SENATE AMENDMENT
Bill No. CS for SB 2364
Amendment No. ___ Barcode 300586
CHAMBER ACTION
Senate House
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04/29/2003 12:25 PM .
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11 Senator Atwater moved the following amendment:
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13 Senate Amendment (with title amendment)
14 On page 63, between lines 24 and 25,
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16 insert:
17 Section 70. Paragraph (d) of subsection (6) of
18 section 627.351, Florida Statutes, is amended to read:
19 627.351 Insurance risk apportionment plans.--
20 (6) CITIZENS PROPERTY INSURANCE CORPORATION.--
21 (d)1. It is the intent of the Legislature that the
22 rates for coverage provided by the corporation be actuarially
23 sound and not competitive with approved rates charged in the
24 admitted voluntary market, so that the corporation functions
25 as a residual market mechanism to provide insurance only when
26 the insurance cannot be procured in the voluntary market.
27 Rates shall include an appropriate catastrophe loading factor
28 that reflects the actual catastrophic exposure of the
29 corporation.
30 2. For each county, the average rates of the
31 corporation for each line of business for personal lines
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1 residential policies excluding rates for wind-only policies
2 shall be no lower than the average rates charged by the
3 insurer that had the highest average rate in that county among
4 the 20 insurers with the greatest total direct written premium
5 in the state for that line of business in the preceding year,
6 except that with respect to mobile home coverages, the average
7 rates of the corporation shall be no lower than the average
8 rates charged by the insurer that had the highest average rate
9 in that county among the 5 insurers with the greatest total
10 written premium for mobile home owner's policies in the state
11 in the preceding year.
12 3. Rates for personal lines residential wind-only
13 policies must be actuarially sound and not competitive with
14 approved rates charged by authorized insurers. However, for
15 personal lines residential wind-only policies issued or
16 renewed between July 1, 2002, and June 30, 2003, the maximum
17 premium increase must be no greater than 10 percent of the
18 Florida Windstorm Underwriting Association premium for that
19 policy in effect on June 30, 2002, as adjusted for coverage
20 changes and seasonal occupancy surcharges. For personal lines
21 residential wind-only policies issued or renewed between July
22 1, 2003, and June 30, 2004, the corporation shall use its
23 existing filed and approved wind-only rating and
24 classification plans, provided, however, that the maximum
25 premium increase must be no greater than 20 percent of the
26 premium for that policy in effect on June 30, 2003, as
27 adjusted for coverage changes and seasonal occupancy
28 surcharges.
29 The personal lines residential wind-only rates for the
30 corporation effective July 1, 2003, must be based on a rate
31 filing by the corporation which establishes rates which are
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1 actuarially sound and not competitive with approved rates
2 charged by authorized insurers. Corporation rate manuals shall
3 include a rate surcharge for seasonal occupancy. To ensure
4 that personal lines residential wind-only rates effective on
5 or after July 1, 2004 2003, are not competitive with approved
6 rates charged by authorized insurers, the corporation, in
7 conjunction with the office, shall develop a wind-only rate
8 making methodology, which methodology shall be contained in a
9 rate filing made by the corporation with the office by January
10 1, 2004. If the office thereafter determines that the
11 wind-only rates or rating factors filed by the corporation
12 fail to comply with the wind-only rate making methodology
13 provided for in this subsection, it shall so notify the
14 corporation and require the corporation to amend its rates or
15 rating factors to come into compliance within 90 days of
16 notice from the office. The office shall report to the Speaker
17 of the House of Representatives and the President of the
18 Senate on the provisions of the wind-only rate making
19 methodology by January 31, 2004 the department, by March 1 of
20 each year, shall provide the corporation, for each county in
21 which there are geographical areas in which personal lines
22 residential wind-only policies may be issued, the average
23 rates charged by the insurer that had the highest average rate
24 in that county for wind coverage in that insurer's rating
25 territories which most closely approximate the geographical
26 area in that county in which personal lines residential
27 wind-only policies may be written by the corporation. The
28 average rates provided must be from an insurer among the 20
29 insurers with the greatest total direct written premium in the
30 state for personal lines residential property insurance for
31 the preceding year. With respect to mobile homes, the five
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1 insurers with the greatest total written premium for that line
2 of business in the preceding year shall be used. The
3 corporation shall certify to the department that its average
4 personal lines residential wind-only rates are no lower in
5 each county than the average rates provided by the department.
6 The department is authorized to adopt rules to establish
7 reporting requirements to obtain the necessary wind-only rate
8 information from insurers to implement this provision.
9 4. Rates for commercial lines coverage shall not be
10 subject to the requirements of subparagraph 2., but shall be
11 subject to all other requirements of this paragraph and s.
12 627.062.
13 5. Nothing in this paragraph shall require or allow
14 the corporation to adopt a rate that is inadequate under s.
15 627.062.
16 6. The corporation shall certify to the office at
17 least twice annually that its personal lines rates comply with
18 the requirements of subparagraphs 1. and 2. If any adjustment
19 in the rates or rating factors of the corporation is necessary
20 to ensure such compliance, the corporation shall make and
21 implement such adjustments and file its revised rates and
22 rating factors with the office. If the office thereafter
23 determines that the revised rates and rating factors fail to
24 comply with the provisions of subparagraphs 1. and 2, it shall
25 notify the corporation and require the corporation to amend
26 its rates or rating factors in conjunction with its next rate
27 filing. The office must notify the corporation by electronic
28 means of any rate filing it approves for any insurer among the
29 insurers referred to in subparagraph 2 make a rate filing at
30 least once a year, but no more often than quarterly.
31 7. In addition to the rates otherwise determined
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1 pursuant to this paragraph, the corporation shall impose and
2 collect an amount equal to the premium tax provided for in s.
3 624.509 to augment the financial resources of the corporation.
4 8.a To assist the corporation in developing additional
5 ratemaking methods to assure compliance with subparagraphs 1.
6 and 4., the corporation shall appoint a rate methodology panel
7 consisting of one person recommended by the Florida
8 Association of Insurance Agents, one person recommended by the
9 Professional Insurance Agents of Florida, one person
10 recommended by the Florida Association of Insurance and
11 Financial Advisors, one person recommended by the insurer with
12 the highest voluntary market share of residential property
13 insurance business in the state, one person recommended by the
14 insurer with the second-highest voluntary market share of
15 residential property insurance business in the state, one
16 person recommended by an insurer writing commercial
17 residential property insurance in this state, one person
18 recommended by the Office of Insurance Regulation, and one
19 board member designated by the board chairman, who shall serve
20 as chairman of the panel.
21 b. By January 1, 2004, the rate methodology panel
22 shall provide a report to the corporation of its findings and
23 recommendations for the use of additional ratemaking methods
24 and procedures, including the use of a rate-equalization
25 surcharge in an amount sufficient to assure that the total
26 cost of coverage for policyholders or applicants to the
27 corporation is sufficient to comply with subparagraph 1.
28 c. Within 30 days after such report, the corporation
29 shall present to the President of the Senate, the Speaker of
30 the House of Representatives, the minority party leaders of
31 each house of the Legislature, and the chairs of the standing
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1 committees of each house of the Legislature having
2 jurisdiction of insurance issues, a plan for implementing the
3 additional ratemaking methods and an outline of any
4 legislation needed to facilitate use of the new methods.
5 d. The plan must include a provision that producer
6 commissions paid by the corporation shall not be calculated in
7 such a manner as to include any rate-equalization surcharge.
8 However, without regard to the plan to be developed or its
9 implementation, producer commissions paid by the corporation
10 for each account, other than the quota share primary program,
11 shall remain fixed as to percentage, effective rate,
12 calculation, and payment method, as these were in effect on
13 January 1, 2003.
14 9. By January 1, 2004, the corporation shall develop a
15 notice to policyholders or applicants that the rates of
16 Citizens Property Insurance Corporation are intended to be
17 higher than the rates of any admitted carrier and providing
18 other information the corporation deems necessary to assist
19 consumers in finding other voluntary admitted insurers willing
20 to insure their property.
21 Section 71. Section 624.105, Florida Statutes, is
22 created to read:
23 624.105 Waiver of customer liability.--Any regulated
24 company as defined in s. 350.111, any electric utility as
25 defined in s. 366.02(2), any utility as defined in s.
26 367.021(12) or s.367.022(2) and (7), and any provider of
27 communications services as defined in s. 202.11(3) may charge
28 for and include an optional waiver of liability provision in
29 their customer contracts under which the entity agrees to
30 waive all or a portion of the customer s liability for
31 service from the entity for a defined period in the event of
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1 the customer s call to active military service, death,
2 disability, involuntary unemployment, qualification for family
3 leave, or similar qualifying event or condition. Such
4 provisions may not be effective in the customer s contract
5 with the entity unless affirmatively elected by the customer.
6 No such provision shall constitute insurance so long as the
7 provision is a contract between the entity and its customer.
8 Section 72. Section 717.1071, Florida Statutes, is
9 created to read:
10 717.1071 Lost owners of unclaimed demutualization,
11 rehabilitation, or related reorganization proceeds.--
12 (1) Property distributable in the course of a
13 demutualization, rehabilitation, or related reorganization of
14 an insurance company is deemed abandoned 2 years after the
15 date the property is first distributable if, at the time of
16 the first distribution, the last known address of the owner on
17 the books and records of the holder is known to be incorrect
18 or the distribution or statements are returned by the post
19 office as undeliverable; and the owner has not communicated in
20 writing with the holder or its agent regarding the interest or
21 otherwise communicated with the holder regarding the interest
22 as evidenced by a memorandum or other record on file with the
23 holder or its agent.
24 (2) Property distributable in the course of
25 demutualization, rehabilitation, or related reorganization of
26 a mutual insurance company that is not subject to subsection
27 (1) shall be reportable as otherwise provided by this chapter.
28 (3) Property subject to this section shall be reported
29 and delivered no later than May 1 as of the preceding December
30 31, however the initial report under this section shall be
31 filed no later than November 1, 2003, as of December 31, 2002.
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1 Section 73. Subsection (8) of section 624.430, Florida
2 Statutes, is redesignated as subsection (9), and a new
3 subsection (8) is added to that section, to read:
4 624.430 Withdrawal of insurer or discontinuance of
5 writing certain kinds or lines of insurance.--
6 (8) Notwithstanding subsection (7), any insurer
7 desiring to surrender its certificate of authority, withdraw
8 from this state, or discontinue the writing of any one or
9 multiple kinds or lines of insurance in this state is expected
10 to have availed itself of all reasonably available
11 reinsurance. Reasonably available reinsurance shall include
12 unrealized reinsurance, which is defined as reinsurance
13 recoverable on known losses incurred and due under valid
14 reinsurance contracts that have not been identified in the
15 normal course of business and have not been reported in
16 financial statements filed with the Office of Insurer
17 Regulation. Within 90 days after surrendering its certificate
18 of authority, withdrawing from this state, or discontinuing
19 the writing of any one or multiple kinds or lines of insurance
20 in this state, the insurer shall certify to the Director of
21 the Office of Insurer Regulation that the insurer has engaged
22 an independent third party to search for unrealized
23 reinsurance, and that the insurer has made all relevant books
24 and records available to such third party. The compensation to
25 such third party may be a percentage of unrealized reinsurance
26 identified and collected.
27 Section 74. Subsection (11) of section 626.7451,
28 Florida Statutes, is amended to read:
29 626.7451 Managing general agents; required contract
30 provisions.--No person acting in the capacity of a managing
31 general agent shall place business with an insurer unless
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1 there is in force a written contract between the parties which
2 sets forth the responsibility for a particular function,
3 specifies the division of responsibilities, and contains the
4 following minimum provisions:
5 (11) A licensed managing general agent, when placing
6 business with an insurer under this code, may charge a
7 per-policy fee not to exceed $40 $25. In no instance shall the
8 aggregate of per-policy fees for a placement of business
9 authorized under this section, when combined with any other
10 per-policy fee charged by the insurer, result in per-policy
11 fees which exceed the aggregate amount of $40 $25. The
12 per-policy fee shall be a component of the insurer's rate
13 filing and shall be fully earned. A managing general agent
14 that collects a per-policy fee shall remit a minimum of $5 per
15 policy to the insurer for the funding of a Special
16 Investigations Unit dedicated to the prevention of insurance
17 fraud; $2 per policy to the Division of Insurance Fraud of the
18 Department of Financial Services, which shall be dedicated to
19 the prevention and detection of motor vehicle insurance fraud;
20 $2 per policy to be remitted to the Department of Legal
21 Affairs which shall remit such funds to the state attorneys in
22 each judicial circuit, in proportion to the population of each
23 judicial circuit, which shall be dedicated to the prosecution
24 of motor vehicle insurance fraud; and $1 per policy to the
25 Office of Statewide Prosecution, which shall be dedicated to
26 the prosecution of motor vehicle insurance fraud. Any insurer
27 that writes directly without a managing general agent and that
28 charges a per-policy fee shall charge an additional policy fee
29 at a minimum of $5 per policy to fund its Special
30 Investigations Unit dedicated to the prevention of insurance
31 fraud; $2 per policy to the Division of Insurance Fraud of the
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1 Department of Financial Services, which shall be dedicated to
2 the prevention and detection of motor vehicle insurance fraud;
3 $2 per policy to be remitted to the Department of Legal
4 Affairs which shall remit such funds to the state attorneys in
5 each judicial circuit, in proportion to the population of each
6 judicial circuit, which shall be dedicated to the prosecution
7 of motor vehicle insurance fraud; and $1 per policy to the
8 Office of Statewide Prosecution, which shall be dedicated to
9 the prosecution of motor vehicle insurance fraud.
10 For the purposes of this section and ss. 626.7453 and
11 626.7454, the term "controlling person" or "controlling" has
12 the meaning set forth in s. 625.012(5)(b)1., and the term
13 "controlled person" or "controlled" has the meaning set forth
14 in s. 625.012(5)(b)2.
15 Section 75. Section 624.4623, Florida Statutes, is
16 created to read:
17 624.4623 Independent Educational Institution
18 Self-Insurance Funds--
19 (1) Notwithstanding any other provision of law, any
20 two or more independent nonprofit colleges or universities
21 accredited by the Commission on Colleges of the Southern
22 Association of Colleges and Schools or independent, nonprofit,
23 accredited secondary educational institutions, located in and
24 chartered by the state of Florida, may form a self-insurance
25 fund for the purpose of pooling and spreading liabilities of
26 its group members in any property or casualty risk or surety
27 insurance or securing the payment of benefits under chapter
28 440, provided the independent educational institution
29 self-insurance fund that is created must:
30 (a) Have annual normal premiums in excess of $5
31 million;
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1 (b) Maintain a continuing program of excess insurance
2 coverage and reserve evaluation to protect the financial
3 stability of the fund in an amount and manner determined by a
4 qualified and independent actuary;
5 (c) Submit annually an audited fiscal year-end
6 financial statement by an independent certified public
7 accountant within 6 months after the end of the fiscal year to
8 the office; and
9 (d) Have a governing body which is comprised entirely
10 of independent educational institution officials.
11 (2) An independent educational institution
12 self-insurance fund that meets the requirements of this
13 section is not subject to s. 624.4621 and is not required to
14 file any report with the department under s. 440.38(2)(b)
15 which is uniquely required of group self-insurer funds
16 qualified under s. 624.4621. If any of the requirements of
17 this section are not met, the independent educational
18 self-insurance fund is subject to the requirements of s.
19 624.4621.
20 Section 76. Present subsections (6), (7), (8), (9),
21 and (10) of section 624.81, Florida Statutes, are redesignated
22 as subsections (7), (8), (9), (10), and (11), respectively,
23 and a new subsection (6) is added to that section, to read:
24 624.81 Notice to comply with written requirements of
25 department; noncompliance.--
26 (6) Any insurer subject to administrative supervision
27 is expected to avail itself of all reasonably available
28 reinsurance. Reasonably available reinsurance shall include
29 unrealized reinsurance, which is defined as reinsurance
30 recoverable on known losses incurred and due under valid
31 reinsurance contracts that have not been identified in the
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1 normal course of business and have not been reported in
2 financial statements filed with the Office of Insurance
3 Regulation. Within 90 days of being placed under
4 administrative supervision, the insurer shall certify to the
5 Director of the Office of Insurance Regulation that the
6 insurer has engaged an independent third party to search for
7 unrealized reinsurance, and that the insurer has made all
8 relevant books and records available to the third party. The
9 compensation to the third party may be a percentage of
10 unrealized reinsurance identified and collected.
11 (7)(6) If the department and the insurer are unable to
12 agree on the provisions of the plan, the department may
13 require the insurer to take such corrective action as may be
14 reasonably necessary to remove the causes and conditions
15 giving rise to the need for administrative supervision.
16 (8)(7) The insurer shall have 60 days, or a longer
17 period of time as designated by the department but not to
18 exceed 120 days, after the date of the written agreement or
19 the receipt of the department's plan within which to comply
20 with the requirements of the department. At the conclusion of
21 the initial period of supervision, the department may extend
22 the supervision in increments of 60 days or longer, not to
23 exceed 120 days, if conditions justifying supervision exist.
24 Each extension of supervision shall provide the insurer with a
25 point of entry pursuant to chapter 120.
26 (9)(8) The initiation or pendency of administrative
27 proceedings arising from actions taken under this section
28 shall not preclude the department from initiating judicial
29 proceedings to place an insurer in conservation,
30 rehabilitation, or liquidation or initiating other delinquency
31 proceedings however designated under the laws of this state.
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1 (10)(9) If it is determined that the conditions giving
2 rise to administrative supervision have been remedied so that
3 the continuance of its business is no longer hazardous to the
4 public or to its insureds, the department shall release the
5 insurer from supervision.
6 (11)(10) The department may adopt rules to define
7 standards of hazardous financial condition and corrective
8 action substantially similar to that indicated in the National
9 Association of Insurance Commissioners' 1997 "Model Regulation
10 to Define Standards and Commissioner's Authority for Companies
11 Deemed to be in Hazardous Financial Condition," which are
12 necessary to implement the provisions of this part.
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14 (Redesignate subsequent sections.)
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17 ================ T I T L E A M E N D M E N T ===============
18 And the title is amended as follows:
19 On page 4, line 29, after the semicolon,
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21 insert:
22 amending s. 627.351, F.S.; providing
23 requirements for the corporation relating to
24 personal lines residential wind-only policies;
25 requiring the corporation to develop a
26 wind-only rate making methodology; requiring a
27 report; requiring the Citizens Property
28 Insurance Corporation to certify at certain
29 intervals that its rates comply with
30 requirements to be set a certain levels
31 relative to other insurers; authorizing the
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1 Office of Insurance Regulation to review and
2 act upon such certification; requiring the
3 corporation to appoint a rate methodology panel
4 to make recommendations for the use of
5 additional ratemaking methods, including the
6 use of a rate equalization surcharge to assure
7 that the cost of coverage is sufficient to
8 comply with state law; requiring the
9 corporation to provide a related report to the
10 Legislature and a plan for implementing the
11 additional ratemaking methods; specifying how
12 the plan shall apply to agent commissions;
13 requiring the corporation to develop a notice
14 to policyholders; creating s. 624.105, F.S.;
15 providing for waiver of customer liability for
16 certain fess by providers of utility and
17 telecommunications services under certain
18 circumstances; creating s. 717.1071, F.S.;
19 providing procedures, requirements, and
20 limitations on lost owners of certain unclaimed
21 insurance entity activity proceeds; amending s.
22 624.430, F.S.; requiring certain insurers to
23 obtain reasonably available reinsurance under
24 certain circumstances; providing procedures and
25 criteria; amending s. 626.7451, F.S.; providing
26 a per-policy fee to be remitted to the
27 insurer's Special Investigations Unit, the
28 Division of Insurance Fraud of the Department
29 of Financial Services, the state attorneys
30 under the Department of Legal Affairs; and the
31 Office of Statewide Prosecution for purposes of
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1 preventing, detecting, and prosecuting motor
2 vehicle insurance fraud; creating s. 624.4623,
3 F.S.; authorizing two or more independent
4 colleges or universities to form a
5 self-insurance fund; providing specific
6 requirements; amending s. 624.81, F.S.;
7 requiring insurers that are under
8 administrative supervision to avail themselves
9 of all reasonably available reinsurance;
10 providing for a third party to search for
11 reinsurance; providing for reimbursing the
12 third party;
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