F.S. 1987 INSURANCE RATES AND CONTRACTS Ch. 627 · F.S. 1987 INSURANCE RATES AND CONTRACTS Ch. 627...

F.S. 1987 INSURANCE RATES AND CONTRACTS Ch. 627

(2) The various officers of this state whose duty it is to approve the sureties upon bonds may accept such an insurer as one of the sureties, or as the only surety, upon such bond as the solvency of the insurer may warrant.

(3) No insurer shall be relieved of its liability upon any bond by reason of the fact that the books and accounts of the principal have been examined and approved as correct by the proper authorities when in fact there has been a breach of the bond and a loss accruing from the breach.

Hlstory.-s. 6t4, ch. 59-205; s. 3, ch. 76-t68; s. t , ch . 77-457; ss. 2, 3, ch . 8t-3t8; ss. 567, 573, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

1Note.-Expires October t , t992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. tt .6t in advance of that date.

1627.756 Bonds for construction contracts; attorney fees in case of suit-Section 627.428 applies to suits brought by owners, subcontractors, laborers, and materialmen against a surety insurer under payment or performance bonds written by the insurer under the laws of this state to indemnify against pecuniary loss by breach of a building or construction contract. Owners, subcontractors, laborers, and materialmen shall be deemed to be insureds or beneficiaries for the purposes of this section.

History.-s. 6t6, ch. 59-205; s. t , ch. 70-334; s. 3, ch. 76-t68; s. 17, ch. 77-353; s. t , ch . 77-457; ss. 2, 3, ch. 8t-3t8; ss. 569, 573, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

1Note.-Expires October t , t992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. tt .6t in advance of that date.

1627.758 Surety on auto club traffic arrest bond; conditions, limit; bail bond.-

(1) Any authorized surety insurer may, in any year, become surety in an amount not to exceed $500 with respect to any guaranteed traffic arrest bond certificate issued in such year by an automobile club or association by filing with the department an undertaking to become surety.

(2) The undertaking shall be in the form prescribed by the department and shall state the following:

(a) The name and address of the automobile club or association with respect to the guaranteed traffic arrest bond certificates for which the surety insurer undertakes to be surety.

(b) The unqualified obligation of the surety insurer to pay the fine or forfeiture in an amount not to exceed $500 for any person who, after posting a guaranteed traffic arrest bond certificate with respect to which the insurer has undertaken to be surety, fails to make the appearance for which the certificate was posted.

(3) The term "guaranteed traffic arrest bond certificate" means any printed card or other certificate issued by the automobile club or association to any of its members, which card or certificate is signed by such member and contains a printed statement that such automobile club or association and a named surety company guarantee the appearance of the person whose signature appears on the card or certificate and that they will, in the event of failure of the person to appear in court at the time of trial, pay any traffic fine or forfeiture imposed on the person in an amount not to exceed $500.

(4) Notwithstanding the provisions of s. 626.311 2or chapter 648, any surety insurer identified in a guaranteed traffic arrest bond certificate or 3any licensed gen-

651

eral lines agent of the surety insurer may execute a bail bond for the automobile club or association member identified in the guaranteed traffic arrest bond certificate in an amount not in excess of $5,000 for any violation of chapter 316 or any similar traffic law or ordinance except for driving under the influence of alcoholic beverages, chemical substances, or controlled substances, as prohibited by s. 316.193.

Hlstory.-s. 6t8, ch . 59-205; ss. t3, 35, ch. 69-t06; s. 3, ch. 76-t68; s. t , ch. 77-457; ss. 2, 3, ch. 8t-3t8; ss. 57t , 573, 809(2nd), ch. 82-243; ss . 70, 79, ch. 82-386; s. t, ch. 85-48; s. 23, ch. 86-296.

'Note.-Expires October t , t992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. tt .6t in advance of that date. •Note.-The word "or· was substituted by the editors for the word "and." 'Note.-The word ·any" was added by the editors.

1627.759 Estoppel to deny power.-Any surety insurer which executes any bond or undertaking of surety under this part shall be estopped from denying its corporate or other power to execute such bond or assume such liability in any proceeding to enforce the liability which it has assumed.

History.-s. 6t9, ch. 59-205; s. 3, ch. 76-t68; s. t , ch. 77-457; ss. 2, 3, ch. 8t-3t8; ss. 572, 573, 809(2nd), ch. 82-243; s. 79, ch . 82-386.

'Note.-Expires October t, t992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. tt .6t in advance of that date.

627.7711 627.776

627.777 627.7773

627.7776 627.778 627.780 627.781 627.782 627.783 627.784 627.7841

627.7842 627.7845

627.785 627.786

627.7865 627.791

627.792

PART XIII

TITLE INSURANCE CONTRACTS

"Title insurer" defined. Especially applicable provisions; nonapplica

ble chapters. Approval of forms. Accounting and auditing of forms by title in-

surers. Furnishing of supplies; civil liability. Limit of risk. Illegal dealings in risk rate premium. "Risk premium" defined. Promulgation of rates. Rate deviation. Casualty title insurance prohibited. Insurance against adverse matters or de-

fects in the title . Policy exceptions. Determination of insurability required; pres

ervation of evidence of title search and examination.

Preemption by state. Transaction of title insurance and any other

kind of insurance prohibited. Title insurer assessments. Penalties against title insurers for violations

by persons or entities not licensed. Liability of title insurers for defalcation by ti

tle insurance agents.

1627.7711 "Title insurer" defined.-"Title insurer" means any domestic company organized and authorized to do business under the provisions of chapter 624; any insurer organized under the laws of another state, the District of Columbia, or a foreign country and holding a certificate of authority to transact business in this state; or any business trust title insurer organized and authorized under the Jaws of this state, each for the pur-

Ch.627 INSURANCE RATES AND CONTRACTS F.S. 1987

pose of issuing title insurance. Hlatory.-ss. 575, 809(2nd), ch. 82-243: s. 79, ch. 82-386.

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch . 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.776 Especially applicable provisions; nonapplicable chapters.-

(1) Provisions of this code especially applicable as to title insurers are contained in the following sections:

(a) Section 624.404(6) (as to business trust insurer). (b) Section 624.406(3) (title insurer must be a stock

insurer, except as to business trust insurers). (c) Section 624.407. (d) Section 624.408. (e) Section 624.411. (f) Section 624.608. (g) Section 625.031(4) (nonadmitted assets do not

include certain properties of title insurers). (h) Section 625.051 (5) (title insurers exempt from

usual unearned premium reserve) . (i) Section 625.111 . U) Section 625.330. (k) Section 626.9541 (1 )(h) (rebates prohibited; title

insurance). (I) Section 627.401 (4) (limited applicability of part II

of chapter 627 as to title insurance). (m) Section 628.151. (2) None of the provisions of any of the following are

applicable as to title insurance: (a) Part I of chapter 626 (insurance representatives;

licensing procedures and general requirements) ; (b) Part II of chapter 626 (general lines agents and

solicitors; qualifications and requirements); (c) Part Ill of chapter 626 (life insurance agents); (d) Part IV of chapter 626 (health insurance agents); (e) Part VI of chapter 626 (insurance adjusters); (f) Part I of chapter 627 (rates and rating organiza

tions); (g) Part Ill of chapter 627 (life insurance policies and

annuity contracts); (h) Part IV of chapter 627 (industrial life insurance

policies); (i) Part V of chapter 627 (group life insurance); U) Part VI of chapter 627 (health insurance policies) ; (k) Part VII of chapter 627 (group, blanket, and fran-

chise health insurance); (I) Part IX of chapter 627 (credit life and disability in

surances); (m) Part X of chapter 627 (property insurance con

tracts); (n) Part XI of chapter 627 (casualty insurance con

tracts); (o) Part XII of chapter 627 (surety insurance con

tracts); (p) Chapter 629; and (q) Chapter 632.

Hlatory.-s. 620, ch. 59-205: s. 2, ch. 61-141 : s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2, 3, ch. 81-318: ss. 574, 584, 809(2nd), ch . 82-243: s. 79, ch. 82-386: s. 32, ch. 87-226.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch . 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.777 Approval offorms.-No title insurer shall issue or agree to issue any form of title insurance binder, title insurance commitment, preliminary report, title in-

surance policy, other contract of title insurance, or related form unless the same has first been filed with and approved by the department. No title guarantee or policy form shall be disapproved on the ground that it has on it a blank form for an attorney's opinion on the title.

Hlatory.-s. 3, ch. 65-359: ss. 13, 35, ch . 69-106; s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2, 3, ch. 81-318; ss. 584, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

'Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.7773 Accounting and auditing of forms by title insurers.-

(1) Each title insurer authorized to do business in this state shall at least once during each calendar year, commencing on January 1, 1986, require of its title insurance agents or members of a business trust title insurer accountings of all outstanding forms in their possession of the types that are specified in s. 627.777 .

(2) If the department has reason to believe that an audit of outstanding forms should be required of any title insurer as to a title insurance agent or member of a business trust title insurer, the department may require the title insurer to make a special audit of such outstanding forms; and the title insurer shall complete such audit not later than 60 days after the request is received from the department and shall report to the department the results of such special audit no later than 90 days after the request is received.

Hlatory.-s. 2, ch. 85-185; s. 1, ch. 86-286. 'Note.-Repealed effective October 1, 1992, by s. 1, ch. 86-286, and scheduled

for review pursuant to s. 11 .61 .

1627.7776 Furnishing of supplies; civilliability.-(1) A title insurer shall not furnish to any person any

blank forms, applications, stationery, or other supplies to be used in soliciting, negotiating, or effecting contracts of title insurance on its behalf until that person has received from the insurer a contract to act as a title insurance agent and has been licensed by the department, if required by s. 626.8417, or has been approved as a member of a business trust title insurer.

(2) A title insurer, title insurance agent, or member of a business trust title insurer that furnishes any supplies to a person not authorized by the title insurer as provided in subsection (1) is subject to civil liability to any insured of such insurer to the same extent and in the same manner as if such person had been appointed or authorized by the insurer to act in its behalf.

Hlatory.-s. 3, ch. 85-185: s. 1, ch . 86-286. 1Note.-Repealed effective October 1, 1992, by s. 1, ch. 86-286, and scheduled


1627.778 Limit of risk.-(1) No title insurer shall issue any contract of title in

surance, either as a primary insurer or as a coinsurer or reinsurer, upon an estate, lien, or interest in property located in this state, which contract does not show on its face the dollar amount of the risk assumed and which is in an amount exceeding one-half of its surplus to policyholders, unless the excess is simultaneously reinsured in one or more approved insurers. No title insurer shall circumvent the foregoing limitation by the issuance of two or more policies upon the same estate, lien, or interest. This subsection shall not be construed to prohibit:

652

F.S. 1987 INSURANCE RATES AND CONTRACTS Ch.627

(a) The simultaneous issuance of policies insuring different estates, liens, or interests in the same property, provided each of such simultaneous policies excepts the paramount estates, liens, or interests to which the insured estate, lien, or interest is subject and each policy so simultaneously issued conforms to the limitations and inhibitions of this subsection:

(b) Ceding portions of the total risk to authorized insurers. Insurance ceded, including coinsurance effected , shall be deemed a retention of risk by the insurer assuming the ceded risk and not by the insurer ceding the same.

(2) Surplus to policyholders shall be determined from the last annual statement of the insurer as provided by s. 624.424.

Hlstory.-s. 4, ch. 65-359; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 584, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


1627.780 Illegal dealings in risk rate premium.-(1) No person shall knowingly quote, charge, ac

cept, collect, or receive a risk premium for title insurance other than the risk premium promulgated by the department.

(2) No insurer shall knowingly accept, collect, or receive any sum as risk premium for title insurance, which insurance is not then provided or is not in due course (subject to acceptance of the risk) to be provided, unless such sum is promptly entered upon the books of account of such insurer as premium collected in advance.

Hlstory.-s. 6, ch. 65-359; ss. 13, 35, ch. 69-106; s. 3, ch . 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 577, 584, 809(2nd), ch. 82-243; s. 79, ch. 82-386. •Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is

scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.781 "Risk premium" defined.-(1) "Risk premium" for the purpose of this part is the

charge as promulgated by the department which shall be made by a stock insurer for the assumption of the risk or the contribution or deposit allocated to and charged by a business trust title insurer for the assumption of risk, under the several classifications of title insurance contracts, and upon which charge a premium tax is paid under s. 624.509. Wherever the words "premium" or "risk premium" are used in this part or in the laws of this state with respect to title insurance, the same shall be construed to mean "premium" or "risk premium" as defined in this section and shall not relate to any other charge incidental to title insurance.

(2) The risk premium shall not be construed to prevent a title insurer, title insurance agent, or member of a business trust title insurer from making a reasonable charge in addition to the risk premium for other services rendered the insured as part of the title insurance transaction, which charge and premium together shall be known as the "regular title insurance premium."

Hlstory.-s. 7, ch. 65-359; ss. 13, 35, ch . 69-106; s. 3, ch . 76-168; s. 1, ch . 77-457; ss. 2, 3, ch . 81-318; ss. 578, 584, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.782 Promulgation of rates.-( 1) The department shall have the power, and it shall

be its duty, subject to the applicable rating section of this code, to promulgate the risk premium rates to be charged in this state by insurers for the respective types

of title insurance contracts and services incident thereto and in connection therewith to promulgate rules incident to the applicability of such rates . Rates shall be made in accordance with the following :

(a) Due consideration shall be given to past loss experience and prospective loss experience, to a reasonable margin for underwriting profit and contingencies, to past expenses and prospective expenses for administration and handling of risks , and to other relevant factors .

(b) Rates may be grouped by classification or schedule and may differ as to class of risk assumed.

(c) Rates shall not be excessive, inadequate, or unfairly discriminatory.

(2) The risk premium shall apply to each $100 of insurance issued to an insured.

(3) The risk premium rates promulgated for title insurance shall apply throughout this state.

(4) The department shall, in accordance with the standards provided in subsection (1 ), review the risk premium as needed, but not less frequently than once every 3 years, and shall, based upon such review, revise the risk premium if results of the review so warrant.

Hlstory.-s. 8, ch. 65-359; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 579, 584, 809(2nd), ch . 82-243; s. 79, ch. 82-386. 'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is

scheduled for review pursuant to s. 11.61 in advance of that date.

1627.783 Rate deviation.-(1) At any time after the first promulgation of risk

rates as provided for in this part, an authorized insurer may petition the department for an order authorizing and permitting a specific deviation in the risk premium. Such petition shall be in writing and sworn to and shall set forth allegations of fact upon which the petitioner will rely including the petitioner's reasons for requesting such deviation. Any authorized title insurer may join in such petition for like authority to deviate or may file a separate petition praying for such authority or opposing such deviation. All such petitions shall be ruled upon simultaneously.

(2) If in the judgment of the department the requested deviation is not justified, the department may enter an order denying such petition . The order or orders entered by the department granting a deviated rate shall be in the nature of a change and amendment of the promulgated risk premium, and the provisions of s. 627.782 shall apply to any such change and amendment and the order or orders affecting the same.

Hlstory.-s. 9, ch . 65-359; ss. 13, 35, ch . 69-106; s. 3, ch . 76-168; s. 1, ch. 77-457; s. 21 , ch. 78-95; ss. 2, 3, ch. 81-318; ss. 580, 584, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.784 Casualty title insurance prohibited.-(1) No title insurance policy or guarantee of title shall

be issued upon a casualty basis . (2) The term "casualty basis" as used in this section

means the issuance of a title insurance policy or guarantee of title with disregard to the possible existence of adverse matters or defects of title.

Hlatory.-s. 10, ch. 65-359; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 584, 809(2nd), ch. 82-243; s. 79, ch . 82-386.


653

Ch. 627 INSURANCE RATES AND CONTRACTS F.S. 1987

1627.7841 Insurance against adverse matters or defects in the title.-A title insurer issuing a binder, commitment, policy of title insurance, or guarantee of title upon an estate, lien, or interest in property located in this state through its officers, employees, agents, or members of a business trust title insurer, which disburses settlement or closing funds, shall insure against the possible existence of adverse matters or defects in the title which are recorded during the period of time between the effective date of the binder or commitment and the date of recording of the document creating the estate or interest to be insured, except as to matters of which the insured has knowledge.

Hlstory.-s. 1, ch. 79-15; s. 2, ch. 81-318; ss. 581,584, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

1Note.-Expires October 1, 1992. pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.7842 Policy exceptions.-(1) No title insurance policy shall be issued in this

state with exceptions from coverage to the policy form approved by the department for the following:

(a) If a survey meeting the minimum technical standards for surveying required by the Department of Professional Regulation and certified to the title insurer by a registered Florida surveyor has been completed on the property within 90 days before the date of closing, the title policy may only except from coverage those encroachments, overlays, boundary line di.sputes, and other matters which are actually shown on the survey.

(b) If at closing the seller signs an affidavit swearing that there is no person in possession of the property or with a claim of possession to the property except the seller, the title policy shall not exclude from coverage rights or claims of parties in possession not shown by the public records.

(c) If at closing the seller signs an affidavit swearing that no improvements have been made to the property within the past 90 days for which payment has not been made in full, the title policy shall not except from coverage any lien or right to a lien for services, labor, or material furnished which is imposed by law and not shown by the public record.

(2) The title insurer or agent issuing the title policy may except from coverage the items specified in subsection (1) if he has knowledge of facts requiring such exceptions, notwithstanding the survey or affidavits. However, he shall disclose such facts to the proposed insured.

Hiatory.-s. 1, ch. 85-20; s. 1, ch . 86-286. 1Note.-Repealed effective October 1, 1992, by s. 1, ch. 86-286, and scheduled

for review pursuant to s. 11 .61.

1627.7845 Determination of insurability required; preservation of evidence of title search and examination.-

(1) No title insurance binder, commitment, policy of title insurance, or guarantee of title shall be written unless and until the title insurer has caused to be conducted a reasonable search and examination of the title and has caused to be made a determination of insurability of title in accordance with sound underwriting practices.

(2) The title insurer shall cause the evidence of the reasonable search and examination of the title to be preserved and retained in its files or in the files of its title

insurance agent or member of a business trust title insurer for a period of not less than 7 years after the title insurance binder, commitment, policy of title insurance, or guarantee of title has been issued. The title insurer shall cause this evidence to be produced at its offices upon the demand of the department. In lieu of retaining the original evidence, the title insurer or the title insurance agent or member of a business trust title insurer may, in the regular course of business, establish a system whereby all or part of these writings are recorded, copied, or reproduced by any photographic, photostatic, microfilm, microcard, miniature photographic, or other process which accurately reproduces or forms a durable medium for reproducing the original.

(3) This section does not apply to an insurer assuming no primary liability in a contract of reinsurance or to an insurer acting as a coinsurer if any other coinsuring insurer has complied with this section .

Hlatory.-ss. 582, 809(2nd), ch. 82-243; s. 79, ch. 82-386; s. 4, ch. 85-185. 1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


1627.785 Preemption by state.-The State of Florida hereby preempts the regulation of title insurers and title insurance.

Hlatory.-s. 11 , ch. 65-359; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 584, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

1Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.786 Transaction of title insurance and any other kind of insurance prohibited.-

(1) No insurer shall transact title insurance and any other kind of insurance in this state.

(2) Subsection (1) does not apply to any insurer actively transacting title insurance and any other kind of insurance in this state on January 1, 1965.

(3) Subsection (1) shall not preclude a title insurer from providing instruments to any prospective insured, in the form and content as approved by the department, whereby the title insurer assumes liability for loss due to the fraud of, dishonesty of, misappropriation of funds by, or failure to comply with written closing instructions by its contract agents, approved attorneys, or members of a business trust title insurer in connection with a real property transaction for which a title insurance policy or guarantee of title by such title insurer is to be issued.

Hlatory.-s. 12, ch. 65-359; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 1, 2, ch. 79-16; ss. 2, 3, ch. 81-318; ss. 584, 809(2nd), ch. 82-243; s. 79, ch. 82-386. 'Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and


1627.7865 Title insurer assessments.-As a condition of doing business in this state, each title insurer shall agree to be liable for an assessment to pay all unpaid title insurance claims on real property in this state for any title insurer which is liquidated with unpaid outstanding claims. The department shall assess all title insurers on a pro rata basis determined by their writings in this state for amounts necessary to pay such claims. However, in no event shall a title insurer be required to pay an amount in excess of one-tenth of its surplus to policyholders.

Hlatory.-ss. 583, 809(2nd), ch. 82-243; s. 79, ch. 82-386. 1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


654


1627.791 Penalties against title insurers for violations by persons or entities not licensed.-A title insurer or business trust title insurer is subject to the penalties 1n ss. 624.418(2) and 624.4211 for any violation of a lawful order, rule of the Department of Insurance, or proVISion of the Florida Insurance Code committed by:

(1) . A: person, firm, association, corporation, cooperative, JOint-stock company, or other legal entity not licen~ed pursuant to this act when issuing and counterslgmng binders, commitments, policies of title insurance, or guarantees of title on behalf of the title insurer.

. (2) An attorney when issuing and countersigning binders, commitments, policies of title insurance, or guarantees of title on behalf of the title insurer.

History.-s. 23, ch. 85-185: s. 1, ch. 86-286. 'Note.-Repealed effective October 1, 1992, by s. 1, ch. 86-286, and scheduled

for rev1ew pursuant to s. 11.61 .

_162_7.792 Liability of title insurers for defalcation by t1tle msurance agents.-A title insurer shall be liable for the defalcation, conversion, or misappropriation by a licensed title insurance agent of funds held in trust by the agent pursuant to s. 626.8473. If such agent is licensed by two or more title insurers, any liability shall be borne by the insurer upon which a title insurance binder commitment, policy, or title guarantee was issued p~ior to the illegal act. If no such binder, commitment, policy, or guarantee was issued, each title insurer represented by the agent at the time of the illegal act shall share in the liability in the same proportion that the premium remitted to 1t by the agent during the 1-year period before the illegal act bears to the total premium remitted to all title insurers by the agent during the same time period.

History.-s. 25, ch. 85-185: s. 1, ch. 86-81: s. 1, ch. 86-286. •Note.-Repeaied effective October 1, 1992, by s. 1, ch. 86-286, and scheduled

for rev1ew pursuant to s. 11.61.

627.801 627.8015

627.802

627.803 627.804 627.805

627.8055

627.806

627.807

PART XIV

VARIABLE OR INDETERMINATE VALUE CONTRACTS

Application of this part. "Indeterminate value contracts" and "variable

contracts" defined. Establishment and maintenance of separate

accounts. Statement of value of benefits. Investment of assets. Departmental regulation of variable and in

determinate value contracts; rules. Qualification of companies to issue variable

or indeterminate value contracts. Applicability of code to indeterminate value

contracts and variable life insurance contracts and accounts.

Variable or indeterminate value contract reserve requirements .

1627.801 Application of this part.-This part applies to annu1ty contracts, life insurance contracts, and contracts upon the lives of beneficiaries under life insurance contracts when such annuities or contracts provide for variable or indeterminate benefits, values, or premiums.

Hlstory.-s. 1, ch. 61-441 : s. 1, ch. 73-30: s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2, 3, ch . 81-318; ss. 585, 593, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


1627.8015 "Indeterminate value contracts" and "variable contracts" defined.-For the purposes of this part:

(1) "Indeterminate value contracts" means annuity contracts , life insurance contracts, and contracts upon the lives of beneficiaries under life insurance contracts when such annuities or contracts provide variable or indeterminate benefits, values, or premiums.

(2) "Variable contracts" means indeterminate value contracts for which assets are held in a separate account.

Hlstory.-ss. 586, 809(2nd), ch . 82-243; s. 79, ch. 82-386. 1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


1627.802 Establishment and maintenance of separate accounts.-A domestic life insurance company may establish one or more separate accounts and allocate thereto amounts, including without limitation proceeds applied under optional modes of settlement or under dividend options, to provide for life insurance or annuities, and benefits incidental thereto, payable in fixed or variable amounts or both . All amounts received by the company which are required by contract to be applied to provide variable benefits or values shall be added to the appropriate separate account. If so provided under applicable contracts , that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to the account shall not be chargeable with liabilities arising out of any other business the company may conduct. Any deficit from mortality experience which may arise in any such separate account shall be adjusted by additions to the account by the company so that the assets of the account are always at least equal to the assets required to satisfy the obligations of the company.

History.-s. 2, ch. 61-441 : ss. 13, 35, ch. 69-106; s. 1, ch . 73-30; s. 3, ch. 76-168: ~2~~~: 77-457: ss. 2, 3, ch. 81-318; ss. 587, 593, 809(2nd), ch. 82-243: s. 79, ch.

•Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.803 Statement of value of benefits.-Any contract or group certificate delivered or issued for delivery in this state which provides variable or indeterminate values shall contain a statement of the essential features of the procedure to be followed by the insurance company in determining the dollar amount of the benefits, values, or premiums and shall state in clear terms that the amount may decrease or increase according to such procedure. Any such contract delivered or issued for delivery in this state, and any such group certificate, shall contain on its first page, in a prominent position in contrasting color or boldfaced type, and in a type size as large as the type used in the text of the policy, a clear statement that the benefits, values, or premiums are on a variable basis.

Hlstory.-s. 3, ch. 61-441: s. 1, ch. 73-30; s. 3, ch. 76-168: s. 1, ch . 77-457; ss. 2, 3, ch . 81-318; ss. 568, 593, 809(2nd), ch. 82-243: s. 79, ch . 82-386: s. 1, ch. 84-93.


1627.804 Investment of assets.-An insurer which issues contracts providing for benefits, values, or premi-

655


ums that vary directly according to investment experience and which has established a separate account or accounts in connection with such contracts may invest and reinvest the assets held in the separate account or accounts without regard to any state requirements or limitations governing the investments of life insurance companies. The investments in the separate account or accounts shall not be considered in applying the investment limitations otherwise applicable to the investments of the company.

Hlstory.-s. 4, ch . 61-441 ; s. 1, ch. 73-30; s. 3, ch . 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 589, 593, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


1627.805 Departmental regulation of variable and indeterminate value contracts; rules.-The department, notwithstanding any other provision of law, shall have the sole authority to regulate the issuance and sale of variable and indeterminate value contracts and to issue such reasonable rules as may be necessary to carry out the purposes and provisions of this part.

History.-s. 5, ch. 61-441 ; ss. 13, 35, ch. 69-106; s. 1, ch. 73-30; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 590, 593, 809(2nd), ch . 82-243; s. 79, ch . 82-386.


1627.8055 Qualification of companies to issue vari· able or indeterminate value contracts.-No insurance company shall issue or deliver any contract on a variable or indeterminate value basis until it has satisfied the department that its financial condition, management, history, and methods of operation are not such as would render its operation harmful to the public welfare.

Hlstory.-ss. 590, 809(2nd), ch. 82-243; s. 79, ch. 82-386. 1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


1627.806 Applicability of code to indeterminate val· ue contracts and variable life insurance contracts and accounts.-

(1) Subject to the provisions of subsection (2), all pertinent provisions of the insurance code, including the provisions relating to reinsurance, apply to indeterminate value contracts .

(2) Except for ss. 627.453, 627.458, 627.459, 627.462, 627.475, 627.476, and 627.559, and as otherwise provided in this part, all pertinent provisions of the insurance code apply to separate accounts and contracts relating to variable life insurance policies. Any individual variable life insurance contract delivered or issued for delivery in this state shall contain appropriate grace, reinstatement, and nonforfeiture provisions. Any group variable life insurance contract delivered or issued for delivery in this state shall contain an appropriate grace provision.

History.-s. 2, ch. 73-30; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 591, 593, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch . 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.807 Variable or indeterminate value contract reserve requirements.-The reserve liability for variable or indeterminate value contracts shall be established in accordance with actuarial procedures that recognize the variable nature of the benefits, values, or premiums provided and any mortality quarantees.

History.-s. 2, ch. 73-30: s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318;

ss. 592, 593, 809(2nd), ch. 82-243; s. 79, ch. 82-386. 1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


627.826 627.827 627.828 627.8281 627.829

627.832

627.833

627.834 627.835 627.836 627.837 627.838

627.839

627.840 627.8405 627.841

627.842

627.843

627.844 627.845 627.847 627.848

627.849

PART XV

PREMIUM FINANCE COMPANIES AND AGREEMENTS

"Premium finance company" defined. "Premium finance agreement" defined. License required. Levy upon deposit. Approval , disapproval of application; license

renewal. Grounds for refusal, suspension, or revoca

tion of license. Administrative fine and probation in lieu of

suspension, revocation , or refusal to renew license.

Examinations. Excessive premium finance charge; penalty. Licensee's books and records; reports . Rebates and inducements prohibited. Filing and approval of forms; service

charges. Form and content of premium finance agree-

ments. Limitation on service and other charges. Prohibited premium financing . Delinquency, collection, cancellation, and

check return charges; attorney's fees . Restrictions on premium finance agree

ments. Delivery of copy of premium finance agree-

ment. Assignment of premium finance agreement. Statement of account; receipts . Extensions or deferrals. Cancellation of insurance contract upon de

fault. Fees.

1627.826 "Premium finance company" defined.(1) An "insurance premium finance company" is: (a) A person engaged, in whole or in part, in the busi

ness of entering into premium finance agreements with insureds; or

(b) A person engaged, in whole or in part, in the business of acquiring premium finance agreements from other premium finance companies.

(2) Credit unions, banks, savings and loan associations, and other lending institutions as defined under chapters 516, 657, 658, 664, and 665 or their federally chartered counterparts are exempt from the provisions of this part.

(3) The inclusion of a charge for insurance on a bona fide sale of goods or services on installments is not subject to the provisions of this part.

Hlatory.-s. 1, ch . 63-16; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 168, ch. 79-164; s. 431 , ch. 81-259; ss. 2, 3, ch . 81-318; ss. 594, 612, 809(2nd), ch. 82-243: s. 79, ch. 82-386.


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1627.827 "Premium finance agreement" defined."Premium finance agreement" means a promissory note or other written agreement by which an insured promises or agrees to pay to, or to the order of, a premium finance company the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent, in payment of premiums on an insurance contract, together with a service charge as authorized and limited by law.

Hlstory.-s. 1, ch. 63-16; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 612, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

1Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.828 License required.-(1) Except as provided in ss. 627.901 and 627.902,

no person shall engage in the business of a premium finance company unless licensed by the department. Every premium finance company licensed under the provisions of this part shall maintain at all times a net worth of $35,000. However, in lieu of having a net worth of $35,000, a premium finance company may file a surety bond or other acceptable collateral with the department as approved by it in the amount of $35,000.

(2) The application for a license shall be in writing and in the form prescribed by the department. Every applicant shall provide proof of a net worth of $35,000. Assets to be used in computing the required net worth shall be determined by rules adopted by the department.

(3) A single license shall entitle the holder to operate more than one office.

(4) At the time of filing an application for a license, the applicant shall pay to the department the license fee and, upon original application or upon application subsequent to denial of application, or revocation, suspension or surrender of a license, an investigation fee.

(5) Such license shall state the name and address of the licensee, and a copy shall be kept conspicuously posted in each office of the licensee and shall not be transferable or assignable.

(6) Prior to moving an existing office to another location, a licensee shall notify the department in writing of its intention to do so.

Hlstory.-s. 1, ch. 63-16; ss. 13, 35, ch. 69-106; s. 2, ch. 69-197; s. 1, ch. 72-249; s. 1, ch. 73-134; s. 3, ch. 76-168; s. 1, ch. 77 -457; ss. 2, 3, ch. 81-318; ss. 595, 612, 809(2nd), ch. 82-243; s. 79, ch . 82-386.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

Note.-Former s. 627.0992; consolidation of s. 627.828 and former ss. 627.830 and 627.831 .

1627.8281 Levy upon deposit.-No judgment creditor or other claimant of a premium finance company shall have the right to levy upon any of the assets or securities held in this state as a deposit under s. 627.828.

Hlatory.-s. 35, ch . 85-321 ; s. 1, ch. 86-286. 'Note.-Repealed effective October 1, 1992, by s. 1, ch. 86-286, and scheduled


1627.829 Approval, disapproval of application; license renewal.-

(1) The department shall issue the license, unless it finds that the management of the premium finance company filing the application is so lacking in managerial experience as to make the proposed operation hazardous to the insurance-buying public or unless it has good reason to believe the management of the premium finance

company is affiliated directly or indirectly through ownership, control, or in other business relations with any person whose business operations are or have been marked as detrimental to the public, policyholders, stockholders, investors, or creditors by manipulation of assets or of accounts or by bad faith.

(2) If the department refuses to issue a license, it shall notify the applicant of the denial and return to the applicant the sum paid as a license fee, but shall retain the investigation fee to cover the costs of investigating the applicant.

(3) Each license shall remain in force until September 30 of the year for which issued, unless earlier surrendered, suspended, or revoked, and may be renewed for the ensuing license year upon the filing of an application therefor. If an application for renewal is filed with the department before October 1 of any year, the license sought to be renewed shall be continued in force either until the issuance by the department of the renewal license applied for or until 5 days after the department refuses to renew the license.

Hlatory.-s. 1, ch. 63-16; ss. 13, 35, ch . 69-106; s. 3, ch . 76-168; s. 1, ch. 77-457; s. 21 , ch. 78-95; ss. 2, 3, ch. 81-318; ss. 596, 612, 809(2nd), ch. 82-243; s. 79, ch. 82-386; s. 48, ch. 85-321 ; s. 8, ch. 86-182.


1627.832 Grounds for refusal, suspension, or revocation of license.-

(1) The department may deny, suspend , revoke, or refuse to renew any license, if it finds:

(a) That the licensee has failed to pay the annual license fee or any sum of money lawfully demanded under authority of any other section of this part or has failed to comply with any order of the department.

(b) That the licensee has violated any provision of this part or any rule of the department.

(c) That any fact or condition exists which, if it had existed at the time of the original application, clearly would have warranted a refusal to issue the license.

(d) Material misstatement , misrepresentation, or fraud in obtaining the license or permit, or in attempting to obtain the license or permit.

(e) That the license or permit is being willfully used, or is to be used, to circumvent any of the requirements or prohibitions of this code.

(f) Willful misrepresentation of any premium finance contract or willful deception with regard to any such contract, accomplished either in person or by any form of dissemination of information.

(g) A demonstrated lack of fitness or trustworthiness.

(h) Fraudulent or dishonest practices in the conduct of business.

(i) Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers, insureds, or beneficiaries or to others and received in the conduct of business.

U) That the licensee has been found guilty of, or has pleaded guilty to , a felony in this state or any other state.

(2) A licensee may surrender a license by delivering to the department written notice that he thereby surrenders such license, but such surrender shall not affect

657


such licensee's civil or criminal liability for acts committed prior to such surrender.

(3) - No revocation, suspension, or surrender of a license shall impair or affect the obligation of any insured under any lawful premium finance agreement previously acquired or held by the licensee.

(4) Every license issued hereunder shall remain in force and effect until it has been surrendered, revoked, or suspended or expires in accordance with the provisions of this part; but the department shall have authority to reinstate a suspended license or to issue a new license to a licensee whose license has been revoked, if no fact or condition then exists which clearly would have warranted departmental refusal originally to issue such license under this part.

History.-s. 1, ch. 63-16: ss. 13, 35, ch. 69-106; s. 3, ch. 76-168: s. 1, ch. 77-457; ss. 2, 3, ch. 81-318: ss. 597, 612, 809(2nd), ch. 82-243: s. 79, ch. 82-386: s. 115, ch. 83-216.


1627.833 Administrative fine and probation in lieu of suspension, revocation, or refusal to renew license.The department may, in its discretion in lieu of a suspension , revocation, or refusal to renew or continue any license, impose on the licensee an administrative penalty or place such licensee on probation pursuant to ss. 626.681 and 626.691.

History.-s. 1, ch. 63-16: ss. 13, 35, ch. 69-106: s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2, 3, ch. 81-318: ss. 612, 809(2nd), ch. 82-243: s. 79, ch. 82-386.

1 Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11.61 in advance of that date.

1627.834 Examinations.-(1) The department may conduct examinations and

investigations of premium finance companies under the provisions of ss . 624.307 and 626.601 .

(2) As often as it deems necessary and not less frequently than each 3 years, the department shall examine each licensed premium finance company. The examination shall be for the purpose of ascertaining compliance by the person examined with the applicable provisions of this code.

Hlstory.-s. 1, ch. 63-16: ss. 13, 35, ch. 69- 106: s. 2, ch . 72-249: s. 3, ch . 76-168: s. 1, ch. 77-457: ss. 2, 3, ch. 81-318: ss. 598,612, 809(2nd), ch. 82-243: s. 79, ch. 82-386.


Note.-Former s. 627.0998.

1627.835 Excessive premium finance charge; penalty.-Any person, premium finance company, or other legal entity who or which knowingly takes, receives, reserves, or charges a premium finance charge other than that authorized by this part shall thereby forfeit the entire premium finance charge to which such person, premium finance company, or legal entity would otherwise be entitled; and any person who has paid such unlawful finance charge may personally or by his legal or personal representative, by suit for recovery thereof, recover from such person, premium finance company, or legal entity twice the entire amount of the premium finance charge so paid.

Hlstory.-s. 1, ch. 63-16: s. 3, ch . 76-168: s. 1, ch . 77-457: ss. 2, 3, ch . 81-318: ss. 599, 612, 809(2nd), ch. 82-243: s. 79, ch. 82-386.

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.836 Licensee's books and records; reports.-(1) The licensee shall keep and use in his business

such books, accounts, and records as will enable the department to determine whether the licensee is complying with the provisions of this part and with the rules pertaining thereto. Every licensee shall preserve such books, accounts, and records, including cards used in a card system, if any, for at least 3 years after making the final entry in respect to any premium finance agreement recorded therein; however, the preservation of photographic reproductions thereof or records in photographic form shall constitute compliance with this requirement.

(2) Each licensee shall annually, on or before March 1 , file a report with the department giving such information as the department may require . The report shall be made under oath and in the form prescribed by the department and shall be accompanied by the annual report filing fee specified in s. 627.849. The department may make and publish annually an analysis and recapitulation of such reports. In addition, the department may require such additional regular or special reports as it may deem necessary.

History.-s. 1, ch. 63-16: ss. 13, 35, ch. 69-106: s. 4, ch . 72-249: s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2, 3, ch. 81-318: ss. 600,612, 809(2nd), ch. 82-243: s. 79, ch. 82-386.



1627.837 Rebates and inducements prohibited.No premium finance company, or employee thereof, shall offer to pay or allow in any manner to any person, either as an inducement to the financing of any insurance policy with the premium finance company or after any such policy has been financed, any rebate, or shall give or offer to give any valuable consideration or inducement of any kind directly or indirectly, other than an article of merchandise not exceeding $1 in value which has thereon the advertisement of the premium finance company.

History.-s. 1, ch. 63-16: s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2, 3, ch. 81-318: ss. 601, 608, 612, 809(2nd), ch. 82-243: s. 79, ch. 82-386.


1627.838 Filing and approval of forms; service charges.-

(1) No premium finance agreement form or related form shall be used in this state by a premium finance company unless it has been filed with and approved by the department. Every filing shall be made within 30 days of issuance or use.

(2) Each premium finance company shall file with the department the service charge and interest rate plan, including all modifications thereto, for informational purposes only. Every filing shall be made within 30 days of its effective date.

(3) Each filing shall be accompanied by the filing fee specified in s. 627.849.

Hlatory.-s. 1, ch. 63-16: ss. 13, 35, ch . 69-106: s. 3, ch. 72-249: s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2, 3, ch . 81-318: ss. 602,612, 809(2nd), ch. 82-243: s. 79, ch. 82-386.



658


1627.839 Form and content of premium finance agreements.-

(1) A premium finance agreement shall be in writing, dated, and signed by or on behalf of the insured ; and the printed portion thereof shall be in at least 8-point type.

(2) It shall contain the entire agreement of the parties with respect to the insurance contract , the premiums for which are advanced or to be advanced under it , and:

(a) At its top, the words "PREMIUM FINANCE AGREEMENT" in at least 10-point bold type; and

(b) A notice in at least 8-point bold type, reading as follows :

"NOTICE: 1. Do not sign this agreement before you read it or

if it contains any blank space. 2. You are entitled to a completely filled-in copy of

this agreement. 3. Under the law, you have the right to pay off in ad-

vance the full amount due and under certain conditions to obtain a partial refund of the service charge."

(3) A premium finance agreement shall: (a) Contain the name and place of business of the

insurance agent negotiating the related insurance contract ; the name and residence or place of business of the insured as specified by him; the name and place of business of the premium finance company to which installment or other payments are to be made; a description of the insurance contract , the premiums for which are advanced or to be advanced under the agreement; and the amounts of the premiums for such insurance contract ; and

(b) Set forth the following items : 1. The total amount of the premiums; 2. The amount of the down payment; 3. The principal balance, which is the difference be

tween the amounts of subparagraphs 1. and 2.; 4. The amount of the service charge; and 5. The balance, which is the sum of the amounts of

subparagraphs 3. and 4., payable by the insured; the number of installments required; the amount of each installment expressed in dollars; and the due date or period thereof.

The items need not be stated in the sequence or order set forth above; inapplicable items may be omitted ; and additional items may be included to explain the computations made in determining the amount to be paid by the insured.

(4) No premium finance agreement shall be signed by an insured when it contains any blank space to be filled in after it has been signed ; however, if the insurance contract , the premiums for which are advanced or to be advanced under the agreement, has not been issued at the time of its signature by the insured and it so provides, the name of the authorized insurer by whom such insurance contract is issued, the policy number, and the due date of the first installment may be left blank and later inserted in the original of the agreement after it has been signed by the insured.

Hlstory.-s. 1, ch. 63-16; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 603, 61 2, 809(2nd), ch. 82-243; s. 79, ch. 82-386; s. 116, ch. 83-216.

•Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch . 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.840 Limitation on service and other charges.(1) A premium finance company shall not charge,

contract for, receive, or collect a service charge other than as permitted by this part.

(2) A premium finance company may, in a premium finance agreement, contract for, charge, receive, and collect a service charge for financing the premiums under the agreement computed as provided in subsection (3) .

(3)(a) The service charge provided for in this section shall be computed on the balance of the premiums due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance coverage for which the premiums are being advanced to and including the date when the final payment of the premium finance agreement is payable.

(b) The service charge shall be a maximum of $12 per $100 per year plus an additional charge not exceeding $20, which additional charge need not be refunded upon prepayment . Such additional charge may be charged only once in a 12-month period for any one customer unless that customer 's policy has been canceled due to nonpayment within the immediately preceding 12-month period. However, any insured may prepay his premium finance agreement in full at any time before the due date of the final payment; and in such event the unearned service charge shall be refunded in accordance with the "Rule of 78ths," or any other method at least as beneficial to the insured and approved by the department, and shall represent at least as great a proportion of the service charge, if any, as the sum of the periodic balances after the month in which prepayment is made bears to the sum of all periodic balances under the schedule of payments in the agreement. When the amount of the refund is less than $1, no refund need be made if the agreement so states .

(c) Such service charge shall be inclusive of all charges incident to the premium finance agreement and for the extension of credit provided for therein .

(d) Paragraphs (a)-(c) apply if the premiums under only one insurance contract are advanced or to be advanced under a premium finance agreement; if premiums under more than one insurance contract are advanced or to be advanced under a premium finance ag'reement , the service charge shall be computed from the inception date of such insurance contracts, or from the due date of such premiums; however, not more than one minimum service charge shall apply to each premium finance agreement.

(e) No insurance agent or premium finance company shall induce an insured to become obligated under more than one premium finance agreement for the purpose of obtaining more than one minimum service charge.

Hlstory.-s. 1, ch. 63-1 6; s. 1, ch. 69- 224; s. 1, ch. 76-126; s. 3, ch. 76-1 68; s. 1, ch . 77-457; ss. 3, 4, 6, ch. 80-363; ss. 2, 3, ch. 81-318; ss. 604, 612, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


659


1627.8405 Prohibited premium financing.-No premium finance company shall , in a premium finance agreement, provide financing for the cost of:

(1) A membership in an automobile club. The term "automobile club" means a legal entity which, in consideration of dues, assessments, or periodic payments of money, promises its members or subscribers to assist them in matters relating to the ownership, operation, use, or maintenance of a motor vehicle ; however, this definition of "automobile club" does not include persons, associations, or corporations which are organized and operated solely for the purpose of conducting, sponsoring, or sanctioning motor vehicle races , exhibitions, or contests upon racetracks, or upon racecourses established and marked as such for the duration of such particular events. The words "motor vehicle" used herein have the same meaning as defined in chapter 320.

(2) An accidental death and dismemberment policy sold in combination with a personal injury protection only policy.

The department shall promulgate rules to assure disclosure, at the time of sale, of coverages financed with personal injury protection .

History.-ss. 604, 809(2nd), ch. 82-243; s. 79, ch. 82-386; s. 117, ch. 83-216. 1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


1627.841 Delinquency, collection, cancellation, and check return charges; attorney's fees.-

(1) A premium finance agreement may provide for the payment by the insured of a delinquency and collection charge on each installment in default for a period of not less than 5 days in an amount not to exceed $10, but only one such delinquency and collection charge may be collected on any such installment regardless of the period during which it remains in default; and, if the default results in the cancellation of any insurance contract listed in the agreement, the agreement may provide for the payment by the insured of a cancellation charge equal to the difference between any delinquency and collection charge imposed in respect to the installment in default and $10.

(2) A premium finance agreement may also provide for the payment of attorney's fees not exceeding 20 percent of the amount due and payable under the agreement if it is referred for collection to an attorney not a salaried employee of the premium finance company holding the agreement.

(3) Notwithstanding the provisions of this section, a premium finance company shall not take, receive from, or charge an insured any cancellation charge or attorney's fees unless, within 10 days after default in the payment of any installment of a premium finance agreement, the premium finance company has mailed a notice of the default to the insured at his address as shown on the agreement and to any insurance agent named therein at his place of business as shown giving the insured at least 5 days within which to make the payment in default.

(4) In the event that a payment is made to a premium finance company by check or draft and the instrument is returned because of insufficient funds to pay it, the premium finance company may, if the premium finance

agreement so provides, impose a charge of $10. Hlstory.-s. 1, ch . 63-16; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318;

ss. 605, 612, 809(2nd), ch. 82-243; s. 79, ch. 82-386. 'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


1627.842 Restrictions on premium finance agreements.-No premium finance agreement or contract ancillary thereto shall contain any provision by which:

(1) In the absence of default of the insured, the premium finance company holding the agreement may, arbitrarily and without reasonable cause, accelerate the maturity of any part or all of the amount owing thereunder;

(2) A power of attorney is given to confer any authority to perform any act other than to request cancellation for nonpayment of premium; or

(3) The insured relieves the insurance agent or the premium finance company holding the agreement from liability for any legal rights or remedies which the insured may otherwise have against him.



1627.843 Delivery of copy of premium finance agreement-Before the due date of the first installment payable under a premium finance agreement, the premium finance company holding the agreement or the insurance agent shall deliver to the insured, or mail to him at his address as shown in the agreement, a copy thereof or, if the agreement contained any blank space when it was signed and such blank space was subsequently filled in, in accordance with s. 627.839(4), a copy of the agreement as so filled in.

History.-s. 1, ch. 63-16; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 607, 612, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


1627.844 Assignment of premium finance agreement.-

(1) A premium finance company may purchase or otherwise acquire a premium finance agreement from another premium finance company with recourse against the other premium finance company on such terms and conditions as may be mutually agreed upon.

(2) No filing of an assignment or notice thereof to the insured shall be necessary to the validity of the written assignment of a premium finance agreement as against creditors or subsequent purchasers, pledgees, or encumbrancers of the assignor.

(3) Unless the insured has notice of an actual or intended assignment of a premium finance agreement, payment thereunder by him to the last known holder of the agreement shall be binding upon all subsequent holders or assignees.

Hiatory.-s. 1, ch . 63-16; s. 3, ch . 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 608, 612, 809(2nd), ch. 82-243; s. 79, ch . 82-386; s. 118, ch. 83- 216.


1627.845 Statement of account; receipts.-(1) At any time after the execution of a premium fi

nance agreement, but not later than 1 year after the last payment thereunder, the premium finance company holding the premium finance agreement shall, upon writ-

660


ten request of the insured, give or mail to him a written statement of the dates and amounts of payments and the total amount, if any, unpaid thereunder. A statement shall be supplied once each year without charge; if any additional statement is requested, the premium finance company shall supply the statement at a charge not exceeding $1 for each additional statement so supplied . An insured shall be given a receipt for a payment when made in cash .

(2) After the payment of all sums for which an insured is obligated under a premium finance agreement, and upon his written demand, the premium finance company holding the agreement shall deliver, or mail to the insured at his last known address, such one or more good and sufficient instruments as may be necessary to acknowledge payment in full and to release all interest in or rights to the insurance contracts , the premiums for which were advanced or are to be advanced under the agreement.



1627.847 Extensions or deferrals.-A premium finance company may, upon agreement with the insured, extend the scheduled due date or defer the scheduled payment of all or any part of any installment or installments payable thereunder. The agreement for such extension or deferment must be in writing and signed by the parties thereto. The premium finance company may charge and contract for the payment of an extension or deferral charge by the insured and collect and receive the same; but such charge may not exceed an amount equal to 1 percent per month simple interest on the amount of the installment or installments, or part thereof, extended or deferred for the period of extension or deferral or $1 , whichever is the greater amount. The period shall not exceed the period from the date when the extended or deferred installment or installments, or part thereof, would have been payable in the absence of an extension or deferral, to the date when the installment or installments, or part thereof, are made payable under the agreement of extension or deferment.

Hlstory.-s. 1, ch. 63-16; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 610, 612, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

'Note--Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.848 Cancellation of insurance contract upon default.-When a premium finance agreement contains a power of attorney or other authority enabling the premium finance company to cancel any insurance contract listed in the agreement, the insurance contract shall not be canceled unless cancellation is in accordance with the following provisions:

( 1) Not less than 10 days' written notice shall be mailed to each insured shown on the premium finance agreement of the intent of the premium finance company to cancel his insurance contract unless the defaulted installment payment is received within 10 days.

(2) After expiration of such period, the premium finance company shall mail to the insurer a request for cancellation, specifying the effective date of cancellation and the unpaid premium balance due under the fi-

661

nance contract, and shall mail a copy thereof to the insured at his last known address as shown on the premium finance agreement.

(3) Every notice of cancellation shall include, in type or print of which its face shall not be smaller than 12 points, a statement that, if the insurance contract or contracts provide motor vehicle liability insurance required by the financial responsibility law, proof of financial responsibility is required to be maintained continuously for a period of 3 years , pursuant to chapter 324, and the operation of a vehicle without such financial responsibility is unlawful.

(4) Upon receipt of a copy of the cancellation notice by the insurer or insurers, the insurance contract shall be canceled with the same force and effect as if the notice of cancellation had been submitted by the insured himself, without requiring any further notice to the insured or the return of the insurance contract.

(5) All statutory, regulatory, and contractual restrictions providing that the insured may not cancel his insurance contract unless he or the insurer first satisfies such restrictions by giving a prescribed notice to a governmental agency, the insurance carrier, a mortgagee, an individual, or a person designated to receive such notice for such governmental agency, insurance carrier, or individual shall apply when cancellation is effected under the provisions of this section. The insurer, in accordance with such prescribed notice when it is required to give such notice in behalf of itself or the insured, shall give notice to such governmental agency, person, mortgagee, or individual; and it shall determine and calculate the effective date of cancellation from the day it receives the copy of the notice of cancellation from the premium finance company.

(6) Whenever an insurance contract is canceled in accordance with this section, the insurer shall promptly return the unpaid balance due under the finance contract, up to the gross amount available upon the cancellation of the policy, to the premium finance company and any remaining unearned premium to the agent or the insured, or both, for the benefit of the insured or insureds.

Hlstory.-s. 1, ch . 63-16; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, 6, ch. 80-363; ss. 2, 3, ch . 81-318; ss . 611,612, 809(2nd), ch. 82-243; s. 79, ch. 82-386; s. 23, ch. 83-288.

•Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.849 Fees.-(1) The department shall collect in advance, and the

persons so served shall pay to it in advance, the following fees :

(a) Annual license fee .............................. ....... .... $250 (b) Investigation fee .... ................ ........... ..... ....... ... 1 00 (c) Annual report filing fee .......... .. ..... ................... . 25 (d) Form filing fee .. ........ .......................................... 10 (2) The fees received under this section shall be

credited to the Insurance Commissioner's Regulatory Trust Fund.

Hlatory.-s. 5, ch. 72-249; s. 3, ch. 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 612, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

•Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

PART XVI

PREMIUM FINANCING


627.901 Premium financing by an insurance agent or agency.

627.902 Premium financing by an insurer or subsidiary. 627.903 Premium finance cost specified. 627.904 Insurer filing; approval of forms; service

charge filing.

1627.901 Premium financing by an insurance agent or agency.-

(1) A general lines agent may make reasonable service charges for financing insurance premiums on policies issued or business produced by such an agent or agency, s. 626.9541 notwithstanding. The service charge shall not exceed $1 per installment, or a $6 total service charge per year, for any premium balance of $120 or less. For any premium balance greater than $120 but not more than $220, the service charge shall not exceed $9 per year. The maximum service charge of $1 per installment for any premium balance greater than $220 shall not exceed $12 per year. In lieu of such service charges, an insurance agent or agency may charge a rate of interest not to exceed 18 percent simple interest per year on the unpaid balance.

(2) Every such agent or agency engaging in premium financing whose service charge or rate of interest is more than as provided in subsection (1) shall be subject to part XV of this chapter.

Hiatory.-s. 2, ch . 63-16; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 3, 5, 6, ch. 80-363; ss. 2, 3, ch. 81-318; ss. 613, 617, 809(2nd), ch. 82-243; s. 79, ch. 82-386. 'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


1627.902 Premium financing by an insurer or subsid· iary.-An insurer, a subsidiary of an insurer, or a corporation under substantially the same management or control as an authorized insurer or group of authorized insurers may finance property, casualty, surety, and marine insurance premiums on policies issued or business produced by such insurer or insurers; however, any such insurer, subsidiary, or corporation or group of insurers the service charge or rate of interest of which is substantially more than that provided ins. 627.901 shall be subject to part XV of this chapter.

Hiatory.-s. 2, ch. 63-16; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 614, 617, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


1627.903 Premium finance cost specified.-(1) When premium financing service charges or in

terest is included in the overall price or cost of insurance, the insurer, insurance agent, or agency shall separately state and identify the amount of service charges or interest to be paid for the financing of such premiums.

(2) All service charges or interest shall be separately stated and identified in all invoices issued to the policyholder and in the records or accounts maintained by the insurer or corporation, as provided in s. 627.902, or by the agent or agency.

History.-s. 2, ch. 63-16; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 615, 617, 809(2nd), ch. 82-243; s. 79, ch . 82-386.


1627.904 Insurer filing; approval of forms; service charge filing.-An insurer, a subsidiary of an insurer, or a corporation under substantially the same manage-

ment or control as an authorized insurer or group of authorized insurers shall file premium finance agreement forms or related forms and the service charge or interest rate plan to be charged as provided in s. 627.838 separately from rates and filings required under part I of this chapter.

Hlatory.-s. 2, ch . 63-16; s. 3, ch . 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 616, 617, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


627.911 627.912

627.9122

627.9126

627.913

627.914

627.915 627.917

627.9175 627.918 627.919

PART XVII

INSURER REPORTING

Scope of this part. Professional liability claims and actions; re

ports by insurers. Officers ' and directors ' liability claims; re

ports by insurers. Annual reports of information by liability in

surers required. Reports of information by products liability

insurers required. Reports of information by workers' compen

sation insurers required. Insurer experience reporting. Uniform risk classification reporting system

for motor vehicle insurance. Reports of information on health insurance. Reporting formats. Maintenance of insurance data.

1627.911 Scope of this part.-Any insurer transacting insurance in this state shall report information as required by this part.

Hiatory.-ss. 618, 809(2nd), ch. 82-243; s. 79, ch. 82-386. 1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


1627.912 Professional liability claims and actions; reports by insurers.-

(1) Each self-insurer authorized under s. 627.356 or s. 627.357 and each insurer or joint underwriting association providing professional liability insurance to a practitioner of medicine licensed pursuant to the provisions of chapter 458, to a practitioner of osteopathic medicine licensed pursuant to the provisions of chapter 459, to a podiatrist licensed pursuant to the provisions of chapter 461, to a hospital licensed pursuant to the provisions of chapter 395, to clinics included in 2chapter 389 and chapter 390, to an ambulatory surgical center as defined in s. 395.002(2), or to a member of The Florida Bar shall report in duplicate to the Department of Insurance any claim or action for damages for personal injuries claimed to have been caused by error, omission, or negligence in the performance of such insured's professional services or based on a claimed performance of professional services without consent, if the claim resulted in:

(a) A final judgment in any amount. (b) A settlement in any amount. (c) A final disposition not resulting in payment on be

half of the insured.

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Reports shall be filed with the department no later than 60 days following the occurrence of any event listed in paragraph (a), paragraph (b), or paragraph (c).

(2) The reports required by subsection (1) shall contain:

(a) The name, address, and specialty coverage of the insured.

(b) The insured's policy number. (c) The date of the occurrence which created the

claim. (d) The date the claim was reported to the insurer or

self-insurer. (e) The name of the injured person. This information

shall be privileged and confidential and shall not be disclosed by the department without the injured person's consent. This information may be used by the department for purposes of identifying multiple or duplicate claims arising out of the same occurrence.

(f) The date of suit, if filed. (g) The injured person's age and sex. (h) The total number and names of all defendants in

volved in the claim . (i) The date and amount of judgment or settlement,

if any, including the itemization of the verdict as required under 3s. 768.48, together with a copy of the settlement or judgment.

U) In the case of a settlement, such information as the department may require with regard to the injured person's incurred and anticipated medical expense, wage loss, and other expenses.

(k) The loss adjustment expense paid to defense counsel, and all other allocated loss adjustment expense paid.

(I) The date and reason for final disposition, if no judgment or settlement.

(m) A summary of the occurrence which created the claim, which shall include:

1. The name of the institution, if any, and the location within the institution at which the injury occurred.

2. The final diagnosis for which treatment was sought or rendered, including the patient's actual condition.

3. A description of the misdiagnosis made, if any, of the patient's actual condition.

4. The operation, diagnostic, or treatment procedure causing the injury.

5. A description of the principal injury giving rise to the claim.

6. The safety management steps that have been taken by the insured to make similar occurrences or injuries less likely in the future.

(n) Any other information required by the department to analyze and evaluate the nature, causes, location, cost, and damages involved in professional liability cases.

(3) The department shall screen the reports and send to the Department of Professional Regulation and the appropriate regulatory board copies of the reports of any physicians or osteopaths having three or more claims with indemnities exceeding $10,000 each within the previous 5-year period, including screening reports for the 3-year period preceding October 1, 1985. With respect to any such report, the Department of Prates-

sional Regulation shall be authorized to obtain the name of the patient to whom the report applies directly from the insurer or self-insurer filing the report, and the insurer or self-insurer shall promptly furnish the name of the patient to the department when requested. For purposes of safety management, the department shall annually provide the Department of Health and Rehabilitative Services with copies of the reports in cases resulting in an indemnity being paid to the claimants.

(4) There shall be no liability on the part of, and no cause of action of any nature shall arise against, any insurer reporting hereunder or its agents or employees or the department or its employees for any action taken by them pursuant to this section.

Hlstory.-s. 1, ch. 74-219; s. 3, ch . 76-168; s. 1, ch . 77-174; s. 1, ch . 77-297; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 619, 625, 809(2nd), ch . 82-243; s. 79, ch. 82-386; s. 119, ch . 83-216; s. 7, ch . 85-175; s. 6, ch . 86-287.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch . 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

•Note.-Effective October 1, 1986, chapter 389 was repealed by s. 1, ch. 86-5. •Note.-Effective July 1, 1986, s. 768.48 was repealed by s. 68, ch. 86-160. Note.-Former ss. 624.431 , 768.55 (1976 Supp.), 624.432.

627.9122 Officers' and directors' liability claims; reports by insurers.-

(1) Each insurer providing coverage for officers' and directors' liability coverage shall report to the Department of Insurance any claim or action for damages claimed to have been caused by error, omission, or negligence in the performance of the officer's or director's services, if the claim resulted in:


half of the insured.

Reports shall be filed with the department no later than 60 days following the occurrence of any event listed in paragraphs (a), (b), or (c).

(2) The reports required by subsection (1) shall contain:

(a) The name, address, and position held by the insured, and the type of corporation or organization, including classifications as provided in section 501 (c) of the Internal Revenue Code of 1986, as amended.

(b) The insured's policy number. (c) The date of the occurrence which created the

claim. (d) The date the claim was reported to the insurer. (e) The name of the injured person. This information

shall be privileged and confidential and shall not be disclosed by the department without the consent of the injured person. This information may be used by the department for purposes of identifying multiple or duplicate claims arising out of the same occurrence.

(f) The date of suit, if filed . (g) The total number and names of all defendants in

volved in the claim. (h) The date and amount of judgment or settlement,

together with a copy of the settlement or judgment. (i) In the case of a settlement, such information as

the department may require with regard to the claimant's anticipated future losses.

U) The loss adjustment expense paid to defense counsel, and all other allocated loss adjustment expenses paid.

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(k) The date and reason for final disposition, if no judgment or settlement.

(I) A summary of the occurrence which created the claim, which shall include:

1. Whether the injuries claimed were the result of physical damage to the claimant, were the result of damage to the reputation of the claimant, were based on self-dealing by the defendant, or were in the nature of a shareholder dispute.

2. A description of the type of activity which caused the injury.

3. The steps taken by the officers or directors to assure that similar occurrences are less likely in the future.

(m) Any other information required by the department to analyze and evaluate the nature, causes, costs, and damages involved in officers ' and directors ' liability cases.

(3) The department shall include a summary of this information in its annual report.

Hlatory.-s. 9, ch. 87-245.

1627.9126 Annual reports of information by liability insurers required.-

(1) Each insurer transacting commercial multiperil , products liability, commercial automobile liability, private passenger automobile liability, or other line of liability insurance shall maintain information as specified in this section . Such information shall be maintained for each line of insurance and for direct Florida business only. The department shall annually conduct a sampling of claims or actions for damages for personal injury or property damage claimed to have been caused by error, omission, or negligence of insureds if the claim resulted in :


half of the insured. (2) Upon request of the department, an insurer shall ,

within 60 days, submit to the department a report which contains:


half of the insured. (3) The reports required by subsection (2) shall con

tain: (a)1 . The name, address, and class or line of cover

age of the insured. 2. The insured 's policy number. 3. The date of the occurrence which created the

claim . 4. The date the claim was reported to the insurer or

self-insurer. 5. The date of suit , if filed . 6. The claimant's name, age, and sex; provided,

however, the name of the claimant shall be maintained by the department as confidential and shall not be subject to public inspection or disclosure under chapter 119. This exemption is subject to the "Open Government Sunset Review Act" in accordance with s. 119.14.

7. The total number and names of all defendants involved in the claim .

8. Claims settled after a suit was filed . 9. Claims paid based on a judgment. 10. Judgments appealed by the insurer, together

with the total results of such appeals. 11. The date and amount of final judgment or settle

ment, if any, including the itemization of the verdict, together with a copy of the settlement or final judgment.

12. In the case of a settlement, such information as the department may require with regard to the injured person 's incurred and anticipated medical expense, wage loss , and other expenses .

13. The loss-adjustment expense paid to defense counsel and other allocated loss-adjustment expense paid.

14. The date and reason for final disposition, if no judgment or settlement.

(b) A summary of the occurrence which created the claim , which shall include:

1. The name of the facility, business, or institution , if any, and the location within the facil ity, business, or institution at which the injury occurred .

2. A description of the principal injury giving rise to the claim.

3. The safety management steps that have been taken by the insured to make similar occurrences or injuries less likely in the future .

(c) Any other information required by the department to analyze and evaluate the nature, causes, location , cost, and damages involved in liability cases.

(4) There shall be no liability on the part of, and no cause of action of any nature shall arise against, any insurer reporting hereunder or its agents or employees or the department or its employees for any action taken by them pursuant to this section.

Hlatory.-s. 42, ch. 86-160; s. 2, ch. 87-50. 1Note.-Repealed effective October 1, 1992, by s. 2, ch. 87-50, and scheduled for

review pursuant to s. 11.61.

1627.913 Reports of information by products liability insurers required.-

(1) Any insurer authorized to write a policy of products liability insurance in the state shall transmit the following information , based on its statewide products liability insurance writings, to the department each year in the annual report of such insurer:

(a) Premiums written; (b) Premiums earned ; (c) Unearned premiums; (d) The dollar amount of claims paid; (e) Incurred claims, not including claims incurred but

not reported ; (f) Claims closed without payment, and the amount

reserved for such claims; (g) Loss reserves for all claims except claims in

curred but not reported; (h) Reserves for claims incurred but not reported ; (i) Losses paid as a percentage of the amount re

served for such losses; U) Net investment gain or loss and other income

gain or loss allocated to products liability lines according to the allocation formula used in the annual insurance expense exhibit ;

(k) Underwriting income or loss; (I) Actual expenses in detail, including , but not limit-

664


ed to , loss adjustment expense; commissions; general expense; and advertising , home office, and defense costs;

(m) Claims settled after a suit was filed ; (n) Claims paid based on a judgment; and (o) Judgments appealed by the insurer, together

with the total results of such appeals . (2) The department shall provide a summary of infor

mation provided pursuant to subsection (1) in its annual report.

(3) In the first year that an insurer makes a report pursuant to subsection (1 ), the insurer shall provide only the information required by paragraphs (a) through (I) of subsection (1) and shall provide such information for the current year and the 3 previous years.

History.-s. 1, ch. 78- 224; s. 2, ch. 81-318; ss. 620,625, 809(2nd), ch. 82-243; s. 79, ch. 82-386. 'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is

scheduled for review pursuant to s. 11 .61 in advance of that date. Note--Former s. 624.433.

1627.914 Reports of information by workers' compensation insurers required.-

(1) The department shall promulgate rules and statistical plans which shall thereafter be used by each insurer in the recording and reporting of loss, expense, and claims experience, in order that the experience of all insurers and self-insurers may be made available at least annually in such form and detail as may be necessary to aid the department in determining whether Florida experience for workers' compensation insurance is sufficient for establishing rates.

(2) Any insurer authorized to write a policy of workers ' compensation insurance shall transmit the following information to the department each year with its annual report , and such information shall be reported on a net basis with respect to reinsurance for nationwide experience and on a direct basis for Florida experience:

(a) Premiums written; (b) Premiums earned; (c) Dividends paid or credited to policyholders; (d) Losses paid; (e) Allocated loss adjustment expenses; (f) The ratio of allocated loss adjustment expenses

to losses paid; (g) Unallocated loss adjustment expenses; (h) The ratio of unallocated loss adjustment ex

penses to losses paid; (i) The total of losses paid and unallocated and allo

cated loss adjustment expenses; U) The ratio of losses paid and unallocated and allo

cated loss adjustment expenses to premiums earned; (k) The number of claims outstanding as of Decem

ber 31 of each year; (I) The total amount of losses unpaid as of Decem

ber 31 of each year; (m) The total amount of allocated and unallocated

loss adjustment expenses unpaid as of December 31 of each year; and

(n) The total of losses paid and allocated loss adjustment expenses and unallocated loss adjustment expenses, plus the total of losses unpaid as of December 31 of each year and loss adjustment expenses unpaid as of December 31 of each year.

(3) A report of the information required in subsection (2) shall be filed no later than April 1 of each year and shall include the information for the preceding year ending December 31 . All reports shall be on a calendaraccident year basis, and each calendar-accident year shall be reported at eight stages of development.

(4) Each insurer authorized to write a policy of workers ' compensation insurance shall transmit the information for paragraphs (a) , (b) , (d) , and (e) annually on both Florida experience and nationwide experience separately:

(a) Payrolls by classification. (b) Manual premiums by classification. (c) Standard premiums by classification . (d) Losses by classification and injury type. (e) Expenses.

A report of this information shall be filed no later than April 1 of each year. All reports shall be filed in accordance with standard reporting procedures for insurers, which procedures have received approval by the department, and shall contain data for the most recent policy period available. A rating organization may be used by insurers to report the data required by this section . The rating organization shall report each data element in the aggregate only for insurers required to report under this section who elect to have the rating organization report on their behalf. Such insurers shall be named in the report.

(5) Self-insurers authorized to transact workers ' compensation insurance as provided in s. 440.02 shall report only Florida data as prescribed in paragraphs (a) through (e) of subsection (4) to the Division of Workers' Compensation of the Department of Labor and Employment Security.

(a) The Division of Workers ' Compensation shall publish the dates and forms necessary to enable selfinsurers to comply with this section .

(b) The Division of Workers ' Compensation shall report the information collected under this section to the Department of Insurance in a manner prescribed by the department.

(c) A statistical or rating organization may be used by self-insurers for the purposes of reporting the data required by this section and calculating experience ratings.

(6) The department shall analyze the information reported for the years 1982-1985 and shall report to the Legislature prior to August 1, 1986, on the sufficiency, by classification , of Florida experience for use in rating workers ' compensation insurance.

(7) The department shall provide a summary of information provided pursuant to subsections (2) and (4) in its annual report.

Hlstory.-s. 19, ch. 78- 300; s. 81 , ch. 79-40; s. 2, ch. 81-318; ss. 621 , 625, 809(2nd), ch. 82-243; s. 79, ch. 82- 386; s. 120, ch. 83-21 6; s. 25, ch. 83-288. •Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is

scheduled for review pursuant to s. 11 .61 in advance of that date. Note.-Former s. 624.435.

1627.915 Insurer experience reporting.-(1) Each insurer transacting private passenger auto

mobile insurance in this state shall report certain information annually to the department. The information will be due on or before July 1 of each year. The information

665


shall be divided into the following categories: bodily injury liability; property damage liability; uninsured motorist; personal injury protection benefits; medical payments; comprehensive and collision . The information given shall be on direct insurance writings in the state alone and shall represent total limits data. The information set forth in paragraphs (a) through (f) is applicable to voluntary private passenger and Joint Underwriting Association private passenger writings and shall be reported for each of the latest 3 calendar-accident years, with an evaluation date of March 31 of the current year. The information set forth in paragraphs (g) through U) is applicable to voluntary private passenger writings and shall be reported on a calendar-accident year basis ultimately s~ven times at seven different stages of development.

(a) Premiums earned for the latest 3 calendaraccident years.

(b) Loss development factors and the historic development of those factors.

(c) Policyholder dividends incurred. (d) Expenses for other acquisition and general ex

pense. (e) Expenses for agents' commissions and taxes, li

censes, and fees . (f) Profit and contingency factors as utilized in the

insurer's automobile rate filings for the applicable years. (g) Losses paid . (h) Losses unpaid. (i) Loss adjustment expenses paid. U) Loss adjustment expenses unpaid. (2) Each insurer transacting fire, homeowner's multi

ple peril, commercial multiple peril, medical malpractice, products liability, workers' compensation, private passenger automobile liability, commercial automobile liability, private passenger automobile physical damage, commercial automobile physical damage, officers' and directors' liability insurance, or other liability insurance shall report, for each such line of insurance, the information specified in this subsection to the department. The information shall be reported for direct Florida business only and shall be reported on a calendar-year basis annually by April 1 for the preceding calendar year:

(a) Direct premiums written . (b) Direct premiums earned. (c) Loss reserves for all known claims: 1. At beginning of the year. 2. At end of the year. (d) Reserves for losses incurred but not reported: 1. At beginning of the year. 2. At end of the year. (e) Allocated loss adjustment expense: 1 . Reserve at beginning of the year. 2. Reserve at end of the year. 3. Paid during the year. (f) Unallocated loss adjustment expense: 1. Reserve at beginning of the year. 2. Reserve at end of the year. 3. Paid during the year. (g) Direct losses paid. (h) Underwriting income or loss. (i) Commissions and brokerage fees . (j) Taxes, licenses, and fees.

(k) Other acquisition costs. (I) General expenses. (m) Policyholder dividends. (n) Net investment gain or loss and other income

gain or loss allocated pro rata by earned premium to Florida business utilizing the investment allocation formula contained in the National Association of Insurance Commissioner's Profitability Report by line by state.

(3) Each insurer transacting medical malpractice, private passenger automobile liability, commercial automobile liability, or other liability insurance shall annually submit separately, on forms prescribed by the department, annual statement data and data in ratemaking format for the following items:

(a) Premiums earned . (b) Loss payments. (c) Loss expense payments. (d) Losses unpaid . 1. Losses reported. 2. Losses incurred but not reported . (e) Loss expense unpaid . (f) The sum of the amounts provided as information

under paragraph (b) , paragraph (c), subparagraph (d)2. , and paragraph (e) .

(g) Such other data as are required to facilitate reconciliation of ratemaking and annual statement data reported under this subsection .

Insurers reporting under this subsection shall , in a form prescribed by the department, reconcile annual statement and ratemaking format data reported pursuant .to this subsection . The first year to be initially reported for private passenger automobile liability insurance is 1983. The initial years to be reported for other lines of insurance shall be as follows: 1983 for medical malpractice; 1983 for commercial automobile liability; and 1984 for other liability. Reports shall be submitted annually by the month and day prescribed by the department for the initial report but not later than August 1 of the year subsequent to the period reported in the most recent annual statement.

(4) There shall be no liability on the part of, and no cause of action of any nature shall arise against, any insurer reporting hereunder or its agents or employees or the department or its employees for any action taken by them pursuant to this section unless such action otherwise constitutes a violation of this code.

(5) The department shall provide a summary of information provided pursuant to subsections (1) and (2) in its annual report.

(6) Any insurer or insurer group which does not write at least 0.5 percent of the Florida market based on premiums written shall not have to file any report required by subsection (2) or subsection (3) other than a report indicating its percentage of the market share. That percentage shall be calculated by dividing the current premiums written by the preceding year's total premiums written in the state for that line of insurance.

History.-ss. 622, 809(2nd), ch . 82-243; ss. 71 , 79, ch. 82-386; s. 121 , ch. 83-216; s. 18, ch. 85-245; s. 2, ch. 86-140; s. 10, ch. 87-245.

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date. cf.-s. 635.091 Applicability of s. 627.915 to mortgage guaranty insurers.

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1627.917 Uniform risk classification reporting system for motor vehicle insurance.-

(1) The department shall establish and promulgate a uniform statewide reporting system to classify risks for the purpose of evaluating rates and premiums and for the purpose of evaluating competition and the availability of motor vehicle insurance in the voluntary market. The system shall divide risks into classifications based upon variations in hazards or expenses of claims. The classification system may include any difference among risks that can be demonstrated to have a probable effect upon losses or expenses, but in no event shall the system adopted by the department discriminate among risks based upon race, creed, color, or national origin . The classification system shall divide the state into geographical areas based upon hazards or expenses of claims.

(2) Each insurer shall annually file with the department a statement reflecting the total number of persons insured by the insurer within each classification by coverage, the premium volume in each classification by coverage, the paid and reserved losses incurred in each classification by coverage, the number of cancellations or nonrenewals by the insurer during the period, and the number of new insureds during the period. This statement shall be filed annually on a date determined by the department and shall cover a 1-year period .

(3) The department may promulgate rules to require each insurer to report its loss and expense experience by classification, in such detail and as often as may be necessary to aid the department in determining the reasonableness of rates, the validity of loss projections, and the validity of the risk classification system.

History.-s. 9, ch . 78-374: s. 2. ch . 81-318: ss. 357, 623, 809(2nd), ch . 82-243: s. 79, ch. 82-386.



627.9175 Reports of information on health insurance.-

1(1) Each health insurer shall submit annually to the department as to policies of individual health insurance:

(a) A summary of typical benefits, exclusions, and limitations for each type of individual policy form currently being issued in the state. The summary shall include, as appropriate:

1. The deductible amount; 2. The coinsurance percentage; 3. The out-of-pocket maximum; 4. Outpatient benefits; 5. Inpatient benefits; and 6. Any exclusions for preexisting conditions.

The department shall determine other appropriate benefits, exclusions, and limitations to be reported for inclusion in the consumer's guide published pursuant to this section.

(b) A schedule of rates for each type of individual policy form reflecting typical variations by age, sex, region of the state, or any other applicable factor which is in use and is determined to be appropriate for inclusion by the department.

The department shall provide by rule a uniform format for the submission of this information in order to allow for meaningful comparisons of premiums charged for comparable benefits. The department shall publish annually a consumer's guide which summarizes and compares the information required to be reported under this subsection.

1(2) For each health insurer, the department shall publish annually in the consumer's guide the percentages obtained by combining incurred claims and increase in policy reserves as a ratio to premiums earned for the most recent calendar year available, as set forth in the Life and Accident and Health Annual Statement as filed with the department. These ratios shall be shown for each of the following categories:

(a) Collectively renewable. (b) Noncancellable. (c) Guaranteed renewable. (d) Nonrenewable for stated reasons only. (e) Other accident only. (f) All other types of policies.

1(3) Each health insurer shall annually submit to the department available information related to physician charges. The department shall provide by rule a uniform format for the submission of this information in order to · allow for meaningful comparisons of physician charge data. The department, in conjunction with the health insurance industry and the Hospital Cost Containment Board, shall make an initial report to the 1985 regular session of the Legislature as to the feasibility of subdividing total physician charges by specialty and subdividing the most commonly used procedures by location in this state. The department shall provide information collec~ed under this subsection to the Hospital Cost Cc!'1t~inment Board for dissemination under the provisions of s. 395.504(9)(b).

2(4)(a) Every insurer transacting health insurance in this state shall report annually to the department, not later than April 1 , information relating to any measure the insurer has implemented or proposes to implement during the next calendar year for the purpose of containing health insurance costs or cost increases. The reports shall identify each measure and the forms to which the measure is applied, shall provide an explanation as to how the measure is used, and shall provide an estimate of the cost effect of the measure.

(b) The department shall promulgate forms to be used by insurers in reporting information pursuant to this subsection and shall utilize such forms to analyze the effects of health care cost-containment programs used by health insurers in this state.

(c) The department shall analyze the data reported under this subsection and shall annually make available to the public a summary of its findings as to the types of cost-containment measures reported and the estimated effect of these measures.

History.-ss. 28, 31 , ch. 84-35: ss. 8, 10, ch . 84-235. 1Note.-Expires October 1, 1992, pursuant to s. 31, ch. 84-35, and is scheduled

for review pursuant to s. 11 .61 in advance of that date. 2Note.-Expires October 1, 1992, pursuant to s. 10, ch. 84-235, and is scheduled

for review pursuant to s. 11 .61 in advance of that date.

1627.918 Reporting formats.-(1) The department shall require that the reporting

667


provided for in this part be made on forms established by the department or in a format compatible with its electronic data processing equipment.

(2) The reporting forms and formats established by the department shall not provide for repeated collection of identical information relating to a single independent data element except when repeated collection of such information is necessary to accomplish the purpose of the section under which the information is reported.

History.- ss. 624. 809(2nd), ch. 82- 243; s. 79, ch. 82- 386. 1Note.-Expires October t , 1992, pursuant to s. 809(2nd), ch. 82- 243, and is


1627.919 Maintenance of insurance data.-The department shall maintain data elements required in insurers ' annual statements and information reported by insurers pursuant to this part in a computer file which will be available for the generation of reports and calculations on a scheduled or demand basis by the department and Legislature. The acquisition by the department of data processing software, hardware, and services necessary to carry out the provisions of this section by the Treasurer's Management Information Center shall be exempt from the provisions of part I of chapter 287.

History.-ss. 624, 809(2nd), ch. 82-243; s. 79, ch. 82- 386. 1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


PART XVIII

LIFE MAINTENANCE CONTRACTS

627.9301 Life maintenance contracts ; purpose of part. 627 .9302 Authority to sell life, health, and disability in

surance. 627.9303 Life maintenance contracts ; minimum stand

ards. 627.9304 Benefits to insurer if minimum standards are

met. 627.9305 Applicability of other provisions.

1627.9301 Life maintenance contracts; purpose of part.-lt is the purpose of this part to encourage the issuance of insurance and the providing of services to persons that provide comprehensive coverage for the life, health, and disability of such persons. By authorizing the issuance of such coverage and by providing incentives to insurers to issue a life maintenance contract that meets certain minimum standards, the Legislature intends to maximize the financial incentive for insurers to maintain a person 's health, life, and ability to engage in gainful employment. It is also the intent to provide insurers with the authority to require insureds to maintain a healthy lifestyle as a condition of entitlement to a life maintenance contract.

Hlstory.-ss. 45, 46, ch. 85- 177. 1Note.-Expires October 1, 1991, pursuant to s. 46, ch. 85-177 , and is scheduled

for review pursuant to s. 11.61 in advance of that date.

1627.9302 Authority to sell life, health, and disability insurance.-

(1) No provision of the Florida Insurance Code shall be deemed to prohibit an insurer that is authorized to issue life and health insurance in Florida from selling an insurance policy that provides life insurance, health in-

surance, and disability income insurance within the same policy. The insurer sell ing any such policy shall separately rate each of these coverages for purposes of its accounting and reporting to the department.

(2) No provision of the Florida Insurance Code or chapter 641 shall be deemed to prohibit a health maintenance organization that has obtained a certificate of authority pursuant to part II of chapter 641 or a health insurer from engaging in a joint venture with an insurer authorized to issue life insurance in Florida in order to provide policyholders and subscribers, within the same contract, the benefits and services prescribed by part II of chapter 641 and life and disability income insurance underwritten by the insurer. Each of these coverages shall be separately rated for purposes of accounting and reporting to the department.

Hlstory.-ss. 45, 46, ch. 85-1 77. 1Note.- Expires October 1, 1991, pursuant to s. 46, ch. 85-177 , and is scheduled


1627.9303 Life maintenance contracts; minimum standards.-

(1) Any insurer or health maintenance organization in conjunction with an insurer that issues a policy or contract that meets the minimum standards listed in this section shall be granted the authority and privileges provided ins. 627 .9304 and shall name and market the policy or contract as a "life maintenance contract ," which name shall be prominently displayed on the face of the policy.

(2) Life insurance benefits of a life maintenance contract shall provide a minimum death benefit of $50,000 to each covered policyholder or subscriber for as long as the policyholder or subscriber is covered under the contract. Benefits shall be payable for death due to accidental and natural causes subject to exclusions normally included under life insurance policies subject to Florida law.

(3)(a) Health insurance benefits or services of a life maintenance contract shall provide either:

1. The minimum benefits of an individual health in-surance policy or contract required by parts II and VI of this chapter, if the policy or contract is issued to an individual , or the minimum benefits of a group health insurance policy required by parts II and VII of this chapter, if the policy or contract is issued to a group; or

2. The minimum benefits of a health maintenance organization contract required by part II of chapter 641.

(b) Health insurance benefits or services may be either paid for by the insurer or health maintenance organization or provided, either directly or through arrangement with other persons. An insurer may enter into contracts for alternative rates of payment with licensed health care providers as authorized by ss. 626.9541 (2) , 627.6375, and 627.6695.

(4) Benefits designed to maintain and improve the health of the policyholder or subscriber to a life maintenance contract shall be provided, including periodic physical examinations, access to exercise programs and facilities , programs designed to educate subscribers about healthy lifestyle habits and to aid subscribers in terminating unhealthy lifestyle habits, and other services for the advancement of the physical and mental well-being of the subscribers.

668


(5) Rehabilitation services, both physical and vocational , shall be provided to a subscriber for a period of at least 26 weeks when an injury or disease precludes the subscriber from earning wages equal to wages earned prior to the injury or disease.

(6) Disability income benefits of a life maintenance contract shall provide a replacement of at least 50 percent of the loss of gross income of a subscriber who becomes disabled. Such benefits must begin no later than 90 days after the policyholder or subscriber becomes disabled , and benefits must be payable to age 65. During the fi rst 2 years of a disability, the insured shall be deemed to be totally disabled if he is unable to perform the principal duties of his occupation . After the first 2 years of disability, the insured shall be deemed to be totally disabled if he is unable to perform the principal duties of his occupation and is not gainfully employed in any occupation. A proportionate benefit shall be paid for partial disability. The insured shall be deemed to be partially disabled if he is unable to perform one or more of the principal duties of his occupation or if he is unable to spend as much time at his occupation as he did before the disability started .

(7) Conversion privileges shall be available to any person insured under the contract whose coverage is canceled or otherwise terminates, as provided in ss. 627 .566, 627.567, and 627.6675.

History.-ss. 45, 46, ch. 85-177. 1Note.-Expires October 1, 1991 , pursuant to s. 46, ch. 85-177, and is scheduled


1627.9304 Benefits to insurer if minimum standards are met.-An insurer or health maintenance organization in conjunction with an insurer that issues a life maintenance contract meeting the minimum standards of s. 627.9303 shall be granted the following authority and privileges :

(1) The life maintenance contract shall be exempt from all rate regulation . This subsection shall not be deemed to exempt such contract , insurer, or other organization from the requirements relating to the establishment of reserves or other requirements relating to the solvency of the insurer or other organization other than the authority of the department to approve or disapprove the rate for the contract.

(2)(a) The insurer or organization shall be authorized to require subscribers to follow prescribed conditions of maintaining a healthy lifestyle as a condition of remaining covered under the life maintenance contract. Such conditions shall be reasonable requirements , as approved by the department, for improving health and prolonging life, such as exercise and diet requirements, prohibitions against smoking , and any other such conditions. Reasonable methods of verifying that such conditions are being followed may be imposed.

(b) If a contract is issued covering the insured and one or more dependents, the insurer may cancel or refuse to renew the coverage of any one or more of the insured and the dependents for failure to follow the prescribed conditions of maintaining a healthy lifestyle.

(3) The insurer or organization may issue the group life maintenance contracts to any type of group and shall not be limited to those groups authorized in parts IV and VII of this chapter.

History.- ss. 45, 46, ch. 85-177. 1Note.- Expires October 1, 1991, pursuant to s. 46, ch. 85- 177, and is scheduled


1627.9305 Applicability of other provisions.- The insurer or health maintenance organization shall be subject to all requirements of the Florida Insurance Code or, if applicable, part II of chapter 641 , except where such provisions are in conflict with this part.

History.-ss. 45, 46, ch. 85-177. 'Note.-Expires October 1, 1991, pursuant to s. 46, ch . 85-177 , and is scheduled


627.941 627.942 627.943 627 .944

627 .945 627 .946 627.947

627.948

627.949

627.950

627 .951

627.952 627.953

627.954

PART XIX

PURCHASING GROUPS AND RISK RETENTION GROUPS

Purpose. Definitions. Risk retention groups certified in Florida. Risk retention groups not certificated in this

state. Compulsory association. Countersignatures not required . Purchasing groups; exemption from certain

insurer provisions. Notice and registration requirements of pur

chasing groups. Restrictions on insurance purchased by pur

chasing groups. Administrative and procedural authority re

garding risk retention and purchasing groups.

Penalties; cease and desist orders; injunctions.

Risk retention and purchasing group agents. Binding effect of orders issued in U.S. District

Court. Rules.

1627.941 Purpose.-The purpose of this part is to regulate the formation or operation of risk retention groups and purchasing groups in this state.

History.-ss. 2, 5, ch . 87- 282. 'Note.- Expires October 1, 1992, pursuant to s. 5, ch. 87- 282, and is scheduled


1627.942 Definitions.-As used in this part, unless the context otherwise requires:

(1) "Completed operations liability" means liability arising out of the installation , maintenance, or repair of any product at a site which is not owned or controlled by:

(a) Any person who performs that work; or (b) Any person who hires an independent contractor

to perform that work; but shall include liability for activities which are completed or abandoned before the date of the occurrence giving rise to the liability.

(2) "Domicile," for purposes of determining the state in which a purchasing group is domiciled, means:

(a) For a corporation, the state in which the purchasing group is incorporated; or

(b) For an unincorporated entity, the state of its principal place of business.

669


(3) "Hazardous financial condition" means that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able:

(a) To meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or

(b) To pay other obligations in the normal course of business.

(4) "Liability" means legal liability for damages, including costs of defense, legal costs and fees , and other claims expenses, because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of:

(a) Any business, whether for profit or nonprofit, trade, product, services (including professional services), premises, or operations; or

(b) Any activity of any state or local government, or any agency or political subdivision thereof.

The term "liability" does not include personal risk liability or workers' compensation and employer's liability with respect to employees other than legal liability under the Federal Employers' Liability Act (45 U.S.C. 51 et seq .).

(5) "Personal risk liability" means liability for damages because of injury to any person, damage to property, or other loss or damage resulting from any personal, familial, or household responsibilities or activities, rather than from responsibilities or activities referred to in subsection (4) under the definition of "liability."

(6) "Plan of operation or a feasibility study" means an analysis which presents the expected activities and results of a risk retention group, including, at a minimum:

(a) For each state in which it intends to operate, the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer.

(b) Historical and expected loss experience of the proposed members and national experience of similar exposures to the extent that this experience is reasonably available.

(c) Pro forma financial statements and projections. (d) Appropriate opinions by a qualified, independent

casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition.

(e) Identification of management, underwriting procedures, managerial oversight methods, and investment policies.

(f) Information sufficient to verify that the members are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations.

(g) Such other matters as may be requested by the department.

(7) "Product liability" means liability for damages because of any personal injury, death, emotional harm, consequential economic damage, or property damage, including damages resulting from the loss of use of property, arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of

a product, but does not include the liability of any person for those damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred .

(8) "Purchasing group" means any group which: (a) Has as one of its purposes the purchase of liabili

ty insurance on a group basis . (b) Purchases such insurance only for its group

members and only to cover their similar or related liability exposure, as described in paragraph (c).

(c) Is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations.

(d) Is domiciled in any state. (9) "Risk retention group" means any corporation or

other limited liability association: (a) Whose primary activity consists of assuming and

spreading all or any portion of the liability exposure of its group members .

(b) Which is organized for the primary purpose of conducting the activity described in paragraph (a) .

(c) Which: 1. Is certificated or licensed as a liability insurance

company and authorized to engage in the business of insurance under the laws of any state; or

2. Before January 1, 1985, was certificated or li-censed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and before such date had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability, as such terms were defined in the Product Liability Risk Retention Act of 1981, before the date of the enactment of the Risk Retention Act of 1986.

(d) Which does not exclude any person from membership in the group solely to provide for members of such a group a competitive advantage over such a person.

(e) Which: 1. Has as its sole owners all persons who comprise

the membership of the risk retention group and who are provided insurance by the risk retention group; or

2. Has as its sole owner an organization which has as:

a. Its members only persons who comprise the membership of the risk retention group.

b. Its owners only persons who comprise the membership of the risk retention group and who are provided insurance by the risk retention group.

(f) Whose members are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar, or common business, trade, products, services, premises, or operations.

(g) Whose activities do not include the provision of insurance other than:

670


1. Liability insurance for assuming and spreading all or any portion of the liability of its group members.

2. Reinsurance with respect to the liability of any other risk retention group, or any members of such other group, which is engaged in businesses or activities so that the group or members meets the requirement described in paragraph (f) for membership in the risk retention group which provides such reinsurance.

(h) The name of which includes the phrase "Risk Retention Group."

(10) "State" means any state of the United States or the District of Columbia.

History.-ss. 2, 5, ch. 87-282. pursuant to s. 11 .61 . 1Note.-Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheduled


1627.943 Risk retention groups certified in Florida. (1) A risk retention group seeking to be certified in

this state shall first obtain a permit pursuant to chapter 628. The risk retention group shall then be organized as a limited liability association or corporation under the laws of this state and shall obtain and maintain a certificate of authority as a domestic insurer authorized to write only liability insurance by the Florida Insurance Code and, except as provided elsewhere in this part, shall comply with all of the provisions of the Florida Insurance Code, rules , statutes, and other laws applicable to domestic liability insurers, including requirements governing the use of agents, and with the provisions of s. 627.944 to the extent the provisions of s. 627.944 are not a limitation on the applicable provisions of the Florida Insurance Code and related rules or other statutory or legal requirements of this state.

(2) Before it may offer insurance in any state, each risk retention group shall also submit for approval to the department a plan of operation or a feasibility study. Before additional lines of liability insurance are offered in this or any other state approval shall be obtained from the department.

(3) A proposed risk retention group shall provide to the department a summary of the application for a certificate of authority at the time it files the application. The summary information shall include the name of the risk retention group, the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group, the amount and nature of initial capitalization, and the states in which the group intends to operate. A copy of the summary shall be provided by the department to the National Association of Insurance Commissioners.

(4) Domestic risk retention groups shall be subject to all taxes imposed on domestic insurers.

(5) Domestic risk retention groups shall be subject to the provisions of s. 627.944(7), (8), and (9).

History.-ss. 2, 5, ch. 87-282. 1Note.-Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheduled

for review pursuant to s. 11.61.

1627.944 Risk retention groups not certificated in this state.-Risk retention groups certificated or licensed in states other than this state and seeking to do business as a risk retention group in this state must observe and abide by the laws of this state as follows:

671

(1) NOTICE OF OPERATIONS AND DESIGNATION OF COMMISSIONER AS AGENT.-Before offering insurance in this state, a risk retention group shall submit to the department:

(a) A statement identifying the state or states in which the risk retention group is certificated or licensed as a liability insurance company, date of certification or licensing, its principal place of business, and such other information, including information on its membership, as the department may require to verify that the risk retention group is qualified as a risk retention group under the provisions of this part.

(b) A copy of its plan of operations or a feasibility study and revisions of such plan or study submitted to its state of domicile; provided, however, that the provision relating to the submission of a plan of operation or a feasibility study shall not apply with respect to any line or classification of liability insurance which was defined in the Product Liability Risk Retention Act of 1981 before October 27, 1986, and which 21iability insurance was offered before such date by any risk retention group which had been certificated or licensed and operating for not less than 3 years before such date.

(c) A statement of registration which designates the Insurance Commissioner and Treasurer or his designee as its agent for the purpose of receiving service of legal documents of process.

(2) FINANCIAL CONDITION.-Any risk retention group doing business in this state shall submit to the department:

(a) A copy of the group's financial statement submitted to its state of domicile, which shall be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a qualified loss reserve specialist under criteria established by rule of the department after considering any criteria established by the National Association of Insurance Commissioners.

(b) A copy of each examination of the risk retention group as certified by the insurance commissioner or public official conducting the examination .

(c) Upon request by the department, a copy of any audit performed with respect to the risk retention group.

(d) Such information as may be required to verify its continuing qualification as a risk retention group under the provisions of this part.

(3) TAXATION.-AII premiums paid for insurance or coverages on risks located within this state to a risk retention group shall be subject to taxation at the same rate and subject to the same interest, fines, and penalties for nonpayment as that applicable to eligible surplus lines insurers. Each agent utilized in any transaction shall report and pay the taxes for the premiums for risks which they have placed with or on behalf of a risk retention group not certificated in this state. In the event that an agent fails to pay the tax, each risk retention group shall pay the tax for insured or covered risks located within this state. Further, each risk retention group shall report all premiums paid to it for insured or covered risks located within this state.

(4) COMPLIANCE WITH UNFAIR CLAIM SETTLEMENT PRACTICES LAW.-Any risk .retention group, its


agents, and its representatives shall comply with the unfair claim settlement practices law of this state as set forth ins. 626.9541(1)(i).

(5) DECEPTIVE, FALSE, OR FRAUDULENT PRACTICES.-Any risk retention group shall comply with and be subject to the laws of this state regarding deceptive, false, or fraudulent acts or practices, including the provisions of part X of chapter 626. If the department seeks an injunction regarding conduct in violation of these laws, the injunction may be obtained from any Florida court of competent jurisdiction.

(6) EXAMINATION REGARDING FINANCIAL CONDITION.-Any risk retention group must submit to an examination by the department to determine its financial condition if the insurance commissioner of the jurisdiction in which the group is certificated or licensed has not initiated an examination or does not initiate an examination within 30 days after a request by the department. Any examination shall be coordinated to avoid unjustified repetition and conducted in an expeditious manner.

(7) NOTICE TO PURCHASERS.-Any policy issued by a risk retention group shall contain in 10-point type on the front page and the declaration page, the following provision:

"Notice, this policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group."

(8) PROHIBITED ACTS REGARDING SOLICITATION OR SALE.- The following acts by a risk retention group are hereby prohibited :

(a) The solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in the group.

(b) The solicitation or sale of insurance by, or operation of, a risk retention group that is in a hazardous financial condition or is financially impaired.

(9) PROHIBITED OWNERSHIP BY AN INSURANCE COMPANY.-No risk retention group shall be allowed to do business in this state if an insurer is directly or indirectly a member or owner of the risk retention group, other than in the case of a risk retention group all of whose members are insurers.

(10) PROHIBITED COVERAGE.-No risk retention group may offer insurance coverage prohibited by the Florida Insurance Code or declared unlawful by the highest court of this state.

(11) DELINQUENCY PROCEEDINGS.-A risk retention group not domiciled in this state but doing business in this state shall comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by the department if there has been a finding of financial impairment after an examination under subsection (6).

(12) UTILIZATION OF AGENT.-A risk retention group shall utilize an agent licensed in this state in order to solicit, transact, underwrite, or provide insurance on a risk of a group member, which risk is located in this state.

Hlatory.-ss. 2, 5, ch. 87-282. •Note.-Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheduled

for review pursuant to s. 11 .61 . •Note.-The words 'liability insurance' were added by the editors.

1627.945 Compulsory association.-(1) No risk retention group shall be permitted to join

or contribute financially to any insurance insolvency guaranty fund, or similar mechanism, in this state, nor shall any risk retention group, or its insured, receive any benefit from any such fund for claims arising out of the operations of the risk retention group.

(2) A risk retention group shall participate in this state's joint underwriting associations as established under ss. 627.311 (3) and 627.351 (1 ), (3), (4), and (5) .

Hlatory.-ss. 2, 5, ch. 87-282. 1Note.-Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheduled

for review pursuant to s. 1 1 .61 .

1627.946 Countersignatures not required.-A policy of insurance issued to a risk retention group or any member of that group shall not be required to be countersigned by a resident agent notwithstanding any other provision of the Florida Insurance Code to the contrary.

Hiatory.-ss. 2, 5, ch . 87-282. •Note.-Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheduled


1627.947 Purchasing groups; exemption from certain insurer provisions.-Any purchasing group meeting the criteria established under the provisions of the Federal Liability Risk Retention Act of 1986 shall be exempt from any law of this state relating to the creation of groups for the purchase of insurance or to prohibition of group purchasing or to any law that would discriminate against a purchasing group or its members. In addition, an insurer shall be exempt from any law of this state which prohibits providing, or offering to provide, to a purchasing group or its members advantages based on their loss and expense experience not afforded to other persons with respect to rates, policy forms, coverages, or other matters. A purchasing group shall be subject to all other applicable laws of this state, including the provisions of the Florida Insurance Code not in conflict with the purposes of this part or with the provisions of the Federal Liability Risk Retention Act of 1986.

Hlstory.-ss. 2, 5, ch. 87-282. •Note.-Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheduled


1627.948 Notice and registration requirements of purchasing groups.-

(1) A purchasing group which intends to do business in this state shall furnish notice to the department which shall:

(a) Identify the state in which the group is domiciled. (b) Specify the lines and classifications of liability in

surance which the purchasing group intends to purchase.

(c) Identify the insurance company or companies from which the group intends to purchase its insurance and the domicile of such company or companies.

(d) Identify the principal place of business of the group.

(e) Provide such other information as may be required by the department to verify that the purchasing group is qualified as a purchasing group under the provisions of this part.

672


(2) The purchasing group shall register with and designate the Insurance Commissioner and Treasurer or his designee as its agent solely for the purpose of receiving service of legal documents or process. This requirement shall not apply in the case of a purchasing group:

(a) Which: 1. Was domiciled before April 1 , 1986. 2. Is domiciled on and after October 27, 1986, in any

state of the United States. (b) Which: 1 . Before October 27, 1986, purchased insurance

from an insurance carrier licensed in any state; and 2. Since October 27, 1986, purchased its insurance

from an insurance carrier licensed in any state. (c) Which was a purchasing group under the re

quirements of the Product Liability Risk Retention Act of 1981 before October 27, 1986.

(d) Which does not purchase insurance that was not authorized for purposes of an exemption under that act, as in effect before October 27, 1986.

History.-ss. 2, 5, ch . 87-282. 1Note.-Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheduled


1627.949 Restrictions on insurance purchased by purchasing groups.-

(1) In order to purchase insurance or coverage for a risk located in this state, which risk is a subject of insurance of a member of the purchasing group, a purchasing group shall only purchase insurance or coverage from:

(a) A risk retention group that is certificated or li-censed in one of the states of the United States;

(b) An authorized insurer; or (c) An eligible surplus lines insurer. (2) A purchasing group shall utilize an agent li

censed in this state in order to solicit, transact, or purchase insurance or coverage for a risk located in this state, which risk is a subject of insurance of a member of the purchasing group.

History.-ss. 2, 5, ch. 87-282. 1Note.-Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheduled


1627.950 Administrative and procedural authority regarding risk retention and purchasing groups.-The department is authorized to make use of any of the powers established under the Florida Insurance Code to enforce the laws of this state so long as those powers are not specifically preempted by the Product Liability Risk Retention Act of 1981 as amended by the Risk Retention Amendments of 1986. This includes, but is not limited to, the department's administrative authority to investigate, issue subpoenas, conduct depositions and hearings, issue orders, and impose penalties. With regard to any investigation, administrative proceedings, or litigation, the department may rely on the procedural law and regulations of the state. The injunctive authority of the department in regard to risk retention groups is restricted to the extent that any injunction shall be issued by a court of competent jurisdiction.

Hlatory.-ss. 2, 5, ch. 87-282. 1Note.-Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheduled


1627.951 Penalties; cease and desist orders; injunctions.-

(1) A risk retention group which violates any applicable provision of the Florida Insurance Code shall be subject to fines and penalties applicable to licensed insurers generally, including revocation of its license or the right to do business in this state. In addition, any such risk retention group shall be subject to the issuance of a cease and desist order of the department or an injunction issued by a court of competent jurisdiction prohibiting such violation or prohibiting the soliciting, selling, or transacting of insurance or otherwise operating or conducting business in this state in violation of the laws of this state. The department may obtain an order from a court of competent jurisdiction to enjoin a risk retention group from further operation or from transacting insurance in this state if the risk retention group is in hazardous financial condition or financially impaired or to enjoin a risk retention group from the soliciting, selling, or transacting of insurance with respect to any person who is not eligible for membership in the group under state or federal law.

(2) A purchasing group which violates any applicable provision of the Florida Insurance Code shall be subject to fines and penalties applicable to licensed insurers and agents generally. In addition, any such purchasing group shall be subject to the issuance of a cease and desist order of the department or an injunction issued by any court of competent jurisdiction prohibiting the soliciting, selling, transacting, or purchasing of insurance or otherwise operating or conducting business in this state.

Hlstory.-ss. 2, 5, ch. 87-282. 1Note.-Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheduled

for review pursuant to s. 11.61 .

1627.952 Risk retention and purchasing group agents.-

(1) Any person offering, soliciting, selling, purchasing, administering, or otherwise servicing insurance contracts, certificates, or agreements for any purchasing group or risk retention group to any resident of this state, either directly or indirectly, by the use of mail, advertising, or other means of communication, shall obtain a license to act as a resident general lines agent, if a resident of this state, or a nonresident general lines agent if not a resident. Any such person shall be subject to all requirements of the Florida Insurance Code.

(a) All books, records, statements, and accounts required to be established and maintained with respect to activities described in this subsection shall be established and maintained on a segregated basis, separate and apart from all other books, records, statements, and accounts regarding the agent's other transactions.

(b) Any person required to be licensed by this subsection, in order to place business through Florida eligible surplus lines carriers, shall, if a resident of this state, be licensed as a surplus lines agent. Any such person, if not a resident of this state, shall be licensed as a surplus lines agent in his state of residence and shall file and thereafter maintain a fidelity bond in favor of the people of the State of Florida executed by a surety company admitted in this state and payable to the State of Florida; provided, however, any activities carried out by

673


such nonresident pursuant to this part shall be limited to the provision of insurance for purchasing groups. The bond shall be continuous in form and maintained in the amount set out in s. 626.928. The bond shall remain in force and effect until the surety is released from liability by the department or until the bond is canceled by the surety. The surety may cancel the bond and be released from further liability thereunder upon 30 days' prior written notice to the department. The cancellation shall not affect any liability incurred or accrued thereunder before the termination of the 30-day period . Upon receipt of a notice of cancellation, the department shall immediately notify the agent.

(2) In addition to any other lawful duties, any person engaging in the activities described in subsection (1) is obligated to exercise reasonable and customary skill and diligence to ascertain that any purchasing group or purchasing group member, to or for whom an offer or solicitation is made with respect to coverage being placed with a risk retention group, receives a written disclosure that the liability insurance coverage being offered may not be subject to all of the insurance laws and rules of this state and that insolvency guaranty fund protection is not available for the purchasing groups or purchasing group members.

(3) Any insurance agent who breaches a fiduciary duty; who solicits , offers, sells , transacts , or purchases insurance coverage from a risk retention group which is not in compliance with the applicable provisions of this part ; or who violates any provision of the Florida Insurance Code shall be subject to fine and revocation or suspension of his license, in accordance with the procedures established under the Florida Insurance Code and may be held liable for civil damages to any person or group resulting from such violation or breach of a fiduciary duty.

(4) Any person retained or employed to solicit , offer, sell , or purchase memberships in a purchasing group

may be ordered to cease any such enrollment activity in this state whenever the department has reason to believe that any such purchasing group has liability insurance coverage from a risk retention group or insurance company which is insolvent or in a hazardous financial condition . Orders entered under this subsection shall be issued in accordance with the procedures set forth in s. 627.951 .

(5) Any person licensed as an agent to act on behalf of a risk retention group or a purchasing group shall be licensed with at least one authorized property and casualty insurer.

(6) Any person licensed as an agent to act on behalf of a risk retention group or a purchasing group shall , except as otherwise provided in this part , be subject to all provisions of the Florida Insurance Code applicable to the type of agent 's license held by such person.

History.-ss. 2, 5, ch. 87- 282. 'Note.-Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheculed


1627.953 Binding effect of orders issued in U.S. District Court.-An order issued by any district court of the United States enjoining a risk retention group from transacting , soliciting, or selling insurance or from operating in any state or in all states or in any territory or possession of the United States, upon a finding that such a group is in a hazardous financial condition, shall be enforceable in the courts of this state.

Hlstory.-ss. 2, 5, ch . 87-282. •Note.-Expires October 1, 1992, pursuant to s. 5, ch . 87-282, and is scheduled


1627.954 Rules.-The department may establish and from time to time amend such rules relating to risk retention groups and purchasing groups as may be necessary or desirable to carry out the provisions of this part.

History.- ss. 2, 5, ch. 87-282. •Nota.- Expires October 1, 1992, pursuant to s. 5, ch. 87-282, and is scheduled


674

F.S. 1987

628.011 628.021 628.031 628.041 628.051

628.061 628.071 628.081 628.091 628.101

628.111

628.121 628.131

628.151 628.152

628.161 628.171 628.181

628.191

628.201 628.221 628.231 628.251

628.255

628.261 628.271

628.281

628.291 628.301 628.311 628.321

STOCK AND MUTUAL INSURERS; HOLDING COMPANIES Ch.628

CHAPTER 628

STOCK AND MUTUAL INSURERS; HOLDING COMPANIES

PART I STOCK AND MUTUAL INSURERS; ORGANIZATION AND CORPORATE PROCEDURES (ss. 628.011-628.535)

PART II INSURANCE HOLDING COMPANIES (ss. 628.801-628.803)

PART Ill CAPTIVE INSURERS (ss. 628.901-628.917)

PART I

STOCK AND MUTUAL INSURERS; ORGANIZATION AND CORPORATE

PROCEDURES

Scope of part. "Stock insurer" defined. "Mutual insurer" defined. Applicability of general corporation statutes. Application for permit to form insurer; con-

tents ; fee. Investigation of proposed organization. Granting, denial of permit. Incorporation of domestic insurer. Filing , approval of articles of incorporation . Amendment of certificate of incorporation ;

stock insurer. Amendment of articles of incorporation; mu

tual insurer. Capital stock; amount; payment. Limitation on organization and stock sales

expenses. Insurance business exclusive. Domestic stock insurers; proxies, consents,

and authorizations with respect to any voting security.

Initial qualifications; domestic mutuals . Formation of mutual insurer; bond. Applications for insurance in formation of

mutual insurer. Formation of mutual insurer; trust deposit of

premiums; issuance of policies. Proposed mutual insurer; failure to qualify. Bylaws of mutual insurer. Directors; number, election. Management and exclusive agency con

tracts . Person with effective control cannot receive

commission unless contract approved ; penalties.

Notice of change of director or officer. Office and records ; penalty for unlawful re

moval of records. Exceptions to requirement that office, rec

ords, and assets be maintained in this state.

Unauthorized transactions in other states. Membership in mutual insurer. Contingent liability of mutual members . Levy of contingent liability.

628.331 628.341 628.351

628.361 628.371 628.381 628.391 628.401 628.411 628.421 628.431 628.4314

628.441 628.451 628.461 628.4615

628.471

628.481 628.491

628.501

628.511 628.520 628.525 628.530 628.535

Enforcement of contingent liability. Nonassessable policies; mutual insurers. Nonassessable policies ; revocation of au-

thority of mutual insurer. Participating policies. Dividends to stockholders . Dividends to mutual policyholders. Illegal dividends; penalty. Borrowed surplus. Impairment of capital or assets. Assessment of stockholders or members . Mutualization of stock insurers. Mutualization of nonprofit health care ser-

vices plan corporations. Converting mutual insurer. Merger or consolidation of stock insurers. Acquisition of controllingstock. . Allied lines insurers; acqu1S1t1on of controlling

stock, ownership interest, assets, or con-trol; merger or consolidation . .

Mergers and consolidations; mutual Insurers.

Bulk reinsurance; stock insurers. Mergers and consolidations; mutual insur

ers· agreement of bulk reinsurance. Mutu~l member 's share of assets on liquida-

tion . Book entry accounting system. Change of domicile of a foreign .insurer. Change of domicile of a domestic Insurer. Effects of redomestication . Authority to promulgate rules.

1628.011 Scope of part.-This part applies only to domestic stock insurers, mutual insurers, and capt1ve Insurers, except that s. 628.341 (2) applies also as to foreign and alien insurers .

Hletory.-s. 621 , ch . 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-31 8; ss. 631, 665, 809(1st), ch. 82- 243; s. 3, ch. 85-21 4. .

•Note.-Expires October 1, 1991, pursuant to s. 809(1st), ch. 82- 243, and 1s scheduled for review pursuant to s. 11.61 1n advance of that date.

1628.021 "Stock insurer" defined.-A "stock insurer" is an incorporated insurer with its capital divided into shares and owned by its stockholders .

Hletory.- s. 622, ch. 59-205; s. 3, ch. 76- 168; s. 1, ch. 77- 457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243.

•Note.-Repealed effective October 1, .1 991, by s. 809(1st), ch. 82- 243, and scheduled for review pursuant to s. 11 .61 m advance of that date.

1628.031 "Mutual insurer" defined.-A "mutual insurer" is an incorporated insurer without permanent capital stock, the governing body of which IS elected 1n ac-

675

Ch.628 STOCK AND MUTUAL INSURERS; HOLDING COMPANIES F.S. 1987

cordance with this part. Hlstory.-s. 623, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch .

81-318; ss. 665, 809(1st), ch. 82-243; s. 4, ch . 85-214. 1Note.-Repealed effective October 1, 1991, by s. 809(1st), ch. 82-243, and


1628.041 Applicability of general corporation statutes.-The applicable statutes of this state relating to the powers and procedures of domestic private corporations formed for profit shall apply to domestic stock insurers and to domestic mutual insurers, except:

(1) As to any domestic mutual insurers incorporated pursuant to chapter 617, which chapter shall govern such insurers when in conflict with chapter 607; and

(2) When in conflict with the express provisions of this code.

History.-s. 624, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 633,665, 809(1st), ch. 82-243.

•Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.051 Application for permit to form insurer; contents; fee.-

(1) No domestic insurer shall be formed unless the persons so proposing have received a permit from the department.

(2) Written application for such permit shall be filed with the department. Such application and filing shall include:

(a) The name, type, and purpose of insurer. (b) The name, residence address, business back

ground, and qualifications of each person associated or to be associated in the formation or financing of the insurer.

(c) A full disclosure of the terms of all understandings and agreements existing or proposed among persons so associated relative to the insurer, or the formation or financing thereof, accompanied by a copy of each such agreement or understanding.

(d) A full disclosure of the terms of all understandings and agreements existing or proposed for management or exclusive agency contracts.

(e) A copy of all proposed articles or certificates of incorporation and proposed bylaws of the proposed insurer.

(f) A copy of all articles or certificates of incorporation of involved corporations, if a copy of the same is not already on file in the department.

(g) A copy of all syndicate, association , firm, partnership, organization, or other similar agreements, by whatever name called, involved in the formation of the proposed insurer or its financing.

(h) If the applicant is a reciprocal insurer, a copy of the power of attorney and of other agreements existing or proposed as affecting investors, subscribers, the attorney in fact, or the applicant.

(i) A copy of any security, or of any proposed document evidencing any right or interest, proposed to be offered.

(j) Such other pertinent information and documents as reasonably requested by the department.

(3) The application shall be accompanied by the filing fee specified in s. 624.501.

Hlstory.-s. 625, ch. 59-205; ss. 13, 35, ch. 69- 106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 634, 665, 809(1st), ch. 82-243.

•Note.-Expires October 1, 1991 , pursuant to s. 809(1 st), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1628.061 Investigation of proposed organization.ln connection with any proposal to incorporate a domestic insurer, the department shall make an investigation of:

(1) The character, reputation, financial standing, and motives of the organizers, incorporators, and subscribers organizing the proposed insurer.

(2) The character, financial responsibility, insurance experience, and business qualifications of its proposed officers.

(3) The character, financial responsibility, business experience, and standing of the proposed stockholders and directors.

Hlatory.-s. 626, ch. 59-205; ss. 13, 35, ch . 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 635, 665, 809(1st), ch. 82-243.

1Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.071 Granting, denial of permit.-(1) The department shall expeditiously examine and

investigate the application for a permit as referred to in s. 628.051. If the department finds that:

(a) The application is complete; (b) The documents therewith filed are in compliance

with law; (c) The proposed financial structure is adequate;

and (d) The proposed officers and directors have suffi

cient insurance experience, ability, and standing to assure reasonable promise of successful operation;

it shall issue to the appiicant a permit to form the proposed insurer.

(2) If the department does not so find, or finds that the insurer if formed or financed would not be able to qualify for or retain a certificate of authority by reason of the provisions of s. 624.404(3), a permit shall not be granted.

(3) A permit granted under the provisions of this section shall be valid for 1 year from the date of issue, and during any extension of such period, not to exceed an additional year, as may be authorized by the department upon cause shown. The articles of incorporation and all other proceedings thereunder shall become void 1 year from the issue date of such permit or upon the expiration of such extended period, unless the formation of the proposed insurer has been completed and a certificate of authority has been issued by the department.

Hlstory.-s. 627, ch. 59-205; s. 1, ch. 63-18; ss. 13, 35, ch . 69-106; s. 3, ch. 76-168; s. 1, ch. 77 -457; s. 21 , ch. 78-95; ss. 2, 3, ch. 81-318; ss. 636, 665, 809(1 st), ch. 82-243; s. 122, ch. 63-216.


1628.081 Incorporation of domestic insurer.-(1) Five or more individuals, none of whom is less

than 18 years of age, may incorporate a stock insurer; 10 or more individuals, none of whom is less than 18 years of age, may incorporate a mutual insurer. At least a majority of the incorporators shall be citizens of the United States.

(2) The incorporators shall execute articles of incorporation in triplicate. At least three of them shall acknowledge execution before an officer authorized to take acknowledgments.

676

F.S. 1987 STOCK AND MUTUAL INSURERS; HOLDING COMPANIES Ch.628

(3) The articles of incorporation shall state the purpose for which the corporation is formed and shall state and show:

(a) The name of the corporation. (b) The duration of its existence, which may be per

petual. (c) The kinds of insurance which the corporation is

formed to transact. (d) If a stock corporation, its authorized capital

stock, the number of shares of stock into which divided, and the par value of each such share, which par value shall be at least $1 but not more than $100.

(e) If a mutual corporation, the maximum contingent liability of its members, other than as to nonassessable policies, for payment of losses and expenses incurred; such liability shall be as stated in the articles of incorporation but shall not be less than 1 nor more than 10 times the premium for the member's policy at the annual premium rate for a term of 1 year.

(f) The number of directors, not less than five, who shall constitute the board of directors and conduct the affairs of the corporation; also, the names, addresses, and terms of the members of the initial board of directors. The term of office of initial directors shall not be for more than 1 year after the date of incorporation .

(g) The name of the county, and the city, town, or place within the county, in which its principal office or principal place of business is to be located in this state.

(h) Such other provisions, not inconsistent with law, deemed appropriate by the incorporators.

(i) The name and residence address of each incorporator and the citizenship of each incorporator who is not a citizen of the United States.

History.-s. 628, ch. 59-205; s. 3, ch. 76-168; s. 58, ch. 77-121; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 637 , 665, 809(1st), ch. 82-243.

'Note.-Expires October 1, 1991, pursuant to s. 809(1st), ch . 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1628.091 Filing, approval of articles of incorporation.-

(1) No domestic stock or mutual insurer shall be formed unless its articles of incorporation are approved by the department prior to filing the same with and approval by the Department of State as provided by law.

(2) The incorporators shall file the triplicate originals of the articles of incorporation with the department, accompanied by the filing fee specified in s. 624.501.

(3) The department shall promptly examine the articles of incorporation. If it finds that the articles of incorporation conform to law, and that a permit has been or will be issued, it shall endorse its approval on each of the triplicate originals of the articles of incorporation, retain one copy for its files, and return the remaining copies to the incorporators for filing with the Department of State.

(4) If the department does not so find, it shall refuse to approve the articles of incorporation and shall return the originals.

History.-s. 629, ch. 59-205; ss. 10, 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21 , ch. 78-95; ss. 2, 3, ch. 81-318; ss. 638,685, 809(1st), ch. 82-243. •Note.-Expires October 1, 1991, pursuant to s. 809(1st), ch. 82-243, and is

scheduled for review pursuant to s. 11 .61 in advance of that date .

1628.101 Amendment of certificate of incorporation; stock insurer.-A domestic stock insurer shall not amend its certificate of incorporation until a copy of the

proposed amendment has been filed with and approved by the department. The department shall promptly examine any such proposed amendment and shall approve the same unless it finds that the proposed amendment does not comply with law.

History.-s. 630, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 639, 685, 809(1st), ch. 82-243.

'Note.-Expires October 1, 1991, pursuant to s. 809(1st), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1628.111 Amendment of articles of incorporation; mutual insurer.-

(1) A domestic mutual insurer may amend its articles of incorporation by vote of a majority of those members present or represented by proxy at a lawful meeting of its members, if the notice given members included due notice of the proposal to amend.

(2)(a) Upon adoption of the amendment, the insurer shall make in triplicate under its corporate seal a certificate thereof, setting forth the amendment and the date and manner of the adoption thereof, which certificate shall be executed by the insurer's president or vice president and secretary or assistant secretary and acknowledged before an officer authorized to take acknowledgments. The insurer shall deliver the triplicate originals of the certificate to the department, together with the filing fee specified in s. 624.501.

(b) The department shall promptly examine the certificate of amendment; and , if it finds that the certificate and the amendment comply with law, it shall endorse its approval upon each of the triplicate originals, place one on file in its office, and return the remaining sets to the insurer. The insurer shall forthwith file such endorsed certificates of amendment with the Department of State. The amendment shall be effective when filed with and approved by the Department of State.

(3) If the department finds that the proposed amendment or certificate does not comply with the law, it shall not approve the same, and shall return the triplicate certificate of amendment to the insurer.

History.-s. 631 , ch. 59-205; ss. 10, 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21 , ch. 78-95; ss. 2. 3, ch. 81-318; ss. 640, 665, 809(1st), ch . 82-243. 'Note.-Expires October 1, 1991, pursuant to s. 809(1st), ch. 82-243, and is


1628.121 Capital stock; amount; payment.-(1) The articles of incorporation of a stock insurer

shall provide for authorized capital in an amount not less than that required under this code.

(2) In the sale of the insurer's capital stock, an amount not less than the minimum paid-in capital stock required under this code shall be paid in with money of the United States or in equivalent United States Government securities. Any additional sums paid for stock or any stock sold after the minimum required capital has been so paid in in money may be in the form of any type of securities in which the insurer is authorized to invest its funds under part II of chapter 625.

History.-s. 632, ch . 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 641,685, 809(1st), ch. 82-243. .

'Note.-Expires October 1, 1991, pursuant to s. 809(1st), ch. 82-243, and IS


1628.131 Limitation on organization and stock sales expenses.-

(1) The total expense involved in the incorporation and financing of a new domestic stock insurer, including

677


incorporation fees, underwriting fees and costs, attorneys' fees, printing costs, and other services and costs, shall not exceed 15 percent of the funds actually received by or on behalf of the corporation from the sale of its securities.

(2) No president, vice president, secretary, treasurer, director, or other executive officer of any such insurer shall participate, either directly or indirectly, in the commissions of any person selling or negotiating the sale of any security of such an insurer.

History.-s. 633, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 642, 665, 809(1 st), ch. 82-243.

'Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.151 Insurance business exclusive.-(1) No domestic insurer shall engage directly or indi

rectly in any business other than the insurance business and business activities reasonably and necessarily incidental to such insurance business.

(2) A title insurer may also engage in business as an escrow agent; and any insurer may also engage in the business of making, acquiring, selling, dealing in, and servicing of real estate mortgage loans and loans incidental thereto.

(3) A business trust whose declaration of trust was filed with the Secretary of State of Florida prior to January 1, 1959, and which, at the time of the adoption of this code, held a certificate of authority as a title insurer may qualify as an insurer for lawyers' professional liability insurance by complying with the applicable provisions of this code.

Hlstory.-s. 635, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 644, 665, 809(1st), ch. 82-243. .

'Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch. 82-243, and 1s scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.152 Domestic stock insurers; proxies, consents, and authorizations with respect to any voting security.-

(1) The department may, by rule, prescribe the form, content, and manner of solicitation of any proxy, consent, or authorization with respect to any voting security issued by a domestic stock insurer, as may be necessary or appropriate in the public interest or for the proper protection of investors in the voting securities issued by such insurer or to ensure the fair dealing in such voting securities.

(2) No person and no domestic stock insurer or any director, officer, or employee of such insurer shall solicit or permit the use of his name to solicit, by mail or otherwise, any person to give any proxy, consent, or authorization with respect to any voting security in contravention of any such rule.

(3) Any proxy or consent obtained in violation of this section is void. The domestic stock insurer, any stockholder of record, or the department may enforce compliance with this section, by an appropriate civil action.

(4) This section shall not apply to voting securities registered pursuant to s. 12 of the Securities Exchange Act of 1934, as amended.

(5) "Voting security" means any instrument which , in law or by contract, gives the holder the right to vote, consent to, or authorize any corporate action.

Hlstory.-s. 1, ch. 65-213; ss. 13, 35, ch. 69-106; s. 2, ch . 71-87; s. 3, ch. 76-168; s. 1, ch . 77-457; ss. 2, 3, ch . 81-318; ss. 645, 665, 809(1st), ch. 82-243.


1628.161 Initial qualifications; domestic mutuals.-(1) When newly organized, a domestic mutual insur

er may be authorized to transact any one of the kinds of insurance listed in the schedule contained in subsection (2).

(2) When applying for an original certificate of authority, the insurer must have received and accepted bona fide applications as to substantial insurable subjects for insurance coverage of a substantial character of the kind of insurance proposed to be transacted; must have collected in cash the full premium therefor; and must have deposited surplus funds in the amount shown in line (e) ; or, in lieu of such applications, premiums, and surplus, may deposit surplus in the amount shown in line (f), all in accordance with that part of the following schedule which applies to the one kind of insurance the insurer proposes to transact:

Kind of Insurance

(i) (ii) (iii) Standards Life Health Property Casualty

(a) Minimum 500 500 250 250 no. of applicants accepted (b) Minimum 500 500 250 250 no. of subjects covered (c) Minimum semi- quarterly semi- semi-premium annually annually annually collected (d) Minimum $1 ,000 $10 $2,000 $2,000 amount of (weekly insurance indem.) each sub-ject (e) Deposit of $100,000 $100,000 $150,000 $150,000 minimum surplus funds (iv) (f) Deposit of $150,000 $150,000 $200,000 $200,000 surplus in lieu (iv)

The following provisos are respectively applicable to the foregoing schedule and provisions as indicated by like Roman numerals appearing in such schedule:

(i) No group insurance or term policies for terms of less than 10 years shall be included.

(ii) Only insurance of the owner's interest in real property may be included.

678

F.S. 1987 STOCK AND MUTUAL INSURERS; HOLDING COMPANIES Ch. 628

(iii) Insurance of legal liability for bodily injury and property damage, to which the maximum and minimum insured amounts apply, must be included.

(iv) The deposit of surplus in the amounts specified in lines (e) and (f) must be maintained unimpaired.

(3) In addition to the surplus deposited as required under subsection (2), the insurer must possess, when first so authorized to transact insurance, expendable surplus in the amount required of a like foreign mutual insurer under s. 624.408.

Hlstory.-s. 636, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 646, 665, 809(1st), ch. 82-243.

1Note.-Expires October 1, 1991, pursuant to s. 809(1st), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.171 Formation of mutual insurer; bond.-(1) Before soliciting any applications for insurance

required under s. 628.161 , the incorporators of the proposed insurer shall file with the department a corporate surety bond in the amount of $20,000 in favor of the State of Florida and for the use and benefit of the state and of applicant members and creditors of the corporation. The bond shall be conditioned as follows:

(a) Upon due accounting for and deposit, as required under s. 628.191, of funds received as premium upon preliminary applications for insurance;

(b) If the corporation fails to complete its organization and secure a certificate of authority issued by the department within 1 year after the date of its certificate of incorporation, all premiums collected in advance from applicant members shall be promptly returned to them; all other indebtedness of the corporation except compensation to directors, officers, or solicitors of insurance applications shall be paid; and costs incurred by the state in event of any legal proceedings for liquidation or dissolution of the corporation shall be paid .

(2) In lieu of such a bond, the incorporators may deposit with the department $20,000 in cash, or in United States Government bonds at par value, to be held in trust upon the same conditions as required for the bond.

(3) Any bond filed or such deposit or remaining portion thereof held under this section shall be released and discharged upon settlement and termination of all liabilities against it.

Hlstory.-s. 637, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457 ; ss. 2, 3, ch. 81-318; ss. 647, 665, 809(1st), ch. 82-243. 'Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch. 82-243, and is


'628.181 Applications for insurance in formation of mutual insurer.-

(1) Upon compliance with s. 628.171 , the proposed domestic mutual insurer may solicit the requisite applications for insurance policies and may receive deposits of premiums thereon .

(2) All such applications shall be in writing signed by the applicant, covering subjects of insurance resident , located, or to be performed in this state.

(3) All such applications shall provide that: (a) Issuance of the policy is contingent upon the in

surer qualifying for and receiving a certificate of authority;

(b) No insurance is in effect unless and until the certificate of authority has been issued; and

(c) The prepaid premium or deposit, and the membership or policy fee , if any, be refunded in full to the applicant if organization is not completed and the certificate of authority is not issued and received by the insurer before a specified reasonable date, which date shall not be later than 1 year after the date of the certificate of incorporation.

(4) All qualifying premiums collected shall be in cash.

(5) Solicitation for such qualifying applications for insurance shall be by licensed agents of the corporation; and the department shall , upon the application of the corporation therefor, issue temporary agents ' licenses expiring on the date specified pursuant to paragraph (3)(c) to individuals qualified for a resident agent's license.

Hlstory.-s. 638, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 648, 665, 809(1st), ch. 82-243.


'628.191 Formation of mutual insurer; trust deposit of premiums; issuance of policies.-

(1) All sums collected by a domestic mutual corporation as premiums or fees on qualifying applications for insurance therein shall be deposited in trust in a bank or trust company in this state under a written trust agreement consistent with this section and with s. 628.181 (3)(c). The corporation shall file an executed copy of such trust agreement with the department.

(2) Upon issuance to the corporation of a certificate of authority as an insurer for the kind of insurance for which such applications were solicited , all funds so held in trust shall become the funds of the insurer, and the insurer shall thereafter in due course, issue and deliver its policies for which premiums had been paid and accepted. The insurance provided by such policies shall be effective as of the date of the certificate of authority, or thereafter as provided in the respective policies.

Hlstory.-s. 639, ch . 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss . 2, 3, ch . 81-318; ss. 665, 809(1st), ch. 82-243.

•Note.-Repealed effective October 1, 1991 , by s. 809(1st), ch. 82-243, and scheduled for review pursuant to s. 11.61 in advance of that date.

1628.201 Proposed mutual insurer; failure to qualify. -If the proposed domestic mutual insurer fails to complete its organization and to secure its original certificate of authority within 1 year from and after date of its certificate of incorporation, the corporation shall be dissolved by the department, and the department shall return or cause to be returned to the persons entitled thereto all advance deposits or payments of premiums held in trust under s. 628.191 .

Hlstory.-s. 640, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch . 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 665, 809(1st), ch. 82- 243.

1Note.-Repealed effective October 1, 1991, by s. 809(1 st), ch . 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.221 Bylaws of mutual insurer.-(1) The initial board of directors of a domestic mutu

al insurer shall adopt original bylaws, subject to the approval of the insurer's members at the next succeeding meeting . The members shall have power to make, modify, and revoke bylaws .

(2) The bylaws shall provide: (a) That each member is entitled to one vote upon

each matter coming to a vote at meetings of members,

679


or to more votes in accordance with a reasonable classification of members as set forth in the bylaws and based upon the amount of insurance in force, or upon the amount of the premiums paid by such member, or upon other reasonable factors . A member shall have the right to vote in person or by his written proxy. No such proxy shall be made irrevocable or for longer than a reasonable period of time;

(b) For the election of directors by the members and the number, qualifications, terms of office, and powers of the directors;

(c) The time, notice, quorum, and conduct of annual and special meetings of members and voting thereat. The bylaws may provide that the annual meeting shall be held at a place, date, and time to be set forth in the policy and without giving other notice of such meeting;

(d) The number, designation, election, terms, and powers and duties of the respective corporate officer;

(e) For deposit, custody, and disbursement of and accounting for corporate funds;

(f) That a quorum at all annual and special meetings of members will consist of all members present and voting in person or by proxy, after due notice of such meeting;

(g) For any other reasonable provisions customary, necessary, or convenient for the management or regulation of its corporate affairs and not inconsistent with law.

(3) The insurer shall promptly file with the department a copy, certified by the insurer's secretary, of its bylaws and of every modification thereof or addition thereto. The department shall disapprove any bylaw provision deemed by it to be unlawful, unreasonable, inadequate, unfair, or detrimental to the proper interests or protection of the insurer's members or any class thereof. The insurer shall not, after receiving written notice of such disapproval and during the existence thereof, effectuate any bylaw provision so disapproved.

History.-s. 642, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 650, 665, 809(1st), ch. 82-243.


1628.231 Directors; number, election.-(1) The affairs of every domestic insurer shall be

managed by not less than five directors. (2) Directors must be elected by the members or

stockholders of a domestic insurer at the annual meeting of stockholders or members. Directors may be elected for terms of not more than 3 years each and until their successors are elected and have qualified; and, if to be elected for terms of more than 1 year, the insurer's bylaws shall provide for a staggered-terms system under which the terms of a proportionate part of the members of the board of directors will expire on the date of each annual meeting of stockholders or members.

(3) A majority of the directors must be citizens of the United States.

(4) If so provided in a stock insurer's bylaws, a director of such stock insurer shall be a stockholder thereof; and, if so provided in a mutual insurer's bylaws, a director of such mutual insurer shall be a policyholder thereof.

History.-s. 643, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 651,665, 809(1st), ch. 82-243.

'Note.-Expires October 1, 1991, pursuant to s. 809(1st), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.251 Management and exclusive agency contracts.-

(1) No domestic mutual insurer or stock insurer shall make any contract whereby any person is granted or is to enjoy in fact the management of the insurer to the substantial exclusion of its board of directors or to have the controlling or preemptive right to produce substantially all insurance business for the insurer, unless the contract is filed with and approved by the department.

(2) Any such contract shall provide that any such manager or producer of its business shall within 90 days after expiration of each calendar year furnish the insurer's board of directors a written statement of amounts received under or on account of the contract and amounts expended thereunder during such calendar year, including the emoluments received therefrom by the respective directors, officers, and other principal management personnel of the manager or producer, and with such classification of items and further detail as the insurer's board of directors may reasonably require.

(3) The department shall disapprove any such contract if it finds that it:

(a) Subjects the insurer to excessive charges; or (b) Is to extend for an unreasonable length of time;

or (c) Does not contain fair and adequate standards of

performance; or (d) Contains other inequitable provision or provi

sions which impair the proper interests of policyholders or members of the insurer.

History.-s. 645, ch . 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21. ch. 78-95; ss. 2. 3. ch. 81-318; ss. 653,665, 809(1st), ch. 82-243.


1628.255 Person with effective control cannot receive commission unless contract approved; penalties.-

(1) No director, officer, or other person having effective control of a domestic insurer shall receive , and no such insurer shall pay to such person, a commission or other compensation with respect to particular risks insured by the insurer, unless such commission or other compensation is paid pursuant to a contract filed with and approved by the department.

(2) This section shall not be deemed to require approval of the contract or to prohibit payment of commissions to such an officer or director with respect to business written by him as an agent of the insurer prior to becoming such an officer or director and vested under the agency contract which was in force at the time such business was originally written.

(3) For the purposes of this section , "effective control" means ownership of 10 percent or more of company stock or receipt of $25,000 or more cumulatively in compensation in 1 calendar year other than commissions resulting from insurance business produced by an agent or solicitor.

(4) Violation of this section shall subject the insurer to loss of its certificate of authority as provided in s. 624.418 and the agent to loss of his license as provided ins. 626.621. Willful violation of this section shall, in addition to the above prescribed penalties, constitute a felo-

680


ny of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

History.-s. 1, ch. 70-319; s. 651 , ch . 71-136; s. 162, ch. 71-355; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 654,665, 809(1st), ch. 82-243.


1628.261 Notice of change of director or officer.An insurer shall give the department written notice of any change of personnel among the directors or principal officers of the insurer within 45 days of such change. The written notice shall include all information necessary to allow the department to determine that the insurer will be in compliance with s. 624.404(3) and at a minimum shall contain the information required by s. 628.051 (2)(b), (c), and (d).

History.-s. 646, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 655, 665, 809(1st), ch . 82-243; s. 3, ch. 86-140.

1Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch . 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.271 Office and records; penalty for unlawful removal of records.-

(1) Every domestic insurer shall have an office in this state and shall keep therein complete records of its assets, transactions, and affairs, specifically including:

(a) Financial records; (b) Corporate records; (c) Reinsurance documents; (d) Access to all accounting transactions and ac

cess in this state, upon demand by the department, to all original accounting documents;

(e) Claim files; and (f) Payment of claims,

in accordance with such methods and systems as are customary or suitable as to the kind or kinds of insurance transacted.

(2) Every domestic insurer shall have and maintain its assets in this state, except as to:

(a) Real property and personal property appurtenant thereto lawfully owned by the insurer and located outside this state, and

(b) Such property of the insurer as may be customary, necessary, and convenient to enable and facilitate the operation of its branch offices, regional home offices, and operations offices, located outside this state as referred to in s. 628.281.

(3) The removal of all or a material part of the records or assets of a domestic insurer from this state except pursuant to a plan of merger or consolidation approved by the department under this code or for such reasonable purposes and periods of time as may be approved by the department in writing in advance of such removal , or the concealment of such records or assets or material part thereof from the department, is prohibited. Any person who removes or attempts to remove such records or assets or such material part thereof from the home office or other place of business or of safekeeping of the insurer in this state with the intent to remove the same from this state, or who conceals or attempts to conceal the same from the department, in violation of this subsection, is guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. Upon any removal or attempted removal of such records or assets or upon retention of such records or assets or

681

material part thereof outside this state, beyond the period therefor specified in the consent of the department under which consent the records were so removed thereat, or upon concealment of or attempt to conceal records or assets in violation of this section, the department may institute delinquency proceedings against the insurer pursuant to the provisions of chapter 631 .

(4) This section is subject to the exceptions provided for in s. 628.281.

Hlstory.-s. 647, ch. 59-205; ss. 13, 35, ch. 69-106; s. 652, ch. 71-136; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 656, 665, 809(1st), ch. 82-243.


1628.281 Exceptions to requirement that office, records, and assets be maintained in this state.-

(1) The provisions of s. 628.271 shall not be deemed to prohibit or prevent an insurer from:

(a) Establishing and maintaining branch offices or regional home offices in other states where necessary or convenient to the transaction of its business and keeping therein the detailed records and assets customary and reasonably necessary for the servicing of its insurance in force and affairs in the territory served by such an office, as long as such records and assets are made readily available at such office for examination by the department at its request.

(b) Having, depositing, or transmitting funds and assets of the insurer in or to jurisdictions outside this state as required by other jurisdictions as a condition of transacting insurance in such jurisdictions reasonably and customarily required in the regular course of its business.

(c) Establishing and maintaining its principal operations offices, its usual operations records , and such of its assets as may be necessary or convenient for the purpose, in another state in which the insurer is authorized to transact insurance in order that general administration of its affairs may be combined with that of an affiliated insurer or insurers, but subject to the following conditions:

1. That the department consent in writing to such removal of offices, records , and assets from this state upon evidence satisfactory to it that the same will facilitate and make more economical the operations of the insurer and will not unreasonably diminish the service or protection thereafter to be given the insurer's policyholders in this state and elsewhere;

2. That the insurer will continue to maintain in this state its principal corporate office or place of business, and maintain therein available to the inspection of the department complete records of its corporate proceedings and a copy of each financial statement of the insurer current within the preceding 5 years , including a copy of each interim financial statement prepared for the information of the insurer's officers or directors;

3. That , upon the written request of the depart-ment, the insurer will with reasonable promptness produce at its principal corporate offices in this state for examination or for subpoena its records or copies thereof relative to a particular transaction or transactions of the insurer as designated by the department in its request; and

Ch. 628 STOCK AND MUTUAL INSURERS; HOLDING COMPANIES F.S. 1987

4. That, if at any time the department finds that the conditions justifying the maintenance of such offices, records, and assets outside this state no longer exist, or that the insurer has willfully and knowingly violated any of the conditions stated in subparagraphs 2. and 3., the department may order the return of such offices, records, and assets to this state within such reasonable time, not less than 6 months, as may be specified in the order; and that for failure to comply with such order, as thereafter modified or extended, if any, the department shall suspend or revoke the insurer's certificate of authority.

(2) Section 628.271 does not apply as to domestic insurers which, as of immediately prior to the effective date of this code, had lawfully established, and which thereafter maintain, their principal offices, records, and assets in another state.

History.-s. 648, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch . 77-457; s. 21 , ch. 78-95; ss. 2, 3, ch. 81-318; ss. 657, 665, 809(1st), ch. 82-243.


1628.291 Unauthorized transactions in other states. ( 1) No domestic insurer shall enter into a contract of

insurance upon the life or person of a resident of a reciprocal state or covering property or risks located in a reciprocal state, unless the insurer is authorized pursuant to the laws of such reciprocal state to do business therein, subject to the following exceptions:

(a) Contracts entered into when the prospective insured is personally present and signs the application in the state in which the insurer is authorized to do business;

(b) Issuance of certificates under any lawfully transacted group life or group health policy if the master policy is entered into in a state in which the insurer is authorized to do business;

(c) Contracts made pursuant to a pension or retirement plan of an employer when such contracts are applied for in a state where the employer is personally present or doing business and the insurer is authorized to do business; and

(d) The renewal, reinstatement, conversion, or continuance in force with or without modification of contracts otherwise lawfully entered into and which were not originally entered into in violation of this section .

(2) The term "reciprocal state" as used in this section means a state the laws of which prohibit an insurer organized under the laws of that state from insuring the lives or property of persons resident or located in this state, unless such insurer is authorized pursuant to the laws of this state to do business in this state.

(3) The department shall annually mail to every domestic insurer notice specifying the several reciprocal states.

Hlstory.-s. 649, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 658, 665, 809(1st), ch. 82-243.


1628.301 Membership in mutual insurer.-( 1) Each policyholder of a domestic mutual insurer,

other than of a reinsurance contract, is a member of the insurer with all rights and obligations of such membership; and the policy shall so specify. Group certificate-

holders may also be members of the insurer if so specified in the bylaws.

(2) Any person, public or private corporation, board, association, firm, estate, trustee, or fiduciary may be a member of a domestic mutual insurer. Any officer, stockholder, trustee, or legal representative of any such corporation, board, association, or estate may be recognized as acting for or on its behalf for the purpose of such membership and shall not be personally liable upon any contract of insurance for acting in such representative capacity. A mutual insurer may issue policies of insurance covering property of this state, or of any county or municipality of this state, without contingent liability, when such policy contains a provision that the state or any such county or municipality insured under it may not participate in the profits of such insurer.

Hlstory.-s. 650, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 659, 665, 809(1st), ch . 82-243.


1628.311 Contingent liability of mutual members.-(1) Each member of a domestic mutual insurer shall ,

except as otherwise hereinafter provided with respect to nonassessable policies, have a contingent liability, pro rata and not one for another, for the discharge of its obligations, which contingent liability shall be expressed in the policy and be in such maximum amount as is specified in the insurer's certificate of incorporation.

(2) The termination of the policy of any such member does not relieve the member of contingent liability for his proportion, if any, of the obligations of the insurer which accrued while the policy was in force.

(3) The unrealized contingent liability of members does not constitute an asset of the insurer in any determination of its financial condition.

Hlstory.-s. 651 , ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 665, 809(1st), ch. 82-243.

'Note.-Repealed effective October 1, 1991 , by s. 809(1 st), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.321 Levy of contingent liability.-(1) If at any time the assets of a domestic mutual in

surer are less than its liabilities and the minimum amount of surplus required to be maintained by it under this code for authority to transact the kinds of insurance being transacted, and the deficiency is not cured from other sources, its directors shall levy an assessment only upon its members who held policies providing for contingent liability at any time within the 12 months preceding the date notice of such assessment was mailed to them; and such members shall be liable to the insurer for the amount so assessed .

(2) The assessment shall be for such an amount as is required to cure such deficiency and to provide a reasonable amount of working funds above such minimum amount of surplus, but such working funds so provided shall not exceed 5 percent of the insurer's liabilities as of the date as of which the amount of such deficiency was determined.

(3) In levying an assessment on policies providing for contingent liability, the assessment shall be computed on a basis of premium earned on such policy.

682


(4) No member shall have an offset against any assessment for which he is liable, on account of any claim for unearned premium or loss payable.

(5) As to life insurance, any part of such an assessment upon a member which remains unpaid following notice of assessment, demand for payment, and lapse of a reasonable waiting period as specified in such notice, may, if approved by the department as being in the best interests of the insurer and its members, be secured by placing a lien upon the cash surrender values and accumulated dividends held by the insurer to the credit of such member.

History.-s. 652. ch. 59-205: ss. 13, 35, ch. 69-106: s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2, 3, ch. 81-318: ss. 665, 809(1st), ch . 82-243.

1Note.-Repealed effective October 1, 1991, by s. 809(1st), ch . 82-243, and scheduled for review pursuant lo s. 11 .61 in advance of that date.

1628.331 Enforcement of contingent liability.-(1) Any assessment made by an insurer under s.

628.321 is prima facie correct. The amount of such assessment to be paid by each member as determined by the insurer is likewise prima facie correct.

(2) The insurer shall notify each member of the amount of the assessment to be paid by written notice mailed to the address of the member last of record with the insurer. The failure of the member to receive the notice so mailed, within the time specified therein for the payment of the assessment or at all, shall be no defense in any action to collect the assessment.

(3) If a member fails to pay the assessment within the period specified in the notice, which period shall not be less than 20 days after mailing, the insurer may institute suit to collect the same.

History.-s. 653, ch. 59-205: s. 3, ch. 76-168: s. 1, ch . 77-457: ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243.

1Note.-Repealed effective October 1, 1991 , by s. 809(1st), ch . 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.341 Nonassessable policies; mutual insurers. (1) While possessing surplus funds in amount not

less than the paid-in capital stock required of a domestic stock insurer transacting like kinds of insurance, a domestic mutual insurer may, upon receipt of the order of the department so authorizing, extinguish the contingent liability of its members as to all its policies in force and may omit provisions imposing contingent liability in all its policies currently issued so long as such surplus funds meet such requirement as to amount.

(2) A foreign or alien mutual insurer may issue nonassessable policies to its members in this state pursuant to its articles of incorporation and the laws of its domicile.

Hlstory.-s. 654, ch. 59-205; ss. 13, 35, ch . 69-106; s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2, 3, ch. 81-318: ss. 665, 809(1st), ch. 82-243.

1Note.-Repealed effective October 1, 1991, by s. 809(1st), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.351 Nonassessable policies; revocation of authority of mutual insurer.-The department shall revoke the authority of a domestic mutual insurer to issue policies without contingent liability if at any time the insurer's assets are less than the sum of its liabilities and the surplus required for such authority, or if the insurer, by resolution of its board of directors approved by a majority of its members, requests that the authority be revoked. During the absence of such authority, the insurer shall not issue any policy without providing therein for

the contingent liability of the policyholder, nor renew any policy which is renewable at the option of the insurer without endorsing the same to provide for such contingent liability. Such renewal or endorsement shall bear conspicuously on its face the provision for contingent liability of the policyholder.

History.-s. 655, ch . 59-205; ss. 13, 35, ch . 69-106: s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2, 3, ch. 81-318: ss. 665, 809(1st), ch. 82-243.

1Note.-Repealed effective October 1, 1991 , by s. 809(1st), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.361 Participating policies.-(1) If provided in its certificate of incorporation, a do

mestic stock or domestic mutual insurer may issue any or all of its policies with or without participation in profits, savings, or unabsorbed portions of premiums, may classify policies issued on a participating and nonparticipating basis, and may determine the right to participate and the extent of participation of any class or classes of policies. Any such classification or determination shall be reasonable and shall not unfairly discriminate as between policyholders within the same such classification. A life insurer may issue both participating and nonparticipating policies only if the right or absence of right to participate is reasonably related to the premium charged.

(2) No dividend, otherwise earned, shall be made contingent upon the payment of renewal premium on any policy.

Hlstory.-s. 656, ch. 59-205: s. 3, ch . 76-168: s. 1, ch. 77-457: ss . 2, 3, ch . 81-318: ss. 665, 809(1st), ch. 82-243.

'Note.-Repealed effective October 1, 1991 , by s. 809(1st), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.371 Dividends to stockholders.-(1) A domestic stock insurer shall not pay any divi

dend or distribute cash or other property to stockholders except out of that part of its available and accumulated surplus funds which is derived from realized net operating profits on its business and net realized capital gains. Dividend payments or distributions to stockholders shall not exceed 10 percent of such surplus in any one year unless otherwise approved by the department. In addition to such limited payments, an insurer may make dividend payments or distributions out of the insurer's entire net operating profits and realized net capital gains derived during the immediately preceding calendar year.

(2) A stock dividend may be paid out of any available surplus funds in excess of the aggregate amount of surplus advanced to the insurer under s. 628.401.

(3) A dividend otherwise lawful may be payable out of the insurer's earned surplus even though its total surplus is then less than the aggregate of its past contributed surplus resulting from issuance of its capital stock at a price in excess of the par value thereof.

(4) The department shall not approve a dividend or distribution in excess of the maximum amount allowed in subsection (1) unless, considering the following factors, it determines that the distribution or dividend would not jeopardize the financial condition of the insurer :

(a) The liquidity, quality, and diversification of the insurer's assets and the effect on its ability to meet its obligations.

683


(b) Reduction of investment portfolio and investment income.

(c) Effects on the written premium to surplus ratios as required by the Florida Insurance Code.

(d) lndustrywide financial conditions. (e) Prior dividend distributions of the insurer. (f) Whether the dividend is only a "pass-through"

dividend from a subsidiary of the insurer. History.-s. 657, ch. 59-205; s. 1, ch. 70-68; s. 1, ch. 70-439; s. 3, ch. 76-168;

s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243; s. 6, ch. 85-214. 1Note.-Repealed effective October 1, 1991 , by s. 809(1st), ch. 82-243, and


1628.381 Dividends to mutual policyholders.-(1) The directors of a domestic mutual insurer may

from time to time apportion and pay or credit to its members dividends only out of that part of its surplus funds which represents net realized savings and net realized earnings in excess of the surplus required by law to be maintained.

(2) A dividend otherwise proper may be payable out of such savings and earnings even though the insurer's total surplus is then less than the aggregate of its contributed surplus.

History.-s. 658, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 665, 809(1st), ch. 82-243.


1628.391 Illegal dividends; penalty.-(1) Any director of a domestic stock or mutual insur

er who knowingly votes for or concurs in declaration or payment of a dividend to stockholders or members other than as authorized under s. 628.371 or s. 628.381 is guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083, and shall be jointly and severally liable, together with other such directors likewise voting for or concurring, for any loss thereby sustained by creditors of the insurer to the extent of such dividend.

(2) Any stockholder receiving such an illegal dividend shall be liable in the amount thereof to the insurer.

(3) The department may revoke or suspend the certificate of authority of an insurer which has declared or paid such an illegal dividend.

History.-s. 659, ch. 59-205; ss. 13, 35, ch. 69-106; s. 653, ch. 71-136; s. 3, ch. 76-168; s. 1, ch. 77-457 ; ss. 2. 3. ch . 81-318; ss. 665, 809(1st). ch. 82-243.

'Note.-Repealed effective October 1, 1991, by s. 809(1st), ch. 82-243. and scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.401 Borrowed surplus.-(1) A domestic stock or mutual insurer may borrow

money to defray the expenses of its organization, to provide itself with surplus funds, or for any purpose of its business, upon a written agreement that such money is required to be repaid only out of the insurer's surplus in excess of that stipulated in such agreement. Any interest provided for shall or shall not constitute a liability of the insurer as to its funds other than such excess of surplus, as stipulated in the agreement. No commission or promotion expense shall be paid in connection with any such loan.

(2) Money so borrowed, together with the interest thereon if so stipulated in the agreement, shall not form a part of the insurer's legal liabilities, except as to its surplus in excess of the amount thereof stipulated in the agreement, or be the basis of any setoff; but until repaid,

financial statements filed or published by the insurer shall show as a footnote thereto the amount thereof then unpaid together with any interest thereon accrued but unpaid.

(3) Any such loan to a domestic stock or mutual insurer shall be subject to the approval of the department for the issue and the rate of interest to be paid. The insurer shall, in advance of the loan, file with the department a statement of the purpose of the loan and a copy of the proposed loan agreement. The department shall disapprove any proposed loan or agreement if it finds that the loan is unnecessary or excessive for the purpose intended; that the terms of the loan agreement are not fair and equitable to the parties and to other similar lenders, if any, to the insurer; or that the information so filed by the insurer is inadequate.

(4) Any such loan to a domestic stock or mutual insurer, or a substantial portion thereof, shall be repaid by the insurer when no longer reasonably necessary for the purpose originally intended. No repayment of such a loan shall be made by a domestic stock or mutual insurer unless approved in advance by the department.

(5) This section does not apply to loans obtained by the insurer in the ordinary course of business from banks and other financial institutions, nor to loans secured by pledge or mortgage of assets.

Hlstory.-s. 660, ch . 59-205; ss. 13, 35, ch. 69-106; s. 1, ch. 73-165; s. 3, ch. 76-168; s. 1, ch. 77-13; s. 1, ch. 77-457; s. 21 , ch. 78-95; ss. 1, 2, ch. 80-19; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243.

1Note.-Repealed effective October 1, 1991 , by s. 809(1st), ch. 82-243, and scheduled for review pursuant to s. 11.61 in advance of that date.

1628.411 Impairment of capital or assets.-(1) If a domestic stock insurer's capital, as repre

sented by the aggregate par value of its outstanding capital stock, becomes impaired, or if the assets of a mutual insurer are less than the sum of its liabilities and the minimum amount of surplus required to be maintained by it, the department shall at once determine the amount of deficiency and serve notice upon the insurer to make good the deficiency within 90 days after service of such notice.

(2) The deficiency may be made good in cash or in assets eligible for the investment of the insurer's funds; or by amendment of the insurer's certificate of authority to cover only such kind or kinds of insurance thereafter for which the insurer has sufficient paid-in capital, if a stock insurer, or surplus, if a mutual insurer, under this code; or, if a stock insurer, by reduction of the insurer's authorized capital stock through amendment of its certificate of incorporation, to an amount of paid-in capital stock not below the minimum required for the kinds of insurance thereafter to be transacted.

(3) After any such reduction of authorized capital stock the insurer shall have the right to require the return of the original certificate of stock held by each stockholder in exchange for new certificates to be issued in lieu thereof for such number of shares as the stockholder is entitled to in the proportion that the reduced capital bears to the original capital.

(4) If the deficiency is not made good and proof thereof filed with the department within such 90-day period , the insurer shall be deemed insolvent and the department shall institute delinquency proceedings

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against it under chapter 631; except that if such deficiency exists because of increased loss reserves required by the department, or because of disallowance by the department of certain assets or reduction of the value at which carried in the insurer's accounts, the department may, in its discretion and upon application and good cause shown, and if it finds that the establishment or maintenance of such inadequate reserves or overvalued assets was not willful on the part of the insurer, extend for not more than an additional 60 days the period within which such deficiency may be so made good and such proof thereof so filed.

History.-s. 661 , ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-166; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 660, 665, 809(1st), ch. 82-243.


1628.421 Assessment of stockholders or members. (1) Any insurer receiving the notice of the depart

ment mentioned in s. 628.411 (1 ): (a) If a stock insurer, by resolution of its board of di

rectors and subject to any limitations upon assessment contained in its certificate of incorporation, may assess its stockholders for amounts necessary to cure the deficiency and provide the insurer with a reasonable amount of surplus in addition. If any stockholder fails to pay a lawful assessment after notice given to him in person or by advertisement in such time and manner as approved by the department, the insurer may require the return of the original certificate of stock held by the stockholder and, in cancellation and in lieu thereof, issue a new certificate for such number of shares as the stockholder may then be entitled to, upon the basis of the stockholder's proportionate interest in the amount of the insurer's capital stock as determined by the department to be remaining at the time of determination of the amount of impairment under s. 628.411, after deducting from such proportionate interest the amount of such unpaid assessment. The insurer may pay for or issue fractional shares under this subsection .

(b) If a mutual insurer, shall levy such an assessment upon members as is provided for under s. 628.321 .

(2) Neither this section nor s. 628.411 shall be deemed to prohibit the insurer from curing any such deficiency through any lawful means other than those referred to in such sections.

History.-s. 662, ch . 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243.


1628.431 Mutualization of stock insurers.-(1) A stock insurer other than a title insurer may be

come a mutual insurer under such plan and procedure as may be approved by the department.

(2) The department shall not approve any such plan, procedure, or mutualization unless:

(a) It is equitable to stockholders and policyholders; (b) It is subject to approval by the holders of not less

than three-fourths of the insurer's outstanding capital stock having voting rights and by not less than twothirds of the insurer's policyholders who vote on such plan in person, by proxy, or by mail pursuant to such notice and procedure as may be approved by the department;

(c) If a life insurer, the right to vote thereon is limited to holders of policies other than term or group policies, and whose policies have been in force for more than 1 year;

(d) Mutualization will result in retirement of shares of the insurer's capital stock at a price not in excess of the fair market value thereof as determined by competent disinterested appraisers;

(e) The plan provides for the purchase of the shares of any nonconsenting stockholder in the same manner and subject to the same applicable conditions as provided by s. 607.247, as to rights of nonconsenting stockholders, with respect to consolidation or merger of private corporations;

(f) The plan provides for definite conditions to be fulfilled by a designated early date upon which such mutualization will be deemed effective; and

(g) The mutualization leaves the insurer with surplus funds reasonably adequate for the security of its policyholders and to enable it to continue successfully in business in the states in which it is then authorized to transact insurance, and for the kinds of insurance included in its certificates of authority in such states.

(3) This section does not apply to mutualization under order of court pursuant to rehabilitation or reorganization of an insurer under chapter 631.

History.-s. 663, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; s. 12, ch. 79-9; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243.


'628.4314 Mutualization of nonprofit health care services plan corporations.-

(1) A nonprofit health care services plan corporation organized pursuant to part I of chapter 641 may become a mutual insurer under such plan which is approved by the department as being in compliance with this section.

(2) The department shall approve such plan for mutualization if:

(a) The plan provides for: 1. The protection of all existing contractual rights of

the service plan subscribers to medical, surgical, and hospital service or care or claims for reimbursement therefor; and

2. The mutualizing insurer to assume, without reincorporation, all assets and liabilities of the preceding health care service plan;

(b) The plan is subject to approval by the corporation in accordance with the procedures specified in its articles of incorporation and bylaws for the amendment of such articles of incorporation;

(c) The plan provides for definite conditions to be fulfilled by a designated early date upon which such mutualization will be deemed effective; and

(d) The mutualization will leave the insurer with surplus funds reasonably adequate for:

1. The security of its policyholders and to enable it to continue successfully in business in the states in which it is then authorized to transact insurance; and

2. The kinds of insurance included in its certificates of authority in such states .

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(3) This section does not apply to mutualization under order of court pursuant to rehabilitation or reorganization of an insurer under chapter 631.

(4) This section shall govern the mutualizing insurer in lieu of ss. 628.051 through 628.091 and ss. 628.161 through 628.201 governing procedures for establishing a new mutual insurer.

Hlstory.-ss. 661 , 809(1st), ch. 82-243. 'Note.-Expires October 1, 1991, pursuant to s. 809(1 st), ch. 82-243, and is


1628.441 Converting mutual insurer.-(1) A mutual insurer may become a stock insurer un

der such plan and procedure as may be approved by the department.

(2) The department shall not approve any such plan or procedure unless:

(a) It is equitable to the insurer's members; (b) It is subject to approval by vote of not less than

three-fourths of the insurer's current members voting thereon in person, by proxy, or by mail at a meeting of members called for the purpose pursuant to such reasonable notice and procedure as may be approved by the department; if a life insurer, the right to vote may be limited to members who hold policies other than term or group policies, and whose policies have been in force for not less than 1 year;

(c) The corporate equity of each policyholder in the insurer, other than as to unearned premiums, nonforfeiture rights, and benefit claims under his policy, is determinable under a fair formula approved by the department, which equity shall be based upon not less than the insurer's entire surplus, after deducting contributed or borrowed surplus funds, plus a reasonable present equity in its reserves and in all nonadmitted assets;

(d) The policyholders entitled to participate in the purchase of stock or distribution of assets shall include all current policyholders and all existing persons who had been policyholders of the insurer within 3 years prior to the date such plan was submitted to the department;

(e) The plan gives to each policyholder of the insurer as specified in paragraph (d) a preemptive right to acquire his proportionate part of all of the proposed capital stock of the insurer, within a designated reasonable period, and to apply upon the purchase thereof the amount of his equity in the insurer as determined under paragraph (c);

(f) Shares are so offered to policyholders at a price not greater than to be thereafter offered to others;

(g) The plan provides for payment of cash to each policyholder not electing to apply his equity in the insurer toward the purchase price of stock to which he is preemptively entitled. The amount so paid shall be not less than 50 percent of the amount of his equity not so used for the purchase of stock. Such cash payment together with stock so purchased, if any, shall constitute full payment and discharge of the policyholder's corporate equity in such mutual insurer; and

(h) The plan, when completed, would provide for the converted insurer paid-in capital stock in an amount not less than the minimum paid-in capital required of a domestic stock insurer transacting like kinds of insurance, together with surplus funds in amounts not less than one-half of such required capital.

Hlstory.-s. 664, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21 , ch. 78-95; ss. 2, 3, ch. 81-318; ss. 662, 665, 809(1st), ch. 82-243.

1Note.-Expires October 1, 1991, pursuant to s. 809(1 st), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.451 Merger or consolidation of stock insurers. (1) A domestic stock insurer may merge or consoli

date with one or more domestic or foreign stock insurers authorized to transact insurance in this state, by complying with the applicable provisions of the statutes of this state governing the merger or consolidation of stock corporations formed for profit, but subject to the special provisions of this section:

(a) A merger or consolidation may be initially proposed at any meeting of the board of directors of a domestic stock insurer by the affirmative vote of twothirds of the total number of directors of the corporation, or at any meeting of the stockholders of the corporation by the affirmative vote of a majority of the total number of shares of stock outstanding and entitled to vote, provided the notice of such meeting sets forth such proposal.

(b) The plan of merger or consolidation, proposed as required by paragraph (a) , shall be submitted to a duly called meeting of the stockholders of record of each domestic stock insurer and may become effective only if adopted at such meeting by the affirmative vote of 75 percent of the total number of shares of stock outstanding and entitled to vote. The notice of such meeting shall set forth in full the proposed plan of merger or consolidation.

(2) No such merger or consolidation shall be effectuated unless in advance thereof the plan and agreement therefor have been filed with the department and approved by it. The department shall give such approval unless it finds such plan or agreement:

(a) Is contrary to law; (b) Is inequitable to the stockholders of any insurer

involved; or (c) Would substantially reduce the security of and

service to be rendered to policyholders of the domestic insurer in this state or elsewhere.

(3) No director, officer, agent, or employee of any insurer party to such merger or consolidation shall receive any fee, commission, compensation, or other valuable consideration whatsoever for in any manner aiding, promoting, or assisting therein except as set forth in such plan or agreement.

(4) Any plan or proposal through which a stock insurer proposes to acquire a controlling stock interest in another stock insurer through an exchange of stock of the first insurer, issued by the insurer for the purpose, for such controlling stock of the second insurer is deemed to be a plan or proposal of merger of the second insurer into the first insurer for the purposes of this section and is subject to the applicable provisions hereof.

Hlstory.-s. 665, ch . 59-205; s. 1, ch. 61-5; ss. 13, 35, ch. 69-106; s. 3, ch. ~t~:; s. 1, ch. 77-457; s. 21 , ch . 78-95; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch.

'Note.-Repealed effective October 1, 1991, by s. 809(1st), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.461 Acquisition of controlling stock.-(1) No person shall, individually or in conjunction

with any affiliated person of such person, acquire direct-

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ly or indirectly, conclude a tender offer or exchange offer for, enter into any agreement to exchange securities for, or otherwise finally acquire 5 percent or more of, the outstanding voting securities of a domestic stock insurer or of a controlling company, unless:

(a) The person or affiliated person has filed with the department and sent to the insurer and controlling company a statement as specified in subsection (3) no later than 5 days after any form of tender offer or exchange offer is proposed, or no later than 5 days after the acquisition of the securities if no tender offer or exchange offer is involved; and

(b) The department has approved the tender or exchange offer, or acquisition if no tender offer or exchange offer is involved, and approval is in effect.

(2) This section does not apply to any acquisition of voting securities of a domestic stock insurer or of a controlling company by any person who, on July 1, 1976, is the owner of a majority of such voting securities or who, on or after July 1 , 1976, becomes the owner of a majority of such voting securities with the approval of the department pursuant to this section. It does apply, however, whenever any domestic stock insurer or controlling company makes a tender offer or exchange offer, enters into an agreement to exchange securities for 5 percent or more of the voting stock, or otherwise seeks to acquire 5 percent or more of the outstanding voting securities of any stock insurance company or controlling company.

(3) The statement to be filed with the department and furnished to the insurer and controlling company shall contain the following information and any additional information as the department may deem necessary to determine the character, experience, ability, and other qualifications of the person or affiliated person of such person for the protection of the policyholders and shareholders of the insurer and the public:

(a) The identity of, and the background information specified in subsection (4) on, each natural person by whom, or on whose behalf, the acquisition is to be made; and, if the acquisition is to be made by, or on behalf of, a corporation, association, or trust, as to the corporation, association, or trust and as to any person who controls either directly or indirectly the corporation, association, or trust, the identity of, and the background information specified in subsection (4) on, each director, officer, trustee, or other natural person performing duties similar to those of a director, officer, or trustee for the corporation , association, or trust;

(b) The source and amount of the funds or other consideration used, or to be used, in making the acquisition;

(c) Any plans or proposals which such persons may have made to liquidate such insurer, to sell any of its assets or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management; and any plans or proposals which such persons may have made to liquidate any controlling company of such insurer, to sell any of its assets or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management;

(d) The number of shares or other securities which the person or affiliated person of such person proposes to acquire, the terms of the proposed acquisition, and

the manner in which the securities are to be acquired; and

(e) Information as to any contract, arrangement, or understanding with any party with respect to any of the securities of the insurer or controlling company, including, but not limited to, information relating to the transfer of any of the securities, option arrangements, puts or calls, or the giving or withholding of proxies, which information names the party with whom the contract, arrangement, or understanding has been entered into and gives the details thereof.

(4)(a) The information as to the background and identity of each person, which information is required to be furnished pursuant to paragraph (3)(a) , shall include:

1. The person's occupations, positions of employ-ment, and offices held during the past 10 years.

2. The principal business and address of any busi-ness, corporation, or other organization in which each such office of the person was held or in which each such occupation or position of employment was carried on.

3. Whether the person was, at any time during such 10-year period , convicted of any crime other than a traffic violation.

4. Whether the person has been, during such 10-year period, the subject of any proceeding for the revocation of any license and, if so, the nature of the proceeding and the disposition of the proceeding.

5. Whether, during the 10-year period, the person has been the subject of any proceeding under the federal Bankruptcy Act or whether, during the 10-year period, any corporation, partnership, firm, trust, or association in which the person was a director, officer, trustee, partner, or other official has been subject to any such proceeding , either during the time in which the person was a director, officer, trustee, partner, or other official or within 12 months thereafter.

6. Whether, during the 10-year period, the person has been enjoined, either temporarily or permanently, by a court of competent jurisdiction from violating any federal or state law regulating the business of insurance, securities, or banking, or from carrying out any particular practice or practices in the course of the business of insurance, securities, or banking, together with details as to any such event.

(b) Any corporation, association, or trust filing the statement required by this section shall give all required information that is within the knowledge of the directors, officers, or trustees (or others performing functions similar to those of a director, officer, or trustee) of the corporation, association, or trust making the filing and of any person controlling either directly or indirectly such corporation, association , or trust. A copy of the statement and any amendments to the statement shall be sent by registered mail to the insurer at its principal office within the state and to any controlling company at its principal office. If any material change occurs in the facts set forth in the statement filed with the department and sent to such insurer or controlling company pursuant to this section, an amendment setting forth such changes shall be filed immediately with the department and sent immediately to such insurer and controlling company.

(5)(a) The acquisition of voting securities shall be deemed approved unless the department disapproves

687


the proposed acquisition within 90 days after the statement required by subsection (1) has been filed . The department may on its own initiate, or if requested to do so in writing by a substantially affected party shall conduct, a proceeding to consider the appropriateness of the proposed filing . The 90-day time period shall be tolled during the pendency of the proceeding. Any written request for a proceeding must be filed with the department within 10 days of the date notice of the filing is given. During the pendency of the proceeding or review period by the department, any person or affiliated person complying with the filing requirements of this section may proceed and take all steps necessary to conclude the acquisition so long as the acquisition becoming final is conditioned upon obtaining departmental approval. The department shall , however, at any time that it finds an immediate danger to the public health, safety, and welfare of the domestic policyholders exists, immediately order, pursuant to s. 120.59(3), the proposed acquisition temporarily disapproved and any further steps to conclude the acquisition ceased .

(b) During the pendency of the department's review of any acquisition subject to the provisions of this section, the acquiring person shall not make any material change in the management or operation of the insurer or controlling company unless the department has specifically approved the change. A material change is a transaction which disposes of or obligates 5 percent or more of the capital and surplus of the insurer or any change in management involving officers or directors of the insurer or any person of the insurer or controlling company having authority to dispose of or obligate 5 percent or more of the insurer's capital or surplus. The department shall approve the change if it finds the applicable provisions of subsection (7) have been met.

(c) If a request for a proceeding is filed , the proceeding shall be conducted within 60 days after the date the written request for a proceeding is received by the department. A recommended order shall be issued within 20 days of the date of the close of the proceedings. A final order shall be issued within 20 days of the date of the recommended order or, if exceptions to the recommended order are filed , within 20 days of the date the exceptions are filed.

(6) The department may disapprove any acquisition subject to the provisions of this section by any person or any affiliated person of such person who:

(a) Willfully violates this section; (b) In violation of an order of the department issued

pursuant to subsection (10), fails to divest himself of any stock obtained in violation of this section , or fails to divest himself of any direct or indirect control of such stock, within 25 days after such order; or

(c) In violation of an order issued by the department pursuant to subsection (10), acquires additional stock of the domestic insurance company or controlling company, or direct or indirect control of such stock, without complying with this section .

(7) The person or persons filing the statement required by subsection (1) shall have the burden of proof. The department shall approve any such acquisition if it finds , on the basis of the record made during any pro-

ceeding or on the basis of the filed statement if no proceeding is conducted, that:

(a) Upon completion of the acquisition, the domestic stock insurer will be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed;

(b) The financial condition of the acquiring person or persons will not jeopardize the financial stability of the insurer or prejudice the interests of its policyholders or the public;

(c) Any plan or proposal which the acquiring person has, or acquiring persons have, made:

1. To liquidate the insurer, sell its assets, or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management; or

2. To liquidate any controlling company, sell its assets, or merge or consolidate it with any person, or to make any major change in its business or corporate structure or management which would have an effect upon the insurer

is fair and free of prejudice to the policyholders of the domestic stock insurer or to the public;

(d) The competence, experience, and integrity of those persons who will control directly or indirectly the operation of the domestic stock insurer indicate that the acquisition is in the best interest of the policyholders of the insurer and in the public interest;

(e) The natural persons for whom background information is required to be furnished pursuant to this section have such backgrounds as to indicate that it is in the best interests of the policyholders of the domestic stock insurer, and in the public interest, to permit such persons to exercise control over such domestic stock insurer;

(f) The officers and directors to be employed after the acquisition have sufficient insurance experience and ability to assure reasonable promise of successful operation ;

(g) The management of the insurer after the acquisition will be competent and trustworthy and will possess sufficient managerial experience so as to make the proposed operation of the insurer not hazardous to the insurance-buying public;

(h) The management of the insurer after the acquisition will not include any person who has directly or indirectly through ownership, control, reinsurance transactions, or other insurance or business relations unlawfully manipulated the assets, accounts, finances, or books of any insurer or otherwise acted in bad faith with respect thereto;

(i) The acquisition is not likely to be hazardous or prejudicial to the insurer's policyholders or the public; and

U) The effect of the acquisition of control would not substantially lessen competition in insurance in this state or would not tend to create a monopoly therein.

(8) No vote by the stockholder of record , or by any other person , of any security acquired in contravention of the provisions of this section is valid . Any acquisition of any security contrary to the provisions of this section is void. Upon the petition of the domestic stock insurer

688


or controlling company, the circuit court for the county in which the principal office of such domestic stock insurer is located may, without limiting the generality of its authority, order the issuance or entry of an injunction or other order to enforce the provisions of this section. There shall be a private right of action in favor of the domestic stock insurer or controlling company to enforce the provisions of this section. No demand upon the department that it perform its functions shall be required as a prerequisite to any suit by the domestic stock insurer or controlling company against any other person, and in no case shall the department be deemed a necessary party to any action by such domestic stock insurer or controlling company to enforce the provisions of this section. Any person who makes or proposes an acquisition requiring the filing of a statement pursuant to this section, or who files such a statement, shall be deemed to have thereby designated the Insurance Commissioner and Treasurer, or his assistant or deputy or another person in charge of his office, as such person's agent for service of process under this section, and shall thereby be deemed to have submitted himself to the administrative jurisdiction of the department and to the jurisdiction of the circuit court.

(9) Any approval by the department under this section does not constitute a recommendation by the department for an acquisition, tender offer, or exchange offer. It is unlawful for a person to represent that the department's approval constitutes a recommendation. A person who violates the provisions of this subsection is guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. The statute-of-limitations period for the prosecution of an offense committed under this subsection is 5 years.

(1 0) Upon notification to the department by the domestic stock insurer or a controlling company that any person or any affiliated person of such person has acquired 5 percent or more of the outstanding voting securities of the domestic stock insurer or controlling company without complying with the provisions of this section, the department shall order that the person and any affiliated person of such person cease acquisition of any further securities of the domestic stock insurer or controlling company; however, the person or any affiliated person of such person may request a proceeding , which proceeding shall be convened within 7 days after the rendering of the order for the sole purpose of determining whether the person , individually or in connection with any affiliated person of such person, has acquired 5 percent or more of the outstanding voting securities of a domestic stock insurer or controlling company. Upon the failure of the person or affiliated person to request a hearing within 7 days, or upon a determination at a hearing convened pursuant to this subsection that the person or affiliated person has acquired voting securities of a domestic stock insurer or controlling company in violation of this section, the department may order the person and affiliated person to divest themselves of any voting securities so acquired.

(11 )(a) The department shall , if necessary to protect the public interest, suspend or revoke the certificate of authority of any insurer or controlling company:

1. The control of which is acquired in violation of this section;

2. That is controlled , directly or indirectly, by any person or any affiliated person of such person who, in violation of this section , has obtained control of a domestic stock insurer or controlling company; or

3. That is controlled, directly or indirectly, by any person who, directly or indirectly, controls any other person who, in violation of this section, acquires control of a domestic stock insurer or controlling company.

(b) If any insurer is subject to suspension or revocation pursuant to paragraph (a) , the insurer shall be deemed to be in such condition, or to be using or to have been subject to such methods or practices in the conduct of its business, as to render its further transaction of insurance presently or prospectively hazardous to its policyholders, creditors , or stockholders or to the public.

(12)(a) For the purpose of this section, the term "affiliated person" of another person means:

1. The spouse of such other person; 2. The parents of such other person and their lineal

descendants and the parents of such other person's spouse and their lineal descendants;

3. Any person who directly or indirectly owns or controls , or holds with power to vote, 5 percent or more of the outstanding voting securities of such other person ;

4. Any person 5 percent or more of the outstanding voting securities of which are directly or indirectly owned or controlled, or held with power to vote, by such other person;

5. Any person or group of persons who directly or indirectly control, are controlled by, or are under common control with such other person ;

6. Any officer, director, partner, copartner, or employee of such other person ;

7. If such other person is an investment company, any investment adviser of such company or any member of an advisory board of such company;

8. If such other person is an unincorporated invest-ment company not having a board of directors, the depositor of such company; or

9. Any person who has entered into an agreement, written or unwritten, to act in concert with such other person in acquiring or limiting the disposition of securities of a domestic stock insurer or controlling company.

(b) For the purposes of this section, the term "controlling company" means any corporation , trust, or association owning , directly or indirectly, 25 percent or more of the voting securities of one or more domestic stock insurance companies.

(13) The department is authorized to adopt, amend , or repeal rules that are necessary to implement the provisions of this section , pursuant to chapter 120.

History.- s. 666, ch. 59- 205; ss. 13, 35, ch. 69-106; s. 1, ch. 70-67 ; s. 1, ch. 70-177; s. 1, ch. 70- 439; s. 1, ch. 76-100; s. 3, ch. 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 685, 809(1 st), ch. 82- 243; s. 1, ch . 84-37; s. 1, ch. 85-312; ss. 1, 17, ch. 86-250; s. 4, ch. 87-50; s. 33, ch. 87-226.

•Note.-Repealed effective October 1, 1991 , by s. 809(1st), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date. Repealed effective October 1, 1991, by s. 17, ch. 86-250, as amended by s. 4, ch. 87-50, and scheduled for review pursuant to s. 11 .61.

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1628.4615 Allied lines insurers; acquisition of controlling stock, ownership interest, assets, or control; merger or consolidation.-

(1) For the purposes of this section, the term "allied lines insurer" means any person holding a license or certificate of authority as:

(a) A motor vehicle service agreement company authorized to issue motor vehicle service agreements as those terms are defined in s. 634.011 (7) and (8);

(b) A home warranty association authorized to issue "home warranties" as those terms are defined in s. 634.301(4) and (5) ;

(c) A service warranty association authorized to issue "service warranties" as those terms are defined in s. 634.401(14) and (15);

(d) An optometric service plan corporation authorized to issue optometric service plan contracts as those terms are defined in s. 637.001 (2) and (3);

(e) A pharmaceutical service plan corporation authorized to issue pharmaceutical service plan contracts as those terms are defined in s. 637.1701 (2) and (3);

(f) A dental service plan corporation licensed to issue contracts for dental services pursuant to a dental service plan as that term is defined in s. 637.401 (1 );

(g) An ambulance service association authorized to issue ambulance service contracts as those terms are defined in s. 638.021 (1) and (2) ;

(h) A licensed direct disposer or a licensed funeral director authorized to issue preneed contracts as those terms are defined in s. 639.07(2), (4) , and (6);

(i) A health care services plan authorized to issue health care services plan contracts to subscribers pursuant to s. 641.04;

(j) An authorized health maintenance organization operating pursuant to s. 641 .21;

(k) An authorized prepaid health clinic operating pursuant to s. 641.405;

(I) A legal expense insurance corporation authorized to engage in a legal expense insurance business pursuant to s. 642.021; or

(m) A provider which is licensed to operate a facility which undertakes to provide continuing care as those terms are defined in s. 651.011 (2), (5), (6), and (7) .

(2) No person shall, individually or in conjunction with any affiliated person of such person, directly or indirectly, conclude a tender offer or exchange offer for, enter into any agreement to exchange securities for, or otherwise finally acquire, 5 percent or more of the outstanding voting securities of an allied lines insurer which is a stock corporation or of a controlling company of an allied lines insurer which is a stock corporation; or conclude an acquisition of, or otherwise finally acquire, 5 percent or more of the ownership interest of an allied lines insurer which is not a stock corporation or of a controlling company of an allied lines insurer which is not a stock corporation, unless:

(a) The person or affiliated person has filed with the department and sent by registered mail to the principal office of the allied lines insurer and controlling company a statement as specified in subsection (4) no later than 5 days after any form of tender offer or exchange offer is proposed, or no later than 5 days after the acquisition

of the securities or ownership interest if no tender offer or exchange offer is involved.

(b) The department has approved the tender offer or exchange offer, or acquisition if no tender offer or exchange offer is involved.

(3) This section does not apply to any acquisition of voting securities or ownership interest of an allied lines insurer or of a controlling company by any person who, on July 9, 1986, is the owner of a majority of such voting securities or ownership interest or who, on or after July 9, 1986, becomes the owner of a majority of such voting securities or ownership interest with the approval of the department pursuant to this section. It does apply, however, whenever any allied lines insurer or controlling company makes a tender offer or exchange offer for, or enters into an agreement to exchange securities for, or otherwise seeks to acquire, 5 percent or more of the voting stock of any allied lines insurer which is a stock corporation, or seeks to acquire 5 percent or more of the ownership interest in an allied lines insurer which is not a stock corporation.

(4) The statement to be filed with the department and furnished to the allied lines insurer and controlling company shall contain the following information and any additional information as the department may deem necessary to determine the character, experience, ability, and other qualifications of the person or affiliated person of such person for the protection of the insureds of the insurer and of the public:

(a)1. The identity of, and the background informa-tion specified in subsection (5) on, each natural person by whom, or on whose behalf, the acquisition is to be made; and,

2. If the acquisition is to be made by, or on behalf of, a person other than a natural person and as to any person who controls, either directly or indirectly, such other person , the identity of, and the background information specified in subsection (5) on:

a. Each director, officer, or trustee, if a corporation, or

b. Each partner, owner, manager, or joint venturer, or other person performing duties similar to those of persons in the aforementioned positions, if not a corporation ,

for the person . (b) The source and amount of the funds or other con

sideration used, or to be used, in making the acquisition. (c) Any plans or proposals which such persons may

have made to liquidate the allied lines insurer, to sell any of its assets or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management; and any plans or proposals which such persons may have made to liquidate any controlling company of the allied lines insurer, to sell any of its assets or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management.

(d) The nature and the extent of the controlling interest which the person or affiliated person of such person proposes to acquire, the terms of the proposed acquisition, and the manner in which the controlling interest is

690


to be acquired of an allied lines insurer or controlling company which is not a stock corporation .

(e) The number of shares or other securities which the person or affiliated person of such person proposes to acquire, the terms of the proposed acquisition , and the manner in which the securities are to be acquired .

(f) Information as to any contract, arrangement, or understanding with any party with respect to any of the securities of the allied lines insurer or controlling company, including, but not limited to, information relating to the transfer of any of the securities, option arrangements, puts or calls , or the giving or withholding of proxies, which information names the party with whom the contract , arrangement, or understanding has been entered into and gives the details thereof.

(5)(a) The information as to the background and identity of each natural person, which information is required to be furnished pursuant to paragraph (4)(a), shall include:

1. The natural person 's occupations, positions of employment, and offices held during the past 10 years.

2. The principal business and address of any business, corporation , or organization in which each such office of the natural person was held, or in which each such occupation or position of employment was carried on.

3. Whether the natural person was, at any time dur-ing such 1 0-year period , convicted of any crime other than a traffic violation .

4. Whether the natural person has been , during such 1 0-year period , the subject of any proceeding for the revocation of any license and , if so, the nature of the proceeding and the disposition of the proceeding .

5. Whether, during the 10-year period , the natural person has been the subject of any proceeding under the Federal Bankruptcy Act; or whether, during the 10-year period , any person or other business or organization in which the natural person was a director, officer, trustee, partner, owner, manager, or other official has been subject to any such proceeding, either during the time in which the natural person was a director, officer, or trustee, if a corporation , or a partner, owner, manager, joint venturer, or other official , if not a corporation , or within 12 months thereafter.

6. Whether, during the 10-year period , the natural person has been enjoined, either temporarily or permanently, by a court of competent jurisdiction from violating any federal or state law regulating the business of insurance, securities, or banking , or from carrying out any particular practice or practices in the course of the business of insurance, securities, or banking, together with details as to any such event.

(b) Any person filing the statement required by this section shall give all required information that is within the knowledge of:

1. The directors, officers, or trustees, if a corporation, or

2. The partners , owners, managers, or joint venturers, or others performing functions similar to those of a director, officer, or trustee, if not a corporation,

of the person making the filing and of any person controlling either directly or indirectly such person . If any

691

material change occurs in the facts set forth in the statement filed with the department pursuant to this section, an amendment setting forth such changes shall be filed immediately with the department, and a copy of the amendment shall be sent by registered mail to the principal office of the allied lines insurer and to the principal office of the controlling company.

(6)(a) The acquisition shall be deemed approved unless the department disapproves the proposed acquisition within 90 days after the statement required by subsection (2) has been filed . The department may on its own initiate, or, if requested to do so in writing by a substantially affected person , shall conduct , a proceeding to consider the appropriateness of the proposed filing. The 90-day time period shall be tolled during the pendency of the proceeding. Any written request for a proceeding must be filed with the department within 10 days of the date notice of the fil ing is given. During the pendency of the proceeding or review period by the department, any person or affiliated person complying with the filing requirements of this section may proceed and take all steps necessary to conclude the acquisition so long as the acquisition becoming final is conditioned upon obtaining departmental approval. The department shall , however, at any time it finds an immediate danger to the public health , safety, and welfare of the insureds exists, immediately order, pursuant to s. 120.59(3), the proposed acquisition temporarily disapproved and any further steps to conclude the acquisition ceased .

(b) During the pendency of the department's review of any acquisition subject to the provisions of this section , the acquiring person shall not make any material change in the management or operation of the allied lines insurer or controlling company unless the department has specifically approved the change. A material change is a transaction which disposes of or obligates 5 percent or more of the capital and surplus of the allied lines insurer or is any change in management involving officers or directors of the allied lines insurer or any person of the allied lines insurer or controlling company having authority to dispose of or obligate 5 percent or more of the allied lines insurer's capital or surplus. The department shall approve the change if it finds the applicable provisions of subsection (8) have been met.

(c) If a request for a proceeding is filed, the proceeding shall be conducted within 60 days after the date the written request for a proceeding is received by the department. A recommended order shall be issued within 20 days of the date of the close of the proceedings. A final order shall be issued within 20 days of the date of the recommended order or, if exceptions to the recommended order are filed , within 20 days of the date the exceptions are filed .

(7) The department may disapprove any acquisition subject to the provisions of this section by any person or any affiliated person of such person who:

(a) Willfully violates this section ; (b) In violation of an order of the department issued

pursuant to subsection (11 ), fails to divest himself of any stock or ownership interest obtained in violation of this section or fails to divest himself of any direct or indirect control of such stock or ownership interest, within 25 days after such order; or


(c) In violation of an order issued by the department pursuant to subsection (11 ), acquires an additional stock or ownership interest in an allied lines insurer or controlling company or direct or indirect control of such stock or ownership interest, without complying with this section .

(8) The person or persons filing the statement required by subsection (2) shall have the burden of proof. The department shall approve any such acquisition if it finds, on the basis of the record made during any proceeding or on the basis of the filed statement if no proceeding is conducted, that:

(a) Upon completion of the acquisition, the allied lines insurer will be able to satisfy the requirements for the issuance of a license or certificate to write the line of insurance for which it is presently licensed or certificated.

(b) The financial condition of the acquiring person or persons will not jeopardize the financial stability of the allied lines insurer or prejudice the interests of its insureds or the public.

(c) Any plan or proposal which the acquiring person has, or acquiring persons have, made:

1. To liquidate the allied lines insurer, sell its assets, or merge or consolidate it with any person, or to make any other major change in its business or corporate structure or management, or

2. To liquidate any controlling company, sell its assets, or merge or consolidate it with any person , or to make any major change in its business or corporate structure or management which would have an effect upon the insurer,

is fair and free of prejudice to the insureds of the allied lines insurer or to the public.

(d) The competence, experience, and integrity of those persons who will control directly or indirectly the operation of the allied lines insurer indicate that the acquisition is in the best interest of the insureds of the insurer and in the public interest.

(e) The natural persons for whom background information is required to be furnished pursuant to this section have such backgrounds as to indicate that it is in the best interests of the insureds of the allied lines insurer and in the public interest to permit such persons to exercise control over the allied lines insurer.

(f) The directors and officers, if such allied lines insurer or controlling company is a stock corporation, or the trustees, partners, owners, managers, or joint venturers or other persons performing duties similar to those of persons in the aforementioned positions, if such allied lines insurer or controlling company is not a stock corporation, to be employed after the acquisition have sufficient insurance experience and ability to assure reasonable promise of successful operation.

(g) The management of the allied lines insurer after the acquisition will be competent and trustworthy, and will possess sufficient managerial experience so as to make the proposed operation of the allied lines insurer not hazardous to the insurance-buying public.

(h) The management of the allied lines insurer after the acquisition shall not include any person who has directly or indirectly through ownership, control, reinsur-

ance transactions, or other insurance or business relations unlawfully manipulated the assets, accounts, finances, or books of any insurer or otherwise acted in bad faith with respect thereto.

(i) The acquisition is not likely to be hazardous or prejudicial to the insureds of the insurer or to the public.

U) The effect of the acquisition would not substantially lessen competition in the line of insurance for which the allied lines insurer is licensed or certified in this state or would not tend to create a monopoly therein.

(9) No vote by the stockholder of record, or by any other person, of any security acquired in contravention of the provisions of this section is valid. Any acquisition contrary to the provisions of this section is void. Upon the petition of the allied lines insurer or the controlling company, the circuit court for the county in which the principal office of the allied lines insurer is located may, without limiting the generality of its authority, order the issuance or entry of an injunction or other order to enforce the provisions of this section. There shall be a private right of action in favor of the allied lines insurer or controlling company to enforce the provisions of this section . No demand upon the department that it perform its functions shall be required as a prerequisite to any suit by the allied lines insurer or controlling company against any other person, and in no case shall the department be deemed a necessary party to any action by the allied lines insurer or controlling company to enforce the provisions of this section . Any person who makes or proposes an acquisition requiring the filing of a statement pursuant to this section, or who files such a statement, shall be deemed to have thereby designated the Insurance Commissioner and Treasurer, or his assistant or deputy or another person in charge of his office, as such person's agent for service of process under this section and shall thereby be deemed to have submitted himself to the administrative jurisdiction of the department and to the jurisdiction of the circuit court.

(10) Any approval by the department under this section does not constitute a recommendation by the department of the tender offer or exchange offer, or acquisition, if no tender offer or exchange offer is involved. It is unlawful for a person to represent that the department's approval constitutes a recommendation. A person who violates the provisions of this subsection is guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. The statute-of-limitations period for the prosecution of an offense committed under this subsection is 5 years.

(11) If the department determines that any person or any affiliated person of such person has acquired 5 percent or more of the outstanding voting securities of an allied lines insurer or controlling company which is a stock corporation, or 5 percent or more of the ownership interest of an allied lines insurer or controlling company which is not a stock corporation, without complying with the provisions of this section, the department may order that the person and any affiliated person of such person cease acquisition of the allied lines insurer or controlling company and, if appropriate, divest itself of any stock or ownership interest acquired in violation of this section.

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(12)(a) The department shall, if necessary to protect the public interest, suspend or revoke the certificate of authority of any allied lines insurer or controlling company acquired in violation of this section.

(b) If any allied lines insurer is subject to suspension or revocation pursuant to paragraph (a), the allied lines insurer shall be deemed to be in such condition, or to be using or to have been subject to such methods or practices in the conduct of its business, as to render its further transaction of insurance presently or prospectively hazardous to its insureds, creditors, or stockholders or to the public.

(13)(a) For the purpose of this section, the term "acquisition" includes:

1. A tender offer or exchange offer for securities, assets, or other ownership interest;

2. An agreement to exchange securities for other securities, assets, or other ownership interest;

3. A merger of a person or affiliated person into an allied lines insurer or a merger of any person with an allied lines insurer;

4. A consolidation; or 5. Any other form of change of control

whereby any person or affiliated person acquires or attempts to acquire, directly or indirectly, 5 percent or more of the ownership interest or assets of an allied lines insurer or of a controlling company. However, in the case of a health maintenance organization organized as a forprofit corporation, the provisions of s. 628.451 shall govern with respect to any merger or consolidation, and, in the case of a health maintenance organization organized as a not-for-profit corporation, the provisions of s. 628.471 shall govern with respect to any merger or consolidation.

(b) For the purpose of this section, the term "affiliated person" of another person includes:

1. The spouse of such other natural person; 2. The parents of such other natural person and

their lineal descendants and the parents of such other natural person's spouse and their lineal descendants;

3. Any person who directly or indirectly owns or controls, or holds with power to vote, 5 percent or more of the outstanding voting securities of such other person;

4. Any person who directly or indirectly owns 5 percent or more of the outstanding voting securities which are directly or indirectly owned or controlled, or held with power to vote, by such other person;

5. Any person or group of persons who directly or indirectly control, are controlled by, or are under common control with such other person;

6. Any director, officer, trustee, partner, owner, manager, joint venturer, or employee, or other person performing duties similar to those of persons in the aforementioned positions, of such other person;

7. If such other person is an investment company, any investment adviser of such company or any member of an advisory board of such company;

8. If such other person is an unincorporated invest-ment company not having a board of directors, the depositor of such company; or

9. Any person who has entered into an agreement, written or unwritten, to act in concert with such other person in acquiring, or limiting the disposition of, securities of an allied lines insurer or controlling company which is a stock corporation or in acquiring, or limiting the disposition of, an ownership interest of an allied lines insurer or controlling company which is not a stock corporation.

(c) For the purposes of this section , the term "controlling company" means any corporation , trust, or association owning, directly or indirectly, 25 percent or more of the voting securities of one or more allied lines insurance companies which are stock corporations, or 25 percent or more of the ownership interest of one or more allied lines insurance companies which are not stock corporations.

(d) For the purpose of this section, the term "natural person" means an individual.

(e) For the purpose of this section, the term "person" includes a natural person, corporation, association, trust, general partnership, limited partnership, joint venture, firm, proprietorship, or any other entity which may hold a license or certificate as an allied lines insurer.

(14) The department is authorized to adopt, amend, or repeal rules that are necessary to implement the provisions of this section, pursuant to chapter 120.

History.-ss. 2, 17, ch. 86-250; s. 4, ch. 87-50. 1Note.-Expires October 1, 1991 , pursuant to s. 17, ch. 86-250, as amended by

s. 4, ch. 87-50, and is scheduled for review pursuant to s. 11.61.

1628.471 Mergers and consolidations; mutual insurers.-

(1) A domestic mutual insurer shall not merge or consolidate with a stock insurer.

(2) A domestic mutual insurer may merge or consolidate with another mutual insurer under the applicable procedures prescribed by the statutes of this state applying to corporations formed for profit, except as hereinbelow provided .

(3) The plan and agreement for merger or consolidation shall be submitted to and approved by at least twothirds of the members of each mutual insurer voting thereon at meetings called for the purpose pursuant to such reasonable notice and procedure as has been approved by the department. If a life insurer, the right to vote may be limited to members whose policies are other than term and group policies and have been in effect for more than 1 year.

(4) No such merger or consolidation shall be effectuated unless in advance thereof the plan and agreement therefor have been filed with the department and approved by it. The department shall give such approval unless it finds such plan or agreement:

(a) Is inequitable to the policyholders of any domestic insurer involved; or

(b) Would substantially reduce the security of and service to be rendered to policyholders of the domestic insurer in this state and elsewhere.

Hlstory.-s. 667, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318: ss. 665, 809(1st), ch. 82-243.


1628.481 Bulk reinsurance; stock insurers.-(1) A domestic stock insurer may reinsure all or sub-

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Ch. 628 STOCK AND MUTUAL INSURERS; HOLDING COMPANIES F.S. 1987

stantially all of its insurance in force or a major class thereof, with another insurer by an agreement of bulk reinsurance; but no such agreement shall become effective unless filed with the department and approved by it in writing.

(2) The department shall approve such agreement unless it finds that it is inequitable to the stockholders of the domestic insurer or it would substantially reduce the protection or service to its policyholders.

History.-s. 668, ch. 59- 205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-1 68; s. 1, ch. 77-457; s. 21, ch. 78- 95; ss. 2, 3, ch. 81- 318; ss . 665, 809(1st), ch. 82-243. 'Note.-Repealed effective October 1, 1991 , by s. 809(1st), ch . 82-243, and


1628.491 Mergers and consolidations; mutual insurers; agreement of bulk reinsurance.-

(1) A domestic mutual insurer may reinsure all or substantially all its business in force, or all or substantially all of a major class thereof, with another insurer, stock or mutual, by an agreement of bulk reinsurance after compliance with this section. No such agreement shall become effective unless filed with the department and approved by it.

(2) The department shall approve such agreement if it finds it to be fair and equitable to each domestic insurer involved, and that such reinsurance if effectuated would not substantially reduce the protection or service to its policyholders.

(3) The plan and agreement for such reinsurance must be approved by vote of not less than two-thirds of each domestic mutual insurer 's members voting thereon at meetings of members called for the purpose, pursuant to such reasonable notice and procedure as the department may approve. If a life insurer, the right to vote may be limited to members whose policies are other than term or group policies and have been in effect for more than 1 year.

(4) If for reinsurance of a mutual insurer in a stock insurer, the agreement must provide for payment in cash to each member of the insurer entitled thereto, as upon conversion of such insurer pursuant to s. 628.441 , of his equity in the business reinsured as determined under a fair formula approved by the department, which equity shall be based upon such member's equity in the reserves , assets (whether or not admitted assets), and surplus, if any, of the mutual insurer to be taken over by the stock insurer.

History.-s. 669, ch . 59-205; ss. 13, 35, ch. 69- 106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch. 81-318; ss. 665, 809(1st), ch. 82-243.

1Note.-Repealed effective October 1, 1991, by s. 809(1st), ch. 82- 243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1628.501 Mutual member's share of assets on liquidation.-

(1) Upon any liquidation of a domestic mutual insurer, its assets remaining after discharge of its indebtedness, policy obligations, repayment of contributed or borrowed surplus, if any, and expenses of administration, shall be distributed to existing persons who were its members at any time within 5 years next preceding the date such liquidation was authorized or ordered, or date of last termination of the insurer's certificate of authority, whichever date is the earlier; except, that if the department has reason to believe that those in charge of the management of the insurer have caused or en-

couraged the reduction of the number of members of the insurer in anticipation of liquidation and for the purpose of reducing thereby the number of persons who may be entitled to share in distribution of the insurer's assets, it may enlarge the 5 years ' qualification period above provided for by such additional period as it may deem to be reasonable .

(2) The distributive share of each such member shall be in the proportion that the aggregate premiums earned by the insurer on the policies of the member during the combined periods of his membership bear to the aggregate of all premiums so earned on the policies of all such members. The insurer may, and if a life insurer shall , make a reasonable classification of its policies so held by such members, and a formula based upon such classification, for determining the equitable distributive share of each such member. Such classification and formula shall be subject to the approval of the department.

History.-s. 670, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81 - 318; ss. 665, 809(1st), ch. 82-243.


1628.511 Book entry accounting system.-(1) The purpose of this section is to authorize do

mestic insurers to utilize modern systems for holding and transferring securities without physical delivery of securities certificates, subject to appropriate rules of the department.

(2) The following terms are defined for use in this section:

(a) "Securities" means instruments as defined in s. 678.1 02(1 ).

(b) "Clearing corporation" means a corporation as defined in s. 678.1 02(3).

(c) "Direct participant" means a national bank, state bank or trust company which maintains an account in its name in a clearing corporation and through which an insurance company participates in a clearing corporation.

(d) "Federal Reserve book-entry system" means the computerized systems sponsored by the United States Department of the Treasury and agencies and instrumentalities of the United States for holding and transferring securities of the United States Government and such agencies and instrumentalities, respectively , in Federal Reserve banks through banks which are members of the Federal Reserve System or which otherwise have access to such computerized systems.

(e) "Member bank" means a national bank, state bank or trust company which is a member of the Federal Reserve System and through which an insurer participates in the Federal Reserve book-entry system.

(3) Notwithstanding any other provision of law, a domestic insurer may deposit or arrange for the deposit of securities held in or purchased for its general account and its separate accounts in a clearing corporation or in the Federal Reserve book-entry system. When securities are deposited with a clearing corporation, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of such clearing corporation with any other securities deposited with such clearing corporation by any person , regardless of the ownership of such securities, and certificates representing securities

694


of small denominations may be merged into one or more certificates of larger denominations. The records of any bank through which an insurer holds securities in the Federal Reserve book-entry system, and the records of any custodian banks through which an insurer holds securities in a clearing corporation, shall at all times show that such securities are held for such insurer and for which accounts thereof. Ownership of, and other inter· ests in, such securities may be transferred by bookkeep· ing entry on the books of such clearing corporation or in the Federal Reserve book-entry system without, in ei· ther case, physical delivery of certificates representing such securities.

(4) The department is authorized to promulgate rules governing the deposit by insurers of securities with clearing corporations and in the Federal Reserve bookentry system.

History.-ss. 663. 809(1st), ch. 82-243; s. 72, ch. 82-386. 'Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch . 82-243, and is


1628.520 Change of domicile of a foreign insurer.Any insurer which is organized under the laws of any other state and is admitted to do business in this state for the purpose of writing insurance may become a do· mestic insurer by complying with all of the requirements of law relative to the organization and licensing of a do· mestic insurer of the same type and by designating its principal place of business at a place in this state upon approval by the department . Such domestic insurer shall be entitled to like certificates and licenses to trans· act business in this state and shall be subject to the authority and jurisdiction of this state.

History.-s. 7, ch. 85-214; s. 1, ch. 86-286. 'Note.-Repealed effective October 1, 1991, by s. 1, ch. 86-286, and scheduled


1628.525 Change of domicile of a domestic insurer. -Any domestic insurer may, upon the approval of the department, transfer its domicile to any other state in which it is admitted to transact the business of insurance; upon such a transfer it shall cease to be a domes· tic insurer and shall be admitted to this state, if qualified, as a foreign insurer. The department shall approve any such proposed transfer unless it shall determine that such transfer is not in the interest of the policyholders of this state.

Hlstory.-s. 7, ch . 85- 214; s. 1, ch. 86-286. 1Note.-Repealed effective October 1, 1991 , by s. 1, ch. 86-286, and scheduled


1628.530 Effects of redomestication.-The certifi· cate of authority, agents appointments and licenses, rates, and other items which the department allows, in its discretion, which are in existence at the time any in· surer licensed to transact the business of insurance in this state transfers its corporate domicile to this or any other state by merger, consolidation, merger pursuant to s. 607.234(4), or any other lawful method shall contin· ue in full force and effect upon such transfer if such in· surer remains duly qualified to transact the business of insurance in this state. All outstanding policies of any transferring insurer shall remain in full force and effect and need not be endorsed as to the new name of the company or its new location unless so ordered by the department. Every transferring insurer shall file new poli·

cy forms with the department on or before the effective date of the transfer, but may use existing policy forms with appropriate endorsements if allowed by, and under such conditions as are approved by, the department. However, every such transferring insurer shall notify the department of the details of the proposed transfer and shall file promptly any resulting amendments to corporate documents filed or required to be filed with the de· partment.

History.-s. 7, ch. 85-214; s. t , ch. 86-286. 'Note.-Repealed effective October 1, 1991 , by s. 1, ch. 86-286, and scheduled


1628.535 Authority to promulgate rules.-The de· partment may promulgate rules to carry out the purposes of this chapter.

History.-s. 7, ch. 85-214; s. 1, ch . 86-286. 'Note.-Repealed effective October 1, 1991 , by s. 1, ch . 86-286, and scheduled

for review pursuant to s. 11.61.

PART II

INSURANCE HOLDING COMPANIES

628.801 Insurance holding companies ; registration; regulation .

628.802 Injunction. 628.803 Sanctions.

1628.801 Insurance holding companies; registration; regulation.-Every insurer which is authorized to do business in this state and which is a member of an insurance holding company shall register with the de· partment and be subject to regulation with respect to its relationship to such holding company as provided by rule or statute. The department shall promulgate rules establishing the information and form required for regis· tration and the manner in which registered insurers and their affiliates shall be regulated. Such rules shall be in substantial conformity to those standards set forth in Chapter 4-26, Florida Administrative Code, as such rule provisions existed on January 1 , 1985, and shall be pro· mulgated pursuant to s. 624.308. It is specifically provid· ed that, until superseding rule provisions become effective, Chapter 4-26, Florida Administrative Code, shall be deemed to implement this provision.

History.-s. 9, ch. 85-214; s. 1, ch. 86-286. 'Note.-Repealed effective October 1, 1991 , by s. 1, ch . 86-286, and scheduled


1628.802 lnjunction.-(1) Whenever it appears to the department that any

insurer or any director, officer, employee, or agent there· of has committed or is about to commit a violation of this part or of any rule or order issued by the department pursuant to this part, the department may apply to the cir· cuit court in and for Leon County for an order enjoining the insurer, director, officer, employee, or agent from vio· lating or continuing to violate this part or the rule or order and for other equitable relief as the nature of the case and the interest of the insurer's policyholders, creditors, and shareholders or the public may require.

(2) Notwithstanding any other provision of law, for the purposes of this part the situs of the ownership of the securities of domestic insurers shall be deemed to be in this state.

History.-s. 9, ch. 85-214; s. 1, ch. 86-286.

695


'Note.-Repealed effective October 1, 1991 , by s. 1, ch. 86-286, and scheduled for review pursuant to s. 11 .61 .

1628.803 Sanctions.-(1) Any company failing , without just cause, to file

any registration statement or certificate of exemption required to be filed pursuant to department rules relating to this part shall , in addition to other penalties prescribed under the Florida Insurance Code, be subject to pay a penalty of $100 for each day's delay, not to exceed a total of $10,000.

(2) Every director or officer of an insurance holding company system who knowingly violates or participates in , or who knowingly directs any of the officers or agents of the company to engage in transactions or make investments which have not been properly filed or approved or which violate department rules relating to this part , shall pay, in their individual capacity, a civil forfeiture of not more than $5,000 per violation. In determining the amount of the civil forfeiture , the department shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, and the history of previous violations.

(3) Whenever it appears to the department that any insurer subject to this part or any director, officer, employee, or agent thereof has engaged in any transaction or entered into a contract which violates department rules relating to this part, the department may order the insurer to cease and desist immediately any further activity under that transaction or contract. The department may also order the insurer to void any such transaction or contract and restore the status quo if this action is in the best interest of the policyholders, creditors , or public.

(4) Any officer, director, or employee of an insurance holding company system who willfully and knowingly subscribes to , or makes or causes to be made, any false statements, false reports , or false filings with the intent to deceive the department in the performance of its duties under this part is guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

History.-s. 9, ch. 85-214; s. 1, ch. 86-286. 1Note.-Repealed effective October 1, 1991 , by s. 1, ch. 86-286, and scheduled


628.901 628.903 628.905 628.907 628.909 628.911 628.913 628.915 628.917

PART Ill

CAPTIVE INSURERS

"Captive insurer" defined. "Industrial insured captive insurer" defined. Licensing : authority . Minimum capital and surplus. Applicabil ity of other laws. Reports and statements. Reinsurance. Exemption from compulsory association. Insolvency and liquidation.

1628.901 "Captive insurer" defined.-For the purposes of this part, except as provided in s. 628.903, a "captive insurer" is a domestic insurer established under part I to insure the risks of a specific corporation or group of corporations owned or controlled by the corpo-

ration or corporations from which it accepts risk under a contract of insurance.

History.- ss. 632, 809(1st), ch. 82-243; s. 5, ch. 85- 214; ss. 1, 11, ch. 87- 127. 'Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch. 82-243, and is

scheduled for review pursuant to s. 11.61 in advance of that date. Repealed effective October 1, 1991 , by. s. 11, ch . 87-127, and scheduled for review pursuant to s. 11.61 .

1628.903 "Industrial insured captive insurer" de-fined.-For purposes of this part:

(1) An "industrial insured" means an insured which: (a) Has gross assets in excess of $50 million; (b) Procures insurance through the use of a full-time

employee of the insured who acts as an insurance manager or buyer or through the services of a person licensed as a property and casualty insurance agent, broker, or consultant in such person's state of domicile;

(c) Has at least 100 full-time employees; and (d) Pays annual premiums of at least $200,000 for

each line of insurance purchased from the industrial insured captive insurer or at least $150,000, with respect to any line of coverage excess of at least $25 million in the annual aggregate. The purchase of umbrella or general liability coverage excess of $25 million in the annual aggregate shall be deemed to be the purchase of a single line of insurance.

(2) An "industrial insured captive insurer" is a captive insurer that:

(a) Has as its stockholders or members only industrial insureds that are reinsured pursuant to subparagraph (b)2. or insured by the industrial insured captive insurer, or has as its sole stockholder a corporation , which corporation 's sole stockholders are industrial insureds that are reinsured pursuant to subparagraph (b)2. or insured by the industrial insured captive insurer: and

(b)1 . Provides insurance only to the industrial in-sureds that are its stockholders or members, and affiliates thereof, or to the stockholders, and affiliates thereof, of its parent corporation ; or

2. Provides reinsurance to insurers only on risks written by such insurers for the industrial insureds who are the stockholders or members, and affiliates thereof, of the industrial insured captive insurer, or the stockholders, and affiliates thereof, of the parent corporation of the industrial insured captive insurer.

For the purposes of this paragraph, the term "affiliate" means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with one or more of the stockholders or members of the industrial insured captive insurer or one or more of the stockholders of the parent corporation of the industrial insured captive insurer.

Hiatory.- ss. 2, 11 , ch. 87-127. 1Note.-Expires October 1, 1991 , pursuant to s. 11 , ch . 87-127, and is scheduled

for review pursuant to s. 11.61 .

1628.905 Licensing; authority.-(1) Any captive insurer, when permitted by its char

ter or articles of incorporation, may apply to the department for a license to provide commercial property, commercial casualty, and commercial marine insurance coverage other than workers ' compensation and employer's liability insurance coverage, except that an industrial insured captive insurer may apply for a license to provide workers ' compensation and employer's liability insurance as set forth in subsection (6) .

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(2) No captive insurer, other than an industrial insured captive insurer, shall insure or accept reinsurance on any risks other than those of its parent and affiliated companies.

(3) In addition to information otherwise required by this code, each applicant captive insurer shall file with the department evidence of the adequacy of the loss prevention program of its insureds.

(4) An industrial insured captive insurer need not be incorporated in this state if it has been validly incorporated under the laws of another jurisdiction .

(5) An industrial insured captive insurer is subject to all provisions of this part except as otherwise indicated.

(6) An industrial insured captive insurer may not provide workers ' compensation and employer's liability insurance except in excess of at least $25 million in the annual aggregate.

History.-ss. 664, 809(1st), ch . 82-243; ss. 3, 11 , ch. 87-127. 1Note.-Expires October 1, 1991, pursuant to s. 809(1st), ch. 82- 243, and is

scheduled for review pursuant to s. 11.61 in advance of that date. Repealed effective October 1, 1991, by s. 11 , ch. 87-127, and scheduled for review pursuant to s. 11.61 .

1628.907 Minimum capital and surplus.-No captive insurer shall be issued a license unless it possesses and thereafter maintains:

(1) Unimpaired paid-in capital of at least $500,000; and

(2) Unimpaired surplus of at least $250,000. History.- ss. 664, 809(1st), ch. 82-243; ss. 4, 11, ch. 87-1 27.

1Note.-Expires October 1, 1991, pursuant to s. 809(1 st), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date. Repealed effective October 1, 1991, by s. 11 , ch. 87-127, and scheduled for review pursuant to s. 11 .61.

1628.909 Applicability of other laws.-(1) The Florida Insurance Code shall not apply to

captive insurers or industrial insured captive insurers except as provided in this part and subsections (2) , (3) , and (4).

(2) The following provisions of the Florida Insurance Code shall apply to captive insurers who are not industrial insured captive insurers to the extent that such provisions are not inconsistent with this part:

(a) Chapter 624, except for ss. 624.425 and 624.426. (b) Chapter 625, part II. (c) Chapter 626, part X. (d) Sections 627.730-627.7405, when no-fault cov

erage is provided. (e) Chapter 628. (3) The following provisions of the Florida Insurance

Code shall apply to industrial insured captive insurers to the extent that such provisions are not inconsistent with this part:

(a) Chapter 624, except for ss . 624.408, 624.4095, 624.425, 624.426, and 624.609(1).

(b) Chapter 625, part II , if the industrial insured captive insurer is incorporated in this state.

(c) Chapter 626, part X. (d) Sections 627.730-627.7405 when no-fault cover

age is provided . (e) Chapter 628, except for ss. 628.311, 628.321,

628.331, 628.341, and 628.351 . (4) Section 624.404(8) shall not apply to an industrial

insured captive insurer if: (a) Not more than 5 percent of the voting rights of

such insurer is held or controlled by any single govern-

mentor government agency, other than an agency or instrumentality of the Federal Government;

(b) Not more than 10 percent of the voting rights of such insurer is held or controlled by any single agency or instrumentality of the Federal Government; and

(c) Not more than 20 percent of the voting rights of such insurer is held or controlled in the aggregate by government or government agencies, including agencies or instrumentalities of the Federal Government.

History.-ss. 664, 809(1st), ch. 82-243; s. 46, ch. 83- 215; ss. 5, 11 , ch. 87-127; s. 34, ch. 87-226.

•Note.-Expires October 1, 1991, pursuant to s. 809(1st), ch. 82- 243, and is scheduled for review pursuant to s. 11 .61 in advance of that date. Repealed effective October 1, 1991, by s. 11, ch. 87-1 27, and scheduled for review pursuant to s. 11.61 .

1628.911 Reports and statements.-(1) A captive insurer shall not be required to make

any annual report except as provided in this section. (2) A captive insurer shall , within 60 days after the

end of its fiscal year and as often as the department may deem necessary, submit to the department a report of its financial condition verified by oath of two of its executive officers. The department may promulgate by rule the form in which captive insurers shall report.

History.-ss. 664, 809(1st), ch . 82-243; ss. 6, 11 , ch . 87-127. ' Note.- Expires October 1, 1991, pursuant to s. 809(1 st), ch. 82- 243, and is

scheduled for review pursuant to s. 11 .61 in advance of that date. Repealed effective October 1, 1991, by s. 11, ch. 87-127, and scheduled forreview pursuant to s. 11 .61 .

1628.913 Reinsurance.-(1 )(a) A ceding captive insurer may reinsure all or

any part of any particular risk or class of risks with: 1. An assuming insurer authorized by the depart

ment to transact such line of insurance or reinsurance in this state. Subject to the other requirements of this code, credit may be taken for reinsurance with an authorized insurer.

2. An assuming insurer approved by the depart-ment to transact such line of reinsurance in this state. The department shall approve only solvent insurers meeting the criteria established for authorized insurers in this state. From time to time, the department shall publish a list of insurers approved pursuant to this subsection . Subject to the other requirements of this code, credit may be taken for reinsurance with an approved reinsurer.

3. An assuming underwriting member of an insur-ance exchange domiciled in any other state or jurisdiction in the United States provided the insurance exchange presents to the department for its approval , and maintains, satisfactory evidence that such assuming underwriting member maintains the standards and meets the financial requirements applicable to an authorized insurer. Subject to the other provisions of this code, credit may be taken for reinsurance with members approved under this subsection by the department.

4. A group of individual unincorporated alien insur-ers which maintains funds in an amount not less than $50,000,000 held in trust for United States policyholders and beneficiaries in a bank or trust company that is subject to supervision by any state of the United States or that is a member of the Federal Reserve System and which group satisfies the department by annually filing evidence that it can meet its obligations under its reinsurance agreements. Subject to the other provisions of this code, credit may be taken for reinsurance with

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groups approved under this subsection by the department.

(b) Credit in accounting and financial statements on account of reinsurance ceded to an unauthorized or unapproved reinsurer may be allowed only:

1 . When it is demonstrated by the ceding captive insurer to the satisfaction of the department that such reinsurer maintains the standards and meets the financial requirements applicable to an authorized insurer;

2. To the extent of deposits by, or funds withheld from , such reinsurer pursuant to express provision therefor in the reinsurance contract as security for the payment of the obligations thereunder if such deposits or funds are held subject to withdrawal by, and under the control of, the ceding captive insurer or such deposits or funds are placed in trust for such purposes in a bank which is a member of the Federal Reserve System if withdrawals from the trust cannot be made without the consent of the ceding captive insurer. The funds withheld may be cash or securities which are qualified as admitted assets under part II of chapter 625 and which have a market value equal to or greater than the credit taken; or

3. To the extent that the amount of a clean and ir-revocable letter of credit , issued for a term of not less than 1 year and in conformity with the requirements set forth in this subparagraph, equals or exceeds the liability of an unauthorized or unapproved reinsurer for unearned premiums, outstanding losses, and an adequate reserve for incurred but not reported losses under a specific reinsurance agreement. The requirements are that such a clean and irrevocable letter of credit be issued under arrangements satisfactory to the department as constituting security to the ceding captive insurer substantially equal to that of a deposit under subparagraph 2. and that the letter be issued by a banking institution which is a member of the Federal Reserve System and which has financial standing satisfactory to the commissioner.

(2) The department shall disallow any credit which it finds would be contrary to the proper interests of the policyholders or stockholders of a ceding captive insurer .

(3) No credit may be allowed for reinsurance in an unauthorized or unapproved assuming insurer unless such insurer designates the commissioner or a person resident in the United States as agent for service of process in any action arising out of, or in connection with, such reinsurance.

(4) Credit shall be allowed to any ceding captive insurer for reinsurance otherwise complying with this section only when the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding captive insurer under the contract or contracts reinsured without diminution because of insolvency of the ceding captive insurer; and such credit shall be allowed to the ceding captive insurer for such reinsurance only when the reinsurance agreement provides that payments by

the assuming insurer will be made directly to the ceding captive insurer or its receiver, except when:

(a) The reinsurance agreement specifically provides for payment to the named insured, assignee, or named beneficiary of the policy issued by the ceding captive insurer in the event of the insolvency of the ceding insurer; or

(b) The assuming insurer, with the consent of the named insured , has assumed the policy obligations of the ceding captive insurer as direct obligations of the assuming insurer in substitution for the obligations of the ceding insurer to the named insured.

(5) No person, other than the ceding captive insurer, has any rights against the reinsurer which are not specifically set forth in the contract of reinsurance or in a specific written, signed agreement between the reinsurer and the person.

(6) No captive insurer may knowingly accept as assuming reinsurer any risk covering a subject of insurance resident, located, or to be performed in this state and written directly by any insurer not then authorized to transact such insurance in this state, other than as to surplus lines insurance lawfully written under part VIII of chapter 626.

History.-ss. 664, 809(1st), ch. 82-243: s. 2, ch. 83- 165; ss. 7, 11, ch. 87-127; s. 35, ch. 87-226.

•Note.-Expires October 1, 1991 , pursuant to s. 809(tst), ch. 82-243, and is scheduled for review pursuant to s. 1 t .6t in advance of that date. Repealed effective October 1, 1991 , by s. 11 , ch. 87- t27, and scheduled forreview pursuant to s. 11 .61 .

1628.915 Exemption from compulsory association. (1) No captive insurer shall be permitted to join or

contribute financially to any joint underwriting association or guaranty fund in this state; nor shall any captive insurer, its insured, or its parent or any affiliated company receive any benefit from any such joint underwriting association or guaranty fund for claims arising out of the operations of such captive insurer.

(2) No industrial insured captive insurer shall be permitted to join or contribute financially to any joint underwriting association or guaranty fund in this state; nor shall any industrial insured captive insurer, its industrial insured, or its parent or any affiliated company receive any benefit from any such joint underwriting association or guaranty fund for claims arising out of the operations of such industrial insured captive insurer.

History.-ss. 664, 809(1st), ch. 82-243: ss. 8, 11 , ch. 87-127. . 'Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch. 82-243, and IS

scheduled for review pursuant to s. 11 .61 in advance of that date. Repealed effective October 1, 1991 , by s. 11 , ch. 87-127, and scheduled for review pursuant to s. 11 .61 .

1628.917 Insolvency and liquidation.-ln the event that a captive insurer is insolvent as defined in chapter 631 , the department shall liquidate the captive insurer pursuant to the provisions of part I of chapter 631; except that the department shall make no attempt to rehabilitate such insurer.

History.-ss. 664, 809(1st), ch. 82-243; ss. 9, 11 , ch. 87-127 . . •Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch. 82-243, and IS

scheduled for review pursuant to s. 11 .61 in advance of that date. Repealed effective October 1, 1991 , by s. 11 , ch. 87-127, and scheduled forreview pursuant to s. 11 .61 .

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F.S. 1987 RECIPROCAL INSURERS Ch. 629

CHAPTER 629

RECIPROCAL INSURERS

629.011 629.021 629.031 629.041 629.051 629.061 629.071 629.081 629.091 629.101 629.111 629.121 629.131 629.141 629.161 629.171 629.181 629.191 629.201 629.211 629.221 629.231 629.241 629.251 629.261 629.271 629.281 629.291 629.301 629.401 629.50 629.501 629.502 629.504 629.506 629.507 629.508 629.509 629.511 629.512 629.513 629.514 629.516 629.517 629.518 629.519

"Reciprocal insurance" defined. "Reciprocal insurer" defined. Scope of chapter. Insuring powers of reciprocals. Name; suits. Attorney. Surplus funds required. Organization of reciprocal insurer. Certificate of authority. Power of attorney. Modifications . Attorney 's bond . Deposit in lieu of bond. Action on bond. Contributions to insurer. Annual statement. Financial condition ; method of determining . Who may be subscribers. Subscribers ' advisory committee. Subscribers ' liability. Subscribers ' liability; on judgment. Assessments . Time limit for assessments. Aggregate liability . Nonassessable policies. Distribution of savings. Subscribers ' share in assets. Merger or conversion. Impaired reciprocal insurers . Insurance exchange. Limited commercial reciprocal insurer. Reinsurance. Certificate of authority. Attorney in fact. Member's liability. Assessments . Time limit for assessments . Impaired limited reciprocal insurers. Use of agents. Filing, approval, and disapproval of forms . Making and use of rates . Reports ; registration of agent. Examination. Suspension or revocation . Applicability of related laws. Conversion of limited commercial reciprocal

insurer.

1629.011 "Reciprocal insurance" defined.-"Reciprocal insurance" is that resulting from an interexchange among persons, known as "subscribers ," of reciprocal agreements of indemnity, the interexchange being effectuated through an "attorney in fact" common to all such persons.

History.-s. 671. ch. 59- 205; s. 3, ch. 76-168; s. 1, ch. 77- 457; ss. 2, 3, ch. 81 - 318; ss. 681, 809(1st). ch. 82-243.

'Note.-Repealed effective October 1, 1991, by s. 809(1st), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that dale.

1629.021 "Reciprocal insurer" defined.-A "reciprocal insurer" means an unincorporated aggregation of subscribers operating individually and collectively through an attorney in fact to provide reciprocal insurance among themselves.

History.-s. 672, ch. 59- 205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81 -318; ss. 666,681, 809(1st), ch. 82-243.


1629.031 Scope of chapter.-AII authorized reciprocal insurers shall be governed by those sections of this chapter not expressly made applicable to domestic reciprocal insurers.

History.- s. 673, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81 - 318; ss. 667 , 681, 809(1st), ch . 82-243; s. 123, ch . 83-216.

1Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1629.041 Insuring powers of reciprocals.-(1) A reciprocal insurer may transact any kind of in

surance other than life or title . (2) Such an insurer may purchase reinsurance, and

may grant reinsurance as to any kind of insurance it is authorized to transact directly.

History.- s. 674, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 668, 681 , 809(1st), ch. 82- 243.

1Note.-Expires October 1. 1991 . pursuant to s. 809(1st), ch. 82- 243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1629.051 Name; suits.-A reciprocal insurer shall : (1) Have and use a business name. The name shall

include the word "reciprocal, " or "interinsurer," or "interinsurance," or "exchange," or "underwriters," or "underwriting ," but this requirement shall not apply as to any insurer holding a certificate of authority to transact insurance in this state immediately prior to the effective date of this code.

(2) Sue and be sued in its own name. History.- s. 675, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457 ; ss. 2, 3, ch.

81 -318; ss. 681, 809(1st), ch . 82-243. 1Note.-Repealed effective October 1, 1991 , by s. 809(1st), ch. 82-243, and


1629.061 Attorney.-(1) "Attorney, " as used in this chapter, refers to the

attorney in fact of a reciprocal insurer. The attorney may be an individual , corporation, or other person .

(2) The attorney of a foreign or alien reciprocal insurer, which insurer is duly authorized to transact insurance in this state, shall not, by virtue of discharge of its duties as such attorney with respect to the insurer's transactions in this state, be thereby deemed to be doing business in this state within the meaning of any laws of this state applying to foreign firms or corporations .

(3) The office of the attorney shall be maintained at such place as is designated by the subscribers in the power of attorney.

History.-s. 676, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 669, 681 , 809(1st), ch. 82- 243.

1Note.-Expires October 1, 1991, pursuant to s. 809(1st), ch. 82- 243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1629.071 Surplus funds required.-(1) A domestic reciprocal insurer hereunder formed,

if it has otherwise complied with the applicable provi-

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Ch. 629 RECIPROCAL INSURERS F.S. 1987

sions of this code, may be authorized to transact insurance if it has and thereafter maintains surplus funds of not less than $250,000.

(2) In addition to the surplus required to be maintained under subsection (1 ), the insurer shall have, when first so authorized, an expendable surplus of not less than $750,000.

History.-s. 677 , ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 116, ch. 79-40; ss. 2, 3, ch . 81-318; ss. 670, 681 , 809(1st), ch. 82-243. 'Note.-Expires October 1, 1991 , pursuant to~· 809(1st), ch. 82-243, and is


1629.081 Organization of reciprocal insurer.-(1) Twenty-five or more persons domiciled in this

state may organize a domestic reciprocal insurer and make application to the department for a certificate of authority to transact insurance.

(2) The proposed attorney shall fulfill the requirements of and shall execute and file with the department, when applying for a certificate of authority, a declaration setting forth:

(a) The name of the insurer; (b) The location of the insurer 's principal office,

which shall be the same as that of the attorney and shall be maintained within this state;

(c) The kinds of insurance proposed to be transacted ;

(d) The names and addresses of the original subscribers;

(e) The designation and appointment of the proposed attorney and a copy of the power of attorney;

(f) The names and addresses of the officers and directors of the attorney, if a corporation, or of its members, if other than a corporation;

(g) The powers of the subscribers' advisory committee, and the names and terms of office of the members thereof;

(h) That all moneys paid to the reciprocal shall , after deducting therefrom any sum payable to the attorney, be held in the name of the insurer and for the purposes specified in the subscribers ' agreement;

(i) A copy of the subscribers' agreement; (j) A statement that each of the original subscribers

has in good faith applied for insurance of a kind proposed to be transacted, and that the insurer has received from each such subscriber the full premium or premium deposit required for the policy applied for, for a term of not less than 6 months at an adequate rate theretofore filed with and approved by the department;

(k) A statement of the financial condition of the insurer, a schedule of its assets, and a statement that the surplus as required by s. 629.071 is on hand; and

(I) A copy of each policy, endorsement, and application form it then proposes to issue or use.

Such declaration shall be acknowledged by the attorney before an officer authorized to take acknowledgments.

History.-s. 678, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 671 , 681 , 809(1st), ch. 82-243.


1629.091 Certificate of authority.-The certificate of authority of a reciprocal insurer shall be issued to its attorney in the name of the insurer.

Hlstory.-s. 679, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch.

77-457; ss. 2, 3, ch. 81-318; ss. 672,681 , 809(1st), ch . 82-243. 'Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch. 82-243, and is


1629.101 Power of aHorney.-(1) The rights and powers of the attorney of a recip

rocal insurer shall be as provided in the power of attorney given it by the subscribers.

(2) The power of attorney must set forth: (a) The powers of the attorney; (b) That the attorney is empowered to accept ser

vice of process on behalf of the insurer in actions against the insurer upon contracts exchanged;

(c) The general services to be performed by the attorney;

(d) The maximum amount to be deducted from advance premiums or deposits to be paid to the attorney and the general items of expense in addition to losses, to be paid by the insurer; and

(e) Except as to nonassessable policies, a provision for a contingent several liability of each subscriber in a specified amount, which amount shall be not less than five nor more than ten times the premium or premium deposit stated in the policy.

(3) The power of attorney may: (a) Provide for the right of substitution of the attor

ney and revocation of the power of attorney and rights thereunder;

(b) Impose such restrictions upon the exercise of the power as are agreed upon by the subscribers;

(c) Provide for the exercise of any right reserved to the subscribers directly or through their advisory committee; and

(d) Contain other lawful provisions deemed advisable.

(4) The terms of any power of attorney or agreement collateral thereto shall be reasonable and equitable, and no such power or agreement shall be used or be effective in this state unless filed with the department.

Hlstory.-s. 680, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 673, 681 , 809(1st), ch. 82-243. 'Note.-Expires October 1, 1991 , pursuant to s. 809(1st), ch. 82-243, and is


1629.111 Modifications.-Modifications of the terms of the subscribers ' agreement or of the power of attorney of a domestic reciprocal insurer shall be made jointly by the attorney and the subscribers' advisory committee. No such modification shall be effective retroactively, nor as to any insurance contract issued prior thereto.

Hlstory.-s. 681 , ch. 59-205; s. 3, ch. 76-168; s. 1, ch . 77-457; ss. 2, 3, ch . 81-318; ss . 681, 809(1st), ch . 82-243.

'Note.-Repealed effective October 1, 1991, by s. 809(1st), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1629.121 Attorney's bond.-(1) Concurrently with the filing of the declaration

provided for in s. 629.081, the attorney of a domestic reciprocal insurer shall file with the department a bond in favor of this state for the benefit of all persons damaged as a result of breach by the attorney of the conditions of his bond as set forth in subsection (2). The bond shall be executed by the attorney and by an authorized corporate surety and shall be subject to the approval of the department.

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F.S. 1987 INSURANCE RATES AND CONTRACTS Ch. 627 · F.S. 1987 INSURANCE RATES AND CONTRACTS Ch. 627...

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