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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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

31  


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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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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                                          HB 1607, First Engrossed



  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.

12  

13  

14  

15  

16  

17  

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19  

20  

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