Florida Lawmakers Amend “Captive” and Property Insurance Laws
Posted in General on July 23, 2012
A new law passed by the Florida Legislature and signed by Gov. Rick Scott affects several areas of insurance policy. The changes authorized by House Bill 1101, which went into effect on July1, include expansion of the types of insurance for which “captive” insurance companies can be licensed in Florida.
Captive insurance companies are set up to insure risks of parent companies, but they can also be used to insure risks of customers. The bill redefines the current definition of “captive insurer” under Florida law to allow the state to better compete for a multi-billion dollar business. Most captive insurance companies are registered offshore in places such as Bermuda, The Cayman Islands, and The British Virgin Islands, but Vermont, Hawaii, Nevada, Arizona and Utah are also common domiciles.
Because captive insurance companies that are established in Florida must hold at least one meeting each year in the state, the bill was promoted by Miami-Dade County’s Economic Development Partnership to enhance tourism spending. Companies must also appoint a registered agent who is a Florida resident.
HB 1101 also contained several targeted provisions relevant to property insurance claims involving sinkhole damage and other losses:
- The alternative dispute resolution procedure for personal and commercial residential property insurance claims can now be requested only by the policyholder, as a first-party claimant, or by the insurer
- The term “rebate” has been defined as it is used with respect to repairs of sinkhole damage
- The Citizens Property Insurance Corporation must now accept the lowest valuation from three specified sources with respect to replacement costs for dwelling coverage
- The alternative claim dispute resolution process is no longer available for losses reported more than three years after a declaration of a state of emergency due to a hurricane
Source: Business Insurance, “Florida becomes newest state to allow formation of captive insurance companies” April 25, 2012