635.021 Authority to transact mortgage guaranty insurance.
635.031 Additional limitations.
635.041 Contingency reserve.
635.042 Minimum surplus requirement.
635.051 Licensing and appointment of mortgage guaranty insurance agents.
635.061 Premium cost.
635.071 Filings, approval of forms; rate filings.
635.075 Restoration of property.
635.081 Administration and enforcement.
635.091 Provisions of Florida Insurance Code applicable to mortgage guaranty insurance.
635.011 Definitions.—As used in this chapter, the term:
(1) “Mortgage guaranty insurance” means a form of casualty insurance insuring lenders against:
(a) Financial loss by reason of nonpayment of principal, interest, and other sums agreed to be paid under the terms of any note, bond, or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate which contains a residential building or a building designed to be occupied for industrial or commercial purposes.
(b) Financial loss by reason of nonpayment of rent and other sums agreed to be paid under the terms of a written lease for the possession, use, or occupancy of real estate, provided such real estate is designed to be occupied for industrial or commercial purposes.
(2) “Contingency reserve” means a special premium reserve which is in addition to other premium reserves required by law and which is established for the protection of policyholders against the effect of adverse economic cycles.
History.—s. 1, ch. 59-182; ss. 13, 35, ch. 69-106; s. 1, ch. 71-151; s. 269, ch. 71-377; s. 2, ch. 81-318; ss. 1, 11, 12, ch. 83-281; ss. 1, 5, ch. 93-21; s. 1517, ch. 2003-261.
635.021 Authority to transact mortgage guaranty insurance.—Mortgage guaranty insurance may be transacted by a stock casualty insurer or a stock surety insurer holding a certificate of authority for the transaction of insurance in this state.
History.—s. 2, ch. 59-182; s. 2, ch. 81-318; ss. 2, 11, 12, ch. 83-281; s. 5, ch. 93-21.
635.031 Additional limitations.—In addition to laws otherwise applicable, mortgage guaranty insurers are subject to the following limitations:
(1) No such insurer may retain risk as to any one subject of insurance in any amount exceeding 10 percent of its surplus as to policyholders. In determining the amount of risk retained, applicable reinsurance in any assuming insurer authorized to transact insurance in this state or approved by the office shall be deducted from the total direct risk insured.
(2) Mortgage guaranty insurance may be written with respect to real estate loans only on those loans which a bank, a savings and loan association, or an insurance company regulated by this state or an agency of the Federal Government is authorized to make.
History.—s. 3, ch. 59-182; s. 1, ch. 63-428; s. 1, ch. 65-494; ss. 13, 35, ch. 69-106; s. 2, ch. 71-151; s. 2, ch. 81-318; ss. 3, 11, 12, ch. 83-281; s. 5, ch. 93-21; s. 1518, ch. 2003-261.
635.041 Contingency reserve.—
(1) Each mortgage guaranty insurer shall establish and maintain as a liability a contingency reserve out of earned premiums remaining after establishment of the unearned premium reserve. The insurer shall contribute an amount equal to 50 percent of the earned premiums into the contingency reserve.
(2) Subject to approval by the insurance department of the insurer’s state of domicile and upon 30 days’ prior notice to the office, the contingency reserve shall be available for loss payments only when the insurer’s incurred losses in any one calendar year exceed 35 percent of the corresponding earned premiums.
(3) In the event of the release of the contingency reserve for payment of losses, as approved by the state regulating agency in the insurer’s state of domicile, the contributions required under subsection (1) shall be treated on a first-in-first-out basis.
(4) The contribution made during each calendar year to the contingency reserve pertaining to a particular insurance policy shall be maintained (subject to prior payment of losses therefrom as provided in subsection (3)) for a period of 120 months.
(1) A mortgage guaranty insurer shall maintain a minimum surplus of not less than the greater of $4 million or 10 percent of the insurer’s total outstanding liabilities other than the required contingency reserve. A mortgage guaranty insurer is not required to have a surplus as to policyholders greater than $100 million.
(2) A mortgage guaranty insurer must possess sufficient capital and surplus so that the total outstanding aggregate exposure net of reinsurance under mortgage guaranty policies written by the insurer does not exceed 25 times its paid-in capital, surplus, and contingency reserve combined. A mortgage guaranty insurer shall disclose in the audited financial reports required under s. 624.424(8), the total aggregate exposure net of reinsurance under mortgage guaranty policies written by the insurer. The Commissioner of Insurance Regulation may permit a temporary exception to the requirements of this subsection at the written request of a mortgage guaranty insurer upon a finding that the mortgage guaranty insurer’s financial position is reasonable in relationship to the mortgage guaranty insurer’s aggregate insured risk and financial needs.
(3) If a mortgage guaranty insurer is not in compliance with this section and has not been permitted an exception as provided in subsection (2), the office may take any action against the insurer that the office may take against an insurer that is not in compliance with s. 624.408.
History.—ss. 5, 12, ch. 83-281; s. 5, ch. 93-21; s. 2, ch. 2001-37; s. 1520, ch. 2003-261; s. 1, ch. 2010-56; s. 1, ch. 2010-56.
635.051 Licensing and appointment of mortgage guaranty insurance agents.—
(1) Agents of mortgage guaranty insurers shall be licensed and appointed and shall be subject to the same qualifications and requirements applicable to general lines agents under the laws of this state, except that:
(a) Particular preliminary specialized education or training is not required of an applicant for such an agent’s license, and continuing education is not required for renewal of the agent’s appointment if, as part of the application for license and appointment, the insurer guarantees that the applicant will receive the necessary training to enable him or her properly to hold himself or herself out to the public as a mortgage guaranty insurance agent and if the department, in its discretion, accepts such guaranty;
(b) The agent’s license and appointment shall be a limited license, limited to the handling of mortgage guaranty insurance only; and
(c) An examination may be required of an applicant for such a license if the insurer fails to provide the guaranty described in paragraph (a).
(2) Any general lines agent licensed under chapter 626 is qualified to represent a mortgage guaranty insurer without additional examination.
(3) The department shall charge mortgage guaranty insurance agents the same applicable license and appointment taxes and fees as charged general lines agents in s. 624.501. The department shall deposit such license and appointment taxes and fees in the same manner as provided in s. 624.523 for the deposit of license and appointment taxes and fees by general lines agents.
History.—s. 5, ch. 59-182; ss. 13, 35, ch. 69-106; s. 2, ch. 81-318; ss. 6, 11, 12, ch. 83-281; s. 41, ch. 87-226; s. 158, ch. 91-108; ss. 3, 5, ch. 93-21; s. 483, ch. 97-102.
635.061 Premium cost.—For purposes of computing finance charges or determining whether a mortgage loan is usurious, any premium cost of mortgage guaranty insurance that is paid by or collected from the mortgagor as a separate charge shall be deemed to not constitute a part of the cost of, or interest upon, or charges or consideration or an amount in excess of permitted charges in connection with, any mortgage loan.
History.—s. 6, ch. 59-182; s. 2, ch. 81-318; ss. 7, 11, 12, ch. 83-281; s. 15, ch. 92-328; s. 5, ch. 93-21.
635.071 Filings, approval of forms; rate filings.—
(1) No policy form or related form may be issued or used in this state unless it has been filed with and approved by the office as provided by laws applicable to casualty or surety insurance.
(2) Each insurer shall file with the office for informational purposes the rate to be charged and the premium to be paid by the policyholder, including all modifications of rates and premiums.
(3) An insurer may not insure mortgages that are offered for sale to the public by advertisement, whether in newspapers, brochures, direct mailings, or similar media, if the advertisement expressly or impliedly represents or stresses that the worth, value, or safety of the mortgage investment arises by virtue of the proposed mortgage guaranty insurance rather than by virtue of the safety inherent in the value of the underlying security as it relates to the face value of the mortgage debt, or if the advertisement stresses the fact that the mortgage guaranty insurance is regulated by an agency of the state or Federal Government.
History.—s. 7, ch. 59-182; ss. 13, 35, ch. 69-106; s. 2, ch. 81-318; ss. 8, 11, 12, ch. 83-281; s. 5, ch. 93-21; s. 19, ch. 2000-370; s. 1521, ch. 2003-261.
635.075 Restoration of property.—Mortgage guaranty insurance policies issued for delivery in this state shall contain, as a condition precedent to payment in the event of default, a provision that the insured must restore the property to its condition at the time of issuance of the policy, except for reasonable wear and tear.
History.—ss. 12, 13, ch. 83-281; s. 5, ch. 93-21.
635.081 Administration and enforcement.—The commission may adopt rules pursuant to ss. 120.536(1) and 120.54 to implement the provisions of this chapter and shall have the same powers of administration and enforcement of the provisions of this chapter as it has with respect to casualty or surety insurers in general under the Florida Insurance Code.
History.—s. 8, ch. 59-182; ss. 13, 35, ch. 69-106; s. 2, ch. 81-318; ss. 9, 11, 12, ch. 83-281; s. 5, ch. 93-21; s. 212, ch. 98-200; s. 1522, ch. 2003-261.
635.091 Provisions of Florida Insurance Code applicable to mortgage guaranty insurance.—The following provisions of the Florida Insurance Code apply to mortgage guaranty insurers: chapter 624; chapter 625; parts I, II, VIII, and X of chapter 626; s. 627.409; s. 627.915; chapter 628; and chapter 631.
History.—ss. 10, 12, ch. 83-281; s. 42, ch. 87-226; s. 20, ch. 90-119; ss. 4, 5, ch. 93-21.