House Bill 3665
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Florida House of Representatives - 1998 HB 3665
By the Committee on Financial Services and Representatives
Safley, Flanagan, Bainter, Tamargo, Sanderson, Lawson and
Wiles
1 A bill to be entitled
2 An act relating to property insurance; amending
3 s. 627.351, F.S.; prohibiting further
4 geographical expansion of Florida Windstorm
5 Underwriting Association eligibility; amending
6 ss. 627.7013 and 627.7014, F.S.; providing
7 findings relating to the moratorium on
8 hurricane-related cancellations and nonrenewals
9 of personal lines residential policies and
10 condominium association policies, respectively;
11 deleting provisions relating to accelerated
12 exposure reduction plans; providing
13 circumstances under which the sections are
14 inoperative; delaying the future repeal date of
15 the sections; creating s. 627.7019, F.S.;
16 requiring certain notice on insurance
17 applications and renewal premium notices;
18 providing an effective date.
19
20 Be It Enacted by the Legislature of the State of Florida:
21
22 Section 1. Paragraph (e) of subsection (2) of section
23 627.351, Florida Statutes, is amended to read:
24 627.351 Insurance risk apportionment plans.--
25 (2) WINDSTORM INSURANCE RISK APPORTIONMENT.--
26 (e) Notwithstanding the provisions of subparagraph
27 (c)2. or paragraph (d), eligibility shall not be extended to
28 any area that was not eligible on March 1, 1997, except that
29 the department may act with respect to any petition on which a
30 hearing was held prior to May 9, 1997 the effective date of
31 this act. This paragraph is repealed on October 1, 1998.
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1 Section 2. Paragraph (c) is added to subsection (1) of
2 section 627.7013, Florida Statutes, and subsection (2) of said
3 section is amended, to read:
4 627.7013 Orderly markets for personal lines
5 residential property insurance.--
6 (1) FINDINGS AND PURPOSE.--
7 (a) The Legislature finds that personal lines
8 residential property insurers, as a condition of doing
9 business in this state, have a responsibility to contribute to
10 an orderly market for personal lines residential property
11 insurance and that there is a compelling state interest in
12 maintaining an orderly market for personal lines residential
13 property insurance. The Legislature further finds that
14 Hurricane Andrew, which caused over $15 billion of insured
15 losses in South Florida, has reinforced the need of consumers
16 to have reliable homeowner's insurance coverage; however, the
17 enormous monetary impact to insurers of Hurricane Andrew
18 claims has prompted insurers to propose substantial
19 cancellation or nonrenewal of their homeowner's insurance
20 policyholders. The Legislature further finds that the massive
21 cancellations and nonrenewals announced, proposed, or
22 contemplated by certain insurers constitute a significant
23 danger to the public health, safety, and welfare, and
24 destabilize the insurance market. In furtherance of the
25 overwhelming public necessity for an orderly market for
26 property insurance, the Legislature, in chapter 93-401, Laws
27 of Florida, imposed, for a limited time, a moratorium on
28 cancellation or nonrenewal of personal lines residential
29 property insurance policies. The Legislature further finds
30 that upon expiration of the moratorium, additional actions are
31 required to maintain an orderly market for personal lines
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1 residential property insurance in this state. The purposes of
2 this section are to provide for a phaseout of the moratorium
3 and to require advance planning and approval for programs of
4 exposure reduction.
5 (b) The Legislature finds, as of the beginning of the
6 1996 Regular Session of the Legislature, that:
7 1. The conditions described in paragraph (a) remain
8 applicable to the property insurance market in this state in
9 1996 and are likely to remain applicable for several years
10 thereafter.
11 2. The Residential Property and Casualty Joint
12 Underwriting Association, a residual market mechanism created
13 to alleviate temporary unavailability of property insurance
14 coverage, remains the primary or exclusive source of new
15 property insurance coverage in significant portions of the
16 state.
17 3. Recent enactments intended to restore a
18 competitive, private sector property insurance market,
19 including creation and enhancement of the Florida Hurricane
20 Catastrophe Fund, incentives for depopulation of the
21 Residential Property and Casualty Joint Underwriting
22 Association, incentives for hurricane loss mitigation and
23 prevention, creation of the Florida Commission on Hurricane
24 Loss Projection Methodology, and revisions of laws relating to
25 rates and coverages, are beginning to have their intended
26 effects; however, the market instability that persists could
27 frustrate these efforts to restore the market.
28 4. The moratorium completion provided in this section
29 is the least intrusive method for maintaining an orderly
30 market, insofar as it applies only to hurricane-related
31 cancellations and nonrenewals of personal lines residential
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1 policies that were in force on the effective date, and insofar
2 as it allows an insurer annually to nonrenew up to 5 percent
3 of the total number of such policies as of the effective date.
4 (c) The Legislature finds, as of January 1, 1998,
5 that:
6 1. The conditions described in paragraphs (a) and (b)
7 remain applicable to the property insurance market in this
8 state in 1998 and are likely to remain applicable for several
9 years thereafter.
10 2. The general instability of the market is reflected
11 by the following facts:
12 a. In spite of depopulation efforts under which
13 approximately 600,000 policies have been transferred from the
14 Residential Property and Casualty Joint Underwriting
15 Association to the voluntary market, the joint underwriting
16 association, with approximately 500,000 policies in force,
17 remains the primary or exclusive source of new property
18 insurance coverage in significant portions of the state.
19 b. The Florida Windstorm Underwriting Association is
20 growing rapidly, with more than 400,000 policies in force,
21 approximately half of which were initially issued in 1997.
22 3. A further extension of the operation of this
23 section until June 1, 2001, will provide an opportunity for
24 the market to stabilize and for continuation of residual
25 market depopulation efforts.
26 (2) MORATORIUM COMPLETION.--
27 (a) As used in this subsection, the term "total number
28 of policies" means the number of an insurer's policies of a
29 specified type that were in force on June 1, 1996, or the date
30 on which this section became law, whichever was later.
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1 (b) The following restrictions apply only to
2 cancellation or nonrenewal of personal lines residential
3 property insurance policies that were in force on June 1,
4 1996, or the date on which this section became law, whichever
5 was later.
6 1. In any 12-month period, an insurer may not cancel
7 or nonrenew more than 5 percent of such insurer's total number
8 of homeowner's policies, 5 percent of such insurer's total
9 number of mobile home owner's policies, or 5 percent of such
10 insurer's total number of personal lines residential policies
11 of all types and classes in the state for the purpose of
12 reducing the insurer's exposure to hurricane claims and may
13 not, with respect to any county, cancel or nonrenew more than
14 10 percent of its total number of homeowner's policies, 10
15 percent of its total number of mobile home owner's policies,
16 or 10 percent of its total number of personal lines
17 residential policies of all types and classes in the county
18 for the purpose of reducing the insurer's exposure to
19 hurricane claims. This subparagraph does not prohibit any
20 cancellations or nonrenewals of such policies for any other
21 lawful reason unrelated to the risk of loss from hurricane
22 exposure.
23 2.a. If, for any 12-month period, an insurer proposes
24 to cancel or nonrenew personal lines residential policies to
25 an extent not authorized by subparagraph 1. for the purpose of
26 reducing exposure to hurricane claims, the insurer must file a
27 phaseout plan with the department at least 90 days prior to
28 the effective date of the plan. In the plan, the insurer must
29 demonstrate to the department that the insurer is protecting
30 market stability and the interests of its policyholders. The
31 plan may not be implemented unless it is approved by the
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1 department. In developing the plan, the insurer must consider
2 policyholder longevity, the use of voluntary incentives to
3 accomplish the reduction, and geographic distribution. The
4 insurer must demonstrate that under the plan the insurer will
5 not cancel or nonrenew more policies in the 12-month period
6 than the largest number of similar policies the insurer
7 canceled or nonrenewed for any reason in any 12-month period
8 between August 24, 1989, and August 24, 1992.
9 b. If the insurer considers the number of
10 cancellations and nonrenewals under sub-subparagraph a. to be
11 insufficient, the insurer may apply for approval of additional
12 cancellations or nonrenewals on the basis of an unreasonable
13 risk of insolvency. In evaluating a request under this
14 sub-subparagraph, the department shall consider and shall
15 require the insurer to provide information relevant to: the
16 insurer's size, market concentration, and general financial
17 condition; the portion of the insurer's business in this state
18 represented by personal lines residential property insurance;
19 the reasonableness of assumptions with respect to size,
20 frequency, severity, and path of hurricanes; the reinsurance
21 available to the insurer and potential recoveries from the
22 Florida Hurricane Catastrophe Fund; and the extent to which
23 the insurer's assets have been voluntarily transferred by
24 dividend or otherwise from the insurer to its stockholders,
25 parent companies, or affiliated companies since June 1, 1996,
26 or the date on which this section became law, whichever was
27 later. In the implementation of exposure reductions under this
28 sub-subparagraph, the department and the insurer shall
29 consider such factors as policyholder longevity, the use of
30 voluntary incentives to accomplish the exposure reduction, and
31 geographic distribution.
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1 c. A policy shall not be counted as having been
2 canceled or nonrenewed for purposes of this subsection if any
3 of the following apply:
4 (I) The policy was canceled or nonrenewed for an
5 underwriting reason unrelated to the risk of loss from
6 hurricane exposure, nonpayment of premium, or any other lawful
7 reason that is unrelated to the risk of loss from hurricane
8 exposure. The department shall consider the reason specified
9 in the notice of cancellation or nonrenewal to be the reason
10 for the cancellation or nonrenewal unless the department finds
11 by a preponderance of the evidence that the stated reason was
12 not the insurer's actual reason for the cancellation or
13 nonrenewal.
14 (II) The cancellation or nonrenewal was initiated by
15 the insured.
16 (III) The insurer has offered the policyholder
17 replacement or alternative coverage at approved rates, which
18 coverage meets the requirements of the secondary mortgage
19 market.
20 d. In addition to any other cancellations or
21 nonrenewals subject to the limitations in this subsection, a
22 policy shall be considered as having been canceled or
23 nonrenewed for purposes of this subsection if:
24 (I) The insurer implements a rate increase under the
25 use-and-file provisions of s. 627.062(2)(a)2., which rate
26 increase exceeds 150 percent of the increase ultimately
27 approved by the department, and, while the rate filing was
28 pending, the policyholder voluntarily canceled or nonrenewed
29 the policy and obtained replacement coverage from another
30 insurer, including the Residential Property and Casualty Joint
31 Underwriting Association; or
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1 (II) The insurer reduces the commission to an agent by
2 more than 25 percent and the agent thereafter places the risk
3 with another insurer, including the Residential Property and
4 Casualty Joint Underwriting Association, or the Florida
5 Windstorm Underwriting Association, or the Coastal Zone
6 Insurance Plan.
7 e. The department must approve or disapprove an
8 application for a waiver within 90 days after the department
9 receives the application for waiver.
10 3. In addition to the cancellations or nonrenewals
11 authorized under this section, an insurer may cancel or
12 nonrenew policies to the extent authorized by an exemption
13 from or waiver of either the moratorium created by chapter
14 93-401, Laws of Florida, or the moratorium phaseout under
15 former s. 627.7013(2).
16 4. Notwithstanding any provisions of this section to
17 the contrary, this section does not apply to any insurer that,
18 prior to August 24, 1992, filed notice of such insurer's
19 intent to discontinue writing insurance in this state under s.
20 624.430, and for which a finding has been made by the
21 department, the Division of Administrative Hearings of the
22 Department of Management Services, or a court that such notice
23 satisfied all requirements of s. 624.430. Nothing in this
24 section shall be construed to authorize an insurer to withdraw
25 from any line of property insurance business for the purpose
26 of reducing exposure to risk of hurricane loss if such
27 withdrawal commenced at any time that the moratorium under
28 chapter 93-401, Laws of Florida, or the moratorium phaseout
29 under this section is in effect.
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1 5. The following actions by an insurer do not
2 constitute cancellations or nonrenewals for purposes of this
3 subsection:
4 a. The transfer of a risk from one admitted insurer to
5 another admitted insurer, unless the terms of the new or
6 replacement policy place the policyholder in default of a
7 mortgage obligation.
8 b. An increase in the hurricane deductible applicable
9 to the policy, unless the new deductible places the
10 policyholder in default of a mortgage obligation or the
11 deductible exceeds the limits specified in s. 627.701.
12 c. Any other lawful change in coverage that does not
13 place the policyholder in default of a mortgage obligation.
14 d. A cancellation or nonrenewal that is part of the
15 same action as the removal of a policy including windstorm or
16 hurricane coverage from the Residential Property and Casualty
17 Joint Underwriting Association.
18 6. In order to assure fair and effective enforcement
19 of this subsection, each insurer shall, no later than October
20 1, 1996, report to the department the policy number of each
21 policy subject to this subsection, arranged by county. The
22 report shall include the policy number for each personal lines
23 residential policy that was in force on June 1, 1996, or the
24 date this section became law, whichever was later. Beginning
25 October 1, 1996, each insurer shall also report, on a monthly
26 basis, all cancellations and nonrenewals of policies included
27 in such policy list and the reasons for the cancellations and
28 nonrenewals.
29 7. An insurer that has an overconcentration of wind
30 risk in areas eligible for coverage under the Florida
31 Windstorm Underwriting Association may submit to the
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1 department for approval an accelerated exposure reduction
2 plan. The plan, if approved, shall allow the insurer to
3 nonrenew additional policies for reasons of reducing hurricane
4 loss, beyond the amounts authorized elsewhere in this
5 paragraph, subject to the following conditions:
6 a. All additional nonrenewals under this subparagraph
7 shall consist of nonrenewals of only the windstorm portion of
8 a policy, and shall be allowed only if the Florida Windstorm
9 Underwriting Association provides windstorm coverage to
10 replace the nonrenewed windstorm coverage.
11 b. At the conclusion of the accelerated exposure
12 reduction plan, which shall be no later than 12 months after
13 the date of the first nonrenewal under such plan, the insurer
14 is prohibited from any further nonrenewals for purposes of
15 reducing hurricane loss until the expiration of this
16 subsection.
17 c. The total number of nonrenewals statewide for
18 purposes of reduction of hurricane loss, under this
19 subparagraph taken together with the other provisions of this
20 paragraph, shall not exceed the total number of nonrenewals
21 that would have been allowed statewide under subparagraph 1.
22 between June 1, 1996, and the expiration of this subsection.
23 d. Notwithstanding the provisions of s. 627.4133, the
24 insurer must give the policyholder 45 days' advance notice of
25 the nonrenewal of windstorm coverage under this subparagraph
26 and the availability of such coverage through the Florida
27 Windstorm Underwriting Association.
28 e. The first nonrenewal under an accelerated exposure
29 reduction program under this subparagraph may not take effect
30 earlier than February 1, 1997.
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1 f. In reviewing the proposed accelerated exposure
2 reduction plan, the department shall consider:
3 (I) The degree to which the exposure reduction plan is
4 necessary to address the insurer's overconcentration.
5 (II) Prior levels of participation in writing
6 voluntary wind coverage in areas eligible for coverage through
7 the Florida Windstorm Underwriting Association.
8 (III) The availability of wind coverage in the
9 voluntary market for the subject risks.
10 (IV) The capacity of the Florida Windstorm
11 Underwriting Association to absorb the risks proposed to be
12 covered by the association.
13 (c) The department may adopt rules to implement this
14 subsection.
15 (d) This section shall cease to operate at such time
16 as the department determines that the insured value of all
17 residential properties insured by the Florida Windstorm
18 Underwriting Association and all properties insured by the
19 Residential Property and Casualty Joint Underwriting
20 Association under policies providing wind coverage, combined,
21 has remained below $25 billion for 3 consecutive months, based
22 on exposure data reported to the department by the
23 associations.
24 (e)(d) This subsection is repealed on June 1, 2001
25 1999.
26 Section 3. Section 627.7014, Florida Statutes, is
27 amended to read:
28 627.7014 Orderly markets for condominium association
29 residential property insurance.--
30 (1) FINDINGS AND PURPOSE.--
31 (a) The Legislature finds:
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1 1. That residential property insurers providing
2 condominium association coverage, as a condition of doing
3 business in this state, have a responsibility to contribute to
4 an orderly market for condominium association residential
5 property insurance and that there is a compelling state
6 interest in maintaining an orderly market for condominium
7 association residential property insurance.
8 2. That Hurricane Andrew, which caused over $15
9 billion of insured losses in South Florida, has reinforced the
10 need of consumers to have reliable condominium association
11 insurance coverage; however, even more than 3 years after
12 Hurricane Andrew, the hurricane's enormous monetary impact is
13 causing insurers to propose substantial cancellation or
14 nonrenewal of their condominium association insurance
15 policyholders.
16 3. That the massive cancellations and nonrenewals
17 announced, proposed, or contemplated by certain insurers
18 constitute a significant danger to the public health, safety,
19 and welfare and destabilize the insurance market.
20 4. That the Residential Property and Casualty Joint
21 Underwriting Association, a residual market mechanism created
22 to alleviate temporary unavailability of property insurance
23 coverage, remains the primary or exclusive source of new
24 property insurance in significant portions of the state.
25 5. That recent enactments intended to restore a
26 competitive, private sector property insurance market,
27 including creation and enhancement of the Florida Hurricane
28 Catastrophe Fund, incentives for depopulation of the
29 Residential Property and Casualty Joint Underwriting
30 Association, incentives for hurricane loss mitigation and
31 prevention, creation of the Florida Commission on Hurricane
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1 Loss Projection Methodology, and revisions of laws relating to
2 rates and coverages, are beginning to have their intended
3 effects; however, the market remains unstable.
4 6. That the moratorium created by this section is the
5 least intrusive method for maintaining an orderly market for
6 condominium association insurance, insofar as it applies only
7 to hurricane-related cancellations and nonrenewals of personal
8 lines residential policies that were in force on the effective
9 date of this section, and insofar as it allows an insurer
10 annually to nonrenew up to 5 percent of the total number of
11 such policies as of the effective date of this section.
12 (b) The Legislature finds, as of January 1, 1998,
13 that:
14 1. The conditions described in paragraph (a) remain
15 applicable to the commercial residential property insurance
16 market in this state in 1998 and are likely to remain
17 applicable for several years thereafter.
18 2. The general instability of the market is reflected
19 by the recent rapid growth of the Florida Windstorm
20 Underwriting Association, which had more than 9,500 commercial
21 residential policies in force as of December 31, 1997,
22 representing a 58 percent increase over the number of
23 commercial residential policies in force on December 31, 1996.
24 3. An extension of the operation of this section until
25 June 1, 2001, will provide an opportunity for the market to
26 stabilize and for continuation of residual market depopulation
27 efforts.
28 (c)(b) The purposes of this section are to provide for
29 a temporary moratorium on hurricane-related cancellations and
30 nonrenewals of condominium association coverage and to require
31
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1 advance planning and approval for programs of condominium
2 association exposure reduction.
3 (2) MORATORIUM.--
4 (a) As used in this subsection, the term "total number
5 of policies" means the number of an insurer's condominium
6 association policies providing windstorm or hurricane coverage
7 that were in force on the effective date of this section. The
8 following restrictions apply to the cancellation or nonrenewal
9 of condominium association residential property insurance
10 policies that were in force on the effective date of this
11 section:
12 1. In any 12-month period, an insurer may not cancel
13 or nonrenew more than 5 percent of its total number of
14 condominium association policies in the state for the purpose
15 of reducing the insurer's exposure to hurricane claims and may
16 not, with respect to any county, cancel or nonrenew more than
17 10 percent of its total number of condominium association
18 policies in the county for the purpose of reducing the
19 insurer's exposure to hurricane claims. This subparagraph does
20 not prohibit any cancellations or nonrenewals of such policies
21 for any other lawful reason unrelated to the risk of loss from
22 hurricane exposure.
23 2.a. If, for any 12-month period, an insurer proposes
24 to cancel or nonrenew condominium association policies to an
25 extent not authorized by subparagraph 1. for the purpose of
26 reducing exposure to hurricane claims, the insurer must file a
27 phaseout plan with the department at least 90 days prior to
28 the effective date of the plan. In the plan, the insurer must
29 demonstrate to the department that the insurer is protecting
30 market stability and the interests of its policyholders. The
31 plan may not be implemented unless it is approved by the
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1 department. In developing the plan, the insurer must consider
2 policyholder longevity, the use of voluntary incentives to
3 accomplish the reduction, and geographic distribution. The
4 insurer must demonstrate that under the plan the insurer will
5 not cancel or nonrenew more policies in the 12-month period
6 than the largest number of similar policies the insurer
7 canceled or nonrenewed for any reason in any 12-month period
8 between August 24, 1989, and August 24, 1992.
9 b. If the insurer considers the number of
10 cancellations and nonrenewals under sub-subparagraph a. to be
11 insufficient, the insurer may apply for approval of additional
12 cancellations or nonrenewals on the basis of an unreasonable
13 risk of insolvency. In evaluating a request under this
14 sub-subparagraph, the department shall consider, and shall
15 require the insurer to provide information relevant to: the
16 insurer's size, market concentration, and general financial
17 condition; the portion of the insurer's business in this state
18 represented by condominium association residential property
19 insurance; the reasonableness of assumptions with respect to
20 size, frequency, severity, and path of hurricanes; and the
21 reinsurance available to the insurer and potential recoveries
22 from the Florida Hurricane Catastrophe Fund. In the
23 implementation of exposure reductions under this
24 sub-subparagraph, the department and the insurer shall
25 consider such factors as policyholder longevity, the use of
26 voluntary incentives to accomplish the exposure reduction, and
27 geographic distribution.
28 c. A policy shall not be counted as having been
29 canceled or nonrenewed for purposes of this subsection if any
30 of the following apply:
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1 (I) The policy was canceled or nonrenewed for an
2 underwriting reason unrelated to the risk of loss from
3 hurricane exposure, nonpayment of premium, or any other lawful
4 reason that is unrelated to the risk of loss from hurricane
5 exposure. The department shall consider the reason specified
6 in the notice of cancellation or nonrenewal to be the reason
7 for the cancellation or nonrenewal unless the department finds
8 by a preponderance of the evidence that the stated reason was
9 not the insurer's actual reason for the cancellation or
10 nonrenewal.
11 (II) The cancellation or nonrenewal was initiated by
12 the insured.
13 (III) The insurer has offered the policyholder
14 replacement or alternative coverage at approved rates.
15 (IV) The risk is transferred from one admitted insurer
16 to another admitted insurer, unless the terms of the new or
17 replacement policy place the policyholder in default of a
18 mortgage obligation.
19 (V) The hurricane deductible applicable to the policy
20 is increased unless the new deductible exceeds statutory
21 limits or places the policyholder in default of a mortgage
22 obligation.
23 (VI) Any other lawful change in coverage that does not
24 place the policyholder in default of a mortgage obligation is
25 made.
26 d. In addition to any other cancellations or
27 nonrenewals subject to the limitations in this subsection, a
28 policy shall be considered as having been canceled or
29 nonrenewed for purposes of this subsection if:
30 (I) The insurer implements a rate increase under the
31 use-and-file provisions of s. 627.062(2)(a)2., which rate
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1 increase exceeds 150 percent of the increase ultimately
2 approved by the department, and, while the rate filing was
3 pending, the policyholder voluntarily canceled or nonrenewed
4 the policy and obtained replacement coverage from another
5 insurer, including the Residential Property and Casualty Joint
6 Underwriting Association; or
7 (II) The insurer reduces the commission to an agent by
8 more than 25 percent and the agent thereafter places the risk
9 with another insurer, including the Residential Property and
10 Casualty Joint Underwriting Association.
11 e. The department must approve or disapprove an
12 application for a waiver within 90 days after the department
13 receives the application for waiver.
14 3. Notwithstanding any provisions of this section to
15 the contrary, this section does not apply to any insurer that,
16 prior to August 24, 1992, filed notice of such insurer's
17 intent to discontinue writing insurance in this state under s.
18 624.430, and for which a finding has been made by the
19 department, the Division of Administrative Hearings of the
20 Department of Management Services, or a court that such notice
21 satisfied all requirements of s. 624.430. This section also
22 does not apply to any insurer that:
23 a. Collects at least 75 percent of its Florida
24 premiums from policies that include hurricane coverage
25 provided to condominium associations in coastal counties.
26 b. Collects at least 80 percent of its Florida
27 premiums from policies that include hurricane coverage
28 provided to condominium associations in Broward, Dade, and
29 Palm Beach Counties.
30 c. Has, annually since 1992:
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1 (I) Increased its aggregate Florida premium volume
2 from policies that include hurricane coverage provided to
3 condominium associations in coastal counties.
4 (II) Increased its aggregate Florida premium volume
5 from policies that include hurricane coverage provided to
6 condominium associations in Broward, Dade, and Palm Beach
7 Counties.
8 (III) Increased its aggregate Florida exposure from
9 policies that include hurricane coverage provided to
10 condominium associations in coastal counties.
11 (IV) Increased its aggregate Florida exposure from
12 policies that include hurricane coverage provided to
13 condominium associations in Broward, Dade, and Palm Beach
14 Counties.
15 d. Has surplus as to policyholders of no more than
16 $200 million as reflected in its annual statement for 1995.
17 4. In order to assure fair and effective enforcement
18 of this subsection, each insurer shall, no later than October
19 1, 1996, report to the department the policy number of each
20 policy subject to this subsection, arranged by county. The
21 report shall include the policy number for each condominium
22 association policy that was in force on the effective date of
23 this section. Beginning October 1, 1996, each insurer shall
24 also report, on a monthly basis, all cancellations and
25 nonrenewals of policies included in such policy list and the
26 reasons for the cancellations and nonrenewals.
27 5. An insurer that has an overconcentration of wind
28 risk in areas eligible for coverage under the Florida
29 Windstorm Underwriting Association may submit to the
30 department for approval an accelerated exposure reduction
31 plan. The plan, if approved, shall allow the insurer to
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1 nonrenew additional policies for reasons of reducing hurricane
2 loss, beyond the amounts authorized elsewhere in this
3 paragraph, subject to the following conditions:
4 a. All additional nonrenewals under this subparagraph
5 shall consist of nonrenewals of only the windstorm portion of
6 a policy, and shall be allowed only if the Florida Windstorm
7 Underwriting Association provides windstorm coverage to
8 replace the nonrenewed windstorm coverage.
9 b. At the conclusion of the accelerated exposure
10 reduction plan, which shall be no later than 12 months after
11 the date of the first nonrenewal under such plan, the insurer
12 is prohibited from any further nonrenewals for purposes of
13 reducing hurricane loss until the expiration of this
14 subsection.
15 c. The total number of nonrenewals statewide for
16 purposes of reduction of hurricane loss, under this
17 subparagraph taken together with the other provisions of this
18 paragraph, shall not exceed the total number of nonrenewals
19 that would have been allowed statewide under subparagraph 1.
20 between June 1, 1996, and the expiration of this subsection.
21 d. Notwithstanding the provisions of s. 627.4133, the
22 insurer must give the policyholder 45 days' advance notice of
23 the nonrenewal of windstorm coverage under this subparagraph
24 and the availability of such coverage through the Florida
25 Windstorm Underwriting Association.
26 e. The first nonrenewal under an accelerated exposure
27 reduction program under this subparagraph may not take effect
28 earlier than February 1, 1997.
29 f. In reviewing the proposed accelerated exposure
30 reduction plan, the department shall consider:
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1 (I) The degree to which the exposure reduction plan is
2 necessary to address the insurer's overconcentration.
3 (II) Prior levels of participation in writing
4 voluntary wind coverage in areas eligible for coverage through
5 the Florida Windstorm Underwriting Association.
6 (III) The availability of wind coverage in the
7 voluntary market for the subject risks.
8 (IV) The capacity of the Florida Windstorm
9 Underwriting Association to absorb the risks proposed to be
10 covered by the association.
11 (b) The department may adopt rules to implement this
12 subsection.
13 (c) This section shall cease to operate at such time
14 as the department determines that the insured value of all
15 residential properties insured by the Florida Windstorm
16 Underwriting Association and all properties insured by the
17 Residential Property and Casualty Joint Underwriting
18 Association under policies providing wind coverage, combined,
19 has remained below $25 billion for 3 consecutive months, based
20 on exposure data reported to the department by the
21 associations.
22 (d)(c) This subsection is repealed on June 1, 2001
23 1999.
24 Section 4. Section 627.7019, Florida Statutes, is
25 created to read:
26 627.7019 Required notice of potential assessment
27 liability.--The application form and the renewal premium
28 notice for any policy of residential property insurance must
29 contain or be accompanied by the following notice in boldface
30 type no smaller than 14 points:
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1 POTENTIAL ASSESSMENT LIABILITY.--All Florida
2 residential property insurance policyholders
3 are potentially subject to assessments or
4 surcharges to defray deficits of the
5 Residential Property and Casualty Joint
6 Underwriting Association (RPCJUA) or the
7 Florida Windstorm Underwriting Association
8 (FWUA), or to fund bonds issued by the Florida
9 Hurricane Catastrophe Fund (FHCF).
10 Section 5. This act shall take effect October 1 of the
11 year in which enacted.
12
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14 HOUSE SUMMARY
15
Prohibits further geographical expansion of Florida
16 Windstorm Underwriting Association eligibility. Provides
findings relating to the moratorium on hurricane-related
17 cancellations and nonrenewals of personal lines
residential policies and condominium association
18 policies. Deletes provisions relating to accelerated
exposure reduction plans, provides circumstances under
19 which the section is inoperative, and delays the future
repeal date of the section. Specifies a required notice
20 on insurance applications and renewal premium notices.
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