Florida Regulations 69O-141.002: Standards Regarding Administrative Supervision
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(1) The Office’s determination as to whether the provisions of part VI, chapter 624, F.S., regarding administrative supervision are appropriate for an insurer shall be based on the standards set out in sections 624.80 and 624.81, F.S.
(2) Criteria which shall be considered in determining whether an insurer is in unsound condition as provided in Florida Statutes § 624.80(2), or is engaging in methods or practices which render the continuance of business hazardous to the public or insureds include the following:
(a) Adverse findings reported in financial condition and market conduct examination reports;
(b) The National Association of Insurance Commissioners Insurance Regulatory Information System and its related reports;
(c) The ratios of commission expense, general insurance expense, policy benefits and reserve increases as to annual written premium and net investment income which could lead to an impairment of capital and surplus;
(d) That the insurer’s asset portfolio when viewed in light of current economic conditions is not of sufficient value, liquidity, or diversity to assure the company’s ability to meet its outstanding obligations as they mature;
(e) The ability of an assuming reinsurer to perform and whether the insurer’s reinsurance program provides sufficient protection for the company’s remaining surplus after taking into account the insurer’s cash flow and the classes of business written as well as the financial condition of the assuming reinsurer;
(f) That the insurer’s operating loss in the last twelve month period or any shorter period of time, including but not limited to net capital gain or loss, change in non-admitted assets, and cash dividends paid to shareholders, is greater than 50% of such insurer’s remaining surplus as regards policyholders in excess of the minimum required;
(g) Whether any parent, holding company, affiliate, subsidiary, or reinsurer is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligations;
(h) Contingent liabilities, pledges or guaranties which either individually or collectively involve a total amount which in the Office’s opinion may affect the solvency of the insurer;
(i) Whether any “”controlling person”” of an insurer is delinquent in the transmitting to, or payment of, net premiums to such insurer;
(j) The age and collectibility of receivables;
(k) Whether the management of an insurer, including officers, directors, or any other person who directly or indirectly controls the operation of such insurer, fails to possess and demonstrate the competence, fitness and reputation deemed necessary to serve the insurer in such position;
(l) Whether management of an insurer has failed to respond to inquiries relative to the condition of the insurer or has furnished false or misleading information concerning an inquiry;
(m) Whether management of an insurer either has filed any false or misleading sworn financial statement, or has released any false or misleading financial statement to lending institutions or to the general public, or has made a false or misleading entry, or has omitted an entry of material amount in the books of the insurer;
(n) Whether an insurer has grown so rapidly and to such an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner;
(o) Whether an insurer has experienced or will experience in the foreseeable future cash flow and/or liquidity problems;
(p) Whether an insurer has violated any applicable statutes or rules, or has been subjected to any final agency action relating to violation of such statutes or rules;
(q) Whether an insurer has incurred substantial new debt, has had to rely on frequent or substantial capital infusions, has a highly leveraged balance sheet, or relies increasingly on outside consulting sources (e.g. TPA’s, MGA’s, or management companies);
(r) Whether the Office has received a noticeable increase of consumer complaints for non-payment of claims or unusual delays in claim payments;
(s) Whether the Office believes future problems with insurer solvency will occur because of known or developing current events or situations (e.g. declining occupancy rates, inadequate reserves or change in reserve practices, or increase in debt service, or adverse changes in financial markets);
(t) Whether an insurer has voluntarily allowed the suspension or revocation of its certificate of authority in any state;
(u) Whether transactions with an insurer’s affiliates, parent company, holding company, subsidiaries, officers, directors, shareholders, owners, management company, employees, agents, creditors, or any other person or entity have affected the insurer’s solvency or liquidity in a manner which places the insurer’s insureds at risk of loss of contracted benefits or security; or
(v) Whether a deadlock or dispute that threatens the solvency or viability of an insurer exists between the officers, directors, managing owners, managers, or other persons who control the operations of an insurer.
(3) Administrative supervision shall include affiliates, subsidiaries, parent companies, or holding companies of an insurer if:
(a) There have been any transactions resulting in the transfer of funds from the insurer to any of those entities; or
(b) The insurer has the authority to transfer funds to any of those entities without prior approval from the Office; and,
(c) The transfers are found to affect the solvency or viability of the insurer.
(4) Actions under administrative supervision shall include the use of all powers of enforcement as provided by Florida Statutes § 624.310, including actions against any affiliated party. These enforcement powers shall apply but not be limited in application to all entities which are subject to administrative supervision based on the criteria set forth in subsection (3) of this rule, whether or not the entity has consented to administrative supervision and whether or not a plan of correction has been approved.
Rulemaking Authority Florida Statutes § 624.308(1). Law Implemented 624.307(1), 624.310, 624.4095, 624.418, 624.80, 624.81, 625.012, 625.305 FS. History-New 1-30-91, Formerly 4-93.002, Amended 5-5-92, Formerly 4-141.002.
Terms Used In Florida Regulations 69O-141.002
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Continuance: Putting off of a hearing ot trial until a later time.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
(a) Adverse findings reported in financial condition and market conduct examination reports;
(b) The National Association of Insurance Commissioners Insurance Regulatory Information System and its related reports;
(c) The ratios of commission expense, general insurance expense, policy benefits and reserve increases as to annual written premium and net investment income which could lead to an impairment of capital and surplus;
(d) That the insurer’s asset portfolio when viewed in light of current economic conditions is not of sufficient value, liquidity, or diversity to assure the company’s ability to meet its outstanding obligations as they mature;
(e) The ability of an assuming reinsurer to perform and whether the insurer’s reinsurance program provides sufficient protection for the company’s remaining surplus after taking into account the insurer’s cash flow and the classes of business written as well as the financial condition of the assuming reinsurer;
(f) That the insurer’s operating loss in the last twelve month period or any shorter period of time, including but not limited to net capital gain or loss, change in non-admitted assets, and cash dividends paid to shareholders, is greater than 50% of such insurer’s remaining surplus as regards policyholders in excess of the minimum required;
(g) Whether any parent, holding company, affiliate, subsidiary, or reinsurer is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligations;
(h) Contingent liabilities, pledges or guaranties which either individually or collectively involve a total amount which in the Office’s opinion may affect the solvency of the insurer;
(i) Whether any “”controlling person”” of an insurer is delinquent in the transmitting to, or payment of, net premiums to such insurer;
(j) The age and collectibility of receivables;
(k) Whether the management of an insurer, including officers, directors, or any other person who directly or indirectly controls the operation of such insurer, fails to possess and demonstrate the competence, fitness and reputation deemed necessary to serve the insurer in such position;
(l) Whether management of an insurer has failed to respond to inquiries relative to the condition of the insurer or has furnished false or misleading information concerning an inquiry;
(m) Whether management of an insurer either has filed any false or misleading sworn financial statement, or has released any false or misleading financial statement to lending institutions or to the general public, or has made a false or misleading entry, or has omitted an entry of material amount in the books of the insurer;
(n) Whether an insurer has grown so rapidly and to such an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner;
(o) Whether an insurer has experienced or will experience in the foreseeable future cash flow and/or liquidity problems;
(p) Whether an insurer has violated any applicable statutes or rules, or has been subjected to any final agency action relating to violation of such statutes or rules;
(q) Whether an insurer has incurred substantial new debt, has had to rely on frequent or substantial capital infusions, has a highly leveraged balance sheet, or relies increasingly on outside consulting sources (e.g. TPA’s, MGA’s, or management companies);
(r) Whether the Office has received a noticeable increase of consumer complaints for non-payment of claims or unusual delays in claim payments;
(s) Whether the Office believes future problems with insurer solvency will occur because of known or developing current events or situations (e.g. declining occupancy rates, inadequate reserves or change in reserve practices, or increase in debt service, or adverse changes in financial markets);
(t) Whether an insurer has voluntarily allowed the suspension or revocation of its certificate of authority in any state;
(u) Whether transactions with an insurer’s affiliates, parent company, holding company, subsidiaries, officers, directors, shareholders, owners, management company, employees, agents, creditors, or any other person or entity have affected the insurer’s solvency or liquidity in a manner which places the insurer’s insureds at risk of loss of contracted benefits or security; or
(v) Whether a deadlock or dispute that threatens the solvency or viability of an insurer exists between the officers, directors, managing owners, managers, or other persons who control the operations of an insurer.
(3) Administrative supervision shall include affiliates, subsidiaries, parent companies, or holding companies of an insurer if:
(a) There have been any transactions resulting in the transfer of funds from the insurer to any of those entities; or
(b) The insurer has the authority to transfer funds to any of those entities without prior approval from the Office; and,
(c) The transfers are found to affect the solvency or viability of the insurer.
(4) Actions under administrative supervision shall include the use of all powers of enforcement as provided by Florida Statutes § 624.310, including actions against any affiliated party. These enforcement powers shall apply but not be limited in application to all entities which are subject to administrative supervision based on the criteria set forth in subsection (3) of this rule, whether or not the entity has consented to administrative supervision and whether or not a plan of correction has been approved.
Rulemaking Authority Florida Statutes § 624.308(1). Law Implemented 624.307(1), 624.310, 624.4095, 624.418, 624.80, 624.81, 625.012, 625.305 FS. History-New 1-30-91, Formerly 4-93.002, Amended 5-5-92, Formerly 4-141.002.