HB 1983

1	A bill to be entitled
2	An act relating to the Florida Hurricane Catastrophe Fund;
3	amending s. 215.555, F.S.; redefining and defining terms;
4	providing for the State Board of Administration to specify
5	interest due on delinquent remittances; revising
6	conditions of, amounts of, and procedures relating to
7	reimbursement contracts; revising maximum rates of, and
8	procedures relating to, emergency assessments; revising
9	provisions relating to reinsurance; deleting expired
10	provisions; providing effective dates.
11
12	Be It Enacted by the Legislature of the State of Florida:
13
14	Section 1.  Paragraphs (c) and (d) of subsection (2),
15	subsection (3), paragraphs (b), (c), (d), and (f) of subsection
16	(4), paragraphs (a) and (c) of subsection (7), and subsection
17	(16) of section 215.555, Florida Statutes, are amended, and
18	paragraph (n) is added to subsection (2) of said section, to
19	read:
20	215.555  Florida Hurricane Catastrophe Fund.--
21	(2)  DEFINITIONS.--As used in this section:
22	(c)  "Covered policy" means any insurance policy covering
23	residential property in this state, including, but not limited
24	to, any homeowner's, mobile home owner's, farm owner's,
25	condominium association, condominium unit owner's, tenant's, or
26	apartment building policy, or any other policy covering a
27	residential structure or its contents issued by any authorized
28	insurer, including the Citizens Property Insurance Corporation
29	and any joint underwriting association or similar entity created
30	pursuant to law. The term "covered policy" includes any
31	collateral protection insurance policy covering personal
32	residences which protects both the borrower's and the lender's
33	financial interests, in an amount at least equal to the coverage
34	for the dwelling in place under the lapsed homeowner's policy,
35	if such policy can be accurately reported as required in
36	subsection (5). Additionally, covered policies include policies
37	covering the peril of wind removed from the Florida Residential
38	Property and Casualty Joint Underwriting Association or from the
39	Citizens Property Insurance Corporation, created pursuant to s.
40	627.351(6), or from the Florida Windstorm Underwriting
41	Association, created pursuant to s. 627.351(2), by an authorized
42	insurer under the terms and conditions of an executed assumption
43	agreement between the authorized insurer and such association or
44	Citizens Property Insurance Corporation. Each assumption
45	agreement between the association and such authorized insurer or
46	Citizens Property Insurance Corporation must be approved by the
47	Florida Department of Insurance or the Office of Insurance
48	Regulation prior to the effective date of the assumption, and
49	the Department of Insurance or the Office of Insurance
50	Regulation must provide written notification to the board within
51	15 working days after such approval. "Covered policy" does not
52	include any policy that excludes wind coverage or hurricane
53	coverage or any reinsurance agreement and does not include any
54	policy otherwise meeting this definition which is issued by a
55	surplus lines insurer or a reinsurer. All commercial residential
56	excess policies and all deductible buy-back policies that, based
57	on sound actuarial principles, require individual ratemaking
58	shall be excluded by rule if the actuarial soundness of the fund
59	is not jeopardized. For this purpose, the term "excess policy"
60	means a policy that provides insurance protection for large
61	commercial property risks and that provides a layer of coverage
62	above a primary layer insured by another insurer.
63	(d)  "Losses" means direct incurred losses under covered
64	policies, which shall include losses for additional living
65	expenses not to exceed 40 20 percent of the insured value of a
66	mobile homes or personal residential structure or its structures
67	and 40 percent of the insured value of contents covered under a
68	tenant's policy or a condominium unit owner's policy and shall
69	exclude loss adjustment expenses. "Losses" does not include
70	losses for fair rental value, loss of use, associated with
71	personal and commercial residential exposures or business
72	interruption losses associated with commercial residential
73	exposures.
74	(n)  "Corporation" means the Florida Hurricane Catastrophe
75	Fund Finance Corporation.
76	(3)  FLORIDA HURRICANE CATASTROPHE FUND CREATED.--There is
77	created the Florida Hurricane Catastrophe Fund to be
78	administered by the State Board of Administration. Moneys in the
79	fund may not be expended, loaned, or appropriated except to pay
80	obligations of the fund arising out of reimbursement contracts
81	entered into under subsection (4), payment of debt service on
82	revenue bonds issued under subsection (6), costs of the
83	mitigation program under subsection (7), costs of procuring
84	reinsurance, and costs of administration of the fund. The board
85	shall invest the moneys in the fund pursuant to ss. 215.44-
86	215.52. Except as otherwise provided in this section, earnings
87	from all investments shall be retained in the fund. The board
88	may employ or contract with such staff and professionals as the
89	board deems necessary for the administration of the fund. The
90	board may adopt such rules as are reasonable and necessary to
91	implement this section and shall specify interest due on any
92	delinquent remittances, which interest may not exceed the fund's
93	rate of return plus 5 percent. Such rules must conform to the
94	Legislature's specific intent in establishing the fund as
95	expressed in subsection (1), must enhance the fund's potential
96	ability to respond to claims for covered events, must contain
97	general provisions so that the rules can be applied with
98	reasonable flexibility so as to accommodate insurers in
99	situations of an unusual nature or where undue hardship may
100	result, except that such flexibility may not in any way impair,
101	override, supersede, or constrain the public purpose of the
102	fund, and must be consistent with sound insurance practices. The
103	board may, by rule, provide for the exemption from subsections
104	(4) and (5) of insurers writing covered policies with less than
105	$10 million $500,000 in aggregate exposure for covered policies,
106	which exposure results in a de minimis reimbursement premium, if
107	the exemption does not affect the actuarial soundness of the
108	fund.
109	(4)  REIMBURSEMENT CONTRACTS.--
110	(b)1.  The contract shall contain a promise by the board to
111	reimburse the insurer for 45 percent, 75 percent, or 90 percent
112	of its losses from each covered event in excess of the insurer's
113	retention, plus 5 percent of the reimbursed losses to cover loss
114	adjustment expenses.
115	2.  The insurer must elect one of the percentage coverage
116	levels specified in this paragraph and may, upon renewal of a
117	reimbursement contract, elect a lower percentage coverage level
118	if no revenue bonds issued under subsection (6) after a covered
119	event are outstanding, or elect a higher percentage coverage
120	level, regardless of whether or not revenue bonds are
121	outstanding. All members of an insurer group must elect the same
122	percentage coverage level.  Any joint underwriting association,
123	risk apportionment plan, or other entity created under s.
124	627.351 must elect the 90-percent coverage level.
125	3.  The contract shall provide that reimbursement amounts
126	shall not be reduced by reinsurance paid or payable to the
127	insurer from other sources; however, recoveries from such other
128	sources, taken together with reimbursements under the contract,
129	may not exceed 100 percent of the insurer's losses from covered
130	events. If such recoveries and reimbursements exceed 100 percent
131	of the insurer's losses from covered events, and if there is no
132	agreement between the insurer and the reinsurer to the contrary,
133	any amount in excess of 100 percent of the insurer's losses
134	shall be returned to the fund.
135	(c)1.  The contract shall also provide that the obligation
136	of the board with respect to all contracts covering a particular
137	contract year shall not exceed the actual claims-paying capacity
138	of the fund up to a limit of $11 billion for that contract year,
139	unless the board determines that there is sufficient estimated
140	claims-paying capacity to provide $11 billion of capacity for
141	the current contract year and an additional $11 billion of
142	capacity for subsequent contract years. Upon such determination
143	being made, the estimated claims-paying capacity for the current
144	contract year shall be determined by adding to the $11 billion
145	limit one-half of the fund's estimated claims-paying capacity in
146	excess of $22 billion.
147	2.  In May before the start of the upcoming contract year
148	and in October during the contract year, the board shall publish
149	in the Florida Administrative Weekly a statement of the fund's
150	estimated borrowing capacity and the projected balance of the
151	fund as of December 31. After the end of each calendar year, the
152	board shall notify insurers of the estimated borrowing capacity
153	and the balance of the fund as of December 31 to provide
154	insurers with data necessary to assist them in determining their
155	retention and projected payout from the fund for loss
156	reimbursement purposes. In conjunction with the development of
157	the premium formula, as provided for in subsection (5), the
158	board shall publish factors or multiples that assist insurers in
159	determining their retention and projected payout for the next
160	contract year. For all regulatory and reinsurance purposes, an
161	insurer may calculate its projected payout from the fund as its
162	share of the total fund premium for the current contract year
163	multiplied by the sum of the projected balance of the fund as of
164	December 31 and the estimated borrowing capacity for that
165	contract year as reported under this subparagraph. The contract
166	shall require the board to annually notify insurers of the
167	fund's estimated borrowing capacity for the next contract year,
168	the projected year-end balance of the fund, and the insurer's
169	estimated share of total reimbursement premium to be paid to the
170	fund.  For all regulatory and reinsurance purposes, an insurer
171	may calculate its projected payout from the fund as its share of
172	the total fund premium for the current contract year multiplied
173	by the sum of the projected year-end fund balance and the
174	estimated borrowing capacity for that contract year as reported
175	under this paragraph. In May and October of each year, the board
176	shall publish in the Florida Administrative Weekly a statement
177	of the fund's estimated borrowing capacity and the projected
178	year-end balance of the fund for the current contract year.
179	(d)1.  For purposes of determining potential liability and
180	to aid in the sound administration of the fund, the contract
181	shall require each insurer to report such insurer's losses from
182	each covered event on an interim basis, as directed by the
183	board.  The contract shall require the insurer to report to the
184	board no later than December 31 of each year, and quarterly
185	thereafter, its reimbursable losses from covered events for the
186	year. The contract shall require the board to determine and pay,
187	as soon as practicable after receiving these reports of
188	reimbursable losses, the initial amount of reimbursement due and
189	adjustments to this amount based on later loss information. The
190	adjustments to reimbursement amounts shall require the board to
191	pay, or the insurer to return, amounts reflecting the most
192	recent calculation of losses.
193	2.  In determining reimbursements pursuant to this
194	subsection, the contract shall provide that the board shall:
195	a.  First reimburse insurers writing covered policies,
196	which insurers are in full compliance with this section and have
197	petitioned the Office of Insurance Regulation and qualified as
198	limited apportionment companies under s. 627.351(2)(b)3.  The
199	amount of such reimbursement shall be the lesser of $10 million
200	or an amount equal to 10 times the insurer's reimbursement
201	premium for the current year.  The amount of reimbursement paid
202	under this sub-subparagraph may not exceed the full amount of
203	reimbursement promised in the reimbursement contract. This sub-
204	subparagraph does not apply with respect to any contract year in
205	which the year-end projected cash balance of the fund, exclusive
206	of any bonding capacity of the fund, exceeds $2 billion. Only
207	one member of any insurer group may receive reimbursement under
208	this sub-subparagraph.
209	b.  Next pay to each insurer such insurer's projected
210	payout, which is the amount of reimbursement it is owed, up to
211	an amount equal to the insurer's share of the actual premium
212	paid for that contract year, multiplied by the actual claims-
213	paying capacity available for that contract year; provided,
214	entities created pursuant to s. 627.351 shall be further
215	reimbursed in accordance with sub-subparagraph c.
216	c.  Thereafter, establish, based on reimbursable losses,
217	the prorated reimbursement level at the highest level for which
218	any remaining fund balance or bond proceeds are sufficient to
219	reimburse entities created pursuant to s. 627.351 based on
220	reimbursable for losses exceeding the amounts payable pursuant
221	to sub-subparagraph b. for the current contract year.
222	(f)  In order to ensure that insurers have properly
223	reported the insured values on which the reimbursement premium
224	is based and to ensure that insurers have properly reported the
225	losses for which reimbursements have been made, the board shall
226	inspect, examine, and verify audit the records of each insurer's
227	covered policies at such times as the board deems appropriate
228	and according to standards established by rule for the specific
229	purpose of validating the accuracy of exposures and losses
230	required to be reported under the terms and conditions of the
231	reimbursement contract in such manner as is consistent with
232	generally accepted auditing standards. The costs of the
233	examinations audits shall be borne by the board. However, in
234	order to remove any incentive for an insurer to delay
235	preparations for an examination audit, the board shall be
236	reimbursed by the insurer for any examination audit expenses
237	incurred in addition to the usual and customary costs of the
238	examination audit, which additional expenses were incurred as a
239	result of an insurer's failure, despite proper notice, to be
240	prepared for the examination audit or as a result of an
241	insurer's failure to provide requested information while the
242	examination audit is in progress. If the board finds any
243	insurer's records or other necessary information to be
244	inadequate or inadequately posted, recorded, or maintained, the
245	board may employ experts to reconstruct, rewrite, record, post,
246	or maintain such records or information, at the expense of the
247	insurer being examined audited, if such insurer has failed to
248	maintain, complete, or correct such records or deficiencies
249	after the board has given the insurer notice and a reasonable
250	opportunity to do so. Any information contained in an
251	examination audit report, which information is described in s.
252	215.557, is confidential and exempt from the provisions of s.
253	119.07(1) and s. 24(a), Art. I of the State Constitution, as
254	provided in s. 215.557. Nothing in this paragraph expands the
255	exemption in s. 215.557.
256	(7)  ADDITIONAL POWERS AND DUTIES.--
257	(a)  The board may procure reinsurance from reinsurers
258	acceptable to the Office of Insurance Regulation approved under
259	s. 624.610 for the purpose of maximizing the capacity of the
260	fund.
261	(c)  Each fiscal year, the Legislature shall appropriate
262	from the investment income of the Florida Hurricane Catastrophe
263	Fund an amount no less than $10 million and no more than 35
264	percent of the investment income based upon the most recent
265	fiscal year-end audited financial statements from the prior
266	fiscal year for the purpose of providing funding for local
267	governments, state agencies, public and private educational
268	institutions, and nonprofit organizations to support programs
269	intended to improve hurricane preparedness, reduce potential
270	losses in the event of a hurricane, provide research into means
271	to reduce such losses, educate or inform the public as to means
272	to reduce hurricane losses, assist the public in determining the
273	appropriateness of particular upgrades to structures or in the
274	financing of such upgrades, or protect local infrastructure from
275	potential damage from a hurricane. Moneys shall first be
276	available for appropriation under this paragraph in fiscal year
277	1997-1998. Moneys in excess of the $10 million specified in this
278	paragraph shall not be available for appropriation under this
279	paragraph if the State Board of Administration finds that an
280	appropriation of investment income from the fund would
281	jeopardize the actuarial soundness of the fund.
282	(16)  For the 2002-2003 fiscal year only, the State Board
283	of Administration shall disburse funds, by nonoperating
284	transfer, from the Florida Hurricane Catastrophe Fund to the
285	Ecosystem Management and Restoration Trust Fund of the
286	Department of Environmental Protection in an amount equal to
287	8.47 percent of the appropriation made from the Ecosystem
288	Management and Restoration Trust Fund for "Grants and Aids to
289	Local Governments and Non-State Entities - Fixed Capital Outlay,
290	Statewide Restoration Projects" in the 2002-2003 General
291	Appropriations Act. This subsection expires July 1, 2003.
292	Section 2.  Effective June 1, 2005, paragraphs (e) and (k)
293	of subsection (2), paragraph (c) of subsection (4) as amended by
294	this act, and subsection (6) of section 215.555, Florida
295	Statutes, are amended to read:
296	215.555  Florida Hurricane Catastrophe Fund.--
297	(2)  DEFINITIONS.--As used in this section:
298	(e)  "Retention" means the amount of losses below which an
299	insurer is not entitled to reimbursement from the fund. An
300	insurer's retention shall be calculated as follows:
301	1.  The board shall calculate and report to each insurer
302	the retention multiples for that year. For the contract year
303	beginning June 1, 2005 1995, the retention multiple shall be
304	equal to $4 $3 billion divided by the total estimated
305	reimbursement premium for the contract year; for subsequent
306	years, the retention multiple shall be equal to $4 $3 billion,
307	adjusted based upon the reported exposure from the prior
308	contract year to reflect the percentage growth in exposure to
309	the fund for covered policies since 2004 1998, divided by the
310	total estimated reimbursement premium for the contract year,
311	provided the percentage increase in the retention may not exceed
312	the percentage increase in the capacity growth as determined
313	under subparagraph (4)(c)1. Total reimbursement premium for
314	purposes of the calculation under this subparagraph shall be
315	estimated using the assumption that all insurers have selected
316	the 90-percent coverage level.
317	2.  The retention multiple as determined under subparagraph
318	1. shall be adjusted to reflect the coverage level elected by
319	the insurer.  For insurers electing the 90-percent coverage
320	level, the adjusted retention multiple is 100 percent of the
321	amount determined under subparagraph 1.  For insurers electing
322	the 75-percent coverage level, the retention multiple is 120
323	percent of the amount determined under subparagraph 1.  For
324	insurers electing the 45-percent coverage level, the adjusted
325	retention multiple is 200 percent of the amount determined under
326	subparagraph 1.
327	3.  An insurer shall determine its provisional retention by
328	multiplying its provisional reimbursement premium by the
329	applicable adjusted retention multiple and shall determine its
330	actual retention by multiplying its actual reimbursement premium
331	by the applicable adjusted retention multiple.
332	(k)  "Pledged revenues" means all or any portion of
333	revenues to be derived from reimbursement premiums under
334	subsection (5) or from emergency assessments under paragraph
335	(6)(b) subparagraph (6)(a)3., as determined by the board.
336	(4)  REIMBURSEMENT CONTRACTS.--
337	(c)1.  The contract shall also provide that the obligation
338	of the board with respect to all contracts covering a particular
339	contract year shall not exceed the actual claims-paying capacity
340	of the fund up to a limit of $15 $11 billion for that contract
341	year adjusted based upon the reported exposure from the prior
342	contract year to reflect the percentage growth in exposure to
343	the fund for covered policies since 2004, provided the dollar
344	growth in the limit may not increase in any year by an amount
345	greater than the dollar growth of the cash balance which
346	occurred over the prior calendar year, unless the board
347	determines that there is sufficient estimated claims-paying
348	capacity to provide $11 billion of capacity for the current
349	contract year and an additional $11 billion of capacity for
350	subsequent contract years. Upon such determination being made,
351	the estimated claims-paying capacity for the current contract
352	year shall be determined by adding to the $11 billion limit one-
353	half of the fund's estimated claims-paying capacity in excess of
354	$22 billion.
355	2.  In May before the start of the upcoming contract year
356	and in October during the contract year, the board shall publish
357	in the Florida Administrative Weekly a statement of the fund's
358	estimated borrowing capacity and the projected balance of the
359	fund as of December 31. After the end of each calendar year, the
360	board shall notify insurers of the estimated borrowing capacity
361	and the balance of the fund as of December 31 to provide
362	insurers with data necessary to assist them in determining their
363	retention and projected payout from the fund for loss
364	reimbursement purposes. In conjunction with the development of
365	the premium formula, as provided for in subsection (5), the
366	board shall publish factors or multiples that assist insurers in
367	determining their retention and projected payout for the next
368	contract year. For all regulatory and reinsurance purposes, an
369	insurer may calculate its projected payout from the fund as its
370	share of the total fund premium for the current contract year
371	multiplied by the sum of the projected balance of the fund as of
372	December 31 and the estimated borrowing capacity for that
373	contract year as reported under this subparagraph.
374	(6)  REVENUE BONDS.--
375	(a)  General provisions.--
376	1.  Upon the occurrence of a hurricane and a determination
377	that the moneys in the fund are or will be insufficient to pay
378	reimbursement at the levels promised in the reimbursement
379	contracts, the board may take the necessary steps under
380	paragraph (c) (b) or paragraph (d) (c) for the issuance of
381	revenue bonds for the benefit of the fund.  The proceeds of such
382	revenue bonds may be used to make reimbursement payments under
383	reimbursement contracts; to refinance or replace previously
384	existing borrowings or financial arrangements; to pay interest
385	on bonds; to fund reserves for the bonds; to pay expenses
386	incident to the issuance or sale of any bond issued under this
387	section, including costs of validating, printing, and delivering
388	the bonds, costs of printing the official statement, costs of
389	publishing notices of sale of the bonds, and related
390	administrative expenses; or for such other purposes related to
391	the financial obligations of the fund as the board may
392	determine. The term of the bonds may not exceed 30 years. The
393	board may pledge or authorize the corporation to pledge all or a
394	portion of all revenues under subsection (5) and under paragraph
395	(b) subparagraph 3. to secure such revenue bonds and the board
396	may execute such agreements between the board and the issuer of
397	any revenue bonds and providers of other financing arrangements
398	under paragraph (7)(b) as the board deems necessary to evidence,
399	secure, preserve, and protect such pledge. If reimbursement
400	premiums received under subsection (5) or earnings on such
401	premiums are used to pay debt service on revenue bonds, such
402	premiums and earnings shall be used only after the use of the
403	moneys derived from assessments under paragraph (b) subparagraph
404	3. The funds, credit, property, or taxing power of the state or
405	political subdivisions of the state shall not be pledged for the
406	payment of such bonds. The board may also enter into agreements
407	under paragraph (c) (b) or paragraph (d) (c) for the purpose of
408	issuing revenue bonds in the absence of a hurricane upon a
409	determination that such action would maximize the ability of the
410	fund to meet future obligations.
411	2.  The Legislature finds and declares that the issuance of
412	bonds under this subsection is for the public purpose of paying
413	the proceeds of the bonds to insurers, thereby enabling insurers
414	to pay the claims of policyholders to assure that policyholders
415	are able to pay the cost of construction, reconstruction,
416	repair, restoration, and other costs associated with damage to
417	property of policyholders of covered policies after the
418	occurrence of a hurricane. Revenue bonds may not be issued under
419	this subsection until validated under chapter 75. The validation
420	of at least the first obligations incurred pursuant to this
421	subsection shall be appealed to the Supreme Court, to be handled
422	on an expedited basis.
423	(b)  Emergency assessments.--
424	1.3.  If the board determines that the amount of revenue
425	produced under subsection (5) is insufficient to fund the
426	obligations, costs, and expenses of the fund and the
427	corporation, including repayment of revenue bonds and that
428	portion of the debt service coverage not met by the
429	reimbursement premiums, the board shall direct the Office of
430	Insurance Regulation to levy, by order, an emergency assessment
431	on direct premiums for all property and casualty lines of
432	business in this state, including property and casualty business
433	of surplus lines insurers regulated under part VIII of chapter
434	626, but not including any workers' compensation premiums each
435	insurer writing property and casualty business in this state.
436	Pursuant to the emergency assessment, each such insurer shall
437	pay to the corporation by July 1 of each year an amount set by
438	the board not exceeding 2 percent of its gross direct written
439	premium for the prior year from all property and casualty
440	business in this state except for workers' compensation, except
441	that, if the Governor has declared a state of emergency under s.
442	252.36 due to the occurrence of a covered event, the amount of
443	the assessment for the contract year may be increased to an
444	amount not exceeding 4 percent of such premium. Any assessment
445	authority not used for the contract year may be used for a
446	subsequent contract year. If, for a subsequent contract year,
447	the board determines that the amount of revenue produced under
448	subsection (5) is insufficient to fund the obligations, costs,
449	and expenses of the fund and the corporation, including
450	repayment of revenue bonds for that contract year, the board
451	shall direct the Office of Insurance Regulation to levy an
452	emergency assessment up to an amount not exceeding the amount of
453	unused assessment authority from a previous contract year or
454	years, plus an additional 2 percent if the Governor has declared
455	a state of emergency under s. 252.36 due to the occurrence of a
456	covered event. Any assessment authority not used for the
457	contract year may be used for a subsequent contract year. As
458	used in this subsection, the term "property and casualty
459	business" includes all lines of business identified on Form 2,
460	Exhibit of Premiums and Losses, in the annual statement required
461	by s. 624.424 and any rules adopted under such section, except
462	for those lines identified as accident and health insurance and
463	except for policies written under the National Flood Insurance
464	Program. The assessment shall be specified as a percentage of
465	future premium collections and is subject to annual adjustments
466	by the board to reflect changes in premiums subject to
467	assessments collected pursuant to this subparagraph in order to
468	meet debt obligations. The same percentage shall apply to all
469	policies in lines of business subject to the assessment issued
470	or renewed during the 12-month period beginning on the effective
471	date of the assessment.
472	2.  At no time shall any premium be subject to annual
473	assessments under this paragraph in excess of 6 percent of
474	premium with respect to obligations arising out of losses
475	attributable to any one contract year and at no time shall any
476	premium be subject to aggregate annual assessments under this
477	paragraph in excess of 10 percent of premium. The annual
478	assessments under this subparagraph shall continue as long as
479	the revenue bonds issued with respect to which the assessment
480	was imposed are outstanding, including any bonds the proceeds of
481	which were used to refund the revenue bonds, unless adequate
482	provision has been made for the payment of such bonds pursuant
483	to the documents authorizing issuance of the bonds.
484	3.  With respect to each insurer collecting premiums that
485	are subject to the assessment, the insurer shall collect the
486	assessment at the same time as the insurer collects the premium
487	payment for each policy and shall remit the assessments
488	collected to the fund or corporation as provided in the order
489	issued by the Office of Insurance Regulation. The office shall
490	verify the accurate and timely collection and remittance of
491	emergency assessments and shall report such information to the
492	board in a form and at a time specified by the board. Each
493	insurer collecting assessments shall provide such information
494	with respect to premiums and collections as may be required by
495	the office to enable the office to monitor and verify compliance
496	with this paragraph.
497	4.  With respect to assessments of surplus lines premiums,
498	each surplus lines agent shall collect the assessment at the
499	same time as the agent collects the surplus lines tax required
500	by s. 626.932, and the surplus lines agent shall remit the
501	assessment to the Florida Surplus Lines Service Office created
502	by s. 626.921 at the same time as the agent remits the surplus
503	lines tax to the Florida Surplus Lines Service Office. The
504	emergency assessment on each insured procuring coverage and
505	filing under s. 626.938 shall be remitted by the insured to the
506	Florida Surplus Lines Service Office at the time the insured
507	pays the surplus lines tax to the Florida Surplus Lines Service
508	Office. The Florida Surplus Lines Office shall remit the
509	collected assessments to the fund or corporation as provided in
510	the order issued by the Office of Insurance Regulation. The
511	Florida Surplus Lines Service Office shall verify the proper
512	application of such emergency assessments and shall assist the
513	board in ensuring the accurate and timely collection and
514	remittance of assessments as required by the board. The Florida
515	Surplus Lines Service Office shall annually calculate the
516	aggregate written premium on property and casualty business
517	other than workers' compensation procured through surplus lines
518	agents and insureds procuring coverage and filing under s.
519	626.938 and shall report such information to the board in a form
520	and at a time specified by the board.
521	5.  Any assessment authority not used for a particular
522	contract year may be used for a subsequent contract year. If,
523	for a subsequent contract year, the board determines that the
524	amount of revenue produced under subsection (5) is insufficient
525	to fund the obligations, costs, and expenses of the fund and the
526	corporation, including repayment of revenue bonds and that
527	portion of the debt service coverage not met by reimbursement
528	premiums, the board shall request the Office of Insurance
529	Regulation to levy an emergency assessment up to an amount not
530	exceeding the amount of unused assessment authority from a
531	previous contract year or years, plus an additional 4 percent
532	provided the assessments in the aggregate do not exceed the
533	limits specified in subparagraph 2.
534	6.  The assessments otherwise payable to the corporation
535	pursuant to this paragraph shall be paid to the fund unless and
536	until the Office of Insurance Regulation and the Florida Surplus
537	Lines Service Office have received from the corporation and the
538	fund a notice, which shall be conclusive and upon which the
539	corporation and fund may rely without further inquiry, that the
540	corporation has issued bonds and the fund has no agreements in
541	effect with local governments pursuant to paragraph (c). On or
542	after the date of such notice and until such date as the
543	corporation has no bonds outstanding, the fund shall have no
544	right, title, or interest in or to the assessments, except as
545	provided in the fund's agreements with the corporation.
546	7.  Emergency assessments are not premium and are not
547	subject to the premium tax, the surplus lines tax, any fees, or
548	any commissions. An insurer is liable for all assessments that
549	the insurer collects and must treat the failure of an insured to
550	pay an assessment as a failure to pay premium. An insurer is not
551	liable for uncollectable assessments.
552	8.  When an insurer is required to return unearned premium,
553	the insurer shall also return any collected assessments
554	attributable to the unearned premium. A credit adjustment to the
555	collected assessments may be made by the insurer with regard to
556	future remittances that are payable to the fund or corporation,
557	but the insurer shall not be entitled to a refund.
558	9.  When a surplus lines insured or an insured who has
559	procured coverage and filed under s. 626.938 is entitled to the
560	return of unearned premium, the Florida Surplus Lines Service
561	Office shall provide a credit or refund to the agent or such
562	insured for the collected assessments attributable to the
563	unearned premium prior to remitting the emergency assessments
564	collected to the fund or corporation The annual assessments
565	under this subparagraph shall continue as long as the revenue
566	bonds issued with respect to which the assessment was imposed
567	are outstanding, unless adequate provision has been made for the
568	payment of such bonds pursuant to the documents authorizing
569	issuance of the bonds. An insurer shall not at any time be
570	subject to aggregate annual assessments under this subparagraph
571	of more than 2 percent of premium, except that in the case of a
572	declared emergency, an insurer shall not at any time be subject
573	to aggregate annual assessments under this subparagraph of more
574	than 6 percent of premium; provided, no more than 4 percent may
575	be assessed for any one contract year. Any rate filing or
576	portion of a rate filing reflecting a rate change attributable
577	entirely to the assessment levied under this subparagraph shall
578	be deemed approved when made, subject to the authority of the
579	Office of Insurance Regulation to require actuarial
580	justification as to the adequacy of any rate at any time. If the
581	rate filing reflects only a rate change attributable to the
582	assessment under this paragraph, the filing may consist of a
583	certification so stating. The assessments otherwise payable to
584	the corporation pursuant to this subparagraph shall be paid
585	instead to the fund unless and until the Office of Insurance
586	Regulation has received from the corporation and the fund a
587	notice, which shall be conclusive and upon which the Office of
588	Insurance Regulation may rely without further inquiry, that the
589	corporation has issued bonds and the fund has no agreements in
590	effect with local governments pursuant to paragraph (b). On or
591	after the date of such notice and until such date as the
592	corporation has no bonds outstanding, the fund shall have no
593	right, title, or interest in or to the assessments, except as
594	provided in the fund's agreements with the corporation.
595	(c)(b)  Revenue bond issuance through counties or
596	municipalities.--
597	1.  If the board elects to enter into agreements with local
598	governments for the issuance of revenue bonds for the benefit of
599	the fund, the board shall enter into such contracts with one or
600	more local governments, including agreements providing for the
601	pledge of revenues, as are necessary to effect such issuance.
602	The governing body of a county or municipality is authorized to
603	issue bonds as defined in s. 125.013 or s. 166.101 from time to
604	time to fund an assistance program, in conjunction with the
605	Florida Hurricane Catastrophe Fund, for the purposes set forth
606	in this section or for the purpose of paying the costs of
607	construction, reconstruction, repair, restoration, and other
608	costs associated with damage to properties of policyholders of
609	covered policies due to the occurrence of a hurricane by
610	assuring that policyholders located in this state are able to
611	recover claims under property insurance policies after a covered
612	event.
613	2.  In order to avoid needless and indiscriminate
614	proliferation, duplication, and fragmentation of such assistance
615	programs, any local government may provide for the payment of
616	fund reimbursements, regardless of whether or not the losses for
617	which reimbursement is made occurred within or outside of the
618	territorial jurisdiction of the local government.
619	3.  The state hereby covenants with holders of bonds issued
620	under this paragraph that the state will not repeal or abrogate
621	the power of the board to direct the Office of Insurance
622	Regulation to levy the assessments and to collect the proceeds
623	of the revenues pledged to the payment of such bonds as long as
624	any such bonds remain outstanding unless adequate provision has
625	been made for the payment of such bonds pursuant to the
626	documents authorizing the issuance of such bonds.
627	4.  There shall be no liability on the part of, and no
628	cause of action shall arise against any members or employees of
629	the governing body of a local government for any actions taken
630	by them in the performance of their duties under this paragraph.
631	(d)(c)  Florida Hurricane Catastrophe Fund Finance
632	Corporation.--
633	1.  In addition to the findings and declarations in
634	subsection (1), the Legislature also finds and declares that:
635	a.  The public benefits corporation created under this
636	paragraph will provide a mechanism necessary for the cost-
637	effective and efficient issuance of bonds. This mechanism will
638	eliminate unnecessary costs in the bond issuance process,
639	thereby increasing the amounts available to pay reimbursement
640	for losses to property sustained as a result of hurricane
641	damage.
642	b.  The purpose of such bonds is to fund reimbursements
643	through the Florida Hurricane Catastrophe Fund to pay for the
644	costs of construction, reconstruction, repair, restoration, and
645	other costs associated with damage to properties of
646	policyholders of covered policies due to the occurrence of a
647	hurricane.
648	c.  The efficacy of the financing mechanism will be
649	enhanced by the corporation's ownership of the assessments, by
650	the insulation of the assessments from possible bankruptcy
651	proceedings, and by covenants of the state with the
652	corporation's bondholders.
653	2.a.  There is created a public benefits corporation, which
654	is an instrumentality of the state, to be known as the Florida
655	Hurricane Catastrophe Fund Finance Corporation.
656	b.  The corporation shall operate under a five-member board
657	of directors consisting of the Governor or a designee, the Chief
658	Financial Officer or a designee, the Attorney General or a
659	designee, the director of the Division of Bond Finance of the
660	State Board of Administration, and the senior employee of the
661	State Board of Administration responsible for operations of the
662	Florida Hurricane Catastrophe Fund.
663	c.  The corporation has all of the powers of corporations
664	under chapter 607 and under chapter 617, subject only to the
665	provisions of this subsection.
666	d.  The corporation may issue bonds and engage in such
667	other financial transactions as are necessary to provide
668	sufficient funds to achieve the purposes of this section.
669	e.  The corporation may invest in any of the investments
670	authorized under s. 215.47.
671	f.  There shall be no liability on the part of, and no
672	cause of action shall arise against, any board members or
673	employees of the corporation for any actions taken by them in
674	the performance of their duties under this paragraph.
675	3.a.  In actions under chapter 75 to validate any bonds
676	issued by the corporation, the notice required by s. 75.06 shall
677	be published only in Leon County and in two newspapers of
678	general circulation in the state, and the complaint and order of
679	the court shall be served only on the State Attorney of the
680	Second Judicial Circuit.
681	b.  The state hereby covenants with holders of bonds of the
682	corporation that the state will not repeal or abrogate the power
683	of the board to direct the Office of Insurance Regulation to
684	levy the assessments and to collect the proceeds of the revenues
685	pledged to the payment of such bonds as long as any such bonds
686	remain outstanding unless adequate provision has been made for
687	the payment of such bonds pursuant to the documents authorizing
688	the issuance of such bonds.
689	4.  The bonds of the corporation are not a debt of the
690	state or of any political subdivision, and neither the state nor
691	any political subdivision is liable on such bonds. The
692	corporation does not have the power to pledge the credit, the
693	revenues, or the taxing power of the state or of any political
694	subdivision. The credit, revenues, or taxing power of the state
695	or of any political subdivision shall not be deemed to be
696	pledged to the payment of any bonds of the corporation.
697	5.a.  The property, revenues, and other assets of the
698	corporation; the transactions and operations of the corporation
699	and the income from such transactions and operations; and all
700	bonds issued under this paragraph and interest on such bonds are
701	exempt from taxation by the state and any political subdivision,
702	including the intangibles tax under chapter 199 and the income
703	tax under chapter 220. This exemption does not apply to any tax
704	imposed by chapter 220 on interest, income, or profits on debt
705	obligations owned by corporations other than the Florida
706	Hurricane Catastrophe Fund Finance Corporation.
707	b.  All bonds of the corporation shall be and constitute
708	legal investments without limitation for all public bodies of
709	this state; for all banks, trust companies, savings banks,
710	savings associations, savings and loan associations, and
711	investment companies; for all administrators, executors,
712	trustees, and other fiduciaries; for all insurance companies and
713	associations and other persons carrying on an insurance
714	business; and for all other persons who are now or may hereafter
715	be authorized to invest in bonds or other obligations of the
716	state and shall be and constitute eligible securities to be
717	deposited as collateral for the security of any state, county,
718	municipal, or other public funds. This sub-subparagraph shall be
719	considered as additional and supplemental authority and shall
720	not be limited without specific reference to this sub-
721	subparagraph.
722	6.  The corporation and its corporate existence shall
723	continue until terminated by law; however, no such law shall
724	take effect as long as the corporation has bonds outstanding
725	unless adequate provision has been made for the payment of such
726	bonds pursuant to the documents authorizing the issuance of such
727	bonds. Upon termination of the existence of the corporation, all
728	of its rights and properties in excess of its obligations shall
729	pass to and be vested in the state.
730	(e)(d)  Protection of bondholders.--
731	1.  As long as the corporation has any bonds outstanding,
732	neither the fund nor the corporation shall have the authority to
733	file a voluntary petition under chapter 9 of the federal
734	Bankruptcy Code or such corresponding chapter or sections as may
735	be in effect, from time to time, and neither any public officer
736	nor any organization, entity, or other person shall authorize
737	the fund or the corporation to be or become a debtor under
738	chapter 9 of the federal Bankruptcy Code or such corresponding
739	chapter or sections as may be in effect, from time to time,
740	during any such period.
741	2.  The state hereby covenants with holders of bonds of the
742	corporation that the state will not limit or alter the denial of
743	authority under this paragraph or the rights under this section
744	vested in the fund or the corporation to fulfill the terms of
745	any agreements made with such bondholders or in any way impair
746	the rights and remedies of such bondholders as long as any such
747	bonds remain outstanding unless adequate provision has been made
748	for the payment of such bonds pursuant to the documents
749	authorizing the issuance of such bonds.
750	3.  Notwithstanding any other provision of law, any pledge
751	of or other security interest in revenue, money, accounts,
752	contract rights, general intangibles, or other personal property
753	made or created by the fund or the corporation shall be valid,
754	binding, and perfected from the time such pledge is made or
755	other security interest attaches without any physical delivery
756	of the collateral or further act and the lien of any such pledge
757	or other security interest shall be valid, binding, and
758	perfected against all parties having claims of any kind in tort,
759	contract, or otherwise against the fund or the corporation
760	irrespective of whether or not such parties have notice of such
761	claims.  No instrument by which such a pledge or security
762	interest is created nor any financing statement need be recorded
763	or filed.
764	Section 3.  Except as otherwise provided herein, this act
765	shall take effect upon becoming a law.

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