Bill Text: FL S1308 | 2014 | Regular Session | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Insurer Solvency
Spectrum: Slight Partisan Bill (? 2-1)
Status: (Passed) 2014-06-13 - Chapter No. 2014-101, companion bill(s) passed, see CS/CS/SB 1300 (Ch. 2014-100) [S1308 Detail]
Download: Florida-2014-S1308-Comm_Sub.html
Bill Title: Insurer Solvency
Spectrum: Slight Partisan Bill (? 2-1)
Status: (Passed) 2014-06-13 - Chapter No. 2014-101, companion bill(s) passed, see CS/CS/SB 1300 (Ch. 2014-100) [S1308 Detail]
Download: Florida-2014-S1308-Comm_Sub.html
Florida Senate - 2014 CS for SB 1308
By the Committee on Banking and Insurance; and Senator Simmons
597-02475-14 20141308c1
1 A bill to be entitled
2 An act relating to insurer solvency; amending s.
3 624.10, F.S.; providing additional definitions
4 applicable to the Florida Insurance Code; amending s.
5 624.319, F.S.; clarifying that production of documents
6 does not waive the attorney-client or work-product
7 privileges; amending s. 624.402, F.S.; conforming a
8 cross-reference; amending s. 624.4085, F.S.; revising
9 a definition; providing additional calculations for
10 determining whether an insurer has a company action
11 level event; revising provisions relating to mandatory
12 control level events; amending s. 624.424, F.S.;
13 requiring an insurer’s annual statement to include an
14 actuarial opinion summary; providing criteria for such
15 summary; providing an exception for life and health
16 insurers; updating provisions; requiring insurers
17 reinsuring through a captive insurance company to file
18 a report containing certain information; amending s.
19 625.121, F.S.; revising the Standard Valuation Law;
20 distinguishing the provisions from valuations done
21 pursuant to the National Association of Insurance
22 Commissioner’s (NAIC) valuation manual and
23 incorporating certain provisions included in the
24 manual; exempting certain documents from civil
25 proceedings; revising the methods for evaluating the
26 valuation of industrial life insurance policies;
27 revising provisions relating to calculating additional
28 premium; updating provisions relating to reserve
29 calculations for indeterminate premium plans; creating
30 s. 625.1212, F.S.; providing for the valuation of
31 policies and contracts after the adoption of the
32 NAIC’s valuation manual; providing applicability;
33 defining terms; requiring the office to value insurer
34 reserves; requiring actuarial opinions of the reserves
35 and a supporting memorandum to the opinions; requiring
36 the insurer to apply the standard prescribed in the
37 valuation manual; providing exceptions; providing
38 requirements for a principle-based valuation of
39 reserves; requiring an insurer to submit certain data
40 to the office; directing the Financial Services
41 Commission to adopt rules; creating s. 625.1214, F.S.;
42 providing for the use of confidential information;
43 prohibiting the use of such information in private
44 civil actions; amending s. 627.476, F.S.; revising the
45 Standard Nonforfeiture Law; distinguishing provisions
46 subject to the valuation manual and providing for the
47 application of tables found in the manual; amending s.
48 628.461, F.S.; revising the amount of outstanding
49 voting securities of a domestic stock insurer or a
50 controlling company which a person is prohibited from
51 acquiring unless certain requirements have been met;
52 deleting a provision authorizing an insurer to file a
53 disclaimer of affiliation and control in lieu of a
54 letter notifying the Office of Insurance Regulation of
55 the Financial Services Commission of the acquisition
56 of the voting securities of a domestic stock company
57 under certain circumstances; requiring the statement
58 notifying the office to include additional
59 information; conforming a provision to changes made by
60 the act; providing that control is presumed to exist
61 under certain conditions; specifying how control may
62 be rebutted and how a controlling interest may be
63 divested; deleting definitions; amending s. 628.801,
64 F.S.; requiring an insurer to annually file a
65 registration statement by a specified date; revising
66 the requirements and standards for the rules
67 establishing the information and statement form for
68 the registration; requiring an insurer to file an
69 annual enterprise risk report; authorizing the office
70 to conduct examinations to determine the financial
71 condition of registrants; providing that failure to
72 file a registration or report is a violation of the
73 section; providing additional grounds, requirements,
74 and conditions with respect to a waiver from the
75 registration requirements; amending s. 628.803, F.S.;
76 providing sanctions for persons who violate certain
77 provisions relating to the acquisition of controlling
78 stock; creating s. 628.804, F.S.; providing for the
79 groupwide supervision of international insurance
80 groups; defining terms; providing for the selection of
81 a groupwide supervisor; authorizing the commission to
82 adopt rules; creating s. 628.805, F.S.; authorizing
83 the office to participate in supervisory colleges;
84 authorizing the office to assess fees on insurers for
85 participation; amending ss. 636.045 and 641.225, F.S.;
86 applying certain statutes related to solvency to
87 prepaid limited health service organizations and
88 health maintenance organizations; amending s. 641.255,
89 F.S.; providing for applicability of specified
90 provisions to a health maintenance organization that
91 is a member of a holding company; providing effective
92 dates and a contingent effective date.
93
94 Be It Enacted by the Legislature of the State of Florida:
95
96 Section 1. Section 624.10, Florida Statutes, is amended to
97 read:
98 624.10 Other definitions Transacting insurance.—As used in
99 the Florida Insurance Code, the term:
100 (1) “Affiliate” means an entity that exercises control over
101 or is directly or indirectly controlled by the insurer through:
102 (a) Equity ownership of voting securities;
103 (b) Common managerial control; or
104 (c) Collusive participation by the management of the
105 insurer and affiliate in the management of the insurer or the
106 affiliate.
107 (2) “Affiliated person” of another person means:
108 (a) The spouse of the other person;
109 (b) The parents of the other person and their lineal
110 descendants, or the parents of the other person’s spouse and
111 their lineal descendants;
112 (c) A person who directly or indirectly owns or controls,
113 or holds with the power to vote, 10 percent or more of the
114 outstanding voting securities of the other person;
115 (d) A person, 10 percent or more of whose outstanding
116 voting securities are directly or indirectly owned or
117 controlled, or held with power to vote, by the other person;
118 (e) A person or group of persons who directly or indirectly
119 control, are controlled by, or are under common control with the
120 other person;
121 (f) An officer, director, partner, copartner, or employee
122 of the other person;
123 (g) If the other person is an investment company, an
124 investment adviser of such company, or a member of an advisory
125 board of such company;
126 (h) If the other person is an unincorporated investment
127 company not having a board of directors, the depositor of such
128 company; or
129 (i) A person who has entered into a written or unwritten
130 agreement to act in concert with the other person in acquiring
131 or limiting the disposition of securities of a domestic stock
132 insurer or controlling company.
133 (3) “Control,” including the terms “controlling,”
134 “controlled by,” and “under common control with,” means the
135 direct or indirect possession of the power to direct or cause
136 the direction of the management and policies of a person,
137 whether through the ownership of voting securities, by contract
138 other than a commercial contract for goods or nonmanagement
139 services, or otherwise. Control is presumed to exist if a
140 person, directly or indirectly, owns, controls, holds with the
141 power to vote, or holds proxies representing 10 percent or more
142 of the voting securities of another person.
143 (4) “NAIC” means the National Association of Insurance
144 Commissioners.
145 (5) “Transact” with respect to insurance includes any of
146 the following, in addition to other applicable provisions of
147 this code:
148 (a)(1) Solicitation or inducement.
149 (b)(2) Preliminary negotiations.
150 (c)(3) Effectuation of a contract of insurance.
151 (d)(4) Transaction of matters subsequent to effectuation of
152 a contract of insurance and arising out of it.
153 Section 2. Subsection (2) of section 624.319, Florida
154 Statutes, is amended to read:
155 624.319 Examination and investigation reports.—
156 (2) The examination report when so filed is shall be
157 admissible in evidence in any action or proceeding brought by
158 the department or office against the person examined, or against
159 its officers, employees, or agents. In all other proceedings,
160 the admissibility of the examination report is governed by the
161 evidence code. The department or office or its examiners may at
162 any time testify and offer other proper evidence as to
163 information secured or matters discovered during the course of
164 an examination, regardless of whether or not a written report of
165 the examination has been either made, furnished, or filed in the
166 department or office. The production of documents during the
167 course of an examination or investigation does not constitute a
168 waiver of the attorney-client or work-product privileges.
169 Section 3. Paragraph (c) of subsection (8) of section
170 624.402, Florida Statutes, is amended to read:
171 624.402 Exceptions, certificate of authority required.—A
172 certificate of authority shall not be required of an insurer
173 with respect to:
174 (8)
175 (c) Subject to the limitations provided in this subsection,
176 services, including those listed in the definition of the term
177 “transact” in s. 624.10, may be provided by the insurer or an
178 affiliated person as defined in s. 624.04 under common ownership
179 or control with the insurer.
180 Section 4. Paragraph (g) of subsection (1), paragraph (a)
181 of subsection (3), and paragraph (b) of subsection (6) of
182 section 624.4085, Florida Statutes, are amended to read:
183 624.4085 Risk-based capital requirements for insurers.—
184 (1) As used in this section, the term:
185 (g) “Life and health insurer” means an any insurer
186 authorized or eligible under the Florida Insurance Code to
187 underwrite life or health insurance. The term includes a
188 property and casualty insurer that writes accident and health
189 insurance only. Effective January 1, 2015, the term also
190 includes a health maintenance organization that is authorized in
191 this state and one or more other states, jurisdictions, or
192 countries and a prepaid limited health service organization that
193 is authorized in this state and one or more other states,
194 jurisdictions, or countries.
195 (3)(a) A company action level event includes:
196 1. The filing of a risk-based capital report by an insurer
197 which indicates that:
198 a. The insurer’s total adjusted capital is greater than or
199 equal to its regulatory action level risk-based capital but less
200 than its company action level risk-based capital; or
201 b. If a life and health insurer reports using the life and
202 health annual statement instructions, the insurer has total
203 adjusted capital that is greater than or equal to its company
204 action level risk-based capital, but is less than the product of
205 its authorized control level risk-based capital and 3.0 2.5, and
206 has a negative trend;
207 c. Effective January 1, 2015, if a life and health or
208 property and casualty insurer reports using the health annual
209 statement instructions, the insurer or organization has total
210 adjusted capital that is greater than or equal to its company
211 action level risk-based capital, but is less than the product of
212 its authorized control level risk-based capital and 3.0, and
213 triggers the trend test determined in accordance with the trend
214 test calculation included in the Risk-Based Capital Forecasting
215 and Instructions, Health, updated annually by the NAIC; or
216 d. If a property and casualty insurer reports using the
217 property and casualty annual statement instructions, the insurer
218 has total adjusted capital that is greater than or equal to its
219 company action level risk-based capital, but less than the
220 product of its authorized control level risk-based capital and
221 3.0, and triggers the trend test determined in accordance with
222 the trend test calculation included in the Risk-Based Capital
223 Forecasting and Instructions, Property/Casualty, updated
224 annually by the NAIC;
225 2. The notification by the office to the insurer of an
226 adjusted risk-based capital report that indicates an event in
227 subparagraph 1., unless the insurer challenges the adjusted
228 risk-based capital report under subsection (7); or
229 3. If, under subsection (7), an insurer challenges an
230 adjusted risk-based capital report that indicates an event in
231 subparagraph 1., the notification by the office to the insurer
232 that the office has, after a hearing, rejected the insurer’s
233 challenge.
234 (6)
235 (b) If a mandatory control level event occurs:
236 1. With respect to a life and health insurer, the office
237 shall, after due consideration of s. 624.408, and effective
238 January 1, 2015, ss. 636.045 and 641.225, take any action
239 necessary to place the insurer under regulatory control,
240 including any remedy available under chapter 631. A mandatory
241 control level event is sufficient ground for the department to
242 be appointed as receiver as provided in chapter 631. The office
243 may forego taking action for up to 90 days after the mandatory
244 control level event if the office finds there is a reasonable
245 expectation that the mandatory control level event may be
246 eliminated within the 90-day period.
247 2. With respect to a property and casualty insurer, the
248 office shall, after due consideration of s. 624.408, take any
249 action necessary to place the insurer under regulatory control,
250 including any remedy available under chapter 631, or, in the
251 case of an insurer that is not writing new business, may allow
252 the insurer to continue to operate under the supervision of the
253 office. In either case, the mandatory control level event is
254 sufficient ground for the department to be appointed as receiver
255 as provided in chapter 631. The office may forego taking action
256 for up to 90 days after the mandatory control level event if the
257 office finds there is a reasonable expectation that the
258 mandatory control level event may will be eliminated within the
259 90-day period.
260 Section 5. Subsection (1) and paragraph (e) of subsection
261 (8) of section 624.424, Florida Statutes, are amended, and
262 subsection (11) is added to that section, to read:
263 624.424 Annual statement and other information.—
264 (1)(a) Each authorized insurer shall file with the office
265 full and true statements of its financial condition,
266 transactions, and affairs. An annual statement covering the
267 preceding calendar year shall be filed on or before March 1, and
268 quarterly statements covering the periods ending on March 31,
269 June 30, and September 30 shall be filed within 45 days after
270 each such date. The office may, for good cause, grant an
271 extension of time for filing of an annual or quarterly
272 statement. The statements must shall contain information
273 generally included in insurers’ financial statements prepared in
274 accordance with generally accepted insurance accounting
275 principles and practices and in a form generally used utilized
276 by insurers for financial statements, sworn to by at least two
277 executive officers of the insurer or, if a reciprocal insurer,
278 by the oath of the attorney in fact or its like officer if a
279 corporation. To facilitate uniformity in financial statements
280 and to facilitate office analysis, the commission may by rule
281 adopt the form and instructions for financial statements
282 approved by the NAIC in 2014 National Association of Insurance
283 Commissioners in 2002, and may adopt subsequent amendments
284 thereto if the methodology remains substantially consistent, and
285 may by rule require each insurer to submit to the office, or
286 such organization as the office may designate, all or part of
287 the information contained in the financial statement in a
288 computer-readable form compatible with the electronic data
289 processing system specified by the office.
290 (b) Each insurer’s annual statement must contain:
291 1. A statement of opinion on loss and loss adjustment
292 expense reserves made by a member of the American Academy of
293 Actuaries or by a qualified loss reserve specialist, pursuant to
294 under criteria established by rule of the commission. In
295 adopting the rule, the commission shall must consider any
296 criteria established by the NAIC National Association of
297 Insurance Commissioners. The office may require semiannual
298 updates of the annual statement of opinion for as to a
299 particular insurer if the office has reasonable cause to believe
300 that such reserves are understated to the extent of materially
301 misstating the financial position of the insurer. Workpapers in
302 support of the statement of opinion must be provided to the
303 office upon request. This paragraph does not apply to life
304 insurance, health insurance, or title insurance.
305 2. An actuarial opinion summary written by the insurer’s
306 appointed actuary. The summary must be filed in accordance with
307 the appropriate NAIC property and casualty annual statement
308 instructions. Proprietary business information contained in the
309 summary is confidential and exempt under s. 624.4212, and the
310 summary and related information are not subject to subpoena or
311 discovery or admissible in evidence in a private civil action.
312 Neither the office nor any person who received documents,
313 materials, or other information while acting under the authority
314 of the office, or with whom such information is shared pursuant
315 to s. 624.4212, may testify in a private civil action concerning
316 such confidential information. However, the department or office
317 may use the confidential and exempt information in the
318 furtherance of any regulatory or legal action brought against an
319 insurer as a part of the official duties of the department or
320 office. No waiver of any other applicable claim of
321 confidentiality or privilege may occur as a result of a
322 disclosure to the office under this section or any other section
323 of the insurance code. This paragraph does not apply to life and
324 health insurers subject to s. 625.121(3) before the operative
325 date of the valuation manual as defined in s. 625.1212(2), and
326 does not apply to life and health insurers subject to s.
327 625.1212(4) on or after such operative date.
328 (c) The commission may by rule require reports or filings
329 required under the insurance code to be submitted by electronic
330 means in a computer-readable form compatible with the electronic
331 data processing equipment specified by the commission.
332 (8)
333 (e) The commission shall adopt rules to administer
334 implement this subsection, which rules must be in substantial
335 conformity with the 2006 Annual Financial Reporting Model
336 Regulation 1998 Model Rule requiring annual audited financial
337 reports adopted by the NAIC National Association of Insurance
338 Commissioners or subsequent amendments, except where
339 inconsistent with the requirements of this subsection. Any
340 exception to, waiver of, or interpretation of accounting
341 requirements of the commission must be in writing and signed by
342 an authorized representative of the office. An No insurer may
343 not raise an as a defense in any action, any exception to,
344 waiver of, or interpretation of accounting requirements as a
345 defense in an action, unless previously issued in writing by an
346 authorized representative of the office.
347 (11) Each insurer doing business in this state which
348 reinsures through a captive insurance company as defined in s.
349 628.901, but without regard to domiciliary status, shall, in
350 conjunction with the annual financial statement required under
351 paragraph (1)(a), file a report with the office containing
352 financial information specific to reinsurance assumed by each
353 captive.
354 (a) The report shall be filed as a separate schedule
355 designed to avoid duplication of disclosures required by the
356 NAIC’s annual statement and instructions.
357 (b) Insurers must:
358 1. Identify the products ceded to the captive and whether
359 the products are subject to rule 69O-164.020, Florida
360 Administrative Code, the NAIC Valuation of Life Insurance
361 Policies Regulation (Model #830), or the NAIC Actuarial
362 Guideline XXXVIII (AG 38).
363 2. Disclose the assets of the captive in the format
364 prescribed in the NAIC annual statement schedules.
365 3. Include a stand-alone actuarial opinion or certification
366 identifying the differences between the assets the ceding
367 company would be required to hold and the assets held by the
368 captive.
369 Section 6. Subsection (2), paragraphs (a) and (b) of
370 subsection (3), subsection (5), paragraph (e) of subsection (6),
371 and subsections (10), (11), and (12) of section 625.121, Florida
372 Statutes, are amended to read:
373 625.121 Standard Valuation Law; life insurance.—
374 (2) ANNUAL VALUATION.—The office shall annually value, or
375 cause to be valued, the reserves reserve liabilities,
376 hereinafter called “reserves,” for all outstanding life
377 insurance policies and annuity and pure endowment contracts of
378 each every life insurer doing business in this state, and may
379 certify the amount of any such reserves, specifying the
380 mortality table or tables, rate or rates of interest, and
381 methods, net-level premium method or others, used in the
382 calculation of such reserves. In the case of an alien insurer,
383 such valuation is shall be limited to its insurance transactions
384 in the United States. In calculating such reserves, the office
385 may use group methods and approximate averages for fractions of
386 a year or otherwise, and. It may accept in its discretion the
387 insurer’s calculation of such reserves. In lieu of the valuation
388 of the reserves herein required of a any foreign or alien
389 insurer, the office it may accept any valuation made or caused
390 to be made by the insurance supervisory official of any state or
391 other jurisdiction if the when such valuation complies with the
392 minimum standard herein provided under this section and if the
393 official of such state or jurisdiction accepts as sufficient and
394 valid for all legal purposes the certificate of valuation of the
395 office when such certificate states the valuation to have been
396 made in a specified manner according to which the aggregate
397 reserves would be at least as large as if they had been computed
398 in the manner prescribed by the law of that state or
399 jurisdiction. If a When any such valuation is made by the
400 office, the office it may use its the actuary of the office or
401 employ an actuary for that the purpose; and the reasonable
402 compensation of the actuary, at a rate approved by the office,
403 plus and reimbursement of travel expenses pursuant to s. 624.320
404 upon demand by the office, supported by an itemized statement of
405 such compensation and expenses, shall be paid by the insurer
406 upon demand of the office. If When a domestic insurer furnishes
407 the office with a valuation of its outstanding policies as
408 computed by its own actuary or by an actuary deemed satisfactory
409 for that the purpose by the office, the valuation shall be
410 verified by the actuary of the office without cost to the
411 insurer. This section applies to the calculation of reserves for
412 policies and contracts not subject to s. 625.1212.
413 (3) ACTUARIAL OPINION OF RESERVES.—
414 (a)1. Each life insurer insurance company doing business in
415 this state shall annually submit the opinion of a qualified
416 actuary as to whether the reserves and related actuarial items
417 held in support of the policies and contracts specified by the
418 commission by rule are computed appropriately, are based on
419 assumptions that which satisfy contractual provisions, are
420 consistent with prior reported amounts, and comply with
421 applicable laws of this state. The commission by rule shall
422 define the specifics of this opinion and add any other items
423 determined to be necessary to its scope.
424 1.2. The opinion shall be submitted with the annual
425 statement and must reflect reflecting the valuation of such
426 reserve liabilities for each year ending on or before after
427 December 31 of the year before the operative date of the
428 valuation manual as defined in s. 625.1212(2), and in accordance
429 with s. 625.1212(4) for each year thereafter, 1992.
430 2.3. The opinion applies shall apply to all business in
431 force, including individual and group health insurance plans, in
432 the form and substance acceptable to the office as specified by
433 rule of the commission.
434 3.4. The commission may adopt rules providing the standards
435 of the actuarial opinion consistent with standards adopted by
436 the Actuarial Standards Board on December 31, 2013 2002, and
437 subsequent revisions thereto if, provided that the standards
438 remain substantially consistent.
439 4.5. In the case of an opinion required to be submitted by
440 a foreign or alien company, The office may accept an the opinion
441 filed by a foreign or alien insurer that company with the
442 insurance supervisory official of another state if the office
443 determines that the opinion reasonably meets the requirements
444 applicable to an insurer a company domiciled in this state.
445 5.6. As used in For the purposes of this subsection, the
446 term “qualified actuary” means a member in good standing of the
447 American Academy of Actuaries who also meets the requirements
448 specified by rule of the commission.
449 6.7. Disciplinary action by the office against the insurer
450 company or the qualified actuary shall be in accordance with the
451 insurance code and related rules adopted by the commission.
452 7.8. A memorandum in the form and substance specified by
453 rule shall be prepared to support each actuarial opinion.
454 8.9. If the insurer insurance company fails to provide a
455 supporting memorandum at the request of the office within a
456 period specified by rule of the commission, or if the office
457 determines that the supporting memorandum provided by the
458 insurer insurance company fails to meet the standards prescribed
459 by rule of the commission, the office may engage a qualified
460 actuary at the expense of the insurer company to review the
461 opinion and the basis for the opinion and prepare such
462 supporting memorandum as is required by the office.
463 9.10. Except as otherwise provided in this subparagraph
464 paragraph, any memorandum or other material in support of the
465 opinion is confidential and exempt from the provisions of s.
466 119.07(1) and is not subject to subpoena or discovery or
467 admissible in evidence in any private civil action; however, the
468 memorandum or other material may be released by the office with
469 the written consent of the insurer company, or to the American
470 Academy of Actuaries upon request stating that the memorandum or
471 other material is required for the purpose of professional
472 disciplinary proceedings and setting forth procedures
473 satisfactory to the office for preserving the confidentiality of
474 the memorandum or other material. If any portion of the
475 confidential memorandum is cited by the insurer company in its
476 marketing, or is cited before any governmental agency other than
477 a state insurance department, or is released by the insurer
478 company to the news media, no portion of the memorandum is
479 confidential. Neither the office nor any person who receives
480 documents, materials, or other information while acting under
481 the authority of the office or with whom such information is
482 shared pursuant to this paragraph may testify in a private civil
483 action concerning the confidential documents, materials, or
484 information. However, the department or office may use the
485 confidential and exempt information in the furtherance of any
486 regulatory or legal action brought against an insurer as a part
487 of the official duties of the department or office. A waiver of
488 an applicable privilege or claim of confidentiality in the
489 documents, materials, or information may not occur as a result
490 of disclosure to the office under this section or any other
491 section of the insurance code, or as a result of sharing as
492 authorized under s. 624.4212.
493 (b) In addition to the opinion required by paragraph (a)
494 subparagraph (a)1., the office may, pursuant to commission rule,
495 require an opinion of the same qualified actuary as to whether
496 the reserves and related actuarial items held in support of the
497 policies and contracts specified by the commission by rule, when
498 considered in light of the assets held by the insurer company
499 with respect to the reserves and related actuarial items,
500 including, but not limited to, the investment earnings on the
501 assets and considerations anticipated to be received and
502 retained under the policies and contracts, make adequate
503 provision for the insurer’s company’s obligations under the
504 policies and contracts, including, but not limited to, the
505 benefits under, and expenses associated with, the policies and
506 contracts.
507 (5) MINIMUM STANDARD FOR VALUATION OF POLICIES AND
508 CONTRACTS ISSUED ON OR AFTER OPERATIVE DATE OF THE STANDARD
509 NONFORFEITURE LAW.—Except as otherwise provided in paragraph (h)
510 and subsections (6), (13) (11), and (14), the minimum standard
511 for the valuation of all such policies and contracts issued on
512 or after the operative date of s. 627.476 (Standard
513 Nonforfeiture Law for Life Insurance) shall be the
514 commissioners’ reserve valuation method defined in subsections
515 (7), (11), and (14); 5 percent interest for group annuity and
516 pure endowment contracts and 3.5 percent interest for all other
517 such policies and contracts, or in the case of life insurance
518 policies and contracts, other than annuity and pure endowment
519 contracts, issued on or after July 1, 1973, 4 percent interest
520 for such policies issued prior to October 1, 1979, and 4.5
521 percent interest for such policies issued on or after October 1,
522 1979; and the following tables:
523 (a) For all ordinary policies of life insurance issued on
524 the standard basis, excluding any disability and accidental
525 death benefits in such policies:
526 1. For policies issued before prior to the operative date
527 of s. 627.476(9), the commissioners’ 1958 Commissioners Standard
528 Ordinary (CSO) Mortality Table; except that, for any category of
529 such policies issued on female risks, modified net premiums and
530 present values, referred to in subsection (7), may be calculated
531 according to an age up to not more than 6 years younger than the
532 actual age of the insured.
533 2. For policies issued on or after the operative date of s.
534 627.476(9), the commissioners’ 1980 Commissioners Standard
535 Ordinary Mortality Table or, at the election of the insurer for
536 any one or more specified plans of life insurance, the
537 commissioners’ 1980 Commissioners Standard Ordinary Mortality
538 Table with Ten-Year Select Mortality Factors.
539 3. For policies issued on or after July 1, 2004, ordinary
540 mortality tables, adopted after 1980 by the NAIC National
541 Association of Insurance Commissioners, adopted by rule by the
542 commission for use in determining the minimum standard of
543 valuation for such policies.
544 (b) For all industrial life insurance policies issued on
545 the standard basis, excluding any disability and accidental
546 death benefits in such policies:
547 1. For policies issued before prior to the first date to
548 which the commissioners’ 1961 Commissioners Standard Industrial
549 Mortality Table is applicable according to s. 627.476, the 1941
550 Standard Industrial Mortality Table; and
551 2. For such policies issued on or after that date, the
552 commissioners’ 1961 Commissioners Standard Industrial Mortality
553 Table; and
554 3. For policies issued on or after October 1, 2014, a
555 Commissioners Standard Industrial Mortality Table adopted by the
556 NAIC after 1980 which is adopted by rule of the commission for
557 use in determining the minimum standard of valuation for such
558 policies.
559 (c) For individual annuity and pure endowment contracts,
560 excluding any disability and accidental death benefits in such
561 policies, the 1937 Standard Annuity Mortality Table or, at the
562 option of the insurer, the Annuity Mortality Table for 1949,
563 Ultimate, or any modification of either of these tables approved
564 by the office.
565 (d) For group annuity and pure endowment contracts,
566 excluding any disability and accidental death benefits in such
567 policies, the Group Annuity Mortality Table for 1951; any
568 modification of such table approved by the office; or, at the
569 option of the insurer, any of the tables or modifications of
570 tables specified for individual annuity and pure endowment
571 contracts.
572 (e) For total and permanent disability benefits in or
573 supplementary to ordinary policies or contracts:
574 1. For policies or contracts issued on or after January 1,
575 1966, the tables of period 2 disablement rates and the 1930 to
576 1950 termination rates of the 1952 disability study of the
577 Society of Actuaries, with due regard to the type of benefit;
578 2. For policies or contracts issued on or after January 1,
579 1961, and before prior to January 1, 1966, either of the tables
580 specified in subparagraph 1. those tables or, at the option of
581 the insurer, the class three disability table (1926);
582 3. For policies issued before prior to January 1, 1961, the
583 class three disability table (1926); and
584 4. For policies or contracts issued on or after July 1,
585 2004, tables of disablement rates and termination rates adopted
586 after 1980 by the NAIC National Association of Insurance
587 Commissioners, adopted by rule by the commission for use in
588 determining the minimum standard of valuation for those policies
589 or contracts.
590
591 Any such table for active lives shall be combined with a
592 mortality table permitted for calculating the reserves for life
593 insurance policies.
594 (f) For accidental death benefits in or supplementary to
595 policies:
596 1. For policies issued on or after January 1, 1966, the
597 1959 Accidental Death Benefits Table;
598 2. For policies issued on or after January 1, 1961, and
599 before prior to January 1, 1966, the 1959 Accidental Death
600 Benefits either that Table or, at the option of the insurer, the
601 Intercompany Double Indemnity Mortality Table;
602 3. For policies issued before prior to January 1, 1961, the
603 Intercompany Double Indemnity Mortality Table; and
604 4. For policies issued on or after July 1, 2004, tables of
605 accidental death benefits adopted after 1980 by the NAIC
606 National Association of Insurance Commissioners, adopted by rule
607 by the commission for use in determining the minimum standard of
608 valuation for those policies.
609
610 Either table shall be combined with a mortality table permitted
611 for calculating the reserves for life insurance policies.
612 (g) For group life insurance, life insurance issued on the
613 substandard basis, and other special benefits, such tables as
614 may be approved by the office as being sufficient with relation
615 to the benefits provided by such policies.
616 (h) Except as provided in subsection (6), the minimum
617 standard for the valuation of all individual annuity and pure
618 endowment contracts issued on or after the operative date of
619 this paragraph and for all annuities and pure endowments
620 purchased on or after such operative date under group annuity
621 and pure endowment contracts shall be the commissioners’ reserve
622 valuation method defined in subsection (7) and the following
623 tables and interest rates:
624 1. For individual annuity and pure endowment contracts
625 issued before prior to October 1, 1979, excluding any disability
626 and accidental death benefits in such contracts, the 1971
627 Individual Annuity Mortality Table, or any modification of this
628 table approved by the office, and 6 percent interest for single
629 premium immediate annuity contracts and 4 percent interest for
630 all other individual annuity and pure endowment contracts.
631 2. For individual single-premium immediate annuity
632 contracts issued on or after October 1, 1979, and before prior
633 to October 1, 1986, excluding any disability and accidental
634 death benefits in such contracts, the 1971 Individual Annuity
635 Mortality Table, or any modification of this table approved by
636 the office, and 7.5 percent interest. For such contracts issued
637 on or after October 1, 1986, the 1983 Individual Annual
638 Mortality Table, or any modification of such table approved by
639 the office, and the applicable calendar year statutory valuation
640 interest rate as described in subsection (6).
641 3. For individual annuity and pure endowment contracts
642 issued on or after October 1, 1979, and before prior to October
643 1, 1986, other than single-premium immediate annuity contracts,
644 excluding any disability and accidental death benefits in such
645 contracts, the 1971 Individual Annuity Mortality Table, or any
646 modification of this table approved by the office, and 5.5
647 percent interest for single-premium deferred annuity and pure
648 endowment contracts and 4.5 percent interest for all other such
649 individual annuity and pure endowment contracts. For such
650 contracts issued on or after October 1, 1986, the 1983
651 Individual Annual Mortality Table, or any modification of such
652 table approved by the office, and the applicable calendar year
653 statutory valuation interest rate as described in subsection
654 (6).
655 4. For all annuities and pure endowments purchased before
656 prior to October 1, 1979, under group annuity and pure endowment
657 contracts, excluding any disability and accidental death
658 benefits purchased under such contracts, the 1971 Group Annuity
659 Mortality Table, or any modification of this table approved by
660 the office, and 6 percent interest.
661 5. For all annuities and pure endowments purchased on or
662 after October 1, 1979, and before prior to October 1, 1986,
663 under group annuity and pure endowment contracts, excluding any
664 disability and accidental death benefits purchased under such
665 contracts, the 1971 Group Annuity Mortality Table, or any
666 modification of this table approved by the office, and 7.5
667 percent interest. For such contracts purchased on or after
668 October 1, 1986, the 1983 Group Annuity Mortality Table, or any
669 modification of such table approved by the office, and the
670 applicable calendar year statutory valuation interest rate as
671 described in subsection (6).
672
673 After July 1, 1973, an any insurer may have filed with the
674 former Department of Insurance a written notice of its election
675 to comply with the provisions of this paragraph after a
676 specified date before January 1, 1979, which shall be the
677 operative date of this paragraph for such insurer. However, an
678 insurer may elect a different operative date for individual
679 annuity and pure endowment contracts from that elected for group
680 annuity and pure endowment contracts. If an insurer does not
681 make makes no such election, the operative date of this
682 paragraph for such insurer is shall be January 1, 1979.
683 (i) In lieu of the mortality tables specified in this
684 subsection, and subject to rules previously adopted by the
685 former Department of Insurance, the insurance company may, at
686 its option:
687 1. Substitute the applicable 1958 CSO or CET Smoker and
688 Nonsmoker Mortality Tables, in lieu of the 1980 CSO or CET
689 mortality table standard, for policies issued on or after the
690 operative date of s. 627.476(9) and before January 1, 1989.
691 2. Substitute the applicable 1980 CSO or CET Smoker and
692 Nonsmoker Mortality Tables in lieu of the 1980 CSO or CET
693 mortality table standard.;
694 3. Use the Annuity 2000 Mortality Table for determining the
695 minimum standard of valuation for individual annuity and pure
696 endowment contracts issued on or after January 1, 1998, and
697 before July 1, 1998.
698 4. Use the 1994 GAR Table for determining the minimum
699 standard of valuation for annuities and pure endowments
700 purchased on or after January 1, 1998, and before July 1, 1998,
701 under group annuity and pure endowment contracts.
702 (j) The commission may adopt by rule the model regulation
703 for valuation of life insurance policies as approved by the NAIC
704 National Association of Insurance Commissioners in March 1999,
705 including tables of select mortality factors, and may make the
706 regulation effective for policies issued on or after January 1,
707 2000.
708 (k) For individual annuity and pure endowment contracts
709 issued on or after July 1, 2004, excluding any disability and
710 accidental death benefits purchased under those contracts,
711 individual annuity mortality tables adopted after 1980 by the
712 NAIC National Association of Insurance Commissioners, adopted by
713 rule by the commission for use in determining the minimum
714 standard of valuation for those contracts.
715 (l) For all annuities and pure endowments purchased on or
716 after July 1, 2004, under group annuity and pure endowment
717 contracts, excluding any disability and accidental death
718 benefits purchased under those contracts, group annuity
719 mortality tables adopted after 1980 by the NAIC National
720 Association of Insurance Commissioners, adopted by rule by the
721 commission for use in determining the minimum standard of
722 valuation for those contracts.
723 (6) MINIMUM STANDARD OF VALUATION.—
724 (e) The interest rate index shall be the Moody’s Corporate
725 Bond Yield Average-Monthly Average Corporates as published by
726 Moody’s Investors Service, Inc., if the as long as this index is
727 calculated by using substantially the same methodology as used
728 by Moody’s it on January 1, 1981. If Moody’s corporate bond
729 yield average ceases to be calculated in substantially the same
730 this manner, the interest rate index shall be the index
731 specified in the valuation manual, as applicable, as provided
732 under s. 625.1212, or an index adopted by the NAIC and approved
733 by rule adopted promulgated by the commission. The methodology
734 used in determining the index approved by rule must shall be
735 substantially the same as the methodology employed on January 1,
736 1981, for determining Moody’s Corporate Bond Yield Average
737 Monthly Average Corporates as published by Moody’s Investors
738 Service, Inc.
739 (10) LOWER VALUATIONS.—An insurer that which at any time
740 had adopted a any standard of valuation producing greater
741 aggregate reserves than those calculated according to the
742 minimum standard herein provided under this section shall may,
743 with the approval of the office, adopt a any lower standard of
744 valuation, but not lower than the minimum herein provided;
745 however, for the purposes of this subsection, the holding of
746 additional reserves previously determined by an appointed a
747 qualified actuary, as defined in s. 625.1212(2), to be necessary
748 to render the opinion required by subsection (3) may shall not
749 be deemed to be the adoption of a higher standard of valuation.
750 (11) ADDITIONAL PREMIUM DEFICIENCY RESERVE.—If in any
751 contract year the gross premium charged by a any life insurer on
752 a any policy or contract is less than the valuation net premium
753 for the policy or contract calculated by the method used in
754 calculating the reserve thereon but using the minimum valuation
755 standards of mortality and rate of interest, the minimum premium
756 reserve required for the policy or contract shall be the greater
757 of the reserve calculated according to the actual mortality
758 table, rate of interest, and method used for the policy or
759 contract, or the actual method used for the policy or contract
760 but using the minimum valuation standards of mortality and rate
761 of interest and replacing the valuation net premium by the
762 actual gross premium in each contract year for which the
763 valuation net premium exceeds the actual gross premium. The
764 minimum valuation standards of mortality and rate of interest
765 are those standards there shall be maintained on such policy or
766 contract a deficiency reserve in addition to the reserve defined
767 by subsections (4), (5), and (6) (7) and (12). For each such
768 policy or contract, the deficiency reserve shall be the present
769 value, according to the minimum valuation standards of mortality
770 and rate of interest, of the differences between all such
771 valuation net premiums and the corresponding premiums charged
772 for such policy or contract during the remainder of the premium
773 paying period. For any category of policies, contracts, or
774 benefits specified in subsections (5) and (6), issued on or
775 after the operative date of s. 627.476 (the Standard
776 Nonforfeiture Law for Life Insurance), the aggregate deficiency
777 reserves may be reduced by the amount, if any, by which the
778 aggregate reserves actually calculated in accordance with
779 subsection (9) exceed the minimum aggregate reserves prescribed
780 by subsection (8). The minimum valuation standards of mortality
781 and rate of interest referred to in this subsection are those
782 standards stated in subsections (5) and (6). However, For any
783 life insurance policy that which is issued on or after January
784 1, 1985, for which the gross premium in the first policy year
785 exceeds that of the second year and for which no comparable
786 additional benefit is provided in the first year for such
787 excess, and which provides an endowment benefit, a cash
788 surrender value, or a combination thereof in an amount greater
789 than such excess premium, the foregoing provisions of this
790 subsection shall be applied as if the method actually used in
791 calculating the reserve for such policy were the method
792 described in subsection (7), the provisions of subparagraph
793 (7)(a)2. being ignored. The minimum premium reserve amount of
794 the deficiency reserve, if any, at each policy anniversary of
795 such a policy is shall be the excess, if any, of the amount
796 determined by the foregoing provisions of this subsection plus
797 the reserve calculated by the method described in subsection
798 (7), the provisions of subparagraph (7)(a)2. being ignored, over
799 the reserve actually calculated by the method described in
800 subsection (7), the provisions of subparagraph (7)(a)2. being
801 taken into account.
802 (12) RESERVE CALCULATION FOR INDETERMINATE PREMIUM PLANS
803 ALTERNATE METHOD FOR DETERMINING RESERVES IN CERTAIN CASES.—In
804 the case of a any plan of life insurance which provides for
805 future premium determination, the amounts of which are to be
806 determined by the insurer based on then estimates of future
807 experience, or in the case of a any plan of life insurance or
808 annuity for which is of such a nature that the minimum reserves
809 cannot be determined by the methods described in subsections (7)
810 and (11) subsection (7), the reserves that which are held under
811 any such plan must shall:
812 (a) Be appropriate in relation to the benefits and the
813 pattern of premiums for that plan; and
814 (b) Be computed by a method that which is consistent with
815 the principles of this section, as determined by rules adopted
816 promulgated by the commission.
817 Section 7. Section 625.1212, Florida Statutes, is created
818 to read:
819 625.1212 Valuation of policies and contracts issued on or
820 after the operative date of the valuation manual.—
821 (1) APPLICABILITY.—This section applies to life insurance
822 contracts, accident and health insurance contracts, and deposit
823 type contracts issued on or after the operative date of the
824 valuation manual unless the manual requires or permits an
825 insurer to determine reserves according to the standards in
826 effect before the operative date of the manual and rules adopted
827 by the commission as provided under s. 625.121. Subsections (5)
828 and (6) do not apply to policies and contracts subject to s.
829 625.121.
830 (2) DEFINITIONS.—As used in this section, the term:
831 (a) “Accident and health insurance” means contracts that
832 incorporate morbidity risk and provide protection against
833 economic loss resulting from accident, sickness, or medical
834 conditions and as may be specified in the valuation manual.
835 (b) “Appointed actuary” means a qualified actuary who is
836 appointed in accordance with the valuation manual to prepare the
837 actuarial opinion required in subsection (4).
838 (c) “Deposit-type contract” means contracts that do not
839 incorporate mortality or morbidity risks and as may be specified
840 in the valuation manual.
841 (d) “Insurer” means a person engaged as an indemnitor,
842 surety, or contractor in the business of entering into contracts
843 of insurance or reinsurance.
844 (e) “Life insurance” means policies or contracts that
845 incorporate mortality risk, including annuity and pure endowment
846 contracts, and as may be specified in the valuation manual.
847 (f) “Operative date of the valuation manual” means the
848 later of January 1, 2017, or the January 1 immediately following
849 the July 1 that the Commissioner of the Office of Insurance
850 Regulation certifies to the Financial Services Commission in
851 writing that the following conditions occurred on or before July
852 1:
853 1. The valuation manual is adopted by the NAIC by an
854 affirmative vote of at least 42 members of the NAIC or 75
855 percent of members voting, whichever is greater;
856 2. The Standard Valuation Law, as amended by the NAIC in
857 2009, or substantially similar legislation, is enacted in states
858 representing more than 75 percent of the direct premiums written
859 as reported in the 2008 annual statements for life, accident and
860 health, health, or fraternal society insurance; and
861 3. The Standard Valuation Law as amended by the NAIC in
862 2009, or substantially similar legislation, is enacted in at
863 least 42 of the following 55 jurisdictions: the 50 states of the
864 United States, the District of Columbia, American Samoa, the
865 American Virgin Islands, Guam, and Puerto Rico.
866 (g) “Policyholder behavior” means an action a policyholder,
867 contract holder, or other person who has the right to elect
868 options, such as a certificateholder, may take under a policy or
869 contract subject to this section including, but not limited to,
870 lapse, withdrawal, transfer, deposit, premium payment, loan,
871 annuitization, or benefit elections prescribed by the policy or
872 contract but excluding events of mortality or morbidity that
873 result in benefits prescribed in their essential aspects by the
874 terms of the policy or contract.
875 (h) “Principle-based valuation” means a reserve valuation
876 that uses one or more methods or assumptions determined by the
877 insurer and must comply with subsection (6) as specified in the
878 valuation manual.
879 (i) “Qualified actuary” means an individual who is
880 qualified to sign the applicable statement of actuarial opinion
881 in accordance with the American Academy of Actuaries
882 qualification standards for actuaries signing such statements
883 and who meets the requirements specified in the valuation
884 manual.
885 (j) “Tail risk” means a risk that occurs when the frequency
886 of low probability events is higher than expected under a normal
887 probability distribution or when there are observed events of
888 very significant size or magnitude.
889 (k) “Valuation manual” means the manual of valuation
890 instructions adopted by the NAIC, or as subsequently amended.
891 (3) RESERVE VALUATION.—The office shall annually value, or
892 cause to be valued, insurer reserves for all outstanding life
893 insurance contracts, accident and health contracts, and deposit
894 type contracts in this state. Insurers are subject to
895 subsections (5) and (6) when calculating the reserves. In lieu
896 of the reserve valuation for a foreign or alien insurer, the
897 office may accept a valuation made, or caused to be made, by the
898 insurance supervisory official of any state or other
899 jurisdiction if the valuation complies with the minimum standard
900 required in this section.
901 (4) ACTUARIAL OPINION OF RESERVES.—
902 (a) Each insurer that has outstanding life insurance
903 contracts, accident and health insurance contracts, or deposit
904 type contracts in this state which are subject to regulation by
905 the office must annually submit the opinion of a qualified
906 actuary as to whether the reserves and related actuarial items
907 held in support of the policies and contracts are computed
908 appropriately, are based on assumptions that satisfy contractual
909 provisions, are consistent with prior reported amounts, and
910 comply with applicable state law. The specifics of the opinion,
911 including any items deemed necessary to its scope, must be as
912 prescribed by the valuation manual.
913 (b) Except as exempted in the valuation manual, each
914 insurer that has outstanding life insurance contracts, accident
915 and health insurance contracts, or deposit-type contracts in
916 this state shall also annually include an opinion by the same
917 appointed actuary as to whether the reserves and related
918 actuarial items held in support of the policies and contracts
919 specified in the valuation manual, when considered in light of
920 the assets held by the insurer with respect to the reserves and
921 related actuarial items, including, but not limited to, the
922 investment earnings on the assets and the considerations
923 anticipated to be received and retained under the policies and
924 contracts, make adequate provision for the insurer’s obligations
925 under the policies and contracts, including, but not limited to,
926 the benefits under and expenses associated with the policies and
927 contracts.
928 (c) The insurer shall prepare a memorandum to support each
929 actuarial opinion in such form and substance as specified in the
930 valuation manual and acceptable to the office. If the insurer
931 fails to provide a supporting memorandum within the period
932 specified in the valuation manual, or if the office determines
933 that the supporting memorandum fails to meet the standards
934 required by the manual or is otherwise unacceptable to the
935 office, the office may engage a qualified actuary at the expense
936 of the insurer to review the opinion and the basis for the
937 opinion and to prepare the supporting memorandum.
938 (d) Each opinion subject to this subsection must be
939 submitted with the annual statement in such form and substance
940 as specified in the valuation manual and acceptable to the
941 office, must reflect the valuation of the reserve liabilities
942 for each year ending on or after the operative date of the
943 valuation manual, and must apply to all policies and contracts
944 subject to paragraph (b), plus other actuarial liabilities as
945 may be specified in the valuation manual. The opinion must be
946 based on standards adopted by the Actuarial Standards Board or
947 its successor, and on such additional standards as may be
948 prescribed in the valuation manual. For a foreign or alien
949 insurer, the office may accept an opinion filed by the insurer
950 with the insurance supervisory official of another state if the
951 office determines that the opinion reasonably meets the
952 requirements applicable to an insurer domiciled in this state.
953 (e) Disciplinary action by the office against the insurer
954 or the appointed actuary shall be in accordance with the laws of
955 this state and related rules adopted by the commission.
956 (5) MINIMUM STANDARD OF VALUATION.—
957 (a) In accordance with this subsection and subsection (6),
958 an insurer must apply the standard prescribed in the valuation
959 manual as the minimum standard of valuation for contracts issued
960 on or after the operative date of the valuation manual, except:
961 1. For specific product forms or product lines exempted
962 pursuant to paragraph (f); or
963 2. That an insurer domiciled in a state that does not
964 require the insurer to apply the standards prescribed in the
965 valuation manual as the minimum standard of valuation, including
966 the principle-based valuation of reserves, may not apply such
967 standards in this state.
968 (b) If, in the opinion of the office, there is no specific
969 valuation requirement or a specific valuation requirement in the
970 valuation manual is not in compliance with this section, the
971 insurer shall comply with the minimum valuation standards
972 prescribed by the commission by rule.
973 (c) The office may engage a qualified actuary, at the
974 insurer’s expense, to perform an actuarial examination of the
975 insurer and to render an opinion as to the appropriateness of
976 any reserve assumption or method, or computer model or modeling
977 software used by the insurer, or to review and provide an
978 opinion on the insurer’s compliance with the requirements of
979 this section. In calculating and establishing reserves under
980 this section, the insurer may rely on the modeling software and
981 tools of a third-party vendor only if the vendor contractually
982 agrees to allow the insurer to provide the office with access to
983 the software or tools as necessary to replicate the results of
984 the software or tools for the purpose of evaluating and
985 validating reserve valuations. The office may rely upon the
986 opinion of a qualified actuary employed by or under contract
987 with the commissioner of another state, district, or territory
988 of the United States with respect to this section.
989 (d) The office may require an insurer to change any
990 assumption or method that, in the opinion of the office, is
991 necessary to comply with the valuation manual or this section.
992 The insurer shall adjust the reserves as required by the office.
993 The office may take other disciplinary action pursuant to
994 applicable state law and rules.
995 (e) The commission may adopt subsequent amendments to the
996 valuation manual by rule if the methodology and standards remain
997 substantially consistent with the valuation manual then in
998 effect.
999 (f) A domestic insurer licensed and doing business only in
1000 this state may exempt specific product forms or product lines
1001 from the requirements of this subsection and subsection (6) if
1002 the insurer computes reserves for the specific product forms or
1003 product lines using assumptions and methods used before the
1004 operative date of the valuation manual, and the amount of
1005 insurance subject to the stochastic or deterministic reserve
1006 requirement is immaterial. The requirements of s. 625.121 apply
1007 to specific product forms and product lines exempted under this
1008 paragraph.
1009 (g) An insurer that adopted a standard of valuation
1010 producing greater aggregate reserves than those calculated
1011 according to the minimum standard provided under this section
1012 may, with the approval of the office, adopt a lower standard of
1013 valuation, but such standard may not be lower than the minimum
1014 provided in this subsection. For purposes of this subsection,
1015 holding additional reserves previously determined by an
1016 appointed actuary to be necessary to render the opinion required
1017 by subsection (3) may not be deemed to be the adoption of a
1018 higher standard of valuation.
1019 (6) REQUIREMENTS OF A PRINCIPLE-BASED VALUATION OF
1020 RESERVES.—
1021 (a) Insurers required to use a principle-based valuation of
1022 reserves for specified product forms and product lines and
1023 associated policies and contracts, pursuant to subparagraph
1024 (5)(a)2., must:
1025 1. Quantify the benefits and guarantees, and the funding
1026 associated with the policies or contracts and their risks at a
1027 level of conservatism that reflects conditions that:
1028 a. Include unfavorable events that have a reasonable
1029 probability of occurring during the lifetime of the policies or
1030 contracts; and
1031 b. Are appropriately adverse to quantifying the tail risk.
1032 2. Incorporate assumptions, risk analysis methods, and
1033 financial models and management techniques that are consistent
1034 with, but not necessarily identical to, those used within the
1035 insurer’s overall risk assessment process while recognizing
1036 potential differences in financial reporting structures and any
1037 prescribed assumptions or methods.
1038 3. Incorporate assumptions that are derived in one of the
1039 following manners:
1040 a. The assumption is prescribed in the valuation manual.
1041 b. For assumptions that are not prescribed, the assumptions
1042 must:
1043 (I) Be established using the insurer’s available
1044 experience, to the extent that it is relevant and statistically
1045 credible; or
1046 (II) To the extent that insurer data is not available,
1047 relevant, or statistically credible, be established using other
1048 relevant, statistically credible experience.
1049 4. Provide margins for uncertainty including adverse
1050 deviation and estimation error, such that the greater the
1051 uncertainty the larger the margin and resulting reserve.
1052 (b) An insurer using a principle-based valuation for one or
1053 more policies or contracts subject to this section as specified
1054 in the valuation manual shall:
1055 1. Establish procedures for corporate governance and
1056 oversight of the actuarial valuation function consistent with
1057 those prescribed in the valuation manual.
1058 2. Submit an annual certification to the office and the
1059 insurer’s board of directors of the effectiveness of internal
1060 controls on the principle-based valuation. The internal controls
1061 must be designed to assure that all material risks inherent in
1062 the liabilities and associated assets subject to the valuation
1063 are included in the valuation, and that valuations are made in
1064 accordance with the valuation manual. The certification must be
1065 based on controls in place as of the end of the preceding
1066 calendar year.
1067 3. Upon request, develop and file with the office a
1068 principle-based valuation report that complies with standards
1069 prescribed in the valuation manual.
1070 (c) A principle-based valuation may include a prescribed
1071 formulaic reserve component.
1072 (7) EXPERIENCE REPORTING.—An insurer subject to the
1073 requirements of paragraph (5)(d) shall submit mortality,
1074 morbidity, policyholder behavior, or expense experience and
1075 other data as prescribed in the valuation manual to the office.
1076 (8) RULE ADOPTION.—The commission may adopt rules as
1077 necessary to administer this section, including rules requiring
1078 the use of the NAIC 2009 Standard Valuation Law and the NAIC
1079 2012 Valuation Manual. The adoption of such rules is not subject
1080 to s. 120.541(3), and the rules do not take effect until the
1081 operative date of the valuation manual.
1082 Section 8. Section 625.1214, Florida Statutes, is created
1083 to read:
1084 625.1214 Use of confidential information.—
1085 (1) Documents, reports, materials, and other information
1086 created, produced, or obtained pursuant to ss. 625.121 and
1087 625.1212 are privileged, confidential, and exempt as provided in
1088 s. 624.4212, and are not subject to subpoena or discovery, or
1089 admissible in evidence in any private civil action. However, the
1090 department or office may use the confidential and exempt
1091 information in the furtherance of any regulatory or legal action
1092 brought against an insurer as a part of the official duties of
1093 the department or office. A waiver of any other applicable claim
1094 of confidentiality or privilege may not occur as a result of a
1095 disclosure to the office under this section, any other section
1096 of the insurance code, or as a result of sharing under s.
1097 624.4212.
1098 (2) Neither the office nor any person who received
1099 confidential and exempt information while acting under the
1100 authority of the office or with whom such information is shared
1101 pursuant to s. 624.4212 may be permitted or required to testify
1102 in a private civil action concerning any confidential and exempt
1103 information subject to s. 624.4212. If any portion of the
1104 confidential memorandum is cited by the insurer in its
1105 marketing, is cited before a governmental agency other than a
1106 state insurance department, or is released by the insurer to the
1107 news media, no portion of the memorandum is confidential.
1108 (3) A privilege established under the law of any state or
1109 jurisdiction that is substantially similar to the privilege
1110 established under subsection (1) shall be available and enforced
1111 in any proceeding in and in any court of this state.
1112 Section 9. Paragraphs (h) and (i) of subsection (9) and
1113 subsection (14) of section 627.476, Florida Statutes, are
1114 amended to read:
1115 627.476 Standard Nonforfeiture Law for Life Insurance.—
1116 (9) CALCULATION OF ADJUSTED PREMIUMS AND PRESENT VALUES FOR
1117 POLICIES ISSUED AFTER OPERATIVE DATE OF THIS SUBSECTION.—
1118 (h) All adjusted premiums and present values referred to in
1119 this section shall, for all policies of ordinary insurance be
1120 calculated on the basis of the Commissioners’ 1980 Standard
1121 Ordinary Mortality Table adopted by the NAIC or, at the election
1122 of the insurer for any one or more specified plans of life
1123 insurance, the Commissioners’ 1980 Standard Ordinary Mortality
1124 Table with Ten-Year Select Mortality Factors adopted by the
1125 NAIC; shall for all policies of industrial insurance be
1126 calculated on the basis of the Commissioners’ 1961 Standard
1127 Industrial Mortality Table adopted by the NAIC; and shall for
1128 all policies issued in a particular calendar year be calculated
1129 on the basis of a rate of interest not exceeding the
1130 nonforfeiture interest rate as defined in this subsection for
1131 policies issued in that calendar year. However:
1132 1. At the option of the insurer, calculations for all
1133 policies issued in a particular calendar year may be made on the
1134 basis of a rate of interest not exceeding the nonforfeiture
1135 interest rate, as defined in this subsection, for policies
1136 issued in the immediately preceding calendar year.
1137 2. Under any paid-up nonforfeiture benefit, including any
1138 paid-up dividend additions, any cash surrender value available,
1139 whether or not required by subsection (2), shall be calculated
1140 on the basis of the mortality table and rate of interest used in
1141 determining the amount of such paid-up nonforfeiture benefit and
1142 paid-up dividend additions, if any.
1143 3. An insurer may calculate the amount of any guaranteed
1144 paid-up nonforfeiture benefit, including any paid-up additions
1145 under the policy, on the basis of an interest rate no lower than
1146 that specified in the policy for calculating cash surrender
1147 values.
1148 4. In calculating the present value of any paid-up term
1149 insurance with accompanying pure endowment, if any, offered as a
1150 nonforfeiture benefit, the rates of mortality assumed may be not
1151 more than those shown in the Commissioners’ 1980 Extended Term
1152 Insurance Table adopted by the NAIC for policies of ordinary
1153 insurance and not more than the Commissioners’ 1961 Industrial
1154 Extended Term Insurance Table adopted by the NAIC for policies
1155 of industrial insurance.
1156 5. In lieu of the mortality tables specified in this
1157 section, at the option of the insurance company and subject to
1158 rules adopted by the commission, the insurance company may
1159 substitute:
1160 a. The 1958 CSO or CET Smoker and Nonsmoker Mortality
1161 Tables, whichever is applicable, for policies issued on or after
1162 the operative date of this subsection and before January 1,
1163 1989;
1164 b. The 1980 CSO or CET Smoker and Nonsmoker Mortality
1165 Tables, whichever is applicable, for policies issued on or after
1166 the operative date of this subsection;
1167 c. A mortality table that is a blend of the sex-distinct
1168 1980 CSO or CET mortality table standard, whichever is
1169 applicable, or a mortality table that is a blend of the sex
1170 distinct 1980 CSO or CET smoker and nonsmoker mortality table
1171 standards, whichever is applicable, for policies that are
1172 subject to the United States Supreme Court decision in Arizona
1173 Governing Committee v. Norris to prevent unfair discrimination
1174 in employment situations.
1175 6. For policies issued:
1176 a. Before the operative date of the valuation manual,
1177 ordinary mortality tables, adopted after 1980 by the NAIC
1178 National Association of Insurance Commissioners, adopted by rule
1179 by the commission for use in determining the minimum
1180 nonforfeiture standard may be substituted for the Commissioners’
1181 1980 Standard Ordinary Mortality Table with or without Ten-Year
1182 Select Mortality Factors or for the Commissioners’ 1980 Extended
1183 Term Insurance Table adopted by the NAIC.
1184 b. On or after the operative date of the valuation manual,
1185 the valuation manual shall provide the Standard Mortality Table
1186 for use in determining the minimum nonforfeiture standard that
1187 may be substituted for:
1188 (I) The 1980 Standard Ordinary Mortality Table with or
1189 without 10-Year Select Mortality Factors or the 1980 Extended
1190 Term Insurance Table adopted by the NAIC. If the commission
1191 approves by rule a Standard Ordinary Mortality Table adopted by
1192 the NAIC for use in determining the minimum nonforfeiture
1193 standard for policies issued on or after the operative date of
1194 the valuation manual, the minimum nonforfeiture standard
1195 supersedes the minimum nonforfeiture standard provided by the
1196 valuation manual.
1197 (II) The 1961 Standard Industrial Mortality Table or 1961
1198 Industrial Extended Term Insurance Table adopted by the NAIC. If
1199 the commission approves by rule any Standard Industrial
1200 Mortality Table adopted by the NAIC for use in determining the
1201 minimum nonforfeiture standard for policies issued on or after
1202 the operative date of the valuation manual, the minimum
1203 nonforfeiture standard supersedes the minimum nonforfeiture
1204 standard provided by the valuation manual.
1205 7. For insurance issued on a substandard basis, the
1206 calculation of any such adjusted premiums and present values may
1207 be based on appropriate modifications of the aforementioned
1208 tables.
1209 (i) The nonforfeiture interest rate per year for a any
1210 policy issued in a particular calendar year for policies issued:
1211 1. Before the operative date of the valuation manual, shall
1212 be equal to 125 percent of the calendar year statutory valuation
1213 interest rate for such policy as defined in the Standard
1214 Valuation Law, rounded to the nearest one-fourth of 1 percent;
1215 however, the nonforfeiture interest rate may not be less than 4
1216 percent.
1217 2. On or after the operative date of the valuation manual,
1218 shall be as provided by the valuation manual.
1219 (14) OPERATIVE DATE.—
1220 (a) After the effective date of this code, an any insurer
1221 may file with the office a written notice or notices of its
1222 election to comply with the provisions of this section on and
1223 after a specified date or dates before January 1, 1966, as to
1224 either or both of its policies of ordinary and industrial
1225 insurance, in which case such specified date or dates shall be
1226 the operative date of this section with respect to such
1227 policies. The operative date of this section for policies of
1228 both ordinary and industrial insurance shall be the earlier of
1229 January 1, 1966, and any prior operative date or dates resulting
1230 from such previously filed written notices. With respect to
1231 policies of industrial insurance issued on and after the
1232 operative date of this section for such policies but before
1233 January 1, 1968, any insurer may file with the office written
1234 notice of its election to have the Commissioners’ 1961 Standard
1235 Industrial Mortality Table and the Commissioners’ 1961
1236 Industrial Extended Term Insurance Table adopted by the NAIC
1237 applicable with respect to subsection (8) for policies issued on
1238 and after the date specified in such election.
1239 (b) As used in subsection (9), the term “operative date of
1240 the valuation manual” has the same meaning as provided in s.
1241 625.1212(2).
1242 Section 10. Subsections (1), (3), (10), (12), and (13) of
1243 section 628.461, Florida Statutes, are amended to read:
1244 628.461 Acquisition of controlling stock.—
1245 (1) A person may not, individually or in conjunction with
1246 any affiliated person of such person, acquire directly or
1247 indirectly, conclude a tender offer or exchange offer for, enter
1248 into any agreement to exchange securities for, or otherwise
1249 finally acquire 10 5 percent or more of the outstanding voting
1250 securities of a domestic stock insurer or of a controlling
1251 company, unless:
1252 (a) The person or affiliated person has filed with the
1253 office and sent to the insurer and controlling company a letter
1254 of notification regarding the transaction or proposed
1255 transaction within no later than 5 days after any form of tender
1256 offer or exchange offer is proposed, or within no later than 5
1257 days after the acquisition of the securities if no tender offer
1258 or exchange offer is involved. The notification must be provided
1259 on forms prescribed by the commission containing information
1260 determined necessary to understand the transaction and identify
1261 all purchasers and owners involved;
1262 (b) The person or affiliated person has filed with the
1263 office the a statement as specified in subsection (3). The
1264 statement must be completed and filed within 30 days after:
1265 1. Any definitive acquisition agreement is entered;
1266 2. Any form of tender offer or exchange offer is proposed;
1267 or
1268 3. The acquisition of the securities, if no definitive
1269 acquisition agreement, tender offer, or exchange offer is
1270 involved; and
1271 (c) The office has approved the tender or exchange offer,
1272 or acquisition if no tender offer or exchange offer is involved,
1273 and approval is in effect.
1274
1275 In lieu of a filing as required under this subsection, a party
1276 acquiring less than 10 percent of the outstanding voting
1277 securities of an insurer may file a disclaimer of affiliation
1278 and control. The disclaimer shall fully disclose all material
1279 relationships and basis for affiliation between the person and
1280 the insurer as well as the basis for disclaiming the affiliation
1281 and control. After a disclaimer has been filed, the insurer
1282 shall be relieved of any duty to register or report under this
1283 section which may arise out of the insurer’s relationship with
1284 the person unless and until the office disallows the disclaimer.
1285 The office shall disallow a disclaimer only after furnishing all
1286 parties in interest with notice and opportunity to be heard and
1287 after making specific findings of fact to support the
1288 disallowance. A filing as required under this subsection must be
1289 made for as to any acquisition that equals or exceeds 10 percent
1290 of the outstanding voting securities.
1291 (3) The statement to be filed with the office under
1292 subsection (1) and furnished to the insurer and controlling
1293 company must shall contain all the following information and any
1294 additional information that as the office deems necessary to
1295 determine the character, experience, ability, and other
1296 qualifications of the person or affiliated person of such person
1297 for the protection of the policyholders and shareholders of the
1298 insurer and the public:
1299 (a) The identity of, and the background information
1300 specified in subsection (4) on, each natural person by whom, or
1301 on whose behalf, the acquisition is to be made; and, if the
1302 acquisition is to be made by, or on behalf of, a corporation,
1303 association, or trust, as to the corporation, association, or
1304 trust and as to any person who controls, either directly or
1305 indirectly, the corporation, association, or trust, the identity
1306 of, and the background information specified in subsection (4)
1307 on, each director, officer, trustee, or other natural person
1308 performing duties similar to those of a director, officer, or
1309 trustee for the corporation, association, or trust.;
1310 (b) The source and amount of the funds or other
1311 consideration used, or to be used, in making the acquisition.;
1312 (c) Any plans or proposals that which such persons may have
1313 made to liquidate such insurer, to sell any of its assets or
1314 merge or consolidate it with any person, or to make any other
1315 major change in its business or corporate structure or
1316 management; and any plans or proposals that which such persons
1317 may have made to liquidate any controlling company of such
1318 insurer, to sell any of its assets or merge or consolidate it
1319 with any person, or to make any other major change in its
1320 business or corporate structure or management.;
1321 (d) The number of shares or other securities that which the
1322 person or affiliated person of such person proposes to acquire,
1323 the terms of the proposed acquisition, and the manner in which
1324 the securities are to be acquired.; and
1325 (e) Information as to any contract, arrangement, or
1326 understanding with any party with respect to any of the
1327 securities of the insurer or controlling company, including, but
1328 not limited to, information relating to the transfer of any of
1329 the securities, option arrangements, puts or calls, or the
1330 giving or withholding of proxies, which information names the
1331 party with whom the contract, arrangement, or understanding has
1332 been entered into and gives the details thereof.
1333 (f) Effective January 1, 2015, an agreement by the person
1334 required to file the statement that the person will provide the
1335 annual report specified in s. 628.801(2) if control exists.
1336 (g) Effective January 1, 2015, an acknowledgement by the
1337 person required to file the statement that the person and all
1338 subsidiaries within the person’s control in the insurance
1339 holding company system will provide, as necessary, information
1340 to the office upon request to evaluate enterprise risk to the
1341 insurer.
1342 (10) Upon notification to the office by the domestic stock
1343 insurer or a controlling company that any person or any
1344 affiliated person of such person has acquired 10 5 percent or
1345 more of the outstanding voting securities of the domestic stock
1346 insurer or controlling company without complying with the
1347 provisions of this section, the office shall order that the
1348 person and any affiliated person of such person cease
1349 acquisition of any further securities of the domestic stock
1350 insurer or controlling company; however, the person or any
1351 affiliated person of such person may request a proceeding, which
1352 proceeding shall be convened within 7 days after the rendering
1353 of the order for the sole purpose of determining whether the
1354 person, individually or in connection with any affiliated person
1355 of such person, has acquired 10 5 percent or more of the
1356 outstanding voting securities of a domestic stock insurer or
1357 controlling company. Upon the failure of the person or
1358 affiliated person to request a hearing within 7 days, or upon a
1359 determination at a hearing convened pursuant to this subsection
1360 that the person or affiliated person has acquired voting
1361 securities of a domestic stock insurer or controlling company in
1362 violation of this section, the office may order the person and
1363 affiliated person to divest themselves of any voting securities
1364 so acquired.
1365 (12)(a) A person may rebut a presumption of control by
1366 filing a disclaimer of control with the office. The disclaimer
1367 must fully disclose all material relationships and bases for
1368 affiliation between the person and the insurer as well as the
1369 basis for disclaiming the affiliation. The disclaimer of control
1370 shall be filed on a form prescribed by the office. A person or
1371 acquiring party may file a disclaimer of control by filing with
1372 the office a copy of a Schedule 13G filed with the Securities
1373 and Exchange Commission pursuant to rules 13d-1(b) or 13d-1(c)
1374 under the Securities Exchange Act of 1934, as amended. After a
1375 disclaimer has been filed, the insurer is relieved of any duty
1376 to register or report under this section which may arise out of
1377 the insurer’s relationship with the person unless the office
1378 disallows the disclaimer.
1379 (b) A controlling person of a domestic insurer who seeks to
1380 divest the person’s controlling interest in the domestic insurer
1381 in any manner shall file with the office, with a copy provided
1382 to the insurer, confidential notice, not subject to public
1383 inspection as provided under s. 624.4212, of the person’s
1384 proposed divestiture at least 30 days before the cessation of
1385 control. The office shall determine those instances in which the
1386 party seeking to divest or to acquire a controlling interest in
1387 an insurer must file for and obtain approval of the transaction.
1388 The information remains confidential until the conclusion of the
1389 transaction unless the office, in its discretion, determines
1390 that confidential treatment interferes with enforcement of this
1391 section. If the statement referred to in subsection (1) is
1392 otherwise filed, this paragraph does not apply For the purpose
1393 of this section, the term “affiliated person” of another person
1394 means:
1395 1. The spouse of such other person;
1396 2. The parents of such other person and their lineal
1397 descendants and the parents of such other person’s spouse and
1398 their lineal descendants;
1399 3. Any person who directly or indirectly owns or controls,
1400 or holds with power to vote, 5 percent or more of the
1401 outstanding voting securities of such other person;
1402 4. Any person 5 percent or more of the outstanding voting
1403 securities of which are directly or indirectly owned or
1404 controlled, or held with power to vote, by such other person;
1405 5. Any person or group of persons who directly or
1406 indirectly control, are controlled by, or are under common
1407 control with such other person;
1408 6. Any officer, director, partner, copartner, or employee
1409 of such other person;
1410 7. If such other person is an investment company, any
1411 investment adviser of such company or any member of an advisory
1412 board of such company;
1413 8. If such other person is an unincorporated investment
1414 company not having a board of directors, the depositor of such
1415 company; or
1416 9. Any person who has entered into an agreement, written or
1417 unwritten, to act in concert with such other person in acquiring
1418 or limiting the disposition of securities of a domestic stock
1419 insurer or controlling company.
1420 (b) For the purposes of this section, the term “controlling
1421 company” means any corporation, trust, or association owning,
1422 directly or indirectly, 25 percent or more of the voting
1423 securities of one or more domestic stock insurance companies.
1424 (13) The commission may adopt, amend, or repeal rules that
1425 are necessary to administer implement the provisions of this
1426 section, pursuant to chapter 120.
1427 Section 11. Section 628.801, Florida Statutes, is amended
1428 to read:
1429 628.801 Insurance holding companies; registration;
1430 regulation.—
1431 (1) An Every insurer that is authorized to do business in
1432 this state and that is a member of an insurance holding company
1433 shall, on or before April 1 of each year, register with the
1434 office and file a registration statement and be subject to
1435 regulation with respect to its relationship to the holding
1436 company as provided by law or rule or statute. The commission
1437 shall adopt rules establishing the information and statement
1438 form required for registration and the manner in which
1439 registered insurers and their affiliates are regulated. The
1440 rules apply to domestic insurers, foreign insurers, and
1441 commercially domiciled insurers, except for a foreign insurers
1442 insurer domiciled in states that are currently accredited by the
1443 NAIC National Association of Insurance Commissioners by December
1444 31, 1995. Except to the extent of any conflict with this code,
1445 the rules must include all requirements and standards of ss. 4
1446 and 5 of the Insurance Holding Company System Regulatory Act and
1447 the Insurance Holding Company System Model Regulation of the
1448 NAIC National Association of Insurance Commissioners, as adopted
1449 in December 2010. The commission may adopt subsequent amendments
1450 thereto if the methodology remains substantially consistent. The
1451 rules Regulatory Act and the Model Regulation existed on
1452 November 30, 2001, and may include a prohibition on oral
1453 contracts between affiliated entities. Material transactions
1454 between an insurer and its affiliates shall be filed with the
1455 office as provided by rule Upon request, the office may waive
1456 filing requirements under this section for a domestic insurer
1457 that is the subsidiary of an insurer that is in full compliance
1458 with the insurance holding company registration laws of its
1459 state of domicile, which state is accredited by the National
1460 Association of Insurance Commissioners.
1461 (2) Effective January 1, 2015, the ultimate controlling
1462 person of every insurer subject to registration shall also file
1463 an annual enterprise risk report on or before April 1. As used
1464 in this subsection, the term “ultimate controlling person” means
1465 a person who is not controlled by any other person. The report,
1466 to the best of the ultimate controlling person’s knowledge and
1467 belief, must identify the material risks within the insurance
1468 holding company system that could pose enterprise risk to the
1469 insurer. The report shall be filed with the lead state office of
1470 the insurance holding company system as determined by the
1471 procedures within the Financial Analysis Handbook adopted by the
1472 NAIC and is confidential and exempt from public disclosure as
1473 provided in s. 624.4212.
1474 (a) An insurer may satisfy this requirement by providing
1475 the office with the most recently filed parent corporation
1476 reports that have been filed with the Securities and Exchange
1477 Commission which provide the appropriate enterprise risk
1478 information.
1479 (b) The term “enterprise risk” means an activity,
1480 circumstance, event, or series of events involving one or more
1481 affiliates of an insurer which, if not remedied promptly, are
1482 likely to have a materially adverse effect upon the financial
1483 condition or liquidity of the insurer or its insurance holding
1484 company system as a whole, including anything that would cause
1485 the insurer’s risk-based capital to fall into company action
1486 level as set forth in s. 624.4085 or would cause the insurer to
1487 be in a hazardous financial condition.
1488 (3) Effective January 1, 2015, pursuant to chapter 624
1489 relating to the examination of insurers, the office may examine
1490 any insurer registered under this section and its affiliates to
1491 ascertain the financial condition of the insurer, including the
1492 enterprise risk to the insurer by the ultimate controlling
1493 party, or by any entity or combination of entities within the
1494 insurance holding company system, or by the insurance holding
1495 company system on a consolidated basis.
1496 (4) The filings and related documents filed pursuant to
1497 this section are confidential and exempt as provided in s.
1498 624.4212 and are not subject to subpoena or discovery or
1499 admissible in evidence in any private civil action. A waiver of
1500 any applicable privilege or claim of confidentiality in the
1501 filings and related documents may not occur as a result of any
1502 disclosure to the office under this section or any other section
1503 of the insurance code as authorized under s. 624.4212. Neither
1504 the office nor any person who received the filings and related
1505 documents while acting under the authority of the office or with
1506 whom such information is shared pursuant to s. 624.4212 is
1507 permitted or required to testify in any private civil action
1508 concerning any confidential documents, materials, or information
1509 subject to s. 624.4212. However, the department or office may
1510 use the confidential and exempt information in the furtherance
1511 of any regulatory or legal action brought against an insurer as
1512 a part of the official duties of the department or office.
1513 (5) Effective January 1, 2015, the failure to file a
1514 registration statement, or a summary of the registration
1515 statement, or the enterprise risk filing report required by this
1516 section within the time specified for filing is a violation of
1517 this section.
1518 (6) Upon request, the office may waive the filing
1519 requirements of this section:
1520 (a) If the insurer is a domestic insurer that is the
1521 subsidiary of an insurer that is in full compliance with the
1522 insurance holding company registration laws of its state of
1523 domicile, which state is accredited by the NAIC; or
1524 (b) If the insurer is a domestic insurer that writes only
1525 in this state and has annual direct written and assumed premium
1526 of less than $300 million, excluding premiums reinsured with the
1527 Federal Crop Insurance Corporation and Federal Flood Program,
1528 and demonstrates that compliance with this section would not
1529 provide substantial regulatory or consumer benefit. In
1530 evaluating a waiver request made under this paragraph, the
1531 office may consider various factors including, but not limited
1532 to, the type of business entity, the volume of business written,
1533 the ownership or organizational structure of the entity, or
1534 whether the company is in run-off.
1535
1536 A waiver granted pursuant to this subsection is valid for 2
1537 years unless sooner withdrawn due to a change in the
1538 circumstances under which the waiver was granted.
1539 Section 12. Effective January 1, 2015, present subsection
1540 (4) of section 628.803, Florida Statutes, is renumbered as
1541 subsection (5), and a new subsection (4) is added to that
1542 section, to read:
1543 628.803 Sanctions.—
1544 (4) If the office determines that any person violated s.
1545 628.461 or s. 628.801, the violation may serve as an independent
1546 basis for disapproving dividends or distributions and for
1547 placing the insurer under an order of supervision in accordance
1548 with part VI of chapter 624.
1549 Section 13. Effective January 1, 2015, section 628.804,
1550 Florida Statutes, is created to read:
1551 628.804 Groupwide supervision for international insurance
1552 groups.—
1553 (1) As used in this section:
1554 (a) “Groupwide supervisor” means the chief insurance
1555 regulatory official for the jurisdiction who is determined by
1556 the office to have significant contacts with the international
1557 insurance group sufficient to conduct and coordinate groupwide
1558 supervision activities.
1559 (b) “International insurance group” means an insurance
1560 group operating internationally which includes an insurer.
1561 (2) The office may act as the groupwide supervisor for an
1562 international insurance group in which the ultimate controlling
1563 person of the group is domiciled in this state.
1564 (3)(a) If the ultimate controlling person is domiciled
1565 outside this state, the office, in cooperation with other
1566 groupwide supervisors, may:
1567 1. Determine that the office is the appropriate groupwide
1568 supervisor for an international insurance group with substantial
1569 operations concentrated in this state or in insurance operations
1570 conducted by subsidiary insurance companies domiciled in this
1571 state; or
1572 2. Acknowledge that another chief insurance regulatory
1573 official is the appropriate groupwide supervisor for the
1574 international insurance group.
1575 (b) Before issuing a determination, the office must notify
1576 the insurer and the ultimate controlling person within the
1577 international insurance group and provide the international
1578 insurance group with at least 30 days to submit information
1579 pertinent to the pending determination.
1580 (4) The commission may adopt rules to administer this
1581 section, including rules establishing the criteria for making a
1582 determination under paragraph (3)(a), such as the extent of
1583 insurance operations in this state and nation; the location of
1584 the executive offices, assets and liabilities, and business
1585 operations of the international insurance group; the domicile of
1586 the ultimate controlling person of the international insurance
1587 group; and the similarity of the regulatory systems of other
1588 jurisdictions acting or seeking to act as lead groupwide
1589 supervisor.
1590 Section 14. Effective January 1, 2015, section 628.805,
1591 Florida Statutes, is created to read:
1592 628.805 Supervisory colleges.—In order to assess the
1593 business strategy, financial position, legal and regulatory
1594 position, risk exposure, risk management, and governance
1595 processes, and as part of the examination of individual insurers
1596 in accordance with ss. 624.316 and 628.801, the office may
1597 participate in a supervisory college with other regulators
1598 charged with supervision of the insurer or its affiliates,
1599 including other state, federal, and international regulatory
1600 agencies. In accordance with s. 624.4212 regarding confidential
1601 information sharing, the office may enter into agreements that
1602 provide the basis for cooperation between the office and the
1603 other regulatory agencies and the activities of the supervisory
1604 college. This section does not delegate to the supervisory
1605 college the office’s authority to regulate or supervise the
1606 insurer or its affiliates under its jurisdiction.
1607 (1) With respect to participation in a supervisory college,
1608 the office may:
1609 (a) Initiate the establishment of a supervisory college.
1610 (b) Clarify the membership and participation of other
1611 supervisors in the supervisory college.
1612 (c) Clarify the functions of the supervisory college and
1613 the role of other regulators, including the establishment of a
1614 groupwide supervisor.
1615 (d) Coordinate the ongoing activities of the supervisory
1616 college, including planning meetings, supervisory activities,
1617 and processes for information sharing.
1618 (e) Establish a crisis management plan.
1619 (2) With respect to an insurer registered under s. 628.801,
1620 and in accordance with this section, the office may participate
1621 in a supervisory college for any domestic insurer that is part
1622 of an insurance holding company system that has international
1623 operations in order to determine the insurer’s compliance with
1624 this chapter.
1625 (3) Each registered insurer subject to this section is
1626 liable for and shall pay reasonable expenses for the office’s
1627 participation in a supervisory college, including reasonable
1628 travel expenses. A supervisory college may be convened as a
1629 temporary or permanent forum for communication and cooperation
1630 between the regulators charged with the supervision of the
1631 insurer or its affiliates, and the office may impose a regular
1632 assessment on the insurer for the payment of these expenses.
1633 Section 15. Effective January 1, 2015, subsection (3) is
1634 added to section 636.045, Florida Statutes, to read:
1635 636.045 Minimum surplus requirements.—
1636 (3) A prepaid limited health service organization that is
1637 authorized in this state and one or more other states,
1638 jurisdictions, or countries is subject to ss. 624.4085 and
1639 624.40851.
1640 Section 16. Effective January 1, 2015, subsection (7) is
1641 added to section 641.225, Florida Statutes, to read:
1642 641.225 Surplus requirements.—
1643 (7) A health maintenance organization that is authorized in
1644 this state and one or more other states, jurisdictions, or
1645 countries is subject to ss. 624.4085 and 624.40851.
1646 Section 17. Effective January 1, 2015, subsection (3) is
1647 added to section 641.255, Florida Statutes, to read:
1648 641.255 Acquisition, merger, or consolidation.—
1649 (3) A health maintenance organization that is a member of a
1650 holding company system is subject to s. 628.461 but not s.
1651 628.4615.
1652 Section 18. Except as otherwise expressly provided in this
1653 act, this act shall take effect October 1, 2014, if SB 1300 or
1654 similar legislation is adopted in the same legislative session
1655 or an extension thereof and becomes a law.
