HB 643 — Insurance

hb643-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 643 2025 Section 1.

Section 624.341, Florida Statutes, is created to read:

624.341 Authority of Department of Law Enforcement to accept fingerprints of, and exchange criminal history records with respect to, certain persons applying to the Office of Insurance Regulation.— (1) The Legislature finds that criminal activity of insurers poses a particular danger to the residents of this state.

Floridians rely, in good faith, on the honest conduct of those who issue and manage insurance policies and other insurance instruments in this state.

To safeguard this state's residents, the Legislature finds it necessary to ensure that incorporators, subscribers, officers, employees, contractors, stockholders, directors, owners, members, managers, or volunteers involved in the organization, operation, or management of any insurer that is authorized to sell insurance do not have a criminal background.

(2) The Department of Law Enforcement shall accept and process fingerprints of incorporators, subscribers, officers, employees, contractors, stockholders, directors, owners, members, managers, or volunteers involved in the organization, operation, or management of:

(a) Any insurer or proposed insurer transacting or proposing to transact insurance in this state.

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hb643-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 643 2025 (b) Any entity that is eligible to be examined or investigated under 624.316.

(3) Each person required to submit fingerprints to the office must provide a full set of fingerprints to the office or to a vendor, entity, or agency authorized under s.

943.053(13).

The office, vendor, entity, or agency shall forward the fingerprints to the Department of Law Enforcement for state processing, and the Department of Law Enforcement shall forward the fingerprints to the Federal Bureau of Investigation for national processing as provided in s.

624.34.

Fees for state and federal fingerprint processing must be borne by the person submitting the fingerprints.

The state cost for fingerprint processing is as provided in s.

943.053(3)(e).

(4) The Department of Law Enforcement may, to the extent authorized by federal law, exchange any state or federal criminal history records with the office for the purpose of issuance or continuation of a certificate of authority, certification, or license to operate in this state.

(5) Fingerprints must be submitted in accordance with rules adopted by the commission.

(a) Fingerprints may be submitted through a third-party vendor authorized by the Department of Law Enforcement.

(b) The Department of Law Enforcement shall conduct the state criminal history background check, and a federal criminal history background check shall be conducted through the Federal Page 4 of 16 CODING:

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hb643-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 643 2025 Bureau of Investigation.

(c) All fingerprints submitted to the Department of Law Enforcement must be submitted and entered into the statewide automated biometric identification system established in s.

943.05(2)(b) and available for use in accordance with s.

943.05(2)(g) and (h).

(d) The costs of fingerprint processing, including the cost of retaining the fingerprints, must be borne by the person subject to the background checks.

(e) The office shall review the results of the state and federal criminal history background checks and determine whether the applicant meets the requirements for the certificate of authority, certification, or license to operate in this state.

(6) State criminal history records obtained through the Department of Law Enforcement, federal criminal history records obtained through the Federal Bureau of Investigation, and local criminal history records obtained through local law enforcement agencies must be used by the office for the purpose of issuance, denial, suspension, or revocation of certificates of authority, certifications, or licenses issued to operate in this state.

Section 2.

Section 624.347, Florida Statutes, is created to read:

624.347 Affiliate transactions;

managing general agents;

attorneys in fact;

oversight.— (1) DEFINITIONS.—As used in this section, the term:

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hb643-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 643 2025 (a) "Affiliated entity" means any affiliate of an insurer.

The term includes a managing general agent, attorney in fact, and reciprocal insurer when acting in a capacity that involves compensation from the insurer.

(b) "Attorney in fact" has the same meaning as in s.

629.011.

(c) "Insurer" means an authorized property insurer.

(d) "Managing general agent" has the same meaning as in s.

626.015.

(e) "Reciprocal insurer" has the same meaning as in s.

629.011.

(2) APPLICABILITY.—This section applies to any insurer that contracts with or makes payments to an affiliated entity.

(3) COMPENSATION ARRANGEMENTS WITH AFFILIATED ENTITIES.— (a) Each insurer doing business in this state which pays, directly or indirectly, a fee, commission, or other financial consideration or payment to any affiliated entity must provide to the office documentation demonstrating that such fee, commission, or other financial consideration or payment is fair and reasonable for each service being provided.

In determining whether the fee, commission, or other financial consideration or payment is fair and reasonable, the office must consider all of the following:

1.

The actual cost of each service provided by an affiliated entity.

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hb643-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 643 2025 2.

The relative financial condition of the insurer and the affiliated entity.

3.

The level of debt and how that debt is serviced.

4.

The amount of the dividends paid by the insurer and the affiliated entity and for what purpose.

5.

Whether the terms of the written contract benefit the insurer and are in the best interest of the policyholders or subscribers.

6.

Any other such information as the office reasonably requires in making this determination.

(b) For each agreement with an affiliated entity in force on July 1, 2025, each insurer shall provide to the office no later than October 1, 2025, the cost incurred by the affiliated entity to provide each service, the dollar amount charged to the insurer for each service, and the dollar amount of fees forgiven, waived, or reimbursed by the affiliated entity for the 2 most recent years.

If the total dollar amount charged to the insurer was greater than the total cost to provide services for either year, the insurer must explain how it determined that the fee was fair and reasonable.

For any proposed contract with an affiliated entity effective after July 1, 2025, the insurer must provide documentation to support that the fee, commission, or other financial consideration or payment to the affiliated entity is fair and reasonable.

(c)1.

Beginning July 1, 2026, the office may require Page 7 of 16 CODING:

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hb643-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 643 2025 specific types of compensation arrangements between an insurer and any affiliated entity to be structured as fee for service.

As used in this subparagraph, the term "fee for service" means fixed amounts or hourly rates for itemized services.

2.

Compensation as a fee for service may not be based on:

a.

Commission;

b.

Premium volume;

c.

Underwriting profit;

or d.

Financial results of the insurer.

(d) This subsection does not prohibit an insurer from paying a dividend to or making other financial arrangement with an affiliated entity if such dividend or financial arrangement has been reviewed and approved by the office pursuant to this section or any other applicable law.

(e) An agreement between an insurer and an affiliated entity must include a termination clause and may not exceed a term of 3 years.

Any extension of such an agreement must be approved by the office before becoming effective.

An agreement between an insurer and an affiliated entity may include provisions for extension, but may not remain in effect for longer than 3 years without continuing to meet the requirements of paragraph (a) and without being approved by the office.

If the agreement provides for extension, the agreement must clearly state that the extension is subject to approval by the office at least every 3 years.

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hb643-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 643 2025 (4) EMERGENCY RESTRICTIONS.— (a) During a declared emergency, the office may issue orders restricting fund transfers from an insurer to an affiliated entity without prior approval.

(b) Orders under paragraph (a) may apply to all or specified insurers and may not exceed 90 days unless extended by the office.

(5) ADDITIONAL OVERSIGHT.— (a) The office may recover improper affiliated entity payment transfers, including, but not limited to, the following:

1.

Transfers that violate the approved compensation, approved dividend, or any other approved financial arrangement.

2.

Transfers made while the insurer was undercapitalized.

(b) An insurer must provide notice to the office at least 30 days before any pledge of capital or assets to any affiliated entity for a loan or financial obligation.

Such notice must include a description of the collateral, the nature of the obligation, and the parties involved.

The office may reject and prohibit the pledge if such financial arrangement is not in the best interest of the insurer.

(6) ENFORCEMENT.— (a) The office may impose penalties for violations of this section.

(b) The office shall adopt rules to implement this section.

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hb643-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 643 2025 Section 3.

Subsection (13) of section 624.424, Florida Statutes, is amended to read:

624.424 Annual statement and other information.— (13) Each insurer doing business in this state which pays a fee, commission, or other financial consideration or payment to any affiliate directly or indirectly is required upon request to provide to the office any information the office deems necessary.

The fee, commission, or other financial consideration or payment to any affiliate must be fair and reasonable.

Affiliate compensation arrangements must comply with s.

624.347 and with the requirements of this subsection In determining whether the fee, commission, or other financial consideration or payment is fair and reasonable, the office shall consider, among other things, the actual cost of the service being provided.

Section 4.

Subsection (1) of section 626.732, Florida Statutes, is amended to read:

626.732 Requirement as to knowledge, experience, or instruction.— (1) Except as provided in subsection (4), an applicant for a license as a general lines agent, except for a chartered property and casualty underwriter (CPCU), may not be qualified or licensed unless, within the 4 years immediately preceding the date the application for license is filed with the department, the applicant has satisfied, at a minimum, one of the following requirements:

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hb643-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 643 2025 (a) Taught or successfully completed 60 200 hours of coursework in property, casualty, surety, health, and marine insurance approved by the department, 3 hours of which must be on the subject matter of ethics.;

(b) Completed at least 1 year in responsible insurance duties as a substantially full-time bona fide employee in all lines of property and casualty insurance as set forth in the definition of a general lines agent under s.

626.015, but without the education requirement described in paragraph (a).;

or (c) Completed at least 1 year of responsible insurance duties as a licensed and appointed customer representative, service representative, or personal lines agent and 40 hours of coursework approved by the department covering the areas of property, casualty, surety, health, and marine insurance.

Section 5.

(4) "Diligent effort" means seeking coverage from and having been rejected by at least three authorized insurers currently writing this type of coverage and documenting these rejections.Page 1 of 6 CODING:

However, if the residential structure has a dwelling replacement cost of $700,000 or more, the term means seeking coverage from and having been rejected by at least one Page 11 of 16 CODING:

hb643-02-c2hb643-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 643 2025 authorizedrejections. insurer currently writing this type of coverage and documenting this rejection.

SectionHowever, 6.if the residential structure has a dwelling replacement cost of $700,000 or more, the term means seeking coverage from and having been rejected by at least one authorized insurer currently writing this type of coverage and documenting this rejection.

Section 2.

However, to be in compliance with the diligent effort requirement, the surplus lines agent's reliance must be reasonable under the particular circumstances surrounding the exportPage 2 of that6 particularCODING: risk.

Reasonableness shall be assessed by taking into account factors which include, but are not limited to, a regularly conducted program of verification of the Page 12 of 16 CODING:

hb643-02-c2hb643-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 643 2025 informationexport providedof bythat theparticular retailrisk. or producing agent.

Reasonableness shall be assessed by taking into account factors which include, but are not limited to, a regularly conducted program of verification of the information provided by the retail or producing agent.

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hb643-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 643 2025 2.

If the disclosure is signed by the insured, the insured is presumed to Pagehave 13been informed and to know that other coverage may be available, and, with respect to the diligent-effort requirement under subsection (1), there is no liability on the part of, and no cause of 16action CODING:arises against, the retail agent presenting the form.

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hb643-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 643 2025 have been informed and to know that other coverage may be available, and, with respect to the diligent-effort requirement under subsection (1), there is no liability on the part of, and no cause of action arises against, the retail agent presenting the form.

Section 7.

Each insured must be notified in writing, at the time of entering into a policy with the corporation and upon each renewal, that the insured must decide whether to resolve disputes through arbitration before the Division of AdministrativePage Hearings.4 of 6 CODING:

Such notification must be in at least 12-point boldfaced type, immediately preceding the insured's signature, in substantially the following form:

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hb643-02-c2hb643-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 643 2025 ANAdministrative INSUREDHearings. MUST CHOOSE AT THE TIME OF ENTERING INTO THIS POLICY OR UPON RENEWAL WHETHER TO RESOLVE DISPUTES THROUGH ARBITRATION BEFORE THE DIVISION OF ADMINISTRATIVE HEARINGS.

THESuch INSUREDnotification MUSTmust INDICATEbe THISin SELECTIONat BYleast MARKING12-point "ACCEPT"boldfaced ORtype, "DECLINE"immediately BELOW.preceding the insured's signature in substantially the following form:

AN INSURED MUST CHOOSE AT THE TIME OF ENTERING INTO THIS POLICY OR UPON RENEWAL WHETHER TO RESOLVE DISPUTES THROUGH ARBITRATION BEFORE THE DIVISION OF ADMINISTRATIVE HEARINGS.

THE INSURED MUST INDICATE THIS SELECTION BY MARKING 'ACCEPT' OR 'DECLINE' BELOW.

[ ] ACCEPT [ ] DECLINE 2.

The corporation may not seek, and the office may not Page 155 of 166 CODING:

hb643-02-c2hb643-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 643 2025 approve, a maximum hourly rate for attorney fees.

Section 8.4.

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