Florida Senate - 2013              PROPOSED COMMITTEE SUBSTITUTE
       Bill No. SB 1770
       
       
       
       
       
                                Barcode 939812                          
       
       576-02773A-13                                                   
       Proposed Committee Substitute by the Committee on Appropriations
       (Appropriations Subcommittee on General Government)
    1                        A bill to be entitled                      
    2         An act relating to property insurance; amending s.
    3         215.555, F.S.; changing the name of the Florida
    4         Hurricane Catastrophe Fund Finance Corporation to the
    5         State Board of Administration Finance Corporation;
    6         creating s. 215.5551, F.S.; creating the Florida
    7         Catastrophe Risk Capital Access Facility to increase
    8         the access of small domestic insurers to risk-capital
    9         markets; providing intent; establishing the facility
   10         in the State Board of Administration; providing the
   11         purposes of the facility; requiring the facility to be
   12         funded entirely by participating insurers after
   13         initial apportionment; providing limitations;
   14         providing for a board of directors; providing immunity
   15         from liability; providing for an annual report;
   16         amending s. 624.155, F.S.; providing that Citizens
   17         Property Insurance Corporation is an insurer subject
   18         to civil actions as an agent of the state covered by
   19         sovereign immunity; amending s. 626.752, F.S.,
   20         relating to the exchange of business between an agent
   21         and insurer; providing an exemption from the
   22         requirements of that section to the corporation or
   23         certain private entities under certain circumstances;
   24         amending s. 627.062, F.S.; requiring the Office of
   25         Insurance Regulation to calculate and publish
   26         insurance inflation factors for use in residential
   27         property insurance filings; prohibiting the office
   28         from disapproving a rate as excessive due to the
   29         insurer’s purchase of reinsurance for certain
   30         purposes; deleting obsolete provisions; conforming
   31         cross-references; amending s. 627.0628, F.S.;
   32         requiring the Florida Commission on Hurricane Loss
   33         Projection Methodology to consider methods for
   34         improving the accuracy of wind mitigation discounts;
   35         amending s. 627.0629, F.S.; requiring insurers to
   36         provide notice of mitigation discounts in a
   37         residential property insurance rate filing; revising
   38         the criteria for when the office may hold a public
   39         hearing regarding a rate filing; amending s. 627.171,
   40         F.S.; allowing a consent to an excess rate to apply to
   41         subsequent policy renewals; limiting the allowable
   42         amount of excess rates to counties where there is no
   43         competition; amending s. 627.351, F.S.; revising
   44         legislative intent with respect to the corporation;
   45         reducing the value of residential structures that can
   46         be covered by the corporation; revising the
   47         corporation’s eligibility criteria for structures
   48         located seaward of the coastal construction control
   49         line; requiring the corporation’s board of governors
   50         to concur with certain decisions by the executive
   51         director; providing for risk-sharing agreements
   52         between the corporation and other insurers and
   53         specifying the requirements and limitations of such
   54         agreements; revising provisions relating to the
   55         appointment of the board of governors and the
   56         executive director; deleting provisions allowing a
   57         policyholder removed from the corporation to remain
   58         eligible for coverage regardless of an offer of
   59         coverage from an authorized insurer; revising
   60         corporation criteria for appointing agents; requiring
   61         disclosure of potential corporation surcharges and
   62         policyholder obligations to try and obtain private
   63         market coverage; revising provisions relating to the
   64         Auditor General’s review of the corporation; requiring
   65         the board to contract with an independent auditing
   66         firm to conduct performance audits; authorizing the
   67         corporation to adopt programs that encourage insurers
   68         to remove policies from the corporation through a loan
   69         secured by a surplus note; requiring the corporation
   70         to have an inspector general; providing for
   71         appointment; providing duties; requiring an annual
   72         report to the Legislature; revising provisions
   73         relating to purchases by the corporation; providing
   74         that the corporation is subject to state agency
   75         purchasing requirements; requiring the corporation to
   76         provide notice of purchasing decisions; providing
   77         procedures for protesting such decisions; providing
   78         applicability; revising the corporation’s rate
   79         standards; requiring that corporation rates be
   80         competitive with approved rates charged in the
   81         admitted market, actuarially sound, and include a
   82         catastrophe risk load factor; providing exceptions;
   83         limiting rate increases for specified personal and
   84         commercial lines residential policies and allowing an
   85         additional rate increase; requiring the corporation to
   86         annually certify its rates; requiring the board of
   87         directors to provide recommendations to the
   88         Legislature on ways of providing rate relief to those
   89         who demonstrate a financial need; deleting obsolete
   90         provisions; creating s. 627.3518, F.S.; establishing a
   91         clearinghouse within the corporation for identifying
   92         and diverting insurance coverage to private insurers;
   93         providing definitions; providing requirements and
   94         duties of the corporation, insurers, and agents;
   95         providing for an alternative to submitting risks to
   96         the corporation; establishing a temporary keepout
   97         program that allows authorized insurers to provide
   98         coverage to applicants for coverage through the
   99         corporation through the market assistance program
  100         until the clearinghouse is operational; providing
  101         program components; providing for expiration; amending
  102         s. 627.405, F.S.; authorizing policyholders to assign
  103         benefits subject to conditions in the policy; amending
  104         s. 627.410, F.S.; conforming provisions to changes
  105         made by the act; creating s. 627.4102, F.S.; providing
  106         for an informational filing of certain forms that are
  107         exempt from the Office of Insurance Regulation’s
  108         approval process; requiring an informational filing to
  109         include a notarized certification from the insurer and
  110         providing a statement that must be included in the
  111         certification; requiring a Notice of Change in Policy
  112         Terms form to be filed with a changed renewal policy;
  113         providing effective dates.
  114  
  115  Be It Enacted by the Legislature of the State of Florida:
  116  
  117         Section 1. Paragraph (n) of subsection (2) and paragraph
  118  (d) of subsection (6) of section 215.555, Florida Statutes, are
  119  amended to read:
  120         215.555 Florida Hurricane Catastrophe Fund.—
  121         (2) DEFINITIONS.—As used in this section:
  122         (n) “Corporation” means the State Board of Administration
  123  Florida Hurricane Catastrophe Fund Finance Corporation created
  124  in paragraph (6)(d).
  125         (6) REVENUE BONDS.—
  126         (d) State Board of Administration Florida Hurricane
  127  Catastrophe Fund Finance Corporation.—
  128         1. In addition to the findings and declarations in
  129  subsection (1), the Legislature also finds and declares that:
  130         a. The public benefits corporation created under this
  131  paragraph will provide a mechanism necessary for the cost
  132  effective and efficient issuance of bonds. This mechanism will
  133  eliminate unnecessary costs in the bond issuance process,
  134  thereby increasing the amounts available for to pay
  135  reimbursement for losses to property sustained as a result of
  136  hurricane damage.
  137         b. The purpose of such bonds is to fund reimbursements
  138  through the Florida Hurricane Catastrophe Fund to pay for the
  139  costs of construction, reconstruction, repair, restoration, and
  140  other costs associated with damage to properties of
  141  policyholders of covered policies due to the occurrence of a
  142  hurricane.
  143         c. The efficacy of the financing mechanism will be enhanced
  144  by the corporation’s ownership of the assessments, by the
  145  insulation of the assessments from possible bankruptcy
  146  proceedings, and by covenants of the state with the
  147  corporation’s bondholders.
  148         2.a.The State Board of Administration Finance Corporation
  149  There is created, which is a public benefits corporation and,
  150  which is an instrumentality of the state, to be known as the
  151  Florida Hurricane Catastrophe Fund Finance Corporation. The
  152  State Board of Administration Finance Corporation is for all
  153  purposes the successor to the Florida Hurricane Catastrophe Fund
  154  Finance Corporation.
  155         a.b. The corporation shall operate under a five-member
  156  board of directors consisting of the Governor or a designee, the
  157  Chief Financial Officer or a designee, the Attorney General or a
  158  designee, the director of the Division of Bond Finance of the
  159  State Board of Administration, and the Chief Operating Officer
  160  senior employee of the State Board of Administration responsible
  161  for operations of the Florida Hurricane Catastrophe Fund.
  162         b.c. The corporation has all of the powers of corporations
  163  under chapter 607 and under chapter 617, subject only to the
  164  provisions of this subsection.
  165         c.d. The corporation may issue bonds and engage in such
  166  other financial transactions as are necessary to provide
  167  sufficient funds to achieve the purposes of this section.
  168         d.e. The corporation may invest in any of the investments
  169  authorized under s. 215.47.
  170         e.f. There is shall be no liability on the part of, and no
  171  cause of action shall arise against, any board members or
  172  employees of the corporation for any actions taken by them in
  173  the performance of their duties under this paragraph.
  174         3.a. In actions under chapter 75 to validate any bonds
  175  issued by the corporation, the notice required by s. 75.06 must
  176  shall be published in two newspapers of general circulation in
  177  the state, and the complaint and order of the court shall be
  178  served only on the State Attorney of the Second Judicial
  179  Circuit.
  180         b. The state hereby covenants with holders of bonds of the
  181  corporation that the state will not repeal or abrogate the power
  182  of the board to direct the Office of Insurance Regulation to
  183  levy the assessments and to collect the proceeds of the revenues
  184  pledged to the payment of such bonds as long as any such bonds
  185  remain outstanding unless adequate provision has been made for
  186  the payment of such bonds pursuant to the documents authorizing
  187  the issuance of the such bonds.
  188         c.4. The bonds of the corporation are not a debt of the
  189  state or of any political subdivision, and neither the state nor
  190  any political subdivision is liable on such bonds. The
  191  corporation may not does not have the power to pledge the
  192  credit, the revenues, or the taxing power of the state or of any
  193  political subdivision. The credit, revenues, or taxing power of
  194  the state or of any political subdivision may shall not be
  195  deemed to be pledged to the payment of any bonds of the
  196  corporation.
  197         d.5.a. The property, revenues, and other assets of the
  198  corporation; the transactions and operations of the corporation
  199  and the income from such transactions and operations; and all
  200  bonds issued under this paragraph and interest on such bonds are
  201  exempt from taxation by the state and any political subdivision,
  202  including the intangibles tax under chapter 199 and the income
  203  tax under chapter 220. This exemption does not apply to any tax
  204  imposed by chapter 220 on interest, income, or profits on debt
  205  obligations owned by corporations other than the State Board of
  206  Administration Florida Hurricane Catastrophe Fund Finance
  207  Corporation.
  208         e.b. All bonds of the corporation are shall be and
  209  constitute legal investments without limitation for all public
  210  bodies of this state; for all banks, trust companies, savings
  211  banks, savings associations, savings and loan associations, and
  212  investment companies; for all administrators, executors,
  213  trustees, and other fiduciaries; for all insurance companies and
  214  associations and other persons carrying on an insurance
  215  business; and for all other persons who are now or may hereafter
  216  be authorized to invest in bonds or other obligations of the
  217  state and are shall be and constitute eligible securities to be
  218  deposited as collateral for the security of any state, county,
  219  municipal, or other public funds. This sub-subparagraph shall be
  220  considered as additional and supplemental authority and may
  221  shall not be limited without specific reference to this sub
  222  subparagraph.
  223         4.6. The corporation and its corporate existence shall
  224  continue until terminated by law; however, no such law shall
  225  take effect as long as the corporation has bonds outstanding
  226  unless adequate provision has been made for the payment of such
  227  bonds pursuant to the documents authorizing the issuance of such
  228  bonds. Upon termination of the existence of the corporation, all
  229  of its rights and properties in excess of its obligations shall
  230  pass to and be vested in the state.
  231         Section 2. Section 215.5551, Florida Statutes, is created
  232  to read:
  233         215.5551Florida Catastrophe Risk Capital Access Facility.
  234         (1) The Legislature finds that the global market for
  235  catastrophe risk has expanded dramatically, resulting in the
  236  availability of billions of dollars in additional risk capital
  237  for insurers and new and innovative alternative risk-transfer
  238  mechanisms. The Legislature also finds that having access to
  239  additional risk capital and risk-transfer mechanisms provides
  240  insurers providing coverage in this state with an opportunity to
  241  expand their capacity to write additional business and diversify
  242  their catastrophe risk. The Legislature further finds that
  243  despite an expansion in the amount of available global risk
  244  capital, small insurers, particularly smaller domestic insurers,
  245  writing property insurance in this state face substantial
  246  challenges accessing these global markets when the relatively
  247  small amount of risk finance required by any one company is not
  248  economically viable. Therefore, it is the intent of the
  249  Legislature to create a mechanism to facilitate the access of
  250  small domestic insurers to global risk capital markets and risk
  251  transfer mechanisms.
  252         (2) Effective July 1, 2013, the Florida Catastrophe Risk
  253  Capital Access Facility is created within the State Board of
  254  Administration. The facility is not defined nor may it function
  255  as an insurer, reinsurer, or other risk-bearing entity under
  256  state law.
  257         (3) The facility shall:
  258         (a) Aggregate the demand for risk finance from global
  259  capital markets among smaller volume domestic property insurance
  260  companies writing business in this state.
  261         (b) Design and execute risk-transfer tools such as
  262  insurance-linked securities and other securitization models for
  263  participating insurers, and use special purpose vehicles or
  264  protected cells, onshore or offshore, as appropriate, to
  265  increase access to risk capital.
  266         (c) Identify and coordinate appropriate risk-transfer
  267  products and opportunities, initially targeting layers of
  268  coverage below, alongside, and above the portion of the
  269  reinsurance market covered by the Florida Hurricane Catastrophe
  270  Fund.
  271         (d) Establish and maintain regular and ongoing contact with
  272  global risk capital market participants, institutions, and
  273  investors, in order to identify opportunities that satisfy and
  274  coordinate insurer demand for additional risk capital.
  275         (4) After an initial apportionment for startup purposes,
  276  the facility shall be funded entirely by participating insurers
  277  on a pro rata basis.
  278         (5) In conducting its affairs, the facility may not:
  279         (a) Take a position in, or provide financial support for,
  280  risk-transfer transactions;
  281         (b) Be a guarantor of premium or make any other financial
  282  guarantees to participating insurers;
  283         (c) Create contractual obligations on the part of the
  284  state; or
  285         (d) Levy taxes or assessments.
  286         (6) The facility shall be governed by a board of directors
  287  composed of seven members, one from the Department of Financial
  288  Services; one from the State Board of Administration; one from
  289  the Office of Insurance Regulation; three industry members
  290  representing Florida property insurance writers, the reinsurance
  291  community, and the financial securities industry; and one member
  292  appointed by a majority of the board. The board may employ or
  293  contract with such staff and professionals as the board deems
  294  necessary to accomplish its purpose.
  295         (7) There shall be no liability on the part of, and no
  296  cause of action of any nature may arise against, the facility or
  297  its agents or employees, the board of directors, or the
  298  department or office or their representatives for any action
  299  taken by them in the performance of their powers and duties
  300  under this section.
  301         (8) The facility shall submit a report to the Financial
  302  Services Commission by January 1 of each year describing
  303  facility activities and transactions undertaken by participating
  304  insurers.
  305         Section 3. Subsection (1) of section 624.155, Florida
  306  Statutes, is amended and subsection (10) is added to that
  307  section, to read:
  308         624.155 Civil remedy.—
  309         (1) Any person may bring a civil action against an insurer,
  310  including Citizens Property Insurance Corporation, if when such
  311  person is damaged:
  312         (a) By a violation of any of the following provisions by
  313  the insurer:
  314         1. Section 626.9541(1)(i), (o), or (x);
  315         2. Section 626.9551;
  316         3. Section 626.9705;
  317         4. Section 626.9706;
  318         5. Section 626.9707; or
  319         6. Section 627.7283.
  320         (b) By the commission of any of the following acts by the
  321  insurer:
  322         1. Not attempting in good faith to settle claims if when,
  323  under all the circumstances, it could and should have done so,
  324  had it acted fairly and honestly toward its insured and with due
  325  regard for her or his interests;
  326         2. Making claims payments to insureds or beneficiaries not
  327  accompanied by a statement setting forth the coverage under
  328  which payments are being made; or
  329         3. Except as to liability coverages, failing to promptly
  330  settle claims, when the obligation to settle a claim has become
  331  reasonably clear, under one portion of the insurance policy
  332  coverage in order to influence settlements under other portions
  333  of the insurance policy coverage.
  334  
  335  Notwithstanding the provisions of this subsection the above to
  336  the contrary, a person pursuing a remedy under this section need
  337  not prove that such act was committed or performed with such
  338  frequency as to indicate a general business practice.
  339         (10) For the purposes of this section, Citizens Property
  340  Insurance Corporation is an agent of the state covered under s.
  341  768.28.
  342         Section 4. Subsection (4) of section 626.752, Florida
  343  Statutes, is amended to read:
  344         626.752 Exchange of business.—
  345         (4) The foregoing limitations and restrictions do shall not
  346  be construed and shall not apply to the placing of surplus lines
  347  business under the provisions of part VIII, or to the activities
  348  of Citizens Property Insurance Corporation or private entities
  349  referenced under 627.3518(7) when placing new and renewal
  350  business with authorized insurers in accordance with s.627.3518.
  351         Section 5. Subsection (2) and paragraph (d) of subsection
  352  (3) of section 627.062, Florida Statutes, are amended to read:
  353         627.062 Rate standards.—
  354         (2) As to all such classes of insurance:
  355         (a) Insurers or rating organizations shall establish and
  356  use rates, rating schedules, or rating manuals that allow the
  357  insurer a reasonable rate of return on the classes of insurance
  358  written in this state. A copy of rates, rating schedules, rating
  359  manuals, premium credits or discount schedules, and surcharge
  360  schedules, and changes thereto, must be filed with the office in
  361  accordance with under one of the following procedures:
  362         1. If the filing is made at least 90 days before the
  363  proposed effective date and is not implemented during the
  364  office’s review of the filing and any proceeding and judicial
  365  review, such filing is considered a “file and use” filing. In
  366  such case, the office shall finalize its review by issuance of a
  367  notice of intent to approve or a notice of intent to disapprove
  368  within 90 days after receipt of the filing. The notice of intent
  369  to approve and the notice of intent to disapprove constitute
  370  agency action for purposes of the Administrative Procedure Act.
  371  Requests for supporting information, requests for mathematical
  372  or mechanical corrections, or notification to the insurer by the
  373  office of its preliminary findings does not toll the 90-day
  374  period during any such proceedings and subsequent judicial
  375  review. The rate shall be deemed approved if the office does not
  376  issue a notice of intent to approve or a notice of intent to
  377  disapprove within 90 days after receipt of the filing.
  378         2. If the filing is not made in accordance with
  379  subparagraph 1., such filing must be made as soon as
  380  practicable, but within 30 days after the effective date, and is
  381  considered a “use and file” filing. An insurer making a “use and
  382  file” filing is potentially subject to an order by the office to
  383  return to policyholders those portions of rates found to be
  384  excessive to policyholders, as provided in paragraph (i) (h).
  385         3. For all property insurance filings made or submitted
  386  after January 25, 2007, but before May 1, 2012, an insurer
  387  seeking a rate that is greater than the rate most recently
  388  approved by the office shall make a “file and use” filing. For
  389  purposes of this subparagraph, motor vehicle collision and
  390  comprehensive coverages are not considered property coverages.
  391         (b) Upon receiving a rate filing, the office shall review
  392  the filing to determine if a rate is excessive, inadequate, or
  393  unfairly discriminatory. In making that determination, the
  394  office shall, in accordance with generally accepted and
  395  reasonable actuarial techniques, consider the following factors:
  396         1. Past and prospective loss experience within and without
  397  this state.
  398         2. Past and prospective expenses.
  399         3. The degree of competition among insurers for the risk
  400  insured.
  401         4. Investment income reasonably expected by the insurer,
  402  consistent with the insurer’s investment practices, from
  403  investable premiums anticipated from in the filing, plus any
  404  other expected income from currently invested assets
  405  representing the amount expected on unearned premium reserves
  406  and loss reserves. The commission may adopt rules that use using
  407  reasonable techniques of actuarial science and economics to
  408  specify the manner in which insurers calculate investment income
  409  attributable to classes of insurance written in this state and
  410  the manner in which investment income is used to calculate
  411  insurance rates. Such rules manner must allow contemplate
  412  allowances for an underwriting profit factor and full
  413  consideration of investment income which produce a reasonable
  414  rate of return; however, investment income from invested surplus
  415  may not be considered.
  416         5. The reasonableness of the judgment reflected in the
  417  filing.
  418         6. Dividends, savings, or unabsorbed premium deposits
  419  allowed or returned to state Florida policyholders, members, or
  420  subscribers.
  421         7. The adequacy of loss reserves.
  422         8. The cost of reinsurance. The office may not disapprove a
  423  rate as excessive solely due solely to the insurer having
  424  obtained catastrophic reinsurance to cover the insurer’s
  425  estimated 250-year probable maximum loss or any lower level of
  426  loss, or due solely to an admitted carrier purchasing private
  427  reinsurance that would insure against potential deficits within
  428  the Florida Hurricane Catastrophe Fund which the most recent
  429  estimate made pursuant to s. 215.555(4)(c)2. predicts would be
  430  funded through revenue bonds issued under s. 215.555(6).
  431         9. Trend factors, including trends in actual losses per
  432  insured unit for the insurer making the filing.
  433         10. Conflagration and catastrophe hazards, if applicable.
  434         11. Projected hurricane losses, if applicable, which must
  435  be estimated using a model or method found to be acceptable or
  436  reliable by the Florida Commission on Hurricane Loss Projection
  437  Methodology, and as further provided in s. 627.0628.
  438         12. A reasonable margin for underwriting profit and
  439  contingencies.
  440         13. The cost of medical services, if applicable.
  441         14. Other relevant factors that affect the frequency or
  442  severity of claims or expenses.
  443         (c) The office shall calculate and publish insurance
  444  inflation factors based on noncatastrophe direct loss costs for
  445  use in residential property insurance filings. The office shall
  446  update the published factors at least annually and make them
  447  available on its website. The calculation of insurance inflation
  448  factors are not subject to rulemaking under chapter 120.
  449         1. An insurer making a residential property insurance rate
  450  filing that proposes a change in noncatastrophe base rates by a
  451  uniform factor equal to or less than the applicable published
  452  insurance inflation factor, may make a rate filing under s.
  453  627.0645 which consists of a rate certification in lieu of a
  454  full rate filing under paragraph (a). The office shall verify
  455  insurer use of the appropriate published inflation factor and,
  456  if the inflation factor is used appropriately, the filed rates
  457  shall be deemed not excessive.
  458         2. An insurer filing under this paragraph may make a
  459  separate filing pursuant to paragraph (l) to adjust its rates
  460  for reinsurance rates, reinsurance financing costs and products,
  461  and cash buildup factor costs. The insurance inflation factors
  462  do not apply to these filings.
  463         3. This paragraph does not apply to filings made by
  464  Citizens Property Insurance Corporation.
  465         (d)(c) In the case of fire insurance rates, consideration
  466  must be given to the availability of water supplies and the
  467  experience of the fire insurance business during a period of not
  468  less than the most recent 5-year or longer period for which such
  469  experience is available.
  470         (e)(d) If conflagration or catastrophe hazards are
  471  considered by an insurer in its rates or rating plan, including
  472  surcharges and discounts, the insurer must shall establish a
  473  reserve for that portion of the premium allocated to such hazard
  474  and maintain the premium in a catastrophe reserve. Removal of
  475  such premiums from the reserve for purposes other than paying
  476  claims associated with a catastrophe or purchasing reinsurance
  477  for catastrophes must be approved by the office. Any ceding
  478  commission received by an insurer purchasing reinsurance for
  479  catastrophes must be placed in the catastrophe reserve.
  480         (f)(e) After consideration of the rate factors provided in
  481  paragraphs (b), (c), and (d), and (e) the office may find a rate
  482  to be excessive, inadequate, or unfairly discriminatory based
  483  upon the following standards:
  484         1. Rates shall be deemed excessive if they are likely to
  485  produce a profit from Florida business which is unreasonably
  486  high in relation to the risk involved in the class of business
  487  or if expenses are unreasonably high in relation to services
  488  rendered.
  489         2. Rates shall be deemed excessive if, among other things,
  490  the rate structure established by a stock insurance company
  491  provides for replenishment of surpluses from premiums, if the
  492  such replenishment is attributable to investment losses.
  493         3. Rates shall be deemed inadequate if they are clearly
  494  insufficient, together with the investment income attributable
  495  to them, they are clearly insufficient to sustain projected
  496  losses and expenses in the class of business to which they
  497  apply.
  498         4. A rating plan, including discounts, credits, or
  499  surcharges, shall be deemed unfairly discriminatory if it fails
  500  to clearly and equitably reflect consideration of the
  501  policyholder’s participation in a risk management program
  502  adopted pursuant to s. 627.0625.
  503         5. A rate shall be deemed inadequate as to the premium
  504  charged to a risk or group of risks if discounts or credits are
  505  allowed which exceed a reasonable reflection of expense savings
  506  and reasonably expected loss experience from the risk or group
  507  of risks.
  508         6. A rate shall be deemed unfairly discriminatory as to a
  509  risk or group of risks if the application of premium discounts,
  510  credits, or surcharges among such risks does not bear a
  511  reasonable relationship to the expected loss and expense
  512  experience among the various risks.
  513         (g)(f) In reviewing a rate filing, the office may require
  514  the insurer to provide, at the insurer’s expense, all
  515  information necessary to evaluate the condition of the company
  516  and the reasonableness of the filing according to the criteria
  517  enumerated in this section.
  518         (h)(g) The office may at any time review a rate, rating
  519  schedule, rating manual, or rate change; the pertinent records
  520  of the insurer; and market conditions. If the office finds on a
  521  preliminary basis that a rate may be excessive, inadequate, or
  522  unfairly discriminatory, the office shall initiate proceedings
  523  to disapprove the rate and shall so notify the insurer. However,
  524  the office may not disapprove as excessive any rate for which it
  525  has given final approval or which has been deemed approved for 1
  526  year after the effective date of the filing unless the office
  527  finds that a material misrepresentation or material error was
  528  made by the insurer or was contained in the filing. Upon
  529  notification being notified, the insurer or rating organization
  530  shall, within 60 days, file with the office all information
  531  that, in the belief of the insurer or organization, proves the
  532  reasonableness, adequacy, and fairness of the rate or rate
  533  change. The office shall issue a notice of intent to approve or
  534  a notice of intent to disapprove pursuant to paragraph (a)
  535  within 90 days after receipt of the insurer’s initial response.
  536  In such instances and in any administrative proceeding relating
  537  to the legality of the rate, the insurer or rating organization
  538  shall carry the burden of proof of showing, by a preponderance
  539  of the evidence, to show that the rate is not excessive,
  540  inadequate, or unfairly discriminatory. After the office
  541  notifies an insurer that a rate may be excessive, inadequate, or
  542  unfairly discriminatory, unless the office withdraws the
  543  notification, the insurer may not alter the rate except to
  544  conform to the office’s notice until the earlier of 120 days
  545  after the date the notification was provided or 180 days after
  546  the date of implementing the rate. The office, Subject to
  547  chapter 120, the office may disapprove without the 60-day
  548  notification any rate increase filed by an insurer within the
  549  prohibited time period or during the time that the legality of
  550  the increased rate is being contested.
  551         (i)(h) If the office finds that a rate or rate change is
  552  excessive, inadequate, or unfairly discriminatory, the office
  553  shall issue an order of disapproval requiring specifying that a
  554  new rate or rate schedule, which responds to the findings of the
  555  office, be filed by the insurer. The office shall further order,
  556  for any “use and file” filing made in accordance with
  557  subparagraph (a)2., that the portion of premiums charged which
  558  constitute each policyholder constituting the portion of the
  559  rate above that which was actuarially justified be returned to
  560  the policyholder in the form of a credit or refund. If the
  561  office finds that an insurer’s rate or rate change is
  562  inadequate, the new rate or rate schedule filed with the office
  563  in response to such a finding applies is applicable only to new
  564  or renewal business of the insurer written by the insurer on or
  565  after the effective date of the responsive filing.
  566         (j)(i) Except as otherwise specifically provided in this
  567  chapter, for property and casualty insurance the office may not
  568  directly or indirectly:
  569         1. Prohibit an any insurer, including any residual market
  570  plan or joint underwriting association, from paying acquisition
  571  costs based on the full amount of premium, as defined in s.
  572  627.403, applicable to any policy, or prohibit any such insurer
  573  from including the full amount of acquisition costs in a rate
  574  filing; or
  575         2. Impede, abridge, or otherwise compromise an insurer’s
  576  right to acquire policyholders, advertise, or appoint agents,
  577  including the calculation, manner, or amount of such agent
  578  commissions, if any.
  579         (k)(j) With respect to residential property insurance rate
  580  filings, the rate filing must account for mitigation measures
  581  undertaken by policyholders to reduce hurricane losses.
  582         (l)(k)1. A residential property insurer may make a separate
  583  filing limited solely to an adjustment of its rates for
  584  reinsurance, the cost of financing products used as a
  585  replacement for reinsurance, financing costs incurred in the
  586  purchase of reinsurance, and the actual cost paid due to the
  587  application of the cash build-up factor pursuant to s.
  588  215.555(5)(b) if the insurer:
  589         a. Elects to purchase financing products, such as a
  590  liquidity instrument or line of credit, in which case the cost
  591  included in filing for the liquidity instrument or line of
  592  credit may not result in a premium increase exceeding 3 percent
  593  for any individual policyholder. All costs contained in the
  594  filing may not result in an overall premium increase of more
  595  than 15 percent for any individual policyholder.
  596         b. Includes in the filing a copy of all of its reinsurance,
  597  liquidity instrument, or line of credit contracts; proof of the
  598  billing or payment for the contracts; and the calculation upon
  599  which the proposed rate change is based demonstrating that the
  600  costs meet the criteria of this section.
  601         2. An insurer that purchases reinsurance or financing
  602  products from an affiliated company may make a separate filing
  603  only if the costs for such reinsurance or financing products are
  604  charged at or below charges made for comparable coverage by
  605  nonaffiliated reinsurers or financial entities making such
  606  coverage or financing products available in this state.
  607         3. An insurer may make only one filing per 12-month period
  608  under this paragraph.
  609         4. An insurer that elects to implement a rate change under
  610  this paragraph must file its rate filing with the office at
  611  least 45 days before the effective date of the rate change.
  612  After an insurer submits a complete filing that meets all of the
  613  requirements of this paragraph, the office has 45 days after the
  614  date of the filing to review the rate filing and determine if
  615  the rate is excessive, inadequate, or unfairly discriminatory.
  616  
  617  The provisions of this subsection do not apply to workers’
  618  compensation, employer’s liability insurance, and motor vehicle
  619  insurance.
  620         (3)
  621         (d)1. The following categories or kinds of insurance and
  622  types of commercial lines risks are not subject to paragraph
  623  (2)(a) or paragraph (2)(g) (2)(f):
  624         a. Excess or umbrella.
  625         b. Surety and fidelity.
  626         c. Boiler and machinery and leakage and fire extinguishing
  627  equipment.
  628         d. Errors and omissions.
  629         e. Directors and officers, employment practices, fiduciary
  630  liability, and management liability.
  631         f. Intellectual property and patent infringement liability.
  632         g. Advertising injury and Internet liability insurance.
  633         h. Property risks rated under a highly protected risks
  634  rating plan.
  635         i. General liability.
  636         j. Nonresidential property, except for collateral
  637  protection insurance as defined in s. 624.6085.
  638         k. Nonresidential multiperil.
  639         l. Excess property.
  640         m. Burglary and theft.
  641         n. Any other commercial lines categories or kinds of
  642  insurance or types of commercial lines risks that the office
  643  determines should not be subject to paragraph (2)(a) or
  644  paragraph (2)(g) (2)(f) because of the existence of a
  645  competitive market for such insurance, similarity of such
  646  insurance to other categories or kinds of insurance not subject
  647  to paragraph (2)(a) or paragraph (2)(g) (2)(f), or to improve
  648  the general operational efficiency of the office.
  649         2. Insurers or rating organizations shall establish and use
  650  rates, rating schedules, or rating manuals that to allow the
  651  insurer a reasonable rate of return on insurance and risks
  652  described in subparagraph 1. which are written in this state.
  653         3. An insurer must notify the office of any changes to
  654  rates for insurance and risks described in subparagraph 1.
  655  within 30 days after the effective date of the change. The
  656  notice must include the name of the insurer, the type or kind of
  657  insurance subject to rate change, total premium written during
  658  the immediately preceding year by the insurer for the type or
  659  kind of insurance subject to the rate change, and the average
  660  statewide percentage change in rates. Underwriting files,
  661  premiums, losses, and expense statistics relating with regard to
  662  such insurance and risks written by an insurer must be
  663  maintained by the insurer and subject to examination by the
  664  office. Upon examination, the office, in accordance with
  665  generally accepted and reasonable actuarial techniques, shall
  666  consider the rate factors in paragraphs (2)(b), (d) (c), and (e)
  667  (d) and the standards in paragraph (2)(f) (2)(e) to determine if
  668  the rate is excessive, inadequate, or unfairly discriminatory.
  669         4. A rating organization must notify the office of any
  670  changes to loss cost for insurance and risks described in
  671  subparagraph 1. within 30 days after the effective date of the
  672  change. The notice must include the name of the rating
  673  organization, the type or kind of insurance subject to a loss
  674  cost change, loss costs during the immediately preceding year
  675  for the type or kind of insurance subject to the loss cost
  676  change, and the average statewide percentage change in loss
  677  cost. Actuarial data relating with regard to changes to loss
  678  cost for risks not subject to paragraph (2)(a) or paragraph
  679  (2)(g) (2)(f) must be maintained by the rating organization for
  680  2 years after the effective date of the change and are subject
  681  to examination by the office. The office may require the rating
  682  organization to incur the costs associated with an examination.
  683  Upon examination, the office, in accordance with generally
  684  accepted and reasonable actuarial techniques, shall consider the
  685  rate factors in paragraphs (2)(b), (d), and (e) (2)(b)-(d) and
  686  the standards in paragraph (2)(f) (2)(e) to determine if the
  687  rate is excessive, inadequate, or unfairly discriminatory.
  688         Section 6. Paragraphs (a) and (b) of subsection (3) of
  689  section 627.0628, Florida Statutes, are amended to read:
  690         627.0628 Florida Commission on Hurricane Loss Projection
  691  Methodology; public records exemption; public meetings
  692  exemption.—
  693         (3) ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.—
  694         (a) The commission shall consider any actuarial methods,
  695  principles, standards, models, or output ranges that have the
  696  potential for improving the accuracy of or reliability of the
  697  hurricane loss projections and wind mitigation discounts used in
  698  residential property insurance rate filings. The commission
  699  shall, from time to time, adopt findings as to the accuracy or
  700  reliability of particular methods, principles, standards,
  701  models, or output ranges.
  702         (b) The commission shall consider any actuarial methods,
  703  principles, standards, or models that have the potential for
  704  improving the accuracy of or reliability of projecting probable
  705  maximum loss levels. The commission shall adopt findings as to
  706  the accuracy or reliability of particular methods, principles,
  707  standards, or models related to probable maximum loss
  708  calculations. The commission shall review models for accuracy of
  709  use when establishing wind mitigation discounts.
  710         Section 7. Subsections (1) and (6) of section 627.0629,
  711  Florida Statutes, are amended to read:
  712         627.0629 Residential property insurance; rate filings.—
  713         (1) It is the intent of the Legislature that insurers
  714  provide savings to consumers who install or implement windstorm
  715  damage mitigation techniques, alterations, or solutions to their
  716  properties to prevent windstorm losses. A rate filing for
  717  residential property insurance must include notice of the
  718  mitigation discounts offered by the insurer, which must be
  719  actuarially reasonable discounts, credits, or other rate
  720  differentials, or appropriate reductions in deductibles, for
  721  properties on which fixtures or construction techniques
  722  demonstrated to reduce the amount of loss in a windstorm have
  723  been installed or implemented. The fixtures or construction
  724  techniques must include, but are not limited to, fixtures or
  725  construction techniques that enhance roof strength, roof
  726  covering performance, roof-to-wall strength, wall-to-floor-to
  727  foundation strength, opening protection, and the impact
  728  resistance of window, door, and skylight openings strength.
  729  Credits, discounts, or other rate differentials, or appropriate
  730  reductions in deductibles, for fixtures and construction
  731  techniques that meet the minimum requirements of the Florida
  732  Building Code must be included in the rate filing. The office
  733  shall determine the discounts, credits, other rate
  734  differentials, and appropriate reductions in deductibles that
  735  reflect the full actuarial value of such revaluation, which may
  736  be used by insurers in rate filings.
  737         (6) The office may hold a public hearing for a any rate
  738  filing that is based in whole or in part on data from a computer
  739  model which exceeds may not exceed 15 percent in counties the
  740  office determines do not have a reasonable degree of competition
  741  unless there is a public hearing.
  742         Section 8. Section 627.171, Florida Statutes, is amended to
  743  read:
  744         627.171 Excess rates.—
  745         (1) With the written consent of the insured signed before
  746  prior to the policy inception date and filed with the insurer,
  747  the insurer may use a rate in excess of the otherwise applicable
  748  filed rate on any specific risk. The signed consent form is
  749  valid for subsequent renewals and must include the filed rate as
  750  well as the excess rate for the risk insured., and A copy of the
  751  form must be maintained by the insurer for 3 years and be
  752  available for review by the office.
  753         (2) In those counties in which the office has determined
  754  there is not a reasonable degree of competition, an insurer may
  755  not use excess rates authorized under pursuant to this section
  756  for more than 10 percent of its commercial insurance policies
  757  written or renewed in each calendar year for any line of
  758  commercial insurance or for more than 5 percent of its personal
  759  lines insurance policies written or renewed in each calendar
  760  year for any line of personal insurance. In determining the 10
  761  percent limitation for commercial insurance policies, the
  762  insurer shall exclude a any workers’ compensation policy that
  763  was written for an employer who had coverage in the joint
  764  underwriting plan created by s. 627.311(5) immediately before
  765  prior to the writing of the policy by the insurer and a any
  766  workers’ compensation policy that was written for an employer
  767  who had been offered coverage in the joint underwriting plan but
  768  who was written a policy by the insurer in lieu of accepting the
  769  joint underwriting plan policy. Such These workers’ compensation
  770  policies shall be excluded from the 10-percent limitation for
  771  the first 3 years of coverage.
  772         Section 9. Paragraphs (a), (b), (c), (g), (i), (m), (q),
  773  and (z) of subsection (6) of section 627.351, Florida Statutes,
  774  are amended, and paragraph (gg) is added to that subsection, to
  775  read:
  776         627.351 Insurance risk apportionment plans.—
  777         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
  778         (a) The public purpose of this subsection is to ensure that
  779  there is an orderly market for property insurance for residents
  780  and businesses of this state.
  781         1. The Legislature finds that private insurers are entering
  782  the Florida property insurance market unwilling or unable to
  783  provide affordable property insurance coverage in many regions
  784  of the state. The Legislature further finds that when Citizens
  785  Property Insurance Corporation offers rates that are not
  786  adequate to cover the average costs that are generated from the
  787  claims filed by its policyholders, the deficiency may create a
  788  financial burden on all other state policyholders who must
  789  purchase their own insurance from private insurers at full
  790  actuarial cost and pay an added fee to cover a portion of the
  791  cost for claims filed by policyholders of the corporation. The
  792  Legislature intends that the corporation not act as a barrier or
  793  competitor to the private insurance market but be available to
  794  residents of in this state only if there is no private market
  795  coverage available at rates determined reasonable by the Office
  796  of Insurance Regulation to the extent sought and needed. The
  797  absence of affordable property insurance threatens the public
  798  health, safety, and welfare and likewise threatens the economic
  799  health of the state. As the corporation has continued its rapid
  800  growth and exposure, it increasingly threatens state residents
  801  with having to absorb an even greater financial burden than they
  802  are currently bearing. The state, therefore, has a compelling
  803  public interest and a public purpose to assist in assuring that
  804  property in the state is insured and that it is insured at
  805  affordable, actuarially sound, noncompetitive rates so as to
  806  facilitate the remediation, reconstruction, and replacement of
  807  damaged or destroyed property without overburdening the
  808  policyholders of this state in order to reduce or avoid the
  809  negative effects on otherwise resulting to the public health,
  810  safety, and welfare; on, to the economy of the state; and on,
  811  and to the revenues of the state and local governments which are
  812  needed to provide for the public welfare. It is necessary,
  813  therefore, to make provide affordable, actuarially sound,
  814  noncompetitive property insurance available to applicants who
  815  are, in good faith, entitled to procure insurance through the
  816  voluntary market but are unable to do so. The Legislature
  817  intends, therefore, that affordable, actuarially sound,
  818  noncompetitive property insurance be provided and that it
  819  continue to be provided, as long as necessary, through Citizens
  820  Property Insurance Corporation, a government entity that is an
  821  integral part of the state, and that is not a private insurance
  822  company, or through referrals to private insurers participating
  823  in a clearinghouse established by the corporation. To that end,
  824  the corporation shall strive to promote increase the
  825  availability of affordable and actuarially sound private
  826  property insurance in this state, supplemented by coverage
  827  provided by the corporation if appropriate, while achieving
  828  efficiencies and economies, and while providing service to
  829  policyholders, applicants, and agents which is no less than the
  830  quality generally provided in the voluntary market, for the
  831  achievement of the foregoing public purposes. Because it is
  832  essential for this government entity to have the maximum
  833  financial resources to pay claims following a catastrophic
  834  hurricane, it is further the intent of the Legislature that the
  835  corporation continue to be an integral part of the state and not
  836  a private insurance company, and that the income of the
  837  corporation be exempt from federal income taxation, and that
  838  interest on the debt obligations issued by the corporation be
  839  exempt from federal income taxation.
  840         2. The Residential Property and Casualty Joint Underwriting
  841  Association originally created by this statute shall be known as
  842  the Citizens Property Insurance Corporation. The corporation
  843  shall provide insurance for residential and commercial property
  844  insurance, for applicants who are eligible entitled, but, in
  845  good faith, are unable to procure insurance through the
  846  voluntary market. The corporation shall operate pursuant to a
  847  plan of operation approved by order of the Financial Services
  848  Commission. The plan is subject to continuous review by the
  849  commission, and. the commission may, by order, withdraw approval
  850  of all or part of a plan if the commission determines that
  851  conditions have changed since approval was granted and that the
  852  purposes of the plan require changes in the plan. For the
  853  purposes of this subsection, residential coverage includes both
  854  personal lines residential coverage, which consists of the type
  855  of coverage provided by homeowner’s, mobile home owner’s,
  856  dwelling, tenant’s, condominium unit owner’s, and similar
  857  policies; and commercial lines residential coverage, which
  858  consists of the type of coverage provided by condominium
  859  association, apartment building, and similar policies.
  860         3. With respect to coverage for personal lines residential
  861  structures:
  862         a. Effective January 1, 2014 2009, a personal lines
  863  residential structure that has a dwelling replacement cost of $1
  864  $2 million or more, or a single condominium unit that has a
  865  combined dwelling and contents replacement cost of $1 $2 million
  866  or more is not eligible for coverage by the corporation. Such
  867  dwellings insured by the corporation on December 31, 2013 2008,
  868  may continue to be covered by the corporation until the end of
  869  the policy term. However, such dwellings may reapply and obtain
  870  coverage if the property owner provides the corporation with a
  871  sworn affidavit from one or more insurance agents, on a form
  872  provided by the corporation, stating that the agents have made
  873  their best efforts to obtain coverage and that the property has
  874  been rejected for coverage by at least one authorized insurer
  875  and at least three surplus lines insurers. If such conditions
  876  are met, the dwelling may be insured by the corporation for up
  877  to 3 years, after which time the dwelling is ineligible for
  878  coverage. The office shall approve the method used by the
  879  corporation for valuing the dwelling replacement costs under
  880  cost for the purposes of this subparagraph. If a policyholder is
  881  insured by the corporation before prior to being determined to
  882  be ineligible pursuant to this subparagraph and such
  883  policyholder files a lawsuit challenging the determination, the
  884  policyholder may remain insured by the corporation until the
  885  conclusion of the litigation.
  886         b. Effective January 1, 2015, a structure that has a
  887  dwelling replacement cost of $900,000 or more, or a single
  888  condominium unit that has a combined dwelling and contents
  889  replacement cost of $900,000 or more, is not eligible for
  890  coverage by the corporation. Such dwellings insured by the
  891  corporation on December 31, 2014, may continue to be covered by
  892  the corporation until the end of the policy term.
  893         c. Effective January 1, 2016, a structure that has a
  894  dwelling replacement cost of $800,000 or more, or a single
  895  condominium unit that has a combined dwelling and contents
  896  replacement cost of $800,000 or more, is not eligible for
  897  coverage by the corporation. Such dwellings insured by the
  898  corporation on December 31, 2015, may continue to be covered by
  899  the corporation until the end of the policy term.
  900         d. Effective January 1, 2017, a structure that has a
  901  dwelling replacement cost of $700,000 or more, or a single
  902  condominium unit that has a combined dwelling and contents
  903  replacement cost of $700,000 or more, is not eligible for
  904  coverage by the corporation. Such dwellings insured by the
  905  corporation on December 31, 2016, may continue to be covered by
  906  the corporation until the end of the policy term.
  907         e. Effective January 1, 2018, a structure that has a
  908  dwelling replacement cost of $600,000 or more, or a single
  909  condominium unit that has a combined dwelling and contents
  910  replacement cost of $600,000 or more, is not eligible for
  911  coverage by the corporation. Such dwellings insured by the
  912  corporation on December 31, 2017, may continue to be covered by
  913  the corporation until the end of the policy term.
  914         f. Effective January 1, 2019, a structure that has a
  915  dwelling replacement cost of $500,000 or more, or a single
  916  condominium unit that has a combined dwelling and contents
  917  replacement cost of $500,000 or more, is not eligible for
  918  coverage by the corporation. Such dwellings insured by the
  919  corporation on December 31, 2018, may continue to be covered by
  920  the corporation until the end of the policy term.
  921         4. It is the intent of the Legislature that policyholders,
  922  applicants, and agents of the corporation receive service and
  923  treatment of the highest possible level but never less than that
  924  generally provided in the voluntary market. It is also intended
  925  that the corporation be held to service standards no less than
  926  those applied to insurers in the voluntary market by the office
  927  with respect to responsiveness, timeliness, customer courtesy,
  928  and overall dealings with policyholders, applicants, or agents
  929  of the corporation.
  930         5. Any structure for which a notice of commencement has
  931  been issued on or after July 1, 2013, pursuant to s. 713.135,
  932  which is located seaward of the coastal construction control
  933  line created pursuant to s. 161.053, is ineligible for coverage
  934  through the corporation unless the structure meets the coastal
  935  code-plus building code criteria developed and recommended by
  936  the Florida Building Commission. Effective January 1, 2009, a
  937  personal lines residential structure that is located in the
  938  “wind-borne debris region,” as defined in s. 1609.2,
  939  International Building Code (2006), and that has an insured
  940  value on the structure of $750,000 or more is not eligible for
  941  coverage by the corporation unless the structure has opening
  942  protections as required under the Florida Building Code for a
  943  newly constructed residential structure in that area. A
  944  residential structure shall be deemed to comply with this
  945  subparagraph if it has shutters or opening protections on all
  946  openings and if such opening protections complied with the
  947  Florida Building Code at the time they were installed.
  948         6. For any claim filed under any policy of the corporation,
  949  a public adjuster may not charge, agree to, or accept any
  950  compensation, payment, commission, fee, or other thing of value
  951  greater than 10 percent of the additional amount actually paid
  952  over the amount that was originally offered by the corporation
  953  for any one claim.
  954         (b)1. All insurers authorized to write one or more subject
  955  lines of business in this state are subject to assessment by the
  956  corporation and, for the purposes of this subsection, are
  957  referred to collectively as “assessable insurers.” Insurers
  958  writing one or more subject lines of business in this state
  959  pursuant to part VIII of chapter 626 are not assessable
  960  insurers; however, but insureds who procure one or more subject
  961  lines of business in this state pursuant to part VIII of chapter
  962  626 are subject to assessment by the corporation and are
  963  referred to collectively as “assessable insureds.” An insurer’s
  964  assessment liability begins on the first day of the calendar
  965  year following the year in which the insurer was issued a
  966  certificate of authority to transact insurance for subject lines
  967  of business in this state and terminates 1 year after the end of
  968  the first calendar year during which the insurer no longer holds
  969  a certificate of authority to transact insurance for subject
  970  lines of business in this state.
  971         2.a. All revenues, assets, liabilities, losses, and
  972  expenses of the corporation shall be divided into three separate
  973  accounts as follows:
  974         (I) A personal lines account for personal residential
  975  policies issued by the corporation, or issued by the Residential
  976  Property and Casualty Joint Underwriting Association and renewed
  977  by the corporation, which provides comprehensive, multiperil
  978  coverage on risks that are not located in areas eligible for
  979  coverage by the Florida Windstorm Underwriting Association as
  980  those areas were defined on January 1, 2002, and for policies
  981  that do not provide coverage for the peril of wind on risks that
  982  are located in such areas;
  983         (II) A commercial lines account for commercial residential
  984  and commercial nonresidential policies issued by the
  985  corporation, or issued by the Residential Property and Casualty
  986  Joint Underwriting Association and renewed by the corporation,
  987  which provides coverage for basic property perils on risks that
  988  are not located in areas eligible for coverage by the Florida
  989  Windstorm Underwriting Association as those areas were defined
  990  on January 1, 2002, and for policies that do not provide
  991  coverage for the peril of wind on risks that are located in such
  992  areas; and
  993         (III) A coastal account for personal residential policies
  994  and commercial residential and commercial nonresidential
  995  property policies issued by the corporation, or transferred to
  996  the corporation, which provides coverage for the peril of wind
  997  on risks that are located in areas eligible for coverage by the
  998  Florida Windstorm Underwriting Association as those areas were
  999  defined on January 1, 2002. The corporation may offer policies
 1000  that provide multiperil coverage and the corporation shall
 1001  continue to offer policies that provide coverage only for the
 1002  peril of wind for risks located in areas eligible for coverage
 1003  in the coastal account. In issuing multiperil coverage, the
 1004  corporation may use its approved policy forms and rates for the
 1005  personal lines account. An applicant or insured who is eligible
 1006  to purchase a multiperil policy from the corporation may
 1007  purchase a multiperil policy from an authorized insurer without
 1008  prejudice to the applicant’s or insured’s eligibility to
 1009  prospectively purchase a policy that provides coverage only for
 1010  the peril of wind from the corporation. An applicant or insured
 1011  who is eligible for a corporation policy that provides coverage
 1012  only for the peril of wind may elect to purchase or retain such
 1013  policy and also purchase or retain coverage excluding wind from
 1014  an authorized insurer without prejudice to the applicant’s or
 1015  insured’s eligibility to prospectively purchase a policy that
 1016  provides multiperil coverage from the corporation. It is the
 1017  goal of the Legislature that there be an overall average savings
 1018  of 10 percent or more for a policyholder who currently has a
 1019  wind-only policy with the corporation, and an ex-wind policy
 1020  with a voluntary insurer or the corporation, and who obtains a
 1021  multiperil policy from the corporation. It is the intent of the
 1022  Legislature that the offer of multiperil coverage in the coastal
 1023  account be made and implemented in a manner that does not
 1024  adversely affect the tax-exempt status of the corporation or
 1025  creditworthiness of or security for currently outstanding
 1026  financing obligations or credit facilities of the coastal
 1027  account, the personal lines account, or the commercial lines
 1028  account. The coastal account must also include quota share
 1029  primary insurance under subparagraph (c)2. The area eligible for
 1030  coverage under the coastal account also includes the area within
 1031  Port Canaveral, which is bordered on the south by the City of
 1032  Cape Canaveral, bordered on the west by the Banana River, and
 1033  bordered on the north by Federal Government property.
 1034         b. The three separate accounts must be maintained as long
 1035  as financing obligations entered into by the Florida Windstorm
 1036  Underwriting Association or Residential Property and Casualty
 1037  Joint Underwriting Association are outstanding, in accordance
 1038  with the terms of the corresponding financing documents. If the
 1039  financing obligations are no longer outstanding, the corporation
 1040  may use a single account for all revenues, assets, liabilities,
 1041  losses, and expenses of the corporation. Consistent with this
 1042  subparagraph and prudent investment policies that minimize the
 1043  cost of carrying debt, the board shall exercise its best efforts
 1044  to retire existing debt or obtain the approval of necessary
 1045  parties to amend the terms of existing debt, in order so as to
 1046  structure the most efficient plan for consolidating to
 1047  consolidate the three separate accounts into a single account.
 1048         c. Creditors of the Residential Property and Casualty Joint
 1049  Underwriting Association and the accounts specified in sub-sub
 1050  subparagraphs a.(I) and (II) may have a claim against, and
 1051  recourse to, those accounts and no claim against, or recourse
 1052  to, the account referred to in sub-sub-subparagraph a.(III).
 1053  Creditors of the Florida Windstorm Underwriting Association have
 1054  a claim against, and recourse to, the account referred to in
 1055  sub-sub-subparagraph a.(III) and no claim against, or recourse
 1056  to, the accounts referred to in sub-sub-subparagraphs a.(I) and
 1057  (II).
 1058         d. Revenues, assets, liabilities, losses, and expenses not
 1059  attributable to particular accounts shall be prorated among the
 1060  accounts.
 1061         e. The Legislature finds that the revenues of the
 1062  corporation are revenues that are necessary to meet the
 1063  requirements set forth in documents authorizing the issuance of
 1064  bonds under this subsection.
 1065         f. The income of the corporation may not inure to the
 1066  benefit of any private person.
 1067         3. With respect to a deficit in an account:
 1068         a. After accounting for the Citizens policyholder surcharge
 1069  imposed under sub-subparagraph i., if the remaining projected
 1070  deficit incurred in the coastal account in a particular calendar
 1071  year:
 1072         (I) Is not greater than 2 percent of the aggregate
 1073  statewide direct written premium for the subject lines of
 1074  business for the prior calendar year, the entire deficit shall
 1075  be recovered through regular assessments of assessable insurers
 1076  under paragraph (q) and assessable insureds.
 1077         (II) Exceeds 2 percent of the aggregate statewide direct
 1078  written premium for the subject lines of business for the prior
 1079  calendar year, the corporation shall levy regular assessments on
 1080  assessable insurers under paragraph (q) and on assessable
 1081  insureds in an amount equal to the greater of 2 percent of the
 1082  projected deficit or 2 percent of the aggregate statewide direct
 1083  written premium for the subject lines of business for the prior
 1084  calendar year. Any remaining projected deficit shall be
 1085  recovered through emergency assessments under sub-subparagraph
 1086  d.
 1087         b. Each assessable insurer’s share of the amount being
 1088  assessed under sub-subparagraph a. must be in the proportion
 1089  that the assessable insurer’s direct written premium for the
 1090  subject lines of business for the year preceding the assessment
 1091  bears to the aggregate statewide direct written premium for the
 1092  subject lines of business for that year. The assessment
 1093  percentage applicable to each assessable insured is the ratio of
 1094  the amount being assessed under sub-subparagraph a. to the
 1095  aggregate statewide direct written premium for the subject lines
 1096  of business for the prior year. Assessments levied by the
 1097  corporation on assessable insurers under sub-subparagraph a.
 1098  must be paid as required by the corporation’s plan of operation
 1099  and paragraph (q). Assessments levied by the corporation on
 1100  assessable insureds under sub-subparagraph a. shall be collected
 1101  by the surplus lines agent at the time the surplus lines agent
 1102  collects the surplus lines tax required by s. 626.932, and paid
 1103  to the Florida Surplus Lines Service Office at the time the
 1104  surplus lines agent pays the surplus lines tax to that office.
 1105  Upon receipt of regular assessments from surplus lines agents,
 1106  the Florida Surplus Lines Service Office shall transfer the
 1107  assessments directly to the corporation as determined by the
 1108  corporation.
 1109         c. After accounting for the Citizens policyholder surcharge
 1110  imposed under sub-subparagraph i., the remaining projected
 1111  deficits in the personal lines account and in the commercial
 1112  lines account in a particular calendar year shall be recovered
 1113  through emergency assessments under sub-subparagraph d.
 1114         d. Upon a determination by the executive director, with the
 1115  concurrence of the board of governors, that a projected deficit
 1116  in an account exceeds the amount that is expected to be
 1117  recovered through regular assessments under sub-subparagraph a.,
 1118  plus the amount that is expected to be recovered through
 1119  policyholder surcharges under sub-subparagraph i., the executive
 1120  director, with concurrence by the board, after verification by
 1121  the office, shall levy emergency assessments for as many years
 1122  as necessary to cover the deficits, to be collected by
 1123  assessable insurers and the corporation and collected from
 1124  assessable insureds upon issuance or renewal of policies for
 1125  subject lines of business, excluding National Flood Insurance
 1126  policies. The executive director shall notify the Financial
 1127  Services Commission of the emergency assessments within 5 days
 1128  after the board’s concurrence with the executive director’s
 1129  determination that such assessments are necessary. The amount
 1130  collected in a particular year must be a uniform percentage of
 1131  that year’s direct written premium for subject lines of business
 1132  and all accounts of the corporation, excluding National Flood
 1133  Insurance Program policy premiums, as annually determined by the
 1134  executive director, with concurrence by the board, and verified
 1135  by the office. The office shall verify the arithmetic
 1136  calculations involved in the board’s determination within 30
 1137  days after receipt of the information on which the determination
 1138  was based. The office shall notify assessable insurers and the
 1139  Florida Surplus Lines Service Office of the date on which
 1140  assessable insurers shall begin to collect and assessable
 1141  insureds shall begin to pay such assessment. The date must be at
 1142  least may be not less than 90 days after the date the
 1143  corporation levies emergency assessments pursuant to this sub
 1144  subparagraph. Notwithstanding any other provision of law, the
 1145  corporation and each assessable insurer that writes subject
 1146  lines of business shall collect emergency assessments from its
 1147  policyholders without such obligation being affected by any
 1148  credit, limitation, exemption, or deferment. Emergency
 1149  assessments levied by the corporation on assessable insureds
 1150  shall be collected by the surplus lines agent at the time the
 1151  surplus lines agent collects the surplus lines tax required by
 1152  s. 626.932 and paid to the Florida Surplus Lines Service Office
 1153  at the time the surplus lines agent pays the surplus lines tax
 1154  to that office. The emergency assessments collected shall be
 1155  transferred directly to the corporation on a periodic basis as
 1156  determined by the corporation and held by the corporation solely
 1157  in the applicable account. The aggregate amount of emergency
 1158  assessments levied for an account under this sub-subparagraph in
 1159  any calendar year may be less than but not exceed the greater of
 1160  10 percent of the amount needed to cover the deficit, plus
 1161  interest, fees, commissions, required reserves, and other costs
 1162  associated with financing the original deficit, or 10 percent of
 1163  the aggregate statewide direct written premium for subject lines
 1164  of business and all accounts of the corporation for the prior
 1165  year, plus interest, fees, commissions, required reserves, and
 1166  other costs associated with financing the deficit.
 1167         e. The corporation may pledge the proceeds of assessments,
 1168  projected recoveries from the Florida Hurricane Catastrophe
 1169  Fund, other insurance and reinsurance recoverables, policyholder
 1170  surcharges and other surcharges, and other funds available to
 1171  the corporation as the source of revenue for and to secure bonds
 1172  issued under paragraph (q), bonds or other indebtedness issued
 1173  under subparagraph (c)3., or lines of credit or other financing
 1174  mechanisms issued or created under this subsection, or to retire
 1175  any other debt incurred as a result of deficits or events giving
 1176  rise to deficits, or in any other way that the executive
 1177  director, with the concurrence of the board, determines will
 1178  efficiently recover such deficits. The purpose of the lines of
 1179  credit or other financing mechanisms is to provide additional
 1180  resources to assist the corporation in covering claims and
 1181  expenses attributable to a catastrophe. As used in this
 1182  subsection, the term “assessments” includes regular assessments
 1183  under sub-subparagraph a. or subparagraph (q)1. and emergency
 1184  assessments under sub-subparagraph d. Emergency assessments
 1185  collected under sub-subparagraph d. are not part of an insurer’s
 1186  rates, are not premium, and are not subject to premium tax,
 1187  fees, or commissions; however, failure to pay the emergency
 1188  assessment shall be treated as failure to pay premium. The
 1189  emergency assessments under sub-subparagraph d. shall continue
 1190  as long as any bonds issued or other indebtedness incurred with
 1191  respect to a deficit for which the assessment was imposed remain
 1192  outstanding, unless adequate provision has been made for the
 1193  payment of such bonds or other indebtedness pursuant to the
 1194  documents governing such bonds or indebtedness.
 1195         f. As used in this subsection for purposes of any deficit
 1196  incurred on or after January 25, 2007, the term “subject lines
 1197  of business” means insurance written by assessable insurers or
 1198  procured by assessable insureds for all property and casualty
 1199  lines of business in this state, but not including workers’
 1200  compensation or medical malpractice. As used in this sub
 1201  subparagraph, the term “property and casualty lines of business”
 1202  includes all lines of business identified on Form 2, Exhibit of
 1203  Premiums and Losses, in the annual statement required of
 1204  authorized insurers under s. 624.424 and any rule adopted under
 1205  this section, except for those lines identified as accident and
 1206  health insurance and except for policies written under the
 1207  National Flood Insurance Program or the Federal Crop Insurance
 1208  Program. For purposes of this sub-subparagraph, the term
 1209  “workers’ compensation” includes both workers’ compensation
 1210  insurance and excess workers’ compensation insurance.
 1211         g. The Florida Surplus Lines Service Office shall annually
 1212  determine annually the aggregate statewide written premium in
 1213  subject lines of business procured by assessable insureds and
 1214  report that information to the corporation in a form and at a
 1215  time the corporation specifies to ensure that the corporation
 1216  can meet the requirements of this subsection and the
 1217  corporation’s financing obligations.
 1218         h. The Florida Surplus Lines Service Office shall verify
 1219  the proper application by surplus lines agents of assessment
 1220  percentages for regular assessments and emergency assessments
 1221  levied under this subparagraph on assessable insureds and assist
 1222  the corporation in ensuring the accurate, timely collection and
 1223  payment of assessments by surplus lines agents as required by
 1224  the corporation.
 1225         i. In 2008 or thereafter, Upon a determination by the board
 1226  of governors that an account has a projected deficit, the board
 1227  shall levy a Citizens policyholder surcharge against all
 1228  policyholders of the corporation.
 1229         (I) The surcharge shall be levied as a uniform percentage
 1230  of the premium for the policy of up to 15 percent of the policy
 1231  such premium, which funds shall be used to offset the deficit.
 1232         (II) The surcharge is payable upon cancellation or
 1233  termination of the policy, upon renewal of the policy, or upon
 1234  issuance of a new policy by the corporation within the first 12
 1235  months after the date of the levy or the period of time
 1236  necessary to fully collect the surcharge amount.
 1237         (III) The corporation may not levy any regular assessments
 1238  under paragraph (q) pursuant to sub-subparagraph a. or sub
 1239  subparagraph b. with respect to a particular year’s deficit
 1240  until the corporation has first levied the full amount of the
 1241  surcharge authorized by this sub-subparagraph.
 1242         (IV) The surcharge is not considered premium and is not
 1243  subject to commissions, fees, or premium taxes. However, failure
 1244  to pay the surcharge shall be treated as failure to pay premium.
 1245         j. If the amount of any assessments or surcharges collected
 1246  from corporation policyholders, assessable insurers or their
 1247  policyholders, or assessable insureds exceeds the amount of the
 1248  deficits, such excess amounts shall be remitted to and retained
 1249  by the corporation in a reserve to be used by the corporation,
 1250  as determined by the executive director, with the concurrence of
 1251  the board of governors, and approved by the office, to pay
 1252  claims or reduce any past, present, or future plan-year deficits
 1253  or to reduce outstanding debt.
 1254         (c) The corporation’s plan of operation:
 1255         1. Must provide for adoption of residential property and
 1256  casualty insurance policy forms and commercial residential and
 1257  nonresidential property insurance forms, which must be approved
 1258  by the office before use. The corporation shall adopt the
 1259  following policy forms:
 1260         a. Standard personal lines policy forms that are
 1261  comprehensive multiperil policies providing full coverage of a
 1262  residential property equivalent to the coverage provided in the
 1263  private insurance market under an HO-3, HO-4, or HO-6 policy.
 1264         b. Basic personal lines policy forms that are policies
 1265  similar to an HO-8 policy or a dwelling fire policy that provide
 1266  coverage meeting the requirements of the secondary mortgage
 1267  market, but which is more limited than the coverage under a
 1268  standard policy.
 1269         c. Commercial lines residential and nonresidential policy
 1270  forms that are generally similar to the basic perils of full
 1271  coverage obtainable for commercial residential structures and
 1272  commercial nonresidential structures in the admitted voluntary
 1273  market.
 1274         d. Personal lines and commercial lines residential property
 1275  insurance forms that cover the peril of wind only. Such The
 1276  forms are applicable only to residential properties located in
 1277  areas eligible for coverage under the coastal account referred
 1278  to in sub-subparagraph (b)2.a.
 1279         e. Commercial lines nonresidential property insurance forms
 1280  that cover the peril of wind only. Such The forms are applicable
 1281  only to nonresidential properties located in areas eligible for
 1282  coverage under the coastal account referred to in sub
 1283  subparagraph (b)2.a.
 1284         f. The corporation may adopt variations of the policy forms
 1285  listed in sub-subparagraphs a.-e. which contain more restrictive
 1286  coverage.
 1287         g. Effective January 1, 2013, the corporation shall offer a
 1288  basic personal lines policy similar to an HO-8 policy with
 1289  dwelling repair based on common construction materials and
 1290  methods.
 1291         2. Must provide that the corporation and an authorized
 1292  insurer may enter into a risk-sharing agreement for the purpose
 1293  of reducing the corporation’s exposure. As used in this
 1294  subparagraph, the term “risk-sharing agreement” means an
 1295  agreement between the corporation and an authorized insurer for
 1296  the corporation to retain part, but not all, of the risk for a
 1297  specified group of policies or specified perils within a group
 1298  of policies, as part of the terms for removal of policies from
 1299  the corporation.
 1300         a. Entering into a risk-sharing agreement is voluntary and
 1301  at the discretion of the corporation and the authorized insurer.
 1302  To avoid unnecessary expense, the executive director, with
 1303  concurrence of the board of governors, may limit the
 1304  corporation’s participation in risk-sharing agreements to those
 1305  participants capable and willing to assume a minimum of 25
 1306  percent of the exposure on at least 100,000 policies and may
 1307  specify other limitations. A risk-sharing agreement in which the
 1308  corporation retains part of the risk may not exceed 5 years.
 1309         b. The risk-sharing agreement may cover policies in any
 1310  account and may cover any perils. The corporation may act as a
 1311  reinsurer or a cedent under a risk sharing agreement or an
 1312  excess of loss agreement. If the corporation is the reinsurer,
 1313  the insurance policy forms and endorsements must be approved by
 1314  the office, cover all perils that are the subject of the risk
 1315  sharing agreement, and cover at least the same limits as the
 1316  corporation policies being replaced.
 1317         c. The terms of each risk-sharing agreement must ensure
 1318  that the consideration received by the corporation is
 1319  commensurate with the risk retained by the corporation and the
 1320  risk assumed by the authorized insurer. The corporation may not
 1321  share risk for bad faith.
 1322         d. The risk-sharing agreement must specify the proportion
 1323  of exposure that the authorized insurer reports to the Florida
 1324  Hurricane Catastrophe Fund and the exposure retained by the
 1325  corporation. Each shall pay premium and receive reimbursements
 1326  from the fund for the exposure that they retain or assume as
 1327  provided in the risk-sharing agreement. The risk retained or
 1328  assumed is eligible for coverage by the fund and is not
 1329  considered reinsurance for purposes of coverage by the fund.
 1330  However, the authorized insurer and the corporation may report
 1331  participation in the risk sharing agreement on their financial
 1332  statements as reinsurance if appropriate according to the
 1333  characteristics of the agreement based on statutory accounting
 1334  rules and instructions.
 1335         e. Notwithstanding any other provision of law:
 1336         (I) Policies offered coverage by the corporation or an
 1337  authorized insurer through a risk-sharing agreement are not
 1338  eligible for coverage by the corporation outside of the
 1339  agreement; and
 1340         (II) A risk-sharing agreement between the corporation and
 1341  an authorized insurer is not subject to the requirements of a
 1342  take-out or keep-out program under ss. 627.3517 and this
 1343  subsection, except that the agreement must be filed by the
 1344  authorized insurer with the office for review and approval
 1345  before the execution of the agreement by the insurer.
 1346         f. To ensure that exposures are accurately reported to the
 1347  Florida Hurricane Catastrophe Fund, the corporation and each
 1348  insurer participating in a risk-sharing agreement under this
 1349  subparagraph must report its exposure under covered policies to
 1350  the fund as required under s. 215.555(5)(c), including the
 1351  requirement that, by September 1 of each year, each insurer
 1352  notify the board of its insured values under covered policies as
 1353  of June 30 of that year. Each report must also specify the
 1354  percentage of liability applicable to the corporation and the
 1355  percentage applicable to the insurer. Pursuant to its authority
 1356  under s. 215.555, the State Board of Administration shall adopt
 1357  rules to administer this sub-subparagraph.
 1358         2. Must provide that the corporation adopt a program in
 1359  which the corporation and authorized insurers enter into quota
 1360  share primary insurance agreements for hurricane coverage, as
 1361  defined in s. 627.4025(2)(a), for eligible risks, and adopt
 1362  property insurance forms for eligible risks which cover the
 1363  peril of wind only.
 1364         a. As used in this subsection, the term:
 1365         (I) “Quota share primary insurance” means an arrangement in
 1366  which the primary hurricane coverage of an eligible risk is
 1367  provided in specified percentages by the corporation and an
 1368  authorized insurer. The corporation and authorized insurer are
 1369  each solely responsible for a specified percentage of hurricane
 1370  coverage of an eligible risk as set forth in a quota share
 1371  primary insurance agreement between the corporation and an
 1372  authorized insurer and the insurance contract. The
 1373  responsibility of the corporation or authorized insurer to pay
 1374  its specified percentage of hurricane losses of an eligible
 1375  risk, as set forth in the agreement, may not be altered by the
 1376  inability of the other party to pay its specified percentage of
 1377  losses. Eligible risks that are provided hurricane coverage
 1378  through a quota share primary insurance arrangement must be
 1379  provided policy forms that set forth the obligations of the
 1380  corporation and authorized insurer under the arrangement,
 1381  clearly specify the percentages of quota share primary insurance
 1382  provided by the corporation and authorized insurer, and
 1383  conspicuously and clearly state that the authorized insurer and
 1384  the corporation may not be held responsible beyond their
 1385  specified percentage of coverage of hurricane losses.
 1386         (II) “Eligible risks” means personal lines residential and
 1387  commercial lines residential risks that meet the underwriting
 1388  criteria of the corporation and are located in areas that were
 1389  eligible for coverage by the Florida Windstorm Underwriting
 1390  Association on January 1, 2002.
 1391         b. The corporation may enter into quota share primary
 1392  insurance agreements with authorized insurers at corporation
 1393  coverage levels of 90 percent and 50 percent.
 1394         c. If the corporation determines that additional coverage
 1395  levels are necessary to maximize participation in quota share
 1396  primary insurance agreements by authorized insurers, the
 1397  corporation may establish additional coverage levels. However,
 1398  the corporation’s quota share primary insurance coverage level
 1399  may not exceed 90 percent.
 1400         d. Any quota share primary insurance agreement entered into
 1401  between an authorized insurer and the corporation must provide
 1402  for a uniform specified percentage of coverage of hurricane
 1403  losses, by county or territory as set forth by the corporation
 1404  board, for all eligible risks of the authorized insurer covered
 1405  under the agreement.
 1406         e. Any quota share primary insurance agreement entered into
 1407  between an authorized insurer and the corporation is subject to
 1408  review and approval by the office. However, such agreement shall
 1409  be authorized only as to insurance contracts entered into
 1410  between an authorized insurer and an insured who is already
 1411  insured by the corporation for wind coverage.
 1412         f. For all eligible risks covered under quota share primary
 1413  insurance agreements, the exposure and coverage levels for both
 1414  the corporation and authorized insurers shall be reported by the
 1415  corporation to the Florida Hurricane Catastrophe Fund. For all
 1416  policies of eligible risks covered under such agreements, the
 1417  corporation and the authorized insurer must maintain complete
 1418  and accurate records for the purpose of exposure and loss
 1419  reimbursement audits as required by fund rules. The corporation
 1420  and the authorized insurer shall each maintain duplicate copies
 1421  of policy declaration pages and supporting claims documents.
 1422         g. The corporation board shall establish in its plan of
 1423  operation standards for quota share agreements which ensure that
 1424  there is no discriminatory application among insurers as to the
 1425  terms of the agreements, pricing of the agreements, incentive
 1426  provisions if any, and consideration paid for servicing policies
 1427  or adjusting claims.
 1428         h. The quota share primary insurance agreement between the
 1429  corporation and an authorized insurer must set forth the
 1430  specific terms under which coverage is provided, including, but
 1431  not limited to, the sale and servicing of policies issued under
 1432  the agreement by the insurance agent of the authorized insurer
 1433  producing the business, the reporting of information concerning
 1434  eligible risks, the payment of premium to the corporation, and
 1435  arrangements for the adjustment and payment of hurricane claims
 1436  incurred on eligible risks by the claims adjuster and personnel
 1437  of the authorized insurer. Entering into a quota sharing
 1438  insurance agreement between the corporation and an authorized
 1439  insurer is voluntary and at the discretion of the authorized
 1440  insurer.
 1441         3.a. May provide that the corporation may employ or
 1442  otherwise contract with individuals or other entities to provide
 1443  administrative or professional services that may be appropriate
 1444  to effectuate the plan. The corporation may borrow funds by
 1445  issuing bonds or by incurring other indebtedness, and shall have
 1446  other powers reasonably necessary to effectuate the requirements
 1447  of this subsection, including, without limitation, the power to
 1448  issue bonds and incur other indebtedness in order to refinance
 1449  outstanding bonds or other indebtedness. The corporation may
 1450  seek judicial validation of its bonds or other indebtedness
 1451  under chapter 75. The corporation may issue bonds or incur other
 1452  indebtedness, or have bonds issued on its behalf by a unit of
 1453  local government pursuant to subparagraph (q)2. in the absence
 1454  of a hurricane or other weather-related event, upon a
 1455  determination by the corporation, subject to approval by the
 1456  office, that such action would enable it to efficiently meet the
 1457  financial obligations of the corporation and that such
 1458  financings are reasonably necessary to effectuate the
 1459  requirements of this subsection. The corporation may take all
 1460  actions needed to facilitate tax-free status for such bonds or
 1461  indebtedness, including formation of trusts or other affiliated
 1462  entities. The corporation may pledge assessments, projected
 1463  recoveries from the Florida Hurricane Catastrophe Fund, other
 1464  reinsurance recoverables, Citizens policyholder surcharges and
 1465  other surcharges, and other funds available to the corporation
 1466  as security for bonds or other indebtedness. In recognition of
 1467  s. 10, Art. I of the State Constitution, prohibiting the
 1468  impairment of obligations of contracts, it is the intent of the
 1469  Legislature that no action not be taken whose purpose is to
 1470  impair any bond indenture or financing agreement or any revenue
 1471  source committed by contract to such bond or other indebtedness.
 1472         b. May provide that the corporation employ or otherwise
 1473  contract with individuals or other entities to provide
 1474  administrative or professional services that may be appropriate
 1475  to effectuate the plan. To ensure that the corporation is
 1476  operating in an efficient and economic manner while providing
 1477  quality service to policyholders, applicants, and agents, the
 1478  board shall commission an independent third-party consultant
 1479  having expertise in insurance company management or insurance
 1480  company management consulting to prepare a report and make
 1481  recommendations on the relative costs and benefits of
 1482  outsourcing various policy issuance and service functions to
 1483  private servicing carriers or entities performing similar
 1484  functions in the private market for a fee, rather than
 1485  performing such functions in-house. In making such
 1486  recommendations, the consultant shall consider how other
 1487  residual markets, both in this state and around the country,
 1488  outsource appropriate functions or use servicing carriers to
 1489  better match expenses with revenues that fluctuate based on a
 1490  widely varying policy count. The report must be completed by
 1491  July 1, 2012. Upon receiving the report, the executive director,
 1492  with the concurrence of the board, shall develop a plan to
 1493  implement the report and submit the plan for review,
 1494  modification, and approval to the Financial Services Commission.
 1495  Upon the commission’s approval of the plan, the board shall
 1496  begin implementing the plan by January 1, 2013.
 1497         4. Must require that the corporation operate subject to the
 1498  supervision and approval of a board of governors consisting of
 1499  eight individuals who are residents of this state and who are,
 1500  from different geographical areas of the this state.
 1501         a. The Governor, the Chief Financial Officer, the President
 1502  of the Senate, and the Speaker of the House of Representatives
 1503  shall each appoint two members of the board. All board members,
 1504  except those appointed by the speaker, must be confirmed by the
 1505  Senate during the legislative session following their
 1506  appointment. At least one of the two members appointed by each
 1507  appointing officer must have demonstrated expertise in insurance
 1508  and must be is deemed to be within the scope of the exemption
 1509  provided under in s. 112.313(7)(b). The Chief Financial Officer
 1510  shall designate one of the appointees as chair for the purpose
 1511  of presiding over the orderly conduct of meetings. An appointee
 1512  serves as chair for no more than one term. All board members
 1513  serve at the pleasure of the appointing officer. All members of
 1514  the board are subject to removal at will by the officers who
 1515  appointed them. All board members, including the chair, shall
 1516  must be appointed to serve for 3-year terms beginning annually
 1517  on a date designated by the plan. However, for the first term
 1518  beginning on or after July 1, 2009, each appointing officer
 1519  shall appoint one member of the board for a 2-year term and one
 1520  member for a 3-year term. A board vacancy shall be filled for
 1521  the unexpired term by the appointing officer. A board member may
 1522  not serve for more than two terms, except that a board member
 1523  appointed to fill an unexpired term created by a vacancy may be
 1524  appointed for two subsequent terms. The Chief Financial Officer
 1525  shall appoint a technical advisory group to provide information
 1526  and advice to the executive director and the board in connection
 1527  with the corporation’s board’s duties under this subsection. The
 1528  executive director shall be appointed by and serve at the
 1529  pleasure of the Governor and the Chief Financial Officer. and
 1530  Senior managers of the corporation shall be appointed by the
 1531  executive director, with the concurrence of engaged by the
 1532  board, and serve at the pleasure of the executive director
 1533  board. Appointment of the Any executive director appointed on or
 1534  after July 1, 2006, is subject to confirmation by the Senate
 1535  upon original appointment and upon the election or reelection of
 1536  the Governor and Chief Financial Officer if retained. The
 1537  executive director is responsible for employing other staff as
 1538  the corporation may require, subject to review and concurrence
 1539  by the board.
 1540         b. The board shall create a Market Accountability Advisory
 1541  Committee to assist the corporation in developing awareness of
 1542  its rates and its customer and agent service levels in
 1543  relationship to the voluntary market insurers writing similar
 1544  coverage.
 1545         (I) The members of the advisory committee consist of the
 1546  following 11 persons, one of whom must be elected chair by the
 1547  members of the committee: four representatives, one appointed by
 1548  the Florida Association of Insurance Agents, one by the Florida
 1549  Association of Insurance and Financial Advisors, one by the
 1550  Professional Insurance Agents of Florida, and one by the Latin
 1551  American Association of Insurance Agencies; three
 1552  representatives appointed by the insurers with the three highest
 1553  voluntary market share of residential property insurance
 1554  business in the state; one representative from the Office of
 1555  Insurance Regulation; one consumer appointed by the board who is
 1556  insured by the corporation at the time of appointment to the
 1557  committee; one representative appointed by the Florida
 1558  Association of Realtors; and one representative appointed by the
 1559  Florida Bankers Association. All members shall be appointed to
 1560  3-year terms, serve at the pleasure of the board of governors,
 1561  and may serve for consecutive terms.
 1562         (II) The committee shall report to the corporation at each
 1563  board meeting on insurance market issues that which may include
 1564  rates and rate competition within with the voluntary market;
 1565  service, including policy issuance, claims processing, and
 1566  general responsiveness to policyholders, applicants, and agents;
 1567  and matters relating to depopulation.
 1568         5. Must provide a procedure for determining the eligibility
 1569  of a risk for coverage by the corporation which applies to both
 1570  new and renewal policies, as follows:
 1571         a. Subject to s. 627.3517, with respect to personal lines
 1572  residential risks, if the risk is offered coverage from an
 1573  authorized insurer at the insurer’s approved rate under a
 1574  standard policy including wind coverage or, if consistent with
 1575  the insurer’s underwriting rules as filed with the office, a
 1576  basic policy including wind coverage, for a new application to
 1577  the corporation for coverage, the risk is not eligible for any
 1578  policy issued by the corporation unless the premium for coverage
 1579  from the authorized insurer is more than 15 percent greater than
 1580  the premium for comparable coverage from the corporation. If the
 1581  risk is not able to obtain such offer, the risk is eligible for
 1582  a standard policy including wind coverage or a basic policy
 1583  including wind coverage issued by the corporation; however, if
 1584  the risk could not be insured under a standard policy including
 1585  wind coverage regardless of market conditions, the risk is
 1586  eligible for a basic policy including wind coverage unless
 1587  rejected under subparagraph 8. However, a policyholder of the
 1588  corporation or a policyholder removed from the corporation
 1589  through an assumption agreement until the end of the assumption
 1590  period remains eligible for coverage from the corporation
 1591  regardless of any offer of coverage from an authorized insurer
 1592  or surplus lines insurer. The corporation shall determine the
 1593  type of policy to be provided on the basis of objective
 1594  standards specified in the underwriting manual and based on
 1595  generally accepted underwriting practices.
 1596         (I) If the risk accepts an offer of coverage through the
 1597  market assistance plan or through a mechanism established by the
 1598  corporation before a policy is issued to the risk by the
 1599  corporation or during the first 30 days of coverage by the
 1600  corporation, and the producing agent who submitted the
 1601  application to the plan or to the corporation is not currently
 1602  appointed by the insurer, the insurer shall:
 1603         (A) Pay to the producing agent of record of the policy for
 1604  the first year, an amount that is the greater of the insurer’s
 1605  usual and customary commission for the type of policy written or
 1606  a fee equal to the usual and customary commission of the
 1607  corporation; or
 1608         (B) Offer to allow the producing agent of record of the
 1609  policy to continue servicing the policy for at least 1 year and
 1610  offer to pay the agent the greater of the insurer’s or the
 1611  corporation’s usual and customary commission for the type of
 1612  policy written.
 1613  
 1614  If the producing agent is unwilling or unable to accept
 1615  appointment, the new insurer shall pay the agent in accordance
 1616  with sub-sub-sub-subparagraph (A).
 1617         (II) If the corporation enters into a contractual agreement
 1618  for a take-out plan, the producing agent of record of the
 1619  corporation policy is entitled to retain any unearned commission
 1620  on the policy, and the insurer shall:
 1621         (A) Pay to the producing agent of record, for the first
 1622  year, an amount that is the greater of the insurer’s usual and
 1623  customary commission for the type of policy written or a fee
 1624  equal to the usual and customary commission of the corporation;
 1625  or
 1626         (B) Offer to allow the producing agent of record to
 1627  continue servicing the policy for at least 1 year and offer to
 1628  pay the agent the greater of the insurer’s or the corporation’s
 1629  usual and customary commission for the type of policy written.
 1630  
 1631  If the producing agent is unwilling or unable to accept
 1632  appointment, the new insurer shall pay the agent in accordance
 1633  with sub-sub-sub-subparagraph (A).
 1634         b. With respect to commercial lines residential risks, for
 1635  a new application to the corporation for coverage, if the risk
 1636  is offered coverage under a policy including wind coverage from
 1637  an authorized insurer at its approved rate, the risk is not
 1638  eligible for a policy issued by the corporation unless the
 1639  premium for coverage from the authorized insurer is more than 15
 1640  percent greater than the premium for comparable coverage from
 1641  the corporation. If the risk is not able to obtain any such
 1642  offer, the risk is eligible for a policy including wind coverage
 1643  issued by the corporation. However, a policyholder of the
 1644  corporation or a policyholder removed from the corporation
 1645  through an assumption agreement until the end of the assumption
 1646  period remains eligible for coverage from the corporation
 1647  regardless of an offer of coverage from an authorized insurer or
 1648  surplus lines insurer.
 1649         (I) If the risk accepts an offer of coverage through the
 1650  market assistance plan or through a mechanism established by the
 1651  corporation before a policy is issued to the risk by the
 1652  corporation or during the first 30 days of coverage by the
 1653  corporation, and the producing agent who submitted the
 1654  application to the plan or the corporation is not currently
 1655  appointed by the insurer, the insurer shall:
 1656         (A) Pay to the producing agent of record of the policy, for
 1657  the first year, an amount that is the greater of the insurer’s
 1658  usual and customary commission for the type of policy written or
 1659  a fee equal to the usual and customary commission of the
 1660  corporation; or
 1661         (B) Offer to allow the producing agent of record of the
 1662  policy to continue servicing the policy for at least 1 year and
 1663  offer to pay the agent the greater of the insurer’s or the
 1664  corporation’s usual and customary commission for the type of
 1665  policy written.
 1666  
 1667  If the producing agent is unwilling or unable to accept
 1668  appointment, the new insurer shall pay the agent in accordance
 1669  with sub-sub-sub-subparagraph (A).
 1670         (II) If the corporation enters into a contractual agreement
 1671  for a take-out plan, the producing agent of record of the
 1672  corporation policy is entitled to retain any unearned commission
 1673  on the policy, and the insurer shall:
 1674         (A) Pay to the producing agent of record, for the first
 1675  year, an amount that is the greater of the insurer’s usual and
 1676  customary commission for the type of policy written or a fee
 1677  equal to the usual and customary commission of the corporation;
 1678  or
 1679         (B) Offer to allow the producing agent of record to
 1680  continue servicing the policy for at least 1 year and offer to
 1681  pay the agent the greater of the insurer’s or the corporation’s
 1682  usual and customary commission for the type of policy written.
 1683  
 1684  If the producing agent is unwilling or unable to accept
 1685  appointment, the new insurer shall pay the agent in accordance
 1686  with sub-sub-sub-subparagraph (A).
 1687         c. For purposes of determining comparable coverage under
 1688  sub-subparagraphs a. and b., the comparison must be based on
 1689  those forms and coverages that are reasonably comparable. The
 1690  corporation may rely on a determination of comparable coverage
 1691  and premium made by the producing agent who submits the
 1692  application to the corporation, made in the agent’s capacity as
 1693  the corporation’s agent. A comparison may be made solely of the
 1694  premium with respect to the main building or structure only on
 1695  the following basis: the same coverage A or other building
 1696  limits; the same percentage hurricane deductible that applies on
 1697  an annual basis or that applies to each hurricane for commercial
 1698  residential property; the same percentage of ordinance and law
 1699  coverage, if the same limit is offered by both the corporation
 1700  and the authorized insurer; the same mitigation credits, to the
 1701  extent the same types of credits are offered both by the
 1702  corporation and the authorized insurer; the same method for loss
 1703  payment, such as replacement cost or actual cash value, if the
 1704  same method is offered both by the corporation and the
 1705  authorized insurer in accordance with underwriting rules; and
 1706  any other form or coverage that is reasonably comparable as
 1707  determined by the board. If an application is submitted to the
 1708  corporation for wind-only coverage in the coastal account, the
 1709  premium for the corporation’s wind-only policy plus the premium
 1710  for the ex-wind policy that is offered by an authorized insurer
 1711  to the applicant must be compared to the premium for multiperil
 1712  coverage offered by an authorized insurer, subject to the
 1713  standards for comparison specified in this subparagraph. If the
 1714  corporation or the applicant requests from the authorized
 1715  insurer a breakdown of the premium of the offer by types of
 1716  coverage so that a comparison may be made by the corporation or
 1717  its agent and the authorized insurer refuses or is unable to
 1718  provide such information, the corporation may treat the offer as
 1719  not being an offer of coverage from an authorized insurer at the
 1720  insurer’s approved rate.
 1721         6. Must include rules for classifications of risks and
 1722  rates.
 1723         7. Must provide that if premium and investment income for
 1724  an account attributable to a particular calendar year are in
 1725  excess of projected losses and expenses for the account
 1726  attributable to that year, such excess must shall be held in
 1727  surplus in the account. Such surplus must be available to defray
 1728  deficits in that account as to future years and used for that
 1729  purpose before assessing assessable insurers and assessable
 1730  insureds as to any calendar year.
 1731         8. Must provide objective criteria and procedures that are
 1732  to be uniformly applied to all applicants in determining whether
 1733  an individual risk is so hazardous as to be uninsurable. In
 1734  making this determination and in establishing the criteria and
 1735  procedures, the following must be considered:
 1736         a. Whether the likelihood of a loss for the individual risk
 1737  is substantially higher than for other risks of the same class;
 1738  and
 1739         b. Whether the uncertainty associated with the individual
 1740  risk is such that an appropriate premium cannot be determined.
 1741  
 1742  The acceptance or rejection of a risk by the corporation shall
 1743  be construed as the private placement of insurance, and the
 1744  provisions of chapter 120 do not apply.
 1745         9. Must provide that the corporation make its best efforts
 1746  to procure catastrophe reinsurance at reasonable rates, to cover
 1747  its projected 100-year probable maximum loss as determined by
 1748  the board of governors.
 1749         10. Must provide that the policies issued by the
 1750  corporation must provide that if the corporation or the market
 1751  assistance plan obtains an offer from an authorized insurer to
 1752  cover the risk at its approved rates, the risk is no longer
 1753  eligible for renewal through the corporation, except as
 1754  otherwise provided in this subsection.
 1755         11. Must provide that corporation policies and applications
 1756  must include a notice that the corporation policy could, under
 1757  this section, be replaced with a policy issued by an authorized
 1758  insurer which does not provide coverage identical to the
 1759  coverage provided by the corporation. The notice must also
 1760  specify that acceptance of corporation coverage creates a
 1761  conclusive presumption that the applicant or policyholder is
 1762  aware of this potential.
 1763         12. May establish, subject to approval by the office,
 1764  different eligibility requirements and operational procedures
 1765  for any line or type of coverage for any specified county or
 1766  area if the board determines that such changes are justified due
 1767  to the voluntary market being sufficiently stable and
 1768  competitive in such area or for such line or type of coverage
 1769  and that consumers who, in good faith, are unable to obtain
 1770  insurance through the voluntary market through ordinary methods
 1771  continue to have access to coverage from the corporation. If
 1772  coverage is sought in connection with a real property transfer,
 1773  the requirements and procedures may not provide an effective
 1774  date of coverage later than the date of the closing of the
 1775  transfer as established by the transferor, the transferee, and,
 1776  if applicable, the lender.
 1777         13. Must provide that, with respect to the coastal account,
 1778  any assessable insurer that has with a surplus as to
 1779  policyholders of $25 million or less writing 25 percent or more
 1780  of its total countrywide property insurance premiums in this
 1781  state may petition the office, within the first 90 days of each
 1782  calendar year, petition the office to qualify as a limited
 1783  apportionment company. A regular assessment levied by the
 1784  corporation on a limited apportionment company for a deficit
 1785  incurred by the corporation for the coastal account may be paid
 1786  to the corporation on a monthly basis as the assessments are
 1787  collected by the limited apportionment company from its
 1788  insureds. The, but a limited apportionment company must begin
 1789  collecting the regular assessments within not later than 90 days
 1790  after the regular assessments are levied by the corporation, and
 1791  the regular assessments must be paid in full within 15 months
 1792  after being levied by the corporation. A limited apportionment
 1793  company shall collect from its policyholders any emergency
 1794  assessment imposed under sub-subparagraph (b)3.d. The plan must
 1795  provide that, if the office determines that any regular
 1796  assessment will result in an impairment of the surplus of a
 1797  limited apportionment company, the office may direct that all or
 1798  part of such assessment be deferred as provided in subparagraph
 1799  (q)4. However, an emergency assessment to be collected from
 1800  policyholders under sub-subparagraph (b)3.d. may not be limited
 1801  or deferred.
 1802         14. Must provide that the corporation appoint as its
 1803  licensed agents only those agents who at the time of initial
 1804  appointment also hold an appointment as defined in s. 626.015(3)
 1805  with an insurer who at the time of the agent’s initial
 1806  appointment by the corporation is authorized to write and is
 1807  actually writing personal lines residential property coverage,
 1808  commercial residential property coverage, or commercial
 1809  nonresidential property coverage within the state. As a
 1810  condition of continued appointment, agents of the corporation
 1811  must maintain appropriate documentation specified by the
 1812  corporation which warrants and certifies that alternative
 1813  coverage was annually sought for each risk placed by that agent
 1814  with the corporation in accordance with s. 627.3518. After
 1815  January 1, 2014, if an agent places a policy with the
 1816  corporation which was ineligible for coverage based on
 1817  eligibility standards at the time of placement, agent
 1818  commissions may not be paid on that policy.
 1819         15. Must provide a premium payment plan option to its
 1820  policyholders which, at a minimum, allows for quarterly and
 1821  semiannual payment of premiums. A monthly payment plan may, but
 1822  is not required to, be offered.
 1823         16. Must limit coverage on mobile homes or manufactured
 1824  homes built before 1994 to actual cash value of the dwelling
 1825  rather than replacement costs of the dwelling.
 1826         17. May provide such limits of coverage as the board
 1827  determines, consistent with the requirements of this subsection.
 1828         18. May require commercial property to meet specified
 1829  hurricane mitigation construction features as a condition of
 1830  eligibility for coverage.
 1831         19. Must provide that new or renewal policies issued by the
 1832  corporation on or after January 1, 2012, which cover sinkhole
 1833  loss do not include coverage for any loss to appurtenant
 1834  structures, driveways, sidewalks, decks, or patios that are
 1835  directly or indirectly caused by sinkhole activity. The
 1836  corporation shall exclude such coverage using a notice of
 1837  coverage change, which may be included with the policy renewal,
 1838  and not by issuance of a notice of nonrenewal of the excluded
 1839  coverage upon renewal of the current policy.
 1840         20. Must, as of July January 1, 2014 2012, must require
 1841  that the agent obtain from an applicant for coverage from the
 1842  corporation an acknowledgment signed by the applicant, which
 1843  includes, at a minimum, the following statement:
 1844  
 1845   ACKNOWLEDGMENT OF POTENTIAL SURCHARGEAND ASSESSMENT LIABILITY:  
 1846  
 1847         1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
 1848  CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
 1849  DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
 1850  MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
 1851  PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
 1852  POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
 1853  OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
 1854  LEGISLATURE.
 1855         2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER
 1856  SURCHARGE, WHICH COULD BE AS HIGH AS 45 PERCENT OF MY PREMIUM,
 1857  BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND THAT TO
 1858  BE ELIGIBLE FOR COVERAGE BY CITIZENS I MUST FIRST TRY TO OBTAIN
 1859  PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR RENEWING COVERAGE
 1860  WITH CITIZENS. I UNDERSTAND THAT PRIVATE MARKET INSURANCE RATES
 1861  ARE REGULATED AND APPROVED BY THE STATE.
 1862         3.2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
 1863  ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
 1864  INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
 1865  FLORIDA LEGISLATURE.
 1866         4.3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
 1867  CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
 1868  STATE OF FLORIDA.
 1869         a. The corporation shall maintain, in electronic format or
 1870  otherwise, a copy of the applicant’s signed acknowledgment and
 1871  provide a copy of the statement to the policyholder as part of
 1872  his or her the first renewal after the effective date of this
 1873  subparagraph.
 1874         b. The signed acknowledgment form creates a conclusive
 1875  presumption that the policyholder understood and accepted his or
 1876  her potential surcharge and assessment liability as a
 1877  policyholder of the corporation.
 1878         (g) The executive director, with the concurrence of the
 1879  board, shall determine whether it is more cost-effective and in
 1880  the best interests of the corporation to use legal services
 1881  provided by in-house attorneys employed by the corporation
 1882  rather than contracting with outside counsel. In making such
 1883  determination, the board shall document its findings and shall
 1884  consider: the expertise needed; whether time commitments exceed
 1885  in-house staff resources; whether local representation is
 1886  needed; the travel, lodging and other costs associated with in
 1887  house representation; and such other factors that the board
 1888  determines are relevant.
 1889         (i)1. The Office of the Internal Auditor is established
 1890  within the corporation to provide a central point for
 1891  coordination of and responsibility for activities that promote
 1892  accountability, integrity, and efficiency to the policyholders
 1893  and to the taxpayers of this state. The internal auditor shall
 1894  be appointed by the board of governors, shall report to and be
 1895  under the general supervision of the board of governors, and is
 1896  not subject to supervision by an any employee of the
 1897  corporation. Administrative staff and support shall be provided
 1898  by the corporation. The internal auditor shall be appointed
 1899  without regard to political affiliation. It is the duty and
 1900  responsibility of the internal auditor to:
 1901         a. Provide direction for, supervise, conduct, and
 1902  coordinate audits, investigations, and management reviews
 1903  relating to the programs and operations of the corporation.
 1904         b. Conduct, supervise, or coordinate other activities
 1905  carried out or financed by the corporation for the purpose of
 1906  promoting efficiency in the administration of, or preventing and
 1907  detecting fraud, abuse, and mismanagement in, its programs and
 1908  operations.
 1909         c. Submit final audit reports, reviews, or investigative
 1910  reports to the board of governors, the executive director, the
 1911  members of the Financial Services Commission, and the President
 1912  of the Senate and the Speaker of the House of Representatives.
 1913         d. Keep the executive director and the board of governors
 1914  informed concerning fraud, abuses, and internal control
 1915  deficiencies relating to programs and operations administered or
 1916  financed by the corporation, recommend corrective action, and
 1917  report on the progress made in implementing corrective action.
 1918         e. Report expeditiously to the Department of Law
 1919  Enforcement or other law enforcement agencies, as appropriate,
 1920  whenever the internal auditor has reasonable grounds to believe
 1921  there has been a violation of criminal law.
 1922         f. Cooperate and coordinate activities with the
 1923  corporation’s inspector general.
 1924         2. On or before February 15, the internal auditor shall
 1925  prepare an annual report evaluating the effectiveness of the
 1926  internal controls of the corporation and providing
 1927  recommendations for corrective action, if necessary, and
 1928  summarizing the audits, reviews, and investigations conducted by
 1929  the office during the preceding fiscal year. The final report
 1930  shall be furnished to the board of governors and the executive
 1931  director, the President of the Senate, the Speaker of the House
 1932  of Representatives, and the Financial Services Commission.
 1933         (m)1. The Auditor General shall conduct an operational
 1934  audit of the corporation annually every 3 years to evaluate
 1935  management’s performance in administering laws, policies, and
 1936  procedures governing the operations of the corporation in an
 1937  efficient and effective manner. The scope of the review must
 1938  shall include, but is not limited to, evaluating claims
 1939  handling, customer service, take-out programs and bonuses;,
 1940  financing arrangements made to address a 100-year probable
 1941  maximum loss; personnel costs and administration; underwriting,
 1942  including processes designed to ensure compliance with policy
 1943  eligibility requirements of law;, procurement of goods and
 1944  services;, internal controls;, and the internal audit function;
 1945  and related internal controls. A copy of the report shall be
 1946  provided to the corporation’s board, the President of the
 1947  Senate, the Speaker of the House of Representatives, each member
 1948  of the Financial Services Commission, and the Office of
 1949  Insurance Regulation. The initial audit must be completed by
 1950  February 1, 2009.
 1951         2. The executive director, with the concurrence of the
 1952  board, shall contract with an independent auditing firm to
 1953  conduct a performance audit of the corporation every 2 years.
 1954  The objectives of the audit include, but are not limited to, an
 1955  evaluation, within the context of insurance industry best
 1956  practices, of the corporation’s strategic planning processes,
 1957  the functionality of the corporation’s organizational structure,
 1958  the compensation levels of senior management, and the overall
 1959  management and operations of the corporation. A copy of the
 1960  audit report shall be provided to the corporation’s board, the
 1961  President of the Senate, the Speaker of the House of
 1962  Representatives, each member of the Financial Services
 1963  Commission, the Office of Insurance Regulation, and the Auditor
 1964  General. The initial audit must be completed by June 1, 2014.
 1965         (q)1. The corporation shall certify to the office its needs
 1966  for annual assessments as to a particular calendar year, and for
 1967  any interim assessments that it deems to be necessary to sustain
 1968  operations as to a particular year pending the receipt of annual
 1969  assessments. Upon verification, the office shall approve such
 1970  certification, and the corporation shall levy such annual or
 1971  interim assessments. Such assessments shall be prorated as
 1972  provided in paragraph (b). The corporation shall take all
 1973  reasonable and prudent steps necessary to collect the amount of
 1974  assessments due from each assessable insurer, including, if
 1975  prudent, filing suit to collect the assessments, and the office
 1976  may provide such assistance to the corporation it deems
 1977  appropriate. If the corporation is unable to collect an
 1978  assessment from any assessable insurer, the uncollected
 1979  assessments shall be levied as an additional assessment against
 1980  the assessable insurers and any assessable insurer required to
 1981  pay an additional assessment as a result of such failure to pay
 1982  shall have a cause of action against the such nonpaying
 1983  assessable insurer. Assessments must shall be included as an
 1984  appropriate factor in the making of rates. The failure of a
 1985  surplus lines agent to collect and remit any regular or
 1986  emergency assessment levied by the corporation is considered to
 1987  be a violation of s. 626.936 and subjects the surplus lines
 1988  agent to the penalties provided in that section.
 1989         2. The governing body of any unit of local government, any
 1990  residents of which are insured by the corporation, may issue
 1991  bonds as defined in s. 125.013 or s. 166.101 from time to time
 1992  to fund an assistance program, in conjunction with the
 1993  corporation, for the purpose of defraying deficits of the
 1994  corporation. In order to avoid needless and indiscriminate
 1995  proliferation, duplication, and fragmentation of such assistance
 1996  programs, the any unit of local government, any residents of
 1997  which are insured by the corporation, may provide for the
 1998  payment of losses, regardless of whether or not the losses
 1999  occurred within or outside of the territorial jurisdiction of
 2000  the local government. Revenue bonds under this subparagraph may
 2001  not be issued until validated pursuant to chapter 75, unless a
 2002  state of emergency is declared by executive order or
 2003  proclamation of the Governor pursuant to s. 252.36 which makes
 2004  making such findings as are necessary to determine that it is in
 2005  the best interests of, and necessary for, the protection of the
 2006  public health, safety, and general welfare of residents of this
 2007  state and declaring it an essential public purpose to permit
 2008  certain municipalities or counties to issue such bonds as will
 2009  permit relief to claimants and policyholders of the corporation.
 2010  Any such unit of local government may enter into such contracts
 2011  with the corporation and with any other entity created pursuant
 2012  to this subsection as are necessary to carry out this paragraph.
 2013  Any bonds issued are under this subparagraph shall be payable
 2014  from and secured by moneys received by the corporation from
 2015  emergency assessments under sub-subparagraph (b)3.d., and
 2016  assigned and pledged to or on behalf of the unit of local
 2017  government for the benefit of the holders of such bonds. The
 2018  funds, credit, property, and taxing power of the state or of the
 2019  unit of local government may shall not be pledged for the
 2020  payment of such bonds.
 2021         3.a. The corporation shall adopt one or more programs
 2022  subject to approval by the office for the reduction of both new
 2023  and renewal writings by in the corporation. The corporation may
 2024  consider any prudent and not unfairly discriminatory approach to
 2025  reducing corporation writings.
 2026         a. The corporation may adopt a credit against assessment
 2027  liability or other liability which provides an incentive for
 2028  insurers to take and keep risks out of the corporation by
 2029  maintaining or increasing voluntary writings in counties or
 2030  areas in which corporation risks are highly concentrated, and a
 2031  program to provide a formula under which an insurer voluntarily
 2032  taking risks out of the corporation by maintaining or increasing
 2033  voluntary writings is relieved, wholly or partially, from
 2034  assessments under sub-subparagraph (b)3.a.
 2035         b.Beginning January 1, 2008, Any program the corporation
 2036  adopts for the payment of bonuses to an insurer for each risk
 2037  the insurer removes from the corporation must shall comply with
 2038  s. 627.3511(2) and may not exceed the amount referenced in s.
 2039  627.3511(2) for each risk removed. The corporation may consider
 2040  any prudent and not unfairly discriminatory approach to reducing
 2041  corporation writings, and may adopt a credit against assessment
 2042  liability or other liability that provides an incentive for
 2043  insurers to take risks out of the corporation and to keep risks
 2044  out of the corporation by maintaining or increasing voluntary
 2045  writings in counties or areas in which corporation risks are
 2046  highly concentrated and a program to provide a formula under
 2047  which an insurer voluntarily taking risks out of the corporation
 2048  by maintaining or increasing voluntary writings will be relieved
 2049  wholly or partially from assessments under sub-subparagraph
 2050  (b)3.a. However, Any “take-out bonus” or payment to an insurer
 2051  must be conditioned on the property being insured for at least 5
 2052  years by the insurer, unless canceled or nonrenewed by the
 2053  policyholder. If the policy is canceled or nonrenewed by the
 2054  policyholder before the end of the 5-year period, the amount of
 2055  the take-out bonus must be prorated for the time period the
 2056  policy was insured. If When the corporation enters into a
 2057  contractual agreement for a take-out plan, the producing agent
 2058  of record of the corporation policy is entitled to retain any
 2059  unearned commission on such policy, and the insurer shall
 2060  either:
 2061         (I) Pay to the producing agent of record of the policy, for
 2062  the first year, an amount which is the greater of the insurer’s
 2063  usual and customary commission for the type of policy written or
 2064  a policy fee equal to the usual and customary commission of the
 2065  corporation; or
 2066         (II) Offer to allow the producing agent of record of the
 2067  policy to continue servicing the policy for at least a period of
 2068  not less than 1 year and offer to pay the agent the insurer’s
 2069  usual and customary commission for the type of policy written.
 2070  If the producing agent is unwilling or unable to accept
 2071  appointment by the new insurer, the new insurer shall pay the
 2072  agent in accordance with sub-sub-subparagraph (I).
 2073         c.b. Any credit or exemption from regular assessments
 2074  adopted under this subparagraph shall last up to no longer than
 2075  the 3 years after following the cancellation or expiration of
 2076  the policy by the corporation. With the approval of the office,
 2077  the board may extend such credits for an additional year if the
 2078  insurer guarantees an additional year of renewability for all
 2079  policies removed from the corporation, or for 2 additional years
 2080  if the insurer guarantees 2 additional years of renewability for
 2081  all policies so removed.
 2082         d.c.A There shall be no credit, limitation, exemption, or
 2083  deferment from emergency assessments to be collected from
 2084  policyholders pursuant to sub-subparagraph (b)3.d. is
 2085  prohibited.
 2086         4. The corporation plan shall provide for the deferment, in
 2087  whole or in part, of the assessment of an assessable insurer,
 2088  other than an emergency assessment collected from policyholders
 2089  pursuant to sub-subparagraph (b)3.d., if the office finds that
 2090  payment of the assessment would endanger or impair the solvency
 2091  of the insurer. If In the event an assessment against an
 2092  assessable insurer is deferred in whole or in part, the amount
 2093  by which such assessment is deferred may be assessed against the
 2094  other assessable insurers in a manner consistent with the basis
 2095  for assessments set forth in paragraph (b).
 2096         5. Effective July 1, 2007, In order to evaluate the costs
 2097  and benefits of approved take-out plans, if the corporation pays
 2098  a bonus or other payment to an insurer for an approved take-out
 2099  plan, it shall maintain a record of the address or such other
 2100  identifying information on the property or risk removed in order
 2101  to track if and when the property or risk is later insured by
 2102  the corporation.
 2103         6. Any policy taken out, assumed, or removed from the
 2104  corporation is, as of the effective date of the take-out,
 2105  assumption, or removal, direct insurance issued by the insurer
 2106  and not by the corporation, even if the corporation continues to
 2107  service the policies. This subparagraph applies to policies of
 2108  the corporation and not policies taken out, assumed, or removed
 2109  from any other entity.
 2110         6. The corporation may adopt one or more programs to
 2111  encourage authorized insurers to remove policies from the
 2112  corporation through a loan from the corporation to an insurer
 2113  secured by a surplus note that contains such necessary and
 2114  reasonable provisions as the corporation requires. Such surplus
 2115  note is subject to the review and approval of the office
 2116  pursuant to s. 628.401. The corporation may include, but is not
 2117  limited to, provisions regarding the maximum size of a loan to
 2118  an insurer, capital matching requirements, the relationship
 2119  between the aggregate number of policies or amount of loss
 2120  exposure removed from the association and the amount of a loan,
 2121  retention requirements related to policies removed from the
 2122  corporation, and limitations on the number of insurers receiving
 2123  loans from the corporation under any one management group in
 2124  whatever form or arrangement. If a loan secured by a surplus
 2125  note is provided to a new mutual insurance company, the
 2126  corporation may require the board of the new mutual insurer to
 2127  have a majority of independent board members, may restrict the
 2128  ability of the new mutual insurer to convert to a stock insurer
 2129  while the mutual insurer owes any principal or interest under
 2130  the surplus note to the corporation, establish a capital match
 2131  requirement of up to $1 of private capital for each $4 of the
 2132  corporation’s loan to a new mutual insurer, and limit the
 2133  eligibility of a new mutual insurer for a waiver of the ceding
 2134  commission traditionally associated with take-out programs from
 2135  the corporation to those new mutual insurers that agree
 2136  contractually to maintain an expense ratio below 20 per cent of
 2137  written premium. For this purpose, the term “expense ratio”
 2138  means the sum of agent commissions and other acquisition
 2139  expenses; general and administrative expenses; and premium
 2140  taxes, licenses, and fees, divided by the gross written premium.
 2141         (z) In enacting the provisions of this section, the
 2142  Legislature recognizes that both the Florida Windstorm
 2143  Underwriting Association and the Residential Property and
 2144  Casualty Joint Underwriting Association have entered into
 2145  financing arrangements that obligate each entity to service its
 2146  debts and maintain the capacity to repay funds secured under
 2147  these financing arrangements. It is the intent of the
 2148  Legislature that nothing in this section not be construed to
 2149  compromise, diminish, or interfere with the rights of creditors
 2150  under such financing arrangements. It is further the intent of
 2151  the Legislature to preserve the obligations of the Florida
 2152  Windstorm Underwriting Association and Residential Property and
 2153  Casualty Joint Underwriting Association with regard to
 2154  outstanding financing arrangements, with such obligations
 2155  passing entirely and unchanged to the corporation and,
 2156  specifically, to the applicable account of the corporation. So
 2157  long as any bonds, notes, indebtedness, or other financing
 2158  obligations of the Florida Windstorm Underwriting Association or
 2159  the Residential Property and Casualty Joint Underwriting
 2160  Association are outstanding, under the terms of the financing
 2161  documents pertaining to them, the executive director of the
 2162  corporation, with the concurrence of the governing board, of the
 2163  corporation shall have and shall exercise the authority to levy,
 2164  charge, collect, and receive all premiums, assessments,
 2165  surcharges, charges, revenues, and receipts that the
 2166  associations had authority to levy, charge, collect, or receive
 2167  under the provisions of subsection (2) and this subsection,
 2168  respectively, as they existed on January 1, 2002, to provide
 2169  moneys, without exercise of the authority provided by this
 2170  subsection, in at least the amounts, and by the times, as would
 2171  be provided under those former provisions of subsection (2) or
 2172  this subsection, respectively, so that the value, amount, and
 2173  collectability of any assets, revenues, or revenue source
 2174  pledged or committed to, or any lien thereon securing such
 2175  outstanding bonds, notes, indebtedness, or other financing
 2176  obligations is will not be diminished, impaired, or adversely
 2177  affected by the amendments made by this section act and to
 2178  permit compliance with all provisions of financing documents
 2179  pertaining to such bonds, notes, indebtedness, or other
 2180  financing obligations, or the security or credit enhancement for
 2181  them, and any reference in this subsection to bonds, notes,
 2182  indebtedness, financing obligations, or similar obligations, of
 2183  the corporation must shall include like instruments or contracts
 2184  of the Florida Windstorm Underwriting Association and the
 2185  Residential Property and Casualty Joint Underwriting Association
 2186  to the extent not inconsistent with the provisions of the
 2187  financing documents pertaining to them.
 2188         (gg) The Office of Inspector General is established within
 2189  the corporation to provide a central point for coordination of
 2190  and responsibility for activities that promote accountability,
 2191  integrity, and efficiency. The office shall be headed by an
 2192  inspector general, which is a senior management position that
 2193  involves planning, coordinating, and performing activities
 2194  assigned to and assumed by the inspector general for the
 2195  corporation.
 2196         1. The inspector general shall be appointed by the
 2197  Financial Services Commission and may be removed from office
 2198  only by the commission. The inspector general shall be appointed
 2199  without regard to political affiliation.
 2200         a. At a minimum, the inspector general must possess a
 2201  bachelor’s degree from an accredited college or university and 8
 2202  years of professional experience related to the duties of an
 2203  inspector general as described in this paragraph, of which 5
 2204  years must have been at a supervisory level.
 2205         b. Until June 30, 2014, the inspector general shall be
 2206  under the general supervision of the Financial Services
 2207  Commission and not subject to the supervision of any employee of
 2208  the corporation. Beginning July 1, 2014, the inspector general
 2209  shall report to, and be under the supervision of, the chair of
 2210  the board of governors. The executive director or corporation
 2211  staff may not prevent or prohibit the inspector general from
 2212  initiating, carrying out, or completing any review, evaluation,
 2213  or investigation.
 2214         2. The inspector general shall initiate, direct,
 2215  coordinate, participate in, and perform studies, reviews,
 2216  evaluations, and investigations designed to assess management
 2217  practices; compliance with laws, rules, and policies; and
 2218  program effectiveness and efficiency. This includes:
 2219         a. Conducting internal examinations; investigating
 2220  allegations of fraud, waste, abuse, malfeasance, mismanagement,
 2221  employee misconduct, or violations of corporation policies; and
 2222  conducting any other investigations as directed by the Financial
 2223  Services Commission or as independently determined.
 2224         b. Evaluating and recommending actions regarding security,
 2225  the ethical behavior of personnel and vendors, and compliance
 2226  with rules, laws, policies, and personnel matters; and rendering
 2227  ethics opinions.
 2228         c. Overseeing or participating in personnel and
 2229  administrative policy compliance and management, operational
 2230  reviews, and conducting and selecting human resources-related
 2231  advice and consultation.
 2232         d. In conjunction with the ethics and compliance officer,
 2233  evaluating the application of a corporation code of ethics,
 2234  providing input on the design and content of ethics-related
 2235  policy training courses, educating employees on the code and on
 2236  appropriate conduct, and checking for compliance.
 2237         e. Participating in policy development and review. This
 2238  includes working collaboratively with the ethics and compliance
 2239  officer in the creation, modification, and maintenance of
 2240  personnel and administrative services policies and in the
 2241  identification of policy enhancements; and researching policy
 2242  related issues.
 2243         f. Participating in the activities of the senior management
 2244  team and evaluating the management’s compliance with recommended
 2245  solutions.
 2246         g. Cooperating and coordinating activities with the chief
 2247  of internal audit, but not conducting internal audits.
 2248         h. Maintaining records of investigations and discipline in
 2249  accordance with established policies.
 2250         i. Supervising and directing the tasks and assignments of
 2251  the staff assigned to assist with the inspector general’s
 2252  projects. This includes regular review and feedback regarding
 2253  work in progress and upon completion and providing input
 2254  regarding relevant training and staff development activities as
 2255  warranted.
 2256         j. Directing, planning, preparing, and presenting interim
 2257  and final reports and oral briefings to the Financial Services
 2258  Commission and the executive director which communicate the
 2259  results of studies, reviews, and investigations.
 2260         k. Providing the executive director with independent and
 2261  objective assessments of programs and activities.
 2262         l. Completing special projects and assignments as directed
 2263  by the Financial Services Commission and performing other duties
 2264  as requested by the commission.
 2265         3. At least annually, the inspector general shall provide a
 2266  report to the President of the Senate and the Speaker of the
 2267  House of Representatives regarding the corporation’s
 2268  clearinghouse and the extent to which policies are being
 2269  returned to the voluntary market. This report must include an
 2270  analysis regarding the effectiveness of the clearinghouse in
 2271  encouraging voluntary market participation in depopulation.
 2272         Section 10. Effective October 1, 2013, paragraph (e) of
 2273  subsection (6) of section 627.351, Florida Statutes, is amended
 2274  to read
 2275         627.351 Insurance risk apportionment plans.—
 2276         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 2277         (e) The corporation is subject to s. 287.057 for the
 2278  purchase of commodities and contractual services except as
 2279  otherwise provided in this paragraph. Services provided by
 2280  tradepersons or technical experts to assist a licensed adjuster
 2281  in the evaluation of individual claims are not subject to the
 2282  procurement requirements of this section. Additionally, the
 2283  procurement of financial services providers and underwriters
 2284  must be made pursuant to s. 627.3513 Purchases that equal or
 2285  exceed $2,500, but are less than $25,000, shall be made by
 2286  receipt of written quotes, written record of telephone quotes,
 2287  or informal bids, whenever practical. The procurement of goods
 2288  or services valued at or over $25,000 shall be subject to
 2289  competitive solicitation, except in situations where the goods
 2290  or services are provided by a sole source or are deemed an
 2291  emergency purchase; the services are exempted from competitive
 2292  solicitation requirements under s. 287.057(3)(f); or the
 2293  procurement of services is subject to s. 627.3513. Justification
 2294  for the sole-sourcing or emergency procurement must be
 2295  documented. Contracts for goods or services valued at or more
 2296  than over $100,000 are subject to approval by the board.
 2297         1. The corporation is an agency for the purposes of s.
 2298  287.057, except for subsection (22) of that section for which
 2299  the corporation is an eligible user.
 2300         a. The authority of the Department of Management Services
 2301  and the Chief Financial Officer under s. 287.057 extends to the
 2302  corporation as if the corporation were an agency.
 2303         b. The executive director of the corporation is the agency
 2304  head under s. 287.057, except for resolution of bid protests for
 2305  which the board would serve as the agency head.
 2306         2. The corporation must provide notice of a decision or
 2307  intended decision concerning a solicitation, contract award, or
 2308  exceptional purchase by electronic posting. Such notice must
 2309  contain the following statement: “Failure to file a protest
 2310  within the time prescribed in this section constitutes a waiver
 2311  of proceedings.”
 2312         a. A person adversely affected by the corporation’s
 2313  decision or intended decision to award a contract pursuant to s.
 2314  287.057(1) or s. 287.057(3)(c) who elects to challenge the
 2315  decision must file a written notice of protest with the
 2316  executive director of the corporation within 72 hours after the
 2317  corporation posts a notice of its decision or intended decision.
 2318  For a protest of the terms, conditions, and specifications
 2319  contained in a solicitation, including any provisions governing
 2320  the methods for ranking bids, proposals, replies, awarding
 2321  contracts, reserving rights of further negotiation, or modifying
 2322  or amending any contract, the notice of protest must be filed in
 2323  writing within 72 hours after the posting of the solicitation.
 2324  Saturdays, Sundays, and state holidays are excluded in the
 2325  computation of the 72-hour time period.
 2326         b. A formal written protest must be filed within 10 days
 2327  after the date the notice of protest is filed. The formal
 2328  written protest must state with particularity the facts and law
 2329  upon which the protest is based. Upon receipt of a formal
 2330  written protest that has been timely filed, the corporation must
 2331  stop the solicitation or contract award process until the
 2332  subject of the protest is resolved by final board action unless
 2333  the executive director sets forth in writing particular facts
 2334  and circumstances that require the continuance of the
 2335  solicitation or contract award process without delay in order to
 2336  avoid an immediate and serious danger to the public health,
 2337  safety, or welfare. The corporation must provide an opportunity
 2338  to resolve the protest by mutual agreement between the parties
 2339  within 7 business days after receipt of the formal written
 2340  protest. If the subject of a protest is not resolved by mutual
 2341  agreement within 7 business days, the corporation’s board must
 2342  place the protest on the agenda and resolve it at its next
 2343  regularly scheduled meeting. The protest must be heard by the
 2344  board at a publicly noticed meeting in accordance with
 2345  procedures established by the board.
 2346         c. In a protest of an invitation-to-bid or request-for
 2347  proposals procurement, submissions made after the bid or
 2348  proposal opening which amend or supplement the bid or proposal
 2349  may not be considered. In protesting an invitation-to-negotiate
 2350  procurement, submissions made after the corporation announces
 2351  its intent to award a contract, reject all replies, or withdraw
 2352  the solicitation that amends or supplements the reply may not be
 2353  considered. Unless otherwise provided by law, the burden of
 2354  proof rests with the party protesting the corporation’s action.
 2355  In a competitive-procurement protest, other than a rejection of
 2356  all bids, proposals, or replies, the corporation’s board must
 2357  conduct a de novo proceeding to determine whether the
 2358  corporation’s proposed action is contrary to the corporation’s
 2359  governing statutes, the corporation’s rules or policies, or the
 2360  solicitation specifications. The standard of proof for the
 2361  proceeding is whether the corporation’s action was clearly
 2362  erroneous, contrary to competition, arbitrary, or capricious. In
 2363  any bid-protest proceeding contesting an intended corporation
 2364  action to reject all bids, proposals, or replies, the standard
 2365  of review by the board is whether the corporation’s intended
 2366  action is illegal, arbitrary, dishonest, or fraudulent.
 2367         d. Failure to file a notice of protest or failure to file a
 2368  formal written protest constitutes a waiver of proceedings.
 2369         3. Contract actions and decisions by the board under this
 2370  paragraph are final. Any further legal remedy must be made in
 2371  the Circuit Court of Leon County.
 2372         Section 11. The purchase of commodities and contractual
 2373  services by Citizens Property Insurance Corporation commenced
 2374  before October 1, 2013, is governed by the law in effect on
 2375  September 30, 2013.
 2376         Section 12. Effective January 1, 2014, paragraph (n) of
 2377  subsection (6) of section 627.351, Florida Statutes, is amended
 2378  to read:
 2379         627.351 Insurance risk apportionment plans.—
 2380         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 2381         (n)1. Rates for coverage provided by the corporation must
 2382  be actuarially sound and subject to s. 627.062, Except as
 2383  otherwise provided in this paragraph, rates for coverage
 2384  provided by the corporation must be actuarially sound and not
 2385  competitive with approved rates charged in the admitted
 2386  voluntary market in order for the corporation to function as a
 2387  residual market mechanism that provides insurance only if
 2388  insurance cannot be procured in the voluntary market.
 2389         a. In establishing actuarially sound rates the corporation
 2390  shall include an appropriate catastrophe risk load factor that
 2391  reflects the actual catastrophic risk exposure retained by the
 2392  corporation.
 2393         b. In establishing noncompetitive rates for personal and
 2394  commercial lines residential policies, the average rates of the
 2395  corporation for each rating territory may not be less than the
 2396  average rates charged by the insurer that had the highest
 2397  average rate in that rating territory among the 20 voluntary
 2398  admitted insurers with the greatest total direct written premium
 2399  in the state for that line of business in the preceding year.
 2400         c. In establishing noncompetitive rates for mobile home
 2401  coverage, the average rates of the corporation may not be less
 2402  than the average rates charged by the insurer that had the
 2403  highest average rate in that rating territory among the five
 2404  voluntary admitted insurers with the greatest total written
 2405  premium for mobile home owner’s policies in the state in the
 2406  preceding year. The corporation shall file its recommended rates
 2407  with the office at least annually. The corporation shall provide
 2408  any additional information regarding the rates which the office
 2409  requires. The office shall consider the recommendations of the
 2410  board and issue a final order establishing the rates for the
 2411  corporation within 45 days after the recommended rates are
 2412  filed. The corporation may not pursue an administrative
 2413  challenge or judicial review of the final order of the office.
 2414         d. Rates for commercial nonresidential policies must be
 2415  actuarially sound in accordance with sub-subparagraph a.
 2416         e. The requirements of sub-subparagraphs b. and c. do not
 2417  apply to rates in territories where the office determines there
 2418  is not a reasonable degree of competition. In such territories
 2419  the corporation’s rates must be actuarially sound in accordance
 2420  with sub-subparagraph a.
 2421         2. In addition to the rates otherwise determined pursuant
 2422  to this paragraph, the corporation shall impose and collect an
 2423  amount equal to the premium tax provided in s. 624.509 to
 2424  augment the financial resources of the corporation.
 2425         3. After the public hurricane loss-projection model under
 2426  s. 627.06281 has been found to be accurate and reliable by the
 2427  Florida Commission on Hurricane Loss Projection Methodology, the
 2428  model shall serve as the minimum benchmark for determining the
 2429  windstorm portion of the corporation’s rates. This subparagraph
 2430  does not require or allow the corporation to adopt rates lower
 2431  than the rates otherwise required or allowed by this paragraph.
 2432         4. The rate filings for the corporation which were approved
 2433  by the office and took effect January 1, 2007, are rescinded,
 2434  except for those rates that were lowered. As soon as possible,
 2435  the corporation shall begin using the lower rates that were in
 2436  effect on December 31, 2006, and provide refunds to
 2437  policyholders who paid higher rates as a result of that rate
 2438  filing. The rates in effect on December 31, 2006, remain in
 2439  effect for the 2007 and 2008 calendar years except for any rate
 2440  change that results in a lower rate. The next rate change that
 2441  may increase rates shall take effect pursuant to a new rate
 2442  filing recommended by the corporation and established by the
 2443  office, subject to this paragraph.
 2444         5. Beginning on July 15, 2009, and annually thereafter, the
 2445  corporation must make a recommended actuarially sound rate
 2446  filing for each personal and commercial line of business it
 2447  writes, to be effective no earlier than January 1, 2010.
 2448         3.6.For policies initially insured by the corporation
 2449  before July 1, 2013, and which have continuously been insured by
 2450  the corporation since that date, Beginning on or after January
 2451  1, 2010, and notwithstanding the board’s recommended rates and
 2452  the office’s final order regarding the corporation’s filed rates
 2453  under subparagraph 1., the corporation shall annually implement
 2454  a rate increase that which, except for sinkhole coverage, does
 2455  not exceed 10 percent for any territory single policy issued by
 2456  the corporation, excluding coverage changes and surcharges. This
 2457  subparagraph is limited to:
 2458         a. Personal lines residential policies that have a dwelling
 2459  replacement cost of less than $300,000 and that cover homestead
 2460  personal residential properties or occupied permanent
 2461  residencies having a written rental agreement for at least 12
 2462  months.
 2463         b. Personal lines residential wind-only policies that cover
 2464  homestead personal residential properties, or that are occupied
 2465  permanent residencies that have a written rental agreement for
 2466  no less than 12 months, and have a dwelling replacement cost of
 2467  less than:
 2468         (1) $1 million on July 1, 2013.
 2469         (II) $800,000 on January 1, 2014.
 2470         (III) $600,000 on January 1, 2015.
 2471         c. Commercial lines residential properties.
 2472         4. The corporation shall also implement the following:
 2473         a.7.The corporation may also implement An increase to
 2474  reflect the effect on the corporation of the cash buildup factor
 2475  pursuant to s. 215.555(5)(b).
 2476         b. An increase of up to 3 percent, which shall only be used
 2477  to purchase catastrophe reinsurance or other risk transfer
 2478  mechanisms for purposes of protecting the corporation and its
 2479  policyholders from potential shortfalls and assessments. In any
 2480  year for which the full 3 percent increase is imposed, there
 2481  must also be a corresponding 3 percent decrease, 1 percent per
 2482  account, from the Citizens policyholder surcharge in (b)3.i.,
 2483  for that year.
 2484         5.8. The corporation’s implementation of rates as
 2485  prescribed in subparagraph 3. 6. shall cease for any line of
 2486  business written by the corporation upon the corporation’s
 2487  implementation of the rates described in subparagraph 1.
 2488  actuarially sound rates. Thereafter, the corporation shall
 2489  annually make a recommended actuarially sound rate filing
 2490  implementing such rates for each commercial and personal line of
 2491  business the corporation writes.
 2492         6. The corporation shall annually certify to the office
 2493  that its rates comply with the requirements of this paragraph.
 2494  If any adjustment in the rates or rating factors of the
 2495  corporation is necessary to ensure such compliance, the
 2496  corporation shall make and implement such adjustments and file
 2497  its revised rates and rating factors with the office. If the
 2498  office thereafter determines that the revised rates and rating
 2499  factors fail to comply with this paragraph, it shall notify the
 2500  corporation and require the corporation to amend its rates or
 2501  rating factors in conjunction with its next rate filing. The
 2502  office must notify the corporation by electronic means of any
 2503  rate filing it approves for any insurer among the insurers
 2504  referred to in this paragraph.
 2505         7. By January 1, 2014, the board shall provide
 2506  recommendations to the Legislature on how to provide relief to a
 2507  policyholder whose premium reflects the full rate required under
 2508  subparagraph 1. and who demonstrates a financial need at the
 2509  time of application or renewal.
 2510         Section 13. Section 627.3518, Florida Statutes, is created
 2511  to read:
 2512         627.3518Citizens Property Insurance Corporation
 2513  clearinghouse.—The Legislature recognizes that Citizens Property
 2514  Insurance Corporation has authority to establish a clearinghouse
 2515  as a separate organizational unit within the corporation for the
 2516  purpose of determining the eligibility of new and renewal risks,
 2517  excluding commercial residential, seeking coverage through the
 2518  corporation and facilitating the identification and diversion of
 2519  ineligible applicants and current policyholders from the
 2520  corporation into the voluntary insurance market. The purpose of
 2521  this section is to augment that authority by providing a
 2522  framework for the corporation to implement such program by July
 2523  1, 2013.
 2524         (1) As used in this section, the term:
 2525         (a) “Clearinghouse” means the clearinghouse diversion
 2526  program created under this section.
 2527         (b) “Corporation” means Citizens Property Insurance
 2528  Corporation.
 2529         (c) “Exclusive agent” means a licensed insurance agent who
 2530  has agreed, by contract, to act exclusively for one company or
 2531  group of affiliated insurance companies and is disallowed by the
 2532  provisions of that contract to directly write for any other
 2533  unaffiliated insurer absent express consent from the company or
 2534  group of affiliated insurance companies.
 2535         (d) “Independent agent” means a licensed insurance agent
 2536  not described in paragraph (c).
 2537         (2) In order to confirm eligibility with the corporation
 2538  and to enhance the access of new applicants for coverage and
 2539  existing policyholders of the corporation to offers of coverage
 2540  from authorized and eligible insurers, the corporation shall
 2541  establish a clearinghouse to facilitate the diversion of
 2542  ineligible applicants and existing policyholders from the
 2543  corporation into the voluntary insurance market.
 2544         (3) The clearinghouse shall have the same rights and
 2545  responsibilities in carrying out its duties as a licensed
 2546  general lines agent, but is not required to employ or engage a
 2547  licensed general lines agent or to maintain an insurance agency
 2548  license in order to solicit and place insurance coverage. In
 2549  establishing the clearinghouse, the corporation may:
 2550         (a) Require all new applications and all policies due for
 2551  renewal to be submitted to the clearinghouse or a private
 2552  alternative in order to facilitate obtaining an offer of
 2553  coverage from an authorized insurer before binding or renewing
 2554  coverage by the corporation.
 2555         (b) Employ or otherwise contract with individuals or other
 2556  entities to provide administrative or professional services in
 2557  order to effectuate the plan within the corporation in
 2558  accordance with the applicable purchasing requirements under s.
 2559  627.351.
 2560         (c) Enter into contracts with an authorized or eligible
 2561  insurer participating in the clearinghouse and accept an
 2562  appointment by such insurer.
 2563         (d) Provide funds to operate the clearinghouse, or charge
 2564  agents and insurers a reasonable fee to offset, or partially
 2565  offset, the costs of the clearinghouse. Insurers participating
 2566  in the clearinghouse are not required to use the clearinghouse
 2567  for the renewal of policies initially written through the
 2568  clearinghouse.
 2569         (e) Develop an enhanced application for obtaining
 2570  information that will assist private insurers in determining
 2571  whether to make an offer of coverage through the clearinghouse.
 2572         (f) Before approving new applications for coverage by the
 2573  corporation, require every application to be subject to a 48
 2574  hour period that allows an insurer participating in the
 2575  clearinghouse to select the application for coverage. The
 2576  insurer may issue a binder on any policy selected for coverage
 2577  for a period of at least 30 days, but not more than 60 days.
 2578         (4) An authorized or eligible insurer may participate in
 2579  the clearinghouse; however, participation is not mandatory.
 2580  Insurers making offers of coverage to new applicants or renewing
 2581  policyholders through the clearinghouse:
 2582         (a) Are not required to individually appoint an agent whose
 2583  customer is underwritten and bound through the clearinghouse.
 2584  Notwithstanding s. 626.112, insurers are not required to appoint
 2585  an agent on a policy underwritten through the clearinghouse as
 2586  long as that policy remains with the insurer. Insurers may
 2587  appoint an agent whose customer is initially underwritten and
 2588  bound through the clearinghouse. If an insurer accepts a policy
 2589  from an agent who is not appointed pursuant to this paragraph
 2590  and thereafter accepts a policy from such agent, the provisions
 2591  of s. 626.112 requiring appointment apply to the agent.
 2592         (b) Must enter into a limited agency agreement with each
 2593  agent who is not appointed in accordance with paragraph (a) and
 2594  whose customer is underwritten and bound through the
 2595  clearinghouse.
 2596         (c) Must enter into its standard agency agreement with each
 2597  agent whose customer is underwritten and bound through the
 2598  clearinghouse if that agent has been appointed by the insurer
 2599  pursuant to s. 626.112.
 2600         (d) Must comply with s. 627.4133(2).
 2601         (e) Must allow authorized or eligible insurers
 2602  participating in the clearinghouse to participate through their
 2603  single, designated managing general agent or broker; however the
 2604  provisions of paragraph (6)(a) regarding ownership, control, and
 2605  use of the expirations apply.
 2606         (5)(a) Notwithstanding s. 627.3517, an applicant for new
 2607  coverage is not eligible for coverage from the corporation if
 2608  the applicant is offered coverage from an authorized insurer
 2609  through the clearinghouse at a premium that is at or below the
 2610  eligibility threshold established under s. 627.351(6)(c)5.a.
 2611         (b) Notwithstanding any other provisions of law, if a
 2612  renewing policyholder of the corporation is offered coverage
 2613  from an authorized insurer for a personal lines or commercial
 2614  lines risk at a premium that is no more than 15 percent above
 2615  the corporation’s renewal premium for comparable coverage, the
 2616  risk is not eligible for coverage with the corporation.
 2617         (c) Notwithstanding s. 626.916(1), if an applicant for new
 2618  or renewal coverage from the corporation does not receive an
 2619  offer of coverage from an authorized insurer, the applicant may
 2620  choose to accept an offer of coverage from an eligible insurer
 2621  or their broker under ss. 626.913-626.937. Such offers of
 2622  coverage from an eligible insurer do not make the risk
 2623  ineligible for coverage with the corporation.
 2624         (d) An applicant for new or renewal coverage from the
 2625  corporation may choose to accept any offers of coverage received
 2626  through the clearinghouse from an authorized insurer that is
 2627  greater than 15 percent of the corporation’s renewal premium.
 2628         (e) Sections 627.351(6)(c)5.a.(I) and b.(I) do not apply to
 2629  an offer of coverage from an authorized insurer obtained through
 2630  the clearinghouse.
 2631         (6) Independent agents who submit new applications for
 2632  coverage or who are the agent of record on a renewal policy
 2633  submitted to the clearinghouse:
 2634         (a) Must maintain ownership and the exclusive use of
 2635  expirations, records, or other written or electronic information
 2636  directly related to such applications or renewals written
 2637  through the corporation or through an insurer participating in
 2638  the clearinghouse, notwithstanding s. 627.351(6)(c)5.a.(I)(B)
 2639  and (II)(B). Contracts with the corporation or required by the
 2640  corporation may not amend, modify, interfere with, or limit such
 2641  rights of ownership. Such expirations, records, or other written
 2642  or electronic information may be used to review an application,
 2643  issue a policy, or for any other purpose necessary for placing
 2644  business through the clearinghouse.
 2645         (b) Are not required to be appointed by an insurer
 2646  participating in the clearinghouse for policies written solely
 2647  through the clearinghouse, notwithstanding s. 626.112.
 2648         (c) May accept an appointment from an insurer participating
 2649  in the clearinghouse.
 2650         (d) Must enter into a standard or limited agency agreement
 2651  with the insurer, at the insurer’s option.
 2652  
 2653         Applicants ineligible for coverage under paragraph (5)
 2654  remain ineligible if their independent agent is unwilling or
 2655  unable to enter into a standard or limited agency agreement with
 2656  an insurer participating in the clearinghouse.
 2657         (7) Exclusive agents submitting new applications for
 2658  coverage or who are the agent of record on a renewal policy
 2659  submitted to the clearinghouse:
 2660         (a) Must maintain ownership and the exclusive use of
 2661  expirations, records, or other written or electronic information
 2662  directly related to such applications or renewals written
 2663  through the corporation or through an insurer participating in
 2664  the clearinghouse, notwithstanding s. 627.351(6)(c)5.a.(I)(B)
 2665  and (II)(B). Contracts with the corporation or required by the
 2666  corporation may not amend, modify, interfere with, or limit such
 2667  rights of ownership. Such expirations, records, or other written
 2668  or electronic information may be used to review an application,
 2669  issue a policy, or for any other purpose necessary for placing
 2670  business through the clearinghouse.
 2671         (b) Are not required to be appointed by an insurer
 2672  participating in the clearinghouse for policies written solely
 2673  through the clearinghouse, notwithstanding s. 626.112.
 2674         (c) Must accept an offer of coverage from an insurer whose
 2675  limited servicing agreement is approved by that agent’s
 2676  exclusive insurer as eligible to participate in the
 2677  clearinghouse with that insurer’s exclusive agents.
 2678         (d) Must enter into a limited servicing agreement with the
 2679  insurer making an offer of coverage, and may do so only after
 2680  the exclusive agent’s insurer has approved the terms of the
 2681  agreement. The exclusive agent’s insurer must approve a limited
 2682  service agreement for the clearinghouse if the insurer has
 2683  approved a service agreement with the agent for other purposes.
 2684  
 2685         An applicant is ineligible for coverage under paragraph (5)
 2686  if the applicant’s exclusive agent is unwilling or unable to
 2687  enter into a standard or limited agency agreement with a
 2688  participating insurer making an offer of coverage to that
 2689  applicant.
 2690         (8) To promote private market initiatives that provide
 2691  offers of coverage from authorized and eligible insurers to
 2692  applicants for coverage by the corporation and to the
 2693  corporation’s policyholders on renewal, the corporation shall
 2694  publish, by January 1, 2014, reasonable standards for private
 2695  alternatives to the submission of a risk to the clearinghouse.
 2696  Such private alternatives may act in a master agency arrangement
 2697  that allows agents to be appointed as subagents of a master
 2698  agency and to use private alternatives for the submission of
 2699  risks to the clearinghouse. The alternative option allowed under
 2700  this subsection is an alternative to, and not a replacement for,
 2701  the clearinghouse. Neither the clearinghouse nor any private
 2702  entity operating under this subsection may prohibit insurers
 2703  that elect to participate from participating in more than one
 2704  clearinghouse or alternative; however, an insurer participating
 2705  in the private entity must also participate in the
 2706  clearinghouse.
 2707         (9) Submission of an application to the clearinghouse for
 2708  coverage by the corporation does not constitute the binding of
 2709  coverage, and the failure of the clearinghouse to obtain an
 2710  offer of coverage by an insurer is not considered acceptance of
 2711  coverage of the risk by the corporation.
 2712         (10) The clearinghouse does not include commercial
 2713  residential policies.
 2714         Section 14. Temporary keepout program.—Citizens Property
 2715  Corporation shall implement a temporary keepout program
 2716  beginning July 1, 2013, and ending on the date the clearinghouse
 2717  program established under s. 627.3518, Florida Statutes, is
 2718  operational.
 2719         (1) Subject to procedures adopted by the corporation, the
 2720  program shall provide an opportunity for new applicants for
 2721  personal residential multiperil coverage with the corporation to
 2722  be offered coverage with authorized insurers through the market
 2723  assistance plan established under s. 627.3515, Florida Statutes.
 2724         (2) The program is subject to all of the following:
 2725         (a) The corporation may not accept a new personal
 2726  residential multiperil application for coverage within 72 hours
 2727  after submission of the risk to the market assistance plan under
 2728  subsection (1).
 2729         (b) Section 627.3517, Florida Statutes, relating to
 2730  consumer choice of agent does not apply to applications for
 2731  coverage accepted by authorized insurers under the program.
 2732         (c) Insurers issuing policies under this section are
 2733  subject to s. 627.3518(3), Florida Statutes, relating to agent
 2734  appointment.
 2735         (d) Notwithstanding s. 626.916(1), Florida Statutes, if an
 2736  applicant for new or renewal coverage from the corporation does
 2737  not receive an offer of coverage from an eligible insurer, the
 2738  applicant may accept an offer from a designated broker of an
 2739  insurer eligible under ss. 626.913-626.937, Florida Statutes.
 2740         (3) This section expires on March 1, 2014, or when the
 2741  clearinghouse program established under s. 627.3518, Florida
 2742  Statutes, becomes operational, whichever occurs first.
 2743         Section 15. Subsection (1) of section 627.405, Florida
 2744  Statutes, is amended to read:
 2745         627.405 Insurable interest; property.—
 2746         (1) A No contract for property of insurance of property or
 2747  of any interest in property or arising from property is not
 2748  shall be enforceable as to the insurance except for the benefit
 2749  of persons having an insurable interest in the things insured as
 2750  at the time of the loss. Policyholders under a contract of
 2751  property insurance may assign benefits to be received under that
 2752  contract consistent with, and subject to, the conditions in the
 2753  policy.
 2754         Section 16. Subsection (1) of section 627.410, Florida
 2755  Statutes, is amended to read:
 2756         627.410 Filing, approval of forms.—
 2757         (1) A No basic insurance policy or annuity contract form,
 2758  or application form where written application is required and is
 2759  to be made a part of the policy or contract, or group
 2760  certificates issued under a master contract delivered in this
 2761  state, or printed rider or endorsement form or form of renewal
 2762  certificate, may not shall be delivered or issued for delivery
 2763  in this state, unless the form has been filed with the office by
 2764  or on in behalf of the insurer that which proposes to use such
 2765  form and has been approved by the office or filed pursuant to s.
 2766  627.4102. This provision does not apply to surety bonds or to
 2767  policies, riders, endorsements, or forms of unique character
 2768  that which are designed for and used with relation to insurance
 2769  on upon a particular subject, (other than as to health
 2770  insurance), or that which relate to the manner of distributing
 2771  distribution of benefits or to the reservation of rights and
 2772  benefits under life or health insurance policies and are used at
 2773  the request of the individual policyholder, contract holder, or
 2774  certificateholder. For As to group insurance policies
 2775  effectuated and delivered outside this state but covering
 2776  persons resident in this state, the group certificates to be
 2777  delivered or issued for delivery in this state shall be filed
 2778  with the office for information purposes only.
 2779         Section 17. Section 627.4102, Florida Statutes, is created
 2780  to read:
 2781         627.4102 Informational filing of forms; certification.—
 2782         (1) Property and casualty forms, except workers’
 2783  compensation forms, are exempt from the approval process
 2784  required under s. 627.410 if:
 2785         (a) The form has been electronically submitted to the
 2786  office in an informational filing made through I-File 30 days
 2787  before the delivery or issuance for delivery of the form within
 2788  this state; and
 2789         (b) At the time the informational filing is made, a
 2790  notarized certification is attached to the filing which
 2791  certifies that each form within the filing is in compliance with
 2792  all applicable state laws and rules. The certification must be
 2793  on the insurer’s letterhead and signed and dated by the
 2794  insurer’s president, chief executive officer, general counsel,
 2795  or an employee of the insurer responsible for the filing on
 2796  behalf of the insurer. The certification must contain the
 2797  following statement, and no other language: “I, ...[name]..., as
 2798  ...[title]... of ...[insurer name]..., do hereby certify that
 2799  this form filing has been thoroughly and diligently reviewed by
 2800  me and by all appropriate company personnel, as well as company
 2801  consultants, if applicable, and certify that each form contained
 2802  within the filing is in compliance with all applicable Florida
 2803  laws and rules. Should a form be found that is not in compliance
 2804  with Florida laws and rules, I acknowledge that the Office of
 2805  Insurance Regulation shall disapprove the form.”
 2806         (2) If the filing contains a form that is not in compliance
 2807  with state laws and rules, the form filing, at the discretion of
 2808  the office, is subject to prior review and approval pursuant to
 2809  s. 627.410, and the period for review and approval established
 2810  under s. 627.410(2) begins to run on the date the office
 2811  notifies the insurer of the discovery of the noncompliant form.
 2812         (3) A Notice of Change in Policy Terms form required under
 2813  s. 627.43141(2) shall be filed as a part of the informational
 2814  filing for a renewal policy that contains a change. All
 2815  modifications, additions, or deletions of terms, coverages,
 2816  duties, or conditions shall be enumerated within the body of the
 2817  form. If a renewal policy that was certified requires such form,
 2818  the insurer must provide a copy to the named insured’s agent
 2819  pursuant to s. 627.43141(6)(c) before or upon providing the form
 2820  to the named insured.
 2821         (4) This section does not preclude an insurer from electing
 2822  to file any form for approval under s. 627.410 which would
 2823  otherwise be exempt under this section.
 2824         (5) The provisions of this section supersede and replace
 2825  the existing order issued by the office exempting specified
 2826  property and casualty forms from the requirements of s. 627.410.
 2827         Section 18. Except as otherwise expressly provided in the
 2828  act, this act shall take effect July 1, 2013.