Senate Bill 2054c1

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    Florida Senate - 1998                           CS for SB 2054

    By the Committee on Banking and Insurance and Senator
    Diaz-Balart




    311-1950-98

  1                      A bill to be entitled

  2         An act relating to property insurance; amending

  3         ss. 627.7013, 627.7014, F.S.; providing

  4         findings relating to the moratorium on

  5         hurricane-related cancellations and nonrenewals

  6         of personal lines residential policies and

  7         condominium association policies, respectively;

  8         deleting provisions relating to accelerated

  9         exposure reduction plans; providing

10         circumstances under which the sections are

11         inoperative; delaying the future repeal date of

12         the sections; providing an effective date.

13

14  Be It Enacted by the Legislature of the State of Florida:

15

16         Section 1.  Subsection 627.7013, Florida Statutes, is

17  amended to read:

18         627.7013  Orderly markets for personal lines

19  residential property insurance.--

20         (1)  FINDINGS AND PURPOSE.--

21         (a)  The Legislature finds that personal lines

22  residential property insurers, as a condition of doing

23  business in this state, have a responsibility to contribute to

24  an orderly market for personal lines residential property

25  insurance and that there is a compelling state interest in

26  maintaining an orderly market for personal lines residential

27  property insurance. The Legislature further finds that

28  Hurricane Andrew, which caused over $15 billion of insured

29  losses in South Florida, has reinforced the need of consumers

30  to have reliable homeowner's insurance coverage; however, the

31  enormous monetary impact to insurers of Hurricane Andrew

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    Florida Senate - 1998                           CS for SB 2054
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  1  claims has prompted insurers to propose substantial

  2  cancellation or nonrenewal of their homeowner's insurance

  3  policyholders. The Legislature further finds that the massive

  4  cancellations and nonrenewals announced, proposed, or

  5  contemplated by certain insurers constitute a significant

  6  danger to the public health, safety, and welfare, and

  7  destabilize the insurance market. In furtherance of the

  8  overwhelming public necessity for an orderly market for

  9  property insurance, the Legislature, in chapter 93-401, Laws

10  of Florida, imposed, for a limited time, a moratorium on

11  cancellation or nonrenewal of personal lines residential

12  property insurance policies. The Legislature further finds

13  that upon expiration of the moratorium, additional actions are

14  required to maintain an orderly market for personal lines

15  residential property insurance in this state. The purposes of

16  this section are to provide for a phaseout of the moratorium

17  and to require advance planning and approval for programs of

18  exposure reduction.

19         (b)  The Legislature finds, as of the beginning of the

20  1996 Regular Session of the Legislature, that:

21         1.  The conditions described in paragraph (a) remain

22  applicable to the property insurance market in this state in

23  1996 and are likely to remain applicable for several years

24  thereafter.

25         2.  The Residential Property and Casualty Joint

26  Underwriting Association, a residual market mechanism created

27  to alleviate temporary unavailability of property insurance

28  coverage, remains the primary or exclusive source of new

29  property insurance coverage in significant portions of the

30  state.

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    Florida Senate - 1998                           CS for SB 2054
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  1         3.  Recent enactments intended to restore a

  2  competitive, private sector property insurance market,

  3  including creation and enhancement of the Florida Hurricane

  4  Catastrophe Fund, incentives for depopulation of the

  5  Residential Property and Casualty Joint Underwriting

  6  Association, incentives for hurricane loss mitigation and

  7  prevention, creation of the Florida Commission on Hurricane

  8  Loss Projection Methodology, and revisions of laws relating to

  9  rates and coverages, are beginning to have their intended

10  effects; however, the market instability that persists could

11  frustrate these efforts to restore the market.

12         4.  The moratorium completion provided in this section

13  is the least intrusive method for maintaining an orderly

14  market, insofar as it applies only to hurricane-related

15  cancellations and nonrenewals of personal lines residential

16  policies that were in force on the effective date, and insofar

17  as it allows an insurer annually to nonrenew up to 5 percent

18  of the total number of such policies as of the effective date.

19         (c)  The Legislature finds, as of March 1, 1998, that:

20         1.  The conditions described in paragraphs (a) and (b)

21  remain applicable to the property insurance market in this

22  state in 1998 and are likely to remain applicable for several

23  years thereafter.

24         2.  The general instability of the market is reflected

25  by the following facts:

26         a.  In spite of depopulation efforts under which

27  approximately 600,000 policies have been transferred from the

28  Residential Property and Casualty Joint Underwriting

29  Association to the voluntary market, the Joint Underwriting

30  Association, with approximately 370,000 policies in force,

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    Florida Senate - 1998                           CS for SB 2054
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  1  remains the primary or exclusive source of new property

  2  insurance coverage in significant portions of the state.

  3         b.  The Florida Windstorm Underwriting Association is

  4  growing rapidly, with more than 430,000 policies in force,

  5  approximately half of which were initially issued after

  6  January 1, 1997.

  7         3.  A further extension of the operation of this

  8  section until June 1, 2001, will provide an opportunity for

  9  the market to stabilize and for continuation of residual

10  market depopulation efforts.

11         (2)  MORATORIUM COMPLETION.--

12         (a)  As used in this subsection, the term "total number

13  of policies" means the number of an insurer's policies of a

14  specified type that were in force on June 1, 1996, or the date

15  on which this section became law, whichever was later.

16         (b)  The following restrictions apply only to

17  cancellation or nonrenewal of personal lines residential

18  property insurance policies that were in force on June 1,

19  1996, or the date on which this section became law, whichever

20  was later.

21         1.  In any 12-month period, an insurer may not cancel

22  or nonrenew more than 5 percent of such insurer's total number

23  of homeowner's policies, 5 percent of such insurer's total

24  number of mobile home owner's policies, or 5 percent of such

25  insurer's total number of personal lines residential policies

26  of all types and classes in the state for the purpose of

27  reducing the insurer's exposure to hurricane claims and may

28  not, with respect to any county, cancel or nonrenew more than

29  10 percent of its total number of homeowner's policies, 10

30  percent of its total number of mobile home owner's policies,

31  or 10 percent of its total number of personal lines

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    Florida Senate - 1998                           CS for SB 2054
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  1  residential policies of all types and classes in the county

  2  for the purpose of reducing the insurer's exposure to

  3  hurricane claims. This subparagraph does not prohibit any

  4  cancellations or nonrenewals of such policies for any other

  5  lawful reason unrelated to the risk of loss from hurricane

  6  exposure.

  7         2.a.  If, for any 12-month period, an insurer proposes

  8  to cancel or nonrenew personal lines residential policies to

  9  an extent not authorized by subparagraph 1. for the purpose of

10  reducing exposure to hurricane claims, the insurer must file a

11  phaseout plan with the department at least 90 days prior to

12  the effective date of the plan. In the plan, the insurer must

13  demonstrate to the department that the insurer is protecting

14  market stability and the interests of its policyholders. The

15  plan may not be implemented unless it is approved by the

16  department. In developing the plan, the insurer must consider

17  policyholder longevity, the use of voluntary incentives to

18  accomplish the reduction, and geographic distribution. The

19  insurer must demonstrate that under the plan the insurer will

20  not cancel or nonrenew more policies in the 12-month period

21  than the largest number of similar policies the insurer

22  canceled or nonrenewed for any reason in any 12-month period

23  between August 24, 1989, and August 24, 1992.

24         b.  If the insurer considers the number of

25  cancellations and nonrenewals under sub-subparagraph a. to be

26  insufficient, the insurer may apply for approval of additional

27  cancellations or nonrenewals on the basis of an unreasonable

28  risk of insolvency. In evaluating a request under this

29  sub-subparagraph, the department shall consider and shall

30  require the insurer to provide information relevant to: the

31  insurer's size, market concentration, and general financial

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    Florida Senate - 1998                           CS for SB 2054
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  1  condition; the portion of the insurer's business in this state

  2  represented by personal lines residential property insurance;

  3  the reasonableness of assumptions with respect to size,

  4  frequency, severity, and path of hurricanes; the reinsurance

  5  available to the insurer and potential recoveries from the

  6  Florida Hurricane Catastrophe Fund; and the extent to which

  7  the insurer's assets have been voluntarily transferred by

  8  dividend or otherwise from the insurer to its stockholders,

  9  parent companies, or affiliated companies since June 1, 1996,

10  or the date on which this section became law, whichever was

11  later. In the implementation of exposure reductions under this

12  sub-subparagraph, the department and the insurer shall

13  consider such factors as policyholder longevity, the use of

14  voluntary incentives to accomplish the exposure reduction, and

15  geographic distribution.

16         c.  A policy shall not be counted as having been

17  canceled or nonrenewed for purposes of this subsection if any

18  of the following apply:

19         (I)  The policy was canceled or nonrenewed for an

20  underwriting reason unrelated to the risk of loss from

21  hurricane exposure, nonpayment of premium, or any other lawful

22  reason that is unrelated to the risk of loss from hurricane

23  exposure. The department shall consider the reason specified

24  in the notice of cancellation or nonrenewal to be the reason

25  for the cancellation or nonrenewal unless the department finds

26  by a preponderance of the evidence that the stated reason was

27  not the insurer's actual reason for the cancellation or

28  nonrenewal.

29         (II)  The cancellation or nonrenewal was initiated by

30  the insured.

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    Florida Senate - 1998                           CS for SB 2054
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  1         (III)  The insurer has offered the policyholder

  2  replacement or alternative coverage at approved rates, which

  3  coverage meets the requirements of the secondary mortgage

  4  market.

  5         d.  In addition to any other cancellations or

  6  nonrenewals subject to the limitations in this subsection, a

  7  policy shall be considered as having been canceled or

  8  nonrenewed for purposes of this subsection if:

  9         (I)  The insurer implements a rate increase under the

10  use-and-file provisions of s. 627.062(2)(a)2., which rate

11  increase exceeds 150 percent of the increase ultimately

12  approved by the department, and, while the rate filing was

13  pending, the policyholder voluntarily canceled or nonrenewed

14  the policy and obtained replacement coverage from another

15  insurer, including the Residential Property and Casualty Joint

16  Underwriting Association; or

17         (II)  The insurer reduces the commission to an agent by

18  more than 25 percent and the agent thereafter places the risk

19  with another insurer, including the Residential Property and

20  Casualty Joint Underwriting Association, the Florida Windstorm

21  Underwriting Association, or the Coastal Zone Insurance Plan.

22         e.  The department must approve or disapprove an

23  application for a waiver within 90 days after the department

24  receives the application for waiver.

25         3.  In addition to the cancellations or nonrenewals

26  authorized under this section, an insurer may cancel or

27  nonrenew policies to the extent authorized by an exemption

28  from or waiver of either the moratorium created by chapter

29  93-401, Laws of Florida, or the moratorium phaseout under

30  former s. 627.7013(2).

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  1         4.  Notwithstanding any provisions of this section to

  2  the contrary, this section does not apply to any insurer that,

  3  prior to August 24, 1992, filed notice of such insurer's

  4  intent to discontinue writing insurance in this state under s.

  5  624.430, and for which a finding has been made by the

  6  department, the Division of Administrative Hearings of the

  7  Department of Management Services, or a court that such notice

  8  satisfied all requirements of s. 624.430. Nothing in this

  9  section shall be construed to authorize an insurer to withdraw

10  from any line of property insurance business for the purpose

11  of reducing exposure to risk of hurricane loss if such

12  withdrawal commenced at any time that the moratorium under

13  chapter 93-401, Laws of Florida, or the moratorium phaseout

14  under this section is in effect.

15         5.  The following actions by an insurer do not

16  constitute cancellations or nonrenewals for purposes of this

17  subsection:

18         a.  The transfer of a risk from one admitted insurer to

19  another admitted insurer, unless the terms of the new or

20  replacement policy place the policyholder in default of a

21  mortgage obligation.

22         b.  An increase in the hurricane deductible applicable

23  to the policy, unless the new deductible places the

24  policyholder in default of a mortgage obligation or the

25  deductible exceeds the limits specified in s. 627.701.

26         c.  Any other lawful change in coverage that does not

27  place the policyholder in default of a mortgage obligation.

28         d.  A cancellation or nonrenewal that is part of the

29  same action as the removal of a policy including windstorm or

30  hurricane coverage from the Residential Property and Casualty

31  Joint Underwriting Association.

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  1         6.  In order to assure fair and effective enforcement

  2  of this subsection, each insurer shall, no later than October

  3  1, 1996, report to the department the policy number of each

  4  policy subject to this subsection, arranged by county. The

  5  report shall include the policy number for each personal lines

  6  residential policy that was in force on June 1, 1996, or the

  7  date this section became law, whichever was later. Beginning

  8  October 1, 1996, each insurer shall also report, on a monthly

  9  basis, all cancellations and nonrenewals of policies included

10  in such policy list and the reasons for the cancellations and

11  nonrenewals.

12         7.  An insurer that has an overconcentration of wind

13  risk in areas eligible for coverage under the Florida

14  Windstorm Underwriting Association may submit to the

15  department for approval an accelerated exposure reduction

16  plan. The plan, if approved, shall allow the insurer to

17  nonrenew additional policies for reasons of reducing hurricane

18  loss, beyond the amounts authorized elsewhere in this

19  paragraph, subject to the following conditions:

20         a.  All additional nonrenewals under this subparagraph

21  shall consist of nonrenewals of only the windstorm portion of

22  a policy, and shall be allowed only if the Florida Windstorm

23  Underwriting Association provides windstorm coverage to

24  replace the nonrenewed windstorm coverage.

25         b.  At the conclusion of the accelerated exposure

26  reduction plan, which shall be no later than 12 months after

27  the date of the first nonrenewal under such plan, the insurer

28  is prohibited from any further nonrenewals for purposes of

29  reducing hurricane loss until the expiration of this

30  subsection.

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  1         c.  The total number of nonrenewals statewide for

  2  purposes of reduction of hurricane loss, under this

  3  subparagraph taken together with the other provisions of this

  4  paragraph, shall not exceed the total number of nonrenewals

  5  that would have been allowed statewide under subparagraph 1.

  6  between June 1, 1996, and the expiration of this subsection.

  7         d.  Notwithstanding the provisions of s. 627.4133, the

  8  insurer must give the policyholder 45 days' advance notice of

  9  the nonrenewal of windstorm coverage under this subparagraph

10  and the availability of such coverage through the Florida

11  Windstorm Underwriting Association.

12         e.  The first nonrenewal under an accelerated exposure

13  reduction program under this subparagraph may not take effect

14  earlier than February 1, 1997.

15         f.  In reviewing the proposed accelerated exposure

16  reduction plan, the department shall consider:

17         (I)  The degree to which the exposure reduction plan is

18  necessary to address the insurer's overconcentration.

19         (II)  Prior levels of participation in writing

20  voluntary wind coverage in areas eligible for coverage through

21  the Florida Windstorm Underwriting Association.

22         (III)  The availability of wind coverage in the

23  voluntary market for the subject risks.

24         (IV)  The capacity of the Florida Windstorm

25  Underwriting Association to absorb the risks proposed to be

26  covered by the association.

27         (c)  The department may adopt rules to implement this

28  subsection.

29         (d)  This section shall cease to operate when the

30  department determines that the insured value of all

31  residential properties insured by the Florida Windstorm

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  1  Underwriting Association and all properties insured by the

  2  Residential Property and Casualty Joint Underwriting

  3  Association under policies providing wind coverage, combined,

  4  has remained below $25 billion for 3 consecutive months, based

  5  on exposure data reported to the department by the

  6  associations.

  7         (e)(d)  This subsection is repealed on June 1, 2001

  8  1999.

  9         Section 2.  Section 627.7014, Florida Statutes, is

10  amended to read:

11         627.7014  Orderly markets for condominium association

12  residential property insurance.--

13         (1)  FINDINGS AND PURPOSE.--

14         (a)  The Legislature finds:

15         1.  That residential property insurers providing

16  condominium association coverage, as a condition of doing

17  business in this state, have a responsibility to contribute to

18  an orderly market for condominium association residential

19  property insurance and that there is a compelling state

20  interest in maintaining an orderly market for condominium

21  association residential property insurance.

22         2.  That Hurricane Andrew, which caused over $15

23  billion of insured losses in South Florida, has reinforced the

24  need of consumers to have reliable condominium association

25  insurance coverage; however, even more than 3 years after

26  Hurricane Andrew, the hurricane's enormous monetary impact is

27  causing insurers to propose substantial cancellation or

28  nonrenewal of their condominium association insurance

29  policyholders.

30         3.  That the massive cancellations and nonrenewals

31  announced, proposed, or contemplated by certain insurers

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  1  constitute a significant danger to the public health, safety,

  2  and welfare and destabilize the insurance market.

  3         4.  That the Residential Property and Casualty Joint

  4  Underwriting Association, a residual market mechanism created

  5  to alleviate temporary unavailability of property insurance

  6  coverage, remains the primary or exclusive source of new

  7  property insurance in significant portions of the state.

  8         5.  That recent enactments intended to restore a

  9  competitive, private sector property insurance market,

10  including creation and enhancement of the Florida Hurricane

11  Catastrophe Fund, incentives for depopulation of the

12  Residential Property and Casualty Joint Underwriting

13  Association, incentives for hurricane loss mitigation and

14  prevention, creation of the Florida Commission on Hurricane

15  Loss Projection Methodology, and revisions of laws relating to

16  rates and coverages, are beginning to have their intended

17  effects; however, the market remains unstable.

18         6.  That the moratorium created by this section is the

19  least intrusive method for maintaining an orderly market for

20  condominium association insurance, insofar as it applies only

21  to hurricane-related cancellations and nonrenewals of personal

22  lines residential policies that were in force on the effective

23  date of this section, and insofar as it allows an insurer

24  annually to nonrenew up to 5 percent of the total number of

25  such policies as of the effective date of this section.

26         (b)  The Legislature finds, as of March 1, 1998, that:

27         1.  The conditions described in paragraph (a) remain

28  applicable to the commercial residential property insurance

29  market in this state in 1998 and are likely to remain

30  applicable for several years thereafter.

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  1         2.  The general instability of the market is reflected

  2  by the recent rapid growth of the Florida Windstorm

  3  Underwriting Association, which had more than 9,700 commercial

  4  residential policies in force as of December 31, 1997,

  5  representing a 58 percent increase over the number of

  6  commercial residential policies in force on December 31, 1996.

  7         3.  An extension of the operation of this section until

  8  June 1, 2001, will provide an opportunity for the market to

  9  stabilize and for continuation of residual market depopulation

10  efforts.

11         (c)(b)  The purposes of this section are to provide for

12  a temporary moratorium on hurricane-related cancellations and

13  nonrenewals of condominium association coverage and to require

14  advance planning and approval for programs of condominium

15  association exposure reduction.

16         (2)  MORATORIUM.--

17         (a)  As used in this subsection, the term "total number

18  of policies" means the number of an insurer's condominium

19  association policies providing windstorm or hurricane coverage

20  that were in force on the effective date of this section. The

21  following restrictions apply to the cancellation or nonrenewal

22  of condominium association residential property insurance

23  policies that were in force on the effective date of this

24  section:

25         1.  In any 12-month period, an insurer may not cancel

26  or nonrenew more than 5 percent of its total number of

27  condominium association policies in the state for the purpose

28  of reducing the insurer's exposure to hurricane claims and may

29  not, with respect to any county, cancel or nonrenew more than

30  10 percent of its total number of condominium association

31  policies in the county for the purpose of reducing the

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  1  insurer's exposure to hurricane claims. This subparagraph does

  2  not prohibit any cancellations or nonrenewals of such policies

  3  for any other lawful reason unrelated to the risk of loss from

  4  hurricane exposure.

  5         2.a.  If, for any 12-month period, an insurer proposes

  6  to cancel or nonrenew condominium association policies to an

  7  extent not authorized by subparagraph 1. for the purpose of

  8  reducing exposure to hurricane claims, the insurer must file a

  9  phaseout plan with the department at least 90 days prior to

10  the effective date of the plan. In the plan, the insurer must

11  demonstrate to the department that the insurer is protecting

12  market stability and the interests of its policyholders. The

13  plan may not be implemented unless it is approved by the

14  department. In developing the plan, the insurer must consider

15  policyholder longevity, the use of voluntary incentives to

16  accomplish the reduction, and geographic distribution. The

17  insurer must demonstrate that under the plan the insurer will

18  not cancel or nonrenew more policies in the 12-month period

19  than the largest number of similar policies the insurer

20  canceled or nonrenewed for any reason in any 12-month period

21  between August 24, 1989, and August 24, 1992.

22         b.  If the insurer considers the number of

23  cancellations and nonrenewals under sub-subparagraph a. to be

24  insufficient, the insurer may apply for approval of additional

25  cancellations or nonrenewals on the basis of an unreasonable

26  risk of insolvency. In evaluating a request under this

27  sub-subparagraph, the department shall consider, and shall

28  require the insurer to provide information relevant to: the

29  insurer's size, market concentration, and general financial

30  condition; the portion of the insurer's business in this state

31  represented by condominium association residential property

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  1  insurance; the reasonableness of assumptions with respect to

  2  size, frequency, severity, and path of hurricanes; and the

  3  reinsurance available to the insurer and potential recoveries

  4  from the Florida Hurricane Catastrophe Fund. In the

  5  implementation of exposure reductions under this

  6  sub-subparagraph, the department and the insurer shall

  7  consider such factors as policyholder longevity, the use of

  8  voluntary incentives to accomplish the exposure reduction, and

  9  geographic distribution.

10         c.  A policy shall not be counted as having been

11  canceled or nonrenewed for purposes of this subsection if any

12  of the following apply:

13         (I)  The policy was canceled or nonrenewed for an

14  underwriting reason unrelated to the risk of loss from

15  hurricane exposure, nonpayment of premium, or any other lawful

16  reason that is unrelated to the risk of loss from hurricane

17  exposure. The department shall consider the reason specified

18  in the notice of cancellation or nonrenewal to be the reason

19  for the cancellation or nonrenewal unless the department finds

20  by a preponderance of the evidence that the stated reason was

21  not the insurer's actual reason for the cancellation or

22  nonrenewal.

23         (II)  The cancellation or nonrenewal was initiated by

24  the insured.

25         (III)  The insurer has offered the policyholder

26  replacement or alternative coverage at approved rates.

27         (IV)  The risk is transferred from one admitted insurer

28  to another admitted insurer, unless the terms of the new or

29  replacement policy place the policyholder in default of a

30  mortgage obligation.

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  1         (V)  The hurricane deductible applicable to the policy

  2  is increased unless the new deductible exceeds statutory

  3  limits or places the policyholder in default of a mortgage

  4  obligation.

  5         (VI)  Any other lawful change in coverage that does not

  6  place the policyholder in default of a mortgage obligation is

  7  made.

  8         d.  In addition to any other cancellations or

  9  nonrenewals subject to the limitations in this subsection, a

10  policy shall be considered as having been canceled or

11  nonrenewed for purposes of this subsection if:

12         (I)  The insurer implements a rate increase under the

13  use-and-file provisions of s. 627.062(2)(a)2., which rate

14  increase exceeds 150 percent of the increase ultimately

15  approved by the department, and, while the rate filing was

16  pending, the policyholder voluntarily canceled or nonrenewed

17  the policy and obtained replacement coverage from another

18  insurer, including the Residential Property and Casualty Joint

19  Underwriting Association; or

20         (II)  The insurer reduces the commission to an agent by

21  more than 25 percent and the agent thereafter places the risk

22  with another insurer, including the Residential Property and

23  Casualty Joint Underwriting Association.

24         e.  The department must approve or disapprove an

25  application for a waiver within 90 days after the department

26  receives the application for waiver.

27         3.  Notwithstanding any provisions of this section to

28  the contrary, this section does not apply to any insurer that,

29  prior to August 24, 1992, filed notice of such insurer's

30  intent to discontinue writing insurance in this state under s.

31  624.430, and for which a finding has been made by the

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  1  department, the Division of Administrative Hearings of the

  2  Department of Management Services, or a court that such notice

  3  satisfied all requirements of s. 624.430. This section also

  4  does not apply to any insurer that:

  5         a.  Collects at least 75 percent of its Florida

  6  premiums from policies that include hurricane coverage

  7  provided to condominium associations in coastal counties.

  8         b.  Collects at least 80 percent of its Florida

  9  premiums from policies that include hurricane coverage

10  provided to condominium associations in Broward, Dade, and

11  Palm Beach Counties.

12         c.  Has, annually since 1992:

13         (I)  Increased its aggregate Florida premium volume

14  from policies that include hurricane coverage provided to

15  condominium associations in coastal counties.

16         (II)  Increased its aggregate Florida premium volume

17  from policies that include hurricane coverage provided to

18  condominium associations in Broward, Dade, and Palm Beach

19  Counties.

20         (III)  Increased its aggregate Florida exposure from

21  policies that include hurricane coverage provided to

22  condominium associations in coastal counties.

23         (IV)  Increased its aggregate Florida exposure from

24  policies that include hurricane coverage provided to

25  condominium associations in Broward, Dade, and Palm Beach

26  Counties.

27         d.  Has surplus as to policyholders of no more than

28  $200 million as reflected in its annual statement for 1995.

29         4.  In order to assure fair and effective enforcement

30  of this subsection, each insurer shall, no later than October

31  1, 1996, report to the department the policy number of each

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    Florida Senate - 1998                           CS for SB 2054
    311-1950-98




  1  policy subject to this subsection, arranged by county. The

  2  report shall include the policy number for each condominium

  3  association policy that was in force on the effective date of

  4  this section. Beginning October 1, 1996, each insurer shall

  5  also report, on a monthly basis, all cancellations and

  6  nonrenewals of policies included in such policy list and the

  7  reasons for the cancellations and nonrenewals.

  8         5.  An insurer that has an overconcentration of wind

  9  risk in areas eligible for coverage under the Florida

10  Windstorm Underwriting Association may submit to the

11  department for approval an accelerated exposure reduction

12  plan. The plan, if approved, shall allow the insurer to

13  nonrenew additional policies for reasons of reducing hurricane

14  loss, beyond the amounts authorized elsewhere in this

15  paragraph, subject to the following conditions:

16         a.  All additional nonrenewals under this subparagraph

17  shall consist of nonrenewals of only the windstorm portion of

18  a policy, and shall be allowed only if the Florida Windstorm

19  Underwriting Association provides windstorm coverage to

20  replace the nonrenewed windstorm coverage.

21         b.  At the conclusion of the accelerated exposure

22  reduction plan, which shall be no later than 12 months after

23  the date of the first nonrenewal under such plan, the insurer

24  is prohibited from any further nonrenewals for purposes of

25  reducing hurricane loss until the expiration of this

26  subsection.

27         c.  The total number of nonrenewals statewide for

28  purposes of reduction of hurricane loss, under this

29  subparagraph taken together with the other provisions of this

30  paragraph, shall not exceed the total number of nonrenewals

31

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    Florida Senate - 1998                           CS for SB 2054
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  1  that would have been allowed statewide under subparagraph 1.

  2  between June 1, 1996, and the expiration of this subsection.

  3         d.  Notwithstanding the provisions of s. 627.4133, the

  4  insurer must give the policyholder 45 days' advance notice of

  5  the nonrenewal of windstorm coverage under this subparagraph

  6  and the availability of such coverage through the Florida

  7  Windstorm Underwriting Association.

  8         e.  The first nonrenewal under an accelerated exposure

  9  reduction program under this subparagraph may not take effect

10  earlier than February 1, 1997.

11         f.  In reviewing the proposed accelerated exposure

12  reduction plan, the department shall consider:

13         (I)  The degree to which the exposure reduction plan is

14  necessary to address the insurer's overconcentration.

15         (II)  Prior levels of participation in writing

16  voluntary wind coverage in areas eligible for coverage through

17  the Florida Windstorm Underwriting Association.

18         (III)  The availability of wind coverage in the

19  voluntary market for the subject risks.

20         (IV)  The capacity of the Florida Windstorm

21  Underwriting Association to absorb the risks proposed to be

22  covered by the association.

23         (b)  The department may adopt rules to implement this

24  subsection.

25         (c)  This section shall cease to operate when the

26  department determines that the insured value of all

27  residential properties insured by the Florida Windstorm

28  Underwriting Association and all properties insured by the

29  Residential Property and Casualty Joint Underwriting

30  Association under policies providing wind coverage, combined,

31  has remained below $25 billion for 3 consecutive months, based

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    Florida Senate - 1998                           CS for SB 2054
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  1  on exposure data reported to the department by the

  2  associations.

  3         (d)(c)  This subsection is repealed on June 1, 2001

  4  1999.

  5         Section 3.  This act shall take effect upon becoming a

  6  law.

  7

  8          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
  9                         Senate Bill 2054

10

11  Updates legislative findings as to the number of policies
    issued by the Florida Windstorm Underwriting Association and
12  Residential Property and Casualty Joint Underwriting
    Association.
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