules.--The commission may adopt
183	rules necessary to administer the provisions of this part.
184	Section 6.  This act shall take effect October 1, 2005.

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