Florida Senate - 2011                      CS for CS for SB 1836
       By the Committees on Budget Subcommittee on General Government
       Appropriations; and Banking and Insurance; and Senator Diaz de
       la Portilla
       601-04519-11                                          20111836c2
    1                        A bill to be entitled                      
    2         An act relating to insurance; amending s. 624.402,
    3         F.S.; revising provisions relating to certain insurers
    4         serving nonresidents domiciled outside the United
    5         States who are exempt from requirements to obtain a
    6         certificate of authority; amending s. 628.901, F.S.;
    7         providing definitions; repealing s. 628.903, F.S.,
    8         relating to the definition of the term “industrial
    9         insured captive insurer”; amending s. 628.905, F.S.;
   10         requiring a captive insurer to obtain a license and to
   11         file evidence that a person or firm with whom it
   12         intends to conduct business is reputable; providing
   13         that a certificate of insurance for an association
   14         captive insurer does not exceed the total funds of the
   15         association members; creating s. 628.908, F.S.;
   16         requiring a licensed captive insurer to maintain its
   17         principal place of business in this state and hold an
   18         annual meeting in this state; amending s. 628.909,
   19         F.S.; applying additional provisions of the insurance
   20         code to captive insurers; providing an effective date.
   22  Be It Enacted by the Legislature of the State of Florida:
   24         Section 1. Subsection (8) of section 624.402, Florida
   25  Statutes, is amended to read:
   26         624.402 Exceptions, certificate of authority required.—A
   27  certificate of authority shall not be required of an insurer
   28  with respect to:
   29         (8) An insurer domiciled outside the United States covering
   30  only persons who, at the time of issuance or renewal, are
   31  nonresidents of the United States.
   32         (a)In order to qualify for this exemption, the insurer:
   33         1.Must register with the office via a letter of
   34  notification upon commencing business from this state.
   35         2.Must provide the following information to the office
   36  annually by March 1:
   37         a.The name of the insurer; the country of domicile; the
   38  address of the insurer’s principal office and office in this
   39  state; the names of the owners of the insurer and their
   40  percentage of ownership; the names of the officers and directors
   41  of the insurer; the name, e-mail, and telephone number of a
   42  contact person for the insurer; and the number of individuals
   43  who are employed by the insurer or its affiliates in this state;
   44         b.The type of products offered by the insurer;
   45         c.A statement from the applicable regulatory body of the
   46  insurer’s domicile certifying that the insurer is licensed or
   47  registered in that domicile; and
   48         d.A copy of the filings required by the applicable
   49  regulatory body of the insurer’s domicile.
   50         3. Or any affiliated person as defined in s. 624.04 under
   51  common ownership or control with the insurer, may not solicit,
   52  sell, or accept an application for any insurance policy or
   53  contract to be delivered or issued for delivery to any
   54  individual other than a nonresident.
   55         (b)All policies or certificates delivered to nonresidents
   56  in this state must include the following statement in a
   57  contrasting color and at least 10-point type: “The policy
   58  providing your coverage and the insurer providing this policy
   59  have not been approved by the Florida Office of Insurance
   60  Regulation”.
   61         (c)If the insurer ceases to do business from this state,
   62  the insurer must agree to provide written notification to the
   63  office within 30 days after cessation.
   64         (d) Subject to the limitations contained in this
   65  subsection, services, including those listed in s. 624.10, may
   66  be provided by the insurer or an affiliated person as defined in
   67  s. 624.04 under common ownership or control with the insurer.
   68         (e) An alien insurer transacting insurance in this state
   69  without complying with this subsection is in violation of this
   70  chapter and subject to the penalties under s. 624.15.
   71         (f) An insurer that holds a certificate of authority in
   72  this state may issue and deliver policies to nonresidents at
   73  temporary or secondary addresses in this state, along with a
   74  notice that the policy form and rate is not subject to the
   75  approval of the Office of Insurance Regulation.
   76         (g) The term “nonresident” means an individual who resides
   77  in and maintains a physical place of domicile in a country other
   78  than the United States, which he or she recognizes as and
   79  intends to maintain as his or her permanent home. The term does
   80  not include an unauthorized immigrant present in the United
   81  States. Notwithstanding any other provision of law, it is
   82  conclusively presumed that an individual is a resident of the
   83  United States if such individual:
   84         1. Has had his or her principal place of domicile in the
   85  United States for 180 days or more in the 365 days before
   86  issuance or renewal the policy;
   87         2. Has registered to vote in any state;
   88         3. Has made a statement of domicile in any state; or
   89         4. Has filed for homestead tax exemption on property in any
   90  state.
   91         (a) Life insurance policies or annuity contracts issued by
   92  an insurer domiciled outside the United States covering only
   93  persons who, at the time of issuance, are not residents of the
   94  United States and are not nonresidents illegally residing in the
   95  United States, provided:
   96         1. The insurer must currently be an authorized insurer in
   97  its country of domicile as to the kind or kinds of insurance
   98  proposed to be offered and must have been such an insurer for
   99  not fewer than the immediately preceding 3 years, or must be the
  100  wholly owned subsidiary of such authorized insurer or must be
  101  the wholly owned subsidiary of an already eligible authorized
  102  insurer as to the kind or kinds of insurance proposed for a
  103  period of not fewer than the immediately preceding 3 years.
  104  However, the office may waive the 3-year requirement if the
  105  insurer has operated successfully for a period of at least the
  106  immediately preceding year and has capital and surplus of not
  107  less than $25 million.
  108         2. Before the office may grant eligibility, the requesting
  109  insurer shall furnish the office with a duly authenticated copy
  110  of its current annual financial statement, in English, and with
  111  all monetary values therein expressed in United States dollars,
  112  at an exchange rate then-current and shown in the statement, in
  113  the case of statements originally made in the currencies of
  114  other countries, and with such additional information relative
  115  to the insurer as the office may request.
  116         3. The insurer must have and maintain surplus as to
  117  policyholders of not less than $15 million. Any such surplus as
  118  to policyholders shall be represented by investments consisting
  119  of eligible investments for like funds of like domestic insurers
  120  under part II of chapter 625; however, any such surplus as to
  121  policyholders may be represented by investments permitted by the
  122  domestic regulator of such alien insurance company if such
  123  investments are substantially similar in terms of quality,
  124  liquidity, and security to eligible investments for like funds
  125  of like domestic insurers under part II of chapter 625.
  126         4. The insurer must be of good reputation as to the
  127  providing of service to its policyholders and the payment of
  128  losses and claims.
  129         5. To maintain eligibility, the insurer shall furnish the
  130  office within the time period specified in s. 624.424(1)(a) a
  131  duly authenticated copy of its current annual and quarterly
  132  financial statements, in English, and with all monetary values
  133  therein expressed in United States dollars, at an exchange rate
  134  then-current and shown in the statement, in the case of
  135  statements originally made in the currencies of other countries,
  136  and with such additional information relative to the insurer as
  137  the office may request.
  138         6. An insurer receiving eligibility under this subsection
  139  shall agree to make its books and records pertaining to its
  140  operations in this state available for inspection during normal
  141  business hours upon request of the office.
  142         7. The insurer shall provide to the applicant for the
  143  policy or contract a copy of the most recent quarterly financial
  144  statements of the insurer providing, in clear and conspicuous
  145  language:
  146         a. The date of organization of the insurer.
  147         b. The identity of and rating assigned by each recognized
  148  insurance company rating organization that has rated the insurer
  149  or, if applicable, that the insurer is unrated.
  150         c. That the insurer does not hold a certificate of
  151  authority issued in this state and that the office does not
  152  exercise regulatory oversight over the insurer.
  153         d. The identity and address of the regulatory authority
  154  exercising oversight of the insurer.
  156  This paragraph does not impose upon the office any duty or
  157  responsibility to determine the actual financial condition or
  158  claims practices of any unauthorized insurer, and the status of
  159  eligibility, if granted by the office, indicates only that the
  160  insurer appears to be financially sound and to have satisfactory
  161  claims practices and that the office has no credible evidence to
  162  the contrary.
  163         (b) If at any time the office has reason to believe that an
  164  insurer issuing policies or contracts pursuant to this
  165  subsection is insolvent or is in unsound financial condition,
  166  does not make reasonable prompt payment of benefits, or is no
  167  longer eligible under the conditions specified in this
  168  subsection, the office may conduct an examination or
  169  investigation in accordance with s. 624.316, s. 624.3161, or s.
  170  624.320 and, if the findings of such examination or
  171  investigation warrant, may withdraw the eligibility of the
  172  insurer to issue policies or contracts pursuant to this
  173  subsection without having a certificate of authority issued by
  174  the office.
  175         (c) This subsection does not provide an exception to the
  176  agent licensure requirements of chapter 626. Any insurer issuing
  177  policies or contracts pursuant to this subsection shall appoint
  178  the agents that the insurer uses to sell such policies or
  179  contracts as provided in chapter 626.
  180         (d) An insurer issuing policies or contracts pursuant to
  181  this subsection is subject to part IX of chapter 626, Unfair
  182  Insurance Trade Practices, and the office may take such actions
  183  against the insurer for a violation as are provided in that
  184  part.
  185         (e) Policies and contracts issued pursuant to this
  186  subsection are not subject to the premium tax specified in s.
  187  624.509.
  188         (f) Applications for life insurance coverage offered under
  189  this subsection must contain, in contrasting color and not less
  190  than 12-point type, the following statement on the same page as
  191  the applicant’s signature:
  193         This policy is primarily governed by the laws of a
  194         foreign country. As a result, all of the rating and
  195         underwriting laws applicable to policies filed in this
  196         state do not apply to this coverage, which may result
  197         in your premiums being higher than would be
  198         permissible under a Florida-approved policy. Any
  199         purchase of individual life insurance should be
  200         considered carefully, as future medical conditions may
  201         make it impossible to qualify for another individual
  202         life policy. If the insurer issuing your policy
  203         becomes insolvent, this policy is not covered by the
  204         Florida Life and Health Insurance Guaranty
  205         Association. For information concerning individual
  206         life coverage under a Florida-approved policy, consult
  207         your agent or the Florida Department of Financial
  208         Services.
  210         (g) All life insurance policies and annuity contracts
  211  issued pursuant to this subsection must contain on the first
  212  page of the policy or contract, in contrasting color and not
  213  less than 10-point type, the following statement:
  215         The benefits of the policy providing your coverage are
  216         governed primarily by the law of a country other than
  217         the United States.
  219         (h) All single-premium life insurance policies and single
  220  premium annuity contracts issued to persons who are not
  221  residents of the United States and are not nonresidents
  222  illegally residing in the United States pursuant to this
  223  subsection shall be subject to the provisions of chapter 896.
  224         Section 2. Section 628.901, Florida Statutes, is amended to
  225  read:
  226         628.901 Definitions “Captive insurer” defined.—As used in
  227  For the purposes of this part, the term: except as provided in
  228  s. 628.903, a “captive insurer” is a domestic insurer
  229  established under part I to insure the risks of a specific
  230  corporation or group of corporations under common ownership
  231  owned by the corporation or corporations from which it accepts
  232  risk under a contract of insurance.
  233         (1) “Association” means a legal association of nursing
  234  homes, hospitals, skilled nursing facilities, assisted living
  235  facilities, or continuing care retirement communities.
  236         (2) “Association captive insurer” means a company that
  237  insures risks of the member organizations of the association and
  238  their affiliated companies.
  239         (3) “Captive insurer” means a pure captive insurer or an
  240  association captive insurer domiciled in this state and formed
  241  or licensed under this part.
  242         (4) “Industrial insured” means an insured that:
  243         (a)Has gross assets in excess of $50 million;
  244         (b)Procures insurance through the use of a full-time
  245  employee of the insured who acts as an insurance manager or
  246  buyer or through the services of a person licensed as a property
  247  and casualty insurance agent, broker, or consultant in such
  248  person’s state of domicile;
  249         (c)Has at least 100 full-time employees; and
  250         (d)Pays annual premiums of at least $200,000 for each line
  251  of insurance purchased from the industrial insured captive
  252  insurer, or at least $75,000 for any line of coverage in excess
  253  of at least $25 million in the annual aggregate. The purchase of
  254  umbrella or general liability coverage in excess of $25 million
  255  in the annual aggregate is deemed to be the purchase of a single
  256  line of insurance.
  257         (5)“Industrial insured captive insurer” is a captive
  258  insurer that:
  259         (a)Has as its stockholders or members only industrial
  260  insureds that the captive insurer insures, or has as its sole
  261  stockholder a corporation whose sole stockholders are industrial
  262  insureds that the captive insurer insures; and
  263         1.Provides insurance only to the industrial insureds that
  264  are its stockholders or members, and affiliates thereof, or to
  265  the stockholders, and affiliates thereof, of its parent
  266  corporation; or
  267         2.Provides reinsurance only on risks written by insurers
  268  of industrial insureds who are the stockholders or members, and
  269  affiliates thereof, of the captive insurer, or the stockholders,
  270  and affiliates thereof, of the parent corporation of the captive
  271  insurer;
  272         (b)Maintains unimpaired capital and surplus of at least
  273  $20 million; and
  274         (c)If licensed in this state before December 31, 1999, or
  275  if any subsidiary formed by the licensed insurer on or after
  276  December 31, 1999, has:
  277         1.Gross assets in excess of $10 million and procures
  278  insurance through the use of a full-time employee of the insured
  279  who acts as an insurance manager or buyer or through the
  280  services of a person licensed as a property and casualty
  281  insurance agent, broker, or consultant in such person’s state of
  282  domicile;
  283         2.At least 25 full-time employees; and
  284         3.Annual aggregate premiums for all insurance risks which
  285  total at least $100,000.
  287  As used in this subsection, the term “affiliate” means a person
  288  that directly or indirectly, through one or more intermediaries,
  289  controls, is controlled by, or is under common control with one
  290  or more of the stockholders or members of an industrial insured
  291  captive insurer or one or more of the stockholders of the parent
  292  corporation of an industrial insured captive insurer.
  293         (6) “Pure captive insurer” means a company that insures the
  294  risks of its parent, affiliated companies, controlled
  295  unaffiliated businesses, or a combination thereof.
  296         Section 3. Section 628.903, Florida Statutes, is repealed.
  297         Section 4. Section 628.905, Florida Statutes, is amended to
  298  read:
  299         628.905 Licensing; authority.—In order to conduct insurance
  300  business in this state, a captive insurer must obtain a license
  301  from the office.
  302         (1) A Any captive insurer, if when permitted by its charter
  303  or articles of incorporation, may apply to the office for a
  304  license to provide commercial property, commercial casualty, and
  305  commercial marine insurance. coverage other than workers’
  306  compensation and employer’s liability insurance coverage, except
  307  that An industrial insured captive insurer may also apply for a
  308  license to provide workers’ compensation and employer’s
  309  liability insurance as set forth in subsection (5) (6).
  310         (2) A No captive insurer, other than an industrial insured
  311  captive insurer, may not shall insure or accept reinsurance on
  312  any risks other than those of its parent and affiliated
  313  companies.
  314         (3) In addition to information otherwise required by this
  315  code, each applicant captive insurer shall file with the office
  316  evidence:
  317         (a) Of the adequacy of the loss prevention program of its
  318  insureds.
  319         (b) That it intends to employ or contract with a reputable
  320  person or firm that possesses the appropriate expertise,
  321  experience, and character to manage the association captive
  322  insurer.
  323         (4) If an association captive insurer operates with
  324  separate cells or segregated accounts, a certificate of
  325  insurance used to satisfy financial responsibility laws shall be
  326  issued in an amount not exceeding the total funds in the
  327  segregated accounts or separate cells of each member
  328  organization of the association.
  329         (5)(4) An industrial insured captive insurer:
  330         (a) Need not be incorporated in this state if it has been
  331  validly incorporated under the laws of another jurisdiction;.
  332         (b)(5)An industrial insured captive insurer Is subject to
  333  all provisions of this part except as otherwise indicated; and.
  334         (c)(6)An industrial insured captive insurer May not
  335  provide workers’ compensation and employer’s liability insurance
  336  except in excess of at least $25 million in the annual
  337  aggregate.
  338         Section 5. Section 628.908, Florida Statutes, is created to
  339  read:
  340         628.908Principal place of business; annual meeting.—In
  341  order to conduct insurance business in this state, a licensed
  342  captive insurer must:
  343         (1) Maintain its principal place of business in this state;
  344  and
  345         (2) Annually hold in this state at least one board of
  346  directors’ meeting; or, in the case of a reciprocal insurer, one
  347  subscriber’s advisory committee meeting; or, in the case of a
  348  limited liability company, one managing board’s meeting.
  349         Section 6. Paragraph (a) of subsection (2) and paragraph
  350  (a) of subsection (3) of section 628.909, Florida Statutes, are
  351  amended to read:
  352         628.909 Applicability of other laws.—
  353         (2) The following provisions of the Florida Insurance Code
  354  shall apply to captive insurers who are not industrial insured
  355  captive insurers to the extent that such provisions are not
  356  inconsistent with this part:
  357         (a) Chapter 624, except for ss. 624.407, 624.408, 624.4085,
  358  624.40851, 624.4095, 624.425, and 624.426.
  359         (3) The following provisions of the Florida Insurance Code
  360  shall apply to industrial insured captive insurers to the extent
  361  that such provisions are not inconsistent with this part:
  362         (a) Chapter 624, except for ss. 624.407, 624.408, 624.4085,
  363  624.40851, 624.4095, 624.425, 624.426, and 624.609(1).
  364         Section 7. This act shall take effect July 1, 2011.