ENROLLED
       2011 Legislature      CS for CS for CS for SB 408, 3rd Engrossed
       
       
       
       
       
       
                                                              2011408er
    1  
    2         An act relating to property and casualty insurance;
    3         amending s. 95.11, F.S.; specifying a statute of
    4         limitation for a breach of a property insurance
    5         contract runs from the date of loss; amending s.
    6         215.555, F.S.; revising the definition of “losses,”
    7         relating to the Florida Hurricane Catastrophe Fund, to
    8         include and exclude certain losses; providing
    9         applicability; amending s. 215.5595, F.S.; authorizing
   10         an insurer to renegotiate the terms a surplus note
   11         issued before a certain date; providing limitations;
   12         amending s. 624.407, F.S.; revising the amount of
   13         surplus funds required for domestic insurers applying
   14         for a certificate of authority; amending s. 624.408,
   15         F.S.; revising the minimum surplus that must be
   16         maintained by certain insurers; authorizing the Office
   17         of Insurance Regulation to reduce the surplus
   18         requirement under specified circumstances; amending s.
   19         626.854, F.S.; providing limitations on the amount of
   20         compensation that may be received by a public adjuster
   21         for a reopened or supplemental claim; providing
   22         limitations on the amount of compensation that may be
   23         received by a public adjuster for a claim; applying
   24         specified provisions regulating the conduct of public
   25         adjusters to condominium unit owners rather than to
   26         condominium associations as is currently required;
   27         providing statements that may be considered deceptive
   28         or misleading if made in any public adjuster’s
   29         advertisement or solicitation; providing a definition
   30         for the term “written advertisement”; requiring that a
   31         disclaimer be included in any public adjuster’s
   32         written advertisement; providing requirements for such
   33         disclaimer; requiring certain persons who act on
   34         behalf of an insurer to provide notice to the insurer,
   35         claimant, public adjuster, or legal representative for
   36         an onsite inspection of the insured property;
   37         authorizing the insured or claimant to deny access to
   38         the property if notice is not provided; requiring the
   39         public adjuster to ensure prompt notice of certain
   40         property loss claims; providing that an insurer be
   41         allowed to interview the insured directly about the
   42         loss claim; prohibiting the insurer from obstructing
   43         or preventing the public adjuster from communicating
   44         with the insured; requiring that the insurer
   45         communicate with the public adjuster in an effort to
   46         reach an agreement as to the scope of the covered loss
   47         under the insurance policy; prohibiting a public
   48         adjuster from restricting or preventing persons acting
   49         on behalf of the insured from having reasonable access
   50         to the insured or the insured’s property; prohibiting
   51         a public adjuster from restricting or preventing the
   52         insured’s adjuster from having reasonable access to or
   53         inspecting the insured’s property; authorizing the
   54         insured’s adjuster to be present for the inspection;
   55         prohibiting a licensed contractor or subcontractor
   56         from adjusting a claim on behalf of an insured if such
   57         contractor or subcontractor is not a licensed public
   58         adjuster; providing an exception; amending s.
   59         626.8796, F.S.; providing requirements for a public
   60         adjuster contract; creating s. 626.70132, F.S.;
   61         requiring that notice of a claim, supplemental claim,
   62         or reopened claim be given to the insurer within a
   63         specified period after a windstorm or hurricane
   64         occurs; providing a definition for the terms
   65         “supplemental claim” or “reopened claim”; providing
   66         applicability; repealing s. 627.0613(4), F.S.,
   67         relating to the requirement that the consumer advocate
   68         for the Chief Financial Officer prepare an annual
   69         report card for each personal residential property
   70         insurer; amending s. 627.062, F.S.; extending the
   71         expiration date for making a “file and use” filing;
   72         prohibiting the Office of Insurance Regulation from,
   73         directly or indirectly, impeding the right of an
   74         insurer to acquire policyholders, advertise or appoint
   75         agents, or regulate agent commissions; revising the
   76         information that must be included in a rate filing
   77         relating to certain reinsurance or financing products;
   78         deleting a provision that prohibited an insurer from
   79         making certain rate filings within a certain period of
   80         time after a rate increase; deleting a provision
   81         prohibiting an insurer from filing for a rate increase
   82         within 6 months after it makes certain rate filings;
   83         deleting obsolete provisions relating to legislation
   84         enacted during the 2003 Special Session D of the
   85         Legislature; providing for the submission of
   86         additional or supplementary information pursuant to a
   87         rate filing; revising provisions relating to the
   88         certifications that are required to be made under oath
   89         by certain officers or actuaries of an insurer
   90         regarding information that must accompany a rate
   91         filing; amending s. 627.06281, F.S.; providing
   92         limitations on fees charged for use of the public
   93         hurricane model; amending s. 627.0629, F.S.; deleting
   94         obsolete provisions; deleting a requirement that the
   95         Office of Insurance Regulation propose a method for
   96         establishing discounts, debits, credits, and other
   97         rate differentials for hurricane mitigation by a
   98         certain date; conforming provisions to changes made by
   99         the act; amending s. 627.351, F.S.; limiting an
  100         adjuster’s fee for a claim against the corporation;
  101         renaming the “high-risk account” as the “coastal
  102         account”; revising the conditions under which the
  103         Citizens policyholder surcharge may be imposed;
  104         providing that members of the Citizens Property
  105         Insurance Corporation Board of Governors are not
  106         prohibited from practicing in a certain profession if
  107         not prohibited by law or ordinance; requiring the
  108         corporation to commission a consultant to prepare a
  109         report on outsourcing various functions and to submit
  110         such report to the Financial Services Commission by a
  111         certain date; limiting coverage for damage from
  112         sinkholes after a certain date; requiring the
  113         policyholders to sign a statement acknowledging that
  114         they may be assessed surcharges to cover corporate
  115         deficits; prohibiting board members from voting on
  116         certain measures; exempting sinkhole coverage from the
  117         corporation’s annual rate increase requirements;
  118         deleting a requirement that the board provide an
  119         annual report to the Legislature relating to certain
  120         coverages; deleting a requirement that the board
  121         reduce the boundaries of certain high-risk areas
  122         eligible for wind-only coverages under certain
  123         circumstances; amending s. 627.3511, F.S.; conforming
  124         provisions to changes made by the act; amending s.
  125         627.4133, F.S.; revising the requirements for
  126         providing an insured with notice of nonrenewal,
  127         cancellation, or termination of personal lines or
  128         commercial residential property insurance; authorizing
  129         an insurer to cancel policies after 45 days’ notice if
  130         the Office of Insurance Regulation determines that the
  131         cancellation of policies is necessary to protect the
  132         interests of the public or policyholders; authorizing
  133         the Office of Insurance Regulation to place an insurer
  134         under administrative supervision or appoint a receiver
  135         upon the consent of the insurer under certain
  136         circumstances; providing criteria and notice
  137         requirements relating to the nonrenewal of policy
  138         covering both a home and motor vehicle; creating s.
  139         627.43141, F.S.; providing definitions; requiring the
  140         delivery of a “Notice of Change in Policy Terms” under
  141         certain circumstances; specifying requirements for
  142         such notice; specifying actions constituting proof of
  143         notice; authorizing policy renewals to contain a
  144         change in policy terms; providing that receipt of
  145         payment by an insurer is deemed acceptance of new
  146         policy terms by an insured; providing that the
  147         original policy remains in effect until the occurrence
  148         of specified events if an insurer fails to provide
  149         notice; providing intent; amending s. 627.7011, F.S.;
  150         requiring the insurer to pay the actual cash value of
  151         an insured loss for a dwelling, less any applicable
  152         deductible; requiring the insurer to offer coverage
  153         under which the insurer is obligated to pay
  154         replacement costs; authorizing the insurer to offer
  155         coverage that limits the initial payment for personal
  156         property to the actual cash value of the property to
  157         be replaced and to require the insured to provide
  158         receipts for purchases; requiring the insurer to
  159         provide notice of this process before the policy is
  160         bound; requiring certain premium credits or discounts
  161         for such coverage; prohibiting an insurer from
  162         requiring the insured to advance payment; amending s.
  163         627.70131, F.S.; specifying application of certain
  164         time periods to initial or supplemental property
  165         insurance claim notices and payments; providing
  166         legislative findings with respect to 2005 statutory
  167         changes relating to sinkhole insurance coverage and
  168         statutory changes in this act; amending s. 627.706,
  169         F.S.; authorizing an insurer to limit coverage for
  170         catastrophic ground cover collapse to the principal
  171         building; authorizing an insurer to require an
  172         inspection before issuance of sinkhole loss coverage;
  173         revising definitions; defining the term “structural
  174         damage”; placing a 2-year statute of repose on claims
  175         for sinkhole coverage; amending s. 627.7061, F.S.;
  176         conforming provisions to changes made by the act;
  177         repealing s. 627.7065, F.S., relating to the
  178         establishment of a sinkhole database; amending s.
  179         627.707, F.S.; revising provisions relating to the
  180         investigation of sinkholes by insurers; providing a
  181         time limitation for demanding sinkhole testing by a
  182         policyholder and entering into a contract for repairs;
  183         requiring the insurer to provide repairs in accordance
  184         with the insurer’s engineer’s recommendations or
  185         tender the policy limits to the policyholder;
  186         requiring all repairs to be completed within a certain
  187         time; providing exceptions; providing criminal
  188         penalties for a person performing repairs who offers a
  189         rebate; amending s. 627.7073, F.S.; revising
  190         provisions relating to inspection reports; revising
  191         the reports that an insurer must file with the clerk
  192         of the court; requiring the policyholder to file
  193         certain reports as a precondition to accepting
  194         payment; requiring the professional engineer
  195         responsible for monitoring sinkhole repairs to issue a
  196         report and certification to the property owner and
  197         file such report with the court; providing that the
  198         act does not create liability for an insurer based on
  199         a representation or certification by the engineer;
  200         amending s. 627.7074, F.S.; revising provisions
  201         relating to neutral evaluation; requiring evaluation
  202         in order to make certain determinations; requiring
  203         that the neutral evaluator be allowed access to
  204         structures being evaluated; providing grounds for
  205         disqualifying an evaluator; allowing the Department of
  206         Financial Services to appoint an evaluator if the
  207         parties cannot come to agreement; revising the
  208         timeframes for scheduling a neutral evaluation
  209         conference; authorizing an evaluator to enlist another
  210         evaluator or other professionals; providing a time
  211         certain for issuing a report; requiring admission of
  212         certain information relating to the neutral evaluation
  213         into evidence; revising provisions relating to
  214         compliance with the evaluator’s recommendations;
  215         providing that the evaluator is an agent of the
  216         department for the purposes of immunity from suit;
  217         requiring the department to adopt rules; amending s.
  218         627.711, F.S.; revising the requirement that the
  219         insurer pay for verification of a uniform mitigation
  220         verification form that the insurer requires; amending
  221         s. 627.712, F.S.; conforming provisions to changes
  222         made by the act; amending s. 631.54, F.S.; revising
  223         the definition of the term “covered claim” for
  224         purposes of the Florida Insurance Guaranty Association
  225         Act; providing for applicability; providing
  226         severability; providing effective dates.
  227  
  228  Be It Enacted by the Legislature of the State of Florida:
  229  
  230         Section 1. Subsection (2) of section 95.11, Florida
  231  Statutes, is amended to read:
  232         95.11 Limitations other than for the recovery of real
  233  property.—Actions other than for recovery of real property shall
  234  be commenced as follows:
  235         (2) WITHIN FIVE YEARS.—
  236         (a) An action on a judgment or decree of any court, not of
  237  record, of this state or any court of the United States, any
  238  other state or territory in the United States, or a foreign
  239  country.
  240         (b) A legal or equitable action on a contract, obligation,
  241  or liability founded on a written instrument, except for an
  242  action to enforce a claim against a payment bond, which shall be
  243  governed by the applicable provisions of ss. 255.05(10) and
  244  713.23(1)(e).
  245         (c) An action to foreclose a mortgage.
  246         (d) An action alleging a willful violation of s. 448.110.
  247         (e) Notwithstanding paragraph (b), an action for breach of
  248  a property insurance contract, with the period running from the
  249  date of loss.
  250         Section 2. Effective June 1, 2011, paragraph (d) of
  251  subsection (2) of section 215.555, Florida Statutes, is amended
  252  to read:
  253         215.555 Florida Hurricane Catastrophe Fund.—
  254         (2) DEFINITIONS.—As used in this section:
  255         (d) “Losses” means all direct incurred losses under covered
  256  policies, including which shall include losses for additional
  257  living expenses not to exceed 40 percent of the insured value of
  258  a residential structure or its contents and amounts paid as fees
  259  on behalf of or inuring to the benefit of a policyholder shall
  260  exclude loss adjustment expenses. The term “Losses” does not
  261  include:
  262         1. Losses for fair rental value, loss of rent or rental
  263  income, or business interruption losses;
  264         2. Losses under liability coverages;
  265         3. Property losses that are proximately caused by any peril
  266  other than a covered event, including, but not limited to, fire,
  267  theft, flood or rising water, or windstorm that does not
  268  constitute a covered event;
  269         4. Amounts paid as the result of a voluntary expansion of
  270  coverage by the insurer, including, but not limited to, a waiver
  271  of an applicable deductible;
  272         5. Amounts paid to reimburse a policyholder for condominium
  273  association or homeowners’ association loss assessments or under
  274  similar coverages for contractual liabilities;
  275         6. Amounts paid as bad faith awards, punitive damage
  276  awards, or other court-imposed fines, sanctions, or penalties;
  277         7. Amounts in excess of the coverage limits under the
  278  covered policy; or
  279         8. Allocated or unallocated loss adjustment expenses.
  280         Section 3. The amendment to s. 215.555, Florida Statutes,
  281  made by this act applies first to the Florida Hurricane
  282  Catastrophe Fund reimbursement contract that takes effect June
  283  1, 2011.
  284         Section 4. Subsection (12) is added to section 215.5595,
  285  Florida Statutes, to read:
  286         215.5595 Insurance Capital Build-Up Incentive Program.—
  287         (12) The insurer may request that the board renegotiate the
  288  terms of any surplus note issued under this section before
  289  January 1, 2011. The request must be submitted to the board by
  290  January 1, 2012. If the insurer agrees to accelerate the payment
  291  period of the note by at least 5 years, the board must agree to
  292  exempt the insurer from the premium-to-surplus ratios required
  293  under paragraph (2)(d). If the insurer agrees to an acceleration
  294  of the payment period for less than 5 years, the board may,
  295  after consultation with the Office of Insurance Regulation,
  296  agree to an appropriate revision of the premium-to-surplus
  297  ratios required under paragraph (2)(d) for the remaining term of
  298  the note if the revised ratios are not lower than a minimum
  299  writing ratio of net premium to surplus of at least 1 to 1 and,
  300  alternatively, a minimum writing ratio of gross premium to
  301  surplus of at least 3 to 1.
  302         Section 5. Section 624.407, Florida Statutes, is amended to
  303  read:
  304         624.407 Surplus Capital funds required; new insurers.—
  305         (1) To receive authority to transact any one kind or
  306  combinations of kinds of insurance, as defined in part V of this
  307  chapter, an insurer applying for its original certificate of
  308  authority in this state after the effective date of this section
  309  shall possess surplus as to policyholders at least not less than
  310  the greater of:
  311         (a) Five million dollars For a property and casualty
  312  insurer, $5 million, or $2.5 million for any other insurer;
  313         (b) For life insurers, 4 percent of the insurer’s total
  314  liabilities;
  315         (c) For life and health insurers, 4 percent of the
  316  insurer’s total liabilities, plus 6 percent of the insurer’s
  317  liabilities relative to health insurance; or
  318         (d) For all insurers other than life insurers and life and
  319  health insurers, 10 percent of the insurer’s total liabilities;
  320  or
  321         (e) Notwithstanding paragraph (a) or paragraph (d), for a
  322  domestic insurer that transacts residential property insurance
  323  and is:
  324         1. Not a wholly owned subsidiary of an insurer domiciled in
  325  any other state, $15 million.
  326         2.however, a domestic insurer that transacts residential
  327  property insurance and is A wholly owned subsidiary of an
  328  insurer domiciled in any other state, shall possess surplus as
  329  to policyholders of at least $50 million.
  330         (2) Notwithstanding subsection (1), a new insurer may not
  331  be required, but no insurer shall be required under this
  332  subsection to have surplus as to policyholders greater than $100
  333  million.
  334         (3)(2) The requirements of this section shall be based upon
  335  all the kinds of insurance actually transacted or to be
  336  transacted by the insurer in any and all areas in which it
  337  operates, whether or not only a portion of such kinds of
  338  insurance are to be transacted in this state.
  339         (4)(3) As to surplus as to policyholders required for
  340  qualification to transact one or more kinds of insurance,
  341  domestic mutual insurers are governed by chapter 628, and
  342  domestic reciprocal insurers are governed by chapter 629.
  343         (5)(4) For the purposes of this section, liabilities do
  344  shall not include liabilities required under s. 625.041(4). For
  345  purposes of computing minimum surplus as to policyholders
  346  pursuant to s. 625.305(1), liabilities shall include liabilities
  347  required under s. 625.041(4).
  348         (5) The provisions of this section, as amended by this act,
  349  shall apply only to insurers applying for a certificate of
  350  authority on or after the effective date of this act.
  351         Section 6. Section 624.408, Florida Statutes, is amended to
  352  read:
  353         624.408 Surplus as to policyholders required; current new
  354  and existing insurers.—
  355         (1)(a) To maintain a certificate of authority to transact
  356  any one kind or combinations of kinds of insurance, as defined
  357  in part V of this chapter, an insurer in this state must shall
  358  at all times maintain surplus as to policyholders at least not
  359  less than the greater of:
  360         (a)1. Except as provided in paragraphs (e), (f), and (g)
  361  subparagraph 5. and paragraph (b), $1.5 million.;
  362         (b)2. For life insurers, 4 percent of the insurer’s total
  363  liabilities.;
  364         (c)3. For life and health insurers, 4 percent of the
  365  insurer’s total liabilities plus 6 percent of the insurer’s
  366  liabilities relative to health insurance.; or
  367         (d)4. For all insurers other than mortgage guaranty
  368  insurers, life insurers, and life and health insurers, 10
  369  percent of the insurer’s total liabilities.
  370         (e)5. For property and casualty insurers, $4 million,
  371  except for property and casualty insurers authorized to
  372  underwrite any line of residential property insurance.
  373         (f)(b) For residential any property insurers not and
  374  casualty insurer holding a certificate of authority before July
  375  1, 2011 on December 1, 1993, $15 million. the
  376         (g) For residential property insurers holding a certificate
  377  of authority before July 1, 2011, and until June 30, 2016, $5
  378  million; on or after July 1, 2016, and until June 30, 2021, $10
  379  million; on or after July 1, 2021, $15 million.
  380  
  381  The office may reduce the surplus requirement in paragraphs (f)
  382  and (g) if the insurer is not writing new business, has premiums
  383  in force of less than $1 million per year in residential
  384  property insurance, or is a mutual insurance company. following
  385  amounts apply instead of the $4 million required by subparagraph
  386  (a)5.:
  387         1. On December 31, 2001, and until December 30, 2002, $3
  388  million.
  389         2. On December 31, 2002, and until December 30, 2003, $3.25
  390  million.
  391         3. On December 31, 2003, and until December 30, 2004, $3.6
  392  million.
  393         4. On December 31, 2004, and thereafter, $4 million.
  394         (2) For purposes of this section, liabilities do shall not
  395  include liabilities required under s. 625.041(4). For purposes
  396  of computing minimum surplus as to policyholders pursuant to s.
  397  625.305(1), liabilities shall include liabilities required under
  398  s. 625.041(4).
  399         (3) This section does not require an No insurer shall be
  400  required under this section to have surplus as to policyholders
  401  greater than $100 million.
  402         (4) A mortgage guaranty insurer shall maintain a minimum
  403  surplus as required by s. 635.042.
  404         Section 7. Effective June 1, 2011, section 626.854, Florida
  405  Statutes, is amended to read:
  406         626.854 “Public adjuster” defined; prohibitions.—The
  407  Legislature finds that it is necessary for the protection of the
  408  public to regulate public insurance adjusters and to prevent the
  409  unauthorized practice of law.
  410         (1) A “public adjuster” is any person, except a duly
  411  licensed attorney at law as hereinafter in s. 626.860 provided,
  412  who, for money, commission, or any other thing of value,
  413  prepares, completes, or files an insurance claim form for an
  414  insured or third-party claimant or who, for money, commission,
  415  or any other thing of value, acts or aids in any manner on
  416  behalf of an insured or third-party claimant in negotiating for
  417  or effecting the settlement of a claim or claims for loss or
  418  damage covered by an insurance contract or who advertises for
  419  employment as an adjuster of such claims, and also includes any
  420  person who, for money, commission, or any other thing of value,
  421  solicits, investigates, or adjusts such claims on behalf of any
  422  such public adjuster.
  423         (2) This definition does not apply to:
  424         (a) A licensed health care provider or employee thereof who
  425  prepares or files a health insurance claim form on behalf of a
  426  patient.
  427         (b) A person who files a health claim on behalf of another
  428  and does so without compensation.
  429         (3) A public adjuster may not give legal advice. A public
  430  adjuster may not act on behalf of or aid any person in
  431  negotiating or settling a claim relating to bodily injury,
  432  death, or noneconomic damages.
  433         (4) For purposes of this section, the term “insured”
  434  includes only the policyholder and any beneficiaries named or
  435  similarly identified in the policy.
  436         (5) A public adjuster may not directly or indirectly
  437  through any other person or entity solicit an insured or
  438  claimant by any means except on Monday through Saturday of each
  439  week and only between the hours of 8 a.m. and 8 p.m. on those
  440  days.
  441         (6) A public adjuster may not directly or indirectly
  442  through any other person or entity initiate contact or engage in
  443  face-to-face or telephonic solicitation or enter into a contract
  444  with any insured or claimant under an insurance policy until at
  445  least 48 hours after the occurrence of an event that may be the
  446  subject of a claim under the insurance policy unless contact is
  447  initiated by the insured or claimant.
  448         (7) An insured or claimant may cancel a public adjuster’s
  449  contract to adjust a claim without penalty or obligation within
  450  3 business days after the date on which the contract is executed
  451  or within 3 business days after the date on which the insured or
  452  claimant has notified the insurer of the claim, by phone or in
  453  writing, whichever is later. The public adjuster’s contract
  454  shall disclose to the insured or claimant his or her right to
  455  cancel the contract and advise the insured or claimant that
  456  notice of cancellation must be submitted in writing and sent by
  457  certified mail, return receipt requested, or other form of
  458  mailing which provides proof thereof, to the public adjuster at
  459  the address specified in the contract; provided, during any
  460  state of emergency as declared by the Governor and for a period
  461  of 1 year after the date of loss, the insured or claimant shall
  462  have 5 business days after the date on which the contract is
  463  executed to cancel a public adjuster’s contract.
  464         (8) It is an unfair and deceptive insurance trade practice
  465  pursuant to s. 626.9541 for a public adjuster or any other
  466  person to circulate or disseminate any advertisement,
  467  announcement, or statement containing any assertion,
  468  representation, or statement with respect to the business of
  469  insurance which is untrue, deceptive, or misleading.
  470         (9) A public adjuster, a public adjuster apprentice, or any
  471  person or entity acting on behalf of a public adjuster or public
  472  adjuster apprentice may not give or offer to give a monetary
  473  loan or advance to a client or prospective client.
  474         (10) A public adjuster, public adjuster apprentice, or any
  475  individual or entity acting on behalf of a public adjuster or
  476  public adjuster apprentice may not give or offer to give,
  477  directly or indirectly, any article of merchandise having a
  478  value in excess of $25 to any individual for the purpose of
  479  advertising or as an inducement to entering into a contract with
  480  a public adjuster.
  481         (11)(a) If a public adjuster enters into a contract with an
  482  insured or claimant to reopen a claim or to file a supplemental
  483  claim that seeks additional payments for a claim that has been
  484  previously paid in part or in full or settled by the insurer,
  485  the public adjuster may not charge, agree to, or accept any
  486  compensation, payment, commission, fee, or other thing of value
  487  based on a previous settlement or previous claim payments by the
  488  insurer for the same cause of loss. The charge, compensation,
  489  payment, commission, fee, or other thing of value may be based
  490  only on the claim payments or settlement obtained through the
  491  work of the public adjuster after entering into the contract
  492  with the insured or claimant. Compensation for the reopened or
  493  supplemental claim may not exceed 20 percent of the reopened or
  494  supplemental claim payment. The contracts described in this
  495  paragraph are not subject to the limitations in paragraph (b).
  496         (b) A public adjuster may not charge, agree to, or accept
  497  any compensation, payment, commission, fee, or other thing of
  498  value in excess of:
  499         1. Ten percent of the amount of insurance claim payments
  500  made by the insurer for claims based on events that are the
  501  subject of a declaration of a state of emergency by the
  502  Governor. This provision applies to claims made during the
  503  period of 1 year after the declaration of emergency. After that
  504  1-year period, 20 percent of the amount of insurance claim
  505  payments made by the insurer.
  506         2. Twenty percent of the amount of all other insurance
  507  claim payments made by the insurer for claims that are not based
  508  on events that are the subject of a declaration of a state of
  509  emergency by the Governor.
  510         (12) Each public adjuster shall provide to the claimant or
  511  insured a written estimate of the loss to assist in the
  512  submission of a proof of loss or any other claim for payment of
  513  insurance proceeds. The public adjuster shall retain such
  514  written estimate for at least 5 years and shall make such
  515  estimate available to the claimant or insured and the department
  516  upon request.
  517         (13) A public adjuster, public adjuster apprentice, or any
  518  person acting on behalf of a public adjuster or apprentice may
  519  not accept referrals of business from any person with whom the
  520  public adjuster conducts business if there is any form or manner
  521  of agreement to compensate the person, whether directly or
  522  indirectly, for referring business to the public adjuster. A
  523  public adjuster may not compensate any person, except for
  524  another public adjuster, whether directly or indirectly, for the
  525  principal purpose of referring business to the public adjuster.
  526  
  527  The provisions of subsections (5)-(13) apply only to residential
  528  property insurance policies and condominium unit owner
  529  association policies as defined in s. 718.111(11).
  530         Section 8. Effective January 1, 2012, section 626.854,
  531  Florida Statutes, as amended by this act, is amended to read:
  532         626.854 “Public adjuster” defined; prohibitions.—The
  533  Legislature finds that it is necessary for the protection of the
  534  public to regulate public insurance adjusters and to prevent the
  535  unauthorized practice of law.
  536         (1) A “public adjuster” is any person, except a duly
  537  licensed attorney at law as exempted under hereinafter in s.
  538  626.860 provided, who, for money, commission, or any other thing
  539  of value, prepares, completes, or files an insurance claim form
  540  for an insured or third-party claimant or who, for money,
  541  commission, or any other thing of value, acts or aids in any
  542  manner on behalf of, or aids an insured or third-party claimant
  543  in negotiating for or effecting the settlement of a claim or
  544  claims for loss or damage covered by an insurance contract or
  545  who advertises for employment as an adjuster of such claims. The
  546  term, and also includes any person who, for money, commission,
  547  or any other thing of value, solicits, investigates, or adjusts
  548  such claims on behalf of a any such public adjuster.
  549         (2) This definition does not apply to:
  550         (a) A licensed health care provider or employee thereof who
  551  prepares or files a health insurance claim form on behalf of a
  552  patient.
  553         (b) A person who files a health claim on behalf of another
  554  and does so without compensation.
  555         (3) A public adjuster may not give legal advice or. A
  556  public adjuster may not act on behalf of or aid any person in
  557  negotiating or settling a claim relating to bodily injury,
  558  death, or noneconomic damages.
  559         (4) For purposes of this section, the term “insured”
  560  includes only the policyholder and any beneficiaries named or
  561  similarly identified in the policy.
  562         (5) A public adjuster may not directly or indirectly
  563  through any other person or entity solicit an insured or
  564  claimant by any means except on Monday through Saturday of each
  565  week and only between the hours of 8 a.m. and 8 p.m. on those
  566  days.
  567         (6) A public adjuster may not directly or indirectly
  568  through any other person or entity initiate contact or engage in
  569  face-to-face or telephonic solicitation or enter into a contract
  570  with any insured or claimant under an insurance policy until at
  571  least 48 hours after the occurrence of an event that may be the
  572  subject of a claim under the insurance policy unless contact is
  573  initiated by the insured or claimant.
  574         (7) An insured or claimant may cancel a public adjuster’s
  575  contract to adjust a claim without penalty or obligation within
  576  3 business days after the date on which the contract is executed
  577  or within 3 business days after the date on which the insured or
  578  claimant has notified the insurer of the claim, by phone or in
  579  writing, whichever is later. The public adjuster’s contract must
  580  shall disclose to the insured or claimant his or her right to
  581  cancel the contract and advise the insured or claimant that
  582  notice of cancellation must be submitted in writing and sent by
  583  certified mail, return receipt requested, or other form of
  584  mailing that which provides proof thereof, to the public
  585  adjuster at the address specified in the contract; provided,
  586  during any state of emergency as declared by the Governor and
  587  for a period of 1 year after the date of loss, the insured or
  588  claimant has shall have 5 business days after the date on which
  589  the contract is executed to cancel a public adjuster’s contract.
  590         (8) It is an unfair and deceptive insurance trade practice
  591  pursuant to s. 626.9541 for a public adjuster or any other
  592  person to circulate or disseminate any advertisement,
  593  announcement, or statement containing any assertion,
  594  representation, or statement with respect to the business of
  595  insurance which is untrue, deceptive, or misleading.
  596         (a) The following statements, made in any public adjuster’s
  597  advertisement or solicitation, are considered deceptive or
  598  misleading:
  599         1. A statement or representation that invites an insured
  600  policyholder to submit a claim when the policyholder does not
  601  have covered damage to insured property.
  602         2. A statement or representation that invites an insured
  603  policyholder to submit a claim by offering monetary or other
  604  valuable inducement.
  605         3. A statement or representation that invites an insured
  606  policyholder to submit a claim by stating that there is “no
  607  risk” to the policyholder by submitting such claim.
  608         4. A statement or representation, or use of a logo or
  609  shield, that implies or could mistakenly be construed to imply
  610  that the solicitation was issued or distributed by a
  611  governmental agency or is sanctioned or endorsed by a
  612  governmental agency.
  613         (b) For purposes of this paragraph, the term “written
  614  advertisement” includes only newspapers, magazines, flyers, and
  615  bulk mailers. The following disclaimer, which is not required to
  616  be printed on standard size business cards, must be added in
  617  bold print and capital letters in typeface no smaller than the
  618  typeface of the body of the text to all written advertisements
  619  by a public adjuster:
  620         “THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD
  621         A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU
  622         ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU
  623         MAY DISREGARD THIS ADVERTISEMENT.”
  624  
  625         (9) A public adjuster, a public adjuster apprentice, or any
  626  person or entity acting on behalf of a public adjuster or public
  627  adjuster apprentice may not give or offer to give a monetary
  628  loan or advance to a client or prospective client.
  629         (10) A public adjuster, public adjuster apprentice, or any
  630  individual or entity acting on behalf of a public adjuster or
  631  public adjuster apprentice may not give or offer to give,
  632  directly or indirectly, any article of merchandise having a
  633  value in excess of $25 to any individual for the purpose of
  634  advertising or as an inducement to entering into a contract with
  635  a public adjuster.
  636         (11)(a) If a public adjuster enters into a contract with an
  637  insured or claimant to reopen a claim or file a supplemental
  638  claim that seeks additional payments for a claim that has been
  639  previously paid in part or in full or settled by the insurer,
  640  the public adjuster may not charge, agree to, or accept any
  641  compensation, payment, commission, fee, or other thing of value
  642  based on a previous settlement or previous claim payments by the
  643  insurer for the same cause of loss. The charge, compensation,
  644  payment, commission, fee, or other thing of value must be based
  645  only on the claim payments or settlement obtained through the
  646  work of the public adjuster after entering into the contract
  647  with the insured or claimant. Compensation for the reopened or
  648  supplemental claim may not exceed 20 percent of the reopened or
  649  supplemental claim payment. The contracts described in this
  650  paragraph are not subject to the limitations in paragraph (b).
  651         (b) A public adjuster may not charge, agree to, or accept
  652  any compensation, payment, commission, fee, or other thing of
  653  value in excess of:
  654         1. Ten percent of the amount of insurance claim payments
  655  made by the insurer for claims based on events that are the
  656  subject of a declaration of a state of emergency by the
  657  Governor. This provision applies to claims made during the year
  658  after the declaration of emergency. After that year, the
  659  limitations in subparagraph 2. apply.
  660         2. Twenty percent of the amount of insurance claim payments
  661  made by the insurer for claims that are not based on events that
  662  are the subject of a declaration of a state of emergency by the
  663  Governor.
  664         (12) Each public adjuster must shall provide to the
  665  claimant or insured a written estimate of the loss to assist in
  666  the submission of a proof of loss or any other claim for payment
  667  of insurance proceeds. The public adjuster shall retain such
  668  written estimate for at least 5 years and shall make the such
  669  estimate available to the claimant or insured, the insurer, and
  670  the department upon request.
  671         (13) A public adjuster, public adjuster apprentice, or any
  672  person acting on behalf of a public adjuster or apprentice may
  673  not accept referrals of business from any person with whom the
  674  public adjuster conducts business if there is any form or manner
  675  of agreement to compensate the person, whether directly or
  676  indirectly, for referring business to the public adjuster. A
  677  public adjuster may not compensate any person, except for
  678  another public adjuster, whether directly or indirectly, for the
  679  principal purpose of referring business to the public adjuster.
  680         (14) A company employee adjuster, independent adjuster,
  681  attorney, investigator, or other persons acting on behalf of an
  682  insurer that needs access to an insured or claimant or to the
  683  insured property that is the subject of a claim must provide at
  684  least 48 hours’ notice to the insured or claimant, public
  685  adjuster, or legal representative before scheduling a meeting
  686  with the claimant or an onsite inspection of the insured
  687  property. The insured or claimant may deny access to the
  688  property if the notice has not been provided. The insured or
  689  claimant may waive the 48-hour notice.
  690         (15) A public adjuster must ensure prompt notice of
  691  property loss claims submitted to an insurer by or through a
  692  public adjuster or on which a public adjuster represents the
  693  insured at the time the claim or notice of loss is submitted to
  694  the insurer. The public adjuster must ensure that notice is
  695  given to the insurer, the public adjuster’s contract is provided
  696  to the insurer, the property is available for inspection of the
  697  loss or damage by the insurer, and the insurer is given an
  698  opportunity to interview the insured directly about the loss and
  699  claim. The insurer must be allowed to obtain necessary
  700  information to investigate and respond to the claim.
  701         (a) The insurer may not exclude the public adjuster from
  702  its in-person meetings with the insured. The insurer shall meet
  703  or communicate with the public adjuster in an effort to reach
  704  agreement as to the scope of the covered loss under the
  705  insurance policy. This section does not impair the terms and
  706  conditions of the insurance policy in effect at the time the
  707  claim is filed.
  708         (b) A public adjuster may not restrict or prevent an
  709  insurer, company employee adjuster, independent adjuster,
  710  attorney, investigator, or other person acting on behalf of the
  711  insurer from having reasonable access at reasonable times to an
  712  insured or claimant or to the insured property that is the
  713  subject of a claim.
  714         (c) A public adjuster may not act or fail to reasonably act
  715  in any manner that obstructs or prevents an insurer or insurer’s
  716  adjuster from timely conducting an inspection of any part of the
  717  insured property for which there is a claim for loss or damage.
  718  The public adjuster representing the insured may be present for
  719  the insurer’s inspection, but if the unavailability of the
  720  public adjuster otherwise delays the insurer’s timely inspection
  721  of the property, the public adjuster or the insured must allow
  722  the insurer to have access to the property without the
  723  participation or presence of the public adjuster or insured in
  724  order to facilitate the insurer’s prompt inspection of the loss
  725  or damage.
  726         (16) A licensed contractor under part I of chapter 489, or
  727  a subcontractor, may not adjust a claim on behalf of an insured
  728  unless licensed and compliant as a public adjuster under this
  729  chapter. However, the contractor may discuss or explain a bid
  730  for construction or repair of covered property with the
  731  residential property owner who has suffered loss or damage
  732  covered by a property insurance policy, or the insurer of such
  733  property, if the contractor is doing so for the usual and
  734  customary fees applicable to the work to be performed as stated
  735  in the contract between the contractor and the insured.
  736         (17) The provisions of subsections (5)-(16) (5)-(13) apply
  737  only to residential property insurance policies and condominium
  738  unit owner policies as defined in s. 718.111(11).
  739         Section 9. Effective January 1, 2012, section 626.8796,
  740  Florida Statutes, is amended to read:
  741         626.8796 Public adjuster contracts; fraud statement.—
  742         (1) All contracts for public adjuster services must be in
  743  writing and must prominently display the following statement on
  744  the contract: “Pursuant to s. 817.234, Florida Statutes, any
  745  person who, with the intent to injure, defraud, or deceive an
  746  any insurer or insured, prepares, presents, or causes to be
  747  presented a proof of loss or estimate of cost or repair of
  748  damaged property in support of a claim under an insurance policy
  749  knowing that the proof of loss or estimate of claim or repairs
  750  contains any false, incomplete, or misleading information
  751  concerning any fact or thing material to the claim commits a
  752  felony of the third degree, punishable as provided in s.
  753  775.082, s. 775.083, or s. 775.084, Florida Statutes.”
  754         (2) A public adjuster contract relating to a property and
  755  casualty claim must contain the full name, permanent business
  756  address, and license number of the public adjuster; the full
  757  name of the public adjusting firm; and the insured’s full name
  758  and street address, together with a brief description of the
  759  loss. The contract must state the percentage of compensation for
  760  the public adjuster’s services; the type of claim, including an
  761  emergency claim, nonemergency claim, or supplemental claim; the
  762  signatures of the public adjuster and all named insureds; and
  763  the signature date. If all of the named insureds signatures are
  764  not available, the public adjuster must submit an affidavit
  765  signed by the available named insureds attesting that they have
  766  authority to enter into the contract and settle all claim issues
  767  on behalf of the named insureds. An unaltered copy of the
  768  executed contract must be remitted to the insurer within 30 days
  769  after execution.
  770         Section 10. Effective June 1, 2011, section 626.70132,
  771  Florida Statutes, is created to read:
  772         626.70132 Notice of windstorm or hurricane claim.—A claim,
  773  supplemental claim, or reopened claim under an insurance policy
  774  that provides property insurance, as defined in s. 624.604, for
  775  loss or damage caused by the peril of windstorm or hurricane is
  776  barred unless notice of the claim, supplemental claim, or
  777  reopened claim was given to the insurer in accordance with the
  778  terms of the policy within 3 years after the hurricane first
  779  made landfall or the windstorm caused the covered damage. For
  780  purposes of this section, the term “supplemental claim” or
  781  “reopened claim” means any additional claim for recovery from
  782  the insurer for losses from the same hurricane or windstorm
  783  which the insurer has previously adjusted pursuant to the
  784  initial claim. This section does not affect any applicable
  785  limitation on civil actions provided in s. 95.11 for claims,
  786  supplemental claims, or reopened claims timely filed under this
  787  section.
  788         Section 11. Subsection (4) of section 627.0613, Florida
  789  Statutes, is repealed.
  790         Section 12. Section 627.062, Florida Statutes, is amended
  791  to read:
  792         627.062 Rate standards.—
  793         (1) The rates for all classes of insurance to which the
  794  provisions of this part are applicable may shall not be
  795  excessive, inadequate, or unfairly discriminatory.
  796         (2) As to all such classes of insurance:
  797         (a) Insurers or rating organizations shall establish and
  798  use rates, rating schedules, or rating manuals that to allow the
  799  insurer a reasonable rate of return on the such classes of
  800  insurance written in this state. A copy of rates, rating
  801  schedules, rating manuals, premium credits or discount
  802  schedules, and surcharge schedules, and changes thereto, must
  803  shall be filed with the office under one of the following
  804  procedures except as provided in subparagraph 3.:
  805         1. If the filing is made at least 90 days before the
  806  proposed effective date and the filing is not implemented during
  807  the office’s review of the filing and any proceeding and
  808  judicial review, then such filing is shall be considered a “file
  809  and use” filing. In such case, the office shall finalize its
  810  review by issuance of a notice of intent to approve or a notice
  811  of intent to disapprove within 90 days after receipt of the
  812  filing. The notice of intent to approve and the notice of intent
  813  to disapprove constitute agency action for purposes of the
  814  Administrative Procedure Act. Requests for supporting
  815  information, requests for mathematical or mechanical
  816  corrections, or notification to the insurer by the office of its
  817  preliminary findings does shall not toll the 90-day period
  818  during any such proceedings and subsequent judicial review. The
  819  rate shall be deemed approved if the office does not issue a
  820  notice of intent to approve or a notice of intent to disapprove
  821  within 90 days after receipt of the filing.
  822         2. If the filing is not made in accordance with the
  823  provisions of subparagraph 1., such filing must shall be made as
  824  soon as practicable, but within no later than 30 days after the
  825  effective date, and is shall be considered a “use and file”
  826  filing. An insurer making a “use and file” filing is potentially
  827  subject to an order by the office to return to policyholders
  828  those portions of rates found to be excessive, as provided in
  829  paragraph (h).
  830         3. For all property insurance filings made or submitted
  831  after January 25, 2007, but before May 1, 2012 December 31,
  832  2010, an insurer seeking a rate that is greater than the rate
  833  most recently approved by the office shall make a “file and use”
  834  filing. For purposes of this subparagraph, motor vehicle
  835  collision and comprehensive coverages are not considered to be
  836  property coverages.
  837         (b) Upon receiving a rate filing, the office shall review
  838  the rate filing to determine if a rate is excessive, inadequate,
  839  or unfairly discriminatory. In making that determination, the
  840  office shall, in accordance with generally accepted and
  841  reasonable actuarial techniques, consider the following factors:
  842         1. Past and prospective loss experience within and without
  843  this state.
  844         2. Past and prospective expenses.
  845         3. The degree of competition among insurers for the risk
  846  insured.
  847         4. Investment income reasonably expected by the insurer,
  848  consistent with the insurer’s investment practices, from
  849  investable premiums anticipated in the filing, plus any other
  850  expected income from currently invested assets representing the
  851  amount expected on unearned premium reserves and loss reserves.
  852  The commission may adopt rules using reasonable techniques of
  853  actuarial science and economics to specify the manner in which
  854  insurers shall calculate investment income attributable to such
  855  classes of insurance written in this state and the manner in
  856  which such investment income is shall be used to calculate
  857  insurance rates. Such manner must shall contemplate allowances
  858  for an underwriting profit factor and full consideration of
  859  investment income which produce a reasonable rate of return;
  860  however, investment income from invested surplus may not be
  861  considered.
  862         5. The reasonableness of the judgment reflected in the
  863  filing.
  864         6. Dividends, savings, or unabsorbed premium deposits
  865  allowed or returned to Florida policyholders, members, or
  866  subscribers.
  867         7. The adequacy of loss reserves.
  868         8. The cost of reinsurance. The office may shall not
  869  disapprove a rate as excessive solely due to the insurer having
  870  obtained catastrophic reinsurance to cover the insurer’s
  871  estimated 250-year probable maximum loss or any lower level of
  872  loss.
  873         9. Trend factors, including trends in actual losses per
  874  insured unit for the insurer making the filing.
  875         10. Conflagration and catastrophe hazards, if applicable.
  876         11. Projected hurricane losses, if applicable, which must
  877  be estimated using a model or method found to be acceptable or
  878  reliable by the Florida Commission on Hurricane Loss Projection
  879  Methodology, and as further provided in s. 627.0628.
  880         12. A reasonable margin for underwriting profit and
  881  contingencies.
  882         13. The cost of medical services, if applicable.
  883         14. Other relevant factors that affect which impact upon
  884  the frequency or severity of claims or upon expenses.
  885         (c) In the case of fire insurance rates, consideration must
  886  shall be given to the availability of water supplies and the
  887  experience of the fire insurance business during a period of not
  888  less than the most recent 5-year period for which such
  889  experience is available.
  890         (d) If conflagration or catastrophe hazards are considered
  891  given consideration by an insurer in its rates or rating plan,
  892  including surcharges and discounts, the insurer shall establish
  893  a reserve for that portion of the premium allocated to such
  894  hazard and shall maintain the premium in a catastrophe reserve.
  895  Any Removal of such premiums from the reserve for purposes other
  896  than paying claims associated with a catastrophe or purchasing
  897  reinsurance for catastrophes must be approved by shall be
  898  subject to approval of the office. Any ceding commission
  899  received by an insurer purchasing reinsurance for catastrophes
  900  must shall be placed in the catastrophe reserve.
  901         (e) After consideration of the rate factors provided in
  902  paragraphs (b), (c), and (d), the office may find a rate may be
  903  found by the office to be excessive, inadequate, or unfairly
  904  discriminatory based upon the following standards:
  905         1. Rates shall be deemed excessive if they are likely to
  906  produce a profit from Florida business which that is
  907  unreasonably high in relation to the risk involved in the class
  908  of business or if expenses are unreasonably high in relation to
  909  services rendered.
  910         2. Rates shall be deemed excessive if, among other things,
  911  the rate structure established by a stock insurance company
  912  provides for replenishment of surpluses from premiums, if when
  913  the replenishment is attributable to investment losses.
  914         3. Rates shall be deemed inadequate if they are clearly
  915  insufficient, together with the investment income attributable
  916  to them, to sustain projected losses and expenses in the class
  917  of business to which they apply.
  918         4. A rating plan, including discounts, credits, or
  919  surcharges, shall be deemed unfairly discriminatory if it fails
  920  to clearly and equitably reflect consideration of the
  921  policyholder’s participation in a risk management program
  922  adopted pursuant to s. 627.0625.
  923         5. A rate shall be deemed inadequate as to the premium
  924  charged to a risk or group of risks if discounts or credits are
  925  allowed which exceed a reasonable reflection of expense savings
  926  and reasonably expected loss experience from the risk or group
  927  of risks.
  928         6. A rate shall be deemed unfairly discriminatory as to a
  929  risk or group of risks if the application of premium discounts,
  930  credits, or surcharges among such risks does not bear a
  931  reasonable relationship to the expected loss and expense
  932  experience among the various risks.
  933         (f) In reviewing a rate filing, the office may require the
  934  insurer to provide, at the insurer’s expense, all information
  935  necessary to evaluate the condition of the company and the
  936  reasonableness of the filing according to the criteria
  937  enumerated in this section.
  938         (g) The office may at any time review a rate, rating
  939  schedule, rating manual, or rate change; the pertinent records
  940  of the insurer; and market conditions. If the office finds on a
  941  preliminary basis that a rate may be excessive, inadequate, or
  942  unfairly discriminatory, the office shall initiate proceedings
  943  to disapprove the rate and shall so notify the insurer. However,
  944  the office may not disapprove as excessive any rate for which it
  945  has given final approval or which has been deemed approved for a
  946  period of 1 year after the effective date of the filing unless
  947  the office finds that a material misrepresentation or material
  948  error was made by the insurer or was contained in the filing.
  949  Upon being so notified, the insurer or rating organization
  950  shall, within 60 days, file with the office all information that
  951  which, in the belief of the insurer or organization, proves the
  952  reasonableness, adequacy, and fairness of the rate or rate
  953  change. The office shall issue a notice of intent to approve or
  954  a notice of intent to disapprove pursuant to the procedures of
  955  paragraph (a) within 90 days after receipt of the insurer’s
  956  initial response. In such instances and in any administrative
  957  proceeding relating to the legality of the rate, the insurer or
  958  rating organization shall carry the burden of proof by a
  959  preponderance of the evidence to show that the rate is not
  960  excessive, inadequate, or unfairly discriminatory. After the
  961  office notifies an insurer that a rate may be excessive,
  962  inadequate, or unfairly discriminatory, unless the office
  963  withdraws the notification, the insurer may shall not alter the
  964  rate except to conform to with the office’s notice until the
  965  earlier of 120 days after the date the notification was provided
  966  or 180 days after the date of implementing the implementation of
  967  the rate. The office may, subject to chapter 120, may disapprove
  968  without the 60-day notification any rate increase filed by an
  969  insurer within the prohibited time period or during the time
  970  that the legality of the increased rate is being contested.
  971         (h) If In the event the office finds that a rate or rate
  972  change is excessive, inadequate, or unfairly discriminatory, the
  973  office shall issue an order of disapproval specifying that a new
  974  rate or rate schedule, which responds to the findings of the
  975  office, be filed by the insurer. The office shall further order,
  976  for any “use and file” filing made in accordance with
  977  subparagraph (a)2., that premiums charged each policyholder
  978  constituting the portion of the rate above that which was
  979  actuarially justified be returned to the such policyholder in
  980  the form of a credit or refund. If the office finds that an
  981  insurer’s rate or rate change is inadequate, the new rate or
  982  rate schedule filed with the office in response to such a
  983  finding is shall be applicable only to new or renewal business
  984  of the insurer written on or after the effective date of the
  985  responsive filing.
  986         (i) Except as otherwise specifically provided in this
  987  chapter, for property and casualty insurance the office may
  988  shall not directly or indirectly:
  989         1. Prohibit any insurer, including any residual market plan
  990  or joint underwriting association, from paying acquisition costs
  991  based on the full amount of premium, as defined in s. 627.403,
  992  applicable to any policy, or prohibit any such insurer from
  993  including the full amount of acquisition costs in a rate filing;
  994  or.
  995         2. Impede, abridge, or otherwise compromise an insurer’s
  996  right to acquire policyholders, advertise, or appoint agents,
  997  including the calculation, manner, or amount of such agent
  998  commissions, if any.
  999         (j) With respect to residential property insurance rate
 1000  filings, the rate filing must account for mitigation measures
 1001  undertaken by policyholders to reduce hurricane losses.
 1002         (k)1. A residential property An insurer may make a separate
 1003  filing limited solely to an adjustment of its rates for
 1004  reinsurance, the cost of financing products used as a
 1005  replacement for reinsurance, or financing costs incurred in the
 1006  purchase of reinsurance, or financing products to replace or
 1007  finance the payment of the amount covered by the Temporary
 1008  Increase in Coverage Limits (TICL) portion of the Florida
 1009  Hurricane Catastrophe Fund including replacement reinsurance for
 1010  the TICL reductions made pursuant to s. 215.555(17)(e); the
 1011  actual cost paid due to the application of the TICL premium
 1012  factor pursuant to s. 215.555(17)(f); and the actual cost paid
 1013  due to the application of the cash build-up factor pursuant to
 1014  s. 215.555(5)(b) if the insurer:
 1015         a. Elects to purchase financing products such as a
 1016  liquidity instrument or line of credit, in which case the cost
 1017  included in the filing for the liquidity instrument or line of
 1018  credit may not result in a premium increase exceeding 3 percent
 1019  for any individual policyholder. All costs contained in the
 1020  filing may not result in an overall premium increase of more
 1021  than 15 10 percent for any individual policyholder.
 1022         b. Includes in the filing a copy of all of its reinsurance,
 1023  liquidity instrument, or line of credit contracts; proof of the
 1024  billing or payment for the contracts; and the calculation upon
 1025  which the proposed rate change is based demonstrating
 1026  demonstrates that the costs meet the criteria of this section
 1027  and are not loaded for expenses or profit for the insurer making
 1028  the filing.
 1029         c. Includes no other changes to its rates in the filing.
 1030         d. Has not implemented a rate increase within the 6 months
 1031  immediately preceding the filing.
 1032         e. Does not file for a rate increase under any other
 1033  paragraph within 6 months after making a filing under this
 1034  paragraph.
 1035         2.f.An insurer that purchases reinsurance or financing
 1036  products from an affiliated company may make a separate filing
 1037  in compliance with this paragraph does so only if the costs for
 1038  such reinsurance or financing products are charged at or below
 1039  charges made for comparable coverage by nonaffiliated reinsurers
 1040  or financial entities making such coverage or financing products
 1041  available in this state.
 1042         3.2. An insurer may only make only one filing per in any
 1043  12-month period under this paragraph.
 1044         4.3. An insurer that elects to implement a rate change
 1045  under this paragraph must file its rate filing with the office
 1046  at least 45 days before the effective date of the rate change.
 1047  After an insurer submits a complete filing that meets all of the
 1048  requirements of this paragraph, the office has 45 days after the
 1049  date of the filing to review the rate filing and determine if
 1050  the rate is excessive, inadequate, or unfairly discriminatory.
 1051  
 1052  The provisions of this subsection do shall not apply to workers’
 1053  compensation, and employer’s liability insurance, and to motor
 1054  vehicle insurance.
 1055         (3)(a) For individual risks that are not rated in
 1056  accordance with the insurer’s rates, rating schedules, rating
 1057  manuals, and underwriting rules filed with the office and that
 1058  which have been submitted to the insurer for individual rating,
 1059  the insurer must maintain documentation on each risk subject to
 1060  individual risk rating. The documentation must identify the
 1061  named insured and specify the characteristics and classification
 1062  of the risk supporting the reason for the risk being
 1063  individually risk rated, including any modifications to existing
 1064  approved forms to be used on the risk. The insurer must maintain
 1065  these records for a period of at least 5 years after the
 1066  effective date of the policy.
 1067         (b) Individual risk rates and modifications to existing
 1068  approved forms are not subject to this part or part II, except
 1069  for paragraph (a) and ss. 627.402, 627.403, 627.4035, 627.404,
 1070  627.405, 627.406, 627.407, 627.4085, 627.409, 627.4132,
 1071  627.4133, 627.415, 627.416, 627.417, 627.419, 627.425, 627.426,
 1072  627.4265, 627.427, and 627.428, but are subject to all other
 1073  applicable provisions of this code and rules adopted thereunder.
 1074         (c) This subsection does not apply to private passenger
 1075  motor vehicle insurance.
 1076         (d)1. The following categories or kinds of insurance and
 1077  types of commercial lines risks are not subject to paragraph
 1078  (2)(a) or paragraph (2)(f):
 1079         a. Excess or umbrella.
 1080         b. Surety and fidelity.
 1081         c. Boiler and machinery and leakage and fire extinguishing
 1082  equipment.
 1083         d. Errors and omissions.
 1084         e. Directors and officers, employment practices, and
 1085  management liability.
 1086         f. Intellectual property and patent infringement liability.
 1087         g. Advertising injury and Internet liability insurance.
 1088         h. Property risks rated under a highly protected risks
 1089  rating plan.
 1090         i. Any other commercial lines categories or kinds of
 1091  insurance or types of commercial lines risks that the office
 1092  determines should not be subject to paragraph (2)(a) or
 1093  paragraph (2)(f) because of the existence of a competitive
 1094  market for such insurance, similarity of such insurance to other
 1095  categories or kinds of insurance not subject to paragraph (2)(a)
 1096  or paragraph (2)(f), or to improve the general operational
 1097  efficiency of the office.
 1098         2. Insurers or rating organizations shall establish and use
 1099  rates, rating schedules, or rating manuals to allow the insurer
 1100  a reasonable rate of return on insurance and risks described in
 1101  subparagraph 1. which are written in this state.
 1102         3. An insurer must notify the office of any changes to
 1103  rates for insurance and risks described in subparagraph 1.
 1104  within no later than 30 days after the effective date of the
 1105  change. The notice must include the name of the insurer, the
 1106  type or kind of insurance subject to rate change, total premium
 1107  written during the immediately preceding year by the insurer for
 1108  the type or kind of insurance subject to the rate change, and
 1109  the average statewide percentage change in rates. Underwriting
 1110  files, premiums, losses, and expense statistics with regard to
 1111  such insurance and risks described in subparagraph 1. written by
 1112  an insurer must shall be maintained by the insurer and subject
 1113  to examination by the office. Upon examination, the office
 1114  shall, in accordance with generally accepted and reasonable
 1115  actuarial techniques, shall consider the rate factors in
 1116  paragraphs (2)(b), (c), and (d) and the standards in paragraph
 1117  (2)(e) to determine if the rate is excessive, inadequate, or
 1118  unfairly discriminatory.
 1119         4. A rating organization must notify the office of any
 1120  changes to loss cost for insurance and risks described in
 1121  subparagraph 1. within no later than 30 days after the effective
 1122  date of the change. The notice must include the name of the
 1123  rating organization, the type or kind of insurance subject to a
 1124  loss cost change, loss costs during the immediately preceding
 1125  year for the type or kind of insurance subject to the loss cost
 1126  change, and the average statewide percentage change in loss
 1127  cost. Loss and exposure statistics with regard to risks
 1128  applicable to loss costs for a rating organization not subject
 1129  to paragraph (2)(a) or paragraph (2)(f) must shall be maintained
 1130  by the rating organization and are subject to examination by the
 1131  office. Upon examination, the office shall, in accordance with
 1132  generally accepted and reasonable actuarial techniques, shall
 1133  consider the rate factors in paragraphs (2)(b)-(d) and the
 1134  standards in paragraph (2)(e) to determine if the rate is
 1135  excessive, inadequate, or unfairly discriminatory.
 1136         5. In reviewing a rate, the office may require the insurer
 1137  to provide, at the insurer’s expense, all information necessary
 1138  to evaluate the condition of the company and the reasonableness
 1139  of the rate according to the applicable criteria described in
 1140  this section.
 1141         (4) The establishment of any rate, rating classification,
 1142  rating plan or schedule, or variation thereof in violation of
 1143  part IX of chapter 626 is also in violation of this section. In
 1144  order to enhance the ability of consumers to compare premiums
 1145  and to increase the accuracy and usefulness of rate-comparison
 1146  information provided by the office to the public, the office
 1147  shall develop a proposed standard rating territory plan to be
 1148  used by all authorized property and casualty insurers for
 1149  residential property insurance. In adopting the proposed plan,
 1150  the office may consider geographical characteristics relevant to
 1151  risk, county lines, major roadways, existing rating territories
 1152  used by a significant segment of the market, and other relevant
 1153  factors. Such plan shall be submitted to the President of the
 1154  Senate and the Speaker of the House of Representatives by
 1155  January 15, 2006. The plan may not be implemented unless
 1156  authorized by further act of the Legislature.
 1157         (5) With respect to a rate filing involving coverage of the
 1158  type for which the insurer is required to pay a reimbursement
 1159  premium to the Florida Hurricane Catastrophe Fund, the insurer
 1160  may fully recoup in its property insurance premiums any
 1161  reimbursement premiums paid to the Florida Hurricane Catastrophe
 1162  fund, together with reasonable costs of other reinsurance;
 1163  however, but except as otherwise provided in this section, the
 1164  insurer may not recoup reinsurance costs that duplicate coverage
 1165  provided by the Florida Hurricane Catastrophe fund. An insurer
 1166  may not recoup more than 1 year of reimbursement premium at a
 1167  time. Any under-recoupment from the prior year may be added to
 1168  the following year’s reimbursement premium, and any over
 1169  recoupment must shall be subtracted from the following year’s
 1170  reimbursement premium.
 1171         (6)(a) If an insurer requests an administrative hearing
 1172  pursuant to s. 120.57 related to a rate filing under this
 1173  section, the director of the Division of Administrative Hearings
 1174  shall expedite the hearing and assign an administrative law
 1175  judge who shall commence the hearing within 30 days after the
 1176  receipt of the formal request and shall enter a recommended
 1177  order within 30 days after the hearing or within 30 days after
 1178  receipt of the hearing transcript by the administrative law
 1179  judge, whichever is later. Each party shall have be allowed 10
 1180  days in which to submit written exceptions to the recommended
 1181  order. The office shall enter a final order within 30 days after
 1182  the entry of the recommended order. The provisions of this
 1183  paragraph may be waived upon stipulation of all parties.
 1184         (b) Upon entry of a final order, the insurer may request a
 1185  expedited appellate review pursuant to the Florida Rules of
 1186  Appellate Procedure. It is the intent of the Legislature that
 1187  the First District Court of Appeal grant an insurer’s request
 1188  for an expedited appellate review.
 1189         (7)(a) The provisions of this subsection apply only with
 1190  respect to rates for medical malpractice insurance and shall
 1191  control to the extent of any conflict with other provisions of
 1192  this section.
 1193         (a)(b) Any portion of a judgment entered or settlement paid
 1194  as a result of a statutory or common-law bad faith action and
 1195  any portion of a judgment entered which awards punitive damages
 1196  against an insurer may not be included in the insurer’s rate
 1197  base, and shall not be used to justify a rate or rate change.
 1198  Any common-law bad faith action identified as such, any portion
 1199  of a settlement entered as a result of a statutory or common-law
 1200  action, or any portion of a settlement wherein an insurer agrees
 1201  to pay specific punitive damages may not be used to justify a
 1202  rate or rate change. The portion of the taxable costs and
 1203  attorney’s fees which is identified as being related to the bad
 1204  faith and punitive damages in these judgments and settlements
 1205  may not be included in the insurer’s rate base and used may not
 1206  be utilized to justify a rate or rate change.
 1207         (b)(c) Upon reviewing a rate filing and determining whether
 1208  the rate is excessive, inadequate, or unfairly discriminatory,
 1209  the office shall consider, in accordance with generally accepted
 1210  and reasonable actuarial techniques, past and present
 1211  prospective loss experience, either using loss experience solely
 1212  for this state or giving greater credibility to this state’s
 1213  loss data after applying actuarially sound methods of assigning
 1214  credibility to such data.
 1215         (c)(d) Rates shall be deemed excessive if, among other
 1216  standards established by this section, the rate structure
 1217  provides for replenishment of reserves or surpluses from
 1218  premiums when the replenishment is attributable to investment
 1219  losses.
 1220         (d)(e) The insurer must apply a discount or surcharge based
 1221  on the health care provider’s loss experience or shall establish
 1222  an alternative method giving due consideration to the provider’s
 1223  loss experience. The insurer must include in the filing a copy
 1224  of the surcharge or discount schedule or a description of the
 1225  alternative method used, and must provide a copy of such
 1226  schedule or description, as approved by the office, to
 1227  policyholders at the time of renewal and to prospective
 1228  policyholders at the time of application for coverage.
 1229         (e)(f) Each medical malpractice insurer must make a rate
 1230  filing under this section, sworn to by at least two executive
 1231  officers of the insurer, at least once each calendar year.
 1232         (8)(a)1. No later than 60 days after the effective date of
 1233  medical malpractice legislation enacted during the 2003 Special
 1234  Session D of the Florida Legislature, the office shall calculate
 1235  a presumed factor that reflects the impact that the changes
 1236  contained in such legislation will have on rates for medical
 1237  malpractice insurance and shall issue a notice informing all
 1238  insurers writing medical malpractice coverage of such presumed
 1239  factor. In determining the presumed factor, the office shall use
 1240  generally accepted actuarial techniques and standards provided
 1241  in this section in determining the expected impact on losses,
 1242  expenses, and investment income of the insurer. To the extent
 1243  that the operation of a provision of medical malpractice
 1244  legislation enacted during the 2003 Special Session D of the
 1245  Florida Legislature is stayed pending a constitutional
 1246  challenge, the impact of that provision shall not be included in
 1247  the calculation of a presumed factor under this subparagraph.
 1248         2. No later than 60 days after the office issues its notice
 1249  of the presumed rate change factor under subparagraph 1., each
 1250  insurer writing medical malpractice coverage in this state shall
 1251  submit to the office a rate filing for medical malpractice
 1252  insurance, which will take effect no later than January 1, 2004,
 1253  and apply retroactively to policies issued or renewed on or
 1254  after the effective date of medical malpractice legislation
 1255  enacted during the 2003 Special Session D of the Florida
 1256  Legislature. Except as authorized under paragraph (b), the
 1257  filing shall reflect an overall rate reduction at least as great
 1258  as the presumed factor determined under subparagraph 1. With
 1259  respect to policies issued on or after the effective date of
 1260  such legislation and prior to the effective date of the rate
 1261  filing required by this subsection, the office shall order the
 1262  insurer to make a refund of the amount that was charged in
 1263  excess of the rate that is approved.
 1264         (b) Any insurer or rating organization that contends that
 1265  the rate provided for in paragraph (a) is excessive, inadequate,
 1266  or unfairly discriminatory shall separately state in its filing
 1267  the rate it contends is appropriate and shall state with
 1268  specificity the factors or data that it contends should be
 1269  considered in order to produce such appropriate rate. The
 1270  insurer or rating organization shall be permitted to use all of
 1271  the generally accepted actuarial techniques provided in this
 1272  section in making any filing pursuant to this subsection. The
 1273  office shall review each such exception and approve or
 1274  disapprove it prior to use. It shall be the insurer’s burden to
 1275  actuarially justify any deviations from the rates required to be
 1276  filed under paragraph (a). The insurer making a filing under
 1277  this paragraph shall include in the filing the expected impact
 1278  of medical malpractice legislation enacted during the 2003
 1279  Special Session D of the Florida Legislature on losses,
 1280  expenses, and rates.
 1281         (c) If any provision of medical malpractice legislation
 1282  enacted during the 2003 Special Session D of the Florida
 1283  Legislature is held invalid by a court of competent
 1284  jurisdiction, the office shall permit an adjustment of all
 1285  medical malpractice rates filed under this section to reflect
 1286  the impact of such holding on such rates so as to ensure that
 1287  the rates are not excessive, inadequate, or unfairly
 1288  discriminatory.
 1289         (d) Rates approved on or before July 1, 2003, for medical
 1290  malpractice insurance shall remain in effect until the effective
 1291  date of a new rate filing approved under this subsection.
 1292         (e) The calculation and notice by the office of the
 1293  presumed factor pursuant to paragraph (a) is not an order or
 1294  rule that is subject to chapter 120. If the office enters into a
 1295  contract with an independent consultant to assist the office in
 1296  calculating the presumed factor, such contract shall not be
 1297  subject to the competitive solicitation requirements of s.
 1298  287.057.
 1299         (8)(9)(a) The chief executive officer or chief financial
 1300  officer of a property insurer and the chief actuary of a
 1301  property insurer must certify under oath and subject to the
 1302  penalty of perjury, on a form approved by the commission, the
 1303  following information, which must accompany a rate filing:
 1304         1. The signing officer and actuary have reviewed the rate
 1305  filing;
 1306         2. Based on the signing officer’s and actuary’s knowledge,
 1307  the rate filing does not contain any untrue statement of a
 1308  material fact or omit to state a material fact necessary in
 1309  order to make the statements made, in light of the circumstances
 1310  under which such statements were made, not misleading;
 1311         3. Based on the signing officer’s and actuary’s knowledge,
 1312  the information and other factors described in paragraph (2)(b),
 1313  including, but not limited to, investment income, fairly present
 1314  in all material respects the basis of the rate filing for the
 1315  periods presented in the filing; and
 1316         4. Based on the signing officer’s and actuary’s knowledge,
 1317  the rate filing reflects all premium savings that are reasonably
 1318  expected to result from legislative enactments and are in
 1319  accordance with generally accepted and reasonable actuarial
 1320  techniques.
 1321         (b) A signing officer or actuary who knowingly makes making
 1322  a false certification under this subsection commits a violation
 1323  of s. 626.9541(1)(e) and is subject to the penalties under s.
 1324  626.9521.
 1325         (c) Failure to provide such certification by the officer
 1326  and actuary shall result in the rate filing being disapproved
 1327  without prejudice to be refiled.
 1328         (d) The certification made pursuant to paragraph (a) is not
 1329  rendered false if, after making the subject rate filing, the
 1330  insurer provides the office with additional or supplementary
 1331  information pursuant to a formal or informal request from the
 1332  office. However, the actuary who is primarily responsible for
 1333  preparing and submitting such information must certify the
 1334  information in accordance with the certification required under
 1335  paragraph (a) and the penalties in paragraph (b), except that
 1336  the chief executive officer, chief financial officer, or chief
 1337  actuary need not certify the additional or supplementary
 1338  information.
 1339         (e)(d) The commission may adopt rules and forms pursuant to
 1340  ss. 120.536(1) and 120.54 to administer this subsection.
 1341         (9)(10) The burden is on the office to establish that rates
 1342  are excessive for personal lines residential coverage with a
 1343  dwelling replacement cost of $1 million or more or for a single
 1344  condominium unit with a combined dwelling and contents
 1345  replacement cost of $1 million or more. Upon request of the
 1346  office, the insurer shall provide to the office such loss and
 1347  expense information as the office reasonably needs to meet this
 1348  burden.
 1349         (10)(11) Any interest paid pursuant to s. 627.70131(5) may
 1350  not be included in the insurer’s rate base and may not be used
 1351  to justify a rate or rate change.
 1352         Section 13. Paragraph (b) of subsection (3) of section
 1353  627.06281, Florida Statutes, is amended to read:
 1354         627.06281 Public hurricane loss projection model; reporting
 1355  of data by insurers.—
 1356         (3)
 1357         (b) The fees charged for private sector access and use of
 1358  the model shall be the reasonable costs associated with the
 1359  operation and maintenance of the model by the office. Such fees
 1360  do not apply to access and use of the model by the office. By
 1361  January 1, 2009, The office shall establish by rule a fee
 1362  schedule for access to and the use of the model. The fee
 1363  schedule must be reasonably calculated to cover only the actual
 1364  costs of providing access to and the use of the model.
 1365         Section 14. Subsections (1) and (5) of section 627.0629,
 1366  Florida Statutes, are amended to read:
 1367         627.0629 Residential property insurance; rate filings.—
 1368         (1)(a) It is the intent of the Legislature that insurers
 1369  must provide savings to consumers who install or implement
 1370  windstorm damage mitigation techniques, alterations, or
 1371  solutions to their properties to prevent windstorm losses. A
 1372  rate filing for residential property insurance must include
 1373  actuarially reasonable discounts, credits, or other rate
 1374  differentials, or appropriate reductions in deductibles, for
 1375  properties on which fixtures or construction techniques
 1376  demonstrated to reduce the amount of loss in a windstorm have
 1377  been installed or implemented. The fixtures or construction
 1378  techniques must shall include, but are not be limited to,
 1379  fixtures or construction techniques that which enhance roof
 1380  strength, roof covering performance, roof-to-wall strength,
 1381  wall-to-floor-to-foundation strength, opening protection, and
 1382  window, door, and skylight strength. Credits, discounts, or
 1383  other rate differentials, or appropriate reductions in
 1384  deductibles, for fixtures and construction techniques that which
 1385  meet the minimum requirements of the Florida Building Code must
 1386  be included in the rate filing. All insurance companies must
 1387  make a rate filing which includes the credits, discounts, or
 1388  other rate differentials or reductions in deductibles by
 1389  February 28, 2003. By July 1, 2007, the office shall reevaluate
 1390  the discounts, credits, other rate differentials, and
 1391  appropriate reductions in deductibles for fixtures and
 1392  construction techniques that meet the minimum requirements of
 1393  the Florida Building Code, based upon actual experience or any
 1394  other loss relativity studies available to the office. The
 1395  office shall determine the discounts, credits, other rate
 1396  differentials, and appropriate reductions in deductibles that
 1397  reflect the full actuarial value of such revaluation, which may
 1398  be used by insurers in rate filings.
 1399         (b) By February 1, 2011, the Office of Insurance
 1400  Regulation, in consultation with the Department of Financial
 1401  Services and the Department of Community Affairs, shall develop
 1402  and make publicly available a proposed method for insurers to
 1403  establish discounts, credits, or other rate differentials for
 1404  hurricane mitigation measures which directly correlate to the
 1405  numerical rating assigned to a structure pursuant to the uniform
 1406  home grading scale adopted by the Financial Services Commission
 1407  pursuant to s. 215.55865, including any proposed changes to the
 1408  uniform home grading scale. By October 1, 2011, the commission
 1409  shall adopt rules requiring insurers to make rate filings for
 1410  residential property insurance which revise insurers’ discounts,
 1411  credits, or other rate differentials for hurricane mitigation
 1412  measures so that such rate differentials correlate directly to
 1413  the uniform home grading scale. The rules may include such
 1414  changes to the uniform home grading scale as the commission
 1415  determines are necessary, and may specify the minimum required
 1416  discounts, credits, or other rate differentials. Such rate
 1417  differentials must be consistent with generally accepted
 1418  actuarial principles and wind-loss mitigation studies. The rules
 1419  shall allow a period of at least 2 years after the effective
 1420  date of the revised mitigation discounts, credits, or other rate
 1421  differentials for a property owner to obtain an inspection or
 1422  otherwise qualify for the revised credit, during which time the
 1423  insurer shall continue to apply the mitigation credit that was
 1424  applied immediately prior to the effective date of the revised
 1425  credit. Discounts, credits, and other rate differentials
 1426  established for rate filings under this paragraph shall
 1427  supersede, after adoption, the discounts, credits, and other
 1428  rate differentials included in rate filings under paragraph (a).
 1429         (5) In order to provide an appropriate transition period,
 1430  an insurer may, in its sole discretion, implement an approved
 1431  rate filing for residential property insurance over a period of
 1432  years. Such An insurer electing to phase in its rate filing must
 1433  provide an informational notice to the office setting out its
 1434  schedule for implementation of the phased-in rate filing. The An
 1435  insurer may include in its rate the actual cost of private
 1436  market reinsurance that corresponds to available coverage of the
 1437  Temporary Increase in Coverage Limits, TICL, from the Florida
 1438  Hurricane Catastrophe Fund. The insurer may also include the
 1439  cost of reinsurance to replace the TICL reduction implemented
 1440  pursuant to s. 215.555(17)(d)9. However, this cost for
 1441  reinsurance may not include any expense or profit load or result
 1442  in a total annual base rate increase in excess of 10 percent.
 1443         Section 15. Paragraphs (a), (b), (c), (d), (n), (v), and
 1444  (y) of subsection (6) of section 627.351, Florida Statutes, are
 1445  amended to read:
 1446         627.351 Insurance risk apportionment plans.—
 1447         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 1448         (a)1.It is The public purpose of this subsection is to
 1449  ensure that there is the existence of an orderly market for
 1450  property insurance for residents Floridians and Florida
 1451  businesses of this state.
 1452         1. The Legislature finds that private insurers are
 1453  unwilling or unable to provide affordable property insurance
 1454  coverage in this state to the extent sought and needed. The
 1455  absence of affordable property insurance threatens the public
 1456  health, safety, and welfare and likewise threatens the economic
 1457  health of the state. The state therefore has a compelling public
 1458  interest and a public purpose to assist in assuring that
 1459  property in the state is insured and that it is insured at
 1460  affordable rates so as to facilitate the remediation,
 1461  reconstruction, and replacement of damaged or destroyed property
 1462  in order to reduce or avoid the negative effects otherwise
 1463  resulting to the public health, safety, and welfare, to the
 1464  economy of the state, and to the revenues of the state and local
 1465  governments which are needed to provide for the public welfare.
 1466  It is necessary, therefore, to provide affordable property
 1467  insurance to applicants who are in good faith entitled to
 1468  procure insurance through the voluntary market but are unable to
 1469  do so. The Legislature intends, therefore, by this subsection
 1470  that affordable property insurance be provided and that it
 1471  continue to be provided, as long as necessary, through Citizens
 1472  Property Insurance Corporation, a government entity that is an
 1473  integral part of the state, and that is not a private insurance
 1474  company. To that end, the Citizens Property Insurance
 1475  corporation shall strive to increase the availability of
 1476  affordable property insurance in this state, while achieving
 1477  efficiencies and economies, and while providing service to
 1478  policyholders, applicants, and agents which is no less than the
 1479  quality generally provided in the voluntary market, for the
 1480  achievement of the foregoing public purposes. Because it is
 1481  essential for this government entity to have the maximum
 1482  financial resources to pay claims following a catastrophic
 1483  hurricane, it is the intent of the Legislature that the Citizens
 1484  Property Insurance corporation continue to be an integral part
 1485  of the state and that the income of the corporation be exempt
 1486  from federal income taxation and that interest on the debt
 1487  obligations issued by the corporation be exempt from federal
 1488  income taxation.
 1489         2. The Residential Property and Casualty Joint Underwriting
 1490  Association originally created by this statute shall be known,
 1491  as of July 1, 2002, as the Citizens Property Insurance
 1492  Corporation. The corporation shall provide insurance for
 1493  residential and commercial property, for applicants who are in
 1494  good faith entitled, but, in good faith, are unable, to procure
 1495  insurance through the voluntary market. The corporation shall
 1496  operate pursuant to a plan of operation approved by order of the
 1497  Financial Services Commission. The plan is subject to continuous
 1498  review by the commission. The commission may, by order, withdraw
 1499  approval of all or part of a plan if the commission determines
 1500  that conditions have changed since approval was granted and that
 1501  the purposes of the plan require changes in the plan. The
 1502  corporation shall continue to operate pursuant to the plan of
 1503  operation approved by the Office of Insurance Regulation until
 1504  October 1, 2006. For the purposes of this subsection,
 1505  residential coverage includes both personal lines residential
 1506  coverage, which consists of the type of coverage provided by
 1507  homeowner’s, mobile home owner’s, dwelling, tenant’s,
 1508  condominium unit owner’s, and similar policies;, and commercial
 1509  lines residential coverage, which consists of the type of
 1510  coverage provided by condominium association, apartment
 1511  building, and similar policies.
 1512         3. Effective January 1, 2009, a personal lines residential
 1513  structure that has a dwelling replacement cost of $2 million or
 1514  more, or a single condominium unit that has a combined dwelling
 1515  and contents content replacement cost of $2 million or more is
 1516  not eligible for coverage by the corporation. Such dwellings
 1517  insured by the corporation on December 31, 2008, may continue to
 1518  be covered by the corporation until the end of the policy term.
 1519  However, such dwellings that are insured by the corporation and
 1520  become ineligible for coverage due to the provisions of this
 1521  subparagraph may reapply and obtain coverage if the property
 1522  owner provides the corporation with a sworn affidavit from one
 1523  or more insurance agents, on a form provided by the corporation,
 1524  stating that the agents have made their best efforts to obtain
 1525  coverage and that the property has been rejected for coverage by
 1526  at least one authorized insurer and at least three surplus lines
 1527  insurers. If such conditions are met, the dwelling may be
 1528  insured by the corporation for up to 3 years, after which time
 1529  the dwelling is ineligible for coverage. The office shall
 1530  approve the method used by the corporation for valuing the
 1531  dwelling replacement cost for the purposes of this subparagraph.
 1532  If a policyholder is insured by the corporation prior to being
 1533  determined to be ineligible pursuant to this subparagraph and
 1534  such policyholder files a lawsuit challenging the determination,
 1535  the policyholder may remain insured by the corporation until the
 1536  conclusion of the litigation.
 1537         4. It is the intent of the Legislature that policyholders,
 1538  applicants, and agents of the corporation receive service and
 1539  treatment of the highest possible level but never less than that
 1540  generally provided in the voluntary market. It is also is
 1541  intended that the corporation be held to service standards no
 1542  less than those applied to insurers in the voluntary market by
 1543  the office with respect to responsiveness, timeliness, customer
 1544  courtesy, and overall dealings with policyholders, applicants,
 1545  or agents of the corporation.
 1546         5. Effective January 1, 2009, a personal lines residential
 1547  structure that is located in the “wind-borne debris region,” as
 1548  defined in s. 1609.2, International Building Code (2006), and
 1549  that has an insured value on the structure of $750,000 or more
 1550  is not eligible for coverage by the corporation unless the
 1551  structure has opening protections as required under the Florida
 1552  Building Code for a newly constructed residential structure in
 1553  that area. A residential structure shall be deemed to comply
 1554  with the requirements of this subparagraph if it has shutters or
 1555  opening protections on all openings and if such opening
 1556  protections complied with the Florida Building Code at the time
 1557  they were installed.
 1558         6. For any claim filed under any policy of the corporation,
 1559  a public adjuster may not charge, agree to, or accept any
 1560  compensation, payment, commission, fee, or other thing of value
 1561  greater than 10 percent of the additional amount actually paid
 1562  over the amount that was originally offered by the corporation
 1563  for any one claim.
 1564         (b)1. All insurers authorized to write one or more subject
 1565  lines of business in this state are subject to assessment by the
 1566  corporation and, for the purposes of this subsection, are
 1567  referred to collectively as “assessable insurers.” Insurers
 1568  writing one or more subject lines of business in this state
 1569  pursuant to part VIII of chapter 626 are not assessable
 1570  insurers, but insureds who procure one or more subject lines of
 1571  business in this state pursuant to part VIII of chapter 626 are
 1572  subject to assessment by the corporation and are referred to
 1573  collectively as “assessable insureds.” An authorized insurer’s
 1574  assessment liability begins shall begin on the first day of the
 1575  calendar year following the year in which the insurer was issued
 1576  a certificate of authority to transact insurance for subject
 1577  lines of business in this state and terminates shall terminate 1
 1578  year after the end of the first calendar year during which the
 1579  insurer no longer holds a certificate of authority to transact
 1580  insurance for subject lines of business in this state.
 1581         2.a. All revenues, assets, liabilities, losses, and
 1582  expenses of the corporation shall be divided into three separate
 1583  accounts as follows:
 1584         (I) A personal lines account for personal residential
 1585  policies issued by the corporation, or issued by the Residential
 1586  Property and Casualty Joint Underwriting Association and renewed
 1587  by the corporation, which provides that provide comprehensive,
 1588  multiperil coverage on risks that are not located in areas
 1589  eligible for coverage by in the Florida Windstorm Underwriting
 1590  Association as those areas were defined on January 1, 2002, and
 1591  for such policies that do not provide coverage for the peril of
 1592  wind on risks that are located in such areas;
 1593         (II) A commercial lines account for commercial residential
 1594  and commercial nonresidential policies issued by the
 1595  corporation, or issued by the Residential Property and Casualty
 1596  Joint Underwriting Association and renewed by the corporation,
 1597  which provides that provide coverage for basic property perils
 1598  on risks that are not located in areas eligible for coverage by
 1599  in the Florida Windstorm Underwriting Association as those areas
 1600  were defined on January 1, 2002, and for such policies that do
 1601  not provide coverage for the peril of wind on risks that are
 1602  located in such areas; and
 1603         (III) A coastal high-risk account for personal residential
 1604  policies and commercial residential and commercial
 1605  nonresidential property policies issued by the corporation, or
 1606  transferred to the corporation, which provides that provide
 1607  coverage for the peril of wind on risks that are located in
 1608  areas eligible for coverage by in the Florida Windstorm
 1609  Underwriting Association as those areas were defined on January
 1610  1, 2002. The corporation may offer policies that provide
 1611  multiperil coverage and the corporation shall continue to offer
 1612  policies that provide coverage only for the peril of wind for
 1613  risks located in areas eligible for coverage in the coastal
 1614  high-risk account. In issuing multiperil coverage, the
 1615  corporation may use its approved policy forms and rates for the
 1616  personal lines account. An applicant or insured who is eligible
 1617  to purchase a multiperil policy from the corporation may
 1618  purchase a multiperil policy from an authorized insurer without
 1619  prejudice to the applicant’s or insured’s eligibility to
 1620  prospectively purchase a policy that provides coverage only for
 1621  the peril of wind from the corporation. An applicant or insured
 1622  who is eligible for a corporation policy that provides coverage
 1623  only for the peril of wind may elect to purchase or retain such
 1624  policy and also purchase or retain coverage excluding wind from
 1625  an authorized insurer without prejudice to the applicant’s or
 1626  insured’s eligibility to prospectively purchase a policy that
 1627  provides multiperil coverage from the corporation. It is the
 1628  goal of the Legislature that there would be an overall average
 1629  savings of 10 percent or more for a policyholder who currently
 1630  has a wind-only policy with the corporation, and an ex-wind
 1631  policy with a voluntary insurer or the corporation, and who then
 1632  obtains a multiperil policy from the corporation. It is the
 1633  intent of the Legislature that the offer of multiperil coverage
 1634  in the coastal high-risk account be made and implemented in a
 1635  manner that does not adversely affect the tax-exempt status of
 1636  the corporation or creditworthiness of or security for currently
 1637  outstanding financing obligations or credit facilities of the
 1638  coastal high-risk account, the personal lines account, or the
 1639  commercial lines account. The coastal high-risk account must
 1640  also include quota share primary insurance under subparagraph
 1641  (c)2. The area eligible for coverage under the coastal high-risk
 1642  account also includes the area within Port Canaveral, which is
 1643  bordered on the south by the City of Cape Canaveral, bordered on
 1644  the west by the Banana River, and bordered on the north by
 1645  Federal Government property.
 1646         b. The three separate accounts must be maintained as long
 1647  as financing obligations entered into by the Florida Windstorm
 1648  Underwriting Association or Residential Property and Casualty
 1649  Joint Underwriting Association are outstanding, in accordance
 1650  with the terms of the corresponding financing documents. If When
 1651  the financing obligations are no longer outstanding, in
 1652  accordance with the terms of the corresponding financing
 1653  documents, the corporation may use a single account for all
 1654  revenues, assets, liabilities, losses, and expenses of the
 1655  corporation. Consistent with the requirement of this
 1656  subparagraph and prudent investment policies that minimize the
 1657  cost of carrying debt, the board shall exercise its best efforts
 1658  to retire existing debt or to obtain the approval of necessary
 1659  parties to amend the terms of existing debt, so as to structure
 1660  the most efficient plan to consolidate the three separate
 1661  accounts into a single account.
 1662         c. Creditors of the Residential Property and Casualty Joint
 1663  Underwriting Association and of the accounts specified in sub
 1664  sub-subparagraphs a.(I) and (II) may have a claim against, and
 1665  recourse to, those the accounts referred to in sub-sub
 1666  subparagraphs a.(I) and (II) and shall have no claim against, or
 1667  recourse to, the account referred to in sub-sub-subparagraph
 1668  a.(III). Creditors of the Florida Windstorm Underwriting
 1669  Association shall have a claim against, and recourse to, the
 1670  account referred to in sub-sub-subparagraph a.(III) and shall
 1671  have no claim against, or recourse to, the accounts referred to
 1672  in sub-sub-subparagraphs a.(I) and (II).
 1673         d. Revenues, assets, liabilities, losses, and expenses not
 1674  attributable to particular accounts shall be prorated among the
 1675  accounts.
 1676         e. The Legislature finds that the revenues of the
 1677  corporation are revenues that are necessary to meet the
 1678  requirements set forth in documents authorizing the issuance of
 1679  bonds under this subsection.
 1680         f. No part of the income of the corporation may inure to
 1681  the benefit of any private person.
 1682         3. With respect to a deficit in an account:
 1683         a. After accounting for the Citizens policyholder surcharge
 1684  imposed under sub-subparagraph h. i., if when the remaining
 1685  projected deficit incurred in a particular calendar year:
 1686         (I) Is not greater than 6 percent of the aggregate
 1687  statewide direct written premium for the subject lines of
 1688  business for the prior calendar year, the entire deficit shall
 1689  be recovered through regular assessments of assessable insurers
 1690  under paragraph (q) and assessable insureds.
 1691         (II)b.After accounting for the Citizens policyholder
 1692  surcharge imposed under sub-subparagraph i., when the remaining
 1693  projected deficit incurred in a particular calendar year Exceeds
 1694  6 percent of the aggregate statewide direct written premium for
 1695  the subject lines of business for the prior calendar year, the
 1696  corporation shall levy regular assessments on assessable
 1697  insurers under paragraph (q) and on assessable insureds in an
 1698  amount equal to the greater of 6 percent of the deficit or 6
 1699  percent of the aggregate statewide direct written premium for
 1700  the subject lines of business for the prior calendar year. Any
 1701  remaining deficit shall be recovered through emergency
 1702  assessments under sub-subparagraph c. d.
 1703         b.c. Each assessable insurer’s share of the amount being
 1704  assessed under sub-subparagraph a. must or sub-subparagraph b.
 1705  shall be in the proportion that the assessable insurer’s direct
 1706  written premium for the subject lines of business for the year
 1707  preceding the assessment bears to the aggregate statewide direct
 1708  written premium for the subject lines of business for that year.
 1709  The assessment percentage applicable to each assessable insured
 1710  is the ratio of the amount being assessed under sub-subparagraph
 1711  a. or sub-subparagraph b. to the aggregate statewide direct
 1712  written premium for the subject lines of business for the prior
 1713  year. Assessments levied by the corporation on assessable
 1714  insurers under sub-subparagraph a. must sub-subparagraphs a. and
 1715  b. shall be paid as required by the corporation’s plan of
 1716  operation and paragraph (q). Assessments levied by the
 1717  corporation on assessable insureds under sub-subparagraph a.
 1718  sub-subparagraphs a. and b. shall be collected by the surplus
 1719  lines agent at the time the surplus lines agent collects the
 1720  surplus lines tax required by s. 626.932, and shall be paid to
 1721  the Florida Surplus Lines Service Office at the time the surplus
 1722  lines agent pays the surplus lines tax to that the Florida
 1723  Surplus Lines Service office. Upon receipt of regular
 1724  assessments from surplus lines agents, the Florida Surplus Lines
 1725  Service Office shall transfer the assessments directly to the
 1726  corporation as determined by the corporation.
 1727         c.d. Upon a determination by the board of governors that a
 1728  deficit in an account exceeds the amount that will be recovered
 1729  through regular assessments under sub-subparagraph a. or sub
 1730  subparagraph b., plus the amount that is expected to be
 1731  recovered through surcharges under sub-subparagraph h. i., as to
 1732  the remaining projected deficit the board shall levy, after
 1733  verification by the office, shall levy emergency assessments,
 1734  for as many years as necessary to cover the deficits, to be
 1735  collected by assessable insurers and the corporation and
 1736  collected from assessable insureds upon issuance or renewal of
 1737  policies for subject lines of business, excluding National Flood
 1738  Insurance policies. The amount of the emergency assessment
 1739  collected in a particular year must shall be a uniform
 1740  percentage of that year’s direct written premium for subject
 1741  lines of business and all accounts of the corporation, excluding
 1742  National Flood Insurance Program policy premiums, as annually
 1743  determined by the board and verified by the office. The office
 1744  shall verify the arithmetic calculations involved in the board’s
 1745  determination within 30 days after receipt of the information on
 1746  which the determination was based. Notwithstanding any other
 1747  provision of law, the corporation and each assessable insurer
 1748  that writes subject lines of business shall collect emergency
 1749  assessments from its policyholders without such obligation being
 1750  affected by any credit, limitation, exemption, or deferment.
 1751  Emergency assessments levied by the corporation on assessable
 1752  insureds shall be collected by the surplus lines agent at the
 1753  time the surplus lines agent collects the surplus lines tax
 1754  required by s. 626.932 and shall be paid to the Florida Surplus
 1755  Lines Service Office at the time the surplus lines agent pays
 1756  the surplus lines tax to that the Florida Surplus Lines Service
 1757  office. The emergency assessments so collected shall be
 1758  transferred directly to the corporation on a periodic basis as
 1759  determined by the corporation and shall be held by the
 1760  corporation solely in the applicable account. The aggregate
 1761  amount of emergency assessments levied for an account under this
 1762  sub-subparagraph in any calendar year may, at the discretion of
 1763  the board of governors, be less than but may not exceed the
 1764  greater of 10 percent of the amount needed to cover the deficit,
 1765  plus interest, fees, commissions, required reserves, and other
 1766  costs associated with financing of the original deficit, or 10
 1767  percent of the aggregate statewide direct written premium for
 1768  subject lines of business and for all accounts of the
 1769  corporation for the prior year, plus interest, fees,
 1770  commissions, required reserves, and other costs associated with
 1771  financing the deficit.
 1772         d.e. The corporation may pledge the proceeds of
 1773  assessments, projected recoveries from the Florida Hurricane
 1774  Catastrophe Fund, other insurance and reinsurance recoverables,
 1775  policyholder surcharges and other surcharges, and other funds
 1776  available to the corporation as the source of revenue for and to
 1777  secure bonds issued under paragraph (q), bonds or other
 1778  indebtedness issued under subparagraph (c)3., or lines of credit
 1779  or other financing mechanisms issued or created under this
 1780  subsection, or to retire any other debt incurred as a result of
 1781  deficits or events giving rise to deficits, or in any other way
 1782  that the board determines will efficiently recover such
 1783  deficits. The purpose of the lines of credit or other financing
 1784  mechanisms is to provide additional resources to assist the
 1785  corporation in covering claims and expenses attributable to a
 1786  catastrophe. As used in this subsection, the term “assessments”
 1787  includes regular assessments under sub-subparagraph a., sub
 1788  subparagraph b., or subparagraph (q)1. and emergency assessments
 1789  under sub-subparagraph d. Emergency assessments collected under
 1790  sub-subparagraph d. are not part of an insurer’s rates, are not
 1791  premium, and are not subject to premium tax, fees, or
 1792  commissions; however, failure to pay the emergency assessment
 1793  shall be treated as failure to pay premium. The emergency
 1794  assessments under sub-subparagraph c. d. shall continue as long
 1795  as any bonds issued or other indebtedness incurred with respect
 1796  to a deficit for which the assessment was imposed remain
 1797  outstanding, unless adequate provision has been made for the
 1798  payment of such bonds or other indebtedness pursuant to the
 1799  documents governing such bonds or other indebtedness.
 1800         e.f. As used in this subsection for purposes of any deficit
 1801  incurred on or after January 25, 2007, the term “subject lines
 1802  of business” means insurance written by assessable insurers or
 1803  procured by assessable insureds for all property and casualty
 1804  lines of business in this state, but not including workers’
 1805  compensation or medical malpractice. As used in this the sub
 1806  subparagraph, the term “property and casualty lines of business”
 1807  includes all lines of business identified on Form 2, Exhibit of
 1808  Premiums and Losses, in the annual statement required of
 1809  authorized insurers under by s. 624.424 and any rule adopted
 1810  under this section, except for those lines identified as
 1811  accident and health insurance and except for policies written
 1812  under the National Flood Insurance Program or the Federal Crop
 1813  Insurance Program. For purposes of this sub-subparagraph, the
 1814  term “workers’ compensation” includes both workers’ compensation
 1815  insurance and excess workers’ compensation insurance.
 1816         f.g. The Florida Surplus Lines Service Office shall
 1817  determine annually the aggregate statewide written premium in
 1818  subject lines of business procured by assessable insureds and
 1819  shall report that information to the corporation in a form and
 1820  at a time the corporation specifies to ensure that the
 1821  corporation can meet the requirements of this subsection and the
 1822  corporation’s financing obligations.
 1823         g.h. The Florida Surplus Lines Service Office shall verify
 1824  the proper application by surplus lines agents of assessment
 1825  percentages for regular assessments and emergency assessments
 1826  levied under this subparagraph on assessable insureds and shall
 1827  assist the corporation in ensuring the accurate, timely
 1828  collection and payment of assessments by surplus lines agents as
 1829  required by the corporation.
 1830         h.i. If a deficit is incurred in any account in 2008 or
 1831  thereafter, the board of governors shall levy a Citizens
 1832  policyholder surcharge against all policyholders of the
 1833  corporation. for a 12-month period, which
 1834         (I) The surcharge shall be levied collected at the time of
 1835  issuance or renewal of a policy, as a uniform percentage of the
 1836  premium for the policy of up to 15 percent of such premium,
 1837  which funds shall be used to offset the deficit.
 1838         (II) The surcharge is payable upon cancellation or
 1839  termination of the policy, upon renewal of the policy, or upon
 1840  issuance of a new policy by the corporation within the first 12
 1841  months after the date of the levy or the period of time
 1842  necessary to fully collect the surcharge amount.
 1843         (III) The corporation may not levy any regular assessments
 1844  under paragraph (q) pursuant to sub-subparagraph a. or sub
 1845  subparagraph b. with respect to a particular year’s deficit
 1846  until the corporation has first levied the full amount of the
 1847  surcharge authorized by this sub-subparagraph.
 1848         (IV) The surcharge is Citizens policyholder surcharges
 1849  under this sub-subparagraph are not considered premium and is
 1850  are not subject to commissions, fees, or premium taxes. However,
 1851  failure to pay the surcharge such surcharges shall be treated as
 1852  failure to pay premium.
 1853         i.j. If the amount of any assessments or surcharges
 1854  collected from corporation policyholders, assessable insurers or
 1855  their policyholders, or assessable insureds exceeds the amount
 1856  of the deficits, such excess amounts shall be remitted to and
 1857  retained by the corporation in a reserve to be used by the
 1858  corporation, as determined by the board of governors and
 1859  approved by the office, to pay claims or reduce any past,
 1860  present, or future plan-year deficits or to reduce outstanding
 1861  debt.
 1862         (c) The corporation’s plan of operation of the corporation:
 1863         1. Must provide for adoption of residential property and
 1864  casualty insurance policy forms and commercial residential and
 1865  nonresidential property insurance forms, which forms must be
 1866  approved by the office before prior to use. The corporation
 1867  shall adopt the following policy forms:
 1868         a. Standard personal lines policy forms that are
 1869  comprehensive multiperil policies providing full coverage of a
 1870  residential property equivalent to the coverage provided in the
 1871  private insurance market under an HO-3, HO-4, or HO-6 policy.
 1872         b. Basic personal lines policy forms that are policies
 1873  similar to an HO-8 policy or a dwelling fire policy that provide
 1874  coverage meeting the requirements of the secondary mortgage
 1875  market, but which coverage is more limited than the coverage
 1876  under a standard policy.
 1877         c. Commercial lines residential and nonresidential policy
 1878  forms that are generally similar to the basic perils of full
 1879  coverage obtainable for commercial residential structures and
 1880  commercial nonresidential structures in the admitted voluntary
 1881  market.
 1882         d. Personal lines and commercial lines residential property
 1883  insurance forms that cover the peril of wind only. The forms are
 1884  applicable only to residential properties located in areas
 1885  eligible for coverage under the coastal high-risk account
 1886  referred to in sub-subparagraph (b)2.a.
 1887         e. Commercial lines nonresidential property insurance forms
 1888  that cover the peril of wind only. The forms are applicable only
 1889  to nonresidential properties located in areas eligible for
 1890  coverage under the coastal high-risk account referred to in sub
 1891  subparagraph (b)2.a.
 1892         f. The corporation may adopt variations of the policy forms
 1893  listed in sub-subparagraphs a.-e. which that contain more
 1894  restrictive coverage.
 1895         2.a. Must provide that the corporation adopt a program in
 1896  which the corporation and authorized insurers enter into quota
 1897  share primary insurance agreements for hurricane coverage, as
 1898  defined in s. 627.4025(2)(a), for eligible risks, and adopt
 1899  property insurance forms for eligible risks which cover the
 1900  peril of wind only.
 1901         a. As used in this subsection, the term:
 1902         (I) “Quota share primary insurance” means an arrangement in
 1903  which the primary hurricane coverage of an eligible risk is
 1904  provided in specified percentages by the corporation and an
 1905  authorized insurer. The corporation and authorized insurer are
 1906  each solely responsible for a specified percentage of hurricane
 1907  coverage of an eligible risk as set forth in a quota share
 1908  primary insurance agreement between the corporation and an
 1909  authorized insurer and the insurance contract. The
 1910  responsibility of the corporation or authorized insurer to pay
 1911  its specified percentage of hurricane losses of an eligible
 1912  risk, as set forth in the quota share primary insurance
 1913  agreement, may not be altered by the inability of the other
 1914  party to the agreement to pay its specified percentage of
 1915  hurricane losses. Eligible risks that are provided hurricane
 1916  coverage through a quota share primary insurance arrangement
 1917  must be provided policy forms that set forth the obligations of
 1918  the corporation and authorized insurer under the arrangement,
 1919  clearly specify the percentages of quota share primary insurance
 1920  provided by the corporation and authorized insurer, and
 1921  conspicuously and clearly state that neither the authorized
 1922  insurer and nor the corporation may not be held responsible
 1923  beyond their its specified percentage of coverage of hurricane
 1924  losses.
 1925         (II) “Eligible risks” means personal lines residential and
 1926  commercial lines residential risks that meet the underwriting
 1927  criteria of the corporation and are located in areas that were
 1928  eligible for coverage by the Florida Windstorm Underwriting
 1929  Association on January 1, 2002.
 1930         b. The corporation may enter into quota share primary
 1931  insurance agreements with authorized insurers at corporation
 1932  coverage levels of 90 percent and 50 percent.
 1933         c. If the corporation determines that additional coverage
 1934  levels are necessary to maximize participation in quota share
 1935  primary insurance agreements by authorized insurers, the
 1936  corporation may establish additional coverage levels. However,
 1937  the corporation’s quota share primary insurance coverage level
 1938  may not exceed 90 percent.
 1939         d. Any quota share primary insurance agreement entered into
 1940  between an authorized insurer and the corporation must provide
 1941  for a uniform specified percentage of coverage of hurricane
 1942  losses, by county or territory as set forth by the corporation
 1943  board, for all eligible risks of the authorized insurer covered
 1944  under the quota share primary insurance agreement.
 1945         e. Any quota share primary insurance agreement entered into
 1946  between an authorized insurer and the corporation is subject to
 1947  review and approval by the office. However, such agreement shall
 1948  be authorized only as to insurance contracts entered into
 1949  between an authorized insurer and an insured who is already
 1950  insured by the corporation for wind coverage.
 1951         f. For all eligible risks covered under quota share primary
 1952  insurance agreements, the exposure and coverage levels for both
 1953  the corporation and authorized insurers shall be reported by the
 1954  corporation to the Florida Hurricane Catastrophe Fund. For all
 1955  policies of eligible risks covered under such quota share
 1956  primary insurance agreements, the corporation and the authorized
 1957  insurer must shall maintain complete and accurate records for
 1958  the purpose of exposure and loss reimbursement audits as
 1959  required by Florida Hurricane Catastrophe fund rules. The
 1960  corporation and the authorized insurer shall each maintain
 1961  duplicate copies of policy declaration pages and supporting
 1962  claims documents.
 1963         g. The corporation board shall establish in its plan of
 1964  operation standards for quota share agreements which ensure that
 1965  there is no discriminatory application among insurers as to the
 1966  terms of the quota share agreements, pricing of the quota share
 1967  agreements, incentive provisions if any, and consideration paid
 1968  for servicing policies or adjusting claims.
 1969         h. The quota share primary insurance agreement between the
 1970  corporation and an authorized insurer must set forth the
 1971  specific terms under which coverage is provided, including, but
 1972  not limited to, the sale and servicing of policies issued under
 1973  the agreement by the insurance agent of the authorized insurer
 1974  producing the business, the reporting of information concerning
 1975  eligible risks, the payment of premium to the corporation, and
 1976  arrangements for the adjustment and payment of hurricane claims
 1977  incurred on eligible risks by the claims adjuster and personnel
 1978  of the authorized insurer. Entering into a quota sharing
 1979  insurance agreement between the corporation and an authorized
 1980  insurer is shall be voluntary and at the discretion of the
 1981  authorized insurer.
 1982         3.a. May provide that the corporation may employ or
 1983  otherwise contract with individuals or other entities to provide
 1984  administrative or professional services that may be appropriate
 1985  to effectuate the plan. The corporation may shall have the power
 1986  to borrow funds, by issuing bonds or by incurring other
 1987  indebtedness, and shall have other powers reasonably necessary
 1988  to effectuate the requirements of this subsection, including,
 1989  without limitation, the power to issue bonds and incur other
 1990  indebtedness in order to refinance outstanding bonds or other
 1991  indebtedness. The corporation may, but is not required to, seek
 1992  judicial validation of its bonds or other indebtedness under
 1993  chapter 75. The corporation may issue bonds or incur other
 1994  indebtedness, or have bonds issued on its behalf by a unit of
 1995  local government pursuant to subparagraph (q)2., in the absence
 1996  of a hurricane or other weather-related event, upon a
 1997  determination by the corporation, subject to approval by the
 1998  office, that such action would enable it to efficiently meet the
 1999  financial obligations of the corporation and that such
 2000  financings are reasonably necessary to effectuate the
 2001  requirements of this subsection. The corporation may is
 2002  authorized to take all actions needed to facilitate tax-free
 2003  status for any such bonds or indebtedness, including formation
 2004  of trusts or other affiliated entities. The corporation may
 2005  shall have the authority to pledge assessments, projected
 2006  recoveries from the Florida Hurricane Catastrophe Fund, other
 2007  reinsurance recoverables, market equalization and other
 2008  surcharges, and other funds available to the corporation as
 2009  security for bonds or other indebtedness. In recognition of s.
 2010  10, Art. I of the State Constitution, prohibiting the impairment
 2011  of obligations of contracts, it is the intent of the Legislature
 2012  that no action be taken whose purpose is to impair any bond
 2013  indenture or financing agreement or any revenue source committed
 2014  by contract to such bond or other indebtedness.
 2015         b. To ensure that the corporation is operating in an
 2016  efficient and economic manner while providing quality service to
 2017  policyholders, applicants, and agents, the board shall
 2018  commission an independent third-party consultant having
 2019  expertise in insurance company management or insurance company
 2020  management consulting to prepare a report and make
 2021  recommendations on the relative costs and benefits of
 2022  outsourcing various policy issuance and service functions to
 2023  private servicing carriers or entities performing similar
 2024  functions in the private market for a fee, rather than
 2025  performing such functions in house. In making such
 2026  recommendations, the consultant shall consider how other
 2027  residual markets, both in this state and around the country,
 2028  outsource appropriate functions or use servicing carriers to
 2029  better match expenses with revenues that fluctuate based on a
 2030  widely varying policy count. The report must be completed by
 2031  July 1, 2012. Upon receiving the report, the board shall develop
 2032  a plan to implement the report and submit the plan for review,
 2033  modification, and approval to the Financial Services Commission.
 2034  Upon the commission’s approval of the plan, the board shall
 2035  begin implementing the plan by January 1, 2013.
 2036         4.a. Must require that the corporation operate subject to
 2037  the supervision and approval of a board of governors consisting
 2038  of eight individuals who are residents of this state, from
 2039  different geographical areas of this state.
 2040         a. The Governor, the Chief Financial Officer, the President
 2041  of the Senate, and the Speaker of the House of Representatives
 2042  shall each appoint two members of the board. At least one of the
 2043  two members appointed by each appointing officer must have
 2044  demonstrated expertise in insurance, and is deemed to be within
 2045  the scope of the exemption provided in s. 112.313(7)(b). The
 2046  Chief Financial Officer shall designate one of the appointees as
 2047  chair. All board members serve at the pleasure of the appointing
 2048  officer. All members of the board of governors are subject to
 2049  removal at will by the officers who appointed them. All board
 2050  members, including the chair, must be appointed to serve for 3
 2051  year terms beginning annually on a date designated by the plan.
 2052  However, for the first term beginning on or after July 1, 2009,
 2053  each appointing officer shall appoint one member of the board
 2054  for a 2-year term and one member for a 3-year term. A Any board
 2055  vacancy shall be filled for the unexpired term by the appointing
 2056  officer. The Chief Financial Officer shall appoint a technical
 2057  advisory group to provide information and advice to the board of
 2058  governors in connection with the board’s duties under this
 2059  subsection. The executive director and senior managers of the
 2060  corporation shall be engaged by the board and serve at the
 2061  pleasure of the board. Any executive director appointed on or
 2062  after July 1, 2006, is subject to confirmation by the Senate.
 2063  The executive director is responsible for employing other staff
 2064  as the corporation may require, subject to review and
 2065  concurrence by the board.
 2066         b. The board shall create a Market Accountability Advisory
 2067  Committee to assist the corporation in developing awareness of
 2068  its rates and its customer and agent service levels in
 2069  relationship to the voluntary market insurers writing similar
 2070  coverage.
 2071         (I) The members of the advisory committee shall consist of
 2072  the following 11 persons, one of whom must be elected chair by
 2073  the members of the committee: four representatives, one
 2074  appointed by the Florida Association of Insurance Agents, one by
 2075  the Florida Association of Insurance and Financial Advisors, one
 2076  by the Professional Insurance Agents of Florida, and one by the
 2077  Latin American Association of Insurance Agencies; three
 2078  representatives appointed by the insurers with the three highest
 2079  voluntary market share of residential property insurance
 2080  business in the state; one representative from the Office of
 2081  Insurance Regulation; one consumer appointed by the board who is
 2082  insured by the corporation at the time of appointment to the
 2083  committee; one representative appointed by the Florida
 2084  Association of Realtors; and one representative appointed by the
 2085  Florida Bankers Association. All members shall be appointed to
 2086  must serve for 3-year terms and may serve for consecutive terms.
 2087         (II) The committee shall report to the corporation at each
 2088  board meeting on insurance market issues which may include rates
 2089  and rate competition with the voluntary market; service,
 2090  including policy issuance, claims processing, and general
 2091  responsiveness to policyholders, applicants, and agents; and
 2092  matters relating to depopulation.
 2093         5. Must provide a procedure for determining the eligibility
 2094  of a risk for coverage, as follows:
 2095         a. Subject to the provisions of s. 627.3517, with respect
 2096  to personal lines residential risks, if the risk is offered
 2097  coverage from an authorized insurer at the insurer’s approved
 2098  rate under either a standard policy including wind coverage or,
 2099  if consistent with the insurer’s underwriting rules as filed
 2100  with the office, a basic policy including wind coverage, for a
 2101  new application to the corporation for coverage, the risk is not
 2102  eligible for any policy issued by the corporation unless the
 2103  premium for coverage from the authorized insurer is more than 15
 2104  percent greater than the premium for comparable coverage from
 2105  the corporation. If the risk is not able to obtain any such
 2106  offer, the risk is eligible for either a standard policy
 2107  including wind coverage or a basic policy including wind
 2108  coverage issued by the corporation; however, if the risk could
 2109  not be insured under a standard policy including wind coverage
 2110  regardless of market conditions, the risk is shall be eligible
 2111  for a basic policy including wind coverage unless rejected under
 2112  subparagraph 8. However, with regard to a policyholder of the
 2113  corporation or a policyholder removed from the corporation
 2114  through an assumption agreement until the end of the assumption
 2115  period, the policyholder remains eligible for coverage from the
 2116  corporation regardless of any offer of coverage from an
 2117  authorized insurer or surplus lines insurer. The corporation
 2118  shall determine the type of policy to be provided on the basis
 2119  of objective standards specified in the underwriting manual and
 2120  based on generally accepted underwriting practices.
 2121         (I) If the risk accepts an offer of coverage through the
 2122  market assistance plan or an offer of coverage through a
 2123  mechanism established by the corporation before a policy is
 2124  issued to the risk by the corporation or during the first 30
 2125  days of coverage by the corporation, and the producing agent who
 2126  submitted the application to the plan or to the corporation is
 2127  not currently appointed by the insurer, the insurer shall:
 2128         (A) Pay to the producing agent of record of the policy, for
 2129  the first year, an amount that is the greater of the insurer’s
 2130  usual and customary commission for the type of policy written or
 2131  a fee equal to the usual and customary commission of the
 2132  corporation; or
 2133         (B) Offer to allow the producing agent of record of the
 2134  policy to continue servicing the policy for at least a period of
 2135  not less than 1 year and offer to pay the agent the greater of
 2136  the insurer’s or the corporation’s usual and customary
 2137  commission for the type of policy written.
 2138  
 2139  If the producing agent is unwilling or unable to accept
 2140  appointment, the new insurer shall pay the agent in accordance
 2141  with sub-sub-sub-subparagraph (A).
 2142         (II) If When the corporation enters into a contractual
 2143  agreement for a take-out plan, the producing agent of record of
 2144  the corporation policy is entitled to retain any unearned
 2145  commission on the policy, and the insurer shall:
 2146         (A) Pay to the producing agent of record of the corporation
 2147  policy, for the first year, an amount that is the greater of the
 2148  insurer’s usual and customary commission for the type of policy
 2149  written or a fee equal to the usual and customary commission of
 2150  the corporation; or
 2151         (B) Offer to allow the producing agent of record of the
 2152  corporation policy to continue servicing the policy for at least
 2153  a period of not less than 1 year and offer to pay the agent the
 2154  greater of the insurer’s or the corporation’s usual and
 2155  customary commission for the type of policy written.
 2156  
 2157  If the producing agent is unwilling or unable to accept
 2158  appointment, the new insurer shall pay the agent in accordance
 2159  with sub-sub-sub-subparagraph (A).
 2160         b. With respect to commercial lines residential risks, for
 2161  a new application to the corporation for coverage, if the risk
 2162  is offered coverage under a policy including wind coverage from
 2163  an authorized insurer at its approved rate, the risk is not
 2164  eligible for a any policy issued by the corporation unless the
 2165  premium for coverage from the authorized insurer is more than 15
 2166  percent greater than the premium for comparable coverage from
 2167  the corporation. If the risk is not able to obtain any such
 2168  offer, the risk is eligible for a policy including wind coverage
 2169  issued by the corporation. However, with regard to a
 2170  policyholder of the corporation or a policyholder removed from
 2171  the corporation through an assumption agreement until the end of
 2172  the assumption period, the policyholder remains eligible for
 2173  coverage from the corporation regardless of an any offer of
 2174  coverage from an authorized insurer or surplus lines insurer.
 2175         (I) If the risk accepts an offer of coverage through the
 2176  market assistance plan or an offer of coverage through a
 2177  mechanism established by the corporation before a policy is
 2178  issued to the risk by the corporation or during the first 30
 2179  days of coverage by the corporation, and the producing agent who
 2180  submitted the application to the plan or the corporation is not
 2181  currently appointed by the insurer, the insurer shall:
 2182         (A) Pay to the producing agent of record of the policy, for
 2183  the first year, an amount that is the greater of the insurer’s
 2184  usual and customary commission for the type of policy written or
 2185  a fee equal to the usual and customary commission of the
 2186  corporation; or
 2187         (B) Offer to allow the producing agent of record of the
 2188  policy to continue servicing the policy for at least a period of
 2189  not less than 1 year and offer to pay the agent the greater of
 2190  the insurer’s or the corporation’s usual and customary
 2191  commission for the type of policy written.
 2192  
 2193  If the producing agent is unwilling or unable to accept
 2194  appointment, the new insurer shall pay the agent in accordance
 2195  with sub-sub-sub-subparagraph (A).
 2196         (II) If When the corporation enters into a contractual
 2197  agreement for a take-out plan, the producing agent of record of
 2198  the corporation policy is entitled to retain any unearned
 2199  commission on the policy, and the insurer shall:
 2200         (A) Pay to the producing agent of record of the corporation
 2201  policy, for the first year, an amount that is the greater of the
 2202  insurer’s usual and customary commission for the type of policy
 2203  written or a fee equal to the usual and customary commission of
 2204  the corporation; or
 2205         (B) Offer to allow the producing agent of record of the
 2206  corporation policy to continue servicing the policy for at least
 2207  a period of not less than 1 year and offer to pay the agent the
 2208  greater of the insurer’s or the corporation’s usual and
 2209  customary commission for the type of policy written.
 2210  
 2211  If the producing agent is unwilling or unable to accept
 2212  appointment, the new insurer shall pay the agent in accordance
 2213  with sub-sub-sub-subparagraph (A).
 2214         c. For purposes of determining comparable coverage under
 2215  sub-subparagraphs a. and b., the comparison must shall be based
 2216  on those forms and coverages that are reasonably comparable. The
 2217  corporation may rely on a determination of comparable coverage
 2218  and premium made by the producing agent who submits the
 2219  application to the corporation, made in the agent’s capacity as
 2220  the corporation’s agent. A comparison may be made solely of the
 2221  premium with respect to the main building or structure only on
 2222  the following basis: the same coverage A or other building
 2223  limits; the same percentage hurricane deductible that applies on
 2224  an annual basis or that applies to each hurricane for commercial
 2225  residential property; the same percentage of ordinance and law
 2226  coverage, if the same limit is offered by both the corporation
 2227  and the authorized insurer; the same mitigation credits, to the
 2228  extent the same types of credits are offered both by the
 2229  corporation and the authorized insurer; the same method for loss
 2230  payment, such as replacement cost or actual cash value, if the
 2231  same method is offered both by the corporation and the
 2232  authorized insurer in accordance with underwriting rules; and
 2233  any other form or coverage that is reasonably comparable as
 2234  determined by the board. If an application is submitted to the
 2235  corporation for wind-only coverage in the coastal high-risk
 2236  account, the premium for the corporation’s wind-only policy plus
 2237  the premium for the ex-wind policy that is offered by an
 2238  authorized insurer to the applicant must shall be compared to
 2239  the premium for multiperil coverage offered by an authorized
 2240  insurer, subject to the standards for comparison specified in
 2241  this subparagraph. If the corporation or the applicant requests
 2242  from the authorized insurer a breakdown of the premium of the
 2243  offer by types of coverage so that a comparison may be made by
 2244  the corporation or its agent and the authorized insurer refuses
 2245  or is unable to provide such information, the corporation may
 2246  treat the offer as not being an offer of coverage from an
 2247  authorized insurer at the insurer’s approved rate.
 2248         6. Must include rules for classifications of risks and
 2249  rates therefor.
 2250         7. Must provide that if premium and investment income for
 2251  an account attributable to a particular calendar year are in
 2252  excess of projected losses and expenses for the account
 2253  attributable to that year, such excess shall be held in surplus
 2254  in the account. Such surplus must shall be available to defray
 2255  deficits in that account as to future years and shall be used
 2256  for that purpose before prior to assessing assessable insurers
 2257  and assessable insureds as to any calendar year.
 2258         8. Must provide objective criteria and procedures to be
 2259  uniformly applied to for all applicants in determining whether
 2260  an individual risk is so hazardous as to be uninsurable. In
 2261  making this determination and in establishing the criteria and
 2262  procedures, the following must shall be considered:
 2263         a. Whether the likelihood of a loss for the individual risk
 2264  is substantially higher than for other risks of the same class;
 2265  and
 2266         b. Whether the uncertainty associated with the individual
 2267  risk is such that an appropriate premium cannot be determined.
 2268  
 2269  The acceptance or rejection of a risk by the corporation shall
 2270  be construed as the private placement of insurance, and the
 2271  provisions of chapter 120 do shall not apply.
 2272         9. Must provide that the corporation shall make its best
 2273  efforts to procure catastrophe reinsurance at reasonable rates,
 2274  to cover its projected 100-year probable maximum loss as
 2275  determined by the board of governors.
 2276         10. The policies issued by the corporation must provide
 2277  that, if the corporation or the market assistance plan obtains
 2278  an offer from an authorized insurer to cover the risk at its
 2279  approved rates, the risk is no longer eligible for renewal
 2280  through the corporation, except as otherwise provided in this
 2281  subsection.
 2282         11. Corporation policies and applications must include a
 2283  notice that the corporation policy could, under this section, be
 2284  replaced with a policy issued by an authorized insurer which
 2285  that does not provide coverage identical to the coverage
 2286  provided by the corporation. The notice must shall also specify
 2287  that acceptance of corporation coverage creates a conclusive
 2288  presumption that the applicant or policyholder is aware of this
 2289  potential.
 2290         12. May establish, subject to approval by the office,
 2291  different eligibility requirements and operational procedures
 2292  for any line or type of coverage for any specified county or
 2293  area if the board determines that such changes to the
 2294  eligibility requirements and operational procedures are
 2295  justified due to the voluntary market being sufficiently stable
 2296  and competitive in such area or for such line or type of
 2297  coverage and that consumers who, in good faith, are unable to
 2298  obtain insurance through the voluntary market through ordinary
 2299  methods would continue to have access to coverage from the
 2300  corporation. If When coverage is sought in connection with a
 2301  real property transfer, the such requirements and procedures may
 2302  shall not provide for an effective date of coverage later than
 2303  the date of the closing of the transfer as established by the
 2304  transferor, the transferee, and, if applicable, the lender.
 2305         13. Must provide that, with respect to the coastal high
 2306  risk account, any assessable insurer with a surplus as to
 2307  policyholders of $25 million or less writing 25 percent or more
 2308  of its total countrywide property insurance premiums in this
 2309  state may petition the office, within the first 90 days of each
 2310  calendar year, to qualify as a limited apportionment company. A
 2311  regular assessment levied by the corporation on a limited
 2312  apportionment company for a deficit incurred by the corporation
 2313  for the coastal high-risk account in 2006 or thereafter may be
 2314  paid to the corporation on a monthly basis as the assessments
 2315  are collected by the limited apportionment company from its
 2316  insureds pursuant to s. 627.3512, but the regular assessment
 2317  must be paid in full within 12 months after being levied by the
 2318  corporation. A limited apportionment company shall collect from
 2319  its policyholders any emergency assessment imposed under sub
 2320  subparagraph (b)3.d. The plan must shall provide that, if the
 2321  office determines that any regular assessment will result in an
 2322  impairment of the surplus of a limited apportionment company,
 2323  the office may direct that all or part of such assessment be
 2324  deferred as provided in subparagraph (q)4. However, there shall
 2325  be no limitation or deferment of an emergency assessment to be
 2326  collected from policyholders under sub-subparagraph (b)3.d. may
 2327  not be limited or deferred.
 2328         14. Must provide that the corporation appoint as its
 2329  licensed agents only those agents who also hold an appointment
 2330  as defined in s. 626.015(3) with an insurer who at the time of
 2331  the agent’s initial appointment by the corporation is authorized
 2332  to write and is actually writing personal lines residential
 2333  property coverage, commercial residential property coverage, or
 2334  commercial nonresidential property coverage within the state.
 2335         15. Must provide, by July 1, 2007, a premium payment plan
 2336  option to its policyholders which, allows at a minimum, allows
 2337  for quarterly and semiannual payment of premiums. A monthly
 2338  payment plan may, but is not required to, be offered.
 2339         16. Must limit coverage on mobile homes or manufactured
 2340  homes built before prior to 1994 to actual cash value of the
 2341  dwelling rather than replacement costs of the dwelling.
 2342         17. May provide such limits of coverage as the board
 2343  determines, consistent with the requirements of this subsection.
 2344         18. May require commercial property to meet specified
 2345  hurricane mitigation construction features as a condition of
 2346  eligibility for coverage.
 2347         19. Must provide that new or renewal policies issued by the
 2348  corporation on or after January 1, 2012, which cover sinkhole
 2349  loss do not include coverage for any loss to appurtenant
 2350  structures, driveways, sidewalks, decks, or patios that are
 2351  directly or indirectly caused by sinkhole activity. The
 2352  corporation shall exclude such coverage using a notice of
 2353  coverage change, which may be included with the policy renewal,
 2354  and not by issuance of a notice of nonrenewal of the excluded
 2355  coverage upon renewal of the current policy.
 2356         20. As of January 1, 2012, must require that the agent
 2357  obtain from an applicant for coverage from the corporation an
 2358  acknowledgement signed by the applicant, which includes, at a
 2359  minimum, the following statement:
 2360  
 2361               ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE              
 2362                      AND ASSESSMENT LIABILITY:                    
 2363  
 2364         1. AS A POLICYHOLDER OF CITIZENS PROPERTY
 2365         INSURANCE CORPORATION, I UNDERSTAND THAT IF THE
 2366         CORPORATION SUSTAINS A DEFICIT AS A RESULT OF
 2367         HURRICANE LOSSES OR FOR ANY OTHER REASON, MY POLICY
 2368         COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
 2369         PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF
 2370         THE POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH
 2371         AS 45 PERCENT OF MY PREMIUM, OR A DIFFERENT AMOUNT AS
 2372         IMPOSED BY THE FLORIDA LEGISLATURE.
 2373         2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO
 2374         EMERGENCY ASSESSMENTS TO THE SAME EXTENT AS
 2375         POLICYHOLDERS OF OTHER INSURANCE COMPANIES, OR A
 2376         DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
 2377         LEGISLATURE.
 2378         3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY
 2379         INSURANCE CORPORATION IS NOT SUPPORTED BY THE FULL
 2380         FAITH AND CREDIT OF THE STATE OF FLORIDA.
 2381  
 2382         a. The corporation shall maintain, in electronic format or
 2383  otherwise, a copy of the applicant’s signed acknowledgement and
 2384  provide a copy of the statement to the policyholder as part of
 2385  the first renewal after the effective date of this subparagraph.
 2386         b. The signed acknowledgement form creates a conclusive
 2387  presumption that the policyholder understood and accepted his or
 2388  her potential surcharge and assessment liability as a
 2389  policyholder of the corporation.
 2390         (d)1. All prospective employees for senior management
 2391  positions, as defined by the plan of operation, are subject to
 2392  background checks as a prerequisite for employment. The office
 2393  shall conduct the background checks on such prospective
 2394  employees pursuant to ss. 624.34, 624.404(3), and 628.261.
 2395         2. On or before July 1 of each year, employees of the
 2396  corporation must are required to sign and submit a statement
 2397  attesting that they do not have a conflict of interest, as
 2398  defined in part III of chapter 112. As a condition of
 2399  employment, all prospective employees must are required to sign
 2400  and submit to the corporation a conflict-of-interest statement.
 2401         3. Senior managers and members of the board of governors
 2402  are subject to the provisions of part III of chapter 112,
 2403  including, but not limited to, the code of ethics and public
 2404  disclosure and reporting of financial interests, pursuant to s.
 2405  112.3145. Notwithstanding s. 112.3143(2), a board member may not
 2406  vote on any measure that would inure to his or her special
 2407  private gain or loss; that he or she knows would inure to the
 2408  special private gain or loss of any principal by whom he or she
 2409  is retained or to the parent organization or subsidiary of a
 2410  corporate principal by which he or she is retained, other than
 2411  an agency as defined in s. 112.312; or that he or she knows
 2412  would inure to the special private gain or loss of a relative or
 2413  business associate of the public officer. Before the vote is
 2414  taken, such member shall publicly state to the assembly the
 2415  nature of his or her interest in the matter from which he or she
 2416  is abstaining from voting and, within 15 days after the vote
 2417  occurs, disclose the nature of his or her interest as a public
 2418  record in a memorandum filed with the person responsible for
 2419  recording the minutes of the meeting, who shall incorporate the
 2420  memorandum in the minutes. Senior managers and board members are
 2421  also required to file such disclosures with the Commission on
 2422  Ethics and the Office of Insurance Regulation. The executive
 2423  director of the corporation or his or her designee shall notify
 2424  each existing and newly appointed and existing appointed member
 2425  of the board of governors and senior managers of their duty to
 2426  comply with the reporting requirements of part III of chapter
 2427  112. At least quarterly, the executive director or his or her
 2428  designee shall submit to the Commission on Ethics a list of
 2429  names of the senior managers and members of the board of
 2430  governors who are subject to the public disclosure requirements
 2431  under s. 112.3145.
 2432         4. Notwithstanding s. 112.3148 or s. 112.3149, or any other
 2433  provision of law, an employee or board member may not knowingly
 2434  accept, directly or indirectly, any gift or expenditure from a
 2435  person or entity, or an employee or representative of such
 2436  person or entity, which that has a contractual relationship with
 2437  the corporation or who is under consideration for a contract. An
 2438  employee or board member who fails to comply with subparagraph
 2439  3. or this subparagraph is subject to penalties provided under
 2440  ss. 112.317 and 112.3173.
 2441         5. Any senior manager of the corporation who is employed on
 2442  or after January 1, 2007, regardless of the date of hire, who
 2443  subsequently retires or terminates employment is prohibited from
 2444  representing another person or entity before the corporation for
 2445  2 years after retirement or termination of employment from the
 2446  corporation.
 2447         6. Any senior manager of the corporation who is employed on
 2448  or after January 1, 2007, regardless of the date of hire, who
 2449  subsequently retires or terminates employment is prohibited from
 2450  having any employment or contractual relationship for 2 years
 2451  with an insurer that has entered into a take-out bonus agreement
 2452  with the corporation.
 2453         (n)1. Rates for coverage provided by the corporation must
 2454  shall be actuarially sound and subject to the requirements of s.
 2455  627.062, except as otherwise provided in this paragraph. The
 2456  corporation shall file its recommended rates with the office at
 2457  least annually. The corporation shall provide any additional
 2458  information regarding the rates which the office requires. The
 2459  office shall consider the recommendations of the board and issue
 2460  a final order establishing the rates for the corporation within
 2461  45 days after the recommended rates are filed. The corporation
 2462  may not pursue an administrative challenge or judicial review of
 2463  the final order of the office.
 2464         2. In addition to the rates otherwise determined pursuant
 2465  to this paragraph, the corporation shall impose and collect an
 2466  amount equal to the premium tax provided for in s. 624.509 to
 2467  augment the financial resources of the corporation.
 2468         3. After the public hurricane loss-projection model under
 2469  s. 627.06281 has been found to be accurate and reliable by the
 2470  Florida Commission on Hurricane Loss Projection Methodology, the
 2471  that model shall serve as the minimum benchmark for determining
 2472  the windstorm portion of the corporation’s rates. This
 2473  subparagraph does not require or allow the corporation to adopt
 2474  rates lower than the rates otherwise required or allowed by this
 2475  paragraph.
 2476         4. The rate filings for the corporation which were approved
 2477  by the office and which took effect January 1, 2007, are
 2478  rescinded, except for those rates that were lowered. As soon as
 2479  possible, the corporation shall begin using the lower rates that
 2480  were in effect on December 31, 2006, and shall provide refunds
 2481  to policyholders who have paid higher rates as a result of that
 2482  rate filing. The rates in effect on December 31, 2006, shall
 2483  remain in effect for the 2007 and 2008 calendar years except for
 2484  any rate change that results in a lower rate. The next rate
 2485  change that may increase rates shall take effect pursuant to a
 2486  new rate filing recommended by the corporation and established
 2487  by the office, subject to the requirements of this paragraph.
 2488         5. Beginning on July 15, 2009, and annually each year
 2489  thereafter, the corporation must make a recommended actuarially
 2490  sound rate filing for each personal and commercial line of
 2491  business it writes, to be effective no earlier than January 1,
 2492  2010.
 2493         6. Beginning on or after January 1, 2010, and
 2494  notwithstanding the board’s recommended rates and the office’s
 2495  final order regarding the corporation’s filed rates under
 2496  subparagraph 1., the corporation shall annually implement a rate
 2497  increase each year which, except for sinkhole coverage, does not
 2498  exceed 10 percent for any single policy issued by the
 2499  corporation, excluding coverage changes and surcharges.
 2500         7. The corporation may also implement an increase to
 2501  reflect the effect on the corporation of the cash buildup factor
 2502  pursuant to s. 215.555(5)(b).
 2503         8. The corporation’s implementation of rates as prescribed
 2504  in subparagraph 6. shall cease for any line of business written
 2505  by the corporation upon the corporation’s implementation of
 2506  actuarially sound rates. Thereafter, the corporation shall
 2507  annually make a recommended actuarially sound rate filing for
 2508  each commercial and personal line of business the corporation
 2509  writes.
 2510         (v)1. Effective July 1, 2002, policies of the Residential
 2511  Property and Casualty Joint Underwriting Association shall
 2512  become policies of the corporation. All obligations, rights,
 2513  assets and liabilities of the Residential Property and Casualty
 2514  Joint Underwriting association, including bonds, note and debt
 2515  obligations, and the financing documents pertaining to them
 2516  become those of the corporation as of July 1, 2002. The
 2517  corporation is not required to issue endorsements or
 2518  certificates of assumption to insureds during the remaining term
 2519  of in-force transferred policies.
 2520         2. Effective July 1, 2002, policies of the Florida
 2521  Windstorm Underwriting Association are transferred to the
 2522  corporation and shall become policies of the corporation. All
 2523  obligations, rights, assets, and liabilities of the Florida
 2524  Windstorm Underwriting association, including bonds, note and
 2525  debt obligations, and the financing documents pertaining to them
 2526  are transferred to and assumed by the corporation on July 1,
 2527  2002. The corporation is not required to issue endorsements or
 2528  certificates of assumption to insureds during the remaining term
 2529  of in-force transferred policies.
 2530         3. The Florida Windstorm Underwriting Association and the
 2531  Residential Property and Casualty Joint Underwriting Association
 2532  shall take all actions necessary as may be proper to further
 2533  evidence the transfers and shall provide the documents and
 2534  instruments of further assurance as may reasonably be requested
 2535  by the corporation for that purpose. The corporation shall
 2536  execute assumptions and instruments as the trustees or other
 2537  parties to the financing documents of the Florida Windstorm
 2538  Underwriting Association or the Residential Property and
 2539  Casualty Joint Underwriting Association may reasonably request
 2540  to further evidence the transfers and assumptions, which
 2541  transfers and assumptions, however, are effective on the date
 2542  provided under this paragraph whether or not, and regardless of
 2543  the date on which, the assumptions or instruments are executed
 2544  by the corporation. Subject to the relevant financing documents
 2545  pertaining to their outstanding bonds, notes, indebtedness, or
 2546  other financing obligations, the moneys, investments,
 2547  receivables, choses in action, and other intangibles of the
 2548  Florida Windstorm Underwriting Association shall be credited to
 2549  the coastal high-risk account of the corporation, and those of
 2550  the personal lines residential coverage account and the
 2551  commercial lines residential coverage account of the Residential
 2552  Property and Casualty Joint Underwriting Association shall be
 2553  credited to the personal lines account and the commercial lines
 2554  account, respectively, of the corporation.
 2555         4. Effective July 1, 2002, a new applicant for property
 2556  insurance coverage who would otherwise have been eligible for
 2557  coverage in the Florida Windstorm Underwriting Association is
 2558  eligible for coverage from the corporation as provided in this
 2559  subsection.
 2560         5. The transfer of all policies, obligations, rights,
 2561  assets, and liabilities from the Florida Windstorm Underwriting
 2562  Association to the corporation and the renaming of the
 2563  Residential Property and Casualty Joint Underwriting Association
 2564  as the corporation does not shall in no way affect the coverage
 2565  with respect to covered policies as defined in s. 215.555(2)(c)
 2566  provided to these entities by the Florida Hurricane Catastrophe
 2567  Fund. The coverage provided by the Florida Hurricane Catastrophe
 2568  fund to the Florida Windstorm Underwriting Association based on
 2569  its exposures as of June 30, 2002, and each June 30 thereafter
 2570  shall be redesignated as coverage for the coastal high-risk
 2571  account of the corporation. Notwithstanding any other provision
 2572  of law, the coverage provided by the Florida Hurricane
 2573  Catastrophe fund to the Residential Property and Casualty Joint
 2574  Underwriting Association based on its exposures as of June 30,
 2575  2002, and each June 30 thereafter shall be transferred to the
 2576  personal lines account and the commercial lines account of the
 2577  corporation. Notwithstanding any other provision of law, the
 2578  coastal high-risk account shall be treated, for all Florida
 2579  Hurricane Catastrophe Fund purposes, as if it were a separate
 2580  participating insurer with its own exposures, reimbursement
 2581  premium, and loss reimbursement. Likewise, the personal lines
 2582  and commercial lines accounts shall be viewed together, for all
 2583  Florida Hurricane Catastrophe fund purposes, as if the two
 2584  accounts were one and represent a single, separate participating
 2585  insurer with its own exposures, reimbursement premium, and loss
 2586  reimbursement. The coverage provided by the Florida Hurricane
 2587  Catastrophe fund to the corporation shall constitute and operate
 2588  as a full transfer of coverage from the Florida Windstorm
 2589  Underwriting Association and Residential Property and Casualty
 2590  Joint Underwriting to the corporation.
 2591         (y) It is the intent of the Legislature that the amendments
 2592  to this subsection enacted in 2002 should, over time, reduce the
 2593  probable maximum windstorm losses in the residual markets and
 2594  should reduce the potential assessments to be levied on property
 2595  insurers and policyholders statewide. In furtherance of this
 2596  intent:
 2597         1. the board shall, on or before February 1 of each year,
 2598  provide a report to the President of the Senate and the Speaker
 2599  of the House of Representatives showing the reduction or
 2600  increase in the 100-year probable maximum loss attributable to
 2601  wind-only coverages and the quota share program under this
 2602  subsection combined, as compared to the benchmark 100-year
 2603  probable maximum loss of the Florida Windstorm Underwriting
 2604  Association. For purposes of this paragraph, the benchmark 100
 2605  year probable maximum loss of the Florida Windstorm Underwriting
 2606  Association shall be the calculation dated February 2001 and
 2607  based on November 30, 2000, exposures. In order to ensure
 2608  comparability of data, the board shall use the same methods for
 2609  calculating its probable maximum loss as were used to calculate
 2610  the benchmark probable maximum loss.
 2611         2. Beginning December 1, 2010, if the report under
 2612  subparagraph 1. for any year indicates that the 100-year
 2613  probable maximum loss attributable to wind-only coverages and
 2614  the quota share program combined does not reflect a reduction of
 2615  at least 25 percent from the benchmark, the board shall reduce
 2616  the boundaries of the high-risk area eligible for wind-only
 2617  coverages under this subsection in a manner calculated to reduce
 2618  such probable maximum loss to an amount at least 25 percent
 2619  below the benchmark.
 2620         3. Beginning February 1, 2015, if the report under
 2621  subparagraph 1. for any year indicates that the 100-year
 2622  probable maximum loss attributable to wind-only coverages and
 2623  the quota share program combined does not reflect a reduction of
 2624  at least 50 percent from the benchmark, the boundaries of the
 2625  high-risk area eligible for wind-only coverages under this
 2626  subsection shall be reduced by the elimination of any area that
 2627  is not seaward of a line 1,000 feet inland from the Intracoastal
 2628  Waterway.
 2629         Section 16. Paragraph (a) of subsection (5) of section
 2630  627.3511, Florida Statutes, is amended to read:
 2631         627.3511 Depopulation of Citizens Property Insurance
 2632  Corporation.—
 2633         (5) APPLICABILITY.—
 2634         (a) The take-out bonus provided by subsection (2) and the
 2635  exemption from assessment provided by paragraph (3)(a) apply
 2636  only if the corporation policy is replaced by either a standard
 2637  policy including wind coverage or, if consistent with the
 2638  insurer’s underwriting rules as filed with the office, a basic
 2639  policy including wind coverage; however, for with respect to
 2640  risks located in areas where coverage through the coastal high
 2641  risk account of the corporation is available, the replacement
 2642  policy need not provide wind coverage. The insurer must renew
 2643  the replacement policy at approved rates on substantially
 2644  similar terms for four additional 1-year terms, unless canceled
 2645  or not renewed by the policyholder. If an insurer assumes the
 2646  corporation’s obligations for a policy, it must issue a
 2647  replacement policy for a 1-year term upon expiration of the
 2648  corporation policy and must renew the replacement policy at
 2649  approved rates on substantially similar terms for four
 2650  additional 1-year terms, unless canceled or not renewed by the
 2651  policyholder. For each replacement policy canceled or nonrenewed
 2652  by the insurer for any reason during the 5-year coverage period
 2653  required by this paragraph, the insurer must remove from the
 2654  corporation one additional policy covering a risk similar to the
 2655  risk covered by the canceled or nonrenewed policy. In addition
 2656  to these requirements, the corporation must place the bonus
 2657  moneys in escrow for a period of 5 years; such moneys may be
 2658  released from escrow only to pay claims. If the policy is
 2659  canceled or nonrenewed before the end of the 5-year period, the
 2660  amount of the take-out bonus must be prorated for the time
 2661  period the policy was insured. A take-out bonus provided by
 2662  subsection (2) or subsection (6) is shall not be considered
 2663  premium income for purposes of taxes and assessments under the
 2664  Florida Insurance Code and shall remain the property of the
 2665  corporation, subject to the prior security interest of the
 2666  insurer under the escrow agreement until it is released from
 2667  escrow;, and after it is released from escrow it is shall be
 2668  considered an asset of the insurer and credited to the insurer’s
 2669  capital and surplus.
 2670         Section 17. Paragraph (b) of subsection (2) of section
 2671  627.4133, Florida Statutes, is amended to read:
 2672         627.4133 Notice of cancellation, nonrenewal, or renewal
 2673  premium.—
 2674         (2) With respect to any personal lines or commercial
 2675  residential property insurance policy, including, but not
 2676  limited to, any homeowner’s, mobile home owner’s, farmowner’s,
 2677  condominium association, condominium unit owner’s, apartment
 2678  building, or other policy covering a residential structure or
 2679  its contents:
 2680         (b) The insurer shall give the named insured written notice
 2681  of nonrenewal, cancellation, or termination at least 100 days
 2682  before prior to the effective date of the nonrenewal,
 2683  cancellation, or termination. However, the insurer shall give at
 2684  least 100 days’ written notice, or written notice by June 1,
 2685  whichever is earlier, for any nonrenewal, cancellation, or
 2686  termination that would be effective between June 1 and November
 2687  30. The notice must include the reason or reasons for the
 2688  nonrenewal, cancellation, or termination, except that:
 2689         1. The insurer shall give the named insured written notice
 2690  of nonrenewal, cancellation, or termination at least 120 180
 2691  days prior to the effective date of the nonrenewal,
 2692  cancellation, or termination for a named insured whose
 2693  residential structure has been insured by that insurer or an
 2694  affiliated insurer for at least a 5-year period immediately
 2695  prior to the date of the written notice.
 2696         2. If When cancellation is for nonpayment of premium, at
 2697  least 10 days’ written notice of cancellation accompanied by the
 2698  reason therefor must shall be given. As used in this
 2699  subparagraph, the term “nonpayment of premium” means failure of
 2700  the named insured to discharge when due any of her or his
 2701  obligations in connection with the payment of premiums on a
 2702  policy or any installment of such premium, whether the premium
 2703  is payable directly to the insurer or its agent or indirectly
 2704  under any premium finance plan or extension of credit, or
 2705  failure to maintain membership in an organization if such
 2706  membership is a condition precedent to insurance coverage. The
 2707  term “Nonpayment of premium” also means the failure of a
 2708  financial institution to honor an insurance applicant’s check
 2709  after delivery to a licensed agent for payment of a premium,
 2710  even if the agent has previously delivered or transferred the
 2711  premium to the insurer. If a dishonored check represents the
 2712  initial premium payment, the contract and all contractual
 2713  obligations are shall be void ab initio unless the nonpayment is
 2714  cured within the earlier of 5 days after actual notice by
 2715  certified mail is received by the applicant or 15 days after
 2716  notice is sent to the applicant by certified mail or registered
 2717  mail, and if the contract is void, any premium received by the
 2718  insurer from a third party must shall be refunded to that party
 2719  in full.
 2720         3. If When such cancellation or termination occurs during
 2721  the first 90 days during which the insurance is in force and the
 2722  insurance is canceled or terminated for reasons other than
 2723  nonpayment of premium, at least 20 days’ written notice of
 2724  cancellation or termination accompanied by the reason therefor
 2725  must shall be given unless except where there has been a
 2726  material misstatement or misrepresentation or failure to comply
 2727  with the underwriting requirements established by the insurer.
 2728         4. The requirement for providing written notice of
 2729  nonrenewal by June 1 of any nonrenewal that would be effective
 2730  between June 1 and November 30 does not apply to the following
 2731  situations, but the insurer remains subject to the requirement
 2732  to provide such notice at least 100 days before prior to the
 2733  effective date of nonrenewal:
 2734         a. A policy that is nonrenewed due to a revision in the
 2735  coverage for sinkhole losses and catastrophic ground cover
 2736  collapse pursuant to s. 627.706, as amended by s. 30, chapter
 2737  2007-1, Laws of Florida.
 2738         b. A policy that is nonrenewed by Citizens Property
 2739  Insurance Corporation, pursuant to s. 627.351(6), for a policy
 2740  that has been assumed by an authorized insurer offering
 2741  replacement or renewal coverage to the policyholder is exempt
 2742  from the notice requirements of paragraph (a) and this
 2743  paragraph. In such cases, the corporation must give the named
 2744  insured written notice of nonrenewal at least 45 days before the
 2745  effective date of the nonrenewal.
 2746  
 2747  After the policy has been in effect for 90 days, the policy may
 2748  shall not be canceled by the insurer unless except when there
 2749  has been a material misstatement, a nonpayment of premium, a
 2750  failure to comply with underwriting requirements established by
 2751  the insurer within 90 days after of the date of effectuation of
 2752  coverage, or a substantial change in the risk covered by the
 2753  policy or if when the cancellation is for all insureds under
 2754  such policies for a given class of insureds. This paragraph does
 2755  not apply to individually rated risks having a policy term of
 2756  less than 90 days.
 2757         5. Notwithstanding any other provision of law, an insurer
 2758  may cancel or nonrenew a property insurance policy after at
 2759  least 45 days’ notice if the office finds that the early
 2760  cancellation of some or all of the insurer’s policies is
 2761  necessary to protect the best interests of the public or
 2762  policyholders and the office approves the insurer’s plan for
 2763  early cancellation or nonrenewal of some or all of its policies.
 2764  The office may base such finding upon the financial condition of
 2765  the insurer, lack of adequate reinsurance coverage for hurricane
 2766  risk, or other relevant factors. The office may condition its
 2767  finding on the consent of the insurer to be placed under
 2768  administrative supervision pursuant to s. 624.81 or to the
 2769  appointment of a receiver under chapter 631.
 2770         6. A policy covering both a home and motor vehicle may be
 2771  nonrenewed for any reason applicable to either the property or
 2772  motor vehicle insurance after providing 90 days’ notice.
 2773         Section 18. Section 627.43141, Florida Statutes, is created
 2774  to read:
 2775         627.43141 Notice of change in policy terms.—
 2776         (1) As used in this section, the term:
 2777         (a) “Change in policy terms” means the modification,
 2778  addition, or deletion of any term, coverage, duty, or condition
 2779  from the previous policy. The correction of typographical or
 2780  scrivener’s errors or the application of mandated legislative
 2781  changes is not a change in policy terms.
 2782         (b) “Policy” means a written contract of property and
 2783  casualty insurance or written agreement for such insurance, by
 2784  whatever name called, and includes all clauses, riders,
 2785  endorsements, and papers that are a part of such policy. The
 2786  term does not include a binder as defined in s. 627.420 unless
 2787  the duration of the binder period exceeds 60 days.
 2788         (c) “Renewal” means the issuance and delivery by an insurer
 2789  of a policy superseding at the end of the policy period a policy
 2790  previously issued and delivered by the same insurer or the
 2791  issuance and delivery of a certificate or notice extending the
 2792  term of a policy beyond its policy period or term. Any policy
 2793  that has a policy period or term of less than 6 months or that
 2794  does not have a fixed expiration date shall, for purposes of
 2795  this section, be considered as written for successive policy
 2796  periods or terms of 6 months.
 2797         (2) A renewal policy may contain a change in policy terms.
 2798  If a renewal policy does contain such change, the insurer must
 2799  give the named insured written notice of the change, which must
 2800  be enclosed along with the written notice of renewal premium
 2801  required by ss. 627.4133 and 627.728. Such notice shall be
 2802  entitled “Notice of Change in Policy Terms.”
 2803         (3) Although not required, proof of mailing or registered
 2804  mailing through the United States Postal Service of the Notice
 2805  of Change in Policy Terms to the named insured at the address
 2806  shown in the policy is sufficient proof of notice.
 2807         (4) Receipt of the premium payment for the renewal policy
 2808  by the insurer is deemed to be acceptance of the new policy
 2809  terms by the named insured.
 2810         (5) If an insurer fails to provide the notice required in
 2811  subsection (2), the original policy terms remain in effect until
 2812  the next renewal and the proper service of the notice, or until
 2813  the effective date of replacement coverage obtained by the named
 2814  insured, whichever occurs first.
 2815         (6) The intent of this section is to:
 2816         (a) Allow an insurer to make a change in policy terms
 2817  without nonrenewing those policyholders that the insurer wishes
 2818  to continue insuring.
 2819         (b) Alleviate concern and confusion to the policyholder
 2820  caused by the required policy nonrenewal for the limited issue
 2821  if an insurer intends to renew the insurance policy, but the new
 2822  policy contains a change in policy terms.
 2823         (c) Encourage policyholders to discuss their coverages with
 2824  their insurance agents.
 2825         Section 19. Section 627.7011, Florida Statutes, is amended
 2826  to read:
 2827         627.7011 Homeowners’ policies; offer of replacement cost
 2828  coverage and law and ordinance coverage.—
 2829         (1) Prior to issuing a homeowner’s insurance policy on or
 2830  after October 1, 2005, or prior to the first renewal of a
 2831  homeowner’s insurance policy on or after October 1, 2005, the
 2832  insurer must offer each of the following:
 2833         (a) A policy or endorsement providing that any loss that
 2834  which is repaired or replaced will be adjusted on the basis of
 2835  replacement costs to the dwelling not exceeding policy limits as
 2836  to the dwelling, rather than actual cash value, but not
 2837  including costs necessary to meet applicable laws and ordinances
 2838  regulating the construction, use, or repair of any property or
 2839  requiring the tearing down of any property, including the costs
 2840  of removing debris.
 2841         (b) A policy or endorsement providing that, subject to
 2842  other policy provisions, any loss that which is repaired or
 2843  replaced at any location will be adjusted on the basis of
 2844  replacement costs to the dwelling not exceeding policy limits as
 2845  to the dwelling, rather than actual cash value, and also
 2846  including costs necessary to meet applicable laws and ordinances
 2847  regulating the construction, use, or repair of any property or
 2848  requiring the tearing down of any property, including the costs
 2849  of removing debris.; However, such additional costs necessary to
 2850  meet applicable laws and ordinances may be limited to either 25
 2851  percent or 50 percent of the dwelling limit, as selected by the
 2852  policyholder, and such coverage applies shall apply only to
 2853  repairs of the damaged portion of the structure unless the total
 2854  damage to the structure exceeds 50 percent of the replacement
 2855  cost of the structure.
 2856  
 2857  An insurer is not required to make the offers required by this
 2858  subsection with respect to the issuance or renewal of a
 2859  homeowner’s policy that contains the provisions specified in
 2860  paragraph (b) for law and ordinance coverage limited to 25
 2861  percent of the dwelling limit, except that the insurer must
 2862  offer the law and ordinance coverage limited to 50 percent of
 2863  the dwelling limit. This subsection does not prohibit the offer
 2864  of a guaranteed replacement cost policy.
 2865         (2) Unless the insurer obtains the policyholder’s written
 2866  refusal of the policies or endorsements specified in subsection
 2867  (1), any policy covering the dwelling is deemed to include the
 2868  law and ordinance coverage limited to 25 percent of the dwelling
 2869  limit. The rejection or selection of alternative coverage shall
 2870  be made on a form approved by the office. The form must shall
 2871  fully advise the applicant of the nature of the coverage being
 2872  rejected. If this form is signed by a named insured, it is will
 2873  be conclusively presumed that there was an informed, knowing
 2874  rejection of the coverage or election of the alternative
 2875  coverage on behalf of all insureds. Unless the policyholder
 2876  requests in writing the coverage specified in this section, it
 2877  need not be provided in or supplemental to any other policy that
 2878  renews, insures, extends, changes, supersedes, or replaces an
 2879  existing policy if when the policyholder has rejected the
 2880  coverage specified in this section or has selected alternative
 2881  coverage. The insurer must provide the such policyholder with
 2882  notice of the availability of such coverage in a form approved
 2883  by the office at least once every 3 years. The failure to
 2884  provide such notice constitutes a violation of this code, but
 2885  does not affect the coverage provided under the policy.
 2886         (3) In the event of a loss for which a dwelling or personal
 2887  property is insured on the basis of replacement costs:
 2888         (a) For a dwelling, the insurer must initially pay at least
 2889  the actual cash value of the insured loss, less any applicable
 2890  deductible. The insurer shall pay any remaining amounts
 2891  necessary to perform such repairs as work is performed and
 2892  expenses are incurred. If a total loss of a dwelling occurs, the
 2893  insurer shall pay the replacement cost coverage without
 2894  reservation or holdback of any depreciation in value, pursuant
 2895  to s. 627.702.
 2896         (b) For personal property:
 2897         1. The insurer must offer coverage under which the insurer
 2898  is obligated to pay the replacement cost without reservation or
 2899  holdback for any depreciation in value, whether or not the
 2900  insured replaces the property.
 2901         2. The insurer may also offer coverage under which the
 2902  insurer may limit the initial payment to the actual cash value
 2903  of the personal property to be replaced, require the insured to
 2904  provide receipts for the purchase of the property financed by
 2905  the initial payment, use such receipts to make the next payment
 2906  requested by the insured for the replacement of insured
 2907  property, and continue this process until the insured remits all
 2908  receipts up to the policy limits for replacement costs. The
 2909  insurer must provide clear notice of this process before the
 2910  policy is bound. A policyholder must be provided an actuarially
 2911  reasonable premium credit or discount for this coverage. The
 2912  insurer may not require the policyholder to advance payment for
 2913  the replaced property, the insurer shall pay the replacement
 2914  cost without reservation or holdback of any depreciation in
 2915  value, whether or not the insured replaces or repairs the
 2916  dwelling or property.
 2917         (4) A Any homeowner’s insurance policy issued or renewed on
 2918  or after October 1, 2005, must include in bold type no smaller
 2919  than 18 points the following statement:
 2920         “LAW AND ORDINANCE COVERAGE IS AN IMPORTANT COVERAGE
 2921         THAT YOU MAY WISH TO PURCHASE. YOU MAY ALSO NEED TO
 2922         CONSIDER THE PURCHASE OF FLOOD INSURANCE FROM THE
 2923         NATIONAL FLOOD INSURANCE PROGRAM. WITHOUT THIS
 2924         COVERAGE, YOU MAY HAVE UNCOVERED LOSSES. PLEASE
 2925         DISCUSS THESE COVERAGES WITH YOUR INSURANCE AGENT.”
 2926  
 2927  The intent of this subsection is to encourage policyholders to
 2928  purchase sufficient coverage to protect them in case events
 2929  excluded from the standard homeowners policy, such as law and
 2930  ordinance enforcement and flood, combine with covered events to
 2931  produce damage or loss to the insured property. The intent is
 2932  also to encourage policyholders to discuss these issues with
 2933  their insurance agent.
 2934         (5) Nothing in This section does not: shall be construed to
 2935         (a) Apply to policies not considered to be “homeowners’
 2936  policies,” as that term is commonly understood in the insurance
 2937  industry. This section specifically does not
 2938         (b) Apply to mobile home policies. Nothing in this section
 2939         (c) Limit shall be construed as limiting the ability of an
 2940  any insurer to reject or nonrenew any insured or applicant on
 2941  the grounds that the structure does not meet underwriting
 2942  criteria applicable to replacement cost or law and ordinance
 2943  policies or for other lawful reasons.
 2944         (d)(6)This section does not Prohibit an insurer from
 2945  limiting its liability under a policy or endorsement providing
 2946  that loss will be adjusted on the basis of replacement costs to
 2947  the lesser of:
 2948         1.(a) The limit of liability shown on the policy
 2949  declarations page;
 2950         2.(b) The reasonable and necessary cost to repair the
 2951  damaged, destroyed, or stolen covered property; or
 2952         3.(c) The reasonable and necessary cost to replace the
 2953  damaged, destroyed, or stolen covered property.
 2954         (e)(7)This section does not Prohibit an insurer from
 2955  exercising its right to repair damaged property in compliance
 2956  with its policy and s. 627.702(7).
 2957         Section 20. Paragraph (a) of subsection (5) of section
 2958  627.70131, Florida Statutes, is amended to read:
 2959         627.70131 Insurer’s duty to acknowledge communications
 2960  regarding claims; investigation.—
 2961         (5)(a) Within 90 days after an insurer receives notice of
 2962  an initial, reopened, or supplemental a property insurance claim
 2963  from a policyholder, the insurer shall pay or deny such claim or
 2964  a portion of the claim unless the failure to pay such claim or a
 2965  portion of the claim is caused by factors beyond the control of
 2966  the insurer which reasonably prevent such payment. Any payment
 2967  of an initial or supplemental a claim or portion of such a claim
 2968  made paid 90 days after the insurer receives notice of the
 2969  claim, or made paid more than 15 days after there are no longer
 2970  factors beyond the control of the insurer which reasonably
 2971  prevented such payment, whichever is later, bears shall bear
 2972  interest at the rate set forth in s. 55.03. Interest begins to
 2973  accrue from the date the insurer receives notice of the claim.
 2974  The provisions of this subsection may not be waived, voided, or
 2975  nullified by the terms of the insurance policy. If there is a
 2976  right to prejudgment interest, the insured shall select whether
 2977  to receive prejudgment interest or interest under this
 2978  subsection. Interest is payable when the claim or portion of the
 2979  claim is paid. Failure to comply with this subsection
 2980  constitutes a violation of this code. However, failure to comply
 2981  with this subsection does shall not form the sole basis for a
 2982  private cause of action.
 2983         Section 21. The Legislature finds and declares:
 2984         (1) There is a compelling state interest in maintaining a
 2985  viable and orderly private-sector market for property insurance
 2986  in this state. The lack of a viable and orderly property market
 2987  reduces the availability of property insurance coverage to state
 2988  residents, increases the cost of property insurance, and
 2989  increases the state’s reliance on a residual property insurance
 2990  market and its potential for imposing assessments on
 2991  policyholders throughout the state.
 2992         (2) In 2005, the Legislature revised ss. 627.706627.7074,
 2993  Florida Statutes, to adopt certain geological or technical
 2994  terms; to increase reliance on objective, scientific testing
 2995  requirements; and generally to reduce the number of sinkhole
 2996  claims and related disputes arising under prior law. The
 2997  Legislature determined that since the enactment of these
 2998  statutory revisions, both private-sector insurers and Citizens
 2999  Property Insurance Corporation have, nevertheless, continued to
 3000  experience high claims frequency and severity for sinkhole
 3001  insurance claims. In addition, many properties remain unrepaired
 3002  even after loss payments, which reduces the local property tax
 3003  base and adversely affects the real estate market. Therefore,
 3004  the Legislature finds that losses associated with sinkhole
 3005  claims adversely affect the public health, safety, and welfare
 3006  of this state and its citizens.
 3007         (3) Pursuant to sections 22 through 27 of this act,
 3008  technical or scientific definitions adopted in the 2005
 3009  legislation are clarified to implement and advance the
 3010  Legislature’s intended reduction of sinkhole claims and
 3011  disputes. Certain other revisions to ss. 627.706627.7074,
 3012  Florida Statutes, are enacted to advance legislative intent to
 3013  rely on scientific or technical determinations relating to
 3014  sinkholes and sinkhole claims, reduce the number and cost of
 3015  disputes relating to sinkhole claims, and ensure that repairs
 3016  are made commensurate with the scientific and technical
 3017  determinations and insurance claims payments.
 3018         Section 22. Section 627.706, Florida Statutes, is reordered
 3019  and amended to read:
 3020         627.706 Sinkhole insurance; catastrophic ground cover
 3021  collapse; definitions.—
 3022         (1)(a) Every insurer authorized to transact property
 3023  insurance in this state must shall provide coverage for a
 3024  catastrophic ground cover collapse.
 3025         (b) The insurer and shall make available, for an
 3026  appropriate additional premium, coverage for sinkhole losses on
 3027  any structure, including the contents of personal property
 3028  contained therein, to the extent provided in the form to which
 3029  the coverage attaches. The insurer may require an inspection of
 3030  the property before issuance of sinkhole loss coverage. A policy
 3031  for residential property insurance may include a deductible
 3032  amount applicable to sinkhole losses equal to 1 percent, 2
 3033  percent, 5 percent, or 10 percent of the policy dwelling limits,
 3034  with appropriate premium discounts offered with each deductible
 3035  amount.
 3036         (c) The insurer may restrict catastrophic ground cover
 3037  collapse and sinkhole loss coverage to the principal building,
 3038  as defined in the applicable policy.
 3039         (2) As used in ss. 627.706-627.7074, and as used in
 3040  connection with any policy providing coverage for a catastrophic
 3041  ground cover collapse or for sinkhole losses, the term:
 3042         (a) “Catastrophic ground cover collapse” means geological
 3043  activity that results in all the following:
 3044         1. The abrupt collapse of the ground cover;
 3045         2. A depression in the ground cover clearly visible to the
 3046  naked eye;
 3047         3. Structural damage to the covered building, including the
 3048  foundation; and
 3049         4. The insured structure being condemned and ordered to be
 3050  vacated by the governmental agency authorized by law to issue
 3051  such an order for that structure.
 3052  
 3053  Contents coverage applies if there is a loss resulting from a
 3054  catastrophic ground cover collapse. Structural Damage consisting
 3055  merely of the settling or cracking of a foundation, structure,
 3056  or building does not constitute a loss resulting from a
 3057  catastrophic ground cover collapse.
 3058         (b) “Neutral evaluation” means the alternative dispute
 3059  resolution provided in s. 627.7074.
 3060         (c) “Neutral evaluator” means a professional engineer or a
 3061  professional geologist who has completed a course of study in
 3062  alternative dispute resolution designed or approved by the
 3063  department for use in the neutral evaluation process and who is
 3064  determined by the department to be fair and impartial.
 3065         (h)(b) “Sinkhole” means a landform created by subsidence of
 3066  soil, sediment, or rock as underlying strata are dissolved by
 3067  groundwater. A sinkhole forms may form by collapse into
 3068  subterranean voids created by dissolution of limestone or
 3069  dolostone or by subsidence as these strata are dissolved.
 3070         (j)(c) “Sinkhole loss” means structural damage to the
 3071  covered building, including the foundation, caused by sinkhole
 3072  activity. Contents coverage and additional living expenses shall
 3073  apply only if there is structural damage to the covered building
 3074  caused by sinkhole activity.
 3075         (i)(d) “Sinkhole activity” means settlement or systematic
 3076  weakening of the earth supporting the covered building such
 3077  property only if the when such settlement or systematic
 3078  weakening results from contemporaneous movement or raveling of
 3079  soils, sediments, or rock materials into subterranean voids
 3080  created by the effect of water on a limestone or similar rock
 3081  formation.
 3082         (f)(e) “Professional engineer” means a person, as defined
 3083  in s. 471.005, who has a bachelor’s degree or higher in
 3084  engineering with a specialty in the geotechnical engineering
 3085  field. A professional engineer must also have geotechnical
 3086  experience and expertise in the identification of sinkhole
 3087  activity as well as other potential causes of structural damage
 3088  to the structure.
 3089         (g)(f) “Professional geologist” means a person, as defined
 3090  in by s. 492.102, who has a bachelor’s degree or higher in
 3091  geology or related earth science and with expertise in the
 3092  geology of Florida. A professional geologist must have
 3093  geological experience and expertise in the identification of
 3094  sinkhole activity as well as other potential geologic causes of
 3095  structural damage to the structure.
 3096         (k) “Structural damage” means a covered building,
 3097  regardless of the date of its construction, has experienced the
 3098  following:
 3099         1. Interior floor displacement or deflection in excess of
 3100  acceptable variances as defined in ACI 117-90 or the Florida
 3101  Building Code, which results in settlement related damage to the
 3102  interior such that the interior building structure or members
 3103  become unfit for service or represents a safety hazard as
 3104  defined within the Florida Building Code;
 3105         2. Foundation displacement or deflection in excess of
 3106  acceptable variances as defined in ACI 318-95 or the Florida
 3107  Building Code, which results in settlement related damage to the
 3108  primary structural members or primary structural systems that
 3109  prevents those members or systems from supporting the loads and
 3110  forces they were designed to support to the extent that stresses
 3111  in those primary structural members or primary structural
 3112  systems exceeds one and one-third the nominal strength allowed
 3113  under the Florida Building Code for new buildings of similar
 3114  structure, purpose, or location;
 3115         3. Damage that results in listing, leaning, or buckling of
 3116  the exterior load bearing walls or other vertical primary
 3117  structural members to such an extent that a plumb line passing
 3118  through the center of gravity does not fall inside the middle
 3119  one-third of the base as defined within the Florida Building
 3120  Code;
 3121         4. Damage that results in the building, or any portion of
 3122  the building containing primary structural members or primary
 3123  structural systems, being significantly likely to imminently
 3124  collapse because of the movement or instability of the ground
 3125  within the influence zone of the supporting ground within the
 3126  sheer plane necessary for the purpose of supporting such
 3127  building as defined within the Florida Building Code; or
 3128         5. Damage occurring on or after October 15, 2005, that
 3129  qualifies as “substantial structural damage” as defined in the
 3130  Florida Building Code.
 3131         (d) “Primary structural member” means a structural element
 3132  designed to provide support and stability for the vertical or
 3133  lateral loads of the overall structure.
 3134         (e) “Primary structural system” means an assemblage of
 3135  primary structural members.
 3136         (3) On or before June 1, 2007, Every insurer authorized to
 3137  transact property insurance in this state shall make a proper
 3138  filing with the office for the purpose of extending the
 3139  appropriate forms of property insurance to include coverage for
 3140  catastrophic ground cover collapse or for sinkhole losses.
 3141  coverage for catastrophic ground cover collapse may not go into
 3142  effect until the effective date provided for in the filing
 3143  approved by the office.
 3144         (3)(4) Insurers offering policies that exclude coverage for
 3145  sinkhole losses must shall inform policyholders in bold type of
 3146  not less than 14 points as follows: “YOUR POLICY PROVIDES
 3147  COVERAGE FOR A CATASTROPHIC GROUND COVER COLLAPSE THAT RESULTS
 3148  IN THE PROPERTY BEING CONDEMNED AND UNINHABITABLE. OTHERWISE,
 3149  YOUR POLICY DOES NOT PROVIDE COVERAGE FOR SINKHOLE LOSSES. YOU
 3150  MAY PURCHASE ADDITIONAL COVERAGE FOR SINKHOLE LOSSES FOR AN
 3151  ADDITIONAL PREMIUM.”
 3152         (4)(5) An insurer offering sinkhole coverage to
 3153  policyholders before or after the adoption of s. 30, chapter
 3154  2007-1, Laws of Florida, may nonrenew the policies of
 3155  policyholders maintaining sinkhole coverage in Pasco County or
 3156  Hernando County, at the option of the insurer, and provide an
 3157  offer of coverage that to such policyholders which includes
 3158  catastrophic ground cover collapse and excludes sinkhole
 3159  coverage. Insurers acting in accordance with this subsection are
 3160  subject to the following requirements:
 3161         (a) Policyholders must be notified that a nonrenewal is for
 3162  purposes of removing sinkhole coverage, and that the
 3163  policyholder is still being offered a policy that provides
 3164  coverage for catastrophic ground cover collapse.
 3165         (b) Policyholders must be provided an actuarially
 3166  reasonable premium credit or discount for the removal of
 3167  sinkhole coverage and provision of only catastrophic ground
 3168  cover collapse.
 3169         (c) Subject to the provisions of this subsection and the
 3170  insurer’s approved underwriting or insurability guidelines, the
 3171  insurer shall provide each policyholder with the opportunity to
 3172  purchase an endorsement to his or her policy providing sinkhole
 3173  coverage and may require an inspection of the property before
 3174  issuance of a sinkhole coverage endorsement.
 3175         (d) Section 624.4305 does not apply to nonrenewal notices
 3176  issued pursuant to this subsection.
 3177         (5) Any claim, including, but not limited to, initial,
 3178  supplemental, and reopened claims under an insurance policy that
 3179  provides sinkhole coverage is barred unless notice of the claim
 3180  was given to the insurer in accordance with the terms of the
 3181  policy within 2 years after the policyholder knew or reasonably
 3182  should have known about the sinkhole loss.
 3183         Section 23. Section 627.7061, Florida Statutes, is amended
 3184  to read:
 3185         627.7061 Coverage inquiries.—Inquiries about coverage on a
 3186  property insurance contract are not claim activity, unless an
 3187  actual claim is filed by the policyholder which insured that
 3188  results in a company investigation of the claim.
 3189         Section 24. Section 627.7065, Florida Statutes, is
 3190  repealed.
 3191         Section 25. Section 627.707, Florida Statutes, is amended
 3192  to read:
 3193         627.707 Standards for Investigation of sinkhole claims by
 3194  insurers; insurer payment; nonrenewals.—Upon receipt of a claim
 3195  for a sinkhole loss to a covered building, an insurer must meet
 3196  the following standards in investigating a claim:
 3197         (1) The insurer must inspect make an inspection of the
 3198  policyholder’s insured’s premises to determine if there is
 3199  structural has been physical damage that to the structure which
 3200  may be the result of sinkhole activity.
 3201         (2) If the insurer confirms that structural damage exists
 3202  but is unable to identify a valid cause of such damage or
 3203  discovers that such damage is consistent with sinkhole loss
 3204  Following the insurer’s initial inspection, the insurer shall
 3205  engage a professional engineer or a professional geologist to
 3206  conduct testing as provided in s. 627.7072 to determine the
 3207  cause of the loss within a reasonable professional probability
 3208  and issue a report as provided in s. 627.7073, only if sinkhole
 3209  loss is covered under the policy. Except as provided in
 3210  subsections (4) and (6), the fees and costs of the professional
 3211  engineer or professional geologist shall be paid by the
 3212  insurer.:
 3213         (a) The insurer is unable to identify a valid cause of the
 3214  damage or discovers damage to the structure which is consistent
 3215  with sinkhole loss; or
 3216         (b) The policyholder demands testing in accordance with
 3217  this section or s. 627.7072.
 3218         (3) Following the initial inspection of the policyholder’s
 3219  insured premises, the insurer shall provide written notice to
 3220  the policyholder disclosing the following information:
 3221         (a) What the insurer has determined to be the cause of
 3222  damage, if the insurer has made such a determination.
 3223         (b) A statement of the circumstances under which the
 3224  insurer is required to engage a professional engineer or a
 3225  professional geologist to verify or eliminate sinkhole loss and
 3226  to engage a professional engineer to make recommendations
 3227  regarding land and building stabilization and foundation repair.
 3228         (c) A statement regarding the right of the policyholder to
 3229  request testing by a professional engineer or a professional
 3230  geologist, and the circumstances under which the policyholder
 3231  may demand certain testing, and the circumstances under which
 3232  the policyholder may incur costs associated with testing.
 3233         (4)(a) If the insurer determines that there is no sinkhole
 3234  loss, the insurer may deny the claim.
 3235         (b) If coverage for sinkhole loss is available and If the
 3236  insurer denies the claim, without performing testing under s.
 3237  627.7072, the policyholder may demand testing by the insurer
 3238  under s. 627.7072.
 3239         1. The policyholder’s demand for testing must be
 3240  communicated to the insurer in writing within 60 days after the
 3241  policyholder’s receipt of the insurer’s denial of the claim.
 3242         2. The policyholder shall pay 50 percent of the actual
 3243  costs of the analyses and services provided under ss. 627.7072
 3244  and 627.7073 or $2,500, whichever is less.
 3245         3. The insurer shall reimburse the policyholder for the
 3246  costs if the insurer’s engineer or geologist provides written
 3247  certification pursuant to s. 627.7073 that there is sinkhole
 3248  loss.
 3249         (5)(a)Subject to paragraph (b), If a sinkhole loss is
 3250  verified, the insurer shall pay to stabilize the land and
 3251  building and repair the foundation in accordance with the
 3252  recommendations of the professional engineer retained pursuant
 3253  to subsection (2), as provided under s. 627.7073, and in
 3254  consultation with notice to the policyholder, subject to the
 3255  coverage and terms of the policy. The insurer shall pay for
 3256  other repairs to the structure and contents in accordance with
 3257  the terms of the policy. If a covered building suffers a
 3258  sinkhole loss or a catastrophic ground cover collapse, the
 3259  insured must repair such damage or loss in accordance with the
 3260  insurer’s professional engineer’s recommended repairs. However,
 3261  if the insurer’s professional engineer determines that the
 3262  repair cannot be completed within policy limits, the insurer
 3263  must pay to complete the repairs recommended by the insurer’s
 3264  professional engineer or tender the policy limits to the
 3265  policyholder.
 3266         (a)(b) The insurer may limit its total claims payment to
 3267  the actual cash value of the sinkhole loss, which does not
 3268  include including underpinning or grouting or any other repair
 3269  technique performed below the existing foundation of the
 3270  building, until the policyholder enters into a contract for the
 3271  performance of building stabilization or foundation repairs in
 3272  accordance with the recommendations set forth in the insurer’s
 3273  report issued pursuant to s. 627.7073.
 3274         (b) In order to prevent additional damage to the building
 3275  or structure, the policyholder must enter into a contract for
 3276  the performance of building stabilization and foundation repairs
 3277  within 90 days after the insurance company confirms coverage for
 3278  the sinkhole loss and notifies the policyholder of such
 3279  confirmation. This time period is tolled if either party invokes
 3280  the neutral evaluation process, and begins again 10 days after
 3281  the conclusion of the neutral evaluation process.
 3282         (c) After the policyholder enters into the contract for the
 3283  performance of building stabilization and foundation repairs,
 3284  the insurer shall pay the amounts necessary to begin and perform
 3285  such repairs as the work is performed and the expenses are
 3286  incurred. The insurer may not require the policyholder to
 3287  advance payment for such repairs. If repair covered by a
 3288  personal lines residential property insurance policy has begun
 3289  and the professional engineer selected or approved by the
 3290  insurer determines that the repair cannot be completed within
 3291  the policy limits, the insurer must either complete the
 3292  professional engineer’s recommended repair or tender the policy
 3293  limits to the policyholder without a reduction for the repair
 3294  expenses incurred.
 3295         (d) The stabilization and all other repairs to the
 3296  structure and contents must be completed within 12 months after
 3297  entering into the contract for repairs described in paragraph
 3298  (b) unless:
 3299         1. There is a mutual agreement between the insurer and the
 3300  policyholder;
 3301         2. The claim is involved with the neutral evaluation
 3302  process;
 3303         3. The claim is in litigation; or
 3304         4. The claim is under appraisal or mediation.
 3305         (e)(c) Upon the insurer’s obtaining the written approval of
 3306  the policyholder and any lienholder, the insurer may make
 3307  payment directly to the persons selected by the policyholder to
 3308  perform the land and building stabilization and foundation
 3309  repairs. The decision by the insurer to make payment to such
 3310  persons does not hold the insurer liable for the work performed.
 3311  The policyholder may not accept a rebate from any person
 3312  performing the repairs specified in this section. If a
 3313  policyholder does receive a rebate, coverage is void and the
 3314  policyholder must refund the amount of the rebate to the
 3315  insurer. Any person making the repairs specified in this section
 3316  who offers a rebate commits insurance fraud punishable as a
 3317  third degree felony as provided in s. 775.082, s. 775.083, or s.
 3318  775.084.
 3319         (6) Except as provided in subsection (7), the fees and
 3320  costs of the professional engineer or the professional geologist
 3321  shall be paid by the insurer.
 3322         (6)(7) If the insurer obtains, pursuant to s. 627.7073,
 3323  written certification that there is no sinkhole loss or that the
 3324  cause of the damage was not sinkhole activity, and if the
 3325  policyholder has submitted the sinkhole claim without good faith
 3326  grounds for submitting such claim, the policyholder shall
 3327  reimburse the insurer for 50 percent of the actual costs of the
 3328  analyses and services provided under ss. 627.7072 and 627.7073;
 3329  however, a policyholder is not required to reimburse an insurer
 3330  more than $2,500 with respect to any claim. A policyholder is
 3331  required to pay reimbursement under this subsection only if the
 3332  policyholder requested the analysis and services provided under
 3333  ss. 627.7072 and 627.7073 and the insurer, before prior to
 3334  ordering the analysis under s. 627.7072, informs the
 3335  policyholder in writing of the policyholder’s potential
 3336  liability for reimbursement and gives the policyholder the
 3337  opportunity to withdraw the claim.
 3338         (7)(8)An No insurer may not shall nonrenew any policy of
 3339  property insurance on the basis of filing of claims for sinkhole
 3340  partial loss if caused by sinkhole damage or clay shrinkage as
 3341  long as the total of such payments does not equal or exceed the
 3342  current policy limits of coverage for the policy in effect on
 3343  the date of loss, for property damage to the covered building,
 3344  as set forth on the declarations page, or if and provided the
 3345  policyholder insured has repaired the structure in accordance
 3346  with the engineering recommendations made pursuant to subsection
 3347  (2) upon which any payment or policy proceeds were based. If the
 3348  insurer pays such limits, it may nonrenew the policy.
 3349         (8)(9) The insurer may engage a professional structural
 3350  engineer to make recommendations as to the repair of the
 3351  structure.
 3352         Section 26. Section 627.7073, Florida Statutes, is amended
 3353  to read:
 3354         627.7073 Sinkhole reports.—
 3355         (1) Upon completion of testing as provided in s. 627.7072,
 3356  the professional engineer or professional geologist shall issue
 3357  a report and certification to the insurer and the policyholder
 3358  as provided in this section.
 3359         (a) Sinkhole loss is verified if, based upon tests
 3360  performed in accordance with s. 627.7072, a professional
 3361  engineer or a professional geologist issues a written report and
 3362  certification stating:
 3363         1. That structural damage to the covered building has been
 3364  identified within a reasonable professional probability.
 3365         2.1. That the cause of the actual physical and structural
 3366  damage is sinkhole activity within a reasonable professional
 3367  probability.
 3368         3.2. That the analyses conducted were of sufficient scope
 3369  to identify sinkhole activity as the cause of damage within a
 3370  reasonable professional probability.
 3371         4.3. A description of the tests performed.
 3372         5.4. A recommendation by the professional engineer of
 3373  methods for stabilizing the land and building and for making
 3374  repairs to the foundation.
 3375         (b) If there is no structural damage or if sinkhole
 3376  activity is eliminated as the cause of such damage to the
 3377  covered building structure, the professional engineer or
 3378  professional geologist shall issue a written report and
 3379  certification to the policyholder and the insurer stating:
 3380         1. That there is no structural damage or the cause of such
 3381  the damage is not sinkhole activity within a reasonable
 3382  professional probability.
 3383         2. That the analyses and tests conducted were of sufficient
 3384  scope to eliminate sinkhole activity as the cause of the
 3385  structural damage within a reasonable professional probability.
 3386         3. A statement of the cause of the structural damage within
 3387  a reasonable professional probability.
 3388         4. A description of the tests performed.
 3389         (c) The respective findings, opinions, and recommendations
 3390  of the insurer’s professional engineer or professional geologist
 3391  as to the cause of distress to the property and the findings,
 3392  opinions, and recommendations of the insurer’s professional
 3393  engineer as to land and building stabilization and foundation
 3394  repair set forth by s. 627.7072 shall be presumed correct.
 3395         (2)(a)An Any insurer that has paid a claim for a sinkhole
 3396  loss shall file a copy of the report and certification, prepared
 3397  pursuant to subsection (1), including the legal description of
 3398  the real property and the name of the property owner, the
 3399  neutral evaluator’s report, if any, which indicates that
 3400  sinkhole activity caused the damage claimed, a copy of the
 3401  certification indicating that stabilization has been completed,
 3402  if applicable, and the amount of the payment, with the county
 3403  clerk of court, who shall record the report and certification.
 3404  The insurer shall bear the cost of filing and recording one or
 3405  more reports and certifications the report and certification.
 3406  There shall be no cause of action or liability against an
 3407  insurer for compliance with this section.
 3408         (a) The recording of the report and certification does not:
 3409         1. Constitute a lien, encumbrance, or restriction on the
 3410  title to the real property or constitute a defect in the title
 3411  to the real property;
 3412         2. Create any cause of action or liability against any
 3413  grantor of the real property for breach of any warranty of good
 3414  title or warranty against encumbrances; or
 3415         3. Create any cause of action or liability against any
 3416  title insurer that insures the title to the real property.
 3417         (b) As a precondition to accepting payment for a sinkhole
 3418  loss, the policyholder must file a copy of any sinkhole report
 3419  regarding the insured property which was prepared on behalf or
 3420  at the request of the policyholder. The policyholder shall bear
 3421  the cost of filing and recording the sinkhole report. The
 3422  recording of the report does not:
 3423         1. Constitute a lien, encumbrance, or restriction on the
 3424  title to the real property or constitute a defect in the title
 3425  to the real property;
 3426         2. Create any cause of action or liability against any
 3427  grantor of the real property for breach of any warranty of good
 3428  title or warranty against encumbrances; or
 3429         3. Create any cause of action or liability against a title
 3430  insurer that insures the title to the real property.
 3431         (c)(b) The seller of real property upon which a sinkhole
 3432  claim has been made by the seller and paid by the insurer must
 3433  shall disclose to the buyer of such property, before the
 3434  closing, that a claim has been paid and whether or not the full
 3435  amount of the proceeds were used to repair the sinkhole damage.
 3436         (3) Upon completion of any building stabilization or
 3437  foundation repairs for a verified sinkhole loss, the
 3438  professional engineer responsible for monitoring the repairs
 3439  shall issue a report to the property owner which specifies what
 3440  repairs have been performed and certifies within a reasonable
 3441  degree of professional probability that such repairs have been
 3442  properly performed. The professional engineer issuing the report
 3443  shall file a copy of the report and certification, which
 3444  includes a legal description of the real property and the name
 3445  of the property owner, with the county clerk of the court, who
 3446  shall record the report and certification. This subsection does
 3447  not create liability for an insurer based on any representation
 3448  or certification by a professional engineer related to the
 3449  stabilization or foundation repairs for the verified sinkhole
 3450  loss.
 3451         Section 27. Section 627.7074, Florida Statutes, is amended
 3452  to read:
 3453         627.7074 Alternative procedure for resolution of disputed
 3454  sinkhole insurance claims.—
 3455         (1) As used in this section, the term:
 3456         (a) “Neutral evaluation” means the alternative dispute
 3457  resolution provided for in this section.
 3458         (b) “Neutral evaluator” means a professional engineer or a
 3459  professional geologist who has completed a course of study in
 3460  alternative dispute resolution designed or approved by the
 3461  department for use in the neutral evaluation process, who is
 3462  determined to be fair and impartial.
 3463         (1)(2)(a) The department shall:
 3464         (a) Certify and maintain a list of persons who are neutral
 3465  evaluators.
 3466         (b) The department shall Prepare a consumer information
 3467  pamphlet for distribution by insurers to policyholders which
 3468  clearly describes the neutral evaluation process and includes
 3469  information and forms necessary for the policyholder to request
 3470  a neutral evaluation.
 3471         (2) Neutral evaluation is available to either party if a
 3472  sinkhole report has been issued pursuant to s. 627.7073. At a
 3473  minimum, neutral evaluation must determine:
 3474         (a) Causation;
 3475         (b) All methods of stabilization and repair both above and
 3476  below ground;
 3477         (c) The costs for stabilization and all repairs; and
 3478         (d) Information necessary to carry out subsection (12).
 3479         (3) Following the receipt of the report provided under s.
 3480  627.7073 or the denial of a claim for a sinkhole loss, the
 3481  insurer shall notify the policyholder of his or her right to
 3482  participate in the neutral evaluation program under this
 3483  section. Neutral evaluation supersedes the alternative dispute
 3484  resolution process under s. 627.7015, but does not invalidate
 3485  the appraisal clause of the insurance policy. The insurer shall
 3486  provide to the policyholder the consumer information pamphlet
 3487  prepared by the department pursuant to subsection (1)
 3488  electronically or by United States mail paragraph (2)(b).
 3489         (4) Neutral evaluation is nonbinding, but mandatory if
 3490  requested by either party. A request for neutral evaluation may
 3491  be filed with the department by the policyholder or the insurer
 3492  on a form approved by the department. The request for neutral
 3493  evaluation must state the reason for the request and must
 3494  include an explanation of all the issues in dispute at the time
 3495  of the request. Filing a request for neutral evaluation tolls
 3496  the applicable time requirements for filing suit for a period of
 3497  60 days following the conclusion of the neutral evaluation
 3498  process or the time prescribed in s. 95.11, whichever is later.
 3499         (5) Neutral evaluation shall be conducted as an informal
 3500  process in which formal rules of evidence and procedure need not
 3501  be observed. A party to neutral evaluation is not required to
 3502  attend neutral evaluation if a representative of the party
 3503  attends and has the authority to make a binding decision on
 3504  behalf of the party. All parties shall participate in the
 3505  evaluation in good faith. The neutral evaluator must be allowed
 3506  reasonable access to the interior and exterior of insured
 3507  structures to be evaluated or for which a claim has been made.
 3508  Any reports initiated by the policyholder, or an agent of the
 3509  policyholder, confirming a sinkhole loss or disputing another
 3510  sinkhole report regarding insured structures must be provided to
 3511  the neutral evaluator before the evaluator’s physical inspection
 3512  of the insured property.
 3513         (6) The insurer shall pay reasonable the costs associated
 3514  with the neutral evaluation. However, if a party chooses to hire
 3515  a court reporter or stenographer to contemporaneously record and
 3516  document the neutral evaluation, that party must bear such
 3517  costs.
 3518         (7) Upon receipt of a request for neutral evaluation, the
 3519  department shall provide the parties a list of certified neutral
 3520  evaluators. The parties shall mutually select a neutral
 3521  evaluator from the list and promptly inform the department. If
 3522  the parties cannot agree to a neutral evaluator within 10
 3523  business days, The department shall allow the parties to submit
 3524  requests to disqualify evaluators on the list for cause.
 3525         (a) The department shall disqualify neutral evaluators for
 3526  cause based only on any of the following grounds:
 3527         1. A familial relationship exists between the neutral
 3528  evaluator and either party or a representative of either party
 3529  within the third degree.
 3530         2. The proposed neutral evaluator has, in a professional
 3531  capacity, previously represented either party or a
 3532  representative of either party, in the same or a substantially
 3533  related matter.
 3534         3. The proposed neutral evaluator has, in a professional
 3535  capacity, represented another person in the same or a
 3536  substantially related matter and that person’s interests are
 3537  materially adverse to the interests of the parties. The term
 3538  “substantially related matter” means participation by the
 3539  neutral evaluator on the same claim, property, or adjacent
 3540  property.
 3541         4. The proposed neutral evaluator has, within the preceding
 3542  5 years, worked as an employer or employee of any party to the
 3543  case.
 3544         (b) The parties shall appoint a neutral evaluator from the
 3545  department list and promptly inform the department. If the
 3546  parties cannot agree to a neutral evaluator within 14 business
 3547  days, the department shall appoint a neutral evaluator from the
 3548  list of certified neutral evaluators. The department shall allow
 3549  each party to disqualify two neutral evaluators without cause.
 3550  Upon selection or appointment, the department shall promptly
 3551  refer the request to the neutral evaluator.
 3552         (c) Within 14 5 business days after the referral, the
 3553  neutral evaluator shall notify the policyholder and the insurer
 3554  of the date, time, and place of the neutral evaluation
 3555  conference. The conference may be held by telephone, if feasible
 3556  and desirable. The neutral evaluator shall make reasonable
 3557  efforts to hold the neutral evaluation conference shall be held
 3558  within 90 45 days after the receipt of the request by the
 3559  department. Failure of the neutral evaluator to hold the
 3560  conference within 90 days does not invalidate either party’s
 3561  right to neutral evaluation or to a neutral evaluation
 3562  conference held outside this timeframe.
 3563         (8) The department shall adopt rules of procedure for the
 3564  neutral evaluation process.
 3565         (8)(9) For policyholders not represented by an attorney, a
 3566  consumer affairs specialist of the department or an employee
 3567  designated as the primary contact for consumers on issues
 3568  relating to sinkholes under s. 20.121 shall be available for
 3569  consultation to the extent that he or she may lawfully do so.
 3570         (9)(10) Evidence of an offer to settle a claim during the
 3571  neutral evaluation process, as well as any relevant conduct or
 3572  statements made in negotiations concerning the offer to settle a
 3573  claim, is inadmissible to prove liability or absence of
 3574  liability for the claim or its value, except as provided in
 3575  subsection (14) (13).
 3576         (10)(11)Regardless of when noticed, any court proceeding
 3577  related to the subject matter of the neutral evaluation shall be
 3578  stayed pending completion of the neutral evaluation and for 5
 3579  days after the filing of the neutral evaluator’s report with the
 3580  court.
 3581         (11) If, based upon his or her professional training and
 3582  credentials, a neutral evaluator is qualified to determine only
 3583  disputes relating to causation or method of repair, the
 3584  department shall allow the neutral evaluator to enlist the
 3585  assistance of another professional from the neutral evaluators
 3586  list not previously stricken, who, based upon his or her
 3587  professional training and credentials, is able to provide an
 3588  opinion as to other disputed issues. A professional who would be
 3589  disqualified for any reason listed in subsection (7) must be
 3590  disqualified. The neutral evaluator may also use the services of
 3591  professional engineers and professional geologists who are not
 3592  certified as neutral evaluators, as well as licensed building
 3593  contractors, in order to ensure that all items in dispute are
 3594  addressed and the neutral evaluation can be completed. Any
 3595  professional engineer, professional geologist, or licensed
 3596  building contractor retained may be disqualified for any of the
 3597  reasons listed in subsection (7). The neutral evaluator may
 3598  request the entity that performed the investigation pursuant to
 3599  s. 627.7072 perform such additional and reasonable testing as
 3600  deemed necessary in the professional opinion of the neutral
 3601  evaluator.
 3602         (12) At For matters that are not resolved by the parties at
 3603  the conclusion of the neutral evaluation, the neutral evaluator
 3604  shall prepare a report describing all matters that are the
 3605  subject of the neutral evaluation, including whether, stating
 3606  that in his or her opinion, the sinkhole loss has been verified
 3607  or eliminated within a reasonable degree of professional
 3608  probability and, if verified, whether the sinkhole activity
 3609  caused structural damage to the covered building, and if so, the
 3610  need for and estimated costs of stabilizing the land and any
 3611  covered structures or buildings and other appropriate
 3612  remediation or necessary building structural repairs due to the
 3613  sinkhole loss. The evaluator’s report shall be sent to all
 3614  parties in attendance at the neutral evaluation and to the
 3615  department, within 14 days after completing the neutral
 3616  evaluation conference.
 3617         (13) The recommendation of the neutral evaluator is not
 3618  binding on any party, and the parties retain access to the
 3619  court. The neutral evaluator’s written recommendation, oral
 3620  testimony, and full report shall be admitted is admissible in
 3621  any subsequent action, litigation, or proceeding relating to the
 3622  claim or to the cause of action giving rise to the claim.
 3623         (14) If the neutral evaluator first verifies the existence
 3624  of a sinkhole that caused structural damage and, second,
 3625  recommends the need for and estimates costs of stabilizing the
 3626  land and any covered structures or buildings and other
 3627  appropriate remediation or building structural repairs, which
 3628  costs exceed the amount that the insurer has offered to pay the
 3629  policyholder, the insurer is liable to the policyholder for up
 3630  to $2,500 in attorney’s fees for the attorney’s participation in
 3631  the neutral evaluation process. For purposes of this subsection,
 3632  the term “offer to pay” means a written offer signed by the
 3633  insurer or its legal representative and delivered to the
 3634  policyholder within 10 days after the insurer receives notice
 3635  that a request for neutral evaluation has been made under this
 3636  section.
 3637         (15) If the insurer timely agrees in writing to comply and
 3638  timely complies with the recommendation of the neutral
 3639  evaluator, but the policyholder declines to resolve the matter
 3640  in accordance with the recommendation of the neutral evaluator
 3641  pursuant to this section:
 3642         (a) The insurer is not liable for extracontractual damages
 3643  related to a claim for a sinkhole loss but only as related to
 3644  the issues determined by the neutral evaluation process. This
 3645  section does not affect or impair claims for extracontractual
 3646  damages unrelated to the issues determined by the neutral
 3647  evaluation process contained in this section; and
 3648         (b) The actions of the insurer are not a confession of
 3649  judgment or admission of liability, and the insurer is not
 3650  liable for attorney’s fees under s. 627.428 or other provisions
 3651  of the insurance code unless the policyholder obtains a judgment
 3652  that is more favorable than the recommendation of the neutral
 3653  evaluator.
 3654         (16) If the insurer agrees to comply with the neutral
 3655  evaluator’s report, payments shall be made in accordance with
 3656  the terms and conditions of the applicable insurance policy
 3657  pursuant to s. 627.707(5).
 3658         (17) Neutral evaluators are deemed to be agents of the
 3659  department and have immunity from suit as provided in s. 44.107.
 3660         (18) The department shall adopt rules of procedure for the
 3661  neutral evaluation process.
 3662         Section 28. Subsection (8) of section 627.711, Florida
 3663  Statutes, is amended to read:
 3664         627.711 Notice of premium discounts for hurricane loss
 3665  mitigation; uniform mitigation verification inspection form.—
 3666         (8) At its expense, the insurer may require that a any
 3667  uniform mitigation verification form provided by a policyholder,
 3668  a policyholder’s agent, or an authorized mitigation inspector or
 3669  inspection company be independently verified by an inspector, an
 3670  inspection company, or an independent third-party quality
 3671  assurance provider which possesses does possess a quality
 3672  assurance program before prior to accepting the uniform
 3673  mitigation verification form as valid.
 3674         Section 29. Subsection (1) of section 627.712, Florida
 3675  Statutes, is amended to read:
 3676         627.712 Residential windstorm coverage required;
 3677  availability of exclusions for windstorm or contents.—
 3678         (1) An insurer issuing a residential property insurance
 3679  policy must provide windstorm coverage. Except as provided in
 3680  paragraph (2)(c), this section does not apply with respect to
 3681  risks that are eligible for wind-only coverage from Citizens
 3682  Property Insurance Corporation under s. 627.351(6), and with
 3683  respect to risks that are not eligible for coverage from
 3684  Citizens Property Insurance Corporation under s. 627.351(6)(a)3.
 3685  or 5. A risk ineligible for Citizens coverage by the corporation
 3686  under s. 627.351(6)(a)3. or 5. is exempt from the requirements
 3687  of this section only if the risk is located within the
 3688  boundaries of the coastal high-risk account of the corporation.
 3689         Section 30. Subsection (3) of section 631.54, Florida
 3690  Statutes, is amended to read:
 3691         631.54 Definitions.—As used in this part:
 3692         (3) “Covered claim” means an unpaid claim, including one of
 3693  unearned premiums, which arises out of, and is within the
 3694  coverage, and not in excess of, the applicable limits of an
 3695  insurance policy to which this part applies, issued by an
 3696  insurer, if such insurer becomes an insolvent insurer and the
 3697  claimant or insured is a resident of this state at the time of
 3698  the insured event or the property from which the claim arises is
 3699  permanently located in this state. For entities other than
 3700  individuals, the residence of a claimant, insured, or
 3701  policyholder is the state in which the entity’s principal place
 3702  of business is located at the time of the insured event. The
 3703  term does “Covered claim” shall not include:
 3704         (a) Any amount due any reinsurer, insurer, insurance pool,
 3705  or underwriting association, sought directly or indirectly
 3706  through a third party, as subrogation, contribution,
 3707  indemnification, or otherwise; or
 3708         (b) Any claim that would otherwise be a covered claim under
 3709  this part that has been rejected by any other state guaranty
 3710  fund on the grounds that an insured’s net worth is greater than
 3711  that allowed under that state’s guaranty law. Member insurers
 3712  shall have no right of subrogation, contribution,
 3713  indemnification, or otherwise, sought directly or indirectly
 3714  through a third party, against the insured of any insolvent
 3715  member; or
 3716         (c) Any amount payable for a sinkhole loss other than
 3717  testing deemed appropriate by the association or payable for the
 3718  actual repair of the loss, except that the association may not
 3719  pay for attorney’s fees or public adjuster’s fees in connection
 3720  with a sinkhole loss or pay the policyholder. The association
 3721  may pay for actual repairs to the property, but is not liable
 3722  for amounts in excess of policy limits.
 3723         Section 31. If any provision of this act, or the
 3724  application thereof to any person or circumstance is held
 3725  invalid, such invalidity shall not affect other provisions or
 3726  applications of this act which can be given effect without the
 3727  invalid provision or application. It is the express intent of
 3728  the Legislature to enact multiple important, but independent,
 3729  reforms to Florida law relating to sinkhole insurance coverage
 3730  and related claims. The Legislature further intends that the
 3731  multiple reforms in the act could and should be enforced if one
 3732  or more provisions are held invalid. To this end, the provisions
 3733  of this act are declared to be severable.
 3734         Section 32. Except as otherwise expressly provided in this
 3735  act, this act shall take effect upon becoming a law.