On April 24, 2012, Florida Governor Rick Scott signed into law Committee Substitute for Committee Substitute for House Bill 1101 (CS/CS/HB 1101). Just over a year later, the Florida Legislature is seeking to revise the law to cure certain unintended consequences of its enactment. More specifically, on April 29, 2013, the Legislature passed Committee Substitute for House Bill 1191 (CS/HB 1191). If approved by the Governor, the newly passed legislation will have a significant impact on the business of captive insurance companies in the “Sunshine State.”
Among other things, CS/HB 1191 will remedy a current inconsistency in the law by exempting captive insurance companies from deposit requirements exceeding the surplus amounts required to form a captive. The law will also restore the ability of industrial insured captives with unencumbered capital and a surplus of $20 million to become licensed to provide workers compensation and employer’s liability insurance in excess of $25 million in annual aggregate. Moreover, the law will require pure captive insurance companies to adopt their own risk management standards designed to ensure that parent companies and affiliated companies are able to exercise sufficient control over the risk management functions of controlled but unaffiliated businesses to be insured by the captive. Whereas the current version of the law requires the Florida Financial Services Commission to adopt uniform risk management standards by rule, the new law will only require that the standards adopted by pure captive insurance companies be approved by the Florida Office of Insurance Regulation.