Amendment
Bill No. 1267

Amendment No. 547291

CHAMBER ACTION
Senate		House
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1	Representatives Ross and Gardiner offered the following:
2
3	Substitute Amendment for Amendment (218561) (with directory
4	and title amendments)
5	Remove lines 221-728 and insert:
6	(b)1.  All insurers authorized to write one or more subject
7	lines of business in this state are subject to assessment by the
8	corporation and, for the purposes of this subsection, are
9	referred to collectively as "assessable insurers." Insurers
10	writing one or more subject lines of business in this state
11	pursuant to part VIII of chapter 626 are not assessable
12	insurers, but insureds who procure one or more subject lines of
13	business in this state pursuant to part VIII of chapter 626 are
14	subject to assessment by the corporation and are referred to
15	collectively as "assessable insureds." An authorized insurer's
16	assessment liability shall begin on the first day of the
17	calendar year following the year in which the insurer was issued
18	a certificate of authority to transact insurance for subject
19	lines of business in this state and shall terminate 1 year after
20	the end of the first calendar year during which the insurer no
21	longer holds a certificate of authority to transact insurance
22	for subject lines of business in this state.
23	1.a. 2.a.  All revenues, assets, liabilities, losses, and
24	expenses of the corporation shall be divided into three separate
25	accounts as follows:
26	(I)  A personal lines account for personal residential
27	policies issued by the corporation or issued by the Residential
28	Property and Casualty Joint Underwriting Association and renewed
29	by the corporation that provide comprehensive, multiperil
30	coverage on risks that are not located in areas eligible for
31	coverage in the Florida Windstorm Underwriting Association as
32	those areas were defined on January 1, 2002, and for such
33	policies that do not provide coverage for the peril of wind on
34	risks that are located in such areas;
35	(II)  A commercial lines account for commercial residential
36	and commercial nonresidential policies issued by the corporation
37	or issued by the Residential Property and Casualty Joint
38	Underwriting Association and renewed by the corporation that
39	provide coverage for basic property perils on risks that are not
40	located in areas eligible for coverage in the Florida Windstorm
41	Underwriting Association as those areas were defined on January
42	1, 2002, and for such policies that do not provide coverage for
43	the peril of wind on risks that are located in such areas; and
44	(III)  A high-risk account for personal residential
45	policies and commercial residential and commercial
46	nonresidential property policies issued by the corporation or
47	transferred to the corporation that provide coverage for the
48	peril of wind on risks that are located in areas eligible for
49	coverage in the Florida Windstorm Underwriting Association as
50	those areas were defined on January 1, 2002. Subject to the
51	approval of a business plan by the Financial Services Commission
52	and Legislative Budget Commission as provided in this sub-sub-
53	subparagraph, but no earlier than March 31, 2007, the
54	corporation may offer policies that provide multiperil coverage
55	and the corporation shall continue to offer policies that
56	provide coverage only for the peril of wind for risks located in
57	areas eligible for coverage in the high-risk account. In issuing
58	multiperil coverage, the corporation may use its approved policy
59	forms and rates for the personal lines account. An applicant or
60	insured who is eligible to purchase a multiperil policy from the
61	corporation may purchase a multiperil policy from an authorized
62	insurer without prejudice to the applicant's or insured's
63	eligibility to prospectively purchase a policy that provides
64	coverage only for the peril of wind from the corporation. An
65	applicant or insured who is eligible for a corporation policy
66	that provides coverage only for the peril of wind may elect to
67	purchase or retain such policy and also purchase or retain
68	coverage excluding wind from an authorized insurer without
69	prejudice to the applicant's or insured's eligibility to
70	prospectively purchase a policy that provides multiperil
71	coverage from the corporation. It is the goal of the Legislature
72	that there would be an overall average savings of 10 percent or
73	more for a policyholder who currently has a wind-only policy
74	with the corporation, and an ex-wind policy with a voluntary
75	insurer or the corporation, and who then obtains a multiperil
76	policy from the corporation. It is the intent of the Legislature
77	that the offer of multiperil coverage in the high-risk account
78	be made and implemented in a manner that does not adversely
79	affect the tax-exempt status of the corporation or
80	creditworthiness of or security for currently outstanding
81	financing obligations or credit facilities of the high-risk
82	account, the personal lines account, or the commercial lines
83	account. By March 1, 2007, the corporation shall prepare and
84	submit for approval by the Financial Services Commission and
85	Legislative Budget Commission a report detailing the
86	corporation's business plan for issuing multiperil coverage in
87	the high-risk account. The business plan shall be approved or
88	disapproved within 30 days after receipt, as submitted or
89	modified and resubmitted by the corporation. The business plan
90	must include: the impact of such multiperil coverage on the
91	corporation's financial resources, the impact of such multiperil
92	coverage on the corporation's tax-exempt status, the manner in
93	which the corporation plans to implement the processing of
94	applications and policy forms for new and existing
95	policyholders, the impact of such multiperil coverage on the
96	corporation's ability to deliver customer service at the high
97	level required by this subsection, the ability of the
98	corporation to process claims, the ability of the corporation to
99	quote and issue policies, the impact of such multiperil coverage
100	on the corporation's agents, the impact of such multiperil
101	coverage on the corporation's existing policyholders, and the
102	impact of such multiperil coverage on rates and premium. The
103	high-risk account must also include quota share primary
104	insurance under subparagraph (c)2. The area eligible for
105	coverage under the high-risk account also includes the area
106	within Port Canaveral, which is bordered on the south by the
107	City of Cape Canaveral, bordered on the west by the Banana
108	River, and bordered on the north by Federal Government property.
109	b.  The three separate accounts must be maintained as long
110	as financing obligations entered into by the Florida Windstorm
111	Underwriting Association or Residential Property and Casualty
112	Joint Underwriting Association are outstanding, in accordance
113	with the terms of the corresponding financing documents. When
114	the financing obligations are no longer outstanding, in
115	accordance with the terms of the corresponding financing
116	documents, the corporation may use a single account for all
117	revenues, assets, liabilities, losses, and expenses of the
118	corporation. Consistent with the requirement of this
119	subparagraph and prudent investment policies that minimize the
120	cost of carrying debt, the board shall exercise its best efforts
121	to retire existing debt or to obtain approval of necessary
122	parties to amend the terms of existing debt, so as to structure
123	the most efficient plan to consolidate the three separate
124	accounts into a single account. By February 1, 2007, the board
125	shall submit a report to the Financial Services Commission, the
126	President of the Senate, and the Speaker of the House of
127	Representatives which includes an analysis of consolidating the
128	accounts, the actions the board has taken to minimize the cost
129	of carrying debt, and its recommendations for executing the most
130	efficient plan.
131	c.  Creditors of the Residential Property and Casualty
132	Joint Underwriting Association shall have a claim against, and
133	recourse to, the accounts referred to in sub-sub-subparagraphs
134	a.(I) and (II) and shall have no claim against, or recourse to,
135	the account referred to in sub-sub-subparagraph a.(III).
136	Creditors of the Florida Windstorm Underwriting Association
137	shall have a claim against, and recourse to, the account
138	referred to in sub-sub-subparagraph a.(III) and shall have no
139	claim against, or recourse to, the accounts referred to in sub-
140	sub-subparagraphs a.(I) and (II).
141	d.  Revenues, assets, liabilities, losses, and expenses not
142	attributable to particular accounts shall be prorated among the
143	accounts.
144	e.  The Legislature finds that the revenues of the
145	corporation are revenues that are necessary to meet the
146	requirements set forth in documents authorizing the issuance of
147	bonds under this subsection.
148	f.  No part of the income of the corporation may inure to
149	the benefit of any private person.
150	2. 3.  With respect to a deficit in an account:
151	a.  When the deficit incurred in a particular calendar year
152	is not greater than 10 percent of the aggregate statewide direct
153	written premium for the subject lines of business for the prior
154	calendar year, the entire deficit shall be recovered through
155	regular assessments of assessable insurers under paragraph (p)
156	and assessable insureds.
157	b.  When the deficit incurred in a particular calendar year
158	exceeds 10 percent of the aggregate statewide direct written
159	premium for the subject lines of business for the prior calendar
160	year, the corporation shall levy regular assessments on
161	assessable insurers under paragraph (p) and on assessable
162	insureds in an amount equal to the greater of 10 percent of the
163	deficit or 10 percent of the aggregate statewide direct written
164	premium for the subject lines of business for the prior calendar
165	year. Any remaining deficit shall be recovered through emergency
166	assessments under sub-subparagraph d.
167	c.  Each assessable insurer's share of the amount being
168	assessed under sub-subparagraph a. or sub-subparagraph b. shall
169	be in the proportion that the assessable insurer's direct
170	written premium for the subject lines of business for the year
171	preceding the assessment bears to the aggregate statewide direct
172	written premium for the subject lines of business for that year.
173	The assessment percentage applicable to each assessable insured
174	is the ratio of the amount being assessed under sub-subparagraph
175	a. or sub-subparagraph b. to the aggregate statewide direct
176	written premium for the subject lines of business for the prior
177	year. Assessments levied by the corporation on assessable
178	insurers under sub-subparagraphs a. and b. shall be paid as
179	required by the corporation's plan of operation and paragraph
180	(p). Notwithstanding any other provision of this subsection, the
181	aggregate amount of a regular assessment for a deficit incurred
182	in a particular calendar year shall be reduced by the estimated
183	amount to be received by the corporation from the Citizens
184	policyholder surcharge under subparagraph (c)11. and the amount
185	collected or estimated to be collected from the assessment on
186	Citizens policyholders pursuant to sub-subparagraph i.
187	Assessments levied by the corporation on assessable insureds
188	under sub-subparagraphs a. and b. shall be collected by the
189	surplus lines agent at the time the surplus lines agent collects
190	the surplus lines tax required by s. 626.932 and shall be paid
191	to the Florida Surplus Lines Service Office at the time the
192	surplus lines agent pays the surplus lines tax to the Florida
193	Surplus Lines Service Office. Upon receipt of regular
194	assessments from surplus lines agents, the Florida Surplus Lines
195	Service Office shall transfer the assessments directly to the
196	corporation as determined by the corporation.
197	d.  Upon a determination by the board of governors that a
198	deficit in an account exceeds the amount that will be recovered
199	through regular assessments under sub-subparagraph a. or sub-
200	subparagraph b., the board shall levy, after verification by the
201	office, emergency assessments, for as many years as necessary to
202	cover the deficits, to be collected by assessable insurers and
203	the corporation and collected from assessable insureds upon
204	issuance or renewal of policies for subject lines of business,
205	excluding National Flood Insurance policies. The amount of the
206	emergency assessment collected in a particular year shall be a
207	uniform percentage of that year's direct written premium for
208	subject lines of business and all accounts of the corporation,
209	excluding National Flood Insurance Program policy premiums, as
210	annually determined by the board and verified by the office. The
211	office shall verify the arithmetic calculations involved in the
212	board's determination within 30 days after receipt of the
213	information on which the determination was based.
214	Notwithstanding any other provision of law, the corporation and
215	each assessable insurer that writes subject lines of business
216	shall collect emergency assessments from its policyholders
217	without such obligation being affected by any credit,
218	limitation, exemption, or deferment. Emergency assessments
219	levied by the corporation on assessable insureds shall be
220	collected by the surplus lines agent at the time the surplus
221	lines agent collects the surplus lines tax required by s.
222	626.932 and shall be paid to the Florida Surplus Lines Service
223	Office at the time the surplus lines agent pays the surplus
224	lines tax to the Florida Surplus Lines Service Office. The
225	emergency assessments so collected shall be transferred directly
226	to the corporation on a periodic basis as determined by the
227	corporation and shall be held by the corporation solely in the
228	applicable account. The aggregate amount of emergency
229	assessments levied for an account under this sub-subparagraph in
230	any calendar year may not exceed the greater of 10 percent of
231	the amount needed to cover the original deficit, plus interest,
232	fees, commissions, required reserves, and other costs associated
233	with financing of the original deficit, or 10 percent of the
234	aggregate statewide direct written premium for subject lines of
235	business and for all accounts of the corporation for the prior
236	year, plus interest, fees, commissions, required reserves, and
237	other costs associated with financing the original deficit.
238	e.  The corporation may pledge the proceeds of assessments,
239	projected recoveries from the Florida Hurricane Catastrophe
240	Fund, other insurance and reinsurance recoverables, policyholder
241	surcharges and other surcharges, and other funds available to
242	the corporation as the source of revenue for and to secure bonds
243	issued under paragraph (p), bonds or other indebtedness issued
244	under subparagraph (c)3., or lines of credit or other financing
245	mechanisms issued or created under this subsection, or to retire
246	any other debt incurred as a result of deficits or events giving
247	rise to deficits, or in any other way that the board determines
248	will efficiently recover such deficits. The purpose of the lines
249	of credit or other financing mechanisms is to provide additional
250	resources to assist the corporation in covering claims and
251	expenses attributable to a catastrophe. As used in this
252	subsection, the term "assessments" includes regular assessments
253	under sub-subparagraph a., sub-subparagraph b., or subparagraph
254	(p)1. and emergency assessments under sub-subparagraph d.
255	Emergency assessments collected under sub-subparagraph d. are
256	not part of an insurer's rates, are not premium, and are not
257	subject to premium tax, fees, or commissions; however, failure
258	to pay the emergency assessment shall be treated as failure to
259	pay premium. The emergency assessments under sub-subparagraph d.
260	shall continue as long as any bonds issued or other indebtedness
261	incurred with respect to a deficit for which the assessment was
262	imposed remain outstanding, unless adequate provision has been
263	made for the payment of such bonds or other indebtedness
264	pursuant to the documents governing such bonds or other
265	indebtedness.
266	f.  As used in this subsection, the term "subject lines of
267	business" means insurance written by assessable insurers or
268	procured by assessable insureds for all property and casualty
269	lines of business in this state, but not including workers'
270	compensation or medical malpractice. As used in the sub-
271	subparagraph, the term "property and casualty lines of business"
272	includes all lines of business identified on Form 2, Exhibit of
273	Premiums and Losses, in the annual statement required of
274	authorized insurers by s. 624.424 and any rule adopted under
275	this section, except for those lines identified as accident and
276	health insurance and except for policies written under the
277	National Flood Insurance program or the Federal Crop Insurance
278	Program. For purposes of this sub-subparagraph, the term
279	"workers' compensation" includes both workers' compensation
280	insurance and excess workers' compensation insurance.
281	g.  The Florida Surplus Lines Service Office shall
282	determine annually the aggregate statewide written premium in
283	subject lines of business procured by assessable insureds and
284	shall report that information to the corporation in a form and
285	at a time the corporation specifies to ensure that the
286	corporation can meet the requirements of this subsection and the
287	corporation's financing obligations.
288	h.  The Florida Surplus Lines Service Office shall verify
289	the proper application by surplus lines agents of assessment
290	percentages for regular assessments and emergency assessments
291	levied under this subparagraph on assessable insureds and shall
292	assist the corporation in ensuring the accurate, timely
293	collection and payment of assessments by surplus lines agents as
294	required by the corporation.
295	b. i.  If a deficit is incurred in any account in 2008 or
296	thereafter, the board of governors shall levy an immediate
297	assessment against the premium of each nonhomestead property
298	policyholder in all accounts of the corporation, as a uniform
299	percentage of the premium of the policy of up to 10 percent of
300	such premium, which funds shall be used to offset the deficit.
301	If this assessment is insufficient to eliminate the deficit, the
302	board of governors shall levy an additional assessment against
303	all policyholders of the corporation, which shall be collected
304	at the time of issuance or renewal of a policy, as a uniform
305	percentage of the premium for the policy of up to 10 percent of
306	such premium, which funds shall be used to further offset the
307	deficit.
308	c. j.  The board of governors shall maintain separate
309	accounting records that consolidate data for nonhomestead
310	properties, including, but not limited to, number of policies,
311	insured values, premiums written, and losses. The board of
312	governors shall annually report to the office and the
313	Legislature a summary of such data.
314	(c)  The plan of operation of the corporation:
315	1.  Must provide for adoption of residential property and
316	casualty insurance policy forms and commercial residential and
317	nonresidential property insurance forms, which forms must be
318	approved by the office prior to use. The corporation shall adopt
319	the following policy forms:
320	a.  Standard personal lines policy forms that are
321	comprehensive multiperil policies providing full coverage of a
322	residential property equivalent to the coverage provided in the
323	private insurance market under an HO-3, HO-4, or HO-6 policy.
324	b.  Basic personal lines policy forms that are policies
325	similar to an HO-8 policy or a dwelling fire policy that provide
326	coverage meeting the requirements of the secondary mortgage
327	market, but which coverage is more limited than the coverage
328	under a standard policy.
329	c.  Commercial lines residential and nonresidential policy
330	forms that are generally similar to the basic perils of full
331	coverage obtainable for commercial residential structures and
332	commercial nonresidential structures in the admitted voluntary
333	market.
334	d.  Personal lines and commercial lines residential
335	property insurance forms that cover the peril of wind only. The
336	forms are applicable only to residential properties located in
337	areas eligible for coverage under the high-risk account referred
338	to in sub-subparagraph (b)2.a.
339	e.  Commercial lines nonresidential property insurance
340	forms that cover the peril of wind only. The forms are
341	applicable only to nonresidential properties located in areas
342	eligible for coverage under the high-risk account referred to in
343	sub-subparagraph (b)2.a.
344	f.  The corporation may adopt variations of the policy
345	forms listed in sub-subparagraphs a.-e. that contain more
346	restrictive coverage.
347	2.a.  Must provide that the corporation adopt a program in
348	which the corporation and authorized insurers enter into quota
349	share primary insurance agreements for hurricane coverage, as
350	defined in s. 627.4025(2)(a), for eligible risks, and adopt
351	property insurance forms for eligible risks which cover the
352	peril of wind only. As used in this subsection, the term:
353	(I)  "Quota share primary insurance" means an arrangement
354	in which the primary hurricane coverage of an eligible risk is
355	provided in specified percentages by the corporation and an
356	authorized insurer. The corporation and authorized insurer are
357	each solely responsible for a specified percentage of hurricane
358	coverage of an eligible risk as set forth in a quota share
359	primary insurance agreement between the corporation and an
360	authorized insurer and the insurance contract. The
361	responsibility of the corporation or authorized insurer to pay
362	its specified percentage of hurricane losses of an eligible
363	risk, as set forth in the quota share primary insurance
364	agreement, may not be altered by the inability of the other
365	party to the agreement to pay its specified percentage of
366	hurricane losses. Eligible risks that are provided hurricane
367	coverage through a quota share primary insurance arrangement
368	must be provided policy forms that set forth the obligations of
369	the corporation and authorized insurer under the arrangement,
370	clearly specify the percentages of quota share primary insurance
371	provided by the corporation and authorized insurer, and
372	conspicuously and clearly state that neither the authorized
373	insurer nor the corporation may be held responsible beyond its
374	specified percentage of coverage of hurricane losses.
375	(II)  "Eligible risks" means personal lines residential and
376	commercial lines residential risks that meet the underwriting
377	criteria of the corporation and are located in areas that were
378	eligible for coverage by the Florida Windstorm Underwriting
379	Association on January 1, 2002.
380	b.  The corporation may enter into quota share primary
381	insurance agreements with authorized insurers at corporation
382	coverage levels of 90 percent and 50 percent.
383	c.  If the corporation determines that additional coverage
384	levels are necessary to maximize participation in quota share
385	primary insurance agreements by authorized insurers, the
386	corporation may establish additional coverage levels. However,
387	the corporation's quota share primary insurance coverage level
388	may not exceed 90 percent.
389	d.  Any quota share primary insurance agreement entered
390	into between an authorized insurer and the corporation must
391	provide for a uniform specified percentage of coverage of
392	hurricane losses, by county or territory as set forth by the
393	corporation board, for all eligible risks of the authorized
394	insurer covered under the quota share primary insurance
395	agreement.
396	e.  Any quota share primary insurance agreement entered
397	into between an authorized insurer and the corporation is
398	subject to review and approval by the office. However, such
399	agreement shall be authorized only as to insurance contracts
400	entered into between an authorized insurer and an insured who is
401	already insured by the corporation for wind coverage.
402	f.  For all eligible risks covered under quota share
403	primary insurance agreements, the exposure and coverage levels
404	for both the corporation and authorized insurers shall be
405	reported by the corporation to the Florida Hurricane Catastrophe
406	Fund. For all policies of eligible risks covered under quota
407	share primary insurance agreements, the corporation and the
408	authorized insurer shall maintain complete and accurate records
409	for the purpose of exposure and loss reimbursement audits as
410	required by Florida Hurricane Catastrophe Fund rules. The
411	corporation and the authorized insurer shall each maintain
412	duplicate copies of policy declaration pages and supporting
413	claims documents.
414	g.  The corporation board shall establish in its plan of
415	operation standards for quota share agreements which ensure that
416	there is no discriminatory application among insurers as to the
417	terms of quota share agreements, pricing of quota share
418	agreements, incentive provisions if any, and consideration paid
419	for servicing policies or adjusting claims.
420	h.  The quota share primary insurance agreement between the
421	corporation and an authorized insurer must set forth the
422	specific terms under which coverage is provided, including, but
423	not limited to, the sale and servicing of policies issued under
424	the agreement by the insurance agent of the authorized insurer
425	producing the business, the reporting of information concerning
426	eligible risks, the payment of premium to the corporation, and
427	arrangements for the adjustment and payment of hurricane claims
428	incurred on eligible risks by the claims adjuster and personnel
429	of the authorized insurer. Entering into a quota sharing
430	insurance agreement between the corporation and an authorized
431	insurer shall be voluntary and at the discretion of the
432	authorized insurer.
433	3.  May provide that the corporation may employ or
434	otherwise contract with individuals or other entities to provide
435	administrative or professional services that may be appropriate
436	to effectuate the plan. The corporation shall have the power to
437	borrow funds, by issuing bonds or by incurring other
438	indebtedness, and shall have other powers reasonably necessary
439	to effectuate the requirements of this subsection, including,
440	without limitation, the power to issue bonds and incur other
441	indebtedness in order to refinance outstanding bonds or other
442	indebtedness. The corporation may, but is not required to, seek
443	judicial validation of its bonds or other indebtedness under
444	chapter 75. The corporation may issue bonds or incur other
445	indebtedness, or have bonds issued on its behalf by a unit of
446	local government pursuant to subparagraph (g)2., in the absence
447	of a hurricane or other weather-related event, upon a
448	determination by the corporation, subject to approval by the
449	office, that such action would enable it to efficiently meet the
450	financial obligations of the corporation and that such
451	financings are reasonably necessary to effectuate the
452	requirements of this subsection. The corporation is authorized
453	to take all actions needed to facilitate tax-free status for any
454	such bonds or indebtedness, including formation of trusts or
455	other affiliated entities. The corporation shall have the
456	authority to pledge assessments, projected recoveries from the
457	Florida Hurricane Catastrophe Fund, other reinsurance
458	recoverables, market equalization and other surcharges, and
459	other funds available to the corporation as security for bonds
460	or other indebtedness. In recognition of s. 10, Art. I of the
461	State Constitution, prohibiting the impairment of obligations of
462	contracts, it is the intent of the Legislature that no action be
463	taken whose purpose is to impair any bond indenture or financing
464	agreement or any revenue source committed by contract to such
465	bond or other indebtedness.
466	4.a.  Must require that the corporation operate subject to
467	the supervision and approval of a board of governors consisting
468	of nine eight individuals who are residents of this state, from
469	different geographical areas of this state. The Governor shall
470	appoint three members of the board., The Chief Financial
471	Officer, the President of the Senate, and the Speaker of the
472	House of Representatives shall each appoint two members of the
473	board. All board members shall possess demonstrated expertise or
474	knowledge in insurance, bond financing, business management or
475	corporate board membership. At least one of the two members
476	appointed by each appointing officer must have demonstrated
477	expertise in insurance. The Chief Financial Officer shall
478	designate one of the appointees as chair. All board members
479	serve at the pleasure of the appointing officer. All members of
480	the board of governors are subject to removal at will by the
481	officers who appointed them. All board members, including the
482	chair, must be appointed to serve for 3-year terms beginning
483	annually on a date designated by the plan. Any board vacancy
484	shall be filled for the unexpired term by the appointing
485	officer. The Governor shall designate one of the nine board
486	members as chair. The Chief Financial Officer shall appoint a
487	technical advisory group to provide information and advice to
488	the board of governors in connection with the board's duties
489	under this subsection. The executive director of the corporation
490	must have substantial insurance and managerial expertise and
491	senior managers of the corporation shall be engaged by the board
492	and serve at the pleasure of the board. Any executive director
493	appointed on or after July 1, 2006, is subject to confirmation
494	by the Senate. The executive director is responsible for
495	employing other staff as the corporation may require, subject to
496	review and concurrence by the board.
497	b.  The board shall create a Market Accountability Advisory
498	Committee to assist the corporation in developing awareness of
499	its rates and its customer and agent service levels in
500	relationship to the voluntary market insurers writing similar
501	coverage. The members of the advisory committee shall consist of
502	the following 11 persons, one of whom must be elected chair by
503	the members of the committee: four representatives, one
504	appointed by the Florida Association of Insurance Agents, one by
505	the Florida Association of Insurance and Financial Advisors, one
506	by the Professional Insurance Agents of Florida, and one by the
507	Latin American Association of Insurance Agencies; three
508	representatives appointed by the insurers with the three highest
509	voluntary market share of residential property insurance
510	business in the state; one representative from the Office of
511	Insurance Regulation; one consumer appointed by the board who is
512	insured by the corporation at the time of appointment to the
513	committee; one representative appointed by the Florida
514	Association of Realtors; and one representative appointed by the
515	Florida Bankers Association. All members must serve for 3-year
516	terms and may serve for consecutive terms. The committee shall
517	report to the corporation at each board meeting on insurance
518	market issues which may include rates and rate competition with
519	the voluntary market; service, including policy issuance, claims
520	processing, and general responsiveness to policyholders,
521	applicants, and agents; and matters relating to depopulation.
522	5.  Must provide a procedure for determining the
523	eligibility of a risk for coverage, as follows:
524	a.  Subject to the provisions of s. 627.3517, with respect
525	to personal lines residential risks, if the risk is offered
526	coverage from an authorized insurer at the insurer's approved
527	rate under either a standard policy including wind coverage or,
528	if consistent with the insurer's underwriting rules as filed
529	with the office, a basic policy including wind coverage, for a
530	new application to the corporation for coverage, the risk is not
531	eligible for any policy issued by the corporation unless the
532	premium for coverage from the authorized insurer is more than 25
533	percent greater than the premium for comparable coverage from
534	the corporation. If the risk is not able to obtain any such
535	offer, the risk is eligible for either a standard policy
536	including wind coverage or a basic policy including wind
537	coverage issued by the corporation; however, if the risk could
538	not be insured under a standard policy including wind coverage
539	regardless of market conditions, the risk shall be eligible for
540	a basic policy including wind coverage unless rejected under
541	subparagraph 8. However, with regard to a policyholder of the
542	corporation, the policyholder remains eligible for coverage from
543	the corporation regardless of any offer of coverage from an
544	authorized insurer or surplus lines insurer. The corporation
545	shall determine the type of policy to be provided on the basis
546	of objective standards specified in the underwriting manual and
547	based on generally accepted underwriting practices.
548	(I)  If the risk accepts an offer of coverage through the
549	market assistance plan or an offer of coverage through a
550	mechanism established by the corporation before a policy is
551	issued to the risk by the corporation or during the first 30
552	days of coverage by the corporation, and the producing agent who
553	submitted the application to the plan or to the corporation is
554	not currently appointed by the insurer, the insurer shall:
555	(A)  Pay to the producing agent of record of the policy,
556	for the first year, an amount that is the greater of the
557	insurer's usual and customary commission for the type of policy
558	written or a fee equal to the usual and customary commission of
559	the corporation; or
560	(B)  Offer to allow the producing agent of record of the
561	policy to continue servicing the policy for a period of not less
562	than 1 year and offer to pay the agent the greater of the
563	insurer's or the corporation's usual and customary commission
564	for the type of policy written.
565
566	If the producing agent is unwilling or unable to accept
567	appointment, the new insurer shall pay the agent in accordance
568	with sub-sub-sub-subparagraph (A).
569	(II)  When the corporation enters into a contractual
570	agreement for a take-out plan, the producing agent of record of
571	the corporation policy is entitled to retain any unearned
572	commission on the policy, and the insurer shall:
573	(A)  Pay to the producing agent of record of the
574	corporation policy, for the first year, an amount that is the
575	greater of the insurer's usual and customary commission for the
576	type of policy written or a fee equal to the usual and customary
577	commission of the corporation; or
578	(B)  Offer to allow the producing agent of record of the
579	corporation policy to continue servicing the policy for a period
580	of not less than 1 year and offer to pay the agent the greater
581	of the insurer's or the corporation's usual and customary
582	commission for the type of policy written.
583
584	If the producing agent is unwilling or unable to accept
585	appointment, the new insurer shall pay the agent in accordance
586	with sub-sub-sub-subparagraph (A).
587	b.  With respect to commercial lines residential risks, for
588	a new application to the corporation for coverage, if the risk
589	is offered coverage under a policy including wind coverage from
590	an authorized insurer at its approved rate, the risk is not
591	eligible for any policy issued by the corporation unless the
592	premium for coverage from the authorized insurer is more than 25
593	percent greater than the premium for comparable coverage from
594	the corporation. If the risk is not able to obtain any such
595	offer, the risk is eligible for a policy including wind coverage
596	issued by the corporation. However, with regard to a
597	policyholder of the corporation, the policyholder remains
598	eligible for coverage from the corporation regardless of any
599	offer of coverage from an authorized insurer or surplus lines
600	insurer.
601	(I)  If the risk accepts an offer of coverage through the
602	market assistance plan or an offer of coverage through a
603	mechanism established by the corporation before a policy is
604	issued to the risk by the corporation or during the first 30
605	days of coverage by the corporation, and the producing agent who
606	submitted the application to the plan or the corporation is not
607	currently appointed by the insurer, the insurer shall:
608	(A)  Pay to the producing agent of record of the policy,
609	for the first year, an amount that is the greater of the
610	insurer's usual and customary commission for the type of policy
611	written or a fee equal to the usual and customary commission of
612	the corporation; or
613	(B)  Offer to allow the producing agent of record of the
614	policy to continue servicing the policy for a period of not less
615	than 1 year and offer to pay the agent the greater of the
616	insurer's or the corporation's usual and customary commission
617	for the type of policy written.
618
619	If the producing agent is unwilling or unable to accept
620	appointment, the new insurer shall pay the agent in accordance
621	with sub-sub-sub-subparagraph (A).
622	(II)  When the corporation enters into a contractual
623	agreement for a take-out plan, the producing agent of record of
624	the corporation policy is entitled to retain any unearned
625	commission on the policy, and the insurer shall:
626	(A)  Pay to the producing agent of record of the
627	corporation policy, for the first year, an amount that is the
628	greater of the insurer's usual and customary commission for the
629	type of policy written or a fee equal to the usual and customary
630	commission of the corporation; or
631	(B)  Offer to allow the producing agent of record of the
632	corporation policy to continue servicing the policy for a period
633	of not less than 1 year and offer to pay the agent the greater
634	of the insurer's or the corporation's usual and customary
635	commission for the type of policy written.
636
637	If the producing agent is unwilling or unable to accept
638	appointment, the new insurer shall pay the agent in accordance
639	with sub-sub-sub-subparagraph (A).
640	6.  Must provide by July 1, 2007, that an application for
641	coverage for a new policy is subject to a waiting period of 10
642	days before coverage is effective, during which time the
643	corporation shall make such application available for review by
644	general lines agents and authorized property and casualty
645	insurers. The board shall approve an exception that allows for
646	coverage to be effective before the end of the 10-day waiting
647	period, for coverage issued in conjunction with a real estate
648	closing. The board may approve such other exceptions as the
649	board determines are necessary to prevent lapses in coverage.
650	7.  Must include rules for classifications of risks and
651	rates therefor.
652	8.  Must provide that if premium and investment income for
653	an account attributable to a particular calendar year are in
654	excess of projected losses and expenses for the account
655	attributable to that year, such excess shall be held in surplus
656	in the account. Such surplus shall be available to defray
657	deficits in that account as to future years and shall be used
658	for that purpose prior to assessing assessable insurers and
659	assessable insureds as to any calendar year.
660	9.  Must provide objective criteria and procedures to be
661	uniformly applied for all applicants in determining whether an
662	individual risk is so hazardous as to be uninsurable. In making
663	this determination and in establishing the criteria and
664	procedures, the following shall be considered:
665	a.  Whether the likelihood of a loss for the individual
666	risk is substantially higher than for other risks of the same
667	class; and
668	b.  Whether the uncertainty associated with the individual
669	risk is such that an appropriate premium cannot be determined.
670
671	The acceptance or rejection of a risk by the corporation shall
672	be construed as the private placement of insurance, and the
673	provisions of chapter 120 shall not apply.
674	10.  Must provide that the corporation shall make its best
675	efforts to procure catastrophe reinsurance at reasonable rates,
676	to cover its projected 100-year probable maximum loss as
677	determined by the board of governors.
678	11.  Must provide that in the event of regular deficit
679	assessments under sub-subparagraph (b)3.a. or sub-subparagraph
680	(b)3.b., in the personal lines account, the commercial lines
681	residential account, or the high-risk account, the corporation
682	shall levy upon corporation policyholders in its next rate
683	filing, or by a separate rate filing solely for this purpose, a
684	Citizens policyholder surcharge arising from a regular
685	assessment in such account in a percentage equal to the total
686	amount of such regular assessments divided by the aggregate
687	statewide direct written premium for subject lines of business
688	for the prior calendar year. For purposes of calculating the
689	Citizens policyholder surcharge to be levied under this
690	subparagraph, the total amount of the regular assessment to
691	which this surcharge is related shall be determined as set forth
692	in subparagraph (b)3., without deducting the estimated Citizens
693	policyholder surcharge. Citizens policyholder surcharges under
694	this subparagraph are not considered premium and are not subject
695	to commissions, fees, or premium taxes; however, failure to pay
696	a market equalization surcharge shall be treated as failure to
697	pay premium.
698	11. 12.  The policies issued by the corporation must
699	provide that, if the corporation or the market assistance plan
700	obtains an offer from an authorized insurer to cover the risk at
701	its approved rates, the risk is no longer eligible for renewal
702	through the corporation, except as otherwise provided in this
703	subsection.
704	12. 13.  Corporation policies and applications must include
705	a notice that the corporation policy could, under this section,
706	be replaced with a policy issued by an authorized insurer that
707	does not provide coverage identical to the coverage provided by
708	the corporation. The notice shall also specify that acceptance
709	of corporation coverage creates a conclusive presumption that
710	the applicant or policyholder is aware of this potential.
711	13. 14.  May establish, subject to approval by the office,
712	different eligibility requirements and operational procedures
713	for any line or type of coverage for any specified county or
714	area if the board determines that such changes to the
715	eligibility requirements and operational procedures are
716	justified due to the voluntary market being sufficiently stable
717	and competitive in such area or for such line or type of
718	coverage and that consumers who, in good faith, are unable to
719	obtain insurance through the voluntary market through ordinary
720	methods would continue to have access to coverage from the
721	corporation. When coverage is sought in connection with a real
722	property transfer, such requirements and procedures shall not
723	provide for an effective date of coverage later than the date of
724	the closing of the transfer as established by the transferor,
725	the transferee, and, if applicable, the lender.
726	15.  Must provide that, with respect to the high-risk
727	account, any assessable insurer with a surplus as to
728	policyholders of $25 million or less writing 25 percent or more
729	of its total countrywide property insurance premiums in this
730	state may petition the office, within the first 90 days of each
731	calendar year, to qualify as a limited apportionment company. A
732	regular assessment levied by the corporation on a limited
733	apportionment company for a deficit incurred by the corporation
734	for the high-risk account in 2006 or thereafter may be paid to
735	the corporation on a monthly basis as the assessments are
736	collected by the limited apportionment company from its insureds
737	pursuant to s. 627.3512, but the regular assessment must be paid
738	in full within 12 months after being levied by the corporation.
739	A limited apportionment company shall collect from its
740	policyholders any emergency assessment imposed under sub-
741	subparagraph (b)3.d. The plan shall provide that, if the office
742	determines that any regular assessment will result in an
743	impairment of the surplus of a limited apportionment company,
744	the office may direct that all or part of such assessment be
745	deferred as provided in subparagraph (g)4. However, there shall
746	be no limitation or deferment of an emergency assessment to be
747	collected from policyholders under sub-subparagraph (b)3.d.
748	14. 16.  Must provide that the corporation appoint as its
749	licensed agents only those agents who also hold an appointment
750	as defined in s. 626.015(3) with an insurer who at the time of
751	the agent's initial appointment by the corporation is authorized
752	to write and is actually writing personal lines residential
753	property coverage, commercial residential property coverage, or
754	commercial nonresidential property coverage within the state.
755	15. 17.  Must provide, by July 1, 2007, a premium payment
756	plan option to its policyholders which allows for quarterly and
757	semiannual payment of premiums.
758	16. 18.  Must provide, effective June 1, 2007, that the
759	corporation contract with each insurer providing the non-wind
760	coverage for risks insured by the corporation in the high-risk
761	account, requiring that the insurer provide claims adjusting
762	services for the wind coverage provided by the corporation for
763	such risks. An insurer is required to enter into this contract
764	as a condition of providing non-wind coverage for a risk that is
765	insured by the corporation in the high-risk account unless the
766	board finds, after a hearing, that the insurer is not capable of
767	providing adjusting services at an acceptable level of quality
768	to corporation policyholders. The terms and conditions of such
769	contracts must be substantially the same as the contracts that
770	the corporation executed with insurers under the "adjust-your-
771	own" program in 2006, except as may be mutually agreed to by the
772	parties and except for such changes that the board determines
773	are necessary to ensure that claims are adjusted appropriately.
774	The corporation shall provide a process for neutral arbitration
775	of any dispute between the corporation and the insurer regarding
776	the terms of the contract. The corporation shall review and
777	monitor the performance of insurers under these contracts.
778	17. 19.  Must limit coverage on mobile homes or
779	manufactured homes built prior to 1994 to actual cash value of
780	the dwelling rather than replacement costs of the dwelling.
781	18. 20.  May provide such limits of coverage as the board
782	determines, consistent with the requirements of this subsection.
783	19. 21.  May require commercial property to meet specified
784	hurricane mitigation construction features as a condition of
785	eligibility for coverage.
786	(m)1.  Rates for coverage provided by the corporation shall
787	be actuarially sound and subject to the requirements of s.
788	627.062, except as otherwise provided in this paragraph. The
789	corporation shall file its recommended rates with the office at
790	least annually. The corporation shall provide any additional
791	information regarding the rates which the office requires. The
792	office shall consider the recommendations of the board and issue
793	a final order establishing the rates for the corporation within
794	45 days after the recommended rates are filed. The corporation
795	may not pursue an administrative challenge or judicial review of
796	the final order of the office.
797	2.  In addition to the rates otherwise determined pursuant
798	to this paragraph, the corporation shall impose and collect an
799	amount equal to the premium tax provided for in s. 624.509 to
800	augment the financial resources of the corporation.
801	3.  After the public hurricane loss-projection model under
802	s. 627.06281 has been found to be accurate and reliable by the
803	Florida Commission on Hurricane Loss Projection Methodology,
804	that model shall serve as the minimum benchmark for determining
805	the windstorm portion of the corporation's rates. This
806	subparagraph does not require or allow the corporation to adopt
807	rates lower than the rates otherwise required or allowed by this
808	paragraph.
809	4.  The rate filings for the corporation which were
810	approved by the office and which took effect January 1, 2007,
811	are rescinded, except for those rates that were lowered. As soon
812	as possible, the corporation shall begin using the lower rates
813	that were in effect on December 31, 2006, and shall provide
814	refunds to policyholders who have paid higher rates as a result
815	of that rate filing. The rates in effect on December 31, 2006,
816	shall remain in effect until January 1, 2008, for the 2007
817	calendar year except for any rate change that results in a lower
818	rate. The next rate change that may increase rates shall take
819	effect January 1, 2008, pursuant to a new rate filing
820	recommended by the corporation and established by the office,
821	subject to the requirements of this paragraph.
822	(p)1.  The corporation shall certify to the office its
823	needs for annual assessments as to a particular calendar year,
824	and for any interim assessments that it deems to be necessary to
825	sustain operations as to a particular year pending the receipt
826	of annual assessments. Upon verification, the office shall
827	approve such certification, and the corporation shall levy such
828	annual or interim assessments. Such assessments shall be
829	prorated as provided in paragraph (b). The corporation shall
830	take all reasonable and prudent steps necessary to collect the
831	amount of assessment due from each assessable insured insurer,
832	including, if prudent, filing suit to collect such assessment.
833	If the corporation is unable to collect an assessment from any
834	assessable insurer, the uncollected assessments shall be levied
835	as an additional assessment against the assessable insurers and
836	any assessable insurer required to pay an additional assessment
837	as a result of such failure to pay shall have a cause of action
838	against such nonpaying assessable insurer. Assessments shall be
839	included as an appropriate factor in the making of rates. The
840	failure of a surplus lines agent to collect and remit any
841	regular or emergency assessment levied by the corporation is
842	considered to be a violation of s. 626.936 and subjects the
843	surplus lines agent to the penalties provided in that section.
844	2.  The governing body of any unit of local government, any
845	residents of which are insured by the corporation, may issue
846	bonds as defined in s. 125.013 or s. 166.101 from time to time
847	to fund an assistance program, in conjunction with the
848	corporation, for the purpose of defraying deficits of the
849	corporation. In order to avoid needless and indiscriminate
850	proliferation, duplication, and fragmentation of such assistance
851	programs, any unit of local government, any residents of which
852	are insured by the corporation, may provide for the payment of
853	losses, regardless of whether or not the losses occurred within
854	or outside of the territorial jurisdiction of the local
855	government. Revenue bonds under this subparagraph may not be
856	issued until validated pursuant to chapter 75, unless a state of
857	emergency is declared by executive order or proclamation of the
858	Governor pursuant to s. 252.36 making such findings as are
859	necessary to determine that it is in the best interests of, and
860	necessary for, the protection of the public health, safety, and
861	general welfare of residents of this state and declaring it an
862	essential public purpose to permit certain municipalities or
863	counties to issue such bonds as will permit relief to claimants
864	and policyholders of the corporation. Any such unit of local
865	government may enter into such contracts with the corporation
866	and with any other entity created pursuant to this subsection as
867	are necessary to carry out this paragraph. Any bonds issued
868	under this subparagraph shall be payable from and secured by
869	moneys received by the corporation from emergency assessments
870	under sub-subparagraph (b)3.b.d., and assigned and pledged to or
871	on behalf of the unit of local government for the benefit of the
872	holders of such bonds. The funds, credit, property, and taxing
873	power of the state or of the unit of local government shall not
874	be pledged for the payment of such bonds. If any of the bonds
875	remain unsold 60 days after issuance, the office shall require
876	all insurers subject to assessment to purchase the bonds, which
877	shall be treated as admitted assets; each insurer shall be
878	required to purchase that percentage of the unsold portion of
879	the bond issue that equals the insurer's relative share of
880	assessment liability under this subsection. An insurer shall not
881	be required to purchase the bonds to the extent that the office
882	determines that the purchase would endanger or impair the
883	solvency of the insurer.
884	3.a.  The corporation shall adopt one or more programs
885	subject to approval by the office for the reduction of both new
886	and renewal writings in the corporation. Beginning January 1,
887	2008, any program the corporation adopts for the payment of
888	bonuses to an insurer for each risk the insurer removes from the
889	corporation shall comply with s. 627.3511(2) and may not exceed
890	the amount referenced in s. 627.3511(2) for each risk removed.
891	The corporation may consider any prudent and not unfairly
892	discriminatory approach to reducing corporation writings, and
893	may adopt a credit against assessment liability or other
894	liability that provides an incentive for insurers to take risks
895	out of the corporation and to keep risks out of the corporation
896	by maintaining or increasing voluntary writings in counties or
897	areas in which corporation risks are highly concentrated and a
898	program to provide a formula under which an insurer voluntarily
899	taking risks out of the corporation by maintaining or increasing
900	voluntary writings will be relieved wholly or partially from
901	assessments under sub-subparagraphs (b)3.a. and b. However, any
902	"take-out bonus" or payment to an insurer must be conditioned on
903	the property being insured for at least 5 years by the insurer,
904	unless canceled or nonrenewed by the policyholder. If the policy
905	is canceled or nonrenewed by the policyholder before the end of
906	the 5-year period, the amount of the take-out bonus must be
907	prorated for the time period the policy was insured. When the
908	corporation enters into a contractual agreement for a take-out
909	plan, the producing agent of record of the corporation policy is
910	entitled to retain any unearned commission on such policy, and
911	the insurer shall either:
912	(I)  Pay to the producing agent of record of the policy,
913	for the first year, an amount which is the greater of the
914	insurer's usual and customary commission for the type of policy
915	written or a policy fee equal to the usual and customary
916	commission of the corporation; or
917	(II)  Offer to allow the producing agent of record of the
918	policy to continue servicing the policy for a period of not less
919	than 1 year and offer to pay the agent the insurer's usual and
920	customary commission for the type of policy written. If the
921	producing agent is unwilling or unable to accept appointment by
922	the new insurer, the new insurer shall pay the agent in
923	accordance with sub-sub-subparagraph (I).
924	b.  Any credit or exemption from regular assessments
925	adopted under this subparagraph shall last no longer than the 3
926	years following the cancellation or expiration of the policy by
927	the corporation. With the approval of the office, the board may
928	extend such credits for an additional year if the insurer
929	guarantees an additional year of renewability for all policies
930	removed from the corporation, or for 2 additional years if the
931	insurer guarantees 2 additional years of renewability for all
932	policies so removed.
933	c.  There shall be no credit, limitation, exemption, or
934	deferment from emergency assessments to be collected from
935	policyholders pursuant to sub-subparagraph (b)3.d.
936	4.  The plan shall provide for the deferment, in whole or
937	in part, of the assessment of an assessable insurer, other than
938	an emergency assessment collected from policyholders pursuant to
939	sub-subparagraph (b)3.d., if the office finds that payment of
940	the assessment would endanger or impair the solvency of the
941	insurer. In the event an assessment against an assessable
942	insurer is deferred in whole or in part, the amount by which
943	such assessment is deferred may be assessed against the other
944	assessable insurers in a manner consistent with the basis for
945	assessments set forth in paragraph (b).
946	4. 5.  Effective July 1, 2007, in order to evaluate the
947	costs and benefits of approved take-out plans, if the
948	corporation pays a bonus or other payment to an insurer for an
949	approved take-out plan, it shall maintain a record of the
950	address or such other identifying information on the property or
951	risk removed in order to track if and when the property or risk
952	is later insured by the corporation.
953	5. 6.  Any policy taken out, assumed, or removed from the
954	corporation is, as of the effective date of the take-out,
955	assumption, or removal, direct insurance issued by the insurer
956	and not by the corporation, even if the corporation continues to
957	service the policies. This subparagraph applies to policies of
958	the corporation and not policies taken out, assumed, or removed
959	from any other entity.
960	(r)  There shall be no liability on the part of, and no
961	cause of action of any nature shall arise against, any
962	assessable insurer or its agents or employees, the corporation
963	or its agents or employees, members of the board of governors or
964	their respective designees at a board meeting, corporation
965	committee members, or the office or its representatives, for any
966	action taken by them in the performance of their duties or
967	responsibilities under this subsection. Such immunity does not
968	apply to:
969	1.  Any of the foregoing persons or entities for any
970	willful tort;
971	2.  The corporation or its producing agents for breach of
972	any contract or agreement pertaining to insurance coverage;
973	3.  The corporation with respect to issuance or payment of
974	debt; or
975	4.  Any assessable insurer with respect to any action to
976	enforce an assessable insurer's obligations to the corporation
977	under this subsection.
978
979	====== D I R E C T O R Y  A M E N D M E N T =====
980	Remove lines 62-64 and insert:
981	Section 2.  Present paragraphs (s) through (ee) of
982	subsection (6) of section 627.351, Florida Statutes, as amended
983	by section 21 of chapter 2007-1, Laws of Florida, are
984	redesignated as paragraphs (r) through (dd), and present
985	paragraphs (a), (b), (c), (m), (p), and (r) of subsection (6) of
986	that section are amended, to read:
987
988	=========== T I T L E  A M E N D M E N T ========
989	Remove lines 18-22 and insert:
990	and threatens the economic health of the state; revising
991	membership of the corporation's board of governors; deleting
992	provisions relating to assessable insurers; deleting provisions
993	relating to who constitutes an assessable insurer; deleting
994	provisions relating to deficit in an account; revising the
995	definition of the term "assessments"; deleting provisions
996	relating to subject lines of business; revising powers of the
997	corporation to levy certain assessments; deleting provisions
998	relating to unsold bonds; revising powers of the corporation;
999	deleting provisions relating to credits and exemptions from
1000	assessments; revising provisions for determining eligibility for
1001	coverage under the corporation; reinstating certain rate filings
1002	by the corporation; deleting provisions relating to the
1003	uncollected assessments; deleting provisions relieving
1004	assessable insurers of liability under certain circumstances;
1005	prohibiting issuance of new

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