INSURANCE RATES AND CONTRACTS Ch.627 …...Ch. 627 INSURANCE RATES AND CONTRACTS F.S. 1987 tems or which collects and furnishes to authorized insur ers or rating organizations loss

F.S. 1987 INSURANCE RATES AND CONTRACTS Ch.627

627.141

627 .151

627.171 627.191

627.211

627.215

627.221 627.231 627.241 627 .251 627 .261 627 .281

627.291

627 .301 627 .311 627.314 627.318 627.321 627.331

627.351 627 .3515

627.356 627.357 627.361 627.371 627.381

Subsequent disapproval of filing ; workers ' compensation and employer's liability insurances.

Basis of approval or disapproval of workers ' compensation or employer's liability insurance filing ; scope of disapproval power.

Excess rates. Adherence to filings ; workers ' compensation

and employer 's liability insurances . Deviations; workers ' compensation and em

ployer's liability insurances. Excessive profits for workers ' compensation

and employer's liability insurances prohibited .

Rating organizations ; licensing ; fee . Subscribers to rating organizations. Notice of changes. Bureau rules not to affect dividends. Actuarial and technical services. Appeal from rating organization ; workers '

compensation and employer's liability insurance filings.

Information to be furnished insureds; appeal by insureds; workers ' compensation and employer's liability insurances.

Advisory organizations. Joint underwriters and joint reinsurers. Concerted action by two or more insurers . Records . Examinations. Recording and reporting of loss, expense,

and claims experience; rating information . Insurance risk apportionment plans. Market assistance plan ; property and casual-

ty risks . Professional liability self-insurance. Medical malpractice self-insurance. False or misleading information . Hearings. Penalty for violation .

1627.011 Short title.-This part of this chapter may be referred to as the "Rating Law."

History.-s. 412, ch. 59-205; s. 3, ch. 76-1 68; s. 1, ch. 77-457; ss. 2, 3, ch. 81 - 318; ss. 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386.

1Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82- 243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.021 Scope of this part.-(1) This part of this chapter applies only to property,

casualty, and surety insurances on subjects of insurance resident , located, or to be performed in this state .

(2) This chapter does not apply to: (a) Reinsurance, except joint reinsurance as provid

ed in s. 627.311. (b) Insurance against loss of or damage to aircraft,

their hulls, accessories, or equipment, or against liability, other than workers ' compensation and employer's liability, arising out of the ownership, maintenance, or use of aircraft.

(c) Insurance of vessels or craft , their cargoes, marine builders ' risks , marine protection and indemnity, or other risks commonly insured under marine, as distinguished from inland marine, insurance policies.

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(3) For the purposes of this chapter, all motor vehicle insurance shall be deemed to be casualty insurance only.

(4) This part does not apply to health insurance. Hlatory.-s. 413, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 92, ch. 79-40;

ss. 2, 3, ch . 81-318; ss. 337, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82- 386. •Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is

scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.031 Purposes of this part; interpretation.(1) The purposes of this part are: (a) To promote the public welfare by regulating in

surance rates as herein provided to the end that they shall not be excessive, inadequate, or unfairly discriminatory;

(b) To encourage independent action by, and reasonable price competition among, insurers;

(c) To authorize the existence and operation of qualified rating organizations and advisory organizations and to require that specified rating services of such rating organizations be generally available to all authorized insurers; and

(d) To authorize cooperation between insurers in ratemaking and other related matters.

(2) It is the purpose of this part to protect policyholders and the public against the adverse effects of excessive, inadequate, or unfairly discriminatory insurance rates , and to authorize the department to regulate such rates. If at any time the department has reason to believe any such rate is excessive, inadequate, or unfairly discriminatory under the law, it is directed to take the necessary action to cause such rate to comply with the laws of this state.

(3) Nothing in this part shall be construed to repeal or modify the provisions of part X of chapter 626, relating to unfair trade practices.

Hlatory.- s. 411 , ch. 59-205; s. 1, ch. 67-9; ss. 13, 35, ch. 69-1 06; s. 1, ch. 71-3(8); s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81 - 318; ss. 338, 357 , 809(2nd), ch. 82-243; ss. 49, 79, ch. 82- 386; s. 28, ch. 87-228.

•Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.041 Definitions.-As used in this part: (1) "Rate" means the unit charge by which the mea

sure of exposure or the amount of insurance specified in a policy of insurance or covered thereunder is multiplied to determine the premium.

(2) "Premium" means the consideration paid or to be paid to an insurer for the issuance and delivery of any binder or policy of insurance.

(3) "Rating organization" means every person , other than an authorized insurer, whether located within or outside this state, who has as his object or purpose the making of rates, rating plans, or rating systems. Two or more authorized insurers that act in concert for the purpose of making rates , rating plans, or rating systems, and that do not operate within the specific authorizations contained in ss. 627 .311 , 627 .314(2), (4) , and 627.351 , shall be deemed to be a rating organization . No single insurer shall be deemed to be a rating organization.

(4) "Advisory organization" means every group, association , or other organization of insurers, whether located within or outside this state, which prepares policy forms or makes underwriting rules incident to but not including the making of rates , rating plans , or rating sys-

Ch. 627 INSURANCE RATES AND CONTRACTS F.S. 1987

tems or which collects and furnishes to authorized insurers or rating organizations loss or expense statistics or other statistical information and data and acts in an advisory, as distinguished from a ratemaking, capacity.

(5) "Member" means an insurer who participates in or is entitled to participate in the management of a rating, advisory, or other organization.

(6) "Subscriber" means an insurer which is furnished at its request:

(a) With rates and rating manuals by a rating organization of which it is not a member; or

(b) With advisory services by an advisory organization of which it is not a member.

(7) "Willful" or "willfully" in relation to an act or omission which constitutes a violation of this part means with actual knowledge or belief that such act or omission constitutes such violation and with specific intent nevertheless to commit such act or omission .

(8) "Motor vehicle insurance" means a policy of motor vehicle insurance delivered or issued for delivery in the state by an authorized insurer:

(a) Insuring a natural person as the named insured or one or more related individuals resident of the same household, or both; and

(b) Insuring a motor vehicle of the private passenger type or station wagon type, which motor vehicle is not used as public or livery conveyance for passengers or rented to others, or insuring any other four-wheeled motor vehicle having a capacity of 1 ,500 pounds or less which is not used in the occupation, profession, or business of the insured , other than farming;

other than any policy issued under an automobile insurance risk apportionment plan; or other than any policy insuring more than four automobiles; or other than any policy covering garage, automobile sales agency, repair shop, service station, or public parking place operation hazards.

(9) "Insurer," for purposes of ss. 627.091, 627.096, 627.101, 627.111, 627 .141, 627.171, 627.191, 627.211, and 627.291, includes a commercial self-insurance fund as defined in s. 624.462.

History.-s. 414, ch. 59-205; s. 2, ch. 67-9; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 340, 357 , 809(2nd), ch . 82-243; ss. 49, 79, ch . 82-386; s. 3, ch. 87-124.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.0612 Administrative proceedings in rating determinations.-ln any proceeding to determine whether rates, rating plans, or other matters governed by this part comply with the law, the appellate court shall set aside a final order of the department if the department has violated s. 120.57(1 )(b)9. by substituting its findings of fact for findings of a hearing officer which were supported by competent substantial evidence.

History.-s. 7, ch. 86-160; s. 2, ch . 87-50. 1Note.-Repealed effective October 1, 1992, by s. 2. ch. 87-50, and scheduled for

review pursuant to s. 11 .61.

1627.062 Rate standards.-(1) The rates for all classes of insurance to which the

provisions of this part are applicable shall not be excessive, inadequate, or unfairly discriminatory.

(2) As to all such classes of insurance: (a) Insurers or rating organizations shall establish

and use rates, rating schedules, or rating manuals to allow the insurer a reasonable rate of return on such classes of insurance written in this state. A copy of rates, rating schedules, rating manuals, premium credits or discount schedules, and surcharge schedules, and changes thereto, shall be filed with the department under one of the following procedures:

1. If the filing is made at least 60 days before the proposed effective date and the filing is not implemented during the department's review of the filing and any proceeding and judicial review, then such filing shall be considered a "file and use" filing. In such case, the department shall initiate proceedings to disapprove the rate and so notify the insurer or shall finalize its review within 60 days of receipt of the filing. Notification to the insurer by the department of its preliminary findings shall toll the 60-day period during any such proceedings and subsequent judicial review. The rate shall be deemed approved if the department does not issue notice to the insurer of its preliminary findings within 60 days of the filing .

2. If the filing is not made in accordance with the provisions of subparagraph 1., such filing shall be made as soon as practicable, but no later than 30 days after the effective date, and shall be considered a "use and file" filing. An insurer making a "use and file" filing is potentially subject to an order by the department to return to policyholders portions of rates found to be excessive, as provided in paragraph (h) .

(b) Upon receiving a rate filing, the department shall review the rate filing to determine if a rate is excessive, inadequate, or unfairly discriminatory. In making that determination, the department shall , in accordance with generally accepted and reasonable actuarial techniques, consider the following factors :

1 . Past and prospective loss experience within and without this state.

2. Past and prospective expenses. 3. The degree of competition among insurers for

the risk insured . 4. Investment income reasonably expected by the

insurer, consistent with the insurer's investment practices, from investable premiums anticipated in the filing , plus any other expected income from currently invested assets representing the amount expected on unearned premium reserves and loss reserves. The department may promulgate rules utilizing reasonable techniques of actuarial science and economics to specify the manner in which insurers shall calculate investment income attributable to such classes of insurance written in this state and the manner in which such investment income shall be used in the calculation of insurance rates. Such manner shall contemplate allowances for an underwriting profit factor and full consideration of investment income which produce a reasonable rate of return; however, investment income from invested surplus shall not be considered. The profit and contingency factor as specified in the filing shall be utilized in computing excess profits in conjunction with s. 627 .0625.

5. The reasonableness of the judgment reflected in the filing .

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6. Dividends, savings, or unabsorbed premium de-posits allowed or returned to Florida policyholders, members, or subscribers.

7. The adequacy of loss reserves. 8. The cost of reinsurance. 9. Trend factors, including trends in actual losses

per insured unit for the insurer making the filing . 10. Conflagration and catastrophe hazards, if appli

cable. 11 . A reasonable margin for underwriting profit and

contingencies . 12. The cost of medical services, if applicable. 13. Other relevant factors which impact upon the fre

quency or severity of claims or upon expenses. (c) In the case of fire insurance rates, consideration

shall be given to the experience of the fire insurance business during a period of not less than the most recent 5-year period for which such experience is available.

(d) If conflagration or catastrophe hazards are given consideration by an insurer in its rates or rating plan , including surcharges and discounts, the insurer shall establish a reserve for that portion of the premium allocated to such hazard and shall maintain the premium in a catastrophe reserve. Any removal of such premiums from the reserve for purposes other than paying claims associated with a catastrophe or purchasing reinsurance for catastrophes shall be subject to approval of the department. Any ceding commission received by an insurer purchasing reinsurance for catastrophes shall be placed in the catastrophe reserve.

(e) After consideration of the rate factors provided in paragraphs (b), (c), and (d), a rate may be found by the department to be excessive, inadequate, or unfairly discriminatory based upon the following standards :

1. Rates shall be deemed excessive if they are like-ly to produce a profit from Florida business that is unreasonably high in relation to the risk involved in the class of business or if expenses are unreasonably high in relation to services rendered .

2. Rates shall be deemed excessive if, among other things, the rate structure established by a stock insurance company provides for replenishment of surpluses from premiums, when the replenishment is attributable to investment losses.

3. Rates shall be deemed inadequate if they are clearly insufficient, together with the investment income attributable to them, to sustain projected losses and expenses in the class of business to which they apply.

4. A rating plan, including discounts, credits, or surcharges, shall be deemed unfairly discriminatory if it fails to clearly and equitably reflect consideration of the policyholder 's participation in a risk management program adopted pursuant to s. 627 .0625.

5. A rate shall be deemed inadequate as to the pre-mium charged to a risk or group of risks if discounts or credits are allowed which exceed a reasonable reflection of expense savings and reasonably expected loss experience from the risk or group of risks.

6. A rate shall be deemed unfairly discriminatory as to a risk or group of risks if the application of premium discounts, credits, or surcharges among such risks

does not bear a reasonable relationship to the expected loss and expense experience among the various risks.

(f) In reviewing a rate filing , the department may require the insurer to provide at the insurer's expense all information necessary to evaluate the condition of the company and the reasonableness of the filing according to the criteria enumerated in this section.

(g) The department may at any time review a rate, rating schedule, rating manual , or rate change; the pertinent records of the insurer; and market conditions. If the department finds on a preliminary basis that a rate may be excessive, inadequate, or unfairly discriminatory, the department shall initiate proceedings to disapprove the rate and shall so notify the insurer. However, the department may not disapprove as excessive any rate for which it has given final approval or which has been deemed approved for a period of 1 year after the effective date of the filing unless the department finds that a material misrepresentation or material error was made by the insurer or was contained in the filing. Upon being so notified , the insurer or rating organization shall, within 60 days, file with the department all information which, in the belief of the insurer or organization, proves the reasonableness, adequacy, and fairness of the rate or rate change . In such instances and in any administrative proceeding relating to the legality of the rate, the insurer or rating organization shall carry the burden of proof by a preponderance of the evidence to show that the rate is not excessive, inadequate, or unfairly discriminatory. After the department notifies an insurer that a rate may be excessive, inadequate, or unfairly discriminatory, unless the department withdraws the notification , the insurer shall not alter the rate except to conform with the department's notice until the earlier of 120 days after the date the notification was provided or 180 days after the date of the implementation of the rate. The department may, subject to chapter 120, disapprove without the 60-day notification any rate increase filed by an insurer within the prohibited time period or during the time that the legality of the increased rate is being contested.

(h) In the event the department finds that a rate or rate change is excessive, inadequate, or unfairly discriminatory , the department shall issue an order of disapproval specifying that a new rate or rate schedule which responds to the findings of the department be filed by the insurer. The department shall further order, for any "use and file" filing made in accordance with subparagraph (a)2., that premiums charged each policyholder constituting the portion of the rate above that which was actuarially justified be returned to such policyholder in the form of a credit or refund . If the department finds that an insurer's rate or rate change is inadequate, the new rate or rate schedule filed with the department in response to such a finding shall be applicable only to new or renewal business of the insurer written on or after the effective date of the responsive filing .

The provisions of this subsection shall not apply to workers' compensation and employer's liability insurance and to motor vehicle insurance.

(3) For individual risks that are not rated in accordance with the insurer's rates, rating schedules, rating manuals, and underwriting rules filed with the depart-

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Ch.627 INSURANCE RATES AND CONTRACTS F.S. 1987

ment and which have been submitted to the insurer for individual rating , the insurer is required to file rates with the department for each such risk as soon as practicable following the effective date of the policy but in no event later than 90 days thereafter.

(4) Nothing contained in this section or elsewhere in this part shall be construed to repeal or modify the provisions of ss. 626.951, 626.9511, 626.9521, 626.9541 , 626.9551' 626.9561 ' 626.9571 ' 626 .9581 ' 626.9591 ' 626.9601' 626.9611 ' 626.9621 ' 626 .9631 ' 626.9641 ' 626.9701 , 626.9702, and 626.973, relating to unfair insurance trade practices; and any rate , rating classification, rating plan or schedule, or variation thereof established in violation of said sections shall, in addition to the consequences stated in said sections or elsewhere, be deemed a violation of this section .

Hlstory.-s. 3, ch . 67-9; s. 3, ch. 71-3(8); s. 3, ch. 76-168; s. 21 , ch. 77-468; s. 1, ch. 77-457; s. 93, ch. 79-40; ss. 2, 3, ch. 81-318; ss. 341 , 357, 809(2nd), ch. 82-243; ss. 45, 49, 79, ch. 82-386; s. 93, ch. 83-216; s. 9, ch. 86-160.

•Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.0625 Supplemental funding for risk management plans through excessive profits.-

(1) For the purposes of this section : (a) "Commercial property insurance" means insur

ance as defined in s. 624.604, but limited to coverage of commercial risks , excluding windstorm coverage. If separate rates and supporting experience data are not filed and justified for windstorm coverage, the insurer shall , using generally accepted actuarial and economic principles and techniques, identify and justify the premiums, losses, reserves, and associated data for the windstorm coverage excluded from commercial property insurance.

(b) "Commercial casualty insurance" means insurance as defined in s. 624.605, other than workers ' compensation and employer's liability insurance, but limited to coverage of commercial risks.

(2) This section shall apply only to commercial property insurance and to commercial casualty insurance as those terms are defined in subsection (1 ), or any combination thereof.

(3) Each insurer or insurer group offering commercial casualty insurance or commercial property insurance covering risks located in this state shall develop and make available to insureds guidelines for risk management plans. Policyholders complying with the guidelines for a risk management plan shall be eligible for distributions from the risk management incentive fund as provided in subsection (11 ). The risk management program shall include the following:

(a) Safety measures, including, as applicable, the following areas:

1. Pollution and environmental hazards; 2. Disease hazards; 3. Accidental occurrences; 4. Fire hazards and fire prevention and detection ; 5. Liability for acts from the course of business; 6. Slip and fall hazards; 7. Product injury; and 8. Hazards unique to a particular class or category

of insureds.

(b) Training to insureds in safety management techniques.

(c) Safety management counseling services.

There shall be no civil cause of action against any insurer or its agents or employees for acts or omissions in any way connected with the requirements of this subsection. This shall not limit the authority for the department to enforce the provisions of this subsection.

(4) Each insurer group shall file with the department prior to July 1 of each year, on a form prescribed by the department, the following data specific to commercial casualty insurance and commercial property insurance:

(a) Calendar-year earned premium. (b) Accident-year incurred losses and loss

adjustment expenses. (c) The administrative and selling expenses incurred

in this state or allocated to this state for the calendar year.

(d) Policyholder dividends applicable to the calendar year.

The data filed for the group shall be a consolidation of the data of the individual insurers of the group.

(S)(a) Excessive profit has been realized if underwriting gain is greater than the anticipated underwriting profit plus 4 percent of earned premiums for the 4 most recent calendar years.

(b) As used in this section with respect to any 4-year period, "anticipated underwriting profit" means the sum of the dollar amounts obtained by multiplying, for each rate filing of the insurer group in effect during such period, the earned premiums applicable to such rate filing during such period by the percentage factor included in such rate filing for profit and contingencies, such percentage factor having been determined with due recognition to investment income from funds generated by Florida business. Separate calculations need not be made for consecutive rate filings containing the same percentage factor for profits and contingencies .

(6) Each insurer group shall also file a schedule of Florida loss and loss-adjustment experience for each of the 4 most recent accident years. The incurred losses and loss-adjustment expenses shall be valued as of December 31 of the accident year, developed to an ultimate basis, and at three 12-month intervals thereafter, each developed to an ultimate basis, so that a total of four evaluations will be provided for each accident year. The first year to be so reported shall be accident year 1987, so that the reporting of 4 accident years will not take place until accident years 1988, 1989, and 1990 have become available. For medical malpractice insurance, the first year to be so reported shall be accident year 1990, so that the reporting of 4 accident years for full inclusion of medical malpractice experience in commercial casualty insurance will not take place until accident years 1991, 1992, and 1993 become available. Accordingly, no medical malpractice insured shall be eligible for refunds or credits until the reporting period ending with calendar-accident year 1993. For reporting purposes unrelated to determining excessive profits, the loss and loss-adjustment experience of each accident

554


year shall continue to be reported until each accident year has been reported at eight stages of development.

(7) Each insurer group's underwriting gain or loss for each calendar-accident year shall be computed as follows: The sum of the accident-year incurred losses and loss-adjustment expenses as of December 31 of the year, developed to an ultimate basis, plus the administrative and selling expenses incurred in the calendar year, plus policyholder dividends applicable to the calendar year, shall be subtracted from the calendar-year earned premium to determine the underwriting gain or loss.

(8) For the 4 most recent calendar-accident years, the underwriting gain or loss shall be compared to the anticipated underwriting profit.

(9) Any insurer realizing an excessive profit shall place such profits in an interest-bearing fund to be called the "risk management incentive fund," hereinafter referred to as the "fund." The fund may be maintained on an insurer groupwide basis or on an individual insurer basis.

(1 0) If the insurer or insurer group has realized an excessive profit, the department shall order that the excessive amounts be placed in the fund while affording the insurer group an opportunity for hearing and otherwise complying with the requirements of chapter 120. Such excessive amounts shall be placed in the fund in all instances unless the insurer group affirmatively demonstrates to the department that the placement of the excessive amounts in the fund will render a member of the insurer group impaired or insolvent under the provisions of the Florida Insurance Code.

(11 )(a) All money placed in the fund and interest thereon shall be distributed to those policyholders of the insurer or insurer group who:

1. Have a policy in force on December 31 of the final compilation year;

2. Have had a policy in force for a least 1 year; and 3. Have complied with the guidelines for the appli

cable risk management plan which shall include maintenance by the insured of loss experience, measured as a loss ratio, which does not exceed, on average, for the lesser of the review period or the total continuous period of coverage with the insurer, the appropriate permissible loss ratio utilized in the rate filings in effect during the reporting period, provided that maintenance of such loss experience requirements shall be applied equally to all insured risks.

(b) All money placed in the fund and interest thereon shall be proportionately distributed to each eligible policyholder on the basis of earned premium.

(c) In no event shall the funds distributed to a policyholder for a reporting period exceed the policyholder's total premium for the reporting period.

(d) Distribution of funds shall not be required as to any one policyholder if the amount of such funds would be less than $25.

(e) If any money remains in the fund after distribution, it shall be carried forward to the next test period for distribution.

(12)(a) With respect to this section, data in required reports to the department may be rounded to the nearest dollar.

(b) Rounding, if elected by the insurer, shall be applied consistently.

(13)(a) Distribution of money shall be completed in one of the following ways:

1. Credits shall be applied to policy renewal premi-um notices which are forwarded to insureds more than 60 calendar days after entry of a final order indicating that excessive profits have been realized.

2. If an insured to whom a credit is applicable there-after cancels or fails to renew his policy or otherwise allows his policy to terminate prior to receiving the credit, the insurer group shall make a cash refund in the amount of the credit not later than 60 days after termination of such coverage. In addition, a cash refund shall be made in the event the renewal premium is less than the amount available for distribution under subsection (11 ).

(b) Upon completion of the renewal credits or refund payments, the insurer group shall immediately certify to the department that the credits or refunds have been made.

(14) Any renewal credit or refund made pursuant to this section shall be treated as a policyholder dividend applicable to the final compilation year of the applicable review period, for purposes of reporting under this section for subsequent years .

(15) This section applies only to policies written or renewed on or after July 1, 1986.

Hlatory.-s. 10, ch . 86-160; s. 2, ch. 87-50. 'Note.-Repealed effective October 1, 1992, by s. 2, ch. 87-50, and scheduled for

review pursuant to s. 11.61 .

1627.0635 Seat belts; rate filings.-lnsurers shall reflect in their filings for rates , rating schedules, or rating manuals for motor vehicle insurance any savings or other effects associated with increased seat belt use experienced in Florida as a result of legislation requiring use of seat belts.

Hlatory.-s. 4, ch. 86-49; s. 2, ch . 87-50. 'Note.-Repealed effective October 1, 1992, by s. 2, ch. 87-50, and scheduled for

review pursuant to s. 11 .61 .

1627.0651 Making and use of rates for motor vehicle insurance.-

(1) Insurers shall establish and use rates, rating schedules, or rating manuals to allow the insurer a reasonable rate of return on motor vehicle insurance written in this state. A copy of rates, rating schedules, and rating manuals, and changes therein, shall be filed with the department as soon as practicable following their effective date, but no later than 30 days after that date.

(2) Upon receiving notice of a rate filing or rate change, the department shall review the rate or rate change to determine if the rate is excessive, inadequate, or unfairly discriminatory. In making that determination, the department shall in accordance with generally accepted and reasonable actuarial techniques consider the following factors:

(a) Past and prospective loss experience within and outside this state.

(b) The past and prospective expenses. (c) The degree of competition among insurers for

the risk insured. (d) Investment income reasonably expected by the

insurer, consistent with the insurer's investment practices, from investable premiums anticipated in the filing,

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plus any other expected income from currently invested assets representing the amount expected on unearned premium reserves and loss reserves. Such investment income shall not include income from invested surplus. The department may promulgate rules utilizing reasonable techniques of actuarial science and economics to specify the manner in which insurers shall calculate investment income attributable to motor vehicle insurance policies written in this state and the manner in which such investment income is used in the calculation of insurance rates. Such manner shall contemplate the use of a positive underwriting profit allowance in the rates that will be compatible with a reasonable rate of return plus provisions for contingencies. The total of the profit and contingency factor as specified in the filing shall be utilized in computing excess profits in conjunction with s. 627.066. In promulgating such rules, the department shall in all instances adhere to and implement the provisions of this paragraph .

(e) The reasonableness of the judgment reflected in the filing.

(f) Dividends, savings, or unabsorbed premium deposits allowed or returned to Florida policyholders, members, or subscribers.

(g) The cost of repairs to motor vehicles. (h) The cost of medical services, if applicable. (i) The adequacy of loss reserves. U) The cost of reinsurance. (k) Trend factors, including trends in actual losses

per insured unit for the insurer making the filing . (I) Other relevant factors which impact upon the fre-

quency or severity of claims or upon expenses. (3) Rates shall be deemed excessive if they are like

ly to produce a profit from Florida business that is unreasonably high in relation to the risk involved in the class of business or if expenses are unreasonably high in relation to services rendered.

(4) Rates shall be deemed excessive if, among other things, the rate structure established by a stock insurance company provides for replenishment of surpluses from premiums, when such replenishment is attributable to investment losses.

(5)(a) Rates shall be deemed inadequate if they are clearly insufficient, together with the investment income attributable to them, to sustain projected losses and expenses in the class of business to which they apply.

(b) The Insurance Commissioner shall have the responsibility to ensure that rates for private passenger vehicle insurance are adequate. To that end , the department shall promulgate rules and regulations establishing standards defining inadequate rates on private passenger vehicle insurance as defined in s. 627.041 (8). In the event that the department finds that a rate or rate change is inadequate, the department shall order that a new rate or rate schedule be thereafter filed by the insurer and shall further provide information as to the manner in which noncompliance of the standards may be corrected. When a violation of this provision occurs, the department shall impose an administrative fine pursuant to s. 624.4211.

(6) One rate shall be deemed unfairly discriminatory in relation to another in the same class if it clearly fails

to reflect equitably the difference in expected losses and expenses.

(7) Rates are not unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expense factors, or like expense factors but different loss exposures, so long as rates reflect the differences with reasonable accuracy.

(8) Rates are not unfairly discriminatory if averaged broadly among members of a group; nor are rates unfairly discriminatory even though they are lower than rates for nonmembers of the group. However, such rates are unfairly discriminatory if they are not actuarially measurable and credible and sufficiently related to actual or expected loss and expense experience of the group so as to assure that nonmembers of the group are not unfairly discriminated against.

(9) In reviewing the rate or rate change filed, the department may require the insurer to provide at the insurer's expense all information necessary to evaluate the condition of the company and the reasonableness of the filing according to the criteria enumerated herein.

(10) The department may, at any time, review a rate or rate change, the pertinent records of the insurer, and market conditions; and, if the department finds on a preliminary basis that the rate or rate change may be excessive, inadequate, or unfairly discriminatory, the department shall so notify the insurer. Upon being so notified, the insurer or rating organization shall, within 60 days, file with the department all information which, in the belief of the insurer or organization , proves the reasonableness, adequacy, and fairness of the rate or rate change. In such instances and in any administrative proceeding relating to the legality of the rate, the insurer or rating organization shall carry the burden of proof by a preponderance of the evidence to show that the rate is not excessive, inadequate, or unfairly discriminatory. After the department notifies an insurer that a rate may be excessive, inadequate, or unfairly discriminatory, unless the department withdraws the notification, the insurer shall not increase the rate until the earlier of 120 days after the date the notification was provided or 180 days after the date of the implementation of the rate. The department may, subject to chapter 120, disapprove without the 60-day notification any rate increase filed by an insurer within the prohibited time period or during the time that the legality of the increased rate is being contested .

(11) In the event the department finds that a rate or rate change is excessive, inadequate, or unfairly discriminatory, the department shall order that a new rate or rate schedule be thereafter filed by the insurer and shall further provide information as to the manner in which noncompliance may be corrected. Supporting information responsive to the findings of the department shall be submitted with the filing.

Hlstory.-s. 22, ch. 77-468: s. 8, ch . 78-374: s. 2, ch. 81-318: ss. 343, 357, 809(2nd), ch. 82-243: ss . 46, 47, 49, 79, ch. 82-386; s. 94, ch . 83-216: s. 16, ch. 85-245.


1627.0652 Insurance discounts for certain persons completing safety course.-

(1) Any rates, rating schedules, or rating manuals for the liability, personal injury protection, and collision cov-

556

F.S. 1987 INSURANCE RATES AND CONTRACTS Ch. 627

erages of a motor vehicle insurance policy filed with the department shall provide for an appropriate reduction in premium charges as to such coverages when the principal operator on the covered vehicle is an insured 65 years of age or older who has successfully completed a motor vehicle accident prevention course approved by the Department of Highway Safety and Motor Vehicles. Any discount used by an insurer shall be presumed appropriate unless credible data demonstrates otherwise.

(2) The premium reduction required by this section shall be effective for an insured for a 3-year period after successful completion of the approved course, except that the insurer may require , as a condition of maintaining the discount, that the insured:

(a) Not be involved in an accident for which the insured is at fault ; and

(b) Not be convicted or plead guilty or nolo contendere to a moving traffic violation.

(3) The Department of Highway Safety and Motor Vehicles shall approve motor vehicle accident prevention courses for the purposes of this section . The department shall consider the competency of the personnel offering the course, the quality of the content and activities of the course with respect to its capability to prevent accidents by persons age 65 or older who complete the course, and the reasonableness of the fee for the course. The department shall establish the minimum number of hours necessary for completion of a course. A course approved by the department shall require each person completing the course to pass a written test given by the course evaluating the person's knowledge of the content of the course.

(4) Upon successfully completing the approved course, each person shall be issued a certificate by the organization offering the course which shall be used to qualify for the premium discount required by this section.

(5) This section shall not apply in the event that the approved course is taken as punishment specified by a court or other governmental entity resulting from a moving traffic violation.

(6) This section shall apply to policies issued or renewed after January 1, 1986.

History.-s. 1, ch. 85-244; s. 1, ch. 86-286. 'Note.-Repealed effective October 1, 1992, by s. 1, ch. 86-286, and scheduled

for review pursuant to s. 11.61 .

1627.066 Excessive profits for motor vehicle insurance prohibited.-

(1) As used herein: (a) "Private passenger automobile business" means

that insurance business that is written on a family automobile policy, standard automobile policy, or personal automobile or similar private passenger automobile policy written for personal use, as opposed to commercial automobile insurance business.

(b) "Cash" means coins, currency, checks, drafts, or money orders.

(2) Each Florida private passenger automobile insurer group shall file with the department, prior to July 1 of each year on forms prescribed by the department, the following data for Florida private passenger automobile business. The data filed for the group shall be a consolidation of the data of the individual insurers of the group.

The data shall include both voluntary and joint underwriting association business, as follows :

(a) Calendar-year total limits earned premium. (b) Accident-year incurred losses and loss



(d) Policyholder dividends incurred during the applicable calendar year.

(3)(a) Excessive profit has been realized if there has been an underwriting gain for the 3 most recent calendar-accident years combined which is greater than the anticipated underwriting profit plus 5 percent of earned premiums for those calendar-accident years.

(b) As used herein with respect to any 3-year period, "anticipated underwriting profit" means the sum of the dollar amounts obtained by multiplying, for each rate filing of the insurer group in effect during such period, the earned premiums applicable to such rate filing during such period by the percentage factor included in such rate filing for profit and contingencies, such percentage factor having been determined with due recognition to investment income from funds generated by Florida business. Separate calculations need not be made for consecutive rate filings containing the same percentage factor for profits and contingencies.

(4) Each insurer group shall also file a schedule of Florida private passenger automobile loss and lossadjustment experience for each of the 3 most recent accident years. The incurred losses and loss-adjustment expenses shall be valued as of March 31 of the year following the close of the accident year, developed to an ultimate basis, and at two 12-month intervals thereafter, each developed to an ultimate basis, so that a total of three evaluations will be provided for each accident year. The first year to be so reported shall be accident year 1976, so that the reporting of 3 accident years will not take place until accident years 1977 and 1978 have become available.

(5) Each insurer group's underwriting gain or loss for each calendar-accident year shall be computed as follows: The sum of the accident-year incurred losses and loss-adjustment expenses as of March 31 of the following year, developed to an ultimate basis, plus the administrative and selling expenses incurred in the calendar year, plus policyholder dividends applicable to the calendar year, will be subtracted from the calendar-year earned premium to determine the underwriting gain or loss.

(6) For the 3 most recent calendar-accident years , the underwriting gain or loss will be compared to the anticipated underwriting profit

(7) If the insurer group has realized an excessive profit, the department shall order a return of the excessive amounts after affording the insurer group an opportunity for hearing and otherwise complying with the requirements of chapter 120. Such excessive amounts shall be refunded in all instances unless the insurer group affirmatively demonstrates to the department that the refund of the excessive amounts will render a member of the insurer group insolvent under the provisions of the Florida Insurance Code.

557


(8) The excessive amount shall be refunded on a pro rata basis in relation to the final compilation year earned premiums to the voluntary private passenger automobile policyholders of record of the insurer group on December 31 of the final compilation year.

(9) Any excess profit of an insurance company offering motor vehicle insurance shall be returned to policyholders in the form of a cash refund or a credit towards the future purchase of insurance.

(10)(a) Cash refunds to policyholders may be rounded to the nearest dollar.

(b) Data in required reports to the department may be rounded to the nearest dollar.

(c) Rounding, if elected by the insurer group, shall be applied consistently.

(11 )(a) Refunds shall be completed in one of the following ways:

1. If the insurer group elects to make a cash refund, the refund shall be completed within 60 days of entry of a final order indicating that excessive profits have been realized.

2. If the insurer group elects to make refunds in the form of a credit to renewal policies, such credits shall be applied to policy renewal premium notices which are forwarded to insureds more than 60 calendar days after entry of a final order indicating that excessive profits have been realized . If an insurer group has made this election but an insured thereafter cancels his policy or otherwise allows his policy to terminate, the insurer group shall make a cash refund not later than 60 days after termination of such coverage.

(b) Upon completion of the renewal credits or refund payments, the insurer group shall immediately certify to the department that the refunds have been made.

(12) Any refund or renewal credit made pursuant to this section shall be treated as a policyholder dividend applicable to the year in which it is incurred , for purposes of reporting under this section for subsequent years .

(13) Since it appears to the Legislature that private passenger automobile insurer groups have realized excessive profits during all or part of the years 1977, 1978, and 1979 and that such profits were realized in part due to statutory changes for which rates were not adequately adjusted , it is the desire and intent of the Legislature that the provisions of this section, as amended by chapter 80-236, Laws of Florida, shall apply retroactively to excessive profits realized during the years 1977, 1978, and 1979. In the event that such retroactive application is judicially determined to be unconstitutional, it is the intent of the Legislature that the act be given prospective application as stated hereinafter. Prior to July 1, 1982, the data required by this section shall be submitted to the department for the years 1979, 1980, and 1981 . Excessive profits shall be calculated in accordance with the provisions of this section . However, only the excessive profits realized by the insurer group in 1981 shall be refunded to policyholders, and such refunds shall be made in accordance with this section. Prior to July 1, 1983, the data required by this section shall be submitted to the department for the years 1980, 1981 , and 1982. Excessive profits shall be calculated in accordance with this section; however, refunds shall

only be made for excessive profits realized in the years 1981 and 1982. Thereafter, excessive profits shall be calculated and refunded on the basis of 3 years as set forth in this section .

Hlstory.-s. 23, ch. 77-468; ss. 26, 27, ch . 80-236; s. 424, ch. 81-259; s. 2, ch. 81-318; ss. 357, 809(2nd), ch . 82-243; ss. 49, 79, ch . 82-386.

1Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for teview pursuant to s. 11 .61 in advance of that date.

1627.072 Making and use of rates.-(1) As to workers ' compensation and employer's lia

bility insurance, the following factors shall be used in the determination and fixing of rates:

(a) The past loss experience and prospective loss experience within and outside this state;

(b) The conflagration and catastrophe hazards; (c) A reasonable margin for underwriting profit and

contingencies; (d) Dividends, savings, or unabsorbed premium de

posits allowed or returned by insurers to their policyholders, members, or subscribers;

(e) Investment income on unearned premium reserves and loss reserves;

(f) Past expenses and prospective expenses, both those countrywide and those specifically applicable to this state; and

(g) All other relevant factors , including judgment factors , within and outside this state.

(2) As to all rates which are subject to this part, the systems of expense provisions included in the rates for use by an insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any such insurer or group with respect to any kind of insurance or with respect to any subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable.

(3) As to all rates which are subject to this part, risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any difference among risks that can be demonstrated to have a probable effect upon losses or expenses. Such classifications and modifications shall apply to all risks under the same or substantially the same circumstances or conditions. ·

(4)(a) In the case of workers' compensation and employer's liability insurance, the department shall consider utilizing the following methodology in rate determinations: Premiums, expenses, and expected claim costs would be discounted to a common point of time, such as the initial point of a policy year, in the determination of rates ; the cash-flow pattern of premiums, expenses, and claim costs would be determined initially by using data from 8 to 10 of the largest insurers writing workers ' compensation insurance in the state; such insurers may be selected for their statistical ability to report the data on an accident-year basis and in accordance with subparagraphs (b)1 ., 2. , and 3., for at least 21/2 years; such a cash-flow pattern would be modified when necessary in accordance with the data and whenever a radical

558


change in the payout pattern is expected in the policy year under consideration .

(b) If the methodology set forth in paragraph (a) is utilized , to facilitate the determination of such a cashflow pattern methodology:

1. Each insurer shall include in its statistical report-ing to the rating bureau and the department the accident year by calendar quarter data for paid-claim costs ;

2. Each insurer shall submit financial reports to the rating bureau and the department which shall include total incurred claim amounts and paid-claim amounts by policy year and by injury types as of December 31 of each calendar year ; and

3. Each insurer shall submit to the rating bureau and the department paid-premium data on an individual risk basis in which risks are to be subdivided by premium size as follows:

Number of Risks in Premium Range

(to be filled in by carrier)





Total :

Standard Premium Size

$300-999 1 ,000-4,999

5,000-49,999 50,000-99,999

100,000 or more

4. Each insurer which does not have the capability of reporting in accordance with subparagraphs 1., 2., and 3. shall be required to commence such reporting procedures as of January 1, 1980.

(c) The Insurance Commissioner is directed to consider using the methodology specified in paragraph (a) prior to March 31, 1980; and, in the event he decides not to use this methodology, he shall report such decision and his reasons therefor to the committees of substance in the area of insurance in each house of the Legislature by March 31 , 1980.

History.- s. 4, ch. 67- 9; s. 1, ch. 70-1 79; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 24, ch. 77-468; s. 94, ch. 79- 40; ss. 2, 3, ch. 81-318; ss. 344, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386; s. 11 , ch. 86-160.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.091 Rate filings; workers' compensation and employer's liability insurances.-

(1) As to workers ' compensation and employer's liability insurances, every insurer shall file with the department every manual of classifications, rules , and rates , every rating plan , and every modification of any of the foregoing which it proposes to use. Every insurer is authorized to include deductible provisions in its manual of classifications, rules , and rates . Such deductibles shall in all cases be in a form and manner which is consistent with the underlying purpose of chapter 440.

(2) Every such filing shall state the proposed effective date thereof, and shall indicate the character and extent of the coverage contemplated. When a filing is not accompanied by the information upon which the insurer supports the filing and the department does not have sufficient information to determine whether the filing meets the applicable requirements of this part , it shall within 15 days after the date of filing require the insurer to furnish the information upon which it supports the filing ; and, in such event, the waiting period provided

for in s. 627.101 (2) shall commence as of the date such information is furnished. The information furnished in support of a filing may include:

(a) The experience or judgment of the insurer or rating organization making the filing ;

(b) Its interpretation of any statistical data it relies upon;

(c) The experience of other insurers or rating organizations; or

(d) Any other factors which the insurer or rating organization deems relevant.

(3) A filing and any supporting information shall be open to public inspection as provided in s. 627 .101.

(4) An insurer may satisfy its obl igation to make such filings by becoming a member of, or a subscriber to , a licensed rating organization which makes such filings and by authorizing the department to accept such filings in its behalf ; but nothing contained in this chapter shall be construed as requiring any insurer to become a member or a subscriber to any rat ing organization.

(5) Pursuant to the provisions of s. 627 .321 , the department may examine the underlying statistical data used in such filings .

(6) Whenever the committee of a recognized rating organization with responsibil ity for workers ' compensation and employer's liability insurance rates in this state meets to discuss the necessity for, or a request for, Florida rate increases or decreases, the determination of Florida rates , the rates to be requested , and any other matters pertaining specifically and directly to such Florida rates , such meetings shall be held in this state and shall be subject to s. 286.011 . The committee of such a rating organization shall provide at least 3 weeks ' prior notice of such meetings to the department and shall provide at least 14 days' prior notice of such meetings to the public by publication in the Florida Administrative Weekly.

History.- s. 419, ch. 59-205; s. 5, ch. 67-9; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 20, ch. 78-300; s. 95, ch. 79- 40; ss. 20, 22, ch. 80- 236; ss. 2, 3, ch. 81 -318; ss. 357, 806, ch. 82-243; s. 49, ch. 82- 386; ss. 4, 9, 10, ch. 87-1 24.

1Note.-Repealed effective October 1, 1997, by s. 10, ch. 87-124, and scheduled for review pursuant to s. 11.61 .

1627.092 Workers' Compensation Administrator.There is created within the Division of Insurance Company Regulation of the Department of Insurance the position of Workers ' Compensation Administrator to monitor carrier practices in the field of workers ' compensation.

History.-s. 21, ch. 78-300; s. 96, ch. 79- 40; s. 2, ch. 81-318; ss. 357, 806, ch. 82-243; s. 49, ch. 82- 386; ss . 9, 10, ch. 87-124.

1Note.-Repealed effective October 1, 1997, by s. 10, ch. 87-124, and scheduled for review pursuant to s. 11 .61.

1627.093 Application of s. 286.011 to workers' compensation and employer's liability insurances.-Section 286.011 shall be applicable to every rate filing , approval or disapproval of filing, rating deviation from filing , or appeal from any of these regarding workers ' compensation and employer's liability insurances.

History.-s. 97, ch. 79-40; s. 2, ch . 81-318; ss. 357, 806, ch. 82- 243; s. 49, ch. 82- 386; ss. 9, 10, ch. 87-124.

1Note.-Repealed effective October 1, 1997, by s. 10, ch. 87-124, and scheduled for review pursuant to s. 11 .61 .

1627.096 Workers' Compensation Rating Bureau.(1) There is created within the department a Work

ers ' Compensation Rating Bureau, which shall make an

559


investigation and study of all insurers authorized to issue workers' compensation and employer's liability coverage in this state. Such bureau shall study the data, statistics , schedules, or other information as it may deem necessary to assist and advise the department in its review of filings made by or on behalf of workers ' compensation and employer's liability insurers. The department shall have the authority to promulgate rules requiring all workers ' compensation and employer' s liabil ity insurers to submit to the rating bureau any data, statistics , schedules, and other information deemed necessary to the rating bureau 's study and advisement.

(2) The acquisition by the Department of General Services of data processing software, hardware, and services necessary to carry out the provisions of this act for the Treasurer 's Management Information Center of the Department of Insurance shall be exempt from the provisions of part I of chapter 287.

History.-s. 98, ch. 79-40; s. 2, ch. 81-318; ss. 345, 357, 806, ch . 82-243; s. 49, ch. 82-386; ss. 5, 9, 10, ch. 87-124.

1Note.-Repealed effective October 1, 1997, by s. 10, ch. 87-124, and scheduled for review pursuant to s. 11 .61 .

1627.101 When filing becomes effective; workers' compensation and employer's liability insurances.-

(1) The department shall review fil ings as to workers' compensation and employer' s liability insurances as soon as reasonably possible after they have been made in order to determine whether they meet the applicable requirements of this part. If the department determines that part of a rate filing does not meet the applicable requirements of this part , it may reject so much of the filing as does not meet these requirements , and approve the remainder of the filing .

(2) Within 15 days after the date the filing , together with any additional information , if any, in support of the filing which has been requested by the department under s. 627.091 (2) , has been received by the department, the department shall place the fil ing and its supporting information on file in its office for public inspection and give notice thereof to the insurer or rating organization that made the filing .

(3) A filing which the department has placed on file for public inspection as provided in subsection (2) shall so remain on file for 15 days (counting such filing date as the fi rst day of such public inspection period) and shall not be approved , be disapproved, or become effective during such 15-day period except after a public hearing . After the 15-day public inspection period , the department shall specifically approve the filing before it becomes effective, unless within such 15-day period the department has concluded it to be in the public interest to hold a public hearing to determine whether the filing meets the requirements of this chapter and has given notice of such hearing to the insurer or rating organization that made the filing , and in which case the effectiveness of the filing shall be subject to the further order of the department made as provided in s. 627.111. If after the 15-day public inspection period the department specifically disapproves the filing , the provisions of subsection (5) shall apply.

(4) An insurer or rating organization may, at the time it makes a filing with the department, request a public hearing thereon. In such event, the department shall

forthwith place the filing on file in its office for public inspection and shall give notice of the hearing .

(5) If the department disapproves a filing, it shall promptly give notice of such disapproval to the insurer or rating organization that made the filing, stating therespects in which it finds that the filing does not meet the requi rements of this chapter . If the department approves a filing , it shall give prompt notice thereof to the insurer or rating organization that made the filing , and in which case the filing shall become effective upon such approval or upon such subsequent date as may be satisfactory to the department and the insurer or rating organization that made the filing. If the filing becomes effective in the absence of affirmative approval , or disapproval , as provided in subsection (3) , the filing shall become operative upon such effective date or upon such subsequent date as may be provided for therein .

History.-s. 420, ch. 59- 205; s. 6, ch. 67-9; ss. 13, 35, ch. 69-106; s. 3, ch. 76- 168; s. 1, ch. 77-457; s. 21, ch. 78-95; s. 22, ch. 78-300; s. 99, ch. 79-40; ss. 2, 3, ch. 81 - 318; ss. 357 , 806, ch. 82-243; s. 49, ch. 82-386; ss. 9, 10, ch. 87-1 24.

1Note.-Repealed effective October 1, 1997, by s. 10, ch. 87-124, and scheduled for review pursuant to s. 11 .61.

1627.111 Effective date of filing.-(1) If, pursuant to s. 627.101 (3) , the department de

termines to hold a public hearing as to a filing, or it holds such a public hearing pursuant to request therefor under s. 627 .101(4), it shall give written notice thereof to the rating organization or insurer that made the filing and shall hold such hearing within 30 days after commencement of the public inspection period provided for in s. 627.101(2) or (4) ; and , not less than 10 days prior to the date of the hearing , it shall give written notice of the hearing to the insurer or rating organization that made the filing . The department may also, in its discretion, give advance public notice of such hearing by publication of notice in one or more daily newspapers of general circulation in this state.

(2) If the order of the department disapproves the filing , the filing shall not become effective during the effectiveness of such order. If the order of the department approves the fil ing , the fil ing shall become effective upon the date of the order or upon such subsequent date as may be satisfactory to the insurer or rating organization that made the filing .

Hlstory.-s. 421, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-1 68; s. 1, ch. 77-457; s. 21 , ch. 78- 95; ss. 2, 3, ch. 81-318; ss. 357, 806, ch. 82- 243; s. 49, ch . 82-386; ss. 9, 10, ch. 87-124.

'Note.- Repealed effective October 1,1997, by s. 10, ch. 87-124, and scheduled for review pursuant to s. 11 .61.

1627.141 Subsequent disapproval of filing; workers' compensation and employer's liability insurances.-lf at any time after a filing has been approved by it or has otherwise become effective the department finds that the fil ing no longer meets the requirements of this chapter, it shall issue an order specifying in what respects it finds that such filing fails to meet such requirements and stating when , within a reasonable period thereafter, such filing shall be deemed no longer effective. The order shall not affect any insurance contract or policy made or issued prior to the expiration of the period set forth in the order.

History.-s. 424, ch. 59-205; s. 7, ch. 67-9; ss. 13, 35, ch. 69-1 06; s. 3, ch . 76-168; s. 1, ch . 77-457; s. 21 , ch. 78- 95; s. 100, ch. 79-40; ss. 2, 3, ch. 81-318; ss. 357 , 806, ch. 82-243; s. 49, ch. 82- 386; ss. 9, 10, ch. 87- 124.

' Note.-Repealed effective October 1, 1997, by ·s. 10, ch. 87-1 24, and scheduled for review pursuant to s. 11 .61.

560


1627.151 Basis of approval or disapproval of workers' compensation or employer's liability insurance filing; scope of disapproval power.-

(1) In determining at any time whether to approve or disapprove a fil ing as to workers ' compensation or employer's liability insurance, or to permit the filing otherwise to become effective, the department shall give consideration only to the applicable standards and factors referred to in ss. 627.062 and 627.Q72.

(2) As to workers ' compensation and employer's liability insurances, no manual of classifications , rule , rating plan, rating system, plan of operation , or any modification of any of the foregoing which establishes standards for measuring variations in hazards or expense provisions, or both , shall be disapproved if the rates thereby produced meet the applicable requirements of this part.

History.-s. 425, ch. 59-205; s. 8. ch . 67- 9; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 101 , ch. 79- 40; ss. 2, 3, ch. 81-31 8; ss. 357, 806, ch. 82-243; s. 49, ch. 82-386; ss. 9, 10, ch. 87-124.

1Note.- Repealed effective October 1, 1997, by s. 10, ch. 87-124, and scheduled for review pursuant to s. 11.61.

1627.171 Excess rates.-With written consent of the insured filed with the insurer, a rate in excess of that otherwise applicable may be used on any specific risk.

History.-s. 427, ch. 59-205; s. 9, ch . 67- 9; s. 3, ch . 76-168; s. 1, ch. 77-457 ; ss. 2, 3, ch. 81-318; ss. 357,806, ch. 82-243; s. 49, ch. 82- 386; ss. 9, 10, ch. 87-124.

1Note.-Repealed effective October 1, 1997, by s. 10, ch. 87-124, and scheduled lor review pursuant to s. 11.61.

1627.191 Adherence to filings; workers' compensation and employer's liability insurances.-No insurer or employee thereof, and no agent, shall make or issue a contract or policy of workers ' compensation or employer's liability insurance except in accordance with the filings which are in effect for such insurer, as provided in the applicable provisions of this part, or in accordance with s. 627.171 .

History.- s. 429, ch. 59-205; s. 11, ch. 67-9; s. 3, ch. 76-1 68; s. 1, ch. 77-457; s. 102, ch. 79- 40; ss. 2, 3, ch. 81-318; ss. 357, 806, ch. 82- 243; s. 49, ch. 82-386; ss. 9, 10, ch. 87-1 24.

1Note.-Repealed effective October 1, 1997, by s. 10, ch. 87-1 24, and scheduled for review pursuant to s. 11.61.

1627.211 Deviations; workers' compensation and employer's liability insurances.-

(1) Every member or subscriber to a rating organization shall , as to workers' compensation or employer's liability insurance, adhere to the filings made on its behalf by such organization ; except that any such insurer may make written application to the department for permission to file a uniform percentage decrease or increase to be applied to the premiums produced by the rating system so filed for a kind of insurance, for a class of insurance which is found by the department to be a proper rating unit for the application of such uniform percentage decrease or increase, or for a subdivision of workers ' compensation or employer's liability insurance:

(a) Comprised of a group of manual classifications which is treated as a separate unit for ratemaking purposes; or

(b) For which separate expense provisions are included in the filings of the rating organization.

Such application shall specify the basis for the modification and shall be accompanied by the data upon which the applicant relies . A copy of the application and data shall be sent simultaneously to the rating organization.

561

(2) In considering the application for permission to file the deviation , the department shall give consideration to the applicable principles for ratemaking as set forth in ss. 627 .062 and 627 .072. The department shall approve the deviation if it finds it to be justified. It shall disapprove the deviation if it finds that the resulting premiums would be excessive, inadequate, or unfairly discriminatory. The insurer may not use a deviation unless the deviation is specifically approved by the department.

(3) Each deviation permitted to be filed shall be effective for a period of 1 year unless terminated , extended, or modified with the approval of the department. If at any time after a deviation has been approved the department finds that the deviation no longer meets therequirements of this code, it shall notify the insurer in what respects it finds that the deviation fails to meet such requirements and specify when , within a reasonable period thereafter, the deviation shall be deemed no longer effective. The notice shall not affect any insurance contract or policy made or issued prior to the expiration of the period set forth in the notice.

History.-s. 431 , ch. 59-205; s. 12, ch. 67- 9; ss. 13, 35, ch. 69- 106; s. 3, ch. 76-168; s. 1, ch. 77- 457; s. 21 , ch. 78-95; s. 103, ch . 79-40; ss. 2, 3, ch . 81- 31 8; ss. 357 , 806, ch. 82-243; s. 49, ch. 82-386; ss. 6, 9, 10, ch. 87-124.

•Note.- Repealed effective October 1, 1997, by s. 10, ch. 87-124, and scheduled for review pursuant to s. 11 .61 .

1627.215 Excessive profits for workers' compensation and employer's liability insurances prohibited.-

(1) Each insurer group shall file with the department prior to July 1 of each year, on a form prescribed by the department, the following data for workers ' compensation and employer's liability insurances:

(a) Calendar-year earned premium. (b) Accident-year incurred losses and loss



(d) Policyholder dividends applicable to the calendar year.

The data fi led for the group shall be a consolidation of the data of the individual insurers of the group. The report for accident years 1984, 1985, and 1986 must be filed prior to July 1, 1988.

(2)(a) Excessive profit has been realized if underwriting gain is greater than the anticipated underwriting profit plus 5 percent of earned premiums for the 3 most recent calendar years for which data is to be filed under this section .

(b) As used in this section wi th respect to any 3-year period , "anticipated underwriting profit" means the sum of the dollar amounts obtained by multiplying , for each rate filing of the insurer group in effect during such period, the earned premiums applicable to such rate filing during such period by the percentage factor included in such rate filing for profit and contingencies, such percentage factor having been determined with due recognition to investment income from funds generated by Florida business. Separate calculations need not be made for consecutive rate filings containing the same percentage factor for profits and contingencies.


(3) Each insurer group shall also file a schedule of Florida loss and loss-adjustment experience for each of the 3 years previous to the most recent accident year. The incurred losses and loss-adjustment expenses shall be valued as of December 31 of the first year follow· ing the latest accident year to be reported, developed to an ultimate basis, and at two 12-month intervals thereafter, each developed to an ultimate basis, so that a total of three evaluations will be provided for each acci· dent year. The first year to be so reported shall be acci· dent year 1984, so that the reporting of 3 accident years under this revised evaluation will not take place until ac· cident years 1985 and 1986 have become available. For reporting purposes unrelated to determining excessive profits, the loss and loss-adjustment experience of each accident year shall continue to be reported until each accident year has been reported at eight stages of de· velopment.

(4) Each insurer group's underwriting gain or loss for each calendar-accident year shall be computed as fol· lows: The sum of the accident-year incurred losses and loss-adjustment expenses as of December 31 of the year, developed to an ultimate basis, plus the adminis· trative and selling expenses incurred in the calendar year, plus policyholder dividends applicable to the cal· endar year, shall be subtracted from the calendar-year earned premium to determine the underwriting gain or loss.

(5) For the 3 most recent calendar-accident years for which data is to be filed under this section, the under· writing gain or loss shall be compared to the anticipated underwriting profit.

(6) If the insurer group has realized an excessive profit, the department shall order a return of the exces· sive amounts after affording the insurer group an oppor· tunity for hearing and otherwise complying with the re· quirements of chapter 120. Such excessive amounts shall be refunded in all instances unless the insurer group affirmatively demonstrates to the department that the refund of the excessive amounts will render a mem· ber of the insurer group insolvent under the provisions of the Florida Insurance Code.

(7) Any excess profit of an insurance company offer· ing workers' compensation or employer's liability insur· ance shall be returned to policyholders in the form of a cash refund or a credit toward the future purchase of in· surance. The excessive amount shall be refunded on a pro rata basis in relation to the final compilation year earned premiums to the workers' compensation policy· holders of record of the insurer group on December 31 of the final compilation year.

(8)(a) Cash refunds to policyholders may be round· ed to the nearest dollar.

(b) Data in required reports to the department may be rounded to the nearest dollar.

(c) Rounding, if elected by the insurer, shall be ap· plied consistently.

(9)(a) Refunds shall be completed in one of the fol· lowing ways:

1. If the insurer group elects to make a cash refund, the refund shall be completed within 60 days of entry of a final order indicating that excessive profits have been realized.

2. If the insurer group elects to make refunds in the form of a credit to renewal policies, such credits shall be applied to policy renewal premium notices which are for· warded to insureds more than 60 calendar days after en· try of a final order indicating that excessive profits have been realized. If an insurer group has made this election but an insured thereafter cancels his policy or otherwise allows his policy to terminate, the insurer group shall make a cash refund not later than 60 days after term ina· tion of such coverage.

(b) Upon completion of the renewal credits or refund payments, the insurer group shall immediately certify to the department that the refunds have been made.

(1 0) Any refund or renewal credit made pursuant to this section shall be treated as a policyholder dividend applicable to the year in which it is incurred, for pur· poses of reporting under this section for subsequent years.

Hlstory.-s. 104, ch. 79-40; ss. 21 , 22, ch. 80-236; s. 425, ch. 81-259; s. 2, ch. 81-318; ss. 357, 806, ch. 82-243; s. 49, ch . 82-386; ss. 7, 9, 10, ch. 87-124.

1Note.-Repealed effective October 1, 1997, by s. 10, ch . 87-124, and scheduled for review pursuant to s. 11 .61 .

1627.221 Rating organizations; licensing; fee.-(1) A person, whether located within or outside this

state, may make application to the department for a li· cense as a rating organization. As to property or inland marine insurance, the application shall be for such kinds of insurance or subdivisions thereof or classes of risk or a part or combination thereof as are specified in the application. As to casualty and surety insurances, the ap· plication shall be for such kinds of insurance or subdivi· sions thereof as are specified in the application. The ap· plicant shall file with its application:

(a) A copy of its constitution, its articles of agree· ment or association or its certificate of incorporation, and of its bylaws, rules, and regulations governing the conduct of its business;

(b) A list of its members and subscribers; (c) The name and address of a resident of this state

upon whom notices or orders of the department or proc· ess affecting such rating organization may be served; and

(d) A statement of its qualifications as a rating orga· nization.

If the department finds that the applicant is competent, trustworthy, and otherwise qualified to act as a rating or· ganization and that its constitution, articles of agree· ment or association or certificate of incorporation, and its bylaws, rules, and regulations governing the conduct of its business conform to the requirements of law, it shall issue a license specifying (in the case of a casualty or surety rating organization) the kinds of insurance or subdivisions thereof, or (in the case of a property insur· ance rating organization) the kinds of insurance or sub· divisions thereof or classes of risk or a part or combina· tion thereof, for which the applicant is authorized to act as a rating organization .

(2) Licenses issued pursuant to this section shall ex· pire on the September 30 next following date of issu· ance and shall be subject to annual renewal.

(3) The fee for the license shall be in the amount specified therefor in s. 624.501. This fee, when collect·

562


ed , shall be deposited to the credit of the Insurance Commissioner's Regulatory Trust Fund.

History.-s. 432, ch . 59-205; s. 17, ch . 65-269; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; ss. 2, 3, ch . 81-318; ss. 346, 357, 809(2nd), ch . 82-243; ss. 49, 79, ch . 82-386.

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.231 Subscribers to rating organizations.-(1) Subject to rules and regulations which have

been approved by the department as reasonable, each rating organization shall permit any insurer, not a member, to subscribe to its rating services. As to property and marine rating organizations, an insurer shall be so permitted to subscribe to rating services for any kind of insurance, subdivision thereof, or class of risk or a part or combination thereof for which the rating organization is authorized so to act. As to casualty and surety rating organizations, an insurer shall be so permitted to subscribe to rating services for any kind of insurance or subdivision thereof for which the rating organization is authorized so to act. The rating organization shall give notice to subscribers of proposed changes in such rules and regulations.

(2) The reasonableness of any rule or regulation in its application to subscribers, or the refusal of any rating organization to admit an insurer as a subscriber, shall, at the request of any subscriber or any such insurer, be reviewed by the department. If the department finds that such rule or regulation is unreasonable in its application to subscribers, it shall order that such rule or regulation shall not be applicable to subscribers. If the rating organization fails to grant or reject an insurer's application for subscribership within 30 days after it was made, the insurer may request a review by the department as if the application had been rejected. If the department finds that the insurer has been refused admittance to the rating organization as a subscriber without justification, it shall order the rating organization to admit the insurer as a subscriber. If it finds that the action of the rating organization was justified, it shall make an order affirming its action.

(3) Each rating organization shall furnish its rating services without discrimination to its members and subscribers.

History.-s. 433, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch . 76-168; s. 1, ch. 77-457; s. 21, ch . 78-95; ss. 2, 3, ch. 81-318; ss. 357 , 809(2nd), ch. 82-243; ss. 49, 79, ch . 82-386.

1Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.241 Notice of changes.-Every rating organization shall notify the department promptly of every change in:

(1) Its constitution, its articles of agreement or association, or its certificate of incorporation, and its bylaws, rules and regulations governing the conduct of its business;

(2) Its list of members and subscribers; and (3) The name and address of the resident of this

state designated by it upon whom notices or orders of the department or process affecting such rating organization may be served.

Hlstory.-s. 434, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386.


1627.251 Bureau rules not to affect dividends.-No rating organization shall adopt any rule the effect of which would be to prohibit or regulate the payment of dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members, or subscribers.

History.-s. 435, ch . 59-205; s. 3, ch . 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss . 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386.

'Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.261 Actuarial and technical services.-Any rating organization may subscribe for or purchase actuarial , technical , or other services; and such services shall be available to all members and subscribers without discrimination.

History.-s. 436, ch . 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 357, 809(2nd), ch. 82- 243; ss. 49, 79, ch. 82-386.


1627.281 Appeal from rating organization; workers' compensation and employer's liability insurance filings.-

(1) Any member or subscriber to a rating organization may appeal to the department from the action or decision of such rating organization in approving or rejecting any proposed change in or addition to the workers' compensation or employer's liability insurance filings of such rating organization, and the department shall issue an order approving the decision of such rating organization or directing it to give further consideration to such proposal. If such appeal is from the action or decision of the rating organization in rejecting a proposed addition to its filings, the department may, in the event it finds that such action or decision was unreasonable, issue an order directing the rating organization to make an addition to its filings, on behalf of its members and subscribers, in a manner consistent with its findings, within a reasonable time after the issuance of such order.

(2) If such appeal is based upon the failure of the rating organization to make a filing on behalf of such member or subscriber which is based on a system of expense provisions which differs, in accordance with the right granted in s. 627.072(2), from the system of expense provisions included in a filing made by the rating organization, the department shall, if it grants the appeal, order the rating organization to make the requested filing for use by the appellant. In deciding such appeal, the department shall apply the applicable standards set forth in ss. 627.062 and 627.072.

History.-s. 438, ch. 59-205; s. 13, ch. 67-9; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch . 77-457; s. 21, ch. 78-95; s. 105, ch. 79-40; ss. 2, 3, ch. 81-318; ss. 357, 806, ch. 82-243; s. 49, ch. 82-386; ss . 9, 10, ch. 87-124.

•Note.-Repealed effective October 1, 1997, by s. 10, ch. 87-124, and scheduled for review pursuant to s. 11.61 .

1627.291 Information to be furnished insureds; appeal by insureds; workers' compensation and employer's liability insurances.-

(1) As to workers' compensation and employer's liability insurances, every rating organization and every insurer which makes its own rates shall, within a reasonable time after receiving written request therefor and upon payment of such reasonable charge as it may make, furnish to any insured affected by a rate made by

563


it, or to the authorized representative of such insured, all pertinent information as to such rate.

(2) As to workers' compensation and employer's liability insurances, every rating organization and every insurer which makes its own rates shall provide within this state reasonable means whereby any person aggrieved by the application of its rating system may be heard, in person or by his authorized representative, on his written request to review the manner in which such rating system has been applied in connection with the insurance afforded him. If the rating organization or insurer fails to grant or rejects such request within 30 days after it is made, the applicant may proceed in the same manner as if his application had been rejected. Any party affected by the action of such rating organization or insurer on such request may, within 30 days after written notice of such action, appeal to the department, which may affirm or reverse such action .

Hlstory.-s. 439, ch. 59-205; s. 14, ch . 67-9; ss. 13, 35, ch . 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78-95; s. 106, ch . 79-40; ss. 2, 3, ch. 81-318; ss. 357, 806, ch . 82-243; s. 49, ch. 82-386; ss. 9, 10, ch. 87-124.

'Note--Repealed effective October 1, 1997, by s. 10, ch . 87-124, and scheduled for review pursuant to s. 11.61 .

1627.301 Advisory organizations.-(1) No advisory organization shall conduct its opera

tions in this state unless and until it has filed with the department:

(a) A copy of its constitution, articles of incorporation, articles of agreement or of association, and bylaws or rules and regulations governing its activities, all duly certified by the custodian of the originals thereof;

(b) A list of its members and subscribers; and (c) The name and address of a resident of this state

upon whom notices or orders of the department or process may be served .

(2) Every such advisory organization shall notify the department promptly of every change in:

(a) Its constitution; (b) Its articles of incorporation, agreement, or asso

ciation; (c) Its bylaws, rules and regulations governing the

conduct of its business; (d) The list of members and subscribers; and (e) The name and address of the resident of this

state designated by it upon whom notices or orders of the department or process affecting such organization may be served.

(3) No such advisory organization shall engage in any unfair or unreasonable practice with respect to such activities.

History--s. 440, ch. 59-205; s. 15, ch. 67-9; ss. 13, 35, ch. 69-106; s. 3, ch . 76-168; s. 1, ch . 77- 457; ss. 2, 3, ch. 81-318; ss. 357, 809(2nd), ch. 82-243; ss. 49, 79, ch . 82-386.

•Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.311 Joint underwriters and joint reinsurers.-(1) Every group, association, or other organization of

insurers which engages in joint underwritings or joint reinsurance shall be subject to regulation with respect thereto as herein provided, subject, however, with respect to joint underwriting, to all other provisions of this chapter and, with respect to joint reinsurance, to ss. 624.15 and 627 .321 .

(2) If the department finds that any activity or practice of any such group, association, or other organization is unfair or unreasonable or otherwise inconsistent with the provisions of this chapter, it may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this chapter, and requiring the discontinuance of such activity or practice.

(3) The department may, after consultation with insurers licensed to write automobile insurance in this state, approve a joint underwriting plan for purposes of equitable apportionment or sharing among insurers of automobile liability insurance and other motor vehicle insurance, as an alternate to the plan required in s. 627.351 (1 ). All insurers authorized to write automobile insurance in this state shall subscribe to the plan and participate therein . The plan shall be subject to continuous review by the department which may at any time disapprove the entire plan or any part thereof if it determines that conditions have changed since prior approval and that in view of the purposes of the plan changes are warranted. Any disapproval by the department shall be subject to the provisions of chapter 120. If adopted, the plan:

(a) Shall be subject to all provisions of s. 627.351 (1 ), except apportionment of applicants;

(b) May provide for one or more designated insurers, able and willing to provide policy and claims service, to act on behalf of all other insurers to provide insurance for applicants who are in good faith entitled to, but unable to, procure insurance through the voluntary insurance market at standard rates;

(c) Shall provide that designated insurers shall issue policies of insurance and provide policyholder and claims service on behalf of all insurers for the joint underwriting association ;

(d) Shall provide for the equitable apportionment among insurers of losses and expenses incurred;

(e) Shall provide that the joint underwriting association shall operate subject to the supervision and approval of a board of governors consisting of 11 individuals, including 1 who shall be elected as chairman. Five members of the board shall be appointed by the Insurance Commissioner. Two of the commissioner's appointees shall be chosen from the insurance industry. Any board member appointed by the Insurance Commissioner may be removed and replaced by him at any time without cause. Six members of the board shall be appointed by the participating insurers, two of whom shall be from the insurance agents' associations. All board members, including the chairman, shall be appointed to serve for 2-year terms beginning annually on a date designated by the plan; and

(f) Shall provide that an agent appointed to a servicing carrier shall be a licensed general lines agent of an insurer which is authorized to write automobile liability and physical damage insurance in the state and which is actively writing such coverage in the county in which the agent is located, or the immediately adjoining counties , or an agent who places a volume of other property and casualty insurance in an amount equal to the premium volume placed with the Florida Joint Underwriting Association. The department may, however, determine

564


that an agent may be appointed to a servicing carrier if, after public hearing, the department finds that consumers in the agent's operating area would not have adequate and reasonable access to the purchase of automobile insurance if the agent were not appointed to a servicing carrier.

(4)(a) The department may, after consultation with insurers licensed to write workers ' compensation and employer's liability insurances in this state, approve a joint underwriting plan for the purpose of equitable apportionment or sharing of workers' compensation and employer's liability insurances among insurers. The plan shall operate subject to the supervision of a board of governors, to be named by the Insurance Commissioner, the members of which shall serve for terms of 2 years, consisting of three insurers participating in the plan, three employers, and one producing agent for the plan. The minutes, audits, and procedures of the board of governors shall be subject to chapter 119. The plan of operation of the joint underwriting plan shall be prepared by the board of governors and shall be subject to approval by the Insurance Commissioner. In addition , the Insurance Commissioner shall review the plan of operation on an ongoing basis. The plan shall be subject to revision at the request of the Insurance Commissioner at any time. The board of governors shall designate one or more servicing carriers for the plan from the ranks of those insurers participating in the plan . Any such designation shall be subject to the approval of the Insurance Commissioner, and any such designation may be rescinded for cause by the board subject to the approval of the Insurance Commissioner or by the Insurance Commissioner if deemed appropriate in the exercise of his judgment. The plan shall take such actions as will, in the judgment of the board, encourage safety among its insureds. It shall annually report to the Department of Insurance and to the Legislature on those actions taken by it in this regard. It shall employ full-time safety consultants or engineers who will be available to advise insureds who may from time to time seek advice regarding safety procedures and to advise such insureds as may demonstrate an unreasonably high frequency of worker accidents. Each designated servicing carrier shall provide as a condition for such designation sufficient personnel to provide support for such safety management subject to coordination by the chief safety manager of the plan. In addition, each designated servicing carrier shall provide personnel for claims adjustment so as to avoid undue costs due to unjust or improper claims against the plan. Such personnel shall be responsive to the requirements and policy dictates of the board of governors subject to approval by the Insurance Commissioner. In the event that no insurer is willing or able in the judgment of the Insurance Commissioner to act as a servicing carrier for the plan, then the board shall have the power to designate a manager and such staff as may in its judgment be necessary in addition to the chief safety manager and related staff to operate the plan . Designated servicing carriers shall provide policy and claims service on behalf of all other insurers participating in the plan in order to provide workers ' compensation and employer's liability insurances for applicants who are in good faith entitled to but who are unable to

purchase workers ' compensation and employer's liability insurances through the voluntary insurance market at standard rates . Such plan shall provide that the designated insurers shall issue policies of insurance and provide policyholder and claims service on behalf of all insurers for the Joint Underwriting Association. The plan shall provide for the equitable apportionment among insurers of losses and expenses incurred. The plan is authorized to pay a commission to producing agents not to exceed 5 percent of the total premium. If the plan is adopted, all insurers authorized to write workers ' compensation and employer 's liability insurances in this state shall subscribe thereto and participate therein. The plan shall be operated as a nonprofit venture. The plan shall be divided into two subplans as follows:

1. Subplan "A" shall provide coverage for insureds who have a demonstrated accident frequency problem, who have a measurably adverse loss ratio over a period of years , or who have demonstrated an attitude of noncompliance with safety requirements.

2. Subplan "B" shall provide coverage for all other insureds of the joint underwriting plan.

The methodology of applying these criteria, which shall be used to determine into which subplan an insured shall be placed, shall be determined by the Insurance Commissioner, and such methodology shall be applied regardless of the number of employees or the amount of payroll of the insured. The board of governors shall establish a system of surcharges applicable to insureds covered under subplan A, subject to approval by the Insurance Commissioner. A system of surcharges applicable to insureds covered under subplan B shall not beestablished. Retrospective evaluation of premiums and loss and expense experience of insureds within either subplan, as well as retrospective evaluation of premiums, losses, and expense experience of each subplan, shall be performed by the board of governors according to methodology submitted by the board to, and approved by, the Insurance Commissioner. If the board of governors determines by such retrospective evaluation of a subplan that a return of a portion of premiums is in order, then such a return shall be accomplished within such subplan subject to the approval of the Insurance Commissioner.

(b) No later than 45 days prior to the expiration date of an insured 's policy year, the insured shall be advised by the insurer that he may be continued in or assigned to the joint underwriting plan and advised that such assignment will require an additional cost or premium. The insured shall be advised that , if he desires, his name will be filed publicly with the Department of Insurance to enable insurance providers the opportunity to offer coverage outside the plan. If the insured agrees, his name, company name, mailing address, telephone number, and the names of his insurer and agent shall be placed on file no later than 25 days prior to the policy expiration date with the Department of Insurance. Any policy subsequently written as a result of the provisions of this paragraph shall be subject to s. 626.752.

(c) Effective July 1, 1981, self-insurers as defined in s. 440.02(18)(a) and (c) shall participate in the equitable apportionment among insurers of losses and loss-

565


adjustment expenses incurred by the plan with credit for investment income. Expenses shall be limited to actual expenses incurred by the plan. However, this paragraph shall not apply to governmental entities which are selfinsurers under s. 440.38(6) or s. 440.57 or public utilities who are self-insurers under s. 440 .38(1 )(b) . Selfinsurers participating in the plan shall be deemed to be insurers for the purposes of this subsection . When the provisions of this paragraph become effective, two individual self-insurers participating in the plan and authorized under s. 440.38(1 )(b) and two group self-insurers participating in the plan and authorized under s. 440.57 shall be added to the board of governors as named by the Insurance Commissioner.

History.-s. 441 , ch. 59-205; ss. 13, 35, ch. 69-106; s. 1, ch. 74-51 ; s. 3, ch. 76- 168; s. 16, ch. 77-290; s. 1, ch. 77-457; s. 21 , ch. 78-95; s. 107, ch. 79-40; ss. 1, 2, 4, ch. 79-394; s. 238, ch. 79-400; ss. 1, 2, ch. 80-360; ss. 1, 2, ch. 80-382; ss. 2. 3, ch . 81- 318; ss . 357, 809(2nd), ch. 82- 243; ss. 49, 79, ch. 82-386.

1Note.-Repealed effec1ive October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.314 Concerted action by two or more insurers. (1) Subject to and in compliance with the provisions

of this part authorizing insurers to be members or subscribers of rating or advisory organizations or to engage in joint underwriting or joint reinsurance, two or more insurers may act in concert with each other and with others with respect to any matters pertaining to:

(a) The making of rates or rating systems except for private passenger automobile insurance rates;

(b) The preparation or making of insurance policy or bond forms, underwriting rules, surveys, inspections, and investigations;

(c) The furnishing of Joss or expense statistics or other information and data; or

(d) The carrying on of research . (2) With respect to any matters pertaining to the

making of rates or rating systems; the preparation or making of insurance policy or bond forms, underwriting rules , surveys, inspections, and investigations; the furnishing of loss or expense statistics or other information and data; or the carrying on of research, two or more authorized insurers having a common ownership or operating in the state under common management or control are hereby authorized to act in concert between or among themselves the same as if they constituted a single insurer. To the extent that such matters relate to cosurety bonds, two or more authorized insurers executing such bonds are hereby authorized to act in concert between or among themselves the same as if they constituted a single insurer.

(3)(a) Members and subscribers of rating or advisory organizations may use the rates , rating systems, underwriting rules , or policy or bond forms of such organizations, either consistently or intermittently; but, except as provided in subsection (2) and ss. 627.311 and 627.351 , they shall not agree with each other or rating organ~a-tions or others to adhere thereto. ,

(b) The fact that two or more authorized insurers, whether or not members or subscribers of a rating or advisory organization, use, either consistently or intermittently, the rates or rating systems made or adopted by a rating organization or the underwriting rules or policy or bond forms prepared by a rating or advisory organization shall not be sufficient in itself to support a finding

that an agreement to so adhere exists, and may be used only for the purpose of supplementing or explaining direct evidence of the existence of any such agreement.

(c) This subsection does not apply as to workers' compensation and employer's liability insurances .

(4) Licensed rating organizations and authorized insurers are authorized to exchange information and experience data with rating organizations and insurers in this and other states and may consult with them with respect to ratemaking and the application of rating systems.

(5) Upon compliance with the provisions of this part applicable thereto, any rating organization or advisory organization, and any group, association, or other organization of authorized insurers which engages in joint underwriting or joint reinsurance through such organization or by standing agreement among the members thereof, may conduct operations in this state. As respects insurance risks or operations in this state, no insurer shall be a member or subscriber of any such organization , group, or association that has not complied with the provisions of this part applicable to it.

(6) Notwithstanding any other provisions of this part, insurers shall not participate directly or indirectly in the deliberations or decisions of rating organizations on private passenger automobile insurance. However, such rating organizations shall , upon request of individual insurers, be required to furnish at reasonable cost the rate indications resulting from the Joss and expense statistics gathered by them. Individual insurers may modify the indications to reflect their individual experience in determining their own rates. Such rates shall be filed with the department for public inspection whenever requested and shall be available for public announcement only by the press, department, or insurer.

Hls1ory.-s. 16, ch. 67- 9; s. 1, ch. 70-320; s. 1, ch. 71-6(8); s. 3, ch . 76-168; s. 1, ch. 77-457; s. 108, ch. 79- 40; ss. 2, 3, ch. 81-318; ss. 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386.

1Note.-Repealed effective October 1, t992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.318 Records.-Every insurer, rating organization , and advisory organization and every group, association, or other organization of insurers which engages in joint underwriting or joint reinsurance shall maintain reasonable records , of the type and kind reasonably adapted to its method of operation, of its experience or the experience of its members and of the data, statistics, or information collected or used by it in connection with the rates, rating plans, rating systems, underwriting rules, policy or bond forms , surveys, or inspections made or used by it, so that such records will be available at all reasonable times to enable the department to determine whether such organization, insurer, group, or association , and, in the case of an insurer or rating organization , every rate , rating plan, and rating system made or used by it, complies with the provisions of this part applicable to it. The maintenance of such records in the office of a licensed rating organization of which an insurer is a member or subscriber will be sufficient compliance with this section for any such insurer maintaining membership or subscribership in such organization, to the extent that the insurer uses the rates, rating plans, rating systems, or underwriting rules of such organization .

566


Such records shall be maintained in an office within this state or shall be made available for examination or inspection within this state by the department at any time upon reasonable notice.

History.-s. 17, ch. 67-9: ss. 13, 35, ch. 69-106: s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2. 3, ch. 81-318; ss. 348, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch . 82-386.


1627.321 Examinations.-(1) As often as it deems necessary, and not less fre

quently than each 3 years, the department shall examine each licensed rating organization, each advisory organization, each group, association, or other organization of insurers which engages in joint underwriting or joint reinsurance, and each authorized insurer transacting in this state any class of insurance to which the provisions of this part are applicable; however, as to any authorized insurer, if in the most recent 3-year period its average annual Florida direct written premium volume is less than $500,000 or its average annual number of Florida policyholders is less than 1 ,000, the department may, but shall not be required to, conduct the examination . The examination shall cover the 3 preceding years of the person examined and shall be commenced within 12 months of the end of the most recent year being covered by the examination. The examination may include examination of events subsequent to the end of the most recent year. The examination shall be for the purpose of ascertaining compliance by the person examined with the applicable provisions of this part. As to insurers, no such examination requirement shall be satisfied by the periodic examination of the insurer's general affairs .

(2) In lieu of any such examination, the department may accept the report of a similar examination made by the insurance supervisory official of another state.

(3) The reasonable cost of the examination shall be paid by the person examined, and such person shall be subject, as though an insurer, to the provisions of s. 624.320.

(4) Such examinations shall also be subject to the applicable provisions of ss. 624.318, 624.319, 624.321, and 624.322.

History.-s. 442, ch. 59-205: s. 18, ch . 67-9: ss. 13, 35, ch . 69-106: s. 3, ch . 76-168; s. 1, ch. 77-457; s. 27, ch. 77-468; ss. 2, 3, ch . 81-318: ss. 349, 357 , 809(2nd), ch . 82-243: ss. 49, 79, ch. 82-386: s. 17, ch. 85-245.


1627.331 Recording and reporting of loss, expense, and claims experience; rating information.-

(1) The department may promulgate rules and statistical plans which shall thereafter be used by each insurer in the recording and reporting of its loss, expense, and claims experience, in order that the experience of all insurers may be made available at least annually in such form and detail as may be necessary to aid the department in determining whether the insurer's activities comply with the applicable standards of this code.

(2) In promulgating such rules and plans, the department shall give due consideration to the rating systems in use in this state and, in order that such rules and plans may be as uniform as is practicable among the several states, to the rules and to the form of the plans used for such rating systems in other states. No insurer shall be

required to record or report its loss experience on a classification basis that is inconsistent with the rating system used by it, except for motor vehicle insurance as otherwise provided by law.

(3) The department may designate one or more rating organizations or other agencies to assist it in gathering such experience and making compilations thereof; and such compilations shall be made available, subject to reasonable rules promulgated by the department, to insurers and rating organizations.

(4)(a) Underwriting rules not contained in rating manuals shall be filed for private passenger automobile insurance and homeowners' insurance.

(b) The submission of rates, rating schedules, and rating manuals to the department by a licensed rating organization of which an insurer is a member or subscriber will be sufficient compliance with this subsection for any insurer maintaining membership or subscribership in such organization, to the extent that the insurer uses the rates, rating schedules, and rating manuals of such organization. All such information shall be available for public inspection, upon receipt by the department, during usual business hours.

(c) The filing requirements of this subsection do not apply to commercial inland marine risks .

Hlstory.-s. 443, ch. 59-205; s. 19, ch. 67-9: ss. 13, 35, ch. 69-106; s. 1, ch. 70-75: s. 1, ch. 70-321 : s. 1, ch . 70-439: s. 1, ch . 73-153; s. 1, ch. 74-320: s. 3, ch. 76-168; s. 1, ch . 77-457 : s. 27, ch . 77-468; ss. 2, 3, ch. 81-318; ss. 350, 357, 809(2nd), ch. 82-243: ss. 49, 79, ch. 82-386; s. 10, ch . 83-288: s. 1, ch. 84-352: s. 12, ch . 86-160.

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.351 Insurance risk apportionment plans.-(1) MOTOR VEHICLE INSURANCE RISK APPOR

TIONMENT-Agreements may be made among casualty and surety insurers with respect to the equitable apportionment among them of insurance which may be afforded applicants who are in good faith entitled to, but are unable to, procure such insurance through ordinary methods; and such insurers may agree among themselves on the use of reasonable rate modifications for such insurance. Such agreements and rate modifications shall be subject to the approval of the department. The department shall , after consultation with the insurers licensed to write automobile liability insurance in this state, adopt a reasonable plan or plans for the equitable apportionment among such insurers of applicants for such insurance who are in good faith entitled to, but are unable to, procure such insurance through ordinary methods; and, when such plan has been adopted, all such insurers shall subscribe thereto and shall participate therein. Such plan or plans shall include rules for classification of risks and rates therefor. Any insured placed with the plan shall be notified of the fact that insurance coverage is being afforded through the plan and not through the private market, and such notification shall be given in writing within 10 days of such placement. To assure that plan rates are ma(je adequate to pay claims and expenses, insurers shall develop a means of obtaining loss and expense experience at least annually; and the plan shall file such experience, when available, with the department in sufficient detail to make a determination of rate adequacy. Such experience shall be filed with the department not more than

567


9 months following the end of the annual statistical period under review. Within 60 days thereafter, the department shall approve such rate revisions as are supported by the filing. In addition to provisions for claims and expenses, the ratemaking formula shall include a factor for projected claims trending and 5 percent for contingencies. Trend factors shall not be found to be inappropriate if not in excess of trend factors normally used in the development of residual market rates by the appropriate licensed rating organization.

(2) WINDSTORM INSURANCE RISK APPORTIONMENT.-

(a) Agreements may be made among property insurers with respect to the equitable apportionment among them of insurance which may be afforded applicants who are in good faith entitled to, but are unable to procure, such insurance through ordinary methods; and such insurers may agree among themselves on the use of reasonable rate modifications for such insurance. Such agreements and rate modifications shall be subject to the applicable provisions of this chapter.

(b) The department shall require all insurers licensed to transact property insurance on a direct basis in this state to provide windstorm coverage to applicants from areas determined to be eligible pursuant to paragraph (c) who in good faith are entitled to, but are unable to procure, such coverage through ordinary means; or it shall adopt a reasonable plan or plans for the equitable apportionment or sharing among such insurers of windstorm coverage. The commissioner shall promulgate rules which provide a formula for the recovery and repayment of any deferred assessments.

1. For the purpose of this section, properties eligi-ble for such windstorm coverage are defined as dwellings, buildings, and other structures, including mobile homes which are used as dwellings and which are tied down in compliance with mobile home tie-down requirements prescribed by the Department of Highway Safety and Motor Vehicles pursuant to s. 320.8325, and the contents of all such properties.

2. All insurers required to be members of such plan shall participate in its writings, expenses, profits , and losses. Such gross participation shall be in the proportion that the net direct premiums of each member written on property in this state during the preceding calendar year bears to the aggregate net direct premiums of all members of the plan written on property in this state during the preceding calendar year . The commissioner, after review of annual statements, other reports, and any other statistics which he deems necessary, shall certify to the plan the aggregate net direct premiums written on property in this state by all members. The plan of operation shall provide that one additional domestic member of the board of directors be elected by the domestic companies of this state on the basis of cumulative weighted voting based on the net written premiums of domestic companies in this state. Any such plan shall provide a formula whereby a company voluntarily providing windstorm coverage in affected areas will be relieved wholly or partially from apportionment. A company which is a member of a group of companies under common management may elect to have its credits applied on a group basis, and any company or group may

elect to have its credits applied to any other company or group.

3. The plan shall also provide that any member with a surplus as to policyholders of $10,000,000 or less writing 25 percent of its total countrywide property insurance premiums in this state may petition the department, within 90 days of the effective date of chapter 76-96, Laws of Florida, and thereafter within the first 90 days of each calendar year, to qualify as a limited apportionment company. The apportionment of such a company in any calendar year for which it is qualified shall not exceed its gross participation, which shall not be affected by the formula for voluntary writings. In no event shall a limited apportionment company be required to participate in any apportionment of losses in the aggregate which exceeds $50,000,000 after payment of available plan funds in any calendar year. The plan shall provide that, if the department determines that any assessment will result in an impairment of the surplus of a limited apportionment company, the department may direct that all or part of such assessment be deferred.

4. The plan shall provide for the deferment, in whole or in part, of the assessment of a member insurer if, in the opinion of the commissioner, payment of the assessment would endanger or impair the solvency of the member insurer. In the event an assessment against a member insurer is deferred in whole or in part, the amount by which such assessment is deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments set forth in subparagraph 2.

5. The plan may include deductibles and rules for classification of risks and rate modifications consistent with the objective of providing and maintaining funds sufficient to pay catastrophe losses.

6. The plan may authorize the formation of a private nonprofit corporation, a private nonprofit unincorporated association, or a nonprofit mutual company which may be empowered , among other things, to borrow money and to accumulate reserves or funds to be used for the payment of insured catastrophe losses . The plan shall incorporate and continue the plan of operation and articles of agreement in effect on the effective date of chapter 76-96, Laws of Florida, to the extent that it is not inconsistent with chapter 76-96, Laws of Florida, and as subsequently modified consistent with chapter 76-96, Laws of Florida. The board of directors and officers currently serving shall continue to serve until their successors are duly qualified as provided under the plan. The assets and obligations of the plan in effect immediately prior to the effective date of chapter 76-96, Laws of Florida, shall be construed to be the assets and obligations of the successor plan created herein.

7. On such coverage, an agent's remuneration shall be that amount of money payable to him by the terms of his contract with the company with which the business is placed. However, no commission will be paid on that portion of the premium which is in excess of the standard premium of that company.

(c) The provisions of paragraph (b) are applicable only with respect to any county or area which the department has heretofore designated or as to which the de-

568


partment, after public hearing, finds that the following criteria exist:

1. Due to the lack of windstorm insurance coverage in the county or area so affected, economic growth and development is being deterred or otherwise stifled in such county or area, mortgages are in default , and financial institutions are unable to make loans;

2. The county or area so affected has adopted and is enforcing the structural requirements of the Southern Standard Building Code, or its equivalent, for new construction and has included adequate minimum floor elevation requirements for structures in areas subject to inundation ; and

3. Extending windstorm insurance coverage to such county or area is consistent with and will implement and further the policies and objectives set forth in applicable state laws, rules , and regulations governing coastal management, coastal construction , comprehensive planning , beach and shore preservation , barrier is· land preservation , coastal zone protection , and the Coastal Zone Protection Act of 1985.

Any time after the department has determined that the criteria referred to in this section do not exist with respect to any county or area of the state, it may, after a subsequent public hearing , declare that such county or area is no longer eligible for windstorm coverage through the plan.

(3) POLITICAL SUBDIVISION; CASUALTY INSURANCE RISK APPORTIONMENT.-

(a) The department shall , after consultation with the casualty insurers licensed in this state, adopt a plan or plans for the equitable apportionment among them of casualty insurance coverage which may be afforded political subdivisions which are in good faith entitled to , but are unable to , procure such coverage through the voluntary market at standard rates or through a statutorily approved plan authorized by the department. The department may adopt a joint underwriting plan which shall provide for one or more designated insurers able and willing to provide policyholder and claims service, including the issuance of insurance policies, to act on behalf of all other insurers required to participate in the joint underwriting plan . Any join t underwriting plan adopted shall provide for the equitable apportionment of any profits realized, or of losses and expenses incurred, among participating insurers. The plan shall in· elude, but shall not be limited to:

1. Rules for the classification of risks and rates which reflect the past loss experience and prospective loss experience in different geographic areas.

2. A rating plan which reasonably reflects the prior claims experience of the insureds.

3. Excess coverage by insurers if the Insurance Commissioner, in his discretion , requires such coverage by insurers participating in the joint underwriting plan .

(b) In the event an underwriting deficit exists at the end of any year the plan is in effect, each policyholder shall pay to the joint underwriting plan a premium contingency assessment not to exceed one-third of the premi· um payment paid by such policyholder for that year. The joint underwriting plan shall pay no further claims on any

policy for which the policyholder fails to pay the premium contingency assessment.

(c) Any deficit sustained under the plan shall first be recovered through a premium contingency assessment. Concurrently, the rates for insureds shall be adjusted for the next year so as to be actuarially sound in conformance with rules of the department.

(d) If there is any remaining deficit under the plan after maximum collection of the premium contingency assessment, such deficit shall be recovered from the companies participating in the plan in the proportion that the net direct premiums of each such member written during the preceding calendar year bears to the aggregate net direct premiums written in this state by all members of the joint underwriting plan.

(e) Upon adoption of a plan , all casualty insurers licensed in the state shall subscribe thereto and participate therein .

(4) MEDICAL MALPRACTICE RISK APPORTIONMENT.-

(a) The department shall, after consultation with in· surers as set forth in paragraph (b) , adopt a joint underwriting plan as set forth in paragraph (d).

(b) Entities licensed to issue casualty insurance as defined ins. 624.605(1 )(b) , (k) , and (q) and self-insurers authorized to issue medical malpractice insurance under s. 627.357 shall participate in the plan and shall be members of the Joint Underwriting Association .

(c) The Joint Underwriting Association shall operate subject to the supervision and approval of a board of governors consisting of representatives of five of the insurers participating in the Joint Underwriting Association , an attorney to be named by The Florida Bar, a physician to be named by the Florida Medical Association , and a hospital representative to be named by the Florida Hospital Association . The board of governors shall choose, during the first meeting of the board after June 30 of each year, one of its members to serve as chairman of the board and another member to serve as vice chairman of the board . There shall be no liability on the part of, and no cause of action of any nature shall arise against , any member insurer, self-insurer, or its agents or employees, the Joint Underwriting Association or its agents or employees, members of the board of governors, or the department or its representatives for any action taken by them in the performance of their powers and duties under this subsection .

(d) The plan shall provide coverage for claims arising out of the rendering of, or failure to render, medical care or services and , in the case of health care facilities , coverage for bodily injury or property damage to the person or property of any patient arising out of the insured 's activities, in appropriate policy forms for all health care providers as defined in paragraph (h). The plan shall in· elude, but shall not be limited to:

1. Classifications of risks and rates which reflect past and prospective loss and expense experience in different areas of practice and in different geographical areas . To assure that plan rates are adequate to pay claims and expenses, the Joint Underwriting Association shall develop a means of obtaining loss and expense experience; and the plan shall file such experience, when available, with the department in sufficient

569


detail to make a determination of rate adequacy. Within 60 days after a rate filing, the department shall approve such rates or rate revisions as are fully supported by the filing. In addition to provisions for claims and expenses, the ratemaking formula may include a factor for projected claims trending and a margin for contingencies. The use of trend factors shall not be found to be inappropriate.

2. A rating plan which reasonably recognizes the prior claims experience of insureds.

3. Provisions as to rates for: a. Insureds who are retired or semiretired. b. The estates of deceased insureds. c. Part-time professionals. 4. Protection in an amount not to exceed $250,000

per claim, $750,000 annual aggregate for health-care providers other than hospitals and in an amount not to exceed $1.5 million per claim, $5 million annual aggregate for hospitals. Such coverage for health care providers other than hospitals shall be available as primary coverage and as excess coverage for the layer of coverage between the primary coverage and the total limits of $250,000 per claim, $750,000 annual aggregate. The plan shall also provide tail coverage in these amounts to insureds whose claims-made coverage with another insurer or trust has or will be terminated. Such tail coverage shall provide coverage for incidents that occurred during the claims-made policy period for which a claim is made after the policy period.

5. A risk management program for insureds of the association . This program shall include, but not be limited to: investigation and analysis of frequency, severity, and causes of adverse or untoward medical injuries; development of measures to control these injuries; systematic reporting of medical incidents; investigation and analysis of patient complaints; and auditing of association members to assure implementation of this program. The plan may refuse to insure any insured who refuses or fails to comply with the risk management program implemented by the association. Prior to cancellation or refusal to renew an insured, the association shall provide the insured 60 days' notice of intent to cancel or nonrenew and shall further notify the insured of any action which must be taken to be in compliance with the risk management program.

(e) In the event an underwriting deficit exists for any policy year the plan is in effect, any surplus which has accrued from previous years and is not projected within reasonable actuarial certainty to be needed for payment of claims in the year the surplus arose shall be used to offset the deficit to the extent available.

1. As to remaining deficit, except those relating to deficit assessment coverage, each policyholder shall pay to the association a premium contingency assessment not to exceed one-third of the premium payment paid by such policyholder to the association for that policy year. The association shall pay no further claims on any policy for the policyholder who fails to pay the premium contingency assessment.

2. If there is any remaining deficit under the plan af-ter maximum collection of the premium contingency assessment, such deficit shall be recovered from the companies participating in the plan in the proportion that the

net direct premiums of each such member written during the calendar year immediately preceding the end of the policy year for which there is a deficit assessment bears to the aggregate net direct premiums written in this state by all members of the association. The term "premiums" as used herein means premiums for the lines of insurance defined in s. 624.605(1 )(b), (k) , and (q) , including premiums for such coverage issued under package policies.

(f) The plan shall provide for one or more insurers able and willing to provide policy service through licensed resident agents and claims service on behalf of all other insurers participating in the plan. In the event no insurer is able and willing to provide such services, the Joint Underwriting Association is authorized to perform any and all such services.

(g) All books, records , documents, or audits relating to the Joint Underwriting Association or its operation shall be open to public inspection, except that a claim file in the possession of the Joint Underwriting Association shall not be available for review during the processing of that claim.

(h) As used in this subsection: 1. "Health care provider" means hospitals licensed

under chapter 395; physicians licensed under chapter 458; osteopaths licensed under chapter 459; podiatrists licensed under chapter 461; dentists licensed under chapter 466; chiropractors licensed under chapter 460; naturopaths licensed under chapter 462; nurses licensed under chapter 464; clinical laboratories registered under chapter 483; physicians ' assistants certified under chapter 458; physical therapists and physical therapist assistants licensed under chapter 486; health maintenance organizations certificated under part II of chapter 641 ; ambulatory surgical centers licensed under chapter 395; other medical facilities as defined in subparagraph 2.; blood banks, plasma centers, industrial clinics, and renal dialysis facilities; or professional associations, partnerships, corporations, joint ventures, or other associations for professional activity by health care providers.

2. "Other medical facility" means a facility the primary purpose of which is to provide human medical diagnostic services or a facility providing nonsurgical human medical treatment, to which facility the patient is admitted and from which facility the patient is discharged within the same working day, and which facility is not part of a hospital. However, a facility existing for the primary purpose of performing terminations of pregnancy or an office maintained by a physician or dentist for the practice of medicine shall not be construed to be an "other medical facility."

3. "Health care facility" means any hospital licensed under chapter 395, health maintenance organization certificated under part II of chapter 641, ambulatory surgical center licensed under chapter 395, or other medical facility as defined in subparagraph 2.

(i) The manager of the plan or his assistant is the agent for service of process for the plan.

2U) Any member of the Florida Patient's Compensation Fund established under s. 768.54 who had applied in writing for, or otherwise made written request for, the deficit assessment coverage previously available from

570


the Joint Underwriting Association under s. 627.351(4)(d)5. , F.S., 1982, as enacted by chapter 82-391 , Laws of Florida, which application or request was made prior to July 1, 1983, but who was denied coverage due to the termination of the offer effective June 23, 1983, shall again be afforded the opportunity to purchase the identical coverage that had been previously available. This coverage shall cover the full amount of any or all deficit assessments issued by the Florida Patient's Compensation Fund against a member for the 1982-1983 fiscal year , limited to twice the amount of the membership fee paid by the member to the fund for the 1982-1983 fiscal year . The premium contingency assessment against policyholders authorized in paragraph (e) of this subsection does not apply to policies issued pursuant to this paragraph. The rate charged for such protection shall not exceed one-third of the membership fee charged the member by the fund . This protection shall only be available to fund members as defined ins. 768.54(1)(b)2 ., 3., 4. , and 8. A request for this protection must be made in writing to an agent together with documentation of evidence of such previous written application or written request together with a sworn affidavit by the applicant and , if an agent was involved with the previous application, the agent, swearing that the requisite application was actually made prior to July 1, 1983. Such coverage shall be made available upon the effective date of this act and for 180 days thereafter.

(5) PROPERTY AND CASUALTY INSURANCE RISK APPORTIONMENT.-If the department determines, after consultation with the insurers authorized in this state to write property insurance as defined in s. 624.604 or casualty insurance as defined in s. 624.605, that any class, line, or type of coverage of property or casualty insurance is not available at adequate levels from insurers authorized to transact and actually writing that kind and class of insurance in this state or in a particular geographic area, the department shall implement by order a joint underwriting plan to equitably apportion among such insurers the underwriting of property insurance or casualty insurance, except for the types of insurance that are included within property insurance or casualty insurance for which an equitable apportionment plan, assigned risk plan, or joint underwriting plan is authorized under s. 627.311 or subsections (1 ), (2), (3), or (4) of this section to persons with risks eligible under subparagraph (a)1. and who are in good faith entitled to, but are unable to , obtain such property or casualty insurance coverage, including excess coverage, through the voluntary market. For purposes of this subsection, an adequate level of coverage means that coverage which is required by state law or by responsible or prudent business practices. The Joint Underwriting Association shall not be required to provide coverage for any type of risk for which there are no insurers providing similar coverage in this state. The department may designate one or more participating insurers who agree to provide policyholder and claims service, including the issuance of policies, on behalf of the participating insurers.

(a) The plan shall provide: 1. A means of establishing eligibility of a risk for ob-

taining insurance through the plan, which provides that:

571

a. A risk shall be eligible for such property insur-ance or casualty insurance as is required by Florida law if the insurance is unavailable in the voluntary market, including the market assistance program and the surplus lines market.

b . A commercial risk not eligible under sub-subparagraph a. shall be eligible for property or casualty insurance if:

(I) The insurance is unavailable in the voluntary market , including the market assistance plan and the surplus lines market;

(II) Failure to secure the insurance would substantially impair the ability of the entity to conduct its affairs; and

(Ill) The risk is not determined by the Risk Underwriting Committee to be uninsurable.

c. In the event the Federal Government terminates the Federal Crime Insurance Program established under Title 44, Code of Federal Regulations , ss. 80-83, Florida commercial and residential risks previously insured under the federal program shall be eligible under the plan .

d . Any agent who falsely certifies the unavailability of coverage as provided by subparagraphs a. and b., is subject to the penalties provided in s. 626.611 .

2. A means for the equitable apportionment of prof-its or losses and expenses among participating insurers.

3. Rules for the classification of risks and rates which reflect the past and prospective loss experience.

4. A rating plan which reasonably reflects the prior claims experience of the insureds . Such rating plan shall include at least two levels of rates for risks that have favorable loss experience and risks that have unfavorable loss experience, as established by the plan .

5. Reasonable limits to available amounts of insur-ance. Such limits may not be less than the amounts of insurance required of eligible risks by Florida law.

6. Risk management requirements for insurance where such requirements are reasonable and are expected to reduce losses.

7. Deductibles as may be necessary to meet the needs of insureds.

8. That the joint underwriting association shall oper-ate subject to the supervision and approval of a board of governors consisting of 11 individuals, including 1 who shall be elected as chairman . Six members of the board shall be appointed by the Insurance Commissioner. Two of the commissioner 's appointees shall be chosen from the insurance industry. Any board member appointed by the Insurance Commissioner may be removed and replaced by him at any time without cause. Five members of the board shall be appointed by the participating insurers, two of whom shall be from the insurance agents' associations. All board members , including the chairman , shall be appointed to serve for 2-year terms beginning annually on a date designated by the plan .

(b) Rates used by the joint underwriting association shall be actuarially sound. To the extent applicable, the rate standards set forth ins. 627.062 shall be considered by the department in establishing rates to be used by the joint underwriting plan .

(c)1 . In the event an underwriting deficit exists for any policy year the plan is in effect , any surplus which


has accrued from previous years and is not projected within reasonable actuarial certainty to be needed for payment for claims in the year the surplus arose shall be used to offset the deficit to the extent available.

2. As to any remaining deficit , the Board of Gover-nors of the Joint Underwriting Association shall levy and collect an assessment in an amount sufficient to offset such deficit. One-third of such assessment shall be levied against the policyholders participating in the plan during the year giving rise to the deficit and the remainder of the assessment, including amounts which cannot be recovered from policyholders, shall be levied against the insurers participating in the plan during the year giving rise to the assessment. The amount of the assessment against each policyholder shall be that portion of the total amount assessable against policyholders that the policyholder's premium paid for the policy year giving rise to the assessment bears to the aggregate net direct premium written in the plan for such policy year. However, in no event shal l any policyholder be assessed, for any policy year, an amount greater than onethird of the premium paid for the policy for that year . Any assessments against insurers for the lines of property and casualty insurance issued to commercial risks shall be recovered from the participating insurers in the proportion that the net direct premium of each insurer for commercial risks written during the preceding calendar year bears to the aggregate net direct premium written for commercial risks by all members of the plan for the lines of insurance included in the plan . Any assessments against insurers for the lines of property and casual ty insurance issued to personal risks shall be recovered from the participating insurers in the proportion that the net direct premium of each insurer for personal risks written during the preceding calendar year bears to the aggregate net direct premium written for personal risks by all members of the plan for the lines of insurance included in the plan .

3. The board shall take all reasonable and prudent steps necessary to collect the amount of assessment due from each participating insurer and policyholder, including, if prudent, filing suit to collect such assessment. If the board is unable to collect an assessment from any insurer or policyholder, the uncollected assessments shall be levied as an additional assessment against the participating insurers and any participating insurer required to pay an additional assessment as aresult of such failure to pay shall have a cause of action against such nonpaying insurer or policyholder.

4. Any funds or entitlements that the state may be eligible to receive by virtue of the Federal Government 's termination of the Federal Crime Insurance Program referenced in sub-subparagraph (a)1 .c. may be used under the plan to offset any subsequent underwriting deficits that may occur from risks previously insured with the Federal Crime Insurance Program.

(d) Upon adoption of the plan , all insurers authorized in this state to underwrite property or casualty insurance shall participate in the plan.

(e) A Risk Underwriting Committee of the Joint Underwriting Association composed of three members experienced in evaluating insurance risks is created to review risks rejected by the voluntary market for which ap-

plication is made for insurance through the joint underwriting plan . The committee shall consist of a representative of the market assistance plan created under s. 627.3515, a member selected by the insurers participating in the Joint Underwriting Association , and a member named by the Insurance Commissioner. The Risk Underwriting Committee shall appoint such advisory committees as are provided for in the plan and are necessary to conduct its functions . The salaries and expenses of the members of the Risk Underwriting Committee and its advisory committees shall be paid by the joint underwriting plan . The plan approved by the department shall establish criteria and procedures for use by the Risk Underwriting Committee for determining whether an individual risk is so hazardous as to be uninsurable . In making this determination and in establishing the criteria and procedures, the following shall be considered:

1. Whether the likelihood of a loss for the individual risk is substantially higher than for other risks of the same class; and

2. Whether the uncertainty associated with the indi-vidual risk is such that an appropriate premium cannot be determined.

The acceptance or rejection of a risk by the underwriting committee shall be construed as the private placement of insurance and the provisions of chapter 120 shall not apply.

History.-s. 445, ch. 59-205; ss. 13, 35, ch. 69-1 06; s. 1, ch. 69-1 99; ss. 1, 2, ch. 70-234; s. 1, ch. 72-22; s. 1, ch. 73-259; s. 1, ch. 74-216; s. 14, ch. 75-9; s. 3, ch . 75-279; s. 1, ch. 76-96; s. 3, ch . 76-168; s. 5, ch. 76-260; s. 3, ch. 77-64; s. 1, ch. 77-93; s. 1, ch. 77-174; s. 1, ch. 77-360; s. 1, ch. 77-457; s. 28, ch. 77-468; s. 1, ch. 78-47; s. 164, ch. 79-164; ss. 1, 2, ch. 79-185; ss. 1, 2, ch. 80- 94; ss. 1, 2, ch. 81-4; ss. 2, 3, ch . 81-318; ss. 351, 357 , 809(2nd), 810, ch. 82-243; ss. 48, 49, 79, ch. 82-386; ss. 1, 5, ch. 82-391 ; s. 1, ch. 83-124; s. 1, ch. 83-206; s. 95, ch. 83-216; s. 15, ch. 85-62; s. 24, ch. 85-175; s. 1, ch. 85-274; ss. 13, 44, ch. 86-1 60; s. 35, ch. 86-191; s. 14, ch. 86-287 .

1Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date .

•Note.-As created by s. 44, ch. 86-160 and s. 14, ch. 86-287; s. 16, ch. 86- 287, provides in pertinent part that "the amendment to s. 769.57(4), Florida Statutes, provided in th is act shall operate ret roactively to October 1, 1985."

1627.3515 Market assistance plan; property and casualty risks.-

( 1) On or before October 1 , 1986, the department shall , after consultation with the property and casualty insurers licensed in this state, adopt a market assistance plan to assist in the placement of risks of applicants who are unable to procure property insurance as defined in s. 624.604 or casualty insurance as defined in s. 624.605(1 )(b) , (e) , (f) , (g) , or (h) from authorized insurers when such insurance is otherwise generally available from insurers authorized to transact and actually writing that kind and class of insurance in this state. All property and casualty insurers licensed in this state shall participate in the plan .

(2) The market assistance plan shall be governed by an 11-member board of governors appointed by the Insurance Commissioner, and shall have an executive or underwriting committee. At least 4 of the members shall be representatives of insurance trade associations as follows: one member representing the American Insurance Association, one member representing the Alliance of American Insurers, one member representing the National Association of Independent Insurers, and one member representing an unaffiliated insurer writing coverage on a national basis. The plan shall be funded

572


and staffed by the participating insurers. The plan shall not be required to assist in the placement of any workers ' compensation, employer's liability, malpractice, or motor vehicle insurance coverage. Any fee charged by the plan shall be for a reasonable amount approved by the department and shall be earned only upon the successful placement of the risk.

History.-s. 1, ch. 85-92; s. 43, ch. 86-160; s. 1, ch. 86-286. 1Note.-Repealed effective October 1, 1992, by s. 1, ch. 86-286, and scheduled

for review pursuant to s. 11 .61.

1627.356 Professional liability self-insurance.-(1) A group or association of individuals licensed in

this state as members of the same profession, composed of any number of members, is authorized to selfinsure against claims of professional liability, upon compliance by the group or association with the following conditions:

(a) Establishment of a Professional Liability Risk Management Trust Fund to provide coverage against professional liability.

(b) Employment of professional consultants for loss prevention and claims management coordination under a risk management program.

(c) Restriction of the membership of such group or association to one of the following professions:

1. Attorneys licensed to practice law in this state. 2. Certified public accountants licensed under

chapter 473. 3. Registered architects licensed under chapter

481. 4. Professional engineers licensed under chapter

471. 5. Veterinarians licensed under chapter 474. 6. Land surveyors registered or licensed to engage

in the practice of land surveying under chapter 472. 7. Insurance agents licensed under chapter 626.

Any such group or association shall be subject to regulation and investigation by the department. The group or association shall be subject to such rules as the department adopts, and shall also be subject to part X of chapter 626, relating to trade practices and frauds .

(2) The trust fund is authorized to purchase professional liability insurance, specific excess insurance, and aggregate excess insurance, up to determined limits, as necessary to provide the insurance coverages authorized by this section, consistent with the market availability. The trust fund is further authorized to purchase such risk management services as may be required and pay claims as may arise under any deductible provisions.

(3) The department shall adopt rules to implement the provisions of this section . Such rules shall guarantee the maintenance of a sufficient reserve in the event of the dissolution of any trust fund authorized hereunder so as to cover contingent liabilities.

(4)(a) The liability of each member for the obligations of the trust fund shall be individual, several, and proportionate, but not joint, except as provided in this subsection.

(b) Each member shall have a contingent assessment liability for payment of actual losses and expenses incurred while his policy was in force.

(c) The trust fund may from time to time assess members of the fund liable therefor under the terms of their policies and pursuant to this section or the department may assess the members in the event of liquidation of the fund.

(d) Each member's share of a deficiency for which an assessment is made shall be computed by applying, to the premium earned on the member's policy or policies during the period to be covered by the assessment, the ratio of the total deficiency to the total premiums earned during such period upon all policies subject to the assessment. In the event one or more members fail to pay an assessment, the other members are liable on a proportionate basis for an additional assessment. The fund, acting on behalf of all members who paid the additional assessment, shall institute legal action, when necessary and appropriate, to recover the assessment from members who failed to pay it.

(e) In computing the earned premiums for the purposes of this section, the gross premium received by the fund for the policy shall be used as a base, deducting therefrom solely charges not recurring upon the renewal or extension of the policy.

(f) No member shall have an offset against any assessment for which he is liable, on account of any claim for unearned premium or losses payable.

(g) If the assets of a trust fund are at any time insufficient to comply with the requirements of law, or to discharge its liabilities , and to meet the required conditions of financial soundness, or if a judgment against the fund has remained unsatisfied for 30 days, the trust fund shall forthwith make up the deficiency or levy an assessment upon the members for the amount needed to make up the deficiency, but subject to the limitation set forth in this subsection.

(h) If the trust fund fails to make an assessment as required by paragraph (g) , the department shall order the fund to do so. If the deficiency is not sufficiently made up within 60 days after the date of the order, the fund shall be deemed insolvent and grounds shall exist to proceed against the fund as provided for in part I of chapter 631.

(i) Subject to the provisions of this section, any re-habilitation, liquidation, conservation, or dissolution of a trust fund shall be conducted under the supervision of the department, which shall have all power with respect thereto granted to it under part I of chapter 631 governing the rehabilitation , liquidation, conservation, or dissolution of insurers.

(5) The expense factors associated with rates utilized in a professional liability self-insurance trust shall be filed with the department at least 30 days prior to use and shall not be utilized until approved by the department. The department shall disapprove the rates unless the filed expense factors associated therewith are justified and reasonable for the benefits and services provided.

History.-s. 2, ch. 77-297; s. 426, ch . 81-259; s. 2, ch. 81-318; ss. 352, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386; s. 14, ch. 86-160; s. 29, ch. 87-226. 'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


573


1627.357 Medical malpractice self-insurance.-(1) DEFINITIONS.- The following definitions apply in

the interpretation and enforcement of this section : (a) The term "fund" means a group or association of

health care providers , as defined in paragraph (b) , authorized to self-insure.

(b) The term "health care provider" means any: 1. Hospital licensed under chapter 395. 2. Physician licensed, or physician 's assistant certi-

fied , under chapter 458. 3. Osteopath licensed under chapter 459. 4. Podiatrist licensed under chapter 461. 5. Health maintenance organization certificated un

der part II of chapter 641 . 6. Ambulatory surgical center licensed under chap-

ter 395. 7. Chiropractor licensed under chapter 460. 8. Psychologist licensed under chapter 490. 9. Optometrist licensed under chapter 463. 10. Dentist licensed under chapter 466. 11 . Pharmacist licensed under chapter 465. 12. Registered nurse, licensed practical nurse, and

advanced registered nurse practitioner licensed or registered under the provisions of chapter 464.

13. "Other medical facility" as defined in paragraph (c) .

14. Professional association, partnership, corporation, joint venture, or other association by the individuals set forth in subparagraphs 2., 3., 4., 7., 8., 9., 10., 11 ., and 12. for professional activity.

(c) The term "other medical facility" means a facility the primary purpose of which is to provide human medical diagnostic services or a facility providing nonsurgical human medical treatment and in which the patient is admitted to and discharged from such facility within the same working day, and which is not part of a hospital. However, a facility existing for the primary purpose of performing terminations of pregnancies or an office maintained by a physician or dentist for the practice of medicine shall not be construed to be an other medical facility.

(d) The term "hospital subsidiary corporation" means any corporation over which a hospital or the hospital's parent corporation exercises financial or operational control and which provides health care services to the hospital or the hospital parent corporation or another hospital subsidiary corporation.

(e) The term "hospital parent corporation" means any corporation which has financial or operational control over a hospital and which provides health care services to the hospital or another hospital subsidiary corporation.

(f) The term "committee" means a committee or board of trustees of a health care provider or group of health care providers established to make recommendations, policies, or decisions regarding patient institutional utilization, patient treatment, or institutional staff privileges or to perform other administrative or professional purposes or functions.

(2) A group or association of health care providers as defined in paragraph (1 )(b) , composed of any number of members, is authorized to self-insure against claims arising out of the rendering of, or failure to render, medi-

cal care or services, or against claims for injury or death to the insured's patients arising out of the insured's activities, upon obtaining approval from the department and upon complying with the following conditions:

(a) Establishment of a Medical Malpractice Risk Management Trust Fund to provide coverage against professional medical malpractice liability.

(b) Employment of professional consultants for loss prevention and claims management coordination under a risk management program.

(3) The fund may insure hospital parent corporations, hospital subsidiary corporations, and committees against claims arising out of the rendering of, or failure to render, medical care or services.

(4) The fund shall be subject to regulation and investigation by the department. The fund shall be subject to such rules as the department adopts, and shall also be subject to part X of chapter 626, relating to trade practices and frauds .

(5) The trust fund is authorized to purchase medical malpractice insurance, specific excess insurance, and aggregate excess insurance, up to determined limits, as necessary to provide the insurance coverages authorized by this section , consistent with market availability. The trust fund is further authorized to purchase such risk management services as may be required and to pay claims as may arise under any deductible provisions.

(6) The department shall promulgate rules to implement the provisions of this section . The rules shall guarantee the maintenance of a sufficient reserve in the event of the dissolution of any trust fund authorized hereunder so as to cover contingent liabilities.

(7)(a) The liability of each member for the obligations of the trust fund shall be individual , several, and proportionate, but not joint, except as provided in this subsection .

(b) Each member shall have a contingent assessment liability for payment of actual losses and expenses incurred while his policy was in force.

(c) The trust fund may from time to time assess members of the fund liable therefor under the terms of their policies and pursuant to this section, or the department may assess the members in the event of liquidation of the fund.

(d) Each member's share of a deficiency for which an assessment is made shall be computed by applying to the premium earned on the member's policy or policies during the period to be covered by the assessment the ratio of the total deficiency to the total premiums earned during such period upon all policies subject to the assessment. In the event one or more members fail to pay an assessment, the other members are liable on a proportionate basis for an additional assessment. The fund , acting on behalf of all members who paid the additional assessment, shall institute legal action , when necessary and appropriate, to recover the assessment from members who failed to pay it.

(e) In computing the earned premiums for the purposes of this section, the gross premium received by the fund for the policy shall be used as a base, deducting therefrom solely charges not recurring upon the renewal or extension of the policy.

574


(f) No member shall have an offset against any assessment for which he is liable, on account of any claim for unearned premium of losses payable.

(g) If the assets of a trust fund are at any time insufficient to comply with the requirements of law, or to discharge its liabilities, and to meet the required conditions of financial soundness, or if a judgment against the fund has remained unsatisfied for 30 days, the trust fund shall forthwith make up the deficiency or levy an assessment upon the members for the amount needed to make up the deficiency, but subject to the limitation set forth in this subsection.

(h) If the trust fund fails to make an assessment as required by paragraph (g), the department shall order the fund to do so. If the deficiency is not sufficiently made up within 60 days after the date of the order, the fund shall be deemed insolvent and grounds shall exist to proceed against the fund as provided for in part I of chapter 631.

(i) Subject to the provisions of this section, any rehabilitation , liquidation, conservation, or dissolution of a trust fund shall be conducted under the supervision of the department, which shall have all power with respect thereto granted to it under part I of chapter 631 governing the rehabilitation, liquidation, conservation, or dissolution of insurers.

(8) The expense factors associated with rates utilized by a fund shall be filed with the department at least 30 days prior to use and shall not be utilized until approved by the department. The department shall disapprove the rates unless the filed expense factors associated therewith are justified and reasonable for the benefits and services provided.

History.-ss. 1, 2, 3. ch. 72-265; s. 162, ch. 73-333; s. 4, ch . 75-9; s. 3, ch. 76-168; s. 8, ch. 76-260; s. 5, ch. 77-64; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 353, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386; s. 15, ch. 86-160; s. 30, ch. 87-226.


Note.-Former s. 627.355; s. 768.52, 1976 Supplement.

1627.361 False or misleading information.-No person shall willfully withhold information from or knowingly give false or misleading information to the department, any statistical agency designated by the department, any rating organization, or any insurer, which will affect the rates or premiums chargeable under this part.

History.-s. 446, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2. 3, ch. 81-318; ss. 354, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243. and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.371 Hearings.-(1) Any person aggrieved by any rate charged, rat

ing plan, rating system, or underwriting rule followed or adopted by an insurer, and any person aggrieved by any rating plan, rating system, or underwriting rule followed or adopted by a rating organization, may himself or by his authorized representative make written request of the insurer or rating organization to review the manner in which the rate, plan, system, or rule has been applied with respect to insurance afforded him. If the request is not granted within 30 days after it is made, the requester may treat it as rejected. Any person aggrieved by therefusal of an insurer or rating organization to grant the review requested, or by the failure or refusal to grant all

or part of the relief requested , may file a written complaint with the department, specifying the grounds relied upon. If the department has already disposed of the issue as r-aised by a similar complaint or believes that probable cause for the complaint does not exist or that the complaint is not made in good faith , it shall so notify the complainant. Otherwise, and if it also finds that the complaint charges a violation of this chapter and that the complainant would be aggrieved if the violation is proven, it shall proceed as provided in subsection (2).

(2) If after examination of an insurer, rating organization , advisory organization, or group, association, or other organization of insurers which engages in joint underwriting or joint reinsurance, upon the basis of other information, or upon sufficient complaint as provided in subsection (1 ), the department has good cause to believe that such insurer, organization, group, or association, or any rate, rating plan , or rating system made or used by any such insurer or rating organization, does not comply with the requirements and standards of this part applicable to it , it shall , unless it has good cause to believe such noncompliance is willful, give notice in writing to such insurer, organization, group, or association stating therein in what manner and to what extent noncompliance is alleged to exist and specifying therein a reasonable time, not less than 10 days thereafter, in which the noncompliance may be corrected, including any premium adjustment. Notices under this subsection shall be confidential as between the department and the parties unless proceedings are held under subsection (3).

(3) If the department has good cause to believe that such noncompliance is willful or if, within the period prescribed by the department in the notice required by subsection (2), the insurer, organization, group, or association does not make such changes as may be necessary to correct the noncompliance specified by the department or establish to the satisfaction of the department that such specified noncompliance does not exist, then the department is required to proceed to further determine the matter. If no notice has been given as provided in subsection (2), the notice shall state in what manner and to what extent noncompliance is alleged to exist. The proceedings shall not consider any subject not specified in the notice required by subsections (2) and (3).

History.-s. 447, ch . 59-205; s. 20, ch. 67-9; ss . 13, 35, ch . 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21 , ch. 78-95; ss. 2, 3, ch. 81-318; ss. 355, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82-386.


1627.381 Penalty for violation.-(1) The department may, if it finds that any person

or organization has violated any provision of this part , impose an administrative fine pursuant to s. 624.4211.

(2) The department may suspend the license or authority of any rating organization or insurer which fails to comply with an order of the department within the time limited by such order, or any extension thereof which the department may grant. The department shall not suspend the license or authority of any rating organization or insurer for failure to comply with an order until the time prescribed for an appeal therefrom has expired or, if an appeal has been taken , until such order has been at-

575


firmed . The department may determine when a suspension of license or authority shall become effective and it shall remain in effect for the period fixed by it, unless it modifies or rescinds such suspension, or until the order upon which such suspension is based is modified, rescinded, or reversed.

History.-s. 448. ch. 59-205: ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21 , ch. 78-95: ss. 2, 3, ch. 81-318; ss. 356, 357, 809(2nd), ch. 82-243; ss. 49, 79, ch. 82- 386.

1Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

627.401 627.402 627.403 627.4035 627.404 627.405 627.406

627.407 627.408 627.409 627.410 627.4105

627.411 627.412 627.413

627 .4132 627.4133

627.414 627.4145 627.4147 627.415 627.416 627.417 627.418 627.419 627.420 627.4205 627.421 627.422 627.423 627 .4232 627.4234

627.4235 627.4238 627.424 627.425 627.426 627.4265 627.427

627.428

PART II

THE INSURANCE CONTRACT

Scope of this part. "Policy" defined. "Premium" defined. Cash payment of premiums; claims. Insurable interest; personal insurance. Insurable interest; property. Power to contract ; purchase of insurance by

or for minor. Alteration of application . Application as evidence. Representations in applications; warranties. Filing , approval of forms . Life and health insurance; reduced premi-

ums upon rigorous physical examination . Grounds for disapproval. Standard provisions, in general. Contents of policies, in general; identifica

tion . Stacking of coverages prohibited . Notice of cancellation , nonrenewal, or renew-

al premium. Additional policy contents. Readable language in insurance policies . Medical malpractice insurance contracts. Charter, bylaw provisions. Execution of policies. Underwriters ' and combination policies . Validity of noncomplying contracts. Construction of policies. Binders. Coverage identification number required . Delivery of policy. Assignment of policies. Payment discharges insurer. Health insurance out-of-hospital benefits . Health insurance cost-containment provi-

sions required. Coordination of benefits. Health insurer examinations. Minor may give acquittance. Forms for proof of loss to be furnished. Claims administration. Payment of settlement. Payment of judgment by insurer; penalty for

failure. Attorney's fee .

1627.401 Scope of this part.-No provision of this part of this chapter applies to:

(1) Reinsurance. (2) Policies or contracts not issued for delivery in this

state nor delivered in this state, except as otherwise provided in this code.

(3) Wet marine and transportation insurance, except ss. 627.409, 627.420, and 627.428.

(4) Title insurance, except ss. 627.406 , 627.415, 627.416, 627.419, 627.427 , and 627.428.

(5) Credit life or credit disability insurance, except ss. 627.419(5) and 627.428.

History.-s. 450, ch. 59-205: s. 1, ch. 70- 322; s. 1, ch. 70-371; s. 1, ch. 71 - 45; s. 163, ch. 73-333: s. 3, ch. 76-168: s. 1, ch. 77-457: ss. 2, 3, ch. 81 - 318: ss. 358, 377, 809(2nd), ch. 82-243: s. 79, ch. 82-386.

1Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date .

1627.402 "Policy" defined.-(1) "Policy" means a written contract of or written

agreement for or effecting insurance, or the certificate thereof, by whatever name called, and includes all clauses, riders , endorsements, and papers which are a part thereof.

(2) The word "certificate" as used in this section does not include certificates as to group life or health insurance or as to group annuities issued to individual insureds.

History.- s. 451 , ch. 59- 205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 359, 377, 809(2nd), ch. 82- 243; s. 79, ch . 82- 386.


1627.403 "Premium" defined.-"Premium" is the consideration for insurance, by whatever name called. Any "assessment," or any "membership," "policy," "survey," "inspection ," "service" or similar fee or charge in consideration for an insurance contract is deemed part of the premium.

History.- s. 452, ch. 59-205; s. 3, ch. 76-1 68; s. 1, ch. 77-457: ss. 2, 3, ch. 81-318; ss. 377, 809(2nd), ch. 82- 243; s. 79, ch. 82-386.

1Note.- Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.4035 Cash payment of premiums; claims.-(1) The premiums for insurance contracts issued in

this state or covering risk located in this state shall be paid in cash consisting of coins, currency, checks, or money orders.

(2) Subsection (1) is not applicable to: (a) Reinsurance agreements; (b) Pension plans; (c) Premium loans, whether or not subject to an au

tomatic provision ; (d) Dividends, whether to purchase additional paid-

up insurance or to shorten the dividend payment period; (e) Salary deduction plans; (f) Preauthorized check plans; (g) Waivers of premiums on disability; (h) Nonforfeiture provisions affording benefits under

supplementary contracts ; or (i) Such other methods of paying for life insurance

as may be permitted by the department pursuant to rule or regulation .

(3) All payments of claims made in this state under any contract of insurance shall be paid in cash consisting of coins, currency, checks, drafts, or money orders and, if by check or draft, shall be in such form as will comply with the standards for cash items adopted by

576


the Federal Reserve System to facilitate the sorting, rout ing , and mechanized processing of such items.

History.-s. 1, ch. 70-69; s. 1, ch. 70- 439; s. 3, ch. 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 377, 809(2nd), ch. 82-243; s. 79, ch. 82-386; s. 11 , ch. 83-288.

'Note.- Repealed effective October 1, 1992, by s. 809(2nd), ch . 82-243, and scheduled for review pursuant to s. 11.61 in advance of that date.

1627.404 Insurable interest; personal insurance.An insurer shall be entitled to rely upon all statements, declarations, and representations made by an applicant for insurance relative to the insurable interest which such applicant has in the insured; and no insurer shall incur any legal liability except as set forth in the policy, by virtue of any untrue statements, declarations, or rep· resentations so relied upon in good faith by the insurer.

History.-s. 453, ch . 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 377, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

1Note.- Repealed effective October 1, 1992, by s. 809(2nd), ch. 82- 243, and scheduled for review pursuant to s. 11.61 in advance of that date.

1627.405 Insurable interest; property.-(1) No contract of insurance of property or of any in·

terest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss.

(2) "Insurable interest" as used in this section means any actual , lawful , and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction , or pecuniary damage or impairment.

(3) The measure of an insurable interest in property is the extent to which the insured might be damnified by loss, injury, or impairment thereof.

History.-s. 454, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 377, 809(2nd), ch. 82-243; s. 79, ch . 82-386.

1Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11.61 in advance of that date.

1627.406 Power to contract; purchase of insurance by or for minor.-

(1) Any person of competent legal capacity may contract for insurance.

(2) Any minor of the age of 15 years or more, as determined by the nearest birthday, may, notwithstanding his minority, contract for annuities or for insurance on his own life, body, health, property, liabilities, or other interests or on the person of another in whom the minor has an insurable interest. Such a minor shall , notwithstanding such minority, be deemed competent to exercise all rights and powers with respect to or under any contract for annuity or for insurance upon his own life, body, or health or any contract such minor effected on his own property, liabilities , or other interests or on the person of another, as might be exercised by a person of full legal age. Such minor may at any time surrender his interest in any such contracts and give a valid discharge for any benefits accruing or money payable thereunder. Such a minor shall not, by reason of his minority , be entitled to rescind , avoid , or repudiate the contract, nor to rescind , avoid, or repudiate any exercise of a right or privilege thereunder, except that such a minor, not otherwise emancipated, shall not be bound by any unperformed agreement to pay, by promissory note or otherwise, any premium on any such annuity or insurance contract.

(3) If any minor mentioned in subsection (2) is possessed of an estate that is being administered by a guardian or curator, no such contract shall be binding upon such estate as to payment of premiums, except as and when consented to by the guardian or curator and approved by the probate court of the county in which the administration of the estate is pending; and such consent and approval shall be required as to each premium payment.

(4} Any annuity contract or policy of life or health insurance procured by or for a minor under subsection (2) shall be made payable either to the minor or his estate or to a person having an insurable interest in the life of such minor.

History.-s. 455, ch . 59-205; s. 3, ch. 76-1 68; s. 1, ch. 77-457; ss . 2, 3, ch. 81 -318; ss. 360, 377, 809(2nd), ch. 82- 243; s. 79, ch. 82-386. 'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is

scheduled for review pursuant to s. 11 .61 in advance of that date. cf.-s. 1.01 Minor defined.

1627.407 Alteration of application.-No alteration of any written application for any life or health insurance policy shall be made by any person other than the applicant without his written consent , except that insertions may be made by the insurer, for administrative purposes only, in such manner as to indicate clearly that such insertions are not to be ascribed to the applicant.

Hlstory.-s. 456, ch. 59-205; s. 3, ch. 76-1 68; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 361,377, 809(2nd), ch. 82- 243; s. 79, ch. 82-386.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.408 Application as evidence.-(1) No application for the issuance of any life or

health insurance policy or annuity contract shall be admissible in evidence in any action relative to such policy or contract , unless a true copy of the application was attached to or otherwise made a part of the policy or contract when issued.

(2) If any policy of life or health insurance delivered or issued for delivery in this state is reinstated or renewed, and the insured or the beneficiary or assignee of the policy makes written request to the insurer for a copy of the application , if any, for such reinstatement or renewal , the insurer shall , within 30 days after receipt of such request at its home office or at any of its branch offices, deliver or mail to the person making such request a copy of such application, reproduced by any legible means. In the case of such a request from the beneficiary, the time within which the insurer is required to furnish a copy of such application shall not begin to run until after receipt of evidence satisfactory to the insurer of the beneficiary's vested interest in the policy or contract.

History.-s. 457, ch. 59- 205; s. 3, ch. 76-1 68; s. 1, ch. 77-457; ss . 2, 3, ch. 81-318; ss. 362, 377, 809(2nd), ch . 82- 243; s. 79, ch. 82-386.

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.409 Representations in applications; warranties.-

(1) All statements and descriptions in any application for an insurance policy or annuity contract , or in negotiations therefor, by or in behalf of the insured or annuitant, shall be deemed to be representations and not warranties . Misrepresentations, omissions, conceal -

577


ment of facts , and incorrect statements shall not prevent a recovery under the policy or contract unless:

(a) They are fraudulent ; (b) They are material either to the acceptance of the

risk or to the hazard assumed by the insurer; or (c) The insurer in good faith would either not have

issued the policy or contract , would not have issued it at the same premium rate , would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise.

(2) A breach or violat ion by the insured of any warranty, condition, or provision of any wet marine or transportation insurance policy, contract of insurance, endorsement, or application therefor shall not render void the policy or contract , or constitute a defense to a loss thereon , unless such breach or violation increased the hazard by any means within the control of the insured.

History.-s. 458, ch . 59-205; s. 2, ch . 71-45; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 363, 377, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd). ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.410 Filing, approval of forms.-(1) No basic insurance policy or annuity contract

form , or application form where written application is required and is to be made a part of the policy or contract, or group certificates issued under a master contract delivered in this state, or printed rider or endorsement form or form of renewal certificate, shall be delivered or issued for delivery in this state, unless the form has been filed with the department at its offices in Tallahassee by or in behalf of the insurer which proposes to use such form and has been approved by the department. This provision does not apply to surety bonds or to specially rated inland marine risks, nor to policies, riders , endorsements, or forms of unique character which are designed for and used with relation to insurance upon a particular subject (other than as to health insurance), or which relate to the manner of distribution of benefits or to the reservation of rights and benefits under life or health insurance policies and are used at the request of the individual policyholder, contract holder, or certificateholder. As to group insurance policies effectuated and delivered outside this state but covering persons resident in this state, the group certificates to be delivered or issued for delivery in this state shall be filed with the department for information purposes only.

(2) Every such fil ing must be made not less than 30 days in advance of any such use or delivery. At the expiration of such 30 days, the form so filed will be deemed approved unless prior thereto it has been affirmatively approved or disapproved by order of the department. The approval of any such form by the department constitutes a waiver of any unexpired portion of such waiting period. The department may extend by not more than an additional 15 days the period within which it may so affirmatively approve or disapprove any such form , by giving notice of such extension before expiration of the initial30-day period . At the expiration of any such period as so extended , and in the absence of such prior affirma-

tive approval or disapproval , any such form shall be deemed approved .

(3) The department may, for cause, withdraw a previous approval. No insurer shall issue or use any form disapproved by the department, or as to which the department has withdrawn approval, after the effective date of the order of the department.

(4) The department may, by order, exempt from the requirements of this section for so long as it deems proper any insurance document or form or type thereof as specified in such order, to which, in its opinion , this section may not practicably be applied , or the filing and approval of which are, in its opinion , not desirable or necessary for the protection of the public.

(5) This section also applies to any such form used by domestic insurers for delivery in a jurisdiction outside this state if the insurance supervisory official of such jurisdiction informs the department that such form is not subject to approval or disapproval by such official, and upon the order of the department requiring the form to be submitted to it for the purpose. The applicable same standards apply to such forms as apply to forms for domestic use.

(6)(a) An insurer shall not deliver or issue for delivery or renew in this state any health insurance policy form until it has filed with the department a copy of every applicable rating manual , rating schedule, change in rating manual , and change in rating schedule; if rating manuals and rating schedules are not applicable, the insurer must file with the department applicable premium rates and any change in applicable premium rates.

(b) The department may establish by rule , for each type of health insurance form, procedures to be used in ascertaining the reasonableness of benefits in relation to premium rates and may, by rule , exempt from any requirement of paragraph (a) any health insurance policy form or type thereof (as specified in such rule) to which form or type such requirements may not be practically applied or to which form or type the application of such requirements is not desirable or necessary for the protection of the public. With respect to any health insurance policy form or type thereof which is exempted by rule from any requirement of paragraph (a), premium rates filed pursuant to ss. 627.640 and 627.662 shall be for informational purposes.

(c) Every filing made pursuant to this subsection shall be made within the same time period provided in, and shall be deemed to be approved under the same conditions as those provided in , subsection (2) .

History.- s. 459, ch. 59-205; ss. 13, 35, ch. 69-106; s. 1, ch. 71- 17; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 21, ch. 78- 95; ss. 2, 3, ch. 81-318; ss. 364, 377, 809(2nd), ch. 82- 243; s. 79, ch. 82-386; s. 2, ch. 64-235.

'Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.4105 Life and health insurance; reduced premiums upon rigorous physical examination.-Upon request, the department may approve special life and health insurance policy forms providing for reduced premiums for each applicant passing a rigorous physical examination.

Hlstory.- s. 1, ch. 78-248; s. 2, ch. 81-318; ss. 365, 377 , 809(2nd), ch. 82- 243; s. 79, ch. 82- 386.

' Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

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1627.411 Grounds for disapproval.-(1) The department shall disapprove any form filed

under s. 627.410, or withdraw any previous approval thereof, only if the form:

(a) Is in any respect in violation of, or does not comply with, this code.

(b) Contains or incorporates by reference, where such incorporation is otherwise permissible, any inconsistent, ambiguous, or misleading clauses, or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract.

(c) Has any title, heading , or other indication of its provisions which is misleading.

(d) Is printed or otherwise reproduced in such manner as to render any material provision of the form substantially illegible.

(e) If for health insurance, provides benefits which are unreasonable in relation to the premium charged or contains provisions which are unfair or inequitable or contrary to the public policy of this state or which encourage misrepresentation.

(2) In determining whether the benefits are reasonable in relation to the premium charged, the department, in accordance with reasonable actuarial techniques, shall consider:

(a) Past loss experience and prospective loss experience within and without this state.

(b) Allocation of expenses. (c) Risk and contingency margins, along with justifi

cation of such margins. (d) Acquisition costs.

History.-s. 460, ch. 59-205; ss. 13, 35, 69-106; s. 3, ch . 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 366, 377, 809(2nd), ch . 82-243; s. 79, ch. 82-386.


1627.412 Standard provisions, in general.-(1) Insurance contracts shall contain such standard

or uniform provisions as are required by the applicable provisions of this code pertaining to contracts of particular kinds of insurance. The department may waive the required use of a particular provision in a particular insurance policy form if:

(a) It finds such provision unnecessary for the protection of the insured and inconsistent with the purposes of the policy; and

(b) The policy is otherwise approved by it. (2) No policy shall contain any provision inconsistent

with or contradictory to any standard or uniform provision used or required to be used, but the department may approve any substitute provision which is, in its opinion , not less favorable in any particular to the insured or beneficiary than the provisions otherwise required.

(3) In lieu of the provisions required by this code for contracts for particular kinds of insurance, substantially similar provisions required by the law of the domicile of a foreign or alien insurer may be used when approved by the department.

History.-s. 461 , ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 377, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


1627.413 Contents of policies, in general; identifica-tion.-

(1) Every policy shall specify: (a) The names of the parties to the contract. (b) The subject of the insurance. (c) The risks insured against. (d) The time when the insurance thereunder takes

effect and the period during which the insurance is to continue.

(e) The premium. (f) The conditions pertaining to the insurance. (g) The form numbers and edition dates or numeric

code indicating edition dates, when such code has been supplied to the department , of all endorsements attached to a policy. This requirement applies to life insurance policies and health insurance policies only at the time of original issue.

(2) If under the policy the exact amount of premium is determinable only at stated intervals or termination of the contract, a statement of the basis and rates upon which the premium is to be determined and paid shall be included.

(3) Subsections (1) and (2) do not apply to surety contracts or to group insurance policies.

(4) All policies and annuity contracts issued by insurers, and the forms thereof filed with the department, shall have printed thereon an appropriate designating letter or figure, or combination of letters or figures or terms identifying the respective forms of policies or contracts. Whenever any change is made in any such form, the designating letters, figures, or terms thereon shall be correspondingly changed.

History.-s. 462, ch . 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 367, 377, 809(2nd), ch . 82-243; ss. 50, 79, ch. 82-386.


1627.4132 Stacking of coverages prohibited.-lf an insured or named insured is protected by any type of motor vehicle insurance policy for liability, personal injury protection, or other coverage, the policy shall provide that the insured or named insured is protected only to the extent of the coverage he has on the vehicle involved in the accident. However, if none of the insured's or named insured's vehicles is involved in the accident, coverage is available only to the extent of coverage on any one of the vehicles with applicable coverage. Coverage on any other vehicles shall not be added to or stacked upon that coverage. This section does not apply:

(1) To uninsured motorist coverage. (2) To reduce the coverage available by reason of in

surance policies insuring different named insureds. History.-s. 10, ch. 76-266; s. 1, ch. 80-364; s. 2, ch . 81-318; ss. 377, 809(2nd),

ch. 82-243; s. 79, ch. 82-386. 1Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and


1627.4133 Notice of cancellation, nonrenewal, or renewal premium.-

(1) An insurer issuing a policy providing coverage for property, casualty, surety, or marine insurance, other than motor vehicle insurance subject to s. 627.728, shall give the named insured at least 45 days' advance written notice of nonrenewal or of the renewal premium. If

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the policy is not to be renewed , the written notice shall state the reason or reasons as to why the policy is not to be renewed. The provisions of this section requiring 45 days' advance written notice of the renewal premium do not apply to workers ' compensation and employer's liability insurance. An insurer must furnish written notice of the renewal premium to an insured covered by a policy of workers ' compensation and employer's liability insurance not later than the expiration date of the policy to be renewed . This requirement applies only if the insured has furnished all of the necessary information so as to enable the insurer to develop the renewal premium prior to the expiration date of the policy to be renewed.

(2) An insurer issuing a policy providing coverage for property, casualty, surety, or marine insurance, other than motor vehicle insurance subject to s. 627.728 or s. 627.7281 , shall give the named insured written notice of cancellation or termination other than nonrenewal at least 45 days prior to the effective date of the cancellation or termination , including in the written notice the reason or reasons for the cancellation or termination , except that:

(a) When cancellation is for nonpayment of premium, at least 10 days' written notice of cancellation accompanied by the reason therefor shall be given; and

(b) When such cancellation or termination occurs during the first 90 days during which the insurance is in force and the insurance is canceled or terminated for reasons other than nonpayment of premium, at least 20 days' written notice of cancellation or termination accompanied by the reason therefor shall be given except where there has been a material misstatement or misrepresentation or failure to comply with the underwriting requirements established by the insurer.

After the policy has been in effect for 90 days, no such policy shall be canceled by the insurer except 2when there has been a material misstatement, a nonpayment of premium, a failure to comply with underwriting requirements established by the insurer within 90 days of the date of effectuation of coverage, 3or a substantial change in the risk covered by the policy or 4when the cancellation is for all insureds under such policies for a given class of insureds. The provisions of this subsection shall not apply to individually rated risks having a policy term of less than 90 days.

(3) If an insurer fails to provide the 45-day or 20-day written notice required under this section, the coverage provided to the named insured shall remain in effect until 45 days after the notice is given or until the effective date of replacement coverage obtained by the named insured , whichever occurs first. The premium for the coverage shall remain the same during any such extension period except that, in the event of failure to provide notice of nonrenewal , if the rate filing then in effect would have resulted in a premium reduction, the premium during such extension of coverage shall be calculated based upon the later rate filing .

History.-s. 16, ch. 86-160; s. 2, ch. 87-50; s. 8, ch. 87-124. 1Note.-Repealed effective October 1, 1992, by s. 2, ch. 87-50, and scheduled for

review pursuant to s. 11 .61. 2Note.- The word "when· was substituted by the editors for the word "where." 3Note.- The word "or" was added by the editors. •Note.-The word "when" was added by the editors.

1627.414 Additional policy contents.-A policy may contain additional provisions not inconsistent with this code and which are:

(1) Required to be inserted by the laws of the insurer's domicile;

(2) Necessary, on account of the manner in which the insurer is constituted or operated , in order to state the rights and obligations of the parties to the contract; or

(3) Desired by the insurer and neither prohibited by law nor in conflict with any provisions required to be included therein .

Hlstory.-s. 463, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 377, 609(2nd), ch . 82-243; s. 79, ch. 82-386.


1627.4145 Readable language in insurance policies. (1) Every policy shall be readable as required by this

section . For the purposes of this section , the term "policy" means a policy form or endorsement. A policy is deemed readable if:

(a) The text achieves a minimum score of 45 on the Flesch reading ease test as computed in subsection (5) or an equivalent score on any other test comparable in result and approved by the department;

(b) It uses layout and spacing which separate the paragraphs from each other and from the border of the paper;

(c) It has section titles that are captioned in boldfaced type or that otherwise stand out significantly from the text;

(d) It avoids the use of unnecessarily long, complicated , or obscure words , sentences , paragraphs, or constructions;

(e) The style, arrangement, and overall appearance of the policy give no undue prominence to any portion of the text of the policy or to any endorsements or riders; and

(f) It contains a table of contents or an index of the principal sections of the policy, if the policy has more than 3,000 words or more than three pages.

(2) The department may authorize a lower score than the Flesch reading ease test score required in subsection (1) whenever it finds that a lower score will provide a more accurate reflection of the readability of a policy form, is warranted by the nature of a particular policy form or type or class of policy forms, or is the result of language which is used to conform to the requirements of any law.

(3) A filing subject to this section shall be accompanied by a certification signed by an officer of the insurer stating that the policy meets the requirements of subsection (1 ). Such certification shall state that the policy meets the minimum reading ease test score on the test used or that the score is lower than the minimum required but should be approved in accordance with subsection (2) . The department may require the submission of further information to verify any certification .

(4) Any non-English language policy shall be deemed to be in compliance with this section if the insurer certifies that such policy is translated from an English language policy which complies with this section.

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(5) A Flesch reading ease test score shall be measured by the following method:

(a) For policy forms containing 10,000 words or fewer of text, the entire form shall be analyzed . For policy forms containing more than 10,000 words, the readability of two 200-word samples per page may be analyzed instead of the entire form . The samples shall be separated by at least 20 printed lines.

(b) The total number of words in the text shall be counted and divided by the total number of sentences, and the figure obtained shall be multiplied by a factor of 1.015.

(c) The total number of syllables shall be counted and divided by the total number of words, and the figure obtained shall be multiplied by a factor of 84.6.

(d) The sum of the figures computed under paragraph (b) and paragraph (c) subtracted from 206.835 equals the Flesch reading ease test score for the policy form .

(e) For purposes of this subsection : 1. A contraction , hyphenated word , or numerals

and letters , when separated by spaces, shall be counted as one word ; and

2. A unit of words ending with a period , semicolon, or colon , excluding headings and captions, shall be counted as one sentence.

(f) The term "text" as used in this subsection includes all printed matter except:

1. The name and address of the insurer; the name, number, or title of the policy; the table of contents or index; captions and subcaptions; specification pages ; schedules; or tables;

2. Policy language required by any collectively bar-gained agreement;

3. Any medical terminology; 4. Words which are defined in the policy; and 5. Any policy language required by law, if the insur

er identifies the language or terminology excepted by this paragraph and certifies to the department, in writing , that the language or terminology is entitled to be excepted under this paragraph.

(g) At the option of the insurer, riders, endorsements, applications, and other forms made a part of the policy may be scored as separate forms or as part of the policy with which they are to be used.

(6) This section does not apply to: (a) Any policy which is a security subject to federal

jurisdiction; (b) Any group policy covering a group of 1 ,000 or

more lives at date of issue, other than a group credit life insurance policy or a group credit health insurance policy ; however, this paragraph does not exempt any certificate issued pursuant to a group policy delivered or issued for delivery in this state;

(c) Any group annuity contract which serves as a funding vehicle for pension, profit-sharing, or deferred compensation plans;

(d) Any form used in connection with , as a conversion from, as an addition to , or in exchange pursuant to a contractual provision for a policy delivered or issued for delivery on a form approved or permitted to be issued prior to the dates such forms must be approved under this section ;

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(e) Any policy or form, or partial revision thereof, or renewal thereof, which policy or form is filed prior to October 1, 1983; or

(f) Endorsements filed on or after October 1 , 1983, which modify policy forms prior to October 1, 1983.

(g) Mortgage guaranty insurance policies, as defined in s. 635.011 .

(7) This section applies to forms filed on or after October 1 , 1983.

History.- ss. 368, 809(2nd), ch. 82-243; ss. 51, 79, ch. 82-386; s. 96, ch. 83- 216; s. 13, ch. 83- 268; s. 2, ch. 84- 352.

'Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.4147 Medical malpractice insurance contracts.-

(1) In addition to any other requirements imposed by law, each self-insurance policy as authorized under s. 627 .357 or insurance policy providing coverage for claims arising out of the rendering of, or the failure to render, medical care or services, including those of the Florida Medical Malpractice Joint Underwriting Association , shall include:

(a) A clause requiring the insured to cooperate fully in the review process prescribed under s. 768.57 if a notice of intent to file a claim for medical malpractice is made against the insured.

(b) A clause authorizing the insurer or self-insurer to determine, to make, and to conclude, without the permission of the insured , any offer of admission of liability and for arbitration pursuant to s. 768.57, settlement offer , or offer of judgment, if the offer is within the policy limits. It is against public policy for any insurance or selfinsurance policy to contain a clause giving the insured the exclusive right to veto any offer for admission of liability and for arbitration made pursuant to s. 768.57, settlement offer, or offer of judgment, when such offer is within the policy limits. However, any offer of admission of liability, settlement offer, or offer of judgment made by an insurer or self-insurer shall be made in good faith and in the best interests of the insured .

(c) A clause requiring the insurer or self-insurer to notify the insured no less than 60 days prior to the effective date of cancellation of the policy or contract and, in the event of a determination by the insurer or selfinsurer not to renew the policy or contract , to notify the insured no less than 60 days prior to the end of the policy or contract period . If cancellation or nonrenewal is due to nonpayment or loss of license, 10 days notice is required.

(2) Each insurer covered by this section may require the insured to be a member in good standing , i.e., not subject to expulsion or suspension, of a duly recognized state or local professional society of health care providers which maintains a medical review committee. No professional society shall expel or suspend a member solely because he participates in a health maintenance organization licensed under part II of chapter 641 .

(3) This section shall apply to all policies issued or renewed after October 1 , 1985.

Hlstory.-ss. 6, 44, ch. 85-175; s. 5, ch. 86-287 . 1Note.-Expires October 1, 1992, pursuant to s. 44, ch. 85- 175, and is scheduled

for review pursuant to s. 11.61 in advance of that date.


1627.415 Charter, bylaw provisions.-No policy shall contain any provision purporting to make any portion of the charter, bylaws, or other constituent document of the insurer (other than the subscribers ' agreement or power of attorney of a reciprocal insurer) a part of the contract unless such portion is set forth in full in the policy. Any policy provision in violation of this section is invalid .

History.- s. 464, ch. 59- 205; s. 3, ch. 76- 168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 377, 809(2nd), ch. 82- 243; s. 79, ch. 82- 386.


1627.416 Execution of policies.-(1) Every insurance policy shall be executed in the

name of and on behalf of the insurer by its officer, attorney in fact , employee, or representative duly authorized by the insurer.

(2) A facsimile signature of any such executing individual may be used in lieu of an original signature.

(3) No insurance contract which is otherwise valid shall be rendered invalid by reason of the apparent execution thereof on behalf of the insurer by the imprinted facsimile signature of an individual not authorized so to execute as of the date of the policy.

History.-s. 465, ch. 59-205; s. 3, ch . 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 369, 377, 809(2nd), ch. 82-243; s. 79, ch. 82- 386.


1627.417 Underwriters' and combination policies.-(1) Two or more authorized insurers may jointly is

sue, and shall be jointly and severally liable on , an underwriters ' policy bearing their names. Any one insurer may issue a policy in the name of an underwriter's department, and such policy shall plainly show the true name of the insurer.

(2) Two or more authorized insurers may, with the approval of the department, issue a combination policy which shall contain provisions substantially as follows:

(a) That the insurers executing the policy shall be severally liable for the full amount of any loss or damage, according to the terms of the policy, or for specified percentages or amounts thereof , aggregating the full amount of insurance under the policy; and

(b) That service of process, or of any notice or proof of loss required by such policy, upon any of the insurers executing the policy, shall constitute service upon all such insurers .

(3) This section does not apply to cosurety obligations .

History.-s. 466, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-1 68; s. 1, ch. 77-457; ss . 2, 3, ch . 81 -318; ss. 377, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


1627.418 Validity of noncomplying contracts.-(1) Any insurance policy, rider, or endorsement oth

erwise valid which contains any condition or provision not in compliance with the requirements of this code shall not be thereby rendered invalid, except as provided in s. 627.415, but shall be construed and applied in accordance with such conditions and provisions as would have applied had such policy, rider, or endorsement been in full compliance with this code. In the event an insurer issues or delivers any policy for an amount which exceeds any limitations otherwise provided in this

code, such insurer shall be liable to the insured or his beneficiary for the full amount stated in the policy in addition to any other penalties that may be imposed under this code.

(2) Any insurance contract delivered or issued for delivery in this state covering a subject or subjects of insurance resident, located, or to be performed in this state, which subjects, pursuant to the provisions of this code, the insurer may not lawfully insure under such a contract , shall be cancellable at any time by the insurer, any provision of the contract to the contrary notwithstanding ; and the insurer shall promptly cancel the contract in accordance with the request of the department therefor . No such illegality or cancellation shall be deemed to relieve the insurer of any liability incurred by it under the contract while in force, or to prohibit the insurer from retaining the pro rata earned premium thereon. This provision does not relieve the insurer from any penalty otherwise incurred by the insurer under this code on account of any such violation.

History.- s. 467 , ch. 59-205; ss. 13, 35, ch . 69-1 06; s. 1, ch. 72-23; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 370, 377, 809(2nd), ch. 82- 243; s. 79, ch. 82-386.

•Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

Note.- Former s. 627.011 7.

1627.419 Construction of policies.-(1) Every insurance contract shall be construed ac

cording to the entirety of its terms and conditions as set forth in the policy and as amplified , extended , or modified by any application therefor or any rider or endorsement thereto.

(2) The word "physician" or "medical doctor," when used in any health insurance policy, health care services plan, or other contract providing for the payment of surgical procedures which are specified in the policy or contract or are performed in an accredited hospital in consultation with a licensed physician and are within the scope of a dentist 's professional license, shall be construed to include a dentist who performs such specified procedures.

(3) Notwithstanding any other provision of law, when any health insurance policy, health care services plan, or other contract provides for the payment for procedures specified in the policy or contract which are within the scope of an optometrist 's or podiatrist's professional license, such policy shall be construed to include payment to an optometrist or podiatrist who performs such procedures. In the case of podiatry services, such payments shall be made in accordance with the coverage now provided for medical and surgical benefits.

(4) Notwithstanding any other provision of law, when any health insurance policy , health care services plan, or other contract provides for the payment for medical expense benefits or procedures, such policy, plan , or contract shall be construed to include payment to a chiropractic physician who provides the medical service benefits or procedures which are within the scope of a chiropractic physician 's license. Any limitation or condition placed upon payment to, or upon services, diagnosis , or treatment by, any licensed physician shall apply equally to all licensed physicians without unfair discrimination to the usual and customary treatment procedures of any class of physicians.

582


(5) For purposes of coverage under a policy of disability income or credit disability insurance, no determination of disability shall be rejected solely on the basis of the chapter under which the physician is licensed; however, such determination may be rejected on the basis that the determination is outside the scope of the physician's authorized practice. However, the insurance carrier shall have the option after 30 days of disability to seek a second physician's opinion prior to paying additional benefits.

History.-s. 468, ch. 59-205; s. 1, ch. 69-245; ss. 1, 2, ch. 72-11 ; s. 163A, ch . 73-333; s. 1, ch. 74-34; s. 1, ch . 74-87; s. 1, ch. 76-167; s. 3, ch. 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 371 , 377 , 809(2nd), ch . 82-243; s. 79, ch. 82-386; s. 1, ch. 86-40.


Note.-Former s. 627.0118.

1627.420 Binders.-Binders or other contracts for temporary property, marine, casualty, or surety insurance may be made orally or in writing, and shall be deemed to include all the usual terms of the policy as to which the binder was given together with such applicable endorsements as are designated in the binder, except as superseded by the clear and express terms of the binder. No notice of cancellation or notice of nonrenewal otherwise required by this chapter shall be required unless the duration of the binder exceeds 60 days . However, for purposes of ss. 627.728 and 627.7281, an insurer shall give 5 days prior notice of cancellation of a binder, unless the binder is replaced by a policy or another binder in the same or another company.

History.-s. 469, ch. 59- 205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss . 377, 809(2nd), ch. 82-243; s. 79, ch . 82-386; s. 1, ch. 85-51.

1Note.-A. Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and sched·

uled for review pursuant to s. 11 .61 in advance of that date. 8. Section 4, ch. 85-51, provides that this act 'shall apply to all binders and poli·

cies issued after [May 30, t 985]. '

1627.4205 Coverage identification number required. -An insurer shall provide to the named insured a coverage identification number no later than the time insurance coverage under a policy, binder, or other contract providing any insurance or surety coverage becomes effective. The coverage identification number shall be construed for regulatory purposes under this code as a policy number.

History.-s. t7, ch . 86-160; s. 2, ch. 87-50. 1Note.-Repealed effective October 1, 1992, by s. 2. ch. 87-50, and scheduled for

review pursuant to s. 11.61.

1627.421 Delivery of policy.-(1) Subject to the insurer's requirement as to pay

ment of premium, every policy shall be mailed or delivered to the insured or to the person entitled thereto not later than 60 days after the effectuation of coverage.

(2) In the event the original policy is delivered or is so required to be delivered to or for deposit with any vendor, mortgagee, or pledgee of any motor vehicle , and in which policy any interest of the vendee, mortgagor, or pledgor in or with reference to such vehicle is insured , a duplicate of such policy setting forth the name and address of the insurer, insurance classification of vehicle, type of coverage, limits of liability, premiums for the respective coverages, and duration of the policy, or memorandum thereof containing the same such information, shall be delivered by the vendor, mortgagee, or

pledgee to each such vendee, mortgagor, or pledgor named in the policy or coming within the group of persons designated in the policy to be so included. If the policy does not provide coverage of legal liability for injury to persons or damage to the property of third parties, a statement of such fact shall be printed, written , or stamped conspicuously on the face of such duplicate policy or memorandum. This subsection does not apply to inland marine floater policies.

(3) Any automobile liability or physical damage policy shall contain on the front page a summary of major coverages, conditions, exclusions, and limitations contained in that policy. Any such summary shall state that the issued policy should be referred to for the actual contractual governing provisions. The company may, in lieu of the summary, provide a readable policy.

History.-s. 470, ch. 59-205; s. 1, ch. 75-218; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 377, 809(2nd), ch. 82-243; s. 79, ch. 82-386; s. 18, ch. 86-160.

'Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11.61 in advance of that date.

1627.422 Assignment of policies.-A policy may be assignable, or not assignable, as provided by its terms. Subject to its terms relating to assignability, any life or health insurance policy under the terms of which the beneficiary may be changed upon the sole request of the policy owner may be assigned either by pledge or transfer of title, by an assignment executed by the policy owner alone and delivered to the insurer, whether or not the pledgee or assignee is the insurer. Any such assignment shall entitle the insurer to deal with the assignee as the owner or pledgee of the policy in accordance with the terms of the assignment, until the insurer has received at its home office written notice of termination of the assignment or pledge or written notice by or on behalf of some other person claiming some interest in the policy in conflict with the assignment.

History.-s. 471, ch . 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 372, 377, 809(2nd), ch. 82-243; s. 79, ch . 82-386.


1627.423 Payment discharges insurer.-Whenever the proceeds of or payments under a life or health insurance policy or annuity contract become payable in accordance with the terms of such policy or contract, or the exercise of any right or privilege thereunder, and the insurer makes payment thereof in accordance with the terms of the policy or contract or in accordance with any written assignment thereof, the person then designated in the policy or contract or by such assignment as being entitled thereto shall be entitled to receive such proceeds or payments and to give full acquittance therefor; and such payments shall fully discharge the insurer from all claims under the policy or contract unless, before payment is made, the insurer has received at its home office written notice by or on behalf of some other person that such other person claims to be entitled to such payment or some interest in the policy or contract.

History.- s. 472, ch. 59-205; s. 3, ch. 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 373, 377, 809(2nd), ch. 82-243; s. 79, ch . 82-386.

•Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.4232 Health insurance out-of-hospital benefits.-No health insurance policy which provides cover-

583


age on a medical , hospital, or surgical expense-incurred basis shall be delivered or issued for delivery in this state unless coverage is provided for treatment performed outside a hospital for any accident or illness as defined in the policy, provided that such treatment would be covered on an inpatient basis and is provided by a health care provider whose services would be covered under the policy if the treatment were performed in a hospital and provided that treatment of the accident or illness is medically necessary and is provided as an alternative to inpatient treatment in a hospital. Reimbursement may be limited to amounts that are reasonable for the treatment or services provided and may be limited by any deductible and coinsurance provisions of the policy.

History.-ss. 6, 10, ch. 84-235. 'Note.-Expires October 1. 1992. pursuant to s. 10, ch. 84-235, and is scheduled

for review pursuant to s. 11 .61 in advance of that date.

1627.4234 Health insurance cost-containment provisions required.-No health insurance policy or health care services plan which provides medical , hospital , or surgical expense coverage shall be issued or issued for delivery in this state unless the policy or plan contains one or more of the following procedures or provisions to contain health insurance costs or cost increases:

(1) Coinsurance. (2) Deductible amounts. (3) Utilization review. (4) Required second opinions for elective or non

emergency surgery. (5) Audits of provider bills to verify that services and

supplies billed were furnished and that proper charges were made.

(6) Scheduled benefits. (7) Benefits for preadmission testing . (8) Any lawful measure or combination of measures

for which information is provided to the department which demonstrates that the measure or combination of measures is reasonably expected to have an effect toward containing health insurance costs or cost in-creases.

History.-ss. 4, 10, ch. 84-235. 'Note.-Expires October 1, 1992. pursuant to s. 10, ch. 84-235, and is scheduled

for review pursuant to s. 11.61 in advance of that date.

1627.4235 Coordination of benefits.-(1) No group hospital , medical , or surgical expense

policy, group health care services plan , or group-type self-insurance plan that provides protection or insurance against hospital , medical , or surgical expenses shall be issued or issued for delivery in this state unless the policy or plan contains a provision for coordinating its benefits with any similar benefits provided by any other group hospital , medical, or surgical expense policy ; group health care services plan; or group-type selfinsurance plan that provides protection or insurance against hospital , medical , or surgical expenses for the same loss.

(2) No hospital , medical, or surgical expense policy, health care services plan , or self-insurance plan that provides protection or insurance against hospital , medical, or surgical expenses shall be issued or issued for delivery in this state which contains any provision whereby the insurer may reduce or refuse to pay bene-

fits otherwise payable thereunder solely on account of the existence of similar benefits provided under insurance policies issued by the same or another insurer, health care services plan , or self-insurance plan which provides protection or insurance against hospital , medical , or surgical expenses unless, as a condition of coordinating benefits with another insurer, the insurers together pay 1 00 percent of the total reasonable expenses actually incurred of the type of expense within the benefits described in the policies and presented to the insurer for payment.

(3) The standards provided in subsection (2) are applicable in coordinating benefits payable under Medicare, Title XVIII of the Social Security Act.

(4) When a claim is submitted in accordance with any group hospital , medical , or surgical expense policy, or in accordance with any group health care service plan or group-type self-insurance plan, that provides protection , insurance, or indemnity against hospital , medical, or surgical expenses, and the policy or any other document that provides coverage includes a coordinationof-benefits provision and the claim involves another policy or plan which has a coordination-of-benefits provision , the following rules shall be used to determine the order in which benefits under the respective health policies or plans will be determined:

(a) The benefits of a policy or plan which covers the person as an employee, member, or subscriber, other than as a dependent, are determined before those of the policy or plan which covers the person as a dependent.

(b) Except as stated in paragraph (c) , when two or more policies or plans cover the same child as a dependent of different parents:

1. The benefits of the policy or plan of the parent whose birthday, excluding year of birth, falls earlier in a year are determined before those of the policy or plan of the parent whose birthday, excluding year of birth, falls later in that year; but

2. If both parents have the same birthday, the bene-fits of the policy or plan which covered the parent for a longer period of time are determined before those of the policy or plan which covered the parent for a shorter period of time.

However, if a policy or plan subject to the rule based on the birthday of the parents as stated above coordinates with an out-of-state policy or plan which contains provisions under which the benefits of a policy or plan which covers a person as a dependent of a male are determined before those of a policy or plan which covers the person as a dependent of a female and if, as a result, the policies or plans do not agree on the order of benefits , the provisions of the other policy or plan shall determine the order of benefits.

(c) If two or more policies or plans cover a dependent child of divorced or separated parents, benefits for the child are determined in this order:

1. First , the policy or plan of the parent with custody of the child ;

2. Second , the policy or plan of the spouse of the parent with custody of the child ; and

3. Third , the policy or plan of the parent not having custody of the child.

584


However, if the specific terms of a court decree state that one of the parents is responsible for the health care expenses of the child and if the entity obliged to pay or provide the benefits of the policy or plan of that parent has actual knowledge of those terms, the benefits of that policy or plan are determined first. This does not apply with respect to any claim determination period or plan or policy year during which any benefits are actually paid or provided before that entity has that actual knowledge.

(d) The benefits of a policy or plan which covers a person as an employee who is neither laid off nor retired , or as that employee's dependent, are determined before those of a policy or plan which covers that person as a laid off or retired employee or as that employee 's dependent. If the other policy or plan is not subject to this rule, and if, as a result, the policies or plans do not agree on the order of benefits, this paragraph shall not apply.

(e) If none of the rules in paragraph (a), paragraph (b), paragraph (c), or paragraph (d) determine the order of benefits, the benefits of the policy or plan which covered an employee, member, or subscriber for a longer period of time are determined before those of the policy or plan which covered that person for the shorter period of time.

(5) Coordination of benefits shall not be permitted against an indemnity-type policy, an excess insurance policy as defined in s. 627 .635, a policy with coverage limited to specified illnesses or accidents, or a Medicare supplement policy.

History.-s. 1, ch. 74-367; s. 3, ch . 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 374, 377, 809(2nd), ch. 82-243; ss. 52, 79, ch. 82-386; s. 5, ch. 84-235; s. 2, ch. 85-244.


1627.4238 Health insurer examinations.-The department may examine each authorized health insurer which transacts health insurance in this state. The purpose of the examination is to ascertain compliance by the ihsurer with the applicable provisions of this chapter. In lieu of the examination , the department may accept the report of a similar examination made by the insurance supervisory official of this state or another state. The reasonable cost of the examination shall be paid by the person examined, and such person is subject to the provisions of s. 624.320. Any examination is also subject to the applicable provisions of ss. 624.318, 624.319, 624.321, and 624.322. An examination under this section may not exceed 10 working days in length, may not be conducted more often than annually, and may not be conducted during the same calendar year as a market conduct examination conducted by the department, except in a case in which the department has prima facie evidence of a violation of this chapter or of chapter 626, which violation is of a nature so as to provide an immediate danger to the insurance-consuming public.

History.-ss. 3, 10, ch. 84-235. 1Note.-Expires October 1, 1992, pursuant to s. 10, ch. 84-235, and is scheduled

for review pursuant to s. 11 .61 in advance of that date.

1627.424 Minor may give acquittance.-(1) Any minor domiciled in this state who has at

tained the age of 16 years shall be deemed competent

to receive and to give full acquittance and discharge for a payment or payments in aggregate amount not exceeding $3,000 in any one year made by a life insurer under the maturity, death, or settlement agreement provisions in effect or elected by such minor under a life insurance policy or annuity contract , if such policy, contract , or agreement provides for the payment to such minor. No such minor shall be deemed competent to alienate the right to or to anticipate or commute such payments. This section shall not be deemed to restrict the rights of minors set forth in s. 627.406.

(2) If a guardian of the property of any such minor is duly appointed and written notice thereof is given to the insurer at its home office, any such payment thereafter falling due shall be paid to the guardian for the account of the minor, unless the policy or contract under which the payment is made expressly provides otherwise.

(3) This section shall not be deemed to require any insurer making any such payment to determine whether any other insurer may be effecting a similar payment to the same minor.

History.-s. 473, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 377, 809(2nd), ch . 82- 243; s. 79, ch . 82-386.

'Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date .

1627.425 Forms for proof of loss to be furnished.An insurer shall furnish , upon written request of any person claiming to have a loss under an insurance contract issued by such insurer, forms of proof of loss for completion by such person , but such insurer shall not, by reason of the requirement so to furnish forms, have any responsibility for or with reference to the completion of such proof or the manner of any such completion or attempted completion .

History.-s. 474, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 377, 809(2nd), ch . 82-243; s. 79, ch. 82-386. 'Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and


1627.426 Claims administration.-(1) Without limitation of any right or defense of an in

surer otherwise, none of the following acts by or on behalf of an insurer shall be deemed to constitute a waiver of any provision of a policy or of any defense of the insurer thereunder:

(a) Acknowledgment of the receipt of notice of loss or claim under the policy.

(b) Furnishing forms for reporting a loss or claim, for giving information relative thereto, or for making proof of loss , or receiving or acknowledging receipt of any such forms or proofs completed or uncompleted.

(c) Investigating any loss or claim under any policy or engaging in negotiations looking toward a possible settlement of any such loss or claim .

(2) A liability insurer shall not be permitted to deny coverage based on a particular coverage defense unless:

(a) Within 30 days after the liability insurer knew or should have known of the coverage defense, written notice of reservation of rights to assert a coverage defense is given to the named insured by registered or certified mail sent to the last known address of the insured or by hand delivery; and

585


(b) Within 60 days of compliance with paragraph (a) or receipt of a summons and complaint naming the insured as a defendant, whichever is later, but in no case later than 30 days before trial , the insurer:

1. Gives written notice to the named insured by registered or certified mail of its refusal to defend the insured;

2. Obtains from the insured a nonwaiver agreement following full disclosure of the specific facts and policy provisions upon which the coverage defense is asserted and the duties, obligations, and liabilities of the insurer during and following the pendency of the subject litigation ; or

3. Retains independent counsel which is mutually agreeable to the parties. Reasonable fees for the counsel may be agreed upon between the parties or , if no agreement is reached, shall be set by the court.

History.-s. 475, ch. 59-205; s. 3, ch . 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 375(1 st), 377, 809(2nd), ch . 82-243; ss. 53, 79, ch. 82- 386; s. 97, ch. 83- 216.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.4265 Payment of settlement-In any case in which a person and an insurer have agreed in writing to the settlement of a claim, the insurer shall tender payment according to the terms of the agreement no later than 20 days after such settlement is reached . The tender of payment may be conditioned upon execution by such person of a release mutually agreeable to the insurer and the claimant, but if the payment is not tendered within 20 days, or such other date as the agreement may provide, it shall bear interest at a rate of 12 percent per year from the date of the agreement; however, if the tender of payment is conditioned upon the execution of a release, the interest shall not begin to accrue until the executed release is tendered to the insurer.

History.- s. 12, ch. 83-288; s. 3, ch. 84-94. •Note.-Repealed effective October 1, 1992, by s. 3, ch. 84-94, and scheduled for

review pursuant to s. 11 .61 in advance of that date.

1627.427 Payment of judgment by insurer; penalty for failure.-

(1) Every judgment or decree for the recovery of money entered in any of the courts of this state against any authorized insurer shall be fully satisfied within 60 days from and after the entry thereof or, in the case of an appeal from such judgment or decree, within 60 days from and after the affirmance of the same by the appellate court.

(2) If the judgment or decree is not satisfied as required under subsection (1 ), and proof of such failure to satisfy is made by filing with the department a certified transcript of the docket of the judgment or decree together with a certificate by the clerk of the court wherein the judgment or decree was entered that the judgment or decree remains unsatisfied, in whole or in part , after the time aforesaid, the department shall forthwith revoke the insurer's certificate of authority. The department shall not issue to such insurer any new certificate of authority until the judgment or decree is wholly paid and satisfied and proof thereof filed with the department under the official certificate of the clerk of the court wherein the judgment was recovered , showing that the same is satisfied of record , and until the expenses and

fees incurred in the case are also paid by the insurer. History.-s. 476, ch. 59-205; ss. t3, 35, ch. 69-1 06; s. 3, ch. 76-1 68; s. 1, ch.

77-457; ss. 2, 3, ch. 81-318; ss . 375(2nd), 377, 809(2nd), ch. 82- 243; s. 79, ch. 82-386.


1627.428 Attorney's fee.-(1) Upon the rendition of a judgment or decree by

any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured 's or beneficiary's attorney prosecuting the suit in which the recovery is had.

(2) As to suits based on claims arising under life insurance policies or annuity contracts , no such attorney's fee shall be allowed if such suit was commenced prior to expiration of 60 days after proof of the claim was duly filed with the insurer.

(3) When so awarded, compensation or fees of the attorney shall be included in the judgment or decree rendered in the case.

History.- s. 477 , ch. 59- 205; s. 1, ch. 67-400; s. 3, ch. 76- 168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 376, 377, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


627.451 627.452 627.453 627.454 627.455 627.456 627.457 627.458 627.4585 627.459 627.460 627.461 627.4615 627.462 627 .463 627.464

627.465

627.466

627.467

627.468

627.469

627.470

PART Ill

LIFE INSURANCE AND ANNUITY CONTRACTS

Scope of this part. Standard provisions required . Grace period . Entire contract; statements in application. Incontestability. Misstatement of age or sex. Dividends. Policy loan. Maximum rate of interest on policy loans. Reinstatement. Authority to alter contract. Settlement on proof of death. Interest payable on death claim payments. Table of installments. Excluded or restricted coverage. Annuity contracts, pure endowment con

tracts ; standard provisions . Annuity contracts, pure endowment con

tracts ; grace period . Annuity contracts , pure endowment con

tracts ; incontestability. Annuity contracts , pure endowment con

tracts ; entire contract. Annuity contracts, pure endowment con

tracts ; misstatement of age or sex. Annuity contracts, pure endowment con

tracts ; dividends. Annuity contracts, pure endowment con

tracts ; reinstatement.

586


627.471 627.472 627.473 627.474 627.475

627.476

627.479 627.480

627.481

Reversionary annuities; standard provisions . Incontestability after reinstatement. Policy settlements. Policy must contain entire contract. Nonforfeiture benefits ; certain interim poli-

cies . Standard Nonforfeiture Law for Life Insur

ance. Prohibited policy plans. Cash payments of single-premium life poli

cies. Special permit for certain annuity agree

ments.

1627.451 Scope of this part.-This part applies to life insurance and annuity contracts , other than reinsurance, group life insurance, group annuities, and industrial life insurance ; except that ss . 627.463, 627.472, 627.476, and 627.479 also apply to industrial life insurance. This part does not apply to credit life insurance except as provided in part IX of chapter 627.

History.-s. 478, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81 - 318; ss. 378, 404, 809(2nd), ch . 82-243; s. 79, ch. 82-386.


1627.452 Standard provisions required.-(1 ) No policy of life insurance, except as stated in

subsection (3) , shall be delivered or issued for delivery in this state unless it contains in substance each of the provisions as required by ss. 627.453-627.462 inclusive and ss. 627.475 and 627.476, or provisions which in the opinion of the department are more favorable to the policyholder.

(2) Any of such provisions or portions thereof not applicable to single-premium or term policies shall to that extent not be incorporated therein .

(3) This section does not apply to annuity contracts , or to any provision of a life insurance policy or contract supplemental thereto relating to health benefits or to additional benefits in the event of death by accident or accidental means.

History.-s. 479, ch. 59- 205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss . 379, 404, 809(2nd), ch. 82-243; s. 79, ch. 82- 386.


1627.453 Grace period.-Every insurance contract shall provide that the insured is entitled to a grace period of not less than 30 days within which payment of any premium after the first may be made. The payment may, at the option of the insurer, be subject to an interest charge not in excess of 8 percent per year for the number of days of grace elapsing before the payment of the premium, during which period of grace the policy shall continue in force . If the policy becomes a claim during the grace period before the overdue premium is paid , or the deferred premiums of the current policy year, if any, are paid , the amount of such premium or premiums with interest not in excess of 8 percent per year thereon may be deducted in any settlement under the policy.

History.-s. 480, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 380, 404, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

1Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch . 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.454 Entire contract; statements in application. -Every insurance contract shall provide that the policy, or the policy and the application therefor if a copy of such application is endorsed upon or attached to the policy when issued, shall constitute the entire contract between the parties, and that all statements contained in the application shall , in the absence of fraud, be deemed representations and not warranties.

History--s. 481 , ch . 59-205; s. 3, ch . 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 381, 404, 809(2nd), ch. 82-243; s. 79, ch. 82- 386.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.455 lncontestability.-Every insurance contract shall provide that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of 2 years from its date of issue except for nonpayment of premiums and except , at the option of the insurer, as to provisions relative to benefits in event of disability and as to provisions which grant additional insurance specifically against death by accident or accidental means .

Hlstory--s. 482, ch . 59-205; s. 3, ch. 76-168; s. 1, ch. 77- 457; ss. 2, 3, ch. 81-318; ss. 382, 404, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

'Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch . 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.456 Misstatement of age or sex.-Every insurance contract shall provide that if it is found that the age or sex of the insured, or of any other individual considered in determining the premium or benefit, has been misstated , the amount payable or benefit accruing under the policy shall be such as the premium would have purchased according to the correct age or sex. Such calculations shall be in accordance with the insurer's rate at date of issue, and at the option of the insurer this may be so specified in the policy.

History.-s. 483, ch. 59- 205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 383, 404 , 809(2nd), ch. 82-243; s. 79, ch. 82-386.

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.457 Dividends.-(1) Every participating policy shall provide that , be

ginning not later than the end of the third policy year, the insurer shall annually ascertain and apportion the divisible surplus, if any, that will accrue on the policy anniversary or other dividend date specified in the policy provided the policy is in force and all premiums to that date are paid .

(2) Except as provided in this section, any dividend so apportioned shall, at the option of the party entitled to elect such option, be either payable in cash or applied to any one of such other dividend options as may be provided by the policy. If any such other dividend options are provided, the policy shall further state which option shall be automatically effective if such party has not elected some other option . If the policy specifies a period within which such other option may be elected, such period shall be not less than 30 days following the date on which such dividend is due and payable.

(3) The annually apportioned dividend shall be deemed to be payable in cash within the meaning of subsection (2) even though the policy provides that payment of such dividend is to be deferred for a specified period , provided such period does not exceed 6 years

587


from the date of apportionment and that interest will be added to such dividend at a specified rate.

(4) If a participating policy provides that the benefit under any paid-up nonforfeiture provision is to be participating, it may provide that any divisible surplus apportioned while the insurance is in force under such nonforfeiture provision be applied in the manner set forth in the policy.

Hlatory.-s. 484, ch. 59-205; s. 3, ch . 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 384, 404, 809(2nd), ch. 82-243; s. 79, ch. 82-386. .

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and IS


1627.458 Policy loan.-(1) There shall be a provision that after the policy

has a cash surrender value and while no premium is in default, the insurer will advance, on proper assignment or pledge of the policy and on the sole security thereof, at a rate of interest not exceeding 10 percent per year, for policies issued prior to October 1, 1981, payable in advance, an amount equal to or, at the option of the party entitled thereto, less than the loan value of the policy. The loan value of the policy shall be at least equal to the cash surrender value at the end of the then current policy year, except that the insurer may deduct, either from such loan value or from the proceeds of the loan, any existing indebtedness not already deducted in determining such cash surrender value, including any interest then accrued but not due, any unpaid balance of the premium for the current policy year, and interest on the loan to the end of the current policy year. However, as a condition for approval of a policy loan interest rate in excess of 6 percent per year, the department shall require the insurer to furnish such assurances as the department deems necessary that the interest rate on such loans will bear a reasonable relationship to other interest rates and that the holders of such policies will benefit through higher dividends or lower premiums, or both.

(2) The policy may also provide that, if interest on any indebtedness is not paid when due, such interest shall then be added to the existing indebtedness and shall bear interest at the same rate and that , if and when the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of loan value thereof, then the policy shall terminate and become void, but not until at least 30 days' notice has been mailed by the insurer to the last known address of the insured or policy owner and of any assignee of record at the home office of the insurer.

(3) The policy shall reserve to the insurer the right to defer the granting of a loan, other than for the payment of any premium to the insurer, for 6 months after application therefor .

(4) This section does not apply to term policies or to term insurance benefits provided by riders or supplemental policy provisions.

Hiatory.-s. 485, ch. 59-205; s. 3, ch. 76-168; ss. 1, 3, ch. 77-324; s. 1, ch. 77-457; ss. 2, 6, ch. 81-289; ss. 2, 3, ch. 81-318; ss. 385, 404, 809(2nd), 810, ch. 82-243; s. 79, ch. 82-386. .

•Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and 1s scheduled for review pursuant to s. 11 .61 in advance of that date.

monthly average" means the value of the interest rate index, as defined in s. 625.121 (5)(e).

(2) Policies issued on or after October 1, 1981, shall provide for policy loan interest rates through:

(a) A provision permitting a maximum interest rate of not more than 1 0 percent a year; or

(b) A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law.

(3) The rate of interest charged on a policy loan made under paragraph (2)(b) shall not exceed the higher of the following :

(a) The published monthly average for the calendar month ending 2 months before the date on which the rate is determined; or

(b) The rate used to compute the cash surrender values under the policy during the applicable period plus 1 percent a year.

(4) If the maximum rate of interest is determined pursuant to paragraph (2)(b), the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy.

(5) The maximum rate for each policy must be determined at regular intervals at least once every 12 months, but not more frequently than once in any 3-month period. At the intervals specified in the policy:

(a) The rate being charged may be increased whenever such increase as determined under subsection (3) would increase that rate by 50 basis points or more a year .

(b) The rate being charged must be reduced whenever such reduction as determined under subsection (3) would decrease that rate by 50 basis points or more a year.

(6) The life insurer shall: (a) Notify the policyholder at the time a cash loan is

made of the initial rate of interest on the loan. (b) Notify the policyholder with respect to premium

loans of the initial rate of interest on the loan as soon as it is reasonably practicable to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in paragraph (c).

(c) Send to policyholders with loans reasonable advance notice of any increase or decrease in the rate.

(d) Include in the notices required in this section the substance of the pertinent provisions of subsections (2) and (4) .

(7) No policy shall terminate in a policy year as the sole result of a change in the interest rate during that policy year, and the life insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year.

(8) The substance of the pertinent provisions of subsections (2) and (4) shall be set forth in the policies to which they apply.

(9) For purposes of this section: (a) The rate of interest on policy loans permitted un

der this section includes the interest rate charged on re-1627.4585 Maximum rate of interest on policy loans. instatement of policy loans for the period during and af-(1) For the purposes of this section, the "published ter any lapse of a policy.

588


(b) The term "policy loan" includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as they fell due.

(c) The term "policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer.

(d) The term "policy" includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans .

(1 0) No other provision of law shall apply to policy loan interest rates unless made specifically applicable to such rates .

History.-ss. 3, 6, ch. 81 - 289; ss. 386, 809(2nd), 810, ch. 82- 243; s. 79, ch. 82- 386.

1Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.459 Reinstatement-Every contract shall provide that the policy may be reinstated upon written application therefor at any time within 3 years after the date of default in the payment of any premiums, unless the policy has been surrendered for its cash value or unless the paid-up term insurance, if any, has expired , upon evidence of insurability satisfactory to the insurer and the payment of all overdue premiums and payment (or, within the limits permitted by the then cash value of the policy, reinstatement) of any other indebtedness to the insurer upon the policy with interest as to both premiums and indebtedness at a rate not exceeding 6 percent per year compounded annually or , as to indebtedness for a policy issued on or after October 1, 1981 , at an interest rate as provided for in s. 627.4585.

History.-s. 486, ch. 59-205; s. 3, ch. 76-1 68; s. 1, ch. 77-457; ss. 4, 6, ch. 81 - 289; ss. 2, 3, ch. 81 -318; ss. 387, 404, 809(2nd), 810, ch . 82-243; s. 79, ch. 82-386.


1627.460 Authority to alter contract-Every contract shall provide, at the option of the insurer, that no agent shall have the power or authority to waive , change, or alter any of the terms or conditions of any policy; except that, at the option of the insurer, the terms or conditions may be changed by an endorsement or rider signed by a duly authorized officer of the insurer.

History.-s. 487, ch. 59- 205; s. 3, ch. 76-1 68; s. 1, ch. 77- 457; ss. 2, 3, ch. 81-318; ss. 388, 404, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

1Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.461 Settlement on proof of death.-Every contract shall provide that, when a policy becomes a claim by the death of the insured, settlement shall be made upon receipt of due proof of death and surrender of the policy.

History.-s. 488, ch. 59-205; s. 3, ch. 76- 168; s. 1, ch. 77- 457; ss. 2, 3, ch. 81-318; ss. 389, 404, 809(2nd), ch. 82- 243; s. 79, ch. 82-386; s. 14, ch. 83-268.


1627.4615 Interest payable on death claim payments.-When a policy provides for payment of its proceeds in a lump sum upon the death of the insured, such payment shall include interest at the rate of 11 percent per year from the date the insurer receives written due proof of death of the insured . This section applies to all policies or contracts delivered or issued for delivery in this state on or after October 1, 1983.

History.-s. 15, ch. 83-268; s. 3, ch. 84-94.

1Note.- Repealed effective October 1, 1992, by s. 3, ch. 84-94, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.462 Table of installments.-lf a policy provides for payment of its proceeds in installments, a table showing the amount and period of such installments shall be included in the policy; except that certain tables may be omitted from the policy if in the judgment of the department it is not practical to include them.

Hlstory.-s. 489, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 404, 809(2nd), ch. 82-243; s. 79, ch. 82- 386.


1627.463 Excluded or restricted coverage.-A clause in any policy of life insurance providing that such policy shall be incontestable after a specified period shall preclude only a contest of the validity of the policy and shall not preclude the assertion at any time of defenses based upon provisions in the policy which exclude or restrict coverage, whether or not such restrictions or exclusions are excepted in such clause.

History.-s. 490, ch. 59-205; s. 3, ch. 76- 168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 404, 809(2nd), ch. 82-243; s. 79, ch. 82- 386.

1Note.- Repealed effective October 1, 1992, by s. 809(2nd), ch. 82- 243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.464 Annuity contracts, pure endowment contracts; standard provisions.-

(1) No fixed- dollar annuity, variable annuity, or pure endowment contract , other than a reversionary annuity, survivorship annuity, or group annuity, shall be delivered or issued for delivery in this state unless it contains in substance each of the provisions set forth in ss . 627.465-627.470, inclusive, or provisions which in the opinion of the department are more favorable to the policyholder. Any of such provisions not applicable to single-premium annuities or single-premium pure endowment contracts shall not to that extent be incorporated therein .

(2) This section does not apply to contracts for annuities included in or upon the lives of beneficiaries under life insurance policies.

History.-s. 491, ch. 59- 205; s. 10, ch. 61-441 ; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 404, 809(2nd), ch. 82-243; s. 79, ch. 82-386.

'Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11.61 in advance of that date.

1627.465 Annuity contracts, pure endowment contracts; grace period.-ln a fixed-dollar annuity, variable annuity, or pure endowment contract , other than a reversionary, survivorship, or group annuity, the contract shall provide that there shall be a period of grace of 1 month but not less than 30 days, within which any stipulated payment to the insurer falling due after the first may be made, subject, at the option of the insurer, to an interest charge thereon at a rate to be specified in the contract but not exceeding 6 percent per year for the number of days of grace elapsing before such payment, during which period of grace the contract shall continue in full force . If a claim arises under the contract on account of death prior to expiration of the period of grace before the overdue payment to the insurer or the deferred payments of the current contract year , if any, are paid , the amount of such payments, with interest on any overdue payments, may be deducted from any amount payable under the contract in settlement.

589


History.- s. 492, ch. 59-205; s. 11 , ch. 61-441; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 390, 404, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


1627.466 Annuity contracts, pure endowment contracts; incontestability.-lf any statements, other than those relating to age, sex, and identity, are required as a condition to issuing a fi xed-dollar annuity contract, variable annuity contract, or pure endowment contract, other than a reversionary, survivorship , or group annuity, and subject to s. 627.468, the contract shall provide that it shall be incontestable after it has been in force during the lifetime of the person, or of each of the persons as to whom such statements are required , for a period of 2 years from its date of issue except for nonpayment of stipulated payments to the insurer; and, at the option of the insurer, the contract may also except any provisions relative to benefits in the event of disability and any provisions which grant insurance specifically against death by accident or accidental means.

History.-s. 493, ch. 59-205; s. 12, ch. 61 - 441 ; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 391, 404, 809(2nd), ch . 82-243; s. 79, ch. 82- 386.


1627.467 Annuity contracts, pure endowment contracts; entire contract-In a fixed-dollar annuity contract , variable annuity contract , or pure endowment contract , other than a reversionary, survivorship, or group annuity, the contract shall provide that it shall constitute the entire contract between the parties or, if a copy of the application is endorsed upon or attached to the contract when issued, that the contract and the application therefor shall constitute the entire contract between the parties.

History.-s. 494, ch. 59-205; s. 13, ch. 61-441 ; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 392, 404, 809(2nd), ch . 82-243; s. 79, ch. 82- 386.


1627.468 Annuity contracts, pure endowment contracts; misstatement of age or sex.-ln a fixed-dollar annuity contract , variable annuity contract , or pure endowment contract , other than a reversionary, survivorship, or group annuity, the contract shall provide that if the age or sex of the person or persons upon whose life or lives the contract is made, or of any of them, has been misstated , the amount payable or benefits accruing under the contract shall be such as the stipulated payment or payments to the insurer would have purchased according to the correct age or sex; and that if the insurer shall make or has made any overpayment or overpayments on account of any such misstatement , the amount thereof, with interest at the rate to be specified in the contract but not exceeding 6 percent per year, may be charged against the current or next succeeding payment or payments to be made by the insurer under the contract.

History.-s. 495, ch . 59-205; s. 14, ch. 61-441; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81 - 318; ss. 393, 404, 809(2nd), ch. 82-243; s. 79, ch. 82-386. 'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is

scheduled for review pursuant to s. 11.61 in advance of that date.

1627.469 Annuity contracts, pure endowment contracts; dividends.-lf a fi xed-dollar annuity contract , variable annuity contract , or pure endowment contract is participating , the contract shall contain a provision

that , beginning not later than the end of the third contract year, the insurer shall annually ascertain and apportion any divisible surplus accruing on the contract.

Hlstory.-s. 496, ch. 59-205; s. 15, ch. 61-441 ; s. 3, ch. 76- 168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 394, 404, 809(2nd), ch. 82- 243; s. 79, ch. 82-386.

' Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.470 Annuity contracts, pure endowment contracts; reinstatement-In a fixed-dollar annuity contract , variable annuity contract, or pure endowment contract, other than a reversionary , survivorship, or group annuity, the contract shall provide that it may be reinstated upon written application therefor at any time within 1 year from the date of default in making stipulated payments to the insurer, unless the cash surrender value has been paid , but all overdue stipulated payments and any indebtedness to the insurer on the contract shall be paid or reinstated, with interest thereon at a rate to be specified in the contract but not exceeding 6 percent per year payable annually; and , when applicable, the insurer may also include a requirement of evidence of insurability satisfactory to the insurer.

History.-s. 497, ch. 59- 205; s. 16, ch. 61-441 ; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81 -318; ss. 395, 404, 809(2nd), ch. 82- 243; s. 79, ch. 82- 386.

' Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.471 Reversionary annuities; standard provisions.-

(1) Except as stated in this section, no contract for a reversionary annuity shall be delivered or issued for delivery in this state unless it contains in substance:

(a) Those prov isions specified in ss . 627.465 through 627.469, except that under s. 627.465 the insurer may at its option provide for an equitable reduction of the amount of the annuity payments in settlement of an overdue or deferred payment in lieu of providing for deduction of such payments from an amount payable upon settlement under the contract; and

(b) A provision that the contract may be reinstated at any time within 3 years from the date of default in making stipulated payments to the insurer, upon production of evidence of insurability satisfactory to the insurer, and upon condition that all overdue payments and any indebtedness to the insurer on account of the contract are paid (or, within the limits permitted by the then cash value of the contract , reinstated) with interest as to both payments and indebtedness at a rate to be specified in the contract but not exceeding 8 percent per year compounded annually.

(2) This section does not apply to group annuities or to annuities included in life insurance policies, and any of such provisions not applicable to single-premium annuities shall not to that extent be incorporated therein.

Hlstory.-s. 498, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 396, 404, 809(2nd), ch. 82- 243; s. 79, ch. 82-386.


1627.472 Incontestability after reinstatement-A reinstated policy of life insurance, fixed-dollar annuity contract , or variable annuity contract may be contested on account of fraud or misrepresentation of facts material to the reinstatement only for the same period following reinstatement and with the same conditions and exceptions as the policy provides with respect to contestabili-

• 590


ty after original issuance. History.- s. 499, ch. 59-205; s. 17, ch. 61-441; s. 3, ch. 76-168; s. 1, ch . 77-457;

ss. 2, 3, ch. 81-318; ss. 404, 809(2nd), ch. 82- 243; s. 79, ch. 82-386. 'Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and


1627.473 Policy seHiements.-Any life insurer shall have the power to hold under agreement the proceeds of any policy issued by it, upon such terms and restrictions as to revocation by the policyholder and control by beneficiaries and with such exemptions from the claims of creditors of beneficiaries other than the policyholder as set forth in the policy or as agreed to in writing by the insurer and the policyholder. Upon maturity of a policy, in the event the policyholder has made no such agreement, the insurer shall have the power to hold the proceeds of the policy under an agreement with the beneficiaries. The insurer shall not be required to segregate the funds so held but may hold them as part of its general assets.

History.-s. 500, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 404, 809(2nd), ch. 82- 243; s. 79, ch. 82-386.


1627.474 Policy must contain entire contract-No life insurer or its agent shall make any contract of insurance or agreement as to such contract other than as plainly expressed in the policy.

History.-s. 501, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 397, 404, 809(2nd), ch. 82- 243; s. 79, ch. 82-386.

1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .6 1 in advance of that date.

1627.475 Nonforfeiture benefits; certain interim policies.-Each life insurance policy issued between the effective date of this code and the operative date of s. 627.476 shall provide:

(1) That , in the event of default in any premium, the insurer will grant, upon proper request not later than 60 days after the due date of the premium in default , a paid-up nonforfeiture benefit on a plan stipulated in the policy.

(2) That , upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums have been paid for at least 3 full years , the insurer will pay, in lieu of any paid-up nonforfeiture benefit , a cash surrender value at least equal to the minimum cash surrender value hereinafter specified . The minimum cash surrender value shall be equal to:

(a) The reserve on the date of default of the premium less a sum of not more than 2.5 percent of the face amount; or

(b) An amount as defined ins. 627.476 but on the basis of the Commissioners ' 1941 Standard Ordinary Mortality Table in lieu of the Commissioners' 1958 Standard Ordinary Mortality Table therein specified . The policy shall reserve to the insurer the right to defer the granting of any cash surrender value for 6 months after demand therefor with surrender of the policy.

(3) That a specified paid-up nonforfeiture benefit , the present value of which shall be at least equal to the cash surrender value, shall become effective as specified in the policy unless the person entitled to make such election elects another available option not later than 60 days after the due date of the premium in default ; however, when the mortal ity table used is the

591

Commissioners ' 1941 Standard Ordinary Mortality Table, the rates of mortality to be assumed in calculating any extended term insurance with accompanying pure endowment, if any, may be not more than 130 percent of the rates of mortality according to such table.

(4) A statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefit , if any, available under the policy on each policy anniversary either during the first 20 policy years or during the term of the policy, whichever is shorter.

This section does not apply to term policies of uniform amount of 15 years ' duration or less, to increasing term policies of 15 years ' duration or less, or to decreasing term policies.

History.- s. 502, ch. 59-205; s. 3, ch. 76- 168; s. 1, ch. 77-457; ss. 2, 3, ch. 81 -318; ss. 404, 809(2nd), ch. 82- 243; s. 79, ch. 82-386.

1Note.- Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.476 Standard Nonforfeiture Law for Life Insurance.-

(1) SHORT TITLE.- This section shall be known as the "Standard Nonforfeiture Law for Life Insurance."

(2) NONFORFEITURE PROVISIONS.-In the case of policies issued on or after the operative date of this section as defined in subsection (14) , no policy of life insurance, except as set forth in subsection (13) , shall be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the department are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements hereinafter specified and are essentially in compliance with subsection (12):

(a) That in the event of default in any premium payment, after premiums have been paid for at least 1 full year in the case of ordinary insurance or 3 full years in the case of industrial insurance, the insurer will grant, upon proper request not later than 60 days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of such amount as may be hereinafter specified . In lieu of such stipulated paid-up nonforfeiture benefit , the company may substitute, upon proper request not later than 60 days after the due date of the premium in default , an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier payment of endowment benefits .

(b) That upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums have been paid for at least 3 full years in the case of ordinary insurance or 5 full years in the case of industrial insurance, the insurer will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be hereinafter specified .

(c) That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make such election elects another


available option not later than 60 days after the due date of the premium in default.

(d) That if the policy becomes paid up by completion of all premium payments, or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance, the insurer will pay, upon surrender of the policy within 30 days after any policy anniversary, a cash surrender value of such amount as may be hereinafter specified.

(e) In the case of a policy which causes on a basis guaranteed in the policy unscheduled changes in benefits or premiums , or which provides an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest rate, and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available under the policy. In the case of any other policy, a statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefit , if any, available under the policy on each policy anniversary, either during the first 20 policy years or during the term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the insurer on the policy.

(f) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance law of this state; an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the insurer on the policy; if a detailed statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that such method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered; and a statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary beyond the last anniversary for which such values and benefits are consecutively shown in the policy.

(3) OMITTED PROVISIONS.-Any of the provisions or portions thereof set forth in paragraphs (a) through (f) of subsection (2) which are not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy. The insurer shall reserve the right to defer the payment of any cash surrender value for a period of 6 months after demand therefor with surrender of the policy.

(4) CASH SURRENDER VALUE.-(a) Any cash surrender value available under the

policy in the event of default in the premium payment due on any policy anniversary, whether or not required by subsection (2), shall be an amount not less than the excess, if any, of the present value on such anniversary

of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up additions, if there had been no default, over the sum of:

1. The then present value of the adjusted premiums as defined in subsections (6) and (9), corresponding to premiums which would have fallen due on and after such anniversary, and

2. The amount of any indebtedness to the insurer on account of or secured by the policy.

(b) For any policy issued on or after the operative date of subsection (9) , as defined therein, which provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value referred to in paragraph (a) shall be an amount not less than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender value as defined in such paragraph for a policy which provides only the benefits otherwise provided by such rider or supplemental policy provision . For any family policy issued on or after the operative date of subsection (9) , as defined therein , which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse reaches age 71 , the cash surrender value referred to in paragraph (a) shall be an amount not less than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the same age without such term insurance on the life of the spouse and the cash surrender value as defined in such paragraph for a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse.

(c) Any cash surrender value available within 30 days after any policy anniversary under any policy paid up by completion of all premium payments, or any policy continued under any paid-up nonforfeiture benefits, whether or not required by subsection (2), shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the insurer on account of or secured by the policy.

(5) PAID-UP NONFORFEITURE BENEFITS.-Any paid-up nonforfeiture benefit available under the policy in the event of default in the premium payment due on any policy anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for by the policy, or, if none is provided for, that cash surrender value which would have been required by this section in the absence of the condition that premiums shall have been paid for at least a specified period .

(6) THE ADJUSTED PREMIUM.-This subsection shall not apply to policies issued on or after the operative date of subsection (9), as defined therein. The adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding extra premiums on a substandard

592


policy, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of:

(a) The then present value of the future guaranteed benefits provided for by the policy;

(b) Two percent of the amount of the insurance if the insurance is uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with the duration of the policy;

(c) Forty percent of the adjusted premium for the first policy year; and

(d) Twenty-five percent of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less.

However, in applying the percentages specified in paragraphs (c) and (d) , no adjusted premium shall be deemed to exceed 4 percent of the amount of insurance or uniform amount equivalent thereto. The date of issue of a policy for the purpose of this subsection shall be the date as of which the rated age of the insured is determined.

(7) EQUIVALENT UNIFORM AMOUNT.- This subsection shall not apply to policies issued on or after the operative date of subsection (9) , as defined therein. In the case of a policy providing an amount of insurance varying with the duration of the policy, the equivalent uniform amount thereof for the purpose of subsection (6) shall be deemed to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the policy, except that, in the case of a policy for a varying amount of insurance issued on the life of a child under age 10, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age 10 were the amount provided by such policy at age 10.

(8) MORTALITY TABLES; INTEREST.- This subsection shall not apply to policies issued on or after the operative date of subsection (9), as defined therein. All adjusted premiums and present values referred to in this section shall for d.ll policies of ordinary insurance be calculated on the basis of the Commissioners' 1958 Standard Ordinary Mortality Table, except that, for any category of such policies issued on female risks , adjusted premiums and present values may be calculated according to an age not more than 6 years younger than the actual age of the insured . Such calculations for all policies of industrial insurance shall be made on the basis of the following tables:

(a) For policies issued on and after the operative date of this section but before January 1, 1968, the 1941 Standard Industrial Mortality Table, unless the Commissioners ' 1961 Standard Industrial Mortality Table is applicable according to subsection (14);

(b) For policies issued on and after January 1, 1968, the Commissioners ' 1961 Standard Industrial Mortality Table.

All calculations shall be made on the basis of the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits; however, such rate of interest shall not exceed 3.5 percent per year, except that a rate of interest not exceeding 4 percent per year may be used for policies issued on or after July 1, 1973, and prior to October 1, 1979, and a rate of interest not exceeding 4.5 percent per year may be used for policies issued on or after October 1, 1979, and a rate of interest not exceeding 5.5 percent per year may be used for policies issued on or after October 1 , 1980. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners ' 1958 Extended Term Insurance Table, for ordinary policies. In the case of industrial policies:

(c) For policies issued on and after the operative date of this section but before January 1, 1968, not more than 130 percent of the rates of mortality according to the 1941 Standard Industrial Mortality Table, unless the Commissioners ' 1961 Industrial Extended Term Insurance Table is applicable according to subsection (14), in which case not more than those of the latter table;

(d) For policies issued on and after January 1, 1968, not more than those of the Commissioners ' 1961 Industrial Extended Term Insurance Table.

For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the insurer and approved by the department.

(9) CALCULATION OF ADJUSTED PREMIUMS AND PRESENT VALUES FOR POLICIES ISSUED AFTER OPERATIVE DATE OF THIS SUBSECTION.-

(a) This subsection shall apply to all policies issued on or after the operative date of this subsection, as defined herein . Except as provided in paragraph (g), the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums shall be equal to the sum of:

1. The then present value of the future guaranteed benefits provided for by the policy;

2. One percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years ; and

3. One hundred and twenty-five percent of the nonforfeiture net-level premium as hereinafter defined.

593


However, in applying the percentage specified in subparagraph 3., no nonforfeiture net-level premium shall be deemed to exceed 4 percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years . The date of issue of a policy for the purpose of this subsection shall be the date as of which the rated age of the insured is determined.

(b) The nonforfeiture net-level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value , at the date of issue of the policy, of an annuity of one per annum payable on the date of issue of the policy and on each anniversary of such policy on which a premium falls due.

(c) In the case of a policy which causes on a basis guaranteed in the policy unscheduled changes in benefits or premiums , or which provides an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums, the future adjusted premiums, nonforfeiture net-level premiums, and present values shall be recalculated on the assumption that future benefits and premiums do not change from those stipulated by the policy immediately after the change.

(d) Except as otherwise provided in paragraph (g), the recalculated future adjusted premiums for any such policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits , that the present value, at the time of change tp the newly defined benefits or premiums, of all such future adjusted premiums shall be equal to the excess of the sum of the then present value of the then future guaranteed benefits provided for by the policy and the additional expense allowance, if any, over the then cash surrender value , if any, or present value of any paid-up nonforfeiture benefit under the policy.

(e) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum of 1 percent of the excess, if positive, of the average amount of insurance at the beginning of each of the first 10 policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of the first 10 policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and 125 percent of the increase, if positive, in the nonforfeiture net-level premium.

(f) The recalculated nonforfeiture net-level premium shall be equal to the result obtained by dividing (A) and (B) where:

1. (A) equals the sum of: a. The nonforfeiture net-level premium applicable

prior to the change times the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred , and

b. The present value of the increase in future guar-anteed benefits provided for by the policy; and

2. (B) equals the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due.

(g) Notwithstanding any other provisions of this subsection to the contrary, in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance so that , in each policy year, such policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform amounts of insurance on the standard basis .

(h) All adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of the Commissioners ' 1980 Standard Ordinary Mortality Table or, at the election of the insurer for any one or more specified plans of life insurance, the Commissioners' 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors; shall for all policies of industrial insurance be calculated on the basis of the Commissioners ' 1961 Standard Industrial Mortality Table; and shall for all policies issued in a particular calendar year be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this subsection for policies issued in that calendar year. However:

1. At the option of the insurer, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this subsection, for policies issued in the immediately preceding calendar year.

2. Under any paid-up nonforfeiture benefit, includ-ing any paid-up dividend additions, any cash surrender value available, whether or not required by subsection (2) , shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any.

3. An insurer may calculate the amount of any guar-anteed paid-up nonforfeiture benefit , including any paid-up additions under the policy, on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.

4. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit , the rates of mortality assumed may be not more than those shown in the Commissioners ' 1980 Extended Term Insurance Table for policies of ordinary insurance and not more than the Commissioners ' 1961 Industrial Extended Term Insurance Table for policies of industrial insurance.

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5. For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on appropriate modifications of the aforementioned tables.

(i) The nonforfeiture interest rate per year for any policy issued in a particular calendar year shall be equal to 125 percent of the calendar year statutory valuation interest rate for such policy as defined in the Standard Valuation Law, rounded to the nearest one-fourth of 1 percent.

(j) Notwithstanding any other provision in this code to the contrary, any refiling of nonforfeiture values or their methods of computation for any previously approved policy form which involves only a change in the interest rate or mortality table used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form .

(k) After October 1, 1981 , any insurer may file with the department a written notice of its election to comply with the provisions of this subsection after a specified date before January 1, 1989, which shall be the operative date of this subsection for that insurer. If an insurer makes no such election, the operative date of this subsection for the insurer shall be January 1, 1989.

(10) INDETERMINATE PREMIUMS OR MINIMUM VALUES.-In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurer based on then estimates of future experience, or in the case of any plan of life insurance which is of such a nature that minimum values cannot be determined by the methods described in subsections (2)-(9) :

(a) The department must be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by subsections (2)-(9) ;

(b) The department must be satisfied that the benefits and the pattern of premiums of that plan are not such as to mislead prospective policyholders or insureds; and

(c) The cash surrender values and paid-up nonforfeiture benefits provided by such plan must not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this Standard Nonforfeiture Law for Life Insurance, as determined by rules promulgated by the department.

(11) CALCULATION OF VALUES.-Any cash surrender value and any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in subsections (4)-(9) may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death . The net value of any paid-up additions, other than paid-up term additions, shall be not less than the amounts used to provide such additions. If term insurance benefits are provided by a rider or by a supplemental policy provision to which, if issued as a separate policy, this section would apply, additional cash surrender values and additional paid-up nonforfeiture benefits, if any, at least equal to those required if is-

sued as a separate policy, may be provided by the insurer and shall be deemed to be in compliance with this section. Notwithstanding the provisions of subsection (4), additional benefits payable:

(a) In the event of death or dismemberment by accident or accidental means,

(b) In the event of total and permanent disability, (c) As reversionary annuity or deferred reversionary

annuity benefits, (d) As term insurance benefits provided by a rider or

supplemental policy provision to which, if issued as a separate policy, this section would not apply,

(e) As term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child , if such term insurance expires before the child 's age is 26, is uniform in amount after the child 's age is 1, and has not become paid up by reason of the death of a parent of the child , and

(f) As other policy benefits additional to life insurance by endowment benefits,

and premiums for all such additional benefits, shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this section ; and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits.

(12) CALCULATION OF VALUES FOR POLICIES ISSUED AFTER 1984.- This subsection , in addition to all other applicable subsections of this section, shall apply to all policies issued on or after January 1, 1985. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall be in an amount which does not differ by more than 0.2 percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years, from the sum of the greater of zero and the basic cash value hereinafter specified and the present value of any exiiting paid-up additions less the amount of any indebtedness to the insurer under the policy. The basic cash value shall be equal to the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy , excluding any existing paid-up additions and before deduction of any indebtedness to the insurer, if there had been no default, less the then present value of the nonforfeiture factors , as hereinafter defined , corresponding to premiums which would have fallen due on and after such anniversary. However, the effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in subsection (4), shall be the same as are the effects specified in subsection (4) on the cash surrender values defined in that subsection. The nonforfeiture factor for each policy year shall be an amount equal to a percentage of the adjusted premium for the policy year, as defined in subsection (6) or subsection (9), whichever is applicable. Except as is required by the next succeeding sentence of this paragraph , such percentage:

(a) Must be the same percentage for each policy year between the second policy anniversary and the later of the fifth policy anniversary and the first policy anniversary at which there is available under the policy a

595


cash surrender value in an amount, before including any paid- up additions and before deducting any indebtedness, of at least 0.2 percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years ; and

(b) Must be such that no percentage after the later of the two policy anniversaries specified in paragraph (a) may apply to fewer than 5 consecutive policy years.

However, no basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in subsection (6) or subsection (9), whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value. All adjusted premiums and present values referred to in this subsection shall be calculated for a particular policy on the same mortality and interest bases as are used in demonstrating the compliance of the policy with the other subsections of this law. The cash surrender values referred to in th is subsection shall include any endowment benefits provided for by the policy. Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment, shall be determined in manners consistent with the manners specified for determining the analogous minimum amounts in subsections (2) , (3) , (4) , (5) , (9) , and (11 ). The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed in paragraphs (11 )(a)-(f) shall conform with the principles of this subsection.

(13) EXCEPTIONS.- This section does not apply to any:

(a) Reinsurance; (b) Group insurance; (c) Pure endowment contract ; (d) Annuity or reversionary annuity contract; (e) Term policy of uniform amount which provides no

guaranteed nonforfeiture or endowment benefits , or renewal thereof, of, 20 years or less expiring before age 71 , for which uniform premiums are payable during the entire term of the policy;

(f) Term policy of decreasing amount which provides no guaranteed nonforfeiture or endowment benefits , on which each adjusted premium calculated as specified in subsections (6)-(9) is less than the adjusted premium so calculated on a policy of uniform amount which provides no guaranteed nonforfeiture or endowment benefits, or renewal thereof, issued at the same age and for the same initial amount of insurance for a term of 20 years or less expiring before age 71 , for which uniform premiums are payable during the entire term of the policy ; or

(g) Policy which provides no guaranteed nonforfeiture or endowment benefits for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit , at the beginning of any policy year, calculated as specified in subsections (4)-(9) exceeds 2.5 percent of the amount of insurance at the beginning of the same policy year.

For purposes of determining the applicability of this section, the age at expiry for a joint term life insurance policy shall be the age at expiry of the oldest life.

(14) OPERATIVE DATE.-After the effective date of this code, any insurer may file with the department a written notice or notices of its election to comply with the provisions of this section on and after a specified date or dates before January 1, 1966, as to either or both of its policies of ordinary and industrial insurance, in which case such specified date or dates shall be the operative date of this section with respect to such policies. The operative date of this section for policies of both ordinary and industrial insurance shall be the earlier of January 1, 1966, and any prior operative date or dates resulting from such previously filed written notices. With respect to policies of industrial insurance issued on and after the operative date of this section for such policies but before January 1, 1968, any insurer may file with the department written notice of its election to have the Commissioners ' 1961 Standard Industrial Mortality Table and the Commissioners ' 1961 Industrial Extended Term Insurance Table applicable with respect to subsection (8) for policies issued on and after the date specified in such election.

History.-s. 503, ch. 59-205; s. 3, ch. 61-106; ss . 2, 3, ch. 65-1 1; ss. 13, 35, ch. 69-106; s. 3, ch. 73-324; s. 3, ch . 76- 168; s. 2, ch. 77- 324; s. 1, ch . 77-457; ss. 2, 3, ch . 79-356; ss. 1, 2, ch. 80-137; ss. 5, 6, ch. 81-289; ss. 2, 3, ch. 81-318; ss. 398, 404, 809(2nd), 810, ch . 82-243; ss . 54, 79, ch. 82-386.


1627.479 Prohibited policy plans.-(1) No insurer shall issue policies , certificates, or

contracts to policyholders or members providing for the grouping of its policyholders or members into groups and divisions , classified according to age, and providing for payment of contingent endowment benefits , by whatever name called , from special funds created for such purpose to the oldest member in seniority of the group or division, or under any other similar plan.

(2) No insurer shall issue policies containing annual endowments or other specialty-type policies such as founder 's policies or coupon-bearing policies . The department shall , by rule, define such prohibited policies.

(3) The department shall revoke the certificate of authority of any insurer which violates this section .

History.-s. 506, ch. 59-205; ss. 13, 35, ch. 69- 106; s. 1, ch. 74-50; s. 3, ch. 76-168; s. 1, ch . 77-457; ss. 2, 3, ch. 81-318; ss. 401, 404, 809(2nd), ch. 82- 243; s. 79, ch. 82- 386. 'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is

scheduled for review pursuant to s. 11.61 in advance of that date.

1627.480 Cash payments of single-premium life policies.-Premiums for single-premium life insurance policies shall be paid in cash. This section is not applicable to the use of dividends to purchase paid-up addi· tional insurance or to such other usual and customary methods of paying for life insurance as may be permitted by rule of the department.

History.-s. 1, ch . 70-66; s. 1, ch. 70-439; s. 3, ch. 76- 168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 402, 404, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


1627.481 Special permit for certain annuity agreements.-

(1) The department may, in its discretion, issue a special permit to make annuity agreements with donors

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to any duly organized domestic or foreign nonstock corporation, or to any unincorporated charitable trust , if such corporation or trust has been in active operation for at least 10 years prior thereto and has qualified as an exempt organization under the Internal Revenue Code, 26 U.S.C. s. 501(c)(3). Such permit shall authorize such corporation or trust to receive gifts conditioned upon, or in return for, its agreement to pay an annuity to the donor or other designated beneficiary or beneficiaries and to make and carry out such annuity agreement. Every such corporation or trust shall , before making any such agreement , f1le w1th the department copies of its forms of agreements with annuitants and a schedule of its maximum annuity rates, which shall be so computed , on the basis of the annuity standard adopted by it for the calculation of its reserves , as to return to such corporation or trust upon the death of the annuitant a residue at least equal to one-half the original gift or other consideration for such annuity.

(2) Every such domestic corporation or such domestic or foreign trust shall have and maintain admitted assets at least equal to the sum of the reserves on its outstanding agreements, calculated in accordance with the United States Internal Revenue Code Revenue Ruling 72-438, and a surplus of 25 percent of such reserves. In determining the reserves of any such corporation or trust, a deduction shall be made for all or any portion of an annuity risk which is reinsured by a life insurance company authorized to do business in this state. The assets of such corporation or trust in an amount at least equal to the sum of such reserves and surplus shall be invested only in securities permitted under part II of chapter 625 for the investment of the reserves of authorized life insurance companies; and such assets shall be segregated as separate and distinct funds , independent of all other funds of such corporation or trust, and shall not be applied for the payment of the debts and obligations of the corporation or trust or for any purpose other than the annuity benefits specified in this section.

(3) No such foreign corporation shall be permitted to make these annuity agreements in this state unless it complies with all the requirements of this section imposed upon like domestic corporations, except that the corporation may invest its reserve and surplus funds in the kind of securities permitted by the laws of the state in which it was incorporated or organized .

(4) If the department finds that any such corporation or trust having such a special permit has failed to comply with the requirements of this section, it may revoke or suspend such permit or it may order such corporation or trust to cease making any new annuity contracts until such requirements have been satisfied. The department may, in its discretion, require annual statements by such corporation or trust and may accept in lieu thereof a sworn statement by two or more of the principal officers thereof, in such form as will satisfy the department that the requirements of this section are being complied with.

(5) Except as provided in this section, every such corporation or trust shall be exempt from the provisions of this code in making annuity agreements pursuant to a special permit issued under this section.

(6) Any annuity agreement entered into by a corporation or trust the sole purpose of which is to support a state institution of higher learning shall contain the following clause:

"This agreement is the entire contract between the parties, with rights and responsibilities of each party to the other as set forth herein. The donor or annuitant shall not have recourse against any assets of the state other than any funds or assets donated by, or funds derived from any assets donated by, the donor as set forth herein."

History.-s. 1, ch. 74- 149: s. 3, ch. 76-168: s. 1, ch. 77-457: s. 21, ch. 78- 95: ss. 2, 3, ch. 81-318: ss. 403, 404, 809(2nd), ch. 82- 243: s. 79, ch. 82-386.

1Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s . 11 .61 in advance of that date.

627.501 627.502 627.503 627.504 627.505 627.506 627 .507 627 .508 627 .509 627.510 627.511 627.512 627.513 627.514 627 .515 627.516 627.517 627.521

PART IV

INDUSTRIAL LIFE INSURANCE POLICIES

Scope of this part. "Industrial life insurance" defined; reporting . Required provisions. Grace period. Entire contract ; statements in application . Incontestability . Misstatement of age or sex. Dividends. Reinstatement. Settlement on proof of death . Authority to alter contract. Beneficiary. Facil ity of payment. Nonforfeiture benefits; certain interim policies. Title of industrial life insurance policy. Advance payment of premiums. Conversion. Disclosure statements.

1627.501 Scope of this part.- The provisions of this part apply only to industrial life insurance policies. Sections 627.463, 627.472, 627.476, and 627.479 also apply to industrial life insurance policies.

History.- s. 507, ch. 59-205: s. 3, ch. 76-168: s. 1, ch. 77- 457: ss. 2, 3, ch. 81 - 318: ss. 420, 809(2nd), ch. 82-243: s. 79, ch. 82-386.

1Note.- Repealed effective October 1, 1992, by s. 809(2nd), ch . 82- 243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.502 "Industrial life insurance" defined; reporting.-

(1) For the purposes of this code, "industrial life insurance" is that form of life insurance written under policies under which premiums are payable monthly or more often, bearing the words "industrial policy" or "weekly premium policy" or words of similar import imprinted upon the policies as part of the descriptive matter, and issued by an insurer which, as to such industrial life insurance, is operating under a system of collecting a debit by its agent.

(2) Every life insurer transacting industrial life insurance shall report to the department all annual statement data regarding the exhibit of life insurance, including relevant information for industrial life insurance.

History.-s. 508, ch. 59- 205: s. 3, ch. 76-168: s. 1, ch. 77- 457: ss. 2, 3, ch. 81-318: ss. 405, 420, 809(2nd), ch . 82- 243: s. 79, ch. 82-386.

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1Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.503 Required provisions.-(1) No policy of industrial life insurance shall be de

livered or issued for delivery in this state unless it contains in substance each of the provisions as required in s. 627.476 and ss. 627.504-627.521 , or provisions which in the opinion of the department are more favorable to the policyholder.

(2) Any such provisions or portions not applicable to single-premium or term policies shall to that extent not be incorporated therein.

History.- s. 509, ch. 59-205; ss. 13, 35, ch. 69-106; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch . 81-318; ss. 406, 420, 809(2nd), ch. 82-243; s. 79, ch. 82-386. 'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is


1627.504 Grace period.-The policy shall provide that the insured is entitled to a grace period of 4 weeks within which the payment of any premiums due after the first premium payment may be made, except that in policies the premiums for which are payable monthly, the grace period shall be 1 month, but not less than 30 days; and that during the grace period the policy shall continue in full force, but if during the grace period there is a claim under the policy, then any premiums due and unpaid may be deducted from any settlement under the policy.

History.-s. 510, ch. 59- 205; s. 3, ch. 76-168; s. 1, ch. 77-457 ; ss. 2, 3, ch. 81-318; ss. 407, 420, 809(2nd), ch. 82-243; s. 79, ch. 82- 386.

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pl.!rsuant to s. 11.61 in advance of that date.

'627.505 Entire contract; statements in application. -The policy shall provide that the policy shall constitute the entire contract between the parties or, if a copy of the application is endorsed upon or attached to the policy when issued, that the policy and the application therefor shall constitute the entire contract. If the application is so made a part of the contract, the policy shall also provide that all statements made by the applicant in such application shall , in the absence of fraud , be deemed to be representations and not warranties.

History.-s. 511, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81 -318; ss. 408, 420, 809(2nd), ch . 82-243; s. 79, ch. 82-386.

'Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

'627.506 Incontestability.-The policy shall provide that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of 2 years from its date of issue except for nonpayment of premiums and except, at the option of the insurer, as to provisions providing benefits for disability or specifically for death by accident or accidental means.


•Note.- Expires Oclober 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.507 Misstatement of age or sex.-The policy shall provide that if it is found that the age or sex of the insured , or of any other individual considered in determining the premium, has been misstated , any amount payable or benefit accruing under the policy shall be such as the premium would have purchased according to the correct sex or age. The calculations shall be in accordance with the insurer's rate at the date of issue, and

at the insurer 's option this may be so specified in the policy.

History.- s. 513, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77- 457; ss. 2, 3, ch. 81-31 8; ss. 410, 420, 809(2nd), ch. 82- 243; s. 79, ch . 82-386.


1627.508 Dividends.-Every participating policy shall provide that the insurer shall annually ascertain and apportion any divisible surplus accruing on the policy. This provision shall not prohibit the payment of additional dividends on default of payment of premiums or termination of the policy.

History.- s. 514, ch. 59-205; s. 3, ch. 76-1 68; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 411 , 420, 809(2nd), ch. 82- 243; s. 79, ch. 82- 386.

1Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date.

1627.509 Reinstatement.-The policy shall provide that the policy may be reinstated at any time within 3 years after the date of default in the payment of any premium, unless the policy has been surrendered for its cash value or unless the paid-up term insurance, if any, has expired, upon evidence of insurability satisfactory to the insurer and the payment of all overdue premiums and payment (or, within the limits permitted by the then cash value of the policy, reinstatement) of any other indebtedness to the insurer upon the policy with interest as to both premiums and indebtedness at a rate not exceeding 6 percent per year compounded annually.

History.-s. 515, ch. 59-205; s. 3, ch. 76-1 68; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 412, 420, 809(2nd), ch. 82- 243; s. 79, ch. 82-386.


1627.510 Settlement on proof of death.-(1) The policy shall provide that when the policy be

comes a claim by the death of the insured , settlement shall be made upon surrender of the policy and receipt of due proof of death or after a specified period not exceeding 60 days after such surrender and receipt of such proof. At the insurer's option , surrender of the premium receipt book may also be required.

2(2) Insurers transacting industrial life insurance business in the state who require a claim form to be filed by a claimant for settlement of a policy shall allow the claimant to file the claim using the uniform life insurance claim form developed by the department. The department shall establish by rule a uniform life insurance claim form to be used by claimants for settlement of any industrial life insurance policy issued by an insurer transacting life insurance business in this state.

History.-s. 516, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 413, 420, 809(2nd), ch. 82-243; s. 79, ch . 82-386; s. 1, ch. 87-37.


2Note.- As created by s. 1, ch . 87-37, effective January 1, 1988.

1627.511 Authority to alter contract.-The policy shall provide that no agent shall have the power or authority to waive, change, or alter any of the terms or conditions of any policy; except that , at the option of the insurer, the terms or conditions may be changed by an endorsement or rider signed by a duly authorized officer of the insurer.



598

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1627.512 Beneficiary.-The policy shall provide a space for the name of the beneficiary designated with a reservation of the right to designate or change the beneficiary after the issuance of the policy. The policy may also provide that no designation or change of beneficiary shall be binding on the insurer until endorsed on the policy by the insurer and that the insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life of the insured .

History.- s. 518, ch. 59-205; s. 3, ch. 76- 168; s. 1, ch . 77-457; ss. 2, 3. ch. 81-318; ss. 41 5. 420, 809(2nd), ch . 82-243; s. 79, ch. 82-386.

'Note.- Expires October 1, 1992, pursuant to s. 809(2nd). ch. 82-243, and is scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.513 Facility of payment.-The policy may also provide that if the beneficiary designated in the policy does not make a claim under the policy or does not surrender the policy with due proof of death within the period stated in the policy, which shall not be less than 30 days after the death of the insured, or if the beneficiary is the estate of the insured or is a minor, or dies before the insured or is not legally competent to give valid release, then the insurer may make payment to the executor or administrator of the insured; to any of the insured's relatives by blood or legal adoption or connection by marriage; to any person appearing to the insurer to be equitably entitled thereto; or to any person who has incurred expense for the maintenance, medical attention , or burial of the insured. The policy may also include a similar provision applicable to any other payment due under the policy.

History.-s. 519, ch. 59-205; s. 3. ch. 76- 168; s. 1, ch. 77-457; ss. 2. 3, ch . 81-318; ss. 416, 420, 809(2nd), ch. 82-243; s. 79, ch. 82- 386.

1Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82- 243, and is scheduled for review pursuant to s. 11 .61 in advance of, that date.

1627.514 Nonforfeiture benefits; certain interim policies.-Each industrial life insurance policy delivered or issued for delivery between the effective date of this code and the operative date of s. 627.476 shall provide:

(1) That, in the event of default in any premiums, the insurer will grant, upon proper request not later than 13 weeks or 3 months after the due date of the premium in default , a paid-up nonforfeiture benefit on a plan stipulated in the policy.

(2) That , upon surrender of the policy within 13 weeks or 3 months after the due date of any premium payment in default after premiums have been paid for at least 5 full years , the insurer will pay, in lieu of any paid-up nonforfeiture benefit , a cash surrender value at least equal to the minimum cash surrender value hereinafter specified . The minimum cash surrender value shall be equal to:

(a) The reserve on the date of default of the premium less a sum of not more than 2.5 percent of the face amount; or

(b) An amount as defined in s. 627.476. The policy shall reserve to the insurer the right to defer the granting of any cash surrender value for 6 months after demand therefor with surrender of the policy.

(3) That a specified paid-up nonforfeiture benefit, the present value of which shall be at least equal to the cash surrender value, shall become effective as specified in the policy unless the person entitled to make

such election elects another available option not later than 13 weeks or 3 months after the due date of the premium in default; however, when the mortality table used is the 1941 Standard Industrial Mortality Table, the rates of mortality to be assumed in calculating any extended term insurance with accompanying pure endowment, if any, may be not more than 130 percent of the rates of mortality according to such table.

(4) A statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefits , if any, available under the policy on each policy anniversary either during the first 20 policy years or during the term of the policy, whichever is shorter.

This section does not apply to term policies of uniform amount of 15 years ' duration or less, to increasing term policies of 15 years ' duration or less, or to decreasing term policies .

History.- s. 520, ch. 59- 205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 417, 420, 809(2nd), ch . 82-243; s. 79, ch. 82- 386.


1627.515 Title of industrial life insurance policy.There shall be a title on the face of each such policy briefly describing its form.

History.- s. 521, ch . 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss . 2, 3, ch. 81-318; ss. 420, 809(2nd), ch. 82- 243; s. 79, ch . 82-386.

•Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82-243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.516 Advance payment of premiums.-Each insurer shall allow a refund or discount on advance premiums paid for an industrial life insurance policy if such premiums are paid in a single sum covering a period of at least 13 weeks. Such refund or discount shall reflect the difference in costs between weekly or monthly premium payment and the advance premiums being paid, with an interest factor used to reflect the time value of money.

History.- s. 522, ch. 59-205; s. 3, ch. 76-1 68; s. 1, ch. 77-457; s. 2, ch. 80- 156; ss. 2, 3, ch. 81-318; ss . 420, 809(2nd), ch. 82- 243; s. 79, ch . 82-386.

1Note.-Repealed effective October 1, 1992, by s. 809(2nd), ch. 82- 243, and scheduled for review pursuant to s. 11 .61 in advance of that date.

1627.517 Conversion.-Each industrial life insurance policy delivered or issued for delivery on or after January 1, 1981 , shall provide that if, upon the sale of any new industrial life insurance policy, the combined face value of all industrial life insurance policies, including the new policy, issued by any one insurer, insuring any one life and owned by any one person, would exceed $3,000, then the owner shall have the option of merging and converting such industrial life insurance policies into one regularly offered ordinary life insurance policy with the same insurer with no further evidence of insurability required .

History.-s. 523, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 3, ch. 80-156; ss. 2, 3, ch. 81-318; ss. 418, 420, 809(2nd), ch. 82-243; s. 79, ch. 82-386.


1627.521 Disclosure statements.-Each industrial life insurance premium receipt book delivered in this state on or after January 1, 1983, shall contain the following disclosure statement: "You are entitled to a discount

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or refund from the company if you make your premium payment 13 weeks in advance."

History.-ss. 419, 809(2nd), ch. 82- 243; s. 79, ch . 82-386. 1Note.-Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is


627 .551

627.5515 627 .552 627 .553 627.554 627 .555 627.556 627 .5565 627.5575 627.558 627 .559 627.560 627 .561

627 .562 627 .563 627 .564 627 .565 627 .566 627.567 627.568 627 .5685 627 .5686 627.569

627.570 627.571

627.572 627.5725

627.573

627.574

627.575

PART V

GROUP LIFE INSURANCE POLICIES

Group contracts and plans of self-insurance must meet group requirements.

Out-of-state groups. Employee groups. Debtor groups. Labor union groups. Trustee groups. Credit union groups. Additional groups. Group life insurance for dependents. Provisions required in group contracts . Grace period . Incontestability. Application ; statements deemed represen-

tations. Insurability. Misstatement of age. Payment of benefits . Certificate. Conversion on termination of eligibility. Conversion on termination of policy. Death pending conversion . Continuance of coverage during disability. Waiver of premium for disabled insured. Use of dividends, refunds, rate reductions,

commissions , service fees . Premium rates. Assignment of incidents of ownership in

group life insurance policies , including conversion privileges.

Group life insurance; association. Notification to insureds of cancellation or ex

piration. Replacement or termination of group life in

surance; liability of prior insurer. Liability of succeeding insurer on replace

ment of group policy. Extension of benefits .

1627.551 Group contracts and plans of selfinsurance must meet group requirements.-

(1) No life insurance policy shall be delivered or issued for delivery in this state insuring the lives of more than one individual unless to one of the groups as provided for in ss. 627.552-627.5575 and 627.572, and unless in compliance with the other applicable provisions of this part. No plan of self-insurance providing benefits in the event of death to residents of this state shall be established or maintained unless in compliance with the applicable provisions of this part relating to the rights of individuals to specified benefits and coverages.

(2) Subsection (1) does not apply to life insurance policies or plans of self-insurance:

(a) Insuring or providing benefits only to individuals related by blood, marriage, or legal adoption ;

(b) Insuring or providing benefits only to individuals who have a common interest through ownership of a business enterprise, or a substantial legal interest or equity therein , and who are actively engaged in the management thereof; or

(c) Insuring or providing benefits only to individuals otherwise having an insurable interest in each other 's lives .

(3) Nothing in s. 627.552 shall affect the provisions of ss. 112.08 to 112.14 inclusive.

(4) As used in this part: (a) "Policy," "insurance policy ," and "group life insur

ance policy" include plans of self-insurance providing death benefits .

(b) "Amount of insurance" and "insurance" include the death benefits provided under a plan of selfinsurance.

(c) "Insurer" includes any person or governmental unit providing a plan of self-insurance.

(5) No nongovernmental self-insurance plan providing life insurance shall be contributory by participants.

(6) This section does not apply to any plan which is established or maintained by an individual employer in accordance with the Employee Retirement Income Security Act of 197 4, Pub. L. No. 93-406. This subsection shall not be construed to permit an authorized insurer to issue a group life insurance policy or certificate which does not comply with this part.

History.-s. 524, ch. 59- 205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 3, 10, ch. 80-341; ss. 2, 3, ch. 81-318; ss. 421 , 448, 809(2nd), ch. 82-243; ss. 55, 79, ch. 82-386; s. 5, ch. 83-203; s. 16, ch. 83- 288.

•Note.- Expires October 1, 1992, pursuant to s. 809(2nd), ch. 82-243, and is scheduled for review pursuant to s. 11.61 in advance of that date .

1627.5515 Out-of-state groups.-(1) Any group life insurance policy issued or deliv

ered outside this state under which a resident of this state is provided coverage shall comply with the provisions of this part in the same manner as group life policies issued in this state.

(2) This part does not apply to a group life insurance policy issued or delivered outside this state under which a resident of this state is provided coverage if:

(a) The policy is issued to an employee group the composition of which is substantially as described in s. 627.552; a labor union group the composition of which is substantially as described in s. 627.554; a trustee group the composition of which is substantially as described ins . 627.555; a credit union group the composition of which is substantially as described ins. 627.556; an additional group complying with s. 627.5565; an association group the composition of which is substantially as described ins. 627.572; an association group to cover persons associated in any other common group, which common group is formed primarily for purposes other than providing insurance; a group which is established primarily for the purpose of providing group insurance, provided the benefits are reasonable in relation to the premiums charged thereunder and issuance of the group policy has resulted , or will result, in economies of administration ; or a group of insurance agents of an insurer, which insurer is the policyholder;

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Documents

INSURANCE RATES AND CONTRACTS Ch.627 …...Ch. 627 INSURANCE RATES AND CONTRACTS F.S. 1987 tems or which collects and furnishes to authorized insur ers or rating organizations loss