Florida Senate - 2005                      COMMITTEE AMENDMENT
    Bill No. PCS for SB 1488 (960506)
                        Barcode 971858
                            CHAMBER ACTION
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11  The Committee on Banking and Insurance (Alexander) recommended
12  the following amendment:
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14         Senate Amendment (with title amendment) 
15         On page 16, line 30, through
16            page 17, line 3, delete those lines
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18  and insert:  
19         Section 7.  Effective August 1, 2005, paragraphs (b),
20  (c), (d), and (g) of subsection (6) of section 627.351,
21  Florida Statutes, are amended to read:
22         627.351  Insurance risk apportionment plans.--
23         (6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
24         (b)1.  All insurers authorized to write one or more
25  subject lines of business in this state are subject to
26  assessment by the corporation and, for the purposes of this
27  subsection, are referred to collectively as "assessable
28  insurers." Insurers writing one or more subject lines of
29  business in this state pursuant to part VIII of chapter 626
30  are not assessable insurers, but insureds who procure one or
31  more subject lines of business in this state pursuant to part
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    9:57 AM   03/28/05                             s1488c-bi17-c8h

Florida Senate - 2005 COMMITTEE AMENDMENT Bill No. PCS for SB 1488 (960506) Barcode 971858 1 VIII of chapter 626 are subject to assessment by the 2 corporation and are referred to collectively as "assessable 3 insureds." An authorized insurer's assessment liability shall 4 begin on the first day of the calendar year following the year 5 in which the insurer was issued a certificate of authority to 6 transact insurance for subject lines of business in this state 7 and shall terminate 1 year after the end of the first calendar 8 year during which the insurer no longer holds a certificate of 9 authority to transact insurance for subject lines of business 10 in this state. 11 2.a. All revenues, assets, liabilities, losses, and 12 expenses of the corporation shall be divided into three 13 separate accounts as follows: 14 (I) A personal lines account for personal residential 15 policies issued by the corporation or issued by the 16 Residential Property and Casualty Joint Underwriting 17 Association and renewed by the corporation that provide 18 comprehensive, multiperil coverage on risks that are not 19 located in areas eligible for coverage in the Florida 20 Windstorm Underwriting Association as those areas were defined 21 on January 1, 2002, and for such policies that do not provide 22 coverage for the peril of wind on risks that are located in 23 such areas; 24 (II) A commercial lines account for commercial 25 residential policies issued by the corporation or issued by 26 the Residential Property and Casualty Joint Underwriting 27 Association and renewed by the corporation that provide 28 coverage for basic property perils on risks that are not 29 located in areas eligible for coverage in the Florida 30 Windstorm Underwriting Association as those areas were defined 31 on January 1, 2002, and for such policies that do not provide 2 9:57 AM 03/28/05 s1488c-bi17-c8h
Florida Senate - 2005 COMMITTEE AMENDMENT Bill No. PCS for SB 1488 (960506) Barcode 971858 1 coverage for the peril of wind on risks that are located in 2 such areas; and 3 (III) A high-risk account for personal residential 4 policies and commercial residential and commercial 5 nonresidential property policies issued by the corporation or 6 transferred to the corporation that provide coverage for the 7 peril of wind on risks that are located in areas eligible for 8 coverage in the Florida Windstorm Underwriting Association as 9 those areas were defined on January 1, 2002. The high-risk 10 account must also include quota share primary insurance under 11 subparagraph (c)2. The area eligible for coverage under the 12 high-risk account also includes the area within Port 13 Canaveral, which is bordered on the south by the City of Cape 14 Canaveral, bordered on the west by the Banana River, and 15 bordered on the north by Federal Government property. The 16 office may remove territory from the area eligible for 17 wind-only and quota share coverage if, after a public hearing, 18 the office finds that authorized insurers in the voluntary 19 market are willing and able to write sufficient amounts of 20 personal and commercial residential coverage for all perils in 21 the territory, including coverage for the peril of wind, such 22 that risks covered by wind-only policies in the removed 23 territory could be issued a policy by the corporation in 24 either the personal lines or commercial lines account without 25 a significant increase in the corporation's probable maximum 26 loss in such account. Removal of territory from the area 27 eligible for wind-only or quota share coverage does not alter 28 the assignment of wind coverage written in such areas to the 29 high-risk account. 30 b. The three separate accounts must be maintained as 31 long as financing obligations entered into by the Florida 3 9:57 AM 03/28/05 s1488c-bi17-c8h
Florida Senate - 2005 COMMITTEE AMENDMENT Bill No. PCS for SB 1488 (960506) Barcode 971858 1 Windstorm Underwriting Association or Residential Property and 2 Casualty Joint Underwriting Association are outstanding, in 3 accordance with the terms of the corresponding financing 4 documents. When the financing obligations are no longer 5 outstanding, in accordance with the terms of the corresponding 6 financing documents, the corporation may use a single account 7 for all revenues, assets, liabilities, losses, and expenses of 8 the corporation. 9 c. Creditors of the Residential Property and Casualty 10 Joint Underwriting Association shall have a claim against, and 11 recourse to, the accounts referred to in sub-sub-subparagraphs 12 a.(I) and (II) and shall have no claim against, or recourse 13 to, the account referred to in sub-sub-subparagraph a.(III). 14 Creditors of the Florida Windstorm Underwriting Association 15 shall have a claim against, and recourse to, the account 16 referred to in sub-sub-subparagraph a.(III) and shall have no 17 claim against, or recourse to, the accounts referred to in 18 sub-sub-subparagraphs a.(I) and (II). 19 d. Revenues, assets, liabilities, losses, and expenses 20 not attributable to particular accounts shall be prorated 21 among the accounts. 22 e. The Legislature finds that the revenues of the 23 corporation are revenues that are necessary to meet the 24 requirements set forth in documents authorizing the issuance 25 of bonds under this subsection. 26 f. No part of the income of the corporation may inure 27 to the benefit of any private person. 28 3. With respect to a deficit in an account: 29 a. When the deficit incurred in a particular calendar 30 year is not greater than 10 percent of the aggregate statewide 31 direct written premium for the subject lines of business for 4 9:57 AM 03/28/05 s1488c-bi17-c8h
Florida Senate - 2005 COMMITTEE AMENDMENT Bill No. PCS for SB 1488 (960506) Barcode 971858 1 the prior calendar year, the entire deficit shall be recovered 2 through regular assessments of assessable insurers under 3 paragraph (g) and assessable insureds. 4 b. When the deficit incurred in a particular calendar 5 year exceeds 10 percent of the aggregate statewide direct 6 written premium for the subject lines of business for the 7 prior calendar year, the corporation shall levy regular 8 assessments on assessable insurers under paragraph (g) and on 9 assessable insureds in an amount equal to the greater of 10 10 percent of the deficit or 10 percent of the aggregate 11 statewide direct written premium for the subject lines of 12 business for the prior calendar year. Any remaining deficit 13 shall be recovered through emergency assessments under 14 sub-subparagraph d. 15 c. Each assessable insurer's share of the amount being 16 assessed under sub-subparagraph a. or sub-subparagraph b. 17 shall be in the proportion that the assessable insurer's 18 direct written premium for the subject lines of business for 19 the year preceding the assessment bears to the aggregate 20 statewide direct written premium for the subject lines of 21 business for that year. The assessment percentage applicable 22 to each assessable insured is the ratio of the amount being 23 assessed under sub-subparagraph a. or sub-subparagraph b. to 24 the aggregate statewide direct written premium for the subject 25 lines of business for the prior year. Assessments levied by 26 the corporation on assessable insurers under sub-subparagraphs 27 a. and b. shall be paid as required by the corporation's plan 28 of operation and paragraph (g). Assessments levied by the 29 corporation on assessable insureds under sub-subparagraphs a. 30 and b. shall be collected by the surplus lines agent at the 31 time the surplus lines agent collects the surplus lines tax 5 9:57 AM 03/28/05 s1488c-bi17-c8h
Florida Senate - 2005 COMMITTEE AMENDMENT Bill No. PCS for SB 1488 (960506) Barcode 971858 1 required by s. 626.932 and shall be paid to the Florida 2 Surplus Lines Service Office at the time the surplus lines 3 agent pays the surplus lines tax to the Florida Surplus Lines 4 Service Office. Upon receipt of regular assessments from 5 surplus lines agents, the Florida Surplus Lines Service Office 6 shall transfer the assessments directly to the corporation as 7 determined by the corporation. 8 d. Upon a determination by the board of governors that 9 a deficit in an account exceeds the amount that will be 10 recovered through regular assessments under sub-subparagraph 11 a. or sub-subparagraph b., the board shall levy, after 12 verification by the office, emergency assessments, for as many 13 years as necessary to cover the deficits, to be collected by 14 assessable insurers and the corporation and collected from 15 assessable insureds upon issuance or renewal of policies for 16 subject lines of business, excluding National Flood Insurance 17 policies. The amount of the emergency assessment collected in 18 a particular year shall be a uniform percentage of that year's 19 direct written premium for subject lines of business and all 20 accounts of the corporation, excluding National Flood 21 Insurance Program policy premiums, as annually determined by 22 the board and verified by the office. The office shall verify 23 the arithmetic calculations involved in the board's 24 determination within 30 days after receipt of the information 25 on which the determination was based. Notwithstanding any 26 other provision of law, the corporation and each assessable 27 insurer that writes subject lines of business shall collect 28 emergency assessments from its policyholders without such 29 obligation being affected by any credit, limitation, 30 exemption, or deferment. Emergency assessments levied by the 31 corporation on assessable insureds shall be collected by the 6 9:57 AM 03/28/05 s1488c-bi17-c8h
Florida Senate - 2005 COMMITTEE AMENDMENT Bill No. PCS for SB 1488 (960506) Barcode 971858 1 surplus lines agent at the time the surplus lines agent 2 collects the surplus lines tax required by s. 626.932 and 3 shall be paid to the Florida Surplus Lines Service Office at 4 the time the surplus lines agent pays the surplus lines tax to 5 the Florida Surplus Lines Service Office. The emergency 6 assessments so collected shall be transferred directly to the 7 corporation on a periodic basis as determined by the 8 corporation and shall be held by the corporation solely in the 9 applicable account. The aggregate amount of emergency 10 assessments levied for an account under this sub-subparagraph 11 in any calendar year may not exceed the greater of 10 percent 12 of the amount needed to cover the original deficit, plus 13 interest, fees, commissions, required reserves, and other 14 costs associated with financing of the original deficit, or 10 15 percent of the aggregate statewide direct written premium for 16 subject lines of business and for all accounts of the 17 corporation for the prior year, plus interest, fees, 18 commissions, required reserves, and other costs associated 19 with financing the original deficit. 20 e. The corporation may pledge the proceeds of 21 assessments, projected recoveries from the Florida Hurricane 22 Catastrophe Fund, other insurance and reinsurance 23 recoverables, market equalization surcharges and other 24 surcharges, and other funds available to the corporation as 25 the source of revenue for and to secure bonds issued under 26 paragraph (g), bonds or other indebtedness issued under 27 subparagraph (c)3., or lines of credit or other financing 28 mechanisms issued or created under this subsection, or to 29 retire any other debt incurred as a result of deficits or 30 events giving rise to deficits, or in any other way that the 31 board determines will efficiently recover such deficits. The 7 9:57 AM 03/28/05 s1488c-bi17-c8h
Florida Senate - 2005 COMMITTEE AMENDMENT Bill No. PCS for SB 1488 (960506) Barcode 971858 1 purpose of the lines of credit or other financing mechanisms 2 is to provide additional resources to assist the corporation 3 in covering claims and expenses attributable to a catastrophe. 4 As used in this subsection, the term "assessments" includes 5 regular assessments under sub-subparagraph a., 6 sub-subparagraph b., or subparagraph (g)1. and emergency 7 assessments under sub-subparagraph d. Emergency assessments 8 collected under sub-subparagraph d. are not part of an 9 insurer's rates, are not premium, and are not subject to 10 premium tax, fees, or commissions; however, failure to pay the 11 emergency assessment shall be treated as failure to pay 12 premium. The emergency assessments under sub-subparagraph d. 13 shall continue as long as any bonds issued or other 14 indebtedness incurred with respect to a deficit for which the 15 assessment was imposed remain outstanding, unless adequate 16 provision has been made for the payment of such bonds or other 17 indebtedness pursuant to the documents governing such bonds or 18 other indebtedness. 19 f. As used in this subsection, the term "subject lines 20 of business" means insurance written by assessable insurers or 21 procured by assessable insureds on real or personal property, 22 as defined in s. 624.604, including insurance for fire, 23 industrial fire, allied lines, farmowners multiperil, 24 homeowners multiperil, commercial multiperil, and mobile 25 homes, and including liability coverage on all such insurance, 26 but excluding inland marine as defined in s. 624.607(3) and 27 excluding vehicle insurance as defined in s. 624.605(1) other 28 than insurance on mobile homes used as permanent dwellings. 29 g. The Florida Surplus Lines Service Office shall 30 determine annually the aggregate statewide written premium in 31 subject lines of business procured by assessable insureds and 8 9:57 AM 03/28/05 s1488c-bi17-c8h
Florida Senate - 2005 COMMITTEE AMENDMENT Bill No. PCS for SB 1488 (960506) Barcode 971858 1 shall report that information to the corporation in a form and 2 at a time the corporation specifies to ensure that the 3 corporation can meet the requirements of this subsection and 4 the corporation's financing obligations. 5 h. The Florida Surplus Lines Service Office shall 6 verify the proper application by surplus lines agents of 7 assessment percentages for regular assessments and emergency 8 assessments levied under this subparagraph on assessable 9 insureds and shall assist the corporation in ensuring the 10 accurate, timely collection and payment of assessments by 11 surplus lines agents as required by the corporation. 12 i. The other provisions of this paragraph 13 notwithstanding, the maximum amount of deficits in all 14 accounts combined, attributable to losses from a single 15 calendar year, which may be recovered directly or indirectly 16 through any form of regular or emergency assessment under this 17 paragraph may not exceed $8 billion for 2005, $7 billion for 18 2006, $6 billion for 2007, and $5 billion for 2008. 19 20 21 ================ T I T L E A M E N D M E N T =============== 22 And the title is amended as follows: 23 On page 2, line 9, after the semicolon, 24 25 insert: 26 providing a cap on deficits of the Citizens 27 Property Insurance Corporation deficits which 28 may be recovered through assessments; 29 30 31 9 9:57 AM 03/28/05 s1488c-bi17-c8h