Florida Senate - 2007 COMMITTEE AMENDMENT
Bill No. SB 2498
Barcode 434690
CHAMBER ACTION
Senate House
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04/09/2007 06:09 PM .
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11 The Committee on Banking and Insurance (Peaden) recommended
12 the following amendment:
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14 Senate Amendment (with title amendment)
15 On page 25, line 1, through
16 page 34, line 6, delete those lines
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18 and insert:
19 5. Must provide a procedure for determining the
20 eligibility of a risk for coverage, as follows:
21 a. Subject to the provisions of s. 627.3517, with
22 respect to personal lines residential risks, if the risk is
23 offered coverage from an authorized insurer at the insurer's
24 approved rate under either a standard policy including wind
25 coverage or, if consistent with the insurer's underwriting
26 rules as filed with the office, a basic policy including wind
27 coverage, for a new application to the corporation for
28 coverage, the risk is not eligible for any policy issued by
29 the corporation unless the premium for coverage from the
30 authorized insurer is more than 15 25 percent greater than the
31 premium for comparable coverage from the corporation. If the
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Florida Senate - 2007 COMMITTEE AMENDMENT
Bill No. SB 2498
Barcode 434690
1 risk is not able to obtain any such offer, the risk is
2 eligible for either a standard policy including wind coverage
3 or a basic policy including wind coverage issued by the
4 corporation; however, if the risk could not be insured under a
5 standard policy including wind coverage regardless of market
6 conditions, the risk shall be eligible for a basic policy
7 including wind coverage unless rejected under subparagraph 8.
8 However, with regard to a policyholder of the corporation, the
9 policyholder remains eligible for coverage from the
10 corporation regardless of any offer of coverage from an
11 authorized insurer or surplus lines insurer. The corporation
12 shall determine the type of policy to be provided on the basis
13 of objective standards specified in the underwriting manual
14 and based on generally accepted underwriting practices.
15 (I) If the risk accepts an offer of coverage through
16 the market assistance plan or an offer of coverage through a
17 mechanism established by the corporation before a policy is
18 issued to the risk by the corporation or during the first 30
19 days of coverage by the corporation, and the producing agent
20 who submitted the application to the plan or to the
21 corporation is not currently appointed by the insurer, the
22 insurer shall:
23 (A) Pay to the producing agent of record of the
24 policy, for the first year, an amount that is the greater of
25 the insurer's usual and customary commission for the type of
26 policy written or a fee equal to the usual and customary
27 commission of the corporation; or
28 (B) Offer to allow the producing agent of record of
29 the policy to continue servicing the policy for a period of
30 not less than 1 year and offer to pay the agent the greater of
31 the insurer's or the corporation's usual and customary
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Florida Senate - 2007 COMMITTEE AMENDMENT
Bill No. SB 2498
Barcode 434690
1 commission for the type of policy written.
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3 If the producing agent is unwilling or unable to accept
4 appointment, the new insurer shall pay the agent in accordance
5 with sub-sub-sub-subparagraph (A).
6 (II) When the corporation enters into a contractual
7 agreement for a take-out plan, the producing agent of record
8 of the corporation policy is entitled to retain any unearned
9 commission on the policy, and the insurer shall:
10 (A) Pay to the producing agent of record of the
11 corporation policy, for the first year, an amount that is the
12 greater of the insurer's usual and customary commission for
13 the type of policy written or a fee equal to the usual and
14 customary commission of the corporation; or
15 (B) Offer to allow the producing agent of record of
16 the corporation policy to continue servicing the policy for a
17 period of not less than 1 year and offer to pay the agent the
18 greater of the insurer's or the corporation's usual and
19 customary commission for the type of policy written.
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21 If the producing agent is unwilling or unable to accept
22 appointment, the new insurer shall pay the agent in accordance
23 with sub-sub-sub-subparagraph (A).
24 b. With respect to commercial lines residential risks,
25 for a new application to the corporation for coverage, if the
26 risk is offered coverage under a policy including wind
27 coverage from an authorized insurer at its approved rate, the
28 risk is not eligible for any policy issued by the corporation
29 unless the premium for coverage from the authorized insurer is
30 more than 15 25 percent greater than the premium for
31 comparable coverage from the corporation. If the risk is not
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Florida Senate - 2007 COMMITTEE AMENDMENT
Bill No. SB 2498
Barcode 434690
1 able to obtain any such offer, the risk is eligible for a
2 policy including wind coverage issued by the corporation.
3 However, with regard to a policyholder of the corporation, the
4 policyholder remains eligible for coverage from the
5 corporation regardless of any offer of coverage from an
6 authorized insurer or surplus lines insurer.
7 (I) If the risk accepts an offer of coverage through
8 the market assistance plan or an offer of coverage through a
9 mechanism established by the corporation before a policy is
10 issued to the risk by the corporation or during the first 30
11 days of coverage by the corporation, and the producing agent
12 who submitted the application to the plan or the corporation
13 is not currently appointed by the insurer, the insurer shall:
14 (A) Pay to the producing agent of record of the
15 policy, for the first year, an amount that is the greater of
16 the insurer's usual and customary commission for the type of
17 policy written or a fee equal to the usual and customary
18 commission of the corporation; or
19 (B) Offer to allow the producing agent of record of
20 the policy to continue servicing the policy for a period of
21 not less than 1 year and offer to pay the agent the greater of
22 the insurer's or the corporation's usual and customary
23 commission for the type of policy written.
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25 If the producing agent is unwilling or unable to accept
26 appointment, the new insurer shall pay the agent in accordance
27 with sub-sub-sub-subparagraph (A).
28 (II) When the corporation enters into a contractual
29 agreement for a take-out plan, the producing agent of record
30 of the corporation policy is entitled to retain any unearned
31 commission on the policy, and the insurer shall:
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Florida Senate - 2007 COMMITTEE AMENDMENT
Bill No. SB 2498
Barcode 434690
1 (A) Pay to the producing agent of record of the
2 corporation policy, for the first year, an amount that is the
3 greater of the insurer's usual and customary commission for
4 the type of policy written or a fee equal to the usual and
5 customary commission of the corporation; or
6 (B) Offer to allow the producing agent of record of
7 the corporation policy to continue servicing the policy for a
8 period of not less than 1 year and offer to pay the agent the
9 greater of the insurer's or the corporation's usual and
10 customary commission for the type of policy written.
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12 If the producing agent is unwilling or unable to accept
13 appointment, the new insurer shall pay the agent in accordance
14 with sub-sub-sub-subparagraph (A).
15 6. Must provide by July 1, 2007, that an application
16 for coverage for a new policy is subject to a waiting period
17 of 10 days before coverage is effective, during which time the
18 corporation shall make such application available for review
19 by general lines agents and authorized property and casualty
20 insurers. The board shall approve an exception that allows for
21 coverage to be effective before the end of the 10-day waiting
22 period, for coverage issued in conjunction with a real estate
23 closing. The board may approve such other exceptions as the
24 board determines are necessary to prevent lapses in coverage.
25 7. Must include rules for classifications of risks and
26 rates therefor.
27 8. Must provide that if premium and investment income
28 for an account attributable to a particular calendar year are
29 in excess of projected losses and expenses for the account
30 attributable to that year, such excess shall be held in
31 surplus in the account. Such surplus shall be available to
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1 defray deficits in that account as to future years and shall
2 be used for that purpose prior to assessing assessable
3 insurers and assessable insureds as to any calendar year.
4 9. Must provide objective criteria and procedures to
5 be uniformly applied for all applicants in determining whether
6 an individual risk is so hazardous as to be uninsurable. In
7 making this determination and in establishing the criteria and
8 procedures, the following shall be considered:
9 a. Whether the likelihood of a loss for the individual
10 risk is substantially higher than for other risks of the same
11 class; and
12 b. Whether the uncertainty associated with the
13 individual risk is such that an appropriate premium cannot be
14 determined.
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16 The acceptance or rejection of a risk by the corporation shall
17 be construed as the private placement of insurance, and the
18 provisions of chapter 120 shall not apply.
19 10. Must provide that the corporation shall make its
20 best efforts to procure catastrophe reinsurance at reasonable
21 rates, to cover its projected 100-year probable maximum loss
22 as determined by the board of governors.
23 11. Must provide that in the event of regular deficit
24 assessments under sub-subparagraph (b)3.a. or sub-subparagraph
25 (b)3.b., in the personal lines account, the commercial lines
26 residential account, or the high-risk account, the corporation
27 shall levy upon corporation policyholders in its next rate
28 filing, or by a separate rate filing solely for this purpose,
29 a Citizens policyholder surcharge arising from a regular
30 assessment in such account in a percentage equal to the total
31 amount of such regular assessments divided by the aggregate
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Florida Senate - 2007 COMMITTEE AMENDMENT
Bill No. SB 2498
Barcode 434690
1 statewide direct written premium for subject lines of business
2 for the prior calendar year. For purposes of calculating the
3 Citizens policyholder surcharge to be levied under this
4 subparagraph, the total amount of the regular assessment to
5 which this surcharge is related shall be determined as set
6 forth in subparagraph (b)3., without deducting the estimated
7 Citizens policyholder surcharge. Citizens policyholder
8 surcharges under this subparagraph are not considered premium
9 and are not subject to commissions, fees, or premium taxes;
10 however, failure to pay a market equalization surcharge shall
11 be treated as failure to pay premium.
12 12. The policies issued by the corporation must
13 provide that, if the corporation or the market assistance plan
14 obtains an offer from an authorized insurer to cover the risk
15 at its approved rates, the risk is no longer eligible for
16 renewal through the corporation, except as otherwise provided
17 in this subsection.
18 13. Corporation policies and applications must include
19 a notice that the corporation policy could, under this
20 section, be replaced with a policy issued by an authorized
21 insurer that does not provide coverage identical to the
22 coverage provided by the corporation. The notice shall also
23 specify that acceptance of corporation coverage creates a
24 conclusive presumption that the applicant or policyholder is
25 aware of this potential.
26 14. May establish, subject to approval by the office,
27 different eligibility requirements and operational procedures
28 for any line or type of coverage for any specified county or
29 area if the board determines that such changes to the
30 eligibility requirements and operational procedures are
31 justified due to the voluntary market being sufficiently
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Florida Senate - 2007 COMMITTEE AMENDMENT
Bill No. SB 2498
Barcode 434690
1 stable and competitive in such area or for such line or type
2 of coverage and that consumers who, in good faith, are unable
3 to obtain insurance through the voluntary market through
4 ordinary methods would continue to have access to coverage
5 from the corporation. When coverage is sought in connection
6 with a real property transfer, such requirements and
7 procedures shall not provide for an effective date of coverage
8 later than the date of the closing of the transfer as
9 established by the transferor, the transferee, and, if
10 applicable, the lender.
11 15. Must provide that, with respect to the high-risk
12 account, any assessable insurer with a surplus as to
13 policyholders of $25 million or less writing 25 percent or
14 more of its total countrywide property insurance premiums in
15 this state may petition the office, within the first 90 days
16 of each calendar year, to qualify as a limited apportionment
17 company. A regular assessment levied by the corporation on a
18 limited apportionment company for a deficit incurred by the
19 corporation for the high-risk account in 2006 or thereafter
20 may be paid to the corporation on a monthly basis as the
21 assessments are collected by the limited apportionment company
22 from its insureds pursuant to s. 627.3512, but the regular
23 assessment must be paid in full within 12 months after being
24 levied by the corporation. A limited apportionment company
25 shall collect from its policyholders any emergency assessment
26 imposed under sub-subparagraph (b)3.d. The plan shall provide
27 that, if the office determines that any regular assessment
28 will result in an impairment of the surplus of a limited
29 apportionment company, the office may direct that all or part
30 of such assessment be deferred as provided in subparagraph
31 (g)4. However, there shall be no limitation or deferment of an
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1 emergency assessment to be collected from policyholders under
2 sub-subparagraph (b)3.d.
3 16. Must provide that the corporation appoint as its
4 licensed agents only those agents who also hold an appointment
5 as defined in s. 626.015(3) with an insurer who at the time of
6 the agent's initial appointment by the corporation is
7 authorized to write and is actually writing personal lines
8 residential property coverage, commercial residential property
9 coverage, or commercial nonresidential property coverage
10 within the state.
11 17. Must provide, by July 1, 2007, a premium payment
12 plan option to its policyholders which allows for quarterly
13 and semiannual payment of premiums.
14 18. Must provide, effective June 1, 2007, that the
15 corporation contract with each insurer providing the non-wind
16 coverage for risks insured by the corporation in the high-risk
17 account, requiring that the insurer provide claims adjusting
18 services for the wind coverage provided by the corporation for
19 such risks. An insurer is required to enter into this contract
20 as a condition of providing non-wind coverage for a risk that
21 is insured by the corporation in the high-risk account unless
22 the board finds, after a hearing, that the insurer is not
23 capable of providing adjusting services at an acceptable level
24 of quality to corporation policyholders. The terms and
25 conditions of such contracts must be substantially the same as
26 the contracts that the corporation executed with insurers
27 under the "adjust-your-own" program in 2006, except as may be
28 mutually agreed to by the parties and except for such changes
29 that the board determines are necessary to ensure that claims
30 are adjusted appropriately. The corporation shall provide a
31 process for neutral arbitration of any dispute between the
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1 corporation and the insurer regarding the terms of the
2 contract. The corporation shall review and monitor the
3 performance of insurers under these contracts.
4 19. Must limit coverage on mobile homes or
5 manufactured homes built prior to 1994 to actual cash value of
6 the dwelling rather than replacement costs of the dwelling.
7 20. May provide such limits of coverage as the board
8 determines, consistent with the requirements of this
9 subsection.
10 21. May require commercial property to meet specified
11 hurricane mitigation construction features as a condition of
12 eligibility for coverage.
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15 ================ T I T L E A M E N D M E N T ===============
16 And the title is amended as follows:
17 On page 1, lines 16-27, delete those lines
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19 and insert:
20 revising provisions for determining eligibility
21 for coverage under Citizens Property Insurance
22 Corporation; prohibiting issuance of new
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