Florida Senate - 2011 COMMITTEE AMENDMENT Bill No. CS for SB 1714 Barcode 706004 LEGISLATIVE ACTION Senate . House . . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— The Committee on Budget (Hays) recommended the following: 1 Senate Amendment 2 3 Delete lines 1431 - 1492 4 and insert: 5 d. Notwithstanding any other provision of law, for purposes 6 of a depopulation, take-out, or keep-out program adopted by the 7 corporation, including an initial or renewal offer of coverage 8 made to a policyholder removed from the corporation pursuant to 9 such program, an eligible surplus lines insurer may participate 10 in the program in the same manner and on the same terms as an 11 authorized insurer, except as provided under this subparagraph. 12 (I) To qualify for participation, the surplus lines insurer 13 must first obtain approval from the office for its depopulation, 14 take-out, or keep-out plan and then comply with all of the 15 corporation’s requirements for such plan applicable to admitted 16 insurers and with all statutory provisions applicable to the 17 removal of policies from the corporation. 18 (II) In considering a surplus lines insurer’s request for 19 approval for its plan, the office must determine that the 20 surplus lines insurer meets the following requirements: 21 (A) Maintains surplus of $50 million on a company or pooled 22 basis; 23 (B) Maintains an A.M. Best Financial Strength Rating of “A 24 ” or better; 25 (C) Maintains reserves, surplus, reinsurance, and 26 reinsurance equivalents sufficient to cover the insurer’s 100 27 year probable maximum hurricane loss at least twice in a single 28 hurricane season, and submits such reinsurance to the office to 29 review for purposes of the take-out; 30 (D) Provides prominent notice to the policyholder before 31 the assumption of the policy that surplus lines policies are not 32 provided coverage by the Florida Insurance Guaranty Association, 33 and an outline of any substantial differences in coverage 34 between the existing policy and the policy being offered to the 35 insured; and 36 (E) Provides similar policy coverage. 37 38 This sub-sub-subparagraph does not subject any surplus lines 39 insurer to requirements in addition to part VIII of chapter 626. 40 Surplus lines brokers making an offer of coverage under this 41 sub-subparagraph are not required to comply with s. 42 626.916(1)(a), (b), (c), and (e). 43 (III) Within 10 days after the date of assumption, the 44 surplus lines insurer assuming policies from the corporation 45 must remit a special deposit equal to the unearned premium net 46 of unearned commissions on the assumed block of business to the 47 Department of Financial Services, Bureau of Collateral 48 Securities. The surplus lines insurer shall submit to the office 49 with the initial deposit an accounting of the policies assumed 50 and the amount of unearned premium for such policies along with 51 a sworn affidavit attesting to its accuracy by an officer of the 52 surplus lines insurer. Thereafter, the surplus lines insurer 53 shall make a filing within 10 days following each calendar 54 quarter, attesting to the unearned premium in force for the 55 previous quarter on policies assumed from the corporation, and 56 shall submit additional funds if the special deposit is 57 insufficient to cover the unearned premium on assumed policies, 58 or may receive a return of funds within 60 days if the special 59 deposit exceeds the amount of unearned premium required for 60 assumed policies. The special deposit is an asset of the surplus 61 lines insurer which is held by the department for the benefit of 62 state policyholders of the surplus lines insurer in the event of 63 the insolvency of the surplus lines insurer. If an order of 64 liquidation is entered in any state against the surplus lines 65 insurer, the department may use the special deposit for payment 66 of unearned premium or policy claims, return all or part of the 67 deposit to the domiciliary receiver, or use the funds in 68 accordance with any action authorized under part I of chapter 69 631 or in compliance with any order of a court with jurisdiction 70 over the insolvency. 71 (IV) Surplus lines brokers representing a surplus lines 72 insurer on a take-out program must obtain confirmation, in 73 written or e-mail form, from each producing agent in advance 74 stating that the agent is willing to participate in the take-out 75 program with the surplus lines insurer engaging in the take-out 76 program. The take-out program is also subject to s. 627.3517. If 77 a policyholder is selected for removal from the corporation by a 78 surplus lines insurer and an admitted carrier, the offer of 79 coverage from the admitted carrier shall be given priority by 80 the corporation. 81 4. The plan must
shallprovide for the deferment, in whole 82 or in part, of the assessment of an assessable insurer, other 83 than an emergency assessment collected from policyholders 84 pursuant to sub-subparagraph (b)3.d., if the office finds that 85 payment of the assessment would endanger or impair the solvency 86 of the insurer. If In the eventan assessment against an 87 assessable insurer is deferred in whole or in part, the amount 88 by which such assessment isdeferred may be assessed against the 89 other assessable insurers in a manner consistent with the basis 90 for assessments set forth in paragraph (b). 91 5. Effective July 1, 2007,In order to evaluate the costs 92 and benefits of approved take-out plans, if the corporation pays 93 a bonus or other payment to an insurer for an approved take-out 94 plan, it shall maintain a record of the address or such other 95 identifying information on the property or risk removed in order 96 to track if and when the property or risk is later insured by 97 the corporation. 98 6. Any policy taken out, assumed, or removed from the 99 corporation is, as of the effective date of the take-out, 100 assumption, or removal, direct insurance issued by the insurer 101 and not by the corporation, even if the corporation continues to 102 service the policies. This subparagraph applies to policies of 103 the corporation and not policies taken out, assumed, or removed 104 from any other entity.