Florida Senate - 2006 PROPOSED COMMITTEE SUBSTITUTE
Bill No. SB 1980
Barcode 070118 Comm: RCS 04/10/2006 09:26 AM
597-2109B-06
Proposed Committee Substitute by the Committee on Banking and
Insurance
1 A bill to be entitled
2 An act relating to property insurance; amending
3 s. 215.555, F.S.; redefining the term "losses";
4 revising certain reimbursement contract
5 criteria; revising certain reimbursement
6 premium requirements; revising certain revenue
7 bond emergency assessment requirements;
8 creating the Home Retrofit Hardening Program;
9 providing eligibility criteria and guidelines
10 for awarding funds under the program; providing
11 limits on grant amounts and on administrative
12 expenses; creating s. 215.5586, F.S.; providing
13 a purpose; requiring the Department of
14 Community Affairs to establish a wind
15 certification and hurricane mitigation
16 inspection program; specifying inspection
17 requirements; providing qualification
18 requirements for inspection providers;
19 requiring the department to adopt rules;
20 amending s. 193.155, F.S.; providing that
21 certain changes made to homestead property for
22 hurricane damage mitigation do not increase the
23 assessed value of the property; creating s.
24 252.63, F.S.; providing purpose and intent;
25 providing powers of the Commissioner of
26 Insurance Regulation during a state of
27 emergency; authorizing the commissioner to
28 issue certain orders in a state of emergency;
29 providing for effect and duration of such
30 orders; providing for legislative termination
31 of such orders; requiring the commissioner to
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1 publish such orders and an explanatory
2 statement; prescribing additional duties of the
3 commissioner with respect to mitigation of
4 consequences of emergencies; amending s.
5 626.918, F.S.; authorizing certain letters of
6 credit to fund an insurer's required
7 policyholder protection trust fund; defining
8 the term "qualified United States financial
9 institution; amending s. 627.062, F.S.;
10 revising factors to be used in reviewing rate
11 filings; providing that, in considering a rate
12 filing, the burden is on the Office of
13 Insurance Regulation to establish that costs of
14 reinsurance are excessive; providing that
15 certain rates are not subject to disapproval as
16 being excessive; amending s. 627.351, F.S.;
17 providing that certain responsibilities of the
18 Office of Insurance Regulation with respect to
19 the plan of operation of Citizens Property
20 Insurance Corporation be assumed by the
21 Financial Services Commission; defining the
22 terms "homestead property" and "nonhomestead
23 property" for use with respect to Citizens
24 Property Insurance Corporation; limiting
25 eligibility for personal lines coverage by the
26 corporation; directing the corporation board to
27 reduce or, with approval by necessary parties,
28 restructure existing debt; requiring a report
29 with respect thereto; providing for a reduction
30 in aggregate amount of a regular assessment in
31 certain circumstances; revising formula for
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1 calculating emergency assessment; requiring the
2 executive director of the corporation to be
3 confirmed by the Senate; deleting authority of
4 the Chief Financial Officer to review corporate
5 employees; prescribing a 10-day waiting period
6 for applications for coverage for a new policy;
7 authorizing exceptions; redesignating the
8 market equalization surcharge as a Citizens
9 policyholder surcharge and providing for its
10 calculation; prescribing an additional
11 surcharge on deficit assessments for certain
12 nonhomestead property; providing for optional
13 payment plans; providing for claims adjusting
14 services for certain wind coverage in certain
15 circumstances; requiring prospective senior
16 management employees of the corporation to
17 successfully pass a background check; requiring
18 employees of the corporation to sign annually a
19 statement that they have no conflict of
20 interest; providing that senior managers and
21 members of the board of governors are subject
22 to the code of ethics and must file financial
23 disclosure; prohibiting employees and members
24 of the board of governors from accepting gifts
25 or expenditures from a persons or entity, or
26 employee thereof, which has or is under
27 consideration for a contract with the
28 corporation; providing penalties; providing a
29 limitation on senior managers' representation
30 of persons before the corporation after
31 retirement or termination of employment and on
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1 employment with an insurer that has received a
2 take-out bonus; prescribing guidelines for
3 purchases of goods and services; providing
4 guidelines on use of outside counsel;
5 prohibiting the corporation from retaining a
6 lobbyist; authorizing full-time employees to
7 register and engage in lobbying; creating the
8 Office of Internal Auditor and prescribing its
9 duties; providing record-retention
10 requirements; requiring establishment of a unit
11 or division to investigate claims involving
12 possible fraud against the corporation and
13 another to receive and respond to consumer
14 complaints; requiring a periodic comprehensive
15 market conduct examination of the corporation;
16 requiring periodic operational audits of the
17 corporation by the Auditor General; prescribing
18 elements to be included in such audits;
19 providing a rate surcharge for certain
20 nonhomestead property; deleting provisions
21 relating to appointment of a rate methodology
22 panel; prescribing requirements for paying
23 takeout bonuses or payments to insurers;
24 requiring records of takeout bonuses or other
25 payments for certain purposes; postponing the
26 dates by which the boundaries of high-risk
27 areas must be reduced; providing applicability
28 of specified provisions relating to assessments
29 and surcharges; amending s. 627.3511, F.S.;
30 extending the period for which an insurer that
31 assumes Citizens Property Insurance
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1 Corporation's obligations under a policy must
2 renew the replacement policy; revising
3 circumstances under which replacement is not
4 required; amending s. 627.3517, F.S.; providing
5 that an insurance risk apportionment plan
6 policyholder's right to retain his or her
7 current agent does not apply during the first
8 10 days after a new application for coverage
9 has been submitted to Citizens Property
10 Insurance Corporation; amending s. 627.4035,
11 F.S.; providing for a waiver of a written
12 authorization requirement to pay claims by
13 debit card or other electronic transfer;
14 creating s. 627.6121, F.S.; prescribing
15 circumstances under which an insurer must pay
16 benefits to a primary policyholder of dual
17 interest property; requiring mortgageholders
18 and lienholders be given notice of such
19 payment; amending s. 627.7011, F.S.; limiting
20 certain law and ordinance coverage; creating s.
21 627.7019, F.S.; requiring the Financial
22 Services Commission to adopt rules imposing
23 standardized requirements applicable to
24 insurers after certain natural events;
25 providing criteria; providing requirements of
26 the Office of Insurance Regulation; amending s.
27 627.707, F.S.; revising guidelines for
28 inspection of and payment for sinkhole claims;
29 authorizing direct payment to contractors
30 performing sinkhole damage repairs; providing
31 limits on applicability of provisions relating
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1 to inspection and repair and payment therefor;
2 amending s. 627.7072, F.S.; deleting a standard
3 applicable to sinkhole testing by professional
4 geologists; amending s. 627.7073, F.S.;
5 revising requirements for sinkhole reports;
6 creating s. 627.7074, F.S.; prescribing an
7 alternative method for resolving disputed
8 sinkhole insurance claims; providing
9 definitions; prescribing procedures for
10 invoking the alternative method; providing that
11 a recommendation by a neutral evaluator is not
12 binding on any party; providing for payments of
13 costs; providing for judicial review; amending
14 s. 627.727, F.S.; conforming a cross-reference;
15 amending s. 631.181, F.S.; providing an
16 exception to certain requirements for a signed
17 statement for certain claims; providing
18 requirements; amending s. 631.54, F.S.;
19 redefining the term "covered claim" and
20 defining the term "homeowner's insurance";
21 amending s. 631.55, F.S.; conforming a
22 cross-reference; amending s. 631.57, F.S.;
23 revising requirements and limitations for
24 obligations of the Florida Insurance Guaranty
25 Association for covered claims; authorizing the
26 association to contract with counties,
27 municipalities, and legal entities to issue
28 revenue bonds for certain purposes; authorizing
29 the Office of Insurance Regulation to levy
30 assessments and emergency assessments on
31 insurers under certain circumstances for
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1 certain bond repayment purposes; providing
2 requirements for and limitations on such
3 assessments; providing for payment, collection,
4 and distribution of such assessments; requiring
5 insurers to include an analysis of revenues
6 from such assessments in a required report;
7 providing rate filing requirements for insurers
8 relating to such assessments; providing for
9 continuing annual assessments under certain
10 circumstances; specifying emergency assessments
11 as not premium and not subject to certain
12 taxes, fees, or commissions; specifying insurer
13 liability for emergency assessments; providing
14 an exception; creating s. 631.695, F.S.;
15 providing legislative findings and purposes;
16 providing for issuance of revenue bonds through
17 counties and municipalities to fund assistance
18 programs for paying covered claims for
19 hurricane damage; providing procedures,
20 requirements, and limitations for counties,
21 municipalities, and the Florida Insurance
22 Guaranty Association, Inc., relating to
23 issuance and validation of such bonds;
24 prohibiting pledging the funds, credit,
25 property, and taxing power of the state,
26 counties, and municipalities for payment of
27 bonds; specifying authorized uses of bond
28 proceeds; limiting the term of bonds;
29 specifying a state covenant to protect
30 bondholders from adverse actions relating to
31 such bonds; specifying exemptions for bonds,
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1 notes, and other obligations of counties and
2 municipalities from certain taxes or
3 assessments on property and revenues;
4 authorizing counties and municipalities to
5 create a legal entity to exercise certain
6 powers; requiring the association to issue an
7 annual report on the status of certain uses of
8 bond proceeds; providing report requirements;
9 requiring the association to provide a copy of
10 the report to the Legislature and Chief
11 Financial Officer; prohibiting repeal of
12 certain provisions relating to certain bonds
13 under certain circumstances; providing
14 appropriations; providing effective dates.
15
16 Be It Enacted by the Legislature of the State of Florida:
17
18 Section 1. Effective June 1, 2006, paragraph (d) of
19 subsection (2), paragraphs (c) and (d) of subsection (4),
20 paragraph (b) of subsection (5), and paragraph (b) of
21 subsection (6) of section 215.555, Florida Statutes, are
22 amended to read:
23 215.555 Florida Hurricane Catastrophe Fund.--
24 (2) DEFINITIONS.--As used in this section:
25 (d) "Losses" means direct incurred losses under
26 covered policies, which shall include losses for additional
27 living expenses not to exceed 40 percent of the insured value
28 of a residential structure or its contents and shall exclude
29 loss adjustment expenses. "Losses" does not include losses for
30 fair rental value, loss of rent or rental income use, or
31 business interruption losses.
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1 (4) REIMBURSEMENT CONTRACTS.--
2 (c)1. The contract shall also provide that the
3 obligation of the board with respect to all contracts covering
4 a particular contract year shall not exceed the actual
5 claims-paying capacity of the fund up to a limit of $15
6 billion for that contract year adjusted based upon the
7 reported exposure from the prior contract year to reflect the
8 percentage growth in exposure to the fund for covered policies
9 since 2003, provided the dollar growth in the limit may not
10 increase in any year by an amount greater than the dollar
11 growth of the cash balance of the fund as of December 31 as
12 defined by rule which occurred over the prior calendar year.
13 2. In May before the start of the upcoming contract
14 year and in October during the contract year, the board shall
15 publish in the Florida Administrative Weekly a statement of
16 the fund's estimated borrowing capacity and the projected
17 balance of the fund as of December 31. After the end of each
18 calendar year, the board shall notify insurers of the
19 estimated borrowing capacity and the balance of the fund as of
20 December 31 to provide insurers with data necessary to assist
21 them in determining their retention and projected payout from
22 the fund for loss reimbursement purposes. In conjunction with
23 the development of the premium formula, as provided for in
24 subsection (5), the board shall publish factors or multiples
25 that assist insurers in determining their retention and
26 projected payout for the next contract year. For all
27 regulatory and reinsurance purposes, an insurer may calculate
28 its projected payout from the fund as its share of the total
29 fund premium for the current contract year multiplied by the
30 sum of the projected balance of the fund as of December 31 and
31 the estimated borrowing capacity for that contract year as
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1 reported under this subparagraph.
2 (d)1. For purposes of determining potential liability
3 and to aid in the sound administration of the fund, the
4 contract shall require each insurer to report such insurer's
5 losses from each covered event on an interim basis, as
6 directed by the board. The contract shall require the insurer
7 to report to the board no later than December 31 of each year,
8 and quarterly thereafter, its reimbursable losses from covered
9 events for the year. The contract shall require the board to
10 determine and pay, as soon as practicable after receiving
11 these reports of reimbursable losses, the initial amount of
12 reimbursement due and adjustments to this amount based on
13 later loss information. The adjustments to reimbursement
14 amounts shall require the board to pay, or the insurer to
15 return, amounts reflecting the most recent calculation of
16 losses.
17 2. In determining reimbursements pursuant to this
18 subsection, the contract shall provide that the board shall:
19 a. First reimburse insurers writing covered policies,
20 which insurers are in full compliance with this section and
21 have petitioned the Office of Insurance Regulation and
22 qualified as limited apportionment companies under s.
23 627.351(2)(b)3. The amount of such reimbursement shall be the
24 lesser of $10 million or an amount equal to 10 times the
25 insurer's reimbursement premium for the current year. The
26 amount of reimbursement paid under this sub-subparagraph may
27 not exceed the full amount of reimbursement promised in the
28 reimbursement contract. This sub-subparagraph does not apply
29 with respect to any contract year in which the year-end
30 projected cash balance of the fund, exclusive of any bonding
31 capacity of the fund, exceeds $2 billion. Only one member of
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1 any insurer group may receive reimbursement under this
2 sub-subparagraph.
3 a.b. Next pay to each insurer such insurer's projected
4 payout, which is the amount of reimbursement it is owed, up to
5 an amount equal to the insurer's share of the actual premium
6 paid for that contract year, multiplied by the actual
7 claims-paying capacity available for that contract year;
8 provided, entities created pursuant to s. 627.351 shall be
9 further reimbursed in accordance with sub-subparagraph b. c.
10 b.c. Thereafter, establish the prorated reimbursement
11 level at the highest level for which any remaining fund
12 balance or bond proceeds are sufficient to reimburse entities
13 created pursuant to s. 627.351 based on reimbursable losses
14 exceeding the amounts payable pursuant to sub-subparagraph a.
15 b. for the current contract year.
16 (5) REIMBURSEMENT PREMIUMS.--
17 (b) The State Board of Administration shall select an
18 independent consultant to develop a formula for determining
19 the actuarially indicated premium to be paid to the fund. The
20 formula shall specify, for each zip code or other limited
21 geographical area, the amount of premium to be paid by an
22 insurer for each $1,000 of insured value under covered
23 policies in that zip code or other area. In establishing
24 premiums, the board shall consider the coverage elected under
25 paragraph (4)(b) and any factors that tend to enhance the
26 actuarial sophistication of ratemaking for the fund, including
27 deductibles, type of construction, type of coverage provided,
28 relative concentration of risks, a factor providing for more
29 rapid cash buildup in the fund until the fund capacity for a
30 single hurricane season is fully funded, and other such
31 factors deemed by the board to be appropriate. The formula may
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1 provide for a procedure to determine the premiums to be paid
2 by new insurers that begin writing covered policies after the
3 beginning of a contract year, taking into consideration when
4 the insurer starts writing covered policies, the potential
5 exposure of the insurer, the potential exposure of the fund,
6 the administrative costs to the insurer and to the fund, and
7 any other factors deemed appropriate by the board. The formula
8 shall include a factor of 25 percent of the fund's actuarially
9 indicated premium in order to provide for more rapid cash
10 buildup in the fund. The formula must be approved by unanimous
11 vote of the board. The board may, at any time, revise the
12 formula pursuant to the procedure provided in this paragraph.
13 (6) REVENUE BONDS.--
14 (b) Emergency assessments.--
15 1. If the board determines that the amount of revenue
16 produced under subsection (5) is insufficient to fund the
17 obligations, costs, and expenses of the fund and the
18 corporation, including repayment of revenue bonds and that
19 portion of the debt service coverage not met by reimbursement
20 premiums, the board shall direct the Office of Insurance
21 Regulation to levy, by order, an emergency assessment on
22 direct premiums for all property and casualty lines of
23 business in this state, including property and casualty
24 business of surplus lines insurers regulated under part VIII
25 of chapter 626, but not including any workers' compensation
26 premiums or medical malpractice premiums. As used in this
27 subsection, the term "property and casualty business" includes
28 all lines of business identified on Form 2, Exhibit of
29 Premiums and Losses, in the annual statement required of
30 authorized insurers by s. 624.424 and any rule adopted under
31 this section, except for those lines identified as accident
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1 and health insurance and except for policies written under the
2 National Flood Insurance Program. The assessment shall be
3 specified as a percentage of future premium collections and is
4 subject to annual adjustments by the board to reflect changes
5 in premiums subject to assessments collected under this
6 subparagraph in order to meet debt obligations. The same
7 percentage shall apply to all policies in lines of business
8 subject to the assessment issued or renewed during the
9 12-month period beginning on the effective date of the
10 assessment.
11 2. A premium is not subject to an annual assessment
12 under this paragraph in excess of 6 percent of premium with
13 respect to obligations arising out of losses attributable to
14 any one contract year, and a premium is not subject to an
15 aggregate annual assessment under this paragraph in excess of
16 10 percent of premium. An annual assessment under this
17 paragraph shall continue for as long as until the revenue
18 bonds issued with respect to which the assessment was imposed
19 are outstanding, including any bonds the proceeds of which
20 were used to refund the revenue bonds, unless adequate
21 provision has been made for the payment of the bonds under the
22 documents authorizing issuance of the bonds.
23 3. With respect to each insurer collecting premiums
24 that are subject to the assessment, the insurer shall collect
25 the assessment at the same time as it collects the premium
26 payment for each policy and shall remit the assessment
27 collected to the fund or corporation as provided in the order
28 issued by the Office of Insurance Regulation. The office shall
29 verify the accurate and timely collection and remittance of
30 emergency assessments and shall report the information to the
31 board in a form and at a time specified by the board. Each
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1 insurer collecting assessments shall provide the information
2 with respect to premiums and collections as may be required by
3 the office to enable the office to monitor and verify
4 compliance with this paragraph.
5 4. With respect to assessments of surplus lines
6 premiums, each surplus lines agent shall collect the
7 assessment at the same time as the agent collects the surplus
8 lines tax required by s. 626.932, and the surplus lines agent
9 shall remit the assessment to the Florida Surplus Lines
10 Service Office created by s. 626.921 at the same time as the
11 agent remits the surplus lines tax to the Florida Surplus
12 Lines Service Office. The emergency assessment on each insured
13 procuring coverage and filing under s. 626.938 shall be
14 remitted by the insured to the Florida Surplus Lines Service
15 Office at the time the insured pays the surplus lines tax to
16 the Florida Surplus Lines Service Office. The Florida Surplus
17 Lines Service Office shall remit the collected assessments to
18 the fund or corporation as provided in the order levied by the
19 Office of Insurance Regulation. The Florida Surplus Lines
20 Service Office shall verify the proper application of such
21 emergency assessments and shall assist the board in ensuring
22 the accurate and timely collection and remittance of
23 assessments as required by the board. The Florida Surplus
24 Lines Service Office shall annually calculate the aggregate
25 written premium on property and casualty business, other than
26 workers' compensation and medical malpractice, procured
27 through surplus lines agents and insureds procuring coverage
28 and filing under s. 626.938 and shall report the information
29 to the board in a form and at a time specified by the board.
30 5. Any assessment authority not used for a particular
31 contract year may be used for a subsequent contract year. If,
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1 for a subsequent contract year, the board determines that the
2 amount of revenue produced under subsection (5) is
3 insufficient to fund the obligations, costs, and expenses of
4 the fund and the corporation, including repayment of revenue
5 bonds and that portion of the debt service coverage not met by
6 reimbursement premiums, the board shall direct the Office of
7 Insurance Regulation to levy an emergency assessment up to an
8 amount not exceeding the amount of unused assessment authority
9 from a previous contract year or years, plus an additional 4
10 percent provided that the assessments in the aggregate do not
11 exceed the limits specified in subparagraph 2.
12 6. The assessments otherwise payable to the
13 corporation under this paragraph shall be paid to the fund
14 unless and until the Office of Insurance Regulation and the
15 Florida Surplus Lines Service Office have received from the
16 corporation and the fund a notice, which shall be conclusive
17 and upon which they may rely without further inquiry, that the
18 corporation has issued bonds and the fund has no agreements in
19 effect with local governments under paragraph (c). On or after
20 the date of the notice and until the date the corporation has
21 no bonds outstanding, the fund shall have no right, title, or
22 interest in or to the assessments, except as provided in the
23 fund's agreement with the corporation.
24 7. Emergency assessments are not premium and are not
25 subject to the premium tax, to the surplus lines tax, to any
26 fees, or to any commissions. An insurer is liable for all
27 assessments that it collects and must treat the failure of an
28 insured to pay an assessment as a failure to pay the premium.
29 An insurer is not liable for uncollectible assessments.
30 8. When an insurer is required to return an unearned
31 premium, it shall also return any collected assessment
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1 attributable to the unearned premium. A credit adjustment to
2 the collected assessment may be made by the insurer with
3 regard to future remittances that are payable to the fund or
4 corporation, but the insurer is not entitled to a refund.
5 9. When a surplus lines insured or an insured who has
6 procured coverage and filed under s. 626.938 is entitled to
7 the return of an unearned premium, the Florida Surplus Lines
8 Service Office shall provide a credit or refund to the agent
9 or such insured for the collected assessment attributable to
10 the unearned premium prior to remitting the emergency
11 assessment collected to the fund or corporation.
12 10. The exemption of medical malpractice insurance
13 premiums from emergency assessments under this paragraph is
14 repealed May 31, 2007, and medical malpractice insurance
15 premiums shall be subject to emergency assessments
16 attributable to loss events occurring in the contract years
17 commencing on June 1, 2007.
18 Section 2. Effective July 1, 2006, section 215.558,
19 Florida Statutes, is created to read:
20 215.558 Home Retrofit Hardening Program.--The
21 Department of Community Affairs shall establish the Home
22 Retrofit Hardening Program. The program is a competitive grant
23 program to fund improvements to homes constructed before the
24 implementation of the current Florida Building Code to make
25 them less vulnerable to hurricane damage and to decrease the
26 cost of residential property insurance. Site-built and mobile
27 homes are eligible for funding under this program. However,
28 the highest priority shall be given to low-income homeowners,
29 as defined in s. 420.004(9), who live in wind-borne debris
30 regions as defined in the Florida Building Code, which shall
31 be eligible for up to 100 percent of the cost of the
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1 improvements. The next highest priority shall be given to
2 homestead dwellings insured at $500,000 or less and, located
3 in the areas designated as high-risk areas for purposes of
4 coverage by the Citizens Property Insurance Corporation, which
5 shall be eligible for up to 50 percent of the cost of the
6 improvements, with priority within this category given to
7 homes insured by Citizens. The next highest priority shall be
8 given to all other homestead dwellings insured at $500,000 or
9 less, which shall be eligible for up to 25 percent of the cost
10 of the improvements.
11 (1) The program shall be administered by local
12 governments, regional planning councils, or private nonprofit
13 agencies under the overall direction of the department. In
14 order to qualify for funding, the program must include an
15 inspection of the dwelling to determine what mitigation
16 measures are needed, a means for verifying that the
17 improvements to be paid by the program have been demonstrated
18 to reduce a dwelling's vulnerability to hurricane damage, and
19 a means for verifying that the proceeds were actually spent on
20 such improvements. Funding for the program is contingent upon
21 appropriations. When awarding program funds, the department
22 shall be guided by:
23 (a) The number of homes in need of improvement.
24 (b) The number of homes located within the wind-borne
25 debris region and within the high-risk area of Citizens
26 Property Insurance Corporation.
27 (c) The number of persons who will benefit from the
28 improvements.
29 (d) The number of low-income households and other
30 dwellings meeting the priority criteria of this section which
31 will benefit from the improvements.
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1 (e) The costs per home to provide improvements.
2 (2) Funds may be used for the following improvements
3 installed in compliance with Blueprint-for-Safety standards:
4 (a) Roof deck attachment;
5 (b) Secondary water barrier;
6 (c) Roof covering;
7 (d) Brace gable ends;
8 (e) Reinforce roof-to-wall connections;
9 (f) Opening protection; and
10 (g) Exterior doors, including garage doors.
11 (3) Each project grant for an individual home retrofit
12 may not exceed $10,000.
13 (4) Administrative costs shall be kept to a minimum
14 and may not exceed 5 percent of the program funding.
15 (5) Grantees are encouraged to leverage grant funds
16 available under this program with other available funds.
17 Matching funds for a project is not a requirement. However,
18 matching funds from other available sources may be considered
19 by the department in the competitive-review process.
20 Section 3. Effective July 1, 2006, section 215.5586,
21 Florida Statutes, is created to read:
22 215.5586 Wind certification and hurricane mitigation
23 inspections.--
24 (1) The purpose of this section is to provide wind
25 certification and hurricane mitigation inspections to eligible
26 homeowners in this state for assistance in retrofitting the
27 properties of those homeowners to become less vulnerable to
28 hurricane damage.
29 (2) The Department of Community Affairs shall
30 establish a request for proposals to solicit proposals from
31 wind certification entities to provide, at no cost to
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1 homeowners, wind certification and hurricane mitigation
2 inspections. The inspections provided to homeowners, at a
3 minimum, must include the following:
4 (a) A home inspection and report that summarizes the
5 results and identifies corrective actions a homeowner may take
6 to mitigate hurricane damage.
7 (b) A range of cost estimates regarding the mitigation
8 features.
9 (c) Insurer-specific information regarding premium
10 discounts correlated to recommended mitigation features
11 identified by the inspection.
12 (d) A hurricane resistance rating scale specifying the
13 home's current, as well as projected, wind resistance
14 capabilities.
15 (3) To qualify for selection by the department as a
16 provider of wind certification and hurricane mitigation
17 inspections, the entity, at a minimum, must:
18 (a) Use wind certification and hurricane mitigation
19 inspectors who have:
20 1. Prior experience in residential construction or
21 inspection and have received specialized training in hurricane
22 mitigation procedures.
23 2. Undergone drug testing and background checks.
24 3. Been certified, in a manner satisfactory to the
25 department, to conduct the inspections.
26 (b) Provide a quality assurance program including a
27 reinspection component.
28 (4) The Department of Community Affairs shall adopt
29 rules pursuant to ss. 120.536(1) and 120.54 governing the wind
30 certification and wind mitigation inspection program.
31 Section 4. Paragraph (a) of subsection (4) of section
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1 193.155, Florida Statutes, is amended to read:
2 193.155 Homestead assessments.--Homestead property
3 shall be assessed at just value as of January 1, 1994.
4 Property receiving the homestead exemption after January 1,
5 1994, shall be assessed at just value as of January 1 of the
6 year in which the property receives the exemption.
7 (4)(a) Changes, additions, or improvements to
8 homestead property shall be assessed at just value as of the
9 first January 1 after the changes, additions, or improvements
10 are substantially completed. However, the addition of storm
11 shutters, impact-resistant glazing, hurricane clips and
12 straps, garage door bracing, or generators for purposes of
13 mitigating hurricane damage and disaster preparedness shall
14 not be included or otherwise increase the assessed value of
15 homestead property.
16 Section 5. Section 252.63, Florida Statutes, is
17 created to read:
18 252.63 Commissioner of Insurance Regulation; powers in
19 a state of emergency.--
20 (1) It is the purpose and intent of this section to
21 provide the Commissioner of Insurance Regulation the authority
22 to temporarily modify or suspend provisions of the Florida
23 Insurance Code in order to expedite the recovery of
24 communities affected by a disaster or other emergency and
25 encourage insurance companies, entities, and persons subject
26 to the Florida Insurance Code and the jurisdiction of the
27 office to meet the insurance needs of such communities.
28 (2)(a) When the Governor declares a state of emergency
29 pursuant to s. 252.36, the commissioner may issue:
30 1. One or more general orders applicable to all
31 insurance companies, entities, and persons, as defined in s.
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1 624.04, which are subject to the Florida Insurance Code and
2 serve any portion of the area of the state under the state of
3 emergency; or
4 2. One or more specific orders to particular insurance
5 companies, entities, and persons that are subject to the
6 Florida Insurance Code, as defined in s. 624.01, which orders
7 may modify or suspend, as to those companies, entities, and
8 persons, all or any part of the Florida Insurance Code, or any
9 applicable rule, consistent with the stated purposes of the
10 Florida Insurance Code.
11 (b) An order issued by the commissioner under this
12 section becomes effective upon issuance and continues for 120
13 days unless terminated sooner by the commissioner. The
14 commissioner may extend an order for one additional period of
15 120 days if he or she determines that the emergency conditions
16 that gave rise to the initial order still exist. By concurrent
17 resolution, the Legislature may terminate any order issued
18 under this section.
19 (3) The commissioner shall publish in the next
20 available publication of the Florida Administrative Weekly a
21 copy of the text of any order issued under this section,
22 together with a statement describing the modification or
23 suspension and explaining how the modification or suspension
24 will facilitate recovery from the emergency.
25 (4) The commissioner shall consider on a continuing
26 basis steps that could be taken to mitigate the harmful
27 consequences of emergencies and from time to time make
28 recommendations to the Legislature and other appropriate
29 private entities regarding such mitigation.
30 Section 6. Subsections (1) and (2) of section 626.918,
31 Florida Statutes, are amended to read:
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1 626.918 Eligible surplus lines insurers.--
2 (1) A No surplus lines agent may not shall place any
3 coverage with any unauthorized insurer which is not then an
4 eligible surplus lines insurer, except as permitted under
5 subsections (5) and (6).
6 (2) An No unauthorized insurer may not shall be or
7 become an eligible surplus lines insurer unless made eligible
8 by the office in accordance with the following conditions:
9 (a) Eligibility of the insurer must be requested in
10 writing by the Florida Surplus Lines Service Office.;
11 (b) The insurer must be currently an authorized
12 insurer in the state or country of its domicile as to the kind
13 or kinds of insurance proposed to be so placed and must have
14 been such an insurer for not less than the 3 years next
15 preceding or must be the wholly owned subsidiary of such
16 authorized insurer or must be the wholly owned subsidiary of
17 an already eligible surplus lines insurer as to the kind or
18 kinds of insurance proposed for a period of not less than the
19 3 years next preceding. However, the office may waive the
20 3-year requirement if the insurer provides a product or
21 service not readily available to the consumers of this state
22 or has operated successfully for a period of at least 1 year
23 next preceding and has capital and surplus of not less than
24 $25 million.;
25 (c) Before granting eligibility, the requesting
26 surplus lines agent or the insurer shall furnish the office
27 with a duly authenticated copy of its current annual financial
28 statement in the English language and with all monetary values
29 therein expressed in United States dollars, at an exchange
30 rate (in the case of statements originally made in the
31 currencies of other countries) then-current and shown in the
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1 statement, and with such additional information relative to
2 the insurer as the office may request.;
3 (d)1.a. The insurer must have and maintain surplus as
4 to policyholders of not less than $15 million; in addition, an
5 alien insurer must also have and maintain in the United States
6 a trust fund for the protection of all its policyholders in
7 the United States under terms deemed by the office to be
8 reasonably adequate, in an amount not less than $5.4 million.
9 Any such surplus as to policyholders or trust fund shall be
10 represented by investments consisting of eligible investments
11 for like funds of like domestic insurers under part II of
12 chapter 625 provided, however, that in the case of an alien
13 insurance company, any such surplus as to policyholders may be
14 represented by investments permitted by the domestic regulator
15 of such alien insurance company if such investments are
16 substantially similar in terms of quality, liquidity, and
17 security to eligible investments for like funds of like
18 domestic insurers under part II of chapter 625. Clean,
19 irrevocable, unconditional, and evergreen letters of credit
20 issued or confirmed by a qualified United States financial
21 institution, as defined in subparagraph 2., may be used to
22 fund the trust.;
23 b.2. For those surplus lines insurers that were
24 eligible on January 1, 1994, and that maintained their
25 eligibility thereafter, the required surplus as to
26 policyholders shall be:
27 (I)a. On December 31, 1994, and until December 30,
28 1995, $2.5 million.
29 (II)b. On December 31, 1995, and until December 30,
30 1996, $3.5 million.
31 (III)c. On December 31, 1996, and until December 30,
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1 1997, $4.5 million.
2 (IV)d. On December 31, 1997, and until December 30,
3 1998, $5.5 million.
4 (V)e. On December 31, 1998, and until December 30,
5 1999, $6.5 million.
6 (VI)f. On December 31, 1999, and until December 30,
7 2000, $8 million.
8 (VII)g. On December 31, 2000, and until December 30,
9 2001, $9.5 million.
10 (VIII)h. On December 31, 2001, and until December 30,
11 2002, $11 million.
12 (IX)i. On December 31, 2002, and until December 30,
13 2003, $13 million.
14 (X)j. On December 31, 2003, and thereafter, $15
15 million.
16 c.3. The capital and surplus requirements as set forth
17 in sub-subparagraph b. subparagraph 2. do not apply in the
18 case of an insurance exchange created by the laws of
19 individual states, where the exchange maintains capital and
20 surplus pursuant to the requirements of that state, or
21 maintains capital and surplus in an amount not less than $50
22 million in the aggregate. For an insurance exchange which
23 maintains funds in the amount of at least $12 million for the
24 protection of all insurance exchange policyholders, each
25 individual syndicate shall maintain minimum capital and
26 surplus in an amount not less than $3 million. If the
27 insurance exchange does not maintain funds in the amount of at
28 least $12 million for the protection of all insurance exchange
29 policyholders, each individual syndicate shall meet the
30 minimum capital and surplus requirements set forth in
31 sub-subparagraph b. subparagraph 2.;
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1 d.4. A surplus lines insurer which is a member of an
2 insurance holding company that includes a member which is a
3 Florida domestic insurer as set forth in its holding company
4 registration statement, as set forth in s. 628.801 and rules
5 adopted thereunder, may elect to maintain surplus as to
6 policyholders in an amount equal to the requirements of s.
7 624.408, subject to the requirement that the surplus lines
8 insurer shall at all times be in compliance with the
9 requirements of chapter 625.
10
11 The election shall be submitted to the office and shall be
12 effective upon the office's being satisfied that the
13 requirements of sub-subparagraph d. subparagraph 4. have been
14 met. The initial date of election shall be the date of office
15 approval. The election approval application shall be on a form
16 adopted by commission rule. The office may approve an election
17 form submitted pursuant to sub-subparagraph d. subparagraph 4.
18 only if it was on file with the former Department of Insurance
19 before February 28, 1998.;
20 2. For purposes of letters of credit under
21 subparagraph 1., the term "qualified United States financial
22 institution" means an institution that:
23 a. Is organized or, in the case of a United States
24 office of a foreign banking organization, is licensed under
25 the laws of the United States or any state.
26 b. Is regulated, supervised, and examined by
27 authorities of the United States or any state having
28 regulatory authority over banks and trust companies.
29 c. Has been determined by the office or the Securities
30 Valuation Office of the National Association of Insurance
31 Commissioners to meet such standards of financial condition
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1 and standing as are considered necessary and appropriate to
2 regulate the quality of financial institutions whose letters
3 of credit are acceptable to the office.
4 (e) The insurer must be of good reputation as to the
5 providing of service to its policyholders and the payment of
6 losses and claims.;
7 (f) The insurer must be eligible, as for authority to
8 transact insurance in this state, under s. 624.404(3).; and
9 (g) This subsection does not apply as to unauthorized
10 insurers made eligible under s. 626.917 as to wet marine and
11 aviation risks.
12 Section 7. Effective July 1, 2006, paragraph (b) of
13 subsection (2) and subsection (5) of section 627.062, Florida
14 Statutes, are amended, and subsection (9) is added to that
15 section, to read:
16 627.062 Rate standards.--
17 (2) As to all such classes of insurance:
18 (b) Upon receiving a rate filing, the office shall
19 review the rate filing to determine if a rate is excessive,
20 inadequate, or unfairly discriminatory. In making that
21 determination, the office shall, in accordance with generally
22 accepted and reasonable actuarial techniques, consider the
23 following factors:
24 1. Past and prospective loss experience within and
25 without this state.
26 2. Past and prospective expenses.
27 3. The degree of competition among insurers for the
28 risk insured.
29 4. Investment income reasonably expected by the
30 insurer, consistent with the insurer's investment practices,
31 from investable premiums anticipated in the filing, plus any
26
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1 other expected income from currently invested assets
2 representing the amount expected on unearned premium reserves
3 and loss reserves. The commission may adopt rules utilizing
4 reasonable techniques of actuarial science and economics to
5 specify the manner in which insurers shall calculate
6 investment income attributable to such classes of insurance
7 written in this state and the manner in which such investment
8 income shall be used in the calculation of insurance rates.
9 Such manner shall contemplate allowances for an underwriting
10 profit factor and full consideration of investment income
11 which produce a reasonable rate of return; however, investment
12 income from invested surplus shall not be considered.
13 5. The reasonableness of the judgment reflected in the
14 filing.
15 6. Dividends, savings, or unabsorbed premium deposits
16 allowed or returned to Florida policyholders, members, or
17 subscribers.
18 7. The adequacy of loss reserves.
19 8. The cost of reinsurance, as further specified in
20 subsection (5).
21 9. Trend factors, including trends in actual losses
22 per insured unit for the insurer making the filing.
23 10. Conflagration and catastrophe hazards, if
24 applicable.
25 11. A reasonable margin for underwriting profit and
26 contingencies. For that portion of the rate covering the risk
27 of hurricanes and other catastrophic losses for which the
28 insurer has not purchased reinsurance and has exposed its
29 capital and surplus to such risk, the office must approve a
30 rating factor that provides the insurer a reasonable rate of
31 return that is commensurate with such risk.
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1 12. The cost of medical services, if applicable.
2 13. Other relevant factors which impact upon the
3 frequency or severity of claims or upon expenses.
4
5 The provisions of this subsection shall not apply to workers'
6 compensation and employer's liability insurance and to motor
7 vehicle insurance.
8 (5) With respect to a rate filing involving coverage
9 of the type for which the insurer is required to pay a
10 reimbursement premium to the Florida Hurricane Catastrophe
11 Fund, the insurer may fully recoup in its property insurance
12 premiums any reimbursement premiums paid to the Florida
13 Hurricane Catastrophe Fund, together with reasonable costs of
14 other reinsurance consistent with prudent business practices
15 and sound actuarial principles, but may not recoup reinsurance
16 costs that duplicate coverage provided by the Florida
17 Hurricane Catastrophe Fund. The burden is on the office to
18 establish that any costs of other reinsurance are in excess of
19 amounts consistent with prudent business practices and sound
20 actuarial principles. An insurer may not recoup more than 1
21 year of reimbursement premium at a time. Any under-recoupment
22 from the prior year may be added to the following year's
23 reimbursement premium and any over-recoupment shall be
24 subtracted from the following year's reimbursement premium.
25 (9) Rates for personal lines residential coverage with
26 a dwelling replacement cost of $1 million or more and for
27 condominium units with a combined dwelling and contents
28 replacement cost of $1 million or more are not subject to
29 disapproval by the office based on a determination that the
30 rate is excessive.
31 Section 8. Effective July 1, 2006, subsection (6) of
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1 section 627.351, Florida Statutes, is amended to read:
2 627.351 Insurance risk apportionment plans.--
3 (6) CITIZENS PROPERTY INSURANCE CORPORATION.--
4 (a)1. The Legislature finds that actual and threatened
5 catastrophic losses to property in this state from hurricanes
6 have caused insurers to be unwilling or unable to provide
7 property insurance coverage to the extent sought and needed.
8 It is in the public interest and a public purpose to assist in
9 assuring that property in the state is insured so as to
10 facilitate the remediation, reconstruction, and replacement of
11 damaged or destroyed property in order to reduce or avoid the
12 negative effects otherwise resulting to the public health,
13 safety, and welfare; to the economy of the state; and to the
14 revenues of the state and local governments needed to provide
15 for the public welfare. It is necessary, therefore, to provide
16 property insurance to applicants who are in good faith
17 entitled to procure insurance through the voluntary market but
18 are unable to do so. The Legislature intends by this
19 subsection that property insurance be provided and that it
20 continues, as long as necessary, through an entity organized
21 to achieve efficiencies and economies, while providing service
22 to policyholders, applicants, and agents that is no less than
23 the quality generally provided in the voluntary market, all
24 toward the achievement of the foregoing public purposes.
25 Because it is essential for the corporation to have the
26 maximum financial resources to pay claims following a
27 catastrophic hurricane, it is the intent of the Legislature
28 that the income of the corporation be exempt from federal
29 income taxation and that interest on the debt obligations
30 issued by the corporation be exempt from federal income
31 taxation.
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1 2. The Residential Property and Casualty Joint
2 Underwriting Association originally created by this statute
3 shall be known, as of July 1, 2002, as the Citizens Property
4 Insurance Corporation. The corporation shall provide insurance
5 for residential and commercial property, for applicants who
6 are in good faith entitled, but are unable, to procure
7 insurance through the voluntary market. The corporation shall
8 operate pursuant to a plan of operation approved by order of
9 the Financial Services Commission office. The plan is subject
10 to continuous review by the commission office. The commission
11 office may, by order, withdraw approval of all or part of a
12 plan if the commission office determines that conditions have
13 changed since approval was granted and that the purposes of
14 the plan require changes in the plan. The corporation shall
15 continue to operate pursuant to the plan of operation approved
16 by the Office of Insurance Regulation until October 1, 2006.
17 For the purposes of this subsection, residential coverage
18 includes both personal lines residential coverage, which
19 consists of the type of coverage provided by homeowner's,
20 mobile home owner's, dwelling, tenant's, condominium unit
21 owner's, and similar policies, and commercial lines
22 residential coverage, which consists of the type of coverage
23 provided by condominium association, apartment building, and
24 similar policies.
25 3. For the purposes of this subsection, the term
26 "homestead property" means:
27 a. Property that has been granted a homestead
28 exemption under chapter 196;
29 b. Property for which the owner has a current, written
30 lease with a renter for a term of at least 6 months;
31 c. An owner-occupied mobile home or manufactured home
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1 as defined in s. 320.01, permanently affixed to real property;
2 d. Tenants coverage; or
3 e. Commercial lines coverage, including both
4 residential and nonresidential.
5 4. For the purposes of this subsection, the term
6 "nonhomestead property" means property that is not homestead
7 property.
8 5. Effective January 1, 2007, a personal lines
9 residential structure with a dwelling replacement cost of $1
10 million or more, or condominium unit with combined dwelling
11 and content replacement cost of $1 million or more is not
12 eligible for coverage by the corporation, except for:
13 a. Property insured by the corporation on December 31,
14 2006, which may continue to be insured by the corporation
15 until the end of the policy term for a renewal effective on or
16 before December 31, 2007; and
17 b. Property for which a building permit has been
18 issued on or before January 1, 2007, and for which a
19 certificate of occupancy has been issued on or before December
20 31, 2007, which may be insured by the corporation until the
21 end of the policy term for a policy issued on or before
22 December 31, 2007.
23 6.3. It is the intent of the Legislature that
24 policyholders, applicants, and agents of the corporation
25 receive service and treatment of the highest possible level
26 but never less than that generally provided in the voluntary
27 market. It also is intended that the corporation be held to
28 service standards no less than those applied to insurers in
29 the voluntary market by the office with respect to
30 responsiveness, timeliness, customer courtesy, and overall
31 dealings with policyholders, applicants, or agents of the
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1 corporation.
2 (b)1. All insurers authorized to write one or more
3 subject lines of business in this state are subject to
4 assessment by the corporation and, for the purposes of this
5 subsection, are referred to collectively as "assessable
6 insurers." Insurers writing one or more subject lines of
7 business in this state pursuant to part VIII of chapter 626
8 are not assessable insurers, but insureds who procure one or
9 more subject lines of business in this state pursuant to part
10 VIII of chapter 626 are subject to assessment by the
11 corporation and are referred to collectively as "assessable
12 insureds." An authorized insurer's assessment liability shall
13 begin on the first day of the calendar year following the year
14 in which the insurer was issued a certificate of authority to
15 transact insurance for subject lines of business in this state
16 and shall terminate 1 year after the end of the first calendar
17 year during which the insurer no longer holds a certificate of
18 authority to transact insurance for subject lines of business
19 in this state.
20 2.a. All revenues, assets, liabilities, losses, and
21 expenses of the corporation shall be divided into three
22 separate accounts as follows:
23 (I) A personal lines account for personal residential
24 policies issued by the corporation or issued by the
25 Residential Property and Casualty Joint Underwriting
26 Association and renewed by the corporation that provide
27 comprehensive, multiperil coverage on risks that are not
28 located in areas eligible for coverage in the Florida
29 Windstorm Underwriting Association as those areas were defined
30 on January 1, 2002, and for such policies that do not provide
31 coverage for the peril of wind on risks that are located in
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1 such areas;
2 (II) A commercial lines account for commercial
3 residential policies issued by the corporation or issued by
4 the Residential Property and Casualty Joint Underwriting
5 Association and renewed by the corporation that provide
6 coverage for basic property perils on risks that are not
7 located in areas eligible for coverage in the Florida
8 Windstorm Underwriting Association as those areas were defined
9 on January 1, 2002, and for such policies that do not provide
10 coverage for the peril of wind on risks that are located in
11 such areas; and
12 (III) A high-risk account for personal residential
13 policies and commercial residential and commercial
14 nonresidential property policies issued by the corporation or
15 transferred to the corporation that provide coverage for the
16 peril of wind on risks that are located in areas eligible for
17 coverage in the Florida Windstorm Underwriting Association as
18 those areas were defined on January 1, 2002. The high-risk
19 account must also include quota share primary insurance under
20 subparagraph (c)2. The area eligible for coverage under the
21 high-risk account also includes the area within Port
22 Canaveral, which is bordered on the south by the City of Cape
23 Canaveral, bordered on the west by the Banana River, and
24 bordered on the north by Federal Government property. The
25 office may remove territory from the area eligible for
26 wind-only and quota share coverage if, after a public hearing,
27 the office finds that authorized insurers in the voluntary
28 market are willing and able to write sufficient amounts of
29 personal and commercial residential coverage for all perils in
30 the territory, including coverage for the peril of wind, such
31 that risks covered by wind-only policies in the removed
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1 territory could be issued a policy by the corporation in
2 either the personal lines or commercial lines account without
3 a significant increase in the corporation's probable maximum
4 loss in such account. Removal of territory from the area
5 eligible for wind-only or quota share coverage does not alter
6 the assignment of wind coverage written in such areas to the
7 high-risk account.
8 b. The three separate accounts must be maintained as
9 long as financing obligations entered into by the Florida
10 Windstorm Underwriting Association or Residential Property and
11 Casualty Joint Underwriting Association are outstanding, in
12 accordance with the terms of the corresponding financing
13 documents. When the financing obligations are no longer
14 outstanding, in accordance with the terms of the corresponding
15 financing documents, the corporation may use a single account
16 for all revenues, assets, liabilities, losses, and expenses of
17 the corporation. Consistent with the requirement of this
18 subparagraph and prudent investment policies that minimize the
19 cost of carrying debt, the board shall exercise its best
20 efforts to retire existing debt or to obtain approval of
21 necessary parties to amend the terms of existing debt, so as
22 to structure the most efficient plan to consolidate the three
23 separate accounts into a single account. By February 1, 2007,
24 the board shall submit a report to the Financial Services
25 Commission, the President of the Senate, and the Speaker of
26 the House of Representatives which includes an analysis of
27 consolidating the accounts, the actions the board has taken to
28 minimize the cost of carrying debt, and its recommendations
29 for executing the most efficient plan.
30 c. Creditors of the Residential Property and Casualty
31 Joint Underwriting Association shall have a claim against, and
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1 recourse to, the accounts referred to in sub-sub-subparagraphs
2 a.(I) and (II) and shall have no claim against, or recourse
3 to, the account referred to in sub-sub-subparagraph a.(III).
4 Creditors of the Florida Windstorm Underwriting Association
5 shall have a claim against, and recourse to, the account
6 referred to in sub-sub-subparagraph a.(III) and shall have no
7 claim against, or recourse to, the accounts referred to in
8 sub-sub-subparagraphs a.(I) and (II).
9 d. Revenues, assets, liabilities, losses, and expenses
10 not attributable to particular accounts shall be prorated
11 among the accounts.
12 e. The Legislature finds that the revenues of the
13 corporation are revenues that are necessary to meet the
14 requirements set forth in documents authorizing the issuance
15 of bonds under this subsection.
16 f. No part of the income of the corporation may inure
17 to the benefit of any private person.
18 3. With respect to a deficit in an account:
19 a. When the deficit incurred in a particular calendar
20 year is not greater than 10 percent of the aggregate statewide
21 direct written premium for the subject lines of business for
22 the prior calendar year, the entire deficit shall be recovered
23 through regular assessments of assessable insurers under
24 paragraph (p) (g) and assessable insureds.
25 b. When the deficit incurred in a particular calendar
26 year exceeds 10 percent of the aggregate statewide direct
27 written premium for the subject lines of business for the
28 prior calendar year, the corporation shall levy regular
29 assessments on assessable insurers under paragraph (p) (g) and
30 on assessable insureds in an amount equal to the greater of 10
31 percent of the deficit or 10 percent of the aggregate
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1 statewide direct written premium for the subject lines of
2 business for the prior calendar year. Any remaining deficit
3 shall be recovered through emergency assessments under
4 sub-subparagraph d.
5 c. Each assessable insurer's share of the amount being
6 assessed under sub-subparagraph a. or sub-subparagraph b.
7 shall be in the proportion that the assessable insurer's
8 direct written premium for the subject lines of business for
9 the year preceding the assessment bears to the aggregate
10 statewide direct written premium for the subject lines of
11 business for that year. The assessment percentage applicable
12 to each assessable insured is the ratio of the amount being
13 assessed under sub-subparagraph a. or sub-subparagraph b. to
14 the aggregate statewide direct written premium for the subject
15 lines of business for the prior year. Assessments levied by
16 the corporation on assessable insurers under sub-subparagraphs
17 a. and b. shall be paid as required by the corporation's plan
18 of operation and paragraph (p) (g). Notwithstanding any other
19 provision of this subsection, the aggregate amount of a
20 regular assessment for a deficit incurred in a particular
21 calendar year shall be reduced by the estimated amount to be
22 received by the corporation from surcharges on corporation
23 policyholders under subparagraph (c)11. Assessments levied by
24 the corporation on assessable insureds under sub-subparagraphs
25 a. and b. shall be collected by the surplus lines agent at the
26 time the surplus lines agent collects the surplus lines tax
27 required by s. 626.932 and shall be paid to the Florida
28 Surplus Lines Service Office at the time the surplus lines
29 agent pays the surplus lines tax to the Florida Surplus Lines
30 Service Office. Upon receipt of regular assessments from
31 surplus lines agents, the Florida Surplus Lines Service Office
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1 shall transfer the assessments directly to the corporation as
2 determined by the corporation.
3 d. Upon a determination by the board of governors that
4 a deficit in an account exceeds the amount that will be
5 recovered through regular assessments under sub-subparagraph
6 a. or sub-subparagraph b., the board shall levy, after
7 verification by the office, emergency assessments, for as many
8 years as necessary to cover the deficits, to be collected by
9 assessable insurers and the corporation and collected from
10 assessable insureds upon issuance or renewal of policies for
11 subject lines of business, excluding National Flood Insurance
12 policies. The amount of the emergency assessment collected in
13 a particular year shall be a uniform percentage of that year's
14 direct written premium for subject lines of business and all
15 accounts of the corporation, excluding National Flood
16 Insurance Program policy premiums, as annually determined by
17 the board and verified by the office. The office shall verify
18 the arithmetic calculations involved in the board's
19 determination within 30 days after receipt of the information
20 on which the determination was based. Notwithstanding any
21 other provision of law, the corporation and each assessable
22 insurer that writes subject lines of business shall collect
23 emergency assessments from its policyholders without such
24 obligation being affected by any credit, limitation,
25 exemption, or deferment. Emergency assessments levied by the
26 corporation on assessable insureds shall be collected by the
27 surplus lines agent at the time the surplus lines agent
28 collects the surplus lines tax required by s. 626.932 and
29 shall be paid to the Florida Surplus Lines Service Office at
30 the time the surplus lines agent pays the surplus lines tax to
31 the Florida Surplus Lines Service Office. The emergency
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1 assessments so collected shall be transferred directly to the
2 corporation on a periodic basis as determined by the
3 corporation and shall be held by the corporation solely in the
4 applicable account. The aggregate amount of emergency
5 assessments levied for an account under this sub-subparagraph
6 in any calendar year may not exceed the greater of 10 percent
7 of the amount needed to cover the original deficit, plus
8 interest, fees, commissions, required reserves, and other
9 costs associated with financing of the original deficit, or 10
10 percent of the aggregate statewide direct written premium for
11 subject lines of business and for all accounts of the
12 corporation for the prior year, plus interest, fees,
13 commissions, required reserves, and other costs associated
14 with financing the original deficit.
15 e. The corporation may pledge the proceeds of
16 assessments, projected recoveries from the Florida Hurricane
17 Catastrophe Fund, other insurance and reinsurance
18 recoverables, policyholder market equalization surcharges and
19 other surcharges, and other funds available to the corporation
20 as the source of revenue for and to secure bonds issued under
21 paragraph (p) (g), bonds or other indebtedness issued under
22 subparagraph (c)3., or lines of credit or other financing
23 mechanisms issued or created under this subsection, or to
24 retire any other debt incurred as a result of deficits or
25 events giving rise to deficits, or in any other way that the
26 board determines will efficiently recover such deficits. The
27 purpose of the lines of credit or other financing mechanisms
28 is to provide additional resources to assist the corporation
29 in covering claims and expenses attributable to a catastrophe.
30 As used in this subsection, the term "assessments" includes
31 regular assessments under sub-subparagraph a.,
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1 sub-subparagraph b., or subparagraph (p)1. (g)1. and emergency
2 assessments under sub-subparagraph d. Emergency assessments
3 collected under sub-subparagraph d. are not part of an
4 insurer's rates, are not premium, and are not subject to
5 premium tax, fees, or commissions; however, failure to pay the
6 emergency assessment shall be treated as failure to pay
7 premium. The emergency assessments under sub-subparagraph d.
8 shall continue as long as any bonds issued or other
9 indebtedness incurred with respect to a deficit for which the
10 assessment was imposed remain outstanding, unless adequate
11 provision has been made for the payment of such bonds or other
12 indebtedness pursuant to the documents governing such bonds or
13 other indebtedness.
14 f. As used in this subsection, the term "subject lines
15 of business" means insurance written by assessable insurers or
16 procured by assessable insureds on real or personal property,
17 as defined in s. 624.604, including insurance for fire,
18 industrial fire, allied lines, farmowners multiperil,
19 homeowners multiperil, commercial multiperil, and mobile
20 homes, and including liability coverage on all such insurance,
21 but excluding inland marine as defined in s. 624.607(3) and
22 excluding vehicle insurance as defined in s. 624.605(1) other
23 than insurance on mobile homes used as permanent dwellings.
24 g. The Florida Surplus Lines Service Office shall
25 determine annually the aggregate statewide written premium in
26 subject lines of business procured by assessable insureds and
27 shall report that information to the corporation in a form and
28 at a time the corporation specifies to ensure that the
29 corporation can meet the requirements of this subsection and
30 the corporation's financing obligations.
31 h. The Florida Surplus Lines Service Office shall
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1 verify the proper application by surplus lines agents of
2 assessment percentages for regular assessments and emergency
3 assessments levied under this subparagraph on assessable
4 insureds and shall assist the corporation in ensuring the
5 accurate, timely collection and payment of assessments by
6 surplus lines agents as required by the corporation.
7 (c) The plan of operation of the corporation:
8 1. Must provide for adoption of residential property
9 and casualty insurance policy forms and commercial residential
10 and nonresidential property insurance forms, which forms must
11 be approved by the office prior to use. The corporation shall
12 adopt the following policy forms:
13 a. Standard personal lines policy forms that are
14 comprehensive multiperil policies providing full coverage of a
15 residential property equivalent to the coverage provided in
16 the private insurance market under an HO-3, HO-4, or HO-6
17 policy.
18 b. Basic personal lines policy forms that are policies
19 similar to an HO-8 policy or a dwelling fire policy that
20 provide coverage meeting the requirements of the secondary
21 mortgage market, but which coverage is more limited than the
22 coverage under a standard policy.
23 c. Commercial lines residential policy forms that are
24 generally similar to the basic perils of full coverage
25 obtainable for commercial residential structures in the
26 admitted voluntary market.
27 d. Personal lines and commercial lines residential
28 property insurance forms that cover the peril of wind only.
29 The forms are applicable only to residential properties
30 located in areas eligible for coverage under the high-risk
31 account referred to in sub-subparagraph (b)2.a.
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1 e. Commercial lines nonresidential property insurance
2 forms that cover the peril of wind only. The forms are
3 applicable only to nonresidential properties located in areas
4 eligible for coverage under the high-risk account referred to
5 in sub-subparagraph (b)2.a.
6 2.a. Must provide that the corporation adopt a program
7 in which the corporation and authorized insurers enter into
8 quota share primary insurance agreements for hurricane
9 coverage, as defined in s. 627.4025(2)(a), for eligible risks,
10 and adopt property insurance forms for eligible risks which
11 cover the peril of wind only. As used in this subsection, the
12 term:
13 (I) "Quota share primary insurance" means an
14 arrangement in which the primary hurricane coverage of an
15 eligible risk is provided in specified percentages by the
16 corporation and an authorized insurer. The corporation and
17 authorized insurer are each solely responsible for a specified
18 percentage of hurricane coverage of an eligible risk as set
19 forth in a quota share primary insurance agreement between the
20 corporation and an authorized insurer and the insurance
21 contract. The responsibility of the corporation or authorized
22 insurer to pay its specified percentage of hurricane losses of
23 an eligible risk, as set forth in the quota share primary
24 insurance agreement, may not be altered by the inability of
25 the other party to the agreement to pay its specified
26 percentage of hurricane losses. Eligible risks that are
27 provided hurricane coverage through a quota share primary
28 insurance arrangement must be provided policy forms that set
29 forth the obligations of the corporation and authorized
30 insurer under the arrangement, clearly specify the percentages
31 of quota share primary insurance provided by the corporation
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1 and authorized insurer, and conspicuously and clearly state
2 that neither the authorized insurer nor the corporation may be
3 held responsible beyond its specified percentage of coverage
4 of hurricane losses.
5 (II) "Eligible risks" means personal lines residential
6 and commercial lines residential risks that meet the
7 underwriting criteria of the corporation and are located in
8 areas that were eligible for coverage by the Florida Windstorm
9 Underwriting Association on January 1, 2002.
10 b. The corporation may enter into quota share primary
11 insurance agreements with authorized insurers at corporation
12 coverage levels of 90 percent and 50 percent.
13 c. If the corporation determines that additional
14 coverage levels are necessary to maximize participation in
15 quota share primary insurance agreements by authorized
16 insurers, the corporation may establish additional coverage
17 levels. However, the corporation's quota share primary
18 insurance coverage level may not exceed 90 percent.
19 d. Any quota share primary insurance agreement entered
20 into between an authorized insurer and the corporation must
21 provide for a uniform specified percentage of coverage of
22 hurricane losses, by county or territory as set forth by the
23 corporation board, for all eligible risks of the authorized
24 insurer covered under the quota share primary insurance
25 agreement.
26 e. Any quota share primary insurance agreement entered
27 into between an authorized insurer and the corporation is
28 subject to review and approval by the office. However, such
29 agreement shall be authorized only as to insurance contracts
30 entered into between an authorized insurer and an insured who
31 is already insured by the corporation for wind coverage.
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1 f. For all eligible risks covered under quota share
2 primary insurance agreements, the exposure and coverage levels
3 for both the corporation and authorized insurers shall be
4 reported by the corporation to the Florida Hurricane
5 Catastrophe Fund. For all policies of eligible risks covered
6 under quota share primary insurance agreements, the
7 corporation and the authorized insurer shall maintain complete
8 and accurate records for the purpose of exposure and loss
9 reimbursement audits as required by Florida Hurricane
10 Catastrophe Fund rules. The corporation and the authorized
11 insurer shall each maintain duplicate copies of policy
12 declaration pages and supporting claims documents.
13 g. The corporation board shall establish in its plan
14 of operation standards for quota share agreements which ensure
15 that there is no discriminatory application among insurers as
16 to the terms of quota share agreements, pricing of quota share
17 agreements, incentive provisions if any, and consideration
18 paid for servicing policies or adjusting claims.
19 h. The quota share primary insurance agreement between
20 the corporation and an authorized insurer must set forth the
21 specific terms under which coverage is provided, including,
22 but not limited to, the sale and servicing of policies issued
23 under the agreement by the insurance agent of the authorized
24 insurer producing the business, the reporting of information
25 concerning eligible risks, the payment of premium to the
26 corporation, and arrangements for the adjustment and payment
27 of hurricane claims incurred on eligible risks by the claims
28 adjuster and personnel of the authorized insurer. Entering
29 into a quota sharing insurance agreement between the
30 corporation and an authorized insurer shall be voluntary and
31 at the discretion of the authorized insurer.
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1 3. May provide that the corporation may employ or
2 otherwise contract with individuals or other entities to
3 provide administrative or professional services that may be
4 appropriate to effectuate the plan. The corporation shall have
5 the power to borrow funds, by issuing bonds or by incurring
6 other indebtedness, and shall have other powers reasonably
7 necessary to effectuate the requirements of this subsection,
8 including, without limitation, the power to issue bonds and
9 incur other indebtedness in order to refinance outstanding
10 bonds or other indebtedness. The corporation may, but is not
11 required to, seek judicial validation of its bonds or other
12 indebtedness under chapter 75. The corporation may issue bonds
13 or incur other indebtedness, or have bonds issued on its
14 behalf by a unit of local government pursuant to subparagraph
15 (g)2., in the absence of a hurricane or other weather-related
16 event, upon a determination by the corporation, subject to
17 approval by the office, that such action would enable it to
18 efficiently meet the financial obligations of the corporation
19 and that such financings are reasonably necessary to
20 effectuate the requirements of this subsection. The
21 corporation is authorized to take all actions needed to
22 facilitate tax-free status for any such bonds or indebtedness,
23 including formation of trusts or other affiliated entities.
24 The corporation shall have the authority to pledge
25 assessments, projected recoveries from the Florida Hurricane
26 Catastrophe Fund, other reinsurance recoverables, market
27 equalization and other surcharges, and other funds available
28 to the corporation as security for bonds or other
29 indebtedness. In recognition of s. 10, Art. I of the State
30 Constitution, prohibiting the impairment of obligations of
31 contracts, it is the intent of the Legislature that no action
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1 be taken whose purpose is to impair any bond indenture or
2 financing agreement or any revenue source committed by
3 contract to such bond or other indebtedness.
4 4.a. Must require that the corporation operate subject
5 to the supervision and approval of a board of governors
6 consisting of 8 individuals who are residents of this state,
7 from different geographical areas of this state. The Governor,
8 the Chief Financial Officer, the President of the Senate, and
9 the Speaker of the House of Representatives shall each appoint
10 two members of the board, effective August 1, 2005. At least
11 one of the two members appointed by each appointing officer
12 must have demonstrated expertise in insurance. The Chief
13 Financial Officer shall designate one of the appointees as
14 chair. All board members serve at the pleasure of the
15 appointing officer. All board members, including the chair,
16 must be appointed to serve for 3-year terms beginning annually
17 on a date designated by the plan. Any board vacancy shall be
18 filled for the unexpired term by the appointing officer. The
19 Chief Financial Officer shall appoint a technical advisory
20 group to provide information and advice to the board of
21 governors in connection with the board's duties under this
22 subsection. The executive director and senior managers of the
23 corporation shall be engaged by the board, as recommended by
24 the Chief Financial Officer, and serve at the pleasure of the
25 board. Any executive director appointed on or after July 1,
26 2006, is subject to confirmation by the Senate. The executive
27 director is responsible for employing other staff as the
28 corporation may require, subject to review and concurrence by
29 the board and the Chief Financial Officer.
30 b. The board shall create a Market Accountability
31 Advisory Committee to assist the corporation in developing
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1 awareness of its rates and its customer and agent service
2 levels in relationship to the voluntary market insurers
3 writing similar coverage. The members of the advisory
4 committee shall consist of the following 11 persons, one of
5 whom must be elected chair by the members of the committee:
6 four representatives, one appointed by the Florida Association
7 of Insurance Agents, one by the Florida Association of
8 Insurance and Financial Advisors, one by the Professional
9 Insurance Agents of Florida, and one by the Latin American
10 Association of Insurance Agencies; three representatives
11 appointed by the insurers with the three highest voluntary
12 market share of residential property insurance business in the
13 state; one representative from the Office of Insurance
14 Regulation; one consumer appointed by the board who is insured
15 by the corporation at the time of appointment to the
16 committee; one representative appointed by the Florida
17 Association of Realtors; and one representative appointed by
18 the Florida Bankers Association. All members must serve for
19 3-year terms and may serve for consecutive terms. The
20 committee shall report to the corporation at each board
21 meeting on insurance market issues which may include rates and
22 rate competition with the voluntary market; service, including
23 policy issuance, claims processing, and general responsiveness
24 to policyholders, applicants, and agents; and matters relating
25 to depopulation.
26 5. Must provide a procedure for determining the
27 eligibility of a risk for coverage, as follows:
28 a. Subject to the provisions of s. 627.3517, with
29 respect to personal lines residential risks, if the risk is
30 offered coverage from an authorized insurer at the insurer's
31 approved rate under either a standard policy including wind
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1 coverage or, if consistent with the insurer's underwriting
2 rules as filed with the office, a basic policy including wind
3 coverage, the risk is not eligible for any policy issued by
4 the corporation. If the risk is not able to obtain any such
5 offer, the risk is eligible for either a standard policy
6 including wind coverage or a basic policy including wind
7 coverage issued by the corporation; however, if the risk could
8 not be insured under a standard policy including wind coverage
9 regardless of market conditions, the risk shall be eligible
10 for a basic policy including wind coverage unless rejected
11 under subparagraph 8. The corporation shall determine the type
12 of policy to be provided on the basis of objective standards
13 specified in the underwriting manual and based on generally
14 accepted underwriting practices.
15 (I) If the risk accepts an offer of coverage through
16 the market assistance plan or an offer of coverage through a
17 mechanism established by the corporation before a policy is
18 issued to the risk by the corporation or during the first 30
19 days of coverage by the corporation, and the producing agent
20 who submitted the application to the plan or to the
21 corporation is not currently appointed by the insurer, the
22 insurer shall:
23 (A) Pay to the producing agent of record of the
24 policy, for the first year, an amount that is the greater of
25 the insurer's usual and customary commission for the type of
26 policy written or a fee equal to the usual and customary
27 commission of the corporation; or
28 (B) Offer to allow the producing agent of record of
29 the policy to continue servicing the policy for a period of
30 not less than 1 year and offer to pay the agent the greater of
31 the insurer's or the corporation's usual and customary
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1 commission for the type of policy written.
2
3 If the producing agent is unwilling or unable to accept
4 appointment, the new insurer shall pay the agent in accordance
5 with sub-sub-sub-subparagraph (A).
6 (II) When the corporation enters into a contractual
7 agreement for a take-out plan, the producing agent of record
8 of the corporation policy is entitled to retain any unearned
9 commission on the policy, and the insurer shall:
10 (A) Pay to the producing agent of record of the
11 corporation policy, for the first year, an amount that is the
12 greater of the insurer's usual and customary commission for
13 the type of policy written or a fee equal to the usual and
14 customary commission of the corporation; or
15 (B) Offer to allow the producing agent of record of
16 the corporation policy to continue servicing the policy for a
17 period of not less than 1 year and offer to pay the agent the
18 greater of the insurer's or the corporation's usual and
19 customary commission for the type of policy written.
20
21 If the producing agent is unwilling or unable to accept
22 appointment, the new insurer shall pay the agent in accordance
23 with sub-sub-sub-subparagraph (A).
24 b. With respect to commercial lines residential risks,
25 if the risk is offered coverage under a policy including wind
26 coverage from an authorized insurer at its approved rate, the
27 risk is not eligible for any policy issued by the corporation.
28 If the risk is not able to obtain any such offer, the risk is
29 eligible for a policy including wind coverage issued by the
30 corporation.
31 (I) If the risk accepts an offer of coverage through
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1 the market assistance plan or an offer of coverage through a
2 mechanism established by the corporation before a policy is
3 issued to the risk by the corporation or during the first 30
4 days of coverage by the corporation, and the producing agent
5 who submitted the application to the plan or the corporation
6 is not currently appointed by the insurer, the insurer shall:
7 (A) Pay to the producing agent of record of the
8 policy, for the first year, an amount that is the greater of
9 the insurer's usual and customary commission for the type of
10 policy written or a fee equal to the usual and customary
11 commission of the corporation; or
12 (B) Offer to allow the producing agent of record of
13 the policy to continue servicing the policy for a period of
14 not less than 1 year and offer to pay the agent the greater of
15 the insurer's or the corporation's usual and customary
16 commission for the type of policy written.
17
18 If the producing agent is unwilling or unable to accept
19 appointment, the new insurer shall pay the agent in accordance
20 with sub-sub-sub-subparagraph (A).
21 (II) When the corporation enters into a contractual
22 agreement for a take-out plan, the producing agent of record
23 of the corporation policy is entitled to retain any unearned
24 commission on the policy, and the insurer shall:
25 (A) Pay to the producing agent of record of the
26 corporation policy, for the first year, an amount that is the
27 greater of the insurer's usual and customary commission for
28 the type of policy written or a fee equal to the usual and
29 customary commission of the corporation; or
30 (B) Offer to allow the producing agent of record of
31 the corporation policy to continue servicing the policy for a
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1 period of not less than 1 year and offer to pay the agent the
2 greater of the insurer's or the corporation's usual and
3 customary commission for the type of policy written.
4
5 If the producing agent is unwilling or unable to accept
6 appointment, the new insurer shall pay the agent in accordance
7 with sub-sub-sub-subparagraph (A).
8 6. Must provide by July 1, 2007, that an application
9 for coverage for a new policy is subject to a waiting period
10 of 10 days before coverage is effective, during which time the
11 corporation shall make such application available for review
12 by general lines agents and authorized property and casualty
13 insurers. The board may approve exceptions that allow for
14 coverage to be effective before the end of the 10-day waiting
15 period, for coverage issued in conjunction with a real estate
16 closing, and for such other exceptions as the board determines
17 are necessary to prevent lapses in coverage.
18 7.6. Must include rules for classifications of risks
19 and rates therefor.
20 8.7. Must provide that if premium and investment
21 income for an account attributable to a particular calendar
22 year are in excess of projected losses and expenses for the
23 account attributable to that year, such excess shall be held
24 in surplus in the account. Such surplus shall be available to
25 defray deficits in that account as to future years and shall
26 be used for that purpose prior to assessing assessable
27 insurers and assessable insureds as to any calendar year.
28 9.8. Must provide objective criteria and procedures to
29 be uniformly applied for all applicants in determining whether
30 an individual risk is so hazardous as to be uninsurable. In
31 making this determination and in establishing the criteria and
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1 procedures, the following shall be considered:
2 a. Whether the likelihood of a loss for the individual
3 risk is substantially higher than for other risks of the same
4 class; and
5 b. Whether the uncertainty associated with the
6 individual risk is such that an appropriate premium cannot be
7 determined.
8
9 The acceptance or rejection of a risk by the corporation shall
10 be construed as the private placement of insurance, and the
11 provisions of chapter 120 shall not apply.
12 10.9. Must provide that the corporation shall make its
13 best efforts to procure catastrophe reinsurance at reasonable
14 rates, to cover its projected 100-year probable maximum loss
15 as determined by the board of governors.
16 11.10. Must provide that in the event of regular
17 deficit assessments under sub-subparagraph (b)3.a. or
18 sub-subparagraph (b)3.b., in the personal lines account, the
19 commercial lines residential account, or the high-risk
20 account, the corporation shall levy upon corporation
21 policyholders in its next rate filing, or by a separate rate
22 filing solely for this purpose, the following surcharges:
23 a. A Citizens policyholder market equalization
24 surcharge arising from a regular assessment in such account in
25 a percentage equal to the total amount of such regular
26 assessments divided by the aggregate statewide direct written
27 premium for subject lines of business for the prior calendar
28 year. For purposes of calculating the Citizens policyholder
29 surcharge to be levied under this subparagraph, the total
30 amount of the regular assessment to which this surcharge is
31 related shall be determined as set forth in subparagraph
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1 (b)3., without deducting the estimated Citizens policyholder
2 surcharge. Market equalization surcharges under this
3 subparagraph are not considered premium and are not subject to
4 commissions, fees, or premium taxes; however, failure to pay a
5 market equalization surcharge shall be treated as failure to
6 pay premium.
7 b. A deficit surcharge of 25 percent of the total
8 premium on nonhomestead property owned by a nonresident of
9 this state.
10
11 Surcharges under this subparagraph are not considered a
12 premium and are not subject to commissions, fees, or premium
13 taxes; however, failure to pay a surcharge shall be treated in
14 the same manner as failure to pay premium.
15 12.11. The policies issued by the corporation must
16 provide that, if the corporation or the market assistance plan
17 obtains an offer from an authorized insurer to cover the risk
18 at its approved rates, the risk is no longer eligible for
19 renewal through the corporation.
20 13.12. Corporation policies and applications must
21 include a notice that the corporation policy could, under this
22 section, be replaced with a policy issued by an authorized
23 insurer that does not provide coverage identical to the
24 coverage provided by the corporation. The notice shall also
25 specify that acceptance of corporation coverage creates a
26 conclusive presumption that the applicant or policyholder is
27 aware of this potential.
28 14.13. May establish, subject to approval by the
29 office, different eligibility requirements and operational
30 procedures for any line or type of coverage for any specified
31 county or area if the board determines that such changes to
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1 the eligibility requirements and operational procedures are
2 justified due to the voluntary market being sufficiently
3 stable and competitive in such area or for such line or type
4 of coverage and that consumers who, in good faith, are unable
5 to obtain insurance through the voluntary market through
6 ordinary methods would continue to have access to coverage
7 from the corporation. When coverage is sought in connection
8 with a real property transfer, such requirements and
9 procedures shall not provide for an effective date of coverage
10 later than the date of the closing of the transfer as
11 established by the transferor, the transferee, and, if
12 applicable, the lender.
13 15.14. Must provide that, with respect to the
14 high-risk account, any assessable insurer with a surplus as to
15 policyholders of $25 million or less writing 25 percent or
16 more of its total countrywide property insurance premiums in
17 this state may petition the office, within the first 90 days
18 of each calendar year, to qualify as a limited apportionment
19 company. In no event shall a limited apportionment company be
20 required to participate in the portion of any assessment,
21 within the high-risk account, pursuant to sub-subparagraph
22 (b)3.a. or sub-subparagraph (b)3.b. in the aggregate which
23 exceeds $50 million after payment of available high-risk
24 account funds in any calendar year. However, a limited
25 apportionment company shall collect from its policyholders any
26 emergency assessment imposed under sub-subparagraph (b)3.d.
27 The plan shall provide that, if the office determines that any
28 regular assessment will result in an impairment of the surplus
29 of a limited apportionment company, the office may direct that
30 all or part of such assessment be deferred as provided in
31 subparagraph (g)4. However, there shall be no limitation or
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1 deferment of an emergency assessment to be collected from
2 policyholders under sub-subparagraph (b)3.d.
3 16.15. Must provide that the corporation appoint as
4 its licensed agents only those agents who also hold an
5 appointment as defined in s. 626.015(3) with an insurer who at
6 the time of the agent's initial appointment by the corporation
7 is authorized to write and is actually writing personal lines
8 residential property coverage, commercial residential property
9 coverage, or commercial nonresidential property coverage
10 within the state.
11 17. Must provide, by July 1, 2007, a premium payment
12 plan option to its policyholders which allows for quarterly
13 and semiannual payment of premiums.
14 18. Must provide, effective July 1, 2007, that the
15 corporation contract with each insurer providing the non-wind
16 coverage for risks insured by the corporation in the high-risk
17 account, requiring that the insurer provide claims adjusting
18 services for the wind coverage provided by the corporation for
19 such risks. An insurer is required to enter into this contract
20 as a condition of providing non-wind coverage for a risk that
21 is insured by the corporation in the high-risk account unless
22 the board finds, after a hearing, that the insurer is not
23 capable of providing adjusting services at an acceptable level
24 of quality to corporation policyholders. The terms and
25 conditions of such contracts must be substantially the same as
26 the contracts that the corporation executed with insurers
27 under the "adjust-your-own" program in 2006, except as may be
28 mutually agreed to by the parties and except for such changes
29 that the board determines are necessary to ensure that claims
30 are adjusted appropriately. The corporation shall provide a
31 process for neutral arbitration of any dispute between the
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1 corporation and the insurer regarding the terms of the
2 contract. The corporation shall review and monitor the
3 performance of insurers under these contracts.
4 (d)1. All prospective employees for senior management
5 positions, as defined by the plan of operation, are subject to
6 background checks as a prerequisite for employment. The office
7 shall conduct background checks on such prospective employees
8 pursuant to ss. 624.404(3) and 628.261.
9 2. On or before July 1 of each year, employees of the
10 corporation are required to sign and submit a statement
11 attesting that they do not have a conflict of interest, as
12 defined in part III of chapter 112. As a condition of
13 employment, all prospective employees are required to sign and
14 submit to the corporation a conflict-of-interest statement.
15 3. Senior managers and members of the board of
16 governors are subject to the provisions of part III of chapter
17 112, including, but not limited to, the code of ethics and
18 public disclosure and reporting of financial interests,
19 pursuant to s. 112.3145. Senior managers and board members are
20 also required to file such disclosures with the Office of
21 Insurance Regulation. The executive director of the
22 corporation or his or her designee shall notify each newly
23 appointed and existing appointed member of the board of
24 governors and senior managers of their duty to comply with the
25 reporting requirements of part III of chapter 112. At least
26 quarterly, the executive director or his or her designee shall
27 submit to the Commission on Ethics a list of names of the
28 senior managers and members of the board of governors that are
29 subject to the public disclosure requirements under s.
30 112.3145.
31 4. Notwithstanding s. 112.3148 or s. 112.3149, or any
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1 other provision of law, an employee or board member may not
2 knowingly accept, directly or indirectly, any gift or
3 expenditure from a person or entity, or an employee or
4 representative of such person or entity, that has a
5 contractual relationship with the corporation or who is under
6 consideration for a contract. An employee or board member that
7 fails to comply with this subparagraph is subject to penalties
8 provided under ss. 112.317 and 112.3173.
9 5. Any senior manager of the corporation who is
10 employed on or after January 1, 2007, regardless of the date
11 of hire, who subsequently retires or terminates employment is
12 prohibited from representing another person or entity before
13 the corporation for 2 years after retirement or termination of
14 employment from the corporation.
15 6. Any employee of the corporation who is employed on
16 or after January 1, 2007, regardless of the date of hire, who
17 subsequently retires or terminates employment is prohibited
18 from having any employment or contractual relationship for 2
19 years with an insurer that has received a take-out bonus from
20 the corporation.
21 (e) Purchases that equal or exceed $2,500, but are
22 less than $25,000, shall be made by receipt of written quotes,
23 written record of telephone quotes, or informal bids, whenever
24 practical. The procurement of goods or services valued at or
25 over $25,000 shall be subject to competitive solicitation,
26 except in situations where the goods or services are provided
27 by a sole source or are deemed an emergency purchase; the
28 services are exempted from competitive solicitation
29 requirements under s. 287.057(5)(f); or the procurement of
30 services is subject to s. 627.3513. Justification for the
31 sole-sourcing or emergency procurement must be documented.
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1 Contracts for goods or services valued at or over $100,000 are
2 subject to approval by the board.
3 (f) The board shall determine whether it is more
4 cost-effective and in the best interests of the corporation to
5 use legal services provided by in-house attorneys employed by
6 the corporation rather than contracting with outside counsel.
7 In making such determination, the board shall document its
8 findings and shall consider: the expertise needed; whether
9 time commitments exceed in-house staff resources; whether
10 local representation is needed; the travel, lodging and other
11 costs associated with in-house representation; and such other
12 factors that the board determines are relevant.
13 (g) The corporation may not retain a lobbyist to
14 represent it before the legislative branch or executive
15 branch. However, full-time employees of the corporation may
16 register as lobbyists and represent the corporation before the
17 legislative branch or executive branch.
18 (h)1. The Office of the Internal Auditor is
19 established within the corporation to provide a central point
20 for coordination of and responsibility for activities that
21 promote accountability, integrity, and efficiency to the
22 policyholders and to the taxpayers of this state. The internal
23 auditor shall be appointed by the board of governors, shall
24 report to and be under the general supervision of the board of
25 governors, and is not subject to supervision by any employee
26 of the corporation. Administrative staff and support shall be
27 provided by the corporation. The internal auditor shall be
28 appointed without regard to political affiliation. It is the
29 duty and responsibility of the internal auditor to:
30 a. Provide direction for, supervise, conduct, and
31 coordinate audits, investigations, and management reviews
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1 relating to the programs and operations of the corporation.
2 b. Conduct, supervise, or coordinate other activities
3 carried out or financed by the corporation for the purpose of
4 promoting efficiency in the administration of, or preventing
5 and detecting fraud, abuse, and mismanagement in, its programs
6 and operations.
7 c. Submit final audit reports, reviews, or
8 investigative reports to the board of governors, the executive
9 director, the members of the Financial Services Commission,
10 and the President of the Senate and the Speaker of the House
11 of Representatives.
12 d. Keep the board of governors informed concerning
13 fraud, abuses, and internal control deficiencies relating to
14 programs and operations administered or financed by the
15 corporation, recommend corrective action, and report on the
16 progress made in implementing corrective action.
17 e. Report expeditiously to the Department of Law
18 Enforcement or other law enforcement agencies, as appropriate,
19 whenever the internal auditor has reasonable grounds to
20 believe there has been a violation of criminal law.
21 2. On or before February 15, the internal auditor
22 shall prepare an annual report evaluating the effectiveness of
23 the internal controls of the corporation and providing
24 recommendations for corrective action, if necessary, and
25 summarizing the audits, reviews, and investigations conducted
26 by the office during the preceding fiscal year. The final
27 report shall be furnished to the board of governors and the
28 executive director, the President of the Senate, the Speaker
29 of the House of Representatives, and the Financial Services
30 Commission.
31 (i) All records of the corporation, except as
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1 otherwise provided by law, are subject to the record retention
2 requirements of s. 119.021.
3 (j)1. The corporation shall establish and maintain a
4 unit or division to investigate possible fraudulent claims by
5 insureds or by persons making claims for services or repairs
6 against policies held by insureds; or it may contract with
7 others to investigate possible fraudulent claims for services
8 or repairs against policies held by the corporation pursuant
9 to s. 626.9891. The corporation must comply with reporting
10 requirements of s. 626.9891.
11 2. The corporation shall establish a unit or division
12 responsible for receiving and responding to consumer
13 complaints, which unit or division is the sole responsibility
14 of a senior manager of the corporation.
15 (k) The office shall conduct a comprehensive market
16 conduct examination of the corporation every 2 years to
17 determine compliance with its plan of operation and internal
18 operations procedures. The first market conduct examination
19 report shall be submitted to the President of the Senate and
20 the Speaker of the House of Representatives no later than
21 February 1, 2009. Subsequent reports shall be submitted on or
22 before February 1 every 2 years thereafter.
23 (l) The Auditor General shall conduct an operational
24 audit of the corporations every 3 years to evaluate
25 management's performance in administering laws, policies, and
26 procedures governing the operations of the corporation in an
27 efficient and effective manner. The scope of the review shall
28 include, but is not limited to, evaluating claims handling,
29 customer service, take-out programs and bonuses, financing
30 arrangements, procurement of goods and services, internal
31 controls, and the internal audit function.
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1 (m)(d)1. It is the intent of the Legislature that the
2 Rates for coverage provided by the corporation shall be
3 actuarially sound and not competitive with approved rates
4 charged in the admitted voluntary market, so that the
5 corporation functions as a residual market mechanism to
6 provide insurance only when the insurance cannot be procured
7 in the voluntary market. Rates shall include an appropriate
8 catastrophe loading factor that reflects the actual
9 catastrophic exposure of the corporation.
10 2. For each county, the average rates of the
11 corporation for each line of business for personal lines
12 residential policies excluding rates for wind-only policies
13 shall be no lower than the average rates charged by the
14 insurer that had the highest average rate in that county among
15 the 20 insurers with the greatest total direct written premium
16 in the state for that line of business in the preceding year,
17 except that with respect to mobile home coverages, the average
18 rates of the corporation shall be no lower than the average
19 rates charged by the insurer that had the highest average rate
20 in that county among the 5 insurers with the greatest total
21 written premium for mobile home owner's policies in the state
22 in the preceding year.
23 3. Rates for personal lines residential wind-only
24 policies must be actuarially sound and not competitive with
25 approved rates charged by authorized insurers. Corporation
26 rate manuals shall include a rate surcharge for seasonal
27 occupancy. To ensure that personal lines residential wind-only
28 rates are not competitive with approved rates charged by
29 authorized insurers, the corporation, in conjunction with the
30 office, shall develop a wind-only ratemaking methodology,
31 which methodology shall be contained in each rate filing made
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1 by the corporation with the office. If the office determines
2 that the wind-only rates or rating factors filed by the
3 corporation fail to comply with the wind-only ratemaking
4 methodology provided for in this subsection, it shall so
5 notify the corporation and require the corporation to amend
6 its rates or rating factors to come into compliance within 90
7 days of notice from the office.
8 4. For policies issued or renewed on or after January
9 1, 2007, rates for coverage provided by the corporation for
10 nonhomestead property shall include a 25-percent surcharge.
11 5.4. For the purposes of establishing a pilot program
12 to evaluate issues relating to the availability and
13 affordability of insurance in an area where historically there
14 has been little market competition, the provisions of
15 subparagraph 2. do not apply to coverage provided by the
16 corporation in Monroe County if the office determines that a
17 reasonable degree of competition does not exist for personal
18 lines residential policies. The provisions of subparagraph 3.
19 do not apply to coverage provided by the corporation in Monroe
20 County if the office determines that a reasonable degree of
21 competition does not exist for personal lines residential
22 policies in the area of that county which is eligible for
23 wind-only coverage. In this county, the rates for personal
24 lines residential coverage shall be actuarially sound and not
25 excessive, inadequate, or unfairly discriminatory and are
26 subject to the other provisions of the paragraph and s.
27 627.062. The commission shall adopt rules establishing the
28 criteria for determining whether a reasonable degree of
29 competition exists for personal lines residential policies in
30 Monroe County. By March 1, 2006, the office shall submit a
31 report to the Legislature providing an evaluation of the
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1 implementation of the pilot program affecting Monroe County.
2 6.5. Rates for commercial lines coverage shall not be
3 subject to the requirements of subparagraph 2., but shall be
4 subject to all other requirements of this paragraph and s.
5 627.062.
6 7.6. Nothing in this paragraph shall require or allow
7 the corporation to adopt a rate that is inadequate under s.
8 627.062.
9 8.7. The corporation shall certify to the office at
10 least twice annually that its personal lines rates comply with
11 the requirements of subparagraphs 1. and 2. If any adjustment
12 in the rates or rating factors of the corporation is necessary
13 to ensure such compliance, the corporation shall make and
14 implement such adjustments and file its revised rates and
15 rating factors with the office. If the office thereafter
16 determines that the revised rates and rating factors fail to
17 comply with the provisions of subparagraphs 1. and 2., it
18 shall notify the corporation and require the corporation to
19 amend its rates or rating factors in conjunction with its next
20 rate filing. The office must notify the corporation by
21 electronic means of any rate filing it approves for any
22 insurer among the insurers referred to in subparagraph 2.
23 9.8. In addition to the rates otherwise determined
24 pursuant to this paragraph, the corporation shall impose and
25 collect an amount equal to the premium tax provided for in s.
26 624.509 to augment the financial resources of the corporation.
27 9.a. To assist the corporation in developing
28 additional ratemaking methods to assure compliance with
29 subparagraphs 1. and 4., the corporation shall appoint a rate
30 methodology panel consisting of one person recommended by the
31 Florida Association of Insurance Agents, one person
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1 recommended by the Professional Insurance Agents of Florida,
2 one person recommended by the Florida Association of Insurance
3 and Financial Advisors, one person recommended by the insurer
4 with the highest voluntary market share of residential
5 property insurance business in the state, one person
6 recommended by the insurer with the second-highest voluntary
7 market share of residential property insurance business in the
8 state, one person recommended by an insurer writing commercial
9 residential property insurance in this state, one person
10 recommended by the Office of Insurance Regulation, and one
11 board member designated by the board chairman, who shall serve
12 as chairman of the panel.
13 b. By January 1, 2004, the rate methodology panel
14 shall provide a report to the corporation of its findings and
15 recommendations for the use of additional ratemaking methods
16 and procedures, including the use of a rate equalization
17 surcharge in an amount sufficient to assure that the total
18 cost of coverage for policyholders or applicants to the
19 corporation is sufficient to comply with subparagraph 1.
20 c. Within 30 days after such report, the corporation
21 shall present to the President of the Senate, the Speaker of
22 the House of Representatives, the minority party leaders of
23 each house of the Legislature, and the chairs of the standing
24 committees of each house of the Legislature having
25 jurisdiction of insurance issues, a plan for implementing the
26 additional ratemaking methods and an outline of any
27 legislation needed to facilitate use of the new methods.
28 d. The plan must include a provision that producer
29 commissions paid by the corporation shall not be calculated in
30 such a manner as to include any rate equalization surcharge.
31 However, without regard to the plan to be developed or its
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1 implementation, producer commissions paid by the corporation
2 for each account, other than the quota share primary program,
3 shall remain fixed as to percentage, effective rate,
4 calculation, and payment method until January 1, 2004.
5 10. By January 1, 2004, The corporation shall develop
6 a notice to policyholders or applicants that the rates of
7 Citizens Property Insurance Corporation are intended to be
8 higher than the rates of any admitted carrier and providing
9 other information the corporation deems necessary to assist
10 consumers in finding other voluntary admitted insurers willing
11 to insure their property.
12 (n)(e) If coverage in an account is deactivated
13 pursuant to paragraph (f), coverage through the corporation
14 shall be reactivated by order of the office only under one of
15 the following circumstances:
16 1. If the market assistance plan receives a minimum of
17 100 applications for coverage within a 3-month period, or 200
18 applications for coverage within a 1-year period or less for
19 residential coverage, unless the market assistance plan
20 provides a quotation from admitted carriers at their filed
21 rates for at least 90 percent of such applicants. Any market
22 assistance plan application that is rejected because an
23 individual risk is so hazardous as to be uninsurable using the
24 criteria specified in subparagraph (c)8. shall not be included
25 in the minimum percentage calculation provided herein. In the
26 event that there is a legal or administrative challenge to a
27 determination by the office that the conditions of this
28 subparagraph have been met for eligibility for coverage in the
29 corporation, any eligible risk may obtain coverage during the
30 pendency of such challenge.
31 2. In response to a state of emergency declared by the
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1 Governor under s. 252.36, the office may activate coverage by
2 order for the period of the emergency upon a finding by the
3 office that the emergency significantly affects the
4 availability of residential property insurance.
5 (o)(f)1. The corporation shall file with the office
6 quarterly statements of financial condition, an annual
7 statement of financial condition, and audited financial
8 statements in the manner prescribed by law. In addition, the
9 corporation shall report to the office monthly on the types,
10 premium, exposure, and distribution by county of its policies
11 in force, and shall submit other reports as the office
12 requires to carry out its oversight of the corporation.
13 2. The activities of the corporation shall be reviewed
14 at least annually by the office to determine whether coverage
15 shall be deactivated in an account on the basis that the
16 conditions giving rise to its activation no longer exist.
17 (p)(g)1. The corporation shall certify to the office
18 its needs for annual assessments as to a particular calendar
19 year, and for any interim assessments that it deems to be
20 necessary to sustain operations as to a particular year
21 pending the receipt of annual assessments. Upon verification,
22 the office shall approve such certification, and the
23 corporation shall levy such annual or interim assessments.
24 Such assessments shall be prorated as provided in paragraph
25 (b). The corporation shall take all reasonable and prudent
26 steps necessary to collect the amount of assessment due from
27 each assessable insurer, including, if prudent, filing suit to
28 collect such assessment. If the corporation is unable to
29 collect an assessment from any assessable insurer, the
30 uncollected assessments shall be levied as an additional
31 assessment against the assessable insurers and any assessable
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1 insurer required to pay an additional assessment as a result
2 of such failure to pay shall have a cause of action against
3 such nonpaying assessable insurer. Assessments shall be
4 included as an appropriate factor in the making of rates. The
5 failure of a surplus lines agent to collect and remit any
6 regular or emergency assessment levied by the corporation is
7 considered to be a violation of s. 626.936 and subjects the
8 surplus lines agent to the penalties provided in that section.
9 2. The governing body of any unit of local government,
10 any residents of which are insured by the corporation, may
11 issue bonds as defined in s. 125.013 or s. 166.101 from time
12 to time to fund an assistance program, in conjunction with the
13 corporation, for the purpose of defraying deficits of the
14 corporation. In order to avoid needless and indiscriminate
15 proliferation, duplication, and fragmentation of such
16 assistance programs, any unit of local government, any
17 residents of which are insured by the corporation, may provide
18 for the payment of losses, regardless of whether or not the
19 losses occurred within or outside of the territorial
20 jurisdiction of the local government. Revenue bonds under this
21 subparagraph may not be issued until validated pursuant to
22 chapter 75, unless a state of emergency is declared by
23 executive order or proclamation of the Governor pursuant to s.
24 252.36 making such findings as are necessary to determine that
25 it is in the best interests of, and necessary for, the
26 protection of the public health, safety, and general welfare
27 of residents of this state and declaring it an essential
28 public purpose to permit certain municipalities or counties to
29 issue such bonds as will permit relief to claimants and
30 policyholders of the corporation. Any such unit of local
31 government may enter into such contracts with the corporation
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1 and with any other entity created pursuant to this subsection
2 as are necessary to carry out this paragraph. Any bonds issued
3 under this subparagraph shall be payable from and secured by
4 moneys received by the corporation from emergency assessments
5 under sub-subparagraph (b)3.d., and assigned and pledged to or
6 on behalf of the unit of local government for the benefit of
7 the holders of such bonds. The funds, credit, property, and
8 taxing power of the state or of the unit of local government
9 shall not be pledged for the payment of such bonds. If any of
10 the bonds remain unsold 60 days after issuance, the office
11 shall require all insurers subject to assessment to purchase
12 the bonds, which shall be treated as admitted assets; each
13 insurer shall be required to purchase that percentage of the
14 unsold portion of the bond issue that equals the insurer's
15 relative share of assessment liability under this subsection.
16 An insurer shall not be required to purchase the bonds to the
17 extent that the office determines that the purchase would
18 endanger or impair the solvency of the insurer.
19 3.a. The corporation shall adopt one or more programs
20 subject to approval by the office for the reduction of both
21 new and renewal writings in the corporation. The corporation
22 may consider any prudent and not unfairly discriminatory
23 approach to reducing corporation writings, and may adopt a
24 credit against assessment liability or other liability that
25 provides an incentive for insurers to take risks out of the
26 corporation and to keep risks out of the corporation by
27 maintaining or increasing voluntary writings in counties or
28 areas in which corporation risks are highly concentrated and a
29 program to provide a formula under which an insurer
30 voluntarily taking risks out of the corporation by maintaining
31 or increasing voluntary writings will be relieved wholly or
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1 partially from assessments under sub-subparagraphs (b)3.a. and
2 b. However, any "take-out bonus" or payment to an insurer must
3 be conditioned on the property being insured for at least 5
4 years by the insurer, unless canceled or nonrenewed by the
5 policyholder. If the policy is canceled or nonrenewed by the
6 policyholder before the end of the 5-year period, the amount
7 of the take-out bonus must be prorated for the time period the
8 policy was insured. When the corporation enters into a
9 contractual agreement for a take-out plan, the producing agent
10 of record of the corporation policy is entitled to retain any
11 unearned commission on such policy, and the insurer shall
12 either:
13 (I) Pay to the producing agent of record of the
14 policy, for the first year, an amount which is the greater of
15 the insurer's usual and customary commission for the type of
16 policy written or a policy fee equal to the usual and
17 customary commission of the corporation; or
18 (II) Offer to allow the producing agent of record of
19 the policy to continue servicing the policy for a period of
20 not less than 1 year and offer to pay the agent the insurer's
21 usual and customary commission for the type of policy written.
22 If the producing agent is unwilling or unable to accept
23 appointment by the new insurer, the new insurer shall pay the
24 agent in accordance with sub-sub-subparagraph (I).
25 b. Any credit or exemption from regular assessments
26 adopted under this subparagraph shall last no longer than the
27 3 years following the cancellation or expiration of the policy
28 by the corporation. With the approval of the office, the board
29 may extend such credits for an additional year if the insurer
30 guarantees an additional year of renewability for all policies
31 removed from the corporation, or for 2 additional years if the
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1 insurer guarantees 2 additional years of renewability for all
2 policies so removed.
3 c. There shall be no credit, limitation, exemption, or
4 deferment from emergency assessments to be collected from
5 policyholders pursuant to sub-subparagraph (b)3.d.
6 4. The plan shall provide for the deferment, in whole
7 or in part, of the assessment of an assessable insurer, other
8 than an emergency assessment collected from policyholders
9 pursuant to sub-subparagraph (b)3.d., if the office finds that
10 payment of the assessment would endanger or impair the
11 solvency of the insurer. In the event an assessment against an
12 assessable insurer is deferred in whole or in part, the amount
13 by which such assessment is deferred may be assessed against
14 the other assessable insurers in a manner consistent with the
15 basis for assessments set forth in paragraph (b).
16 5. Effective July 1, 2007, in order to evaluate the
17 costs and benefits of approved take-out plans, if the
18 corporation pays a bonus or other payment to an insurer for an
19 approved take-out plan, it shall maintain a record of the
20 address or such other identifying information on the property
21 or risk removed in order to track if and when the property or
22 risk is later insured by the corporation.
23 (q)(h) Nothing in this subsection shall be construed
24 to preclude the issuance of residential property insurance
25 coverage pursuant to part VIII of chapter 626.
26 (r)(i) There shall be no liability on the part of, and
27 no cause of action of any nature shall arise against, any
28 assessable insurer or its agents or employees, the corporation
29 or its agents or employees, members of the board of governors
30 or their respective designees at a board meeting, corporation
31 committee members, or the office or its representatives, for
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1 any action taken by them in the performance of their duties or
2 responsibilities under this subsection. Such immunity does not
3 apply to:
4 1. Any of the foregoing persons or entities for any
5 willful tort;
6 2. The corporation or its producing agents for breach
7 of any contract or agreement pertaining to insurance coverage;
8 3. The corporation with respect to issuance or payment
9 of debt; or
10 4. Any assessable insurer with respect to any action
11 to enforce an assessable insurer's obligations to the
12 corporation under this subsection.
13 (s)(j) For the purposes of s. 199.183(1), the
14 corporation shall be considered a political subdivision of the
15 state and shall be exempt from the corporate income tax. The
16 premiums, assessments, investment income, and other revenue of
17 the corporation are funds received for providing property
18 insurance coverage as required by this subsection, paying
19 claims for Florida citizens insured by the corporation,
20 securing and repaying debt obligations issued by the
21 corporation, and conducting all other activities of the
22 corporation, and shall not be considered taxes, fees,
23 licenses, or charges for services imposed by the Legislature
24 on individuals, businesses, or agencies outside state
25 government. Bonds and other debt obligations issued by or on
26 behalf of the corporation are not to be considered "state
27 bonds" within the meaning of s. 215.58(8). The corporation is
28 not subject to the procurement provisions of chapter 287, and
29 policies and decisions of the corporation relating to
30 incurring debt, levying of assessments and the sale, issuance,
31 continuation, terms and claims under corporation policies, and
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1 all services relating thereto, are not subject to the
2 provisions of chapter 120. The corporation is not required to
3 obtain or to hold a certificate of authority issued by the
4 office, nor is it required to participate as a member insurer
5 of the Florida Insurance Guaranty Association. However, the
6 corporation is required to pay, in the same manner as an
7 authorized insurer, assessments pledged by the Florida
8 Insurance Guaranty Association to secure bonds issued or other
9 indebtedness incurred to pay covered claims arising from
10 insurer insolvencies caused by, or proximately related to,
11 hurricane losses. It is the intent of the Legislature that the
12 tax exemptions provided in this paragraph will augment the
13 financial resources of the corporation to better enable the
14 corporation to fulfill its public purposes. Any bonds issued
15 by the corporation, their transfer, and the income therefrom,
16 including any profit made on the sale thereof, shall at all
17 times be free from taxation of every kind by the state and any
18 political subdivision or local unit or other instrumentality
19 thereof; however, this exemption does not apply to any tax
20 imposed by chapter 220 on interest, income, or profits on debt
21 obligations owned by corporations other than the corporation.
22 (t)(k) Upon a determination by the office that the
23 conditions giving rise to the establishment and activation of
24 the corporation no longer exist, the corporation is dissolved.
25 Upon dissolution, the assets of the corporation shall be
26 applied first to pay all debts, liabilities, and obligations
27 of the corporation, including the establishment of reasonable
28 reserves for any contingent liabilities or obligations, and
29 all remaining assets of the corporation shall become property
30 of the state and shall be deposited in the Florida Hurricane
31 Catastrophe Fund. However, no dissolution shall take effect as
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1 long as the corporation has bonds or other financial
2 obligations outstanding unless adequate provision has been
3 made for the payment of the bonds or other financial
4 obligations pursuant to the documents authorizing the issuance
5 of the bonds or other financial obligations.
6 (u)(l)1. Effective July 1, 2002, policies of the
7 Residential Property and Casualty Joint Underwriting
8 Association shall become policies of the corporation. All
9 obligations, rights, assets and liabilities of the Residential
10 Property and Casualty Joint Underwriting Association,
11 including bonds, note and debt obligations, and the financing
12 documents pertaining to them become those of the corporation
13 as of July 1, 2002. The corporation is not required to issue
14 endorsements or certificates of assumption to insureds during
15 the remaining term of in-force transferred policies.
16 2. Effective July 1, 2002, policies of the Florida
17 Windstorm Underwriting Association are transferred to the
18 corporation and shall become policies of the corporation. All
19 obligations, rights, assets, and liabilities of the Florida
20 Windstorm Underwriting Association, including bonds, note and
21 debt obligations, and the financing documents pertaining to
22 them are transferred to and assumed by the corporation on July
23 1, 2002. The corporation is not required to issue endorsement
24 or certificates of assumption to insureds during the remaining
25 term of in-force transferred policies.
26 3. The Florida Windstorm Underwriting Association and
27 the Residential Property and Casualty Joint Underwriting
28 Association shall take all actions as may be proper to further
29 evidence the transfers and shall provide the documents and
30 instruments of further assurance as may reasonably be
31 requested by the corporation for that purpose. The corporation
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1 shall execute assumptions and instruments as the trustees or
2 other parties to the financing documents of the Florida
3 Windstorm Underwriting Association or the Residential Property
4 and Casualty Joint Underwriting Association may reasonably
5 request to further evidence the transfers and assumptions,
6 which transfers and assumptions, however, are effective on the
7 date provided under this paragraph whether or not, and
8 regardless of the date on which, the assumptions or
9 instruments are executed by the corporation. Subject to the
10 relevant financing documents pertaining to their outstanding
11 bonds, notes, indebtedness, or other financing obligations,
12 the moneys, investments, receivables, choses in action, and
13 other intangibles of the Florida Windstorm Underwriting
14 Association shall be credited to the high-risk account of the
15 corporation, and those of the personal lines residential
16 coverage account and the commercial lines residential coverage
17 account of the Residential Property and Casualty Joint
18 Underwriting Association shall be credited to the personal
19 lines account and the commercial lines account, respectively,
20 of the corporation.
21 4. Effective July 1, 2002, a new applicant for
22 property insurance coverage who would otherwise have been
23 eligible for coverage in the Florida Windstorm Underwriting
24 Association is eligible for coverage from the corporation as
25 provided in this subsection.
26 5. The transfer of all policies, obligations, rights,
27 assets, and liabilities from the Florida Windstorm
28 Underwriting Association to the corporation and the renaming
29 of the Residential Property and Casualty Joint Underwriting
30 Association as the corporation shall in no way affect the
31 coverage with respect to covered policies as defined in s.
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1 215.555(2)(c) provided to these entities by the Florida
2 Hurricane Catastrophe Fund. The coverage provided by the
3 Florida Hurricane Catastrophe Fund to the Florida Windstorm
4 Underwriting Association based on its exposures as of June 30,
5 2002, and each June 30 thereafter shall be redesignated as
6 coverage for the high-risk account of the corporation.
7 Notwithstanding any other provision of law, the coverage
8 provided by the Florida Hurricane Catastrophe Fund to the
9 Residential Property and Casualty Joint Underwriting
10 Association based on its exposures as of June 30, 2002, and
11 each June 30 thereafter shall be transferred to the personal
12 lines account and the commercial lines account of the
13 corporation. Notwithstanding any other provision of law, the
14 high-risk account shall be treated, for all Florida Hurricane
15 Catastrophe Fund purposes, as if it were a separate
16 participating insurer with its own exposures, reimbursement
17 premium, and loss reimbursement. Likewise, the personal lines
18 and commercial lines accounts shall be viewed together, for
19 all Florida Hurricane Catastrophe Fund purposes, as if the two
20 accounts were one and represent a single, separate
21 participating insurer with its own exposures, reimbursement
22 premium, and loss reimbursement. The coverage provided by the
23 Florida Hurricane Catastrophe Fund to the corporation shall
24 constitute and operate as a full transfer of coverage from the
25 Florida Windstorm Underwriting Association and Residential
26 Property and Casualty Joint Underwriting to the corporation.
27 (v)(m) Notwithstanding any other provision of law:
28 1. The pledge or sale of, the lien upon, and the
29 security interest in any rights, revenues, or other assets of
30 the corporation created or purported to be created pursuant to
31 any financing documents to secure any bonds or other
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1 indebtedness of the corporation shall be and remain valid and
2 enforceable, notwithstanding the commencement of and during
3 the continuation of, and after, any rehabilitation,
4 insolvency, liquidation, bankruptcy, receivership,
5 conservatorship, reorganization, or similar proceeding against
6 the corporation under the laws of this state.
7 2. No such proceeding shall relieve the corporation of
8 its obligation, or otherwise affect its ability to perform its
9 obligation, to continue to collect, or levy and collect,
10 assessments, market equalization or other surcharges under
11 subparagraph (c)10., or any other rights, revenues, or other
12 assets of the corporation pledged pursuant to any financing
13 documents.
14 3. Each such pledge or sale of, lien upon, and
15 security interest in, including the priority of such pledge,
16 lien, or security interest, any such assessments, market
17 equalization or other surcharges, or other rights, revenues,
18 or other assets which are collected, or levied and collected,
19 after the commencement of and during the pendency of, or
20 after, any such proceeding shall continue unaffected by such
21 proceeding. As used in this subsection, the term "financing
22 documents" means any agreement or agreements, instrument or
23 instruments, or other document or documents now existing or
24 hereafter created evidencing any bonds or other indebtedness
25 of the corporation or pursuant to which any such bonds or
26 other indebtedness has been or may be issued and pursuant to
27 which any rights, revenues, or other assets of the corporation
28 are pledged or sold to secure the repayment of such bonds or
29 indebtedness, together with the payment of interest on such
30 bonds or such indebtedness, or the payment of any other
31 obligation or financial product, as defined in the plan of
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1 operation of the corporation related to such bonds or
2 indebtedness.
3 4. Any such pledge or sale of assessments, revenues,
4 contract rights, or other rights or assets of the corporation
5 shall constitute a lien and security interest, or sale, as the
6 case may be, that is immediately effective and attaches to
7 such assessments, revenues, or contract rights or other rights
8 or assets, whether or not imposed or collected at the time the
9 pledge or sale is made. Any such pledge or sale is effective,
10 valid, binding, and enforceable against the corporation or
11 other entity making such pledge or sale, and valid and binding
12 against and superior to any competing claims or obligations
13 owed to any other person or entity, including policyholders in
14 this state, asserting rights in any such assessments,
15 revenues, or contract rights or other rights or assets to the
16 extent set forth in and in accordance with the terms of the
17 pledge or sale contained in the applicable financing
18 documents, whether or not any such person or entity has notice
19 of such pledge or sale and without the need for any physical
20 delivery, recordation, filing, or other action.
21 (w)(n)1. The following records of the corporation are
22 confidential and exempt from the provisions of s. 119.07(1)
23 and s. 24(a), Art. I of the State Constitution:
24 a. Underwriting files, except that a policyholder or
25 an applicant shall have access to his or her own underwriting
26 files.
27 b. Claims files, until termination of all litigation
28 and settlement of all claims arising out of the same incident,
29 although portions of the claims files may remain exempt, as
30 otherwise provided by law. Confidential and exempt claims file
31 records may be released to other governmental agencies upon
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1 written request and demonstration of need; such records held
2 by the receiving agency remain confidential and exempt as
3 provided for herein.
4 c. Records obtained or generated by an internal
5 auditor pursuant to a routine audit, until the audit is
6 completed, or if the audit is conducted as part of an
7 investigation, until the investigation is closed or ceases to
8 be active. An investigation is considered "active" while the
9 investigation is being conducted with a reasonable, good faith
10 belief that it could lead to the filing of administrative,
11 civil, or criminal proceedings.
12 d. Matters reasonably encompassed in privileged
13 attorney-client communications.
14 e. Proprietary information licensed to the corporation
15 under contract and the contract provides for the
16 confidentiality of such proprietary information.
17 f. All information relating to the medical condition
18 or medical status of a corporation employee which is not
19 relevant to the employee's capacity to perform his or her
20 duties, except as otherwise provided in this paragraph.
21 Information which is exempt shall include, but is not limited
22 to, information relating to workers' compensation, insurance
23 benefits, and retirement or disability benefits.
24 g. Upon an employee's entrance into the employee
25 assistance program, a program to assist any employee who has a
26 behavioral or medical disorder, substance abuse problem, or
27 emotional difficulty which affects the employee's job
28 performance, all records relative to that participation shall
29 be confidential and exempt from the provisions of s. 119.07(1)
30 and s. 24(a), Art. I of the State Constitution, except as
31 otherwise provided in s. 112.0455(11).
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1 h. Information relating to negotiations for financing,
2 reinsurance, depopulation, or contractual services, until the
3 conclusion of the negotiations.
4 i. Minutes of closed meetings regarding underwriting
5 files, and minutes of closed meetings regarding an open claims
6 file until termination of all litigation and settlement of all
7 claims with regard to that claim, except that information
8 otherwise confidential or exempt by law will be redacted.
9
10 When an authorized insurer is considering underwriting a risk
11 insured by the corporation, relevant underwriting files and
12 confidential claims files may be released to the insurer
13 provided the insurer agrees in writing, notarized and under
14 oath, to maintain the confidentiality of such files. When a
15 file is transferred to an insurer that file is no longer a
16 public record because it is not held by an agency subject to
17 the provisions of the public records law. Underwriting files
18 and confidential claims files may also be released to staff of
19 and the board of governors of the market assistance plan
20 established pursuant to s. 627.3515, who must retain the
21 confidentiality of such files, except such files may be
22 released to authorized insurers that are considering assuming
23 the risks to which the files apply, provided the insurer
24 agrees in writing, notarized and under oath, to maintain the
25 confidentiality of such files. Finally, the corporation or
26 the board or staff of the market assistance plan may make the
27 following information obtained from underwriting files and
28 confidential claims files available to licensed general lines
29 insurance agents: name, address, and telephone number of the
30 residential property owner or insured; location of the risk;
31 rating information; loss history; and policy type. The
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1 receiving licensed general lines insurance agent must retain
2 the confidentiality of the information received.
3 2. Portions of meetings of the corporation are exempt
4 from the provisions of s. 286.011 and s. 24(b), Art. I of the
5 State Constitution wherein confidential underwriting files or
6 confidential open claims files are discussed. All portions of
7 corporation meetings which are closed to the public shall be
8 recorded by a court reporter. The court reporter shall record
9 the times of commencement and termination of the meeting, all
10 discussion and proceedings, the names of all persons present
11 at any time, and the names of all persons speaking. No
12 portion of any closed meeting shall be off the record.
13 Subject to the provisions hereof and s. 119.07(1)(b)-(d), the
14 court reporter's notes of any closed meeting shall be retained
15 by the corporation for a minimum of 5 years. A copy of the
16 transcript, less any exempt matters, of any closed meeting
17 wherein claims are discussed shall become public as to
18 individual claims after settlement of the claim.
19 (x)(o) It is the intent of the Legislature that the
20 amendments to this subsection enacted in 2002 should, over
21 time, reduce the probable maximum windstorm losses in the
22 residual markets and should reduce the potential assessments
23 to be levied on property insurers and policyholders statewide.
24 In furtherance of this intent:
25 1. The board shall, on or before February 1 of each
26 year, provide a report to the President of the Senate and the
27 Speaker of the House of Representatives showing the reduction
28 or increase in the 100-year probable maximum loss attributable
29 to wind-only coverages and the quota share program under this
30 subsection combined, as compared to the benchmark 100-year
31 probable maximum loss of the Florida Windstorm Underwriting
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1 Association. For purposes of this paragraph, the benchmark
2 100-year probable maximum loss of the Florida Windstorm
3 Underwriting Association shall be the calculation dated
4 February 2001 and based on November 30, 2000, exposures. In
5 order to ensure comparability of data, the board shall use the
6 same methods for calculating its probable maximum loss as were
7 used to calculate the benchmark probable maximum loss.
8 2. Beginning February 1, 2009 2007, if the report
9 under subparagraph 1. for any year indicates that the 100-year
10 probable maximum loss attributable to wind-only coverages and
11 the quota share program combined does not reflect a reduction
12 of at least 25 percent from the benchmark, the board shall
13 reduce the boundaries of the high-risk area eligible for
14 wind-only coverages under this subsection in a manner
15 calculated to reduce such probable maximum loss to an amount
16 at least 25 percent below the benchmark.
17 3. Beginning February 1, 2014 2012, if the report
18 under subparagraph 1. for any year indicates that the 100-year
19 probable maximum loss attributable to wind-only coverages and
20 the quota share program combined does not reflect a reduction
21 of at least 50 percent from the benchmark, the boundaries of
22 the high-risk area eligible for wind-only coverages under this
23 subsection shall be reduced by the elimination of any area
24 that is not seaward of a line 1,000 feet inland from the
25 Intracoastal Waterway.
26 (y)(p) In enacting the provisions of this section, the
27 Legislature recognizes that both the Florida Windstorm
28 Underwriting Association and the Residential Property and
29 Casualty Joint Underwriting Association have entered into
30 financing arrangements that obligate each entity to service
31 its debts and maintain the capacity to repay funds secured
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1 under these financing arrangements. It is the intent of the
2 Legislature that nothing in this section be construed to
3 compromise, diminish, or interfere with the rights of
4 creditors under such financing arrangements. It is further the
5 intent of the Legislature to preserve the obligations of the
6 Florida Windstorm Underwriting Association and Residential
7 Property and Casualty Joint Underwriting Association with
8 regard to outstanding financing arrangements, with such
9 obligations passing entirely and unchanged to the corporation
10 and, specifically, to the applicable account of the
11 corporation. So long as any bonds, notes, indebtedness, or
12 other financing obligations of the Florida Windstorm
13 Underwriting Association or the Residential Property and
14 Casualty Joint Underwriting Association are outstanding, under
15 the terms of the financing documents pertaining to them, the
16 governing board of the corporation shall have and shall
17 exercise the authority to levy, charge, collect, and receive
18 all premiums, assessments, surcharges, charges, revenues, and
19 receipts that the associations had authority to levy, charge,
20 collect, or receive under the provisions of subsection (2) and
21 this subsection, respectively, as they existed on January 1,
22 2002, to provide moneys, without exercise of the authority
23 provided by this subsection, in at least the amounts, and by
24 the times, as would be provided under those former provisions
25 of subsection (2) or this subsection, respectively, so that
26 the value, amount, and collectability of any assets, revenues,
27 or revenue source pledged or committed to, or any lien thereon
28 securing such outstanding bonds, notes, indebtedness, or other
29 financing obligations will not be diminished, impaired, or
30 adversely affected by the amendments made by this act and to
31 permit compliance with all provisions of financing documents
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1 pertaining to such bonds, notes, indebtedness, or other
2 financing obligations, or the security or credit enhancement
3 for them, and any reference in this subsection to bonds,
4 notes, indebtedness, financing obligations, or similar
5 obligations, of the corporation shall include like instruments
6 or contracts of the Florida Windstorm Underwriting Association
7 and the Residential Property and Casualty Joint Underwriting
8 Association to the extent not inconsistent with the provisions
9 of the financing documents pertaining to them.
10 (z)(q) The corporation shall not require the securing
11 of flood insurance as a condition of coverage if the insured
12 or applicant executes a form approved by the office affirming
13 that flood insurance is not provided by the corporation and
14 that if flood insurance is not secured by the applicant or
15 insured in addition to coverage by the corporation, the risk
16 will not be covered for flood damage. A corporation
17 policyholder electing not to secure flood insurance and
18 executing a form as provided herein making a claim for water
19 damage against the corporation shall have the burden of
20 proving the damage was not caused by flooding. Notwithstanding
21 other provisions of this subsection, the corporation may deny
22 coverage to an applicant or insured who refuses to execute the
23 form described herein.
24 (aa)(r) A salaried employee of the corporation who
25 performs policy administration services subsequent to the
26 effectuation of a corporation policy is not required to be
27 licensed as an agent under the provisions of s. 626.112.
28 Section 9. The amendments made by this act to s.
29 627.351(6), Florida Statutes, which change the method for
30 calculating and determining the assessments and surcharges
31 that must be levied or collected to fund deficits in Citizens
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1 Property Insurance Corporation apply to a deficit incurred by
2 the corporation for calendar year 2006 and thereafter.
3 Section 10. Effective July 1, 2006, paragraph (a) of
4 subsection (5) of section 627.3511, Florida Statutes, is
5 amended to read:
6 627.3511 Depopulation of Citizens Property Insurance
7 Corporation.--
8 (5) APPLICABILITY.--
9 (a) The take-out bonus provided by subsection (2) and
10 the exemption from assessment provided by paragraph (3)(a)
11 apply only if the corporation policy is replaced by either a
12 standard policy including wind coverage or, if consistent with
13 the insurer's underwriting rules as filed with the office, a
14 basic policy including wind coverage; however, with respect to
15 risks located in areas where coverage through the high-risk
16 account of the corporation is available, the replacement
17 policy need not provide wind coverage. The insurer must renew
18 the replacement policy at approved rates on substantially
19 similar terms for four two additional 1-year terms, unless
20 canceled or not renewed by the policyholder insurer for a
21 lawful reason other than reduction of hurricane exposure. If
22 an insurer assumes the corporation's obligations for a policy,
23 it must issue a replacement policy for a 1-year term upon
24 expiration of the corporation policy and must renew the
25 replacement policy at approved rates on substantially similar
26 terms for four two additional 1-year terms, unless canceled or
27 not renewed by the policyholder insurer for a lawful reason
28 other than reduction of hurricane exposure. For each
29 replacement policy canceled or nonrenewed by the insurer for
30 any reason during the 5-year 3-year coverage period required
31 by this paragraph, the insurer must remove from the
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1 corporation one additional policy covering a risk similar to
2 the risk covered by the canceled or nonrenewed policy. In
3 addition to these requirements, the corporation must place the
4 bonus moneys in escrow for a period of 5 3 years; such moneys
5 may be released from escrow only to pay claims. If the policy
6 is canceled or nonrenewed before the end of the 5-year period,
7 the amount of the take-out bonus must be prorated for the time
8 period the policy was insured. A take-out bonus provided by
9 subsection (2) or subsection (6) shall not be considered
10 premium income for purposes of taxes and assessments under the
11 Florida Insurance Code and shall remain the property of the
12 corporation, subject to the prior security interest of the
13 insurer under the escrow agreement until it is released from
14 escrow, and after it is released from escrow it shall be
15 considered an asset of the insurer and credited to the
16 insurer's capital and surplus.
17 Section 11. Effective July 1, 2006, section 627.3517,
18 Florida Statutes, is amended to read:
19 627.3517 Consumer choice.--
20 (1) Except as provided in subsection (2), no provision
21 of s. 627.351, s. 627.3511, or s. 627.3515 shall be construed
22 to impair the right of any insurance risk apportionment plan
23 policyholder, upon receipt of any keepout or take-out offer,
24 to retain his or her current agent, so long as that agent is
25 duly licensed and appointed by the insurance risk
26 apportionment plan or otherwise authorized to place business
27 with the insurance risk apportionment plan. This right shall
28 not be canceled, suspended, impeded, abridged, or otherwise
29 compromised by any rule, plan of operation, or depopulation
30 plan, whether through keepout, take-out, midterm assumption,
31 or any other means, of any insurance risk apportionment plan
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1 or depopulation plan, including, but not limited to, those
2 described in s. 627.351, s. 627.3511, or s. 627.3515. The
3 commission shall adopt any rules necessary to cause any
4 insurance risk apportionment plan or market assistance plan
5 under such sections to demonstrate that the operations of the
6 plan do not interfere with, promote, or allow interference
7 with the rights created under this section. If the
8 policyholder's current agent is unable or unwilling to be
9 appointed with the insurer making the take-out or keepout
10 offer, the policyholder shall not be disqualified from
11 participation in the appropriate insurance risk apportionment
12 plan because of an offer of coverage in the voluntary market.
13 An offer of full property insurance coverage by the insurer
14 currently insuring either the ex-wind or wind-only coverage on
15 the policy to which the offer applies shall not be considered
16 a take-out or keepout offer. Any rule, plan of operation, or
17 plan of depopulation, through keepout, take-out, midterm
18 assumption, or any other means, of any property insurance risk
19 apportionment plan under s. 627.351(2) or (6) is subject to
20 ss. 627.351(2)(b) and (6)(c) and 627.3511(4).
21 (2) This section does not apply during the first 10
22 days after a new application for coverage has been submitted
23 to Citizens Property Insurance Corporation under s.
24 627.351(6), whether or not coverage is bound during this
25 period.
26 Section 12. Paragraph (b) of subsection (3) of section
27 627.4035, Florida Statutes, is amended to read:
28 627.4035 Cash payment of premiums; claims.--
29 (3) All payments of claims made in this state under
30 any contract of insurance shall be paid:
31 (b) If authorized in writing by the recipient or the
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1 recipient's representative, by debit card or any other form of
2 electronic transfer. Any fees or costs to be charged against
3 the recipient must be disclosed in writing to the recipient or
4 the recipient's representative at the time of written
5 authorization. However, the written authorization requirement
6 may be waived by the recipient or the recipient's
7 representative if the insurer verifies the identity of the
8 insured or the insured's recipient and does not charge a fee
9 for the transaction. If the funds are misdirected, the insurer
10 remains liable for the payment of the claim.
11 Section 13. Section 627.6121, Florida Statutes, is
12 created to read:
13 627.6121 Payment of claims for dual interest
14 property.--For policies issued or renewed on or after October
15 1, 2006, a property insurer shall transmit claims payments
16 directly to the primary policyholder by check or other
17 allowable payment method, payable to the primary policyholder
18 only, without requiring a dual endorsement from any
19 mortgageholder or lienholder, for the following:
20 (1) Amounts payable under the policy for personal
21 property and contents, additional living expenses, and other
22 covered items that are not subject to a recorded security
23 interest that is noted in the dual interest provision of the
24 policy.
25 (2) Amounts payable under the policy for the lesser of
26 $20,000 or the first 20 percent of the insurer's estimate of
27 the total projected covered claim amount, for the repair or
28 replacement of property subject to a recorded security
29 interest that is noted in the dual interest provision of the
30 policy. The insurer shall provide written notice to the
31 mortgageholder or lienholder of such payments made pursuant to
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1 this subsection.
2 Section 14. Subsection (2) of section 627.7011,
3 Florida Statutes, is amended to read:
4 627.7011 Homeowners' policies; offer of replacement
5 cost coverage and law and ordinance coverage.--
6 (2) Unless the insurer obtains the policyholder's
7 written refusal of the policies or endorsements specified in
8 subsection (1), any policy covering the dwelling is deemed to
9 include the law and ordinance coverage limited to 25 percent
10 of the dwelling limit specified in paragraph (1)(b). The
11 rejection or selection of alternative coverage shall be made
12 on a form approved by the office. The form shall fully advise
13 the applicant of the nature of the coverage being rejected. If
14 this form is signed by a named insured, it will be
15 conclusively presumed that there was an informed, knowing
16 rejection of the coverage or election of the alternative
17 coverage on behalf of all insureds. Unless the policyholder
18 requests in writing the coverage specified in this section, it
19 need not be provided in or supplemental to any other policy
20 that renews, insures, extends, changes, supersedes, or
21 replaces an existing policy when the policyholder has rejected
22 the coverage specified in this section or has selected
23 alternative coverage. The insurer must provide such
24 policyholder with notice of the availability of such coverage
25 in a form approved by the office at least once every 3 years.
26 The failure to provide such notice constitutes a violation of
27 this code, but does not affect the coverage provided under the
28 policy.
29 Section 15. Section 627.7019, Florida Statutes, is
30 created to read:
31 627.7019 Standardization of requirements applicable to
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1 insurers after natural disasters.--
2 (1) The commission shall adopt by rule, pursuant to s.
3 120.54(1)-(3), standardized requirements that may be applied
4 to insurers as a consequence of a hurricane or other natural
5 disaster. The rules shall address the following areas:
6 (a) Claims reporting requirements.
7 (b) Grace periods for payment of premiums and
8 performance of other duties by insureds.
9 (c) Temporary postponement of cancellations and
10 nonrenewals.
11 (2) The rules adopted under this section shall require
12 the office to issue an order within 72 hours after the
13 occurrence of a hurricane or other natural disaster
14 specifying, by line of insurance, which of the standardized
15 requirements apply, the geographic areas in which they apply,
16 the time at which applicability commences, and the time at
17 which applicability terminates.
18 Section 16. Subsection (5) of section 627.707, Florida
19 Statutes, is amended to read:
20 627.707 Standards for investigation of sinkhole claims
21 by insurers; nonrenewals.--Upon receipt of a claim for a
22 sinkhole loss, an insurer must meet the following standards in
23 investigating a claim:
24 (5)(a) Subject to paragraph (b), if a sinkhole loss is
25 verified, the insurer shall pay to stabilize the land and
26 building and repair the foundation in accordance with the
27 recommendations of the engineer as provided under s. 627.7073,
28 and in consultation with the policyholder, subject to the
29 coverage and terms of the policy. The insurer shall pay for
30 other repairs to the structure and contents in accordance with
31 the terms of the policy.
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1 (b) The insurer may limit its payment to the actual
2 cash value of the sinkhole loss, not including underpinning or
3 grouting or any other repair technique performed below the
4 existing foundation of the building, until the policyholder
5 enters into a contract for the performance of building
6 stabilization or foundation repairs. After the policyholder
7 enters into the contract, the insurer shall pay the amounts
8 necessary to begin and perform such repairs as the work is
9 performed and the expenses are incurred. The insurer may not
10 require the policyholder to advance payment for such repairs.
11 If repair covered by the policy has begun and the engineer
12 selected or approved by the insurer determines that the repair
13 cannot be completed within the policy limits, the insurer must
14 either complete the engineer's recommended repair or tender
15 the policy limits to the policyholder without a reduction for
16 the repair expenses incurred.
17 (c) Upon written approval of the policyholder and the
18 lienholder, if any, obtained by the insurer, the insurer may
19 make payment directly to the persons selected by the
20 policyholder to perform the land and building stabilization
21 and foundation repairs. The decision by the insurer to make
22 direct payment to such persons does not create liability for
23 the insurer for the work performed.
24
25 This subsection does not apply when two or more buildings,
26 structures, mobile homes, or manufactured buildings are
27 insured under a blanket form for a single amount of insurance.
28 Section 17. Section 627.7072, Florida Statutes, is
29 amended to read:
30 627.7072 Testing standards for sinkholes.--
31 (1) The engineer and professional geologist shall
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1 perform such tests as are sufficient, in their professional
2 opinion, to determine the presence or absence of sinkhole loss
3 or other cause of damage within reasonable professional
4 probability and for the engineer to make recommendations
5 regarding necessary building stabilization and foundation
6 repair.
7 (2) Testing by a professional geologist shall be
8 conducted in compliance with the Florida Geological Survey
9 Special Publication No. 57 (2005).
10 Section 18. Paragraph (c) of subsection (1) of section
11 627.7073, Florida Statutes, is amended to read:
12 627.7073 Sinkhole reports.--
13 (1) Upon completion of testing as provided in s.
14 627.7072, the engineer and professional geologist shall issue
15 a report and certification to the insurer and the policyholder
16 as provided in this section.
17 (c) The respective findings, opinions, and
18 recommendations of the engineer and professional geologist as
19 to the cause of damage verification or elimination of a
20 sinkhole loss and the findings, opinions, and recommendations
21 of the engineer as to land and building stabilization and
22 foundation repair shall be presumed correct.
23 Section 19. Effective October 1, 2006, section
24 627.7074, Florida Statutes, is created to read:
25 627.7074 Alternative procedure for resolution of
26 disputed sinkhole insurance claims.--
27 (1) As used in this section, the term:
28 (a) "Neutral evaluation" means the alternative dispute
29 resolution provided for in this section.
30 (b) "Neutral evaluator" means an engineer or a
31 professional geologist who has completed a course of study in
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1 alternative dispute resolution designed or approved by the
2 department for use in the neutral evaluation process, who is
3 determined to be fair and impartial.
4 (2)(a) The department shall certify and maintain a
5 list of persons who are neutral evaluators.
6 (b) The department shall prepare a consumer
7 information pamphlet for distribution by insurers to
8 policyholders which clearly describes the neutral evaluation
9 process and includes information and forms necessary for the
10 policyholder to request a neutral evaluation.
11 (3) Following the receipt of the report provided under
12 s. 627.7073 or the denial of a claim for a sinkhole loss, the
13 insurer shall notify the policyholder of his or her right to
14 participate in the neutral evaluation program under this
15 section. Neutral evaluation supersedes the alternative dispute
16 resolution process under s. 627.7015. The insurer shall
17 provide to the policyholder the consumer information pamphlet
18 prepared by the department pursuant to paragraph (2)(b).
19 (4) Neutral evaluation is optional and nonbinding.
20 Either the policyholder or the insurer may decline to
21 participate. A request for neutral evaluation may be filed
22 with the department by the policyholder or the insurer on a
23 form approved by the department. The request for neutral
24 evaluation must state the reason for the request and must
25 include an explanation of all the issues in dispute at the
26 time of the request. Filing a request for neutral evaluation
27 tolls the applicable time requirements for filing suit for a
28 period of 60 days following the conclusion of the neutral
29 evaluation process or the time prescribed in s. 95.11,
30 whichever is later.
31 (5) Neutral evaluation shall be conducted as an
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1 informal process in which formal rules of evidence and
2 procedure need not be observed. A party to neutral evaluation
3 is not required to attend neutral evaluation if a
4 representative of the party attends and has the authority to
5 make a binding decision on behalf of the party. All parties
6 shall participate in the evaluation in good faith.
7 (6) The insurer shall pay the costs associated with
8 the neutral evaluation.
9 (7) Upon receipt of a request for neutral evaluation,
10 the department shall refer the request to a neutral evaluator.
11 The neutral evaluator shall notify the policyholder and the
12 insurer of the date, time, and place of the neutral evaluation
13 conference. The conference may be held by telephone, if
14 feasible and desirable. The neutral evaluation conference
15 shall be held within 45 days after receipt of the request by
16 the department.
17 (8) The department shall adopt rules of procedure for
18 the neutral evaluation process.
19 (9) For policyholders not represented by an attorney,
20 a consumer affairs specialist of the department or an employee
21 designated as the primary contact for consumers on issues
22 relating to sinkholes under s. 20.121 shall be available for
23 consultation to the extent that he or she may lawfully do so.
24 (10) Evidence of an offer to settle a claim during the
25 neutral evaluation process, as well as any relevant conduct or
26 statements made in negotiations concerning the offer to settle
27 a claim, is inadmissible to prove liability or absence of
28 liability for the claim or its value, except as provided in
29 subsection (13).
30 (11) Any court proceeding related to the subject
31 matter of the neutral evaluation shall be stayed pending
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1 completion of the neutral evaluation.
2 (12) For matters that are not resolved by the parties
3 at the conclusion of the neutral evaluation, the neutral
4 evaluator shall prepare a report stating that in his or her
5 opinion the sinkhole loss has been verified or eliminated and,
6 if verified, the need for and estimated costs of stabilizing
7 the land and any covered structures or buildings and other
8 appropriate remediation or structural repairs. The evaluator's
9 report shall be sent to all parties in attendance at the
10 neutral evaluation and to the department.
11 (13) The recommendation of the neutral evaluator is
12 not binding on any party, and the parties retain access to
13 courts. The neutral evaluator's written recommendation is
14 admissible in any subsequent action or proceeding relating to
15 the claim or to the cause of action giving rise to the claim
16 only for purposes of determining the award of attorney's fees.
17 (14) If the policyholder declines to participate in
18 neutral evaluation requested by the insurer or declines to
19 resolve the matter in accordance with the recommendation of
20 the neutral evaluator pursuant to this section, the insurer is
21 not liable for attorney's fees under s. 627.428 or other
22 provisions of the insurance code or for extra-contractual
23 damages related to a claim for a sinkhole loss.
24 (15) A party may seek judicial review of the
25 recommendation of the neutral evaluator to determine whether
26 the recommendation is reasonable. A recommendation is
27 reasonable unless: it was procured by corruption, fraud, or
28 other undue means; there was evident partiality by the neutral
29 evaluator or misconduct prejudicing the rights of any party;
30 or the neutral evaluator exceeded the authority and power
31 granted by this section. If the court declares the
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1 recommendation is not reasonable, the neutral evaluation
2 recommendation shall be vacated.
3 Section 20. Subsection (5) of section 627.727, Florida
4 Statutes, is amended to read:
5 627.727 Motor vehicle insurance; uninsured and
6 underinsured vehicle coverage; insolvent insurer protection.--
7 (5) Any person having a claim against an insolvent
8 insurer as defined in s. 631.54(6) s. 631.54(5) under the
9 provisions of this section shall present such claim for
10 payment to the Florida Insurance Guaranty Association only. In
11 the event of a payment to any person in settlement of a claim
12 arising under the provisions of this section, the association
13 is not subrogated or entitled to any recovery against the
14 claimant's insurer. The association, however, has the rights
15 of recovery as set forth in chapter 631 in the proceeds
16 recoverable from the assets of the insolvent insurer.
17 Section 21. Paragraph (f) is added to subsection (2)
18 of section 631.181, Florida Statutes, to read:
19 631.181 Filing and proof of claim.--
20 (2)
21 (f) The signed statement required by this section
22 shall not be required on claims for which adequate claims file
23 documentation exists within the records of the insolvent
24 insurer. Claims for payment of unearned premium shall not be
25 required to use the signed statement required by this section
26 if the receiver certifies to the guaranty fund that the
27 records of the insolvent insurer are sufficient to determine
28 the amount of unearned premium owed to each policyholder of
29 the insurer and such information is remitted to the guaranty
30 fund by the receiver in electronic or other mutually
31 agreed-upon format.
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1 Section 22. Subsection (3) of section 631.54, Florida
2 Statutes, is amended, present subsections (5), (6), (7), and
3 (8) of that section are renumbered as subsections (6), (7),
4 (8), and (9), respectively, and a new subsection (5) is added
5 to that section to read:
6 631.54 Definitions.--As used in this part:
7 (3) "Covered claim" means an unpaid claim, including
8 one of unearned premiums, which arises out of, and is within
9 the coverage, and not in excess of, the applicable limits of
10 an insurance policy to which this part applies, issued by an
11 insurer, if such insurer becomes an insolvent insurer and the
12 claimant or insured is a resident of this state at the time of
13 the insured event or the property from which the claim arises
14 is permanently located in this state. For entities other than
15 individuals, the residence of a claimant, insured, or
16 policyholder is the state in which the entity's principal
17 place of business is located at the time of the insured event.
18 "Covered claim" shall not include:
19 (a) Any amount due any reinsurer, insurer, insurance
20 pool, or underwriting association, sought directly or
21 indirectly through a third party, as subrogation,
22 contribution, indemnification, or otherwise; or
23 (b) Any claim that would otherwise be a covered claim
24 under this part that has been rejected by any other state
25 guaranty fund on the grounds that an insured's net worth is
26 greater than that allowed under that state's guaranty law.
27 Member insurers shall have no right of subrogation,
28 contribution, indemnification, or otherwise, sought directly
29 or indirectly through a third party, against the insured of
30 any insolvent member.
31 (5) "Homeowner's insurance" means personal lines
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1 residential property insurance coverage that consists of the
2 type of coverage provided under homeowner's, dwelling, and
3 similar policies for repair or replacement of the insured
4 structure and contents, which policies are written directly to
5 the individual homeowner. Residential coverage for personal
6 lines as set forth in this section includes policies that
7 provide coverage for particular perils such as windstorm and
8 hurricane coverage but excludes all coverage for mobile homes,
9 renter's insurance, or tenant's coverage. The term
10 "homeowner's insurance" excludes commercial residential
11 policies covering condominium associations or homeowners'
12 associations, which associations have a responsibility to
13 provide insurance coverage on residential units within the
14 association, and also excludes coverage for the common
15 elements of a homeowners' association.
16 Section 23. Subsection (1) of section 631.55, Florida
17 Statutes, is amended to read:
18 631.55 Creation of the association.--
19 (1) There is created a nonprofit corporation to be
20 known as the "Florida Insurance Guaranty Association,
21 Incorporated." All insurers defined as member insurers in s.
22 631.54(7) s. 631.54(6) shall be members of the association as
23 a condition of their authority to transact insurance in this
24 state, and, further, as a condition of such authority, an
25 insurer shall agree to reimburse the association for all claim
26 payments the association makes on said insurer's behalf if
27 such insurer is subsequently rehabilitated. The association
28 shall perform its functions under a plan of operation
29 established and approved under s. 631.58 and shall exercise
30 its powers through a board of directors established under s.
31 631.56. The corporation shall have all those powers granted or
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1 permitted nonprofit corporations, as provided in chapter 617.
2 Section 24. Paragraph (a) of subsection (1), paragraph
3 (d) of subsection (2), and paragraph (a) of subsection (3) of
4 section 631.57, Florida Statutes, are amended, and paragraph
5 (e) is added to subsection (3) of that section, to read:
6 631.57 Powers and duties of the association.--
7 (1) The association shall:
8 (a)1. Be obligated to the extent of the covered claims
9 existing:
10 a. Prior to adjudication of insolvency and arising
11 within 30 days after the determination of insolvency;
12 b. Before the policy expiration date if less than 30
13 days after the determination; or
14 c. Before the insured replaces the policy or causes
15 its cancellation, if she or he does so within 30 days of the
16 determination.
17 2. The obligation under subparagraph 1. includes only
18 the amount of each covered claim which is in excess of $100
19 and is less than $300,000, except that policies providing
20 coverage for homeowner's insurance shall provide for an
21 additional $200,000 for the portion of a covered claim which
22 relates only to the damage to the structure and contents.
23 3.a.2. Notwithstanding subparagraph 2., the obligation
24 under subparagraph 1. for shall include only that amount of
25 each covered claim which is in excess of $100 and is less than
26 $300,000, except with respect to policies covering condominium
27 associations or homeowners' associations, which associations
28 have a responsibility to provide insurance coverage on
29 residential units within the association, the obligation shall
30 include that amount of each covered property insurance claim
31 which is less than $100,000 multiplied by the number of
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1 condominium units or other residential units; however, as to
2 homeowners' associations, this sub-subparagraph subparagraph
3 applies only to claims for damage or loss to residential units
4 and structures attached to residential units.
5 b. Notwithstanding sub-subparagraph a., the
6 association has no obligation to pay covered claims that are
7 to be paid from the proceeds of bonds issued under s. 631.695.
8 However, the association shall assign and pledge the first
9 available moneys from all or part of the assessments to be
10 made under paragraph (3)(a) to or on behalf of the issuer of
11 such bonds for the benefit of the holders of such bonds. The
12 association shall administer any such covered claims and
13 present valid covered claims for payment in accordance with
14 the provisions of the assistance program in connection with
15 which such bonds have been issued.
16 4.3. In no event shall the association be obligated to
17 a policyholder or claimant in an amount in excess of the
18 obligation of the insolvent insurer under the policy from
19 which the claim arises.
20 (2) The association may:
21 (d) Negotiate and become a party to such contracts as
22 are necessary to carry out the purpose of this part.
23 Additionally, the association may enter into such contracts
24 with a municipality, a county, or a legal entity created
25 pursuant to s. 163.01(7)(g) as are necessary in order for the
26 municipality, county, or legal entity to issue bonds under s.
27 631.695. In connection with the issuance of any such bonds and
28 the entering into of any such necessary contracts, the
29 association may agree to such terms and conditions as the
30 association deems necessary and proper.
31 (3)(a) To the extent necessary to secure the funds for
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1 the respective accounts for the payment of covered claims, and
2 also to pay the reasonable costs to administer the same, and
3 to the extent necessary to secure the funds for the account
4 specified in s. 631.55(2)(c) or to retire indebtedness,
5 including, without limitation, the principal, redemption
6 premium, if any, and interest on, and related costs of
7 issuance of, bonds issued under s. 631.695 and the funding of
8 any reserves and other payments required under the bond
9 resolution or trust indenture pursuant to which such bonds
10 have been issued, the office, upon certification of the board
11 of directors, shall levy assessments in the proportion that
12 each insurer's net direct written premiums in this state in
13 the classes protected by the account bears to the total of
14 said net direct written premiums received in this state by all
15 such insurers for the preceding calendar year for the kinds of
16 insurance included within such account. Assessments shall be
17 remitted to and administered by the board of directors in the
18 manner specified by the approved plan. Each insurer so
19 assessed shall have at least 30 days' written notice as to the
20 date the assessment is due and payable. Every assessment shall
21 be made as a uniform percentage applicable to the net direct
22 written premiums of each insurer in the kinds of insurance
23 included within the account in which the assessment is made.
24 The assessments levied against any insurer shall not exceed in
25 any one year more than 2 percent of that insurer's net direct
26 written premiums in this state for the kinds of insurance
27 included within such account during the calendar year next
28 preceding the date of such assessments.
29 (e)1.a. In addition to assessments otherwise
30 authorized in paragraph (a) and to the extent necessary to
31 secure the funds for the account specified in s. 631.55(2)(c)
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1 or to retire indebtedness, including, without limitation, the
2 principal, redemption premium, if any, and interest on, and
3 related costs of issuance of, bonds issued under s. 631.695
4 and the funding of any reserves and other payments required
5 under the bond resolution or trust indenture pursuant to which
6 such bonds have been issued, the office, upon certification of
7 the board of directors, shall levy emergency assessments upon
8 insurers holding a certificate of authority. The emergency
9 assessments payable under this paragraph by any insurer shall
10 not exceed in any single year more than 2 percent of that
11 insurer's direct written premiums, net of refunds, in this
12 state during the preceding calendar year for the kinds of
13 insurance within the account specified in s. 631.55(2)(c).
14 b. Any emergency assessments authorized under this
15 paragraph shall be levied by the office upon insurers referred
16 to in sub-subparagraph a., upon certification as to the need
17 for such assessments by the board of directors, in each year
18 that bonds issued under s. 631.695 and secured by such
19 emergency assessments are outstanding, in such amounts up to
20 such 2-percent limit as required in order to provide for the
21 full and timely payment of the principal of, redemption
22 premium, if any, and interest on, and related costs of
23 issuance of, such bonds. The emergency assessments provided
24 for in this paragraph are assigned and pledged to the
25 municipality, county, or legal entity issuing bonds under s.
26 631.695 for the benefit of the holders of such bonds, in order
27 to enable such municipality, county, or legal entity to
28 provide for the payment of the principal of, redemption
29 premium, if any, and interest on such bonds, the cost of
30 issuance of such bonds, and the funding of any reserves and
31 other payments required under the bond resolution or trust
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1 indenture pursuant to which such bonds have been issued,
2 without the necessity of any further action by the
3 association, the office, or any other party. To the extent
4 bonds are issued under s. 631.695 and the association
5 determines to secure such bonds by a pledge of revenues
6 received from the emergency assessments, such bonds, upon such
7 pledge of revenues, shall be secured by and payable from the
8 proceeds of such emergency assessments, and the proceeds of
9 emergency assessments levied under this paragraph shall be
10 remitted directly to and administered by the trustee or
11 custodian appointed for such bonds.
12 c. Emergency assessments under this paragraph may be
13 payable in a single payment or, at the option of the
14 association, may be payable in 12 monthly installments with
15 the first installment being due and payable at the end of the
16 month after an emergency assessment is levied and subsequent
17 installments being due not later than the end of each
18 succeeding month.
19 d. If emergency assessments are imposed, the report
20 required by s. 631.695(7) shall include an analysis of the
21 revenues generated from the emergency assessments imposed
22 under this paragraph.
23 e. If emergency assessments are imposed, the
24 references in sub-subparagraph (1)(a)3.b. and s. 631.695(2)
25 and (7) to assessments levied under paragraph (a) shall
26 include emergency assessments imposed under this paragraph.
27 2. In order to ensure that insurers paying emergency
28 assessments levied under this paragraph continue to charge
29 rates that are neither inadequate nor excessive, within 90
30 days after being notified of such assessments, each insurer
31 that is to be assessed pursuant to this paragraph shall submit
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1 a rate filing for coverage included within the account
2 specified in s. 631.55(2)(c) and for which rates are required
3 to be filed under s. 627.062. If the filing reflects a rate
4 change that, as a percentage, is equal to the difference
5 between the rate of such assessment and the rate of the
6 previous year's assessment under this paragraph, the filing
7 shall consist of a certification so stating and shall be
8 deemed approved when made. Any rate change of a different
9 percentage shall be subject to the standards and procedures of
10 s. 627.062.
11 3. An annual assessment under this paragraph shall
12 continue while the bonds issued with respect to which the
13 assessment was imposed are outstanding, including any bonds
14 the proceeds of which were used to refund bonds issued
15 pursuant to s. 631.695, unless adequate provision has been
16 made for the payment of the bonds in the documents authorizing
17 the issuance of such bonds.
18 4. Emergency assessments under this paragraph are not
19 premium and are not subject to the premium tax, to any fees,
20 or to any commissions. An insurer is liable for all emergency
21 assessments that the insurer collects and shall treat the
22 failure of an insured to pay an emergency assessment as a
23 failure to pay the premium. An insurer is not liable for
24 uncollectible emergency assessments.
25 Section 25. Section 631.695, Florida Statutes, is
26 created to read:
27 631.695 Revenue bond issuance through counties or
28 municipalities.--
29 (1) The Legislature finds:
30 (a) The potential for widespread and massive damage to
31 persons and property caused by hurricanes making landfall in
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1 this state can generate insurance claims of such a number as
2 to render numerous insurers operating within this state
3 insolvent and therefore unable to satisfy covered claims.
4 (b) The inability of insureds within this state to
5 receive payment of covered claims or to timely receive such
6 payment creates financial and other hardships for such
7 insureds and places undue burdens on the state, the affected
8 units of local government, and the community at large.
9 (c) In addition, the failure of insurers to pay
10 covered claims or to timely pay such claims due to the
11 insolvency of such insurers can undermine the public's
12 confidence in insurers operating within this state, thereby
13 adversely affecting the stability of the insurance industry in
14 this state.
15 (d) The state has previously taken action to address
16 these problems by adopting the Florida Insurance Guaranty
17 Association Act, which, among other things, provides a
18 mechanism for the payment of covered claims under certain
19 insurance policies to avoid excessive delay in payment and to
20 avoid financial loss to claimants or policyholders because of
21 the insolvency of an insurer.
22 (e) In the wake of the unprecedented destruction
23 caused by various hurricanes that have made landfall in this
24 state, the resultant covered claims, and the number of
25 insurers rendered insolvent thereby, make it evident that
26 alternative programs must be developed to allow the Florida
27 Insurance Guaranty Association to more expeditiously and
28 effectively provide for the payment of covered claims.
29 (f) It is therefore determined to be in the best
30 interests of, and necessary for, the protection of the public
31 health, safety, and general welfare of the residents of this
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1 state and for the protection and preservation of the economic
2 stability of insurers operating in this state, and it is
3 declared to be an essential public purpose, to permit certain
4 municipalities and counties to take such actions as will
5 provide relief to claimants and policyholders having covered
6 claims against insolvent insurers operating in this state by
7 expediting the handling and payment of covered claims.
8 (g) To achieve the foregoing purposes, it is proper to
9 authorize municipalities and counties of this state
10 substantially affected by the landfall of a hurricane to issue
11 bonds to assist the Florida Insurance Guaranty Association in
12 expediting the handling and payment of covered claims of
13 insolvent insurers.
14 (h) In order to avoid the needless and indiscriminate
15 proliferation, duplication, and fragmentation of such
16 assistance programs, it is in the best interests of the
17 residents of this state to authorize municipalities and
18 counties severely affected by a hurricane to provide for the
19 payment of covered claims beyond their territorial limits in
20 the implementation of such programs.
21 (i) It is a paramount public purpose for
22 municipalities and counties substantially affected by the
23 landfall of a hurricane to be able to issue bonds for the
24 purposes described in this section. Such issuance shall
25 provide assistance to residents of those municipalities and
26 counties as well as to other residents of this state.
27 (2) The governing body of any municipality or county,
28 the residents of which have been substantially affected by a
29 hurricane, may issue bonds to fund an assistance program in
30 conjunction with, and with the consent of, the Florida
31 Insurance Guaranty Association for the purpose of paying
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1 claimants' or policyholders' covered claims, as defined in s.
2 631.54, arising through the insolvency of an insurer, which
3 insolvency is determined by the Florida Insurance Guaranty
4 Association to have been a result of a hurricane, regardless
5 of whether the claimants or policyholders are residents of
6 such municipality or county or the property to which the claim
7 relates is located within or outside the territorial
8 jurisdiction of the municipality or county. The power of a
9 municipality or county to issue bonds, as described in this
10 section, is in addition to any powers granted by law and may
11 not be abrogated or restricted by any provisions in such
12 municipality's or county's charter. A municipality or county
13 issuing bonds for this purpose shall enter into such contracts
14 with the Florida Insurance Guaranty Association or any entity
15 acting on behalf of the Florida Insurance Guaranty Association
16 as are necessary to implement the assistance program. Any
17 bonds issued by a municipality or county or a combination
18 thereof under this subsection shall be payable from and
19 secured by moneys received by or on behalf of the municipality
20 or county from assessments levied under s. 631.57(3)(a) and
21 assigned and pledged to or on behalf of the municipality or
22 county for the benefit of the holders of the bonds in
23 connection with the assistance program. The funds, credit,
24 property, and taxing power of the state or any municipality or
25 county shall not be pledged for the payment of such bonds.
26 (3) Bonds may be validated by the municipality or
27 county pursuant to chapter 75. The proceeds of the bonds may
28 be used to pay covered claims of insolvent insurers; to
29 refinance or replace previously existing borrowings or
30 financial arrangements; to pay interest on bonds; to fund
31 reserves for the bonds; to pay expenses incident to the
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1 issuance or sale of any bond issued under this section,
2 including costs of validating, printing, and delivering the
3 bonds, costs of printing the official statement, costs of
4 publishing notices of sale of the bonds, costs of obtaining
5 credit enhancement or liquidity support, and related
6 administrative expenses; or for such other purposes related to
7 the financial obligations of the fund as the association may
8 determine. The term of the bonds may not exceed 30 years.
9 (4) The state covenants with holders of bonds of the
10 assistance program that the state will not take any action
11 that will have a material adverse effect on the holders and
12 will not repeal or abrogate the power of the board of
13 directors of the association to direct the Office of Insurance
14 Regulation to levy the assessments and to collect the proceeds
15 of the revenues pledged to the payment of the bonds as long as
16 any of the bonds remain outstanding, unless adequate provision
17 has been made for the payment of the bonds in the documents
18 authorizing the issuance of the bonds.
19 (5) The accomplishment of the authorized purposes of
20 such municipality or county under this section is in all
21 respects for the benefit of the people of the state, for the
22 increase of their commerce and prosperity, and for the
23 improvement of their health and living conditions. The
24 municipality or county, in performing essential governmental
25 functions in accomplishing its purposes, is not required to
26 pay any taxes or assessments of any kind whatsoever upon any
27 property acquired or used by the county or municipality for
28 such purposes or upon any revenues at any time received by the
29 county or municipality. The bonds, notes, and other
30 obligations of the municipality or county and the transfer of
31 and income from such bonds, notes, and other obligations,
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1 including any profits made on the sale of such bonds, notes,
2 and other obligations, are exempt from taxation of any kind by
3 the state or by any political subdivision or other agency or
4 instrumentality of the state. The exemption granted in this
5 subsection is not applicable to any tax imposed by chapter 220
6 on interest, income, or profits on debt obligations owned by
7 corporations.
8 (6) Two or more municipalities or counties, the
9 residents of which have been substantially affected by a
10 hurricane, may create a legal entity pursuant to s.
11 163.01(7)(g) to exercise the powers described in this section
12 as well as those powers granted in s. 163.01(7)(g). References
13 in this section to a municipality or county includes such
14 legal entity.
15 (7) The association shall issue an annual report on
16 the status of the use of bond proceeds as related to
17 insolvencies caused by hurricanes. The report must contain the
18 number and amount of claims paid. The association shall also
19 include an analysis of the revenue generated from the
20 assessment levied under s. 631.57(3)(a) to pay such bonds. The
21 association shall submit a copy of the report to the President
22 of the Senate, the Speaker of the House of Representatives,
23 and the Chief Financial Officer within 90 days after the end
24 of each calendar year in which bonds were outstanding.
25 Section 26. No provision of s. 631.57 or s. 631.695,
26 Florida Statutes, shall be repealed until such time as the
27 principal, redemption premium, if any, and interest on all
28 bonds issued under s. 631.695, Florida Statutes, payable and
29 secured from assessments levied under s. 631.57(3)(a), Florida
30 Statutes, have been paid in full or adequate provision for
31 such payment has been made in accordance with the bond
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1 resolution or trust indenture pursuant to which the bonds were
2 issued.
3 Section 27. For the 2006-2007 fiscal year, the sum
4 of is appropriated from the General Revenue Fund to the
5 Department of Community Affairs as a nonrecurring
6 appropriation for the purposes of the Home Retrofit Hardening
7 Program specified in s. 215.558, Florida Statutes, as created
8 by this act.
9 Section 28. For the 2006-2007 fiscal year, the sum
10 of is appropriated from the General Revenue Fund to the
11 Department of Community Affairs as a nonrecurring
12 appropriation for the purposes of wind certification and
13 hurricane mitigation inspections specified in s. 215.5586,
14 Florida Statutes, as created by this act.
15 Section 29. Except as otherwise expressly provided in
16 this act, this act shall take effect upon becoming a law.
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