Meeting Packet - Insurance & Banking Subcommittee, Commerce Committee (January 27, 2022)

Summary

Meeting packet of the Insurance & Banking Subcommittee of the Florida House of Representatives Commerce Committee for Thursday, January 27, 2022, 9:00 AM - 11:00 AM, in Morris Hall (17 HOB). The agenda lists CS/HB 265 (Value of Motor Vehicles Exempt from Legal Process), HB 689 (Workers' Compensation Benefits for First Responders), HB 951 (Domestic Surplus Lines Insurers) and HB 1023 (Insolvent Insurers), plus proposed committee substitutes for HB 353 (Mortgage Payoff Letters) and HB 389 (Money Services Businesses). The staff analysis of CS/HB 265 says the bill increases the maximum value of a motor vehicle that may be exempted from legal process in a bankruptcy case from $1,000 to $5,000, and provides an effective date of July 1, 2022.

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Insurance & Banking Subcommittee
Thursday, January 27, 2022
9:00 AM – 11:00 AM
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 27, 2022
9:00 AM – 11:00 AM
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 265 Value of Motor Vehicles Exempt from Legal Process by Civil Justice &
Property Rights Subcommittee, Gottlieb, Benjamin

• HB 689 Workers' Compensation Benefits for First Responders by Giallombardo

• HB 951 Domestic Surplus Lines Insurers by Gregory

• HB 1023 Insolvent Insurers by Fabricio

Consideration of the following proposed committee substitute(s):

• PCS for HB 353 -- Mortgage Payoff Letters

• PCS for HB 389 -- Money Services Businesses

V. Closing Remarks

VI. Adjournment

303 House Office Building, 402 South Monroe Street, Tallahassee, FL 32399-1300
(850) 717-4870
CS/HB 265
HOUSE OF REPRESENTATIVES STAFF ANALYSIS

BILL #: CS/HB 265 Value Of Motor Vehicles Exempt From Legal Process
SPONSOR(S): Civil Justice & Property Rights Subcommittee, Gottlieb, Benjamin
TIED BILLS: IDEN./SIM. BILLS:

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY
CHIEF

1) Civil Justice & Property Rights 15 Y, 0 N, As Mathews Jones
Subcommittee CS
2) Insurance & Banking Subcommittee Herendeen Luczynski
3) Judiciary Committee

SUMMARY ANALYSIS
Bankruptcy filings create an estate comprised of all property a debtor has an interest in. Federal law exempts
certain types of property, but also permits states to opt out of federal exemptions and instead establish state
exemptions. Florida exercised this option by creating Chapter 222, Florida Statutes.

In Florida, a debtor has a constitutional right to exempt his or her homestead from creditors’ claims so long as
the property is used as a primary residence. If a debtor does not have a homestead, state law permits the
debtor to exempt $4,000 of personal property in a bankruptcy proceeding.

Additional state exemptions include wages earned as a head of household, the cash surrender value of life
insurance policies and annuity contracts, pension funds and exempt retirement accounts, and up to $1,000 of
the debtor’s interest in a motor vehicle.

The bill increases the maximum value of a motor vehicle that may be exempted from legal process in a
bankruptcy case from $1,000 to $5,000.

The bill does not appear to have a fiscal impact on state or local governments.

The bill provides 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

Bankruptcy

Filing bankruptcy can help a person obtain a fresh start by discharging debt or adopting a repayment
plan. As a matter of public policy, the debtor is allowed to retain sufficient property so the debtor has
basic necessities and is not left entirely destitute. 1

All bankruptcy cases are handled in federal courts under rules outlined in the U.S. Bankruptcy Code. 2
The filing of a bankruptcy petition operates as an automatic stay on most legal actions against a debtor,
including a foreclosure.3 The automatic stay is in effect from the time the petition is filed until discharge
of the debtor, unless sooner lifted by the bankruptcy court.

There are two primary forms of bankruptcy an individual may file. 4 In a proceeding under Chapter 7 of
the bankruptcy code, the debtor surrenders his or her assets to a trustee who then liquidates the assets
and distributes proceeds to the creditors.5 A petition filed pursuant to Chapter 7 of the bankruptcy code
is used when the rehabilitative chapters of the code would not be applicable, such as when there is no
nonexempt property to protect.6 A Chapter 13 petition allows the debtor to stay creditor actions and
propose a plan to pay creditors, rehabilitating the debtor financially. 7

Florida Exemptions for Debtors

Cases commenced under the federal Bankruptcy Code create an estate which is comprised of all the
property in which the debtor has a legal or equitable interest as of the date of the petition filing. 8

Federal law includes exemptions for certain assets, but states may opt out of the federal exemptions
and limit its residents to those exemptions provided under state law. 9 Florida exercised this option by
creating Chapter 222, F.S.

Therefore, citizens of Florida are entitled only to those exemptions enumerated in the Article X, section
IV of the Florida Constitution and exemptions created by state law. 10

Constitutional Exemptions

The Florida Constitution allows a debtor to exempt a homestead property, regardless of value, from the
claims of creditors so long as the property is used as a residence. Debtors may also exempt up to
$1,000 in personal property.11

1 9 Am Jur 2d Bankruptcy s. 5.
2 11 U.S.C. s. 101, et seq.
3 11 U.S.C. s. 362(a)(4).
4 An individual can file a petition under Chapter 11, but it is rare.
5 11 U.S.C. ss. 704 & 726.
6 9 Am Jur 2d Bankruptcy s. 68.
7 9 Am Jur 2d Bankruptcy s. 72.
8 11 U.S.C. § 541(a).
9 11. U.S.C. § 522(b).
10 In re Haning, 252 B.R. 799 (Bankr. M.D. Fla. 2000), citing In re Bark er, 168 B.R. 773, 775–76 (Bankr. M.D. Fla.
1994) (discussing extent of Florida exemptions).
11 Art. X, S. 4, Fla. Const.
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Other Asset Exemptions

If a debtor does not claim or receive the benefits of a homestead exemption, state law permits the
debtor to exempt up to $4,000 in personal property.12

State law permits the debtor to exempt up to $1,000 of the value of a single motor vehicle.13

Thus, if a debtor did not claim a homestead exemption, such debtor may exempt $4,000 in personal
property and $1,000 of the value of the motor vehicle, creating a combined exemption of $5,000. 14

Chapter 222, F.S., also protects the following assets from legal process:

 Funds held in an individual retirement account and other tax-exempt accounts;15
 Proceeds of a life insurance policy;16
 The cash surrender value of a life insurance policy or annuity;17
 Funds held in qualified tuition programs and medical, Coverdell education, or hurricane savings
accounts;18
 Disability income benefits;19
 Wages, unless the debtor agrees to waive the exemption in writing;20
 Any professionally prescribed health aides for the debtor or a dependent;21
 A refund or credit under the Internal Revenue Code, unless the debtor owes money for child
support or spousal support;22
 Social security benefits; unemployment compensation, or public assistance benefits; veterans’
benefits; alimony, support, or separate maintenance; and stock or pension plans under
specified circumstances;23

Liens and other Judgments

Historically, exempt assets have remained out of a creditor’s reach unless specifically pledged in a
security agreement24 During the bankruptcy proceeding, the court determines whether property is
exempt from process under non-bankruptcy law.25

If a creditor has a judgment against the debtor’s interest in a motor vehicle, the debtor may not avail
himself or herself of the $1,000 exemption.26 Unsecured debts do not prevent a debtor from claiming
the exemption.27

12 S. 222.25(4), F.S. (this exemption is not applicable to a debt owed for child support or spousal support).
13 S. 222.25(1), F.S.
14 See, e.g., In re Haffner, 383 B.R. 350 (Bankr. N. D. Fla. 2008); and In re Rutter, 247 B.R. 334 (Bankr. M.D. 2000).
15 S. 222.21, F.S.
16 S. 222.13, F.S.
17 S. 222.14, F.S.
18 S. 222.22, F.S.
19 S. 222.18, F.S.
20 Ss. 222.11 and 225.15, F.S.
21 S. 222.25(2), F.S.
22 S. 222.25(3), F.S.
23 S. 222.201, F.S.
24 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).
25 11 U.S.C. § 522(b)(2)(B).
26 In Re Campbell, 214 B.R. 411, (Bankr. M.D. Fla. 1997).
27 In Re Juergens, 176 B.R. 275 (Bankr. M.D. Fla. 1995).
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Effect of Proposed Changes

The bill amends section 222.25, F.S., to increase the maximum value for a single exempt motor vehicle
from $1,000 to $5,000 in bankruptcy actions filed on or after July 1, 2022.

The bill provides an effective date of July 1, 2022.

B. SECTION DIRECTORY:
Section 1: Amends s. 222.25, F.S., relating to other individual property of natural persons exempt from
legal process.

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:

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. This 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.

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C. DRAFTING ISSUES OR OTHER COMMENTS:
None.

IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On January 13, 2022, the Civil Justice and Property Rights Subcommittee adopted one strike-all
amendment and reported the bill favorably as a committee substitute. The committee substitute limits the
increased exemption amount of $5,000 in a single motor vehicle to apply only in bankruptcy cases. For all
other matters, a debtor’s interest in a single motor vehicle remains exempt up to $1,000 in value.

The staff analysis has been updated to reflect the committee substitute.

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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 265 2022

1 A bill to be entitled
2 An act relating to the value of motor vehicles exempt
3 from legal process; amending s. 222.25, F.S.; revising
4 upward the value of motor vehicles owned by certain
5 natural persons that is exempt from certain legal
6 processes; providing an effective date.
7
8 Be It Enacted by the Legislature of the State of Florida:
9
10 Section 1. Section 222.25, Florida Statutes, is amended to
11 read:
12 222.25 Other individual property of natural persons exempt
13 from legal process.—
14 (1) The following property is exempt from attachment,
15 garnishment, or other legal process:
16 (a)(1) A debtor's interest, not to exceed $1,000 in value,
17 in a single motor vehicle as defined in s. 320.01(1) s. 320.01.
18 (b)(2) A debtor's interest in any professionally
19 prescribed health aids for the debtor or a dependent of the
20 debtor.
21 (c)(3) A debtor's interest in a refund or a credit
22 received or to be received, or the traceable deposits in a
23 financial institution of a debtor's interest in a refund or
24 credit, pursuant to s. 32 of the Internal Revenue Code of 1986,
25 as amended. This exemption does not apply to a debt owed for

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CODING: Words stricken are deletions; words underlined are additions.
hb0265-01-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 265 2022

26 child support or spousal support.
27 (d)(4) A debtor's interest in personal property, not to
28 exceed $4,000, if the debtor does not claim or receive the
29 benefits of a homestead exemption under s. 4, Art. X of the
30 State Constitution. This exemption does not apply to a debt owed
31 for child support or spousal support.
32 (2) Notwithstanding paragraph (1)(a), an individual debtor
33 under the federal Bankruptcy Code may exempt a debtor's
34 interest, not to exceed $5,000 in value, in a single motor
35 vehicle as defined in s. 320.01(1). This subsection applies to
36 any bankruptcy action filed on or after July 1, 2022.
37 Section 2. This act shall take effect July 1, 2022.

Page 2 of 2

CODING: Words stricken are deletions; words underlined are additions.
hb0265-01-c1
HB 689
HOUSE OF REPRESENTATIVES STAFF ANALYSIS

BILL #: HB 689 Workers' Compensation Benefits for First Responders
SPONSOR(S): Giallombardo and others
TIED BILLS: IDEN./SIM. BILLS: SB 1066

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY
CHIEF

1) Government Operations Subcommittee 15 Y, 0 N Villa Toliver

2) Insurance & Banking Subcommittee Herendeen Luczynski

3) State Administration & Technology
Appropriations Subcommittee

4) State Affairs Committee

SUMMARY ANALYSIS
Workers’ compensation is a no-fault system that provides medical benefits and compensation for lost wages
when an employee is injured or killed in the course of employment. In addition to on-the-job injuries, employers
may be required to provide benefits if an occupational disease causes death or disablement, is due to the nature
of the employee’s occupation, and the employee contracted the disease while on the job.

Mental or nervous injuries are generally not compensable unless they are triggered by a physical injury.
However, the following special rules apply to certain first responders (firefighters, paramedics, emergency
medical technicians, and law enforcement officers):

 If the first responder is injured on the job and the injury triggers posttraumatic stress disorder (PTSD),
the first responder may be eligible for medical benefits and compensation for lost wages;
 If the first responder is diagnosed with PTSD and demonstrates that the disorder arose out of
employment, the first responder may be eligible for medical benefits;
 If the first responder experiences a qualifying event defined in the law and is subsequently diagnosed
with PTSD, the first responder may be eligible for medical benefits and compensation for lost wages.

This bill addresses notice provisions for first responders seeking workers compensation benefits for PTSD.

Currently, notice of a PTSD-related injury is due to the employer within 90 days of a qualifying event or the
manifestation of the disorder, whichever is later. If the compensability of an injury is disputed, a claim must be
filed within 52 weeks of the qualifying event.

The bill makes the notice of injury due within 90 days of a qualifying event or diagnosis of the disorder,
whichever is later. Similarly, the bill extends the claim filing deadline to either 52 weeks of the qualifying event
or diagnosis of the disorder, whichever is later.

Extending the claim deadline to one year after a PTSD diagnosis allows claims more than one year after a
qualifying event. Symptoms of PTSD may begin shortly after a traumatic event, or may not appear until years
after the event.

The bill will likely have a significant negative fiscal impact on state and local governments.

The bill provides an effective date of July 1, 2022.

FULL ANALYSIS
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:

Background

Workers’ compensation is a no-fault system that provides medical benefits and compensation for lost
wages when an employee is injured or killed in the course of employment. Employers must secure
coverage, and may do so by purchasing insurance from an authorized carrier or through an employee-
leasing agreement, qualifying as a self-insurer, or purchasing coverage from the Florida Workers’
Compensation Joint Underwriting Association, which is the state-sponsored insurer of last resort. In
return for providing compensation, the employer is relieved of liability for workplace injuries, and may
only be sued for intentional acts that result in injury or death. 1 The workers’ compensation system is
administered by the Department of Financial Services, Division of Workers’ Compensation (DWC).

Benefits for Temporary and Permanent Disability

Workers’ compensation is the injured employee’s remedy for “compensable” workplace injuries. 2 A
work-related accident must be the major contributing cause of any resulting injury or illness, meaning
that the cause must be more than 50 percent responsible for the injury as compared to all other causes
combined, as demonstrated by medical evidence only. 3 For work-related injuries, employees are
entitled to receive all medically necessary remedial treatment, care, and attendance, including
medications, medical supplies, durable medical equipment, and prostheses, for as long as the nature of
the injury and process of recovery requires.4

Payments for lost wages, known as indemnity benefits, may be required if an employee has been
disabled for at least eight days;5 indemnity benefits are generally payable at 66.67 percent of the
employee’s average weekly wage,6 up to the maximum weekly benefit established by law. 7

Indemnity benefits fall into one of four categories: temporary partial disability, temporary total disability,
permanent partial disability, or permanent total disability and are payable as follows:

 Temporary partial disability and temporary total disability benefits are payable for up to a
combined total of 260 weeks.8
 Permanent partial disability benefits are payable as impairment income benefits that are
provided for a variable number of weeks depending upon the value of the injured worker’s
permanent impairment rating pursuant to a statutory formula.9
 Permanent total disability benefits are payable until the age of 75, unless the work-related
accident occurs after the worker’s 70th birthday, in which case the benefit is paid for no more
than five years.10

1 Ss. 440.015, 440.09, 440.10, 440.38, and 627.313, F.S.
2 S. 440.13(1)(d), F.S., states: “ ‘Compensable’ means a determination by a carrier or judge of compensation claims that a
condition suffered by an employee results from an injury arising out of and in the course of employment.”
3 S. 440.09(1), F.S.
4 S. 440.13(2)(a), F.S.
5 S. 440.12(1), F.S
6 An injured worker’s average weekly wage is an amount equal to one-thirteenth of the total amount of wages earned

during the 13 weeks immediately preceding the compensable accident pursuant to s. 440.14(1), F.S.
7 S. 440.15(1)-(4), F.S.
8 The Florida Supreme Court and the First District Court of Appeal in two cases found the general limitation on temporary

indemnity benefits unconstitutional in circumstances where the injured worker had reached the 104-week limit on benefits,
but was unable to return to work. The courts invalidated the 104-week limitation and replaced it with the previous statutory
limit of 260 weeks. Westphal v. City of St. Petersburg, 194 So. 3d 311 (Fla. 2016); Jones v. Food Lion, Inc., 202 So. 3d
964 (Fla. 1st DCA 2016).
9 S 440.15(3), F.S.
10 S. 440.15(1)(b), F.S.
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Occupational Diseases

In addition to on-the-job injuries, employers may be required to pay compensation or furnish benefits if
an occupational disease causes death or disablement, is due to the nature of the employee’s
occupation, and the employee contracted the disease in the course of his or her employment.11

In general, occupational diseases are compensable if:

 A condition peculiar to the occupation causes the disease;
 The employee contracts the disease on the job;
 The job presents a particular hazard of the disease;
 The incidence of the disease is substantially higher in the occupation than in the public;
 The nature of the employment was a major contributing cause of the disease; and
 Epidemiological studies show that exposure to the specific substance involved, at the levels to
which the employee was exposed, may cause the precise disease sustained by the employee. 12

General Rules for Mental or Nervous Injuries

Mental or Nervous injuries may be compensable, but only if the injury is accompanied by a physical injury
that requires medical treatment. Thus, if a workplace accident causes both a physical injury and a related
mental or nervous injury, both may be compensable so long as the physical injury that requires medical
treatment is the major contributing cause (at least 50 percent responsible) of the mental or nervous injury.
A mental or nervous injury caused by “stress, fright, or excitement” is not compensable. 13

However, temporary disability benefits for a mental or nervous injury are limited to six months after a
claimant reaches maximum medical improvement for the physical injury that triggered the mental or
nervous injury.14 Additionally, benefits may not exceed a 1 percent limit on permanent psychiatric
impairment benefits.15

Special Rules for First Responders

The Legislature recognized the unique occupational hazards associated with the work of first
responders in 2007, by authorizing:

 Medical and indemnity benefits (lost wages) for first responders who demonstrate that a mental
or nervous injury arose out of a physical injury suffered during the course of employment, and
 Medical benefits for first responders who did not suffer a physical injury but demonstrate, by
clear and convincing evidence, that a mental or nervous injury arose out of employment.

The law also relaxed the burden of proof for first responders suffering from occupational diseases
caused by exposure to specific toxic substances, and exempted first responders from limits that
typically apply to temporary disability benefits.16

Benefits for Posttraumatic Stress Disorder

In 2018, the Legislature authorized medical benefits and compensation for lost wages for first
responders who are diagnosed with PTSD (as described by the Diagnostic and Statistical Manual of
Mental Disorders, Fifth Edition, published by the American Psychiatric Association). 17

11 Ss. 440.09, and 440.151, F.S.
12 S. 440.151(2), F.S.
13 S. 440.093, F.S.
14 S. 440.093(3), F.S.
15 S. 440.14(3), F.S.
16 Chapter 2007-87, Laws of Florida, created s. 112.1815, F.S.
17 Chapter 2018-124 amended s. 112.1815, F.S.
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As a result, a first responder who experiences one of the following qualifying events need not suffer a
physical injury to qualify for medical benefits and be compensated for lost wages:

 Seeing a deceased minor;
 Witnessing the death of a minor;
 Witnessing an injury to a minor who subsequently dies before or upon arrival at a hospital
emergency department;
 Participating in the treatment of an injured minor who dies before or on arrival at a hospital
emergency department;
 Transporting an injured minor who dies before or on arrival at a hospital emergency department;
 Seeing a decedent whose death was due to grievous bodily harm of a nature that shocks the
conscience;
 Witnessing a death (including suicide) that involved grievous bodily harm of a nature that
shocks the conscience;
 Witnessing a homicide, whether criminal or excusable, including murder, mass killing,
manslaughter, self-defense, misadventure, and negligence;
 Witnessing an injury (including an attempted suicide) to a person who dies before or upon
arrival at a hospital emergency department if the person was injured by grievous bodily harm of
a nature that shocks the conscience;
 Participating in the treatment of an injury (including attempted suicide) to a person who dies
before or upon arrival at a hospital emergency department if the person was injured by grievous
bodily harm of a nature that shocks the conscience; or
 Transporting a person who was injured (including by attempted suicide) who dies before or
upon arrival at a hospital emergency department if the person was injured by grievous bodily
harm of a nature that shocks the conscience.18

The following injuries qualify as grievous bodily harm of a nature that shocks the conscience:
decapitation; degloving; enucleation; evisceration; impalement; severance; third degree burns on nine
percent or more of the body; and exposure of one or more of the following internal organs: brain; heart;
intestines; kidneys; liver; or lungs.19

Posttraumatic Stress Disorder

According to the American Psychiatric Association, PTSD is a psychiatric disorder that may occur in
people who have experienced or witnessed a traumatic event, such as a natural disaster, serious
accident, terrorist act, war, or rape; or people who have been threatened with death, sexual violence, or
serious injury.20 Exposure to an upsetting traumatic event may be indirect rather than first hand. PTSD
can occur if a person learns of the violent death of a close family member or friend, or is repeatedly
exposed to the horrible details of trauma.21

Symptoms may include flashbacks, nightmares and severe anxiety, as well as uncontrollable thoughts
about the event. This can lead to avoidance of any stimuli that recalls the traumatic events, negative
thoughts about oneself or the world, and changes in emotional reactions to events, like being easily
startled or having trouble sleeping or concentrating.22

Symptoms may begin shortly after the traumatic event, or may not appear until years after the event.
Rates of PTSD are higher among veterans, police officers, firefighters, and emergency medical
personnel.23

18 S. 112.1815(5), F.S.
19 Rule 69L-3.009, F.A.C
20 American Psychiatric Association, What is Posttraumatic Stress Disorder, https://www.psychiatry.org/patients-

families/ptsd/what-is-ptsd (last visited Jan. 24, 2022).
21 Id.
22 Mayo Clinic, Post-traumatic stress disorder (PTSD), https://www.mayoclinic.org/diseases-conditions/post-traumatic-

stress-disorder/symptoms-causeds/syc-20355967 (last visited Jan. 24, 2022).
23 Id.
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Notice Requirements

A first responder who suffers from PTSD must notify his or her employer within 90 days of a qualifying
event identified in the law, or the manifestation of the disorder, whichever is later. 24

If the compensability of an injury is disputed, the first responder must file a petition for workers’
compensation benefits within 52 weeks of the qualifying event.25

A first responder who develops symptoms of PTSD after the one-year deadline for filing a claim has
elapsed has no cause of action.26

Effects of the Bill

The bill amends both the timeframe in which the employee must notify the employer of an injury and the
timeframe in which a petition for workers’ compensation benefits must be filed.

Notice to the employer would be required within 90 days of a qualifying event listed at s.
112.1815(5)(a)2, F.S., or diagnosis of the disorder, whichever is later.

And a petition for workers’ compensation benefits would be timely if filed within 52 weeks of a qualifying
event listed at s. 112.1815(5)(a)2, F.S., or diagnosis of the disorder, whichever is later.

B. SECTION DIRECTORY:

Section 1. Amends s. 112.1815, F.S., Firefighters, paramedics, emergency medical technicians, and
law enforcement officers; special provisions for employment-related accidents and injuries.

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:
See Fiscal Comments.

B. FISCAL IMPACT ON LOCAL GOVERNMENTS:

1. Revenues:
None.

2. Expenditures:
See Fiscal Comments.

C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:

24 S. 112.1815(5)(d), F.S.
25 Id.
26 Palm Beach County Fire Rescue v. Wilk es, 309 So. 3d 687 (Fla. 1st DCA, 2020).

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If the bill generates an increase in compensable workers’ compensation claims, physicians who are
authorized providers could experience an increase in patients and insurance carriers could experience
an increase in claims.

D. FISCAL COMMENTS:
Providing a point of entry that is tied to the date of diagnosis, rather than manifestation of PTSD, likely
would expand the time for notice of injury and notice of claim, and thereby lead to an increase of
compensable claims. In its analysis for 2022 House Bill 689, DWC states that the impact could be
significant, but did not have a more precise estimate related to the proposed changes in notice
deadlines. In its analysis for 2022 House Bill 425, DWC states that it has been notified of 84 workers
compensation claims brought by first responders suffering from PTSD since the 2018 amendments
became effective. There was no accompanying physical injury for 50 of the 84 claims. The average
cost per claim is $42,326.

III. COMMENTS

A. CONSTITUTIONAL ISSUES:

1. Applicability of Municipality/County Mandates Provision:
The county/municipality mandates provision of Art. VII, s. 18 of the Florida Constitution may apply
because this bill would permit compensation claims long after a qualifying event and likely lead to an
increase in compensable claims; however, an exemption may apply if the fiscal impact of the bill is
insignificant. In addition, an exemption may apply because all similarly situated state and local
government employers of first responders are required to provide workers’ compensation benefits.

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: 1/25/2022
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 689 2022

1 A bill to be entitled
2 An act relating to workers' compensation benefits for
3 first responders; amending s. 112.1815, F.S.;
4 providing that the time for specified notice in
5 certain cases is measured from the time of the
6 qualifying event or the diagnosis of the disorder,
7 rather than the manifestation of the disorder,
8 whichever is later; providing an effective date.
9
10 Be It Enacted by the Legislature of the State of Florida:
11
12 Section 1. Paragraph (d) of subsection (5) of section
13 112.1815, Florida Statutes, is amended to read:
14 112.1815 Firefighters, paramedics, emergency medical
15 technicians, and law enforcement officers; special provisions
16 for employment-related accidents and injuries.—
17 (5)
18 (d) The time for notice of injury or death in cases of
19 compensable posttraumatic stress disorder under this subsection
20 is the same as in s. 440.151(6) and is measured from one of the
21 qualifying events listed in subparagraph (a)2. or the diagnosis
22 manifestation of the disorder, whichever is later. A claim under
23 this subsection must be properly noticed within 52 weeks after
24 the qualifying event or the diagnosis of the disorder, whichever
25 is later.

Page 1 of 2

CODING: Words stricken are deletions; words underlined are additions.
hb0689-00
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 689 2022

26 Section 2. This act shall take effect July 1, 2022.

Page 2 of 2

CODING: Words stricken are deletions; words underlined are additions.
hb0689-00
HB 951
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 951 Domestic Surplus Lines Insurers
SPONSOR(S): Gregory
TIED BILLS: IDEN./SIM. BILLS:

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF

1) Insurance & Banking Subcommittee Fortenberry Luczynski

2) Ways & Means Committee

3) Commerce Committee

SUMMARY ANALYSIS
With certain exceptions, Florida law requires any person transacting insurance to have a certificate of authority
issued by the Office of Insurance Regulation (OIR). States also realized that there are risks for which insurance in
the admitted market are not available because insurers are unable or unwilling to write policies for them. Therefore,
they allow insurers that are not otherwise authorized to sell policies to sell surplus lines insurance if they meet
certain requirements.

Historically, surplus lines insurers generally are not permitted to write surplus lines insurance in their states of
domicile. However, some states have enacted laws authorizing domestic surplus lines insurers ( DSLI) in more
recent years. These are surplus lines insurers that offer surplus lines policies in their states of domicile. Prior to the
creation of laws allowing DSLI, a surplus lines insurer seeking to transact surplus lines in its state of domicile had to
form a second company domiciled in a different state which would then offer surplus lines policies in the original
insurer’s state of domicile. Over 20 states have authorized domestic surplus lines insurance.

The bill has no impact on state or local government revenues or expenditures, but may have an indeterminate
positive economic impact on the private sector.

The bill is effective on July 1, 2022.

This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h0951.IBS
DATE: 1/25/2022
FULL ANALYSIS

I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:
Background

With certain exceptions, Florida law requires any person transacting insurance to have a certificate of
authority issued by the Office of Insurance Regulation (OIR). 1 The term “admitted market” is used to
refer to insurers that have a certificate of authority issued by OIR. 2 Such insurers are also referred to as
“authorized insurers.”

Authorized insurers in Florida are subject to the provisions of the Florida Insurance Code 3 and
regulation primarily by OIR.4 OIR’s regulatory authority over authorized insurers includes solvency and
financial strength, insurance policy forms and rates, and market conduct of insurers.

Surplus Lines Insurance

States also realized that there are risks for which insurance in the admitted market are not available
because insurers are unable or unwilling to write policies for them. Therefore, they allow insurers that
are not otherwise authorized to sell policies to sell surplus lines insurance if they meet certain
requirements. The three basic categories of risks typically written by surplus lines insurers:
 Specialty risks that admitted insurers do not desire to write;
 Risks for which admitted carriers do not have approved policy forms or rates; and
 Risks where a policyholder needs higher coverage limits than those available on the admitted
market.

The Florida Surplus Lines Service Office (FSLSO) administers surplus lines business in this state. 5 A
certificate of authority is not required of an insurer with respect to lawfully written surplus lines policies. 6
Surplus lines insurers are still considered “unauthorized” insurers 7, and may right only surplus lines
policies if they are made “eligible” by OIR. Except as specifically stated, surplus lines insurers are not
subject to regulation by OIR under ch. 627, F.S., which includes statutory provisions regarding rating
standards and insurance policy forms.8 Surplus lines insurers are subject to the Unfair Insurance
Trade Practice Act.9

Surplus Lines Law

Florida’s Surplus Lines Law is designed to provide orderly access to unauthorized insurers who provide
surplus lines policies. Four general requirements must be met for insurance to be exported to a surplus
lines insurer:10
 The insurance must be eligible for export under s. 626.916, F.S. or 626.917, F.S.;
 The insurer must be an eligible surplus lines insurer under s. 626.917, F.S. or 626.918, F.S.;
 The insurance must be placed through a licensed Florida Surplus Lines Agent; and

1 S. 624.401, F.S. In the Florida Insurance Code (FIC), a person also includes a business entity such as an insurer.
2 S. 624.404, F.S.
3 Section 624.404, F.S., provides that an insurer must be in compliance with the FIC to qualify for and hold authority to

transact insurance in the state. The FIC is chapters 624-632, 634, 635, 636,641, 642, 648, and 651, F.S. S. 624.01, F.S.
4 In general, OIR has regulatory authority over insurers and the Department of Financial Services (DFS) has regulatory

authority over insurance agents and agencies.
5 S. 626.921, F.S.
6 S. 624.402, F.S.
7 S.624.09(2), F.S.
8 S. 626.913(4), F.S.
9 Ss. 626.951– 626.99, F.S. Under s. 626.9521, F.S., no person may engage in this state in any unfair insurance trade

practice. “Person” is defined by s. 626.9511(1), F.S., to mean any individual, corporation, association, partnership…or any
entity involved in the business of insurance.
10 S. 626.915, F.S.
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 All other applicable provisions of the Surplus Lines Law must be met.

Eligibility for Export to a Surplus Lines Insurer

Insurance coverage is eligible for export to a surplus lines insurer only if:
 The insurance cannot be obtained from an authorized insurer after the agent has made a
diligent effort to place the insurance with an authorized insurer. 11 The surplus lines agent must
verify that a diligent effort was made by requiring a properly documented statement of diligent
effort from the agent.12 A “diligent effort” means seeking coverage from, and having been
rejected by, at least three authorized insurers currently writing the same type of coverage and
documenting these rejections.13 However, if a residential structure has a dwelling replacement
cost of $700,000 or more, coverage need only be sought from one authorized insurer. 14
 The premium rate for the surplus lines coverage may not be lower than the rate in currently
used by a majority of authorized insurers for the same coverage on a similar risk.15
 The surplus lines coverage may not be more favorable to the insured than under similar
contracts currently used by the majority of authorized insurers writing similar coverage on
similar risks.16
 The surplus lines policy must not provide a deductible that is generally unavailable from
authorized insurers, except as applicable to extended coverage for fire or windstorm
insurance.17

Requirements for Eligibility of Surplus Lines Insurers

An unauthorized insurer may only become an eligible surplus lines insurer if it meets the following
requirements:18
 The insurer must currently be an authorized insurer in its state or country of domicile as to the
kinds of insurance it would transact in Florida. In general, the insurer must have transacted such
insurance for three years in its state of domicile.19 However, OIR may waive this requirement if
the insurer has capital and surplus of at least $25 million and either is offering a product not
readily available in Florida or has operated successfully for at least the immediately preceding
year.20
 OIR receives an authenticated copy of its current annual financial statement. 21
 The insurer must maintain surplus as to policyholders of not less than $15 million 22, with the
exception of:
o Insurance exchanges created by the laws of a state, if they meet the state’s capital and
surplus requirements or maintain a capital and surplus of at least $50 million; 23 and
o A surplus lines insurer that is a member of an insurance holding company that includes a
member which is a Florida domestic insurer, may instead meet the surplus and capital
requirements applicable to authorized insurers under s. 624.408, F.S., and must comply
with ch. 625, F.S., regarding accounting, investments, and deposits by insurers. 24

11 S. 626.916(1)(a), F.S.
12 Id.
13 S. 626.914(4), F.S.
14 Id.
15 S. 626.916(1)(b), F.S.
16 S. 626.916(1)(c), F.S.
17 S. 626.916(1)(d), F.S.
18 S. 626.918, F.S.
19 Id. Alternatively, the insurer may be a wholly owned subsidiary of such an insurer.
20 Id.
21 S. 626.918(2)(b), F.S.
22 S. 626.918(2)(c), F.S. An alien insurer (insurer domiciled in a foreign country) must also have and maintain a trust fund

in the United States under terms approved by OIR, in an account of at least $5.4 million.
23 S. 626.918(2)(c)1.c., F.S.
24 S. 626.918(2)(c)1.d., F.S.
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 The insurer must have a good reputation regarding service to its policyholders and payment of
losses and claims.25
 The management, officers, and directors of the insurer must meet the requirements of
competence and trustworthiness required by s. 624.404(3), F.S. 26

The Surplus Lines Law specifies that OIR does not have any duty to determine the actual financial
condition or claims practices of any unauthorized insurer. 27 OIR, when determining whether a surplus
lines insurer is eligible bases that decision on the insurer appearing to be financially sound and having
satisfactory claims practices, and not having any credible evidence to the contrary. 28

Requirement to Place Surplus Lines Insurance Through a Licensed Florida Surplus Lines Agent

A Florida-licensed surplus lines insurance agent must place surplus lines insurance policies.29 A
Florida-licensed general lines agent may obtain licensure as a surplus lines agent if such an agent has
at least one year of experience working for a licensed surplus lines agent or successfully completes at
least 60 class hours in surplus and excess lines and passes a licensure exam. 30 This licensure is solely
for the purpose of placing property, marine, casualty, or surety coverages originated by general lines
agents with surplus lines insurers.31

Nonresidents licensed in their home state as resident general lines and surplus lines agents may obtain
licensure as nonresident surplus lines agents if their home states have similar licensure requirements
as Florida and provide reciprocity regarding residents of Florida obtaining licensure as nonresident
surplus lines agents in those states.32

Mandatory Disclosures

Surplus lines agents must disclose in writing that surplus lines insurance carriers do not have the
protection of the Florida Insurance Guaranty Act33 and that surplus lines rates and policy forms are not
subject to regulation by any Florida agency.34 When a policy is exported to surplus lines, the insured
must also sign or provide documented knowledge of the following disclosure:
You are agreeing to place coverage in the surplus lines market. Coverage may be
available in the admitted market. Persons insured by surplus lines carriers are not
protected under the Florida Insurance Guaranty Act with respect to any right of
recovery for the obligation of an insolvent unlicensed insurer.35

The Florida Surplus Lines Service Office (FSLSO)

The FSLSO is a self-regulating, nonprofit association designed to act as a “self-regulating organization”
to permit better access by consumers to approved surplus lines insurers.36 The FSLSO’s
responsibilities include monitoring activities and compliance of the licensed surplus lines agents
conducting business in Florida and of the eligible surplus lines insurers. 37 All Florida-licensed surplus
lines agents are deemed members of the FSLSO and must register with it.38

25 S. 626.918(2)(d), F.S.
26 S. 626.918(2)(e), F.S.
27 S. 626.918(4), F.S.
28 Id.
29 See s. 926.927, F.S.
30 Id.
31 Id.
32 S. 626.9272, F.S.
33 Ss. 631.50– 631.70, F.S., are known as the Florida Insurance Guaranty Association Act, and establish the framework

for the Florida Insurance Guaranty Association.
34 S. 626.924, F.S.
35 S. 626.916(1)(e), F.S.
36 S. 626.921, F.S.
37 See id.
38 S. 626.921(2), F.S.
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The FSLSO must conduct the following activities:
 Receive, record and review all surplus lines insurance policies;
 Maintain records of the policies reported to the FSLSO and prepare reports as required by the
Financial Services Commission;39
 Prepare and deliver to each surplus lines agent quarterly reports of each agent’s business;
 Collect and remit surplus lines tax to the Department of Financial Services;
 Reconcile the policies provided by non-admitted insurers with the policies reports to the FSLSO
by agents; and
 Other activities specified by statute.40

Domestic Surplus Lines Insurance

Prior to the creation of laws allowing DSLI, a surplus lines insurer seeking to transact surplus lines in its
state of domicile had to form a second company domiciled in a different state which would then offer
surplus lines policies in the original insurer’s state of domicile. Over 20 states have authorized
domestic surplus lines insurance.41 A review of the state laws authorizing DSLI show that laws
authorizing the formation of domestic surplus lines insurance often have certain requirements in
common:
 The DSLI must meet a policyholder surplus requirement, usually $15 million or $20 million;
 The DSLI must be an eligible surplus lines insurer in at least one jurisdiction other than its state
of domicile;
 The board of directors of the DSLI must pass a resolution seeking to be a DSLI; and
 The insurance commissioner of the DSLI must make it eligible in its state of domicile.

Certain commonalities are also present regarding how state and federal insurance laws generally
applicable to authorized insurers apply to DSLI:
 DSLI are subject to the state’s solvency requirements for authorized domestic insurers, unless a
DSLI is specifically exempted;
 DLSI are exempt from requirements relating to rates, forms, and policy cancellations;
 Policies written by DSLI must be placed on the surplus lines market in accordance with the
requirements of the state’s surplus lines law; and
 Policies written by DSLI are not covered by any of the state’s guaranty associations.

The number of DSLIs has increased from 15 in 2011, to over 70, with the majority domiciled in Illinois or
Delaware.42

Federal Nonadmitted and Reinsurance Reform Act of 2010 (NRRA)

Pursuant to the NRRA, the surplus lines insurance and surplus lines brokers are subject only to the
statutory and regulatory requirements of the insured’s home state. 43 The NRRA provides that only the
home state of an insured may require any premium tax payment for surplus lines insurance. 44 States

39 The Financial Services Commission consists of the Governor, the Chief Financial Officer, the Attorney General, and the
Commissioner of Agriculture. S. 20.121, F.S.
40 See generally s. 626.921(3), F.S.
41 See e.g., Arizona (s. 20-407.01, Az. S.), Texas (s. 981.071-981.074, Tex. Ins. Code), and Vermont (s. 8 V.S.A. s.

5023a).
42 John N. Emmanuel and Zachary N. Lerner, Lock e Lord Excess and Surplus Lines Laws Manual, p. 1.6 (2021),

https://surplusmanual.lockelord.com/ (last visited Jan. 23, 2022).
43 15 U.S.C. § 8202.
44 15 U.S.C. § 8201(a).
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are authorized to establish procedures to allocate tax revenues properly to other states for multi-state
risks and an insured’s home state may require surplus lines brokers and insureds to file annual tax
allocation reports detailing the portion of the policy premium attributable to the exposure located each in
state.

States must participate in the National Association of Insurance Commissioners’ (NAIC) database or an
equivalent uniform national database for the licensure of surplus lines brokers, and a state that does
not participate is prohibited from collecting fees related to licensing surplus lines brokers. 45 Unless a
state adopts requirements that comply with the NRRA’s requirements regarding allocation of
nonadmitted premium taxes that include alternative nationwide uniform eligibility requirements, the
eligibility requirements for a state’s surplus lines insurers must conform to the NAIC’s Non-Admitted
Insurance Model Act.46 The NRRA also prohibits state laws from requiring a due diligence search to
determine if the insurance can be obtained from an admitted insurer before placing a risk for an exempt
commercial purchaser47 on the surplus lines market if certain disclosures are made. 48

Florida Insurance Guaranty Association (FIGA)

FIGA provides a “mechanism for the payment of covered claims under certain insurance policies to
avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of
the insolvency of an insurer.”49 It issues guaranty fund payments and provides related services for all
lines of property and casualty insurance50 with certain exceptions.51 FIGA is only obligated to pay the
portions of claims made to insolvent property and casualty insurers, which are less than $300,000. 52
For policies providing homeowners insurance, FIGA provides for up to an additional $200,000 for the
portion of a covered claim, which relates to damage to structure and contents. 53

Florida Life and Health Insurance Guaranty Association (FLAHIGA)

FLAHIGA exists to “protect policyholders, insureds, beneficiaries, annuitants, payees, and assignees of
life insurance policies, health insurance policies, annuity contracts, and supplemental contracts, subject
to certain limitations, against the future of an insurer issuing such policies or contracts to perform its
contractual obligations due to its impairment or insolvency.” 54 The maximum obligation of FLAHIGA to
provide payment for any covered claim or policy is the following:
 For life insurance, $100,000 in net cash surrender and net cash withdrawal values.
 For deferred annuity contracts, $250,000 in net cash surrender and net cash withdrawal values.
 For basic hospital expense health insurance policies, basic medical-surgical health insurance
policies, or major medical expense health insurance policies, but not including long-term care
policies, $500,000.
 For all other benefits, including in long-term care policies, $300,000, including cash values. 55

Florida Workers’ Compensation Insurance Guaranty Association (FWCIGA)

FWCIGA “provides a mechanism for the payment of covered claims” under ch. 440, F.S., to avoid delay

45 15 U.S.C. § 8203.
46 15 U.S.C. § 8204.
47 15 U.S.C. § 8206(5) defines a commercial purchaser as a person purchasing commercial insurance if such person has
a qualified risk manager to negotiate insurance coverage, has paid nationwide property and casualty insurance premiums
in excess of $100,000 in the preceding 12 months, and meets one of five specified requirements regarding net worth,
annual revenues, number of employees, not-for-profit annual budgeted expenditures, or status as a municipality.
48 15 U.S.C. § 8205.
49 S. 631.51, F.S.
50 S. 631.57(3)(a), F.S. As established in s. 632.52, F.S., FIGA covers “all kinds of direct insurance” with certain

exceptions, such as life, annuity, health, disability, workers’ compensation, and surplus lines insurance.
51 Id.
52 S. 631.57(1), F.S.
53 Id.
54 S. 631.712, F.S.
55 S. 631.717(12), F.S.
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and financial loss to claimants due to the insolvency of a workers’ compensation insurer. 56 FWCIGA
services workers’ compensation claims against insolvent workers’ compensation insurers 57 and self-
insurance funds.58 For purposes of FWCIGA, “covered claim” includes unpaid claims under any
employer liability coverage of a workers’ compensation policy limited to the lesser of $300,000 or the
limits of the policy.59

Effect of the Bill

The bill defines “domestic surplus lines insurer” as a nonadmitted insurer domiciled in this state that
OIR has authorized to write surplus lines insurance. The bill creates a statutory framework to allow a
DSLI to issue surplus lines policies in this state, in addition to issuing policies in other jurisdictions, by
establishing the following:
 The term “nonadmitted insurer” has the same meaning as provided in the NRRA.
 A nonadmitted insurer possessing a policyholder surplus of at least $15 million may be
authorized to transact insurance as a DSLI under a resolution by its board and with approval of
OIR.
 Such nonadmitted insurers are authorized to write surplus lines insurance in any jurisdiction,
including this state, and that this authorization is not contingent upon holding a certificate of
authority.
 A DSLI shall be deemed an eligible surplus lines insurer and be included in the list of eligible
surplus lines insurers required under current statutes.
 Eligible surplus lines insurers may write any kind of insurance that unauthorized insurers not
domiciled in this state are eligible to write.
 A DSLI is an unauthorized insurer for the purposes of writing surplus lines insurance under the
Surplus Lines Law.
 A DSLI is a nonadmitted insurer for the purposes of the federal NRRA.
 A DSLI may only write surplus lines insurance in Florida and may only sell policies through a
surplus lines agent.
 Unless specifically exempt, a DSLI is subject to all financial and solvency requirements imposed
on admitted domestic insurers under state law. However, a DSLI is exempt from the surplus
requirements applied to admitted insurers.60
 A policy issued by a DSLI is exempt from all statutory requirements relating to insurance rating,
policy forms, premiums, cancellations, nonrenewals, and renewals, and from any other statutory
requirements that do not apply to surplus lines policies issued by surplus lines insurers
domiciled in another state.
 A policy issued by a DSLI is subject to taxes assessed on surplus lines policies issued by
nonadmitted insurers, including surplus lines premium taxes, but it not subject to other taxes
levied upon domestic or foreign admitted insurers.
 A policy issued by a DSLI is not subject to the protections or requirements of FIGA, FLAHIGA,
or FWCIGA.

The bill also contains technical amendments to several statutes to conform cross -references to this
new statutory framework.

56 S. 631.902, F.S.
57 “Insurer means an insurance carrier or self-insurance fund authorized to insure under ch. 440, F.S. For the purposes of
this act, ‘insurer’ does not include a qualified local government self-insurance fund, as defined in s. 624.4622 or an
individual self-insurer as defined in s. 440.385.” S. 631.904(5), F.S.
58 “‘Self-insurance fund’ means a group self-insurance fund authorized under s. 624.4621, a commercial self-insurance

fund writing workers’ compensation insurance authorized under s. 624.462, or an assessable mutual insurer authorized
under s. 628.6011. For purposes of this act, the term “self-insurance fund” does not include a qualified local government
self-insurance fund, as defined in s. 624.4622, an independent educational institution self-insurance fund as defined in s.
624.4623, an electric cooperative self-insurance fund as described in s. 624.4626, or an individual self-insurer as defined
in s. 440.385.” S. 631.904(6), F.S.
59 S. 631.904(2), F.S.
60 These requirements are set forth in s. 624.408, F.S.
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B. SECTION DIRECTORY:
Section 1. Amends s. 626.914, F.S., relating to definitions.

Section 2. Creates s. 626.91805, F.S., relating to domestic surplus lines insurers.

Section 3. Amends s. 458.320, F.S., relating to financial responsibility.

Section 4. Amends s. 459.0085, F.S., relating to financial responsibility.

Section 5. Amends s. 464.0123, F.S., relating to autonomous practice by an advanced practice
registered nurse.

Section 6. Amends s. 629.401, F.S., relating to insurance exchange.

Section 7. 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:

1. Revenues:
None.

2. Expenditures:
None.

C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
To the extent that consumers have additional options for coverage from surplus lines carriers which
results in more competitive insurance rates, the bill may have an indeterminate positive impact on the
private sector.

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:
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DATE: 1/25/2022
The bill neither authorizes nor requires administrative rulemaking.

C. DRAFTING ISSUES OR OTHER COMMENTS:
None.

IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES

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DATE: 1/25/2022
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 951 2022

1 A bill to be entitled
2 An act relating to domestic surplus lines insurers;
3 amending s. 626.914, F.S.; revising the definition of
4 the term "eligible surplus lines insurer" to include
5 domestic surplus lines insurers; defining the term
6 "domestic surplus line insurer"; creating s.
7 626.91805, F.S.; defining the term "nonadmitted
8 insurer"; authorizing specified nonadmitted insurers
9 to transact insurance as domestic surplus lines
10 insurers under certain circumstances; authorizing such
11 insurers to write surplus lines insurance in any
12 jurisdiction; providing that such authorization is not
13 contingent on the existence of a certificate of
14 authority; requiring domestic surplus lines insurers
15 to be deemed eligible surplus lines insurers and to be
16 included in the list of eligible surplus lines
17 insurers; authorizing such insurers to write certain
18 kinds of insurance; requiring domestic surplus lines
19 insurers to be considered unauthorized insurers for
20 specified purposes; requiring domestic surplus lines
21 insurers to be considered nonadmitted insurers for
22 specified purposes; authorizing domestic surplus lines
23 insurers to write only surplus lines insurance;
24 limiting the circumstances under which such insurers
25 may write surplus lines insurance; providing

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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 951 2022

26 applicability of specified financial and solvency
27 requirements to domestic surplus lines insurers;
28 providing an exception; providing an exemption from a
29 specified law for domestic surplus lines insurers;
30 providing exemptions from specified requirements for
31 surplus lines insurance policies issued by such
32 insurers; providing that such policies are subject to
33 specified taxes but are not subject to certain other
34 taxes; providing that such policies are not subject to
35 the protections and requirements of specified acts;
36 amending ss. 458.320, 459.0085, and 464.0123, F.S.;
37 conforming cross-references; amending s. 629.401,
38 F.S.; specifying cross-references; providing an
39 effective date.
40
41 Be It Enacted by the Legislature of the State of Florida:
42
43 Section 1. Section 626.914, Florida Statutes, is amended
44 to read:
45 626.914 Definitions.—As used in this Surplus Lines Law,
46 the term:
47 (1)(4) "Diligent effort" means seeking coverage from and
48 having been rejected by at least three authorized insurers
49 currently writing this type of coverage and documenting these
50 rejections. However, if the residential structure has a dwelling

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51 replacement cost of $700,000 or more, the term means seeking
52 coverage from and having been rejected by at least one
53 authorized insurer currently writing this type of coverage and
54 documenting this rejection.
55 (2) "Domestic surplus lines insurer" means a nonadmitted
56 insurer domiciled in this state that has been authorized by the
57 office to write surplus lines insurance.
58 (3)(2) "Eligible surplus lines insurer" means:
59 (a) An unauthorized insurer that which has been made
60 eligible by the office to issue insurance coverage under this
61 Surplus Lines Law; or
62 (b) A domestic surplus lines insurer.
63 (4)(3) "Export" "To export" means to place, in an
64 unauthorized insurer under this Surplus Lines Law, insurance
65 covering a subject of insurance resident, located, or to be
66 performed in this state.
67 (5)(1) "Surplus lines agent" means an individual licensed
68 as provided in this part to handle the placement of insurance
69 coverages with unauthorized insurers and to place such coverages
70 with authorized insurers as to which the licensee is not
71 licensed as an agent.
72 Section 2. Section 626.91805, Florida Statutes, is created
73 to read:
74 626.91805 Domestic surplus lines insurers.—
75 (1) As used in this section, the term "nonadmitted

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76 insurer" has the same meaning as provided in the federal
77 Nonadmitted and Reinsurance Reform Act of 2010.
78 (2) Notwithstanding any other law, a nonadmitted insurer
79 possessing a policyholder surplus of at least $15 million may,
80 under a resolution by its board of directors and with the
81 written approval of the office, be authorized to transact
82 insurance as a domestic surplus lines insurer. Such insurers are
83 authorized to write surplus lines insurance in any jurisdiction,
84 including this state, and such authorization is not contingent
85 on the company's holding of an existing certificate of
86 authority.
87 (3) Notwithstanding s. 626.918(2), a domestic surplus
88 lines insurer shall be deemed an eligible surplus lines insurer
89 and shall be included in the list of eligible surplus lines
90 insurers required by s. 626.918(3). Eligible surplus lines
91 insurers listed in s. 626.918(3) may write any kind of insurance
92 that an unauthorized insurer not domiciled in this state is
93 eligible to write.
94 (4) For purposes of writing surplus lines insurance
95 pursuant to the Surplus Lines Law, a domestic surplus lines
96 insurer shall be considered an unauthorized insurer.
97 (5) For purposes of the federal Nonadmitted and
98 Reinsurance Reform Act of 2010, a domestic surplus lines insurer
99 shall be considered a nonadmitted insurer.
100 (6) A domestic surplus lines insurer may write only

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101 surplus lines insurance in this state and only if procured from
102 a surplus lines agent pursuant to the Surplus Lines Law.
103 (7) All financial and solvency requirements imposed by
104 this state's laws on admitted domestic insurers apply to
105 domestic surplus lines insurers unless domestic surplus lines
106 insurers are otherwise specifically exempted.
107 (8) A domestic surplus lines insurer is exempt from s.
108 624.408.
109 (9) A surplus lines insurance policy issued by a domestic
110 surplus lines insurer is exempt from all statutory requirements
111 relating to insurance rating and rating plans; policy forms;
112 premiums charged to insureds; policy cancellation, nonrenewal,
113 and renewal; and other statutory requirements in the same manner
114 and to the same extent as surplus lines policies issued by a
115 surplus lines insurer domiciled in another state.
116 (10) Notwithstanding any other law, a policy issued by a
117 domestic surplus lines insurer is subject to taxes assessed upon
118 surplus lines policies issued by nonadmitted insurers, including
119 surplus lines premium taxes, but is not subject to other taxes
120 levied upon admitted insurers, whether domestic or foreign.
121 (11) A policy issued by a domestic surplus lines insurer
122 is not subject to the protections or requirements of the Florida
123 Insurance Guaranty Association Act, the Florida Life and Health
124 Insurance Guaranty Association Act, or the Florida Workers'
125 Compensation Insurance Guaranty Association Act.

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126 Section 3. Paragraph (b) of subsection (1) and paragraph
127 (b) of subsection (2) of section 458.320, Florida Statutes, are
128 amended to read:
129 458.320 Financial responsibility.—
130 (1) As a condition of licensing and maintaining an active
131 license, and prior to the issuance or renewal of an active
132 license or reactivation of an inactive license for the practice
133 of medicine, an applicant must by one of the following methods
134 demonstrate to the satisfaction of the board and the department
135 financial responsibility to pay claims and costs ancillary
136 thereto arising out of the rendering of, or the failure to
137 render, medical care or services:
138 (b) Obtaining and maintaining professional liability
139 coverage in an amount not less than $100,000 per claim, with a
140 minimum annual aggregate of not less than $300,000, from an
141 authorized insurer as defined under s. 624.09, from a surplus
142 lines insurer as defined under s. 626.914 s. 626.914(2), from a
143 risk retention group as defined under s. 627.942, from the Joint
144 Underwriting Association established under s. 627.351(4), or
145 through a plan of self-insurance as provided in s. 627.357. The
146 required coverage amount set forth in this paragraph may not be
147 used for litigation costs or attorney's fees for the defense of
148 any medical malpractice claim.
149 (2) Physicians who perform surgery in an ambulatory
150 surgical center licensed under chapter 395 and, as a continuing

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151 condition of hospital staff privileges, physicians who have
152 staff privileges must also establish financial responsibility b y
153 one of the following methods:
154 (b) Obtaining and maintaining professional liability
155 coverage in an amount not less than $250,000 per claim, with a
156 minimum annual aggregate of not less than $750,000 from an
157 authorized insurer as defined under s. 624.09, from a surplus
158 lines insurer as defined under s. 626.914 s. 626.914(2), from a
159 risk retention group as defined under s. 627.942, from the Joint
160 Underwriting Association established under s. 627.351(4),
161 through a plan of self-insurance as provided in s. 627.357, or
162 through a plan of self-insurance which meets the conditions
163 specified for satisfying financial responsibility in s. 766.110.
164 The required coverage amount set forth in this paragraph may not
165 be used for litigation costs or attorney's fees for the defense
166 of any medical malpractice claim.
167
168 This subsection shall be inclusive of the coverage in subsection
169 (1).
170 Section 4. Paragraph (b) of subsection (1) and paragraph
171 (b) of subsection (2) of section 459.0085, Florida Statutes, are
172 amended to read:
173 459.0085 Financial responsibility.—
174 (1) As a condition of licensing and maintaining an active
175 license, and prior to the issuance or renewal of an active

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176 license or reactivation of an inactive license for the practice
177 of osteopathic medicine, an applicant must by one of the
178 following methods demonstrate to the satisfaction of the board
179 and the department financial responsibility to pay claims and
180 costs ancillary thereto arising out of the rendering of, or the
181 failure to render, medical care or services:
182 (b) Obtaining and maintaining professional liability
183 coverage in an amount not less than $100,000 per claim, with a
184 minimum annual aggregate of not less than $300,000, from an
185 authorized insurer as defined under s. 624.09, from a surplus
186 lines insurer as defined under s. 626.914 s. 626.914(2), from a
187 risk retention group as defined under s. 627.942, from the Joint
188 Underwriting Association established under s. 627.351(4), or
189 through a plan of self-insurance as provided in s. 627.357. The
190 required coverage amount set forth in this paragraph may not be
191 used for litigation costs or attorney's fees for the defense of
192 any medical malpractice claim.
193 (2) Osteopathic physicians who perform surgery in an
194 ambulatory surgical center licensed under chapter 395 and, as a
195 continuing condition of hospital staff privileges, osteopathic
196 physicians who have staff privileges must also establish
197 financial responsibility by one of the following methods:
198 (b) Obtaining and maintaining professional liability
199 coverage in an amount not less than $250,000 per claim, with a
200 minimum annual aggregate of not less than $750,000 from an

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201 authorized insurer as defined under s. 624.09, from a surplus
202 lines insurer as defined under s. 626.914 s. 626.914(2), from a
203 risk retention group as defined under s. 627.942, from the Joint
204 Underwriting Association established under s. 627.351(4),
205 through a plan of self-insurance as provided in s. 627.357, or
206 through a plan of self-insurance that meets the conditions
207 specified for satisfying financial responsibility in s. 766.110.
208 The required coverage amount set forth in this paragraph may not
209 be used for litigation costs or attorney's fees for the defense
210 of any medical malpractice claim.
211
212 This subsection shall be inclusive of the coverage in subsection
213 (1).
214 Section 5. Paragraph (a) of subsection (2) of section
215 464.0123, Florida Statutes, is amended to read:
216 464.0123 Autonomous practice by an advanced practice
217 registered nurse.—
218 (2) FINANCIAL RESPONSIBILITY.—
219 (a) An advanced practice registered nurse registered under
220 this section must, by one of the following methods, demonstrate
221 to the satisfaction of the board and the department financial
222 responsibility to pay claims and costs ancillary thereto arising
223 out of the rendering of, or the failure to render, nursing care,
224 treatment, or services:
225 1. Obtaining and maintaining professional liability

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226 coverage in an amount not less than $100,000 per claim, with a
227 minimum annual aggregate of not less than $300,000, from an
228 authorized insurer as defined in s. 624.09, from a surplus lines
229 insurer as defined in s. 626.914 s. 626.914(2), from a risk
230 retention group as defined in s. 627.942, from the Joint
231 Underwriting Association established under s. 627.351(4), or
232 through a plan of self-insurance as provided in s. 627.357; or
233 2. Obtaining and maintaining an unexpired, irrevocable
234 letter of credit, established pursuant to chapter 675, in an
235 amount of not less than $100,000 per claim, with a minimum
236 aggregate availability of credit of not less than $300,000. T he
237 letter of credit must be payable to the advanced practice
238 registered nurse as beneficiary upon presentment of a final
239 judgment indicating liability and awarding damages to be paid by
240 the advanced practice registered nurse or upon presentment of a
241 settlement agreement signed by all parties to such agreement
242 when such final judgment or settlement is a result of a claim
243 arising out of the rendering of, or the failure to render,
244 nursing care and services.
245 Section 6. Paragraph (b) of subsection (6) of sec tion
246 629.401, Florida Statutes, is amended to read:
247 629.401 Insurance exchange.—
248 (6)
249 (b) In addition to the insurance laws specified in
250 paragraph (a), the office shall regulate the exchange pursuant

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251 to the following powers, rights, and duties:
252 1. General examination powers.—The office shall examine
253 the affairs, transactions, accounts, records, and assets of any
254 security fund, exchange, members, and associate brokers as often
255 as it deems advisable. The examination may be conducted by the
256 accredited examiners of the office at the offices of the entity
257 or person being examined. The office shall examine in like
258 manner each prospective member or associate broker applying for
259 membership in an exchange.
260 2. Office approval and applications of underwriting
261 members.—No underwriting member shall commence operation without
262 the approval of the office. Before commencing operation, an
263 underwriting member shall provide a written application
264 containing:
265 a. Name, type, and purpose of the underwriting member.
266 b. Name, residence address, business background, and
267 qualifications of each person associated or to be associated in
268 the formation or financing of the underwriting member.
269 c. Full disclosure of the terms of all understandings and
270 agreements existing or proposed among persons so associated
271 relative to the underwriting member, or the formation or
272 financing thereof, accompanied by a copy of each such agreement
273 or understanding.
274 d. Full disclosure of the terms of all understandings and
275 agreements existing or proposed for management or exclusive

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276 agency contracts.
277 3. Investigation of underwriting member applications.—In
278 connection with any proposal to establish an underwriting
279 member, the office shall make an investigation of:
280 a. The character, reputation, financial standing, and
281 motives of the organizers, incorporators, or subscribers
282 organizing the proposed underwriting member.
283 b. The character, financial responsibility, insurance
284 experience, and business qualifications of its proposed
285 officers.
286 c. The character, financial responsibility, business
287 experience, and standing of the proposed stockholders and
288 directors, or owners.
289 4. Notice of management changes.—An underwriting member
290 shall promptly give the office written notice of any change
291 among the directors or principal officers of the underwriting
292 member within 30 days after such change. The office shall
293 investigate the new directors or principal officers of the
294 underwriting member. The office's investigation shall include an
295 investigation of the character, financial responsibility,
296 insurance experience, and business qualifications of any new
297 directors or principal officers. As a result of the
298 investigation, the office may require the underwriting member to
299 replace any new directors or principal officers.
300 5. Alternate financial statement.—In lieu of any financial

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301 examination, the office may accept an audited financial
302 statement.
303 6. Correction and reconstruction of records.—If the office
304 finds any accounts or records to be inadequate, or inadequately
305 kept or posted, it may employ experts to reconstruct, rewrite,
306 post, or balance them at the expense of the person or entity
307 being examined if such person or entity has failed to maintain,
308 complete, or correct such records or accounts after the office
309 has given him or her or it notice and reasonable opportunity to
310 do so.
311 7. Obstruction of examinations.—Any person or entity who
312 or which willfully obstructs the office or its examiner in an
313 examination is guilty of a misdemeanor of the second degree,
314 punishable as provided in s. 775.082 or s. 775.083.
315 8. Filing of annual statement.—Each underwriting member
316 shall file with the office a full and true statement of its
317 financial condition, transactions, and affairs. The statement
318 shall be filed on or before March 1 of each year, or within such
319 extension of time as the office for good cause grants, and shall
320 be for the preceding calendar year. The statement shall contain
321 information generally included in insurer financial statements
322 prepared in accordance with generally accepted insurance
323 accounting principles and practices and in a form generally
324 utilized by insurers for financial statements, sworn to by at
325 least two executive officers of the underwriting member. The

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326 form of the financial statements shall be the approved form of
327 the National Association of Insurance Commissioners or its
328 successor organization. The commission may by rule require each
329 insurer to submit any part of the information contained in the
330 financial statement in a computer-readable form compatible with
331 the office's electronic data processing system. In addition to
332 information furnished in connection with its annual statement,
333 an underwriting member must furnish to the office as soon as
334 reasonably possible such information about its transactions or
335 affairs as the office requests in writing. All information
336 furnished pursuant to the office's request must be verified by
337 the oath of two executive officers of the underwriting member.
338 9. Record maintenance.—Each underwriting member shall have
339 and maintain its principal place of business in this state and
340 shall keep therein complete records of its assets, transactions,
341 and affairs in accordance with such methods and systems as are
342 customary for or suitable to the kind or kinds of insurance
343 transacted.
344 10. Examination of agents.—If the department has reason to
345 believe that any agent, as defined in s. 626.015 or s.
346 626.914(5) s. 626.914, has violated or is violating any
347 provision of the insurance law, or upon receipt of a written
348 complaint signed by any interested person indicating that any
349 such violation may exist, the department shall conduct such
350 examination as it deems necessary of the accounts, records,

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351 documents, and transactions pertaining to or affecting the
352 insurance affairs of such agent.
353 11. Written reports of office.—The office or its examiner
354 shall make a full and true written report of any examination.
355 The report shall contain only information obtained from
356 examination of the records, accounts, files, and documents of or
357 relative to the person or entity examined or from testimony of
358 individuals under oath, together with relevant conclusions and
359 recommendations of the examiner based thereon. The office shall
360 furnish a copy of the report to the person or entity examined
361 not less than 30 days prior to filing the report in its office.
362 If such person or entity so requests in writing within such 30-
363 day period, the office shall grant a hearing with respect to the
364 report and shall not file the report until after the hearing and
365 after such modifications have been made therein as the office
366 deems proper.
367 12. Admissibility of reports.—The report of an examination
368 when filed shall be admissible in evidence in any action or
369 proceeding brought by the office against the person or entity
370 examined, or against his or her or its officers, employees, or
371 agents. The office or its examiners may at any time testify and
372 offer other proper evidence as to information secured or matters
373 discovered during the course of an examination, whether or not a
374 written report of the examination has been either made,
375 furnished, or filed in the office.

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376 13. Publication of reports.—After an examination report
377 has been filed, the office may publish the results of any such
378 examination in one or more newspapers published in this state
379 whenever it deems it to be in the public interest.
380 14. Consideration of examination reports by entity
381 examined.—After the examination report of an underwriting member
382 has been filed, an affidavit shall be filed with the office, not
383 more than 30 days after the report has been filed, on a form
384 furnished by the office and signed by the person or a
385 representative of any entity examined, stating that the report
386 has been read and that the recommendations made in the report
387 will be considered within a reasonable time.
388 15. Examination costs.—Each person or entity examined by
389 the office shall pay to the office the expenses incurred in such
390 examination.
391 16. Exchange costs.—An exchange shall reimburse the office
392 for any expenses incurred by it relating to the regulation of
393 the exchange and its members, except as specified in
394 subparagraph 15.
395 17. Powers of examiners.—Any examiner appointed by the
396 office, as to the subject of any examination, investigation, or
397 hearing being conducted by him or her, may administ er oaths,
398 examine and cross-examine witnesses, and receive oral and
399 documentary evidence, and shall have the power to subpoena
400 witnesses, compel their attendance and testimony, and require by

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401 subpoena the production of books, papers, records, files,
402 correspondence, documents, or other evidence which the examiner
403 deems relevant to the inquiry. If any person refuses to comply
404 with any such subpoena or to testify as to any matter concerning
405 which he or she may be lawfully interrogated, the Circuit Court
406 of Leon County or the circuit court of the county wherein such
407 examination, investigation, or hearing is being conducted, or of
408 the county wherein such person resides, on the office's
409 application may issue an order requiring such person to comply
410 with the subpoena and to testify; and any failure to obey such
411 an order of the court may be punished by the court as a contempt
412 thereof. Subpoenas shall be served, and proof of such service
413 made, in the same manner as if issued by a circuit court.
414 Witness fees and mileage, if claimed, shall be allowed the same
415 as for testimony in a circuit court.
416 18. False testimony.—Any person willfully testifying
417 falsely under oath as to any matter material to any examination,
418 investigation, or hearing shall upon conviction thereof be
419 guilty of perjury and shall be punished accordingly.
420 19. Self-incrimination.—
421 a. If any person asks to be excused from attending or
422 testifying or from producing any books, papers, records,
423 contracts, documents, or other evidence in connection with any
424 examination, hearing, or investigation being conducted by the
425 office or its examiner, on the ground that the testimony or

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426 evidence required of the person may tend to incriminate him or
427 her or subject him or her to a penalty or forfeiture, and the
428 person notwithstanding is directed to give such testimony or
429 produce such evidence, he or she shall, if so directed by the
430 office and the Department of Legal Affairs, nonetheless comply
431 with such direction; but the person shall not thereafter be
432 prosecuted or subjected to any penalty or forfeiture for or on
433 account of any transaction, matter, or thing concerning which he
434 or she may have so testified or produced evidence, and no
435 testimony so given or evidence so produced shall be received
436 against him or her upon any criminal action, investigation, or
437 proceeding; except that no such person so testifying shall be
438 exempt from prosecution or punishment for any perjury committed
439 by him or her in such testimony, and the testimony or evidence
440 so given or produced shall be admissible against him or her upon
441 any criminal action, investigation, or proceeding concerning
442 such perjury, nor shall he or she be exempt from the refusal,
443 suspension, or revocation of any license, permission, or
444 authority conferred, or to be conferred, pursuant to the
445 insurance law.
446 b. Any such individual may execute, acknowledge, and file
447 with the office a statement expressly waiving such immunity or
448 privilege in respect to any transaction, matter, or thing
449 specified in such statement, and thereupon the testimony of such
450 individual or such evidence in relation to such transaction,

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451 matter, or thing may be received or produced before any judge or
452 justice, court, tribunal, grand jury, or otherwise; and if such
453 testimony or evidence is so received or produced, such
454 individual shall not be entitled to any immunity or privileges
455 on account of any testimony so given or evidence so produced.
456 20. Penalty for failure to testify.—Any person who refuses
457 or fails, without lawful cause, to testify relative to the
458 affairs of any member, associate broker, or other person when
459 subpoenaed and requested by the office to so testify, as
460 provided in subparagraph 17., shall, in addition to the penalty
461 provided in subparagraph 17., be guilty of a misdemeanor of the
462 second degree, punishable as provided in s. 775.082 or s.
463 775.083.
464 21. Name selection.—No underwriting member shall be formed
465 or authorized to transact insurance in this state under a name
466 which is the same as that of any authorized insurer or is so
467 nearly similar thereto as to cause or tend to cause confusion or
468 under a name which would tend to mislead as to the type of
469 organization of the insurer. Before incorporating under or using
470 any name, the underwriting syndicate or proposed underwriting
471 syndicate shall submit its name or proposed name to the office
472 for the approval of the office.
473 22. Capitalization.—An underwriting member approved on or
474 after July 2, 1987, shall provide an initial paid-in capital and
475 surplus of $3 million and thereafter shall maintain a mi nimum

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476 policyholder surplus of $2 million in order to be permitted to
477 write insurance. Underwriting members approved prior to July 2,
478 1987, shall maintain a minimum policyholder surplus of $1
479 million. After June 29, 1988, underwriting members approved
480 prior to July 2, 1987, must maintain a minimum policyholder
481 surplus of $1.5 million to write insurance. After June 29, 1989,
482 underwriting members approved prior to July 2, 1987, must
483 maintain a minimum policyholder surplus of $1.75 million to
484 write insurance. After December 30, 1989, all underwriting
485 members, regardless of the date they were approved, must
486 maintain a minimum policyholder surplus of $2 million to write
487 insurance. Except for that portion of the paid-in capital and
488 surplus which shall be maintained in a security fund of an
489 exchange, the paid-in capital and surplus shall be invested by
490 an underwriting member in a manner consistent with ss. 625.301-
491 625.340. The portion of the paid-in capital and surplus in any
492 security fund of an exchange shall be invested in a manner
493 limited to investments for life insurance companies under the
494 Florida insurance laws.
495 23. Limitations on coverage written.—
496 a. Limit of risk.—No underwriting member shall expose
497 itself to any loss on any one risk in an amount exceedin g 10
498 percent of its surplus to policyholders. Any risk or portion of
499 any risk which shall have been reinsured in an assuming
500 reinsurer authorized or approved to do such business in this

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501 state shall be deducted in determining the limitation of risk
502 prescribed in this section.
503 b. Restrictions on premiums written.—If the office has
504 reason to believe that the underwriting member's ratio of actual
505 or projected annual gross written premiums to policyholder
506 surplus exceeds 8 to 1 or the underwriting member's rat io of
507 actual or projected annual net premiums to policyholder surplus
508 exceeds 4 to 1, the office may establish maximum gross or net
509 annual premiums to be written by the underwriting member
510 consistent with maintaining the ratios specified in this sub -
511 subparagraph.
512 (I) Projected annual net or gross premiums shall be based
513 on the actual writings to date for the underwriting member's
514 current calendar year, its writings for the previous calendar
515 year, or both. Ratios shall be computed on an annualized basis.
516 (II) For purposes of this sub-subparagraph, the term
517 "gross written premiums" means direct premiums written and
518 reinsurance assumed.
519 c. Surplus as to policyholders.—For the purpose of
520 determining the limitation on coverage written, surplus as to
521 policyholders shall be deemed to include any voluntary reserves,
522 or any part thereof, which are not required by or pursuant to
523 law and shall be determined from the last sworn statement of
524 such underwriting member with the office, or by the last report
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526 the time of assumption of such risk.
527 24. Unearned premium reserves.—An underwriting member must
528 at all times maintain an unearned premium reserve equal to 50
529 percent of the net written premiums of the subscribers on
530 policies having 1 year or less to run, and pro rata on those for
531 longer periods, except that all premiums on any marine or
532 transportation insurance trip risk shall be deemed unearned
533 until the trip is terminated. For the purpose of this
534 subparagraph, the term "net written premiums" means the premium
535 payments made by subscribers plus the premiums due from
536 subscribers, after deducting the amounts specifically provided
537 in the subscribers' agreements for expenses, including
538 reinsurance costs and fees paid to the attorney in fact,
539 provided that the power of attorney agreement contains an
540 explicit provision requiring the attorney in fact to refund any
541 unearned subscribers fees on a pro-rata basis for canceled
542 policies. If there is no such provision, the unearned premium
543 reserve shall be calculated without any adjustment for fees paid
544 to the attorney in fact. If the unearned premium reserves at any
545 time do not amount to $100,000, there shall be maintained on
546 deposit at the exchange at all times additional funds in cash or
547 eligible securities which, together with the unearned premium
548 reserves, equal $100,000. In calculating the foregoing reserves,
549 the amount of the attorney's bond, as filed with the office and
550 as required by s. 629.121, shall be included in such reserves.

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551 If at any time the unearned premium reserves are less than the
552 foregoing requirements, the subscribers, or the attorney in
553 fact, shall advance funds to make up the deficiency. Such
554 advances shall only be repaid out of the surplus of the exchange
555 and only after receiving written approval from the office.
556 25. Loss reserves.—All underwriting members of an exchange
557 shall maintain loss reserves, including a reserve for incurred
558 but not reported claims. The reserves shall be subject to revie w
559 by the office, and, if loss experience shows that an
560 underwriting member's loss reserves are inadequate, the office
561 shall require the underwriting member to maintain loss reserves
562 in such additional amount as is needed to make them adequate.
563 26. Distribution of profits.—An underwriting member shall
564 not distribute any profits in the form of cash or other assets
565 to owners except out of that part of its available and
566 accumulated surplus funds which is derived from realized net
567 operating profits on its business and realized capital gains. In
568 any one year such payments to owners shall not exceed 30 percent
569 of such surplus as of December 31 of the immediately preceding
570 year, unless otherwise approved by the office. No distribution
571 of profits shall be made that would render an underwriting
572 member either impaired or insolvent.
573 27. Stock dividends.—A stock dividend may be paid by an
574 underwriting member out of any available surplus funds in excess
575 of the aggregate amount of surplus advanced to the underwriting

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576 member under subparagraph 29.
577 28. Dividends from earned surplus.—A dividend otherwise
578 lawful may be payable out of an underwriting member's earned
579 surplus even though the total surplus of the underwriting member
580 is then less than the aggregate of its past contributed surplus
581 resulting from issuance of its capital stock at a price in
582 excess of the par value thereof.
583 29. Borrowing of money by underwriting members.—
584 a. An underwriting member may borrow money to defray the
585 expenses of its organization, provide it with surplus funds, or
586 for any purpose of its business, upon a written agreement that
587 such money is required to be repaid only out of the underwriting
588 member's surplus in excess of that stipulated in such agreement.
589 The agreement may provide for interest not exceeding 15 percent
590 simple interest per annum. The interest shall or shall not
591 constitute a liability of the underwriting member as to its
592 funds other than such excess of surplus, as stipulated in the
593 agreement. No commission or promotion expense shall be paid in
594 connection with any such loan. The use of any surplus note and
595 any repayments thereof shall be subject to the approval of the
596 office.
597 b. Money so borrowed, together with any interest thereon
598 if so stipulated in the agreement, shall not form a part of the
599 underwriting member's legal liabilities except as to its surplus
600 in excess of the amount thereof stipulated in the agreement, nor

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601 be the basis of any setoff; but until repayment, financial
602 statements filed or published by an underwriting member shall
603 show as a footnote thereto the amount thereof then unpaid,
604 together with any interest thereon accrued but unpaid.
605 30. Liquidation, rehabilitation, and restrictions. —The
606 office, upon a showing that a member or associate broker of an
607 exchange has met one or more of the grounds contained in part I
608 of chapter 631, may restrict sales by type of risk, policy or
609 contract limits, premium levels, or policy or contract
610 provisions; increase surplus or capital requirements of
611 underwriting members; issue cease and desist orders; suspend or
612 restrict a member's or associate broker's right to transact
613 business; place an underwriting member under conservatorship or
614 rehabilitation; or seek an order of liquidation as authorized by
615 part I of chapter 631.
616 31. Prohibited conduct.—The following acts by a member,
617 associate broker, or affiliated person shall constitute
618 prohibited conduct:
619 a. Fraud.
620 b. Fraudulent or dishonest acts committed by a member or
621 associate broker prior to admission to an exchange, if the facts
622 and circumstances were not disclosed to the office upon
623 application to become a member or associate broker.
624 c. Conduct detrimental to the welfare of an exchange.
625 d. Unethical or improper practices or conduct,

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626 inconsistent with just and equitable principles of trade as set
627 forth in, but not limited to, ss. 626.951-626.9641 and 626.973.
628 e. Failure to use due diligence to ascertain the insurance
629 needs of a client or a principal.
630 f. Misstatements made under oath or upon an application
631 for membership on an exchange.
632 g. Failure to testify or produce documents when requested
633 by the office.
634 h. Willful violation of any law of this state.
635 i. Failure of an officer or principal to testify under
636 oath concerning a member, associate broker, or other person's
637 affairs as they relate to the operation of an exchange.
638 j. Violation of the constitution and bylaws of the
639 exchange.
640 32. Penalties for participating in prohibited conduct. —
641 a. The office may order the suspension of further
642 transaction of business on the exchange of any member or
643 associate broker found to have engaged in prohibited conduct. In
644 addition, any member or associate broker found to have engaged
645 in prohibited conduct may be subject to reprimand, censure,
646 and/or a fine not exceeding $25,000 imposed by the office.
647 b. Any member which has an affiliated person who is found
648 to have engaged in prohibited conduct shall be subject to
649 involuntary withdrawal or in addition thereto may be subject to
650 suspension, reprimand, censure, and/or a fine not exceeding

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651 $25,000.
652 33. Reduction of penalties.—Any suspension, reprimand,
653 censure, or fine may be remitted or reduced by the office on
654 such terms and conditions as are deemed fair and equitable.
655 34. Other offenses.—Any member or associate broker that is
656 suspended shall be deprived, during the period of suspension, of
657 all rights and privileges of a member or of an associate broker
658 and may be proceeded against by the office for any offense
659 committed either before or after the date of suspension .
660 35. Reinstatement.—Any member or associate broker that is
661 suspended may be reinstated at any time on such terms and
662 conditions as the office may specify.
663 36. Remittance of fines.—Fines imposed under this section
664 shall be remitted to the office and shall be paid into the
665 Insurance Regulatory Trust Fund.
666 37. Failure to pay fines.—When a member or associate
667 broker has failed to pay a fine for 15 days after it becomes
668 payable, such member or associate broker shall be suspended,
669 unless the office has granted an extension of time to pay such
670 fine.
671 38. Changes in ownership or assets.—In the event of a
672 major change in the ownership or a major change in the assets of
673 an underwriting member, the underwriting member shall report
674 such change in writing to the office within 30 days of the
675 effective date thereof. The report shall set forth the details

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676 of the change. Any change in ownership or assets of more than 5
677 percent shall be considered a major change.
678 39. Retaliation.—
679 a. When by or pursuant to the laws of any other state or
680 foreign country any taxes, licenses, or other fees, in the
681 aggregate, and any fines, penalties, deposit requirements, or
682 other material obligations, prohibitions, or restrictions are or
683 would be imposed upon an exchange or upon the agents or
684 representatives of such exchange which are in excess of such
685 taxes, licenses, and other fees, in the aggregate, or which are
686 in excess of such fines, penalties, deposit requirements, or
687 other obligations, prohibitions, or restrictions directly
688 imposed upon similar exchanges or upon the agents or
689 representatives of such exchanges of such other state or country
690 under the statutes of this state, so long as such laws of such
691 other state or country continue in force or are so applied, the
692 same taxes, licenses, and other fees, in the aggregate, or
693 fines, penalties, deposit requirements, or other material
694 obligations, prohibitions, or restrictions of whatever kind
695 shall be imposed by the office upon the exchanges, or upon the
696 agents or representatives of such exchanges, of such other state
697 or country doing business or seeking to do business in this
698 state.
699 b. Any tax, license, or other obligation imposed by any
700 city, county, or other political subdivision or agency of a

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701 state, jurisdiction, or foreign country on an exchange, or on
702 the agents or representatives on an exchange, shall be deemed to
703 be imposed by such state, jurisdiction, or foreign country
704 within the meaning of sub-subparagraph a.
705 40. Agents.—
706 a. Agents as defined in ss. 626.015 and 626.914(5) 626.914
707 who are broker members or associate broker members of an
708 exchange shall be allowed only to place on an exchange the same
709 kind or kinds of business that the agent is licensed to place
710 pursuant to Florida law. Direct Florida business as defined i n
711 s. 626.916 or s. 626.917 shall be written through a broker
712 member who is a surplus lines agent as defined in s. 626.914.
713 The activities of each broker member or associate broker with
714 regard to an exchange shall be subject to all applicable
715 provisions of the insurance laws of this state, and all such
716 activities shall constitute transactions under his or her
717 license as an insurance agent for purposes of the Florida
718 insurance law.
719 b. Premium payments and other requirements.—If an
720 underwriting member has assumed the risk as to a surplus lines
721 coverage and if the premium therefor has been received by the
722 surplus lines agent who placed such insurance, then in all
723 questions thereafter arising under the coverage as between the
724 underwriting member and the insured, the underwriting member
725 shall be deemed to have received the premium due to it for such

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726 coverage; and the underwriting member shall be liable to the
727 insured as to losses covered by such insurance, and for unearned
728 premiums which may become payable to the insured upon
729 cancellation of such insurance, whether or not in fact the
730 surplus lines agent is indebted to the underwriting member with
731 respect to such insurance or for any other cause.
732 41. Improperly issued contracts, riders, and
733 endorsements.—
734 a. Any insurance policy, rider, or endorsement issued by
735 an underwriting member and otherwise valid which contains any
736 condition or provision not in compliance with the requirements
737 of this section shall not be thereby rendered invalid, except as
738 provided in s. 627.415, but shall be construed and applied in
739 accordance with such conditions and provisions as would have
740 applied had such policy, rider, or endorsement been in full
741 compliance with this section. In the event an underwriting
742 member issues or delivers any policy for an amount which exceeds
743 any limitations otherwise provided in this section, the
744 underwriting member shall be liable to the insured or his or her
745 beneficiary for the full amount stated in the policy in addition
746 to any other penalties that may be imposed.
747 b. Any insurance contract delivered or issued for delivery
748 in this state governing a subject or subjects of insurance
749 resident, located, or to be performed in this state which,
750 pursuant to the provisions of this section, the underwriting

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751 member may not lawfully insure under such a contract shall be
752 cancelable at any time by the underwriting member, any provision
753 of the contract to the contrary notwithstanding; and the
754 underwriting member shall promptly cancel the contract in
755 accordance with the request of the office therefor. No such
756 illegality or cancellation shall be deemed to relieve the
757 underwriting syndicate of any liability incurred by it under the
758 contract while in force or to prohibit the underwriting
759 syndicate from retaining the pro rata earned premium thereon.
760 This provision does not relieve the underwriting syndicate from
761 any penalty otherwise incurred by the underwriting syndicate.
762 42. Satisfaction of judgments.—
763 a. Every judgment or decree for the recovery of money
764 heretofore or hereafter entered in any court of competent
765 jurisdiction against any underwriting member shall be fully
766 satisfied within 60 days from and after the entry thereof or, in
767 the case of an appeal from such judgment or decree, within 60
768 days from and after the affirmance of the judgment or decree by
769 the appellate court.
770 b. If the judgment or decree is not satisfied as required
771 under sub-subparagraph a., and proof of such failure to satisfy
772 is made by filing with the office a certified transcript of the
773 docket of the judgment or the decree together with a certificate
774 by the clerk of the court wherein the judgment or decree remains
775 unsatisfied, in whole or in part, after the time provided in

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776 sub-subparagraph a., the office shall forthwith prohibit the
777 underwriting member from transacting business. The office shall
778 not permit such underwriting member to write any new business
779 until the judgment or decree is wholly paid and satisfied and
780 proof thereof is filed with the office under the official
781 certificate of the clerk of the court wherein the judgment was
782 recovered, showing that the judgment or decree is satisfied of
783 record, and until the expenses and fees incurred in the case are
784 also paid by the underwriting syndicate.
785 43. Tender and exchange offers.—No person shall conclude a
786 tender offer or an exchange offer or otherwise acquire 5 percent
787 or more of the outstanding voting securities of an underwriting
788 member or controlling company or purchase 5 percent or more of
789 the ownership of an underwriting member or controlling company
790 unless such person has filed with, and obtained the approval of,
791 the office and sent to such underwriting member a statement
792 setting forth:
793 a. The identity of, and background information on, each
794 person by whom, or on whose behalf, the acquisition is to be
795 made; and, if the acquisition is to be made by or on behalf of a
796 corporation, association, or trust, the identity of and
797 background information on each director, officer, trustee, or
798 other natural person performing duties similar to those of a
799 director, officer, or trustee for the corporation, association,
800 or trust.

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801 b. The source and amount of the funds or other
802 consideration used, or to be used, in making the acquisition.
803 c. Any plans or proposals which such person may have to
804 liquidate such member, to sell its assets, or to merge or
805 consolidate it.
806 d. The percentage of ownership which such person proposes
807 to acquire and the terms of the offer or exchange, as the case
808 may be.
809 e. Information as to any contracts, arrangements, or
810 understandings with any party with respect to any securities of
811 such member or controlling company, including, but not limited
812 to, information relating to the transfer of any securities,
813 option arrangements, or puts or calls or the giving or
814 withholding of proxies, naming the party with whom such
815 contract, arrangements, or understandings have been entered and
816 giving the details thereof.
817 f. The office may disapprove any acquisition subject to
818 the provisions of this subparagraph by any person or any
819 affiliated person of such person who:
820 (I) Willfully violates this subparagraph;
821 (II) In violation of an order of the office issued
822 pursuant to sub-subparagraph j., fails to divest himself or
823 herself of any stock obtained in violation of this subparagraph,
824 or fails to divest himself or herself of any direct or indirect
825 control of such stock, within 25 days after such order; or

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826 (III) In violation of an order issued by the office
827 pursuant to sub-subparagraph j., acquires additional stock of
828 the underwriting member or controlling company, or direct or
829 indirect control of such stock, without complying with this
830 subparagraph.
831 g. The person or persons filing the statement required by
832 this subparagraph have the burden of proof. The office shall
833 approve any such acquisition if it finds, on the basis of the
834 record made during any proceeding or on the basis of the filed
835 statement if no proceeding is conducted, that:
836 (I) Upon completion of the acquisition, the underwriting
837 member will be able to satisfy the requirements for the approval
838 to write the line or lines of insurance for which it is
839 presently approved;
840 (II) The financial condition of the acquiring person or
841 persons will not jeopardize the financial stability of the
842 underwriting member or prejudice the interests of its
843 policyholders or the public;
844 (III) Any plan or proposal which the acquiring person has,
845 or acquiring persons have, made:
846 (A) To liquidate the insurer, sell its assets, or merge or
847 consolidate it with any person, or to make any other major
848 change in its business or corporate structure or management; or
849 (B) To liquidate any controlling company, sell its assets,
850 or merge or consolidate it with any person, or to make any major

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851 change in its business or corporate structure or management
852 which would have an effect upon the underwriting member
853
854 is fair and free of prejudice to the policyholders of the
855 underwriting member or to the public;
856 (IV) The competence, experience, and integrity of those
857 persons who will control directly or indirectly the operation of
858 the underwriting member indicate that the acquisition is in the
859 best interest of the policyholders of the underwriting member
860 and in the public interest;
861 (V) The natural persons for whom background information is
862 required to be furnished pursuant to this subparagraph have such
863 backgrounds as to indicate that it is in the best interests of
864 the policyholders of the underwriting member, and in the public
865 interest, to permit such persons to exercise control over such
866 underwriting member;
867 (VI) The officers and directors to be employed after the
868 acquisition have sufficient insurance experience and ability to
869 assure reasonable promise of successful operation;
870 (VII) The management of the underwriting member after the
871 acquisition will be competent and trustworthy and will possess
872 sufficient managerial experience so as to make the proposed
873 operation of the underwriting member not hazardous to the
874 insurance-buying public;
875 (VIII) The management of the underwriting member after the

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876 acquisition will not include any person who has directly or
877 indirectly through ownership, control, reinsurance transactions,
878 or other insurance or business relations unlawfully manipulated
879 the assets, accounts, finances, or books of any insurer or
880 underwriting member or otherwise acted in bad faith with respect
881 thereto;
882 (IX) The acquisition is not likely to be hazardous or
883 prejudicial to the underwriting member's policyholders or the
884 public; and
885 (X) The effect of the acquisition of control would not
886 substantially lessen competition in insurance in this state or
887 would not tend to create a monopoly therein.
888 h. No vote by the stockholder of record, or by any other
889 person, of any security acquired in contravention of the
890 provisions of this subparagraph is valid. Any acqui sition of any
891 security contrary to the provisions of this subparagraph is
892 void. Upon the petition of the underwriting member or
893 controlling company, the circuit court for the county in which
894 the principal office of such underwriting member is located may,
895 without limiting the generality of its authority, order the
896 issuance or entry of an injunction or other order to enforce the
897 provisions of this subparagraph. There shall be a private right
898 of action in favor of the underwriting member or controlling
899 company to enforce the provisions of this subparagraph. No
900 demand upon the office that it perform its functions shall be

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901 required as a prerequisite to any suit by the underwriting
902 member or controlling company against any other person, and in
903 no case shall the office be deemed a necessary party to any
904 action by such underwriting member or controlling company to
905 enforce the provisions of this subparagraph. Any person who
906 makes or proposes an acquisition requiring the filing of a
907 statement pursuant to this subparagraph, or who files such a
908 statement, shall be deemed to have thereby designated the Chief
909 Financial Officer as such person's agent for service of process
910 under this subparagraph and shall thereby be deemed to have
911 submitted himself or herself to the administrative jurisdiction
912 of the office and to the jurisdiction of the circuit court.
913 i. Any approval by the office under this subparagraph does
914 not constitute a recommendation by the office for an
915 acquisition, tender offer, or exchange offer. It is unlawful for
916 a person to represent that the office's approval constitutes a
917 recommendation. A person who violates the provisions of this
918 sub-subparagraph is guilty of a felony of the third degree,
919 punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
920 The statute-of-limitations period for the prosecution of an
921 offense committed under this sub-subparagraph is 5 years.
922 j. Upon notification to the office by the underwriting
923 member or a controlling company that any person or any
924 affiliated person of such person has acquired 5 percent or more
925 of the outstanding voting securities of the underwriting member

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926 or controlling company without complying with the provisions of
927 this subparagraph, the office shall order that the person and
928 any affiliated person of such person cease acquisition of any
929 further securities of the underwriting member or controlling
930 company; however, the person or any affiliated person of such
931 person may request a proceeding, which proceeding shall be
932 convened within 7 days after the rendering of the order for the
933 sole purpose of determining whether the person, individually or
934 in connection with any affiliated person of such person, has
935 acquired 5 percent or more of the outstanding voting securities
936 of an underwriting member or controlling company. Upon the
937 failure of the person or affiliated person to request a hearing
938 within 7 days, or upon a determination at a hearing convened
939 pursuant to this sub-subparagraph that the person or affiliated
940 person has acquired voting securities of an underwrit ing member
941 or controlling company in violation of this subparagraph, the
942 office may order the person and affiliated person to divest
943 themselves of any voting securities so acquired.
944 k.(I) The office shall, if necessary to protect the public
945 interest, suspend or revoke the certificate of authority of any
946 underwriting member or controlling company:
947 (A) The control of which is acquired in violation of this
948 subparagraph;
949 (B) That is controlled, directly or indirectly, by any
950 person or any affiliated person of such person who, in violation

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951 of this subparagraph, has obtained control of an underwriting
952 member or controlling company; or
953 (C) That is controlled, directly or indirectly, by any
954 person who, directly or indirectly, controls any other person
955 who, in violation of this subparagraph, acquires control of an
956 underwriting member or controlling company.
957 (II) If any underwriting member is subject to suspension
958 or revocation pursuant to sub-sub-subparagraph (I), the
959 underwriting member shall be deemed to be in such condition, or
960 to be using or to have been subject to such methods or practices
961 in the conduct of its business, as to render its further
962 transaction of insurance presently or prospectively hazardous to
963 its policyholders, creditors, or stockholders or to the public.
964 l.(I) For the purpose of this sub-sub-subparagraph, the
965 term "affiliated person" of another person means:
966 (A) The spouse of such other person;
967 (B) The parents of such other person and their lineal
968 descendants and the parents of such other person's spouse and
969 their lineal descendants;
970 (C) Any person who directly or indirectly owns or
971 controls, or holds with power to vote, 5 percent or more of the
972 outstanding voting securities of such other person;
973 (D) Any person 5 percent or more of the outstanding voting
974 securities of which are directly or indirectly owned or
975 controlled, or held with power to vote, by such other person;

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976 (E) Any person or group of persons who directly or
977 indirectly control, are controlled by, or are under common
978 control with such other person; or any officer, director,
979 partner, copartner, or employee of such other person;
980 (F) If such other person is an investment company, any
981 investment adviser of such company or any member of an advisory
982 board of such company;
983 (G) If such other person is an unincorporated investment
984 company not having a board of directors, the depositor of such
985 company; or
986 (H) Any person who has entered into an agreement, written
987 or unwritten, to act in concert with such other person in
988 acquiring or limiting the disposition of securities of an
989 underwriting member or controlling company.
990 (II) For the purposes of this section, the term
991 "controlling company" means any corporation, trust, or
992 association owning, directly or indirectly, 25 perc ent or more
993 of the voting securities of one or more underwriting members.
994 m. The commission may adopt, amend, or repeal rules that
995 are necessary to implement the provisions of this subparagraph,
996 pursuant to chapter 120.
997 44. Background information.—The information as to the
998 background and identity of each person about whom information is
999 required to be furnished pursuant to sub-subparagraph 43.a.
1000 shall include, but shall not be limited to:

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1001 a. Such person's occupations, positions of employment, and
1002 offices held during the past 10 years.
1003 b. The principal business and address of any business,
1004 corporation, or other organization in which each such office was
1005 held or in which such occupation or position of employment was
1006 carried on.
1007 c. Whether, at any time during such 10-year period, such
1008 person was convicted of any crime other than a traffic
1009 violation.
1010 d. Whether, during such 10-year period, such person has
1011 been the subject of any proceeding for the revocation of any
1012 license and, if so, the nature of such proceeding and the
1013 disposition thereof.
1014 e. Whether, during such 10-year period, such person has
1015 been the subject of any proceeding under the federal Bankruptcy
1016 Act or whether, during such 10-year period, any corporation,
1017 partnership, firm, trust, or association in which such person
1018 was a director, officer, trustee, partner, or other official has
1019 been subject to any such proceeding, either during the time in
1020 which such person was a director, officer, trustee, partner, or
1021 other official, or within 12 months thereafter.
1022 f. Whether, during such 10-year period, such person has
1023 been enjoined, either temporarily or permanently, by a court of
1024 competent jurisdiction from violating any federal or state law
1025 regulating the business of insurance, securities, or ba nking, or

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1026 from carrying out any particular practice or practices in the
1027 course of the business of insurance, securities, or banking,
1028 together with details of any such event.
1029 45. Security fund.—All underwriting members shall be
1030 members of the security fund of any exchange.
1031 46. Underwriting member defined.—Whenever the term
1032 "underwriting member" is used in this subsection, it shall be
1033 construed to mean "underwriting syndicate."
1034 47. Offsets.—Any action, requirement, or constraint
1035 imposed by the office shall reduce or offset similar actions,
1036 requirements, or constraints of any exchange.
1037 48. Restriction on member ownership.—
1038 a. Investments existing prior to July 2, 1987.—The
1039 investment in any member by brokers, agents, and intermediaries
1040 transacting business on the exchange, and the investment in any
1041 such broker, agent, or intermediary by any member, directly or
1042 indirectly, shall in each case be limited in the aggregate to
1043 less than 20 percent of the total investment in such member,
1044 broker, agent, or intermediary, as the case may be. After
1045 December 31, 1987, the aggregate percent of the total investment
1046 in such member by any broker, agent, or intermediary and the
1047 aggregate percent of the total investment in any such broker,
1048 agent, or intermediary by any member, directly or indirectly,
1049 shall not exceed 15 percent. After June 30, 1988, such aggregate
1050 percent shall not exceed 10 percent and after December 31, 1988,

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1051 such aggregate percent shall not exceed 5 percent.
1052 b. Investments arising on or after July 2, 1987.—The
1053 investment in any underwriting member by brokers, agents, or
1054 intermediaries transacting business on the exchange, and the
1055 investment in any such broker, agent, or intermediary by any
1056 underwriting member, directly or indirectly, shall in each case
1057 be limited in the aggregate to less than 5 percent of the total
1058 investment in such underwriting member, broker, agent, or
1059 intermediary.
1060 49. "Underwriting manager" defined.—"Underwriting manager"
1061 as used in this subparagraph includes any person, partnership,
1062 corporation, or organization providing any of the following
1063 services to underwriting members of the exchange:
1064 a. Office management and allied services, including
1065 correspondence and secretarial services.
1066 b. Accounting services, including bookkeeping and
1067 financial report preparation.
1068 c. Investment and banking consultations and services.
1069 d. Underwriting functions and services including the
1070 acceptance, rejection, placement, and marketing of risk.
1071 50. Prohibition of underwriting manager investment.—Any
1072 direct or indirect investment in any underwriting manager by a
1073 broker member or any affiliated person of a broker member or any
1074 direct or indirect investment in a broker member by an
1075 underwriting manager or any affiliated person of an underwriting

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1076 manager is prohibited. "Affiliated person" for purposes of this
1077 subparagraph is defined in subparagraph 43.
1078 51. An underwriting member may not accept reinsurance on
1079 an assumed basis from an affiliate or a controlling company, nor
1080 may a broker member or management company place reinsurance from
1081 an affiliate or controlling company of theirs with an
1082 underwriting member. "Affiliate and controlling company" for
1083 purposes of this subparagraph is defined in subpara graph 43.
1084 52. Premium defined.—"Premium" is the consideration for
1085 insurance, by whatever name called. Any "assessment" or any
1086 "membership," "policy," "survey," "inspection," "service" fee or
1087 charge or similar fee or charge in consideration for an
1088 insurance contract is deemed part of the premium.
1089 53. Rules.—The commission shall adopt rules necessary for
1090 or as an aid to the effectuation of any provision of this
1091 section.
1092 Section 7. This act shall take effect July 1, 2022.

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HB 1023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS

BILL #: HB 1023 Insolvent Insurers
SPONSOR(S): Fabricio
TIED BILLS: IDEN./SIM. BILLS: CS/SB 1430

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY
CHIEF

1) Insurance & Banking Subcommittee Herendeen Luczynski

2) State Administration & Technology
Appropriations Subcommittee

3) Commerce Committee

SUMMARY ANALYSIS
As a condition of selling and servicing insurance in Florida, insurers must be members of a guaranty
association associated with the lines of coverage the insurer sells.

If an admitted insurer becomes unsound or insolvent, the Office of Insurance Regulation (OIR) may place the
insurer in confidential administrative supervision, and, if rehabilitation is impossible, recommend liquidation by
the Department of Financial Services, Division of Rehabilitation and Liquidation (Receiver).

Existing insurance policies are cancelled 30 days after a judge issues an order of liquidation and the applicable
guaranty fund becomes responsible for managing any outstanding claims.

The bill makes minor changes to procedures of the Florida Insurance Guaranty Association (FIGA) and Florida
Workers’ Compensation Insurance Guaranty Association (FWCIGA), and requires that claims data from
insolvent insurers be used in the ratemaking process for workers’ compensation insurance.

If the assets of an insolvent estate are not enough to pay covered claims, the applicable guaranty fund may
ask OIR to levy assessments against fund members. The bill makes technical changes to the laws governing
assessments that would allow certain property and casualty insurers to: 1) pay assessments in quarterly
installments rather than one full payment on a date selected by OIR; and 2) decline to recoup the cost of
assessments if the cost of placing a surcharge on policies exceeds the cost of the assessment.

OIR adopts rates for workers’ compensation insurance annually, based on recommendations from the National
Council on Compensation Insurance (NCCI), which evaluates risks associated with more than 500
occupational classes by tracking covered claims of insurers.

Insurers that are in an unsound financial condition or later become insolvent do not always report claims to
NCCI. When data is missing, the adequacy of workers’ compensation insurance rates can be affected and the
experience rating modification factor of an individual insured may be inaccurate. When an insurer is ordered
into liquidation, the responsibility for data reporting falls to DFS, as court appointed receiver, and FWCIGA, as
administrator of any open claims.

The bill adds the impact of missing data from insolvent insurers to a list of factors that are used in the
determination of workers’ compensation rates.

The bill does not have a fiscal impact on state or local government; and has minimal impact on the private
sector. The bill provides an effective date of July 1, 2022.

FULL ANALYSIS

This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h1023.IBS
DATE: 1/25/2022
I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:

Current Situation

Insolvent Insurers

The Office of Insurance Regulation (OIR) monitors the financial strength of insurers authorized to do
business in Florida by reviewing annual and quarterly financial statements submitted to the National
Association of Insurance Commissioners. Florida law establishes required minimum surplus 1 and risk-
based capital requirements 2 for different types of insurers, identifies the types of investments that may be
designated as an admitted asset on the insurer’s financial statements, 3 and places restrictions on the
investments an insurer makes in its subsidiaries or affiliated companies. 4

Insurers Must Belong to a Guaranty Fund

As a condition of selling and servicing insurance in Florida, insurers must be members of the guaranty
association associated with the lines of coverage the insurer sells. The Insurance Code authorizes the:

 Florida Insurance Guaranty Association (FIGA), for property and casualty insurances, including
homeowners and automobile insurance;5
 Florida Life & Health Guaranty Association (FLHGA), for life and health insurance policies, annuity
contracts, and related supplemental insurance contracts; 6 and
 Florida Workers’ Compensation Insurance Guaranty Association (FWCIGA), for workers’
compensation and employer liability coverages.7

Similar protections are available to persons who subscribe to Health Maintenance Organizations through
the Health Maintenance Organization Consumer Assistance Plan.8

Insolvency

If an insurer becomes insolvent,9 OIR may place the insurer in confidential administrative supervision. If the
insurer cannot be rehabilitated, OIR may refer the matter to the Department of Financial Services, Division
of Liquidation and Rehabilitation (DFS), for appointment of a receiver to liquidate the insurance company. 10

When a Circuit Court judge issues an order of liquidation, the order appoints DFS as receiver for the insolvent
insurer’s estate and requires that the appropriate guaranty fund administer all outstanding claims. 11

Existing policies are cancelled 30 days after the order of liquidation, unless: the policy expires prior to the
30-day deadline; 2) the insured or the receiver finds a replacement policy with another insurer, or 3) the
policyholder terminates the policy.12

1 Ss. 624.407 and 627.408, F.S.
2 S. 624.4085, F.S.
3 Ch. 625, Part II, F.S.
4 Ss. 625.325 and 625.332, F.S.
5 Ss. 631.50-631.70, F.S.
6 Ss. 631.711-631.738, F.S.
7 Ss. 631.901-631.932, F.S.
8 Ss. 631.811-631.828, F.S.
9 S. 631.011(14), F.S. states: “Insolvency” means that all the assets of the insurer, if made immediately available , would

not be sufficient to discharge all its liabilities or that the insurer is unable to pay its debts as they become due in the u sual
course of business. When the context of any provision of this code so indicates, insolvency also includes and is defin ed
as “impairment of surplus,” as defined in subsection (13), and “impairment of capital,” as defined in subsection (12).
10 Ss. 624.81 and 631.051, F.S.
11 S. 631.395, F.S.
12 S. 631.252(1), F.S.
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The applicable guaranty fund becomes responsible for managing any outstanding claims that were pending
upon appointment of the receiver or filed during the 30-day cancellation period.

Assessments

When the assets of an insolvent estate are not enough to pay covered claims, the guaranty fund may ask
OIR to levy assessments against fund members.13

Insurers that belong to FIGA may recoup the cost of assessments by applying a uniform surcharge to all
policies of the kind identified in OIR’s assessment order. 14

Insurers that belong to FLHGA may receive a refund of contributions that exceed the amount needed to
carry out the obligations of FLHGA, and may offset the cost of assessments against either the insurer’s
liability for premium taxes or corporate income taxes. 15

Insurers that belong to FWCIGA pay assessments by collecting surcharges placed on policies and
remitting the surcharge to FWCIGA.16

Workers’ Compensation Rates

All carriers selling workers’ compensation insurance in Florida subscribe to the National Council on
Compensation Insurance (NCCI), an industry group that develops policy forms, premium rates, and rules
for its members in 37 states.17

NCCI develops rates annually, based on the risks associated with more than 500 occupational classes.
OIR reviews and approves proposed rates in accordance with the standards established by Florida law. 18
The following factors are used in the determination of workers’ compensation insurance rates:

 The past loss experience and prospective loss experience within and outside this state;
 The conflagration and catastrophe hazards;
 A reasonable margin for underwriting profit and contingencies;
 Dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their
policyholders, members, or subscribers;
 Investment income on unearned premium reserves and loss reserves;
 Past expenses and prospective expenses, both those countrywide and those specifically applicable to
this state; and
 All other relevant factors, including judgment factors, within and outside this state. 19

To calculate premium, the insurer applies rates approved for specific jobs, called class codes, to every
$100 of an employer’s payroll. This results in a manual rate that is adjusted by an experience rating factor
calculated by NCCI, based on the employer’s loss experience in the prior three years. An employer with
better than average loss experience may receive a credit; an employer with above average losses will pay
more than the manual rate.20

Insurers report claims to NCCI, so NCCI can track loss experience across industries, identify trends
associated with different types of risks, and adjust rates associated with specific class codes accordingly. 21

13 Ss. 631.57, 631.718, and 631.914, F.S.
14 S. 631.57(3), F.S.
15 Ss. 631.718(5) and 631.72(1), F.S.
16 S. 631.914(1), F.S.
17 627.091(3), F.S.
18 Ss. 627.062 and 627.072, F.S.
19 S. 627.072, F.S.
20 National Council on Compensation Insurance, ABCs of Experience Rating,

https://www.ncci.com/Articles/Documents/UW_ABC_Exp_Rating.pdf (last visited Jan. 6, 2022).
21 Id.
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Workers’ Compensation Claims Reporting by Insolvent Insurers

Insurers that are in an unsound financial condition or later become insolvent do not always report claims to
NCCI. When data is missing, the adequacy of workers’ compensation insurance rates can be affected and
the experience rating modification factor of an individual insured may be inaccurate. When an insurer is
ordered into liquidation, the responsibility for data reporting falls to DFS, as court appointed receiver, and
FWCIGA, as administrator of any open claims.

The impact on missing data from insolvent insurers is discussed in an actuarial analysis conducted for
FWCIGA, which focused on the 2017 insolvency of Guarantee Insurance Company. 22 The study concluded
that the insolvency of Guarantee Insurance Company (GIC) – which had 8,600 active policies, 10,500
clams and $487 million in claim liabilities when it was placed into liquidation – did not create significant
market disruption because policyholders were able to obtain coverage in the voluntary market.23 However,
if accurate claims data had been reported to NCCI, workers’ compensation rate decreases approved in
2016 and 2018 could have been slightly smaller. 24 The claim’s experience GIC reported to NCCI was
slightly worse than average; during liquidation, it was determined that GIC’s actual experience was
understated by nearly $100 million.25

The actuarial analysis warned that missing claims data could impact the overall statewide rate for workers’
compensation insurance if Florida were to experience multiple insolvencies at the same time. Similarly,
missing data for one insolvent insurer with a book of business concentrated in a single industry group or
class code could have a material impact the affected industry group or class code. 26

The actuary recommended that the claims data of insolvent insurers be collected and reported to NCCI – to
the extent that such data can be reported consistently and at a reasonable cost – for inclusion in
ratemaking and experience rating.27

NCCI reviews the characteristics of an insolvent carrier (prior premium market share, distribution of
premium writings across individual job classifications, and whether prior insures will be able to obtain
coverage in the voluntary market) to assess the impact the insolvency may have on future worker’s
compensation rates.28 Claims data reported during receivership is subject to data validation checks prior to
being used in ratemaking.29

Effect of the Bill

For FIGA, the bill amends s. 631.57, F.S., to state that property and casualty insurers are not required to
recoup the cost of assessments levied by OIR on behalf of FIGA. Additionally, if the FIGA board of
directors certifies the need for an assessment, the board may ask OIR to permit payments on a quarterly
basis throughout the assessment year, instead of full payment on a date selected by OIR at the
commencement of the assessment year.

For FWCIGA, the bill amends s. 631.914, F.S., to permit payment of assessments in a single payment or
on a quarterly basis, at the discretion of the FWCIGA board. Currently, workers’ compensation insurance

22 Perr & Knight, Insolvency Materiality
Analysis for the Florida Work ers’ Compensat ion Insurance Guaranty Association,
May 29, 2019.
23 Id. at 4.
24 Memo to the Board of Directors of the Florida Workers’ Compensation Insurance Guaranty Association, Inc., by Tom

Streukens, Sept. 19, 2019.
25 Id.
26 Id. at 17.
27 Id. at 19-20.
28 Email from George Fejoo, governmental affairs consultant with Floridian Partners, RE: FWCIGA Post -Liquidation Data

Reporting (Jan. 19., 2022).
29 Id.
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DATE: 1/25/2022
carriers may pay assessments on a quarterly basis only if the FWCIGA board determines that full payment
of the assessment would result in an impairment of an insurer’s required minimum amount of capital and
surplus.

For workers’ compensation rates, the bill amends s. 627.072, F.S., to add the impact of missing data from
insolvent insurers to the list of factors that are used in the determination of workers’ compensation
insurance rates. Due to the difficulty of obtaining and validating claims data of an insolvent insurer, the bill
permits the use of “prior reported data” and “all other relevant information” during the ratemaking process.

B. SECTION DIRECTORY:
Section 1. Amends s. 627.072, F.S., making and use of rates.

Section 2. Amends s. 631.57, F.S., powers and duties of the association.

Section 3. Amends s. 631.914, F.S., assessments.

Section 4. 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:

1. Revenues:
None.

2. Expenditures:
None.

C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill provides flexibility to insurance carriers by providing the option of paying assessments on an
annual or quarterly basis. Insurance carriers would not be required to recoup the cost of an assessment
if the administrative cost of recoupment outweighs the benefit of recoupment.

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:
None.
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DATE: 1/25/2022
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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DATE: 1/25/2022
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 1023 2022

1 A bill to be entitled
2 An act relating to insolvent insurers; amending s.
3 627.072, F.S.; providing required factors to be used
4 in the determination and fixing of rates for premiums
5 paid to insolvent insurers for specified coverages;
6 amending s. 631.57, F.S.; authorizing insurers to
7 elect not to recoup advance assessments paid to the
8 Florida Insurance Guaranty Association, Incorporated;
9 revising provisions relating to payments of
10 assessments and insurers' reconciliation reports to
11 the association; requiring insurers to treat insureds'
12 failure to pay surcharges, rather than recoupment
13 charges, as failure to pay premiums; revising
14 construction; providing that insurers are liable for
15 surcharges and are not liable for uncollectible
16 surcharges, rather than emergency assessments;
17 deleting a requirement that insurers treat insureds'
18 failure to pay emergency assessments as failure to pay
19 premiums; amending s. 631.914, F.S.; revising
20 provisions relating to insurers' collection of
21 surcharges and payments of assessments to the Florida
22 Workers' Compensation Insurance Guaranty Association,
23 Incorporated; providing an effective date.
24
25 Be It Enacted by the Legislature of the State of Florida:

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26
27 Section 1. Paragraphs (b) through (g) of subsection (1) of
28 section 627.072, Florida Statutes, are redesignated as
29 paragraphs (c) through (h), respectively, and a new paragraph
30 (b) is added to that subsection, to read:
31 627.072 Making and use of rates.—
32 (1) As to workers' compensation and employer's liability
33 insurance, the following factors shall be used in the
34 determination and fixing of rates:
35 (b) The impact resulting from the past loss experience and
36 prospective loss experience for insurers whose data are missing
37 from statewide experience due to insolvency. Prior reported data
38 for such insurers and all other relevant information may be used
39 to assess the impact on rates;
40 Section 2. Paragraph (c) and paragraphs (f) through (i) of
41 subsection (3) of section 631.57, Florida Statutes, are amended
42 to read:
43 631.57 Powers and duties of the association.—
44 (3)
45 (c) The Legislature finds and declares that all
46 assessments paid by an insurer or insurer group as a result of a
47 levy by the office, including assessments levied pursuant to
48 paragraph (a) and emergency assessments levied pursuant to
49 paragraph (e), constitute advances of funds from the insurer to
50 the association. An insurer may fully recoup such advances by

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51 applying the uniform assessment percentage levied by the office
52 to all policies of the same kind or line as were considered by
53 the office in determining the assessment liability of the
54 insurer or insurer group as set forth in paragraph (f). An
55 insurer remitting an assessment to the association as r equired
56 by subparagraph (f)1. or subparagraph (f)2. may elect to not
57 recoup advances.
58 1. Assessments levied under subparagraph (f)1. are paid
59 before policy surcharges are collected and result in a
60 receivable for policy surcharges collected in the future. This
61 amount, to the extent it is likely that it will be realized,
62 meets the definition of an admissible asset as specified in the
63 National Association of Insurance Commissioners' Statement of
64 Statutory Accounting Principles No. 4. The asset shall be
65 established and recorded separately from the liability
66 regardless of whether it is based on a retrospective or
67 prospective premium-based assessment. If an insurer is unable to
68 fully recoup the amount of the assessment because of a reduction
69 in writings or withdrawal from the market, the amount recorded
70 as an asset shall be reduced to the amount reasonably expected
71 to be recouped.
72 2. Assessments levied under subparagraph (f)2. are paid
73 after policy surcharges are collected so that the recognition of
74 assets is based on actual premium written offset by the
75 obligation to the association.

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76 (f)1. The association, office, and insurers remitting
77 assessments pursuant to paragraph (a) or paragraph (e) must
78 comply with the following:
79 a. In the order levying an assessment, the office shall
80 specify the actual percentage amount to be advanced to the
81 association and thereafter collected uniformly from all the
82 policyholders of insurers subject to the assessment and the date
83 on which the assessment year begins, which may not begin before
84 90 days after the association board certifies such an
85 assessment.
86 b. Insurers shall make an initial payment to the
87 association before the beginning of the assessment year on or
88 before the date specified in the order of the office. Each
89 insurer shall have at least 30 days' written notice as to the
90 date on which the initial assessment payment is due and payable.
91 The association may request that the order issued by the office
92 authorize insurers to remit the advance payments in quarterly
93 installments throughout the assessment year.
94 c. Insurers that have written insurance in the calendar
95 year before the year in which the assessment is certified by the
96 board shall make payments an initial payment based on the direct
97 written premium in this state for the classes protected by the
98 account from the previous calendar year as set forth in the
99 insurer's annual statement, multiplied by the uniform percentage
100 of premium specified in the order issued by the office. Insurers

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101 that have not written insurance in the previous calendar year in
102 any of the lines under the account which are being assessed, but
103 which are writing insurance as of, or after, the date the board
104 certifies the assessment to the office, shall pay an amount
105 based on a good faith estimate of the amount of direct written
106 premium anticipated to be written in the subject line s of
107 business for the assessment year, multiplied by the uniform
108 percentage of premium specified in the order issued by the
109 office.
110 d. Insurers shall file one or more a reconciliation
111 reports report with the association which indicate indicates the
112 amount of the initial payment to the association before the
113 assessment year, whether such amount was based on direct written
114 premium contained in a previous calendar year annual statement
115 or a good faith projection, the amount actually collected during
116 the assessment year, and such other information contained on a
117 form and schedule adopted by the association and provided to the
118 insurers in advance. If the insurer collected from policyholders
119 more surcharges than the amount initially paid, the insurer
120 shall pay the excess amount to the association. If the insurer
121 collected surcharges from policyholders in an amount that which
122 is less than the amount initially paid to the association, the
123 association shall credit the insurer that amount against future
124 assessments. Such payment reconciliation report, and any payment
125 of excess amounts collected from policyholders, shall be

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126 completed and remitted to the association within 90 days after
127 the end of the assessment year. The association shall send a
128 final reconciliation report on all insurers to the office within
129 120 days after each assessment year.
130 e. Insurers remitting reconciliation reports under this
131 paragraph to the association are subject to s. 626.9541(1)(e).
132 2. For assessments required under paragraph (a) or
133 paragraph (e), the association may use a quarterly installment
134 method instead of the method described in sub-subparagraphs 1.b.
135 and c. or in combination thereof based on the association's
136 projected cash flow. If the association projects that it has
137 cash on hand for the payment of anticipated claims in the
138 applicable account for at least 6 months, the board may make an
139 estimate of the assessment needed and may recommend to the
140 office the assessment percentage that may be collected as a
141 quarterly assessment. The office may, in the order levying the
142 assessment on insurers, specify that the assessment is due and
143 payable quarterly as the funds are collected from insureds
144 throughout the assessment year, in which case the assessment
145 shall be a uniform percentage of premium collected during the
146 assessment year and shall be collected from all policyholders
147 with policies in the classes protected by the account. All
148 insurers shall collect the assessment without regard to whether
149 the insurers reported premium in the year preceding the
150 assessment. Insurers are not required to advance funds if the

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151 association and the office elect to use the quarterly
152 installment option. All funds collected shall be retained by the
153 association for the payment of current or future claims. This
154 subparagraph does not alter the obligation of an insurer to
155 remit assessments levied pursuant to this subsection to the
156 association. Insurers shall file one or more reconciliation
157 reports with the association which indicate the amount actually
158 collected during the assessment year, and such other information
159 contained on a form and schedule adopted by the association and
160 provided to the insurers in advance.
161 (g) Insurers shall treat the failure of an insured to pay
162 a surcharge recoupment charge as a failure to pay the premium.
163 (h) Assessments levied under this subsection are levied
164 upon insurers. This subsection does not create a cause of action
165 by a policyholder with respect to the levying of, or a
166 policyholder's duty to pay, such assessments and related
167 surcharges.
168 (i) Assessments levied under this subsection are not
169 premium and are not subject to the premium tax, to any fees, or
170 to any commissions. An insurer is liable for any surcharges
171 emergency assessments that the insurer collects and shall treat
172 the failure of an insured to pay an emergency assessment as a
173 failure to pay the premium. An insurer is not liable for
174 uncollectible surcharges emergency assessments.
175 Section 3. Paragraphs (c) and (d) of subsection (1) and

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176 paragraph (c) of subsection (4) of section 631.914, Florida
177 Statutes, are amended to read:
178 631.914 Assessments.—
179 (1)
180 (c) The office shall levy the uniform surcharge percentage
181 on all policies of the same kind or line as were considered by
182 the office in determining the assessment liability of the
183 insurer. Member insurers shall collect policy surcharges at a
184 uniform percentage rate on new and renewal policies issued and
185 effective during the assessment year period of 12 months
186 beginning on January 1, April 1, July 1, or October 1, whichever
187 is the first day of the following calendar quarter as specified
188 in an order issued by the office. The policy surcharge may not
189 begin until 90 days after the board of directors certifies the
190 assessment.
191 (d) The association may use a pass-through an installment
192 method to require the insurer to remit the policy surcharge as
193 collected or may require the insurer to remit the assessment to
194 the association before collecting the policy surcharge.
195 1. If the association elects to use the pass-through
196 installment method, the office may, in the order levying the
197 assessment on insurers, specify that the policy surcharge is due
198 and payable quarterly as collected throughout the assessment
199 year. Insurers shall collect policy surcharges at a uniform
200 percentage rate specified by order as described in paragraph

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201 (c). Insurers are not required to advance funds if the
202 association and the office elect to use the pass-through
203 installment option. Assessments levied under this subparagraph
204 are paid after policy surcharges are collected, and the
205 recognition of assets is based on actual policy surcharges
206 collected offset by the obligation to the association.
207 2. If the association elects to require insurers to remit
208 the assessment before surcharging the policy, the following
209 shall apply:
210 a. On or before the date specified in the order of the
211 office, insurers shall make an initial advance payment to the
212 association of the percentage specified in the order multiplied
213 by the insurer's direct written premiums received in this state
214 for the preceding calendar year for the kinds of insurance
215 included within such account before the beginning of the
216 assessment year. The board may authorize an insurer to pay an
217 assessment in a single payment or on a quarterly basis, based on
218 cash-flow needs.
219 b. The levy order shall provide each insurer so assessed
220 at least 30 days' written notice of the date the initial
221 assessment payment is due and payable by the insurer.
222 c. Insurers shall collect policy surcharges at a uniform
223 percentage rate specified by the order, as described in
224 paragraph (c).
225 d. Assessments levied under this subparagraph and paid by

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226 an insurer constitute advances of funds from the insurer to the
227 association and result in a receivable for policy surcharges to
228 be billed in the future. The amount of billed policy surcharges,
229 to the extent it is likely that it will be realized, meets the
230 definition of an admissible asset as specified in the National
231 Association of Insurance Commissioners' Statement of Statutory
232 Accounting Principles No. 4. The asset shall be established and
233 recorded separately from the liability. If an insurer is unable
234 to fully recoup the amount of the assessment, the amount
235 recorded as an asset shall be reduced to the amount reasonably
236 expected to be recouped.
237 3. Insurers must submit a reconciliation report to the
238 association within 120 days after the end of the 12 -month
239 assessment year period and annually thereafter for a period of 2
240 3 years. The report must indicate the amount of the initial
241 payment or installment payments made to the association and the
242 amount of policy surcharges collected for the assessment year.
243 If the insurer's reconciled obligation is more than the amount
244 paid to the association, the insurer shall pay the excess policy
245 surcharges collected to the association. If the insurer's
246 reconciled obligation is less than the initial amount paid to
247 the association, the association shall return the overpayment to
248 the insurer.
249 (4)
250 (c) The board may allow an insurer to pay an assessment on

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251 a quarterly basis.
252 Section 4. This act shall take effect July 1, 2022.

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PCS for HB 353
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: PCS for HB 353 Mortgage Payoff Letters
SPONSOR(S): Insurance & Banking Subcommittee
TIED BILLS: IDEN./SIM. BILLS:

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF

Orig. Comm.: Insurance & Banking Subcommittee Hinshelwood Luczynski

SUMMARY ANALYSIS
A mortgage payoff letter may be requested, for example, by a mortgagor who is selling the property that is
collateral for the mortgage loan, refinancing the mortgage loan, or paying off the mortgage loan. Florida law
requires that a mortgage lender or servicer deliver to the requestor, within 14 days after receipt of a written
request, a mortgage payoff letter setting forth the unpaid balance of the loan secured by the mortgage. When a
mortgage loan has been fully paid, the mortgage lender or servicer must execute in writing an instrument
acknowledging satisfaction of the mortgage and have the instrument acknowledged, or proven, and duly
entered in the official records of the proper county. Within 60 days after receiving full payment of the mortgage
loan, the mortgage lender or servicer must send the borrower the recorded satisfaction.

Bill proponents have explained that some mortgage payoff letters include language reserving the mortgage
servicer’s or lender’s right to change the amounts listed in the payoff letter and disclaiming the reliance of
others on the information in the payoff letter. In the event that the mortgage lender or servicer determines after
sending the mortgage payoff letter that the borrower owes additional money, bill proponents have said that
some mortgage lenders or servicers return the funds received from the closing which were sent in reliance on
the amount stated in the mortgage payoff letter. This results in the continued accrual of interest and potential
fees during the pendency of resolving the discrepancy in amount owed. Further, prior to resolution of the
discrepancy, there is not clear title to the property.

The bill:
 Reduces from 14 days to 10 days the timeframe within which a lender or servicer must send a
requested mortgage payoff letter.
 Standardizes the contents of the mortgage payoff letter as to all of the authorized requestors.
 Prohibits the lender or servicer from qualifying, reserving the right to change, or conditioning or
disclaiming the reliance of others on the information provided in a mortgage payoff letter; any attempt to
do so is void and unenforceable.
 Allows the lender or servicer to send a corrected mortgage payoff letter that will supersede any prior
payoff letter so long as the corrected payoff letter is received by the end of normal business hours at
least one business day before payment is made in reliance on the payoff letter.
 Prohibits the lender or servicer from denying the accuracy of the mortgage payoff letter as against any
person who relied upon it, but allows recovery of the sum owed from the borrower.
 Requires the lender or servicer to promptly apply payment received in reliance on the payoff letter.
 Specifies the process by which a mortgage payoff letter may be requested and sent.
 Requires the lender or servicer, within 60 days after the mortgage loan has been paid pursuant to the
mortgage payoff letter, to execute, have duly entered in the official records of the proper county, and
send to the mortgagor or record title owner an instrument acknowledging release of the mortgage (i.e.,
a satisfaction of mortgage or a release of mortgage).

The bill has no fiscal impact on state and local governments and an indeterminate fiscal impact on the private
sector.

The bill provides an effective date of October 1, 2022.

This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: pcs0353.IBS
DATE: 1/25/2022
FULL ANALYSIS

I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:
Background

A mortgage payoff letter1 may be requested, for example, by a mortgagor2 who is selling the property
that is collateral for the mortgage loan, refinancing the mortgage loan, or paying off the mortgage loan.
Florida law requires that a mortgage lender or servicer deliver to the requestor, within 14 days after
receipt of a written request, a mortgage payoff letter setting forth the unpaid balance of the loan
secured by the mortgage.3 The request may be made by a mortgagor, a record title owner of the
property, a fiduciary or trustee lawfully acting on behalf of a record title owner, or any other person
lawfully authorized to act on behalf of a mortgagor or record title owner of the property.4

Florida law specifies the information that must be contained in the mortgage payoff letter, depending on
who requests the letter:5
 If the mortgagor, or any person lawfully authorized to act on behalf of the mortgagor, makes the
request, the mortgage payoff letter must include an itemization of the principal, interest, and any
other charges properly due under or secured by the mortgage and interest on a per-day basis
for the unpaid balance.
 If a record title owner of the property, or any person lawfully authorized to act on behalf of a
mortgagor or record title owner of the property, makes the request, the mortgage payoff letter
may include the itemization of information required above, but must at a minimum include the
total unpaid balance due under or secured by the mortgage on a per-day basis.

When the amount of money due on any mortgage loan has been fully paid, the mortgage lender or
servicer must execute in writing an instrument acknowledging satisfaction of the mortgage and have
the instrument acknowledged, or proven, and duly entered in the official records of the proper county. 6
Within 60 days after receiving full payment of the mortgage loan, the person required to acknowledge
satisfaction of the mortgage must send or cause to be sent the recorded satisfaction to the person who
has made the full payment.7 In the case of a civil action arising out of this requirement, the prevailing
party is entitled to attorney fees and costs.

Bill proponents have explained that some mortgage payoff letters include language reserving the
mortgage servicer’s or lender’s right to change the amounts listed in the payoff letter and disclaiming
the reliance of others on the information in the payoff letter. In the event that the mortgage lender or
servicer determines after sending the mortgage payoff letter that the borrower owes additional money,
bill proponents have said that some mortgage lenders or servicers return the funds received from the
closing which were sent in reliance on the amount stated in the mortgage payoff letter. This results in
the continued accrual of interest and potential fees during the pendency of resolving the discrepancy in
amount owed. Further, prior to resolution of the discrepancy, there is not clear title to the property.

Effect of the Bill

The bill reduces from 14 days to 10 days the timeframe within which a mortgage lender or servicer
must send a requested mortgage payoff letter setting forth the unpaid balance of the mortgage loan. If

1 Referred to as an “estoppel letter” in Florida statutes. See ss. 701.04 and 701.041, F.S.
2 Mortgagor means “[s]omeone who mortgages property; the mortgage-debtor, or borrower.” Black's Law Dictionary (11th
ed. 2019).
3 S. 701.04(1), F.S.
4 Id.
5 Id.
6 S. 701.04(2), F.S.
7 Id.
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the request for a mortgage payoff letter is made by a person other than the mortgagor,8 the request
must include a copy of the instrument showing such person’s title in the property or other lawful
authorization, and the mortgage lender or servicer must notify the mortgagor of the request.

The bill standardizes the information that must be contained in the mortgage payoff letter, regardless of
whether the requestor is the mortgagor, a record title owner, or a person lawfully authorized to act on
behalf of the mortgagor or record title owner. The letter must at a minimum include:
 The unpaid balance of the loan secured by the mortgage as of the date specified in the letter,
including an itemization of the principal, interest, and any other charges comprising the unpaid
balance; and
 Interest accruing on a per-day basis for the unpaid balance, if applicable.

The bill prohibits the mortgage lender or servicer from qualifying, reserving the right to change, or
conditioning or disclaiming the reliance of others on the information provided in a mortgage payoff
letter, and any attempt to do so is void and unenforceable. However, this prohibition does not apply to
mortgages for which a notice of lis pendens 9 in a foreclosure action or a suggestion of bankruptcy10 has
been properly filed and recorded.

If the mortgage lender or servicer determines that any of the information in the mortgage payoff letter
was inaccurate, the mortgage lender or servicer may send a corrected mortgage payoff letter. The
corrected mortgage payoff letter will supersede any prior mortgage payoff letter so long as the
corrected payoff letter is received by the end of normal business hours at least one business day
before payment is made in reliance on the mortgage payoff letter.

If any of the information in the mortgage payoff letter was inaccurate and there was not a timely
corrected payoff letter, the bill prohibits the mortgage lender or servicer from denying the accuracy of
the mortgage payoff letter as against any person who relied upon it. However, this does not affect the
mortgage lender’s right to recover any sum not included in the mortgage payoff letter, nor does it limit
any claim or defense to recovery that the borrower may have.

If a payment is received at the location and in the manner specified by the mortgage lender or servicer,
the mortgage lender or servicer must accept and may not return any payment received in reliance on
the mortgage payoff letter, and the mortgage lender or servicer must promptly apply such payment to
the unpaid balance of the mortgage loan. This will prevent accrual of interest and potential fees while
the mortgage lender or servicer and the borrower work through any discrepancy as to the amount
owed.

The bill specifies the process for requesting a mortgage payoff letter. A written request for a mortgage
payoff letter must be sent to the mortgage lender or servicer by first-class mail, postage prepaid; by
common carrier delivery service; or by e-mail, facsimile, or other electronic means at the address made
available by the mortgage lender or servicer for such purpose, or through an automated system
provided by the mortgage lender or servicer for requesting a mortgage payoff letter. The request is
considered received:
a. Five days after the request sent by first-class mail is deposited with the United States Postal
Service;
b. The day the request is delivered by a common carrier delivery service; or
c. The day the request is sent by e-mail, facsimile, or other electronic means or through an
automated system provided by the mortgage lender or servicer for requesting a mortgage payoff letter.

8 Definition of “mortgagor”, supra note 2.
9 A notice of lis pendens is “[a] notice, recorded in the chain of title to real property, required or permitted in some
jurisdictions to warn all persons that certain property is the subject matter of litigation, and that any interests acquired
during the pendency of the suit are subject to its outcome. Black's Law Dictionary (11th ed. 2019). See also s. 48.23, F.S.,
relating to lis pendens.
10 “Suggestion of bankruptcy is a document filed with a court to put it on notice that the defendant in a pending lawsuit has

filed a bankruptcy case. A party can file a suggestion of bankruptcy whenever a party believes that the bankruptcy or
automatic stay provision of bankruptcy code has an effect on a state court case. ” US Legal,
https://definitions.uslegal.com/s/suggestion-of-bankruptcy/ (last visited Jan. 23, 2022).
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If any of the foregoing dates is a Saturday, Sunday, or legal holiday, the request for a mortgage payoff
letter is considered received on the next business day.

The bill also specifies the process by which a mortgage payoff letter may be sent. The mortgage lender
or servicer must send a mortgage payoff letter by first-class mail, by common carrier delivery service,
or by e-mail, facsimile, or other electronic means, as directed in the written request, or through an
automated system provided by the mortgage lender or servicer for this purpose. However, the
mortgage lender or servicer is not required to pay for a common carrier delivery service. If the 10-day
period after a written request is received by the mortgage lender or servicer ends on a Saturday,
Sunday, or legal holiday, the mortgage payoff letter is considered timely if it is sent by the close of
business on the next business day.

The bill requires the mortgage lender or servicer, within 60 days after the mortgage loan has been fully
paid or paid pursuant to the mortgage payoff letter, to execute, have duly entered in the official records
of the proper county, and send to the mortgagor or record title owner an instrument acknowledging
release of the mortgage (i.e., a satisfaction of mortgage or a release of mortgage). The prevailing party
in a civil action brought against the mortgage lender or servicer to enforce this requirement is entitled to
reasonable attorney fees and costs. The recorded release of the mortgage does not relieve the
mortgagor, or the mortgagor’s successors or assigns, from any personal liability on the mortgage loan.
In the event of a discrepancy in the amount owed on the mortgage loan, this provision will ensure clear
title to the property while maintaining the mortgage lender’s or servicer’s ability to recover sums
properly owed under the mortgage loan.

The bill conforms the definition of “estoppel letter” in s. 701.041, F.S., to the estoppel letter
requirements in s. 701.04, F.S.

The bill provides an effective date of October 1, 2022.

B. SECTION DIRECTORY:
Section 1. Amends s. 701.04, F.S., relating to cancellation of mortgages, liens, and judgments.

Section 2. Amends s. 701.041, F.S., relating to title insurer; mortgage release certificate.

Section 3. 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.

B. FISCAL IMPACT ON LOCAL GOVERNMENTS:

1. Revenues:
None.

2. Expenditures:
None.

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DATE: 1/25/2022
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill has an indeterminate impact on the private sector. The bill may lead to smoother real estate
closings to the extent that mortgage lenders or servicers provide more accurate information in
mortgage payoff letters. In the event of a discrepancy in the amount owed on the mortgage loan, the bill
will prevent accrual of interest and potential fees while the mortgage lender or servicer and the
borrower work through the issue. Additionally, the bill will ensure clear title to the property while
maintaining the mortgage lender’s or servicer’s ability to recover sums properly owed under the
mortgage loan.

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:
None.

B. RULE-MAKING AUTHORITY:
None.

C. DRAFTING ISSUES OR OTHER COMMENTS:
None.

IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES

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DATE: 1/25/2022
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

PCS for HB 353 2022

1 A bill to be entitled
2 An act relating to mortgage payoff letters; amending
3 s. 701.04, F.S.; revising the timeframe for a
4 mortgagee or mortgage servicer to send or cause to be
5 sent an estoppel letter with specified information to
6 certain persons ; revising the circumstances under
7 which a copy of the instrument showing title in the
8 property or other lawful authorization must be
9 included; requiring notice to the mortgagor of a
10 request for an estoppel letter under certain
11 circumstances; revising requirements for an estoppel
12 letter; specifying prohibited actions by the mortgagee
13 or mortgage servicer of certain mortgages and deeming
14 such prohibited actions void and unenforceable;
15 authorizing a corrected estoppel letter under certain
16 circumstances; providing that a corrected estoppel
17 letter supersedes any previous estoppel letter under
18 certain circumstances; prohibiting the mortgagee or
19 mortgage servicer from denying the accuracy of an
20 estoppel letter under certain circumstances; providing
21 construction; prohibiting payments received pursuant
22 to an estoppel letter from being returned and
23 requiring such payments to be applied to any unpaid
24 balance of a mortgage; providing methods for sending a
25 written request for an estoppel letter and for sending

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26 the estoppel letter; providing that the mortgagee or
27 mortgage servicer is not required to pay for a common
28 carrier delivery service; requiring the mortgagee or
29 mortgage servicer to take certain actions within a
30 specified time after the unpaid balance of a mortgage
31 has been fully paid or paid pursuant to an estoppel
32 letter; providing for liability under certain
33 circumstances; authorizing attorney fees and costs;
34 providing that certain persons may still be personally
35 liable after recording a release of a mortgage;
36 amending s. 701.041, F.S.; revising a definition;
37 conforming provisions to changes made by the act;
38 providing an effective date.
39
40 Be It Enacted by the Legislature of the State of Florida:
41
42 Section 1. Section 701.04, Florida Statutes, is amended to
43 read:
44 701.04 Cancellation of mortgages, liens, and judgments.—
45 (1)(a) Within 10 14 days after receipt of the written
46 request of a mortgagor, a record title owner of the property, a
47 fiduciary or trustee lawfully acting on behalf of a record title
48 owner, or any other person lawfully authorized to act on behalf
49 of a mortgagor or record title owner of the property, the
50 mortgagee holder of a mortgage shall deliver or cause the

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51 mortgage servicer of the mortgage shall send or cause to be sent
52 to deliver to the person making the request at a place
53 designated in the written request an estoppel letter setting
54 forth the unpaid balance of the loan secured by the mortgage. If
55 the written request is made by a person other than the
56 mortgagor, the request must include a copy of the instrument
57 showing such person’s title in the property or other lawful
58 authorization, and the mortgagee or mortgage servicer must
59 notify the mortgagor of the request.
60 (a) If the mortgagor, or any person lawfully authorized to
61 act on behalf of the mortgagor, makes the request, the estoppel
62 letter must include an itemization of the principal, interest,
63 and any other charges properly due under or secured by the
64 mortgage and interest on a per-day basis for the unpaid balance.
65 (b) If a record title owner of the property, or any person
66 lawfully authorized to act on behalf of a mortgagor or record
67 title owner of the property, makes the request:
68 1. The request must include a copy of the instrument
69 showing title in the property or lawful authorization.
70 2. The estoppel letter may include the itemization of
71 information required under paragraph (a), but must at a minimum
72 include:
73 1. The total unpaid balance of the loan due under or
74 secured by the mortgage as of the date specified in the estoppel
75 letter, including an itemization of the principal, interest, and

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76 any other charges comprising the unpaid balance on a per-day
77 basis.; and
78 2. Interest accruing on a per-day basis for the unpaid
79 balance, if applicable.
80 (c)1. Except for mortgages for which a notice of lis
81 pendens in a foreclosure action or a suggestion of bankruptcy
82 has been properly filed and recorded, the mortgagee or mortgage
83 servicer may not qualify, reserve the right to change, or
84 condition or disclaim the reliance of others on the information
85 provided in an estoppel letter under paragraph (b), and any
86 attempt to do so is void and unenforceable. However, if the
87 mortgagee or mortgage servicer determines that any of the
88 information provided in the estoppel letter under paragraph (b)
89 was inaccurate, the mortgagee or mortgage servicer may send a
90 corrected estoppel letter to the person who requested the
91 estoppel letter.
92 2. If the person who requested the estoppel letter
93 receives a corrected estoppel letter by the end of normal
94 business hours at least 1 business day before a payment is made
95 in reliance on the previous estoppel letter, the corrected
96 estoppel letter supersedes all prior estoppel letters.
97 3. If any of the information provided in the estoppel
98 letter under paragraph (b) was inaccurate but the person who
99 requested the estoppel letter did not timely receive a corrected
100 estoppel letter as provided in subparagraph 2., the mortgagee or

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101 mortgage servicer may not deny the accuracy of such information
102 as against any person who relied upon it. This subparagraph does
103 not affect the right of a mortgagee to recover any sum that it
104 did not include in an estoppel letter from any person liable for
105 payment of the loan or other obligations secured by the
106 mortgage, nor does it limit any claim or defense to recovery
107 that such person may have at law or in equity.
108 (d)3. The mortgagee or mortgage servicer of the mortgagee
109 acting in accordance with a request in substantial compliance
110 with this subsection paragraph is expressly discharged from any
111 obligation or liability to any person on account of the release
112 of the requested information, other than the obligation to
113 comply with the terms of the estoppel letter.
114 (e) If a payment is received at the location and in the
115 manner specified by the mortgagee or mortgage servicer, the
116 mortgagee or mortgage servicer must accept and may not return
117 any payment received in reliance on an estoppel letter and must
118 promptly apply such payment to the unpaid balance of the loan
119 properly due under or secured by the mortgage.
120 (f)1. A written request for an estoppel letter under
121 paragraph (a) must be sent to the mortgagee or mortgage servicer
122 by first-class mail, postage prepaid; by common carrier delivery
123 service; or by e-mail, facsimile, or other electronic means at
124 the address made available by the mortgagee or mortgage servicer
125 for such purpose, or through an automated system provided by the

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126 mortgagee or mortgage servicer for requesting an estoppel
127 letter. The written request is considered received by the
128 mortgagee or mortgage servicer:
129 a. Five days after the request sent by first-class mail is
130 deposited with the United States Postal Service;
131 b. The day the request is delivered by a common carrier
132 delivery service; or
133 c. The day the request is sent by e-mail, facsimile, or
134 other electronic means or through an automated system provided
135 by the mortgagee or mortgage servicer for requesting an estoppel
136 letter.
137
138 If any of the foregoing dates is a Saturday, Sunday, or legal
139 holiday under the laws of this state or the United States, the
140 request for an estoppel letter is considered received on the
141 next business day.
142 2. The mortgagee or mortgage servicer must send an
143 estoppel letter by first-class mail, by common carrier delivery
144 service, or by e-mail, facsimile, or other electronic means, as
145 directed in the written request, or through an automated system
146 provided by the mortgagee or mortgage servicer for this purpose.
147 However, the mortgagee or mortgage servicer is not required to
148 pay for a common carrier delivery service. If the 10-day period
149 after a written request is received by the mortgagee or mortgage
150 servicer ends on a Saturday, Sunday, or legal holiday under the

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151 laws of this state or the United States, the estoppel letter is
152 considered timely if it is sent by the close of business on the
153 next business day.
154 (g)(c) Notwithstanding s. 655.059, a mortgagee or mortgage
155 servicer mortgage holder may provide the financial information
156 required under this subsection to a person authorized under this
157 subsection to request the financial information notwithstanding
158 s. 655.059.
159 (2)(a) Within 60 days after the unpaid balance of a loan
160 secured by a mortgage has been fully paid or paid pursuant to an
161 estoppel letter under subsection (1), whichever is earlier, the
162 mortgagee or mortgage servicer shall execute in writing an
163 instrument acknowledging release of the mortgage; have the
164 instrument acknowledged, or proven, and duly entered in the
165 official records of the proper county; and send or cause to be
166 sent the recorded release to the mortgagor or record title owner
167 of the property. The prevailing party in a civil action brought
168 against the mortgagee or mortgage servicer to enforce the
169 requirements of this paragraph is entitled to reasonable
170 attorney fees and costs.
171 (b) The recorded release of the mortgage does not relieve
172 the mortgagor, or the mortgagor’s successors or assigns, from
173 any personal liability on the loan or other obligations
174 previously secured by the mortgage.
175 (3)(2) Within 60 days after the unpaid balance Whenever

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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

PCS for HB 353 2022

176 the amount of money due on a any mortgage, lien, or judgment has
177 been fully paid to the person or party entitled to the payment
178 thereof, the mortgagee, creditor, or assignee, or the attorney
179 of record in the case of a judgment, to whom the payment was
180 made, shall execute in writing an instrument acknowledging
181 satisfaction of the mortgage, lien, or judgment; and have the
182 instrument acknowledged, or proven, and duly entered in the
183 official records of the proper county; and. Within 60 days after
184 the date of receipt of the full payment of the mortgage, lien,
185 or judgment, the person required to acknowledge satisfaction of
186 the mortgage, lien, or judgment shall send or cause to be sent
187 the recorded satisfaction to the person who has made the full
188 payment. In the case of a civil action arising out of this
189 section, The prevailing party in a civil action brought against
190 the creditor or assignee, or the attorney of record in the case
191 of a judgment, to enforce the requirements of this subsection is
192 entitled to reasonable attorney fees and costs.
193 (4)(3) When Whenever a writ of execution has been issued,
194 docketed, and indexed with a sheriff and the judgment upon which
195 it was issued has been fully paid, it is the responsibility of
196 the person party receiving payment to request, in writing,
197 addressed to the sheriff, return of the writ of execution as
198 fully satisfied.
199 Section 2. Paragraph (a) of subsection (1) and subsection
200 (2) of section 701.041, Florida Statutes, are amended to read:

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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

PCS for HB 353 2022

201 701.041 Title insurer; mortgage release certificate.—
202 (1) DEFINITIONS.—For purposes of this section:
203 (a) "Estoppel letter" means a statement containing, at a
204 minimum, the information required in s. 701.04(1)(b) of the
205 amount of:
206 1. The unpaid balance of a loan secured by a mortgage,
207 including principal, interest, and any other charges properly
208 due under or secured by the mortgage.
209 2. Interest on a per-day basis for the unpaid balance.
210 (2) CERTIFICATE OF RELEASE.—An officer or duly appointed
211 agent of a title insurer may, on behalf of a mortgagor or a
212 person who acquired from the mortgagor title to all or a part of
213 the property described in a mortgage, execute a certificate of
214 release that complies with the requirements of this section and
215 record the certificate of release in the real property records
216 of each county in which the mortgage is recorded if a
217 satisfaction or release of the mortgage has not been executed
218 and recorded after the date payment in full of the loan properly
219 due under or secured by the mortgage was made in accordance with
220 an estoppel letter a payoff statement furnished by the mortgagee
221 or the mortgage servicer.
222 Section 3. This act shall take effect October 1, 2022.

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PCS for HB 353
PCS for HB 389
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: PCS for HB 389 Money Services Businesses
SPONSOR(S): Insurance & Banking Subcommittee
TIED BILLS: IDEN./SIM. BILLS:

REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF

Orig. Comm.: Insurance & Banking Subcommittee Hinshelwood Luczynski

SUMMARY ANALYSIS
The Office of Financial Regulation’s (OFR) Division of Consumer Finance licenses and regulates various
aspects of the non-depository financial services industries, including money services businesses (MSBs)
regulated under ch. 560, F.S. MSB applicants must submit fingerprints to the Florida Department of Law
Enforcement (FDLE) for a state criminal history background check, and the fingerprints must be submitted to
the Federal Bureau of Investigation (FBI) for a federal criminal history background check. The OFR must
review the results of the state and federal criminal history background checks and determine whether the
applicant meets licensure requirements.

Access to the FBI’s criminal history record information system (CHRI) was previously authorized for
fingerprints pursuant to ch. 560, F.S. However, in order to obtain CHRI for applicants to the recently created
Financial Technology Sandbox, FDLE sent correspondence to the FBI’s Criminal Justice Information Law Unit
(CJILU) to obtain an Originating Agency Identifier (ORI). The ORI validates legal authorization to access
criminal justice information and identifies the specific agency requesting the information. CJILU responded to
this request stating that the MSB licensing statute does not qualify for CHRI because the terms “responsible
person” and “control of a money services business”, as used in that statute to specify persons who are
required to submit fingerprints, are overly broad and, thus, do not sufficiently define the categories of people
subject to the background check. The CJILU acknowledged that MSB fingerprinting was previously approved
by the CJILU and that the FBI will continue to honor fingerprints submitted for MSB licensure. However, the
CJILU has placed MSB fingerprinting on a grace period of unspecified length in order to allow Florida to amend
MSB fingerprinting statutes such that the statutes specifically identify the categories of licensees or employees
falling within the purview of the statutes; CJILU will not allow fingerprinting of additional categories of
applicants (i.e., those applying under the Financial Technology Sandbox) during this grace period.

The bill creates the term “control person”, repeals the definitions of “officer” and “responsible person”, and
repeals the statute that defines when a person has a controlling interest in an MSB. Some of the elements from
these repealed definitions and statute are made part of the “control person” definition, and the bill inserts
“control person” throughout ch. 560, F.S., in place of these repealed definitions and statute. Thus, a person
who meets the definition of “control person”, as defined in the bill, must submit fingerprints and be vetted by the
OFR.

The bill repeals the requirement that a person or group of persons proposing to acquire a controlling interest in
an MSB submit an application for licensure prior to the acquisition. The bill deletes portions of current law that
relate to the change of control application process, including a provision that caps fees when a change of
control application is filed. If a new “control person”, as defined in the bill, is added, such person must submit
fingerprints and be vetted by the OFR.

The bill has an indeterminate negative fiscal impact on the state, an indeterminate positive fiscal impact on the
private sector, and no fiscal impact on local governments.

The bill provides an effective date of October 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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DATE: 1/25/2022
FULL ANALYSIS

I. SUBSTANTIVE ANALYSIS

A. EFFECT OF PROPOSED CHANGES:
Background

The Office of Financial Regulation (OFR) regulates banks, credit unions, other financial institutions,
finance companies, and the securities industry.1 The Division of Consumer Finance within the OFR
licenses and regulates various aspects of the non-depository financial services industries, including
money services businesses (MSBs) regulated under ch. 560, F.S. An MSB is any person located in or
doing business in this state, from this state, or into this state from locations outside this state or country
who acts as the following:2
 Payment instrument seller: A payment instrument seller sells, issues, provides, or delivers
payment instruments.3
 Foreign currency exchanger: A foreign currency exchanger exchanges, for compensation,
currency4 of the United States or a foreign government to currency of another government. 5
 Check casher: A check casher sells, issues, provides, or delivers currency6 in exchange for
payment instruments 7 received, except travelers checks.8
 Money transmitter: A money transmitter receives currency,9 monetary value,10 or payment
instruments 11 for the purpose of transmitting the same by any means, including transmission by
wire, facsimile, electronic transfer, courier, the Internet, or through bill payment services or other
businesses that facilitate such transfer within this country, or to or from this country. 12

An MSB may engage in deferred presentment transactions, commonly known as “payday loans”, by
filing a declaration of intent with the OFR.13 A money transmitter or payment instrument seller may
engage in the activities authorized for check cashers and foreign currency exchangers without paying
additional licensing fees.14 State and federally chartered depository institutions, such as banks and
credit unions, are exempt from licensure as an MSB.15

An applicant for an MSB license must submit the following to the OFR:
 An application;16
 A nonrefundable application fee;17

1 S. 20.121(3)(a)2., F.S.
2 S. 560.103(22), F.S.
3 S. 560.103(30) and (34), F.S. The term “payment instrument” means a check, draft, warrant, money order, travelers

check, electronic instrument, or other instrument, payment of money, or monetary value whether or not negotiable. The
term does not include an instrument that is redeemable by the issuer in merchandise or service, a credit card voucher, or
a letter of credit. S. 560.103(29), F.S.
4 The term “currency” means the coin and paper money of the United States or of any other country which is designated

as legal tender and which circulates and is customarily used and accepted as a medium of exchange in the country of
issuance. Currency includes United States silver certificates, United States notes, and Federal Reserve notes. Currency
also includes official foreign bank notes that are customarily used and accepted as a medium of exchange in a foreign
country. S. 560.103(11), F.S.
5 S. 560.103(17), F.S.
6 Definition of “currency”, supra note 4.
7 Definition of “payment instrument”, supra note 3.
8 S. 560.103(6) and (34), F.S.
9 Definition of “currency”, supra note 4.
10 The term “monetary value” means a medium of exchange, whether or not redeemable in currency. S. 560.103(21), F.S.
11 Definition of “payment instrument”, supra note 3.
12 S. 560.103(23), F.S.
13 S. 560.403, F.S.
14 S. 560.204(2), F.S.
15 S. 560.104, F.S.
16 S. 560.141(1)(a), F.S.
17 Ss. 560.141(1)(b) and 560.143, F.S.
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 A copy of the applicant’s written anti-money laundering program required by federal law;18 and
 Fingerprints for the following individuals:19
o An officer, which is defined as an individual, other than a director, who participates in, or
has authority to participate in, the major policymaking functions of an MSB, regardless
of whether the individual has an official title or receives a salary or other
compensation.20
o A director.
o A responsible person, which is defined as an individual who is employed by or affiliated
with an MSB and who has principal active management authority over the business
decisions, actions, and activities of the MSB in this state.21 In turn, “affiliated party”
means a director, officer, responsible person, employee, or foreign affiliate of a money
services business, or a person who has a controlling interest in a money services
business.22
o The compliance officer, which is defined as the individual in charge of overseeing,
managing, and ensuring that an MSB is in compliance with all state and federal laws
and rules relating to MSBs, as applicable, including all money laundering laws and
rules.23
o A controlling shareholder.
o Any other person who has a controlling interest, meaning a person who:24
 Possesses the power, directly or indirectly, to direct the management or policies
of the MSB, whether through ownership, by contract, or otherwise;
 Directly or indirectly may vote 25 percent or more of a class of a voting security
or sell or direct the sale of 25 percent or more of a class of voting securities; or
 In the case of a partnership, may receive upon dissolution or has contributed 25
percent or more of the capital.

Fingerprints are not required if the applicant is a publicly traded corporation. 25 If fingerprints are
required, the fingerprints must be submitted for live-scan processing.26 Live-scan is a device that
electronically takes fingerprints and other information and uploads that information to the Florida
Department of Law Enforcement (FDLE) who, in turn, sends the fingerprints to the Federal Bureau of
Investigation (FBI) for a fingerprint background check.27 The fingerprints may be submitted through a
third-party vendor authorized by FDLE to provide live-scan fingerprinting.28 FDLE must conduct the
state criminal history background check, and a federal criminal history background check must be
conducted through the FBI.29 The costs of fingerprint processing, including the cost of retaining the
fingerprints, must be borne by the person subject to the background check. 30 The OFR must review the
results of the state and federal criminal history background checks and determine whether the applicant
meets licensure requirements.31

An MSB license must be renewed every two years.32

18 S. 560.141(d), F.S.
19 Ss. 560.141(c) and 560.127, F.S.
20 S. 560.103(26), F.S.
21 S. 560.103(33), F.S.
22 S. 560.103(1), F.S.
23 S. 560.103(8), F.S.
24 S. 560.127, F.S.
25 S. 560.141(1)(c)6., F.S.
26 S. 560.141(1)(c), F.S.
27 Florida Live Scan,

https://livescanflorida.com/#:~:text=LiveScan%20is%20a% 20device%20t hat,for%20a%20fingerprint%20background%20c
heck. (last visited Jan. 25, 2022).
28 S. 560.141(1)(c)1., F.S.
29 S. 560.141(1)(c)2., F.S.
30 S. 560.141(1)(c)4., F.S.
31 560.141(1)(c)5., F.S.
32 Ss. 560.141(2) and 560.142, F.S.
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Once licensed, an MSB is required to report any change in the partners, officers, members, joint
venturers, directors, controlling shareholders, or responsible persons. 33 If such person does not have a
controlling interest in the MSB, then the person must simply comply with fingerprint requirements and
be vetted by the OFR.34 If any person, directly or indirectly or acting by or through one or more persons,
proposes to purchase or acquire a controlling interest in an MSB, such person or group must submit a
new application for licensure at least 30 days before such purchase or acquisition.35 Such a change of
control application is not required where the person or group of persons has previously complied with
applicable licensing provisions, provided that they are currently affiliated with the MSB, or where the
person or group of persons is currently licensed with the OFR as an MSB.36 A change of control
application must be accompanied by the payment of an initial licensing fee and a fee per branch or
authorized vendor, up to a maximum of $20,000.37

As previously mentioned, when fingerprinting is required, the fingerprints must be submitted to FDLE
for a state and federal criminal history background check. The federal background check is conducted
through the FBI’s criminal history record information (CHRI) system. Federal law Pub. L. 92-544
authorizes the exchange of CHRI with officials of state and local governmental agencies for licensing
and employment purposes.38 One of the primary purposes for enacting Pub. L. 92-544 was to establish
a national policy with adequate sanctions and administrative safeguards regarding the dissemination of
FBI’s CHRI to state and local governments for non-criminal justice licensing and employment
purposes.39 The FBI, with the assistance of the United States Department of Justice, has determined
the parameters of Pub. L. 92-544.40 The criteria for granting access to the FBI’s CHRI are as follows:
a. The statute must exist as a result of a legislative enactment;
b. It must require the fingerprinting of applicants who are to be subjected to a national criminal
history background check;
c. It must, expressly (“submit to the FBI”) or by implication (“submit for a national check”),
authorize the use of FBI records for the screening of applicants;
d. It must identify the specific category(ies) of licensees/employees falling within its purview,
thereby avoiding over breadth;
e. It must not be against public policy; and
f. It may not authorize receipt of the CHRI by a private entity.

Access to the FBI’s CHRI was previously authorized for fingerprints pursuant to ch. 560, F.S. However,
in order to obtain CHRI for applicants to the recently created Financial Technology Sandbox under s.
559.952, F.S., created in the 2020 legislative session,41 FDLE sent correspondence to the FBI’s
Criminal Justice Information Law Unit (CJILU) to obtain an Originating Agency Identifier (ORI). The ORI
validates legal authorization to access criminal justice information and identifies the specific agency
requesting the information. CJILU reviewed s. 559.952, F.S., which derives its fingerprinting authority
from s. 560.141, F.S. CJILU responded to this request stating that s. 560.141, F.S., does not qualify for
CHRI because the terms “responsible person” and “control of a money services business” as used in s .
560.141, F.S., are overly broad and, thus, do not sufficiently define the categories of people subject to
the background check.42 The CJILU acknowledged that MSB fingerprinting was previously approved by
the CJILU and that the FBI will continue to honor fingerprints submitted for MSB licensure.43 However,
the CJILU has placed MSB fingerprinting on a grace period of unspecified length in order to allow

33 S. 560.126(3), F.S.
34 S. 560.126(3)(b), F.S.
35 S. 560.126(3)(a), F.S.; r. 69v-560.201(3), F.A.C.
36 S. 560.126(3)(c), F.S.; r. 69v-560.201(6), F.A.C.
37 Ss. 560.126(3) and 560.143(1), F.S.
38 20 C.F.R. § 20.33.
39 Federal Bureau of Investigation, Testimony of Dennis Lormel Before the House Financial Services Committee (Mar. 06,

2001), https://archives.fbi.gov/archives/news/testimony/fbis-pers pective-on-criminal-history-record-information-checks-on-
individuals-conducting-insuranc e-business (last visited Jan. 25, 2022).
40 Email from Heather R. Postlethwait, FBI Office of the General Counsel, to Nathan Pate, Florida Department of Law

Enforcement, RE: ORI Request - Florida Office of Financial Regulation (Mar. 22, 2021).
41 Ch. 2020-161, Laws of Fla.
42 Email from Heather R. Postlethwait, supra note 40.
43 Id.
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Florida to amend MSB fingerprinting statutes such that the statutes specifically identify the categories
of licensees or employees falling within the purview of the statutes; CJILU will not allow fingerprinting of
additional categories of applicants (i.e., those applying under the Financial Technology Sandbox)
during this grace period.44

Effect of the Bill

The bill creates the term “control person” and defines the term as:
 A person that possesses the power, directly or indirectly, to direct the management or policies
of a money services business, whether through ownership of securities, by contract, or through
other means, and regardless of whether such person has an official title or receives a salary or
other compensation. The following persons are each presumed to be a control person:
o The president, chief executive officer, chief financial officer, chief operations officer,
chief legal officer, and compliance officer.
o A person holding any of the officer positions named in the money services business's
governing documents.
o A person holding any position named by the money services business's liability
insurance coverage for directors and officers, if the business has such coverage.
o A director of the money services business's board of directors.
 For a corporation that is not publicly traded,45 all shareholders that, directly or indirectly, own 25
percent or more or that have the power to vote 25 percent or more of a class of voting
securities.
 For a partnership, all general partners, and those limited or special partners that have
contributed 25 percent or more or that have the right to receive, upon dissolution, 25 percent or
more of the partnership's capital.
 For a trust, all trustees.
 For a limited liability company, all managers, and those members that have contributed 25
percent or more or that have the right to receive, upon dissolution, 25 percent or more of the
limited liability company's capital.

The bill repeals the definitions of “officer” and “responsible person” and repeals s. 560.127, F.S., which
defines when a person has a controlling interest in a money services business. Some of the elements
from these repealed definitions and statute are made part of the “control person” definition, and the bill
inserts “control person” throughout ch. 560, F.S., in place of these repealed definitions and statute.
Thus, a person who meets the definition of “control person”, as defined in the bill, must submit
fingerprints and be vetted by the OFR.

The bill repeals the requirement that a person or group of persons proposing to acquire a controlling
interest in an MSB submit an application for licensure prior to the acquisition. The bill deletes portions
of current law that relate to the change of control application process, including a provision that caps
fees when a change of control application is filed. If a new “control person”, as defined in the bill, is
added, such person must submit fingerprints and be vetted by the OFR.

The bill provides an effective date of October 1, 2022.

B. SECTION DIRECTORY:
Section 1. Amends s. 560.103, F.S., relating to definitions.

Section 2. Amends s. 560.118, F.S., relating to reports.

Section 3. Amends s. 560.123, F.S., relating to Florida Control of Money Laundering in Money
Services Business Act.

44 Id.
45 The term “publicly traded” is currently defined s. 560.141(1)(c)6., F.S., and only applies to paragraph (c). The bill
relocates the definition of “publicly traded” to s. 560.103, F.S., which contains definitions applicable to the entire chapte r.
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Section 4. Amends s. 560.126, F.S., required notice by licensee.

Section 5. Repeals s. 560.127, F.S., relating to control of a money services business.

Section 6. Amends s. 560.141, F.S., relating to license application.

Section 7. Amends s. 560.143, F.S., relating to fees.

Section 8. Reenacts s. 559.952, F.S., relating to Financial Technology Sandbox.

Section 9. Reenacts s. 560.114, F.S., disciplinary actions; penalties.

Section 10. Provides an effective date of October 1, 2022.

II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT

A. FISCAL IMPACT ON STATE GOVERNMENT:

1. Revenues:
The repeal of the requirement to submit a change of control application may result in a decrease in
revenue to the OFR. As such, this change may have an indeterminate negative fiscal impact on the
state.

2. Expenditures:
None.

B. FISCAL IMPACT ON LOCAL GOVERNMENTS:

1. Revenues:
None.

2. Expenditures:
None.

C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The repeal of the requirement to submit a change of control application will have a positive but
indeterminate fiscal impact on the private sector.

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.

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B. RULE-MAKING AUTHORITY:
The Financial Services Commission (commission)46 will need to amend rules to conform to changes
made by the bill.

C. DRAFTING ISSUES OR OTHER COMMENTS:
The changes proposed by the bill have not yet been reviewed by the FBI. Continued access to national
criminal history record information for persons required to submit fingerprints pursuant to ch. 560, F.S.,
is reliant upon the FBI’s approval of the changes made by the bill.47 FDLE has stated that, based on
past FDLE legislative analysis, the FBI may continue to consider the term “control person” to be overly
vague and not acceptable (as they did with “responsible person”) when re-evaluating the fingerprinting
provisions of ch. 560, F.S.48

IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES

46 S. 657.028(6), F.S. The 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 OFR’s agency head for the purpose of
rulemaking. S. 20.121(3)(c), F.S.
47 Florida Department of Law Enforcement, Agency Analysis of 2022 Senate Bill 1536 (Jan. 10, 2022).
48 Id.
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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

PCS for HB 389 2022

1 A bill to be entitled
2 An act relating to money services businesses; amending
3 s. 560.103, F.S.; defining the terms "control person"
4 and "publicly traded"; revising and deleting
5 definitions; amending s. 560.118, F.S.; providing that
6 a rule may require certain reports to the Office of
7 Financial Regulation to contain declarations by
8 control persons, rather than officers or other
9 responsible persons; amending s. 560.123, F.S.;
10 providing that control persons, rather than officers,
11 are not liable for loss or damages under certain
12 circumstances; amending s. 560.126, F.S.; requiring
13 licensees to report changes in control persons, rather
14 than certain other entities or persons; deleting a
15 requirement for certain persons to submit a licensure
16 application under certain circumstances; deleting the
17 definition of the term "controlling interest";
18 providing that the addition of a control person,
19 rather than certain other entities or persons, is
20 subject to certain requirements; deleting a
21 requirement for the Financial Services Commission to
22 adopt rules; repealing s. 560.127, F.S., relating to
23 control of a money services business; amending s.
24 560.141, F.S.; revising requirements for applications
25 for licensure as a money services business; amending

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PCS for HB 389 2022

26 s. 560.143, F.S.; revising a limitation for certain
27 fees to apply to a change in control, rather than in a
28 controlling interest; reenacting s. 559.952(4)(a),
29 F.S., relating to the Financial Technology Sandbox, to
30 incorporate the amendments made to ss. 560.118 and
31 560.141, F.S., in references thereto; reenacting s.
32 560.114(2)(c), F.S., relating to disciplinary actions
33 and penalties, to incorporate the amendment made to s.
34 560.141, F.S., in a reference thereto; providing an
35 effective date.
36
37 Be It Enacted by the Legislature of the State of Florida:
38
39 Section 1. Section 560.103, Florida Statutes, is amended
40 to read:
41 560.103 Definitions.—As used in this chapter, the term:
42 (1) "Affiliated party" means a control director, officer,
43 responsible person, employee, or foreign affiliate of a money
44 services business, or a person who has a controlling interest in
45 a money services business as provided in s. 560.127 .
46 (2) "Appropriate regulator" means a state, federal, or
47 foreign agency that has been granted authority to enforce state,
48 federal, or foreign laws related to a money services business or
49 deferred presentment provider.
50 (3) "Authorized vendor" means a person designated by a

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PCS for HB 389 2022

51 money services business licensed under part II of this chapter
52 to act on behalf of the licensee at locations in this state
53 pursuant to a written contract with the licensee.
54 (4) "Branch office" means the physical location, other
55 than the principal place of business, of a money services
56 business operated by a licensee under this chapter.
57 (5) "Cashing" means providing currency for payment
58 instruments except for travelers checks.
59 (6) "Check casher" means a person who sells currency in
60 exchange for payment instruments received, except travelers
61 checks.
62 (7) "Commission" means the Financial Services Commission.
63 (8) "Compliance officer" means the individual in charge of
64 overseeing, managing, and ensuring that a money services
65 business is in compliance with all state and federal laws and
66 rules relating to money services businesses, as applicable,
67 including all money laundering laws and rules.
68 (9) "Conductor" means a natural person who presents
69 himself or herself to a licensee for purposes of cashing a
70 payment instrument.
71 (10) "Control person" means:
72 (a) A person that possesses the power, directly or
73 indirectly, to direct the management or policies of a money
74 services business, whether through ownership of securities, by
75 contract, or through other means, and regardless of whether such

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PCS for HB 389 2022

76 person has an official title or receives a salary or other
77 compensation. The following persons are each presumed to be a
78 control person:
79 1. The president, chief executive officer, chief financial
80 officer, chief operations officer, chief legal officer, and
81 compliance officer.
82 2. A person holding any of the officer positions named in
83 the money services business's governing documents.
84 3. A person holding any position named by the money
85 services business's liability insurance coverage for directors
86 and officers, if the business has such coverage.
87 4. A director of the money services business's board of
88 directors.
89 (b) For a corporation that is not publicly traded, all
90 shareholders that, directly or indirectly, own 25 percent or
91 more or that have the power to vote 25 percent or more of a
92 class of voting securities.
93 (c) For a partnership, all general partners, and those
94 limited or special partners that have contributed 25 percent or
95 more or that have the right to receive, upon dissolution, 25
96 percent or more of the partnership's capital.
97 (d) For a trust, all trustees.
98 (e) For a limited liability company, all managers , and
99 those members that have contributed 25 percent or more or that
100 have the right to receive, upon dissolution, 25 percent or more

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101 of the limited liability company's capital.
102 (11)(10) "Corporate payment instrument" means a payment
103 instrument on which the payee named on the instrument's face is
104 other than a natural person.
105 (12)(11) "Currency" means the coin and paper money of the
106 United States or of any other country which is designated as
107 legal tender and which circulates and is customarily used and
108 accepted as a medium of exchange in the country of issuance.
109 Currency includes United States silver certificates, United
110 States notes, and Federal Reserve notes. Currency a lso includes
111 official foreign bank notes that are customarily used and
112 accepted as a medium of exchange in a foreign country.
113 (13)(12) "Deferred presentment provider" means a person
114 who is licensed under part II or part III of this chapter and
115 has filed a declaration of intent with the office to engage in
116 deferred presentment transactions as provided under part IV of
117 this chapter.
118 (14)(13) "Department" means the Department of Financial
119 Services.
120 (15)(14) "Electronic instrument" means a card, tangible
121 object, or other form of electronic payment for the transmission
122 or payment of money or the exchange of monetary value, including
123 a stored value card or device that contains a microprocessor
124 chip, magnetic stripe, or other means for storing information;
125 that is prefunded; and for which the value is decremented upon

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126 each use.
127 (16)(15) "Financial audit report" means a report prepared
128 in connection with a financial audit that is conducted in
129 accordance with generally accepted auditing standards prescribed
130 by the American Institute of Certified Public Accountants by a
131 certified public accountant licensed to do business in the
132 United States, and which must include:
133 (a) Financial statements, including notes related to the
134 financial statements and required supplementary information,
135 prepared in conformity with accounting principles generally
136 accepted in the United States. The notes must, at a minimum,
137 include detailed disclosures regarding receivables that are
138 greater than 90 days, if the total amount of such receivables
139 represents more than 2 percent of the licensee's total assets.
140 (b) An expression of opinion regarding whether the
141 financial statements are presented in conformity with accounting
142 principles generally accepted in the United States, or an
143 assertion to the effect that such an opinion cannot be expressed
144 and the reasons.
145 (17)(16) "Foreign affiliate" means a person located
146 outside this state who has been designated by a licensee to make
147 payments on behalf of the licensee to persons who reside outside
148 this state. The term also includes a person located outside of
149 this state for whom the licensee has been designated to make
150 payments in this state.

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151 (18)(17) "Foreign currency exchanger" means a person who
152 exchanges, for compensation, currency of the United States or a
153 foreign government to currency of another government.
154 (19)(18) "Fraudulent identification paraphernalia" means
155 all equipment, products, or materials of any kind that are used,
156 intended for use, or designed for use in the misrepresentation
157 of a customer's identity. The term includes, but is not limited
158 to:
159 (a) A signature stamp, thumbprint stamp, or other tool or
160 device used to forge a customer's personal identification
161 information.
162 (b) An original of any type of personal identification
163 listed in s. 560.310(2)(b) which is blank, stolen, or unlawfully
164 issued.
165 (c) A blank, forged, fictitious, or counterfeit instrument
166 in the similitude of any type of personal identification listed
167 in s. 560.310(2)(b) which would in context lead a reasonably
168 prudent person to believe that such instrument is an authentic
169 original of such personal identification.
170 (d) Counterfeit, fictitious, or fabricated information in
171 the similitude of a customer's personal identification
172 information that, although not authentic, would in context lead
173 a reasonably prudent person to credit its authenticity.
174 (20)(19) "Licensee" means a person licensed under this
175 chapter.

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176 (21)(20) "Location" means a branch office, mobile
177 location, or location of an authorized vendor whose business
178 activity is regulated under this chapter.
179 (22)(21) "Monetary value" means a medium of exchange,
180 whether or not redeemable in currency.
181 (23)(22) "Money services business" means any person
182 located in or doing business in this state, from this state, or
183 into this state from locations outside this state or country who
184 acts as a payment instrument seller, foreign currency exchanger,
185 check casher, or money transmitter.
186 (24)(23) "Money transmitter" means a corporation, limited
187 liability company, limited liability partnership, or foreign
188 entity qualified to do business in this state which receives
189 currency, monetary value, or payment instruments for the purpose
190 of transmitting the same by any means, including transmission by
191 wire, facsimile, electronic transfer, courier, the Internet, or
192 through bill payment services or other businesses that
193 facilitate such transfer within this country, or to or from this
194 country.
195 (25)(24) "Net worth" means assets minus liabilities,
196 determined in accordance with United States generally accepted
197 accounting principles.
198 (26)(25) "Office" means the Office of Financial Regulation
199 of the commission.
200 (26) "Officer" means an individual, other than a director,

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201 who participates in, or has authority to participate in, the
202 major policymaking functions of a money services business,
203 regardless of whether the individual has an official title or
204 receives a salary or other compensation.
205 (27) "Outstanding money transmission" means a money
206 transmission to a designated recipient or a refund to a sender
207 that has not been completed.
208 (28) "Outstanding payment instrument" means an unpaid
209 payment instrument whose sale has been reported to a licensee.
210 (29) "Payment instrument" means a check, draft, warrant,
211 money order, travelers check, electronic instrument, or other
212 instrument, payment of money, or monetary value whether or not
213 negotiable. The term does not include an instrument that is
214 redeemable by the issuer in merchandise or service, a credit
215 card voucher, or a letter of credit.
216 (30) "Payment instrument seller" means a corporation,
217 limited liability company, limited liability partnership, or
218 foreign entity qualified to do business in this state which
219 sells a payment instrument.
220 (31) "Person" means an individual, partnership,
221 association, trust, corporation, limited liability company, or
222 other group, however organized, but does not include a public
223 agency or instrumentality thereof.
224 (32) "Personal identification information" means a
225 customer's name that, alone or together with any of the

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226 following information, may be used to identify that specific
227 customer:
228 (a) Customer's signature.
229 (b) Photograph, digital image, or other likeness of the
230 customer.
231 (c) Unique biometric data, such as the customer's
232 thumbprint or fingerprint, voice print, retina or iris image, or
233 other unique physical representation of the customer.
234 (33) "Responsible person" means an individual who is
235 employed by or affiliated with a money services business and who
236 has principal active management authority over the business
237 decisions, actions, and activities of the money services
238 business in this state.
239 (33) "Publicly traded" means a stock is currently traded
240 on a national securities exchange registered with the Securities
241 and Exchange Commission, or traded on an exchange in a country
242 other than the United States regulated by a regulator equivalent
243 to the Securities and Exchange Commission and the disclosure and
244 reporting requirements of such regulator are substantially
245 similar to those of the Securities and Exchange Commission.
246 (34) "Sells" means to sell, issue, provide, or deliver.
247 (35) "Stored value" means funds or monetary value
248 represented in digital electronic format, whether or not
249 specially encrypted, and stored or capable of storage on
250 electronic media in such a way as to be retrievable and

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251 transferred electronically.
252 Section 2. Subsection (2) of section 560.118, Florida
253 Statutes, is amended to read:
254 560.118 Reports.—
255 (2) Each licensee must submit quarterly reports to the
256 office in a format and include information as specified by rule.
257 The rule may require the report to contain a declaration by a
258 control an officer, or any other responsible person authorized
259 to make such declaration, that the report is true and correct to
260 the best of her or his knowledge and belief.
261 Section 3. Paragraph (d) of subsection (3) of section
262 560.123, Florida Statutes, is amended to read:
263 560.123 Florida Control of Money Laundering in Money
264 Services Business Act.—
265 (3) A money services business shall keep a record of each
266 financial transaction occurring in this state which it knows to
267 involve currency or other payment instrument, as prescribed by
268 the commission, having a value greater than $10,000; to involve
269 the proceeds of specified unlawful activity; or to be designed
270 to evade the reporting requirements of this section or chapter
271 896. The money services business must maintain appropriate
272 procedures to ensure compliance with this section and chapter
273 896.
274 (d) A money services business, or control person officer,
275 employee, or agent thereof, that files a report in good faith

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276 pursuant to this section is not liable to any person for loss or
277 damage caused in whole or in part by the making, filing, or
278 governmental use of the report, or any information contained
279 therein.
280 Section 4. Subsection (3) of section 560.126, Florida
281 Statutes, is amended to read:
282 560.126 Required notice by licensee.—
283 (3) Each licensee must report any change in the control
284 partners, officers, members, joint venturers, directors,
285 controlling shareholders, or responsible persons of the licensee
286 or changes in the form of business organization by written
287 amendment in such form and at such time as specified by rule.
288 (a) If any person, directly or indirectly or acting by or
289 through one or more persons, proposes to purchase or acquire a
290 controlling interest in a licensee, such person or group must
291 submit an application for licensure as a money services bu siness
292 or deferred presentment provider before such purchase or
293 acquisition at such time and in such form as prescribed by rule.
294 As used in this subsection, the term "controlling interest"
295 means the same as described in s. 560.127.
296 (b) The addition of a control person partner, officer,
297 member, joint venturer, director, controlling shareholder, or
298 responsible person of the applicant who does not have a
299 controlling interest and who has not previously complied with
300 the applicable provisions of ss. 560.1401 and 560.141 is subject

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301 to such provisions. If the office determines that the licensee
302 does not continue to meet the licensure requirements, the office
303 may bring an administrative action in accordance with s. 560.114
304 to enforce the provisions of this chapter.
305 (c) The commission shall adopt rules providing for the
306 waiver of the license application required by this subsection if
307 the person or group of persons proposing to purchase or acquire
308 a controlling interest in a licensee has previously complied
309 with the applicable provisions of ss. 560.1401 and 560.141 under
310 the same legal entity or is currently licensed under this
311 chapter.
312 Section 5. Section 560.127, Florida Statutes, is repealed.
313 Section 6. Paragraphs (a) and (c) of subsection (1) of
314 section 560.141, Florida Statutes, are amended to read:
315 560.141 License application.—
316 (1) To apply for a license as a money services business
317 under this chapter, the applicant must submit:
318 (a) An application to the office on forms prescribed by
319 rule which includes the following information:
320 1. The legal name and address of the applicant, including
321 any fictitious or trade names used by the applicant in the
322 conduct of its business.
323 2. The date of the applicant's formation and the state in
324 which the applicant was formed, if applicable.
325 3. The name, social security number, alien identification

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326 or taxpayer identification number, business and residence
327 addresses, and employment history for the past 5 years for each
328 control person officer, director, responsible person, the
329 compliance officer, each controlling shareholder, and any other
330 person who has a controlling interest in the money services
331 business as provided in s. 560.127.
332 4. A description of the organizational structure of the
333 applicant, including the identity of any parent or subsidiary of
334 the applicant, and the disclosure of whether any parent or
335 subsidiary is publicly traded.
336 5. The applicant's history of operations in other states
337 if applicable and a description of the money services business
338 or deferred presentment provider activities proposed to be
339 conducted by the applicant in this state.
340 6. If the applicant or its parent is a publicly traded
341 company, copies of all filings made by the applicant with the
342 United States Securities and Exchange Commission, or with a
343 similar regulator in a country other than the United States,
344 within the preceding year.
345 7. The location at which the applicant proposes to
346 establish its principal place of business and any other
347 location, including branch offices and authorized vendors
348 operating in this state. For each branch office and each
349 location of an authorized vendor, the applicant shall include
350 the nonrefundable fee required by s. 560.143.

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351 8. The name and address of the clearing financial
352 institution or financial institutions through which the
353 applicant's payment instruments are drawn or through which the
354 payment instruments are payable.
355 9. The history of the applicant's material litigation,
356 criminal convictions, pleas of nolo contendere, and cases of
357 adjudication withheld.
358 10. The history of material litigation, arrests, criminal
359 convictions, pleas of nolo contendere, and cases of adjudication
360 withheld for each control executive officer, director,
361 controlling shareholder, and responsible person.
362 11. The name of the registered agent in this state for
363 service of process unless the applicant is a sole proprietor.
364 12. Any other information specified in this chapter or by
365 rule.
366 (c) Fingerprints for each person listed in subpar agraph
367 (a)3. for live-scan processing in accordance with rules adopted
368 by the commission.
369 1. The fingerprints may be submitted through a third -party
370 vendor authorized by the Department of Law Enforcement to
371 provide live-scan fingerprinting.
372 2. The Department of Law Enforcement must conduct the
373 state criminal history background check, and a federal criminal
374 history background check must be conducted through the Federal
375 Bureau of Investigation.

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376 3. All fingerprints submitted to the Department of Law
377 Enforcement must be submitted electronically and entered into
378 the statewide automated fingerprint identification system
379 established in s. 943.05(2)(b) and available for use in
380 accordance with s. 943.05(2)(g) and (h). The office shall pay an
381 annual fee to the Department of Law Enforcement to participate
382 in the system and shall inform the Department of Law Enforcement
383 of any person whose fingerprints no longer must be retained.
384 4. The costs of fingerprint processing, including the cost
385 of retaining the fingerprints, shall be borne by the person
386 subject to the background check.
387 5. The office shall review the results of the state and
388 federal criminal history background checks and determine whether
389 the applicant meets licensure requirements.
390 6. For purposes of this paragraph, fingerprints are not
391 required to be submitted if the applicant is a publicly traded
392 corporation or is exempted from this chapter under s.
393 560.104(1). The term "publicly traded" means a stock is
394 currently traded on a national securities exchange registered
395 with the federal Securities and Exchange Commission or traded on
396 an exchange in a country other than the United States regulated
397 by a regulator equivalent to the Securities and Exchange
398 Commission and the disclosure and reporting requirements of such
399 regulator are substantially similar to those of the commission.
400 7. Licensees initially approved before October 1, 2013,

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401 who are seeking renewal must submit fingerprints for each person
402 listed in subparagraph (a)3. for live-scan processing pursuant
403 to this paragraph. Such fingerprints must be submitted before
404 renewing a license that is scheduled to expire between April 30,
405 2014, and December 31, 2015.
406 Section 7. Subsection (1) of section 560.143, Florida
407 Statutes, is amended to read:
408 560.143 Fees.—
409 (1) LICENSE APPLICATION FEES.—The applicable non-
410 refundable fees must accompany an application for licensure:
411 (a) Part II .................................... $375.
412 (b) Part III ................................... $188.
413 (c) Per branch office ........................... $38.
414 (d) For each location of an authorized
415 vendor ............................................... $38.
416 (e) Declaration as a deferred presentment
417 provider .......................................... $1,000.
418 (f) Fingerprint retention fees as prescribed by rule.
419 (g) License application fees for branch offices and
420 authorized vendors are limited to $20,000 when such fees are
421 assessed as a result of a change in control controlling interest
422 as defined in s. 560.127.
423 Section 8. For the purpose of incorporating the amendment s
424 made by this act to sections 560.118 and 560.141, Florida
425 Statutes, in references thereto, paragraph (a) of subsection (4)

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426 of section 559.952, Florida Statutes, is reenacted to read:
427 559.952 Financial Technology Sandbox.—
428 (4) EXCEPTIONS TO GENERAL LAW AND WAIVERS OF RULE
429 REQUIREMENTS.—
430 (a) Notwithstanding any other law, upon approval of a
431 Financial Technology Sandbox application, the following
432 provisions and corresponding rule requirements are not
433 applicable to the licensee during the sandbox period:
434 1. Section 516.03(1), except for the application fee, the
435 investigation fee, the requirement to provide the social
436 security numbers of control persons, evidence of liquid assets
437 of at least $25,000, and the office's authority to investigate
438 the applicant's background. The office may prorate the license
439 renewal fee for an extension granted under subsection (7).
440 2. Section 516.05(1) and (2), except that the office shall
441 investigate the applicant's background.
442 3. Section 560.109, only to the extent that the section
443 requires the office to examine a licensee at least once every 5
444 years.
445 4. Section 560.118(2).
446 5. Section 560.125(1), only to the extent that the
447 subsection would prohibit a licensee from engaging in the
448 business of a money transmitter or payment instrument seller
449 during the sandbox period.
450 6. Section 560.125(2), only to the extent that the

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451 subsection would prohibit a licensee from appointing an
452 authorized vendor during the sandbox period. Any authorized
453 vendor of such a licensee during the sandbox period remains
454 liable to the holder or remitter.
455 7. Section 560.128.
456 8. Section 560.141, except for s. 560.141(1)(a)1., 3., 7.-
457 10. and (b), (c), and (d).
458 9. Section 560.142(1) and (2), except that the office may
459 prorate, but may not entirely eliminate, the license renewal
460 fees in s. 560.143 for an extension granted under subsection
461 (7).
462 10. Section 560.143(2), only to the extent necessary for
463 proration of the renewal fee under subparagraph 9.
464 11. Section 560.204(1), only to the extent that the
465 subsection would prohibit a licensee from engaging in, or
466 advertising that it engages in, the selling or issuing of
467 payment instruments or in the activity of a money transmitter
468 during the sandbox period.
469 12. Section 560.205(2).
470 13. Section 560.208(2).
471 14. Section 560.209, only to the extent that the office
472 may modify, but may not entirely eliminate, the net worth,
473 corporate surety bond, and collateral deposit amounts required
474 under that section. The modified amounts must be in such lower
475 amounts that the office determines to be commensurate with the

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476 factors under paragraph (5)(c) and the maximum number of
477 consumers authorized to receive the financial product or service
478 under this section.
479 Section 9. For the purpose of incorporating the amendment
480 made by this act to section 560.141, Florida Statutes, in a
481 reference thereto, paragraph (c) of subsection (2) of section
482 560.114, Florida Statutes, is reenacted, to read:
483 560.114 Disciplinary actions; penalties.—
484 (2) Pursuant to s. 120.60(6), the office may summarily
485 suspend the license of a money services business if the office
486 finds that a licensee poses an immediate, serious danger to the
487 public health, safety, and welfare. A proceeding in which the
488 office seeks the issuance of a final order for the summary
489 suspension of a licensee shall be conducted by the commissioner
490 of the office, or his or her designee, who shall issue such
491 order. The following acts are deemed to constitute an immediate
492 and serious danger to the public health, safety, and welfare,
493 and the office may immediately suspend the license of a money
494 services business if:
495 (c) A natural person required to be listed on the license
496 application for a money services business pursuant to s.
497 560.141(1)(a)3. is criminally charged with, or arrested for, a
498 crime described in paragraph (1)(o), paragraph (1)(p), or
499 paragraph(1)(q).
500 Section 10. This act shall take effect October 1, 2022.

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