1

A bill to be entitled

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An act relating to insurance rate standards; amending s.

3

627.062, F.S.; requiring that an insurer seeking a rate

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that is greater than the rate most recently approved by

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the Office of Insurance Regulation make a "file and use"

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filing for all such rate filings made after a specified

7

date; repealing s. 627.062(6), F.S., which provides for

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the submission of a disputed rate filing, other than a

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rate filing for medical malpractice insurance, to an

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arbitration panel in lieu of an administrative hearing if

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the rate is filed before a specified date; amending ss.

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627.0613 and 627.0628, F.S.; deleting cross-references to

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conform to changes made by the act; amending s. 627.351,

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F.S.; deleting a provision allowing the Residential

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Property and Casualty Joint Underwriting Association to

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require the arbitration of a rate filing under state law;

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providing an effective date.

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Be It Enacted by the Legislature of the State of Florida:

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21

     Section 1.  Paragraph (a) of subsection (2) of section

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627.062, Florida Statutes, is amended to read:

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     627.062  Rate standards.--

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     (2)  As to all such classes of insurance:

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     (a)  Insurers or rating organizations shall establish and

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use rates, rating schedules, or rating manuals to allow the

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insurer a reasonable rate of return on such classes of insurance

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written in this state. A copy of rates, rating schedules, rating

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manuals, premium credits or discount schedules, and surcharge

30

schedules, and changes thereto, shall be filed with the office

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under one of the following procedures except as provided in

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subparagraph 3.:

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     1.  If the filing is made at least 90 days before the

34

proposed effective date and the filing is not implemented during

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the office's review of the filing and any proceeding and judicial

36

review, then such filing shall be considered a "file and use"

37

filing. In such case, the office shall finalize its review by

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issuance of a notice of intent to approve or a notice of intent

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to disapprove within 90 days after receipt of the filing. The

40

notice of intent to approve and the notice of intent to

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disapprove constitute agency action for purposes of the

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Administrative Procedure Act. Requests for supporting

43

information, requests for mathematical or mechanical corrections,

44

or notification to the insurer by the office of its preliminary

45

findings shall not toll the 90-day period during any such

46

proceedings and subsequent judicial review. The rate shall be

47

deemed approved if the office does not issue a notice of intent

48

to approve or a notice of intent to disapprove within 90 days

49

after receipt of the filing.

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     2.  If the filing is not made in accordance with the

51

provisions of subparagraph 1., such filing shall be made as soon

52

as practicable, but no later than 30 days after the effective

53

date, and shall be considered a "use and file" filing. An insurer

54

making a "use and file" filing is potentially subject to an order

55

by the office to return to policyholders portions of rates found

56

to be excessive, as provided in paragraph (h).

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     3.  For all filings made or submitted after January 25,

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2007, but before December 31, 2008, an insurer seeking a rate

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that is greater than the rate most recently approved by the

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office shall make a "file and use" filing. This subparagraph

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applies to property insurance only. For purposes of this

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subparagraph, motor vehicle collision and comprehensive coverages

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are not considered to be property coverages.

64

65

The provisions of this subsection shall not apply to workers'

66

compensation and employer's liability insurance and to motor

67

vehicle insurance.

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     Section 2. Subsection (6) of section 627.062, Florida

69

Statutes, is repealed.

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     Section 3.  Subsection (1) of section 627.0613, Florida

71

Statutes, is amended to read:

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     627.0613  Consumer advocate.--The Chief Financial Officer

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must appoint a consumer advocate who must represent the general

74

public of the state before the department and the office. The

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consumer advocate must report directly to the Chief Financial

76

Officer, but is not otherwise under the authority of the

77

department or of any employee of the department. The consumer

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advocate has such powers as are necessary to carry out the duties

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of the office of consumer advocate, including, but not limited

80

to, the powers to:

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     (1)  Recommend to the department or office, by petition, the

82

commencement of any proceeding or action; appear in any

83

proceeding or action before the department or office; or appear

84

in any proceeding before the Division of Administrative Hearings

85

or arbitration panel specified in s. 627.062(6) relating to

86

subject matter under the jurisdiction of the department or

87

office.

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     Section 4.  Paragraph (c) of subsection (3) of section

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627.0628, Florida Statutes, is amended to read:

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     627.0628  Florida Commission on Hurricane Loss Projection

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Methodology; public records exemption; public meetings

92

exemption.--

93

     (3)  ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--

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     (c)  With respect to a rate filing under s. 627.062, an

95

insurer may employ actuarial methods, principles, standards,

96

models, or output ranges found by the commission to be accurate

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or reliable to determine hurricane loss factors for use in a rate

98

filing under s. 627.062. Such findings and factors are admissible

99

and relevant in consideration of a rate filing by the office or

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in any arbitration or administrative or judicial review only if

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the office and the consumer advocate appointed pursuant to s.

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627.0613 have access to all of the assumptions and factors that

103

were used in developing the actuarial methods, principles,

104

standards, models, or output ranges, and are not precluded from

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disclosing such information in a rate proceeding. In any rate

106

hearing under s. 120.57 or in any arbitration proceeding under s.

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627.062(6), the hearing officer or, judge, or arbitration panel

108

may determine whether the office and the consumer advocate were

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provided with access to all of the assumptions and factors that

110

were used in developing the actuarial methods, principles,

111

standards, models, or output ranges and to determine their

112

admissibility.

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     Section 5.  Paragraph (b) of subsection (2) of section

114

627.351, Florida Statutes, is amended to read:

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     627.351  Insurance risk apportionment plans.--

116

     (2)  WINDSTORM INSURANCE RISK APPORTIONMENT.--

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     (b)  The department shall require all insurers holding a

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certificate of authority to transact property insurance on a

119

direct basis in this state, other than joint underwriting

120

associations and other entities formed pursuant to this section,

121

to provide windstorm coverage to applicants from areas determined

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to be eligible pursuant to paragraph (c) who in good faith are

123

entitled to, but are unable to procure, such coverage through

124

ordinary means; or it shall adopt a reasonable plan or plans for

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the equitable apportionment or sharing among such insurers of

126

windstorm coverage, which may include formation of an association

127

for this purpose. As used in this subsection, the term "property

128

insurance" means insurance on real or personal property, as

129

defined in s. 624.604, including insurance for fire, industrial

130

fire, allied lines, farmowners multiperil, homeowners'

131

multiperil, commercial multiperil, and mobile homes, and

132

including liability coverages on all such insurance, but

133

excluding inland marine as defined in s. 624.607(3) and excluding

134

vehicle insurance as defined in s. 624.605(1)(a) other than

135

insurance on mobile homes used as permanent dwellings. The

136

department shall adopt rules that provide a formula for the

137

recovery and repayment of any deferred assessments.

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     1.  For the purpose of this section, properties eligible for

139

such windstorm coverage are defined as dwellings, buildings, and

140

other structures, including mobile homes which are used as

141

dwellings and which are tied down in compliance with mobile home

142

tie-down requirements prescribed by the Department of Highway

143

Safety and Motor Vehicles pursuant to s. 320.8325, and the

144

contents of all such properties. An applicant or policyholder is

145

eligible for coverage only if an offer of coverage cannot be

146

obtained by or for the applicant or policyholder from an admitted

147

insurer at approved rates.

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     2.a.(I)  All insurers required to be members of such

149

association shall participate in its writings, expenses, and

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losses. Surplus of the association shall be retained for the

151

payment of claims and shall not be distributed to the member

152

insurers. Such participation by member insurers shall be in the

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proportion that the net direct premiums of each member insurer

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written for property insurance in this state during the preceding

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calendar year bear to the aggregate net direct premiums for

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property insurance of all member insurers, as reduced by any

157

credits for voluntary writings, in this state during the

158

preceding calendar year. For the purposes of this subsection, the

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term "net direct premiums" means direct written premiums for

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property insurance, reduced by premium for liability coverage and

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for the following if included in allied lines: rain and hail on

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growing crops; livestock; association direct premiums booked;

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National Flood Insurance Program direct premiums; and similar

164

deductions specifically authorized by the plan of operation and

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approved by the department. A member's participation shall begin

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on the first day of the calendar year following the year in which

167

it is issued a certificate of authority to transact property

168

insurance in the state and shall terminate 1 year after the end

169

of the calendar year during which it no longer holds a

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certificate of authority to transact property insurance in the

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state. The commissioner, after review of annual statements, other

172

reports, and any other statistics that the commissioner deems

173

necessary, shall certify to the association the aggregate direct

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premiums written for property insurance in this state by all

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member insurers.

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     (II)  Effective July 1, 2002, the association shall operate

177

subject to the supervision and approval of a board of governors

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who are the same individuals that have been appointed by the

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Treasurer to serve on the board of governors of the Citizens

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Property Insurance Corporation.

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     (III)  The plan of operation shall provide a formula whereby

182

a company voluntarily providing windstorm coverage in affected

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areas will be relieved wholly or partially from apportionment of

184

a regular assessment pursuant to sub-sub-subparagraph d.(I) or

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sub-sub-subparagraph d.(II).

186

     (IV)  A company which is a member of a group of companies

187

under common management may elect to have its credits applied on

188

a group basis, and any company or group may elect to have its

189

credits applied to any other company or group.

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     (V)  There shall be no credits or relief from apportionment

191

to a company for emergency assessments collected from its

192

policyholders under sub-sub-subparagraph d.(III).

193

     (VI)  The plan of operation may also provide for the award

194

of credits, for a period not to exceed 3 years, from a regular

195

assessment pursuant to sub-sub-subparagraph d.(I) or sub-sub-

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subparagraph d.(II) as an incentive for taking policies out of

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the Residential Property and Casualty Joint Underwriting

198

Association. In order to qualify for the exemption under this

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sub-sub-subparagraph, the take-out plan must provide that at

200

least 40 percent of the policies removed from the Residential

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Property and Casualty Joint Underwriting Association cover risks

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located in Dade, Broward, and Palm Beach Counties or at least 30

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percent of the policies so removed cover risks located in Dade,

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Broward, and Palm Beach Counties and an additional 50 percent of

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the policies so removed cover risks located in other coastal

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counties, and must also provide that no more than 15 percent of

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the policies so removed may exclude windstorm coverage. With the

208

approval of the department, the association may waive these

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geographic criteria for a take-out plan that removes at least the

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lesser of 100,000 Residential Property and Casualty Joint

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Underwriting Association policies or 15 percent of the total

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number of Residential Property and Casualty Joint Underwriting

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Association policies, provided the governing board of the

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Residential Property and Casualty Joint Underwriting Association

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certifies that the take-out plan will materially reduce the

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Residential Property and Casualty Joint Underwriting

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Association's 100-year probable maximum loss from hurricanes.

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With the approval of the department, the board may extend such

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credits for an additional year if the insurer guarantees an

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additional year of renewability for all policies removed from the

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Residential Property and Casualty Joint Underwriting Association,

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or for 2 additional years if the insurer guarantees 2 additional

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years of renewability for all policies removed from the

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Residential Property and Casualty Joint Underwriting Association.

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     b.  Assessments to pay deficits in the association under

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this subparagraph shall be included as an appropriate factor in

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the making of rates as provided in s. 627.3512.

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     c.  The Legislature finds that the potential for unlimited

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deficit assessments under this subparagraph may induce insurers

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to attempt to reduce their writings in the voluntary market, and

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that such actions would worsen the availability problems that the

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association was created to remedy. It is the intent of the

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Legislature that insurers remain fully responsible for paying

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regular assessments and collecting emergency assessments for any

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deficits of the association; however, it is also the intent of

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the Legislature to provide a means by which assessment

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liabilities may be amortized over a period of years.

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     d.(I)  When the deficit incurred in a particular calendar

239

year is 10 percent or less of the aggregate statewide direct

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written premium for property insurance for the prior calendar

241

year for all member insurers, the association shall levy an

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assessment on member insurers in an amount equal to the deficit.

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     (II)  When the deficit incurred in a particular calendar

244

year exceeds 10 percent of the aggregate statewide direct written

245

premium for property insurance for the prior calendar year for

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all member insurers, the association shall levy an assessment on

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member insurers in an amount equal to the greater of 10 percent

248

of the deficit or 10 percent of the aggregate statewide direct

249

written premium for property insurance for the prior calendar

250

year for member insurers. Any remaining deficit shall be

251

recovered through emergency assessments under sub-sub-

252

subparagraph (III).

253

     (III)  Upon a determination by the board of directors that a

254

deficit exceeds the amount that will be recovered through regular

255

assessments on member insurers, pursuant to sub-sub-subparagraph

256

(I) or sub-sub-subparagraph (II), the board shall levy, after

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verification by the department, emergency assessments to be

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collected by member insurers and by underwriting associations

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created pursuant to this section which write property insurance,

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upon issuance or renewal of property insurance policies other

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than National Flood Insurance policies in the year or years

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following levy of the regular assessments. The amount of the

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emergency assessment collected in a particular year shall be a

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uniform percentage of that year's direct written premium for

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property insurance for all member insurers and underwriting

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associations, excluding National Flood Insurance policy premiums,

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as annually determined by the board and verified by the

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department. The department shall verify the arithmetic

269

calculations involved in the board's determination within 30 days

270

after receipt of the information on which the determination was

271

based. Notwithstanding any other provision of law, each member

272

insurer and each underwriting association created pursuant to

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this section shall collect emergency assessments from its

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policyholders without such obligation being affected by any

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credit, limitation, exemption, or deferment. The emergency

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assessments so collected shall be transferred directly to the

277

association on a periodic basis as determined by the association.

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The aggregate amount of emergency assessments levied under this

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sub-sub-subparagraph in any calendar year may not exceed the

280

greater of 10 percent of the amount needed to cover the original

281

deficit, plus interest, fees, commissions, required reserves, and

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other costs associated with financing of the original deficit, or

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10 percent of the aggregate statewide direct written premium for

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property insurance written by member insurers and underwriting

285

associations for the prior year, plus interest, fees,

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commissions, required reserves, and other costs associated with

287

financing the original deficit. The board may pledge the proceeds

288

of the emergency assessments under this sub-sub-subparagraph as

289

the source of revenue for bonds, to retire any other debt

290

incurred as a result of the deficit or events giving rise to the

291

deficit, or in any other way that the board determines will

292

efficiently recover the deficit. The emergency assessments under

293

this sub-sub-subparagraph shall continue as long as any bonds

294

issued or other indebtedness incurred with respect to a deficit

295

for which the assessment was imposed remain outstanding, unless

296

adequate provision has been made for the payment of such bonds or

297

other indebtedness pursuant to the document governing such bonds

298

or other indebtedness. Emergency assessments collected under this

299

sub-sub-subparagraph are not part of an insurer's rates, are not

300

premium, and are not subject to premium tax, fees, or

301

commissions; however, failure to pay the emergency assessment

302

shall be treated as failure to pay premium.

303

     (IV)  Each member insurer's share of the total regular

304

assessments under sub-sub-subparagraph (I) or sub-sub-

305

subparagraph (II) shall be in the proportion that the insurer's

306

net direct premium for property insurance in this state, for the

307

year preceding the assessment bears to the aggregate statewide

308

net direct premium for property insurance of all member insurers,

309

as reduced by any credits for voluntary writings for that year.

310

     (V)  If regular deficit assessments are made under sub-sub-

311

subparagraph (I) or sub-sub-subparagraph (II), or by the

312

Residential Property and Casualty Joint Underwriting Association

313

under sub-subparagraph (6)(b)3.a. or sub-subparagraph (6)(b)3.b.,

314

the association shall levy upon the association's policyholders,

315

as part of its next rate filing, or by a separate rate filing

316

solely for this purpose, a market equalization surcharge in a

317

percentage equal to the total amount of such regular assessments

318

divided by the aggregate statewide direct written premium for

319

property insurance for member insurers for the prior calendar

320

year. Market equalization surcharges under this sub-sub-

321

subparagraph are not considered premium and are not subject to

322

commissions, fees, or premium taxes; however, failure to pay a

323

market equalization surcharge shall be treated as failure to pay

324

premium.

325

     e.  The governing body of any unit of local government, any

326

residents of which are insured under the plan, may issue bonds as

327

defined in s. 125.013 or s. 166.101 to fund an assistance

328

program, in conjunction with the association, for the purpose of

329

defraying deficits of the association. In order to avoid needless

330

and indiscriminate proliferation, duplication, and fragmentation

331

of such assistance programs, any unit of local government, any

332

residents of which are insured by the association, may provide

333

for the payment of losses, regardless of whether or not the

334

losses occurred within or outside of the territorial jurisdiction

335

of the local government. Revenue bonds may not be issued until

336

validated pursuant to chapter 75, unless a state of emergency is

337

declared by executive order or proclamation of the Governor

338

pursuant to s. 252.36 making such findings as are necessary to

339

determine that it is in the best interests of, and necessary for,

340

the protection of the public health, safety, and general welfare

341

of residents of this state and the protection and preservation of

342

the economic stability of insurers operating in this state, and

343

declaring it an essential public purpose to permit certain

344

municipalities or counties to issue bonds as will provide relief

345

to claimants and policyholders of the association and insurers

346

responsible for apportionment of plan losses. Any such unit of

347

local government may enter into such contracts with the

348

association and with any other entity created pursuant to this

349

subsection as are necessary to carry out this paragraph. Any

350

bonds issued under this sub-subparagraph shall be payable from

351

and secured by moneys received by the association from

352

assessments under this subparagraph, and assigned and pledged to

353

or on behalf of the unit of local government for the benefit of

354

the holders of such bonds. The funds, credit, property, and

355

taxing power of the state or of the unit of local government

356

shall not be pledged for the payment of such bonds. If any of the

357

bonds remain unsold 60 days after issuance, the department shall

358

require all insurers subject to assessment to purchase the bonds,

359

which shall be treated as admitted assets; each insurer shall be

360

required to purchase that percentage of the unsold portion of the

361

bond issue that equals the insurer's relative share of assessment

362

liability under this subsection. An insurer shall not be required

363

to purchase the bonds to the extent that the department

364

determines that the purchase would endanger or impair the

365

solvency of the insurer. The authority granted by this sub-

366

subparagraph is additional to any bonding authority granted by

367

subparagraph 6.

368

     3.  The plan shall also provide that any member with a

369

surplus as to policyholders of $20 million or less writing 25

370

percent or more of its total countrywide property insurance

371

premiums in this state may petition the department, within the

372

first 90 days of each calendar year, to qualify as a limited

373

apportionment company. The apportionment of such a member company

374

in any calendar year for which it is qualified shall not exceed

375

its gross participation, which shall not be affected by the

376

formula for voluntary writings. In no event shall a limited

377

apportionment company be required to participate in any

378

apportionment of losses pursuant to sub-sub-subparagraph 2.d.(I)

379

or sub-sub-subparagraph 2.d.(II) in the aggregate which exceeds

380

$50 million after payment of available plan funds in any calendar

381

year. However, a limited apportionment company shall collect from

382

its policyholders any emergency assessment imposed under sub-sub-

383

subparagraph 2.d.(III). The plan shall provide that, if the

384

department determines that any regular assessment will result in

385

an impairment of the surplus of a limited apportionment company,

386

the department may direct that all or part of such assessment be

387

deferred. However, there shall be no limitation or deferment of

388

an emergency assessment to be collected from policyholders under

389

sub-sub-subparagraph 2.d.(III).

390

     4.  The plan shall provide for the deferment, in whole or in

391

part, of a regular assessment of a member insurer under sub-sub-

392

subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II), but not

393

for an emergency assessment collected from policyholders under

394

sub-sub-subparagraph 2.d.(III), if, in the opinion of the

395

commissioner, payment of such regular assessment would endanger

396

or impair the solvency of the member insurer. In the event a

397

regular assessment against a member insurer is deferred in whole

398

or in part, the amount by which such assessment is deferred may

399

be assessed against the other member insurers in a manner

400

consistent with the basis for assessments set forth in sub-sub-

401

subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II).

402

     5.a.  The plan of operation may include deductibles and

403

rules for classification of risks and rate modifications

404

consistent with the objective of providing and maintaining funds

405

sufficient to pay catastrophe losses.

406

     b. The association may require arbitration of a rate filing

407

under s. 627.062(6). It is the intent of the Legislature that the

408

rates for coverage provided by the association be actuarially

409

sound and not competitive with approved rates charged in the

410

admitted voluntary market such that the association functions as

411

a residual market mechanism to provide insurance only when the

412

insurance cannot be procured in the voluntary market. The plan of

413

operation shall provide a mechanism to assure that, beginning no

414

later than January 1, 1999, the rates charged by the association

415

for each line of business are reflective of approved rates in the

416

voluntary market for hurricane coverage for each line of business

417

in the various areas eligible for association coverage.

418

     c.  The association shall provide for windstorm coverage on

419

residential properties in limits up to $10 million for commercial

420

lines residential risks and up to $1 million for personal lines

421

residential risks. If coverage with the association is sought for

422

a residential risk valued in excess of these limits, coverage

423

shall be available to the risk up to the replacement cost or

424

actual cash value of the property, at the option of the insured,

425

if coverage for the risk cannot be located in the authorized

426

market. The association must accept a commercial lines

427

residential risk with limits above $10 million or a personal

428

lines residential risk with limits above $1 million if coverage

429

is not available in the authorized market. The association may

430

write coverage above the limits specified in this subparagraph

431

with or without facultative or other reinsurance coverage, as the

432

association determines appropriate.

433

     d.  The plan of operation must provide objective criteria

434

and procedures, approved by the department, to be uniformly

435

applied for all applicants in determining whether an individual

436

risk is so hazardous as to be uninsurable. In making this

437

determination and in establishing the criteria and procedures,

438

the following shall be considered:

439

     (I)  Whether the likelihood of a loss for the individual

440

risk is substantially higher than for other risks of the same

441

class; and

442

     (II)  Whether the uncertainty associated with the individual

443

risk is such that an appropriate premium cannot be determined.

444

445

The acceptance or rejection of a risk by the association pursuant

446

to such criteria and procedures must be construed as the private

447

placement of insurance, and the provisions of chapter 120 do not

448

apply.

449

     e.  If the risk accepts an offer of coverage through the

450

market assistance program or through a mechanism established by

451

the association, either before the policy is issued by the

452

association or during the first 30 days of coverage by the

453

association, and the producing agent who submitted the

454

application to the association is not currently appointed by the

455

insurer, the insurer shall:

456

     (I)  Pay to the producing agent of record of the policy, for

457

the first year, an amount that is the greater of the insurer's

458

usual and customary commission for the type of policy written or

459

a fee equal to the usual and customary commission of the

460

association; or

461

     (II)  Offer to allow the producing agent of record of the

462

policy to continue servicing the policy for a period of not less

463

than 1 year and offer to pay the agent the greater of the

464

insurer's or the association's usual and customary commission for

465

the type of policy written.

466

467

If the producing agent is unwilling or unable to accept

468

appointment, the new insurer shall pay the agent in accordance

469

with sub-sub-subparagraph (I). Subject to the provisions of s.

470

627.3517, the policies issued by the association must provide

471

that if the association obtains an offer from an authorized

472

insurer to cover the risk at its approved rates under either a

473

standard policy including wind coverage or, if consistent with

474

the insurer's underwriting rules as filed with the department, a

475

basic policy including wind coverage, the risk is no longer

476

eligible for coverage through the association. Upon termination

477

of eligibility, the association shall provide written notice to

478

the policyholder and agent of record stating that the association

479

policy must be canceled as of 60 days after the date of the

480

notice because of the offer of coverage from an authorized

481

insurer. Other provisions of the insurance code relating to

482

cancellation and notice of cancellation do not apply to actions

483

under this sub-subparagraph.

484

     f.  When the association enters into a contractual agreement

485

for a take-out plan, the producing agent of record of the

486

association policy is entitled to retain any unearned commission

487

on the policy, and the insurer shall:

488

     (I)  Pay to the producing agent of record of the association

489

policy, for the first year, an amount that is the greater of the

490

insurer's usual and customary commission for the type of policy

491

written or a fee equal to the usual and customary commission of

492

the association; or

493

     (II)  Offer to allow the producing agent of record of the

494

association policy to continue servicing the policy for a period

495

of not less than 1 year and offer to pay the agent the greater of

496

the insurer's or the association's usual and customary commission

497

for the type of policy written.

498

499

If the producing agent is unwilling or unable to accept

500

appointment, the new insurer shall pay the agent in accordance

501

with sub-sub-subparagraph (I).

502

     6.a.  The plan of operation may authorize the formation of a

503

private nonprofit corporation, a private nonprofit unincorporated

504

association, a partnership, a trust, a limited liability company,

505

or a nonprofit mutual company which may be empowered, among other

506

things, to borrow money by issuing bonds or by incurring other

507

indebtedness and to accumulate reserves or funds to be used for

508

the payment of insured catastrophe losses. The plan may authorize

509

all actions necessary to facilitate the issuance of bonds,

510

including the pledging of assessments or other revenues.

511

     b.  Any entity created under this subsection, or any entity

512

formed for the purposes of this subsection, may sue and be sued,

513

may borrow money; issue bonds, notes, or debt instruments; pledge

514

or sell assessments, market equalization surcharges and other

515

surcharges, rights, premiums, contractual rights, projected

516

recoveries from the Florida Hurricane Catastrophe Fund, other

517

reinsurance recoverables, and other assets as security for such

518

bonds, notes, or debt instruments; enter into any contracts or

519

agreements necessary or proper to accomplish such borrowings; and

520

take other actions necessary to carry out the purposes of this

521

subsection. The association may issue bonds or incur other

522

indebtedness, or have bonds issued on its behalf by a unit of

523

local government pursuant to subparagraph (6)(p)2., in the

524

absence of a hurricane or other weather-related event, upon a

525

determination by the association subject to approval by the

526

department that such action would enable it to efficiently meet

527

the financial obligations of the association and that such

528

financings are reasonably necessary to effectuate the

529

requirements of this subsection. Any such entity may accumulate

530

reserves and retain surpluses as of the end of any association

531

year to provide for the payment of losses incurred by the

532

association during that year or any future year. The association

533

shall incorporate and continue the plan of operation and articles

534

of agreement in effect on the effective date of chapter 76-96,

535

Laws of Florida, to the extent that it is not inconsistent with

536

chapter 76-96, and as subsequently modified consistent with

537

chapter 76-96. The board of directors and officers currently

538

serving shall continue to serve until their successors are duly

539

qualified as provided under the plan. The assets and obligations

540

of the plan in effect immediately prior to the effective date of

541

chapter 76-96 shall be construed to be the assets and obligations

542

of the successor plan created herein.

543

     c.  In recognition of s. 10, Art. I of the State

544

Constitution, prohibiting the impairment of obligations of

545

contracts, it is the intent of the Legislature that no action be

546

taken whose purpose is to impair any bond indenture or financing

547

agreement or any revenue source committed by contract to such

548

bond or other indebtedness issued or incurred by the association

549

or any other entity created under this subsection.

550

     7.  On such coverage, an agent's remuneration shall be that

551

amount of money payable to the agent by the terms of his or her

552

contract with the company with which the business is placed.

553

However, no commission will be paid on that portion of the

554

premium which is in excess of the standard premium of that

555

company.

556

     8.  Subject to approval by the department, the association

557

may establish different eligibility requirements and operational

558

procedures for any line or type of coverage for any specified

559

eligible area or portion of an eligible area if the board

560

determines that such changes to the eligibility requirements and

561

operational procedures are justified due to the voluntary market

562

being sufficiently stable and competitive in such area or for

563

such line or type of coverage and that consumers who, in good

564

faith, are unable to obtain insurance through the voluntary

565

market through ordinary methods would continue to have access to

566

coverage from the association. When coverage is sought in

567

connection with a real property transfer, such requirements and

568

procedures shall not provide for an effective date of coverage

569

later than the date of the closing of the transfer as established

570

by the transferor, the transferee, and, if applicable, the

571

lender.

572

     9.  Notwithstanding any other provision of law:

573

     a.  The pledge or sale of, the lien upon, and the security

574

interest in any rights, revenues, or other assets of the

575

association created or purported to be created pursuant to any

576

financing documents to secure any bonds or other indebtedness of

577

the association shall be and remain valid and enforceable,

578

notwithstanding the commencement of and during the continuation

579

of, and after, any rehabilitation, insolvency, liquidation,

580

bankruptcy, receivership, conservatorship, reorganization, or

581

similar proceeding against the association under the laws of this

582

state or any other applicable laws.

583

     b.  No such proceeding shall relieve the association of its

584

obligation, or otherwise affect its ability to perform its

585

obligation, to continue to collect, or levy and collect,

586

assessments, market equalization or other surcharges, projected

587

recoveries from the Florida Hurricane Catastrophe Fund,

588

reinsurance recoverables, or any other rights, revenues, or other

589

assets of the association pledged.

590

     c.  Each such pledge or sale of, lien upon, and security

591

interest in, including the priority of such pledge, lien, or

592

security interest, any such assessments, emergency assessments,

593

market equalization or renewal surcharges, projected recoveries

594

from the Florida Hurricane Catastrophe Fund, reinsurance

595

recoverables, or other rights, revenues, or other assets which

596

are collected, or levied and collected, after the commencement of

597

and during the pendency of or after any such proceeding shall

598

continue unaffected by such proceeding.

599

     d.  As used in this subsection, the term "financing

600

documents" means any agreement, instrument, or other document now

601

existing or hereafter created evidencing any bonds or other

602

indebtedness of the association or pursuant to which any such

603

bonds or other indebtedness has been or may be issued and

604

pursuant to which any rights, revenues, or other assets of the

605

association are pledged or sold to secure the repayment of such

606

bonds or indebtedness, together with the payment of interest on

607

such bonds or such indebtedness, or the payment of any other

608

obligation of the association related to such bonds or

609

indebtedness.

610

     e.  Any such pledge or sale of assessments, revenues,

611

contract rights or other rights or assets of the association

612

shall constitute a lien and security interest, or sale, as the

613

case may be, that is immediately effective and attaches to such

614

assessments, revenues, contract, or other rights or assets,

615

whether or not imposed or collected at the time the pledge or

616

sale is made. Any such pledge or sale is effective, valid,

617

binding, and enforceable against the association or other entity

618

making such pledge or sale, and valid and binding against and

619

superior to any competing claims or obligations owed to any other

620

person or entity, including policyholders in this state,

621

asserting rights in any such assessments, revenues, contract, or

622

other rights or assets to the extent set forth in and in

623

accordance with the terms of the pledge or sale contained in the

624

applicable financing documents, whether or not any such person or

625

entity has notice of such pledge or sale and without the need for

626

any physical delivery, recordation, filing, or other action.

627

     f.  There shall be no liability on the part of, and no cause

628

of action of any nature shall arise against, any member insurer

629

or its agents or employees, agents or employees of the

630

association, members of the board of directors of the

631

association, or the department or its representatives, for any

632

action taken by them in the performance of their duties or

633

responsibilities under this subsection. Such immunity does not

634

apply to actions for breach of any contract or agreement

635

pertaining to insurance, or any willful tort.

636

     Section 6.  This act shall take effect upon becoming a law.