Senate Bill sb0708

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    Florida Senate - 2003                                   SB 708

    By Senator Geller





    31-413A-03

  1                      A bill to be entitled

  2         An act relating to insurance rate standards;

  3         amending s. 627.062, F.S.; deleting a provision

  4         that allows insurers to require arbitration in

  5         rate-filing matters; amending s. 627.351, F.S.,

  6         relating to windstorm risk apportionment;

  7         conforming a cross-reference; providing an

  8         effective date.

  9  

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

11  

12         Section 1.  Subsection (6) of section 627.062, Florida

13  Statutes, is amended to read:

14         627.062  Rate standards.--

15         (6)(a)  After any action with respect to a rate filing

16  that constitutes agency action for purposes of the

17  Administrative Procedure Act, an insurer may, in lieu of

18  demanding a hearing under s. 120.57, require arbitration of

19  the rate filing. Arbitration shall be conducted by a board of

20  arbitrators consisting of an arbitrator selected by the

21  department, an arbitrator selected by the insurer, and an

22  arbitrator selected jointly by the other two arbitrators. Each

23  arbitrator must be certified by the American Arbitration

24  Association. A decision is valid only upon the affirmative

25  vote of at least two of the arbitrators. No arbitrator may be

26  an employee of any insurance regulator or regulatory body or

27  of any insurer, regardless of whether or not the employing

28  insurer does business in this state. The department and the

29  insurer must treat the decision of the arbitrators as the

30  final approval of a rate filing. Costs of arbitration shall be

31  paid by the insurer.

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 1         (b)  Arbitration under this subsection shall be

 2  conducted pursuant to the procedures specified in ss.

 3  682.06-682.10. Either party may apply to the circuit court to

 4  vacate or modify the decision pursuant to s. 682.13 or s.

 5  682.14. The department shall adopt rules for arbitration under

 6  this subsection, which rules may not be inconsistent with the

 7  arbitration rules of the American Arbitration Association as

 8  of January 1, 1996.

 9         (c)  Upon initiation of the arbitration process, the

10  insurer waives all rights to challenge the action of the

11  department under the Administrative Procedure Act or any other

12  provision of law; however, such rights are restored to the

13  insurer if the arbitrators fail to render a decision within 90

14  days after initiation of the arbitration process.

15         Section 2.  Paragraph (b) of subsection (2) of section

16  627.351, Florida Statutes, is amended to read:

17         627.351  Insurance risk apportionment plans.--

18         (2)  WINDSTORM INSURANCE RISK APPORTIONMENT.--

19         (b)  The department shall require all insurers holding

20  a certificate of authority to transact property insurance on a

21  direct basis in this state, other than joint underwriting

22  associations and other entities formed pursuant to this

23  section, to provide windstorm coverage to applicants from

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

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

26  coverage through ordinary means; or it shall adopt a

27  reasonable plan or plans for the equitable apportionment or

28  sharing among such insurers of windstorm coverage, which may

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

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

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

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 1  624.604, including insurance for fire, industrial fire, allied

 2  lines, farmowners multiperil, homeowners' multiperil,

 3  commercial multiperil, and mobile homes, and including

 4  liability coverages on all such insurance, but excluding

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

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

 7  insurance on mobile homes used as permanent dwellings. The

 8  department shall adopt rules that provide a formula for the

 9  recovery and repayment of any deferred assessments.

10         1.  For the purpose of this section, properties

11  eligible for such windstorm coverage are defined as dwellings,

12  buildings, and other structures, including mobile homes which

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

14  with mobile home tie-down requirements prescribed by the

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

16  320.8325, and the contents of all such properties. An

17  applicant or policyholder is eligible for coverage only if an

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

19  or policyholder from an admitted insurer at approved rates.

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

21  association shall participate in its writings, expenses, and

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

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

24  insurers. Such participation by member insurers shall be in

25  the proportion that the net direct premiums of each member

26  insurer written for property insurance in this state during

27  the preceding calendar year bear to the aggregate net direct

28  premiums for property insurance of all member insurers, as

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

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

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

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 1  written premiums for property insurance, reduced by premium

 2  for liability coverage and for the following if included in

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

 4  association direct premiums booked; National Flood Insurance

 5  Program direct premiums; and similar deductions specifically

 6  authorized by the plan of operation and approved by the

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

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

 9  issued a certificate of authority to transact property

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

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

12  certificate of authority to transact property insurance in the

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

14  other reports, and any other statistics that the commissioner

15  deems necessary, shall certify to the association the

16  aggregate direct premiums written for property insurance in

17  this state by all member insurers.

18         (II)  Effective July 1, 2002, the association shall

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

20  governors who are the same individuals that have been

21  appointed by the Treasurer to serve on the board of governors

22  of the Citizens Property Insurance Corporation.

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

24  whereby a company voluntarily providing windstorm coverage in

25  affected areas will be relieved wholly or partially from

26  apportionment of a regular assessment pursuant to

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

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

29  companies under common management may elect to have its

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

31  

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

 2  group.

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

 4  apportionment to a company for emergency assessments collected

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

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

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

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

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

10  policies out of the Residential Property and Casualty Joint

11  Underwriting Association.  In order to qualify for the

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

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

14  from the Residential Property and Casualty Joint Underwriting

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

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

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

18  Counties and an additional 50 percent of the policies so

19  removed cover risks located in other coastal counties, and

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

21  so removed may exclude windstorm coverage.  With the approval

22  of the department, the association may waive these geographic

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

24  of 100,000 Residential Property and Casualty Joint

25  Underwriting Association policies or 15 percent of the total

26  number of Residential Property and Casualty Joint Underwriting

27  Association policies, provided the governing board of the

28  Residential Property and Casualty Joint Underwriting

29  Association certifies that the take-out plan will materially

30  reduce the Residential Property and Casualty Joint

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

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

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

 3  guarantees an additional year of renewability for all policies

 4  removed from the Residential Property and Casualty Joint

 5  Underwriting Association, or for 2 additional years if the

 6  insurer guarantees 2 additional years of renewability for all

 7  policies removed from the Residential Property and Casualty

 8  Joint Underwriting Association.

 9         b.  Assessments to pay deficits in the association

10  under this subparagraph shall be included as an appropriate

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

12         c.  The Legislature finds that the potential for

13  unlimited deficit assessments under this subparagraph may

14  induce insurers to attempt to reduce their writings in the

15  voluntary market, and that such actions would worsen the

16  availability problems that the association was created to

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

18  remain fully responsible for paying regular assessments and

19  collecting emergency assessments for any deficits of the

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

21  to provide a means by which assessment liabilities may be

22  amortized over a period of years.

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

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

25  direct written premium for property insurance for the prior

26  calendar year for all member insurers, the association shall

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

28  the deficit.

29         (II)  When the deficit incurred in a particular

30  calendar year exceeds 10 percent of the aggregate statewide

31  direct written premium for property insurance for the prior

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 1  calendar year for all member insurers, the association shall

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

 3  the greater of 10 percent of the deficit or 10 percent of the

 4  aggregate statewide direct written premium for property

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

 6  remaining deficit shall be recovered through emergency

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

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

 9  that a deficit exceeds the amount that will be recovered

10  through regular assessments on member insurers, pursuant to

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

12  board shall levy, after verification by the department,

13  emergency assessments to be collected by member insurers and

14  by underwriting associations created pursuant to this section

15  which write property insurance, upon issuance or renewal of

16  property insurance policies other than National Flood

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

18  regular assessments. The amount of the emergency assessment

19  collected in a particular year shall be a uniform percentage

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

21  for all member insurers and underwriting associations,

22  excluding National Flood Insurance policy premiums, as

23  annually determined by the board and verified by the

24  department. The department shall verify the arithmetic

25  calculations involved in the board's determination within 30

26  days after receipt of the information on which the

27  determination was based. Notwithstanding any other provision

28  of law, each member insurer and each underwriting association

29  created pursuant to this section shall collect emergency

30  assessments from its policyholders without such obligation

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

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 1  deferment.  The emergency assessments so collected shall be

 2  transferred directly to the association on a periodic basis as

 3  determined by the association. The aggregate amount of

 4  emergency assessments levied under this sub-sub-subparagraph

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

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

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

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

 9  percent of the aggregate statewide direct written premium for

10  property insurance written by member insurers and underwriting

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

12  commissions, required reserves, and other costs associated

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

14  proceeds of the emergency assessments under this

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

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

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

18  the board determines will efficiently recover the deficit. The

19  emergency assessments under this sub-sub-subparagraph shall

20  continue as long as any bonds issued or other indebtedness

21  incurred with respect to a deficit for which the assessment

22  was imposed remain outstanding, unless adequate provision has

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

24  pursuant to the document governing such bonds or other

25  indebtedness. Emergency assessments collected under this

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

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

28  commissions; however, failure to pay the emergency assessment

29  shall be treated as failure to pay premium.

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

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

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

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

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

 4  aggregate statewide net direct premium for property insurance

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

 6  voluntary writings for that year.

 7         (V)  If regular deficit assessments are made under

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

 9  the Residential Property and Casualty Joint Underwriting

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

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

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

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

14  a market equalization surcharge in a percentage equal to the

15  total amount of such regular assessments divided by the

16  aggregate statewide direct written premium for property

17  insurance for member insurers for the prior calendar year.

18  Market equalization surcharges under this sub-sub-subparagraph

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

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

21  equalization surcharge shall be treated as failure to pay

22  premium.

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

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

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

26  assistance program, in conjunction with the association, for

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

28  to avoid needless and indiscriminate proliferation,

29  duplication, and fragmentation of such assistance programs,

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

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

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 1  losses, regardless of whether or not the losses occurred

 2  within or outside of the territorial jurisdiction of the local

 3  government. Revenue bonds may not be issued until validated

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

 5  declared by executive order or proclamation of the Governor

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

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

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

 9  welfare of residents of this state and the protection and

10  preservation of the economic stability of insurers operating

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

12  permit certain municipalities or counties to issue bonds as

13  will provide relief to claimants and policyholders of the

14  association and insurers responsible for apportionment of plan

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

16  contracts with the association and with any other entity

17  created pursuant to this subsection as are necessary to carry

18  out this paragraph. Any bonds issued under this

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

20  received by the association from assessments under this

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

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

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

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

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

26  remain unsold 60 days after issuance, the department shall

27  require all insurers subject to assessment to purchase the

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

29  shall be required to purchase that percentage of the unsold

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

31  share of assessment liability under this subsection. An

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

 2  extent that the department determines that the purchase would

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

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

 5  authority granted by subparagraph 6.

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

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

 8  percent or more of its total countrywide property insurance

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

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

11  apportionment company. The apportionment of such a member

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

13  not exceed its gross participation, which shall not be

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

15  shall a limited apportionment company be required to

16  participate in any apportionment of losses pursuant to

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

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

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

20  apportionment company shall collect from its policyholders any

21  emergency assessment imposed under sub-sub-subparagraph

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

23  determines that any regular assessment will result in an

24  impairment of the surplus of a limited apportionment company,

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

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

27  deferment of an emergency assessment to be collected from

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

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

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

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

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 1  but not for an emergency assessment collected from

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

 3  opinion of the commissioner, payment of such regular

 4  assessment would endanger or impair the solvency of the member

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

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

 7  such assessment is deferred may be assessed against the other

 8  member insurers in a manner consistent with the basis for

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

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

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

12  rules for classification of risks and rate modifications

13  consistent with the objective of providing and maintaining

14  funds sufficient to pay catastrophe losses.

15         b.  The association may require arbitration of a rate

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

17  Legislature that the rates for coverage provided by the

18  association be actuarially sound and not competitive with

19  approved rates charged in the admitted voluntary market such

20  that the association functions as a residual market mechanism

21  to provide insurance only when the insurance cannot be

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

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

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

25  line of business are reflective of approved rates in the

26  voluntary market for hurricane coverage for each line of

27  business in the various areas eligible for association

28  coverage.

29         c.  The association shall provide for windstorm

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

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

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 1  for personal lines residential risks. If coverage with the

 2  association is sought for a residential risk valued in excess

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

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

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

 6  located in the authorized market. The association must accept

 7  a commercial lines residential risk with limits above $10

 8  million or a personal lines residential risk with limits above

 9  $1 million if coverage is not available in the authorized

10  market.  The association may write coverage above the limits

11  specified in this subparagraph with or without facultative or

12  other reinsurance coverage, as the association determines

13  appropriate.

14         d.  The plan of operation must provide objective

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

16  uniformly applied for all applicants in determining whether an

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

18  making this determination and in establishing the criteria and

19  procedures, the following shall be considered:

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

21  individual risk is substantially higher than for other risks

22  of the same class; and

23         (II)  Whether the uncertainty associated with the

24  individual risk is such that an appropriate premium cannot be

25  determined.

26  

27  The acceptance or rejection of a risk by the association

28  pursuant to such criteria and procedures must be construed as

29  the private placement of insurance, and the provisions of

30  chapter 120 do not apply.

31  

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 1         e.  If the risk accepts an offer of coverage through

 2  the market assistance program or through a mechanism

 3  established by the association, either before the policy is

 4  issued by the association or during the first 30 days of

 5  coverage by the association, and the producing agent who

 6  submitted the application to the association is not currently

 7  appointed by the insurer, the insurer shall:

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

 9  policy, for the first year, an amount that is the greater of

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

11  policy written or a fee equal to the usual and customary

12  commission of the association; or

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

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

15  not less than 1 year and offer to pay the agent the greater of

16  the insurer's or the association's usual and customary

17  commission for the type of policy written.

18  

19  If the producing agent is unwilling or unable to accept

20  appointment, the new insurer shall pay the agent in accordance

21  with sub-sub-subparagraph (I). Subject to the provisions of s.

22  627.3517, the policies issued by the association must provide

23  that if the association obtains an offer from an authorized

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

25  standard policy including wind coverage or, if consistent with

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

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

28  eligible for coverage through the association. Upon

29  termination of eligibility, the association shall provide

30  written notice to the policyholder and agent of record stating

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

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

 2  from an authorized insurer. Other provisions of the insurance

 3  code relating to cancellation and notice of cancellation do

 4  not apply to actions under this sub-subparagraph.

 5         f.  When the association enters into a contractual

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

 7  of the association policy is entitled to retain any unearned

 8  commission on the policy, and the insurer shall:

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

10  association policy, for the first year, an amount that is the

11  greater of the insurer's usual and customary commission for

12  the type of policy written or a fee equal to the usual and

13  customary commission of the association; or

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

15  the association policy to continue servicing the policy for a

16  period of not less than 1 year and offer to pay the agent the

17  greater of the insurer's or the association's usual and

18  customary commission for the type of policy written.

19  

20  If the producing agent is unwilling or unable to accept

21  appointment, the new insurer shall pay the agent in accordance

22  with sub-sub-subparagraph (I).

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

24  of a private nonprofit corporation, a private nonprofit

25  unincorporated association, a partnership, a trust, a limited

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

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

28  bonds or by incurring other indebtedness and to accumulate

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

30  catastrophe losses. The plan may authorize all actions

31  

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 1  necessary to facilitate the issuance of bonds, including the

 2  pledging of assessments or other revenues.

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

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

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

 6  instruments; pledge or sell assessments, market equalization

 7  surcharges and other surcharges, rights, premiums, contractual

 8  rights, projected recoveries from the Florida Hurricane

 9  Catastrophe Fund, other reinsurance recoverables, and other

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

11  enter into any contracts or agreements necessary or proper to

12  accomplish such borrowings; and take other actions necessary

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

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

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

16  subparagraph (6)(g)2., in the absence of a hurricane or other

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

18  subject to approval by the department that such action would

19  enable it to efficiently meet the financial obligations of the

20  association and that such financings are reasonably necessary

21  to effectuate the requirements of this subsection. Any such

22  entity may accumulate reserves and retain surpluses as of the

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

24  losses incurred by the association during that year or any

25  future year. The association shall incorporate and continue

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

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

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

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

30  of directors and officers currently serving shall continue to

31  serve until their successors are duly qualified as provided

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    Florida Senate - 2003                                   SB 708
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 1  under the plan. The assets and obligations of the plan in

 2  effect immediately prior to the effective date of chapter

 3  76-96 shall be construed to be the assets and obligations of

 4  the successor plan created herein.

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

 6  Constitution, prohibiting the impairment of obligations of

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

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

 9  financing agreement or any revenue source committed by

10  contract to such bond or other indebtedness issued or incurred

11  by the association or any other entity created under this

12  subsection.

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

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

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

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

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

18  company.

19         8.  Subject to approval by the department, the

20  association may establish different eligibility requirements

21  and operational procedures for any line or type of coverage

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

23  if the board determines that such changes to the eligibility

24  requirements and operational procedures are justified due to

25  the voluntary market being sufficiently stable and competitive

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

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

28  through the voluntary market through ordinary methods would

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

30  coverage is sought in connection with a real property

31  transfer, such requirements and procedures shall not provide

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    Florida Senate - 2003                                   SB 708
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 1  for an effective date of coverage later than the date of the

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

 3  transferee, and, if applicable, the lender.

 4         9.  Notwithstanding any other provision of law:

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

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

 7  the association created or purported to be created pursuant to

 8  any financing documents to secure any bonds or other

 9  indebtedness of the association shall be and remain valid and

10  enforceable, notwithstanding the commencement of and during

11  the continuation of, and after, any rehabilitation,

12  insolvency, liquidation, bankruptcy, receivership,

13  conservatorship, reorganization, or similar proceeding against

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

15  applicable laws.

16         b.  No such proceeding shall relieve the association of

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

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

19  assessments, market equalization or other surcharges,

20  projected recoveries from the Florida Hurricane Catastrophe

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

22  or other assets of the association pledged.

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

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

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

26  assessments, market equalization or renewal surcharges,

27  projected recoveries from the Florida Hurricane Catastrophe

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

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

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

31  

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    Florida Senate - 2003                                   SB 708
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 1  any such proceeding shall continue unaffected by such

 2  proceeding.

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

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

 5  now existing or hereafter created evidencing any bonds or

 6  other indebtedness of the association or pursuant to which any

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

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

 9  association are pledged or sold to secure the repayment of

10  such bonds or indebtedness, together with the payment of

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

12  any other obligation of the association related to such bonds

13  or indebtedness.

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

15  contract rights or other rights or assets of the association

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

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

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

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

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

21  valid, binding, and enforceable against the association or

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

23  against and superior to any competing claims or obligations

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

25  this state, asserting rights in any such assessments,

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

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

28  sale contained in the applicable financing documents, whether

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

30  sale and without the need for any physical delivery,

31  recordation, filing, or other action.

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    Florida Senate - 2003                                   SB 708
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 1         f.  There shall be no liability on the part of, and no

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

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

 4  association, members of the board of directors of the

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

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

 7  responsibilities under this subsection. Such immunity does not

 8  apply to actions for breach of any contract or agreement

 9  pertaining to insurance, or any willful tort.

10         Section 3.  This act shall take effect July 1, 2003.

11  

12            *****************************************

13                          SENATE SUMMARY

14    Deletes a provision that permits an insurer to require
      arbitration in matters regarding rate filings.
15  

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