HB 223

1
A bill to be entitled
2An act relating to Citizens Property Insurance Corporation
3residential property insurance rates; amending s. 627.351,
4F.S.; providing additional legislative intent relating to
5coverage rates provided by the Citizens Property Insurance
6Corporation; specifying nonapplication of certain policy
7requirements in postal zip code areas lacking any
8competition for personal lines residential policies under
9certain circumstances; requiring the Financial Services
10Commission to adopt rules; requiring the Office of
11Insurance Regulation to periodically determine and
12identify postal zip code areas in which no competition
13exists for personal lines residential policies; deleting
14an obsolete rate methodology panel reporting requirement
15provision; providing an effective date.
16
17Be It Enacted by the Legislature of the State of Florida:
18
19     Section 1.  Paragraph (d) of subsection (6) of section
20627.351, 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
24for coverage provided by the corporation be actuarially sound
25and not competitive with approved rates charged in the admitted
26voluntary market, so that the corporation functions as a
27residual market mechanism to provide insurance only when the
28insurance cannot be procured in the voluntary market. Rates
29shall include an appropriate catastrophe loading factor that
30reflects the actual catastrophic exposure of the corporation.
31     2.a.  Except as provided in subparagraph 3., for each
32county, the average rates of the corporation for each line of
33business for personal lines residential policies excluding rates
34for wind-only policies shall be no lower than the average rates
35charged by the insurer that had the highest average rate in that
36county among the 20 insurers with the greatest total direct
37written premium in the state for that line of business in the
38preceding year, except that with respect to mobile home
39coverages, the average rates of the corporation shall be no
40lower than the average rates charged by the insurer that had the
41highest average rate in that county among the 5 insurers with
42the greatest total written premium for mobile home owner's
43policies in the state in the preceding year.
44     b.3.  Rates for personal lines residential wind-only
45policies must be actuarially sound and not competitive with
46approved rates charged by authorized insurers. Corporation rate
47manuals shall include a rate surcharge for seasonal occupancy.
48To ensure that personal lines residential wind-only rates are
49not competitive with approved rates charged by authorized
50insurers, the corporation, in conjunction with the office, shall
51develop a wind-only ratemaking methodology, which methodology
52shall be contained in each rate filing made by the corporation
53with the office. If the office determines that the wind-only
54rates or rating factors filed by the corporation fail to comply
55with the wind-only ratemaking methodology provided for in this
56subsection, it shall so notify the corporation and require the
57corporation to amend its rates or rating factors to come into
58compliance within 90 days of notice from the office.
59     3.  The provisions of sub-subparagraph 2.a. do not apply to
60coverage provided by the corporation in any area of a postal zip
61code for which the office determines that no competition exists
62for personal lines residential policies. The provisions of sub-
63subparagraph 2.b. do not apply to coverage provided by the
64corporation in any area of a postal zip code for which the
65office determines that no competition exists for personal lines
66residential policies in the portion of the area of that postal
67zip code that is eligible for wind-only coverage. In such postal
68zip code areas, the rates for personal lines residential
69coverage must only be actuarially sound and not excessive,
70inadequate, or unfairly discriminatory and are subject to the
71other provisions of this paragraph and s. 627.062. The
72commission shall adopt rules establishing criteria for
73determining whether no competition exists for personal lines
74residential policies in an area of a postal zip code. Beginning
75October 1, 2006, and each 3 months thereafter, the office shall
76determine and identify for purposes of this subparagraph those
77areas of postal zip codes for which no competition exists for
78personal lines residential policies.
79     4.  For the purposes of establishing a pilot program to
80evaluate issues relating to the availability and affordability
81of insurance in an area where historically there has been little
82market competition, the provisions of sub-subparagraph 2.a.
83subparagraph 2. do not apply to coverage provided by the
84corporation in Monroe County if the office determines that a
85reasonable degree of competition does not exist for personal
86lines residential policies. The provisions of sub-subparagraph
872.b. subparagraph 3. do not apply to coverage provided by the
88corporation in Monroe County if the office determines that a
89reasonable degree of competition does not exist for personal
90lines residential policies in the area of that county which is
91eligible for wind-only coverage. In this county, the rates for
92personal lines residential coverage shall be actuarially sound
93and not excessive, inadequate, or unfairly discriminatory and
94are subject to the other provisions of the paragraph and s.
95627.062. The commission shall adopt rules establishing the
96criteria for determining whether a reasonable degree of
97competition exists for personal lines residential policies in
98Monroe County. By March 1, 2006, the office shall submit a
99report to the Legislature providing an evaluation of the
100implementation of the pilot program affecting Monroe County.
101     5.  Rates for commercial lines coverage shall not be
102subject to the requirements of sub-subparagraph 2.a.
103subparagraph 2., but shall be subject to all other requirements
104of this paragraph and s. 627.062.
105     6.  Nothing in this paragraph shall require or allow the
106corporation to adopt a rate that is inadequate under s. 627.062.
107     7.  The corporation shall certify to the office at least
108twice annually that its personal lines rates comply with the
109requirements of this paragraph subparagraphs 1. and 2. If any
110adjustment in the rates or rating factors of the corporation is
111necessary to ensure such compliance, the corporation shall make
112and implement such adjustments and file its revised rates and
113rating factors with the office. If the office thereafter
114determines that the revised rates and rating factors fail to
115comply with the provisions of this paragraph subparagraphs 1.
116and 2., the office it shall notify the corporation and require
117the corporation to amend its rates or rating factors in
118conjunction with its next rate filing. The office must notify
119the corporation by electronic means of any rate filing it
120approves for any insurer among the insurers referred to in sub-
121subparagraph 2.a subparagraph 2.
122     8.  In addition to the rates otherwise determined pursuant
123to this paragraph, the corporation shall impose and collect an
124amount equal to the premium tax provided for in s. 624.509 to
125augment the financial resources of the corporation.
126     9.a.  To assist the corporation in developing additional
127ratemaking methods to ensure assure compliance with this
128paragraph subparagraphs 1. and 4., the corporation shall appoint
129a rate methodology panel consisting of one person recommended by
130the Florida Association of Insurance Agents, one person
131recommended by the Professional Insurance Agents of Florida, one
132person recommended by the Florida Association of Insurance and
133Financial Advisors, one person recommended by the insurer with
134the highest voluntary market share of residential property
135insurance business in the state, one person recommended by the
136insurer with the second-highest voluntary market share of
137residential property insurance business in the state, one person
138recommended by an insurer writing commercial residential
139property insurance in this state, one person recommended by the
140Office of Insurance Regulation, and one board member designated
141by the board chairman, who shall serve as chairman of the panel.
142     b.  By January 1, 2004, the rate methodology panel shall
143provide a report to the corporation of its findings and
144recommendations for the use of additional ratemaking methods and
145procedures, including the use of a rate equalization surcharge
146in an amount sufficient to assure that the total cost of
147coverage for policyholders or applicants to the corporation is
148sufficient to comply with subparagraph 1.
149     c.  Within 30 days after such report, the corporation shall
150present to the President of the Senate, the Speaker of the House
151of Representatives, the minority party leaders of each house of
152the Legislature, and the chairs of the standing committees of
153each house of the Legislature having jurisdiction of insurance
154issues, a plan for implementing the additional ratemaking
155methods and an outline of any legislation needed to facilitate
156use of the new methods.
157     d.  The plan must include a provision that producer
158commissions paid by the corporation shall not be calculated in
159such a manner as to include any rate equalization surcharge.
160However, without regard to the plan to be developed or its
161implementation, producer commissions paid by the corporation for
162each account, other than the quota share primary program, shall
163remain fixed as to percentage, effective rate, calculation, and
164payment method until January 1, 2004.
165     10.  By January 1, 2004, The corporation shall develop a
166notice to policyholders or applicants that the rates of Citizens
167Property Insurance Corporation are intended to be higher than
168the rates of any admitted carrier and providing other
169information the corporation deems necessary to assist consumers
170in finding other voluntary admitted insurers willing to insure
171their property.
172     Section 2.  This act shall take effect July 1, 2006.


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