Florida Senate - 2005 COMMITTEE AMENDMENT
Bill No. PCS for SB 1488 (960506)
Barcode 971858
CHAMBER ACTION
Senate House
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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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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
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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
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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
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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
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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
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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
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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
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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.
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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,
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25 insert:
26 providing a cap on deficits of the Citizens
27 Property Insurance Corporation deficits which
28 may be recovered through assessments;
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