Bill Text: FL S0940 | 2016 | Regular Session | Comm Sub

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Bill Title: Title Insurance

Spectrum: Slight Partisan Bill (? 2-1)

Status: (Introduced - Dead) 2016-02-24 - Laid on Table, companion bill(s) passed, see CS/HB 695 (Ch. 2016-57) [S0940 Detail]

Download: Florida-2016-S0940-Comm_Sub.html

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       Florida Senate - 2016                       CS for CS for SB 940
       
       
        
       By the Committees on Commerce and Tourism; and Banking and
       Insurance; and Senator Bradley
       
       577-02548-16                                           2016940c2
    1                        A bill to be entitled                      
    2         An act relating to title insurance; amending s.
    3         625.111, F.S.; revising the reserves that certain
    4         title insurers must set aside after a certain date;
    5         revising the manner in which reserves must be
    6         released; revising premium reserve requirements and
    7         calculations for a title insurer who transfers
    8         domicile to this state; providing an effective date.
    9          
   10  Be It Enacted by the Legislature of the State of Florida:
   11  
   12         Section 1. Subsections (1) and (3) of section 625.111,
   13  Florida Statutes, are amended to read:
   14         625.111 Title insurance reserve.—In addition to an adequate
   15  reserve as to outstanding losses relating to known claims as
   16  required under s. 625.041, a domestic title insurer shall
   17  establish, segregate, and maintain a guaranty fund or unearned
   18  premium reserve as provided in this section. The sums to be
   19  reserved for unearned premiums on title guarantees and policies
   20  shall be considered and constitute unearned portions of the
   21  original premiums and shall be charged as a reserve liability of
   22  the insurer in determining its financial condition. Such
   23  reserved funds shall be withdrawn from the use of the insurer
   24  for its general purposes, impressed with a trust in favor of the
   25  holders of title guarantees and policies, and held available for
   26  reinsurance of the title guarantees and policies in the event of
   27  the insolvency of the insurer. This section does not preclude
   28  the insurer from investing such reserve in investments
   29  authorized by law, and the income from such investments shall be
   30  included in the general income of the insurer and may be used by
   31  such insurer for any lawful purpose.
   32         (1) For an unearned premium reserve established on or after
   33  July 1, 1999, such reserve must be in an amount at least equal
   34  to the sum of paragraphs (a), (b), and (d) for title insurers
   35  holding less than $50 million in surplus as to policyholders as
   36  of the previous year end and the sum of paragraphs (c) and (d)
   37  for title insurers holding $50 million or more in surplus as to
   38  policyholders as of the previous year end or title insurers that
   39  are members of an insurance holding company system that has $1
   40  billion or more in surplus as to policyholders and a superior,
   41  excellent, exceptional, or an equivalent financial strength
   42  rating by a rating agency acceptable to the office:
   43         (a) A reserve with respect to unearned premiums for
   44  policies written or title liability assumed in reinsurance
   45  before July 1, 1999, equal to the reserve established on June
   46  30, 1999, for those unearned premiums with such reserve being
   47  subsequently released as provided in subsection (2). For
   48  domestic title insurers subject to this section, such amounts
   49  shall be calculated in accordance with state law in effect at
   50  the time the associated premiums were written or assumed and as
   51  amended before July 1, 1999.
   52         (b) A total amount equal to 30 cents for each $1,000 of net
   53  retained liability for policies written or title liability
   54  assumed in reinsurance on or after July 1, 1999, with such
   55  reserve being subsequently released as provided in subsection
   56  (2). For the purpose of calculating this reserve, the total of
   57  the net retained liability for all simultaneous issue policies
   58  covering a single risk shall be equal to the liability for the
   59  policy with the highest limit covering that single risk, net of
   60  any liability ceded in reinsurance.
   61         (c) On or after January 1, 2014, for title insurers that
   62  are members of an insurance holding company system that has $1
   63  billion or more in surplus as to policyholders and a superior,
   64  excellent, exceptional, or an equivalent financial strength
   65  rating by a rating agency acceptable to the office, or title
   66  insurers holding $50 million or more in surplus as to
   67  policyholders as of the previous year end, a minimum of 6.5
   68  percent of the total of the following:
   69         1. Direct premiums written; and
   70         2. Premiums for reinsurance assumed, plus other income,
   71  less premiums for reinsurance ceded as displayed in Schedule P
   72  of the title insurer’s most recent annual statement filed with
   73  the office with such reserve being subsequently released as
   74  provided in subsection (2). Title insurers with less than $50
   75  million in surplus as to policyholders that are not members of
   76  an insurance holding company system that has $1 billion or more
   77  in surplus as to policyholders and a superior, excellent,
   78  exceptional, or an equivalent financial strength rating by a
   79  rating agency acceptable to the office must continue to record
   80  unearned premium reserve in accordance with paragraph (b).
   81         (d) An additional amount, if deemed necessary by a
   82  qualified actuary, to be subsequently released as provided in
   83  subsection (2). Using financial results as of December 31 of
   84  each year, all domestic title insurers shall obtain a Statement
   85  of Actuarial Opinion from a qualified actuary regarding the
   86  insurer’s loss and loss adjustment expense reserves, including
   87  reserves for known claims, incurred but not reported claims, and
   88  unallocated loss adjustment expenses. The actuarial opinion must
   89  conform to the annual statement instructions for title insurers
   90  adopted by the National Association of Insurance Commissioners
   91  and include the actuary’s professional opinion of the insurer’s
   92  reserves as of the date of the annual statement. If the amount
   93  of the reserve stated in the opinion and displayed in Schedule P
   94  of the annual statement for that reporting date is greater than
   95  the sum of the known claim reserve and unearned premium reserve
   96  as calculated under this section, as of the same reporting date
   97  and including any previous actuarial provisions added at earlier
   98  dates, the insurer shall add to the insurer’s unearned premium
   99  reserve an actuarial amount equal to the reserve shown in the
  100  actuarial opinion, minus the known claim reserve and the
  101  unearned premium reserve, as of the current reporting date and
  102  calculated in accordance with this section, but not calculated
  103  as of any date before December 31, 1999. The comparison shall be
  104  made using that line on Schedule P displaying the Total Net Loss
  105  and Loss Adjustment Expense which is comprised of the Known
  106  Claim Reserve, and any associated Adverse Development Reserve,
  107  the reserve for Incurred But Not Reported Losses, and
  108  Unallocated Loss Adjustment Expenses.
  109         (3) If a title insurer that is organized under the laws of
  110  another state transfers its domicile to this state, the insurer
  111  shall calculate an adjusted statutory or unearned premium
  112  reserve as of the effective date of redomestication to this
  113  state. The adjusted statutory or unearned premium reserve shall
  114  be calculated as if subsections (1) and (2) had been in effect
  115  as to the insurer’s foreign statutory premium reserve for all
  116  years beginning 20 years before the effective date of
  117  redomestication. For purposes of calculating the adjusted
  118  statutory or unearned premium reserve, the balance of the
  119  insurer’s foreign statutory premium reserve as of the date 20
  120  years before the redomestication shall be $0. If the adjusted
  121  statutory or unearned premium reserve exceeds the aggregate
  122  amount set aside for statutory or unearned premiums in the
  123  insurer’s annual statement on file with the office on the date
  124  of redomestication, the insurer shall, out of total charges for
  125  policies of title insurance, increase its statutory or unearned
  126  premium reserve by an amount equal to one-sixth of that excess
  127  in each of the succeeding 6 years, commencing with the calendar
  128  year that includes the redomestication, until the entire excess
  129  has been added. If the adjusted statutory or unearned premium
  130  reserve is less than the aggregate amount set aside for
  131  statutory or unearned premiums in the insurer’s annual statement
  132  on file with the office on the date of redomestication, the
  133  insurer may release the excess into surplus statutory or
  134  unearned premium reserve shall be the amount required by the
  135  laws of the state of the title insurer’s former state of
  136  domicile as of the date of transfer of domicile and shall be
  137  released from reserve according to the requirements of law in
  138  effect in the former state at the time of domicile. On or after
  139  January 1, 2014, for new business written after the effective
  140  date of the transfer of domicile to this state, the domestic
  141  title insurer shall add to and set aside in the statutory or
  142  unearned premium reserve such amount as provided in subsection
  143  (1).
  144         Section 2. This act shall take effect July 1, 2016.