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; requiring the Office of Insurance Regulation to
122	submit a report to the Legislature relating to residential
123	property insurance; providing report requirements;
124	providing effective dates.
125
126	Be It Enacted by the Legislature of the State of Florida:
127
128	Section 1.  Section 489.1285, Florida Statutes, is created
129	to read:
130	489.1285  Consumer protections; contract limitations.--
131	Subsequent to the issuance of an executive order by the Office
132	of the Governor declaring the existence of a state of emergency
133	as a result and consequence of a serious threat posed to the
134	public health, safety, and property in this state, in which
135	damage to property has occurred and for which property insurance
136	claims have been filed, the following consumer protection
137	measures shall be in effect:
138	(1)  A contract for the repair or reroofing of a
139	residential structure that has been agreed to in writing by the
140	parties to the contract shall be a valid and binding agreement.
141	A roofing contractor licensed pursuant to this chapter who is a
142	party to a contract for the repair or reroofing of a residential
143	structure shall be bound by the qualifications for licensure and
144	the job scope specified in this chapter for a roofing contractor
145	to provide timely and professional services.
146	(2)  If a contract is agreed to for the repair of a roof or
147	reroofing of a residential structure, which repair is necessary
148	as a result of damage caused by an emergency situation
149	designated by executive order, the damages must be confirmed by
150	a third party who is independent from the parties to the
151	contract that the damages are a direct result of a designated
152	emergency situation. Third-party confirmation must be attested
153	to by an insurance adjuster, emergency management personnel,
154	local building official, or other similar authority.
155	(3)(a)  A contract for services shall not be valid after 60
156	calendar days after the date the contract agreement was signed
157	by the parties to the contract. The contract may not provide for
158	an automatic extension of time for the provisions of the
159	contract. After the 60 days have expired, the contract shall be
160	null and void by operation of law.
161	(b)  Within 10 calendar days after the period of time for
162	expiration of the contract, the parties to the contract may
163	agree in writing, as a separate contract to the original
164	contract, to an additional period of 60 calendar days beyond the
165	time period specified in the original contract to complete the
166	roofing services. If the performance of services under the
167	contract by the roofing contractor have not been completed, the
168	contract shall be null and void with no further responsibilities
169	or duties on the part of the parties to the contract except as
170	provided in this paragraph and subsection (4).
171	(c)  The subsequent contract may be extended beyond the
172	additional 60 days pursuant to a written agreement between the
173	parties and signed as an addendum or supplement to the contract.
174	The delay or extension of services may only be agreed to if the
175	delay in providing the contractual services is due to the
176	unavailability, beyond the control of the roofing contractor, of
177	roofing materials necessary for the completion of the repair or
178	reroofing of the residence. The contracted price of the services
179	may not be changed from the agreed to cost specified in the
180	subsequent contract.
181	(4)  Subsequent to the expiration of the contract or
182	contracts specified in subsection (3), the contractor shall
183	refund and pay in full, upon demand, any and all remuneration
184	received in the form of a prepayment, up-front fee, deposit, or
185	other consideration already paid to the contractor.
186	(5)  The provisions of this section apply to registered, as
187	well as certified, roofing contractors.
188	Section 2.  Subsection (5) of section 627.062, Florida
189	Statutes, is amended to read:
190	627.062  Rate standards.--
191	(5)  With respect to a rate filing involving coverage of
192	the type for which the insurer is required to pay a
193	reimbursement premium to the Florida Hurricane Catastrophe Fund,
194	the insurer may fully recoup in its property insurance premiums
195	any reimbursement premiums paid to the Florida Hurricane
196	Catastrophe Fund, together with reasonable costs of other
197	reinsurance, but may not recoup reinsurance costs that duplicate
198	coverage provided by the Florida Hurricane Catastrophe Fund. An
199	insurer may not recoup more than one year of reimbursement
200	premium at a time. Any under-recoupment from the prior year may
201	be added to the following year's reimbursement premium and any
202	over-recoupment shall be subtracted from the following year's
203	reimbursement premium.
204	Section 3.  Paragraph (c) of subsection (1) and paragraph
205	(c) of subsection (3) of section 627.0628, Florida Statutes, are
206	amended to read:
207	627.0628  Florida Commission on Hurricane Loss Projection
208	Methodology.--
209	(1)  LEGISLATIVE FINDINGS AND INTENT.--
210	(c)  It is the intent of the Legislature to create the
211	Florida Commission on Hurricane Loss Projection Methodology as a
212	panel of experts to provide the most actuarially sophisticated
213	guidelines and standards for projection of hurricane losses
214	possible, given the current state of actuarial science. It is
215	the further intent of the Legislature that such standards and
216	guidelines must be used by the State Board of Administration in
217	developing reimbursement premium rates for the Florida Hurricane
218	Catastrophe Fund, and, subject to paragraph (3)(c), may be used
219	by insurers in rate filings under s. 627.062 unless the way in
220	which such standards and guidelines were applied by the insurer
221	was erroneous, as shown by a preponderance of the evidence.
222	(3)  ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--
223	(c)  With respect to a rate filing under s. 627.062, an
224	insurer may employ actuarial methods, principles, standards,
225	models, or output ranges found by the commission to be accurate
226	or reliable to determine hurricane loss factors for use in a
227	rate filing under s. 627.062. Such, which findings and factors
228	are admissible and relevant in consideration of a rate filing by
229	the office or in any arbitration or administrative or judicial
230	review only if the office and the consumer advocate appointed
231	pursuant to s. 627.0613 have access to all of the assumptions
232	and factors that were used in developing the actuarial methods,
233	principles, standards, models, or output ranges and are not
234	precluded from disclosing such information in a rate proceeding.
235	Section 4.  Section 627.06281, Florida Statutes, is created
236	to read:
237	627.06281  Public hurricane loss projection model;
238	reporting of data by insurers.--Within 30 days after a written
239	request for loss data and associated exposure data by the office
240	or a type I center within the State University System
241	established to study mitigation, residential property insurers
242	and licensed rating and advisory organizations that compile
243	residential property insurance loss data shall provide loss data
244	and associated exposure data for residential property insurance
245	policies to the office or to a type I center within the State
246	University System established to study mitigation, as directed
247	by the office, for the purposes of developing, maintaining, and
248	updating a public model for hurricane loss projections. The loss
249	data and associated exposure data provided shall be in writing.
250	Any loss data and associated exposure data provided pursuant to
251	this section that constitutes a trade secret as defined in s.
252	812.081, and as provided in s. 815.04(3), shall be subject to
253	the provisions of s. 815.045.
254	Section 5.  Subsection (7) of section 627.0629, Florida
255	Statutes, is amended to read:
256	627.0629  Residential property insurance; rate filings.--
257	(7)  Any rate filing that is based in whole or part on data
258	from a computer model may not exceed 15 25 percent unless there
259	is a public hearing.
260	Section 6.  Paragraphs (a), (c), (d), and (q) of subsection
261	(6) of section 627.351, Florida Statutes, are amended to read:
262	627.351  Insurance risk apportionment plans.--
263	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
264	(a)1.  The Legislature finds that actual and threatened
265	catastrophic losses to property in this state from hurricanes
266	have caused insurers to be unwilling or unable to provide
267	property insurance coverage to the extent sought and needed. It
268	is in the public interest and a public purpose to assist in
269	assuring that property in the state is insured so as to
270	facilitate the remediation, reconstruction, and replacement of
271	damaged or destroyed property in order to reduce or avoid the
272	negative effects otherwise resulting to the public health,
273	safety, and welfare; to the economy of the state; and to the
274	revenues of the state and local governments needed to provide
275	for the public welfare. It is necessary, therefore, to provide
276	property insurance to applicants who are in good faith entitled
277	to procure insurance through the voluntary market but are unable
278	to do so. The Legislature intends by this subsection that
279	property insurance be provided and that it continues, as long as
280	necessary, through an entity organized to achieve efficiencies
281	and economies, while providing service to policyholders,
282	applicants, and agents that is no less than the quality
283	generally provided in the voluntary market, all toward the
284	achievement of the foregoing public purposes. Because it is
285	essential for the corporation to have the maximum financial
286	resources to pay claims following a catastrophic hurricane, it
287	is the intent of the Legislature that the income of the
288	corporation be exempt from federal income taxation and that
289	interest on the debt obligations issued by the corporation be
290	exempt from federal income taxation.
291	2.  The Residential Property and Casualty Joint
292	Underwriting Association originally created by this statute
293	shall be known, as of July 1, 2002, as the Citizens Property
294	Insurance Corporation. The corporation shall provide insurance
295	for residential and commercial property, for applicants who are
296	in good faith entitled, but are unable, to procure insurance
297	through the voluntary market. The corporation shall operate
298	pursuant to a plan of operation approved by order of the office.
299	The plan is subject to continuous review by the office. The
300	office may, by order, withdraw approval of all or part of a plan
301	if the office determines that conditions have changed since
302	approval was granted and that the purposes of the plan require
303	changes in the plan. For the purposes of this subsection,
304	residential coverage includes both personal lines residential
305	coverage, which consists of the type of coverage provided by
306	homeowner's, mobile home owner's, dwelling, tenant's,
307	condominium unit owner's, and similar policies, and commercial
308	lines residential coverage, which consists of the type of
309	coverage provided by condominium association, apartment
310	building, and similar policies.
311	3.  It is the intent of the Legislature that policyholders,
312	applicants, and agents of the corporation receive service and
313	treatment of the highest possible level but never less than that
314	generally provided in the voluntary market. It also is intended
315	that the corporation be held to service standards no less than
316	those applied to insurers in the voluntary market by the office
317	with respect to responsiveness, timeliness, customer courtesy,
318	and overall dealings with policyholders, applicants, or agents
319	of the corporation.
320	(c)  The plan of operation of the corporation:
321	1.  Must provide for adoption of residential property and
322	casualty insurance policy forms and commercial residential and
323	nonresidential property insurance forms, which forms must be
324	approved by the office prior to use. The corporation shall adopt
325	the following policy forms:
326	a.  Standard personal lines policy forms that are
327	comprehensive multiperil policies providing full coverage of a
328	residential property equivalent to the coverage provided in the
329	private insurance market under an HO-3, HO-4, or HO-6 policy.
330	b.  Basic personal lines policy forms that are policies
331	similar to an HO-8 policy or a dwelling fire policy that provide
332	coverage meeting the requirements of the secondary mortgage
333	market, but which coverage is more limited than the coverage
334	under a standard policy.
335	c.  Commercial lines residential policy forms that are
336	generally similar to the basic perils of full coverage
337	obtainable for commercial residential structures in the admitted
338	voluntary market.
339	d.  Personal lines and commercial lines residential
340	property insurance forms that cover the peril of wind only. The
341	forms are applicable only to residential properties located in
342	areas eligible for coverage under the high-risk account referred
343	to in sub-subparagraph (b)2.a.
344	e.  Commercial lines nonresidential property insurance
345	forms that cover the peril of wind only. The forms are
346	applicable only to nonresidential properties located in areas
347	eligible for coverage under the high-risk account referred to in
348	sub-subparagraph (b)2.a.
349
350	For new personal residential risks written by the corporation on
351	or after May 7, 2005, in areas eligible for coverage in the
352	high-risk account, the corporation shall offer, subject to
353	reasonable underwriting guidelines, a wind only policy with
354	building coverage valued at up to $1 million. For such new
355	personal residential risks covering properties valued at more
356	than $1 million, the corporation shall offer a wind-only policy
357	of up to $1 million of building coverage without any penalty or
358	reduction in coverage for underinsurance or the purchase of
359	other insurance, provided the insured property owner maintains
360	insurance coverage for the value of the building in excess of $1
361	million. Coverage for property other than the building and any
362	attached structures shall be offered by the corporation in
363	addition to the $1 million limit of building coverage. For all
364	existing high-risk account policies in effect on May 7, 2005,
365	the corporation shall continue to offer coverage for the full
366	value of the building and property without limitation.
367	2.a.  Must provide that the corporation adopt a program in
368	which the corporation and authorized insurers enter into quota
369	share primary insurance agreements for hurricane coverage, as
370	defined in s. 627.4025(2)(a), for eligible risks, and adopt
371	property insurance forms for eligible risks which cover the
372	peril of wind only. As used in this subsection, the term:
373	(I)  "Quota share primary insurance" means an arrangement
374	in which the primary hurricane coverage of an eligible risk is
375	provided in specified percentages by the corporation and an
376	authorized insurer. The corporation and authorized insurer are
377	each solely responsible for a specified percentage of hurricane
378	coverage of an eligible risk as set forth in a quota share
379	primary insurance agreement between the corporation and an
380	authorized insurer and the insurance contract. The
381	responsibility of the corporation or authorized insurer to pay
382	its specified percentage of hurricane losses of an eligible
383	risk, as set forth in the quota share primary insurance
384	agreement, may not be altered by the inability of the other
385	party to the agreement to pay its specified percentage of
386	hurricane losses. Eligible risks that are provided hurricane
387	coverage through a quota share primary insurance arrangement
388	must be provided policy forms that set forth the obligations of
389	the corporation and authorized insurer under the arrangement,
390	clearly specify the percentages of quota share primary insurance
391	provided by the corporation and authorized insurer, and
392	conspicuously and clearly state that neither the authorized
393	insurer nor the corporation may be held responsible beyond its
394	specified percentage of coverage of hurricane losses.
395	(II)  "Eligible risks" means personal lines residential and
396	commercial lines residential risks that meet the underwriting
397	criteria of the corporation and are located in areas that were
398	eligible for coverage by the Florida Windstorm Underwriting
399	Association on January 1, 2002.
400	b.  The corporation may enter into quota share primary
401	insurance agreements with authorized insurers at corporation
402	coverage levels of 90 percent and 50 percent.
403	c.  If the corporation determines that additional coverage
404	levels are necessary to maximize participation in quota share
405	primary insurance agreements by authorized insurers, the
406	corporation may establish additional coverage levels. However,
407	the corporation's quota share primary insurance coverage level
408	may not exceed 90 percent.
409	d.  Any quota share primary insurance agreement entered
410	into between an authorized insurer and the corporation must
411	provide for a uniform specified percentage of coverage of
412	hurricane losses, by county or territory as set forth by the
413	corporation board, for all eligible risks of the authorized
414	insurer covered under the quota share primary insurance
415	agreement.
416	e.  Any quota share primary insurance agreement entered
417	into between an authorized insurer and the corporation is
418	subject to review and approval by the office. However, such
419	agreement shall be authorized only as to insurance contracts
420	entered into between an authorized insurer and an insured who is
421	already insured by the corporation for wind coverage.
422	f.  For all eligible risks covered under quota share
423	primary insurance agreements, the exposure and coverage levels
424	for both the corporation and authorized insurers shall be
425	reported by the corporation to the Florida Hurricane Catastrophe
426	Fund. For all policies of eligible risks covered under quota
427	share primary insurance agreements, the corporation and the
428	authorized insurer shall maintain complete and accurate records
429	for the purpose of exposure and loss reimbursement audits as
430	required by Florida Hurricane Catastrophe Fund rules. The
431	corporation and the authorized insurer shall each maintain
432	duplicate copies of policy declaration pages and supporting
433	claims documents.
434	g.  The corporation board shall establish in its plan of
435	operation standards for quota share agreements which ensure that
436	there is no discriminatory application among insurers as to the
437	terms of quota share agreements, pricing of quota share
438	agreements, incentive provisions if any, and consideration paid
439	for servicing policies or adjusting claims.
440	h.  The quota share primary insurance agreement between the
441	corporation and an authorized insurer must set forth the
442	specific terms under which coverage is provided, including, but
443	not limited to, the sale and servicing of policies issued under
444	the agreement by the insurance agent of the authorized insurer
445	producing the business, the reporting of information concerning
446	eligible risks, the payment of premium to the corporation, and
447	arrangements for the adjustment and payment of hurricane claims
448	incurred on eligible risks by the claims adjuster and personnel
449	of the authorized insurer. Entering into a quota sharing
450	insurance agreement between the corporation and an authorized
451	insurer shall be voluntary and at the discretion of the
452	authorized insurer.
453	3.  May provide that the corporation may employ or
454	otherwise contract with individuals or other entities to provide
455	administrative or professional services that may be appropriate
456	to effectuate the plan. The corporation shall have the power to
457	borrow funds, by issuing bonds or by incurring other
458	indebtedness, and shall have other powers reasonably necessary
459	to effectuate the requirements of this subsection, including
460	without limitation, the power to issue bonds and incur other
461	indebtedness in order to refinance outstanding bonds or other
462	indebtedness. The corporation may, but is not required to, seek
463	judicial validation of its bonds or other indebtedness under
464	chapter 75. The corporation may issue bonds or incur other
465	indebtedness, or have bonds issued on its behalf by a unit of
466	local government pursuant to subparagraph (g)2., in the absence
467	of a hurricane or other weather-related event, upon a
468	determination by the corporation, subject to approval by the
469	office, that such action would enable it to efficiently meet the
470	financial obligations of the corporation and that such
471	financings are reasonably necessary to effectuate the
472	requirements of this subsection. The corporation is authorized
473	to take all actions needed to facilitate tax-free status for any
474	such bonds or indebtedness, including formation of trusts or
475	other affiliated entities. The corporation shall have the
476	authority to pledge assessments, projected recoveries from the
477	Florida Hurricane Catastrophe Fund, other reinsurance
478	recoverables, market equalization and other surcharges, and
479	other funds available to the corporation as security for bonds
480	or other indebtedness. In recognition of s. 10, Art. I of the
481	State Constitution, prohibiting the impairment of obligations of
482	contracts, it is the intent of the Legislature that no action be
483	taken whose purpose is to impair any bond indenture or financing
484	agreement or any revenue source committed by contract to such
485	bond or other indebtedness.
486	4.a.  Must require that the corporation operate subject to
487	the supervision and approval of a board of governors consisting
488	of 7 individuals who are residents of this state, from different
489	geographical areas of this state, appointed by the Chief
490	Financial Officer. The Chief Financial Officer shall designate
491	one of the appointees as chair. All board members serve at the
492	pleasure of the Chief Financial Officer. All board members,
493	including the chair, must be appointed to serve for 3-year terms
494	beginning annually on a date designated by the plan. Any board
495	vacancy shall be filled for the unexpired term by the Chief
496	Financial Officer. The Chief Financial Officer shall appoint a
497	technical advisory group to provide information and advice to
498	the board of governors in connection with the board's duties
499	under this subsection. The executive director and senior
500	managers of the corporation shall be engaged by the Chief
501	Financial Officer and serve at the pleasure of the Chief
502	Financial Officer. The executive director is responsible for
503	employing other staff as the corporation may require, subject to
504	review and concurrence by the office of the Chief Financial
505	Officer.
506	b.  The board shall create a Market Accountability Advisory
507	Committee to assist the corporation in developing awareness of
508	its rates and its customer and agent service levels in
509	relationship to the voluntary market insurers writing similar
510	coverage. The members of the advisory committee shall consist of
511	the following 11 persons, one of whom must be elected chair by
512	the members of the committee: four representatives, one
513	appointed by the Florida Association of Insurance Agents, one by
514	the Florida Association of Insurance and Financial Advisors, one
515	by the Professional Insurance Agents of Florida, and one by the
516	Latin American Association of Insurance Agencies; three
517	representatives appointed by the insurers with the three highest
518	voluntary market share of residential property insurance
519	business in the state; one representative from the Office of
520	Insurance Regulation; one consumer appointed by the board who is
521	insured by the corporation at the time of appointment to the
522	committee; one representative appointed by the Florida
523	Association of Realtors; and one representative appointed by the
524	Florida Bankers Association. All members must serve for 3-year
525	terms and may serve for consecutive terms. The committee shall
526	report to the corporation at each board meeting on insurance
527	market issues which may include rates and rate competition with
528	the voluntary market; service, including policy issuance, claims
529	processing, and general responsiveness to policyholders,
530	applicants, and agents; and matters relating to depopulation.
531	5.  Must provide a procedure for determining the
532	eligibility of a risk for coverage, as follows:
533	a.  Subject to the provisions of s. 627.3517, with respect
534	to personal lines residential risks, if the risk is offered
535	coverage from an authorized insurer at the insurer's approved
536	rate under either a standard policy including wind coverage or,
537	if consistent with the insurer's underwriting rules as filed
538	with the office, a basic policy including wind coverage, the
539	risk is not eligible for any policy issued by the corporation.
540	If the risk is not able to obtain any such offer, the risk is
541	eligible for either a standard policy including wind coverage or
542	a basic policy including wind coverage issued by the
543	corporation; however, if the risk could not be insured under a
544	standard policy including wind coverage regardless of market
545	conditions, the risk shall be eligible for a basic policy
546	including wind coverage unless rejected under subparagraph 8.
547	The corporation shall determine the type of policy to be
548	provided on the basis of objective standards specified in the
549	underwriting manual and based on generally accepted underwriting
550	practices.
551	(I)  If the risk accepts an offer of coverage through the
552	market assistance plan or an offer of coverage through a
553	mechanism established by the corporation before a policy is
554	issued to the risk by the corporation or during the first 30
555	days of coverage by the corporation, and the producing agent who
556	submitted the application to the plan or to the corporation is
557	not currently appointed by the insurer, the insurer shall:
558	(A)  Pay to the producing agent of record of the policy,
559	for the first year, an amount that is the greater of the
560	insurer's usual and customary commission for the type of policy
561	written or a fee equal to the usual and customary commission of
562	the corporation; or
563	(B)  Offer to allow the producing agent of record of the
564	policy to continue servicing the policy for a period of not less
565	than 1 year and offer to pay the agent the greater of the
566	insurer's or the corporation's usual and customary commission
567	for the type of policy written.
568
569	If the producing agent is unwilling or unable to accept
570	appointment, the new insurer shall pay the agent in accordance
571	with sub-sub-sub-subparagraph (A).
572	(II)  When the corporation enters into a contractual
573	agreement for a take-out plan, the producing agent of record of
574	the corporation policy is entitled to retain any unearned
575	commission on the policy, and the insurer shall:
576	(A)  Pay to the producing agent of record of the
577	corporation policy, for the first year, an amount that is the
578	greater of the insurer's usual and customary commission for the
579	type of policy written or a fee equal to the usual and customary
580	commission of the corporation; or
581	(B)  Offer to allow the producing agent of record of the
582	corporation policy to continue servicing the policy for a period
583	of not less than 1 year and offer to pay the agent the greater
584	of the insurer's or the corporation's usual and customary
585	commission for the type of policy written.
586
587	If the producing agent is unwilling or unable to accept
588	appointment, the new insurer shall pay the agent in accordance
589	with sub-sub-sub-subparagraph (A).
590	b.  With respect to commercial lines residential risks, if
591	the risk is offered coverage under a policy including wind
592	coverage from an authorized insurer at its approved rate, the
593	risk is not eligible for any policy issued by the corporation.
594	If the risk is not able to obtain any such offer, the risk is
595	eligible for a policy including wind coverage issued by the
596	corporation.
597	(I)  If the risk accepts an offer of coverage through the
598	market assistance plan or an offer of coverage through a
599	mechanism established by the corporation before a policy is
600	issued to the risk by the corporation or during the first 30
601	days of coverage by the corporation, and the producing agent who
602	submitted the application to the plan or the corporation is not
603	currently appointed by the insurer, the insurer shall:
604	(A)  Pay to the producing agent of record of the policy,
605	for the first year, an amount that is the greater of the
606	insurer's usual and customary commission for the type of policy
607	written or a fee equal to the usual and customary commission of
608	the corporation; or
609	(B)  Offer to allow the producing agent of record of the
610	policy to continue servicing the policy for a period of not less
611	than 1 year and offer to pay the agent the greater of the
612	insurer's or the corporation's usual and customary commission
613	for the type of policy written.
614
615	If the producing agent is unwilling or unable to accept
616	appointment, the new insurer shall pay the agent in accordance
617	with sub-sub-sub-subparagraph (A).
618	(II)  When the corporation enters into a contractual
619	agreement for a take-out plan, the producing agent of record of
620	the corporation policy is entitled to retain any unearned
621	commission on the policy, and the insurer shall:
622	(A)  Pay to the producing agent of record of the
623	corporation policy, for the first year, an amount that is the
624	greater of the insurer's usual and customary commission for the
625	type of policy written or a fee equal to the usual and customary
626	commission of the corporation; or
627	(B)  Offer to allow the producing agent of record of the
628	corporation policy to continue servicing the policy for a period
629	of not less than 1 year and offer to pay the agent the greater
630	of the insurer's or the corporation's usual and customary
631	commission for the type of policy written.
632
633	If the producing agent is unwilling or unable to accept
634	appointment, the new insurer shall pay the agent in accordance
635	with sub-sub-sub-subparagraph (A).
636	6.  Must include rules for classifications of risks and
637	rates therefor.
638	7.  Must provide that if premium and investment income for
639	an account attributable to a particular calendar year are in
640	excess of projected losses and expenses for the account
641	attributable to that year, such excess shall be held in surplus
642	in the account. Such surplus shall be available to defray
643	deficits in that account as to future years and shall be used
644	for that purpose prior to assessing assessable insurers and
645	assessable insureds as to any calendar year.
646	8.  Must provide objective criteria and procedures to be
647	uniformly applied for all applicants in determining whether an
648	individual risk is so hazardous as to be uninsurable. In making
649	this determination and in establishing the criteria and
650	procedures, the following shall be considered:
651	a.  Whether the likelihood of a loss for the individual
652	risk is substantially higher than for other risks of the same
653	class; and
654	b.  Whether the uncertainty associated with the individual
655	risk is such that an appropriate premium cannot be determined.
656
657	The acceptance or rejection of a risk by the corporation shall
658	be construed as the private placement of insurance, and the
659	provisions of chapter 120 shall not apply.
660	9.  Must provide that the corporation shall make its best
661	efforts to procure catastrophe reinsurance at reasonable rates,
662	to cover its projected 100-year probable maximum loss as
663	determined by the board of governors.
664	10.  Must provide that in the event of regular deficit
665	assessments under sub-subparagraph (b)3.a. or sub-subparagraph
666	(b)3.b., in the personal lines account, the commercial lines
667	residential account, or the high-risk account, the corporation
668	shall levy upon corporation policyholders in its next rate
669	filing, or by a separate rate filing solely for this purpose, a
670	market equalization surcharge arising from a regular assessment
671	in such account in a percentage equal to the total amount of
672	such regular assessments divided by the aggregate statewide
673	direct written premium for subject lines of business for the
674	prior calendar year. Market equalization surcharges under this
675	subparagraph are not considered premium and are not subject to
676	commissions, fees, or premium taxes; however, failure to pay a
677	market equalization surcharge shall be treated as failure to pay
678	premium.
679	11.  The policies issued by the corporation must provide
680	that, if the corporation or the market assistance plan obtains
681	an offer from an authorized insurer to cover the risk at its
682	approved rates, the risk is no longer eligible for renewal
683	through the corporation.
684	12.  Corporation policies and applications must include a
685	notice that the corporation policy could, under this section, be
686	replaced with a policy issued by an authorized insurer that does
687	not provide coverage identical to the coverage provided by the
688	corporation. The notice shall also specify that acceptance of
689	corporation coverage creates a conclusive presumption that the
690	applicant or policyholder is aware of this potential.
691	13.  May establish, subject to approval by the office,
692	different eligibility requirements and operational procedures
693	for any line or type of coverage for any specified county or
694	area if the board determines that such changes to the
695	eligibility requirements and operational procedures are
696	justified due to the voluntary market being sufficiently stable
697	and competitive in such area or for such line or type of
698	coverage and that consumers who, in good faith, are unable to
699	obtain insurance through the voluntary market through ordinary
700	methods would continue to have access to coverage from the
701	corporation. When coverage is sought in connection with a real
702	property transfer, such requirements and procedures shall not
703	provide for an effective date of coverage later than the date of
704	the closing of the transfer as established by the transferor,
705	the transferee, and, if applicable, the lender.
706	14.  Must provide that, with respect to the high-risk
707	account, any assessable insurer with a surplus as to
708	policyholders of $25 million or less writing 25 percent or more
709	of its total countrywide property insurance premiums in this
710	state may petition the office, within the first 90 days of each
711	calendar year, to qualify as a limited apportionment company. In
712	no event shall a limited apportionment company be required to
713	participate in the portion of any assessment, within the high-
714	risk account, pursuant to sub-subparagraph (b)3.a. or sub-
715	subparagraph (b)3.b. in the aggregate which exceeds $50 million
716	after payment of available high-risk account funds in any
717	calendar year. However, a limited apportionment company shall
718	collect from its policyholders any emergency assessment imposed
719	under sub-subparagraph (b)3.d. The plan shall provide that, if
720	the office determines that any regular assessment will result in
721	an impairment of the surplus of a limited apportionment company,
722	the office may direct that all or part of such assessment be
723	deferred as provided in subparagraph (g)4. However, there shall
724	be no limitation or deferment of an emergency assessment to be
725	collected from policyholders under sub-subparagraph (b)3.d.
726	15.  Must provide that the corporation appoint as its
727	licensed agents only those agents who also hold an appointment
728	as defined in s. 626.015(3) with an insurer who at the time of
729	the agent's initial appointment by the corporation is authorized
730	to write and is actually writing personal lines residential
731	property coverage, commercial residential property coverage, or
732	commercial nonresidential property coverage within the state.
733	16.  Must provide a plan for removing personal lines
734	policies from coverage by the corporation which includes the
735	development and implementation of a take-out bonus strategy
736	determining, at a minimum, the necessity and application of
737	financial and regulatory incentives.
738	(d)1.  It is the intent of the Legislature that the rates
739	for coverage provided by the corporation be actuarially sound
740	and not competitive with approved rates charged in the admitted
741	voluntary market, so that the corporation functions as a
742	residual market mechanism to provide insurance only when the
743	insurance cannot be procured in the voluntary market. Rates
744	shall include an appropriate catastrophe loading factor that
745	reflects the actual catastrophic exposure of the corporation.
746	2.  For each county, the average rates of the corporation
747	for each line of business for personal lines residential
748	policies excluding rates for wind-only policies shall be no
749	lower than the average rates charged by the insurer that had the
750	highest average rate in that county among the 20 insurers with
751	the greatest total direct written premium in the state for that
752	line of business in the preceding year, except that with respect
753	to mobile home coverages, the average rates of the corporation
754	shall be no lower than the average rates charged by the insurer
755	that had the highest average rate in that county among the 5
756	insurers with the greatest total written premium for mobile home
757	owner's policies in the state in the preceding year.
758	3.  Rates for personal lines residential wind-only policies
759	must be actuarially sound and not competitive with approved
760	rates charged by authorized insurers. However, for personal
761	lines residential wind-only policies issued or renewed between
762	July 1, 2002, and June 30, 2003, the maximum premium increase
763	must be no greater than 10 percent of the Florida Windstorm
764	Underwriting Association premium for that policy in effect on
765	June 30, 2002, as adjusted for coverage changes and seasonal
766	occupancy surcharges. For personal lines residential wind-only
767	policies issued or renewed between July 1, 2003, and June 30,
768	2004, the corporation shall use its existing filed and approved
769	wind-only rating and classification plans, provided, however,
770	that the maximum premium increase must be no greater than 20
771	percent of the premium for that policy in effect on June 30,
772	2003, as adjusted for coverage changes and seasonal occupancy
773	surcharges. Corporation rate manuals shall include a rate
774	surcharge for seasonal occupancy. To ensure that personal lines
775	residential wind-only rates effective on or after July 1, 2004,
776	are not competitive with approved rates charged by authorized
777	insurers, the corporation, in conjunction with the office, shall
778	develop a wind-only ratemaking methodology, which methodology
779	shall be contained in each a rate filing made by the corporation
780	with the office by January 1, 2004. If the office thereafter
781	determines that the wind-only rates or rating factors filed by
782	the corporation fail to comply with the wind-only ratemaking
783	methodology provided for in this subsection, it shall so notify
784	the corporation and require the corporation to amend its rates
785	or rating factors to come into compliance within 90 days of
786	notice from the office. The office shall report to the Speaker
787	of the House of Representatives and the President of the Senate
788	on the provisions of the wind-only ratemaking methodology by
789	January 31, 2004.
790	4.  The provisions of subparagraph 2. do not apply to
791	coverage provided by the corporation in any county for which the
792	office determines that a reasonable degree of competition does
793	not exist for personal lines residential policies. The
794	provisions of subparagraph 3. do not apply to coverage provided
795	by the corporation in any county for which the office determines
796	that a reasonable degree of competition does not exist for
797	personal lines residential policies in the area of that county
798	which is eligible for wind-only coverage. In such counties, the
799	rates for personal lines residential coverage shall be
800	actuarially sound and not excessive, inadequate, or unfairly
801	discriminatory and are subject to the other provisions of the
802	paragraph and s. 627.062. The commission shall adopt rules
803	establishing the criteria for determining whether a reasonable
804	degree of competition exists for personal lines residential
805	policies. Beginning October 1, 2005, and each 6 months
806	thereafter, the office shall determine and identify those
807	counties for which a reasonable degree of competition does not
808	exist for purposes of subparagraphs 2. and 3., respectively.
809	5.4.  Rates for commercial lines coverage shall not be
810	subject to the requirements of subparagraph 2., but shall be
811	subject to all other requirements of this paragraph and s.
812	627.062.
813	6.5.  Nothing in this paragraph shall require or allow the
814	corporation to adopt a rate that is inadequate under s. 627.062.
815	7.6.  The corporation shall certify to the office at least
816	twice annually that its personal lines rates comply with the
817	requirements of this paragraph subparagraphs 1. and 2. If any
818	adjustment in the rates or rating factors of the corporation is
819	necessary to ensure such compliance, the corporation shall make
820	and implement such adjustments and file its revised rates and
821	rating factors with the office. If the office thereafter
822	determines that the revised rates and rating factors fail to
823	comply with the provisions of this paragraph subparagraphs 1.
824	and 2., it shall notify the corporation and require the
825	corporation to amend its rates or rating factors in conjunction
826	with its next rate filing. The office must notify the
827	corporation by electronic means of any rate filing it approves
828	for any insurer among the insurers referred to in subparagraph
829	2.
830	8.7.  In addition to the rates otherwise determined
831	pursuant to this paragraph, the corporation shall impose and
832	collect an amount equal to the premium tax provided for in s.
833	624.509 to augment the financial resources of the corporation.
834	9.8.a.  To assist the corporation in developing additional
835	ratemaking methods to assure compliance with this paragraph
836	subparagraphs 1. and 4., the corporation shall appoint a rate
837	methodology panel consisting of one person recommended by the
838	Florida Association of Insurance Agents, one person recommended
839	by the Professional Insurance Agents of Florida, one person
840	recommended by the Florida Association of Insurance and
841	Financial Advisors, one person recommended by the insurer with
842	the highest voluntary market share of residential property
843	insurance business in the state, one person recommended by the
844	insurer with the second-highest voluntary market share of
845	residential property insurance business in the state, one person
846	recommended by an insurer writing commercial residential
847	property insurance in this state, one person recommended by the
848	Office of Insurance Regulation, and one board member designated
849	by the board chairman, who shall serve as chairman of the panel.
850	b.  By January 1, 2004, the rate methodology panel shall
851	provide a report to the corporation of its findings and
852	recommendations for the use of additional ratemaking methods and
853	procedures, including the use of a rate equalization surcharge
854	in an amount sufficient to assure that the total cost of
855	coverage for policyholders or applicants to the corporation is
856	sufficient to comply with subparagraph 1.
857	c.  Within 30 days after such report, the corporation shall
858	present to the President of the Senate, the Speaker of the House
859	of Representatives, the minority party leaders of each house of
860	the Legislature, and the chairs of the standing committees of
861	each house of the Legislature having jurisdiction of insurance
862	issues, a plan for implementing the additional ratemaking
863	methods and an outline of any legislation needed to facilitate
864	use of the new methods.
865	d.  The plan must include a provision that producer
866	commissions paid by the corporation shall not be calculated in
867	such a manner as to include any rate equalization surcharge.
868	However, without regard to the plan to be developed or its
869	implementation, producer commissions paid by the corporation for
870	each account, other than the quota share primary program, shall
871	remain fixed as to percentage, effective rate, calculation, and
872	payment method until January 1, 2004.
873	10.9.  By January 1, 2004, The corporation shall develop a
874	notice to policyholders or applicants that the rates of Citizens
875	Property Insurance Corporation are intended to be higher than
876	the rates of any admitted carrier except when the provisions of
877	subparagraph 4. apply and providing other information the
878	corporation deems necessary to assist consumers in finding other
879	voluntary admitted insurers willing to insure their property.
880	(q)  The corporation shall not require the securing of
881	flood insurance as a condition of coverage if the property risk
882	of the insured or applicant is located in a Special Flood Hazard
883	Area as defined by the Federal Emergency Management Agency for
884	the National Flood Insurance Program. executes a form approved
885	by the office affirming that Flood insurance is not provided by
886	the corporation and that if flood insurance is not secured by
887	the applicant or insured in addition to coverage by the
888	corporation, the risk will not be covered for flood damage. A
889	corporation policyholder that does electing not to secure flood
890	insurance and makes a claim executing a form as provided herein
891	making a claim for water damage against the corporation shall
892	have the burden of proving the damage was not caused by
893	flooding. Notwithstanding other provisions of this subsection,
894	the corporation may deny coverage or refuse to issue or renew a
895	policy to an applicant or insured who refuses to purchase flood
896	insurance as required by this subsection to execute the form
897	described herein.
898	Section 7.  Subsection (1) of section 627.411, Florida
899	Statutes, is amended to read:
900	627.411  Grounds for disapproval.--
901	(1)  The office shall disapprove any form filed under s.
902	627.410, or withdraw any previous approval thereof, only if the
903	form:
904	(a)  Is in any respect in violation of, or does not comply
905	with, this code.
906	(b)  Contains or incorporates by reference, where such
907	incorporation is otherwise permissible, any inconsistent,
908	ambiguous, or misleading clauses, or exceptions and conditions
909	which deceptively affect the risk purported to be assumed in the
910	general coverage of the contract.
911	(c)  Has any title, heading, or other indication of its
912	provisions which is misleading.
913	(d)  Is printed or otherwise reproduced in such manner as
914	to render any material provision of the form substantially
915	illegible.
916	(e)  Is for residential property insurance and contains
917	provisions that are unfair or inequitable or encourage
918	misrepresentation.
919	(f)(e)  Is for health insurance, and:
920	1.  Provides benefits that are unreasonable in relation to
921	the premium charged.;
922	2.  Contains provisions that are unfair or inequitable or
923	contrary to the public policy of this state or that encourage
924	misrepresentation.;
925	3.  Contains provisions that apply rating practices that
926	result in unfair discrimination pursuant to s. 626.9541(1)(g)2.
927	(g)(f)  Excludes coverage for human immunodeficiency virus
928	infection or acquired immune deficiency syndrome or contains
929	limitations in the benefits payable, or in the terms or
930	conditions of such contract, for human immunodeficiency virus
931	infection or acquired immune deficiency syndrome which are
932	different than those which apply to any other sickness or
933	medical condition.
934	Section 8.  Subsection (3) of section 627.7011, Florida
935	Statutes, is renumbered as subsection (4), and a new subsection
936	(3) is added to said section, to read:
937	627.7011  Homeowners' policies; offer of replacement cost
938	coverage and law and ordinance coverage.--
939	(3)  In the event of a covered loss to the dwelling, the
940	insurer shall pay no less than the actual cash value of the
941	damaged part of the dwelling at the time of the loss, subject to
942	the limits of coverage and terms contained in the policy. Once
943	the dwelling is repaired or replaced, the insurer shall pay the
944	remainder of the repair or replacement costs, subject to limits
945	of coverage and terms contained in the policy. The insurer is
946	not required to pay more than the actual cost to repair or
947	replace the dwelling.
948	(4)(3)  Nothing in this section shall be construed to apply
949	to policies not considered to be "homeowners' policies," as that
950	term is commonly understood in the insurance industry. This
951	section specifically does not apply to mobile home policies.
952	Nothing in this section shall be construed as limiting the
953	ability of any insurer to reject or nonrenew any insured or
954	applicant on the grounds that the structure does not meet
955	underwriting criteria applicable to replacement cost or law and
956	ordinance policies or for other lawful reasons.
957	Section 9.  Effective October 1, 2005, subsection (1) of
958	section 627.7011, Florida Statutes, is amended, and subsection
959	(4) is added to said section, to read:
960	627.7011  Homeowners' policies; offer of replacement cost
961	coverage and law and ordinance coverage.--
962	(1)  Prior to issuing a homeowner's insurance policy on or
963	after October 1, 2005 June 1, 1994, or prior to the first
964	renewal of a homeowner's insurance policy on or after October 1,
965	2005 June 1, 1994, the insurer must offer each of the following:
966	(a)  A policy or endorsement providing that any loss which
967	is repaired or replaced will be adjusted on the basis of
968	replacement costs not exceeding policy limits as to the
969	dwelling, rather than actual cash value, but not including costs
970	necessary to meet applicable laws and ordinances regulating the
971	construction, use, or repair of any property or requiring the
972	tearing down of any property, including the costs of removing
973	debris.
974	(b)  A policy or endorsement providing that, subject to
975	other policy provisions, any loss which is repaired or replaced
976	at any location will be adjusted on the basis of replacement
977	costs not exceeding policy limits as to the dwelling, rather
978	than actual cash value, and also including costs necessary to
979	meet applicable laws and ordinances regulating the construction,
980	use, or repair of any property or requiring the tearing down of
981	any property, including the costs of removing debris; however,
982	such additional costs necessary to meet applicable laws and
983	ordinances may be limited to either 25 percent or 50 percent of
984	the dwelling limit, as selected by the policyholder, and such
985	coverage shall apply only to repairs of the damaged portion of
986	the structure unless the total damage to the structure exceeds
987	50 percent of the replacement cost of the structure.
988
989	An insurer is not required to make the offers required by this
990	subsection with respect to the issuance or renewal of a
991	homeowner's policy that contains the provisions specified in
992	paragraph (b) for law and ordinance coverage limited to 25
993	percent of the dwelling limit, except that the insurer must
994	offer the law and ordinance coverage limited to 50 percent of
995	the dwelling limit. This subsection does not prohibit the offer
996	of a guaranteed replacement cost policy.
997	(4)  Any homeowner's insurance policy issued or renewed on
998	or after October 1, 2005, must include in bold type no smaller
999	than 18 points the following statement:
1000	"LAW AND ORDINANCE COVERAGE IS AN IMPORTANT COVERAGE THAT
1001	YOU MAY WISH TO PURCHASE. YOU MAY ALSO NEED TO CONSIDER
1002	THE PURCHASE OF FLOOD INSURANCE FROM THE NATIONAL FLOOD
1003	INSURANCE PROGRAM. WITHOUT THIS COVERAGE, YOU MAY HAVE
1004	UNCOVERED LOSSES. PLEASE DISCUSS THESE COVERAGES WITH
1005	YOUR INSURANCE AGENT."
1006	The intent of this subsection is to encourage policyholders to
1007	purchase sufficient coverage to protect them in case events
1008	excluded from the standard homeowners policy, such as law and
1009	ordinance enforcement and flood, combine with covered events to
1010	produce damage or loss to the insured property. The intent is
1011	also to encourage policyholders to discuss these issues with
1012	their insurance agent.
1013	Section 10.  Subsections (1) and (7) of section 627.7015,
1014	Florida Statutes, are amended to read:
1015	627.7015  Alternative procedure for resolution of disputed
1016	property insurance claims.--
1017	(1)  PURPOSE AND SCOPE.--This section sets forth a
1018	nonadversarial alternative dispute resolution procedure for a
1019	mediated claim resolution conference prompted by the need for
1020	effective, fair, and timely handling of property insurance
1021	claims. There is a particular need for an informal,
1022	nonthreatening forum for helping parties who elect this
1023	procedure to resolve their claims disputes because most
1024	homeowner's and commercial residential insurance policies
1025	obligate insureds to participate in a potentially expensive and
1026	time-consuming adversarial appraisal process prior to
1027	litigation. The procedure set forth in this section is designed
1028	to bring the parties together for a mediated claims settlement
1029	conference without any of the trappings or drawbacks of an
1030	adversarial process. Before resorting to these procedures,
1031	insureds and insurers are encouraged to resolve claims as
1032	quickly and fairly as possible. This section is available with
1033	respect to claims under personal lines and commercial
1034	residential policies for all claimants and insurers prior to
1035	commencing the appraisal process, or commencing litigation. If
1036	requested by the insured, participation by legal counsel shall
1037	be permitted. Mediation under this section is also available to
1038	litigants referred to the department by a county court or
1039	circuit court. This section does not apply to commercial
1040	coverages, to private passenger motor vehicle insurance
1041	coverages, or to disputes relating to liability coverages in
1042	policies of property insurance.
1043	(7)  If the insurer fails to comply with subsection (2) by
1044	failing to notify a first-party claimant of its right to
1045	participate in the mediation program under this section or if
1046	the insurer requests the mediation, and the mediation results
1047	are rejected by either party, the insured shall not be required
1048	to submit to or participate in any contractual loss appraisal
1049	process of the property loss damage as a precondition to legal
1050	action for breach of contract against the insurer for its
1051	failure to pay the policyholder's claims covered by the policy.
1052	Section 11.  Effective upon this act becoming a law,
1053	subsection (1) of section 627.702, Florida Statutes, is amended
1054	to read:
1055	627.702  Valued policy law.--
1056	(1)(a)  In the event of the total loss of any building,
1057	structure, mobile home as defined in s. 320.01(2), or
1058	manufactured building as defined in s. 553.36(12), located in
1059	this state and insured by any insurer as to a covered peril, in
1060	the absence of any change increasing the risk without the
1061	insurer's consent and in the absence of fraudulent or criminal
1062	fault on the part of the insured or one acting in her or his
1063	behalf, the insurer's liability, if any, under the policy for
1064	such total loss, if caused by a covered peril, shall be in the
1065	amount of money for which such property was so insured as
1066	specified in the policy and for which a premium has been charged
1067	and paid.
1068	(b)  The intent of this subsection is not to deprive an
1069	insurer of any proper defense under the policy, to create new or
1070	additional coverage under the policy, or to require an insurer
1071	to pay for a loss caused by a peril other than the covered
1072	peril. In furtherance of such legislative intent, when a loss
1073	was caused in part by a covered peril and in part by a
1074	noncovered peril, paragraph (a) does not apply. In such
1075	circumstances, the insurer's liability under this section shall
1076	be limited to the amount of the loss caused by the covered
1077	peril.
1078	(c)  It is the intent of the Legislature that the amendment
1079	to this section shall not be applied retroactively and shall
1080	apply only to claims filed after effective date of such
1081	amendment.
1082	Section 12.  Section 627.706, Florida Statutes, is amended
1083	to read:
1084	627.706  Sinkhole insurance; definitions.--
1085	(1)  Every insurer authorized to transact property
1086	insurance in this state shall make available coverage for
1087	insurable sinkhole losses on any structure, including contents
1088	of personal property contained therein, to the extent provided
1089	in the form to which the sinkhole coverage attaches.
1090	(2)  As used in ss. 627.706-627.7074, and as used in
1091	connection with any policy providing coverage for sinkhole
1092	losses:
1093	(a)  "Sinkhole" means a landform created by subsidence of
1094	soil, sediment, or rock as underlying strata are dissolved by
1095	ground water. A sinkhole may form by collapse into subterranean
1096	voids created by dissolution of limestone or dolostone or by
1097	subsidence as these strata are dissolved.
1098	(b)  "Sinkhole loss" means structural damage to a the
1099	building caused by sinkhole activity. Contents coverage shall
1100	apply only if there is structural damage to the building caused
1101	by sinkhole activity.
1102	(c)(3)  "Sinkhole activity loss" means actual physical
1103	damage to the property covered arising out of or caused by
1104	sudden settlement or systematic weakening collapse of the earth
1105	supporting such property only when such settlement or systematic
1106	weakening collapse results from movement or raveling of soils,
1107	sediments, or rock materials into subterranean voids created by
1108	the effect action of water on a limestone or similar rock
1109	formation.
1110	(d)  "Engineer" means a person, as defined in s. 471.005,
1111	who has a bachelor's degree or higher in engineering with a
1112	specialty in the geotechnical engineering field. An engineer
1113	must have geotechnical experience and expertise in the
1114	identification of sinkhole activity as well as other potential
1115	causes of damage to the structure.
1116	(e)  "Professional geologist" means a person, as defined by
1117	s. 492.102, who has a bachelor's degree or higher in geology or
1118	a related earth science with expertise in the geology of this
1119	state. A professional geologist must have geological experience
1120	and expertise in the identification of sinkhole activity as well
1121	as other potential causes of damage to the structure.
1122	(3)(4)  Every insurer authorized to transact property
1123	insurance in this state shall make a proper filing with the
1124	office for the purpose of extending the appropriate forms of
1125	property insurance to include coverage for insurable sinkhole
1126	losses.
1127	Section 13.  Section 627.7065, Florida Statutes, is created
1128	to read:
1129	627.7065  Database of information relating to sinkholes;
1130	the Department of Financial Services and the Department of
1131	Environmental Protection.--
1132	(1)  The Legislature finds that there has been a dramatic
1133	increase in the number of sinkholes and insurance claims for
1134	sinkhole damage in the state during the past 10 years.
1135	Accordingly, the Legislature recognizes the need to track
1136	current and past sinkhole activity and to make the information
1137	available for prevention and remediation activities. The
1138	Legislature further finds that the Florida Geological Survey of
1139	the Department of Environmental Protection has created a partial
1140	database of some sinkholes identified in Florida, although the
1141	database is not reflective of all sinkholes or insurance claims
1142	for sinkhole damage. The Legislature determines that creating a
1143	complete electronic database of sinkhole activity serves an
1144	important purpose in protecting the public and in studying
1145	property claims activities in the insurance industry.
1146	(2)  The Department of Financial Services, including the
1147	employee of the Division of Consumer Services designated as the
1148	primary contact for consumers on issues relating to sinkholes,
1149	and the Office of the Insurance Consumer Advocate shall consult
1150	with the Florida Geological Survey and the Department of
1151	Environmental Protection to implement a statewide automated
1152	database of sinkholes and related activity identified in the
1153	state.
1154	(3)  Representatives of the Department of Financial
1155	Services, with the agreement of the Department of Environmental
1156	Protection, shall determine the form and content of the
1157	database. The content may include standards for reporting and
1158	investigating sinkholes for inclusion in the database and
1159	requirements for insurers to report to the departments the
1160	receipt of claims involving sinkhole loss and other similar
1161	activities. The Department of Financial Services may require
1162	insurers to report present and past data of sinkhole claims. The
1163	database also may include information of damage due to ground
1164	settling and other subsidence activity.
1165	(4)  The Department of Financial Services may manage the
1166	database or may contract for its management and maintenance. The
1167	Department of Environmental Protection shall investigate reports
1168	of sinkhole activity and include its findings and investigations
1169	in the database.
1170	(5)  The Department of Environmental Protection, in
1171	consultation with the Department of Financial Services, shall
1172	present a report of activities relating to the sinkhole
1173	database, including recommendations regarding the database and
1174	similar matters, to the Governor, the Speaker of the House of
1175	Representatives, the President of the Senate, and the Chief
1176	Financial Officer by December 31, 2005. The report may consider
1177	the need for the Legislature to create an entity to study the
1178	increase in sinkhole activity in the state and other similar
1179	issues relating to sinkhole damage, including recommendations
1180	and costs for staffing the entity. The report may include other
1181	information, as appropriate.
1182	(6)  The Department of Financial Services, in consultation
1183	with the Department of Environmental Protection, may adopt rules
1184	to implement the provisions of this section.
1185	Section 14.  Section 627.707, Florida Statutes, is amended
1186	to read:
1187	627.707  Minimum Standards for investigation of sinkhole
1188	claims by insurers; nonrenewals.--
1189	(1)  Upon receipt of a claim for a sinkhole loss, an
1190	insurer must meet the following minimum standards in
1191	investigating a claim:
1192	(1)(a)  Upon receipt of a claim for a sinkhole loss, The
1193	insurer must make an inspection of the insured's premises to
1194	determine if there has been physical damage to the structure
1195	which may might be the result of sinkhole activity.
1196	(b)  If, upon the investigation pursuant to paragraph (a),
1197	the insurer discovers damage to a structure which is consistent
1198	with sinkhole activity or if the structure is located in close
1199	proximity to a structure in which sinkhole damage has been
1200	verified, then prior to denying a claim, the insurer must obtain
1201	a written certification from an individual qualified to
1202	determine the existence of sinkhole activity, stating that the
1203	cause of the claim is not sinkhole activity, and that the
1204	analysis conducted was of sufficient scope to eliminate sinkhole
1205	activity as the cause of damage within a reasonable professional
1206	probability. The written certification must also specify the
1207	professional discipline and professional licensure or
1208	registration under which the analysis was conducted.
1209	(2)  Following the insurer's initial inspection, the
1210	insurer shall engage an engineer and a professional geologist to
1211	conduct testing as provided in s. 627.7072 to determine the
1212	cause of the loss within a reasonable professional probability
1213	and issue a report as provided in s. 627.7073, if:
1214	(a)  The insurer is unable to identify a valid cause of the
1215	damage or discovers damage to the structure which is consistent
1216	with sinkhole loss; or
1217	(b)  The policyholder demands testing in accordance with
1218	this section or s. 627.7072.
1219	(3)  Following the initial inspection of the insured
1220	premises, the insurer shall provide written notice to the
1221	policyholder disclosing the following information:
1222	(a)  What the insurer has determined to be the cause of
1223	damage, if the insurer has made such a determination.
1224	(b)  A statement of the circumstances under which the
1225	insurer is required to engage an engineer and a professional
1226	geologist to verify or eliminate sinkhole loss and to make
1227	recommendations regarding land and building stabilization and
1228	foundation repair.
1229	(c)  A statement regarding the right of the policyholder to
1230	request testing by an engineer and a professional geologist and
1231	the circumstances under which the policyholder may demand
1232	certain testing.
1233	(4)  If the insurer determines that there is no sinkhole
1234	loss, the insurer may deny the claim. If the insurer denies the
1235	claim, without performing testing under s. 627.7072, the
1236	policyholder may demand testing by the insured under s.
1237	627.7072. The policyholder's demand for testing must be
1238	communicated to the insurer in writing after the policyholder's
1239	receipt of the insurer's denial of the claim.
1240	(5)(a)  Subject to paragraph (b), if a sinkhole loss is
1241	verified, the insurer shall pay to stabilize the land and
1242	building and repair the foundation in accordance with the
1243	recommendations of the engineer and the professional geologist
1244	as provided under s. 627.7073, and in consultation with the
1245	policyholder, subject to the coverage and terms of the policy.
1246	The insurer shall pay for other repairs to the structure and
1247	contents in accordance with the terms of the policy.
1248	(b)  The insurer may limit its payment to the actual cash
1249	value of the sinkhole loss until such time as expenses related
1250	to land and building stabilization and foundation repairs are
1251	incurred.
1252	(6)  Except as provided in subsection (7), the fees and
1253	costs of the engineer or the professional geologist shall be
1254	paid by the insurer.
1255	(7)(c)  If the insurer obtains, pursuant to s. 627.7073
1256	paragraph (b), written certification that there is no sinkhole
1257	loss or that the cause of the damage claim was not sinkhole
1258	activity, and if the policyholder has submitted the sinkhole
1259	claim without good faith grounds for submitting such claim, the
1260	policyholder shall reimburse the insurer for 50 percent of the
1261	actual costs cost of the analyses and services provided analysis
1262	under ss. 627.7072 and 627.7073 paragraph (b); however, a
1263	policyholder is not required to reimburse an insurer more than
1264	$2,500 with respect to any claim. A policyholder is required to
1265	pay reimbursement under this subsection paragraph only if the
1266	insurer, prior to ordering the analysis under s. 627.7072
1267	paragraph (b), informs the policyholder in writing of the
1268	policyholder's potential liability for reimbursement and gives
1269	the policyholder the opportunity to withdraw the claim.
1270	(8)(2)  No insurer shall nonrenew any policy of property
1271	insurance on the basis of filing of claims for partial loss
1272	caused by sinkhole damage or clay shrinkage as long as the total
1273	of such payments does not exceed the current policy limits of
1274	coverage for property damage, and provided the insured has
1275	repaired the structure in accordance with the engineering
1276	recommendations upon which any payment or policy proceeds were
1277	based.
1278	(9)  The insurer may engage a structural engineer to make
1279	recommendations as to the repair of the structure.
1280	Section 15.  Section 627.7072, Florida Statutes, is created
1281	to read:
1282	627.7072  Testing standards for sinkholes.--
1283	(1)  The engineer and professional geologist shall perform
1284	such tests as sufficient, in their professional opinion, to
1285	determine the presence or absence of sinkhole loss or other
1286	cause of damage within reasonable professional probability and
1287	to make recommendations regarding necessary building
1288	stabilization and foundation repair.
1289	(2)  Testing shall be conducted in compliance with the
1290	Florida Geological Survey Special Publication No. 57 (2005).
1291	Section 16.  Section 627.7073, Florida Statutes, is created
1292	to read:
1293	627.7073  Sinkhole reports.--
1294	(1)  Upon completion of testing as provided in s. 627.7072,
1295	the engineer and professional geologist shall issue a report and
1296	certification to the insurer and the policyholder as provided in
1297	this section.
1298	(a)  Sinkhole loss is verified if, based upon tests
1299	performed in accordance with s. 627.7072, an engineer and a
1300	professional geologist issue a written report and certification
1301	stating:
1302	1.  That the cause of the actual physical and structural
1303	damage is sinkhole activity within a reasonable professional
1304	probability.
1305	2.  That the analyses conducted were of sufficient scope to
1306	identify sinkhole activity as the cause of damage within a
1307	reasonable professional probability.
1308	3.  A description of the tests performed.
1309	4.  A recommendation of methods for stabilizing the land
1310	and building and for making repairs to the foundation.
1311	(b)  If sinkhole activity is eliminated as the cause of
1312	damage to the structure, the engineer and professional geologist
1313	shall issue a written report and certification to the
1314	policyholder and the insurer stating:
1315	1.  That the cause of the damage is not sinkhole activity
1316	within a reasonable professional probability.
1317	2.  That the analyses and tests conducted were of
1318	sufficient scope to eliminate sinkhole activity as the cause of
1319	damage within a reasonable professional probability.
1320	3.  A statement of the cause of the damage within a
1321	reasonable professional probability.
1322	4.  A description of the tests performed.
1323	(c)  The respective findings, opinions, and recommendations
1324	of the engineer and professional geologist as to the
1325	verification of a sinkhole loss, land and building
1326	stabilization, foundation repair, and elimination of sinkhole
1327	loss shall be presumed correct.
1328	(2)  Any insurer that has paid a claim for a sinkhole loss
1329	shall file a copy of the report and certification, prepared
1330	pursuant to subsection (1), with the county property appraiser
1331	who shall record the report and certification with the parcel
1332	number. The insurer shall bear the cost of filing and recording
1333	the report and certification. There shall be no cause of action
1334	or liability against an insurer for compliance with this
1335	section. The seller of real property upon which a sinkhole claim
1336	has been made shall disclose to the buyer of such property that
1337	a claim has been paid and whether or not the full amount of the
1338	proceeds were used to repair the sinkhole damage.
1339	Section 17.  Notwithstanding that revenues of Citizens
1340	Property Insurance Corporation are not state revenues, the
1341	Auditor General shall perform an operational audit, as defined
1342	in s. 11.45(1), Florida Statutes, of the Citizens Property
1343	Insurance Corporation created under s. 627.351(6), Florida
1344	Statutes. The scope of the audit shall also include:
1345	(1)  An analysis of the corporation's infrastructure,
1346	customer service, claims handling, accessibility of policyholder
1347	information to the agent of record, take-out programs, take-out
1348	bonuses, and financing arrangements.
1349	(2)  An evaluation of costs associated with the
1350	administration and servicing of the policies issued by the
1351	corporation to determine alternatives by which costs can be
1352	reduced, customer service improved, and claims handling
1353	improved.
1354
1355	The audit shall contain policy alternatives for the Legislature
1356	to consider. The Auditor General shall submit a report to the
1357	Governor, the President of the Senate, and the Speaker of the
1358	House of Representatives no later than February 1, 2006.
1359	Section 18.  The board of governors of the Citizens
1360	Property Insurance Corporation created under section 627.351(6),
1361	Florida Statutes, shall, by February 1, 2006, submit a report to
1362	the President of the Senate, the Speaker of the House of
1363	Representatives, the minority party leaders of the Senate and
1364	the House of Representatives, and the chairs of the standing
1365	committees of the Senate and the House of Representatives having
1366	jurisdiction over matters relating to property and casualty
1367	insurance. The report shall include the board's findings and
1368	recommendations on the following issues:
1369	(1)  The number of policies and the aggregate premium of
1370	the Citizens Property Insurance Corporation, before and after
1371	enactment of this act, and projections for future policy and
1372	premium growth.
1373	(2)  Increases or decreases in availability of residential
1374	property coverage in the voluntary market and the effectiveness
1375	of this act in improving the availability of residential
1376	property coverage in the voluntary market in the state.
1377	(3)  The board's efforts to depopulate the corporation and
1378	the willingness of insurers in the voluntary market to avail
1379	themselves of depopulation incentives.
1380	(4)  Further actions that could be taken by the Legislature
1381	to improve availability of residential property coverage in the
1382	voluntary and residual markets.
1383	(5)  Actions that the board has taken to restructure the
1384	corporation and recommendations for legislative action to
1385	restructure the corporation, including, but not limited to,
1386	actions relating to claims handling and customer service.
1387	(6)  Projected surpluses or deficits and possible means of
1388	providing funding to ensure the continued solvency of the
1389	corporation.
1390	(7)  The corporation's efforts to procure catastrophe
1391	reinsurance to cover its projected 100-year probable maximum
1392	loss with specification as to what best efforts were made by the
1393	corporation to procure such reinsurance.
1394	(8)  Such other issues as the board determines are worthy
1395	of the Legislature's consideration.
1396	Section 19.  (1) Upon an insurer's receiving a
1397	communication with respect to a claim, the insurer shall, within
1398	14 calendar days, review and acknowledge receipt of such
1399	communication unless payment is made within that period of time
1400	or unless the failure to acknowledge is caused by factors beyond
1401	the control of the insurer which reasonably prevent such
1402	acknowledgement. If the acknowledgement is not in writing, a
1403	notification indicating acknowledgement shall be made in the
1404	insurer's claim file and dated. A communication made to or by an
1405	agent of an insurer with respect to a claim shall constitute
1406	communication to or by the insurer. As used in this subsection,
1407	the term "agent" means any person to whom an insurer has granted
1408	authority or responsibility to receive or make such
1409	communications with respect to claims on behalf of the insurer.
1410	This subsection shall not apply to claimants represented by
1411	counsel beyond those communications necessary to provide forms
1412	and instructions.
1413	(2)  Such acknowledgement shall be responsive to the
1414	communication. If the communication constitutes a notification
1415	of a claim, unless the acknowledgement reasonably advises the
1416	claimant that the claim appears not to be covered by the
1417	insurer, the acknowledgement shall provide necessary claim
1418	forms, and instructions, including an appropriate telephone
1419	number.
1420	(3)  Unless otherwise provided by the policy of insurance
1421	or by law, within 10 working days after an insurer receives
1422	proof of loss statements the insurer shall begin such
1423	investigation as is reasonably necessary unless the failure to
1424	begin such investigation is caused by factors beyond the control
1425	of the insurer which reasonably prevent the commencement of such
1426	investigation.
1427	Section 20.  Sections 3 and 4 of this act shall take effect
1428	on the same date that House Bill 1939 or similar legislation
1429	takes effect, if such legislation is adopted in the same
1430	legislative session or an extension thereof and becomes a law.
1431	Section 21.   The Office of Insurance Regulation shall, by
1432	January 1, 2006, submit a report to the President of the Senate,
1433	the Speaker of the House of Representatives, the minority party
1434	leaders of the Senate and the House of Representatives, and the
1435	chairs of the standing committees of the Senate and the House of
1436	Representatives having jurisdiction over matters relating to
1437	property and casualty insurance. The report shall include
1438	findings and recommendations on requiring residential property
1439	insurers to provide law and ordinance coverage for residential
1440	property insurance policies, the increase or decrease in
1441	insurance costs associated with requiring such coverage, and
1442	such other related information as the Office of Insurance
1443	Regulation determines is appropriate for the Legislature to
1444	consider.
1445	Section 22.  Except as otherwise provided herein, this act
1446	shall take effect July 1, 2005.

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