Florida Senate - 2023 COMMITTEE AMENDMENT
Bill No. SB 7052
Ì451290ÆÎ451290
LEGISLATIVE ACTION
Senate . House
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The Committee on Fiscal Policy (Hutson) recommended the
following:
1 Senate Substitute for Amendment (592450) (with title
2 amendment)
3
4 Delete everything after the enacting clause
5 and insert:
6 Section 1. Paragraph (b) of subsection (10) of section
7 624.307, Florida Statutes, is amended to read:
8 624.307 General powers; duties.—
9 (10)
10 (b) Any person licensed or issued a certificate of
11 authority by the department or the office shall respond, in
12 writing or electronically, to the division within 14 20 days
13 after receipt of a written request for documents and information
14 from the division concerning a consumer complaint. The response
15 must address the issues and allegations raised in the complaint
16 and include any requested documents concerning the consumer
17 complaint not subject to attorney-client or work-product
18 privilege. The division may impose an administrative penalty for
19 failure to comply with this paragraph of up to $5,000 $2,500 per
20 violation upon any entity licensed by the department or the
21 office and $250 for the first violation, $500 for the second
22 violation, and up to $1,000 per for the third or subsequent
23 violation by upon any individual licensed by the department or
24 the office.
25 Section 2. Present subsection (4) of section 624.315,
26 Florida Statutes, is redesignated as subsection (5), and a new
27 subsection (4) is added to that section, to read:
28 624.315 Annual reports; quarterly reports report.—
29 (4)(a) The office shall create a report detailing all
30 actions of the office to enforce insurer compliance with this
31 code and all rules and orders of the office or department during
32 the previous year. For each of the following, the report must
33 detail the insurer or other licensee or registrant against whom
34 such action was taken; whether the office found any violation of
35 law or rule by such party, and, if so, detail such violation;
36 and the resolution of such action, including any penalties
37 imposed by the office. The report must be published on the
38 website of the office and submitted to the commission, the
39 President of the Senate, the Speaker of the House of
40 Representatives, and the legislative committees with
41 jurisdiction over matters of insurance on or before January 31
42 of each year. The report must include, but need not be limited
43 to:
44 1. The revocation, denial, or suspension of any license or
45 registration issued by the office.
46 2. All actions taken pursuant to s. 624.310.
47 3. Fines imposed by the office for violations of this code.
48 4. Consent orders entered into by the office.
49 5. Examinations and investigations conducted and completed
50 by the office pursuant to ss. 624.316 and 624.3161.
51 6. Investigations conducted and completed, by line of
52 insurance, for which the office found violations of law or rule
53 but did not take enforcement action.
54 (b) Each quarter, the office shall create a report
55 detailing all actions of the office to enforce insurer
56 compliance during the previous quarter. The report must include,
57 but not be limited to, the subjects that must be included in the
58 annual report under paragraph (a). The report must be submitted
59 to the commission, the President of the Senate, the Speaker of
60 the House of Representatives, and the legislative committees
61 with jurisdiction over matters of insurance. The report is due
62 on or before April 30, July 31, October 31, and January 31,
63 respectively, for the immediately preceding quarter. The report
64 due January 31 may be included within the annual report required
65 under paragraph (a).
66 (c) The office need not include within any report required
67 under this subsection information that would violate any
68 confidentiality provision included within any agreement, order,
69 or consent order entered into or promulgated by the office.
70 Section 3. Subsections (3) and (4) are added to section
71 624.316, Florida Statutes, to read:
72 624.316 Examination of insurers.—
73 (3) The office shall create, and the commission shall adopt
74 by rule, a risk-based selection methodology for scheduling
75 examinations of insurers subject to this section. This
76 requirement does not restrict the authority of the office to
77 conduct examinations under this section as often as it deems
78 advisable. Such methodology must include all of the following:
79 (a) Use of a risk-focused analysis to prioritize financial
80 examinations of insurers when such reporting indicates a decline
81 in the insurer’s financial condition.
82 (b) Consideration of:
83 1. Level of capitalization and identification of
84 unfavorable trends;
85 2. Negative trends in profitability or cash flow from
86 operations;
87 3. National Association of Insurance Commissioners
88 Insurance Regulatory Information System ratio results;
89 4. Risk-based capital and risk-based capital trend test
90 results;
91 5. The structure and complexity of the insurer;
92 6. Changes in the insurer’s officers or board of directors;
93 7. Changes in the insurer’s business strategy or
94 operations;
95 8. Findings and recommendations from an examination made
96 pursuant to s. 624.316 or s. 624.3161;
97 9. Current or pending regulatory actions by the office or
98 the department;
99 10. Information obtained from other regulatory agencies or
100 independent organization ratings and reports; and
101 11. The impact of an insurer’s insolvency on policyholders
102 of the insurer and the public generally.
103 (c) Prioritization of property insurers for which the
104 office identifies significant concerns about an insurer’s
105 solvency pursuant to s. 627.7154.
106 (d) Any other matters the office deems necessary to
107 consider for the protection of the public.
108 (4) To facilitate the development of the methodology for
109 scheduling examinations pursuant to this section, the commission
110 may adopt by rule the National Association of Insurance
111 Commissioners Financial Analysis Handbook, to the extent that
112 the handbook is consistent with and does not negate the
113 requirements of this section.
114 Section 4. Subsection (7) of section 624.3161, Florida
115 Statutes, is amended, and subsection (8) is added to that
116 section, to read:
117 624.3161 Market conduct examinations.—
118 (7) Notwithstanding subsection (1), any authorized insurer
119 transacting residential property insurance business in this
120 state:
121 (a) May be subject to an additional market conduct
122 examination after a hurricane if, at any time more than 90 days
123 after the end of the hurricane, the insurer:
124 (a) is among the top 20 percent of insurers based upon a
125 calculation of the ratio of hurricane-related property insurance
126 claims filed to the number of property insurance policies in
127 force;
128 (b) Must be subject to a market conduct examination after a
129 hurricane if, at any time more than 90 days after the end of the
130 hurricane, the insurer:
131 1. Is among the top 20 percent of insurers based upon a
132 calculation of the ratio of hurricane claim-related consumer
133 complaints made about that insurer to the department to the
134 insurer’s total number of hurricane-related claims;
135 2. Is among the top 20 percent of insurers based upon a
136 calculation of the ratio of hurricane claims closed without
137 payment to the insurer’s total number of hurricane claims;
138 3.(c) Has made significant payments to its managing general
139 agent since the hurricane; or
140 4.(d) Is identified by the office as necessitating a market
141 conduct exam for any other reason.
142
143 All relevant criteria under this section and s. 624.316 shall be
144 applied to the market conduct examination under this subsection.
145 Such an examination must be initiated within 18 months after the
146 landfall of a hurricane that results in an executive order or a
147 state of emergency issued by the Governor. The requirements of
148 this subsection do not limit the authority of the office to
149 conduct at any time a market conduct examination of a property
150 insurer in the aftermath of a hurricane. This subsection does
151 not require the office to conduct multiple market conduct
152 examinations of the same insurer when multiple hurricanes make
153 landfall in this state in a single calendar year. An examination
154 of an insurer under this subsection must also include an
155 examination of its managing general agent as if it were the
156 insurer.
157 (8) The office shall create, and the commission shall adopt
158 by rule, a selection methodology for scheduling and conducting
159 market conduct examinations of insurers and other entities
160 regulated by the office. This requirement does not restrict the
161 authority of the office to conduct market conduct examinations
162 as often as it deems necessary. Such selection methodology must
163 prioritize market conduct examinations of insurers and other
164 entities regulated by the office to whom any of the following
165 conditions applies:
166 (a) An insurance regulator in another state has initiated
167 or taken regulatory action against the insurer or entity
168 regarding an act or omission of such insurer which, if committed
169 in this state, would constitute a violation of the laws of this
170 state or any rule or order of the office or department.
171 (b) Given the insurer’s market share in this state, the
172 department or the office has received a disproportionate number
173 of the following types of claims-handling complaints against the
174 insurer:
175 1. Failure to timely communicate with respect to claims;
176 2. Failure to timely pay claims;
177 3. Untimely payments giving rise to the payment of
178 statutory interest;
179 4. Failure to adjust and pay claims in accordance with the
180 terms and conditions of the policy or contract and in compliance
181 with state law;
182 5. Violations of part IX of chapter 626, the Unfair
183 Insurance Trade Practices Act;
184 6. Failure to use licensed and duly appointed claims
185 adjusters;
186 7. Failure to maintain reasonable claims records; or
187 8. Failure to adhere to the company’s claims-handling
188 manual.
189 (c) The results of a National Association of Insurance
190 Commissioners Market Conduct Annual Statement indicate that the
191 insurer is a negative outlier with regard to particular metrics.
192 (d) There is evidence that the insurer is violating or has
193 violated the Unfair Insurance Trade Practices Act.
194 (e) The insurer meets the criteria in subsection (7).
195 (f) Any other conditions the office deems necessary for the
196 protection of the public.
197
198 The office shall present the proposed rule required by this
199 subsection to the commission no later than October 1, 2023. In
200 addition to the methodology required by this subsection, the
201 rule must provide criteria for how the office, in coordination
202 with the department, will determine what constitutes a
203 disproportionate number of claims-handling complaints described
204 in paragraph (b).
205 Section 5. Section 624.4211, Florida Statutes, is amended
206 to read:
207 624.4211 Administrative fine in lieu of suspension or
208 revocation.—
209 (1) If the office finds that one or more grounds exist for
210 the discretionary revocation or suspension of a certificate of
211 authority issued under this chapter, the office may, in lieu of
212 such revocation or suspension, impose a fine upon the insurer.
213 (2)(a) With respect to a any nonwillful violation, such
214 fine may not exceed:
215 1. Twenty-five thousand dollars per violation, up to an
216 aggregate amount of $100,000 for all nonwillful violations
217 arising out of the same action, related to a covered loss or
218 claim caused by an emergency for which the Governor declared a
219 state of emergency pursuant to s. 252.36.
220 2. Twelve thousand five hundred dollars $5,000 per
221 violation, up to. In no event shall such fine exceed an
222 aggregate amount of $50,000 $20,000 for all other nonwillful
223 violations arising out of the same action.
224 (b) If an insurer discovers a nonwillful violation, the
225 insurer shall correct the violation and, if restitution is due,
226 make restitution to all affected persons. Such restitution shall
227 include interest at 12 percent per year from either the date of
228 the violation or the date of inception of the affected person’s
229 policy, at the insurer’s option. The restitution may be a credit
230 against future premiums due, provided that interest accumulates
231 until the premiums are due. If the amount of restitution due to
232 any person is $50 or more and the insurer wishes to credit it
233 against future premiums, it shall notify such person that she or
234 he may receive a check instead of a credit. If the credit is on
235 a policy that is not renewed, the insurer shall pay the
236 restitution to the person to whom it is due.
237 (3)(a) With respect to a any knowing and willful violation
238 of a lawful order or rule of the office or commission or a
239 provision of this code, the office may impose a fine upon the
240 insurer in an amount not to exceed:
241 1. Two hundred thousand dollars for each such violation, up
242 to an aggregate amount of $1 million for all knowing and willful
243 violations arising out of the same action, related to a covered
244 loss or claim caused by an emergency for which the Governor
245 declared a state of emergency pursuant to s. 252.36.
246 2. One hundred thousand dollars $40,000 for each such
247 violation, up to. In no event shall such fine exceed an
248 aggregate amount of $500,000 $200,000 for all other knowing and
249 willful violations arising out of the same action.
250 (b) In addition to such fines, the insurer shall make
251 restitution when due in accordance with subsection (2).
252 (4) The failure of an insurer to make restitution when due
253 as required under this section constitutes a willful violation
254 of this code. However, if an insurer in good faith is uncertain
255 as to whether any restitution is due or as to the amount of such
256 restitution, it shall promptly notify the office of the
257 circumstances; and the failure to make restitution pending a
258 determination thereof shall not constitute a violation of this
259 code.
260 Section 6. Section 624.4301, Florida Statutes, is created
261 to read:
262 624.4301 Notice of temporary discontinuance of writing new
263 residential property insurance policies.—
264 (1) Any authorized insurer, before temporarily suspending
265 writing new residential property insurance policies in this
266 state, must give notice to the office of the insurer’s reasons
267 for such action, the effective dates of the temporary
268 suspension, and the proposed communication to its agents. Such
269 notice must be provided on a form approved by the office and
270 adopted by the commission. The insurer shall submit such notice
271 to the office the earlier of 20 business days before the
272 effective date of the temporary suspension of writing or 5
273 business days before notifying its agents of the temporary
274 suspension of writing. The insurer must provide any other
275 information requested by the office related to the insurer’s
276 temporary suspension of writing. The requirements of this
277 section do not apply to a temporary suspension of writing new
278 business made in response to a hurricane that may make landfall
279 in this state if such temporary suspension ceases within 72
280 hours after hurricane conditions are no longer present in this
281 state.
282 (2) The commission may adopt rules to administer this
283 section.
284 Section 7. Section 624.805, Florida Statutes, is created to
285 read:
286 624.805 Hazardous insurer standards; office’s evaluation
287 and enforcement authority; immediate final order.—
288 (1) In determining whether the continued operation of any
289 insurer transacting business in this state may be deemed to be
290 hazardous to its policyholders or creditors or to the general
291 public, the office may consider, in the totality of the
292 circumstances of such insurer, any of the following:
293 (a) Adverse findings reported in financial condition or
294 market conduct examination reports, audit reports, or actuarial
295 opinions, reports, or summaries.
296 (b) The National Association of Insurance Commissioners
297 Insurance Regulatory Information System and its other financial
298 analysis solvency tools and reports.
299 (c) Whether the insurer has made adequate provisions,
300 according to presently accepted actuarial standards of practice,
301 for the anticipated cash flows required to cover its contractual
302 obligations and related expenses.
303 (d) The ability of an assuming reinsurer to perform and
304 whether the insurer’s reinsurance program provides sufficient
305 protection for the insurer’s remaining surplus after taking into
306 account the insurer’s cash flow and the classes of business
307 written, as well as the financial condition of the assuming
308 reinsurer.
309 (e) Whether the insurer’s operating loss in the last 12
310 month period, including, but not limited to, net capital gain or
311 loss, change in nonadmitted assets, and cash dividends paid to
312 shareholders is greater than 50 percent of the insurer’s
313 remaining surplus as regards policyholders in excess of the
314 minimum required.
315 (f) Whether the insurer’s operating loss in the last 12
316 month period, excluding net capital gains, is greater than 20
317 percent of the insurer’s remaining surplus as regards
318 policyholders in excess of the minimum required.
319 (g) Whether a reinsurer, an obligor, or any entity within
320 the insurer’s insurance holding company system is insolvent,
321 threatened with insolvency, or delinquent in payment of its
322 monetary or other obligations, and which in the opinion of the
323 office may affect the solvency of the insurer.
324 (h) Contingent liabilities, pledges, or guaranties that
325 individually or collectively involve a total amount that in the
326 opinion of the office may affect the solvency of the insurer.
327 (i) Whether any affiliate, as defined in s. 624.10(1), of
328 the insurer is delinquent in the transmitting to, or payment of,
329 net premiums to the insurer.
330 (j) The age and collectability of receivables.
331 (k) Whether the management of the insurer, including
332 officers, directors, or any other person who directly or
333 indirectly controls the operation of the insurer, fails to
334 possess and demonstrate the competence, fitness, and reputation
335 deemed necessary to serve the insurer in such position.
336 (l) Whether management of the insurer has failed to respond
337 to inquiries relative to the condition of the insurer or has
338 furnished false or misleading information to the office
339 concerning an inquiry.
340 (m) Whether the insurer has failed to meet financial and
341 holding company filing requirements in the absence of a reason
342 satisfactory to the office.
343 (n) Whether management of the insurer has filed any false
344 or misleading sworn financial statement, has released a false or
345 misleading financial statement to lending institutions or to the
346 general public, has made a false or misleading entry, or has
347 omitted an entry of material amount in the books of the insurer.
348 (o) Whether the insurer has grown so rapidly and to such an
349 extent that it lacks adequate financial and administrative
350 capacity to meet its obligations in a timely manner.
351 (p) Whether the insurer has experienced, or will experience
352 in the foreseeable future, cash flow or liquidity problems.
353 (q) Whether management has established reserves that do not
354 comply with minimum standards established by state insurance
355 laws and regulations, statutory accounting standards, sound
356 actuarial principles, and standards of practice.
357 (r) Whether management persistently engages in material
358 under-reserving that results in adverse development.
359 (s) Whether transactions among affiliates, subsidiaries, or
360 controlling persons for which the insurer receives assets or
361 capital gains, or both, do not provide sufficient value,
362 liquidity, or diversity to assure the insurer’s ability to meet
363 its outstanding obligations as they mature.
364 (t) The ratio of the annual premium volume to surplus or of
365 its liabilities to surplus in relation to loss experience, the
366 kinds of risks insured, or both.
367 (u) Whether the insurer’s asset portfolio, when viewed in
368 light of current economic conditions and indications of
369 financial or operational leverage, is of sufficient value,
370 liquidity, or diversity to assure the company’s ability to meet
371 its outstanding obligations as they mature.
372 (v) Whether the excess of surplus as regards policyholders
373 above the insurer’s statutorily required surplus as regards
374 policyholders has decreased by more than 50 percent in the
375 preceding 12-month period.
376 (w) As to a residential property insurer, whether it has
377 sufficient capital, surplus, and reinsurance to withstand
378 significant weather events, including, but not limited to,
379 hurricanes.
380 (x) Whether the insurer’s required surplus, capital, or
381 capital stock is impaired to an extent prohibited by law.
382 (y) Whether the insurer continues to write new business
383 when it has not maintained the required surplus or capital.
384 (z) Whether the insurer moves to dissolve or liquidate
385 without first having made provisions satisfactory to the office
386 for liabilities arising from insurance policies issued by the
387 insurer.
388 (aa) Whether the insurer has incurred substantial new debt,
389 has had to rely on frequent or substantial capital infusions,
390 has a highly leveraged balance sheet, or relies increasingly on
391 other entities, including, but not limited to, affiliates,
392 third-party administrators, managing general agents, or
393 management companies.
394 (bb) Whether the insurer meets one or more of the grounds
395 in s. 631.051 for the appointment of the department as receiver.
396 (cc) Any other finding determined by the office to be
397 hazardous to the insurer’s policyholders or creditors or to the
398 general public.
399 (2) For the purposes of making a determination of an
400 insurer’s financial condition under the Florida Insurance Code,
401 the office may:
402 (a) Disregard any credit or amount receivable resulting
403 from transactions with a reinsurer that is insolvent, impaired,
404 or otherwise subject to a delinquency proceeding;
405 (b) Make appropriate adjustments, including disallowance to
406 asset values attributable to investments in or transactions with
407 parents, subsidiaries, or affiliates, consistent with the
408 National Association of Insurance Commissioners Accounting
409 Practices and Procedures Manual and state laws and rules;
410 (c) Refuse to recognize the stated value of accounts
411 receivable if the ability to collect receivables is highly
412 speculative in view of the age of the account or the financial
413 condition of the debtor; or
414 (d) Increase the insurer’s liability, in an amount equal to
415 any contingent liability, pledge, or guarantee not otherwise
416 included, if there is a substantial risk that the insurer will
417 be called upon to meet the obligation undertaken within the next
418 12-month period.
419 (3) If the office determines that the continued operations
420 of an insurer authorized to transact business in this state may
421 be hazardous to its policyholders or creditors or to the general
422 public, the office may issue an order requiring the insurer to
423 do any of the following:
424 (a) Reduce the total amount of present and potential
425 liability for policy benefits by procuring additional
426 reinsurance.
427 (b) Reduce, suspend, or limit the volume of business being
428 accepted or renewed.
429 (c) Reduce general insurance and commission expenses by
430 specified methods or amounts.
431 (d) Increase the insurer’s capital and surplus.
432 (e) Suspend or limit the declaration and payment of
433 dividends by an insurer to its stockholders or to its
434 policyholders.
435 (f) File reports in a form acceptable to the office
436 concerning the market value of the insurer’s assets.
437 (g) Limit or withdraw from certain investments or
438 discontinue certain investment practices to the extent the
439 office deems necessary.
440 (h) Document the adequacy of premium rates in relation to
441 the risks insured.
442 (i) File, in addition to regular annual statements, interim
443 financial reports on a form prescribed by the commission and
444 adopted by the National Association of Insurance Commissioners.
445 (j) Correct corporate governance practice deficiencies and
446 adopt and use governance practices acceptable to the office.
447 (k) Provide a business plan to the office in order to
448 continue to transact business in this state.
449 (l) Notwithstanding any other law limiting the frequency or
450 amount of rate adjustments, adjust rates for any non-life
451 insurance product written by the insurer which the office
452 considers necessary to improve the financial condition of the
453 insurer.
454 (4) This section may not be interpreted to limit the powers
455 granted to the office by any laws of this state, nor may it be
456 interpreted to supersede any laws of this state.
457 (5) The office may, pursuant to ss. 120.569 and 120.57, in
458 its discretion and without advance notice or hearing, issue an
459 immediate final order to any insurer requiring the actions
460 listed in subsection (3).
461 Section 8. Subsection (11) of section 624.81, Florida
462 Statutes, is amended to read:
463 624.81 Notice to comply with written requirements of
464 office; noncompliance.—
465 (11) The commission may adopt rules to define standards of
466 hazardous financial condition and corrective action
467 substantially similar to that indicated in the National
468 Association of Insurance Commissioners’ 1997 “Model Regulation
469 to Define Standards and Commissioner’s Authority for Companies
470 Deemed to be in Hazardous Financial Condition,” which are
471 necessary to implement the provisions of this part.
472 Section 9. Section 624.865, Florida Statutes, is created to
473 read:
474 624.865 Rulemaking.—The commission may adopt rules to
475 administer ss. 624.80-624.87. Such rules must protect the
476 interests of insureds, claimants, insurers, and the public.
477 Section 10. Paragraph (d) of subsection (2) and paragraph
478 (b) of subsection (3) of section 628.8015, Florida Statutes, is
479 amended to read:
480 628.8015 Own-risk and solvency assessment; corporate
481 governance annual disclosure.—
482 (2) OWN-RISK AND SOLVENCY ASSESSMENT.—
483 (d) Exemption.—
484 1. An insurer is exempt from the requirements of this
485 subsection if:
486 a. The insurer has annual direct written and unaffiliated
487 assumed premium, including international direct and assumed
488 premium, but excluding premiums reinsured with the Federal Crop
489 Insurance Corporation and the National Flood Insurance Program,
490 of less than $500 million; or
491 b. The insurer is a member of an insurance group and the
492 insurance group has annual direct written and unaffiliated
493 assumed premium, including international direct and assumed
494 premium, but excluding premiums reinsured with the Federal Crop
495 Insurance Corporation and the National Flood Insurance Program,
496 of less than $1 billion.
497 2. If an insurer is:
498 a. Exempt under sub-subparagraph 1.a., but the insurance
499 group of which the insurer is a member is not exempt under sub
500 subparagraph 1.b., the ORSA summary report must include every
501 insurer within the insurance group. The insurer may satisfy this
502 requirement by submitting more than one ORSA summary report for
503 any combination of insurers if any combination of reports
504 includes every insurer within the insurance group.
505 b. Not exempt under sub-subparagraph 1.a., but the
506 insurance group of which it is a member is exempt under sub
507 subparagraph 1.b., the insurer must submit to the office the
508 ORSA summary report applicable only to that insurer.
509 3. The office may require an exempt insurer to maintain a
510 risk management framework, conduct an ORSA, and file an ORSA
511 summary report:
512 a. Based on unique circumstances, including, but not
513 limited to, the type and volume of business written, ownership
514 and organizational structure, federal agency requests, and
515 international supervisor requests;
516 b. If the insurer has risk-based capital for a company
517 action level event pursuant to s. 624.4085(3), meets one or more
518 of the standards of an insurer deemed to be in hazardous
519 financial condition under s. 624.805 as defined in rules adopted
520 by the commission pursuant to s. 624.81(11), or exhibits
521 qualities of an insurer in hazardous financial condition as
522 determined by the office; or
523 c. If the office determines it is in the best interest of
524 the state.
525 4. If an exempt insurer becomes disqualified for an
526 exemption because of changes in premium as reported on the most
527 recent annual statement of the insurer or annual statements of
528 the insurers within the insurance group of which the insurer is
529 a member, the insurer must comply with the requirements of this
530 section effective 1 year after the year in which the insurer
531 exceeded the premium thresholds.
532 (3) CORPORATE GOVERNANCE ANNUAL DISCLOSURE.—
533 (b) Disclosure requirement.—
534 1.a. An insurer, or insurer member of an insurance group,
535 of which the office is the lead state regulator, as determined
536 by the procedures in the most recent National Association of
537 Insurance Commissioners Financial Analysis Handbook, shall
538 submit a corporate governance annual disclosure to the office by
539 June 1 of each calendar year. The initial corporate governance
540 annual disclosure must be submitted by December 31, 2018.
541 b. An insurer or insurance group not required to submit a
542 corporate governance annual disclosure under sub-subparagraph a.
543 shall do so at the request of the office, but not more than once
544 per calendar year. The insurer or insurance group shall notify
545 the office of the proposed submission date within 30 days after
546 the request of the office.
547 c. Before December 31, 2018, the office may require an
548 insurer or insurance group to provide a corporate governance
549 annual disclosure:
550 (I) Based on unique circumstances, including, but not
551 limited to, the type and volume of business written, the
552 ownership and organizational structure, federal agency requests,
553 and international supervisor requests;
554 (II) If the insurer has risk-based capital for a company
555 action level event pursuant to s. 624.4085(3), meets one or more
556 of the standards of an insurer deemed to be in hazardous
557 financial condition under s. 624.805 as defined in rules adopted
558 pursuant to s. 624.81(11), or exhibits qualities of an insurer
559 in hazardous financial condition as determined by the office;
560 (III) If the insurer is the member of an insurer group of
561 which the office acts as the lead state regulator as determined
562 by the procedures in the most recent National Association of
563 Insurance Commissioners Financial Analysis Handbook; or
564 (IV) If the office determines that it is in the best
565 interest of the state.
566 2. The chief executive officer or corporate secretary of
567 the insurer or the insurance group must sign the corporate
568 governance annual disclosure attesting that, to the best of his
569 or her knowledge and belief, the insurer has implemented the
570 corporate governance practices and provided a copy of the
571 disclosure to the board of directors or the appropriate board
572 committee.
573 3.a. Depending on the structure of its system of corporate
574 governance, the insurer or insurance group may provide corporate
575 governance information at one of the following levels:
576 (I) The ultimate controlling parent level;
577 (II) An intermediate holding company level; or
578 (III) The individual legal entity level.
579 b. The insurer or insurance group may make the corporate
580 governance annual disclosure at:
581 (I) The level used to determine the risk appetite of the
582 insurer or insurance group;
583 (II) The level at which the earnings, capital, liquidity,
584 operations, and reputation of the insurer are collectively
585 overseen and the supervision of those factors is coordinated and
586 exercised; or
587 (III) The level at which legal liability for failure of
588 general corporate governance duties would be placed.
589
590 An insurer or insurance group must indicate the level of
591 reporting used and explain any subsequent changes in the
592 reporting level.
593 4. The review of the corporate governance annual disclosure
594 and any additional requests for information shall be made
595 through the lead state as determined by the procedures in the
596 most recent National Association of Insurance Commissioners
597 Financial Analysis Handbook.
598 5. An insurer or insurance group may comply with this
599 paragraph by cross-referencing other existing relevant and
600 applicable documents, including, but not limited to, the ORSA
601 summary report, Holding Company Form B or F filings, Securities
602 and Exchange Commission proxy statements, or foreign regulatory
603 reporting requirements, if the documents contain information
604 substantially similar to the information described in paragraph
605 (c). The insurer or insurance group shall clearly identify and
606 reference the specific location of the relevant and applicable
607 information within the corporate governance annual disclosure
608 and attach the referenced document if it has not already been
609 filed with, or made available to, the office.
610 6. Each year following the initial filing of the corporate
611 governance annual disclosure, the insurer or insurance group
612 shall file an amended version of the previously filed corporate
613 governance annual disclosure indicating changes that have been
614 made. If changes have not been made in the previously filed
615 disclosure, the insurer or insurance group should so indicate.
616 Section 11. Paragraph (c) of subsection (3) of section
617 626.207, Florida Statutes, is amended to read:
618 626.207 Disqualification of applicants and licensees;
619 penalties against licensees; rulemaking authority.—
620 (3) An applicant who has been found guilty of or has
621 pleaded guilty or nolo contendere to a crime not included in
622 subsection (2), regardless of adjudication, is subject to:
623 (c) A 7-year disqualifying period for all misdemeanors
624 directly related to the financial services business or any
625 violation of the Florida Insurance Code.
626 Section 12. Subsections (2) and (3) of section 626.9521,
627 Florida Statutes, are amended to read:
628 626.9521 Unfair methods of competition and unfair or
629 deceptive acts or practices prohibited; penalties.—
630 (2) Except as provided in subsection (3), any person who
631 violates any provision of this part is subject to a fine in an
632 amount not greater than $12,500 $5,000 for each nonwillful
633 violation and not greater than $100,000 $40,000 for each willful
634 violation. Fines under this subsection imposed against an
635 insurer may not exceed an aggregate amount of $50,000 $20,000
636 for all nonwillful violations arising out of the same action or
637 an aggregate amount of $500,000 $200,000 for all willful
638 violations arising out of the same action. The fines may be
639 imposed in addition to any other applicable penalty.
640 (3)(a) If a person violates s. 626.9541(1)(l), the offense
641 known as “twisting,” or violates s. 626.9541(1)(aa), the offense
642 known as “churning,” the person commits a misdemeanor of the
643 first degree, punishable as provided in s. 775.082, and an
644 administrative fine not greater than $12,500 $5,000 shall be
645 imposed for each nonwillful violation or an administrative fine
646 not greater than $187,500 $75,000 shall be imposed for each
647 willful violation. To impose an administrative fine for a
648 willful violation under this paragraph, the practice of
649 “churning” or “twisting” must involve fraudulent conduct.
650 (b) If a person violates s. 626.9541(1)(ee) by willfully
651 submitting fraudulent signatures on an application or policy
652 related document, the person commits a felony of the third
653 degree, punishable as provided in s. 775.082, and an
654 administrative fine not greater than $12,500 $5,000 shall be
655 imposed for each nonwillful violation or an administrative fine
656 not greater than $187,500 $75,000 shall be imposed for each
657 willful violation.
658 (c) If a person violates any provision of this part and
659 such violation is related to a covered loss or covered claim
660 caused by an emergency for which the Governor declared a state
661 of emergency pursuant to s. 252.36, such person is subject to a
662 fine in an amount not greater than $25,000 for each nonwillful
663 violation and not greater than $200,000 for each willful
664 violation. Fines imposed under this paragraph against an insurer
665 may not exceed an aggregate amount of $100,000 for all
666 nonwillful violations arising out of the same action or an
667 aggregate amount of $1 million for all willful violations
668 arising out of the same action.
669 (d) Administrative fines under paragraphs (a) and (b) this
670 subsection may not exceed an aggregate amount of $125,000
671 $50,000 for all nonwillful violations arising out of the same
672 action or an aggregate amount of $625,000 $250,000 for all
673 willful violations arising out of the same action.
674 Section 13. Paragraphs (i) and (w) of subsection (1) of
675 section 626.9541, Florida Statutes, are amended to read:
676 626.9541 Unfair methods of competition and unfair or
677 deceptive acts or practices defined.—
678 (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
679 ACTS.—The following are defined as unfair methods of competition
680 and unfair or deceptive acts or practices:
681 (i) Unfair claim settlement practices.—
682 1. Attempting to settle claims on the basis of an
683 application, when serving as a binder or intended to become a
684 part of the policy, or any other material document which was
685 altered without notice to, or knowledge or consent of, the
686 insured;
687 2. A material misrepresentation made to an insured or any
688 other person having an interest in the proceeds payable under
689 such contract or policy, for the purpose and with the intent of
690 effecting settlement of such claims, loss, or damage under such
691 contract or policy on less favorable terms than those provided
692 in, and contemplated by, such contract or policy;
693 3. Committing or performing with such frequency as to
694 indicate a general business practice any of the following:
695 a. Failing to adopt and implement standards for the proper
696 investigation of claims;
697 b. Misrepresenting pertinent facts or insurance policy
698 provisions relating to coverages at issue;
699 c. Failing to acknowledge and act promptly upon
700 communications with respect to claims;
701 d. Denying claims without conducting reasonable
702 investigations based upon available information;
703 e. Failing to affirm or deny full or partial coverage of
704 claims, and, as to partial coverage, the dollar amount or extent
705 of coverage, or failing to provide a written statement that the
706 claim is being investigated, upon the written request of the
707 insured within 30 days after proof-of-loss statements have been
708 completed;
709 f. Failing to promptly provide a reasonable explanation in
710 writing to the insured of the basis in the insurance policy, in
711 relation to the facts or applicable law, for denial of a claim
712 or for the offer of a compromise settlement;
713 g. Failing to promptly notify the insured of any additional
714 information necessary for the processing of a claim;
715 h. Failing to clearly explain the nature of the requested
716 information and the reasons why such information is necessary;
717 or
718 i. Failing to pay personal injury protection insurance
719 claims within the time periods required by s. 627.736(4)(b). The
720 office may order the insurer to pay restitution to a
721 policyholder, medical provider, or other claimant, including
722 interest at a rate consistent with the amount set forth in s.
723 55.03(1), for the time period within which an insurer fails to
724 pay claims as required by law. Restitution is in addition to any
725 other penalties allowed by law, including, but not limited to,
726 the suspension of the insurer’s certificate of authority; or
727 j. Altering or amending an insurance adjuster’s report
728 without:
729 (I) Providing a detailed explanation as to why any change
730 that has the effect of reducing the estimate of the loss was
731 made; and
732 (II) Including on the report or as an addendum to the
733 report a detailed list of all changes made to the report and the
734 identity of the person who ordered each change; or
735 (III) Retaining all versions of the report, and including
736 within each such version, for each change made within such
737 version of the report, the identity of each person who made or
738 ordered such change; or
739 4. Failing to pay undisputed amounts of partial or full
740 benefits owed under first-party property insurance policies
741 within 60 days after an insurer receives notice of a residential
742 property insurance claim, determines the amounts of partial or
743 full benefits, and agrees to coverage, unless payment of the
744 undisputed benefits is prevented by factors beyond the control
745 of the insurer as defined in s. 627.70131(5).
746 (w) Soliciting or accepting new or renewal insurance risks
747 by insolvent or impaired insurer or receipt of certain bonuses
748 by an officer or director of an insolvent insurer prohibited;
749 penalty.—
750 1. Whether or not delinquency proceedings as to the insurer
751 have been or are to be initiated, but while such insolvency or
752 impairment exists, no director or officer of an insurer, except
753 with the written permission of the office, shall authorize or
754 permit the insurer to solicit or accept new or renewal insurance
755 risks in this state after such director or officer knew, or
756 reasonably should have known, that the insurer was insolvent or
757 impaired.
758 2. Regardless of whether delinquency proceedings as to the
759 insurer have been or are to be initiated, but while such
760 insolvency or impairment exists, a director or an officer of an
761 impaired insurer may not receive a bonus from such insurer, nor
762 may such director or officer receive a bonus from a holding
763 company or an affiliate that shares common ownership or control
764 with such insurer.
765 3. As used in this paragraph, the term:
766 a. “Bonus” means a payment, in addition to an officer’s or
767 a director’s usual compensation, which is in addition to any
768 amounts contracted for or otherwise legally due.
769 b. “Impaired” includes impairment of capital or surplus, as
770 defined in s. 631.011(12) and (13).
771 4.2. Any such director or officer, upon conviction of a
772 violation of this paragraph, commits is guilty of a felony of
773 the third degree, punishable as provided in s. 775.082, s.
774 775.083, or s. 775.084.
775 Section 14. Subsection (6) of section 626.989, Florida
776 Statutes, is amended, and subsection (10) is added to that
777 section, to read:
778 626.989 Investigation by department or Division of
779 Investigative and Forensic Services; compliance; immunity;
780 confidential information; reports to division; division
781 investigator’s power of arrest.—
782 (6)(a) Any person, other than an insurer, agent, or other
783 person licensed under the code, or an employee thereof, having
784 knowledge or who believes that a fraudulent insurance act or any
785 other act or practice which, upon conviction, constitutes a
786 felony or a misdemeanor under the code, or under s. 817.234, is
787 being or has been committed may send to the Division of
788 Investigative and Forensic Services a report or information
789 pertinent to such knowledge or belief and such additional
790 information relative thereto as the department may request. Any
791 professional practitioner licensed or regulated by the
792 Department of Business and Professional Regulation, except as
793 otherwise provided by law, any medical review committee as
794 defined in s. 766.101, any private medical review committee, and
795 any insurer, agent, or other person licensed under the code, or
796 an employee thereof, having knowledge or who believes that a
797 fraudulent insurance act or any other act or practice which,
798 upon conviction, constitutes a felony or a misdemeanor under the
799 code, or under s. 817.234, is being or has been committed shall
800 send to the Division of Investigative and Forensic Services a
801 report or information pertinent to such knowledge or belief and
802 such additional information relative thereto as the department
803 may require.
804 (b) The Division of Investigative and Forensic Services
805 shall review such information or reports and select such
806 information or reports as, in its judgment, may require further
807 investigation. It shall then cause an independent examination of
808 the facts surrounding such information or report to be made to
809 determine the extent, if any, to which a fraudulent insurance
810 act or any other act or practice which, upon conviction,
811 constitutes a felony or a misdemeanor under the code, or under
812 s. 817.234, is being committed.
813 (c) The Division of Investigative and Forensic Services
814 shall report any alleged violations of law which its
815 investigations disclose to the appropriate licensing agency and
816 state attorney or other prosecuting agency having jurisdiction,
817 including, but not limited to, the statewide prosecutor for
818 crimes that impact two or more judicial circuits in this state,
819 with respect to any such violation, as provided in s. 624.310.
820 If prosecution by the state attorney or other prosecuting agency
821 having jurisdiction with respect to such violation is not begun
822 within 60 days of the division’s report, the state attorney or
823 other prosecuting agency having jurisdiction with respect to
824 such violation shall inform the division of the reasons for the
825 lack of prosecution.
826 (10) The Division of Investigative and Forensic Services
827 Bureau of Insurance Fraud shall prepare and submit a performance
828 report to the President of the Senate and the Speaker of the
829 House of Representatives by January 1 of each year. The annual
830 report must include, but need not be limited to:
831 (a) The total number of initial referrals received, cases
832 opened, cases presented for prosecution, cases closed, and
833 convictions resulting from cases presented for prosecution by
834 the Bureau of Insurance Fraud, by type of insurance fraud and
835 circuit.
836 (b) The number of referrals received from insurers, the
837 office, and the Division of Consumer Services of the department,
838 and the outcome of those referrals.
839 (c) The number of investigations undertaken by the Bureau
840 of Insurance Fraud which were not the result of a referral from
841 an insurer and the outcome of those referrals.
842 (d) The number of investigations that resulted in a
843 referral to a regulatory agency and the disposition of those
844 referrals.
845 (e) The number of cases presented by the Bureau of
846 Insurance Fraud which local prosecutors or the statewide
847 prosecutor declined to prosecute and the reasons provided for
848 declining prosecution.
849 (f) A summary of the annual report required under s.
850 626.9896.
851 (g) The total number of employees assigned to the Bureau of
852 Insurance Fraud, delineated by location of staff assigned, and
853 the number and location of employees assigned to the Bureau of
854 Insurance Fraud who were assigned to work other types of fraud
855 cases.
856 (h) The average caseload and turnaround time by type of
857 case for each investigator.
858 (i) The training provided during the year to insurance
859 fraud investigators.
860 Section 15. Subsections (1), (3), and (4) of section
861 627.0629, Florida Statutes, are amended to read:
862 627.0629 Residential property insurance; rate filings.—
863 (1) It is the intent of the Legislature that insurers
864 provide savings to consumers who install or implement windstorm
865 damage mitigation techniques, alterations, or solutions to their
866 properties to prevent windstorm losses. A rate filing for
867 residential property insurance must include actuarially
868 reasonable discounts, credits, or other rate differentials, or
869 appropriate reductions in deductibles, for properties on which
870 fixtures or construction techniques demonstrated to reduce the
871 amount of loss in a windstorm have been installed or
872 implemented. The fixtures or construction techniques must
873 include, but are not limited to, fixtures or construction
874 techniques that enhance roof strength, roof covering
875 performance, roof-to-wall strength, wall-to-floor-to-foundation
876 strength, opening protection, and window, door, and skylight
877 strength. Credits, discounts, or other rate differentials, or
878 appropriate reductions in deductibles, for fixtures and
879 construction techniques that meet the minimum requirements of
880 the Florida Building Code must be included in the rate filing.
881 The office shall determine the discounts, credits, other rate
882 differentials, and appropriate reductions in deductibles that
883 reflect the full actuarial value of such revaluation, which may
884 be used by insurers in rate filings. Effective October 1, 2023,
885 each insurer subject to the requirements of this section must
886 provide information on the insurer’s website describing the
887 hurricane mitigation discounts available to policyholders. Such
888 information must be accessible on, or through a hyperlink
889 located on, the home page of the insurer’s website or the
890 primary page of the insurer’s website for property insurance
891 policyholders or applicants for such coverage in this state. On
892 or before January 1, 2025, and every 5 years thereafter, the
893 office shall reevaluate and update the fixtures or construction
894 techniques demonstrated to reduce the amount of loss in a
895 windstorm and the discounts, credits, other rate differentials,
896 and appropriate reductions in deductibles that reflect the full
897 actuarial value of such fixtures or construction techniques. The
898 office shall adopt rules and forms necessitated by such
899 reevaluation.
900 (3) A rate filing made on or after July 1, 1995, for mobile
901 home owner insurance must include appropriate discounts,
902 credits, or other rate differentials for mobile homes
903 constructed to comply with American Society of Civil Engineers
904 Standard ANSI/ASCE 7-88, adopted by the United States Department
905 of Housing and Urban Development on July 13, 1994, and that also
906 comply with all applicable tie-down requirements provided by
907 state law.
908 (4) The Legislature finds that separate consideration and
909 notice of hurricane insurance premiums will assist consumers by
910 providing greater assurance that hurricane premiums are lawful
911 and by providing more complete information regarding the
912 components of property insurance premiums. Effective January 1,
913 1997, A rate filing for residential property insurance shall be
914 separated into two components, rates for hurricane coverage and
915 rates for all other coverages. A premium notice reflecting a
916 rate implemented on the basis of such a filing shall separately
917 indicate the premium for hurricane coverage and the premium for
918 all other coverages.
919 Section 16. Paragraph (ll) is added to subsection (6) of
920 section 627.351, Florida Statutes, to read:
921 627.351 Insurance risk apportionment plans.—
922 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
923 (ll) The corporation may not determine that a risk is
924 ineligible for coverage with the corporation solely because such
925 risk has unrepaired damage caused by a covered loss that is the
926 subject of a claim that has been filed with the Florida
927 Insurance Guaranty Association. This paragraph applies to a risk
928 until the earlier of 36 months after the date the Florida
929 Insurance Guaranty Association began servicing such claim or the
930 Florida Insurance Guaranty Association closes the claim.
931 Section 17. Subsection (4) of section 627.410, Florida
932 Statutes, is amended to read:
933 627.410 Filing, approval of forms.—
934 (4) The office may, by order, exempt from the requirements
935 of this section for so long as it deems proper any insurance
936 document or form or type thereof as specified in such order, to
937 which, in its opinion, this section may not practicably be
938 applied, or the filing and approval of which are, in its
939 opinion, not desirable or necessary for the protection of the
940 public. The office may not exempt from the requirements of this
941 section the insurance documents or forms of any insurer, against
942 whom the office enters a final order determining that such
943 insurer violated any provision of this code, for a period of 36
944 months after the date of such order, and may not be deemed
945 approved under subsection (2).
946 Section 18. Section 627.4108, Florida Statutes, is created
947 to read:
948 627.4108 Claims-handling manuals; submission; attestation.—
949 (1) Each authorized residential property insurer conducting
950 business in this state must create and use a claims-handling
951 manual that provides guidelines and procedures and that complies
952 with the requirements of this code and comports to usual and
953 customary industry claims-handling practices. Such manual must
954 include guidelines and procedures for:
955 (a) Initially receiving and acknowledging initial receipt
956 of the claim and reviewing and evaluating the claim;
957 (b) Communicating with policyholders, beginning with the
958 receipt of the claim and continuing until closure of the claim;
959 (c) Setting the claim reserve;
960 (d) Investigating the claim, including conducting
961 inspections of the property that is the subject of the claim;
962 (e) Making preliminary estimates and estimates of the
963 covered damages to the insured property and communicating such
964 estimates to the policyholder;
965 (f) The payment, partial payment, or denial of the claim
966 and communicating such claim decision to the policyholder;
967 (g) Closing claims; and
968 (h) Any aspect of the claims-handling process which the
969 office determines should be included in the claims-handling
970 manual in order to:
971 1. Comply with the laws of this state or rules or orders of
972 the office or department;
973 2. Ensure the claims-handling manual comports with usual
974 and customary industry claims-handling guidelines; or
975 3. Protect policyholders of the insurer or the general
976 public.
977 (2) At any time, the office may request that a residential
978 property insurer submit a physical or electronic copy of the
979 insurer’s currently applicable, or otherwise specifically
980 requested, claims-handling manuals. Upon receiving such a
981 request, a residential property insurer must submit to the
982 office within 5 business days:
983 (a) A true and correct copy of each claims-handling manual
984 requested; and
985 (b) An attestation, on a form prescribed by the commission,
986 that certifies:
987 1. That the insurer has provided a true and correct copy of
988 each currently applicable, or otherwise specifically requested,
989 claims-handling manual; and
990 2. The timeframe for which each submitted claims-handling
991 manual was or is in effect.
992 (3)(a) Annually, each authorized residential property
993 insurer must certify and attest, on a form prescribed by the
994 commission, that:
995 1. Each of the insurer’s current claims-handling manuals
996 complies with the requirements of this code and comports to
997 usual and customary industry claims-handling practices; and
998 2. The insurer maintains adequate resources available to
999 implement the requirements of each of its claims-handling
1000 manuals at all times, including during natural disasters and
1001 catastrophic events.
1002 (b) Such attestation must be submitted to the office:
1003 1. On or before August 1, 2023; and
1004 2. Annually thereafter, on or before May 1 of each calendar
1005 year.
1006 (4) The commission is authorized, and all conditions are
1007 deemed met, to adopt emergency rules under s. 120.54(4), for the
1008 purpose of implementing this section. Notwithstanding any other
1009 law, emergency rules adopted under this section are effective
1010 for 6 months after adoption and may be renewed during the
1011 pendency of procedures to adopt permanent rules addressing the
1012 subject of the emergency rules.
1013 Section 19. Paragraph (d) of subsection (2) of section
1014 627.4133, Florida Statutes, is amended to read:
1015 627.4133 Notice of cancellation, nonrenewal, or renewal
1016 premium.—
1017 (2) With respect to any personal lines or commercial
1018 residential property insurance policy, including, but not
1019 limited to, any homeowner, mobile home owner, farmowner,
1020 condominium association, condominium unit owner, apartment
1021 building, or other policy covering a residential structure or
1022 its contents:
1023 (d)1. Upon a declaration of an emergency pursuant to s.
1024 252.36 and the filing of an order by the Commissioner of
1025 Insurance Regulation, An authorized insurer may not cancel or
1026 nonrenew a personal residential or commercial residential
1027 property insurance policy covering a dwelling or residential
1028 property located in this state:
1029 a. For a period of 90 days after the dwelling or
1030 residential property has been repaired, if such property which
1031 has been damaged as a result of a hurricane or wind loss that is
1032 the subject of the declaration of emergency pursuant to s.
1033 252.36 and the filing of an order by the Commissioner of
1034 Insurance Regulation for a period of 90 days after the dwelling
1035 or residential property has been repaired. A structure is deemed
1036 to be repaired when substantially completed and restored to the
1037 extent that it is insurable by another authorized insurer that
1038 is writing policies in this state.
1039 b. Until the earlier of when the dwelling or residential
1040 property has been repaired or 1 year after the insurer issues
1041 the final claim payment, if such property was damaged by any
1042 covered peril and sub-subparagraph a. does not apply.
1043 2. However, an insurer or agent may cancel or nonrenew such
1044 a policy prior to the repair of the dwelling or residential
1045 property:
1046 a. Upon 10 days’ notice for nonpayment of premium; or
1047 b. Upon 45 days’ notice:
1048 (I) For a material misstatement or fraud related to the
1049 claim;
1050 (II) If the insurer determines that the insured has
1051 unreasonably caused a delay in the repair of the dwelling; or
1052 (III) If the insurer has paid policy limits.
1053 3. If the insurer elects to nonrenew a policy covering a
1054 property that has been damaged, the insurer shall provide at
1055 least 90 days’ notice to the insured that the insurer intends to
1056 nonrenew the policy 90 days after the dwelling or residential
1057 property has been repaired. Nothing in this paragraph shall
1058 prevent the insurer from canceling or nonrenewing the policy 90
1059 days after the repairs are complete for the same reasons the
1060 insurer would otherwise have canceled or nonrenewed the policy
1061 but for the limitations of subparagraph 1. The Financial
1062 Services Commission may adopt rules, and the Commissioner of
1063 Insurance Regulation may issue orders, necessary to implement
1064 this paragraph.
1065 4. This paragraph shall also apply to personal residential
1066 and commercial residential policies covering property that was
1067 damaged as the result of Hurricane Ian or Hurricane Nicole
1068 Tropical Storm Bonnie, Hurricane Charley, Hurricane Frances,
1069 Hurricane Ivan, or Hurricane Jeanne.
1070 5. For purposes of this paragraph:
1071 a. A structure is deemed to be repaired when substantially
1072 completed and restored to the extent that it is insurable by
1073 another authorized insurer writing policies in this state.
1074 b. The term “insurer” means an authorized insurer.
1075 Section 20. Subsection (3) is added to section 627.426,
1076 Florida Statutes, to read:
1077 627.426 Claims administration.—
1078 (3)(a) Upon receiving actual notice of an incident or a
1079 loss that could give rise to a covered liability claim under an
1080 insurance policy, each liability insurer must do all of the
1081 following:
1082 1. Assign a licensed and appointed insurance adjuster to
1083 investigate the extent of the insured’s probable exposure and
1084 diligently attempt to resolve any questions concerning the
1085 existence or extent of the insured’s coverage.
1086 2. Evaluate the claim fairly, honestly, and with due regard
1087 for the interests of the insured based on available information;
1088 consider the extent of the claimant’s recoverable damages; and
1089 consider the information in a reasonable and prudent manner.
1090 3. Request from the insured or claimant additional relevant
1091 information the insurer reasonably deems necessary to evaluate
1092 whether to settle a claim.
1093 4. Conduct all oral and written communications with the
1094 insured with honesty and candor.
1095 5. Make reasonable efforts to explain to persons not
1096 represented by counsel matters requiring expertise beyond the
1097 level normally expected of a layperson with no training in
1098 insurance or claims-handling issues.
1099 6. Retain all written and recorded communications and
1100 create and retain a summary of all verbal communications in a
1101 reasonable manner for a period of not less than 5 years after
1102 the later of the entry of a judgment against the insured in
1103 excess of policy limits becoming final or the conclusion of the
1104 extracontractual claim, if any, including any related appeals.
1105 7. Within 30 days after a request, provide the insured with
1106 all communications related to the insurer’s handling of the
1107 claim which are not privileged as to the insured.
1108 8. Provide, upon request and at the insurer’s expense,
1109 reasonable accommodations necessary to communicate effectively
1110 with an insured covered under the Americans with Disabilities
1111 Act.
1112 9. Communicate to an insured all of the following within 15
1113 days after notice of the existence of a third-party claim:
1114 a. The identity of any other person or entity the insurer
1115 has reason to believe may be liable.
1116 b. The insurer’s evaluation of the claim, given the facts
1117 known by the insurer at that time.
1118 c. The likelihood and possible extent of an excess
1119 judgment.
1120 d. Steps the insured can take to avoid exposure to an
1121 excess judgment, including the right to secure personal counsel
1122 at the insured’s expense.
1123 e. The insured’s duty to cooperate with the insurer,
1124 including any specific requests required because of a settlement
1125 opportunity or by the insurer in accordance with the policy, the
1126 purpose of the required cooperation, and the consequences of
1127 refusing to cooperate.
1128 f. Any settlement demands or offers.
1129 10. Initiate settlement negotiations by tendering its
1130 policy limits to the claimant in exchange for a general release
1131 of the insured if the facts available to the insurer indicate
1132 that the insured’s liability is likely to exceed the policy
1133 limits.
1134 11. Give fair consideration to a settlement offer that is
1135 not unreasonable under the facts available to the insurer and
1136 settle in exchange for a general release of the insured, if
1137 possible, when a reasonably prudent person, faced with the
1138 prospect of paying the total probable exposure of the insured,
1139 would do so. The insurer shall provide reasonable assistance to
1140 the insured to comply with the insured’s obligations to
1141 cooperate and act reasonably to attempt to satisfy any
1142 conditions of a claimant’s settlement offer. If it is not
1143 possible to settle a liability claim within the available policy
1144 limits in exchange for a general release of the insured, the
1145 insurer shall act reasonably to attempt to minimize the excess
1146 exposure to the insured.
1147 12. Attempt to minimize the magnitude of possible excess
1148 judgments against the insured when multiple claims arise out of
1149 a single occurrence and the combined value of all claims exceeds
1150 the total of all applicable policy limits. The insurer is
1151 entitled to great discretion to decide how much to offer each
1152 respective claimant in its attempt to settle with such claimant
1153 in exchange for a general release of the insured. This
1154 subparagraph may not be interpreted to prevent an insurer from
1155 using either process provided under s. 624.155(6). An insurer
1156 does not violate this subsection simply because it is unable to
1157 settle all claims in a multiple claimant case.
1158 13. Attempt to settle the claim in exchange for a general
1159 release of all insureds against whom a claim may be presented if
1160 a loss creates the potential for a third-party claim against
1161 more than one insured. If it is not possible to settle in
1162 exchange for a general release of all insureds, the insurer, in
1163 consultation with the insureds, must attempt to enter into
1164 reasonable settlements of claims against certain insureds in
1165 exchange for a general release of such insureds to the exclusion
1166 of other insureds.
1167 14. Respond to any request for insurance information in
1168 compliance with s. 626.9372 or s. 627.4137, as applicable.
1169 15. Take reasonable measures to preserve evidence, for a
1170 reasonable period of time, which is needed for the defense of
1171 the liability claim if it appears the insured’s probable
1172 exposure is greater than policy limits.
1173 16. Comply with subsections (1) and (2), if applicable.
1174 17. Comply with the Unfair Insurance Trade Practices Act.
1175 (b) As used in this subsection, the term “actual notice”
1176 means the insurer’s receipt of notice of an incident or a loss
1177 that could give rise to a covered claim that is communicated to
1178 the insurer or an agent of the insurer:
1179 1. By any manner permitted by the policy or other documents
1180 provided to the insured by the insurer;
1181 2. Through the claims link on the insurer’s website; or
1182 3. Through the e-mail address designated by the insurer
1183 under s. 624.422.
1184 (c) In determining whether an insurer violated this
1185 subsection, it is relevant whether the insured, claimant, and
1186 any representative of the insured or claimant was acting in good
1187 faith toward the insurer in furnishing information regarding the
1188 claim, in making demands of the insurer, in setting deadlines,
1189 and in attempting to settle the claim. Such matters include
1190 whether:
1191 1. The insured met its duty to cooperate with the insurer
1192 in the defense of the claim and in making settlements by taking
1193 reasonable actions requested by the claimant or required by the
1194 policy which are necessary to assist the insurer in settling a
1195 covered claim, including:
1196 a. Executing affidavits regarding the facts within the
1197 insured’s knowledge regarding the covered loss; and
1198 b. Providing documents, including if reasonably necessary
1199 to settle a covered claim valued in excess of policy limits and
1200 upon the request of the claimant, a summary of the insured’s
1201 assets, liabilities, obligations, other insurance policies that
1202 may provide coverage for the claim, and the name and contact
1203 information of the insured’s employer when the insured is a
1204 natural person who was acting in the course and scope of
1205 employment when the incident giving rise to the claim occurred.
1206 2. The claimant and any claimant’s representative:
1207 a. Acted honestly in furnishing information regarding the
1208 claim;
1209 b. Acted reasonably in setting deadlines; and
1210 c. Refrained from taking actions that may be reasonably
1211 expected to prevent an insurer from accepting the settlement
1212 demand, such as providing insufficient detail within the demand,
1213 providing unreasonable deadlines for acceptance of the demand,
1214 or including unreasonable conditions to settlement.
1215 (d) Any violation of this subsection, when found by the
1216 office in any investigation or examination, constitutes a
1217 violation of the Florida Insurance Code and is subject to any
1218 applicable enforcement provisions therein. Administrative fines
1219 imposed for violations of this subsection are subject to a 2.0
1220 multiplier and may exceed the limits on fine amounts and
1221 aggregate fine amounts provided for under this code.
1222 (e) This subsection does not create a civil cause of
1223 action, nor does it abrogate or diminish any civil cause of
1224 action currently existing in statutory or common law.
1225 (f) Any proceedings, determinations, or enforcement actions
1226 taken by the office against an insurer for violations of this
1227 subsection are not admissible in any civil action.
1228 Section 21. Paragraph (a) of subsection (10) of section
1229 627.701, Florida Statutes, is amended to read:
1230 627.701 Liability of insureds; coinsurance; deductibles.—
1231 (10)(a) Notwithstanding any other provision of law, an
1232 insurer issuing a personal lines residential property insurance
1233 policy may include in such policy a separate roof deductible
1234 that meets all of the following requirements:
1235 1. The insurer has complied with the offer requirements
1236 under subsection (7) regarding a deductible applicable to losses
1237 from perils other than a hurricane.
1238 2. The roof deductible may not exceed the lesser of 2
1239 percent of the Coverage A limit of the policy or 50 percent of
1240 the cost to replace the roof.
1241 3. The premium that a policyholder is charged for the
1242 policy includes an actuarially sound credit or premium discount
1243 for the roof deductible.
1244 4. The roof deductible applies only to a claim adjusted on
1245 a replacement cost basis.
1246 5. The roof deductible does not apply to any of the
1247 following events:
1248 a. A total loss to a primary structure in accordance with
1249 the valued policy law under s. 627.702 which is caused by a
1250 covered peril.
1251 b. A roof loss resulting from a hurricane as defined in s.
1252 627.4025(2)(c).
1253 c. A roof loss resulting from a tree fall or other hazard
1254 that damages the roof and punctures the roof deck.
1255 d. A roof loss requiring the repair of less than 50 percent
1256 of the roof.
1257
1258 If a roof deductible is applied, no other deductible under the
1259 policy may be applied to the loss or to any other loss to the
1260 property caused by the same covered peril.
1261 Section 22. Subsection (2) of section 627.70132, Florida
1262 Statutes, is amended to read:
1263 627.70132 Notice of property insurance claim.—
1264 (2) A claim or reopened claim, but not a supplemental
1265 claim, under an insurance policy that provides property
1266 insurance, as defined in s. 624.604, including a property
1267 insurance policy issued by an eligible surplus lines insurer,
1268 for loss or damage caused by any peril is barred unless notice
1269 of the claim was given to the insurer in accordance with the
1270 terms of the policy within 1 year after the date of loss. A
1271 supplemental claim is barred unless notice of the supplemental
1272 claim was given to the insurer in accordance with the terms of
1273 the policy within 18 months after the date of loss. The time
1274 limitations of this subsection are tolled during any term of
1275 deployment to a combat zone or combat support posting which
1276 materially affects the ability of a servicemember as defined in
1277 s. 250.01 to file a claim, supplemental claim, or reopened
1278 claim.
1279 Section 23. Chapter 2022-271, Laws of Florida, shall not be
1280 construed to impair any right under an insurance contract in
1281 effect on or before the effective date of that chapter law. To
1282 the extent that chapter 2022-271, Laws of Florida, affects a
1283 right under an insurance contract, that chapter law applies to
1284 an insurance contract issued or renewed after the effective date
1285 of that chapter law. This section is intended to clarify
1286 existing law and is remedial in nature.
1287 Section 24. (1) Every residential property insurer and
1288 every motor vehicle insurer rate filing made or pending with the
1289 Office of Insurance Regulation on or after July 1, 2023, must
1290 reflect the projected savings or reduction in claim frequency,
1291 claim severity, and loss adjustment expenses, including for
1292 attorney fees, payment of attorney fees to claimants, and any
1293 other reduction actuarially indicated, due to the combined
1294 effect of the applicable provisions of chapters 2021-77, 2022
1295 268, 2022-271, and 2023-15, Laws of Florida, in order to ensure
1296 that rates for such insurance accurately reflect the risk of
1297 providing such insurance.
1298 (2) The Office of Insurance Regulation must consider in its
1299 review of such rate filings the projected savings or reduction
1300 in claim frequency, claim severity, and loss adjustment
1301 expenses, including for attorney fees, payment of attorney fees
1302 to claimants, and any other reduction actuarially indicated, due
1303 to the combined effect of the applicable provisions of chapters
1304 2021-77, 2022-268, 2022-271, and 2023-15, Laws of Florida. The
1305 office may develop methodology and data that incorporate
1306 generally accepted actuarial techniques and standards to be used
1307 in its review of rate filings governed by this section. The
1308 office may contract with an appropriate vendor to advise the
1309 office in developing such methodology and data to consider. Such
1310 methodology and data are not intended to create a mandatory
1311 minimum rate decrease for all motor vehicle insurers and
1312 property insurers, respectively, but rather to ensure that the
1313 rates for such coverage meet the requirements of s. 627.062,
1314 Florida Statutes, and thus are not excessive, inadequate, or
1315 unfairly discriminatory and allow such insurers a reasonable
1316 rate of return.
1317 (3) This section does not apply to rate filings made
1318 pursuant to s. 627.062(2)(k), Florida Statutes.
1319 (4) For the 2023-2024 fiscal year, the sum of $500,000 in
1320 nonrecurring funds is appropriated from the Insurance Regulatory
1321 Trust Fund in the Department of Financial Services to the Office
1322 of Insurance Regulation to implement this section.
1323 Section 25. For the 2023-2024 fiscal year, 18 full-time
1324 equivalent positions with associated salary rate of 1,116,500
1325 are authorized and the sum of $1,879,129 in recurring funds and
1326 $185,086 in nonrecurring funds is appropriated from the
1327 Insurance Regulatory Trust Fund to the Office of Insurance
1328 Regulation to implement this act.
1329 Section 26. For the 2023-2024 fiscal year, seven full-time
1330 equivalent positions with associated salary rate of 350,000 are
1331 authorized and the sum of $574,036 in recurring funds and
1332 $33,467 in nonrecurring funds is appropriated from the Insurance
1333 Regulatory Trust Fund to the Department of Financial Services to
1334 implement this act.
1335 Section 27. This act shall take effect July 1, 2023.
1336
1337 ================= T I T L E A M E N D M E N T ================
1338 And the title is amended as follows:
1339 Delete everything before the enacting clause
1340 and insert:
1341 A bill to be entitled
1342 An act relating to insurer accountability; amending s.
1343 624.307, F.S.; authorizing electronic responses to
1344 certain requests from the Division of Consumer
1345 Services of the Department of Financial Services
1346 concerning consumer complaints; revising the timeframe
1347 in which responses must be made; revising
1348 administrative penalties; amending s. 624.315, F.S.;
1349 requiring the Office of Insurance Regulation to
1350 annually and quarterly create and publish specified
1351 reports relating to the enforcement of insurer
1352 compliance; requiring the office to submit such
1353 reports to the Financial Services Commission and the
1354 Legislature by specified dates; amending s. 624.316,
1355 F.S.; requiring the office to create a specified
1356 methodology for scheduling examinations of insurers;
1357 specifying requirements for such methodology;
1358 providing construction; authorizing the commission to
1359 adopt rules; amending s. 624.3161, F.S.; revising
1360 requirements and conditions for certain insurer market
1361 conduct examinations after a hurricane; providing
1362 construction; requiring the office to create, and the
1363 commission to adopt by rule, a specified selection
1364 methodology for examinations; specifying requirements
1365 for such methodology; specifying rulemaking
1366 requirements; amending s. 624.4211, F.S.; revising
1367 administrative fines the office may impose in lieu of
1368 revocation or suspension; creating s. 624.4301, F.S.;
1369 specifying requirements for residential property
1370 insurers temporarily suspending writing new policies
1371 in notifying the office; authorizing the commission to
1372 adopt rules; creating s. 624.805, F.S.; specifying
1373 factors the office may consider in determining whether
1374 the continued operation of an insurer may be deemed to
1375 be hazardous to its policyholders or creditors or to
1376 the general public; specifying actions the office may
1377 take in determining an insurer’s financial condition;
1378 authorizing the office to issue an order requiring a
1379 hazardous insurer to take specified actions; providing
1380 construction; authorizing the office to issue
1381 immediate final orders; amending s. 624.81, F.S.;
1382 deleting certain rulemaking authority of the
1383 commission; creating s. 624.865, F.S.; authorizing the
1384 commission to adopt certain rules; amending s.
1385 628.8015, F.S.; conforming provisions to changes made
1386 by the act; amending s. 626.207, F.S.; revising a
1387 condition for disqualification of an insurance
1388 representative applicant or licensee; amending s.
1389 626.9521, F.S.; revising and specifying applicable
1390 fines for unfair methods of competition and unfair or
1391 deceptive acts or practices; amending s. 626.9541,
1392 F.S.; adding an unfair claim settlement practice by an
1393 insurer; prohibiting an officer or a director of an
1394 impaired insurer from receiving a bonus from such
1395 insurer or from certain holding companies or
1396 affiliates; defining the term “bonus”; providing a
1397 criminal penalty; amending s. 626.989, F.S.; revising
1398 a reporting requirement for the department’s Division
1399 of Investigative and Forensic Services; requiring the
1400 division to submit an annual performance report to the
1401 Legislature; specifying requirements for the report;
1402 amending s. 627.0629, F.S.; specifying requirements
1403 for residential property insurers in providing certain
1404 hurricane mitigation discount information to
1405 policyholders in a specified manner; specifying
1406 requirements for the office in reevaluating and
1407 updating certain fixtures and construction techniques;
1408 deleting obsolete dates; amending s. 627.351, F.S.;
1409 prohibiting Citizens Property Insurance Corporation
1410 from determining that a risk is ineligible for
1411 coverage solely on a specified basis; providing
1412 applicability; amending s. 627.410, F.S.; prohibiting
1413 the office from exempting specified insurers from form
1414 filing requirements for a specified period; providing
1415 construction; creating s. 627.4108, F.S.; specifying
1416 requirements for residential property insurers in
1417 creating and using claims-handling manuals;
1418 authorizing the office to request submission of such
1419 manuals; providing requirements for such submissions;
1420 requiring authorized insurers to annually submit a
1421 certified attestation to the office; authorizing the
1422 commission to adopt emergency rules; amending s.
1423 627.4133, F.S.; revising prohibitions on insurers
1424 against the cancellation or nonrenewal of property
1425 insurance policies; revising applicability; providing
1426 construction; defining the term “insurer”; amending s.
1427 627.426, F.S.; specifying duties of a liability
1428 insurer upon receiving actual notice of certain
1429 incidents or losses; defining the term “actual
1430 notice”; providing construction; specifying penalties;
1431 amending s. 627.701, F.S.; providing that if a roof
1432 deductible is applied under a personal lines
1433 residential property insurance policy, no other
1434 deductible under the policy may be applied to any
1435 other loss to the property caused by the same covered
1436 peril; amending s. 627.70132, F.S.; providing for the
1437 tolling of certain timeframes for filing notices of
1438 property insurance claims for servicemembers under
1439 specified circumstances; providing construction
1440 relating to chapter 2022-271, Laws of Florida;
1441 requiring residential property insurers and motor
1442 vehicle insurer rate filings to reflect certain
1443 projected savings and reductions in expenses;
1444 specifying requirements for the office in reviewing
1445 rate filings; authorizing the office to develop
1446 certain methodology and data and contract with a
1447 vendor for a certain purpose; providing applicability;
1448 providing appropriations; providing an effective date.