Senate Bill sb1488e1

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  1                      A bill to be entitled

  2         An act relating to property insurance; amending

  3         s. 215.555, F.S.; revising the retention of

  4         losses for which an insurer is not entitled to

  5         reimbursement from the Florida Hurricane

  6         Catastrophe Fund; amending s. 215.559, F.S.;

  7         revising the allocation of funds appropriated

  8         to the Department of Community Affairs from the

  9         Florida Hurricane Catastrophe Fund for the

10         Hurricane Loss Mitigation Program; requiring

11         that the department establish a low-interest

12         loan program and pilot project for hurricane

13         loss mitigation; authorizing contractual

14         agreements between the department and financial

15         institutions; authorizing the Department of

16         Community Affairs to adopt rules; amending s.

17         627.062, F.S.; requiring the Office of

18         Insurance Regulation to submit a proposed plan

19         to the Legislature establishing uniform rating

20         territories to be used by insurers for

21         residential property insurance rate filings;

22         requiring a further act of the Legislature to

23         implement the plan; limiting the recoupment by

24         an insurer in its rates of the reimbursement

25         premium it pays to the Florida Hurricane

26         Catastrophe Fund; amending s. 627.0628, F.S.;

27         restricting the admissibility and relevance in

28         rate proceedings of findings of the Florida

29         Commission on Hurricane Loss Projection

30         Methodology; amending s. 627.0629, F.S.;

31         lowering the percentage amount of a rate filing


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 1         based on a computer model which requires a

 2         public hearing; creating s. 627.06281, F.S.;

 3         requiring residential property insurers and

 4         rating and advisory organizations to report

 5         hurricane loss data for development of a public

 6         hurricane model for hurricane loss projections;

 7         amending s. 627.351, F.S.; revising the

 8         appointments to the board and the approval of

 9         officers and employees of the corporation;

10         providing additional legislative intent

11         relating to the Citizens Property Insurance

12         Corporation; authorizing the corporation to

13         issue bonds and incur indebtedness for certain

14         purposes; requiring creation of a Market

15         Accountability Advisory Committee to assist the

16         corporation for certain purposes; providing for

17         appointment of committee members; providing for

18         terms; requiring reports to the corporation;

19         revising requirements for the plan of operation

20         of the corporation; requiring the corporation

21         to require the securing of flood insurance as a

22         condition of coverage under certain

23         circumstances; providing requirements and

24         limitations; creating s. 627.40951, F.S.;

25         providing legislative findings and intent;

26         providing for an advisory committee; providing

27         for membership; providing for recommendations

28         to be submitted to the Legislature regarding

29         standard residential property insurance

30         policies; amending s. 627.411, F.S.; adding

31         grounds for which the Office of Insurance


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 1         Regulation must disapprove a form filed by an

 2         insurer; amending s. 627.4133, F.S.;

 3         prohibiting insurers from canceling or

 4         nonrenewing residential property insurance

 5         policies under certain emergency circumstances;

 6         providing exceptions; providing notice

 7         requirements; providing application to personal

 8         residential and commercial residential policies

 9         covering certain damaged property; extending

10         the effective date of certain policies under

11         certain hurricane circumstances; authorizing

12         the insurer to collect premiums for the

13         extended period; providing nonapplication;

14         amending s. 627.4143, F.S.; requiring insurers

15         to provide personal lines property insurance

16         policyholders with a checklist of items

17         contained in policies; authorizing the

18         Financial Services Commission to adopt rules;

19         prescribing elements to be contained in the

20         checklist; requiring the checklist and outline

21         of insurance coverage to be sent with each

22         renewal; clarifying that homeowners' insurance

23         includes mobile homeowners', dwelling, and

24         condominium unit owners' insurance for purposes

25         of the outline of coverage; amending s.

26         627.701, F.S.; increasing the maximum allowable

27         hurricane deductible for personal lines and

28         certain commercial lines residential policies;

29         requiring insurers to offer specified hurricane

30         deductibles for such policies; requiring

31         insurers to provide written notice explaining


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 1         hurricane deductible options for such policies;

 2         providing for computation and display of the

 3         dollar value of hurricane deductibles;

 4         requiring insurers to compute and display

 5         actual dollar values of certain riders for

 6         certain policies; amending s. 627.701, F.S.;

 7         providing that the requirement for a hurricane

 8         deductible to apply on an annual basis applies

 9         to personal lines residential property

10         insurance policies; requiring insurers that

11         provide commercial residential property

12         insurance to offer alternative hurricane

13         deductibles that apply on an annual basis or to

14         each hurricane; amending s. 627.7011, F.S.;

15         requiring insurers to offer coverage for

16         additional costs of repair due to laws and

17         ordinances; requiring insurers to pay the

18         replacement cost for a loss insured on that

19         basis, whether or not the insured replaces or

20         repairs the dwelling or property; requiring

21         certain homeowner's insurance policies to

22         contain a specified statement; providing

23         intent; amending s. 627.7015, F.S.; revising

24         purpose and scope provisions relating to an

25         alternative procedure for resolution of

26         disputed property insurance claims; providing

27         that failure of an insurer to notify a claimant

28         of the availability of mediation excuses an

29         insured from being required to submit to

30         certain loss appraisal processes; amending s.

31         627.702, F.S.; providing legislative intent


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 1         regarding the requirement that an insurer pay

 2         policy limits if there is a total loss of a

 3         building; providing nonapplication of certain

 4         insurer liability requirements under certain

 5         circumstances; limiting an insurer's liability

 6         to certain loss covered by a covered peril;

 7         amending s. 627.706, F.S., relating to sinkhole

 8         insurance; providing definitions; creating s.

 9         627.7065, F.S.; providing legislative findings;

10         requiring the Department of Financial Services

11         and the Office of the Insurance Consumer

12         Advocate to consult with the Florida Geological

13         Survey and the Department of Environmental

14         Protection to implement a statewide automated

15         database of sinkholes and related activity;

16         providing requirements for the form and content

17         of the database; authorizing the Department of

18         Financial Services to require insurers to

19         provide certain information; providing for

20         management of the database; requiring the

21         department to investigate sinkhole activity

22         reports and include findings and investigations

23         in the database; requiring the Department of

24         Environmental Protection to report on the

25         database to the Governor, Legislature, and

26         Chief Financial Officer; authorizing the

27         Department of Financial Services to adopt

28         implementing rules; amending s. 627.707, F.S.;

29         revising standards for investigations of

30         sinkhole claims by insurers; requiring an

31         insurer to engage an engineer or professional


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 1         geologist for certain purposes; requiring a

 2         report under certain circumstances; requiring

 3         an insurer to provide written notice to a

 4         policyholder disclosing certain information;

 5         authorizing an insurer to deny a claim under

 6         certain circumstances; authorizing a

 7         policyholder to demand certain testing;

 8         providing requirements; specifying required

 9         activities for insurers if a sinkhole loss is

10         verified; specifying payment requirements for

11         insurers; providing limitations; requiring the

12         insurer to pay fees of the engineer and

13         geologist; authorizing an insurer to engage a

14         structural engineer for certain purposes;

15         creating s. 627.7072, F.S.; specifying

16         requirements for sinkhole testing by engineers

17         and geologists; creating s. 627.7073, F.S.;

18         providing reporting requirements for engineers

19         and geologists after testing for sinkholes;

20         specifying a presumption of correctness of

21         certain findings; requiring an insurer paying a

22         sinkhole loss claim to file a report and

23         certification with the county property

24         appraiser; requiring the property appraiser to

25         record the report and certification; requiring

26         the insurer to bear the cost of filing and

27         recording; requiring a seller of certain

28         property to make certain disclosures to

29         property buyers under certain circumstances;

30         creating s. 627.711, F.S.; requiring insurers

31         to notify applicants or policyholders of the


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 1         availability and amounts of certain discounts,

 2         credits, rate differentials, or reductions in

 3         deductibles for properties on which certain

 4         fixtures have been installed or construction

 5         techniques have been implemented; requiring

 6         insurers to provide qualifying information;

 7         authorizing the Financial Services Commission

 8         to adopt rules; creating s. 627.712, F.S.;

 9         requiring property insurers to pay or deny

10         claims within certain time periods; providing

11         that overdue payments bear interest; requiring

12         the Office of Insurance Regulation to submit a

13         report to the Legislature relating to

14         residential property insurance; providing

15         report requirements; requiring the Office of

16         the Auditor General to conduct an operational

17         audit of Citizens Property Insurance

18         Corporation; specifying audit requirements;

19         requiring a report; requiring the board of

20         governors of the Citizens Property Insurance

21         Corporation to submit a report to the

22         Legislature relating to property and casualty

23         insurance; specifying report requirements;

24         providing an appropriation and authorizing

25         positions; providing a contingent effective

26         date; providing effective dates.

27  

28  Be It Enacted by the Legislature of the State of Florida:

29  

30  

31  


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 1         Section 1.  Effective June 1, 2005, paragraph (e) of

 2  subsection (2) of section 215.555, Florida Statutes, is

 3  amended to read:

 4         215.555  Florida Hurricane Catastrophe Fund.--

 5         (2)  DEFINITIONS.--As used in this section:

 6         (e)  "Retention" means the amount of losses below which

 7  an insurer is not entitled to reimbursement from the fund. An

 8  insurer's retention shall be calculated as follows:

 9         1.  The board shall calculate and report to each

10  insurer the retention multiples for that year. For the

11  contract year beginning June 1, 2005 2004, the retention

12  multiple shall be equal to $4.5 billion divided by the total

13  estimated reimbursement premium for the contract year; for

14  subsequent years, the retention multiple shall be equal to

15  $4.5 billion, adjusted based upon the reported exposure from

16  the prior contract year to reflect the percentage growth in

17  exposure to the fund for covered policies since 2004 2003,

18  divided by the total estimated reimbursement premium for the

19  contract year. Total reimbursement premium for purposes of the

20  calculation under this subparagraph shall be estimated using

21  the assumption that all insurers have selected the 90-percent

22  coverage level.

23         2.  The retention multiple as determined under

24  subparagraph 1. shall be adjusted to reflect the coverage

25  level elected by the insurer. For insurers electing the

26  90-percent coverage level, the adjusted retention multiple is

27  100 percent of the amount determined under subparagraph 1. For

28  insurers electing the 75-percent coverage level, the retention

29  multiple is 120 percent of the amount determined under

30  subparagraph 1. For insurers electing the 45-percent coverage

31  


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 1  level, the adjusted retention multiple is 200 percent of the

 2  amount determined under subparagraph 1.

 3         3.  An insurer shall determine its provisional

 4  retention by multiplying its provisional reimbursement premium

 5  by the applicable adjusted retention multiple and shall

 6  determine its actual retention by multiplying its actual

 7  reimbursement premium by the applicable adjusted retention

 8  multiple.

 9         4.  For insurers who experience multiple covered events

10  causing loss during the contract year, beginning June 1, 2005,

11  each insurer's full retention shall be applied to each of the

12  covered events causing the two largest losses for that

13  insurer. For each other covered event resulting in losses, the

14  insurer's retention shall be reduced to one-third of the full

15  retention. The reimbursement contract shall provide for the

16  reimbursement of losses for each covered event based on the

17  full retention with adjustments made to reflect the reduced

18  retentions after January 1 of the contract year provided the

19  insurer reports its losses as specified in the reimbursement

20  contract.

21         Section 2.  Effective July 1, 2005, section 215.559,

22  Florida Statutes, is amended to read:

23         215.559  Hurricane Loss Mitigation Program.--

24         (1)  There is created a Hurricane Loss Mitigation

25  Program. The Legislature shall annually appropriate $10

26  million of the moneys authorized for appropriation under s.

27  215.555(7)(c) from the Florida Hurricane Catastrophe Fund to

28  the Department of Community Affairs for the purposes set forth

29  in this section.

30         (2)(a)  Seven million dollars in funds provided in

31  subsection (1) shall be used for programs to improve the wind


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 1  resistance of residences and mobile homes, including loans,

 2  subsidies, grants, demonstration projects, and direct

 3  assistance; cooperative programs with local governments and

 4  the Federal Government; and other efforts to prevent or reduce

 5  losses or reduce the cost of rebuilding after a disaster.

 6         (b)  Three million dollars in funds provided in

 7  subsection (1) shall be used to retrofit existing facilities

 8  used as public hurricane shelters. The department must

 9  prioritize the use of these funds for projects included in the

10  September 1, 2000, version of the Shelter Retrofit Report

11  prepared in accordance with s. 252.385(3), and each annual

12  report thereafter. The department must give funding priority

13  to projects in regional planning council regions that have

14  shelter deficits and to projects that maximize use of state

15  funds.

16         (3)  By the 2006-2007 fiscal year, the Department of

17  Community Affairs shall develop a low-interest loan program

18  for homeowners and mobile home owners to retrofit their homes

19  with fixtures or apply construction techniques that have been

20  demonstrated to reduce the amount of damage or loss due to a

21  hurricane. Funding for the program shall be used to subsidize

22  or guaranty private-sector loans for this purpose to qualified

23  homeowners by financial institutions chartered by the state or

24  Federal Government. The department may enter into contracts

25  with financial institutions for this purpose. The department

26  shall establish criteria for determining eligibility for the

27  loans and selecting recipients, standards for retrofitting

28  homes or mobile homes, limitations on loan subsidies and loan

29  guaranties, and other terms and conditions of the program,

30  which must be specified in the department's report to the

31  Legislature on January 1, 2006, required by subsection (8).


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 1  For the 2005-2006 fiscal year, the Department of Community

 2  Affairs may use up to $1 million of the funds appropriated

 3  pursuant to paragraph (2)(a) to begin the low-interest loan

 4  program as a pilot project in one or more counties. The

 5  Department of Financial Services, the Office of Financial

 6  Regulation, the Florida Housing Finance Corporation, and the

 7  Office of Tourism, Trade, and Economic Development shall

 8  assist the Department of Community Affairs in establishing the

 9  program and pilot project. The department may use up to 2.5

10  percent of the funds appropriated in any given fiscal year for

11  administering the loan program. The department may adopt rules

12  to implement the program.

13         (4)(3)  Forty percent of the total appropriation in

14  paragraph (2)(a) shall be used to inspect and improve

15  tie-downs for mobile homes. Within 30 days after the effective

16  date of that appropriation, the department shall contract with

17  a public higher educational institution in this state which

18  has previous experience in administering the programs set

19  forth in this subsection to serve as the administrative entity

20  and fiscal agent pursuant to s. 216.346 for the purpose of

21  administering the programs set forth in this subsection in

22  accordance with established policy and procedures. The

23  administrative entity working with the advisory council set up

24  under subsection (6) (5) shall develop a list of mobile home

25  parks and counties that may be eligible to participate in the

26  tie-down program.

27         (5)(4)  Of moneys provided to the Department of

28  Community Affairs in paragraph (2)(a), 10 percent shall be

29  allocated to a Type I Center within the State University

30  System dedicated to hurricane research. The Type I Center

31  shall develop a preliminary work plan approved by the advisory


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 1  council set forth in subsection (6) (5) to eliminate the state

 2  and local barriers to upgrading existing mobile homes and

 3  communities, research and develop a program for the recycling

 4  of existing older mobile homes, and support programs of

 5  research and development relating to hurricane loss reduction

 6  devices and techniques for site-built residences. The State

 7  University System also shall consult with the Department of

 8  Community Affairs and assist the department with the report

 9  required under subsection (8) (7).

10         (6)(5)  Except for the program set forth in subsection

11  (3), The Department of Community Affairs shall develop the

12  programs set forth in this section in consultation with an

13  advisory council consisting of a representative designated by

14  the Chief Financial Officer, a representative designated by

15  the Florida Home Builders Association, a representative

16  designated by the Florida Insurance Council, a representative

17  designated by the Federation of Manufactured Home Owners, a

18  representative designated by the Florida Association of

19  Counties, and a representative designated by the Florida

20  Manufactured Housing Association.

21         (7)(6)  Moneys provided to the Department of Community

22  Affairs under this section are intended to supplement other

23  funding sources of the Department of Community Affairs and may

24  not supplant other funding sources of the Department of

25  Community Affairs.

26         (8)(7)  On January 1st of each year, the Department of

27  Community Affairs shall provide a full report and accounting

28  of activities under this section and an evaluation of such

29  activities to the Speaker of the House of Representatives, the

30  President of the Senate, and the Majority and Minority Leaders

31  of the House of Representatives and the Senate.


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 1         (9)(8)  This section is repealed June 30, 2011.

 2         Section 3.  Subsections (4) and (5) of section 627.062,

 3  Florida Statutes, are amended to read:

 4         627.062  Rate standards.--

 5         (4)  The establishment of any rate, rating

 6  classification, rating plan or schedule, or variation thereof

 7  in violation of part IX of chapter 626 is also in violation of

 8  this section. In order to enhance the ability of consumers to

 9  compare premiums and to increase the accuracy and usefulness

10  of rate-comparison information provided by the office to the

11  public, the office shall develop a proposed standard rating

12  territory plan to be used by all authorized property and

13  casualty insurers for residential property insurance. In

14  adopting the proposed plan, the office may consider

15  geographical characteristics relevant to risk, county lines,

16  major roadways, existing rating territories used by a

17  significant segment of the market, and other relevant factors.

18  Such plan shall be submitted to the President of the Senate

19  and the Speaker of the House of Representatives by January 15,

20  2006. The plan may not be implemented unless authorized by

21  further act of the Legislature.

22         (5)  With respect to a rate filing involving coverage

23  of the type for which the insurer is required to pay a

24  reimbursement premium to the Florida Hurricane Catastrophe

25  Fund, the insurer may fully recoup in its property insurance

26  premiums any reimbursement premiums paid to the Florida

27  Hurricane Catastrophe Fund, together with reasonable costs of

28  other reinsurance, but may not recoup reinsurance costs that

29  duplicate coverage provided by the Florida Hurricane

30  Catastrophe Fund. An insurer may not recoup more than 1 year

31  of reimbursement premium at a time. Any under-recoupment from


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 1  the prior year may be added to the following year's

 2  reimbursement premium and any over-recoupment shall be

 3  subtracted from the following year's reimbursement premium.

 4         Section 4.  Paragraph (c) of subsection (1) and

 5  paragraph (c) of subsection (3) of section 627.0628, Florida

 6  Statutes, are amended to read:

 7         627.0628  Florida Commission on Hurricane Loss

 8  Projection Methodology.--

 9         (1)  LEGISLATIVE FINDINGS AND INTENT.--

10         (c)  It is the intent of the Legislature to create the

11  Florida Commission on Hurricane Loss Projection Methodology as

12  a panel of experts to provide the most actuarially

13  sophisticated guidelines and standards for projection of

14  hurricane losses possible, given the current state of

15  actuarial science. It is the further intent of the Legislature

16  that such standards and guidelines must be used by the State

17  Board of Administration in developing reimbursement premium

18  rates for the Florida Hurricane Catastrophe Fund, and, subject

19  to paragraph (3)(c), may be used by insurers in rate filings

20  under s. 627.062 unless the way in which such standards and

21  guidelines were applied by the insurer was erroneous, as shown

22  by a preponderance of the evidence.

23         (3)  ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--

24         (c)  With respect to a rate filing under s. 627.062, an

25  insurer may employ actuarial methods, principles, standards,

26  models, or output ranges found by the commission to be

27  accurate or reliable to determine hurricane loss factors for

28  use in a rate filing under s. 627.062. Such, which findings

29  and factors are admissible and relevant in consideration of a

30  rate filing by the office or in any arbitration or

31  administrative or judicial review only if the office and the


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 1  consumer advocate appointed pursuant to s. 627.0613 have

 2  access to all of the assumptions and factors that were used in

 3  developing the actuarial methods, principles, standards,

 4  models, or output ranges, and are not precluded from

 5  disclosing such information in a rate proceeding.

 6         Section 5.  Subsection (7) of section 627.0629, Florida

 7  Statutes, is amended to read:

 8         627.0629  Residential property insurance; rate

 9  filings.--

10         (7)  Any rate filing that is based in whole or part on

11  data from a computer model may not exceed 15 25 percent unless

12  there is a public hearing.

13         Section 6.  Section 627.06281, Florida Statutes, is

14  created to read:

15         627.06281  Public hurricane loss projection model;

16  reporting of data by insurers.--Within 30 days after a written

17  request for loss data and associated exposure data by the

18  office or a type I center within the State University System

19  established to study mitigation, residential property insurers

20  and licensed rating and advisory organizations that compile

21  residential property insurance loss data shall provide loss

22  data and associated exposure data for residential property

23  insurance policies to the office or to a type I center within

24  the State University System established to study mitigation,

25  as directed by the office, for the purposes of developing,

26  maintaining, and updating a public model for hurricane loss

27  projections. The loss data and associated exposure data

28  provided shall be in writing.

29         Section 7.  Paragraphs (a), (c), and (q) of subsection

30  (6) of section 627.351, Florida Statutes, are amended to read:

31         627.351  Insurance risk apportionment plans.--


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 1         (6)  CITIZENS PROPERTY INSURANCE CORPORATION.--

 2         (a)1.  The Legislature finds that actual and threatened

 3  catastrophic losses to property in this state from hurricanes

 4  have caused insurers to be unwilling or unable to provide

 5  property insurance coverage to the extent sought and needed.

 6  It is in the public interest and a public purpose to assist in

 7  assuring that property in the state is insured so as to

 8  facilitate the remediation, reconstruction, and replacement of

 9  damaged or destroyed property in order to reduce or avoid the

10  negative effects otherwise resulting to the public health,

11  safety, and welfare; to the economy of the state; and to the

12  revenues of the state and local governments needed to provide

13  for the public welfare. It is necessary, therefore, to provide

14  property insurance to applicants who are in good faith

15  entitled to procure insurance through the voluntary market but

16  are unable to do so. The Legislature intends by this

17  subsection that property insurance be provided and that it

18  continues, as long as necessary, through an entity organized

19  to achieve efficiencies and economies, while providing service

20  to policyholders, applicants, and agents that is no less than

21  the quality generally provided in the voluntary market, all

22  toward the achievement of the foregoing public purposes.

23  Because it is essential for the corporation to have the

24  maximum financial resources to pay claims following a

25  catastrophic hurricane, it is the intent of the Legislature

26  that the income of the corporation be exempt from federal

27  income taxation and that interest on the debt obligations

28  issued by the corporation be exempt from federal income

29  taxation.

30         2.  The Residential Property and Casualty Joint

31  Underwriting Association originally created by this statute


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 1  shall be known, as of July 1, 2002, as the Citizens Property

 2  Insurance Corporation. The corporation shall provide insurance

 3  for residential and commercial property, for applicants who

 4  are in good faith entitled, but are unable, to procure

 5  insurance through the voluntary market. The corporation shall

 6  operate pursuant to a plan of operation approved by order of

 7  the office. The plan is subject to continuous review by the

 8  office. The office may, by order, withdraw approval of all or

 9  part of a plan if the office determines that conditions have

10  changed since approval was granted and that the purposes of

11  the plan require changes in the plan. For the purposes of this

12  subsection, residential coverage includes both personal lines

13  residential coverage, which consists of the type of coverage

14  provided by homeowner's, mobile home owner's, dwelling,

15  tenant's, condominium unit owner's, and similar policies, and

16  commercial lines residential coverage, which consists of the

17  type of coverage provided by condominium association,

18  apartment building, and similar policies.

19         3.  It is the intent of the Legislature that

20  policyholders, applicants, and agents of the corporation

21  receive service and treatment of the highest possible level

22  but never less than that generally provided in the voluntary

23  market. It also is intended that the corporation be held to

24  service standards no less than those applied to insurers in

25  the voluntary market by the office with respect to

26  responsiveness, timeliness, customer courtesy, and overall

27  dealings with policyholders, applicants, or agents of the

28  corporation.

29         (c)  The plan of operation of the corporation:

30         1.  Must provide for adoption of residential property

31  and casualty insurance policy forms and commercial residential


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 1  and nonresidential property insurance forms, which forms must

 2  be approved by the office prior to use. The corporation shall

 3  adopt the following policy forms:

 4         a.  Standard personal lines policy forms that are

 5  comprehensive multiperil policies providing full coverage of a

 6  residential property equivalent to the coverage provided in

 7  the private insurance market under an HO-3, HO-4, or HO-6

 8  policy.

 9         b.  Basic personal lines policy forms that are policies

10  similar to an HO-8 policy or a dwelling fire policy that

11  provide coverage meeting the requirements of the secondary

12  mortgage market, but which coverage is more limited than the

13  coverage under a standard policy.

14         c.  Commercial lines residential policy forms that are

15  generally similar to the basic perils of full coverage

16  obtainable for commercial residential structures in the

17  admitted voluntary market.

18         d.  Personal lines and commercial lines residential

19  property insurance forms that cover the peril of wind only.

20  The forms are applicable only to residential properties

21  located in areas eligible for coverage under the high-risk

22  account referred to in sub-subparagraph (b)2.a.

23         e.  Commercial lines nonresidential property insurance

24  forms that cover the peril of wind only. The forms are

25  applicable only to nonresidential properties located in areas

26  eligible for coverage under the high-risk account referred to

27  in sub-subparagraph (b)2.a.

28         2.a.  Must provide that the corporation adopt a program

29  in which the corporation and authorized insurers enter into

30  quota share primary insurance agreements for hurricane

31  coverage, as defined in s. 627.4025(2)(a), for eligible risks,


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    CS for CS for SB 1488                          First Engrossed



 1  and adopt property insurance forms for eligible risks which

 2  cover the peril of wind only. As used in this subsection, the

 3  term:

 4         (I)  "Quota share primary insurance" means an

 5  arrangement in which the primary hurricane coverage of an

 6  eligible risk is provided in specified percentages by the

 7  corporation and an authorized insurer. The corporation and

 8  authorized insurer are each solely responsible for a specified

 9  percentage of hurricane coverage of an eligible risk as set

10  forth in a quota share primary insurance agreement between the

11  corporation and an authorized insurer and the insurance

12  contract. The responsibility of the corporation or authorized

13  insurer to pay its specified percentage of hurricane losses of

14  an eligible risk, as set forth in the quota share primary

15  insurance agreement, may not be altered by the inability of

16  the other party to the agreement to pay its specified

17  percentage of hurricane losses. Eligible risks that are

18  provided hurricane coverage through a quota share primary

19  insurance arrangement must be provided policy forms that set

20  forth the obligations of the corporation and authorized

21  insurer under the arrangement, clearly specify the percentages

22  of quota share primary insurance provided by the corporation

23  and authorized insurer, and conspicuously and clearly state

24  that neither the authorized insurer nor the corporation may be

25  held responsible beyond its specified percentage of coverage

26  of hurricane losses.

27         (II)  "Eligible risks" means personal lines residential

28  and commercial lines residential risks that meet the

29  underwriting criteria of the corporation and are located in

30  areas that were eligible for coverage by the Florida Windstorm

31  Underwriting Association on January 1, 2002.


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    CS for CS for SB 1488                          First Engrossed



 1         b.  The corporation may enter into quota share primary

 2  insurance agreements with authorized insurers at corporation

 3  coverage levels of 90 percent and 50 percent.

 4         c.  If the corporation determines that additional

 5  coverage levels are necessary to maximize participation in

 6  quota share primary insurance agreements by authorized

 7  insurers, the corporation may establish additional coverage

 8  levels. However, the corporation's quota share primary

 9  insurance coverage level may not exceed 90 percent.

10         d.  Any quota share primary insurance agreement entered

11  into between an authorized insurer and the corporation must

12  provide for a uniform specified percentage of coverage of

13  hurricane losses, by county or territory as set forth by the

14  corporation board, for all eligible risks of the authorized

15  insurer covered under the quota share primary insurance

16  agreement.

17         e.  Any quota share primary insurance agreement entered

18  into between an authorized insurer and the corporation is

19  subject to review and approval by the office. However, such

20  agreement shall be authorized only as to insurance contracts

21  entered into between an authorized insurer and an insured who

22  is already insured by the corporation for wind coverage.

23         f.  For all eligible risks covered under quota share

24  primary insurance agreements, the exposure and coverage levels

25  for both the corporation and authorized insurers shall be

26  reported by the corporation to the Florida Hurricane

27  Catastrophe Fund. For all policies of eligible risks covered

28  under quota share primary insurance agreements, the

29  corporation and the authorized insurer shall maintain complete

30  and accurate records for the purpose of exposure and loss

31  reimbursement audits as required by Florida Hurricane


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    CS for CS for SB 1488                          First Engrossed



 1  Catastrophe Fund rules. The corporation and the authorized

 2  insurer shall each maintain duplicate copies of policy

 3  declaration pages and supporting claims documents.

 4         g.  The corporation board shall establish in its plan

 5  of operation standards for quota share agreements which ensure

 6  that there is no discriminatory application among insurers as

 7  to the terms of quota share agreements, pricing of quota share

 8  agreements, incentive provisions if any, and consideration

 9  paid for servicing policies or adjusting claims.

10         h.  The quota share primary insurance agreement between

11  the corporation and an authorized insurer must set forth the

12  specific terms under which coverage is provided, including,

13  but not limited to, the sale and servicing of policies issued

14  under the agreement by the insurance agent of the authorized

15  insurer producing the business, the reporting of information

16  concerning eligible risks, the payment of premium to the

17  corporation, and arrangements for the adjustment and payment

18  of hurricane claims incurred on eligible risks by the claims

19  adjuster and personnel of the authorized insurer. Entering

20  into a quota sharing insurance agreement between the

21  corporation and an authorized insurer shall be voluntary and

22  at the discretion of the authorized insurer.

23         3.  May provide that the corporation may employ or

24  otherwise contract with individuals or other entities to

25  provide administrative or professional services that may be

26  appropriate to effectuate the plan. The corporation shall have

27  the power to borrow funds, by issuing bonds or by incurring

28  other indebtedness, and shall have other powers reasonably

29  necessary to effectuate the requirements of this subsection,

30  including without limitation, the power to issue bonds and

31  incur other indebtedness in order to refinance outstanding


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    CS for CS for SB 1488                          First Engrossed



 1  bonds or other indebtedness. The corporation may, but is not

 2  required to, seek judicial validation of its bonds or other

 3  indebtedness under chapter 75. The corporation may issue bonds

 4  or incur other indebtedness, or have bonds issued on its

 5  behalf by a unit of local government pursuant to subparagraph

 6  (g)2., in the absence of a hurricane or other weather-related

 7  event, upon a determination by the corporation, subject to

 8  approval by the office, that such action would enable it to

 9  efficiently meet the financial obligations of the corporation

10  and that such financings are reasonably necessary to

11  effectuate the requirements of this subsection. The

12  corporation is authorized to take all actions needed to

13  facilitate tax-free status for any such bonds or indebtedness,

14  including formation of trusts or other affiliated entities.

15  The corporation shall have the authority to pledge

16  assessments, projected recoveries from the Florida Hurricane

17  Catastrophe Fund, other reinsurance recoverables, market

18  equalization and other surcharges, and other funds available

19  to the corporation as security for bonds or other

20  indebtedness. In recognition of s. 10, Art. I of the State

21  Constitution, prohibiting the impairment of obligations of

22  contracts, it is the intent of the Legislature that no action

23  be taken whose purpose is to impair any bond indenture or

24  financing agreement or any revenue source committed by

25  contract to such bond or other indebtedness.

26         4.a.  Must require that the corporation operate subject

27  to the supervision and approval of a board of governors

28  consisting of 8 7 individuals who are residents of this state,

29  from different geographical areas of this state, appointed by

30  the Chief Financial Officer. The Governor, the Chief Financial

31  Officer, the President of the Senate, and the Speaker of the


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    CS for CS for SB 1488                          First Engrossed



 1  House of Representatives shall each appoint two members of the

 2  board, effective August 1, 2005. At least one of the two

 3  members appointed by each appointing officer must have

 4  demonstrated expertise in insurance. The Chief Financial

 5  Officer shall designate one of the appointees as chair. All

 6  board members serve at the pleasure of the appointing officer

 7  Chief Financial Officer. All board members, including the

 8  chair, must be appointed to serve for 3-year terms beginning

 9  annually on a date designated by the plan. Any board vacancy

10  shall be filled for the unexpired term by the appointing

11  officer Chief Financial Officer. The Chief Financial Officer

12  shall appoint a technical advisory group to provide

13  information and advice to the board of governors in connection

14  with the board's duties under this subsection. The executive

15  director and senior managers of the corporation shall be

16  engaged by the board, as recommended by the Chief Financial

17  Officer and serve at the pleasure of the board Chief Financial

18  Officer. The executive director is responsible for employing

19  other staff as the corporation may require, subject to review

20  and concurrence by the board and office of the Chief Financial

21  Officer.

22         b.  The board shall create a Market Accountability

23  Advisory Committee to assist the corporation in developing

24  awareness of its rates and its customer and agent service

25  levels in relationship to the voluntary market insurers

26  writing similar coverage. The members of the advisory

27  committee shall consist of the following 11 persons, one of

28  whom must be elected chair by the members of the committee:

29  four representatives, one appointed by the Florida Association

30  of Insurance Agents, one by the Florida Association of

31  Insurance and Financial Advisors, one by the Professional


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    CS for CS for SB 1488                          First Engrossed



 1  Insurance Agents of Florida, and one by the Latin American

 2  Association of Insurance Agencies; three representatives

 3  appointed by the insurers with the three highest voluntary

 4  market share of residential property insurance business in the

 5  state; one representative from the Office of Insurance

 6  Regulation; one consumer appointed by the board who is insured

 7  by the corporation at the time of appointment to the

 8  committee; one representative appointed by the Florida

 9  Association of Realtors; and one representative appointed by

10  the Florida Bankers Association. All members must serve for

11  3-year terms and may serve for consecutive terms. The

12  committee shall report to the corporation at each board

13  meeting on insurance market issues which may include rates and

14  rate competition with the voluntary market; service, including

15  policy issuance, claims processing, and general responsiveness

16  to policyholders, applicants, and agents; and matters relating

17  to depopulation.

18         5.  Must provide a procedure for determining the

19  eligibility of a risk for coverage, as follows:

20         a.  Subject to the provisions of s. 627.3517, with

21  respect to personal lines residential risks, if the risk is

22  offered coverage from an authorized insurer at the insurer's

23  approved rate under either a standard policy including wind

24  coverage or, if consistent with the insurer's underwriting

25  rules as filed with the office, a basic policy including wind

26  coverage, the risk is not eligible for any policy issued by

27  the corporation. If the risk is not able to obtain any such

28  offer, the risk is eligible for either a standard policy

29  including wind coverage or a basic policy including wind

30  coverage issued by the corporation; however, if the risk could

31  not be insured under a standard policy including wind coverage


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    CS for CS for SB 1488                          First Engrossed



 1  regardless of market conditions, the risk shall be eligible

 2  for a basic policy including wind coverage unless rejected

 3  under subparagraph 8. The corporation shall determine the type

 4  of policy to be provided on the basis of objective standards

 5  specified in the underwriting manual and based on generally

 6  accepted underwriting practices.

 7         (I)  If the risk accepts an offer of coverage through

 8  the market assistance plan or an offer of coverage through a

 9  mechanism established by the corporation before a policy is

10  issued to the risk by the corporation or during the first 30

11  days of coverage by the corporation, and the producing agent

12  who submitted the application to the plan or to the

13  corporation is not currently appointed by the insurer, the

14  insurer shall:

15         (A)  Pay to the producing agent of record of the

16  policy, for the first year, an amount that is the greater of

17  the insurer's usual and customary commission for the type of

18  policy written or a fee equal to the usual and customary

19  commission of the corporation; or

20         (B)  Offer to allow the producing agent of record of

21  the policy to continue servicing the policy for a period of

22  not less than 1 year and offer to pay the agent the greater of

23  the insurer's or the corporation's usual and customary

24  commission for the type of policy written.

25  

26  If the producing agent is unwilling or unable to accept

27  appointment, the new insurer shall pay the agent in accordance

28  with sub-sub-sub-subparagraph (A).

29         (II)  When the corporation enters into a contractual

30  agreement for a take-out plan, the producing agent of record

31  


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    CS for CS for SB 1488                          First Engrossed



 1  of the corporation policy is entitled to retain any unearned

 2  commission on the policy, and the insurer shall:

 3         (A)  Pay to the producing agent of record of the

 4  corporation policy, for the first year, an amount that is the

 5  greater of the insurer's usual and customary commission for

 6  the type of policy written or a fee equal to the usual and

 7  customary commission of the corporation; or

 8         (B)  Offer to allow the producing agent of record of

 9  the corporation policy to continue servicing the policy for a

10  period of not less than 1 year and offer to pay the agent the

11  greater of the insurer's or the corporation's usual and

12  customary commission for the type of policy written.

13  

14  If the producing agent is unwilling or unable to accept

15  appointment, the new insurer shall pay the agent in accordance

16  with sub-sub-sub-subparagraph (A).

17         b.  With respect to commercial lines residential risks,

18  if the risk is offered coverage under a policy including wind

19  coverage from an authorized insurer at its approved rate, the

20  risk is not eligible for any policy issued by the corporation.

21  If the risk is not able to obtain any such offer, the risk is

22  eligible for a policy including wind coverage issued by the

23  corporation.

24         (I)  If the risk accepts an offer of coverage through

25  the market assistance plan or an offer of coverage through a

26  mechanism established by the corporation before a policy is

27  issued to the risk by the corporation or during the first 30

28  days of coverage by the corporation, and the producing agent

29  who submitted the application to the plan or the corporation

30  is not currently appointed by the insurer, the insurer shall:

31  


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    CS for CS for SB 1488                          First Engrossed



 1         (A)  Pay to the producing agent of record of the

 2  policy, for the first year, an amount that is the greater of

 3  the insurer's usual and customary commission for the type of

 4  policy written or a fee equal to the usual and customary

 5  commission of the corporation; or

 6         (B)  Offer to allow the producing agent of record of

 7  the policy to continue servicing the policy for a period of

 8  not less than 1 year and offer to pay the agent the greater of

 9  the insurer's or the corporation's usual and customary

10  commission for the type of policy written.

11  

12  If the producing agent is unwilling or unable to accept

13  appointment, the new insurer shall pay the agent in accordance

14  with sub-sub-sub-subparagraph (A).

15         (II)  When the corporation enters into a contractual

16  agreement for a take-out plan, the producing agent of record

17  of the corporation policy is entitled to retain any unearned

18  commission on the policy, and the insurer shall:

19         (A)  Pay to the producing agent of record of the

20  corporation policy, for the first year, an amount that is the

21  greater of the insurer's usual and customary commission for

22  the type of policy written or a fee equal to the usual and

23  customary commission of the corporation; or

24         (B)  Offer to allow the producing agent of record of

25  the corporation policy to continue servicing the policy for a

26  period of not less than 1 year and offer to pay the agent the

27  greater of the insurer's or the corporation's usual and

28  customary commission for the type of policy written.

29  

30  

31  


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    CS for CS for SB 1488                          First Engrossed



 1  If the producing agent is unwilling or unable to accept

 2  appointment, the new insurer shall pay the agent in accordance

 3  with sub-sub-sub-subparagraph (A).

 4         6.  Must include rules for classifications of risks and

 5  rates therefor.

 6         7.  Must provide that if premium and investment income

 7  for an account attributable to a particular calendar year are

 8  in excess of projected losses and expenses for the account

 9  attributable to that year, such excess shall be held in

10  surplus in the account. Such surplus shall be available to

11  defray deficits in that account as to future years and shall

12  be used for that purpose prior to assessing assessable

13  insurers and assessable insureds as to any calendar year.

14         8.  Must provide objective criteria and procedures to

15  be uniformly applied for all applicants in determining whether

16  an individual risk is so hazardous as to be uninsurable. In

17  making this determination and in establishing the criteria and

18  procedures, the following shall be considered:

19         a.  Whether the likelihood of a loss for the individual

20  risk is substantially higher than for other risks of the same

21  class; and

22         b.  Whether the uncertainty associated with the

23  individual risk is such that an appropriate premium cannot be

24  determined.

25  

26  The acceptance or rejection of a risk by the corporation shall

27  be construed as the private placement of insurance, and the

28  provisions of chapter 120 shall not apply.

29         9.  Must provide that the corporation shall make its

30  best efforts to procure catastrophe reinsurance at reasonable

31  


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    CS for CS for SB 1488                          First Engrossed



 1  rates, to cover its projected 100-year probable maximum loss

 2  as determined by the board of governors.

 3         10.  Must provide that in the event of regular deficit

 4  assessments under sub-subparagraph (b)3.a. or sub-subparagraph

 5  (b)3.b., in the personal lines account, the commercial lines

 6  residential account, or the high-risk account, the corporation

 7  shall levy upon corporation policyholders in its next rate

 8  filing, or by a separate rate filing solely for this purpose,

 9  a market equalization surcharge arising from a regular

10  assessment in such account in a percentage equal to the total

11  amount of such regular assessments divided by the aggregate

12  statewide direct written premium for subject lines of business

13  for the prior calendar year. Market equalization surcharges

14  under this subparagraph are not considered premium and are not

15  subject to commissions, fees, or premium taxes; however,

16  failure to pay a market equalization surcharge shall be

17  treated as failure to pay premium.

18         11.  The policies issued by the corporation must

19  provide that, if the corporation or the market assistance plan

20  obtains an offer from an authorized insurer to cover the risk

21  at its approved rates, the risk is no longer eligible for

22  renewal through the corporation.

23         12.  Corporation policies and applications must include

24  a notice that the corporation policy could, under this

25  section, be replaced with a policy issued by an authorized

26  insurer that does not provide coverage identical to the

27  coverage provided by the corporation. The notice shall also

28  specify that acceptance of corporation coverage creates a

29  conclusive presumption that the applicant or policyholder is

30  aware of this potential.

31  


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    CS for CS for SB 1488                          First Engrossed



 1         13.  May establish, subject to approval by the office,

 2  different eligibility requirements and operational procedures

 3  for any line or type of coverage for any specified county or

 4  area if the board determines that such changes to the

 5  eligibility requirements and operational procedures are

 6  justified due to the voluntary market being sufficiently

 7  stable and competitive in such area or for such line or type

 8  of coverage and that consumers who, in good faith, are unable

 9  to obtain insurance through the voluntary market through

10  ordinary methods would continue to have access to coverage

11  from the corporation. When coverage is sought in connection

12  with a real property transfer, such requirements and

13  procedures shall not provide for an effective date of coverage

14  later than the date of the closing of the transfer as

15  established by the transferor, the transferee, and, if

16  applicable, the lender.

17         14.  Must provide that, with respect to the high-risk

18  account, any assessable insurer with a surplus as to

19  policyholders of $25 million or less writing 25 percent or

20  more of its total countrywide property insurance premiums in

21  this state may petition the office, within the first 90 days

22  of each calendar year, to qualify as a limited apportionment

23  company. In no event shall a limited apportionment company be

24  required to participate in the portion of any assessment,

25  within the high-risk account, pursuant to sub-subparagraph

26  (b)3.a. or sub-subparagraph (b)3.b. in the aggregate which

27  exceeds $50 million after payment of available high-risk

28  account funds in any calendar year. However, a limited

29  apportionment company shall collect from its policyholders any

30  emergency assessment imposed under sub-subparagraph (b)3.d.

31  The plan shall provide that, if the office determines that any


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    CS for CS for SB 1488                          First Engrossed



 1  regular assessment will result in an impairment of the surplus

 2  of a limited apportionment company, the office may direct that

 3  all or part of such assessment be deferred as provided in

 4  subparagraph (g)4. However, there shall be no limitation or

 5  deferment of an emergency assessment to be collected from

 6  policyholders under sub-subparagraph (b)3.d.

 7         15.  Must provide that the corporation appoint as its

 8  licensed agents only those agents who also hold an appointment

 9  as defined in s. 626.015(3) with an insurer who at the time of

10  the agent's initial appointment by the corporation is

11  authorized to write and is actually writing personal lines

12  residential property coverage, commercial residential property

13  coverage, or commercial nonresidential property coverage

14  within the state.

15         (q)  The corporation shall not require the securing of

16  flood insurance as a condition of coverage if the property

17  risk of the insured or applicant is located in a Special Flood

18  Hazard Area as defined by the Federal Emergency Management

19  Agency for the National Flood Insurance Program. executes a

20  form approved by the office affirming that Flood insurance is

21  not provided by the corporation and that if flood insurance is

22  not secured by the applicant or insured in addition to

23  coverage by the corporation, the risk will not be covered for

24  flood damage. A corporation policyholder that does electing

25  not to secure flood insurance and makes a claim executing a

26  form as provided herein making a claim for water damage

27  against the corporation shall have the burden of proving the

28  damage was not caused by flooding. Notwithstanding other

29  provisions of this subsection, the corporation may deny

30  coverage or refuse to issue or renew a policy to an applicant

31  


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    CS for CS for SB 1488                          First Engrossed



 1  or insured who refuses to purchase flood insurance as required

 2  by this subsection to execute the form described herein.

 3         Section 8.  Section 627.40951, Florida Statutes, is

 4  created to read:

 5         627.40951  Standard personal lines residential

 6  insurance policy.--

 7         (1)  The Legislature finds that many consumers who

 8  filed property loss claims as a result of the hurricanes that

 9  struck this state in 2004 were inadequately insured due to the

10  difficulty consumers encounter in trying to understand the

11  complex nature of property insurance policies. The purpose and

12  intent of this section is to have property and casualty

13  insurers offer standard personal lines residential property

14  insurance policies and standard checklists of policy contents,

15  in accordance with s. 627.4143, to consumers and to ensure

16  that these policies and checklists are written in a simple

17  format with easily readable language that will enable most

18  consumers to understand the principal benefits and coverage

19  provided in the policy; the principal exclusions and

20  limitations or reductions contained in the policy, including,

21  but not limited to, deductibles, coinsurance, and any other

22  limitations or reductions; and any additional coverage

23  provided through any rider or endorsement that accompanies the

24  policy and renewal or cancellation provisions.

25         (2)  The Chief Financial Officer shall appoint an

26  advisory committee composed of two representatives of insurers

27  currently selling personal lines residential property

28  insurance coverage, two representatives of property and

29  casualty agents, two representatives of consumers, two

30  representatives of the Commissioner of Insurance Regulation,

31  and the Insurance Consumer Advocate or her or his designee.


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    CS for CS for SB 1488                          First Engrossed



 1  The Chief Financial Officer or her or his designee shall serve

 2  as chair of the committee. The committee shall develop policy

 3  language for coverage that represents general industry

 4  standards in the market for comprehensive coverage under

 5  personal lines residential insurance policies and shall

 6  develop a checklist to be used with each type of personal

 7  lines residential property insurance policy. The committee

 8  shall review policies and related forms written by Insurance

 9  Services Office, Inc. The committee shall file a report

10  containing its recommendations to the President of the Senate

11  and the Speaker of the House of Representatives by January 15,

12  2006. No insurer shall be required to offer the standard

13  policy unless required by further act of the Legislature.

14         Section 9.  Subsection (1) of section 627.411, Florida

15  Statutes, is amended to read:

16         627.411  Grounds for disapproval.--

17         (1)  The office shall disapprove any form filed under

18  s. 627.410, or withdraw any previous approval thereof, only if

19  the form:

20         (a)  Is in any respect in violation of, or does not

21  comply with, this code.

22         (b)  Contains or incorporates by reference, where such

23  incorporation is otherwise permissible, any inconsistent,

24  ambiguous, or misleading clauses, or exceptions and conditions

25  which deceptively affect the risk purported to be assumed in

26  the general coverage of the contract.

27         (c)  Has any title, heading, or other indication of its

28  provisions which is misleading.

29         (d)  Is printed or otherwise reproduced in such manner

30  as to render any material provision of the form substantially

31  illegible.


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    CS for CS for SB 1488                          First Engrossed



 1         (e)  Is for residential property insurance and contains

 2  provisions that are unfair or inequitable or encourage

 3  misrepresentation.

 4         (f)(e)  Is for health insurance, and:

 5         1.  Provides benefits that are unreasonable in relation

 6  to the premium charged.;

 7         2.  Contains provisions that are unfair or inequitable

 8  or contrary to the public policy of this state or that

 9  encourage misrepresentation.;

10         3.  Contains provisions that apply rating practices

11  that result in unfair discrimination pursuant to s.

12  626.9541(1)(g)2.

13         (g)(f)  Excludes coverage for human immunodeficiency

14  virus infection or acquired immune deficiency syndrome or

15  contains limitations in the benefits payable, or in the terms

16  or conditions of such contract, for human immunodeficiency

17  virus infection or acquired immune deficiency syndrome which

18  are different than those which apply to any other sickness or

19  medical condition.

20         Section 10.  Paragraphs (d) and (e) are added to

21  subsection (2) of section 627.4133, Florida Statutes, to read:

22         627.4133  Notice of cancellation, nonrenewal, or

23  renewal premium.--

24         (2)  With respect to any personal lines or commercial

25  residential property insurance policy, including, but not

26  limited to, any homeowner's, mobile home owner's, farmowner's,

27  condominium association, condominium unit owner's, apartment

28  building, or other policy covering a residential structure or

29  its contents:

30         (d)1.  Upon a declaration of an emergency pursuant to

31  s. 252.36 and the filing of an order by the Commissioner of


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    CS for CS for SB 1488                          First Engrossed



 1  Insurance Regulation, an insurer may not cancel or nonrenew a

 2  personal residential or commercial residential property

 3  insurance policy covering a dwelling or residential property

 4  located in this state which has been damaged as a result of a

 5  hurricane or wind loss that is the subject of the declaration

 6  of emergency for a period of 90 days after the dwelling or

 7  residential property has been repaired. A structure is deemed

 8  to be repaired when substantially completed and restored to

 9  the extent that it is insurable by another authorized insurer

10  that is writing policies in this state.

11         2.  However, an insurer or agent may cancel or nonrenew

12  such a policy prior to the repair of the dwelling or

13  residential property:

14         a.  Upon 10 days' notice for nonpayment of premium; or

15         b.  Upon 45 days' notice:

16         (I)  For a material misstatement or fraud related to

17  the claim;

18         (II)  If the insurer determines that the insured has

19  unreasonably caused a delay in the repair of the dwelling; or

20         (III)  If the insurer has paid policy limits.

21         3.  If the insurer elects to nonrenew a policy covering

22  a property that has been damaged, the insurer shall provide at

23  least 90 days' notice to the insured that the insurer intends

24  to nonrenew the policy 90 days after the dwelling or

25  residential property has been repaired. Nothing in this

26  paragraph shall prevent the insurer from canceling or

27  nonrenewing the policy 90 days after the repairs are complete

28  for the same reasons the insurer would otherwise have canceled

29  or nonrenewed the policy but for the limitations of

30  subparagraph 1. The Financial Services Commission may adopt

31  


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 1  rules, and the Commissioner of Insurance Regulation may issue

 2  orders, necessary to implement this paragraph.

 3         4.  This paragraph shall also apply to personal

 4  residential and commercial residential policies covering

 5  property that was damaged as the result of Tropical Storm

 6  Bonnie, Hurricane Charley, Hurricane Frances, Hurricane Ivan,

 7  or Hurricane Jeanne.

 8         (e)  If any cancellation or nonrenewal of a policy

 9  subject to this subsection is to take effect during the

10  duration of a hurricane as defined in s. 627.4025(2)(c), the

11  effective date of such cancellation or nonrenewal is extended

12  until the end of the duration of such hurricane. The insurer

13  may collect premium at the prior rates or the rates then in

14  effect for the period of time for which coverage is extended.

15  This paragraph does not apply to any property with respect to

16  which replacement coverage has been obtained and which is in

17  effect for a claim occurring during the duration of the

18  hurricane.

19         Section 11.  Effective January 1, 2006, section

20  627.4143, Florida Statutes, is amended to read:

21         627.4143  Outline of coverage.--

22         (1)  No private passenger automobile or basic

23  homeowner's policy shall be delivered or issued for delivery

24  in this state unless an appropriate outline of coverage has

25  been delivered prior to issuance of the policy or accompanies

26  the policy when issued.

27         (2)  The outline of coverage for a private passenger

28  motor vehicle insurance policy shall contain all of the

29  following:

30         (a)  A brief description of the principal benefits and

31  coverage provided in the policy, broken down by each class or


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 1  type of coverage provided under the policy for which a premium

 2  is charged, and itemization of the applicable premium.

 3         (b)  A summary statement of the principal exclusions

 4  and limitations or reductions contained in the policy by class

 5  or type, including, but not limited to, deductibles,

 6  coinsurance, and any other limitations or reductions.

 7         (c)  A summary statement of any renewal or cancellation

 8  provisions.

 9         (d)  A description of the credit or surcharge plan that

10  is being applied.  The description may display numerical or

11  alphabetical codes on the declarations page or premium notice

12  to enable the insured to determine the reason or reasons why

13  her or his policy is being surcharged or is receiving a

14  credit.

15         (e)  A list of any additional coverage provided through

16  any rider or endorsement which accompanies the policy.  The

17  list shall contain a descriptive reference to each additional

18  coverage, rather than solely a reference to a form or code

19  number.

20         (f)  For a private passenger motor vehicle insurance

21  policy, The extent of coverage provided to the insured in the

22  event of collision damage to a rental vehicle rented by the

23  insured. The proof-of-insurance card required by s. 316.646

24  must also specify whether rental car coverage is provided, and

25  may refer to the outline of coverage as to the details or

26  extent of coverage.

27         (3)  A basic homeowners', mobile homeowners', dwelling,

28  or condominium unit owners' policy may not be delivered or

29  issued for delivery in this state unless a comprehensive

30  checklist of coverage on a form adopted by the commission and

31  an appropriate outline of coverage have been delivered prior


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 1  to issuance of the policy or accompanies the policy when

 2  issued. The commission shall, by rule, adopt a form for the

 3  checklist for each type of policy to which this subsection

 4  applies. Each form shall indicate that it was adopted by the

 5  commission.

 6         (a)  The checklist must contain a list of the standard

 7  provisions and elements that may typically be included in

 8  these policies, whether or not they are included in the

 9  particular policy being issued, in a format that allows the

10  insurer to place a check mark next to the provisions elements

11  that are included so that the consumer can see both what is

12  included and what is not included in the policy. As an

13  alternative to checking the boxes on the checklist, an insurer

14  may delete the check boxes from the form and replace them with

15  text indicating whether the provision's elements are included

16  or not. Limits of liability shall be listed for each item. The

17  checklist must include, but is not limited to, the following:

18         1.  Property coverage for the principal premises shown

19  in the declarations.

20         2.  Property coverage for other structures on the

21  residence premises.

22         3.  Whether the principal premises and other structures

23  are insured against the following perils:

24         a.  Fire.

25         b.  Lightning.

26         c.  Explosion.

27         d.  Hurricane loss.

28         e.  Nonhurricane wind loss.

29         f.  Collapse.

30         g.  Mold.

31         h.  Sinkhole loss.


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 1         i.  Vandalism.

 2         4.  Personal property coverage.

 3         5.  Whether personal property is insured against the

 4  following perils:

 5         a.  Fire.

 6         b.  Lightning.

 7         c.  Hurricane loss.

 8         d.  Nonhurricane wind loss.

 9         e.  Collapse.

10         f.  Mold.

11         g.  Sinkhole loss.

12         h.  Theft.

13         6.  The following additional coverages:

14         a.  Debris removal.

15         b.  Loss assessment.

16         c.  Additional living expenses.

17         7.  Personal liability coverage.

18         8.  Medical payments coverage.

19         9.  Discounts applied to the premium.

20         10.  Deductibles for loss due to hurricane and loss to

21  other perils.

22         11.  Building ordinance or law coverage.

23         12.  Replacement cost coverage.

24         13.  Actual cash value coverage.

25         (b)  The forms shall allow insurers to place other

26  coverages on the checklists which may or may not be included

27  in the insurer's policies.

28         (c)  The outline of coverage must contain:

29         1.  A brief description of the principal benefits and

30  coverage provided in the policy, broken down by each class or

31  


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 1  type of coverage provided under the policy for which a premium

 2  is charged, and itemization of the applicable premium.

 3         2.  A summary statement of the principal exclusions and

 4  limitations or reductions contained in the policy by class or

 5  type, including, but not limited to, deductibles, coinsurance,

 6  and any other limitations or reductions.

 7         3.  A summary statement of any renewal or cancellation

 8  provisions.

 9         4.  A description of the credit or surcharge plan that

10  is being applied. The description may display numerical or

11  alphabetical codes on the declarations page or premium notice

12  to enable the insured to determine the reason or reasons why

13  her or his policy is being surcharged or is receiving a

14  credit.

15         5.  A summary of any additional coverage provided

16  through any rider or endorsement that accompanies the policy.

17         (4)(3)  The outline of coverage for a private passenger

18  motor vehicle policy is required only on the initial policy

19  issued by an insurer. The outline of coverage and the

20  checklist for a basic homeowners', mobile homeowners',

21  dwelling, or condominium unit owners' policy is required on

22  the initial policy and each renewal thereof issued by an

23  insurer.

24         (5)(4)  An insurer must insert the following language

25  on the outline of coverage:

26  

27  "The following outline of coverage  or checklist  is for

28  informational purposes only. Florida law prohibits this

29  outline  or checklist  from changing any of the provisions of

30  the insurance contract which is the subject of this outline.

31  Any endorsement regarding changes in types of coverage,


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 1  exclusions, limitations, reductions, deductibles, coinsurance,

 2  renewal provisions, cancellation provisions, surcharges, or

 3  credits will be sent separately."

 4  

 5         (6)(5)  Neither this section nor the outline of

 6  coverage or checklist mandated by this section alters or

 7  modifies the terms of the insurance contract, creates a cause

 8  of action, or is admissible in any civil action.

 9         Section 12.  Effective October 1, 2005, subsections

10  (3), (4), (8), and (9) of section 627.701, Florida Statutes,

11  as amended by section 4 of chapter 2004-480, Laws of Florida,

12  are amended to read:

13         627.701  Liability of insureds; coinsurance;

14  deductibles.--

15         (3)(a)  A policy of residential property insurance

16  shall include a deductible amount applicable to hurricane or

17  wind losses no lower than $500 and no higher than 2 percent of

18  the policy dwelling limits with respect to personal lines

19  residential risks, and no higher than 3 percent of the policy

20  limits with respect to commercial lines residential risks;

21  however, if a risk was covered on August 24, 1992, under a

22  policy having a higher deductible than the deductibles allowed

23  by this paragraph, a policy covering such risk may include a

24  deductible no higher than the deductible in effect on August

25  24, 1992. Notwithstanding the other provisions of this

26  paragraph, a personal lines residential policy covering a risk

27  valued at $50,000 or less may include a deductible amount

28  attributable to hurricane or wind losses no lower than $250,

29  and a personal lines residential policy covering a risk valued

30  at $100,000 or more may include a deductible amount

31  attributable to hurricane or wind losses no higher than 10 5


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    CS for CS for SB 1488                          First Engrossed



 1  percent of the policy limits unless subject to a higher

 2  deductible on August 24, 1992; however, no maximum deductible

 3  is required with respect to a personal lines residential

 4  policy covering a risk valued at more than $500,000.  An

 5  insurer may require a higher deductible, provided such

 6  deductible is the same as or similar to a deductible program

 7  lawfully in effect on June 14, 1995.  In addition to the

 8  deductible amounts authorized by this paragraph, an insurer

 9  may also offer policies with a copayment provision under

10  which, after exhaustion of the deductible, the policyholder is

11  responsible for 10 percent of the next $10,000 of insured

12  hurricane or wind losses.

13         (b)1.  Except as otherwise provided in this paragraph,

14  prior to issuing a personal lines residential property

15  insurance policy on or after January 1, 2006 April 1, 1996, or

16  prior to the first renewal of a residential property insurance

17  policy on or after January 1, 2006 April 1, 1996, the insurer

18  must offer alternative deductible amounts applicable to

19  hurricane or wind losses equal to $500, and 2 percent, 5

20  percent, and 10 percent of the policy dwelling limits, unless

21  the specific percentage 2 percent deductible is less than

22  $500. The written notice of the offer shall specify the

23  hurricane or wind deductible to be applied in the event that

24  the applicant or policyholder fails to affirmatively choose a

25  hurricane deductible. The insurer must provide such

26  policyholder with notice of the availability of the deductible

27  amounts specified in this paragraph in a form approved by the

28  office in conjunction with each renewal of the policy. The

29  failure to provide such notice constitutes a violation of this

30  code but does not affect the coverage provided under the

31  policy.


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    CS for CS for SB 1488                          First Engrossed



 1         2.  This paragraph does not apply with respect to a

 2  deductible program lawfully in effect on June 14, 1995, or to

 3  any similar deductible program, if the deductible program

 4  requires a minimum deductible amount of no less than 2 percent

 5  of the policy limits.

 6         3.  With respect to a policy covering a risk with

 7  dwelling limits of at least $100,000, but less than $250,000,

 8  the insurer may, in lieu of offering a policy with a $500

 9  hurricane or wind deductible as required by subparagraph 1.,

10  offer a policy that the insurer guarantees it will not

11  nonrenew for reasons of reducing hurricane loss for one

12  renewal period and that contains up to a 2 percent hurricane

13  or wind deductible as required by subparagraph 1.

14         4.  With respect to a policy covering a risk with

15  dwelling limits of $250,000 or more, the insurer need not

16  offer the $500 hurricane or wind deductible as required by

17  subparagraph 1., but must, except as otherwise provided in

18  this subsection, offer the other 2 percent hurricane

19  deductibles or wind deductible as required by subparagraph 1.

20         (c)  In order to provide for the transition from wind

21  deductibles to hurricane deductibles as required by this

22  subsection, an insurer is required to provide wind deductibles

23  meeting the requirements of this subsection until the

24  effective date of the insurer's first rate filing made after

25  January 1, 1997, and is thereafter required to provide

26  hurricane deductibles meeting the requirements of this

27  subsection.

28         (4)(a)  Any policy that contains a separate hurricane

29  deductible must on its face include in boldfaced type no

30  smaller than 18 points the following statement: "THIS POLICY

31  CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY


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    CS for CS for SB 1488                          First Engrossed



 1  RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU." A policy

 2  containing a coinsurance provision applicable to hurricane

 3  losses must on its face include in boldfaced type no smaller

 4  than 18 points the following statement: "THIS POLICY CONTAINS

 5  A CO-PAY PROVISION THAT MAY RESULT IN HIGH OUT-OF-POCKET

 6  EXPENSES TO YOU."

 7         (b)  Beginning October 1, 2005, for any personal lines

 8  residential property insurance policy containing a separate

 9  hurricane deductible, the insurer shall compute and

10  prominently display the actual dollar value of the hurricane

11  deductible on the declarations page of the policy at issuance

12  and, for renewal, on the renewal declarations page of the

13  policy or on the premium renewal notice.

14         (c)  Beginning October 1, 2005, for any personal lines

15  residential property insurance policy containing an inflation

16  guard rider, the insurer shall compute and prominently display

17  the actual dollar value of the hurricane deductible on the

18  declarations page of the policy at issuance and, for renewal,

19  on the renewal declarations page of the policy or on the

20  premium renewal notice. In addition, beginning October 1,

21  2005, for any personal lines residential property insurance

22  policy containing an inflation guard rider, the insurer shall

23  notify the policyholder of the possibility that the hurricane

24  deductible may be higher than indicated when loss occurs due

25  to application of the inflation guard rider. Such notification

26  shall be made on the declarations page of the policy at

27  issuance and, for renewal, on the renewal declarations page of

28  the policy or on the premium renewal notice.

29         (8)(a)  The Legislature finds that property insurance

30  coverage has become unaffordable for a significant number of

31  mobile home owners, as evidenced by reports that up to 100,000


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    CS for CS for SB 1488                          First Engrossed



 1  mobile home owners have terminated their insurance coverage

 2  because they cannot afford to pay approved rates charged in

 3  the voluntary or residual markets. The Legislature further

 4  finds that additional flexibility in available coverages will

 5  enable mobile home owners to obtain affordable insurance and

 6  increase capacity.

 7         (b)  Notwithstanding the provisions of subsection (3),

 8  with respect to mobile home policies:

 9         1.  The deductible for hurricane coverage may not

10  exceed 10 percent of the property value if the property is not

11  subject to any liens and may not exceed 5 percent of the

12  property value if the property is subject to any liens.

13         2.  The insurer need not make the offers required by

14  paragraph (3)(b).

15         (8)(9)  Notwithstanding the other provisions of this

16  section or of other law, but only as to hurricane coverage as

17  defined in s. 627.4025 for commercial lines residential

18  coverages, an insurer may offer a deductible in an amount not

19  exceeding 5 percent of the insured value with respect to a

20  condominium association or cooperative association policy, or

21  in an amount not exceeding 10 percent of the insured value

22  with respect to any other commercial lines residential policy,

23  if, at the time of such offer and at each renewal, the insurer

24  also offers to the policyholder a deductible in the amount of

25  3 percent of the insured value. Nothing in this subsection

26  prohibits any deductible otherwise authorized by this section.

27  All forms by which the offers authorized in this subsection

28  are made or required to be made shall be on forms that are

29  adopted or approved by the commission or office.

30  

31  


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 1         Section 13.  Subsection (5) of section 627.701, Florida

 2  Statutes, as amended by section 4 of chapter 2004-480, Laws of

 3  Florida, is amended to read:

 4         627.701  Liability of Insureds; coinsurance;

 5  deductibles.--

 6         (5)(a)  The hurricane deductible of any personal lines

 7  residential property insurance policy issued or renewed on or

 8  after May 1, 2005, shall be applied as follows:

 9         1.(a)  The hurricane deductible shall apply on an

10  annual basis to all covered hurricane losses that occur during

11  the calendar year for losses that are covered under one or

12  more policies issued by the same insurer or an insurer in the

13  same insurer group.

14         2.(b)  If a hurricane deductible applies separately to

15  each of one or more structures insured under a single policy,

16  the requirements of this paragraph subsection apply with

17  respect to the deductible for each structure.

18         3.(c)  If there was a hurricane loss for a prior

19  hurricane or hurricanes during the calendar year, the insurer

20  may apply a deductible to a subsequent hurricane which that is

21  the greater of the remaining amount of the hurricane

22  deductible or the amount of the deductible that applies to

23  perils other than a hurricane. Insurers may require

24  policyholders to report hurricane losses that are below the

25  hurricane deductible or to maintain receipts or other records

26  of such hurricane losses in order to apply such losses to

27  subsequent hurricane claims.

28         4.(d)  If there are hurricane losses in a calendar year

29  on more than one policy issued by the same insurer or an

30  insurer in the same insurer group, the hurricane deductible

31  shall be the highest amount stated in any one of the policies.


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 1  If a policyholder who had a hurricane loss under the prior

 2  policy is provided or offered a lower hurricane deductible

 3  under the new or renewal policy, the insurer must notify the

 4  policyholder, in writing, at the time the lower hurricane

 5  deductible is provided or offered, that the lower hurricane

 6  deductible will not apply until January 1 of the following

 7  calendar year.

 8         (b)  For commercial residential property insurance

 9  policies issued or renewed on or after January 1, 2006, the

10  insurer must offer the policyholder the following alternative

11  hurricane deductibles:

12         1.  A hurricane deductible that applies on an annual

13  basis as provided in paragraph (a); and

14         2.  A hurricane deductible that applies to each

15  hurricane.

16         Section 14.  Effective October 1, 2005, section

17  627.7011, Florida Statutes, is amended to read:

18         627.7011  Homeowners' policies; offer of replacement

19  cost coverage and law and ordinance coverage.--

20         (1)  Prior to issuing a homeowner's insurance policy on

21  or after October 1, 2005 June 1, 1994, or prior to the first

22  renewal of a homeowner's insurance policy on or after October

23  1, 2005 June 1, 1994, the insurer must offer each of the

24  following:

25         (a)  A policy or endorsement providing that any loss

26  which is repaired or replaced will be adjusted on the basis of

27  replacement costs not exceeding policy limits as to the

28  dwelling, rather than actual cash value, but not including

29  costs necessary to meet applicable laws and ordinances

30  regulating the construction, use, or repair of any property or

31  


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 1  requiring the tearing down of any property, including the

 2  costs of removing debris.

 3         (b)  A policy or endorsement providing that, subject to

 4  other policy provisions, any loss which is repaired or

 5  replaced at any location will be adjusted on the basis of

 6  replacement costs not exceeding policy limits as to the

 7  dwelling, rather than actual cash value, and also including

 8  costs necessary to meet applicable laws and ordinances

 9  regulating the construction, use, or repair of any property or

10  requiring the tearing down of any property, including the

11  costs of removing debris; however, such additional costs

12  necessary to meet applicable laws and ordinances may be

13  limited to either 25 percent or 50 percent of the dwelling

14  limit, as selected by the policyholder, and such coverage

15  shall apply only to repairs of the damaged portion of the

16  structure unless the total damage to the structure exceeds 50

17  percent of the replacement cost of the structure.

18  

19  An insurer is not required to make the offers required by this

20  subsection with respect to the issuance or renewal of a

21  homeowner's policy that contains the provisions specified in

22  paragraph (b) for law and ordinance coverage limited to 25

23  percent of the dwelling limit, except that the insurer must

24  offer the law and ordinance coverage limited to 50 percent of

25  the dwelling limit. This subsection does not prohibit the

26  offer of a guaranteed replacement cost policy.

27         (2)  Unless the insurer obtains the policyholder's

28  written refusal of the policies or endorsements specified in

29  subsection (1), any policy covering the dwelling is deemed to

30  include the coverage specified in paragraph (1)(b). The

31  rejection or selection of alternative coverage shall be made


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 1  on a form approved by the office. The form shall fully advise

 2  the applicant of the nature of the coverage being rejected. If

 3  this form is signed by a named insured, it will be

 4  conclusively presumed that there was an informed, knowing

 5  rejection of the coverage or election of the alternative

 6  coverage on behalf of all insureds. Unless the policyholder

 7  requests in writing the coverage specified in this section, it

 8  need not be provided in or supplemental to any other policy

 9  that renews, insures, extends, changes, supersedes, or

10  replaces an existing policy when the policyholder has rejected

11  the coverage specified in this section or has selected

12  alternative coverage. The insurer must provide such

13  policyholder with notice of the availability of such coverage

14  in a form approved by the office at least once every 3 years.

15  The failure to provide such notice constitutes a violation of

16  this code, but does not affect the coverage provided under the

17  policy.

18         (3)  In the event of a loss for which a dwelling or

19  personal property is insured on the basis of replacement

20  costs, the insurer shall pay the replacement cost without

21  reservation or holdback of any depreciation in value, whether

22  or not the insured replaces or repairs the dwelling or

23  property.

24         (4)  Any homeowner's insurance policy issued or renewed

25  on or after October 1, 2005, must include in bold type no

26  smaller than 18 points the following statement:

27         "LAW AND ORDINANCE COVERAGE IS AN IMPORTANT

28         COVERAGE THAT YOU MAY WISH TO PURCHASE. YOU MAY

29         ALSO NEED TO CONSIDER THE PURCHASE OF FLOOD

30         INSURANCE FROM THE NATIONAL FLOOD INSURANCE

31         PROGRAM. WITHOUT THIS COVERAGE, YOU MAY HAVE


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 1         UNCOVERED LOSSES. PLEASE DISCUSS THESE

 2         COVERAGES WITH YOUR INSURANCE AGENT."

 3         The intent of this subsection is to encourage

 4  policyholders to purchase sufficient coverage to protect them

 5  in case events excluded from the standard homeowners policy,

 6  such as law and ordinance enforcement and flood, combine with

 7  covered events to produce damage or loss to the insured

 8  property. The intent is also to encourage policyholders to

 9  discuss these issues with their insurance agent.

10         (5)(3)  Nothing in this section shall be construed to

11  apply to policies not considered to be "homeowners' policies,"

12  as that term is commonly understood in the insurance industry.

13  This section specifically does not apply to mobile home

14  policies. Nothing in this section shall be construed as

15  limiting the ability of any insurer to reject or nonrenew any

16  insured or applicant on the grounds that the structure does

17  not meet underwriting criteria applicable to replacement cost

18  or law and ordinance policies or for other lawful reasons.

19         Section 15.  Effective July 1, 2005, subsections (1)

20  and (7) of section 627.7015, Florida Statutes, are amended,

21  and subsection (2) of that section is reenacted, to read:

22         627.7015  Alternative procedure for resolution of

23  disputed property insurance claims.--

24         (1)  PURPOSE AND SCOPE.--This section sets forth a

25  nonadversarial alternative dispute resolution procedure for a

26  mediated claim resolution conference prompted by the need for

27  effective, fair, and timely handling of property insurance

28  claims. There is a particular need for an informal,

29  nonthreatening forum for helping parties who elect this

30  procedure to resolve their claims disputes because most

31  homeowner's and commercial residential insurance policies


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 1  obligate insureds to participate in a potentially expensive

 2  and time-consuming adversarial appraisal process prior to

 3  litigation. The procedure set forth in this section is

 4  designed to bring the parties together for a mediated claims

 5  settlement conference without any of the trappings or

 6  drawbacks of an adversarial process. Before resorting to these

 7  procedures, insureds and insurers are encouraged to resolve

 8  claims as quickly and fairly as possible. This section is

 9  available with respect to claims under personal lines and

10  commercial residential policies for all claimants and insurers

11  prior to commencing the appraisal process, or commencing

12  litigation. If requested by the insured, participation by

13  legal counsel shall be permitted. Mediation under this section

14  is also available to litigants referred to the department by a

15  county court or circuit court. This section does not apply to

16  commercial coverages, to private passenger motor vehicle

17  insurance coverages, or to disputes relating to liability

18  coverages in policies of property insurance.

19         (2)  At the time a first-party claim within the scope

20  of this section is filed, the insurer shall notify all

21  first-party claimants of their right to participate in the

22  mediation program under this section. The department shall

23  prepare a consumer information pamphlet for distribution to

24  persons participating in mediation under this section.

25         (7)  If the insurer fails to comply with subsection (2)

26  by failing to notify a first-party claimant of its right to

27  participate in the mediation program under this section or if

28  the insurer requests the mediation, and the mediation results

29  are rejected by either party, the insured shall not be

30  required to submit to or participate in any contractual loss

31  appraisal process of the property loss damage as a


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    CS for CS for SB 1488                          First Engrossed



 1  precondition to legal action for breach of contract against

 2  the insurer for its failure to pay the policyholder's claims

 3  covered by the policy.

 4         Section 16.  Subsection (1) of section 627.702, Florida

 5  Statutes, is amended to read:

 6         627.702  Valued policy law.--

 7         (1)(a)  In the event of the total loss of any building,

 8  structure, mobile home as defined in s. 320.01(2), or

 9  manufactured building as defined in s. 553.36(12), located in

10  this state and insured by any insurer as to a covered peril,

11  in the absence of any change increasing the risk without the

12  insurer's consent and in the absence of fraudulent or criminal

13  fault on the part of the insured or one acting in her or his

14  behalf, the insurer's liability, if any, under the policy for

15  such total loss, if caused by a covered peril, shall be in the

16  amount of money for which such property was so insured as

17  specified in the policy and for which a premium has been

18  charged and paid.

19         (b)  The intent of this subsection is not to deprive an

20  insurer of any proper defense under the policy, to create new

21  or additional coverage under the policy, or to require an

22  insurer to pay for a loss caused by a peril other than the

23  covered peril. In furtherance of such legislative intent, when

24  a loss was caused in part by a covered peril and in part by a

25  noncovered peril, paragraph (a) does not apply. In such

26  circumstances, the insurer's liability under this section

27  shall be limited to the amount of the loss caused by the

28  covered peril. However, if the covered perils alone would have

29  caused the total loss, paragraph (a) shall apply. The insurer

30  is never liable for more than the amount necessary to repair,

31  rebuild, or replace the structure following the total loss,


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    CS for CS for SB 1488                          First Engrossed



 1  after considering all other benefits actually paid for the

 2  total loss.

 3         (c)  It is the intent of the Legislature that the

 4  amendment to this section shall not be applied retroactively

 5  and shall apply only to claims filed after effective date of

 6  such amendment.

 7         Section 17.  Section 627.706, Florida Statutes, is

 8  amended to read:

 9         627.706  Sinkhole insurance; definitions.--

10         (1)  Every insurer authorized to transact property

11  insurance in this state shall make available coverage for

12  insurable sinkhole losses on any structure, including contents

13  of personal property contained therein, to the extent provided

14  in the form to which the sinkhole coverage attaches.

15         (2)  As used in ss. 627.706-627.7074, and as used in

16  connection with any policy providing coverage for sinkhole

17  losses:

18         (a)  "Sinkhole" means a landform created by subsidence

19  of soil, sediment, or rock as underlying strata are dissolved

20  by ground water. A sinkhole may form by collapse into

21  subterranean voids created by dissolution of limestone or

22  dolostone or by subsidence as these strata are dissolved.

23         (b)(2)  "Sinkhole loss" means structural damage to the

24  building, including the foundation, caused by sinkhole

25  activity. Contents coverage shall apply only if there is

26  structural damage to the building caused by sinkhole activity.

27         (c)(3)  "Sinkhole activity loss" means actual physical

28  damage to the property covered arising out of or caused by

29  sudden settlement or systematic weakening collapse of the

30  earth supporting such property only when such settlement or

31  systematic weakening collapse results from movement or


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    CS for CS for SB 1488                          First Engrossed



 1  raveling of soils, sediments, or rock materials into

 2  subterranean voids created by the effect action of water on a

 3  limestone or similar rock formation.

 4         (d)  "Engineer" means a person, as defined in s.

 5  471.005, who has a bachelor degree or higher in engineering

 6  with a specialty in the geotechnical engineering field. An

 7  engineer must have geotechnical experience and expertise in

 8  the identification of sinkhole activity as well as other

 9  potential causes of damage to the structure.

10         (e)  "Professional geologist" means a person, as

11  defined by s. 492.102, who has a bachelor degree or higher in

12  geology or related earth science with expertise in the geology

13  of Florida. A professional geologist must have geological

14  experience and expertise in the identification of sinkhole

15  activity as well as other potential geologic causes of damage

16  to the structure.

17         (3)(4)  Every insurer authorized to transact property

18  insurance in this state shall make a proper filing with the

19  office for the purpose of extending the appropriate forms of

20  property insurance to include coverage for insurable sinkhole

21  losses.

22         Section 18.  Section 627.7065, Florida Statutes, is

23  created to read:

24         627.7065  Database of information relating to

25  sinkholes; the Department of Financial Services and the

26  Department of Environmental Protection.--

27         (1)  The Legislature finds that there has been a

28  dramatic increase in the number of sinkholes and insurance

29  claims for sinkhole damage in the state during the past 10

30  years. Accordingly, the Legislature recognizes the need to

31  track current and past sinkhole activity and to make the


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    CS for CS for SB 1488                          First Engrossed



 1  information available for prevention and remediation

 2  activities. The Legislature further finds that the Florida

 3  Geological Survey of the Department of Environmental

 4  Protection has created a partial database of some sinkholes

 5  identified in Florida, although the database is not reflective

 6  of all sinkholes or insurance claims for sinkhole damage. The

 7  Legislature determines that creating a complete electronic

 8  database of sinkhole activity serves an important purpose in

 9  protecting the public and in studying property claims

10  activities in the insurance industry.

11         (2)  The Department of Financial Services, including

12  the employee of the Division of Consumer Services designated

13  as the primary contact for consumers on issues relating to

14  sinkholes, and the Office of the Insurance Consumer Advocate

15  shall consult with the Florida Geological Survey and the

16  Department of Environmental Protection to implement a

17  statewide automated database of sinkholes and related activity

18  identified in the state.

19         (3)  Representatives of the Department of Financial

20  Services, with the agreement of the Department of

21  Environmental Protection, shall determine the form and content

22  of the database. The content may include standards for

23  reporting and investigating sinkholes for inclusion in the

24  database and requirements for insurers to report to the

25  departments the receipt of claims involving sinkhole loss and

26  other similar activities. The Department of Financial Services

27  may require insurers to report present and past data of

28  sinkhole claims. The database also may include information of

29  damage due to ground settling and other subsidence activity.

30         (4)  The Department of Financial Services may manage

31  the database or may contract for its management and


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    CS for CS for SB 1488                          First Engrossed



 1  maintenance. The Department of Environmental Protection shall

 2  investigate reports of sinkhole activity and include its

 3  findings and investigations in the database.

 4         (5)  The Department of Environmental Protection, in

 5  consultation with the Department of Financial Services, shall

 6  present a report of activities relating to the sinkhole

 7  database, including recommendations regarding the database and

 8  similar matters, to the Governor, the Speaker of the House of

 9  Representatives, the President of the Senate, and the Chief

10  Financial Officer by December 31, 2005. The report may

11  consider the need for the Legislature to create an entity to

12  study the increase in sinkhole activity in the state and other

13  similar issues relating to sinkhole damage, including

14  recommendations and costs for staffing the entity. The report

15  may include other information, as appropriate.

16         (6)  The Department of Financial Services, in

17  consultation with the Department of Environmental Protection,

18  may adopt rules to implement this section.

19         Section 19.  Section 627.707, Florida Statutes, is

20  amended to read:

21         627.707  Minimum Standards for investigation of

22  sinkhole claims by insurers; nonrenewals.--

23         (1)  Upon receipt of a claim for a sinkhole loss, an

24  insurer must meet the following minimum standards in

25  investigating a claim:

26         (1)(a)  Upon receipt of a claim for a sinkhole loss,

27  The insurer must make an inspection of the insured's premises

28  to determine if there has been physical damage to the

29  structure which may might be the result of sinkhole activity.

30         (b)  If, upon the investigation pursuant to paragraph

31  (a), the insurer discovers damage to a structure which is


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    CS for CS for SB 1488                          First Engrossed



 1  consistent with sinkhole activity or if the structure is

 2  located in close proximity to a structure in which sinkhole

 3  damage has been verified, then prior to denying a claim, the

 4  insurer must obtain a written certification from an individual

 5  qualified to determine the existence of sinkhole activity,

 6  stating that the cause of the claim is not sinkhole activity,

 7  and that the analysis conducted was of sufficient scope to

 8  eliminate sinkhole activity as the cause of damage within a

 9  reasonable professional probability. The written certification

10  must also specify the professional discipline and professional

11  licensure or registration under which the analysis was

12  conducted.

13         (2)  Following the insurer's initial inspection, the

14  insurer shall engage an engineer or a professional geologist

15  to conduct testing as provided in s. 627.7072 to determine the

16  cause of the loss within a reasonable professional probability

17  and issue a report as provided in s. 627.7073, if:

18         (a)  The insurer is unable to identify a valid cause of

19  the damage or discovers damage to the structure which is

20  consistent with sinkhole loss; or

21         (b)  The policyholder demands testing in accordance

22  with this section or s. 627.7072.

23         (3)  Following the initial inspection of the insured

24  premises, the insurer shall provide written notice to the

25  policyholder disclosing the following information:

26         (a)  What the insurer has determined to be the cause of

27  damage, if the insurer has made such a determination.

28         (b)  A statement of the circumstances under which the

29  insurer is required to engage an engineer or a professional

30  geologist to verify or eliminate sinkhole loss and to engage

31  


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    CS for CS for SB 1488                          First Engrossed



 1  an engineer to make recommendations regarding land and

 2  building stabilization and foundation repair.

 3         (c)  A statement regarding the right of the

 4  policyholder to request testing by an engineer or a

 5  professional geologist and the circumstances under which the

 6  policyholder may demand certain testing.

 7         (4)  If the insurer determines that there is no

 8  sinkhole loss, the insurer may deny the claim. If the insurer

 9  denies the claim, without performing testing under s.

10  627.7072, the policyholder may demand testing by the insurer

11  under s. 627.7072. The policyholder's demand for testing must

12  be communicated to the insurer in writing after the

13  policyholder's receipt of the insurer's denial of the claim.

14         (5)(a)  Subject to paragraph (b), if a sinkhole loss is

15  verified, the insurer shall pay to stabilize the land and

16  building and repair the foundation in accordance with the

17  recommendations of the engineer as provided under s. 627.7073,

18  and in consultation with the policyholder, subject to the

19  coverage and terms of the policy. The insurer shall pay for

20  other repairs to the structure and contents in accordance with

21  the terms of the policy.

22         (b)  The insurer may limit its payment to the actual

23  cash value of the sinkhole loss, not including underpinning or

24  grouting or any other repair technique performed below the

25  existing foundation of the building, until the policyholder

26  enters into a contract for the performance of building

27  stabilization or foundation repairs. After the policyholder

28  enters into the contract, the insurer shall pay the amounts

29  necessary to begin and perform such repairs as the work is

30  performed and the expenses are incurred. The insurer may not

31  require the policyholder to advance payment for such repairs.


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    CS for CS for SB 1488                          First Engrossed



 1  If repair has begun and the engineer selected or approved by

 2  the insurer determines that the repair cannot be completed

 3  within the policy limits, the insurer must either complete the

 4  engineer's recommended repair or tender the policy limits to

 5  the policyholder without a reduction for the repair expenses

 6  incurred.

 7         (6)  Except as provided in subsection (7), the fees and

 8  costs of the engineer or the professional geologist shall be

 9  paid by the insurer.

10         (7)(c)  If the insurer obtains, pursuant to s. 627.7073

11  paragraph (b), written certification that there is no sinkhole

12  loss or that the cause of the damage claim was not sinkhole

13  activity, and if the policyholder has submitted the sinkhole

14  claim without good faith grounds for submitting such claim,

15  the policyholder shall reimburse the insurer for 50 percent of

16  the actual costs cost of the analyses and services provided

17  analysis under ss. 627.7072 and 627.7073 paragraph (b);

18  however, a policyholder is not required to reimburse an

19  insurer more than $2,500 with respect to any claim. A

20  policyholder is required to pay reimbursement under this

21  subsection paragraph only if the insurer, prior to ordering

22  the analysis under s. 627.7072 paragraph (b), informs the

23  policyholder in writing of the policyholder's potential

24  liability for reimbursement and gives the policyholder the

25  opportunity to withdraw the claim.

26         (8)(2)  No insurer shall nonrenew any policy of

27  property insurance on the basis of filing of claims for

28  partial loss caused by sinkhole damage or clay shrinkage as

29  long as the total of such payments does not exceed the current

30  policy limits of coverage for property damage, and provided

31  the insured has repaired the structure in accordance with the


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    CS for CS for SB 1488                          First Engrossed



 1  engineering recommendations upon which any payment or policy

 2  proceeds were based.

 3         (9)  The insurer may engage a structural engineer to

 4  make recommendations as to the repair of the structure.

 5         Section 20.  Section 627.7072, Florida Statutes, is

 6  created to read:

 7         627.7072  Testing standards for sinkholes.--

 8         (1)  The engineer and professional geologist shall

 9  perform such tests as sufficient, in their professional

10  opinion, to determine the presence or absence of sinkhole loss

11  or other cause of damage within reasonable professional

12  probability and for the engineer to make recommendations

13  regarding necessary building stabilization, and foundation

14  repair.

15         (2)  Testing by a professional geologist shall be

16  conducted in compliance with the Florida Geological Survey

17  Special Publication No. 57 (2005).

18         Section 21.  Section 627.7073, Florida Statutes, is

19  created to read:

20         627.7073  Sinkhole reports.--

21         (1)  Upon completion of testing as provided in s.

22  627.7072, the engineer and professional geologist shall issue

23  a report and certification to the insurer and the policyholder

24  as provided in this section.

25         (a)  Sinkhole loss is verified if, based upon tests

26  performed in accordance with s. 627.7072, an engineer and a

27  professional geologist issue a written report and

28  certification stating:

29         1.  That the cause of the actual physical and

30  structural damage is sinkhole activity within a reasonable

31  professional probability.


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    CS for CS for SB 1488                          First Engrossed



 1         2.  That the analyses conducted were of sufficient

 2  scope to identify sinkhole activity as the cause of damage

 3  within a reasonable professional probability.

 4         3.  A description of the tests performed.

 5         4.  A recommendation by the engineer of methods for

 6  stabilizing the land and building and for making repairs to

 7  the foundation.

 8         (b)  If sinkhole activity is eliminated as the cause of

 9  damage to the structure, the engineer and professional

10  geologist shall issue a written report and certification to

11  the policyholder and the insurer stating:

12         1.  That the cause of the damage is not sinkhole

13  activity within a reasonable professional probability.

14         2.  That the analyses and tests conducted were of

15  sufficient scope to eliminate sinkhole activity as the cause

16  of damage within a reasonable professional probability.

17         3.  A statement of the cause of the damage within a

18  reasonable professional probability.

19         4.  A description of the tests performed.

20         (c)  The respective findings, opinions, and

21  recommendations of the engineer and professional geologist as

22  to the verification or elimination of a sinkhole loss and the

23  findings, opinions, and recommendations of the engineer as to

24  land and building stabilization and foundation repair shall be

25  presumed correct.

26         (2)  Any insurer that has paid a claim for a sinkhole

27  loss shall file a copy of the report and certification,

28  prepared pursuant to subsection (1), with the county property

29  appraiser who shall record the report and certification with

30  the parcel number. The insurer shall bear the cost of filing

31  and recording the report and certification. There shall be no


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    CS for CS for SB 1488                          First Engrossed



 1  cause of action or liability against an insurer for compliance

 2  with this section. The seller of real property upon which a

 3  sinkhole claim has been made shall disclose to the buyer of

 4  such property that a claim has been paid and whether or not

 5  the full amount of the proceeds were used to repair the

 6  sinkhole damage.

 7         Section 22.  Effective October 1, 2005, and applicable

 8  to policies issued or renewed on or after that date, section

 9  627.711, Florida Statutes, is created to read:

10         627.711  Notice of premium discounts for hurricane loss

11  mitigation.--Using a form prescribed by the Office of

12  Insurance Regulation, the insurer shall clearly notify the

13  applicant or policyholder of any personal lines residential

14  property insurance policy, at the time of the issuance of the

15  policy and at each renewal, of the availability and the range

16  of each premium discount, credit, other rate differential, or

17  reduction in deductibles for properties on which fixtures or

18  construction techniques demonstrated to reduce the amount of

19  loss in a windstorm can or have been installed or implemented.

20  The prescribed form shall describe generally what actions the

21  policyholders may be able to take to reduce their windstorm

22  premium. The prescribed form and a list of such ranges

23  approved by the office for each insurer licensed in the state

24  and providing such discounts, credits, other rate

25  differentials, or reductions in deductibles for properties

26  described in this subsection shall be available for electronic

27  viewing and download from the Department of Financial

28  Services' or the Office of Insurance Regulation's Internet

29  website. The Financial Services Commission may adopt rules to

30  implement this subsection.

31  


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    CS for CS for SB 1488                          First Engrossed



 1         Section 23.  Section 627.712, Florida Statutes, is

 2  created to read:

 3         627.712  Timely payment of claims.--

 4         (1)  An insurer shall, within 30 days after receipt of

 5  a claim under a property insurance policy:

 6         (a)  Pay that portion of the claim for which the

 7  policyholder has submitted all information that is required

 8  for payment under the terms of the policy;

 9         (b)  Provide a written denial to the policyholder for

10  that portion of a claim which the insurer determines is not

11  covered under the policy, including the specific reasons; and

12         (c)  Specify, in writing, the additional information

13  that the policyholder must submit to the insurer in order for

14  any remaining amount of the claim to be paid.

15         (2)  Within 30 days after receipt of the additional

16  information specified in paragraph (1)(c), the insurer shall

17  either pay or deny the claim as specified in paragraph (1)(a)

18  or paragraph (1)(b).

19         (3)  Payment shall be considered made on the date a

20  check or other valid payment instrument is placed in the

21  United States mail in a properly addressed, postpaid envelope,

22  or if not so posted, on the date of delivery.

23         (4)  All overdue payments shall bear simple interest at

24  the rate of 10 percent per year.

25         (5)  Following a hurricane or natural disaster, the

26  requirements of this section are subject to such exceptions or

27  alternative requirements as may be provided by rule of the

28  commission or order of the office.

29         Section 24.  The Office of Insurance Regulation shall,

30  by January 1, 2006, submit a report to the President of the

31  Senate, the Speaker of the House of Representatives, the


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    CS for CS for SB 1488                          First Engrossed



 1  minority party leaders of the Senate and the House of

 2  Representatives, and the chairs of the standing committees of

 3  the Senate and the House of Representatives having

 4  jurisdiction over matters relating to property and casualty

 5  insurance. The report shall include findings and

 6  recommendations on requiring residential property insurers to

 7  provide law and ordinance coverage for residential property

 8  insurance policies, the increase or decrease in insurance

 9  costs associated with requiring such coverage, and such other

10  related information as the Office of Insurance Regulation

11  determines is appropriate for the Legislature to consider.

12         Section 25.  Notwithstanding that revenues of Citizens

13  Property Insurance Corporation are not state revenues, the

14  Auditor General shall perform an operational audit, as defined

15  in section 11.45(1), Florida Statutes, of the Citizens

16  Property Insurance Corporation created under section

17  627.351(6), Florida Statutes. The scope of the audit shall

18  also include:

19         (1)  An analysis of the corporation's infrastructure,

20  customer service, claims handling, accessibility of

21  policyholder information to the agent of record, take-out

22  programs, take-out bonuses, and financing arrangements.

23         (2)  An evaluation of costs associated with the

24  administration and servicing of the policies issued by the

25  corporation to determine alternatives by which costs can be

26  reduced, customer service improved, and claims handling

27  improved.

28  

29  The audit shall contain policy alternatives for the

30  Legislature to consider. The Auditor General shall submit a

31  report to the Governor, the President of the Senate, and the


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    CS for CS for SB 1488                          First Engrossed



 1  Speaker of the House of Representatives no later than February

 2  1, 2006.

 3         Section 26.  The board of governors of the Citizens

 4  Property Insurance Corporation created under section

 5  627.351(6), Florida Statutes, shall, by February 1, 2006,

 6  submit a report to the President of the Senate, the Speaker of

 7  the House of Representatives, the minority party leaders of

 8  the Senate and the House of Representatives, and the chairs of

 9  the standing committees of the Senate and the House of

10  Representatives having jurisdiction over matters relating to

11  property and casualty insurance. The report shall include the

12  board's findings and recommendations on the following issues:

13         (1)  The number of policies and the aggregate premium

14  of the Citizens Property Insurance Corporation, before and

15  after enactment of this act, and projections for future policy

16  and premium growth.

17         (2)  Increases or decreases in availability of

18  residential property coverage in the voluntary market and the

19  effectiveness of this act in improving the availability of

20  residential property coverage in the voluntary market in the

21  state.

22         (3)  The board's efforts to depopulate the corporation

23  and the willingness of insurers in the voluntary market to

24  avail themselves of depopulation incentives.

25         (4)  Further actions that could be taken by the

26  Legislature to improve availability of residential property

27  coverage in the voluntary and residual markets.

28         (5)  Actions that the board has taken to restructure

29  the corporation and recommendations for legislative action to

30  restructure the corporation, including, but not limited to,

31  actions relating to claims handling and customer service.


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    CS for CS for SB 1488                          First Engrossed



 1         (6)  Projected surpluses or deficits and possible means

 2  of providing funding to ensure the continued solvency of the

 3  corporation.

 4         (7)  The corporation's efforts to procure catastrophe

 5  reinsurance to cover its projected 100-year probable maximum

 6  loss with specification as to what best efforts were made by

 7  the corporation to procure such reinsurance.

 8         (8)  Such other issues as the board determines are

 9  worthy of the Legislature's consideration.

10         Section 27.  For the 2005-2006 fiscal year, there is

11  appropriated $350,000 in recurring funds from the Insurance

12  Regulatory Trust Fund and four positions are authorized to the

13  Office of the Consumer Advocate within the Department of

14  Financial Services for the purposes provided in section

15  627.0613, Florida Statutes.

16         Section 28.  The amendment to section 627.0628, Florida

17  Statutes, and the creation of section 627.06281, Florida

18  Statutes, as provided in this act shall take effect on the

19  same date that House Bill 1939, Senate Bill 1478, or similar

20  legislation takes effect, if such legislation is adopted in

21  the same legislative session or an extension thereof and

22  becomes a law.

23         Section 29.  Except as otherwise expressly provided in

24  this act, this act shall take effect upon becoming a law.

25  

26  

27  

28  

29  

30  

31  


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