HB 1937

1	A bill to be entitled
2	An act relating to property insurance; creating s.
3	489.1285, F.S.; specifying certain consumer protection
4	measures relating to roofing construction to be in effect
5	following certain executive orders; specifying certain
6	requirements to be complied with relating to roof repair
7	or reroofing; amending s. 627.062, F.S.; limiting an
8	insurer's recoupment of reimbursement premium; providing
9	limitations; amending s. 627.0628, F.S.; limiting use of
10	certain methodologies in determining hurricane loss
11	factors for reimbursement premium rates in certain rate
12	filings; creating s. 627.06281, F.S.; requiring certain
13	insurers and organizations to develop, maintain, and
14	update a public hurricane loss projection model; providing
15	reporting requirements for insurers; protecting trade
16	secret information; amending s. 627.0629, F.S.; tightening
17	a limitation on rate filings based on computer models
18	under certain circumstances; amending s. 627.351, F.S.;
19	providing additional legislative intent relating to the
20	Citizens Property Insurance Corporation; specifying a
21	limitation on dwelling limits for personal lines policies;
22	requiring the corporation to offer wind-only policies in
23	certain areas for new personal residential risks;
24	providing requirements and limitations; authorizes the
25	corporation to issue bonds and incur indebtedness for
26	certain purposes; requiring creation of a Market
27	Accountability Advisory Committee to assist the
28	corporation for certain purposes; providing for
29	appointment of committee members; providing for terms;
30	requiring reports to the corporation; revising
31	requirements for the plan of operation of the corporation;
32	requiring a plan for removing personal lines policies from
33	coverage by the corporation which includes the development
34	and implementation of a take-out bonus strategy; deleting
35	limitations on certain personal lines residential wind-
36	only policies; deleting an obsolete reporting requirement;
37	specifying nonapplication of certain policy requirements
38	in counties lacking reasonable degrees of competition for
39	certain policies under certain circumstances; requiring
40	the commission to adopt rules; deleting an obsolete rate
41	methodology panel reporting requirement provision;
42	requiring the corporation to require the securing of flood
43	insurance as a condition of coverage under certain
44	circumstances; providing requirements and limitations;
45	amending s. 627.411, F.S.; revising grounds for office
46	disapproval of certain forms; amending s. 627.7011, F.S.;
47	specifying payment requirements for insurers for covered
48	losses to a dwelling; limiting payment to actual cost to
49	repair or replace the dwelling; amending s. 627.7011,
50	F.S.; requiring insurers to offer coverage for additional
51	costs of repair due to laws and ordinances; requiring
52	certain homeowner's insurance policies to contain a
53	specified statement; providing intent; amending s.
54	627.7015, F.S.; revising purpose and scope provisions
55	relating to an alternative procedure for resolution of
56	disputed property insurance claims; providing an
57	additional criterion for excusing an insured from being
58	required to submit to certain loss appraisal processes;
59	amending s. 627.702, F.S.; specifying intent; providing
60	nonapplication of certain insurer liability requirements
61	under certain circumstances; limiting an insurer's
62	liability to certain loss covered by a covered peril;
63	providing legislative intent relating to application;
64	amending s. 627.706, F.S.; revising definitions relating
65	to sinkholes; providing additional definitions; creating
66	s. 627.7065, F.S.; providing legislative findings;
67	requiring the Department of Financial Services and the
68	Office of the Insurance Consumer Advocate to consult with
69	the Florida Geological Survey and the Department of
70	Environmental Protection to implement a statewide
71	automated database of sinkholes and related activity;
72	providing requirements for the form and content of the
73	database; authorizing the Department of Financial Services
74	to require insurers to provide certain information;
75	providing for management of the database; requiring the
76	department to investigate sinkhole activity reports and
77	include findings and investigations in the database;
78	requiring the Department of Environmental Protection to
79	report on the database to the Governor, Legislature, and
80	Chief Financial Officer; authorizing the Department of
81	Financial Services to adopt implementing rules; amending
82	s. 627.707, F.S.; revising standards for investigations of
83	sinkhole claims by insurers; requiring an insurer to
84	engage an engineer and professional geologist for certain
85	purposes; requiring a report under certain circumstances;
86	requiring an insurer to provide written notice to a
87	policyholder disclosing certain information; authorizing
88	an insurer to deny a claim under certain circumstances;
89	authorizing a policyholder to demand certain testing;
90	providing requirements; specifying required activities for
91	insurers if a sinkhole loss is verified; specifying
92	payment requirements for insurers; providing limitations;
93	requiring the insurer to pay fees of the engineer and
94	geologist; authorizing an insurer to engage a structural
95	engineer for certain purposes; creating s. 627.7072, F.S.;
96	specifying requirements for sinkhole testing by engineers
97	and geologists; creating s. 627.7073, F.S.; providing
98	reporting requirements for engineers and geologists after
99	testing for sinkholes; specifying a presumption of
100	correctness of certain findings; requiring an insurer
101	paying a sinkhole loss claim to file a report and
102	certification with the county property appraiser;
103	requiring the property appraiser to record the report and
104	certification; requiring the insurer to bear the cost of
105	filing and recording; requiring a seller of certain
106	property to make certain disclosures to property buyers
107	under certain circumstances; requiring the Auditor General
108	to perform an operational audit of the Citizens Property
109	Insurance Corporation; specifying audit requirements;
110	requiring a report; requiring the board of governors of
111	the Citizens Property Insurance Corporation to submit a
112	report to the Legislature relating to property and
113	casualty insurance; specifying report requirements;
114	requiring insurers to review and acknowledge receipt of
115	certain communications relating to claims; providing an
116	exception; providing a definition; providing for
117	nonapplication to certain claimants; providing procedures
118	and requirements relating to such acknowledgements;
119	requiring an insurer to conduct certain investigations
120	under certain circumstances; providing for contingent
121	effect; providing effective dates.
122
123	Be It Enacted by the Legislature of the State of Florida:
124
125	Section 1.  Section 489.1285, Florida Statutes, is created
126	to read:
127	489.1285  Consumer protections; contract limitations.--
128	Subsequent to the issuance of an executive order by the Office
129	of the Governor declaring the existence of a state of emergency
130	as a result and consequence of a serious threat posed to the
131	public health, safety, and property in this state, in which
132	damage to property has occurred and for which property insurance
133	claims have been filed, the following consumer protection
134	measures shall be in effect:
135	(1)  A contract for the repair or reroofing of a
136	residential structure that has been agreed to in writing by the
137	parties to the contract shall be a valid and binding agreement.
138	A roofing contractor licensed pursuant to this chapter who is a
139	party to a contract for the repair or reroofing of a residential
140	structure shall be bound by the qualifications for licensure and
141	the job scope specified in this chapter for a roofing contractor
142	to provide timely and professional services.
143	(2)  If a contract is agreed to for the repair of a roof or
144	reroofing of a residential structure, which repair is necessary
145	as a result of damage caused by an emergency situation
146	designated by executive order, the damages must be confirmed by
147	a third party who is independent from the parties to the
148	contract that the damages are a direct result of a designated
149	emergency situation. Third-party confirmation must be attested
150	to by an insurance adjuster, emergency management personnel,
151	local building official, or other similar authority.
152	(3)(a)  A contract for services shall not be valid after 60
153	calendar days after the date the contract agreement was signed
154	by the parties to the contract. The contract may not provide for
155	an automatic extension of time for the provisions of the
156	contract. After the 60 days have expired, the contract shall be
157	null and void by operation of law.
158	(b)  Within 10 calendar days after the period of time for
159	expiration of the contract, the parties to the contract may
160	agree in writing, as a separate contract to the original
161	contract, to an additional period of 60 calendar days beyond the
162	time period specified in the original contract to complete the
163	roofing services. If the performance of services under the
164	contract by the roofing contractor have not been completed, the
165	contract shall be null and void with no further responsibilities
166	or duties on the part of the parties to the contract except as
167	provided in this paragraph and subsection (4).
168	(c)  The subsequent contract may be extended beyond the
169	additional 60 days pursuant to a written agreement between the
170	parties and signed as an addendum or supplement to the contract.
171	The delay or extension of services may only be agreed to if the
172	delay in providing the contractual services is due to the
173	unavailability, beyond the control of the roofing contractor, of
174	roofing materials necessary for the completion of the repair or
175	reroofing of the residence. The contracted price of the services
176	may not be changed from the agreed to cost specified in the
177	subsequent contract.
178	(4)  Subsequent to the expiration of the contract or
179	contracts specified in subsection (3), the contractor shall
180	refund and pay in full, upon demand, any and all remuneration
181	received in the form of a prepayment, up-front fee, deposit, or
182	other consideration already paid to the contractor.
183	(5)  The provisions of this section apply to registered, as
184	well as certified, roofing contractors.
185	Section 2.  Subsection (5) of section 627.062, Florida
186	Statutes, is amended to read:
187	627.062  Rate standards.--
188	(5)  With respect to a rate filing involving coverage of
189	the type for which the insurer is required to pay a
190	reimbursement premium to the Florida Hurricane Catastrophe Fund,
191	the insurer may fully recoup in its property insurance premiums
192	any reimbursement premiums paid to the Florida Hurricane
193	Catastrophe Fund, together with reasonable costs of other
194	reinsurance, but may not recoup reinsurance costs that duplicate
195	coverage provided by the Florida Hurricane Catastrophe Fund. An
196	insurer may not recoup more than one year of reimbursement
197	premium at a time. Any under-recoupment from the prior year may
198	be added to the following year's reimbursement premium and any
199	over-recoupment shall be subtracted from the following year's
200	reimbursement premium.
201	Section 3.  Paragraph (c) of subsection (1) and paragraph
202	(c) of subsection (3) of section 627.0628, Florida Statutes, are
203	amended to read:
204	627.0628  Florida Commission on Hurricane Loss Projection
205	Methodology.--
206	(1)  LEGISLATIVE FINDINGS AND INTENT.--
207	(c)  It is the intent of the Legislature to create the
208	Florida Commission on Hurricane Loss Projection Methodology as a
209	panel of experts to provide the most actuarially sophisticated
210	guidelines and standards for projection of hurricane losses
211	possible, given the current state of actuarial science. It is
212	the further intent of the Legislature that such standards and
213	guidelines must be used by the State Board of Administration in
214	developing reimbursement premium rates for the Florida Hurricane
215	Catastrophe Fund, and, subject to paragraph (3)(c), may be used
216	by insurers in rate filings under s. 627.062 unless the way in
217	which such standards and guidelines were applied by the insurer
218	was erroneous, as shown by a preponderance of the evidence.
219	(3)  ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--
220	(c)  With respect to a rate filing under s. 627.062, an
221	insurer may employ actuarial methods, principles, standards,
222	models, or output ranges found by the commission to be accurate
223	or reliable to determine hurricane loss factors for use in a
224	rate filing under s. 627.062. Such, which findings and factors
225	are admissible and relevant in consideration of a rate filing by
226	the office or in any arbitration or administrative or judicial
227	review only if the office and the consumer advocate appointed
228	pursuant to s. 627.0613 have access to all of the assumptions
229	and factors that were used in developing the actuarial methods,
230	principles, standards, models, or output ranges and are not
231	precluded from disclosing such information in a rate proceeding.
232	Section 4.  Section 627.06281, Florida Statutes, is created
233	to read:
234	627.06281  Public hurricane loss projection model;
235	reporting of data by insurers.--Within 30 days after a written
236	request for loss data and associated exposure data by the office
237	or a type I center within the State University System
238	established to study mitigation, residential property insurers
239	and licensed rating and advisory organizations that compile
240	residential property insurance loss data shall provide loss data
241	and associated exposure data for residential property insurance
242	policies to the office or to a type I center within the State
243	University System established to study mitigation, as directed
244	by the office, for the purposes of developing, maintaining, and
245	updating a public model for hurricane loss projections. The loss
246	data and associated exposure data provided shall be in writing.
247	Any loss data and associated exposure data provided pursuant to
248	this section that constitutes a trade secret as defined in s.
249	812.081, and as provided in s. 815.04(3), shall be subject to
250	the provisions of s. 815.045.
251	Section 5.  Subsection (7) of section 627.0629, Florida
252	Statutes, is amended to read:
253	627.0629  Residential property insurance; rate filings.--
254	(7)  Any rate filing that is based in whole or part on data
255	from a computer model may not exceed 15 25 percent unless there
256	is a public hearing.
257	Section 6.  Paragraphs (a), (c), (d), and (q) of subsection
258	(6) of section 627.351, Florida Statutes, are amended to read:
259	627.351  Insurance risk apportionment plans.--
260	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
261	(a)1.  The Legislature finds that actual and threatened
262	catastrophic losses to property in this state from hurricanes
263	have caused insurers to be unwilling or unable to provide
264	property insurance coverage to the extent sought and needed. It
265	is in the public interest and a public purpose to assist in
266	assuring that property in the state is insured so as to
267	facilitate the remediation, reconstruction, and replacement of
268	damaged or destroyed property in order to reduce or avoid the
269	negative effects otherwise resulting to the public health,
270	safety, and welfare; to the economy of the state; and to the
271	revenues of the state and local governments needed to provide
272	for the public welfare. It is necessary, therefore, to provide
273	property insurance to applicants who are in good faith entitled
274	to procure insurance through the voluntary market but are unable
275	to do so. The Legislature intends by this subsection that
276	property insurance be provided and that it continues, as long as
277	necessary, through an entity organized to achieve efficiencies
278	and economies, while providing service to policyholders,
279	applicants, and agents that is no less than the quality
280	generally provided in the voluntary market, all toward the
281	achievement of the foregoing public purposes. Because it is
282	essential for the corporation to have the maximum financial
283	resources to pay claims following a catastrophic hurricane, it
284	is the intent of the Legislature that the income of the
285	corporation be exempt from federal income taxation and that
286	interest on the debt obligations issued by the corporation be
287	exempt from federal income taxation.
288	2.  The Residential Property and Casualty Joint
289	Underwriting Association originally created by this statute
290	shall be known, as of July 1, 2002, as the Citizens Property
291	Insurance Corporation. The corporation shall provide insurance
292	for residential and commercial property, for applicants who are
293	in good faith entitled, but are unable, to procure insurance
294	through the voluntary market. The corporation shall operate
295	pursuant to a plan of operation approved by order of the office.
296	The plan is subject to continuous review by the office. The
297	office may, by order, withdraw approval of all or part of a plan
298	if the office determines that conditions have changed since
299	approval was granted and that the purposes of the plan require
300	changes in the plan. For the purposes of this subsection,
301	residential coverage includes both personal lines residential
302	coverage, which consists of the type of coverage provided by
303	homeowner's, mobile home owner's, dwelling, tenant's,
304	condominium unit owner's, and similar policies, and commercial
305	lines residential coverage, which consists of the type of
306	coverage provided by condominium association, apartment
307	building, and similar policies.
308	3.  It is the intent of the Legislature that policyholders,
309	applicants, and agents of the corporation receive service and
310	treatment of the highest possible level but never less than that
311	generally provided in the voluntary market. It also is intended
312	that the corporation be held to service standards no less than
313	those applied to insurers in the voluntary market by the office
314	with respect to responsiveness, timeliness, customer courtesy,
315	and overall dealings with policyholders, applicants, or agents
316	of the corporation.
317	(c)  The plan of operation of the corporation:
318	1.  Must provide for adoption of residential property and
319	casualty insurance policy forms and commercial residential and
320	nonresidential property insurance forms, which forms must be
321	approved by the office prior to use. The corporation shall adopt
322	the following policy forms:
323	a.  Standard personal lines policy forms that are
324	comprehensive multiperil policies providing full coverage of a
325	residential property equivalent to the coverage provided in the
326	private insurance market under an HO-3, HO-4, or HO-6 policy.
327	b.  Basic personal lines policy forms that are policies
328	similar to an HO-8 policy or a dwelling fire policy that provide
329	coverage meeting the requirements of the secondary mortgage
330	market, but which coverage is more limited than the coverage
331	under a standard policy.
332	c.  Commercial lines residential policy forms that are
333	generally similar to the basic perils of full coverage
334	obtainable for commercial residential structures in the admitted
335	voluntary market.
336	d.  Personal lines and commercial lines residential
337	property insurance forms that cover the peril of wind only. The
338	forms are applicable only to residential properties located in
339	areas eligible for coverage under the high-risk account referred
340	to in sub-subparagraph (b)2.a.
341	e.  Commercial lines nonresidential property insurance
342	forms that cover the peril of wind only. The forms are
343	applicable only to nonresidential properties located in areas
344	eligible for coverage under the high-risk account referred to in
345	sub-subparagraph (b)2.a.
346
347	For new personal residential risks written by the corporation on
348	or after May 7, 2005, in areas eligible for coverage in the
349	high-risk account, the corporation shall offer, subject to
350	reasonable underwriting guidelines, a wind only policy with
351	building coverage valued at up to $1 million. For such new
352	personal residential risks covering properties valued at more
353	than $1 million, the corporation shall offer a wind-only policy
354	of up to $1 million of building coverage without any penalty or
355	reduction in coverage for underinsurance or the purchase of
356	other insurance, provided the insured property owner maintains
357	insurance coverage for the value of the building in excess of $1
358	million. Coverage for property other than the building and any
359	attached structures shall be offered by the corporation in
360	addition to the $1 million limit of building coverage. For all
361	existing high-risk account policies in effect on May 7, 2005,
362	the corporation shall continue to offer coverage for the full
363	value of the building and property without limitation.
364	2.a.  Must provide that the corporation adopt a program in
365	which the corporation and authorized insurers enter into quota
366	share primary insurance agreements for hurricane coverage, as
367	defined in s. 627.4025(2)(a), for eligible risks, and adopt
368	property insurance forms for eligible risks which cover the
369	peril of wind only. As used in this subsection, the term:
370	(I)  "Quota share primary insurance" means an arrangement
371	in which the primary hurricane coverage of an eligible risk is
372	provided in specified percentages by the corporation and an
373	authorized insurer. The corporation and authorized insurer are
374	each solely responsible for a specified percentage of hurricane
375	coverage of an eligible risk as set forth in a quota share
376	primary insurance agreement between the corporation and an
377	authorized insurer and the insurance contract. The
378	responsibility of the corporation or authorized insurer to pay
379	its specified percentage of hurricane losses of an eligible
380	risk, as set forth in the quota share primary insurance
381	agreement, may not be altered by the inability of the other
382	party to the agreement to pay its specified percentage of
383	hurricane losses. Eligible risks that are provided hurricane
384	coverage through a quota share primary insurance arrangement
385	must be provided policy forms that set forth the obligations of
386	the corporation and authorized insurer under the arrangement,
387	clearly specify the percentages of quota share primary insurance
388	provided by the corporation and authorized insurer, and
389	conspicuously and clearly state that neither the authorized
390	insurer nor the corporation may be held responsible beyond its
391	specified percentage of coverage of hurricane losses.
392	(II)  "Eligible risks" means personal lines residential and
393	commercial lines residential risks that meet the underwriting
394	criteria of the corporation and are located in areas that were
395	eligible for coverage by the Florida Windstorm Underwriting
396	Association on January 1, 2002.
397	b.  The corporation may enter into quota share primary
398	insurance agreements with authorized insurers at corporation
399	coverage levels of 90 percent and 50 percent.
400	c.  If the corporation determines that additional coverage
401	levels are necessary to maximize participation in quota share
402	primary insurance agreements by authorized insurers, the
403	corporation may establish additional coverage levels. However,
404	the corporation's quota share primary insurance coverage level
405	may not exceed 90 percent.
406	d.  Any quota share primary insurance agreement entered
407	into between an authorized insurer and the corporation must
408	provide for a uniform specified percentage of coverage of
409	hurricane losses, by county or territory as set forth by the
410	corporation board, for all eligible risks of the authorized
411	insurer covered under the quota share primary insurance
412	agreement.
413	e.  Any quota share primary insurance agreement entered
414	into between an authorized insurer and the corporation is
415	subject to review and approval by the office. However, such
416	agreement shall be authorized only as to insurance contracts
417	entered into between an authorized insurer and an insured who is
418	already insured by the corporation for wind coverage.
419	f.  For all eligible risks covered under quota share
420	primary insurance agreements, the exposure and coverage levels
421	for both the corporation and authorized insurers shall be
422	reported by the corporation to the Florida Hurricane Catastrophe
423	Fund. For all policies of eligible risks covered under quota
424	share primary insurance agreements, the corporation and the
425	authorized insurer shall maintain complete and accurate records
426	for the purpose of exposure and loss reimbursement audits as
427	required by Florida Hurricane Catastrophe Fund rules. The
428	corporation and the authorized insurer shall each maintain
429	duplicate copies of policy declaration pages and supporting
430	claims documents.
431	g.  The corporation board shall establish in its plan of
432	operation standards for quota share agreements which ensure that
433	there is no discriminatory application among insurers as to the
434	terms of quota share agreements, pricing of quota share
435	agreements, incentive provisions if any, and consideration paid
436	for servicing policies or adjusting claims.
437	h.  The quota share primary insurance agreement between the
438	corporation and an authorized insurer must set forth the
439	specific terms under which coverage is provided, including, but
440	not limited to, the sale and servicing of policies issued under
441	the agreement by the insurance agent of the authorized insurer
442	producing the business, the reporting of information concerning
443	eligible risks, the payment of premium to the corporation, and
444	arrangements for the adjustment and payment of hurricane claims
445	incurred on eligible risks by the claims adjuster and personnel
446	of the authorized insurer. Entering into a quota sharing
447	insurance agreement between the corporation and an authorized
448	insurer shall be voluntary and at the discretion of the
449	authorized insurer.
450	3.  May provide that the corporation may employ or
451	otherwise contract with individuals or other entities to provide
452	administrative or professional services that may be appropriate
453	to effectuate the plan. The corporation shall have the power to
454	borrow funds, by issuing bonds or by incurring other
455	indebtedness, and shall have other powers reasonably necessary
456	to effectuate the requirements of this subsection, including
457	without limitation, the power to issue bonds and incur other
458	indebtedness in order to refinance outstanding bonds or other
459	indebtedness. The corporation may, but is not required to, seek
460	judicial validation of its bonds or other indebtedness under
461	chapter 75. The corporation may issue bonds or incur other
462	indebtedness, or have bonds issued on its behalf by a unit of
463	local government pursuant to subparagraph (g)2., in the absence
464	of a hurricane or other weather-related event, upon a
465	determination by the corporation, subject to approval by the
466	office, that such action would enable it to efficiently meet the
467	financial obligations of the corporation and that such
468	financings are reasonably necessary to effectuate the
469	requirements of this subsection. The corporation is authorized
470	to take all actions needed to facilitate tax-free status for any
471	such bonds or indebtedness, including formation of trusts or
472	other affiliated entities. The corporation shall have the
473	authority to pledge assessments, projected recoveries from the
474	Florida Hurricane Catastrophe Fund, other reinsurance
475	recoverables, market equalization and other surcharges, and
476	other funds available to the corporation as security for bonds
477	or other indebtedness. In recognition of s. 10, Art. I of the
478	State Constitution, prohibiting the impairment of obligations of
479	contracts, it is the intent of the Legislature that no action be
480	taken whose purpose is to impair any bond indenture or financing
481	agreement or any revenue source committed by contract to such
482	bond or other indebtedness.
483	4.a.  Must require that the corporation operate subject to
484	the supervision and approval of a board of governors consisting
485	of 7 individuals who are residents of this state, from different
486	geographical areas of this state, appointed by the Chief
487	Financial Officer. The Chief Financial Officer shall designate
488	one of the appointees as chair. All board members serve at the
489	pleasure of the Chief Financial Officer. All board members,
490	including the chair, must be appointed to serve for 3-year terms
491	beginning annually on a date designated by the plan. Any board
492	vacancy shall be filled for the unexpired term by the Chief
493	Financial Officer. The Chief Financial Officer shall appoint a
494	technical advisory group to provide information and advice to
495	the board of governors in connection with the board's duties
496	under this subsection. The executive director and senior
497	managers of the corporation shall be engaged by the Chief
498	Financial Officer and serve at the pleasure of the Chief
499	Financial Officer. The executive director is responsible for
500	employing other staff as the corporation may require, subject to
501	review and concurrence by the office of the Chief Financial
502	Officer.
503	b.  The board shall create a Market Accountability Advisory
504	Committee to assist the corporation in developing awareness of
505	its rates and its customer and agent service levels in
506	relationship to the voluntary market insurers writing similar
507	coverage. The members of the advisory committee shall consist of
508	the following 11 persons, one of whom must be elected chair by
509	the members of the committee: four representatives, one
510	appointed by the Florida Association of Insurance Agents, one by
511	the Florida Association of Insurance and Financial Advisors, one
512	by the Professional Insurance Agents of Florida, and one by the
513	Latin American Association of Insurance Agencies; three
514	representatives appointed by the insurers with the three highest
515	voluntary market share of residential property insurance
516	business in the state; one representative from the Office of
517	Insurance Regulation; one consumer appointed by the board who is
518	insured by the corporation at the time of appointment to the
519	committee; one representative appointed by the Florida
520	Association of Realtors; and one representative appointed by the
521	Florida Bankers Association. All members must serve for 3-year
522	terms and may serve for consecutive terms. The committee shall
523	report to the corporation at each board meeting on insurance
524	market issues which may include rates and rate competition with
525	the voluntary market; service, including policy issuance, claims
526	processing, and general responsiveness to policyholders,
527	applicants, and agents; and matters relating to depopulation.
528	5.  Must provide a procedure for determining the
529	eligibility of a risk for coverage, as follows:
530	a.  Subject to the provisions of s. 627.3517, with respect
531	to personal lines residential risks, if the risk is offered
532	coverage from an authorized insurer at the insurer's approved
533	rate under either a standard policy including wind coverage or,
534	if consistent with the insurer's underwriting rules as filed
535	with the office, a basic policy including wind coverage, the
536	risk is not eligible for any policy issued by the corporation.
537	If the risk is not able to obtain any such offer, the risk is
538	eligible for either a standard policy including wind coverage or
539	a basic policy including wind coverage issued by the
540	corporation; however, if the risk could not be insured under a
541	standard policy including wind coverage regardless of market
542	conditions, the risk shall be eligible for a basic policy
543	including wind coverage unless rejected under subparagraph 8.
544	The corporation shall determine the type of policy to be
545	provided on the basis of objective standards specified in the
546	underwriting manual and based on generally accepted underwriting
547	practices.
548	(I)  If the risk accepts an offer of coverage through the
549	market assistance plan or an offer of coverage through a
550	mechanism established by the corporation before a policy is
551	issued to the risk by the corporation or during the first 30
552	days of coverage by the corporation, and the producing agent who
553	submitted the application to the plan or to the corporation is
554	not currently appointed by the insurer, the insurer shall:
555	(A)  Pay to the producing agent of record of the policy,
556	for the first year, an amount that is the greater of the
557	insurer's usual and customary commission for the type of policy
558	written or a fee equal to the usual and customary commission of
559	the corporation; or
560	(B)  Offer to allow the producing agent of record of the
561	policy to continue servicing the policy for a period of not less
562	than 1 year and offer to pay the agent the greater of the
563	insurer's or the corporation's usual and customary commission
564	for the type of policy written.
565
566	If the producing agent is unwilling or unable to accept
567	appointment, the new insurer shall pay the agent in accordance
568	with sub-sub-sub-subparagraph (A).
569	(II)  When the corporation enters into a contractual
570	agreement for a take-out plan, the producing agent of record of
571	the corporation policy is entitled to retain any unearned
572	commission on the policy, and the insurer shall:
573	(A)  Pay to the producing agent of record of the
574	corporation policy, for the first year, an amount that is the
575	greater of the insurer's usual and customary commission for the
576	type of policy written or a fee equal to the usual and customary
577	commission of the corporation; or
578	(B)  Offer to allow the producing agent of record of the
579	corporation policy to continue servicing the policy for a period
580	of not less than 1 year and offer to pay the agent the greater
581	of the insurer's or the corporation's usual and customary
582	commission for the type of policy written.
583
584	If the producing agent is unwilling or unable to accept
585	appointment, the new insurer shall pay the agent in accordance
586	with sub-sub-sub-subparagraph (A).
587	b.  With respect to commercial lines residential risks, if
588	the risk is offered coverage under a policy including wind
589	coverage from an authorized insurer at its approved rate, the
590	risk is not eligible for any policy issued by the corporation.
591	If the risk is not able to obtain any such offer, the risk is
592	eligible for a policy including wind coverage issued by the
593	corporation.
594	(I)  If the risk accepts an offer of coverage through the
595	market assistance plan or an offer of coverage through a
596	mechanism established by the corporation before a policy is
597	issued to the risk by the corporation or during the first 30
598	days of coverage by the corporation, and the producing agent who
599	submitted the application to the plan or the corporation is not
600	currently appointed by the insurer, the insurer shall:
601	(A)  Pay to the producing agent of record of the policy,
602	for the first year, an amount that is the greater of the
603	insurer's usual and customary commission for the type of policy
604	written or a fee equal to the usual and customary commission of
605	the corporation; or
606	(B)  Offer to allow the producing agent of record of the
607	policy to continue servicing the policy for a period of not less
608	than 1 year and offer to pay the agent the greater of the
609	insurer's or the corporation's usual and customary commission
610	for the type of policy written.
611
612	If the producing agent is unwilling or unable to accept
613	appointment, the new insurer shall pay the agent in accordance
614	with sub-sub-sub-subparagraph (A).
615	(II)  When the corporation enters into a contractual
616	agreement for a take-out plan, the producing agent of record of
617	the corporation policy is entitled to retain any unearned
618	commission on the policy, and the insurer shall:
619	(A)  Pay to the producing agent of record of the
620	corporation policy, for the first year, an amount that is the
621	greater of the insurer's usual and customary commission for the
622	type of policy written or a fee equal to the usual and customary
623	commission of the corporation; or
624	(B)  Offer to allow the producing agent of record of the
625	corporation policy to continue servicing the policy for a period
626	of not less than 1 year and offer to pay the agent the greater
627	of the insurer's or the corporation's usual and customary
628	commission for the type of policy written.
629
630	If the producing agent is unwilling or unable to accept
631	appointment, the new insurer shall pay the agent in accordance
632	with sub-sub-sub-subparagraph (A).
633	6.  Must include rules for classifications of risks and
634	rates therefor.
635	7.  Must provide that if premium and investment income for
636	an account attributable to a particular calendar year are in
637	excess of projected losses and expenses for the account
638	attributable to that year, such excess shall be held in surplus
639	in the account. Such surplus shall be available to defray
640	deficits in that account as to future years and shall be used
641	for that purpose prior to assessing assessable insurers and
642	assessable insureds as to any calendar year.
643	8.  Must provide objective criteria and procedures to be
644	uniformly applied for all applicants in determining whether an
645	individual risk is so hazardous as to be uninsurable. In making
646	this determination and in establishing the criteria and
647	procedures, the following shall be considered:
648	a.  Whether the likelihood of a loss for the individual
649	risk is substantially higher than for other risks of the same
650	class; and
651	b.  Whether the uncertainty associated with the individual
652	risk is such that an appropriate premium cannot be determined.
653
654	The acceptance or rejection of a risk by the corporation shall
655	be construed as the private placement of insurance, and the
656	provisions of chapter 120 shall not apply.
657	9.  Must provide that the corporation shall make its best
658	efforts to procure catastrophe reinsurance at reasonable rates,
659	to cover its projected 100-year probable maximum loss as
660	determined by the board of governors.
661	10.  Must provide that in the event of regular deficit
662	assessments under sub-subparagraph (b)3.a. or sub-subparagraph
663	(b)3.b., in the personal lines account, the commercial lines
664	residential account, or the high-risk account, the corporation
665	shall levy upon corporation policyholders in its next rate
666	filing, or by a separate rate filing solely for this purpose, a
667	market equalization surcharge arising from a regular assessment
668	in such account in a percentage equal to the total amount of
669	such regular assessments divided by the aggregate statewide
670	direct written premium for subject lines of business for the
671	prior calendar year. Market equalization surcharges under this
672	subparagraph are not considered premium and are not subject to
673	commissions, fees, or premium taxes; however, failure to pay a
674	market equalization surcharge shall be treated as failure to pay
675	premium.
676	11.  The policies issued by the corporation must provide
677	that, if the corporation or the market assistance plan obtains
678	an offer from an authorized insurer to cover the risk at its
679	approved rates, the risk is no longer eligible for renewal
680	through the corporation.
681	12.  Corporation policies and applications must include a
682	notice that the corporation policy could, under this section, be
683	replaced with a policy issued by an authorized insurer that does
684	not provide coverage identical to the coverage provided by the
685	corporation. The notice shall also specify that acceptance of
686	corporation coverage creates a conclusive presumption that the
687	applicant or policyholder is aware of this potential.
688	13.  May establish, subject to approval by the office,
689	different eligibility requirements and operational procedures
690	for any line or type of coverage for any specified county or
691	area if the board determines that such changes to the
692	eligibility requirements and operational procedures are
693	justified due to the voluntary market being sufficiently stable
694	and competitive in such area or for such line or type of
695	coverage and that consumers who, in good faith, are unable to
696	obtain insurance through the voluntary market through ordinary
697	methods would continue to have access to coverage from the
698	corporation. When coverage is sought in connection with a real
699	property transfer, such requirements and procedures shall not
700	provide for an effective date of coverage later than the date of
701	the closing of the transfer as established by the transferor,
702	the transferee, and, if applicable, the lender.
703	14.  Must provide that, with respect to the high-risk
704	account, any assessable insurer with a surplus as to
705	policyholders of $25 million or less writing 25 percent or more
706	of its total countrywide property insurance premiums in this
707	state may petition the office, within the first 90 days of each
708	calendar year, to qualify as a limited apportionment company. In
709	no event shall a limited apportionment company be required to
710	participate in the portion of any assessment, within the high-
711	risk account, pursuant to sub-subparagraph (b)3.a. or sub-
712	subparagraph (b)3.b. in the aggregate which exceeds $50 million
713	after payment of available high-risk account funds in any
714	calendar year. However, a limited apportionment company shall
715	collect from its policyholders any emergency assessment imposed
716	under sub-subparagraph (b)3.d. The plan shall provide that, if
717	the office determines that any regular assessment will result in
718	an impairment of the surplus of a limited apportionment company,
719	the office may direct that all or part of such assessment be
720	deferred as provided in subparagraph (g)4. However, there shall
721	be no limitation or deferment of an emergency assessment to be
722	collected from policyholders under sub-subparagraph (b)3.d.
723	15.  Must provide that the corporation appoint as its
724	licensed agents only those agents who also hold an appointment
725	as defined in s. 626.015(3) with an insurer who at the time of
726	the agent's initial appointment by the corporation is authorized
727	to write and is actually writing personal lines residential
728	property coverage, commercial residential property coverage, or
729	commercial nonresidential property coverage within the state.
730	16.  Must provide a plan for removing personal lines
731	policies from coverage by the corporation which includes the
732	development and implementation of a take-out bonus strategy
733	determining, at a minimum, the necessity and application of
734	financial and regulatory incentives.
735	(d)1.  It is the intent of the Legislature that the rates
736	for coverage provided by the corporation be actuarially sound
737	and not competitive with approved rates charged in the admitted
738	voluntary market, so that the corporation functions as a
739	residual market mechanism to provide insurance only when the
740	insurance cannot be procured in the voluntary market. Rates
741	shall include an appropriate catastrophe loading factor that
742	reflects the actual catastrophic exposure of the corporation.
743	2.  For each county, the average rates of the corporation
744	for each line of business for personal lines residential
745	policies excluding rates for wind-only policies shall be no
746	lower than the average rates charged by the insurer that had the
747	highest average rate in that county among the 20 insurers with
748	the greatest total direct written premium in the state for that
749	line of business in the preceding year, except that with respect
750	to mobile home coverages, the average rates of the corporation
751	shall be no lower than the average rates charged by the insurer
752	that had the highest average rate in that county among the 5
753	insurers with the greatest total written premium for mobile home
754	owner's policies in the state in the preceding year.
755	3.  Rates for personal lines residential wind-only policies
756	must be actuarially sound and not competitive with approved
757	rates charged by authorized insurers. However, for personal
758	lines residential wind-only policies issued or renewed between
759	July 1, 2002, and June 30, 2003, the maximum premium increase
760	must be no greater than 10 percent of the Florida Windstorm
761	Underwriting Association premium for that policy in effect on
762	June 30, 2002, as adjusted for coverage changes and seasonal
763	occupancy surcharges. For personal lines residential wind-only
764	policies issued or renewed between July 1, 2003, and June 30,
765	2004, the corporation shall use its existing filed and approved
766	wind-only rating and classification plans, provided, however,
767	that the maximum premium increase must be no greater than 20
768	percent of the premium for that policy in effect on June 30,
769	2003, as adjusted for coverage changes and seasonal occupancy
770	surcharges. Corporation rate manuals shall include a rate
771	surcharge for seasonal occupancy. To ensure that personal lines
772	residential wind-only rates effective on or after July 1, 2004,
773	are not competitive with approved rates charged by authorized
774	insurers, the corporation, in conjunction with the office, shall
775	develop a wind-only ratemaking methodology, which methodology
776	shall be contained in each a rate filing made by the corporation
777	with the office by January 1, 2004. If the office thereafter
778	determines that the wind-only rates or rating factors filed by
779	the corporation fail to comply with the wind-only ratemaking
780	methodology provided for in this subsection, it shall so notify
781	the corporation and require the corporation to amend its rates
782	or rating factors to come into compliance within 90 days of
783	notice from the office. The office shall report to the Speaker
784	of the House of Representatives and the President of the Senate
785	on the provisions of the wind-only ratemaking methodology by
786	January 31, 2004.
787	4.  The provisions of subparagraph 2. do not apply to
788	coverage provided by the corporation in any county for which the
789	office determines that a reasonable degree of competition does
790	not exist for personal lines residential policies. The
791	provisions of subparagraph 3. do not apply to coverage provided
792	by the corporation in any county for which the office determines
793	that a reasonable degree of competition does not exist for
794	personal lines residential policies in the area of that county
795	which is eligible for wind-only coverage. In such counties, the
796	rates for personal lines residential coverage shall be
797	actuarially sound and not excessive, inadequate, or unfairly
798	discriminatory and are subject to the other provisions of the
799	paragraph and s. 627.062. The commission shall adopt rules
800	establishing the criteria for determining whether a reasonable
801	degree of competition exists for personal lines residential
802	policies. Beginning October 1, 2005, and each 6 months
803	thereafter, the office shall determine and identify those
804	counties for which a reasonable degree of competition does not
805	exist for purposes of subparagraphs 2. and 3., respectively.
806	5.4.  Rates for commercial lines coverage shall not be
807	subject to the requirements of subparagraph 2., but shall be
808	subject to all other requirements of this paragraph and s.
809	627.062.
810	6.5.  Nothing in this paragraph shall require or allow the
811	corporation to adopt a rate that is inadequate under s. 627.062.
812	7.6.  The corporation shall certify to the office at least
813	twice annually that its personal lines rates comply with the
814	requirements of this paragraph subparagraphs 1. and 2. If any
815	adjustment in the rates or rating factors of the corporation is
816	necessary to ensure such compliance, the corporation shall make
817	and implement such adjustments and file its revised rates and
818	rating factors with the office. If the office thereafter
819	determines that the revised rates and rating factors fail to
820	comply with the provisions of this paragraph subparagraphs 1.
821	and 2., it shall notify the corporation and require the
822	corporation to amend its rates or rating factors in conjunction
823	with its next rate filing. The office must notify the
824	corporation by electronic means of any rate filing it approves
825	for any insurer among the insurers referred to in subparagraph
826	2.
827	8.7.  In addition to the rates otherwise determined
828	pursuant to this paragraph, the corporation shall impose and
829	collect an amount equal to the premium tax provided for in s.
830	624.509 to augment the financial resources of the corporation.
831	9.8.a.  To assist the corporation in developing additional
832	ratemaking methods to assure compliance with this paragraph
833	subparagraphs 1. and 4., the corporation shall appoint a rate
834	methodology panel consisting of one person recommended by the
835	Florida Association of Insurance Agents, one person recommended
836	by the Professional Insurance Agents of Florida, one person
837	recommended by the Florida Association of Insurance and
838	Financial Advisors, one person recommended by the insurer with
839	the highest voluntary market share of residential property
840	insurance business in the state, one person recommended by the
841	insurer with the second-highest voluntary market share of
842	residential property insurance business in the state, one person
843	recommended by an insurer writing commercial residential
844	property insurance in this state, one person recommended by the
845	Office of Insurance Regulation, and one board member designated
846	by the board chairman, who shall serve as chairman of the panel.
847	b.  By January 1, 2004, the rate methodology panel shall
848	provide a report to the corporation of its findings and
849	recommendations for the use of additional ratemaking methods and
850	procedures, including the use of a rate equalization surcharge
851	in an amount sufficient to assure that the total cost of
852	coverage for policyholders or applicants to the corporation is
853	sufficient to comply with subparagraph 1.
854	c.  Within 30 days after such report, the corporation shall
855	present to the President of the Senate, the Speaker of the House
856	of Representatives, the minority party leaders of each house of
857	the Legislature, and the chairs of the standing committees of
858	each house of the Legislature having jurisdiction of insurance
859	issues, a plan for implementing the additional ratemaking
860	methods and an outline of any legislation needed to facilitate
861	use of the new methods.
862	d.  The plan must include a provision that producer
863	commissions paid by the corporation shall not be calculated in
864	such a manner as to include any rate equalization surcharge.
865	However, without regard to the plan to be developed or its
866	implementation, producer commissions paid by the corporation for
867	each account, other than the quota share primary program, shall
868	remain fixed as to percentage, effective rate, calculation, and
869	payment method until January 1, 2004.
870	10.9.  By January 1, 2004, The corporation shall develop a
871	notice to policyholders or applicants that the rates of Citizens
872	Property Insurance Corporation are intended to be higher than
873	the rates of any admitted carrier except when the provisions of
874	subparagraph 4. apply and providing other information the
875	corporation deems necessary to assist consumers in finding other
876	voluntary admitted insurers willing to insure their property.
877	(q)  The corporation shall not require the securing of
878	flood insurance as a condition of coverage if the property risk
879	of the insured or applicant is located in a Special Flood Hazard
880	Area as defined by the Federal Emergency Management Agency for
881	the National Flood Insurance Program. executes a form approved
882	by the office affirming that Flood insurance is not provided by
883	the corporation and that if flood insurance is not secured by
884	the applicant or insured in addition to coverage by the
885	corporation, the risk will not be covered for flood damage. A
886	corporation policyholder that does electing not to secure flood
887	insurance and makes a claim executing a form as provided herein
888	making a claim for water damage against the corporation shall
889	have the burden of proving the damage was not caused by
890	flooding. Notwithstanding other provisions of this subsection,
891	the corporation may deny coverage or refuse to issue or renew a
892	policy to an applicant or insured who refuses to purchase flood
893	insurance as required by this subsection to execute the form
894	described herein.
895	Section 7.  Subsection (1) of section 627.411, Florida
896	Statutes, is amended to read:
897	627.411  Grounds for disapproval.--
898	(1)  The office shall disapprove any form filed under s.
899	627.410, or withdraw any previous approval thereof, only if the
900	form:
901	(a)  Is in any respect in violation of, or does not comply
902	with, this code.
903	(b)  Contains or incorporates by reference, where such
904	incorporation is otherwise permissible, any inconsistent,
905	ambiguous, or misleading clauses, or exceptions and conditions
906	which deceptively affect the risk purported to be assumed in the
907	general coverage of the contract.
908	(c)  Has any title, heading, or other indication of its
909	provisions which is misleading.
910	(d)  Is printed or otherwise reproduced in such manner as
911	to render any material provision of the form substantially
912	illegible.
913	(e)  Is for residential property insurance and contains
914	provisions that are unfair or inequitable or encourage
915	misrepresentation.
916	(f)(e)  Is for health insurance, and:
917	1.  Provides benefits that are unreasonable in relation to
918	the premium charged.;
919	2.  Contains provisions that are unfair or inequitable or
920	contrary to the public policy of this state or that encourage
921	misrepresentation.;
922	3.  Contains provisions that apply rating practices that
923	result in unfair discrimination pursuant to s. 626.9541(1)(g)2.
924	(g)(f)  Excludes coverage for human immunodeficiency virus
925	infection or acquired immune deficiency syndrome or contains
926	limitations in the benefits payable, or in the terms or
927	conditions of such contract, for human immunodeficiency virus
928	infection or acquired immune deficiency syndrome which are
929	different than those which apply to any other sickness or
930	medical condition.
931	Section 8.  Subsection (3) of section 627.7011, Florida
932	Statutes, is renumbered as subsection (4), and a new subsection
933	(3) is added to said section, to read:
934	627.7011  Homeowners' policies; offer of replacement cost
935	coverage and law and ordinance coverage.--
936	(3)  In the event of a covered loss to the dwelling, the
937	insurer shall pay no less than the actual cash value of the
938	damaged part of the dwelling at the time of the loss, subject to
939	the limits of coverage and terms contained in the policy. Once
940	the dwelling is repaired or replaced, the insurer shall pay the
941	remainder of the repair or replacement costs, subject to limits
942	of coverage and terms contained in the policy. The insurer is
943	not required to pay more than the actual cost to repair or
944	replace the dwelling.
945	(4)(3)  Nothing in this section shall be construed to apply
946	to policies not considered to be "homeowners' policies," as that
947	term is commonly understood in the insurance industry. This
948	section specifically does not apply to mobile home policies.
949	Nothing in this section shall be construed as limiting the
950	ability of any insurer to reject or nonrenew any insured or
951	applicant on the grounds that the structure does not meet
952	underwriting criteria applicable to replacement cost or law and
953	ordinance policies or for other lawful reasons.
954	Section 9.  Effective October 1, 2005, subsection (1) of
955	section 627.7011, Florida Statutes, is amended, and subsection
956	(4) is added to said section, to read:
957	627.7011  Homeowners' policies; offer of replacement cost
958	coverage and law and ordinance coverage.--
959	(1)  Prior to issuing a homeowner's insurance policy on or
960	after October 1, 2005 June 1, 1994, or prior to the first
961	renewal of a homeowner's insurance policy on or after October 1,
962	2005 June 1, 1994, the insurer must offer each of the following:
963	(a)  A policy or endorsement providing that any loss which
964	is repaired or replaced will be adjusted on the basis of
965	replacement costs not exceeding policy limits as to the
966	dwelling, rather than actual cash value, but not including costs
967	necessary to meet applicable laws and ordinances regulating the
968	construction, use, or repair of any property or requiring the
969	tearing down of any property, including the costs of removing
970	debris.
971	(b)  A policy or endorsement providing that, subject to
972	other policy provisions, any loss which is repaired or replaced
973	at any location will be adjusted on the basis of replacement
974	costs not exceeding policy limits as to the dwelling, rather
975	than actual cash value, and also including costs necessary to
976	meet applicable laws and ordinances regulating the construction,
977	use, or repair of any property or requiring the tearing down of
978	any property, including the costs of removing debris; however,
979	such additional costs necessary to meet applicable laws and
980	ordinances may be limited to either 25 percent or 50 percent of
981	the dwelling limit, as selected by the policyholder, and such
982	coverage shall apply only to repairs of the damaged portion of
983	the structure unless the total damage to the structure exceeds
984	50 percent of the replacement cost of the structure.
985
986	An insurer is not required to make the offers required by this
987	subsection with respect to the issuance or renewal of a
988	homeowner's policy that contains the provisions specified in
989	paragraph (b) for law and ordinance coverage limited to 25
990	percent of the dwelling limit, except that the insurer must
991	offer the law and ordinance coverage limited to 50 percent of
992	the dwelling limit. This subsection does not prohibit the offer
993	of a guaranteed replacement cost policy.
994	(4)  Any homeowner's insurance policy issued or renewed on
995	or after October 1, 2005, must include in bold type no smaller
996	than 18 points the following statement:
997	"LAW AND ORDINANCE COVERAGE IS AN IMPORTANT COVERAGE THAT
998	YOU MAY WISH TO PURCHASE. YOU MAY ALSO NEED TO CONSIDER
999	THE PURCHASE OF FLOOD INSURANCE FROM THE NATIONAL FLOOD
1000	INSURANCE PROGRAM. WITHOUT THIS COVERAGE, YOU MAY HAVE
1001	UNCOVERED LOSSES. PLEASE DISCUSS THESE COVERAGES WITH
1002	YOUR INSURANCE AGENT."
1003	The intent of this subsection is to encourage policyholders to
1004	purchase sufficient coverage to protect them in case events
1005	excluded from the standard homeowners policy, such as law and
1006	ordinance enforcement and flood, combine with covered events to
1007	produce damage or loss to the insured property. The intent is
1008	also to encourage policyholders to discuss these issues with
1009	their insurance agent.
1010	Section 10.  Subsections (1) and (7) of section 627.7015,
1011	Florida Statutes, are amended to read:
1012	627.7015  Alternative procedure for resolution of disputed
1013	property insurance claims.--
1014	(1)  PURPOSE AND SCOPE.--This section sets forth a
1015	nonadversarial alternative dispute resolution procedure for a
1016	mediated claim resolution conference prompted by the need for
1017	effective, fair, and timely handling of property insurance
1018	claims. There is a particular need for an informal,
1019	nonthreatening forum for helping parties who elect this
1020	procedure to resolve their claims disputes because most
1021	homeowner's and commercial residential insurance policies
1022	obligate insureds to participate in a potentially expensive and
1023	time-consuming adversarial appraisal process prior to
1024	litigation. The procedure set forth in this section is designed
1025	to bring the parties together for a mediated claims settlement
1026	conference without any of the trappings or drawbacks of an
1027	adversarial process. Before resorting to these procedures,
1028	insureds and insurers are encouraged to resolve claims as
1029	quickly and fairly as possible. This section is available with
1030	respect to claims under personal lines and commercial
1031	residential policies for all claimants and insurers prior to
1032	commencing the appraisal process, or commencing litigation. If
1033	requested by the insured, participation by legal counsel shall
1034	be permitted. Mediation under this section is also available to
1035	litigants referred to the department by a county court or
1036	circuit court. This section does not apply to commercial
1037	coverages, to private passenger motor vehicle insurance
1038	coverages, or to disputes relating to liability coverages in
1039	policies of property insurance.
1040	(7)  If the insurer fails to comply with subsection (2) by
1041	failing to notify a first-party claimant of its right to
1042	participate in the mediation program under this section or if
1043	the insurer requests the mediation, and the mediation results
1044	are rejected by either party, the insured shall not be required
1045	to submit to or participate in any contractual loss appraisal
1046	process of the property loss damage as a precondition to legal
1047	action for breach of contract against the insurer for its
1048	failure to pay the policyholder's claims covered by the policy.
1049	Section 11.  Effective upon this act becoming a law,
1050	subsection (1) of section 627.702, Florida Statutes, is amended
1051	to read:
1052	627.702  Valued policy law.--
1053	(1)(a)  In the event of the total loss of any building,
1054	structure, mobile home as defined in s. 320.01(2), or
1055	manufactured building as defined in s. 553.36(12), located in
1056	this state and insured by any insurer as to a covered peril, in
1057	the absence of any change increasing the risk without the
1058	insurer's consent and in the absence of fraudulent or criminal
1059	fault on the part of the insured or one acting in her or his
1060	behalf, the insurer's liability, if any, under the policy for
1061	such total loss, if caused by a covered peril, shall be in the
1062	amount of money for which such property was so insured as
1063	specified in the policy and for which a premium has been charged
1064	and paid.
1065	(b)  The intent of this subsection is not to deprive an
1066	insurer of any proper defense under the policy, to create new or
1067	additional coverage under the policy, or to require an insurer
1068	to pay for a loss caused by a peril other than the covered
1069	peril. In furtherance of such legislative intent, when a loss
1070	was caused in part by a covered peril and in part by a
1071	noncovered peril, paragraph (a) does not apply. In such
1072	circumstances, the insurer's liability under this section shall
1073	be limited to the amount of the loss caused by the covered
1074	peril.
1075	(c)  It is the intent of the Legislature that the amendment
1076	to this section shall not be applied retroactively and shall
1077	apply only to claims filed after effective date of such
1078	amendment.
1079	Section 12.  Section 627.706, Florida Statutes, is amended
1080	to read:
1081	627.706  Sinkhole insurance; definitions.--
1082	(1)  Every insurer authorized to transact property
1083	insurance in this state shall make available coverage for
1084	insurable sinkhole losses on any structure, including contents
1085	of personal property contained therein, to the extent provided
1086	in the form to which the sinkhole coverage attaches.
1087	(2)  As used in ss. 627.706-627.7074, and as used in
1088	connection with any policy providing coverage for sinkhole
1089	losses:
1090	(a)  "Sinkhole" means a landform created by subsidence of
1091	soil, sediment, or rock as underlying strata are dissolved by
1092	ground water. A sinkhole may form by collapse into subterranean
1093	voids created by dissolution of limestone or dolostone or by
1094	subsidence as these strata are dissolved.
1095	(b)  "Sinkhole loss" means structural damage to a the
1096	building caused by sinkhole activity. Contents coverage shall
1097	apply only if there is structural damage to the building caused
1098	by sinkhole activity.
1099	(c)(3)  "Sinkhole activity loss" means actual physical
1100	damage to the property covered arising out of or caused by
1101	sudden settlement or systematic weakening collapse of the earth
1102	supporting such property only when such settlement or systematic
1103	weakening collapse results from movement or raveling of soils,
1104	sediments, or rock materials into subterranean voids created by
1105	the effect action of water on a limestone or similar rock
1106	formation.
1107	(d)  "Engineer" means a person, as defined in s. 471.005,
1108	who has a bachelor's degree or higher in engineering with a
1109	specialty in the geotechnical engineering field. An engineer
1110	must have geotechnical experience and expertise in the
1111	identification of sinkhole activity as well as other potential
1112	causes of damage to the structure.
1113	(e)  "Professional geologist" means a person, as defined by
1114	s. 492.102, who has a bachelor's degree or higher in geology or
1115	a related earth science with expertise in the geology of this
1116	state. A professional geologist must have geological experience
1117	and expertise in the identification of sinkhole activity as well
1118	as other potential causes of damage to the structure.
1119	(3)(4)  Every insurer authorized to transact property
1120	insurance in this state shall make a proper filing with the
1121	office for the purpose of extending the appropriate forms of
1122	property insurance to include coverage for insurable sinkhole
1123	losses.
1124	Section 13.  Section 627.7065, Florida Statutes, is created
1125	to read:
1126	627.7065  Database of information relating to sinkholes;
1127	the Department of Financial Services and the Department of
1128	Environmental Protection.--
1129	(1)  The Legislature finds that there has been a dramatic
1130	increase in the number of sinkholes and insurance claims for
1131	sinkhole damage in the state during the past 10 years.
1132	Accordingly, the Legislature recognizes the need to track
1133	current and past sinkhole activity and to make the information
1134	available for prevention and remediation activities. The
1135	Legislature further finds that the Florida Geological Survey of
1136	the Department of Environmental Protection has created a partial
1137	database of some sinkholes identified in Florida, although the
1138	database is not reflective of all sinkholes or insurance claims
1139	for sinkhole damage. The Legislature determines that creating a
1140	complete electronic database of sinkhole activity serves an
1141	important purpose in protecting the public and in studying
1142	property claims activities in the insurance industry.
1143	(2)  The Department of Financial Services, including the
1144	employee of the Division of Consumer Services designated as the
1145	primary contact for consumers on issues relating to sinkholes,
1146	and the Office of the Insurance Consumer Advocate shall consult
1147	with the Florida Geological Survey and the Department of
1148	Environmental Protection to implement a statewide automated
1149	database of sinkholes and related activity identified in the
1150	state.
1151	(3)  Representatives of the Department of Financial
1152	Services, with the agreement of the Department of Environmental
1153	Protection, shall determine the form and content of the
1154	database. The content may include standards for reporting and
1155	investigating sinkholes for inclusion in the database and
1156	requirements for insurers to report to the departments the
1157	receipt of claims involving sinkhole loss and other similar
1158	activities. The Department of Financial Services may require
1159	insurers to report present and past data of sinkhole claims. The
1160	database also may include information of damage due to ground
1161	settling and other subsidence activity.
1162	(4)  The Department of Financial Services may manage the
1163	database or may contract for its management and maintenance. The
1164	Department of Environmental Protection shall investigate reports
1165	of sinkhole activity and include its findings and investigations
1166	in the database.
1167	(5)  The Department of Environmental Protection, in
1168	consultation with the Department of Financial Services, shall
1169	present a report of activities relating to the sinkhole
1170	database, including recommendations regarding the database and
1171	similar matters, to the Governor, the Speaker of the House of
1172	Representatives, the President of the Senate, and the Chief
1173	Financial Officer by December 31, 2005. The report may consider
1174	the need for the Legislature to create an entity to study the
1175	increase in sinkhole activity in the state and other similar
1176	issues relating to sinkhole damage, including recommendations
1177	and costs for staffing the entity. The report may include other
1178	information, as appropriate.
1179	(6)  The Department of Financial Services, in consultation
1180	with the Department of Environmental Protection, may adopt rules
1181	to implement the provisions of this section.
1182	Section 14.  Section 627.707, Florida Statutes, is amended
1183	to read:
1184	627.707  Minimum Standards for investigation of sinkhole
1185	claims by insurers; nonrenewals.--
1186	(1)  Upon receipt of a claim for a sinkhole loss, an
1187	insurer must meet the following minimum standards in
1188	investigating a claim:
1189	(1)(a)  Upon receipt of a claim for a sinkhole loss, The
1190	insurer must make an inspection of the insured's premises to
1191	determine if there has been physical damage to the structure
1192	which may might be the result of sinkhole activity.
1193	(b)  If, upon the investigation pursuant to paragraph (a),
1194	the insurer discovers damage to a structure which is consistent
1195	with sinkhole activity or if the structure is located in close
1196	proximity to a structure in which sinkhole damage has been
1197	verified, then prior to denying a claim, the insurer must obtain
1198	a written certification from an individual qualified to
1199	determine the existence of sinkhole activity, stating that the
1200	cause of the claim is not sinkhole activity, and that the
1201	analysis conducted was of sufficient scope to eliminate sinkhole
1202	activity as the cause of damage within a reasonable professional
1203	probability. The written certification must also specify the
1204	professional discipline and professional licensure or
1205	registration under which the analysis was conducted.
1206	(2)  Following the insurer's initial inspection, the
1207	insurer shall engage an engineer and a professional geologist to
1208	conduct testing as provided in s. 627.7072 to determine the
1209	cause of the loss within a reasonable professional probability
1210	and issue a report as provided in s. 627.7073, if:
1211	(a)  The insurer is unable to identify a valid cause of the
1212	damage or discovers damage to the structure which is consistent
1213	with sinkhole loss; or
1214	(b)  The policyholder demands testing in accordance with
1215	this section or s. 627.7072.
1216	(3)  Following the initial inspection of the insured
1217	premises, the insurer shall provide written notice to the
1218	policyholder disclosing the following information:
1219	(a)  What the insurer has determined to be the cause of
1220	damage, if the insurer has made such a determination.
1221	(b)  A statement of the circumstances under which the
1222	insurer is required to engage an engineer and a professional
1223	geologist to verify or eliminate sinkhole loss and to make
1224	recommendations regarding land and building stabilization and
1225	foundation repair.
1226	(c)  A statement regarding the right of the policyholder to
1227	request testing by an engineer and a professional geologist and
1228	the circumstances under which the policyholder may demand
1229	certain testing.
1230	(4)  If the insurer determines that there is no sinkhole
1231	loss, the insurer may deny the claim. If the insurer denies the
1232	claim, without performing testing under s. 627.7072, the
1233	policyholder may demand testing by the insured under s.
1234	627.7072. The policyholder's demand for testing must be
1235	communicated to the insurer in writing after the policyholder's
1236	receipt of the insurer's denial of the claim.
1237	(5)(a)  Subject to paragraph (b), if a sinkhole loss is
1238	verified, the insurer shall pay to stabilize the land and
1239	building and repair the foundation in accordance with the
1240	recommendations of the engineer and the professional geologist
1241	as provided under s. 627.7073, and in consultation with the
1242	policyholder, subject to the coverage and terms of the policy.
1243	The insurer shall pay for other repairs to the structure and
1244	contents in accordance with the terms of the policy.
1245	(b)  The insurer may limit its payment to the actual cash
1246	value of the sinkhole loss until such time as expenses related
1247	to land and building stabilization and foundation repairs are
1248	incurred.
1249	(6)  Except as provided in subsection (7), the fees and
1250	costs of the engineer or the professional geologist shall be
1251	paid by the insurer.
1252	(7)(c)  If the insurer obtains, pursuant to s. 627.7073
1253	paragraph (b), written certification that there is no sinkhole
1254	loss or that the cause of the damage claim was not sinkhole
1255	activity, and if the policyholder has submitted the sinkhole
1256	claim without good faith grounds for submitting such claim, the
1257	policyholder shall reimburse the insurer for 50 percent of the
1258	actual costs cost of the analyses and services provided analysis
1259	under ss. 627.7072 and 627.7073 paragraph (b); however, a
1260	policyholder is not required to reimburse an insurer more than
1261	$2,500 with respect to any claim. A policyholder is required to
1262	pay reimbursement under this subsection paragraph only if the
1263	insurer, prior to ordering the analysis under s. 627.7072
1264	paragraph (b), informs the policyholder in writing of the
1265	policyholder's potential liability for reimbursement and gives
1266	the policyholder the opportunity to withdraw the claim.
1267	(8)(2)  No insurer shall nonrenew any policy of property
1268	insurance on the basis of filing of claims for partial loss
1269	caused by sinkhole damage or clay shrinkage as long as the total
1270	of such payments does not exceed the current policy limits of
1271	coverage for property damage, and provided the insured has
1272	repaired the structure in accordance with the engineering
1273	recommendations upon which any payment or policy proceeds were
1274	based.
1275	(9)  The insurer may engage a structural engineer to make
1276	recommendations as to the repair of the structure.
1277	Section 15.  Section 627.7072, Florida Statutes, is created
1278	to read:
1279	627.7072  Testing standards for sinkholes.--
1280	(1)  The engineer and professional geologist shall perform
1281	such tests as sufficient, in their professional opinion, to
1282	determine the presence or absence of sinkhole loss or other
1283	cause of damage within reasonable professional probability and
1284	to make recommendations regarding necessary building
1285	stabilization and foundation repair.
1286	(2)  Testing shall be conducted in compliance with the
1287	Florida Geological Survey Special Publication No. 57 (2005).
1288	Section 16.  Section 627.7073, Florida Statutes, is created
1289	to read:
1290	627.7073  Sinkhole reports.--
1291	(1)  Upon completion of testing as provided in s. 627.7072,
1292	the engineer and professional geologist shall issue a report and
1293	certification to the insurer and the policyholder as provided in
1294	this section.
1295	(a)  Sinkhole loss is verified if, based upon tests
1296	performed in accordance with s. 627.7072, an engineer and a
1297	professional geologist issue a written report and certification
1298	stating:
1299	1.  That the cause of the actual physical and structural
1300	damage is sinkhole activity within a reasonable professional
1301	probability.
1302	2.  That the analyses conducted were of sufficient scope to
1303	identify sinkhole activity as the cause of damage within a
1304	reasonable professional probability.
1305	3.  A description of the tests performed.
1306	4.  A recommendation of methods for stabilizing the land
1307	and building and for making repairs to the foundation.
1308	(b)  If sinkhole activity is eliminated as the cause of
1309	damage to the structure, the engineer and professional geologist
1310	shall issue a written report and certification to the
1311	policyholder and the insurer stating:
1312	1.  That the cause of the damage is not sinkhole activity
1313	within a reasonable professional probability.
1314	2.  That the analyses and tests conducted were of
1315	sufficient scope to eliminate sinkhole activity as the cause of
1316	damage within a reasonable professional probability.
1317	3.  A statement of the cause of the damage within a
1318	reasonable professional probability.
1319	4.  A description of the tests performed.
1320	(c)  The respective findings, opinions, and recommendations
1321	of the engineer and professional geologist as to the
1322	verification of a sinkhole loss, land and building
1323	stabilization, foundation repair, and elimination of sinkhole
1324	loss shall be presumed correct.
1325	(2)  Any insurer that has paid a claim for a sinkhole loss
1326	shall file a copy of the report and certification, prepared
1327	pursuant to subsection (1), with the county property appraiser
1328	who shall record the report and certification with the parcel
1329	number. The insurer shall bear the cost of filing and recording
1330	the report and certification. There shall be no cause of action
1331	or liability against an insurer for compliance with this
1332	section. The seller of real property upon which a sinkhole claim
1333	has been made shall disclose to the buyer of such property that
1334	a claim has been paid and whether or not the full amount of the
1335	proceeds were used to repair the sinkhole damage.
1336	Section 17.  Notwithstanding that revenues of Citizens
1337	Property Insurance Corporation are not state revenues, the
1338	Auditor General shall perform an operational audit, as defined
1339	in s. 11.45(1), Florida Statutes, of the Citizens Property
1340	Insurance Corporation created under s. 627.351(6), Florida
1341	Statutes. The scope of the audit shall also include:
1342	(1)  An analysis of the corporation's infrastructure,
1343	customer service, claims handling, accessibility of policyholder
1344	information to the agent of record, take-out programs, take-out
1345	bonuses, and financing arrangements.
1346	(2)  An evaluation of costs associated with the
1347	administration and servicing of the policies issued by the
1348	corporation to determine alternatives by which costs can be
1349	reduced, customer service improved, and claims handling
1350	improved.
1351
1352	The audit shall contain policy alternatives for the Legislature
1353	to consider. The Auditor General shall submit a report to the
1354	Governor, the President of the Senate, and the Speaker of the
1355	House of Representatives no later than February 1, 2006.
1356	Section 18.  The board of governors of the Citizens
1357	Property Insurance Corporation created under section 627.351(6),
1358	Florida Statutes, shall, by February 1, 2006, submit a report to
1359	the President of the Senate, the Speaker of the House of
1360	Representatives, the minority party leaders of the Senate and
1361	the House of Representatives, and the chairs of the standing
1362	committees of the Senate and the House of Representatives having
1363	jurisdiction over matters relating to property and casualty
1364	insurance. The report shall include the board's findings and
1365	recommendations on the following issues:
1366	(1)  The number of policies and the aggregate premium of
1367	the Citizens Property Insurance Corporation, before and after
1368	enactment of this act, and projections for future policy and
1369	premium growth.
1370	(2)  Increases or decreases in availability of residential
1371	property coverage in the voluntary market and the effectiveness
1372	of this act in improving the availability of residential
1373	property coverage in the voluntary market in the state.
1374	(3)  The board's efforts to depopulate the corporation and
1375	the willingness of insurers in the voluntary market to avail
1376	themselves of depopulation incentives.
1377	(4)  Further actions that could be taken by the Legislature
1378	to improve availability of residential property coverage in the
1379	voluntary and residual markets.
1380	(5)  Actions that the board has taken to restructure the
1381	corporation and recommendations for legislative action to
1382	restructure the corporation, including, but not limited to,
1383	actions relating to claims handling and customer service.
1384	(6)  Projected surpluses or deficits and possible means of
1385	providing funding to ensure the continued solvency of the
1386	corporation.
1387	(7)  The corporation's efforts to procure catastrophe
1388	reinsurance to cover its projected 100-year probable maximum
1389	loss with specification as to what best efforts were made by the
1390	corporation to procure such reinsurance.
1391	(8)  Such other issues as the board determines are worthy
1392	of the Legislature's consideration.
1393	Section 19.  (1) Upon an insurer's receiving a
1394	communication with respect to a claim, the insurer shall, within
1395	14 calendar days, review and acknowledge receipt of such
1396	communication unless payment is made within that period of time
1397	or unless the failure to acknowledge is caused by factors beyond
1398	the control of the insurer which reasonably prevent such
1399	acknowledgement. If the acknowledgement is not in writing, a
1400	notification indicating acknowledgement shall be made in the
1401	insurer's claim file and dated. A communication made to or by an
1402	agent of an insurer with respect to a claim shall constitute
1403	communication to or by the insurer. As used in this subsection,
1404	the term "agent" means any person to whom an insurer has granted
1405	authority or responsibility to receive or make such
1406	communications with respect to claims on behalf of the insurer.
1407	This subsection shall not apply to claimants represented by
1408	counsel beyond those communications necessary to provide forms
1409	and instructions.
1410	(2)  Such acknowledgement shall be responsive to the
1411	communication. If the communication constitutes a notification
1412	of a claim, unless the acknowledgement reasonably advises the
1413	claimant that the claim appears not to be covered by the
1414	insurer, the acknowledgement shall provide necessary claim
1415	forms, and instructions, including an appropriate telephone
1416	number.
1417	(3)  Unless otherwise provided by the policy of insurance
1418	or by law, within 10 working days after an insurer receives
1419	proof of loss statements the insurer shall begin such
1420	investigation as is reasonably necessary unless the failure to
1421	begin such investigation is caused by factors beyond the control
1422	of the insurer which reasonably prevent the commencement of such
1423	investigation.
1424	Section 20.  Sections 3 and 4 of this act shall take effect
1425	on the same date that House Bill 1939 or similar legislation
1426	takes effect, if such legislation is adopted in the same
1427	legislative session or an extension thereof and becomes a law.
1428	Section 21.  Except as otherwise provided herein, this act
1429	shall take effect July 1, 2005.

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