Florida Senate - 2011                CS for CS for CS for SB 408
       
       
       
       By the Committees on Rules; Budget Subcommittee on General
       Government Appropriations; and Banking and Insurance; and
       Senators Richter and Hays
       
       
       595-03920-11                                           2011408c3
    1                        A bill to be entitled                      
    2         An act relating to property and casualty insurance;
    3         amending s. 215.555, F.S.; revising the definition of
    4         “losses,” relating to the Florida Hurricane
    5         Catastrophe Fund, to exclude certain losses; providing
    6         applicability; amending s. 215.5595, F.S.; authorizing
    7         an insurer to renegotiate the terms a surplus note
    8         issued before a certain date; providing limitations;
    9         amending s. 624.407, F.S.; revising the amount of
   10         surplus funds required for domestic insurers applying
   11         for a certificate of authority after a certain date;
   12         amending s. 624.408, F.S.; revising the minimum
   13         surplus that must be maintained by certain insurers;
   14         authorizing the Office of Insurance Regulation to
   15         reduce the surplus requirement under specified
   16         circumstances; amending s. 624.4095, F.S.; excluding
   17         certain premiums for federal multiple-peril crop
   18         insurance from calculations for an insurer’s gross
   19         writing ratio; requiring insurers to disclose the
   20         gross written premiums for federal multiple-peril crop
   21         insurance in a financial statement; amending s.
   22         624.424, F.S.; revising the frequency that an insurer
   23         may use the same accountant or partner to prepare an
   24         annual audited financial report; amending s. 626.854,
   25         F.S.; providing limitations on the amount of
   26         compensation that may be received by a public adjuster
   27         for a reopened or supplemental claim; providing
   28         statements that may be considered deceptive or
   29         misleading if made in any public adjuster’s
   30         advertisement or solicitation; providing a definition
   31         for the term “written advertisement”; requiring that a
   32         disclaimer be included in any public adjuster’s
   33         written advertisement; providing requirements for such
   34         disclaimer; requiring certain persons who act on
   35         behalf of an insurer to provide notice to the insurer,
   36         claimant, public adjuster, or legal representative for
   37         an onsite inspection of the insured property;
   38         authorizing the insured or claimant to deny access to
   39         the property if notice is not provided; requiring the
   40         public adjuster to ensure prompt notice of certain
   41         property loss claims; providing that an insurer be
   42         allowed to interview the insured directly about the
   43         loss claim; prohibiting the insurer from obstructing
   44         or preventing the public adjuster from communicating
   45         with the insured; requiring that the insurer
   46         communicate with the public adjuster in an effort to
   47         reach an agreement as to the scope of the covered loss
   48         under the insurance policy; prohibiting a public
   49         adjuster from restricting or preventing persons acting
   50         on behalf of the insured from having reasonable access
   51         to the insured or the insured’s property; prohibiting
   52         a public adjuster from restricting or preventing the
   53         insured’s adjuster from having reasonable access to or
   54         inspecting the insured’s property; authorizing the
   55         insured’s adjuster to be present for the inspection;
   56         prohibiting a licensed contractor or subcontractor
   57         from adjusting a claim on behalf of an insured if such
   58         contractor or subcontractor is not a licensed public
   59         adjuster; providing an exception; amending s.
   60         626.8651, F.S.; requiring that a public adjuster
   61         apprentice complete a minimum number of hours of
   62         continuing education to qualify for licensure;
   63         amending s. 626.8796, F.S.; providing requirements for
   64         a public adjuster contract; creating s. 626.70132,
   65         F.S.; requiring that notice of a claim, supplemental
   66         claim, or reopened claim be given to the insurer
   67         within a specified period after a windstorm or
   68         hurricane occurs; providing a definition for the terms
   69         “supplemental claim” or “reopened claim”; providing
   70         applicability; repealing s. 627.0613(4), F.S.,
   71         relating to the requirement that the consumer advocate
   72         for the Chief Financial Officer prepare an annual
   73         report card for each personal residential property
   74         insurer; amending s. 627.062, F.S.; requiring that the
   75         office issue an approval rather than a notice of
   76         intent to approve following its approval of a file and
   77         use filing; authorizing the office to disapprove a
   78         rate filing because the coverage is inadequate or the
   79         insurer charges a higher premium due to certain
   80         discriminatory factors; extending the expiration date
   81         for making a “file and use” filing; prohibiting the
   82         Office of Insurance Regulation from, directly or
   83         indirectly, impeding the right of an insurer to
   84         acquire policyholders, advertise or appoint agents, or
   85         regulate agent commissions; revising the information
   86         that must be included in a rate filing relating to
   87         certain reinsurance or financing products; deleting a
   88         provision that prohibited an insurer from making
   89         certain rate filings within a certain period of time
   90         after a rate increase; deleting a provision
   91         prohibiting an insurer from filing for a rate increase
   92         within 6 months after it makes certain rate filings;
   93         deleting obsolete provisions relating to legislation
   94         enacted during the 2003 Special Session D of the
   95         Legislature; providing for the submission of
   96         additional or supplementary information pursuant to a
   97         rate filing; amending s. 627.0629, F.S.; deleting
   98         obsolete provisions; deleting a requirement that the
   99         Office of Insurance Regulation propose a method for
  100         establishing discounts, debits, credits, and other
  101         rate differentials for hurricane mitigation by a
  102         certain date; requiring the Financial Services
  103         Commission to adopt rules relating to such debits by a
  104         certain date; deleting a provision that prohibits an
  105         insurer from including an expense or profit load in
  106         the cost of reinsurance to replace the Temporary
  107         Increase in Coverage Limits; conforming provisions to
  108         changes made by the act; amending s. 627.351, F.S.;
  109         renaming the “Citizens Property Insurance Corporation”
  110         as the “Taxpayer-Funded Property Insurance
  111         Corporation”; requiring policies issued by the
  112         corporation to include a provision that prohibits
  113         policyholders from engaging the services of a public
  114         adjuster until after the corporation has tendered an
  115         offer; limiting an adjuster’s fee for a claim against
  116         the corporation; renaming the “high-risk account” as
  117         the “coastal account”; revising the conditions under
  118         which the Citizens policyholder surcharge may be
  119         imposed; providing that members of the Citizens
  120         Property Insurance Corporation Board of Governors are
  121         not prohibited from practicing in a certain profession
  122         if not prohibited by law or ordinance; limiting
  123         coverage for damage from sinkholes after a certain
  124         date and providing that the corporation must require
  125         repair of the property as a condition of any payment;
  126         prohibiting board members from voting on certain
  127         measures; exempting sinkhole coverage from the
  128         corporation’s annual rate increase requirements;
  129         deleting a requirement that the board reduce the
  130         boundaries of certain high-risk areas eligible for
  131         wind-only coverages under certain circumstances;
  132         amending s. 627.3511, F.S.; conforming provisions to
  133         changes made by the act; amending s. 627.4133, F.S.;
  134         revising the requirements for providing an insured
  135         with notice of nonrenewal, cancellation, or
  136         termination of personal lines or commercial
  137         residential property insurance; authorizing an insurer
  138         to cancel policies after 45 days’ notice if the Office
  139         of Insurance Regulation determines that the
  140         cancellation of policies is necessary to protect the
  141         interests of the public or policyholders; authorizing
  142         the Office of Insurance Regulation to place an insurer
  143         under administrative supervision or appoint a receiver
  144         upon the consent of the insurer under certain
  145         circumstances; creating s. 627.43141, F.S.; providing
  146         definitions; requiring the delivery of a “Notice of
  147         Change in Policy Terms” under certain circumstances;
  148         specifying requirements for such notice; specifying
  149         actions constituting proof of notice; authorizing
  150         policy renewals to contain a change in policy terms;
  151         providing that receipt of payment by an insurer is
  152         deemed acceptance of new policy terms by an insured;
  153         providing that the original policy remains in effect
  154         until the occurrence of specified events if an insurer
  155         fails to provide notice; providing intent; amending s.
  156         627.7011, F.S.; requiring the insurer to pay the
  157         actual cash value of an insured loss for a dwelling,
  158         less any applicable deductible; requiring a
  159         policyholder to enter into a contract for the
  160         performance of building and structural repairs unless
  161         waived by the insurer; restricting insurers and
  162         contractors from requiring advance payments for
  163         repairs and expenses; requiring the insurer to offer
  164         coverage under which the insurer is obligated to pay
  165         replacement costs; authorizing the insurer to offer
  166         coverage that limits the initial payment for personal
  167         property to the actual cash value of the property to
  168         be replaced and to require the insured to provide
  169         receipts for purchases; requiring the insurer to
  170         provide notice of this process in the insurance
  171         contract; prohibiting an insurer from requiring the
  172         insured to advance payment; amending s. 627.70131,
  173         F.S.; specifying application of certain time periods
  174         to initial or supplemental property insurance claim
  175         notices and payments; providing legislative findings
  176         with respect to 2005 statutory changes relating to
  177         sinkhole insurance coverage and statutory changes in
  178         this act; amending s. 627.706, F.S.; authorizing an
  179         insurer to limit coverage for catastrophic ground
  180         cover collapse to the principal building and to have
  181         discretion to provide additional coverage; allowing
  182         the deductible to include costs relating to an
  183         investigation of whether sinkhole activity is present;
  184         revising definitions; defining the term “structural
  185         damage”; providing an insurer with discretion to
  186         provide a policyholder with an opportunity to purchase
  187         an endorsement to sinkhole coverage; placing a 2-year
  188         statute of repose on claims for sinkhole coverage;
  189         amending s. 627.7061, F.S.; conforming provisions to
  190         changes made by the act; repealing s. 627.7065, F.S.,
  191         relating to the establishment of a sinkhole database;
  192         amending s. 627.707, F.S.; revising provisions
  193         relating to the investigation of sinkholes by
  194         insurers; deleting a requirement that the insurer
  195         provide a policyholder with a statement regarding
  196         testing for sinkhole activity; providing a time
  197         limitation for demanding sinkhole testing by a
  198         policyholder and entering into a contract for repairs;
  199         requiring all repairs to be completed within a certain
  200         time; providing exceptions; providing a criminal
  201         penalty on a policyholder for accepting rebates from
  202         persons performing repairs; amending s. 627.7073,
  203         F.S.; revising provisions relating to inspection
  204         reports; providing that the presumption that the
  205         report is correct shifts the burden of proof; revising
  206         the reports that an insurer must file with the clerk
  207         of the court; requiring the policyholder to file
  208         certain reports as a precondition to accepting
  209         payment; requiring the professional engineer
  210         responsible for monitoring sinkhole repairs to issue a
  211         report and certification to the property owner and
  212         file such report with the court; providing that the
  213         act does not create liability for an insurer based on
  214         a representation or certification by the engineer;
  215         amending s. 627.7074, F.S.; revising provisions
  216         relating to neutral evaluation; requiring evaluation
  217         in order to make certain determinations; requiring
  218         that the neutral evaluator be allowed access to
  219         structures being evaluated; providing grounds for
  220         disqualifying an evaluator; allowing the Department of
  221         Financial Services to appoint an evaluator if the
  222         parties cannot come to agreement; revising the
  223         timeframes for scheduling a neutral evaluation
  224         conference; authorizing an evaluator to enlist another
  225         evaluator or other professionals; providing a time
  226         certain for issuing a report; providing that certain
  227         information is confidential; revising provisions
  228         relating to compliance with the evaluator’s
  229         recommendations; providing that the evaluator is an
  230         agent of the department for the purposes of immunity
  231         from suit; requiring the department to adopt rules;
  232         amending s. 627.711, F.S.; deleting the requirement
  233         that the insurer pay for verification of a uniform
  234         mitigation verification form that the insurer
  235         requires; amending s. 627.712, F.S.; conforming
  236         provisions to changes made by the act; providing
  237         effective dates.
  238  
  239  Be It Enacted by the Legislature of the State of Florida:
  240  
  241         Section 1. Effective June 1, 2011, paragraph (d) of
  242  subsection (2) of section 215.555, Florida Statutes, is amended
  243  to read
  244         215.555 Florida Hurricane Catastrophe Fund.—
  245         (2) DEFINITIONS.—As used in this section:
  246         (d) “Losses” means all direct incurred losses under covered
  247  policies, including which shall include losses for additional
  248  living expenses not to exceed 40 percent of the insured value of
  249  a residential structure or its contents and amounts paid as fees
  250  on behalf of or inuring to the benefit of a policyholder shall
  251  exclude loss adjustment expenses. The term “Losses” does not
  252  include:
  253         1. Losses for fair rental value, loss of rent or rental
  254  income, or business interruption losses;
  255         2. Losses under liability coverages;
  256         3. Property losses that are proximately caused by any peril
  257  other than a covered event, including, but not limited to, fire,
  258  theft, flood or rising water, or windstorm that does not
  259  constitute a covered event;
  260         4. Amounts paid as the result of a voluntary expansion of
  261  coverage by the insurer, including, but not limited to, a waiver
  262  of an applicable deductible;
  263         5. Amounts paid to reimburse a policyholder for condominium
  264  association or homeowners’ association loss assessments or under
  265  similar coverages for contractual liabilities;
  266         6. Amounts paid as bad faith awards, punitive damage
  267  awards, or other court-imposed fines, sanctions, or penalties;
  268         7. Amounts in excess of the coverage limits under the
  269  covered policy; or
  270         8. Allocated or unallocated loss adjustment expenses.
  271         Section 2. The amendment to s. 215.555, Florida Statutes,
  272  made by this act applies first to the Florida Hurricane
  273  Catastrophe Fund reimbursement contract that takes effect June
  274  1, 2011.
  275         Section 3. Subsection (12) is added to section 215.5595,
  276  Florida Statutes, to read:
  277         215.5595 Insurance Capital Build-Up Incentive Program.—
  278         (12) The insurer may request that the board renegotiate the
  279  terms of any surplus note issued under this section before
  280  January 1, 2011. The request must be submitted to the board by
  281  January 1, 2012. If the insurer agrees to accelerate the payment
  282  period of the note by at least 5 years, the board must agree to
  283  exempt the insurer from the premium-to-surplus ratios required
  284  under paragraph (2)(d). If the insurer agrees to an acceleration
  285  of the payment period for less than 5 years, the board may,
  286  after consultation with the Office of Insurance Regulation,
  287  agree to an appropriate revision of the premium-to-surplus
  288  ratios required under paragraph (2)(d) for the remaining term of
  289  the note if the revised ratios are not lower than a minimum
  290  writing ratio of net premium to surplus of at least 1 to 1 and,
  291  alternatively, a minimum writing ratio of gross premium to
  292  surplus of at least 3 to 1.
  293         Section 4. Section 624.407, Florida Statutes, is amended to
  294  read:
  295         624.407 Surplus Capital funds required; new insurers.—
  296         (1) To receive authority to transact any one kind or
  297  combinations of kinds of insurance, as defined in part V of this
  298  chapter, an insurer applying for its original certificate of
  299  authority in this state after November 10, 1993, the effective
  300  date of this section shall possess surplus funds as to
  301  policyholders at least not less than the greater of:
  302         (a) Five million dollars For a property and casualty
  303  insurer, $5 million, or $2.5 million for any other insurer;
  304         (b) For life insurers, 4 percent of the insurer’s total
  305  liabilities;
  306         (c) For life and health insurers, 4 percent of the
  307  insurer’s total liabilities, plus 6 percent of the insurer’s
  308  liabilities relative to health insurance; or
  309         (d) For all insurers other than life insurers and life and
  310  health insurers, 10 percent of the insurer’s total liabilities;
  311  or
  312         (e) Notwithstanding paragraph (a) or paragraph (d), for a
  313  domestic insurer that transacts residential property insurance
  314  and is:
  315         1. Not a wholly owned subsidiary of an insurer domiciled in
  316  any other state, $15 million.
  317         2.however, a domestic insurer that transacts residential
  318  property insurance and is A wholly owned subsidiary of an
  319  insurer domiciled in any other state, shall possess surplus as
  320  to policyholders of at least $50 million.
  321         (2) Notwithstanding subsection (1), a new insurer may not
  322  be required, but no insurer shall be required under this
  323  subsection to have surplus as to policyholders greater than $100
  324  million.
  325         (3)(2) The requirements of this section shall be based upon
  326  all the kinds of insurance actually transacted or to be
  327  transacted by the insurer in any and all areas in which it
  328  operates, whether or not only a portion of such kinds of
  329  insurance are to be transacted in this state.
  330         (4)(3) As to surplus funds as to policyholders required for
  331  qualification to transact one or more kinds of insurance,
  332  domestic mutual insurers are governed by chapter 628, and
  333  domestic reciprocal insurers are governed by chapter 629.
  334         (5)(4) For the purposes of this section, liabilities do
  335  shall not include liabilities required under s. 625.041(4). For
  336  purposes of computing minimum surplus funds as to policyholders
  337  pursuant to s. 625.305(1), liabilities shall include liabilities
  338  required under s. 625.041(4).
  339         (6)(5) The provisions of this section, as amended by
  340  chapter 89-360, Laws of Florida this act, shall apply only to
  341  insurers applying for a certificate of authority on or after
  342  October 1, 1989 the effective date of this act.
  343         Section 5. Section 624.408, Florida Statutes, is amended to
  344  read:
  345         624.408 Surplus funds as to policyholders required; current
  346  new and existing insurers.—
  347         (1)(a) To maintain a certificate of authority to transact
  348  any one kind or combinations of kinds of insurance, as defined
  349  in part V of this chapter, an insurer in this state must shall
  350  at all times maintain surplus funds as to policyholders at least
  351  not less than the greater of:
  352         (a)1. Except as provided in paragraphs (e),(f), and (g)
  353  subparagraph 5. and paragraph (b), $1.5 million.;
  354         (b)2. For life insurers, 4 percent of the insurer’s total
  355  liabilities.;
  356         (c)3. For life and health insurers, 4 percent of the
  357  insurer’s total liabilities plus 6 percent of the insurer’s
  358  liabilities relative to health insurance.; or
  359         (d)4. For all insurers other than mortgage guaranty
  360  insurers, life insurers, and life and health insurers, 10
  361  percent of the insurer’s total liabilities.
  362         (e)5. For property and casualty insurers, $4 million,
  363  except for property and casualty insurers authorized to
  364  underwrite any line of residential property insurance.
  365         (f)(b) For residential any property insurers not and
  366  casualty insurer holding a certificate of authority before July
  367  1, 2011 on December 1, 1993, $15 million. the
  368         (g) For residential property insurers holding a certificate
  369  of authority before July 1, 2011, and until June 30, 2016, $5
  370  million; on or after July 1, 2016, and until June 30, 2021, $10
  371  million; on or after July 1, 2021, $15 million. The office may
  372  reduce this surplus requirement if the insurer is not writing
  373  new business, has premiums in force of less than $1 million per
  374  year in residential property insurance, or is a mutual insurance
  375  company. following amounts apply instead of the $4 million
  376  required by subparagraph (a)5.:
  377         1.On December 31, 2001, and until December 30, 2002, $3
  378  million.
  379         2.On December 31, 2002, and until December 30, 2003, $3.25
  380  million.
  381         3.On December 31, 2003, and until December 30, 2004, $3.6
  382  million.
  383         4.On December 31, 2004, and thereafter, $4 million.
  384         (2) For purposes of this section, liabilities do shall not
  385  include liabilities required under s. 625.041(4). For purposes
  386  of computing minimum surplus as to policyholders pursuant to s.
  387  625.305(1), liabilities shall include liabilities required under
  388  s. 625.041(4).
  389         (3) This section does not require an No insurer shall be
  390  required under this section to have surplus as to policyholders
  391  greater than $100 million.
  392         (4) A mortgage guaranty insurer shall maintain a minimum
  393  surplus as required by s. 635.042.
  394         Section 6. Subsection (7) is added to section 624.4095,
  395  Florida Statutes, to read:
  396         624.4095 Premiums written; restrictions.—
  397         (7)For the purposes of this section and ss. 624.407 and
  398  624.408, with respect to capital and surplus requirements, gross
  399  written premiums for federal multiple-peril crop insurance which
  400  are ceded to the Federal Crop Insurance Corporation or
  401  authorized reinsurers may not be included in the calculation of
  402  an insurer’s gross writing ratio. The liabilities for ceded
  403  reinsurance premiums payable for federal multiple-peril crop
  404  insurance ceded to the Federal Crop Insurance Corporation and
  405  authorized reinsurers shall be netted against the asset for
  406  amounts recoverable from reinsurers. Each insurer that writes
  407  other insurance products together with federal multiple-peril
  408  crop insurance must disclose in the notes to its annual and
  409  quarterly financial statements, or in a supplement to those
  410  statements, the gross written premiums for federal multiple
  411  peril crop insurance.
  412         Section 7. Paragraph (d) of subsection (8) of section
  413  624.424, Florida Statutes, is amended to read:
  414         624.424 Annual statement and other information.—
  415         (8)
  416         (d) An insurer may not use the same accountant or partner
  417  of an accounting firm responsible for preparing the report
  418  required by this subsection for more than 5 7 consecutive years.
  419  Following this period, the insurer may not use such accountant
  420  or partner for a period of 5 2 years, but may use another
  421  accountant or partner of the same firm. An insurer may request
  422  the office to waive this prohibition based upon an unusual
  423  hardship to the insurer and a determination that the accountant
  424  is exercising independent judgment that is not unduly influenced
  425  by the insurer considering such factors as the number of
  426  partners, expertise of the partners or the number of insurance
  427  clients of the accounting firm; the premium volume of the
  428  insurer; and the number of jurisdictions in which the insurer
  429  transacts business.
  430         Section 8. Effective June 1, 2011, subsection (11) of
  431  section 626.854, Florida Statutes, is amended to read:
  432         626.854 “Public adjuster” defined; prohibitions.—The
  433  Legislature finds that it is necessary for the protection of the
  434  public to regulate public insurance adjusters and to prevent the
  435  unauthorized practice of law.
  436         (11)(a) If a public adjuster enters into a contract with an
  437  insured or claimant to reopen a claim or to file a supplemental
  438  claim that seeks additional payments for a claim that has been
  439  previously paid in part or in full or settled by the insurer,
  440  the public adjuster may not charge, agree to, or accept any
  441  compensation, payment, commission, fee, or other thing of value
  442  based on a previous settlement or previous claim payments by the
  443  insurer for the same cause of loss. The charge, compensation,
  444  payment, commission, fee, or other thing of value must may be
  445  based only on the claim payments or settlement obtained through
  446  the work of the public adjuster after entering into the contract
  447  with the insured or claimant. Compensation for the reopened or
  448  supplemental claim may not exceed 20 percent of the reopened or
  449  supplemental claim payment. The contracts described in this
  450  paragraph are not subject to the limitations in paragraph (b).
  451         (b) A public adjuster may not charge, agree to, or accept
  452  any compensation, payment, commission, fee, or other thing of
  453  value in excess of:
  454         1. Ten percent of the amount of insurance claim payments
  455  made by the insurer for claims based on events that are the
  456  subject of a declaration of a state of emergency by the
  457  Governor. This provision applies to claims made during the
  458  period of 1 year after the declaration of emergency. After that
  459  year, the limitations in subparagraph 2. apply.
  460         2. Twenty percent of the amount of all other insurance
  461  claim payments made by the insurer for claims that are not based
  462  on events that are the subject of a declaration of a state of
  463  emergency by the Governor.
  464  
  465  The provisions of subsections (5)-(13) apply only to residential
  466  property insurance policies and condominium association policies
  467  as defined in s. 718.111(11).
  468         Section 9. Effective January 1, 2012, section 626.854,
  469  Florida Statutes, as amended by this act, is amended to read:
  470         626.854 “Public adjuster” defined; prohibitions.—The
  471  Legislature finds that it is necessary for the protection of the
  472  public to regulate public insurance adjusters and to prevent the
  473  unauthorized practice of law.
  474         (1) A “public adjuster” is any person, except a duly
  475  licensed attorney at law as exempted under hereinafter in s.
  476  626.860 provided, who, for money, commission, or any other thing
  477  of value, prepares, completes, or files an insurance claim form
  478  for an insured or third-party claimant or who, for money,
  479  commission, or any other thing of value, acts or aids in any
  480  manner on behalf of, or aids an insured or third-party claimant
  481  in negotiating for or effecting the settlement of a claim or
  482  claims for loss or damage covered by an insurance contract or
  483  who advertises for employment as an adjuster of such claims. The
  484  term, and also includes any person who, for money, commission,
  485  or any other thing of value, solicits, investigates, or adjusts
  486  such claims on behalf of a any such public adjuster.
  487         (2) This definition does not apply to:
  488         (a) A licensed health care provider or employee thereof who
  489  prepares or files a health insurance claim form on behalf of a
  490  patient.
  491         (b) A person who files a health claim on behalf of another
  492  and does so without compensation.
  493         (3) A public adjuster may not give legal advice or. A
  494  public adjuster may not act on behalf of or aid any person in
  495  negotiating or settling a claim relating to bodily injury,
  496  death, or noneconomic damages.
  497         (4) For purposes of this section, the term “insured”
  498  includes only the policyholder and any beneficiaries named or
  499  similarly identified in the policy.
  500         (5) A public adjuster may not directly or indirectly
  501  through any other person or entity solicit an insured or
  502  claimant by any means except on Monday through Saturday of each
  503  week and only between the hours of 8 a.m. and 8 p.m. on those
  504  days.
  505         (6) A public adjuster may not directly or indirectly
  506  through any other person or entity initiate contact or engage in
  507  face-to-face or telephonic solicitation or enter into a contract
  508  with any insured or claimant under an insurance policy until at
  509  least 48 hours after the occurrence of an event that may be the
  510  subject of a claim under the insurance policy unless contact is
  511  initiated by the insured or claimant.
  512         (7) An insured or claimant may cancel a public adjuster’s
  513  contract to adjust a claim without penalty or obligation within
  514  3 business days after the date on which the contract is executed
  515  or within 3 business days after the date on which the insured or
  516  claimant has notified the insurer of the claim, by phone or in
  517  writing, whichever is later. The public adjuster’s contract must
  518  shall disclose to the insured or claimant his or her right to
  519  cancel the contract and advise the insured or claimant that
  520  notice of cancellation must be submitted in writing and sent by
  521  certified mail, return receipt requested, or other form of
  522  mailing that which provides proof thereof, to the public
  523  adjuster at the address specified in the contract; provided,
  524  during any state of emergency as declared by the Governor and
  525  for a period of 1 year after the date of loss, the insured or
  526  claimant has shall have 5 business days after the date on which
  527  the contract is executed to cancel a public adjuster’s contract.
  528         (8) It is an unfair and deceptive insurance trade practice
  529  pursuant to s. 626.9541 for a public adjuster or any other
  530  person to circulate or disseminate any advertisement,
  531  announcement, or statement containing any assertion,
  532  representation, or statement with respect to the business of
  533  insurance which is untrue, deceptive, or misleading.
  534         (a) The following statements, made in any public adjuster’s
  535  advertisement or solicitation, are considered deceptive or
  536  misleading:
  537         1. A statement or representation that invites an insured
  538  policyholder to submit a claim when the policyholder does not
  539  have covered damage to insured property.
  540         2. A statement or representation that invites an insured
  541  policyholder to submit a claim by offering monetary or other
  542  valuable inducement.
  543         3. A statement or representation that invites an insured
  544  policyholder to submit a claim by stating that there is “no
  545  risk” to the policyholder by submitting such claim.
  546         4. A statement or representation, or use of a logo or
  547  shield, that implies or could mistakenly be construed to imply
  548  that the solicitation was issued or distributed by a
  549  governmental agency or is sanctioned or endorsed by a
  550  governmental agency.
  551         (b) For purposes of this paragraph, the term “written
  552  advertisement” includes only newspapers, magazines, flyers, and
  553  bulk mailers. The following disclaimer, which is not required to
  554  be printed on standard size business cards, must be added in
  555  bold print and capital letters in typeface no smaller than the
  556  typeface of the body of the text to all written advertisements
  557  by a public adjuster:
  558         “THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD
  559         A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU
  560         ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU
  561         MAY DISREGARD THIS ADVERTISEMENT.”
  562  
  563         (9) A public adjuster, a public adjuster apprentice, or any
  564  person or entity acting on behalf of a public adjuster or public
  565  adjuster apprentice may not give or offer to give a monetary
  566  loan or advance to a client or prospective client.
  567         (10) A public adjuster, public adjuster apprentice, or any
  568  individual or entity acting on behalf of a public adjuster or
  569  public adjuster apprentice may not give or offer to give,
  570  directly or indirectly, any article of merchandise having a
  571  value in excess of $25 to any individual for the purpose of
  572  advertising or as an inducement to entering into a contract with
  573  a public adjuster.
  574         (11)(a) If a public adjuster enters into a contract with an
  575  insured or claimant to reopen a claim or file a supplemental
  576  claim that seeks additional payments for a claim that has been
  577  previously paid in part or in full or settled by the insurer,
  578  the public adjuster may not charge, agree to, or accept any
  579  compensation, payment, commission, fee, or other thing of value
  580  based on a previous settlement or previous claim payments by the
  581  insurer for the same cause of loss. The charge, compensation,
  582  payment, commission, fee, or other thing of value must be based
  583  only on the claim payments or settlement obtained through the
  584  work of the public adjuster after entering into the contract
  585  with the insured or claimant. Compensation for the reopened or
  586  supplemental claim may not exceed 20 percent of the reopened or
  587  supplemental claim payment. The contracts described in this
  588  paragraph are not subject to the limitations in paragraph (b).
  589         (b) A public adjuster may not charge, agree to, or accept
  590  any compensation, payment, commission, fee, or other thing of
  591  value in excess of:
  592         1. Ten percent of the amount of insurance claim payments
  593  made by the insurer for claims based on events that are the
  594  subject of a declaration of a state of emergency by the
  595  Governor. This provision applies to claims made during the year
  596  after the declaration of emergency. After that year, the
  597  limitations in subparagraph 2. apply.
  598         2. Twenty percent of the amount of insurance claim payments
  599  made by the insurer for claims that are not based on events that
  600  are the subject of a declaration of a state of emergency by the
  601  Governor.
  602         (12) Each public adjuster must shall provide to the
  603  claimant or insured a written estimate of the loss to assist in
  604  the submission of a proof of loss or any other claim for payment
  605  of insurance proceeds. The public adjuster shall retain such
  606  written estimate for at least 5 years and shall make the such
  607  estimate available to the claimant or insured and the department
  608  upon request.
  609         (13) A public adjuster, public adjuster apprentice, or any
  610  person acting on behalf of a public adjuster or apprentice may
  611  not accept referrals of business from any person with whom the
  612  public adjuster conducts business if there is any form or manner
  613  of agreement to compensate the person, whether directly or
  614  indirectly, for referring business to the public adjuster. A
  615  public adjuster may not compensate any person, except for
  616  another public adjuster, whether directly or indirectly, for the
  617  principal purpose of referring business to the public adjuster.
  618         (14) A company employee adjuster, independent adjuster,
  619  attorney, investigator, or other persons acting on behalf of an
  620  insurer that needs access to an insured or claimant or to the
  621  insured property that is the subject of a claim must provide at
  622  least 48 hours’ notice to the insured or claimant, public
  623  adjuster, or legal representative before scheduling a meeting
  624  with the claimant or an onsite inspection of the insured
  625  property. The insured or claimant may deny access to the
  626  property if the notice has not been provided. The insured or
  627  claimant may waive the 48-hour notice.
  628         (15) A public adjuster must ensure prompt notice of
  629  property loss claims submitted to an insurer by or through a
  630  public adjuster or on which a public adjuster represents the
  631  insured at the time the claim or notice of loss is submitted to
  632  the insurer. The public adjuster must ensure that notice is
  633  given to the insurer, the public adjuster’s contract is provided
  634  to the insurer, the property is available for inspection of the
  635  loss or damage by the insurer, and the insurer is given an
  636  opportunity to interview the insured directly about the loss and
  637  claim. The insurer must be allowed to obtain necessary
  638  information to investigate and respond to the claim.
  639         (a) The insurer may not exclude the public adjuster from
  640  its in-person meetings with the insured. The insurer shall meet
  641  or communicate with the public adjuster in an effort to reach
  642  agreement as to the scope of the covered loss under the
  643  insurance policy. This section does not impair the terms and
  644  conditions of the insurance policy in effect at the time the
  645  claim is filed.
  646         (b) A public adjuster may not restrict or prevent an
  647  insurer, company employee adjuster, independent adjuster,
  648  attorney, investigator, or other person acting on behalf of the
  649  insurer from having reasonable access at reasonable times to an
  650  insured or claimant or to the insured property that is the
  651  subject of a claim.
  652         (c) A public adjuster may not act or fail to reasonably act
  653  in any manner that obstructs or prevents an insurer or insurer’s
  654  adjuster from timely conducting an inspection of any part of the
  655  insured property for which there is a claim for loss or damage.
  656  The public adjuster representing the insured may be present for
  657  the insurer’s inspection, but if the unavailability of the
  658  public adjuster otherwise delays the insurer’s timely inspection
  659  of the property, the public adjuster or the insured must allow
  660  the insurer to have access to the property without the
  661  participation or presence of the public adjuster or insured in
  662  order to facilitate the insurer’s prompt inspection of the loss
  663  or damage.
  664         (16) A licensed contractor under part I of chapter 489, or
  665  a subcontractor, may not adjust a claim on behalf of an insured
  666  unless licensed and compliant as a public adjuster under this
  667  chapter. However, the contractor may discuss or explain a bid
  668  for construction or repair of covered property with the
  669  residential property owner who has suffered loss or damage
  670  covered by a property insurance policy, or the insurer of such
  671  property, if the contractor is doing so for the usual and
  672  customary fees applicable to the work to be performed as stated
  673  in the contract between the contractor and the insured.
  674         (17) The provisions of subsections (5)-(16) (5)-(13) apply
  675  only to residential property insurance policies and condominium
  676  unit owner association policies as defined in s. 718.111(11).
  677         Section 10. Effective January 1, 2012, subsection (6) of
  678  section 626.8651, Florida Statutes, is amended to read:
  679         626.8651 Public adjuster apprentice license;
  680  qualifications.—
  681         (6) To qualify for licensure as a public adjuster, a public
  682  adjuster apprentice must shall complete: at
  683         (a) A minimum of 100 hours of employment per month for 12
  684  months of employment under the supervision of a licensed and
  685  appointed all-lines public adjuster in order to qualify for
  686  licensure as a public adjuster. The department may adopt rules
  687  that establish standards for such employment requirements.
  688         (b) A minimum of 8 hours of continuing education specific
  689  to the practice of a public adjuster, 2 hours of which must
  690  relate to ethics. The continuing education must be designed to
  691  inform the licensee about the current insurance laws of this
  692  state for the purpose of enabling him or her to engage in
  693  business as an insurance adjuster fairly and without injury to
  694  the public and to adjust all claims in accordance with the
  695  insurance contract and the laws of this state.
  696         Section 11. Effective January 1, 2012, section 626.8796,
  697  Florida Statutes, is amended to read:
  698         626.8796 Public adjuster contracts; fraud statement.—
  699         (1) All contracts for public adjuster services must be in
  700  writing and must prominently display the following statement on
  701  the contract: “Pursuant to s. 817.234, Florida Statutes, any
  702  person who, with the intent to injure, defraud, or deceive an
  703  any insurer or insured, prepares, presents, or causes to be
  704  presented a proof of loss or estimate of cost or repair of
  705  damaged property in support of a claim under an insurance policy
  706  knowing that the proof of loss or estimate of claim or repairs
  707  contains any false, incomplete, or misleading information
  708  concerning any fact or thing material to the claim commits a
  709  felony of the third degree, punishable as provided in s.
  710  775.082, s. 775.083, or s. 775.084, Florida Statutes.”
  711         (2) A public adjuster contract must contain the full name,
  712  permanent business address, and license number of the public
  713  adjuster; the full name of the public adjusting firm; and the
  714  insured’s full name and street address, together with a brief
  715  description of the loss. The contract must state the percentage
  716  of compensation for the public adjuster’s services; the type of
  717  claim, including an emergency claim, nonemergency claim, or
  718  supplemental claim; the signatures of the public adjuster and
  719  all named insureds; and the signature date. If all of the named
  720  insureds signatures are not available, the public adjuster must
  721  submit an affidavit signed by the available named insureds
  722  attesting that they have authority to enter into the contract
  723  and settle all claim issues on behalf of the named insureds. An
  724  unaltered copy of the executed contract must be remitted to the
  725  insurer within 30 days after execution.
  726         Section 12. Effective June 1, 2011, section 626.70132,
  727  Florida Statutes, is created to read:
  728         626.70132Notice of windstorm or hurricane claim.—A claim,
  729  supplemental claim, or reopened claim under an insurance policy
  730  that provides property insurance, as defined in s. 624.604, for
  731  loss or damage caused by the peril of windstorm or hurricane is
  732  barred unless notice of the claim, supplemental claim, or
  733  reopened claim was given to the insurer in accordance with the
  734  terms of the policy within 3 years after the hurricane first
  735  made landfall or the windstorm caused the covered damage. For
  736  purposes of this section, the term “supplemental claim” or
  737  “reopened claim” means any additional claim for recovery from
  738  the insurer for losses from the same hurricane or windstorm
  739  which the insurer has previously adjusted pursuant to the
  740  initial claim. This section does not affect any applicable
  741  limitation on civil actions provided in s. 95.11 for claims,
  742  supplemental claims, or reopened claims timely filed under this
  743  section.
  744         Section 13. Subsection (4) of section 627.0613, Florida
  745  Statutes, is repealed.
  746         Section 14. Section 627.062, Florida Statutes, is amended
  747  to read:
  748         627.062 Rate standards.—
  749         (1) The rates for all classes of insurance to which the
  750  provisions of this part are applicable may shall not be
  751  excessive, inadequate, or unfairly discriminatory.
  752         (2) As to all such classes of insurance:
  753         (a) Insurers or rating organizations shall establish and
  754  use rates, rating schedules, or rating manuals that to allow the
  755  insurer a reasonable rate of return on the such classes of
  756  insurance written in this state. A copy of rates, rating
  757  schedules, rating manuals, premium credits or discount
  758  schedules, and surcharge schedules, and changes thereto, must
  759  shall be filed with the office under one of the following
  760  procedures except as provided in subparagraph 3.:
  761         1. If the filing is made at least 90 days before the
  762  proposed effective date and the filing is not implemented during
  763  the office’s review of the filing and any proceeding and
  764  judicial review, then such filing is shall be considered a “file
  765  and use” filing. In such case, the office shall finalize its
  766  review by issuance of an approval a notice of intent to approve
  767  or a notice of intent to disapprove within 90 days after receipt
  768  of the filing. The approval notice of intent to approve and the
  769  notice of intent to disapprove constitute agency action for
  770  purposes of the Administrative Procedure Act. Requests for
  771  supporting information, requests for mathematical or mechanical
  772  corrections, or notification to the insurer by the office of its
  773  preliminary findings does shall not toll the 90-day period
  774  during any such proceedings and subsequent judicial review. The
  775  rate shall be deemed approved if the office does not issue an
  776  approval a notice of intent to approve or a notice of intent to
  777  disapprove within 90 days after receipt of the filing.
  778         2. If the filing is not made in accordance with the
  779  provisions of subparagraph 1., such filing must shall be made as
  780  soon as practicable, but within no later than 30 days after the
  781  effective date, and is shall be considered a “use and file”
  782  filing. An insurer making a “use and file” filing is potentially
  783  subject to an order by the office to return to policyholders
  784  those portions of rates found to be excessive, as provided in
  785  paragraph (h).
  786         3. For all property insurance filings made or submitted
  787  after January 25, 2007, but before May 1, 2012 December 31,
  788  2010, an insurer seeking a rate that is greater than the rate
  789  most recently approved by the office shall make a “file and use”
  790  filing. For purposes of this subparagraph, motor vehicle
  791  collision and comprehensive coverages are not considered to be
  792  property coverages.
  793         (b) Upon receiving a rate filing, the office shall review
  794  the rate filing to determine if a rate is excessive, inadequate,
  795  or unfairly discriminatory. In making that determination, the
  796  office shall, in accordance with generally accepted and
  797  reasonable actuarial techniques, consider the following factors:
  798         1. Past and prospective loss experience within and without
  799  this state.
  800         2. Past and prospective expenses.
  801         3. The degree of competition among insurers for the risk
  802  insured.
  803         4. Investment income reasonably expected by the insurer,
  804  consistent with the insurer’s investment practices, from
  805  investable premiums anticipated in the filing, plus any other
  806  expected income from currently invested assets representing the
  807  amount expected on unearned premium reserves and loss reserves.
  808  The commission may adopt rules using reasonable techniques of
  809  actuarial science and economics to specify the manner in which
  810  insurers shall calculate investment income attributable to such
  811  classes of insurance written in this state and the manner in
  812  which such investment income is shall be used to calculate
  813  insurance rates. Such manner must shall contemplate allowances
  814  for an underwriting profit factor and full consideration of
  815  investment income which produce a reasonable rate of return;
  816  however, investment income from invested surplus may not be
  817  considered.
  818         5. The reasonableness of the judgment reflected in the
  819  filing.
  820         6. Dividends, savings, or unabsorbed premium deposits
  821  allowed or returned to Florida policyholders, members, or
  822  subscribers.
  823         7. The adequacy of loss reserves.
  824         8. The cost of reinsurance. The office may shall not
  825  disapprove a rate as excessive solely due to the insurer having
  826  obtained catastrophic reinsurance to cover the insurer’s
  827  estimated 250-year probable maximum loss or any lower level of
  828  loss.
  829         9. Trend factors, including trends in actual losses per
  830  insured unit for the insurer making the filing.
  831         10. Conflagration and catastrophe hazards, if applicable.
  832         11. Projected hurricane losses, if applicable, which must
  833  be estimated using a model or method found to be acceptable or
  834  reliable by the Florida Commission on Hurricane Loss Projection
  835  Methodology, and as further provided in s. 627.0628.
  836         12. A reasonable margin for underwriting profit and
  837  contingencies.
  838         13. The cost of medical services, if applicable.
  839         14. Other relevant factors that affect which impact upon
  840  the frequency or severity of claims or upon expenses.
  841         (c) In the case of fire insurance rates, consideration must
  842  shall be given to the availability of water supplies and the
  843  experience of the fire insurance business during a period of not
  844  less than the most recent 5-year period for which such
  845  experience is available.
  846         (d) If conflagration or catastrophe hazards are considered
  847  given consideration by an insurer in its rates or rating plan,
  848  including surcharges and discounts, the insurer shall establish
  849  a reserve for that portion of the premium allocated to such
  850  hazard and shall maintain the premium in a catastrophe reserve.
  851  Any Removal of such premiums from the reserve for purposes other
  852  than paying claims associated with a catastrophe or purchasing
  853  reinsurance for catastrophes must be approved by shall be
  854  subject to approval of the office. Any ceding commission
  855  received by an insurer purchasing reinsurance for catastrophes
  856  must shall be placed in the catastrophe reserve.
  857         (e) After consideration of the rate factors provided in
  858  paragraphs (b), (c), and (d), the office may find a rate may be
  859  found by the office to be excessive, inadequate, or unfairly
  860  discriminatory based upon the following standards:
  861         1. Rates shall be deemed excessive if they are likely to
  862  produce a profit from Florida business which that is
  863  unreasonably high in relation to the risk involved in the class
  864  of business or if expenses are unreasonably high in relation to
  865  services rendered.
  866         2. Rates shall be deemed excessive if, among other things,
  867  the rate structure established by a stock insurance company
  868  provides for replenishment of surpluses from premiums, if when
  869  the replenishment is attributable to investment losses.
  870         3. Rates shall be deemed inadequate if they are clearly
  871  insufficient, together with the investment income attributable
  872  to them, to sustain projected losses and expenses in the class
  873  of business to which they apply.
  874         4. A rating plan, including discounts, credits, or
  875  surcharges, shall be deemed unfairly discriminatory if it fails
  876  to clearly and equitably reflect consideration of the
  877  policyholder’s participation in a risk management program
  878  adopted pursuant to s. 627.0625.
  879         5. A rate shall be deemed inadequate as to the premium
  880  charged to a risk or group of risks if discounts or credits are
  881  allowed which exceed a reasonable reflection of expense savings
  882  and reasonably expected loss experience from the risk or group
  883  of risks.
  884         6. A rate shall be deemed unfairly discriminatory as to a
  885  risk or group of risks if the application of premium discounts,
  886  credits, or surcharges among such risks does not bear a
  887  reasonable relationship to the expected loss and expense
  888  experience among the various risks.
  889         (f) In reviewing a rate filing, the office may require the
  890  insurer to provide, at the insurer’s expense, all information
  891  necessary to evaluate the condition of the company and the
  892  reasonableness of the filing according to the criteria
  893  enumerated in this section.
  894         (g) The office may at any time review a rate, rating
  895  schedule, rating manual, or rate change; the pertinent records
  896  of the insurer; and market conditions. If the office finds on a
  897  preliminary basis that a rate may be excessive, inadequate, or
  898  unfairly discriminatory, the office shall initiate proceedings
  899  to disapprove the rate and shall so notify the insurer. However,
  900  the office may not disapprove as excessive any rate for which it
  901  has given final approval or which has been deemed approved for a
  902  period of 1 year after the effective date of the filing unless
  903  the office finds that a material misrepresentation or material
  904  error was made by the insurer or was contained in the filing.
  905  Upon being so notified, the insurer or rating organization
  906  shall, within 60 days, file with the office all information that
  907  which, in the belief of the insurer or organization, proves the
  908  reasonableness, adequacy, and fairness of the rate or rate
  909  change. The office shall issue an approval a notice of intent to
  910  approve or a notice of intent to disapprove pursuant to the
  911  procedures of paragraph (a) within 90 days after receipt of the
  912  insurer’s initial response. In such instances and in any
  913  administrative proceeding relating to the legality of the rate,
  914  the insurer or rating organization shall carry the burden of
  915  proof by a preponderance of the evidence to show that the rate
  916  is not excessive, inadequate, or unfairly discriminatory. After
  917  the office notifies an insurer that a rate may be excessive,
  918  inadequate, or unfairly discriminatory, unless the office
  919  withdraws the notification, the insurer may shall not alter the
  920  rate except to conform to with the office’s notice until the
  921  earlier of 120 days after the date the notification was provided
  922  or 180 days after the date of implementing the implementation of
  923  the rate. The office may, subject to chapter 120, may disapprove
  924  without the 60-day notification any rate increase filed by an
  925  insurer within the prohibited time period or during the time
  926  that the legality of the increased rate is being contested.
  927         (h) If In the event the office finds that a rate or rate
  928  change is excessive, inadequate, or unfairly discriminatory, the
  929  office shall issue an order of disapproval specifying that a new
  930  rate or rate schedule, which responds to the findings of the
  931  office, be filed by the insurer. The office shall further order,
  932  for any “use and file” filing made in accordance with
  933  subparagraph (a)2., that premiums charged each policyholder
  934  constituting the portion of the rate above that which was
  935  actuarially justified be returned to the such policyholder in
  936  the form of a credit or refund. If the office finds that an
  937  insurer’s rate or rate change is inadequate, the new rate or
  938  rate schedule filed with the office in response to such a
  939  finding is shall be applicable only to new or renewal business
  940  of the insurer written on or after the effective date of the
  941  responsive filing.
  942         (i) Except as otherwise specifically provided in this
  943  chapter, the office may shall not, directly or indirectly:
  944         1. Prohibit any insurer, including any residual market plan
  945  or joint underwriting association, from paying acquisition costs
  946  based on the full amount of premium, as defined in s. 627.403,
  947  applicable to any policy, or prohibit any such insurer from
  948  including the full amount of acquisition costs in a rate filing;
  949  or.
  950         2. Impede, abridge, or otherwise compromise an insurer’s
  951  right to acquire policyholders, advertise, or appoint agents,
  952  including the calculation, manner, or amount of such agent
  953  commissions, if any.
  954         (j) With respect to residential property insurance rate
  955  filings, the rate filing must account for mitigation measures
  956  undertaken by policyholders to reduce hurricane losses.
  957         (k)1. An insurer may make a separate filing limited solely
  958  to an adjustment of its rates for reinsurance or financing costs
  959  incurred in the purchase of reinsurance or financing products to
  960  replace or finance the payment of the amount covered by the
  961  Temporary Increase in Coverage Limits (TICL) portion of the
  962  Florida Hurricane Catastrophe Fund including replacement
  963  reinsurance for the TICL reductions made pursuant to s.
  964  215.555(17)(e); the actual cost paid due to the application of
  965  the TICL premium factor pursuant to s. 215.555(17)(f); and the
  966  actual cost paid due to the application of the cash build-up
  967  factor pursuant to s. 215.555(5)(b) if the insurer:
  968         a. Elects to purchase financing products such as a
  969  liquidity instrument or line of credit, in which case the cost
  970  included in the filing for the liquidity instrument or line of
  971  credit may not result in a premium increase exceeding 3 percent
  972  for any individual policyholder. All costs contained in the
  973  filing may not result in an overall premium increase of more
  974  than 10 percent for any individual policyholder.
  975         b. An insurer that makes a separate filing relating to
  976  reinsurance or financing products must include Includes in the
  977  filing a copy of all of its reinsurance, liquidity instrument,
  978  or line of credit contracts; proof of the billing or payment for
  979  the contracts; and the calculation upon which the proposed rate
  980  change is based demonstrating demonstrates that the costs meet
  981  the criteria of this section and are not loaded for expenses or
  982  profit for the insurer making the filing.
  983         c.Includes no other changes to its rates in the filing.
  984         d.Has not implemented a rate increase within the 6 months
  985  immediately preceding the filing.
  986         e.Does not file for a rate increase under any other
  987  paragraph within 6 months after making a filing under this
  988  paragraph.
  989         c.f.An insurer that purchases reinsurance or financing
  990  products from an affiliated company may make a separate filing
  991  in compliance with this paragraph does so only if the costs for
  992  such reinsurance or financing products are charged at or below
  993  charges made for comparable coverage by nonaffiliated reinsurers
  994  or financial entities making such coverage or financing products
  995  available in this state.
  996         2. An insurer may only make only one filing per in any 12
  997  month period under this paragraph.
  998         3. An insurer that elects to implement a rate change under
  999  this paragraph must file its rate filing with the office at
 1000  least 45 days before the effective date of the rate change.
 1001  After an insurer submits a complete filing that meets all of the
 1002  requirements of this paragraph, the office has 45 days after the
 1003  date of the filing to review the rate filing and determine if
 1004  the rate is excessive, inadequate, or unfairly discriminatory.
 1005         (l)The office may disapprove a rate for sinkhole coverage
 1006  only if the rate is inadequate or the insurer charges an
 1007  applicant or an insured a higher premium solely because of the
 1008  applicant’s or the insured’s race, religion, sex, national
 1009  origin, or marital status. Policies subject to this paragraph
 1010  may not be counted in the calculation under s. 627.171(2).
 1011  
 1012  The provisions of this subsection do shall not apply to workers’
 1013  compensation, and employer’s liability insurance, and to motor
 1014  vehicle insurance.
 1015         (3)(a) For individual risks that are not rated in
 1016  accordance with the insurer’s rates, rating schedules, rating
 1017  manuals, and underwriting rules filed with the office and that
 1018  which have been submitted to the insurer for individual rating,
 1019  the insurer must maintain documentation on each risk subject to
 1020  individual risk rating. The documentation must identify the
 1021  named insured and specify the characteristics and classification
 1022  of the risk supporting the reason for the risk being
 1023  individually risk rated, including any modifications to existing
 1024  approved forms to be used on the risk. The insurer must maintain
 1025  these records for a period of at least 5 years after the
 1026  effective date of the policy.
 1027         (b) Individual risk rates and modifications to existing
 1028  approved forms are not subject to this part or part II, except
 1029  for paragraph (a) and ss. 627.402, 627.403, 627.4035, 627.404,
 1030  627.405, 627.406, 627.407, 627.4085, 627.409, 627.4132,
 1031  627.4133, 627.415, 627.416, 627.417, 627.419, 627.425, 627.426,
 1032  627.4265, 627.427, and 627.428, but are subject to all other
 1033  applicable provisions of this code and rules adopted thereunder.
 1034         (c) This subsection does not apply to private passenger
 1035  motor vehicle insurance.
 1036         (d)1. The following categories or kinds of insurance and
 1037  types of commercial lines risks are not subject to paragraph
 1038  (2)(a) or paragraph (2)(f):
 1039         a. Excess or umbrella.
 1040         b. Surety and fidelity.
 1041         c. Boiler and machinery and leakage and fire extinguishing
 1042  equipment.
 1043         d. Errors and omissions.
 1044         e. Directors and officers, employment practices, and
 1045  management liability.
 1046         f. Intellectual property and patent infringement liability.
 1047         g. Advertising injury and Internet liability insurance.
 1048         h. Property risks rated under a highly protected risks
 1049  rating plan.
 1050         i. Any other commercial lines categories or kinds of
 1051  insurance or types of commercial lines risks that the office
 1052  determines should not be subject to paragraph (2)(a) or
 1053  paragraph (2)(f) because of the existence of a competitive
 1054  market for such insurance, similarity of such insurance to other
 1055  categories or kinds of insurance not subject to paragraph (2)(a)
 1056  or paragraph (2)(f), or to improve the general operational
 1057  efficiency of the office.
 1058         2. Insurers or rating organizations shall establish and use
 1059  rates, rating schedules, or rating manuals to allow the insurer
 1060  a reasonable rate of return on insurance and risks described in
 1061  subparagraph 1. which are written in this state.
 1062         3. An insurer must notify the office of any changes to
 1063  rates for insurance and risks described in subparagraph 1.
 1064  within no later than 30 days after the effective date of the
 1065  change. The notice must include the name of the insurer, the
 1066  type or kind of insurance subject to rate change, total premium
 1067  written during the immediately preceding year by the insurer for
 1068  the type or kind of insurance subject to the rate change, and
 1069  the average statewide percentage change in rates. Underwriting
 1070  files, premiums, losses, and expense statistics with regard to
 1071  such insurance and risks described in subparagraph 1. written by
 1072  an insurer must shall be maintained by the insurer and subject
 1073  to examination by the office. Upon examination, the office
 1074  shall, in accordance with generally accepted and reasonable
 1075  actuarial techniques, shall consider the rate factors in
 1076  paragraphs (2)(b), (c), and (d) and the standards in paragraph
 1077  (2)(e) to determine if the rate is excessive, inadequate, or
 1078  unfairly discriminatory.
 1079         4. A rating organization must notify the office of any
 1080  changes to loss cost for insurance and risks described in
 1081  subparagraph 1. within no later than 30 days after the effective
 1082  date of the change. The notice must include the name of the
 1083  rating organization, the type or kind of insurance subject to a
 1084  loss cost change, loss costs during the immediately preceding
 1085  year for the type or kind of insurance subject to the loss cost
 1086  change, and the average statewide percentage change in loss
 1087  cost. Loss and exposure statistics with regard to risks
 1088  applicable to loss costs for a rating organization not subject
 1089  to paragraph (2)(a) or paragraph (2)(f) must shall be maintained
 1090  by the rating organization and are subject to examination by the
 1091  office. Upon examination, the office shall, in accordance with
 1092  generally accepted and reasonable actuarial techniques, shall
 1093  consider the rate factors in paragraphs (2)(b)-(d) and the
 1094  standards in paragraph (2)(e) to determine if the rate is
 1095  excessive, inadequate, or unfairly discriminatory.
 1096         5. In reviewing a rate, the office may require the insurer
 1097  to provide, at the insurer’s expense, all information necessary
 1098  to evaluate the condition of the company and the reasonableness
 1099  of the rate according to the applicable criteria described in
 1100  this section.
 1101         (4) The establishment of any rate, rating classification,
 1102  rating plan or schedule, or variation thereof in violation of
 1103  part IX of chapter 626 is also in violation of this section. In
 1104  order to enhance the ability of consumers to compare premiums
 1105  and to increase the accuracy and usefulness of rate-comparison
 1106  information provided by the office to the public, the office
 1107  shall develop a proposed standard rating territory plan to be
 1108  used by all authorized property and casualty insurers for
 1109  residential property insurance. In adopting the proposed plan,
 1110  the office may consider geographical characteristics relevant to
 1111  risk, county lines, major roadways, existing rating territories
 1112  used by a significant segment of the market, and other relevant
 1113  factors. Such plan shall be submitted to the President of the
 1114  Senate and the Speaker of the House of Representatives by
 1115  January 15, 2006. The plan may not be implemented unless
 1116  authorized by further act of the Legislature.
 1117         (5) With respect to a rate filing involving coverage of the
 1118  type for which the insurer is required to pay a reimbursement
 1119  premium to the Florida Hurricane Catastrophe Fund, the insurer
 1120  may fully recoup in its property insurance premiums any
 1121  reimbursement premiums paid to the Florida Hurricane Catastrophe
 1122  fund, together with reasonable costs of other reinsurance;
 1123  however, but except as otherwise provided in this section, the
 1124  insurer may not recoup reinsurance costs that duplicate coverage
 1125  provided by the Florida Hurricane Catastrophe fund. An insurer
 1126  may not recoup more than 1 year of reimbursement premium at a
 1127  time. Any under-recoupment from the prior year may be added to
 1128  the following year’s reimbursement premium, and any over
 1129  recoupment must shall be subtracted from the following year’s
 1130  reimbursement premium.
 1131         (6)(a) If an insurer requests an administrative hearing
 1132  pursuant to s. 120.57 related to a rate filing under this
 1133  section, the director of the Division of Administrative Hearings
 1134  shall expedite the hearing and assign an administrative law
 1135  judge who shall commence the hearing within 30 days after the
 1136  receipt of the formal request and shall enter a recommended
 1137  order within 30 days after the hearing or within 30 days after
 1138  receipt of the hearing transcript by the administrative law
 1139  judge, whichever is later. Each party shall have be allowed 10
 1140  days in which to submit written exceptions to the recommended
 1141  order. The office shall enter a final order within 30 days after
 1142  the entry of the recommended order. The provisions of this
 1143  paragraph may be waived upon stipulation of all parties.
 1144         (b) Upon entry of a final order, the insurer may request a
 1145  expedited appellate review pursuant to the Florida Rules of
 1146  Appellate Procedure. It is the intent of the Legislature that
 1147  the First District Court of Appeal grant an insurer’s request
 1148  for an expedited appellate review.
 1149         (7)(a) The provisions of this subsection apply only with
 1150  respect to rates for medical malpractice insurance and shall
 1151  control to the extent of any conflict with other provisions of
 1152  this section.
 1153         (a)(b) Any portion of a judgment entered or settlement paid
 1154  as a result of a statutory or common-law bad faith action and
 1155  any portion of a judgment entered which awards punitive damages
 1156  against an insurer may not be included in the insurer’s rate
 1157  base, and shall not be used to justify a rate or rate change.
 1158  Any common-law bad faith action identified as such, any portion
 1159  of a settlement entered as a result of a statutory or common-law
 1160  action, or any portion of a settlement wherein an insurer agrees
 1161  to pay specific punitive damages may not be used to justify a
 1162  rate or rate change. The portion of the taxable costs and
 1163  attorney’s fees which is identified as being related to the bad
 1164  faith and punitive damages in these judgments and settlements
 1165  may not be included in the insurer’s rate base and used may not
 1166  be utilized to justify a rate or rate change.
 1167         (b)(c) Upon reviewing a rate filing and determining whether
 1168  the rate is excessive, inadequate, or unfairly discriminatory,
 1169  the office shall consider, in accordance with generally accepted
 1170  and reasonable actuarial techniques, past and present
 1171  prospective loss experience, either using loss experience solely
 1172  for this state or giving greater credibility to this state’s
 1173  loss data after applying actuarially sound methods of assigning
 1174  credibility to such data.
 1175         (c)(d) Rates shall be deemed excessive if, among other
 1176  standards established by this section, the rate structure
 1177  provides for replenishment of reserves or surpluses from
 1178  premiums when the replenishment is attributable to investment
 1179  losses.
 1180         (d)(e) The insurer must apply a discount or surcharge based
 1181  on the health care provider’s loss experience or shall establish
 1182  an alternative method giving due consideration to the provider’s
 1183  loss experience. The insurer must include in the filing a copy
 1184  of the surcharge or discount schedule or a description of the
 1185  alternative method used, and must provide a copy of such
 1186  schedule or description, as approved by the office, to
 1187  policyholders at the time of renewal and to prospective
 1188  policyholders at the time of application for coverage.
 1189         (e)(f) Each medical malpractice insurer must make a rate
 1190  filing under this section, sworn to by at least two executive
 1191  officers of the insurer, at least once each calendar year.
 1192         (8)(a)1.No later than 60 days after the effective date of
 1193  medical malpractice legislation enacted during the 2003 Special
 1194  Session D of the Florida Legislature, the office shall calculate
 1195  a presumed factor that reflects the impact that the changes
 1196  contained in such legislation will have on rates for medical
 1197  malpractice insurance and shall issue a notice informing all
 1198  insurers writing medical malpractice coverage of such presumed
 1199  factor. In determining the presumed factor, the office shall use
 1200  generally accepted actuarial techniques and standards provided
 1201  in this section in determining the expected impact on losses,
 1202  expenses, and investment income of the insurer. To the extent
 1203  that the operation of a provision of medical malpractice
 1204  legislation enacted during the 2003 Special Session D of the
 1205  Florida Legislature is stayed pending a constitutional
 1206  challenge, the impact of that provision shall not be included in
 1207  the calculation of a presumed factor under this subparagraph.
 1208         2.No later than 60 days after the office issues its notice
 1209  of the presumed rate change factor under subparagraph 1., each
 1210  insurer writing medical malpractice coverage in this state shall
 1211  submit to the office a rate filing for medical malpractice
 1212  insurance, which will take effect no later than January 1, 2004,
 1213  and apply retroactively to policies issued or renewed on or
 1214  after the effective date of medical malpractice legislation
 1215  enacted during the 2003 Special Session D of the Florida
 1216  Legislature. Except as authorized under paragraph (b), the
 1217  filing shall reflect an overall rate reduction at least as great
 1218  as the presumed factor determined under subparagraph 1. With
 1219  respect to policies issued on or after the effective date of
 1220  such legislation and prior to the effective date of the rate
 1221  filing required by this subsection, the office shall order the
 1222  insurer to make a refund of the amount that was charged in
 1223  excess of the rate that is approved.
 1224         (b)Any insurer or rating organization that contends that
 1225  the rate provided for in paragraph (a) is excessive, inadequate,
 1226  or unfairly discriminatory shall separately state in its filing
 1227  the rate it contends is appropriate and shall state with
 1228  specificity the factors or data that it contends should be
 1229  considered in order to produce such appropriate rate. The
 1230  insurer or rating organization shall be permitted to use all of
 1231  the generally accepted actuarial techniques provided in this
 1232  section in making any filing pursuant to this subsection. The
 1233  office shall review each such exception and approve or
 1234  disapprove it prior to use. It shall be the insurer’s burden to
 1235  actuarially justify any deviations from the rates required to be
 1236  filed under paragraph (a). The insurer making a filing under
 1237  this paragraph shall include in the filing the expected impact
 1238  of medical malpractice legislation enacted during the 2003
 1239  Special Session D of the Florida Legislature on losses,
 1240  expenses, and rates.
 1241         (c)If any provision of medical malpractice legislation
 1242  enacted during the 2003 Special Session D of the Florida
 1243  Legislature is held invalid by a court of competent
 1244  jurisdiction, the office shall permit an adjustment of all
 1245  medical malpractice rates filed under this section to reflect
 1246  the impact of such holding on such rates so as to ensure that
 1247  the rates are not excessive, inadequate, or unfairly
 1248  discriminatory.
 1249         (d)Rates approved on or before July 1, 2003, for medical
 1250  malpractice insurance shall remain in effect until the effective
 1251  date of a new rate filing approved under this subsection.
 1252         (e)The calculation and notice by the office of the
 1253  presumed factor pursuant to paragraph (a) is not an order or
 1254  rule that is subject to chapter 120. If the office enters into a
 1255  contract with an independent consultant to assist the office in
 1256  calculating the presumed factor, such contract shall not be
 1257  subject to the competitive solicitation requirements of s.
 1258  287.057.
 1259         (8)(9)(a) The chief executive officer or chief financial
 1260  officer of a property insurer and the chief actuary of a
 1261  property insurer must certify under oath and subject to the
 1262  penalty of perjury, on a form approved by the commission, the
 1263  following information, which must accompany a rate filing:
 1264         1. The signing officer and actuary have reviewed the rate
 1265  filing;
 1266         2. Based on the signing officer’s and actuary’s knowledge,
 1267  the rate filing does not contain any untrue statement of a
 1268  material fact or omit to state a material fact necessary in
 1269  order to make the statements made, in light of the circumstances
 1270  under which such statements were made, not misleading;
 1271         3. Based on the signing officer’s and actuary’s knowledge,
 1272  the information and other factors described in paragraph (2)(b),
 1273  including, but not limited to, investment income, fairly present
 1274  in all material respects the basis of the rate filing for the
 1275  periods presented in the filing; and
 1276         4. Based on the signing officer’s and actuary’s knowledge,
 1277  the rate filing reflects all premium savings that are reasonably
 1278  expected to result from legislative enactments and are in
 1279  accordance with generally accepted and reasonable actuarial
 1280  techniques.
 1281         (b) A signing officer or actuary who knowingly makes making
 1282  a false certification under this subsection commits a violation
 1283  of s. 626.9541(1)(e) and is subject to the penalties under s.
 1284  626.9521.
 1285         (c) Failure to provide such certification by the officer
 1286  and actuary shall result in the rate filing being disapproved
 1287  without prejudice to be refiled.
 1288         (d)The certification made pursuant to paragraph (a) is not
 1289  rendered false if, after making the subject rate filing, the
 1290  insurer provides the office with additional or supplementary
 1291  information pursuant to a formal or informal request from the
 1292  office. However, the actuary who is primarily responsible for
 1293  preparing and submitting such information must certify the
 1294  information in accordance with the certification required under
 1295  paragraph (a) and the penalties in paragraph (b), except that
 1296  the chief executive officer, chief financial officer, or chief
 1297  actuary need not certify the additional or supplementary
 1298  information.
 1299         (e)(d) The commission may adopt rules and forms pursuant to
 1300  ss. 120.536(1) and 120.54 to administer this subsection.
 1301         (9)(10) The burden is on the office to establish that rates
 1302  are excessive for personal lines residential coverage with a
 1303  dwelling replacement cost of $1 million or more or for a single
 1304  condominium unit with a combined dwelling and contents
 1305  replacement cost of $1 million or more. Upon request of the
 1306  office, the insurer shall provide to the office such loss and
 1307  expense information as the office reasonably needs to meet this
 1308  burden.
 1309         (10)(11) Any interest paid pursuant to s. 627.70131(5) may
 1310  not be included in the insurer’s rate base and may not be used
 1311  to justify a rate or rate change.
 1312         Section 15. Subsections (1) and (5) and paragraph (b) of
 1313  subsection (8) of section 627.0629, Florida Statutes, are
 1314  amended to read:
 1315         627.0629 Residential property insurance; rate filings.—
 1316         (1)(a) It is the intent of the Legislature that insurers
 1317  must provide savings to consumers who install or implement
 1318  windstorm damage mitigation techniques, alterations, or
 1319  solutions to their properties to prevent windstorm losses. A
 1320  rate filing for residential property insurance must include
 1321  actuarially reasonable discounts, credits, or other rate
 1322  differentials, or appropriate reductions in deductibles, for
 1323  properties on which fixtures or construction techniques
 1324  demonstrated to reduce the amount of loss in a windstorm have
 1325  been installed or implemented. The fixtures or construction
 1326  techniques must shall include, but are not be limited to,
 1327  fixtures or construction techniques that which enhance roof
 1328  strength, roof covering performance, roof-to-wall strength,
 1329  wall-to-floor-to-foundation strength, opening protection, and
 1330  window, door, and skylight strength. Credits, discounts, or
 1331  other rate differentials, or appropriate reductions in
 1332  deductibles, for fixtures and construction techniques that which
 1333  meet the minimum requirements of the Florida Building Code must
 1334  be included in the rate filing. All insurance companies must
 1335  make a rate filing that which includes the credits, discounts,
 1336  or other rate differentials or reductions in deductibles by
 1337  February 28, 2003. By July 1, 2007, the office shall reevaluate
 1338  the discounts, credits, other rate differentials, and
 1339  appropriate reductions in deductibles for fixtures and
 1340  construction techniques that meet the minimum requirements of
 1341  the Florida Building Code, based upon actual experience or any
 1342  other loss relativity studies available to the office. The
 1343  office shall determine the discounts, credits, other rate
 1344  differentials, and appropriate reductions in deductibles that
 1345  reflect the full actuarial value of such revaluation, which may
 1346  be used by insurers in rate filings.
 1347         (b) By February 1, 2011, the Office of Insurance
 1348  Regulation, in consultation with the Department of Financial
 1349  Services and the Department of Community Affairs, shall develop
 1350  and make publicly available a proposed method for insurers to
 1351  establish discounts, credits, or other rate differentials for
 1352  hurricane mitigation measures which directly correlate to the
 1353  numerical rating assigned to a structure pursuant to the uniform
 1354  home grading scale adopted by the Financial Services Commission
 1355  pursuant to s. 215.55865, including any proposed changes to the
 1356  uniform home grading scale. By October 1, 2011, the commission
 1357  shall adopt rules requiring insurers to make rate filings for
 1358  residential property insurance which revise insurers’ discounts,
 1359  credits, or other rate differentials for hurricane mitigation
 1360  measures so that such rate differentials correlate directly to
 1361  the uniform home grading scale. The rules may include such
 1362  changes to the uniform home grading scale as the commission
 1363  determines are necessary, and may specify the minimum required
 1364  discounts, credits, or other rate differentials. Such rate
 1365  differentials must be consistent with generally accepted
 1366  actuarial principles and wind-loss mitigation studies. The rules
 1367  shall allow a period of at least 2 years after the effective
 1368  date of the revised mitigation discounts, credits, or other rate
 1369  differentials for a property owner to obtain an inspection or
 1370  otherwise qualify for the revised credit, during which time the
 1371  insurer shall continue to apply the mitigation credit that was
 1372  applied immediately prior to the effective date of the revised
 1373  credit. Discounts, credits, and other rate differentials
 1374  established for rate filings under this paragraph shall
 1375  supersede, after adoption, the discounts, credits, and other
 1376  rate differentials included in rate filings under paragraph (a).
 1377         (5) In order to provide an appropriate transition period,
 1378  an insurer may, in its sole discretion, implement an approved
 1379  rate filing for residential property insurance over a period of
 1380  years. Such An insurer electing to phase in its rate filing must
 1381  provide an informational notice to the office setting out its
 1382  schedule for implementation of the phased-in rate filing. The An
 1383  insurer may include in its rate the actual cost of private
 1384  market reinsurance that corresponds to available coverage of the
 1385  Temporary Increase in Coverage Limits, TICL, from the Florida
 1386  Hurricane Catastrophe Fund. The insurer may also include the
 1387  cost of reinsurance to replace the TICL reduction implemented
 1388  pursuant to s. 215.555(17)(d)9. However, this cost for
 1389  reinsurance may not include any expense or profit load or result
 1390  in a total annual base rate increase in excess of 10 percent.
 1391         (8) EVALUATION OF RESIDENTIAL PROPERTY STRUCTURAL
 1392  SOUNDNESS.—
 1393         (b) To the extent that funds are provided for this purpose
 1394  in the General Appropriations Act, the Legislature hereby
 1395  authorizes the establishment of a program to be administered by
 1396  the Citizens Property Insurance Corporation for homeowners
 1397  insured in the coastal high-risk account is authorized.
 1398         Section 16. Paragraphs (a), (b), (c), (d), (n), (v), and
 1399  (y) of subsection (6) of section 627.351, Florida Statutes, are
 1400  amended to read:
 1401         627.351 Insurance risk apportionment plans.—
 1402         (6) TAXPAYER-FUNDED CITIZENS PROPERTY INSURANCE
 1403  CORPORATION.—
 1404         (a)1.It is The public purpose of this subsection is to
 1405  ensure that there is the existence of an orderly market for
 1406  property insurance for residents Floridians and Florida
 1407  businesses of this state.
 1408         1. The Legislature finds that private insurers are
 1409  unwilling or unable to provide affordable property insurance
 1410  coverage in this state to the extent sought and needed. The
 1411  absence of affordable property insurance threatens the public
 1412  health, safety, and welfare and likewise threatens the economic
 1413  health of the state. The state therefore has a compelling public
 1414  interest and a public purpose to assist in assuring that
 1415  property in the state is insured and that it is insured at
 1416  affordable rates so as to facilitate the remediation,
 1417  reconstruction, and replacement of damaged or destroyed property
 1418  in order to reduce or avoid the negative effects otherwise
 1419  resulting to the public health, safety, and welfare, to the
 1420  economy of the state, and to the revenues of the state and local
 1421  governments which are needed to provide for the public welfare.
 1422  It is necessary, therefore, to provide affordable property
 1423  insurance to applicants who are in good faith entitled to
 1424  procure insurance through the voluntary market but are unable to
 1425  do so. The Legislature intends, therefore, by this subsection
 1426  that affordable property insurance be provided and that it
 1427  continue to be provided, as long as necessary, through the
 1428  Taxpayer-Funded Citizens Property Insurance Corporation, a
 1429  government entity that is an integral part of the state, and
 1430  that is not a private insurance company. To that end, the
 1431  Citizens Property Insurance corporation shall strive to increase
 1432  the availability of affordable property insurance in this state,
 1433  while achieving efficiencies and economies, and while providing
 1434  service to policyholders, applicants, and agents which is no
 1435  less than the quality generally provided in the voluntary
 1436  market, for the achievement of the foregoing public purposes.
 1437  Because it is essential for this government entity to have the
 1438  maximum financial resources to pay claims following a
 1439  catastrophic hurricane, it is the intent of the Legislature that
 1440  the Citizens Property Insurance corporation continue to be an
 1441  integral part of the state and that the income of the
 1442  corporation be exempt from federal income taxation and that
 1443  interest on the debt obligations issued by the corporation be
 1444  exempt from federal income taxation.
 1445         2. The Residential Property and Casualty Joint Underwriting
 1446  Association originally created by this statute shall be known,
 1447  as of July 1, 2002, as the Taxpayer-Funded Citizens Property
 1448  Insurance Corporation. The corporation shall provide insurance
 1449  for residential and commercial property, for applicants who are
 1450  in good faith entitled, but, in good faith, are unable, to
 1451  procure insurance through the voluntary market. The corporation
 1452  shall operate pursuant to a plan of operation approved by order
 1453  of the Financial Services Commission. The plan is subject to
 1454  continuous review by the commission. The commission may, by
 1455  order, withdraw approval of all or part of a plan if the
 1456  commission determines that conditions have changed since
 1457  approval was granted and that the purposes of the plan require
 1458  changes in the plan. The corporation shall continue to operate
 1459  pursuant to the plan of operation approved by the Office of
 1460  Insurance Regulation until October 1, 2006. For the purposes of
 1461  this subsection, residential coverage includes both personal
 1462  lines residential coverage, which consists of the type of
 1463  coverage provided by homeowner’s, mobile home owner’s, dwelling,
 1464  tenant’s, condominium unit owner’s, and similar policies;, and
 1465  commercial lines residential coverage, which consists of the
 1466  type of coverage provided by condominium association, apartment
 1467  building, and similar policies.
 1468         3. Effective January 1, 2009, a personal lines residential
 1469  structure that has a dwelling replacement cost of $2 million or
 1470  more, or a single condominium unit that has a combined dwelling
 1471  and contents content replacement cost of $2 million or more is
 1472  not eligible for coverage by the corporation. Such dwellings
 1473  insured by the corporation on December 31, 2008, may continue to
 1474  be covered by the corporation until the end of the policy term.
 1475  However, such dwellings that are insured by the corporation and
 1476  become ineligible for coverage due to the provisions of this
 1477  subparagraph may reapply and obtain coverage if the property
 1478  owner provides the corporation with a sworn affidavit from one
 1479  or more insurance agents, on a form provided by the corporation,
 1480  stating that the agents have made their best efforts to obtain
 1481  coverage and that the property has been rejected for coverage by
 1482  at least one authorized insurer and at least three surplus lines
 1483  insurers. If such conditions are met, the dwelling may be
 1484  insured by the corporation for up to 3 years, after which time
 1485  the dwelling is ineligible for coverage. The office shall
 1486  approve the method used by the corporation for valuing the
 1487  dwelling replacement cost for the purposes of this subparagraph.
 1488  If a policyholder is insured by the corporation prior to being
 1489  determined to be ineligible pursuant to this subparagraph and
 1490  such policyholder files a lawsuit challenging the determination,
 1491  the policyholder may remain insured by the corporation until the
 1492  conclusion of the litigation.
 1493         4. It is the intent of the Legislature that policyholders,
 1494  applicants, and agents of the corporation receive service and
 1495  treatment of the highest possible level but never less than that
 1496  generally provided in the voluntary market. It is also is
 1497  intended that the corporation be held to service standards no
 1498  less than those applied to insurers in the voluntary market by
 1499  the office with respect to responsiveness, timeliness, customer
 1500  courtesy, and overall dealings with policyholders, applicants,
 1501  or agents of the corporation.
 1502         5. Effective January 1, 2009, a personal lines residential
 1503  structure that is located in the “wind-borne debris region,” as
 1504  defined in s. 1609.2, International Building Code (2006), and
 1505  that has an insured value on the structure of $750,000 or more
 1506  is not eligible for coverage by the corporation unless the
 1507  structure has opening protections as required under the Florida
 1508  Building Code for a newly constructed residential structure in
 1509  that area. A residential structure shall be deemed to comply
 1510  with the requirements of this subparagraph if it has shutters or
 1511  opening protections on all openings and if such opening
 1512  protections complied with the Florida Building Code at the time
 1513  they were installed.
 1514         6. In recognition of the corporation’s status as a
 1515  governmental entity, policies issued by the corporation must
 1516  include a provision stating that as a condition of coverage with
 1517  the corporation, policyholders may not engage the services of a
 1518  public adjuster to represent the policyholder with respect to
 1519  any claim filed under a policy issued by the corporation until
 1520  after the corporation has tendered an offer with respect to such
 1521  claim. For any claim filed under any policy of the corporation,
 1522  a public adjuster may not request payment or be paid, on a
 1523  contingency basis or based in any way, directly or indirectly,
 1524  on a percentage of the claim amount, and may be paid only a
 1525  reasonable hourly fee based on the actual hours of work
 1526  performed, subject to a maximum of 5 percent of the additional
 1527  amount actually paid over the amount that was originally offered
 1528  by the corporation for any one claim.
 1529         (b)1. All insurers authorized to write one or more subject
 1530  lines of business in this state are subject to assessment by the
 1531  corporation and, for the purposes of this subsection, are
 1532  referred to collectively as “assessable insurers.” Insurers
 1533  writing one or more subject lines of business in this state
 1534  pursuant to part VIII of chapter 626 are not assessable
 1535  insurers, but insureds who procure one or more subject lines of
 1536  business in this state pursuant to part VIII of chapter 626 are
 1537  subject to assessment by the corporation and are referred to
 1538  collectively as “assessable insureds.” An authorized insurer’s
 1539  assessment liability begins shall begin on the first day of the
 1540  calendar year following the year in which the insurer was issued
 1541  a certificate of authority to transact insurance for subject
 1542  lines of business in this state and terminates shall terminate 1
 1543  year after the end of the first calendar year during which the
 1544  insurer no longer holds a certificate of authority to transact
 1545  insurance for subject lines of business in this state.
 1546         2.a. All revenues, assets, liabilities, losses, and
 1547  expenses of the corporation shall be divided into three separate
 1548  accounts as follows:
 1549         (I) A personal lines account for personal residential
 1550  policies issued by the corporation, or issued by the Residential
 1551  Property and Casualty Joint Underwriting Association and renewed
 1552  by the corporation, which provides that provide comprehensive,
 1553  multiperil coverage on risks that are not located in areas
 1554  eligible for coverage by in the Florida Windstorm Underwriting
 1555  Association as those areas were defined on January 1, 2002, and
 1556  for such policies that do not provide coverage for the peril of
 1557  wind on risks that are located in such areas;
 1558         (II) A commercial lines account for commercial residential
 1559  and commercial nonresidential policies issued by the
 1560  corporation, or issued by the Residential Property and Casualty
 1561  Joint Underwriting Association and renewed by the corporation,
 1562  which provides that provide coverage for basic property perils
 1563  on risks that are not located in areas eligible for coverage by
 1564  in the Florida Windstorm Underwriting Association as those areas
 1565  were defined on January 1, 2002, and for such policies that do
 1566  not provide coverage for the peril of wind on risks that are
 1567  located in such areas; and
 1568         (III) A coastal high-risk account for personal residential
 1569  policies and commercial residential and commercial
 1570  nonresidential property policies issued by the corporation, or
 1571  transferred to the corporation, which provides that provide
 1572  coverage for the peril of wind on risks that are located in
 1573  areas eligible for coverage by in the Florida Windstorm
 1574  Underwriting Association as those areas were defined on January
 1575  1, 2002. The corporation may offer policies that provide
 1576  multiperil coverage and the corporation shall continue to offer
 1577  policies that provide coverage only for the peril of wind for
 1578  risks located in areas eligible for coverage in the coastal
 1579  high-risk account. In issuing multiperil coverage, the
 1580  corporation may use its approved policy forms and rates for the
 1581  personal lines account. An applicant or insured who is eligible
 1582  to purchase a multiperil policy from the corporation may
 1583  purchase a multiperil policy from an authorized insurer without
 1584  prejudice to the applicant’s or insured’s eligibility to
 1585  prospectively purchase a policy that provides coverage only for
 1586  the peril of wind from the corporation. An applicant or insured
 1587  who is eligible for a corporation policy that provides coverage
 1588  only for the peril of wind may elect to purchase or retain such
 1589  policy and also purchase or retain coverage excluding wind from
 1590  an authorized insurer without prejudice to the applicant’s or
 1591  insured’s eligibility to prospectively purchase a policy that
 1592  provides multiperil coverage from the corporation. It is the
 1593  goal of the Legislature that there would be an overall average
 1594  savings of 10 percent or more for a policyholder who currently
 1595  has a wind-only policy with the corporation, and an ex-wind
 1596  policy with a voluntary insurer or the corporation, and who then
 1597  obtains a multiperil policy from the corporation. It is the
 1598  intent of the Legislature that the offer of multiperil coverage
 1599  in the coastal high-risk account be made and implemented in a
 1600  manner that does not adversely affect the tax-exempt status of
 1601  the corporation or creditworthiness of or security for currently
 1602  outstanding financing obligations or credit facilities of the
 1603  coastal high-risk account, the personal lines account, or the
 1604  commercial lines account. The coastal high-risk account must
 1605  also include quota share primary insurance under subparagraph
 1606  (c)2. The area eligible for coverage under the coastal high-risk
 1607  account also includes the area within Port Canaveral, which is
 1608  bordered on the south by the City of Cape Canaveral, bordered on
 1609  the west by the Banana River, and bordered on the north by
 1610  Federal Government property.
 1611         b. The three separate accounts must be maintained as long
 1612  as financing obligations entered into by the Florida Windstorm
 1613  Underwriting Association or Residential Property and Casualty
 1614  Joint Underwriting Association are outstanding, in accordance
 1615  with the terms of the corresponding financing documents. If When
 1616  the financing obligations are no longer outstanding, in
 1617  accordance with the terms of the corresponding financing
 1618  documents, the corporation may use a single account for all
 1619  revenues, assets, liabilities, losses, and expenses of the
 1620  corporation. Consistent with the requirement of this
 1621  subparagraph and prudent investment policies that minimize the
 1622  cost of carrying debt, the board shall exercise its best efforts
 1623  to retire existing debt or to obtain the approval of necessary
 1624  parties to amend the terms of existing debt, so as to structure
 1625  the most efficient plan to consolidate the three separate
 1626  accounts into a single account.
 1627         c. Creditors of the Residential Property and Casualty Joint
 1628  Underwriting Association and of the accounts specified in sub
 1629  sub-subparagraphs a.(I) and (II) may have a claim against, and
 1630  recourse to, those the accounts referred to in sub-sub
 1631  subparagraphs a.(I) and (II) and shall have no claim against, or
 1632  recourse to, the account referred to in sub-sub-subparagraph
 1633  a.(III). Creditors of the Florida Windstorm Underwriting
 1634  Association shall have a claim against, and recourse to, the
 1635  account referred to in sub-sub-subparagraph a.(III) and shall
 1636  have no claim against, or recourse to, the accounts referred to
 1637  in sub-sub-subparagraphs a.(I) and (II).
 1638         d. Revenues, assets, liabilities, losses, and expenses not
 1639  attributable to particular accounts shall be prorated among the
 1640  accounts.
 1641         e. The Legislature finds that the revenues of the
 1642  corporation are revenues that are necessary to meet the
 1643  requirements set forth in documents authorizing the issuance of
 1644  bonds under this subsection.
 1645         f. No part of the income of the corporation may inure to
 1646  the benefit of any private person.
 1647         3. With respect to a deficit in an account:
 1648         a. After accounting for the Citizens policyholder surcharge
 1649  imposed under sub-subparagraph h. i., if when the remaining
 1650  projected deficit incurred in a particular calendar year:
 1651         (I) Is not greater than 6 percent of the aggregate
 1652  statewide direct written premium for the subject lines of
 1653  business for the prior calendar year, the entire deficit shall
 1654  be recovered through regular assessments of assessable insurers
 1655  under paragraph (q) and assessable insureds.
 1656         (II)b.After accounting for the Citizens policyholder
 1657  surcharge imposed under sub-subparagraph i., when the remaining
 1658  projected deficit incurred in a particular calendar year Exceeds
 1659  6 percent of the aggregate statewide direct written premium for
 1660  the subject lines of business for the prior calendar year, the
 1661  corporation shall levy regular assessments on assessable
 1662  insurers under paragraph (q) and on assessable insureds in an
 1663  amount equal to the greater of 6 percent of the deficit or 6
 1664  percent of the aggregate statewide direct written premium for
 1665  the subject lines of business for the prior calendar year. Any
 1666  remaining deficit shall be recovered through emergency
 1667  assessments under sub-subparagraph c. d.
 1668         b.c. Each assessable insurer’s share of the amount being
 1669  assessed under sub-subparagraph a. must or sub-subparagraph b.
 1670  shall be in the proportion that the assessable insurer’s direct
 1671  written premium for the subject lines of business for the year
 1672  preceding the assessment bears to the aggregate statewide direct
 1673  written premium for the subject lines of business for that year.
 1674  The applicable assessment percentage applicable to each
 1675  assessable insured is the ratio of the amount being assessed
 1676  under sub-subparagraph a. or sub-subparagraph b. to the
 1677  aggregate statewide direct written premium for the subject lines
 1678  of business for the prior year. Assessments levied by the
 1679  corporation on assessable insurers under sub-subparagraph a.
 1680  must sub-subparagraphs a. and b. shall be paid as required by
 1681  the corporation’s plan of operation and paragraph (q).
 1682  Assessments levied by the corporation on assessable insureds
 1683  under sub-subparagraph a. sub-subparagraphs a. and b. shall be
 1684  collected by the surplus lines agent at the time the surplus
 1685  lines agent collects the surplus lines tax required by s.
 1686  626.932, and shall be paid to the Florida Surplus Lines Service
 1687  Office at the time the surplus lines agent pays the surplus
 1688  lines tax to that the Florida Surplus Lines Service office. Upon
 1689  receipt of regular assessments from surplus lines agents, the
 1690  Florida Surplus Lines Service Office shall transfer the
 1691  assessments directly to the corporation as determined by the
 1692  corporation.
 1693         c.d. Upon a determination by the board of governors that a
 1694  deficit in an account exceeds the amount that will be recovered
 1695  through regular assessments under sub-subparagraph a. or sub
 1696  subparagraph b., plus the amount that is expected to be
 1697  recovered through surcharges under sub-subparagraph h. i., as to
 1698  the remaining projected deficit the board shall levy, after
 1699  verification by the office, shall levy emergency assessments,
 1700  for as many years as necessary to cover the deficits, to be
 1701  collected by assessable insurers and the corporation and
 1702  collected from assessable insureds upon issuance or renewal of
 1703  policies for subject lines of business, excluding National Flood
 1704  Insurance policies. The amount of the emergency assessment
 1705  collected in a particular year must shall be a uniform
 1706  percentage of that year’s direct written premium for subject
 1707  lines of business and all accounts of the corporation, excluding
 1708  National Flood Insurance Program policy premiums, as annually
 1709  determined by the board and verified by the office. The office
 1710  shall verify the arithmetic calculations involved in the board’s
 1711  determination within 30 days after receipt of the information on
 1712  which the determination was based. Notwithstanding any other
 1713  provision of law, the corporation and each assessable insurer
 1714  that writes subject lines of business shall collect emergency
 1715  assessments from its policyholders without such obligation being
 1716  affected by any credit, limitation, exemption, or deferment.
 1717  Emergency assessments levied by the corporation on assessable
 1718  insureds shall be collected by the surplus lines agent at the
 1719  time the surplus lines agent collects the surplus lines tax
 1720  required by s. 626.932 and shall be paid to the Florida Surplus
 1721  Lines Service Office at the time the surplus lines agent pays
 1722  the surplus lines tax to that the Florida Surplus Lines Service
 1723  office. The emergency assessments so collected shall be
 1724  transferred directly to the corporation on a periodic basis as
 1725  determined by the corporation and shall be held by the
 1726  corporation solely in the applicable account. The aggregate
 1727  amount of emergency assessments levied for an account under this
 1728  sub-subparagraph in any calendar year may, at the discretion of
 1729  the board of governors, be less than but may not exceed the
 1730  greater of 10 percent of the amount needed to cover the deficit,
 1731  plus interest, fees, commissions, required reserves, and other
 1732  costs associated with financing of the original deficit, or 10
 1733  percent of the aggregate statewide direct written premium for
 1734  subject lines of business and for all accounts of the
 1735  corporation for the prior year, plus interest, fees,
 1736  commissions, required reserves, and other costs associated with
 1737  financing the deficit.
 1738         d.e. The corporation may pledge the proceeds of
 1739  assessments, projected recoveries from the Florida Hurricane
 1740  Catastrophe Fund, other insurance and reinsurance recoverables,
 1741  policyholder surcharges and other surcharges, and other funds
 1742  available to the corporation as the source of revenue for and to
 1743  secure bonds issued under paragraph (q), bonds or other
 1744  indebtedness issued under subparagraph (c)3., or lines of credit
 1745  or other financing mechanisms issued or created under this
 1746  subsection, or to retire any other debt incurred as a result of
 1747  deficits or events giving rise to deficits, or in any other way
 1748  that the board determines will efficiently recover such
 1749  deficits. The purpose of the lines of credit or other financing
 1750  mechanisms is to provide additional resources to assist the
 1751  corporation in covering claims and expenses attributable to a
 1752  catastrophe. As used in this subsection, the term “assessments”
 1753  includes regular assessments under sub-subparagraph a., sub
 1754  subparagraph b., or subparagraph (q)1. and emergency assessments
 1755  under sub-subparagraph d. Emergency assessments collected under
 1756  sub-subparagraph d. are not part of an insurer’s rates, are not
 1757  premium, and are not subject to premium tax, fees, or
 1758  commissions; however, failure to pay the emergency assessment
 1759  shall be treated as failure to pay premium. The emergency
 1760  assessments under sub-subparagraph c. d. shall continue as long
 1761  as any bonds issued or other indebtedness incurred with respect
 1762  to a deficit for which the assessment was imposed remain
 1763  outstanding, unless adequate provision has been made for the
 1764  payment of such bonds or other indebtedness pursuant to the
 1765  documents governing such bonds or other indebtedness.
 1766         e.f. As used in this subsection for purposes of any deficit
 1767  incurred on or after January 25, 2007, the term “subject lines
 1768  of business” means insurance written by assessable insurers or
 1769  procured by assessable insureds for all property and casualty
 1770  lines of business in this state, but not including workers’
 1771  compensation or medical malpractice. As used in this the sub
 1772  subparagraph, the term “property and casualty lines of business”
 1773  includes all lines of business identified on Form 2, Exhibit of
 1774  Premiums and Losses, in the annual statement required of
 1775  authorized insurers under by s. 624.424 and any rule adopted
 1776  under this section, except for those lines identified as
 1777  accident and health insurance and except for policies written
 1778  under the National Flood Insurance Program or the Federal Crop
 1779  Insurance Program. For purposes of this sub-subparagraph, the
 1780  term “workers’ compensation” includes both workers’ compensation
 1781  insurance and excess workers’ compensation insurance.
 1782         f.g. The Florida Surplus Lines Service Office shall
 1783  determine annually the aggregate statewide written premium in
 1784  subject lines of business procured by assessable insureds and
 1785  shall report that information to the corporation in a form and
 1786  at a time the corporation specifies to ensure that the
 1787  corporation can meet the requirements of this subsection and the
 1788  corporation’s financing obligations.
 1789         g.h. The Florida Surplus Lines Service Office shall verify
 1790  the proper application by surplus lines agents of assessment
 1791  percentages for regular assessments and emergency assessments
 1792  levied under this subparagraph on assessable insureds and shall
 1793  assist the corporation in ensuring the accurate, timely
 1794  collection and payment of assessments by surplus lines agents as
 1795  required by the corporation.
 1796         h.i. If a deficit is incurred in any account in 2008 or
 1797  thereafter, the board of governors shall levy a Citizens
 1798  policyholder surcharge against all policyholders of the
 1799  corporation. for a 12-month period, which
 1800         (I) The surcharge shall be levied collected at the time of
 1801  issuance or renewal of a policy, as a uniform percentage of the
 1802  premium for the policy of up to 15 percent of such premium,
 1803  which funds shall be used to offset the deficit.
 1804         (II) The surcharge is payable upon cancellation or
 1805  termination of the policy, upon renewal of the policy, or upon
 1806  issuance of a new policy by the corporation within the first 12
 1807  months after the date of the levy or the period of time
 1808  necessary to fully collect the surcharge amount.
 1809         (III) The corporation may not levy any regular assessments
 1810  under paragraph (q) pursuant to sub-subparagraph a. or sub
 1811  subparagraph b. with respect to a particular year’s deficit
 1812  until the corporation has first levied the full amount of the
 1813  surcharge authorized by this sub-subparagraph.
 1814         (IV) The surcharge is Citizens policyholder surcharges
 1815  under this sub-subparagraph are not considered premium and is
 1816  are not subject to commissions, fees, or premium taxes. However,
 1817  failure to pay the surcharge such surcharges shall be treated as
 1818  failure to pay premium.
 1819         i.j. If the amount of any assessments or surcharges
 1820  collected from corporation policyholders, assessable insurers or
 1821  their policyholders, or assessable insureds exceeds the amount
 1822  of the deficits, such excess amounts shall be remitted to and
 1823  retained by the corporation in a reserve to be used by the
 1824  corporation, as determined by the board of governors and
 1825  approved by the office, to pay claims or reduce any past,
 1826  present, or future plan-year deficits or to reduce outstanding
 1827  debt.
 1828         (c) The corporation’s plan of operation of the corporation:
 1829         1. Must provide for adoption of residential property and
 1830  casualty insurance policy forms and commercial residential and
 1831  nonresidential property insurance forms, which forms must be
 1832  approved by the office before prior to use. The corporation
 1833  shall adopt the following policy forms:
 1834         a. Standard personal lines policy forms that are
 1835  comprehensive multiperil policies providing full coverage of a
 1836  residential property equivalent to the coverage provided in the
 1837  private insurance market under an HO-3, HO-4, or HO-6 policy.
 1838         b. Basic personal lines policy forms that are policies
 1839  similar to an HO-8 policy or a dwelling fire policy that provide
 1840  coverage meeting the requirements of the secondary mortgage
 1841  market, but which coverage is more limited than the coverage
 1842  under a standard policy.
 1843         c. Commercial lines residential and nonresidential policy
 1844  forms that are generally similar to the basic perils of full
 1845  coverage obtainable for commercial residential structures and
 1846  commercial nonresidential structures in the admitted voluntary
 1847  market.
 1848         d. Personal lines and commercial lines residential property
 1849  insurance forms that cover the peril of wind only. The forms are
 1850  applicable only to residential properties located in areas
 1851  eligible for coverage under the coastal high-risk account
 1852  referred to in sub-subparagraph (b)2.a.
 1853         e. Commercial lines nonresidential property insurance forms
 1854  that cover the peril of wind only. The forms are applicable only
 1855  to nonresidential properties located in areas eligible for
 1856  coverage under the coastal high-risk account referred to in sub
 1857  subparagraph (b)2.a.
 1858         f. The corporation may adopt variations of the policy forms
 1859  listed in sub-subparagraphs a.-e. which that contain more
 1860  restrictive coverage.
 1861         2.a. Must provide that the corporation adopt a program in
 1862  which the corporation and authorized insurers enter into quota
 1863  share primary insurance agreements for hurricane coverage, as
 1864  defined in s. 627.4025(2)(a), for eligible risks, and adopt
 1865  property insurance forms for eligible risks which cover the
 1866  peril of wind only.
 1867         a. As used in this subsection, the term:
 1868         (I) “Quota share primary insurance” means an arrangement in
 1869  which the primary hurricane coverage of an eligible risk is
 1870  provided in specified percentages by the corporation and an
 1871  authorized insurer. The corporation and authorized insurer are
 1872  each solely responsible for a specified percentage of hurricane
 1873  coverage of an eligible risk as set forth in a quota share
 1874  primary insurance agreement between the corporation and an
 1875  authorized insurer and the insurance contract. The
 1876  responsibility of the corporation or authorized insurer to pay
 1877  its specified percentage of hurricane losses of an eligible
 1878  risk, as set forth in the quota share primary insurance
 1879  agreement, may not be altered by the inability of the other
 1880  party to the agreement to pay its specified percentage of
 1881  hurricane losses. Eligible risks that are provided hurricane
 1882  coverage through a quota share primary insurance arrangement
 1883  must be provided policy forms that set forth the obligations of
 1884  the corporation and authorized insurer under the arrangement,
 1885  clearly specify the percentages of quota share primary insurance
 1886  provided by the corporation and authorized insurer, and
 1887  conspicuously and clearly state that neither the authorized
 1888  insurer and nor the corporation may not be held responsible
 1889  beyond their its specified percentage of coverage of hurricane
 1890  losses.
 1891         (II) “Eligible risks” means personal lines residential and
 1892  commercial lines residential risks that meet the underwriting
 1893  criteria of the corporation and are located in areas that were
 1894  eligible for coverage by the Florida Windstorm Underwriting
 1895  Association on January 1, 2002.
 1896         b. The corporation may enter into quota share primary
 1897  insurance agreements with authorized insurers at corporation
 1898  coverage levels of 90 percent and 50 percent.
 1899         c. If the corporation determines that additional coverage
 1900  levels are necessary to maximize participation in quota share
 1901  primary insurance agreements by authorized insurers, the
 1902  corporation may establish additional coverage levels. However,
 1903  the corporation’s quota share primary insurance coverage level
 1904  may not exceed 90 percent.
 1905         d. Any quota share primary insurance agreement entered into
 1906  between an authorized insurer and the corporation must provide
 1907  for a uniform specified percentage of coverage of hurricane
 1908  losses, by county or territory as set forth by the corporation
 1909  board, for all eligible risks of the authorized insurer covered
 1910  under the quota share primary insurance agreement.
 1911         e. Any quota share primary insurance agreement entered into
 1912  between an authorized insurer and the corporation is subject to
 1913  review and approval by the office. However, such agreement shall
 1914  be authorized only as to insurance contracts entered into
 1915  between an authorized insurer and an insured who is already
 1916  insured by the corporation for wind coverage.
 1917         f. For all eligible risks covered under quota share primary
 1918  insurance agreements, the exposure and coverage levels for both
 1919  the corporation and authorized insurers shall be reported by the
 1920  corporation to the Florida Hurricane Catastrophe Fund. For all
 1921  policies of eligible risks covered under such quota share
 1922  primary insurance agreements, the corporation and the authorized
 1923  insurer must shall maintain complete and accurate records for
 1924  the purpose of exposure and loss reimbursement audits as
 1925  required by Florida Hurricane Catastrophe fund rules. The
 1926  corporation and the authorized insurer shall each maintain
 1927  duplicate copies of policy declaration pages and supporting
 1928  claims documents.
 1929         g. The corporation board shall establish in its plan of
 1930  operation standards for quota share agreements which ensure that
 1931  there is no discriminatory application among insurers as to the
 1932  terms of the quota share agreements, pricing of the quota share
 1933  agreements, incentive provisions if any, and consideration paid
 1934  for servicing policies or adjusting claims.
 1935         h. The quota share primary insurance agreement between the
 1936  corporation and an authorized insurer must set forth the
 1937  specific terms under which coverage is provided, including, but
 1938  not limited to, the sale and servicing of policies issued under
 1939  the agreement by the insurance agent of the authorized insurer
 1940  producing the business, the reporting of information concerning
 1941  eligible risks, the payment of premium to the corporation, and
 1942  arrangements for the adjustment and payment of hurricane claims
 1943  incurred on eligible risks by the claims adjuster and personnel
 1944  of the authorized insurer. Entering into a quota sharing
 1945  insurance agreement between the corporation and an authorized
 1946  insurer is shall be voluntary and at the discretion of the
 1947  authorized insurer.
 1948         3. May provide that the corporation may employ or otherwise
 1949  contract with individuals or other entities to provide
 1950  administrative or professional services that may be appropriate
 1951  to effectuate the plan. The corporation may shall have the power
 1952  to borrow funds, by issuing bonds or by incurring other
 1953  indebtedness, and shall have other powers reasonably necessary
 1954  to effectuate the requirements of this subsection, including,
 1955  without limitation, the power to issue bonds and incur other
 1956  indebtedness in order to refinance outstanding bonds or other
 1957  indebtedness. The corporation may, but is not required to, seek
 1958  judicial validation of its bonds or other indebtedness under
 1959  chapter 75. The corporation may issue bonds or incur other
 1960  indebtedness, or have bonds issued on its behalf by a unit of
 1961  local government pursuant to subparagraph (q)2., in the absence
 1962  of a hurricane or other weather-related event, upon a
 1963  determination by the corporation, subject to approval by the
 1964  office, that such action would enable it to efficiently meet the
 1965  financial obligations of the corporation and that such
 1966  financings are reasonably necessary to effectuate the
 1967  requirements of this subsection. The corporation may is
 1968  authorized to take all actions needed to facilitate tax-free
 1969  status for any such bonds or indebtedness, including formation
 1970  of trusts or other affiliated entities. The corporation may
 1971  shall have the authority to pledge assessments, projected
 1972  recoveries from the Florida Hurricane Catastrophe Fund, other
 1973  reinsurance recoverables, market equalization and other
 1974  surcharges, and other funds available to the corporation as
 1975  security for bonds or other indebtedness. In recognition of s.
 1976  10, Art. I of the State Constitution, prohibiting the impairment
 1977  of obligations of contracts, it is the intent of the Legislature
 1978  that no action be taken whose purpose is to impair any bond
 1979  indenture or financing agreement or any revenue source committed
 1980  by contract to such bond or other indebtedness.
 1981         4.a. Must require that the corporation operate subject to
 1982  the supervision and approval of a board of governors consisting
 1983  of eight individuals who are residents of this state, from
 1984  different geographical areas of this state.
 1985         a. The Governor, the Chief Financial Officer, the President
 1986  of the Senate, and the Speaker of the House of Representatives
 1987  shall each appoint two members of the board. At least one of the
 1988  two members appointed by each appointing officer must have
 1989  demonstrated expertise in insurance, and is deemed to be within
 1990  the scope of the exemption provided in s. 112.313(7)(b). The
 1991  Chief Financial Officer shall designate one of the appointees as
 1992  chair. All board members serve at the pleasure of the appointing
 1993  officer. All members of the board of governors are subject to
 1994  removal at will by the officers who appointed them. All board
 1995  members, including the chair, must be appointed to serve for 3
 1996  year terms beginning annually on a date designated by the plan.
 1997  However, for the first term beginning on or after July 1, 2009,
 1998  each appointing officer shall appoint one member of the board
 1999  for a 2-year term and one member for a 3-year term. A Any board
 2000  vacancy shall be filled for the unexpired term by the appointing
 2001  officer. The Chief Financial Officer shall appoint a technical
 2002  advisory group to provide information and advice to the board of
 2003  governors in connection with the board’s duties under this
 2004  subsection. The executive director and senior managers of the
 2005  corporation shall be engaged by the board and serve at the
 2006  pleasure of the board. Any executive director appointed on or
 2007  after July 1, 2006, is subject to confirmation by the Senate.
 2008  The executive director is responsible for employing other staff
 2009  as the corporation may require, subject to review and
 2010  concurrence by the board.
 2011         b. The board shall create a Market Accountability Advisory
 2012  Committee to assist the corporation in developing awareness of
 2013  its rates and its customer and agent service levels in
 2014  relationship to the voluntary market insurers writing similar
 2015  coverage.
 2016         (I) The members of the advisory committee shall consist of
 2017  the following 11 persons, one of whom must be elected chair by
 2018  the members of the committee: four representatives, one
 2019  appointed by the Florida Association of Insurance Agents, one by
 2020  the Florida Association of Insurance and Financial Advisors, one
 2021  by the Professional Insurance Agents of Florida, and one by the
 2022  Latin American Association of Insurance Agencies; three
 2023  representatives appointed by the insurers with the three highest
 2024  voluntary market share of residential property insurance
 2025  business in the state; one representative from the Office of
 2026  Insurance Regulation; one consumer appointed by the board who is
 2027  insured by the corporation at the time of appointment to the
 2028  committee; one representative appointed by the Florida
 2029  Association of Realtors; and one representative appointed by the
 2030  Florida Bankers Association. All members shall be appointed to
 2031  must serve for 3-year terms and may serve for consecutive terms.
 2032         (II) The committee shall report to the corporation at each
 2033  board meeting on insurance market issues which may include rates
 2034  and rate competition with the voluntary market; service,
 2035  including policy issuance, claims processing, and general
 2036  responsiveness to policyholders, applicants, and agents; and
 2037  matters relating to depopulation.
 2038         5. Must provide a procedure for determining the eligibility
 2039  of a risk for coverage, as follows:
 2040         a. Subject to the provisions of s. 627.3517, with respect
 2041  to personal lines residential risks, if the risk is offered
 2042  coverage from an authorized insurer at the insurer’s approved
 2043  rate under either a standard policy including wind coverage or,
 2044  if consistent with the insurer’s underwriting rules as filed
 2045  with the office, a basic policy including wind coverage, for a
 2046  new application to the corporation for coverage, the risk is not
 2047  eligible for any policy issued by the corporation unless the
 2048  premium for coverage from the authorized insurer is more than 15
 2049  percent greater than the premium for comparable coverage from
 2050  the corporation. If the risk is not able to obtain any such
 2051  offer, the risk is eligible for either a standard policy
 2052  including wind coverage or a basic policy including wind
 2053  coverage issued by the corporation; however, if the risk could
 2054  not be insured under a standard policy including wind coverage
 2055  regardless of market conditions, the risk is shall be eligible
 2056  for a basic policy including wind coverage unless rejected under
 2057  subparagraph 8. However, with regard to a policyholder of the
 2058  corporation or a policyholder removed from the corporation
 2059  through an assumption agreement until the end of the assumption
 2060  period, the policyholder remains eligible for coverage from the
 2061  corporation regardless of any offer of coverage from an
 2062  authorized insurer or surplus lines insurer. The corporation
 2063  shall determine the type of policy to be provided on the basis
 2064  of objective standards specified in the underwriting manual and
 2065  based on generally accepted underwriting practices.
 2066         (I) If the risk accepts an offer of coverage through the
 2067  market assistance plan or an offer of coverage through a
 2068  mechanism established by the corporation before a policy is
 2069  issued to the risk by the corporation or during the first 30
 2070  days of coverage by the corporation, and the producing agent who
 2071  submitted the application to the plan or to the corporation is
 2072  not currently appointed by the insurer, the insurer shall:
 2073         (A) Pay to the producing agent of record of the policy, for
 2074  the first year, an amount that is the greater of the insurer’s
 2075  usual and customary commission for the type of policy written or
 2076  a fee equal to the usual and customary commission of the
 2077  corporation; or
 2078         (B) Offer to allow the producing agent of record of the
 2079  policy to continue servicing the policy for at least a period of
 2080  not less than 1 year and offer to pay the agent the greater of
 2081  the insurer’s or the corporation’s usual and customary
 2082  commission for the type of policy written.
 2083  
 2084  If the producing agent is unwilling or unable to accept
 2085  appointment, the new insurer shall pay the agent in accordance
 2086  with sub-sub-sub-subparagraph (A).
 2087         (II) If When the corporation enters into a contractual
 2088  agreement for a take-out plan, the producing agent of record of
 2089  the corporation policy is entitled to retain any unearned
 2090  commission on the policy, and the insurer shall:
 2091         (A) Pay to the producing agent of record of the corporation
 2092  policy, for the first year, an amount that is the greater of the
 2093  insurer’s usual and customary commission for the type of policy
 2094  written or a fee equal to the usual and customary commission of
 2095  the corporation; or
 2096         (B) Offer to allow the producing agent of record of the
 2097  corporation policy to continue servicing the policy for at least
 2098  a period of not less than 1 year and offer to pay the agent the
 2099  greater of the insurer’s or the corporation’s usual and
 2100  customary commission for the type of policy written.
 2101  
 2102  If the producing agent is unwilling or unable to accept
 2103  appointment, the new insurer shall pay the agent in accordance
 2104  with sub-sub-sub-subparagraph (A).
 2105         b. With respect to commercial lines residential risks, for
 2106  a new application to the corporation for coverage, if the risk
 2107  is offered coverage under a policy including wind coverage from
 2108  an authorized insurer at its approved rate, the risk is not
 2109  eligible for a any policy issued by the corporation unless the
 2110  premium for coverage from the authorized insurer is more than 15
 2111  percent greater than the premium for comparable coverage from
 2112  the corporation. If the risk is not able to obtain any such
 2113  offer, the risk is eligible for a policy including wind coverage
 2114  issued by the corporation. However, with regard to a
 2115  policyholder of the corporation or a policyholder removed from
 2116  the corporation through an assumption agreement until the end of
 2117  the assumption period, the policyholder remains eligible for
 2118  coverage from the corporation regardless of an any offer of
 2119  coverage from an authorized insurer or surplus lines insurer.
 2120         (I) If the risk accepts an offer of coverage through the
 2121  market assistance plan or an offer of coverage through a
 2122  mechanism established by the corporation before a policy is
 2123  issued to the risk by the corporation or during the first 30
 2124  days of coverage by the corporation, and the producing agent who
 2125  submitted the application to the plan or the corporation is not
 2126  currently appointed by the insurer, the insurer shall:
 2127         (A) Pay to the producing agent of record of the policy, for
 2128  the first year, an amount that is the greater of the insurer’s
 2129  usual and customary commission for the type of policy written or
 2130  a fee equal to the usual and customary commission of the
 2131  corporation; or
 2132         (B) Offer to allow the producing agent of record of the
 2133  policy to continue servicing the policy for at least a period of
 2134  not less than 1 year and offer to pay the agent the greater of
 2135  the insurer’s or the corporation’s usual and customary
 2136  commission for the type of policy written.
 2137  
 2138  If the producing agent is unwilling or unable to accept
 2139  appointment, the new insurer shall pay the agent in accordance
 2140  with sub-sub-sub-subparagraph (A).
 2141         (II) If When the corporation enters into a contractual
 2142  agreement for a take-out plan, the producing agent of record of
 2143  the corporation policy is entitled to retain any unearned
 2144  commission on the policy, and the insurer shall:
 2145         (A) Pay to the producing agent of record of the corporation
 2146  policy, for the first year, an amount that is the greater of the
 2147  insurer’s usual and customary commission for the type of policy
 2148  written or a fee equal to the usual and customary commission of
 2149  the corporation; or
 2150         (B) Offer to allow the producing agent of record of the
 2151  corporation policy to continue servicing the policy for at least
 2152  a period of not less than 1 year and offer to pay the agent the
 2153  greater of the insurer’s or the corporation’s usual and
 2154  customary commission for the type of policy written.
 2155  
 2156  If the producing agent is unwilling or unable to accept
 2157  appointment, the new insurer shall pay the agent in accordance
 2158  with sub-sub-sub-subparagraph (A).
 2159         c. For purposes of determining comparable coverage under
 2160  sub-subparagraphs a. and b., the comparison must shall be based
 2161  on those forms and coverages that are reasonably comparable. The
 2162  corporation may rely on a determination of comparable coverage
 2163  and premium made by the producing agent who submits the
 2164  application to the corporation, made in the agent’s capacity as
 2165  the corporation’s agent. A comparison may be made solely of the
 2166  premium with respect to the main building or structure only on
 2167  the following basis: the same coverage A or other building
 2168  limits; the same percentage hurricane deductible that applies on
 2169  an annual basis or that applies to each hurricane for commercial
 2170  residential property; the same percentage of ordinance and law
 2171  coverage, if the same limit is offered by both the corporation
 2172  and the authorized insurer; the same mitigation credits, to the
 2173  extent the same types of credits are offered both by the
 2174  corporation and the authorized insurer; the same method for loss
 2175  payment, such as replacement cost or actual cash value, if the
 2176  same method is offered both by the corporation and the
 2177  authorized insurer in accordance with underwriting rules; and
 2178  any other form or coverage that is reasonably comparable as
 2179  determined by the board. If an application is submitted to the
 2180  corporation for wind-only coverage in the coastal high-risk
 2181  account, the premium for the corporation’s wind-only policy plus
 2182  the premium for the ex-wind policy that is offered by an
 2183  authorized insurer to the applicant must shall be compared to
 2184  the premium for multiperil coverage offered by an authorized
 2185  insurer, subject to the standards for comparison specified in
 2186  this subparagraph. If the corporation or the applicant requests
 2187  from the authorized insurer a breakdown of the premium of the
 2188  offer by types of coverage so that a comparison may be made by
 2189  the corporation or its agent and the authorized insurer refuses
 2190  or is unable to provide such information, the corporation may
 2191  treat the offer as not being an offer of coverage from an
 2192  authorized insurer at the insurer’s approved rate.
 2193         6. Must include rules for classifications of risks and
 2194  rates therefor.
 2195         7. Must provide that if premium and investment income for
 2196  an account attributable to a particular calendar year are in
 2197  excess of projected losses and expenses for the account
 2198  attributable to that year, such excess shall be held in surplus
 2199  in the account. Such surplus must shall be available to defray
 2200  deficits in that account as to future years and shall be used
 2201  for that purpose before prior to assessing assessable insurers
 2202  and assessable insureds as to any calendar year.
 2203         8. Must provide objective criteria and procedures to be
 2204  uniformly applied to for all applicants in determining whether
 2205  an individual risk is so hazardous as to be uninsurable. In
 2206  making this determination and in establishing the criteria and
 2207  procedures, the following must shall be considered:
 2208         a. Whether the likelihood of a loss for the individual risk
 2209  is substantially higher than for other risks of the same class;
 2210  and
 2211         b. Whether the uncertainty associated with the individual
 2212  risk is such that an appropriate premium cannot be determined.
 2213  
 2214  The acceptance or rejection of a risk by the corporation shall
 2215  be construed as the private placement of insurance, and the
 2216  provisions of chapter 120 do shall not apply.
 2217         9. Must provide that the corporation shall make its best
 2218  efforts to procure catastrophe reinsurance at reasonable rates,
 2219  to cover its projected 100-year probable maximum loss as
 2220  determined by the board of governors.
 2221         10. The policies issued by the corporation must provide
 2222  that, if the corporation or the market assistance plan obtains
 2223  an offer from an authorized insurer to cover the risk at its
 2224  approved rates, the risk is no longer eligible for renewal
 2225  through the corporation, except as otherwise provided in this
 2226  subsection.
 2227         11. Corporation policies and applications must include a
 2228  notice that the corporation policy could, under this section, be
 2229  replaced with a policy issued by an authorized insurer which
 2230  that does not provide coverage identical to the coverage
 2231  provided by the corporation. The notice must shall also specify
 2232  that acceptance of corporation coverage creates a conclusive
 2233  presumption that the applicant or policyholder is aware of this
 2234  potential.
 2235         12. May establish, subject to approval by the office,
 2236  different eligibility requirements and operational procedures
 2237  for any line or type of coverage for any specified county or
 2238  area if the board determines that such changes to the
 2239  eligibility requirements and operational procedures are
 2240  justified due to the voluntary market being sufficiently stable
 2241  and competitive in such area or for such line or type of
 2242  coverage and that consumers who, in good faith, are unable to
 2243  obtain insurance through the voluntary market through ordinary
 2244  methods would continue to have access to coverage from the
 2245  corporation. If When coverage is sought in connection with a
 2246  real property transfer, the such requirements and procedures may
 2247  shall not provide for an effective date of coverage later than
 2248  the date of the closing of the transfer as established by the
 2249  transferor, the transferee, and, if applicable, the lender.
 2250         13. Must provide that, with respect to the coastal high
 2251  risk account, any assessable insurer with a surplus as to
 2252  policyholders of $25 million or less writing 25 percent or more
 2253  of its total countrywide property insurance premiums in this
 2254  state may petition the office, within the first 90 days of each
 2255  calendar year, to qualify as a limited apportionment company. A
 2256  regular assessment levied by the corporation on a limited
 2257  apportionment company for a deficit incurred by the corporation
 2258  for the coastal high-risk account in 2006 or thereafter may be
 2259  paid to the corporation on a monthly basis as the assessments
 2260  are collected by the limited apportionment company from its
 2261  insureds pursuant to s. 627.3512, but the regular assessment
 2262  must be paid in full within 12 months after being levied by the
 2263  corporation. A limited apportionment company shall collect from
 2264  its policyholders any emergency assessment imposed under sub
 2265  subparagraph (b)3.d. The plan must shall provide that, if the
 2266  office determines that any regular assessment will result in an
 2267  impairment of the surplus of a limited apportionment company,
 2268  the office may direct that all or part of such assessment be
 2269  deferred as provided in subparagraph (q)4. However, there shall
 2270  be no limitation or deferment of an emergency assessment to be
 2271  collected from policyholders under sub-subparagraph (b)3.d. may
 2272  not be limited or deferred.
 2273         14. Must provide that the corporation appoint as its
 2274  licensed agents only those agents who also hold an appointment
 2275  as defined in s. 626.015(3) with an insurer who at the time of
 2276  the agent’s initial appointment by the corporation is authorized
 2277  to write and is actually writing personal lines residential
 2278  property coverage, commercial residential property coverage, or
 2279  commercial nonresidential property coverage within the state.
 2280         15. Must provide, by July 1, 2007, a premium payment plan
 2281  option to its policyholders which, allows at a minimum, allows
 2282  for quarterly and semiannual payment of premiums. A monthly
 2283  payment plan may, but is not required to, be offered.
 2284         16. Must limit coverage on mobile homes or manufactured
 2285  homes built before prior to 1994 to actual cash value of the
 2286  dwelling rather than replacement costs of the dwelling.
 2287         17. May provide such limits of coverage as the board
 2288  determines, consistent with the requirements of this subsection.
 2289         18. May require commercial property to meet specified
 2290  hurricane mitigation construction features as a condition of
 2291  eligibility for coverage.
 2292         19. Must offer sinkhole coverage. However, effective
 2293  February 1, 2012, coverage is not included for losses to
 2294  appurtenant structures, driveways, sidewalks, decks, or patios
 2295  that are directly or indirectly caused by sinkhole activity. The
 2296  corporation shall exclude such coverage using a notice of
 2297  coverage change, which may be included with the policy renewal,
 2298  and not by issuance of a notice of nonrenewal of the excluded
 2299  coverage upon renewal of the current policy.
 2300         20. As a condition for making payment for damage caused by
 2301  the peril of sinkhole, regardless of whether such payment is
 2302  made pursuant to the contract, mediation, neutral evaluation,
 2303  appraisal, arbitration, settlement, or litigation, the payment
 2304  must be dedicated entirely to the costs of repairing the
 2305  structure or remediation of the land. Unless this condition is
 2306  met, the corporation is prohibited from making payment.
 2307         (d)1. All prospective employees for senior management
 2308  positions, as defined by the plan of operation, are subject to
 2309  background checks as a prerequisite for employment. The office
 2310  shall conduct the background checks on such prospective
 2311  employees pursuant to ss. 624.34, 624.404(3), and 628.261.
 2312         2. On or before July 1 of each year, employees of the
 2313  corporation must are required to sign and submit a statement
 2314  attesting that they do not have a conflict of interest, as
 2315  defined in part III of chapter 112. As a condition of
 2316  employment, all prospective employees must are required to sign
 2317  and submit to the corporation a conflict-of-interest statement.
 2318         3. Senior managers and members of the board of governors
 2319  are subject to the provisions of part III of chapter 112,
 2320  including, but not limited to, the code of ethics and public
 2321  disclosure and reporting of financial interests, pursuant to s.
 2322  112.3145. Notwithstanding s. 112.3143(2), a board member may not
 2323  vote on any measure that would inure to his or her special
 2324  private gain or loss; that he or she knows would inure to the
 2325  special private gain or loss of any principal by whom he or she
 2326  is retained or to the parent organization or subsidiary of a
 2327  corporate principal by which he or she is retained, other than
 2328  an agency as defined in s. 112.312; or that he or she knows
 2329  would inure to the special private gain or loss of a relative or
 2330  business associate of the public officer. Before the vote is
 2331  taken, such member shall publicly state to the assembly the
 2332  nature of his or her interest in the matter from which he or she
 2333  is abstaining from voting and, within 15 days after the vote
 2334  occurs, disclose the nature of his or her interest as a public
 2335  record in a memorandum filed with the person responsible for
 2336  recording the minutes of the meeting, who shall incorporate the
 2337  memorandum in the minutes. Senior managers and board members are
 2338  also required to file such disclosures with the Commission on
 2339  Ethics and the Office of Insurance Regulation. The executive
 2340  director of the corporation or his or her designee shall notify
 2341  each existing and newly appointed and existing appointed member
 2342  of the board of governors and senior managers of their duty to
 2343  comply with the reporting requirements of part III of chapter
 2344  112. At least quarterly, the executive director or his or her
 2345  designee shall submit to the Commission on Ethics a list of
 2346  names of the senior managers and members of the board of
 2347  governors who are subject to the public disclosure requirements
 2348  under s. 112.3145.
 2349         4. Notwithstanding s. 112.3148 or s. 112.3149, or any other
 2350  provision of law, an employee or board member may not knowingly
 2351  accept, directly or indirectly, any gift or expenditure from a
 2352  person or entity, or an employee or representative of such
 2353  person or entity, which that has a contractual relationship with
 2354  the corporation or who is under consideration for a contract. An
 2355  employee or board member who fails to comply with subparagraph
 2356  3. or this subparagraph is subject to penalties provided under
 2357  ss. 112.317 and 112.3173.
 2358         5. Any senior manager of the corporation who is employed on
 2359  or after January 1, 2007, regardless of the date of hire, who
 2360  subsequently retires or terminates employment is prohibited from
 2361  representing another person or entity before the corporation for
 2362  2 years after retirement or termination of employment from the
 2363  corporation.
 2364         6. Any senior manager of the corporation who is employed on
 2365  or after January 1, 2007, regardless of the date of hire, who
 2366  subsequently retires or terminates employment is prohibited from
 2367  having any employment or contractual relationship for 2 years
 2368  with an insurer that has entered into a take-out bonus agreement
 2369  with the corporation.
 2370         (n)1. Rates for coverage provided by the corporation must
 2371  shall be actuarially sound and subject to the requirements of s.
 2372  627.062, except as otherwise provided in this paragraph. The
 2373  corporation shall file its recommended rates with the office at
 2374  least annually. The corporation shall provide any additional
 2375  information regarding the rates which the office requires. The
 2376  office shall consider the recommendations of the board and issue
 2377  a final order establishing the rates for the corporation within
 2378  45 days after the recommended rates are filed. The corporation
 2379  may not pursue an administrative challenge or judicial review of
 2380  the final order of the office.
 2381         2. In addition to the rates otherwise determined pursuant
 2382  to this paragraph, the corporation shall impose and collect an
 2383  amount equal to the premium tax provided for in s. 624.509 to
 2384  augment the financial resources of the corporation.
 2385         3. After the public hurricane loss-projection model under
 2386  s. 627.06281 has been found to be accurate and reliable by the
 2387  Florida Commission on Hurricane Loss Projection Methodology, the
 2388  that model shall serve as the minimum benchmark for determining
 2389  the windstorm portion of the corporation’s rates. This
 2390  subparagraph does not require or allow the corporation to adopt
 2391  rates lower than the rates otherwise required or allowed by this
 2392  paragraph.
 2393         4. The rate filings for the corporation which were approved
 2394  by the office and which took effect January 1, 2007, are
 2395  rescinded, except for those rates that were lowered. As soon as
 2396  possible, the corporation shall begin using the lower rates that
 2397  were in effect on December 31, 2006, and shall provide refunds
 2398  to policyholders who have paid higher rates as a result of that
 2399  rate filing. The rates in effect on December 31, 2006, shall
 2400  remain in effect for the 2007 and 2008 calendar years except for
 2401  any rate change that results in a lower rate. The next rate
 2402  change that may increase rates shall take effect pursuant to a
 2403  new rate filing recommended by the corporation and established
 2404  by the office, subject to the requirements of this paragraph.
 2405         5. Beginning on July 15, 2009, and annually each year
 2406  thereafter, the corporation must make a recommended actuarially
 2407  sound rate filing for each personal and commercial line of
 2408  business it writes, to be effective no earlier than January 1,
 2409  2010.
 2410         6. Beginning on or after January 1, 2010, and
 2411  notwithstanding the board’s recommended rates and the office’s
 2412  final order regarding the corporation’s filed rates under
 2413  subparagraph 1., the corporation shall annually implement a rate
 2414  increase each year which, except for sinkhole coverage, does not
 2415  exceed 10 percent for any single policy issued by the
 2416  corporation, excluding coverage changes and surcharges.
 2417         7. The corporation may also implement an increase to
 2418  reflect the effect on the corporation of the cash buildup factor
 2419  pursuant to s. 215.555(5)(b).
 2420         8. The corporation’s implementation of rates as prescribed
 2421  in subparagraph 6. shall cease for any line of business written
 2422  by the corporation upon the corporation’s implementation of
 2423  actuarially sound rates. Thereafter, the corporation shall
 2424  annually make a recommended actuarially sound rate filing for
 2425  each commercial and personal line of business the corporation
 2426  writes.
 2427         (v)1. Effective July 1, 2002, policies of the Residential
 2428  Property and Casualty Joint Underwriting Association shall
 2429  become policies of the corporation. All obligations, rights,
 2430  assets and liabilities of the Residential Property and Casualty
 2431  Joint Underwriting association, including bonds, note and debt
 2432  obligations, and the financing documents pertaining to them
 2433  become those of the corporation as of July 1, 2002. The
 2434  corporation is not required to issue endorsements or
 2435  certificates of assumption to insureds during the remaining term
 2436  of in-force transferred policies.
 2437         2. Effective July 1, 2002, policies of the Florida
 2438  Windstorm Underwriting Association are transferred to the
 2439  corporation and shall become policies of the corporation. All
 2440  obligations, rights, assets, and liabilities of the Florida
 2441  Windstorm Underwriting association, including bonds, note and
 2442  debt obligations, and the financing documents pertaining to them
 2443  are transferred to and assumed by the corporation on July 1,
 2444  2002. The corporation is not required to issue endorsements or
 2445  certificates of assumption to insureds during the remaining term
 2446  of in-force transferred policies.
 2447         3. The Florida Windstorm Underwriting Association and the
 2448  Residential Property and Casualty Joint Underwriting Association
 2449  shall take all actions necessary as may be proper to further
 2450  evidence the transfers and shall provide the documents and
 2451  instruments of further assurance as may reasonably be requested
 2452  by the corporation for that purpose. The corporation shall
 2453  execute assumptions and instruments as the trustees or other
 2454  parties to the financing documents of the Florida Windstorm
 2455  Underwriting Association or the Residential Property and
 2456  Casualty Joint Underwriting Association may reasonably request
 2457  to further evidence the transfers and assumptions, which
 2458  transfers and assumptions, however, are effective on the date
 2459  provided under this paragraph whether or not, and regardless of
 2460  the date on which, the assumptions or instruments are executed
 2461  by the corporation. Subject to the relevant financing documents
 2462  pertaining to their outstanding bonds, notes, indebtedness, or
 2463  other financing obligations, the moneys, investments,
 2464  receivables, choses in action, and other intangibles of the
 2465  Florida Windstorm Underwriting Association shall be credited to
 2466  the coastal high-risk account of the corporation, and those of
 2467  the personal lines residential coverage account and the
 2468  commercial lines residential coverage account of the Residential
 2469  Property and Casualty Joint Underwriting Association shall be
 2470  credited to the personal lines account and the commercial lines
 2471  account, respectively, of the corporation.
 2472         4. Effective July 1, 2002, a new applicant for property
 2473  insurance coverage who would otherwise have been eligible for
 2474  coverage in the Florida Windstorm Underwriting Association is
 2475  eligible for coverage from the corporation as provided in this
 2476  subsection.
 2477         5. The transfer of all policies, obligations, rights,
 2478  assets, and liabilities from the Florida Windstorm Underwriting
 2479  Association to the corporation and the renaming of the
 2480  Residential Property and Casualty Joint Underwriting Association
 2481  as the corporation does not shall in no way affect the coverage
 2482  with respect to covered policies as defined in s. 215.555(2)(c)
 2483  provided to these entities by the Florida Hurricane Catastrophe
 2484  Fund. The coverage provided by the Florida Hurricane Catastrophe
 2485  fund to the Florida Windstorm Underwriting Association based on
 2486  its exposures as of June 30, 2002, and each June 30 thereafter
 2487  shall be redesignated as coverage for the coastal high-risk
 2488  account of the corporation. Notwithstanding any other provision
 2489  of law, the coverage provided by the Florida Hurricane
 2490  Catastrophe fund to the Residential Property and Casualty Joint
 2491  Underwriting Association based on its exposures as of June 30,
 2492  2002, and each June 30 thereafter shall be transferred to the
 2493  personal lines account and the commercial lines account of the
 2494  corporation. Notwithstanding any other provision of law, the
 2495  coastal high-risk account shall be treated, for all Florida
 2496  Hurricane Catastrophe Fund purposes, as if it were a separate
 2497  participating insurer with its own exposures, reimbursement
 2498  premium, and loss reimbursement. Likewise, the personal lines
 2499  and commercial lines accounts shall be viewed together, for all
 2500  Florida Hurricane Catastrophe fund purposes, as if the two
 2501  accounts were one and represent a single, separate participating
 2502  insurer with its own exposures, reimbursement premium, and loss
 2503  reimbursement. The coverage provided by the Florida Hurricane
 2504  Catastrophe fund to the corporation shall constitute and operate
 2505  as a full transfer of coverage from the Florida Windstorm
 2506  Underwriting Association and Residential Property and Casualty
 2507  Joint Underwriting to the corporation.
 2508         (y) It is the intent of the Legislature that the amendments
 2509  to this subsection enacted in 2002 should, over time, reduce the
 2510  probable maximum windstorm losses in the residual markets and
 2511  should reduce the potential assessments to be levied on property
 2512  insurers and policyholders statewide. In furtherance of this
 2513  intent,:
 2514         1. the board shall, on or before February 1 of each year,
 2515  provide a report to the President of the Senate and the Speaker
 2516  of the House of Representatives showing the reduction or
 2517  increase in the 100-year probable maximum loss attributable to
 2518  wind-only coverages and the quota share program under this
 2519  subsection combined, as compared to the benchmark 100-year
 2520  probable maximum loss of the Florida Windstorm Underwriting
 2521  Association. For purposes of this paragraph, the benchmark 100
 2522  year probable maximum loss of the Florida Windstorm Underwriting
 2523  Association is shall be the calculation dated February 2001 and
 2524  based on November 30, 2000, exposures. In order to ensure
 2525  comparability of data, the board shall use the same methods for
 2526  calculating its probable maximum loss as were used to calculate
 2527  the benchmark probable maximum loss.
 2528         2.Beginning December 1, 2010, if the report under
 2529  subparagraph 1. for any year indicates that the 100-year
 2530  probable maximum loss attributable to wind-only coverages and
 2531  the quota share program combined does not reflect a reduction of
 2532  at least 25 percent from the benchmark, the board shall reduce
 2533  the boundaries of the high-risk area eligible for wind-only
 2534  coverages under this subsection in a manner calculated to reduce
 2535  such probable maximum loss to an amount at least 25 percent
 2536  below the benchmark.
 2537         3.Beginning February 1, 2015, if the report under
 2538  subparagraph 1. for any year indicates that the 100-year
 2539  probable maximum loss attributable to wind-only coverages and
 2540  the quota share program combined does not reflect a reduction of
 2541  at least 50 percent from the benchmark, the boundaries of the
 2542  high-risk area eligible for wind-only coverages under this
 2543  subsection shall be reduced by the elimination of any area that
 2544  is not seaward of a line 1,000 feet inland from the Intracoastal
 2545  Waterway.
 2546         Section 17. Paragraph (a) of subsection (5) of section
 2547  627.3511, Florida Statutes, is amended to read:
 2548         627.3511 Depopulation of Citizens Property Insurance
 2549  Corporation.—
 2550         (5) APPLICABILITY.—
 2551         (a) The take-out bonus provided by subsection (2) and the
 2552  exemption from assessment provided by paragraph (3)(a) apply
 2553  only if the corporation policy is replaced by either a standard
 2554  policy including wind coverage or, if consistent with the
 2555  insurer’s underwriting rules as filed with the office, a basic
 2556  policy including wind coverage; however, for with respect to
 2557  risks located in areas where coverage through the coastal high
 2558  risk account of the corporation is available, the replacement
 2559  policy need not provide wind coverage. The insurer must renew
 2560  the replacement policy at approved rates on substantially
 2561  similar terms for four additional 1-year terms, unless canceled
 2562  or not renewed by the policyholder. If an insurer assumes the
 2563  corporation’s obligations for a policy, it must issue a
 2564  replacement policy for a 1-year term upon expiration of the
 2565  corporation policy and must renew the replacement policy at
 2566  approved rates on substantially similar terms for four
 2567  additional 1-year terms, unless canceled or not renewed by the
 2568  policyholder. For each replacement policy canceled or nonrenewed
 2569  by the insurer for any reason during the 5-year coverage period
 2570  required by this paragraph, the insurer must remove from the
 2571  corporation one additional policy covering a risk similar to the
 2572  risk covered by the canceled or nonrenewed policy. In addition
 2573  to these requirements, the corporation must place the bonus
 2574  moneys in escrow for a period of 5 years; such moneys may be
 2575  released from escrow only to pay claims. If the policy is
 2576  canceled or nonrenewed before the end of the 5-year period, the
 2577  amount of the take-out bonus must be prorated for the time
 2578  period the policy was insured. A take-out bonus provided by
 2579  subsection (2) or subsection (6) is shall not be considered
 2580  premium income for purposes of taxes and assessments under the
 2581  Florida Insurance Code and shall remain the property of the
 2582  corporation, subject to the prior security interest of the
 2583  insurer under the escrow agreement until it is released from
 2584  escrow;, and after it is released from escrow it is shall be
 2585  considered an asset of the insurer and credited to the insurer’s
 2586  capital and surplus.
 2587         Section 18. Paragraph (b) of subsection (2) of section
 2588  627.4133, Florida Statutes, is amended to read:
 2589         627.4133 Notice of cancellation, nonrenewal, or renewal
 2590  premium.—
 2591         (2) With respect to any personal lines or commercial
 2592  residential property insurance policy, including, but not
 2593  limited to, any homeowner’s, mobile home owner’s, farmowner’s,
 2594  condominium association, condominium unit owner’s, apartment
 2595  building, or other policy covering a residential structure or
 2596  its contents:
 2597         (b) The insurer shall give the named insured written notice
 2598  of nonrenewal, cancellation, or termination at least 90 100 days
 2599  before prior to the effective date of the nonrenewal,
 2600  cancellation, or termination. However, the insurer shall give at
 2601  least 100 days’ written notice, or written notice by June 1,
 2602  whichever is earlier, for any nonrenewal, cancellation, or
 2603  termination that would be effective between June 1 and November
 2604  30. The notice must include the reason or reasons for the
 2605  nonrenewal, cancellation, or termination, except that:
 2606         1. The insurer shall give the named insured written notice
 2607  of nonrenewal, cancellation, or termination at least 180 days
 2608  prior to the effective date of the nonrenewal, cancellation, or
 2609  termination for a named insured whose residential structure has
 2610  been insured by that insurer or an affiliated insurer for at
 2611  least a 5-year period immediately prior to the date of the
 2612  written notice.
 2613         1.2.If When cancellation is for nonpayment of premium, at
 2614  least 10 days’ written notice of cancellation accompanied by the
 2615  reason therefor must shall be given. As used in this
 2616  subparagraph, the term “nonpayment of premium” means failure of
 2617  the named insured to discharge when due any of her or his
 2618  obligations in connection with the payment of premiums on a
 2619  policy or any installment of such premium, whether the premium
 2620  is payable directly to the insurer or its agent or indirectly
 2621  under any premium finance plan or extension of credit, or
 2622  failure to maintain membership in an organization if such
 2623  membership is a condition precedent to insurance coverage. The
 2624  term “Nonpayment of premium” also means the failure of a
 2625  financial institution to honor an insurance applicant’s check
 2626  after delivery to a licensed agent for payment of a premium,
 2627  even if the agent has previously delivered or transferred the
 2628  premium to the insurer. If a dishonored check represents the
 2629  initial premium payment, the contract and all contractual
 2630  obligations are shall be void ab initio unless the nonpayment is
 2631  cured within the earlier of 5 days after actual notice by
 2632  certified mail is received by the applicant or 15 days after
 2633  notice is sent to the applicant by certified mail or registered
 2634  mail, and if the contract is void, any premium received by the
 2635  insurer from a third party must shall be refunded to that party
 2636  in full.
 2637         2.3.If When such cancellation or termination occurs during
 2638  the first 90 days during which the insurance is in force and the
 2639  insurance is canceled or terminated for reasons other than
 2640  nonpayment of premium, at least 20 days’ written notice of
 2641  cancellation or termination accompanied by the reason therefor
 2642  must shall be given unless except where there has been a
 2643  material misstatement or misrepresentation or failure to comply
 2644  with the underwriting requirements established by the insurer.
 2645         3.4. The requirement for providing written notice of
 2646  nonrenewal by June 1 of any nonrenewal that would be effective
 2647  between June 1 and November 30 does not apply to the following
 2648  situations, but the insurer remains subject to the requirement
 2649  to provide such notice at least 100 days before prior to the
 2650  effective date of nonrenewal:
 2651         a. A policy that is nonrenewed due to a revision in the
 2652  coverage for sinkhole losses and catastrophic ground cover
 2653  collapse pursuant to s. 627.706, as amended by s. 30, chapter
 2654  2007-1, Laws of Florida.
 2655         b. A policy that is nonrenewed by Citizens Property
 2656  Insurance Corporation, pursuant to s. 627.351(6), for a policy
 2657  that has been assumed by an authorized insurer offering
 2658  replacement or renewal coverage to the policyholder is exempt
 2659  from the notice requirements of paragraph (a) and this
 2660  paragraph. In such cases, the corporation must give the named
 2661  insured written notice of nonrenewal at least 45 days before the
 2662  effective date of the nonrenewal.
 2663  
 2664  After the policy has been in effect for 90 days, the policy may
 2665  shall not be canceled by the insurer unless except when there
 2666  has been a material misstatement, a nonpayment of premium, a
 2667  failure to comply with underwriting requirements established by
 2668  the insurer within 90 days after of the date of effectuation of
 2669  coverage, or a substantial change in the risk covered by the
 2670  policy or if when the cancellation is for all insureds under
 2671  such policies for a given class of insureds. This paragraph does
 2672  not apply to individually rated risks having a policy term of
 2673  less than 90 days.
 2674         4.Notwithstanding any other provision of law, an insurer
 2675  may cancel or nonrenew a property insurance policy after at
 2676  least 45 days notice if the office finds that the early
 2677  cancellation of some or all of the insurer’s policies is
 2678  necessary to protect the best interests of the public or
 2679  policyholders and the office approves the insurer’s plan for
 2680  early cancellation or nonrenewal of some or all of its policies.
 2681  The office may base such finding upon the financial condition of
 2682  the insurer, lack of adequate reinsurance coverage for hurricane
 2683  risk, or other relevant factors. The office may condition its
 2684  finding on the consent of the insurer to be placed under
 2685  administrative supervision pursuant to s. 624.81 or to the
 2686  appointment of a receiver under chapter 631.
 2687         Section 19. Section 627.43141, Florida Statutes, is created
 2688  to read:
 2689         627.43141 Notice of change in policy terms.—
 2690         (1) As used in this section, the term:
 2691         (a) “Change in policy terms” means the modification,
 2692  addition, or deletion of any term, coverage, duty, or condition
 2693  from the previous policy. The correction of typographical or
 2694  scrivener’s errors or the application of mandated legislative
 2695  changes is not a change in policy terms.
 2696         (b) “Policy” means a written contract or written agreement
 2697  for personal lines property and casualty insurance, or the
 2698  certificate of such insurance, by whatever name called, and
 2699  includes all clauses, riders, endorsements, and papers that are
 2700  a part of such policy. The term does not include a binder as
 2701  defined in s. 627.420 unless the duration of the binder period
 2702  exceeds 60 days.
 2703         (c) “Renewal” means the issuance and delivery by an insurer
 2704  of a policy superseding at the end of the policy period a policy
 2705  previously issued and delivered by the same insurer or the
 2706  issuance and delivery of a certificate or notice extending the
 2707  term of a policy beyond its policy period or term. Any policy
 2708  that has a policy period or term of less than 6 months or that
 2709  does not have a fixed expiration date shall, for purposes of
 2710  this section, be considered as written for successive policy
 2711  periods or terms of 6 months.
 2712         (2) A renewal policy may contain a change in policy terms.
 2713  If a renewal policy does contains such change, the insurer must
 2714  give the named insured written notice of the change, which must
 2715  be enclosed along with the written notice of renewal premium
 2716  required by ss. 627.4133 and 627.728. Such notice shall be
 2717  entitled “Notice of Change in Policy Terms.”
 2718         (3) Although not required, proof of mailing or registered
 2719  mailing through the United States Postal Service of the Notice
 2720  of Change in Policy Terms to the named insured at the address
 2721  shown in the policy is sufficient proof of notice.
 2722         (4) Receipt of the premium payment for the renewal policy
 2723  by the insurer is deemed to be acceptance of the new policy
 2724  terms by the named insured.
 2725         (5) If an insurer fails to provide the notice required in
 2726  subsection (2), the original policy terms remain in effect until
 2727  the next renewal and the proper service of the notice, or until
 2728  the effective date of replacement coverage obtained by the named
 2729  insured, whichever occurs first.
 2730         (6) The intent of this section is to:
 2731         (a) Allow an insurer to make a change in policy terms
 2732  without nonrenewing those policyholders that the insurer wishes
 2733  to continue insuring.
 2734         (b) Alleviate concern and confusion to the policyholder
 2735  caused by the required policy nonrenewal for the limited issue
 2736  if an insurer intends to renew the insurance policy, but the new
 2737  policy contains a change in policy terms.
 2738         (c) Encourage policyholders to discuss their coverages with
 2739  their insurance agents.
 2740         Section 20. Section 627.7011, Florida Statutes, is amended
 2741  to read:
 2742         627.7011 Homeowners’ policies; offer of replacement cost
 2743  coverage and law and ordinance coverage.—
 2744         (1) Before Prior to issuing or renewing a homeowner’s
 2745  insurance policy on or after October 1, 2005, or prior to the
 2746  first renewal of a homeowner’s insurance policy on or after
 2747  October 1, 2005, the insurer must offer each of the following:
 2748         (a) A policy or endorsement providing that any loss that
 2749  which is repaired or replaced will be adjusted on the basis of
 2750  replacement costs to the dwelling not exceeding policy limits as
 2751  to the dwelling, rather than actual cash value, but not
 2752  including costs necessary to meet applicable laws and ordinances
 2753  regulating the construction, use, or repair of any property or
 2754  requiring the tearing down of any property, including the costs
 2755  of removing debris.
 2756         (b) A policy or endorsement providing that, subject to
 2757  other policy provisions, any loss that which is repaired or
 2758  replaced at any location will be adjusted on the basis of
 2759  replacement costs to the dwelling not exceeding policy limits as
 2760  to the dwelling, rather than actual cash value, and also
 2761  including costs necessary to meet applicable laws and ordinances
 2762  regulating the construction, use, or repair of any property or
 2763  requiring the tearing down of any property, including the costs
 2764  of removing debris.; However, such additional costs necessary to
 2765  meet applicable laws and ordinances may be limited to either 25
 2766  percent or 50 percent of the dwelling limit, as selected by the
 2767  policyholder, and such coverage applies shall apply only to
 2768  repairs of the damaged portion of the structure unless the total
 2769  damage to the structure exceeds 50 percent of the replacement
 2770  cost of the structure.
 2771  
 2772  An insurer is not required to make the offers required by this
 2773  subsection with respect to the issuance or renewal of a
 2774  homeowner’s policy that contains the provisions specified in
 2775  paragraph (b) for law and ordinance coverage limited to 25
 2776  percent of the dwelling limit, except that the insurer must
 2777  offer the law and ordinance coverage limited to 50 percent of
 2778  the dwelling limit. This subsection does not prohibit the offer
 2779  of a guaranteed replacement cost policy.
 2780         (2) Unless the insurer obtains the policyholder’s written
 2781  refusal of the policies or endorsements specified in subsection
 2782  (1), any policy covering the dwelling is deemed to include the
 2783  law and ordinance coverage limited to 25 percent of the dwelling
 2784  limit. The rejection or selection of alternative coverage shall
 2785  be made on a form approved by the office. The form must shall
 2786  fully advise the applicant of the nature of the coverage being
 2787  rejected. If this form is signed by a named insured, it is will
 2788  be conclusively presumed that there was an informed, knowing
 2789  rejection of the coverage or election of the alternative
 2790  coverage on behalf of all insureds. Unless the policyholder
 2791  requests in writing the coverage specified in this section, it
 2792  need not be provided in or supplemental to any other policy that
 2793  renews, insures, extends, changes, supersedes, or replaces an
 2794  existing policy if when the policyholder has rejected the
 2795  coverage specified in this section or has selected alternative
 2796  coverage. The insurer must provide the such policyholder with
 2797  notice of the availability of such coverage in a form approved
 2798  by the office at least once every 3 years. The failure to
 2799  provide such notice constitutes a violation of this code, but
 2800  does not affect the coverage provided under the policy.
 2801         (3) In the event of a loss for which a dwelling or personal
 2802  property is insured on the basis of replacement costs:
 2803         (a) For a dwelling, the insurer must initially pay at least
 2804  the actual cash value of the insured loss, less any applicable
 2805  deductible. To receive payment from an insurer for replacement
 2806  costs, the policyholder must enter into a contract for the
 2807  performance of building and structural repairs, unless the
 2808  requirement for a contract is waived by the insurer. The insurer
 2809  shall pay any remaining amounts necessary to perform such
 2810  repairs as work is performed and expenses are incurred. The
 2811  insurer or any contractor or subcontractor may not require the
 2812  policyholder to advance payment for such repairs or expenses,
 2813  with the exception of incidental expenses to mitigate further
 2814  damage. If a total loss of a dwelling occurs, the insurer shall
 2815  pay the replacement cost coverage without reservation or
 2816  holdback of any depreciation in value, pursuant to s. 627.702.
 2817         (b) For personal property:
 2818         1. The insurer must offer coverage under which the insurer
 2819  is obligated to pay the replacement cost without reservation or
 2820  holdback for any depreciation in value, whether or not the
 2821  insured replaces the property.
 2822         2. The insurer may also offer coverage under which the
 2823  insurer may limit the initial payment to the actual cash value
 2824  of the personal property to be replaced, require the insured to
 2825  provide receipts for the purchase of the property financed by
 2826  the initial payment, use such receipts to make the next payment
 2827  requested by the insured for the replacement of insured
 2828  property, and continue this process until the insured remits all
 2829  receipts up to the policy limits for replacement costs. The
 2830  insurer must provide clear notice of this process in the
 2831  insurance contract. The insurer may not require the policyholder
 2832  to advance payment for the replaced property, the insurer shall
 2833  pay the replacement cost without reservation or holdback of any
 2834  depreciation in value, whether or not the insured replaces or
 2835  repairs the dwelling or property.
 2836         (4) A Any homeowner’s insurance policy issued or renewed on
 2837  or after October 1, 2005, must include in bold type no smaller
 2838  than 18 points the following statement:
 2839  
 2840         “LAW AND ORDINANCE COVERAGE IS AN IMPORTANT COVERAGE
 2841         THAT YOU MAY WISH TO PURCHASE. YOU MAY ALSO NEED TO
 2842         CONSIDER THE PURCHASE OF FLOOD INSURANCE FROM THE
 2843         NATIONAL FLOOD INSURANCE PROGRAM. WITHOUT THIS
 2844         COVERAGE, YOU MAY HAVE UNCOVERED LOSSES. PLEASE
 2845         DISCUSS THESE COVERAGES WITH YOUR INSURANCE AGENT.”
 2846  
 2847  The intent of this subsection is to encourage policyholders to
 2848  purchase sufficient coverage to protect them in case events
 2849  excluded from the standard homeowners policy, such as law and
 2850  ordinance enforcement and flood, combine with covered events to
 2851  produce damage or loss to the insured property. The intent is
 2852  also to encourage policyholders to discuss these issues with
 2853  their insurance agent.
 2854         (5) Nothing in This section does not: shall be construed to
 2855         (a) Apply to policies not considered to be “homeowners’
 2856  policies,” as that term is commonly understood in the insurance
 2857  industry. This section specifically does not
 2858         (b) Apply to mobile home policies. Nothing in this section
 2859         (c) Limit shall be construed as limiting the ability of an
 2860  any insurer to reject or nonrenew any insured or applicant on
 2861  the grounds that the structure does not meet underwriting
 2862  criteria applicable to replacement cost or law and ordinance
 2863  policies or for other lawful reasons.
 2864         (d)(6)This section does not Prohibit an insurer from
 2865  limiting its liability under a policy or endorsement providing
 2866  that loss will be adjusted on the basis of replacement costs to
 2867  the lesser of:
 2868         1.(a) The limit of liability shown on the policy
 2869  declarations page;
 2870         2.(b) The reasonable and necessary cost to repair the
 2871  damaged, destroyed, or stolen covered property; or
 2872         3.(c) The reasonable and necessary cost to replace the
 2873  damaged, destroyed, or stolen covered property.
 2874         (e)(7)This section does not Prohibit an insurer from
 2875  exercising its right to repair damaged property in compliance
 2876  with its policy and s. 627.702(7).
 2877         Section 21. Paragraph (a) of subsection (5) of section
 2878  627.70131, Florida Statutes, is amended to read:
 2879         627.70131 Insurer’s duty to acknowledge communications
 2880  regarding claims; investigation.—
 2881         (5)(a) Within 90 days after an insurer receives notice of
 2882  an initial, reopened, or supplemental a property insurance claim
 2883  from a policyholder, the insurer shall pay or deny such claim or
 2884  a portion of the claim unless the failure to pay such claim or a
 2885  portion of the claim is caused by factors beyond the control of
 2886  the insurer which reasonably prevent such payment. Any payment
 2887  of an initial or supplemental a claim or portion of such a claim
 2888  made paid 90 days after the insurer receives notice of the
 2889  claim, or made paid more than 15 days after there are no longer
 2890  factors beyond the control of the insurer which reasonably
 2891  prevented such payment, whichever is later, bears shall bear
 2892  interest at the rate set forth in s. 55.03. Interest begins to
 2893  accrue from the date the insurer receives notice of the claim.
 2894  The provisions of this subsection may not be waived, voided, or
 2895  nullified by the terms of the insurance policy. If there is a
 2896  right to prejudgment interest, the insured shall select whether
 2897  to receive prejudgment interest or interest under this
 2898  subsection. Interest is payable when the claim or portion of the
 2899  claim is paid. Failure to comply with this subsection
 2900  constitutes a violation of this code. However, failure to comply
 2901  with this subsection does shall not form the sole basis for a
 2902  private cause of action.
 2903         Section 22. The Legislature finds and declares:
 2904         (1) There is a compelling state interest in maintaining a
 2905  viable and orderly private-sector market for property insurance
 2906  in this state. The lack of a viable and orderly property market
 2907  reduces the availability of property insurance coverage to state
 2908  residents, increases the cost of property insurance, and
 2909  increases the state’s reliance on a residual property insurance
 2910  market and its potential for imposing assessments on
 2911  policyholders throughout the state.
 2912         (2) In 2005, the Legislature revised ss. 627.706627.7074,
 2913  Florida Statutes, to adopt certain geological or technical
 2914  terms; to increase reliance on objective, scientific testing
 2915  requirements; and generally to reduce the number of sinkhole
 2916  claims and related disputes arising under prior law. The
 2917  Legislature determined that since the enactment of these
 2918  statutory revisions, both private-sector insurers and Citizens
 2919  Property Insurance Corporation have, nevertheless, continued to
 2920  experience high claims frequency and severity for sinkhole
 2921  insurance claims. In addition, many properties remain unrepaired
 2922  even after loss payments, which reduces the local property tax
 2923  base and adversely affects the real estate market. Therefore,
 2924  the Legislature finds that losses associated with sinkhole
 2925  claims adversely affect the public health, safety, and welfare
 2926  of this state and its citizens.
 2927         (3) Pursuant to sections 19 through 24 of this act,
 2928  technical or scientific definitions adopted in the 2005
 2929  legislation are clarified to implement and advance the
 2930  Legislature’s intended reduction of sinkhole claims and
 2931  disputes. The legal presumption intended by the Legislature is
 2932  clarified to reduce disputes and litigation associated with the
 2933  technical reviews associated with sinkhole claims. Certain other
 2934  revisions to ss. 627.706627.7074, Florida Statutes, are enacted
 2935  to advance legislative intent to rely on scientific or technical
 2936  determinations relating to sinkholes and sinkhole claims, reduce
 2937  the number and cost of disputes relating to sinkhole claims, and
 2938  ensure that repairs are made commensurate with the scientific
 2939  and technical determinations and insurance claims payments.
 2940         Section 23. Section 627.706, Florida Statutes, is reordered
 2941  and amended to read:
 2942         627.706 Sinkhole insurance; catastrophic ground cover
 2943  collapse; definitions.—
 2944         (1) Every insurer authorized to transact property insurance
 2945  in this state must shall provide coverage for a catastrophic
 2946  ground cover collapse. However, the insurer may restrict such
 2947  coverage to the principal building, as defined in the applicable
 2948  policy. The insurer may and shall make available, for an
 2949  appropriate additional premium, coverage for sinkhole losses on
 2950  any structure, including the contents of personal property
 2951  contained therein, to the extent provided in the form to which
 2952  the coverage attaches. A policy for residential property
 2953  insurance may include a deductible amount applicable to sinkhole
 2954  losses, including any expenses incurred by an insurer
 2955  investigating whether sinkhole activity is present. The
 2956  deductible may be equal to 1 percent, 2 percent, 5 percent, or
 2957  10 percent of the policy dwelling limits, with appropriate
 2958  premium discounts offered with each deductible amount.
 2959         (2) As used in ss. 627.706-627.7074, and as used in
 2960  connection with any policy providing coverage for a catastrophic
 2961  ground cover collapse or for sinkhole losses, the term:
 2962         (a) “Catastrophic ground cover collapse” means geological
 2963  activity that results in all the following:
 2964         1. The abrupt collapse of the ground cover;
 2965         2. A depression in the ground cover clearly visible to the
 2966  naked eye;
 2967         3. Structural damage to the covered building, including the
 2968  foundation; and
 2969         4. The insured structure being condemned and ordered to be
 2970  vacated by the governmental agency authorized by law to issue
 2971  such an order for that structure.
 2972  
 2973  Contents coverage applies if there is a loss resulting from a
 2974  catastrophic ground cover collapse. Structural Damage consisting
 2975  merely of the settling or cracking of a foundation, structure,
 2976  or building does not constitute a loss resulting from a
 2977  catastrophic ground cover collapse.
 2978         (b) “Neutral evaluation” means the alternative dispute
 2979  resolution provided in s. 627.7074.
 2980         (c) “Neutral evaluator” means a professional engineer or a
 2981  professional geologist who has completed a course of study in
 2982  alternative dispute resolution designed or approved by the
 2983  department for use in the neutral evaluation process and who is
 2984  determined to be fair and impartial.
 2985         (f)(b) “Sinkhole” means a landform created by subsidence of
 2986  soil, sediment, or rock as underlying strata are dissolved by
 2987  groundwater. A sinkhole forms may form by collapse into
 2988  subterranean voids created by dissolution of limestone or
 2989  dolostone or by subsidence as these strata are dissolved.
 2990         (h)(c) “Sinkhole loss” means structural damage to the
 2991  covered building, including the foundation, caused by sinkhole
 2992  activity. Contents coverage and additional living expenses shall
 2993  apply only if there is structural damage to the covered building
 2994  caused by sinkhole activity.
 2995         (g)(d) “Sinkhole activity” means settlement or systematic
 2996  weakening of the earth supporting such property only if the when
 2997  such settlement or systematic weakening results from
 2998  contemporary movement or raveling of soils, sediments, or rock
 2999  materials into subterranean voids created by the effect of water
 3000  on a limestone or similar rock formation.
 3001         (d)(e) “Professional engineer” means a person, as defined
 3002  in s. 471.005, who has a bachelor’s degree or higher in
 3003  engineering and has successfully completed at least five courses
 3004  in any combination of the following: geotechnical engineering,
 3005  structural engineering, soil mechanics, foundations, or geology
 3006  with a specialty in the geotechnical engineering field. A
 3007  professional engineer must also have geotechnical experience and
 3008  expertise in the identification of sinkhole activity as well as
 3009  other potential causes of structural damage to the structure.
 3010         (e)(f) “Professional geologist” means a person, as defined
 3011  in by s. 492.102, who has a bachelor’s degree or higher in
 3012  geology or related earth science and with expertise in the
 3013  geology of Florida. A professional geologist must have
 3014  geological experience and expertise in the identification of
 3015  sinkhole activity as well as other potential geologic causes of
 3016  structural damage to the structure.
 3017         (i) “Structural damage” means:
 3018         1. A covered building that suffers foundation movement
 3019  outside an acceptable variance under the applicable building
 3020  code;
 3021         2. Damage to a covered building, including the foundation,
 3022  which prevents the primary structural members or primary
 3023  structural systems from supporting the loads and forces they
 3024  were designed to support; and
 3025         3. As may be further defined by the applicable policy.
 3026         (3) On or before June 1, 2007, Every insurer authorized to
 3027  transact property insurance in this state shall make a proper
 3028  filing with the office for the purpose of extending the
 3029  appropriate forms of property insurance to include coverage for
 3030  catastrophic ground cover collapse or for sinkhole losses.
 3031  coverage for catastrophic ground cover collapse may not go into
 3032  effect until the effective date provided for in the filing
 3033  approved by the office.
 3034         (3)(4) Insurers offering policies that exclude coverage for
 3035  sinkhole losses must shall inform policyholders in bold type of
 3036  not less than 14 points as follows: “YOUR POLICY PROVIDES
 3037  COVERAGE FOR A CATASTROPHIC GROUND COVER COLLAPSE THAT RESULTS
 3038  IN THE PROPERTY BEING CONDEMNED AND UNINHABITABLE. OTHERWISE,
 3039  YOUR POLICY DOES NOT PROVIDE COVERAGE FOR SINKHOLE LOSSES. YOU
 3040  MAY PURCHASE ADDITIONAL COVERAGE FOR SINKHOLE LOSSES FOR AN
 3041  ADDITIONAL PREMIUM.”
 3042         (4)(5) An insurer offering sinkhole coverage to
 3043  policyholders before or after the adoption of s. 30, chapter
 3044  2007-1, Laws of Florida, may nonrenew the policies of
 3045  policyholders maintaining sinkhole coverage in Pasco County or
 3046  Hernando County, at the option of the insurer, and provide an
 3047  offer of coverage that to such policyholders which includes
 3048  catastrophic ground cover collapse and excludes sinkhole
 3049  coverage. Insurers acting in accordance with this subsection are
 3050  subject to the following requirements:
 3051         (a) Policyholders must be notified that a nonrenewal is for
 3052  purposes of removing sinkhole coverage, and that the
 3053  policyholder is still being offered a policy that provides
 3054  coverage for catastrophic ground cover collapse.
 3055         (b) Policyholders must be provided an actuarially
 3056  reasonable premium credit or discount for the removal of
 3057  sinkhole coverage and provision of only catastrophic ground
 3058  cover collapse.
 3059         (c) Subject to the provisions of this subsection and the
 3060  insurer’s approved underwriting or insurability guidelines, the
 3061  insurer may shall provide each policyholder with the opportunity
 3062  to purchase an endorsement to his or her policy providing
 3063  sinkhole coverage and may require an inspection of the property
 3064  before issuance of a sinkhole coverage endorsement.
 3065         (d) Section 624.4305 does not apply to nonrenewal notices
 3066  issued pursuant to this subsection.
 3067         (5) Any claim, including, but not limited to, initial,
 3068  supplemental, and reopened claims under an insurance policy that
 3069  provides sinkhole coverage is barred unless notice of the claim
 3070  was given to the insurer in accordance with the terms of the
 3071  policy within 2 years after the policyholder knew or reasonably
 3072  should have known about the sinkhole loss.
 3073         Section 24. Section 627.7061, Florida Statutes, is amended
 3074  to read:
 3075         627.7061 Coverage inquiries.—Inquiries about coverage on a
 3076  property insurance contract are not claim activity, unless an
 3077  actual claim is filed by the policyholder which insured that
 3078  results in a company investigation of the claim.
 3079         Section 25. Section 627.7065, Florida Statutes, is
 3080  repealed.
 3081         Section 26. Section 627.707, Florida Statutes, is amended
 3082  to read:
 3083         627.707 Standards for Investigation of sinkhole claims by
 3084  policyholders insurers; insurer payment; nonrenewals.—Upon
 3085  receipt of a claim for a sinkhole loss to a covered building, an
 3086  insurer must meet the following standards in investigating a
 3087  claim:
 3088         (1) The insurer must inspect make an inspection of the
 3089  policyholder’s insured’s premises to determine if there is
 3090  structural has been physical damage that to the structure which
 3091  may be the result of sinkhole activity.
 3092         (2) If the insurer confirms that structural damage exists
 3093  but is unable to identify a valid cause of such damage or
 3094  discovers that such damage is consistent with sinkhole loss
 3095  Following the insurer’s initial inspection, the insurer shall
 3096  engage a professional engineer or a professional geologist to
 3097  conduct testing as provided in s. 627.7072 to determine the
 3098  cause of the loss within a reasonable professional probability
 3099  and issue a report as provided in s. 627.7073, only if sinkhole
 3100  loss is covered under the policy. Except as provided in
 3101  subsection (6), the fees and costs of the professional engineer
 3102  or professional geologist shall be paid by the insurer.:
 3103         (a) The insurer is unable to identify a valid cause of the
 3104  damage or discovers damage to the structure which is consistent
 3105  with sinkhole loss; or
 3106         (b) The policyholder demands testing in accordance with
 3107  this section or s. 627.7072.
 3108         (3) Following the initial inspection of the policyholder’s
 3109  insured premises, the insurer shall provide written notice to
 3110  the policyholder disclosing the following information:
 3111         (a) What the insurer has determined to be the cause of
 3112  damage, if the insurer has made such a determination.
 3113         (b) A statement of the circumstances under which the
 3114  insurer is required to engage a professional engineer or a
 3115  professional geologist to verify or eliminate sinkhole loss and
 3116  to engage a professional engineer to make recommendations
 3117  regarding land and building stabilization and foundation repair.
 3118         (c) A statement regarding the right of the policyholder to
 3119  request testing by a professional engineer or a professional
 3120  geologist and the circumstances under which the policyholder may
 3121  demand certain testing.
 3122         (4) If the insurer determines that there is no sinkhole
 3123  loss, the insurer may deny the claim. If coverage for sinkhole
 3124  loss is available and If the insurer denies the claim on such
 3125  basis, without performing testing under s. 627.7072, the
 3126  policyholder may demand testing by the insurer under s.
 3127  627.7072. The policyholder’s demand for testing must be
 3128  communicated to the insurer in writing within 60 days after the
 3129  policyholder’s receipt of the insurer’s denial of the claim.
 3130         (5)(a)Subject to paragraph (b), If a sinkhole loss is
 3131  verified, the insurer shall pay to stabilize the land and
 3132  building and repair the foundation in accordance with the
 3133  recommendations of the professional engineer retained pursuant
 3134  to subsection (2), as provided under s. 627.7073, and in
 3135  consultation with notice to the policyholder, subject to the
 3136  coverage and terms of the policy. The insurer shall pay for
 3137  other repairs to the structure and contents in accordance with
 3138  the terms of the policy.
 3139         (a)(b) The insurer may limit its total claims payment to
 3140  the actual cash value of the sinkhole loss, which does not
 3141  include including underpinning or grouting or any other repair
 3142  technique performed below the existing foundation of the
 3143  building, until the policyholder enters into a contract for the
 3144  performance of building stabilization or foundation repairs in
 3145  accordance with the recommendations set forth in the insurer’s
 3146  report issued pursuant to s. 627.7073.
 3147         (b) In order to prevent additional damage to the building
 3148  or structure, the policyholder must enter into a contract for
 3149  the performance of building stabilization or foundation repairs
 3150  within 90 days after the insurance company confirms coverage for
 3151  the sinkhole loss and notifies the policyholder of such
 3152  confirmation. This time period is tolled if either party invokes
 3153  the neutral evaluation process.
 3154         (c) After the policyholder enters into the contract for the
 3155  performance of building stabilization or foundation repairs, the
 3156  insurer shall pay the amounts necessary to begin and perform
 3157  such repairs as the work is performed and the expenses are
 3158  incurred. The insurer may not require the policyholder to
 3159  advance payment for such repairs. If repair covered by a
 3160  personal lines residential property insurance policy has begun
 3161  and the professional engineer selected or approved by the
 3162  insurer determines that the repair cannot be completed within
 3163  the policy limits, the insurer must either complete the
 3164  professional engineer’s recommended repair or tender the policy
 3165  limits to the policyholder without a reduction for the repair
 3166  expenses incurred.
 3167         (d) The stabilization and all other repairs to the
 3168  structure and contents must be completed within 12 months after
 3169  entering into the contract for repairs described in paragraph
 3170  (b) unless:
 3171         1. There is a mutual agreement between the insurer and the
 3172  policyholder;
 3173         2. The claim is involved with the neutral evaluation
 3174  process;
 3175         3. The claim is in litigation; or
 3176         4. The claim is under appraisal.
 3177         (e)(c) Upon the insurer’s obtaining the written approval of
 3178  the policyholder and any lienholder, the insurer may make
 3179  payment directly to the persons selected by the policyholder to
 3180  perform the land and building stabilization and foundation
 3181  repairs. The decision by the insurer to make payment to such
 3182  persons does not hold the insurer liable for the work performed.
 3183  The policyholder may not accept a rebate from any person
 3184  performing the repairs specified in this section. If a
 3185  policyholder does receive a rebate, coverage is void and the
 3186  policyholder must refund the amount of the rebate to the
 3187  insurer. Any person making the repairs specified in this section
 3188  who offers a rebate, or any policyholder who accepts a rebate
 3189  for such repairs, commits insurance fraud punishable as a third
 3190  degree felony as provided in s. 775.082, s. 775.083, or s.
 3191  775.084.
 3192         (6) Except as provided in subsection (7), the fees and
 3193  costs of the professional engineer or the professional geologist
 3194  shall be paid by the insurer.
 3195         (6)(7) If the insurer obtains, pursuant to s. 627.7073,
 3196  written certification that there is no sinkhole loss or that the
 3197  cause of the damage was not sinkhole activity, and if the
 3198  policyholder has submitted the sinkhole claim without good faith
 3199  grounds for submitting such claim, the policyholder shall
 3200  reimburse the insurer for 50 percent of the actual costs of the
 3201  analyses and services provided under ss. 627.7072 and 627.7073;
 3202  however, a policyholder is not required to reimburse an insurer
 3203  more than the deductible or $2,500, whichever is greater, with
 3204  respect to any claim. A policyholder is required to pay
 3205  reimbursement under this subsection only if the policyholder
 3206  requested the testing and report provided pursuant to ss.
 3207  627.7072 and 627.7073 and the insurer, before prior to ordering
 3208  the analysis under s. 627.7072, informs the policyholder in
 3209  writing of the policyholder’s potential liability for
 3210  reimbursement and gives the policyholder the opportunity to
 3211  withdraw the claim.
 3212         (7)(8)An No insurer may not shall nonrenew any policy of
 3213  property insurance on the basis of filing of claims for partial
 3214  loss caused by sinkhole damage or clay shrinkage if as long as
 3215  the total of such payments does not equal or exceed the current
 3216  policy limits of coverage for the policy in effect on the date
 3217  of loss, for property damage to the covered building, as set
 3218  forth on the declarations page, or if and provided the
 3219  policyholder insured has repaired the structure in accordance
 3220  with the engineering recommendations made pursuant to subsection
 3221  (2) upon which any payment or policy proceeds were based. If the
 3222  insurer pays such limits, it may nonrenew the policy.
 3223         (8)(9) The insurer may engage a professional structural
 3224  engineer to make recommendations as to the repair of the
 3225  structure.
 3226         Section 27. Section 627.7073, Florida Statutes, is amended
 3227  to read:
 3228         627.7073 Sinkhole reports.—
 3229         (1) Upon completion of testing as provided in s. 627.7072,
 3230  the professional engineer or professional geologist shall issue
 3231  a report and certification to the insurer and the policyholder
 3232  as provided in this section.
 3233         (a) Sinkhole loss is verified if, based upon tests
 3234  performed in accordance with s. 627.7072, a professional
 3235  engineer or a professional geologist issues a written report and
 3236  certification stating:
 3237         1. That structural damage to the covered building has been
 3238  identified within a reasonable professional probability.
 3239         2.1. That the cause of the actual physical and structural
 3240  damage is sinkhole activity within a reasonable professional
 3241  probability.
 3242         3.2. That the analyses conducted were of sufficient scope
 3243  to identify sinkhole activity as the cause of damage within a
 3244  reasonable professional probability.
 3245         4.3. A description of the tests performed.
 3246         5.4. A recommendation by the professional engineer of
 3247  methods for stabilizing the land and building and for making
 3248  repairs to the foundation.
 3249         (b) If there is no structural damage or if sinkhole
 3250  activity is eliminated as the cause of such damage to the
 3251  covered building structure, the professional engineer or
 3252  professional geologist shall issue a written report and
 3253  certification to the policyholder and the insurer stating:
 3254         1. That there is no structural damage or the cause of such
 3255  the damage is not sinkhole activity within a reasonable
 3256  professional probability.
 3257         2. That the analyses and tests conducted were of sufficient
 3258  scope to eliminate sinkhole activity as the cause of the
 3259  structural damage within a reasonable professional probability.
 3260         3. A statement of the cause of the structural damage within
 3261  a reasonable professional probability.
 3262         4. A description of the tests performed.
 3263         (c) The respective findings, opinions, and recommendations
 3264  of the professional engineer or professional geologist as to the
 3265  cause of distress to the property and the findings, opinions,
 3266  and recommendations of the insurer’s professional engineer as to
 3267  land and building stabilization and foundation repair set forth
 3268  by s. 627.7072 shall be presumed correct, which presumption
 3269  shifts the burden of proof in accordance with s. 90.302(2). The
 3270  presumption of correctness is based upon public policy concerns
 3271  regarding the affordability of sinkhole coverage, consistency in
 3272  claims handling, and a reduction in the number of disputed
 3273  sinkhole claims.
 3274         (2)(a)An Any insurer that has paid a claim for a sinkhole
 3275  loss shall file a copy of the report and certification, prepared
 3276  pursuant to subsection (1), including the legal description of
 3277  the real property and the name of the property owner, the
 3278  neutral evaluator’s report, if any, which indicates that
 3279  sinkhole activity caused the damage claimed, a copy of the
 3280  certification indicating that stabilization has been completed,
 3281  if applicable, and the amount of the payment, with the county
 3282  clerk of court, who shall record the report and certification.
 3283  The insurer shall bear the cost of filing and recording one or
 3284  more reports and certifications the report and certification.
 3285  There shall be no cause of action or liability against an
 3286  insurer for compliance with this section.
 3287         (a) The recording of the report and certification does not:
 3288         1. Constitute a lien, encumbrance, or restriction on the
 3289  title to the real property or constitute a defect in the title
 3290  to the real property;
 3291         2. Create any cause of action or liability against any
 3292  grantor of the real property for breach of any warranty of good
 3293  title or warranty against encumbrances; or
 3294         3. Create any cause of action or liability against any
 3295  title insurer that insures the title to the real property.
 3296         (b) As a precondition to accepting payment for a sinkhole
 3297  loss, the policyholder must file a copy of any sinkhole report
 3298  regarding the insured property which was prepared on behalf or
 3299  at the request of the policyholder. The policyholder shall bear
 3300  the cost of filing and recording the sinkhole report. The
 3301  recording of the report does not:
 3302         1. Constitute a lien, encumbrance, or restriction on the
 3303  title to the real property or constitute a defect in the title
 3304  to the real property;
 3305         2. Create any cause of action or liability against any
 3306  grantor of the real property for breach of any warranty of good
 3307  title or warranty against encumbrances; or
 3308         3. Create any cause of action or liability against a title
 3309  insurer that insures the title to the real property.
 3310         (c)(b) The seller of real property upon which a sinkhole
 3311  claim has been made by the seller and paid by the insurer must
 3312  shall disclose to the buyer of such property, before the
 3313  closing, that a claim has been paid and whether or not the full
 3314  amount of the proceeds were used to repair the sinkhole damage.
 3315         (3) Upon completion of any building stabilization or
 3316  foundation repairs for a verified sinkhole loss, the
 3317  professional engineer responsible for monitoring the repairs
 3318  shall issue a report to the property owner which specifies what
 3319  repairs have been performed and certifies within a reasonable
 3320  degree of professional probability that such repairs have been
 3321  properly performed. The professional engineer issuing the report
 3322  shall file a copy of the report and certification, which
 3323  includes a legal description of the real property and the name
 3324  of the property owner, with the county clerk of the court, who
 3325  shall record the report and certification. This subsection does
 3326  not create liability for an insurer based on any representation
 3327  or certification by a professional engineer related to the
 3328  stabilization or foundation repairs for the verified sinkhole
 3329  loss.
 3330         Section 28. Section 627.7074, Florida Statutes, is amended
 3331  to read:
 3332         627.7074 Alternative procedure for resolution of disputed
 3333  sinkhole insurance claims.—
 3334         (1) As used in this section, the term:
 3335         (a) “Neutral evaluation” means the alternative dispute
 3336  resolution provided for in this section.
 3337         (b) “Neutral evaluator” means a professional engineer or a
 3338  professional geologist who has completed a course of study in
 3339  alternative dispute resolution designed or approved by the
 3340  department for use in the neutral evaluation process, who is
 3341  determined to be fair and impartial.
 3342         (1)(2)(a) The department shall:
 3343         (a) Certify and maintain a list of persons who are neutral
 3344  evaluators.
 3345         (b) The department shall Prepare a consumer information
 3346  pamphlet for distribution by insurers to policyholders which
 3347  clearly describes the neutral evaluation process and includes
 3348  information and forms necessary for the policyholder to request
 3349  a neutral evaluation.
 3350         (2) Neutral evaluation is available to either party if a
 3351  sinkhole report has been issued pursuant to s. 627.7073. At a
 3352  minimum, neutral evaluation must determine:
 3353         (a) Causation;
 3354         (b) All methods of stabilization and repair both above and
 3355  below ground;
 3356         (c) The costs for stabilization and all repairs; and
 3357         (d) Information necessary to carry out subsection (12).
 3358         (3) Following the receipt of the report provided under s.
 3359  627.7073 or the denial of a claim for a sinkhole loss, the
 3360  insurer shall notify the policyholder of his or her right to
 3361  participate in the neutral evaluation program under this
 3362  section. Neutral evaluation supersedes the alternative dispute
 3363  resolution process under s. 627.7015, but does not invalidate
 3364  the appraisal clause of the insurance policy. The insurer shall
 3365  provide to the policyholder the consumer information pamphlet
 3366  prepared by the department pursuant to subsection (1)
 3367  electronically or by United States mail paragraph (2)(b).
 3368         (4) Neutral evaluation is nonbinding, but mandatory if
 3369  requested by either party. A request for neutral evaluation may
 3370  be filed with the department by the policyholder or the insurer
 3371  on a form approved by the department. The request for neutral
 3372  evaluation must state the reason for the request and must
 3373  include an explanation of all the issues in dispute at the time
 3374  of the request. Filing a request for neutral evaluation tolls
 3375  the applicable time requirements for filing suit for a period of
 3376  60 days following the conclusion of the neutral evaluation
 3377  process or the time prescribed in s. 95.11, whichever is later.
 3378         (5) Neutral evaluation shall be conducted as an informal
 3379  process in which formal rules of evidence and procedure need not
 3380  be observed. A party to neutral evaluation is not required to
 3381  attend neutral evaluation if a representative of the party
 3382  attends and has the authority to make a binding decision on
 3383  behalf of the party. All parties shall participate in the
 3384  evaluation in good faith. The neutral evaluator must be allowed
 3385  reasonable access to the interior and exterior of insured
 3386  structures to be evaluated or for which a claim has been made.
 3387  Any reports initiated by the policyholder, or an agent of the
 3388  policyholder, confirming a sinkhole loss or disputing another
 3389  sinkhole report regarding insured structures must be provided to
 3390  the neutral evaluator before the evaluator’s physical inspection
 3391  of the insured property.
 3392         (6) The insurer shall pay reasonable the costs associated
 3393  with the neutral evaluation. However, if a party chooses to hire
 3394  a court reporter or stenographer to contemporaneously record and
 3395  document the neutral evaluation, that party must bear such
 3396  costs.
 3397         (7) Upon receipt of a request for neutral evaluation, the
 3398  department shall provide the parties a list of certified neutral
 3399  evaluators. The parties shall mutually select a neutral
 3400  evaluator from the list and promptly inform the department. If
 3401  the parties cannot agree to a neutral evaluator within 10
 3402  business days, The department shall allow the parties to submit
 3403  requests to disqualify evaluators on the list for cause.
 3404         (a) The department shall disqualify neutral evaluators for
 3405  cause based only on any of the following grounds:
 3406         1. A familial relationship exists between the neutral
 3407  evaluator and either party or a representative of either party
 3408  within the third degree.
 3409         2. The proposed neutral evaluator has, in a professional
 3410  capacity, previously represented either party or a
 3411  representative of either party, in the same or a substantially
 3412  related matter.
 3413         3. The proposed neutral evaluator has, in a professional
 3414  capacity, represented another person in the same or a
 3415  substantially related matter and that person’s interests are
 3416  materially adverse to the interests of the parties. The term
 3417  “substantially related matter” means participation by the
 3418  neutral evaluator on the same claim, property, or adjacent
 3419  property.
 3420         4. The proposed neutral evaluator has, within the preceding
 3421  5 years, worked as an employer or employee of any party to the
 3422  case.
 3423         (b) The parties shall appoint a neutral evaluator from the
 3424  department list and promptly inform the department. If the
 3425  parties cannot agree to a neutral evaluator within 14 days, the
 3426  department shall appoint a neutral evaluator from the list of
 3427  certified neutral evaluators. The department shall allow each
 3428  party to disqualify two neutral evaluators without cause. Upon
 3429  selection or appointment, the department shall promptly refer
 3430  the request to the neutral evaluator.
 3431         (c) Within 14 5 business days after the referral, the
 3432  neutral evaluator shall notify the policyholder and the insurer
 3433  of the date, time, and place of the neutral evaluation
 3434  conference. The conference may be held by telephone, if feasible
 3435  and desirable. The neutral evaluator shall make reasonable
 3436  efforts to hold the neutral evaluation conference shall be held
 3437  within 90 45 days after the receipt of the request by the
 3438  department. Failure of the neutral evaluator to hold the
 3439  conference within 90 days does not invalidate either party’s
 3440  right to neutral evaluation or to a neutral evaluation
 3441  conference held outside this timeframe.
 3442         (8) The department shall adopt rules of procedure for the
 3443  neutral evaluation process.
 3444         (8)(9) For policyholders not represented by an attorney, a
 3445  consumer affairs specialist of the department or an employee
 3446  designated as the primary contact for consumers on issues
 3447  relating to sinkholes under s. 20.121 shall be available for
 3448  consultation to the extent that he or she may lawfully do so.
 3449         (9)(10) Evidence of an offer to settle a claim during the
 3450  neutral evaluation process, as well as any relevant conduct or
 3451  statements made in negotiations concerning the offer to settle a
 3452  claim, is inadmissible to prove liability or absence of
 3453  liability for the claim or its value, except as provided in
 3454  subsection (14) (13).
 3455         (10)(11)Regardless of when noticed, any court proceeding
 3456  related to the subject matter of the neutral evaluation shall be
 3457  stayed pending completion of the neutral evaluation and for 5
 3458  days after the filing of the neutral evaluator’s report with the
 3459  court.
 3460         (11) If, based upon his or her professional training and
 3461  credentials, a neutral evaluator is qualified to determine only
 3462  disputes relating to causation or method of repair, the
 3463  department shall allow the neutral evaluator to enlist the
 3464  assistance of another professional from the neutral evaluators
 3465  list not previously stricken, who, based upon his or her
 3466  professional training and credentials, is able to provide an
 3467  opinion as to other disputed issues. A professional who would be
 3468  disqualified for any reason listed in subsection (7) must be
 3469  disqualified. The neutral evaluator may also use the services of
 3470  professional engineers and professional geologists who are not
 3471  certified as neutral evaluators, as well as licensed building
 3472  contractors, in order to ensure that all items in dispute are
 3473  addressed and the neutral evaluation can be completed. Any
 3474  professional engineer, professional geologist, or licensed
 3475  building contractor retained may be disqualified for any of the
 3476  reasons listed in subsection (7). The neutral evaluator may
 3477  request the entity that performed the investigation pursuant to
 3478  s. 627.7072 perform such additional and reasonable testing as
 3479  deemed necessary in the professional opinion of the neutral
 3480  evaluator.
 3481         (12) At For matters that are not resolved by the parties at
 3482  the conclusion of the neutral evaluation, the neutral evaluator
 3483  shall prepare a report describing all matters that are the
 3484  subject of the neutral evaluation, including whether, stating
 3485  that in his or her opinion, the sinkhole loss has been verified
 3486  or eliminated within a reasonable degree of professional
 3487  probability and, if verified, whether the sinkhole activity
 3488  caused structural damage to the covered building, and if so, the
 3489  need for and estimated costs of stabilizing the land and any
 3490  covered structures or buildings and other appropriate
 3491  remediation or necessary building structural repairs due to the
 3492  sinkhole loss. The evaluator’s report shall be sent to all
 3493  parties in attendance at the neutral evaluation and to the
 3494  department, within 14 days after completing the neutral
 3495  evaluation conference.
 3496         (13) The recommendation of the neutral evaluator is not
 3497  binding on any party, and the parties retain access to the
 3498  court. The neutral evaluator’s written recommendation, oral
 3499  testimony, and full report shall be admitted is admissible in
 3500  any subsequent action, litigation, or proceeding relating to the
 3501  claim or to the cause of action giving rise to the claim.
 3502  However, oral or written statements or nonverbal conduct
 3503  intended to make an assertion made by a party or neutral
 3504  evaluator during the course of neutral evaluation, other than
 3505  those statements or conduct expressly required to be admitted by
 3506  this subsection, are confidential and may not be disclosed to a
 3507  person other than a party to neutral evaluation or a party’s
 3508  counsel.
 3509         (14) If the neutral evaluator first verifies the existence
 3510  of a sinkhole that caused structural damage and, second,
 3511  recommends the need for and estimates costs of stabilizing the
 3512  land and any covered structures or buildings and other
 3513  appropriate remediation or building structural repairs, which
 3514  costs exceed the amount that the insurer estimates as necessary
 3515  to stabilize and repair, and the insurer refuses to comply with
 3516  the neutral evaluator’s findings and recommendations has offered
 3517  to pay the policyholder, the insurer is liable to the
 3518  policyholder for up to $2,500 in attorney’s fees for the
 3519  attorney’s participation in the neutral evaluation process. For
 3520  purposes of this subsection, the term “offer to pay” means a
 3521  written offer signed by the insurer or its legal representative
 3522  and delivered to the policyholder within 10 days after the
 3523  insurer receives notice that a request for neutral evaluation
 3524  has been made under this section.
 3525         (15) If the insurer timely agrees in writing to comply and
 3526  timely complies with the recommendation of the neutral
 3527  evaluator, but the policyholder declines to resolve the matter
 3528  in accordance with the recommendation of the neutral evaluator
 3529  pursuant to this section:
 3530         (a) The insurer is not liable for extracontractual damages
 3531  related to a claim for a sinkhole loss but only as related to
 3532  the issues determined by the neutral evaluation process. This
 3533  section does not affect or impair claims for extracontractual
 3534  damages unrelated to the issues determined by the neutral
 3535  evaluation process contained in this section; and
 3536         (b) The actions of the insurer are not a confession of
 3537  judgment or admission of liability, and the insurer is not
 3538  liable for attorney’s fees under s. 627.428 or other provisions
 3539  of the insurance code unless the policyholder obtains a judgment
 3540  that is more favorable than the recommendation of the neutral
 3541  evaluator.
 3542         (16) If the insurer agrees to comply with the neutral
 3543  evaluator’s report, payments shall be made in accordance with
 3544  the terms and conditions of the applicable insurance policy
 3545  pursuant to s. 627.707(5).
 3546         (17) Neutral evaluators are deemed to be agents of the
 3547  department and have immunity from suit as provided in s. 44.107.
 3548         (18) The department shall adopt rules of procedure for the
 3549  neutral evaluation process.
 3550         Section 29. Subsection (8) of section 627.711, Florida
 3551  Statutes, is amended to read:
 3552         627.711 Notice of premium discounts for hurricane loss
 3553  mitigation; uniform mitigation verification inspection form.—
 3554         (8) At its expense, The insurer may require that a any
 3555  uniform mitigation verification form provided by a policyholder,
 3556  a policyholder’s agency, or an authorized mitigation inspector
 3557  or inspection company be independently verified by an inspector,
 3558  an inspection company, or an independent third-party quality
 3559  assurance provider which possesses does possess a quality
 3560  assurance program before prior to accepting the uniform
 3561  mitigation verification form as valid.
 3562         Section 30. Subsection (1) of section 627.712, Florida
 3563  Statutes, is amended to read:
 3564         627.712 Residential windstorm coverage required;
 3565  availability of exclusions for windstorm or contents.—
 3566         (1) An insurer issuing a residential property insurance
 3567  policy must provide windstorm coverage. Except as provided in
 3568  paragraph (2)(c), this section does not apply with respect to
 3569  risks that are eligible for wind-only coverage from Citizens
 3570  Property Insurance Corporation under s. 627.351(6), and with
 3571  respect to risks that are not eligible for coverage from
 3572  Citizens Property Insurance Corporation under s. 627.351(6)(a)3.
 3573  or 5. A risk ineligible for Citizens coverage by the corporation
 3574  under s. 627.351(6)(a)3. or 5. is exempt from the requirements
 3575  of this section only if the risk is located within the
 3576  boundaries of the coastal high-risk account of the corporation.
 3577         Section 31. Except as otherwise expressly provided in this
 3578  act and except for this section, which shall take effect June 1,
 3579  2011, this act shall take effect July 1, 2011.