HB 223

1	A bill to be entitled
2	An act relating to Citizens Property Insurance Corporation
3	residential property insurance rates; amending s. 627.351,
4	F.S.; providing additional legislative intent relating to
5	coverage rates provided by the Citizens Property Insurance
6	Corporation; specifying nonapplication of certain policy
7	requirements in postal zip code areas lacking any
8	competition for personal lines residential policies under
9	certain circumstances; requiring the Financial Services
10	Commission to adopt rules; requiring the Office of
11	Insurance Regulation to periodically determine and
12	identify postal zip code areas in which no competition
13	exists for personal lines residential policies; deleting
14	an obsolete rate methodology panel reporting requirement
15	provision; providing an effective date.
16
17	Be It Enacted by the Legislature of the State of Florida:
18
19	Section 1.  Paragraph (d) of subsection (6) of section
20	627.351, Florida Statutes, is amended to read:
21	627.351  Insurance risk apportionment plans.--
22	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
23	(d)1.  It is the intent of the Legislature that the rates
24	for coverage provided by the corporation be actuarially sound
25	and not competitive with approved rates charged in the admitted
26	voluntary market, so that the corporation functions as a
27	residual market mechanism to provide insurance only when the
28	insurance cannot be procured in the voluntary market. Rates
29	shall include an appropriate catastrophe loading factor that
30	reflects the actual catastrophic exposure of the corporation.
31	2.a.  Except as provided in subparagraph 3., for each
32	county, the average rates of the corporation for each line of
33	business for personal lines residential policies excluding rates
34	for wind-only policies shall be no lower than the average rates
35	charged by the insurer that had the highest average rate in that
36	county among the 20 insurers with the greatest total direct
37	written premium in the state for that line of business in the
38	preceding year, except that with respect to mobile home
39	coverages, the average rates of the corporation shall be no
40	lower than the average rates charged by the insurer that had the
41	highest average rate in that county among the 5 insurers with
42	the greatest total written premium for mobile home owner's
43	policies in the state in the preceding year.
44	b.3.  Rates for personal lines residential wind-only
45	policies must be actuarially sound and not competitive with
46	approved rates charged by authorized insurers. Corporation rate
47	manuals shall include a rate surcharge for seasonal occupancy.
48	To ensure that personal lines residential wind-only rates are
49	not competitive with approved rates charged by authorized
50	insurers, the corporation, in conjunction with the office, shall
51	develop a wind-only ratemaking methodology, which methodology
52	shall be contained in each rate filing made by the corporation
53	with the office. If the office determines that the wind-only
54	rates or rating factors filed by the corporation fail to comply
55	with the wind-only ratemaking methodology provided for in this
56	subsection, it shall so notify the corporation and require the
57	corporation to amend its rates or rating factors to come into
58	compliance within 90 days of notice from the office.
59	3.  The provisions of sub-subparagraph 2.a. do not apply to
60	coverage provided by the corporation in any area of a postal zip
61	code for which the office determines that no competition exists
62	for personal lines residential policies. The provisions of sub-
63	subparagraph 2.b. do not apply to coverage provided by the
64	corporation in any area of a postal zip code for which the
65	office determines that no competition exists for personal lines
66	residential policies in the portion of the area of that postal
67	zip code that is eligible for wind-only coverage. In such postal
68	zip code areas, the rates for personal lines residential
69	coverage must only be actuarially sound and not excessive,
70	inadequate, or unfairly discriminatory and are subject to the
71	other provisions of this paragraph and s. 627.062. The
72	commission shall adopt rules establishing criteria for
73	determining whether no competition exists for personal lines
74	residential policies in an area of a postal zip code. Beginning
75	October 1, 2006, and each 3 months thereafter, the office shall
76	determine and identify for purposes of this subparagraph those
77	areas of postal zip codes for which no competition exists for
78	personal lines residential policies.
79	4.  For the purposes of establishing a pilot program to
80	evaluate issues relating to the availability and affordability
81	of insurance in an area where historically there has been little
82	market competition, the provisions of sub-subparagraph 2.a.
83	subparagraph 2. do not apply to coverage provided by the
84	corporation in Monroe County if the office determines that a
85	reasonable degree of competition does not exist for personal
86	lines residential policies. The provisions of sub-subparagraph
87	2.b. subparagraph 3. do not apply to coverage provided by the
88	corporation in Monroe County if the office determines that a
89	reasonable degree of competition does not exist for personal
90	lines residential policies in the area of that county which is
91	eligible for wind-only coverage. In this county, the rates for
92	personal lines residential coverage shall be actuarially sound
93	and not excessive, inadequate, or unfairly discriminatory and
94	are subject to the other provisions of the paragraph and s.
95	627.062. The commission shall adopt rules establishing the
96	criteria for determining whether a reasonable degree of
97	competition exists for personal lines residential policies in
98	Monroe County. By March 1, 2006, the office shall submit a
99	report to the Legislature providing an evaluation of the
100	implementation of the pilot program affecting Monroe County.
101	5.  Rates for commercial lines coverage shall not be
102	subject to the requirements of sub-subparagraph 2.a.
103	subparagraph 2., but shall be subject to all other requirements
104	of this paragraph and s. 627.062.
105	6.  Nothing in this paragraph shall require or allow the
106	corporation to adopt a rate that is inadequate under s. 627.062.
107	7.  The corporation shall certify to the office at least
108	twice annually that its personal lines rates comply with the
109	requirements of this paragraph subparagraphs 1. and 2. If any
110	adjustment in the rates or rating factors of the corporation is
111	necessary to ensure such compliance, the corporation shall make
112	and implement such adjustments and file its revised rates and
113	rating factors with the office. If the office thereafter
114	determines that the revised rates and rating factors fail to
115	comply with the provisions of this paragraph subparagraphs 1.
116	and 2., the office it shall notify the corporation and require
117	the corporation to amend its rates or rating factors in
118	conjunction with its next rate filing. The office must notify
119	the corporation by electronic means of any rate filing it
120	approves for any insurer among the insurers referred to in sub-
121	subparagraph 2.a subparagraph 2.
122	8.  In addition to the rates otherwise determined pursuant
123	to this paragraph, the corporation shall impose and collect an
124	amount equal to the premium tax provided for in s. 624.509 to
125	augment the financial resources of the corporation.
126	9.a.  To assist the corporation in developing additional
127	ratemaking methods to ensure assure compliance with this
128	paragraph subparagraphs 1. and 4., the corporation shall appoint
129	a rate methodology panel consisting of one person recommended by
130	the Florida Association of Insurance Agents, one person
131	recommended by the Professional Insurance Agents of Florida, one
132	person recommended by the Florida Association of Insurance and
133	Financial Advisors, one person recommended by the insurer with
134	the highest voluntary market share of residential property
135	insurance business in the state, one person recommended by the
136	insurer with the second-highest voluntary market share of
137	residential property insurance business in the state, one person
138	recommended by an insurer writing commercial residential
139	property insurance in this state, one person recommended by the
140	Office of Insurance Regulation, and one board member designated
141	by the board chairman, who shall serve as chairman of the panel.
142	b.  By January 1, 2004, the rate methodology panel shall
143	provide a report to the corporation of its findings and
144	recommendations for the use of additional ratemaking methods and
145	procedures, including the use of a rate equalization surcharge
146	in an amount sufficient to assure that the total cost of
147	coverage for policyholders or applicants to the corporation is
148	sufficient to comply with subparagraph 1.
149	c.  Within 30 days after such report, the corporation shall
150	present to the President of the Senate, the Speaker of the House
151	of Representatives, the minority party leaders of each house of
152	the Legislature, and the chairs of the standing committees of
153	each house of the Legislature having jurisdiction of insurance
154	issues, a plan for implementing the additional ratemaking
155	methods and an outline of any legislation needed to facilitate
156	use of the new methods.
157	d.  The plan must include a provision that producer
158	commissions paid by the corporation shall not be calculated in
159	such a manner as to include any rate equalization surcharge.
160	However, without regard to the plan to be developed or its
161	implementation, producer commissions paid by the corporation for
162	each account, other than the quota share primary program, shall
163	remain fixed as to percentage, effective rate, calculation, and
164	payment method until January 1, 2004.
165	10.  By January 1, 2004, The corporation shall develop a
166	notice to policyholders or applicants that the rates of Citizens
167	Property Insurance Corporation are intended to be higher than
168	the rates of any admitted carrier and providing other
169	information the corporation deems necessary to assist consumers
170	in finding other voluntary admitted insurers willing to insure
171	their property.
172	Section 2.  This act shall take effect July 1, 2006.

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