PCS for CS/HB 643 — Act Relating to Insurance (Commerce Committee, 2025)
Summary
PCS for CS/HB 643 2025 is a bill to be entitled an act relating to insurance. It removes the definition of "diligent effort" and the diligent effort requirements for insurance coverage to be eligible for export. Section 1 creates a section requiring the Department of Law Enforcement to accept and process fingerprints of people involved in the organization, operation or management of an insurer or proposed insurer, with fingerprints forwarded to the Federal Bureau of Investigation for national processing. The bill also creates standards for affiliate compensation arrangements involving insurers, managing general agents and attorneys in fact, and revises requirements for general lines agent licensing.
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“PCS for CS/HB 643 — Act Relating to Insurance (Commerce Committee, 2025).”
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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 CS/HB 643 2025
1 A bill to be entitled
2 An act relating to insurance; amending s. 626.914,
3 F.S.; removing the definition of the term "diligent
4 effort"; amending s. 626.916, F.S.; removing the
5 diligent effort and other requirements for insurance
6 coverage to be eligible for export; providing that
7 insureds are presumed to have been informed and to
8 know of the availability of certain insurance coverage
9 under specified circumstances; creating s. 624.341,
10 F.S.; providing legislative findings and intent;
11 requiring the Department of Law Enforcement to accept
12 certain fingerprints; specifying procedures for
13 fingerprinting; authorizing the department to exchange
14 certain records with the Office of Insurance
15 Regulation; specifying that fingerprints must be
16 submitted in accordance with certain rules;
17 authorizing that the fingerprints be submitted through
18 a third-party vendor authorized by the department;
19 requiring the department to conduct certain background
20 checks; requiring that certain fingerprints be
21 submitted and entered into a specified system;
22 requiring the office to inform the department of any
23 person whose fingerprints no longer must be retained;
24 specifying who bears the costs of fingerprint
25 processing; specifying that certain criminal records
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26 must be used by the office for certain purposes;
27 creating s. 624.347, F.S.; providing definitions;
28 providing applicability; establishing standards for
29 compensation arrangements and oversight of affiliate
30 transactions involving insurers, managing general
31 agents, and attorneys in fact; providing penalties;
32 requiring the office to adopt rules; amending s.
33 624.424, F.S.; specifying requirements for affiliate
34 compensation arrangements; removing requirements that
35 the office consider a specified factor in determining
36 whether certain affiliate considerations and payments
37 by an insurer are fair and reasonable; amending s.
38 626.732, F.S.; revising the requirements for licensing
39 and qualifying for general lines agents; amending s.
40 627.351, F.S.; requiring notification of arbitration
41 before the Division of Administrative Hearings as an
42 option for dispute resolution procedures under
43 Citizens Property Insurance Corporation; removing
44 obsolete language; providing an effective date.
45
46 Be It Enacted by the Legislature of the State of Florida:
47
48 Section 1. Section 624.341, Florida Statutes, is created
49 to read:
50 624.341 Authority of Department of Law Enforcement to
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51 accept fingerprints of, and exchange criminal history records
52 with respect to, certain persons applying to the Office of
53 Insurance Regulation.—
54 (1) The Legislature finds that criminal activity of
55 insurers poses a particular danger to the residents of this
56 state. Floridians rely, in good faith, on the honest conduct of
57 those who issue and manage insurance policies and other
58 insurance instruments in this state. To safeguard this state's
59 residents, the Legislature finds it necessary to ensure that
60 incorporators, subscribers, officers, employees, contractors,
61 stockholders, directors, owners, members, managers, or
62 volunteers, or in the organization, operation, or management of
63 any insurer that is authorized to sell insurance do not have a
64 criminal background.
65 (2) The Department of Law Enforcement shall accept and
66 process fingerprints of incorporators, subscribers, officers,
67 employees, contractors, stockholders, directors, owners,
68 members, managers, or volunteers involved in the organization,
69 operation, or management of:
70 (a) Any insurer or proposed insurer transacting or
71 proposing to transact insurance in this state.
72 (b) Any entity that is eligible to be examined or
73 investigated under 624.316, F.S.
74 (3) Each person required to submit fingerprints to the
75 office, must provide a full set of fingerprints to the office or
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76 to a vendor, an entity, or an agency authorized by s.
77 943.053(13). The office, vendor, entity, or agency shall forward
78 the fingerprints to the Department of Law Enforcement for state
79 processing, and the Department of Law Enforcement shall forward
80 the fingerprints to the Federal Bureau of Investigation for
81 national processing as described in s. 624.34. Fees for state
82 and federal fingerprint processing must be borne by the person
83 submitting the fingerprints. The state cost for fingerprint
84 processing is as provided in s. 943.053(3)(e).
85 (4) The Department of Law Enforcement may, to the extent
86 provided by federal law, exchange any state or national criminal
87 history records with the office for the purpose of issuance or
88 continuation of a certificate of authority, certification, or
89 license to operate in this state.
90 (5) Fingerprints must be submitted in accordance with
91 rules adopted by the commission.
92 (a) Fingerprints may be submitted through a third-party
93 vendor authorized by the Department of Law Enforcement.
94 (b) The Department of Law Enforcement shall conduct the
95 state criminal history background check, and a federal criminal
96 history background check shall be conducted through the Federal
97 Bureau of Investigation.
98 (c) All fingerprints submitted to the Department of Law
99 Enforcement must be submitted and entered into the statewide
100 automated fingerprint identification system established in s.
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101 943.05(2)(b) and available for use in accordance with s.
102 943.05(2)(g) and (h).
103 (d) The costs of fingerprint processing, including the
104 cost of retaining the fingerprints, must be borne by the person
105 subject to the background checks.
106 (e) The office shall review the results of the state and
107 federal criminal history background checks and determine whether
108 the applicant meets the requirements for the certificate of
109 authority, certification, or license to operate in this state.
110 (6) Statewide criminal records obtained through the
111 Department of Law Enforcement, federal criminal records obtained
112 through the Federal Bureau of Investigation, and local criminal
113 records obtained through local law enforcement agencies must be
114 used by the office for the purpose of issuance, denial,
115 suspension, or revocation of certificates of authority,
116 certifications, or licenses issued to operate in this state.
117 Section 2. Section 624.347, Florida Statutes, is created
118 to read:
119 624.347 Affiliate transactions; managing general agents;
120 attorneys in fact; oversight.—
121 (1) DEFINITIONS.—As used in this section, the term:
122 (a) “Affiliated entity” means any affiliate of an insurer.
123 The term includes a managing general agent, attorney in fact,
124 and reciprocal insurer when acting in a capacity that involves
125 compensation from the insurer.
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126 (b) “Attorney in fact” has the same meaning as in s.
127 629.011.
128 (c) “Managing general agent” has the same meaning as in s.
129 626.015.
130 (d) “Reciprocal insurer” has the same meaning as in s.
131 629.011.
132 (e) “Insurer” means an authorized property insurer.
133 (2) APPLICABILITY.—This section applies to any insurer that
134 contracts with or makes payments to an affiliated entity.
135 (3) COMPENSATION ARRANGEMENTS WITH AFFILIATED ENTITIES.—
136 (a) Each insurer doing business in this state which pays,
137 directly or indirectly, a fee, commission, or other financial
138 consideration or payment to any affiliated entity must provide
139 to the office documentation demonstrating that such fee,
140 commission, or other financial consideration or payment is fair
141 and reasonable for each service being provided. In determining
142 whether the fee, commission, or other financial consideration or
143 payment is fair and reasonable, the office must consider all of
144 the following:
145 1. The actual cost of each service provided by an
146 affiliated entity.
147 2. The relative financial condition of the insurer and the
148 affiliated entity.
149 3. The level of debt and how that debt is serviced.
150 4. The amount of the dividends paid by the insurer and the
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151 affiliated entity and for what purpose.
152 5. Whether the terms of the written contract benefit the
153 insurer and are in the best interest of the policyholders or
154 subscribers.
155 6. Any other such information as the office reasonably
156 requires in making this determination.
157 (b) For each agreement with an affiliated entity in force
158 on July 1, 2025, each insurer shall provide to the office no
159 later than October 1, 2025, the cost incurred by the affiliated
160 entity to provide each service, the dollar amount charged to the
161 insurer for each service, and the dollar amount of fees
162 forgiven, waived, or reimbursed by the affiliated entity for the
163 2 most recent preceding years. If the total dollar amount
164 charged to the insurer was greater than the total cost to
165 provide services for either year, the insurer must explain how
166 it determined the fee was fair and reasonable. For any proposed
167 contract with an affiliated entity effective after July 1, 2025,
168 the insurer must provide documentation to support that the fee,
169 commission, or other financial consideration or payment to the
170 affiliated entity is fair and reasonable.
171 (c)1. Beginning July 1, 2026, the office may require
172 specific types of compensation arrangements between an insurer
173 and any affiliated entity to be be structured as fee for
174 service. As used in this subparagraph, the term “fee for
175 service” means fixed amounts or hourly rates for itemized
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176 services.
177 2. Compensation as a fee for service may not be based on:
178 a. Commission;
179 b. Premium volume;
180 c. Underwriting profit; or
181 d. Financial results of the insurer.
182 (d) This subsection does not prohibit an insurer from
183 paying a dividend or other financial arrangement to an
184 affiliated entity if such dividend or financial arrangement has
185 been reviewed and approved by the office pursuant to this
186 section, s. 628.372, or any other applicable law.
187 (e) An agreement between an insurer and an affiliated
188 entity must include a termination clause and may not exceed a
189 term of 3 years. Any extension of such an agreement must be
190 approved by the office before becoming effective. An agreement
191 between an insurer and an affiliated entity may include
192 provisions for extension, but may not remain in effect for
193 longer than 3 years without a review pursuant to paragraph (a)
194 and approval by the office. If the agreement provides for
195 extension, the agreement must clearly state that the extension
196 is subject to approval by the office at least every 3 years.
197 (4) EMERGENCY RESTRICTIONS.—
198 (a) During a declared emergency, the office may issue
199 orders restricting fund transfers from an insurer to an
200 affiliated entity without prior approval.
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201 (b) Orders under paragraph (a) may apply to all or
202 specified insurers and may not exceed 90 days unless extended by
203 the office.
204 (5) ADDITIONAL OVERSIGHT.—
205 (a) The office may recover improper affiliated entity
206 payment transfers, including, but not limited to, both of the
207 following:
208 1. Transfers that violate the approved compensation,
209 approved dividend, or any other approved financial arrangement.
210 2. Transfers made while the insurer was undercapitalized.
211 (b) An insurer must provide notice to the office at least
212 30 days before any pledge of capital or assets to any affiliated
213 entity for a loan or financial obligation. Such notice must
214 include a description of the collateral, the nature of the
215 obligation, and the parties involved. The office may reject and
216 prohibit the pledge if such financial arrangement is not in the
217 best interest of the insurer.
218 (6) ENFORCEMENT.—
219 (a) The office may impose penalties for violations of this
220 section.
221 (b) The office shall adopt rules to implement this section.
222 Section 3. Subsection (13) of section 624.424, Florida
223 Statutes, is amended to read:
224 624.424 Annual statement and other information.—
225 (13) Each insurer doing business in this state which pays
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226 a fee, commission, or other financial consideration or payment
227 to any affiliate directly or indirectly is required upon request
228 to provide to the office any information the office deems
229 necessary. The fee, commission, or other financial consideration
230 or payment to any affiliate must be fair and reasonable.
231 Affiliate compensation arrangements must comply with s. 624.347
232 and with the requirements of this subsection In determining
233 whether the fee, commission, or other financial consideration or
234 payment is fair and reasonable, the office shall consider, among
235 other things, the actual cost of the service being provided.
236 Section 4. Subsection (4) of section 626.914, Florida
237 Statutes, is amended to read:
238 626.914 Definitions.—As used in this Surplus Lines Law,
239 the term:
240 (4) "Diligent effort" means seeking coverage from and
241 having been rejected by at least three authorized insurers
242 currently writing this type of coverage and documenting these
243 rejections. However, if the residential structure has a dwelling
244 replacement cost of $700,000 or more, the term means seeking
245 coverage from and having been rejected by at least one
246 authorized insurer currently writing this type of coverage and
247 documenting this rejection.
248 Section 5. Paragraphs (a) and (e) of subsection (1) and
249 paragraph (b) of subsection (3) of section 626.916, Florida
250 Statutes, are amended to read:
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251 626.916 Eligibility for export.—
252 (1) No insurance coverage shall be eligible for export
253 unless it meets all of the following conditions:
254 (a) The coverage must be of a kind or class not generally
255 available from authorized insurers transacting insurance in this
256 state The full amount of insurance required must not be
257 procurable, after a diligent effort has been made by the
258 producing agent to do so, from among the insurers authorized to
259 transact and actually writing that kind and class of insurance
260 in this state, and the amount of insurance exported shall be
261 only the excess over the amount so procurable from authorized
262 insurers. Surplus lines agents must verify that a diligent
263 effort has been made by requiring a properly documented
264 statement of diligent effort from the retail or producing agent.
265 However, to be in compliance with the diligent effort
266 requirement, the surplus lines agent's reliance must be
267 reasonable under the particular circumstances surrounding the
268 export of that particular risk. Reasonableness shall be assessed
269 by taking into account factors which include, but are not
270 limited to, a regularly conducted program of verification of the
271 information provided by the retail or producing agent.
272 Declinations must be documented on a risk-by-risk basis. If it
273 is not possible to obtain the full amount of insurance required
274 by layering the risk, it is permissible to export the full
275 amount.
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276 (e) The insured has signed or otherwise provided
277 documented acknowledgment of a disclosure in substantially the
278 following form: "You are agreeing to place coverage in the
279 surplus lines market. Coverage may be available in the admitted
280 market. Persons insured by surplus lines carriers are not
281 protected under the Florida Insurance Guaranty Act with respect
282 to any right of recovery for the obligation of an insolvent
283 unlicensed insurer." If the acknowledgment of the disclosure is
284 signed by the insured, the insured is presumed to have been
285 informed and to know that other coverage may be available.
286 (3)
287 (b) Subsection (1) does not apply to classes of insurance
288 which are related to indemnity of deductibles for property
289 insurance or are subject to s. 627.062(3)(d)1. These classes may
290 be exportable under the following conditions:
291 1. The insurance must be placed only by or through a
292 surplus lines agent licensed in this state;
293 2. The insurer must be made eligible under s. 626.918; and
294 3. The insured has complied with paragraph (1)(e). If the
295 disclosure is signed by the insured, the insured is presumed to
296 have been informed and to know that other coverage may be
297 available, and, with respect to the diligent-effort requirement
298 under subsection (1), there is no liability on the part of, and
299 no cause of action arises against, the retail agent presenting
300 the form.
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301 Section 6. Paragraph (ll) of subsection (6) of section
302 627.351, Florida Statutes, is amended to read:
303 627.351 Insurance risk apportionment plans.—
304 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
305 (ll)1. In addition to any other method of alternative
306 dispute resolution authorized by state law, the corporation may
307 adopt policy forms that provide an option for the insured to
308 select, at the time of entering into the policy or upon renewal,
309 to have disputes regarding the corporation's claim
310 determinations for the resolution of disputes regarding its
311 claim determinations, including disputes regarding coverage for,
312 or the scope and value of, a claim, resolved through arbitration
313 in a proceeding before the Division of Administrative Hearings.
314 Each insured must be notified in writing, at the time of
315 entering into a policy with the corporation and upon each
316 renewal, that the insured must decide whether to resolve
317 disputes through arbitration before the Division of
318 Administrative Hearings. Such notification must be in at least
319 12-point boldfaced type, immediately preceding the insured's
320 signature in substantially the following form:
321
322 AN INSURED MUST CHOOSE AT THE TIME OF ENTERING INTO THIS POLICY
323 OR UPON RENEWAL WHETHER TO RESOLVE DISPUTES THROUGH ARBITRATION
324 BEFORE THE DIVISION OF ADMINISTRATIVE HEARINGS. THE INSURED MUST
325 INDICATE THIS SELECTION BY MARKING 'ACCEPT' OR 'DECLINE' BELOW.
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326 THIS DECISION CANNOT BE CHANGED DURING THE TERM OF THE POLICY.
327
328 2. Any such policies are not subject to s. 627.70154. All
329 arbitrations before proceedings in the Division of
330 Administrative Hearings pursuant to such policies are subject to
331 ss. 57.105 and 768.79 as if filed in the courts of this state
332 and are not considered chapter 120 administrative proceedings.
333 Rule 1.442, Florida Rules of Civil Procedure, applies to any
334 offer served pursuant to s. 768.79, except that, notwithstanding
335 any provision in Rule 1.442, Florida Rules of Civil Procedure,
336 to the contrary, an offer shall not be served earlier than 10
337 days after filing the request for hearing with the Division of
338 Administrative Hearings and shall not be served later than 10
339 days before the date set for the final hearing. The
340 administrative law judge in such arbitrations proceedings shall
341 award attorney fees and other relief pursuant to ss. 57.105 and
342 768.79. The corporation may not seek, and the office may not
343 approve, a maximum hourly rate for attorney fees.
344 2. The corporation may contract with the division to
345 conduct proceedings to resolve disputes regarding its claim
346 determinations as may be provided for in the applicable policies
347 of insurance. This subparagraph expires July 1, 2025.
348 Section 7. Subsection (1) of section 626.732, Florida
349 Statutes, is amended to read:
350 626.732 Requirement as to knowledge, experience, or
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351 instruction.—
352 (1) Except as provided in subsection (4), an applicant for
353 a license as a general lines agent, except for a chartered
354 property and casualty underwriter (CPCU), may not be qualified
355 or licensed unless, within the 4 years immediately preceding the
356 date the application for license is filed with the department,
357 the applicant has satisfied, at a minimum, one of the following
358 requirements:
359 (a) Taught or successfully completed 60 200 hours of
360 coursework in property, casualty, surety, health, and marine
361 insurance approved by the department, 3 hours of which must be
362 on the subject matter of ethics.;
363 (b) Completed at least 1 year in responsible insurance
364 duties as a substantially full-time bona fide employee in all
365 lines of property and casualty insurance as set forth in the
366 definition of a general lines agent under s. 626.015, but
367 without the education requirement described in paragraph (a).;
368 or
369 (c) Completed at least 1 year of responsible insurance
370 duties as a licensed and appointed customer representative,
371 service representative, or personal lines agent and 40 hours of
372 coursework approved by the department covering the areas of
373 property, casualty, surety, health, and marine insurance.
374 Section 8. This act shall take effect July 1, 2025.
375
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