HB 0009A

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

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