PCS for HB 881, 2025: An Act Relating to Insurance
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- 2025 3289 Insurance Banking Subcommittee Proposed Committee Bills Pcbs Fn Pcs For Hb 881A
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- 2025 3289 Insurance Banking Subcommittee Proposed Committee Bills Pcbs Fn Pcs For Hb 881A
Summary
A Florida House of Representatives proposed committee substitute, PCS for HB 881, 2025, a 35-page bill relating to insurance. It amends s. 624.155, F.S., to define "sufficient evidence" for bad faith actions and to give insurers 10 business days to object to a claimant's evidence. It creates s. 624.341, F.S., requiring the Department of Law Enforcement to accept and process fingerprints of persons involved in insurers for criminal history checks, and s. 624.347, F.S., on affiliate transactions involving managing general agents and attorneys in fact. The title also lists changes to reciprocal insurer rules, including subscriber contributions, subscriber savings accounts and unearned premium reserves under s. 629.56. Section 26 sets compliance dates of July 1, 2026 and July 1, 2027 for reciprocal insurers, and Section 27 makes the act effective July 1, 2025.
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“PCS for HB 881, 2025: An Act Relating to Insurance.”
Original at www.flhouse.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2025-3289-insurance-banking-subcommittee-proposed-committee-bills-pcbs-fn-pcs-for-hb-881a/
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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 881 2025
1 A bill to be entitled
2 An act relating to insurance; amending s. 624.155,
3 F.S.; defining the term "sufficient evidence";
4 providing procedures and timelines for objecting, and
5 responding to the objections, to the sufficiency of
6 evidence submitted by claimants to insurers; creating
7 s. 624.341, F.S.; providing legislative findings and
8 intent; requiring the Department of Law Enforcement to
9 accept certain fingerprints; specifying procedures for
10 fingerprinting; authorizing the department to exchange
11 certain records with the Office of Insurance
12 Regulation; specifying that fingerprints must be
13 submitted in accordance with certain rules;
14 authorizing that the fingerprints be submitted through
15 a third-party vendor authorized by the department;
16 requiring the department to conduct certain background
17 checks; requiring that certain fingerprints be
18 submitted and entered into a specified system;
19 requiring the office to inform the department of any
20 person whose fingerprints no longer must be retained;
21 specifying who bears the costs of fingerprint
22 processing; specifying that certain criminal records
23 must be used by the office for certain purposes;
24 creating s. 624.347, F.S.; providing definitions;
25 providing applicability; establishing standards for
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26 compensation arrangements and oversight of affiliate
27 transactions involving insurers, managing general
28 agents, and attorneys in fact; providing penalties;
29 requiring the office to adopt rules; amending s.
30 624.424, F.S.; specifying requirements for affiliate
31 compensation arrangements; removing requirements that
32 the office consider a specified factor in determining
33 whether certain affiliate considerations and payments
34 by an insurer are fair and reasonable; amending s.
35 626.854, F.S.; requiring public adjusters, public
36 adjuster apprentices, and public adjusting firms to
37 respond to requests for claims' statuses within a
38 specified timeframe; creating s. 627.4823, F.S.;
39 providing definitions; providing reporting
40 requirements relating to universal life insurance
41 policies; providing applicability; amending s.
42 628.371, F.S.; defining the term "affiliated entity";
43 applying provisions on prohibitions against,
44 limitations on, and authority of insurers relating to
45 dividend payments and distributions to stockholders to
46 affiliated entities; providing requirements for
47 certain approvals of dividends, distributions, and
48 other financial arrangements; creating s. 628.372,
49 F.S.; providing authority of the office over affiliate
50 dividends; providing penalties; requiring the office
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51 to adopt rules; amending s. 629.011, F.S.; revising
52 and providing definitions; amending s. 629.071, F.S.;
53 authorizing assessable and nonassessable reciprocal
54 insurers, rather than domestic reciprocal insurers, to
55 transact insurance if they maintain specified amounts
56 of surplus funds; creating s. 629.082, F.S.; providing
57 that attorneys in fact of reciprocal insurers are
58 affiliated entities for certain purposes; amending s.
59 629.121, F.S.; providing that certain bonds filed with
60 the office as security are filed by attorneys in fact,
61 rather than attorneys, of domestic reciprocal
62 insurers; increasing the bond amount; amending s.
63 629.181, F.S; replacing surplus deposits of
64 subscribers with subscriber contributions; providing
65 limits on subscriber contributions; creating s.
66 629.162, F.S.; authorizing reciprocal insurers to
67 require subscriber contributions; providing disclosure
68 and reporting requirements for subscriber
69 contributions; creating s. 629.163, F.S.; authorizing
70 reciprocal insurers to establish subscriber savings
71 accounts; providing construction; providing
72 requirements for subscriber savings accounts; creating
73 s. 629.164, F.S.; authorizing reciprocal insurers to
74 make distributions to subscribers from subscriber
75 savings accounts; granting to subscribers' advisory
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76 committees sole authority to authorize distributions,
77 subject to prior written approval by the office;
78 providing requirements for reciprocal insurers that
79 prohibit subscribers from receiving distributions for
80 a specified period of time; providing construction;
81 authorizing reciprocal insurers to return to
82 subscribers unused premiums, savings, and credits
83 accruing to their accounts; authorizing domestic
84 reciprocal insurers to pay to their subscribers
85 portions of unassigned funds; providing distribution
86 limits; prohibiting distribution discrimination;
87 providing requirements for distributions and other
88 financial arrangements; amending s. 629.171, F.S.;
89 revising requirements for filing with the office
90 annual statements by reciprocal insurers; providing
91 requirements for filing annual statements of the
92 accounts and records of attorneys in fact; amending s.
93 629.201, F.S.; requiring that each domestic reciprocal
94 insurer have a subscribers' advisory committee;
95 requiring that such committee be formed in compliance
96 with specified laws; requiring that rules and
97 amendments adopted by subscribers have prior approval
98 of the office; revising subscribers' advisory
99 committees' duties and membership; providing for
100 election and terms; requiring that attorneys in fact
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101 provide a communication platform to subscribers under
102 certain circumstances; repealing s. 629.271, F.S.,
103 relating to distribution of savings; amending s.
104 629.291, F.S.; providing that forms filed with the
105 office for plans to merge a reciprocal insurer with
106 another reciprocal insurer or to convert a reciprocal
107 insurer to a stock or mutual insurer are adopted by
108 the Financial Services Commission rather than the
109 office; amending s. 629.301, F.S.; specifying the
110 manner in which impaired reciprocal insurers are
111 proceeded against if they cannot make up deficiencies
112 in assets; specifying the manner in which assessments
113 are levied upon subscribers if reciprocal insurers are
114 liquidated; providing that assessments are subject to
115 specified limits; repealing ss. 629.401 and 629.520,
116 F.S., relating to insurance exchange and the authority
117 of a limited reciprocal insurer, respectively;
118 creating s. 629.56, F.S.; requiring reciprocal
119 insurers to maintain unearned premium reserves at all
120 times; amending s. 624.45, F.S.; conforming a
121 provision to changes made by the act; providing
122 applicability timelines; providing effective dates.
123
124 Be It Enacted by the Legislature of the State of Florida:
125
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126 Section 1. Paragraph (a) of subsection (4) of section
127 624.155, Florida Statutes, is amended to read:
128 624.155 Civil remedy.—
129 (4)(a)1. An action for bad faith involving a liability
130 insurance claim, including any such action brought under the
131 common law, may shall not lie if the insurer tenders the lesser
132 of the policy limits or the amount demanded by the claimant
133 within 90 days after receiving actual notice of a claim which is
134 accompanied by sufficient evidence to support the amount of the
135 claim.
136 2. For purposes of this paragraph, the term "sufficient
137 evidence" means written or photographic evidence submitted to
138 the insurer which indicates that the claimant has suffered
139 personal injury or property damage. Evidence that may satisfy
140 this requirement includes, but is not limited to:
141 a. Accident reports.
142 b. Photographs of an accident scene, physical injuries, or
143 property damage.
144 c. Medical bills.
145 d. Repair bills.
146 e. Other receipts or copies of payments rendered.
147 3. If an insurer does not believe that the submitted
148 evidence is sufficient evidence, the insurer must provide a
149 written notice of objection within 10 business days after
150 receipt of the submitted evidence; otherwise, any objection to
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151 the sufficiency of the evidence for purposes of this paragraph
152 is waived. The submitting party has an additional 10 business
153 days after receipt of a written notice of objection to provide
154 clarification or submit further evidence.
155 Section 2. Section 624.341, Florida Statutes, is created
156 to read:
157 624.341 Authority of Department of Law Enforcement to
158 accept fingerprints of, and exchange criminal history records
159 with respect to, certain persons applying to the Office of
160 Insurance Regulation.—
161 (1) The Legislature finds that criminal activity of
162 insurers poses a particular danger to the residents of this
163 state. Floridians rely, in good faith, on the honest conduct of
164 those who issue and manage insurance policies and other
165 insurance instruments in this state. To safeguard this state's
166 residents, the Legislature finds it necessary to ensure that
167 organizers, incorporators, subscribers, officers, employees,
168 contractors, affiliates, stockholders, directors, owners,
169 members, managers, or volunteers of, or any other persons who
170 exercise or have the ability to exercise effective control of,
171 or who influence or have the ability to influence the
172 transaction of the business of, or any other persons involved,
173 directly or indirectly, in the organization, operation, or
174 management of any insurer that is authorized to sell insurance
175 do not have a criminal background.
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176 (2) The Department of Law Enforcement shall accept and
177 process fingerprints of organizers, incorporators, subscribers,
178 officers, employees, contractors, affiliates, stockholders,
179 directors, owners, members, managers, or volunteers involved,
180 directly or indirectly, in the organization, operation, or
181 management of:
182 (a) Any insurer or proposed insurer transacting or
183 proposing to transact insurance in this state.
184 (b) Any other entity that is examined or investigated or
185 that is eligible to be examined or investigated under the
186 Florida Insurance Code.
187 (c) Any other person or entity subject to licensure under
188 the Florida Insurance Code.
189 (3) A full set of fingerprints of persons described in
190 subsection (2) must be submitted to the office or to a vendor,
191 an entity, or an agency authorized by s. 943.053(13). The
192 office, vendor, entity, or agency shall forward the fingerprints
193 to the Department of Law Enforcement for state processing, and
194 the Department of Law Enforcement shall forward the fingerprints
195 to the Federal Bureau of Investigation for national processing
196 as described in s. 624.34. Fees for state and federal
197 fingerprint processing must be borne by the person submitting
198 the fingerprints. The state cost for fingerprint processing is
199 as provided in s. 943.053(3)(e).
200 (4) The Department of Law Enforcement may, to the extent
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201 provided by federal law, exchange state, multistate, and federal
202 criminal history records with the office for the purpose of
203 issuance, denial, suspension, or revocation of a certificate of
204 authority, certification, or license to operate in this state.
205 (5) Fingerprints for each person described in subsection
206 (2) must be submitted in accordance with rules adopted by the
207 commission.
208 (a) Fingerprints may be submitted through a third-party
209 vendor authorized by the Department of Law Enforcement.
210 (b) The Department of Law Enforcement shall conduct the
211 state criminal history background check, and a federal criminal
212 history background check shall be conducted through the Federal
213 Bureau of Investigation.
214 (c) All fingerprints submitted to the Department of Law
215 Enforcement must be submitted and entered into the statewide
216 automated biometric identification system established in s.
217 943.05(2)(b) and available for use in accordance with s.
218 943.05(2)(g) and (h). The office shall inform the Department of
219 Law Enforcement of any person whose fingerprints are no longer
220 required to be retained.
221 (d) The costs of fingerprint processing, including the
222 costs of retaining the fingerprints, must be borne by the person
223 subject to the background checks.
224 (e) The office shall review the results of the state and
225 federal criminal history background checks and determine whether
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226 the applicant meets the requirements for the certificate of
227 authority, certification, or license to operate in this state.
228 (6) Statewide criminal records obtained through the
229 Department of Law Enforcement, federal criminal records obtained
230 through the Federal Bureau of Investigation, and local criminal
231 records obtained through local law enforcement agencies must be
232 used by the office for the purpose of issuance, denial,
233 suspension, or revocation of certificates of authority,
234 certifications, or licenses to operate in this state.
235 Section 3. Section 624.347, Florida Statutes, is created
236 to read:
237 624.347 Affiliate transactions; managing general agents;
238 attorneys in fact; oversight.—
239 (1) DEFINITIONS.—As used in this section, the term:
240 (a) "Affiliated entity" means any affiliate. The term
241 includes a managing general agent, attorney in fact, and
242 reciprocal insurer when acting in a capacity that involves
243 compensation or contractual arrangements with the insurer.
244 (b) "Attorney in fact" has the same meaning as in s.
245 629.011.
246 (c) "Managing general agent" has the same meaning as in s.
247 626.015.
248 (d) "Reciprocal insurer" has the same meaning as in s.
249 629.011.
250 (2) APPLICABILITY.—This section applies to any insurer
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251 that contracts with or makes payments to an affiliated entity.
252 (3) COMPENSATION ARRANGEMENTS WITH AFFILIATED ENTITIES.—
253 (a) Each insurer doing business in this state which pays,
254 directly or indirectly, a fee, commission, or other financial
255 consideration or payment to any affiliated entity must provide
256 to the office documentation demonstrating that such fee,
257 commission, or other financial consideration or payment is fair
258 and reasonable for each service being provided. In determining
259 whether the fee, commission, or other financial consideration or
260 payment is fair and reasonable, the office must consider all of
261 the following:
262 1. The actual cost of each service provided by the
263 affiliated entity.
264 2. The relative financial condition of the insurer and the
265 affiliated entity.
266 3. The level of debt and how that debt is serviced.
267 4. The amount and purpose of any dividends or other
268 payments exchanged between the insurer and any affiliated
269 entity, including payments made to or received from the
270 affiliated entity, and any payments between affiliated entities.
271 5. Whether the terms of the written contract benefit the
272 insurer and are in the best interest of the insurer.
273 6. Any other information as the office reasonably requires
274 in making the determination.
275 (b) For each agreement with an affiliated entity in force
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276 on July 1, 2025, each insurer shall provide to the office no
277 later than October 1, 2025, the cost incurred by the affiliated
278 entity to provide each service, the dollar amount charged to the
279 insurer for each service, and the dollar amount of fees
280 forgiven, waived, or reimbursed by the affiliated entity for the
281 2 most recent preceding years. If the total dollar amount
282 charged to the insurer was greater than the total cost to
283 provide services for either year, the insurer must explain how
284 it determined the fee was fair and reasonable. For any proposed
285 contract with an affiliated entity effective after July 1, 2025,
286 the insurer must provide documentation to support that the fee,
287 commission, or other financial consideration or payment to the
288 affiliated entity is fair and reasonable.
289 (c)1. All compensation arrangements between an insurer and
290 any affiliated entity entered into on or after July 1, 2026,
291 must be structured as fee for service. As used in this
292 subparagraph, the term "fee for service" means fixed amounts or
293 hourly rates for itemized services.
294 2. Compensation may not be based on:
295 a. Commission;
296 b. Premium volume;
297 c. Underwriting profit; or
298 d. Financial results of the insurer.
299 (d) This subsection does not prohibit an insurer from
300 paying a dividend or other financial arrangement to an
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301 affiliated entity if such dividend or financial arrangement is
302 separately reviewed and approved by the office pursuant to this
303 section, s. 628.372, or any other applicable law.
304 (e) An agreement between an insurer and an affiliated
305 entity must include a termination clause and may not exceed a
306 term of 3 years. Any extension of such an agreement must be
307 approved by the office before becoming effective. An agreement
308 between an insurer and an affiliated entity may include
309 provisions for extension, but may not remain in effect for
310 longer than 3 years without a review pursuant to paragraph (a)
311 and approval by the office. If the agreement provides for
312 extension, the agreement must clearly state that the extension
313 is subject to approval by the office at least every 3 years.
314 (4) EMERGENCY RESTRICTIONS.—
315 (a) During a declared emergency, the office may issue
316 orders restricting fund transfers from an insurer to an
317 affiliated entity without prior approval.
318 (b) Orders under paragraph (a) may apply to all or
319 specified insurers and may not exceed 90 days unless extended by
320 the office.
321 (5) ADDITIONAL OVERSIGHT.—
322 (a) Any dividend paid by an insurer to an affiliated
323 entity must be reviewed and approved by the office, regardless
324 of whether the affiliated entity is the insurer's parent,
325 subsidiary, or otherwise related entity.
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326 (b) The office may recover improper affiliated entity
327 payment transfers, including, but not limited to, both of the
328 following:
329 1. Transfers that violate the approved compensation,
330 approved dividend, or any other approved financial arrangement.
331 2. Transfers made while the insurer was undercapitalized.
332 (c) An insurer must provide notice to the office at least
333 30 days before any pledge of capital or assets to any affiliated
334 entity for a loan or financial obligation. Such notice must
335 include a description of the collateral, the nature of the
336 obligation, and the parties involved. The office may reject and
337 prohibit the pledge if such financial arrangement is not in the
338 best interest of the insurer.
339 (6) ENFORCEMENT.—
340 (a) The office may impose penalties for violations of this
341 section.
342 (b) The office shall adopt rules to implement this
343 section.
344 Section 4. Subsection (13) of section 624.424, Florida
345 Statutes, is amended to read:
346 624.424 Annual statement and other information.—
347 (13) Each insurer doing business in this state which pays
348 a fee, commission, or other financial consideration or payment
349 to any affiliate directly or indirectly is required upon request
350 to provide to the office any information the office deems
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351 necessary. The fee, commission, or other financial consideration
352 or payment to any affiliate must be fair and reasonable.
353 Affiliate compensation arrangements must comply with s. 624.347
354 and with the requirements of this subsection In determining
355 whether the fee, commission, or other financial consideration or
356 payment is fair and reasonable, the office shall consider, among
357 other things, the actual cost of the service being provided.
358 Section 5. Subsection (24) is added to section 626.854,
359 Florida Statutes, to read:
360 626.854 "Public adjuster" defined; prohibitions.—The
361 Legislature finds that it is necessary for the protection of the
362 public to regulate public insurance adjusters and to prevent the
363 unauthorized practice of law.
364 (24) A public adjuster, public adjuster apprentice, or
365 public adjusting firm shall respond with specific information to
366 a written or electronic request for a claim's status from an
367 insured or claimant or his or her designated representative
368 within 14 days after receipt of the request and shall document
369 the file accordingly.
370 Section 6. Section 627.4823, Florida Statutes, is created
371 to read:
372 627.4823 Universal life insurance policies.—
373 (1) As used in this section, the term:
374 (a) "Cash surrender value" means the net cash surrender
375 value, plus any outstanding amounts as policy loans.
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376 (b) "Fixed-premium universal life insurance policy" means
377 a universal life insurance policy other than a flexible-premium
378 universal life insurance policy.
379 (c) "Flexible-premium universal life insurance policy"
380 means a universal life insurance policy that allows the
381 policyowner to vary, independently of each other, the amount of
382 timing of one or more premium payments or the amount of
383 insurance.
384 (d) "Net cash surrender value" means the maximum amount
385 payable to the policyowner upon surrender.
386 (e) "Policy value" means the value of any individual life
387 insurance policy, rider, group master policy, or individual
388 certificate, under the provisions of which separately identified
389 interest credits, other than in connection with dividend
390 accumulations, premium deposit funds, or other supplementary
391 accounts, and mortality and expense charges are made to the
392 policy. A universal life insurance policy may provide for other
393 credits and charges, such as charges for the cost of benefits
394 provided by a rider.
395 (f) "Universal life insurance policy" means any individual
396 life insurance policy, rider, group master policy, or individual
397 certificate, under the provisions of which separately identified
398 interest credits and mortality and expense charges are made to
399 the policy. The policy, rider, or certificate does not apply to
400 policies, riders, group master policies, or individual
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401 certificates in connection with dividend accumulations, premium
402 deposit funds, or other supplementary accounts. A universal life
403 insurance policy may provide for other credits and charges, such
404 as charges for the cost of benefits provided by a rider.
405 (2)(a) A universal life insurance policy issued in this
406 state must provide that the policyowner will be sent without
407 charge, at least annually, a report that will serve to keep the
408 policyowner advised of the status of the policy. The end date of
409 the current reporting period may not be more than 3 months
410 before the date of the mailing of the report.
411 (b) The report must include all of the following:
412 1. The beginning and end dates of the current reporting
413 period.
414 2. The policy value at the end of the previous reporting
415 period and at the end of the current reporting period.
416 3. The total amounts, identified by each type, which have
417 been credited or debited to the policy value during the current
418 reporting period.
419 4. The current death benefit at the end of the current
420 reporting period on each life covered by the policy.
421 5. The net cash surrender value of the policy as of the
422 end of the current reporting period.
423 6. The amount of outstanding loans, if any, as of the end
424 of the current reporting period.
425 7. For a fixed-premium universal life insurance policy,
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426 if, assuming the guaranteed interest, mortality and expense
427 loads, and continued scheduled premium payment, the policy's net
428 cash surrender value is such that it would not maintain
429 insurance in force until the end of the next reporting period, a
430 notice to this effect in the report.
431 8. For a flexible-premium universal life insurance policy,
432 if, assuming the guaranteed interest and the mortality and
433 expense loads, the policy's net cash surrender value will not
434 maintain insurance in force until the end of the next reporting
435 period unless further premium payments are made, a notice to
436 this effect in the report.
437 9. For a fixed-premium or flexible-premium universal life
438 insurance policy, if, assuming the guaranteed interest and the
439 mortality and expense loads, the policy's net cash surrender
440 value will not maintain insurance in force until the maturity of
441 the contract, the projected date on which policy values will be
442 insufficient to continue coverage in force.
443 (3) This section applies to all universal life insurance
444 policies except variable contracts as defined in s. 627.8015.
445 Section 7. Section 628.371, Florida Statutes, is amended
446 to read:
447 628.371 Dividends to stockholders.—
448 (1) As used in this section, the term "affiliated entity"
449 has the same meaning as in s. 624.347(1).
450 (2)(1) A domestic stock insurer or an affiliated entity
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451 shall not pay any dividend or distribute cash or other property
452 to stockholders except out of that part of its available and
453 accumulated surplus funds which is derived from realized net
454 operating profits on its business and net realized capital
455 gains.
456 (3)(2) Dividend payments or distributions to stockholders,
457 without prior written approval of the office, shall not exceed
458 the larger of:
459 (a) The lesser of 10 percent of surplus or net gain from
460 operations (life and health companies) or net income (property
461 and casualty companies), not including realized capital gains,
462 plus a 2-year carryforward for property and casualty companies;
463 (b) Ten percent of surplus, with dividends payable
464 constrained to unassigned funds minus 25 percent of unrealized
465 capital gains;
466 (c) The lesser of 10 percent of surplus or net investment
467 income (net gain before capital gains for life and health
468 companies) plus a 3-year carryforward (2-year carryforward for
469 life and health companies) with dividends payable constrained to
470 unassigned funds minus 25 percent of unrealized capital gains.
471 (4)(3) In lieu of the provisions in subsection (3) (2), an
472 insurer or an affiliated entity may pay a dividend or make a
473 distribution without the prior written approval of the office
474 when:
475 (a) The dividend is equal to or less than the greater of:
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476 1. Ten percent of the insurer's or the affiliated entity's
477 surplus as to policyholders derived from realized net operating
478 profits on its business and net realized capital gains; or
479 2. The insurer's or the affiliated entity's entire net
480 operating profits and realized net capital gains derived during
481 the immediately preceding calendar year; and
482 (b) The insurer or the affiliated entity will have surplus
483 as to policyholders equal to or exceeding 115 percent of the
484 minimum required statutory surplus as to policyholders after the
485 dividend or distribution is made; and
486 (c) The insurer or the affiliated entity has filed notice
487 with the office at least 10 business days before prior to the
488 dividend payment or distribution, or such shorter period of time
489 as approved by the office on a case-by-case basis. Such notice
490 shall not create a right in the office to approve or disapprove
491 a dividend otherwise properly payable hereunder; and
492 (d) The notice includes a certification by an officer of
493 the insurer or the affiliated entity attesting that after
494 payment of the dividend or distribution the insurer or the
495 affiliated entity will have at least 115 percent of required
496 statutory surplus as to policyholders.
497 (5)(4) The office shall not approve a dividend or
498 distribution in excess of the maximum amount allowed in
499 subsection (2) (1) unless, considering the following factors, it
500 determines that the distribution or dividend would not
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501 jeopardize the financial condition of the insurer or the
502 affiliated entity:
503 (a) The liquidity, quality, and diversification of the
504 insurer's assets and the effect on its ability to meet its
505 obligations.
506 (b) Reduction of investment portfolio and investment
507 income.
508 (c) Effects on the written premium to surplus ratios as
509 required by the Florida Insurance Code.
510 (d) Industrywide financial conditions.
511 (e) Prior dividend distributions of the insurer or the
512 affiliated entity.
513 (f) Whether the dividend is only a "pass-through" dividend
514 from a subsidiary of the insurer or the affiliated entity.
515 (6)(5) A dividend or distribution by a not-for-profit
516 insurance company subsidiary to its mutual insurance holding
517 company, directly or indirectly through one or more intermediate
518 holding companies, pursuant to part III of this chapter, which
519 meets the requirements of this section and which applies to a
520 stock insurer, is permitted under this section.
521 (7) Approval of a dividend, distribution, or other
522 financial arrangement under this section must comply with the
523 requirements of s. 624.347.
524 Section 8. Section 628.372, Florida Statutes, is created
525 to read:
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526 628.372 Authority over affiliate dividends.—
527 (1) The office has oversight and regulatory authority over
528 the issuance of dividends or other financial arrangements paid
529 to an affiliate.
530 (2) There may be no declaration or distribution of such
531 dividends or other financial arrangements without prior approval
532 of the office.
533 (3) Dividends and other financial arrangements must comply
534 with the requirements of s. 624.347.
535 (4) Any unauthorized dividend, distribution, or other
536 financial arrangement may result in penalties determined by the
537 office.
538 (5) The office must adopt rules to implement this section.
539 Section 9. Subsection (5) of section 629.011, Florida
540 Statutes, is amended, and subsections (6), (7), and (8) are
541 added to that section, to read:
542 629.011 Definitions.—As used in this part, the term:
543 (4) "Distribution" means any transfer of money from the
544 reciprocal insurer to subscribers other than for the payment of
545 a claim, settlement of a legal dispute, or return of principle.
546 (6)(5) "Reciprocal insurer" means an unincorporated
547 aggregation of subscribers operating individually and
548 collectively through an attorney in fact to provide reciprocal
549 insurance among themselves.
550 (a) An assessable reciprocal insurer is a reciprocal
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551 insurer that is able to levy an assessment on its subscribers to
552 make up any shortfall in capital and surplus to cover claims and
553 expenses as specified in s. 629.231.
554 (b) A nonassessable reciprocal insurer is a reciprocal
555 insurer authorized under s. 629.091(3) or s. 629.291(5) to issue
556 policies where there is no recourse against subscribers for any
557 shortfall in capital and surplus to cover claims and expenses.
558 (7) "Subscriber contribution" means any transfer of money
559 by a subscriber of a reciprocal insurer to the reciprocal
560 insurer in excess of the premium approved by the office, when
561 such money is counted as surplus for the reciprocal insurer or
562 used to pay surplus notes.
563 (8) "Subscriber savings account" means any account in
564 which a reciprocal insurer assigns money for the benefit of an
565 individual subscriber, other than accounts holding money for the
566 payment of a specific claim by or settlement of a specific legal
567 dispute with that individual subscriber.
568 (9) "Subscribers' advisory committee" means the committee
569 of a domestic reciprocal insurer which is formed in compliance
570 with s. 629.201 and represents the interests of the subscribers.
571 Section 10. Section 629.071, Florida Statutes, is amended
572 to read:
573 629.071 Surplus funds required.—
574 (1) An assessable A domestic reciprocal insurer hereunder
575 formed, if it has otherwise complied with the applicable
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576 provisions of this code, may be authorized to transact insurance
577 if it has and thereafter maintains surplus funds of not less
578 than $3 million $250,000.
579 (2) A nonassessable reciprocal insurer, if it has
580 otherwise complied with the applicable provisions of this code,
581 may be authorized to transact insurance if it has and thereafter
582 maintains a surplus as to policyholders which is equal to that
583 required under s. 624.408 for a domestic stock insurer
584 authorized to transact like kinds of insurance In addition to
585 the surplus required to be maintained under subsection (1), the
586 insurer shall have, when first so authorized, an expendable
587 surplus of not less than $750,000.
588 Section 11. Section 629.082, Florida Statutes, is created
589 to read:
590 629.082 Reciprocal affiliates.—The attorney in fact of a
591 reciprocal insurer is an affiliated entity of the reciprocal
592 insurer for purposes of ss. 624.10 and 624.347.
593 Section 12. Section 629.121, Florida Statutes, is amended
594 to read:
595 629.121 Attorney in fact Attorney's bond.—
596 (1) Concurrently with the filing of the declaration
597 provided for in s. 629.081, the attorney in fact of a domestic
598 reciprocal insurer shall file with the office a bond in favor of
599 this state for the benefit of all persons damaged as a result of
600 breach by the attorney in fact of the conditions of his or her
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601 bond as set forth in subsection (2). The bond shall be executed
602 by the attorney in fact and by an authorized corporate surety
603 and shall be subject to the approval of the office.
604 (2) The bond shall be in the sum of $300,000 $100,000,
605 aggregate in form, the bond conditioned that the attorney in
606 fact will faithfully account for all moneys and other property
607 of the insurer coming into his or her hands, and that he or she
608 will not withdraw or appropriate to his or her own use from the
609 funds of the insurer any moneys or property to which he or she
610 is not entitled under the power of attorney.
611 (3) The bond shall provide that it is not subject to
612 cancellation unless 30 days' advance notice in writing of
613 cancellation is given to both the attorney in fact and the
614 office.
615 Section 13. Section 629.162, Florida Statutes, is created
616 to read:
617 629.162 Subscriber contributions.—
618 (1) Reciprocal insurers may, subject to prior approval by
619 the office, require contributions from subscribers in addition
620 to premiums approved by the office.
621 (2) A reciprocal insurer shall clearly disclose required
622 subscriber contributions on the declarations page of any policy
623 issued by the reciprocal insurer, separate from any cost
624 associated with the premium.
625 (3) Reciprocal insurers must provide subscribers an annual
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626 report detailing how each dollar of subscriber contributions was
627 allocated or spent.
628 Section 14. Section 629.163, Florida Statutes, is created
629 to read:
630 629.163 Subscriber savings accounts.—
631 (1) Reciprocal insurers may establish subscriber savings
632 accounts.
633 (2) Moneys assigned to subscriber savings accounts are not
634 considered distributions under s. 629.164.
635 (3) Subscriber savings accounts are subject to the
636 following requirements:
637 (a) Reciprocal insurers must inform each subscriber, in
638 writing, of the limitations and restrictions imposed upon the
639 use or possession of moneys assigned to subscriber savings
640 accounts.
641 (b) Reciprocal insurers must inform each subscriber, in
642 writing, of the procedures used to assign moneys to subscriber
643 savings accounts and any calculations used to determine the
644 amount of moneys to be assigned to subscriber savings accounts.
645 (c) Advertisements marketing the benefits of subscriber
646 savings accounts must note the limitations and restrictions
647 imposed upon the use or possession of moneys assigned to
648 subscriber savings accounts.
649 (d) Upon cancellation or nonrenewal of a subscriber's
650 policy or policies, the subscriber is entitled, within 60 days,
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651 to all moneys assigned to the subscriber's savings account,
652 except when such moneys are otherwise allocated by law or
653 contract, or when such assignment is prohibited by order of the
654 office.
655 Section 15. Section 629.164, Florida Statutes, is created
656 to read:
657 629.164 Subscriber distributions.—
658 (1) Reciprocal insurers may make distributions to
659 subscribers from their subscriber savings accounts.
660 (2) The subscribers' advisory committee has the sole
661 authority to authorize distributions, subject to prior written
662 approval by the office.
663 (3) Any reciprocal insurer that otherwise authorizes
664 distributions but prohibits subscribers from receiving
665 distributions for a specified period of time, including after
666 initial subscription, must renew the subscriber's policy for
667 that period of time plus 1 additional policy year. This
668 subsection does not prohibit the cancellation or nonrenewal of a
669 policy pursuant to s. 624.4133 or by order of the office.
670 (4) A reciprocal insurer may return to its subscribers any
671 unused premiums, savings, or credits accruing to their accounts.
672 Such distribution may not unfairly discriminate between classes
673 of risks or policies, or between subscribers, but may vary as to
674 classes of subscribers based on the experience of the classes.
675 (5) In addition to the option provided in subsection (4),
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676 a domestic reciprocal insurer may, upon the prior written
677 approval of the office, pay to its subscribers a portion of
678 unassigned funds of up to 10 percent of surplus, with
679 distribution limited to 50 percent of net income from the
680 previous calendar year. Such distribution may not unfairly
681 discriminate between classes of risks or policies, or between
682 subscribers, but may vary as to classes of subscribers based on
683 the experience of the classes.
684 (6) Distributions and other financial arrangements must
685 comply with the requirements of s. 624.347.
686 Section 16. Section 629.171, Florida Statutes, is amended
687 to read:
688 629.171 Annual statement.—
689 (1) The subscribers' advisory committee shall procure an
690 audited annual statement of the accounts and records of the
691 insurer and the attorney in fact. The statement of the insurer
692 must be prepared by an independent auditor at the expense of the
693 reciprocal insurer and must be available for inspection by any
694 subscriber. The statement of the attorney in fact must be
695 prepared by an independent auditor at the expense of the
696 attorney in fact.
697 (2)(1) The annual statement filing of a reciprocal insurer
698 must shall be submitted made and filed by its attorney in fact.
699 (3)(2) The audited statement of the attorney in fact must
700 shall be submitted with the annual statement filing of the
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701 reciprocal insurer, as required under s. 624.424, and
702 supplemented by such information as may be required by the
703 office relative to the affairs and transactions of the attorney
704 in fact relating insofar as they relate to the reciprocal
705 insurer.
706 Section 17. Section 629.201, Florida Statutes, is amended
707 to read:
708 629.201 Subscribers' advisory committee.—Each domestic
709 reciprocal insurer must have a subscribers' advisory committee
710 representing the interests of the subscribers.
711 (1) The subscribers' advisory committee of a domestic
712 reciprocal insurer exercising the subscribers' rights must shall
713 be formed in compliance with this section and selected under
714 such rules as the subscribers adopt. Such rules, along with any
715 amendments, must be approved by the office before becoming
716 effective.
717 (2) Not less than two-thirds of such committee shall be
718 subscribers other than the attorney, or any person employed by,
719 representing, or having a financial interest in the attorney.
720 (2)(3) The subscribers' advisory committee shall perform
721 all of the following duties:
722 (a) Supervise the finances of the insurer.;
723 (b) Supervise the insurer's operations to such extent as
724 to ensure assure conformity with the subscribers' agreement, and
725 power of attorney, and other governing documents.;
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726 (c) Hire independent auditors, counsel, and other experts
727 at the expense of the insurer as necessary to fulfill the
728 committee's duties. Procure the audit of the accounts and
729 records of the insurer and of the attorney at the expense of the
730 insurer; and
731 (d) Exercise any Have such additional powers and functions
732 as may be conferred by the subscribers' agreement.
733 (3) The initial subscribers' advisory committee must be
734 appointed by the original subscribers or the attorney in fact.
735 Within 6 months after the reciprocal insurer is authorized to
736 transact insurance, at least two-thirds of the committee members
737 must be elected as provided for in subsections (4) and (5).
738 (4) The subscribers' advisory committee must consist of
739 subscribers of the domestic reciprocal insurer. At least two-
740 thirds of the subscribers' advisory committee must be composed
741 of subscribers who are independent of, not employed by, not
742 representing, not selected by, and without any financial
743 interest in the attorney in fact. The independent subscribers
744 must be elected by the subscribers of the domestic reciprocal
745 insurer.
746 (5) Any rules governing the election of subscribers to the
747 subscribers' advisory committee must require all of the
748 following:
749 (a) An electorate composed exclusively of all subscribers
750 of the reciprocal insurer.
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751 (b) Terms of not more than 5 years.
752 (c) A process that allows subscribers to nominate other
753 subscribers for election to the subscribers' advisory committee.
754 (6) If a reciprocal insurer has more than 50 subscribers,
755 the attorney in fact must provide a platform by which
756 subscribers can communicate with each other regarding the
757 subscribers' advisory committee election process.
758 Section 18. Subsection (1) of section 629.181, Florida
759 Statutes, is amended to read:
760 629.181 Financial condition; method of determining.—In
761 determining the financial condition of a reciprocal insurer, the
762 office shall apply the following rules:
763 (1) Subscriber contributions are The surplus deposits of
764 subscribers shall be allowed as assets, except that any premium
765 deposits delinquent for 90 days must shall first be charged
766 against such subscriber contributions. Subscriber contributions
767 may not exceed 2 percent of each individual subscribers' policy
768 premium for a nonassessable reciprocal insurer and 10 percent of
769 each individual subscribers' policy premium for an assessable
770 reciprocal insurer surplus deposit.
771 Section 19. Section 629.271, Florida Statutes, is
772 repealed.
773 Section 20. Effective upon this act becoming a law,
774 subsections (1) and (2) of section 629.291, Florida Statutes,
775 are amended to read:
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776 629.291 Merger or conversion.—
777 (1) A reciprocal insurer, upon affirmative vote of not
778 less than two-thirds of its subscribers who vote on such merger
779 or conversion pursuant to due notice, and subject to approval by
780 the office of the terms therefor, may merge with another
781 reciprocal insurer or be converted to a stock or mutual insurer,
782 to be thereafter governed by the applicable sections of the
783 Florida Insurance Code. However, a domestic stock insurer may
784 not convert to a reciprocal insurer.
785 (2) A plan to merge a reciprocal insurer with another
786 reciprocal insurer or for conversion of the reciprocal insurer
787 to a stock or mutual insurer must be filed with the office on
788 forms adopted by the commission office and must contain such
789 information as the office reasonably requires to evaluate the
790 transaction.
791 Section 21. Section 629.301, Florida Statutes, is amended
792 to read:
793 629.301 Impaired reciprocal insurers.—
794 (1) If the assets of a domestic reciprocal insurer are at
795 any time insufficient to discharge its liabilities, other than
796 any liability on account of funds contributed by the attorney in
797 fact or others, and to maintain the required surplus, its
798 attorney in fact shall forthwith make up the deficiency or levy
799 an assessment upon the subscribers for the amount needed to make
800 up the deficiency, but subject to the limitation set forth in
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801 the power of attorney or policy.
802 (2) If the attorney in fact fails to make up such
803 deficiency or to make the assessment within 30 days after the
804 office orders the attorney in fact him or her to do so, or if
805 the deficiency is not fully made up within 60 days after the
806 date the assessment was made, the insurer shall be deemed
807 insolvent and shall be proceeded against in the same manner as
808 any other insurer under chapter 631 and the insurance as
809 authorized by this code.
810 (3) If liquidation of a reciprocal such an insurer is
811 ordered, the receiver shall levy an assessment shall be levied
812 upon the subscribers an assessment for such an amount as the
813 receiver determines to be necessary to discharge all liabilities
814 of the insurer. The liabilities must be, subject to limits as
815 provided by this chapter, as the office determines to be
816 necessary to discharge all liabilities of the insurer, exclusive
817 of any funds contributed by the attorney in fact or other
818 persons, but inclusive of including the reasonable cost of the
819 liquidation. The assessment is subject to any limits set forth
820 in the power of attorney, the subscribers’ agreement, the
821 policy, or this chapter.
822 Section 22. Section 629.401, Florida Statutes, is
823 repealed.
824 Section 23. Section 629.520, Florida Statutes, is
825 repealed.
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826 Section 24. Section 629.56, Florida Statutes, is created
827 to read:
828 629.56 Unearned premium reserves.—A reciprocal insurer
829 must maintain an unearned premium reserve at all times and as
830 required under s. 625.051.
831 Section 25. Subsection (2) of section 624.45, Florida
832 Statutes, is amended to read:
833 624.45 Participation of financial institutions in
834 reinsurance and in insurance exchanges.—Subject to applicable
835 laws relating to financial institutions and to any other
836 applicable provision of the Florida Insurance Code, any
837 financial institution or aggregation of such institutions may:
838 (2) Participate, directly or indirectly, as an
839 underwriting member or as an investor in an underwriting member
840 of any insurance exchange authorized in accordance with s.
841 629.401, which underwriting member transacts only aggregate or
842 specific excess insurance over underlying self-insurance
843 coverage for self-insurance organizations authorized under the
844 Florida Insurance Code, for multiple-employer welfare
845 arrangements, or for workers' compensation self-insurance
846 trusts, in addition to any reinsurance the underwriting member
847 may transact.
848
849 Nothing in this section shall be deemed to prohibit a financial
850 institution from engaging in any presently authorized insurance
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851 activity.
852 Section 26. Reciprocal insurers licensed before July 1,
853 2025, have until July 1, 2026, to comply with the changes made
854 to subscribers' advisory committees in s. 629.201, Florida
855 Statutes. Reciprocal insurers licensed before July 1, 2025, have
856 until July 1, 2027, to comply with the unearned premium reserve
857 requirements imposed under s. 629.56, Florida Statutes.
858 Section 27. Except as otherwise expressly provided in this
859 act and except for this section, which shall take effect upon
860 this act becoming a law, this act shall take effect July 1,
861 2025.
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