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 
    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.
   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 shall provide 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 event an assessment against an
   87  assessable insurer is deferred in whole or in part, the amount
   88  by which such assessment is deferred 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.