CHAPTER 625

625.01115 Definitions. As used in this chapter, the term “statutory accounting principles” means accounting principles as defined in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual as of March 2002 and subsequent amendments thereto if the methodology remains substantially consistent. History. — s. 14, ch. 2001-213; s. 864, ch. 2003-261. 625.012 “Assets” defined. In any determination of the financial condition of an insurer, there shall be allowed as “assets” only such assets as are owned by the insurer and which consist of: (1) Cash or cash equivalents, in the possession of the insurer, or in transit under its control, and including the true balance of any deposit in a solvent bank, savings and loan association, or trust company. Cash equivalents are short-term, highly liquid investments, with original maturities of 3 months or less, which are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. (2) Investments, securities, properties, and loans acquired or held in accordance with this code, and in connection therewith the following items: (a) Interest due or accrued on any bond or evidence of indebtedness which is not in default and which is not valued on a basis including accrued interest. (b) Declared and unpaid dividends on stock and shares, unless such amount has otherwise been allowed as an asset. (c) Interest due or accrued upon a collateral loan in an amount not to exceed 1 year’s interest thereon. (d) Interest due or accrued on deposits in solvent banks, savings and loan associations, and trust companies, and interest due or accrued on other assets, if such interest is in the judgment of the office a collectible asset. (e) Interest due or accrued on a current mortgage loan, in an amount not exceeding in any event the amount, if any, of the excess of the value of the property less delinquent taxes thereon over the unpaid principal; but in no event shall interest accrued for a period in excess of 90 days be allowed as an asset. (f) Rent due or accrued on real property if such rent is not in arrears for more than 3 months, and rent more than 3 months in arrears if the payment of such rent is adequately secured by property held in the name of the tenant and conveyed to the insurer as collateral. (g) The unaccrued portion of taxes paid prior to the due date on real property. (3) Premium notes, policy loans, and other policy assets and liens on policies and certificates of life insurance and annuity contracts and accrued interest thereon, in an amount not exceeding the legal reserve and other policy liabilities carried on each individual policy. (4) The net amount of uncollected and deferred premiums and annuity considerations in the case of a life insurer. (5)(a) Premiums in the course of collection, other than for life insurance, not more than 3 months past due, less commissions payable thereon. The foregoing limitation shall not apply to premiums payable directly or indirectly by the United States Government or by any of its instrumentalities. All premiums, excluding commissions payable thereon, due from a controlling or controlled person shall not be allowed as an asset to the extent that: 1. The premiums collected by the controlling or controlled person and not remitted to the insurer are not held in a trust account with a bank or other depository approved by the office. Such funds shall be held as trust funds and may not be commingled with any other funds of the controlling or controlled person. Disbursements from the trust account may be made only to the insurer, the insured, or, for the purpose of returning premiums, an entity who is entitled to returned premiums on behalf of the insured. A written copy of the trust agreement must be filed with and approved by the office prior to its becoming effective. However, the investment income derived from the trust may be allocated as the parties deem proper. A controlling or controlled person shall deposit premiums collected into the trust account within 15 working days after collection; 2. The controlling or controlled person has not provided to the insurer and the insurer has not maintained in its possession an unexpired, clean irrevocable letter of credit, payable to the insurer, issued for a term of not less than 1 year and in conformity with the requirements set forth in this subparagraph, the amount of which equals or exceeds the liability of the controlling or controlled person to the insurer, at all times during the period which the letter of credit is in effect, for premiums collected by the controlling or controlled person. The requirements are that such letter of credit be issued under arrangements satisfactory to the office and that the letter be issued by a banking institution which is a member of the Federal Reserve System and which has a financial standing satisfactory to the office; 3. The controlling or controlled person has not provided to the insurer and the insurer maintained in its possession evidence that the controlling or controlled person has purchased and has currently in effect a financial guaranty bond, payable to the insurer, issued for a term of not less than 1 year and which is in conformity with the requirements set forth in this subparagraph, the amount of which equals or exceeds the liability of the controlling or controlled person to the insurer, at all times during which the financial guaranty bond is in effect, for the premiums collected by the controlling or controlled person. The requirements are that such a financial guaranty bond shall be issued under an arrangement satisfactory to the office and that the financial guaranty bond be issued by an insurer authorized to transact such business in Florida and which has a financial standing satisfactory to the office and which is neither controlled nor controlling in relation to either the insurer or the person for whom the bond is purchased; or 4. A financial evaluation indicates that the controlling or controlled person is unlikely to have the ability to pay such premiums as they become due. The financial evaluation shall be based on a review of the books and records of the controlling or controlled person. (b) For the purpose of this subsection: 1. “Controlling person” means any person owning, directly or indirectly, 25 percent or more of the voting securities of the insurer. 2. “Controlled person” means any person that is, directly or indirectly, owned or controlled by a controlling person. 3. “Controlling” or “controlled person” means any person that individually or in combination with other such persons owes to the insurer an amount that exceeds 50 percent of the insurer’s total premiums in course of collection as stated on the insurer’s financial statement. (c) The office shall disapprove any trust agreement filed pursuant to paragraph (a) which does not assure the safety of the premiums collected. (6) Installment premiums other than life insurance premiums to the extent of the unearned premium reserve carried on the policy to which such premiums apply. (7) Notes and like written obligations not past due, taken for premiums other than life insurance premiums, on policies permitted to be issued on such basis, to the extent of the unearned premium reserves carried thereon. (8) The full amount of reinsurance recoverable by a ceding insurer from a solvent reinsurer and which reinsurance is authorized under s. 624.610. (9) Amounts receivable by an assuming insurer representing funds withheld by a solvent ceding insurer under a reinsurance treaty. (10) Deposits or equities recoverable from underwriting associations, syndicates, and reinsurance funds, or from any suspended banking institution, to the extent deemed by the office available for the payment of losses and claims and at values to be determined by it. (11) Electronic and mechanical machines, including computer-operating software equipment and system software constituting a data processing and accounting system, the cost of which is at least $25,000, which cost shall be amortized in full over a period not to exceed 3 calendar years. The aggregate amount admitted under this subsection shall be limited to 3 percent of the insurer’s capital and surplus, adjusted to exclude any electronic data processing equipment and operating software, net deferred tax assets, and net positive goodwill, as reported on the insurer’s most recently filed annual statement. (12) Goodwill arising from acquisitions and mergers occurring after January 1, 2001. (13) Loans or advances by an insurer to its parent or principal owner if approved by the office. (14) Current income tax recoverables. (15)(a) Assessments levied pursuant to s. 631.57(3)(a) and (e) or s. 631.914 which are paid before policy surcharges are collected and result in a receivable for policy surcharges to be collected in the future. This amount, to the extent it is likely that it will be realized, meets the definition of an admissible asset as specified in the National Association of Insurance Commissioners’ Statement of Statutory Accounting Principles No. 4. The asset shall be established and recorded separately from the liability regardless of whether it is based on a retrospective or prospective premium-based assessment. If an insurer is unable to fully recoup the amount of the assessment because of a reduction in writings or withdrawal from the market, the amount recorded as an asset shall be reduced to the amount reasonably expected to be recouped. (b) Assessments levied as installments pursuant to s. 631.57(3)(e)3. or s. 631.914 which are paid after policy surcharges are collected so that the recognition of assets is based on actual premium written offset by the obligation to the Florida Insurance Guaranty Association or the Florida Workers’ Compensation Insurance Guaranty Association, Incorporated. (16) Capitalized interest. (17) Other assets, not inconsistent with the provisions of this section, deemed by the office to be available for the payment of losses and claims, at values to be determined by it. History. — s. 109, 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. 87, 98, 809(1st), ch. 82-243; s. 28, ch. 83-288; s. 11, ch. 85-245; ss. 184, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 15, ch. 2001-213; s. 865, ch. 2003-261; s. 1, ch. 2015-167; s. 78, ch. 2016-10; s. 8, ch. 2017-132; s. 4, ch. 2020-54. 625.031 Assets not allowed. In addition to assets impliedly excluded by the provisions of s. 625.012, the following expressly shall not be allowed as assets in any determination of the financial condition of an insurer: (1) Trade names, patents, agreements not to compete, and other like intangible assets. (2) Advances (other than policy loans) to officers and directors, whether secured or not, and advances to employees, agents, and other persons on personal security only. (3) Stock of such insurer, owned by it, or any material equity therein or loans secured thereby, or any material proportionate interest in such stock acquired or held through the ownership by such insurer of an interest in another firm, corporation, or business unit. (4) Furniture, fixtures, furnishings, safes, vehicles, libraries, stationery, literature, and supplies, other than data processing and accounting systems authorized under s. 625.012(11), except in the case of title insurers such materials and plants as the insurer is expressly authorized to invest in under s. 625.330 and except, in the case of any insurer, such personal property as the insurer is permitted to hold pursuant to part II of this chapter, or which is acquired through foreclosure of chattel mortgages acquired pursuant to s. 625.329, or which is reasonably necessary for the maintenance and operation of real estate lawfully acquired and held by the insurer other than real estate used by it for home office, branch office, and similar purposes. (5) The amount, if any, by which the aggregate book value of investments as carried in the ledger assets of the insurer exceeds the aggregate value thereof as determined under this code. (6) Bonds, notes, or other evidences of indebtedness which are secured by mortgages or deeds of trust which are in default. (7) Prepaid and deferred expenses. History. — s. 111, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 89, 98, 809(1st), ch. 82-243; s. 40, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 16, ch. 2001-213. 625.041 Liabilities, in general. In any determination of the financial condition of an insurer, liabilities to be charged against its assets include: (1) The amount, estimated in accordance with this code, necessary to pay all of its unpaid losses and claims incurred on or before the date of statement, whether reported or unreported, together with the expenses of adjustment or settlement thereof. (2) With respect to title insurance, the amount, estimated in accordance with this code, necessary to pay all of its known unpaid losses and claims incurred on or before the date of statement, together with the expenses of adjustment or settlement thereof. This requirement is in addition to the reserves required under s. 625.111. (3) With respect to life and health insurance and annuity contracts: (a) The amount of reserves on life insurance policies and annuity contracts in force, valued according to the tables of mortality, rates of interest, and methods adopted pursuant to this code which are applicable thereto. (b) Reserves for disability benefits, for both active and disabled lives. (c) Reserves for accidental death benefits. (d) Any additional reserves that may be required by the office in accordance with practice formulated or approved by the National Association of Insurance Commissioners or its successor organization, on account of such insurance, including contract and premium deficiency reserves. (4) With respect to insurance other than that specified in subsections (2) and (3), the amount of reserves equal to the unearned portions of the gross premiums charged on policies in force, computed in accordance with this part. (5) Taxes, expenses, and other obligations due or accrued at the date of the statement. (6) An insurer in this state that writes workers’ compensation insurance shall accrue a liability on its financial statements for all Special Disability Trust Fund assessments that are due within the current calendar year. Those insurers shall also disclose in the notes to the financial statements required to be filed pursuant to s. 624.424 an estimate of future Special Disability Trust Fund assessments if the assessments are likely to occur and can be estimated with reasonable certainty. History. — s. 112, 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. 90, 98, 809(1st), ch. 82-243; s. 41, ch. 89-360; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 20, ch. 95-211; s. 17, ch. 2001-213; s. 5, ch. 2002-247; s. 6, ch. 2002-282; s. 866, ch. 2003-261; s. 1, ch. 2014-112; s. 1, ch. 2014-132. 625.051 Unearned premium reserve. (1) As to insurance against loss or damage to property, except as provided in s. 625.061, and as to all general casualty insurance and surety insurance, every insurer shall maintain an unearned premium reserve on all policies in force. (2) The office may require that such reserves be equal to the unearned portions of the gross premiums in force after deducting applicable reinsurance in solvent insurers as computed on each respective risk from the date of issue of the policy. If the office does not so require, the portions of the gross premium in force, less applicable reinsurance in solvent insurers, to be held as an unearned premium reserve, shall be computed according to the following table: Term for which policy Reserve for unearned was written premium 1 year or less .......... 1 / 2 2 years .......... 1st year— 3 / 4 2nd year— 1 / 4 3 years .......... 1st year— 5 / 6 2nd year— 1 / 2 3rd year— 1 / 6 4 years .......... 1st year— 7 / 8 2nd year— 5 / 8 3rd year— 3 / 8 4th year— 1 / 8 5 years .......... 1st year— 9 / 10 2nd year— 7 / 10 3rd year— 1 / 2 4th year— 3 / 10 5th year— 1 / 10 Over 5 years .......... pro rata (3) In lieu of computation according to the foregoing table, the insurer at its option may compute all of such reserves on a monthly or more frequent pro rata basis. (4) After adopting a method for computing such reserve, an insurer shall not change methods without approval of the public insurance supervisory official of the state of domicile. (5) This section does not apply to title insurance. History. — s. 113, 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. 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 867, ch. 2003-261. 625.061 Unearned premium reserve for marine and transportation insurance. As to marine and transportation insurance, the entire amount of premiums on trip risks not terminated shall be deemed unearned; and the office may require the insurer to carry a reserve equal to 100 percent of premiums on trip risks written during the month ended as of the date of statement. History. — s. 114, 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. 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 868, ch. 2003-261. 625.071 Special reserve for bail and judicial bonds. In lieu of the unearned premium reserve required on surety bonds under s. 625.051, the office may require any surety insurer or limited surety insurer to set up and maintain a reserve on all bail bonds or other single-premium bonds without definite expiration date, furnished in judicial proceedings, equal to the lesser of 35 percent of the bail premiums in force or $7 per $1,000 of bail liability. Such reserve shall be reported as a liability in financial statements required to be filed with the office. Each insurer shall file a supplementary schedule showing bail premiums in force and bail liability and the associated special reserve for bail and judicial bonds with financial statements required by s. 624.424. Bail premiums in force do not include amounts retained by licensed bail bond agents or appointed managing general agents, but may not be less than 6.5 percent of the total consideration received for all bail bonds in force. History. — s. 115, 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. 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1, ch. 2001-248; s. 869, ch. 2003-261; s. 15, ch. 2018-102. 625.081 Reserve for health insurance. For all health insurance policies, the insurer shall maintain an active life reserve which places a sound value on the insurer’s liabilities under such policies; is not less than the reserve according to appropriate standards set forth in rules issued by the commission; and, with the exception of credit disability insurance, in no event, is less in the aggregate than the pro rata gross unearned premiums for such policies. History. — s. 116, 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. 91, 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 870, ch. 2003-261; s. 6, ch. 2004-370; s. 151, ch. 2004-390. 625.091 Losses and loss adjustment expense reserves; liability insurance and workers’ compensation insurance. The reserve liabilities recorded in the insurer’s annual statement and financial statements for unpaid losses and loss adjustment expenses shall be the estimated value of its claims when ultimately settled and shall be computed as follows: (1) For all liability and workers’ compensation claims, the statement and statutory reserves and loss adjustment expenses shall be in accordance with the form of the annual statement as required in s. 624.424, and shall include the computed, determined, or estimated value of the unpaid reported claims and loss adjustment expenses, allocated and unallocated, and a provision for loss and loss adjustment expenses, allocated and unallocated, that are incurred but not reported. For claims under liability policies, the reserve for reported claims shall not be less than $1,000 for each outstanding liability suit. (2)(a) Workers’ compensation tabular reserves and long-term disability claims including death claims may be reserved at the present value at 4 percent interest of the determined and the estimated future payments. (b) If workers’ compensation reserves are discounted in accordance with paragraph (a), discounted loss and loss expense reserves shall be used in the computation of excess statutory reserves over statement reserves. (3) Structured settlements may be used to reduce reserves if: (a) There is the purchase of an annuity by the insurer to fund future payments that are fixed or determined by settlement provisions or statutes wherein the claimant is the payee, the transaction may be treated as a paid claim and the reserve taken down accordingly. The appropriate disclosure of the contingent liability for such amount must be disclosed in notes to the financial statements of the annual statement; or (b) The insurer assigns the obligation to make periodic payments to a third party and obtains a full and complete release from the claimant, the claim may be treated as a paid claim without additional disclosure. (4)(a) Accounting credit for anticipated recoveries from the Special Disability Trust Fund may only be taken in the determination of loss reserves and may not be reflected on the financial statements in any manner other than that allowed pursuant to this subsection. (b) An insurer may only take accounting credit for anticipated recoveries from the Special Disability Trust Fund for each proof of claim which the fund has reviewed, determined to be a valid claim and so notified the carrier, and extended a payment offer; or a reimbursement request audited and approved for payment or paid by the fund. (c)1. Each insurer shall separately identify anticipated recoveries from the Special Disability Trust Fund on the annual statement required to be filed pursuant to s. 624.424. 2. For all financial statements filed with the office, each insurer shall disclose in the notes to the financial statements of any financial statement required to be filed pursuant to s. 624.424 any credit in loss reserves taken for anticipated recoveries from the Special Disability Trust Fund. That disclosure shall include: a. The amount of credit taken by the insurer in the determination of its loss reserves for the prior calendar year and the current reporting period on a year-to-date basis. b. The amount of payments received by the insurer from the Special Disability Trust Fund during the prior calendar year and the year-to-date recoveries for the current year. c. The amount the insurer was assessed by the Special Disability Trust Fund during the prior calendar year and during the current calendar year. History. — s. 117, ch. 59-205; s. 3, ch. 76-168; s. 1, ch. 77-457; s. 86, ch. 79-40; ss. 2, 3, ch. 81-318; ss. 92, 98, 809(1st), ch. 82-243; ss. 47, 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 2, ch. 97-262; s. 871, ch. 2003-261; s. 141, ch. 2020-2; s. 45, ch. 2021-51. 625.101 Increase of inadequate loss reserves. If loss experience shows that an insurer’s loss reserves, however computed or estimated, are inadequate, the office shall require the insurer to maintain loss reserves in such additional amount as is needed to make them adequate. This section does not apply as to life insurance. History. — s. 118, 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. 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 872, ch. 2003-261. 625.111 Title insurance reserve. In addition to an adequate reserve as to outstanding losses relating to known claims as required under s. 625.041, a domestic title insurer shall establish, segregate, and maintain a guaranty fund or unearned premium reserve as provided in this section. The sums to be reserved for unearned premiums on title guarantees and policies shall be considered and constitute unearned portions of the original premiums and shall be charged as a reserve liability of the insurer in determining its financial condition. Such reserved funds shall be withdrawn from the use of the insurer for its general purposes, impressed with a trust in favor of the holders of title guarantees and policies, and held available for reinsurance of the title guarantees and policies in the event of the insolvency of the insurer. This section does not preclude the insurer from investing such reserve in investments authorized by law, and the income from such investments shall be included in the general income of the insurer and may be used by such insurer for any lawful purpose. (1) For an unearned premium reserve established on or after July 1, 1999, such reserve must be in an amount at least equal to the sum of paragraphs (a), (b), and (d) for title insurers holding less than $50 million in surplus as to policyholders as of the previous year end and the sum of paragraphs (c) and (d) for title insurers holding $50 million or more in surplus as to policyholders as of the previous year end or title insurers that are members of an insurance holding company system holding $1 billion or more in surplus as to policyholders and a superior, excellent, exceptional, or equivalent financial strength rating by a rating agency acceptable to the office: (a) A reserve with respect to unearned premiums for policies written or title liability assumed in reinsurance before July 1, 1999, equal to the reserve established on June 30, 1999, for those unearned premiums with such reserve being subsequently released as provided in subsection (2). For domestic title insurers subject to this section, such amounts shall be calculated in accordance with state law in effect at the time the associated premiums were written or assumed and as amended before July 1, 1999. (b) A total amount equal to 30 cents for each $1,000 of net retained liability for policies written or title liability assumed in reinsurance on or after July 1, 1999, with such reserve being subsequently released as provided in subsection (2). For the purpose of calculating this reserve, the total of the net retained liability for all simultaneous issue policies covering a single risk shall be equal to the liability for the policy with the highest limit covering that single risk, net of any liability ceded in reinsurance. (c) On or after January 1, 2014, for title insurers holding $50 million or more in surplus as to policyholders as of the previous year end or title insurers that are members of an insurance holding company system holding $1 billion or more in surplus as to policyholders and a superior, excellent, exceptional, or equivalent financial strength rating by a rating agency acceptable to the office, a minimum of 6.5 percent of the total of the following: 1. Direct premiums written; and 2. Premiums for reinsurance assumed, plus other income, less premiums for reinsurance ceded as displayed in Schedule P of the title insurer’s most recent annual statement filed with the office with such reserve being subsequently released as provided in subsection (2). Title insurers with less than $50 million in surplus as to policyholders and that are not members of an insurance holding company system with $1 billion or more in surplus as to policyholders and a superior, excellent, exceptional, or equivalent financial strength rating by a rating agency acceptable to the office must continue to record unearned premium reserve in accordance with paragraph (b). (d) An additional amount, if deemed necessary by a qualified actuary, to be subsequently released as provided in subsection (2). Using financial results as of December 31 of each year, all domestic title insurers shall obtain a Statement of Actuarial Opinion from a qualified actuary regarding the insurer’s loss and loss adjustment expense reserves, including reserves for known claims, incurred but not reported claims, and unallocated loss adjustment expenses. The actuarial opinion must conform to the annual statement instructions for title insurers adopted by the National Association of Insurance Commissioners and include the actuary’s professional opinion of the insurer’s reserves as of the date of the annual statement. If the amount of the reserve stated in the opinion and displayed in Schedule P of the annual statement for that reporting date is greater than the sum of the known claim reserve and unearned premium reserve as calculated under this section, as of the same reporting date and including any previous actuarial provisions added at earlier dates, the insurer shall add to the insurer’s unearned premium reserve an actuarial amount equal to the reserve shown in the actuarial opinion, minus the known claim reserve and the unearned premium reserve, as of the current reporting date and calculated in accordance with this section, but not calculated as of any date before December 31, 1999. The comparison shall be made using that line on Schedule P displaying the Total Net Loss and Loss Adjustment Expense which is comprised of the Known Claim Reserve, and any associated Adverse Development Reserve, the reserve for Incurred But Not Reported Losses, and Unallocated Loss Adjustment Expenses. (2) With respect to reserves established in accordance with: (a) Paragraph (1)(a), the domestic title insurer shall release the reserve over the subsequent 20 years as provided in this paragraph. The insurer shall release 30 percent of the initial aggregate sum during 1999, with one quarter of that amount being released on March 31, June 30, September 30, and December 31, 1999, with the March 31 and June 30 releases to be retroactive and reflected on the September 30 financial statements. Thereafter, the insurer shall release, on the same quarterly basis as specified for reserves released during 1999, a percentage of the initial aggregate sum as follows: 15 percent during calendar year 2000, 10 percent during each of calendar years 2001 and 2002, 5 percent during each of calendar years 2003 and 2004, 3 percent during each of calendar years 2005 and 2006, 2 percent during each of calendar years 2007-2013, and 1 percent during each of calendar years 2014-2018. (b) Paragraph (1)(b), the unearned premium for policies written or title liability assumed during a particular calendar year shall be earned, and released from reserve, over the subsequent 20 years as provided in this paragraph. The insurer shall release 30 percent of the initial sum during the year following the year the premium was written or assumed, with one quarter of that amount being released on March 31, June 30, September 30, and December 31 of such year. Thereafter, the insurer shall release, on the same quarterly basis as specified for reserves released during the year following the year the premium was written or assumed, a percentage of the initial sum as follows: 15 percent during the next succeeding year, 10 percent during each of the next succeeding 2 years, 5 percent during each of the next succeeding 2 years, 3 percent during each of the next succeeding 2 years, 2 percent during each of the next succeeding 7 years, and 1 percent during each of the next succeeding 5 years. (c) Paragraph (1)(c), the unearned premium for policies written or title liability assumed during a particular calendar year shall be earned, and released from reserve, over the subsequent 20 years at an amortization rate not to exceed the formula in this paragraph. The insurer shall release 35 percent of the initial sum during the year following the year the premium was written or assumed, with one quarter of that amount being released on March 31, June 30, September 30, and December 31 of such year. Thereafter, the insurer shall release, on the same quarterly basis, as specified for reserve released during the year following the year the premium was written or assumed, a percentage of the initial sum as follows: 15 percent during each year of the next succeeding 2 years, 10 percent during the next succeeding year, 3 percent during each of the next succeeding 3 years, 2 percent during each of the succeeding 3 years, and 1 percent during each of the next succeeding 10 years. (d) Paragraph (1)(d), any additional amount established in any calendar year shall be released in the years subsequent to its establishment as provided in paragraph (c), with the timing and percentage of releases being in all respects identical to those of unearned premium reserves that are calculated as provided in paragraph (c) and established with regard to premiums written or liability assumed in reinsurance in the same year as the year in which any additional amount was originally established. (3) If a title insurer that is organized under the laws of another state transfers its domicile to this state, the insurer must calculate an adjusted statutory or unearned premium reserve as of the effective date of its redomestication to this state. The adjusted statutory or unearned premium reserve must be calculated as if subsections (1) and (2) had been in effect as to the insurer’s foreign statutory premium reserve for all years beginning 20 years before the date of redomestication. For purposes of calculating the adjusted statutory or unearned premium reserve, the balance of the insurer’s foreign statutory premium reserve as of the date 20 years before the redomestication shall be $0. If the adjusted statutory or unearned premium reserve exceeds the aggregate amount set aside for statutory or unearned premium in the insurer’s annual statement on file with the office on the date of redomestication, the insurer must, out of the total charges for policies of title insurance, increase its statutory or unearned premium reserve by an amount equal to one-sixth of that excess in each of the following 6 years, beginning with the calendar year that includes the redomestication, until the entire excess has been added. If the adjusted statutory or unearned premium reserve is less than the aggregate amount set aside for statutory or unearned premiums in the insurer’s annual statement on file with the office on the date of redomestication, the insurer may release the excess into surplus. (4) At any reporting date, the amount of the required releases of existing unearned premium reserves under subsection (2) shall be calculated and deducted from the total unearned premium reserve before any additional amount is established for the current calendar year in accordance with paragraph (1)(d). (5) A domestic title insurer is not required to record a separate bulk reserve. However, if a separate bulk reserve is recorded, the statutory premium reserve must be reduced by the amount recorded for such bulk reserve. A domestic title insurer must obtain approval from the office before using or recording a bulk reserve. (6) As used in this section, the term: (a) “Bulk reserve” means provision for subsequent development on known claims. (b) “Net retained liability” means the total liability retained by a title insurer for a single risk, after taking into account the deduction for ceded liability, if any. (c) “Qualified actuary” means a person who is, as detailed in the National Association of Insurance Commissioners’ Annual Statement Instructions: 1. A member in good standing of the Casualty Actuarial Society; 2. A member in good standing of the American Academy of Actuaries who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries; or 3. A person who otherwise has competency in loss reserve evaluation as demonstrated to the satisfaction of the insurance regulatory official of the domiciliary state. In such case, at least 90 days before filing its annual statement, the insurer must request that the person be deemed qualified and that request must be approved or denied. The request must include the National Association of Insurance Commissioners’ Biographical Form and a list of all loss reserve opinions issued in the last 3 years by this person. (d) “Single risk” means the insured amount of a title insurance policy, except that where two or more title insurance policies are issued simultaneously covering different estates in the same real property, “single risk” means the sum of the insured amounts of all such policies. A title insurance policy insuring a mortgage interest, a claim payment under which reduces the insured amount of a fee or leasehold title insurance policy, shall be excluded in computing the amount of a single risk to the extent that the insured amount of the mortgage title insurance policy does not exceed the insured amount of the fee or leasehold title insurance policy. History. — s. 119, ch. 59-205; s. 2, ch. 65-359; s. 1, ch. 72-363; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 2, 3, ch. 81-318; ss. 93, 98, 809(1st), ch. 82-243; ss. 187, 188, ch. 91-108; s. 4, ch. 91-429; s. 1, ch. 92-34; s. 2, ch. 93-253; s. 2, ch. 99-286; s. 1, ch. 99-336; s. 2, ch. 2014-112; s. 2, ch. 2014-132; s. 1, ch. 2016-57; s. 38, ch. 2017-3. 625.121 Standard Valuation Law; life insurance. (1) SHORT TITLE. — This section shall be known as the “Standard Valuation Law.” (2) ANNUAL VALUATION. — The office shall annually value, or cause to be valued, the reserves for all outstanding life insurance policies and annuity and pure endowment contracts of each life insurer doing business in this state. In the case of an alien insurer, such valuation is limited to its insurance transactions in the United States. In calculating reserves, the office may use group methods and approximate averages for fractions of a year or otherwise, and may accept the insurer’s calculation of such reserves. In lieu of the valuation of the reserves required of a foreign or alien insurer, the office may accept any valuation made or caused to be made by the insurance supervisory official of any state or other jurisdiction if the valuation complies with the minimum standard provided under this section. If a valuation is made by the office, the office may use its actuary or employ an actuary for that purpose; and the reasonable compensation of the actuary, at a rate approved by the office, plus reimbursement of travel expenses pursuant to s. 624.320, supported by an itemized statement of such compensation and expenses, shall be paid by the insurer upon demand of the office. If a domestic insurer furnishes the office with a valuation of its outstanding policies as computed by its own actuary or by an actuary deemed satisfactory for that purpose by the office, the valuation shall be verified by the actuary of the office without cost to the insurer. This section applies to the calculation of reserves for policies and contracts not subject to s. 625.1212. (3) ACTUARIAL OPINION OF RESERVES. — (a) Each life insurer doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commission by rule are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this state. The commission by rule shall define the specifics of this opinion and add any other items determined necessary to its scope. 1. The opinion shall be submitted with the annual statement and must reflect the valuation of such reserve liabilities for each year ending on or before December 31 of the year before the operative date of the valuation manual as defined in s. 625.1212(2), and in accordance with s. 625.1212(4) for each year thereafter. 2. The opinion applies to all business in force, including individual and group health insurance plans, in the form and substance acceptable to the office as specified by rule of the commission. 3. The commission may adopt rules providing the standards of the actuarial opinion consistent with standards adopted by the Actuarial Standards Board on December 31, 2013, and subsequent revisions thereto if the standards remain substantially consistent. 4. The office may accept an opinion filed by a foreign or alien insurer with the insurance supervisory official of another state if the office determines that the opinion reasonably meets the requirements applicable to an insurer domiciled in this state. 5. As used in this subsection, the term “qualified actuary” means a member in good standing of the American Academy of Actuaries who also meets the requirements specified by rule of the commission. 6. Disciplinary action by the office against the insurer or the qualified actuary shall be in accordance with the insurance code and related rules adopted by the commission. 7. A memorandum in the form and substance specified by rule shall be prepared to support each actuarial opinion. 8. If the insurer fails to provide a supporting memorandum at the request of the office within a period specified by rule of the commission, or if the office determines that the supporting memorandum provided by the insurer fails to meet the standards prescribed by rule of the commission, the office may engage a qualified actuary at the expense of the insurer to review the opinion and the basis for the opinion and prepare such supporting memorandum as required by the office. 9. Except as otherwise provided in this subparagraph, any memorandum or other material in support of the opinion is confidential and exempt from s. 119.07(1) and is not subject to subpoena or discovery directly from the office; however, the memorandum or other material may be released by the office with the written consent of the insurer, or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the office for preserving the confidentiality of the memorandum or other material. If any portion of the confidential memorandum is cited by the insurer in its marketing, is cited before any governmental agency other than a state insurance department, or is released by the insurer to the news media, no portion of the memorandum is confidential. Neither the office nor any person who receives documents, materials, or other information while acting under the authority of the office or with whom such information is shared pursuant to this paragraph may testify in a private civil action concerning the confidential documents, materials, or information. However, the department or office may use the confidential and exempt information in the furtherance of any regulatory or legal action brought against an insurer as a part of the official duties of the department or office. A waiver of an applicable privilege or claim of confidentiality in the documents, materials, or information may not occur as a result of disclosure to the office under this section or any other section of the insurance code, or as a result of sharing as authorized under s. 624.4212. (b) In addition to the opinion required by paragraph (a), the office may, pursuant to commission rule, require an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commission by rule, when considered in light of the assets held by the insurer with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the insurer’s obligations under the policies and contracts, including, but not limited to, the benefits under, and expenses associated with, the policies and contracts. (c) The commission may provide by rule for a transition period for establishing any higher reserves which the qualified actuary may deem necessary in order to render the opinion required by this subsection. (4) MINIMUM STANDARD FOR VALUATION OF POLICIES AND CONTRACTS ISSUED BEFORE OPERATIVE DATE OF STANDARD NONFORFEITURE LAW. — The minimum standard for the valuation of all such policies and contracts issued prior to the operative date of s. 627.476 (Standard Nonforfeiture Law) shall be any basis satisfactory to the office. Any basis satisfactory to the former Department of Insurance on the effective date of this code shall be deemed to meet such minimum standards. (5) MINIMUM STANDARD FOR VALUATION OF POLICIES AND CONTRACTS ISSUED ON OR AFTER OPERATIVE DATE OF THE STANDARD NONFORFEITURE LAW. — Except as otherwise provided in paragraph (h) and subsections (6), (13), and (14), the minimum standard for the valuation of all such policies and contracts issued on or after the operative date of s. 627.476 shall be the commissioners’ reserve valuation method defined in subsections (7), (11), and (14); 5 percent interest for group annuity and pure endowment contracts and 3.5 percent interest for all other such policies and contracts, or in the case of life insurance policies and contracts, other than annuity and pure endowment contracts, issued on or after July 1, 1973, 4 percent interest for such policies issued prior to October 1, 1979, and 4.5 percent interest for such policies issued on or after October 1, 1979; and the following tables: (a) For all ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies: 1. For policies issued before the operative date of s. 627.476(9), the 1958 Commissioners Standard Ordinary (CSO) Mortality Table; except that, for any category of such policies issued on female risks, modified net premiums and present values, referred to in subsection (7), may be calculated according to an age up to 6 years younger than the actual age of the insured. 2. For policies issued on or after the operative date of s. 627.476(9), the 1980 Commissioners Standard Ordinary Mortality Table or, at the election of the insurer for any one or more specified plans of life insurance, the 1980 Commissioners Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors. 3. For policies issued on or after July 1, 2004, ordinary mortality tables, adopted after 1980 by the NAIC, adopted by rule by the commission for use in determining the minimum standard of valuation for such policies. (b) For all industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in such policies: 1. For policies issued before the first date, the 1961 Commissioners Standard Industrial Mortality Table is applicable according to s. 627.476, the 1941 Standard Industrial Mortality Table; 2. For policies issued on or after that date, the 1961 Commissioners Standard Industrial Mortality Table; and 3. For policies issued on or after October 1, 2014, a Commissioners Standard Industrial Mortality Table adopted by the NAIC after 1980 which is adopted by rule of the commission for use in determining the minimum standard of valuation for such policies. (c) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the 1937 Standard Annuity Mortality Table or, at the option of the insurer, the Annuity Mortality Table for 1949, Ultimate, or any modification of these tables approved by the office. (d) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the Group Annuity Mortality Table for 1951; any modification of such table approved by the office; or, at the option of the insurer, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts. (e) For total and permanent disability benefits in or supplementary to ordinary policies or contracts: 1. For policies or contracts issued on or after January 1, 1966, the tables of period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 disability study of the Society of Actuaries, with due regard to the type of benefit; 2. For policies or contracts issued on or after January 1, 1961, and before January 1, 1966, either of the tables specified in subparagraph 1. or, at the option of the insurer, the class three disability table (1926); 3. For policies issued before January 1, 1961, the class three disability table (1926); and 4. For policies or contracts issued on or after July 1, 2004, tables of disablement rates and termination rates adopted after 1980 by the NAIC, adopted by rule by the commission for use in determining the minimum standard of valuation for those policies or contracts. Any such table for active lives shall be combined with a mortality table permitted for calculating the reserves for life insurance policies. (f) For accidental death benefits in or supplementary to policies: 1. For policies issued on or after January 1, 1966, the 1959 Accidental Death Benefits Table; 2. For policies issued on or after January 1, 1961, and before January 1, 1966, the 1959 Accidental Death Benefits Table or, at the option of the insurer, the Intercompany Double Indemnity Mortality Table; 3. For policies issued before January 1, 1961, the Intercompany Double Indemnity Mortality Table; and 4. For policies issued on or after July 1, 2004, tables of accidental death benefits adopted after 1980 by the NAIC, adopted by rule by the commission for use in determining the minimum standard of valuation for those policies. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies. (g) For group life insurance, life insurance issued on the substandard basis, and other special benefits, such tables as may be approved by the office as being sufficient with relation to the benefits provided by such policies. (h) Except as provided in subsection (6), the minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the operative date of this paragraph and for all annuities and pure endowments purchased on or after such operative date under group annuity and pure endowment contracts shall be the commissioners’ reserve valuation method defined in subsection (7) and the following tables and interest rates: 1. For individual annuity and pure endowment contracts issued before October 1, 1979, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, or any modification of this table approved by the office, and 6 percent interest for single-premium immediate annuity contracts and 4 percent interest for all other individual annuity and pure endowment contracts. 2. For individual single-premium immediate annuity contracts issued on or after October 1, 1979, and before October 1, 1986, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, or any modification of this table approved by the office, and 7.5 percent interest. For such contracts issued on or after October 1, 1986, the 1983 Individual Annual Mortality Table, or any modification of such table approved by the office, and the applicable calendar year statutory valuation interest rate as described in subsection (6). 3. For individual annuity and pure endowment contracts issued on or after October 1, 1979, and before October 1, 1986, other than single-premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, or any modification of this table approved by the office, and 5.5 percent interest for single-premium deferred annuity and pure endowment contracts and 4.5 percent interest for all other such individual annuity and pure endowment contracts. For such contracts issued on or after October 1, 1986, the 1983 Individual Annual Mortality Table, or any modification of such table approved by the office, and the applicable calendar year statutory valuation interest rate as described in subsection (6). 4. For all annuities and pure endowments purchased before October 1, 1979, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table, or any modification of this table approved by the office, and 6 percent interest. 5. For all annuities and pure endowments purchased on or after October 1, 1979, and before October 1, 1986, under group annuity and pure endowment contracts, excluding disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table, or any modification of this table approved by the office, and 7.5 percent interest. For such contracts purchased on or after October 1, 1986, the 1983 Group Annuity Mortality Table, or any modification of such table approved by the office, and the applicable calendar year statutory valuation interest rate as described in subsection (6). After July 1, 1973, an insurer may have filed with the former Department of Insurance a written notice of its election to comply with this paragraph after a specified date before January 1, 1979, which shall be the operative date of this paragraph for such insurer. However, an insurer may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If an insurer does not make such election, the operative date of this paragraph for such insurer is January 1, 1979. (i) In lieu of the mortality tables specified in this subsection, and subject to rules previously adopted by the former Department of Insurance, the insurance company may, at its option: 1. Substitute the applicable 1958 CSO or CET Smoker and Nonsmoker Mortality Tables, in lieu of the 1980 CSO or CET mortality table standard, for policies issued on or after the operative date of s. 627.476(9) and before January 1, 1989. 2. Substitute the applicable 1980 CSO or CET Smoker and Nonsmoker Mortality Tables in lieu of the 1980 CSO or CET mortality table standard. 3. Use the Annuity 2000 Mortality Table for determining the minimum standard of valuation for individual annuity and pure endowment contracts issued on or after January 1, 1998, and before July 1, 1998. 4. Use the 1994 GAR Table for determining the minimum standard of valuation for annuities and pure endowments purchased on or after January 1, 1998, and before July 1, 1998, under group annuity and pure endowment contracts. (j) The commission may adopt by rule the model regulation for valuation of life insurance policies as approved by the NAIC in March 1999, including tables of select mortality factors, and may make the regulation effective for policies issued on or after January 1, 2000. (k) For individual annuity and pure endowment contracts issued on or after July 1, 2004, excluding disability and accidental death benefits purchased under those contracts, individual annuity mortality tables adopted after 1980 by the NAIC, adopted by rule by the commission for use in determining the minimum standard of valuation for those contracts. (l) For all annuities and pure endowments purchased on or after July 1, 2004, under group annuity and pure endowment contracts, excluding disability and accidental death benefits purchased under those contracts, group annuity mortality tables adopted after 1980 by the NAIC, adopted by rule by the commission for use in determining the minimum standard of valuation for those contracts. (6) MINIMUM STANDARD OF VALUATION. — (a) The interest rates used in determining the minimum standard for the valuation of: 1. All life insurance policies issued in a particular calendar year on or after the operative date of s. 627.476(9); 2. All individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1982; 3. All annuities and pure endowments purchased in a particular calendar year on or after January 1, 1982, under group annuity and pure endowment contracts; and 4. The net increase, if any, in a particular calendar year after January 1, 1982, in amounts held under guaranteed interest contracts, shall be the calendar year statutory valuation interest rates for the year-of-issue purchase or increase as defined in this subsection. (b) The calendar year statutory valuation interest rates I shall be determined as follows, and the results rounded to the nearest 0.25 percent: 1. For life insurance: I = 0.03 + W(R1–0.03) + (W/2)(R2–0.09). For purposes of this subparagraph, “R1” is the lesser of R and .09; “R2” is the greater of R and .09; “R” is the reference interest rate defined in this subsection; and “W” is the weighting factor defined in this subsection. 2. For single-premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options: I = 0.03 + W(R–0.03). For purposes of this subparagraph, “R” is the reference interest rate defined in this subsection, and “W” is the weighting factor defined in this subsection. 3. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue-year basis, except as stated in subparagraph 2., the formula for life insurance stated in subparagraph 1. shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of 10 years, and the formula for single-premium immediate annuities stated in subparagraph 2. shall apply to annuities and guaranteed interest contracts with guarantee durations of 10 years or less. 4. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single-premium immediate annuities stated in subparagraph 2. shall apply. 5. For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change-in-fund basis, the formula for single-premium immediate annuities stated in subparagraph 2. shall apply. However, if the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than 0.5 percent, the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980, the reference interest rate defined for 1979 being used, and shall be determined for each subsequent calendar year regardless of when s. 627.476(9) becomes operative. (c) The weighting factors referred to in the formulas stated in paragraph (b) are given in the following tables: 1. Weighting factors for life insurance: Guarantee Duration Weighting (Years) Factors 10 or less: .......... 0.50 More than 10, but not more than 20: .......... 0.45 More than 20: .......... 0.35 For life insurance, the “g