Summary of Insurance Proposal - Florida, USA
An enormous opportunity exists for Florida to become an important regional center for international insurance activities.
by Bowman Brown
enormous opportunity exists for Florida to become an important regional center
for international insurance activities.
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.
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
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.
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.
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.
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.
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
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.
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.
[PRINTER FRIENDLY VERSION]
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