| 1 | Representative Bernard offered the following: |
| 2 |
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| 3 | Amendment (with title amendment) |
| 4 | Between lines 35 and 36, insert: |
| 5 | Section 1. Subsection (11) of section 215.5595, Florida |
| 6 | Statutes, is amended to read: |
| 7 | 215.5595 Insurance Capital Build-Up Incentive Program.- |
| 8 | (11) For a surplus note issued under this section before |
| 9 | January 1, 2011, the insurer may request that the board |
| 10 | renegotiate terms of the note as provided in this subsection. |
| 11 | The request must be submitted to the board by January 1, 2012. |
| 12 | If the insurer agrees to accelerate the payment period of the |
| 13 | note by at least 5 years, the board shall agree to exempt the |
| 14 | insurer from the premium-to-surplus ratios required under |
| 15 | paragraph (2)(d). If the insurer requesting the renegotiation |
| 16 | agrees to an acceleration of the payment period of less than 5 |
| 17 | years, the board may, after consultation with the Office of |
| 18 | Insurance Regulation, agree to an appropriate revision of the |
| 19 | premium-to-surplus ratios required under paragraph (2)(d) for |
| 20 | the remaining term of the note. However, the revised ratios may |
| 21 | not be lower than a minimum writing ratio of net premium to |
| 22 | surplus of at least 1:1, and alternatively, a minimum writing |
| 23 | ratio of gross premium to surplus of at least 3:1 On January 15, |
| 24 | 2009, the State Board of Administration shall transfer to |
| 25 | Citizens Property Insurance Corporation any funds that have not |
| 26 | been committed or reserved for insurers approved to receive such |
| 27 | funds under the program, from the funds that were transferred |
| 28 | from Citizens Property Insurance Corporation in 2008-2009 for |
| 29 | such purposes. |
| 30 | Section 2. Paragraph (e) of subsection (3) of section |
| 31 | 624.610, Florida Statutes, is amended to read: |
| 32 | 624.610 Reinsurance.- |
| 33 | (3) |
| 34 | (e) If the reinsurance is ceded to an assuming insurer not |
| 35 | meeting the requirements of paragraph (a), paragraph (b), |
| 36 | paragraph (c), or paragraph (d), the commissioner may allow |
| 37 | credit, but only if the assuming insurer holds surplus in excess |
| 38 | of $250 $100 million and has a secure financial strength rating |
| 39 | from at least two nationally recognized statistical rating |
| 40 | organizations deemed acceptable by the commissioner as having |
| 41 | experience and expertise in rating insurers doing business in |
| 42 | Florida, including, but not limited to, Standard & Poor's, |
| 43 | Moody's Investors Service, Fitch Ratings, A.M. Best Company, and |
| 44 | Demotech. In determining whether credit should be allowed, the |
| 45 | commissioner shall consider the following: |
| 46 | 1. The domiciliary regulatory jurisdiction of the assuming |
| 47 | insurer. |
| 48 | 2. The structure and authority of the domiciliary |
| 49 | regulator with regard to solvency regulation requirements and |
| 50 | the financial surveillance of the reinsurer. |
| 51 | 3. The substance of financial and operating standards for |
| 52 | reinsurers in the domiciliary jurisdiction. |
| 53 | 4. The form and substance of financial reports required to |
| 54 | be filed by the reinsurers in the domiciliary jurisdiction or |
| 55 | other public financial statements filed in accordance with |
| 56 | generally accepted accounting principles. |
| 57 | 5. The domiciliary regulator's willingness to cooperate |
| 58 | with United States regulators in general and the office in |
| 59 | particular. |
| 60 | 6. The history of performance by reinsurers in the |
| 61 | domiciliary jurisdiction. |
| 62 | 7. Any documented evidence of substantial problems with |
| 63 | the enforcement of valid United States judgments in the |
| 64 | domiciliary jurisdiction. |
| 65 | 8. Any other matters deemed relevant by the commissioner. |
| 66 | The commissioner shall give appropriate consideration to insurer |
| 67 | group ratings that may have been issued. The commissioner may, |
| 68 | in lieu of granting full credit under this subsection, reduce |
| 69 | the amount required to be held in trust under paragraph (c). |
| 70 | Section 3. Section 631.400, Florida Statutes, is created |
| 71 | to read: |
| 72 | 631.400 Rehabilitation of title insurer.- |
| 73 | (1) After the entry of an order of rehabilitation, the |
| 74 | receiver shall review the condition of the insurer and file a |
| 75 | plan of rehabilitation for approval with the court. The plan of |
| 76 | rehabilitation shall provide: |
| 77 | (a) That policies on real property in this state issued by |
| 78 | the title insurer in rehabilitation shall remain in force unless |
| 79 | the receiver determines the assessment capacity provided by this |
| 80 | section is insufficient to pay claims in the ordinary course of |
| 81 | business. |
| 82 | (b) That policies on real property located outside the |
| 83 | this state may be canceled as of a date provided by the receiver |
| 84 | and approved by the court if the state in which the property is |
| 85 | located does not have statutory provisions to pay future losses |
| 86 | on those policies. |
| 87 | (c) A claims filing deadline for policies on real property |
| 88 | located outside this state which are canceled under paragraph |
| 89 | (b). |
| 90 | (d) A proposed percentage of the remaining estate assets |
| 91 | to fund out-of-state claims where policies have been canceled, |
| 92 | with any unused funds being returned to the general assets of |
| 93 | the estate. |
| 94 | (e) A proposed percentage of the remaining estate assets |
| 95 | to fund out-of-state claims where policies remain in force. |
| 96 | (f) That the funds allocated to pay claims on policies |
| 97 | located outside of this state shall be based on the pro rata |
| 98 | share of premiums written in each state over each of the 5 |
| 99 | calendar years preceding the date of an order of rehabilitation. |
| 100 | (2) As a condition of doing business in this state, each |
| 101 | title insurer shall be liable for an assessment to pay all |
| 102 | unpaid title insurance claims and expenses of administering and |
| 103 | settling those claims on real property in this state for any |
| 104 | title insurer that is ordered into rehabilitation. |
| 105 | (3) The office shall order an assessment if requested by |
| 106 | the receiver on an annual basis in an amount that the receiver |
| 107 | deems sufficient for the payment of known claims, loss |
| 108 | adjustment expenses, and the cost of administration of the |
| 109 | rehabilitation expenses. The receiver shall consider the |
| 110 | remaining assets of the insurer in receivership when making its |
| 111 | request to the office. Annual assessments may be made until no |
| 112 | more policies of the title insurer in rehabilitation are in |
| 113 | force or the potential future liability has been satisfied. The |
| 114 | office may exempt or limit the assessment of a title insurer if |
| 115 | such assessment would result in a reduction to surplus as to |
| 116 | policyholders below the minimum required to maintain the |
| 117 | insurer's certificate of authority in any state. |
| 118 | (4) Assessments shall be based on the total of the direct |
| 119 | title insurance premiums written in this state as reported to |
| 120 | the office for the most recent calendar year. Each title insurer |
| 121 | doing business in this state shall be assessed on a pro rata |
| 122 | share basis of the total direct title insurance premiums written |
| 123 | in this state. |
| 124 | (5) Assessments shall be paid to the receiver within 90 |
| 125 | days after notice of the assessment or pursuant to a quarterly |
| 126 | installment plan approved by the receiver. Any insurer that |
| 127 | elects to pay an assessment on an installment plan shall also |
| 128 | pay a financing charge to be determined by the receiver. |
| 129 | (6) The office shall order an emergency assessment if |
| 130 | requested by the receiver. The total of any emergency |
| 131 | assessment, when added to any annual assessment in a single |
| 132 | calendar year, may not exceed the limitation in subsection (7). |
| 133 | (7) No title insurer shall be required to pay an |
| 134 | assessment in any one year that exceeds 3 percent of its surplus |
| 135 | to policyholders as of the end of the previous calendar year or |
| 136 | more than 10 percent of its surplus to policyholders over any |
| 137 | consecutive 5-year period. The 10 percent limitation shall be |
| 138 | calculated as the sum of the percentages of surplus to |
| 139 | policyholders assessed in each of those 5 years. |
| 140 | (8) Assessments and emergency assessments once ordered by |
| 141 | the office shall be considered assets of the estate and subject |
| 142 | to the provisions of s. 631.154. |
| 143 | (9) In an effort to keep in force the policies on real |
| 144 | property located in this state issued by the title insurer in |
| 145 | rehabilitation, the receiver may use the proceeds of an |
| 146 | assessment to acquire reinsurance or otherwise provide for the |
| 147 | assumption of policy obligations by another insurer. |
| 148 | (10) The receiver shall make available information |
| 149 | regarding unpaid claims on a quarterly basis. |
| 150 | (11) A title insurer in rehabilitation may not be released |
| 151 | from rehabilitation until all of the assessed insurers have |
| 152 | recovered the amount assessed either through surcharges |
| 153 | collected pursuant to s. 631.401 or payments from the insurer in |
| 154 | rehabilitation. |
| 155 | (12) A title insurer in rehabilitation for which an |
| 156 | assessment has been ordered pursuant to this section may not |
| 157 | issue any new policies until released from rehabilitation and it |
| 158 | shall have received approval from the office to resume issuing |
| 159 | policies. |
| 160 | (13) Officers, directors, and shareholders of a title |
| 161 | insurer who served in that capacity within the 2-year period |
| 162 | prior to the date the title insurer was ordered into |
| 163 | rehabilitation or liquidation may not thereafter serve as an |
| 164 | officer, director, or shareholder of an insurer authorized in |
| 165 | this state unless the officer, director, or shareholder |
| 166 | demonstrates to the office for the 2-year period immediately |
| 167 | preceding the receivership that: |
| 168 | (a) His or her personal actions or omissions were not a |
| 169 | significant contributing cause to the receivership; |
| 170 | (b) He or she did not willfully violate any order of the |
| 171 | office; |
| 172 | (c) He or she did not receive directly or indirectly any |
| 173 | distribution of funds from the insurer in excess of amounts |
| 174 | authorized in writing by the office; |
| 175 | (d) The financial statements filed with the office were |
| 176 | true and correct statements of the title insurer's financial |
| 177 | contrition; |
| 178 | (e) He or she did not engage in any business practices |
| 179 | which were hazardous to the policyholders, creditors, or the |
| 180 | public; and |
| 181 | (f) He or she at all times acted in the best interests of |
| 182 | the title insurer. |
| 183 | Section 4. Section 631.401, Florida Statutes, is created |
| 184 | to read: |
| 185 | 631.401 Recovery of assessments and assumed policy |
| 186 | obligations.- |
| 187 | (1) Upon the making of any assessment allowed by s. |
| 188 | 631.400, the office shall order a surcharge on each title |
| 189 | insurance policy thereafter issued insuring an interest in real |
| 190 | property in this state. The office shall set the per transaction |
| 191 | surcharge at an amount estimated to generate sufficient funds to |
| 192 | recover the amount assessed over a period of not more than 7 |
| 193 | years. The amount of the surcharge ordered under this section |
| 194 | may not exceed $25 per transaction for each impaired title |
| 195 | insurer. If additional surcharges are occasioned by additional |
| 196 | title insurers becoming impaired, the office shall order an |
| 197 | increase in the amount of the surcharge to reflect the aggregate |
| 198 | surcharge. |
| 199 | (2) The party responsible for payment of title insurance |
| 200 | premium, unless otherwise agreed between the parties, shall be |
| 201 | responsible for the payment of the surcharge. No surcharge will |
| 202 | be due or owing as to any policy of title insurance issued at |
| 203 | the simultaneous issue rate. For all other purposes, the |
| 204 | surcharge will be considered a governmental assessment to be |
| 205 | separately stated on any settlement statement. The surcharge is |
| 206 | not subject to premium tax or reserve requirements under chapter |
| 207 | 625. |
| 208 | (3) Title insurers doing business in this state writing no |
| 209 | premiums in the prior calendar year shall collect the same per |
| 210 | transaction surcharge as provided by this section. Such |
| 211 | surcharge collected shall be paid to the receiver within 60 days |
| 212 | after receipt from the title agent or agency. |
| 213 | (4) Each title insurance agent, agency, or direct title |
| 214 | operation shall collect the surcharge as to each title insurance |
| 215 | policy written and remit those surcharges along with the |
| 216 | policies and premiums within 60 days to the title insurer on |
| 217 | whom the policy was written. |
| 218 | (5) A title insurer may not retain more in surcharges for |
| 219 | an ordered assessment than the amount of assessment that title |
| 220 | insurer paid. |
| 221 | (6) Each title insurer collecting surcharges shall |
| 222 | promptly notify the office when it has collected surcharges |
| 223 | equal to the amount of the assessment paid pursuant to s. |
| 224 | 631.400. The office shall notify all companies, including those |
| 225 | collecting surcharges as required by subsection (3), to cease |
| 226 | collecting surcharges when notified that all assessments have |
| 227 | been recovered. |
| 228 | (7) In conjunction with the filing of each quarterly |
| 229 | financial statement, each title insurer shall provide the office |
| 230 | with an accounting of assessments paid and surcharges collected |
| 231 | during the period. Any surcharges collected in excess of the |
| 232 | amount assessed shall be paid to the Insurance Regulatory Trust |
| 233 | Fund. |
| 234 |
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| 235 | ----------------------------------------------------- |
| 236 | T I T L E A M E N D M E N T |
| 237 | Remove line 2 and insert: |
| 238 | An act relating to insurer insolvency; amending s. |
| 239 | 215.5595, F.S., relating to the Insurance Capital Build-Up |
| 240 | Incentive Program; providing for renegotiation of surplus |
| 241 | notes issued before a specified date; providing for an |
| 242 | exemption from certain premium-to-surplus ratios in certain |
| 243 | circumstances; amending s. 624.610, F.S.; revising surplus |
| 244 | requirements for assuming insurers in connection with |
| 245 | reinsurance credits; specifying rating agencies that may |
| 246 | rate such assuming insurers; creating s. 631.400, F.S.; |
| 247 | providing for rehabilitation plans for title insurers; |
| 248 | providing that each title insurer doing business in this |
| 249 | state is liable for an assessment for claims against title |
| 250 | insurers ordered into rehabilitation; providing for an |
| 251 | annual assessment upon request of a receiver; providing for |
| 252 | emergency assessments in certain circumstances; providing |
| 253 | limits on the amount of an assessment; providing that |
| 254 | assessments are considered an asset of the estate and |
| 255 | subject to specified provisions; providing for use of |
| 256 | assessment proceeds; providing for availability of |
| 257 | information concerning unpaid claims; specifying |
| 258 | circumstances for release of title insurers from |
| 259 | rehabilitation; prohibiting a title insurer in |
| 260 | rehabilitation from issuing new policies until released |
| 261 | from rehabilitation and permission to issue new policies |
| 262 | granted; providing that officers, directors, and |
| 263 | shareholders of a title insurer who served in that capacity |
| 264 | within the 2-year period prior to the date the insurer was |
| 265 | ordered into rehabilitation or liquidation may not |
| 266 | thereafter serve in that capacity unless the officer, |
| 267 | director, and shareholder meets specified criteria; |
| 268 | creating s. 631.401, F.S.; providing for surcharges on |
| 269 | title insurance policies to collect the amount needed to |
| 270 | cover an assessment for an insolvent insurer; providing for |
| 271 | a maximum period for a surcharge; providing a maximum for a |
| 272 | surcharge; providing for responsibility for payment of a |
| 273 | surcharge; providing for collection of surcharges by a |
| 274 | title insurer doing business in the state writing no |
| 275 | premiums in the prior calendar year; providing for |
| 276 | remission and collection of surcharges within a specified |
| 277 | period; specifying a limit on the amount in surcharges that |
| 278 | may be retained by a title insurer; requiring notification |
| 279 | when the collection of an assessment is completed; |
| 280 | requiring an accounting of assessments paid and surcharges |
| 281 | collected; providing for disposition of surcharges |
| 282 | collected in excess of the amount assessed; amending s. |