Senate Bill 0144c1

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    Florida Senate - 2000                            CS for SB 144

    By the Committee on Banking and Insurance; and Senator
    Campbell




    311-2173-00

  1                      A bill to be entitled

  2         An act relating to insurance; amending s.

  3         627.351, F.S.; deleting provisions authorizing

  4         certain associations to require rate

  5         arbitration of rate filings; amending s.

  6         631.54, F.S.; revising the definition of the

  7         term "covered claim" for purposes of the

  8         Florida Insurance Guaranty Association;

  9         amending s. 631.57, F.S.; providing that the

10         Florida Residential Property and Casualty Joint

11         Underwriting Association is exempt from

12         assessments by the Florida Insurance Guaranty

13         Association, except for assessments to pay or

14         defease costs of bond issues; requiring the

15         Department of Revenue to conduct a study and

16         submit a report to the Legislature related to

17         distributing premium taxes to local

18         governments; prohibiting the Department of

19         Insurance from auditing insurers with respect

20         to certain data; repealing s. 627.062(6), F.S.,

21         relating to an insurer's alternative under rate

22         standards to require arbitration of rate

23         filings; providing an effective date.

24

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

26

27         Section 1.  Paragraph (b) of subsection (2) and

28  paragraph (d) of subsection (6) of section 627.351, Florida

29  Statutes, are amended to read:

30         627.351  Insurance risk apportionment plans.--

31         (2)  WINDSTORM INSURANCE RISK APPORTIONMENT.--

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  1         (b)  The department shall require all insurers holding

  2  a certificate of authority to transact property insurance on a

  3  direct basis in this state, other than joint underwriting

  4  associations and other entities formed pursuant to this

  5  section, to provide windstorm coverage to applicants from

  6  areas determined to be eligible pursuant to paragraph (c) who

  7  in good faith are entitled to, but are unable to procure, such

  8  coverage through ordinary means; or it shall adopt a

  9  reasonable plan or plans for the equitable apportionment or

10  sharing among such insurers of windstorm coverage, which may

11  include formation of an association for this purpose. As used

12  in this subsection, the term "property insurance" means

13  insurance on real or personal property, as defined in s.

14  624.604, including insurance for fire, industrial fire, allied

15  lines, farmowners multiperil, homeowners' multiperil,

16  commercial multiperil, and mobile homes, and including

17  liability coverages on all such insurance, but excluding

18  inland marine as defined in s. 624.607(3) and excluding

19  vehicle insurance as defined in s. 624.605(1)(a) other than

20  insurance on mobile homes used as permanent dwellings. The

21  department shall adopt rules that provide a formula for the

22  recovery and repayment of any deferred assessments.

23         1.  For the purpose of this section, properties

24  eligible for such windstorm coverage are defined as dwellings,

25  buildings, and other structures, including mobile homes which

26  are used as dwellings and which are tied down in compliance

27  with mobile home tie-down requirements prescribed by the

28  Department of Highway Safety and Motor Vehicles pursuant to s.

29  320.8325, and the contents of all such properties. An

30  applicant or policyholder is eligible for coverage only if an

31

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  1  offer of coverage cannot be obtained by or for the applicant

  2  or policyholder from an admitted insurer at approved rates.

  3         2.a.(I)  All insurers required to be members of such

  4  association shall participate in its writings, expenses, and

  5  losses. Surplus of the association shall be retained for the

  6  payment of claims and shall not be distributed to the member

  7  insurers. Such participation by member insurers shall be in

  8  the proportion that the net direct premiums of each member

  9  insurer written for property insurance in this state during

10  the preceding calendar year bear to the aggregate net direct

11  premiums for property insurance of all member insurers, as

12  reduced by any credits for voluntary writings, in this state

13  during the preceding calendar year. For the purposes of this

14  subsection, the term "net direct premiums" means direct

15  written premiums for property insurance, reduced by premium

16  for liability coverage and for the following if included in

17  allied lines: rain and hail on growing crops; livestock;

18  association direct premiums booked; National Flood Insurance

19  Program direct premiums; and similar deductions specifically

20  authorized by the plan of operation and approved by the

21  department. A member's participation shall begin on the first

22  day of the calendar year following the year in which it is

23  issued a certificate of authority to transact property

24  insurance in the state and shall terminate 1 year after the

25  end of the calendar year during which it no longer holds a

26  certificate of authority to transact property insurance in the

27  state. The commissioner, after review of annual statements,

28  other reports, and any other statistics that the commissioner

29  deems necessary, shall certify to the association the

30  aggregate direct premiums written for property insurance in

31  this state by all member insurers.

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  1         (II)  The plan of operation shall provide for a board

  2  of directors consisting of the Insurance Consumer Advocate

  3  appointed under s. 627.0613, 1 consumer representative

  4  appointed by the Insurance Commissioner, 1 consumer

  5  representative appointed by the Governor, and 12 additional

  6  members appointed as specified in the plan of operation. One

  7  of the 12 additional members shall be elected by the domestic

  8  companies of this state on the basis of cumulative weighted

  9  voting based on the net direct premiums of domestic companies

10  in this state. Nothing in the 1997 amendments to this

11  paragraph terminates the existing board or the terms of any

12  members of the board.

13         (III)  The plan of operation shall provide a formula

14  whereby a company voluntarily providing windstorm coverage in

15  affected areas will be relieved wholly or partially from

16  apportionment of a regular assessment pursuant to

17  sub-sub-subparagraph d.(I) or sub-sub-subparagraph d.(II).

18         (IV)  A company which is a member of a group of

19  companies under common management may elect to have its

20  credits applied on a group basis, and any company or group may

21  elect to have its credits applied to any other company or

22  group.

23         (V)  There shall be no credits or relief from

24  apportionment to a company for emergency assessments collected

25  from its policyholders under sub-sub-subparagraph d.(III).

26         (VI)  The plan of operation may also provide for the

27  award of credits, for a period not to exceed 3 years, from a

28  regular assessment pursuant to sub-sub-subparagraph d.(I) or

29  sub-sub-subparagraph d.(II) as an incentive for taking

30  policies out of the Residential Property and Casualty Joint

31  Underwriting Association.  In order to qualify for the

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  1  exemption under this sub-sub-subparagraph, the take-out plan

  2  must provide that at least 40 percent of the policies removed

  3  from the Residential Property and Casualty Joint Underwriting

  4  Association cover risks located in Dade, Broward, and Palm

  5  Beach Counties or at least 30 percent of the policies so

  6  removed cover risks located in Dade, Broward, and Palm Beach

  7  Counties and an additional 50 percent of the policies so

  8  removed cover risks located in other coastal counties, and

  9  must also provide that no more than 15 percent of the policies

10  so removed may exclude windstorm coverage.  With the approval

11  of the department, the association may waive these geographic

12  criteria for a take-out plan that removes at least the lesser

13  of 100,000 Residential Property and Casualty Joint

14  Underwriting Association policies or 15 percent of the total

15  number of Residential Property and Casualty Joint Underwriting

16  Association policies, provided the governing board of the

17  Residential Property and Casualty Joint Underwriting

18  Association certifies that the take-out plan will materially

19  reduce the Residential Property and Casualty Joint

20  Underwriting Association's 100-year probable maximum loss from

21  hurricanes.  With the approval of the department, the board

22  may extend such credits for an additional year if the insurer

23  guarantees an additional year of renewability for all policies

24  removed from the Residential Property and Casualty Joint

25  Underwriting Association, or for 2 additional years if the

26  insurer guarantees 2 additional years of renewability for all

27  policies removed from the Residential Property and Casualty

28  Joint Underwriting Association.

29         b.  Assessments to pay deficits in the association

30  under this subparagraph shall be included as an appropriate

31  factor in the making of rates as provided in s. 627.3512.

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  1         c.  The Legislature finds that the potential for

  2  unlimited deficit assessments under this subparagraph may

  3  induce insurers to attempt to reduce their writings in the

  4  voluntary market, and that such actions would worsen the

  5  availability problems that the association was created to

  6  remedy. It is the intent of the Legislature that insurers

  7  remain fully responsible for paying regular assessments and

  8  collecting emergency assessments for any deficits of the

  9  association; however, it is also the intent of the Legislature

10  to provide a means by which assessment liabilities may be

11  amortized over a period of years.

12         d.(I)  When the deficit incurred in a particular

13  calendar year is 10 percent or less of the aggregate statewide

14  direct written premium for property insurance for the prior

15  calendar year for all member insurers, the association shall

16  levy an assessment on member insurers in an amount equal to

17  the deficit.

18         (II)  When the deficit incurred in a particular

19  calendar year exceeds 10 percent of the aggregate statewide

20  direct written premium for property insurance for the prior

21  calendar year for all member insurers, the association shall

22  levy an assessment on member insurers in an amount equal to

23  the greater of 10 percent of the deficit or 10 percent of the

24  aggregate statewide direct written premium for property

25  insurance for the prior calendar year for member insurers. Any

26  remaining deficit shall be recovered through emergency

27  assessments under sub-sub-subparagraph (III).

28         (III)  Upon a determination by the board of directors

29  that a deficit exceeds the amount that will be recovered

30  through regular assessments on member insurers, pursuant to

31  sub-sub-subparagraph (I) or sub-sub-subparagraph (II), the

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  1  board shall levy, after verification by the department,

  2  emergency assessments to be collected by member insurers and

  3  by underwriting associations created pursuant to this section

  4  which write property insurance, upon issuance or renewal of

  5  property insurance policies other than National Flood

  6  Insurance policies in the year or years following levy of the

  7  regular assessments. The amount of the emergency assessment

  8  collected in a particular year shall be a uniform percentage

  9  of that year's direct written premium for property insurance

10  for all member insurers and underwriting associations,

11  excluding National Flood Insurance policy premiums, as

12  annually determined by the board and verified by the

13  department. The department shall verify the arithmetic

14  calculations involved in the board's determination within 30

15  days after receipt of the information on which the

16  determination was based. Notwithstanding any other provision

17  of law, each member insurer and each underwriting association

18  created pursuant to this section shall collect emergency

19  assessments from its policyholders without such obligation

20  being affected by any credit, limitation, exemption, or

21  deferment.  The emergency assessments so collected shall be

22  transferred directly to the association on a periodic basis as

23  determined by the association. The aggregate amount of

24  emergency assessments levied under this sub-sub-subparagraph

25  in any calendar year may not exceed the greater of 10 percent

26  of the amount needed to cover the original deficit, plus

27  interest, fees, commissions, required reserves, and other

28  costs associated with financing of the original deficit, or 10

29  percent of the aggregate statewide direct written premium for

30  property insurance written by member insurers and underwriting

31  associations for the prior year, plus interest, fees,

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  1  commissions, required reserves, and other costs associated

  2  with financing the original deficit. The board may pledge the

  3  proceeds of the emergency assessments under this

  4  sub-sub-subparagraph as the source of revenue for bonds, to

  5  retire any other debt incurred as a result of the deficit or

  6  events giving rise to the deficit, or in any other way that

  7  the board determines will efficiently recover the deficit. The

  8  emergency assessments under this sub-sub-subparagraph shall

  9  continue as long as any bonds issued or other indebtedness

10  incurred with respect to a deficit for which the assessment

11  was imposed remain outstanding, unless adequate provision has

12  been made for the payment of such bonds or other indebtedness

13  pursuant to the document governing such bonds or other

14  indebtedness. Emergency assessments collected under this

15  sub-sub-subparagraph are not part of an insurer's rates, are

16  not premium, and are not subject to premium tax, fees, or

17  commissions; however, failure to pay the emergency assessment

18  shall be treated as failure to pay premium.

19         (IV)  Each member insurer's share of the total regular

20  assessments under sub-sub-subparagraph (I) or

21  sub-sub-subparagraph (II) shall be in the proportion that the

22  insurer's net direct premium for property insurance in this

23  state, for the year preceding the assessment bears to the

24  aggregate statewide net direct premium for property insurance

25  of all member insurers, as reduced by any credits for

26  voluntary writings for that year.

27         (V)  If regular deficit assessments are made under

28  sub-sub-subparagraph (I) or sub-sub-subparagraph (II), or by

29  the Residential Property and Casualty Joint Underwriting

30  Association under sub-subparagraph (6)(b)3.a. or

31  sub-subparagraph (6)(b)3.b., the association shall levy upon

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  1  the association's policyholders, as part of its next rate

  2  filing, or by a separate rate filing solely for this purpose,

  3  a market equalization surcharge in a percentage equal to the

  4  total amount of such regular assessments divided by the

  5  aggregate statewide direct written premium for property

  6  insurance for member insurers for the prior calendar year.

  7  Market equalization surcharges under this sub-sub-subparagraph

  8  are not considered premium and are not subject to commissions,

  9  fees, or premium taxes; however, failure to pay a market

10  equalization surcharge shall be treated as failure to pay

11  premium.

12         e.  The governing body of any unit of local government,

13  any residents of which are insured under the plan, may issue

14  bonds as defined in s. 125.013 or s. 166.101 to fund an

15  assistance program, in conjunction with the association, for

16  the purpose of defraying deficits of the association. In order

17  to avoid needless and indiscriminate proliferation,

18  duplication, and fragmentation of such assistance programs,

19  any unit of local government, any residents of which are

20  insured by the association, may provide for the payment of

21  losses, regardless of whether or not the losses occurred

22  within or outside of the territorial jurisdiction of the local

23  government. Revenue bonds may not be issued until validated

24  pursuant to chapter 75, unless a state of emergency is

25  declared by executive order or proclamation of the Governor

26  pursuant to s. 252.36 making such findings as are necessary to

27  determine that it is in the best interests of, and necessary

28  for, the protection of the public health, safety, and general

29  welfare of residents of this state and the protection and

30  preservation of the economic stability of insurers operating

31  in this state, and declaring it an essential public purpose to

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  1  permit certain municipalities or counties to issue bonds as

  2  will provide relief to claimants and policyholders of the

  3  association and insurers responsible for apportionment of plan

  4  losses. Any such unit of local government may enter into such

  5  contracts with the association and with any other entity

  6  created pursuant to this subsection as are necessary to carry

  7  out this paragraph. Any bonds issued under this

  8  sub-subparagraph shall be payable from and secured by moneys

  9  received by the association from assessments under this

10  subparagraph, and assigned and pledged to or on behalf of the

11  unit of local government for the benefit of the holders of

12  such bonds. The funds, credit, property, and taxing power of

13  the state or of the unit of local government shall not be

14  pledged for the payment of such bonds. If any of the bonds

15  remain unsold 60 days after issuance, the department shall

16  require all insurers subject to assessment to purchase the

17  bonds, which shall be treated as admitted assets; each insurer

18  shall be required to purchase that percentage of the unsold

19  portion of the bond issue that equals the insurer's relative

20  share of assessment liability under this subsection. An

21  insurer shall not be required to purchase the bonds to the

22  extent that the department determines that the purchase would

23  endanger or impair the solvency of the insurer. The authority

24  granted by this sub-subparagraph is additional to any bonding

25  authority granted by subparagraph 6.

26         3.  The plan shall also provide that any member with a

27  surplus as to policyholders of $20 million or less writing 25

28  percent or more of its total countrywide property insurance

29  premiums in this state may petition the department, within the

30  first 90 days of each calendar year, to qualify as a limited

31  apportionment company. The apportionment of such a member

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  1  company in any calendar year for which it is qualified shall

  2  not exceed its gross participation, which shall not be

  3  affected by the formula for voluntary writings. In no event

  4  shall a limited apportionment company be required to

  5  participate in any apportionment of losses pursuant to

  6  sub-sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II)

  7  in the aggregate which exceeds $50 million after payment of

  8  available plan funds in any calendar year. However, a limited

  9  apportionment company shall collect from its policyholders any

10  emergency assessment imposed under sub-sub-subparagraph

11  2.d.(III). The plan shall provide that, if the department

12  determines that any regular assessment will result in an

13  impairment of the surplus of a limited apportionment company,

14  the department may direct that all or part of such assessment

15  be deferred. However, there shall be no limitation or

16  deferment of an emergency assessment to be collected from

17  policyholders under sub-sub-subparagraph 2.d.(III).

18         4.  The plan shall provide for the deferment, in whole

19  or in part, of a regular assessment of a member insurer under

20  sub-sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II),

21  but not for an emergency assessment collected from

22  policyholders under sub-sub-subparagraph 2.d.(III), if, in the

23  opinion of the commissioner, payment of such regular

24  assessment would endanger or impair the solvency of the member

25  insurer. In the event a regular assessment against a member

26  insurer is deferred in whole or in part, the amount by which

27  such assessment is deferred may be assessed against the other

28  member insurers in a manner consistent with the basis for

29  assessments set forth in sub-sub-subparagraph 2.d.(I) or

30  sub-sub-subparagraph 2.d.(II).

31

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  1         5.a.  The plan of operation may include deductibles and

  2  rules for classification of risks and rate modifications

  3  consistent with the objective of providing and maintaining

  4  funds sufficient to pay catastrophe losses.

  5         b.  The association may require arbitration of a rate

  6  filing under s. 627.062(6). It is the intent of the

  7  Legislature that the rates for coverage provided by the

  8  association be actuarially sound and not competitive with

  9  approved rates charged in the admitted voluntary market such

10  that the association functions as a residual market mechanism

11  to provide insurance only when the insurance cannot be

12  procured in the voluntary market.  The plan of operation shall

13  provide a mechanism to assure that, beginning no later than

14  January 1, 1999, the rates charged by the association for each

15  line of business are reflective of approved rates in the

16  voluntary market for hurricane coverage for each line of

17  business in the various areas eligible for association

18  coverage.

19         c.  The association shall provide for windstorm

20  coverage on residential properties in limits up to $10 million

21  for commercial lines residential risks and up to $1 million

22  for personal lines residential risks. If coverage with the

23  association is sought for a residential risk valued in excess

24  of these limits, coverage shall be available to the risk up to

25  the replacement cost or actual cash value of the property, at

26  the option of the insured, if coverage for the risk cannot be

27  located in the authorized market. The association must accept

28  a commercial lines residential risk with limits above $10

29  million or a personal lines residential risk with limits above

30  $1 million if coverage is not available in the authorized

31  market.  The association may write coverage above the limits

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  1  specified in this subparagraph with or without facultative or

  2  other reinsurance coverage, as the association determines

  3  appropriate.

  4         d.  The plan of operation must provide objective

  5  criteria and procedures, approved by the department, to be

  6  uniformly applied for all applicants in determining whether an

  7  individual risk is so hazardous as to be uninsurable. In

  8  making this determination and in establishing the criteria and

  9  procedures, the following shall be considered:

10         (I)  Whether the likelihood of a loss for the

11  individual risk is substantially higher than for other risks

12  of the same class; and

13         (II)  Whether the uncertainty associated with the

14  individual risk is such that an appropriate premium cannot be

15  determined.

16

17  The acceptance or rejection of a risk by the association

18  pursuant to such criteria and procedures must be construed as

19  the private placement of insurance, and the provisions of

20  chapter 120 do not apply.

21         e.  The policies issued by the association must provide

22  that if the association obtains an offer from an authorized

23  insurer to cover the risk at its approved rates under either a

24  standard policy including wind coverage or, if consistent with

25  the insurer's underwriting rules as filed with the department,

26  a basic policy including wind coverage, the risk is no longer

27  eligible for coverage through the association. Upon

28  termination of eligibility, the association shall provide

29  written notice to the policyholder and agent of record stating

30  that the association policy must be canceled as of 60 days

31  after the date of the notice because of the offer of coverage

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  1  from an authorized insurer. Other provisions of the insurance

  2  code relating to cancellation and notice of cancellation do

  3  not apply to actions under this sub-subparagraph.

  4         f.  Association policies and applications must include

  5  a notice that the association policy could, under this

  6  section, be replaced with a policy issued by an authorized

  7  insurer that does not provide coverage identical to the

  8  coverage provided by the association. The notice shall also

  9  specify that acceptance of association coverage creates a

10  conclusive presumption that the applicant or policyholder is

11  aware of this potential.

12         6.a.  The plan of operation may authorize the formation

13  of a private nonprofit corporation, a private nonprofit

14  unincorporated association, a partnership, a trust, a limited

15  liability company, or a nonprofit mutual company which may be

16  empowered, among other things, to borrow money by issuing

17  bonds or by incurring other indebtedness and to accumulate

18  reserves or funds to be used for the payment of insured

19  catastrophe losses. The plan may authorize all actions

20  necessary to facilitate the issuance of bonds, including the

21  pledging of assessments or other revenues.

22         b.  Any entity created under this subsection, or any

23  entity formed for the purposes of this subsection, may sue and

24  be sued, may borrow money; issue bonds, notes, or debt

25  instruments; pledge or sell assessments, market equalization

26  surcharges and other surcharges, rights, premiums, contractual

27  rights, projected recoveries from the Florida Hurricane

28  Catastrophe Fund, other reinsurance recoverables, and other

29  assets as security for such bonds, notes, or debt instruments;

30  enter into any contracts or agreements necessary or proper to

31  accomplish such borrowings; and take other actions necessary

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  1  to carry out the purposes of this subsection. The association

  2  may issue bonds or incur other indebtedness, or have bonds

  3  issued on its behalf by a unit of local government pursuant to

  4  subparagraph (g)2., in the absence of a hurricane or other

  5  weather-related event, upon a determination by the association

  6  subject to approval by the department that such action would

  7  enable it to efficiently meet the financial obligations of the

  8  association and that such financings are reasonably necessary

  9  to effectuate the requirements of this subsection. Any such

10  entity may accumulate reserves and retain surpluses as of the

11  end of any association year to provide for the payment of

12  losses incurred by the association during that year or any

13  future year. The association shall incorporate and continue

14  the plan of operation and articles of agreement in effect on

15  the effective date of chapter 76-96, Laws of Florida, to the

16  extent that it is not inconsistent with chapter 76-96, and as

17  subsequently modified consistent with chapter 76-96. The board

18  of directors and officers currently serving shall continue to

19  serve until their successors are duly qualified as provided

20  under the plan. The assets and obligations of the plan in

21  effect immediately prior to the effective date of chapter

22  76-96 shall be construed to be the assets and obligations of

23  the successor plan created herein.

24         c.  In recognition of s. 10, Art. I of the State

25  Constitution, prohibiting the impairment of obligations of

26  contracts, it is the intent of the Legislature that no action

27  be taken whose purpose is to impair any bond indenture or

28  financing agreement or any revenue source committed by

29  contract to such bond or other indebtedness issued or incurred

30  by the association or any other entity created under this

31  subsection.

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  1         7.  On such coverage, an agent's remuneration shall be

  2  that amount of money payable to the agent by the terms of his

  3  or her contract with the company with which the business is

  4  placed. However, no commission will be paid on that portion of

  5  the premium which is in excess of the standard premium of that

  6  company.

  7         8.  Subject to approval by the department, the

  8  association may establish different eligibility requirements

  9  and operational procedures for any line or type of coverage

10  for any specified eligible area or portion of an eligible area

11  if the board determines that such changes to the eligibility

12  requirements and operational procedures are justified due to

13  the voluntary market being sufficiently stable and competitive

14  in such area or for such line or type of coverage and that

15  consumers who, in good faith, are unable to obtain insurance

16  through the voluntary market through ordinary methods would

17  continue to have access to coverage from the association. When

18  coverage is sought in connection with a real property

19  transfer, such requirements and procedures shall not provide

20  for an effective date of coverage later than the date of the

21  closing of the transfer as established by the transferor, the

22  transferee, and, if applicable, the lender.

23         9.  Notwithstanding any other provision of law:

24         a.  The pledge or sale of, the lien upon, and the

25  security interest in any rights, revenues, or other assets of

26  the association created or purported to be created pursuant to

27  any financing documents to secure any bonds or other

28  indebtedness of the association shall be and remain valid and

29  enforceable, notwithstanding the commencement of and during

30  the continuation of, and after, any rehabilitation,

31  insolvency, liquidation, bankruptcy, receivership,

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  1  conservatorship, reorganization, or similar proceeding against

  2  the association under the laws of this state or any other

  3  applicable laws.

  4         b.  No such proceeding shall relieve the association of

  5  its obligation, or otherwise affect its ability to perform its

  6  obligation, to continue to collect, or levy and collect,

  7  assessments, market equalization or other surcharges,

  8  projected recoveries from the Florida Hurricane Catastrophe

  9  Fund, reinsurance recoverables, or any other rights, revenues,

10  or other assets of the association pledged.

11         c.  Each such pledge or sale of, lien upon, and

12  security interest in, including the priority of such pledge,

13  lien, or security interest, any such assessments, emergency

14  assessments, market equalization or renewal surcharges,

15  projected recoveries from the Florida Hurricane Catastrophe

16  Fund, reinsurance recoverables, or other rights, revenues, or

17  other assets which are collected, or levied and collected,

18  after the commencement of and during the pendency of or after

19  any such proceeding shall continue unaffected by such

20  proceeding.

21         d.  As used in this subsection, the term "financing

22  documents" means any agreement, instrument, or other document

23  now existing or hereafter created evidencing any bonds or

24  other indebtedness of the association or pursuant to which any

25  such bonds or other indebtedness has been or may be issued and

26  pursuant to which any rights, revenues, or other assets of the

27  association are pledged or sold to secure the repayment of

28  such bonds or indebtedness, together with the payment of

29  interest on such bonds or such indebtedness, or the payment of

30  any other obligation of the association related to such bonds

31  or indebtedness.

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  1         e.  Any such pledge or sale of assessments, revenues,

  2  contract rights or other rights or assets of the association

  3  shall constitute a lien and security interest, or sale, as the

  4  case may be, that is immediately effective and attaches to

  5  such assessments, revenues, contract, or other rights or

  6  assets, whether or not imposed or collected at the time the

  7  pledge or sale is made. Any such pledge or sale is effective,

  8  valid, binding, and enforceable against the association or

  9  other entity making such pledge or sale, and valid and binding

10  against and superior to any competing claims or obligations

11  owed to any other person or entity, including policyholders in

12  this state, asserting rights in any such assessments,

13  revenues, contract, or other rights or assets to the extent

14  set forth in and in accordance with the terms of the pledge or

15  sale contained in the applicable financing documents, whether

16  or not any such person or entity has notice of such pledge or

17  sale and without the need for any physical delivery,

18  recordation, filing, or other action.

19         f.  There shall be no liability on the part of, and no

20  cause of action of any nature shall arise against, any member

21  insurer or its agents or employees, agents or employees of the

22  association, members of the board of directors of the

23  association, or the department or its representatives, for any

24  action taken by them in the performance of their duties or

25  responsibilities under this subsection. Such immunity does not

26  apply to actions for breach of any contract or agreement

27  pertaining to insurance, or any willful tort.

28         (6)  RESIDENTIAL PROPERTY AND CASUALTY JOINT

29  UNDERWRITING ASSOCIATION.--

30         (d)1.  It is the intent of the Legislature that the

31  rates for coverage provided by the association be actuarially

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  1  sound and not competitive with approved rates charged in the

  2  admitted voluntary market, so that the association functions

  3  as a residual market mechanism to provide insurance only when

  4  the insurance cannot be procured in the voluntary market.

  5  Rates shall include an appropriate catastrophe loading factor

  6  that reflects the actual catastrophic exposure of the

  7  association and recognizes that the association has little or

  8  no capital or surplus; and the association shall carefully

  9  review each rate filing to assure that provider compensation

10  is not excessive.

11         2.  For each county, the average rates of the

12  association for each line of business for personal lines

13  residential policies shall be no lower than the average rates

14  charged by the insurer that had the highest average rate in

15  that county among the 20 insurers with the greatest total

16  direct written premium in the state for that line of business

17  in the preceding year, except that with respect to mobile home

18  coverages, the average rates of the association shall be no

19  lower than the average rates charged by the insurer that had

20  the highest average rate in that county among the 5 insurers

21  with the greatest total written premium for mobile home

22  owner's policies in the state in the preceding year.

23         3.  Rates for commercial residential coverage shall not

24  be subject to the requirements of subparagraph 2., but shall

25  be subject to all other requirements of this paragraph and s.

26  627.062.

27         4.  Nothing in this paragraph shall require or allow

28  the association to adopt a rate that is inadequate under s.

29  627.062 or to reduce rates approved under s. 627.062.

30         5.  The association may require arbitration of a filing

31  pursuant to s. 627.062(6). Rate filings of the association

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  1  under this paragraph shall be made on a use and file basis

  2  under s. 627.062(2)(a)2. The association shall make a rate

  3  filing at least once a year, but no more often than quarterly.

  4         Section 2.  Subsections (3) and (7) of section 631.54,

  5  Florida Statutes, are amended to read:

  6         631.54  Definitions.--As used in this part:

  7         (3)  "Covered claim" means an unpaid claim, including

  8  one of unearned premiums, which arises out of, and is within

  9  the coverage, and not in excess of, the applicable limits of

10  an insurance policy to which this part applies, issued by an

11  insurer, if such insurer becomes an insolvent insurer after

12  October 1, 1970, and the claimant or insured is a resident of

13  this state at the time of the insured event or the property

14  from which the claim arises is permanently located in this

15  state. "Covered claim" shall not include any amount due any

16  reinsurer, insurer, insurance pool, the Florida Residential

17  Property and Casualty Joint Underwriting Association formed

18  pursuant to s. 627.351, or any other underwriting association,

19  as subrogation, contribution, indemnification, recoveries or

20  otherwise.  Member insurers shall have no right of subrogation

21  against the insured of any insolvent member.

22         (7)  "Member insurer" means any person who writes any

23  kind of insurance to which this part applies under s. 631.52,

24  including the exchange of reciprocal or interinsurance

25  contracts, and who is licensed to transact insurance in this

26  state. "Member insurer" shall not include the Florida

27  Residential Property and Casualty Joint Underwriting

28  Association formed pursuant to s. 627.351.

29         Section 3.  Present subsections (4), (5), and (6) of

30  section 631.57, Florida Statutes, are redesignated as

31

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  1  subsections (5), (6), and (7), respectively, and a new

  2  subsection (4) is added to that section to read:

  3         631.57  Powers and duties of the association.--

  4         (4)  The Florida Residential Property and Casualty

  5  Joint Underwriting Association shall be exempt from all

  6  assessments made by the association except that the Florida

  7  Residential Property and Casualty Joint Underwriting

  8  Association shall be required to pay all assessments levied by

  9  the association to secure funds to pay or defease all

10  interest, principal, redemption premium, if any, related costs

11  of issuance of, and any other payments required under the bond

12  resolution or trust indenture, of bond issues to pay covered

13  claims arising from insurer insolvencies caused by, or

14  proximately related to, any hurricane. Any assessment levied

15  pursuant to this subsection shall be levied in the proportion

16  that the Florida Residential Property and Casualty Joint

17  Underwriting Association's net direct written premiums in this

18  state in the classes protected by the account bears to the

19  total of the net direct written premiums received in this

20  state by all insurers for the preceding year for all coverages

21  listed under s. 631.55(2)(c).

22         Section 4.  Subsection (6) of section 627.062, Florida

23  Statutes, is repealed.

24         Section 5.  Effective upon this act becoming a law, the

25  Department of Revenue, in consultation with the Department of

26  Insurance and the Division of Retirement, shall conduct a

27  study evaluating various alternatives to determining the

28  method of calculating and distributing insurance premium taxes

29  to participating municipalities and special fire control

30  districts for use in funding the firefighter pensions under

31  chapter 175, Florida Statutes, and municipal police pensions

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  1  under chapter 185, Florida Statutes. The study shall evaluate

  2  the effect of various distribution formulas and new

  3  technologies on participating municipalities and special fire

  4  control districts. At least one public workshop shall be held.

  5  This study shall also evaluate the feasibility of "hold

  6  harmless" provisions with the goal that no participating

  7  municipality or special fire control district shall receive

  8  less funding than was received during the year 2000. The

  9  Department of Revenue shall submit to the Legislature by

10  February 1, 2001, a report containing the results of its study

11  and the department's recommended legislation, if any. Until

12  July 1, 2001, the Department of Insurance shall not take any

13  action to audit insurers or finalize any pending audits of

14  insurers with respect to the accuracy of coding the location

15  of insured properties for purposes associated with these

16  premium taxes.

17         Section 6.  Except as otherwise provided in this act,

18  this act shall take effect October 1, 2000.

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  1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
  2                         Senate Bill 144

  3

  4  Provides that the Florida Residential Property and Casualty
    Joint Underwriting Association (RPCJUA) shall not be assessed
  5  by the Florida Insurance Guaranty Association (FIGA) to fund
    claims of insolvent insurers unless a special assessment is
  6  necessary to fund a bond issue by FIGA.

  7  Requires the Department of Revenue to conduct a study
    evaluating alternatives to determining the method of
  8  calculating and distributing insurance premium taxes to
    municipalities and fire control districts for use in funding
  9  the firefighter pensions and municipal police pensions. The
    Department of Revenue must submit to the Legislature by
10  February 1, 2001, a report containing the results of its study
    and any recommended legislation. Until July 1, 2001, the
11  Department of Insurance would be prohibited from taking any
    action to audit insurers or to finalize any pending audits of
12  insurers with respect to the accuracy of coding the location
    of insured properties for purposes associated with these
13  premium taxes.

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