CS/CS/HB 1267

1	A bill to be entitled
2	An act relating to property insurance; authorizing the
3	State Board of Administration to sell reinsurance to
4	private insurance companies taking insurance policies from
5	Citizens Property Insurance Corporation under certain
6	circumstances; providing for a discount to policyholders
7	of Citizens Property Insurance Corporation; authorizing
8	the State Board of Administration to offer discounted
9	reinsurance rates to private insurance companies under
10	certain circumstances; authorizing the State Board of
11	Administration to determine the number of policies taken
12	from Citizens Property Insurance Corporation to get
13	discounted reinsurance; providing requirements for private
14	insurance companies to get a discounted reinsurance rate;
15	amending s. 627.351, F.S.; revising legislative findings
16	to provide a finding that the lack of affordable property
17	insurance threatens the public health, safety, and welfare
18	and threatens the economic health of the state; revising
19	membership of the corporation's board of governors;
20	revising provisions for determining eligibility for
21	coverage under the corporation; reinstating certain rate
22	filings by the corporation; prohibiting issuance of new
23	certificates of authority to certain insurers; requiring
24	rate filings of certain insurers to include certain parent
25	company profits information; creating the Citizens
26	Property Insurance Corporation Mission Review Task Force;
27	providing purposes; requiring a report; providing report
28	requirements; providing for appointment of members;
29	providing responsibilities; specifying service without
30	compensation; providing for reimbursement of per diem and
31	travel expenses; providing meeting requirements; requiring
32	the corporation to assist the task force; providing for
33	the expiration of the task force; providing effective
34	dates.
35
36	Be It Enacted by the Legislature of the State of Florida:
37
38	Section 1.  (1)  The State Board of Administration may sell
39	reinsurance below the Florida Hurricane Catastrophe Fund
40	retention level in the Florida Hurricane Catastrophe Fund within
41	the range of 30 to 60 percent online to private insurance
42	companies that agree to take out of Citizens Property Insurance
43	Corporation a specified number of individual policies held by
44	Citizens Property Insurance Corporation on a geographically
45	diverse basis.
46	(2)  Policyholders of Citizens Property Insurance
47	Corporation must receive a discount no less than a rate
48	specified by the State Board of Administration, which must be no
49	less than 10 percent.
50	(3)  The State Board of Administration may offer discounted
51	reinsurance rates to private insurance companies through offers
52	to negotiate via auction, individual negotiation, or any method
53	designed to achieve the best discounted rate for policyholders
54	of Citizens Property Insurance Corporation.
55	(4)  The State Board of Administration may determine how
56	many policies a private company must assume from Citizens
57	Property Insurance Corporation in order to purchase reinsurance
58	from the state at the discounted rate.
59	(5)  Private insurance companies must assume 100 percent of
60	each policy taken from Citizens Property Insurance Corporation
61	in exchange for the discounted reinsurance rate.
62	Section 2.  Paragraphs (a), (c), and (m) of subsection (6)
63	of section 627.351, Florida Statutes, as amended by section 21
64	of chapter 2007-1, Laws of Florida, are amended to read:
65	627.351  Insurance risk apportionment plans.--
66	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
67	(a)1.  It is the public purpose of this subsection to
68	ensure the existence of an orderly market for property insurance
69	for citizens of this state and businesses in this state. The
70	Legislature finds that private insurers are unwilling or unable
71	to provide affordable property insurance coverage in this state
72	to the extent sought and needed. The absence of affordable
73	property insurance threatens the public health, safety, and
74	welfare and likewise threatens the economic health of the state.
75	The state therefore has a compelling public interest and a
76	public purpose to assist in ensuring that property in the state
77	is insured and that property is insured at affordable rates so
78	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 which are needed
83	to provide for the public welfare. It is necessary, therefore,
84	to provide affordable property insurance to applicants who are
85	in good faith entitled to procure insurance through the
86	voluntary market but are unable to do so. The Legislature
87	intends by this subsection that affordable property insurance be
88	provided and that such insurance continue to be provided, as
89	long as necessary, through Citizens Property Insurance
90	Corporation, a government entity that is an integral part of the
91	state and that is not a private insurance company. To that end,
92	Citizens Property Insurance Company shall strive to increase the
93	availability of affordable property insurance in this state,
94	while achieving efficiencies and economies and while providing
95	service to policyholders, applicants, and agents which is no
96	less than the quality generally provided in the voluntary
97	market, for the achievement of the foregoing public purposes.
98	Because it is essential for this government entity to have the
99	maximum financial resources to pay claims following a
100	catastrophic hurricane, it is the intent of the Legislature that
101	Citizens Property Insurance Corporation continue to be an
102	integral part of the state and that the income of the
103	corporation be exempt from federal income taxation and that
104	interest on the debt obligations issued by the corporation be
105	exempt from federal income taxation. The Legislature finds that
106	actual and threatened catastrophic losses to property in this
107	state from hurricanes have caused insurers to be unwilling or
108	unable to provide property insurance coverage to the extent
109	sought and needed. It is in the public interest and a public
110	purpose to assist in assuring that property in the state is
111	insured so as to facilitate the remediation, reconstruction, and
112	replacement of damaged or destroyed property in order to reduce
113	or avoid the negative effects otherwise resulting to the public
114	health, safety, and welfare; to the economy of the state; and to
115	the revenues of the state and local governments needed to
116	provide for the public welfare. It is necessary, therefore, to
117	provide property insurance to applicants who are in good faith
118	entitled to procure insurance through the voluntary market but
119	are unable to do so. The Legislature intends by this subsection
120	that property insurance be provided and that it continues, as
121	long as necessary, through an entity organized to achieve
122	efficiencies and economies, while providing service to
123	policyholders, applicants, and agents that is no less than the
124	quality generally provided in the voluntary market, all toward
125	the achievement of the foregoing public purposes. Because it is
126	essential for the corporation to have the maximum financial
127	resources to pay claims following a catastrophic hurricane, it
128	is the intent of the Legislature that the income of the
129	corporation be exempt from federal income taxation and that
130	interest on the debt obligations issued by the corporation be
131	exempt from federal income taxation.
132	2.  The Residential Property and Casualty Joint
133	Underwriting Association originally created by this statute
134	shall be known, as of July 1, 2002, as the Citizens Property
135	Insurance Corporation. The corporation shall provide insurance
136	for residential and commercial property, for applicants who are
137	in good faith entitled, but are unable, to procure insurance
138	through the voluntary market. The corporation shall operate
139	pursuant to a plan of operation approved by order of the
140	Financial Services Commission. The plan is subject to continuous
141	review by the commission. The commission may, by order, withdraw
142	approval of all or part of a plan if the commission determines
143	that conditions have changed since approval was granted and that
144	the purposes of the plan require changes in the plan. The
145	corporation shall continue to operate pursuant to the plan of
146	operation approved by the Office of Insurance Regulation until
147	October 1, 2006. For the purposes of this subsection,
148	residential coverage includes both personal lines residential
149	coverage, which consists of the type of coverage provided by
150	homeowner's, mobile home owner's, dwelling, tenant's,
151	condominium unit owner's, and similar policies, and commercial
152	lines residential coverage, which consists of the type of
153	coverage provided by condominium association, apartment
154	building, and similar policies.
155	3.  For the purposes of this subsection, the term
156	"homestead property" means:
157	a.  Property that has been granted a homestead exemption
158	under chapter 196;
159	b.  Property for which the owner has a current, written
160	lease with a renter for a term of at least 7 months and for
161	which the dwelling is insured by the corporation for $200,000 or
162	less;
163	c.  An owner-occupied mobile home or manufactured home, as
164	defined in s. 320.01, which is permanently affixed to real
165	property, is owned by a Florida resident, and has been granted a
166	homestead exemption under chapter 196 or, if the owner does not
167	own the real property, the owner certifies that the mobile home
168	or manufactured home is his or her principal place of residence;
169	d.  Tenant's coverage;
170	e.  Commercial lines residential property; or
171	f.  Any county, district, or municipal hospital; a hospital
172	licensed by any not-for-profit corporation qualified under s.
173	501(c)(3) of the United States Internal Revenue Code; or a
174	continuing care retirement community that is certified under
175	chapter 651 and that receives an exemption from ad valorem taxes
176	under chapter 196.
177	4.  For the purposes of this subsection, the term
178	"nonhomestead property" means property that is not homestead
179	property.
180	5.  Effective July 1, 2008, a personal lines residential
181	structure that has a dwelling replacement cost of $1 million or
182	more, or a single condominium unit that has a combined dwelling
183	and content replacement cost of $1 million or more is not
184	eligible for coverage by the corporation. Such dwellings insured
185	by the corporation on June 30, 2008, may continue to be covered
186	by the corporation until the end of the policy term. However,
187	such dwellings that are insured by the corporation and become
188	ineligible for coverage due to the provisions of this
189	subparagraph may reapply and obtain coverage in the high-risk
190	account and be considered "nonhomestead property" if the
191	property owner provides the corporation with a sworn affidavit
192	from one or more insurance agents, on a form provided by the
193	corporation, stating that the agents have made their best
194	efforts to obtain coverage and that the property has been
195	rejected for coverage by at least one authorized insurer and at
196	least three surplus lines insurers. If such conditions are met,
197	the dwelling may be insured by the corporation for up to 3
198	years, after which time the dwelling is ineligible for coverage.
199	The office shall approve the method used by the corporation for
200	valuing the dwelling replacement cost for the purposes of this
201	subparagraph. If a policyholder is insured by the corporation
202	prior to being determined to be ineligible pursuant to this
203	subparagraph and such policyholder files a lawsuit challenging
204	the determination, the policyholder may remain insured by the
205	corporation until the conclusion of the litigation.
206	6.  For properties constructed on or after January 1, 2009,
207	the corporation may not insure any property located within 2,500
208	feet landward of the coastal construction control line created
209	pursuant to s. 161.053 unless the property meets the
210	requirements of the code-plus building standards developed by
211	the Florida Building Commission.
212	7.  It is the intent of the Legislature that policyholders,
213	applicants, and agents of the corporation receive service and
214	treatment of the highest possible level but never less than that
215	generally provided in the voluntary market. It also is intended
216	that the corporation be held to service standards no less than
217	those applied to insurers in the voluntary market by the office
218	with respect to responsiveness, timeliness, customer courtesy,
219	and overall dealings with policyholders, applicants, or agents
220	of the corporation.
221	(c)  The plan of operation of the corporation:
222	1.  Must provide for adoption of residential property and
223	casualty insurance policy forms and commercial residential and
224	nonresidential property insurance forms, which forms must be
225	approved by the office prior to use. The corporation shall adopt
226	the following policy forms:
227	a.  Standard personal lines policy forms that are
228	comprehensive multiperil policies providing full coverage of a
229	residential property equivalent to the coverage provided in the
230	private insurance market under an HO-3, HO-4, or HO-6 policy.
231	b.  Basic personal lines policy forms that are policies
232	similar to an HO-8 policy or a dwelling fire policy that provide
233	coverage meeting the requirements of the secondary mortgage
234	market, but which coverage is more limited than the coverage
235	under a standard policy.
236	c.  Commercial lines residential and nonresidential policy
237	forms that are generally similar to the basic perils of full
238	coverage obtainable for commercial residential structures and
239	commercial nonresidential structures in the admitted voluntary
240	market.
241	d.  Personal lines and commercial lines residential
242	property insurance forms that cover the peril of wind only. The
243	forms are applicable only to residential properties located in
244	areas eligible for coverage under the high-risk account referred
245	to in sub-subparagraph (b)2.a.
246	e.  Commercial lines nonresidential property insurance
247	forms that cover the peril of wind only. The forms are
248	applicable only to nonresidential properties located in areas
249	eligible for coverage under the high-risk account referred to in
250	sub-subparagraph (b)2.a.
251	f.  The corporation may adopt variations of the policy
252	forms listed in sub-subparagraphs a.-e. that contain more
253	restrictive coverage.
254	2.a.  Must provide that the corporation adopt a program in
255	which the corporation and authorized insurers enter into quota
256	share primary insurance agreements for hurricane coverage, as
257	defined in s. 627.4025(2)(a), for eligible risks, and adopt
258	property insurance forms for eligible risks which cover the
259	peril of wind only. As used in this subsection, the term:
260	(I)  "Quota share primary insurance" means an arrangement
261	in which the primary hurricane coverage of an eligible risk is
262	provided in specified percentages by the corporation and an
263	authorized insurer. The corporation and authorized insurer are
264	each solely responsible for a specified percentage of hurricane
265	coverage of an eligible risk as set forth in a quota share
266	primary insurance agreement between the corporation and an
267	authorized insurer and the insurance contract. The
268	responsibility of the corporation or authorized insurer to pay
269	its specified percentage of hurricane losses of an eligible
270	risk, as set forth in the quota share primary insurance
271	agreement, may not be altered by the inability of the other
272	party to the agreement to pay its specified percentage of
273	hurricane losses. Eligible risks that are provided hurricane
274	coverage through a quota share primary insurance arrangement
275	must be provided policy forms that set forth the obligations of
276	the corporation and authorized insurer under the arrangement,
277	clearly specify the percentages of quota share primary insurance
278	provided by the corporation and authorized insurer, and
279	conspicuously and clearly state that neither the authorized
280	insurer nor the corporation may be held responsible beyond its
281	specified percentage of coverage of hurricane losses.
282	(II)  "Eligible risks" means personal lines residential and
283	commercial lines residential risks that meet the underwriting
284	criteria of the corporation and are located in areas that were
285	eligible for coverage by the Florida Windstorm Underwriting
286	Association on January 1, 2002.
287	b.  The corporation may enter into quota share primary
288	insurance agreements with authorized insurers at corporation
289	coverage levels of 90 percent and 50 percent.
290	c.  If the corporation determines that additional coverage
291	levels are necessary to maximize participation in quota share
292	primary insurance agreements by authorized insurers, the
293	corporation may establish additional coverage levels. However,
294	the corporation's quota share primary insurance coverage level
295	may not exceed 90 percent.
296	d.  Any quota share primary insurance agreement entered
297	into between an authorized insurer and the corporation must
298	provide for a uniform specified percentage of coverage of
299	hurricane losses, by county or territory as set forth by the
300	corporation board, for all eligible risks of the authorized
301	insurer covered under the quota share primary insurance
302	agreement.
303	e.  Any quota share primary insurance agreement entered
304	into between an authorized insurer and the corporation is
305	subject to review and approval by the office. However, such
306	agreement shall be authorized only as to insurance contracts
307	entered into between an authorized insurer and an insured who is
308	already insured by the corporation for wind coverage.
309	f.  For all eligible risks covered under quota share
310	primary insurance agreements, the exposure and coverage levels
311	for both the corporation and authorized insurers shall be
312	reported by the corporation to the Florida Hurricane Catastrophe
313	Fund. For all policies of eligible risks covered under quota
314	share primary insurance agreements, the corporation and the
315	authorized insurer shall maintain complete and accurate records
316	for the purpose of exposure and loss reimbursement audits as
317	required by Florida Hurricane Catastrophe Fund rules. The
318	corporation and the authorized insurer shall each maintain
319	duplicate copies of policy declaration pages and supporting
320	claims documents.
321	g.  The corporation board shall establish in its plan of
322	operation standards for quota share agreements which ensure that
323	there is no discriminatory application among insurers as to the
324	terms of quota share agreements, pricing of quota share
325	agreements, incentive provisions if any, and consideration paid
326	for servicing policies or adjusting claims.
327	h.  The quota share primary insurance agreement between the
328	corporation and an authorized insurer must set forth the
329	specific terms under which coverage is provided, including, but
330	not limited to, the sale and servicing of policies issued under
331	the agreement by the insurance agent of the authorized insurer
332	producing the business, the reporting of information concerning
333	eligible risks, the payment of premium to the corporation, and
334	arrangements for the adjustment and payment of hurricane claims
335	incurred on eligible risks by the claims adjuster and personnel
336	of the authorized insurer. Entering into a quota sharing
337	insurance agreement between the corporation and an authorized
338	insurer shall be voluntary and at the discretion of the
339	authorized insurer.
340	3.  May provide that the corporation may employ or
341	otherwise contract with individuals or other entities to provide
342	administrative or professional services that may be appropriate
343	to effectuate the plan. The corporation shall have the power to
344	borrow funds, by issuing bonds or by incurring other
345	indebtedness, and shall have other powers reasonably necessary
346	to effectuate the requirements of this subsection, including,
347	without limitation, the power to issue bonds and incur other
348	indebtedness in order to refinance outstanding bonds or other
349	indebtedness. The corporation may, but is not required to, seek
350	judicial validation of its bonds or other indebtedness under
351	chapter 75. The corporation may issue bonds or incur other
352	indebtedness, or have bonds issued on its behalf by a unit of
353	local government pursuant to subparagraph (g)2., in the absence
354	of a hurricane or other weather-related event, upon a
355	determination by the corporation, subject to approval by the
356	office, that such action would enable it to efficiently meet the
357	financial obligations of the corporation and that such
358	financings are reasonably necessary to effectuate the
359	requirements of this subsection. The corporation is authorized
360	to take all actions needed to facilitate tax-free status for any
361	such bonds or indebtedness, including formation of trusts or
362	other affiliated entities. The corporation shall have the
363	authority to pledge assessments, projected recoveries from the
364	Florida Hurricane Catastrophe Fund, other reinsurance
365	recoverables, market equalization and other surcharges, and
366	other funds available to the corporation as security for bonds
367	or other indebtedness. In recognition of s. 10, Art. I of the
368	State Constitution, prohibiting the impairment of obligations of
369	contracts, it is the intent of the Legislature that no action be
370	taken whose purpose is to impair any bond indenture or financing
371	agreement or any revenue source committed by contract to such
372	bond or other indebtedness.
373	4.a.  Must require that the corporation operate subject to
374	the supervision and approval of a board of governors consisting
375	of nine eight individuals who are residents of this state, from
376	different geographical areas of this state. The Governor shall
377	appoint three members of the board., The Chief Financial
378	Officer, the President of the Senate, and the Speaker of the
379	House of Representatives shall each appoint two members of the
380	board. All board members shall possess demonstrated expertise or
381	knowledge in insurance, bond financing, business management or
382	corporate board membership. At least one of the two members
383	appointed by each appointing officer must have demonstrated
384	expertise in insurance. The Chief Financial Officer shall
385	designate one of the appointees as chair. All board members
386	serve at the pleasure of the appointing officer. All members of
387	the board of governors are subject to removal at will by the
388	officers who appointed them. All board members, including the
389	chair, must be appointed to serve for 3-year terms beginning
390	annually on a date designated by the plan. Any board vacancy
391	shall be filled for the unexpired term by the appointing
392	officer. The Governor shall designate one of the nine board
393	members as chair. The Chief Financial Officer shall appoint a
394	technical advisory group to provide information and advice to
395	the board of governors in connection with the board's duties
396	under this subsection. The executive director of the corporation
397	must have substantial insurance and managerial expertise and
398	senior managers of the corporation shall be engaged by the board
399	and serve at the pleasure of the board. Any executive director
400	appointed on or after July 1, 2006, is subject to confirmation
401	by the Senate. The executive director is responsible for
402	employing other staff as the corporation may require, subject to
403	review and concurrence by the board.
404	b.  The board shall create a Market Accountability Advisory
405	Committee to assist the corporation in developing awareness of
406	its rates and its customer and agent service levels in
407	relationship to the voluntary market insurers writing similar
408	coverage. The members of the advisory committee shall consist of
409	the following 11 persons, one of whom must be elected chair by
410	the members of the committee: four representatives, one
411	appointed by the Florida Association of Insurance Agents, one by
412	the Florida Association of Insurance and Financial Advisors, one
413	by the Professional Insurance Agents of Florida, and one by the
414	Latin American Association of Insurance Agencies; three
415	representatives appointed by the insurers with the three highest
416	voluntary market share of residential property insurance
417	business in the state; one representative from the Office of
418	Insurance Regulation; one consumer appointed by the board who is
419	insured by the corporation at the time of appointment to the
420	committee; one representative appointed by the Florida
421	Association of Realtors; and one representative appointed by the
422	Florida Bankers Association. All members must serve for 3-year
423	terms and may serve for consecutive terms. The committee shall
424	report to the corporation at each board meeting on insurance
425	market issues which may include rates and rate competition with
426	the voluntary market; service, including policy issuance, claims
427	processing, and general responsiveness to policyholders,
428	applicants, and agents; and matters relating to depopulation.
429	5.  Must provide a procedure for determining the
430	eligibility of a risk for coverage, as follows:
431	a.  Subject to the provisions of s. 627.3517, with respect
432	to personal lines residential risks, if the risk is offered
433	coverage from an authorized insurer at the insurer's approved
434	rate under either a standard policy including wind coverage or,
435	if consistent with the insurer's underwriting rules as filed
436	with the office, a basic policy including wind coverage, for a
437	new application to the corporation for coverage, the risk is not
438	eligible for any policy issued by the corporation unless the
439	premium for coverage from the authorized insurer is more than 25
440	percent greater than the premium for comparable coverage from
441	the corporation. If the risk is not able to obtain any such
442	offer, the risk is eligible for either a standard policy
443	including wind coverage or a basic policy including wind
444	coverage issued by the corporation; however, if the risk could
445	not be insured under a standard policy including wind coverage
446	regardless of market conditions, the risk shall be eligible for
447	a basic policy including wind coverage unless rejected under
448	subparagraph 8. However, with regard to a policyholder of the
449	corporation, the policyholder remains eligible for coverage from
450	the corporation regardless of any offer of coverage from an
451	authorized insurer or surplus lines insurer. The corporation
452	shall determine the type of policy to be provided on the basis
453	of objective standards specified in the underwriting manual and
454	based on generally accepted underwriting practices.
455	(I)  If the risk accepts an offer of coverage through the
456	market assistance plan or an offer of coverage through a
457	mechanism established by the corporation before a policy is
458	issued to the risk by the corporation or during the first 30
459	days of coverage by the corporation, and the producing agent who
460	submitted the application to the plan or to the corporation is
461	not currently appointed by the insurer, the insurer shall:
462	(A)  Pay to the producing agent of record of the policy,
463	for the first year, an amount that is the greater of the
464	insurer's usual and customary commission for the type of policy
465	written or a fee equal to the usual and customary commission of
466	the corporation; or
467	(B)  Offer to allow the producing agent of record of the
468	policy to continue servicing the policy for a period of not less
469	than 1 year and offer to pay the agent the greater of the
470	insurer's or the corporation's usual and customary commission
471	for the type of policy written.
472
473	If the producing agent is unwilling or unable to accept
474	appointment, the new insurer shall pay the agent in accordance
475	with sub-sub-sub-subparagraph (A).
476	(II)  When the corporation enters into a contractual
477	agreement for a take-out plan, the producing agent of record of
478	the corporation policy is entitled to retain any unearned
479	commission on the policy, and the insurer shall:
480	(A)  Pay to the producing agent of record of the
481	corporation policy, for the first year, an amount that is the
482	greater of the insurer's usual and customary commission for the
483	type of policy written or a fee equal to the usual and customary
484	commission of the corporation; or
485	(B)  Offer to allow the producing agent of record of the
486	corporation policy to continue servicing the policy for a period
487	of not less than 1 year and offer to pay the agent the greater
488	of the insurer's or the corporation's usual and customary
489	commission for the type of policy written.
490
491	If the producing agent is unwilling or unable to accept
492	appointment, the new insurer shall pay the agent in accordance
493	with sub-sub-sub-subparagraph (A).
494	b.  With respect to commercial lines residential risks, for
495	a new application to the corporation for coverage, if the risk
496	is offered coverage under a policy including wind coverage from
497	an authorized insurer at its approved rate, the risk is not
498	eligible for any policy issued by the corporation unless the
499	premium for coverage from the authorized insurer is more than 25
500	percent greater than the premium for comparable coverage from
501	the corporation. If the risk is not able to obtain any such
502	offer, the risk is eligible for a policy including wind coverage
503	issued by the corporation. However, with regard to a
504	policyholder of the corporation, the policyholder remains
505	eligible for coverage from the corporation regardless of any
506	offer of coverage from an authorized insurer or surplus lines
507	insurer.
508	(I)  If the risk accepts an offer of coverage through the
509	market assistance plan or an offer of coverage through a
510	mechanism established by the corporation before a policy is
511	issued to the risk by the corporation or during the first 30
512	days of coverage by the corporation, and the producing agent who
513	submitted the application to the plan or the corporation is not
514	currently appointed by the insurer, the insurer shall:
515	(A)  Pay to the producing agent of record of the policy,
516	for the first year, an amount that is the greater of the
517	insurer's usual and customary commission for the type of policy
518	written or a fee equal to the usual and customary commission of
519	the corporation; or
520	(B)  Offer to allow the producing agent of record of the
521	policy to continue servicing the policy for a period of not less
522	than 1 year and offer to pay the agent the greater of the
523	insurer's or the corporation's usual and customary commission
524	for the type of policy written.
525
526	If the producing agent is unwilling or unable to accept
527	appointment, the new insurer shall pay the agent in accordance
528	with sub-sub-sub-subparagraph (A).
529	(II)  When the corporation enters into a contractual
530	agreement for a take-out plan, the producing agent of record of
531	the corporation policy is entitled to retain any unearned
532	commission on the policy, and the insurer shall:
533	(A)  Pay to the producing agent of record of the
534	corporation policy, for the first year, an amount that is the
535	greater of the insurer's usual and customary commission for the
536	type of policy written or a fee equal to the usual and customary
537	commission of the corporation; or
538	(B)  Offer to allow the producing agent of record of the
539	corporation policy to continue servicing the policy for a period
540	of not less than 1 year and offer to pay the agent the greater
541	of the insurer's or the corporation's usual and customary
542	commission for the type of policy written.
543
544	If the producing agent is unwilling or unable to accept
545	appointment, the new insurer shall pay the agent in accordance
546	with sub-sub-sub-subparagraph (A).
547	6.  Must provide by July 1, 2007, that an application for
548	coverage for a new policy is subject to a waiting period of 10
549	days before coverage is effective, during which time the
550	corporation shall make such application available for review by
551	general lines agents and authorized property and casualty
552	insurers. The board shall approve an exception that allows for
553	coverage to be effective before the end of the 10-day waiting
554	period, for coverage issued in conjunction with a real estate
555	closing. The board may approve such other exceptions as the
556	board determines are necessary to prevent lapses in coverage.
557	7.  Must include rules for classifications of risks and
558	rates therefor.
559	8.  Must provide that if premium and investment income for
560	an account attributable to a particular calendar year are in
561	excess of projected losses and expenses for the account
562	attributable to that year, such excess shall be held in surplus
563	in the account. Such surplus shall be available to defray
564	deficits in that account as to future years and shall be used
565	for that purpose prior to assessing assessable insurers and
566	assessable insureds as to any calendar year.
567	9.  Must provide objective criteria and procedures to be
568	uniformly applied for all applicants in determining whether an
569	individual risk is so hazardous as to be uninsurable. In making
570	this determination and in establishing the criteria and
571	procedures, the following shall be considered:
572	a.  Whether the likelihood of a loss for the individual
573	risk is substantially higher than for other risks of the same
574	class; and
575	b.  Whether the uncertainty associated with the individual
576	risk is such that an appropriate premium cannot be determined.
577
578	The acceptance or rejection of a risk by the corporation shall
579	be construed as the private placement of insurance, and the
580	provisions of chapter 120 shall not apply.
581	10.  Must provide that the corporation shall make its best
582	efforts to procure catastrophe reinsurance at reasonable rates,
583	to cover its projected 100-year probable maximum loss as
584	determined by the board of governors.
585	11.  Must provide that in the event of regular deficit
586	assessments under sub-subparagraph (b)3.a. or sub-subparagraph
587	(b)3.b., in the personal lines account, the commercial lines
588	residential account, or the high-risk account, the corporation
589	shall levy upon corporation policyholders in its next rate
590	filing, or by a separate rate filing solely for this purpose, a
591	Citizens policyholder surcharge arising from a regular
592	assessment in such account in a percentage equal to the total
593	amount of such regular assessments divided by the aggregate
594	statewide direct written premium for subject lines of business
595	for the prior calendar year. For purposes of calculating the
596	Citizens policyholder surcharge to be levied under this
597	subparagraph, the total amount of the regular assessment to
598	which this surcharge is related shall be determined as set forth
599	in subparagraph (b)3., without deducting the estimated Citizens
600	policyholder surcharge. Citizens policyholder surcharges under
601	this subparagraph are not considered premium and are not subject
602	to commissions, fees, or premium taxes; however, failure to pay
603	a market equalization surcharge shall be treated as failure to
604	pay premium.
605	12.  The policies issued by the corporation must provide
606	that, if the corporation or the market assistance plan obtains
607	an offer from an authorized insurer to cover the risk at its
608	approved rates, the risk is no longer eligible for renewal
609	through the corporation, except as otherwise provided in this
610	subsection.
611	13.  Corporation policies and applications must include a
612	notice that the corporation policy could, under this section, be
613	replaced with a policy issued by an authorized insurer that does
614	not provide coverage identical to the coverage provided by the
615	corporation. The notice shall also specify that acceptance of
616	corporation coverage creates a conclusive presumption that the
617	applicant or policyholder is aware of this potential.
618	14.  May establish, subject to approval by the office,
619	different eligibility requirements and operational procedures
620	for any line or type of coverage for any specified county or
621	area if the board determines that such changes to the
622	eligibility requirements and operational procedures are
623	justified due to the voluntary market being sufficiently stable
624	and competitive in such area or for such line or type of
625	coverage and that consumers who, in good faith, are unable to
626	obtain insurance through the voluntary market through ordinary
627	methods would continue to have access to coverage from the
628	corporation. When coverage is sought in connection with a real
629	property transfer, such requirements and procedures shall not
630	provide for an effective date of coverage later than the date of
631	the closing of the transfer as established by the transferor,
632	the transferee, and, if applicable, the lender.
633	15.  Must provide that, with respect to the high-risk
634	account, any assessable insurer with a surplus as to
635	policyholders of $25 million or less writing 25 percent or more
636	of its total countrywide property insurance premiums in this
637	state may petition the office, within the first 90 days of each
638	calendar year, to qualify as a limited apportionment company. A
639	regular assessment levied by the corporation on a limited
640	apportionment company for a deficit incurred by the corporation
641	for the high-risk account in 2006 or thereafter may be paid to
642	the corporation on a monthly basis as the assessments are
643	collected by the limited apportionment company from its insureds
644	pursuant to s. 627.3512, but the regular assessment must be paid
645	in full within 12 months after being levied by the corporation.
646	A limited apportionment company shall collect from its
647	policyholders any emergency assessment imposed under sub-
648	subparagraph (b)3.d. The plan shall provide that, if the office
649	determines that any regular assessment will result in an
650	impairment of the surplus of a limited apportionment company,
651	the office may direct that all or part of such assessment be
652	deferred as provided in subparagraph (g)4. However, there shall
653	be no limitation or deferment of an emergency assessment to be
654	collected from policyholders under sub-subparagraph (b)3.d.
655	16.  Must provide that the corporation appoint as its
656	licensed agents only those agents who also hold an appointment
657	as defined in s. 626.015(3) with an insurer who at the time of
658	the agent's initial appointment by the corporation is authorized
659	to write and is actually writing personal lines residential
660	property coverage, commercial residential property coverage, or
661	commercial nonresidential property coverage within the state.
662	17.  Must provide, by July 1, 2007, a premium payment plan
663	option to its policyholders which allows for quarterly and
664	semiannual payment of premiums.
665	18.  Must provide, effective June 1, 2007, that the
666	corporation contract with each insurer providing the non-wind
667	coverage for risks insured by the corporation in the high-risk
668	account, requiring that the insurer provide claims adjusting
669	services for the wind coverage provided by the corporation for
670	such risks. An insurer is required to enter into this contract
671	as a condition of providing non-wind coverage for a risk that is
672	insured by the corporation in the high-risk account unless the
673	board finds, after a hearing, that the insurer is not capable of
674	providing adjusting services at an acceptable level of quality
675	to corporation policyholders. The terms and conditions of such
676	contracts must be substantially the same as the contracts that
677	the corporation executed with insurers under the "adjust-your-
678	own" program in 2006, except as may be mutually agreed to by the
679	parties and except for such changes that the board determines
680	are necessary to ensure that claims are adjusted appropriately.
681	The corporation shall provide a process for neutral arbitration
682	of any dispute between the corporation and the insurer regarding
683	the terms of the contract. The corporation shall review and
684	monitor the performance of insurers under these contracts.
685	19.  Must limit coverage on mobile homes or manufactured
686	homes built prior to 1994 to actual cash value of the dwelling
687	rather than replacement costs of the dwelling.
688	20.  May provide such limits of coverage as the board
689	determines, consistent with the requirements of this subsection.
690	21.  May require commercial property to meet specified
691	hurricane mitigation construction features as a condition of
692	eligibility for coverage.
693	(m)1.  Rates for coverage provided by the corporation shall
694	be actuarially sound and subject to the requirements of s.
695	627.062, except as otherwise provided in this paragraph. The
696	corporation shall file its recommended rates with the office at
697	least annually. The corporation shall provide any additional
698	information regarding the rates which the office requires. The
699	office shall consider the recommendations of the board and issue
700	a final order establishing the rates for the corporation within
701	45 days after the recommended rates are filed. The corporation
702	may not pursue an administrative challenge or judicial review of
703	the final order of the office.
704	2.  In addition to the rates otherwise determined pursuant
705	to this paragraph, the corporation shall impose and collect an
706	amount equal to the premium tax provided for in s. 624.509 to
707	augment the financial resources of the corporation.
708	3.  After the public hurricane loss-projection model under
709	s. 627.06281 has been found to be accurate and reliable by the
710	Florida Commission on Hurricane Loss Projection Methodology,
711	that model shall serve as the minimum benchmark for determining
712	the windstorm portion of the corporation's rates. This
713	subparagraph does not require or allow the corporation to adopt
714	rates lower than the rates otherwise required or allowed by this
715	paragraph.
716	4.  The rate filings for the corporation which were
717	approved by the office and which took effect January 1, 2007,
718	are rescinded, except for those rates that were lowered. As soon
719	as possible, the corporation shall begin using the lower rates
720	that were in effect on December 31, 2006, and shall provide
721	refunds to policyholders who have paid higher rates as a result
722	of that rate filing. The rates in effect on December 31, 2006,
723	shall remain in effect until January 1, 2008, for the 2007
724	calendar year except for any rate change that results in a lower
725	rate. The next rate change that may increase rates shall take
726	effect January 1, 2008, pursuant to a new rate filing
727	recommended by the corporation and established by the office,
728	subject to the requirements of this paragraph.
729	Section 3.  Effective January 1, 2008, and notwithstanding
730	any other provision of law:
731	(1)  A new certificate of authority for the transaction of
732	residential property insurance may not be issued to any insurer
733	domiciled in this state that is a wholly owned subsidiary of an
734	insurer authorized to do business in any other state.
735	(2)  The rate filings of any insurer domiciled in this
736	state that is a wholly owned subsidiary of an insurer authorized
737	to do business in any other state shall include information
738	relating to the profits of the parent company of the insurer
739	domiciled in this state.
740	Section 4.  (1)  The Citizens Property Insurance
741	Corporation Mission Review Task Force is created to analyze and
742	compile available data and to develop a report setting forth the
743	statutory and operational changes needed to return Citizens
744	Property Insurance Corporation to its former role as a state-
745	created, noncompetitive residual market mechanism that provides
746	property insurance coverage to risks that are otherwise entitled
747	but unable to obtain such coverage in the private insurance
748	market. The task force shall submit a report to the Governor,
749	the President of the Senate, and the Speaker of the House of
750	Representatives by January 31, 2008. At a minimum, the task
751	force shall analyze and evaluate relevant and applicable
752	information and data and develop recommendations concerning:
753	(a)  The nature of Citizens Property Insurance
754	Corporation's role in providing property insurance coverage when
755	and only if such coverage is not available from private
756	insurers.
757	(b)  The ability of the admitted market to offer policies
758	to those consumers formerly insured through Citizens Property
759	Insurance Corporation. This consideration shall include, but not
760	be limited to, the availability of private market reinsurance
761	and coverage through the Florida Hurricane Catastrophe Fund, the
762	general adequacy of the admitted market's current rates, and the
763	capacity of the industry to offer policies to former Citizens
764	Property Insurance Corporation policyholders within existing
765	writing ratio limitations.
766	(c)  The appropriate relationship of rates charged by
767	Citizens Property Insurance Corporation to rates charged by
768	private insurers, with due consideration for the corporation's
769	role as a noncompetitive residual market mechanism.
770	(d)  The relationships between the exposure of Citizens
771	Property Insurance Corporation to catastrophic hurricane losses,
772	the corporation's history of purchasing inadequate or no
773	reinsurance coverage, and the corporation's lack of adequate
774	capital to meet its potential claim obligations without
775	incurring large deficits.
776	(e)  The adverse effects on the people and the economy of
777	this state of the large, multiyear deficit assessments by
778	Citizens Property Insurance Corporation that may be levied on
779	businesses and households in this state, and steps that can be
780	taken to reduce those effects.
781	(f)  The operational implications of the variation in the
782	number of policies in force over time in Citizens Property
783	Insurance Corporation and the merits of outsourcing some or all
784	of its operational responsibilities.
785	(g)  Changes in the mission and operations of Citizens
786	Property Insurance Corporation to reduce or eliminate any
787	adverse effect such mission and operations may be having on the
788	promotion of sound and economic growth and development of the
789	coastal areas of this state.
790	(2)  The task force shall be composed of 17 members as
791	follows:
792	(a)  Three members appointed by the Speaker of the House of
793	Representatives.
794	(b)  Three members appointed by the President of the
795	Senate.
796	(c)  Three members appointed by the Governor who are not
797	employed by or professionally affiliated with an insurance
798	company or a subsidiary of an insurance company.
799	(d)  Eight members appointed as representatives of private
800	insurance companies as follows:
801	1.  Two members representing two separate insurance
802	companies in this state that each provide at least 300,000
803	property insurance policies statewide at the time of the
804	creation of the task force.
805	2.  Two members representing two separate insurance
806	companies in this state that each provide at least 100,000 but
807	no more than 299,000 property insurance policies statewide at
808	the time of the creation of the task force.
809	3.  Two members representing two separate insurance
810	companies in this state that each provide fewer than 100,000
811	property insurance policies statewide at the time of the
812	creation of the task force.
813	4.  Two members appointed by the Chief Financial Officer
814	representing insurance agents in this state, at least one of
815	whom represents the largest property and casualty insurance
816	agent's association in this state.
817
818	Of each pair of members appointed under subparagraphs 1., 2.,
819	and 3., one shall be appointed by the President of the Senate
820	and one by the Speaker of the House of Representatives.
821	(3)  The task force shall conduct research, hold public
822	meetings, receive testimony, employ consultants and
823	administrative staff, and undertake other activities determined
824	by its members to be necessary to complete its responsibilities.
825	Citizens Property Insurance Corporation shall have appropriate
826	senior staff attend task force meetings, shall respond to
827	requests for testimony and data by the task force, and shall
828	otherwise cooperate with the task force.
829	(4)  A member of the task force may not delegate his or her
830	attendance or voting power to a designee.
831	(5)  Members of the task force shall serve without
832	compensation but are entitled to receive reimbursement for
833	travel and per diem as provided in s. 112.061, Florida Statutes.
834	(6)  The appointments to the task force must be completed
835	within 30 calendar days after the effective date of this act,
836	and the task force must hold its initial meeting within 1 month
837	after appointment of all members. The task force shall expire no
838	later than 60 calendar days after submission of the report
839	required in subsection (1).
840	Section 5.  Except as otherwise expressly provided in this
841	act, this act shall take effect upon becoming a law.

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