Senate Bill sb1980c1

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    Florida Senate - 2006                           CS for SB 1980

    By the Committee on Banking and Insurance; and Senator Garcia





    597-2224-06

  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; deleting a requirement

  7         that bonds be validated; revising certain

  8         revenue bond emergency assessment requirements;

  9         specifying premiums that are subject to

10         assessment; revising the date on which the

11         exemption of medical malpractice premiums from

12         emergency assessments is repealed; creating s.

13         215.558, F.S.; creating the Home Retrofit

14         Hardening Program; providing eligibility

15         criteria and guidelines for awarding funds

16         under the program; providing limits on grant

17         amounts and on administrative expenses;

18         creating s. 215.5586, F.S.; providing a

19         purpose; requiring the Department of Community

20         Affairs to establish a wind certification and

21         hurricane mitigation inspection program;

22         specifying inspection requirements; providing

23         qualification requirements for inspection

24         providers; requiring the department to adopt

25         rules; amending s. 193.155, F.S.; providing

26         that certain changes made to homestead property

27         for hurricane damage mitigation do not increase

28         the assessed value of the property; creating s.

29         252.63, F.S.; providing purpose and intent;

30         providing powers of the Commissioner of

31         Insurance Regulation during a state of

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 1         emergency; authorizing the commissioner to

 2         issue certain orders in a state of emergency;

 3         providing for effect and duration of such

 4         orders; providing for legislative termination

 5         of such orders; requiring the commissioner to

 6         publish such orders and an explanatory

 7         statement; prescribing additional duties of the

 8         commissioner with respect to mitigation of

 9         consequences of emergencies; amending s.

10         626.918, F.S.; authorizing certain letters of

11         credit to fund a surplus lines insurer's

12         required policyholder protection trust fund;

13         defining the term "qualified United States

14         financial institution; amending s. 627.062,

15         F.S.; requiring the chief executive officer and

16         the chief financial officer of each property

17         insurer, or its certified public accountant

18         acting on its behalf, to sign a statement of

19         certification, sworn under oath, to accompany

20         the rate filing; revising factors to be used in

21         reviewing rate filings; providing that, in

22         considering a rate filing, the burden is on the

23         Office of Insurance Regulation to establish

24         that costs of reinsurance are excessive;

25         providing that the burden is on the Office of

26         Insurance Regulation to establish that certain

27         rates are excessive; amending s. 627.06281,

28         F.S.; requiring the public hurricane

29         loss-projection model to be submitted for

30         review by the Florida Commission on Hurricane

31         Loss Projection Methodology; allowing the

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    Florida Senate - 2006                           CS for SB 1980
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 1         Office of Insurance Regulation to use the

 2         public model until the commission determines

 3         that the public model is not accurate or

 4         reliable; amending s. 627.351, F.S.; providing

 5         that certain responsibilities of the Office of

 6         Insurance Regulation with respect to the plan

 7         of operation of Citizens Property Insurance

 8         Corporation be assumed by the Financial

 9         Services Commission; defining the terms

10         "homestead property" and "nonhomestead

11         property" for use with respect to Citizens

12         Property Insurance Corporation; limiting

13         eligibility for personal lines coverage by the

14         corporation; directing the corporation board to

15         reduce or, with approval by necessary parties,

16         restructure existing debt; requiring a report

17         with respect thereto; providing for a reduction

18         in aggregate amount of a regular assessment in

19         certain circumstances; requiring the executive

20         director of the corporation to be confirmed by

21         the Senate; deleting authority of the Chief

22         Financial Officer to review corporate

23         employees; prescribing a 10-day waiting period

24         for applications for coverage for a new policy;

25         authorizing exceptions; redesignating the

26         market equalization surcharge as a Citizens

27         policyholder surcharge and providing for its

28         calculation; prescribing an additional

29         surcharge on deficit assessments for certain

30         nonhomestead property; providing for optional

31         payment plans; requiring insurers to provide

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 1         claims-adjusting services for certain wind

 2         coverage in certain circumstances; requiring

 3         prospective senior management employees of the

 4         corporation to successfully pass a background

 5         check; requiring employees of the corporation

 6         to sign annually a statement that they have no

 7         conflict of interest; providing that senior

 8         managers and members of the board of governors

 9         are subject to the code of ethics and must file

10         financial disclosure; prohibiting employees and

11         members of the board of governors from

12         accepting gifts or expenditures from a persons

13         or entity, or employee thereof, which has or is

14         under consideration for a contract with the

15         corporation; providing penalties; providing a

16         limitation on senior managers' representation

17         of persons before the corporation after

18         retirement or termination of employment and on

19         employment with an insurer that has received a

20         take-out bonus; prescribing guidelines for

21         purchases of goods and services; providing

22         guidelines on use of outside counsel;

23         prohibiting the corporation from retaining a

24         lobbyist; authorizing full-time employees to

25         register and engage in lobbying; creating the

26         Office of Internal Auditor and prescribing its

27         duties; providing record-retention

28         requirements; requiring establishment of a unit

29         or division to investigate claims involving

30         possible fraud against the corporation and

31         another to receive and respond to consumer

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 1         complaints; requiring a periodic comprehensive

 2         market conduct examination of the corporation;

 3         requiring periodic operational audits of the

 4         corporation by the Auditor General; prescribing

 5         elements to be included in such audits;

 6         providing a rate surcharge for certain

 7         nonhomestead property and property valued at

 8         more than a certain amount; providing that

 9         rates for the corporation are not subject to

10         the requirements for being noncompetitive if

11         the Office of Insurance Regulation makes a

12         certain determination; deleting provisions

13         relating to appointment of a rate methodology

14         panel; providing for use of the public

15         hurricane loss-projection model in ratemaking;

16         prescribing requirements for paying takeout

17         bonuses or payments to insurers; requiring

18         records of takeout bonuses or other payments

19         for certain purposes; postponing the dates by

20         which the boundaries of high-risk areas must be

21         reduced; requiring a study of the viability of

22         authorized insurers issuing and servicing, for

23         a fee, certain high-risk insurance policies;

24         requiring a report to legislative leaders;

25         providing applicability of specified provisions

26         relating to assessments and surcharges;

27         amending s. 627.3511, F.S.; extending the

28         period for which an insurer that assumes

29         Citizens Property Insurance Corporation's

30         obligations under a policy must renew the

31         replacement policy; revising circumstances

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 1         under which replacement is not required;

 2         amending s. 627.3517, F.S.; providing that an

 3         insurance risk apportionment plan

 4         policyholder's right to retain his or her

 5         current agent does not apply during the first

 6         10 days after a new application for coverage

 7         has been submitted to Citizens Property

 8         Insurance Corporation; creating s. 627.3519,

 9         F.S.; requiring the Financial Services

10         Commission to report annually to the

11         Legislature on probable maximum losses,

12         financing options, and assessment potentials of

13         the Florida Hurricane Catastrophe Fund and

14         Citizens Property Insurance Corporation;

15         amending s. 627.4035, F.S.; providing for a

16         waiver of a written authorization requirement

17         to pay claims by debit card or other electronic

18         transfer; creating s. 627.6121, F.S.;

19         prescribing circumstances under which an

20         insurer must pay benefits to a primary

21         policyholder of dual interest property;

22         requiring mortgageholders and lienholders be

23         given notice of such payment; amending s.

24         627.7011, F.S.; limiting certain law and

25         ordinance coverage; providing that the section

26         does not prohibit an insurer from limiting its

27         liability concerning certain replacement costs;

28         creating s. 627.7019, F.S.; requiring the

29         Financial Services Commission to adopt rules

30         imposing standardized requirements applicable

31         to insurers after certain natural events;

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 1         providing criteria; providing requirements of

 2         the Office of Insurance Regulation; amending s.

 3         627.706, F.S.; allowing for a deductible amount

 4         applicable to sinkhole losses in a policy for

 5         residential property insurance; defining the

 6         term "professional engineer"; amending s.

 7         627.707, F.S.; revising references to certain

 8         engineers; authorizing insurers to make direct

 9         payment for certain repairs; excluding insurers

10         from liability for repairs under certain

11         circumstances; amending s. 627.7072, F.S.;

12         revising references to certain engineers;

13         amending s. 627.7073, F.S.; revising

14         requirements for sinkhole reports by

15         professional engineers and professional

16         geologists; providing for the recording of

17         sinkhole reports by the clerk of court rather

18         than the property appraiser; creating s.

19         627.7074, F.S.; prescribing an alternative

20         method for resolving disputed sinkhole

21         insurance claims; providing definitions;

22         prescribing procedures for invoking the

23         alternative method; providing that a

24         recommendation by a neutral evaluator is not

25         binding on any party; providing for payments of

26         costs; requiring the insurer to pay attorney's

27         fees of the policyholder up to a specified

28         amount under certain conditions; providing that

29         an insurer is not liable for attorney's fees or

30         for certain damages under certain conditions;

31         providing for judicial review; amending s.

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 1         627.727, F.S.; conforming a cross-reference;

 2         amending s. 631.181, F.S.; providing an

 3         exception to certain requirements for a signed

 4         statement for certain claims related to the

 5         insolvency of an insurer; providing

 6         requirements; amending s. 631.54, F.S.;

 7         redefining the term "covered claim" and

 8         defining the term "homeowner's insurance" for

 9         purposes of the Florida Insurance Guaranty

10         Association; amending s. 631.55, F.S.;

11         conforming a cross-reference; amending s.

12         631.57, F.S.; revising requirements and

13         limitations for obligations of the Florida

14         Insurance Guaranty Association for covered

15         claims; authorizing the association to contract

16         with counties, municipalities, and legal

17         entities to issue revenue bonds for certain

18         purposes; authorizing the Office of Insurance

19         Regulation to levy assessments and emergency

20         assessments on insurers under certain

21         circumstances for certain bond repayment

22         purposes; providing requirements for and

23         limitations on such assessments; providing for

24         payment, collection, and distribution of such

25         assessments; requiring insurers to include an

26         analysis of revenues from such assessments in a

27         required report; providing rate filing

28         requirements for insurers relating to such

29         assessments; providing for continuing annual

30         assessments under certain circumstances;

31         specifying emergency assessments as not premium

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 1         and not subject to certain taxes, fees, or

 2         commissions; specifying insurer liability for

 3         emergency assessments; providing an exception;

 4         creating s. 631.695, F.S.; providing

 5         legislative findings and purposes; providing

 6         for issuance of revenue bonds through counties

 7         and municipalities to fund assistance programs

 8         for paying covered claims for hurricane damage;

 9         providing procedures, requirements, and

10         limitations for counties, municipalities, and

11         the Florida Insurance Guaranty Association,

12         Inc., relating to issuance and validation of

13         such bonds; prohibiting pledging the funds,

14         credit, property, and taxing power of the

15         state, counties, and municipalities for payment

16         of bonds; specifying authorized uses of bond

17         proceeds; limiting the term of bonds;

18         specifying a state covenant to protect

19         bondholders from adverse actions relating to

20         such bonds; specifying exemptions for bonds,

21         notes, and other obligations of counties and

22         municipalities from certain taxes or

23         assessments on property and revenues;

24         authorizing counties and municipalities to

25         create a legal entity to exercise certain

26         powers; requiring the association to issue an

27         annual report on the status of certain uses of

28         bond proceeds; providing report requirements;

29         requiring the association to provide a copy of

30         the report to the Legislature and Chief

31         Financial Officer; prohibiting repeal of

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 1         certain provisions relating to certain bonds

 2         under certain circumstances; amending s.

 3         877.02, F.S.; prohibiting certain solicitations

 4         by contractors and other persons providing

 5         sinkhole remediation services; providing

 6         penalties; providing appropriations; providing

 7         effective dates.

 8  

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

10  

11         Section 1.  Effective June 1, 2006, paragraph (d) of

12  subsection (2), paragraphs (c) and (d) of subsection (4),

13  paragraph (b) of subsection (5), and paragraphs (a) and (b) of

14  subsection (6) of section 215.555, Florida Statutes, are

15  amended to read:

16         215.555  Florida Hurricane Catastrophe Fund.--

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

18         (d)  "Losses" means direct incurred losses under

19  covered policies, which shall include losses for additional

20  living expenses not to exceed 40 percent of the insured value

21  of a residential structure or its contents and shall exclude

22  loss adjustment expenses. "Losses" does not include losses for

23  fair rental value, loss of rent or rental income use, or

24  business interruption losses.

25         (4)  REIMBURSEMENT CONTRACTS.--

26         (c)1.  The contract shall also provide that the

27  obligation of the board with respect to all contracts covering

28  a particular contract year shall not exceed the actual

29  claims-paying capacity of the fund up to a limit of $15

30  billion for that contract year adjusted based upon the

31  reported exposure from the prior contract year to reflect the

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 1  percentage growth in exposure to the fund for covered policies

 2  since 2003, provided the dollar growth in the limit may not

 3  increase in any year by an amount greater than the dollar

 4  growth of the cash balance of the fund as of December 31 as

 5  defined by rule which occurred over the prior calendar year.

 6         2.  In May before the start of the upcoming contract

 7  year and in October during the contract year, the board shall

 8  publish in the Florida Administrative Weekly a statement of

 9  the fund's estimated borrowing capacity and the projected

10  balance of the fund as of December 31. After the end of each

11  calendar year, the board shall notify insurers of the

12  estimated borrowing capacity and the balance of the fund as of

13  December 31 to provide insurers with data necessary to assist

14  them in determining their retention and projected payout from

15  the fund for loss reimbursement purposes. In conjunction with

16  the development of the premium formula, as provided for in

17  subsection (5), the board shall publish factors or multiples

18  that assist insurers in determining their retention and

19  projected payout for the next contract year. For all

20  regulatory and reinsurance purposes, an insurer may calculate

21  its projected payout from the fund as its share of the total

22  fund premium for the current contract year multiplied by the

23  sum of the projected balance of the fund as of December 31 and

24  the estimated borrowing capacity for that contract year as

25  reported under this subparagraph.

26         (d)1.  For purposes of determining potential liability

27  and to aid in the sound administration of the fund, the

28  contract shall require each insurer to report such insurer's

29  losses from each covered event on an interim basis, as

30  directed by the board. The contract shall require the insurer

31  to report to the board no later than December 31 of each year,

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 1  and quarterly thereafter, its reimbursable losses from covered

 2  events for the year. The contract shall require the board to

 3  determine and pay, as soon as practicable after receiving

 4  these reports of reimbursable losses, the initial amount of

 5  reimbursement due and adjustments to this amount based on

 6  later loss information. The adjustments to reimbursement

 7  amounts shall require the board to pay, or the insurer to

 8  return, amounts reflecting the most recent calculation of

 9  losses.

10         2.  In determining reimbursements pursuant to this

11  subsection, the contract shall provide that the board shall:

12         a.  First reimburse insurers writing covered policies,

13  which insurers are in full compliance with this section and

14  have petitioned the Office of Insurance Regulation and

15  qualified as limited apportionment companies under s.

16  627.351(2)(b)3. The amount of such reimbursement shall be the

17  lesser of $10 million or an amount equal to 10 times the

18  insurer's reimbursement premium for the current year. The

19  amount of reimbursement paid under this sub-subparagraph may

20  not exceed the full amount of reimbursement promised in the

21  reimbursement contract. This sub-subparagraph does not apply

22  with respect to any contract year in which the year-end

23  projected cash balance of the fund, exclusive of any bonding

24  capacity of the fund, exceeds $2 billion. Only one member of

25  any insurer group may receive reimbursement under this

26  sub-subparagraph.

27         a.b.  Next pay to each insurer such insurer's projected

28  payout, which is the amount of reimbursement it is owed, up to

29  an amount equal to the insurer's share of the actual premium

30  paid for that contract year, multiplied by the actual

31  claims-paying capacity available for that contract year;

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 1  provided, entities created pursuant to s. 627.351 shall be

 2  further reimbursed in accordance with sub-subparagraph b. c.

 3         b.c.  Thereafter, establish the prorated reimbursement

 4  level at the highest level for which any remaining fund

 5  balance or bond proceeds are sufficient to reimburse entities

 6  created pursuant to s. 627.351 based on reimbursable losses

 7  exceeding the amounts payable pursuant to sub-subparagraph a.

 8  b. for the current contract year.

 9         (5)  REIMBURSEMENT PREMIUMS.--

10         (b)  The State Board of Administration shall select an

11  independent consultant to develop a formula for determining

12  the actuarially indicated premium to be paid to the fund. The

13  formula shall specify, for each zip code or other limited

14  geographical area, the amount of premium to be paid by an

15  insurer for each $1,000 of insured value under covered

16  policies in that zip code or other area. In establishing

17  premiums, the board shall consider the coverage elected under

18  paragraph (4)(b) and any factors that tend to enhance the

19  actuarial sophistication of ratemaking for the fund, including

20  deductibles, type of construction, type of coverage provided,

21  relative concentration of risks, a factor providing for more

22  rapid cash buildup in the fund until the fund capacity for a

23  single hurricane season is fully funded, and other such

24  factors deemed by the board to be appropriate. The formula may

25  provide for a procedure to determine the premiums to be paid

26  by new insurers that begin writing covered policies after the

27  beginning of a contract year, taking into consideration when

28  the insurer starts writing covered policies, the potential

29  exposure of the insurer, the potential exposure of the fund,

30  the administrative costs to the insurer and to the fund, and

31  any other factors deemed appropriate by the board. The formula

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 1  shall include a factor of 25 percent of the fund's actuarially

 2  indicated premium in order to provide for more rapid cash

 3  buildup in the fund. The formula must be approved by unanimous

 4  vote of the board. The board may, at any time, revise the

 5  formula pursuant to the procedure provided in this paragraph.

 6         (6)  REVENUE BONDS.--

 7         (a)  General provisions.--

 8         1.  Upon the occurrence of a hurricane and a

 9  determination that the moneys in the fund are or will be

10  insufficient to pay reimbursement at the levels promised in

11  the reimbursement contracts, the board may take the necessary

12  steps under paragraph (c) or paragraph (d) for the issuance of

13  revenue bonds for the benefit of the fund.  The proceeds of

14  such revenue bonds may be used to make reimbursement payments

15  under reimbursement contracts; to refinance or replace

16  previously existing borrowings or financial arrangements; to

17  pay interest on bonds; to fund reserves for the bonds; to pay

18  expenses incident to the issuance or sale of any bond issued

19  under this section, including costs of validating, printing,

20  and delivering the bonds, costs of printing the official

21  statement, costs of publishing notices of sale of the bonds,

22  and related administrative expenses; or for such other

23  purposes related to the financial obligations of the fund as

24  the board may determine. The term of the bonds may not exceed

25  30 years. The board may pledge or authorize the corporation to

26  pledge all or a portion of all revenues under subsection (5)

27  and under paragraph (b) to secure such revenue bonds and the

28  board may execute such agreements between the board and the

29  issuer of any revenue bonds and providers of other financing

30  arrangements under paragraph (7)(b) as the board deems

31  necessary to evidence, secure, preserve, and protect such

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 1  pledge. If reimbursement premiums received under subsection

 2  (5) or earnings on such premiums are used to pay debt service

 3  on revenue bonds, such premiums and earnings shall be used

 4  only after the use of the moneys derived from assessments

 5  under paragraph (b). The funds, credit, property, or taxing

 6  power of the state or political subdivisions of the state

 7  shall not be pledged for the payment of such bonds. The board

 8  may also enter into agreements under paragraph (c) or

 9  paragraph (d) for the purpose of issuing revenue bonds in the

10  absence of a hurricane upon a determination that such action

11  would maximize the ability of the fund to meet future

12  obligations.

13         2.  The Legislature finds and declares that the

14  issuance of bonds under this subsection is for the public

15  purpose of paying the proceeds of the bonds to insurers,

16  thereby enabling insurers to pay the claims of policyholders

17  to assure that policyholders are able to pay the cost of

18  construction, reconstruction, repair, restoration, and other

19  costs associated with damage to property of policyholders of

20  covered policies after the occurrence of a hurricane. Revenue

21  bonds may not be issued under this subsection until validated

22  under chapter 75. The validation of at least the first

23  obligations incurred pursuant to this subsection shall be

24  appealed to the Supreme Court, to be handled on an expedited

25  basis.

26         (b)  Emergency assessments.--

27         1.  If the board determines that the amount of revenue

28  produced under subsection (5) is insufficient to fund the

29  obligations, costs, and expenses of the fund and the

30  corporation, including repayment of revenue bonds and that

31  portion of the debt service coverage not met by reimbursement

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 1  premiums, the board shall direct the Office of Insurance

 2  Regulation to levy, by order, an emergency assessment on

 3  direct premiums for all property and casualty lines of

 4  business in this state, including property and casualty

 5  business of surplus lines insurers regulated under part VIII

 6  of chapter 626, but not including any workers' compensation

 7  premiums or medical malpractice premiums. As used in this

 8  subsection, the term "property and casualty business" includes

 9  all lines of business identified on Form 2, Exhibit of

10  Premiums and Losses, in the annual statement required of

11  authorized insurers by s. 624.424 and any rule adopted under

12  this section, except for those lines identified as accident

13  and health insurance and except for policies written under the

14  National Flood Insurance Program. The assessment shall be

15  specified as a percentage of direct written future premium

16  collections and is subject to annual adjustments by the board

17  to reflect changes in premiums subject to assessments

18  collected under this subparagraph in order to meet debt

19  obligations. The same percentage shall apply to all policies

20  in lines of business subject to the assessment issued or

21  renewed during the 12-month period beginning on the effective

22  date of the assessment.

23         2.  A premium is not subject to an annual assessment

24  under this paragraph in excess of 6 percent of premium with

25  respect to obligations arising out of losses attributable to

26  any one contract year, and a premium is not subject to an

27  aggregate annual assessment under this paragraph in excess of

28  10 percent of premium. An annual assessment under this

29  paragraph shall continue as long as until the revenue bonds

30  issued with respect to which the assessment was imposed are

31  outstanding, including any bonds the proceeds of which were

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 1  used to refund the revenue bonds, unless adequate provision

 2  has been made for the payment of the bonds under the documents

 3  authorizing issuance of the bonds.

 4         3.  Emergency assessments shall be collected from

 5  policyholders.  Emergency assessments shall be remitted by

 6  insurers as a percentage of direct written premium for the

 7  preceding calendar quarter as specified in the order from the

 8  Office of Insurance Regulation. With respect to each insurer

 9  collecting premiums that are subject to the assessment, the

10  insurer shall collect the assessment at the same time as it

11  collects the premium payment for each policy and shall remit

12  the assessment collected to the fund or corporation as

13  provided in the order issued by the Office of Insurance

14  Regulation. The office shall verify the accurate and timely

15  collection and remittance of emergency assessments and shall

16  report the information to the board in a form and at a time

17  specified by the board. Each insurer collecting assessments

18  shall provide the information with respect to premiums and

19  collections as may be required by the office to enable the

20  office to monitor and verify compliance with this paragraph.

21         4.  With respect to assessments of surplus lines

22  premiums, each surplus lines agent shall collect the

23  assessment at the same time as the agent collects the surplus

24  lines tax required by s. 626.932, and the surplus lines agent

25  shall remit the assessment to the Florida Surplus Lines

26  Service Office created by s. 626.921 at the same time as the

27  agent remits the surplus lines tax to the Florida Surplus

28  Lines Service Office. The emergency assessment on each insured

29  procuring coverage and filing under s. 626.938 shall be

30  remitted by the insured to the Florida Surplus Lines Service

31  Office at the time the insured pays the surplus lines tax to

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 1  the Florida Surplus Lines Service Office. The Florida Surplus

 2  Lines Service Office shall remit the collected assessments to

 3  the fund or corporation as provided in the order levied by the

 4  Office of Insurance Regulation. The Florida Surplus Lines

 5  Service Office shall verify the proper application of such

 6  emergency assessments and shall assist the board in ensuring

 7  the accurate and timely collection and remittance of

 8  assessments as required by the board. The Florida Surplus

 9  Lines Service Office shall annually calculate the aggregate

10  written premium on property and casualty business, other than

11  workers' compensation and medical malpractice, procured

12  through surplus lines agents and insureds procuring coverage

13  and filing under s. 626.938 and shall report the information

14  to the board in a form and at a time specified by the board.

15         5.  Any assessment authority not used for a particular

16  contract year may be used for a subsequent contract year. If,

17  for a subsequent contract year, the board determines that the

18  amount of revenue produced under subsection (5) is

19  insufficient to fund the obligations, costs, and expenses of

20  the fund and the corporation, including repayment of revenue

21  bonds and that portion of the debt service coverage not met by

22  reimbursement premiums, the board shall direct the Office of

23  Insurance Regulation to levy an emergency assessment up to an

24  amount not exceeding the amount of unused assessment authority

25  from a previous contract year or years, plus an additional 4

26  percent provided that the assessments in the aggregate do not

27  exceed the limits specified in subparagraph 2.

28         6.  The assessments otherwise payable to the

29  corporation under this paragraph shall be paid to the fund

30  unless and until the Office of Insurance Regulation and the

31  Florida Surplus Lines Service Office have received from the

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 1  corporation and the fund a notice, which shall be conclusive

 2  and upon which they may rely without further inquiry, that the

 3  corporation has issued bonds and the fund has no agreements in

 4  effect with local governments under paragraph (c). On or after

 5  the date of the notice and until the date the corporation has

 6  no bonds outstanding, the fund shall have no right, title, or

 7  interest in or to the assessments, except as provided in the

 8  fund's agreement with the corporation.

 9         7.  Emergency assessments are not premium and are not

10  subject to the premium tax, to the surplus lines tax, to any

11  fees, or to any commissions. An insurer is liable for all

12  assessments that it collects and must treat the failure of an

13  insured to pay an assessment as a failure to pay the premium.

14  An insurer is not liable for uncollectible assessments.

15         8.  When an insurer is required to return an unearned

16  premium, it shall also return any collected assessment

17  attributable to the unearned premium. A credit adjustment to

18  the collected assessment may be made by the insurer with

19  regard to future remittances that are payable to the fund or

20  corporation, but the insurer is not entitled to a refund.

21         9.  When a surplus lines insured or an insured who has

22  procured coverage and filed under s. 626.938 is entitled to

23  the return of an unearned premium, the Florida Surplus Lines

24  Service Office shall provide a credit or refund to the agent

25  or such insured for the collected assessment attributable to

26  the unearned premium prior to remitting the emergency

27  assessment collected to the fund or corporation.

28         10.  The exemption of medical malpractice insurance

29  premiums from emergency assessments under this paragraph is

30  repealed May 31, 2010 2007, and medical malpractice insurance

31  premiums shall be subject to emergency assessments

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 1  attributable to loss events occurring in the contract years

 2  commencing on June 1, 2010 2007.

 3         Section 2.  Effective July 1, 2006, section 215.558,

 4  Florida Statutes, is created to read:

 5         215.558  Home Retrofit Hardening Program.--The

 6  Department of Community Affairs shall establish the Home

 7  Retrofit Hardening Program. The program is a competitive grant

 8  program to fund improvements to homes constructed before the

 9  implementation of the current Florida Building Code to make

10  them less vulnerable to hurricane damage and to decrease the

11  cost of residential property insurance. Site-built homes,

12  manufactured homes, and mobile homes are eligible for funding

13  under this program. However, the highest priority shall be

14  given to low-income homeowners, as defined in s. 420.004(9),

15  who live in wind-borne debris regions as defined in the

16  Florida Building Code, which shall be eligible for up to 100

17  percent of the cost of the improvements. The next highest

18  priority shall be given to homestead dwellings insured at

19  $500,000 or less and located in the areas designated as

20  high-risk areas for purposes of coverage by the Citizens

21  Property Insurance Corporation, which shall be eligible for up

22  to 50 percent of the cost of the improvements, with priority

23  within this category given to homes insured by Citizens. The

24  next highest priority shall be given to all other homestead

25  dwellings insured at $500,000 or less, which shall be eligible

26  for up to 25 percent of the cost of the improvements.

27         (1)  The program shall be administered by local

28  governments, regional planning councils, or private nonprofit

29  agencies under the overall direction of the department. In

30  order to qualify for funding, the program must include an

31  inspection of the dwelling to determine what mitigation

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 1  measures are needed, a means for verifying that the

 2  improvements to be paid by the program have been demonstrated

 3  to reduce a dwelling's vulnerability to hurricane damage, and

 4  a means for verifying that the proceeds were actually spent on

 5  such improvements. Funding for the program is contingent upon

 6  appropriations. When awarding program funds, the department

 7  shall be guided by:

 8         (a)  The number of homes in need of improvement.

 9         (b)  The number of homes located within the wind-borne

10  debris region and within the high-risk area of Citizens

11  Property Insurance Corporation.

12         (c)  The number of persons who will benefit from the

13  improvements.

14         (d)  The number of low-income households and other

15  dwellings meeting the priority criteria of this section which

16  will benefit from the improvements.

17         (e)  The costs per home to provide improvements.

18         (2)  Funds may be used for the following improvements

19  installed in compliance with Blueprint-for-Safety standards:

20         (a)  Roof deck attachment;

21         (b)  Secondary water barrier;

22         (c)  Roof covering;

23         (d)  Brace gable ends;

24         (e)  Reinforce roof-to-wall connections;

25         (f)  Opening protection; and

26         (g)  Exterior doors, including garage doors.

27         (3)  Each project grant for an individual home retrofit

28  may not exceed $10,000.

29         (4)  Administrative costs shall be kept to a minimum

30  and may not exceed 5 percent of the program funding.

31  

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 1         (5)  Grantees are encouraged to leverage grant funds

 2  available under this program with other available funds.

 3  Matching funds for a project is not a requirement. However,

 4  matching funds from other available sources may be considered

 5  by the department in the competitive-review process.

 6         Section 3.  Effective July 1, 2006, section 215.5586,

 7  Florida Statutes, is created to read:

 8         215.5586  Wind certification and hurricane mitigation

 9  inspections.--

10         (1)  The purpose of this section is to provide wind

11  certification and hurricane mitigation inspections to eligible

12  homeowners in this state for assistance in retrofitting the

13  properties of those homeowners to become less vulnerable to

14  hurricane damage.

15         (2)  The Department of Community Affairs shall

16  establish a request for proposals to solicit proposals from

17  wind certification entities to provide, at no cost to

18  homeowners, wind certification and hurricane mitigation

19  inspections. The inspections provided to homeowners, at a

20  minimum, must include the following:

21         (a)  A home inspection and report that summarizes the

22  results and identifies corrective actions a homeowner may take

23  to mitigate hurricane damage.

24         (b)  A range of cost estimates regarding the mitigation

25  features.

26         (c)  Insurer-specific information regarding premium

27  discounts correlated to recommended mitigation features

28  identified by the inspection.

29         (d)  A hurricane resistance rating scale specifying the

30  home's current, as well as projected, wind resistance

31  capabilities.

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 1         (3)  To qualify for selection by the department as a

 2  provider of wind certification and hurricane mitigation

 3  inspections, the entity, at a minimum, must:

 4         (a)  Use wind certification and hurricane mitigation

 5  inspectors who have:

 6         1.  Prior experience in residential construction or

 7  inspection and have received specialized training in hurricane

 8  mitigation procedures.

 9         2.  Undergone drug testing and background checks.

10         3.  Been certified, in a manner satisfactory to the

11  department, to conduct the inspections.

12         (b)  Provide a quality assurance program including a

13  reinspection component.

14         (4)  The Department of Community Affairs shall adopt

15  rules pursuant to ss. 120.536(1) and 120.54 governing the wind

16  certification and wind mitigation inspection program.

17         Section 4.  Paragraph (a) of subsection (4) of section

18  193.155, Florida Statutes, is amended to read:

19         193.155  Homestead assessments.--Homestead property

20  shall be assessed at just value as of January 1, 1994.

21  Property receiving the homestead exemption after January 1,

22  1994, shall be assessed at just value as of January 1 of the

23  year in which the property receives the exemption.

24         (4)(a)  Changes, additions, or improvements to

25  homestead property shall be assessed at just value as of the

26  first January 1 after the changes, additions, or improvements

27  are substantially completed. However, the addition of storm

28  shutters, impact-resistant glazing, hurricane clips and

29  straps, garage door bracing, or generators for purposes of

30  mitigating hurricane damage and disaster preparedness shall

31  

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 1  not be included or otherwise increase the assessed value of

 2  homestead property.

 3         Section 5.  Section 252.63, Florida Statutes, is

 4  created to read:

 5         252.63  Commissioner of Insurance Regulation; powers in

 6  a state of emergency.--

 7         (1)  It is the purpose and intent of this section to

 8  provide the Commissioner of Insurance Regulation the authority

 9  to temporarily modify or suspend provisions of the Florida

10  Insurance Code in order to expedite the recovery of

11  communities affected by a disaster or other emergency and

12  encourage insurance companies, entities, and persons subject

13  to the Florida Insurance Code and the jurisdiction of the

14  office to meet the insurance needs of such communities.

15         (2)(a)  When the Governor declares a state of emergency

16  pursuant to s. 252.36, the commissioner may issue:

17         1.  One or more general orders applicable to all

18  insurance companies, entities, and persons, as defined in s.

19  624.04, which are subject to the Florida Insurance Code and

20  serve any portion of the area of the state under the state of

21  emergency; or

22         2.  One or more specific orders to particular insurance

23  companies, entities, and persons that are subject to the

24  Florida Insurance Code, as defined in s. 624.01, which orders

25  may modify or suspend, as to those companies, entities, and

26  persons, all or any part of the Florida Insurance Code, or any

27  applicable rule, consistent with the stated purposes of the

28  Florida Insurance Code.

29         (b)  An order issued by the commissioner under this

30  section becomes effective upon issuance and continues for 120

31  days unless terminated sooner by the commissioner. The

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 1  commissioner may extend an order for one additional period of

 2  120 days if he or she determines that the emergency conditions

 3  that gave rise to the initial order still exist. By concurrent

 4  resolution, the Legislature may terminate any order issued

 5  under this section.

 6         (3)  The commissioner shall publish in the next

 7  available publication of the Florida Administrative Weekly a

 8  copy of the text of any order issued under this section,

 9  together with a statement describing the modification or

10  suspension and explaining how the modification or suspension

11  will facilitate recovery from the emergency.

12         (4)  The commissioner shall consider on a continuing

13  basis steps that could be taken to mitigate the harmful

14  consequences of emergencies and from time to time make

15  recommendations to the Legislature and other appropriate

16  private entities regarding such mitigation.

17         Section 6.  Subsections (1) and (2) of section 626.918,

18  Florida Statutes, are amended to read:

19         626.918  Eligible surplus lines insurers.--

20         (1)  A No surplus lines agent may not shall place any

21  coverage with any unauthorized insurer which is not then an

22  eligible surplus lines insurer, except as permitted under

23  subsections (5) and (6).

24         (2)  An No unauthorized insurer may not shall be or

25  become an eligible surplus lines insurer unless made eligible

26  by the office in accordance with the following conditions:

27         (a)  Eligibility of the insurer must be requested in

28  writing by the Florida Surplus Lines Service Office.;

29         (b)  The insurer must be currently an authorized

30  insurer in the state or country of its domicile as to the kind

31  or kinds of insurance proposed to be so placed and must have

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 1  been such an insurer for not less than the 3 years next

 2  preceding or must be the wholly owned subsidiary of such

 3  authorized insurer or must be the wholly owned subsidiary of

 4  an already eligible surplus lines insurer as to the kind or

 5  kinds of insurance proposed for a period of not less than the

 6  3 years next preceding. However, the office may waive the

 7  3-year requirement if the insurer provides a product or

 8  service not readily available to the consumers of this state

 9  or has operated successfully for a period of at least 1 year

10  next preceding and has capital and surplus of not less than

11  $25 million.;

12         (c)  Before granting eligibility, the requesting

13  surplus lines agent or the insurer shall furnish the office

14  with a duly authenticated copy of its current annual financial

15  statement in the English language and with all monetary values

16  therein expressed in United States dollars, at an exchange

17  rate (in the case of statements originally made in the

18  currencies of other countries) then-current and shown in the

19  statement, and with such additional information relative to

20  the insurer as the office may request.;

21         (d)1.a.  The insurer must have and maintain surplus as

22  to policyholders of not less than $15 million; in addition, an

23  alien insurer must also have and maintain in the United States

24  a trust fund for the protection of all its policyholders in

25  the United States under terms deemed by the office to be

26  reasonably adequate, in an amount not less than $5.4 million.

27  Any such surplus as to policyholders or trust fund shall be

28  represented by investments consisting of eligible investments

29  for like funds of like domestic insurers under part II of

30  chapter 625 provided, however, that in the case of an alien

31  insurance company, any such surplus as to policyholders may be

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 1  represented by investments permitted by the domestic regulator

 2  of such alien insurance company if such investments are

 3  substantially similar in terms of quality, liquidity, and

 4  security to eligible investments for like funds of like

 5  domestic insurers under part II of chapter 625. Clean,

 6  irrevocable, unconditional, and evergreen letters of credit

 7  issued or confirmed by a qualified United States financial

 8  institution, as defined in subparagraph 2., may be used to

 9  fund the trust.;

10         b.2.  For those surplus lines insurers that were

11  eligible on January 1, 1994, and that maintained their

12  eligibility thereafter, the required surplus as to

13  policyholders shall be:

14         (I)a.  On December 31, 1994, and until December 30,

15  1995, $2.5 million.

16         (II)b.  On December 31, 1995, and until December 30,

17  1996, $3.5 million.

18         (III)c.  On December 31, 1996, and until December 30,

19  1997, $4.5 million.

20         (IV)d.  On December 31, 1997, and until December 30,

21  1998, $5.5 million.

22         (V)e.  On December 31, 1998, and until December 30,

23  1999, $6.5 million.

24         (VI)f.  On December 31, 1999, and until December 30,

25  2000, $8 million.

26         (VII)g.  On December 31, 2000, and until December 30,

27  2001, $9.5 million.

28         (VIII)h.  On December 31, 2001, and until December 30,

29  2002, $11 million.

30         (IX)i.  On December 31, 2002, and until December 30,

31  2003, $13 million.

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 1         (X)j.  On December 31, 2003, and thereafter, $15

 2  million.

 3         c.3.  The capital and surplus requirements as set forth

 4  in sub-subparagraph b. subparagraph 2. do not apply in the

 5  case of an insurance exchange created by the laws of

 6  individual states, where the exchange maintains capital and

 7  surplus pursuant to the requirements of that state, or

 8  maintains capital and surplus in an amount not less than $50

 9  million in the aggregate. For an insurance exchange which

10  maintains funds in the amount of at least $12 million for the

11  protection of all insurance exchange policyholders, each

12  individual syndicate shall maintain minimum capital and

13  surplus in an amount not less than $3 million. If the

14  insurance exchange does not maintain funds in the amount of at

15  least $12 million for the protection of all insurance exchange

16  policyholders, each individual syndicate shall meet the

17  minimum capital and surplus requirements set forth in

18  sub-subparagraph b. subparagraph 2.;

19         d.4.  A surplus lines insurer which is a member of an

20  insurance holding company that includes a member which is a

21  Florida domestic insurer as set forth in its holding company

22  registration statement, as set forth in s. 628.801 and rules

23  adopted thereunder, may elect to maintain surplus as to

24  policyholders in an amount equal to the requirements of s.

25  624.408, subject to the requirement that the surplus lines

26  insurer shall at all times be in compliance with the

27  requirements of chapter 625.

28  

29  The election shall be submitted to the office and shall be

30  effective upon the office's being satisfied that the

31  requirements of sub-subparagraph d. subparagraph 4. have been

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 1  met. The initial date of election shall be the date of office

 2  approval. The election approval application shall be on a form

 3  adopted by commission rule. The office may approve an election

 4  form submitted pursuant to sub-subparagraph d. subparagraph 4.

 5  only if it was on file with the former Department of Insurance

 6  before February 28, 1998.;

 7         2.  For purposes of letters of credit under

 8  subparagraph 1., the term "qualified United States financial

 9  institution" means an institution that:

10         a.  Is organized or, in the case of a United States

11  office of a foreign banking organization, is licensed under

12  the laws of the United States or any state.

13         b.  Is regulated, supervised, and examined by

14  authorities of the United States or any state having

15  regulatory authority over banks and trust companies.

16         c.  Has been determined by the office or the Securities

17  Valuation Office of the National Association of Insurance

18  Commissioners to meet such standards of financial condition

19  and standing as are considered necessary and appropriate to

20  regulate the quality of financial institutions whose letters

21  of credit are acceptable to the office.

22         (e)  The insurer must be of good reputation as to the

23  providing of service to its policyholders and the payment of

24  losses and claims.;

25         (f)  The insurer must be eligible, as for authority to

26  transact insurance in this state, under s. 624.404(3).; and

27         (g)  This subsection does not apply as to unauthorized

28  insurers made eligible under s. 626.917 as to wet marine and

29  aviation risks.

30         Section 7.  Effective July 1, 2006, paragraphs (a) and

31  (b) of subsection (2) and subsection (5) of section 627.062,

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 1  Florida Statutes, are amended, and subsection (9) is added to

 2  that section, to read:

 3         627.062  Rate standards.--

 4         (2)  As to all such classes of insurance:

 5         (a)  Insurers or rating organizations shall establish

 6  and use rates, rating schedules, or rating manuals to allow

 7  the insurer a reasonable rate of return on such classes of

 8  insurance written in this state.  A copy of rates, rating

 9  schedules, rating manuals, premium credits or discount

10  schedules, and surcharge schedules, and changes thereto, shall

11  be filed with the office under one of the following

12  procedures:

13         1.  If the filing is made at least 90 days before the

14  proposed effective date and the filing is not implemented

15  during the office's review of the filing and any proceeding

16  and judicial review, then such filing shall be considered a

17  "file and use" filing.  In such case, the office shall

18  finalize its review by issuance of a notice of intent to

19  approve or a notice of intent to disapprove within 90 days

20  after receipt of the filing. The notice of intent to approve

21  and the notice of intent to disapprove constitute agency

22  action for purposes of the Administrative Procedure Act.

23  Requests for supporting information, requests for mathematical

24  or mechanical corrections, or notification to the insurer by

25  the office of its preliminary findings shall not toll the

26  90-day period during any such proceedings and subsequent

27  judicial review. The rate shall be deemed approved if the

28  office does not issue a notice of intent to approve or a

29  notice of intent to disapprove within 90 days after receipt of

30  the filing.

31  

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 1         2.  If the filing is not made in accordance with the

 2  provisions of subparagraph 1., such filing shall be made as

 3  soon as practicable, but no later than 30 days after the

 4  effective date, and shall be considered a "use and file"

 5  filing.  An insurer making a "use and file" filing is

 6  potentially subject to an order by the office to return to

 7  policyholders portions of rates found to be excessive, as

 8  provided in paragraph (h).

 9         3.  The chief executive officer and the chief financial

10  officer of each property insurer, or its certified public

11  accountant acting on its behalf, shall sign a statement of

12  certification, sworn under oath, to accompany the rate filing.

13  The statement must certify the appropriateness of the

14  information provided in the rate filing and that the

15  information fairly presents, in all material respects, the

16  basis of the rate filing submitted by the property and

17  casualty insurer. The insurer shall certify all of the

18  information and factors described in paragraph (b), including,

19  but not limited to, investment income. The Office of Insurance

20  Regulation shall adopt by rule the form for the statement of

21  certification. Failure to provide the statement of

22  certification shall result in the rate filing being

23  disapproved without prejudice to be refiled.

24         (b)  Upon receiving a rate filing, the office shall

25  review the rate filing to determine if a rate is excessive,

26  inadequate, or unfairly discriminatory.  In making that

27  determination, the office shall, in accordance with generally

28  accepted and reasonable actuarial techniques, consider the

29  following factors:

30         1.  Past and prospective loss experience within and

31  without this state.

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 1         2.  Past and prospective expenses.

 2         3.  The degree of competition among insurers for the

 3  risk insured.

 4         4.  Investment income reasonably expected by the

 5  insurer, consistent with the insurer's investment practices,

 6  from investable premiums anticipated in the filing, plus any

 7  other expected income from currently invested assets

 8  representing the amount expected on unearned premium reserves

 9  and loss reserves.  The commission may adopt rules utilizing

10  reasonable techniques of actuarial science and economics to

11  specify the manner in which insurers shall calculate

12  investment income attributable to such classes of insurance

13  written in this state and the manner in which such investment

14  income shall be used in the calculation of insurance rates.

15  Such manner shall contemplate allowances for an underwriting

16  profit factor and full consideration of investment income

17  which produce a reasonable rate of return; however, investment

18  income from invested surplus shall not be considered.

19         5.  The reasonableness of the judgment reflected in the

20  filing.

21         6.  Dividends, savings, or unabsorbed premium deposits

22  allowed or returned to Florida policyholders, members, or

23  subscribers.

24         7.  The adequacy of loss reserves.

25         8.  The cost of reinsurance, as further specified in

26  subsection (5).

27         9.  Trend factors, including trends in actual losses

28  per insured unit for the insurer making the filing.

29         10.  Conflagration and catastrophe hazards, if

30  applicable.

31  

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 1         11.  A reasonable margin for underwriting profit and

 2  contingencies.

 3         12.  The cost of medical services, if applicable.

 4         13.  Other relevant factors which impact upon the

 5  frequency or severity of claims or upon expenses.

 6  

 7  The provisions of this subsection shall not apply to workers'

 8  compensation and employer's liability insurance and to motor

 9  vehicle insurance.

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

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

12  reimbursement premium to the Florida Hurricane Catastrophe

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

14  premiums any reimbursement premiums paid to the Florida

15  Hurricane Catastrophe Fund, together with reasonable costs of

16  other reinsurance consistent with prudent business practices

17  and sound actuarial principles, but may not recoup reinsurance

18  costs that duplicate coverage provided by the Florida

19  Hurricane Catastrophe Fund. The burden is on the office to

20  establish that any costs of other reinsurance are in excess of

21  amounts consistent with prudent business practices and sound

22  actuarial principles. An insurer may not recoup more than 1

23  year of reimbursement premium at a time. Any under-recoupment

24  from the prior year may be added to the following year's

25  reimbursement premium and any over-recoupment shall be

26  subtracted from the following year's reimbursement premium.

27         (9)  The burden is on the office to establish that

28  rates are excessive for personal lines residential coverage

29  with a dwelling replacement cost of $1 million or more or for

30  a single condominium unit with a combined dwelling and

31  contents replacement cost of $1 million or more.

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 1         Section 8.  Section 627.06281, Florida Statutes, is

 2  amended to read:

 3         627.06281  Public hurricane loss projection model;

 4  reporting of data by insurers.--

 5         (1)  Within 30 days after a written request for loss

 6  data and associated exposure data by the office or a type I

 7  center within the State University System established to study

 8  mitigation, residential property insurers and licensed rating

 9  and advisory organizations that compile residential property

10  insurance loss data shall provide loss data and associated

11  exposure data for residential property insurance policies to

12  the office or to a type I center within the State University

13  System established to study mitigation, as directed by the

14  office, for the purposes of developing, maintaining, and

15  updating a public model for hurricane loss projections. The

16  loss data and associated exposure data provided shall be in

17  writing.

18         (2)  The public model must be submitted to the Florida

19  Commission on Hurricane Loss Projection Methodology for review

20  under s. 627.0628. The office may continue to use the model

21  for its review of rate filings pursuant to ss. 627.062 and

22  627.351 until such time as the Florida Commission on Hurricane

23  Loss Projection Methodology determines that the public model

24  is not accurate or reliable pursuant to the same process and

25  standards as the commission uses for the review of other

26  hurricane loss projection models.

27         Section 9.  Effective July 1, 2006, subsection (6) of

28  section 627.351, Florida Statutes, is amended to read:

29         627.351  Insurance risk apportionment plans.--

30         (6)  CITIZENS PROPERTY INSURANCE CORPORATION.--

31  

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

 2  catastrophic losses to property in this state from hurricanes

 3  have caused insurers to be unwilling or unable to provide

 4  property insurance coverage to the extent sought and needed.

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

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

 7  facilitate the remediation, reconstruction, and replacement of

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

 9  negative effects otherwise resulting to the public health,

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

11  revenues of the state and local governments needed to provide

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

13  property insurance to applicants who are in good faith

14  entitled to procure insurance through the voluntary market but

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

16  subsection that property insurance be provided and that it

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

18  to achieve efficiencies and economies, while providing service

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

20  the quality generally provided in the voluntary market, all

21  toward the achievement of the foregoing public purposes.

22  Because it is essential for the corporation to have the

23  maximum financial resources to pay claims following a

24  catastrophic hurricane, it is the intent of the Legislature

25  that the income of the corporation be exempt from federal

26  income taxation and that interest on the debt obligations

27  issued by the corporation be exempt from federal income

28  taxation.

29         2.  The Residential Property and Casualty Joint

30  Underwriting Association originally created by this statute

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

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 1  Insurance Corporation. The corporation shall provide insurance

 2  for residential and commercial property, for applicants who

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

 4  insurance through the voluntary market. The corporation shall

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

 6  the Financial Services Commission office. The plan is subject

 7  to continuous review by the commission office. The commission

 8  office may, by order, withdraw approval of all or part of a

 9  plan if the commission office determines that conditions have

10  changed since approval was granted and that the purposes of

11  the plan require changes in the plan. The corporation shall

12  continue to operate pursuant to the plan of operation approved

13  by the Office of Insurance Regulation until October 1, 2006.

14  For the purposes of this subsection, residential coverage

15  includes both personal lines residential coverage, which

16  consists of the type of coverage provided by homeowner's,

17  mobile home owner's, dwelling, tenant's, condominium unit

18  owner's, and similar policies, and commercial lines

19  residential coverage, which consists of the type of coverage

20  provided by condominium association, apartment building, and

21  similar policies.

22         3.  For the purposes of this subsection, the term

23  "homestead property" means:

24         a.  Property that has been granted a homestead

25  exemption under chapter 196;

26         b.  Property for which the owner has a current, written

27  lease with a renter for a term of at least 6 months and for

28  which the dwelling is insured by the corporation for $200,000

29  or less;

30         c.  An owner-occupied mobile home or manufactured home,

31  as defined in s. 320.01, which is permanently affixed to real

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 1  property, is owned by a Florida resident, and has been granted

 2  a homestead exemption under chapter 196 or, if the owner does

 3  not own the real property, the owner certifies that the mobile

 4  home or manufactured home is his or her principal place of

 5  residence.

 6         d.  Tenants coverage; or

 7         e.  Commercial lines coverage, including both

 8  residential and nonresidential.

 9         4.  For the purposes of this subsection, the term

10  "nonhomestead property" means property that is not homestead

11  property.

12         5.  Effective July 1, 2011, a personal lines

13  residential structure with a dwelling replacement cost of $1

14  million or more, or a single condominium unit with combined

15  dwelling and content replacement cost of $1 million or more,

16  is not eligible for coverage by the corporation.

17         6.3.  It is the intent of the Legislature that

18  policyholders, applicants, and agents of the corporation

19  receive service and treatment of the highest possible level

20  but never less than that generally provided in the voluntary

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

22  service standards no less than those applied to insurers in

23  the voluntary market by the office with respect to

24  responsiveness, timeliness, customer courtesy, and overall

25  dealings with policyholders, applicants, or agents of the

26  corporation.

27         (b)1.  All insurers authorized to write one or more

28  subject lines of business in this state are subject to

29  assessment by the corporation and, for the purposes of this

30  subsection, are referred to collectively as "assessable

31  insurers." Insurers writing one or more subject lines of

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 1  business in this state pursuant to part VIII of chapter 626

 2  are not assessable insurers, but insureds who procure one or

 3  more subject lines of business in this state pursuant to part

 4  VIII of chapter 626 are subject to assessment by the

 5  corporation and are referred to collectively as "assessable

 6  insureds." An authorized insurer's assessment liability shall

 7  begin on the first day of the calendar year following the year

 8  in which the insurer was issued a certificate of authority to

 9  transact insurance for subject lines of business in this state

10  and shall terminate 1 year after the end of the first calendar

11  year during which the insurer no longer holds a certificate of

12  authority to transact insurance for subject lines of business

13  in this state.

14         2.a.  All revenues, assets, liabilities, losses, and

15  expenses of the corporation shall be divided into three

16  separate accounts as follows:

17         (I)  A personal lines account for personal residential

18  policies issued by the corporation or issued by the

19  Residential Property and Casualty Joint Underwriting

20  Association and renewed by the corporation that provide

21  comprehensive, multiperil coverage on risks that are not

22  located in areas eligible for coverage in the Florida

23  Windstorm Underwriting Association as those areas were defined

24  on January 1, 2002, and for such policies that do not provide

25  coverage for the peril of wind on risks that are located in

26  such areas;

27         (II)  A commercial lines account for commercial

28  residential policies issued by the corporation or issued by

29  the Residential Property and Casualty Joint Underwriting

30  Association and renewed by the corporation that provide

31  coverage for basic property perils on risks that are not

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 1  located in areas eligible for coverage in the Florida

 2  Windstorm Underwriting Association as those areas were defined

 3  on January 1, 2002, and for such policies that do not provide

 4  coverage for the peril of wind on risks that are located in

 5  such areas; and

 6         (III)  A high-risk account for personal residential

 7  policies and commercial residential and commercial

 8  nonresidential property policies issued by the corporation or

 9  transferred to the corporation that provide coverage for the

10  peril of wind on risks that are located in areas eligible for

11  coverage in the Florida Windstorm Underwriting Association as

12  those areas were defined on January 1, 2002. The high-risk

13  account must also include quota share primary insurance under

14  subparagraph (c)2. The area eligible for coverage under the

15  high-risk account also includes the area within Port

16  Canaveral, which is bordered on the south by the City of Cape

17  Canaveral, bordered on the west by the Banana River, and

18  bordered on the north by Federal Government property. The

19  office may remove territory from the area eligible for

20  wind-only and quota share coverage if, after a public hearing,

21  the office finds that authorized insurers in the voluntary

22  market are willing and able to write sufficient amounts of

23  personal and commercial residential coverage for all perils in

24  the territory, including coverage for the peril of wind, such

25  that risks covered by wind-only policies in the removed

26  territory could be issued a policy by the corporation in

27  either the personal lines or commercial lines account without

28  a significant increase in the corporation's probable maximum

29  loss in such account. Removal of territory from the area

30  eligible for wind-only or quota share coverage does not alter

31  

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 1  the assignment of wind coverage written in such areas to the

 2  high-risk account.

 3         b.  The three separate accounts must be maintained as

 4  long as financing obligations entered into by the Florida

 5  Windstorm Underwriting Association or Residential Property and

 6  Casualty Joint Underwriting Association are outstanding, in

 7  accordance with the terms of the corresponding financing

 8  documents. When the financing obligations are no longer

 9  outstanding, in accordance with the terms of the corresponding

10  financing documents, the corporation may use a single account

11  for all revenues, assets, liabilities, losses, and expenses of

12  the corporation. Consistent with the requirement of this

13  subparagraph and prudent investment policies that minimize the

14  cost of carrying debt, the board shall exercise its best

15  efforts to retire existing debt or to obtain approval of

16  necessary parties to amend the terms of existing debt, so as

17  to structure the most efficient plan to consolidate the three

18  separate accounts into a single account. By February 1, 2007,

19  the board shall submit a report to the Financial Services

20  Commission, the President of the Senate, and the Speaker of

21  the House of Representatives which includes an analysis of

22  consolidating the accounts, the actions the board has taken to

23  minimize the cost of carrying debt, and its recommendations

24  for executing the most efficient plan.

25         c.  Creditors of the Residential Property and Casualty

26  Joint Underwriting Association shall have a claim against, and

27  recourse to, the accounts referred to in sub-sub-subparagraphs

28  a.(I) and (II) and shall have no claim against, or recourse

29  to, the account referred to in sub-sub-subparagraph a.(III).

30  Creditors of the Florida Windstorm Underwriting Association

31  shall have a claim against, and recourse to, the account

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 1  referred to in sub-sub-subparagraph a.(III) and shall have no

 2  claim against, or recourse to, the accounts referred to in

 3  sub-sub-subparagraphs a.(I) and (II).

 4         d.  Revenues, assets, liabilities, losses, and expenses

 5  not attributable to particular accounts shall be prorated

 6  among the accounts.

 7         e.  The Legislature finds that the revenues of the

 8  corporation are revenues that are necessary to meet the

 9  requirements set forth in documents authorizing the issuance

10  of bonds under this subsection.

11         f.  No part of the income of the corporation may inure

12  to the benefit of any private person.

13         3.  With respect to a deficit in an account:

14         a.  When the deficit incurred in a particular calendar

15  year is not greater than 10 percent of the aggregate statewide

16  direct written premium for the subject lines of business for

17  the prior calendar year, the entire deficit shall be recovered

18  through regular assessments of assessable insurers under

19  paragraph (p) (g) and assessable insureds.

20         b.  When the deficit incurred in a particular calendar

21  year exceeds 10 percent of the aggregate statewide direct

22  written premium for the subject lines of business for the

23  prior calendar year, the corporation shall levy regular

24  assessments on assessable insurers under paragraph (p) (g) and

25  on assessable insureds in an amount equal to the greater of 10

26  percent of the deficit or 10 percent of the aggregate

27  statewide direct written premium for the subject lines of

28  business for the prior calendar year. Any remaining deficit

29  shall be recovered through emergency assessments under

30  sub-subparagraph d.

31  

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 1         c.  Each assessable insurer's share of the amount being

 2  assessed under sub-subparagraph a. or sub-subparagraph b.

 3  shall be in the proportion that the assessable insurer's

 4  direct written premium for the subject lines of business for

 5  the year preceding the assessment bears to the aggregate

 6  statewide direct written premium for the subject lines of

 7  business for that year. The assessment percentage applicable

 8  to each assessable insured is the ratio of the amount being

 9  assessed under sub-subparagraph a. or sub-subparagraph b. to

10  the aggregate statewide direct written premium for the subject

11  lines of business for the prior year. Assessments levied by

12  the corporation on assessable insurers under sub-subparagraphs

13  a. and b. shall be paid as required by the corporation's plan

14  of operation and paragraph (p) (g). Notwithstanding any other

15  provision of this subsection, the aggregate amount of a

16  regular assessment for a deficit incurred in a particular

17  calendar year shall be reduced by the estimated amount to be

18  received by the corporation from surcharges on corporation

19  policyholders under subparagraph (c)11. Assessments levied by

20  the corporation on assessable insureds under sub-subparagraphs

21  a. and b. shall be collected by the surplus lines agent at the

22  time the surplus lines agent collects the surplus lines tax

23  required by s. 626.932 and shall be paid to the Florida

24  Surplus Lines Service Office at the time the surplus lines

25  agent pays the surplus lines tax to the Florida Surplus Lines

26  Service Office. Upon receipt of regular assessments from

27  surplus lines agents, the Florida Surplus Lines Service Office

28  shall transfer the assessments directly to the corporation as

29  determined by the corporation.

30         d.  Upon a determination by the board of governors that

31  a deficit in an account exceeds the amount that will be

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 1  recovered through regular assessments under sub-subparagraph

 2  a. or sub-subparagraph b., the board shall levy, after

 3  verification by the office, emergency assessments, for as many

 4  years as necessary to cover the deficits, to be collected by

 5  assessable insurers and the corporation and collected from

 6  assessable insureds upon issuance or renewal of policies for

 7  subject lines of business, excluding National Flood Insurance

 8  policies. The amount of the emergency assessment collected in

 9  a particular year shall be a uniform percentage of that year's

10  direct written premium for subject lines of business and all

11  accounts of the corporation, excluding National Flood

12  Insurance Program policy premiums, as annually determined by

13  the board and verified by the office. The office shall verify

14  the arithmetic calculations involved in the board's

15  determination within 30 days after receipt of the information

16  on which the determination was based. Notwithstanding any

17  other provision of law, the corporation and each assessable

18  insurer that writes subject lines of business shall collect

19  emergency assessments from its policyholders without such

20  obligation being affected by any credit, limitation,

21  exemption, or deferment. Emergency assessments levied by the

22  corporation on assessable insureds shall be collected by the

23  surplus lines agent at the time the surplus lines agent

24  collects the surplus lines tax required by s. 626.932 and

25  shall be paid to the Florida Surplus Lines Service Office at

26  the time the surplus lines agent pays the surplus lines tax to

27  the Florida Surplus Lines Service Office. The emergency

28  assessments so collected shall be transferred directly to the

29  corporation on a periodic basis as determined by the

30  corporation and shall be held by the corporation solely in the

31  applicable account. The aggregate amount of emergency

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 1  assessments levied for an account under this sub-subparagraph

 2  in any calendar year may not exceed the greater of 10 percent

 3  of the amount needed to cover the original deficit, plus

 4  interest, fees, commissions, required reserves, and other

 5  costs associated with financing of the original deficit, or 10

 6  percent of the aggregate statewide direct written premium for

 7  subject lines of business and for all accounts of the

 8  corporation for the prior year, plus interest, fees,

 9  commissions, required reserves, and other costs associated

10  with financing the original deficit.

11         e.  The corporation may pledge the proceeds of

12  assessments, projected recoveries from the Florida Hurricane

13  Catastrophe Fund, other insurance and reinsurance

14  recoverables, policyholder market equalization surcharges and

15  other surcharges, and other funds available to the corporation

16  as the source of revenue for and to secure bonds issued under

17  paragraph (p) (g), bonds or other indebtedness issued under

18  subparagraph (c)3., or lines of credit or other financing

19  mechanisms issued or created under this subsection, or to

20  retire any other debt incurred as a result of deficits or

21  events giving rise to deficits, or in any other way that the

22  board determines will efficiently recover such deficits. The

23  purpose of the lines of credit or other financing mechanisms

24  is to provide additional resources to assist the corporation

25  in covering claims and expenses attributable to a catastrophe.

26  As used in this subsection, the term "assessments" includes

27  regular assessments under sub-subparagraph a.,

28  sub-subparagraph b., or subparagraph (p)1. (g)1. and emergency

29  assessments under sub-subparagraph d. Emergency assessments

30  collected under sub-subparagraph d. are not part of an

31  insurer's rates, are not premium, and are not subject to

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 1  premium tax, fees, or commissions; however, failure to pay the

 2  emergency assessment shall be treated as failure to pay

 3  premium. The emergency assessments under sub-subparagraph d.

 4  shall continue as long as any bonds issued or other

 5  indebtedness incurred with respect to a deficit for which the

 6  assessment was imposed remain outstanding, unless adequate

 7  provision has been made for the payment of such bonds or other

 8  indebtedness pursuant to the documents governing such bonds or

 9  other indebtedness.

10         f.  As used in this subsection, the term "subject lines

11  of business" means insurance written by assessable insurers or

12  procured by assessable insureds on real or personal property,

13  as defined in s. 624.604, including insurance for fire,

14  industrial fire, allied lines, farmowners multiperil,

15  homeowners multiperil, commercial multiperil, and mobile

16  homes, and including liability coverage on all such insurance,

17  but excluding inland marine as defined in s. 624.607(3) and

18  excluding vehicle insurance as defined in s. 624.605(1) other

19  than insurance on mobile homes used as permanent dwellings.

20         g.  The Florida Surplus Lines Service Office shall

21  determine annually the aggregate statewide written premium in

22  subject lines of business procured by assessable insureds and

23  shall report that information to the corporation in a form and

24  at a time the corporation specifies to ensure that the

25  corporation can meet the requirements of this subsection and

26  the corporation's financing obligations.

27         h.  The Florida Surplus Lines Service Office shall

28  verify the proper application by surplus lines agents of

29  assessment percentages for regular assessments and emergency

30  assessments levied under this subparagraph on assessable

31  insureds and shall assist the corporation in ensuring the

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 1  accurate, timely collection and payment of assessments by

 2  surplus lines agents as required by the corporation.

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

 4         1.  Must provide for adoption of residential property

 5  and casualty insurance policy forms and commercial residential

 6  and nonresidential property insurance forms, which forms must

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

 8  adopt the following policy forms:

 9         a.  Standard personal lines policy forms that are

10  comprehensive multiperil policies providing full coverage of a

11  residential property equivalent to the coverage provided in

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

13  policy.

14         b.  Basic personal lines policy forms that are policies

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

16  provide coverage meeting the requirements of the secondary

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

18  coverage under a standard policy.

19         c.  Commercial lines residential policy forms that are

20  generally similar to the basic perils of full coverage

21  obtainable for commercial residential structures in the

22  admitted voluntary market.

23         d.  Personal lines and commercial lines residential

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

25  The forms are applicable only to residential properties

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

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

28         e.  Commercial lines nonresidential property insurance

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

30  applicable only to nonresidential properties located in areas

31  

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

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

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

 4  in which the corporation and authorized insurers enter into

 5  quota share primary insurance agreements for hurricane

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

 7  and adopt property insurance forms for eligible risks which

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

 9  term:

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

11  arrangement in which the primary hurricane coverage of an

12  eligible risk is provided in specified percentages by the

13  corporation and an authorized insurer. The corporation and

14  authorized insurer are each solely responsible for a specified

15  percentage of hurricane coverage of an eligible risk as set

16  forth in a quota share primary insurance agreement between the

17  corporation and an authorized insurer and the insurance

18  contract. The responsibility of the corporation or authorized

19  insurer to pay its specified percentage of hurricane losses of

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

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

22  the other party to the agreement to pay its specified

23  percentage of hurricane losses. Eligible risks that are

24  provided hurricane coverage through a quota share primary

25  insurance arrangement must be provided policy forms that set

26  forth the obligations of the corporation and authorized

27  insurer under the arrangement, clearly specify the percentages

28  of quota share primary insurance provided by the corporation

29  and authorized insurer, and conspicuously and clearly state

30  that neither the authorized insurer nor the corporation may be

31  

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 1  held responsible beyond its specified percentage of coverage

 2  of hurricane losses.

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

 4  and commercial lines residential risks that meet the

 5  underwriting criteria of the corporation and are located in

 6  areas that were eligible for coverage by the Florida Windstorm

 7  Underwriting Association on January 1, 2002.

 8         b.  The corporation may enter into quota share primary

 9  insurance agreements with authorized insurers at corporation

10  coverage levels of 90 percent and 50 percent.

11         c.  If the corporation determines that additional

12  coverage levels are necessary to maximize participation in

13  quota share primary insurance agreements by authorized

14  insurers, the corporation may establish additional coverage

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

16  insurance coverage level may not exceed 90 percent.

17         d.  Any quota share primary insurance agreement entered

18  into between an authorized insurer and the corporation must

19  provide for a uniform specified percentage of coverage of

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

21  corporation board, for all eligible risks of the authorized

22  insurer covered under the quota share primary insurance

23  agreement.

24         e.  Any quota share primary insurance agreement entered

25  into between an authorized insurer and the corporation is

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

27  agreement shall be authorized only as to insurance contracts

28  entered into between an authorized insurer and an insured who

29  is already insured by the corporation for wind coverage.

30         f.  For all eligible risks covered under quota share

31  primary insurance agreements, the exposure and coverage levels

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 1  for both the corporation and authorized insurers shall be

 2  reported by the corporation to the Florida Hurricane

 3  Catastrophe Fund. For all policies of eligible risks covered

 4  under quota share primary insurance agreements, the

 5  corporation and the authorized insurer shall maintain complete

 6  and accurate records for the purpose of exposure and loss

 7  reimbursement audits as required by Florida Hurricane

 8  Catastrophe Fund rules. The corporation and the authorized

 9  insurer shall each maintain duplicate copies of policy

10  declaration pages and supporting claims documents.

11         g.  The corporation board shall establish in its plan

12  of operation standards for quota share agreements which ensure

13  that there is no discriminatory application among insurers as

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

15  agreements, incentive provisions if any, and consideration

16  paid for servicing policies or adjusting claims.

17         h.  The quota share primary insurance agreement between

18  the corporation and an authorized insurer must set forth the

19  specific terms under which coverage is provided, including,

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

21  under the agreement by the insurance agent of the authorized

22  insurer producing the business, the reporting of information

23  concerning eligible risks, the payment of premium to the

24  corporation, and arrangements for the adjustment and payment

25  of hurricane claims incurred on eligible risks by the claims

26  adjuster and personnel of the authorized insurer. Entering

27  into a quota sharing insurance agreement between the

28  corporation and an authorized insurer shall be voluntary and

29  at the discretion of the authorized insurer.

30         3.  May provide that the corporation may employ or

31  otherwise contract with individuals or other entities to

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 1  provide administrative or professional services that may be

 2  appropriate to effectuate the plan. The corporation shall have

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

 4  other indebtedness, and shall have other powers reasonably

 5  necessary to effectuate the requirements of this subsection,

 6  including, without limitation, the power to issue bonds and

 7  incur other indebtedness in order to refinance outstanding

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

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

10  indebtedness under chapter 75. The corporation may issue bonds

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

12  behalf by a unit of local government pursuant to subparagraph

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

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

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

16  efficiently meet the financial obligations of the corporation

17  and that such financings are reasonably necessary to

18  effectuate the requirements of this subsection. The

19  corporation is authorized to take all actions needed to

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

21  including formation of trusts or other affiliated entities.

22  The corporation shall have the authority to pledge

23  assessments, projected recoveries from the Florida Hurricane

24  Catastrophe Fund, other reinsurance recoverables, market

25  equalization and other surcharges, and other funds available

26  to the corporation as security for bonds or other

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

28  Constitution, prohibiting the impairment of obligations of

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

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

31  

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 1  financing agreement or any revenue source committed by

 2  contract to such bond or other indebtedness.

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

 4  to the supervision and approval of a board of governors

 5  consisting of 8 individuals who are residents of this state,

 6  from different geographical areas of this state. The Governor,

 7  the Chief Financial Officer, the President of the Senate, and

 8  the Speaker of the House of Representatives shall each appoint

 9  two members of the board, effective August 1, 2005. At least

10  one of the two members appointed by each appointing officer

11  must have demonstrated expertise in insurance. The Chief

12  Financial Officer shall designate one of the appointees as

13  chair. All board members serve at the pleasure of the

14  appointing officer. All board members, including the chair,

15  must be appointed to serve for 3-year terms beginning annually

16  on a date designated by the plan. Any board vacancy shall be

17  filled for the unexpired term by the appointing officer. The

18  Chief Financial Officer shall appoint a technical advisory

19  group to provide information and advice to the board of

20  governors in connection with the board's duties under this

21  subsection. The executive director and senior managers of the

22  corporation shall be engaged by the board, as recommended by

23  the Chief Financial Officer, and serve at the pleasure of the

24  board. Any executive director appointed on or after July 1,

25  2006, is subject to confirmation by the Senate. The executive

26  director is responsible for employing other staff as the

27  corporation may require, subject to review and concurrence by

28  the board and the Chief Financial Officer.

29         b.  The board shall create a Market Accountability

30  Advisory Committee to assist the corporation in developing

31  awareness of its rates and its customer and agent service

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 1  levels in relationship to the voluntary market insurers

 2  writing similar coverage. The members of the advisory

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

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

 5  four representatives, one appointed by the Florida Association

 6  of Insurance Agents, one by the Florida Association of

 7  Insurance and Financial Advisors, one by the Professional

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

 9  Association of Insurance Agencies; three representatives

10  appointed by the insurers with the three highest voluntary

11  market share of residential property insurance business in the

12  state; one representative from the Office of Insurance

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

14  by the corporation at the time of appointment to the

15  committee; one representative appointed by the Florida

16  Association of Realtors; and one representative appointed by

17  the Florida Bankers Association. All members must serve for

18  3-year terms and may serve for consecutive terms. The

19  committee shall report to the corporation at each board

20  meeting on insurance market issues which may include rates and

21  rate competition with the voluntary market; service, including

22  policy issuance, claims processing, and general responsiveness

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

24  to depopulation.

25         5.  Must provide a procedure for determining the

26  eligibility of a risk for coverage, as follows:

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

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

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

30  approved rate under either a standard policy including wind

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

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

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

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

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

 5  including wind coverage or a basic policy including wind

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

 7  not be insured under a standard policy including wind coverage

 8  regardless of market conditions, the risk shall be eligible

 9  for a basic policy including wind coverage unless rejected

10  under subparagraph 8. The corporation shall determine the type

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

12  specified in the underwriting manual and based on generally

13  accepted underwriting practices.

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

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

16  mechanism established by the corporation before a policy is

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

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

19  who submitted the application to the plan or to the

20  corporation is not currently appointed by the insurer, the

21  insurer shall:

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

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

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

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

26  commission of the corporation; or

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

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

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

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

31  commission for the type of policy written.

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 1  

 2  If the producing agent is unwilling or unable to accept

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

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

 5         (II)  When the corporation enters into a contractual

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

 7  of the corporation policy is entitled to retain any unearned

 8  commission on the policy, and the insurer shall:

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

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

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

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

13  customary commission of the corporation; or

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

15  the corporation policy to continue servicing the policy for a

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

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

18  customary commission for the type of policy written.

19  

20  If the producing agent is unwilling or unable to accept

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

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

23         b.  With respect to commercial lines residential risks,

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

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

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

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

28  eligible for a policy including wind coverage issued by the

29  corporation.

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

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

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 1  mechanism established by the corporation before a policy is

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

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

 4  who submitted the application to the plan or the corporation

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

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

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

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

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

10  commission of the corporation; or

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

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

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

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

15  commission for the type of policy written.

16  

17  If the producing agent is unwilling or unable to accept

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

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

20         (II)  When the corporation enters into a contractual

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

22  of the corporation policy is entitled to retain any unearned

23  commission on the policy, and the insurer shall:

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

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

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

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

28  customary commission of the corporation; or

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

30  the corporation policy to continue servicing the policy for a

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

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

 2  customary commission for the type of policy written.

 3  

 4  If the producing agent is unwilling or unable to accept

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

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

 7         6.  Must provide by July 1, 2007, that an application

 8  for coverage for a new policy is subject to a waiting period

 9  of 10 days before coverage is effective, during which time the

10  corporation shall make such application available for review

11  by general lines agents and authorized property and casualty

12  insurers. The board may approve exceptions that allow for

13  coverage to be effective before the end of the 10-day waiting

14  period, for coverage issued in conjunction with a real estate

15  closing, and for such other exceptions as the board determines

16  are necessary to prevent lapses in coverage.

17         7.6.  Must include rules for classifications of risks

18  and rates therefor.

19         8.7.  Must provide that if premium and investment

20  income for an account attributable to a particular calendar

21  year are in excess of projected losses and expenses for the

22  account attributable to that year, such excess shall be held

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

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

25  be used for that purpose prior to assessing assessable

26  insurers and assessable insureds as to any calendar year.

27         9.8.  Must provide objective criteria and procedures to

28  be uniformly applied for all applicants in determining whether

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

30  making this determination and in establishing the criteria and

31  procedures, the following shall be considered:

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

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

 3  class; and

 4         b.  Whether the uncertainty associated with the

 5  individual risk is such that an appropriate premium cannot be

 6  determined.

 7  

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

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

10  provisions of chapter 120 shall not apply.

11         10.9.  Must provide that the corporation shall make its

12  best efforts to procure catastrophe reinsurance at reasonable

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

14  as determined by the board of governors.

15         11.10.  Must provide that in the event of regular

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

17  sub-subparagraph (b)3.b., in the personal lines account, the

18  commercial lines residential account, or the high-risk

19  account, the corporation shall levy upon corporation

20  policyholders in its next rate filing, or by a separate rate

21  filing solely for this purpose, the following surcharges:

22         a.  A Citizens policyholder market equalization

23  surcharge arising from a regular assessment in such account in

24  a percentage equal to the total amount of such regular

25  assessments divided by the aggregate statewide direct written

26  premium for subject lines of business for the prior calendar

27  year. For purposes of calculating the Citizens policyholder

28  surcharge to be levied under this subparagraph, the total

29  amount of the regular assessment to which this surcharge is

30  related shall be determined as set forth in subparagraph

31  (b)3., without deducting the estimated Citizens policyholder

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 1  surcharge. Market equalization surcharges under this

 2  subparagraph are not considered premium and are not subject to

 3  commissions, fees, or premium taxes; however, failure to pay a

 4  market equalization surcharge shall be treated as failure to

 5  pay premium.

 6         b.  A deficit surcharge of 25 percent of the total

 7  premium on nonhomestead property owned by a nonresident of

 8  this state.

 9  

10  Surcharges under this subparagraph are not considered a

11  premium and are not subject to commissions, fees, or premium

12  taxes; however, failure to pay a surcharge shall be treated in

13  the same manner as failure to pay premium.

14         12.11.  The policies issued by the corporation must

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

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

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

18  renewal through the corporation.

19         13.12.  Corporation policies and applications must

20  include a notice that the corporation policy could, under this

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

22  insurer that does not provide coverage identical to the

23  coverage provided by the corporation. The notice shall also

24  specify that acceptance of corporation coverage creates a

25  conclusive presumption that the applicant or policyholder is

26  aware of this potential.

27         14.13.  May establish, subject to approval by the

28  office, different eligibility requirements and operational

29  procedures for any line or type of coverage for any specified

30  county or area if the board determines that such changes to

31  the eligibility requirements and operational procedures are

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 1  justified due to the voluntary market being sufficiently

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

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

 4  to obtain insurance through the voluntary market through

 5  ordinary methods would continue to have access to coverage

 6  from the corporation. When coverage is sought in connection

 7  with a real property transfer, such requirements and

 8  procedures shall not provide for an effective date of coverage

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

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

11  applicable, the lender.

12         15.14.  Must provide that, with respect to the

13  high-risk account, any assessable insurer with a surplus as to

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

15  more of its total countrywide property insurance premiums in

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

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

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

19  required to participate in the portion of any assessment,

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

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

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

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

24  apportionment company shall collect from its policyholders any

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

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

27  regular assessment will result in an impairment of the surplus

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

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

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

31  

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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  

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 1         4.  Notwithstanding s. 112.3148 or s. 112.3149, or any

 2  other provision of law, an employee or board member may not

 3  knowingly accept, directly or indirectly, any gift or

 4  expenditure from a person or entity, or an employee or

 5  representative of such person or entity, that has a

 6  contractual relationship with the corporation or who is under

 7  consideration for a contract. An employee or board member that

 8  fails to comply with this subparagraph is subject to penalties

 9  provided under ss. 112.317 and 112.3173.

10         5.  Any senior manager of the corporation who is

11  employed on or after January 1, 2007, regardless of the date

12  of hire, who subsequently retires or terminates employment is

13  prohibited from representing another person or entity before

14  the corporation for 2 years after retirement or termination of

15  employment from the corporation.

16         6.  Any employee of the corporation who is employed on

17  or after January 1, 2007, regardless of the date of hire, who

18  subsequently retires or terminates employment is prohibited

19  from having any employment or contractual relationship for 2

20  years with an insurer that has received a take-out bonus from

21  the corporation.

22         (e)  Purchases that equal or exceed $2,500, but are

23  less than $25,000, shall be made by receipt of written quotes,

24  written record of telephone quotes, or informal bids, whenever

25  practical. The procurement of goods or services valued at or

26  over $25,000 shall be subject to competitive solicitation,

27  except in situations where the goods or services are provided

28  by a sole source or are deemed an emergency purchase; the

29  services are exempted from competitive solicitation

30  requirements under s. 287.057(5)(f); or the procurement of

31  services is subject to s. 627.3513. Justification for the

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 1  sole-sourcing or emergency procurement must be documented.

 2  Contracts for goods or services valued at or over $100,000 are

 3  subject to approval by the board.

 4         (f)  The board shall determine whether it is more

 5  cost-effective and in the best interests of the corporation to

 6  use legal services provided by in-house attorneys employed by

 7  the corporation rather than contracting with outside counsel.

 8  In making such determination, the board shall document its

 9  findings and shall consider: the expertise needed; whether

10  time commitments exceed in-house staff resources; whether

11  local representation is needed; the travel, lodging and other

12  costs associated with in-house representation; and such other

13  factors that the board determines are relevant.

14         (g)  The corporation may not retain a lobbyist to

15  represent it before the legislative branch or executive

16  branch. However, full-time employees of the corporation may

17  register as lobbyists and represent the corporation before the

18  legislative branch or executive branch.

19         (h)1.  The Office of the Internal Auditor is

20  established within the corporation to provide a central point

21  for coordination of and responsibility for activities that

22  promote accountability, integrity, and efficiency to the

23  policyholders and to the taxpayers of this state. The internal

24  auditor shall be appointed by the board of governors, shall

25  report to and be under the general supervision of the board of

26  governors, and is not subject to supervision by any employee

27  of the corporation. Administrative staff and support shall be

28  provided by the corporation. The internal auditor shall be

29  appointed without regard to political affiliation. It is the

30  duty and responsibility of the internal auditor to:

31  

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 1         a.  Provide direction for, supervise, conduct, and

 2  coordinate audits, investigations, and management reviews

 3  relating to the programs and operations of the corporation.

 4         b.  Conduct, supervise, or coordinate other activities

 5  carried out or financed by the corporation for the purpose of

 6  promoting efficiency in the administration of, or preventing

 7  and detecting fraud, abuse, and mismanagement in, its programs

 8  and operations.

 9         c.  Submit final audit reports, reviews, or

10  investigative reports to the board of governors, the executive

11  director, the members of the Financial Services Commission,

12  and the President of the Senate and the Speaker of the House

13  of Representatives.

14         d.  Keep the board of governors informed concerning

15  fraud, abuses, and internal control deficiencies relating to

16  programs and operations administered or financed by the

17  corporation, recommend corrective action, and report on the

18  progress made in implementing corrective action.

19         e.  Report expeditiously to the Department of Law

20  Enforcement or other law enforcement agencies, as appropriate,

21  whenever the internal auditor has reasonable grounds to

22  believe there has been a violation of criminal law.

23         2.  On or before February 15, the internal auditor

24  shall prepare an annual report evaluating the effectiveness of

25  the internal controls of the corporation and providing

26  recommendations for corrective action, if necessary, and

27  summarizing the audits, reviews, and investigations conducted

28  by the office during the preceding fiscal year. The final

29  report shall be furnished to the board of governors and the

30  executive director, the President of the Senate, the Speaker

31  

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 1  of the House of Representatives, and the Financial Services

 2  Commission.

 3         (i)  All records of the corporation, except as

 4  otherwise provided by law, are subject to the record retention

 5  requirements of s. 119.021.

 6         (j)1.  The corporation shall establish and maintain a

 7  unit or division to investigate possible fraudulent claims by

 8  insureds or by persons making claims for services or repairs

 9  against policies held by insureds; or it may contract with

10  others to investigate possible fraudulent claims for services

11  or repairs against policies held by the corporation pursuant

12  to s. 626.9891. The corporation must comply with reporting

13  requirements of s. 626.9891.

14         2.  The corporation shall establish a unit or division

15  responsible for receiving and responding to consumer

16  complaints, which unit or division is the sole responsibility

17  of a senior manager of the corporation.

18         (k)  The office shall conduct a comprehensive market

19  conduct examination of the corporation every 2 years to

20  determine compliance with its plan of operation and internal

21  operations procedures. The first market conduct examination

22  report shall be submitted to the President of the Senate and

23  the Speaker of the House of Representatives no later than

24  February 1, 2009. Subsequent reports shall be submitted on or

25  before February 1 every 2 years thereafter.

26         (l)  The Auditor General shall conduct an operational

27  audit of the corporations every 3 years to evaluate

28  management's performance in administering laws, policies, and

29  procedures governing the operations of the corporation in an

30  efficient and effective manner. The scope of the review shall

31  include, but is not limited to, evaluating claims handling,

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 1  customer service, take-out programs and bonuses, financing

 2  arrangements, procurement of goods and services, internal

 3  controls, and the internal audit function.

 4         (m)(d)1.  It is the intent of the Legislature that the

 5  Rates for coverage provided by the corporation shall be

 6  actuarially sound and not competitive with approved rates

 7  charged in the admitted voluntary market, so that the

 8  corporation functions as a residual market mechanism to

 9  provide insurance only when the insurance cannot be procured

10  in the voluntary market. Rates shall include an appropriate

11  catastrophe loading factor that reflects the actual

12  catastrophic exposure of the corporation.

13         2.  For each county, the average rates of the

14  corporation for each line of business for personal lines

15  residential policies excluding rates for wind-only policies

16  shall be no lower than the average rates charged by the

17  insurer that had the highest average rate in that county among

18  the 20 insurers with the greatest total direct written premium

19  in the state for that line of business in the preceding year,

20  except that with respect to mobile home coverages, the average

21  rates of the corporation shall be no lower than the average

22  rates charged by the insurer that had the highest average rate

23  in that county among the 5 insurers with the greatest total

24  written premium for mobile home owner's policies in the state

25  in the preceding year.

26         3.  Rates for personal lines residential wind-only

27  policies must be actuarially sound and not competitive with

28  approved rates charged by authorized insurers. Corporation

29  rate manuals shall include a rate surcharge for seasonal

30  occupancy. To ensure that personal lines residential wind-only

31  rates are not competitive with approved rates charged by

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 1  authorized insurers, the corporation, in conjunction with the

 2  office, shall develop a wind-only ratemaking methodology,

 3  which methodology shall be contained in each rate filing made

 4  by the corporation with the office. If the office determines

 5  that the wind-only rates or rating factors filed by the

 6  corporation fail to comply with the wind-only ratemaking

 7  methodology provided for in this subsection, it shall so

 8  notify the corporation and require the corporation to amend

 9  its rates or rating factors to come into compliance within 90

10  days of notice from the office.

11         4.a.  For policies issued or renewed on or after

12  January 1, 2007, rates for coverage provided by the

13  corporation for nonhomestead property shall include a

14  25-percent surcharge.

15         b.  For policies issued or renewed on or after January

16  1, 2007, rates for coverage provided by the corporation in the

17  high-risk account shall include a 25-percent surcharge for a

18  personal lines residential structure with a dwelling

19  replacement cost of $1 million or more or for a single

20  condominium unit with a combined dwelling and content

21  replacement cost of $1 million or more.

22         5.  The requirements of paragraph (m) that rates not be

23  competitive with approved rates charged by authorized insurers

24  do not apply in a county or area for which the office

25  determines that no authorized insurer is offering coverage.

26         6.4.  For the purposes of establishing a pilot program

27  to evaluate issues relating to the availability and

28  affordability of insurance in an area where historically there

29  has been little market competition, the provisions of

30  subparagraph 2. do not apply to coverage provided by the

31  corporation in Monroe County if the office determines that a

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 1  reasonable degree of competition does not exist for personal

 2  lines residential policies. The provisions of subparagraph 3.

 3  do not apply to coverage provided by the corporation in Monroe

 4  County if the office determines that a reasonable degree of

 5  competition does not exist for personal lines residential

 6  policies in the area of that county which is eligible for

 7  wind-only coverage. In this county, the rates for personal

 8  lines residential coverage shall be actuarially sound and not

 9  excessive, inadequate, or unfairly discriminatory and are

10  subject to the other provisions of the paragraph and s.

11  627.062. The commission shall adopt rules establishing the

12  criteria for determining whether a reasonable degree of

13  competition exists for personal lines residential policies in

14  Monroe County. By March 1, 2006, the office shall submit a

15  report to the Legislature providing an evaluation of the

16  implementation of the pilot program affecting Monroe County.

17         7.5.  Rates for commercial lines coverage shall not be

18  subject to the requirements of subparagraph 2., but shall be

19  subject to all other requirements of this paragraph and s.

20  627.062.

21         8.6.  Nothing in this paragraph shall require or allow

22  the corporation to adopt a rate that is inadequate under s.

23  627.062.

24         9.7.  The corporation shall certify to the office at

25  least twice annually that its personal lines rates comply with

26  the requirements of subparagraphs 1. and 2. If any adjustment

27  in the rates or rating factors of the corporation is necessary

28  to ensure such compliance, the corporation shall make and

29  implement such adjustments and file its revised rates and

30  rating factors with the office. If the office thereafter

31  determines that the revised rates and rating factors fail to

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 1  comply with the provisions of subparagraphs 1. and 2., it

 2  shall notify the corporation and require the corporation to

 3  amend its rates or rating factors in conjunction with its next

 4  rate filing. The office must notify the corporation by

 5  electronic means of any rate filing it approves for any

 6  insurer among the insurers referred to in subparagraph 2.

 7         10.8.  In addition to the rates otherwise determined

 8  pursuant to this paragraph, the corporation shall impose and

 9  collect an amount equal to the premium tax provided for in s.

10  624.509 to augment the financial resources of the corporation.

11         9.a.  To assist the corporation in developing

12  additional ratemaking methods to assure compliance with

13  subparagraphs 1. and 4., the corporation shall appoint a rate

14  methodology panel consisting of one person recommended by the

15  Florida Association of Insurance Agents, one person

16  recommended by the Professional Insurance Agents of Florida,

17  one person recommended by the Florida Association of Insurance

18  and Financial Advisors, one person recommended by the insurer

19  with the highest voluntary market share of residential

20  property insurance business in the state, one person

21  recommended by the insurer with the second-highest voluntary

22  market share of residential property insurance business in the

23  state, one person recommended by an insurer writing commercial

24  residential property insurance in this state, one person

25  recommended by the Office of Insurance Regulation, and one

26  board member designated by the board chairman, who shall serve

27  as chairman of the panel.

28         b.  By January 1, 2004, the rate methodology panel

29  shall provide a report to the corporation of its findings and

30  recommendations for the use of additional ratemaking methods

31  and procedures, including the use of a rate equalization

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 1  surcharge in an amount sufficient to assure that the total

 2  cost of coverage for policyholders or applicants to the

 3  corporation is sufficient to comply with subparagraph 1.

 4         c.  Within 30 days after such report, the corporation

 5  shall present to the President of the Senate, the Speaker of

 6  the House of Representatives, the minority party leaders of

 7  each house of the Legislature, and the chairs of the standing

 8  committees of each house of the Legislature having

 9  jurisdiction of insurance issues, a plan for implementing the

10  additional ratemaking methods and an outline of any

11  legislation needed to facilitate use of the new methods.

12         d.  The plan must include a provision that producer

13  commissions paid by the corporation shall not be calculated in

14  such a manner as to include any rate equalization surcharge.

15  However, without regard to the plan to be developed or its

16  implementation, producer commissions paid by the corporation

17  for each account, other than the quota share primary program,

18  shall remain fixed as to percentage, effective rate,

19  calculation, and payment method until January 1, 2004.

20         11.10.  By January 1, 2004, The corporation shall

21  develop a notice to policyholders or applicants that the rates

22  of Citizens Property Insurance Corporation are intended to be

23  higher than the rates of any admitted carrier and providing

24  other information the corporation deems necessary to assist

25  consumers in finding other voluntary admitted insurers willing

26  to insure their property.

27         12.  After the public hurricane loss-projection model

28  under s. 627.06281 has been found to be accurate and reliable

29  by the Florida Commission on Hurricane Loss Projection

30  Methodology, that model shall serve as the minimum benchmark

31  for determining the windstorm portion of the corporation's

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 1  rates. This subparagraph does not require or allow the

 2  corporation to adopt rates lower than the rates otherwise

 3  required or allowed by this paragraph.

 4         (n)(e)  If coverage in an account is deactivated

 5  pursuant to paragraph (f), coverage through the corporation

 6  shall be reactivated by order of the office only under one of

 7  the following circumstances:

 8         1.  If the market assistance plan receives a minimum of

 9  100 applications for coverage within a 3-month period, or 200

10  applications for coverage within a 1-year period or less for

11  residential coverage, unless the market assistance plan

12  provides a quotation from admitted carriers at their filed

13  rates for at least 90 percent of such applicants. Any market

14  assistance plan application that is rejected because an

15  individual risk is so hazardous as to be uninsurable using the

16  criteria specified in subparagraph (c)8. shall not be included

17  in the minimum percentage calculation provided herein. In the

18  event that there is a legal or administrative challenge to a

19  determination by the office that the conditions of this

20  subparagraph have been met for eligibility for coverage in the

21  corporation, any eligible risk may obtain coverage during the

22  pendency of such challenge.

23         2.  In response to a state of emergency declared by the

24  Governor under s. 252.36, the office may activate coverage by

25  order for the period of the emergency upon a finding by the

26  office that the emergency significantly affects the

27  availability of residential property insurance.

28         (o)(f)1.  The corporation shall file with the office

29  quarterly statements of financial condition, an annual

30  statement of financial condition, and audited financial

31  statements in the manner prescribed by law. In addition, the

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 1  corporation shall report to the office monthly on the types,

 2  premium, exposure, and distribution by county of its policies

 3  in force, and shall submit other reports as the office

 4  requires to carry out its oversight of the corporation.

 5         2.  The activities of the corporation shall be reviewed

 6  at least annually by the office to determine whether coverage

 7  shall be deactivated in an account on the basis that the

 8  conditions giving rise to its activation no longer exist.

 9         (p)(g)1.  The corporation shall certify to the office

10  its needs for annual assessments as to a particular calendar

11  year, and for any interim assessments that it deems to be

12  necessary to sustain operations as to a particular year

13  pending the receipt of annual assessments. Upon verification,

14  the office shall approve such certification, and the

15  corporation shall levy such annual or interim assessments.

16  Such assessments shall be prorated as provided in paragraph

17  (b). The corporation shall take all reasonable and prudent

18  steps necessary to collect the amount of assessment due from

19  each assessable insurer, including, if prudent, filing suit to

20  collect such assessment. If the corporation is unable to

21  collect an assessment from any assessable insurer, the

22  uncollected assessments shall be levied as an additional

23  assessment against the assessable insurers and any assessable

24  insurer required to pay an additional assessment as a result

25  of such failure to pay shall have a cause of action against

26  such nonpaying assessable insurer. Assessments shall be

27  included as an appropriate factor in the making of rates. The

28  failure of a surplus lines agent to collect and remit any

29  regular or emergency assessment levied by the corporation is

30  considered to be a violation of s. 626.936 and subjects the

31  surplus lines agent to the penalties provided in that section.

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 1         2.  The governing body of any unit of local government,

 2  any residents of which are insured by the corporation, may

 3  issue bonds as defined in s. 125.013 or s. 166.101 from time

 4  to time to fund an assistance program, in conjunction with the

 5  corporation, for the purpose of defraying deficits of the

 6  corporation. In order to avoid needless and indiscriminate

 7  proliferation, duplication, and fragmentation of such

 8  assistance programs, any unit of local government, any

 9  residents of which are insured by the corporation, may provide

10  for the payment of losses, regardless of whether or not the

11  losses occurred within or outside of the territorial

12  jurisdiction of the local government. Revenue bonds under this

13  subparagraph may not be issued until validated pursuant to

14  chapter 75, unless a state of emergency is declared by

15  executive order or proclamation of the Governor pursuant to s.

16  252.36 making such findings as are necessary to determine that

17  it is in the best interests of, and necessary for, the

18  protection of the public health, safety, and general welfare

19  of residents of this state and declaring it an essential

20  public purpose to permit certain municipalities or counties to

21  issue such bonds as will permit relief to claimants and

22  policyholders of the corporation. Any such unit of local

23  government may enter into such contracts with the corporation

24  and with any other entity created pursuant to this subsection

25  as are necessary to carry out this paragraph. Any bonds issued

26  under this subparagraph shall be payable from and secured by

27  moneys received by the corporation from emergency assessments

28  under sub-subparagraph (b)3.d., and assigned and pledged to or

29  on behalf of the unit of local government for the benefit of

30  the holders of such bonds.  The funds, credit, property, and

31  taxing power of the state or of the unit of local government

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 1  shall not be pledged for the payment of such bonds. If any of

 2  the bonds remain unsold 60 days after issuance, the office

 3  shall require all insurers subject to assessment to purchase

 4  the bonds, which shall be treated as admitted assets; each

 5  insurer shall be required to purchase that percentage of the

 6  unsold portion of the bond issue that equals the insurer's

 7  relative share of assessment liability under this subsection.

 8  An insurer shall not be required to purchase the bonds to the

 9  extent that the office determines that the purchase would

10  endanger or impair the solvency of the insurer.

11         3.a.  The corporation shall adopt one or more programs

12  subject to approval by the office for the reduction of both

13  new and renewal writings in the corporation. The corporation

14  may consider any prudent and not unfairly discriminatory

15  approach to reducing corporation writings, and may adopt a

16  credit against assessment liability or other liability that

17  provides an incentive for insurers to take risks out of the

18  corporation and to keep risks out of the corporation by

19  maintaining or increasing voluntary writings in counties or

20  areas in which corporation risks are highly concentrated and a

21  program to provide a formula under which an insurer

22  voluntarily taking risks out of the corporation by maintaining

23  or increasing voluntary writings will be relieved wholly or

24  partially from assessments under sub-subparagraphs (b)3.a. and

25  b. However, any "take-out bonus" or payment to an insurer must

26  be conditioned on the property being insured for at least 5

27  years by the insurer, unless canceled or nonrenewed by the

28  policyholder. If the policy is canceled or nonrenewed by the

29  policyholder before the end of the 5-year period, the amount

30  of the take-out bonus must be prorated for the time period the

31  policy was insured. When the corporation enters into a

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 1  contractual agreement for a take-out plan, the producing agent

 2  of record of the corporation policy is entitled to retain any

 3  unearned commission on such policy, and the insurer shall

 4  either:

 5         (I)  Pay to the producing agent of record of the

 6  policy, for the first year, an amount which is the greater of

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

 8  policy written or a policy fee equal to the usual and

 9  customary commission of the corporation; or

10         (II)  Offer to allow the producing agent of record of

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

12  not less than 1 year and offer to pay the agent the insurer's

13  usual and customary commission for the type of policy written.

14  If the producing agent is unwilling or unable to accept

15  appointment by the new insurer, the new insurer shall pay the

16  agent in accordance with sub-sub-subparagraph (I).

17         b.  Any credit or exemption from regular assessments

18  adopted under this subparagraph shall last no longer than the

19  3 years following the cancellation or expiration of the policy

20  by the corporation. With the approval of the office, the board

21  may extend such credits for an additional year if the insurer

22  guarantees an additional year of renewability for all policies

23  removed from the corporation, or for 2 additional years if the

24  insurer guarantees 2 additional years of renewability for all

25  policies so removed.

26         c.  There shall be no credit, limitation, exemption, or

27  deferment from emergency assessments to be collected from

28  policyholders pursuant to sub-subparagraph (b)3.d.

29         4.  The plan shall provide for the deferment, in whole

30  or in part, of the assessment of an assessable insurer, other

31  than an emergency assessment collected from policyholders

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 1  pursuant to sub-subparagraph (b)3.d., if the office finds that

 2  payment of the assessment would endanger or impair the

 3  solvency of the insurer. In the event an assessment against an

 4  assessable insurer is deferred in whole or in part, the amount

 5  by which such assessment is deferred may be assessed against

 6  the other assessable insurers in a manner consistent with the

 7  basis for assessments set forth in paragraph (b).

 8         5.  Effective July 1, 2007, in order to evaluate the

 9  costs and benefits of approved take-out plans, if the

10  corporation pays a bonus or other payment to an insurer for an

11  approved take-out plan, it shall maintain a record of the

12  address or such other identifying information on the property

13  or risk removed in order to track if and when the property or

14  risk is later insured by the corporation.

15         (q)(h)  Nothing in this subsection shall be construed

16  to preclude the issuance of residential property insurance

17  coverage pursuant to part VIII of chapter 626.

18         (r)(i)  There shall be no liability on the part of, and

19  no cause of action of any nature shall arise against, any

20  assessable insurer or its agents or employees, the corporation

21  or its agents or employees, members of the board of governors

22  or their respective designees at a board meeting, corporation

23  committee members, or the office or its representatives, for

24  any action taken by them in the performance of their duties or

25  responsibilities under this subsection. Such immunity does not

26  apply to:

27         1.  Any of the foregoing persons or entities for any

28  willful tort;

29         2.  The corporation or its producing agents for breach

30  of any contract or agreement pertaining to insurance coverage;

31  

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 1         3.  The corporation with respect to issuance or payment

 2  of debt; or

 3         4.  Any assessable insurer with respect to any action

 4  to enforce an assessable insurer's obligations to the

 5  corporation under this subsection.

 6         (s)(j)  For the purposes of s. 199.183(1), the

 7  corporation shall be considered a political subdivision of the

 8  state and shall be exempt from the corporate income tax. The

 9  premiums, assessments, investment income, and other revenue of

10  the corporation are funds received for providing property

11  insurance coverage as required by this subsection, paying

12  claims for Florida citizens insured by the corporation,

13  securing and repaying debt obligations issued by the

14  corporation, and conducting all other activities of the

15  corporation, and shall not be considered taxes, fees,

16  licenses, or charges for services imposed by the Legislature

17  on individuals, businesses, or agencies outside state

18  government. Bonds and other debt obligations issued by or on

19  behalf of the corporation are not to be considered "state

20  bonds" within the meaning of s. 215.58(8). The corporation is

21  not subject to the procurement provisions of chapter 287, and

22  policies and decisions of the corporation relating to

23  incurring debt, levying of assessments and the sale, issuance,

24  continuation, terms and claims under corporation policies, and

25  all services relating thereto, are not subject to the

26  provisions of chapter 120. The corporation is not required to

27  obtain or to hold a certificate of authority issued by the

28  office, nor is it required to participate as a member insurer

29  of the Florida Insurance Guaranty Association. However, the

30  corporation is required to pay, in the same manner as an

31  authorized insurer, assessments pledged by the Florida

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 1  Insurance Guaranty Association to secure bonds issued or other

 2  indebtedness incurred to pay covered claims arising from

 3  insurer insolvencies caused by, or proximately related to,

 4  hurricane losses. It is the intent of the Legislature that the

 5  tax exemptions provided in this paragraph will augment the

 6  financial resources of the corporation to better enable the

 7  corporation to fulfill its public purposes. Any bonds issued

 8  by the corporation, their transfer, and the income therefrom,

 9  including any profit made on the sale thereof, shall at all

10  times be free from taxation of every kind by the state and any

11  political subdivision or local unit or other instrumentality

12  thereof; however, this exemption does not apply to any tax

13  imposed by chapter 220 on interest, income, or profits on debt

14  obligations owned by corporations other than the corporation.

15         (t)(k)  Upon a determination by the office that the

16  conditions giving rise to the establishment and activation of

17  the corporation no longer exist, the corporation is dissolved.

18  Upon dissolution, the assets of the corporation shall be

19  applied first to pay all debts, liabilities, and obligations

20  of the corporation, including the establishment of reasonable

21  reserves for any contingent liabilities or obligations, and

22  all remaining assets of the corporation shall become property

23  of the state and shall be deposited in the Florida Hurricane

24  Catastrophe Fund. However, no dissolution shall take effect as

25  long as the corporation has bonds or other financial

26  obligations outstanding unless adequate provision has been

27  made for the payment of the bonds or other financial

28  obligations pursuant to the documents authorizing the issuance

29  of the bonds or other financial obligations.

30         (u)(l)1.  Effective July 1, 2002, policies of the

31  Residential Property and Casualty Joint Underwriting

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 1  Association shall become policies of the corporation. All

 2  obligations, rights, assets and liabilities of the Residential

 3  Property and Casualty Joint Underwriting Association,

 4  including bonds, note and debt obligations, and the financing

 5  documents pertaining to them become those of the corporation

 6  as of July 1, 2002. The corporation is not required to issue

 7  endorsements or certificates of assumption to insureds during

 8  the remaining term of in-force transferred policies.

 9         2.  Effective July 1, 2002, policies of the Florida

10  Windstorm Underwriting Association are transferred to the

11  corporation and shall become policies of the corporation. All

12  obligations, rights, assets, and liabilities of the Florida

13  Windstorm Underwriting Association, including bonds, note and

14  debt obligations, and the financing documents pertaining to

15  them are transferred to and assumed by the corporation on July

16  1, 2002. The corporation is not required to issue endorsement

17  or certificates of assumption to insureds during the remaining

18  term of in-force transferred policies.

19         3.  The Florida Windstorm Underwriting Association and

20  the Residential Property and Casualty Joint Underwriting

21  Association shall take all actions as may be proper to further

22  evidence the transfers and shall provide the documents and

23  instruments of further assurance as may reasonably be

24  requested by the corporation for that purpose. The corporation

25  shall execute assumptions and instruments as the trustees or

26  other parties to the financing documents of the Florida

27  Windstorm Underwriting Association or the Residential Property

28  and Casualty Joint Underwriting Association may reasonably

29  request to further evidence the transfers and assumptions,

30  which transfers and assumptions, however, are effective on the

31  date provided under this paragraph whether or not, and

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 1  regardless of the date on which, the assumptions or

 2  instruments are executed by the corporation. Subject to the

 3  relevant financing documents pertaining to their outstanding

 4  bonds, notes, indebtedness, or other financing obligations,

 5  the moneys, investments, receivables, choses in action, and

 6  other intangibles of the Florida Windstorm Underwriting

 7  Association shall be credited to the high-risk account of the

 8  corporation, and those of the personal lines residential

 9  coverage account and the commercial lines residential coverage

10  account of the Residential Property and Casualty Joint

11  Underwriting Association shall be credited to the personal

12  lines account and the commercial lines account, respectively,

13  of the corporation.

14         4.  Effective July 1, 2002, a new applicant for

15  property insurance coverage who would otherwise have been

16  eligible for coverage in the Florida Windstorm Underwriting

17  Association is eligible for coverage from the corporation as

18  provided in this subsection.

19         5.  The transfer of all policies, obligations, rights,

20  assets, and liabilities from the Florida Windstorm

21  Underwriting Association to the corporation and the renaming

22  of the Residential Property and Casualty Joint Underwriting

23  Association as the corporation shall in no way affect the

24  coverage with respect to covered policies as defined in s.

25  215.555(2)(c) provided to these entities by the Florida

26  Hurricane Catastrophe Fund. The coverage provided by the

27  Florida Hurricane Catastrophe Fund to the Florida Windstorm

28  Underwriting Association based on its exposures as of June 30,

29  2002, and each June 30 thereafter shall be redesignated as

30  coverage for the high-risk account of the corporation.

31  Notwithstanding any other provision of law, the coverage

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 1  provided by the Florida Hurricane Catastrophe Fund to the

 2  Residential Property and Casualty Joint Underwriting

 3  Association based on its exposures as of June 30, 2002, and

 4  each June 30 thereafter shall be transferred to the personal

 5  lines account and the commercial lines account of the

 6  corporation. Notwithstanding any other provision of law, the

 7  high-risk account shall be treated, for all Florida Hurricane

 8  Catastrophe Fund purposes, as if it were a separate

 9  participating insurer with its own exposures, reimbursement

10  premium, and loss reimbursement. Likewise, the personal lines

11  and commercial lines accounts shall be viewed together, for

12  all Florida Hurricane Catastrophe Fund purposes, as if the two

13  accounts were one and represent a single, separate

14  participating insurer with its own exposures, reimbursement

15  premium, and loss reimbursement. The coverage provided by the

16  Florida Hurricane Catastrophe Fund to the corporation shall

17  constitute and operate as a full transfer of coverage from the

18  Florida Windstorm Underwriting Association and Residential

19  Property and Casualty Joint Underwriting to the corporation.

20         (v)(m)  Notwithstanding any other provision of law:

21         1.  The pledge or sale of, the lien upon, and the

22  security interest in any rights, revenues, or other assets of

23  the corporation created or purported to be created pursuant to

24  any financing documents to secure any bonds or other

25  indebtedness of the corporation shall be and remain valid and

26  enforceable, notwithstanding the commencement of and during

27  the continuation of, and after, any rehabilitation,

28  insolvency, liquidation, bankruptcy, receivership,

29  conservatorship, reorganization, or similar proceeding against

30  the corporation under the laws of this state.

31  

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 1         2.  No such proceeding shall relieve the corporation of

 2  its obligation, or otherwise affect its ability to perform its

 3  obligation, to continue to collect, or levy and collect,

 4  assessments, market equalization or other surcharges under

 5  subparagraph (c)10., or any other rights, revenues, or other

 6  assets of the corporation pledged pursuant to any financing

 7  documents.

 8         3.  Each such pledge or sale of, lien upon, and

 9  security interest in, including the priority of such pledge,

10  lien, or security interest, any such assessments, market

11  equalization or other surcharges, or other rights, revenues,

12  or other assets which are collected, or levied and collected,

13  after the commencement of and during the pendency of, or

14  after, any such proceeding shall continue unaffected by such

15  proceeding.  As used in this subsection, the term "financing

16  documents" means any agreement or agreements, instrument or

17  instruments, or other document or documents now existing or

18  hereafter created evidencing any bonds or other indebtedness

19  of the corporation or pursuant to which any such bonds or

20  other indebtedness has been or may be issued and pursuant to

21  which any rights, revenues, or other assets of the corporation

22  are pledged or sold to secure the repayment of such bonds or

23  indebtedness, together with the payment of interest on such

24  bonds or such indebtedness, or the payment of any other

25  obligation or financial product, as defined in the plan of

26  operation of the corporation related to such bonds or

27  indebtedness.

28         4.  Any such pledge or sale of assessments, revenues,

29  contract rights, or other rights or assets of the corporation

30  shall constitute a lien and security interest, or sale, as the

31  case may be, that is immediately effective and attaches to

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 1  such assessments, revenues, or contract rights or other rights

 2  or assets, whether or not imposed or collected at the time the

 3  pledge or sale is made.  Any such pledge or sale is effective,

 4  valid, binding, and enforceable against the corporation or

 5  other entity making such pledge or sale, and valid and binding

 6  against and superior to any competing claims or obligations

 7  owed to any other person or entity, including policyholders in

 8  this state, asserting rights in any such assessments,

 9  revenues, or contract rights or other rights or assets to the

10  extent set forth in and in accordance with the terms of the

11  pledge or sale contained in the applicable financing

12  documents, whether or not any such person or entity has notice

13  of such pledge or sale and without the need for any physical

14  delivery, recordation, filing, or other action.

15         (w)(n)1.  The following records of the corporation are

16  confidential and exempt from the provisions of s. 119.07(1)

17  and s. 24(a), Art. I of the State Constitution:

18         a.  Underwriting files, except that a policyholder or

19  an applicant shall have access to his or her own underwriting

20  files.

21         b.  Claims files, until termination of all litigation

22  and settlement of all claims arising out of the same incident,

23  although portions of the claims files may remain exempt, as

24  otherwise provided by law. Confidential and exempt claims file

25  records may be released to other governmental agencies upon

26  written request and demonstration of need; such records held

27  by the receiving agency remain confidential and exempt as

28  provided for herein.

29         c.  Records obtained or generated by an internal

30  auditor pursuant to a routine audit, until the audit is

31  completed, or if the audit is conducted as part of an

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 1  investigation, until the investigation is closed or ceases to

 2  be active.  An investigation is considered "active" while the

 3  investigation is being conducted with a reasonable, good faith

 4  belief that it could lead to the filing of administrative,

 5  civil, or criminal proceedings.

 6         d.  Matters reasonably encompassed in privileged

 7  attorney-client communications.

 8         e.  Proprietary information licensed to the corporation

 9  under contract and the contract provides for the

10  confidentiality of such proprietary information.

11         f.  All information relating to the medical condition

12  or medical status of a corporation employee which is not

13  relevant to the employee's capacity to perform his or her

14  duties, except as otherwise provided in this paragraph.

15  Information which is exempt shall include, but is not limited

16  to, information relating to workers' compensation, insurance

17  benefits, and retirement or disability benefits.

18         g.  Upon an employee's entrance into the employee

19  assistance program, a program to assist any employee who has a

20  behavioral or medical disorder, substance abuse problem, or

21  emotional difficulty which affects the employee's job

22  performance, all records relative to that participation shall

23  be confidential and exempt from the provisions of s. 119.07(1)

24  and s. 24(a), Art. I of the State Constitution, except as

25  otherwise provided in s. 112.0455(11).

26         h.  Information relating to negotiations for financing,

27  reinsurance, depopulation, or contractual services, until the

28  conclusion of the negotiations.

29         i.  Minutes of closed meetings regarding underwriting

30  files, and minutes of closed meetings regarding an open claims

31  file until termination of all litigation and settlement of all

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 1  claims with regard to that claim, except that information

 2  otherwise confidential or exempt by law will be redacted.

 3  

 4  When an authorized insurer is considering underwriting a risk

 5  insured by the corporation, relevant underwriting files and

 6  confidential claims files may be released to the insurer

 7  provided the insurer agrees in writing, notarized and under

 8  oath, to maintain the confidentiality of such files.  When a

 9  file is transferred to an insurer that file is no longer a

10  public record because it is not held by an agency subject to

11  the provisions of the public records law. Underwriting files

12  and confidential claims files may also be released to staff of

13  and the board of governors of the market assistance plan

14  established pursuant to s. 627.3515, who must retain the

15  confidentiality of such files, except such files may be

16  released to authorized insurers that are considering assuming

17  the risks to which the files apply, provided the insurer

18  agrees in writing, notarized and under oath, to maintain the

19  confidentiality of such files.  Finally, the corporation or

20  the board or staff of the market assistance plan may make the

21  following information obtained from underwriting files and

22  confidential claims files available to licensed general lines

23  insurance agents: name, address, and telephone number of the

24  residential property owner or insured; location of the risk;

25  rating information; loss history; and policy type.  The

26  receiving licensed general lines insurance agent must retain

27  the confidentiality of the information received.

28         2.  Portions of meetings of the corporation are exempt

29  from the provisions of s. 286.011 and s. 24(b), Art. I of the

30  State Constitution wherein confidential underwriting files or

31  confidential open claims files are discussed.  All portions of

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 1  corporation meetings which are closed to the public shall be

 2  recorded by a court reporter. The court reporter shall record

 3  the times of commencement and termination of the meeting, all

 4  discussion and proceedings, the names of all persons present

 5  at any time, and the names of all persons speaking.  No

 6  portion of any closed meeting shall be off the record.

 7  Subject to the provisions hereof and s. 119.07(1)(b)-(d), the

 8  court reporter's notes of any closed meeting shall be retained

 9  by the corporation for a minimum of 5 years. A copy of the

10  transcript, less any exempt matters, of any closed meeting

11  wherein claims are discussed shall become public as to

12  individual claims after settlement of the claim.

13         (x)(o)  It is the intent of the Legislature that the

14  amendments to this subsection enacted in 2002 should, over

15  time, reduce the probable maximum windstorm losses in the

16  residual markets and should reduce the potential assessments

17  to be levied on property insurers and policyholders statewide.

18  In furtherance of this intent:

19         1.  The board shall, on or before February 1 of each

20  year, provide a report to the President of the Senate and the

21  Speaker of the House of Representatives showing the reduction

22  or increase in the 100-year probable maximum loss attributable

23  to wind-only coverages and the quota share program under this

24  subsection combined, as compared to the benchmark 100-year

25  probable maximum loss of the Florida Windstorm Underwriting

26  Association.  For purposes of this paragraph, the benchmark

27  100-year probable maximum loss of the Florida Windstorm

28  Underwriting Association shall be the calculation dated

29  February 2001 and based on November 30, 2000, exposures.  In

30  order to ensure comparability of data, the board shall use the

31  

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 1  same methods for calculating its probable maximum loss as were

 2  used to calculate the benchmark probable maximum loss.

 3         2.  Beginning February 1, 2009 2007, if the report

 4  under subparagraph 1. for any year indicates that the 100-year

 5  probable maximum loss attributable to wind-only coverages and

 6  the quota share program combined does not reflect a reduction

 7  of at least 25 percent from the benchmark, the board shall

 8  reduce the boundaries of the high-risk area eligible for

 9  wind-only coverages under this subsection in a manner

10  calculated to reduce such probable maximum loss to an amount

11  at least 25 percent below the benchmark.

12         3.  Beginning February 1, 2014 2012, if the report

13  under subparagraph 1. for any year indicates that the 100-year

14  probable maximum loss attributable to wind-only coverages and

15  the quota share program combined does not reflect a reduction

16  of at least 50 percent from the benchmark, the boundaries of

17  the high-risk area eligible for wind-only coverages under this

18  subsection shall be reduced by the elimination of any area

19  that is not seaward of a line 1,000 feet inland from the

20  Intracoastal Waterway.

21         (y)(p)  In enacting the provisions of this section, the

22  Legislature recognizes that both the Florida Windstorm

23  Underwriting Association and the Residential Property and

24  Casualty Joint Underwriting Association have entered into

25  financing arrangements that obligate each entity to service

26  its debts and maintain the capacity to repay funds secured

27  under these financing arrangements. It is the intent of the

28  Legislature that nothing in this section be construed to

29  compromise, diminish, or interfere with the rights of

30  creditors under such financing arrangements. It is further the

31  intent of the Legislature to preserve the obligations of the

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 1  Florida Windstorm Underwriting Association and Residential

 2  Property and Casualty Joint Underwriting Association with

 3  regard to outstanding financing arrangements, with such

 4  obligations passing entirely and unchanged to the corporation

 5  and, specifically, to the applicable account of the

 6  corporation. So long as any bonds, notes, indebtedness, or

 7  other financing obligations of the Florida Windstorm

 8  Underwriting Association or the Residential Property and

 9  Casualty Joint Underwriting Association are outstanding, under

10  the terms of the financing documents pertaining to them, the

11  governing board of the corporation shall have and shall

12  exercise the authority to levy, charge, collect, and receive

13  all premiums, assessments, surcharges, charges, revenues, and

14  receipts that the associations had authority to levy, charge,

15  collect, or receive under the provisions of subsection (2) and

16  this subsection, respectively, as they existed on January 1,

17  2002, to provide moneys, without exercise of the authority

18  provided by this subsection, in at least the amounts, and by

19  the times, as would be provided under those former provisions

20  of subsection (2) or this subsection, respectively, so that

21  the value, amount, and collectability of any assets, revenues,

22  or revenue source pledged or committed to, or any lien thereon

23  securing such outstanding bonds, notes, indebtedness, or other

24  financing obligations will not be diminished, impaired, or

25  adversely affected by the amendments made by this act and to

26  permit compliance with all provisions of financing documents

27  pertaining to such bonds, notes, indebtedness, or other

28  financing obligations, or the security or credit enhancement

29  for them, and any reference in this subsection to bonds,

30  notes, indebtedness, financing obligations, or similar

31  obligations, of the corporation shall include like instruments

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 1  or contracts of the Florida Windstorm Underwriting Association

 2  and the Residential Property and Casualty Joint Underwriting

 3  Association to the extent not inconsistent with the provisions

 4  of the financing documents pertaining to them.

 5         (z)(q)  The corporation shall not require the securing

 6  of flood insurance as a condition of coverage if the insured

 7  or applicant executes a form approved by the office affirming

 8  that flood insurance is not provided by the corporation and

 9  that if flood insurance is not secured by the applicant or

10  insured in addition to coverage by the corporation, the risk

11  will not be covered for flood damage. A corporation

12  policyholder electing not to secure flood insurance and

13  executing a form as provided herein making a claim for water

14  damage against the corporation shall have the burden of

15  proving the damage was not caused by flooding. Notwithstanding

16  other provisions of this subsection, the corporation may deny

17  coverage to an applicant or insured who refuses to execute the

18  form described herein.

19         (aa)(r)  A salaried employee of the corporation who

20  performs policy administration services subsequent to the

21  effectuation of a corporation policy is not required to be

22  licensed as an agent under the provisions of s. 626.112.

23         (bb)  By February 1, 2007, the corporation shall submit

24  a report to the President of the Senate, the Speaker of the

25  House of Representatives, the minority party leaders of the

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

27  standing committees of the Senate and the House of

28  Representatives having jurisdiction over matters relating to

29  property and casualty insurance. In preparing the report, the

30  corporation shall consult with the Office of Insurance

31  Regulation, the Department of Financial Services, and any

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 1  other party the corporation determines appropriate. The report

 2  must include all findings and recommendations on the

 3  feasibility of requiring authorized insurers that issue and

 4  service personal and commercial residential policies and

 5  commercial nonresidential policies that provide coverage for

 6  basic property perils except for the peril of wind to issue

 7  and service for a fee personal and commercial residential

 8  policies and commercial nonresidential policies providing

 9  coverage for the peril of wind issued by the corporation. The

10  report must include:

11         1.  The expense savings to the corporation of issuing

12  and servicing such policies as determined by a cost-benefit

13  analysis.

14         2.  The expenses and liability to authorized insurers

15  associated with issuing and servicing such policies.

16         3.  The effect on service to policyholders of the

17  corporation relating to issuing and servicing such policies.

18         4.  The effect on the producing agent of the

19  corporation of issuing and servicing such policies.

20         5.  Recommendations as to the amount of the fee which

21  should be paid to authorized insurers for issuing and

22  servicing such policies.

23         6.  The effect that issuing and servicing such policies

24  will have on the corporation's number of policies, total

25  insured value, and probable maximum loss.

26         Section 10.  The amendments made by this act to s.

27  627.351(6), Florida Statutes, which change the method for

28  calculating and determining the assessments and surcharges

29  that must be levied or collected to fund deficits in Citizens

30  Property Insurance Corporation apply to a deficit incurred by

31  the corporation for calendar year 2006 and thereafter.

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 1         Section 11.  Effective July 1, 2006, paragraph (a) of

 2  subsection (5) of section 627.3511, Florida Statutes, is

 3  amended to read:

 4         627.3511  Depopulation of Citizens Property Insurance

 5  Corporation.--

 6         (5)  APPLICABILITY.--

 7         (a)  The take-out bonus provided by subsection (2) and

 8  the exemption from assessment provided by paragraph (3)(a)

 9  apply only if the corporation policy is replaced by either a

10  standard policy including wind coverage or, if consistent with

11  the insurer's underwriting rules as filed with the office, a

12  basic policy including wind coverage; however, with respect to

13  risks located in areas where coverage through the high-risk

14  account of the corporation is available, the replacement

15  policy need not provide wind coverage. The insurer must renew

16  the replacement policy at approved rates on substantially

17  similar terms for four two additional 1-year terms, unless

18  canceled or not renewed by the policyholder insurer for a

19  lawful reason other than reduction of hurricane exposure. If

20  an insurer assumes the corporation's obligations for a policy,

21  it must issue a replacement policy for a 1-year term upon

22  expiration of the corporation policy and must renew the

23  replacement policy at approved rates on substantially similar

24  terms for four two additional 1-year terms, unless canceled or

25  not renewed by the policyholder insurer for a lawful reason

26  other than reduction of hurricane exposure. For each

27  replacement policy canceled or nonrenewed by the insurer for

28  any reason during the 5-year 3-year coverage period required

29  by this paragraph, the insurer must remove from the

30  corporation one additional policy covering a risk similar to

31  the risk covered by the canceled or nonrenewed policy.  In

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 1  addition to these requirements, the corporation must place the

 2  bonus moneys in escrow for a period of 5 3 years; such moneys

 3  may be released from escrow only to pay claims. If the policy

 4  is canceled or nonrenewed before the end of the 5-year period,

 5  the amount of the take-out bonus must be prorated for the time

 6  period the policy was insured. A take-out bonus provided by

 7  subsection (2) or subsection (6) shall not be considered

 8  premium income for purposes of taxes and assessments under the

 9  Florida Insurance Code and shall remain the property of the

10  corporation, subject to the prior security interest of the

11  insurer under the escrow agreement until it is released from

12  escrow, and after it is released from escrow it shall be

13  considered an asset of the insurer and credited to the

14  insurer's capital and surplus.

15         Section 12.  Effective July 1, 2006, section 627.3517,

16  Florida Statutes, is amended to read:

17         627.3517  Consumer choice.--

18         (1)  Except as provided in subsection (2), no provision

19  of s. 627.351, s. 627.3511, or s. 627.3515 shall be construed

20  to impair the right of any insurance risk apportionment plan

21  policyholder, upon receipt of any keepout or take-out offer,

22  to retain his or her current agent, so long as that agent is

23  duly licensed and appointed by the insurance risk

24  apportionment plan or otherwise authorized to place business

25  with the insurance risk apportionment plan. This right shall

26  not be canceled, suspended, impeded, abridged, or otherwise

27  compromised by any rule, plan of operation, or depopulation

28  plan, whether through keepout, take-out, midterm assumption,

29  or any other means, of any insurance risk apportionment plan

30  or depopulation plan, including, but not limited to, those

31  described in s. 627.351, s. 627.3511, or s. 627.3515. The

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 1  commission shall adopt any rules necessary to cause any

 2  insurance risk apportionment plan or market assistance plan

 3  under such sections to demonstrate that the operations of the

 4  plan do not interfere with, promote, or allow interference

 5  with the rights created under this section. If the

 6  policyholder's current agent is unable or unwilling to be

 7  appointed with the insurer making the take-out or keepout

 8  offer, the policyholder shall not be disqualified from

 9  participation in the appropriate insurance risk apportionment

10  plan because of an offer of coverage in the voluntary market.

11  An offer of full property insurance coverage by the insurer

12  currently insuring either the ex-wind or wind-only coverage on

13  the policy to which the offer applies shall not be considered

14  a take-out or keepout offer. Any rule, plan of operation, or

15  plan of depopulation, through keepout, take-out, midterm

16  assumption, or any other means, of any property insurance risk

17  apportionment plan under s. 627.351(2) or (6) is subject to

18  ss. 627.351(2)(b) and (6)(c) and 627.3511(4).

19         (2)  This section does not apply during the first 10

20  days after a new application for coverage has been submitted

21  to Citizens Property Insurance Corporation under s.

22  627.351(6), whether or not coverage is bound during this

23  period.

24         Section 13.  Section 627.3519, Florida Statutes, is

25  created to read:

26         627.3519  Annual report of aggregate net probable

27  maximum losses, financing options, and potential

28  assessments.--No later than February 1 of each year, the

29  Financial Services Commission shall provide to the Legislature

30  a report of the aggregate net probable maximum losses,

31  financing options, and potential assessments of the Florida

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 1  Hurricane Catastrophe Fund and Citizens Property Insurance

 2  Corporation. The report must include the respective 50-year,

 3  100-year, and 250-year probable maximum losses of the fund and

 4  the corporation; analysis of all reasonable financing

 5  strategies for each such probable maximum loss, including the

 6  amount and term of debt instruments; specification of the

 7  percentage assessments that would be needed to support each of

 8  the financing strategies; and calculations of the aggregate

 9  assessment burden on Florida property and casualty

10  policyholders for each of the probable maximum losses. The

11  commission shall require the fund and the corporation to

12  provide the commission with such data and analysis as the

13  commission considers necessary to prepare the report.

14         Section 14.  Paragraph (b) of subsection (3) of section

15  627.4035, Florida Statutes, is amended to read:

16         627.4035  Cash payment of premiums; claims.--

17         (3)  All payments of claims made in this state under

18  any contract of insurance shall be paid:

19         (b)  If authorized in writing by the recipient or the

20  recipient's representative, by debit card or any other form of

21  electronic transfer. Any fees or costs to be charged against

22  the recipient must be disclosed in writing to the recipient or

23  the recipient's representative at the time of written

24  authorization. However, the written authorization requirement

25  may be waived by the recipient or the recipient's

26  representative if the insurer verifies the identity of the

27  insured or the insured's recipient and does not charge a fee

28  for the transaction. If the funds are misdirected, the insurer

29  remains liable for the payment of the claim.

30         Section 15.  Section 627.6121, Florida Statutes, is

31  created to read:

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 1         627.6121  Payment of claims for dual interest

 2  property.--For policies issued or renewed on or after October

 3  1, 2006, a property insurer shall transmit claims payments

 4  directly to the primary policyholder by check or other

 5  allowable payment method, payable to the primary policyholder

 6  only, without requiring a dual endorsement from any

 7  mortgageholder or lienholder, for the following:

 8         (1)  Amounts payable under the policy for personal

 9  property and contents, additional living expenses, and other

10  covered items that are not subject to a recorded security

11  interest that is noted in the dual interest provision of the

12  policy.

13         (2)  Amounts payable under the policy for the lesser of

14  $20,000 or the first 20 percent of the insurer's estimate of

15  the total projected covered claim amount, for the repair or

16  replacement of property subject to a recorded security

17  interest that is noted in the dual interest provision of the

18  policy. The insurer shall provide written notice to the

19  mortgageholder or lienholder of such payments made pursuant to

20  this subsection.

21         Section 16.  Subsection (2) of section 627.7011,

22  Florida Statutes, is amended, and subsection (6) is added to

23  that section, to read:

24         627.7011  Homeowners' policies; offer of replacement

25  cost coverage and law and ordinance coverage.--

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

27  written refusal of the policies or endorsements specified in

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

29  include the law and ordinance coverage limited to 25 percent

30  of the dwelling limit specified in paragraph (1)(b). The

31  rejection or selection of alternative coverage shall be made

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

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

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

 4  conclusively presumed that there was an informed, knowing

 5  rejection of the coverage or election of the alternative

 6  coverage on behalf of all insureds. Unless the policyholder

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

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

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

10  replaces an existing policy when the policyholder has rejected

11  the coverage specified in this section or has selected

12  alternative coverage. The insurer must provide such

13  policyholder with notice of the availability of such coverage

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

15  The failure to provide such notice constitutes a violation of

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

17  policy.

18         (6)  This section does not prohibit an insurer from

19  limiting its liability under a policy or endorsement providing

20  that loss will be adjusted on the basis of replacement costs

21  to the lesser of:

22         (a)  The limit of liability shown on the policy

23  declarations page;

24         (b)  The reasonable and necessary cost to repair the

25  damaged, destroyed, or stolen covered property; or

26         (c)  The reasonable and necessary cost to replace the

27  damaged, destroyed, or stolen covered property.

28         Section 17.  Section 627.7019, Florida Statutes, is

29  created to read:

30         627.7019  Standardization of requirements applicable to

31  insurers after natural disasters.--

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 1         (1)  The commission shall adopt by rule, pursuant to s.

 2  120.54(1)-(3), standardized requirements that may be applied

 3  to insurers as a consequence of a hurricane or other natural

 4  disaster. The rules shall address the following areas:

 5         (a)  Claims reporting requirements.

 6         (b)  Grace periods for payment of premiums and

 7  performance of other duties by insureds.

 8         (c)  Temporary postponement of cancellations and

 9  nonrenewals.

10         (2)  The rules adopted under this section shall require

11  the office to issue an order within 72 hours after the

12  occurrence of a hurricane or other natural disaster

13  specifying, by line of insurance, which of the standardized

14  requirements apply, the geographic areas in which they apply,

15  the time at which applicability commences, and the time at

16  which applicability terminates.

17         Section 18.  Subsection (1) and paragraph (d) of

18  subsection (2) of section 627.706, Florida Statutes, are

19  amended to read:

20         627.706  Sinkhole insurance; definitions.--

21         (1)  Every insurer authorized to transact property

22  insurance in this state shall make available coverage for

23  insurable sinkhole losses on any structure, including contents

24  of personal property contained therein, to the extent provided

25  in the form to which the sinkhole coverage attaches. A policy

26  for residential property insurance may include a deductible

27  amount applicable to sinkhole losses equal to 1 percent, 2

28  percent, 5 percent, or 10 percent of the policy dwelling

29  limits, with appropriate premium discounts offered with each

30  deductible amount.

31  

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

 2  connection with any policy providing coverage for sinkhole

 3  losses:

 4         (d)  "Professional engineer" means a person, as defined

 5  in s. 471.005, who has a bachelor's degree or higher in

 6  engineering with a specialty in the geotechnical engineering

 7  field. A professional An engineer must have geotechnical

 8  experience and expertise in the identification of sinkhole

 9  activity as well as other potential causes of damage to the

10  structure.

11         Section 19.  Subsections (2), (3), (5), (6), and (9) of

12  section 627.707, Florida Statutes, are amended to read:

13         627.707  Standards for investigation of sinkhole claims

14  by insurers; nonrenewals.--Upon receipt of a claim for a

15  sinkhole loss, an insurer must meet the following standards in

16  investigating a claim:

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

18  insurer shall engage a professional an engineer or a

19  professional geologist to conduct testing as provided in s.

20  627.7072 to determine the cause of the loss within a

21  reasonable professional probability and issue a report as

22  provided in s. 627.7073, if:

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

24  the damage or discovers damage to the structure which is

25  consistent with sinkhole loss; or

26         (b)  The policyholder demands testing in accordance

27  with this section or s. 627.7072.

28         (3)  Following the initial inspection of the insured

29  premises, the insurer shall provide written notice to the

30  policyholder disclosing the following information:

31  

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

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

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

 4  insurer is required to engage a professional an engineer or a

 5  professional geologist to verify or eliminate sinkhole loss

 6  and to engage a professional an engineer to make

 7  recommendations regarding land and building stabilization and

 8  foundation repair.

 9         (c)  A statement regarding the right of the

10  policyholder to request testing by a professional an engineer

11  or a professional geologist and the circumstances under which

12  the policyholder may demand certain testing.

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

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

15  building and repair the foundation in accordance with the

16  recommendations of the professional engineer as provided under

17  s. 627.7073, and in consultation with the policyholder,

18  subject to the coverage and terms of the policy. The insurer

19  shall pay for other repairs to the structure and contents in

20  accordance with the terms of the policy.

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

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

23  grouting or any other repair technique performed below the

24  existing foundation of the building, until the policyholder

25  enters into a contract for the performance of building

26  stabilization or foundation repairs. After the policyholder

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

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

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

30  require the policyholder to advance payment for such repairs.

31  If repair covered by a personal lines residential property

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 1  insurance policy has begun and the professional engineer

 2  selected or approved by the insurer determines that the repair

 3  cannot be completed within the policy limits, the insurer must

 4  either complete the professional engineer's recommended repair

 5  or tender the policy limits to the policyholder without a

 6  reduction for the repair expenses incurred.

 7         (c)  Upon the insurer's obtaining the written approval

 8  of the policyholder and any lienholder, the insurer may make

 9  payment directly to the persons selected by the policyholder

10  to perform the land and building stabilization and foundation

11  repairs. The decision by the insurer to make payment to such

12  persons does not hold the insurer liable for the work

13  performed.

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

15  costs of the professional engineer or the professional

16  geologist shall be paid by the insurer.

17         (9)  The insurer may engage a professional structural

18  engineer to make recommendations as to the repair of the

19  structure.

20         Section 20.  Subsection (1) of section 627.7072,

21  Florida Statutes, is amended to read:

22         627.7072  Testing standards for sinkholes.--

23         (1)  The professional engineer and professional

24  geologist shall perform such tests as sufficient, in their

25  professional opinion, to determine the presence or absence of

26  sinkhole loss or other cause of damage within reasonable

27  professional probability and for the professional engineer to

28  make recommendations regarding necessary building

29  stabilization and foundation repair.

30         Section 21.  Subsections (1) and (2) of section

31  627.7073, Florida Statutes, are amended to read:

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 1         627.7073  Sinkhole reports.--

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

 3  627.7072, the professional engineer and professional geologist

 4  shall issue a report and certification to the insurer and the

 5  policyholder as provided in this section.

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

 7  performed in accordance with s. 627.7072, a professional an

 8  engineer and a professional geologist issue a written report

 9  and certification stating:

10         1.  That the cause of the actual physical and

11  structural damage is sinkhole activity within a reasonable

12  professional probability.

13         2.  That the analyses conducted were of sufficient

14  scope to identify sinkhole activity as the cause of damage

15  within a reasonable professional probability.

16         3.  A description of the tests performed.

17         4.  A recommendation by the professional engineer of

18  methods for stabilizing the land and building and for making

19  repairs to the foundation.

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

21  damage to the structure, the professional engineer and

22  professional geologist shall issue a written report and

23  certification to the policyholder and the insurer stating:

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

25  activity within a reasonable professional probability.

26         2.  That the analyses and tests conducted were of

27  sufficient scope to eliminate sinkhole activity as the cause

28  of damage within a reasonable professional probability.

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

30  reasonable professional probability.

31         4.  A description of the tests performed.

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 1         (c)  The respective findings, opinions, and

 2  recommendations of the professional engineer and professional

 3  geologist as to the cause of distress to the property

 4  verification or elimination of a sinkhole loss and the

 5  findings, opinions, and recommendations of the professional

 6  engineer as to land and building stabilization and foundation

 7  repair shall be presumed correct.

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

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

10  prepared pursuant to subsection (1), with the county clerk of

11  court property appraiser, who shall record the report and

12  certification with the parcel number. The insurer shall bear

13  the cost of filing and recording the report and certification.

14  There shall be no cause of action or liability against an

15  insurer for compliance with this section. The seller of real

16  property upon which a sinkhole claim has been made shall

17  disclose to the buyer of such property that a claim has been

18  paid and whether or not the full amount of the proceeds were

19  used to repair the sinkhole damage.

20         Section 22.  Effective October 1, 2006, section

21  627.7074, Florida Statutes, is created to read:

22         627.7074  Alternative procedure for resolution of

23  disputed sinkhole insurance claims.--

24         (1)  As used in this section, the term:

25         (a)  "Neutral evaluation" means the alternative dispute

26  resolution provided for in this section.

27         (b)  "Neutral evaluator" means a professional engineer

28  or a professional geologist who has completed a course of

29  study in alternative dispute resolution designed or approved

30  by the department for use in the neutral evaluation process,

31  who is determined to be fair and impartial.

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 1         (2)(a)  The department shall certify and maintain a

 2  list of persons who are neutral evaluators.

 3         (b)  The department shall prepare a consumer

 4  information pamphlet for distribution by insurers to

 5  policyholders which clearly describes the neutral evaluation

 6  process and includes information and forms necessary for the

 7  policyholder to request a neutral evaluation.

 8         (3)  Following the receipt of the report provided under

 9  s. 627.7073 or the denial of a claim for a sinkhole loss, the

10  insurer shall notify the policyholder of his or her right to

11  participate in the neutral evaluation program under this

12  section. Neutral evaluation supersedes the alternative dispute

13  resolution process under s. 627.7015. The insurer shall

14  provide to the policyholder the consumer information pamphlet

15  prepared by the department pursuant to paragraph (2)(b).

16         (4)  Neutral evaluation is optional and nonbinding.

17  Either the policyholder or the insurer may decline to

18  participate. A request for neutral evaluation may be filed

19  with the department by the policyholder or the insurer on a

20  form approved by the department. The request for neutral

21  evaluation must state the reason for the request and must

22  include an explanation of all the issues in dispute at the

23  time of the request. Filing a request for neutral evaluation

24  tolls the applicable time requirements for filing suit for a

25  period of 60 days following the conclusion of the neutral

26  evaluation process or the time prescribed in s. 95.11,

27  whichever is later.

28         (5)  Neutral evaluation shall be conducted as an

29  informal process in which formal rules of evidence and

30  procedure need not be observed. A party to neutral evaluation

31  is not required to attend neutral evaluation if a

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 1  representative of the party attends and has the authority to

 2  make a binding decision on behalf of the party. All parties

 3  shall participate in the evaluation in good faith.

 4         (6)  The insurer shall pay the costs associated with

 5  the neutral evaluation.

 6         (7)  Upon receipt of a request for neutral evaluation,

 7  the department shall refer the request to a neutral evaluator.

 8  The neutral evaluator shall notify the policyholder and the

 9  insurer of the date, time, and place of the neutral evaluation

10  conference. The conference may be held by telephone, if

11  feasible and desirable. The neutral evaluation conference

12  shall be held within 45 days after receipt of the request by

13  the department.

14         (8)  The department shall adopt rules of procedure for

15  the neutral evaluation process.

16         (9)  For policyholders not represented by an attorney,

17  a consumer affairs specialist of the department or an employee

18  designated as the primary contact for consumers on issues

19  relating to sinkholes under s. 20.121 shall be available for

20  consultation to the extent that he or she may lawfully do so.

21         (10)  Evidence of an offer to settle a claim during the

22  neutral evaluation process, as well as any relevant conduct or

23  statements made in negotiations concerning the offer to settle

24  a claim, is inadmissible to prove liability or absence of

25  liability for the claim or its value, except as provided in

26  subsection (13).

27         (11)  Any court proceeding related to the subject

28  matter of the neutral evaluation shall be stayed pending

29  completion of the neutral evaluation.

30         (12)  For matters that are not resolved by the parties

31  at the conclusion of the neutral evaluation, the neutral

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 1  evaluator shall prepare a report stating that in his or her

 2  opinion the sinkhole loss has been verified or eliminated and,

 3  if verified, the need for and estimated costs of stabilizing

 4  the land and any covered structures or buildings and other

 5  appropriate remediation or structural repairs. The evaluator's

 6  report shall be sent to all parties in attendance at the

 7  neutral evaluation and to the department.

 8         (13)  The recommendation of the neutral evaluator is

 9  not binding on any party, and the parties retain access to

10  courts. The neutral evaluator's written recommendation is

11  admissible in any subsequent action or proceeding relating to

12  the claim or to the cause of action giving rise to the claim

13  only for purposes of determining the award of attorney's fees.

14         (14)  If the neutral evaluator first verifies the

15  existence of a sinkhole and, second, recommends the need for

16  and estimates costs of stabilizing the land and any covered

17  structures or buildings and other appropriate remediation or

18  structural repairs, which costs exceed the amount that the

19  insurer has offered to pay the policyholder, the insurer is

20  liable to the policyholder for up to $2,500 in attorney's fees

21  for the attorney's participation in the neutral evaluation

22  process. For purposes of this subsection, the term "offer to

23  pay" means a written offer signed by the insurer or its legal

24  representative and delivered to the policyholder within 10

25  days after the insurer receives notice that a request for

26  neutral evaluation has been made under this section.

27         (15)  If the policyholder declines to participate in

28  neutral evaluation requested by the insurer or declines to

29  resolve the matter in accordance with the recommendation of

30  the neutral evaluator pursuant to this section, the insurer is

31  not liable for attorney's fees under s. 627.428 or other

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 1  provisions of the insurance code or for extra-contractual

 2  damages related to a claim for a sinkhole loss.

 3         (16)  A party may seek judicial review of the

 4  recommendation of the neutral evaluator to determine whether

 5  the recommendation is reasonable. A recommendation is

 6  reasonable unless: it was procured by corruption, fraud, or

 7  other undue means; there was evident partiality by the neutral

 8  evaluator or misconduct prejudicing the rights of any party;

 9  or the neutral evaluator exceeded the authority and power

10  granted by this section. If the court declares the

11  recommendation is not reasonable, the neutral evaluation

12  recommendation shall be vacated.

13         Section 23.  Subsection (5) of section 627.727, Florida

14  Statutes, is amended to read:

15         627.727  Motor vehicle insurance; uninsured and

16  underinsured vehicle coverage; insolvent insurer protection.--

17         (5)  Any person having a claim against an insolvent

18  insurer as defined in s. 631.54(6) s. 631.54(5) under the

19  provisions of this section shall present such claim for

20  payment to the Florida Insurance Guaranty Association only. In

21  the event of a payment to any person in settlement of a claim

22  arising under the provisions of this section, the association

23  is not subrogated or entitled to any recovery against the

24  claimant's insurer. The association, however, has the rights

25  of recovery as set forth in chapter 631 in the proceeds

26  recoverable from the assets of the insolvent insurer.

27         Section 24.  Paragraph (f) is added to subsection (2)

28  of section 631.181, Florida Statutes, to read:

29         631.181  Filing and proof of claim.--

30         (2)

31  

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 1         (f)  The signed statement required by this section

 2  shall not be required on claims for which adequate claims file

 3  documentation exists within the records of the insolvent

 4  insurer. Claims for payment of unearned premium shall not be

 5  required to use the signed statement required by this section

 6  if the receiver certifies to the guaranty fund that the

 7  records of the insolvent insurer are sufficient to determine

 8  the amount of unearned premium owed to each policyholder of

 9  the insurer and such information is remitted to the guaranty

10  fund by the receiver in electronic or other mutually

11  agreed-upon format.

12         Section 25.  Subsection (3) of section 631.54, Florida

13  Statutes, is amended, present subsections (5), (6), (7), and

14  (8) of that section are renumbered as subsections (6), (7),

15  (8), and (9), respectively, and a new subsection (5) is added

16  to that section to read:

17         631.54  Definitions.--As used in this part:

18         (3)  "Covered claim" means an unpaid claim, including

19  one of unearned premiums, which arises out of, and is within

20  the coverage, and not in excess of, the applicable limits of

21  an insurance policy to which this part applies, issued by an

22  insurer, if such insurer becomes an insolvent insurer and the

23  claimant or insured is a resident of this state at the time of

24  the insured event or the property from which the claim arises

25  is permanently located in this state. For entities other than

26  individuals, the residence of a claimant, insured, or

27  policyholder is the state in which the entity's principal

28  place of business is located at the time of the insured event.

29  "Covered claim" shall not include:

30         (a)  Any amount due any reinsurer, insurer, insurance

31  pool, or underwriting association, sought directly or

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 1  indirectly through a third party, as subrogation,

 2  contribution, indemnification, or otherwise; or

 3         (b)  Any claim that would otherwise be a covered claim

 4  under this part that has been rejected by any other state

 5  guaranty fund on the grounds that an insured's net worth is

 6  greater than that allowed under that state's guaranty law.

 7  Member insurers shall have no right of subrogation,

 8  contribution, indemnification, or otherwise, sought directly

 9  or indirectly through a third party, against the insured of

10  any insolvent member.

11         (5)  "Homeowner's insurance" means personal lines

12  residential property insurance coverage that consists of the

13  type of coverage provided under homeowner's, dwelling, and

14  similar policies for repair or replacement of the insured

15  structure and contents, which policies are written directly to

16  the individual homeowner. Residential coverage for personal

17  lines as set forth in this section includes policies that

18  provide coverage for particular perils such as windstorm and

19  hurricane coverage but excludes all coverage for mobile homes,

20  renter's insurance, or tenant's coverage. The term

21  "homeowner's insurance" excludes commercial residential

22  policies covering condominium associations or homeowners'

23  associations, which associations have a responsibility to

24  provide insurance coverage on residential units within the

25  association, and also excludes coverage for the common

26  elements of a homeowners' association.

27         Section 26.  Subsection (1) of section 631.55, Florida

28  Statutes, is amended to read:

29         631.55  Creation of the association.--

30         (1)  There is created a nonprofit corporation to be

31  known as the "Florida Insurance Guaranty Association,

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 1  Incorporated." All insurers defined as member insurers in s.

 2  631.54(7) s. 631.54(6) shall be members of the association as

 3  a condition of their authority to transact insurance in this

 4  state, and, further, as a condition of such authority, an

 5  insurer shall agree to reimburse the association for all claim

 6  payments the association makes on said insurer's behalf if

 7  such insurer is subsequently rehabilitated. The association

 8  shall perform its functions under a plan of operation

 9  established and approved under s. 631.58 and shall exercise

10  its powers through a board of directors established under s.

11  631.56. The corporation shall have all those powers granted or

12  permitted nonprofit corporations, as provided in chapter 617.

13         Section 27.  Paragraph (a) of subsection (1), paragraph

14  (d) of subsection (2), and paragraph (a) of subsection (3) of

15  section 631.57, Florida Statutes, are amended, and paragraph

16  (e) is added to subsection (3) of that section, to read:

17         631.57  Powers and duties of the association.--

18         (1)  The association shall:

19         (a)1.  Be obligated to the extent of the covered claims

20  existing:

21         a.  Prior to adjudication of insolvency and arising

22  within 30 days after the determination of insolvency;

23         b.  Before the policy expiration date if less than 30

24  days after the determination; or

25         c.  Before the insured replaces the policy or causes

26  its cancellation, if she or he does so within 30 days of the

27  determination.

28         2.  The obligation under subparagraph 1. includes only

29  the amount of each covered claim which is in excess of $100

30  and is less than $300,000, except that policies providing

31  coverage for homeowner's insurance shall provide for an

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 1  additional $200,000 for the portion of a covered claim which

 2  relates only to the damage to the structure and contents.

 3         3.a.2.  Notwithstanding subparagraph 2., the obligation

 4  under subparagraph 1. for shall include only that amount of

 5  each covered claim which is in excess of $100 and is less than

 6  $300,000, except with respect to policies covering condominium

 7  associations or homeowners' associations, which associations

 8  have a responsibility to provide insurance coverage on

 9  residential units within the association, the obligation shall

10  include that amount of each covered property insurance claim

11  which is less than $100,000 multiplied by the number of

12  condominium units or other residential units; however, as to

13  homeowners' associations, this sub-subparagraph subparagraph

14  applies only to claims for damage or loss to residential units

15  and structures attached to residential units.

16         b.  Notwithstanding sub-subparagraph a., the

17  association has no obligation to pay covered claims that are

18  to be paid from the proceeds of bonds issued under s. 631.695.

19  However, the association shall assign and pledge the first

20  available moneys from all or part of the assessments to be

21  made under paragraph (3)(a) to or on behalf of the issuer of

22  such bonds for the benefit of the holders of such bonds. The

23  association shall administer any such covered claims and

24  present valid covered claims for payment in accordance with

25  the provisions of the assistance program in connection with

26  which such bonds have been issued.

27         4.3.  In no event shall the association be obligated to

28  a policyholder or claimant in an amount in excess of the

29  obligation of the insolvent insurer under the policy from

30  which the claim arises.

31         (2)  The association may:

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 1         (d)  Negotiate and become a party to such contracts as

 2  are necessary to carry out the purpose of this part.

 3  Additionally, the association may enter into such contracts

 4  with a municipality, a county, or a legal entity created

 5  pursuant to s. 163.01(7)(g) as are necessary in order for the

 6  municipality, county, or legal entity to issue bonds under s.

 7  631.695. In connection with the issuance of any such bonds and

 8  the entering into of any such necessary contracts, the

 9  association may agree to such terms and conditions as the

10  association deems necessary and proper.

11         (3)(a)  To the extent necessary to secure the funds for

12  the respective accounts for the payment of covered claims, and

13  also to pay the reasonable costs to administer the same, and

14  to the extent necessary to secure the funds for the account

15  specified in s. 631.55(2)(c) or to retire indebtedness,

16  including, without limitation, the principal, redemption

17  premium, if any, and interest on, and related costs of

18  issuance of, bonds issued under s. 631.695 and the funding of

19  any reserves and other payments required under the bond

20  resolution or trust indenture pursuant to which such bonds

21  have been issued, the office, upon certification of the board

22  of directors, shall levy assessments in the proportion that

23  each insurer's net direct written premiums in this state in

24  the classes protected by the account bears to the total of

25  said net direct written premiums received in this state by all

26  such insurers for the preceding calendar year for the kinds of

27  insurance included within such account. Assessments shall be

28  remitted to and administered by the board of directors in the

29  manner specified by the approved plan. Each insurer so

30  assessed shall have at least 30 days' written notice as to the

31  date the assessment is due and payable. Every assessment shall

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 1  be made as a uniform percentage applicable to the net direct

 2  written premiums of each insurer in the kinds of insurance

 3  included within the account in which the assessment is made.

 4  The assessments levied against any insurer shall not exceed in

 5  any one year more than 2 percent of that insurer's net direct

 6  written premiums in this state for the kinds of insurance

 7  included within such account during the calendar year next

 8  preceding the date of such assessments.

 9         (e)1.a.  In addition to assessments otherwise

10  authorized in paragraph (a) and to the extent necessary to

11  secure the funds for the account specified in s. 631.55(2)(c)

12  or to retire indebtedness, including, without limitation, the

13  principal, redemption premium, if any, and interest on, and

14  related costs of issuance of, bonds issued under s. 631.695

15  and the funding of any reserves and other payments required

16  under the bond resolution or trust indenture pursuant to which

17  such bonds have been issued, the office, upon certification of

18  the board of directors, shall levy emergency assessments upon

19  insurers holding a certificate of authority. The emergency

20  assessments payable under this paragraph by any insurer shall

21  not exceed in any single year more than 2 percent of that

22  insurer's direct written premiums, net of refunds, in this

23  state during the preceding calendar year for the kinds of

24  insurance within the account specified in s. 631.55(2)(c).

25         b.  Any emergency assessments authorized under this

26  paragraph shall be levied by the office upon insurers referred

27  to in sub-subparagraph a., upon certification as to the need

28  for such assessments by the board of directors, in each year

29  that bonds issued under s. 631.695 and secured by such

30  emergency assessments are outstanding, in such amounts up to

31  such 2-percent limit as required in order to provide for the

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 1  full and timely payment of the principal of, redemption

 2  premium, if any, and interest on, and related costs of

 3  issuance of, such bonds. The emergency assessments provided

 4  for in this paragraph are assigned and pledged to the

 5  municipality, county, or legal entity issuing bonds under s.

 6  631.695 for the benefit of the holders of such bonds, in order

 7  to enable such municipality, county, or legal entity to

 8  provide for the payment of the principal of, redemption

 9  premium, if any, and interest on such bonds, the cost of

10  issuance of such bonds, and the funding of any reserves and

11  other payments required under the bond resolution or trust

12  indenture pursuant to which such bonds have been issued,

13  without the necessity of any further action by the

14  association, the office, or any other party. To the extent

15  bonds are issued under s. 631.695 and the association

16  determines to secure such bonds by a pledge of revenues

17  received from the emergency assessments, such bonds, upon such

18  pledge of revenues, shall be secured by and payable from the

19  proceeds of such emergency assessments, and the proceeds of

20  emergency assessments levied under this paragraph shall be

21  remitted directly to and administered by the trustee or

22  custodian appointed for such bonds.

23         c.  Emergency assessments under this paragraph may be

24  payable in a single payment or, at the option of the

25  association, may be payable in 12 monthly installments with

26  the first installment being due and payable at the end of the

27  month after an emergency assessment is levied and subsequent

28  installments being due not later than the end of each

29  succeeding month.

30         d.  If emergency assessments are imposed, the report

31  required by s. 631.695(7) shall include an analysis of the

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 1  revenues generated from the emergency assessments imposed

 2  under this paragraph.

 3         e.  If emergency assessments are imposed, the

 4  references in sub-subparagraph (1)(a)3.b. and s. 631.695(2)

 5  and (7) to assessments levied under paragraph (a) shall

 6  include emergency assessments imposed under this paragraph.

 7         2.  In order to ensure that insurers paying emergency

 8  assessments levied under this paragraph continue to charge

 9  rates that are neither inadequate nor excessive, within 90

10  days after being notified of such assessments, each insurer

11  that is to be assessed pursuant to this paragraph shall submit

12  a rate filing for coverage included within the account

13  specified in s. 631.55(2)(c) and for which rates are required

14  to be filed under s. 627.062. If the filing reflects a rate

15  change that, as a percentage, is equal to the difference

16  between the rate of such assessment and the rate of the

17  previous year's assessment under this paragraph, the filing

18  shall consist of a certification so stating and shall be

19  deemed approved when made. Any rate change of a different

20  percentage shall be subject to the standards and procedures of

21  s. 627.062.

22         3.  An annual assessment under this paragraph shall

23  continue while the bonds issued with respect to which the

24  assessment was imposed are outstanding, including any bonds

25  the proceeds of which were used to refund bonds issued

26  pursuant to s. 631.695, unless adequate provision has been

27  made for the payment of the bonds in the documents authorizing

28  the issuance of such bonds.

29         4.  Emergency assessments under this paragraph are not

30  premium and are not subject to the premium tax, to any fees,

31  or to any commissions. An insurer is liable for all emergency

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 1  assessments that the insurer collects and shall treat the

 2  failure of an insured to pay an emergency assessment as a

 3  failure to pay the premium. An insurer is not liable for

 4  uncollectible emergency assessments.

 5         Section 28.  Section 631.695, Florida Statutes, is

 6  created to read:

 7         631.695  Revenue bond issuance through counties or

 8  municipalities.--

 9         (1)  The Legislature finds:

10         (a)  The potential for widespread and massive damage to

11  persons and property caused by hurricanes making landfall in

12  this state can generate insurance claims of such a number as

13  to render numerous insurers operating within this state

14  insolvent and therefore unable to satisfy covered claims.

15         (b)  The inability of insureds within this state to

16  receive payment of covered claims or to timely receive such

17  payment creates financial and other hardships for such

18  insureds and places undue burdens on the state, the affected

19  units of local government, and the community at large.

20         (c)  In addition, the failure of insurers to pay

21  covered claims or to timely pay such claims due to the

22  insolvency of such insurers can undermine the public's

23  confidence in insurers operating within this state, thereby

24  adversely affecting the stability of the insurance industry in

25  this state.

26         (d)  The state has previously taken action to address

27  these problems by adopting the Florida Insurance Guaranty

28  Association Act, which, among other things, provides a

29  mechanism for the payment of covered claims under certain

30  insurance policies to avoid excessive delay in payment and to

31  

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 1  avoid financial loss to claimants or policyholders because of

 2  the insolvency of an insurer.

 3         (e)  In the wake of the unprecedented destruction

 4  caused by various hurricanes that have made landfall in this

 5  state, the resultant covered claims, and the number of

 6  insurers rendered insolvent thereby, make it evident that

 7  alternative programs must be developed to allow the Florida

 8  Insurance Guaranty Association to more expeditiously and

 9  effectively provide for the payment of covered claims.

10         (f)  It is therefore determined to be in the best

11  interests of, and necessary for, the protection of the public

12  health, safety, and general welfare of the residents of this

13  state and for the protection and preservation of the economic

14  stability of insurers operating in this state, and it is

15  declared to be an essential public purpose, to permit certain

16  municipalities and counties to take such actions as will

17  provide relief to claimants and policyholders having covered

18  claims against insolvent insurers operating in this state by

19  expediting the handling and payment of covered claims.

20         (g)  To achieve the foregoing purposes, it is proper to

21  authorize municipalities and counties of this state

22  substantially affected by the landfall of a hurricane to issue

23  bonds to assist the Florida Insurance Guaranty Association in

24  expediting the handling and payment of covered claims of

25  insolvent insurers.

26         (h)  In order to avoid the needless and indiscriminate

27  proliferation, duplication, and fragmentation of such

28  assistance programs, it is in the best interests of the

29  residents of this state to authorize municipalities and

30  counties severely affected by a hurricane to provide for the

31  

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 1  payment of covered claims beyond their territorial limits in

 2  the implementation of such programs.

 3         (i)  It is a paramount public purpose for

 4  municipalities and counties substantially affected by the

 5  landfall of a hurricane to be able to issue bonds for the

 6  purposes described in this section. Such issuance shall

 7  provide assistance to residents of those municipalities and

 8  counties as well as to other residents of this state.

 9         (2)  The governing body of any municipality or county,

10  the residents of which have been substantially affected by a

11  hurricane, may issue bonds to fund an assistance program in

12  conjunction with, and with the consent of, the Florida

13  Insurance Guaranty Association for the purpose of paying

14  claimants' or policyholders' covered claims, as defined in s.

15  631.54, arising through the insolvency of an insurer, which

16  insolvency is determined by the Florida Insurance Guaranty

17  Association to have been a result of a hurricane, regardless

18  of whether the claimants or policyholders are residents of

19  such municipality or county or the property to which the claim

20  relates is located within or outside the territorial

21  jurisdiction of the municipality or county. The power of a

22  municipality or county to issue bonds, as described in this

23  section, is in addition to any powers granted by law and may

24  not be abrogated or restricted by any provisions in such

25  municipality's or county's charter. A municipality or county

26  issuing bonds for this purpose shall enter into such contracts

27  with the Florida Insurance Guaranty Association or any entity

28  acting on behalf of the Florida Insurance Guaranty Association

29  as are necessary to implement the assistance program. Any

30  bonds issued by a municipality or county or a combination

31  thereof under this subsection shall be payable from and

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 1  secured by moneys received by or on behalf of the municipality

 2  or county from assessments levied under s. 631.57(3)(a) and

 3  assigned and pledged to or on behalf of the municipality or

 4  county for the benefit of the holders of the bonds in

 5  connection with the assistance program. The funds, credit,

 6  property, and taxing power of the state or any municipality or

 7  county shall not be pledged for the payment of such bonds.

 8         (3)  Bonds may be validated by the municipality or

 9  county pursuant to chapter 75. The proceeds of the bonds may

10  be used to pay covered claims of insolvent insurers; to

11  refinance or replace previously existing borrowings or

12  financial arrangements; to pay interest on bonds; to fund

13  reserves for the bonds; to pay expenses incident to the

14  issuance or sale of any bond issued under this section,

15  including costs of validating, printing, and delivering the

16  bonds, costs of printing the official statement, costs of

17  publishing notices of sale of the bonds, costs of obtaining

18  credit enhancement or liquidity support, and related

19  administrative expenses; or for such other purposes related to

20  the financial obligations of the fund as the association may

21  determine. The term of the bonds may not exceed 30 years.

22         (4)  The state covenants with holders of bonds of the

23  assistance program that the state will not take any action

24  that will have a material adverse effect on the holders and

25  will not repeal or abrogate the power of the board of

26  directors of the association to direct the Office of Insurance

27  Regulation to levy the assessments and to collect the proceeds

28  of the revenues pledged to the payment of the bonds as long as

29  any of the bonds remain outstanding, unless adequate provision

30  has been made for the payment of the bonds in the documents

31  authorizing the issuance of the bonds.

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 1         (5)  The accomplishment of the authorized purposes of

 2  such municipality or county under this section is in all

 3  respects for the benefit of the people of the state, for the

 4  increase of their commerce and prosperity, and for the

 5  improvement of their health and living conditions. The

 6  municipality or county, in performing essential governmental

 7  functions in accomplishing its purposes, is not required to

 8  pay any taxes or assessments of any kind whatsoever upon any

 9  property acquired or used by the county or municipality for

10  such purposes or upon any revenues at any time received by the

11  county or municipality. The bonds, notes, and other

12  obligations of the municipality or county and the transfer of

13  and income from such bonds, notes, and other obligations,

14  including any profits made on the sale of such bonds, notes,

15  and other obligations, are exempt from taxation of any kind by

16  the state or by any political subdivision or other agency or

17  instrumentality of the state. The exemption granted in this

18  subsection is not applicable to any tax imposed by chapter 220

19  on interest, income, or profits on debt obligations owned by

20  corporations.

21         (6)  Two or more municipalities or counties, the

22  residents of which have been substantially affected by a

23  hurricane, may create a legal entity pursuant to s.

24  163.01(7)(g) to exercise the powers described in this section

25  as well as those powers granted in s. 163.01(7)(g). References

26  in this section to a municipality or county includes such

27  legal entity.

28         (7)  The association shall issue an annual report on

29  the status of the use of bond proceeds as related to

30  insolvencies caused by hurricanes. The report must contain the

31  number and amount of claims paid. The association shall also

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 1  include an analysis of the revenue generated from the

 2  assessment levied under s. 631.57(3)(a) to pay such bonds. The

 3  association shall submit a copy of the report to the President

 4  of the Senate, the Speaker of the House of Representatives,

 5  and the Chief Financial Officer within 90 days after the end

 6  of each calendar year in which bonds were outstanding.

 7         Section 29.  No provision of s. 631.57 or s. 631.695,

 8  Florida Statutes, shall be repealed until such time as the

 9  principal, redemption premium, if any, and interest on all

10  bonds issued under s. 631.695, Florida Statutes, payable and

11  secured from assessments levied under s. 631.57(3)(a), Florida

12  Statutes, have been paid in full or adequate provision for

13  such payment has been made in accordance with the bond

14  resolution or trust indenture pursuant to which the bonds were

15  issued.

16         Section 30.  Subsection (2) of section 877.02, Florida

17  Statutes, is amended to read:

18         877.02  Solicitation of legal services or retainers

19  therefor; penalty.--

20         (2)  It shall be unlawful for any person in the employ

21  of or in any capacity attached to any hospital, sanitarium,

22  police department, wrecker service or garage, prison or court,

23  or for a person authorized to furnish bail bonds,

24  investigators, photographers, insurance or public adjusters,

25  or for a general or other contractor as defined in s. 489.105

26  or other business providing sinkhole remediation services, to

27  communicate directly or indirectly with any attorney or person

28  acting on said attorney's behalf for the purpose of aiding,

29  assisting or abetting such attorney in the solicitation of

30  legal business or the procurement through solicitation of a

31  

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 1  retainer, written or oral, or any agreement authorizing the

 2  attorney to perform or render legal services.

 3         Section 31.  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 32.  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 33.  Except as otherwise expressly provided in

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

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 1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
 2                         Senate Bill 1980

 3                                 

 4  1.   Requires a 25 percent rate surcharge in Citizens Property
         Insurance Corporation ("Citizens") for personal lines
 5       residential property valued at $1 million or more,
         effective January 1, 2007, and makes such properties
 6       ineligible for coverage with Citizens, effective July 1,
         2011.
 7  
    2.   Revises the definition of "homestead property" for
 8       purposes of requiring Citizens to impose a 25 percent
         surcharge for "nonhomestead" property.
 9  
    3.   Revises standards for rates for coverage provided by
10       Citizens.

11  4.   Revises standards for approval by the Office of Insurance
         Regulation of property insurance rates by authorized
12       insurers.

13  5.   Requires Citizens to report to the Legislature on the
         feasibility of requiring insurers providing the non-wind
14       coverage to issue and service Citizens' wind policy.

15  6.   Extends the exemption of medical malpractice premiums
         from assessments to fund bonds issued by the Florida
16       Hurricane Catastrophe Fund (FHCF).

17  7.   Clarifies procedures for issuing bonds and collecting
         assessments, in order to facilitate a bond issue to cover
18       the current deficit of the FHCF.

19  8.   Requires the public hurricane loss model to be submitted
         for review by the Florida Commission on Hurricane Loss
20       Projection Methodology.  Allows OIR to continue to use
         the public model in reviewing rate filings until the
21       Commission determines that the public model is not
         accurate or reliable.
22  
    9.   Requires the chief executive officer and chief financial
23       officer of an insurer or its certified public accountant
         to sign a sworn statement certifying the appropriateness
24       of a rate filing.

25  10.  Requires the Financial Services Commission to provide an
         annual report to the Legislature of the probable maximum
26       losses, financing options, and potential assessments of
         Citizens and the FHCF, and the assessment burden on
27       Florida policyholders.

28  11.  Allows residential policies to provide a deductible for
         sinkhole losses equal to 1 percent, 2 percent, 5 percent,
29       or 10 percent of the dwelling limits and makes other
         changes regarding coverage of sinkhole losses.
30  
    12   Makes it unlawful for a contractor or business providing
31       sinkhole remediation services to communicate with any
         attorney for the purpose of assisting the attorney in the
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 1       solicitation of legal business.

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