House Bill hb1607e1
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HB 1607, First Engrossed
1 A bill to be entitled
2 An act relating to insurance; amending s.
3 631.57, F.S.; specifying assessment liability;
4 amending s. 324.031, F.S.; providing for
5 establishing financial responsibility with
6 respect to damages arising out of the operation
7 of certain vehicles; providing definitions;
8 amending s. 627.351, F.S.; specifying
9 membership of the boards of the Florida
10 Windstorm Underwriting Association and the
11 Residential Property and Casualty Joint
12 Underwriting Association; revising criteria for
13 limited apportionment; providing rate
14 standards; specifying duties with respect to
15 pursuit of federal tax exemptions and tax-free
16 bond status; providing premium tax exemption;
17 providing for appropriation of funds for
18 hurricane loss mitigation purposes; providing
19 standards for certain payments to agents of
20 record of Florida Winstorm Underwriting
21 Association and Residential Property and
22 Casualty Joint Underwriting Association
23 policies; amending s. 627.3511, F.S.; revising
24 agent compensation in connection with take-out
25 plans; amending s. 627.7013, F.S.; delaying the
26 repeal date of the moratorium on
27 hurricane-related cancellation or nonrenewal of
28 property insurance policies; amending s.
29 624.4072, F.S.; increasing a period of
30 exemption from certain taxes and assessments
31 for certain minority businesses; extending a
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HB 1607, First Engrossed
1 future repeal; amending ss. 624.3161, 626.171,
2 F.S.; directing the department to adopt rules
3 relating to market conduct examinations and
4 license applications; amending s. 626.9541,
5 F.S.; revising provisions relating to unfair
6 competition and deceptive practices; creating
7 s. 626.9651, F.S.; directing the department to
8 adopt rules to govern the use of a consumer's
9 nonpublic personal financial and health
10 information by health insurers and health
11 maintenance organizations; providing standards
12 governing the rules; amending s. 627.062, F.S.;
13 providing for filing forms for rate standards;
14 amending s. 627.0625, F.S.; authorizing the
15 department to adopt rules relating to
16 third-party claimants; amending s. 627.0651,
17 F.S.; prohibiting motor vehicle insurers from
18 imposing a surcharge or a discount due to
19 certain factors; creating s. 627.385, F.S.;
20 providing rules of conduct for residual market
21 board members; creating s. 627.4065, F.S.;
22 providing for notice of right to return health
23 insurance policies; creating s. 627.41345,
24 F.S.; prohibiting an insurer or agent from
25 issuing or signing certain certificates of
26 insurance; providing that the terms of the
27 policy control in case of conflict; amending s.
28 627.7015, F.S.; defining "claim" for purposes
29 of alternative procedures for resolution of
30 disputed property insurance claims; amending s.
31 627.7276, F.S.; providing for notice of
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HB 1607, First Engrossed
1 coverage of automobile policies; creating s.
2 627.795, F.S.; providing guidelines for title
3 insurance policies; creating 626.9552, F.S.;
4 providing standards for single interest
5 insurance; amending s. 627.918, F.S.; directing
6 the department to adopt rules relating to
7 reporting formats; amending s. 641.3108, F.S.;
8 requiring health maintenance organizations to
9 provide certain information to subscriber
10 groups whose contract is not renewed for
11 certain reasons; requiring certain meetings of
12 the Florida Windstorm Underwriting Association
13 to be open to the public; requiring notice;
14 providing an effective date.
15
16 Be It Enacted by the Legislature of the State of Florida:
17
18 Section 1. Subsection (7) is added to section 631.57,
19 Florida Statutes, to read:
20 631.57 Powers and duties of the association.--
21 (7) Notwithstanding any other provision of law, the
22 net direct written premiums of medical malpractice insurance
23 are not subject to assessment under this section to cover
24 claims and administrative costs for the type of insurance
25 defined in s. 624.604.
26 Section 2. Section 324.031, Florida Statues, is
27 amended to read:
28 324.031 Manner of proving financial
29 responsibility.--The owner or operator of a taxicab,
30 limousine, jitney, or any other for-hire passenger
31 transportation vehicle may prove financial responsibility by
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HB 1607, First Engrossed
1 providing satisfactory evidence of holding a motor vehicle
2 liability policy as defined in s. 324.021(8) or s. 324.151,
3 which policy is issued by an insurance carrier which is a
4 member of the Florida Insurance Guaranty Association. The
5 operator or owner of any other vehicle may prove his or her
6 financial responsibility by:
7 (1) Furnishing satisfactory evidence of holding a
8 motor vehicle liability policy, providing single limits of
9 $100,000/300,000/50,000 or $500,000 combined limits, as
10 defined in ss. 324.021(8) and 324.151;
11 (2) Posting with the department a satisfactory bond of
12 a surety company authorized to do business in this state,
13 conditioned for payment of the amount specified in s.
14 324.021(7);
15 (3) Furnishing a certificate of the department showing
16 a deposit of cash or securities in accordance with s. 324.161;
17 or
18 (4) Furnishing a certificate of self-insurance issued
19 by the department in accordance with s. 324.171.
20
21 Any person, including any firm, partnership, association,
22 corporation, or other person, other than a natural person,
23 electing to use the method of proof specified in subsection
24 (2) or subsection (3) shall post a bond or deposit equal to
25 the number of vehicles owned times $30,000, to a maximum of
26 $120,000; in addition, any such person, other than a natural
27 person, shall maintain insurance providing coverage in excess
28 of limits of $10,000/20,000/10,000 or $30,000 combined single
29 limits, and such excess insurance shall provide minimum limits
30 of $100,000/300,000/50,000 $50,000/100,000/50,000 or $500,000
31 $150,000 combined single limits. The operator of any vehicle
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HB 1607, First Engrossed
1 with limits of coverage in the amount of
2 $100,000/300,000/50,000 or $500,000 combined limits shall be
3 deemed both the common carrier operating such vehicle and the
4 owner of such vehicle, and no other person or entity shall be
5 responsible in damages for the operator's negligence. For
6 purposes of this section, "operator" shall mean the driver.
7 Section 3. Effective July 1, 2001, paragraph (b) of
8 subsection (2) and paragraph (c) of subsection (6) of section
9 627.351, Florida Statutes, are amended, and paragraph (f) is
10 added to subsection (2) of said section, to read:
11 627.351 Insurance risk apportionment plans.--
12 (2) WINDSTORM INSURANCE RISK APPORTIONMENT.--
13 (b) The department shall require all insurers holding
14 a certificate of authority to transact property insurance on a
15 direct basis in this state, other than joint underwriting
16 associations and other entities formed pursuant to this
17 section, to provide windstorm coverage to applicants from
18 areas determined to be eligible pursuant to paragraph (c) who
19 in good faith are entitled to, but are unable to procure, such
20 coverage through ordinary means; or it shall adopt a
21 reasonable plan or plans for the equitable apportionment or
22 sharing among such insurers of windstorm coverage, which may
23 include formation of an association for this purpose. As used
24 in this subsection, the term "property insurance" means
25 insurance on real or personal property, as defined in s.
26 624.604, including insurance for fire, industrial fire, allied
27 lines, farmowners multiperil, homeowners' multiperil,
28 commercial multiperil, and mobile homes, and including
29 liability coverages on all such insurance, but excluding
30 inland marine as defined in s. 624.607(3) and excluding
31 vehicle insurance as defined in s. 624.605(1)(a) other than
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HB 1607, First Engrossed
1 insurance on mobile homes used as permanent dwellings. The
2 department shall adopt rules that provide a formula for the
3 recovery and repayment of any deferred assessments.
4 1. For the purpose of this section, properties
5 eligible for such windstorm coverage are defined as dwellings,
6 buildings, and other structures, including mobile homes which
7 are used as dwellings and which are tied down in compliance
8 with mobile home tie-down requirements prescribed by the
9 Department of Highway Safety and Motor Vehicles pursuant to s.
10 320.8325, and the contents of all such properties. An
11 applicant or policyholder is eligible for coverage only if an
12 offer of coverage cannot be obtained by or for the applicant
13 or policyholder from an admitted insurer at approved rates.
14 2.a.(I) All insurers required to be members of such
15 association shall participate in its writings, expenses, and
16 losses. Surplus of the association shall be retained for the
17 payment of claims and shall not be distributed to the member
18 insurers. Such participation by member insurers shall be in
19 the proportion that the net direct premiums of each member
20 insurer written for property insurance in this state during
21 the preceding calendar year bear to the aggregate net direct
22 premiums for property insurance of all member insurers, as
23 reduced by any credits for voluntary writings, in this state
24 during the preceding calendar year. For the purposes of this
25 subsection, the term "net direct premiums" means direct
26 written premiums for property insurance, reduced by premium
27 for liability coverage and for the following if included in
28 allied lines: rain and hail on growing crops; livestock;
29 association direct premiums booked; National Flood Insurance
30 Program direct premiums; and similar deductions specifically
31 authorized by the plan of operation and approved by the
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HB 1607, First Engrossed
1 department. A member's participation shall begin on the first
2 day of the calendar year following the year in which it is
3 issued a certificate of authority to transact property
4 insurance in the state and shall terminate 1 year after the
5 end of the calendar year during which it no longer holds a
6 certificate of authority to transact property insurance in the
7 state. The commissioner, after review of annual statements,
8 other reports, and any other statistics that the commissioner
9 deems necessary, shall certify to the association the
10 aggregate direct premiums written for property insurance in
11 this state by all member insurers.
12 (II) The plan of operation shall provide for a board
13 of directors consisting of the members of the State Board of
14 Administration, which shall oversee the operations of the
15 association and shall carry out any other duties provided by
16 law. The board shall appoint an advisory council consisting
17 of an actuary, a meterorologist, an engineer, a representative
18 of insurers, a representative of insurance agents, and three
19 consumers who shall also be representatives of other
20 professions and industries, to provide the board with
21 information and advice in connection with its duties under
22 this section. Members of the advisory council shall be
23 eligible for per diem and travel expeses under s. 112.061.
24 The association shall not be considered a state agency and its
25 obligations shall not be considered obligations of the state
26 consisting of the Insurance Consumer Advocate appointed under
27 s. 627.0613, 1consumer representative appointed by the
28 Insurance Commissioner, 1 consumer representative appointed by
29 the Governor, and 12 additional members appointed as specified
30 in the plan of operation. One of the 12 additional members
31 shall be elected by the domestic companies of this state on
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HB 1607, First Engrossed
1 the basis of cumulative weighted voting based on the net
2 direct premiums of domestic companies in this state. Nothing
3 in the 1997 amendments to this paragraph terminates the
4 existing board or the terms of any members of the board.
5 (III) The plan of operation shall provide a formula
6 whereby a company voluntarily providing windstorm coverage in
7 affected areas will be relieved wholly or partially from
8 apportionment of a regular assessment pursuant to
9 sub-sub-subparagraph d.(I) or sub-sub-subparagraph d.(II).
10 (IV) A company which is a member of a group of
11 companies under common management may elect to have its
12 credits applied on a group basis, and any company or group may
13 elect to have its credits applied to any other company or
14 group.
15 (V) There shall be no credits or relief from
16 apportionment to a company for emergency assessments collected
17 from its policyholders under sub-sub-subparagraph d.(III).
18 (VI) The plan of operation may also provide for the
19 award of credits, for a period not to exceed 3 years, from a
20 regular assessment pursuant to sub-sub-subparagraph d.(I) or
21 sub-sub-subparagraph d.(II) as an incentive for taking
22 policies out of the Residential Property and Casualty Joint
23 Underwriting Association. In order to qualify for the
24 exemption under this sub-sub-subparagraph, the take-out plan
25 must provide that at least 40 percent of the policies removed
26 from the Residential Property and Casualty Joint Underwriting
27 Association cover risks located in Dade, Broward, and Palm
28 Beach Counties or at least 30 percent of the policies so
29 removed cover risks located in Dade, Broward, and Palm Beach
30 Counties and an additional 50 percent of the policies so
31 removed cover risks located in other coastal counties, and
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HB 1607, First Engrossed
1 must also provide that no more than 15 percent of the policies
2 so removed may exclude windstorm coverage. With the approval
3 of the department, the association may waive these geographic
4 criteria for a take-out plan that removes at least the lesser
5 of 100,000 Residential Property and Casualty Joint
6 Underwriting Association policies or 15 percent of the total
7 number of Residential Property and Casualty Joint Underwriting
8 Association policies, provided the governing board of the
9 Residential Property and Casualty Joint Underwriting
10 Association certifies that the take-out plan will materially
11 reduce the Residential Property and Casualty Joint
12 Underwriting Association's 100-year probable maximum loss from
13 hurricanes. With the approval of the department, the board
14 may extend such credits for an additional year if the insurer
15 guarantees an additional year of renewability for all policies
16 removed from the Residential Property and Casualty Joint
17 Underwriting Association, or for 2 additional years if the
18 insurer guarantees 2 additional years of renewability for all
19 policies removed from the Residential Property and Casualty
20 Joint Underwriting Association.
21 b. Assessments to pay deficits in the association
22 under this subparagraph shall be included as an appropriate
23 factor in the making of rates as provided in s. 627.3512.
24 c. The Legislature finds that the potential for
25 unlimited deficit assessments under this subparagraph may
26 induce insurers to attempt to reduce their writings in the
27 voluntary market, and that such actions would worsen the
28 availability problems that the association was created to
29 remedy. It is the intent of the Legislature that insurers
30 remain fully responsible for paying regular assessments and
31 collecting emergency assessments for any deficits of the
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HB 1607, First Engrossed
1 association; however, it is also the intent of the Legislature
2 to provide a means by which assessment liabilities may be
3 amortized over a period of years.
4 d.(I) When the deficit incurred in a particular
5 calendar year is 10 percent or less of the aggregate statewide
6 direct written premium for property insurance for the prior
7 calendar year for all member insurers, the association shall
8 levy an assessment on member insurers in an amount equal to
9 the deficit.
10 (II) When the deficit incurred in a particular
11 calendar year exceeds 10 percent of the aggregate statewide
12 direct written premium for property insurance for the prior
13 calendar year for all member insurers, the association shall
14 levy an assessment on member insurers in an amount equal to
15 the greater of 10 percent of the deficit or 10 percent of the
16 aggregate statewide direct written premium for property
17 insurance for the prior calendar year for member insurers. Any
18 remaining deficit shall be recovered through emergency
19 assessments under sub-sub-subparagraph (III).
20 (III) Upon a determination by the board of directors
21 that a deficit exceeds the amount that will be recovered
22 through regular assessments on member insurers, pursuant to
23 sub-sub-subparagraph (I) or sub-sub-subparagraph (II), the
24 board shall levy, after verification by the department,
25 emergency assessments to be collected by member insurers and
26 by underwriting associations created pursuant to this section
27 which write property insurance, upon issuance or renewal of
28 property insurance policies other than National Flood
29 Insurance policies in the year or years following levy of the
30 regular assessments. The amount of the emergency assessment
31 collected in a particular year shall be a uniform percentage
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HB 1607, First Engrossed
1 of that year's direct written premium for property insurance
2 for all member insurers and underwriting associations,
3 excluding National Flood Insurance policy premiums, as
4 annually determined by the board and verified by the
5 department. The department shall verify the arithmetic
6 calculations involved in the board's determination within 30
7 days after receipt of the information on which the
8 determination was based. Notwithstanding any other provision
9 of law, each member insurer and each underwriting association
10 created pursuant to this section shall collect emergency
11 assessments from its policyholders without such obligation
12 being affected by any credit, limitation, exemption, or
13 deferment. The emergency assessments so collected shall be
14 transferred directly to the association on a periodic basis as
15 determined by the association. The aggregate amount of
16 emergency assessments levied under this sub-sub-subparagraph
17 in any calendar year may not exceed the greater of 10 percent
18 of the amount needed to cover the original deficit, plus
19 interest, fees, commissions, required reserves, and other
20 costs associated with financing of the original deficit, or 10
21 percent of the aggregate statewide direct written premium for
22 property insurance written by member insurers and underwriting
23 associations for the prior year, plus interest, fees,
24 commissions, required reserves, and other costs associated
25 with financing the original deficit. The board may pledge the
26 proceeds of the emergency assessments under this
27 sub-sub-subparagraph as the source of revenue for bonds, to
28 retire any other debt incurred as a result of the deficit or
29 events giving rise to the deficit, or in any other way that
30 the board determines will efficiently recover the deficit. The
31 emergency assessments under this sub-sub-subparagraph shall
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HB 1607, First Engrossed
1 continue as long as any bonds issued or other indebtedness
2 incurred with respect to a deficit for which the assessment
3 was imposed remain outstanding, unless adequate provision has
4 been made for the payment of such bonds or other indebtedness
5 pursuant to the document governing such bonds or other
6 indebtedness. Emergency assessments collected under this
7 sub-sub-subparagraph are not part of an insurer's rates, are
8 not premium, and are not subject to premium tax, fees, or
9 commissions; however, failure to pay the emergency assessment
10 shall be treated as failure to pay premium.
11 (IV) Each member insurer's share of the total regular
12 assessments under sub-sub-subparagraph (I) or
13 sub-sub-subparagraph (II) shall be in the proportion that the
14 insurer's net direct premium for property insurance in this
15 state, for the year preceding the assessment bears to the
16 aggregate statewide net direct premium for property insurance
17 of all member insurers, as reduced by any credits for
18 voluntary writings for that year.
19 (V) If regular deficit assessments are made under
20 sub-sub-subparagraph (I) or sub-sub-subparagraph (II), or by
21 the Residential Property and Casualty Joint Underwriting
22 Association under sub-subparagraph (6)(b)3.a. or
23 sub-subparagraph (6)(b)3.b., the association shall levy upon
24 the association's policyholders, as part of its next rate
25 filing, or by a separate rate filing solely for this purpose,
26 a market equalization surcharge in a percentage equal to the
27 total amount of such regular assessments divided by the
28 aggregate statewide direct written premium for property
29 insurance for member insurers for the prior calendar year.
30 Market equalization surcharges under this sub-sub-subparagraph
31 are not considered premium and are not subject to commissions,
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HB 1607, First Engrossed
1 fees, or premium taxes; however, failure to pay a market
2 equalization surcharge shall be treated as failure to pay
3 premium.
4 e. The governing body of any unit of local government,
5 any residents of which are insured under the plan, may issue
6 bonds as defined in s. 125.013 or s. 166.101 to fund an
7 assistance program, in conjunction with the association, for
8 the purpose of defraying deficits of the association. In order
9 to avoid needless and indiscriminate proliferation,
10 duplication, and fragmentation of such assistance programs,
11 any unit of local government, any residents of which are
12 insured by the association, may provide for the payment of
13 losses, regardless of whether or not the losses occurred
14 within or outside of the territorial jurisdiction of the local
15 government. Revenue bonds may not be issued until validated
16 pursuant to chapter 75, unless a state of emergency is
17 declared by executive order or proclamation of the Governor
18 pursuant to s. 252.36 making such findings as are necessary to
19 determine that it is in the best interests of, and necessary
20 for, the protection of the public health, safety, and general
21 welfare of residents of this state and the protection and
22 preservation of the economic stability of insurers operating
23 in this state, and declaring it an essential public purpose to
24 permit certain municipalities or counties to issue bonds as
25 will provide relief to claimants and policyholders of the
26 association and insurers responsible for apportionment of plan
27 losses. Any such unit of local government may enter into such
28 contracts with the association and with any other entity
29 created pursuant to this subsection as are necessary to carry
30 out this paragraph. Any bonds issued under this
31 sub-subparagraph shall be payable from and secured by moneys
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HB 1607, First Engrossed
1 received by the association from assessments under this
2 subparagraph, and assigned and pledged to or on behalf of the
3 unit of local government for the benefit of the holders of
4 such bonds. The funds, credit, property, and taxing power of
5 the state or of the unit of local government shall not be
6 pledged for the payment of such bonds. If any of the bonds
7 remain unsold 60 days after issuance, the department shall
8 require all insurers subject to assessment to purchase the
9 bonds, which shall be treated as admitted assets; each insurer
10 shall be required to purchase that percentage of the unsold
11 portion of the bond issue that equals the insurer's relative
12 share of assessment liability under this subsection. An
13 insurer shall not be required to purchase the bonds to the
14 extent that the department determines that the purchase would
15 endanger or impair the solvency of the insurer. The authority
16 granted by this sub-subparagraph is additional to any bonding
17 authority granted by subparagraph 6.
18 3. The plan shall also provide that any member with a
19 surplus as to policyholders of $25 $20 million or less writing
20 25 percent or more of its total countrywide property insurance
21 premiums in this state may petition the department, within the
22 first 90 days of each calendar year, to qualify as a limited
23 apportionment company. The apportionment of such a member
24 company in any calendar year for which it is qualified shall
25 not exceed its gross participation, which shall not be
26 affected by the formula for voluntary writings. In no event
27 shall a limited apportionment company be required to
28 participate in any apportionment of losses pursuant to
29 sub-sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II)
30 in the aggregate which exceeds $50 million after payment of
31 available plan funds in any calendar year. However, a limited
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1 apportionment company shall collect from its policyholders any
2 emergency assessment imposed under sub-sub-subparagraph
3 2.d.(III). The plan shall provide that, if the department
4 determines that any regular assessment will result in an
5 impairment of the surplus of a limited apportionment company,
6 the department may direct that all or part of such assessment
7 be deferred. However, there shall be no limitation or
8 deferment of an emergency assessment to be collected from
9 policyholders under sub-sub-subparagraph 2.d.(III).
10 4. The plan shall provide for the deferment, in whole
11 or in part, of a regular assessment of a member insurer under
12 sub-sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II),
13 but not for an emergency assessment collected from
14 policyholders under sub-sub-subparagraph 2.d.(III), if, in the
15 opinion of the commissioner, payment of such regular
16 assessment would endanger or impair the solvency of the member
17 insurer. In the event a regular assessment against a member
18 insurer is deferred in whole or in part, the amount by which
19 such assessment is deferred may be assessed against the other
20 member insurers in a manner consistent with the basis for
21 assessments set forth in sub-sub-subparagraph 2.d.(I) or
22 sub-sub-subparagraph 2.d.(II).
23 5.a. The plan of operation may include deductibles and
24 rules for classification of risks and rate modifications
25 consistent with the objective of providing and maintaining
26 funds sufficient to pay catastrophe losses.
27 b.(I) Subject to the provisions of
28 sub-sub-subparagraph (II), all rate filings under this
29 subsection relating to coverage for windstorm losses must
30 reflect historical insurance data. When using a computer model
31 in making a rate filing under this subsection, the association
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1 may use only a computer model which is based upon standards
2 and guidelines developed or established by the Florida
3 Commission on Hurricane Loss Projection Methodology under s.
4 627.0628. Consideration of historical insurance data and the
5 use of computer models shall be consistent with applicable
6 Standards of Practice of the American Academy of Actuaries.
7 The association may require arbitration of a rate filing under
8 s. 627.062(6).
9 (II) It is the intent of the Legislature that the
10 Rates for coverage provided by the association must be
11 actuarially sound and not competitive with approved rates
12 charged in the admitted voluntary market such that the
13 association functions as a residual market mechanism to
14 provide insurance only when the insurance cannot be procured
15 in the voluntary market. The plan of operation shall provide
16 a mechanism to assure that the average base rates for each
17 line of business charged by the asociation for hurricane
18 coverage for each unmitigated risk in a particular county
19 shall be no lower than the highest department-approved rate
20 within the association's eligible area for hurricane coverage
21 in the voluntary market for each line of business in such
22 county, among the 20 largest insurers actually writing such
23 coverage in such county , beginning no later than January 1,
24 1999, the rates charged by the association for each line of
25 business are reflective of approved rates in the voluntary
26 market for hurricane coverage for each line of business in the
27 various areas eligible for association coverage.
28 (III) Notwithstanding any other provision of law,
29 windstorm rates under this subsection previously adjudicated
30 for use and in effect as of the effective date of this act,
31 and the related mitigation credit program, shall apply to
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HB 1607, First Engrossed
1 rates of the association and shall continue in effect until
2 such rates are fully phased in. The rate for a particular
3 group or class of policies may be increased only after the
4 full phase-in of the current rate plan as to that group or
5 class of policies.
6 c. The association shall provide for windstorm
7 coverage on residential properties in limits up to $10 million
8 for commercial lines residential risks and up to $1 million
9 for personal lines residential risks. If coverage with the
10 association is sought for a residential risk valued in excess
11 of these limits, coverage shall be available to the risk up to
12 the replacement cost or actual cash value of the property, at
13 the option of the insured, if coverage for the risk cannot be
14 located in the authorized market. The association must accept
15 a commercial lines residential risk with limits above $10
16 million or a personal lines residential risk with limits above
17 $1 million if coverage is not available in the authorized
18 market. The association may write coverage above the limits
19 specified in this subparagraph with or without facultative or
20 other reinsurance coverage, as the association determines
21 appropriate.
22 d. The plan of operation must provide objective
23 criteria and procedures, approved by the department, to be
24 uniformly applied for all applicants in determining whether an
25 individual risk is so hazardous as to be uninsurable. In
26 making this determination and in establishing the criteria and
27 procedures, the following shall be considered:
28 (I) Whether the likelihood of a loss for the
29 individual risk is substantially higher than for other risks
30 of the same class; and
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1 (II) Whether the uncertainty associated with the
2 individual risk is such that an appropriate premium cannot be
3 determined.
4
5 The acceptance or rejection of a risk by the association
6 pursuant to such criteria and procedures must be construed as
7 the private placement of insurance, and the provisions of
8 chapter 120 do not apply.
9 e. The policies issued by the association must provide
10 that if the association obtains an offer from an authorized
11 insurer to cover the risk at its approved rates under either a
12 standard policy including wind coverage or, if consistent with
13 the insurer's underwriting rules as filed with the department,
14 a basic policy including wind coverage, the risk is no longer
15 eligible for coverage through the association. Upon
16 termination of eligibility, the association shall provide
17 written notice to the policyholder and agent of record stating
18 that the association policy must be canceled as of 60 days
19 after the date of the notice because of the offer of coverage
20 from an authorized insurer. Other provisions of the insurance
21 code relating to cancellation and notice of cancellation do
22 not apply to actions under this sub-subparagraph.
23 f. Association policies and applications must include
24 a notice that the association policy could, under this
25 section, be replaced with a policy issued by an authorized
26 insurer that does not provide coverage identical to the
27 coverage provided by the association. The notice shall also
28 specify that acceptance of association coverage creates a
29 conclusive presumption that the applicant or policyholder is
30 aware of this potential.
31
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1 g. If the risk accepts an offer of coverage through
2 the market assistanceprogram or through a mechanism
3 established by the association, either before the policy is
4 issued by the association or during the first 30 days of
5 coverage by the association, and the producing agent who
6 submitted the application to the association is not currrently
7 appointed by the insurer, the insurer shall either:
8 (I) Pay to the producing agent of record of the
9 policy, for the first year, an amount that is the greater of
10 the insurer's usual and customary commission for the type of
11 policy written or a fee equal to the usual and customary
12 commission of the association; or
13 (II) Offer to allow the producing agency of record of
14 the policy to continue servicing the policy for a period of
15 not less than 1 year and offer to pay the agent the greater of
16 the insurer's or the association's usual and customary
17 commission for the type of policy written.
18
19 If the new or producing agent is unwilling or unable to accept
20 appointment, the new insurer shall pay the agent in accordance
21 with sub-sub-subparagraph (I).
22 h. When the association enters into a contractual
23 agreement for a take-out plan, the producing agent of record
24 of the association policy is entitled to retain any unearned
25 commission on the policy, and the insurer shall either:
26 (I) Pay to the producing agent of record of the
27 association policy, for the first year, an amount that is the
28 greater of the insurer's usual and customary commission for
29 the type of policy written or a fee equal to the usual and
30 customary commission of the association; or
31
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1 (II) Offer to allow the producing agent of record of
2 the association policy to continue servicing the policy for a
3 period of not less than 1 year and offer to pay the agent the
4 greater of the insurer's or the association's usual and
5 customary commission for the type of policy written.
6
7 If the new or producing agent is unwilling or unable to accept
8 appointment, the new insurer shall pay the agent in accordance
9 with sub-sub-subparagraph(I).
10 6.a. The plan of operation may authorize the formation
11 of a private nonprofit corporation, a private nonprofit
12 unincorporated association, a partnership, a trust, a limited
13 liability company, or a nonprofit mutual company which may be
14 empowered, among other things, to borrow money by issuing
15 bonds or by incurring other indebtedness and to accumulate
16 reserves or funds to be used for the payment of insured
17 catastrophe losses. The plan may authorize all actions
18 necessary to facilitate the issuance of bonds, including the
19 pledging of assessments or other revenues.
20 b. Any entity created under this subsection, or any
21 entity formed for the purposes of this subsection, may sue and
22 be sued, may borrow money; issue bonds, notes, or debt
23 instruments; pledge or sell assessments, market equalization
24 surcharges and other surcharges, rights, premiums, contractual
25 rights, projected recoveries from the Florida Hurricane
26 Catastrophe Fund, other reinsurance recoverables, and other
27 assets as security for such bonds, notes, or debt instruments;
28 enter into any contracts or agreements necessary or proper to
29 accomplish such borrowings; and take other actions necessary
30 to carry out the purposes of this subsection. The association
31 may issue bonds or incur other indebtedness, or have bonds
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1 issued on its behalf by a unit of local government pursuant to
2 subparagraph (g)2., in the absence of a hurricane or other
3 weather-related event, upon a determination by the association
4 subject to approval by the department that such action would
5 enable it to efficiently meet the financial obligations of the
6 association and that such financings are reasonably necessary
7 to effectuate the requirements of this subsection. Any such
8 entity may accumulate reserves and retain surpluses as of the
9 end of any association year to provide for the payment of
10 losses incurred by the association during that year or any
11 future year. The association shall incorporate and continue
12 the plan of operation and articles of agreement in effect on
13 the effective date of chapter 76-96, Laws of Florida, to the
14 extent that it is not inconsistent with chapter 76-96, and as
15 subsequently modified consistent with chapter 76-96. The board
16 of directors and officers currently serving shall continue to
17 serve until their successors are duly qualified as provided
18 under the plan. The assets and obligations of the plan in
19 effect immediately prior to the effective date of chapter
20 76-96 shall be construed to be the assets and obligations of
21 the successor plan created herein.
22 c. In recognition of s. 10, Art. I of the State
23 Constitution, prohibiting the impairment of obligations of
24 contracts, it is the intent of the Legislature that no action
25 be taken whose purpose is to impair any bond indenture or
26 financing agreement or any revenue source committed by
27 contract to such bond or other indebtedness issued or incurred
28 by the association or any other entity created under this
29 subsection.
30 7. On such coverage, an agent's remuneration shall be
31 that amount of money payable to the agent by the terms of his
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HB 1607, First Engrossed
1 or her contract with the company with which the business is
2 placed. However, no commission will be paid on that portion of
3 the premium which is in excess of the standard premium of that
4 company.
5 8. Subject to approval by the department, the
6 association may establish different eligibility requirements
7 and operational procedures for any line or type of coverage
8 for any specified eligible area or portion of an eligible area
9 if the board determines that such changes to the eligibility
10 requirements and operational procedures are justified due to
11 the voluntary market being sufficiently stable and competitive
12 in such area or for such line or type of coverage and that
13 consumers who, in good faith, are unable to obtain insurance
14 through the voluntary market through ordinary methods would
15 continue to have access to coverage from the association. When
16 coverage is sought in connection with a real property
17 transfer, such requirements and procedures shall not provide
18 for an effective date of coverage later than the date of the
19 closing of the transfer as established by the transferor, the
20 transferee, and, if applicable, the lender.
21 9. Notwithstanding any other provision of law:
22 a. The pledge or sale of, the lien upon, and the
23 security interest in any rights, revenues, or other assets of
24 the association created or purported to be created pursuant to
25 any financing documents to secure any bonds or other
26 indebtedness of the association shall be and remain valid and
27 enforceable, notwithstanding the commencement of and during
28 the continuation of, and after, any rehabilitation,
29 insolvency, liquidation, bankruptcy, receivership,
30 conservatorship, reorganization, or similar proceeding against
31
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1 the association under the laws of this state or any other
2 applicable laws.
3 b. No such proceeding shall relieve the association of
4 its obligation, or otherwise affect its ability to perform its
5 obligation, to continue to collect, or levy and collect,
6 assessments, market equalization or other surcharges,
7 projected recoveries from the Florida Hurricane Catastrophe
8 Fund, reinsurance recoverables, or any other rights, revenues,
9 or other assets of the association pledged.
10 c. Each such pledge or sale of, lien upon, and
11 security interest in, including the priority of such pledge,
12 lien, or security interest, any such assessments, emergency
13 assessments, market equalization or renewal surcharges,
14 projected recoveries from the Florida Hurricane Catastrophe
15 Fund, reinsurance recoverables, or other rights, revenues, or
16 other assets which are collected, or levied and collected,
17 after the commencement of and during the pendency of or after
18 any such proceeding shall continue unaffected by such
19 proceeding.
20 d. As used in this subsection, the term "financing
21 documents" means any agreement, instrument, or other document
22 now existing or hereafter created evidencing any bonds or
23 other indebtedness of the association or pursuant to which any
24 such bonds or other indebtedness has been or may be issued and
25 pursuant to which any rights, revenues, or other assets of the
26 association are pledged or sold to secure the repayment of
27 such bonds or indebtedness, together with the payment of
28 interest on such bonds or such indebtedness, or the payment of
29 any other obligation of the association related to such bonds
30 or indebtedness.
31
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HB 1607, First Engrossed
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 10. It is the intent of the Legislature that the
29 association vigorously pursue an exemption from federal income
30 taxation and tax-free status for bonds issued by or on behalf
31 of the association. In furtherance of this intent:
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HB 1607, First Engrossed
1 a. The association shall retain such expert tax
2 counsel and bond counsel as necessary and expend such funds as
3 necessary to pursue such negotiations or litigation as may
4 lead to favorable tax rulings.
5 b. The association shall, no later than January 1,
6 2002, provide a report to the Governor, the Insurance
7 Commissioner, the President of the Senate, and the Speaker of
8 the House of Representatives detailing the status of the
9 negotiations or litigation and recommending statutory changes,
10 if any, needed to secure favorable tax rulings.
11 (f)1. In recognition of the fact that the association
12 created under this subsection furthers an essentially
13 governmental purpose, the association is exempt from premium
14 taxes effective July 1, 2002.
15 2. Begining with the 2002-2003 fiscal year, and except
16 for years in which the association is collecting regular or
17 emergency assessments under this subsection, the association
18 shall annually transfer the sum of $5 million to the General
19 Revenue Fund, which moneys shall be appropriated for hurricane
20 loss mitigation purposes as specified in s. 215.555(7)(c).
21 Such appropriations are in addition to any appropriations
22 required or authorized by s. 215.555(7)(c).
23 (6) RESIDENTIAL PROPERTY AND CASUALTY JOINT
24 UNDERWRITING ASSOCIATION.--
25 (c) The plan of operation of the association:
26 1. May provide for one or more designated insurers,
27 able and willing to provide policy and claims service, to act
28 on behalf of the association to provide such service. Each
29 licensed agent shall be entitled to indicate the order of
30 preference regarding who will service the business placed by
31 the agent. The association shall adhere to each agent's
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1 preferences unless after consideration of other factors in
2 assigning agents, including, but not limited to, servicing
3 capacity and fee arrangements, the association has reason to
4 believe it is in the best interest of the association to make
5 a different assignment.
6 2. Must provide for adoption of residential property
7 and casualty insurance policy forms, which forms must be
8 approved by the department prior to use. The association
9 shall adopt the following policy forms:
10 a. Standard personal lines policy forms including wind
11 coverage, which are multiperil policies providing what is
12 generally considered to be full coverage of a residential
13 property similar to the coverage provided under an HO-2, HO-3,
14 HO-4, or HO-6 policy.
15 b. Standard personal lines policy forms without wind
16 coverage, which are the same as the policies described in
17 sub-subparagraph a. except that they do not include wind
18 coverage.
19 c. Basic personal lines policy forms including wind
20 coverage, which are policies similar to an HO-8 policy or a
21 dwelling fire policy that provide coverage meeting the
22 requirements of the secondary mortgage market, but which
23 coverage is more limited than the coverage under a standard
24 policy.
25 d. Basic personal lines policy forms without wind
26 coverage, which are the same as the policies described in
27 sub-subparagraph c. except that they do not include wind
28 coverage.
29 e. Commercial lines residential policy forms including
30 wind coverage that are generally similar to the basic perils
31
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1 of full coverage obtainable for commercial residential
2 structures in the admitted voluntary market.
3 f. Commercial lines residential policy forms without
4 wind coverage, which are the same as the policies described in
5 sub-subparagraph e. except that they do not include wind
6 coverage.
7 3. May provide that the association may employ or
8 otherwise contract with individuals or other entities to
9 provide administrative or professional services that may be
10 appropriate to effectuate the plan. The association shall
11 have the power to borrow funds, by issuing bonds or by
12 incurring other indebtedness, and shall have other powers
13 reasonably necessary to effectuate the requirements of this
14 subsection. The association may issue bonds or incur other
15 indebtedness, or have bonds issued on its behalf by a unit of
16 local government pursuant to subparagraph (g)2., in the
17 absence of a hurricane or other weather-related event, upon a
18 determination by the association, subject to approval by the
19 department, that such action would enable it to efficiently
20 meet the financial obligations of the association and that
21 such financings are reasonably necessary to effectuate the
22 requirements of this subsection. The association is
23 authorized to take all actions needed to facilitate tax-free
24 status for any such bonds or indebtedness, including formation
25 of trusts or other affiliated entities. The association shall
26 have the authority to pledge assessments, projected recoveries
27 from the Florida Hurricane Catastrophe Fund, other reinsurance
28 recoverables, market equalization and other surcharges, and
29 other funds available to the association as security for bonds
30 or other indebtedness. In recognition of s. 10, Art. I of the
31 State Constitution, prohibiting the impairment of obligations
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HB 1607, First Engrossed
1 of contracts, it is the intent of the Legislature that no
2 action be taken whose purpose is to impair any bond indenture
3 or financing agreement or any revenue source committed by
4 contract to such bond or other indebtedness.
5 4. Must require that the association operate subject
6 to the supervision and approval of a board of governors
7 consisting of the members of the State Board of
8 Administration. consisting of 13 individuals, including 1 who
9 is elected as chair. The board shall consist of:
10 a. The insurance consumer advocate appointed under s.
11 627.0613.
12 b. Five members designated by the insurance industry.
13 c. Five consumer representatives appointed by the
14 Insurance Commissioner. Two of the consumer representatives
15 must, at the time of appointment, be holders of policies
16 issued by the association, who are selected with consideration
17 given to reflecting the geographic balance of association
18 policyholders. Two of the consumer members must be individuals
19 who are minority persons as defined in s. 288.703(3). One of
20 the consumer members shall have expertise in the field of
21 mortgage lending.
22 d. Two representatives of the insurance industry
23 appointed by the Insurance Commissioner. Of the two insurance
24 industry representatives appointed by the Insurance
25 Commissioner, at least one must be an individual who is a
26 minority person as defined in s. 288.703(3).
27
28 Any board member may be disapproved or removed and replaced by
29 the commissioner at any time for cause. All board members,
30 including the chair, must be appointed to serve for 3-year
31 terms beginning annually on a date designated by the plan.
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HB 1607, First Engrossed
1 5. Must provide a procedure for determining the
2 eligibility of a risk for coverage, as follows:
3 a. With respect to personal lines residential risks,
4 if the risk is offered coverage from an authorized insurer at
5 the insurer's approved rate under either a standard policy
6 including wind coverage or, if consistent with the insurer's
7 underwriting rules as filed with the department, a basic
8 policy including wind coverage, the risk is not eligible for
9 any policy issued by the association.
10 (I) If the risk accepts an offer of coverage through
11 the market assistance program 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 currently
16 appointed by the insurer, the insurer shall either:
17 (A) 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 cmmission for the type of
20 policy written or a fee equal to the usual and customary
21 commission of the association; or
22 (B) Offer to allow the producing agent 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 ssociation'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-sub-subparagraph (A).
31
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HB 1607, First Engrossed
1 (II) When the association enters into a contractual
2 agreement for a take-out plan, the producing agent of record
3 of the association policy is entitled to retain any unearned
4 commission on the policy, and the isnurer shall either:
5 (A) Pay to the producing agent of record of the
6 association policy, for the first year, an amount that is the
7 greater of the insurer's usual and customary commission for
8 the type of policy written or a fee equal to the usual and
9 customary commission of the association; or
10 (B) Offer to allow the producing agent of record of
11 the associaton policy to continue servicing the policy for a
12 period of not less than 1 year and offer to pay the agent the
13 greater of the insurer's or the asociation's usual and
14 customary commission for the type of policy written.
15
16 If the new or producing agent is unwilling or unable to accept
17 appointment, the new insurer shall pay the agent in accordance
18 with sub-sub-sub-subparagraph (A). If the risk accepts an
19 offer of coverage through the market assistance plan or an
20 offer of coverage through a mechanism established by the
21 association before a policy is issued to the risk by the
22 association or during the first 30 days of coverage by the
23 association, and the producing agent who submitted the
24 application to the plan or to the association is not currently
25 appointed by the insurer, the insurer shall either appoint the
26 agent to service the risk or, if the insurer places the
27 coverage through a new agent, require the new agent who then
28 writes the policy to pay not less than 50 percent of the first
29 year's commission to the producing agent who submitted the
30 application to the plan or the association, except that if the
31 new agent is an employee or exclusive agent of the insurer,
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HB 1607, First Engrossed
1 the new agent shall pay a policy fee of $50 to the producing
2 agent in lieu of splitting the commission. If the risk is not
3 able to obtain any such offer, the risk is eligible for either
4 a standard policy including wind coverage or a basic policy
5 including wind coverage issued by the association; however, if
6 the risk could not be insured under a standard policy
7 including wind coverage regardless of market conditions, the
8 risk shall be eligible for a basic policy including wind
9 coverage unless rejected under subparagraph 8. The association
10 shall determine the type of policy to be provided on the basis
11 of objective standards specified in the underwriting manual
12 and based on generally accepted underwriting practices.
13 b. With respect to commercial lines residential risks,
14 if the risk is offered coverage under a policy including wind
15 coverage from an authorized insurer at its approved rate, the
16 risk is not eligible for any policy issued by the association.
17 (I) If the risk accepts an offer of coverage through
18 the market assistance program or through a mechanism
19 established by the association, either before the policy is
20 issued by the association or during the first 30 days of
21 coverage by the association, and the producing agent who
22 submitted the application to the association is not currently
23 appointed by the insurer, the insurer shall either:
24 (A) Pay to the producing agent of record of the
25 policy, for the first year, an amount that is the greater of
26 the insurer's usual and customary cmmission for the type of
27 policy written or a fee equal to the usual and customary
28 commission of the association; or
29 (B) Offer to allow the producing agent of record of
30 the policy to continue servicing the policy for a period of
31 not less than 1 year and offer to pay the agent the greater of
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HB 1607, First Engrossed
1 the insurer's or the ssociation's usual and customary
2 commission for the type of policy written.
3
4 If the new or producing agent is unwilling or unable to accept
5 appointment, the new insurer shall pay the agent in accordance
6 with sub-sub-sub-subparagraph (A).
7 (II) When the association enters into a contractual
8 agreement for a take-out plan, the producing agent of record
9 of the association policy is entitled to retain any unearned
10 commission on the policy, and the isnurer shall either:
11 (A) Pay to the producing agent of record of the
12 association policy, for the first year, an amount that is the
13 greater of the insurer's usual and customary commission for
14 the type of policy written or a fee equal to the usual and
15 customary commission of the association; or
16 (B) Offer to allow the producing agent of record of
17 the associaton policy to continue servicing the policy for a
18 period of not less than 1 year and offer to pay the agent the
19 greater of the insurer's or the asociation's usual and
20 customary commission for the type of policy written.
21
22 If the new or producing gent is unwilling or unable to accept
23 appointment, the new insurer shall pay the agent in accordance
24 with sub-sub-sub-subparagraph (A). If the risk accepts an
25 offer of coverage through the market assistance plan or an
26 offer of coverage through a mechanism established by the
27 association before a policy is issued to the risk by the
28 association, and the producing agent who submitted the
29 application to the plan or the association is not currently
30 appointed by the insurer, the insurer shall either appoint the
31 agent to service the risk or, if the insurer places the
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HB 1607, First Engrossed
1 coverage through a new agent, require the new agent who then
2 writes the policy to pay not less than 50 percent of the first
3 year's commission to the producing agent who submitted the
4 application to the plan, except that if the new agent is an
5 employee or exclusive agent of the insurer, the new agent
6 shall pay a policy fee of $50 to the producing agent in lieu
7 of splitting the commission. If the risk is not able to obtain
8 any such offer, the risk is eligible for a policy including
9 wind coverage issued by the association.
10 c. This subparagraph does not require the association
11 to provide wind coverage or hurricane coverage in any area in
12 which such coverage is available through the Florida Windstorm
13 Underwriting Association.
14 6. Must include rules for classifications of risks and
15 rates therefor.
16 7. Must provide that if premium and investment income
17 attributable to a particular plan year are in excess of
18 projected losses and expenses of the plan attributable to that
19 year, such excess shall be held in surplus. Such surplus shall
20 be available to defray deficits as to future years and shall
21 be used for that purpose prior to assessing member insurers as
22 to any plan year.
23 8. Must provide objective criteria and procedures to
24 be uniformly applied for all applicants in determining whether
25 an individual risk is so hazardous as to be uninsurable. In
26 making this determination and in establishing the criteria and
27 procedures, the following shall be considered:
28 a. Whether the likelihood of a loss for the individual
29 risk is substantially higher than for other risks of the same
30 class; and
31
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HB 1607, First Engrossed
1 b. Whether the uncertainty associated with the
2 individual risk is such that an appropriate premium cannot be
3 determined.
4
5 The acceptance or rejection of a risk by the association shall
6 be construed as the private placement of insurance, and the
7 provisions of chapter 120 shall not apply.
8 9. Must provide that the association shall make its
9 best efforts to procure catastrophe reinsurance at reasonable
10 rates, as determined by the board of governors.
11 10. Must provide that in the event of regular deficit
12 assessments under sub-subparagraph (b)3.a. or sub-subparagraph
13 (b)3.b., or by the Florida Windstorm Underwriting Association
14 under sub-sub-subparagraph (2)(b)2.d.(I) or
15 sub-sub-subparagraph (2)(b)2.d.(II), the association shall
16 levy upon association policyholders in its next rate filing,
17 or by a separate rate filing solely for this purpose, a market
18 equalization surcharge in a percentage equal to the total
19 amount of such regular assessments divided by the aggregate
20 statewide direct written premium for subject lines of business
21 for member insurers for the prior calendar year. Market
22 equalization surcharges under this subparagraph are not
23 considered premium and are not subject to commissions, fees,
24 or premium taxes; however, failure to pay a market
25 equalization surcharge shall be treated as failure to pay
26 premium.
27 11. The policies issued by the association must
28 provide that, if the association or the market assistance plan
29 obtains an offer from an authorized insurer to cover the risk
30 at its approved rates under either a standard policy including
31 wind coverage or a basic policy including wind coverage, the
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HB 1607, First Engrossed
1 risk is no longer eligible for coverage through the
2 association. However, if the risk is located in an area in
3 which Florida Windstorm Underwriting Association coverage is
4 available, such an offer of a standard or basic policy
5 terminates eligibility regardless of whether or not the offer
6 includes wind coverage. Upon termination of eligibility, the
7 association shall provide written notice to the policyholder
8 and agent of record stating that the association policy shall
9 be canceled as of 60 days after the date of the notice because
10 of the offer of coverage from an authorized insurer. Other
11 provisions of the insurance code relating to cancellation and
12 notice of cancellation do not apply to actions under this
13 subparagraph.
14 12. Association policies and applications must include
15 a notice that the association policy could, under this section
16 or s. 627.3511, be replaced with a policy issued by an
17 admitted insurer that does not provide coverage identical to
18 the coverage provided by the association. The notice shall
19 also specify that acceptance of association coverage creates a
20 conclusive presumption that the applicant or policyholder is
21 aware of this potential.
22 13. May establish, subject to approval by the
23 department, different eligibility requirements and operational
24 procedures for any line or type of coverage for any specified
25 county or area if the board determines that such changes to
26 the eligibility requirements and operational procedures are
27 justified due to the voluntary market being sufficiently
28 stable and competitive in such area or for such line or type
29 of coverage and that consumers who, in good faith, are unable
30 to obtain insurance through the voluntary market through
31 ordinary methods would continue to have access to coverage
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HB 1607, First Engrossed
1 from the association. When coverage is sought in connection
2 with a real property transfer, such requirements and
3 procedures shall not provide for an effective date of coverage
4 later than the date of the closing of the transfer as
5 established by the transferor, the transferee, and, if
6 applicable, the lender.
7 Section 4. Subsection (4) of section 627.3511, Florida
8 Statutes,is amended to read:
9 627.3511 Depopulation of Residential Property and
10 Casualty Joint Underwriting Association.--
11 (4) AGENT BONUS.--When the Residential Property and
12 Casualty Joint Underwriting Association enters into a
13 contractual agreement for a take-out plan that provides a
14 bonus to the insurer, the producing agent of record of the
15 association policy is entitled to retain any unearned
16 commission on such policy, and the insurer shall either:
17 (a) Pay to the producing agent of record of the
18 association policy, for the first year, an amount that is the
19 greater of the insurer's usual and customary commission for
20 the type of policy written or a fee equal to the usual and
21 customary commission of the association an amount equal to the
22 insurer's usual and customary commission for the type of
23 policy written if the term of the association policy was in
24 excess of 6 months, or one-half of such usual and customary
25 commission if the term of the association policy was 6 months
26 or less; or
27 (b) Offer to allow the producing agent of record of
28 the association policy to continue servicing the policy for a
29 period of not less than 1 year and offer to pay the agent the
30 greater of the insurer's or the association's usual and
31 customary commission for the type of policy written.
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HB 1607, First Engrossed
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 paragraph (a). The insurer need not take any further
5 action if the offer is rejected. This subsection does not
6 apply to any reciprocal interinsurance exchange, nonprofit
7 federation, or any subsidiary or affiliate of such
8 organization. This subsection does not apply if the agent is
9 also the agent of record on the new coverage. The requirement
10 of this subsection that the producing agent of record is
11 entitled to retain the unearned commission on an association
12 policy does not apply to a policy for which coverage has been
13 provided in the association for 30 days or less or for which a
14 cancellation notice has been issued pursuant to s.
15 627.351(6)(c)11. during the first 30 days of coverage.
16 Section 5. Subsection (2) of section 627.7013, Florida
17 Statutes is amended to read:
18 627.7013 Orderly markets for personal lines
19 residential property insurance.--
20 (2) MORATORIUM COMPLETION.--
21 (a) As used in this subsection, the term "total number
22 of policies" means the number of an insurer's policies of a
23 specified type that were in force on June 1, 1996, or the date
24 on which this section became law, whichever was later.
25 (b) The following restrictions apply only to
26 cancellation or nonrenewal of personal lines residential
27 property insurance policies that were in force on June 1,
28 1996, or the date on which this section became law, whichever
29 was later.
30 1. In any 12-month period, an insurer may not cancel
31 or nonrenew more than 5 percent of such insurer's total number
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1 of homeowner's policies, 5 percent of such insurer's total
2 number of mobile home owner's policies, or 5 percent of such
3 insurer's total number of personal lines residential policies
4 of all types and classes in the state for the purpose of
5 reducing the insurer's exposure to hurricane claims and may
6 not, with respect to any county, cancel or nonrenew more than
7 10 percent of its total number of homeowner's policies, 10
8 percent of its total number of mobile home owner's policies,
9 or 10 percent of its total number of personal lines
10 residential policies of all types and classes in the county
11 for the purpose of reducing the insurer's exposure to
12 hurricane claims. This subparagraph does not prohibit any
13 cancellations or nonrenewals of such policies for any other
14 lawful reason unrelated to the risk of loss from hurricane
15 exposure.
16 2.a. If, for any 12-month period, an insurer proposes
17 to cancel or nonrenew personal lines residential policies to
18 an extent not authorized by subparagraph 1. for the purpose of
19 reducing exposure to hurricane claims, the insurer must file a
20 phaseout plan with the department at least 90 days prior to
21 the effective date of the plan. In the plan, the insurer must
22 demonstrate to the department that the insurer is protecting
23 market stability and the interests of its policyholders. The
24 plan may not be implemented unless it is approved by the
25 department. In developing the plan, the insurer must consider
26 policyholder longevity, the use of voluntary incentives to
27 accomplish the reduction, and geographic distribution. The
28 insurer must demonstrate that under the plan the insurer will
29 not cancel or nonrenew more policies in the 12-month period
30 than the largest number of similar policies the insurer
31
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1 canceled or nonrenewed for any reason in any 12-month period
2 between August 24, 1989, and August 24, 1992.
3 b. If the insurer considers the number of
4 cancellations and nonrenewals under sub-subparagraph a. to be
5 insufficient, the insurer may apply for approval of additional
6 cancellations or nonrenewals on the basis of an unreasonable
7 risk of insolvency. In evaluating a request under this
8 sub-subparagraph, the department shall consider and shall
9 require the insurer to provide information relevant to: the
10 insurer's size, market concentration, and general financial
11 condition; the portion of the insurer's business in this state
12 represented by personal lines residential property insurance;
13 the reasonableness of assumptions with respect to size,
14 frequency, severity, and path of hurricanes; the reinsurance
15 available to the insurer and potential recoveries from the
16 Florida Hurricane Catastrophe Fund; and the extent to which
17 the insurer's assets have been voluntarily transferred by
18 dividend or otherwise from the insurer to its stockholders,
19 parent companies, or affiliated companies since June 1, 1996,
20 or the date on which this section became law, whichever was
21 later. In the implementation of exposure reductions under this
22 sub-subparagraph, the department and the insurer shall
23 consider such factors as policyholder longevity, the use of
24 voluntary incentives to accomplish the exposure reduction, and
25 geographic distribution.
26 c. A policy shall not be counted as having been
27 canceled or nonrenewed for purposes of this subsection if any
28 of the following apply:
29 (I) The policy was canceled or nonrenewed for an
30 underwriting reason unrelated to the risk of loss from
31 hurricane exposure, nonpayment of premium, or any other lawful
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1 reason that is unrelated to the risk of loss from hurricane
2 exposure. The department shall consider the reason specified
3 in the notice of cancellation or nonrenewal to be the reason
4 for the cancellation or nonrenewal unless the department finds
5 by a preponderance of the evidence that the stated reason was
6 not the insurer's actual reason for the cancellation or
7 nonrenewal.
8 (II) The cancellation or nonrenewal was initiated by
9 the insured.
10 (III) The insurer has offered the policyholder
11 replacement or alternative coverage at approved rates, which
12 coverage meets the requirements of the secondary mortgage
13 market.
14 d. In addition to any other cancellations or
15 nonrenewals subject to the limitations in this subsection, a
16 policy shall be considered as having been canceled or
17 nonrenewed for purposes of this subsection if:
18 (I) The insurer implements a rate increase under the
19 use-and-file provisions of s. 627.062(2)(a)2., which rate
20 increase exceeds 150 percent of the increase ultimately
21 approved by the department, and, while the rate filing was
22 pending, the policyholder voluntarily canceled or nonrenewed
23 the policy and obtained replacement coverage from another
24 insurer, including the Residential Property and Casualty Joint
25 Underwriting Association; or
26 (II) The insurer reduces the commission to an agent by
27 more than 25 percent and the agent thereafter places the risk
28 with another insurer, including the Residential Property and
29 Casualty Joint Underwriting Association, or the Florida
30 Windstorm Underwriting Association.
31
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1 e. The department must approve or disapprove an
2 application for a waiver within 90 days after the department
3 receives the application for waiver.
4 3. In addition to the cancellations or nonrenewals
5 authorized under this section, an insurer may cancel or
6 nonrenew policies to the extent authorized by an exemption
7 from or waiver of either the moratorium created by chapter
8 93-401, Laws of Florida, or the moratorium phaseout under
9 former s. 627.7013(2).
10 4. Notwithstanding any provisions of this section to
11 the contrary, this section does not apply to any insurer that,
12 prior to August 24, 1992, filed notice of such insurer's
13 intent to discontinue writing insurance in this state under s.
14 624.430, and for which a finding has been made by the
15 department, the Division of Administrative Hearings of the
16 Department of Management Services, or a court that such notice
17 satisfied all requirements of s. 624.430. Nothing in this
18 section shall be construed to authorize an insurer to withdraw
19 from any line of property insurance business for the purpose
20 of reducing exposure to risk of hurricane loss if such
21 withdrawal commenced at any time that the moratorium under
22 chapter 93-401, Laws of Florida, or the moratorium phaseout
23 under this section is in effect.
24 5. The following actions by an insurer do not
25 constitute cancellations or nonrenewals for purposes of this
26 subsection:
27 a. The transfer of a risk from one admitted insurer to
28 another admitted insurer, unless the terms of the new or
29 replacement policy place the policyholder in default of a
30 mortgage obligation.
31
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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
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1 on exposure data reported to the department by the
2 associations.
3 (e) This subsection is repealed on June 1, 2004 2001.
4 Section 6. Subsections (1) and (4) of section
5 624.4072, Florida Statutes, are amended to read:
6 624.4072 Minority-owned property and casualty
7 insurers; limited exemption for taxation and assessments.--
8 (1) A minority business that is at least 51 percent
9 owned by minority persons, as defined in s. 288.703(3),
10 initially issued a certificate of authority in this state as
11 an authorized insurer after May 1, 1998, to write property and
12 casualty insurance shall be exempt, for a period not to exceed
13 10 5 years from the date of receiving its certificate of
14 authority, from the following taxes and assessments:
15 (a) Taxes imposed under ss. 175.101, 185.08, and
16 624.509;
17 (b) Assessments by the Florida Residential Property
18 and Casualty Joint Underwriting Association or by the Florida
19 Windstorm Underwriting Association, as provided under s.
20 627.351, except for emergency assessments collected from
21 policyholders pursuant to s. 627.351(2)(b)2.d.(III) and
22 (6)(b)3.d. Any such insurer shall be a member insurer of the
23 Florida Windstorm Underwriting Association and the Florida
24 Residential Property and Casualty Joint Underwriting
25 Association. The premiums of such insurer shall be included in
26 determining, for the Florida Windstorm Underwriting
27 Association, the aggregate statewide direct written premium
28 for property insurance and in determining, for the Florida
29 Residential Property and Casualty Joint Underwriting
30 Association, the aggregate statewide direct written premium
31 for the subject lines of business for all member insurers.
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1 (4) This section is repealed effective December 31,
2 2010 July 1, 2003, and the tax and assessment exemptions
3 authorized by this section shall terminate on such date.
4 Section 7. Subsection (6) is added to section
5 624.3161, Florida Statutes, to read:
6 624.3161 Market conduct examinations.--
7 (6) The department shall adopt rules as necessary to
8 effectuate the market conduct examination process, to assure
9 compliance by the person examined with the applicable
10 provisions of the Insurance Code. Such rules shall not exceed
11 the authority of the statutes involved in the market conduct
12 examination.
13 Section 8. Subsection (8) is added to section 626.171,
14 Florida Statutes, to read:
15 626.171 Application for license.--
16 (8) The department shall adopt rules to effectuate the
17 license application process, including photo identification,
18 background checks and credit reports, prelicensing courses,
19 the impact of criminal and law enforcement history, and other
20 relevant information in an effort to determine an applicant's
21 fitness and trustworthiness to engage in the business of
22 insurance.
23 Section 9. Paragraph (o) of subsection (1) of section
24 626.9541, Florida Statutes, is amended to read:
25 626.9541 Unfair methods of competition and unfair or
26 deceptive acts or practices defined.--
27 (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR
28 DECEPTIVE ACTS.--The following are defined as unfair methods
29 of competition and unfair or deceptive acts or practices:
30 (o) Illegal dealings in premiums; excess or reduced
31 charges for insurance.--
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1 1. Knowingly collecting any sum as a premium or charge
2 for insurance, which is not then provided, or is not in due
3 course to be provided, subject to acceptance of the risk by
4 the insurer, by an insurance policy issued by an insurer as
5 permitted by this code.
6 2. Knowingly collecting as a premium or charge for
7 insurance any sum in excess of or less than the premium or
8 charge applicable to such insurance, in accordance with the
9 applicable classifications and rates as filed with and
10 approved by the department, and as specified in the policy;
11 or, in cases when classifications, premiums, or rates are not
12 required by this code to be so filed and approved, premiums
13 and charges in excess of or less than those specified in the
14 policy and as fixed by the insurer. This provision shall not
15 be deemed to prohibit the charging and collection, by surplus
16 lines agents licensed under part VIII of this chapter, of the
17 amount of applicable state and federal taxes, or fees as
18 authorized by s. 626.916(4), in addition to the premium
19 required by the insurer or the charging and collection, by
20 licensed agents, of the exact amount of any discount or other
21 such fee charged by a credit card facility in connection with
22 the use of a credit card, as authorized by subparagraph (q)3.,
23 in addition to the premium required by the insurer. This
24 subparagraph shall not be construed to prohibit collection of
25 a premium for a universal life or a variable or indeterminate
26 value insurance policy made in accordance with the terms of
27 the contract.
28 3.a. Imposing or requesting an additional premium for
29 a policy of motor vehicle liability, personal injury
30 protection, medical payment, or collision insurance or any
31 combination thereof or refusing to renew the policy solely
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1 because the insured was involved in a motor vehicle accident
2 unless the insurer's file contains information from which the
3 insurer in good faith determines that the insured was
4 substantially at fault in the accident.
5 b. An insurer which imposes and collects such a
6 surcharge or which refuses to renew such policy shall, in
7 conjunction with the notice of premium due or notice of
8 nonrenewal, notify the named insured that he or she is
9 entitled to reimbursement of such amount or renewal of the
10 policy under the conditions listed below and will subsequently
11 reimburse him or her or renew the policy, if the named insured
12 demonstrates that the operator involved in the accident was:
13 (I) Lawfully parked;
14 (II) Reimbursed by, or on behalf of, a person
15 responsible for the accident or has a judgment against such
16 person;
17 (III) Struck in the rear by another vehicle headed in
18 the same direction and was not convicted of a moving traffic
19 violation in connection with the accident;
20 (IV) Hit by a "hit-and-run" driver, if the accident
21 was reported to the proper authorities within 24 hours after
22 discovering the accident;
23 (V) Not convicted of a moving traffic violation in
24 connection with the accident, but the operator of the other
25 automobile involved in such accident was convicted of a moving
26 traffic violation;
27 (VI) Finally adjudicated not to be liable by a court
28 of competent jurisdiction;
29 (VII) In receipt of a traffic citation which was
30 dismissed or nolle prossed; or
31
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1 (VIII) Not at fault as evidenced by a written
2 statement from the insured establishing facts demonstrating
3 lack of fault which are not rebutted by information in the
4 insurer's file from which the insurer in good faith determines
5 that the insured was substantially at fault.
6 c. In addition to the other provisions of this
7 subparagraph, an insurer may not fail to renew a policy if the
8 insured has had only one accident in which he or she was at
9 fault within the current 3-year period. However, an insurer
10 may nonrenew a policy for reasons other than accidents in
11 accordance with s. 627.728. This subparagraph does not
12 prohibit nonrenewal of a policy under which the insured has
13 had three or more accidents, regardless of fault, during the
14 most recent 3-year period.
15 4. Imposing or requesting an additional premium for,
16 or refusing to renew, a policy for motor vehicle insurance
17 solely because the insured committed a noncriminal traffic
18 infraction as described in s. 318.14 unless the infraction is:
19 a. A second infraction committed within an 18-month
20 period, or a third or subsequent infraction committed within a
21 36-month period.
22 b. A violation of s. 316.183, when such violation is a
23 result of exceeding the lawful speed limit by more than 15
24 miles per hour.
25 5. Upon the request of the insured, the insurer and
26 licensed agent shall supply to the insured the complete proof
27 of fault or other criteria which justifies the additional
28 charge or cancellation.
29 6. No insurer shall impose or request an additional
30 premium for motor vehicle insurance, cancel or refuse to issue
31 a policy, or refuse to renew a policy because the insured or
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1 the applicant is a handicapped or physically disabled person,
2 so long as such handicap or physical disability does not
3 substantially impair such person's mechanically assisted
4 driving ability.
5 7. No insurer may cancel or otherwise terminate any
6 insurance contract or coverage, or require execution of a
7 consent to rate endorsement, during the stated policy term for
8 the purpose of offering to issue, or issuing, a similar or
9 identical contract or coverage to the same insured with the
10 same exposure at a higher premium rate or continuing an
11 existing contract or coverage with the same exposure at an
12 increased premium.
13 8. No insurer may issue a nonrenewal notice on any
14 insurance contract or coverage, or require execution of a
15 consent to rate endorsement, for the purpose of offering to
16 issue, or issuing, a similar or identical contract or coverage
17 to the same insured at a higher premium rate or continuing an
18 existing contract or coverage at an increased premium without
19 meeting any applicable notice requirements.
20 9. No insurer shall, with respect to premiums charged
21 for motor vehicle insurance, unfairly discriminate solely on
22 the basis of age, sex, marital status, location of the risk,
23 accidents more than 3 years old, or scholastic achievement.
24 10. Imposing or requesting an additional premium for
25 motor vehicle comprehensive or uninsured motorist coverage
26 solely because the insured was involved in a motor vehicle
27 accident or was convicted of a moving traffic violation.
28 11. No insurer shall cancel or issue a nonrenewal
29 notice on any insurance policy or contract without complying
30 with any applicable cancellation or nonrenewal provision
31 required under the Florida Insurance Code.
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1 12. No insurer shall impose or request an additional
2 premium, cancel a policy, or issue a nonrenewal notice on any
3 insurance policy or contract because of any traffic infraction
4 when adjudication has been withheld and no points have been
5 assessed pursuant to s. 318.14(9) and (10). However, this
6 subparagraph does not apply to traffic infractions involving
7 accidents in which the insurer has incurred a loss due to the
8 fault of the insured.
9 Section 10. Section 626.9651, Florida Statutes, is
10 created to read:
11 626.9651 Privacy.--The department shall adopt rules
12 consistent with other provisions of the Insurance Code to
13 govern the use of a consumer's nonpublic personal financial
14 and health information. These rules shall be based on,
15 consistent with, and not more restrictive than the National
16 Association of Insurance Commissioners' Privacy of Consumer
17 Financial and Health Information Regulation adopted September
18 26, 2000, by the National Association of Insurance
19 Commissioners, provided, however, the rules shall permit the
20 use and disclosure of nonpublic personal health information
21 for scientific, medical, or public policy research in
22 accordance with federal law. In addition, these rules shall
23 be consistent with, and not more restrictive than, the
24 standards contained in Title V of the Gramm-Leach-Bliley Act
25 of 1999 (public law 106-102). Any health insurer or health
26 maintenance organization determined by the department to be in
27 compliance with, or to be actively undertaking compliance
28 with, the consumer privacy protection rules promulgated by the
29 United States Department of Health and Human Services, in
30 conformance with the Health Insurance Portability and
31
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1 Affordability Act, shall be deemed in compliance with this
2 section. This section shall become effective July 1, 2001.
3 Section 11. Paragraph (a) of subsection (2) of section
4 627.062, Florida Statutes, is amended to read:
5 627.062 Rate standards.--
6 (2) As to all such classes of insurance:
7 (a) Insurers or rating organizations shall establish
8 and use rates, rating schedules, or rating manuals to allow
9 the insurer a reasonable rate of return on such classes of
10 insurance written in this state. Copies A copy of rates,
11 rating schedules, rating manuals, premium credits or discount
12 schedules, and surcharge schedules, and changes thereto, shall
13 be filed with the department under one of the following
14 procedures:
15 1. If the filing is made at least 90 days before the
16 proposed effective date and the filing is not implemented
17 during the department's review of the filing and any
18 proceeding and judicial review, then such filing shall be
19 considered a "file and use" filing. In such case, the
20 department shall finalize its review by issuance of a notice
21 of intent to approve or a notice of intent to disapprove
22 within 90 days after receipt of the filing. The notice of
23 intent to approve and the notice of intent to disapprove
24 constitute agency action for purposes of the Administrative
25 Procedure Act. Requests for supporting information, requests
26 for mathematical or mechanical corrections, or notification to
27 the insurer by the department of its preliminary findings
28 shall not toll the 90-day period during any such proceedings
29 and subsequent judicial review. The rate shall be deemed
30 approved if the department does not issue a notice of intent
31
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1 to approve or a notice of intent to disapprove within 90 days
2 after receipt of the filing.
3 2. If the filing is not made in accordance with the
4 provisions of subparagraph 1., such filing shall be made as
5 soon as practicable, but no later than 30 days after the
6 effective date, and shall be considered a "use and file"
7 filing. An insurer making a "use and file" filing is
8 potentially subject to an order by the department to return to
9 policyholders portions of rates found to be excessive, as
10 provided in paragraph (h).
11 Section 12. Subsection (4) is added to Section
12 627.0625, Florida Statutes, to read:
13 627.0625 Commercial property and casualty risk
14 management plans.--
15 (4) Commercial motor vehicle policies that are issued
16 to satisfy mandatory financial responsibility requirements of
17 a state or local government must provide first dollar coverage
18 to third-party claimants without a deductible. With respect to
19 such policies, the department may adopt rules necessary to
20 assure that claims are administered fairly as required by law.
21 Section 13. Subsection (8) of section 627.0651,
22 Florida Statutes, is amended to read:
23 627.0651 Making and use of rates for motor vehicle
24 insurance.--
25 (8) Rates are not unfairly discriminatory if averaged
26 broadly among members of a group; nor are rates unfairly
27 discriminatory even though they are lower than rates for
28 nonmembers of the group. However, such rates are unfairly
29 discriminatory if they are not actuarially measurable and
30 credible and sufficiently related to actual or expected loss
31 and expense experience of the group so as to assure that
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1 nonmembers of the group are not unfairly discriminated
2 against. Use of a single United States Postal Service zip code
3 as a rating territory shall be deemed unfairly discriminatory.
4 An insurer may not impose a surcharge or discount for
5 liability coverages based on the type of vehicle without
6 providing acceptable actuarial justification.
7 Section 14. Section 627.385, Florida Statutes, is
8 created to read:
9 627.385 Conduct of residual market board members.--
10 (1)(a) For various insurance coverages, a residual
11 market has been created by legislation to provide a market of
12 last resort for individuals unable to secure coverage in the
13 voluntary market.
14 (b) Each residual market's enabling legislation calls
15 for the establishment of a board of governors or directors
16 that operates subject to a plan of operation. The board, in
17 carrying out its obligations, must engage in business
18 transactions in order to provide and administer the required
19 coverage and maintain adequate funds to support the plan. In
20 order for the board to fully execute its responsibilities
21 required by law, conflict of interest or inappropriate
22 activity by board members, or the appearance thereof, with
23 regard to member insurers or policyholders of the residual
24 market mechanism must be avoided. The Legislature has
25 determined that the provisions set forth in subsection (2) are
26 necessary to protect the public interest by ensuring fair,
27 reasonable, and beneficial board practice and activity.
28 (c) This section applies to the Florida Medical
29 Malpractice Joint Underwriting Association, the Florida
30 Automobile Joint Underwriting Association, the Florida
31 Workers' Compensation Joint Underwriting Association, the
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1 Florida Comprehensive Health Association, the Florida
2 Windstorm Underwriting Association, the Florida Property and
3 Casualty Joint Underwriting Association, the Florida
4 Residential Property and Casualty Joint Underwriting
5 Association, and the board members thereof.
6 (2) To ensure that the board is free from potential
7 conflict or inappropriate behavior the following are adopted
8 in the plan of operation of the subject residual market in
9 this state.
10 (a) A board member may not act as a servicing carrier
11 or administering entity for the subject plan, other than a
12 claim adjustment contract open to all members of the plan.
13 (b) A board member or board member representative may
14 not use his or her position to foster or facilitate any
15 special pecuniary gain for himself or herself, his or her
16 member company, or any other entity in which the board member
17 or board member representative or the member company has a
18 substantial financial interest, except as otherwise provided
19 in paragraph (a).
20 (c) A board member or board member representative may
21 not use his or her position on the board to secure or promote
22 any business relationship from which he or she may derive a
23 financial gain.
24 (d) A board member or designee may not receive any
25 gift or gratuity, except as provided in s. 112.3248, other
26 than meals, while acting in his or her capacity as a board
27 member.
28 (3) Board members and board member representatives
29 shall maintain reasonable board expenses based on state travel
30 policy as set forth in s. 112.061. The board shall develop a
31 detailed policy regarding board member travel, which policy
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1 must be based on s. 112.061 and is subject to the approval of
2 the department.
3 Section 15. Section 627.4065, Florida Statutes, is
4 created to read:
5 627.4065 Insured's right to return policy; notice.--A
6 health insurance policy issued or issued for delivery in this
7 state must have printed or stamped thereon or attached thereto
8 a notice in a prominent place stating in substance that the
9 policyholder may return the policy to the insurer within 10
10 days after its delivery and may have the premium paid refunded
11 if, after examination of the policy or contract, the
12 policyholder is not satisfied with it for any reason. The
13 notice must provide that if the policyholder, pursuant to such
14 notice, returns the policy or contract to the insurer at its
15 home office or branch office or to the agent through whom it
16 was purchased, it is considered void from the beginning and
17 the parties are in the same position as if no policy or
18 contract had been issued. This section does not apply to group
19 policies, single premium nonrenewable policies, or travel
20 accident policies.
21 Section 16. Section 627.41345 Certificate of
22 insurance.--An insurer or agent may not issue or sign a
23 certificate of insurance that contains terms or conditions
24 that differ from those in the policy under which the
25 certificate of insurance is issued. In the event of a
26 conflict, the terms of the policy under which the certificate
27 of insurance is issued shall control.
28 Section 17. Subsection (9) is added to section
29 627.7015, Florida Statutes, to read:
30 627.7015 Alternative procedure for resolution of
31 disputed property insurance claims.--
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1 (9) For purposes of this section, the term "claim"
2 refers to any dispute between an insurer and an insured
3 relating to a material issue of fact other than a dispute:
4 (a) With respect to which the insurer has a reasonable
5 basis to suspect fraud;
6 (b) Where, based on agreed-upon facts as to the cause
7 of loss, there is no coverage under the policy;
8 (c) With respect to which the insurer has a reasonable
9 basis to believe that the claimant has intentionally made a
10 material misrepresentation of fact which is relevant to the
11 claim, and the entire request for payment of a loss has been
12 denied on the basis of the material misrepresentation; or
13 (d) Where the amount in controversy is less than $500,
14 unless the parties agree to mediate a dispute involving a
15 lesser amount.
16 Section 18. Section 627.7276, Florida Statutes, is
17 amended to read:
18 627.7276 Notice of limited coverage.--
19 (1) The following notice of limited coverage shall An
20 automobile policy that does not contain coverage for bodily
21 injury and property damage must be clearly stamped or printed
22 on any motor vehicle insurance policy that provides coverage
23 only for first-party damage to the insured vehicle, but does
24 not provide coverage for bodily injury liability, property
25 damage liability, or personal injury protection to the effect
26 that such coverage is not included in the policy in the
27 following manner:
28
29 "THIS POLICY DOES NOT PROVIDE BODILY INJURY
30 LIABILITY, AND PROPERTY DAMAGE LIABILITY, OR
31 PERSONAL INJURY PROTECTION INSURANCE OR ANY
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HB 1607, First Engrossed
1 OTHER COVERAGE FOR WHICH A SPECIFIC PREMIUM
2 CHARGE IS NOT MADE, AND DOES NOT COMPLY WITH
3 ANY FINANCIAL RESPONSIBILITY LAW OR WITH THE
4 FLORIDA MOTOR VEHICLE NO-FAULT LAW."
5
6 (2) This legend must appear on the policy declaration
7 page and on the filing back of the policy and be printed in a
8 contrasting color from that used on the policy and in type
9 larger than the largest type used in the text thereof, as an
10 overprint or by a rubber stamp impression.
11 Section 19. Section 627.795, Florida Statutes, is
12 created to read:
13 627.795 Policy exceptions.--
14 (1) A title insurance commitment must be issued on all
15 real estate closing transactions when a title insurance policy
16 is to be issued, except for multiple conveyances on the same
17 property such as timesharing.
18 (2) A gap exception may not be deleted on a commitment
19 until the time of closing.
20 Section 20. Section 626.9552, Florida Statutes, is
21 created to read:
22 626.9552 Single interest insurance.--
23 (1) When single interest insurance is written at the
24 expense of the purchaser or borrower in connection with a
25 finance or loan transaction, a clear and concise statement
26 must be furnished the purchaser or borrower advising the
27 purchaser or borrower that the insurance effected is solely
28 for the interest of the financing entity, and that no
29 protection thereunder exists for the benefit of the purchaser
30 or borrower. When single interest insurance is written, no
31 effort may be made by the insurer to recover the amount of any
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HB 1607, First Engrossed
1 payment from the borrower. Single interest insurance policies
2 must be clearly stamped or printed on the declarations page,
3 "Single Interest Only----No Subrogation." Single interest
4 insurance is to be placed only after it has been determined
5 that no other kind of insurance can be placed on the risk,
6 except with the consent of the purchaser or borrower. Single
7 interest may be written in cases of inland marine installment
8 sales floater policies. If insurance cannot be obtained for
9 the dual protection of the purchaser or borrower, and the
10 seller or lender or financing entity for all the coverages
11 contemplated, or if obtained, is canceled by the insurer
12 before expiration, the seller or lender or financing entity
13 may obtain insurance to protect his or her interest in the
14 motor vehicle or other personal property, and the purchaser or
15 borrower may be required to pay the cost thereof. In such
16 event the seller or lender or financing entity shall promptly
17 notify the purchaser or borrower that such insurance cannot be
18 obtained, or has been canceled, and credit to the purchaser or
19 borrower the difference between the amount charged for dual
20 protection insurance and the actual cost of such single
21 interest insurance, less, in the event of cancellation, the
22 earned premium on the dual interest insurance for the period
23 it was in force. If the purchaser or borrower procures
24 acceptable dual interest insurance within 30 days after the
25 date of such notice and provides the seller or lender, or
26 finance entity with evidence that the premium therefore has
27 been paid, there is no charge to him or her for the single
28 interest coverage. As used in this section, the term
29 "financing entity" means a finance company, bank, or other
30 lending institution. However, those lenders licensed under the
31 Consumer Finance Act, chapter 516, must provide coverage
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HB 1607, First Engrossed
1 issued in the name of the borrower containing the customary
2 mortgagee or loss payee clause.
3 (2) If a certificate is issued under a master policy,
4 the same coverage as provided in an individual policy will
5 apply.
6 (3) The provisions of this section do not apply to
7 title insurance as defined in s. 624.608.
8 Section 21. Subsection (1) of section 627.918, Florida
9 Statutes, is amended to read:
10 627.918 Reporting formats.--
11 (1) The department shall require that the reporting
12 provided for in this part be made on forms adopted established
13 by the department or in a format compatible with the
14 department's its electronic data processing equipment. The
15 department shall adopt by rule standards for such approval.
16 Section 22. Subsection (3) of section 641.3108,
17 Florida Statutes, is amended to read:
18 641.3108 Notice of cancellation of contract.--
19 (3) In the case of a health maintenance contract
20 issued to an employer or person holding the contract on behalf
21 of the subscriber group, the health maintenance organization
22 may make the notification through the employer or group
23 contract holder, and, if the health maintenance organization
24 elects to take this action through the employer or group
25 contract holder, the organization shall be deemed to have
26 complied with the provisions of this section upon notifying
27 the employer or group contract holder of the requirements of
28 this section and requesting the employer or group contract
29 holder to forward to all subscribers the notice required
30 herein. If a subscriber group contract is not renewed due to
31 claim experience, the subscriber group is entitled to receive
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HB 1607, First Engrossed
1 information concerning its loss ratio. If requested by a
2 subscriber group, a detailed claim experience record may be
3 provided at a reasonable expense. The record shall maintain
4 subscriber confidentiality.
5 Section 23. Any meeting of the board or a committee of
6 the Florida Windstorm Underwriting Association, held pursuant
7 to s. 627.351, Florida Statutes, shall be open to the public
8 and notice shall be provided to the public pursuant to s.
9 286.011, Florida Statutes.
10 Section 24. This act shall take effect upon becoming a
11 law.
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