HB 311

1	A bill to be entitled
2	An act relating to insurance; amending s. 628.461,
3	F.S., relating to acquisition of controlling stock
4	with respect to stock and mutual insurers; including
5	prepaid limited health service organizations, health
6	maintenance organizations, prepaid health clinics,
7	continuing care providers, and multiple-employer
8	welfare arrangements within the definition of the term
9	"insurer"; providing that a person may not acquire a
10	domestic stock insurer or a controlling company unless
11	such person has filed with the commissioner and sent
12	to the insurer a statement containing specified
13	information and the offer, request, invitation,
14	agreement, or acquisition has been approved by the
15	Commissioner of Insurance; requiring a controlling
16	person of a domestic insurer seeking to divest its
17	controlling interest in the domestic insurer to file
18	notice of the proposed divestiture; requiring the
19	filing of a preacquisition notification; providing for
20	contents of statement; providing for alternative
21	filing materials under specified circumstances;
22	providing for approval or disapproval by the
23	commissioner of any merger or acquisition of control
24	after a public hearing; providing procedures and
25	requirements, including notice requirements, with
26	respect to such hearings; providing for hearings on a
27	consolidated basis; authorizing the commissioner to
28	retain attorneys and experts in reviewing the proposed
29	acquisition of control; providing nonapplicability;
30	providing that failure to file any required statement,
31	amendment, or other material or the effectuation or
32	attempted effectuation of an acquisition of control
33	of, divestiture of, or merger with a domestic insurer
34	without approval of the commissioner constitutes a
35	violation of the section; providing for jurisdiction
36	of courts with respect to violations and service of
37	process; authorizing the commissioner to enter an
38	order under specified circumstances; defining terms;
39	providing criteria and establishing formulae for
40	competitive standards; providing that the burden of
41	showing prima facie evidence of violation of the
42	competitive standard rests with the commissioner;
43	authorizing the commissioner to issue specified orders
44	if an acquisition violates required standards;
45	requiring hearings; requiring an order to be
46	accompanied by a written decision of the commissioner;
47	authorizing penalties for violation of a cease and
48	desist order of the commissioner; providing a fine for
49	failure to make required filings and failure to
50	demonstrate a good faith effort to comply with any
51	filing requirement; specifying acquisitions and
52	purchase of securities that are exempt from the
53	section; providing procedures and requirements with
54	respect to approval or disapproval of the acquisition
55	of voting securities; amending s. 628.4615, F.S.,
56	relating to specialty insurers, the acquisition of
57	controlling stock, ownership interest, assets, or
58	control thereof, and the merger or consolidation of
59	such insurers; removing prepaid limited health service
60	organizations, health maintenance organizations,
61	prepaid health clinics, continuing care providers, and
62	multiple-employer welfare arrangements from the
63	definition of specialty insurer; revising procedures
64	and requirements with respect to the acquisition of a
65	specialty insurer; requiring specified background
66	information with respect to new officers, directors,
67	trustees, partners, owners, or managers of a specialty
68	insurer that is the subject of an acquisition;
69	eliminating provisions relating to review of
70	acquisition applications, prohibited material change
71	in the operation of a specialty insurer or controlling
72	company by an acquiring person, acquisition
73	proceedings, approval and disapproval of acquisitions,
74	burden of proof, validity of acquisitions, and
75	unlawful representation of approval by the office,
76	penalties therefor, and statute of limitations
77	thereon; creating s. 628.800, F.S.; providing
78	definitions with respect to pt. IV, ch. 628, F.S.,
79	relating to insurance holding companies; amending s.
80	628.801, F.S.; substantially rewording provisions
81	relating to registration of members of an insurance
82	holding company system; providing procedures and
83	requirements with respect to such registration;
84	requiring reporting of dividends and other
85	distributions to shareholders; providing for
86	termination of registration; providing for filing of
87	consolidated registration statements; authorizing
88	specified insurers to register on behalf of an
89	affiliated insurer; providing inapplicability;
90	providing for filing of a disclaimer of affiliation
91	and procedures and requirements with respect thereto;
92	requiring the filing of an annual enterprise risk
93	report; providing that failure timely to file a
94	registration statement or summary thereof or an
95	enterprise risk filing constitutes a violation of the
96	section; creating s. 628.8011, F.S.; providing
97	procedures and requirements with respect to standards
98	and management of an insurer within an insurance
99	holding company system; establishing standards for
100	transactions within an insurance holding company
101	system; precluding specified transactions involving a
102	domestic insurer and any person in its insurance
103	holding company system; providing exceptions;
104	providing for review of transactions; requiring notice
105	with respect to specified investments; providing
106	procedures and requirements with respect to payment of
107	extraordinary dividends or the making of extraordinary
108	distributions by a domestic insurer; providing
109	requirements with respect to management of domestic
110	insurers; providing factors to be considered in
111	determining adequacy of an insurer's surplus; creating
112	628.8012, F.S.; providing for the establishment of and
113	participation in a supervisory college; specifying
114	powers of the Commissioner of Insurance with respect
115	thereto; providing for payment of expenses of the
116	college; creating s. 628.8013, F.S.; providing
117	rulemaking authority of the commissioner; creating s.
118	628.8014, providing restrictions on voting of
119	securities; amending s. 628.802, F.S.; providing for
120	injunctions against specified violations;
121	substantially revising provisions relating to the
122	voting of securities; substantially revising
123	provisions relating to the seizure or sequestration of
124	voting securities; amending s. 628.803, F.S.;
125	providing a penalty for failure to file a registration
126	statement; providing for deposit of funds derived
127	therefrom; providing a penalty for knowing violation,
128	participation in, or assent to specified violative
129	transactions or the making of investments by a
130	director or officer of an insurance holding company
131	system; authorizing the issuance of cease and desist
132	orders with respect to specified transactions or
133	contracts; providing penalties for willful violation
134	of pt. IV of ch. 628, F.S., by an insurer or any
135	director, officer, employee, or agent thereof;
136	providing a penalty for knowingly making false
137	statements, false reports, or false filings with the
138	intent to deceive in the performance duties as an
139	officer, director, or employee of an insurance holding
140	company system; providing that a violation of ch. 628,
141	F.S., which prevents full understanding of an
142	enterprise risk may serve as an independent basis for
143	disapproving dividends or distributions and for
144	placing the insurer under an order of supervision;
145	amending ss. 636.065, 641.255, 641.416, and 651.024,
146	F.S.; conforming cross-references; reenacting s.
147	48.151(3), F.S., relating to service of process by the
148	Chief Financial Officer on specified insurers, to
149	incorporate the amendment to s. 628.461, F.S., in a
150	reference thereto; reenacting s. 624.310(1)(a), F.S.,
151	relating to the definition of the term "affiliated
152	party," to incorporate the amendments to ss. 628.461
153	and 628.4615, F.S., in references thereto; reenacting
154	s. 625.765, F.S., relating to exemptions from
155	specified provisions of pt. IV, ch. 625, F.S.,
156	relating to domestic stock insurers and equity
157	securities, to incorporate the amendment to s.
158	628.461, F.S., in a reference thereto; reenacting s.
159	628.705(2), F.S., relating to prohibition of stock
160	transfers, to incorporate the amendment to s. 628.461,
161	F.S., in a reference thereto; reenacting s.
162	631.051(7), F.S., relating to grounds for
163	rehabilitation of a domestic insurer or alien insurer,
164	to incorporate the amendments to ss. 628.461 and
165	628.4615, F.S., in references thereto; reenacting s.
166	409.912(19), F.S., relating to cost-effective
167	purchasing of health care, to incorporate the
168	amendment to s. 628.4615, F.S., in a reference
169	thereto; reenacting s. 624.80(1)(b), F.S., relating to
170	the definition of the term "insurer," to incorporate
171	the amendment to s. 628.4615, F.S., in a reference
172	thereto; reenacting s. 626.9928, F.S., relating to
173	acquisition of interest in a viatical settlement
174	provider, to incorporate the amendment to s. 628.4615,
175	F.S., in a reference thereto; reenacting s. 634.252,
176	F.S., relating to acquisition requirements with
177	respect to motor vehicle service agreement companies,
178	to incorporate the amendment to s. 628.4615, F.S., in
179	a reference thereto; reenacting s. 634.3073, F.S.,
180	relating to acquisition requirements with respect to
181	home warranty associations, to incorporate the
182	amendment to s. 628.4615, F.S., in a reference
183	thereto; reenacting s. 634.4085, F.S., relating to
184	acquisition requirements with respect to service
185	warranty associations, to incorporate the amendment to
186	s. 628.4615, F.S., in a reference thereto; reenacting
187	s. 642.032(5), F.S., relating to provisions of general
188	insurance law applicable to legal expense insurance
189	corporations, to incorporate the amendment to s.
190	628.4615, F.S., in a reference thereto; reenacting s.
191	626.7492(6)(b), (8)(f), and (9)(f), F.S., relating to
192	duties of insurers using the services of a reinsurance
193	intermediary broker or manager, to incorporate the
194	amendments to s. 628.801, F.S., in references thereto;
195	reenacting s. 626.918(2)(d), F.S., relating to
196	conditions of eligibility for surplus lines insurers,
197	to incorporate the amendment to s. 628.801, F.S., in a
198	reference thereto; providing an effective date.
199
200	Be It Enacted by the Legislature of the State of Florida:
201
202	Section 1.  Section 628.461, Florida Statutes, is amended
203	to read:
204	(Substantial rewording of section. See
205	s. 628.461, F.S., for present text.)
206	628.461  Acquisition of controlling stock.-
207	(1)  DEFINITIONS.-As used in this section, the term
208	"insurer" includes any:
209	(a)  Multiple-employer welfare arrangements operating
210	pursuant to chapter 624.
211	(b)  Prepaid limited health service organizations operating
212	under a certificate of authority issued under part I of chapter
213	636.
214	(c)  Health maintenance organizations operating under a
215	certificate of authority issued under part I of chapter 641.
216	(d)  Prepaid health clinics operating under a certificate
217	of authority issued under part II of chapter 641.
218	(e)  Provider of continuing care operating under a
219	certificate of authority or provisional certificate of authority
220	issued under chapter 651.
221	(2) FILING REQUIREMENTS.-A person may not, individually or
222	in conjunction with any affiliated person of such person,
223	acquire directly or indirectly, conclude a tender offer or
224	exchange offer for, enter into any agreement to exchange
225	securities for, or otherwise finally acquire 10 percent or more
226	of the outstanding voting securities of a domestic stock insurer
227	or of a controlling company, unless at the time the offer,
228	request, or invitation is made or the agreement is entered into,
229	or prior to the acquisition of the securities if no offer or
230	agreement is involved, such person has filed with the
231	commissioner and has sent to the insurer, a statement containing
232	the information required by this section and the offer, request,
233	invitation, agreement, or acquisition has been approved by the
234	commissioner in the manner prescribed in this section.
235	(a)  For purposes of this section, any controlling person
236	of a domestic insurer seeking to divest its controlling interest
237	in the domestic insurer in any manner shall file with the
238	commissioner, with a copy provided to the insurer, notice of its
239	proposed divestiture at least 30 days prior to the cessation of
240	control. The commissioner shall determine those instances in
241	which the party or parties seeking to divest a controlling
242	interest in an insurer will be required to file for and obtain
243	approval of the transaction.
244	(b)  With respect to a transaction subject to this
245	subsection, the acquiring person must also file a preacquisition
246	notification with the commissioner within 5 days of execution of
247	an agreement, which shall contain the information as prescribed
248	by the National Association of Insurance Commissioners relating
249	to those markets which cause the acquisition not to be exempted
250	from the provisions of this section. The commissioner may
251	require such additional material and information as deemed
252	necessary to determine whether the proposed acquisition, if
253	consummated, would violate the competitive standard set forth in
254	subsection (8). Failure to file the notification may subject the
255	violator to penalties specified in subsection (9). The waiting
256	period required begins on the date of receipt by the
257	commissioner of a preacquisition notification and ends on the
258	earlier of the 30th day after the date of receipt of
259	notification or termination of the waiting period by the
260	commissioner. Prior to the end of the waiting period, the
261	commissioner, on a one-time basis, may require the submission of
262	additional needed information relevant to the proposed
263	acquisition, in which event the waiting period shall end on the
264	earlier of the 30th day after receipt of the additional
265	information by the commissioner or termination of the waiting
266	period by the commissioner.
267	(c)  For purposes of this section, the term "domestic
268	insurer" includes any person controlling a domestic insurer
269	unless the person, as determined by the commissioner, is either
270	directly or through its affiliates primarily engaged in business
271	other than the business of insurance. For the purposes of this
272	section, the term "person" does not include any securities
273	broker that holds, in the usual and customary broker's function,
274	less than 20 percent of the voting securities of an insurance
275	company or of any person who controls an insurance company.
276	(3)  CONTENT OF STATEMENT.-
277	(a)  The statement to be filed with the office and
278	furnished to the insurer and controlling company shall be made
279	under oath and contain the following information and any
280	additional information as the office deems necessary to
281	determine the character, experience, ability, and other
282	qualifications of the person or affiliated person of such person
283	for the protection of the policyholders and shareholders of the
284	insurer and the public:
285	1.  The name and address of each person by whom or on whose
286	behalf the merger or other acquisition of control referred to in
287	subsection (2) is to be effected, hereinafter referred to as the
288	"acquiring party," the background information on each natural
289	person by whom, or on whose behalf, the acquisition is to be
290	made, and, if the acquisition is to be made by or on behalf of a
291	corporation, association, or trust, the identity of, and the
292	background information specified in this section on, each
293	director, officer, trustee, or other natural person performing
294	duties similar to those of a director, officer, or trustee for
295	the corporation, association, or trust or any person who
296	controls, either directly or indirectly, the corporation,
297	association, or trust, and:
298	a.  If the person is an individual, his or her principal
299	occupation and all offices and positions held during the past 10
300	years, and any conviction of crimes other than minor traffic
301	violations during the past 10 years.
302	b.  Whether, during such 10-year period, the person has
303	been the subject of any proceeding for the revocation of any
304	license and, if so, the nature of the proceeding and the
305	disposition of the proceeding.
306	c.  Whether, during the 10-year period, the person has been
307	the subject of any proceeding under the Federal Bankruptcy Code
308	or whether, during the 10-year period, any corporation,
309	partnership, firm, trust, or association in which the person was
310	a director, officer, trustee, partner, or other official has
311	been subject to any such proceeding, either during the time in
312	which the person was a director, officer, trustee, partner, or
313	other official or within 12 months thereafter.
314	d.  Whether, during the 10-year period, the person has been
315	enjoined, either temporarily or permanently, by a court of
316	competent jurisdiction from violating any federal or state law
317	regulating the business of insurance, securities, or banking, or
318	from carrying out any particular practice or practices in the
319	course of the business of insurance, securities, or banking,
320	together with details as to any such event.
321	e.  If the person is not an individual, a report of the
322	nature of its business operations during the past 5 years or for
323	the period of time that the person and any predecessors have
324	been in existence, whichever is less, an informative description
325	of the business intended to be conducted by the person and the
326	person's subsidiaries, and a list of all individuals who are or
327	who have been selected to become directors, trustees, or
328	executive officers of the person, or who perform or will perform
329	functions appropriate to such positions. The list must include
330	for each individual the information required under subparagraph
331	(a)1.
332	2.  The source, nature, and amount of the consideration
333	used or to be used in effecting the merger or other acquisition
334	of control, a description of any transaction where funds were or
335	are to be obtained for any such purpose, including any pledge of
336	the insurer's stock or the stock of any of its subsidiaries or
337	controlling affiliates, and the identity of persons furnishing
338	consideration.
339	3.  Fully audited financial information as to the earnings
340	and financial condition of each acquiring party for the
341	preceding 5 fiscal years of each acquiring party, or for the
342	period the acquiring party and any predecessors have been in
343	existence, whichever is less, and similar unaudited information
344	as of a date not earlier than 90 days prior to the filing of the
345	statement.
346	4.  Any plans or proposals which each acquiring party may
347	have to liquidate the insurer, to sell its assets or merge or
348	consolidate it with any person, or to make any other material
349	change in its business or corporate structure or management.
350	5.  The number and class of shares of any security referred
351	to in subsection (2) that each acquiring party proposes to
352	acquire, the terms of the offer, request, invitation, agreement
353	or acquisition referred to in subsection (2), and a statement as
354	to the method used to determine the fairness of the proposal.
355	6.  The amount of each class of any security referred to in
356	subsection (2) which is beneficially owned or concerning which
357	there is a right to acquire beneficial ownership by each
358	acquiring party.
359	7.  A full description of any contracts, arrangement, or
360	understandings with respect to any security referred to in
361	subsection (2) in which any acquiring party is involved,
362	including, but not limited to, transfer of any of the
363	securities, joint ventures, loan or option arrangements, puts or
364	calls, guarantees of loans, guarantees against loss or
365	guarantees of profits, division of losses or profits, or the
366	giving or withholding of proxies. The description must identify
367	the persons with whom the contracts, arrangements, or
368	understandings have been entered into.
369	8.  A description of the purchase of any security referred
370	to in subsection (2) during the 12 calendar months preceding the
371	filing of the statement by any acquiring party, including the
372	dates of purchase, names of the purchasers, and consideration
373	paid or agreed to be paid.
374	9.  A description of any recommendations to purchase any
375	security referred to in subsection (2), made during the 12
376	calendar months preceding the filing of the statement by any
377	acquiring party or by anyone based upon interviews or at the
378	suggestion of the acquiring party.
379	10.  Copies of all tender offers for, requests or
380	invitations for tenders of, exchange offers for, and agreements
381	to acquire or exchange any securities referred to in subsection
382	(2), and, if distributed, copies of additional soliciting
383	material relating to them.
384	11.  The term of any agreement, contract, or understanding
385	made with or proposed to be made with any broker-dealer as to
386	solicitation of securities referred to in subsection (2) for
387	tender, and the amount of any fees, commissions, or other
388	compensation to be paid to broker-dealers with regard thereto.
389	12.  An agreement by the person required to file the
390	statement referred to in subsection (2) that he or she will
391	provide the annual enterprise risk report, if applicable,
392	specified in s. 628.801, for so long as control exists.
393	13.  An acknowledgement by the person required to file the
394	statement referred to in subsection (2) that the person and all
395	subsidiaries within its control in the insurance holding company
396	system will provide information to the commissioner upon request
397	as necessary to evaluate enterprise risk to the insurer.
398	14.  Such additional information as the commissioner may by
399	rule or regulation prescribe as necessary or appropriate for the
400	protection of policyholders of the insurer or in the public
401	interest.
402	(b)  If the person required to file the statement referred
403	to in subsection (2) is a partnership, limited partnership,
404	syndicate, or other group, the commissioner may require that the
405	information required by paragraph (a) be given with respect to
406	each partner of the partnership or limited partnership, each
407	member of the syndicate or group, and each person who controls
408	the partner or member. If any partner, member, or person is a
409	corporation or if the person required to file the statement
410	referred to in subsection (2) is a corporation, the commissioner
411	may require that the information required by paragraph (a) be
412	given with respect to the corporation, each officer and director
413	of the corporation, and each person who is directly or
414	indirectly the beneficial owner of more than 10 percent of the
415	outstanding voting securities of the corporation.
416	(c)  If any material change occurs in the facts set forth
417	in the statement filed with the commissioner and sent to the
418	insurer pursuant to this section, an amendment setting forth the
419	change, together with copies of all documents and other material
420	relevant to the change, shall be filed with the commissioner and
421	sent to the insurer within 2 business days after the person
422	learns of the change. A material change in the operation of the
423	insurer is a transaction which disposes of or obligates 5
424	percent or more of the capital and surplus of the insurer. A
425	material change in the management of the insurer is any change
426	in management involving officers or directors of the insurer or
427	any person of the insurer or controlling company having
428	authority to dispose of or obligate 5 percent or more of the
429	insurer's capital or surplus.
430	(3)  ALTERNATIVE FILING MATERIALS.-If any offer, request,
431	invitation, agreement, or acquisition referred to in subsection
432	(2) is proposed to be made by means of a registration statement
433	under the Securities Act of 1933, or in circumstances requiring
434	the disclosure of similar information under the Securities
435	Exchange Act of 1934, or under a state law requiring similar
436	registration or disclosure, the person required to file the
437	statement referred to in subsection (2) may utilize the
438	documents in furnishing the information called for by that
439	statement.
440	(4)  APPROVAL BY COMMISSIONER; HEARINGS.-
441	(a)  The commissioner shall approve any merger or other
442	acquisition of control under subsection (2) unless, after a
443	public hearing, the commissioner finds that:
444	1.  After the change of control, the domestic insurer
445	referred to in subsection (2) would not be able to satisfy the
446	requirements for the issuance of a license to write the line or
447	lines of insurance for which it is presently licensed;
448	2.  The effect of the merger or other acquisition of
449	control would be substantially to lessen competition in
450	insurance in this state or tend to create a monopoly. In
451	applying the competitive standard in this subparagraph:
452	a.  The informational requirements of subsection (2) and
453	the standards of subsection (8) shall apply;
454	b.  The merger or other acquisition shall not be
455	disapproved if the commissioner finds that any of the situations
456	meeting the criteria provided by subsection (8) exist; and
457	c.  The commissioner may condition the approval of the
458	merger or other acquisition on the removal of the basis of
459	disapproval within a specified period of time;
460	3.  The financial condition of any acquiring party is such
461	that it might jeopardize the financial stability of the insurer,
462	or prejudice the interest of its policyholders;
463	4.  The plans or proposals which the acquiring party has to
464	liquidate the insurer or controlling company, sell its assets,
465	consolidate or merge it with any person, or make any other
466	material change in its business or corporate structure or
467	management are unfair and unreasonable to policyholders of the
468	insurer and not in the public interest;
469	5.  The competence, experience, and integrity of those
470	persons who would control the operation of the insurer are such
471	that it would not be in the interest of policyholders of the
472	insurer and of the public to permit the merger or other
473	acquisition of control;
474	6.  The natural persons for whom background information is
475	required to be furnished pursuant to this section have
476	backgrounds which indicate that it is in the best interests of
477	the policyholders of the domestic stock insurer and in the
478	public interest to permit such persons to exercise control over
479	such domestic stock insurer;
480	7.  The officers and directors to be employed after the
481	acquisition have sufficient insurance experience and ability to
482	assure reasonable promise of successful operation;
483	8.  The management of the insurer after the acquisition
484	will be competent and trustworthy and will possess sufficient
485	managerial experience to make the proposed operation of the
486	insurer not hazardous to the insurance-buying public;
487	9.  The management of the insurer after the acquisition
488	will not include any person who has, directly or indirectly,
489	through ownership, control, reinsurance transactions, or other
490	insurance or business relations, unlawfully manipulated the
491	assets, accounts, finances, or books of any insurer or otherwise
492	acted in bad faith with respect thereto; or
493	10.  The acquisition is likely to be hazardous or
494	prejudicial to the insurance-buying public.
495	(b)  The public hearing under paragraph (a) shall be held
496	within 30 days after the filing of the statement required by
497	subsection (2), and at least 20 days' notice shall be given by
498	the commissioner to the person filing the statement. Not less
499	than 7 days' notice of the public hearing shall be given by the
500	person filing the statement to the insurer and to such other
501	persons as may be designated by the commissioner. The
502	commissioner shall make a determination within the 60-day period
503	preceding the effective date of the proposed transaction. At the
504	hearing, the person filing the statement, the insurer, any
505	person to whom notice of hearing was sent, and any other person
506	whose interest may be affected shall have the right to present
507	evidence, examine and cross-examine witnesses, and offer oral
508	and written arguments and in connection therewith shall be
509	entitled to conduct discovery proceedings in the same manner as
510	is presently allowed in the circuit courts of this state. All
511	discovery proceedings shall be concluded not later than 3 days
512	prior to the commencement of the public hearing.
513	(c)  If the proposed acquisition of control will require
514	the approval of more than one commissioner, the public hearing
515	referred to in paragraph (b) may be held on a consolidated basis
516	upon request of the person filing the statement referred to in
517	subsection (2). Such person shall file the statement with the
518	National Association of Insurance Commissioners within 5 days of
519	making the request for a public hearing. A commissioner may opt
520	out of a consolidated hearing and shall provide notice to the
521	applicant of the decision to do so within 10 days of the receipt
522	of the statement. A hearing conducted on a consolidated basis
523	shall be public and shall be held within the United States
524	before the commissioners of the states in which the insurers are
525	domiciled. At such hearing the commissioners shall hear and
526	receive evidence. A commissioner may attend such hearing in
527	person or by telecommunication.
528	(d)  In connection with a change of control of a domestic
529	insurer, any determination by the commissioner that the person
530	acquiring control of the insurer shall be required to maintain
531	or restore the capital of the insurer to the level required by
532	the laws and regulations of this state must be made not later
533	than 60 days after the date of notification of the change in
534	control submitted pursuant to subsection (2).
535	(e)  The commissioner may retain, at the acquiring person's
536	expense, any attorneys, actuaries, accountants, and other
537	experts not otherwise a part of the commissioner's staff as may
538	be reasonably necessary to assist the commissioner in reviewing
539	the proposed acquisition of control.
540	(5)  NONAPPLICABILITY.-The provisions of this section do
541	not apply to any offer, request, invitation, agreement or
542	acquisition which the commissioner, by order or by letter,
543	exempts as not having been made or entered into for the purpose
544	of, and not having the effect of, changing or influencing the
545	control of a domestic insurer.
546	(6)  VIOLATIONS.-The following constitute violations of
547	this section:
548	(a)  The failure to file any statement, amendment, or other
549	material required to be filed pursuant to subsection (2) or
550	subsection (3); or
551	(b)  The effectuation or any attempted effectuation of an
552	acquisition of control of, divestiture of, or merger with a
553	domestic insurer unless the commissioner has given approval.
554	(7)  JURISDICTION; CONSENT TO SERVICE OF PROCESS.-The
555	courts of this state are hereby vested with jurisdiction over
556	every person not resident, domiciled, or authorized to do
557	business in this state who files a statement with the
558	commissioner under this section, and overall actions involving
559	such person arising out of violations of this section. Each such
560	person shall be deemed to have performed acts equivalent to and
561	constituting an appointment by the person of the commissioner to
562	be his true and lawful attorney upon whom may be served all
563	lawful process in any action, suit, or proceeding arising out of
564	violations of this section. Copies of all lawful process shall
565	be served on the commissioner and transmitted by registered or
566	certified mail by the commissioner to the person at his last
567	known address.
568	(8)  COMPETITIVE STANDARD.-
569	(a)  As used in this subsection:
570	1.  The term "insurer" includes any company or group of
571	companies under common management, ownership, or control.
572	2.  The term "market" means the relevant product and
573	geographical markets. In determining the relevant product and
574	geographical markets, the commissioner shall give due
575	consideration to, among other things, the definitions or
576	guidelines, if any, promulgated by the National Association of
577	Insurance Commissioners and to information, if any, submitted by
578	parties to the acquisition. In the absence of sufficient
579	information to the contrary, the relevant product market is
580	assumed to be the direct written insurance premium for a line of
581	business, such line being that used in the annual statement
582	required to be filed by insurers doing business in this state,
583	and the relevant geographical market is assumed to be this
584	state.
585	(b)  The commissioner may enter an order or may send a
586	letter under subsection (9) with respect to an acquisition if
587	there is substantial evidence that the effect of the acquisition
588	may be substantially to lessen competition in any line of
589	insurance in this state or to tend to create a monopoly, or if
590	the insurer fails to file adequate information in compliance
591	with the preacquisition notification required by this section.
592	(c)  In determining whether a proposed acquisition would
593	violate the competitive standard, the commissioner shall
594	consider the following:
595	1.  Any acquisition covered under subsection (11) involving
596	two or more insurers competing in the same market is prima facie
597	evidence of violation of the competitive standards.
598	a.  If the market is highly concentrated and the involved
599	insurers possess the following shares of the market:
600
601	Insurer A     Insurer B
602
603	4%          4% or more
604	10%          2% or more
605	15%          1% or more
606
607	b.  Or, if the market is not highly concentrated and the
608	involved insurers possess the following shares of the market:
609
610	Insurer A     Insurer B
611
612	5%          5% or more
613	10%          4% or more
614	15%          3% or more
615	19%          1% or more
616
617	A highly concentrated market is one in which the share of the
618	four largest insurers is 75 percent or more of the market.
619	Percentages not shown in the tables are interpolated
620	proportionately to the percentages that are shown. If more than
621	two insurers are involved, exceeding the total of the two
622	columns in the table is prima facie evidence of violation of the
623	competitive standard in this subsection. For the purposes of
624	this paragraph, the insurer with the largest share of the market
625	is deemed to be Insurer A.
626	2.  There is a significant trend toward increased
627	concentration when the aggregate market share of any grouping of
628	the largest insurers in the market, from the two largest to the
629	eighth largest, has increased by 7 percent or more of the market
630	over a period of time extending from any base year 5 to 10 years
631	prior to the acquisition up to the time of the acquisition. Any
632	acquisition or merger covered under this section involving two
633	or more insurers competing in the same market is prima facie
634	evidence of violation of the competitive standard in this
635	subsection if:
636	a.  There is a significant trend toward increased
637	concentration in the market;
638	b.  One of the insurers involved is one of the insurers in
639	a grouping of large insurers showing the requisite increase in
640	the market share; and
641	c.  Another involved insurer's market is 2 percent or more.
642	(d)1.  The burden of showing prima facie evidence of
643	violation of the competitive standard rests upon the
644	commissioner.
645	2.  Even though an acquisition is not prima facie evidence
646	of violation of the competitive standard under this subsection,
647	the commissioner may establish the requisite anticompetitive
648	effect based upon other substantial evidence and a party may
649	establish the absence of the requisite anticompetitive effect
650	based upon other substantial evidence. Relevant factors in
651	making a determination under this subsection include, but are
652	not limited to, the following:
653	a.  Market shares.
654	b.  Volatility of ranking of market leaders.
655	c.  Number of competitors.
656	d.  Concentration.
657	e.  Trend of concentration in the industry.
658	f.  Ease of entry into and exit from the market.
659	(e)  An order denying the acquisition may not be entered
660	if:
661	1.  The acquisition will yield substantial economies of
662	scale or economies in resource utilization that cannot be
663	feasibly achieved in any other way, and the public benefits
664	which would arise from such economies exceed the public benefits
665	which would arise from not lessening competition; or
666	2.  The acquisition will substantially increase the
667	availability of insurance, and the public benefits of the
668	increase exceed the public benefits which would arise from not
669	lessening competition.
670	(9)  ORDERS AND PENALTIES.-
671	(a)  If an acquisition violates the standards of this
672	section, the commissioner may enter an order:
673	1.  Requiring an involved insurer to cease and desist from
674	doing business in this state with respect to the line or lines
675	of insurance involved in the violation; or
676	2.  Denying the application of an acquired or acquiring
677	insurer for a license to do business in this state.
678	(b)  Such an order shall not be entered unless:
679	1.  There is a hearing;
680	2.  Notice of the hearing is issued prior to the end of the
681	waiting period and not less than 15 days prior to the hearing;
682	and
683	3.  The hearing is concluded and the order is issued no
684	later than 60 days after the date of the filing of the
685	preacquisition notification with the commissioner. This deadline
686	may be waived by the parties.
687
688	Every order shall be accompanied by a written decision of the
689	commissioner setting forth findings of fact and conclusions of
690	law.
691	(c)  An order pursuant to this section does not apply if
692	the acquisition is not consummated.
693	(d)  Any person who violates a cease and desist order of
694	the commissioner under this section while the order is in effect
695	may, after notice and hearing and upon order of the
696	commissioner, be subject at the discretion of the commissioner
697	to one or more of the following:
698	1.  A monetary penalty of not more than $10,000 for every
699	day of violation; or
700	2.  Suspension or revocation of the person's license.
701	(e)  Any insurer or other person who fails to make any
702	filing required by this section and who also fails to
703	demonstrate a good faith effort to comply with any filing
704	requirement shall be subject to a fine of not more than $50,000.
705	(10)  EXEMPTIONS.-This section does not apply to the
706	following:
707	(a)  A purchase of securities solely for investment
708	purposes so long as the securities are not used by voting or
709	otherwise to cause or attempt to cause the substantial lessening
710	of competition in any insurance market in this state. If a
711	purchase of securities results in a presumption of control it is
712	not solely for investment purposes unless the commissioner of
713	the insurer's state of domicile accepts a disclaimer of control
714	or affirmatively finds that control does not exist and the
715	disclaimer action or affirmative finding is communicated by the
716	domiciliary commissioner to the commissioner of this state.
717	(b)  The acquisition of a person by another person when
718	both persons are neither directly nor through affiliates
719	primarily engaged in the business of insurance, if
720	preacquisition notification is filed with the commissioner in
721	accordance with this section 30 days prior to the proposed
722	effective date of the acquisition. However, such preacquisition
723	notification is not required for exclusion from this section if
724	the acquisition would otherwise be excluded from this section.
725	(c)  The acquisition of already affiliated persons.
726	(d)  An acquisition if, as an immediate result of the
727	acquisition:
728	1.  In no market would the combined market share of the
729	involved insurers exceed 5 percent of the total market;
730	2.  There would be no increase in any market share; or
731	3.  In no market would:
732	a.  The combined market share of the involved insurers
733	exceed 12 percent of the total market; and
734	b.  The market share increase by more than 2 percent of the
735	total market.
736
737	As used in this paragraph, the term "market" means direct
738	written insurance premium in this state for a line of business
739	as contained in the annual statement required to be filed by
740	insurers licensed to do business in this state.
741	(e)  An acquisition for which a preacquisition notification
742	would be required pursuant to this section due solely to the
743	resulting effect on the ocean marine insurance line of business.
744	(f)  An acquisition of an insurer whose domiciliary
745	commissioner affirmatively finds that:
746	1.  The insurer is in failing condition;
747	2.  There is a lack of feasible alternative to improving
748	such condition;
749	3.  The public benefits of improving the insurer's
750	condition through the acquisition exceed the public benefits
751	that would arise from not lessening competition; and
752	4.  The findings are communicated by the domiciliary
753	commissioner to the commissioner of this state.
754	(g)  Acquisitions subject to s. 628.4615.
755	(11)  APPROVAL; CONCLUSION OF ACQUISITION; DISAPPROVAL.-The
756	acquisition of voting securities shall be deemed approved unless
757	the office disapproves the proposed acquisition within 90 days
758	after the statement required by subsection (2) has been filed.
759	The office may on its own initiate or, if requested to do so in
760	writing by a substantially affected party, shall conduct a
761	proceeding to consider the appropriateness of the proposed
762	filing. The 90-day time period shall be tolled during the
763	pendency of the proceeding. Any written request for a proceeding
764	must be filed with the office within 10 days of the date on
765	which notice of the filing is given. During the pendency of the
766	proceeding or review period by the office, any person or
767	affiliated person complying with the filing requirements of this
768	section may proceed and take all steps necessary to conclude the
769	acquisition so long as the acquisition becoming final is
770	conditioned upon obtaining office approval. The office shall,
771	however, at any time that it finds an immediate danger to the
772	public health, safety, and welfare of the domestic policyholders
773	exists, immediately order, pursuant to s. 120.569(2)(n), the
774	proposed acquisition temporarily disapproved and any further
775	steps to conclude the acquisition ceased.
776	Section 2.  Section 628.4615, Florida Statutes, is amended
777	to read:
778	628.4615  Specialty insurers; acquisition of controlling
779	stock, ownership interest, assets, or control; merger or
780	consolidation.-
781	(1)  For the purposes of this section, the term "specialty
782	insurer" means any person holding a license or certificate of
783	authority as:
784	(a)  A motor vehicle service agreement company authorized
785	to issue motor vehicle service agreements as those terms are
786	defined in s. 634.011;
787	(b)  A home warranty association authorized to issue "home
788	warranties" as those terms are defined in s. 634.301;
789	(c)  A service warranty association authorized to issue
790	"service warranties" as those terms are defined in s.
791	634.401(13) and (14);
792	(d)  A prepaid limited health service organization
793	authorized to issue prepaid limited health service contracts, as
794	those terms are defined in chapter 636;
795	(e)  An authorized health maintenance organization
796	operating pursuant to s. 641.21;
797	(f)  An authorized prepaid health clinic operating pursuant
798	to s. 641.405;
799	(d)(g)  A legal expense insurance corporation authorized to
800	engage in a legal expense insurance business pursuant to s.
801	642.021;
802	(h)  A provider that is licensed to operate a facility that
803	undertakes to provide continuing care as those terms are defined
804	in s. 651.011;
805	(i)  A multiple-employer welfare arrangement operating
806	pursuant to ss. 624.436-624.446;
807	(e)(j)  A premium finance company authorized to finance
808	insurance premiums pursuant to s. 627.828; or
809	(f)(k)  A corporation authorized to accept donor annuity
810	agreements pursuant to s. 627.481.
811	(2)  A person may not, individually or in conjunction with
812	any affiliated person of such person, directly or indirectly,
813	conclude a tender offer or exchange offer for, enter into any
814	agreement to exchange securities for, or otherwise finally
815	acquire, 10 percent or more of the outstanding voting securities
816	of a specialty insurer which is a stock corporation or of a
817	controlling company of a specialty insurer which is a stock
818	corporation; or conclude an acquisition of, or otherwise finally
819	acquire, 10 percent or more of the ownership interest of a
820	specialty insurer which is not a stock corporation or of a
821	controlling company of a specialty insurer which is not a stock
822	corporation, unless:
823	(a)  the person or affiliated person has filed with the
824	office and sent by registered mail to the principal office of
825	the specialty insurer and controlling company a letter of
826	notification regarding the transaction or proposed transaction
827	no later than 5 days after any form of tender offer or exchange
828	offer is proposed, or no later than 5 days after the acquisition
829	of the securities or ownership interest if no tender offer or
830	exchange offer is involved. The notification must be provided on
831	forms prescribed by the commission containing information
832	determined necessary to understand the transaction and identify
833	all purchasers and owners involved.;
834	(b)  The person or affiliated person has filed with the
835	office an application signed under oath and prepared on forms
836	prescribed by the commission which contains the information
837	specified in subsection (4). The application must be completed
838	and filed within 30 days after any form of tender offer or
839	exchange offer is proposed, or after the acquisition of the
840	securities if no tender offer or exchange offer is involved; and
841	(c)  The office has approved the tender offer or exchange
842	offer, or acquisition if no tender offer or exchange offer is
843	involved.
844	(3)  This section does not apply to any acquisition of
845	voting securities or ownership interest of a specialty insurer
846	or of a controlling company by any person who, on July 9, 1986,
847	is the owner of a majority of such voting securities or
848	ownership interest or who, on or after July 9, 1986, becomes the
849	owner of a majority of such voting securities or ownership
850	interest with the approval of the office under this section. The
851	person or affiliated person filing the required notice in
852	paragraph (2)(a) may request the office to waive the
853	requirements of paragraph (2)(b) if there is no change in the
854	ultimate controlling shareholder or ownership percentages of the
855	ultimate controlling shareholders and no unaffiliated parties
856	acquire any direct or indirect interest in the specialty
857	insurer. The office may waive the filing if it determines that
858	in fact there is no change in the ultimate controlling
859	shareholder or ownership percentages of the ultimate controlling
860	shareholders and no unaffiliated parties will acquire any direct
861	or indirect interest in the specialty insurer.
862	(3)(a)(4)  Within 30 days of the tender offer or exchange
863	offer, the party or affiliated party shall provide to the office
864	the background information for any new officers, directors,
865	trustees, partners, owners, managers, or joint venturers, or
866	other persons performing duties similar to those of persons in
867	such positions, of the specialty insurer as a result of the
868	acquisition The application to be filed with the office and
869	furnished to the specialty insurer and controlling company shall
870	contain the following information and any additional information
871	as the office deems necessary to determine the character,
872	experience, ability, and other qualifications of the specialty
873	insurer's management person or affiliated person of such person
874	for the protection of the insureds of the specialty insurer and
875	of the public. The information as to the background and identity
876	of each such natural person shall include:
877	(a)1.  The identity of, and the background information
878	specified in subsection (5) on, each natural person by whom, or
879	on whose behalf, the acquisition is to be made; and,
880	2.  If the acquisition is to be made by, or on behalf of, a
881	person other than a natural person and as to any person who
882	controls, either directly or indirectly, such other person, the
883	identity of, and the background information specified in
884	subsection (5) on:
885	a.  Each director, officer, or trustee, if a corporation,
886	or
887	b.  Each partner, owner, manager, or joint venturer, or
888	other person performing duties similar to those of persons in
889	the aforementioned positions, if not a corporation,
890
891	for the person.
892	(b)  The source and amount of the funds or other
893	consideration used, or to be used, in making the acquisition.
894	(c)  Any plans or proposals which such persons may have
895	made to liquidate the specialty insurer, to sell any of its
896	assets or merge or consolidate it with any person, or to make
897	any other major change in its business or corporate structure or
898	management; and any plans or proposals which such persons may
899	have made to liquidate any controlling company of the specialty
900	insurer, to sell any of its assets or merge or consolidate it
901	with any person, or to make any other major change in its
902	business or corporate structure or management.
903	(d)  The nature and the extent of the controlling interest
904	which the person or affiliated person of such person proposes to
905	acquire, the terms of the proposed acquisition, and the manner
906	in which the controlling interest is to be acquired of a
907	specialty insurer or controlling company which is not a stock
908	corporation.
909	(e)  The number of shares or other securities which the
910	person or affiliated person of such person proposes to acquire,
911	the terms of the proposed acquisition, and the manner in which
912	the securities are to be acquired.
913	(f)  Information as to any contract, arrangement, or
914	understanding with any party with respect to any of the
915	securities of the specialty insurer or controlling company,
916	including, but not limited to, information relating to the
917	transfer of any of the securities, option arrangements, puts or
918	calls, or the giving or withholding of proxies, which
919	information names the party with whom the contract, arrangement,
920	or understanding has been entered into and gives the details
921	thereof.
922	(5)(a)  The information as to the background and identity
923	of each natural person, which information is required to be
924	furnished pursuant to paragraph (4)(a), shall include:
925	1.  The natural person's occupations, positions of
926	employment, and offices held during the past 10 years.
927	2.  The principal business and address of any business,
928	corporation, or organization in which each such office of the
929	natural person was held, or in which each such occupation or
930	position of employment was carried on.
931	3.  Whether the natural person was, at any time during such
932	10-year period, convicted of any crime other than a traffic
933	violation.
934	4.  Whether the natural person has been, during such 10-
935	year period, the subject of any proceeding for the revocation of
936	any license and, if so, the nature of the proceeding and the
937	disposition of the proceeding.
938	5.  Whether, during the 10-year period, the natural person
939	has been the subject of any proceeding under the federal
940	Bankruptcy Act; or whether, during the 10-year period, any
941	person or other business or organization in which the natural
942	person was a director, officer, trustee, partner, owner,
943	manager, or other official has been subject to any such
944	proceeding, either during the time in which the natural person
945	was a director, officer, or trustee, if a corporation, or a
946	partner, owner, manager, joint venturer, or other official, if
947	not a corporation, or within 12 months thereafter.
948	6.  Whether, during the 10-year period, the natural person
949	has been enjoined, either temporarily or permanently, by a court
950	of competent jurisdiction from violating any federal or state
951	law regulating the business of insurance, securities, or
952	banking, or from carrying out any particular practice or
953	practices in the course of the business of insurance,
954	securities, or banking, together with details as to any such
955	event.
956	7.  Fingerprints of each person referred to in this section
957	subsection (4).
958	(b)  Any person filing the statement required by this
959	section shall give all required information that is within the
960	knowledge of:
961	1.  The directors, officers, or trustees, if a corporation,
962	or
963	2.  The partners, owners, managers, or joint venturers, or
964	others performing functions similar to those of a director,
965	officer, or trustee, if not a corporation,
966
967	of the person making the filing and of any person controlling
968	either directly or indirectly such person. If any material
969	change occurs in the facts set forth in the application filed
970	with the office pursuant to this section, an amendment setting
971	forth such changes shall be filed immediately with the office,
972	and a copy of the amendment shall be sent by registered mail to
973	the principal office of the specialty insurer and to the
974	principal office of the controlling company.
975	(6)(a)  The acquisition application shall be reviewed in
976	accordance with chapter 120. The office may on its own initiate,
977	or, if requested to do so in writing by a substantially affected
978	person, shall conduct, a proceeding to consider the
979	appropriateness of the proposed filing. Time periods for
980	purposes of chapter 120 shall be tolled during the pendency of
981	the proceeding. Any written request for a proceeding must be
982	filed with the office within 10 days of the date notice of the
983	filing is given. During the pendency of the proceeding or review
984	period by the office, any person or affiliated person complying
985	with the filing requirements of this section may proceed and
986	take all steps necessary to conclude the acquisition so long as
987	the acquisition becoming final is conditioned upon obtaining
988	office approval. The office shall, however, at any time it finds
989	an immediate danger to the public health, safety, and welfare of
990	the insureds exists, immediately order, pursuant to s.
991	120.569(2)(n), the proposed acquisition disapproved and any
992	further steps to conclude the acquisition ceased.
993	(b)  During the pendency of the office's review of any
994	acquisition subject to the provisions of this section, the
995	acquiring person shall not make any material change in the
996	operation of the specialty insurer or controlling company unless
997	the office has specifically approved the change nor shall the
998	acquiring person make any material change in the management of
999	the specialty insurer unless advance written notice of the
1000	change in management is furnished to the office. A material
1001	change in the operation of the specialty insurer is a
1002	transaction which disposes of or obligates 5 percent or more of
1003	the capital and surplus of the specialty insurer. A material
1004	change in the management of the specialty insurer is any change
1005	in management involving officers or directors of the specialty
1006	insurer or any person of the specialty insurer or controlling
1007	company having authority to dispose of or obligate 5 percent or
1008	more of the specialty insurer's capital or surplus. The office
1009	shall approve a material change in operations if it finds the
1010	applicable provisions of subsection (8) have been met. The
1011	office may disapprove a material change in management if it
1012	finds that the applicable provisions of subsection (8) have not
1013	been met and in such case the specialty insurer shall promptly
1014	change management as acceptable to the office.
1015	(c)  If a request for a proceeding is filed, the proceeding
1016	shall be conducted within 60 days after the date the written
1017	request for a proceeding is received by the office. A
1018	recommended order shall be issued within 20 days of the date of
1019	the close of the proceedings. A final order shall be issued
1020	within 20 days of the date of the recommended order or, if
1021	exceptions to the recommended order are filed, within 20 days of
1022	the date the exceptions are filed.
1023	(7)  The office may disapprove any acquisition subject to
1024	the provisions of this section by any person or any affiliated
1025	person of such person who:
1026	(a)  Willfully violates this section;
1027	(b)  In violation of an order of the office issued pursuant
1028	to subsection (11), fails to divest himself or herself of any
1029	stock or ownership interest obtained in violation of this
1030	section or fails to divest himself or herself of any direct or
1031	indirect control of such stock or ownership interest, within 25
1032	days after such order; or
1033	(c)  In violation of an order issued by the office pursuant
1034	to subsection (11), acquires an additional stock or ownership
1035	interest in a specialty insurer or controlling company or direct
1036	or indirect control of such stock or ownership interest, without
1037	complying with this section.
1038	(8)  The person or persons filing the application required
1039	by subsection (2) shall have the burden of proof. The office
1040	shall approve any such acquisition if it finds, on the basis of
1041	the record made during any proceeding or on the basis of the
1042	filed application if no proceeding is conducted, that:
1043	(a)  Upon completion of the acquisition, the specialty
1044	insurer will be able to satisfy the requirements for the
1045	issuance of a license or certificate to write the line of
1046	insurance for which it is presently licensed or certificated.
1047	(b)  The financial condition of the acquiring person or
1048	persons will not jeopardize the financial stability of the
1049	specialty insurer or prejudice the interests of its insureds or
1050	the public.
1051	(c)  Any plan or proposal which the acquiring person has,
1052	or acquiring persons have, made:
1053	1.  To liquidate the specialty insurer, sell its assets, or
1054	merge or consolidate it with any person, or to make any other
1055	major change in its business or corporate structure or
1056	management, or
1057	2.  To liquidate any controlling company, sell its assets,
1058	or merge or consolidate it with any person, or to make any major
1059	change in its business or corporate structure or management
1060	which would have an effect upon the specialty insurer,
1061
1062	is fair and free of prejudice to the insureds of the specialty
1063	insurer or to the public.
1064	(d)  The competence, experience, and integrity of those
1065	persons who will control directly or indirectly the operation of
1066	the specialty insurer indicate that the acquisition is in the
1067	best interest of the insureds of the insurer and in the public
1068	interest.
1069	(e)  The natural persons for whom background information is
1070	required to be furnished pursuant to this section have such
1071	backgrounds as to indicate that it is in the best interests of
1072	the insureds of the specialty insurer and in the public interest
1073	to permit such persons to exercise control over the specialty
1074	insurer.
1075	(f)  The directors and officers, if such specialty insurer
1076	or controlling company is a stock corporation, or the trustees,
1077	partners, owners, managers, or joint venturers or other persons
1078	performing duties similar to those of persons in the
1079	aforementioned positions, if such specialty insurer or
1080	controlling company is not a stock corporation, to be employed
1081	after the acquisition have sufficient insurance experience and
1082	ability to assure reasonable promise of successful operation.
1083	(g)  The management of the specialty insurer after the
1084	acquisition will be competent and trustworthy, and will possess
1085	sufficient managerial experience so as to make the proposed
1086	operation of the specialty insurer not hazardous to the
1087	insurance-buying public.
1088	(h)  The management of the specialty insurer after the
1089	acquisition shall not include any person who has directly or
1090	indirectly through ownership, control, reinsurance transactions,
1091	or other insurance or business relations unlawfully manipulated
1092	the assets, accounts, finances, or books of any insurer or
1093	otherwise acted in bad faith with respect thereto.
1094	(i)  The acquisition is not likely to be hazardous or
1095	prejudicial to the insureds of the insurer or to the public.
1096	(j)  The effect of the acquisition would not substantially
1097	lessen competition in the line of insurance for which the
1098	specialty insurer is licensed or certified in this state or
1099	would not tend to create a monopoly therein.
1100	(9)  No vote by the stockholder of record, or by any other
1101	person, of any security acquired in contravention of the
1102	provisions of this section is valid. Any acquisition contrary to
1103	the provisions of this section is void. Upon the petition of the
1104	specialty insurer or the controlling company, the circuit court
1105	for the county in which the principal office of the specialty
1106	insurer is located may, without limiting the generality of its
1107	authority, order the issuance or entry of an injunction or other
1108	order to enforce the provisions of this section. There shall be
1109	a private right of action in favor of the specialty insurer or
1110	controlling company to enforce the provisions of this section.
1111	No demand upon the office that it perform its functions shall be
1112	required as a prerequisite to any suit by the specialty insurer
1113	or controlling company against any other person, and in no case
1114	shall the office be deemed a necessary party to any action by
1115	the specialty insurer or controlling company to enforce the
1116	provisions of this section. Any person who makes or proposes an
1117	acquisition requiring the filing of an application pursuant to
1118	this section, or who files such an application, shall be deemed
1119	to have thereby designated the Chief Financial Officer, or his
1120	or her assistant or deputy or another person in charge of his or
1121	her office, as such person's agent for service of process under
1122	this section and shall thereby be deemed to have submitted
1123	himself or herself to the administrative jurisdiction of the
1124	office and to the jurisdiction of the circuit court.
1125	(10)  Any approval by the office under this section does
1126	not constitute a recommendation by the office of the tender
1127	offer or exchange offer, or acquisition, if no tender offer or
1128	exchange offer is involved. It is unlawful for a person to
1129	represent that the office's approval constitutes a
1130	recommendation. A person who violates the provisions of this
1131	subsection commits a felony of the third degree, punishable as
1132	provided in s. 775.082, s. 775.083, or s. 775.084. The statute-
1133	of-limitations period for the prosecution of an offense
1134	committed under this subsection is 5 years.
1135	(4)(11)  If the office determines that any person or any
1136	affiliated person of such person has acquired 10 percent or more
1137	of the outstanding voting securities of a specialty insurer or
1138	controlling company which is a stock corporation, or 10 percent
1139	or more of the ownership interest of a specialty insurer or
1140	controlling company which is not a stock corporation, without
1141	complying with the provisions of this section, the office may
1142	order that the person and any affiliated person of such person
1143	cease acquisition of the specialty insurer or controlling
1144	company and, if appropriate, divest itself of any stock or
1145	ownership interest acquired in violation of this section.
1146	(5)(12)(a)  The office shall, if necessary to protect the
1147	public interest, suspend or revoke the certificate of authority
1148	of any specialty insurer or controlling company acquired in
1149	violation of this section.
1150	(b)  If any specialty insurer is subject to suspension or
1151	revocation pursuant to this section paragraph (a), the specialty
1152	insurer shall be deemed to be in such condition, or to be using
1153	or to have been subject to such methods or practices in the
1154	conduct of its business, as to render its further transaction of
1155	insurance presently or prospectively hazardous to its insureds,
1156	creditors, or stockholders or to the public.
1157	(6)(13)(a)  For the purpose of this section, the term
1158	"acquisition" includes:
1159	1.  A tender offer or exchange offer for securities,
1160	assets, or other ownership interest;
1161	2.  An agreement to exchange securities for other
1162	securities, assets, or other ownership interest;
1163	3.  A merger of a person or affiliated person into a
1164	specialty insurer or a merger of any person with a specialty
1165	insurer;
1166	4.  A consolidation; or
1167	5.  Any other form of change of control
1168
1169	whereby any person or affiliated person acquires or attempts to
1170	acquire, directly or indirectly, 10 percent or more of the
1171	ownership interest or assets of a specialty insurer or of a
1172	controlling company. However, in the case of a health
1173	maintenance organization organized as a for-profit corporation,
1174	the provisions of s. 628.451 shall govern with respect to any
1175	merger or consolidation, and, in the case of a health
1176	maintenance organization organized as a not-for-profit
1177	corporation, the provisions of s. 628.471 shall govern with
1178	respect to any merger or consolidation.
1179	(b)  For the purpose of this section, the term "affiliated
1180	person" of another person includes:
1181	1.  The spouse of such other natural person;
1182	2.  The parents of such other natural person and their
1183	lineal descendants and the parents of such other natural
1184	person's spouse and their lineal descendants;
1185	3.  Any person who directly or indirectly owns or controls,
1186	or holds with power to vote, 10 percent or more of the
1187	outstanding voting securities of such other person;
1188	4.  Any person who directly or indirectly owns 10 percent
1189	or more of the outstanding voting securities which are directly
1190	or indirectly owned or controlled, or held with power to vote,
1191	by such other person;
1192	5.  Any person or group of persons who directly or
1193	indirectly control, are controlled by, or are under common
1194	control with such other person;
1195	6.  Any director, officer, trustee, partner, owner,
1196	manager, joint venturer, or employee, or other person performing
1197	duties similar to those of persons in the aforementioned
1198	positions, of such other person;
1199	7.  If such other person is an investment company, any
1200	investment adviser of such company or any member of an advisory
1201	board of such company;
1202	8.  If such other person is an unincorporated investment
1203	company not having a board of directors, the depositor of such
1204	company; or
1205	9.  Any person who has entered into an agreement, written
1206	or unwritten, to act in concert with such other person in
1207	acquiring, or limiting the disposition of, securities of a
1208	specialty insurer or controlling company which is a stock
1209	corporation or in acquiring, or limiting the disposition of, an
1210	ownership interest of a specialty insurer or controlling company
1211	which is not a stock corporation.
1212	(c)  For the purposes of this section, the term
1213	"controlling company" means any corporation, trust, or
1214	association owning, directly or indirectly, 25 percent or more
1215	of the voting securities of one or more specialty insurance
1216	companies which are stock corporations, or 25 percent or more of
1217	the ownership interest of one or more specialty insurance
1218	companies which are not stock corporations.
1219	(d)  For the purpose of this section, the term "natural
1220	person" means an individual.
1221	(e)  For the purpose of this section, the term "person"
1222	includes a natural person, corporation, association, trust,
1223	general partnership, limited partnership, joint venture, firm,
1224	proprietorship, or any other entity which may hold a license or
1225	certificate as a specialty insurer.
1226	(7)(14)  The commission may adopt, amend, or repeal rules
1227	that are necessary to implement the provisions of this section,
1228	pursuant to chapter 120.
1229	Section 3.  Section 628.800, Florida Statutes, is created
1230	to read:
1231	628.800  Definitions.-As used in this part, unless the
1232	context otherwise requires, the term:
1233	(1)  "Affiliate" means a person that, directly or
1234	indirectly, through one or more intermediaries, controls or is
1235	controlled by, or is under common control with, the person
1236	specified.
1237	(2)  "Control" means the possession, whether direct or
1238	indirect, of the power to direct or cause the direction of the
1239	management and policies of a person, whether through the
1240	ownership of voting securities, by contract other than a
1241	commercial contract for goods or nonmanagement services, or
1242	otherwise, unless the power is the result of an official
1243	position with, or corporate office held by, the person. Control
1244	shall be presumed to exist if any person, directly or
1245	indirectly, owns, controls, holds with the power to vote, or
1246	holds proxies representing 10 percent or more of the voting
1247	securities of any other person. To disclaim control or
1248	affiliation, any person may file with the commissioner a
1249	disclaimer of control or affiliation with any authorized
1250	insurer, or a disclaimer of control or affiliation may be filed
1251	by the insurer or any member of an insurance holding company
1252	system. The disclaimer shall fully disclose all material
1253	relationships and bases for control or affiliation between the
1254	person and the insurer, as well as the basis for disclaiming the
1255	control or affiliation. A disclaimer of control or affiliation
1256	shall be deemed to have been granted unless the commissioner,
1257	within 30 days following receipt of a complete disclaimer,
1258	notifies the filing party that the disclaimer is disallowed. In
1259	the event of disallowance, the disclaiming party may request an
1260	administrative hearing, which shall be granted. The disclaiming
1261	party shall be relieved of its duty to register under this
1262	section if approval of the disclaimer has been granted by the
1263	commissioner or if the disclaimer is deemed to have been
1264	approved. The commissioner may determine, after furnishing all
1265	persons in interest notice and opportunity to be heard and
1266	making specific findings of fact to support such determination,
1267	that control exists in fact, notwithstanding the absence of a
1268	presumption to that effect.
1269	(3)  "Insurance holding company system" consists of two or
1270	more affiliated persons, one or more of which is an insurer.
1271	(4)  "Insurer" has the same meaning as set forth in s.
1272	624.03, except that it shall not include:
1273	(a)  Agencies, authorities, or instrumentalities of the
1274	United States, its possessions and territories, the Commonwealth
1275	of Puerto Rico, the District of Columbia, or a state or
1276	political subdivision of a state;
1277	(b)  Fraternal benefit societies;
1278	(c)  Nonprofit medical and hospital service associations;
1279	or
1280	(d)  Business trusts.
1281	(5)  "Commissioner" means the Commissioner of Insurance
1282	Regulation as designated under ss. 20.121 and 624.05, his or her
1283	deputies and assistants, or the Office of Insurance Regulation,
1284	as appropriate.
1285	(6)  "Person" means an individual, a corporation, a
1286	partnership, an association, a business trust, an insurer, a
1287	company, an organization, Lloyds insurer, a society, a
1288	reciprocal insurer or interinsurance exchange, a syndicate, an
1289	agent, a general agent, a broker, a solicitor, a service
1290	representative, an adjuster, every legal entity, a joint stock
1291	company, an unincorporated organization, or any similar entity
1292	or combination acting in concert, but does not include any
1293	securities broker performing no more than the usual and
1294	customary broker's function.
1295	(7)  "Securityholder" of a specified person means one who
1296	owns any security of such person, including common stock,
1297	preferred stock, debt obligation, and any other security
1298	convertible into or evidencing the right to acquire any of the
1299	foregoing.
1300	(8)  "Subsidiary" of a specified person means an affiliate
1301	controlled by such person, directly or indirectly, through one
1302	or more intermediaries.
1303	(9)  "Voting security" means any security convertible into
1304	or evidencing a right to acquire a voting security.
1305	Section 4.  Section 628.801, Florida Statutes, is amended
1306	to read:
1307	(Substantial rewording of section. See
1308	s. 628.801, F.S., for present text.)
1309	628.801  Insurance holding companies; registration;
1310	regulation.-
1311	(1)  REGISTRATION.-Every insurer authorized to do business
1312	in this state that is a member of an insurance holding company
1313	system must register with the commissioner, except a foreign
1314	insurer subject to registration requirements and standards
1315	adopted by statute or regulation in the jurisdiction of its
1316	domicile which are substantially similar to those contained
1317	chapter 624.
1318	(a)  Each registered insurer shall keep current the
1319	information required to be disclosed in its registration
1320	statement by reporting all material changes or additions within
1321	15 days after the end of the month in which it learns of each
1322	change or addition. Any insurer that is subject to registration
1323	under this section shall register within 15 days after it
1324	becomes subject to registration, and annually thereafter by June
1325	1 of each year for the previous calendar year, unless the
1326	commissioner for good cause shown extends the time for
1327	registration, in which case the insurer shall register within
1328	the extended registration period. The commissioner may require
1329	any insurer authorized to do business in the state that is a
1330	member of an insurance holding company system and that is not
1331	subject to registration under this section to furnish a copy of
1332	the registration statement, the report specified in subsection
1333	(9), or other information filed by the insurance company with
1334	the insurance regulatory authority of its domiciliary
1335	jurisdiction.
1336	(b)  Every insurer subject to registration shall file the
1337	registration statement with the commissioner on a form and in a
1338	format prescribed by the National Association of Insurance
1339	Commissioners, which shall contain the following current
1340	information:
1341	1.  The capital structure, general financial condition,
1342	ownership, and management of the insurer and any person
1343	controlling the insurer.
1344	2.  The identity and relationship of every member of the
1345	insurance holding company system.
1346	3.  The following agreements in force and transactions
1347	currently outstanding or that have occurred during the last
1348	calendar year between the insurer and its affiliates:
1349	a.  Loans, other investments, or purchases, sales, or
1350	exchanges of securities of the affiliates by the insurer or of
1351	the insurer by its affiliates.
1352	b.  Purchases, sales, or exchange of assets.
1353	c.  Transactions not in the ordinary course of business.
1354	d.  Guarantees or undertakings for the benefit of an
1355	affiliate which result in an actual contingent exposure of the
1356	insurer's assets to liability, other than insurance contracts
1357	entered into in the ordinary course of the insurer's business.
1358	e.  All management agreements, service contracts, and all
1359	cost-sharing arrangements.
1360	f.  Reinsurance agreements.
1361	g.  Dividends and other distributions to shareholders.
1362	h.  Consolidated tax allocation agreements.
1363	4.  Any pledge of the insurer's stock, including stock of
1364	any subsidiary or controlling affiliate, for a loan made to any
1365	member of the insurance holding company system.
1366	5.  If requested by the commissioner, financial statements
1367	of or within an insurance holding company system, including all
1368	affiliates. Financial statements may include, but are not
1369	limited to, annual audited financial statements filed with the
1370	United States Securities and Exchange Commission pursuant to the
1371	Securities Act of 1933, as amended, or the Securities Exchange
1372	Act of 1934, as amended. An insurer required to file financial
1373	statements pursuant to this paragraph may satisfy the request by
1374	providing the commissioner with the most recently filed parent
1375	corporation financial statements that have been filed with the
1376	United States Securities and Exchange Commission.
1377	6.  Other matters concerning transactions between
1378	registered insurers and any affiliates as may be included from
1379	time to time in any registration forms adopted or approved by
1380	the commissioner.
1381	7.  Statements attesting that the insurer's board of
1382	directors oversees corporate governance and internal controls
1383	and that the insurer's officers or senior management have
1384	approved, implemented, and continue to maintain and monitor
1385	corporate governance and internal control procedures.
1386	8.  Any other information required by the commissioner by
1387	rule or regulation.
1388	(c)  All registration statements must contain a summary
1389	outlining all items in the current registration statement
1390	representing changes from the prior registration statement.
1391	(d)  Information need not be disclosed on the registration
1392	statement filed pursuant to this section that is not material
1393	for the purposes of this section. Unless the commissioner by
1394	rule, regulation, or order provides otherwise, sales, purchases,
1395	exchanges, loans, or extensions of credit, investments, or
1396	guarantees involving .5 percent or less of an insurer's admitted
1397	assets as of the 31st day of December next preceding shall not
1398	be deemed material for purposes of this section.
1399	(2)  REPORTING OF DIVIDENDS TO SHAREHOLDERS.-Subject to the
1400	requirements of this section, each registered insurer shall
1401	report to the commissioner all dividends and other distributions
1402	to shareholders within 15 business days following the
1403	declaration thereof.
1404	(3)  INFORMATION OF INSURERS.-Any person within an
1405	insurance holding company system subject to registration shall
1406	be required to provide complete and accurate information to an
1407	insurer, where the information is reasonably necessary to enable
1408	the insurer to comply with the provisions of this section.
1409	(4)  TERMINATION OF REGISTRATION.-The commissioner shall
1410	terminate the registration of any insurer that demonstrates that
1411	it no longer is a member of an insurance holding company system.
1412	(5)  CONSOLIDATED FILING.-The commissioner may require or
1413	allow two or more affiliated insurers subject to registration to
1414	file a consolidated registration statement.
1415	(6)  ALTERNATIVE REGISTRATION.-The commissioner may allow
1416	an insurer authorized to do business in this state and that is
1417	part of an insurance holding company system to register on
1418	behalf of any affiliated insurer required to register under this
1419	section and to file all information and material required to be
1420	filed under this section.
1421	(7)  EXEMPTIONS.-This section does not apply to any
1422	insurer, information, or transaction if, and to the extent that,
1423	the commissioner by rule, regulation, or order exempts the
1424	insurer, information, or transaction from the provisions of this
1425	section.
1426	(8)  DISCLAIMER.-Any person may file with the commissioner
1427	a disclaimer of affiliation with any authorized insurer, or a
1428	disclaimer may be filed by the insurer or any member of an
1429	insurance holding company system. The disclaimer shall fully
1430	disclose all material relationships and bases for affiliation
1431	between the person and the insurer as well as the basis for
1432	disclaiming the affiliation. A disclaimer of affiliation shall
1433	be deemed to have been granted unless the commissioner, within
1434	30 days following receipt of a complete disclaimer, notifies the
1435	filing party that the disclaimer is disallowed. In the event of
1436	disallowance, the disclaiming party may request an
1437	administrative hearing, which shall be granted. The disclaiming
1438	party shall be relieved of its duty to register under this
1439	section if approval of the disclaimer has been granted by the
1440	commissioner or if the disclaimer is deemed to have been
1441	approved.
1442	(9)  ENTERPRISE RISK FILING.-The ultimate controlling
1443	person of every insurer subject to registration shall also file
1444	an annual enterprise risk report. The report shall, to the best
1445	of the ultimate controlling person's knowledge and belief,
1446	identify the material risks within the insurance holding company
1447	system that could pose enterprise risk to the insurer. The
1448	report shall be filed with the lead state commissioner of the
1449	insurance holding company system as determined by the procedures
1450	within the Financial Analysis Handbook adopted by the National
1451	Association of Insurance Commissioners.
1452	(10)  VIOLATIONS.-Failure to file a registration statement
1453	or any summary of the registration statement or enterprise risk
1454	filing required by this section within the time specified for
1455	filing constitutes a violation of this section.
1456	Section 5.  Section 628.8011, Florida Statues, is created
1457	to read:
1458	628.8011  Standards and management of an insurer within an
1459	insurance holding company system.-
1460	(1)  STANDARDS.-Transactions within an insurance holding
1461	company system to which an insurer subject to registration is a
1462	party shall be subject to the following standards:
1463	(a)  The terms shall be fair and reasonable.
1464	(b)  Agreements for cost-sharing services and management
1465	shall include such provisions as required by rule and regulation
1466	issued by the commissioner.
1467	(c)  Charges or fees for services performed shall be
1468	reasonable.
1469	(d)  Contracts or agreements with affiliates for the
1470	management or servicing of the business written by an insurer
1471	shall contain provisions providing that, if the combined ratio
1472	for the insurer exceeds 100 percent, then the fees paid to any
1473	affiliates for such services shall be decreased to bring the
1474	combined ratio down to 100 percent.
1475	(e)  Expenses incurred and payment received shall be
1476	allocated to the insurer in conformity with customary insurance
1477	accounting practices consistently applied.
1478	(f)  The books, accounts, and records of each party to all
1479	such transactions shall be so maintained as to clearly and
1480	accurately disclose the nature and details of the transactions,
1481	including such accounting information as is necessary to support
1482	the reasonableness of the charges or fees to the respective
1483	parties.
1484	(g)  The insurer's surplus as regards policyholders
1485	following any dividends or distributions to shareholder
1486	affiliates shall be reasonable in relation to the insurer's
1487	outstanding liabilities and adequate to meet its financial
1488	needs.
1489	(2)  PRECLUDED TRANSACTIONS.-The following transactions
1490	involving a domestic insurer and any person in its insurance
1491	holding company system, including amendments or modifications of
1492	affiliate agreements previously filed pursuant to this section,
1493	that are subject to any materiality standards contained in
1494	subsection (1), may not be entered into unless the insurer has
1495	notified the commissioner in writing of its intention to enter
1496	into the transaction at least 30 days prior thereto, or such
1497	shorter period as the commissioner may permit, and the
1498	commissioner has not disapproved the transaction within that
1499	period. The notice for amendments or modifications shall include
1500	the reasons for the change and the financial impact on the
1501	domestic insurer. Informal notice shall be reported, within 30
1502	days after a termination of a previously filed agreement, to the
1503	commissioner for determination of the type of filing required,
1504	if any.
1505	(a)  Sales, purchases, exchanges, loans, extensions of
1506	credit, or investments, provided the transactions are equal to
1507	or exceed:
1508	1.  With respect to nonlife insurers, the lesser of 3
1509	percent of the insurer's admitted assets or 25 percent of
1510	surplus as regards policyholders as of the 31st day of December
1511	next preceding.
1512	2.  With respect to life insurers, 3 percent of the
1513	insurer's admitted assets as of the 31st day of December next
1514	preceding.
1515	(b)  Loans or extensions of credit to any person who is not
1516	an affiliate, where the insurer makes loans or extensions of
1517	credit with the agreement or understanding that the proceeds of
1518	the transactions, in whole or in substantial part, are to be
1519	used to make loans or extensions of credit to, purchase assets
1520	of, or make investments in any affiliate of the insurer making
1521	the loans or extensions of credit, provided the transactions are
1522	equal to or exceed:
1523	1.  With respect to nonlife insurers, the lesser of 3
1524	percent of the insurer's admitted assets or 25 percent of
1525	surplus as regards policyholders as of the 31st day of December
1526	next preceding; or
1527	2.  With respect to life insurers, 3 percent of the
1528	insurer's admitted assets as of the 31st day of December next
1529	preceding.
1530	(c)  Reinsurance agreements or modifications thereto,
1531	including:
1532	1.  All reinsurance pooling agreements.
1533	2.  Agreements in which the reinsurance premium or a change
1534	in the insurer's liabilities, or the projected reinsurance
1535	premium or a change in the insurer's liabilities in any of the
1536	next 3 years, equals or exceeds 5 percent of the insurer's
1537	surplus as regards policyholders, as of the 31st day of December
1538	next preceding, including those agreements which may require as
1539	consideration the transfer of assets from an insurer to a
1540	nonaffiliate, if an agreement or understanding exists between
1541	the insurer and nonaffiliate that any portion of the assets will
1542	be transferred to one or more affiliates of the insurer.
1543	(d)  All management agreements, service contracts, tax
1544	allocation agreements, guarantees, and all cost-sharing
1545	arrangements.
1546	(e)  Guarantees when made by a domestic insurer. Provided,
1547	however, that a guarantee which is quantifiable as to amount is
1548	not subject to the notice requirements of this paragraph unless
1549	it exceeds the lesser of .5 percent of the insurer's admitted
1550	assets or 10 percent of surplus as regards policyholders as of
1551	the 31st day of December next preceding. Further, all guarantees
1552	which are not quantifiable as to amount are subject to the
1553	notice requirements of this paragraph.
1554	(f)  Direct or indirect acquisitions or investments in a
1555	person that controls the insurer or in an affiliate of the
1556	insurer in an amount which, together with its present holdings
1557	in such investments, exceeds 2.5 percent of the insurer's
1558	surplus to policyholders. Direct or indirect acquisitions or
1559	investments in subsidiaries acquired pursuant to s. 628.461, or
1560	in nonsubsidiary insurance affiliates that are subject to the
1561	provisions of this part, are exempt from this requirement.
1562	(g)  Any material transactions, specified by regulation,
1563	which the commissioner determines may adversely affect the
1564	interests of the insurer's policyholders.
1565
1566	Nothing in this subsection shall be deemed to authorize or
1567	permit any transactions which, in the case of an insurer that is
1568	not a member of the same insurance holding company system, would
1569	otherwise be contrary to law.
1570	(3)  ADDITIONAL PRECLUDED TRANSACTION.-A domestic insurer
1571	may not enter into transactions that are part of a plan or
1572	series of like transactions with persons within the insurance
1573	holding company system if the purpose of those separate
1574	transactions is to avoid the statutory threshold amount and thus
1575	avoid the review that would occur otherwise. If the commissioner
1576	determines that separate transactions were entered into over any
1577	12-month period for that purpose, the commissioner may exercise
1578	his or her authority under the Insurance Code or s. 628.803.
1579	(4)  REVIEW OF TRANSACTIONS.-The commissioner, in reviewing
1580	transactions pursuant to this section, shall consider whether
1581	the transactions comply with the standards set forth in this
1582	section and whether they may adversely affect the interests of
1583	policyholders.
1584	(5)  NOTIFICATION.-The commissioner shall be notified
1585	within 30 days of any investment of the domestic insurer in any
1586	one corporation if the total investment in the corporation by
1587	the insurance holding company system exceeds 10 percent of the
1588	corporation's voting securities.
1589	(6)  DIVIDENDS AND OTHER DISTRIBUTIONS.-
1590	(a)  No domestic insurer shall pay any extraordinary
1591	dividend or make any other extraordinary distribution to its
1592	shareholders until 30 days after the commissioner has received
1593	notice of the declaration thereof and has not within that period
1594	disapproved the payment, or until the commissioner has approved
1595	the payment within the 30-day period.
1596	(b)  For purposes of this section, an extraordinary
1597	dividend or distribution includes any dividend or distribution
1598	of cash or other property, whose fair market value together with
1599	that of other dividends or distributions made within the
1600	preceding 12 months exceeds the lesser of:
1601	1.  Ten percent of the insurer's surplus as regards
1602	policyholders as of the 31st day of December next preceding; or
1603	2.  The net gain after taxes from operations of the
1604	insurer, if the insurer is a life insurer, or the net income
1605	after taxes, if the insurer is not a life insurer, not including
1606	realized capital gains, for the 12-month period ending the 31st
1607	day of December next preceding, excluding pro rata distributions
1608	of any class of the insurer's own securities.
1609	(c)  In determining whether a dividend or distribution is
1610	extraordinary, an insurer other than a life insurer may carry
1611	forward net income from the previous 2 calendar years that has
1612	not already been paid out as dividends. This carryforward shall
1613	be computed by taking the net income from the second and third
1614	preceding calendar years, not including realized capital gains,
1615	less dividends paid in the second and immediate preceding
1616	calendar years.
1617	(d)  Notwithstanding any other provision of law, an insurer
1618	may declare an extraordinary dividend or distribution which is
1619	conditional upon the commissioner's approval, and the
1620	declaration shall confer no rights upon shareholders until:
1621	1.  The commissioner has approved the payment of the
1622	dividend or distribution; or
1623	2.  The commissioner has not disapproved payment within the
1624	30-day period provided for in this subsection.
1625	(7)  MANAGEMENT OF DOMESTIC INSURERS SUBJECT TO
1626	REGISTRATION.-
1627	(a)  Notwithstanding the control of a domestic insurer by
1628	any person, the officers and directors of the insurer may not
1629	thereby be relieved of any obligation or liability to which they
1630	would otherwise be subject by law, and the insurer shall be
1631	managed so as to assure its separate operating identity
1632	consistent with this section.
1633	(b)  Nothing in this section shall preclude a domestic
1634	insurer from having or sharing a common management or
1635	cooperative or joint use of personnel, property, or services
1636	with one or more other persons under arrangements meeting the
1637	standards of this section.
1638	(c)  Not less than one-third of the directors of a domestic
1639	insurer and not less than one-third of the members of each
1640	committee of the board of directors of any domestic insurer
1641	shall be persons who are not officers or employees of the
1642	insurer or of any entity controlling, controlled by, or under
1643	common control with the insurer and who are not beneficial
1644	owners of a controlling interest in the voting stock of the
1645	insurer or entity. At least one such person must be included in
1646	any quorum for the transaction of business at any meeting of the
1647	board of directors or any committee thereof.
1648	(d)  The board of directors of a domestic insurer shall
1649	establish one or more committees comprised solely of directors
1650	who are not officers or employees of the insurer or of any
1651	entity controlling, controlled by, or under common control with
1652	the insurer and who are not beneficial owners of a controlling
1653	interest in the voting stock of the insurer or any such entity.
1654	The committee or committees shall have responsibility for
1655	nominating candidates for director for election by shareholders
1656	or policyholders, evaluating the performance of officers deemed
1657	to be principal officers of the insurer, and recommending to the
1658	board of directors the selection and compensation of the
1659	principal officers.
1660	(e)  The provisions of paragraphs (c) and (d) do not apply
1661	to a domestic insurer if the person controlling the insurer,
1662	such as an insurer, a mutual insurance holding company, or a
1663	publicly held corporation, has a board of directors and
1664	committees thereof that meet the requirements of paragraphs (c)
1665	and (d) with respect to such controlling entity.
1666	(f)  An insurer may make application to the commissioner
1667	for a waiver from the requirements of this subsection, if the
1668	insurer's annual direct written and assumed premium, excluding
1669	premiums reinsured with the Federal Crop Insurance Corporation
1670	and the federal flood insurance program, is less than $300
1671	million. An insurer may also make application to the
1672	commissioner for a waiver from the requirements of this
1673	subsection based on unique circumstances. The commissioner may
1674	consider various factors including, but not limited to, the type
1675	of business entity, volume of business written, availability of
1676	qualified board members, or the ownership or organizational
1677	structure of the entity.
1678	(8)  ADEQUACY OF SURPLUS.-For purposes of this section, in
1679	determining whether an insurer's surplus as regards
1680	policyholders is reasonable in relation to the insurer's
1681	outstanding liabilities and adequate to meet its financial
1682	needs, the following factors, among others, shall be considered:
1683	(a)  The size of the insurer as measured by its assets,
1684	capital and surplus, reserves, premium writings, insurance in
1685	force, and other appropriate criteria.
1686	(b)  The extent to which the insurer's business is
1687	diversified among several lines of insurance.
1688	(c)  The number and size of risks insured in each line of
1689	business.
1690	(d)  The extent of the geographical dispersion of the
1691	insurer's insured risks.
1692	(e)  The nature and extent of the insurer's reinsurance
1693	program.
1694	(f)  The quality, diversification, and liquidity of the
1695	insurer's investment portfolio.
1696	(g)  The recent past and projected future trend in the size
1697	of the insurer's investment portfolio.
1698	(h)  The surplus as regards policyholders maintained by
1699	other comparable insurers.
1700	(i)  The adequacy of the insurer's reserves.
1701	(j)  The quality and liquidity of investments in
1702	affiliates. The commissioner may treat any such investment as a
1703	disallowed asset for purposes of determining the adequacy of
1704	surplus as regards policyholders whenever in the judgment of the
1705	commissioner the investment so warrants.
1706	Section 6.  Section 628.8012, Florida Statutes, is created
1707	to read:
1708	628.8012  Supervisory colleges.-
1709	(1)  POWER OF COMMISSIONER.-With respect to any insurer
1710	registered under this part and in accordance with subsection
1711	(3), the commissioner shall have the power to participate in a
1712	supervisory college for any domestic insurer that is part of an
1713	insurance holding company system with international operations
1714	in order to determine compliance by the insurer with this part.
1715	The powers of the commissioner with respect to supervisory
1716	colleges include, but are not limited to, the following:
1717	(a)  Initiating the establishment of a supervisory college.
1718	(b)  Clarifying the membership and participation of other
1719	supervisors in the supervisory college.
1720	(c)  Clarifying the functions of the supervisory college
1721	and the role of other regulators, including the establishment of
1722	a group-wide supervisor.
1723	(d)  Coordinating the ongoing activities of the supervisory
1724	college, including planning meetings, supervisory activities,
1725	and processes for information sharing.
1726	(e)  Establishing a crisis management plan.
1727	(2)  EXPENSES.-Each registered insurer subject to this
1728	section shall be liable for and shall pay the reasonable
1729	expenses of the commissioner's participation in a supervisory
1730	college in accordance with subsection (3), including reasonable
1731	travel expenses. For purposes of this section, a supervisory
1732	college may be convened as either a temporary or permanent forum
1733	for communication and cooperation between the regulators charged
1734	with the supervision of the insurer or its affiliates, and the
1735	commissioner may establish a regular assessment to the insurer
1736	for the payment of these expenses.
1737	(3)  SUPERVISORY COLLEGE.-In order to assess the business
1738	strategy, financial position, legal and regulatory position,
1739	risk exposure, risk management, and governance processes, and as
1740	part of the examination of individual insurers, the commissioner
1741	may participate in a supervisory college with other regulators
1742	charged with supervision of the insurer or its affiliates,
1743	including other state, federal, and international regulatory
1744	agencies. The commissioner may enter into agreements in
1745	accordance with this chapter, providing the basis for
1746	cooperation between the commissioner, other regulatory agencies,
1747	and the supervisory college. Nothing in this section shall
1748	delegate to the supervisory college the authority of the
1749	commissioner to regulate or supervise the insurer or its
1750	affiliates within its jurisdiction.
1751	Section 7.  Section 628.8013, Florida Statutes, is created
1752	to read:
1753	628.8013  Rules and regulations.-The commissioner may, upon
1754	notice and opportunity for all interested persons to be heard,
1755	issue such rules, regulations, and orders necessary to carry out
1756	the provisions of this part.
1757	Section 8.  Section 628.8014, Florida Statutes, is created
1758	to read:
1759	628.8014  Voting of securities.-A security which is the
1760	subject of any agreement or arrangement regarding acquisition,
1761	or which is acquired or to be acquired, in contravention of any
1762	statute or rule adopted thereunder, may not be voted at any
1763	shareholder's meeting or counted for quorum purposes, and any
1764	action of shareholders requiring the affirmative vote of a
1765	percentage of shares may be taken as though such securities were
1766	not issued and outstanding. However, an action taken at any such
1767	meeting may not be invalidated by the voting of such securities
1768	unless the action would materially affect the control of the
1769	insurer or unless a court of competent jurisdiction has so
1770	ordered. If the office has reason to believe that any security
1771	of the insurer has been or is about to be acquired in
1772	contravention of s. 628.461, or this chapter, the office may
1773	pursue its remedies pursuant to ss. 628.802 and 628.803.
1774	Section 9.  Section 628.802, Florida Statutes, is amended
1775	to read:
1776	(Substantial rewording of section. See
1777	s. 628.802, F.S., for present text.)
1778	628.802  Injunctions; prohibitions against voting
1779	securities; sequestration of voting securities.-
1780	(1)  INJUNCTIONS.-Whenever it appears to the commissioner
1781	that any insurer or any director, officer, employee, or agent
1782	thereof has committed or is about to commit a violation of this
1783	part or of any rule, regulation, or order issued by the
1784	commissioner thereunder, the commissioner may apply to the
1785	circuit court for the county in which the principal officer of
1786	the insurer is located or, if the insurer has no office in this
1787	state, to the Circuit Court for Leon County for an order
1788	enjoining the insurer or director, officer, employee or agent
1789	thereof from violating or continuing to violate this part or any
1790	rule, regulation or order, and for such other equitable relief
1791	as the nature of the case and the interest of the insurer's
1792	policyholders, creditors, and shareholders or the public may
1793	require.
1794	(2)  VOTING OF SECURITIES; WHEN PROHIBITED.-No security
1795	which is the subject of any agreement or arrangement regarding
1796	acquisition, or which is acquired or to be acquired, in
1797	contravention of the provisions of this part or of any rule,
1798	regulation, or order issued by the commissioner thereunder may
1799	be voted at any shareholder's meeting, or may be counted for
1800	quorum purposes, and any action of shareholders requiring the
1801	affirmative vote of a percentage of shares may be taken as
1802	though the securities were not issued and outstanding. However,
1803	no action taken at any such meeting shall be invalidated by the
1804	voting of the securities, unless the action would materially
1805	affect control of the insurer or unless the courts of this state
1806	have so ordered. If an insurer or the commissioner has reason to
1807	believe that any security of the insurer has been or is about to
1808	be acquired in contravention of the provisions of this part or
1809	of any rule, regulation, or order issued by the commissioner
1810	hereunder, the insurer or the commissioner may apply to the
1811	circuit court for the county in which the insurer has its
1812	principal place of business to enjoin any offer, request,
1813	invitation, agreement, or acquisition made in contravention of
1814	s. 628.461 or any rule, regulation, or order issued by the
1815	commissioner thereunder to enjoin the voting of any security so
1816	acquired, to void any vote of the security already cast at any
1817	meeting of shareholders, and for such other equitable relief as
1818	the nature of the case and the interest of the insurer's
1819	policyholders, creditors, and shareholders or the public may
1820	require.
1821	(3)  SEQUESTRATION OF VOTING SECURITIES.-In any case where
1822	a person has acquired or is proposing to acquire any voting
1823	securities in violation of this part or any rule, regulation, or
1824	order issued by the commissioner hereunder, the circuit court
1825	for Leon County or the circuit court for the county in which the
1826	insurer has its principal place of business may, on such notice
1827	as the court deems appropriate, upon the application of the
1828	insurer or the commissioner, seize or sequester any voting
1829	securities of the insurer owned directly or indirectly by the
1830	person, and issue such order as may be appropriate to effectuate
1831	the provisions of this part.
1832	(4)  SITUS OF OWNERSHIP.-Notwithstanding any other
1833	provisions of law, for the purposes of this part, the situs of
1834	the ownership of the securities of domestic insurers shall be
1835	deemed to be in this state.
1836	Section 10.  Section 628.803, Florida Statutes, is amended
1837	to read:
1838	(Substantial rewording of section. See
1839	s. 628.803, F.S., for present text.)
1840	628.803  Sanctions.-
1841	(1)  Any insurer failing, without just cause, to file any
1842	registration statement as required under this part shall be
1843	required, after notice and hearing, to pay a penalty of $1,000
1844	for each day's delay, to be recovered by the commissioner.
1845	Penalties so recovered shall be paid into the General Revenue
1846	Fund. The maximum penalty under this section is $500,000. The
1847	commissioner may reduce the penalty if the insurer demonstrates
1848	to the commissioner that the imposition of the penalty would
1849	constitute a financial hardship to the insurer.
1850	(2)  Every director or officer of an insurance holding
1851	company system who knowingly violates, participates in, or
1852	assents to, or who knowingly permits any of the officers or
1853	agents of the insurer to engage in, transactions or the making
1854	of investments which have not been properly reported or
1855	submitted pursuant to the Insurance Code or which violate this
1856	act, shall, in their individual capacity, pay a civil forfeiture
1857	of not more than $1,000 per violation after notice and hearing
1858	before the commissioner. In determining the amount of the civil
1859	forfeiture, the commissioner shall take into account the
1860	appropriateness of the forfeiture with respect to the gravity of
1861	the violation, the history of previous violations, and such
1862	other matters as justice may require.
1863	(3)  Whenever it appears to the commissioner that any
1864	insurer subject to this part or any director, officer, employee,
1865	or agent thereof has engaged in any transaction or entered into
1866	a contract which is subject to s. 628.8011 and which would not
1867	have been approved had approval been requested, the commissioner
1868	may order the insurer to cease and desist immediately from any
1869	further activity under that transaction or contract. After
1870	notice and hearing, the commissioner may also order the insurer
1871	to void any contracts and restore the status quo if the action
1872	is in the best interests of the policyholders, creditors, or the
1873	public.
1874	(4)  Whenever it appears to the commissioner that any
1875	insurer or any director, officer, employee, or agent thereof has
1876	committed a willful violation of this part, the commissioner may
1877	cause criminal proceedings to be instituted by the circuit court
1878	for the county in which the principal office of the insurer is
1879	located or, if the insurer has no office in this state, by the
1880	circuit court for Leon County against the insurer or the
1881	responsible director, officer, employee, or agent thereof. Any
1882	insurer which willfully violates this part may be fined not more
1883	than $1 million. Any individual who willfully violates this part
1884	may be fined in his or her individual capacity not more than
1885	$500,000 or be imprisoned for not more than one to 3 years, or
1886	both.
1887	(5)  Any officer, director, or employee of an insurance
1888	holding company system who willfully and knowingly subscribes to
1889	or makes or causes to be made any false statements or false
1890	reports or false filings with the intent to deceive the
1891	commissioner in the performance of his or her duties under this
1892	part, upon conviction shall be imprisoned for not more than 3
1893	years or fined $500,000 or both. Any fines imposed shall be paid
1894	by the officer, director, or employee in his or her individual
1895	capacity.
1896	(6)  Whenever it appears to the commissioner that any
1897	person has committed a violation of chapter 628, which violation
1898	prevents the full understanding of the enterprise risk to the
1899	insurer by affiliates or by the insurance holding company
1900	system, the violation may serve as an independent basis for
1901	disapproving dividends or distributions and for placing the
1902	insurer under an order of supervision in accordance with part VI
1903	of chapter 624.
1904	Section 11.  Section 636.065, Florida Statutes, is amended
1905	to read:
1906	636.065  Acquisitions.-Each prepaid limited health service
1907	organization is subject to the provisions of s. 628.461
1908	628.4615.
1909	Section 12.  Section 641.255, Florida Statutes, is amended
1910	to read:
1911	641.255  Acquisition, merger, or consolidation.-
1912	(1)  Every acquisition of a health maintenance organization
1913	shall be subject to the provisions of s. 628.461 628.4615.
1914	However, in the case of a health maintenance organization
1915	organized as a for-profit corporation, the provisions of s.
1916	628.451 govern with respect to any merger or consolidation; and,
1917	in the case of a health maintenance organization organized as a
1918	not-for-profit corporation, the provisions of s. 628.471 govern
1919	with respect to any merger or consolidation.
1920	(2)  In addition to the requirements set forth in ss.
1921	628.451, 628.461 628.4615, and 628.471, each party to any
1922	transaction involving any licensee which, as indicated in its
1923	most recent quarterly or annual statement, derives income from
1924	Medicaid funds shall in the filing made with the office
1925	identify:
1926	(a)  Any person who has received any payment from either
1927	party or any person on that party's behalf; or
1928	(b)  The existence of any agreement entered into by either
1929	party or by any person on that party's behalf to pay a
1930	consultant fee, a broker fee, a commission, or other fee or
1931	charge,
1932
1933	which in any way relates to the acquisition, merger, or
1934	consolidation. The commission may adopt a form to be made part
1935	of the application which is to be sworn to by an officer of the
1936	entity which made or will make the payment. The form shall
1937	include the name of the person or entity paying the fee; the
1938	name of the person or entity receiving the fee; the date of
1939	payment; and a brief description of the work performed.
1940	Section 13.  Section 641.416, Florida Statutes, is amended
1941	to read:
1942	641.416  Acquisition.-Every prepaid health clinic shall be
1943	subject to the provisions of s. 628.461 628.4615.
1944	Section 14.  Section 651.024, Florida Statutes, is amended
1945	to read:
1946	651.024  Acquisition.-A person issued a certificate of
1947	authority to operate a continuing care facility or a provisional
1948	certificate of authority shall be subject to the provisions of
1949	s. 628.461 628.4615.
1950	Section 15.  For the purpose of incorporating the amendment
1951	made by this act to section 628.461, Florida Statutes, in a
1952	reference thereto, subsection (3) of section 48.151, Florida
1953	Statutes, is reenacted to read:
1954	48.151  Service on statutory agents for certain persons.-
1955	(3)  The Chief Financial Officer or his or her assistant or
1956	deputy or another person in charge of the office is the agent
1957	for service of process on all insurers applying for authority to
1958	transact insurance in this state, all licensed nonresident
1959	insurance agents, all nonresident disability insurance agents
1960	licensed pursuant to s. 626.835, any unauthorized insurer under
1961	s. 626.906 or s. 626.937, domestic reciprocal insurers,
1962	fraternal benefit societies under chapter 632, warranty
1963	associations under chapter 634, prepaid limited health service
1964	organizations under chapter 636, and persons required to file
1965	statements under s. 628.461.
1966	Section 16.  For the purpose of incorporating the
1967	amendments made by this act to sections 628.461 and 628.4615,
1968	Florida Statutes, in references thereto, paragraph (a) of
1969	subsection (1) of section 624.310, Florida Statutes, is
1970	reenacted to read:
1971	624.310  Enforcement; cease and desist orders; removal of
1972	certain persons; fines.-
1973	(1)  DEFINITIONS.-For the purposes of this section, the
1974	term:
1975	(a)  "Affiliated party" means any person who directs or
1976	participates in the conduct of the affairs of a licensee and who
1977	is:
1978	1.  A director, officer, employee, trustee, committee
1979	member, or controlling stockholder of a licensee or a subsidiary
1980	or service corporation of the licensee, other than a controlling
1981	stockholder which is a holding company, or an agent of a
1982	licensee or a subsidiary or service corporation of the licensee;
1983	2.  A person who has filed or is required to file a
1984	statement or any other information required to be filed under s.
1985	628.461 or s. 628.4615;
1986	3.  A stockholder, other than a stockholder that is a
1987	holding company of the licensee, who participates in the conduct
1988	of the affairs of the licensee;
1989	4.  An independent contractor who:
1990	a.  Renders a written opinion required by the laws of this
1991	state under her or his professional credentials on behalf of the
1992	licensee, which opinion is reasonably relied on by the
1993	department or office in the performance of its duties; or
1994	b.  Affirmatively and knowingly conceals facts, through a
1995	written misrepresentation to the department or office, with
1996	knowledge that such misrepresentation:
1997	(I)  Constitutes a violation of the insurance code or a
1998	lawful rule or order of the department, commission, or office;
1999	and
2000	(II)  Directly and materially endangers the ability of the
2001	licensee to meet its obligations to policyholders.
2002
2003	For the purposes of this subparagraph, any representation of
2004	fact made by an independent contractor on behalf of a licensee,
2005	affirmatively communicated as a representation of the licensee
2006	to the independent contractor, shall not be considered a
2007	misrepresentation by the independent contractor; or
2008	5.  A third-party marketer who aids or abets a licensee in
2009	a violation of the insurance code relating to the sale of an
2010	annuity to a person 65 years of age or older.
2011	Section 17.  For the purpose of incorporating the amendment
2012	made by this act to section 628.461, Florida Statutes, in a
2013	reference thereto, section 625.765, Florida Statutes, is
2014	reenacted to read:
2015	625.765  Exemptions from ss. 625.75 and 625.76.-The
2016	commission may adopt by rule exemptions from ss. 625.75 and
2017	625.76 for transactions that are not subject to s. 628.461 and
2018	that are the result of proceedings in probate, incompetency, or
2019	bankruptcy; sales of securities by odd-lot securities dealers;
2020	small transactions by gift which do not exceed $3,000 over any
2021	6-month period; transactions that are effected in connection
2022	with the distribution of a substantial block of securities;
2023	acquisitions of shares of stock and stock options under a stock
2024	bonus plan, stock option plan, or similar plan; securities
2025	acquired by redeeming other securities by an insurer;
2026	consolidations or mergers of insurers that hold over 85 percent
2027	of the companies being merged or consolidated; acquisitions or
2028	dispositions of an equity security involved in the deposit of
2029	the security under, or the withdrawal of the security from, a
2030	voting trust or deposit agreement; and conversions of an
2031	insurer's equity securities into another equity security of the
2032	same insurer. The commission may limit by rule the scope of
2033	exemptions and provide conditions for exemptions as necessary to
2034	maintain the purpose and intent of ss. 625.75 and 625.76 and
2035	prevent the circumvention of ss. 625.75 and 625.76.
2036	Section 18.  For the purpose of incorporating the amendment
2037	made by this act to section 628.461, Florida Statutes, in a
2038	reference thereto, subsection (2) of section 628.705, Florida
2039	Statutes, is reenacted to read:
2040	628.705  Prohibition of stock transfers.-
2041	(2)  Voting shares of the capital stock of a subsidiary
2042	insurance company or the intermediate holding company may not be
2043	acquired by any affiliated member of the holding company system
2044	except where the affiliated member of the mutual holding company
2045	system is the majority shareholder. A number of shares equal to
2046	5 percent of the outstanding voting shares of the capital stock
2047	of one corporate member of the Mutual Insurance Holding Company
2048	System selected by the mutual insurance holding company may be
2049	issued or sold to directors and officers as part of a plan of
2050	compensation, and such shares shall not be considered part of
2051	the majority shares to be owned by the mutual insurance company
2052	under subsection (1). A number of shares equal to an additional
2053	5 percent of the outstanding voting shares of the capital stock
2054	of one corporate member of the Mutual Insurance Holding Company
2055	System selected by the mutual insurance holding company may be
2056	issued or sold to employees, which may not include any officer
2057	or director, as part of an employee stock dividend or benefit
2058	plan, and such shares shall not be considered part of the
2059	majority shares to be owned by the mutual insurance company
2060	under subsection (1). Prior to issuance of shares in excess of
2061	the authorized 5 percent to either officers and directors or
2062	employees, pursuant to this section, a fairness opinion shall be
2063	rendered by an independent authority acceptable to the office to
2064	assure that the long term interests of the shareholders and
2065	policyholders are adequately protected. The office shall approve
2066	or disapprove the transaction within 30 days after receipt of
2067	the fairness opinion. Nothing in this section prohibits any
2068	officer or director from purchasing shares of stock at market
2069	value which are not part of a plan of compensation, in
2070	accordance with the requirements of s. 628.461, and, if such
2071	stock is not regularly traded on a national stock exchange, the
2072	officer or director purchasing the shares of stock is
2073	responsible for establishing its market value.
2074	Section 19.  For the purpose of incorporating the
2075	amendments made by this act to sections 628.461 and 628.4615,
2076	Florida Statutes, in references thereto, subsection (7) of
2077	section 631.051, Florida Statutes, is reenacted to read:
2078	631.051  Grounds for rehabilitation; domestic insurers.-The
2079	department may petition for an order directing it to
2080	rehabilitate a domestic insurer or an alien insurer domiciled in
2081	this state on any one or more of the following grounds, that the
2082	insurer:
2083	(7)  Has transferred or attempted to transfer substantially
2084	its entire property or business, or has entered into any
2085	transaction the effect of which is to merge substantially its
2086	entire property or business into that of any other insurer or
2087	entity without having first obtained the written approval of the
2088	office under the provisions of s. 628.451, s. 628.461, or s.
2089	628.4615, as the case may be;
2090	Section 20.  For the purpose of incorporating the amendment
2091	made by this act to section 628.4615, Florida Statutes, in a
2092	reference thereto, subsection (19) of section 409.912, Florida
2093	Statutes, is reenacted to read:
2094	409.912  Cost-effective purchasing of health care.-The
2095	agency shall purchase goods and services for Medicaid recipients
2096	in the most cost-effective manner consistent with the delivery
2097	of quality medical care. To ensure that medical services are
2098	effectively utilized, the agency may, in any case, require a
2099	confirmation or second physician's opinion of the correct
2100	diagnosis for purposes of authorizing future services under the
2101	Medicaid program. This section does not restrict access to
2102	emergency services or poststabilization care services as defined
2103	in 42 C.F.R. part 438.114. Such confirmation or second opinion
2104	shall be rendered in a manner approved by the agency. The agency
2105	shall maximize the use of prepaid per capita and prepaid
2106	aggregate fixed-sum basis services when appropriate and other
2107	alternative service delivery and reimbursement methodologies,
2108	including competitive bidding pursuant to s. 287.057, designed
2109	to facilitate the cost-effective purchase of a case-managed
2110	continuum of care. The agency shall also require providers to
2111	minimize the exposure of recipients to the need for acute
2112	inpatient, custodial, and other institutional care and the
2113	inappropriate or unnecessary use of high-cost services. The
2114	agency shall contract with a vendor to monitor and evaluate the
2115	clinical practice patterns of providers in order to identify
2116	trends that are outside the normal practice patterns of a
2117	provider's professional peers or the national guidelines of a
2118	provider's professional association. The vendor must be able to
2119	provide information and counseling to a provider whose practice
2120	patterns are outside the norms, in consultation with the agency,
2121	to improve patient care and reduce inappropriate utilization.
2122	The agency may mandate prior authorization, drug therapy
2123	management, or disease management participation for certain
2124	populations of Medicaid beneficiaries, certain drug classes, or
2125	particular drugs to prevent fraud, abuse, overuse, and possible
2126	dangerous drug interactions. The Pharmaceutical and Therapeutics
2127	Committee shall make recommendations to the agency on drugs for
2128	which prior authorization is required. The agency shall inform
2129	the Pharmaceutical and Therapeutics Committee of its decisions
2130	regarding drugs subject to prior authorization. The agency is
2131	authorized to limit the entities it contracts with or enrolls as
2132	Medicaid providers by developing a provider network through
2133	provider credentialing. The agency may competitively bid single-
2134	source-provider contracts if procurement of goods or services
2135	results in demonstrated cost savings to the state without
2136	limiting access to care. The agency may limit its network based
2137	on the assessment of beneficiary access to care, provider
2138	availability, provider quality standards, time and distance
2139	standards for access to care, the cultural competence of the
2140	provider network, demographic characteristics of Medicaid
2141	beneficiaries, practice and provider-to-beneficiary standards,
2142	appointment wait times, beneficiary use of services, provider
2143	turnover, provider profiling, provider licensure history,
2144	previous program integrity investigations and findings, peer
2145	review, provider Medicaid policy and billing compliance records,
2146	clinical and medical record audits, and other factors. Providers
2147	are not entitled to enrollment in the Medicaid provider network.
2148	The agency shall determine instances in which allowing Medicaid
2149	beneficiaries to purchase durable medical equipment and other
2150	goods is less expensive to the Medicaid program than long-term
2151	rental of the equipment or goods. The agency may establish rules
2152	to facilitate purchases in lieu of long-term rentals in order to
2153	protect against fraud and abuse in the Medicaid program as
2154	defined in s. 409.913. The agency may seek federal waivers
2155	necessary to administer these policies.
2156	(19)  When a merger or acquisition of a Medicaid prepaid
2157	contractor has been approved by the Office of Insurance
2158	Regulation pursuant to s. 628.4615, the agency shall approve the
2159	assignment or transfer of the appropriate Medicaid prepaid
2160	contract upon request of the surviving entity of the merger or
2161	acquisition if the contractor and the other entity have been in
2162	good standing with the agency for the most recent 12-month
2163	period, unless the agency determines that the assignment or
2164	transfer would be detrimental to the Medicaid recipients or the
2165	Medicaid program. To be in good standing, an entity must not
2166	have failed accreditation or committed any material violation of
2167	the requirements of s. 641.52 and must meet the Medicaid
2168	contract requirements. For purposes of this section, a merger or
2169	acquisition means a change in controlling interest of an entity,
2170	including an asset or stock purchase. This subsection expires
2171	October 1, 2014.
2172	Section 21.  For the purpose of incorporating the amendment
2173	made by this act to section 628.4615, Florida Statutes, in a
2174	reference thereto, paragraph (b) of subsection (1) of section
2175	624.80, Florida Statutes, is reenacted to read:
2176	624.80  Definitions.-As used in this part:
2177	(1)  "Insurer" means and includes every person as defined
2178	in s. 624.03 as limited to:
2179	(b)  Any specialty insurer as that term is defined in s.
2180	628.4615.
2181	Section 22.  For the purpose of incorporating the amendment
2182	made by this act to section 628.4615, Florida Statutes, in a
2183	reference thereto, section 626.9928, Florida Statutes, is
2184	reenacted to read:
2185	626.9928  Acquisitions.-Acquisition of interest in a
2186	viatical settlement provider is subject to s. 628.4615.
2187	Section 23.  For the purpose of incorporating the amendment
2188	made by this act to section 628.4615, Florida Statutes, in a
2189	reference thereto, section 634.252, Florida Statutes, is
2190	reenacted to read:
2191	634.252  Acquisition.-Every motor vehicle service agreement
2192	company shall be subject to the provisions of s. 628.4615.
2193	Section 24.  For the purpose of incorporating the amendment
2194	made by this act to section 628.4615, Florida Statutes, in a
2195	reference thereto, section 634.3073, Florida Statutes, is
2196	reenacted to read:
2197	634.3073  Acquisition.-Every home warranty association
2198	shall be subject to the provisions of s. 628.4615.
2199	Section 25.  For the purpose of incorporating the amendment
2200	made by this act to section 628.4615, Florida Statutes, in a
2201	reference thereto, section 634.4085, Florida Statutes, is
2202	reenacted to read:
2203	634.4085  Acquisition.-Except for manufacturers as defined
2204	in this part, every service warranty association shall be
2205	subject to the provisions of s. 628.4615.
2206	Section 26.  For the purpose of incorporating the amendment
2207	made by this act to section 628.4615, Florida Statutes, in a
2208	reference thereto, subsection (5) of section 642.032, Florida
2209	Statutes, is reenacted to read:
2210	642.032  Provisions of general insurance law applicable to
2211	legal expense insurance corporations.-The following provisions
2212	of the Florida Insurance Code shall apply to legal expense
2213	insurance corporations, to the extent that they are not
2214	inconsistent with the provisions of ss. 642.011-642.049:
2215	(5)  Section 628.4615, specialty insurers; acquisition of
2216	controlling stock, ownership interest, assets, or control;
2217	merger or consolidation.
2218	Section 27.  For the purpose of incorporating the amendment
2219	made by this act to section 628.801, Florida Statutes, in a
2220	reference thereto, paragraph (b) of subsection (6), paragraph
2221	(f) of subsection (8), and paragraph (f) of subsection (9) of
2222	section 626.7492, Florida Statutes, are reenacted to read:
2223	626.7492  Reinsurance intermediaries.-
2224	(6)  DUTIES OF INSURERS USING THE SERVICES OF A REINSURANCE
2225	INTERMEDIARY BROKER.-
2226	(b)  An insurer may not employ an individual who is
2227	employed by a reinsurance intermediary broker with which it
2228	transacts business, unless the reinsurance intermediary broker
2229	is under common control with the insurer and subject to ss.
2230	628.801, 628.802, and 628.803.
2231	(8)  PROHIBITED ACTS.-The reinsurance intermediary manager
2232	shall not:
2233	(f)  Jointly employ an individual who is employed by the
2234	reinsurer, unless such reinsurance intermediary manager is under
2235	common control with the reinsurer subject to ss. 628.801,
2236	628.802, and 628.803.
2237	(9)  DUTIES OF REINSURERS USING THE SERVICES OF A
2238	REINSURANCE INTERMEDIARY MANAGER.-
2239	(f)  A reinsurer shall not appoint to its board of
2240	directors any officer, director, employee, controlling
2241	shareholder, or subproducer of its reinsurance intermediary
2242	manager. This paragraph shall not apply to relationships
2243	governed by ss. 628.801, 628.802, and 628.803 or, if applicable,
2244	this section.
2245	Section 28.  For the purpose of incorporating the amendment
2246	made by this act to section 628.801, Florida Statutes, in a
2247	reference thereto, paragraph (d) of subsection (2) of section
2248	626.918, Florida Statutes, is reenacted to read:
2249	626.918  Eligible surplus lines insurers.-
2250	(2)  An unauthorized insurer may not be or become an
2251	eligible surplus lines insurer unless made eligible by the
2252	office in accordance with the following conditions:
2253	(d)1.a.  The insurer must have and maintain surplus as to
2254	policyholders of not less than $15 million; in addition, an
2255	alien insurer must also have and maintain in the United States a
2256	trust fund for the protection of all its policyholders in the
2257	United States under terms deemed by the office to be reasonably
2258	adequate, in an amount not less than $5.4 million. Any such
2259	surplus as to policyholders or trust fund shall be represented
2260	by investments consisting of eligible investments for like funds
2261	of like domestic insurers under part II of chapter 625 provided,
2262	however, that in the case of an alien insurance company, any
2263	such surplus as to policyholders may be represented by
2264	investments permitted by the domestic regulator of such alien
2265	insurance company if such investments are substantially similar
2266	in terms of quality, liquidity, and security to eligible
2267	investments for like funds of like domestic insurers under part
2268	II of chapter 625. Clean, irrevocable, unconditional, and
2269	evergreen letters of credit issued or confirmed by a qualified
2270	United States financial institution, as defined in subparagraph
2271	2., may be used to fund the trust.
2272	b.  For those surplus lines insurers that were eligible on
2273	January 1, 1994, and that maintained their eligibility
2274	thereafter, the required surplus as to policyholders shall be:
2275	(I)  On December 31, 1994, and until December 30, 1995,
2276	$2.5 million.
2277	(II)  On December 31, 1995, and until December 30, 1996,
2278	$3.5 million.
2279	(III)  On December 31, 1996, and until December 30, 1997,
2280	$4.5 million.
2281	(IV)  On December 31, 1997, and until December 30, 1998,
2282	$5.5 million.
2283	(V)  On December 31, 1998, and until December 30, 1999,
2284	$6.5 million.
2285	(VI)  On December 31, 1999, and until December 30, 2000, $8
2286	million.
2287	(VII)  On December 31, 2000, and until December 30, 2001,
2288	$9.5 million.
2289	(VIII)  On December 31, 2001, and until December 30, 2002,
2290	$11 million.
2291	(IX)  On December 31, 2002, and until December 30, 2003,
2292	$13 million.
2293	(X)  On December 31, 2003, and thereafter, $15 million.
2294	c.  The capital and surplus requirements as set forth in
2295	sub-subparagraph b. do not apply in the case of an insurance
2296	exchange created by the laws of individual states, where the
2297	exchange maintains capital and surplus pursuant to the
2298	requirements of that state, or maintains capital and surplus in
2299	an amount not less than $50 million in the aggregate. For an
2300	insurance exchange which maintains funds in the amount of at
2301	least $12 million for the protection of all insurance exchange
2302	policyholders, each individual syndicate shall maintain minimum
2303	capital and surplus in an amount not less than $3 million. If
2304	the insurance exchange does not maintain funds in the amount of
2305	at least $12 million for the protection of all insurance
2306	exchange policyholders, each individual syndicate shall meet the
2307	minimum capital and surplus requirements set forth in sub-
2308	subparagraph b.
2309	d.  A surplus lines insurer which is a member of an
2310	insurance holding company that includes a member which is a
2311	Florida domestic insurer as set forth in its holding company
2312	registration statement, as set forth in s. 628.801 and rules
2313	adopted thereunder, may elect to maintain surplus as to
2314	policyholders in an amount equal to the requirements of s.
2315	624.408, subject to the requirement that the surplus lines
2316	insurer shall at all times be in compliance with the
2317	requirements of chapter 625.
2318
2319	The election shall be submitted to the office and shall be
2320	effective upon the office's being satisfied that the
2321	requirements of sub-subparagraph d. have been met. The initial
2322	date of election shall be the date of office approval. The
2323	election approval application shall be on a form adopted by
2324	commission rule. The office may approve an election form
2325	submitted pursuant to sub-subparagraph d. only if it was on file
2326	with the former Department of Insurance before February 28,
2327	1998.
2328	2.  For purposes of letters of credit under subparagraph
2329	1., the term "qualified United States financial institution"
2330	means an institution that:
2331	a.  Is organized or, in the case of a United States office
2332	of a foreign banking organization, is licensed under the laws of
2333	the United States or any state.
2334	b.  Is regulated, supervised, and examined by authorities
2335	of the United States or any state having regulatory authority
2336	over banks and trust companies.
2337	c.  Has been determined by the office or the Securities
2338	Valuation Office of the National Association of Insurance
2339	Commissioners to meet such standards of financial condition and
2340	standing as are considered necessary and appropriate to regulate
2341	the quality of financial institutions whose letters of credit
2342	are acceptable to the office.
2343	Section 29.  This act shall take effect July 1, 2012.

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