Florida Governor Rick Scott Approves Insurance Holding Company Supervision Bills
Jun 13, 2014
Two bills signed into law by Florida Governor Rick Scott today, June 13, 2014, are expected to benefit Florida policyholders by modernizing insurer solvency regulation.
“I would like to thank Governor Scott and the Legislature for their support of Senate Bill 1308 relating to Insurer Solvency, and for bringing solvency standards to the forefront during the 2014 Legislative Session,” Florida Insurance Commissioner Kevin McCarty said in a statement issued today. “Florida now stands ready to implement additional tools to aid in the ongoing supervision of insurance holding companies.”
Sponsored by Senator David Simmons and State Representative Clay Ingram, CS/CS/SB 1308, along with CS/CS/SB 1300, a linked bill relating to public records, the package makes fundamental changes to the way insurance companies and their affiliates are supervised by state regulators and creates a principle-based approach to establishing insurer reserves for term life and certain universal life insurance products.
“The new solvency requirements are, in part, responsive to the financial crisis and strengthen the state regulation of insurance holding companies,” explained Commissioner McCarty, who helped develop the standards during his tenure as National Association of Insurance Commissioners (“NAIC”) President in 2012 in the aftermath of the 2008 financial crisis.
Specifically, the new law provides for enterprise risk reporting at the insurance holding company level, enhanced regulator access to data and information from non-insurance operations, clear authority to participate in supervisory colleges, and enhanced information sharing among regulators.
Except as otherwise expressly provided, CS/CS/SB 1308 and CS/CS/SB 1300 take effect on October 1, 2014.
“Principle-based reserving will replace the current ‘one-size-fits-all’ formula to determine appropriate reserve levels with an approach that more closely reflects the risks associated with today’s highly complex insurance products,” Commissioner McCarty said. “It will ‘right-size reserves’-reducing reserves that may be too high for some products and increasing reserves that may be too low for other products.
According to the American Council of Life Insurers, Florida is now the 18th state to adopt the new principle-based reserving standard, which takes effect in 2017 upon the approval of 42 other states adopting the same measure. The standard is expected to be expanded to apply to health insurance and eventually other insurance lines of business.
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