19.2 Insurers
Life insurers prominently invest in bonds and mortgages looking for long-term advantages. Generally, life insurance companies may invest in federal obligations, state or local governments, corporate bonds, real estate mortgages, real estate, corporate stocks, and policy loans.
Possible consequences for acting as an insurer without proper licensure are:
- conviction on charges of up to a first-degree felony;
- liability for all unpaid claims; and
- suspension or revocation of all insurance licenses.
The Office of Insurance Regulation conducts examinations of insurance company financial and operational situations at least every three years.
Leeway or "Basket" Provision
The Insurance Code contains this provision which spells out the terms that allow domestic insurers the right to invest a certain percentage of their total assets in loans or certain other investments.
Legal Reserve Requirement
The legal reserve is mandatory according to Florida's Standard Valuation Law. It means that a certain amount of money is set aside to fulfill future claims. The amount to be set aside is determined using a calculation defined in the Insurance Code, which takes into account mortality tables and interest rates.
The legal reserve is displayed as a liability on the company's balance sheet.
