Meeting Packet — Insurance & Banking Subcommittee (March 14, 2023)
Summary
Meeting packet for the Insurance & Banking Subcommittee of the Florida House of Representatives Commerce Committee, Tuesday, March 14, 2023, 11:30 AM – 2:30 PM, Morris Hall (17 HOB). The meeting agenda lists HB 599 Debt Management Services by Garcia, HB 677 Interchange Fees on Taxes by Caruso, HB 721 Paid Family Leave Insurance by Chaney, HB 793 by Fernandez-Barquin and HB 987 Public Deposits by Botana, plus PCS for HB 541 -- Motor Vehicle Glass. The staff analysis of HB 599 states that the Legislature created laws in 2004 limiting the amount and types of fees credit counseling agencies may charge debtors for debt management services. The packet ends with the text of PCS for HB 541, whose Section 5 states that the act shall take effect July 1, 2023.
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Insurance & Banking Subcommittee
Tuesday, March 14, 2023
11:30 AM - 2:30 PM
Morris Hall (17 HOB)
Meeting Packet
Paul Renner Wyman Duggan
Speaker Chair
The Florida House of Representatives
Commerce Committee
Insurance & Banking Subcommittee
Paul Renner Wyman Duggan
Speaker Chair
Meeting Agenda
Tuesday, March 14, 2023
11:30 AM – 2:30 PM
Morris Hall (17 HOB)
I. Call to Order
II. Roll Call
III. Welcome and Opening Remarks
IV. Consideration of the following bill(s):
• HB 599 Debt Management Services by Garcia
• HB 677 Interchange Fees on Taxes by Caruso
• HB 721 Paid Family Leave Insurance by Chaney
• HB 793 Collateral Protection Insurance on Real Property by Fernandez-Barquin
• HB 987 Public Deposits by Botana
Consideration of the following proposed committee substitute(s):
• PCS for HB 541 -- Motor Vehicle Glass
V. Closing Remarks
VI. Adjournment
303 House Office Building, 402 South Monroe Street, Tallahassee, FL 32399-1300
(850) 717-4870
HB 599
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 599 Debt Management Services
SPONSOR(S):Garcia
TIED BILLS: IDEN./SIM. BILLS: SB 628
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fletcher Lloyd
2) Commerce Committee
SUMMARY ANALYSIS
Debt management services laws regulate the fees credit counseling organizations may charge
debtors for debt management services and credit counseling services. Debt management services
include effectuating an adjustment, compromise, or discharge of indebtedness, and advising debtors
on debt reduction and general money management practices.
There are two types of organization that provide debt management services: non-profit, 501(c)(3)
credit counseling agencies and debt settlement companies, typically for-profit organizations. While
debt settlement companies often ruin a debtor’s credit and sever ties with the debtor’s lenders, non-
profit credit counseling agencies work with debtors’ creditors, educate debtors about credit practices,
and enroll qualifying debtors in debt management plans tailored to their specific situation and budget.
The Legislature created laws in 2004 limiting the amount and types of fees credit counseling agencies
may charge debtors for debt management services. Since 2004, however, Florida’s limitation on fees
for debt management services has not been increased.
The bill revises the fee chargeable to a debtor for receiving from the debtor, and subsequently
disbursing to a creditor, money or anything of value from greater of 7.5 percent of the monthly
payment or $35 monthly to the lesser of 15 percent of the monthly payment or $75 monthly.
This bill will not have a fiscal impact on state and local governments but will have both positive and
negative fiscal impacts on the private sector.
The bill provides an effective date of July 1, 2023.
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:
Current Situation
Credit Counseling Organizations
Debtors seeking to manage and reduce their debts often engage credit counseling organizations
who provide debt management services and credit counseling services.1 Non-profit credit
counseling agencies assist debtors with managing and reducing their debt by offering free
counseling on credit practices, enrolling qualifying debtors in debt management plans, and
providing community education to individuals and families on money management skills.2
Floridians are among the many individuals who could benefit from non-profit credit counseling
organizations. According to Experian, the average Floridian carried $84,926 in debt in 2021. 3 The
majority consisted of mortgages which averaged $208,536.4 Credit card debt, student loans, and
auto loans accounted for the other main sources, with a state average of $5,620, $40,866, and
$10,110, respectively.5 In 2022, the average Floridian carried $89,195 in debt, a 5% increase
from 2021.6
Debt Management Services
Debt management services is defined by Florida statute as services provided for a fee to “effect
the adjustment, compromise, or discharge of any unsecured note, account, or other indebtedness
of the debtor; or receive from the debtor and disburse to a creditor any money or other item of
value.”7
Credit counseling agencies and creditors classify individuals who find it particularly difficult to
manage their debt, whether due to their health or specific situation, as “vulnerable.”8 If an agency
or creditor is aware an individual is vulnerable, taking extra measures to ensure the individual
receives the same services as others, while not being placed at a disadvantage because of their
unique situation, is imperative.9
1 Consumer Financial Protection Bureau, What is credit counseling?, https://www.consumerfinance.gov/ask-cfpb/what-is-
credit-counseling-en-1451/ (last visited Mar. 10, 2023).
2 Financial Counseling Association of America, https://fcaa.org/ (last visited Mar. 10, 2023).
3 Experian, Average Consumer Debt Levels Increase in 2022, https://www.experian.com/blogs/ask-
experian/research/consumer-debt-study/ (last visited Mar. 7, 2023).
4 Id.
5 Id.
6 Id.
7 S. 817.801(4), F.S.
8 Step Change: Debt Charity, Dealing with the debts of a vulnerable person, https://www.stepchange.org/debt-
info/dealing-with-the-debts-of-vulnerable-people.aspx (last visited Mar. 10, 2023).
9 Id.
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Florida’s Limitations on Fees for Debt Management Services
In 2004, the Legislature recognized the importance of easy access to debt management services,
while also acknowledging the vulnerability of debtors, by prescribing the maximum fees a person
or entity could charge a debtor for debt management services.10
Specifically, the 2004 legislation made it unlawful for any entity or individual engaging in debt
management services or credit counseling services, to charge a debtor:
a fee greater than $50 for an initial consultation;11 and
a fee greater than $120 per year for additional consultations or, alternatively, in the case of
receiving debt payments from the debtor and disbursing to a creditor any money or other
item of value, the greater of 7.5% of the amount paid monthly by the debtor or $35 per
month.12
No state agency directly regulates credit counseling organizations. Regulation is self-executing by
means of private civil actions under part II of ch. 501, including possible action by the Attorney
General or local prosecutors.13 Any person in violation of the debt services statute “commits an
unfair or deceptive trade practice.”14 A violation results in criminal and civil penalties. Namely, a
violation is a third-degree felony, and an individual injured by a violation can bring an action for
damages, where judgement is entered for actual damages no less than the amount paid by the
aggrieved individual to the credit counseling organization.15
Although a 2006 amendment narrowed the scope of debtors protected to those debtors
specifically residing in the State of Florida,16 the limitation on fees for debt management services
has not been increased since its enactment in 2004.
Effect of the Bill
The bill changes the fee a person or entity may charge for the debt management services
described in s. 817.802(4)(b) (namely, receiving from the debtor and disbursing to a creditor any
money or item of value) to the lesser of 15 percent of the amount paid monthly by the debtor or
$75 per month, rather than the greater of 7.5 percent of the amount paid or $35 per month. The
following table illustrates the current and proposed fees.
Current HB 599
Greater of Lesser of
Monthly Monthly Result of
Monthly 7.5% of 15% of
$35 Fee $75 Fee Current vs.
Payment monthly monthly
Allowed Allowed HB 599
$100 $ 7.50 $ 35.00 $ 35.00 $ 15.00 $ 75.00 $ 15.00 Reduction
$500 $ 37.50 $ 35.00 $ 37.50 $ 75.00 $ 75.00 $ 75.00 Increase
$1,000 $ 75.00 $ 35.00 $ 75.00 $ 150.00 $ 75.00 $ 75.00 No Change
$1,500 $ 112.50 $ 35.00 $ 112.50 $ 225.00 $ 75.00 $ 75.00 Reduction
10 Chapter 2004-351, Laws of Florida, created s. 817.802, F.S.
11 S. 817.802(1), F.S.
12 Id.
13 Ch. 501, part II, F.S., relating to the protection of consumers from unfair trade practices, and remedies for violations
thereof, similar to federal policies relating to consumer protection.
14 S. 817.806, F.S.
15 S. 17.806, F.S.
16 Chapter 2006-136, Laws of Florida, amended s. 817.802, F.S.
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B. SECTION DIRECTORY:
Section 1. Amends s. 817.802(1), F.S., relating to unlawful fees and costs.
Section 2. Provides an effective date of July 1, 2023.
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:
Credit counseling organizations and debtors residing in Florida would experience fiscal impact
from this bill. Specifically, the change in fees to the greater of 15% of the amount paid monthly
by the debtor and $75 would likely result in an increase in some revenue for credit counseling
organizations. On the other hand, the increase in the maximum chargeable amount might have
a negative, possibly significant, fiscal impact on debtors residing in Florida.17 Please see
Section III.C., Drafting Issues or Other Comments, below.
D. FISCAL COMMENTS:
The bill would increase some revenues for credit counseling organizations, but the bill would
have a negative fiscal impact on debtors residing in Florida.
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:
17 Florida Office of Financial Regulations, Agency Analysis of 2023 House Bill 599, p. 3 (Mar. 3, 2023).
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B. RULE-MAKING AUTHORITY:
This bill does not appear to amend or create rulemaking authority.
C. DRAFTING ISSUES OR OTHER COMMENTS:
Current law and the bill provide for a specified monthly fee allowed to debt management
services providers. However, correspondence received from Cambridge Credit indicates that
they charge less than the allowed fee. If the bill were to provide for a fee “up to” the lesser of
15 percent of the monthly amount or $75, then the debt management service providers would
be specifically authorized to charge less than a maximum allowed fee. The providers would
then have the option to operate within a range of allowed monthly fees, subject to a statutory
cap.18 This could also mitigate the possible direct fiscal impacts on the private sector (i.e.,
debtors receiving debt management services).
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
18 Email from Martin Lynch, President, Cambridge Credit, Re: HB 599, regarding fee practices (Mar. 10, 2023).
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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 599 2023
1 A bill to be entitled
2 An act relating to debt management services; amending
3 s. 817.802, F.S.; increasing the maximum fee that may
4 be charged for debt management services; providing an
5 effective date.
6
7 Be It Enacted by the Legislature of the State of Florida:
8
9 Section 1. Subsection (1) of section 817.802, Florida
10 Statutes, is amended to read:
11 817.802 Unlawful fees and costs.—
12 (1) It is unlawful for any person, while engaging in debt
13 management services or credit counseling services, to charge or
14 accept from a debtor residing in this state, directly or
15 indirectly, a fee or contribution greater than $50 for the
16 initial setup or initial consultation. Subsequently, the person
17 may not charge or accept a fee or contribution from a debtor
18 residing in this state greater than $120 per year for additional
19 consultations or, alternatively, if debt management services as
20 defined in s. 817.801(4)(b) are provided, the person may charge
21 the lesser greater of 15 7.5 percent of the amount paid monthly
22 by the debtor to the person or $75 $35 per month.
23 Section 2. This act shall take effect July 1, 2023.
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CODING: Words stricken are deletions; words underlined are additions.
hb0599-00
HB 677
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 677 Interchange Fees on Taxes
SPONSOR(S): Caruso
TIED BILLS: IDEN./SIM. BILLS: SB 564
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Sellas Lloyd
2) Commerce Committee
SUMMARY ANALYSIS
Electronic payments through either a debit card or credit card involve many parties to authorize, settle, and
fund the transaction between customer and merchant. A merchant will pay part of the transaction proceeds to
the facilitating parties of this electronic transaction. This amount is known as a merchant discount fee, and
typically amounts to 1-3% of the total transaction amount. The largest portion of the merchant discount fee is
the interchange fee which is a fee charged by an issuing bank to the merchant bank. The interchange fee
allows for card benefits to the cardholder but also reflects the risk of nonpayment from a cardholder as issuing
banks will send out payments to merchant banks before the cardholder pays the issuing bank.
The bill prohibits the charge of interchange fees on the sales tax proportion of an electronic payment
transaction. This prohibition applies to debit cards, credit cards, and any other payment devices approved
through a payment card network. A payment card network can comply with this prohibition by deducting the tax
portion of a transaction before calculating the interchange fee or the payment card network can rebate the
merchant for the portion of the interchange fee attributable to the tax portion of the transaction.
The bill provides for a $1,000 civil penalty per each violation in addition to refunding the entire surcharge to the
merchant.
The bill has an indeterminate negative impact on state expenditures and no impact on state revenues and local
government. It also has indeterminate negative impacts on the private sector.
The bill has an effective date of July 1, 2023
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
The Florida Office of Financial Regulation (OFR) is responsible for all activities of the Financial
Services Commission relating to the regulation of banks, credit unions, other financial institutions,
finance companies, and the securities industry.1 The OFR has three divisions: the Division of
Consumer Finance, the Division of Financial Institutions, and the Division of Securities. The OFR also
has a Bureau of Financial Investigations, which functions as a criminal justice agency and has a
separate budget.2
Florida law defines the term “financial institution” as “a state or federal savings or thrift association,
bank, savings bank, trust company, international bank agency, international banking corporation,
international branch, international representative office, international administrative office, international
trust entity, international trust company representative office, qualified limited service affiliate, credit
union, or an agreement corporation operating pursuant to s. 25 of the Federal Reserve Act, 12 U.S.C.
s. 601 et seq. or Edge Act corporation organized pursuant to s. 25(a) of the Federal Reserve Act, 12
U.S.C. ss. 611 et seq.”3
Financial institutions may be either state or federally chartered. OFR’s Division of Financial Institutions
provides general supervision over all state financial institutions, their subsidiaries, and service
corporations,4 and is charged with the administration of the financial institutions codes, which apply to
all state-authorized or state-chartered financial institutions and to the enforcement of all laws relating to
state-authorized or state-chartered financial institutions.5 The specific chapters under the financial
institutions codes, which govern state-chartered financial institutions, are:
Chapter 655, F.S. – Financial Institutions Generally
Chapter 657, F.S. – Credit Unions
Chapter 658, F.S. – Banks and Trust Companies
Chapter 660, F.S. – Trust Business
Chapter 662, F.S. – Family Trust Companies
Chapter 663, F.S. – International Banking
Chapter 665, F.S. – Capital Stock Associations
Chapter 667, F.S. – Savings Banks
As of June 30, 2020, the Division of Financial Institutions regulates 197 financial institutions: 6
69 banks
66 credit unions
21 international bank offices
15 trust companies
16 family trust companies
10 qualified limited service affiliates
Chapter 655, F.S., governs financial institutions generally. Pursuant to section 655.001(1), F.S., one of
the stated purposes of the financial institutions codes is to provide general regulatory powers to be
exercised by the Financial Services Commission and the OFR in relation to the regulation of financial
institutions. Other purposes include providing for and promoting the safe and sound conduct of the
1 S. 20.121(3)(a)2., F.S.
2 Id.
3 S. 655.005(1)(i), F.S.
4 S. 655.012(1), F.S.
5 Ss. 655.001(1) and 655.012(1), F.S.
6 Office of Financial Regulation, Fast Facts (2021 ed.), https://flofr.gov/sitePages/documents/FastFacts.pdf.
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business of state financial institutions, the prudent conservation of their assets, the maintenance of
public confidence therein, and the protection of the interests of their depositors and creditors. 7
Electronic Payment Transactions and Interchange Fees
Even the smallest credit or debit card transactions involve a host of parties that facilitate the exchange
between the merchant and customer.
These parties include the cardholder, merchant, merchant bank, payment processors, issuing banks ,
and card associations.8 In a typical transaction, a cardholder will purchase a good or service from a
merchant through the use of a credit or debit card. At this time the merchant will send a payment
authorization request to the merchant’s payment processor who in turn submits the transaction to the
correct card association.9 The card association will then send this authorization request to the issuing
bank where the transaction will either be approved or denied. 10 The issuing bank’s response will then
be sent back to the card association which sends the information to the merchant bank who send the
information to the merchant.11
The parties:
The cardholder is the buyer in the transaction and has a line of credit or a checking account with
an issuing bank.
The merchant is the seller in the transaction and in choosing to accept debit card and credit
card purchases will partner with a payment processor.
A payment processor sends payment information to the customer’s card association.
A card association acts as an intermediary between the issuing bank (customer’s bank) and the
merchant bank as they relay both payment information to the issuing bank and the issuing
bank’s response to the merchant bank.
The issuing bank receives purchase information from the card association and either approves
or denies the transaction. It will inform the card association of its determination. Upon
determination from the issuing bank for a transaction the card association will inform the
merchant bank.
The merchant bank is the bank of the merchant and will inform the merchant of the issuing
bank’s determination.12
A credit card transaction is made up of three processes, the authorization process, the settlement
process, and the funding process.13 The authorization process happens near instantaneously and
results in either approval or denial.14 The authorization process reflects the issuing bank’s approval or
denial of a transaction which is then relayed through the card association’s payment network to the
merchant, as described above.
The settlement and funding process reflect the movement of funds from the issuing bank to the
merchant.15 Here, the merchant will send authorized transactions to their payment processor who
sends this information to the card association, who in turn sends this information to the issuing bank.16
The issuing bank then charges the cardholder for the amount of the transaction. 17 At this time the
7 See s. 655.001(2)(a)-(e), F.S.
8 FIS Global, How Credit Card Processing Work s, https://www.fisglobal.com/en/insights/merchant-solutions-
worldpay/article/how-credit-card-processing-works (last visited Mar. 7, 2023).
9 Id.
10 Id.
11 Id.
12 Id.
13 Id.
14 This process plays out in full when a debit or credit card is either accepted or rejected at a payment terminal.
15 FIS Global, How Credit Card Processing Work s, https://www.fisglobal.com/en/insights/merchant-solutions-
worldpay/article/how-credit-card-processing-works (last visited Mar. 7, 2023).
16 Id.
17 Id.
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issuing bank transfers the transaction amount to the merchant bank, minus the interchange fee. 18
Finally, the merchant bank deposits the transaction amount (minus interchange fees and other service
fees) into the merchant’s account.19
In a debit or credit card transaction, a merchant will pay a portion of their sales to the various parties
that facilitate the use of the card. This payment is known as a merchant discount fee and is made of
three parts; the interchange fee, the acquirer fee, and the network processing fee. 20 The:
Interchange fee is paid to the issuing bank of the card in the transaction,
Acquirer fee is paid to the merchant’s bank, and
Network processing fee is paid to the card association. 21
The interchange fee is charged against the merchant bank by the issuing bank, but the merchant bank
will typically pass this cost onto the merchant.22 The default interchange fee amount is set by the card
association,23 but issuing and merchant banks can negotiate rates that differ from the default amount. 24
The interchange fee is typically a percentage of the underlying transaction amount, a flat fee, or a
combination of both.25 Typically, interchange fees will vary from 1-3% of the total transaction amount.26
Interchange fees cover the cost and risks that issuing banks face in facilitating the transaction as well
as funding the issuing bank’s reward programs accessible to cardholders.27
In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. An
amendment to this act, the Durbin Amendment, was adopted which mandated the Federal Reserve
Board of Governors (“The Board”) to reduce debit card interchange fees.28 Following this mandate the
Board issued Regulation II (Debit Card Interchange Fees and Routing) which established a cap on the
debit card interchange fees a financial institution with more than $10 billion in assets can charge a
merchant bank.29 Regulation II limited the debit card interchange fee for these financial institutions to a
base fee of $0.21, per transaction, to cover the issuer’s processing cost, 0.05% of the transaction cost
to cover fraud losses, as well as a $0.01, per transaction, to cover fraud loss.30 On average, this
regulation cut the debit card interchange fee rate in half. 31
While the Durbin Amendment reduced the interchange fee rate it is unclear what the magnitude of this
effect had on reducing interchange cost for merchants.32 An unintended effect of this bill was that small
value transactions, that had been charged a reduce rate in order to incentivize debit card adoption
amongst merchants, now had their rates raised to the maximum allowed amount as the revenue
generated on large value transactions, that made up for the loss on the small value reduced
18 Id.
19 Id.
20 Electronic Payments Coalition, Overview of Interchange and its Value,
https://electronicpaymentscoalition.org/resources/overview-of-interc hange-and-its-value/ (last visited Mar. 7, 2023).
21 Id.
22 Testimony from Sarah Bloom Raskin, Governor, Board of Governors of the Federal Reserve System, Testimony
regarding Interchange fees from Feb. 17, 2011,
https://www.federalreserve.gov/newsevents/testimony/raskin20110217a.htm (last visited Mar. 7, 2023).
23 Id.
24 Electronic Payments Coalition, Overview of Interchange and its Value,
https://electronicpaymentscoalition.org/resources/overview-of-interc hange-and-its-value/ (last visited Mar. 7, 2023).
25 Julia Kagan, Interchange Rate: Definition, calculation Factors, Examples ,
https://www.investopedia.com/terms/i/interchange-
rate.asp#:~:text=Interchange%20rates%20are%20set%20by%20credit%20card%20companies %20such% 20as,might%20
set%20their%20rates%20annually. (last visited Mar. 7, 2023).
26 Id.
27 Payment Depot, A Practical Guide to Understanding Interchange Fees, https://paymentdepot.com/blog/interchange-
fees/ (last visited Mar. 7, 2023).
28 Renee Haltom and Zhu Wang, Did the Durbin Amendment Reduce Merchant Costs? Evidence from Survey Results ,
Federal Reserve Bank of Richmond, Dec. 2015, at 1.
29 Id.
30 Id. at 2.
31 Id.
32 Id.
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interchange rate, were now impossible to reach due to this lower maximum limit. 33 This led to
interchange fee cost increasing for merchants with small value transactions such as the fast food and
delivery service industry.34 Speaking for merchants generally, it is unclear whether the Durbin
Amendment reduced debit card interchange fee costs on merchants in more than just a limited
manner.35
Effect of the Bill
The bill prohibits payment card networks from charging interchange fees on taxes and fees levied by
county governments and the state sales tax.
The payment card network must deduct tax from the calculation of the interchange fee or rebate the
amount attributable to the tax. The deduction or rebate must occur at settlement. The bill provides a
mechanism for merchants to submit proof of tax amounts to the card network when the matter cannot
be handled at time of settlement. The card network must then promptly credit the merchant’s settlement
account.
The bill creates a civil penalty of up to $1,000, per violation, for violations of the bill’s requirements. In
addition the merchant must refund the portion of the interchange fee impermissibly charged against the
tax collected.
The bill provides an effective date of July 1, 2023.
B. SECTION DIRECTORY:
Section 1: Creates s. 655.969, F.S., relating to interchange fees on taxes prohibited.
Section 2: Provides an effective date of July 1, 2023.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
The bill has an indeterminate, negative fiscal impact on OFR for implementation of the bill’s
requirements. OFR does not currently regulate some participants in the transactions affected by the
bill and may need resources to accomplish enforcement. 36
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
33 Id.
34 Id. at 3.
35 Id. at 2.
36 Florida Office of Insurance Regulation, Agency Analysis of HB 677, p, 4 (Feb. 21, 2023).
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The bill may require the implementation of new point of sale hardware and software and transaction
processing software by the various participants in the transaction process to implement the bills
requirements.
D. FISCAL COMMENTS:
State and local government, when making purchases using credit or debit cards will be impacted in the
same fashion as the general public.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not Applicable. This bill does not appear to affect county of municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
None.
C. DRAFTING ISSUES OR OTHER COMMENTS:
Payment card networks do not meet the definition of “financial institution” in section 655.005(1)(i), Fla.
Stat, and are not currently regulated by the OFR as such. An appropriation may be necessary to fund
this expansion of OFR regulation and oversight.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 677 2023
1 A bill to be entitled
2 An act relating to interchange fees on taxes; creating
3 s. 655.969, F.S.; defining terms; requiring that
4 certain taxes listed on evidences of sales must be
5 excluded from the amount on which an interchange fee
6 is charged for that electronic payment transaction;
7 specifying requirements for payment card networks in
8 deducting taxes or rebating amounts; specifying
9 requirements for payment card networks if a mercha nt
10 or seller is unable to capture and transmit tax
11 amounts relevant to the sale at the time of sale;
12 providing a penalty; providing an effective date.
13
14 Be It Enacted by the Legislature of the State of Florida:
15
16 Section 1. Section 655.969, Florida Statutes, is created
17 to read:
18 655.969 Interchange fees on taxes prohibited.—
19 (1) As used in this section, the term:
20 (a) "Credit card" means a card, plate, coupon book, or
21 other credit device existing for the purpose of obtaining money,
22 property, labor, or services on credit.
23 (b) "Debit card":
24 1. Means a card, or other payment code or device, issued
25 or approved for use through a payment card network to debit an
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HB 677 2023
26 asset account, regardless of the purpose for which the account
27 is established, whether authorization is based on signature,
28 personal identification number, or other means;
29 2. Includes a general-use prepaid card as defined in 15
30 U.S.C. s. 1693l-1; and
31 3. Excludes paper checks.
32 (c) "Electronic payment transaction" means a transaction
33 in which a person uses a debit card, credit card, or other
34 payment code or device, issued or approved through a payment
35 card network, to debit a deposit account or use a line of
36 credit, whether authorization is based on a signature, personal
37 identification number, or other means.
38 (d) "Interchange fee" means a fee established, charged, or
39 received by a payment card network for the purpose of
40 compensating the issuer for its involvement in an electronic
41 payment transaction.
42 (e) "Issuer" means a person, or the person's agent,
43 issuing a debit card or credit card.
44 (f) "Payment card network" means an entity that:
45 1. Directly or through licensed members, processors, or
46 agents, provides the proprietary services, infrastructure, and
47 software that routes information and data to conduct debit card
48 or credit card transaction authorization, clearance, and
49 settlement; and
50 2. A merchant or seller uses to accept as a form of
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51 payment a brand of debit card, credit card, or other device that
52 may be used to carry out debit or credit transactions.
53 (g) "Settlement" means the transfer of funds from a
54 customer's account to a seller or merchant upon electronic
55 submission of finalized sales transactions to the payment card
56 network.
57 (h) "Tax" means all taxes and fees levied under chapters
58 125 and 212.
59 (2) The amount of tax listed separately on the payment
60 invoice, sales slip, or other evidence of sale must be excluded
61 from the amount on which an interchange fee is charged for that
62 electronic payment transaction.
63 (3) A payment card network shall either:
64 (a) Deduct the amount of tax imposed from the calculation
65 of interchange fees specific to each form or type of electronic
66 payment transaction; or
67 (b) Rebate an amount of interchange fees proportionate to
68 the amount attributable to the tax.
69 (4) The deduction or rebate must occur at the time of
70 settlement when the merchant or seller is able to capture and
71 transmit tax amounts relevant to the sale at the time of sale as
72 part of the transaction finalization.
73 (5) If a merchant or seller is unable to capture and
74 transmit tax amounts relevant to the sale at the time of sale,
75 the payment card network must accept proof of tax amounts
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76 collected on sales subject to an interchange fee upon the
77 submission of sales data by the merchant or seller, and promptly
78 credit the merchant or seller's settlement account.
79 (6) A payment card network that violates this section is
80 subject to a civil penalty of up to $1,000 per violation and
81 shall refund the surcharge to each merchant or seller.
82 Section 2. This act shall take effect July 1, 2023.
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INSURANCE & BANKING SUBCOMMITTEE
HB 677 by Rep. Caruso
Interchange Fees on Taxes
AMENDMENT SUMMARY
March 14, 2023
Amendment 1 by Rep. Caruso (Line 47): The amendment:
• Replaces the term “debit card or credit card transaction” with “electronic payment
transaction”.
• Clarifies which tax types are subject to the bill’s provisions. Accordingly, an
interchange fee could not be charged on state sales tax and local tourist
development tax, rather than state sales tax and any county tax under ch. 125, F.S.
• Establishes that if the merchant is unable to transmit tax amounts at the time of sale,
the merchant has 180 days to submit proof of tax amounts to the payment card
network to access a rebate for the interchange fees on taxes.
• Clarifies that the rebate or credit must be settled within 30 days of the payment card
network receiving proof of the tax amount when it is not captured at the point of sale.
• Changes the effective date from July 1, 2023, to October 1, 2023.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 677 (2023)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Caruso offered the following:
4
5 Amendment
6 Remove lines 47-82 and insert:
7 software that routes information and data to conduct electronic
8 payment transaction authorization, clearance, and settlement;
9 and
10 2. A merchant or seller uses to accept as a form of
11 payment a brand of debit card, credit card, or other device that
12 may be used to carry out electronic payment transactions.
13 (g) "Settlement" means the transfer of funds from a
14 customer's account to a seller or merchant upon electronic
15 submission of finalized sales transactions to the payment card
16 network.
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Page 1 of 3
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 677 (2023)
Amendment No. 1
17 (h) "Tax" means all taxes and fees levied under chapter
18 212 and s. 125.0104.
19 (2) The amount of tax listed separately on the payment
20 invoice, sales slip, or other evidence of sale must be excluded
21 from the amount on which an interchange fee is charged for that
22 electronic payment transaction.
23 (3) A payment card network shall either:
24 (a) Deduct the amount of tax imposed from the calculation
25 of interchange fees specific to each form or type of electronic
26 payment transaction; or
27 (b) Rebate an amount of interchange fee proportionate to
28 the amount attributable to the tax.
29 (4) The deduction or rebate must occur at the time of
30 settlement when the merchant or seller is able to capture and
31 transmit tax amounts relevant to the sale at the time of sale as
32 part of the transaction finalization.
33 (5) If a merchant or seller is unable to capture and
34 transmit tax amounts relevant to the sale at the time of sale,
35 the merchant or seller shall have 180 days to submit proof of
36 tax amounts or sales data to the payment card network. Such
37 proof may include tax returns filed with the Department of
38 Revenue or local taxing authorities. The payment card network
39 shall proportionally rebate the amount of interchange fee to the
40 merchant or seller or credit the merchant or seller's settlement
41 account within 30 days.
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 677 (2023)
Amendment No. 1
42 (6) A payment card network that violates this section is
43 subject to a civil penalty of up to $1,000 per violation and
44 shall refund the surcharge to each merchant or seller.
45 Section 2. This act shall take effect October 1, 2023.
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HB 721
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 721 Paid Family Leave Insurance
SPONSOR(S):Chaney
TIED BILLS: IDEN./SIM. BILLS: SB 670
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fletcher Lloyd
2) Appropriations Committee
3) Commerce Committee
SUMMARY ANALYSIS
Currently, life insurers in the state are authorized to transact health insurance, disability income
insurance, excess coverage for health maintenance organizations and multiple-employer welfare
arrangements, but are not expressly authorized to issue paid family leave insurance.
Family leave guarantees originated with the Family Medical Leave Act of 1993 (FMLA), requiring
covered employers to provide eligible employees job-protected leave for qualifying family and medical
reasons. Covered employers under FMLA include private-sector employers who employ 50 or more
employees in 20 or more workweeks during a calendar year, all public agencies, and all educational
agencies. FMLA protects leave for the birth or adoption of a child, the serious health condition of an
employee, care for an employee’s family member who has a serious health condition, and reasons
related to a family member’s service in the military.
The bill creates a regulatory structure for production and sale of paid family leave insurance policies
by life insurers. Notably, the bill does not create a right to paid family leave benefits for employees not
otherwise eligible under FMLA, but rather gives their employers the option to offer, and authorizes life
insurers to transact, paid family leave insurance providing benefits covering certain lost wages.
Among other things, the bill:
revises the definition of “kinds of insurance” to include paid family leave insurance,
defines “paid family leave insurance”
specifies requirements under which family leave insurance benefits may be provided,
requires insurance policies to specify details and requirements for covered leave reasons,
specifies requirements for polices relating to benefit periods and waiting periods,
permits limitations, exclusions and reductions for eligibility, and
authorizes the Financial Services Commission to adopt rules.
While the bill does not have a fiscal impact on local governments, the bill does have an indeterminate,
but likely positive, fiscal impact on state government. The bill has a positive and negative fiscal impact
on the private sector.
The bill will take effect upon becoming a law.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h0721.IBS
DATE: 3/13/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Current Situation
Florida’s Insurance Industry
The Florida Office of Insurance Regulation (OIR) regulates the insurance industry in the state. As
regulator, OIR is responsible for all activities in the state concerning insurers and other risk
bearing entities, including licensing, rates, policy forms, market conduct, claims, issuance of
certificates of authority, solvency, viatical settlements, premium financing, and administrative
supervision.1
The OIR is housed within the Florida Department of Financial Services (DFS), and its funding is
appropriated by the Legislature from the Insurance Regulatory Trust Fund (IRTF). 2 The IRTF is
funded by insurance company licensing fees, premium tax, surplus lines tax, and fines that may
be levied for non-compliance with provisions of the Florida Insurance Code (Insurance Code).3
Under Florida’s Insurance Code, a qualifying insurer is authorized to transact any one kind or
combination of insurance, including life, health, property, casualty, surety, marine, and title.4
Among the types of authorized insurance, paid family leave insurance is not currently included.
Nonetheless, OIR has already approved paid family leave insurance products and such products
have been sold and marketed in the state as riders to disability income benefits for individuals out
on family and medical leave.5
Paid Family Leave Insurance
The federal Family Medical Leave Act of 1993 (FMLA) requires covered employers to provide
eligible employees job-protected leave for qualifying family and medical reasons. Covered
employers under FMLA include private-sector employers who employ 50 or more employees in 20
or more workweeks during a calendar year, all public agencies, and all educational agencies.
FMLA protects leave for the birth or adoption of a child, the serious health condition of an
employee, care for an employee’s family member who has a serious health condition, and
reasons related to a family member’s service in the military.
In 2022, the National Council of Insurance Legislators (NCOIL) adopted the Paid Family Leave
Insurance Model Act (NCOIL Model Act).6 The Model Act created a new product of life insurance,
known as paid family leave insurance, under which any insurer licensed to transact life insurance
1 Florida Office of Insurance Regulation, Organization and Operation, https://floir.com/about-us/organization-and-
operation#:~:text=The%20Florida%20Offic e%20of% 20Insurance,settlements%2C% 20premium%20financing%2C%20and
%20administrative (last visited Mar. 10, 2023). See also s. 624.308, F.S., and R. 69O, et seq., F.A.C.
2 Florida Office of Insurance Regulation, Organization and Operation, https://floir.com/about-us/organization-and-
operation#:~:text=The%20Florida%20Offic e%20of% 20Insurance,settlements%2C% 20premium%20financing%2C%20and
%20administrative (last visited Mar. 10, 2023).
3 Id. Chapters 624-632, 634, 635, 636, 641, 642, 648, and 651 constitute the Florida Insurance Code. See also s. 624.01,
F.S.
4 Ss. 624.406(1), and 624.6011, F.S.
5 Email from Stephen Marante, Deputy Director of Government Affairs, Office of Insurance Regulation, Re: Family Leave
Insurance (Feb. 17, 2023).
6 National Council of Insurance Legislators, Paid Family Leave Insurance Model Act (Adopted on Nov. 19, 2022).
STORAGE NAME: h0721.IBS PAGE: 2
DATE: 3/13/2023
or disability income insurance business could be authorized to issue policies covering benefits for
employees unable to work due to circumstances eligible for FMLA protection.
Some states provide a program using either a social insurance policy design that funds benefits
through pooled payroll taxes on employees and/or employers, or private insurance to fund the
programs.7 Programs available in these states are the result of legislation either making such
programs mandatory or voluntary.8 States currently offering paid family leave insurance benefits
through private insurers are New York (mandatory), New Hampshire (voluntary), and Virginia
(voluntary).9
Effect of the Bill
The bill creates a regulatory structure for production and sale of paid family leave insurance
policies both as a stand-alone product, as a group insurance policy, and as a rider to a group
disability income policy. Notably, the bill does not create a right to paid family leave benefits for
employees not otherwise eligible under FMLA, but rather gives their employers the option to offer,
and authorizes life insurers to transact, paid family leave insurance benefits.
The bill includes paid family leave insurance as a type of insurance product with life, health,
property, casualty, surety, marine, and title insurance products. The bill defines paid family leave
insurance as insurance issued to an employer to pay for a percentage or portion of the
employee’s income loss due to:
The birth of a child or adoption of a child by the employee;
Placement of a foster child with the employee;
Care of an employee’s family member who has a serious health condition; or
Circumstances arising out of the fact the employee’s family member is a servicemember on
active duty or has been notified of an impending call or order to active duty.
Defined Terms
The bill defines the following terms as follows:
“Child” is someone who is:
o Under 18 years of age, or 18 years of age or older and incapable of self-care
because of a mental or physical disability; and
o A biological, adopted, or foster son or daughter; a stepson or stepdaughter; a legal
ward; or a son or daughter of a person to whom the employee stands in loco
parentis.
“Family leave” is any leave taken by an employee for work for any of the reasons specified
in the newly created s. 627.445(4), F.S. (as more particularly described below).
“Family member” includes a child, spouse, or parent, or other person defined as a family
member in the policy.
“Health care provider” means any physician, hospital, or other institution, organization, or
person that furnishes health care services and is licensed or otherwise authorized to
practice in this state.
“Parent” means a biological, foster, or adoptive parent; a stepparent; a legal guardian; or
other person who stood in loco parentis to the employee when the employee was a child
“Serious health condition” means an illness, injury, impairment, or physical or mental
condition, including transplantation preparation and recovery from surgery related to an
7 Department of Financial Services, Agency Analysis of SB 670, p. 1 (Feb. 27, 2023).
8 Id.
9 Id.
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organ or tissue donation, which involves inpatient care in a hospital, hospice, or residential
health care facility; continuing treatment; or continuing supervision by a health care
provider as defined in the policy.
Requirements and Specifications for the Policy
The bill provides family leave insurance may be written as an amendment or a rider to a group
disability income policy, included in a group disability income policy, or written as a separate g roup
insurance policy purchased by an employer. The bill also provides the policy must specify:
Details and requirements with regard to each of the covered family leave reasons;
The length of family leave insurance benefits available for each covered family leave
reason, which may not be less than 2 weeks during a period of 52 consecutive calendar
weeks;
Whether there is an unpaid waiting period, and if so, the terms and conditions of the unpaid
waiting period;
The amount of benefits that will be paid for covered family reasons;
Definition of the wages or other income upon which the amount of family leave insurance
benefits will be issued; and
Whether the family leave insurance benefits are subject to offsets for wages or other
income received or for which the insured may be eligible, and if so, all such wages or
income that may be set off and the circumstances under which it may be offset.
Permissible Limitations, Exclusions and Reductions for Eligibility
The bill allows eligibility for family leave insurance benefits to be limited, excluded, or reduced, but
requires any such limitation, exclusion, or reduction be specified in the policy. Permissible
limitations, exclusions, and reductions under the bill include, but are not limited to, any period of
leave:
Wherein the required notice and medical certification as prescribed in the policy has not
been provided;
Related to a serious health condition or other harm to a family member caused by the willful
intention of the employee;
During which the employee performed work for remuneration or profit;
For which the employee is eligible to receive from his or her employer, or from a fund to
which the employer has contributed, remuneration or maintenance;
In which the employee is eligible to receive benefits under any other statutory program or
employer-sponsored program, including, but not limited to, unemployment insurance
benefits, workers’ compensation benefits, statutory disability benefits, statutory paid leave
benefits, or any paid time off or employer’s paid leave policy;
Commencing before the employee becomes eligible for family leave insurance benefits
under the policy; or
Where more than one person seeks family leave insurance for the same family member.
The bill provides family leave insurance benefits provided under the newly created statute be paid
periodically and promptly, except as to a contested period of leave and subject to any of the
limitations, exclusions, or reductions explained above. The bill also provides rates for policies or
riders providing paid family leave insurance benefits must meet Florida’s rate making standard, to
wit, they must not be inadequate, excessive, or unfairly discriminatory.10
B. SECTION DIRECTORY:
10 S. 627.062, F.S.
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DATE: 3/13/2023
Section 1. Provides a short title, “Florida Paid Family Leave Insurance Act.”
Section 2. Amends s. 624.6011, F.S., relating to combinations of insuring powers, one insurer.
Section 3. Amends s., 624.6011, F.S., relating to “kinds of Insurance” defined.
Section 4. Creates s. 624.6086, F.S., relating to “paid family leave insurance” defined.
Section 5. Creates s. 627.445, F.S., relating to paid family leave insurance.
Section 6. Provides the bill shall become effective upon becoming a law.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
The bill has an indeterminate, but likely positive, fiscal impact on state government. The
state may see increased premium tax revenues to the extent that a paid family leave
insurance market develops.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
Employees eligible to receive family leave insurance benefits can receive compensation they
would not have otherwise received while unable to work due to eligible parental leave or their
own or their family member’s serious health condition or military service. Although the paid
family leave insurance is optional for private employers not otherwise covered under FMLA,
the insurance policy would be funded by the employer and/or the employee.
D. FISCAL COMMENTS:
The bill has an indeterminate impact on state government and none on local governments. The
bill has a fiscal impact on the private sector, specifically, a positive fiscal impact for eligible
employees and a negative fiscal impact for employers and employees due to premiums
funding the policies, but may see greater employee satisfaction and productivity. They may
also be more competitive in hiring quality employees.
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DATE: 3/13/2023
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill authorizes the Financial Services Commission to adopt rules to administer the Paid
Family Leave Income Replacement Act, s. 627.445, F.S.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 721 2023
1 A bill to be entitled
2 An act relating to paid family leave insurance;
3 providing a short title; amending s. 624.406, F.S.;
4 authorizing life insurers to transact paid family
5 leave insurance; amending s. 624.6011, F.S.; revising
6 the definition of the term "kinds of insurance" to
7 include paid family leave insurance; creating s.
8 624.6086, F.S.; defining terms; creating s. 627.445,
9 F.S.; providing a short title; providing legislative
10 findings and intent; defining terms; specifying
11 circumstances under which family leave benefits may be
12 provided; requiring paid family leave insurance
13 policies to specify details and requirements with
14 regard to covered family leave reasons; specifying
15 requirements for policies relating to benefit periods,
16 waiting periods, benefit amounts and certain offsets,
17 and the payment of benefits; providing that
18 eligibility for family leave benefits may be limited,
19 excluded, or reduced but must be specified in the
20 policy; specifying permissible limitations,
21 exclusions, and reductions; providing applicable
22 provisions for calculating rates; specifying the means
23 by which a policy may offer family leave benefits;
24 authorizing the Financial Services Commission to adopt
25 rules; providing an effective date.
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26
27 Be It Enacted by the Legislature of the State of Florida:
28
29 Section 1. This act may be cited as the "Florida Paid
30 Family Leave Insurance Act."
31 Section 2. Subsection (1) of section 624.406, Florida
32 Statutes, is amended to read:
33 624.406 Combinations of insuring powers, one insurer.—An
34 insurer which otherwise qualifies therefor may be authorized to
35 transact any one kind or combination of kinds of insurance as
36 defined in part V except:
37 (1) A life insurer may also grant annuities, but shall not
38 be authorized to transact any other kind of insurance except
39 health insurance, disability income insurance, paid family leave
40 insurance, excess coverage for health maintenance organizations,
41 or excess insurance, specific and aggregate, for self-insurers
42 of a plan of health insurance and multiple-employer welfare
43 arrangements.
44 Section 3. Subsection (8) is added to section 624.6011,
45 Florida Statutes, to read:
46 624.6011 "Kinds of insurance" defined.—Insurance shall be
47 classified into the following "kinds of insurance":
48 (8) Paid family leave.
49 Section 4. Section 624.6086, Florida Statutes, is created
50 to read:
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51 624.6086 "Paid family leave insurance" defined.—
52 (1) "Paid family leave insurance" is insurance issued to
53 an employer which is related to a benefit program provided to an
54 employee to pay for a percentage or portion of the employee's
55 income loss due to:
56 (a) The birth of a child or adoption of a child by the
57 employee;
58 (b) Placement of a child with the employee for foster
59 care;
60 (c) Care of the employee's family member who has a serious
61 health condition; or
62 (d) Circumstances arising out of the fact that the
63 employee's family member who is a servicemember is on active
64 duty or has been notified of an impending call or order to
65 active duty.
66 (2) Family leave insurance may be written as an amendment
67 or a rider to a group disability income policy, included in a
68 group disability income policy, or written as a separate group
69 insurance policy purchased by an employer.
70 (3) As used in this section, the terms "child," "family
71 leave," and "family member" have the same meanings as provided
72 in s. 627.445(3).
73 Section 5. Section 627.445, Florida Statutes, is created
74 to read:
75 627.445 Paid family leave insurance.—
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76 (1) SHORT TITLE.—This section may be cited as the "Paid
77 Family Leave Income Replacement Benefits Act."
78 (2) LEGISLATIVE FINDINGS AND INTENT.—The Legislature
79 intends to provide the workers of this family-friendly state
80 with access to paid family leave insurance to encourage an
81 entrepreneurial atmosphere, to encourage economic growth, and to
82 promote a healthy business climate. Many workers need to take
83 time off work for family reasons, including bonding with a new
84 child or caring for an ill family member. Increasingly,
85 employers in this state want to make paid leave benefits
86 available to workers who need time off for these reasons.
87 Employers recognize workers will be healthier and more
88 productive when able to take care of family responsibilities
89 without a complete loss of income, and employers believe that
90 offering paid family leave benefits to their employees will
91 improve recruitment opportunities and reduce turnover in the
92 workplace. Disability insurers currently offer income
93 replacement benefits to workers who need time off from work
94 because of their own disabling medical condition. Disability
95 insurers have extensive experience, claims staff, systems, and
96 expertise that can be used to provide fully insured paid family
97 leave benefits for employees, either through employer-sponsored
98 group insurance policies or voluntarily purchased employee
99 policies. It is in the best interests of this state's workers
100 and employers to permit disability insurers to expand their
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101 fully insured benefits in this state to include paid family
102 leave benefits.
103 (3) DEFINITIONS.—As used in this section, the term:
104 (a) "Armed Forces of the United States" includes members
105 of the National Guard and the reserves.
106 (b) "Child" means a person who is:
107 1. Under 18 years of age, or 18 years of age or older and
108 incapable of self-care because of a mental or physical
109 disability; and
110 2. A biological, adopted, or foster son or daughter; a
111 stepson or stepdaughter; a legal ward; or a son or daughter of a
112 person to whom the employee stands in loco parentis.
113 (c) "Family leave" is any leave taken by an employee from
114 work for any of the reasons specified in subsection (4).
115 (d) "Family member" includes a child, spouse, or parent,
116 or other person defined as a family member in the policy.
117 (e) "Health care provider" means any physician, hospital,
118 or other institution, organization, or person that furnishes
119 health care services and is licensed or otherwise authorized to
120 practice in this state.
121 (f) "Parent" means a biological, foster, or adoptive
122 parent; a stepparent; a legal guardian; or other person who
123 stood in loco parentis to the employee when the employee was a
124 child.
125 (g) "Serious health condition" means an illness, injury,
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126 impairment, or physical or mental condition, including
127 transplantation preparation and recovery from surgery related to
128 organ or tissue donation, which involves inpatient care in a
129 hospital, hospice, or residential health care facility;
130 continuing treatment; or continuing supervision by a health care
131 provider as defined in the policy. Continuing supervision by a
132 health care provider includes a period of incapacity which is
133 permanent or long-term due to a condition for which treatment
134 may not be effective and where the family member need not be
135 receiving active treatment by a health care provider.
136 (4) FAMILY LEAVE BENEFITS.—Family leave benefits may be
137 provided for any leave taken by an employee from work to:
138 (a) Participate in providing care, including physical or
139 psychological care, for a family member of the employee made
140 necessary by a serious health condition of the family member;
141 (b) Bond with the employee's child during the first 12
142 months after the child's birth or the first 12 months after the
143 placement of the child for adoption by or foster care with the
144 employee;
145 (c) Address a qualifying exigency as interpreted under the
146 Family and Medical Leave Act of 1993, 29 U.S.C. s. 2612(a)(1)(E)
147 and 29 C.F.R. s. 825.126(a)(1)-(8), arising out of the fact that
148 the spouse, child, or parent of the employee is on active duty
149 or has been notified of an impending call or order to active
150 duty, in the Armed Forces of the United States;
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151 (d) Care for a family servicemember injured in the line of
152 duty; or
153 (e) Take other leave to provide care for a family member
154 or other family leave as specified in the policy.
155 (5) EXPLANATION OF FAMILY LEAVE REASONS.—The policy must
156 specify details and requirements with regard to each of the
157 covered family leave reasons.
158 (6) BENEFIT PERIOD.—The policy must specify the length of
159 family leave benefits available for each covered family leave
160 reason, which may not be less than 2 weeks during a period of 52
161 consecutive calendar weeks. For purposes of this subsection, 52
162 consecutive calendar weeks may be calculated by:
163 (a) A calendar year;
164 (b) Any fixed period starting on a particular date, such
165 as the effective or anniversary date;
166 (c) The period measured forward from the employee's first
167 day of family leave;
168 (d) A rolling period measured by looking back from the
169 employee's first day of family leave; or
170 (e) Any other method specified in the policy.
171 (7) WAITING PERIOD.—The policy must specify whether there
172 is an unpaid waiting period, and if so, the terms and conditions
173 of the unpaid waiting period, which may include, but are not
174 limited to, whether:
175 (a) The waiting period runs over a consecutive calendar
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176 day period;
177 (b) The waiting period is counted toward the annual
178 allotment of family leave benefits or is in addition to the
179 annual allotment of family leave benefits;
180 (c) The waiting period must be met only once per benefit
181 year or must be met for each separate claim for benefits; and
182 (d) The employee may work or receive paid time off or
183 other compensation by the employer during the waiting period.
184 (8) AMOUNT OF FAMILY LEAVE BENEFITS; OTHER INCOME.—
185 (a) The policy must specify:
186 1. The amount of benefits that will be paid for covered
187 family reasons;
188 2. The definition of the wages or other income upon which
189 the amount of family leave benefits will be issued; and
190 3. How such wages or other income will be calculated.
191 (b) If the family leave benefits are subject to offsets
192 for wages or other income received or for which the insured may
193 be eligible, the policy must specify all such wages or other
194 income that may be set off and the circumstances under which it
195 may be offset.
196 (9) PERMISSIBLE LIMITATIONS, EXCLUSIONS, OR REDUCTIONS. —
197 Eligibility for family leave benefits under this section may be
198 limited, excluded, or reduced, but any limitation, exclusion, or
199 reduction must be specified in the policy. Permissible
200 limitations, exclusions, or reductions may include, but are not
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201 limited to, any of the following reasons:
202 (a) For any period of family leave wherein the required
203 notice and medical certification as prescribed in the policy has
204 not been provided;
205 (b) For any family leave related to a serious health
206 condition or other harm to a family member brought about by the
207 willful intention of the employee;
208 (c) For any period of family leave during which the
209 employee performed work for remuneration or profit;
210 (d) For any period of family leave for which the employee
211 is eligible to receive from his or her employer, or from a fund
212 to which the employer has contributed, remuneration or
213 maintenance;
214 (e) For any period of family leave in which the employee
215 is eligible to receive benefits under any other statutory
216 program or employer-sponsored program, including, but not
217 limited to, unemployment insurance benefits, workers'
218 compensation benefits, statutory disability benefits, statutory
219 paid leave benefits, or any paid time off or employer's paid
220 leave policy;
221 (f) For any period of family leave commencing before the
222 employee becomes eligible for family leave benefits under the
223 policy; or
224 (g) For periods of family leave where more than one person
225 seeks family leave for the same family member.
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226 (10) PAYMENT OF FAMILY LEAVE BENEFITS.—Family leave
227 benefits provided under this section must be paid periodically
228 and promptly, except as to a contested period of family leave
229 and subject to any of the limitations, exclusions, or reductions
230 under subsection (9).
231 (11) INSURANCE POLICY.—
232 (a) Rates for policies or riders providing paid family
233 leave benefits must be calculated pursuant to s. 627.062.
234 (b) A policy issued pursuant to this section may o ffer
235 coverage for paid family leave benefits or may offer paid family
236 leave benefits as a rider to a policy of disability income
237 insurance.
238 (12) RULEMAKING.—The commission may adopt rules to
239 administer this section.
240 Section 6. This act shall take effect upon becoming a law.
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INSURANCE & BANKING SUBCOMMITTEE
HB 721 by Rep. Chaney
Paid Family Leave Insurance
AMENDMENT SUMMARY
March 14, 2023
Amendment 1 by Rep. Chaney (Strike-all): The amendment:
• Revises definitions, including:
o Armed Forces of the United States
o Health care provider; and
o Serious health condition;
• Establishes that forms for policies or riders providing paid family leave insurance
benefits are subject to review by the Office of Insurance Regulation;
• Makes technical changes to conform the model act on which the bill is based to
conform to the requirements of the Florida Insurance Code; and
• Removes superfluous language from the bill.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 721 (2023)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Chaney offered the following:
4
5 Amendment (with title amendment)
6 Remove everything after the enacting clause and insert:
7 Section 1. Subsection (1) of section 624.406, Florida
8 Statutes, is amended to read:
9 624.406 Combinations of insuring powers, one insurer.—An
10 insurer which otherwise qualifies therefor may be authorized to
11 transact any one kind or combination of kinds of insurance as
12 defined in part V except:
13 (1) A life insurer may also grant annuities, but shall not
14 be authorized to transact any other kind of insurance except
15 health insurance, disability income insurance, paid family leave
16 insurance, excess coverage for health maintenance organizations,
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 721 (2023)
Amendment No. 1
17 or excess insurance, specific and aggregate, for self -insurers
18 of a plan of health insurance and multiple-employer welfare
19 arrangements.
20 Section 2. Section 624.6086, Florida Statutes, is created
21 to read:
22 624.6086 "Paid family leave insurance" defined.—
23 (1) "Paid family leave insurance" is insurance issued to
24 an employer which is related to a benefit program provided to an
25 employee to pay for a percentage or portion of the employee's
26 income loss due to:
27 (a) The birth of a child or adoption of a child by the
28 employee;
29 (b) Placement of a child with the employee for foster
30 care;
31 (c) Care of the employee's family member who has a serious
32 health condition; or
33 (d) Circumstances arising out of the fact that the
34 employee's family member who is a servicemember is on active
35 duty or has been notified of an impending call or order to
36 active duty.
37 (2) Paid family leave insurance may be issued to and
38 purchased by an employer as an amendment or a rider to a group
39 disability income policy, included in a group disability income
40 policy, or issued as a separate group insurance policy.
41 (3) As used in this section, the terms "child," "family
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 721 (2023)
Amendment No. 1
42 leave," and "family member" have the same meanings as provided
43 in s. 627.445(1).
44 Section 3. Section 627.445, Florida Statutes, is created
45 to read:
46 627.445 Paid family leave insurance.—
47 (1) DEFINITIONS.—As used in this section, the term:
48 (a) "Armed Forces of the United States" means an officer
49 or enlisted member of the Army, Navy, Air Force, Marine Corps,
50 Space Force, or Coast Guard of the United States, the Florida
51 National Guard, and the United States Reserve Forces.
52 (b) "Child" means a person who is:
53 1. Under 18 years of age, or 18 years of age or older and
54 incapable of self-care because of a mental or physical
55 disability; and
56 2. A biological, adopted, or foster son or daughter; a
57 stepson or stepdaughter; a legal ward; or a son or daughter of a
58 person to whom the employee stands in loco parentis.
59 (c) "Family leave" is any leave taken by an employee from
60 work for any of the circumstances specified in subsection (4).
61 (d) "Family member" includes a child, spouse, or parent,
62 or other person defined as a family member of the employee i n
63 the policy.
64 (e) "Health care provider" means any hospital licensed
65 under chapter 395 and any health care institution licensed under
66 chapter 400 or chapter 429 or a individual licensed under
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 721 (2023)
Amendment No. 1
67 chapter 458, chapter 459, chapter 460, chapter 461, chapter 464,
68 or chapter 466.
69 (f) "Parent" means a biological, foster, or adoptive
70 parent; a stepparent; a legal guardian; or other person who
71 stood in loco parentis to the employee when the employee was a
72 child.
73 (g) "Serious health condition" means an illness, i njury,
74 impairment, or physical or mental condition, including, but not
75 limited to, pregnancy complications that threaten the life of
76 the mother or unborn child; transplantation preparation and
77 recovery from surgery related to organ or tissue donation, whic h
78 involves inpatient care in a hospital, hospice, or residential
79 health care facility; continuing treatment; or continuing
80 supervision by a health care provider. Continuing supervision by
81 a health care provider includes a period of incapacity which is
82 permanent or long-term due to a condition for which treatment
83 may not be effective and where the family member need not be
84 receiving active treatment by a health care provider.
85 (4) COVERED FAMILY LEAVE BENEFITS.—Family leave insurance
86 benefits provided in a paid family leave insurance policy may be
87 provided for any leave taken by an employee from work for any of
88 the following circumstances:
89 (a) Participation in providing care, including physical or
90 psychological care, for a family member made necessary by a
91 serious health condition of the family member;
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 721 (2023)
Amendment No. 1
92 (b) Bonding with the employee's child during the first 12
93 months after the child's birth or the first 12 months after the
94 placement of the child for adoption by or foster care with the
95 employee;
96 (c) Addressing a qualifying exigency as interpreted under
97 the Family and Medical Leave Act of 1993, 29 U.S.C. s.
98 2612(a)(1)(E) and 29 C.F.R. s. 825.126(a)(1)-(8), arising out of
99 the fact that the spouse, child, or parent of the employee is on
100 active duty or has been notified of an impending call or order
101 to active duty in the Armed Forces of the United States;
102 (d) Caring for a family injured in the line of duty with
103 the Armed Forces of the United States; or
104 (e) Caring for a family member or other leave as s pecified
105 in the policy.
106 (5) REQUIRED POLICY SPECIFICITY.—The policy must specify:
107 (a) Details and requirements with regard to each of the
108 covered circumstances specified in subsection (4),
109 (b) The length of family leave benefits available for each
110 covered circumstance, which may not be less than 2 weeks during
111 a period of 52 consecutive calendar weeks.
112 (c) Whether there is an uncovered waiting period, and if
113 so, the terms and conditions of the uncovered waiting period,
114 which may include, but are not limited to, whether:
115 1. The period runs over a consecutive calendar day period;
116 2. The period is counted toward the annual allotment of
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 721 (2023)
Amendment No. 1
117 covered family leave benefits or is in addition to the annual
118 allotment of covered family leave benefits;
119 3. The period must be met only once per benefit year or
120 must be met for each separate claim for benefits; and
121 4. The employee may work or receive paid time off or other
122 compensation during the period.
123 (d) The amount of benefits that will be paid for covered
124 circumstances provided in subsection (4).
125 (e) The definition of the wages or other income upon which
126 the amount of benefits will be issued.
127 (f) How such wages or other income will be calculated.
128 (g) If the family leave benefits are subject to offsets
129 for wages or other income received or for which the insured may
130 be eligible, all such wages or other income that may be set off
131 and the circumstances under which it may be offset.
132 (h) The frequency of payments due for covered benefits.
133 (6) For purposes of this section, 52 consecutive calendar
134 weeks may be calculated by:
135 (a) A calendar year;
136 (b) Any fixed period starting on a particular date, such
137 as the effective or anniversary date of the policy;
138 (c) The employee's hiring date or anniversary of hiring
139 date;
140 (d) The period measured forward from the employee's first
141 day of family leave;
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 721 (2023)
Amendment No. 1
142 (e) A rolling period measured by looking back from the
143 employee's first day of family leave; or
144 (f) Any other method specified in the policy.
145 (7) PERMISSIBLE LIMITATIONS, EXCLUSIONS, OR REDUCTIONS.—
146 Eligibility for family leave benefits under this section may be
147 limited, excluded, or reduced, but any limitation, exclusion, or
148 reduction must be specified in the policy and not conflict with
149 the Insurance Code. Permissible limitations, exclusions, or
150 reductions may be made for the following:
151 (a) For any period wherein the required notice and medical
152 certification as prescribed in the policy has not been provided;
153 (b) For any leave related to a serious health condition or
154 other harm to a family member brought about by a willful act by
155 the employee;
156 (c) For any period during which the employee performed
157 work for remuneration or profit;
158 (d) For any period for which the employee is eligible to
159 receive remuneration or maintenance from her or his employer, or
160 from a fund to which the employer has contributed;
161 (e) For any period during which the employee is eligible
162 to receive benefits under any other statutory program or
163 employer-sponsored program, including, but not limited to,
164 unemployment insurance benefits, workers' compensation benefits,
165 or any paid time off or employer's paid leave policy;
166 (f) For any period commencing before the employee becomes
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 721 (2023)
Amendment No. 1
167 eligible for family leave benefits under the policy; or
168 (g) For periods where more than one person seeks family
169 leave for the same family member under the same policy, unless
170 the policy specifies otherwise.
171 (h) other reasons specified in the policy.
172 (8) PAYMENT OF FAMILY LEAVE BENEFITS.—Family leave
173 benefits provided under a policy that complies with this section
174 must be paid periodically and promptly, as specified in the
175 policy, except as to a contested period of family leave and
176 subject to any of the limitations, exclusions, or reductions
177 permitted under subsection (7).
178 (9) INSURANCE POLICY.—
179 (a) Rates for policies or riders providing paid family
180 leave insurance benefits must be calculated in accordance with
181 the rate standards provided in s. 627.062.
182 (b) Forms for policies or riders providing paid family
183 leave insurance benefits are subject to review by the office
184 under s. 627.410.
185 (c) A policy issued under to this section must be issued
186 as provided in s. 624.6086(2).
187 (10) RULEMAKING.—The commission may adopt rules to
188 implement this section.
189 Section 6. This act shall take effect upon becoming a law.
190
191 -----------------------------------------------------
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 721 (2023)
Amendment No. 1
192 T I T L E A M E N D M E N T
193 Remove everything before the enacting clause and insert:
194 A bill to be entitled
195 An act relating to paid family leave insurance;
196 amending s. 624.406, F.S.; authorizing life insurers
197 to transact paid family leave insurance; creating s.
198 624.6086, F.S.; defining terms; creating s. 627.445,
199 F.S.; defining terms; specifying circumstances under
200 which family leave benefits may be provided; requiring
201 paid family leave insurance policies to specify
202 details and requirements with regard to covered
203 circumstances; specifying requirements for policies
204 relating to benefit periods, waiting periods, benefit
205 amounts and certain offsets, and the payment of
206 benefits; providing that eligibility for family leave
207 benefits may be limited, excluded, or reduced but must
208 be specified in the policy; specifying permissible
209 limitations, exclusions, and reductions; providing
210 applicable provisions for calculating rates;
211 specifying the means by which a policy may offer
212 family leave benefits; authorizing the Financial
213 Services Commission to adopt rules; providing an
214 effective date.
215
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HB 793
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 793 Collateral Protection Insurance on Real Property
SPONSOR(S): Fernandez-Barquin
TIED BILLS: IDEN./SIM. BILLS: SB 410
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fortenberry Lloyd
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
In general, mortgages require borrowers to maintain adequate homeowners’ insurance on their property.
Borrowers may fail to maintain the required insurance coverage for a variety of reasons, including cancellation
or withdrawal of an insurer from the market. If the policy lapses and the borrower does not secure a
replacement policy, most mortgages allow the lender to obtain insurance for the borrower and “force-place” it.
A lender-placed, or force-placed, insurance policy is an insurance policy placed by a bank or mortgage servicer
on a home when the homeowners’ property insurance has lapsed or is deemed insufficient by the bank or
mortgage servicer. In recent years, there has been significant media attention on the rates charged for lender-
placed insurance policies and whether insurers and lenders are making excess profits on this line of business.
Lender-placed insurance typically is more expensive than the insurance a borrower purchases on his or her
own and provides more limited coverage. Concerns have also been raised about “reverse competition”
stemming from the use of lender-place insurance because the lender chooses the coverage provider and
amount, but the borrower must pay for the coverage.
In order to address some of these concerns, the National Association of Insurance Commissioners (NAIC)
issued a Real Property Lender-Placed Insurance Model Act (Model Act) that can be adopted by member
states. Florida law does not use the term lender-placed insurance. Instead, it refers to collateral protection
insurance (CPI). The bill creates a new statutory chapter part (Part XXII) for the purposes of:
Regulating CPI on real property;
Establishing a legal framework for the writing of CPI on real property in Florida;
Maintaining separation between lenders or servicers, and insurers or insurance agents; and
Minimizing the possibilities of unfair competition practices in the sale, placement, or solicitation, and
negotiation of CPI.
Part XXII applies to insurers and insurance agents engaged in transactions of CPI on real property. All CPI
policies for mortgaged real property, including manufactured and mobile homes are subject to Part XXII, with
certain exceptions. The bill contains statutory definitions of CPI and several related terms. CPI is defined as
commercial property insurance under which a creditor is the primary beneficiary and policyholder, and which
protects or covers the creditor’s interest arising out of a credit transaction secured by the real property. CPI is
triggered by the mortgagor’s failure to maintain insurance coverage required by the mortgage or other lending
document. The bill provides the Office of Insurance Regulation with authority to develop rules related to the
regulation of Part XXII.
The bill has no effect local revenues or expenditures or state revenues. It has an indeterminate impact on state
expenditures. It may have a positive direct economic impact on the private sector.
The bill has an effective date of July 1, 2023.
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
Mortgages on Real Property
A mortgage is an agreement between a borrower and a lender that gives the lender the right to take the
property if the borrower fails to pay the loan plus interest.1 A mortgage is generally secured by a
mortgage note, which is a note evidencing a loan for which real property has been offered as security. 2
All mortgages require borrowers to maintain adequate homeowners’ insurance on their property. 3
Borrowers may fail to maintain the required insurance coverage for a variety of reasons, including
cancellation or withdrawal of an insurer from the market. 4 If the policy lapses and the borrower does not
secure a replacement policy, most mortgages allow the lender to obtain insurance for the borrower and
“force-place” it.5
Lender-placed Insurance/Collateral Protection Insurance (CPI)
A lender-placed insurance policy6 is an insurance policy placed by a bank or mortgage servicer on a
home when the homeowners’ property insurance has lapsed or is deemed insufficient by the bank or
mortgage servicer.7 In recent years, there has been significant media attention on the rates charged for
lender-placed insurance policies and whether insurers and lenders are making excess profits on this
line of business.8 Lender-placed insurance typically is more expensive than the insurance a borrower
purchases on his or her own and provides more limited coverage.9 Concerns have also been raised
about “reverse competition” stemming from the use of lender-place insurance because the lender
chooses the coverage provider and amount, but the borrower must pay for the coverage. 10
In order to address some of these concerns, the National Association of Insurance Commissioners
(NAIC) issued a Real Property Lender-Placed Insurance Model Act (Model Act) that can be adopted by
member states.11 Its state purpose includes creating a legal framework within which lender-placed
insurance on real property may be written in a particular state. 12 However, Florida law does not use the
term lender-placed insurance. Instead, it refers to collateral protection insurance, which is defined as:
[C]ommercial property insurance under which a creditor is the primary beneficiary
and policyholder and which protects or covers an interest of the creditor arising out
of a credit transaction secured by real or personal property. Initiation of such
coverage is triggered by the mortgagor’s failure to maintain insurance coverage as
1 Consumer Financial Protection Bureau, What is a mortgage?, What is a mortgage? | Consumer Financial Protection
Bureau (consumerfinance.gov) (last visited Mar. 12, 2023). The borrower and the lender are also referred to as the
mortgagor and mortgagee, respectively.
2 Black’s Law Dictionary (11th ed. 2019).
3 NAIC, Lender-Placed Insurance, https://content.naic.org/cipr-topics/lender-placed-insurance (last visited Mar. 12, 2023)
4 Id.
5 Id.
6 Lender-placed insurance is also known as creditor-placed or force-placed insurance.
7 NAIC, supra note 3.
8 Id.
9 Id.
10 Id.
11 Id. Some of these concerns regarding price and coverage have been raised regarding the lender-place insurers issuing
policies in Florida. However, the largest two insurers issuing these policies are already bound by consent orders with the
Office of Insurance Regulation (OIR) with conditions very similar to those contained in the Model Act. A copy of these
consent orders has been requested from OIR, but has not been received as of the publication of this analysis.
12 Id.
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required by the mortgage or other lending document. Collateral protection
insurance is not residential coverage.13
Review of Insurance Policy Forms and Rates
In general, an insurer may not use forms to issue insurance policies in the state unless the forms have
been filed with, and approved by, the Office of Insurance Regulation (OIR). 14 Once filed, OIR has 30
days to review insurance forms.15 At the end of the 30-day period, forms will be deemed approved
unless they have been affirmatively approved or disapproved by OIR. 16
Insurers must also file a copy of rates, rating schedules, rating manuals, premium credits or discount
schedules, and surcharge schedules, and changes to these documents, for approval by OIR. 17 OIR
must review insurers’ rate filings to determine whether rates are excessive, inadequate, or unfairly
discriminatory.18 In doing so, OIR must consider factors including, but not limited to, the following:
Past and prospective loss experience in and out of Florida.
Past and prospective expenses.
Degree of competition among insurers for particular risk to be insured.
Investment income reasonably expected by the insurer.
Reasonableness of the judgment reflected in the filing.
Dividends, savings, or unabsorbed premium deposits allowed or returns to policyholders,
members or subscribers in Florida.
Adequacy of loss reserves.
Cost of reinsurance.
Trend factors.
Conflagration and catastrophe hazards, if applicable.
Projected hurricane losses.
Projected flood losses.
Reasonable margin for underwriting profit and contingencies.
Insurers may make rate filings with OIR on a file and use, or use and file basis. If a filing is made on a
file and use basis, OIR has 90 days to review and approve the filing before an insurer may use the filed
rate.19 In contrast, a use and file rate may be used before filing, but must be filed within 30 days of the
effective date.20 A use and fie rate is still subject to review and disapproval by OIR. 21
Effect of the Bill
The bill creates a new statutory part of chapter 627, F.S. (Part XXII),22 for the purposes of:
Regulating CPI on real property;
Establishing a legal framework for the writing of CPI on real property in Florida;
Maintaining separation between lenders or services, and insurers or insurance agents; and
Minimizing the possibilities of unfair competition practices in the sale, placement, or solicitation,
and negotiation of CPI.
13 S. 627.6085, F.S.
14 S. 627.410(1), F.S.
15 S. 627.410(2), F.S.
16 Id.
17 S. 627.062(2)(a), F.S.
18 S. 627.062(1), F.S.
19 S. 627.062(2)(a)1., F.S.
20 S. 627.062(2)(a)2., F.S.
21 Id.
22 The new statutory chapter part will be part XXII of chapter 627, F.S., and will contain ss. 627.9901-627.9913, F.S. It is
similar to the NAIC Model Act, but is drafted in a way that will fit appropriately within the Florida Insurance Code. Chapters
624-632, 634, 635, 636, 641, 642, 648, and 651 constitute the Florida Insurance Code. S. 624.01, F.S.
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Part XXII applies to insurers and insurance agents engaged in transactions of CPI on real property. All
CPI policies for mortgaged real property, including manufactured and mobile homes is subject to Part
XXII except:
Transactions involving extensions of credit primarily for business, commercial, or agricultural
purposes.
Insurance offered by a lender or servicer and elected by the mortgagor at the mortgagor’s
option.
Insurance purchased by a lender or servicer on real-estate owned property.23
Insurance for which no specific charge is made to the mortgagor or mortgagor’s account.
The bill contains statutory definitions of CPI and several related terms. CPI is defined as commercial
property insurance under which a creditor is the primary beneficiary and policyholder, and which
protects or covers the creditor’s interest arising out of a credit transaction secured by the real
property.24 CPI is triggered by the mortgagor’s failure to maintain insurance coverage required by the
mortgage or other lending document. CPI under Part XXII applies only to mortgaged real property, not
personal property.
Individual CPI is defined in the bill as coverage for individual real property evidenced by a certificate of
coverage under a master CPI policy or a CPI policy for individual real property. A master CPI policy is a
group policy issued to a lender or servicer providing coverage for all loans in the lender’s or servicer’s
loan portfolio, as needed.
Pursuant to the bill, CPI becomes effective no earlier than the date of lapse of insurance on mortgaged
real property. Individual CPI terminates on the earliest of the following dates:
The date on which insurance acceptable under the mortgage agreement becomes effective.
The date on which the applicable real property no longer serves as collateral for a mortgage
loan.
Such other date specified by the individual policy or certificate of insurance.
Such other date as specified by the lender or servicers
The termination date of the policy.
According to the bill, CPI coverage, and the calculation of the related premium, should be based on the
replacement cost value of the real property serving as collateral, as best determined by the last known
coverage amount. The last known coverage amount is the dwelling coverage amount specified in the
most recent evidence of insurance coverage provided by the mortgagee. The bill requires that an
insurer or insurance agent ask the insured, at least once, for the last known coverage amount. If the
insurer or insurance agent cannot obtain the last known coverage amount from the insured or by
another means, the CPI coverage and the calculation of the related premium may be based on the:
Replacement cost value of the real property serving as collateral as calculated by the insurer; or
Unpaid principal balance of the mortgage loan.
Part XXII prohibits the following practices by insurers or insurance agents related to CPI:
Issuing CPI on a mortgaged real property if the insurer or insurance agent or an affiliate of the
insurer or insurance agent owns the real property or performs the servicing for, or owns the
servicing rights to, the real property.
Compensating a lender, insurer, investor, or servicer, including through the payment of
commissions, on CPI policies issued by the insurer.
Sharing CPI premium or risk with the lender, investor, or servicer that obtained the CPI.
Offering contingent commissions, profit-sharing, or other payments dependent on profitability or
loss ratios to any person affiliated with a servicer or the insurer in connection with CPI.
Providing free or below-cost outsourced services to a lender, investor, or servicer and
outsourcing its own functions to a lender, investor, or servicer at a rate above cost.
23 Real-estate owned property is often referred to as bank-owned property, and may be property that failed to sell during a
foreclosure.
24 This definition is similar to the definition of collateral protection insurance in s. 624.6085, F.S., discussed above, except
that definition also includes coverage secured by personal property.
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Making any payments, including, but not limited to, the payment of expenses to a lender,
insurer, investor, or servicer to secure CPI business or related outsourced services.
The bill requires that proof of CPI is provided in an individual policy or certificate of insurance, which
must be delivered to the mortgagor either by mail, in person, or electronically. 25 The individual policy or
certificate of insurance must include all of the following information:
Address and identification of the insured real property.
Coverage amount, or amounts if multiple coverages are provided.
Effective date of coverage.
Term of coverage.
Premium charged for the coverage.
Contact information for filing a claim.
Complete description of the coverage provided.
The policy forms and certificates of insurance for CPI, and related premium rates, must be reviewed
and approved by OIR. As part of the rate review, OIR must also evaluate whether expenses included
by the insurer in the rates are appropriate. The bill requires that insurers subject to Part XXII refile CPI
insurance rates at least once every four years. All insurers writing CPI must have separate rates for CPI
and voluntary insurance obtained by a mortgage servicer on real-estate owned property.
By April 1 each year, each insurer with at least $100,000 in direct written premium for CPI in Florida
during the prior calendar year must report the following information to OIR for the prior calendar year:
Actual loss ratio.26
Earned premiums.
Any aggregate schedule rating debit or credit to earned premium.
Itemized expenses.
Paid losses.
Loss reserves, including case reserves and reserves for incurred but not reported losses. 27
The bill provides OIR with the rights and powers to enforce Part XXII, and all proceedings brought
pursuant to Part XXII will be conducted under the Florida Administrative Procedures Act. 28 It also
provides OIR with rulemaking authority so that it may, after notice and hearing, adopt reasonable rules
and regulations to implement and administer Part XXII. Finally, the bill contains a severability clause so
that if any portion of Part XXII is held invalid, the remainder of the Part is not affected.
B. SECTION DIRECTORY:
Section 1. Creates part XXII of chapter 627, F.S., relating to real property collateral protection
insurance.
Section 2. Provides an effective date of July 1, 2023.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
25 The Uniform Electronic Transaction Act, s. 668.50, F.S., provides the requirements for electronic delivery.
26 Loss ratio is an insurer’s actual claims paid plus loss adjustment expenses divided by total earned premiums.
27 Incurred but not reported losses are estimated liabilities from losses that have taken place and not yet but reported to
insurers as claims.
28 The Florida Administrative Procedures Act is ch. 120, F.S.
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Indeterminate.29
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
To the extent that the requirements of Part XXII result in lower CPI premiums for mortgagors, the bill
may have a positive direct economic impact on the private sector.
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 provides OIR with rulemaking authority so that it may, after notice and hearing, adopt
reasonable rules and regulations to implement and administer Part XXII.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
29 An analysis HB 793 has been requested from OIR, but not yet received. It should contain information from OIR
regarding the bill’s impact on state expenditures.
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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 793 2023
1 A bill to be entitled
2 An act relating to collateral protection insurance on
3 real property; creating part XXII of ch. 627, F.S.,
4 titled "Real Property Collateral Protection
5 Insurance"; creating s. 627.9901, F.S.; providing
6 purpose; creating s. 627.9902, F.S.; providing scope;
7 creating s. 627.9903, F.S.; providing definitions;
8 creating s. 627.9904, F.S.; providing the effective
9 date of collateral protection insurance on mortgaged
10 real property; providing the termination date of
11 individual collateral protection insurance;
12 prohibiting insurance charges under certain
13 circumstances; creating s. 627.9905, F.S.; providing
14 calculations of coverages and premiums; creating s.
15 627.9906, F.S.; prohibiting collateral protection
16 insurers and insurance agents from engaging in certain
17 practices; creating s. 627.9907, F.S.; providing
18 construction; creating s. 627.9908, F.S.; providing
19 requirements for proof of collateral protection
20 insurance; creating s. 627.9909, F.S.; providing
21 requirements for policy forms, certificates of
22 insurance, and rate filings; providing reporting
23 requirements for certain insurers; creating s.
24 627.9911, F.S.; providing rights and powers of the
25 Office of Insurance Regulation for enforcement
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26 purposes; providing requirements for proceedings;
27 providing penalties; creating s. 627.9912, F.S.;
28 providing rulemaking authority; creating s. 627.9913,
29 F.S.; providing severability; providing an effective
30 date.
31
32 Be It Enacted by the Legislature of the State of Florida:
33
34 Section 1. Part XXII of chapter 627, Florida Statutes,
35 consisting of sections 627.9901, 627.9902, 627.9903, 627.9904,
36 627.9905, 627.9906, 627.9907, 627.9908, 627.9909, 627.9911,
37 627.9912, and 627.9913, Florida Statutes, is created to read:
38 PART XXII
39 REAL PROPERTY COLLATERAL PROTECTION INSURANCE
40 627.9901 Purpose.—The purpose of this part is to:
41 (1) Promote the public welfare by regulating collateral
42 protection insurance on real property.
43 (2) Create a legal framework within which collateral
44 protection insurance on real property may be written in the
45 state.
46 (3) Help maintain the separation between lenders or
47 servicers, and insurers or insurance agents.
48 (4) Minimize the possibilities of unfair competitive
49 practices in the sale, placement, solicitation, and negotiation
50 of collateral protection insurance.
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51 627.9902 Scope.—This part applies to insurers and
52 insurance agents engaged in any transaction involving collateral
53 protection insurance on real property. All collateral protection
54 insurance written in connection with mortgaged real property,
55 including manufactured and mobile homes, is subject to the
56 provisions of this part, except:
57 (1) Transactions involving extensions of credit primarily
58 for business, commercial, or agricultural purposes.
59 (2) Insurance offered by the lender or servicer and
60 elected by the mortgagor at the mortgagor's option.
61 (3) Insurance purchased by a lender or servicer on real -
62 estate owned property.
63 (4) Insurance for which no specific charge is made to the
64 mortgagor or the mortgagor's account.
65 627.9903 Definitions.—As used in this part, the term:
66 (1) "Collateral protection insurance" means commercial
67 property insurance under which a creditor is the primary
68 beneficiary and policyholder and which protects or covers an
69 interest of the creditor arising out of a credit transaction
70 secured by real property. Initiation of such coverage is
71 triggered by the mortgagor's failure to maintain insurance
72 coverage as required by the mortgage or other lending document.
73 For purposes of this part, collateral protection insurance
74 applies only to mortgaged real property, not personal property.
75 (2) "Individual collateral protection insurance" means
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76 coverage for individual real property evidenced by a certificate
77 of coverage under a master collateral protection insurance
78 policy or a collateral protection insurance policy for
79 individual real property.
80 (3) "Insurer" means an insurer authorized to issue
81 collateral protection insurance on mortgaged real property in
82 the state.
83 (4) "Investor" means a person or an entity, and affiliates
84 of the person or entity, holding a beneficial interest in loans
85 secured by real property.
86 (5) "Lapse" means the moment in time in which a mortgagor
87 has failed to secure or maintain valid or sufficient insurance
88 upon a mortgaged real property as required by a mortgage
89 agreement.
90 (6) "Last known coverage amount" means a dwelling coverage
91 amount specified in the most recent evidence of insurance
92 coverage provided by the mortgagee.
93 (7) "Lender" means a person or entity, and affiliates of
94 the person or entity, making loans secured by an interest in
95 real property.
96 (8) "Loss ratio" means the ratio of incurred losses to
97 earned premium.
98 (9) "Master collateral protection insurance policy" means
99 a group policy issued to a lender or servicer providing coverage
100 for all loans in the lender's or servicer's loan portfolio as
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101 needed.
102 (10) "Mortgage agreement" means a written document that
103 specifies an obligation or a liability of any kind secured by a
104 lien on a real property and due from, and owing or incurred by,
105 a mortgagor to a lender on account of a mortgage loan, including
106 the security agreement, deed of trust, any other document of
107 similar effect, and any other document incorporated by
108 reference.
109 (11) "Mortgage loan" means a loan, an advance, a
110 guarantee, or other extension of credit from a lender to a
111 mortgagor.
112 (12) "Mortgagee" means a person or an entity that holds a
113 mortgaged real property, or, as applicable, a lien on mortgaged
114 real property, as security for repayment of a mortgage
115 agreement.
116 (13) "Mortgagor" means a person who is obligated on a
117 mortgage loan pursuant to a mortgage agreement.
118 (14) "Real-estate owned property" means a real property
119 owned or held by a lender or servicer following foreclosure
120 under the related mortgage agreement or the acceptance of a deed
121 in lieu of foreclosure.
122 (15) "Replacement cost value" is the estimated cost to
123 replace a covered real property at the time of loss or damage
124 without deduction for depreciation. Replacement cost value is
125 not market value, but the cost to replace the covered real
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126 property to its condition before the loss or damage.
127 (17) "Servicer" means a person or an entity, and
128 affiliates of the person or entity, contractually obligated to
129 service one or more mortgage loans for a lender or investor. The
130 term includes persons or entities involved in subservicing
131 arrangements.
132 627.9904 Terms of policies.—
133 (1) Collateral protection insurance shall become effective
134 no earlier than the date of lapse of insurance upon mortgaged
135 real property subject to the terms of a mortgage agreement or
136 any other state or federal law requiring the same.
137 (2) Individual collateral protection insurance shall
138 terminate on the earliest of the following dates:
139 (a) The date on which insurance that is acceptable under
140 the mortgage agreement becomes effective, subject to the
141 mortgagor providing sufficient evidence of such acceptable
142 insurance.
143 (b) The date on which the applicable real property no
144 longer serves as collateral for a mortgage loan pursuant to a
145 mortgage agreement.
146 (c) Such other date as specified by the individual policy
147 or certificate of insurance.
148 (d) Such other date as specified by the lender or
149 servicer.
150 (e) The termination date of the policy.
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151 (3) An insurance charge may not be made to a mortgagor for
152 collateral protection insurance for a term longer than the
153 scheduled term of the collateral protection insurance, and an
154 insurance charge may not be made to the mortgagor for collateral
155 protection insurance before the effective date of the collateral
156 protection insurance.
157 ` 627.9905 Calculations of coverages and premiums.—
158 (1)(a) Any collateral protection insurance coverage and
159 subsequent calculation of premium should be based upon the
160 replacement cost value of the real property serving as
161 collateral as best determined by the last known coverage amount,
162 if known to the lender or servicer.
163 (b) An insurer or insurance agent shall inquire of the
164 insured, at least once, as to the last known coverage amount
165 and, if the insurer or insurance agent cannot obtain the last
166 known coverage amount from the insured or in another manner, the
167 collateral protection insurance coverage and subsequent
168 calculation of premium may be based upon:
169 1. The replacement cost value of the real property serving
170 as collateral as calculated by the insurer, if the use of
171 replacement cost value for this purpose is not prohibited by
172 other state or federal law; or
173 2 The unpaid principal balance of the mortgage loan, if
174 the use of replacement cost value for this purpose is prohibited
175 by other state or federal law or if the replacement cost value
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176 is not available.
177 (c) In the event of a covered loss, any replacement cost
178 value coverage provided by an insurer in excess of the unpaid
179 principal balance of the mortgage loan shall be paid to the
180 mortgagor.
181 (2) An insurer may not write collateral protection
182 insurance for which the premium rate differs from that
183 determined by the schedules of the insurer on file with the
184 office as of the effective date of such policy.
185 627.9906 Prohibited practices.—An insurer or insurance
186 agent may not:
187 (1) Issue collateral protection insurance on a mortgaged
188 real property if the insurer or insurance agent or an affiliate
189 of the insurer or insurance agent owns the real property or
190 performs the servicing for, or owns the servicing rights to, the
191 real property;
192 (2) Compensate a lender, insurer, investor, or servicer,
193 including through the payment of commissions, on collateral
194 protection property insurance policies issued by the insurer;
195 (3) Share collateral protection insurance premium or risk
196 with the lender, investor, or servicer that obtained the
197 collateral protection insurance;
198 (4) Offer contingent commissions, profit-sharing, or other
199 payments dependent on profitability or loss ratios to any person
200 affiliated with a servicer or the insurer in connection with
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201 collateral protection insurance;
202 (5) Provide free or below-cost outsourced services to a
203 lender, investor, or servicer and may not outsource its own
204 functions to a lender, investor, or servicer on an above-cost
205 basis; or
206 (6) Make any payments, including, but not limited to, the
207 payment of expenses to a lender, insurer, investor, or servicer
208 for the purpose of securing collateral protection insurance
209 business or related outsourced services.
210 627.9907 Noncircumvention.—This part may not be construed
211 to allow an insurance agent or insurer underwriting collateral
212 protection insurance solely to circumvent the requirements
213 specified in this part. Any such requirement, limitation, or
214 exclusion provided in this part applies to all insurers or
215 insurance agents involved in collateral protection insurance.
216 627.9908 Evidence of coverage.—Proof of collateral
217 protection insurance must be provided in an individual policy or
218 a certificate of insurance. A copy of the individual policy,
219 certificate of insurance, or other evidence of insurance
220 coverage shall be mailed by first-class mail or delivered in
221 person to the last known address of the mortgagor or delivered
222 in accordance with s. 668.50, the Uniform Electronic Transaction
223 Act. Notwithstanding any other general law to the contrary, the
224 individual policy or certificate of insurance coverage must
225 include the following information:
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226 (1) The address and identification of the insured real
227 property.
228 (2) The coverage amount or, if multiple coverages are
229 provided, amounts.
230 (3) The effective date of the coverage.
231 (4) The term of coverage.
232 (5) The premium charge for the coverage.
233 (6) Contact information for filing a claim.
234 (7) A complete description of the coverage provided.
235 627.9909 Policy forms and certificates of insurance; rate
236 filings.—
237 (1) Except as otherwise provided in this part, all policy
238 forms and certificates of insurance to be delivered or issued
239 for delivery in the state are subject to the applicable
240 provisions of s. 627.410, and the schedules of premium rates
241 pertaining thereto are subject to the applicable provision s of
242 s. 627.062.
243 (2) With respect to an analysis of rates in accordance
244 with s. 627.062(1), the analysis must also include a
245 determination as to whether expenses included by the insurer in
246 the rates are appropriate.
247 (3) Notwithstanding s. 627.0645, insurers subject to this
248 part shall refile collateral protection property insurance rates
249 at least once every 4 years.
250 (4) All insurers writing collateral protection insurance
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251 must have separate rates for collateral protection insurance and
252 voluntary insurance obtained by a mortgage servicer on real-
253 estate owned property.
254 (5) Upon the introduction of a new collateral protection
255 insurance program, the insurer shall reference its experience in
256 existing programs in the associated filings. This part does not
257 limit an insurer's discretion, as actuarially appropriate, to
258 distinguish different terms, conditions, exclusions, eligibility
259 criteria, or other unique or different characteristics.
260 Moreover, an insurer may, if actuarially acceptable, rely upon
261 models or, in the case of flood filings if applicable experience
262 is not credible, on the Federal Emergency Management Agency's
263 National Flood Insurance Program data.
264 (6)(a) By April 1 of each year, each insurer with at least
265 $100,000 in direct written premium for collateral protection
266 insurance in the state during the prior calendar year shall
267 report to the office the following information for the prior
268 calendar year:
269 1. Actual loss ratio.
270 2. Earned premiums.
271 3. Any aggregate schedule rating debit or credit to earned
272 premium.
273 4. Itemized expenses.
274 5. Paid losses.
275 6. Loss reserves, including case reserves and reserves for
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276 incurred but not reported losses.
277 (b) The report shall be separately produced for each
278 collateral protection insurance program and presented on both an
279 individual-jurisdiction and countrywide basis.
280 (7) Except in the case of collateral protection insurance
281 covering the peril of flood, to which this subsection does not
282 apply, if an insurer experiences an annual loss ratio of less
283 than 35 percent in any collateral protection insurance program
284 for 2 consecutive years, the insurer shall submit a rate filing,
285 either adjusting its rates or supporting the continuance of its
286 rates, to the office no more than 90 days after the submission
287 of the data required in paragraph (6)(a).
288 (8) Except as provided in this section, rate and form
289 filing requirements are subject to the Florida Insurance Code.
290 627.9911 Enforcement and judicial review.—The office shall
291 have all rights and powers to enforce the provisions of this
292 part, as provided in s. 624.307. All proceedings, including
293 judicial review, shall be conducted in accordance with the
294 administrative procedures prescribed in chapter 120. Penalties
295 for any violation of this part shall be assessed in accordance
296 with s. 624.4211.
297 627.9912 Rulemaking authority.—The office may, after
298 notice and hearing, adopt reasonable rules and regulations to
299 implement and administer this part.
300 627.9913 Severability provisions.—If any provision of this
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301 part or the application of the provision to any person or
302 circumstance is held invalid, the remainder of this part and the
303 application of such provision to other persons or circumstances
304 are not affected thereby.
305 Section 2. This act shall take effect July 1, 2023.
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HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 987 Public Deposits
SPONSOR(S):Botana
TIED BILLS: IDEN./SIM. BILLS: SB 1360
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fletcher Lloyd
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
State and local governments are required, unless exempted by law, to deposit public funds in a
qualified public depository (QPD) pursuant to the Florida Security for Public Deposits Act (Act), which
is administered by the Chief Financial Officer (CFO) and Department of Financial Services (DFS).
Before a QPD accepts or retains a public deposit, it must deposit collateral with an approved
custodian in an amount commensurate with the amount of public deposits held and the financial
stability of the QPD. Currently, banks, savings banks, and savings associations are the only types of
financial institutions eligible to be a QPD or a custodian for another QPD’s pledged collateral.
The bill makes the following amendments to the Act:
Allows state-chartered and federally-chartered credit unions to become QPDs and custodians
for another QPD’s pledged collateral;
Provides criteria a credit union must meet before the CFO can designate the credit union as a
QPD;
Creates separate mutual responsibility and contingent liability provisions for credit union QPDs
to prevent banks from sharing liability with credit unions in the event of a credit union QPD’s
default or insolvency, and vice versa; and
Requires the CFO to segregate and separately account for any collateral proceeds,
assessments, or administrative penalties attributable to a credit union from those attributable to
any banks, savings bank, or savings association.
Although the bill would potentially have a positive impact on the state government’s revenues, the bill
will require recurring and non-recurring expenditures. See Fiscal Impact on State Government
section. Further, the bill does not include an appropriation to fund DFS’s implementation and ongoing
maintenance of credit unions as QPDs. The bill has an indeterminate fiscal impact on local
governments and the private sector.
The bill provides an effective date of July 1, 2023.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h0987.IBS
DATE: 3/12/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Current Situation
Public Depositories
Pursuant to the Florida Security for Public Deposits Act (Act),1 and unless exempted therein, state
and local governments are required to deposit public funds in a qualified public depository (QPD).2
A QPD is any bank, savings bank, or savings association that:
is organized and exists under the laws of the United States, the laws of this state, or any
other state or territory of the United States (i.e., state or federally chartered);
has its principal place of business in this state or has a branch office in this state which is
authorized under Florida or federal laws to receive deposits in this state;
has deposit insurance under the provision of the Federal Deposit Insurance Act, as
amended3;
has procedures and practices for accurate identification, classification, reporting, and
collateralization of public deposits;
meets all the requirements of the Act; and
has been designated by the Chief Financial Officer (CFO) as a QPD. 4
Upon approval from the CFO, these banks, savings banks, and savings associations may accept
“public deposits” from state and local governments. The Act does not permit credit unions to
become QPDs, due to their absence from the definition of “qualified public depository.” As of May
20, 2022, there are 118 active QPDs in this state.5
Before a QPD can accept or retain a public deposit, the QPD must deposit collateral with an
approved custodian in an amount commensurate with the amount of public deposits held and the
financial stability of the QPD.6 The Act’s collateral requirements protect public deposits against
loss in the event of certain triggering events, most notably, a QPD’s insolvency or default.7 Losses
are satisfied first through the standard maximum federal deposit insurance of $250,000, 8 and then
through the CFO’s demand for payment under letters of credit or the sale of collateral pledged or
deposited by the defaulting QPD. Any shortfall would then be covered by the CFO’s authority to
impose assessments against the other solvent QPDs, who must agree to share mutual
responsibility and contingent liability as a condition of acting as a QPD. 9
A “custodian” can be the CFO or any state or federally chartered bank, savings association, or
trust company approved by the CFO to hold collateral pledged by QPDs to secure public
1 Ch. 280, F.S.
2 S. 280.03(1)(b), F.S.
3 12 U.S.C. ss. 1811 et seq.
4 S. 280.02(26), F.S.
5 Florida Department of Financial Services, List of Active QPDs, https://myfloridacfo.com/docs-sf/treasury-
libraries/treasury-documents/listofactiveqpds.pdf (last visited Mar. 9, 2023).
6 S. 280.04, F.S. See also ch. 69C-2, F.A.C.
7 S. 280.041(6), F.S.
8 12 U.S.C. § 1821(a)(1)(E).
9 S. 280.07, F.S.
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deposits.10 Collateral may be pledged, deposited or issued using the following collateral
agreements as approved the CFO to meet the requisite collateral:
regular custody arrangement for collateral pledged to the CFO, subject to certain
requirements;11
Federal Reserve Bank custody arrangement for collateral pledged to the CFO, subject to
certain requirements;12
CFO’s custody arrangement for collateral deposited in the CFO’s name, subject to certain
requirements;13
Federal Home Loan Bank letter of credit arrangement for collateral issued with the CFO as
beneficiary, subject to certain requirements.14
DFS oversees the Act’s reporting and collateral pledging requirements through its public deposits
program and Bureau of Collateral Management.15 The CFO has authority to act against
noncompliant QPDs, as well as financial institutions that accept public deposits without a
certificate of qualification from the CFO.16 In the event of loss to public depositors, the CFO has
the authority to oversee the payment of losses.17
Regulation of Credit Unions
Like banks, savings banks, and savings associations, credit union accept deposits and make
loans, and can be state-chartered or federally-chartered:
State-chartered credit unions may be formed under the Florida Credit Union Act (FCUA),
which became law in 1980.18 The FCUA provides that “[a] credit union is a cooperative,
nonprofit association, organized . . . for the purposes of encouraging thrift among its
members, creating sources of credit at fair and reasonable rates of interest, and providing
an opportunity for its members to use and control their resources on a democratic basis in
order to improve their economic and social condition.”19 State-chartered credit unions have
both a state regulator, the Office of Financial Regulation, and a federal regulator, the
National Credit Union Association (NCUA).
Federally-chartered credit unions are chartered under the Federal Credit Union Act of
193420 and are regulated by the NCUA.
In addition to regulating both state-chartered and federally-chartered credit unions, the NCUA also
operates and manages the National Credit Union Share Insurance Fund (NCUSIF), which insures
share (deposit) accounts for members of all federally-chartered credit unions and most state-
10 Ss. 280.02(10) and 280.041(1)(a), F.S.
11 S. 280.041(1)(a), F.S.
12 S. 280.041(1)(b), F.S.
13 S. 280.041(1)(c), F.S.
14 S. 280.041(1)(d), F.S.
15 Ch. 80-258, Laws of Fla.; codified at ch. 657, F.S.
16 S. 280.05, F.S.
17 Id. at (10).
18 Ch. 80-258, Laws of Fla.; codified at ch. 657, F.S.
19 S. 657.003, F.S.
20 Public Law 73-467, codified at 12 U.S.C. § 1751 et seq.
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chartered credit unions.21 All state-chartered credit unions operating in Florida must carry NCUSIF
insurance.22 The standard maximum share insurance amount is $250,000.23
Effect of the Bill
The bill makes state-chartered and federally-chartered credit unions eligible to become QPDs and
custodian for another QPD’s pledged collateral.
The bill creates s. 280.042, F.S., to provide criteria that a credit union must meet before the CFO
can designate a credit union as a QPD. These provisions are designed to protect public deposits.
The credit union is required to submit its agreement of contingent liability and its collateral
agreement to the CFO and meet the following requirements:
The credit union must submit a signed statement from a public depositor (i.e., a state or
local government) indicating that, if the credit union is designated as a QPD, the public
depositor intends to deposit public funds with the credit union; and
There are at least four other credit unions that are designated as QPDs or have applied to
be designated as QPDs and have submitted an agreement of contingent liability, a
collateral agreement, and a signed statement from a public depositor of intent to deposit
public funds with the credit union.
The CFO must withdraw from a collateral agreement previously entered into with a credit union if,
during any 90 calendar days, the combined total of the number of credit unions designated as
QPDs and the number of eligible credit unions applying to be designated as QPDs is less than
five. As a result of the CFO’s withdrawal, the credit union loses its designation as a QPD, and
must within 10 days after the CFO’s notification of such withdrawal, return all public deposits that
the credit union holds to the public depositor who deposited the funds. Additionally, the CFO may
limit the amount of public deposits any one credit union may hold in order to make sure that no
single credit union holds an amount of public deposits that might adversely affect the integrity of
the public deposits program.
In order to prevent credit unions from sharing contingent liability with banks, and vice versa, the
bill creates separate mutual responsibility and contingent liability provisions for credit unions. Any
credit union that is designated as a QPD and that is not insolvent must guarantee public
depositors against loss caused by the default or insolvency of other credit unions that are
designated as QPDs. In the event of a default or insolvency of a credit union QPD, any loss to
public depositors would be satisfied through any applicable share insurance and then through
demanding payment under letters of credit or the sale of collateral pledged or deposited by the
defaulting depository. The CFO may assess QPDs, subject to the segregation of contingent
liability provided in s. 280.07, F.S., for the total loss if the demand for payment or sale of collateral
cannot be accomplished within 7 business days.
The bill requires the CFO to segregate and separately account for any collateral proceeds,
assessments, or administrative penalties attributable to a credit union from those attributable to
any bank, savings bank, or savings association. Subject to this segregation of funds requirement,
the CFO is authorized to pay any losses to public depositors from the Public Deposits Trust Fund.
21 Federally-chartered credit unions must be insured through NCUSIF, and state-chartered credit unions may be insured
through NCUSIF, though some state-chartered credit unions may be insured by private insurance or guaranty
corporations. See NCUA, How Your Accounts Are Federally Insured, available at
https://www.ncua.gov/files/publications/guides-manuals/NCUAHowY ourAcctInsured.pdf (last visited Mar. 10, 2023).
22 Ss. 657.005(7), 657.008(5)(a)2., and 657.033(9), F.S.
23 NCUA, supra note 21.
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Lastly, the bill makes conforming changes to allow credit unions to participate in the public deposit
program and to subject credit union QPDs to the regulatory oversight of the CFO.
B. SECTION DIRECTORY:
Section 1. Amends s. 17.68, F.S., relating to Financial Literacy Program for Individuals with
Developmental Disabilities.
Section 2. Amends s. 280.02, F.S., relating to definitions.
Section 3. Amends s. 280.03, F.S., relating to public deposits to be secured; prohibitions;
exemptions.
Section 4. Creates s. 280.042, F.S., relating to credit union designations as qualified public
depositories; withdrawal by the Chief Financial Officer from collateral agreements;
limits on public deposits.
Section 5. Amends s. 280.05, F.S., relating to powers and duties of the Chief Financial Officer.
Section 6. Amends s. 280.052, F.S., relating to order of suspension or disqualification;
procedure.
Section 7. Amends s. 280.053, F.S., relating to period of suspension or disqualification;
obligations during period; reinstatement.
Section 8. Amends s. 280.055, F.S., relating to cease and desist order; corrective order;
administrative penalty.
Section 9. Amends s. 280.07, F.S., relating to mutual responsibility and contingent liability.
Section 10. Amends s. 280.08, F.S., relating to procedure for payment of losses.
Section 11. Amends s. 280.085, F.S., relating to notice to claimants.
Section 12. Amends s. 280.09, F.S., relating to Public Deposits Trust Fund.
Section 13. Amends s. 280.10, F.S., relating to effect of merger, acquisition, or consolidation;
change of name or address.
Section 14. Amends s. 280.13, F.S., relating to eligible collateral.
Section 15. Amends s. 280.17, F.S., relating to requirements for public depositors; notice to public
depositors and governmental units; loss of protection.
Sections 16-33. Reenacts various sections of statutes to incorporate amendments to ch. 280, F.S.
Section 34. Provides an effective date of July 1, 2023.
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II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
The bill’s impact on state government revenues is indeterminate. However, the potential
positive impact to revenues of state government is the same as the potential positive impact to
revenues of local governments. See Fiscal Impact on Local Governments section below.
2. Expenditures:
According to DFS, allowing credit unions to be QPDs will require: 24
$188,650 in non-recurring expenditures for DFS’s Office of Information Technology
(OIT) to make:
o Significant programming changes to the Collateral Administration Program
(CAP), a computer application used to administer Florida’s public deposits
program.
o Modifications to the Florida Planning Accounting, and Ledger Management
(PALM) system to accommodate the required segregated accounting of collateral
proceeds, assessments, or administrative penalties attributable to credit unions.
$5,728 in recurring expenditures for independent ranking service data on credit unions.
$75,450 in recurring expenditures for one additional Financial Examiner/Analyst II FTE,
class code 1564, pay grade 023.
The cost estimate for OIT changes described above may differ, as the cost of such changes
has not been evaluated as of 2022.25 The addition of credit unions as QPDs may also require
additional ongoing OIT support, especially at the outset.26
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
The bill’s impact on local government revenues is indeterminate. However, a 2014 study by
the Office of Program Policy Analysis and Government Accountability explained the
potential positive impact to local government public depositors:
Federal and state tax differences between credit unions and banks may allow credit
unions a competitive advantage when bidding for local government public deposits.
Credit unions may also benefit from lower overhead costs since these institutions may
use office space belonging to a sponsoring organization. The combined effect of lower
taxes and overhead may allow credit unions to pay higher interest rates for public
deposits and to provide other business services to local governments at a lower cost
than banks.27
2. Expenditures:
24 Department of Financial Services, Agency Analysis of 2022 House Bill 1559 (Jan. 27, 2022). 2022 HB 1559 is identical
to this bill. An updated bill analysis has been requested from DFS, but not yet received as of the date of this bill analysis.
25 Id.
26 Id.
27 Office of Program Policy Analysis and Government Accountability, Issues Related to Credit Unions Operating as
Qualified Public Depositories, Nov. 13, 2014, at 5.
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None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
Allowing credit unions to accept public deposits may generate additional income for the credit
unions and provide more options for the public depositors. It is unclear what impact the bill wi ll
have on existing QPDs (banks, savings banks, or savings associations). The bill’s impact on
the private sector is indeterminate due to the number of variables involved in determining such
impact.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not Applicable. This bill does not appear to require counties or municipalities to spend
funds or take action requiring the expenditures of funds; reduce the authority that counties
or municipalities have to raise revenues in the aggregate; or reduce the percentage of state
tax shared with counties or municipalities.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The CFO has rulemaking authority to administer ch. 280, F.S. In order to add credit unions as
QPDs, rulemaking is necessary to amend ch. 69C-2, F.A.C., and several forms incorporated
by reference in the rules.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 987 2023
1 A bill to be entitled
2 An act relating to public deposits; amending s. 17.68,
3 F.S.; providing requirements for credit unions that
4 are qualified public depositories; requiring the
5 Department of Financial Services to provide its
6 brochures to such credit unions upon request; amending
7 s. 280.02, F.S.; revising definitions; amending s.
8 280.03, F.S.; providing that public deposits in credit
9 unions by specified trust departments or trust
10 companies are exempt from certain requirements and
11 protection; creating s. 280.042, F.S.; prohibiting the
12 Chief Financial Officer from designating credit unions
13 as qualified public depositories unless certain
14 requirements are met; requiring the Chief Financial
15 Officer to withdraw from specified collateral
16 agreements under certain circumstances; prohibiting
17 credit unions from being designated as qualified
18 public depositories if the Chief Financial Officer
19 withdraws from collateral agreements; requiring
20 specified credit unions to return all public deposits
21 in the credit unions within a specified timeframe
22 under certain circumstances; authorizing the Chief
23 Financial Officer to limit the amount of public
24 deposits in credit unions for a specified purpose;
25 amending s. 280.05, F.S.; revising the losses for
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26 which the Chief Financial Officer may sell securities
27 to protect the integrity of the public deposits
28 program; amending s. 280.052, F.S.; providing
29 requirements for the suspension or disqualification of
30 credit unions as qualified public depositories;
31 amending s. 280.053, F.S.; authorizing credit unions
32 to be reinstated, or to reapply for qualification, as
33 qualified public depositories under specified
34 circumstances; providing exceptions; amending s.
35 280.055, F.S.; authorizing the Chief Financial Officer
36 to issue a cease and desist order and a corrective
37 order to credit unions upon certain determinations;
38 providing penalties; amending s. 280.07, F.S.;
39 specifying the losses against which certain solvent
40 banks, savings banks, savings associations, and credit
41 unions must guarantee public depositors; amending s.
42 280.08, F.S.; revising the Chief Financial Officer's
43 procedures upon a default or insolvency of a qualified
44 public depository; amending s. 280.085, F.S.; revising
45 the exemptions to the notice to claimants upon a
46 default or insolvency of a qualified public
47 depository; amending s. 280.09, F.S.; requiring the
48 Chief Financial Officer to segregate and separately
49 account for certain proceeds, assessments, and
50 administrative penalties; revising the payment of any
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51 losses to public depositors; amending s. 280.10, F.S.;
52 revising the duties, responsibilities, and liabilities
53 of resulting institutions upon specified mergers,
54 acquisitions, and consolidations; amending s. 280.13,
55 F.S.; providing that the limits imposed on specified
56 securities apply to qualified public depositories,
57 rather than to banks and savings associations;
58 amending s. 280.17, F.S.; revising the evidence that
59 public depositors must submit when in default or
60 insolvent; reenacting ss. 17.57(7)(a), 24.114(1),
61 125.901(3)(e), 136.01, 159.608(11), 175.301,
62 175.401(8), 185.30, 185.50(8), 190.007(3),
63 191.006(16), 215.34(2), 218.415(16)(c), (17)(c), and
64 (23)(a), 255.502(4)(h), 331.309(1) and (2),
65 373.553(2), 631.221, and 723.06115(3)(c), F.S.,
66 relating to deposits and investments of state money;
67 bank deposits and control of lottery transactions;
68 children's services and independent special districts;
69 county depositories; powers of housing finance
70 authorities; depositories for pension funds; retiree
71 health insurance subsidies; depositories for
72 retirement funds; retiree health insurance subsidies;
73 board of supervisors; general powers; state funds and
74 noncollectible items; local government investment
75 policies; definitions; treasurer, depositories, and
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76 fiscal agent; treasurer of the board, payment of
77 funds, and depositories; deposit of moneys collected;
78 and the Florida Mobile Home Relocation Trust Fund,
79 respectively, to incorporate the amendments made by
80 the act; providing an effective date.
81
82 Be It Enacted by the Legislature of the State of Florida:
83
84 Section 1. Subsection (4) of section 17.68, Florida
85 Statutes, is amended to read:
86 17.68 Financial Literacy Program for Individuals with
87 Developmental Disabilities.—
88 (4) Within 90 days after the department establishes the
89 website clearinghouse and publishes the brochure, each bank,
90 credit union, savings association, and savings bank that is a
91 qualified public depository as defined in s. 280.02 shall:
92 (a) Make copies of the department's brochures available,
93 upon the request of the consumer, at its principal place of
94 business and each branch office located in this state which has
95 in-person teller services by having copies of the brochure
96 available or having the capability to print a copy of the
97 brochure from the department's website. Upon request, the
98 department shall provide copies of the brochure to a bank,
99 credit union, savings association, or savings bank.
100 (b) Provide on its website a hyperlink to the department's
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101 website clearinghouse. If the department changes the website
102 address for the clearinghouse, the bank, credit union, savings
103 association, or savings bank must update the hyperlink within 90
104 days after notification by the department of such change.
105 Section 2. Subsections (6), (10), (21), (23), and (26) of
106 section 280.02, Florida Statutes, are amended to read:
107 280.02 Definitions.—As used in this chapter, the term:
108 (6) "Capital account" or "tangible equity capital" means
109 total equity capital, as defined on the balance-sheet portion of
110 the Consolidated Reports of Condition and Income (call report),
111 or net worth, as described in the National Credit Union
112 Administration 5300 Call Report, less intangible assets, as
113 submitted to the regulatory financial banking authority.
114 (10) "Custodian" means the Chief Financial Officer or a
115 bank, credit union, savings association, or trust company that:
116 (a) Is organized and existing under the laws of this
117 state, any other state, or the United States;
118 (b) Has executed all forms required under this chapter or
119 any rule adopted hereunder;
120 (c) Agrees to be subject to the jurisdiction of the courts
121 of this state, or of the courts of the United States which are
122 located within this state, for the purpose of any litigation
123 arising out of this chapter; and
124 (d) Has been approved by the Chief Financial Officer to
125 act as a custodian.
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126 (21) "Pool figure" means the total average monthly
127 balances of public deposits held by all banks, savings banks, or
128 savings associations or held separately by all credit unions
129 qualified public depositories during the immediately preceding
130 12-month period.
131 (23) "Public deposit" means the moneys of the state or of
132 any state university, county, school district, community college
133 district, special district, metropolitan government, or
134 municipality, including agencies, boards, bureaus, commissions,
135 and institutions of any of the foregoing, or of any court, and
136 includes the moneys of all county officers, including
137 constitutional officers, which are placed on deposit in a bank,
138 credit union, savings bank, or savings association. This
139 includes, but is not limited to, time deposit accounts, demand
140 deposit accounts, and nonnegotiable certificates of deposit.
141 Moneys in deposit notes and in other nondeposit accounts such as
142 repurchase or reverse repurchase operations are not public
143 deposits. Securities, mutual funds, and similar types of
144 investments are not public deposits and are not subject to this
145 chapter.
146 (26) "Qualified public depository" means a bank, credit
147 union, savings bank, or savings association that:
148 (a) Is organized and exists under the laws of the United
149 States, or the laws of this state, or the laws of any other
150 state or territory of the United States.
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151 (b) Has its principal place of business in this state or
152 has a branch office in this state which is authorized under the
153 laws of this state or of the United States to receive deposits
154 in this state.
155 (c) Is insured by the Federal Deposit Insurance
156 Corporation or the National Credit Union Share Insurance Fund
157 Has deposit insurance pursuant to the Federal Deposit Insurance
158 Act, as amended, 12 U.S.C. ss. 1811 et seq.
159 (d) Has procedures and practices for accurate
160 identification, classification, reporting, and collateralization
161 of public deposits.
162 (e) Meets all the requirements of this chapter.
163 (f) Has been designated by the Chief Financial Officer as
164 a qualified public depository.
165 Section 3. Paragraph (a) of subsection (3) of section
166 280.03, Florida Statutes, is amended to read:
167 280.03 Public deposits to be secured; prohibitions;
168 exemptions.—
169 (3) The following are exempt from the requirements of, and
170 protection under, this chapter:
171 (a) Public deposits deposited in a bank, credit union, or
172 savings association by a trust department or trust company which
173 are fully secured under trust business laws.
174 Section 4. Section 280.042, Florida Statutes, is created
175 to read:
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176 280.042 Credit union designations as qualified public
177 depositories; withdrawal by the Chief Financial Officer from
178 collateral agreements; limits on public deposits.—
179 (1) The Chief Financial Officer may not designate a credit
180 union as a qualified public depository unless, at the time the
181 credit union submits its agreement of contingent liability and
182 its collateral agreement:
183 (a) The credit union submits a signed statement from a
184 public depositor indicating that if the credit union is
185 designated as a qualified public depository, the public
186 depositor intends to deposit public funds with the credit union.
187 (b) The combined total of the numbers in subparagraphs 1.
188 and 2. is at least four:
189 1. The number of credit unions designated as qualified
190 public depositories.
191 2. The number of credit unions that meet all of the
192 following requirements:
193 a. Apply to be designated as qualified public
194 depositories.
195 b. Meet the requirements in paragraph (a).
196 (2) The Chief Financial Officer must withdraw from a
197 collateral agreement previously entered into with a credit union
198 if, during any 90 calendar days, the combined total of the
199 number of credit unions designated as qualified public
200 depositories and the number of eligible credit unions applying
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201 to be designated as qualified public depositories is less than
202 five.
203 (3) A credit union that is a party to a collateral
204 agreement from which the Chief Financial Officer withdraws in
205 accordance with subsection (2) may no longer be designated as a
206 qualified public depository. Within 10 business days after the
207 Chief Financial Officer notifies the credit union that the Chief
208 Financial Officer has withdrawn from the collateral agreement,
209 the credit union must return all public deposits that the credit
210 union holds to the public depositor who deposited the funds. The
211 notice provided for in this subsection may be sent to a credit
212 union by regular mail or by e-mail.
213 (4) The Chief Financial Officer may limit the amount of
214 public deposits that a credit union may hold in order to make
215 sure that no single credit union holds an amount of public
216 deposits that might adversely affect the integrity of the public
217 deposits program.
218 Section 5. Subsection (11) of section 280.05, Florida
219 Statutes, is amended to read:
220 280.05 Powers and duties of the Chief Financial Officer.—
221 In fulfilling the requirements of this act, the Chief Financial
222 Officer has the power to take the following actions he or she
223 deems necessary to protect the integrity of the public deposits
224 program:
225 (11) Sell securities for the purpose of paying losses to
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226 public depositors not covered by deposit or share insurance.
227 Section 6. Subsection (1) of section 280.052, Florida
228 Statutes, is amended to read:
229 280.052 Order of suspension or disqualification;
230 procedure.—
231 (1) The suspension or disqualification of a bank, credit
232 union, or savings association as a qualified public depository
233 must be by order of the Chief Financial Officer and must be
234 mailed to the qualified public depository by registered or
235 certified mail.
236 Section 7. Paragraph (c) of subsection (1) and paragraph
237 (c) of subsection (2) of section 280.053, Florida Statutes, are
238 amended to read:
239 280.053 Period of suspension or disqualification;
240 obligations during period; reinstatement.—
241 (1)
242 (c) Upon expiration of the suspension period, the bank ,
243 credit union, or savings association may, by order of the Chief
244 Financial Officer, be reinstated as a qualified public
245 depository, unless the cause of the suspension has not been
246 corrected or the bank, credit union, or savings association is
247 otherwise not in compliance with this chapter or any rule
248 adopted pursuant to this chapter.
249 (2)
250 (c) Upon expiration of the disqualification period, the
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251 bank, credit union, or savings association may reapply for
252 qualification as a qualified public depository. If a
253 disqualified bank, credit union, or savings association is
254 purchased or otherwise acquired by new owners, it may reapply to
255 the Chief Financial Officer to be a qualified public depository
256 before prior to the expiration date of the disqualification
257 period. Redesignation as a qualified public depository may occur
258 only after the Chief Financial Officer has determined that all
259 requirements for holding public deposits under the law have been
260 met.
261 Section 8. Section 280.055, Florida Statutes, is amended
262 to read:
263 280.055 Cease and desist order; corrective order;
264 administrative penalty.—
265 (1) The Chief Financial Officer may issue a cease and
266 desist order and a corrective order upon determining that:
267 (a) A qualified public depository has requested and
268 obtained a release of pledged collateral without approval of the
269 Chief Financial Officer;
270 (b) A bank, credit union, savings association, or other
271 financial institution is holding public deposits without a
272 certificate of qualification issued by the Chief Financial
273 Officer;
274 (c) A qualified public depository pledges, deposits, or
275 arranges for the issuance of unacceptable collateral;
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276 (d) A custodian has released pledged collateral without
277 approval of the Chief Financial Officer;
278 (e) A qualified public depository or a custodian has not
279 furnished to the Chief Financial Officer, when the Chief
280 Financial Officer requested, a power of attorney or bond power
281 or bond assignment form required by the bond agent or bond
282 trustee for each issue of registered certificated securities
283 pledged and registered in the name, or nominee name, of the
284 qualified public depository or custodian; or
285 (f) A qualified public depository; a bank, credit union,
286 savings association, or other financial institution; or a
287 custodian has committed any other violation of this chapter or
288 any rule adopted pursuant to this chapter that the Chief
289 Financial Officer determines may be remedied by a cease and
290 desist order or corrective order.
291 (2) Any qualified public depository or other bank, credit
292 union, savings association, or financial institution or
293 custodian that violates a cease and desist order or corrective
294 order of the Chief Financial Officer is subject to an
295 administrative penalty not exceeding $1,000 for each violation
296 of the order. Each day the violation of the order continues
297 constitutes a separate violation.
298 Section 9. Section 280.07, Florida Statutes, is amended to
299 read:
300 280.07 Mutual responsibility and contingent liability. —
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301 (1) A Any bank, savings bank, or savings association that
302 is designated as a qualified public depository and that is not
303 insolvent shall guarantee public depositors against loss caused
304 by the default or insolvency of other banks, savings banks, or
305 savings associations that are designated as qualified public
306 depositories.
307 (2) A credit union that is designated as a qualified
308 public depository and that is not insolvent shall guarantee
309 public depositors against loss caused by the default or
310 insolvency of other credit unions that are designated as
311 qualified public depositories.
312
313 Each qualified public depository shall execute a form prescribed
314 by the Chief Financial Officer for such guarantee which must
315 shall be approved by the board of directors and must shall
316 become an official record of the institution.
317 Section 10. Subsections (1) and (3) of section 280.08,
318 Florida Statutes, are amended to read:
319 280.08 Procedure for payment of losses.—When the Chief
320 Financial Officer determines that a default or insolvency has
321 occurred, he or she shall provide notice as required in s.
322 280.085 and implement the following procedures:
323 (1) The Division of Treasury, in cooperation with the
324 Office of Financial Regulation of the Financial Services
325 Commission or the receiver of the qualified public depository in
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326 default, shall ascertain the amount of funds of each public
327 depositor on deposit at such depository and the amount of
328 deposit or share insurance applicable to such deposits.
329 (3)(a) The loss to public depositors shall be satisfied,
330 insofar as possible, first through any applicable deposit or
331 share insurance and then through demanding payment under letters
332 of credit or the sale of collateral pledged or deposited by the
333 defaulting depository. The Chief Financial Officer may assess
334 qualified public depositories as provided in paragraph (b) ,
335 subject to the segregation of contingent liability in s. 280.07,
336 for the total loss if the demand for payment or sale of
337 collateral cannot be accomplished within 7 business days.
338 (b) The Chief Financial Officer shall provide coverage of
339 any remaining loss by assessment against the other qualified
340 public depositories. The Chief Financial Officer shall determine
341 such assessment for each qualified public depository by
342 multiplying the total amount of any remaining loss to all public
343 depositors by a percentage which represents the average monthly
344 balance of public deposits held by each qualified public
345 depository during the previous 12 months divided by the total
346 average monthly balances of public deposits held by all
347 qualified public depositories, excluding the defaul ting
348 depository, during the same period. The assessment calculation
349 must shall be computed to six decimal places.
350 Section 11. Subsection (4) of section 280.085, Florida
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351 Statutes, is amended, and subsection (1) of that section is
352 republished, to read:
353 280.085 Notice to claimants.—
354 (1) Upon determining the default or insolvency of a
355 qualified public depository, the Chief Financial Officer shall
356 notify, by first-class mail, all public depositors that have
357 complied with s. 280.17 of such default or insolvency. The
358 notice must direct all public depositors having claims or
359 demands against the Public Deposits Trust Fund occasioned by the
360 default or insolvency to file their claims with the Chief
361 Financial Officer within 30 days after the date of the notice.
362 (4) The notice required in subsection (1) is not required
363 if the default or insolvency of a qualified public depository is
364 resolved in a manner in which all Florida public deposits are
365 acquired by another insured bank, credit union, savings bank, or
366 savings association.
367 Section 12. Section 280.09, Florida Statutes, is amended
368 to read:
369 280.09 Public Deposits Trust Fund.—
370 (1) In order to facilitate the administration of this
371 chapter, there is created the Public Deposits Trust Fund,
372 hereafter in this section designated "the fund." The proceeds
373 from the sale of securities or draw on letters of credit held as
374 collateral or from any assessment pursuant to s. 280.08 must
375 shall be deposited into the fund. The Chief Financial Officer
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376 must segregate and separately account for any collateral
377 proceeds, assessments, or administrative penalties attributable
378 to a credit union from any collateral proceeds, assessments, or
379 administrative penalties attributable to any bank, savings bank,
380 or savings association. Any administrative penalty collected
381 pursuant to this chapter shall be deposited into the Treasury
382 Administrative and Investment Trust Fund.
383 (2) The Chief Financial Officer is authorized to pay any
384 losses to public depositors from the fund, subject to the
385 limitations provided in subsection (1), and there are hereby
386 appropriated from the fund such sums as may be necessary from
387 time to time to pay the losses. The term "losses," for purposes
388 of this chapter, must shall also include losses of interest or
389 other accumulations to the public depositor as a result of
390 penalties for early withdrawal required by Depository
391 Institution Deregulatory Commission Regulations or applicable
392 successor federal laws or regulations because of suspension or
393 disqualification of a qualified public depository by the Chief
394 Financial Officer pursuant to s. 280.05 or because of withdrawal
395 from the public deposits program pursuant to s. 280.11. In that
396 event, the Chief Financial Officer is authorized to assess
397 against the suspended, disqualified, or withdrawing public
398 depository, in addition to any amount authorized by any other
399 provision of this chapter, an administrative penalty equal to
400 the amount of the early withdrawal penalty and to pay that
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401 amount over to the public depositor as reimbursement for such
402 loss. Any money in the fund estimated not to be needed for
403 immediate cash requirements shall be invested pursuant to s.
404 17.61.
405 Section 13. Subsections (1) and (3) of section 280.10,
406 Florida Statutes, are amended to read:
407 280.10 Effect of merger, acquisition, or consolidation;
408 change of name or address.—
409 (1) When a qualified public depository is merged into,
410 acquired by, or consolidated with a bank, credit union, savings
411 bank, or savings association that is not a qualified public
412 depository:
413 (a) The resulting institution shall automatically become a
414 qualified public depository subject to the requirements of the
415 public deposits program.
416 (b) The contingent liability of the former institution
417 shall be a liability of the resulting institution.
418 (c) The public deposits and associated collateral of the
419 former institution shall be public deposits and collateral of
420 the resulting institution.
421 (d) The resulting institution shall, within 90 calendar
422 days after the effective date of the merger, acquisition, or
423 consolidation, deliver to the Chief Financial Officer:
424 1. Documentation in its name as required for participation
425 in the public deposits program; or
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426 2. Written notice of intent to withdraw from the program
427 as provided in s. 280.11 and a proposed effective date of
428 withdrawal which shall be within 180 days after the effective
429 date of the acquisition, merger, or consolidation of the former
430 institution.
431 (e) If the resulting institution does not meet
432 qualifications to become a qualified public depository or does
433 not submit required documentation within 90 calendar days after
434 the effective date of the merger, acquisition, or consolidation,
435 the Chief Financial Officer shall initiate mandatory withdrawal
436 actions as provided in s. 280.11 and shall set an effective date
437 of withdrawal that is within 180 days after the effective date
438 of the acquisition, merger, or consolidation of the former
439 institution.
440 (3) If the default or insolvency of a qualified public
441 depository results in acquisition of all or part of its Florida
442 public deposits by a bank, credit union, savings bank, or
443 savings association that is not a qualified public depository,
444 the bank, credit union, savings bank, or savings association
445 acquiring the Florida public deposits is subject to subsection
446 (1).
447 Section 14. Subsection (1) of section 280.13, Florida
448 Statutes, is amended to read:
449 280.13 Eligible collateral.—
450 (1) Securities eligible to be pledged as collateral by
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451 qualified public depositories banks and savings associations
452 shall be limited to:
453 (a) Direct obligations of the United States Government.
454 (b) Obligations of any federal agency that are fully
455 guaranteed as to payment of principal and interest by the United
456 States Government.
457 (c) Obligations of the following federal agencies:
458 1. Farm credit banks.
459 2. Federal land banks.
460 3. The Federal Home Loan Bank and its district banks.
461 4. Federal intermediate credit banks.
462 5. The Federal Home Loan Mortgage Corporation.
463 6. The Federal National Mortgage Association.
464 7. Obligations guaranteed by the Government National
465 Mortgage Association.
466 (d) General obligations of a state of the United States,
467 or of Puerto Rico, or of a political subdivision or municipality
468 thereof.
469 (e) Obligations issued by the Florida State Board of
470 Education under authority of the State Constitution or
471 applicable statutes.
472 (f) Tax anticipation certificates or warrants of counties
473 or municipalities having maturities not exceeding 1 year.
474 (g) Public housing authority obligations.
475 (h) Revenue bonds or certificates of a state of the United
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476 States or of a political subdivision or municipality thereof.
477 (i) Corporate bonds of any corporation that is not an
478 affiliate or subsidiary of the qualified public depository.
479 Section 15. Paragraph (b) of subsection (4) of section
480 280.17, Florida Statutes, is amended to read:
481 280.17 Requirements for public depositors; notice to
482 public depositors and governmental units; loss of protection. —In
483 addition to any other requirement specified in this chapter,
484 public depositors shall comply with the following:
485 (4) If public deposits are in a qualified public
486 depository that has been declared to be in default or insolvent,
487 each public depositor shall:
488 (b) Submit to the Chief Financial Officer for each public
489 deposit, within 30 days after the date of official notification
490 from the Chief Financial Officer, the following:
491 1. A claim form and agreement, as prescribed by the Chief
492 Financial Officer, executed under oath, accompanied by proof of
493 authority to execute the form on behalf of the public depositor.
494 2. A completed public deposit identification and
495 acknowledgment form, as described in subsection (2).
496 3. Evidence of the insurance afforded the deposit pursuant
497 to the Federal Deposit Insurance Act or the Federal Credit Union
498 Act, as appropriate.
499 Section 16. For the purpose of incorporating the amendment
500 made by this act to section 280.02, Florida Statutes, in a
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501 reference thereto, paragraph (a) of subsection (7) of section
502 17.57, Florida Statutes, is reenacted to read:
503 17.57 Deposits and investments of state money.—
504 (7) In addition to the deposits authorized under this
505 section and notwithstanding any other provisions of law, funds
506 that are not needed to meet the disbursement needs of the state
507 may be deposited by the Chief Financial Officer in accordance
508 with the following conditions:
509 (a) The funds are initially deposited in a qualified
510 public depository, as defined in s. 280.02, selected by the
511 Chief Financial Officer.
512 Section 17. For the purpose of incorporating the amendment
513 made by this act to section 280.02, Florida Statutes, in a
514 reference thereto, subsection (1) of section 24.114, Florida
515 Statutes, is reenacted to read:
516 24.114 Bank deposits and control of lottery transactions.—
517 (1) All moneys received by each retailer from the
518 operation of the state lottery, including, but not limited to,
519 all ticket sales, interest, gifts, and donations, less the
520 amount retained as compensation for the sale of the tickets and
521 the amount paid out as prizes, shall be remitted to the
522 department or deposited in a qualified public depository, as
523 defined in s. 280.02, as directed by the department. The
524 department shall have the responsibility for all administrative
525 functions related to the receipt of funds. The department may
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526 also require each retailer to file with the department reports
527 of the retailer's receipts and transactions in the sale of
528 lottery tickets in such form and containing such information as
529 the department may require. The department may require any
530 person, including a qualified public depository, to perform any
531 function, activity, or service in connection with the operation
532 of the lottery as it may deem advisable pursuant to this act and
533 rules of the department, and such functions, activities, or
534 services shall constitute lawful functions, activities, and
535 services of such person.
536 Section 18. For the purpose of incorporating the amendment
537 made by this act to section 280.02, Florida Statutes, in a
538 reference thereto, paragraph (e) of subsection (3) of section
539 125.901, Florida Statutes, is reenacted to read:
540 125.901 Children's services; independent special district;
541 council; powers, duties, and functions; public records
542 exemption.—
543 (3)
544 (e)1. All moneys received by the council on children's
545 services shall be deposited in qualified public depositories, as
546 defined in s. 280.02, with separate and distinguishable accounts
547 established specifically for the council and shall be withdrawn
548 only by checks signed by the chair of the council and
549 countersigned by either one other member of the council on
550 children's services or by a chief executive officer who shall be
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551 so authorized by the council.
552 2. Upon entering the duties of office, the chair and the
553 other member of the council or chief executive officer who signs
554 its checks shall each give a surety bond in the sum of at least
555 $1,000 for each $1 million or portion thereof of the council's
556 annual budget, which bond shall be conditioned that each shall
557 faithfully discharge the duties of his or her office. The
558 premium on such bond may be paid by the district as part of the
559 expense of the council. No other member of the council shall be
560 required to give bond or other security.
561 3. No funds of the district shall be expended except by
562 check as aforesaid, except expenditures from a petty cash
563 account which shall not at any time exceed $100. All
564 expenditures from petty cash shall be recorded on the books and
565 records of the council on children's services. No funds of the
566 council on children's services, excepting expenditures from
567 petty cash, shall be expended without prior approval of the
568 council, in addition to the budgeting thereof.
569 Section 19. For the purpose of incorporating the amendment
570 made by this act to section 280.02, Florida Statutes, in a
571 reference thereto, section 136.01, Florida Statutes, is
572 reenacted to read:
573 136.01 County depositories.—Each county depository shall
574 be a qualified public depository as defined in s. 280.02 for the
575 following funds: county funds; funds of all county officers,
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576 including constitutional officers; funds of the school board;
577 and funds of the community college district board of trustees.
578 This enumeration of funds is made not by way of limitation, but
579 of illustration; and it is the intent hereof that all funds of
580 the county, the board of county commissioners or the several
581 county officers, the school board, or the community college
582 district board of trustees be included.
583 Section 20. For the purpose of incorporating the amendment
584 made by this act to section 280.02, Florida Statutes, in a
585 reference thereto, subsection (11) of section 159.608, Florida
586 Statutes, is reenacted to read:
587 159.608 Powers of housing finance authorities.—A housing
588 finance authority shall constitute a public body corporate a nd
589 politic, exercising the public and essential governmental
590 functions set forth in this act, and shall exercise its power to
591 borrow only for the purpose as provided herein:
592 (11) To invest and reinvest surplus funds of the housing
593 finance authority in accordance with s. 218.415. However, in
594 addition to the investments expressly authorized in s.
595 218.415(16)(a)-(g) and (17)(a)-(d), a housing finance authority
596 may invest surplus funds in interest-bearing time deposits or
597 savings accounts that are fully insured by the Federal Deposit
598 Insurance Corporation regardless of whether the bank or
599 financial institution in which the deposit or investment is made
600 is a qualified public depository as defined in s. 280.02. This
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601 subsection is supplementary to and may not be construed as
602 limiting any powers of a housing finance authority or providing
603 or implying a limiting construction of any other statutory
604 provision.
605 Section 21. For the purpose of incorporating the amendment
606 made by this act to section 280.02, Florida Statutes, in a
607 reference thereto, section 175.301, Florida Statutes, is
608 reenacted to read:
609 175.301 Depository for pension funds.—For any
610 municipality, special fire control district, chapter plan, local
611 law municipality, local law special fire control district, or
612 local law plan under this chapter, all funds of the
613 firefighters' pension trust fund of any chapter plan or local
614 law plan under this chapter may be deposited by the board of
615 trustees with the treasurer of the municipality or special fire
616 control district, acting in a ministerial capacity only, who
617 shall be liable in the same manner and to the same extent as he
618 or she is liable for the safekeeping of funds for the
619 municipality or special fire control district. However, any
620 funds so deposited with the treasurer of the municipality or
621 special fire control district shall be kept in a separate fund
622 by the treasurer or clearly identified as such funds of the
623 firefighters' pension trust fund. In lieu thereof, the board of
624 trustees shall deposit the funds of the firefighters' pension
625 trust fund in a qualified public depository as defined in s.
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626 280.02, which depository with regard to such funds shall conform
627 to and be bound by all of the provisions of chapter 280.
628 Section 22. For the purpose of incorporating the amendment
629 made by this act to section 280.02, Florida Statutes, in
630 references thereto, subsection (8) of section 175.401, Florida
631 Statutes, is reenacted to read:
632 175.401 Retiree health insurance subsidy.—For any
633 municipality, special fire control district, chapter plan, local
634 law municipality, local law special fire control district, or
635 local law plan under this chapter, under the broad grant of home
636 rule powers under the Florida Constitution and chapter 166,
637 municipalities have the authority to establish and administer
638 locally funded health insurance subsidy programs. In addition,
639 special fire control districts may, by resolution, establish and
640 administer locally funded health insurance subsidy programs.
641 Pursuant thereto:
642 (8) DEPOSIT OF HEALTH INSURANCE SUBSIDY FUNDS.—All funds
643 of the health insurance subsidy fund may be deposited by the
644 board of trustees with the treasurer of the municipality or
645 special fire control district, acting in a ministerial capacity
646 only, who shall be liable in the same manner and to the same
647 extent as he or she is liable for the safekeeping of funds for
648 the municipality or special fire control district. Any funds so
649 deposited shall be segregated by the treasurer in a separate
650 fund, clearly identified as funds of the health insurance
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651 subsidy fund. In lieu thereof, the board of trustees shall
652 deposit the funds of the health insurance subsidy fund in a
653 qualified public depository as defined in s. 280.02, which shall
654 conform to and be bound by the provisions of chapter 280 w ith
655 regard to such funds. In no case shall the funds of the health
656 insurance subsidy fund be deposited in any financial
657 institution, brokerage house trust company, or other entity that
658 is not a public depository as provided by s. 280.02.
659 Section 23. For the purpose of incorporating the amendment
660 made by this act to section 280.02, Florida Statutes, in a
661 reference thereto, section 185.30, Florida Statutes, is
662 reenacted to read:
663 185.30 Depository for retirement fund.—For any
664 municipality, chapter plan, local law municipality, or local law
665 plan under this chapter, all funds of the municipal police
666 officers' retirement trust fund of any municipality, chapter
667 plan, local law municipality, or local law plan under this
668 chapter may be deposited by the board of trustees with the
669 treasurer of the municipality acting in a ministerial capacity
670 only, who shall be liable in the same manner and to the same
671 extent as he or she is liable for the safekeeping of funds for
672 the municipality. However, any funds so deposited with the
673 treasurer of the municipality shall be kept in a separate fund
674 by the municipal treasurer or clearly identified as such funds
675 of the municipal police officers' retirement trust fund. In lieu
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676 thereof, the board of trustees shall deposit the funds o f the
677 municipal police officers' retirement trust fund in a qualified
678 public depository as defined in s. 280.02, which depository with
679 regard to such funds shall conform to and be bound by all of the
680 provisions of chapter 280.
681 Section 24. For the purpose of incorporating the amendment
682 made by this act to section 280.02, Florida Statutes, in
683 references thereto, subsection (8) of section 185.50, Florida
684 Statutes, is reenacted to read:
685 185.50 Retiree health insurance subsidy.—For any
686 municipality, chapter plan, local law municipality, or local law
687 plan under this chapter, under the broad grant of home rule
688 powers under the Florida Constitution and chapter 166,
689 municipalities have the authority to establish and administer
690 locally funded health insurance subsidy programs. Pursuant
691 thereto:
692 (8) DEPOSIT OF PENSION FUNDS.—All funds of the health
693 insurance subsidy fund may be deposited by the board of trustees
694 with the treasurer of the municipality, acting in a ministerial
695 capacity only, who shall be liable in the same manner and to the
696 same extent as he or she is liable for the safekeeping of funds
697 for the municipality. Any funds so deposited shall be segregated
698 by said treasurer in a separate fund, clearly identified as
699 funds of the health insurance subsidy fund. In lieu thereof, the
700 board of trustees shall deposit the funds of the health
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701 insurance subsidy fund in a qualified public depository as
702 defined in s. 280.02, which shall conform to and be bound by the
703 provisions of chapter 280 with regard to such funds. In no case
704 shall the funds of the health insurance subsidy fund be
705 deposited in any financial institution, brokerage house trust
706 company, or other entity that is not a public depository as
707 provided by s. 280.02.
708 Section 25. For the purpose of incorporating the amendment
709 made by this act to section 280.02, Florida Statutes, in a
710 reference thereto, subsection (3) of section 190.007, Florida
711 Statutes, is reenacted to read:
712 190.007 Board of supervisors; general duties.—
713 (3) The board is authorized to select as a depository for
714 its funds any qualified public depository as defined in s.
715 280.02 which meets all the requirements of chapter 280 and has
716 been designated by the Chief Financial Officer as a qualified
717 public depository, upon such terms and conditions as to the
718 payment of interest by such depository upon the funds so
719 deposited as the board may deem just and reasonable.
720 Section 26. For the purpose of incorporating the amendment
721 made by this act to section 280.02, Florida Statutes, in a
722 reference thereto, subsection (16) of section 191.006, Florida
723 Statutes, is reenacted to read:
724 191.006 General powers.—The district shall have, and the
725 board may exercise by majority vote, the following powers:
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726 (16) To select as a depository for its funds any qualified
727 public depository as defined in s. 280.02 which meets all the
728 requirements of chapter 280 and has been designated by the Chief
729 Financial Officer as a qualified public depository, upon such
730 terms and conditions as to the payment of interest upon the
731 funds deposited as the board deems just and reasonable.
732 Section 27. For the purpose of incorporating the amendment
733 made by this act to section 280.02, Florida Statutes, in a
734 reference thereto, subsection (2) of section 215.34, Florida
735 Statutes, is reenacted to read:
736 215.34 State funds; noncollectible items; procedure. —
737 (2) Whenever a check, draft, or other order for the
738 payment of money is returned by the Chief Financial Officer, or
739 by a qualified public depository as defined in s. 280.02, to a
740 state officer, a state agency, or the judicial branch for
741 collection, the officer, agency, or judicial branch shall add to
742 the amount due a service fee of $15 or 5 percent of the face
743 amount of the check, draft, or order, whichever is greater. An
744 agency or the judicial branch may adopt a rule which prescribes
745 a lesser maximum service fee, which shall be added to the amount
746 due for the dishonored check, draft, or other order tendered for
747 a particular service, license, tax, fee, or other charge, but in
748 no event shall the fee be less than $15. The service fee shall
749 be in addition to all other penalties imposed by law, except
750 that when other charges or penalties are imposed by an agency
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751 related to a noncollectible item, the amount of the service fee
752 shall not exceed $150. Proceeds from this fee shall be deposited
753 in the same fund as the collected item. Nothing in this section
754 shall be construed as authorization to deposit moneys outside
755 the State Treasury unless specifically authorized by law.
756 Section 28. For the purpose of incorporating the amendment
757 made by this act to section 280.02, Florida Statutes, in
758 references thereto, paragraph (c) of subsection (16), paragraph
759 (c) of subsection (17), and paragraph (a) of subsection (23) of
760 section 218.415, Florida Statutes, are reenacted to read:
761 218.415 Local government investment policies.—Investment
762 activity by a unit of local government must be consistent with a
763 written investment plan adopted by the governing body, or in the
764 absence of the existence of a governing body, the respective
765 principal officer of the unit of local government and maintained
766 by the unit of local government or, in the alternative, such
767 activity must be conducted in accordance with subsection (17).
768 Any such unit of local government shall have an investment
769 policy for any public funds in excess of the amounts needed to
770 meet current expenses as provided in subsections (1)-(16), or
771 shall meet the alternative investment guidelines contained in
772 subsection (17). Such policies shall be structured to place the
773 highest priority on the safety of principal and liquidity of
774 funds. The optimization of investment returns shall be secondary
775 to the requirements for safety and liquidity. Each unit of local
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776 government shall adopt policies that are commensurate with the
777 nature and size of the public funds within its custody.
778 (16) AUTHORIZED INVESTMENTS; WRITTEN INVESTMENT POLICIES. —
779 Those units of local government electing to adopt a written
780 investment policy as provided in subsections (1)-(15) may by
781 resolution invest and reinvest any surplus public funds in their
782 control or possession in:
783 (c) Interest-bearing time deposits or savings accounts in
784 qualified public depositories as defined in s. 280.02.
785 (17) AUTHORIZED INVESTMENTS; NO WRITTEN INVESTMENT
786 POLICY.—Those units of local government electing not to adopt a
787 written investment policy in accordance with investment policies
788 developed as provided in subsections (1)-(15) may invest or
789 reinvest any surplus public funds in their control or possession
790 in:
791 (c) Interest-bearing time deposits or savings accounts in
792 qualified public depositories, as defined in s. 280.02.
793
794 The securities listed in paragraphs (c) and (d) shall be
795 invested to provide sufficient liquidity to pay obligations as
796 they come due.
797 (23) AUTHORIZED DEPOSITS.—In addition to the investments
798 authorized for local governments in subsections (16) and (17)
799 and notwithstanding any other provisions of law, a unit of local
800 government may deposit any portion of surplus public funds in
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801 its control or possession in accordance with the following
802 conditions:
803 (a) The funds are initially deposited in a qualified
804 public depository, as defined in s. 280.02, selected by the unit
805 of local government.
806 Section 29. For the purpose of incorporating the amendmen t
807 made by this act to section 280.02, Florida Statutes, in a
808 reference thereto, paragraph (h) of subsection (4) of section
809 255.502, Florida Statutes, is reenacted to read:
810 255.502 Definitions; ss. 255.501-255.525.—As used in this
811 act, the following words and terms shall have the following
812 meanings unless the context otherwise requires:
813 (4) "Authorized investments" means and includes without
814 limitation any investment in:
815 (h) Savings accounts in, or certificates of deposit of,
816 qualified public depositories as defined in s. 280.02, in an
817 amount that does not exceed 15 percent of the net worth of the
818 institution, or a lesser amount as determined by rule by the
819 State Board of Administration, provided such savings accounts
820 and certificates of deposit are secured in the manner prescribed
821 in chapter 280.
822
823 Investments in any security authorized in this subsection may be
824 under repurchase agreements or reverse repurchase agreements.
825 Section 30. For the purpose of incorporating the amendment
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826 made by this act to section 280.02, Florida Statutes, in
827 references thereto, subsections (1) and (2) of section 331.309,
828 Florida Statutes, are reenacted to read:
829 331.309 Treasurer; depositories; fiscal agent.—
830 (1) The board shall designate an individual who is a
831 resident of the state, or a qualified public depository as
832 defined in s. 280.02, as treasurer of Space Florida, who shall
833 have charge of the funds of Space Florida. Such funds shall be
834 disbursed only upon the order of or pursuant to the resolution
835 of the board by warrant, check, authorization, or direct deposit
836 pursuant to s. 215.85, signed or authorized by the treasurer or
837 his or her representative or by such other persons as may be
838 authorized by the board. The board may give the treasurer such
839 other or additional powers and duties as the board may deem
840 appropriate and shall establish the treasurer's compensation.
841 The board may require the treasurer to give a bond in such
842 amount, on such terms, and with such sureties as may be deemed
843 satisfactory to the board to secure the performance by the
844 treasurer of his or her powers and duties. The board shall audit
845 or have audited the books of the treasurer at least once a year.
846 (2) The board is authorized to select as depositories in
847 which the funds of the board and of Space Florida shall be
848 deposited any qualified public depository as defined in s.
849 280.02, upon such terms and conditions as to the payment of
850 interest by such depository upon the funds so deposited as the
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851 board may deem just and reasonable. The funds of Space Florida
852 may be kept in or removed from the State Treasury upon written
853 notification from the chair of the board to the Chief Financial
854 Officer.
855 Section 31. For the purpose of incorporating the amendment
856 made by this act to section 280.02, Florida Statutes, in a
857 reference thereto, subsection (2) of section 373.553, Florida
858 Statutes, is reenacted to read:
859 373.553 Treasurer of the board; payment of funds;
860 depositories.—
861 (2) The board is authorized to select as depositories in
862 which the funds of the board and of the district shall be
863 deposited in any qualified public depository as defined in s.
864 280.02, and such deposits shall be secured in the manner
865 provided in chapter 280.
866 Section 32. For the purpose of incorporating the amendment
867 made by this act to section 280.02, Florida Statutes, in a
868 reference thereto, section 631.221, Florida Statutes, is
869 reenacted to read:
870 631.221 Deposit of moneys collected.—The moneys collected
871 by the department in a proceeding under this chapter shall be
872 deposited in a qualified public depository as defined in s.
873 280.02, which depository with regards to such funds shall
874 conform to and be bound by all the provisions of chapter 280, or
875 invested with the Chief Financial Officer pursuant to chapter
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876 18. For the purpose of accounting for the assets and
877 transactions of the estate, the receiver shall use such
878 accounting books, records, and systems as the court directs
879 after it hears and considers the recommendations of the
880 receiver.
881 Section 33. For the purpose of incorporating the amendment
882 made by this act to section 280.02, Florida Statutes, in a
883 reference thereto, paragraph (c) of subsection (3) of section
884 723.06115, Florida Statutes, is reenacted to read:
885 723.06115 Florida Mobile Home Relocation Trust Fund. —
886 (3) The department shall distribute moneys in the Florida
887 Mobile Home Relocation Trust Fund to the Florida Mobile Home
888 Relocation Corporation in accordance with the following:
889 (c) Funds transferred from the trust fund to the
890 corporation shall be transferred electronically and shall be
891 transferred to and maintained in a qualified public depository
892 as defined in s. 280.02 which is specified by the corporation.
893 Section 34. This act shall take effect July 1, 2023.
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PCS for HB 541
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: PCS for HB 541 Motor Vehicle Glass
SPONSOR(S): Insurance & Banking Subcommittee
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
Orig. Comm.: Insurance & Banking Subcommittee Fortenberry Lloyd
SUMMARY ANALYSIS
The bill addresses the following issues regarding motor vehicle glass replacements and repairs:
Incentives: Some motor vehicle glass repair shops currently offer incentives, including cash and gift cards, in
exchange for a consumer filing an insurance claim for motor vehicle glass repair or replacement. Many industries
and professions currently prohibit incentives in exchange for an act that would earn the inducer additional income.
The bill provides that a motor vehicle repair shop may not offer a customer a rebate, gift, gift car d, cash, coupon, or
other thing of value in exchange for making an insurance claim for motor vehicle glass replacement or repair,
including calibration or recalibration of an advanced driver assistance system (ADAS). The bill prohibits an
employee of a motor vehicle repair shop or a nonemployee, who is compensated by a motor vehicle repa ir shop for
the solicitation of claims, from offering such an incentive. The bill establishes that it is a violation of law for a motor
vehicle repair shop, or an employee of such shop, to fail to provide electronic or written notice to a customer
whether the calibration or recalibration of an ADAS is required as part of the replacement or repair of motor vehicle
glass to make the ADAS operable and to ensure that the service meets or exceeds the specifications of the vehicle
manufacturer. The bill also provides a definition of ADAS as a motor vehicle electronic safety system associated
with motor vehicle glass and designed to support the driver and motor vehicle in a manner intended to increase
motor vehicle safety and reduce losses associated with motor vehicle crashes.
Deductibles: A “deductible” is the amount an insured must pay before an insurance company will make any
payment on an insurance claim. The deductible provisions of a motor vehicle insurance policy providing
comprehensive or combined additional coverage are not applicable to the damage to the windshield of any motor
vehicle covered under such policy. Therefore, a consumer who owes money on a motor vehicle often qualifies for
motor vehicle glass repair or replacement without paying a deductible out of pocket. The bill allows an insurer, when
issuing or renewing a policy providing comprehensive coverage or combined additional coverage, to offer an insured
or applicant a deductible of $250 for claims of damage to the windshield of a motor vehicle. The insured or applicant
may decline the offer of the deductible. The bill also establishes that, if a deductible for comprehensive coverage or
combined additional coverage is applied to a loss that includes damage in addition to windshield damage, no
windshield damage deductible may apply.
Assignments of Benefits (AOB): An assignment of benefits (AOB) is a binding agreement between an insured and
a provider of repair services that allows a third-party, in this instance a motor vehicle glass repair shop, to “stand in
the shoes” of the insured to obtain the benefits the insured is entitled to under the motor vehicle insurance contract,
including payment of the claim. The glass repair shop to which the insured has assigned benefits can negotiate
directly with, or file a lawsuit in the name of the insured against, the insurer , if the insurer and the glass repair
company do not agree on the amount the insurer will pay for the glass claim. The bill prohibits a policyholder, or
another person, from signing an AOB for motor vehicle glass replacement or repair, including, but not limited to,
calibration or recalibration of an ADAS, under an motor vehicle insurance policy issued or renewed on or after July
1, 2023. The bill also provides a definition of an AOB for motor vehicle glass replacement or repair, which includes
inspecting, protecting, repairing, restoring, or replacing the glass, or calibrating or recalibrating an ADAS.
The bill has no effect on state or local revenues or expenditures. It may have a posit ive or negative direct economic
impact on certain aspects of the private sector including motor vehicle insurance policyholders and motor vehicle
glass repair shops.
The bill has an effective date of July 1, 2023.
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:
General Background
Motor Vehicle Repair Shops
Motor vehicle repair shops in Florida are regulated by the Department of Agriculture and Consumer
Services (DACS) under the Florida Motor Vehicle Repair Act (Repair Act).1 This Repair Act requires
that all motor vehicle repair shops, with minor exceptions, register with DACS. 2 A motor vehicle repair
shop may be fixed or mobile and includes a person or business that does motor vehicle glass work for
compensation.3
Under the Repair Act, it is unlawful for a motor vehicle repair shop or its employee to engage in various
activities such as misrepresenting that repairs of been made to a motor vehicle or fraudulently altering
any customer contract, estimate, invoice, or other document.4 The Repair Act provides for various
remedies for unlawful acts by motor vehicle repair shops, including notices of noncompliance,
administrative fines, orders to cease and desist, probation of registrants, and suspension or revocation
of registrations.5
Motor Vehicle Insurance
When a consumer purchases the minimum motor vehicle insurance required by Florida law, including
personal injury protection coverage (PIP), that consumer does not have first-party insurance coverage
for the repair or replacement of motor vehicle glass. However, a consumer who purchases
comprehensive coverage, which pays for damage to a motor vehicle caused by an event besides a
collision, generally has coverage for damaged or broken motor vehicle glass.6 Because lenders often
require borrowers who obtain motor vehicle loans to also purchase comprehensive motor vehicle
insurance coverage, a consumer who owes money on a motor vehicle often has motor vehicle glass
coverage.7 See discussion on deductible below.
Incentives for Motor Vehicle Glass Insurance Claims
Some motor vehicle glass repair shops currently offer incentives, including cash and gift cards, in
exchange for a consumer filing an insurance claim for motor vehicle glass repair or replacement.8
Consumers have also complained to DACS that they never received the incentives promised by the
motor vehicle glass repair shops, even after their motor vehicle glass was replaced and the claims were
submitted to the motor vehicle insurance companies. 9
Auto Glass America, a motor vehicle glass repair shop that advertises up to $100 cash back and a
$100 gift card for submitting a “qualifying” motor vehicle glass insurance claim, filed over 15,300 motor
1 Ss. 559.901-559.9221, F.S.
2 S. 559.904, F.S.
3 S. 559.903(6) and (7), F.S.
4 S. 559.920, F.S.
5 S. 559.921, F.S.
6 See Florida Department of Financial Services, Automobile Insurance a Toolk it for Consumers,
https://www.myfloridacfo.com/docs-sf/consumer-services-libraries/consumerservices -doc uments/understanding-
coverage/consumer-guides/english---automobile-insurance-toolkit.pdf?sfvrsn= 6b999793_4 (last visited Mar. 11, 2023).
7 Id.
8 See, e.g., https://webuywindshields.com/ (last visited Mar. 11, 2023).
9 See, e.g., Consumer Complaint No.: 225337/Case No. 1509-37312, submitted to DACS on Sept. 18, 2015; available on
request from DACS.
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vehicle glass related lawsuits against insurers in Florida between January 1, 2016, and February 7,
2019.10
Many industries and professions currently prohibit incentives in exchange for an act that would earn the
inducer additional income. For example:
Section 456.054, F.S., prohibits a healthcare provider from offering a kickback to anyone in
exchange for patient referrals;
Section 468.456(1)(f), F.S., prohibits an athlete agent from offering anything of value to a
student athlete to induce the athlete to enter into an agreement for representation;
Section 626.854(7)(a)2., F.S., prohibits a public adjuster from inducing an insured to submit an
insurance claim; and
Section 626.9541, F.S., prohibits an insurance agent from offering inducements in many
situations, including offering a rebate to induce a customer to enter into an insurance contract,
or offering a reduced fee for providing title insurance.
Advanced Driver Assistance Systems (ADAS)
ADAS include automatic emergency braking, lane and highway assistance features, and driver
monitoring.11 They make roadways safer and help save lives by using radar, lidar, cameras, computer
imaging, sensors, networking, and other features.12 While repair or replacement of motor vehicle glass
often includes calibration or recalibration of ADAS, the Repair Act does not currently include a definition
of ADAS.
Effect of the Bill
The bill provides that a motor vehicle repair shop may not offer a customer a rebate, gift, gift card, cash,
coupon, or other thing of value in exchange for making an insurance claim for motor vehicle glass
replacement or repair, including calibration or recalibration of an ADAS. The bill prohibits an employee
of a motor vehicle repair shop or a nonemployee, who is compensated by a motor vehicle repair shop
for the solicitation of claims, from offering such an inducement.
The bill establishes that it is a violation of law for a motor vehicle repair shop, or an employee of such
shop, to fail to provide electronic or written notice to a customer whether the calibration or recalibration
of an ADAS is required as part of the replacement or repair of motor vehicle glass to make the ADAS
operable and ensure that the service meets or exceeds the specifications of the vehicle manufacturer.
Additionally, the bill defines ADAS for its use in the Repair Act. According to the bill, ADAS means any
motor vehicle electronic safety system associated with motor vehicle glass and designed to support the
driver and motor vehicle in a manner intended to:
Increase motor vehicle safety; and
Reduce losses associated with motor vehicle crashes.
10 Data retrieved from Department of Financial Services Service of Process Reports application,
https://apps.fldfs.com/LSOPReports/Reports/Report.aspx (last visited Feb. 7, 2019).
11 ARM, Advanced Driver Assistance Systems,
https://www.arm.com/markets/automotive/adas?utm_source= google& utm_medium=cpc&utm_content=solutions&utm_ca
mpaign=2022_automotive_mk 12_adas&utm_term=adas%20system&gclid=Cj0K CQiA6rCgBhDVARIsAK1kGPL3OcDDtlD
90i-oBymynl453g40Y5iNZmFyjRc QmdqeFYag_tACRlYaA oPSEALw_wcB (last visited Mar. 11, 2023).
12 Florida Department of Financial Services, Agency Analysis of 2023 Senate Bill 1002, p. 1 (Feb. 27, 2023) (Senate Bill
1002 is the companion bill to PCS for HB 541).
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Windshield Deductibles
A “deductible” is the amount an insured must pay before an insurance company will make any payment
on an insurance claim. Pursuant to s. 627.7288, F.S., the deductible provisions of a motor vehicle
insurance policy “delivered or issued” in Florida and providing “comprehensive coverage or combined
additional coverage shall not be applicable to the damage to the windshield of any motor vehicle
covered under such policy.”13 Therefore, a consumer who owes money on a motor vehicle often
qualifies for motor vehicle glass repair or replacement without paying a deductible out of pocket.14
Effect of the Bill
The bill allows an insurer, when issuing or renewing a policy providing comprehensive coverage or
combined additional coverage, to offer an insured or applicant a deductible of $250 for claims of
damage to the windshield of a motor vehicle. The insured or applicant may decline the offer of the
deductible. The bill also establishes that, if a deductible for comprehensive coverage or combined
additional coverage is applied to a loss that includes other damage in addition to windshield damage,
no windshield damage deductible may apply.
Assignment of Post-loss Motor Vehicle Glass Benefits
Motor Vehicle Glass Replacement and Repair
Florida law has no specific requirements applicable to insurance claims made for damaged motor
vehicle glass.15 Instead, these claims are handled according to the terms of a consumer’s motor vehicle
insurance policy.16 Some Florida motor vehicle insurers have set up a network of motor vehicle glass
repair shops that will provide motor vehicle glass repair or replacement at negotiated rates.17 If a
consumer utilizes one of these network shops, the consumer’s motor vehicle glass is repaired or
replaced and paid for directly by the insurance company. 18 If an insured uses an motor vehicle glass
repair shop that is not within the insurer’s network, the provider often obtains an assignment of benefits
from the consumer.19
An assignment of benefits (AOB) is a binding agreement between an insured and a provider of repair
services that allows a third-party, in this instance a motor vehicle glass repair shop, to “stand in the
shoes” of the insured to obtain the benefits the insured is entitled to under the motor vehicle insurance
contract, including payment of the claim. The glass repair shop to which the insured has assigned
benefits can negotiate directly with, or file a lawsuit in the name of the insured against, the insurer if the
insurer and the glass repair company do not agree on the amount that the insurer will pay for the motor
vehicle glass claim.
13 Combined additional coverage is an obsolete auto physical damage term that still appears in the Florida Insurance
Code. It refers to hazards other than fire or theft. IRMI, combined additional coverage,
https://www.irmi.com/term/insurance-definitions/combined-additional-coverage (last visited Mar. 11, 2023).
14 Department of Financial Services, supra note 6.
15 Dale Parker and Brendan McKay, Florida Auto Glass Claims: A Crack ed System, Trial Advocate Quarterly Fall 2016,
*21 (Westlaw Citation: 35 No. 4 Trial Advoc. Q. 20).
16 Id.
17 Id.
18 See id.
19 See id.
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Motor Vehicle Glass Litigation
According to data provided by the Department of Financial Services, the number of motor vehicle
glass lawsuits has increased significantly in the past decade:20
Year 2011 2012 2021 2022
# of law
suits 478 1,389 24,080 33,196
Florida law allows the insured or the assignee to obtain attorney fees from the insurer if the insured or
assignee obtains a judgment against an insurer in a lawsuit regarding an motor vehicle insurance
claim.21 However, this operates in one direction. An insurer that prevails in a lawsuit against an insured
or assignee is not permitted to recover attorney fees.22 The purpose is to “discourage contesting of
valid claims of insureds against insurance companies . . . and to reimburse successful insureds
reasonably for their outlays for attorney's fees when they are compelled to defend or to sue to enforce
their contracts. . . .”23
Some insurers have asserted that the increase in litigation is the result of the practice by some motor
vehicle glass repair shops to execute AOBs, sue for unpaid claims, and collect attorney fees under s.
627.428, F.S.24 They have also alleged that some motor vehicle glass repair shops obtain AOBs from
the insured and inflate the costs of the motor vehicle glass repair or replacement when billing the
insurance company.25 Insurers also believe that some motor vehicle glass claims submitted by
assignees are fraudulent.26 If they believe claims are fraudulent or inflated, insurers are left with a
choice between paying those claims or paying attorneys to litigate cases that may result in payment of
attorney’s fees to assignees if the insurers do not prevail regardless of the amount of increased benefit
payment awarded.
Some motor vehicle glass repair shops have argued that the litigation is necessary because motor
vehicle insurers have entered into agreements with preferred vendors (i.e., the network shops) and the
insurers will not pay the “prevailing competitive price” for motor vehicle glass repair or replacement.27
These repair shops contend that the insurers will only pay them the price that they pay to their preferred
vendors and that they must litigate against the insurers to force them to pay the “prevailing competitive
price” provided for by insurance policies.28
20 Data provided by the Department of Financial Services to the Senate Committee on Banking and Insurance on January
22, 2019 (Senate Meeting Packet), http://flsenate.gov/PublishedContent/ Committees/2018 -
2020/BI/MeetingRecords/MeetingPacket_4350.pdf (last visited Mar. 11, 2023) and data provided in Florida Department of
Financial Services, Agency Analysis of 2023 Senate Bill 1002, p. 1 (Feb. 27, 2023) (Senate Bill 1002 is the companion bill
to PCS for HB 541).
21 S. 627.428, F.S.; The Florida Supreme Court has recognized the right of assignees to obtain attorney fees under s.
627.428, F.S., (and its predecessor statute) since at least 1972. See All Ways Reliable Building Maintenance, Inc. v.
Moore, 261 So. 2d 131 (Fla. 1972). The First District Court of Appeal has recognized the right since at least 1961. See
Travelers Insurance Co. v. Tallahassee Bank and Trust Co., 133 So. 2d 463 (Fla. 1st DCA 1961). However, in
December 2022, the Legislature prohibited the use of AOBs for property insurance claims, and the recovery of attorney
fees for litigation regarding property insurance claims.
22 In certain circumstances, insurers can recovery attorney fees by using offers of judgment and proposals for settlement.
See s. 768.79, F.S., and Fla. R. Civ. P. 1.442.
23 Wilder v. Wright, 269 So. 2d 434, 436 (Fla. 2d DCA 1972).
24 See Park er and McKay, supra note 10.
25 Id.
26 See, e.g., Government Employees Insurance Co. v. Clear Vision Windshield Repair, L.L.C., 2017 WL 1196438 (M.D.
Fla. Mar. 29, 2017).
27 VIP Auto Glass, Inc. v. Geico General Insurance Co., 2017 WL 3712918, *1 (M.D. Fla. Mar. 17, 2017).
28 Id.
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Effect of the Bill
The bill prohibits a policyholder, or another person, from signing an AOB for motor vehicle glass
replacement or repair, including, but not limited to, calibration or recalibration of an ADAS, under an
motor vehicle insurance policy issued or renewed on or after July 1, 2023. The bill also provides a
definition of an AOB for motor vehicle glass replacement or repair, which includes inspecting,
protecting, repairing, restoring, or replacing the glass, or calibrating or recalibrating an ADAS.
B. SECTION DIRECTORY:
Section 1. Amends s. 559.903, F.S, relating to definitions.
Section 2. Amends s. 559.920, F.S., relating to unlawful acts and practices.
Section 3. Amends s. 627.7288, F.S., relating to comprehensive coverage; deductible not to apply to
motor vehicle glass.
Section 4. Creates s. 627.7289, F.S., relating to assignment of post-loss motor vehicle glass benefits
prohibited.
Section 5. Provides an effective date of July 1, 2023.
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:
Indeterminate. Motor vehicle repair shops may claim their business is negatively affected by the
inability to provide incentives to consumers. However, given the number motor vehicle glass lawsuits
over the past several years, and the reports of individuals receiving incentives to submit motor vehicle
glass claims to their motor vehicle insurers, it is possible that eliminating incentives provided by motor
vehicle repair shops for these claims would reduce the number of disputed motor vehicle glass claims,
and thereby reduce the number of motor vehicle glass lawsuits. Additionally, the elimination of AOBs
for motor vehicle glass claims, will likely reduce the number of motor vehicle glass lawsuits.
The reduction in the number of motor vehicle glass lawsuits may have a positive impact on motor
vehicle insurance premiums, particularly the portion of the rate that pertains to comprehensive
coverage. Policyholders’ election of deductibles for windshield glass may also reduce their motor
vehicle insurance premiums.
D. FISCAL COMMENTS:
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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.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
PCS for HB 541 2023
1 A bill to be entitled
2 An act relating to motor vehicle glass; amending s.
3 559.903, F.S.; defining the term "advanced driver
4 assistance system"; revising the definition of the
5 term "motor vehicle repair"; amending s. 559.920,
6 F.S.; prohibiting motor vehicle repair shops or their
7 employees from offering anything of value to a
8 customer in exchange for making an insurance claim for
9 motor vehicle glass replacement or repair, including
10 offers made through certain persons; specifying that
11 the failure to provide certain electronic or written
12 notice relating to calibrating or recalibrating an
13 advanced driver assistance system is unlawful;
14 amending s. 627.7288, F.S.; allowing an optional
15 deductible for windshield glass; specifying deductible
16 amount; limiting deductible application; creating s.
17 627.7289, F.S.; prohibiting persons from entering into
18 assignment agreements of post-loss benefits for motor
19 vehicle glass replacement or repair after a specified
20 date; providing that such assignment agreements are
21 void and unenforceable; defining the term "assignment
22 agreement"; providing an effective date.
23
24 Be It Enacted by the Legislature of the State of Florida:
25
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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 541 2023
26 Section 1. Present subsections (1) through (5), (6), and
27 (7) of section 559.903, Florida Statutes, are redesignated as
28 subsections (2) through (6), (8), and (9), respectively, a new
29 subsection (1) is added to that section, and present subsection
30 (8) of that section is amended, to read:
31 559.903 Definitions.—As used in this act:
32 (1) "Advanced driver assistance system" means any motor
33 vehicle electronic safety system that is associated with mot or
34 vehicle glass and is designed to support the driver and motor
35 vehicle in a manner intended to increase motor vehicle safety
36 and reduce losses associated with motor vehicle crashes.
37 (7)(8) "Motor vehicle repair" means all maintenance of and
38 modifications and repairs to motor vehicles, and diagnostic work
39 incident thereto, including, but not limited to, the rebuilding
40 or restoring of rebuilt vehicles, body work, painting, warranty
41 work, calibration or recalibration of advanced driver assistance
42 systems, and other work customarily undertaken by motor vehicle
43 repair shops.
44 Section 2. Section 2. Section 559.920, Florida Statutes,
45 is amended to read:
46 559.920 Unlawful acts and practices.—It is shall be a
47 violation of this act for any motor vehicle repair shop or
48 employee thereof to do any of the following:
49 (1) Engage or attempt to engage in repair work for
50 compensation of any type without first being registered with or
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51 having submitted an affidavit of exemption to the department .;
52 (2) Make or charge for repairs that which have not been
53 expressly or impliedly authorized by the customer.; (3)
54 Misrepresent that repairs have been made to a motor vehicle.;
55 (4) Misrepresent that certain parts and repairs are
56 necessary to repair a vehicle.;
57 (5) Misrepresent that the vehicle being inspected or
58 diagnosed is in a dangerous condition or that the customer's
59 continued use of the vehicle may be harmful or cause great
60 damage to the vehicle.;
61 (6) Fraudulently alter any customer contract, estimate,
62 invoice, or other document.;
63 (7) Fraudulently misuse any customer's credit card .;
64 (8) Make or authorize in any manner or by any means
65 whatever any written or oral statement that which is untrue,
66 deceptive, or misleading, and that which is known, or that which
67 by the exercise of reasonable care should be known, to be
68 untrue, deceptive, or misleading.;
69 (9) Make false promises of a character likely to
70 influence, persuade, or induce a customer to authorize the
71 repair, service, or maintenance of a motor vehicle.;
72 (10) Substitute used, rebuilt, salvaged, or straightened
73 parts for new replacement parts without notice to the motor
74 vehicle owner and to her or his insurer if the cost of repair is
75 to be paid pursuant to an insurance policy and the identity of
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76 the insurer or its claims adjuster is disclosed to the motor
77 vehicle repair shop.;
78 (11) Cause or allow a customer to sign any work order that
79 does not state the repairs requested by the customer or the
80 automobile's odometer reading at the time of repair .;
81 (12) Fail or refuse to give to a customer a copy of any
82 document requiring the customer's signature upon completion or
83 cancellation of the repair work.;
84 (13) Willfully depart from or disregard accepted practices
85 and professional standards.;
86 (14) Have repair work subcontracted without the knowledge
87 or consent of the customer unless the motor vehicle repair shop
88 or employee thereof demonstrates that the customer could not
89 reasonably have been notified.;
90 (15) Conduct the business of motor vehicle repair in a
91 location other than that stated on the registration
92 certificate.;
93 (16) Rebuild or restore a rebuilt vehicle without the
94 knowledge of the owner in such a manner that it does not conform
95 to the original vehicle manufacturer's established repair
96 procedures or specifications and allowable tolerances for the
97 particular model and year.; or
98 (17) Offer to a customer a rebate, gift, gift card, cash,
99 coupon, or any other thing of value in exchange for making an
100 insurance claim for motor vehicle glass replacement or repair,
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101 including, but not limited to, calibration or recalibration of
102 an advanced driver assistance system. A nonemployee who is
103 compensated for the solicitation of insurance claims is also
104 prohibited from making such offer.
105 (18) Fail to provide electronic notice or written notice
106 in at least 12-point type to the customer whether the
107 calibration or recalibration of the advanced driver assistance
108 system is required as part of the replacement or repair of motor
109 vehicle glass to make such system operable and to ensure such
110 service is performed in a manner that meets or exceeds the
111 vehicle manufacturer's specifications.
112 (20) Perform any other act that is a violation of this
113 part or that constitutes fraud or misrepresentation.
114 (19)(18) Violate any provision of s. 713.585.
115 Section 3. Section 627.7288, Florida Statutes, is amended
116 to read:
117 627.7288 Comprehensive coverage; deductible not to apply
118 to motor vehicle windshield glass; exceptions.—
119 (1) Except as otherwise provided in this section, the
120 deductible provisions of any policy of motor vehicle insurance,
121 delivered or issued in this state by an authorized insurer,
122 providing comprehensive coverage or combined additional coverage
123 shall not be applicable to damage to the windshield of any motor
124 vehicle covered under such policy.
125 (2) An insurer may offer to an insured or applicant, upon
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126 the issuance or renewal of a policy providing comprehensive
127 coverage or combined additional coverage, a deductible of $250
128 for claims of damage to the windshield of any motor vehicle
129 covered under such policy. The insured or applicant may decline
130 the offer of a deductible.
131 (3) If a deductible for comprehensive coverage or combined
132 additional coverage is applied to a loss that includes damage in
133 addition to windshield damage, no deductible under section this
134 may apply.
135 Section 4. Section 627.7289, Florida Statutes, is created
136 to read:
137 627.7289 Assignment of post-loss motor vehicle glass
138 benefits prohibited.—
139 (1) A policyholder or any other person may not enter into
140 an assignment agreement of post-loss benefits for motor vehicle
141 glass replacement or repair, including, but not limited to, for
142 calibration or recalibration of advanced driver assistance
143 systems as defined in s. 559.903, under a policy of motor
144 vehicle insurance issued or renewed in this state by an
145 authorized insurer on or after July 1, 2023. Any such assignment
146 agreement entered into in violation of this subsection is void
147 and unenforceable.
148 (2) As used in this section, the term "assignment
149 agreement" means any instrument, regardless of how such
150 agreement is named or styled, by which post-loss benefits,
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151 including, but not limited to, claim payments, under a motor
152 vehicle insurance policy are, in whole or in part, assigned or
153 transferred to, or acquired in any manner by, a person providing
154 services for motor vehicle glass replacement or repair,
155 including, but not limited to, inspecting, protecting,
156 repairing, restoring, or replacing the motor vehicle glass or
157 calibrating or recalibrating advanced driver assistance systems.
158 Section 5. This act shall take effect July 1, 2023.
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