Florida Legislation Eases “Seasoning” Restrictions Applicable to Insurer Expansion Applications
Oct 3, 2019
By Wes Strickland and Michael Billmeier
During the 2019 session, the Florida Legislature passed a bill that gives foreign or alien insurers an additional method to obtain a waiver of the three-year “seasoning” requirement to apply for a certificate of authority in Florida. The bill allows a foreign or alien insurer to be authorized to operate in Florida without having operated for three years in its domiciliary jurisdiction if it possesses sufficient capital and surplus to support its plan of operation as filed with the Office of Insurance Regulation (OIR). The Governor signed the bill (CS/CS/CS/HB 301) on June 18, 2019, and it has been codified as chapter 2019-108, Laws of Florida, effective July 1, 2019.
Pursuant to section 624.404, Florida Statutes, a foreign or alien insurer may not be authorized to transact insurance in Florida unless it complies with the Florida Insurance Code and has operated satisfactorily for at least three years in its state or country of domicile. This is typically referred to as a “seasoning” requirement.
The three-year “seasoning” requirement is subject to certain exceptions set forth in section 624.404(2), Florida Statutes. Under the exceptions, the OIR may waive the requirement that the insurer has operated successfully for three years if the insurer:
- Has operated successfully and has capital and surplus of $5 million;
- Is the wholly owned subsidiary of an insurer which is an authorized insurer in this state;
- Is the successor in interest through merger or consolidation of an authorized insurer; or
- Provides a product or service not readily available to Florida consumers.
Effective July 1, 2019, an additional “seasoning” exception has been added to allow a foreign or alien insurer to be authorized to transact business in Florida where it possesses sufficient capital and surplus to support its plan of operation as filed with the OIR. This new exception grants the OIR greater flexibility to allow companies to enter the Florida insurance market more quickly based on the strength and merit of their business plan, managerial experience and financial resources available to ensure the protection of policyholders and the public.
Insurers and start-ups that have avoided applying for authority to transact business in Florida due to the three-year seasoning requirement should re-evaluate that decision in light of this change in the law. In addition, insurers that have been granted authority to transact business in Florida under restrictive Consent Order conditions due to the previously limited seasoning exceptions should consider revisiting those conditions with the OIR, provided the insurer has a strong balance sheet has been otherwise complying with all applicable regulatory requirements.
About the Authors
Wes Strickland is a Shareholder at Colodny Fass and heads the firm’s Insurance Regulatory & Transactions Practice in Tallahassee, Florida. He can be reached at (850) 321-3475 or wstrickland@colodnyfass.com. Michael Billmeier is a Partner in the firm’s Insurance Regulatory & Transactions Practice Group and its Governmental Consulting Practice Group. He can be reached at 850-701-3113 or mbillmeier@colodnyfass.com.