An enormous opportunity exists for Florida to become an important regional center for international insurance activities. 
 
Over the past several decades, Florida has developed as a major regional international financial center.  Much of this development has centered around the sale of investment products issued by offshore companies and mutual funds to non-resident customers.  It is estimated that at least $20 billion of investments of this type are held in accounts at banks and brokerage houses based in Florida.
 
The development of Florida as a center for offshore investment activity has been made possible by regulations adopted by the Securities and Exchange Commission (Regulation S, adopted in 1990) and the Florida Comptroller’s Office (Florida Administrative Code Rule 3E-500.015, adopted in 1998), which provide exemptions from the time-consuming and expensive securities registration requirements of federal and state securities laws which otherwise would apply. 
 
Although there is a very substantial market for insurance products of all types, including principally annuities and life and health insurance, issued by offshore insurers to non-resident purchasers, international financial service providers located in Florida are largely precluded by Florida insurance law from participating in the market for such products.
 
Florida insurance law prohibits the offer or sale to non-resident customers from Florida of insurance products issued by offshore insurers, unless the insurer obtains a certificate of authority from the Florida Department of Insurance and the insurance policies being offered are approved by the Florida Department of Insurance.  Florida insurance law also prohibits the provision of the following administrative services by Florida-based individuals and entities to offshore insurers, unless the insurer obtains a certificate of authority from the Florida Department of Insurance:
 
§         Underwriting services to determine insurability of risks;
 
§         The analysis of insurance applications, questionnaires, or materials prepared by or concerning prospective insureds or risks to determine the eligibility, insurability or underwriting in any fashion of prospective insureds or risks; and
 
§         The performance of certain other administrative functions on behalf of an offshore insurer.
 
Obtaining a certificate of authority from the Florida Department of Insurance involves a time-consuming and expensive process.
 
            Although Florida has a legitimate public policy interest in ensuring that fraudulent or inferior insurance products issued by offshore insurers are not offered or sold from Florida to unsuspecting non-residents, and that Florida is not used as a platform for the administration of offshore insurers that issue fraudulent or inferior products to non-residents, such concerns can be addressed in a way which will discourage such activities without making it completely impractical for Florida individuals and entities to be involved in the very substantial non-resident market for offshore insurance products.
 
In this regard, Florida’s insurance regulatory framework should be revised as follows:
 
§         Offshore insurers should be permitted to offer and sell their products to U.S. non-residents through Florida-licensed insurance agents without being required to obtain certificates of authority or product approval from the Florida Department of Insurance.
 
§         Florida-based individuals and entities should be permitted to provide a full range of administrative services to offshore insurers that offer their products only to U.S. non-residents without the insurers= being required to obtain certificates of authority or product approval from the Florida Department of Insurance.
 
§         To ensure the quality and integrity of Florida’s offshore insurance industry, Florida’s agent licensing requirements and prohibitions on misleading or deceptive sales practices should continue to apply to individuals soliciting sales of offshore insurance products to non-residents from Florida.
 
§         To ensure that purchasers of insurance issued by offshore insurers understand that the insurer has not obtained a certificate of authority to issue insurance from the Florida Department of Insurance, and that the Florida Department of Insurance is not responsible for regulating the issuer of the insurance, full and clear disclosure to this effect should be required to be included in all sales materials and in any policy sold by offshore insurers selling their products through Florida agents.
 
§         The foregoing amendments to Florida's insurance regulatory framework should not grant relief from "certificate of authority" requirements applicable to entities issuing insurance covering property located in this state, or entities issuing insurance the benefits of which consist of health care or other services to be provided exclusively from a location or locations in this state.
 
The proposed exemption for the offer or sale from Florida of offshore insurance products to non-residents and for the provision by Florida entities and individuals of administrative services to offshore insurers that do not sell insurance products to U.S. residents would parallel the existing federal and state exemptions applicable to investment products and would greatly stimulate Florida’s development as a regional international insurance center with adequate safeguards against illicit conduct.