Banking on insurance: proposed legislation now making its way to the floor of the State House and Senate could open doors for more foreign-owned insurers to expand into South Florida

South Florida CEO,  Sept, 2004  by Jaclyn Alcantara

Tags: banking, insurance, insurance company, U.S. Senate

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"This next session we're going to start early," says Brown, who is optimistic that the legislation will be enacted by early 2005.

A New Framework

The proposed legislation is an amendment to current state legislation and applies to life and annuity insurance products only, its authors say. That group of products was targeted because it "is most in demand and probably the easiest at this time to accomplish," says the Beacon Council's Fernety. Brown adds that nothing is currently in the works with respect to other insurance products, because the issues, for health insurance for example, are too different to be tackled in the same legislation.

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If the proposal is passed, there will be a new process for offshore insurers to register with the state. "But primarily the process is going to be one-on-one between the insurer and the insured," says Fernety, speculating that even disputes between the two would typically be resolved in the policy buyer's nation of origin.

The details of the registration process are still being worked out, but the companies would be required to comply with the Florida Insurance Code and submit compliance reports on a regular basis. Agents selling policies would also be required to register with the state, but the individual policies would no longer be required to fit so strictly within the Florida code framework.

Still, policies would continue to be subject to extensive regulation to prevent unfair insurance practices. "This [proposed legislation] would require an abbreviated, more focused, filing." Brown says, noting that fulfilling current requirements can, in extreme cases, take up to three years.

None of the involved parties could think of any group opposed to the proposed legislation at this time. "The biggest hurdle was working with the Department of Insurance to ensure that their issues were taken care of," says Seitlin CEO Cornish.

The department is charged with maintaining the safety of insurance in Florida, and insisted on maintaining a comfortable level of oversight of insurers, he says. Fernety, Brown and Cornish all say that the proposal has enough flexibility to accommodate both the concerns of regulators and those of insurers.

One of the biggest concerns that had to be addressed was the sale of fraudulent policies and sales by unreliable insurers. The Beacon Council's report says that under the proposed amendment, "agent licensing requirements continue to apply to sales agents, state prohibitions on deceptive or misleading sales practices continue to apply," and legislation benefits are only to be extended to "insurers rated by an international insurance rating organization or one affiliated with a rated insurer."

Although the details of the legislation are rather complicated, the result, according to advocates, will be greater simplicity and freedom for the international insurance industry. This, they say, will attract additional international insurance companies, particularly European companies, to Florida.