The Florida Senate

624.4071  Special purpose homeowner insurance company.--

(1)  The department may issue to a qualified applicant a certificate of authority to operate a special purpose homeowner insurance company in order to provide residential coverage to policyholders in this state. The purpose of a special purpose homeowner insurance company is to provide, on a temporary basis, a new, limited authority insurance company in order to accelerate the restoration of the Florida homeowner insurance marketplace, which includes depopulation of the Residential Property and Casualty Joint Underwriting Association.

(2)  A special purpose homeowner insurance company must have a parent company, and both companies must meet the requirements of this subsection in order for the subsidiary to qualify for and maintain a certificate of authority under this section.

(a)  The parent company must be an admitted insurer in at least one state in the United States and must have over $50 million in capital and surplus.

(b)  The parent company must have and maintain at least 51 percent of the equity and at least 51 percent of the control of the special purpose homeowner insurance company.

(c)  An insurer not authorized to transact business in this state, but that otherwise meets the requirements of this section, may apply as a special purpose homeowner insurance company.

(d)  The special purpose homeowner insurance company must:

1.  Have and maintain at least $10 million in surplus and otherwise satisfy the requirements of s. 624.4095.

2.  Be a member of the Florida Insurance Guaranty Association and the Florida Hurricane Catastrophe Fund, and be subject to any of their required assessments and premium charges. However, a special purpose homeowner insurance company may not be a member of the Florida Windstorm Underwriting Association or the Florida Residential Property and Casualty Joint Underwriting Association, and neither the company nor its policyholders are subject to any assessments by these associations except for emergency assessments collected from policyholders pursuant to s. 627.351(2)(b)2.d.(III) and (6)(b)3.d. For the sole purpose of levying and collecting emergency assessments and determining the statewide written premium for property insurance, special purpose homeowner insurance companies shall be considered member insurers of the Florida Windstorm Underwriting Association and the Florida Residential Property and Casualty Joint Underwriting Association.

3.  Offer coverage for all perils, including windstorm, in providing residential coverage as defined in s. 627.4025. A special purpose homeowner insurance company's rates must be filed with the department. After a period of 1 year from the date a company receives a certificate of authority, the company's rates are subject to department approval under s. 627.062.

(3)(a)  The special purpose homeowner insurance company may charge a policyholder an initial premium of up to 110 percent of the premium charged to that policyholder for substantially similar coverage by the authorized insurer that last insured the policyholder, or the Residential Property and Casualty Joint Underwriting Association if the Residential Property and Casualty Joint Underwriting Association last insured the policyholder; or the special purpose homeowner insurance company may charge a policyholder the same premium that the policyholder would have been charged for substantially similar coverage upon renewal by the authorized insurer last insuring the policyholder or by the Residential Property and Casualty Joint Underwriting Association, if the Residential Property and Casualty Joint Underwriting Association last insured the policyholder.

(b)  A special purpose homeowner insurance company's forms must be substantially similar to standard ISO homeowner forms and must be filed with the department at least 30 days prior to use and must be approved by the department.

(4)  An application for a certificate of authority to operate a special purpose homeowner insurance company must be approved by the department, or be denied for good cause, under an expedited approval process within 75 days after receipt of the application. Both the special purpose homeowner insurance company and its parent company must demonstrate that its management is competent and trustworthy as required by s. 624.404(3).

(5)  The special purpose homeowner insurance company may write only policies that are directly taken from the Residential Property and Casualty Joint Underwriting Association or from an unaffiliated authorized insurer; may assume such policies either during the policy period or at the time of renewal; and must offer to renew such policies for two additional policy periods of 12 months each in accordance with subsection (3).

(a)  If the policy is to be nonrenewed by the Residential Property and Casualty Joint Underwriting Association or by an unaffiliated authorized insurer, the policyholder must be given 45 days' notice of nonrenewal along with a concurrent offer of coverage from the special purpose homeowner insurance company. If the policyholder declines coverage by nonpayment of premium or by notice given prior to the effective date of the new policy, the policyholder is ineligible for coverage by the Residential Property and Casualty Joint Underwriting Association, and the offer made by the special purpose homeowner insurance company terminates.

(b)  If the policy is to be nonrenewed by the Residential Property and Casualty Joint Underwriting Association or by an unaffiliated authorized insurer as the result of an assumption by a special purpose homeowner insurance company, the policyholder must be given 45 days' notice of assumption. If the policyholder declines coverage by nonpayment of premium or by notice given prior to the effective date of the new policy, the policyholder is ineligible for coverage with the ceding insurer or the Residential Property and Casualty Joint Underwriting Association, and the policy will not be assumed by the special purpose homeowner insurance company.

(c)  If a special purpose homeowner insurance company assumes a policy other than at nonrenewal, the authorized insurer last insuring the policyholder or the Residential Property and Casualty Joint Underwriting Association must pay any rate charge in excess of the current policy rate until the date the policy would have been renewed, at which time the policyholder is responsible for the entire rate at the time the policy is renewed with the special purpose homeowner company.

(d)  If a policy is assumed at any time other than at its renewal, the coverage and terms provided by the assumed policy continue in force until the original policy would have been renewed.

(e)  A policyholder who, at time of assumption, is covered for wind damage by the Florida Windstorm Underwriting Association shall have that peril assumed by the special purpose homeowner insurance company at the normal expiration of the Florida Windstorm Underwriting Association policy.

(6)  A special purpose homeowner insurance company must report, in writing, twice annually to the department, its most current estimate of probable maximum loss, and must furnish the department with copies of its reinsurance treaties in effect as of the reporting date. The first report must be filed with the department within 6 months after the company receives its certificate of authority, and subsequent reports must be filed at 6-month intervals.

(7)  A special purpose homeowner insurance company shall file with the department full and true statements of its financial condition, transactions, and affairs in accordance with s. 624.424. This annual statement covering the preceding calendar year must be filed on or before March 1. Such statements must contain information generally included in insurers' financial statements prepared in accordance with generally accepted insurance accounting principles and practices and in a form generally used by insurers for financial statements. Each special purpose homeowner insurance company shall submit no later than June 1 an audited financial statement pursuant to s. 624.424(8) which shall verify the unaudited statement previously filed.

(a)  Such statements must contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries.

(b)  The parent company and the subsidiary must file such statements as a material part of an application to receive a certificate of authority for operating a special purpose homeowner insurance company. From the date a special purpose homeowner insurance company receives a certificate of authority, the company shall file such statements with the department every 6 months.

(c)  The department may refuse to continue, or may suspend or revoke, the certificate of authority of a special purpose homeowner insurance company that fails to comply with the requirements of this section or that meets the grounds specified in s. 624.418.

(8)  The department shall draft and formally propose rules within 60 days after the effective date of this section. The rules shall set forth the contents of the notice that insurers and the special purpose homeowner insurance company shall provide policyholders when a policy is canceled or nonrenewed for any reason and when an offer of new coverage is made. In developing the rule, the department shall consider factors necessary to inform the policyholder with respect to the policyholder's rights and responsibilities and the significant features of the policy.

(9)  A certificate of authority to operate a special purpose homeowner insurance company may not be issued after December 31, 1998. After December 31, 1998, a certificate of authority issued pursuant to the requirements of this section continues to be effective and subject to the requirements of this section until surrendered to the Department of Insurance. A certificate of authority issued pursuant to this section may not be sold or otherwise transferred without the approval of the department.

History.--s. 1, ch. 96-345; s. 1, ch. 97-55.