HB 0009A

CS

CHAMBER ACTION

1	The Commerce Council recommends the following:
2
3	Council/Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to hurricane deductibles; providing
7	legislative findings and intent; providing a definition;
8	providing for the Department of Financial Services to
9	reimburse policyholders of residential property insurance
10	for multiple deductibles applied by insurers for two or
11	more hurricanes; establishing criteria for policyholders
12	to be eligible for reimbursements; requiring applications
13	to be submitted to the department, including certain
14	information; limiting the maximum amount of
15	reimbursements; limiting total reimbursements to the
16	amount appropriated for this purpose; providing
17	reimbursement criteria for the department under certain
18	circumstances; requiring insurers to provide certain
19	information to the department relating to claims for
20	reimbursement, subject to policyholders' authorization;
21	authorizing the department to contract with third parties
22	for investigation or adjustment of claims for
23	reimbursement; requiring insurers to mail notices to
24	certain policyholders of the reimbursement procedures;
25	authorizing the department to adopt certain rules;
26	providing legislative intent; providing that applications
27	for reimbursements shall be insurance claims for purposes
28	of determining insurance fraud; prohibiting insurers from
29	changing methods of waiving or applying deductibles due to
30	the provisions of law providing for reimbursement to
31	policyholders; requiring the Office of Insurance
32	Regulation to collect data from insurers regarding the
33	application of multiple deductibles; amending s. 627.701,
34	F.S.; requiring that hurricane deductibles of residential
35	property insurance policies be applied on an annual basis
36	to all hurricane losses that occur during the calendar
37	year; allowing insurers to apply an alternative deductible
38	to subsequent hurricane losses after the annual deductible
39	is met; providing for calculations of hurricane
40	deductibles for new or renewed policies; allowing insurers
41	to require policyholders to report hurricane losses or to
42	maintain receipts or records in order to apply hurricane
43	losses to subsequent hurricane claims; providing
44	applicability; providing appropriations for certain
45	purposes; providing for reversion of certain unexpended
46	moneys; requiring the Chief Financial Officer to report to
47	certain entities certain multiple hurricane deductible
48	reimbursement information; requiring the State Board of
49	Administration to increase future premiums to the Florida
50	Hurricane Catastrophe Fund; providing construction;
51	providing an effective date.
52
53	Be It Enacted by the Legislature of the State of Florida:
54
55	Section 1.  Legislative findings and intent.--The
56	Legislature finds that the four hurricanes striking Florida in
57	2004 resulted in at least 30,000 residential property insurance
58	policyholders experiencing damage from two or more hurricanes
59	for which insurers have applied the hurricane deductible to each
60	hurricane claim. The fact that policyholders have separate
61	hurricane deductibles can result in significant out-of-pocket
62	expense and financial hardship to policyholders. Although
63	insurers are required by law to notify policyholders that the
64	hurricane deductible can result in a large out-of-pocket
65	expense, it was not anticipated that a policyholder would have
66	damage from two or more hurricanes in the same year and be
67	forced to meet two or more deductibles in this circumstance. The
68	Legislature further finds that the public health, safety, and
69	welfare demand that residential structures damaged or destroyed
70	in a catastrophe be repaired or reconstructed as soon as
71	possible and that application of multiple deductibles delays or
72	prevents such reconstruction, hinders the economic recovery of
73	the state and its citizens, and endangers the public health,
74	safety, and welfare. Therefore, state action to establish a
75	program to reimburse policyholders for the financial loss
76	suffered due to the application of multiple hurricane
77	deductibles constitutes a valid and necessary public and
78	governmental purpose. The Legislature intends to establish a
79	program to reimburse policyholders for such losses, up to
80	specified limits.
81	Section 2.  Reimbursement for multiple hurricane
82	deductibles.--
83	(1)  For the purposes of this section, "residential
84	property insurance" means residential coverage as described in
85	s. 627.4025(1), Florida Statutes.
86	(2)  The Department of Financial Services shall reimburse
87	policyholders of residential property insurance whose property
88	was damaged by two or more hurricanes in 2004 and whose insurer
89	applied more than one hurricane deductible to the insurance
90	claims. The reimbursement shall be the amount of the claim that
91	was not paid due to application of the second or subsequent
92	deductible, as further limited by this section.
93	(3)  To be eligible for reimbursement, a policyholder must
94	meet the criteria of subsection (2) and must:
95	(a)  Apply to the department by March 1, 2005, on a form
96	provided by the department. The form shall identify the amount
97	of the claims paid by the insurer, per hurricane, the amount of
98	the deductible that was applied to each claim, and such
99	additional information as the department may require to verify
100	the claim for reimbursement, including documentation from the
101	insurer. The applicant must submit documentation from the
102	insurer that the insurance claim was not paid, in full or in
103	part, due to application of the deductible.
104	(b)  Have incurred damages in excess of the full amount of
105	a single hurricane deductible.
106	(c)  Meet a $100 deductible for a second and each
107	subsequent hurricane claim in addition to the amount of the
108	deductible which must be met under paragraph (b).
109	(d)  Provide written authorization for the department to
110	obtain information from the policyholder's insurer related to
111	the claim for reimbursement.
112	(4)(a)  Reimbursement may be provided only for damages that
113	would have been paid under the policy but for application of the
114	deductible. The maximum reimbursement shall be limited to the
115	amount of the policyholder's loss in excess of one full
116	deductible, but not more than $10,000 per policy for damage
117	caused by two hurricanes, not more than $20,000 per policy for
118	damage caused by three or more hurricanes, except as otherwise
119	provided in this subsection.
120	(b)  For a policy issued to a condominium association, the
121	maximum reimbursement shall be limited to an amount equal to
122	$3,000 multiplied by the number of condominium units, or the
123	maximum amount specified in paragraph (a) or paragraph (c),
124	whichever is greater.
125	(c)  If more than one residential structure is insured
126	under the policy and a separate hurricane deductible applies to
127	each residential structure, the maximum reimbursement shall be
128	limited to $10,000 per structure for multiple hurricane claims
129	for that structure.
130	(d)  Reimbursement may not be paid for loss amounts for
131	which the policyholder has received a grant from the Federal
132	Emergency Management Agency or any other federal, state, county,
133	or municipal agency or program. Reimbursement may not be paid to
134	a condominium association for loss amounts for which the
135	condominium association has assessed unit owners and for which
136	the unit owners have insurance coverage for the assessment.
137	(5)  The total amount of funds paid to policyholders
138	pursuant to this section is limited to the amount appropriated
139	for this purpose. Payments shall be made to eligible applicants
140	in the following order of priority:
141	(a)  The department shall first reimburse policyholders who
142	received claims payments from their insurer for two or more
143	hurricanes for which each payment was reduced by the full amount
144	of the deductible.
145	(b)  After reimbursing all policyholders who meet the
146	criteria of paragraph (a), the department shall reimburse all
147	other eligible policyholders. If the amount appropriated for
148	this purpose is not adequate to pay all other eligible
149	policyholders up to the maximum reimbursement amounts, the
150	department shall provide reimbursement on a pro rata basis so
151	that each policyholder receives an equal percentage of the
152	amount of the reimbursement claim that is approved.
153	(6)  The insurer issuing the policy to the applicant for
154	reimbursement shall provide to the department, upon request,
155	such information in the applicant's claim file that would assist
156	the department in determining the validity and reasonableness of
157	the claim, subject to the policyholder's authorization to
158	release such information. The department may further investigate
159	or adjust the claim as the department determines is necessary
160	and may contract with third parties for this purpose.
161	(7)  Insurers shall mail notice to those residential
162	property insurance policyholders who filed claims with the
163	insurer for two or more hurricanes in 2004 and to whom the
164	insurer applied more than one hurricane deductible, whether
165	there was a claims payment or not. The notice shall be on a form
166	provided by the department informing the policyholder of the
167	reimbursement program established by this section and the
168	procedures for seeking reimbursement, including the application
169	form provided by the department. The notice shall be mailed in
170	such manner and within such time as specified by the department.
171	For subsequent claims, the insurer shall provide the notice at
172	the time that the insurer notifies the policyholder of the
173	application of the second deductible.
174	(8)  The department may adopt rules to implement this
175	section. It is the Legislature's intent that the department
176	implement this section as soon as possible in order to provide
177	immediate relief to affected policyholders. Therefore, the
178	department may adopt such rules pursuant to the emergency rule
179	procedures of s. 120.54(4), Florida Statutes.
180	(9)  Applications for reimbursement shall be considered
181	submitting an insurance claim for purposes of determining
182	whether a person has committed insurance fraud pursuant to s.
183	817.234, Florida Statutes. The Department of Financial Services
184	and the department's Division of Insurance Fraud shall have such
185	powers to investigate and enforce such actions as provided in s.
186	626.989, Florida Statutes.
187	(10)  It is a violation of the Insurance Code for an
188	insurer to change its method of determining whether to waive or
189	apply multiple hurricane deductibles to multiple claims due to
190	the provisions of this section.
191	(11)  The Office of Insurance Regulation shall collect data
192	from residential property insurers regarding the number of
193	claims that were filed by policyholders for two or more
194	hurricanes for the 2004 hurricane season, the number of those
195	claims for which the insurer applied two or more deductibles,
196	including the dollar amount of those claims, and such additional
197	related information as the department may require.
198	Section 3.  Subsections (5), (6), (7), and (8) of section
199	627.701, Florida Statutes, are renumbered as subsections (6),
200	(7), (8), and (9), respectively, and a new subsection (5) is
201	added to said section to read:
202	627.701  Liability of insureds; coinsurance; deductibles.--
203	(5)  The hurricane deductible of any residential property
204	insurance policy shall be applied as follows:
205	(a)  The hurricane deductible shall apply on an annual
206	basis to all covered hurricane losses that occur during the
207	calendar year for losses that are covered under one or more
208	policies issued by the same insurer or an insurer in the same
209	insurer group.
210	(b)  If a hurricane deductible applies separately to each
211	of one or more structures insured under a single policy, the
212	requirements of this subsection apply with respect to the
213	deductible for each structure.
214	(c)  If there was a hurricane loss for a prior hurricane or
215	hurricanes during the calendar year, the insurer may apply a
216	deductible to a subsequent hurricane that is the greater of the
217	remaining amount of the hurricane deductible or the amount of
218	the deductible that applies to perils other than a hurricane.
219	Insurers may require policyholders to report hurricane losses
220	that are below the hurricane deductible or to maintain receipts
221	or other records of such hurricane losses in order to apply such
222	losses to subsequent hurricane claims.
223	(d)  If there are hurricane losses in a calendar year on
224	more than one policy issued by the same insurer or an insurer in
225	the same insurer group, the hurricane deductible shall be the
226	highest amount stated in any one of the policies. If a
227	policyholder who had a hurricane loss under the prior policy is
228	provided or offered a lower hurricane deductible under the new
229	or renewal policy, the insurer must notify the policyholder, in
230	writing, at the time the lower hurricane deductible is provided
231	or offered, that the lower hurricane deductible will not apply
232	until January 1 of the following calendar year.
233	Section 4.  The amendment of s. 627.701, Florida Statutes,
234	by section 3 applies only to policies issued or renewed on or
235	after May 1, 2005.
236	Section 5.  (1)  Notwithstanding s. 215.555, Florida
237	Statutes, the State Board of Administration is directed to
238	transfer, no later than January 15, 2005, $20 million from the
239	Florida Hurricane Catastrophe Fund's cash balance to the
240	Insurance Regulatory Trust Fund within the Department of
241	Financial Services to provide funding for the reimbursements
242	authorized in subsection (3).
243	(2)  Notwithstanding s. 215.555, Florida Statutes, the
244	State Board of Administration is directed to transfer up to $130
245	million from the Florida Hurricane Catastrophe Fund's cash
246	balance to the Insurance Regulatory Trust Fund in the Department
247	of Financial Services to provide funding for the reimbursements
248	authorized in subsection (3). The Chief Financial Officer shall
249	periodically certify to the State Board of Administration an
250	amount to be transferred from the funds appropriated in this
251	subsection based on the documented expenditure need for
252	reimbursement payments submitted to the Department of Financial
253	Services. The amount of each transfer may not exceed the
254	documented need. The Chief Financial Officer shall provide a
255	copy of each certification to the Executive Office of the
256	Governor and the chair and vice chair of the Legislative Budget
257	Commission. The State Board of Administration shall provide
258	notice of each transfer to the Executive Office of the Governor
259	and the chair and vice chair of the Legislative Budget
260	Commission at least 3 working days before such transfer.
261	(3)  The sum of $150 million is appropriated for the period
262	from the effective date of this act through September 30, 2005,
263	from the Insurance Regulatory Trust Fund in the Department of
264	Financial Services in a special appropriation category
265	"Hurricane Multiple Deductible Reimbursements" for reimbursement
266	to residential property insurance policyholders for the expense
267	of multiple hurricane deductibles, as provided in sections 1 and
268	2. Up to 1 percent of this appropriation may be used by the
269	department for the administration of payments to such
270	policyholders.
271	(4)  All Florida Hurricane Catastrophe Fund moneys
272	transferred to the Insurance Regulatory Trust Fund under this
273	act which remain unexpended on December 31, 2005, shall revert
274	to the Florida Hurricane Catastrophe Fund.
275	(5)  Beginning January 15, 2005, and monthly thereafter,
276	the Chief Financial Officer shall provide a report to the
277	Executive Office of the Governor and the chair and vice chair of
278	the Legislative Budget Commission containing information
279	regarding the reimbursement for multiple hurricane deductibles.
280	The report shall include, but is not limited to, cumulative and
281	monthly information on the number of reimbursement claims
282	submitted, the total amount requested for reimbursement, the
283	number of claims paid, and the amount paid for reimbursement.
284	(6)  In order to maintain actuarially indicated premiums as
285	required by s. 215.555, Florida Statutes, the State Board of
286	Administration shall increase future premiums by the amount
287	appropriated and transferred from the Florida Hurricane
288	Catastrophe Fund under this section, plus additional amounts
289	necessary to recover lost investment income, less any refunds of
290	unused cash to the Florida Hurricane Catastrophe Fund. The
291	increase in future premiums shall be spread over 5 years, in
292	equal or approximately equal amounts, beginning with the June 1,
293	2006, contract year.
294	(7)  All appropriations authorized by this act are
295	nonrecurring and are intended to address needs caused by
296	Hurricanes Charley, Frances, Ivan, and Jeanne.
297	Section 6.  This act shall take effect upon becoming a law.

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