Florida Senate - 2009 CS for SB 1950
By the Committee on Banking and Insurance; and Senator Richter
597-04422-09 20091950c1
1 A bill to be entitled
2 An act relating to property insurance; amending s.
3 215.555, F.S.; revising the dates of an insurer’s
4 contract year for purposes of calculating the
5 insurer’s retention; requiring the State Board of
6 Administration to offer an additional amount of
7 reimbursement coverage to certain insurers that
8 purchased coverage during a certain calendar year;
9 requiring an insurer that purchases certain coverage
10 to retain an amount equal to a percentage of the
11 insurer’s surplus on a certain date; providing that an
12 insurer’s retention will apply along with a mandatory
13 coverage after an optional coverage is exhausted;
14 revising an expiration date on the requirement for the
15 State Board of Administration to offer certain
16 optional coverage to insurers; revising the dates on
17 which the State Board of Administration is required to
18 publish a statement of the estimated borrowing
19 capacity of the Hurricane Catastrophe Fund;
20 authorizing the State Board of Administration to
21 reimburse insurers based on a formula related to the
22 claims-paying capacity of the Hurricane Catastrophe
23 Fund; requiring the formula to determine an
24 actuarially indicated premium to include specified
25 cash build-up factors; authorizing insurers to
26 purchase temporary increased coverage limit for
27 certain future hurricane seasons; providing that a
28 cash build-up factor does not apply to temporary
29 increased coverage limit premiums; providing dates on
30 which the claims-paying capacity of the fund will
31 increase; deleting authority for the State Board of
32 Administration to increase the claims-paying capacity
33 of the Hurricane Catastrophe Fund; amending s.
34 627.062, F.S.; revising the date by which certain
35 filings for a rate increase must be made by a file and
36 use filing; exempting certain rate filings from
37 determination by the Office of Insurance Regulation
38 that the rate in the rate filing is excessive or
39 unfairly discriminatory; amending s. 627.0621, F.S.;
40 deleting a limitation on the application of the
41 attorney-client privilege and work product doctrine in
42 challenges to actions by the Office of Insurance
43 Regulation relating to rate filings; amending s.
44 627.0629, F.S.; authorizing an insurer to include in
45 its rates the actual cost of certain reinsurance;
46 amending s. 627.351, F.S.; deleting a provision
47 requiring a seller of certain residential property to
48 disclose the structure’s windstorm mitigation rating
49 to the prospective purchaser of the property;
50 providing for members of the board of governors of
51 Citizens Property Insurance Corporation to serve
52 staggered terms; requiring Citizen’s Property
53 Insurance Corporation to implement rate increases
54 until the implementation of actuarially sound rates;
55 requiring the corporation to transfer a portion of the
56 funds received from the rate increase into the General
57 Revenue Fund; revising the dates after which the State
58 Board of Administration is required to reduce the
59 boundaries of high-risk areas eligible for wind-only
60 coverages under certain circumstances; amending s.
61 627.3512, F.S.; authorizing insurers to recoup
62 assessments within a certain period; requiring
63 insurers to file a final accounting report with the
64 Office of Insurance Regulation which documents the
65 assessment recouped; requiring the officer of the
66 insurer who signs the report to acknowledge certain
67 statements; prohibiting insurers that do not file the
68 report from including the uncollected assessment
69 amount in any subsequent rate filing; amending s.
70 627.712, F.S.; revising the properties for which an
71 insurer must make policies available which exclude
72 windstorm coverage; amending s. 631.57, F.S.; deleting
73 provisions requiring certain insurers to submit
74 certain information; amending s. 631.64, F.S.;
75 authorizing insurers to recoup certain assessments;
76 requiring the recoupment to begin within a certain
77 period; limiting the recoupment factor; authorizing
78 insurers to carry forward certain assessments that
79 have not been recouped; requiring insurers to file a
80 final accounting report with the Office of Insurance
81 Regulation which documents the assessment recouped;
82 requiring the officer of the insurer who signs the
83 report to acknowledge certain statements; providing
84 that all excess recoupment be sent to the Florida
85 Insurance Guaranty Association; requiring that the
86 insurer document the accounting of the over-recoupment
87 in the final accounting report; authorizing the
88 commission to adopt rules; amending s. 631.65, F.S.;
89 providing that an insurance agent is not prohibited
90 from explaining the existence or function of the
91 insurance guaranty association; providing for the
92 appropriation of certain transferred funds to the
93 Insurance Regulatory Trust Fund for purposes of the My
94 Safe Florida Home Program; providing an effective
95 date.
96
97 Be It Enacted by the Legislature of the State of Florida:
98
99 Section 1. Paragraph (e) of subsection (2), subsection (4),
100 paragraph (b) of subsection (5), and subsection (17) of section
101 215.555, Florida Statutes, are amended to read:
102 215.555 Florida Hurricane Catastrophe Fund.—
103 (2) DEFINITIONS.—As used in this section:
104 (e) “Retention” means the amount of losses below which an
105 insurer is not entitled to reimbursement from the fund. An
106 insurer’s retention shall be calculated as follows:
107 1. The board shall calculate and report to each insurer the
108 retention multiples for that year. For the contract year
109 beginning June 1, 2005, the retention multiple shall be equal to
110 $4.5 billion divided by the total estimated reimbursement
111 premium for the contract year; for subsequent years, the
112 retention multiple shall be equal to $4.5 billion, adjusted
113 based upon the reported exposure from the prior contract year to
114 reflect the percentage growth in exposure to the fund for
115 covered policies since 2004, divided by the total estimated
116 reimbursement premium for the contract year. Total reimbursement
117 premium for purposes of the calculation under this subparagraph
118 shall be estimated using the assumption that all insurers have
119 selected the 90-percent coverage level. In 2010, the contract
120 year begins June 1 and ends December 31, 2010. In 2011 and
121 thereafter, the contract year begins January 1 and ends December
122 31.
123 2. The retention multiple as determined under subparagraph
124 1. shall be adjusted to reflect the coverage level elected by
125 the insurer. For insurers electing the 90-percent coverage
126 level, the adjusted retention multiple is 100 percent of the
127 amount determined under subparagraph 1. For insurers electing
128 the 75-percent coverage level, the retention multiple is 120
129 percent of the amount determined under subparagraph 1. For
130 insurers electing the 45-percent coverage level, the adjusted
131 retention multiple is 200 percent of the amount determined under
132 subparagraph 1.
133 3. An insurer shall determine its provisional retention by
134 multiplying its provisional reimbursement premium by the
135 applicable adjusted retention multiple and shall determine its
136 actual retention by multiplying its actual reimbursement premium
137 by the applicable adjusted retention multiple.
138 4. For insurers who experience multiple covered events
139 causing loss during the contract year, beginning June 1, 2005,
140 each insurer’s full retention shall be applied to each of the
141 covered events causing the two largest losses for that insurer.
142 For each other covered event resulting in losses, the insurer’s
143 retention shall be reduced to one-third of the full retention.
144 The reimbursement contract shall provide for the reimbursement
145 of losses for each covered event based on the full retention
146 with adjustments made to reflect the reduced retentions on or
147 after January 1 of the contract year provided the insurer
148 reports its losses as specified in the reimbursement contract.
149 (4) REIMBURSEMENT CONTRACTS.—
150 (a) The board shall enter into a contract with each insurer
151 writing covered policies in this state to provide to the insurer
152 the reimbursement described in paragraphs (b) and (d), in
153 exchange for the reimbursement premium paid into the fund under
154 subsection (5). As a condition of doing business in this state,
155 each such insurer shall enter into such a contract.
156 (b)1. The contract shall contain a promise by the board to
157 reimburse the insurer for 45 percent, 75 percent, or 90 percent
158 of its losses from each covered event in excess of the insurer’s
159 retention, plus 5 percent of the reimbursed losses to cover loss
160 adjustment expenses.
161 2. The insurer must elect one of the percentage coverage
162 levels specified in this paragraph and may, upon renewal of a
163 reimbursement contract, elect a lower percentage coverage level
164 if no revenue bonds issued under subsection (6) after a covered
165 event are outstanding, or elect a higher percentage coverage
166 level, regardless of whether or not revenue bonds are
167 outstanding. All members of an insurer group must elect the same
168 percentage coverage level. Any joint underwriting association,
169 risk apportionment plan, or other entity created under s.
170 627.351 must elect the 90-percent coverage level.
171 3. The contract shall provide that reimbursement amounts
172 shall not be reduced by reinsurance paid or payable to the
173 insurer from other sources.
174 4. Notwithstanding any other provision contained in this
175 section, the board shall make available to insurers that
176 purchased coverage provided by this subparagraph in 2008 2007,
177 insurers qualifying as limited apportionment companies under s.
178 627.351(6)(c), and insurers that have been approved to
179 participate in the Insurance Capital Build-Up Incentive Program
180 pursuant to s. 215.5595 a contract or contract addendum that
181 provides an additional amount of reimbursement coverage of up to
182 $10 million. The premium to be charged for this additional
183 reimbursement coverage shall be 50 percent of the additional
184 reimbursement coverage provided, which shall include one prepaid
185 reinstatement. The minimum retention level that an eligible
186 participating insurer must retain associated with this
187 additional coverage layer is 30 percent of the insurer’s surplus
188 as of December 31, 2008 December 31, 2007. This coverage shall
189 be in addition to all other coverage that may be provided under
190 this section. The coverage provided by the fund under this
191 subparagraph shall be in addition to the claims-paying capacity
192 as defined in subparagraph (c)1., but only with respect to those
193 insurers that select the additional coverage option and meet the
194 requirements of this subparagraph. The claims-paying capacity
195 with respect to all other participating insurers and limited
196 apportionment companies that do not select the additional
197 coverage option shall be limited to their reimbursement
198 premium’s proportionate share of the actual claims-paying
199 capacity otherwise defined in subparagraph (c)1. and as provided
200 for under the terms of the reimbursement contract. The optional
201 coverage retention as specified shall be accessed before the
202 mandatory coverage under the reimbursement contract, but once
203 the limit of coverage selected under this option is exhausted,
204 the insurer’s retention under the mandatory coverage will apply.
205 This coverage will apply and be paid concurrently with mandatory
206 coverage. Coverage provided in the reimbursement contract shall
207 not be affected by the additional premiums paid by participating
208 insurers exercising the additional coverage option allowed in
209 this subparagraph. This subparagraph expires on January 1, 2012
210 May 31, 2009.
211 (c)1. The contract shall also provide that the obligation
212 of the board with respect to all contracts covering a particular
213 contract year shall not exceed the actual claims-paying capacity
214 of the fund up to a limit of $15 billion for that contract year
215 adjusted based upon the reported exposure from the prior
216 contract year to reflect the percentage growth in exposure to
217 the fund for covered policies since 2003, provided the dollar
218 growth in the limit may not increase in any year by an amount
219 greater than the dollar growth of the balance of the fund as of
220 December 31, less any premiums or interest attributable to
221 optional coverage, as defined by rule which occurred over the
222 prior calendar year.
223 2. In May before the start of the upcoming contract year
224 and in October of during the contract year, the board shall
225 publish in the Florida Administrative Weekly a statement of the
226 fund’s estimated borrowing capacity and the projected balance of
227 the fund as of December 31. After the end of each calendar year,
228 the board shall notify insurers of the estimated borrowing
229 capacity and the balance of the fund as of December 31 to
230 provide insurers with data necessary to assist them in
231 determining their retention and projected payout from the fund
232 for loss reimbursement purposes. In conjunction with the
233 development of the premium formula, as provided for in
234 subsection (5), the board shall publish factors or multiples
235 that assist insurers in determining their retention and
236 projected payout for the next contract year. For all regulatory
237 and reinsurance purposes, an insurer may calculate its projected
238 payout from the fund as its share of the total fund premium for
239 the current contract year multiplied by the sum of the projected
240 balance of the fund as of December 31 and the estimated
241 borrowing capacity for that contract year as reported under this
242 subparagraph.
243 (d)1. For purposes of determining potential liability and
244 to aid in the sound administration of the fund, the contract
245 shall require each insurer to report such insurer’s losses from
246 each covered event on an interim basis, as directed by the
247 board. The contract shall require the insurer to report to the
248 board no later than December 31 of each year, and quarterly
249 thereafter, its reimbursable losses from covered events for the
250 year. The contract shall require the board to determine and pay,
251 as soon as practicable after receiving these reports of
252 reimbursable losses, the initial amount of reimbursement due and
253 adjustments to this amount based on later loss information. The
254 adjustments to reimbursement amounts shall require the board to
255 pay, or the insurer to return, amounts reflecting the most
256 recent calculation of losses.
257 2. In determining reimbursements pursuant to this
258 subsection, the contract shall provide that the board shall pay
259 to each insurer such insurer’s projected payout, which is the
260 amount of reimbursement it is owed, up to an amount equal to the
261 insurer’s share of the actual premium paid for that contract
262 year, multiplied by the actual claims-paying capacity available
263 for that contract year.
264 3. The board may reimburse insurers for amounts up to the
265 published factors or multiples for determining each
266 participating insurer’s retention and projected payout derived
267 as a result of the development of the premium formula in those
268 situations in which the total reimbursement of losses to such
269 insurers would not exceed the estimated claims-paying capacity
270 of the fund. Otherwise, such factors or multiples shall be
271 reduced uniformly among all insurers to reflect the estimated
272 claims-paying capacity.
273 (e)1. Except as provided in subparagraphs 2. and 3., the
274 contract shall provide that if an insurer demonstrates to the
275 board that it is likely to qualify for reimbursement under the
276 contract, and demonstrates to the board that the immediate
277 receipt of moneys from the board is likely to prevent the
278 insurer from becoming insolvent, the board shall advance the
279 insurer, at market interest rates, the amounts necessary to
280 maintain the solvency of the insurer, up to 50 percent of the
281 board’s estimate of the reimbursement due the insurer. The
282 insurer’s reimbursement shall be reduced by an amount equal to
283 the amount of the advance and interest thereon.
284 2. With respect only to an entity created under s. 627.351,
285 the contract shall also provide that the board may, upon
286 application by such entity, advance to such entity, at market
287 interest rates, up to 90 percent of the lesser of:
288 a. The board’s estimate of the amount of reimbursement due
289 to such entity; or
290 b. The entity’s share of the actual reimbursement premium
291 paid for that contract year, multiplied by the currently
292 available liquid assets of the fund. In order for the entity to
293 qualify for an advance under this subparagraph, the entity must
294 demonstrate to the board that the advance is essential to allow
295 the entity to pay claims for a covered event and the board must
296 determine that the fund’s assets are sufficient and are
297 sufficiently liquid to allow the board to make an advance to the
298 entity and still fulfill the board’s reimbursement obligations
299 to other insurers. The entity’s final reimbursement for any
300 contract year in which an advance has been made under this
301 subparagraph must be reduced by an amount equal to the amount of
302 the advance and any interest on such advance. In order to
303 determine what amounts, if any, are due the entity, the board
304 may require the entity to report its exposure and its losses at
305 any time to determine retention levels and reimbursements
306 payable.
307 3. The contract shall also provide specifically and solely
308 with respect to any limited apportionment company under s.
309 627.351(2)(b)3. that the board may, upon application by such
310 company, advance to such company the amount of the estimated
311 reimbursement payable to such company as calculated pursuant to
312 paragraph (d), at market interest rates, if the board determines
313 that the fund’s assets are sufficient and are sufficiently
314 liquid to permit the board to make an advance to such company
315 and at the same time fulfill its reimbursement obligations to
316 the insurers that are participants in the fund. Such company’s
317 final reimbursement for any contract year in which an advance
318 pursuant to this subparagraph has been made shall be reduced by
319 an amount equal to the amount of the advance and interest
320 thereon. In order to determine what amounts, if any, are due to
321 such company, the board may require such company to report its
322 exposure and its losses at such times as may be required to
323 determine retention levels and loss reimbursements payable.
324 (f) In order to ensure that insurers have properly reported
325 the insured values on which the reimbursement premium is based
326 and to ensure that insurers have properly reported the losses
327 for which reimbursements have been made, the board shall
328 inspect, examine, and verify the records of each insurer’s
329 covered policies at such times as the board deems appropriate
330 and according to standards established by rule for the specific
331 purpose of validating the accuracy of exposures and losses
332 required to be reported under the terms and conditions of the
333 reimbursement contract. The costs of the examinations shall be
334 borne by the board. However, in order to remove any incentive
335 for an insurer to delay preparations for an examination, the
336 board shall be reimbursed by the insurer for any examination
337 expenses incurred in addition to the usual and customary costs
338 of the examination, which additional expenses were incurred as a
339 result of an insurer’s failure, despite proper notice, to be
340 prepared for the examination or as a result of an insurer’s
341 failure to provide requested information while the examination
342 is in progress. If the board finds any insurer’s records or
343 other necessary information to be inadequate or inadequately
344 posted, recorded, or maintained, the board may employ experts to
345 reconstruct, rewrite, record, post, or maintain such records or
346 information, at the expense of the insurer being examined, if
347 such insurer has failed to maintain, complete, or correct such
348 records or deficiencies after the board has given the insurer
349 notice and a reasonable opportunity to do so. Any information
350 contained in an examination report, which information is
351 described in s. 215.557, is confidential and exempt from the
352 provisions of s. 119.07(1) and s. 24(a), Art. I of the State
353 Constitution, as provided in s. 215.557. Nothing in this
354 paragraph expands the exemption in s. 215.557.
355 (g) The contract shall provide that in the event of the
356 insolvency of an insurer, the fund shall pay directly to the
357 Florida Insurance Guaranty Association for the benefit of
358 Florida policyholders of the insurer the net amount of all
359 reimbursement moneys owed to the insurer. As used in this
360 paragraph, the term “net amount of all reimbursement moneys”
361 means that amount which remains after reimbursement for:
362 1. Preliminary or duplicate payments owed to private
363 reinsurers or other inuring reinsurance payments to private
364 reinsurers that satisfy statutory or contractual obligations of
365 the insolvent insurer attributable to covered events to such
366 reinsurers; or
367 2. Funds owed to a bank or other financial institution to
368 cover obligations of the insolvent insurer under a credit
369 agreement that assists the insolvent insurer in paying claims
370 attributable to covered events.
371
372 The private reinsurers, banks, or other financial institutions
373 shall be reimbursed or otherwise paid prior to payment to the
374 Florida Insurance Guaranty Association, notwithstanding any law
375 to the contrary. The guaranty association shall pay all claims
376 up to the maximum amount permitted by chapter 631; thereafter,
377 any remaining moneys shall be paid pro rata to claims not fully
378 satisfied. This paragraph does not apply to a joint underwriting
379 association, risk apportionment plan, or other entity created
380 under s. 627.351.
381 (5) REIMBURSEMENT PREMIUMS.—
382 (b) The State Board of Administration shall select an
383 independent consultant to develop a formula for determining the
384 actuarially indicated premium to be paid to the fund. The
385 formula shall specify, for each zip code or other limited
386 geographical area, the amount of premium to be paid by an
387 insurer for each $1,000 of insured value under covered policies
388 in that zip code or other area. In establishing premiums, the
389 board shall consider the coverage elected under paragraph (4)(b)
390 and any factors that tend to enhance the actuarial
391 sophistication of ratemaking for the fund, including
392 deductibles, type of construction, type of coverage provided,
393 relative concentration of risks, and other such factors deemed
394 by the board to be appropriate. The formula must provide for a
395 cash build-up factor. For the 2009-2010 contract year, the
396 factor is 5 percent. For the contract year beginning June 1,
397 2010, and ending December 31, 2010, the factor is 10 percent.
398 For the 2011 contract year, the factor is 15 percent. For the
399 2012 contract year, the factor is 20 percent. For the 2013
400 contract year and thereafter, the factor is 25 percent. The
401 formula may provide for a procedure to determine the premiums to
402 be paid by new insurers that begin writing covered policies
403 after the beginning of a contract year, taking into
404 consideration when the insurer starts writing covered policies,
405 the potential exposure of the insurer, the potential exposure of
406 the fund, the administrative costs to the insurer and to the
407 fund, and any other factors deemed appropriate by the board. The
408 formula must be approved by unanimous vote of the board. The
409 board may, at any time, revise the formula pursuant to the
410 procedure provided in this paragraph.
411 (17) TEMPORARY INCREASE IN COVERAGE LIMIT OPTIONS.—
412 (a) Findings and intent.—
413 1. The Legislature finds that:
414 a. Because of temporary disruptions in the market for
415 catastrophic reinsurance, many property insurers were unable to
416 procure sufficient amounts of reinsurance for the 2006 hurricane
417 season or were able to procure such reinsurance only by
418 incurring substantially higher costs than in prior years.
419 b. The reinsurance market problems were responsible, at
420 least in part, for substantial premium increases to many
421 consumers and increases in the number of policies issued by
422 Citizens Property Insurance Corporation.
423 c. It is likely that the reinsurance market disruptions
424 will not significantly abate prior to the 2007 hurricane season.
425 2. It is the intent of the Legislature to create options
426 for insurers to purchase a temporary increased coverage limit
427 above the statutorily determined limit in subparagraph (4)(c)1.,
428 applicable for the 2007, 2008, and 2009, 2010, 2011, 2012, and
429 2013 hurricane seasons, to address market disruptions and enable
430 insurers, at their option, to procure additional coverage from
431 the Florida Hurricane Catastrophe Fund.
432 (b) Applicability of other provisions of this section.—All
433 provisions of this section and the rules adopted under this
434 section apply to the coverage created by this subsection unless
435 specifically superseded by provisions in this subsection.
436 (c) Optional coverage.—For the contract year commencing
437 June 1, 2007, and ending May 31, 2008, the contract year
438 commencing June 1, 2008, and ending May 31, 2009, and the
439 contract year commencing June 1, 2009, and ending May 31, 2010,
440 the contract year commencing June 1, 2010, and ending December
441 31, 2010, the contract year commencing January 1, 2011, and
442 ending December 31, 2011, the contract year commencing January
443 1, 2012, and ending December 31, 2012, and the contract year
444 commencing January 1, 2013, and ending December 31, 2013, the
445 board shall offer, for each of such years, the optional coverage
446 as provided in this subsection.
447 (d) Additional definitions.—As used in this subsection, the
448 term:
449 1. “FHCF” means Florida Hurricane Catastrophe Fund.
450 2. “FHCF reimbursement premium” means the premium paid by
451 an insurer for its coverage as a mandatory participant in the
452 FHCF, but does not include additional premiums for optional
453 coverages.
454 3. “Payout multiple” means the number or multiple created
455 by dividing the statutorily defined claims-paying capacity as
456 determined in subparagraph (4)(c)1. by the aggregate
457 reimbursement premiums paid by all insurers estimated or
458 projected as of calendar year-end.
459 4. “TICL” means the temporary increase in coverage limit.
460 5. “TICL options” means the temporary increase in coverage
461 options created under this subsection.
462 6. “TICL insurer” means an insurer that has opted to obtain
463 coverage under the TICL options addendum in addition to the
464 coverage provided to the insurer under its FHCF reimbursement
465 contract.
466 7. “TICL reimbursement premium” means the premium charged
467 by the fund for coverage provided under the TICL option.
468 8. “TICL coverage multiple” means the coverage multiple
469 when multiplied by an insurer’s reimbursement premium that
470 defines the temporary increase in coverage limit.
471 9. “TICL coverage” means the coverage for an insurer’s
472 losses above the insurer’s statutorily determined claims-paying
473 capacity based on the claims-paying limit in subparagraph
474 (4)(c)1., which an insurer selects as its temporary increase in
475 coverage from the fund under the TICL options selected. A TICL
476 insurer’s increased coverage limit options shall be calculated
477 as follows:
478 a. The board shall calculate and report to each TICL
479 insurer the TICL coverage multiples based on 12 options for
480 increasing the insurer’s FHCF coverage limit. Each TICL coverage
481 multiple shall be calculated by dividing $1 billion, $2 billion,
482 $3 billion, $4 billion, $5 billion, $6 billion, $7 billion, $8
483 billion, $9 billion, $10 billion, $11 billion, or $12 billion by
484 the total estimated aggregate FHCF reimbursement premiums for
485 the 2007-2008 contract year, and the 2008-2009 contract year,
486 and the 2009-2010 contract year.
487 b. For the 2009-2010 contract year, the board shall
488 calculate and report to each TICL insurer the TICL coverage
489 multiples based on 10 options for increasing the insurer’s FHCF
490 coverage limit. Each TICL coverage multiple shall be calculated
491 by dividing $1 billion, $2 billion, $3 billion, $4 billion, $5
492 billion, $6 billion, $7 billion, $8 billion, $9 billion, and $10
493 billion by the total estimated aggregate FHCF reimbursement
494 premiums for the 2009-2010 contract year.
495 c. For the contract year beginning June 1, 2010, and ending
496 December 31, 2010, the board shall calculate and report to each
497 TICL insurer the TICL coverage multiples based on eight options
498 for increasing the insurer’s FHCF coverage limit. Each TICL
499 coverage multiple shall be calculated by dividing $1 billion, $2
500 billion, $3 billion, $4 billion, $5 billion, $6 billion, $7
501 billion, and $8 billion by the total estimated aggregate FHCF
502 reimbursement premiums for the contract year.
503 d. For the 2011 contract year, the board shall calculate
504 and report to each TICL insurer the TICL coverage multiples
505 based on six options for increasing the insurer’s FHCF coverage
506 limit. Each TICL coverage multiple shall be calculated by
507 dividing $1 billion, $2 billion, $3 billion, $4 billion, $5
508 billion, and $6 billion by the total estimated aggregate FHCF
509 reimbursement premiums for the 2011 contract year.
510 e. For the 2012 contract year, the board shall calculate
511 and report to each TICL insurer the TICL coverage multiples
512 based on four options for increasing the insurer’s FHCF coverage
513 limit. Each TICL coverage multiple shall be calculated by
514 dividing $1 billion, $2 billion, $3 billion, and $4 billion by
515 the total estimated aggregate FHCF reimbursement premiums for
516 the 2012 contract year.
517 f. For the 2013 contract year, the board shall calculate
518 and report to each TICL insurer the TICL coverage multiples
519 based on two options for increasing the insurer’s FHCF coverage
520 limit. Each TICL coverage multiple shall be calculated by
521 dividing $1 billion and $2 billion by the total estimated
522 aggregate FHCF reimbursement premiums for the 2013 contract
523 year.
524 g.b. The TICL insurer’s increased coverage shall be the
525 FHCF reimbursement premium multiplied by the TICL coverage
526 multiple. In order to determine an insurer’s total limit of
527 coverage, an insurer shall add its TICL coverage multiple to its
528 payout multiple. The total shall represent a number that, when
529 multiplied by an insurer’s FHCF reimbursement premium for a
530 given reimbursement contract year, defines an insurer’s total
531 limit of FHCF reimbursement coverage for that reimbursement
532 contract year.
533 10. “TICL options addendum” means an addendum to the
534 reimbursement contract reflecting the obligations of the fund
535 and insurers selecting an option to increase an insurer’s FHCF
536 coverage limit.
537 (e) TICL options addendum.—
538 1. The TICL options addendum shall provide for
539 reimbursement of TICL insurers for covered events occurring
540 between June 1, 2007, and May 31, 2008, and between June 1,
541 2008, and May 31, 2009, or between June 1, 2009, and May 31,
542 2010, between June 1, 2010, and December 31, 2010, between
543 January 1, 2011, and December 31, 2011, between January 1, 2012,
544 and December 31, 2012, or between January 1, 2013, and December
545 31, 2013, in exchange for the TICL reimbursement premium paid
546 into the fund under paragraph (f). Any insurer writing covered
547 policies has the option of selecting an increased limit of
548 coverage under the TICL options addendum and shall select such
549 coverage at the time that it executes the FHCF reimbursement
550 contract.
551 2. The TICL addendum shall contain a promise by the board
552 to reimburse the TICL insurer for 45 percent, 75 percent, or 90
553 percent of its losses from each covered event in excess of the
554 insurer’s retention, plus 5 percent of the reimbursed losses to
555 cover loss adjustment expenses. The percentage shall be the same
556 as the coverage level selected by the insurer under paragraph
557 (4)(b).
558 3. The TICL addendum shall provide that reimbursement
559 amounts shall not be reduced by reinsurance paid or payable to
560 the insurer from other sources.
561 4. The priorities, schedule, and method of reimbursements
562 under the TICL addendum shall be the same as provided under
563 subsection (4).
564 (f) TICL reimbursement premiums.—Each TICL insurer shall
565 pay to the fund, in the manner and at the time provided in the
566 reimbursement contract for payment of reimbursement premiums, a
567 TICL reimbursement premium determined as specified in subsection
568 (5), except that a cash build-up factor does not apply to the
569 TICL reimbursement premiums. However, the TICL reimbursement
570 premium shall be increased in contract year 2009-2010 by a
571 factor of two, in the contract year beginning June 1, 2010, and
572 ending December 31, 2010, by a factor of three, in the 2011
573 contract year by a factor of four, in the 2012 contract year by
574 a factor of five, and in the 2013 contract year by a factor of
575 six.
576 (g) Effect on claims-paying capacity of the fund.—For the
577 contract terms commencing June 1, 2007, June 1, 2008, and June
578 1, 2009, June 1, 2010, January 1, 2011, January 1, 2012, and
579 January 1, 2013, the program created by this subsection shall
580 increase the claims-paying capacity of the fund as provided in
581 subparagraph (4)(c)1. by an amount not to exceed $12 billion and
582 shall depend on the TICL coverage options selected and the
583 number of insurers that select the TICL optional coverage. The
584 additional capacity shall apply only to the additional coverage
585 provided under the TICL options and shall not otherwise affect
586 any insurer’s reimbursement from the fund if the insurer chooses
587 not to select the temporary option to increase its limit of
588 coverage under the FHCF.
589 (h) Increasing the claims-paying capacity of the fund.—For
590 the contract years commencing June 1, 2007, June 1, 2008, and
591 June 1, 2009, the board may increase the claims-paying capacity
592 of the fund as provided in paragraph (g) by an amount not to
593 exceed $4 billion in four $1 billion options and shall depend on
594 the TICL coverage options selected and the number of insurers
595 that select the TICL optional coverage. Each insurer’s TICL
596 premium shall be calculated based upon the additional limit of
597 increased coverage that the insurer selects. Such limit is
598 determined by multiplying the TICL multiple associated with one
599 of the four options times the insurer’s FHCF reimbursement
600 premium. The reimbursement premium associated with the
601 additional coverage provided in this paragraph shall be
602 determined as specified in subsection (5).
603 Section 2. Subsections (2) and (5) of section 627.062,
604 Florida Statutes, are amended to read:
605 627.062 Rate standards.—
606 (2) As to all such classes of insurance:
607 (a) Insurers or rating organizations shall establish and
608 use rates, rating schedules, or rating manuals to allow the
609 insurer a reasonable rate of return on such classes of insurance
610 written in this state. A copy of rates, rating schedules, rating
611 manuals, premium credits or discount schedules, and surcharge
612 schedules, and changes thereto, shall be filed with the office
613 under one of the following procedures except as provided in
614 subparagraph 3.:
615 1. If the filing is made at least 90 days before the
616 proposed effective date and the filing is not implemented during
617 the office’s review of the filing and any proceeding and
618 judicial review, then such filing shall be considered a “file
619 and use” filing. In such case, the office shall finalize its
620 review by issuance of a notice of intent to approve or a notice
621 of intent to disapprove within 90 days after receipt of the
622 filing. The notice of intent to approve and the notice of intent
623 to disapprove constitute agency action for purposes of the
624 Administrative Procedure Act. Requests for supporting
625 information, requests for mathematical or mechanical
626 corrections, or notification to the insurer by the office of its
627 preliminary findings shall not toll the 90-day period during any
628 such proceedings and subsequent judicial review. The rate shall
629 be deemed approved if the office does not issue a notice of
630 intent to approve or a notice of intent to disapprove within 90
631 days after receipt of the filing.
632 2. If the filing is not made in accordance with the
633 provisions of subparagraph 1., such filing shall be made as soon
634 as practicable, but no later than 30 days after the effective
635 date, and shall be considered a “use and file” filing. An
636 insurer making a “use and file” filing is potentially subject to
637 an order by the office to return to policyholders portions of
638 rates found to be excessive, as provided in paragraph (h).
639 3. For all property insurance filings made or submitted
640 before December 31, 2010 after January 25, 2007, but before
641 December 31, 2009, an insurer seeking a rate that is greater
642 than the rate most recently approved by the office shall make a
643 “file and use” filing. For purposes of this subparagraph, motor
644 vehicle collision and comprehensive coverages are not considered
645 to be property coverages.
646 (b) Upon receiving a rate filing, the office shall review
647 the rate filing to determine if a rate is excessive, inadequate,
648 or unfairly discriminatory, except as provided in paragraph (k)
649 or paragraph (l). In making that determination, the office
650 shall, in accordance with generally accepted and reasonable
651 actuarial techniques, consider the following factors:
652 1. Past and prospective loss experience within and without
653 this state.
654 2. Past and prospective expenses.
655 3. The degree of competition among insurers for the risk
656 insured.
657 4. Investment income reasonably expected by the insurer,
658 consistent with the insurer’s investment practices, from
659 investable premiums anticipated in the filing, plus any other
660 expected income from currently invested assets representing the
661 amount expected on unearned premium reserves and loss reserves.
662 The commission may adopt rules using reasonable techniques of
663 actuarial science and economics to specify the manner in which
664 insurers shall calculate investment income attributable to such
665 classes of insurance written in this state and the manner in
666 which such investment income shall be used to calculate
667 insurance rates. Such manner shall contemplate allowances for an
668 underwriting profit factor and full consideration of investment
669 income which produce a reasonable rate of return; however,
670 investment income from invested surplus may not be considered.
671 5. The reasonableness of the judgment reflected in the
672 filing.
673 6. Dividends, savings, or unabsorbed premium deposits
674 allowed or returned to Florida policyholders, members, or
675 subscribers.
676 7. The adequacy of loss reserves.
677 8. The cost of reinsurance. The office shall not disapprove
678 a rate as excessive solely due to the insurer having obtained
679 catastrophic reinsurance to cover the insurer’s estimated 250
680 year probable maximum loss or any lower level of loss.
681 9. Trend factors, including trends in actual losses per
682 insured unit for the insurer making the filing.
683 10. Conflagration and catastrophe hazards, if applicable.
684 11. Projected hurricane losses, if applicable, which must
685 be estimated using a model or method found to be acceptable or
686 reliable by the Florida Commission on Hurricane Loss Projection
687 Methodology, and as further provided in s. 627.0628.
688 12. A reasonable margin for underwriting profit and
689 contingencies.
690 13. The cost of medical services, if applicable.
691 14. Other relevant factors which impact upon the frequency
692 or severity of claims or upon expenses.
693 (c) In the case of fire insurance rates, consideration
694 shall be given to the availability of water supplies and the
695 experience of the fire insurance business during a period of not
696 less than the most recent 5-year period for which such
697 experience is available.
698 (d) If conflagration or catastrophe hazards are given
699 consideration by an insurer in its rates or rating plan,
700 including surcharges and discounts, the insurer shall establish
701 a reserve for that portion of the premium allocated to such
702 hazard and shall maintain the premium in a catastrophe reserve.
703 Any removal of such premiums from the reserve for purposes other
704 than paying claims associated with a catastrophe or purchasing
705 reinsurance for catastrophes shall be subject to approval of the
706 office. Any ceding commission received by an insurer purchasing
707 reinsurance for catastrophes shall be placed in the catastrophe
708 reserve.
709 (e) After consideration of the rate factors provided in
710 paragraphs (b), (c), and (d), a rate may be found by the office
711 to be excessive, inadequate, or unfairly discriminatory based
712 upon the following standards:
713 1. Rates shall be deemed excessive if they are likely to
714 produce a profit from Florida business that is unreasonably high
715 in relation to the risk involved in the class of business or if
716 expenses are unreasonably high in relation to services rendered.
717 2. Rates shall be deemed excessive if, among other things,
718 the rate structure established by a stock insurance company
719 provides for replenishment of surpluses from premiums, when the
720 replenishment is attributable to investment losses.
721 3. Rates shall be deemed inadequate if they are clearly
722 insufficient, together with the investment income attributable
723 to them, to sustain projected losses and expenses in the class
724 of business to which they apply.
725 4. A rating plan, including discounts, credits, or
726 surcharges, shall be deemed unfairly discriminatory if it fails
727 to clearly and equitably reflect consideration of the
728 policyholder’s participation in a risk management program
729 adopted pursuant to s. 627.0625.
730 5. A rate shall be deemed inadequate as to the premium
731 charged to a risk or group of risks if discounts or credits are
732 allowed which exceed a reasonable reflection of expense savings
733 and reasonably expected loss experience from the risk or group
734 of risks.
735 6. A rate shall be deemed unfairly discriminatory as to a
736 risk or group of risks if the application of premium discounts,
737 credits, or surcharges among such risks does not bear a
738 reasonable relationship to the expected loss and expense
739 experience among the various risks.
740 (f) In reviewing a rate filing, the office may require the
741 insurer to provide at the insurer’s expense all information
742 necessary to evaluate the condition of the company and the
743 reasonableness of the filing according to the criteria
744 enumerated in this section.
745 (g) The office may at any time review a rate, rating
746 schedule, rating manual, or rate change; the pertinent records
747 of the insurer; and market conditions. If the office finds on a
748 preliminary basis that a rate may be excessive, inadequate, or
749 unfairly discriminatory, the office shall initiate proceedings
750 to disapprove the rate and shall so notify the insurer. However,
751 the office may not disapprove as excessive any rate for which it
752 has given final approval or which has been deemed approved for a
753 period of 1 year after the effective date of the filing unless
754 the office finds that a material misrepresentation or material
755 error was made by the insurer or was contained in the filing.
756 Upon being so notified, the insurer or rating organization
757 shall, within 60 days, file with the office all information
758 which, in the belief of the insurer or organization, proves the
759 reasonableness, adequacy, and fairness of the rate or rate
760 change. The office shall issue a notice of intent to approve or
761 a notice of intent to disapprove pursuant to the procedures of
762 paragraph (a) within 90 days after receipt of the insurer’s
763 initial response. In such instances and in any administrative
764 proceeding relating to the legality of the rate, the insurer or
765 rating organization shall carry the burden of proof by a
766 preponderance of the evidence to show that the rate is not
767 excessive, inadequate, or unfairly discriminatory. After the
768 office notifies an insurer that a rate may be excessive,
769 inadequate, or unfairly discriminatory, unless the office
770 withdraws the notification, the insurer shall not alter the rate
771 except to conform with the office’s notice until the earlier of
772 120 days after the date the notification was provided or 180
773 days after the date of the implementation of the rate. The
774 office may, subject to chapter 120, disapprove without the 60
775 day notification any rate increase filed by an insurer within
776 the prohibited time period or during the time that the legality
777 of the increased rate is being contested.
778 (h) In the event the office finds that a rate or rate
779 change is excessive, inadequate, or unfairly discriminatory, the
780 office shall issue an order of disapproval specifying that a new
781 rate or rate schedule which responds to the findings of the
782 office be filed by the insurer. The office shall further order,
783 for any “use and file” filing made in accordance with
784 subparagraph (a)2., that premiums charged each policyholder
785 constituting the portion of the rate above that which was
786 actuarially justified be returned to such policyholder in the
787 form of a credit or refund. If the office finds that an
788 insurer’s rate or rate change is inadequate, the new rate or
789 rate schedule filed with the office in response to such a
790 finding shall be applicable only to new or renewal business of
791 the insurer written on or after the effective date of the
792 responsive filing.
793 (i) Except as otherwise specifically provided in this
794 chapter, the office shall not prohibit any insurer, including
795 any residual market plan or joint underwriting association, from
796 paying acquisition costs based on the full amount of premium, as
797 defined in s. 627.403, applicable to any policy, or prohibit any
798 such insurer from including the full amount of acquisition costs
799 in a rate filing.
800 (j) With respect to residential property insurance rate
801 filings, the rate filing must account for mitigation measures
802 undertaken by policyholders to reduce hurricane losses.
803 (k) Notwithstanding any other provision of this section:
804 1. A rate filing for residential property insurance
805 relating to rate changes, rating factors, territories,
806 classification, discounts, credits, or similar matters with
807 respect to any policy form, including endorsements issued with
808 the form, is exempt from a determination by the office that the
809 rate is excessive or unfairly discriminatory under s. 627.062
810 if:
811 a. All changes specified in the filing do not result in an
812 increase from the insurer’s rates then in effect of more than
813 the rate increase authorized by s. 627.0629(5), plus the actual
814 additional cost paid due to the application of s.
815 215.555(17)(f), plus the actual additional cost paid due to the
816 application by the Florida Hurricane Catastrophe Fund of a cash
817 buildup factor pursuant to s. 215.555(5)(b); and
818 b. All changes specified in the filing do not result in an
819 overall premium increase of more than 10 percent statewide, and
820 12 percent for an individual policyholder, for reasons related
821 solely to the rate change.
822 2. An insurer that submits a filing pursuant to this
823 paragraph shall include a copy of the reinsurance contract,
824 proof of the billing or payment for the contract, and the
825 calculations upon which the rate change is based.
826 3. A rate filing is not exempt under subparagraph 1. if the
827 filing exceeds the overall premium increases authorized under
828 subparagraph 1. in any 12-month period. An insurer must proceed
829 under other provisions of this section or other provisions of
830 law if the insurer seeks to exceed the premium or rate
831 limitations of subparagraph 1.
832 4. This paragraph does not limit the authority of the
833 office to disapprove a rate as inadequate or to disapprove a
834 filing for the use of unfairly discriminatory rating factors
835 pursuant to s. 626.9541. An insurer that elects to implement a
836 rate change under this paragraph must file its rate filing with
837 the office at least 40 days before the effective date of the
838 rate change. The office shall have 30 days after the date that
839 the rate filing is submitted to review the filing and determine
840 if the rate is inadequate or uses unfairly discriminatory rating
841 factors. Absent a finding by the office within the 30-day period
842 that the rate is inadequate or that the insurer has used
843 unfairly discriminatory rating factors, the filing is deemed
844 approved. If the office finds during the 30-day period that the
845 filing will result in inadequate premiums or otherwise endanger
846 the insurer’s solvency, the rate increase shall proceed pending
847 additional action by the office to ensure the adequacy of the
848 rate.
849 5. This paragraph does not apply to rate filings for any
850 insurance other than residential property insurance.
851
852 The provisions of this subsection do shall not apply to workers’
853 compensation and employer’s liability insurance and to motor
854 vehicle insurance.
855 (5) With respect to a rate filing involving coverage of the
856 type for which the insurer is required to pay a reimbursement
857 premium to the Florida Hurricane Catastrophe Fund, the insurer
858 may fully recoup in its property insurance premiums any
859 reimbursement premiums paid to the Florida Hurricane Catastrophe
860 Fund, together with reasonable costs of other reinsurance, but
861 except as otherwise provided in this section, may not recoup
862 reinsurance costs that duplicate coverage provided by the
863 Florida Hurricane Catastrophe Fund. An insurer may not recoup
864 more than 1 year of reimbursement premium at a time. Any under
865 recoupment from the prior year may be added to the following
866 year’s reimbursement premium and any over-recoupment shall be
867 subtracted from the following year’s reimbursement premium.
868 Section 3. Section 627.0621, Florida Statutes, is amended
869 to read:
870 627.0621 Transparency in rate regulation.—
871 (1) DEFINITIONS.—As used in this section, the term:
872 (a) “Rate filing” means any original or amended rate
873 residential property insurance filing.
874 (b) “Recommendation” means any proposed, preliminary, or
875 final recommendation from an office actuary reviewing a rate
876 filing with respect to the issue of approval or disapproval of
877 the rate filing or with respect to rate indications that the
878 office would consider acceptable.
879 (2) WEBSITE FOR PUBLIC ACCESS TO RATE FILING INFORMATION.
880 With respect to any rate filing made on or after July 1, 2008,
881 the office shall provide the following information on a publicly
882 accessible Internet website:
883 (a) The overall rate change requested by the insurer.
884 (b) All assumptions made by the office’s actuaries.
885 (c) A statement describing any assumptions or methods that
886 deviate from the actuarial standards of practice of the Casualty
887 Actuarial Society or the American Academy of Actuaries,
888 including an explanation of the nature, rationale, and effect of
889 the deviation.
890 (d) All recommendations made by any office actuary who
891 reviewed the rate filing.
892 (e) Certification by the office’s actuary that, based on
893 the actuary’s knowledge, his or her recommendations are
894 consistent with accepted actuarial principles.
895 (f) The overall rate change approved by the office.
896 (3) ATTORNEY-CLIENT PRIVILEGE; WORK PRODUCT.—It is the
897 intent of the Legislature that the principles of the public
898 records and open meetings laws apply to the assertion of
899 attorney-client privilege and work product confidentiality by
900 the office in connection with a challenge to its actions on a
901 rate filing. Therefore, in any administrative or judicial
902 proceeding relating to a rate filing, attorney-client privilege
903 and work product exemptions from disclosure do not apply to
904 communications with office attorneys or records prepared by or
905 at the direction of an office attorney, except when the
906 conditions of paragraphs (a) and (b) have been met:
907 (a) The communication or record reflects a mental
908 impression, conclusion, litigation strategy, or legal theory of
909 the attorney or office that was prepared exclusively for civil
910 or criminal litigation or adversarial administrative
911 proceedings.
912 (b) The communication occurred or the record was prepared
913 after the initiation of an action in a court of competent
914 jurisdiction, after the issuance of a notice of intent to deny a
915 rate filing, or after the filing of a request for a proceeding
916 under ss. 120.569 and 120.57.
917 Section 4. Subsection (5) of section 627.0629, Florida
918 Statutes, is amended to read:
919 627.0629 Residential property insurance; rate filings.—
920 (5) In order to provide an appropriate transition period,
921 an insurer may, in its sole discretion, implement an approved
922 rate filing for residential property insurance over a period of
923 years. An insurer electing to phase in its rate filing must
924 provide an informational notice to the office setting out its
925 schedule for implementation of the phased-in rate filing. An
926 insurer may include in its rate the actual cost of reinsurance
927 that duplicates available coverage of the Temporary Increase in
928 Coverage Limits, TICL, from the Florida Hurricane Catastrophe
929 Fund. The insurer may include the cost of reinsurance in its
930 rate even if the insurer does not purchase the TICL layer.
931 However, this cost for reinsurance may not include any expense
932 or profit load or result in a total annual base rate increase in
933 excess of 10 percent.
934 Section 5. Paragraphs (a), (c), (m), and (x) of subsection
935 (6) of section 627.351, Florida Statutes, are amended to read:
936 627.351 Insurance risk apportionment plans.—
937 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
938 (a)1. It is the public purpose of this subsection to ensure
939 the existence of an orderly market for property insurance for
940 Floridians and Florida businesses. The Legislature finds that
941 private insurers are unwilling or unable to provide affordable
942 property insurance coverage in this state to the extent sought
943 and needed. The absence of affordable property insurance
944 threatens the public health, safety, and welfare and likewise
945 threatens the economic health of the state. The state therefore
946 has a compelling public interest and a public purpose to assist
947 in assuring that property in the state is insured and that it is
948 insured at affordable rates so as to facilitate the remediation,
949 reconstruction, and replacement of damaged or destroyed property
950 in order to reduce or avoid the negative effects otherwise
951 resulting to the public health, safety, and welfare, to the
952 economy of the state, and to the revenues of the state and local
953 governments which are needed to provide for the public welfare.
954 It is necessary, therefore, to provide affordable property
955 insurance to applicants who are in good faith entitled to
956 procure insurance through the voluntary market but are unable to
957 do so. The Legislature intends by this subsection that
958 affordable property insurance be provided and that it continue
959 to be provided, as long as necessary, through Citizens Property
960 Insurance Corporation, a government entity that is an integral
961 part of the state, and that is not a private insurance company.
962 To that end, Citizens Property Insurance Corporation shall
963 strive to increase the availability of affordable property
964 insurance in this state, while achieving efficiencies and
965 economies, and while providing service to policyholders,
966 applicants, and agents which is no less than the quality
967 generally provided in the voluntary market, for the achievement
968 of the foregoing public purposes. Because it is essential for
969 this government entity to have the maximum financial resources
970 to pay claims following a catastrophic hurricane, it is the
971 intent of the Legislature that Citizens Property Insurance
972 Corporation continue to be an integral part of the state and
973 that the income of the corporation be exempt from federal income
974 taxation and that interest on the debt obligations issued by the
975 corporation be exempt from federal income taxation.
976 2. The Residential Property and Casualty Joint Underwriting
977 Association originally created by this statute shall be known,
978 as of July 1, 2002, as the Citizens Property Insurance
979 Corporation. The corporation shall provide insurance for
980 residential and commercial property, for applicants who are in
981 good faith entitled, but are unable, to procure insurance
982 through the voluntary market. The corporation shall operate
983 pursuant to a plan of operation approved by order of the
984 Financial Services Commission. The plan is subject to continuous
985 review by the commission. The commission may, by order, withdraw
986 approval of all or part of a plan if the commission determines
987 that conditions have changed since approval was granted and that
988 the purposes of the plan require changes in the plan. The
989 corporation shall continue to operate pursuant to the plan of
990 operation approved by the Office of Insurance Regulation until
991 October 1, 2006. For the purposes of this subsection,
992 residential coverage includes both personal lines residential
993 coverage, which consists of the type of coverage provided by
994 homeowner’s, mobile home owner’s, dwelling, tenant’s,
995 condominium unit owner’s, and similar policies, and commercial
996 lines residential coverage, which consists of the type of
997 coverage provided by condominium association, apartment
998 building, and similar policies.
999 3. Effective January 1, 2009, a personal lines residential
1000 structure that has a dwelling replacement cost of $2 million or
1001 more, or a single condominium unit that has a combined dwelling
1002 and content replacement cost of $2 million or more is not
1003 eligible for coverage by the corporation. Such dwellings insured
1004 by the corporation on December 31, 2008, may continue to be
1005 covered by the corporation until the end of the policy term.
1006 However, such dwellings that are insured by the corporation and
1007 become ineligible for coverage due to the provisions of this
1008 subparagraph may reapply and obtain coverage if the property
1009 owner provides the corporation with a sworn affidavit from one
1010 or more insurance agents, on a form provided by the corporation,
1011 stating that the agents have made their best efforts to obtain
1012 coverage and that the property has been rejected for coverage by
1013 at least one authorized insurer and at least three surplus lines
1014 insurers. If such conditions are met, the dwelling may be
1015 insured by the corporation for up to 3 years, after which time
1016 the dwelling is ineligible for coverage. The office shall
1017 approve the method used by the corporation for valuing the
1018 dwelling replacement cost for the purposes of this subparagraph.
1019 If a policyholder is insured by the corporation prior to being
1020 determined to be ineligible pursuant to this subparagraph and
1021 such policyholder files a lawsuit challenging the determination,
1022 the policyholder may remain insured by the corporation until the
1023 conclusion of the litigation.
1024 4. It is the intent of the Legislature that policyholders,
1025 applicants, and agents of the corporation receive service and
1026 treatment of the highest possible level but never less than that
1027 generally provided in the voluntary market. It also is intended
1028 that the corporation be held to service standards no less than
1029 those applied to insurers in the voluntary market by the office
1030 with respect to responsiveness, timeliness, customer courtesy,
1031 and overall dealings with policyholders, applicants, or agents
1032 of the corporation.
1033 5. Effective January 1, 2009, a personal lines residential
1034 structure that is located in the “wind-borne debris region,” as
1035 defined in s. 1609.2, International Building Code (2006), and
1036 that has an insured value on the structure of $750,000 or more
1037 is not eligible for coverage by the corporation unless the
1038 structure has opening protections as required under the Florida
1039 Building Code for a newly constructed residential structure in
1040 that area. A residential structure shall be deemed to comply
1041 with the requirements of this subparagraph if it has shutters or
1042 opening protections on all openings and if such opening
1043 protections complied with the Florida Building Code at the time
1044 they were installed. Effective January 1, 2010, for personal
1045 lines residential property insured by the corporation that is
1046 located in the wind-borne debris region and has an insured value
1047 on the structure of $500,000 or more, a prospective purchaser of
1048 any such residential property must be provided by the seller a
1049 written disclosure that contains the structure’s windstorm
1050 mitigation rating based on the uniform home grading scale
1051 adopted under s. 215.55865. Such rating shall be provided to the
1052 purchaser at or before the time the purchaser executes a
1053 contract for sale and purchase.
1054 (c) The plan of operation of the corporation:
1055 1. Must provide for adoption of residential property and
1056 casualty insurance policy forms and commercial residential and
1057 nonresidential property insurance forms, which forms must be
1058 approved by the office prior to use. The corporation shall adopt
1059 the following policy forms:
1060 a. Standard personal lines policy forms that are
1061 comprehensive multiperil policies providing full coverage of a
1062 residential property equivalent to the coverage provided in the
1063 private insurance market under an HO-3, HO-4, or HO-6 policy.
1064 b. Basic personal lines policy forms that are policies
1065 similar to an HO-8 policy or a dwelling fire policy that provide
1066 coverage meeting the requirements of the secondary mortgage
1067 market, but which coverage is more limited than the coverage
1068 under a standard policy.
1069 c. Commercial lines residential and nonresidential policy
1070 forms that are generally similar to the basic perils of full
1071 coverage obtainable for commercial residential structures and
1072 commercial nonresidential structures in the admitted voluntary
1073 market.
1074 d. Personal lines and commercial lines residential property
1075 insurance forms that cover the peril of wind only. The forms are
1076 applicable only to residential properties located in areas
1077 eligible for coverage under the high-risk account referred to in
1078 sub-subparagraph (b)2.a.
1079 e. Commercial lines nonresidential property insurance forms
1080 that cover the peril of wind only. The forms are applicable only
1081 to nonresidential properties located in areas eligible for
1082 coverage under the high-risk account referred to in sub
1083 subparagraph (b)2.a.
1084 f. The corporation may adopt variations of the policy forms
1085 listed in sub-subparagraphs a.-e. that contain more restrictive
1086 coverage.
1087 2.a. Must provide that the corporation adopt a program in
1088 which the corporation and authorized insurers enter into quota
1089 share primary insurance agreements for hurricane coverage, as
1090 defined in s. 627.4025(2)(a), for eligible risks, and adopt
1091 property insurance forms for eligible risks which cover the
1092 peril of wind only. As used in this subsection, the term:
1093 (I) “Quota share primary insurance” means an arrangement in
1094 which the primary hurricane coverage of an eligible risk is
1095 provided in specified percentages by the corporation and an
1096 authorized insurer. The corporation and authorized insurer are
1097 each solely responsible for a specified percentage of hurricane
1098 coverage of an eligible risk as set forth in a quota share
1099 primary insurance agreement between the corporation and an
1100 authorized insurer and the insurance contract. The
1101 responsibility of the corporation or authorized insurer to pay
1102 its specified percentage of hurricane losses of an eligible
1103 risk, as set forth in the quota share primary insurance
1104 agreement, may not be altered by the inability of the other
1105 party to the agreement to pay its specified percentage of
1106 hurricane losses. Eligible risks that are provided hurricane
1107 coverage through a quota share primary insurance arrangement
1108 must be provided policy forms that set forth the obligations of
1109 the corporation and authorized insurer under the arrangement,
1110 clearly specify the percentages of quota share primary insurance
1111 provided by the corporation and authorized insurer, and
1112 conspicuously and clearly state that neither the authorized
1113 insurer nor the corporation may be held responsible beyond its
1114 specified percentage of coverage of hurricane losses.
1115 (II) “Eligible risks” means personal lines residential and
1116 commercial lines residential risks that meet the underwriting
1117 criteria of the corporation and are located in areas that were
1118 eligible for coverage by the Florida Windstorm Underwriting
1119 Association on January 1, 2002.
1120 b. The corporation may enter into quota share primary
1121 insurance agreements with authorized insurers at corporation
1122 coverage levels of 90 percent and 50 percent.
1123 c. If the corporation determines that additional coverage
1124 levels are necessary to maximize participation in quota share
1125 primary insurance agreements by authorized insurers, the
1126 corporation may establish additional coverage levels. However,
1127 the corporation’s quota share primary insurance coverage level
1128 may not exceed 90 percent.
1129 d. Any quota share primary insurance agreement entered into
1130 between an authorized insurer and the corporation must provide
1131 for a uniform specified percentage of coverage of hurricane
1132 losses, by county or territory as set forth by the corporation
1133 board, for all eligible risks of the authorized insurer covered
1134 under the quota share primary insurance agreement.
1135 e. Any quota share primary insurance agreement entered into
1136 between an authorized insurer and the corporation is subject to
1137 review and approval by the office. However, such agreement shall
1138 be authorized only as to insurance contracts entered into
1139 between an authorized insurer and an insured who is already
1140 insured by the corporation for wind coverage.
1141 f. For all eligible risks covered under quota share primary
1142 insurance agreements, the exposure and coverage levels for both
1143 the corporation and authorized insurers shall be reported by the
1144 corporation to the Florida Hurricane Catastrophe Fund. For all
1145 policies of eligible risks covered under quota share primary
1146 insurance agreements, the corporation and the authorized insurer
1147 shall maintain complete and accurate records for the purpose of
1148 exposure and loss reimbursement audits as required by Florida
1149 Hurricane Catastrophe Fund rules. The corporation and the
1150 authorized insurer shall each maintain duplicate copies of
1151 policy declaration pages and supporting claims documents.
1152 g. The corporation board shall establish in its plan of
1153 operation standards for quota share agreements which ensure that
1154 there is no discriminatory application among insurers as to the
1155 terms of quota share agreements, pricing of quota share
1156 agreements, incentive provisions if any, and consideration paid
1157 for servicing policies or adjusting claims.
1158 h. The quota share primary insurance agreement between the
1159 corporation and an authorized insurer must set forth the
1160 specific terms under which coverage is provided, including, but
1161 not limited to, the sale and servicing of policies issued under
1162 the agreement by the insurance agent of the authorized insurer
1163 producing the business, the reporting of information concerning
1164 eligible risks, the payment of premium to the corporation, and
1165 arrangements for the adjustment and payment of hurricane claims
1166 incurred on eligible risks by the claims adjuster and personnel
1167 of the authorized insurer. Entering into a quota sharing
1168 insurance agreement between the corporation and an authorized
1169 insurer shall be voluntary and at the discretion of the
1170 authorized insurer.
1171 3. May provide that the corporation may employ or otherwise
1172 contract with individuals or other entities to provide
1173 administrative or professional services that may be appropriate
1174 to effectuate the plan. The corporation shall have the power to
1175 borrow funds, by issuing bonds or by incurring other
1176 indebtedness, and shall have other powers reasonably necessary
1177 to effectuate the requirements of this subsection, including,
1178 without limitation, the power to issue bonds and incur other
1179 indebtedness in order to refinance outstanding bonds or other
1180 indebtedness. The corporation may, but is not required to, seek
1181 judicial validation of its bonds or other indebtedness under
1182 chapter 75. The corporation may issue bonds or incur other
1183 indebtedness, or have bonds issued on its behalf by a unit of
1184 local government pursuant to subparagraph (p)2., in the absence
1185 of a hurricane or other weather-related event, upon a
1186 determination by the corporation, subject to approval by the
1187 office, that such action would enable it to efficiently meet the
1188 financial obligations of the corporation and that such
1189 financings are reasonably necessary to effectuate the
1190 requirements of this subsection. The corporation is authorized
1191 to take all actions needed to facilitate tax-free status for any
1192 such bonds or indebtedness, including formation of trusts or
1193 other affiliated entities. The corporation shall have the
1194 authority to pledge assessments, projected recoveries from the
1195 Florida Hurricane Catastrophe Fund, other reinsurance
1196 recoverables, market equalization and other surcharges, and
1197 other funds available to the corporation as security for bonds
1198 or other indebtedness. In recognition of s. 10, Art. I of the
1199 State Constitution, prohibiting the impairment of obligations of
1200 contracts, it is the intent of the Legislature that no action be
1201 taken whose purpose is to impair any bond indenture or financing
1202 agreement or any revenue source committed by contract to such
1203 bond or other indebtedness.
1204 4.a. Must require that the corporation operate subject to
1205 the supervision and approval of a board of governors consisting
1206 of eight individuals who are residents of this state, from
1207 different geographical areas of this state. The Governor, the
1208 Chief Financial Officer, the President of the Senate, and the
1209 Speaker of the House of Representatives shall each appoint two
1210 members of the board. At least one of the two members appointed
1211 by each appointing officer must have demonstrated expertise in
1212 insurance. The Chief Financial Officer shall designate one of
1213 the appointees as chair. All board members serve at the pleasure
1214 of the appointing officer. All members of the board of governors
1215 are subject to removal at will by the officers who appointed
1216 them. All board members, including the chair, must be appointed
1217 to serve for 3-year terms beginning annually on a date
1218 designated by the plan. However, for the first term beginning on
1219 or after July 1, 2009, each appointing officer shall appoint one
1220 member of the board for a 2-year term and one member for a 3
1221 year term. Any board vacancy shall be filled for the unexpired
1222 term by the appointing officer. The Chief Financial Officer
1223 shall appoint a technical advisory group to provide information
1224 and advice to the board of governors in connection with the
1225 board’s duties under this subsection. The executive director and
1226 senior managers of the corporation shall be engaged by the board
1227 and serve at the pleasure of the board. Any executive director
1228 appointed on or after July 1, 2006, is subject to confirmation
1229 by the Senate. The executive director is responsible for
1230 employing other staff as the corporation may require, subject to
1231 review and concurrence by the board.
1232 b. The board shall create a Market Accountability Advisory
1233 Committee to assist the corporation in developing awareness of
1234 its rates and its customer and agent service levels in
1235 relationship to the voluntary market insurers writing similar
1236 coverage. The members of the advisory committee shall consist of
1237 the following 11 persons, one of whom must be elected chair by
1238 the members of the committee: four representatives, one
1239 appointed by the Florida Association of Insurance Agents, one by
1240 the Florida Association of Insurance and Financial Advisors, one
1241 by the Professional Insurance Agents of Florida, and one by the
1242 Latin American Association of Insurance Agencies; three
1243 representatives appointed by the insurers with the three highest
1244 voluntary market share of residential property insurance
1245 business in the state; one representative from the Office of
1246 Insurance Regulation; one consumer appointed by the board who is
1247 insured by the corporation at the time of appointment to the
1248 committee; one representative appointed by the Florida
1249 Association of Realtors; and one representative appointed by the
1250 Florida Bankers Association. All members must serve for 3-year
1251 terms and may serve for consecutive terms. The committee shall
1252 report to the corporation at each board meeting on insurance
1253 market issues which may include rates and rate competition with
1254 the voluntary market; service, including policy issuance, claims
1255 processing, and general responsiveness to policyholders,
1256 applicants, and agents; and matters relating to depopulation.
1257 5. Must provide a procedure for determining the eligibility
1258 of a risk for coverage, as follows:
1259 a. Subject to the provisions of s. 627.3517, with respect
1260 to personal lines residential risks, if the risk is offered
1261 coverage from an authorized insurer at the insurer’s approved
1262 rate under either a standard policy including wind coverage or,
1263 if consistent with the insurer’s underwriting rules as filed
1264 with the office, a basic policy including wind coverage, for a
1265 new application to the corporation for coverage, the risk is not
1266 eligible for any policy issued by the corporation unless the
1267 premium for coverage from the authorized insurer is more than 15
1268 percent greater than the premium for comparable coverage from
1269 the corporation. If the risk is not able to obtain any such
1270 offer, the risk is eligible for either a standard policy
1271 including wind coverage or a basic policy including wind
1272 coverage issued by the corporation; however, if the risk could
1273 not be insured under a standard policy including wind coverage
1274 regardless of market conditions, the risk shall be eligible for
1275 a basic policy including wind coverage unless rejected under
1276 subparagraph 8. However, with regard to a policyholder of the
1277 corporation or a policyholder removed from the corporation
1278 through an assumption agreement until the end of the assumption
1279 period, the policyholder remains eligible for coverage from the
1280 corporation regardless of any offer of coverage from an
1281 authorized insurer or surplus lines insurer. The corporation
1282 shall determine the type of policy to be provided on the basis
1283 of objective standards specified in the underwriting manual and
1284 based on generally accepted underwriting practices.
1285 (I) If the risk accepts an offer of coverage through the
1286 market assistance plan or an offer of coverage through a
1287 mechanism established by the corporation before a policy is
1288 issued to the risk by the corporation or during the first 30
1289 days of coverage by the corporation, and the producing agent who
1290 submitted the application to the plan or to the corporation is
1291 not currently appointed by the insurer, the insurer shall:
1292 (A) Pay to the producing agent of record of the policy, for
1293 the first year, an amount that is the greater of the insurer’s
1294 usual and customary commission for the type of policy written or
1295 a fee equal to the usual and customary commission of the
1296 corporation; or
1297 (B) Offer to allow the producing agent of record of the
1298 policy to continue servicing the policy for a period of not less
1299 than 1 year and offer to pay the agent the greater of the
1300 insurer’s or the corporation’s usual and customary commission
1301 for the type of policy written.
1302
1303 If the producing agent is unwilling or unable to accept
1304 appointment, the new insurer shall pay the agent in accordance
1305 with sub-sub-sub-subparagraph (A).
1306 (II) When the corporation enters into a contractual
1307 agreement for a take-out plan, the producing agent of record of
1308 the corporation policy is entitled to retain any unearned
1309 commission on the policy, and the insurer shall:
1310 (A) Pay to the producing agent of record of the corporation
1311 policy, for the first year, an amount that is the greater of the
1312 insurer’s usual and customary commission for the type of policy
1313 written or a fee equal to the usual and customary commission of
1314 the corporation; or
1315 (B) Offer to allow the producing agent of record of the
1316 corporation policy to continue servicing the policy for a period
1317 of not less than 1 year and offer to pay the agent the greater
1318 of the insurer’s or the corporation’s usual and customary
1319 commission for the type of policy written.
1320
1321 If the producing agent is unwilling or unable to accept
1322 appointment, the new insurer shall pay the agent in accordance
1323 with sub-sub-sub-subparagraph (A).
1324 b. With respect to commercial lines residential risks, for
1325 a new application to the corporation for coverage, if the risk
1326 is offered coverage under a policy including wind coverage from
1327 an authorized insurer at its approved rate, the risk is not
1328 eligible for any policy issued by the corporation unless the
1329 premium for coverage from the authorized insurer is more than 15
1330 percent greater than the premium for comparable coverage from
1331 the corporation. If the risk is not able to obtain any such
1332 offer, the risk is eligible for a policy including wind coverage
1333 issued by the corporation. However, with regard to a
1334 policyholder of the corporation or a policyholder removed from
1335 the corporation through an assumption agreement until the end of
1336 the assumption period, the policyholder remains eligible for
1337 coverage from the corporation regardless of any offer of
1338 coverage from an authorized insurer or surplus lines insurer.
1339 (I) If the risk accepts an offer of coverage through the
1340 market assistance plan or an offer of coverage through a
1341 mechanism established by the corporation before a policy is
1342 issued to the risk by the corporation or during the first 30
1343 days of coverage by the corporation, and the producing agent who
1344 submitted the application to the plan or the corporation is not
1345 currently appointed by the insurer, the insurer shall:
1346 (A) Pay to the producing agent of record of the policy, for
1347 the first year, an amount that is the greater of the insurer’s
1348 usual and customary commission for the type of policy written or
1349 a fee equal to the usual and customary commission of the
1350 corporation; or
1351 (B) Offer to allow the producing agent of record of the
1352 policy to continue servicing the policy for a period of not less
1353 than 1 year and offer to pay the agent the greater of the
1354 insurer’s or the corporation’s usual and customary commission
1355 for the type of policy written.
1356
1357 If the producing agent is unwilling or unable to accept
1358 appointment, the new insurer shall pay the agent in accordance
1359 with sub-sub-sub-subparagraph (A).
1360 (II) When the corporation enters into a contractual
1361 agreement for a take-out plan, the producing agent of record of
1362 the corporation policy is entitled to retain any unearned
1363 commission on the policy, and the insurer shall:
1364 (A) Pay to the producing agent of record of the corporation
1365 policy, for the first year, an amount that is the greater of the
1366 insurer’s usual and customary commission for the type of policy
1367 written or a fee equal to the usual and customary commission of
1368 the corporation; or
1369 (B) Offer to allow the producing agent of record of the
1370 corporation policy to continue servicing the policy for a period
1371 of not less than 1 year and offer to pay the agent the greater
1372 of the insurer’s or the corporation’s usual and customary
1373 commission for the type of policy written.
1374
1375 If the producing agent is unwilling or unable to accept
1376 appointment, the new insurer shall pay the agent in accordance
1377 with sub-sub-sub-subparagraph (A).
1378 c. For purposes of determining comparable coverage under
1379 sub-subparagraphs a. and b., the comparison shall be based on
1380 those forms and coverages that are reasonably comparable. The
1381 corporation may rely on a determination of comparable coverage
1382 and premium made by the producing agent who submits the
1383 application to the corporation, made in the agent’s capacity as
1384 the corporation’s agent. A comparison may be made solely of the
1385 premium with respect to the main building or structure only on
1386 the following basis: the same coverage A or other building
1387 limits; the same percentage hurricane deductible that applies on
1388 an annual basis or that applies to each hurricane for commercial
1389 residential property; the same percentage of ordinance and law
1390 coverage, if the same limit is offered by both the corporation
1391 and the authorized insurer; the same mitigation credits, to the
1392 extent the same types of credits are offered both by the
1393 corporation and the authorized insurer; the same method for loss
1394 payment, such as replacement cost or actual cash value, if the
1395 same method is offered both by the corporation and the
1396 authorized insurer in accordance with underwriting rules; and
1397 any other form or coverage that is reasonably comparable as
1398 determined by the board. If an application is submitted to the
1399 corporation for wind-only coverage in the high-risk account, the
1400 premium for the corporation’s wind-only policy plus the premium
1401 for the ex-wind policy that is offered by an authorized insurer
1402 to the applicant shall be compared to the premium for multiperil
1403 coverage offered by an authorized insurer, subject to the
1404 standards for comparison specified in this subparagraph. If the
1405 corporation or the applicant requests from the authorized
1406 insurer a breakdown of the premium of the offer by types of
1407 coverage so that a comparison may be made by the corporation or
1408 its agent and the authorized insurer refuses or is unable to
1409 provide such information, the corporation may treat the offer as
1410 not being an offer of coverage from an authorized insurer at the
1411 insurer’s approved rate.
1412 6. Must include rules for classifications of risks and
1413 rates therefor.
1414 7. Must provide that if premium and investment income for
1415 an account attributable to a particular calendar year are in
1416 excess of projected losses and expenses for the account
1417 attributable to that year, such excess shall be held in surplus
1418 in the account. Such surplus shall be available to defray
1419 deficits in that account as to future years and shall be used
1420 for that purpose prior to assessing assessable insurers and
1421 assessable insureds as to any calendar year.
1422 8. Must provide objective criteria and procedures to be
1423 uniformly applied for all applicants in determining whether an
1424 individual risk is so hazardous as to be uninsurable. In making
1425 this determination and in establishing the criteria and
1426 procedures, the following shall be considered:
1427 a. Whether the likelihood of a loss for the individual risk
1428 is substantially higher than for other risks of the same class;
1429 and
1430 b. Whether the uncertainty associated with the individual
1431 risk is such that an appropriate premium cannot be determined.
1432
1433 The acceptance or rejection of a risk by the corporation shall
1434 be construed as the private placement of insurance, and the
1435 provisions of chapter 120 shall not apply.
1436 9. Must provide that the corporation shall make its best
1437 efforts to procure catastrophe reinsurance at reasonable rates,
1438 to cover its projected 100-year probable maximum loss as
1439 determined by the board of governors.
1440 10. The policies issued by the corporation must provide
1441 that, if the corporation or the market assistance plan obtains
1442 an offer from an authorized insurer to cover the risk at its
1443 approved rates, the risk is no longer eligible for renewal
1444 through the corporation, except as otherwise provided in this
1445 subsection.
1446 11. Corporation policies and applications must include a
1447 notice that the corporation policy could, under this section, be
1448 replaced with a policy issued by an authorized insurer that does
1449 not provide coverage identical to the coverage provided by the
1450 corporation. The notice shall also specify that acceptance of
1451 corporation coverage creates a conclusive presumption that the
1452 applicant or policyholder is aware of this potential.
1453 12. May establish, subject to approval by the office,
1454 different eligibility requirements and operational procedures
1455 for any line or type of coverage for any specified county or
1456 area if the board determines that such changes to the
1457 eligibility requirements and operational procedures are
1458 justified due to the voluntary market being sufficiently stable
1459 and competitive in such area or for such line or type of
1460 coverage and that consumers who, in good faith, are unable to
1461 obtain insurance through the voluntary market through ordinary
1462 methods would continue to have access to coverage from the
1463 corporation. When coverage is sought in connection with a real
1464 property transfer, such requirements and procedures shall not
1465 provide for an effective date of coverage later than the date of
1466 the closing of the transfer as established by the transferor,
1467 the transferee, and, if applicable, the lender.
1468 13. Must provide that, with respect to the high-risk
1469 account, any assessable insurer with a surplus as to
1470 policyholders of $25 million or less writing 25 percent or more
1471 of its total countrywide property insurance premiums in this
1472 state may petition the office, within the first 90 days of each
1473 calendar year, to qualify as a limited apportionment company. A
1474 regular assessment levied by the corporation on a limited
1475 apportionment company for a deficit incurred by the corporation
1476 for the high-risk account in 2006 or thereafter may be paid to
1477 the corporation on a monthly basis as the assessments are
1478 collected by the limited apportionment company from its insureds
1479 pursuant to s. 627.3512, but the regular assessment must be paid
1480 in full within 12 months after being levied by the corporation.
1481 A limited apportionment company shall collect from its
1482 policyholders any emergency assessment imposed under sub
1483 subparagraph (b)3.d. The plan shall provide that, if the office
1484 determines that any regular assessment will result in an
1485 impairment of the surplus of a limited apportionment company,
1486 the office may direct that all or part of such assessment be
1487 deferred as provided in subparagraph (p)4. However, there shall
1488 be no limitation or deferment of an emergency assessment to be
1489 collected from policyholders under sub-subparagraph (b)3.d.
1490 14. Must provide that the corporation appoint as its
1491 licensed agents only those agents who also hold an appointment
1492 as defined in s. 626.015(3) with an insurer who at the time of
1493 the agent’s initial appointment by the corporation is authorized
1494 to write and is actually writing personal lines residential
1495 property coverage, commercial residential property coverage, or
1496 commercial nonresidential property coverage within the state.
1497 15. Must provide, by July 1, 2007, a premium payment plan
1498 option to its policyholders which allows at a minimum for
1499 quarterly and semiannual payment of premiums. A monthly payment
1500 plan may, but is not required to, be offered.
1501 16. Must limit coverage on mobile homes or manufactured
1502 homes built prior to 1994 to actual cash value of the dwelling
1503 rather than replacement costs of the dwelling.
1504 17. May provide such limits of coverage as the board
1505 determines, consistent with the requirements of this subsection.
1506 18. May require commercial property to meet specified
1507 hurricane mitigation construction features as a condition of
1508 eligibility for coverage.
1509 (m)1. Rates for coverage provided by the corporation shall
1510 be actuarially sound and subject to the requirements of s.
1511 627.062, except as otherwise provided in this paragraph. The
1512 corporation shall file its recommended rates with the office at
1513 least annually. The corporation shall provide any additional
1514 information regarding the rates which the office requires. The
1515 office shall consider the recommendations of the board and issue
1516 a final order establishing the rates for the corporation within
1517 45 days after the recommended rates are filed. The corporation
1518 may not pursue an administrative challenge or judicial review of
1519 the final order of the office.
1520 2. In addition to the rates otherwise determined pursuant
1521 to this paragraph, the corporation shall impose and collect an
1522 amount equal to the premium tax provided for in s. 624.509 to
1523 augment the financial resources of the corporation.
1524 3. After the public hurricane loss-projection model under
1525 s. 627.06281 has been found to be accurate and reliable by the
1526 Florida Commission on Hurricane Loss Projection Methodology,
1527 that model shall serve as the minimum benchmark for determining
1528 the windstorm portion of the corporation’s rates. This
1529 subparagraph does not require or allow the corporation to adopt
1530 rates lower than the rates otherwise required or allowed by this
1531 paragraph.
1532 4. The rate filings for the corporation which were approved
1533 by the office and which took effect January 1, 2007, are
1534 rescinded, except for those rates that were lowered. As soon as
1535 possible, the corporation shall begin using the lower rates that
1536 were in effect on December 31, 2006, and shall provide refunds
1537 to policyholders who have paid higher rates as a result of that
1538 rate filing. The rates in effect on December 31, 2006, shall
1539 remain in effect for the 2007 and 2008 calendar years except for
1540 any rate change that results in a lower rate. The next rate
1541 change that may increase rates shall take effect pursuant to a
1542 new rate filing recommended by the corporation and established
1543 by the office, subject to the requirements of this paragraph.
1544 5. Beginning on July 15, 2009, and each year thereafter,
1545 the corporation must make a recommended actuarially sound rate
1546 filing for each personal and commercial line of business it
1547 writes, to be effective no earlier than January 1, 2010.
1548 6. Notwithstanding the board’s recommended rates and the
1549 office’s final order regarding the corporation’s filed rates
1550 under subparagraph 1., the corporation shall implement a rate
1551 increase each year which does not exceed 10 percent for any
1552 single policy issued by the corporation, excluding coverage
1553 changes and surcharges. The corporation may also implement an
1554 increase to reflect the effect on the corporation of the cash
1555 buildup factor pursuant to s. 215.555(5)(b).
1556 7. The corporation’s implementation of rates as prescribed
1557 in subparagraph 6. shall cease upon the corporation’s
1558 implementation of actuarially sound rates.
1559 8. Beginning January 1, 2010, and each year thereafter, the
1560 corporation shall transfer 10 percent of the funds received from
1561 the rate increase prescribed by subparagraph 6. to the General
1562 Revenue Fund. The corporation’s transfer of such funds shall
1563 cease upon the corporation’s implementation of actuarially sound
1564 rates.
1565 (x) It is the intent of the Legislature that the amendments
1566 to this subsection enacted in 2002 should, over time, reduce the
1567 probable maximum windstorm losses in the residual markets and
1568 should reduce the potential assessments to be levied on property
1569 insurers and policyholders statewide. In furtherance of this
1570 intent:
1571 1. The board shall, on or before February 1 of each year,
1572 provide a report to the President of the Senate and the Speaker
1573 of the House of Representatives showing the reduction or
1574 increase in the 100-year probable maximum loss attributable to
1575 wind-only coverages and the quota share program under this
1576 subsection combined, as compared to the benchmark 100-year
1577 probable maximum loss of the Florida Windstorm Underwriting
1578 Association. For purposes of this paragraph, the benchmark 100
1579 year probable maximum loss of the Florida Windstorm Underwriting
1580 Association shall be the calculation dated February 2001 and
1581 based on November 30, 2000, exposures. In order to ensure
1582 comparability of data, the board shall use the same methods for
1583 calculating its probable maximum loss as were used to calculate
1584 the benchmark probable maximum loss.
1585 2. Beginning February 1, 2013 February 1, 2010, if the
1586 report under subparagraph 1. for any year indicates that the
1587 100-year probable maximum loss attributable to wind-only
1588 coverages and the quota share program combined does not reflect
1589 a reduction of at least 25 percent from the benchmark, the board
1590 shall reduce the boundaries of the high-risk area eligible for
1591 wind-only coverages under this subsection in a manner calculated
1592 to reduce such probable maximum loss to an amount at least 25
1593 percent below the benchmark.
1594 3. Beginning February 1, 2018 February 1, 2015, if the
1595 report under subparagraph 1. for any year indicates that the
1596 100-year probable maximum loss attributable to wind-only
1597 coverages and the quota share program combined does not reflect
1598 a reduction of at least 50 percent from the benchmark, the
1599 boundaries of the high-risk area eligible for wind-only
1600 coverages under this subsection shall be reduced by the
1601 elimination of any area that is not seaward of a line 1,000 feet
1602 inland from the Intracoastal Waterway.
1603 Section 6. Section 627.3512, Florida Statutes, is amended
1604 to read:
1605 627.3512 Recoupment of residual market deficit
1606 assessments.—
1607 (1) An insurer or insurer group may recoup any assessments
1608 that have been paid during or after 1995 by the insurer or
1609 insurer group to defray deficits of an insurance risk
1610 apportionment plan or assigned risk plan under ss. 627.311 and
1611 627.351, net of any earnings returned to the insurer or insurer
1612 group by the association or plan for any year after 1993. The
1613 insurer or insurer group shall begin the recoupment process
1614 within 180 days after the date of the assessment as indicated on
1615 the invoice received by the insurer or insurer group. An insurer
1616 that fails to begin the recoupment process within 180 days after
1617 the date of the assessment may not recoup the amount assessed. A
1618 limited apportionment company as defined in s. 627.351(6)(c) may
1619 recoup any regular assessment that has been levied by, or paid
1620 to, Citizens Property Insurance Corporation.
1621 (2) The recoupment shall be made by applying a separate
1622 recoupment assessment factor on policies of the same line or
1623 type as were considered by the residual markets in determining
1624 the assessment liability of the insurer or insurer group. An
1625 insurer or insurer group shall calculate a separate assessment
1626 factor for personal lines and commercial lines. The separate
1627 assessment factor shall provide for full recoupment of the
1628 assessments over a period of 1 year, unless the insurer or
1629 insurer group, at its option, elects to recoup the assessments
1630 over a longer period. The assessment factor expires upon
1631 collection of the full amount allowed to be recouped. Amounts
1632 recouped under this section are not subject to premium taxes,
1633 fees, or commissions.
1634 (3)(2) The recoupment assessment factor may must not be
1635 more than 3 percentage points above the ratio of the deficit
1636 assessment to the Florida direct written premium for policies
1637 for the lines or types of business as to which the assessment
1638 was calculated, as written in the year the deficit assessment
1639 was paid. If an insurer or insurer group fails to collect the
1640 full amount of the deficit assessment within a 1-year period,
1641 the insurer or insurer group may must carry forward the amount
1642 of the deficit and adjust the deficit assessment to be recouped
1643 in the a subsequent year by that amount. The insurer or insurer
1644 group shall adjust the recoupment factor to be applied for the
1645 subsequent year. The insurer or insurer group may not apply any
1646 recoupment factor in a manner that is unfairly discriminatory
1647 among its policyholders within the same lines, types, or
1648 sublines of business.
1649 (4)(3) The insurer or insurer group shall file with the
1650 office a statement setting forth the amount of the assessment
1651 factor and an explanation of how the factor will be applied, at
1652 least 15 days prior to the factor being applied to any policies.
1653 The statement shall include documentation of the assessment paid
1654 by the insurer or insurer group and the arithmetic calculations
1655 supporting the assessment factor. The office shall complete its
1656 review within 30 15 days after receipt of the filing and shall
1657 limit its review to verification of the arithmetic calculations.
1658 The insurer or insurer group may use the assessment factor at
1659 any time after the expiration of the 30-day 15-day period unless
1660 the office has notified the insurer or insurer group in writing
1661 that the arithmetic calculations are incorrect.
1662 (5) If an insurer or insurer group over-recoups any
1663 assessment it has, it shall forward all excess recoupment to the
1664 corporation to be held in a separate account to offset future
1665 assessments.
1666 (6) A final accounting report documenting the assessment
1667 recouped shall be submitted to the office within 60 days after
1668 the recoupment period ends. The chief executive officer or chief
1669 financial officer must certify under oath and subject to the
1670 penalty of perjury, on a form approved by the commission, that
1671 he or she has reviewed the report; that the information in the
1672 report is true and accurate; and that, based on his or her
1673 knowledge:
1674 (a) The report does not contain any untrue statement of a
1675 material fact or omit a material fact necessary in order to make
1676 the statements not misleading, in light of the circumstances
1677 under which the statements were made;
1678 (b) The effective dates of the recoupment period are
1679 correct;
1680 (c) The recoupment factor used is correct;
1681 (d) The direct written premium and associated recoupment
1682 amounts received each month for the entire recoupment period are
1683 correct; and
1684 (e) All excess recoupment moneys have been paid to the
1685 corporation.
1686 (7) Any insurer or insurer group that does not elect to use
1687 this process to recoup an assessment amount that it has paid is
1688 prohibited from including this uncollected assessment amount as
1689 any component in any subsequent rate filing required by s.
1690 627.062 or s. 627.0651.
1691 (8)(4) The commission may adopt rules to implement this
1692 section.
1693 Section 7. Subsections (1) and (2) of section 627.712,
1694 Florida Statutes, are amended to read:
1695 627.712 Residential windstorm coverage required;
1696 availability of exclusions for windstorm or contents.—
1697 (1) An insurer issuing a residential property insurance
1698 policy must provide windstorm coverage. Except as provided in
1699 paragraph (2)(c), this section does not apply with respect to
1700 risks that are eligible for wind-only coverage from Citizens
1701 Property Insurance Corporation under s. 627.351(6), and with
1702 respect to risks that are not eligible for coverage from
1703 Citizens Property Insurance Corporation under s. 627.351(6)(a)3.
1704 or s. 627.351(6)(a)5. A risk ineligible for Citizens coverage
1705 under s. 627.351(6)(a)3. or s. 627.351(6)(a)5. is exempt from
1706 the requirements of this section only if the risk is located
1707 within the boundaries of the high-risk account of the
1708 corporation.
1709 (2) A property insurer must make available, at the option
1710 of the policyholder, an exclusion of windstorm coverage.
1711 (a) The coverage may be excluded only if:
1712 1. When the policyholder is a natural person, the
1713 policyholder personally writes and provides to the insurer the
1714 following statement in his or her own handwriting and signs his
1715 or her name, which must also be signed by every other named
1716 insured on the policy, and dated: “I do not want the insurance
1717 on my (home/mobile home/condominium unit) to pay for damage from
1718 windstorms. I will pay those costs. My insurance will not.”
1719 2. When the policyholder is other than a natural person,
1720 the policyholder provides to the insurer on the policyholder’s
1721 letterhead the following statement that must be signed by the
1722 policyholder’s authorized representative and dated: “...(Name of
1723 entity)... does not want the insurance on its ...(type of
1724 structure)... to pay for damage from windstorms. ...(Name of
1725 entity)... will be responsible for these costs. ...(Name of
1726 entity's)... insurance will not.”
1727 (b) If the structure insured by the policy is subject to a
1728 mortgage or lien, the policyholder must provide the insurer with
1729 a written statement from the mortgageholder or lienholder
1730 indicating that the mortgageholder or lienholder approves the
1731 policyholder electing to exclude windstorm coverage or hurricane
1732 coverage from his or her or its property insurance policy.
1733 (c) If the residential structure is eligible for wind-only
1734 coverage from Citizens Property Insurance Corporation, An
1735 insurer nonrenewing a policy and issuing a replacement policy,
1736 or issuing a new policy, that does not provide wind coverage
1737 shall provide a notice to the mortgageholder or lienholder
1738 indicating the policyholder has elected coverage that does not
1739 cover wind.
1740 Section 8. Subsection (3) of section 631.57, Florida
1741 Statutes, is amended to read:
1742 631.57 Powers and duties of the association.—
1743 (3)(a) To the extent necessary to secure the funds for the
1744 respective accounts for the payment of covered claims, to pay
1745 the reasonable costs to administer the same, and to the extent
1746 necessary to secure the funds for the account specified in s.
1747 631.55(2)(c) or to retire indebtedness, including, without
1748 limitation, the principal, redemption premium, if any, and
1749 interest on, and related costs of issuance of, bonds issued
1750 under s. 631.695 and the funding of any reserves and other
1751 payments required under the bond resolution or trust indenture
1752 pursuant to which such bonds have been issued, the office, upon
1753 certification of the board of directors, shall levy assessments
1754 in the proportion that each insurer’s net direct written
1755 premiums in this state in the classes protected by the account
1756 bears to the total of said net direct written premiums received
1757 in this state by all such insurers for the preceding calendar
1758 year for the kinds of insurance included within such account.
1759 Assessments shall be remitted to and administered by the board
1760 of directors in the manner specified by the approved plan. Each
1761 insurer so assessed shall have at least 30 days’ written notice
1762 as to the date the assessment is due and payable. Every
1763 assessment shall be made as a uniform percentage applicable to
1764 the net direct written premiums of each insurer in the kinds of
1765 insurance included within the account in which the assessment is
1766 made. The assessments levied against any insurer shall not
1767 exceed in any one year more than 2 percent of that insurer’s net
1768 direct written premiums in this state for the kinds of insurance
1769 included within such account during the calendar year next
1770 preceding the date of such assessments.
1771 (b) If sufficient funds from such assessments, together
1772 with funds previously raised, are not available in any one year
1773 in the respective account to make all the payments or
1774 reimbursements then owing to insurers, the funds available shall
1775 be prorated and the unpaid portion shall be paid as soon
1776 thereafter as funds become available.
1777 (c) Assessments shall be included as an appropriate factor
1778 in the making of rates.
1779 (d) No state funds of any kind shall be allocated or paid
1780 to said association or any of its accounts.
1781 (e)1.a. In addition to assessments otherwise authorized in
1782 paragraph (a) and to the extent necessary to secure the funds
1783 for the account specified in s. 631.55(2)(c) for the direct
1784 payment of covered claims of insurers rendered insolvent by the
1785 effects of a hurricane and to pay the reasonable costs to
1786 administer such claims, or to retire indebtedness, including,
1787 without limitation, the principal, redemption premium, if any,
1788 and interest on, and related costs of issuance of, bonds issued
1789 under s. 631.695 and the funding of any reserves and other
1790 payments required under the bond resolution or trust indenture
1791 pursuant to which such bonds have been issued, the office, upon
1792 certification of the board of directors, shall levy emergency
1793 assessments upon insurers holding a certificate of authority.
1794 The emergency assessments payable under this paragraph by any
1795 insurer shall not exceed in any single year more than 2 percent
1796 of that insurer’s direct written premiums, net of refunds, in
1797 this state during the preceding calendar year for the kinds of
1798 insurance within the account specified in s. 631.55(2)(c).
1799 b. Any emergency assessments authorized under this
1800 paragraph shall be levied by the office upon insurers referred
1801 to in sub-subparagraph a., upon certification as to the need for
1802 such assessments by the board of directors. In the event the
1803 board of directors participates in the issuance of bonds in
1804 accordance with s. 631.695, emergency assessments shall be
1805 levied in each year that bonds issued under s. 631.695 and
1806 secured by such emergency assessments are outstanding, in such
1807 amounts up to such 2-percent limit as required in order to
1808 provide for the full and timely payment of the principal of,
1809 redemption premium, if any, and interest on, and related costs
1810 of issuance of, such bonds. The emergency assessments provided
1811 for in this paragraph are assigned and pledged to the
1812 municipality, county, or legal entity issuing bonds under s.
1813 631.695 for the benefit of the holders of such bonds, in order
1814 to enable such municipality, county, or legal entity to provide
1815 for the payment of the principal of, redemption premium, if any,
1816 and interest on such bonds, the cost of issuance of such bonds,
1817 and the funding of any reserves and other payments required
1818 under the bond resolution or trust indenture pursuant to which
1819 such bonds have been issued, without the necessity of any
1820 further action by the association, the office, or any other
1821 party. To the extent bonds are issued under s. 631.695 and the
1822 association determines to secure such bonds by a pledge of
1823 revenues received from the emergency assessments, such bonds,
1824 upon such pledge of revenues, shall be secured by and payable
1825 from the proceeds of such emergency assessments, and the
1826 proceeds of emergency assessments levied under this paragraph
1827 shall be remitted directly to and administered by the trustee or
1828 custodian appointed for such bonds.
1829 c. Emergency assessments under this paragraph may be
1830 payable in a single payment or, at the option of the
1831 association, may be payable in 12 monthly installments with the
1832 first installment being due and payable at the end of the month
1833 after an emergency assessment is levied and subsequent
1834 installments being due not later than the end of each succeeding
1835 month.
1836 d. If emergency assessments are imposed, the report
1837 required by s. 631.695(7) shall include an analysis of the
1838 revenues generated from the emergency assessments imposed under
1839 this paragraph.
1840 e. If emergency assessments are imposed, the references in
1841 sub-subparagraph (1)(a)3.b. and s. 631.695(2) and (7) to
1842 assessments levied under paragraph (a) shall include emergency
1843 assessments imposed under this paragraph.
1844 2. In order to ensure that insurers paying emergency
1845 assessments levied under this paragraph continue to charge rates
1846 that are neither inadequate nor excessive, within 90 days after
1847 being notified of such assessments, each insurer that is to be
1848 assessed pursuant to this paragraph shall submit a rate filing
1849 for coverage included within the account specified in s.
1850 631.55(2)(c) and for which rates are required to be filed under
1851 s. 627.062. If the filing reflects a rate change that, as a
1852 percentage, is equal to the difference between the rate of such
1853 assessment and the rate of the previous year’s assessment under
1854 this paragraph, the filing shall consist of a certification so
1855 stating and shall be deemed approved when made. Any rate change
1856 of a different percentage shall be subject to the standards and
1857 procedures of s. 627.062.
1858 2.3. In the event the board of directors participates in
1859 the issuance of bonds in accordance with s. 631.695, an annual
1860 assessment under this paragraph shall continue while the bonds
1861 issued with respect to which the assessment was imposed are
1862 outstanding, including any bonds the proceeds of which were used
1863 to refund bonds issued pursuant to s. 631.695, unless adequate
1864 provision has been made for the payment of the bonds in the
1865 documents authorizing the issuance of such bonds.
1866 3.4. Emergency assessments under this paragraph are not
1867 premium and are not subject to the premium tax, to any fees, or
1868 to any commissions. An insurer is liable for all emergency
1869 assessments that the insurer collects and shall treat the
1870 failure of an insured to pay an emergency assessment as a
1871 failure to pay the premium. An insurer is not liable for
1872 uncollectible emergency assessments.
1873 Section 9. Section 631.64, Florida Statutes, is amended to
1874 read:
1875 631.64 Recognition of assessments in rates.—
1876 (1) The rates and premiums charged for insurance policies
1877 to which this part applies may include amounts sufficient to
1878 recoup a sum equal to the amounts paid to the association by the
1879 member insurer less any amounts returned to the member insurer
1880 by the association, and such rates shall not be deemed excessive
1881 because they contain an amount reasonably calculated to recoup
1882 assessments paid by the member insurer. The member insurer shall
1883 begin the recoupment process within 180 days after the date of
1884 the assessment as indicated on the invoice received by the
1885 member insurer. A member insurer that fails to begin the
1886 recoupment process within 180 days after the date of the
1887 assessment may not recoup the amount assessed.
1888 (2) The recoupment factor may not be more than 2 percentage
1889 points above the ratio of the deficit assessment to the Florida
1890 direct written premium for policies for the lines or types of
1891 business as to which the assessment was calculated. If a member
1892 insurer fails to collect the full amount of the deficit
1893 assessment within a 1-year period, the member insurer may carry
1894 forward the amount of the deficit assessment to be recouped in
1895 the next subsequent year. The member insurer shall adjust the
1896 recoupment factor to be applied for the next subsequent year.
1897 The member insurer may not apply any recoupment factor in a
1898 manner that is unfairly discriminatory among its policyholders
1899 within the same lines, types, or sublines of business.
1900 (3) A final accounting report documenting the assessment
1901 recouped shall be submitted to the office within 60 days after
1902 the recoupment period ends. The chief executive officer or chief
1903 financial officer must certify under oath and subject to the
1904 penalty of perjury, on a form approved by the commission, that
1905 he or she has reviewed the report; that the information in the
1906 report is true and accurate; and that, based on his or her
1907 knowledge:
1908 (a) The report does not contain any untrue statement of a
1909 material fact or omit to state a material fact necessary in
1910 order to make the statements not misleading, in light of the
1911 circumstances under which the statements were made;
1912 (b) The effective dates of the recoupment period are
1913 correct; and
1914 (c) The direct written premium and associated recoupment
1915 amounts received each month for the entire recoupment period are
1916 correct.
1917 (4) If a member insurer over-recoups any assessment it has
1918 paid, it shall forward all excess recoupment to the association.
1919 An accounting of the over-recoupment shall be documented in the
1920 final accounting report.
1921 (5) Any member insurer that does not elect to use this
1922 process to recoup an assessment amount that it has paid is
1923 prohibited from including this uncollected assessment amount as
1924 any component in any subsequent rate filing required by s.
1925 627.062 or s. 627.0651.
1926 (6) The commission may adopt rules to implement this
1927 section.
1928 Section 10. Section 631.65, Florida Statutes, is amended to
1929 read:
1930 631.65 Prohibited advertisement or solicitation.—No person
1931 shall make, publish, disseminate, circulate, or place before the
1932 public, or cause, directly or indirectly, to be made, published,
1933 disseminated, circulated, or placed before the public, in a
1934 newspaper, magazine, or other publication, or in the form of a
1935 notice, circular, pamphlet, letter, or poster, or over any radio
1936 station or television station, or in any other way, any
1937 advertisement, announcement, or statement which uses the
1938 existence of the insurance guaranty association for the purpose
1939 of sales, solicitation, or inducement to purchase any form of
1940 insurance covered under this part. However, this section does
1941 not prohibit a duly licensed insurance agent from explaining the
1942 existence or function of the insurance guaranty association to
1943 policyholders, prospects, or applicants for coverage.
1944 Section 11. Upon receipt of funds transferred to the
1945 General Revenue fund pursuant to s. 627.351(6)(m)8., Florida
1946 Statutes, the funds transferred are appropriated on a
1947 nonrecurring basis from the General Revenue Fund to the
1948 Insurance Regulatory Trust Fund in the Department of Financial
1949 Services for purposes of the My Safe Florida Home Program
1950 specified in s. 215.5586, Florida Statutes. The My Safe Florida
1951 Home Program shall use the funds solely for the provision of
1952 mitigation grants pursuant to s. 215.5586(2), Florida Statutes,
1953 for single-family homes insured by the corporation. The
1954 department shall establish a separate account within the trust
1955 fund for accounting purposes.
1956 Section 12. This act shall take effect June 1, 2009.