Senate Bill sb1248
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Florida Senate - 2006 SB 1248
By Senator Fasano
11-934-06 See HB 223
1 A bill to be entitled
2 An act relating to Citizens Property Insurance
3 Corporation residential property insurance
4 rates; amending s. 627.351, F.S.; providing
5 additional legislative intent relating to
6 coverage rates provided by the Citizens
7 Property Insurance Corporation; specifying
8 nonapplication of certain policy requirements
9 in postal zip code areas lacking any
10 competition for personal lines residential
11 policies under certain circumstances; requiring
12 the Financial Services Commission to adopt
13 rules; requiring the Office of Insurance
14 Regulation to periodically determine and
15 identify postal zip code areas in which no
16 competition exists for personal lines
17 residential policies; deleting an obsolete rate
18 methodology panel reporting requirement
19 provision; providing an effective date.
20
21 Be It Enacted by the Legislature of the State of Florida:
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23 Section 1. Paragraph (d) of subsection (6) of section
24 627.351, Florida Statutes, is amended to read:
25 627.351 Insurance risk apportionment plans.--
26 (6) CITIZENS PROPERTY INSURANCE CORPORATION.--
27 (d)1. It is the intent of the Legislature that the
28 rates for coverage provided by the corporation be actuarially
29 sound and not competitive with approved rates charged in the
30 admitted voluntary market, so that the corporation functions
31 as a residual market mechanism to provide insurance only when
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Florida Senate - 2006 SB 1248
11-934-06 See HB 223
1 the insurance cannot be procured in the voluntary market.
2 Rates shall include an appropriate catastrophe loading factor
3 that reflects the actual catastrophic exposure of the
4 corporation.
5 2.a. Except as provided in subparagraph 3., for each
6 county, the average rates of the corporation for each line of
7 business for personal lines residential policies excluding
8 rates for wind-only policies shall be no lower than the
9 average rates charged by the insurer that had the highest
10 average rate in that county among the 20 insurers with the
11 greatest total direct written premium in the state for that
12 line of business in the preceding year, except that with
13 respect to mobile home coverages, the average rates of the
14 corporation shall be no lower than the average rates charged
15 by the insurer that had the highest average rate in that
16 county among the 5 insurers with the greatest total written
17 premium for mobile home owner's policies in the state in the
18 preceding year.
19 b.3. Rates for personal lines residential wind-only
20 policies must be actuarially sound and not competitive with
21 approved rates charged by authorized insurers. Corporation
22 rate manuals shall include a rate surcharge for seasonal
23 occupancy. To ensure that personal lines residential wind-only
24 rates are not competitive with approved rates charged by
25 authorized insurers, the corporation, in conjunction with the
26 office, shall develop a wind-only ratemaking methodology,
27 which methodology shall be contained in each rate filing made
28 by the corporation with the office. If the office determines
29 that the wind-only rates or rating factors filed by the
30 corporation fail to comply with the wind-only ratemaking
31 methodology provided for in this subsection, it shall so
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Florida Senate - 2006 SB 1248
11-934-06 See HB 223
1 notify the corporation and require the corporation to amend
2 its rates or rating factors to come into compliance within 90
3 days of notice from the office.
4 3. The provisions of sub-subparagraph 2.a. do not
5 apply to coverage provided by the corporation in any area of a
6 postal zip code for which the office determines that no
7 competition exists for personal lines residential policies.
8 The provisions of sub-subparagraph 2.b. do not apply to
9 coverage provided by the corporation in any area of a postal
10 zip code for which the office determines that no competition
11 exists for personal lines residential policies in the portion
12 of the area of that postal zip code which is eligible for
13 wind-only coverage. In such postal zip code areas, the rates
14 for personal lines residential coverage must only be
15 actuarially sound and not excessive, inadequate, or unfairly
16 discriminatory and are subject to the other provisions of this
17 paragraph and s. 627.062. The commission shall adopt rules
18 establishing criteria for determining whether no competition
19 exists for personal lines residential policies in an area of a
20 postal zip code. Beginning October 1, 2006, and each 3 months
21 thereafter, the office shall determine and identify for
22 purposes of this subparagraph those areas of postal zip codes
23 for which no competition exists for personal lines residential
24 policies.
25 4. For the purposes of establishing a pilot program to
26 evaluate issues relating to the availability and affordability
27 of insurance in an area where historically there has been
28 little market competition, the provisions of sub-subparagraph
29 2.a. subparagraph 2. do not apply to coverage provided by the
30 corporation in Monroe County if the office determines that a
31 reasonable degree of competition does not exist for personal
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Florida Senate - 2006 SB 1248
11-934-06 See HB 223
1 lines residential policies. The provisions of sub-subparagraph
2 2.b. subparagraph 3. do not apply to coverage provided by the
3 corporation in Monroe County if the office determines that a
4 reasonable degree of competition does not exist for personal
5 lines residential policies in the area of that county which is
6 eligible for wind-only coverage. In this county, the rates for
7 personal lines residential coverage shall be actuarially sound
8 and not excessive, inadequate, or unfairly discriminatory and
9 are subject to the other provisions of the paragraph and s.
10 627.062. The commission shall adopt rules establishing the
11 criteria for determining whether a reasonable degree of
12 competition exists for personal lines residential policies in
13 Monroe County. By March 1, 2006, the office shall submit a
14 report to the Legislature providing an evaluation of the
15 implementation of the pilot program affecting Monroe County.
16 5. Rates for commercial lines coverage shall not be
17 subject to the requirements of sub-subparagraph 2.a.
18 subparagraph 2., but shall be subject to all other
19 requirements of this paragraph and s. 627.062.
20 6. Nothing in this paragraph shall require or allow
21 the corporation to adopt a rate that is inadequate under s.
22 627.062.
23 7. The corporation shall certify to the office at
24 least twice annually that its personal lines rates comply with
25 the requirements of this paragraph subparagraphs 1. and 2. If
26 any adjustment in the rates or rating factors of the
27 corporation is necessary to ensure such compliance, the
28 corporation shall make and implement such adjustments and file
29 its revised rates and rating factors with the office. If the
30 office thereafter determines that the revised rates and rating
31 factors fail to comply with the provisions of this paragraph
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Florida Senate - 2006 SB 1248
11-934-06 See HB 223
1 subparagraphs 1. and 2., the office it shall notify the
2 corporation and require the corporation to amend its rates or
3 rating factors in conjunction with its next rate filing. The
4 office must notify the corporation by electronic means of any
5 rate filing it approves for any insurer among the insurers
6 referred to in sub-subparagraph 2.a subparagraph 2.
7 8. In addition to the rates otherwise determined
8 pursuant to this paragraph, the corporation shall impose and
9 collect an amount equal to the premium tax provided for in s.
10 624.509 to augment the financial resources of the corporation.
11 9.a. To assist the corporation in developing
12 additional ratemaking methods to ensure assure compliance with
13 this paragraph subparagraphs 1. and 4., the corporation shall
14 appoint a rate methodology panel consisting of one person
15 recommended by the Florida Association of Insurance Agents,
16 one person recommended by the Professional Insurance Agents of
17 Florida, one person recommended by the Florida Association of
18 Insurance and Financial Advisors, one person recommended by
19 the insurer with the highest voluntary market share of
20 residential property insurance business in the state, one
21 person recommended by the insurer with the second-highest
22 voluntary market share of residential property insurance
23 business in the state, one person recommended by an insurer
24 writing commercial residential property insurance in this
25 state, one person recommended by the Office of Insurance
26 Regulation, and one board member designated by the board
27 chairman, who shall serve as chairman of the panel.
28 b. By January 1, 2004, the rate methodology panel
29 shall provide a report to the corporation of its findings and
30 recommendations for the use of additional ratemaking methods
31 and procedures, including the use of a rate equalization
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Florida Senate - 2006 SB 1248
11-934-06 See HB 223
1 surcharge in an amount sufficient to assure that the total
2 cost of coverage for policyholders or applicants to the
3 corporation is sufficient to comply with subparagraph 1.
4 c. Within 30 days after such report, the corporation
5 shall present to the President of the Senate, the Speaker of
6 the House of Representatives, the minority party leaders of
7 each house of the Legislature, and the chairs of the standing
8 committees of each house of the Legislature having
9 jurisdiction of insurance issues, a plan for implementing the
10 additional ratemaking methods and an outline of any
11 legislation needed to facilitate use of the new methods.
12 d. The plan must include a provision that producer
13 commissions paid by the corporation shall not be calculated in
14 such a manner as to include any rate equalization surcharge.
15 However, without regard to the plan to be developed or its
16 implementation, producer commissions paid by the corporation
17 for each account, other than the quota share primary program,
18 shall remain fixed as to percentage, effective rate,
19 calculation, and payment method until January 1, 2004.
20 10. By January 1, 2004, The corporation shall develop
21 a notice to policyholders or applicants that the rates of
22 Citizens Property Insurance Corporation are intended to be
23 higher than the rates of any admitted carrier and providing
24 other information the corporation deems necessary to assist
25 consumers in finding other voluntary admitted insurers willing
26 to insure their property.
27 Section 2. This act shall take effect July 1, 2006.
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