HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
CHAMBER ACTION
Senate House
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5 ORIGINAL STAMP BELOW
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11 Representative(s) Ryan, Alexander, and Waters offered the
12 following:
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14 Amendment to Amendment (823559) (with title amendment)
15 On page 1, between lines 16 and 17 of the amendment
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17 insert:
18 Section 1. Effective July 1, 2001, paragraph (b) of
19 subsection (2) and paragraph (c) of subsection (6) of section
20 627.351, Florida Statutes, are amended, and paragraph (f) is
21 added to subsection (2) of said section, to read:
22 627.351 Insurance risk apportionment plans.--
23 (2) WINDSTORM INSURANCE RISK APPORTIONMENT.--
24 (b) The department shall require all insurers holding
25 a certificate of authority to transact property insurance on a
26 direct basis in this state, other than joint underwriting
27 associations and other entities formed pursuant to this
28 section, to provide windstorm coverage to applicants from
29 areas determined to be eligible pursuant to paragraph (c) who
30 in good faith are entitled to, but are unable to procure, such
31 coverage through ordinary means; or it shall adopt a
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 reasonable plan or plans for the equitable apportionment or
2 sharing among such insurers of windstorm coverage, which may
3 include formation of an association for this purpose. As used
4 in this subsection, the term "property insurance" means
5 insurance on real or personal property, as defined in s.
6 624.604, including insurance for fire, industrial fire, allied
7 lines, farmowners multiperil, homeowners' multiperil,
8 commercial multiperil, and mobile homes, and including
9 liability coverages on all such insurance, but excluding
10 inland marine as defined in s. 624.607(3) and excluding
11 vehicle insurance as defined in s. 624.605(1)(a) other than
12 insurance on mobile homes used as permanent dwellings. The
13 department shall adopt rules that provide a formula for the
14 recovery and repayment of any deferred assessments.
15 1. For the purpose of this section, properties
16 eligible for such windstorm coverage are defined as dwellings,
17 buildings, and other structures, including mobile homes which
18 are used as dwellings and which are tied down in compliance
19 with mobile home tie-down requirements prescribed by the
20 Department of Highway Safety and Motor Vehicles pursuant to s.
21 320.8325, and the contents of all such properties. An
22 applicant or policyholder is eligible for coverage only if an
23 offer of coverage cannot be obtained by or for the applicant
24 or policyholder from an admitted insurer at approved rates.
25 2.a.(I) All insurers required to be members of such
26 association shall participate in its writings, expenses, and
27 losses. Surplus of the association shall be retained for the
28 payment of claims and shall not be distributed to the member
29 insurers. Such participation by member insurers shall be in
30 the proportion that the net direct premiums of each member
31 insurer written for property insurance in this state during
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 the preceding calendar year bear to the aggregate net direct
2 premiums for property insurance of all member insurers, as
3 reduced by any credits for voluntary writings, in this state
4 during the preceding calendar year. For the purposes of this
5 subsection, the term "net direct premiums" means direct
6 written premiums for property insurance, reduced by premium
7 for liability coverage and for the following if included in
8 allied lines: rain and hail on growing crops; livestock;
9 association direct premiums booked; National Flood Insurance
10 Program direct premiums; and similar deductions specifically
11 authorized by the plan of operation and approved by the
12 department. A member's participation shall begin on the first
13 day of the calendar year following the year in which it is
14 issued a certificate of authority to transact property
15 insurance in the state and shall terminate 1 year after the
16 end of the calendar year during which it no longer holds a
17 certificate of authority to transact property insurance in the
18 state. The commissioner, after review of annual statements,
19 other reports, and any other statistics that the commissioner
20 deems necessary, shall certify to the association the
21 aggregate direct premiums written for property insurance in
22 this state by all member insurers.
23 (II) The plan of operation shall provide for a board
24 of directors consisting of the members of the State Board of
25 Administration, which shall oversee the operations of the
26 association and shall carry out any other duties provided by
27 law. The board shall appoint an advisory council consisting
28 of an actuary, a meterorologist, an engineer, a representative
29 of insurers, a representative of insurance agents, and three
30 consumers who shall also be representatives of other
31 professions and industries, to provide the board with
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 information and advice in connection with its duties under
2 this section. Members of the advisory council shall be
3 eligible for per diem and travel expeses under s. 112.061.
4 The association shall not be considered a state agency and its
5 obligations shall not be considered obligations of the state
6 consisting of the Insurance Consumer Advocate appointed under
7 s. 627.0613, 1consumer representative appointed by the
8 Insurance Commissioner, 1 consumer representative appointed by
9 the Governor, and 12 additional members appointed as specified
10 in the plan of operation. One of the 12 additional members
11 shall be elected by the domestic companies of this state on
12 the basis of cumulative weighted voting based on the net
13 direct premiums of domestic companies in this state. Nothing
14 in the 1997 amendments to this paragraph terminates the
15 existing board or the terms of any members of the board.
16 (III) The plan of operation shall provide a formula
17 whereby a company voluntarily providing windstorm coverage in
18 affected areas will be relieved wholly or partially from
19 apportionment of a regular assessment pursuant to
20 sub-sub-subparagraph d.(I) or sub-sub-subparagraph d.(II).
21 (IV) A company which is a member of a group of
22 companies under common management may elect to have its
23 credits applied on a group basis, and any company or group may
24 elect to have its credits applied to any other company or
25 group.
26 (V) There shall be no credits or relief from
27 apportionment to a company for emergency assessments collected
28 from its policyholders under sub-sub-subparagraph d.(III).
29 (VI) The plan of operation may also provide for the
30 award of credits, for a period not to exceed 3 years, from a
31 regular assessment pursuant to sub-sub-subparagraph d.(I) or
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 sub-sub-subparagraph d.(II) as an incentive for taking
2 policies out of the Residential Property and Casualty Joint
3 Underwriting Association. In order to qualify for the
4 exemption under this sub-sub-subparagraph, the take-out plan
5 must provide that at least 40 percent of the policies removed
6 from the Residential Property and Casualty Joint Underwriting
7 Association cover risks located in Dade, Broward, and Palm
8 Beach Counties or at least 30 percent of the policies so
9 removed cover risks located in Dade, Broward, and Palm Beach
10 Counties and an additional 50 percent of the policies so
11 removed cover risks located in other coastal counties, and
12 must also provide that no more than 15 percent of the policies
13 so removed may exclude windstorm coverage. With the approval
14 of the department, the association may waive these geographic
15 criteria for a take-out plan that removes at least the lesser
16 of 100,000 Residential Property and Casualty Joint
17 Underwriting Association policies or 15 percent of the total
18 number of Residential Property and Casualty Joint Underwriting
19 Association policies, provided the governing board of the
20 Residential Property and Casualty Joint Underwriting
21 Association certifies that the take-out plan will materially
22 reduce the Residential Property and Casualty Joint
23 Underwriting Association's 100-year probable maximum loss from
24 hurricanes. With the approval of the department, the board
25 may extend such credits for an additional year if the insurer
26 guarantees an additional year of renewability for all policies
27 removed from the Residential Property and Casualty Joint
28 Underwriting Association, or for 2 additional years if the
29 insurer guarantees 2 additional years of renewability for all
30 policies removed from the Residential Property and Casualty
31 Joint Underwriting Association.
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 b. Assessments to pay deficits in the association
2 under this subparagraph shall be included as an appropriate
3 factor in the making of rates as provided in s. 627.3512.
4 c. The Legislature finds that the potential for
5 unlimited deficit assessments under this subparagraph may
6 induce insurers to attempt to reduce their writings in the
7 voluntary market, and that such actions would worsen the
8 availability problems that the association was created to
9 remedy. It is the intent of the Legislature that insurers
10 remain fully responsible for paying regular assessments and
11 collecting emergency assessments for any deficits of the
12 association; however, it is also the intent of the Legislature
13 to provide a means by which assessment liabilities may be
14 amortized over a period of years.
15 d.(I) When the deficit incurred in a particular
16 calendar year is 10 percent or less of the aggregate statewide
17 direct written premium for property insurance for the prior
18 calendar year for all member insurers, the association shall
19 levy an assessment on member insurers in an amount equal to
20 the deficit.
21 (II) When the deficit incurred in a particular
22 calendar year exceeds 10 percent of the aggregate statewide
23 direct written premium for property insurance for the prior
24 calendar year for all member insurers, the association shall
25 levy an assessment on member insurers in an amount equal to
26 the greater of 10 percent of the deficit or 10 percent of the
27 aggregate statewide direct written premium for property
28 insurance for the prior calendar year for member insurers. Any
29 remaining deficit shall be recovered through emergency
30 assessments under sub-sub-subparagraph (III).
31 (III) Upon a determination by the board of directors
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 that a deficit exceeds the amount that will be recovered
2 through regular assessments on member insurers, pursuant to
3 sub-sub-subparagraph (I) or sub-sub-subparagraph (II), the
4 board shall levy, after verification by the department,
5 emergency assessments to be collected by member insurers and
6 by underwriting associations created pursuant to this section
7 which write property insurance, upon issuance or renewal of
8 property insurance policies other than National Flood
9 Insurance policies in the year or years following levy of the
10 regular assessments. The amount of the emergency assessment
11 collected in a particular year shall be a uniform percentage
12 of that year's direct written premium for property insurance
13 for all member insurers and underwriting associations,
14 excluding National Flood Insurance policy premiums, as
15 annually determined by the board and verified by the
16 department. The department shall verify the arithmetic
17 calculations involved in the board's determination within 30
18 days after receipt of the information on which the
19 determination was based. Notwithstanding any other provision
20 of law, each member insurer and each underwriting association
21 created pursuant to this section shall collect emergency
22 assessments from its policyholders without such obligation
23 being affected by any credit, limitation, exemption, or
24 deferment. The emergency assessments so collected shall be
25 transferred directly to the association on a periodic basis as
26 determined by the association. The aggregate amount of
27 emergency assessments levied under this sub-sub-subparagraph
28 in any calendar year may not exceed the greater of 10 percent
29 of the amount needed to cover the original deficit, plus
30 interest, fees, commissions, required reserves, and other
31 costs associated with financing of the original deficit, or 10
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 percent of the aggregate statewide direct written premium for
2 property insurance written by member insurers and underwriting
3 associations for the prior year, plus interest, fees,
4 commissions, required reserves, and other costs associated
5 with financing the original deficit. The board may pledge the
6 proceeds of the emergency assessments under this
7 sub-sub-subparagraph as the source of revenue for bonds, to
8 retire any other debt incurred as a result of the deficit or
9 events giving rise to the deficit, or in any other way that
10 the board determines will efficiently recover the deficit. The
11 emergency assessments under this sub-sub-subparagraph shall
12 continue as long as any bonds issued or other indebtedness
13 incurred with respect to a deficit for which the assessment
14 was imposed remain outstanding, unless adequate provision has
15 been made for the payment of such bonds or other indebtedness
16 pursuant to the document governing such bonds or other
17 indebtedness. Emergency assessments collected under this
18 sub-sub-subparagraph are not part of an insurer's rates, are
19 not premium, and are not subject to premium tax, fees, or
20 commissions; however, failure to pay the emergency assessment
21 shall be treated as failure to pay premium.
22 (IV) Each member insurer's share of the total regular
23 assessments under sub-sub-subparagraph (I) or
24 sub-sub-subparagraph (II) shall be in the proportion that the
25 insurer's net direct premium for property insurance in this
26 state, for the year preceding the assessment bears to the
27 aggregate statewide net direct premium for property insurance
28 of all member insurers, as reduced by any credits for
29 voluntary writings for that year.
30 (V) If regular deficit assessments are made under
31 sub-sub-subparagraph (I) or sub-sub-subparagraph (II), or by
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 the Residential Property and Casualty Joint Underwriting
2 Association under sub-subparagraph (6)(b)3.a. or
3 sub-subparagraph (6)(b)3.b., the association shall levy upon
4 the association's policyholders, as part of its next rate
5 filing, or by a separate rate filing solely for this purpose,
6 a market equalization surcharge in a percentage equal to the
7 total amount of such regular assessments divided by the
8 aggregate statewide direct written premium for property
9 insurance for member insurers for the prior calendar year.
10 Market equalization surcharges under this sub-sub-subparagraph
11 are not considered premium and are not subject to commissions,
12 fees, or premium taxes; however, failure to pay a market
13 equalization surcharge shall be treated as failure to pay
14 premium.
15 e. The governing body of any unit of local government,
16 any residents of which are insured under the plan, may issue
17 bonds as defined in s. 125.013 or s. 166.101 to fund an
18 assistance program, in conjunction with the association, for
19 the purpose of defraying deficits of the association. In order
20 to avoid needless and indiscriminate proliferation,
21 duplication, and fragmentation of such assistance programs,
22 any unit of local government, any residents of which are
23 insured by the association, may provide for the payment of
24 losses, regardless of whether or not the losses occurred
25 within or outside of the territorial jurisdiction of the local
26 government. Revenue bonds may not be issued until validated
27 pursuant to chapter 75, unless a state of emergency is
28 declared by executive order or proclamation of the Governor
29 pursuant to s. 252.36 making such findings as are necessary to
30 determine that it is in the best interests of, and necessary
31 for, the protection of the public health, safety, and general
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 welfare of residents of this state and the protection and
2 preservation of the economic stability of insurers operating
3 in this state, and declaring it an essential public purpose to
4 permit certain municipalities or counties to issue bonds as
5 will provide relief to claimants and policyholders of the
6 association and insurers responsible for apportionment of plan
7 losses. Any such unit of local government may enter into such
8 contracts with the association and with any other entity
9 created pursuant to this subsection as are necessary to carry
10 out this paragraph. Any bonds issued under this
11 sub-subparagraph shall be payable from and secured by moneys
12 received by the association from assessments under this
13 subparagraph, and assigned and pledged to or on behalf of the
14 unit of local government for the benefit of the holders of
15 such bonds. The funds, credit, property, and taxing power of
16 the state or of the unit of local government shall not be
17 pledged for the payment of such bonds. If any of the bonds
18 remain unsold 60 days after issuance, the department shall
19 require all insurers subject to assessment to purchase the
20 bonds, which shall be treated as admitted assets; each insurer
21 shall be required to purchase that percentage of the unsold
22 portion of the bond issue that equals the insurer's relative
23 share of assessment liability under this subsection. An
24 insurer shall not be required to purchase the bonds to the
25 extent that the department determines that the purchase would
26 endanger or impair the solvency of the insurer. The authority
27 granted by this sub-subparagraph is additional to any bonding
28 authority granted by subparagraph 6.
29 3. The plan shall also provide that any member with a
30 surplus as to policyholders of $25 $20 million or less writing
31 25 percent or more of its total countrywide property insurance
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 premiums in this state may petition the department, within the
2 first 90 days of each calendar year, to qualify as a limited
3 apportionment company. The apportionment of such a member
4 company in any calendar year for which it is qualified shall
5 not exceed its gross participation, which shall not be
6 affected by the formula for voluntary writings. In no event
7 shall a limited apportionment company be required to
8 participate in any apportionment of losses pursuant to
9 sub-sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II)
10 in the aggregate which exceeds $50 million after payment of
11 available plan funds in any calendar year. However, a limited
12 apportionment company shall collect from its policyholders any
13 emergency assessment imposed under sub-sub-subparagraph
14 2.d.(III). The plan shall provide that, if the department
15 determines that any regular assessment will result in an
16 impairment of the surplus of a limited apportionment company,
17 the department may direct that all or part of such assessment
18 be deferred. However, there shall be no limitation or
19 deferment of an emergency assessment to be collected from
20 policyholders under sub-sub-subparagraph 2.d.(III).
21 4. The plan shall provide for the deferment, in whole
22 or in part, of a regular assessment of a member insurer under
23 sub-sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II),
24 but not for an emergency assessment collected from
25 policyholders under sub-sub-subparagraph 2.d.(III), if, in the
26 opinion of the commissioner, payment of such regular
27 assessment would endanger or impair the solvency of the member
28 insurer. In the event a regular assessment against a member
29 insurer is deferred in whole or in part, the amount by which
30 such assessment is deferred may be assessed against the other
31 member insurers in a manner consistent with the basis for
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 assessments set forth in sub-sub-subparagraph 2.d.(I) or
2 sub-sub-subparagraph 2.d.(II).
3 5.a. The plan of operation may include deductibles and
4 rules for classification of risks and rate modifications
5 consistent with the objective of providing and maintaining
6 funds sufficient to pay catastrophe losses.
7 b.(I) Subject to the provisions of
8 sub-sub-subparagraph (II), all rate filings under this
9 subsection relating to coverage for windstorm losses must
10 reflect historical insurance data. When using a computer model
11 in making a rate filing under this subsection, the association
12 may use only a computer model which is based upon standards
13 and guidelines developed or established by the Florida
14 Commission on Hurricane Loss Projection Methodology under s.
15 627.0628. Consideration of historical insurance data and the
16 use of computer models shall be consistent with applicable
17 Standards of Practice of the American Academy of Actuaries.
18 The association may require arbitration of a rate filing under
19 s. 627.062(6).
20 (II) It is the intent of the Legislature that the
21 Rates for coverage provided by the association must be
22 actuarially sound and not competitive with approved rates
23 charged in the admitted voluntary market such that the
24 association functions as a residual market mechanism to
25 provide insurance only when the insurance cannot be procured
26 in the voluntary market. The plan of operation shall provide
27 a mechanism to assure that the average base rates for each
28 line of business charged by the asociation for hurricane
29 coverage for each unmitigated risk in a particular county
30 shall be no lower than the highest department-approved rate
31 within the association's eligible area for hurricane coverage
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 in the voluntary market for each line of business in such
2 county, among the 20 largest insurers actually writing such
3 coverage in such county , beginning no later than January 1,
4 1999, the rates charged by the association for each line of
5 business are reflective of approved rates in the voluntary
6 market for hurricane coverage for each line of business in the
7 various areas eligible for association coverage.
8 (III) Notwithstanding any other provision of law,
9 windstorm rates under this subsection previously adjudicated
10 for use and in effect as of the effective date of this act,
11 and the related mitigation credit program, shall apply to
12 rates of the association and shall continue in effect until
13 such rates are fully phased in. The rate for a particular
14 group or class of policies may be increased only after the
15 full phase-in of the current rate plan as to that group or
16 class of policies.
17 c. The association shall provide for windstorm
18 coverage on residential properties in limits up to $10 million
19 for commercial lines residential risks and up to $1 million
20 for personal lines residential risks. If coverage with the
21 association is sought for a residential risk valued in excess
22 of these limits, coverage shall be available to the risk up to
23 the replacement cost or actual cash value of the property, at
24 the option of the insured, if coverage for the risk cannot be
25 located in the authorized market. The association must accept
26 a commercial lines residential risk with limits above $10
27 million or a personal lines residential risk with limits above
28 $1 million if coverage is not available in the authorized
29 market. The association may write coverage above the limits
30 specified in this subparagraph with or without facultative or
31 other reinsurance coverage, as the association determines
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 appropriate.
2 d. The plan of operation must provide objective
3 criteria and procedures, approved by the department, to be
4 uniformly applied for all applicants in determining whether an
5 individual risk is so hazardous as to be uninsurable. In
6 making this determination and in establishing the criteria and
7 procedures, the following shall be considered:
8 (I) Whether the likelihood of a loss for the
9 individual risk is substantially higher than for other risks
10 of the same class; and
11 (II) Whether the uncertainty associated with the
12 individual risk is such that an appropriate premium cannot be
13 determined.
14
15 The acceptance or rejection of a risk by the association
16 pursuant to such criteria and procedures must be construed as
17 the private placement of insurance, and the provisions of
18 chapter 120 do not apply.
19 e. The policies issued by the association must provide
20 that if the association obtains an offer from an authorized
21 insurer to cover the risk at its approved rates under either a
22 standard policy including wind coverage or, if consistent with
23 the insurer's underwriting rules as filed with the department,
24 a basic policy including wind coverage, the risk is no longer
25 eligible for coverage through the association. Upon
26 termination of eligibility, the association shall provide
27 written notice to the policyholder and agent of record stating
28 that the association policy must be canceled as of 60 days
29 after the date of the notice because of the offer of coverage
30 from an authorized insurer. Other provisions of the insurance
31 code relating to cancellation and notice of cancellation do
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 not apply to actions under this sub-subparagraph.
2 f. Association policies and applications must include
3 a notice that the association policy could, under this
4 section, be replaced with a policy issued by an authorized
5 insurer that does not provide coverage identical to the
6 coverage provided by the association. The notice shall also
7 specify that acceptance of association coverage creates a
8 conclusive presumption that the applicant or policyholder is
9 aware of this potential.
10 g. If the risk accepts an offer of coverage through
11 the market assistanceprogram or through a mechanism
12 established by the association, either before the policy is
13 issued by the association or during the first 30 days of
14 coverage by the association, and the producing agent who
15 submitted the application to the association is not currrently
16 appointed by the insurer, the insurer shall either:
17 (I) Pay to the producing agent of record of the
18 policy, for the first year, an amount that is the greater of
19 the insurer's usual and customary commission for the type of
20 policy written or a fee equal to the usual and customary
21 commission of the association; or
22 (II) Offer to allow the producing agency of record of
23 the policy to continue servicing the policy for a period of
24 not less than 1 year and offer to pay the agent the greater of
25 the insurer's or the association's usual and customary
26 commission for the type of policy written.
27
28 If the new or producing agent is unwilling or unable to accept
29 appointment, the new insurer shall pay the agent in accordance
30 with sub-sub-subparagraph (I).
31 h. When the association enters into a contractual
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 agreement for a take-out plan, the producing agent of record
2 of the association policy is entitled to retain any unearned
3 commission on the policy, and the insurer shall either:
4 (I) Pay to the producing agent of record of the
5 association policy, for the first year, an amount that is the
6 greater of the insurer's usual and customary commission for
7 the type of policy written or a fee equal to the usual and
8 customary commission of the association; or
9 (II) Offer to allow the producing agent of record of
10 the association policy to continue servicing the policy for a
11 period of not less than 1 year and offer to pay the agent the
12 greater of the insurer's or the association's usual and
13 customary commission for the type of policy written.
14
15 If the new or producing agent is unwilling or unable to accept
16 appointment, the new insurer shall pay the agent in accordance
17 with sub-sub-subparagraph(I).
18 6.a. The plan of operation may authorize the formation
19 of a private nonprofit corporation, a private nonprofit
20 unincorporated association, a partnership, a trust, a limited
21 liability company, or a nonprofit mutual company which may be
22 empowered, among other things, to borrow money by issuing
23 bonds or by incurring other indebtedness and to accumulate
24 reserves or funds to be used for the payment of insured
25 catastrophe losses. The plan may authorize all actions
26 necessary to facilitate the issuance of bonds, including the
27 pledging of assessments or other revenues.
28 b. Any entity created under this subsection, or any
29 entity formed for the purposes of this subsection, may sue and
30 be sued, may borrow money; issue bonds, notes, or debt
31 instruments; pledge or sell assessments, market equalization
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 surcharges and other surcharges, rights, premiums, contractual
2 rights, projected recoveries from the Florida Hurricane
3 Catastrophe Fund, other reinsurance recoverables, and other
4 assets as security for such bonds, notes, or debt instruments;
5 enter into any contracts or agreements necessary or proper to
6 accomplish such borrowings; and take other actions necessary
7 to carry out the purposes of this subsection. The association
8 may issue bonds or incur other indebtedness, or have bonds
9 issued on its behalf by a unit of local government pursuant to
10 subparagraph (g)2., in the absence of a hurricane or other
11 weather-related event, upon a determination by the association
12 subject to approval by the department that such action would
13 enable it to efficiently meet the financial obligations of the
14 association and that such financings are reasonably necessary
15 to effectuate the requirements of this subsection. Any such
16 entity may accumulate reserves and retain surpluses as of the
17 end of any association year to provide for the payment of
18 losses incurred by the association during that year or any
19 future year. The association shall incorporate and continue
20 the plan of operation and articles of agreement in effect on
21 the effective date of chapter 76-96, Laws of Florida, to the
22 extent that it is not inconsistent with chapter 76-96, and as
23 subsequently modified consistent with chapter 76-96. The board
24 of directors and officers currently serving shall continue to
25 serve until their successors are duly qualified as provided
26 under the plan. The assets and obligations of the plan in
27 effect immediately prior to the effective date of chapter
28 76-96 shall be construed to be the assets and obligations of
29 the successor plan created herein.
30 c. In recognition of s. 10, Art. I of the State
31 Constitution, prohibiting the impairment of obligations of
17
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 contracts, it is the intent of the Legislature that no action
2 be taken whose purpose is to impair any bond indenture or
3 financing agreement or any revenue source committed by
4 contract to such bond or other indebtedness issued or incurred
5 by the association or any other entity created under this
6 subsection.
7 7. On such coverage, an agent's remuneration shall be
8 that amount of money payable to the agent by the terms of his
9 or her contract with the company with which the business is
10 placed. However, no commission will be paid on that portion of
11 the premium which is in excess of the standard premium of that
12 company.
13 8. Subject to approval by the department, the
14 association may establish different eligibility requirements
15 and operational procedures for any line or type of coverage
16 for any specified eligible area or portion of an eligible area
17 if the board determines that such changes to the eligibility
18 requirements and operational procedures are justified due to
19 the voluntary market being sufficiently stable and competitive
20 in such area or for such line or type of coverage and that
21 consumers who, in good faith, are unable to obtain insurance
22 through the voluntary market through ordinary methods would
23 continue to have access to coverage from the association. When
24 coverage is sought in connection with a real property
25 transfer, such requirements and procedures shall not provide
26 for an effective date of coverage later than the date of the
27 closing of the transfer as established by the transferor, the
28 transferee, and, if applicable, the lender.
29 9. Notwithstanding any other provision of law:
30 a. The pledge or sale of, the lien upon, and the
31 security interest in any rights, revenues, or other assets of
18
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 the association created or purported to be created pursuant to
2 any financing documents to secure any bonds or other
3 indebtedness of the association shall be and remain valid and
4 enforceable, notwithstanding the commencement of and during
5 the continuation of, and after, any rehabilitation,
6 insolvency, liquidation, bankruptcy, receivership,
7 conservatorship, reorganization, or similar proceeding against
8 the association under the laws of this state or any other
9 applicable laws.
10 b. No such proceeding shall relieve the association of
11 its obligation, or otherwise affect its ability to perform its
12 obligation, to continue to collect, or levy and collect,
13 assessments, market equalization or other surcharges,
14 projected recoveries from the Florida Hurricane Catastrophe
15 Fund, reinsurance recoverables, or any other rights, revenues,
16 or other assets of the association pledged.
17 c. Each such pledge or sale of, lien upon, and
18 security interest in, including the priority of such pledge,
19 lien, or security interest, any such assessments, emergency
20 assessments, market equalization or renewal surcharges,
21 projected recoveries from the Florida Hurricane Catastrophe
22 Fund, reinsurance recoverables, or other rights, revenues, or
23 other assets which are collected, or levied and collected,
24 after the commencement of and during the pendency of or after
25 any such proceeding shall continue unaffected by such
26 proceeding.
27 d. As used in this subsection, the term "financing
28 documents" means any agreement, instrument, or other document
29 now existing or hereafter created evidencing any bonds or
30 other indebtedness of the association or pursuant to which any
31 such bonds or other indebtedness has been or may be issued and
19
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 pursuant to which any rights, revenues, or other assets of the
2 association are pledged or sold to secure the repayment of
3 such bonds or indebtedness, together with the payment of
4 interest on such bonds or such indebtedness, or the payment of
5 any other obligation of the association related to such bonds
6 or indebtedness.
7 e. Any such pledge or sale of assessments, revenues,
8 contract rights or other rights or assets of the association
9 shall constitute a lien and security interest, or sale, as the
10 case may be, that is immediately effective and attaches to
11 such assessments, revenues, contract, or other rights or
12 assets, whether or not imposed or collected at the time the
13 pledge or sale is made. Any such pledge or sale is effective,
14 valid, binding, and enforceable against the association or
15 other entity making such pledge or sale, and valid and binding
16 against and superior to any competing claims or obligations
17 owed to any other person or entity, including policyholders in
18 this state, asserting rights in any such assessments,
19 revenues, contract, or other rights or assets to the extent
20 set forth in and in accordance with the terms of the pledge or
21 sale contained in the applicable financing documents, whether
22 or not any such person or entity has notice of such pledge or
23 sale and without the need for any physical delivery,
24 recordation, filing, or other action.
25 f. There shall be no liability on the part of, and no
26 cause of action of any nature shall arise against, any member
27 insurer or its agents or employees, agents or employees of the
28 association, members of the board of directors of the
29 association, or the department or its representatives, for any
30 action taken by them in the performance of their duties or
31 responsibilities under this subsection. Such immunity does not
20
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 apply to actions for breach of any contract or agreement
2 pertaining to insurance, or any willful tort.
3 10. It is the intent of the Legislature that the
4 association vigorously pursue an exemption from federal income
5 taxation and tax-free status for bonds issued by or on behalf
6 of the association. In furtherance of this intent:
7 a. The association shall retain such expert tax
8 counsel and bond counsel as necessary and expend such funds as
9 necessary to pursue such negotiations or litigation as may
10 lead to favorable tax rulings.
11 b. The association shall, no later than January 1,
12 2002, provide a report to the Governor, the Insurance
13 Commissioner, the President of the Senate, and the Speaker of
14 the House of Representatives detailing the status of the
15 negotiations or litigation and recommending statutory changes,
16 if any, needed to secure favorable tax rulings.
17 (f)1. In recognition of the fact that the association
18 created under this subsection furthers an essentially
19 governmental purpose, the association is exempt from premium
20 taxes effective July 1, 2002.
21 2. Begining with the 2002-2003 fiscal year, and except
22 for years in which the association is collecting regular or
23 emergency assessments under this subsection, the association
24 shall annually transfer the sum of $5 million to the General
25 Revenue Fund, which moneys shall be appropriated for hurricane
26 loss mitigation purposes as specified in s. 215.555(7)(c).
27 Such appropriations are in addition to any appropriations
28 required or authorized by s. 215.555(7)(c).
29 (6) RESIDENTIAL PROPERTY AND CASUALTY JOINT
30 UNDERWRITING ASSOCIATION.--
31 (c) The plan of operation of the association:
21
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 1. May provide for one or more designated insurers,
2 able and willing to provide policy and claims service, to act
3 on behalf of the association to provide such service. Each
4 licensed agent shall be entitled to indicate the order of
5 preference regarding who will service the business placed by
6 the agent. The association shall adhere to each agent's
7 preferences unless after consideration of other factors in
8 assigning agents, including, but not limited to, servicing
9 capacity and fee arrangements, the association has reason to
10 believe it is in the best interest of the association to make
11 a different assignment.
12 2. Must provide for adoption of residential property
13 and casualty insurance policy forms, which forms must be
14 approved by the department prior to use. The association
15 shall adopt the following policy forms:
16 a. Standard personal lines policy forms including wind
17 coverage, which are multiperil policies providing what is
18 generally considered to be full coverage of a residential
19 property similar to the coverage provided under an HO-2, HO-3,
20 HO-4, or HO-6 policy.
21 b. Standard personal lines policy forms without wind
22 coverage, which are the same as the policies described in
23 sub-subparagraph a. except that they do not include wind
24 coverage.
25 c. Basic personal lines policy forms including wind
26 coverage, which are policies similar to an HO-8 policy or a
27 dwelling fire policy that provide coverage meeting the
28 requirements of the secondary mortgage market, but which
29 coverage is more limited than the coverage under a standard
30 policy.
31 d. Basic personal lines policy forms without wind
22
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 coverage, which are the same as the policies described in
2 sub-subparagraph c. except that they do not include wind
3 coverage.
4 e. Commercial lines residential policy forms including
5 wind coverage that are generally similar to the basic perils
6 of full coverage obtainable for commercial residential
7 structures in the admitted voluntary market.
8 f. Commercial lines residential policy forms without
9 wind coverage, which are the same as the policies described in
10 sub-subparagraph e. except that they do not include wind
11 coverage.
12 3. May provide that the association may employ or
13 otherwise contract with individuals or other entities to
14 provide administrative or professional services that may be
15 appropriate to effectuate the plan. The association shall
16 have the power to borrow funds, by issuing bonds or by
17 incurring other indebtedness, and shall have other powers
18 reasonably necessary to effectuate the requirements of this
19 subsection. The association may issue bonds or incur other
20 indebtedness, or have bonds issued on its behalf by a unit of
21 local government pursuant to subparagraph (g)2., in the
22 absence of a hurricane or other weather-related event, upon a
23 determination by the association, subject to approval by the
24 department, that such action would enable it to efficiently
25 meet the financial obligations of the association and that
26 such financings are reasonably necessary to effectuate the
27 requirements of this subsection. The association is
28 authorized to take all actions needed to facilitate tax-free
29 status for any such bonds or indebtedness, including formation
30 of trusts or other affiliated entities. The association shall
31 have the authority to pledge assessments, projected recoveries
23
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 from the Florida Hurricane Catastrophe Fund, other reinsurance
2 recoverables, market equalization and other surcharges, and
3 other funds available to the association as security for bonds
4 or other indebtedness. In recognition of s. 10, Art. I of the
5 State Constitution, prohibiting the impairment of obligations
6 of contracts, it is the intent of the Legislature that no
7 action be taken whose purpose is to impair any bond indenture
8 or financing agreement or any revenue source committed by
9 contract to such bond or other indebtedness.
10 4. Must require that the association operate subject
11 to the supervision and approval of a board of governors
12 consisting of the members of the State Board of
13 Administration. consisting of 13 individuals, including 1 who
14 is elected as chair. The board shall consist of:
15 a. The insurance consumer advocate appointed under s.
16 627.0613.
17 b. Five members designated by the insurance industry.
18 c. Five consumer representatives appointed by the
19 Insurance Commissioner. Two of the consumer representatives
20 must, at the time of appointment, be holders of policies
21 issued by the association, who are selected with consideration
22 given to reflecting the geographic balance of association
23 policyholders. Two of the consumer members must be individuals
24 who are minority persons as defined in s. 288.703(3). One of
25 the consumer members shall have expertise in the field of
26 mortgage lending.
27 d. Two representatives of the insurance industry
28 appointed by the Insurance Commissioner. Of the two insurance
29 industry representatives appointed by the Insurance
30 Commissioner, at least one must be an individual who is a
31 minority person as defined in s. 288.703(3).
24
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1
2 Any board member may be disapproved or removed and replaced by
3 the commissioner at any time for cause. All board members,
4 including the chair, must be appointed to serve for 3-year
5 terms beginning annually on a date designated by the plan.
6 5. Must provide a procedure for determining the
7 eligibility of a risk for coverage, as follows:
8 a. With respect to personal lines residential risks,
9 if the risk is offered coverage from an authorized insurer at
10 the insurer's approved rate under either a standard policy
11 including wind coverage or, if consistent with the insurer's
12 underwriting rules as filed with the department, a basic
13 policy including wind coverage, the risk is not eligible for
14 any policy issued by the association.
15 (I) If the risk accepts an offer of coverage through
16 the market assistance program or through a mechanism
17 established by the association, either before the policy is
18 issued by the association or during the first 30 days of
19 coverage by the association, and the producing agent who
20 submitted the application to the association is not currently
21 appointed by the insurer, the insurer shall either:
22 (A) Pay to the producing agent of record of the
23 policy, for the first year, an amount that is the greater of
24 the insurer's usual and customary cmmission for the type of
25 policy written or a fee equal to the usual and customary
26 commission of the association; or
27 (B) Offer to allow the producing agent of record of
28 the policy to continue servicing the policy for a period of
29 not less than 1 year and offer to pay the agent the greater of
30 the insurer's or the ssociation's usual and customary
31 commission for the type of policy written.
25
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1
2 If the new or producing agent is unwilling or unable to accept
3 appointment, the new insurer shall pay the agent in accordance
4 with sub-sub-sub-subparagraph (A).
5 (II) When the association enters into a contractual
6 agreement for a take-out plan, the producing agent of record
7 of the association policy is entitled to retain any unearned
8 commission on the policy, and the isnurer shall either:
9 (A) Pay to the producing agent of record of the
10 association policy, for the first year, an amount that is the
11 greater of the insurer's usual and customary commission for
12 the type of policy written or a fee equal to the usual and
13 customary commission of the association; or
14 (B) Offer to allow the producing agent of record of
15 the associaton policy to continue servicing the policy for a
16 period of not less than 1 year and offer to pay the agent the
17 greater of the insurer's or the asociation's usual and
18 customary commission for the type of policy written.
19
20 If the new or producing agent is unwilling or unable to accept
21 appointment, the new insurer shall pay the agent in accordance
22 with sub-sub-sub-subparagraph (A). If the risk accepts an
23 offer of coverage through the market assistance plan or an
24 offer of coverage through a mechanism established by the
25 association before a policy is issued to the risk by the
26 association or during the first 30 days of coverage by the
27 association, and the producing agent who submitted the
28 application to the plan or to the association is not currently
29 appointed by the insurer, the insurer shall either appoint the
30 agent to service the risk or, if the insurer places the
31 coverage through a new agent, require the new agent who then
26
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 writes the policy to pay not less than 50 percent of the first
2 year's commission to the producing agent who submitted the
3 application to the plan or the association, except that if the
4 new agent is an employee or exclusive agent of the insurer,
5 the new agent shall pay a policy fee of $50 to the producing
6 agent in lieu of splitting the commission. If the risk is not
7 able to obtain any such offer, the risk is eligible for either
8 a standard policy including wind coverage or a basic policy
9 including wind coverage issued by the association; however, if
10 the risk could not be insured under a standard policy
11 including wind coverage regardless of market conditions, the
12 risk shall be eligible for a basic policy including wind
13 coverage unless rejected under subparagraph 8. The association
14 shall determine the type of policy to be provided on the basis
15 of objective standards specified in the underwriting manual
16 and based on generally accepted underwriting practices.
17 b. With respect to commercial lines residential risks,
18 if the risk is offered coverage under a policy including wind
19 coverage from an authorized insurer at its approved rate, the
20 risk is not eligible for any policy issued by the association.
21 (I) If the risk accepts an offer of coverage through
22 the market assistance program or through a mechanism
23 established by the association, either before the policy is
24 issued by the association or during the first 30 days of
25 coverage by the association, and the producing agent who
26 submitted the application to the association is not currently
27 appointed by the insurer, the insurer shall either:
28 (A) Pay to the producing agent of record of the
29 policy, for the first year, an amount that is the greater of
30 the insurer's usual and customary cmmission for the type of
31 policy written or a fee equal to the usual and customary
27
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 commission of the association; or
2 (B) Offer to allow the producing agent of record of
3 the policy to continue servicing the policy for a period of
4 not less than 1 year and offer to pay the agent the greater of
5 the insurer's or the ssociation's usual and customary
6 commission for the type of policy written.
7
8 If the new or producing agent is unwilling or unable to accept
9 appointment, the new insurer shall pay the agent in accordance
10 with sub-sub-sub-subparagraph (A).
11 (II) When the association enters into a contractual
12 agreement for a take-out plan, the producing agent of record
13 of the association policy is entitled to retain any unearned
14 commission on the policy, and the isnurer shall either:
15 (A) Pay to the producing agent of record of the
16 association policy, for the first year, an amount that is the
17 greater of the insurer's usual and customary commission for
18 the type of policy written or a fee equal to the usual and
19 customary commission of the association; or
20 (B) Offer to allow the producing agent of record of
21 the associaton policy to continue servicing the policy for a
22 period of not less than 1 year and offer to pay the agent the
23 greater of the insurer's or the asociation's usual and
24 customary commission for the type of policy written.
25
26 If the new or producing gent is unwilling or unable to accept
27 appointment, the new insurer shall pay the agent in accordance
28 with sub-sub-sub-subparagraph (A). If the risk accepts an
29 offer of coverage through the market assistance plan or an
30 offer of coverage through a mechanism established by the
31 association before a policy is issued to the risk by the
28
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 association, and the producing agent who submitted the
2 application to the plan or the association is not currently
3 appointed by the insurer, the insurer shall either appoint the
4 agent to service the risk or, if the insurer places the
5 coverage through a new agent, require the new agent who then
6 writes the policy to pay not less than 50 percent of the first
7 year's commission to the producing agent who submitted the
8 application to the plan, except that if the new agent is an
9 employee or exclusive agent of the insurer, the new agent
10 shall pay a policy fee of $50 to the producing agent in lieu
11 of splitting the commission. If the risk is not able to obtain
12 any such offer, the risk is eligible for a policy including
13 wind coverage issued by the association.
14 c. This subparagraph does not require the association
15 to provide wind coverage or hurricane coverage in any area in
16 which such coverage is available through the Florida Windstorm
17 Underwriting Association.
18 6. Must include rules for classifications of risks and
19 rates therefor.
20 7. Must provide that if premium and investment income
21 attributable to a particular plan year are in excess of
22 projected losses and expenses of the plan attributable to that
23 year, such excess shall be held in surplus. Such surplus shall
24 be available to defray deficits as to future years and shall
25 be used for that purpose prior to assessing member insurers as
26 to any plan year.
27 8. Must provide objective criteria and procedures to
28 be uniformly applied for all applicants in determining whether
29 an individual risk is so hazardous as to be uninsurable. In
30 making this determination and in establishing the criteria and
31 procedures, the following shall be considered:
29
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 a. Whether the likelihood of a loss for the individual
2 risk is substantially higher than for other risks of the same
3 class; and
4 b. Whether the uncertainty associated with the
5 individual risk is such that an appropriate premium cannot be
6 determined.
7
8 The acceptance or rejection of a risk by the association shall
9 be construed as the private placement of insurance, and the
10 provisions of chapter 120 shall not apply.
11 9. Must provide that the association shall make its
12 best efforts to procure catastrophe reinsurance at reasonable
13 rates, as determined by the board of governors.
14 10. Must provide that in the event of regular deficit
15 assessments under sub-subparagraph (b)3.a. or sub-subparagraph
16 (b)3.b., or by the Florida Windstorm Underwriting Association
17 under sub-sub-subparagraph (2)(b)2.d.(I) or
18 sub-sub-subparagraph (2)(b)2.d.(II), the association shall
19 levy upon association policyholders in its next rate filing,
20 or by a separate rate filing solely for this purpose, a market
21 equalization surcharge in a percentage equal to the total
22 amount of such regular assessments divided by the aggregate
23 statewide direct written premium for subject lines of business
24 for member insurers for the prior calendar year. Market
25 equalization surcharges under this subparagraph are not
26 considered premium and are not subject to commissions, fees,
27 or premium taxes; however, failure to pay a market
28 equalization surcharge shall be treated as failure to pay
29 premium.
30 11. The policies issued by the association must
31 provide that, if the association or the market assistance plan
30
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 obtains an offer from an authorized insurer to cover the risk
2 at its approved rates under either a standard policy including
3 wind coverage or a basic policy including wind coverage, the
4 risk is no longer eligible for coverage through the
5 association. However, if the risk is located in an area in
6 which Florida Windstorm Underwriting Association coverage is
7 available, such an offer of a standard or basic policy
8 terminates eligibility regardless of whether or not the offer
9 includes wind coverage. Upon termination of eligibility, the
10 association shall provide written notice to the policyholder
11 and agent of record stating that the association policy shall
12 be canceled as of 60 days after the date of the notice because
13 of the offer of coverage from an authorized insurer. Other
14 provisions of the insurance code relating to cancellation and
15 notice of cancellation do not apply to actions under this
16 subparagraph.
17 12. Association policies and applications must include
18 a notice that the association policy could, under this section
19 or s. 627.3511, be replaced with a policy issued by an
20 admitted insurer that does not provide coverage identical to
21 the coverage provided by the association. The notice shall
22 also specify that acceptance of association coverage creates a
23 conclusive presumption that the applicant or policyholder is
24 aware of this potential.
25 13. May establish, subject to approval by the
26 department, different eligibility requirements and operational
27 procedures for any line or type of coverage for any specified
28 county or area if the board determines that such changes to
29 the eligibility requirements and operational procedures are
30 justified due to the voluntary market being sufficiently
31 stable and competitive in such area or for such line or type
31
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 of coverage and that consumers who, in good faith, are unable
2 to obtain insurance through the voluntary market through
3 ordinary methods would continue to have access to coverage
4 from the association. When coverage is sought in connection
5 with a real property transfer, such requirements and
6 procedures shall not provide for an effective date of coverage
7 later than the date of the closing of the transfer as
8 established by the transferor, the transferee, and, if
9 applicable, the lender.
10 Section 2. Subsection (4) of section 627.3511, Florida
11 Statutes,is amended to read:
12 627.3511 Depopulation of Residential Property and
13 Casualty Joint Underwriting Association.--
14 (4) AGENT BONUS.--When the Residential Property and
15 Casualty Joint Underwriting Association enters into a
16 contractual agreement for a take-out plan that provides a
17 bonus to the insurer, the producing agent of record of the
18 association policy is entitled to retain any unearned
19 commission on such policy, and the insurer shall either:
20 (a) Pay to the producing agent of record of the
21 association policy, for the first year, an amount that is the
22 greater of the insurer's usual and customary commission for
23 the type of policy written or a fee equal to the usual and
24 customary commission of the association an amount equal to the
25 insurer's usual and customary commission for the type of
26 policy written if the term of the association policy was in
27 excess of 6 months, or one-half of such usual and customary
28 commission if the term of the association policy was 6 months
29 or less; or
30 (b) Offer to allow the producing agent of record of
31 the association policy to continue servicing the policy for a
32
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 period of not less than 1 year and offer to pay the agent the
2 greater of the insurer's or the association's usual and
3 customary commission for the type of policy written.
4
5 If the new or producing agent is unwilling or unable to accept
6 appointment, the new insurer shall pay the agent in accordance
7 with paragraph (a). The insurer need not take any further
8 action if the offer is rejected. This subsection does not
9 apply to any reciprocal interinsurance exchange, nonprofit
10 federation, or any subsidiary or affiliate of such
11 organization. This subsection does not apply if the agent is
12 also the agent of record on the new coverage. The requirement
13 of this subsection that the producing agent of record is
14 entitled to retain the unearned commission on an association
15 policy does not apply to a policy for which coverage has been
16 provided in the association for 30 days or less or for which a
17 cancellation notice has been issued pursuant to s.
18 627.351(6)(c)11. during the first 30 days of coverage.
19 Section 3. Subsection (2) of section 627.7013, Florida
20 Statutes is amended to read:
21 627.7013 Orderly markets for personal lines
22 residential property insurance.--
23 (2) MORATORIUM COMPLETION.--
24 (a) As used in this subsection, the term "total number
25 of policies" means the number of an insurer's policies of a
26 specified type that were in force on June 1, 1996, or the date
27 on which this section became law, whichever was later.
28 (b) The following restrictions apply only to
29 cancellation or nonrenewal of personal lines residential
30 property insurance policies that were in force on June 1,
31 1996, or the date on which this section became law, whichever
33
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 was later.
2 1. In any 12-month period, an insurer may not cancel
3 or nonrenew more than 5 percent of such insurer's total number
4 of homeowner's policies, 5 percent of such insurer's total
5 number of mobile home owner's policies, or 5 percent of such
6 insurer's total number of personal lines residential policies
7 of all types and classes in the state for the purpose of
8 reducing the insurer's exposure to hurricane claims and may
9 not, with respect to any county, cancel or nonrenew more than
10 10 percent of its total number of homeowner's policies, 10
11 percent of its total number of mobile home owner's policies,
12 or 10 percent of its total number of personal lines
13 residential policies of all types and classes in the county
14 for the purpose of reducing the insurer's exposure to
15 hurricane claims. This subparagraph does not prohibit any
16 cancellations or nonrenewals of such policies for any other
17 lawful reason unrelated to the risk of loss from hurricane
18 exposure.
19 2.a. If, for any 12-month period, an insurer proposes
20 to cancel or nonrenew personal lines residential policies to
21 an extent not authorized by subparagraph 1. for the purpose of
22 reducing exposure to hurricane claims, the insurer must file a
23 phaseout plan with the department at least 90 days prior to
24 the effective date of the plan. In the plan, the insurer must
25 demonstrate to the department that the insurer is protecting
26 market stability and the interests of its policyholders. The
27 plan may not be implemented unless it is approved by the
28 department. In developing the plan, the insurer must consider
29 policyholder longevity, the use of voluntary incentives to
30 accomplish the reduction, and geographic distribution. The
31 insurer must demonstrate that under the plan the insurer will
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 not cancel or nonrenew more policies in the 12-month period
2 than the largest number of similar policies the insurer
3 canceled or nonrenewed for any reason in any 12-month period
4 between August 24, 1989, and August 24, 1992.
5 b. If the insurer considers the number of
6 cancellations and nonrenewals under sub-subparagraph a. to be
7 insufficient, the insurer may apply for approval of additional
8 cancellations or nonrenewals on the basis of an unreasonable
9 risk of insolvency. In evaluating a request under this
10 sub-subparagraph, the department shall consider and shall
11 require the insurer to provide information relevant to: the
12 insurer's size, market concentration, and general financial
13 condition; the portion of the insurer's business in this state
14 represented by personal lines residential property insurance;
15 the reasonableness of assumptions with respect to size,
16 frequency, severity, and path of hurricanes; the reinsurance
17 available to the insurer and potential recoveries from the
18 Florida Hurricane Catastrophe Fund; and the extent to which
19 the insurer's assets have been voluntarily transferred by
20 dividend or otherwise from the insurer to its stockholders,
21 parent companies, or affiliated companies since June 1, 1996,
22 or the date on which this section became law, whichever was
23 later. In the 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:
31 (I) The policy was canceled or nonrenewed for an
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 underwriting reason unrelated to the risk of loss from
2 hurricane exposure, nonpayment of premium, or any other lawful
3 reason that is unrelated to the risk of loss from hurricane
4 exposure. The department shall consider the reason specified
5 in the notice of cancellation or nonrenewal to be the reason
6 for the cancellation or nonrenewal unless the department finds
7 by a preponderance of the evidence that the stated reason was
8 not the insurer's actual reason for the cancellation or
9 nonrenewal.
10 (II) The cancellation or nonrenewal was initiated by
11 the insured.
12 (III) The insurer has offered the policyholder
13 replacement or alternative coverage at approved rates, which
14 coverage meets the requirements of the secondary mortgage
15 market.
16 d. In addition to any other cancellations or
17 nonrenewals subject to the limitations in this subsection, a
18 policy shall be considered as having been canceled or
19 nonrenewed for purposes of this subsection if:
20 (I) The insurer implements a rate increase under the
21 use-and-file provisions of s. 627.062(2)(a)2., which rate
22 increase exceeds 150 percent of the increase ultimately
23 approved by the department, and, while the rate filing was
24 pending, the policyholder voluntarily canceled or nonrenewed
25 the policy and obtained replacement coverage from another
26 insurer, including the Residential Property and Casualty Joint
27 Underwriting Association; or
28 (II) The insurer reduces the commission to an agent by
29 more than 25 percent and the agent thereafter places the risk
30 with another insurer, including the Residential Property and
31 Casualty Joint Underwriting Association, or the Florida
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 Windstorm Underwriting Association.
2 e. The department must approve or disapprove an
3 application for a waiver within 90 days after the department
4 receives the application for waiver.
5 3. In addition to the cancellations or nonrenewals
6 authorized under this section, an insurer may cancel or
7 nonrenew policies to the extent authorized by an exemption
8 from or waiver of either the moratorium created by chapter
9 93-401, Laws of Florida, or the moratorium phaseout under
10 former s. 627.7013(2).
11 4. Notwithstanding any provisions of this section to
12 the contrary, this section does not apply to any insurer that,
13 prior to August 24, 1992, filed notice of such insurer's
14 intent to discontinue writing insurance in this state under s.
15 624.430, and for which a finding has been made by the
16 department, the Division of Administrative Hearings of the
17 Department of Management Services, or a court that such notice
18 satisfied all requirements of s. 624.430. Nothing in this
19 section shall be construed to authorize an insurer to withdraw
20 from any line of property insurance business for the purpose
21 of reducing exposure to risk of hurricane loss if such
22 withdrawal commenced at any time that the moratorium under
23 chapter 93-401, Laws of Florida, or the moratorium phaseout
24 under this section is in effect.
25 5. The following actions by an insurer do not
26 constitute cancellations or nonrenewals for purposes of this
27 subsection:
28 a. The transfer of a risk from one admitted insurer to
29 another admitted insurer, unless the terms of the new or
30 replacement policy place the policyholder in default of a
31 mortgage obligation.
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 b. An increase in the hurricane deductible applicable
2 to the policy, unless the new deductible places the
3 policyholder in default of a mortgage obligation or the
4 deductible exceeds the limits specified in s. 627.701.
5 c. Any other lawful change in coverage that does not
6 place the policyholder in default of a mortgage obligation.
7 d. A cancellation or nonrenewal that is part of the
8 same action as the removal of a policy including windstorm or
9 hurricane coverage from the Residential Property and Casualty
10 Joint Underwriting Association.
11 6. In order to assure fair and effective enforcement
12 of this subsection, each insurer shall, no later than October
13 1, 1996, report to the department the policy number of each
14 policy subject to this subsection, arranged by county. The
15 report shall include the policy number for each personal lines
16 residential policy that was in force on June 1, 1996, or the
17 date this section became law, whichever was later. Beginning
18 October 1, 1996, each insurer shall also report, on a monthly
19 basis, all cancellations and nonrenewals of policies included
20 in such policy list and the reasons for the cancellations and
21 nonrenewals.
22 (c) The department may adopt rules to implement this
23 subsection.
24 (d) This section shall cease to operate at such time
25 as the department determines that the insured value of all
26 residential properties insured by the Florida Windstorm
27 Underwriting Association and all properties insured by the
28 Residential Property and Casualty Joint Underwriting
29 Association under policies providing wind coverage, combined,
30 has remained below $25 billion for 3 consecutive months, based
31 on exposure data reported to the department by the
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 associations.
2 (e) This subsection is repealed on June 1, 2004 2001.
3 Section 4. Subsections (1) and (4) of section
4 624.4072, Florida Statutes, are amended to read:
5 624.4072 Minority-owned property and casualty
6 insurers; limited exemption for taxation and assessments.--
7 (1) A minority business that is at least 51 percent
8 owned by minority persons, as defined in s. 288.703(3),
9 initially issued a certificate of authority in this state as
10 an authorized insurer after May 1, 1998, to write property and
11 casualty insurance shall be exempt, for a period not to exceed
12 10 5 years from the date of receiving its certificate of
13 authority, from the following taxes and assessments:
14 (a) Taxes imposed under ss. 175.101, 185.08, and
15 624.509;
16 (b) Assessments by the Florida Residential Property
17 and Casualty Joint Underwriting Association or by the Florida
18 Windstorm Underwriting Association, as provided under s.
19 627.351, except for emergency assessments collected from
20 policyholders pursuant to s. 627.351(2)(b)2.d.(III) and
21 (6)(b)3.d. Any such insurer shall be a member insurer of the
22 Florida Windstorm Underwriting Association and the Florida
23 Residential Property and Casualty Joint Underwriting
24 Association. The premiums of such insurer shall be included in
25 determining, for the Florida Windstorm Underwriting
26 Association, the aggregate statewide direct written premium
27 for property insurance and in determining, for the Florida
28 Residential Property and Casualty Joint Underwriting
29 Association, the aggregate statewide direct written premium
30 for the subject lines of business for all member insurers.
31 (4) This section is repealed effective December 31,
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 2010 July 1, 2003, and the tax and assessment exemptions
2 authorized by this section shall terminate on such date.
3
4
5 ================ T I T L E A M E N D M E N T ===============
6 And the title is amended as follows:
7 On page 16, line 28, of the amendment
8 remove: "the Department of Insurance"
9
10 and insert in lieu thereof:
11 insurance; amending s. 627.351, F.S.;
12 specifying membership of the boards of the
13 Florida Windstorm Underwriting Association and
14 the Residential Property and Casualty Joint
15 Underwriting Association; revising criteria for
16 limited apportionment; providing rate
17 standards; specifying duties with respect to
18 pursuit of federal tax exemptions and tax-free
19 bond status; providing premium tax exemption;
20 providing for appropriation of funds for
21 hurricane loss mitigation purposes; providing
22 standards for certain payments to agents of
23 record of Florida Winstorm Underwriting
24 Association and Residential Property and
25 Casualty Joint Underwriting Association
26 policies; amending s. 627.3511, F.S.; revising
27 agent compensation in connection with take-out
28 plans; amending s. 627.7013, F.S.; delaying the
29 repeal date of the moratorium on
30 hurricane-related cancellation or nonrenewal of
31 property insurance policies; amending s.
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HOUSE AMENDMENT
Bill No. HB 1607
Amendment No. ___ (for drafter's use only)
1 624.4072, F.S.; increasing a period of
2 exemption from certain taxes and assessments
3 for certain minority businesses; extending a
4 future repeal;
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