Florida Governor Rick Scott Signs CS/CS/HB 1101 Relating to Regulation of Insurers, Insurance Agents, Insurance Adjusters and Insurance Coverage

Florida Governor Rick Scott signed CS/CS/HB 1101 into law today, April 24, 2012. 

Originally sponsored by State Representative Mike Horner and ultimately approved unanimously in both the Florida House of Representatives and Senate, the bill changes a number of provisions relating to the regulation of insurance companies, insurance agents, insurance adjusters and insurance coverage.

Specifically, CS/CS/HB 1101:

• Specifies that a salvage motor vehicle dealer is not required to carry the $25,000 combined single-limit liability coverage for bodily injury and property damage, or the $10,000 PIP coverage, for vehicles that cannot be operated legally on state roads.

• Revises the current exemption provisions relating to such alien insurers by providing that an insurer who has an affiliate would not be disqualified from obtaining an exemption, and by expanding the definition of nonresident to include a trust or other entity organized and domiciled under the laws of a country other than the United States.

A summary of the bill by the Senate Committee on Banking and Insurance follows:

Alien Insurers

The bill creates an exemption from the certificate of authority requirements for an alien insurer issuing life insurance or annuity contracts covering only persons who are not residents of the U.S., if the insurer meets the following requirements:

1.  The insurer is an authorized insurer in its domiciliary country in the kinds of insurance proposed to be offered in this state; and:

• Has been an insurer for at least the last 3 consecutive years; or
• Is the wholly owned subsidiary of an authorized insurer; or
• Is the wholly owned subsidiary of an already eligible authorized insurer as to the kind of insurance proposed to be issued in this state for a period of not less than the immediately preceding three years.

2.  Prior to the Florida Office of Insurance Regulation (“OIR”) granting eligibility to an alien insurer to issue policies and contracts in Florida, the insurer is required to meet the following requirements:

• Submit a copy of its annual financial statement to the OIR in English and with all monetary values expressed in U.S. dollars.
• Maintain a surplus of at least $15 million in eligible investments for like funds of like domestic insurers or by investments permitted by the domiciliary regulator, if such investments are substantially similar in terms of quality, liquidity, and security to eligible investments for like funds of domestic insurers under ch. 625, part II, F.S.
• Have a good reputation for providing service and paying claims.
• Furnish to the OIR with annual and quarterly financial statements.
• Provide certain disclosures to policy or contract applicants.

In addition, the bill:

• Allows a not-for-profit self-insurance fund to purchase for its members coverage for health, accident or hospitalization if certain conditions are met.
• Clarifies that a current exemption from filing specified reinsurance information applies to any insurer with less than $500,000 in direct written premiums in Florida in the preceding calendar year, and not more than $250,000 of premium during the preceding calendar quarter and less than 1,000 policyholders at the end of the preceding calendar year.
• Allows the Florida Department of Financial Services to provide licensing examinations in Spanish at the expense of the applicant.
• Expands the list of entities to whom a limited license for travel insurance may be issued.
• Allows a licensed independent adjuster or a licensed agent to supervise up to 25 individuals who are not required to obtain a license to perform functions in connection with entering data into an automated claims adjudication system for portable electronics insurance claims.
• Provides that a resident of Canada cannot obtain a license as a nonresident independent adjuster for the purpose of adjusting portable electronics insurance claims, unless the individual obtains an adjuster license in another U.S. state.
• Provides that a surplus lines carrier is not required to provide 45 days’ notice of nonrenewal if the insurer has manifested its willingness to renew.
• Specifies that it is an unfair or deceptive act or practice for someone to knowingly present a property and casualty certificate of insurance that has been altered after being issued.
• Provides that an insurer with surplus as to policyholders of $25 million or less can qualify as a limited apportionment company for all statutory purposes.
• Requires Citizens to begin offering a basic personal lines policy similar to an HO-8 policy by January 1, 2013.
• Requires that in establishing replacement costs for dwelling coverage, Citizens must accept the lowest valuation from three specified sources.
• Provides that mandated health benefits are not intended to apply only to limited benefit types of health benefit plans, unless specifically designated otherwise.
• Provides a definition of the term “rebate” within the context of performing repairs made pursuant to sinkhole damage.
• Allows an insurer to cancel a private passenger motor vehicle insurance policy within the first 60 days for nonpayment of premium.
• Specifies that the alternative dispute resolution procedure for personal and commercial residential property insurance claims can be requested only by the policyholder, as a first-party claimant, or by the insurer.
• Provides that when the notice of loss is reported more than 36 months after a declaration of a state of emergency by the Governor in response to a hurricane, the alternative claim dispute resolution process is not available.
• Allows the cancellation of a private passenger motor vehicle insurance policy, regardless of whether the first two months of premiums need to be paid up front, within the first 60 days for non-payment of premium when the check or other method of payment presented is subsequently dishonored.
• Clarifies that when an insurer fails to meet the statutory requirements for timely payment of Personal Injury Protection (“PIP”) insurance benefits, the obligation will accrue interest at the rate established in the contract or the statutory interest rate that applies to judgments and decrees, whichever is greater, that is in effect on the date the payment became overdue.
• Specifies that an insurer providing PIP coverage does not have a right of reimbursement from an owner or registrant of a motor vehicle used as a taxi cab.

Captive Insurance Companies

The bill also deletes the current definition of captive insurer and redefines it as meaning a domestic insurer established under ch. 628, part V, F.S., including any of three specified types of captive formation, defined as:

• Pure captive insurance company means a company that insures the risks of its parent, affiliated companies, controlled unaffiliated business, or a combination thereof.
• Special purpose captive insurance company means a captive insurance company licensed under ch. 628, F.S. that does not meet the definition of any other type of captive insurance company.
• Industrial insured captive insurance company means a company that insures risks of the industrial insureds that comprise the industrial insured group and their affiliated companies.
• Establishes capital and reserve requirements for each type of captive insurer and removes the current requirement that captive insurers are also subject to the same level of surplus specified for various lines of insurance written in this state.
• Adds accumulated interest on allowed claims as a new class for distribution of claims from an insurer’s estate, which precedes the priority of claims of shareholders and other owners.

These provisions take effect on July 1, 2012, except as otherwise expressly provided.

 

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