Meeting Packet - Insurance & Banking Subcommittee, January 13, 2022
Summary
A meeting packet of the Insurance & Banking Subcommittee, Commerce Committee, Florida House of Representatives, for Thursday, January 13, 2022, 2:00 PM, at Morris Hall. The agenda lists CS/HB 139 Motor Vehicle Insurance, HB 275 Loss Run Statements, HB 451, HB 503 Insurance, HB 695 Property Insurer Reimbursements, HB 925 and HB 7013. The staff analysis of CS/HB 139 says the bill requires an employing agency that operates a vehicle take-home program to maintain motor vehicle insurance, limits suits to $200,000 per person and $300,000 per incident, and has an effective date of July 1, 2022. The HB 7013 text provides an October 1, 2022 effective date.
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Insurance & Banking
Subcommittee
Thursday, January 13, 2022
2:00 PM - 4:00 PM
Morris Hall (17 HOB)
Meeting Packet
Chris Sprowls Nick DiCeglie
Speaker Chair
The Florida House of Representatives
Commerce Committee
Insurance & Banking Subcommittee
Chris Sprowls Nick DiCeglie
Speaker Chair
Meeting Agenda
Thursday, January 13, 2022
2:00 PM – 4:00 PM
Morris Hall (17 HOB)
I. Call to Order
II. Roll Call
III. Welcome and Opening Remarks
IV. Consideration of the following bill(s):
• CS/HB 139 Motor Vehicle Insurance by Government Operations Subcommittee,
Fabricio, Rizo
• HB 275 Loss Run Statements by Fernandez-Barquin
• HB 451 Sufficiency of Description of Security Interests by Robinson, W.
• HB 503 Insurance by Gregory
• HB 695 Property Insurer Reimbursements by Stevenson
• HB 925 Benchmark Replacements for London Interbank Offered Rate by
Stevenson
• HB 7013 OGSR/Workers' Compensation/Department of Financial Services by
Government Operations Subcommittee, Fabricio
V. Closing Remarks
VI. Adjournment
303 House Office Building, 402 South Monroe Street, Tallahassee, FL 32399-1300
(850) 717-4870
CS/HB 139
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 139 Motor Vehicle Insurance
SPONSOR(S): Government Operations Subcommittee, Fabricio, Rizo, and others
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Government Operations Subcommittee 13 Y, 0 N, As CS Villa Toliver
2) Insurance & Banking Subcommittee Herendeen Luczynski
3) Judiciary Committee
4) Appropriations Committee
SUMMARY ANALYSIS
Chapter 627, part XI, F.S., Motor Vehicle and Casualty Insurance Contracts, and ch. 324, F.S., the Financial
Responsibility Law of 1955, establish motor vehicle insurance coverage requirements. Florida law requires
owners of motor vehicles to purchase both $10,000 of personal injury protection (PIP) insurance and $10,000
of property damage (PD) liability insurance. A liability insurer owes two major contractual duties to its insured in
exchange for premium payments—the duty to indemnify and the duty to defend.
A vehicle take-home program is a program in which an agency employing a law enforcement officer
(employing agency) assigns a vehicle to a law enforcement officer that the officer may take home at the end of
each shift. Approximately 90 percent of the state’s law enforcement agencies operate a vehicle take-home
program. The rationale for and the benefits of such a program are often cited to include an increased police
presence and improved emergency response times.
The bill requires an employing agency that operates a vehicle take-home program, which allows the operation
of an official law enforcement vehicle outside of the scope of employment, to maintain motor vehicle insurance
that covers the time a law enforcement officer spends going to or coming from work or any other agency
assignment.
The bill specifies that any suit or action brought or maintained against an employing agency for damages
arising out of tort pursuant to the bill are limited to $200,000 per person and $300,000 per incident.
The bill specifies that employing agencies are authorized to be self-insured, to enter into risk management
programs, or to purchase liability insurance in order to meet the bill’s requirements.
The bill will likely have a negative fiscal impact on state government and local governments. See Fiscal
Comments.
The bill has an effective date of July 1, 2022.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Motor Vehicle Insurance
Chapter 627, part XI, F.S., Motor Vehicle and Casualty Insurance Contracts, and ch. 324, F.S., the
Financial Responsibility Law of 1955, establish motor vehicle insurance coverage requirements.
Florida’s financial responsibility law exists to ensure that the privilege of owning or operating a motor
vehicle on the public streets and highways is exercised with due consideration for others and their
property, to promote safety, and to provide financial security requirements for the owners or operators
of motor vehicles who are responsible to recompense others for injury to person or property caused by
a motor vehicle.1 Florida law requires owners of motor vehicles with four or more wheels to purchase
both $10,000 of property damage (PD) liability insurance and $10,000 of personal injury protection
(PIP) insurance.2
PD liability insurance covers damage to, or destruction of, property of others as a result of a crash.3 PIP
insurance, on the other hand, compensates insureds injured in accidents regardless of fault. 4
Policyholders are indemnified by their own insurer. The intent of no-fault insurance is to provide for
medical, surgical, funeral, and disability insurance benefits without regard to fault.5 This coverage also
provides policyholders with immunity from liability for economic damages up to the policy limits and
limits tort suits for non-economic damages (pain and suffering) below a specified injury threshold. 6
A driver’s license and vehicle registration are subject to suspension for failure to comply with the
security requirement to maintain PD and PIP insurance coverage.7 A driver’s license and registration
may be reinstated by obtaining a liability policy and by paying a fee to the Department of Highway
Safety and Motor Vehicles.8
Obligations of Insurer to Insured
A liability insurer generally owes two major contractual duties to its insured in exchange for premium
payments–the duty to indemnify and the duty to defend. The duty to indemnify refers to the insurer’s
obligation to issue payment to either the insured or a beneficiary on a valid claim. The duty to defend
refers to the insurer’s duty to provide a defense for the insured in court against a third party with respect
to a claim within the scope of the insurance contract. 9
Vehicle Take-Home Programs for Law Enforcement Officers
1 Section 324.011, F.S.
2 See ss. 627.733, 627.736, and 324.022, F.S. A driver in compliance with the requirement to carry PIP coverage is not
required to maintain bodily injury (BI) liability coverage. However, Florida law requires proof of ability to pay monetary
damages in the amount of $10,000 because of bodily injury to, or death of, one person in any one crash, and $20,000 for
bodily injury to, or death of, two or more persons in any one crash, and $10,000 in the event of damage to property of
others, or $30,000 combined BI/PD liability insurance after a motor vehicle accident. See ss. 324.011 and 324.051, F.S.
3 Section 324.022, F.S.
4 Section 627.733, F.S.
5 See s. 627.731, F.S.
6 Section 627.737, F.S.
7 Section 324.0221(2), F.S.
8 Section 324.0221(3), F.S.
9 See 16 Williston on Contracts s. 49:105 (4th Ed.).
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A vehicle take-home program, also referred to as an assigned vehicle program, is a program in which
an agency that employs a law enforcement officer (employing agency) assigns a vehicle to a law
enforcement officer that the officer may take home at the end of each shift. Vehicle take-home
programs are currently in operation throughout Florida and the country at large. The 2020 Criminal
Justice Agency Profile Report by the Florida Department of Law Enforcement shows that about 90
percent of the state’s law enforcement agencies operate a vehicle take-home program.10 This includes
all 67 county sheriff’s offices, 218 of 232 municipal police departments, 26 of 34 state agencies that
employ law enforcement officers, and 32 of 43 school systems and ports that employ law enforcement
officers. The often cited rationale for and benefits of such a program include:
An increased police presence in the community;
Improved patrol shift transitions;
Improved operational mobility and flexibility;
Improved emergency response and control;
Increased vehicle longevity;
Lower operating cost; and
Less down time for vehicle maintenance.11
Tort Claims Against Government Agencies
State government and its subdivisions may be liable for the acts of an employee if the employee was
acting within the scope of his or her employment; however, the law limits judgments to $200,000 per
person and $300,000 per incident unless additional damages are approved by the Legislature. 12
Counties and municipalities are similarly liable for torts committed by employees acting within the scope
of their employment, much as private employers may be held liable for the acts committed by
employees acting within the scope of their employment. 13
Courts use a three-part test to determine if an employee’s conduct is within the scope of his or her
employment: 1) the conduct is of the kind the employee was employed to perform; 2) the conduct
occurs substantially within the time and space limits authorized or required by the work to be
performed; and 3) The conduct is activated at least in part by a purpose to serve the master. 14
The assignment of a take-home car does not enlarge the state’s liability for tortious acts of an employee
committed outside the employee’s scope of employment. 15 Merely driving to or from work in a vehicle
provided by an employer is an act performed outside of the course of employment, unless the
employee is on a special errand for the employer.16
The courts have not been persuaded by plaintiffs who cite the “going and coming” rule associated with
workers’ compensation law as a reason why the government should be liable for accidents involving
law enforcement officers driving take-home vehicles owned by their employer. For the purposes of
10 Florida Department of Law Enforcement, Criminal Justice Agency Profile Report, available at
http://www.fdle.state.fl.us/CJSTC/Publications/CJAP/CJAP.aspx (last visited November 17, 2021); See also U.S.
Department of Justice Office of Justice Programs Bureau of Justice Statistics, Sheriffs’ Offices, 2007 – Statistical Table
(December 2012), https://bjs.ojp.gov/content/pub/pdf/so07st.pdf (last visited November 17, 2021) (reporting that 93% of
sheriffs’ departments around the country allow personnel to take department vehicles home).
11 See Pima County Sheriff’s Department, Assigned Vehicle Program,
https://pimasheriff.org/application/files/5415/6346/6464/Assigned_V ehicles_P rogram.pdf (last visited November 17, 2021).
See also 05-36 Fla. Op. Att’y Gen. (June 16, 2005).
12 Art. 10, s. 13, Fla. Const. and s. 768.28(5), F.S.
13 S. 768.28(2), F.S., and City of Miami v. Simpson, 172 So. 2d 435, 437, (Fla. 1965).
14 Iglesia Cristiana La Casa Del Senor, Inc. v. L.M., 783 So. 2d 353, 357 (Fla. 3d DCA 2001); Hennagan v. Dep't of
̃
Highway Safety & Motor Vehicles, 467 So. 2d 748, 750 (Fla. 1st DCA 1985).
15 Rabideau v. State of Florida, 409 So. 2d 1045 (Fla. 1982) (The Secretary of State’s office was not liable for an
investigator who struck and killed two men who had been repairing a motorcycle at the side of a road, even though the
investigator was driving a state-issued vehicle, because the investigator caused the fatal accident after consuming six or
seven drinks at a bar after completing his shift).
16 Robelo v. United Consumers Club, Inc., 555 So. 2d 395, 396 (Fla. 3d DCA 1989).
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worker’ compensation benefits, an injury suffered by a law enforcement officer while going or coming
from work in a law enforcement vehicle is presumed to be an injury arising out of and in the course of
employment unless the injury occurred during a “distinct deviation for a nonessential personal errand”
that is not permitted by the employer’s take-home vehicle policy or a collective bargaining agreement. 17
This statutory presumption for workers’ compensation benefits does not alter the employer’s liability for
accidents involving a take-home vehicle.18
Garcia v. City of Hollywood is the most compelling example in the line of cases involving take-home
vehicles provided to law enforcement officers. In a 2007 decision, the Fourth District Court of Appeals
held that the city was not liable for a fatal accident involving a sergeant who was driving a marked
patrol car that had been assigned to him on a take-home basis. The sergeant, who was reporting to
work one hour early so he could study for a lieutenant’s exam, struck and killed a child while she
attempted to cross a roadway to reach her school bus. The sergeant was required to be in uniform
while driving the patrol car, and he was required to stop and take action if he witnessed a crime. The
sergeant was not acting within the scope of his employment when the accident occurred, because he
was not required to drive to work early, to study before beginning his shift. 19
As a result of the Garcia opinion, various law enforcement agencies recommend or require their law
enforcement officers to obtain a “use of non-owned vehicle” insurance policy that provides liability
coverage when the officer is operating a vehicle owned by another person or entity (i.e., an official law
enforcement vehicle).20 For example, the Orlando Police Department requires their officers to show
proof of non-owned vehicle insurance coverage before issuance of a take-home vehicle. The stated
purposes of “this policy is to recognize that certain potential liabilities incurred by employees are not
covered by the City’s insurance program, and that requiring personal insurance coverage is in the best
interest of the City, the employee, and the public.” 21
Effect of the Bill
The bill requires an employing agency of a law enforcement officer 22 that allows a law enforcement
officer to operate an agency-owned vehicle outside the course and scope of the officer’s employment or
function to maintain current and valid motor vehicle insurance – including bodily injury, death, and
property damage liability coverage – that covers the time an officer spends while going to or coming
from work or any other agency assignment in an official law enforcement vehicle. However, the bill
does not require such motor vehicle insurance to provide for coverage in the following events:
17 S. 440.092(2), F.S.
18 Bencomo v. City of Miami, 306 So. 3d 268 (Fla. 3d DCA, 2020).
19 Garcia v. City of Hollywood, 966 So. 2d 5 (Fla. 4th DCA 2007).
20 See Collective Bargaining Agreement between the City of Ocala, Florida and Florida State Lodge, Fraternal Order of
Police, https://www.ocalafl.org/home/showpublisheddocument/2130/637504395197530000 (last visited November 17,
2021); City of Hollywood, Florida, Take Home Vehicle Policy HB-038:2,
http://www.hollywoodfl.org/DocumentCenter/View/11445/038-2-Take-Home-V ehicle?bidId (last visited November 17,
2021); Orlando Police Department Policy and Procedure 1802.17, Use of City Vehicles,
https://www.orlando.gov/ files/sharedassets/public/documents/opd/policies-and-procedures/city-owned-vehicles/1802.17-
use-of-city-vehicles.pdf (Last visited November 17, 2021); Collective Bargaining Agreement between Town of Davie,
Florida and Florida State Lodge Fraternal Order of Police, Inc., https://www.davie-fl.gov/DocumentCenter/View/9755/FOP -
Collective-Bargaining-A greement-2019-2022-P DF (last visited November 17, 2021).
21 Orlando Police Department Policy and Procedure 1802.17, Use of City Vehicles,
https://www.orlando.gov/ files/sharedassets/public/documents/opd/policies-and-procedures/city-owned-vehicles/1802.17-
use-of-city-vehicles.pdf (Last visited November 17, 2021)
22 The bill specifies that the term “law enforcement officer” means any person who is elected, appointed, or e mployed full
time by any municipality or the state or any political subdivision thereof; who is vested with authority to bear arms and
make arrests; and whose primary responsibility is the prevention and detection of crime or the enforcement of the penal,
criminal, traffic, or highway laws of the state. This definition includes all certified supervisory and command personnel
whose duties include, in whole or in part, the supervision, training, guidance, and management responsibilities of full -time
law enforcement officers, part-time law enforcement officers, or auxiliary law enforcement officers but does not include
support personnel employed by the employing agency.
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The officer makes a distinct deviation for a nonessential personal errand unless a provision of
an applicable collective bargaining agreement permits such a deviation.
The officer acts in bad faith or with malicious purpose or in a manner exhibiting wanton and
willful disregard of human rights, safety, or property.
The bill specifies that any suit or action brought or maintained against an agency that employs a law
enforcement officer for damages arising out of tort pursuant to the bill are limited to $200,000 per
person and $300,000 per incident.
The bill specifies that employing agencies are authorized to be self-insured, to enter into risk
management programs, or to purchase liability insurance in order to meet the bill’s requirements.
Lastly, the bill specifies that the Legislature finds and declares that the act fulfills an important state
interest.
B. SECTION DIRECTORY:
Section 1 creates s. 627.7491, F.S., relating to motor vehicle insurance requirements for official law
enforcement vehicles.
Section 2 creates an unnumbered section of law providing that the Legislature finds that the act fulfills
an important state interest.
Section 3 provides an effective date of July 1, 2022.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
See Fiscal Comments.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
See Fiscal Comments.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill will likely have an indeterminate, positive fiscal impact on the private sector as a result of
premiums collected by insurers on the motor vehicle insurance required by the bill to be maintained by
employing agencies that operate a vehicle take-home program.
D. FISCAL COMMENTS:
The bill may have a significant, yet indeterminate, negative fiscal impact on state and local government
expenditures. The bill requires an employing agency that operates a vehicle take-home program to
maintain motor vehicle insurance that covers the time an officer spends traveling to and from work or
any other agency assignment in an official law enforcement vehicle. The dollar amount of expenditures
required by the bill are dependent upon the insurance selected by the individual agencies.
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III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
The county/municipality provision of Art. VII, s. 18 of the Florida Constitution may apply because this
bill requires an employing agency that operates a vehicle take-home program to maintain motor
vehicle insurance that covers the time an officer spends traveling to and from work or any other
agency assignment in an official law enforcement vehicle; however, an exemption may apply if the
fiscal impact of the bill is insignificant. In addition, an exception may apply because the bill declares it
fulfills an important state interest and all similarly situated state and local employing agencies that
operate a vehicle take-home program are required to maintain motor vehicle insurance.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill does not confer rulemaking authority, nor require rulemaking.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On December 2, 2021, the Government Operations Subcommittee adopted a proposed committee
substitute (PCS) and reported the bill favorably as a committee substitute. The PCS differed from HB 139
in that it:
Removed a provision amending the definition of “law enforcement officer” providing that service as
a law enforcement officer includes time spent on certain activities;
Removed provisions providing enhanced workers’ compensation and death benefits to law
enforcement officers injured or killed during defined service time;
Required an employing agency that operates a vehicle take home program to maintain motor
vehicle insurance that covers the time a law enforcement officer spends going to or coming from
work or any other agency assignment in an official law enforcement vehicle;
Specified that any suit or action brought or maintained against an employing agency for damages
arising out of tort are limited to $200,000 per person and $300,000 per incident; and
Specified that employing agencies are authorized to be self-insured, to enter into risk management
programs, or to purchase liability insurance.
This analysis is drafted to the committee substitute adopted by the Government Operations Subcommittee.
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
CS/HB 139 2022
1 A bill to be entitled
2 An act relating to motor vehicle insurance; creating
3 s. 627.7491, F.S.; providing definitions; requiring
4 agencies that employ law enforcement officers to
5 maintain motor vehicle insurance under certain
6 circumstances; providing exceptions; providing
7 liability limitations; providing methods in which the
8 employing agency may meet the liability insurance
9 requirements; providing a declaration of important
10 state interest; providing an effective date.
11
12 Be It Enacted by the Legislature of the State of Florida:
13
14 Section 1. Section 627.7491, Florida Statutes, is created
15 to read:
16 627.7491 Official law enforcement vehicles; motor vehicle
17 insurance requirements.—
18 (1) For purposes of this section, the term:
19 (a) "Law enforcement officer" has the same meaning as in
20 s. 943.10(1).
21 (b) "Employing agency" means an agency that employs a law
22 enforcement officer.
23 (2) If an employing agency authorizes a law enforc ement
24 officer to travel to his or her place of residence in an
25 official law enforcement vehicle outside of the course and scope
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CODING: Words stricken are deletions; words underlined are additions.
hb0139-01-c1
F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
CS/HB 139 2022
26 of the officer's employment or function, the employing agency
27 shall maintain current and valid motor vehicle insurance,
28 including bodily injury, death, and property damage liability
29 coverage that covers the period in which a law enforcement
30 officer travels to or from work in an official law enforcement
31 vehicle and covers the time a law enforcement officer travels to
32 and from any other employing agency assignment in an official
33 law enforcement vehicle. However, such motor vehicle insurance
34 is not required to provide for coverage if:
35 (a) The law enforcement officer makes a distinct deviation
36 for a nonessential personal errand unless a collective
37 bargaining agreement permits such deviation; or
38 (b) The law enforcement officer acts in bad faith or with
39 malicious purpose or in a manner exhibiting wanton and willful
40 disregard of human rights, safety, or property.
41 (3) Any suit or action brought or maintained against an
42 employing agency for damages arising out of tort pursuant to
43 this section, including, without limitation, any claim arising
44 upon account of an act causing loss of property, personal
45 injury, or death, shall be subject to the limitations provided
46 in s. 768.28(5).
47 (4) The requirements of this section may be met by any
48 method authorized by s. 768.28(16).
49 Section 2. The Legislature finds and declares that this
50 act fulfills an important state interest.
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hb0139-01-c1
F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
CS/HB 139 2022
51 Section 3. This act shall take effect July 1, 2022.
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CODING: Words stricken are deletions; words underlined are additions.
hb0139-01-c1
HB 275
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 275 Loss Run Statements
SPONSOR(S): Fernandez-Barquin
TIED BILLS: IDEN./SIM. BILLS: SB 156
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fortenberry Luczynski
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
A loss run statement is a report from an insurer that shows the claims a specific insured has filed under that
insured’s policy during a particular period of time. This report can be provided to a prospective insurer when an
insured is shopping for a new insurance policy. The prospective insurer can use the loss run statement to
review the types, frequency, and dollar value of prior claims in order to determine whether to write a policy for
the prospective insured and what premium to charge for that policy.
Statutes enacted in 2020, established a framework regarding when, and how, insurers must provide loss run
statements to insureds. Pursuant to these statutes, for all lines of insurance written on the admitted and
surplus lines markets, insurers must provide loss run statements with a five-year loss run history within 15 days
of receiving an insured’s written request. If an insured requests a loss run statement regarding a personal lines
policy, an insurer may provide the insured information about how to obtain a loss run statement at no charge
through a consumer reporting agency. However, the insured may still ask the insurer for a loss run statement
even after receiving information from a consumer reporting agency.
The bill amends the loss run statutes that were enacted in 2020, so that they better reflect existing industry
standards. It revises the number of years of loss history that an insurer must provide from a minimum of five
years to a minimum of three years to reflect the industry practice of routinely providing insureds with a three-
year history upon request before the enactment of the 2020 statutes. The bill requires that if a personal lines
insured asks an insurer for a loss run statement after receiving information from a consumer reporting agenc y,
the insurer must provide that statement within 15 days. It establishes that sections 626.9202 and 627.444,
F.S., regarding loss runs statements, do not apply to life insurers.
The bill also resolves a conflict between the 2020 statutes and an existing statute regarding loss run
statements for group health insurance policies by repealing the health-specific statute. Repealing this statute
will create a more seamless process for requesting a loss run statement regardless of the type of insurance for
which the statement is requested. The bill establishes that, as applied to group health insurance, a loss run
statement also includes premiums paid, number of insureds on a monthly basis, and dependent status. Finally,
the bill clarifies that for group health insurance, only plan sponsors, not individual employees covered by the
group policy, may request a loss run statement.
The bill has no impact on state or local government revenues or expenditures and no direct economic impact
on the private sector.
The bill is effective upon becoming law.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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DATE: 1/11/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
A loss run statement1 is a report from an insurer that shows the claims a specific insured has filed
under that insured’s policy during a particular period of time. 2 This report can be provided to a
prospective insurer when an insured is shopping for a new insurance policy. 3 The prospective insurer
can use the loss run statement to review the types, frequency, and dollar value of prior claims in order
to determine whether to write a policy for the prospective insured and what premium to charge for that
policy.4 Prospective insurers often want to review loss run statements showing a loss run history from
three to five years to make decisions about writing insurance policies. 5
While insureds may request loss run statements for any line of insurance, insureds seeking new
general liability, business owner’s, commercial property, commercial auto insurance, or workers’
compensation insurance, often request them to shop for new insurance 6 upon cancelation or
nonrenewal of a policy by an insurer or when the insured chooses to shop for new insurance at the time
a policy is up for renewal. Some insurers, especially those providing commercial lines coverage or
workers’ compensation insurance, have existing loss runs systems that allow their insureds to log into a
portal and to obtain their own detailed reports on claims. 7 However, other insurers, in these and other
lines of insurance, may provide insureds with loss run statements that they have created upon request
or direct the insureds to obtain such statements from their agents of record or consumer reporting
agencies.
Often, personal lines loss history can be obtained from public sources. A Comprehensive Loss
Underwriting Exchange, or CLUE, report is a claims report generated by the consumer-reporting
agency, LexisNexis.8 A CLUE report contains claims information reported by insurers for all personal
auto and personal property claims in which they pay money, set up a file for a possible claim, or deny a
claim.9 However, CLUE reports and other publicly available reports, may not be completely accurate. 10
Additionally, commercial and health insurance data are not readily available from public sources.
Statutes enacted in 2020, established a framework regarding when, and how, insurers must provide
loss run statements to insureds.11 These statutes define “loss run statement” as a report that contains
the policy number, the period of coverage, the number of claims, the paid losses on all claims, and the
date of each loss.12 This definition also specifies that a loss run statement does not include supporting
claim file documents, such as copies of claim files, investigation reports, evaluation statements,
insureds’ statements, and documents protected by common law or statutory privilege. 13
1 Loss run statements are also referred to as loss runs or loss run reports.
2 Insureon, https://www.insureon.com/insurance-glossary/loss-runs (last visited Nov. 22, 2021).
3 Id.
4 Id.
5 Id.
6 Id.
7 See, e.g., MSIG Loss Runs, https://www.msigusa.com/loss -runs/ and StarStone,
http://myaccount.starstoneworkcomp.com/index.htm (last visited Nov. 22, 2021).
8 Office of the Insurance Commissioner Washington State, https://www.insurance.wa.gov/clue-comprehensive-loss-underwriting-
exchange (last visited Nov. 19, 2021).
9 Id.
10 Florida Association of Insurance Agents, Loss Run Statements, https://www.faia.com/resources -(1)/legislative-summaries/300-
worders/2020-300-worders/loss-run-statements (last visited Dec. 16, 2021). See also Forbes Advisor, What is a C.L.U.E. Report for
Insurance?, https://www.forbes.com/advisor/homeowners -insurance/clue-report/ (last visited Dec. 16, 2021).
11 See ss. 626.9202 and 627.444, F.S.
12 Id.
13 Id.
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Pursuant to these statutes, for all lines of insurance written on the admitted and surplus lines m arkets,
insurers must provide loss run statements with a five-year loss run history within 15 days of receiving
insured’s written requests.14 If an insured requests a loss run statement regarding a personal lines
policy, an insurer may provide the insured information about how to obtain a loss run statement at no
charge through a consumer reporting agency.15 However, the insured may still ask the insurer for a loss
run statement even after receiving information from a consumer reporting agency. 16 An insurer is
prohibited from charging an insured for the first loss run statement that an insured requests annually. 17
Additionally, an insurer is not required to provide loss reserve information as part of a loss run
statement provided to an insured.18
Effect of the Bill
The bill amends the loss run statutes that were enacted in 2020, so that they better reflect existing
industry standards. It revises the number of years of loss history that an insurer must provide from a
minimum of five years to a minimum of three years to reflect the industry practice of routinely providing
insureds with a three-year history upon request before the enactment of the 2020 statutes. The bill
requires that if a personal lines insured asks an insurer for a loss run statement after receiving
information from a consumer reporting agency, the insurer must provide that statement within 15 days.
It establishes that sections 626.9202 and 627.444, F.S., regarding loss runs statements, do not apply to
life insurers.19
The bill also resolves a conflict between the 2020 statutes and an existing statute regarding loss run
statements for group health insurance policies by repealing the health-specific statute.20 Repealing this
statute will create a more seamless process for requesting a loss run statement regardless of the type
of insurance for which the statement is requested. The bill establishes that, as applied to group health
insurance, a loss run statement also includes premiums paid, number of insureds on a monthly basis,
and dependent status. Finally, the bill clarifies that for group health insurance, only plan sponsors, not
individual employees covered by the group policy, may request a loss run statement.
B. SECTION DIRECTORY:
Section 1. Amends s. 626.9202, F.S., relating to loss run statements for all lines of insurance.
Section 2. Amends s. 627.444, F.S., relating to loss run statements for all lines of insurance.
Section 3. Repeals s. 627.6647, F.S., relating to release of claims experience.
Section 4. Provides that the bill is effective upon becoming law.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
14 Id.
15 Ss. 626.9202(2)(b) and 627.444(2)(b), F.S.
16 Id.
17 Ss. 626.9202(6) and 627.444(6), F.S.
18 Ss. 626.9202(5) and 627.444(5), F.S.
19 Because loss run statements are used to shop for new insurance, and life insurance claims are only made after the death of an
insured, loss run statements are not necessary for this type of policy.
20 See s. 627.6647, F.S.
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None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
None.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 275 2022
1 A bill to be entitled
2 An act relating to loss run statements; amending ss.
3 626.9202 and 627.444, F.S.; revising the definition of
4 the term "loss run statement"; specifying the entities
5 that must receive requests for loss run statements;
6 specifying that insurers must provide loss run
7 statements within a specified timeframe under certain
8 circumstances; revising the required claims history in
9 loss run statements; providing applicability; limiting
10 loss run statement requests with respect to group
11 health insurance policies to group policyholders;
12 repealing s. 627.6647, F.S., relating to release of
13 claims experience; providing an effective date.
14
15 Be It Enacted by the Legislature of the State of Florida:
16
17 Section 1. Subsections (1), (2), and (4) of section
18 626.9202, Florida Statutes, are amended, and subsections (7) and
19 (8) are added to that section, to read:
20 626.9202 Loss run statements for all lines of insurance.—
21 (1) As used in this section, the term:
22 (a) "Loss run statement" means a report that contains the
23 policy number, the period of coverage, the number of claims, the
24 paid losses on all claims, and the date of each loss. T he term
25 does not include supporting claim file documentation, including,
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HB 275 2022
26 but not limited to, copies of claim files, investigation
27 reports, evaluation statements, insureds' statements, and
28 documents protected by a common law or statutory privilege. As
29 applied to group health insurance, the term means a report that
30 also contains the premiums paid, the number of insureds on a
31 monthly basis, and the dependent status under the reported
32 policy.
33 (b) "Provide" means to electronically send a document or
34 to allow access through an electronic portal to view or generate
35 a document.
36 (2) Notwithstanding any other law, an insurer shall
37 provide to an insured within 15 calendar days after an
38 individual or entity designated by the insurer receives receipt
39 of the insured's written request, either:
40 (a) A loss run statement; or
41 (b) For personal lines of insurance, information on how to
42 obtain a loss run statement at no charge through a consumer
43 reporting agency. However, this section does not prohibit an
44 insured from requesting a loss run statement after receiving
45 information from a consumer reporting agency, in which case the
46 insurer shall then provide the loss run statement within 15
47 calendar days after the individual or entity designated by the
48 insurer receives the insured's subsequent written request.
49 (4) A loss run statement provided pursuant to this section
50 must contain a claims history with the insurer for the preceding
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51 3 5 years or, if the claims history is less than 3 5 years, a
52 complete claims history with the insurer.
53 (7) This section does not apply to a life insurer as
54 defined in s. 624.602.
55 (8) For group health insurance, only the group
56 policyholder may request and be provided a loss run statement
57 pursuant to this section.
58 Section 2. Subsections (1), (2), and (4) of section
59 627.444, Florida Statutes, are amended, and subsections (7) and
60 (8) are added to that section, to read:
61 627.444 Loss run statements for all lines of insurance. —
62 (1) As used in this section, the term:
63 (a) "Loss run statement" means a report that contains the
64 policy number, the period of coverage, the number of claims, the
65 paid losses on all claims, and the date of each loss. The term
66 does not include supporting claim file documentation, including,
67 but not limited to, copies of claim files, investigation
68 reports, evaluation statements, insureds' statements, and
69 documents protected by a common law or statutory privilege. As
70 applied to group health insurance, the term means a report that
71 also contains the premiums paid, the number of insureds on a
72 monthly basis, and the dependent status under the reported
73 policy.
74 (b) "Provide" means to electronically send a document or
75 to allow access through an electronic portal to view or generate
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76 a document.
77 (2) Notwithstanding any other law, an insurer shall
78 provide to an insured within 15 calendar days after an
79 individual or entity designated by the insurer receives receipt
80 of the insured's written request, either:
81 (a) A loss run statement; or
82 (b) For personal lines of insurance, information on how to
83 obtain a loss run statement at no charge through a consumer
84 reporting agency. However, this section does not prohibit an
85 insured from requesting a loss run statement after receiving
86 information from a consumer reporting agency, in which case the
87 insurer shall then provide the loss run statement within 15
88 calendar days after the individual or entity designated by the
89 insurer receives the insured's subsequent written request.
90 (4) A loss run statement provided pursuant to this section
91 must contain a claims history with the insurer for the preceding
92 3 5 years or, if the claims history is less than 3 5 years, a
93 complete claims history with the insurer.
94 (7) This section does not apply to a life insurer as
95 defined in s. 624.602.
96 (8) For group health insurance, only the group
97 policyholder may request and be provided a loss run statement
98 pursuant to this section.
99 Section 3. Section 627.6647, Florida Statutes, is
100 repealed.
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101 Section 4. This act shall take effect upon becoming a law.
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HB 451
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 451 Sufficiency of Description of Security Interests
SPONSOR(S): Robinson, W.
TIED BILLS: IDEN./SIM. BILLS: SB 406
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Civil Justice & Property Rights Subcommittee 17 Y, 0 N Mawn Jones
2) Insurance & Banking Subcommittee Hinshelwood Luczynski
3) Judiciary Committee
SUMMARY ANALYSIS
A security interest arises when, in exchange for a loan, a borrower pledges in a security agreement specified
assets he or she owns that the lender may take if the borrower defaults on the loan. A security interest also
assures the lender that, if the borrower enters bankruptcy, the lender may be able to recover the loan’s value
by taking the asset. Under Florida law, a description of an asset, whether or not the description is specific, is
sufficient to pledge the asset under a security agreement if it reasonably identifies what is described. However,
a description of assets in general terms, such as “all the debtor’s assets,” “all the debtor’s personal property,”
or similar phrasing, does not sufficiently identify the collateral for purposes of a security interest.
Florida Law protects certain assets from legal process so that they remain out of a creditor’s reach, including:
Funds held in individual retirement accounts (“IRA”) and other tax-exempt accounts.
The cash surrender value of a life insurance policy and the proceeds of an annuity contract.
Funds held in qualified tuition programs and medical, Coverdell education, and hurricane savings
accounts.
Disability income benefits.
A deceased person’s wages and unemployment compensation benefits.
Homestead property and certain personal property items.
Social security benefits; unemployment compensation, or public assistance benefits; veterans’ benefits;
alimony, support, or separate maintenance; and stock or pension plans under spec ified circumstances.
Historically, exempt assets not specifically pledged in a security agreement remained exempt from a creditor’s
reach. However, a recent Eleventh Circuit Court of Appeals decision broke with this rule by holding that a
security agreement granting a security interest in “all assets and rights of the Pledgor” pledged the debtor’s
IRA as security for a loan even though the IRA was not specifically identified in the agreement. This decision
may have significant federal tax consequences for Floridians, as the use of certain tax-exempt accounts as
security for a loan is considered distribution of the funds to the owner, who then owes federal income tax on
the money and may owe a tax penalty for early distribution.
The bill provides that a general description only by type of collateral is an insufficient description to pledge
certain statutorily-exempt assets for the purposes of a security agreement. The bill applies retroactively.
The bill does not appear to have a fiscal impact on state or local governments.
The bill provides an effective date of upon becoming a law.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h0451b.IBS
DATE: 1/11/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Security Interests
A security interest arises when, in exchange for a loan, a borrower pledges in a security agreement1
specified assets owned by the borrower that the lender may take if the borrower defaults on the loan. 2
A security interest also assures the lender that, if the borrower enters bankruptcy, the lender may be
able to recover the loan’s value by taking possession of the specified assets.3
Under Florida law, a description of personal or real property, whether or not it is specific, is sufficient for
the purposes of a security agreement if it reasonably identifies what is described.4 An effective
description of collateral5 in a security agreement identifies the asset by:
Specific listing;
Category;
Type of collateral;
Quantity;
Computational or allocational formula or procedure; or
Any method under which the identity of the collateral is objectively determinable.6
However, a general description of collateral as “all the debtor’s assets,” “all the debtor’s personal
property,” or similar phraseology, does not sufficiently identify the collateral for purposes of creating a
security interest.7 Further, a description only by type of collateral is an insufficient description of:
A commercial tort claim;
In a consumer transaction, consumer goods, a security entitlement, a securities account, or a
commodity account; or
An account consisting of a right to payment of a monetary obligation for the sale of real property
that is the debtor’s homestead under Florida law. 8
Asset Exemptions
Florida law protects certain assets from legal process so that they remain out of a creditor’s reach,
including:
Funds held in an individual retirement account (“IRA”) and other tax-exempt accounts.9
A life insurance policy’s proceeds.10
A life insurance policy’s cash surrender value and an annuity contract’s proceeds.11
Funds held in qualified tuition programs, medical savings accounts, Coverdell education
accounts, and hurricane savings accounts.12
Disability income benefits.13
1 “Security agreement” means an agreement that creates or provides for a security interest. S. 679.1021(1)(uuu), F.S.
2
Legal Information Institute, Secured Transactions, https://www.law.cornell.edu/wex/secured_transactions (last visited Nov. 22, 2021).
3 Id.
4 S. 679.1081(1), F.S.
5 “Collateral” means the property subject to a security interest. The term includes proceeds to which a security interest attac hes;
accounts, chattel paper, payment intangibles, and promissory notes that have been sold; and goods that are the subject of
consignment. S. 679.1021(1)(l), F.S.
6 S. 679.1081(2), F.S.
7 S. 679.1081(3), F.S.
8 S. 679.1081(5), F.S.
9 S. 222.21, F.S.
10 S. 222.13, F.S.
11 S. 222.14, F.S.
12 S. 222.22, F.S.
13 S. 222.18, F.S.
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A deceased person’s wages, travel expenses, and reemployment assistance or unemployment
compensation payments.14
Homestead property.15
Certain personal property items.16
A debtor’s interest in a motor vehicle, up to $1,000 in value, and any professionally prescribed
health aides.17
Social security benefits; unemployment compensation, or public assistance benefits; veterans’
benefits; alimony, support, or separate maintenance; and stock or pension plans under
specified circumstances.18
Historically, exempt assets have remained exempt from a creditor’s reach unless specifically pledged in
a security agreement.19
Recent Case Law
In Kearney Constr. Co., LLC v. Travelers Casualty & Surety Co. of America, the federal Eleventh Circuit
Court of Appeals broke with the historic tradition of maintaining asset exemptions unless the asset is
specifically pledged.20 In Kearney, the debtor obtained a line of credit and pledged the following
collateral as a security interest:
[A]ll assets and rights of the Pledgor, wherever located, whether now owned or hereafter
acquired or arising, and all proceeds and products thereof, all goods (including
inventory, equipment and any accessories thereto), instruments (including promissory
notes)[,] documents, accounts, chattel paper, deposit accounts, letters of credit, rights,
securities and all other investment property, supporting obligation[s], and contrac t or
contract rights or rights to the payment of money, insurance claims, and proceeds, and
general intangibles.21
The Court held that this language was an “unambiguous pledge” of “all assets and rights” of the debtor,
including the debtor’s IRA, even though the IRA was not specifically identified in the agreement. 22
Practically speaking, the Kearney decision makes it possible for a borrower to inadvertently pledge as a
security interest assets historically exempt from the reach of creditors under Florida law.23 This may
affect Florida consumers with security agreements containing general language similar to the language
at issue in Kearney.
The decision could also have significant federal tax implications, as the use of certain tax-exempt
accounts as security for a loan is considered a distribution of the funds in the account to the owner, who
then may owe federal income tax on the distribution.24 The Tax Code also imposes a 10 percent tax
penalty for early distributions from certain tax-exempt accounts.25
14 Ss. 225.15 and 225.16, F.S.
15
Ss. 222.01-222.05, F.S.; Art. X, Sec. 4, Fla. Const.
16 S. 222.061, F.S.
17 S. 222.25, F.S.
18 Ss. 222.201 and 222.21(1), F.S.
19 Real Property, Probate, and Trust Law Section of the Florida Bar (“RPPTL”), White Paper (Jan. 26, 2021); see, e.g., Havoco of Am.
Ltd. v. Hill, 790 So. 2d 1018 (Fla. 2001); Connor v. Seaside Nat’l Bank , 135 So. 3d 508 (Fla. 5th DCA 2014); Killian v. Lawson, 387 So.
2d 960 (Fla. 1980).
20 795 Fed. Appx. 671 (11th Cir. 2019). The Kearney case is an unpublished opinion of the Federal Court of Appeals for the Eleventh
Circuit. Opinions that the Eleventh Circuit’s panel of judges believes to have no precedential value are not published. FED . R. APP. P.
36, Internal Operating Procedure 6; see also 11th Cir. R. 36-2. Although unpublished opinions may be cited as persuasive authority,
they are not considered binding precedent. FED . R. APP. P. 36, Internal Operating Procedure 6; see also 11th Cir. R. 36-2.
21 795 Fed. Appx. 673-74.
22 Id. at 674. The borrower testified that he did not intend to pledge the IRA; however, the lower court rejected such testimony because
it was inconsistent with the borrower’s earlier court filings. Id.
23 The exception is homestead property, as a waiver of such rights must be “knowing, voluntary, and intelligent” to have any eff ect. See
RPPTL, supra note 19; see also Chames v. DeMayo, 972 So. 2d 850 (Fla. 2007) (citing State v. Upton, 658 So. 2d 86 (Fla. 1995)).
24 I.R.C. 408(e)(4) and (d)(1); I.R.C. 72(p)(1)(B).
25 I.R.C. 72(t).
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Effect of Proposed Changes
The bill provides that a general description only by type of collateral is an insufficient description to
pledge, for the purposes of a security agreement, accounts and other entitlements set forth in ss.
222.13-222.16, 222.18, and 222.201-222.22, F.S. These include:
Funds held in an IRA and other tax-exempt accounts.
A life insurance policy’s proceeds.
A life insurance policy’s cash surrender value and an annuity contract’s proceeds.
Funds held in qualified tuition programs, medical savings accounts, Coverdell education
accounts, and hurricane savings accounts.
Disability income benefits.
A deceased person’s wages, travel expenses, and reemployment assistance or unemployment
compensation payments.
Social security benefits; unemployment compensation, or public assistance benefits; veterans’
benefits; alimony, support, or separate maintenance; and stock or pension plans under
specified circumstances.
The bill provides that it is remedial in nature and applies retroactively.
The bill will take effect upon becoming a law.
B. SECTION DIRECTORY:
Section 1: Amends s. 679.1081, F.S., relating to sufficiency of description.
Section 2: Provides that the bill is remedial in nature and applies retroactively.
Section 3: Provides an effective date of upon becoming a law.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may prevent Floridians from inadvertently pledging as security specified exempt assets and
suffering any related federal tax consequences.
D. FISCAL COMMENTS:
None.
III. COMMENTS
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A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not Applicable. This bill does not appear to affect county or municipal governments.
2. Other:
Impairment of Contracts and Due Process
Both the Florida and the United States Constitutions prohibit the state from passing a law impairing
contractual obligations.26 However, the Legislature may provide that a non-criminal law, including
one that affects existing contractual obligations, applies retroactively in certain situations. 27 In
determining whether a law may be applied retroactively, courts first determine whether the law is
procedural, remedial, or substantive in nature.28 A purely procedural or remedial law may apply
retroactively without offending the Constitution, but a substantive law generally may not apply
retroactively absent clear legislative intent to the contrary.29 However, even where the Legislature
has expressly stated that a law will have retroactive application, a court may reject that application if
the law impairs a vested right, creates a new obligation, or imposes a new penalty.30 Further, where
a law is designed to serve a remedial purpose, a court may decide not to apply the law retroactively
where doing so “would attach new legal consequences to events completed before its enactment.” 31
Moreover, both the Florida and United States Constitutions prohibit the taking of life, liberty, or
property without due process of law.32 The right to contract, as long as no fraud or deception is
involved and the contract is otherwise legal, is both a liberty and a property right subject to due
process protections, and the impairment of contracts may, in certain instances, be viewed as the
taking of property without due process.33
The bill contains a statement of legislative intent indicating that the bill is remedial in nature and
applies retroactively. Some parties who entered into security agreements after the Kearney decision
may have used general language to create a security interest with the understanding that such
language was sufficient to pledge certain exempt assets. Whether the Legislature’s retroactive
modification of the meaning of such language is procedural, remedial, or substantive, and whether
such modification implicates the constitutional right to contract or the constitutional right to due
process, is for the courts to decide.
B. RULE-MAKING AUTHORITY:
Not applicable.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
26
U.S. Const. art. I, s. 10; Art. I, s. 10, Fla. Const.
27 U.S. Const. art. I, ss. 9 and 10; Art. 1, s. 10, Fla. Const.
28 A procedural law merely establishes the means and methods for applying or enforcing existing duties or rights. A remedial law
confers or changes a remedy, i.e., the means employed in enforcing an existing right or in redressing an injury. A substantive law
creates, alters, or impairs existing substantive rights. Windom v. State, 656 So. 2d 432 (Fla. 1995); St. John’s Village I, Ltd. v. Dept. of
State, 497 So. 2d 990 (Fla. 5th DCA 1986); McMillen v. State Dept. of Revenue, 74 So. 2d 1234 (Fla. 1st DCA 1999).
29 State Farm Mutual Automob ile Ins. Co. v. Laforet, 658 So. 2d 55 (Fla. 1995).
30 Menendez v. Progressive Exp. Ins. Co., Inc., 35 So. 3d 873 (Fla. 2010).
31 L. Ross, Inc. v. R.W. Rob erts Const. Co., 481 So. 2d 484 (Fla. 1986).
32 U.S. Const. amends. V and XIV; Art. I, s. 21, Fla. Const.
33 Miles v. City of Edgewater Police Dept., 190 So. 3d 171 (Fla. 1st DCA 2016); s ee, e.g., Griffin v. Sharpe, 65 So. 2d 751 (Fla. 1953)
(finding that a statute removing a specific deed restriction’s expiration date both impaired contracts and constituted a taking of private
property without due process).
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 451 2022
1 A bill to be entitled
2 An act relating to sufficiency of description of
3 security interests; amending s. 679.1081, F.S.;
4 providing that a description of certain accounts and
5 entitlements by a certain type of collateral is
6 insufficient for the purpose of security agreements;
7 providing retroactive application; providing an
8 effective date.
9
10 Be It Enacted by the Legislature of the State of Florida:
11
12 Section 1. Subsection (5) of section 679.1081, Florida
13 Statutes, is amended to read:
14 679.1081 Sufficiency of description.—
15 (5) A description only by type of collateral defined in
16 this chapter is an insufficient description of:
17 (a) A commercial tort claim;
18 (b) In a consumer transaction, consumer goods, a security
19 entitlement, a securities account, or a commodity account; or
20 (c) An account consisting of a right to payment of a
21 monetary obligation for the sale of real property that is the
22 debtor's homestead under the laws of this state; or
23 (d) Accounts and other entitlements set forth in ss.
24 222.13-222.16, s. 222.18, and ss. 222.201-222.22.
25 Section 2. The amendment made by this act to s. 679.1081,
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HB 451 2022
26 Florida Statutes, is remedial in nature and applies
27 retroactively.
28 Section 3. This act shall take effect upon becoming a law.
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HB 503
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 503 Insurance
SPONSOR(S): Gregory
TIED BILLS: IDEN./SIM. BILLS: SB 468
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY
CHIEF
1) Insurance & Banking Subcommittee Fortenberry Luczynski
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
The bill makes the following changes regarding insurance:
Florida Hurricane Catastrophe (FHCF) Coverage – modifies when a collateral protection insurance policy is
eligible for FHCF coverage.
Worker’s Compensation Payroll Audits – modifies the requirement that the annual audit for construction
businesses be conducted onsite to only be onsite if the estimated annual premium is $10,000 or more.
Service of Process – provides that service of process is perfected on an insurer when process served on the
Department of Financial Services (DFS) is delivered to the insurer or DFS has notified the insurer of its availability
online.
Meeting Requirements – authorizes associations, trusts, and pools that provide self-insurance for public entities
to use communications media technology to establish a quorum and conduct public business.
Adjusters and Agents – adds adjusters employed by an insurer’s affiliate to the definition of company employee
adjuster; allows licensed general or personal lines agents to sell service agreements or warrant ies without a
salesperson or sales representative license.
Hurricane Modeling – provides that a property insurer may use a weighted or straight average of two or more
approved hurricane models in a rate filing.
Mitigation Credits in Residential Property Insurance Rate Filings – allows insurers to give mitigation credit for
evaluation by, and compliance with, standards developed by an independent, not -for-profit, scientific research
organization.
Automatic Withdrawal of Premium – modifies the notice requirement for a change in the amount of premium by
automatic bank withdrawal from an increase of any amount to increases greater than $10.
Citizens Property Insurance Corporation (Citizens) – allows Citizens the option to insure residential
condominiums under commercial residential wind-only coverage if the units are intended for residential use, but
are rented on a short-term basis.
Policy Documents – authorizes electronic transmission of policy documents and revises notice requirements for
certain automobile insurance policies.
Method to Reject/Exclude Certain Property Insurance Deductibles/Coverages – permits the required
statements related to waiving the 10 percent limit on hurricane deductibles, excluding windstorm coverage, and
excluding contents coverage, to be either personally written or typed by the policyholder.
Assignment Agreements – adds inspection to the definition of assignment agreement, specifies that the list of
services that is specified in the definition of assignment agreement is not exhaustive, specifies that fees charged
by a public adjuster are not included in the definition of assignment agreement, and establishes where the pre-suit
notice required before filing a suit over a claim with an assignment agreement must be sent, whether sent by
certified mail or email.
The bill has no impact on state or local government revenues or expenditures. It has an unknown direct economic impact
on the private sector.
The bill has an effective date of July 1, 2022, except as otherwise provided.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h0503.IBS
DATE: 1/11/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Hurricane Catastrophe Fund – Collateral Protection Insurance
The Florida Hurricane Catastrophe Fund (FHCF) is a tax-exempt trust fund created by the Legislature
in 1993 as a form of reinsurance for residential property insurance losses. 1 The purpose of the FHCF is
to protect and advance the state’s interest in maintaining insurance capacity in Florida by providing
reimbursements to insurers for a portion of their catastrophic losses. 2 The FHCF is administered by the
State Board of Administration and reimburses property insurers for a selected percentage of hurricane
losses to residential property when those losses exceed the insurer’s retention (deductible). 3 As a
condition of transacting insurance business in the state, residential property insurers are required to
enter reimbursement contracts with the FHCF.
The FHCF reimburses participating insurers for losses under covered polices, subject to limitations. 4
Covered policies include collateral protection5 insurance policies covering personal residences that
protect both the borrower’s and the lender’s financial interest in an amount at least equal to coverage
for the dwelling in place under a lapsed homeowner’s policy, if such policies meet certain statutory
conditions.6
Collateral protection insurance is placed by an insurer when a homeowner’s policy on the property has
lapsed. Sometimes, the insurer is unable to obtain correct information from the homeowner and places
coverage at an amount other than the amount of the homeowner’s lapsed policy. This can create a
discrepancy between the coverage in place and the amount of the homeowner’s lapsed policy, which
makes the policy ineligible for FHCF coverage.
Effect of the Bill
The bill amends the conditions under which a collateral protection insurance policy can be considered a
“covered policy” and, thus, eligible for FHCF coverage. The bill provides that a collateral protection
insurance policy is eligible for FHCF coverage if it is placed for the amount of the last known coverage,
the amount that the homeowner was notified of by the collateral protection insurer, or the amount that
the homeowner requests from the collateral protection insurer.
Workers’ Compensation – Payroll Audit Procedures
The cost of workers’ compensation insurance is based primarily upon an employer’s payroll and the
types of duties employees perform. Employers pay an estimated premium at the commencement of a
workers’ compensation policy and receive a refund or a bill for additional premium due at the end of the
policy year, based on a payroll audit conducted by the insurance carrier.
1 See s. 215.555, F.S.
22 See id.
3 Id.
4 S. 215.555(2)(d), F.S.
5 “Collateral protection insurance” means commercial property insurance of which a creditor is the primary beneficiary and
policyholder and which protects or covers an interest of the creditor arising out of a credit transaction secured by real or
personal property. Initiation of such coverage is triggered by the mortgagor’s failure to maintain insurance coverage as
required by the mortgage or other lending document. Collateral protection insurance is not residential coverage. Ss.
215.555(15) and 624.6085, F.S.
6 S. 215.555(2)(c), F.S.
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The law requires that the Financial Services Commission7 establish by rule the minimum requirements
for audits of payroll and classifications 8 to ensure that the appropriate premium is charged for workers’
compensation coverage. The rules shall require payroll audits no less than every other year for non-
construction businesses. Businesses in the construction industry that are large enough to have an
experience rating factor applied to their premium (meaning the policy is based on Florida estimated
annual premium of $5,750 or more9) must be audited annually and the audit must take place at the
employer’s worksite.10
The Office of Insurance Regulation (OIR) has promulgated rules for payroll audits that were adopted by
the Financial Services Commission. The rules require:
An annual physical audit for policies with an estimated annual premium of $10,000 or more,
regardless of governing classification;
An annual mail or physical audit for policies with an estimated annual premium of $9,999 to $1;
A physical audit for all new businesses that have construction classifications, regardless of
premium;
An annual physical audit for renewal policies that have construction classifications if the estimated
annual premium is $5,000 or more;11 and
A mail or physical audit not less than every other year for per capita policies, which use the number
of workers during the policy period to measure exposure.
Audits conducted by telephone are not permitted in lieu of mail or physical audits. 12
Effect of the Bill
The bill requires in-person audits for construction businesses only if the construction business has an
estimated annual premium of $10,000 or more. Passage of the bill would require changes to OIR rules
that require physical audits for all new construction businesses and for construction businesses that
have an annual premium of $5,000 or more.
Service of Process
In general, the law provides for the designation of a public officer, board, agency, or commission as the
agent for service of process on a person, firm, or corporation in the state.13 However, the state Chief
Financial Officer (CFO) is designated as the agent for service of process on insurers and other specific
entities or persons licensed by the Department of Financial Services (DFS) or the Office of Insurance
Regulation (OIR).14 Service of process on the CFO is made by mail, personal service, or via DFS’s e-
portal.15
After receiving service of process, the CFO is required to promptly send a copy by registered or
certified mail, or by any other verifiable means, to the person designated by the insurer to receive the
process.16 Verifiable means includes making the documents available by electronic transmission from a
7 The Financial Services Commission (commission) is composed of the Governor, Attorney General, Chief Financial
Officer, and Commissioner of Agriculture. S. 20.121(3), F.S. The commission members are the OIR’s agency head for t he
purpose of rulemaking. S. 20.121(3)(c), F.S.
8 Classifications, or classification codes, are three- or four-digit codes used to identify types of work so that risk can be
estimated when establishing workers’ compensation insurance rates. The Hartford, Work ers’ Comp Class Codes,
https://www.thehartford.com/workers-compensation/workers-comp-class-codes (last visited Jan. 5, 2022).
9 OIR, 2020 Workers’ Compensation Annual Report, p. 32 (Jan. 15, 2021), 2020WorkersCompensationAnnualReport.pdf
(floir.com) (last visited Jan. 5, 2022).
10 S. 440.381, F.S.
11 R. 69O-189.003(4)(b)1, F.A.C.
12 R. 69O-189.003(4)(b)3, F.A.C.
13 S. 48.151, F.S.
14 Id.
15 Id. DFS, https://myfloridacfo.com/division/generalcounsel/servic e-of-process (last visited Dec. 16, 2021).
16 S. 624.423, F.S.
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secure website established by DFS.17 If DFS makes the documents available electronically, the CFO is
required to send a notice of receipt of process to the person designated by the insurer being served to
receive legal process.18
Service is considered perfected on an insurer when the CFO is served with the process. 19 Although an
insurer is not required to respond to a lawsuit except until 20 days after the CFO sends or makes a
copy of the process available, the triggering date for other legal deadlines is the date the CFO is served
with process.20 This can create problems for an insurer when a delay occurs between the time the CFO
is served and the time the CFO notifies the insurer of the service of process.
Effect of the Bill
The bill provides that service of process is perfected on an insurer when the process served on the
CFO is delivered to the insurer or the insurer is notified that a copy of the process is available on DFS’s
website.
Meeting Requirements – Risk Management Mechanisms and Self-Insurance Pools
Current law does not address whether associations, trusts, and pools formed to provide self-insurance
for public entities can establish a quorum, and conduct public business, virtually. The authority to
conduct business virtually has become a greater issue as COVID-19 has forced private and public
entities to work remotely.
Effect of the Bill
The bill authorizes associations, trusts, and pools formed to provide self-insurance for public entities to
establish a quorum, and to conduct public business, through communications media technology.
Adjusters and Agents
Company Employee Adjuster
A “company employee adjuster” is a licensed insurance adjuster who is appointed and employed on an
insurer’s adjusting staff or a wholly owned subsidiary of the insurer.21 The duties of such an adjuster
include determining the amount of a claim, loss, or damage payable under an insurance policy, and
settling the claim, loss, or damage.22
Effect of the Bill
The bill adds adjusters employed by an insurer’s affiliate to the definition of company employee
adjuster.
Agent Licensing
General Lines Agent
A general lines agent23 is one who sells the following lines of insurance: property; 24 casualty,25 including
commercial liability insurance underwritten by a risk retention group, a commercial self-insurance
17 S. 624.307(9), F.S.
18 Id.
19 S. 624.423(3), F.S.
20 S. 624.423(2), F.S.
21 S. 626.856, F.S.
22 Id.
23 S. 626.015(5), F.S.
24 S. 624.604, F.S.
25 S. 624.605, F.S.
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fund,26 or a workers’ compensation self-insurance fund;27 surety;28 health;29 and, marine.30 The general
lines agent may only transact health insurance for an insurer that the general lines agent also
represents for property and casualty insurance. If the general lines agent wishes to represent health
insurers that are not also property and casualty insurers, they must be licensed as a health insurance
agent.31
Personal Lines Agent
A personal lines agent is a general lines agent who is limited to transacting business related to property
and casualty insurance sold to individuals and families for noncommercial purposes.32
Motor Vehicle Servicing Agreements
Motor vehicle service agreements provide vehicle owners with protection when the manufacturer’s
warranty expires. A motor vehicle service agreement indemnifies the vehicle owner (or holder of the
agreement) against loss caused by failure of any mechanical or other component part, or any
mechanical or other component part that does not function as it was originally intended. 33 Motor vehicle
service agreements can only be sold by a licensed and appointed salesperson. Salespersons are
licensed in the same manner as insurance representatives under ch. 626, F.S., with some exceptions
to the requirements applied to insurance representatives.
Service Warranty Associations
Service warranty associations are entities, other than insurers, which issue service warranties. A
service warranty is an agreement or maintenance service contract equal to or greater than 1 year in
length to repair, replace, or maintain a consumer product, or for indemnification for repair, replacement,
or maintenance, for operational or structural failure due to a defect in materials or workmanship, normal
wear and tear, power surge, or accidental damage from handling in return for the payment of a
segregated charge by the consumer.34 No person or entity shall solicit, negotiate, advertise, or
effectuate service warranty contracts in this state unless such person or entity is licensed and
appointed as a sales representative.35
Home Warranty Contracts
A home warranty association is any corporation or any other organization, other than an authorized
insurer, issuing home warranties. A home warranty is any contract or agreement whereby a person
undertakes to indemnify the warranty holder against the cost of repair or replacement, or actually
furnishes repair or replacement, of any structural component or appliance of a home, necessitated by
wear and tear or an inherent defect of any such structural component or appliance or necessitated by
the failure of an inspection to detect the likelihood of any such loss. No person may solicit, negotiate, or
effectuate home warranty contracts for remuneration in this state unless such person is licensed and
appointed as a sales representative.36
26 S. 624.462, F.S.
27 S. 624.4621, F.S.
28 S. 626.606, F.S.
29 Ss. 624.603 and 627.6482, F.S.
30 S. 624.607, F.S.
31 S. 626.829, F.S.
32 S. 626.015(17), F.S.
33 S. 634.011(8), F.S.
34 S. 634.401(13).
35 S. 634.419, F.S. A “sales representative” is any person, retail store, corporation, partnership, or sole proprietorship
utilized by an insurer or service warranty association for the purpose of selling or issuing service warranties. However, in
the case of service warranty associations selling service warranties from one or more business locations, the person in
charge of each location may be considered the sales representative. S. 634.401(12), F.S.
36 S. 634.317, F.S. “Sales representative” is any person with whom an insurer or home inspection or warranty association
has a contract and who is utilized by such insurer or association for the purpose of selling or issuing home warranties. The
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Effect of the Bill
The bill allows a licensed general lines agent or licensed personal lines agent to advertise, solicit,
negotiate, or sell motor vehicle service agreements, home warranty contracts, or service warranty
contracts without being separately licensed as a sales representative or insurance representative, as
applicable.
Use of Hurricane Models in Residential Property Insurance Rate Filings
The law regarding OIR’s review and approval of residential property insurance rate filings requires that
a rate filing consider mitigation measures that policyholders undertake to reduce hurricane losses. 37 It
sets forth the criteria under which OIR may disapprove rate filings, including disapproval of rates that it
determines to be excessive, inadequate, or unfairly discriminatory. 38 The law also establishes criteria
for the Florida Commission on Hurricane Loss Projection Methodology’s (Commission) consideration,
and approval, of hurricane loss models and prescribes how those models affect OIR’s approval of
property insurance rate filings.39
Effect of the Bill
The bill provides parameters for OIR’s approval or disapproval of rate filings by providing that, with
respect to residential property insurance rate filings, the rate filing may use a modeling indication that is
the weighted or straight average of two or more models found to be accurate or reliable by the
Commission.
Mitigation Credits in Residential Property Insurance Rate Filings
Current law requires residential property insurers to include “positive and negative rate factors that
reflect the manner in which building code enforcement in a particular jurisdiction addresses the risk of
wind damage” in their rate filings that are filed with, and approved by, OIR. 40 Insurers utilize factors
from statewide organizations’ building code rating factor plans that evaluate how building code
enforcement in particular jurisdictions evaluate risk.41 Often times these ratings are flawed and not an
accurate depiction of actual building code enforcement activity in a jurisdiction.
Since 2003, residential property insurers have been required to provide credits, discounts, and other
rate differentials to reduce insurance premiums for properties with mitigation features. 42 Mitigation
features are construction techniques used or items installed to protect a structure against windstorm
damage or loss.43 Examples of mitigation features include hurricane shutters, a hip roof, or a specific
type of roof covering.
Code-plus programs help property owners avoid or reduce damage caused by natural hazards and
other risks by implementing additional levels of resilience to hazards beyond those required by building
codes.44 Presently, insurers are unable to submit rating plans for review and approval by OIR that
term includes all employees of an insurer or association engaged directly in the sale or issuance of home warranties. S.
634.301(12), F.S
37 S. 627.062(2)(j), F.S.
38 S. 627.062(2)(b), F.S.
39 Ss. 627.0628-627.06281, F.S.
40 S. 627.0629(2)(b), F.S.
41 See, e.g., ISO Mitigation, ISO’s Building Code Effectiveness Grading Schedule (BCEGS),
https://www.isomitigation.com/bcegs/ (last visited Dec. 16, 2021). BCEGS is a program that provides these rating factors .
42 See s. 627.0629, F.S.
43 See id.
44 Whole Building Design Guide, Code-Plus Program for Disaster Resistance, https://www.wbdg.org/resources/code-plus-
programs-disaster-resistance (last visited Dec. 16, 2021).
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include mitigation credits for those insureds that are evaluated by, and comply with, code-plus
standards established by independent, not-for-profit, scientific research organizations.45
Effect of the Bill
The bill allows insurers to file a rating plan with OIR in which it offers additional windstorm mitigation
credits based on standards established by an independent, not-for-profit, scientific research
organization that meets the requirements of the rate filing statute.
Notification of Automatic Withdrawal of Insurance Premiums
Insurers issuing personal lines residential and commercial property policies are required to provide
premium payment options for quarterly and semiannual payments. They may, but are not required to,
offer monthly payment plans.46 Insurers and policyholders may enter into automatic bank withdrawal
agreements for paying insurance premiums.47 Current law requires insurers to provide the policyholder
with 15 days advance written notice prior to any automatic bank withdrawal if the premium payment
increases from the previous withdrawal period by any amount.
Federal law gives consumers the option of receiving notice of a change in an automatic bank
withdrawal only when the withdrawal differs from the most recent withdrawal by more than an agreed-
upon amount.48
Effect of the Bill
The bill changes the 15-day written notice requirement of any increase in policy premiums to require
the notice only if the increase in policy premiums results in the next automatic withdrawal being
increased by more than $10.
Citizens Property Insurance Corporation
Citizens is a state-created, not-for-profit, tax-exempt government entity that is an integral part of the
state, whose public purpose is to provide property insurance to those unable to find affordable
coverage in the private market.49 Citizens offers property insurance in three separate accounts: the
personal lines account; the commercial lines account; and the coastal account. The commercial lines
account offers commercial lines residential and nonresidential policies. Currently, residential
condominiums are ineligible for coverage as “commercial residential” if 50 percent or more of the units
are rented more than eight times in a calendar year for a rental agreement period of less than 30
days.50
Effect of the Bill
The bill allows Citizens the option to insure residential condominiums under commercial residential
wind-only coverage if the units are intended for residential use, but are rented on a short-term basis.
Delivery of Policy Documents
The law requires that an insurance policy be mailed, delivered, or electronically transmitted to an
insured or other person entitled to receive the policy (designated person) within 60 days of the policy
taking effect.51 An insurer may allow a personal lines policyholder to elect delivery of policy documents
45 See, e.g., Insurance Institute of Business & Home Safety, https://ibhs.org/ (last visited Dec. 16, 2021).
46 S. 627.4035(1)(a), F.S.
47 S. 627.0665, F.S.
48 12 CFR 1005(10)(d).
49 S. 627.351(6)(a)1., F.S.
50 S. 627.351(6), F.S.
51 S. 627.421(1), F.S.
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by electronic means instead of by mail.52 Electronic delivery of commercial risks constitutes delivery to
the insured or designated person, unless the insured or designated person notifies the insurer that he
or she does not agree to electronic delivery.53 However, if a policy is delivered electronically, the insurer
must include with the policy, a notice of the right to receive the policy by mail rather than
electronically.54 Additionally, an insurer must provide a paper copy of an insurance policy to an insured
or designated person upon his or her request.55
Effect of the Bill
The bill eliminates the requirement that an insurer provide notice with the policy of the right to receive
the policy by mail. It also eliminates the requirement that a paper copy of a policy be provided to the
insured or designated person upon request. The proposed change does not prevent an insured or
designated person from requesting a paper copy of a policy; the insurer may, but would not be required
to, provide a paper copy, unless the insured or designated person communicated to the insurer that he
or she no longer agrees to delivery by electronic means.
Method to Reject/Exclude Certain Property Insurance Deductibles/Coverages
With certain exceptions, prior to issuing a personal lines residential property insurance policy, the
insurer must offer alternative deductible amounts applicable to hurricane losses equal to $500, 2
percent, 5 percent, and 10 percent of the policy dwelling limits. For such policies covering a risk valued
at less than $500,000, a hurricane deductible may not be greater than 10 percent of the policy dwelling
limits unless the policyholder personally writes and provides to the insurer, in his or her own
handwriting the following statement: “I do not want the insurance on my home to pay for the first
(specify dollar value) of the damage from hurricanes. I will pay those costs. My insurance will not.”
An insurer issuing a residential property insurance policy must provide windstorm coverage; however,
the insurer must also make available, at the option of the policyholder, an exclusion for the windstorm
coverage.56 To exclude windstorm coverage, the policyholder must personally write and provide to the
insurer, in his or her own handwriting, the following statement: “I do not want the insurance on my
(home/mobile home/condominium unit) to pay for damage from windstorms. I will pay those costs. My
insurance will not.”57
An insurer issuing a residential property insurance policy, except for a condominium unit owner policy
or a tenant policy, must make available, at the option of the policyholder, an exclusion of contents
coverage.58 To exclude contents coverage, the policyholder must personally write and provide to the
insurer, in his or her own handwriting, the following statement: “I do not want the insurance on my
(home/mobile home) to pay for the costs to repair or replace any contents that are damaged. I will pay
those costs. My insurance will not.” 59
.
Effect of the Bill
For the above three provisions related to waiving the 10 percent limit on hurricane deductibles,
excluding windstorm coverage, and excluding contents coverage, the bill permits the required
statements to be either personally written or typed by the policyholder. The proposed change should
give insurers and policyholders more options for conducting business electronically.
Assignment Agreements
52 Id.
53 Id.
54 Id.
55 Id.
56 S. 627.712(1)-(2),F.S.
57 S. 627.712(2)(a)1., F.S.
58 S. 627.712(3), F.S.
59 Id.
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An assignment is the voluntary transfer of the rights of one party under a contract to another party.
Current law generally allows a policyholder to assign the benefits of the policy, such as the right to be
paid, to another party. This assignment is often called an assignment of benefits (AOB). An assignment
agreement is an instrument that assigns or transfers post-loss benefits under a residential or
commercial property insurance policy to or from a person who protects, repairs, restores, or replaces
property or mitigates against further property damage.60
Once an assignment agreement is executed, the assignee can take action to enforce the insurance
policy. Accordingly, if an insurer refuses to pay an assignee for a claim submitted under the policy, the
assignee may file a lawsuit against the insurer. An assignee must give an insurer and the assignor prior
written notice of at least ten business days before filing suit on a claim (pre-suit notice).61 The pre-suit
notice may not be served before the insurer has made a determination of coverage. 62 It must specify
the damages in dispute, the amount claimed, and a pre-suit settlement demand, and must include an
itemized, detailed, written invoice or estimate of the work performed or to be performed. 63
The law requires pre-suit notice to be sent by certified mail, return receipt requested, or by electronic
delivery, but does not specify the mailing address or email address where the pre-suit notice must be
sent.64 The lack of a specific address may delay an insurer’s or assignor’s receipt of the notice, and
thus reduce an insurer’s time to respond to the notice.
Effect of the Bill
The bill adds inspection to the list of services included in the definition of assignment agreement to
address the concern that certain individuals providing services, but who did not otherwise engage in
protecting, repairing, restoring, or replacing insured property following a loss, were not subject to the
requirements of s. 627.7152, F.S. The bill establishes that the list of services in s. 627.7152, F.S., is not
exhaustive. The bill specifies that fees charged by a public adjuster are not included in the definition of
assignment agreement. Additionally, the bill requires that the pre-suit notice, if sent by certified mail, be
sent to the name and mailing address specified by an insurer in its policy forms, and if sent by email, be
sent to the email address specified by an insurer in its policy forms.
Limited Coverage Notice Requirements
Automobile insurance policies that do not contain coverage for bodily injury and property damage 65
must be stamped on the policy declarations page with the following language in a font larger than the
largest font otherwise used in the declarations page (notice):
THIS POLICY DOES NOT PROVIDE BODILY INJURY AND PROPERTY DAMAGE
LIABILITY INSURANCE OR ANY OTHER COVERAGE FOR WHICH A SPECIFIC
PREMIUM CHARGE IS NOT MADE, AND DOES NOT COMPLY WITH ANY FINANCIAL
RESPONSIBILITY LAW.
The stamping requirement is antiquated and prevents these types of policies from being delivered
electronically.
Effect of the Bill
The bill eliminates the requirement that the notice be stamped on the declarations page of limited
coverage automobile policies. Instead, the notice must accompany the declarations page and must be
typed in a font at least as large as the font used in the declarations page. This change will allow these
types of policies to be delivered electronically.
60 S. 627.7152(1)(b), F.S.
61 S. 627.7152(9)(b), F.S.
62 Id.
63 Id.
64 See id.
65 S. 627.7276, F.S. These limited policies are typically issued to certain antique cars.
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B. SECTION DIRECTORY:
Section 1. Amends s. 215.555, F.S., relating to Florida Hurricane Catastrophe Fund.
Section 2. Amends s. 440.381, F.S., relating to application for coverage; reporting payroll; payroll audit
procedures; penalties.
Section 3. Amends s. 624.423, F.S., relating to serving process.
Section 4. Creates s. 624.46227, F.S., relating to meeting requirements.
Section 5. Amends s. 626.856, F.S., relating to “company employee adjuster” defined.
Section 6. Amends. 627.062, F.S., relating to rate standards.
Section 7. Amends s. 627.0629, F.S., relating to residential property insurance; rate filings.
Section 8. Amends s. 627.0665, F.S., relating to automatic bank withdrawal agreements; notification
required.
Section 9. Amends s. 627.351, F.S., relating to insurance risk apportionment plans.
Section 10. Amends s. 627.421, F.S., relating to delivery of policy.
Section 11. Amends s. 627.701, F.S., relating to liability of insureds; coinsurance; deductibles.
Section 12. Amends s. 627.712, F.S., relating to residential windstorm coverage required; availability of
exclusions for windstorm or contents.
Section 13. Amends s. 627.7152, F.S., relating to assignment agreements.
Section 14. Amends s. 627.7276, F.S., relating to notice of limited coverage.
Section 15. Amends s. 634.171, F.S., relating to salesperson to be licensed and appointed.
Section 16. Amends s. 634.317, F.S., relating to license and appointment required.
Section 17. Amends s. 634.419, F.S., relating to license and appointment required.
Section 18. Reenacts s. 624.424, F.S., relating to annual statement and other information.
Section 19. Reenacts s. 627.351, F.S., relating to insurance risk apportionment plans.
Section 20. Reenacts s. 626.856, F.S., relating to public adjuster’s qualifications, bond.
Section 21. Reenacts s. 627.7153, F.S., relating to policies restricting assignment of post-loss benefits
under a property insurance policy.
Section 22. Provides an effective date of July 1, 2022, except as otherwise provided.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
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DATE: 1/11/2022
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
OIR has indicated that the bill may have a positive economic impact for policyholders, who may benefit
from lower collateral protection insurance costs if more policies are eligible for coverage from the
FHCF.66
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill will require modification of the rule related to workers’ compensation payroll audit procedures to
reflect the changes to audits for businesses with construction classifications. 67
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
66 OIR Agency Analysis of House Bill 815, p. 6 (Feb. 23, 2021). House Bill 815 from the 2021 Legislative Session is
largely the same as this bill.
67 R. 69O-189.003, F.A.C.
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 503 2022
1 A bill to be entitled
2 An act relating to insurance; amending s. 215.555,
3 F.S.; redefining the term "covered policy" under the
4 Florida Hurricane Catastrophe Fund in relation to
5 certain collateral protection insurance policies;
6 amending s. 440.381, F.S.; revising the annual audit
7 requirement for construction classes to apply to new
8 and renewal policies having estimated annual premiums
9 over a specified threshold; amending s. 624.423, F.S.;
10 specifying when service of process is valid and
11 binding upon insurers; creating s. 624.46227, F.S.;
12 authorizing any association, trust, or pool created
13 for the purpose of forming a risk management mechanism
14 or providing self-insurance for a public entity to
15 establish a quorum and conduct public business through
16 communications media technology; amending s. 626.856,
17 F.S.; revising the definition of the term "company
18 employee adjuster"; amending s. 627.062, F.S.;
19 authorizing the use of a certain modeling indication
20 for residential property insurance rate filings;
21 amending s. 627.0629, F.S.; authorizing insurers to
22 file certain insurance rating plans based on certain
23 windstorm mitigation construction standards, if
24 certain requirements are met; amending s. 627.0665,
25 F.S.; revising notification requirements for insurers
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26 who have automatic bank withdrawal agreements with
27 insureds to include notices when withdrawal amounts
28 increase above a specified threshold; amending s.
29 627.351, F.S.; revising conditions for determining the
30 ineligibility of condominiums for wind-only coverage;
31 amending s. 627.421, F.S.; deleting a requirement for
32 electronic transmissions of certain documents to
33 include specified notices; deleting a requirement that
34 paper copies of policies be provided upon request;
35 amending ss. 627.701 and 627.712, F.S.; revising
36 policyholder acknowledgment statement requirements for
37 property insurance policies having certain hurricane
38 deductibles or windstorm or contents coverage
39 exclusions, respectively; amending s. 627.7152, F.S.;
40 revising the definition of the term "assignment
41 agreement"; specifying the addresses to which a notice
42 of intent must be served; amending s. 627.7276, F.S.;
43 revising notice requirements for motor vehicle
44 policies that do not provide coverage for bodily
45 injury and property damage liability; amending ss.
46 634.171, 634.317, and 634.419, F.S.; authorizing
47 licensed personal lines or general lines agents to
48 solicit, negotiate, advertise, or sell motor vehicle
49 service agreements, home warranty contracts, and
50 service warranty contracts, respectively, without a
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51 sales representative license; making technical
52 changes; reenacting ss. 624.424(10) and 627.351(6)(v),
53 F.S., relating to annual statements and other
54 information and Citizens Property Insurance
55 Corporation, respectively, to incorporate the
56 amendment made to s. 215.555, F.S., in references
57 thereto; reenacting s. 626.865(1)(e), F.S., relating
58 to public adjuster's qualifications, to incorporate
59 the amendment made to s. 626.856, F.S., in a reference
60 thereto; reenacting s. 627.7153(1) and (2)(d), F.S.,
61 relating to policies restricting assignment of post-
62 loss benefits under a property insurance policy, to
63 incorporate the amendment made to s. 627.7152, F.S.,
64 in references thereto; providing effective dates.
65
66 Be It Enacted by the Legislature of the State of Florida:
67
68 Section 1. Effective June 1, 2023, paragraph (c) of
69 subsection (2) of section 215.555, Florida Statutes, is amended
70 to read:
71 215.555 Florida Hurricane Catastrophe Fund.—
72 (2) DEFINITIONS.—As used in this section:
73 (c) "Covered policy" means any insurance policy covering
74 residential property in this state, including, but not limited
75 to, any homeowner, mobile home owner, farm owner, condominium
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76 association, condominium unit owner, tenant, or apartment
77 building policy, or any other policy covering a residential
78 structure or its contents issued by any authorized insurer,
79 including a commercial self-insurance fund holding a certificate
80 of authority issued by the Office of Insurance Regulation under
81 s. 624.462, the Citizens Property Insurance Corporation, and any
82 joint underwriting association or similar entity created under
83 law. The term "covered policy" includes any collateral
84 protection insurance policy covering personal residences which
85 protects both the borrower's and the lender's financial
86 interests, in an amount at least equal to the coverage amount
87 for the dwelling in place under the lapsed homeowner's policy,
88 the coverage amount that the homeowner has been notified of by
89 the collateral protection insurer, or the coverage amount the
90 homeowner requests from the collateral protection insurer, if
91 such collateral protection insurance policy can be accurately
92 reported as required in subsection (5). Additionally, covered
93 policies include policies covering the peril of wind removed
94 from the Florida Residential Property and Casualty Joint
95 Underwriting Association or from the Citizens Property Insurance
96 Corporation, created under s. 627.351(6), or from the Florida
97 Windstorm Underwriting Association, created under s. 627.351(2),
98 by an authorized insurer under the terms and conditions of an
99 executed assumption agreement between the authorized insurer and
100 such association or Citizens Property Insurance Corporation.
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101 Each assumption agreement between the association and such
102 authorized insurer or Citizens Property Insurance Corporation
103 must be approved by the Office of Insurance Regulation before
104 the effective date of the assumption, and the Office of
105 Insurance Regulation must provide written notification to the
106 board within 15 working days after such approval. "Covered
107 policy" does not include any policy that excludes wind coverage
108 or hurricane coverage or any reinsurance agreement and does not
109 include any policy otherwise meeting this definition which is
110 issued by a surplus lines insurer or a reinsurer. All commercial
111 residential excess policies and all deductible buy-back policies
112 that, based on sound actuarial principles, require individual
113 ratemaking must shall be excluded by rule if the actuarial
114 soundness of the fund is not jeopardized. For this purpose, the
115 term "excess policy" means a policy that provides insurance
116 protection for large commercial property risks and that provides
117 a layer of coverage above a primary layer insured by another
118 insurer.
119 Section 2. Subsection (3) of section 440.381, Florida
120 Statutes, is amended to read:
121 440.381 Application for coverage; reporting payroll;
122 payroll audit procedures; penalties.—
123 (3) The Financial Services Commission, in consultation
124 with the department, shall establish by rule minimum
125 requirements for audits of payroll and classifications in order
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126 to ensure that the appropriate premium is charged for workers'
127 compensation coverage. The rules must shall ensure that audits
128 performed by both carriers and employers are adequate to provide
129 that all sources of payments to employees, subcontractor s, and
130 independent contractors are have been reviewed and that the
131 accuracy of classification of employees is has been verified.
132 The rules must require shall provide that employers in all
133 classes other than the construction class be audited at least
134 not less frequently than biennially and may provide for more
135 frequent audits of employers in specified classifications based
136 on factors such as amount of premium, type of business, loss
137 ratios, or other relevant factors. In no event shall Employers
138 in the construction class, generating more than the amount of
139 premium required to be experience rated must, be audited at
140 least less than annually. The annual audits required for
141 construction classes must shall consist of physical onsite
142 audits for new and renewal policies only if the estimated annual
143 premium is $10,000 or more. Payroll verification audit rules
144 must include, but need not be limited to, the use of state and
145 federal reports of employee income, payroll and other accounting
146 records, certificates of insurance maintained by subcontractors,
147 and duties of employees. At the completion of an audit, the
148 employer or officer of the corporation and the auditor must
149 print and sign their names on the audit document and attach
150 proof of identification to the audit document.
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151 Section 3. Effective upon this act becoming a law,
152 subsection (3) of section 624.423, Florida Statutes, is amended
153 to read:
154 624.423 Serving process.—
155 (3) Service of process is valid and binding upon the
156 insurer on the date process served upon the Chief Financial
157 Officer is delivered to the insurer and sent or the date on
158 which the insurer is notified that such information has been
159 made available on a secured network in accordance with this
160 section and s. 624.307(9) shall for all purposes constitute
161 valid and binding service thereof upon the insurer.
162 Section 4. Section 624.46227, Florida Statutes, is created
163 to read:
164 624.46227 Meeting requirements.—Any association, trust, or
165 pool authorized by state law and created for the purpose of
166 forming a risk management mechanism or providing self-insurance
167 for public entities in this state may establish a quorum and
168 conduct public business through communications media technology.
169 Section 5. Section 626.856, Florida Statutes, is amended
170 to read:
171 626.856 "Company employee adjuster" defined.—A "company
172 employee adjuster" means a person licensed as an all-lines
173 adjuster who is appointed and employed on an insurer's staff of
174 adjusters, by an affiliate, or by a wholly owned subsidiary of
175 the insurer, and who undertakes on behalf of such insurer or
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176 other insurers under common control or ownership to ascertain
177 and determine the amount of any claim, loss, or damage payable
178 under a contract of insurance, or undertakes to effect
179 settlement of such claim, loss, or damage.
180 Section 6. Paragraph (j) of subsection (2) of section
181 627.062, Florida Statutes, is amended to read:
182 627.062 Rate standards.—
183 (2) As to all such classes of insurance:
184 (j) With respect to residential property insurance rate
185 filings, the rate filing:
186 1. Must account for mitigation measures undertaken by
187 policyholders to reduce hurricane losses.
188 2. May use a modeling indication that is the weighted or
189 straight average of two or more models found by the commission
190 to be accurate or reliable pursuant to s. 627.0628.
191
192 The provisions of this subsection do not apply to workers'
193 compensation, employer's liability insurance, and motor vehicle
194 insurance.
195 Section 7. Subsection (9) is added to section 627.0629,
196 Florida Statutes, to read:
197 627.0629 Residential property insurance; rate filings. —
198 (9) An insurer may file with the office a personal lines
199 residential property insurance rating plan that provides
200 justified premium discounts, credits, or other rate
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201 differentials based on windstorm mitigation construction
202 standards developed by an independent, not-for-profit scientific
203 research organization, if such standards meet the requirements
204 of this section.
205 Section 8. Section 627.0665, Florida Statutes, is amended
206 to read:
207 627.0665 Automatic bank withdrawal agreements;
208 notification required.—Any insurer licensed to issue insurance
209 in this the state who has an automatic bank withdrawal agreement
210 with an insured party for the payment of insurance premiums for
211 any type of insurance shall give the named insured at least 15
212 days advance written notice of any increase in policy premiums
213 that results in the next automatic bank withdrawal being
214 increased by more than $10. Such notice must be provided before
215 prior to any automatic bank withdrawal containing the of an
216 increased premium amount.
217 Section 9. Paragraph (a) of subsection (6) of section
218 627.351, Florida Statutes, is amended to read:
219 627.351 Insurance risk apportionment plans.—
220 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
221 (a) The public purpose of this subsection is to ensure
222 that there is an orderly market for property insurance for
223 residents and businesses of this state.
224 1. The Legislature finds that private insurers are
225 unwilling or unable to provide affordable property insurance
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226 coverage in this state to the extent sought and needed. The
227 absence of affordable property insurance threatens the public
228 health, safety, and welfare and likewise threatens the economic
229 health of the state. The state therefore has a compelling publi c
230 interest and a public purpose to assist in assuring that
231 property in this the state is insured and that it is insured at
232 affordable rates so as to facilitate the remediation,
233 reconstruction, and replacement of damaged or destroyed property
234 in order to reduce or avoid the negative effects otherwise
235 resulting to the public health, safety, and welfare, to the
236 economy of the state, and to the revenues of the state and local
237 governments which are needed to provide for the public welfare.
238 It is necessary, therefore, to provide affordable property
239 insurance to applicants who are in good faith entitled to
240 procure insurance through the voluntary market but are unable to
241 do so. The Legislature intends, therefore, that affordable
242 property insurance be provided and that it continue to be
243 provided, as long as necessary, through Citizens Property
244 Insurance Corporation, a government entity that is an integral
245 part of the state, and that is not a private insurance company.
246 To that end, the corporation shall strive to increase the
247 availability of affordable property insurance in this state,
248 while achieving efficiencies and economies, and while providing
249 service to policyholders, applicants, and agents which is no
250 less than the quality generally provided in the voluntary
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251 market, for the achievement of the foregoing public purposes.
252 Because it is essential for this government entity to have the
253 maximum financial resources to pay claims following a
254 catastrophic hurricane, it is the intent of the Legislature that
255 the corporation continue to be an integral part of the state and
256 that the income of the corporation be exempt from federal income
257 taxation and that interest on the debt obligations issued by the
258 corporation be exempt from federal income taxation.
259 2. The Residential Property and Casualty Joint
260 Underwriting Association originally created by this statute
261 shall be known as the Citizens Property Insurance Corporation.
262 The corporation shall provide insurance for residential and
263 commercial property, for applicants who are entitled, but, in
264 good faith, are unable to procure insurance through the
265 voluntary market. The corporation shall operate pursuant to a
266 plan of operation approved by order of the Financial Services
267 Commission. The plan is subject to continuous review by the
268 commission. The commission may, by order, withdraw approval of
269 all or part of a plan if the commission determines that
270 conditions have changed since approval was granted and that the
271 purposes of the plan require changes in the plan. For the
272 purposes of this subsection, residential coverage includes both
273 personal lines residential coverage, which consists of the type
274 of coverage provided by homeowner, mobile home owner, dwelling,
275 tenant, condominium unit owner, and similar policies; and
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276 commercial lines residential coverage, which consists of the
277 type of coverage provided by condominium association, apartment
278 building, and similar policies.
279 3. With respect to coverage for personal lines residential
280 structures:
281 a. Effective January 1, 2014, a structure that has a
282 dwelling replacement cost of $1 million or more, or a single
283 condominium unit that has a combined dwelling and contents
284 replacement cost of $1 million or more, is not eligible for
285 coverage by the corporation. Such dwellings insured by the
286 corporation on December 31, 2013, may continue to be covered by
287 the corporation until the end of the policy term. The office
288 shall approve the method used by the corporation for valuing the
289 dwelling replacement cost for the purposes of this subparagraph.
290 If a policyholder is insured by the corporation before being
291 determined to be ineligible pursuant to this subparagraph and
292 such policyholder files a lawsuit challenging the determination,
293 the policyholder may remain insured by the corporation until the
294 conclusion of the litigation.
295 b. Effective January 1, 2015, a structure that has a
296 dwelling replacement cost of $900,000 or more, or a single
297 condominium unit that has a combined dwelling and contents
298 replacement cost of $900,000 or more, is not eligible for
299 coverage by the corporation. Such dwellings insured by the
300 corporation on December 31, 2014, may continue to be covered by
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301 the corporation only until the end of the policy term.
302 c. Effective January 1, 2016, a structure that has a
303 dwelling replacement cost of $800,000 or more, or a single
304 condominium unit that has a combined dwelling and contents
305 replacement cost of $800,000 or more, is not eligible for
306 coverage by the corporation. Such dwellings insured by the
307 corporation on December 31, 2015, may continue to be co vered by
308 the corporation until the end of the policy term.
309 d. Effective January 1, 2017, a structure that has a
310 dwelling replacement cost of $700,000 or more, or a single
311 condominium unit that has a combined dwelling and contents
312 replacement cost of $700,000 or more, is not eligible for
313 coverage by the corporation. Such dwellings insured by the
314 corporation on December 31, 2016, may continue to be covered by
315 the corporation until the end of the policy term.
316
317 The requirements of sub-subparagraphs b.-d. do not apply in
318 counties where the office determines there is not a reasonable
319 degree of competition. In such counties a personal lines
320 residential structure that has a dwelling replacement cost of
321 less than $1 million, or a single condominium unit that has a
322 combined dwelling and contents replacement cost of less than $1
323 million, is eligible for coverage by the corporation.
324 4. It is the intent of the Legislature that policyholders,
325 applicants, and agents of the corporation receive service and
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326 treatment of the highest possible level but never less than that
327 generally provided in the voluntary market. It is also intended
328 that the corporation be held to service standards no less than
329 those applied to insurers in the voluntary market by the office
330 with respect to responsiveness, timeliness, customer courtesy,
331 and overall dealings with policyholders, applicants, or agents
332 of the corporation.
333 5.a. Effective January 1, 2009, a personal lines
334 residential structure that is located in the "wind-borne debris
335 region," as defined in s. 1609.2, International Building Code
336 (2006), and that has an insured value on the structure of
337 $750,000 or more is not eligible for coverage by the corporation
338 unless the structure has opening protections as required under
339 the Florida Building Code for a newly constructed residential
340 structure in that area. A residential structure is deemed to
341 comply with this sub-subparagraph if it has shutters or opening
342 protections on all openings and if such opening protections
343 complied with the Florida Building Code at the time they were
344 installed.
345 b. Any major structure, as defined in s. 161.54(6)(a),
346 that is newly constructed, or rebuilt, repaired, restored, or
347 remodeled to increase the total square footage of finished area
348 by more than 25 percent, pursuant to a permit applied for after
349 July 1, 2015, is not eligible for coverage by the corporation if
350 the structure is seaward of the coastal construction control
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351 line established pursuant to s. 161.053 or is within the Coastal
352 Barrier Resources System as designated by 16 U.S.C. ss. 3501-
353 3510.
354 6. With respect to wind-only coverage for commercial lines
355 residential condominiums, effective July 1, 2014, a condominium
356 may shall be deemed ineligible for coverage when if 50 percent
357 or more of the units are rented more than eight times in a
358 calendar year for a rental agreement period of less than 30
359 days.
360 Section 10. Subsection (1) of section 627.421, Florida
361 Statutes, is amended to read:
362 627.421 Delivery of policy.—
363 (1) Subject to the insurer's requirement as to payment of
364 premium, every policy shall be mailed, delivered, or
365 electronically transmitted to the insured or to the person
366 entitled thereto not later than 60 days after the effectuation
367 of coverage. Notwithstanding any other provision of law, an
368 insurer may allow a policyholder of personal lines insurance to
369 affirmatively elect delivery of the policy documents, including,
370 but not limited to, policies, endorsements, notices, or
371 documents, by electronic means in lieu of delivery by mail.
372 Electronic transmission of a policy for commercial risks,
373 including, but not limited to, workers' compensation and
374 employers' liability, commercial automobile liability,
375 commercial automobile physical damage, commercial lines
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376 residential property, commercial nonresidential property,
377 farmowners insurance, and the types of commercial lines risks
378 set forth in s. 627.062(3)(d), constitutes delivery to the
379 insured or to the person entitled to delivery, unless the
380 insured or the person entitled to delivery communicates to t he
381 insurer in writing or electronically that he or she does not
382 agree to delivery by electronic means. Electronic transmission
383 shall include a notice to the insured or to the person entitled
384 to delivery of a policy of his or her right to receive the
385 policy via United States mail rather than via electronic
386 transmission. A paper copy of the policy shall be provided to
387 the insured or to the person entitled to delivery at his or her
388 request.
389 Section 11. Paragraph (d) of subsection (4) of section
390 627.701, Florida Statutes, is amended to read:
391 627.701 Liability of insureds; coinsurance; deductibles.—
392 (4)
393 (d)1. A personal lines residential property insurance
394 policy covering a risk valued at less than $500,000 may not have
395 a hurricane deductible in excess of 10 percent of the policy
396 dwelling limits, unless the following conditions are met:
397 a. The policyholder must personally write or type and
398 provide to the insurer the following statement in his or her own
399 handwriting and sign his or her name, which must also be signed
400 by every other named insured on the policy, and dated: "I do not
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401 want the insurance on my home to pay for the first (specify
402 dollar value) of damage from hurricanes. I will pay those costs.
403 My insurance will not."
404 b. If the structure insured by the policy is subject to a
405 mortgage or lien, the policyholder must provide the insurer with
406 a written statement from the mortgageholder or lienholder
407 indicating that the mortgageholder or lienholder approves the
408 policyholder electing to have the specified deductible.
409 2. A deductible subject to the requirements of this
410 paragraph applies for the term of the policy and for each
411 renewal thereafter. Changes to the deductible percentage may be
412 implemented only as of the date of renewal.
413 3. An insurer shall keep the original copy of the signed
414 statement required by this paragraph, electronically or
415 otherwise, and provide a copy to the policyholder providing the
416 signed statement. A signed statement meeting the requirements of
417 this paragraph creates a presumption that there was an informed,
418 knowing election of coverage.
419 4. The commission shall adopt rules providing appropriate
420 alternative methods for providing the statements required by
421 this section for policyholders who have a handicapping or
422 disabling condition that prevents them from providing a
423 handwritten statement.
424 Section 12. Paragraph (a) of subsection (2) and subsection
425 (3) of section 627.712, Florida Statutes, are amended to read:
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426 627.712 Residential windstorm coverage required;
427 availability of exclusions for windstorm or contents.—
428 (2) A property insurer must make available, at the option
429 of the policyholder, an exclusion of windstorm coverage.
430 (a) The coverage may be excluded only if:
431 1. When the policyholder is a natural person, the
432 policyholder personally writes or types and provides to the
433 insurer the following statement in his or her own handwriting
434 and signs his or her name, which must also be signed by every
435 other named insured on the policy, and dated: "I do not want the
436 insurance on my (home/mobile home/condominium unit) to pay for
437 damage from windstorms. I will pay those costs. My insurance
438 will not."
439 2. When the policyholder is other than a natural person,
440 the policyholder provides to the insurer on the policyholder's
441 letterhead the following statement that must be signed by the
442 policyholder's authorized representative and dated: "...(Name of
443 entity)... does not want the insurance on its ...(type of
444 structure)... to pay for damage from windstorms. ...(Name of
445 entity)... will be responsible for these costs. ...(Name of
446 entity's)... insurance will not."
447 (3) An insurer issuing a residential property insurance
448 policy, except for a condominium unit owner policy or a tenant
449 policy, must make available, at the option of the policyho lder,
450 an exclusion of coverage for the contents. The coverage may be
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451 excluded only if the policyholder personally writes or types and
452 provides to the insurer the following statement in his or her
453 own handwriting and signs his or her signature, which must also
454 be signed by every other named insured on the policy, and dated:
455 "I do not want the insurance on my (home/mobile home) to pay for
456 the costs to repair or replace any contents that are damaged. I
457 will pay those costs. My insurance will not."
458 Section 13. Effective upon this act becoming a law,
459 paragraph (b) of subsection (1) and paragraph (a) of subsection
460 (9) of section 627.7152, Florida Statutes, are amended to read:
461 627.7152 Assignment agreements.—
462 (1) As used in this section, the term:
463 (b) "Assignment agreement" means any instrument by which
464 post-loss benefits under a residential property insurance policy
465 or commercial property insurance policy, as that term is defined
466 in s. 627.0625(1), are assigned or transferred, or acquired in
467 any manner, in whole or in part, to or from a person providing
468 services, including, but not limited to, scopes of service, to
469 inspect, protect, repair, restore, or replace property or to
470 mitigate against further damage to the property. This term does
471 not include fees collected by a public adjuster, as defined in
472 s. 626.854(1).
473 (9)(a) An assignee must provide the named insured,
474 insurer, and the assignor, if not the named insured, with a
475 written notice of intent to initiate litigation before filing
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476 suit under the policy. Such notice must be served at least 10
477 business days before filing suit, but not before the insurer has
478 made a determination of coverage under s. 627.70131, by
479 certified mail, return receipt requested, to the name and
480 mailing address designated by the insurer in the policy forms or
481 by electronic delivery to the e-mail address designated by the
482 insurer in the policy forms at least 10 business days before
483 filing suit, but may not be served before the insurer has made a
484 determination of coverage under s. 627.70131. The notice must
485 specify the damages in dispute, the amount claimed, and a
486 presuit settlement demand. Concurrent with the notice, and as a
487 precondition to filing suit, the assignee must provide the named
488 insured, insurer, and the assignor, if not the named insured, a
489 detailed written invoice or estimate of services, including
490 itemized information on equipment, materials, and supplies; the
491 number of labor hours; and, in the case of work performed, proof
492 that the work has been performed in accordance with accepted
493 industry standards.
494 Section 14. Section 627.7276, Florida Statutes, is amended
495 to read:
496 627.7276 Notice of limited coverage.—
497 (1) An automobile policy that does not contain coverage
498 for bodily injury and property damage must include a notice be
499 clearly stamped or printed to the effect that such coverage is
500 not included in the policy in the following manner:
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501
502 "THIS POLICY DOES NOT PROVIDE BODILY INJURY AND
503 PROPERTY DAMAGE LIABILITY INSURANCE OR ANY OTHER
504 COVERAGE FOR WHICH A SPECIFIC PREMIUM CHARGE IS NOT
505 MADE, AND DOES NOT COMPLY WITH ANY FINANCIAL
506 RESPONSIBILITY LAW."
507
508 (2) This notice legend must accompany appear on the policy
509 declarations declaration page and on the filing back of the
510 policy and be printed in a contrasting color from that used on
511 the policy and in type size at least as large as the type size
512 used on the declarations page larger than the largest type used
513 in the text thereof, as an overprint or by a rubber stamp
514 impression.
515 Section 15. Section 634.171, Florida Statutes, is amended
516 to read:
517 634.171 Salesperson to be licensed and appointed;
518 exemptions.—Salespersons for motor vehicle service agreement
519 companies and insurers must shall be licensed, appointed,
520 renewed, continued, reinstated, or terminated as prescr ibed in
521 chapter 626 for insurance representatives in general. However,
522 they are shall be exempt from all other provisions of chapter
523 626, including those relating to fingerprinting, photo
524 identification, education, and examination provisions.
525 Applicable license, appointment, and other fees are as shall be
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526 those prescribed in s. 624.501. A licensed and appointed
527 salesperson is shall be directly responsible and accountable for
528 all acts of her or his employees and other representatives. Each
529 service agreement company or insurer shall, on forms prescribed
530 by the department, within 30 days after termination of the
531 appointment, notify the department of such termination. An No
532 employee or a salesperson of a motor vehicle service agreement
533 company or an insurer may not directly or indirectly solicit or
534 negotiate insurance contracts, or hold herself or himself out in
535 any manner to be an insurance agent, unless so qualified,
536 licensed, and appointed therefor under the Florida Insurance
537 Code. A licensed personal lines or general lines agent is not
538 required to be licensed as a salesperson under this section to
539 solicit, negotiate, advertise, or sell motor vehicle service
540 agreements. A motor vehicle service agreement company is not
541 required to be licensed as a salesperson to solicit, sell,
542 issue, or otherwise transact the motor vehicle service
543 agreements issued by the motor vehicle service agreement
544 company.
545 Section 16. Section 634.317, Florida Statutes, is amended
546 to read:
547 634.317 License and appointment required; exemptions.—A No
548 person may not solicit, negotiate, or effectuate home warranty
549 contracts for remuneration in this state unless such person is
550 licensed and appointed as a sales representative. A licensed and
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551 appointed sales representative is shall be directly responsible
552 and accountable for all acts of the licensee's employees. A
553 licensed personal lines or general lines agent is not required
554 to be licensed as a sales representative under this section to
555 solicit, negotiate, advertise, or sell home warranty contr acts.
556 Section 17. Section 634.419, Florida Statutes, is amended
557 to read:
558 634.419 License and appointment required; exemptions.—A No
559 person or an entity may not shall solicit, negotiate, advertise,
560 or effectuate service warranty contracts in this stat e unless
561 such person or entity is licensed and appointed as a sales
562 representative. Sales representatives are shall be responsible
563 for the actions of persons under their supervision. However, a
564 service warranty association licensed as such under this part is
565 shall not be required to be licensed and appointed as a sales
566 representative to solicit, negotiate, advertise, or effectuate
567 its products. A licensed personal lines or general lines agent
568 is not required to be licensed as a sales representative under
569 this section to solicit, negotiate, advertise, or sell service
570 warranty contracts.
571 Section 18. Effective June 1, 2023, for the purpose of
572 incorporating the amendment made by this act to section 215.555,
573 Florida Statutes, in a reference thereto, subsectio n (10) of
574 section 624.424, Florida Statutes, is reenacted to read:
575 624.424 Annual statement and other information.—
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576 (10) Each insurer or insurer group doing business in this
577 state shall file on a quarterly basis in conjunction with
578 financial reports required by paragraph (1)(a) a supplemental
579 report on an individual and group basis on a form prescribed by
580 the commission with information on personal lines and commercial
581 lines residential property insurance policies in this state. The
582 supplemental report shall include separate information for
583 personal lines property policies and for commercial lines
584 property policies and totals for each item specified, including
585 premiums written for each of the property lines of business as
586 described in ss. 215.555(2)(c) and 627.351(6)(a). The report
587 shall include the following information for each county on a
588 monthly basis:
589 (a) Total number of policies in force at the end of each
590 month.
591 (b) Total number of policies canceled.
592 (c) Total number of policies nonrenewed.
593 (d) Number of policies canceled due to hurricane risk.
594 (e) Number of policies nonrenewed due to hurricane risk.
595 (f) Number of new policies written.
596 (g) Total dollar value of structure exposure under
597 policies that include wind coverage.
598 (h) Number of policies that exclude wind coverage.
599 Section 19. Effective June 1, 2023, for the purpose of
600 incorporating the amendment made by this act to section 215.555,
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601 Florida Statutes, in a reference thereto, paragraph (v) of
602 subsection (6) of section 627.351, Florida Statutes, is
603 reenacted to read:
604 627.351 Insurance risk apportionment plans.—
605 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
606 (v)1. Effective July 1, 2002, policies of the Residential
607 Property and Casualty Joint Underwriting Association become
608 policies of the corporation. All obligations, rights, assets and
609 liabilities of the association, including bonds, note and debt
610 obligations, and the financing documents pertaining to them
611 become those of the corporation as of July 1, 2002. The
612 corporation is not required to issue endorsements or
613 certificates of assumption to insureds during the remaining term
614 of in-force transferred policies.
615 2. Effective July 1, 2002, policies of the Florida
616 Windstorm Underwriting Association are transferred to the
617 corporation and become policies of the corporation. All
618 obligations, rights, assets, and liabilities of the association,
619 including bonds, note and debt obligations, and the financing
620 documents pertaining to them are transferred to and assumed by
621 the corporation on July 1, 2002. The corporation is not required
622 to issue endorsements or certificates of assumption to insureds
623 during the remaining term of in-force transferred policies.
624 3. The Florida Windstorm Underwriting Association and the
625 Residential Property and Casualty Joint Underwriting Association
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626 shall take all actions necessary to further evidence the
627 transfers and provide the documents and instruments of further
628 assurance as may reasonably be requested by the corporation for
629 that purpose. The corporation shall execute assumptions and
630 instruments as the trustees or other parties to the financing
631 documents of the Florida Windstorm Underwriting Association or
632 the Residential Property and Casualty Joint Underwriting
633 Association may reasonably request to further evidence the
634 transfers and assumptions, which transfers and assumptions,
635 however, are effective on the date provided under this paragraph
636 whether or not, and regardless of the date on which, the
637 assumptions or instruments are executed by the corporation.
638 Subject to the relevant financing documents pertaining to their
639 outstanding bonds, notes, indebtedness, or other financing
640 obligations, the moneys, investments, receivables, choses in
641 action, and other intangibles of the Florida Windstorm
642 Underwriting Association shall be credited to the coastal
643 account of the corporation, and those of the personal lines
644 residential coverage account and the commercial lines
645 residential coverage account of the Residential Property and
646 Casualty Joint Underwriting Association shall be credited to the
647 personal lines account and the commercial lines account,
648 respectively, of the corporation.
649 4. Effective July 1, 2002, a new applicant for property
650 insurance coverage who would otherwise have been eligible for
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651 coverage in the Florida Windstorm Underwriting Association is
652 eligible for coverage from the corporation as provided in this
653 subsection.
654 5. The transfer of all policies, obligations, rights,
655 assets, and liabilities from the Florida Windstorm Underwriting
656 Association to the corporation and the renaming of the
657 Residential Property and Casualty Joint Underwriting Association
658 as the corporation does not affect the coverage with respect to
659 covered policies as defined in s. 215.555(2)(c) provided to
660 these entities by the Florida Hurricane Catastrophe Fund. The
661 coverage provided by the fund to the Florida Windstorm
662 Underwriting Association based on its exposures as of June 30,
663 2002, and each June 30 thereafter shall be redesignated as
664 coverage for the coastal account of the corporation.
665 Notwithstanding any other provision of law, the coverage
666 provided by the fund to the Residential Property and Casualty
667 Joint Underwriting Association based on its exposures as of June
668 30, 2002, and each June 30 thereafter shall be transferred to
669 the personal lines account and the commercial lines account of
670 the corporation. Notwithstanding any other provision of law, the
671 coastal account shall be treated, for all Florida Hurricane
672 Catastrophe Fund purposes, as if it were a separate
673 participating insurer with its own exposures, reimbursement
674 premium, and loss reimbursement. Likewise, the personal lines
675 and commercial lines accounts shall be viewed together, for all
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676 fund purposes, as if the two accounts were one and represent a
677 single, separate participating insurer with its own exposures,
678 reimbursement premium, and loss reimbursement. The coverage
679 provided by the fund to the corporation shall constitute and
680 operate as a full transfer of coverage from the Florida
681 Windstorm Underwriting Association and Residential Property and
682 Casualty Joint Underwriting Association to the corporation.
683 Section 20. For the purpose of incorporating the amendment
684 made by this act to section 626.856, Florida Statutes, in a
685 reference thereto, paragraph (e) of subsection (1) of section
686 626.865, Florida Statutes, is reenacted to read:
687 626.865 Public adjuster's qualifications, bond.—
688 (1) The department shall issue a license to an applicant
689 for a public adjuster's license upon determining that the
690 applicant has paid the applicable fees specified in s. 624.501
691 and possesses the following qualifications:
692 (e) Has been licensed in this state as an all-lines
693 adjuster, and has been appointed on a continual basis for the
694 previous 6 months as a public adjuster apprentice under s.
695 626.8561, as an independent adjuster under s. 626.855, or as a
696 company employee adjuster under s. 626.856.
697 Section 21. Effective upon this act becoming a law, for
698 the purpose of incorporating the amendment made by this act to
699 section 627.7152, Florida Statutes, in references thereto,
700 subsection (1) and paragraph (d) of subsection (2) of section
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701 627.7153, Florida Statutes, are reenacted to read:
702 627.7153 Policies restricting assignment of post-loss
703 benefits under a property insurance policy.—
704 (1) As used in this section, the term "assignment
705 agreement" has the same meaning as provided in s. 627.7152.
706 (2) An insurer may make available a policy that restricts
707 in whole or in part an insured's right to execute an assignment
708 agreement only if all of the following conditions are met:
709 (d) Each restricted policy include on its face the
710 following notice in 18-point uppercase and boldfaced type:
711
712 THIS POLICY DOES NOT ALLOW THE UNRESTRICTED ASSIGNMENT
713 OF POST-LOSS INSURANCE BENEFITS. BY SELECTING THIS
714 POLICY, YOU WAIVE YOUR RIGHT TO FREELY ASSIGN OR
715 TRANSFER THE POST-LOSS PROPERTY INSURANCE BENEFITS
716 AVAILABLE UNDER THIS POLICY TO A THIRD PARTY OR TO
717 OTHERWISE FREELY ENTER INTO AN ASSIGNMENT AGREEMENT AS
718 THE TERM IS DEFINED IN SECTION 627.7152 OF THE FLORIDA
719 STATUTES.
720 Section 22. Except as otherwise expressly provided in this
721 act and except for this section, which shall take effect upon
722 this act becoming a law, this act shall take effect July 1,
723 2022.
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INSURANCE & BANKING SUBCOMMITTEE
HB 503 by Rep. Gregory
Insurance
AMENDMENT SUMMARY
January 13, 2022
Amendment 1 by Rep. Gregory (Line 142): The amendment makes the following
modifications to the bill:
• Removes the section of the bill addressing service of process on an insurer.
• Adds an additional professional designation to the list of designations under which an
applicant to become a licensed all-lines adjuster is exempt from the written
examination normally required to be passed in order to receive licensure.
• Makes various formatting and minor technical wording changes for clarity.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 503 (2022)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Gregory offered the following:
4
5 Amendment (with title amendment)
6 Remove lines 142-470 and insert:
7 audits for policies only if the estimated annual premium is
8 $10,000 or more. Payroll verification audit rules must include,
9 but need not be limited to, the use of state and federal reports
10 of employee income, payroll and other accounting records,
11 certificates of insurance maintained by subcontractors, and
12 duties of employees. At the completion of an audit, the employer
13 or officer of the corporation and the auditor must print and
14 sign their names on the audit document and attach proof of
15 identification to the audit document.
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Bill No. HB 503 (2022)
Amendment No. 1
16 Section 3. Section 624.46227, Florida Statutes, is created
17 to read:
18 624.46227 Meeting requirements.—Any association, trust, or
19 pool authorized by state law and created for the purpose of
20 forming a risk management mechanism or providing self-insurance
21 for public entities in this state may use communications media
22 technology to establish a quorum and conduct public business.
23 Section 4. Paragraph (j) of subsection (2) of section
24 626.221, Florida Statutes is amended to read:
25 626.221 Examination Requirement; exemptions.–
26 (j) An applicant for license as an all-lines adjuster who
27 has the designation of Accredited Claims Adjuster (ACA) from a
28 regionally accredited postsecondary institution in this state ,
29 Certified All Lines Adjuster (CALA) from Kaplan, Associate in
30 Claims (AIC) from the Insurance Institute of America,
31 Professional Claims Adjuster (PCA) from the Professional Career
32 Institute, Professional Property Insurance Adjuster (PPIA) from
33 the HurriClaim Training Academy, Certified Adjuster (CA) fro m
34 ALL LINES Training, Certified Claims Adjuster (CCA) from AE21
35 Incorporated, Claims Adjuster Certified Professional (CACP) from
36 WebCE, Inc., Accredited Insurance Claims Specialist (AICS) from
37 Encore Claim Services, or Universal Claims Certification (UCC)
38 from Claims and Litigation Management Alliance (CLM) whose
39 curriculum has been approved by the department and which
40 includes comprehensive analysis of basic property and casualty
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Bill No. HB 503 (2022)
Amendment No. 1
41 lines of insurance and testing at least equal to that of
42 standard department testing for the all-lines adjuster license.
43 The department shall adopt rules establishing standards for the
44 approval of curriculum.
45 Section 5. Section 3. For the purpose of incorporating the
46 amendment made by this act to section 626.221, Florida Statu tes,
47 in a reference thereto, paragraph (b) of subsection (1) of
48 section 626.8734, Florida Statutes, is reenacted to read:
49 626.8734 Nonresident all-lines adjuster license
50 qualifications.—
51 (1) The department shall issue a license to an applicant
52 for a nonresident all-lines adjuster license upon determining
53 that the applicant has paid the applicable license fees required
54 under s. 624.501 and:
55 (b) Has passed to the satisfaction of the department a
56 written Florida all-lines adjuster examination of the scope
57 prescribed in s. 626.241(6); however, the requirement for the
58 examination does not apply to:
59 1. An applicant who is licensed as an all-lines adjuster
60 in his or her home state if that state has entered into a
61 reciprocal agreement with the department;
62 2. An applicant who is licensed as a nonresident all -lines
63 adjuster in a state other than his or her home state and a
64 reciprocal agreement with the appropriate official of the state
65 of licensure has been entered into with the department; or
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Bill No. HB 503 (2022)
Amendment No. 1
66 3. An applicant who holds a certification set forth in s.
67 626.221(2)(j).
68 Section 6. Section 626.856, Florida Statutes, is amended
69 to read:
70 626.856 "Company employee adjuster" defined.—A "company
71 employee adjuster" means a person licensed as an all-lines
72 adjuster who is appointed and employed on an insurer's staff of
73 adjusters, by an affiliate, or by a wholly owned subsidiary of
74 the insurer, and who undertakes on behalf of such insurer or
75 other insurers under common control or ownership to ascertain
76 and determine the amount of any claim, loss, or damage payable
77 under a contract of insurance, or undertakes to effect
78 settlement of such claim, loss, or damage.
79 Section 7. Paragraph (j) of subsection (2) of section
80 627.062, Florida Statutes, is amended to read:
81 627.062 Rate standards.—
82 (2) As to all such classes of insurance:
83 (j) With respect to residential property insurance rate
84 filings, the rate filing:
85 1. Must account for mitigation measures undertaken by
86 policyholders to reduce hurricane losses.
87 2. May use a modeling indication that is the weighted or
88 straight average of two or more hurricane loss projection models
89 found by the commission to be accurate or reliable pursuant to
90 s. 627.0628.
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Bill No. HB 503 (2022)
Amendment No. 1
91
92 The provisions of this subsection do not apply to workers'
93 compensation, employer's liability insurance, and motor vehicle
94 insurance.
95 Section 8. Subsection (9) is added to section 627.0629,
96 Florida Statutes, to read:
97 627.0629 Residential property insurance; rate filings. —
98 (9) An insurer may file with the office a personal lines
99 residential property insurance rating plan that provides
100 justified premium discounts, credits, or other rate
101 differentials based on windstorm mitigation construction
102 standards developed by an independent, not-for-profit scientific
103 research organization, if such standards meet the requirements
104 of this section.
105 Section 9. Section 627.0665, Florida Statutes, is amended
106 to read:
107 627.0665 Automatic bank withdrawal agreements;
108 notification required.—Any insurer licensed to issue insurance
109 in this the state who has an automatic bank withdrawal agreement
110 with an insured party for the payment of insurance premiums for
111 any type of insurance shall give the named insured at least 15
112 days advance written notice of any increase in policy premiums
113 that results in the next automatic bank withdrawal being
114 increased by more than $10. Such notice must be provided before
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Bill No. HB 503 (2022)
Amendment No. 1
115 prior to any automatic bank withdrawal containing the of an
116 increased premium amount.
117 Section 10. Paragraph (a) of subsection (6) of section
118 627.351, Florida Statutes, is amended to read:
119 627.351 Insurance risk apportionment plans.—
120 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
121 (a) The public purpose of this subsection is to ensure
122 that there is an orderly market for property insurance for
123 residents and businesses of this state.
124 1. The Legislature finds that private insurers are
125 unwilling or unable to provide affordable property insurance
126 coverage in this state to the extent sought and needed. The
127 absence of affordable property insurance threatens the public
128 health, safety, and welfare and likewise threatens the economic
129 health of the state. The state therefore has a compelling public
130 interest and a public purpose to assist in assuring that
131 property in this the state is insured and that it is insured at
132 affordable rates so as to facilitate the remediation,
133 reconstruction, and replacement of damaged or destroyed property
134 in order to reduce or avoid the negative effects otherwise
135 resulting to the public health, safety, and welfare, to the
136 economy of the state, and to the revenues of the state and local
137 governments which are needed to provide for the public welfare.
138 It is necessary, therefore, to provide affordable property
139 insurance to applicants who are in good faith entitled to
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Amendment No. 1
140 procure insurance through the voluntary market but are unable to
141 do so. The Legislature intends, therefore, that affordable
142 property insurance be provided and that it continue to be
143 provided, as long as necessary, through Citizens Property
144 Insurance Corporation, a government entity that is an integral
145 part of the state, and that is not a private insurance company.
146 To that end, the corporation shall strive to increase the
147 availability of affordable property insurance in this state,
148 while achieving efficiencies and economies, and while providing
149 service to policyholders, applicants, and agents which is no
150 less than the quality generally provided in the voluntary
151 market, for the achievement of the foregoing public purposes.
152 Because it is essential for this government entity to have the
153 maximum financial resources to pay claims following a
154 catastrophic hurricane, it is the intent of the Legislature that
155 the corporation continue to be an integral part of the state and
156 that the income of the corporation be exempt from fed eral income
157 taxation and that interest on the debt obligations issued by the
158 corporation be exempt from federal income taxation.
159 2. The Residential Property and Casualty Joint
160 Underwriting Association originally created by this statute
161 shall be known as the Citizens Property Insurance Corporation.
162 The corporation shall provide insurance for residential and
163 commercial property, for applicants who are entitled, but, in
164 good faith, are unable to procure insurance through the
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Bill No. HB 503 (2022)
Amendment No. 1
165 voluntary market. The corporation shall operate pursuant to a
166 plan of operation approved by order of the Financial Services
167 Commission. The plan is subject to continuous review by the
168 commission. The commission may, by order, withdraw approval of
169 all or part of a plan if the commission determines that
170 conditions have changed since approval was granted and that the
171 purposes of the plan require changes in the plan. For the
172 purposes of this subsection, residential coverage includes both
173 personal lines residential coverage, which consists of t he type
174 of coverage provided by homeowner, mobile home owner, dwelling,
175 tenant, condominium unit owner, and similar policies; and
176 commercial lines residential coverage, which consists of the
177 type of coverage provided by condominium association, apartment
178 building, and similar policies.
179 3. With respect to coverage for personal lines residential
180 structures:
181 a. Effective January 1, 2014, a structure that has a
182 dwelling replacement cost of $1 million or more, or a single
183 condominium unit that has a combined dwelling and contents
184 replacement cost of $1 million or more, is not eligible for
185 coverage by the corporation. Such dwellings insured by the
186 corporation on December 31, 2013, may continue to be covered by
187 the corporation until the end of the policy term. The office
188 shall approve the method used by the corporation for valuing the
189 dwelling replacement cost for the purposes of this subparagraph.
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Amendment No. 1
190 If a policyholder is insured by the corporation before being
191 determined to be ineligible pursuant to this subparagraph and
192 such policyholder files a lawsuit challenging the determination,
193 the policyholder may remain insured by the corporation until the
194 conclusion of the litigation.
195 b. Effective January 1, 2015, a structure that has a
196 dwelling replacement cost of $900,000 or more, or a single
197 condominium unit that has a combined dwelling and contents
198 replacement cost of $900,000 or more, is not eligible for
199 coverage by the corporation. Such dwellings insured by the
200 corporation on December 31, 2014, may continue to be covered by
201 the corporation only until the end of the policy term.
202 c. Effective January 1, 2016, a structure that has a
203 dwelling replacement cost of $800,000 or more, or a single
204 condominium unit that has a combined dwelling and contents
205 replacement cost of $800,000 or more, is not eligible for
206 coverage by the corporation. Such dwellings insured by the
207 corporation on December 31, 2015, may continue to be covered by
208 the corporation until the end of the policy term.
209 d. Effective January 1, 2017, a structure that has a
210 dwelling replacement cost of $700,000 or more, or a single
211 condominium unit that has a combined dwelling and contents
212 replacement cost of $700,000 or more, is not eligible for
213 coverage by the corporation. Such dwellings insured by the
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Amendment No. 1
214 corporation on December 31, 2016, may continue to be covered by
215 the corporation until the end of the policy term.
216
217 The requirements of sub-subparagraphs b.-d. do not apply in
218 counties where the office determines there is not a reasonable
219 degree of competition. In such counties a personal lines
220 residential structure that has a dwelling replacement cost of
221 less than $1 million, or a single condominium unit that has a
222 combined dwelling and contents replacement cost of less than $1
223 million, is eligible for coverage by the corporation.
224 4. It is the intent of the Legislature that policyholders,
225 applicants, and agents of the corporation receive service and
226 treatment of the highest possible level but never less than that
227 generally provided in the voluntary market. It is a lso intended
228 that the corporation be held to service standards no less than
229 those applied to insurers in the voluntary market by the office
230 with respect to responsiveness, timeliness, customer courtesy,
231 and overall dealings with policyholders, applicants, or agents
232 of the corporation.
233 5.a. Effective January 1, 2009, a personal lines
234 residential structure that is located in the "wind-borne debris
235 region," as defined in s. 1609.2, International Building Code
236 (2006), and that has an insured value on the structure of
237 $750,000 or more is not eligible for coverage by the corporation
238 unless the structure has opening protections as required under
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 503 (2022)
Amendment No. 1
239 the Florida Building Code for a newly constructed residential
240 structure in that area. A residential structure is deemed to
241 comply with this sub-subparagraph if it has shutters or opening
242 protections on all openings and if such opening protections
243 complied with the Florida Building Code at the time they were
244 installed.
245 b. Any major structure, as defined in s. 161.54(6)(a),
246 that is newly constructed, or rebuilt, repaired, restored, or
247 remodeled to increase the total square footage of finished area
248 by more than 25 percent, pursuant to a permit applied for after
249 July 1, 2015, is not eligible for coverage by the corporation if
250 the structure is seaward of the coastal construction control
251 line established pursuant to s. 161.053 or is within the Coastal
252 Barrier Resources System as designated by 16 U.S.C. ss. 3501 -
253 3510.
254 6. With respect to wind-only coverage for commercial lines
255 residential condominiums, effective July 1, 2014, a condominium
256 may shall be deemed ineligible for coverage when if 50 percent
257 or more of the units are rented more than eight times in a
258 calendar year for a rental agreement period of less than 30
259 days.
260 Section 11. Subsection (1) of section 627.421, Florida
261 Statutes, is amended to read:
262 627.421 Delivery of policy.—
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COMMITTEE/SUBCOMMITTEE AMENDMENT
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Amendment No. 1
263 (1) Subject to the insurer's requirement as to payment of
264 premium, every policy shall be mailed, delivered, or
265 electronically transmitted to the insured or to the person
266 entitled thereto not later than 60 days after the effectuation
267 of coverage. Notwithstanding any other provision of law, an
268 insurer may allow a policyholder of personal lines insurance to
269 affirmatively elect delivery of the policy documents, including,
270 but not limited to, policies, endorsements, notices, or
271 documents, by electronic means in lieu of delivery by mail.
272 Electronic transmission of a policy for commercial risks,
273 including, but not limited to, workers' compensation and
274 employers' liability, commercial automobile liability,
275 commercial automobile physical damage, commercial lines
276 residential property, commercial nonresidential property,
277 farmowners insurance, and the types of commercial lines risks
278 set forth in s. 627.062(3)(d), constitutes delivery to the
279 insured or to the person entitled to delivery, unless the
280 insured or the person entitled to delivery communicates to the
281 insurer in writing or electronically that he or she does not
282 agree to delivery by electronic means. Electronic transmission
283 shall include a notice to the insured or to the person entitled
284 to delivery of a policy of his or her right to receive the
285 policy via United States mail rather than via electronic
286 transmission. A paper copy of the policy shall be provided to
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 503 (2022)
Amendment No. 1
287 the insured or to the person entitled to delivery at his or her
288 request.
289 Section 12. Paragraph (d) of subsection (4) of section
290 627.701, Florida Statutes, is amended to read:
291 627.701 Liability of insureds; coinsurance; deductibles.—
292 (4)
293 (d)1. A personal lines residential property insurance
294 policy covering a risk valued at less than $500,000 may not have
295 a hurricane deductible in excess of 10 percent of the policy
296 dwelling limits, unless the following conditions are met:
297 a. The policyholder must personally write or type and
298 provide to the insurer the following statement in his or her own
299 handwriting and sign his or her name, which must also be signed
300 by every other named insured on the policy, and dated: "I do not
301 want the insurance on my home to pay for the first (specify
302 dollar value) of damage from hurricanes. I will pay those costs.
303 My insurance will not."
304 b. If the structure insured by the policy is subject to a
305 mortgage or lien, the policyholder must provide the insurer with
306 a written statement from the mortgageholder or lienholder
307 indicating that the mortgageholder or lienholder approves the
308 policyholder electing to have the specified deductible.
309 2. A deductible subject to the requirements of this
310 paragraph applies for the term of the policy and for each
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 503 (2022)
Amendment No. 1
311 renewal thereafter. Changes to the deductible percentage may be
312 implemented only as of the date of renewal.
313 3. An insurer shall keep the original copy of the signed
314 statement required by this paragraph, electronically or
315 otherwise, and provide a copy to the policyholder providing the
316 signed statement. A signed statement meeting the requirements of
317 this paragraph creates a presumption that there was an informed,
318 knowing election of coverage.
319 4. The commission shall adopt rules providing appropriate
320 alternative methods for providing the statements required by
321 this section for policyholders who have a handicapping or
322 disabling condition that prevents them from providing a
323 handwritten statement.
324 Section 12. Paragraph (a) of subsection (2) and subsection (3)
325 of section 627.712, Florida Statutes, are amended to read:
326 627.712 Residential windstorm coverage required;
327 availability of exclusions for windstorm or contents. —
328 (2) A property insurer must make available, at the option
329 of the policyholder, an exclusion of windstorm coverage.
330 (a) The coverage may be excluded only if:
331 1. When the policyholder is a natural person, the
332 policyholder personally writes or types and provides to the
333 insurer the following statement in his or her own handwriting
334 and signs his or her name, which must also be signed by every
335 other named insured on the policy, and dated: "I do not want the
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 503 (2022)
Amendment No. 1
336 insurance on my (home/mobile home/condominium unit) to pay for
337 damage from windstorms. I will pay those costs. My insurance
338 will not."
339 2. When the policyholder is other than a natural person,
340 the policyholder provides to the insurer on the policyholder's
341 letterhead the following statement that must be signed by the
342 policyholder's authorized representative and dated: "...(Name of
343 entity)... does not want the insurance on its ...(type of
344 structure)... to pay for damage from windstorms. ...(Name of
345 entity)... will be responsible for these costs. ...(Name of
346 entity's)... insurance will not."
347 (3) An insurer issuing a residential property insurance
348 policy, except for a condominium unit owner policy or a tenant
349 policy, must make available, at the option of the policyholder,
350 an exclusion of coverage for the contents. The coverage may be
351 excluded only if the policyholder personally writes or types and
352 provides to the insurer the following statement in his or her
353 own handwriting and signs his or her signature, which must also
354 be signed by every other named insured on the policy, and dated:
355 "I do not want the insurance on my (home/mobile home) to pay for
356 the costs to repair or replace any contents that are damaged. I
357 will pay those costs. My insurance will not."
358 Section 14. Effective upon this act becoming a law,
359 paragraph (b) of subsection (1) and paragraph (a) of subsection
360 (9) of section 627.7152, Florida Statutes, are amended to read:
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Amendment No. 1
361 627.7152 Assignment agreements.—
362 (1) As used in this section, the term:
363 (b) "Assignment agreement" means any instrument by which
364 post-loss benefits under a residential property insurance policy
365 or commercial property insurance policy, as that term is defined
366 in s. 627.0625(1), are assigned or transferred, or acquired in
367 any manner, in whole or in part, to or from a person providing
368 services, including, but not limited to,to inspecting,
369 protecting, repairing, restoring, or replacing protect, repair,
370 restore, or replace property or to mitigate mitigating against
371 further damage to the property. The term does
372
373 -----------------------------------------------------
374 T I T L E A M E N D M E N T
375 Remove lines 7-16 and insert:
376 requirement for construction classes to apply policies having
377 estimated annual premiums over a specified threshold; creating
378 s. 624.46227, F.S.; authorizing any association, trust, or pool
379 created for the purpose of forming a risk management mechanism
380 or providing self-insurance for a public entity to use
381 communications media technology to establish a quorum and
382 conduct public business; amending s. 626.221, F.S.; exempting
383 certain applicants for licensure as an all-lines adjuster from a
384 required examination; reenacting s. 626.8734(1)(b), F.S.,
385 relating to nonresident all-lines adjuster license
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 503 (2022)
Amendment No. 1
386 qualifications, to incorporate the amendment made to s. 626.221,
387 F.S., in a reference thereto; amending s. 626.856,
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HB 695
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 695 Property Insurer Reimbursements
SPONSOR(S): Stevenson
TIED BILLS: IDEN./SIM. BILLS: SB 1058
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fortenberry Luczynski
2) Appropriations Committee
3) Commerce Committee
SUMMARY ANALYSIS
The Florida Hurricane Catastrophe Fund (FHCF) is a tax-exempt trust fund created by the Legislature in 1993
as a form of reinsurance for residential property catastrophic hurricane losses. As a condition of transacting
insurance business in the state, residential property insurers are required to enter contracts with the State
Board of Administration (SBA) to purchase reimbursement coverage (reinsurance) on their residential property
exposure.
As part of its regulation, the Office of Insurance Regulation (OIR) monitors the solvency of insurers to protect
policyholders against the risk that insurers will not be able to meet their financial responsibilities. If an insurer is
in an unsound financial condition, OIR may refer that insurer to the Department of Financial Services for the
filing of a delinquency proceeding in circuit court, which may result in the liquidation of the insurer. If Citizens
Property Insurance Corporation (Citizens) assumes policies from such liquidated insurer, Citizens may obtain
coverage from the FHCF for these policies under its reimbursement contract with the SBA or by accepting an
assignment of the liquidated insurer’s reimbursement contract with the SBA. However, current law does not
address the transfer of FHCF coverage to Citizens if it assumes policies from an authorized insurer that is in an
unsound financial condition, but is not the subject of a delinquency proceeding, or the transfer of FHCF
coverage if an authorized private insurer assumes policies from an unsound insurer.
The bill defines “unsound insurer” as an insurer that OIR has determined to be in unsound condition as defined
in s. 624.80(2), F.S., or an insurer that has been placed into receivership under ch. 631, F.S. The bill allows
any authorized insurer to receive the transfer of FHCF coverage along with policies that it assumes from an
unsound insurer, subject to an agreement with the SBA. The bill extends to authorized insurers the
requirements that exist when Citizens assumes policies from unsound insurers and wishes to obtain coverage
from the FHCF for those policies and establishes additional requirements for both authorized insurers and
Citizens. The bill replaces the statutory phrase “placed in liquidation” with the defined term “unsound insurer”
so that FHCF coverage can be transferred to Citizens or an authorized insurer with policies that Citizens or
such authorized insurer assumes from an unsound insurer or a liquidated insurer.
The bill establishes that if a covered event has occurred before the effective date of the transfer of the policies
to the authorized insurer or Citizens, the authorized insurer or Citizens may only obtain coverage from the
FHCF subject to an assignment of the remaining term of the unsound insurer’s FHCF contract.
The bill has no impact on state or local government revenues or expenditures and no direct economic impact
on the private sector.
The bill has an effective date of July 1, 2022.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h0695.IBS
DATE: 1/11/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Florida Hurricane Catastrophe Fund
The Florida Hurricane Catastrophe Fund (FHCF) is a tax-exempt trust fund created by the Legislature
in 1993 as a form of reinsurance for residential property catastrophic hurricane losses.1 The purpose of
the FHCF is to protect and advance the state’s interest in maintaining insurance capacity in Florida by
providing reimbursements to insurers for a portion of their catastrophic losses. 2 The FHCF provides
insurers a source of reinsurance that is stable and generally less expensive than private reinsurance.
The FHCF is administered by the State Board of Administration (SBA) and reimburses property
insurers for a selected percentage of hurricane losses to residential property when those losses exceed
the insurer’s retention (deductible).3 The FHCF reimburses participating insurers for losses under
covered policies, subject to limitations.4 A covered policy is defined as “any insurance policy covering
residential property” in Florida, including, but not limited to the following types of policies:
homeowner
mobile home owner
farm owner
condominium association
condominium unit owner
tenant
apartment building policy
any other policy covering a residential structure or its contents.5
Covered policies may be issued by any authorized insurer,6 a commercial self-insurance fund holding a
certificate of authority issued by the Office of Insurance Regulation (OIR), the Citizens Property
Insurance Corporation (Citizens), and any joint underwriting association or similar legal entity.7
As a condition of transacting insurance business in the state, residential property insurers are required
to enter contracts with the SBA to purchase reimbursement coverage (reinsurance) on their residential
property exposure.8 Pursuant its contract with the SBA, each insurer must pay an actuarially-indicated
annual premium for the reimbursement.9 The actuarial basis for the premium includes an analysis of
hurricane loss projection models found acceptable by the Florida Commission on Hurricane Loss
Projection Methodology, which is also part of the SBA.
Insurer Financial Condition
1 See s. 215.555, F.S.
2 See id.
3 Id. Retention is defined as the amount of losses below which an insurer is not entitled to reimbursement from the FHCF .
It is calculated for each insurer based upon that insurer’s proportionate share of overall premiums charged by the FHCF.
See s. 215.555(2)(e), F.S.
4 S. 215.555(2)(d), F.S.
5 S. 215.555(2)(c), F.S.
6 Authorized insurers are those insurers that have obtained a certificate of authority from OIR to transact insurance
business in Florida. S. 624.09(1), F.S.
7 S. 215.555(2)(c), F.S.
8 S. 215.555(4), F.S.
9 S. 215.555(5)(a), F.S.
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As part of its regulation, OIR monitors the solvency of insurers to protect policyholders against the risk
that insurers will not be able to meet their financial responsibilities. OIR considers an insurer to be in an
unsound financial condition if:
the insurer’s required surplus, capital, or capital stock is impaired to an extent prohibited by law;
the insurer continues to write new business when it has not maintained the required surplus or
capital;
the insurer attempted to dissolve or liquidate without making provisions for liabilities arising from
insurance policies that it issued; or
the insurer meets one or more of the grounds in s. 631.051, F.S., for appointment of the
Department of Financial Services (DFS) as receiver. 10
Federal law specifies that insurers cannot file for bankruptcy. 11 Instead, insolvent insurers are either
rehabilitated or liquidated by the state. In Florida, the Division of Rehabilitation and Liquidation of DFS
is responsible for rehabilitating or liquidating insurance companies. 12
Chapter 631, F.S., relating to insurers insolvency and guaranty payments, governs the receivership
process. This process involves the initiation of a delinquency proceeding in circuit court and the
placement of in insurer under the control of DFS as the receiver. 13 Depending on the insurer’s
circumstances, the delinquency proceeding may result in an order of rehabilitation or liquidation.14
Assumption of Residential Property Insurance Policies by Citizens
Citizens is a state-created, not-for-profit, tax-exempt government entity that is an integral part of the
state, whose public purpose is to provide property insurance to those unable to find affordable
coverage in the private market from an authorized insurer.15 Unlike private insurers, Citizens is not
required to hold a certificate of authority from OIR.16
A significant portion of Citizens’ total policy count consists of residential property insurance policies.
These policies include homeowners, mobile homeowners, dwelling fire, tenants, condominium unit
owners, and some other similar policies. Pursuant to its enabling statute, s. 627.351(6), F.S., Citizens
must enter into a reimbursement contract with the SBA for coverage from the FHCF for its residential
property insurance policies.17 While private carriers may select from various coverage levels available
from the FHCF, Citizens is statutorily required to purchase the highest available level of coverage from
the FHCF.18
Currently, if an insurer is placed in liquidation under ch. 631, F.S., and Citizens assumes policies from
such liquidated insurer, Citizens may obtain coverage from the FHCF for these policies under its
reimbursement contract with the SBA or by accepting an assignment of the liquidated insurer’s
reimbursement contract with the SBA.19 The assignment of the contract must be provided for in the
liquidation order or otherwise determined by the court as part of the delinquency proceedings involving
10 S. 624.80(2), F.S.
11 The Bankruptcy Code expressly provides that “a domestic insurance company” may not be the subject of federal
bankruptcy proceeding. 11 U.S.C. 109(b)(2). The exclusion of insurers from the federal bankruptcy process is consistent
with federal policy generally allowing states to regulate insurance. See 15 U.S.C. ss. 1011-1012.
12 Typically, insurers are put into liquidation when the company is insolvent, but put into rehabilitation for various other
reasons, including an unsound financial condition. The goal of rehabilitation is to return the insurer to a sound financial
condition. The goal of liquidation, however, is to dissolve the insurer. See s. 631.051, F.S., for the grounds for
rehabilitation and s. 631.061, F.S., for the grounds for liquidation.
13 S. 631.031, F.S.
14 See ss. 631.101 and 631.111, F.S.
15 S. 627.351(6)(a)1., F.S.
16 Citizens, Management Discussion and Analysis for 2017,
https://www.citizensfla.com/documents/20702/6867558/20180411+04E+MDA+2017.pdf/4584208b -1d87-4add-9a11-
55e818fe0046?t=1523029712990 (last visited Jan. 10, 2021).
17 Id.
18 Id.
19 State Board of Administration, Agency Analysis of 2022 Senate Bill 1058, p. 1 (Jan. 6, 2022). 2022 Senate Bill 1058 is
identical to this bill. See also s. 215.555(5)(e), F.S.
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the liquidated insurer.20 The law does not address the transfer of FHCF coverage to Citizens if it
assumes policies from an authorized insurer that is in an unsound financial condition (unsound insurer),
but is not the subject of a delinquency proceeding.
Assumption of Residential Property Insurance Policies by Authorized Insurers
Under certain circumstances, OIR may approve the assumption of policies by an authorized insurer
(assuming insurer) from an unsound insurer. However, current law does not provide for the
assignment of the FHCF coverage that the unsound insurer had on its policies to the assuming insurer.
Effect of the Bill
The bill defines “unsound insurer” as an insurer that OIR has determined to be in unsound condition as
defined in s. 624.80(2), F.S., or an insurer that has been placed into receivership under ch. 631, F.S.
The bill allows any authorized insurer to receive the transfer of FHCF coverage along with policies that
it assumes from an unsound insurer, subject to an agreement with the SBA. The bill extends to
authorized insurers the requirements that exist when Citizens assumes policies from unsound insurers
and wishes to obtain coverage from the FHCF for those policies, and also establishes additional
requirements for both authorized insurers and Citizens.
The bill replaces the statutory phrase “placed in liquidation” with the defined term “unsound insurer” so
that FHCF coverage can be transferred to Citizens or an authorized insurer with policies that Citizens
or such authorized insurer assumes from an unsound insurer or a liquidated insurer.
The bill establishes that if a covered event has occurred before the effective date of the transfer of the
policies to the authorized insurer or Citizens, the authorized insurer or Citizens may only obtain
coverage from the FHCF subject to an assignment of the remaining term of the unsound insurer’s
FHCF contract.
The bill removes language regarding assignments that becomes obsolete if assignment is no longer
limited to policies from insurers that have been placed in liquidation under ch. 631, F.S. Finally, the bill
provides that the new language regarding assignment of policies from an unsound insurer does not
limit the FHCF’s right to receive premium due under the contract between an unsound insurer and the
FHCF.
B. SECTION DIRECTORY:
Section 1. Amends s. 215.555, F.S., relating to Florida Hurricane Catastrophe Fund.
Section 2. Provides an effective date of July 1, 2022.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
20 S. 215.555(5)(e), F.S.
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1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
None.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 695 2022
1 A bill to be entitled
2 An act relating to property insurer reimbursements;
3 amending s. 215.555, F.S.; defining the term "unsound
4 insurer"; revising requirements for coverage under the
5 Florida Hurricane Catastrophe Fund of certain policies
6 assumed by authorized insurers or the Citizens
7 Property Insurance Corporation; providing
8 construction; providing an effective date.
9
10 Be It Enacted by the Legislature of the State of Florida:
11
12 Section 1. Paragraph (e) of subsection (5) of section
13 215.555, Florida Statutes, is amended, and paragraph (p) is
14 added to subsection (2) of that section, to read:
15 215.555 Florida Hurricane Catastrophe Fund.—
16 (2) DEFINITIONS.—As used in this section:
17 (p) "Unsound insurer" means an insurer determined by the
18 Office of Insurance Regulation to be in unsound condition as
19 defined in s. 624.80(2) or an insurer placed in receivership
20 under chapter 631.
21 (5) REIMBURSEMENT PREMIUMS.—
22 (e)1. If an authorized insurer or the Citizens Property
23 Insurance Corporation assumes or otherwise provides coverage for
24 policies of an unsound insurer placed in liquidation under
25 chapter 631 pursuant to s. 627.351(6), the authorized insurer or
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HB 695 2022
26 the Citizens Property Insurance Corporation may, pursuant to
27 conditions mutually agreed to between the authorized insurer or
28 the Citizens Property Insurance Corporation and the State Board
29 of Administration, seek to obtain coverage for such policies
30 under its contract with the fund or accept an assignment of the
31 unsound liquidated insurer's contract with the fund. However, if
32 a covered event has occurred before the effective date of the
33 transfer of the policies, the authorized insurer or the Citizens
34 Property Insurance Corporation may obtain coverage for such
35 policies only through an assignment as provided in subparagraph
36 3.
37 2. If an authorized insurer or the Citizens Property
38 Insurance Corporation assumes policies from an unsound insurer
39 and elects to cover these policies under its the corporation's
40 contract with the fund, it shall notify the board of its insured
41 values with respect to such policies within a specified time
42 mutually agreed to between the authorized insurer or the
43 Citizens Property Insurance Corporation and the board, after
44 such assumption or other coverage transaction, and the fund
45 shall treat such policies as having been in effect as of June 30
46 of that year.
47 3. If an authorized insurer or the Citizens Property
48 Insurance Corporation accepts In the event of an assignment of
49 an unsound insurer's contract, the fund shall apply the unsound
50 insurer's that contract to such policies and treat the
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HB 695 2022
51 authorized insurer or the Citizens Property Insurance
52 Corporation as if it the corporation were the unsound liquidated
53 insurer for the remaining term of the contract, with and the
54 corporation shall have all rights and duties of the unsound
55 liquidated insurer beginning on the date it provides coverage
56 for such policies. This subparagraph may not be construed to
57 limit the fund's right to receive the premium due under the
58 unsound insurer's contract, but the corporation is not subject
59 to any preexisting rights, liabilities, or duties of the
60 liquidated insurer. The assignment, including any unresolved
61 issues between the liquidated insurer and Citizens Property
62 Insurance Corporation under the contract, shall be provided for
63 in the liquidation order or otherwise determined by the court.
64 However, if a covered event occurs before the effective date of
65 the assignment, the corporation may not obtain coverage for such
66 policies under its contract with the fund and shall accept an
67 assignment of the liquidated insurer's contract as provided in
68 this paragraph.
69 Section 2. This act shall take effect July 1, 2022.
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HB 925
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 925 Benchmark Replacements for London Interbank Offered Rate
SPONSOR(S): Stevenson
TIED BILLS: IDEN./SIM. BILLS: SB 1246
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Hinshelwood Luczynski
2) Civil Justice & Property Rights Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
The London Interbank Offered Rate (LIBOR) is the reference rate at which large banks indicate that they can
borrow short-term wholesale funds from one another on an unsecured basis in the interbank market. LIBOR
has been used in setting interest rates for adjustable rate mortgages, asset-backed securities, municipal
bonds, credit default swaps, private student loans, and other types of debt. Prior to the end of 2021, LIBOR
was calculated in five currencies (UK Pound Sterling, the Swiss Franc, the Euro, Japanese Yen, and the U.S.
Dollar), and LIBOR was produced in seven maturity terms or “tenors” (overnight/spot next, 1-week, 1-month, 2-
month, 3-month, 6-month, and 12-month). In 2017, the entity that regulates LIBOR stated that LIBOR would
cease after the end of 2021. However, most U.S. Dollar LIBOR tenors have been extended to the end of June
2023 to enable time for the market to transition away from LIBOR.
In 2014, the Federal Reserve Board and the Federal Reserve Bank of New York convened the Alternative
Reference Rates Committee (ARRC) to address already known risks related to the U.S. Dollar LIBOR. In 2017,
the ARRC identified the Secured Overnight Financing Rate (SOFR) as its recommended alternative to the U.S.
Dollar LIBOR. The Federal Reserve Bank of New York currently publishes SOFR data daily, as well as SOFR
Averages and a SOFR Index.
The total exposure to the U.S. Dollar LIBOR, as of the fourth quarter of 2020, was $223 trillion. Although the
derivatives market accounts for a large majority of the outstanding value of all financial products referencing
the U.S. Dollar LIBOR, LIBOR is also referenced in several trillion dollars of corporate loans, floating-rate
mortgages, floating-rate notes, and securitized products. While an estimated 67 percent of current LIBOR
exposures will mature before LIBOR ceases at the end of June 2023, an estimated $74 trillion will remain
outstanding. This fact underscores the importance of finding solutions for legacy contracts, including legacy
LIBOR contracts that have no provisions to replace LIBOR upon its cessation.
For contracts and instruments lacking transition provisions, the bill provides for a transition to SOFR as the
replacement rate for LIBOR, provides for conforming changes to be made to the contract or instrument, voids
fallback provisions that are based on LIBOR, and provides for construction of rights and duties under contracts
affected by the bill. The bill precludes liability, a claim, or a cause of action arising out of or related to the
selection or use of a recommended benchmark replacement or the determination, implementation, or
performance of a benchmark replacement conforming change. The bill provides a statement demonstrating the
overpowering public necessity for the bill and a finding that there are no alternative means to meet this public
necessity. Additionally, the bill contains a statement of legislative intent indicating that the bill is remedial in
nature and applies retroactively to all contracts, agreements, mortgages, deeds of trust, leases, instruments,
obligations, or securities, whether representing debt or equity, and including all interests in a corporation,
partnership, or limited liability company, in existence on December 31, 2021.
The bill has no fiscal impact on state or local governments and an indeterminate fiscal impact on the private
sector.
The bill will take effect upon becoming law.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
The London Interbank Offered Rate (LIBOR) is the reference rate at which large banks indicate that
they can borrow short-term wholesale funds from one another on an unsecured basis in the interbank
market.1 The origins of LIBOR can be traced back to a loan transaction in 1969 in which multiple banks
were joint lenders (i.e., a syndicated loan) on a large loan of $80 million.2 The interest rate of the loan
was based on the weighted average of the funding costs for each of the participating banks plus a
spread for profit.3 The rate was recalculated periodically, hence the rate was variable and reflected
market conditions.4 The idea caught on, and eventually nearly all syndicated loans used LIBOR to
calculate the interest charged.5 Soon the rate was adopted by bankers outside the loan market who
were looking for an elegant proxy for bank borrowing costs that was simple, fair, and appeared to be
independent.6
In addition to providing loans at rates tied to LIBOR, banks whose submissions determined the fixing of
LIBOR had also begun to borrow heavily using LIBOR-based contracts by the mid-1980s, creating an
incentive to underreport funding costs.7 As a result, the British Bankers’ Association (BBA) took control
of the rate in 1986 to formalize the data collection and governance process.8 In that year, LIBOR
settings were calculated for the U.S. dollar, the British pound, and the Japanese yen.9 Over time, the
inclusion of additional currencies and integration of existing ones into the euro left the BBA with
oversight of settings for over ten currencies as of 2012.10 Fifteen maturity terms were reported for each
currency, ranging from overnight to a 1 year term.11
Today, LIBOR is calculated daily by the Intercontinental Exchange (ICE) Benchmark Administration.12
Eighteen international banks submit rates that each bank believes it would pay, not what it actually
pays, if it had to borrow money from another bank on the interbank lending market in London. 13 The
four highest and four lowest submissions are then removed in order to calculate LIBOR.14 Prior to the
end of 2021, the ICE Benchmark Administration calculated the rate in five currencies (UK Pound
Sterling, the Swiss Franc, the Euro, Japanese Yen, and the U.S. Dollar), and LIBOR was produced in
seven maturity terms or “tenors” (overnight/spot next, 1-week, 1-month, 2-month, 3-month, 6-month,
and 12-month).15
1 David Hou & David Skeie, LIBOR: Origins, Economics, Crisis, Scandal, and Reform, Federal Reserve Bank of New York
Staff Reports (Mar. 2014), https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr667.pdf (last visited
Jan. 7, 2022).
2 Id.
3 Gavin Finch and Liam Vaughan, The Man Who Invented the World’s Most Important Number (Nov. 29, 2016),
https://www.bloomberg.com/news/features/2016-11-29/the-man-who-invented-libor-iw3fpmed (last visited Jan. 7, 2022).
4 Id.
5 Id.
6 Id.
7 David Hou & David Skeie, supra note 1.
8 Id.
9 Id.
10 Id.
11 Id.
12 Miranda Marquit and Benjamin Curry, What Is Libor And Why Is It Being Abandoned?, Forbes (Dec. 16, 2020),
https://www.forbes.com/advisor/investing/what-is-libor/ (last visited Jan. 7, 2022).
13 Id.
14 Id.
15 Id.; Financial Conduct Authority, About LIBOR Transition, https://www.fca.org.uk/markets/libor-transition (last visited
Jan. 7, 2022).
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LIBOR has come under increasing scrutiny from regulators and financial markets alike following the
2008 financial crisis as well as documented patterns of manipulation by participating banks. 16 Others
have noted the declining correlations between LIBOR and actual bank funding costs.17 In 2017, the
entity that regulates LIBOR, the Financial Conduct Authority (FCA) of the United Kingdom, stated that
LIBOR would cease after the end of 2021.18 However, most U.S. Dollar LIBOR tenors have been
extended to the end of June 2023 to enable time for the market to transition away from LIBOR.19 The 1-
week and 2-month U.S. Dollar LIBOR ended at the end of 2021.20 The FCA has recommended
transitions to alternative rates before these dates.21
In 2014, the Federal Reserve Board and the Federal Reserve Bank of New York convened the
Alternative Reference Rates Committee (ARRC) to address risks related to the U.S. Dollar LIBOR.22
The ARRC’s initial objectives were to identify risk-free alternative reference rates for the U.S. Dollar
LIBOR, identify best practices for contract robustness, and create an implementation plan with metrics
of success and a timeline to support an orderly adoption.23 The ARCC was reconstituted in 2018 with
an expanded membership to serve as a forum to coordinate planning across cash and derivatives
products as well as market participants currently using the U.S. Dollar LIBOR.24 The ARRC is
comprised of a diverse set of private-sector entities, each with an important presence in markets
affected by the U.S. Dollar LIBOR, and a wide array of official-sector entities, including banking and
financial sector regulators, as ex-officio members.25
In 2017, the ARRC identified the Secured Overnight Financing Rate (SOFR) as its recommended
alternative to the U.S. Dollar LIBOR.26 SOFR is fully-transaction based and is a broad measure of the
cost of borrowing cash overnight collateralized by U.S. Treasury securities.27 SOFR is based on
transaction data from three segments of the Treasury repurchase agreement market: (1) tri-party
repurchase agreements, (2) General Collateral Finance repurchase agreements; and (3) bilateral
repurchase agreement transactions cleared through the Fixed Income Clearing Corporation. 28 The
Federal Reserve Bank of New York currently publishes SOFR data daily, as well as SOFR Averages
and a SOFR Index.29
LIBOR has been used in setting interest rates for adjustable rate mortgages, asset-backed securities,
municipal bonds, credit default swaps, private student loans, and other types of debt. 30 The total
exposure to the U.S. Dollar LIBOR, as of the fourth quarter of 2020, was $223 trillion.31 Although the
derivatives market accounts for a large majority of the outstanding value of all financial products
referencing the U.S. Dollar LIBOR, LIBOR is also referenced in several trillion dollars of corporate
loans, floating-rate mortgages, floating-rate notes, and securitized products.32
Financial institutions and other market participants have been in the process of assessing their
exposure to the discontinuation of LIBOR, and various financial regulators have discouraged the use of
16 Marquit and Curry, supra note 12.
17 Bowman et al., How Correlated is LIBOR with Bank Funding Costs? (June 29, 2020),
https://www.federalreserve.gov/econres/notes/feds-notes/how-correlated-is-libor-with-bank-funding-c osts-20200629.htm
(last visited Jan. 7, 2022).
18 Financial Conduct Authority, supra note 15.
19 Id.
20 Id.
21 Id.
22 Alternative Reference Rates Committee, Frequently Ask ed Questions (Aug. 27, 2021),
https://www.newyorkfed.org/medialibrary/Microsites/arrc/files/ARRC-faq.pdf (last visited Jan. 7, 2021).
23 Id.
24 Id.
25 Id.
26 Id.
27 Id.
28 Id.
29 Id.
30 Marquit and Curry, supra note 12.
31 Alternative Reference Rates Committee, supra note 22.
32 Id.
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LIBOR as a reference rate in new contracts after December 31, 2021. 33 Some financial contracts that
reference LIBOR include robust fallback language that contemplates a replacement interest rate index
or replacement interest rate calculation in the event that the rate referenced in the contract is
discontinued. While an estimated 67 percent of current LIBOR exposures will mature before LIBOR
ceases at the end of June 2023, an estimated $74 trillion will remain outstanding.34 This fact
underscores the importance of finding solutions for legacy contracts, including legacy LIBOR contracts
that have no provisions to replace LIBOR upon its cessation.35 The ARRC believes that legislation is a
necessary step to address those contracts.36
Similar to the bill, federal legislation (H.R. 4616) has been proposed that would provide for the transition
of certain financial contracts away from LIBOR.37 In the event a contract referencing LIBOR does not
have a fallback or replacement rate provision in effect when LIBOR is retired, or a replacement rate is
not selected by a determining person as defined by H.R. 4616, H.R. 4616 provides for a transition to
SOFR as the replacement rate.38 H.R. 4616 also provides for conforming changes to these contracts,
the continuity and enforceability of these contracts, and protections against liability as a result of such a
transition.39 H.R. 4616 passed the House but has not yet been acted upon in the Senate. 40
New York41 and Alabama42 have passed legislation similar to the bill.
Effect of the Bill
The bill provides the following legislative finding:
The Legislature finds that the discontinuation of LIBOR 43 as a viable interest rate
threatens the continued viability of certain contracts, securities, and instruments and the
rights of the parties to those contracts, securities, or instruments. Furthermore, the threat
of unknown and potentially unbounded liability and the viability of contracts, securities,
and instruments threatens the state's economy and has created an overpowering public
necessity to provide an immediate and remedial legislative solution. Therefore, the
Legislature intends for parties to certain contracts, securities, or instruments, as provided
in [the bill], to enjoy heightened legal protections as a result of the discontinuation of
LIBOR. The Legislature also finds that there are no alternative means to meet this public
necessity. The Legislature finds that the public interest as a whole is best served by
providing certainty to these contracts, securities, and instruments and the parties
thereto, so that these contracts, securities, and instruments may remain viable and
continue to be enforceable in the state.
33 See, e.g., U.S. Securities and Exchange Commission Office of Compliance Inspections and Examinations, Risk Alert
(June 18, 2020), https://www.sec.gov/files/Risk%20Alert%20-%20OCIE%20LIBOR%20Initiative_1.pdf (last visited Jan. 7,
2022); Board of Governors of the Federal Reserve System et al., Statement on LIBOR Transition (Nov. 30, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20201130a1.pdf (last visited Jan. 7, 2022); Rohit
Chopra, Joint Statement on Managing the LIBOR Transition (Oct. 20, 2021), https://www.consumerfinance.gov/ about-
us/newsroom/joint-statement-on-managing-the-libor-transition/#note5 (last visited Jan. 7, 2022).
34 Alternative Reference Rates Committee, supra note 22.
35 Id.
36 Id.
37 Adjustable Interest Rate (LIBOR) Act of 2021, H.R. 4616, 117th Cong., https://www.congress.gov/bill/117th-
congress/house-bill/4616/text.
38 Id.
39 Id.
40 Id.
41 Discontinuance of the London interbank offered rate, Assembly Bill 164B,
https://legislation.nysenate.gov/pdf/bills/2021/A164B.
42 Financial transactions, Senate Bill 279, https://legiscan.com/AL/text/SB279/id/2379813.
43 "LIBOR" means, for purposes of the application of the bill to any particular contract, security, or instrument, the United
States Dollar LIBOR, formerly known as the London Interbank Offered Rate, as administered by ICE Benchmark
Administration, or any predecessor or successor thereof, or any tenor thereof, as applicable, that is used in making any
calculation or determination of benchmark rates.
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Under the bill, various LIBOR discontinuance events 44 trigger a LIBOR replacement date45 for a
contract, security, or instrument46 that uses LIBOR as a benchmark47 and that:
(a) Does not contain a fallback provision;48 or
(b) Contains fallback provisions resulting in a benchmark replacement 49 that is based in any way
on a LIBOR value.
For such a contract, security, or instrument, on the LIBOR replacement date, the recommended
benchmark replacement, will be the benchmark replacement by operation of law. The recommended
benchmark is a benchmark replacement based on SOFR 50 and must include any recommended spread
adjustment51 and any benchmark replacement conforming change52 that have been selected or
44 "LIBOR discontinuance event" means the earliest to occur of any of the following:
a. A public statement or publication of information by, or on behalf of, the administrator of LIBOR announcing that
the administrator has ceased or will cease to provide LIBOR permanently or indefinitely, if, at the time of the statement or
publication, there is no successor administrator that will continue to provide LIBOR.
b. A public statement or publication of information by the regulatory supervisor for the administrator of LIBOR, the
Federal Reserve System, an insolvency official with jurisdiction over the administrator of LIBOR, a resolution authority
with jurisdiction over the administrator of LIBOR, or a court or an entity with similar insolvency or resolution authority over
the administrator of LIBOR, announcing that the administrator of LIBOR has c eased or will cease to provide LIBOR
permanently or indefinitely, if, at the time of the statement or publication, there is no successor administrator that will
continue to provide LIBOR.
c. A public statement or publication of information by the regulat ory supervisor for the administrator of LIBOR
announcing that LIBOR is no longer representative.
A public statement or publication of information that affects one or more tenors of LIBOR does not constitute a LIBOR
discontinuance event with respect to a contract, security, or instrument that:
a. Provides for only one tenor of LIBOR, if the contract, security, or instrument requires interpolation and the
tenor can be interpolated from LIBOR tenors that are not so affected; or
b. Allows a party to choose from more than one tenor of LIBOR and any of the tenors is not so affected or, if the
contract, security, or instrument requires interpolation, can be interpolated from LIBOR tenors that are not so affected.
45 "LIBOR replacement date" means:
a. In the case of a LIBOR discontinuance event described in a. or b. (supra note 44), the later of:
(I) The date of the public statement or publication of information referenced in a. or b. (supra note 44); or
(II) The date on which the administrator of LIBOR permanently or indefinitely ceases to provide LIBOR.
b. In the case of a LIBOR discontinuance event described in c. (supra note 44), the date of the public statement
or publication of information referenced in c. (supra note 44).
2. A date that affects one or more tenors of LIBOR does not constitute a LIBOR replacement date with respect to
a contract, security, or instrument that:
a. Provides for only one tenor of LIBOR, if the contract, security, or instrument requires interpolation and the
tenor can be interpolated from LIBOR tenors that are not so affected; or
b. Allows a party to choose from more than one tenor of LIBOR and any of the tenors is not so affected or, if the
contract, security, or instrument requires interpolation, can be interpolated from LIBOR tenors that are not so affected.
46 "Contract, security, or instrument" includes, without limitation, any contract, agreement, mortgage, deed of trust, lease,
instrument, obligation, or security, whether representing debt or equity, and including any interest in a corporation,
partnership, or limited liability company.
47 "Benchmark" means an index of interest rates or dividend rates that is used, in whole or in part, as the basis of, or as a
reference for, calculating or determining a valuation, payment, or other measurement under or in respect of a contract,
security, or instrument.
48 "Fallback provision" means a term in a contract, security, or instrument which sets forth a methodology or procedure for
determining a benchmark replacement, including any term relating to the date on which the benchmark replacement
becomes effective, without regard to whether a benchmark replacement can be determined in accordance with the
methodology or procedure.
49 "Benchmark replacement" means a benchmark, an interest rate, or a dividend rate that may or may not be based, in
whole or in part, on a prior setting of LIBOR, to replace LIBOR or any interest rate or dividend rate based on LIBOR,
whether on a temporary, permanent, or indefinite basis, under or in respect of a contract, security, or instrument.
50 "SOFR" means, with respect to any day, the secured overnight financing rate published for the day by the Federal
Reserve Bank of New York as the administrator of the benchmark, or a successor administrator, on the Federal Reserve
Bank of New York's website.
51 "Recommended spread adjustment" means a spread adjustment, or method for calculating or determining the spread
adjustment, which has been selected or recommended by a relevant recommending body for a recommende d benchmark
replacement for a particular type of contract, security, or instrument and for a particular term to account for the effects o f
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recommended by a relevant recommending body53 with respect to the type of contract, security, or
instrument.
After the occurrence of a LIBOR discontinuance event, any fallback provisions in a contract, security, or
instrument which provide for a benchmark replacement based on or otherwise involving a poll, survey,
or inquiry for quotes or information concerning interbank lending rates or any interest rate or dividend
rate based on LIBOR will be void and of no force or effect.
For any contract, security, or instrument that uses LIBOR as a benchmark and that contains fallback
provisions allowing or requiring the selection of a benchmark replacement that is based in any way on a
LIBOR value or a benchmark replacement that is similar to LIBOR, a determining person54 may, but is
not required to, select the recommended benchmark replacement as the benchmark replacement after
the occurrence of a LIBOR discontinuance event. In such case, the selection of the recommended
benchmark replacement must be:
1) Irrevocable;
2) Made by the earlier of the LIBOR replacement date or the latest date for selecting a benchmark
replacement according to the contract, security, or instrument; and
3) Used in any determination of the benchmark under or with respect to the contract, security, or
instrument occurring on and after the LIBOR replacement date.
If a recommended benchmark replacement becomes the benchmark replacement for a contract,
security, or instrument under the bill, then all benchmark replacement conforming changes that are
applicable to the recommended benchmark replacement must become an integral part of the contract,
security, or instrument by operation of law.
The selection or use of a recommended benchmark replacement as a benchmark replacement under
or in respect of a contract, security, or instrument by operation of the bill must constitute all of the
following:
the transition or change from LIBOR to a recommended benchmark replacement. This term may be a positive or negative
value or zero.
52 "Benchmark replacement conforming change" means, with respect to any type of contract, security, or instrument, a
technical, administrative, or operational change, alteration, or modification that is associated with and reasonably
necessary to the use, adoption, calculation, or implementation of a recommended benchmark replacement and that meets
the following conditions:
1. The change, alteration, or modification has been selected or recommended by a relevant recommending body.
2. If, in the reasonable judgment of the calculating person, the change, alteration, or modification selected or
recommended under subparagraph 1. does not apply to the contract, security, or instrument or is insufficient to allow
administration and calculation of the recommended benchmark replacement, the benchmark replacement conforming
change must include other changes, alterations, or modifications that, in the reasonable judgment of the calculating
person:
a. Are necessary to allow administration and calculation of the recommended benchmark replacement under or
in respect of the contract, security, or instrument in a manner consistent with market practice for substantially similar
contracts, securities, or instruments and, to the extent practicable, the manner in which the contract, security, or
instrument was administered immediately before the LIBOR replacement date; and
b. Would not result in a disposition of the contract, security, or instrument for federal income tax purposes.
"Calculating person" means, with respect to any contract, security, or instrument, a person responsible for calculating or
determining a valuation, payment, or other measurement based on a benchmark. This person may be the determining
person. See infra note 54 for the definition of “determining person”.
53 "Relevant recommending body" means the Federal Reserve Board, the Federal Reserve Bank of New York, the ARRC,
or a successor to any of them.
54 "Determining person" means, with respect to any contract, security, or instrument, the following persons in decreasing
order of priority:
1. A person so specified.
2. A person with the authority, right, or obligation to do any of the following:
a. Determine the benchmark replacement that will take effect on the LIBOR replacement date.
b. Calculate or determine a valuation, payment, or other measurement based on a benchmark.
c. Notify other persons of the occurrence of a LIBOR discontinuance event , a LIBOR replacement date, or a
benchmark replacement.
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1) A commercially reasonable replacement for and a commercially substantial equivalent to
LIBOR.
2) A reasonable, comparable, or analogous term for LIBOR under or in respect of the contract,
security, or instrument.
3) A replacement that is based on a methodology or information that is similar or comparable to
LIBOR.
4) Substantial performance by any person of any right or obligation relating to or based on LIBOR
under or in respect of a contract, security, or instrument.
A LIBOR discontinuance event, a LIBOR replacement date, the selection or use of a recommended
benchmark replacement as a benchmark replacement, or the determination, implementation, or
performance of a benchmark replacement conforming change, in each case, by operation of the bill,
may not:
1) Be deemed to impair or affect the right of any person to receive a payment, or affect the amount
or timing of the payment, under a contract, security, or instrument;
2) Have the effect of discharging or excusing performance under a contract, security, or instrument
for any reason, claim, or defense, including, but not limited to, any force majeure or other
provision in a contract, security, or instrument;
3) Have the effect of giving any person the right to unilaterally terminate or suspend performance
under a contract, security, or instrument;
4) Have the effect of constituting a breach of a contract, security, or instrument; or
5) Have the effect of voiding or nullifying a contract, security, or instrument.
A person is not liable for damages to any other person, and is not subject to any claim or request for
equitable relief, arising out of or related to the selection or use of a recommended benchmark
replacement or the determination, implementation, or performance of a benchmark replacement
conforming change, in each case, by operation of the bill. The selection or use of the recommended
benchmark replacement or the determination, implementation, or performance of a benchmark
replacement conforming change may not give rise to any claim or cause of action by any person in law
or in equity.
The selection or use of a recommended benchmark replacement or the determination, implementation,
or performance of a benchmark replacement conforming change, by operation of the bill, may not be
deemed to:
1) Be an amendment or modification of a contract, security, or instrument.
2) Prejudice, impair, or affect a person's rights, interests, or obligations under or in respect of a
contract, security, or instrument.
Except as otherwise provided in the bill, the bill may not be interpreted as creating a negative inference
or negative presumption regarding the validity or enforceability of any of the following:
1) A benchmark replacement that is not a recommended replacement benchmark.
2) A spread adjustment, or method for calculating or determining a spread adjustment, which is not
a recommended spread adjustment.
3) A change, alteration, or modification to or in respect of a contract, security, or instrument which
is not a benchmark replacement conforming change.
The bill does not alter or impair any of the following:
1) A written agreement by all requisite parties 55 which, retrospectively or prospectively, provides
that a contract, security, or instrument is not subject to the bill without necessarily referring
specifically to the statute created by the bill.
2) A contract, security, or instrument that contains fallback provisions that would result in a
benchmark replacement that is not based on LIBOR, including, but not limited to, the prime rate
or the federal funds rate. However, after the occurrence of a LIBOR discontinuance event, any
fallback provisions in a contract, security, or instrument which provide for a benchmark
55 "Requisite parties" means all parties required to amend the terms and provisions of a contract, security, or instrument
that would otherwise be altered or affected by the bill.
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replacement based on or otherwise involving a poll, survey, or inquiry for quotes or information
concerning interbank lending rates or any interest rate or dividend rate based on LIBOR will be
void and of no force or effect.
3) A contract, security, or instrument as to which a determining person does not elect to use a
recommended benchmark replacement or as to which a determining person elects to use a
recommended benchmark replacement before the occurrence of a LIBOR discontinuance
event. However, after the occurrence of a LIBOR discontinuance event, any fallback provisions
in a contract, security, or instrument which provide for a benchmark replacement based on or
otherwise involving a poll, survey, or inquiry for quotes or information concerning interbank
lending rates or any interest rate or dividend rate based on LIBOR will be void and of no force or
effect.
4) The application to a recommended benchmark replacement of any cap, floor, modifier, or
spread adjustment to which LIBOR had been subject pursuant to the terms of a contract,
security, or instrument.
Notwithstanding the Uniform Commercial Code56 or any other law of this state, and except as otherwise
provided in the bill, the bill applies to all contracts, securities, and instruments, including contracts with
respect to commercial transactions, and may not be superseded by any other law of this state.
The bill provides that this act is remedial in nature and applies retroactively to all contracts,
agreements, mortgages, deeds of trust, leases, instruments, obligations, or securities, whether
representing debt or equity, and including all interests in a corporation, partnership, or limited liability
company, in existence on December 31, 2021.
The bill takes effect upon becoming a law.
B. SECTION DIRECTORY:
Section 1. Amends s. 687.15, F.S., relating to benchmark replacements for the London Interbank
Offered Rate.
Section 2. Provides that this act is remedial in nature and applies retroactively.
Section 3. Provides that this act shall take effect upon becoming a law.
II. FICAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
56 Chapters 670-680, F.S., comprise the Uniform Commercial Code. s. 671.101, F.S.
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The bill has an indeterminate impact on the private sector. The bill may have both positive and negative
impacts on private sector entities. Replacing LIBOR with SOFR could result in a different interest rate
under the contract or instrument, though the ARCC has recommended spread adjustments for various
types of financial contracts and instruments for which SOFR replaces LIBOR. Additionally, the bill could
prevent an aggrieved party from bringing a claim in court relating to the replacement of LIBOR with
SOFR, as well as accompanying conforming changes; but elimination of such liability and claims may
have the effect of quieting financial markets.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not Applicable. This bill does not appear to affect county or municipal governments.
2. Other:
Impairment of Contracts and Due Process
Both the Florida and the United States Constitutions prohibit the state from passing a law impairing
contractual obligations.57 However, the Legislature may provide that a non-criminal law, including
one that affects existing contractual obligations, applies retroactively in certain situations.58 In
determining whether a law may be applied retroactively, courts first determine whether the law is
procedural, remedial, or substantive in nature.59 A purely procedural or remedial law may apply
retroactively without offending the Constitution, but a substantive law generally may not apply
retroactively absent clear legislative intent to the contrary. 60 However, even where the Legislature
has expressly stated that a law will have retroactive application, a court may reject that applic ation if
the law impairs a vested right, creates a new obligation, or imposes a new penalty. 61 Further, where
a law is designed to serve a remedial purpose, a court may decide not to apply the law retroactively
where doing so “would attach new legal consequences to events completed before its enactment.” 62
Moreover, both the Florida and United States Constitutions prohibit the taking of life, liberty, or
property without due process of law.63 The right to contract, as long as no fraud or deception is
involved and the contract is otherwise legal, is both a liberty and a property right subject to due
process protections, and the impairment of contracts may, in certain instances, be viewed as the
taking of property without due process.64
For certain contracts and instruments, the bill provides for a transition to SOFR as the replacement
rate for LIBOR, provides for conforming changes to be made to the contract or instrument, voids
fallback provisions that are based on LIBOR, and provides for construction of rights and duties under
contracts affected by the bill. Additionally, the bill contains a statement of legislative intent indicating
57
U.S. Const. art. I, s. 10; Art. I, s. 10, Fla. Const.
58 U.S. Const. art. I, ss. 9 and 10; Art. 1, s. 10, Fla. Const.
59 A procedural law merely establishes the means and methods for applying or enforcing existing duties or rights. A remedial law
confers or changes a remedy, i.e., the means employed in enforcing an existing right or in redressing an injury. A substantive law
creates, alters, or impairs existing substantive rights. Windom v. State, 656 So. 2d 432 (Fla. 1995); St. John’s Village I, Ltd. v. Dept. of
State, 497 So. 2d 990 (Fla. 5th DCA 1986); McMillen v. State Dept. of Revenue, 74 So. 2d 1234 (Fla. 1st DCA 1999).
60 State Farm Mutual Automob ile Ins. Co. v. Laforet, 658 So. 2d 55 (Fla. 1995).
61 Menendez v. Progressive Exp. Ins. Co., Inc., 35 So. 3d 873 (Fla. 2010).
62 L. Ross, Inc. v. R.W. Rob erts Const. Co., 481 So. 2d 484 (Fla. 1986).
63 U.S. Const. amends. V and XIV; Art. I, s. 21, Fla. Const.
64 Miles v. City of Edgewater Police Dept., 190 So. 3d 171 (Fla. 1st DCA 2016); s ee, e.g., Griffin v. Sharpe, 65 So. 2d 751 (Fla. 1953)
(finding that a statute removing a specific deed restriction’s expiration date both impaired contracts and constituted a taking of private
property without due process).
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that the bill is remedial in nature and applies retroactively to all contracts, agreements, mortgages,
deeds of trust, leases, instruments, obligations, or securities, whether representing debt or equity,
and including all interests in a corporation, partnership, or limited liability company, in existence on
December 31, 2021. Whether the Legislature’s retroactive modification of such contracts and
instruments is procedural, remedial, or substantive, and whether such modification implicates the
constitutional right to contract or the constitutional right to due process, is for the courts to decide.
Access to Courts
In Kluger v. White,65 the Florida Supreme Court evaluated to what extent the Legislature may alter a
civil cause of action. The Court stated that it would not completely prohibit the Legislature from
altering a cause of action, but neither would it allow the Legislature "to destroy a traditional and long-
standing cause of action upon mere legislative whim . . . ." The takeaway from Kluger and other
relevant case law is that the Legislature may:
Reduce the right to bring a cause of action as long as the right is not entirely abolished.66
Abolish a cause of action that is not "traditional and long-standing"—that is, a cause of
action that did not exist at common law, and that did not exist in statute before the adoption
of the Florida Constitution's Declaration of Rights.67
Abolish a cause of action if the Legislature either:
o Provides a reasonable commensurate benefit in exchange; 68 or
o Shows an "overpowering public necessity for the abolishment of such right, and no
alternative method of meeting such public necessity can be shown."69
The bill precludes liability, a claim, or a cause of action arising out of or related to the selection or
use of a recommended benchmark replacement or the determination, implementation, or
performance of a benchmark replacement conforming change. The bill also provides a statement
demonstrating the overpowering public necessity for the bill and a finding that there are no
alternative means to meet this public necessity. Whether an overpowering public necessity truly
exists, and whether there truly are no alternative means to meet the public necessity as the
Legislature asserts, is for the courts to decide.
B. RULE-MAKING AUTHORITY:
None.
C. DRAFTING ISSUES OR OTHER COMMENTS:
The definition of “benchmark replacement conforming change” (lines 68-93) should be clarified to
reflect that subparagraph two is permissive rather than a mandatory requirement for every contract,
security, or instrument subject to the bill.
The phrase “must constitute” on line 253 should be changed to “constitutes” in order to clarify that the
bill deems the subsequent paragraphs (a) – (d) on lines 254-262 to be true.
65 Kluger, 281 So. 2d 1 (Fla. 1973).
66 See Achord v. Osceola Farms Co., 52 So. 3d 699 (Fla. 2010).
67 See Anderson v. Gannett Comp., 994 So. 2d 1048 (Fla. 2008) (false light was not actionable under the common law); McPhail v.
Jenkins, 382 So. 2d 1329 (Fla. 1980) (wrongful death was not actionable under the common law); see also Kluger, 281 So. 2d at 4
("We hold, therefore, that where a right of access to the courts for redress for a particular injury has been provided by sta tutory law
predating the adoption of the Declaration of Rights of the Constitution of the State of Florida, or where such right has become a p a rt o f
the common law of the State . . . the Legislature is without power to abolish such a right without providing a reasonable alt ern a ti ve . . .
unless the Legislature can show an overpowering public necessity . . .").
68 Kluger, 281 So. 2d at 4; see Univ. of Miami v. Echarte, 618 So. 2d 189 (Fla. 1993) (upholding statutory cap on medical malpractice
damages because the Legislature provided arbitration, which is a "commensurate benefit" for a claimant); accord Lasky v. Sta te Fa rm
Ins. Co., 296 So. 2d 9 (Fla. 1974); b ut see Smith v. Dept. of Ins., 507 So. 2d 1080 (Fla. 1992) (striking down noneconomic cap on
damages, which, although not wholly abolishing a cause of action, did not provide a commensurate benefit).
69 Kluger, 281 So. 2d at 4-5 (noting that in 1945, the Legislature abolished the right to sue for several causes of action, but successfu l ly
demonstrated "the public necessity required for the total abolition of a right to sue") (citing Rotwein v. Gersten, 36 So. 2d 419 (Fla.
1948); see Echarte, 618 So. 2d at 195 ("Even if the medical malpractice arbitration statutes at issue did not provide a commensurate
benefit, we would find that the statutes satisfy the second prong of Kluger which requires a legislative finding that an 'overpowering
public necessity' exists, and further that 'no alternative method of meeting such public necessity can be shown'").
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The phrase “recommended replacement benchmark” on lines 306-307 should be changed to
“recommended benchmark replacement”, as “recommended benchmark replacement” is the defined
term (lines 187-193).
The sponsor has indicated an intent to amend the bill in order to address these drafting issues.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 925 2022
1 A bill to be entitled
2 An act relating to benchmark replacements for London
3 Interbank Offered Rate; creating s. 687.15, F.S.;
4 providing legislative findings and intent and a
5 statement of public interest; providing definitions;
6 requiring that recommended benchmark replacements
7 selected or recommended by specified persons be
8 benchmark replacements on the United States dollar
9 London Interbank Offered Rate (LIBOR) replacement date
10 for certain contracts, securities, and instruments;
11 requiring certain fallback provisions in contracts,
12 securities, and instruments providing specified
13 benchmark replacements to be disregarded and void;
14 authorizing specified persons to select benchmark
15 replacements under certain circumstances; providing
16 requirements for such selection; providing
17 applicability; requiring benchmark replacement
18 conforming changes to become an integral part of
19 contracts, securities, and instruments under certain
20 circumstances; providing requirements for selections
21 or uses of recommended benchmark replacements as
22 benchmark replacements; providing construction;
23 providing that a person is not liable for damages and
24 is not subject to claims and requests for equitable
25 relief under certain circumstances; providing
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26 applicability; prohibiting other laws from superseding
27 specified provisions; providing that the act is
28 remedial in nature; providing retroactive
29 applicability; providing an effective date.
30
31 Be It Enacted by the Legislature of the State of Florida:
32
33 Section 1. Section 687.15, Florida Statutes, is created to
34 read:
35 687.15 Benchmark replacements for the London Interbank
36 Offered Rate.—
37 (1) The Legislature finds that the discontinuation of the
38 London Interbank Offered Rate (LIBOR) as a viable interest rate
39 threatens the continued viability of certain contracts,
40 securities, and instruments and the rights of the parties to
41 those contracts, securities, or instruments. Furthermore, the
42 threat of unknown and potentially unbounded liability and the
43 viability of contracts, securities, and instruments threatens
44 the state's economy and has created an overpowering public
45 necessity to provide an immediate and remedial legislative
46 solution. Therefore, the Legislature intends for parties to
47 certain contracts, securities, or instruments, as provided in
48 this section, to enjoy heightened legal protections as a result
49 of the discontinuation of LIBOR. The Legislature also finds that
50 there are no alternative means to meet this public necessity.
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51 The Legislature finds that the public interest as a whole is
52 best served by providing certainty to these contracts,
53 securities, and instruments and the parties thereto, so that
54 these contracts, securities, and instruments may remain viable
55 and continue to be enforceable in the state.
56 (2) As used in this section, the term:
57 (a) "Benchmark" means an index of interest rates or
58 dividend rates that is used, in whole or in part, as the basis
59 of, or as a reference for, calculating or determining a
60 valuation, payment, or other measurement under or in respect of
61 a contract, security, or instrument.
62 (b) "Benchmark replacement" means a benchmark, an interest
63 rate, or a dividend rate that may or may not be based, in whole
64 or in part, on a prior setting of LIBOR, to replace LIBOR or any
65 interest rate or dividend rate based on LIBOR, whether on a
66 temporary, permanent, or indefinite basis, under or in respect
67 of a contract, security, or instrument.
68 (c) "Benchmark replacement conforming change" means, with
69 respect to any type of contract, security, or instrument, a
70 technical, administrative, or operational change, alteration, or
71 modification that is associated with and reasonably necessary to
72 the use, adoption, calculation, or implementation of a
73 recommended benchmark replacement and that meets the following
74 conditions:
75 1. The change, alteration, or modification has been
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76 selected or recommended by a relevant recommending body.
77 2. If, in the reasonable judgment of the calculating
78 person, the change, alteration, or modification selected or
79 recommended under subparagraph 1. does not apply to the
80 contract, security, or instrument or is insufficient to allow
81 administration and calculation of the recommended benchmark
82 replacement, the benchmark replacement conforming change must
83 include other changes, alterations, or modifications that, in
84 the reasonable judgment of the calculating person:
85 a. Are necessary to allow administration and calculation
86 of the recommended benchmark replacement under or in respect of
87 the contract, security, or instrument in a manner consistent
88 with market practice for substantially similar contra cts,
89 securities, or instruments and, to the extent practicable, the
90 manner in which the contract, security, or instrument was
91 administered immediately before the LIBOR replacement date; and
92 b. Would not result in a disposition of the contract,
93 security, or instrument for federal income tax purposes.
94 (d) "Calculating person" means, with respect to any
95 contract, security, or instrument, a person responsible for
96 calculating or determining a valuation, payment, or other
97 measurement based on a benchmark. This person may be the
98 determining person.
99 (e) "Contract, security, or instrument" includes, without
100 limitation, any contract, agreement, mortgage, deed of trust,
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101 lease, instrument, obligation, or security, whether representing
102 debt or equity, and including any interest in a corporation,
103 partnership, or limited liability company.
104 (f) "Determining person" means, with respect to any
105 contract, security, or instrument, the following persons in
106 decreasing order of priority:
107 1. A person so specified.
108 2. A person with the authority, right, or obligation to do
109 any of the following:
110 a. Determine the benchmark replacement that will take
111 effect on the LIBOR replacement date.
112 b. Calculate or determine a valuation, payment, or other
113 measurement based on a benchmark.
114 c. Notify other persons of the occurrence of a LIBOR
115 discontinuance event, a LIBOR replacement date, or a benchmark
116 replacement.
117 (g) "Fallback provision" means a term in a contract,
118 security, or instrument which sets forth a methodology or
119 procedure for determining a benchmark replacement, including any
120 term relating to the date on which the benchmark replacement
121 becomes effective, without regard to whether a benchmark
122 replacement can be determined in accordance with the methodology
123 or procedure.
124 (h) "LIBOR" means, for purposes of the application of this
125 section to any particular contract, security, or instrument, the
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126 United States dollar LIBOR, formerly known as the London
127 Interbank Offered Rate, as administered by ICE Benchmark
128 Administration, or any predecessor or successor thereof, or any
129 tenor thereof, as applicable, that is used in making any
130 calculation or determination of benchmark rates.
131 (i)1. "LIBOR discontinuance event" means the earliest to
132 occur of any of the following:
133 a. A public statement or publication of information by, or
134 on behalf of, the administrator of LIBOR announcing that the
135 administrator has ceased or will cease to provide LIBOR
136 permanently or indefinitely, if, at the time of the statement or
137 publication, there is no successor administrator that will
138 continue to provide LIBOR.
139 b. A public statement or publication of information by the
140 regulatory supervisor for the administrator of LIBOR, the
141 Federal Reserve System, an insolvency official with jurisdiction
142 over the administrator of LIBOR, a resolution authority with
143 jurisdiction over the administrator of LIBOR, or a court or an
144 entity with similar insolvency or resolution authority over the
145 administrator of LIBOR, announcing that the administrator of
146 LIBOR has ceased or will cease to provide LIBOR permanently or
147 indefinitely, if, at the time of the statement or publication,
148 there is no successor administrator that will continue to
149 provide LIBOR.
150 c. A public statement or publication of information by the
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151 regulatory supervisor for the administrator of LIBOR announcing
152 that LIBOR is no longer representative.
153 2. A public statement or publication of information that
154 affects one or more tenors of LIBOR does not constitute a LIBOR
155 discontinuance event with respect to a contract, security, or
156 instrument that:
157 a. Provides for only one tenor of LIBOR, if the contract,
158 security, or instrument requires interpolation and the tenor can
159 be interpolated from LIBOR tenors that are not so affected; or
160 b. Allows a party to choose from more than one tenor of
161 LIBOR and any of the tenors is not so affected or, if the
162 contract, security, or instrument requires interpolation, can be
163 interpolated from LIBOR tenors that are not so affected.
164 (j)1. "LIBOR replacement date" means:
165 a. In the case of a LIBOR discontinuance event described
166 in sub-subparagraph (i)1.a. or sub-subparagraph (i)1.b., the
167 later of:
168 (I) The date of the public statement or publication of
169 information referenced in sub-subparagraph (i)1.a. or sub-
170 subparagraph (i)1.b.; or
171 (II) The date on which the administrator of LIBOR
172 permanently or indefinitely ceases to provide LIBOR.
173 b. In the case of a LIBOR discontinuance event described
174 in sub-subparagraph (i)1.c., the date of the public statement or
175 publication of information referenced in sub-subparagraph
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176 (i)1.c.
177 2. A date that affects one or more tenors of LIBOR does
178 not constitute a LIBOR replacement date with respect to a
179 contract, security, or instrument that:
180 a. Provides for only one tenor of LIBOR, if the contract,
181 security, or instrument requires interpolation and the tenor can
182 be interpolated from LIBOR tenors that are not so affected; or
183 b. Allows a party to choose from more than one tenor of
184 LIBOR and any of the tenors is not so affected or, if the
185 contract, security, or instrument requires interpolation, can be
186 interpolated from LIBOR tenors that are not so affected.
187 (k) "Recommended benchmark replacement" means, with
188 respect to any particular type of contract, security, or
189 instrument, a benchmark replacement based on SOFR that must
190 include any recommended spread adjustment and any benchmark
191 replacement conforming change that have been selected or
192 recommended by a relevant recommending body with respect to the
193 type of contract, security, or instrument.
194 (l) "Recommended spread adjustment" means a spread
195 adjustment, or method for calculating or determining the spread
196 adjustment, which has been selected or recommended by a relevant
197 recommending body for a recommended benchmark replacement for a
198 particular type of contract, security, or instrument and for a
199 particular term to account for the effects of the transition or
200 change from LIBOR to a recommended benchmark replacement. This
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201 term may be a positive or negative value or zero.
202 (m) "Relevant recommending body" means the Federal Reserve
203 Board, the Federal Reserve Bank of New York, the Alternative
204 Reference Rates Committee, or a successor to any of them.
205 (n) "SOFR" means, with respect to any day, the secured
206 overnight financing rate published for the day by the Federal
207 Reserve Bank of New York as the administrator of the benchmark,
208 or a successor administrator, on the Federal Reserve Bank of New
209 York's website.
210 (3) On the LIBOR replacement date, the recommended
211 benchmark replacement, by operation of law, shall be the
212 benchmark replacement for a contract, security, or instrument
213 that uses LIBOR as a benchmark and that:
214 (a) Does not contain a fallback provision; or
215 (b) Contains fallback provisions resulting in a benchmark
216 replacement, other than a recommended benchmark replacement,
217 that is based in any way on a LIBOR value.
218 (4) After the occurrence of a LIBOR discontinuance event,
219 any fallback provisions in a contract, security, or instrument
220 which provide for a benchmark replacement based on or o therwise
221 involving a poll, survey, or inquiry for quotes or information
222 concerning interbank lending rates or any interest rate or
223 dividend rate based on LIBOR shall be void and of no force or
224 effect.
225 (5)(a) A determining person may, but is not required to,
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226 select the recommended benchmark replacement as the benchmark
227 replacement after the occurrence of a LIBOR discontinuance
228 event. The selection of the recommended benchmark replacement
229 must be:
230 1. Irrevocable;
231 2. Made by the earlier of the LIBOR replacement date or
232 the latest date for selecting a benchmark replacement according
233 to the contract, security, or instrument; and
234 3. Used in any determination of the benchmark under or
235 with respect to the contract, security, or instrument occurring
236 on and after the LIBOR replacement date.
237 (b) Paragraph (a) applies to a contract, security, or
238 instrument that uses LIBOR as a benchmark and that contains
239 fallback provisions allowing or requiring the selection of a
240 benchmark replacement that is:
241 1. Based in any way on a LIBOR value; or
242 2. The substantive equivalent of paragraph (7)(a),
243 paragraph (7)(b), or paragraph (7)(c).
244 (6) If a recommended benchmark replacement becomes the
245 benchmark replacement for a contract, security, or instrument
246 under this section, then all benchmark replacement conforming
247 changes that are applicable to the recommended benchmark
248 replacement must become an integral part of the contract,
249 security, or instrument by operation of law.
250 (7) The selection or use of a recommended benchmark
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251 replacement as a benchmark replacement under or in respect of a
252 contract, security, or instrument by operation of this section
253 must constitute all of the following:
254 (a) A commercially reasonable replacement for and a
255 commercially substantial equivalent to LIBOR.
256 (b) A reasonable, comparable, or analogous term for LIBOR
257 under or in respect of the contract, security, or instrument.
258 (c) A replacement that is based on a methodology or
259 information that is similar or comparable to LIBOR.
260 (d) Substantial performance by any person of any right or
261 obligation relating to or based on LIBOR under or in respect of
262 a contract, security, or instrument.
263 (8) A LIBOR discontinuance event, a LIBOR replacement
264 date, the selection or use of a recommended benchmark
265 replacement as a benchmark replacement, or the determination,
266 implementation, or performance of a benchmark replacement
267 conforming change, in each case, by operation of this section,
268 may not:
269 (a) Be deemed to impair or affect the right of any person
270 to receive a payment, or affect the amount or timing of the
271 payment, under a contract, security, or instrument;
272 (b) Have the effect of discharging or excusing performance
273 under a contract, security, or instrument for any reason, claim,
274 or defense, including, but not limited to, any force majeure or
275 other provision in a contract, security, or instrument;
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276 (c) Have the effect of giving any person the right to
277 unilaterally terminate or suspend performance under a contract,
278 security, or instrument;
279 (d) Have the effect of constituting a breach of a
280 contract, security, or instrument; or
281 (e) Have the effect of voiding or nullifying a contract,
282 security, or instrument.
283 (9) A person is not liable for damages to any other
284 person, and is not subject to any claim or request for equitable
285 relief, arising out of or related to the selection or use of a
286 recommended benchmark replacement or the determination,
287 implementation, or performance of a benchmark replacement
288 conforming change, in each case, by operation of this sect ion.
289 The selection or use of the recommended benchmark replacement or
290 the determination, implementation, or performance of a benchmark
291 replacement conforming change may not give rise to any claim or
292 cause of action by any person in law or in equity.
293 (10) The selection or use of a recommended benchmark
294 replacement or the determination, implementation, or performance
295 of a benchmark replacement conforming change, by operation of
296 this section, may not be deemed to:
297 (a) Be an amendment or modification of a contract,
298 security, or instrument.
299 (b) Prejudice, impair, or affect a person's rights,
300 interests, or obligations under or in respect of a contract,
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301 security, or instrument.
302 (11) Except as provided in subsection (3) or subsection
303 (5), this section may not be interpreted as creating a negative
304 inference or negative presumption regarding the validity or
305 enforceability of any of the following:
306 (a) A benchmark replacement that is not a recommended
307 replacement benchmark.
308 (b) A spread adjustment, or method for calculating or
309 determining a spread adjustment, which is not a recommended
310 spread adjustment.
311 (c) A change, alteration, or modification to or in respect
312 of a contract, security, or instrument which is not a benchmark
313 replacement conforming change.
314 (12) This section does not alter or impair any of the
315 following:
316 (a) A written agreement by all requisite parties which,
317 retrospectively or prospectively, provides that a contract,
318 security, or instrument is not subject to this section without
319 necessarily referring specifically to this section. As used in
320 this paragraph, the term "requisite parties" means all parties
321 required to amend the terms and provisions of a contract,
322 security, or instrument that would otherwise be altered or
323 affected by this section.
324 (b) A contract, security, or instrument that contains
325 fallback provisions that would result in a benchmark replacement
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326 that is not based on LIBOR, including, but not limited to, the
327 prime rate or the federal funds rate. However, the contract,
328 security, or instrument is subject to subsection (4).
329 (c) A contract, security, or instrument subject to
330 subsection (5) as to which a determining person does not elect
331 to use a recommended benchmark replacement or as to which a
332 determining person elects to use a recommended benchmark
333 replacement before the occurrence of a LIBOR discontinuance
334 event. However, the contract, security, or instrument is subject
335 to subsection (4).
336 (d) The application to a recommended benchmark replacement
337 of any cap, floor, modifier, or spread adjustment to which LIBOR
338 had been subject pursuant to the terms of a contract, security,
339 or instrument.
340 (13) Notwithstanding the Uniform Commercial Code or any
341 other law of this state, and except as otherwise provided in
342 this section, this section applies to all contracts, securities,
343 and instruments, including contracts with respect to commercial
344 transactions, and may not be superseded by any other law of this
345 state.
346 Section 2. This act is remedial in nature and applies
347 retroactively to all contracts, agreements, mortgages, deeds of
348 trust, leases, instruments, obligations, or securities, whether
349 representing debt or equity, and including all interests in a
350 corporation, partnership, or limited liability company, in
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351 existence on December 31, 2021.
352 Section 3. This act shall take effect upon becoming a law.
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INSURANCE & BANKING SUBCOMMITTEE
HB 925 by Rep. Stevenson
Benchmark Replacements for London Interbank Offered Rate
AMENDMENT SUMMARY
January 13, 2021
Amendment 1 by Rep. Stevenson (lines 73-307): The amendment:
• Clarifies the definition of “benchmark replacement conforming change” (lines 68-93) to
reflect that subparagraph 2 is permissive rather than a mandatory requirement for every
contract, security, or instrument subject to the bill.
• Changes the phrase “must constitute” on line 253 to “constitutes” in order to clarify that
the bill deems the subsequent paragraphs (a) – (d) on lines 254-262 to be true when a
recommended benchmark replacement is selected or used.
• Changes the phrase “recommended replacement benchmark” on lines 306-307 to
“recommended benchmark replacement”, as “recommended benchmark replacement”
is the defined term.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 925 (2022)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Stevenson offered the following:
4
5 Amendment (with title amendment)
6 Remove lines 73-307 and insert:
7 recommended benchmark replacement and that has been selected or
8 recommended by a relevant recommending body. However, if, in the
9 reasonable judgment of a calculating person, the change,
10 alteration, or modification selected or recommended b y a
11 relevant recommending body does not apply to the contract,
12 security, or instrument or is insufficient to allow
13 administration and calculation of the recommended benchmark
14 replacement, the benchmark replacement conforming change may
15 include other changes, alterations, or modifications that, in
16 the reasonable judgment of the calculating person:
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Amendment No. 1
17 1. Are necessary to allow administration and calculation
18 of the recommended benchmark replacement under or in respect of
19 the contract, security, or instrument in a manner consistent
20 with market practice for substantially similar contracts,
21 securities, or instruments and, to the extent practicable, the
22 manner in which the contract, security, or instrument was
23 administered immediately before the LIBOR replacement da te; and
24 2. Would not result in a disposition of the contract,
25 security, or instrument for federal income tax purposes.
26 (d) "Calculating person" means, with respect to any
27 contract, security, or instrument, a person responsible for
28 calculating or determining a valuation, payment, or other
29 measurement based on a benchmark. This person may be the
30 determining person.
31 (e) "Contract, security, or instrument" includes, without
32 limitation, any contract, agreement, mortgage, deed of trust,
33 lease, instrument, obligation, or security, whether representing
34 debt or equity, and including any interest in a corporation,
35 partnership, or limited liability company.
36 (f) "Determining person" means, with respect to any
37 contract, security, or instrument, the following pers ons in
38 decreasing order of priority:
39 1. A person so specified.
40 2. A person with the authority, right, or obligation to do
41 any of the following:
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Amendment No. 1
42 a. Determine the benchmark replacement that will take
43 effect on the LIBOR replacement date.
44 b. Calculate or determine a valuation, payment, or other
45 measurement based on a benchmark.
46 c. Notify other persons of the occurrence of a LIBOR
47 discontinuance event, a LIBOR replacement date, or a benchmark
48 replacement.
49 (g) "Fallback provision" means a term in a contract,
50 security, or instrument which sets forth a methodology or
51 procedure for determining a benchmark replacement, including any
52 term relating to the date on which the benchmark replacement
53 becomes effective, without regard to whether a benchmark
54 replacement can be determined in accordance with the methodology
55 or procedure.
56 (h) "LIBOR" means, for purposes of the application of this
57 section to any particular contract, security, or instrument, the
58 United States dollar LIBOR, formerly known as the London
59 Interbank Offered Rate, as administered by ICE Benchmark
60 Administration, or any predecessor or successor thereof, or any
61 tenor thereof, as applicable, that is used in making any
62 calculation or determination of benchmark rates.
63 (i)1. "LIBOR discontinuance event" means the earliest to
64 occur of any of the following:
65 a. A public statement or publication of information by, or
66 on behalf of, the administrator of LIBOR announcing that the
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 925 (2022)
Amendment No. 1
67 administrator has ceased or will cease to provide LIBOR
68 permanently or indefinitely, if, at the time of the statement or
69 publication, there is no successor administrator that will
70 continue to provide LIBOR.
71 b. A public statement or publication of information by the
72 regulatory supervisor for the administrator of LIBOR, the
73 Federal Reserve System, an insolvency official with jurisdiction
74 over the administrator of LIBOR, a resolution authority with
75 jurisdiction over the administrator of LIBOR, or a court or an
76 entity with similar insolvency or resolution authority over the
77 administrator of LIBOR, announcing that the administrator of
78 LIBOR has ceased or will cease to provide LIBOR permanently or
79 indefinitely, if, at the time of the statement or publication,
80 there is no successor administrator that will continue to
81 provide LIBOR.
82 c. A public statement or publication of information by the
83 regulatory supervisor for the administrator of LIBOR announcing
84 that LIBOR is no longer representative.
85 2. A public statement or publication of information that
86 affects one or more tenors of LIBOR does not constitute a LIBOR
87 discontinuance event with respect to a contract, security, or
88 instrument that:
89 a. Provides for only one tenor of LIBOR, if the contract,
90 security, or instrument requires interpolation and the tenor can
91 be interpolated from LIBOR tenors that are not so affected; or
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Bill No. HB 925 (2022)
Amendment No. 1
92 b. Allows a party to choose from more than one tenor of
93 LIBOR and any of the tenors is not so affected or, if the
94 contract, security, or instrument requires interpolation, can be
95 interpolated from LIBOR tenors that are not so affected.
96 (j)1. "LIBOR replacement date" means:
97 a. In the case of a LIBOR discontinuance event described
98 in sub-subparagraph (i)1.a. or sub-subparagraph (i)1.b., the
99 later of:
100 (I) The date of the public statement or publication of
101 information referenced in sub-subparagraph (i)1.a. or sub-
102 subparagraph (i)1.b.; or
103 (II) The date on which the administrator of LIBOR
104 permanently or indefinitely ceases to provide LIBOR.
105 b. In the case of a LIBOR discontinuance event described
106 in sub-subparagraph (i)1.c., the date of the public statement or
107 publication of information referenced in sub-subparagraph
108 (i)1.c.
109 2. A date that affects one or more tenors of LIBOR does
110 not constitute a LIBOR replacement date with respect to a
111 contract, security, or instrument that:
112 a. Provides for only one tenor of LIBOR, if the contract,
113 security, or instrument requires interpolation and the tenor can
114 be interpolated from LIBOR tenors that are not so affected; or
115 b. Allows a party to choose from more than one te nor of
116 LIBOR and any of the tenors is not so affected or, if the
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 925 (2022)
Amendment No. 1
117 contract, security, or instrument requires interpolation, can be
118 interpolated from LIBOR tenors that are not so affected.
119 (k) "Recommended benchmark replacement" means, with
120 respect to any particular type of contract, security, or
121 instrument, a benchmark replacement based on SOFR that must
122 include any recommended spread adjustment and any benchmark
123 replacement conforming change that have been selected or
124 recommended by a relevant recommending body with respect to the
125 type of contract, security, or instrument.
126 (l) "Recommended spread adjustment" means a spread
127 adjustment, or method for calculating or determining the spread
128 adjustment, which has been selected or recommended by a relevant
129 recommending body for a recommended benchmark replacement for a
130 particular type of contract, security, or instrument and for a
131 particular term to account for the effects of the transition or
132 change from LIBOR to a recommended benchmark replacement. This
133 term may be a positive or negative value or zero.
134 (m) "Relevant recommending body" means the Federal Reserve
135 Board, the Federal Reserve Bank of New York, the Alternative
136 Reference Rates Committee, or a successor to any of them.
137 (n) "SOFR" means, with respect to any day, the secured
138 overnight financing rate published for the day by the Federal
139 Reserve Bank of New York as the administrator of the benchmark,
140 or a successor administrator, on the Federal Reserve Bank of New
141 York's website.
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 925 (2022)
Amendment No. 1
142 (3) On the LIBOR replacement date, the recommended
143 benchmark replacement, by operation of law, shall be the
144 benchmark replacement for a contract, security, or instrument
145 that uses LIBOR as a benchmark and that:
146 (a) Does not contain a fallback provision; or
147 (b) Contains fallback provisions resulting in a benchmark
148 replacement, other than a recommended benchmark replacement,
149 that is based in any way on a LIBOR value.
150 (4) After the occurrence of a LIBOR discontinuance event,
151 any fallback provisions in a contract, security, or instrument
152 which provide for a benchmark replacement based on or otherwise
153 involving a poll, survey, or inquiry for quotes or information
154 concerning interbank lending rates or any interest rate or
155 dividend rate based on LIBOR shall be void and of no force or
156 effect.
157 (5)(a) A determining person may, but is not required to,
158 select the recommended benchmark replacement as the benchmark
159 replacement after the occurrence of a LIBOR discontinuance
160 event. The selection of the recommended benchmark replacement
161 must be:
162 1. Irrevocable;
163 2. Made by the earlier of the LIBOR replacement date or
164 the latest date for selecting a benchmark replacement according
165 to the contract, security, or instrument; and
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 925 (2022)
Amendment No. 1
166 3. Used in any determination of the benchmark under or
167 with respect to the contract, security, or instrument occurring
168 on and after the LIBOR replacement date.
169 (b) Paragraph (a) applies to a contract, security, or
170 instrument that uses LIBOR as a benchmark and that contains
171 fallback provisions allowing or requiring the selection of a
172 benchmark replacement that is:
173 1. Based in any way on a LIBOR value; or
174 2. The substantive equivalent of paragraph (7)(a),
175 paragraph (7)(b), or paragraph (7)(c).
176 (6) If a recommended benchmark replacement becomes the
177 benchmark replacement for a contract, security, or instrument
178 under this section, then all benchmark replacement conforming
179 changes that are applicable to the recommended benchmark
180 replacement must become an integral part of the contract,
181 security, or instrument by operation of law.
182 (7) The selection or use of a recommended benchmark
183 replacement as a benchmark replacement under or in respect of a
184 contract, security, or instrument by operation of this section
185 constitutes all of the following:
186 (a) A commercially reasonable replacement for and a
187 commercially substantial equivalent to LIBOR.
188 (b) A reasonable, comparable, or analogous term for LIBOR
189 under or in respect of the contract, security, or instrument.
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 925 (2022)
Amendment No. 1
190 (c) A replacement that is based on a methodology or
191 information that is similar or comparable to LIBOR.
192 (d) Substantial performance by any person of any right or
193 obligation relating to or based on LIBOR under or in respect of
194 a contract, security, or instrument.
195 (8) A LIBOR discontinuance event, a LIBOR replacement
196 date, the selection or use of a recommended benchmark
197 replacement as a benchmark replacement, or the determination,
198 implementation, or performance of a benchmark replacement
199 conforming change, in each case, by operation of this section,
200 may not:
201 (a) Be deemed to impair or affect the right of any person
202 to receive a payment, or affect the amount or timing of the
203 payment, under a contract, security, or instrument;
204 (b) Have the effect of discharging or excusing performance
205 under a contract, security, or instrument for any reason, claim,
206 or defense, including, but not limited to, any force majeure or
207 other provision in a contract, security, or instrument;
208 (c) Have the effect of giving any person the right to
209 unilaterally terminate or suspend performance under a contract,
210 security, or instrument;
211 (d) Have the effect of constituting a breach of a
212 contract, security, or instrument; or
213 (e) Have the effect of voiding or nullifying a contract,
214 security, or instrument.
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 925 (2022)
Amendment No. 1
215 (9) A person is not liable for damages to any other
216 person, and is not subject to any claim or request for equitable
217 relief, arising out of or related to the selection or use of a
218 recommended benchmark replacement or the determination,
219 implementation, or performance of a benchmark replacement
220 conforming change, in each case, by operation of this section.
221 The selection or use of the recommended benchmark replacement or
222 the determination, implementation, or performance of a benchmark
223 replacement conforming change may not give rise to any claim or
224 cause of action by any person in law or in equity.
225 (10) The selection or use of a recommended benchmark
226 replacement or the determination, implementation, or performance
227 of a benchmark replacement conforming change, by operation of
228 this section, may not be deemed to:
229 (a) Be an amendment or modification of a contract,
230 security, or instrument.
231 (b) Prejudice, impair, or affect a person's rights,
232 interests, or obligations under or in respect of a contract,
233 security, or instrument.
234 (11) Except as provided in subsection (3) or subsection
235 (5), this section may not be interpreted as creating a negative
236 inference or negative presumption regarding the validity or
237 enforceability of any of the following:
238 (a) A benchmark replacement that is not a recommended
239 benchmark replacement.
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 925 (2022)
Amendment No. 1
240
241 -----------------------------------------------------
242 T I T L E A M E N D M E N T
243 Remove lines 20-22 and insert:
244 circumstances; providing construction;
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HB 7013
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 7013 PCB GOS 22-04 OGSR/Workers' Compensation/Department of Financial
Services
SPONSOR(S): Government Operations Subcommittee, Fabricio
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
Orig. Comm.: Government Operations 13 Y, 0 N Villa Toliver
Subcommittee
1) Insurance & Banking Subcommittee Herendeen Luczynski
2) State Affairs Committee
SUMMARY ANALYSIS
The Open Government Sunset Review Act requires the Legislature to review each public record exemption
and each public meeting exemption five years after enactment. If the Legislature does not reenact the
exemption, it automatically repeals on October 2nd of the fifth year after enactment.
Workers’ compensation is a required form of employer insurance that provides all medically necessary
remedial treatment, care, and attendance, including medications, medical supplies, durable medical
equipment, and prosthetics to employees for work-related injuries. It also provides compensation for disability
when the injury causes an employee to miss more than seven days of work. The Department of Financial
Services, Division of Workers’ Compensation (DWC) administers Florida’s workers’ compensation system. In
carrying out its duties and responsibilities under the workers’ compensation law, the DWC receives various
documents that contain the personal identifying information of injured workers, including the initial notice of
injury or death, copies of medical bills and reports, and wage statements.
Current law provides a public record exemption for the personal identifying information of an injured or
deceased employee contained in records held by the DWC pursuant to the workers’ compensation law. The
term “personal identifying information” means the injured or deceased employee’s name, date of birth, home
address or mailing address, e-mail address, or telephone number. The exemption authorizes the DWC to
disclose the confidential and exempt information to specified parties under certain circumstances; however, the
information is required to be maintained as confidential and exempt by the receiving party.
The bill saves from repeal the public record exemption, which will repeal on October 2, 2022 if this bill does not
become law.
The bill does not appear to have a fiscal impact on state government or local governments.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h7013.IBS
DATE: 1/11/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Open Government Sunset Review Act
The Open Government Sunset Review Act (Act) 1 sets forth a legislative review process for newly
created or substantially amended public record or public meeting exemptions. It requires an automatic
repeal of the exemption on October 2nd of the fifth year after creation or substantial amendment,
unless the Legislature reenacts the exemption.2
The Act provides that a public record or public meeting exemption may be created or maintained only if
it serves an identifiable public purpose. In addition, it may be no broader than is necessary to meet one
of the following purposes:
Allow the state or its political subdivisions to effectively and efficiently administer a
governmental program, which administration would be significantly impaired without the
exemption.
Protect sensitive personal information that, if released, would be defamatory or would
jeopardize an individual’s safety; however, only the identity of an individual may be exempted
under this provision.
Protect trade or business secrets.3
If, and only if, in reenacting an exemption that will repeal, the exemption is expanded (essentially
creating a new exemption), then a public necessity statement and a two-thirds vote for passage are
required.4 If the exemption is reenacted with grammatical or stylistic changes that do not expand the
exemption, if the exemption is narrowed, or if an exception to the exemption is created, then a public
necessity statement and a two-thirds vote for passage are not required.
Workers’ Compensation Law
Chapter 440, F.S., is Florida’s workers’ compensation law. It is the stated intent of the Legis lature that
the workers’ compensation system be self-executing and for the law to be interpreted to “assure the
quick and efficient delivery of disability and medical benefits to an injured worker and to facilitate the
worker’s return to gainful reemployment at a reasonable cost to the employer.” 5 Workers’ compensation
is a required form of employer insurance that provides all medically necessary remedial treatment,
care, and attendance, including medications, medical supplies, durable medical equipment, and
prosthetics to employees for work-related injuries.6 It also provides compensation for disability when
the injury causes an employee to miss more than seven days of work. 7 The DWC has the primary
responsibility for administering the workers’ compensation system.8
1 Section 119.15, F.S.
2 Section 119.15(3), F.S.
3 Section 119.15(6)(b), F.S.
4 Article I, s. 24(c), FLA . CONST.
5 Section 440.015, F.S.
6 Section 440.13(2)(a), F.S.
7 Section 440.12(1), F.S.
8 The Office of Insurance Regulation and the Office of Judges of Compensation Claims within the Division of
Administrative Hearings are also responsible for administering provisions of the workers’ compensation law.
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The workers’ compensation law sets forth reporting requirements for employees, employers, and
insurers.9 For example, employees must inform their employer of the injury within 30 days after the
initial date of manifestation of the injury, except as otherwise specified.10 Employers are required to
report an injury or death to their workers’ compensation insurer within seven days of having knowledge
of the injury.11 Insurers must then report the injury to the DWC within 14 days of the employer’s receipt
of the notice of injury or death.12
In addition to the initial notice of injury or death, employers and insurers are required to file subsequent
reports with the DWC that contain information that would identify an injured worker. These reports or
forms include, but are not limited to the: employee wage statements, notices of action/change, notices
of denial, and claim cost reports.13
The workers’ compensation law provides two other exemptions to the Public Records Law, for records
produced as part of a drug-free workplace program 14 and for medical records of injured workers
submitted to the DWC as part of a reimbursement dispute or utilization review. 15
Public Record Exemption under Review
In 2017, the Legislature created a public record exemption for the personal identifying information of an
injured or deceased employee contained in records held by the DWC pursuant to the workers’
compensation law.16 The term “personal identifying information” means the injured or deceased
employee’s name, date of birth, home address or mailing address, e-mail address, or telephone
number.17 The exemption allows the DWC to disclose the confidential and exempt 18 information:
To the injured employee, the surviving spouse or dependents of a deceased employee, the
spouse or dependent of the injured employee (if authorized by the employee), or the legal
representative of the deceased employee’s estate;
To participants in workers’ compensation claims litigation at Division of Administrative Hearings;
To an anti-fraud unit of an insurer;
In an aggregate reporting format, subject to certain content limitations;
Pursuant to a court order or subpoena;
To a state agency for purposes of anti-fraud investigations; and
To other state or federal agencies in the furtherance of those agencies’ official duties and
responsibilities.19
9 See s. 440.185, F.S. The term “insurer” means a group self-insurers’ fund authorized by s. 624.4621, F.S., an individual
self-insurer authorized by s. 440.38, F.S., a commercial self-insurance fund authorized by s. 624.462, F.S., an assessable
mutual insurer authorized by s. 628.6011, F.S., and an insurer licensed to write workers’ compensation and employer’s
liability insurance in this state. Section 440.02(38), F.S.
10 Section 440.185(1), F.S.
11 Section 440.185(2), F.S.
12 Id.
13 See r. 69L-3.025, F.A.C.
14 S. 440.102(8), F.S.
15 S. 440.13, F.S. Health care providers who treat injured workers are subject to the privacy rules of the Health Insurance
Portability and Accountability Act enacted by Congress in 1996, but the federal law does not apply to insurers, workers’
compensation administrative agencies, or employers. See, U.S. Department of Health and Human Services, HIPAA
Guidance Materials, Disclosures for Work ers’ Compensation Purposes, www.hhs.gov/ hipaa/for-
professionals/privacy/guidance/ disclosures-work ers-compensation/index.html (last visited Dec. 16, 2021).
16 Section 440.1851, F.S.
17 Section 440.1851(1)(a), F.S.
18 There is a difference between records the Legislature designates exempt from public record requirements and those
the Legislature deems confidential and exempt. A record classified as exempt from public disclosure may be disclosed
under certain circumstances. See WFTV, Inc. v. Sch. Bd. of Seminole, 874 So.2d 48, 53 (Fla. 5th DCA 2004), review
denied 892 So.2d 1015 (Fla. 2004); City of Rivera Beach v. Barfield, 642 So.2d 1135 (Fla. 4th DCA 1994); Williams v. City
of Minneola, 575 So.2d 683, 687 (Fla. 5th DCA 1991). If the Legislature designates a record as confidential and exempt
from public disclosure, such record may not be released by the custodian of public records to anyone other than the
persons or entities specifically designated in statute. See Op. Att’y Gen. Fla. 04- 09 (2004).
19 Section 440.1851(1)(b), F.S.
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An employer, insurer, agency, or governmental entity receiving an injured or deceased employee’s
personal identifying information from the DWC must maintain its confidential and exempt status. The
knowing and willful disclosure of the confidential and exempt information to an unauthorized person or
entity is a first degree misdemeanor.20
The 2017 public necessity statement21 for the exemption provides that:
[Personal identifying] information is of a sensitive, personal nature, and disclosure
of such information about an injured or deceased employee is an invasion of that
employee’s privacy or the privacy of his or her family. . . . Public records requests
for this information have resulted in unwanted solicitation of injured workers and
their families. Further, the release of such information could lead to discrimination
against the employee by coworkers, potential employers, and others because of
perceived social stigma related to injuries or disabilities.22
Pursuant to the Open Government Sunset Review Act, the exemption will repeal on October 2, 2022,
unless reenacted by the Legislature.
During the 2021 interim, the House Government Operations Subcommittee staff conducted an interview
with staff from the DWC as part of its review under the Open Government Sunset Review Act. The
DWC staff indicated that the exemption is functioning well and that it has not received any complaints
regarding the exemption. The DWC staff emphasized the importance of the exemption as it mitigates
unnecessary litigation between injured workers and insurers on claim disputes. As such, the DWC
recommended the exemption be reenacted in its current form.
Effect of the Bill
The bill removes the scheduled repeal date of the public record exemption, thereby maintaining the
public record exemption for the personal identifying information of an injured or deceased employee
contained in records held by the DWC pursuant to the workers’ compensation law.
B. SECTION DIRECTORY:
Section 1 amends s. 440.1851, F.S., relating to a public record exemption for the personal identifying
information of an injured or deceased employee.
Section 2 provides an effective date of October 1, 2022.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
20 Section 440.1851(2), F.S. A first degree misdemeanor is punishable by a term of imprisonment not to exceed one year
and a $1,000 fine. See ss. 775.082 and 775.083, F.S.
21 Article I, s. 24(c), FLA . CONST., requires each public record exemption state with specificity the public necessity justifying
the exemption.
22 Chapter 2017-185, L.O.F.
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B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
None.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill does not require rulemaking nor confer or alter an agency’s rulemaking authority.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES
None.
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DATE: 1/11/2022
F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 7013 2022
1 A bill to be entitled
2 An act relating to a review under the Open Government
3 Sunset Review Act; amending s. 440.1851, F.S., which
4 provides an exemption from public records requirements
5 for personal identifying information of an injured or
6 deceased employee contained in certain records held by
7 the Department of Financial Services pursuant to the
8 Workers' Compensation Law; making technical changes;
9 removing the scheduled repeal of the exemption;
10 providing an effective date.
11
12 Be It Enacted by the Legislature of the State of Florida:
13
14 Section 1. Section 440.1851, Florida Statutes, is amended
15 to read:
16 440.1851 Personal identifying information of an injured or
17 deceased employee; public records exemption.—
18 (1) The personal identifying information of an injured or
19 deceased employee which is contained in reports, notices,
20 records, or supporting documentation held by the department
21 pursuant to this chapter is confidential and exempt from s.
22 119.07(1) and s. 24(a), Art. I of the State Constitution. This
23 public records exemption applies to personal identifying
24 information held by the department before, on, or after the
25 effective date of this exemption.
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26 (a) As used in this section, the term "personal
27 identifying information" means the injured or deceased
28 employee's name, date of birth, home address or mailing address,
29 e-mail address, or telephone number.
30 (2)(a)(b) The department may disclose confidential and
31 exempt personal identifying information made confidential and
32 exempt under this section only:
33 1. To the injured employee, to the spouse or a dependent
34 of the deceased employee, to the spouse or a dependent of the
35 injured employee if authorized by the injured employee, or to
36 the legal representative of the deceased employee's estate;
37 2. To a party litigant, or his or her authorized
38 representative, in matters pending before the Office of the
39 Judges of Compensation Claims;
40 3. To a carrier or an employer for the purpose of
41 investigating the compensability of a claim or for the purpose
42 of administering its anti-fraud investigative unit established
43 pursuant to s. 626.9891;
44 4. In an aggregate reporting format that does not reveal
45 the personal identifying information of any employee;
46 5. Pursuant to a court order or subpoena;
47 6. To an agency for administering its anti-fraud
48 investigative function or in the furtherance of the agency's
49 official duties and responsibilities; or
50 7. To a federal governmental entity in the furtherance of
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51 the entity's official duties and responsibilities.
52 (b) A carrier, employer, agency, or governmental entity
53 receiving confidential and exempt personal identifying
54 information from the department shall maintain the confidential
55 and exempt status of the information.
56 (c) This public records exemption applies to personal
57 identifying information held by the department before, on, or
58 after the effective date of this exemption.
59 (3)(2) A person who willfully and knowingly discloses
60 personal identifying information made confidential and exempt
61 under this section to an unauthorized person or entity commits a
62 misdemeanor of the first degree, punishable as provided in s.
63 775.082 or s. 775.083.
64 (4) As used in this section, the term "personal
65 identifying information" means the injured or deceased
66 employee's name, date of birth, home address or mailing address,
67 e-mail address, or telephone number.
68 (3) This section is subject to the Open Government Sunset
69 Review Act in accordance with s. 119.15 and shall stand repealed
70 on October 2, 2022, unless reviewed and saved from repeal
71 through reenactment by the Legislature.
72 Section 2. This act shall take effect October 1, 2022.
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