HB 1267

1	A bill to be entitled
2	An act relating to the Citizens Property Insurance
3	Corporation; amending s. 627.351, F.S.; revising
4	legislative findings to provide a finding that the lack of
5	affordable property insurance threatens the public health,
6	safety, and welfare and threatens the economic health of
7	the state; authorizing the corporation to offer multiperil
8	coverage, wind-only coverage, or both types of coverage in
9	the high-risk account; providing legislative intent that
10	such coverage not affect the creditworthiness of or
11	security for outstanding financing obligations of the
12	high-risk account, the personal lines account, or the
13	commercial lines account; authorizing a policyholder to
14	choose coverage from the corporation regardless of the
15	availability of other coverage under certain
16	circumstances; deleting certain limitations on eligibility
17	for a policy issued by the corporation; revising
18	requirements for the corporation in determining whether an
19	individual risk is eligible for coverage; deleting
20	provisions providing that a policyholder is no longer
21	eligible for coverage if an authorized insurer offers
22	coverage at an approved rate; prohibiting issuance of new
23	certificates of authority to certain insurers; providing
24	for expiration of existing certificates of authority of
25	certain insurers; prohibiting the Office of Insurance
26	Regulation and the Financial Services Commission from
27	renewing or reissuing existing certificates of authority
28	of certain insurers; requiring rate filings of certain
29	insurers to include certain parent company profits
30	information; providing effective dates.
31
32	Be It Enacted by the Legislature of the State of Florida:
33
34	Section 1.  Paragraphs (a), (b), and (c) of subsection (6)
35	of section 627.351, Florida Statutes, as amended by section 21
36	of chapter 2007-1, Laws of Florida, are amended to read:
37	627.351  Insurance risk apportionment plans.--
38	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
39	(a)1.  The Legislature finds that private insurers are
40	unwilling or unable to provide affordable property insurance
41	coverage in this state to the extent sought and needed. The
42	absence of affordable property insurance threatens the public
43	health, safety, and welfare and likewise threatens the economic
44	health of the state. The Legislature finds therefore that it is
45	a compelling public interest and public purpose to assist in
46	ensuring that property in the state is insured and that it is
47	insured at affordable rates so as to facilitate the remediation,
48	reconstruction, and replacement of damaged or destroyed property
49	in order to reduce or avoid the negative effects otherwise
50	resulting to the public health, safety, and welfare; to the
51	economy of the state; and to the revenues of the state and local
52	governments which are needed to provide for the public welfare.
53	It is necessary, therefore, to provide affordable property
54	insurance to applicants who are in good faith entitled to
55	procure insurance through the voluntary market but are unable to
56	do so. The Legislature intends by this subsection that
57	affordable property insurance be provided and that it continue,
58	as long as necessary, through an entity that is not devoted to
59	private profitmaking pursuits and that is organized to achieve
60	efficiencies and economies, while providing service to
61	policyholder, applicants, and agents which equals or exceeds the
62	quality generally provided in the voluntary market, all toward
63	the achievement of the foregoing public purposes. To that end,
64	such entity shall strive to increase the availability of
65	affordable property insurance in this state and shall offer the
66	lowest rates possible consistent with sound business practices.
67	Because it is essential for the corporation to have the maximum
68	financial resources to pay claims following a catastrophic
69	hurricane, it is the intent of the Legislature that the income
70	of the corporation be exempt from federal income taxation and
71	that interest on the debt obligations issued by the corporation
72	be exempt from federal income taxation. The Legislature finds
73	that actual and threatened catastrophic losses to property in
74	this state from hurricanes have caused insurers to be unwilling
75	or unable to provide property insurance coverage to the extent
76	sought and needed. It is in the public interest and a public
77	purpose to assist in assuring that property in the state is
78	insured so as to facilitate the remediation, reconstruction, and
79	replacement of damaged or destroyed property in order to reduce
80	or avoid the negative effects otherwise resulting to the public
81	health, safety, and welfare; to the economy of the state; and to
82	the revenues of the state and local governments needed to
83	provide for the public welfare. It is necessary, therefore, to
84	provide property insurance to applicants who are in good faith
85	entitled to procure insurance through the voluntary market but
86	are unable to do so. The Legislature intends by this subsection
87	that property insurance be provided and that it continues, as
88	long as necessary, through an entity organized to achieve
89	efficiencies and economies, while providing service to
90	policyholders, applicants, and agents that is no less than the
91	quality generally provided in the voluntary market, all toward
92	the achievement of the foregoing public purposes. Because it is
93	essential for the corporation to have the maximum financial
94	resources to pay claims following a catastrophic hurricane, it
95	is the intent of the Legislature that the income of the
96	corporation be exempt from federal income taxation and that
97	interest on the debt obligations issued by the corporation be
98	exempt from federal income taxation.
99	2.  The Residential Property and Casualty Joint
100	Underwriting Association originally created by this statute
101	shall be known, as of July 1, 2002, as the Citizens Property
102	Insurance Corporation. The corporation shall provide insurance
103	for residential and commercial property, for applicants who are
104	in good faith entitled, but are unable, to procure insurance
105	through the voluntary market. The corporation shall operate
106	pursuant to a plan of operation approved by order of the
107	Financial Services Commission. The plan is subject to continuous
108	review by the commission. The commission may, by order, withdraw
109	approval of all or part of a plan if the commission determines
110	that conditions have changed since approval was granted and that
111	the purposes of the plan require changes in the plan. The
112	corporation shall continue to operate pursuant to the plan of
113	operation approved by the Office of Insurance Regulation until
114	October 1, 2006. For the purposes of this subsection,
115	residential coverage includes both personal lines residential
116	coverage, which consists of the type of coverage provided by
117	homeowner's, mobile home owner's, dwelling, tenant's,
118	condominium unit owner's, and similar policies, and commercial
119	lines residential coverage, which consists of the type of
120	coverage provided by condominium association, apartment
121	building, and similar policies.
122	3.  For the purposes of this subsection, the term
123	"homestead property" means:
124	a.  Property that has been granted a homestead exemption
125	under chapter 196;
126	b.  Property for which the owner has a current, written
127	lease with a renter for a term of at least 7 months and for
128	which the dwelling is insured by the corporation for $200,000 or
129	less;
130	c.  An owner-occupied mobile home or manufactured home, as
131	defined in s. 320.01, which is permanently affixed to real
132	property, is owned by a Florida resident, and has been granted a
133	homestead exemption under chapter 196 or, if the owner does not
134	own the real property, the owner certifies that the mobile home
135	or manufactured home is his or her principal place of residence;
136	d.  Tenant's coverage;
137	e.  Commercial lines residential property; or
138	f.  Any county, district, or municipal hospital; a hospital
139	licensed by any not-for-profit corporation qualified under s.
140	501(c)(3) of the United States Internal Revenue Code; or a
141	continuing care retirement community that is certified under
142	chapter 651 and that receives an exemption from ad valorem taxes
143	under chapter 196.
144	4.  For the purposes of this subsection, the term
145	"nonhomestead property" means property that is not homestead
146	property.
147	5.  Effective July 1, 2008, a personal lines residential
148	structure that has a dwelling replacement cost of $1 million or
149	more, or a single condominium unit that has a combined dwelling
150	and content replacement cost of $1 million or more is not
151	eligible for coverage by the corporation. Such dwellings insured
152	by the corporation on June 30, 2008, may continue to be covered
153	by the corporation until the end of the policy term. However,
154	such dwellings that are insured by the corporation and become
155	ineligible for coverage due to the provisions of this
156	subparagraph may reapply and obtain coverage in the high-risk
157	account and be considered "nonhomestead property" if the
158	property owner provides the corporation with a sworn affidavit
159	from one or more insurance agents, on a form provided by the
160	corporation, stating that the agents have made their best
161	efforts to obtain coverage and that the property has been
162	rejected for coverage by at least one authorized insurer and at
163	least three surplus lines insurers. If such conditions are met,
164	the dwelling may be insured by the corporation for up to 3
165	years, after which time the dwelling is ineligible for coverage.
166	The office shall approve the method used by the corporation for
167	valuing the dwelling replacement cost for the purposes of this
168	subparagraph. If a policyholder is insured by the corporation
169	prior to being determined to be ineligible pursuant to this
170	subparagraph and such policyholder files a lawsuit challenging
171	the determination, the policyholder may remain insured by the
172	corporation until the conclusion of the litigation.
173	6.  For properties constructed on or after January 1, 2009,
174	the corporation may not insure any property located within 2,500
175	feet landward of the coastal construction control line created
176	pursuant to s. 161.053 unless the property meets the
177	requirements of the code-plus building standards developed by
178	the Florida Building Commission.
179	7.  It is the intent of the Legislature that policyholders,
180	applicants, and agents of the corporation receive service and
181	treatment of the highest possible level but never less than that
182	generally provided in the voluntary market. It also is intended
183	that the corporation be held to service standards no less than
184	those applied to insurers in the voluntary market by the office
185	with respect to responsiveness, timeliness, customer courtesy,
186	and overall dealings with policyholders, applicants, or agents
187	of the corporation.
188	(b)1.  All insurers authorized to write one or more subject
189	lines of business in this state are subject to assessment by the
190	corporation and, for the purposes of this subsection, are
191	referred to collectively as "assessable insurers." Insurers
192	writing one or more subject lines of business in this state
193	pursuant to part VIII of chapter 626 are not assessable
194	insurers, but insureds who procure one or more subject lines of
195	business in this state pursuant to part VIII of chapter 626 are
196	subject to assessment by the corporation and are referred to
197	collectively as "assessable insureds." An authorized insurer's
198	assessment liability shall begin on the first day of the
199	calendar year following the year in which the insurer was issued
200	a certificate of authority to transact insurance for subject
201	lines of business in this state and shall terminate 1 year after
202	the end of the first calendar year during which the insurer no
203	longer holds a certificate of authority to transact insurance
204	for subject lines of business in this state.
205	2.a.  All revenues, assets, liabilities, losses, and
206	expenses of the corporation shall be divided into three separate
207	accounts as follows:
208	(I)  A personal lines account for personal residential
209	policies issued by the corporation or issued by the Residential
210	Property and Casualty Joint Underwriting Association and renewed
211	by the corporation that provide comprehensive, multiperil
212	coverage on risks that are not located in areas eligible for
213	coverage in the Florida Windstorm Underwriting Association as
214	those areas were defined on January 1, 2002, and for such
215	policies that do not provide coverage for the peril of wind on
216	risks that are located in such areas;
217	(II)  A commercial lines account for commercial residential
218	and commercial nonresidential policies issued by the corporation
219	or issued by the Residential Property and Casualty Joint
220	Underwriting Association and renewed by the corporation that
221	provide coverage for basic property perils on risks that are not
222	located in areas eligible for coverage in the Florida Windstorm
223	Underwriting Association as those areas were defined on January
224	1, 2002, and for such policies that do not provide coverage for
225	the peril of wind on risks that are located in such areas; and
226	(III)  A high-risk account for personal residential
227	policies and commercial residential and commercial
228	nonresidential property policies issued by the corporation or
229	transferred to the corporation that provide coverage for the
230	peril of wind on risks that are located in areas eligible for
231	coverage in the Florida Windstorm Underwriting Association as
232	those areas were defined on January 1, 2002. Beginning July 1,
233	2007, the corporation may offer multiperil coverage, wind-only
234	coverage, or both types of coverage in the high-risk account. In
235	issuing multiperil coverage, the corporation may use its
236	approved policy forms and rates for personal lines accounts
237	through December 31, 2007. It is the intent of the Legislature
238	that the offer of multiperil coverage in the high-risk account
239	be made and implemented in a manner that does not adversely
240	affect the creditworthiness of or security for currently
241	outstanding financing obligations or credit facilities of the
242	high-risk account, the personal lines account, or the commercial
243	lines account. Subject to the approval of a business plan by the
244	Financial Services Commission and Legislative Budget Commission
245	as provided in this sub-sub-subparagraph, but no earlier than
246	March 31, 2007, the corporation may offer policies that provide
247	multiperil coverage and the corporation shall continue to offer
248	policies that provide coverage only for the peril of wind for
249	risks located in areas eligible for coverage in the high-risk
250	account. In issuing multiperil coverage, the corporation may use
251	its approved policy forms and rates for the personal lines
252	account. An applicant or insured who is eligible to purchase a
253	multiperil policy from the corporation may purchase a multiperil
254	policy from an authorized insurer without prejudice to the
255	applicant's or insured's eligibility to prospectively purchase a
256	policy that provides coverage only for the peril of wind from
257	the corporation. An applicant or insured who is eligible for a
258	corporation policy that provides coverage only for the peril of
259	wind may elect to purchase or retain such policy and also
260	purchase or retain coverage excluding wind from an authorized
261	insurer without prejudice to the applicant's or insured's
262	eligibility to prospectively purchase a policy that provides
263	multiperil coverage from the corporation. It is the goal of the
264	Legislature that there would be an overall average savings of 10
265	percent or more for a policyholder who currently has a wind-only
266	policy with the corporation, and an ex-wind policy with a
267	voluntary insurer or the corporation, and who then obtains a
268	multiperil policy from the corporation. It is the intent of the
269	Legislature that the offer of multiperil coverage in the high-
270	risk account be made and implemented in a manner that does not
271	adversely affect the tax-exempt status of the corporation or
272	creditworthiness of or security for currently outstanding
273	financing obligations or credit facilities of the high-risk
274	account, the personal lines account, or the commercial lines
275	account. By March 1, 2007, the corporation shall prepare and
276	submit for approval by the Financial Services Commission and
277	Legislative Budget Commission a report detailing the
278	corporation's business plan for issuing multiperil coverage in
279	the high-risk account. The business plan shall be approved or
280	disapproved within 30 days after receipt, as submitted or
281	modified and resubmitted by the corporation. The business plan
282	must include: the impact of such multiperil coverage on the
283	corporation's financial resources, the impact of such multiperil
284	coverage on the corporation's tax-exempt status, the manner in
285	which the corporation plans to implement the processing of
286	applications and policy forms for new and existing
287	policyholders, the impact of such multiperil coverage on the
288	corporation's ability to deliver customer service at the high
289	level required by this subsection, the ability of the
290	corporation to process claims, the ability of the corporation to
291	quote and issue policies, the impact of such multiperil coverage
292	on the corporation's agents, the impact of such multiperil
293	coverage on the corporation's existing policyholders, and the
294	impact of such multiperil coverage on rates and premium. The
295	high-risk account must also include quota share primary
296	insurance under subparagraph (c)2. The area eligible for
297	coverage under the high-risk account also includes the area
298	within Port Canaveral, which is bordered on the south by the
299	City of Cape Canaveral, bordered on the west by the Banana
300	River, and bordered on the north by Federal Government property.
301	b.  The three separate accounts must be maintained as long
302	as financing obligations entered into by the Florida Windstorm
303	Underwriting Association or Residential Property and Casualty
304	Joint Underwriting Association are outstanding, in accordance
305	with the terms of the corresponding financing documents. When
306	the financing obligations are no longer outstanding, in
307	accordance with the terms of the corresponding financing
308	documents, the corporation may use a single account for all
309	revenues, assets, liabilities, losses, and expenses of the
310	corporation. Consistent with the requirement of this
311	subparagraph and prudent investment policies that minimize the
312	cost of carrying debt, the board shall exercise its best efforts
313	to retire existing debt or to obtain approval of necessary
314	parties to amend the terms of existing debt, so as to structure
315	the most efficient plan to consolidate the three separate
316	accounts into a single account. By February 1, 2007, the board
317	shall submit a report to the Financial Services Commission, the
318	President of the Senate, and the Speaker of the House of
319	Representatives which includes an analysis of consolidating the
320	accounts, the actions the board has taken to minimize the cost
321	of carrying debt, and its recommendations for executing the most
322	efficient plan.
323	c.  Creditors of the Residential Property and Casualty
324	Joint Underwriting Association shall have a claim against, and
325	recourse to, the accounts referred to in sub-sub-subparagraphs
326	a.(I) and (II) and shall have no claim against, or recourse to,
327	the account referred to in sub-sub-subparagraph a.(III).
328	Creditors of the Florida Windstorm Underwriting Association
329	shall have a claim against, and recourse to, the account
330	referred to in sub-sub-subparagraph a.(III) and shall have no
331	claim against, or recourse to, the accounts referred to in sub-
332	sub-subparagraphs a.(I) and (II).
333	d.  Revenues, assets, liabilities, losses, and expenses not
334	attributable to particular accounts shall be prorated among the
335	accounts.
336	e.  The Legislature finds that the revenues of the
337	corporation are revenues that are necessary to meet the
338	requirements set forth in documents authorizing the issuance of
339	bonds under this subsection.
340	f.  No part of the income of the corporation may inure to
341	the benefit of any private person.
342	3.  With respect to a deficit in an account:
343	a.  When the deficit incurred in a particular calendar year
344	is not greater than 10 percent of the aggregate statewide direct
345	written premium for the subject lines of business for the prior
346	calendar year, the entire deficit shall be recovered through
347	regular assessments of assessable insurers under paragraph (p)
348	and assessable insureds.
349	b.  When the deficit incurred in a particular calendar year
350	exceeds 10 percent of the aggregate statewide direct written
351	premium for the subject lines of business for the prior calendar
352	year, the corporation shall levy regular assessments on
353	assessable insurers under paragraph (p) and on assessable
354	insureds in an amount equal to the greater of 10 percent of the
355	deficit or 10 percent of the aggregate statewide direct written
356	premium for the subject lines of business for the prior calendar
357	year. Any remaining deficit shall be recovered through emergency
358	assessments under sub-subparagraph d.
359	c.  Each assessable insurer's share of the amount being
360	assessed under sub-subparagraph a. or sub-subparagraph b. shall
361	be in the proportion that the assessable insurer's direct
362	written premium for the subject lines of business for the year
363	preceding the assessment bears to the aggregate statewide direct
364	written premium for the subject lines of business for that year.
365	The assessment percentage applicable to each assessable insured
366	is the ratio of the amount being assessed under sub-subparagraph
367	a. or sub-subparagraph b. to the aggregate statewide direct
368	written premium for the subject lines of business for the prior
369	year. Assessments levied by the corporation on assessable
370	insurers under sub-subparagraphs a. and b. shall be paid as
371	required by the corporation's plan of operation and paragraph
372	(p). Notwithstanding any other provision of this subsection, the
373	aggregate amount of a regular assessment for a deficit incurred
374	in a particular calendar year shall be reduced by the estimated
375	amount to be received by the corporation from the Citizens
376	policyholder surcharge under subparagraph (c)11. and the amount
377	collected or estimated to be collected from the assessment on
378	Citizens policyholders pursuant to sub-subparagraph i.
379	Assessments levied by the corporation on assessable insureds
380	under sub-subparagraphs a. and b. shall be collected by the
381	surplus lines agent at the time the surplus lines agent collects
382	the surplus lines tax required by s. 626.932 and shall be paid
383	to the Florida Surplus Lines Service Office at the time the
384	surplus lines agent pays the surplus lines tax to the Florida
385	Surplus Lines Service Office. Upon receipt of regular
386	assessments from surplus lines agents, the Florida Surplus Lines
387	Service Office shall transfer the assessments directly to the
388	corporation as determined by the corporation.
389	d.  Upon a determination by the board of governors that a
390	deficit in an account exceeds the amount that will be recovered
391	through regular assessments under sub-subparagraph a. or sub-
392	subparagraph b., the board shall levy, after verification by the
393	office, emergency assessments, for as many years as necessary to
394	cover the deficits, to be collected by assessable insurers and
395	the corporation and collected from assessable insureds upon
396	issuance or renewal of policies for subject lines of business,
397	excluding National Flood Insurance policies. The amount of the
398	emergency assessment collected in a particular year shall be a
399	uniform percentage of that year's direct written premium for
400	subject lines of business and all accounts of the corporation,
401	excluding National Flood Insurance Program policy premiums, as
402	annually determined by the board and verified by the office. The
403	office shall verify the arithmetic calculations involved in the
404	board's determination within 30 days after receipt of the
405	information on which the determination was based.
406	Notwithstanding any other provision of law, the corporation and
407	each assessable insurer that writes subject lines of business
408	shall collect emergency assessments from its policyholders
409	without such obligation being affected by any credit,
410	limitation, exemption, or deferment. Emergency assessments
411	levied by the corporation on assessable insureds shall be
412	collected by the surplus lines agent at the time the surplus
413	lines agent collects the surplus lines tax required by s.
414	626.932 and shall be paid to the Florida Surplus Lines Service
415	Office at the time the surplus lines agent pays the surplus
416	lines tax to the Florida Surplus Lines Service Office. The
417	emergency assessments so collected shall be transferred directly
418	to the corporation on a periodic basis as determined by the
419	corporation and shall be held by the corporation solely in the
420	applicable account. The aggregate amount of emergency
421	assessments levied for an account under this sub-subparagraph in
422	any calendar year may not exceed the greater of 10 percent of
423	the amount needed to cover the original deficit, plus interest,
424	fees, commissions, required reserves, and other costs associated
425	with financing of the original deficit, or 10 percent of the
426	aggregate statewide direct written premium for subject lines of
427	business and for all accounts of the corporation for the prior
428	year, plus interest, fees, commissions, required reserves, and
429	other costs associated with financing the original deficit.
430	e.  The corporation may pledge the proceeds of assessments,
431	projected recoveries from the Florida Hurricane Catastrophe
432	Fund, other insurance and reinsurance recoverables, policyholder
433	surcharges and other surcharges, and other funds available to
434	the corporation as the source of revenue for and to secure bonds
435	issued under paragraph (p), bonds or other indebtedness issued
436	under subparagraph (c)3., or lines of credit or other financing
437	mechanisms issued or created under this subsection, or to retire
438	any other debt incurred as a result of deficits or events giving
439	rise to deficits, or in any other way that the board determines
440	will efficiently recover such deficits. The purpose of the lines
441	of credit or other financing mechanisms is to provide additional
442	resources to assist the corporation in covering claims and
443	expenses attributable to a catastrophe. As used in this
444	subsection, the term "assessments" includes regular assessments
445	under sub-subparagraph a., sub-subparagraph b., or subparagraph
446	(p)1. and emergency assessments under sub-subparagraph d.
447	Emergency assessments collected under sub-subparagraph d. are
448	not part of an insurer's rates, are not premium, and are not
449	subject to premium tax, fees, or commissions; however, failure
450	to pay the emergency assessment shall be treated as failure to
451	pay premium. The emergency assessments under sub-subparagraph d.
452	shall continue as long as any bonds issued or other indebtedness
453	incurred with respect to a deficit for which the assessment was
454	imposed remain outstanding, unless adequate provision has been
455	made for the payment of such bonds or other indebtedness
456	pursuant to the documents governing such bonds or other
457	indebtedness.
458	f.  As used in this subsection, the term "subject lines of
459	business" means insurance written by assessable insurers or
460	procured by assessable insureds for all property and casualty
461	lines of business in this state, but not including workers'
462	compensation or medical malpractice. As used in the sub-
463	subparagraph, the term "property and casualty lines of business"
464	includes all lines of business identified on Form 2, Exhibit of
465	Premiums and Losses, in the annual statement required of
466	authorized insurers by s. 624.424 and any rule adopted under
467	this section, except for those lines identified as accident and
468	health insurance and except for policies written under the
469	National Flood Insurance Program or the Federal Crop Insurance
470	Program. For purposes of this sub-subparagraph, the term
471	"workers' compensation" includes both workers' compensation
472	insurance and excess workers' compensation insurance.
473	g.  The Florida Surplus Lines Service Office shall
474	determine annually the aggregate statewide written premium in
475	subject lines of business procured by assessable insureds and
476	shall report that information to the corporation in a form and
477	at a time the corporation specifies to ensure that the
478	corporation can meet the requirements of this subsection and the
479	corporation's financing obligations.
480	h.  The Florida Surplus Lines Service Office shall verify
481	the proper application by surplus lines agents of assessment
482	percentages for regular assessments and emergency assessments
483	levied under this subparagraph on assessable insureds and shall
484	assist the corporation in ensuring the accurate, timely
485	collection and payment of assessments by surplus lines agents as
486	required by the corporation.
487	i.  If a deficit is incurred in any account in 2008 or
488	thereafter, the board of governors shall levy an immediate
489	assessment against the premium of each nonhomestead property
490	policyholder in all accounts of the corporation, as a uniform
491	percentage of the premium of the policy of up to 10 percent of
492	such premium, which funds shall be used to offset the deficit.
493	If this assessment is insufficient to eliminate the deficit, the
494	board of governors shall levy an additional assessment against
495	all policyholders of the corporation, which shall be collected
496	at the time of issuance or renewal of a policy, as a uniform
497	percentage of the premium for the policy of up to 10 percent of
498	such premium, which funds shall be used to further offset the
499	deficit.
500	j.  The board of governors shall maintain separate
501	accounting records that consolidate data for nonhomestead
502	properties, including, but not limited to, number of policies,
503	insured values, premiums written, and losses. The board of
504	governors shall annually report to the office and the
505	Legislature a summary of such data.
506	(c)  The plan of operation of the corporation:
507	1.  Must provide for adoption of residential property and
508	casualty insurance policy forms and commercial residential and
509	nonresidential property insurance forms, which forms must be
510	approved by the office prior to use. The corporation shall adopt
511	the following policy forms:
512	a.  Standard personal lines policy forms that are
513	comprehensive multiperil policies providing full coverage of a
514	residential property equivalent to the coverage provided in the
515	private insurance market under an HO-3, HO-4, or HO-6 policy.
516	b.  Basic personal lines policy forms that are policies
517	similar to an HO-8 policy or a dwelling fire policy that provide
518	coverage meeting the requirements of the secondary mortgage
519	market, but which coverage is more limited than the coverage
520	under a standard policy.
521	c.  Commercial lines residential and nonresidential policy
522	forms that are generally similar to the basic perils of full
523	coverage obtainable for commercial residential structures and
524	commercial nonresidential structures in the admitted voluntary
525	market.
526	d.  Personal lines and commercial lines residential
527	property insurance forms that cover the peril of wind only. The
528	forms are applicable only to residential properties located in
529	areas eligible for coverage under the high-risk account referred
530	to in sub-subparagraph (b)2.a.
531	e.  Commercial lines nonresidential property insurance
532	forms that cover the peril of wind only. The forms are
533	applicable only to nonresidential properties located in areas
534	eligible for coverage under the high-risk account referred to in
535	sub-subparagraph (b)2.a.
536	f.  The corporation may adopt variations of the policy
537	forms listed in sub-subparagraphs a.-e. that contain more
538	restrictive coverage.
539	2.a.  Must provide that the corporation adopt a program in
540	which the corporation and authorized insurers enter into quota
541	share primary insurance agreements for hurricane coverage, as
542	defined in s. 627.4025(2)(a), for eligible risks, and adopt
543	property insurance forms for eligible risks which cover the
544	peril of wind only. As used in this subsection, the term:
545	(I)  "Quota share primary insurance" means an arrangement
546	in which the primary hurricane coverage of an eligible risk is
547	provided in specified percentages by the corporation and an
548	authorized insurer. The corporation and authorized insurer are
549	each solely responsible for a specified percentage of hurricane
550	coverage of an eligible risk as set forth in a quota share
551	primary insurance agreement between the corporation and an
552	authorized insurer and the insurance contract. The
553	responsibility of the corporation or authorized insurer to pay
554	its specified percentage of hurricane losses of an eligible
555	risk, as set forth in the quota share primary insurance
556	agreement, may not be altered by the inability of the other
557	party to the agreement to pay its specified percentage of
558	hurricane losses. Eligible risks that are provided hurricane
559	coverage through a quota share primary insurance arrangement
560	must be provided policy forms that set forth the obligations of
561	the corporation and authorized insurer under the arrangement,
562	clearly specify the percentages of quota share primary insurance
563	provided by the corporation and authorized insurer, and
564	conspicuously and clearly state that neither the authorized
565	insurer nor the corporation may be held responsible beyond its
566	specified percentage of coverage of hurricane losses.
567	(II)  "Eligible risks" means personal lines residential and
568	commercial lines residential risks that meet the underwriting
569	criteria of the corporation and are located in areas that were
570	eligible for coverage by the Florida Windstorm Underwriting
571	Association on January 1, 2002.
572	b.  The corporation may enter into quota share primary
573	insurance agreements with authorized insurers at corporation
574	coverage levels of 90 percent and 50 percent.
575	c.  If the corporation determines that additional coverage
576	levels are necessary to maximize participation in quota share
577	primary insurance agreements by authorized insurers, the
578	corporation may establish additional coverage levels. However,
579	the corporation's quota share primary insurance coverage level
580	may not exceed 90 percent.
581	d.  Any quota share primary insurance agreement entered
582	into between an authorized insurer and the corporation must
583	provide for a uniform specified percentage of coverage of
584	hurricane losses, by county or territory as set forth by the
585	corporation board, for all eligible risks of the authorized
586	insurer covered under the quota share primary insurance
587	agreement.
588	e.  Any quota share primary insurance agreement entered
589	into between an authorized insurer and the corporation is
590	subject to review and approval by the office. However, such
591	agreement shall be authorized only as to insurance contracts
592	entered into between an authorized insurer and an insured who is
593	already insured by the corporation for wind coverage.
594	f.  For all eligible risks covered under quota share
595	primary insurance agreements, the exposure and coverage levels
596	for both the corporation and authorized insurers shall be
597	reported by the corporation to the Florida Hurricane Catastrophe
598	Fund. For all policies of eligible risks covered under quota
599	share primary insurance agreements, the corporation and the
600	authorized insurer shall maintain complete and accurate records
601	for the purpose of exposure and loss reimbursement audits as
602	required by Florida Hurricane Catastrophe Fund rules. The
603	corporation and the authorized insurer shall each maintain
604	duplicate copies of policy declaration pages and supporting
605	claims documents.
606	g.  The corporation board shall establish in its plan of
607	operation standards for quota share agreements which ensure that
608	there is no discriminatory application among insurers as to the
609	terms of quota share agreements, pricing of quota share
610	agreements, incentive provisions if any, and consideration paid
611	for servicing policies or adjusting claims.
612	h.  The quota share primary insurance agreement between the
613	corporation and an authorized insurer must set forth the
614	specific terms under which coverage is provided, including, but
615	not limited to, the sale and servicing of policies issued under
616	the agreement by the insurance agent of the authorized insurer
617	producing the business, the reporting of information concerning
618	eligible risks, the payment of premium to the corporation, and
619	arrangements for the adjustment and payment of hurricane claims
620	incurred on eligible risks by the claims adjuster and personnel
621	of the authorized insurer. Entering into a quota sharing
622	insurance agreement between the corporation and an authorized
623	insurer shall be voluntary and at the discretion of the
624	authorized insurer.
625	3.  May provide that the corporation may employ or
626	otherwise contract with individuals or other entities to provide
627	administrative or professional services that may be appropriate
628	to effectuate the plan. The corporation shall have the power to
629	borrow funds, by issuing bonds or by incurring other
630	indebtedness, and shall have other powers reasonably necessary
631	to effectuate the requirements of this subsection, including,
632	without limitation, the power to issue bonds and incur other
633	indebtedness in order to refinance outstanding bonds or other
634	indebtedness. The corporation may, but is not required to, seek
635	judicial validation of its bonds or other indebtedness under
636	chapter 75. The corporation may issue bonds or incur other
637	indebtedness, or have bonds issued on its behalf by a unit of
638	local government pursuant to subparagraph (g)2., in the absence
639	of a hurricane or other weather-related event, upon a
640	determination by the corporation, subject to approval by the
641	office, that such action would enable it to efficiently meet the
642	financial obligations of the corporation and that such
643	financings are reasonably necessary to effectuate the
644	requirements of this subsection. The corporation is authorized
645	to take all actions needed to facilitate tax-free status for any
646	such bonds or indebtedness, including formation of trusts or
647	other affiliated entities. The corporation shall have the
648	authority to pledge assessments, projected recoveries from the
649	Florida Hurricane Catastrophe Fund, other reinsurance
650	recoverables, market equalization and other surcharges, and
651	other funds available to the corporation as security for bonds
652	or other indebtedness. In recognition of s. 10, Art. I of the
653	State Constitution, prohibiting the impairment of obligations of
654	contracts, it is the intent of the Legislature that no action be
655	taken whose purpose is to impair any bond indenture or financing
656	agreement or any revenue source committed by contract to such
657	bond or other indebtedness.
658	4.a.  Must require that the corporation operate subject to
659	the supervision and approval of a board of governors consisting
660	of eight individuals who are residents of this state, from
661	different geographical areas of this state. The Governor, the
662	Chief Financial Officer, the President of the Senate, and the
663	Speaker of the House of Representatives shall each appoint two
664	members of the board. At least one of the two members appointed
665	by each appointing officer must have demonstrated expertise in
666	insurance. The Chief Financial Officer shall designate one of
667	the appointees as chair. All board members serve at the pleasure
668	of the appointing officer. All members of the board of governors
669	are subject to removal at will by the officers who appointed
670	them. All board members, including the chair, must be appointed
671	to serve for 3-year terms beginning annually on a date
672	designated by the plan. Any board vacancy shall be filled for
673	the unexpired term by the appointing officer. The Chief
674	Financial Officer shall appoint a technical advisory group to
675	provide information and advice to the board of governors in
676	connection with the board's duties under this subsection. The
677	executive director and senior managers of the corporation shall
678	be engaged by the board and serve at the pleasure of the board.
679	Any executive director appointed on or after July 1, 2006, is
680	subject to confirmation by the Senate. The executive director is
681	responsible for employing other staff as the corporation may
682	require, subject to review and concurrence by the board.
683	b.  The board shall create a Market Accountability Advisory
684	Committee to assist the corporation in developing awareness of
685	its rates and its customer and agent service levels in
686	relationship to the voluntary market insurers writing similar
687	coverage. The members of the advisory committee shall consist of
688	the following 11 persons, one of whom must be elected chair by
689	the members of the committee: four representatives, one
690	appointed by the Florida Association of Insurance Agents, one by
691	the Florida Association of Insurance and Financial Advisors, one
692	by the Professional Insurance Agents of Florida, and one by the
693	Latin American Association of Insurance Agencies; three
694	representatives appointed by the insurers with the three highest
695	voluntary market share of residential property insurance
696	business in the state; one representative from the Office of
697	Insurance Regulation; one consumer appointed by the board who is
698	insured by the corporation at the time of appointment to the
699	committee; one representative appointed by the Florida
700	Association of Realtors; and one representative appointed by the
701	Florida Bankers Association. All members must serve for 3-year
702	terms and may serve for consecutive terms. The committee shall
703	report to the corporation at each board meeting on insurance
704	market issues which may include rates and rate competition with
705	the voluntary market; service, including policy issuance, claims
706	processing, and general responsiveness to policyholders,
707	applicants, and agents; and matters relating to depopulation.
708	5.  Must provide procedures a procedure for determining the
709	eligibility of a risk for coverage, as follows:
710	a.  Applicants are not ineligible for coverage based on the
711	availability of coverage from the private insurance market or
712	the surplus lines market. An applicant or policyholder may
713	choose to be insured by the corporation even if the applicant or
714	policyholder has another offer of coverage if the risk otherwise
715	meets the underwriting guidelines of the corporation. Subject to
716	the provisions of s. 627.3517, with respect to personal lines
717	residential risks, if the risk is offered coverage from an
718	authorized insurer at the insurer's approved rate under either a
719	standard policy including wind coverage or, if consistent with
720	the insurer's underwriting rules as filed with the office, a
721	basic policy including wind coverage, for a new application to
722	the corporation for coverage, the risk is not eligible for any
723	policy issued by the corporation unless the premium for coverage
724	from the authorized insurer is more than 25 percent greater than
725	the premium for comparable coverage from the corporation. If the
726	risk is not able to obtain any such offer, the risk is eligible
727	for either a standard policy including wind coverage or a basic
728	policy including wind coverage issued by the corporation;
729	however, if the risk could not be insured under a standard
730	policy including wind coverage regardless of market conditions,
731	the risk shall be eligible for a basic policy including wind
732	coverage unless rejected under subparagraph 8. However, with
733	regard to a policyholder of the corporation, the policyholder
734	remains eligible for coverage from the corporation regardless of
735	any offer of coverage from an authorized insurer or surplus
736	lines insurer. The corporation shall determine the type of
737	policy to be provided on the basis of objective standards
738	specified in the underwriting manual and based on generally
739	accepted underwriting practices.
740	(I)  If the risk accepts an offer of coverage through the
741	market assistance plan or an offer of coverage through a
742	mechanism established by the corporation before a policy is
743	issued to the risk by the corporation or during the first 30
744	days of coverage by the corporation, and the producing agent who
745	submitted the application to the plan or to the corporation is
746	not currently appointed by the insurer, the insurer shall:
747	(A)  Pay to the producing agent of record of the policy,
748	for the first year, an amount that is the greater of the
749	insurer's usual and customary commission for the type of policy
750	written or a fee equal to the usual and customary commission of
751	the corporation; or
752	(B)  Offer to allow the producing agent of record of the
753	policy to continue servicing the policy for a period of not less
754	than 1 year and offer to pay the agent the greater of the
755	insurer's or the corporation's usual and customary commission
756	for the type of policy written.
757
758	If the producing agent is unwilling or unable to accept
759	appointment, the new insurer shall pay the agent in accordance
760	with sub-sub-sub-subparagraph (A).
761	(II)  When the corporation enters into a contractual
762	agreement for a take-out plan, the producing agent of record of
763	the corporation policy is entitled to retain any unearned
764	commission on the policy, and the insurer shall:
765	(A)  Pay to the producing agent of record of the
766	corporation policy, for the first year, an amount that is the
767	greater of the insurer's usual and customary commission for the
768	type of policy written or a fee equal to the usual and customary
769	commission of the corporation; or
770	(B)  Offer to allow the producing agent of record of the
771	corporation policy to continue servicing the policy for a period
772	of not less than 1 year and offer to pay the agent the greater
773	of the insurer's or the corporation's usual and customary
774	commission for the type of policy written.
775
776	If the producing agent is unwilling or unable to accept
777	appointment, the new insurer shall pay the agent in accordance
778	with sub-sub-sub-subparagraph (A).
779	b.  With respect to commercial lines residential risks, for
780	a new application to the corporation for coverage, if the risk
781	is offered coverage under a policy including wind coverage from
782	an authorized insurer at its approved rate, the risk is not
783	eligible for any policy issued by the corporation unless the
784	premium for coverage from the authorized insurer is more than 25
785	percent greater than the premium for comparable coverage from
786	the corporation. If the risk is not able to obtain any such
787	offer, the risk is eligible for a policy including wind coverage
788	issued by the corporation. However, with regard to a
789	policyholder of the corporation, the policyholder remains
790	eligible for coverage from the corporation regardless of any
791	offer of coverage from an authorized insurer or surplus lines
792	insurer.
793	b.(I)  If the risk accepts an offer of coverage through the
794	market assistance plan or an offer of coverage through a
795	mechanism established by the corporation before a policy is
796	issued to the risk by the corporation or during the first 30
797	days of coverage by the corporation, and the producing agent who
798	submitted the application to the plan or the corporation is not
799	currently appointed by the insurer, the insurer shall:
800	(I)(A)  Pay to the producing agent of record of the policy,
801	for the first year, an amount that is the greater of the
802	insurer's usual and customary commission for the type of policy
803	written or a fee equal to the usual and customary commission of
804	the corporation; or
805	(II)(B)  Offer to allow the producing agent of record of
806	the policy to continue servicing the policy for a period of not
807	less than 1 year and offer to pay the agent the greater of the
808	insurer's or the corporation's usual and customary commission
809	for the type of policy written.
810
811	If the producing agent is unwilling or unable to accept
812	appointment, the new insurer shall pay the agent in accordance
813	with sub-sub-subparagraph (I) sub-sub-sub-subparagraph (A).
814	c.(II)  When the corporation enters into a contractual
815	agreement for a take-out plan, the producing agent of record of
816	the corporation policy is entitled to retain any unearned
817	commission on the policy, and the insurer shall:
818	(I)(A)  Pay to the producing agent of record of the
819	corporation policy, for the first year, an amount that is the
820	greater of the insurer's usual and customary commission for the
821	type of policy written or a fee equal to the usual and customary
822	commission of the corporation; or
823	(II)(B)  Offer to allow the producing agent of record of
824	the corporation policy to continue servicing the policy for a
825	period of not less than 1 year and offer to pay the agent the
826	greater of the insurer's or the corporation's usual and
827	customary commission for the type of policy written.
828
829	If the producing agent is unwilling or unable to accept
830	appointment, the new insurer shall pay the agent in accordance
831	with sub-sub-subparagraph (I) sub-sub-sub-subparagraph (A).
832	6.  Must provide by July 1, 2007, that an application for
833	coverage for a new policy is subject to a waiting period of 10
834	days before coverage is effective, during which time the
835	corporation shall make such application available for review by
836	general lines agents and authorized property and casualty
837	insurers. The board shall approve an exception that allows for
838	coverage to be effective before the end of the 10-day waiting
839	period, for coverage issued in conjunction with a real estate
840	closing. The board may approve such other exceptions as the
841	board determines are necessary to prevent lapses in coverage.
842	7.  Must include rules for classifications of risks and
843	rates therefor.
844	8.  Must provide that if premium and investment income for
845	an account attributable to a particular calendar year are in
846	excess of projected losses and expenses for the account
847	attributable to that year, such excess shall be held in surplus
848	in the account. Such surplus shall be available to defray
849	deficits in that account as to future years and shall be used
850	for that purpose prior to assessing assessable insurers and
851	assessable insureds as to any calendar year.
852	9.  Must provide objective criteria and procedures to be
853	uniformly applied for all applicants in determining whether an
854	individual risk is eligible for coverage so hazardous as to be
855	uninsurable. In making this determination and in establishing
856	the criteria and procedures, the following shall be considered:
857	a.  Whether the likelihood of a loss for the individual
858	risk is substantially higher than for other risks of the same
859	class; and
860	b.  Whether the applicant has taken such actions as are
861	reasonably necessary, as specified by the corporation, to reduce
862	the risk of loss uncertainty associated with the individual risk
863	is such that an appropriate premium cannot be determined.
864
865	The acceptance or rejection of a risk by the corporation shall
866	be construed as the private placement of insurance, and the
867	provisions of chapter 120 shall not apply.
868	10.  Must provide that the corporation shall make its best
869	efforts to procure catastrophe reinsurance at reasonable rates,
870	to cover its projected 100-year probable maximum loss as
871	determined by the board of governors.
872	11.  Must provide that in the event of regular deficit
873	assessments under sub-subparagraph (b)3.a. or sub-subparagraph
874	(b)3.b., in the personal lines account, the commercial lines
875	residential account, or the high-risk account, the corporation
876	shall levy upon corporation policyholders in its next rate
877	filing, or by a separate rate filing solely for this purpose, a
878	Citizens policyholder surcharge arising from a regular
879	assessment in such account in a percentage equal to the total
880	amount of such regular assessments divided by the aggregate
881	statewide direct written premium for subject lines of business
882	for the prior calendar year. For purposes of calculating the
883	Citizens policyholder surcharge to be levied under this
884	subparagraph, the total amount of the regular assessment to
885	which this surcharge is related shall be determined as set forth
886	in subparagraph (b)3., without deducting the estimated Citizens
887	policyholder surcharge. Citizens policyholder surcharges under
888	this subparagraph are not considered premium and are not subject
889	to commissions, fees, or premium taxes; however, failure to pay
890	a market equalization surcharge shall be treated as failure to
891	pay premium.
892	12.  The policies issued by the corporation must provide
893	that, if the corporation or the market assistance plan obtains
894	an offer from an authorized insurer to cover the risk at its
895	approved rates, the risk is no longer eligible for renewal
896	through the corporation, except as otherwise provided in this
897	subsection.
898	13.  Corporation policies and applications must include a
899	notice that the corporation policy could, under this section, be
900	replaced with a policy issued by an authorized insurer that does
901	not provide coverage identical to the coverage provided by the
902	corporation. The notice shall also specify that acceptance of
903	corporation coverage creates a conclusive presumption that the
904	applicant or policyholder is aware of this potential.
905	12.14.  May establish, subject to approval by the office,
906	different eligibility requirements and operational procedures
907	for any line or type of coverage for any specified county or
908	area if the board determines that such changes to the
909	eligibility requirements and operational procedures are
910	justified due to the voluntary market being sufficiently stable
911	and competitive in such area or for such line or type of
912	coverage and that consumers who, in good faith, are unable to
913	obtain insurance through the voluntary market through ordinary
914	methods would continue to have access to coverage from the
915	corporation. When coverage is sought in connection with a real
916	property transfer, such requirements and procedures shall not
917	provide for an effective date of coverage later than the date of
918	the closing of the transfer as established by the transferor,
919	the transferee, and, if applicable, the lender.
920	13.15.  Must provide that, with respect to the high-risk
921	account, any assessable insurer with a surplus as to
922	policyholders of $25 million or less writing 25 percent or more
923	of its total countrywide property insurance premiums in this
924	state may petition the office, within the first 90 days of each
925	calendar year, to qualify as a limited apportionment company. A
926	regular assessment levied by the corporation on a limited
927	apportionment company for a deficit incurred by the corporation
928	for the high-risk account in 2006 or thereafter may be paid to
929	the corporation on a monthly basis as the assessments are
930	collected by the limited apportionment company from its insureds
931	pursuant to s. 627.3512, but the regular assessment must be paid
932	in full within 12 months after being levied by the corporation.
933	A limited apportionment company shall collect from its
934	policyholders any emergency assessment imposed under sub-
935	subparagraph (b)3.d. The plan shall provide that, if the office
936	determines that any regular assessment will result in an
937	impairment of the surplus of a limited apportionment company,
938	the office may direct that all or part of such assessment be
939	deferred as provided in subparagraph (g)4. However, there shall
940	be no limitation or deferment of an emergency assessment to be
941	collected from policyholders under sub-subparagraph (b)3.d.
942	14.16.  Must provide that the corporation appoint as its
943	licensed agents only those agents who also hold an appointment
944	as defined in s. 626.015(3) with an insurer who at the time of
945	the agent's initial appointment by the corporation is authorized
946	to write and is actually writing personal lines residential
947	property coverage, commercial residential property coverage, or
948	commercial nonresidential property coverage within the state.
949	15.17.  Must provide, by July 1, 2007, a premium payment
950	plan option to its policyholders which allows for quarterly and
951	semiannual payment of premiums.
952	16.18.  Must provide, effective June 1, 2007, that the
953	corporation contract with each insurer providing the non-wind
954	coverage for risks insured by the corporation in the high-risk
955	account, requiring that the insurer provide claims adjusting
956	services for the wind coverage provided by the corporation for
957	such risks. An insurer is required to enter into this contract
958	as a condition of providing non-wind coverage for a risk that is
959	insured by the corporation in the high-risk account unless the
960	board finds, after a hearing, that the insurer is not capable of
961	providing adjusting services at an acceptable level of quality
962	to corporation policyholders. The terms and conditions of such
963	contracts must be substantially the same as the contracts that
964	the corporation executed with insurers under the "adjust-your-
965	own" program in 2006, except as may be mutually agreed to by the
966	parties and except for such changes that the board determines
967	are necessary to ensure that claims are adjusted appropriately.
968	The corporation shall provide a process for neutral arbitration
969	of any dispute between the corporation and the insurer regarding
970	the terms of the contract. The corporation shall review and
971	monitor the performance of insurers under these contracts.
972	17.19.  Must limit coverage on mobile homes or manufactured
973	homes built prior to 1994 to actual cash value of the dwelling
974	rather than replacement costs of the dwelling.
975	18.20.  May provide such limits of coverage as the board
976	determines, consistent with the requirements of this subsection.
977	19.21.  May require commercial property to meet specified
978	hurricane mitigation construction features as a condition of
979	eligibility for coverage.
980	Section 2.  Effective January 1, 2008, and notwithstanding
981	any other provision of law:
982	(1)  A new certificate of authority for the transaction of
983	residential property insurance may not be issued to any insurer
984	domiciled in this state that is a wholly owned subsidiary of an
985	insurer authorized to do business in any other state.
986	(2)(a)  The existing certificate of authority for the
987	transaction of residential property insurance held by any
988	insurer domiciled in this state that is a wholly owned
989	subsidiary of an insurer authorized to do business in any other
990	state shall expire at the end of its period of validation and
991	may not be renewed or reissued by the Office of Insurance
992	Regulation or the Financial Services Commission.
993	(b)  The rate filings of any insurer domiciled in this
994	state that is a wholly owned subsidiary of an insurer authorized
995	to do business in any other state shall include information
996	relating to the profits of the parent company of the insurer
997	domiciled in this state.
998	Section 3.  Except as otherwise expressly provided in this
999	act, this act shall take effect upon becoming a law.

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