House Bill hb1361c1

CODING: Words stricken are deletions; words underlined are additions.




    Florida House of Representatives - 2002             CS/HB 1361

        By the Committee on Insurance and Representatives Atwater,
    Barreiro, Heyman, Garcia, Diaz-Balart, Mayfield, Cantens,
    Goodlette, Harrell, Bilirakis, Allen, Lacasa, Carassas,
    Andrews, Sorensen, Prieguez, Green, Fiorentino, Kottkamp,
    Arza, Lerner, Needelman, Bucher and Slosberg


  1                      A bill to be entitled

  2         An act relating to insurance; amending s.

  3         215.555, F.S.; revising a definition; amending

  4         s. 627.351, F.S.; providing for waiver of

  5         required flood insurance under certain

  6         circumstances; specifying policyholder burden

  7         of proof under certain circumstances;

  8         authorizing an association to deny certain

  9         coverage under certain circumstances; renaming

10         the Residential Property and Casualty Joint

11         Underwriting Association as the Citizens

12         Property Insurance Corporation to provide

13         residential and commercial property insurance;

14         requiring insurers writing property insurance

15         to participate in the corporation; providing

16         for dividing the revenues, assets, liabilities,

17         losses, and expenses of the corporation into

18         three accounts; authorizing the Department of

19         Insurance to remove certain territories from

20         certain eligible areas under certain

21         circumstances; providing for emergency

22         assessments for policyholders of participating

23         insurers; providing a plan of operation;

24         defining the terms "quota share primary

25         insurance" and "eligible risks"; authorizing

26         the corporation to enter into quota share

27         primary insurance agreements; providing for a

28         board of governors appointed by the Treasurer,

29         subject to confirmation by the Cabinet;

30         providing rate plans of the association to

31         become rate plans of the corporation; providing

                                  1

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         limitations; requiring the corporation to file

  2         quarterly statements of financial condition and

  3         submit other reports to the Department of

  4         Insurance; providing that the corporation is

  5         not required to obtain a certificate of

  6         authority from the Department of Insurance;

  7         providing that the corporation is not required

  8         to be a member of the Florida Insurance

  9         Guaranty Association; requiring the corporation

10         to pay assessments pledged by the association

11         to secure bonds to pay covered claims arising

12         from insurer insolvencies caused by hurricane

13         losses; providing for transfer of policies of

14         the association and the Florida Windstorm

15         Underwriting Association to the corporation;

16         providing for a transfer of assets and

17         liabilities; requiring the associations to take

18         actions necessary to further the transfers;

19         providing for the redesignation of certain

20         coverage as the high-risk account of the

21         corporation; providing that such account be

22         treated as if it were a separate participating

23         insurer for certain purposes; providing that

24         the personal lines and commercial lines

25         accounts be treated as a single participating

26         insurer for certain purposes; providing that

27         the department may postpone the July 1, 2002,

28         effective date of transfer under the act;

29         providing legislative intent; requiring the

30         board to report to the Legislature on certain

31         loss activities; requiring the board to reduce

                                  2

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         certain eligibility boundaries under certain

  2         circumstances; providing legislative intent not

  3         to interfere with the rights of creditors, to

  4         preserve the obligation of the association, and

  5         to assure that outstanding financing agreements

  6         pass unchanged to the corporation; creating s.

  7         627.3517, F.S.; preserving the right of a

  8         residual-market policyholder to select and

  9         maintain an agent of his or her own choice;

10         providing an effective date.

11

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

13

14         Section 1.  Paragraph (d) of subsection (2) of section

15  215.555, Florida Statutes, is amended to read:

16         215.555  Florida Hurricane Catastrophe Fund.--

17         (2)  DEFINITIONS.--As used in this section:

18         (d)  "Losses" means direct incurred losses under

19  covered policies, including up to 20 percent of the value of

20  the residential structure or up to 40 percent of the value of

21  the residential contents for excluding losses attributable to

22  additional living expense coverages on mobile homes and

23  personal residential exposures, but excluding fair rental

24  value losses associated with personal and commercial

25  residential exposures, business interruption losses associated

26  with commercial residential exposures, and also excluding loss

27  adjustment expenses.

28         Section 2.  Paragraph (b) of subsection (2) and

29  subsection (6) of section 627.351, Florida Statutes, are

30  amended to read:

31         627.351  Insurance risk apportionment plans.--

                                  3

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         (2)  WINDSTORM INSURANCE RISK APPORTIONMENT.--

  2         (b)  The department shall require all insurers holding

  3  a certificate of authority to transact property insurance on a

  4  direct basis in this state, other than joint underwriting

  5  associations and other entities formed pursuant to this

  6  section, to provide windstorm coverage to applicants from

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

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

  9  coverage through ordinary means; or it shall adopt a

10  reasonable plan or plans for the equitable apportionment or

11  sharing among such insurers of windstorm coverage, which may

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

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

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

15  624.604, including insurance for fire, industrial fire, allied

16  lines, farmowners multiperil, homeowners' multiperil,

17  commercial multiperil, and mobile homes, and including

18  liability coverages on all such insurance, but excluding

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

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

21  insurance on mobile homes used as permanent dwellings. The

22  department shall adopt rules that provide a formula for the

23  recovery and repayment of any deferred assessments.

24         1.  For the purpose of this section, properties

25  eligible for such windstorm coverage are defined as dwellings,

26  buildings, and other structures, including mobile homes which

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

28  with mobile home tie-down requirements prescribed by the

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

30  320.8325, and the contents of all such properties. An

31  applicant or policyholder is eligible for coverage only if an

                                  4

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






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

  2  or policyholder from an admitted insurer at approved rates.

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

  4  association shall participate in its writings, expenses, and

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

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

  7  insurers. Such participation by member insurers shall be in

  8  the proportion that the net direct premiums of each member

  9  insurer written for property insurance in this state during

10  the preceding calendar year bear to the aggregate net direct

11  premiums for property insurance of all member insurers, as

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

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

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

15  written premiums for property insurance, reduced by premium

16  for liability coverage and for the following if included in

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

18  association direct premiums booked; National Flood Insurance

19  Program direct premiums; and similar deductions specifically

20  authorized by the plan of operation and approved by the

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

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

23  issued a certificate of authority to transact property

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

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

26  certificate of authority to transact property insurance in the

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

28  other reports, and any other statistics that the commissioner

29  deems necessary, shall certify to the association the

30  aggregate direct premiums written for property insurance in

31  this state by all member insurers.

                                  5

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






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

  2  of directors consisting of the Insurance Consumer Advocate

  3  appointed under s. 627.0613, 1 consumer representative

  4  appointed by the Insurance Commissioner, 1 consumer

  5  representative appointed by the Governor, and 12 additional

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

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

  8  companies of this state on the basis of cumulative weighted

  9  voting based on the net direct premiums of domestic companies

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

11  paragraph terminates the existing board or the terms of any

12  members of the board.

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

14  whereby a company voluntarily providing windstorm coverage in

15  affected areas will be relieved wholly or partially from

16  apportionment of a regular assessment pursuant to

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

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

19  companies under common management may elect to have its

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

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

22  group.

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

24  apportionment to a company for emergency assessments collected

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

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

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

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

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

30  policies out of the Residential Property and Casualty Joint

31  Underwriting Association.  In order to qualify for the

                                  6

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






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

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

  3  from the Residential Property and Casualty Joint Underwriting

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

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

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

  7  Counties and an additional 50 percent of the policies so

  8  removed cover risks located in other coastal counties, and

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

10  so removed may exclude windstorm coverage.  With the approval

11  of the department, the association may waive these geographic

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

13  of 100,000 Residential Property and Casualty Joint

14  Underwriting Association policies or 15 percent of the total

15  number of Residential Property and Casualty Joint Underwriting

16  Association policies, provided the governing board of the

17  Residential Property and Casualty Joint Underwriting

18  Association certifies that the take-out plan will materially

19  reduce the Residential Property and Casualty Joint

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

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

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

23  guarantees an additional year of renewability for all policies

24  removed from the Residential Property and Casualty Joint

25  Underwriting Association, or for 2 additional years if the

26  insurer guarantees 2 additional years of renewability for all

27  policies removed from the Residential Property and Casualty

28  Joint Underwriting Association.

29         b.  Assessments to pay deficits in the association

30  under this subparagraph shall be included as an appropriate

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

                                  7

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         c.  The Legislature finds that the potential for

  2  unlimited deficit assessments under this subparagraph may

  3  induce insurers to attempt to reduce their writings in the

  4  voluntary market, and that such actions would worsen the

  5  availability problems that the association was created to

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

  7  remain fully responsible for paying regular assessments and

  8  collecting emergency assessments for any deficits of the

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

10  to provide a means by which assessment liabilities may be

11  amortized over a period of years.

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

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

14  direct written premium for property insurance for the prior

15  calendar year for all member insurers, the association shall

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

17  the deficit.

18         (II)  When the deficit incurred in a particular

19  calendar year exceeds 10 percent of the aggregate statewide

20  direct written premium for property insurance for the prior

21  calendar year for all member insurers, the association shall

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

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

24  aggregate statewide direct written premium for property

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

26  remaining deficit shall be recovered through emergency

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

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

29  that a deficit exceeds the amount that will be recovered

30  through regular assessments on member insurers, pursuant to

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

                                  8

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  board shall levy, after verification by the department,

  2  emergency assessments to be collected by member insurers and

  3  by underwriting associations created pursuant to this section

  4  which write property insurance, upon issuance or renewal of

  5  property insurance policies other than National Flood

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

  7  regular assessments. The amount of the emergency assessment

  8  collected in a particular year shall be a uniform percentage

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

10  for all member insurers and underwriting associations,

11  excluding National Flood Insurance policy premiums, as

12  annually determined by the board and verified by the

13  department. The department shall verify the arithmetic

14  calculations involved in the board's determination within 30

15  days after receipt of the information on which the

16  determination was based. Notwithstanding any other provision

17  of law, each member insurer and each underwriting association

18  created pursuant to this section shall collect emergency

19  assessments from its policyholders without such obligation

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

21  deferment.  The emergency assessments so collected shall be

22  transferred directly to the association on a periodic basis as

23  determined by the association. The aggregate amount of

24  emergency assessments levied under this sub-sub-subparagraph

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

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

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

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

29  percent of the aggregate statewide direct written premium for

30  property insurance written by member insurers and underwriting

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

                                  9

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  commissions, required reserves, and other costs associated

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

  3  proceeds of the emergency assessments under this

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

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

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

  7  the board determines will efficiently recover the deficit. The

  8  emergency assessments under this sub-sub-subparagraph shall

  9  continue as long as any bonds issued or other indebtedness

10  incurred with respect to a deficit for which the assessment

11  was imposed remain outstanding, unless adequate provision has

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

13  pursuant to the document governing such bonds or other

14  indebtedness. Emergency assessments collected under this

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

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

17  commissions; however, failure to pay the emergency assessment

18  shall be treated as failure to pay premium.

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

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

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

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

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

24  aggregate statewide net direct premium for property insurance

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

26  voluntary writings for that year.

27         (V)  If regular deficit assessments are made under

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

29  the Residential Property and Casualty Joint Underwriting

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

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

                                  10

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






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

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

  3  a market equalization surcharge in a percentage equal to the

  4  total amount of such regular assessments divided by the

  5  aggregate statewide direct written premium for property

  6  insurance for member insurers for the prior calendar year.

  7  Market equalization surcharges under this sub-sub-subparagraph

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

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

10  equalization surcharge shall be treated as failure to pay

11  premium.

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

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

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

15  assistance program, in conjunction with the association, for

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

17  to avoid needless and indiscriminate proliferation,

18  duplication, and fragmentation of such assistance programs,

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

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

21  losses, regardless of whether or not the losses occurred

22  within or outside of the territorial jurisdiction of the local

23  government. Revenue bonds may not be issued until validated

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

25  declared by executive order or proclamation of the Governor

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

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

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

29  welfare of residents of this state and the protection and

30  preservation of the economic stability of insurers operating

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

                                  11

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  permit certain municipalities or counties to issue bonds as

  2  will provide relief to claimants and policyholders of the

  3  association and insurers responsible for apportionment of plan

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

  5  contracts with the association and with any other entity

  6  created pursuant to this subsection as are necessary to carry

  7  out this paragraph. Any bonds issued under this

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

  9  received by the association from assessments under this

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

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

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

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

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

15  remain unsold 60 days after issuance, the department shall

16  require all insurers subject to assessment to purchase the

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

18  shall be required to purchase that percentage of the unsold

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

20  share of assessment liability under this subsection. An

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

22  extent that the department determines that the purchase would

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

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

25  authority granted by subparagraph 6.

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

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

28  percent or more of its total countrywide property insurance

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

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

31  apportionment company. The apportionment of such a member

                                  12

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






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

  2  not exceed its gross participation, which shall not be

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

  4  shall a limited apportionment company be required to

  5  participate in any apportionment of losses pursuant to

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

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

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

  9  apportionment company shall collect from its policyholders any

10  emergency assessment imposed under sub-sub-subparagraph

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

12  determines that any regular assessment will result in an

13  impairment of the surplus of a limited apportionment company,

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

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

16  deferment of an emergency assessment to be collected from

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

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

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

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

21  but not for an emergency assessment collected from

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

23  opinion of the commissioner, payment of such regular

24  assessment would endanger or impair the solvency of the member

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

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

27  such assessment is deferred may be assessed against the other

28  member insurers in a manner consistent with the basis for

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

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

31

                                  13

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






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

  2  rules for classification of risks and rate modifications

  3  consistent with the objective of providing and maintaining

  4  funds sufficient to pay catastrophe losses.

  5         b.  The association may require arbitration of a rate

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

  7  Legislature that the rates for coverage provided by the

  8  association be actuarially sound and not competitive with

  9  approved rates charged in the admitted voluntary market such

10  that the association functions as a residual market mechanism

11  to provide insurance only when the insurance cannot be

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

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

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

15  line of business are reflective of approved rates in the

16  voluntary market for hurricane coverage for each line of

17  business in the various areas eligible for association

18  coverage.

19         c.  The association shall provide for windstorm

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

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

22  for personal lines residential risks. If coverage with the

23  association is sought for a residential risk valued in excess

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

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

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

27  located in the authorized market. The association must accept

28  a commercial lines residential risk with limits above $10

29  million or a personal lines residential risk with limits above

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

31  market.  The association may write coverage above the limits

                                  14

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  specified in this subparagraph with or without facultative or

  2  other reinsurance coverage, as the association determines

  3  appropriate.

  4         d.  The plan of operation must provide objective

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

  6  uniformly applied for all applicants in determining whether an

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

  8  making this determination and in establishing the criteria and

  9  procedures, the following shall be considered:

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

11  individual risk is substantially higher than for other risks

12  of the same class; and

13         (II)  Whether the uncertainty associated with the

14  individual risk is such that an appropriate premium cannot be

15  determined.

16

17  The acceptance or rejection of a risk by the association

18  pursuant to such criteria and procedures must be construed as

19  the private placement of insurance, and the provisions of

20  chapter 120 do not apply.

21         e.  The policies issued by the association must provide

22  that if the association obtains an offer from an authorized

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

24  standard policy including wind coverage or, if consistent with

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

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

27  eligible for coverage through the association. Upon

28  termination of eligibility, the association shall provide

29  written notice to the policyholder and agent of record stating

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

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

                                  15

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  from an authorized insurer. Other provisions of the insurance

  2  code relating to cancellation and notice of cancellation do

  3  not apply to actions under this sub-subparagraph.

  4         f.  Association policies and applications must include

  5  a notice that the association policy could, under this

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

  7  insurer that does not provide coverage identical to the

  8  coverage provided by the association. The notice shall also

  9  specify that acceptance of association coverage creates a

10  conclusive presumption that the applicant or policyholder is

11  aware of this potential.

12         g.  The association shall not require the securing of

13  flood insurance as a condition of coverage if the insured or

14  applicant executes a form approved by the department affirming

15  that flood insurance is not provided by the association and

16  that if flood insurance is not secured by the applicant or

17  insured in addition to coverage by the association, the risk

18  will not be covered for flood damage.  An association

19  policyholder electing not to secure flood insurance and

20  executing a form as provided herein making a claim for water

21  damage against the association shall have the burden of

22  proving the damage was not caused by flooding.

23  Notwithstanding other provisions of this subsection, the

24  association may deny coverage to an applicant or insured who

25  refuses to execute the form described herein.

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

27  of a private nonprofit corporation, a private nonprofit

28  unincorporated association, a partnership, a trust, a limited

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

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

31  bonds or by incurring other indebtedness and to accumulate

                                  16

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






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

  2  catastrophe losses. The plan may authorize all actions

  3  necessary to facilitate the issuance of bonds, including the

  4  pledging of assessments or other revenues.

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

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

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

  8  instruments; pledge or sell assessments, market equalization

  9  surcharges and other surcharges, rights, premiums, contractual

10  rights, projected recoveries from the Florida Hurricane

11  Catastrophe Fund, other reinsurance recoverables, and other

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

13  enter into any contracts or agreements necessary or proper to

14  accomplish such borrowings; and take other actions necessary

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

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

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

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

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

20  subject to approval by the department that such action would

21  enable it to efficiently meet the financial obligations of the

22  association and that such financings are reasonably necessary

23  to effectuate the requirements of this subsection. Any such

24  entity may accumulate reserves and retain surpluses as of the

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

26  losses incurred by the association during that year or any

27  future year. The association shall incorporate and continue

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

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

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

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

                                  17

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  of directors and officers currently serving shall continue to

  2  serve until their successors are duly qualified as provided

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

  4  effect immediately prior to the effective date of chapter

  5  76-96 shall be construed to be the assets and obligations of

  6  the successor plan created herein.

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

  8  Constitution, prohibiting the impairment of obligations of

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

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

11  financing agreement or any revenue source committed by

12  contract to such bond or other indebtedness issued or incurred

13  by the association or any other entity created under this

14  subsection.

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

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

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

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

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

20  company.

21         8.  Subject to approval by the department, the

22  association may establish different eligibility requirements

23  and operational procedures for any line or type of coverage

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

25  if the board determines that such changes to the eligibility

26  requirements and operational procedures are justified due to

27  the voluntary market being sufficiently stable and competitive

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

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

30  through the voluntary market through ordinary methods would

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

                                  18

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  coverage is sought in connection with a real property

  2  transfer, such requirements and procedures shall not provide

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

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

  5  transferee, and, if applicable, the lender.

  6         9.  Notwithstanding any other provision of law:

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

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

  9  the association created or purported to be created pursuant to

10  any financing documents to secure any bonds or other

11  indebtedness of the association shall be and remain valid and

12  enforceable, notwithstanding the commencement of and during

13  the continuation of, and after, any rehabilitation,

14  insolvency, liquidation, bankruptcy, receivership,

15  conservatorship, reorganization, or similar proceeding against

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

17  applicable laws.

18         b.  No such proceeding shall relieve the association of

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

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

21  assessments, market equalization or other surcharges,

22  projected recoveries from the Florida Hurricane Catastrophe

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

24  or other assets of the association pledged.

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

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

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

28  assessments, market equalization or renewal surcharges,

29  projected recoveries from the Florida Hurricane Catastrophe

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

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

                                  19

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






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

  2  any such proceeding shall continue unaffected by such

  3  proceeding.

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

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

  6  now existing or hereafter created evidencing any bonds or

  7  other indebtedness of the association or pursuant to which any

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

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

10  association are pledged or sold to secure the repayment of

11  such bonds or indebtedness, together with the payment of

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

13  any other obligation of the association related to such bonds

14  or indebtedness.

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

16  contract rights or other rights or assets of the association

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

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

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

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

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

22  valid, binding, and enforceable against the association or

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

24  against and superior to any competing claims or obligations

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

26  this state, asserting rights in any such assessments,

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

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

29  sale contained in the applicable financing documents, whether

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

31

                                  20

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  sale and without the need for any physical delivery,

  2  recordation, filing, or other action.

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

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

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

  6  association, members of the board of directors of the

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

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

  9  responsibilities under this subsection. Such immunity does not

10  apply to actions for breach of any contract or agreement

11  pertaining to insurance, or any willful tort.

12         (6)  CITIZENS RESIDENTIAL PROPERTY INSURANCE

13  CORPORATION AND CASUALTY JOINT UNDERWRITING ASSOCIATION.--

14         (a)1.  The Legislature finds that actual and threatened

15  catastrophic losses to property in this state from hurricanes

16  have caused insurers to be unwilling or unable to provide

17  property insurance coverage to the extent sought and needed.

18  It is in the public interest and a public purpose to assist in

19  assuring that property in the state is insured so as to

20  facilitate the remediation, reconstruction, and replacement of

21  damaged or destroyed property in order to reduce or avoid the

22  negative effects otherwise resulting to the public health,

23  safety, and welfare; to the economy of the state; and to the

24  revenues of the state and local governments needed to provide

25  for the public welfare. It is necessary, therefore, to provide

26  property insurance to applicants who are in good faith

27  entitled to procure insurance through the voluntary market but

28  are unable to do so. The Legislature intends by this

29  subsection that property insurance be provided and that it

30  continues, as long as necessary, through an entity organized

31  to achieve efficiencies and economies, all toward the

                                  21

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  achievement of the foregoing public purposes. Because it is

  2  essential for the corporation to have the maximum financial

  3  responses to pay claims following a catastrophic hurricane, it

  4  is the intent of the Legislature that the income of the

  5  corporation be exempt from federal income taxation and that

  6  interest on the debt obligations issued by the corporation be

  7  exempt from federal income taxation.

  8         2.  The Residential Property and Casualty Joint

  9  Underwriting Association originally created by this statute

10  shall be known, as of July 1, 2002, as the Citizens Property

11  Insurance Corporation. The corporation shall provide insurance

12  for residential and commercial

13         (a)  There is created a joint underwriting association

14  for equitable apportionment or sharing among insurers of

15  property and casualty insurance covering residential property,

16  for applicants who are in good faith entitled, but are unable,

17  to procure insurance through the voluntary market. The

18  corporation association shall operate pursuant to a plan of

19  operation approved by order of the department. The plan is

20  subject to continuous review by the department. The department

21  may, by order, withdraw approval of all or part of a plan if

22  the department determines that conditions have changed since

23  approval was granted and that the purposes of the plan require

24  changes in the plan.  For the purposes of this subsection,

25  residential coverage includes both personal lines residential

26  coverage, which consists of the type of coverage provided by

27  homeowner's, mobile home owner's, dwelling, tenant's,

28  condominium unit owner's, and similar policies, and commercial

29  lines residential coverage, which consists of the type of

30  coverage provided by condominium association, apartment

31  building, and similar policies.

                                  22

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         (b)1.  All insurers authorized to write one or more

  2  subject lines of business in this state are subject to

  3  assessment by the corporation and, for the purposes of this

  4  subsection, are referred to collectively as "assessable

  5  insurers." Insurers writing one or more subject lines of

  6  business in this state pursuant to part VIII of chapter 626

  7  are not assessable insurers, but insureds who procure one or

  8  more subject lines of business in this state pursuant to part

  9  VIII of chapter 626 are subject to assessment by the

10  corporation and are referred to collectively as "assessable

11  insureds." An authorized insurer's assessment liability, other

12  than underwriting associations or other entities created under

13  this section, must participate in and be members of the

14  Residential Property and Casualty Joint Underwriting

15  Association. A member's participation shall begin on the first

16  day of the calendar year following the year in which the

17  insurer member was issued a certificate of authority to

18  transact insurance for subject lines of business in this state

19  and shall terminate 1 year after the end of the first calendar

20  year during which the insurer member no longer holds a

21  certificate of authority to transact insurance for subject

22  lines of business in this state.

23         2.a.  All revenues, assets, liabilities, losses, and

24  expenses of the corporation association shall be divided into

25  three two separate accounts as follows:

26         (I)  A personal lines account for personal residential

27  policies issued by the corporation or issued by the

28  Residential Property and Casualty Joint Underwriting

29  Association and renewed by the corporation on risks that are

30  not located in areas eligible for coverage in the Florida

31

                                  23

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  Windstorm Underwriting Association as those areas were defined

  2  on January 1, 2002;

  3         (II)  A commercial lines account for commercial

  4  residential policies issued by the corporation or issued by

  5  the Residential Property and Casualty Joint Underwriting

  6  Association and renewed by the corporation on risks that are

  7  not located in areas eligible for coverage in the Florida

  8  Windstorm Underwriting Association as those areas were defined

  9  on January 1, 2002; and

10         (III)  A high-risk account for personal residential

11  policies and commercial residential and commercial

12  nonresidential property policies issued by the corporation or

13  transferred to the corporation on risks that are located in

14  areas eligible for coverage in the Florida Windstorm

15  Underwriting Association as those areas were defined on

16  January 1, 2002. The department may remove territory from the

17  area eligible for wind-only and quota-share coverage if, after

18  a public hearing, the department finds that the following

19  criteria have been met:

20         (A)  Admitted insurers in the voluntary market are

21  willing and able to write sufficient amounts of residential

22  coverage for all perils, including windstorm in the territory,

23  such that the remaining risks covered by wind-only policies

24  may be transferred to basic or standard personal lines

25  policies issued by the corporation without a significant

26  increase in the probable maximum loss of the corporation

27  attributable to such policies.

28         (B)  Such action will not significantly impair economic

29  growth in the territory or prevent financial institutions from

30  making mortgage loans covering properties in the territory.

31

                                  24

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  For purposes of the administrative proceedings to determine

  2  whether a territory should be removed from the eligible area,

  3  the proposed action shall be deemed to affect the substantial

  4  interests of any person who owns residential property within

  5  the territory and any insurer that provides coverage to any

  6  residential property within the territory. The high-risk

  7  account must also include quota share primary insurance under

  8  subparagraph (c)2.

  9         b.  The three separate accounts must be maintained as

10  long as financing obligations entered into by the Florida

11  Windstorm Underwriting Association or Residential Property and

12  Casualty Joint Underwriting Association are outstanding, in

13  accordance with the terms of the corresponding financing

14  documents. When the financing obligations are no longer

15  outstanding, in accordance with the terms of the corresponding

16  financing documents, the corporation may use a single account

17  for all revenues, assets, liabilities, losses, and expenses of

18  the corporation. , one of which is for personal lines

19  residential coverages and the other of which is for commercial

20  lines residential coverages.

21         c.  Revenues, assets, liabilities, losses, and expenses

22  not attributable to particular accounts coverages shall be

23  prorated among between the accounts.

24         d.  The Legislature finds that the revenues of the

25  corporation are revenues that are necessary to meet the

26  requirements set forth in documents authorizing the issuance

27  of bonds under this subsection.

28         e.  No part of the income of the corporation may inure

29  to the benefit of any private person.

30         3.  With respect to a deficit in an account:

31

                                  25

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         a.  When the deficit incurred in a particular calendar

  2  year is not greater than 10 percent of the aggregate statewide

  3  direct written premium for the subject lines of business for

  4  the prior calendar year for all member insurers, the entire

  5  deficit shall be recovered through regular assessments of

  6  assessable member insurers under paragraph (g) and assessable

  7  insureds.

  8         b.  When the deficit incurred in a particular calendar

  9  year exceeds 10 percent of the aggregate statewide direct

10  written premium for the subject lines of business for the

11  prior calendar year for all member insurers, the corporation

12  association shall levy regular assessments an assessment on

13  assessable member insurers under paragraph (g) and on

14  assessable insureds in an amount equal to the greater of 10

15  percent of the deficit or 10 percent of the aggregate

16  statewide direct written premium for the subject lines of

17  business for the prior calendar year for all member insurers.

18  Any remaining deficit shall be recovered through emergency

19  assessments under sub-subparagraph d.

20         c.  Each assessable member insurer's share of the

21  amount being assessed total assessment under sub-subparagraph

22  a. or sub-subparagraph b. shall be in the proportion that the

23  assessable member insurer's direct written premium for the

24  subject lines of business for the year preceding the

25  assessment bears to the aggregate statewide direct written

26  premium for the subject lines of business for that year for

27  all member insurers. The assessment percentage applicable to

28  each assessable insured is the ratio of the amount being

29  assessed under sub-subparagraph a. or sub-subparagraph b. to

30  the aggregate statewide direct written premium for the subject

31  lines of business for the prior year. Assessments levied by

                                  26

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  the corporation on assessable insurers under sub-subparagraphs

  2  a. and b. shall be paid as required by the corporation's plan

  3  of operation and paragraph (g). Assessments levied by the

  4  corporation on assessable insureds under sub-subparagraphs a.

  5  and b. shall be collected by the surplus lines agent at the

  6  time the surplus lines agent collects the surplus lines tax

  7  required by s. 626.932 and shall be paid to the Florida

  8  Surplus Lines Service Office at the time the surplus lines

  9  agency pays the surplus lines tax to the Florida Surplus Lines

10  Service Office. Upon receipt of regular assessments from

11  surplus lines agents, the Florida surplus Lines Service Office

12  shall transfer the assessments directly to the corporation as

13  determined by the corporation.

14         d.  Upon a determination by the board of governors that

15  a deficit in an account exceeds the amount that will be

16  recovered through regular assessments on member insurers under

17  sub-subparagraph a. or sub-subparagraph b., the board shall

18  levy, after verification by the department, emergency

19  assessments to be collected by assessable member insurers and

20  the corporation and collected from assessable insureds by

21  underwriting associations created under this section which

22  write subject lines of business upon issuance or renewal of

23  policies for subject lines of business, excluding National

24  Flood Insurance policies, in the year or years following levy

25  of the regular assessments.  The amount of the emergency

26  assessment collected in a particular year shall be a uniform

27  percentage of that year's direct written premium for subject

28  lines of business and all accounts of the corporation for all

29  member insurers and underwriting associations, excluding

30  National Flood Insurance Program policy premiums, as annually

31  determined by the board and verified by the department. The

                                  27

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  department shall verify the arithmetic calculations involved

  2  in the board's determination within 30 days after receipt of

  3  the information on which the determination was based.

  4  Notwithstanding any other provision of law, the corporation

  5  and each assessable member insurer that and each underwriting

  6  association created under this section which writes subject

  7  lines of business shall collect emergency assessments from its

  8  policyholders without such obligation being affected by any

  9  credit, limitation, exemption, or deferment. Emergency

10  assessments levied by the corporation on assessable insureds

11  shall be collected by the surplus lines agent at the time the

12  surplus lines agent collects the surplus lines tax required by

13  s. 626.932 and shall be paid to the Florida Surplus Lines

14  Service Office at the time the surplus lines agent pays the

15  surplus lines tax to the Florida Surplus Lines Service Office.

16  The emergency assessments so collected shall be transferred

17  directly to the corporation association on a periodic basis as

18  determined by the corporation association.  The aggregate

19  amount of emergency assessments levied under this

20  sub-subparagraph in any calendar year may not exceed the

21  greater of 10 percent of the amount needed to cover the

22  original deficit, plus interest, fees, commissions, required

23  reserves, and other costs associated with financing of the

24  original deficit, or 10 percent of the aggregate statewide

25  direct written premium for subject lines of business and for

26  all accounts of the corporation written by member insurers and

27  underwriting associations for the prior year, plus interest,

28  fees, commissions, required reserves, and other costs

29  associated with financing the original deficit.

30         e.  The board may pledge the proceeds of assessments,

31  projected recoveries from the Florida Hurricane Catastrophe

                                  28

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  Fund, other insurance and reinsurance recoverables, market

  2  equalization surcharges and other surcharges, and other funds

  3  available to the corporation association as the source of

  4  revenue for and to secure bonds issued under paragraph (g),

  5  bonds or other indebtedness issued under subparagraph (c)3.,

  6  or lines of credit or other financing mechanisms issued or

  7  created under this subsection, or to retire any other debt

  8  incurred as a result of deficits or events giving rise to

  9  deficits, or in any other way that the board determines will

10  efficiently recover such deficits. The purpose of the lines of

11  credit or other financing mechanisms is to provide additional

12  resources to assist the corporation association in covering

13  claims and expenses attributable to a catastrophe. As used in

14  this subsection, the term "assessments" includes regular

15  assessments under sub-subparagraph a., sub-subparagraph b., or

16  subparagraph (g)1. and emergency assessments under

17  sub-subparagraph d. Emergency assessments collected under

18  sub-subparagraph d. are not part of an insurer's rates, are

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

20  commissions; however, failure to pay the emergency assessment

21  shall be treated as failure to pay premium. The emergency

22  assessments under sub-subparagraph d. shall continue as long

23  as any bonds issued or other indebtedness incurred with

24  respect to a deficit for which the assessment was imposed

25  remain outstanding, unless adequate provision has been made

26  for the payment of such bonds or other indebtedness pursuant

27  to the documents governing such bonds or other indebtedness.

28         f.  As used in this subsection, the term "subject lines

29  of business" means insurance written by assessable insurers or

30  procured by assessable insureds on real or personal property,

31  as defined in s. 624.604, including insurance for fire,

                                  29

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  industrial fire, allied lines, farmowners multiperil,

  2  homeowners multiperil, commercial multiperil, and mobile

  3  homes, and including liability coverage on all such insurance,

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

  5  excluding vehicle insurance as defined in s. 624.605(1) other

  6  than insurance on mobile homes used as permanent dwellings.

  7         g.  The Florida Surplus Lines Service Office shall

  8  determine annually the aggregate statewide written premium in

  9  subject lines of business procured by assessable insureds and

10  shall report that information to the corporation in a form and

11  at a time the corporation specifies to ensure that the

12  corporation can meet the requirements of this subsection and

13  the corporation's financing obligations.

14         h.  The Florida Surplus Lines Service Office shall

15  verify the proper application by surplus lines agents of

16  assessment percentages for regular assessments and emergency

17  assessments levied under this subparagraph on assessable

18  insureds and shall assist the corporation in ensuring the

19  accurate, timely collection and payment of assessments by

20  surplus lines agents as required by the corporation., with

21  respect to the personal lines account, any personal lines

22  policy defined in s. 627.4025, and means, with respect to the

23  commercial lines account, all commercial property and

24  commercial fire insurance.

25         (c)  The plan of operation of the corporation

26  association:

27         1.  May provide for one or more designated insurers,

28  able and willing to provide policy and claims service, to act

29  on behalf of the association to provide such service.  Each

30  licensed agent shall be entitled to indicate the order of

31  preference regarding who will service the business placed by

                                  30

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  the agent.  The association shall adhere to each agent's

  2  preferences unless after consideration of other factors in

  3  assigning agents, including, but not limited to, servicing

  4  capacity and fee arrangements, the association has reason to

  5  believe it is in the best interest of the association to make

  6  a different assignment.

  7         1.2.  Must provide for adoption of residential property

  8  and casualty insurance policy forms and commercial residential

  9  and nonresidential property insurance forms, which forms must

10  be approved by the department prior to use.  The corporation

11  association shall adopt the following policy forms:

12         a.  Standard personal lines policy forms that including

13  wind coverage, which are comprehensive multiperil policies

14  providing what is generally considered to be full coverage of

15  a residential property equivalent similar to the coverage

16  provided in the private insurance market under a dwelling fire

17  an HO-2, HO-3, HO-4, or HO-6 policy.

18         b.  Standard personal lines policy forms without wind

19  coverage, which are the same as the policies described in

20  sub-subparagraph a. except that they do not include wind

21  coverage.

22         b.c.  Basic personal lines policy forms that including

23  wind coverage, which are policies similar to an HO-8 policy or

24  a dwelling fire policy that provide coverage meeting the

25  requirements of the secondary mortgage market, but which

26  coverage is more limited than the coverage under a standard

27  policy.

28         d.  Basic personal lines policy forms without wind

29  coverage, which are the same as the policies described in

30  sub-subparagraph c. except that they do not include wind

31  coverage.

                                  31

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         c.e.  Commercial lines residential policy forms

  2  including wind coverage that are generally similar to the

  3  basic perils of full coverage obtainable for commercial

  4  residential structures in the admitted voluntary market.

  5         d.  Commercial lines nonresidential property insurance

  6  forms that cover the peril of wind only. The form is

  7  applicable only to commercial lines nonresidential properties

  8  located in areas eligible for coverage in the Florida

  9  Windstorm Underwriting Association as those areas were defined

10  on January 1, 2002.

11         2.a.  Must provide that the corporation adopt a program

12  in which the corporation and authorized insurers enter into

13  quota share primary insurance agreements for hurricane

14  coverage, as defined in s. 627.4025(2)(a), for eligible risks,

15  and adopt property insurance forms for eligible risks which

16  cover the peril of wind only. As used in this subsection, the

17  term:

18         (I)  "Quota share primary insurance" means an

19  arrangement in which the primary hurricane coverage of an

20  eligible risk is provided in specified percentages by the

21  corporation and an authorized insurer. The corporation and

22  authorized insurer are each solely responsible for a specified

23  percentage of hurricane coverage of an eligible risk as set

24  forth in a quota share primary insurance agreement between the

25  corporation and an authorized insurer. The responsibility of

26  the corporation or authorized insurer to pay its specified

27  percentage of hurricane losses of an eligible risk, as set

28  forth in the quota share primary insurance agreement may not

29  be altered by the inability of the other party to the

30  agreement to pay its specified percentage of hurricane losses.

31  Eligible risks that are provided hurricane coverage through a

                                  32

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  quota share primary insurance arrangement must be provided

  2  policy forms that set forth the obligations of the corporation

  3  and authorized insurer under the arrangement, and that clearly

  4  specify the percentages of quota share primary insurance

  5  provided by the corporation and authorized insurer.

  6         (II)  "Eligible risks" means personal lines residential

  7  and commercial lines residential risks that meet the

  8  underwriting criteria of the corporation and are located in

  9  areas that were eligible for coverage by the Florida Windstorm

10  Underwriting Association on January 1, 2002.

11         b.  The corporation may enter into quota share primary

12  insurance agreements with authorized insurers at corporation

13  coverage levels of 90 percent and 50 percent.

14         c.  If the corporation determines that additional

15  coverage levels are necessary to maximize participation in

16  quota share primary insurance agreements by authorized

17  insurers, the corporation may establish additional coverage

18  levels. However, the corporation's quota share primary

19  insurance coverage level may not exceed 90 percent.

20         d.  Any quota share primary insurance agreement entered

21  into between an authorized insurer and the corporation must

22  provide for a uniform, specified percentage of coverage of

23  hurricane losses, by county or territory as set forth by the

24  corporation board, for all eligible risks of the authorized

25  insurer covered under the quota share primary insurance

26  agreement.

27         e.  Any quota share primary insurance agreement entered

28  into between an authorized insurer and the corporation is

29  subject to review and approval by the department.

30         f.  For all eligible risks covered under quota share

31  primary insurance agreements, the exposure and coverage levels

                                  33

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  for both the corporation and authorized insurers shall be

  2  reported by the corporation to the Florida Hurricane

  3  Catastrophe Fund. For all policies of eligible risks covered

  4  under quota share primary insurance agreements, the

  5  corporation and the authorized insurer shall maintain complete

  6  and accurate records for the purpose of exposure and loss

  7  reimbursement audits as required by Florida Hurricane

  8  Catastrophe Fund rules. The corporation and the authorized

  9  insurer shall each maintain duplicate copies of policy

10  declaration pages and supporting claims documents.

11         g.  The rates charged by the corporation for covering

12  eligible personal lines residential risks under quota share

13  primary insurance agreements for the coverage levels in

14  sub-subparagraphs b. and c. must be based on the formula A

15  times B, where A is the percentage of coverage provided under

16  the quota share agreement and B is the rate that the

17  corporation would charge the owners of the subject property

18  for wind-only policies as provided in subparagraph (d)3.

19  Rates for coverage of other risks under quota share agreements

20  shall be calculated according to a formula approved by the

21  department and derived from the corporation's rates for direct

22  insurance of such other risks.

23         h.  The quota share primary insurance agreement between

24  the corporation and an authorized insurer must set forth the

25  specific terms under which coverage is provided, including,

26  but not limited to, the sale and servicing of policies issued

27  under the agreement by the insurance agent of the authorized

28  insurer producing the business, the reporting of information

29  concerning eligible risks, the payment of premium to the

30  corporation, and arrangements for the adjustment and payment

31

                                  34

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  of hurricane claims incurred on eligible risks by the claims

  2  adjuster and personnel of the authorized insurer.

  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 corporation association may

  8  employ or otherwise contract with individuals or other

  9  entities to provide administrative or professional services

10  that may be appropriate to effectuate the plan. The

11  corporation association shall have the power to borrow funds,

12  by issuing bonds or by incurring other indebtedness, and shall

13  have other powers reasonably necessary to effectuate the

14  requirements of this subsection. The corporation may, but is

15  not required to, seek judicial validation of its bonds or

16  other indebtedness under chapter 75. The corporation

17  association may issue bonds or incur other indebtedness, or

18  have bonds issued on its behalf by a unit of local government

19  pursuant to subparagraph (g)2., in the absence of a hurricane

20  or other weather-related event, upon a determination by the

21  corporation association, subject to approval by the

22  department, that such action would enable it to efficiently

23  meet the financial obligations of the corporation association

24  and that such financings are reasonably necessary to

25  effectuate the requirements of this subsection. The

26  corporation association is authorized to take all actions

27  needed to facilitate tax-free status for any such bonds or

28  indebtedness, including formation of trusts or other

29  affiliated entities. The corporation association shall have

30  the authority to pledge assessments, projected recoveries from

31  the Florida Hurricane Catastrophe Fund, other reinsurance

                                  35

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  recoverables, market equalization and other surcharges, and

  2  other funds available to the corporation association as

  3  security for bonds or other indebtedness. In recognition of s.

  4  10, Art. I of the State Constitution, prohibiting the

  5  impairment of obligations of contracts, it is the intent of

  6  the Legislature that no action be taken whose purpose is to

  7  impair any bond indenture or financing agreement or any

  8  revenue source committed by contract to such bond or other

  9  indebtedness.

10         4.a.  Must require that the corporation association

11  operate subject to the supervision and approval of a board of

12  governors consisting of 7 13 individuals from diverse

13  geographical areas of the state, appointed by the Treasurer.

14  The appointment of each board member is subject to

15  confirmation by three members of the Cabinet as provided in s.

16  6, Art. IV of the State Constitution.  The term of office of a

17  board member terminates upon termination of the term of office

18  of the official who appointed the board member. The Treasurer

19  shall designate one of the appointees as chair. All board

20  members serve at the pleasure of the Treasurer., including 1

21  who is elected as chair. The board shall consist of:

22         a.  The insurance consumer advocate appointed under s.

23  627.0613.

24         b.  Five members designated by the insurance industry.

25         c.  Five consumer representatives appointed by the

26  Insurance Commissioner. Two of the consumer representatives

27  must, at the time of appointment, be holders of policies

28  issued by the association, who are selected with consideration

29  given to reflecting the geographic balance of association

30  policyholders. Two of the consumer members must be individuals

31  who are minority persons as defined in s. 288.703(3). One of

                                  36

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  the consumer members shall have expertise in the field of

  2  mortgage lending.

  3         d.  Two representatives of the insurance industry

  4  appointed by the Insurance Commissioner. Of the two insurance

  5  industry representatives appointed by the Insurance

  6  Commissioner, at least one must be an individual who is a

  7  minority person as defined in s. 288.703(3).

  8

  9  Any board member may be disapproved or removed and replaced by

10  the commissioner at any time for cause. All board members,

11  including the chair, must be appointed to serve for 3-year

12  terms beginning annually on a date designated by the plan. Any

13  board vacancy shall be filled for the unexpired term by the

14  Treasurer. The Treasurer shall appoint a technical advisory

15  group to provide information and advice to the board of

16  governors in connection with the board's duties under this

17  subsection. The executive director and senior managers of the

18  corporation shall be engaged by the Treasurer and serve at the

19  pleasure of the Treasurer. The executive director is

20  responsible for employing other staff as the corporation may

21  require, subject to review and concurrence by the Office of

22  the Treasurer.

23         b.  To ensure the effective and efficient

24  implementation of this section, the Treasurer shall appoint

25  the board of governors by July 1, 2002. The board of governors

26  shall work in conjunction with the Residential Property

27  Insurance Market Coordinating Council to address appropriate

28  organizational, operational, and financial matters relating to

29  the corporation. In addition, after consultation with the

30  Residential Property Insurance Market Coordinating Council,

31  the Treasurer may postpone the implementation of the

                                  37

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  provisions of paragraph (l) and any other provision this

  2  section related to the operation of the corporation for a

  3  period not to exceed 180 days if the Treasurer determines that

  4  phasing-in these provisions is necessary to ensure the

  5  effective and efficient implementation of the corporation's

  6  operations or financing arrangements. However, the Treasurer

  7  may not affect any provision in paragraph (b) or any other

  8  provision of this section related to financing arrangements

  9  entered into by the Florida Windstorm Underwriting Association

10  or the Florida Residential Property and Casualty Joint

11  Underwriting Association and the ability of those entities or

12  the corporation to service its debts and maintain the capacity

13  to repay funds secured under those arrangements.

14         5.  Must provide a procedure for determining the

15  eligibility of a risk for coverage, as follows:

16         a.  With respect to personal lines residential risks,

17  if the risk is offered full coverage from an authorized

18  insurer at the insurer's approved rate under either a standard

19  policy including wind coverage or, if consistent with the

20  insurer's underwriting rules as filed with the department, a

21  basic policy including wind coverage, the risk is not eligible

22  for any policy issued by the corporation association. If the

23  risk accepts an offer of coverage through the market

24  assistance plan or an offer of coverage through a mechanism

25  established by the corporation association before a policy is

26  issued to the risk by the corporation association or during

27  the first 30 days of coverage by the corporation association,

28  and the producing agent who submitted the application to the

29  plan or to the corporation association is not currently

30  appointed by the insurer, the insurer shall either:

31

                                  38

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         (I)  Pay to the producing agent of record of the

  2  policy, for the first year, an amount which is the greater of

  3  the insurer's usual and customary commission for the type of

  4  policy written or a policy fee equal to the usual and

  5  customary commission of the corporation; or

  6         (II)  Offer to allow the producing agent of record of

  7  the policy to continue servicing the policy for a period of

  8  not less than 1 year and offer to pay the agent the insurer's

  9  usual and customary commission for the type of policy written.

10  If the new or producing agent is unwilling or unable to accept

11  appointment by the new insurer, the new insurer shall pay the

12  agent in accordance with sub-sub-subparagraph (I). appoint the

13  agent to service the risk or, if the insurer places the

14  coverage through a new agent, require the new agent who then

15  writes the policy to pay not less than 50 percent of the first

16  year's commission to the producing agent who submitted the

17  application to the plan or the association, except that if the

18  new agent is an employee or exclusive agent of the insurer,

19  the new agent shall pay a policy fee of $50 to the producing

20  agent in lieu of splitting the commission.

21

22  If the risk is not able to obtain any such offer, the risk is

23  eligible for either a standard policy including wind coverage

24  or a basic policy including wind coverage issued by the

25  corporation association; however, if the risk could not be

26  insured under a standard policy including wind coverage

27  regardless of market conditions, the risk shall be eligible

28  for a basic policy including wind coverage unless rejected

29  under subparagraph 8. The corporation association shall

30  determine the type of policy to be provided on the basis of

31

                                  39

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  objective standards specified in the underwriting manual and

  2  based on generally accepted underwriting practices.

  3         b.  With respect to commercial lines residential risks,

  4  if the risk is offered coverage under a policy including wind

  5  coverage from an authorized insurer at its approved rate, the

  6  risk is not eligible for any policy issued by the corporation

  7  association. If the risk accepts an offer of coverage through

  8  the market assistance plan or an offer of coverage through a

  9  mechanism established by the corporation association before a

10  policy is issued to the risk by the corporation association,

11  and the producing agent who submitted the application to the

12  plan or the corporation association is not currently appointed

13  by the insurer, the insurer shall either:

14         (I)  Pay to the producing agent of record of the

15  policy, for the first year, an amount which is the greater of

16  the insurer's usual and customary commission for the type of

17  policy written or a policy fee equal to the usual and

18  customary commission of the corporation; or

19         (II)  Offer to allow the producing agent of record of

20  the policy to continue servicing the policy for a period of

21  not less than 1 year and offer to pay the agent the insurer's

22  usual and customary commission for the type of policy written.

23  If the new or producing agent is unwilling or unable to accept

24  appointment by the new insurer, the new insurer shall pay the

25  agent in accordance with sub-sub-subparagraph (I). 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, except that if the new agent is an

31  employee or exclusive agent of the insurer, the new agent

                                  40

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  shall pay a policy fee of $50 to the producing agent in lieu

  2  of splitting the commission.

  3

  4  If the risk is not able to obtain any such offer, the risk is

  5  eligible for a policy including wind coverage issued by the

  6  corporation association.

  7         c.  This subparagraph does not require the association

  8  to provide wind coverage or hurricane coverage in any area in

  9  which such coverage is available through the Florida Windstorm

10  Underwriting Association.

11         6.  Must include rules for classifications of risks and

12  rates therefor.

13         7.  Must provide that if premium and investment income

14  for an account attributable to a particular calendar plan year

15  are in excess of projected losses and expenses for the account

16  of the plan attributable to that year, such excess shall be

17  held in surplus in the account. Such surplus shall be

18  available to defray deficits as to future years and shall be

19  used for that purpose prior to assessing assessable member

20  insurers and assessable insureds as to any calendar plan year.

21         8.  Must provide objective criteria and procedures to

22  be uniformly applied for all applicants in determining whether

23  an individual risk is so hazardous as to be uninsurable. In

24  making this determination and in establishing the criteria and

25  procedures, the following shall be considered:

26         a.  Whether the likelihood of a loss for the individual

27  risk is substantially higher than for other risks of the same

28  class; and

29         b.  Whether the uncertainty associated with the

30  individual risk is such that an appropriate premium cannot be

31  determined.

                                  41

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1

  2  The acceptance or rejection of a risk by the corporation

  3  association shall be construed as the private placement of

  4  insurance, and the provisions of chapter 120 shall not apply.

  5         9.  Must provide that the corporation association shall

  6  make its best efforts to procure catastrophe reinsurance at

  7  reasonable rates, as determined by the board of governors.

  8         10.  Must provide that in the event of regular deficit

  9  assessments under sub-subparagraph (b)3.a. or sub-subparagraph

10  (b)3.b., in the personal lines account, the commercial lines

11  residential account, or the high-risk account or by the

12  Florida Windstorm Underwriting Association under

13  sub-sub-subparagraph (2)(b)2.d.(I) or sub-sub-subparagraph

14  (2)(b)2.d.(II), the corporation association shall levy upon

15  corporation association policyholders in such account in its

16  next rate filing, or by a separate rate filing solely for this

17  purpose, a market equalization surcharge in a percentage equal

18  to the total amount of such regular assessments divided by the

19  aggregate statewide direct written premium for subject lines

20  of business for member insurers for the prior calendar year.

21  Market equalization surcharges under this subparagraph are not

22  considered premium and are not subject to commissions, fees,

23  or premium taxes; however, failure to pay a market

24  equalization surcharge shall be treated as failure to pay

25  premium.

26         11.  The policies issued by the corporation association

27  must provide that, if the corporation association or the

28  market assistance plan obtains an offer from an authorized

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

30  standard policy including wind coverage or a basic policy

31  including wind coverage, the risk is no longer eligible for

                                  42

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  renewal coverage through the corporation association. However,

  2  if the risk is located in an area in which Florida Windstorm

  3  Underwriting Association coverage is available, such an offer

  4  of a standard or basic policy terminates eligibility

  5  regardless of whether or not the offer includes wind coverage.

  6  Upon termination of eligibility, the association shall provide

  7  written notice to the policyholder and agent of record stating

  8  that the association policy shall be canceled as of 60 days

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

10  from an authorized insurer. Other provisions of the insurance

11  code relating to cancellation and notice of cancellation do

12  not apply to actions under this subparagraph.

13         12.  Corporation Association policies and applications

14  must include a notice that the corporation association policy

15  could, under this section or s. 627.3511, be replaced with a

16  policy issued by an authorized admitted insurer that does not

17  provide coverage identical to the coverage provided by the

18  corporation association. The notice shall also specify that

19  acceptance of corporation 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

                                  43

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  from the corporation association. When coverage is sought in

  2  connection with a real property transfer, such requirements

  3  and procedures shall not provide for an effective date of

  4  coverage 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         14.  Must provide that, with respect to the high-risk

  8  account, any assessable insurer with a surplus as to

  9  policyholders of $25 million or less writing 25 percent or

10  more of its total countrywide property insurance premiums in

11  this state may petition the department, within the first 90

12  days of each calendar year, to qualify as a limited

13  apportionment company. In no event shall a limited

14  apportionment company be required to participate in the

15  portion of any assessment, within the high-risk account,

16  pursuant to sub-subparagraph (b)3.a. or sub-subparagraph

17  (b)3.b. in the aggregate which exceeds $50 million after

18  payment of available high-risk account funds in any calendar

19  year. However, a limited apportionment company shall collect

20  from its policyholders any emergency assessment imposed under

21  sub-subparagraph (b)3.d. The plan shall provide that, if the

22  department determines that any regular assessment will result

23  in an impairment of the surplus of a limited apportionment

24  company, the department may direct that all or part of such

25  assessment be deferred. However, there shall be no limitation

26  or deferment of an emergency assessment to be collected from

27  policyholders under sub-subparagraph (b)3.d.

28         15.  Must provide that the corporation appoint as its

29  licensed agents only those agents who also hold an appointment

30  as defined in s. 626.104 with an insurer who at the time of

31  the agent's initial appointment by the corporation is

                                  44

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  authorized to write and is actually writing personal lines

  2  residential property coverage, commercial residential property

  3  coverage, or commercial nonresidential property coverage

  4  within the state.

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

  6  rates for coverage provided by the corporation association be

  7  actuarially sound and not competitive with approved rates

  8  charged in the admitted voluntary market, so that the

  9  corporation association functions as a residual market

10  mechanism to provide insurance only when the insurance cannot

11  be procured in the voluntary market. Rates shall include an

12  appropriate catastrophe loading factor that reflects the

13  actual catastrophic exposure of the corporation association

14  and recognizes that the association has little or no capital

15  or surplus; and the association shall carefully review each

16  rate filing to assure that provider compensation is not

17  excessive.

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

19  corporation association for each line of business for personal

20  lines residential policies excluding rates for wind-only

21  policies shall be no lower than the average rates charged by

22  the insurer that had the highest average rate in that county

23  among the 20 insurers with the greatest total direct written

24  premium in the state for that line of business in the

25  preceding year, except that with respect to mobile home

26  coverages, the average rates of the corporation association

27  shall be no lower than the average rates charged by the

28  insurer that had the highest average rate in that county among

29  the 5 insurers with the greatest total written premium for

30  mobile home owner's policies in the state in the preceding

31  year.

                                  45

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         3.  Rates for personal lines residential wind-only

  2  policies must be actuarially sound and not competitive with

  3  approved rates charged by authorized insurers. Beginning July

  4  1, 2002, the rate plans used by the Florida Windstorm

  5  Underwriting Association on January 1, 2002, shall become the

  6  rate plans of the corporation for all wind-only rates.  With

  7  respect to personal lines residential wind-only rates, the

  8  corporation shall continue the phase in of such rate plan

  9  until the full actuarially indicated rates are completely

10  phased in.  The Legislature recognizes that while it is a

11  matter of public necessity for the wind-only rates eventually

12  to reach their full actuarially indicated level as provided in

13  such rate plan, the rapid implementation of these rates will

14  create a hardship for some wind-only policyholders.  Therefore

15  the corporation shall continue to phase in the rate plan, but

16  shall limit the premium increase to any wind-only personal

17  lines residential policyholder in any year to 15 percent.  The

18  15-percent limitation shall first apply with respect to

19  policies issued or renewed on or after July 1, 2003.  The

20  15-percent limitation applies only to a residence for which

21  the property owner has provided the corporation with proof

22  that the property qualifies for a homestead exemption under

23  chapter 196 or to a property valued at $500,000 or less

24  according to the property appraiser's most recent official

25  appraisal.

26         4.3.  Rates for commercial lines residential coverage

27  shall not be subject to the requirements of subparagraph 2.,

28  but shall be subject to all other requirements of this

29  paragraph and s. 627.062.

30

31

                                  46

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         5.4.  Nothing in this paragraph shall require or allow

  2  the corporation association to adopt a rate that is inadequate

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

  4         6.5.  The association may require arbitration of a

  5  filing pursuant to s. 627.062(6). Rate filings of the

  6  association under this paragraph shall be made on a use and

  7  file basis under s. 627.062(2)(a)2. The corporation

  8  association shall make a rate filing at least once a year, but

  9  no more often than quarterly.

10         7.  In addition to the rates otherwise determined

11  pursuant to this paragraph, the corporation shall impose and

12  collect an amount equal to the premium tax provided for in s.

13  624.509 to augment the financial resources of the corporation.

14         (e)  If coverage in an account through the association

15  is hereby activated effective upon approval of the plan, and

16  shall remain activated until coverage is deactivated pursuant

17  to paragraph (f). Thereafter, coverage through the corporation

18  association shall be reactivated by order of the department

19  only under one of the following circumstances:

20         1.  If the market assistance plan receives a minimum of

21  100 applications for coverage within a 3-month period, or 200

22  applications for coverage within a 1-year period or less for

23  residential coverage, unless the market assistance plan

24  provides a quotation from admitted carriers at their filed

25  rates for at least 90 percent of such applicants. Any market

26  assistance plan application that is rejected because an

27  individual risk is so hazardous as to be uninsurable using the

28  criteria specified in subparagraph (c)8. shall not be included

29  in the minimum percentage calculation provided herein. In the

30  event that there is a legal or administrative challenge to a

31  determination by the department that the conditions of this

                                  47

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  subparagraph have been met for eligibility for coverage in the

  2  corporation association, any eligible risk may obtain coverage

  3  during the pendency of such challenge.

  4         2.  In response to a state of emergency declared by the

  5  Governor under s. 252.36, the department may activate coverage

  6  by order for the period of the emergency upon a finding by the

  7  department that the emergency significantly affects the

  8  availability of residential property insurance.

  9         (f)1.  The corporation shall file with the department

10  quarterly statements of financial condition, an annual

11  statement of financial condition, and audited financial

12  statements in the manner prescribed by law. In addition, the

13  corporation shall report to the department monthly on the

14  types, premium, exposure, and distribution by county of its

15  policies in force, and shall submit other reports as the

16  department requires to carry out its oversight of the

17  corporation.

18         2.  The activities of the corporation association shall

19  be reviewed at least annually by the department to determine

20  whether board and, upon recommendation by the board or

21  petition of any interested party, coverage shall be

22  deactivated in an account on the basis if the department finds

23  that the conditions giving rise to its activation no longer

24  exist.

25         (g)1.  The corporation board shall certify to the

26  department its needs for annual assessments as to a particular

27  calendar year, and for any startup or interim assessments that

28  it deems to be necessary to sustain operations as to a

29  particular year pending the receipt of annual assessments.

30  Upon verification, the department shall approve such

31  certification, and the corporation board shall levy such

                                  48

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  annual, startup, or interim assessments. Such assessments

  2  shall be prorated as provided in paragraph (b). The

  3  corporation board shall take all reasonable and prudent steps

  4  necessary to collect the amount of assessment due from each

  5  assessable participating member insurer, including, if

  6  prudent, filing suit to collect such assessment. If the

  7  corporation board is unable to collect an assessment from any

  8  assessable member insurer, the uncollected assessments shall

  9  be levied as an additional assessment against the assessable

10  participating member insurers and any assessable participating

11  member insurer required to pay an additional assessment as a

12  result of such failure to pay shall have a cause of action

13  against such nonpaying assessable member insurer. Assessments

14  shall be included as an appropriate factor in the making of

15  rates. The failure of a surplus lines agent to collect and

16  remit any regular or emergency assessment levied by the

17  corporation is considered to be a violation of s. 626.936 and

18  subjects the surplus lines agent to the penalties provided in

19  that section.

20         2.  The governing body of any unit of local government,

21  any residents of which are insured by the corporation

22  association, may issue bonds as defined in s. 125.013 or s.

23  166.101 from time to time to fund an assistance program, in

24  conjunction with the corporation association, for the purpose

25  of defraying deficits of the corporation association. In order

26  to avoid needless and indiscriminate proliferation,

27  duplication, and fragmentation of such assistance programs,

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

29  insured by the corporation association, may provide for the

30  payment of losses, regardless of whether or not the losses

31  occurred within or outside of the territorial jurisdiction of

                                  49

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  the local government. Revenue bonds may not be issued until

  2  validated pursuant to chapter 75, unless a state of emergency

  3  is declared by executive order or proclamation of the Governor

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

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

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

  7  welfare of residents of this state and the protection and

  8  preservation of the economic stability of insurers operating

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

10  permit certain municipalities or counties to issue such bonds

11  as will permit relief to claimants and policyholders of the

12  corporation joint underwriting association and insurers

13  responsible for apportionment of association losses. Any such

14  unit of local government may enter into such contracts with

15  the corporation association and with any other entity created

16  pursuant to this subsection as are necessary to carry out this

17  paragraph. Any bonds issued under this subparagraph shall be

18  payable from and secured by moneys received by the corporation

19  association from emergency assessments under sub-subparagraph

20  (b)3.d., and assigned and pledged to or on behalf of the unit

21  of local government for the benefit of the holders of such

22  bonds.  The funds, credit, property, and taxing power of the

23  state or of the unit of local government shall not be pledged

24  for the payment of such bonds. If any of the bonds remain

25  unsold 60 days after issuance, the department shall require

26  all insurers subject to assessment to purchase the bonds,

27  which shall be treated as admitted assets; each insurer shall

28  be required to purchase that percentage of the unsold portion

29  of the bond issue that equals the insurer's relative share of

30  assessment liability under this subsection. An insurer shall

31  not be required to purchase the bonds to the extent that the

                                  50

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  department determines that the purchase would endanger or

  2  impair the solvency of the insurer.

  3         3.a.  In addition to any credits, bonuses, or

  4  exemptions provided under s. 627.3511, The corporation board

  5  shall adopt one or more programs a program subject to approval

  6  by the department for the reduction of both new and renewal

  7  writings in the corporation association. The corporation board

  8  may consider any prudent and not unfairly discriminatory

  9  approach to reducing corporation association writings, and may

10  but must adopt at least a credit against assessment liability

11  or other liability that provides an incentive for insurers to

12  take risks out of the corporation association and to keep

13  risks out of the corporation association by maintaining or

14  increasing voluntary writings in counties or areas in which

15  corporation association risks are highly concentrated and a

16  program to provide a formula under which an insurer

17  voluntarily taking risks out of the corporation association by

18  maintaining or increasing voluntary writings will be relieved

19  wholly or partially from assessments under sub-subparagraphs

20  (b)3.a. and b. When the corporation enters into a contractual

21  agreement for a take-out plan, the producing agent of record

22  of the corporation policy is entitled to retain any unearned

23  commission on such policy, and the insurer shall either:

24         (I)  Pay to the producing agent of record of the

25  policy, for the first year, an amount which is the greater of

26  the insurer's usual and customary commission for the type of

27  policy written or a policy fee equal to the usual and

28  customary commission of the corporation; or

29         (II)  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 insurer's

                                  51

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  usual and customary commission for the type of policy written.

  2  If the new or producing agent is unwilling or unable to accept

  3  appointment by the new insurer, the new insurer shall pay the

  4  agent in accordance with sub-sub-subparagraph (I).

  5         b.  Any credit or exemption from regular assessments

  6  adopted under this subparagraph shall last no longer than the

  7  3 years following the cancellation or expiration of the policy

  8  by the corporation association. With the approval of the

  9  department, the board may extend such credits for an

10  additional year if the insurer guarantees an additional year

11  of renewability for all policies removed from the corporation

12  association, or for 2 additional years if the insurer

13  guarantees 2 additional years of renewability for all policies

14  so removed.

15         c.  There shall be no credit, limitation, exemption, or

16  deferment from emergency assessments to be collected from

17  policyholders pursuant to sub-subparagraph (b)3.d.

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

19  or in part, of the assessment of an assessable a member

20  insurer, other than an emergency assessment collected from

21  policyholders pursuant to sub-subparagraph (b)3.d., if the

22  department finds that payment of the assessment would endanger

23  or impair the solvency of the insurer. In the event an

24  assessment against an assessable a member insurer is deferred

25  in whole or in part, the amount by which such assessment is

26  deferred may be assessed against the other assessable member

27  insurers in a manner consistent with the basis for assessments

28  set forth in paragraph (b).

29         (h)  Nothing in this subsection shall be construed to

30  preclude the issuance of residential property insurance

31  coverage pursuant to part VIII of chapter 626.

                                  52

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         (i)  There shall be no liability on the part of, and no

  2  cause of action of any nature shall arise against, any

  3  assessable member insurer or its agents or employees, the

  4  corporation association or its agents or employees, members of

  5  the board of governors or their respective designees at a

  6  board meeting, corporation association committee members, or

  7  the department or its representatives, for any action taken by

  8  them in the performance of their duties or responsibilities

  9  under this subsection. Such immunity does not apply to:

10         1.  Any of the foregoing persons or entities for any

11  willful tort;

12         2.  The corporation association or its servicing or

13  producing agents for breach of any contract or agreement

14  pertaining to insurance coverage;

15         3.  The corporation association with respect to

16  issuance or payment of debt; or

17         4.  Any assessable member insurer with respect to any

18  action to enforce an assessable a member insurer's obligations

19  to the corporation association under this subsection.

20         (j)  The Residential Property and Casualty Joint

21  Underwriting Association is not a state agency, board, or

22  commission. However, For the purposes of s. 199.183(1), the

23  corporation Residential Property and Casualty Joint

24  Underwriting Association shall be considered a political

25  subdivision of the state and shall be exempt from the

26  corporate income tax. The premiums, assessments, investment

27  income, and other revenue of the corporation are funds

28  received for providing property insurance coverage as required

29  by this subsection, paying claims for Florida citizens insured

30  by the corporation, securing and repaying debt obligations

31  issued by the corporation, and conducting all other activities

                                  53

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  of the corporation, and shall not be considered taxes, fees,

  2  licenses, or charges for services imposed by the Legislature

  3  on individuals, businesses, or agencies outside state

  4  government. Bonds and other debt obligations issued by or on

  5  behalf of the corporation are not to be considered "State

  6  bonds" within the meaning of s. 215.58(10). The corporation is

  7  not subject to the procurement provisions of chapter 287, and

  8  policies and decisions of the corporation relating to

  9  incurring debt, levying of assessments and the sale, issuance,

10  continuation, terms and claims under corporation policies, and

11  all services relating thereto, are not subject to the

12  provisions of chapter 120. The corporation is not required to

13  obtain or to hold a certificate of authority issued by the

14  department, nor is it required to participate as a member

15  insurer of the Florida Insurance Guaranty Association.

16  However, the corporation is required to pay, in the same

17  manner as an authorized insurer, assessments pledged by the

18  Florida Insurance Guaranty Association to secure bonds issued

19  or other indebtedness incurred to pay covered claims arising

20  from insurer insolvencies caused by, or proximately related

21  to, hurricane losses. It is the intent of the Legislature that

22  the tax exemptions provided in this paragraph will augment the

23  financial resources of the corporation to better enable the

24  corporation to fulfill its public purposes. Any bonds issued

25  by the corporation, their transfer, and the income therefrom,

26  including any profit made on the sale thereof, shall at all

27  times be free from taxation of every kind by the state and any

28  political subdivision or local unit or other instrumentality

29  thereof; however, this exemption does not apply to any tax

30  imposed by chapter 200 on interest, income, or profits on debt

31  obligations owned by corporations other than the corporation.

                                  54

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1         (k)  Upon a determination by the department board of

  2  governors that the conditions giving rise to the establishment

  3  and activation of the corporation association no longer exist,

  4  and upon the consent thereto by order of the department, the

  5  corporation association is dissolved. Upon dissolution, the

  6  assets of the association shall be applied first to pay all

  7  debts, liabilities, and obligations of the corporation

  8  association, including the establishment of reasonable

  9  reserves for any contingent liabilities or obligations, and

10  all remaining assets of the corporation association shall

11  become property of the state and deposited in the Florida

12  Hurricane Catastrophe Fund.

13         (l)1.  Effective July 1, 2002, policies of the

14  Residential Property and Casualty Joint Underwriting

15  Association shall become policies of the corporation. All

16  obligations, rights, assets and liabilities of the Residential

17  Property and Casualty Joint Underwriting Association,

18  including bonds, note and debt obligations, and the financing

19  documents pertaining to them become those of the corporation

20  as of July 1, 2002. The corporation is not required to issue

21  endorsements or certificates of assumption to insureds during

22  the remaining term of in-force transferred policies.

23         2.  Effective July 1, 2002, policies of the Florida

24  Windstorm Underwriting Association are transferred to the

25  corporation and shall become policies of the corporation. All

26  obligations, rights, assets, and liabilities of the Florida

27  Windstorm Underwriting Association, including bonds, note, and

28  debt obligations, and the financing documents pertaining to

29  them are transferred to and assumed by the corporation on July

30  1, 2002. The corporation is not required to issue endorsement

31

                                  55

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  or certificates of assumption to insureds during the remaining

  2  term of in-force transferred policies.

  3         3.  The Florida Windstorm Underwriting Association and

  4  the Residential Property and Casualty Joint Underwriting

  5  Association shall take all actions as may be proper to further

  6  evidence the transfers and shall provide the documents and

  7  instruments of further assurance as may reasonably be

  8  requested by the corporation for that purpose. The corporation

  9  shall execute assumptions and instruments as the trustees or

10  other parties to the financing documents of the Florida

11  Windstorm Underwriting Association or the Residential Property

12  and Casualty Joint Underwriting Association may reasonably

13  request to further evidence the transfers and assumptions,

14  which transfers and assumptions, however, are effective on the

15  date provided under this paragraph whether or not, and

16  regardless of the date on which, the assumptions or

17  instruments are executed by the corporation. Subject to the

18  relevant financing documents pertaining to their outstanding

19  bonds, notes, indebtedness, or other financing obligations,

20  the moneys, investments, receivables, choses in action, and

21  other intangibles of the Florida Windstorm Underwriting

22  Association shall be credited to the high-risk account of the

23  corporation, and those of the personal lines residential

24  coverage account and the commercial lines residential coverage

25  account of the Residential Property and Casualty Joint

26  Underwriting Association shall be credited to the personal

27  lines account and the commercial lines account, respectively,

28  of the corporation.

29         4.  Effective July 1, 2002, a new applicant for

30  property insurance coverage who would otherwise have been

31  eligible for coverage in the Florida Windstorm Underwriting

                                  56

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  Association is eligible for coverage from the corporation as

  2  provided in this subsection.

  3         5.  The transfer of all policies, obligations, rights,

  4  assets, and liabilities from the Florida Windstorm

  5  Underwriting Association to the corporation and the renaming

  6  of the Residential Property and Casualty Joint Underwriting

  7  Association as the corporation shall in no way affect the

  8  coverage with respect to covered policies as defined in s.

  9  215.555(2)(c) provided to these entities by the Florida

10  Hurricane Catastrophe Fund. The coverage provided by the

11  Florida Hurricane Catastrophe Fund to the Florida Windstorm

12  Underwriting Association based on its exposures as of June 30,

13  2002, and each June 30 thereafter shall be redesignated as

14  coverage for the high-risk account of the corporation. The

15  coverage provided by the Florida Hurricane Catastrophe Fund to

16  the Residential Property and Casualty Joint Underwriting

17  Association based on its exposures as of June 30, 2002, and

18  each June 30 thereafter shall be transferred to the personal

19  lines account and the commercial lines account of the

20  corporation. The high-risk account shall be treated, for all

21  Florida Hurricane Catastrophe Fund purposes, as if it were a

22  separate participating insurer with its own exposures,

23  reimbursement premium, and loss reimbursement. Likewise, the

24  personal lines and commercial lines accounts shall be viewed

25  together, for all Florida Hurricane Catastrophe Fund purposes,

26  as if the two accounts were one and represent a single,

27  separate participating insurer with its own exposures,

28  reimbursement premium, and loss reimbursement. The coverage

29  provided by the Florida Hurricane Catastrophe Fund to the

30  corporation shall constitute and operate as a full transfer of

31  coverage from the Florida Windstorm Underwriting Association

                                  57

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  and Residential Property and Casualty Joint Underwriting to

  2  the corporation.

  3         6.  The department may, by order, postpone the July 1,

  4  2002, effective dates set forth in this paragraph if the

  5  department finds that effectuation of these dates cannot be

  6  accomplished due to emergency conditions. All obligations,

  7  rights, assets, and liabilities of the Florida Property and

  8  Casualty Joint Underwriting Association created by subsection

  9  (5), which obligations, rights, assets, or liabilities relate

10  to the provision of commercial lines residential property

11  insurance coverage as described in this section are hereby

12  transferred to the Residential Property and Casualty Joint

13  Underwriting Association. The Residential Property and

14  Casualty Joint Underwriting Association is not required to

15  issue endorsements or certificates of assumption to insureds

16  during the remaining term of in-force transferred policies.

17         (m)  Notwithstanding any other provision of law:

18         1.  The pledge or sale of, the lien upon, and the

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

20  the corporation association created or purported to be created

21  pursuant to any financing documents to secure any bonds or

22  other indebtedness of the corporation association shall be and

23  remain valid and enforceable, notwithstanding the commencement

24  of and during the continuation of, and after, any

25  rehabilitation, insolvency, liquidation, bankruptcy,

26  receivership, conservatorship, reorganization, or similar

27  proceeding against the corporation association under the laws

28  of this state.

29         2.  No such proceeding shall relieve the corporation

30  association of its obligation, or otherwise affect its ability

31  to perform its obligation, to continue to collect, or levy and

                                  58

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  collect, assessments, market equalization or other surcharges

  2  under subparagraph (c)10., or any other rights, revenues, or

  3  other assets of the corporation association pledged pursuant

  4  to any financing documents.

  5         3.  Each such pledge or sale of, lien upon, and

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

  7  lien, or security interest, any such assessments, market

  8  equalization or other surcharges, or other rights, revenues,

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

10  after the commencement of and during the pendency of, or

11  after, any such proceeding shall continue unaffected by such

12  proceeding.  As used in this subsection, the term "financing

13  documents" means any agreement or agreements, instrument or

14  instruments, or other document or documents now existing or

15  hereafter created evidencing any bonds or other indebtedness

16  of the corporation association or pursuant to which any such

17  bonds or other indebtedness has been or may be issued and

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

19  corporation association are pledged or sold to secure the

20  repayment of such bonds or indebtedness, together with the

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

22  payment of any other obligation or financial product, as

23  defined in the plan of operation of the corporation

24  association related to such bonds or indebtedness.

25         4.  Any such pledge or sale of assessments, revenues,

26  contract rights, or other rights or assets of the corporation

27  association shall constitute a lien and security interest, or

28  sale, as the case may be, that is immediately effective and

29  attaches to such assessments, revenues, or contract rights or

30  other rights or assets, whether or not imposed or collected at

31  the time the pledge or sale is made.  Any such pledge or sale

                                  59

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  is effective, valid, binding, and enforceable against the

  2  corporation association or other entity making such pledge or

  3  sale, and valid and binding against and superior to any

  4  competing claims or obligations owed to any other person or

  5  entity, including policyholders in this state, asserting

  6  rights in any such assessments, revenues, or contract rights

  7  or other rights or assets to the extent set forth in and in

  8  accordance with the terms of the pledge or sale contained in

  9  the applicable financing documents, whether or not any such

10  person or entity has notice of such pledge or sale and without

11  the need for any physical delivery, recordation, filing, or

12  other action.

13         (n)1.  The following records of the corporation

14  Residential Property and Casualty Joint Underwriting

15  Association are confidential and exempt from the provisions of

16  s. 119.07(1) and s. 24(a), Art. I of the State Constitution:

17         a.  Underwriting files, except that a policyholder or

18  an applicant shall have access to his or her own underwriting

19  files.

20         b.  Claims files, until termination of all litigation

21  and settlement of all claims arising out of the same incident,

22  although portions of the claims files may remain exempt, as

23  otherwise provided by law. Confidential and exempt claims file

24  records may be released to other governmental agencies upon

25  written request and demonstration of need; such records held

26  by the receiving agency remain confidential and exempt as

27  provided for herein.

28         c.  Records obtained or generated by an internal

29  auditor pursuant to a routine audit, until the audit is

30  completed, or if the audit is conducted as part of an

31  investigation, until the investigation is closed or ceases to

                                  60

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  be active.  An investigation is considered "active" while the

  2  investigation is being conducted with a reasonable, good faith

  3  belief that it could lead to the filing of administrative,

  4  civil, or criminal proceedings.

  5         d.  Matters reasonably encompassed in privileged

  6  attorney-client communications.

  7         e.  Proprietary information licensed to the corporation

  8  association under contract and the contract provides for the

  9  confidentiality of such proprietary information.

10         f.  All information relating to the medical condition

11  or medical status of a corporation an association employee

12  which is not relevant to the employee's capacity to perform

13  his or her duties, except as otherwise provided in this

14  paragraph. Information which is exempt shall include, but is

15  not limited to, information relating to workers' compensation,

16  insurance benefits, and retirement or disability benefits.

17         g.  Upon an employee's entrance into the employee

18  assistance program, a program to assist any employee who has a

19  behavioral or medical disorder, substance abuse problem, or

20  emotional difficulty which affects the employee's job

21  performance, all records relative to that participation shall

22  be confidential and exempt from the provisions of s. 119.07(1)

23  and s. 24(a), Art. I of the State Constitution, except as

24  otherwise provided in s. 112.0455(11).

25         h.  Information relating to negotiations for financing,

26  reinsurance, depopulation, or contractual services, until the

27  conclusion of the negotiations.

28         i.  Minutes of closed meetings regarding underwriting

29  files, and minutes of closed meetings regarding an open claims

30  file until termination of all litigation and settlement of all

31

                                  61

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  claims with regard to that claim, except that information

  2  otherwise confidential or exempt by law will be redacted.

  3

  4  When an authorized insurer is considering underwriting a risk

  5  insured by the corporation association, relevant underwriting

  6  files and confidential claims files may be released to the

  7  insurer provided the insurer agrees in writing, notarized and

  8  under oath, to maintain the confidentiality of such files.

  9  When a file is transferred to an insurer that file is no

10  longer a public record because it is not held by an agency

11  subject to the provisions of the public records law.

12  Underwriting files and confidential claims files may also be

13  released to staff of and the board of governors of the market

14  assistance plan established pursuant to s. 627.3515, who must

15  retain the confidentiality of such files, except such files

16  may be released to authorized insurers that are considering

17  assuming the risks to which the files apply, provided the

18  insurer agrees in writing, notarized and under oath, to

19  maintain the confidentiality of such files.  Finally, the

20  corporation association or the board or staff of the market

21  assistance plan may make the following information obtained

22  from underwriting files and confidential claims files

23  available to licensed general lines insurance agents: name,

24  address, and telephone number of the residential property

25  owner or insured; location of the risk; rating information;

26  loss history; and policy type.  The receiving licensed general

27  lines insurance agent must retain the confidentiality of the

28  information received.

29         2.  Portions of meetings of the corporation Residential

30  Property and Casualty Joint Underwriting Association are

31  exempt from the provisions of s. 286.011 and s. 24(b), Art. I

                                  62

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  of the State Constitution wherein confidential underwriting

  2  files or confidential open claims files are discussed.  All

  3  portions of corporation association meetings which are closed

  4  to the public shall be recorded by a court reporter.  The

  5  court reporter shall record the times of commencement and

  6  termination of the meeting, all discussion and proceedings,

  7  the names of all persons present at any time, and the names of

  8  all persons speaking.  No portion of any closed meeting shall

  9  be off the record.  Subject to the provisions hereof and s.

10  119.07(2)(a), the court reporter's notes of any closed meeting

11  shall be retained by the corporation association for a minimum

12  of 5 years. A copy of the transcript, less any exempt matters,

13  of any closed meeting wherein claims are discussed shall

14  become public as to individual claims after settlement of the

15  claim.

16         (o)  It is the intent of the Legislature that the

17  amendments to this subsection enacted in 2002 should, over

18  time, reduce the probable maximum windstorm losses in the

19  residual markets and should reduce the potential assessments

20  to be levied on property insurers and policyholders statewide.

21  In furtherance of this intent:

22         1.  The board shall, on or before February 1 of each

23  year, provide a report to the President of the Senate and the

24  Speaker of the House of Representatives showing the reduction

25  or increase in the 100-year probable maximum loss attributable

26  to wind-only coverages and the quota share program under this

27  subsection combined, as compared to the benchmark 100-year

28  probable maximum loss of the Florida Windstorm Underwriting

29  Association.  For purposes of this paragraph, the benchmark

30  100-year probable maximum loss of the Florida Windstorm

31  Underwriting Association shall be the calculation dated

                                  63

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  February 2001 and based on November 30, 2000, exposures.  In

  2  order to ensure comparability of data, the board shall use the

  3  same methods for calculating its probable maximum loss as were

  4  used to calculate the benchmark probable maximum loss.

  5         2.  Beginning February 1, 2007, if the report under

  6  subparagraph 1. for any year indicates that the 100-year

  7  probable maximum loss attributable to wind-only coverages and

  8  the quota share program combined does not reflect a reduction

  9  of at least 25 percent from the benchmark, the board shall

10  reduce the boundaries of the high-risk area eligible for

11  wind-only coverages under this subsection in a manner

12  calculated to reduce such probable maximum loss to an amount

13  at least 25 percent below the benchmark.

14         3.  Beginning February 1, 2012, if the report under

15  subparagraph 1. for any year indicates that the 100-year

16  probable maximum loss attributable to wind-only coverages and

17  the quota share program combined does not reflect a reduction

18  of at least 50 percent from the benchmark, the boundaries of

19  the high-risk area eligible for wind-only coverages under this

20  subsection shall be reduced by the elimination of any area

21  that is not seaward of a line 1,000 feet inland from the

22  Intracoastal Waterway.

23         (p)  In enacting the provisions of this section, the

24  Legislature recognizes that both the Florida Windstorm

25  Underwriting Association and the Residential Property and

26  Casualty Joint Underwriting Association have entered into

27  financing arrangements that obligate each entity to service

28  its debts and maintain the capacity to repay funds secured

29  under these financing arrangements. It is the intent of the

30  Legislature that nothing in this section be construed to

31  compromise, diminish, or interfere with the rights of

                                  64

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  creditors under such financing arrangements. It is further the

  2  intent of the Legislature to preserve the obligations of the

  3  Florida Windstorm Underwriting Association and Residential

  4  Property and Casualty Joint Underwriting Association with

  5  regard to outstanding financing arrangements, with such

  6  obligations passing entirely and unchanged to the corporation.

  7  So long as any bonds, notes, indebtedness, or other financing

  8  obligations of the Florida Windstorm Underwriting Association

  9  or the Residential Property and Casualty Joint Underwriting

10  Association are outstanding, under the terms of the financing

11  documents pertaining to them, the governing board of the

12  corporation shall have and shall exercise the authority to

13  levy, charge, collect, and receive all premiums, assessments,

14  surcharges, charges, revenues and receipts that the

15  associations had authority to levy, charge, collect, or

16  receive under the provisions of subsection (2) and subsection

17  (6), respectively, as they existed on January 1, 2002, to the

18  extent necessary to provide moneys, together with other

19  available moneys of the corporation without exercise of the

20  authority provided by this paragraph, in at least the amounts,

21  and by the times, as would be provided under those former

22  provisions of subsection (2) or subsection (6), respectively,

23  so that the value, amount, and collectability of any assets,

24  revenues, or revenue source pledged or committed to, or any

25  lien thereon securing such outstanding bonds, notes,

26  indebtedness, or other financing obligations will not be

27  diminished, impaired, or adversely affected by the amendments

28  made by this act and to permit compliance with all provisions

29  of financing documents pertaining to such bonds, notes,

30  indebtedness, or other financing obligations, or the security

31  or credit enhancement for them, and any reference in this

                                  65

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  subsection to bonds, notes, indebtedness, financing

  2  obligations, or similar obligations, of the corporation shall

  3  include like instruments or contracts of the Florida Windstorm

  4  Underwriting Association and the Residential Property and

  5  Casualty Joint Underwriting Association to the extent not

  6  inconsistent with the provisions of the financing documents

  7  pertaining to them.

  8         (q)  Effective January 7, 2003, any reference in this

  9  subsection to the Treasurer shall be deemed to be a reference

10  to the Chief Financial Officer and any reference to the

11  Department of Insurance shall be deemed to be a reference to

12  the Department of Insurance and Financial Services or other

13  successor to the Department of Insurance specified by law.

14         Section 3.  Section 627.3517, Florida Statutes, is

15  created to read:

16         627.3517  Consumer choice.--A provision of this part

17  may not be construed to impair the right of any residual

18  market policyholder to select and maintain an agent of his or

19  her own choosing. This right may not be cancelled, suspended,

20  impeded, abridged, or otherwise compromised by any rule, plan

21  of operation, or depopulation plan, whether through keepout,

22  takeout, midterm assumption, or any other means, of any

23  Insurance Risk Apportionment plan or depopulation plan

24  including, but not limited to, those described in ss. 627.351,

25  627.3511, and 627.3515. The department shall adopt any rules

26  necessary to cause any Insurance Risk Apportionment Plan or

27  Market Assistance Plan under this part to demonstrate that its

28  operations do not interfere with, promote, or allow

29  interference with the rights created under this section. If

30  the policyholder chooses an agent who is either unable or

31  unwilling to be appointed with a particular carrier, the

                                  66

CODING: Words stricken are deletions; words underlined are additions.






    Florida House of Representatives - 2002             CS/HB 1361

    200-575-02






  1  policyholder is not disqualified from participation in the

  2  appropriate residual market because of an offer of coverage in

  3  the voluntary market. Any rule, plan of operation, or

  4  depopulation plan, through keepout, takeout, midterm

  5  assumption, or any other means, of any Insurance Risk

  6  Apportionment plan is subject to ss. 627.351(2)(b) and

  7  627.3511(4)(a).

  8         Section 4.  This act shall take effect July 1, 2002.

  9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

                                  67

CODING: Words stricken are deletions; words underlined are additions.