(LATE FILED)	Amendment
Bill No. 0001A

Amendment No. 111795

CHAMBER ACTION
Senate		House
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1	Representative(s) Skidmore offered the following:
2
3	Amendment (with title amendment)
4	Remove line(s) 177-312 and insert:
5	or arbitration panel specified in s. 627.062(6) relating to
6	subject matter under the jurisdiction of the department or
7	office.
8	(2)  Have access to and use of all files, records, and data
9	of the department or office.
10	(3)  Examine rate and form filings submitted to the office,
11	hire consultants as necessary to aid in the review process, and
12	recommend to the department or office any position deemed by the
13	consumer advocate to be in the public interest.
14	(4)  Prepare an annual report card for each authorized
15	property insurer, on a form and using a letter-grade scale
16	developed by the commission by rule, which grades each insurer
17	based on the following factors:
18	1.  The number and nature of consumer complaints received
19	by the department against the insurer.
20	2.  The disposition of all complaints received by the
21	department.
22	3.  The average length of time for payment of claims by the
23	insurer.
24	4.  Any other factors the commission identifies as
25	assisting policyholders in making informed choices about
26	homeowner's insurance.
27	(5)(4)  Prepare an annual budget for presentation to the
28	Legislature by the department, which budget must be adequate to
29	carry out the duties of the office of consumer advocate.
30	Section 8.  Paragraphs (a) and (b) of subsection (2) and
31	subsections (6), (7), (8), and (9) of section 627.062, Florida
32	Statutes, are amended to read:
33	627.062  Rate standards.--
34	(2)  As to all such classes of insurance:
35	(a)  Insurers or rating organizations shall establish and
36	use rates, rating schedules, or rating manuals to allow the
37	insurer a reasonable rate of return on such classes of insurance
38	written in this state. A copy of rates, rating schedules, rating
39	manuals, premium credits or discount schedules, and surcharge
40	schedules, and changes thereto, shall be filed with the office
41	under one of the following procedures:
42	1.  If the filing is made at least 90 days before the
43	proposed effective date and the filing is not implemented during
44	the office's review of the filing and any proceeding and
45	judicial review, then such filing shall be considered a "file
46	and use" filing. In such case, the office shall finalize its
47	review by issuance of a notice of intent to approve or a notice
48	of intent to disapprove within 90 days after receipt of the
49	filing. The notice of intent to approve and the notice of intent
50	to disapprove constitute agency action for purposes of the
51	Administrative Procedure Act. Requests for supporting
52	information, requests for mathematical or mechanical
53	corrections, or notification to the insurer by the office of its
54	preliminary findings shall not toll the 90-day period during any
55	such proceedings and subsequent judicial review. The rate shall
56	be deemed approved if the office does not issue a notice of
57	intent to approve or a notice of intent to disapprove within 90
58	days after receipt of the filing.
59	2.  If the filing is not made in accordance with the
60	provisions of subparagraph 1., such filing shall be made as soon
61	as practicable, but no later than 30 days after the effective
62	date, and shall be considered a "use and file" filing. An
63	insurer making a "use and file" filing is potentially subject to
64	an order by the office to return to policyholders portions of
65	rates found to be excessive, as provided in paragraph (h).
66	3.  The insurer's senior officer responsible for insurance
67	business operations in this state shall sign a sworn statement
68	of certification given under oath subject to the penalty of
69	perjury to accompany the rate filing. The statement shall
70	certify the appropriateness of the information provided in and
71	with the rate filing and that the information fairly presents,
72	in all material respects, the basis of the rate filing submitted
73	by the property and casualty insurer. The insurer shall certify
74	all of the information and factors described in paragraph (b),
75	including, but not limited to, investment income. The commission
76	shall prescribe by rule the form and contents of the statement
77	of certification. Failure to provide such statement of
78	certification shall result in the rate filing being disapproved
79	without prejudice to be refiled but shall not create any private
80	right of action against the insurer.
81	(b)  Upon receiving a rate filing, the office shall review
82	the rate filing to determine if a rate is excessive, inadequate,
83	or unfairly discriminatory. In making that determination, the
84	office shall, in accordance with generally accepted and
85	reasonable actuarial techniques, consider the following factors:
86	1.  Past and prospective loss experience within and without
87	this state.
88	2.  Past and prospective expenses.
89	3.  The degree of competition among insurers for the risk
90	insured.
91	4.  Investment income reasonably expected by the insurer,
92	consistent with the insurer's investment practices, from
93	investable premiums anticipated in the filing, plus any other
94	expected income from currently invested assets representing the
95	amount expected on unearned premium reserves and loss reserves.
96	The commission may adopt rules utilizing reasonable techniques
97	of actuarial science and economics to specify the manner in
98	which insurers shall calculate investment income attributable to
99	such classes of insurance written in this state and the manner
100	in which such investment income shall be used in the calculation
101	of insurance rates. Such manner shall contemplate allowances for
102	an underwriting profit factor and full consideration of
103	investment income which produce a reasonable rate of return;
104	however, investment income from invested surplus shall not be
105	considered.
106	5.  The reasonableness of the judgment reflected in the
107	filing.
108	6.  Dividends, savings, or unabsorbed premium deposits
109	allowed or returned to Florida policyholders, members, or
110	subscribers.
111	7.  The adequacy of loss reserves.
112	8.  The cost of reinsurance.
113	9.  Trend factors, including trends in actual losses per
114	insured unit for the insurer making the filing.
115	10.  Conflagration and catastrophe hazards, if applicable.
116	11.  A reasonable margin for underwriting profit and
117	contingencies. For that portion of the rate covering the risk of
118	hurricanes and other catastrophic losses for which the insurer
119	has not purchased reinsurance and has exposed its capital and
120	surplus to such risk, the office must approve a rating factor
121	that provides the insurer a reasonable rate of return that is
122	commensurate with such risk.
123	12.  The cost of medical services, if applicable.
124	13.  For an insurer that is a wholly owned subsidiary of an
125	insurer authorized to do business in any other state, the
126	profits of the insurer authorized to do business in any other
127	state for the most recent reporting year. However, this
128	subparagraph may not be the sole basis for a rate filing denial.
129	14.13.  Other relevant factors which impact upon the
130	frequency or severity of claims or upon expenses.
131
132	The provisions of this subsection shall not apply to workers'
133	compensation and employer's liability insurance and to motor
134	vehicle insurance.
135	(6)(a)  After any action with respect to a rate filing that
136	constitutes agency action for purposes of the Administrative
137	Procedure Act, except for a rate filing for medical malpractice,
138	an insurer may, in lieu of demanding a hearing under s. 120.57,
139	require arbitration of the rate filing. Arbitration shall be
140	conducted by a board of arbitrators consisting of an arbitrator
141	selected by the office, an arbitrator selected by the insurer,
142	and an arbitrator selected jointly by the other two arbitrators.
143	Each arbitrator must be certified by the American Arbitration
144	Association. A decision is valid only upon the affirmative vote
145	of at least two of the arbitrators. No arbitrator may be an
146	employee of any insurance regulator or regulatory body or of any
147	insurer, regardless of whether or not the employing insurer does
148	business in this state. The office and the insurer must treat
149	the decision of the arbitrators as the final approval of a rate
150	filing. Costs of arbitration shall be paid by the insurer.
151	(b)  Arbitration under this subsection shall be conducted
152	pursuant to the procedures specified in ss. 682.06-682.10.
153	Either party may apply to the circuit court to vacate or modify
154	the decision pursuant to s. 682.13 or s. 682.14. The commission
155	shall adopt rules for arbitration under this subsection, which
156	rules may not be inconsistent with the arbitration rules of the
157	American Arbitration Association as of January 1, 1996.
158	(c)  Upon initiation of the arbitration process, the
159	insurer waives all rights to challenge the action of the office
160	under the Administrative Procedure Act or any other provision of
161	law; however, such rights are restored to the insurer if the
162	arbitrators fail to render a decision within 90 days after
163	initiation of the arbitration process.
164	(6)(7)(a)  The provisions of this subsection apply only
165	with respect to rates for medical malpractice insurance and
166	shall control to the extent of any conflict with other
167	provisions of this section.
168	(b)  Any portion of a judgment entered or settlement paid
169	as a result of a statutory or common-law bad faith action and
170	any portion of a judgment entered which awards punitive damages
171	against an insurer may not be included in the insurer's rate
172	base, and shall not be used to justify a rate or rate change.
173	Any common-law bad faith action identified as such, any portion
174	of a settlement entered as a result of a statutory or common-law
175	action, or any portion of a settlement wherein an insurer agrees
176	to pay specific punitive damages may not be used to justify a
177	rate or rate change. The portion of the taxable costs and
178	attorney's fees which is identified as being related to the bad
179	faith and punitive damages in these judgments and settlements
180	may not be included in the insurer's rate base and may not be
181	utilized to justify a rate or rate change.
182	(c)  Upon reviewing a rate filing and determining whether
183	the rate is excessive, inadequate, or unfairly discriminatory,
184	the office shall consider, in accordance with generally accepted
185	and reasonable actuarial techniques, past and present
186	prospective loss experience, either using loss experience solely
187	for this state or giving greater credibility to this state's
188	loss data after applying actuarially sound methods of assigning
189	credibility to such data.
190	(d)  Rates shall be deemed excessive if, among other
191	standards established by this section, the rate structure
192	provides for replenishment of reserves or surpluses from
193	premiums when the replenishment is attributable to investment
194	losses.
195	(e)  The insurer must apply a discount or surcharge based
196	on the health care provider's loss experience or shall establish
197	an alternative method giving due consideration to the provider's
198	loss experience. The insurer must include in the filing a copy
199	of the surcharge or discount schedule or a description of the
200	alternative method used, and must provide a copy of such
201	schedule or description, as approved by the office, to
202	policyholders at the time of renewal and to prospective
203	policyholders at the time of application for coverage.
204	(f)  Each medical malpractice insurer must make a rate
205	filing under this section, sworn to by at least two executive
206	officers of the insurer, at least once each calendar year.
207	(7)(8)(a)1.  No later than 60 days after the effective date
208	of medical malpractice legislation enacted during the 2003
209	Special Session D of the Florida Legislature, the office shall
210	calculate a presumed factor that reflects the impact that the
211	changes contained in such legislation will have on rates for
212	medical malpractice insurance and shall issue a notice informing
213	all insurers writing medical malpractice coverage of such
214	presumed factor. In determining the presumed factor, the office
215	shall use generally accepted actuarial techniques and standards
216	provided in this section in determining the expected impact on
217	losses, expenses, and investment income of the insurer. To the
218	extent that the operation of a provision of medical malpractice
219	legislation enacted during the 2003 Special Session D of the
220	Florida Legislature is stayed pending a constitutional
221	challenge, the impact of that provision shall not be included in
222	the calculation of a presumed factor under this subparagraph.
223	2.  No later than 60 days after the office issues its
224	notice of the presumed rate change factor under subparagraph 1.,
225	each insurer writing medical malpractice coverage in this state
226	shall submit to the office a rate filing for medical malpractice
227	insurance, which will take effect no later than January 1, 2004,
228	and apply retroactively to policies issued or renewed on or
229	after the effective date of medical malpractice legislation
230	enacted during the 2003 Special Session D of the Florida
231	Legislature. Except as authorized under paragraph (b), the
232	filing shall reflect an overall rate reduction at least as great
233	as the presumed factor determined under subparagraph 1. With
234	respect to policies issued on or after the effective date of
235	such legislation and prior to the effective date of the rate
236	filing required by this subsection, the office shall order the
237	insurer to make a refund of the amount that was charged in
238	excess of the rate that is approved.
239	(b)  Any insurer or rating organization that contends that
240	the rate provided for in paragraph (a) is excessive, inadequate,
241	or unfairly discriminatory shall separately state in its filing
242	the rate it contends is appropriate and shall state with
243	specificity the factors or data that it contends should be
244	considered in order to produce such appropriate rate. The
245	insurer or rating organization shall be permitted to use all of
246	the generally accepted actuarial techniques provided in this
247	section in making any filing pursuant to this subsection. The
248	office shall review each such exception and approve or
249	disapprove it prior to use. It shall be the insurer's burden to
250	actuarially justify any deviations from the rates required to be
251	filed under paragraph (a). The insurer making a filing under
252	this paragraph shall include in the filing the expected impact
253	of medical malpractice legislation enacted during the 2003
254	Special Session D of the Florida Legislature on losses,
255	expenses, and rates.
256	(c)  If any provision of medical malpractice legislation
257	enacted during the 2003 Special Session D of the Florida
258	Legislature is held invalid by a court of competent
259	jurisdiction, the office shall permit an adjustment of all
260	medical malpractice rates filed under this section to reflect
261	the impact of such holding on such rates so as to ensure that
262	the rates are not excessive, inadequate, or unfairly
263	discriminatory.
264	(d)  Rates approved on or before July 1, 2003, for medical
265	malpractice insurance shall remain in effect until the effective
266	date of a new rate filing approved under this subsection.
267	(e)  The calculation and notice by the office of the
268	presumed factor pursuant to paragraph (a) is not an order or
269	rule that is subject to chapter 120. If the office enters into a
270	contract with an independent consultant to assist the office in
271	calculating the presumed factor, such contract shall not be
272	subject to the competitive solicitation requirements of s.
273	287.057.
274	(8)(9)  The burden is on the office to establish that rates
275	are excessive for personal lines residential coverage with a
276	dwelling replacement cost of $1 million or more or for a single
277	condominium unit with a combined dwelling and contents
278	replacement cost of $1 million or more. Upon request of the
279	office, the insurer shall provide to the office such loss and
280	expense information as the office reasonably needs to meet this
281	burden.
282	Section 9.  Paragraph (c) of subsection (3) of section
283	627.0628, Florida Statutes, is amended to read:
284	627.0628  Florida Commission on Hurricane Loss Projection
285	Methodology; public records exemption; public meetings
286	exemption.--
287	(3)  ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--
288	(c)  With respect to a rate filing under s. 627.062, an
289	insurer may employ actuarial methods, principles, standards,
290	models, or output ranges found by the commission to be accurate
291	or reliable to determine hurricane loss factors for use in a
292	rate filing under s. 627.062. Such findings and factors are
293	admissible and relevant in consideration of a rate filing by the
294	office or in any arbitration or administrative or judicial
295	review only if the office and the consumer advocate appointed
296	pursuant to s. 627.0613 have access to all of the assumptions
297	and factors that were used in developing the actuarial methods,
298	principles, standards, models, or output ranges, and are not
299	precluded from disclosing such information in a rate proceeding.
300	In any rate hearing under s. 120.57 or in any arbitration
301	proceeding under s. 627.062(6), the hearing officer, judge, or
302	arbitration panel may determine whether the office and the
303	consumer advocate were provided with access to all of the
304	assumptions and factors that were used in developing the
305	actuarial methods, principles, standards, models, or output
306	ranges and to determine their admissibility.
307	Section 10.  Paragraph (b) of subsection (2) of section
308	627.351, Florida Statutes, is amended to read:
309	627.351  Insurance risk apportionment plans.--
310	(2)  WINDSTORM INSURANCE RISK APPORTIONMENT.--
311	(b)  The department shall require all insurers holding a
312	certificate of authority to transact property insurance on a
313	direct basis in this state, other than joint underwriting
314	associations and other entities formed pursuant to this section,
315	to provide windstorm coverage to applicants from areas
316	determined to be eligible pursuant to paragraph (c) who in good
317	faith are entitled to, but are unable to procure, such coverage
318	through ordinary means; or it shall adopt a reasonable plan or
319	plans for the equitable apportionment or sharing among such
320	insurers of windstorm coverage, which may include formation of
321	an association for this purpose. As used in this subsection, the
322	term "property insurance" means insurance on real or personal
323	property, as defined in s. 624.604, including insurance for
324	fire, industrial fire, allied lines, farmowners multiperil,
325	homeowners' multiperil, commercial multiperil, and mobile homes,
326	and including liability coverages on all such insurance, but
327	excluding inland marine as defined in s. 624.607(3) and
328	excluding vehicle insurance as defined in s. 624.605(1)(a) other
329	than insurance on mobile homes used as permanent dwellings. The
330	department shall adopt rules that provide a formula for the
331	recovery and repayment of any deferred assessments.
332	1.  For the purpose of this section, properties eligible
333	for such windstorm coverage are defined as dwellings, buildings,
334	and other structures, including mobile homes which are used as
335	dwellings and which are tied down in compliance with mobile home
336	tie-down requirements prescribed by the Department of Highway
337	Safety and Motor Vehicles pursuant to s. 320.8325, and the
338	contents of all such properties. An applicant or policyholder is
339	eligible for coverage only if an offer of coverage cannot be
340	obtained by or for the applicant or policyholder from an
341	admitted insurer at approved rates.
342	2.a.(I)  All insurers required to be members of such
343	association shall participate in its writings, expenses, and
344	losses. Surplus of the association shall be retained for the
345	payment of claims and shall not be distributed to the member
346	insurers. Such participation by member insurers shall be in the
347	proportion that the net direct premiums of each member insurer
348	written for property insurance in this state during the
349	preceding calendar year bear to the aggregate net direct
350	premiums for property insurance of all member insurers, as
351	reduced by any credits for voluntary writings, in this state
352	during the preceding calendar year. For the purposes of this
353	subsection, the term "net direct premiums" means direct written
354	premiums for property insurance, reduced by premium for
355	liability coverage and for the following if included in allied
356	lines: rain and hail on growing crops; livestock; association
357	direct premiums booked; National Flood Insurance Program direct
358	premiums; and similar deductions specifically authorized by the
359	plan of operation and approved by the department. A member's
360	participation shall begin on the first day of the calendar year
361	following the year in which it is issued a certificate of
362	authority to transact property insurance in the state and shall
363	terminate 1 year after the end of the calendar year during which
364	it no longer holds a certificate of authority to transact
365	property insurance in the state. The commissioner, after review
366	of annual statements, other reports, and any other statistics
367	that the commissioner deems necessary, shall certify to the
368	association the aggregate direct premiums written for property
369	insurance in this state by all member insurers.
370	(II)  Effective July 1, 2002, the association shall operate
371	subject to the supervision and approval of a board of governors
372	who are the same individuals that have been appointed by the
373	Treasurer to serve on the board of governors of the Citizens
374	Property Insurance Corporation.
375	(III)  The plan of operation shall provide a formula
376	whereby a company voluntarily providing windstorm coverage in
377	affected areas will be relieved wholly or partially from
378	apportionment of a regular assessment pursuant to sub-sub-
379	subparagraph d.(I) or sub-sub-subparagraph d.(II).
380	(IV)  A company which is a member of a group of companies
381	under common management may elect to have its credits applied on
382	a group basis, and any company or group may elect to have its
383	credits applied to any other company or group.
384	(V)  There shall be no credits or relief from apportionment
385	to a company for emergency assessments collected from its
386	policyholders under sub-sub-subparagraph d.(III).
387	(VI)  The plan of operation may also provide for the award
388	of credits, for a period not to exceed 3 years, from a regular
389	assessment pursuant to sub-sub-subparagraph d.(I) or sub-sub-
390	subparagraph d.(II) as an incentive for taking policies out of
391	the Residential Property and Casualty Joint Underwriting
392	Association. In order to qualify for the exemption under this
393	sub-sub-subparagraph, the take-out plan must provide that at
394	least 40 percent of the policies removed from the Residential
395	Property and Casualty Joint Underwriting Association cover risks
396	located in Dade, Broward, and Palm Beach Counties or at least 30
397	percent of the policies so removed cover risks located in Dade,
398	Broward, and Palm Beach Counties and an additional 50 percent of
399	the policies so removed cover risks located in other coastal
400	counties, and must also provide that no more than 15 percent of
401	the policies so removed may exclude windstorm coverage. With the
402	approval of the department, the association may waive these
403	geographic criteria for a take-out plan that removes at least
404	the lesser of 100,000 Residential Property and Casualty Joint
405	Underwriting Association policies or 15 percent of the total
406	number of Residential Property and Casualty Joint Underwriting
407	Association policies, provided the governing board of the
408	Residential Property and Casualty Joint Underwriting Association
409	certifies that the take-out plan will materially reduce the
410	Residential Property and Casualty Joint Underwriting
411	Association's 100-year probable maximum loss from hurricanes.
412	With the approval of the department, the board may extend such
413	credits for an additional year if the insurer guarantees an
414	additional year of renewability for all policies removed from
415	the Residential Property and Casualty Joint Underwriting
416	Association, or for 2 additional years if the insurer guarantees
417	2 additional years of renewability for all policies removed from
418	the Residential Property and Casualty Joint Underwriting
419	Association.
420	b.  Assessments to pay deficits in the association under
421	this subparagraph shall be included as an appropriate factor in
422	the making of rates as provided in s. 627.3512.
423	c.  The Legislature finds that the potential for unlimited
424	deficit assessments under this subparagraph may induce insurers
425	to attempt to reduce their writings in the voluntary market, and
426	that such actions would worsen the availability problems that
427	the association was created to remedy. It is the intent of the
428	Legislature that insurers remain fully responsible for paying
429	regular assessments and collecting emergency assessments for any
430	deficits of the association; however, it is also the intent of
431	the Legislature to provide a means by which assessment
432	liabilities may be amortized over a period of years.
433	d.(I)  When the deficit incurred in a particular calendar
434	year is 10 percent or less of the aggregate statewide direct
435	written premium for property insurance for the prior calendar
436	year for all member insurers, the association shall levy an
437	assessment on member insurers in an amount equal to the deficit.
438	(II)  When the deficit incurred in a particular calendar
439	year exceeds 10 percent of the aggregate statewide direct
440	written premium for property insurance for the prior calendar
441	year for all member insurers, the association shall levy an
442	assessment on member insurers in an amount equal to the greater
443	of 10 percent of the deficit or 10 percent of the aggregate
444	statewide direct written premium for property insurance for the
445	prior calendar year for member insurers. Any remaining deficit
446	shall be recovered through emergency assessments under sub-sub-
447	subparagraph (III).
448	(III)  Upon a determination by the board of directors that
449	a deficit exceeds the amount that will be recovered through
450	regular assessments on member insurers, pursuant to sub-sub-
451	subparagraph (I) or sub-sub-subparagraph (II), the board shall
452	levy, after verification by the department, emergency
453	assessments to be collected by member insurers and by
454	underwriting associations created pursuant to this section which
455	write property insurance, upon issuance or renewal of property
456	insurance policies other than National Flood Insurance policies
457	in the year or years following levy of the regular assessments.
458	The amount of the emergency assessment collected in a particular
459	year shall be a uniform percentage of that year's direct written
460	premium for property insurance for all member insurers and
461	underwriting associations, excluding National Flood Insurance
462	policy premiums, as annually determined by the board and
463	verified by the department. The department shall verify the
464	arithmetic calculations involved in the board's determination
465	within 30 days after receipt of the information on which the
466	determination was based. Notwithstanding any other provision of
467	law, each member insurer and each underwriting association
468	created pursuant to this section shall collect emergency
469	assessments from its policyholders without such obligation being
470	affected by any credit, limitation, exemption, or deferment. The
471	emergency assessments so collected shall be transferred directly
472	to the association on a periodic basis as determined by the
473	association. The aggregate amount of emergency assessments
474	levied under this sub-sub-subparagraph in any calendar year may
475	not exceed the greater of 10 percent of the amount needed to
476	cover the original deficit, plus interest, fees, commissions,
477	required reserves, and other costs associated with financing of
478	the original deficit, or 10 percent of the aggregate statewide
479	direct written premium for property insurance written by member
480	insurers and underwriting associations for the prior year, plus
481	interest, fees, commissions, required reserves, and other costs
482	associated with financing the original deficit. The board may
483	pledge the proceeds of the emergency assessments under this sub-
484	sub-subparagraph as the source of revenue for bonds, to retire
485	any other debt incurred as a result of the deficit or events
486	giving rise to the deficit, or in any other way that the board
487	determines will efficiently recover the deficit. The emergency
488	assessments under this sub-sub-subparagraph shall continue as
489	long as any bonds issued or other indebtedness incurred with
490	respect to a deficit for which the assessment was imposed remain
491	outstanding, unless adequate provision has been made for the
492	payment of such bonds or other indebtedness pursuant to the
493	document governing such bonds or other indebtedness. Emergency
494	assessments collected under this sub-sub-subparagraph are not
495	part of an insurer's rates, are not premium, and are not subject
496	to premium tax, fees, or commissions; however, failure to pay
497	the emergency assessment shall be treated as failure to pay
498	premium.
499	(IV)  Each member insurer's share of the total regular
500	assessments under sub-sub-subparagraph (I) or sub-sub-
501	subparagraph (II) shall be in the proportion that the insurer's
502	net direct premium for property insurance in this state, for the
503	year preceding the assessment bears to the aggregate statewide
504	net direct premium for property insurance of all member
505	insurers, as reduced by any credits for voluntary writings for
506	that year.
507	(V)  If regular deficit assessments are made under sub-sub-
508	subparagraph (I) or sub-sub-subparagraph (II), or by the
509	Residential Property and Casualty Joint Underwriting Association
510	under sub-subparagraph (6)(b)3.a. or sub-subparagraph
511	(6)(b)3.b., the association shall levy upon the association's
512	policyholders, as part of its next rate filing, or by a separate
513	rate filing solely for this purpose, a market equalization
514	surcharge in a percentage equal to the total amount of such
515	regular assessments divided by the aggregate statewide direct
516	written premium for property insurance for member insurers for
517	the prior calendar year. Market equalization surcharges under
518	this sub-sub-subparagraph are not considered premium and are not
519	subject to commissions, fees, or premium taxes; however, failure
520	to pay a market equalization surcharge shall be treated as
521	failure to pay premium.
522	e.  The governing body of any unit of local government, any
523	residents of which are insured under the plan, may issue bonds
524	as defined in s. 125.013 or s. 166.101 to fund an assistance
525	program, in conjunction with the association, for the purpose of
526	defraying deficits of the association. In order to avoid
527	needless and indiscriminate proliferation, duplication, and
528	fragmentation of such assistance programs, any unit of local
529	government, any residents of which are insured by the
530	association, may provide for the payment of losses, regardless
531	of whether or not the losses occurred within or outside of the
532	territorial jurisdiction of the local government. Revenue bonds
533	may not be issued until validated pursuant to chapter 75, unless
534	a state of emergency is declared by executive order or
535	proclamation of the Governor pursuant to s. 252.36 making such
536	findings as are necessary to determine that it is in the best
537	interests of, and necessary for, the protection of the public
538	health, safety, and general welfare of residents of this state
539	and the protection and preservation of the economic stability of
540	insurers operating in this state, and declaring it an essential
541	public purpose to permit certain municipalities or counties to
542	issue bonds as will provide relief to claimants and
543	policyholders of the association and insurers responsible for
544	apportionment of plan losses. Any such unit of local government
545	may enter into such contracts with the association and with any
546	other entity created pursuant to this subsection as are
547	necessary to carry out this paragraph. Any bonds issued under
548	this sub-subparagraph shall be payable from and secured by
549	moneys received by the association from assessments under this
550	subparagraph, and assigned and pledged to or on behalf of the
551	unit of local government for the benefit of the holders of such
552	bonds. The funds, credit, property, and taxing power of the
553	state or of the unit of local government shall not be pledged
554	for the payment of such bonds. If any of the bonds remain unsold
555	60 days after issuance, the department shall require all
556	insurers subject to assessment to purchase the bonds, which
557	shall be treated as admitted assets; each insurer shall be
558	required to purchase that percentage of the unsold portion of
559	the bond issue that equals the insurer's relative share of
560	assessment liability under this subsection. An insurer shall not
561	be required to purchase the bonds to the extent that the
562	department determines that the purchase would endanger or impair
563	the solvency of the insurer. The authority granted by this sub-
564	subparagraph is additional to any bonding authority granted by
565	subparagraph 6.
566	3.  The plan shall also provide that any member with a
567	surplus as to policyholders of $20 million or less writing 25
568	percent or more of its total countrywide property insurance
569	premiums in this state may petition the department, within the
570	first 90 days of each calendar year, to qualify as a limited
571	apportionment company. The apportionment of such a member
572	company in any calendar year for which it is qualified shall not
573	exceed its gross participation, which shall not be affected by
574	the formula for voluntary writings. In no event shall a limited
575	apportionment company be required to participate in any
576	apportionment of losses pursuant to sub-sub-subparagraph 2.d.(I)
577	or sub-sub-subparagraph 2.d.(II) in the aggregate which exceeds
578	$50 million after payment of available plan funds in any
579	calendar year. However, a limited apportionment company shall
580	collect from its policyholders any emergency assessment imposed
581	under sub-sub-subparagraph 2.d.(III). The plan shall provide
582	that, if the department determines that any regular assessment
583	will result in an impairment of the surplus of a limited
584	apportionment company, the department may direct that all or
585	part of such assessment be deferred. However, there shall be no
586	limitation or deferment of an emergency assessment to be
587	collected from policyholders under sub-sub-subparagraph
588	2.d.(III).
589	4.  The plan shall provide for the deferment, in whole or
590	in part, of a regular assessment of a member insurer under sub-
591	sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II), but
592	not for an emergency assessment collected from policyholders
593	under sub-sub-subparagraph 2.d.(III), if, in the opinion of the
594	commissioner, payment of such regular assessment would endanger
595	or impair the solvency of the member insurer. In the event a
596	regular assessment against a member insurer is deferred in whole
597	or in part, the amount by which such assessment is deferred may
598	be assessed against the other member insurers in a manner
599	consistent with the basis for assessments set forth in sub-sub-
600	subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II).
601	5.a.  The plan of operation may include deductibles and
602	rules for classification of risks and rate modifications
603	consistent with the objective of providing and maintaining funds
604	sufficient to pay catastrophe losses.
605	b.  The association may require arbitration of a rate
606	filing under s. 627.062(6). It is the intent of the Legislature
607	that the rates for coverage provided by the association be
608	actuarially sound and not competitive with approved rates
609	charged in the admitted voluntary market such that the
610	association functions as a residual market mechanism to provide
611	insurance only when the insurance cannot be procured in the
612	voluntary market. The plan of operation shall provide a
613	mechanism to assure that, beginning no later than January 1,
614	1999, the rates charged by the association for each line of
615	business are reflective of approved rates in the voluntary
616	market for hurricane coverage for each line of business in the
617	various areas eligible for association coverage.
618	c.  The association shall provide for windstorm coverage on
619	residential properties in limits up to $10 million for
620	commercial lines residential risks and up to $1 million for
621	personal lines residential risks. If coverage with the
622	association is sought for a residential risk valued in excess of
623	these limits, coverage shall be available to the risk up to the
624	replacement cost or actual cash value of the property, at the
625	option of the insured, if coverage for the risk cannot be
626	located in the authorized market. The association must accept a
627	commercial lines residential risk with limits above $10 million
628	or a personal lines residential risk with limits above $1
629	million if coverage is not available in the authorized market.
630	The association may write coverage above the limits specified in
631	this subparagraph with or without facultative or other
632	reinsurance coverage, as the association determines appropriate.
633	d.  The plan of operation must provide objective criteria
634	and procedures, approved by the department, to be uniformly
635	applied for all applicants in determining whether an individual
636	risk is so hazardous as to be uninsurable. In making this
637	determination and in establishing the criteria and procedures,
638	the following shall be considered:
639	(I)  Whether the likelihood of a loss for the individual
640	risk is substantially higher than for other risks of the same
641	class; and
642	(II)  Whether the uncertainty associated with the
643	individual risk is such that an appropriate premium cannot be
644	determined.
645
646	The acceptance or rejection of a risk by the association
647	pursuant to such criteria and procedures must be construed as
648	the private placement of insurance, and the provisions of
649	chapter 120 do not apply.
650	e.  If the risk accepts an offer of coverage through the
651	market assistance program or through a mechanism established by
652	the association, either before the policy is issued by the
653	association or during the first 30 days of coverage by the
654	association, and the producing agent who submitted the
655	application to the association is not currently appointed by the
656	insurer, the insurer shall:
657	(I)  Pay to the producing agent of record of the policy,
658	for the first year, an amount that is the greater of the
659	insurer's usual and customary commission for the type of policy
660	written or a fee equal to the usual and customary commission of
661	the association; or
662	(II)  Offer to allow the producing agent of record of the
663	policy to continue servicing the policy for a period of not less
664	than 1 year and offer to pay the agent the greater of the
665	insurer's or the association's usual and customary commission
666	for the type of policy written.
667
668	If the producing agent is unwilling or unable to accept
669	appointment, the new insurer shall pay the agent in accordance
670	with sub-sub-subparagraph (I). Subject to the provisions of s.
671	627.3517, the policies issued by the association must provide
672	that if the association obtains an offer from an authorized
673	insurer to cover the risk at its approved rates under either a
674	standard policy including wind coverage or, if consistent with
675	the insurer's underwriting rules as filed with the department, a
676	basic policy including wind coverage, the risk is no longer
677	eligible for coverage through the association. Upon termination
678	of eligibility, the association shall provide written notice to
679	the policyholder and agent of record stating that the
680	association policy must be canceled as of 60 days after the date
681	of the notice because of the offer of coverage from an
682	authorized insurer. Other provisions of the insurance code
683	relating to cancellation and notice of cancellation do not apply
684	to actions under this sub-subparagraph.
685	f.  When the association enters into a contractual
686	agreement for a take-out plan, the producing agent of record of
687	the association policy is entitled to retain any unearned
688	commission on the policy, and the insurer shall:
689	(I)  Pay to the producing agent of record of the
690	association policy, for the first year, an amount that is the
691	greater of the insurer's usual and customary commission for the
692	type of policy written or a fee equal to the usual and customary
693	commission of the association; or
694	(II)  Offer to allow the producing agent of record of the
695	association policy to continue servicing the policy for a period
696	of not less than 1 year and offer to pay the agent the greater
697	of the insurer's or the association's usual and customary
698	commission for the type of policy written.
699
700	If the producing agent is unwilling or unable to accept
701	appointment, the new insurer shall pay the agent in accordance
702	with sub-sub-subparagraph (I).
703	6.a.  The plan of operation may authorize the formation of
704	a private nonprofit corporation, a private nonprofit
705	unincorporated association, a partnership, a trust, a limited
706	liability company, or a nonprofit mutual company which may be
707	empowered, among other things, to borrow money by issuing bonds
708	or by incurring other indebtedness and to accumulate reserves or
709	funds to be used for the payment of insured catastrophe losses.
710	The plan may authorize all actions necessary to facilitate the
711	issuance of bonds, including the pledging of assessments or
712	other revenues.
713	b.  Any entity created under this subsection, or any entity
714	formed for the purposes of this subsection, may sue and be sued,
715	may borrow money; issue bonds, notes, or debt instruments;
716	pledge or sell assessments, market equalization surcharges and
717	other surcharges, rights, premiums, contractual rights,
718	projected recoveries from the Florida Hurricane Catastrophe
719	Fund, other reinsurance recoverables, and other assets as
720	security for such bonds, notes, or debt instruments; enter into
721	any contracts or agreements necessary or proper to accomplish
722	such borrowings; and take other actions necessary to carry out
723	the purposes of this subsection. The association may issue bonds
724	or incur other indebtedness, or have bonds issued on its behalf
725	by a unit of local government pursuant to subparagraph (6)(g)2.,
726	in the absence of a hurricane or other weather-related event,
727	upon a determination by the association subject to approval by
728	the department that such action would enable it to efficiently
729	meet the financial obligations of the association and that such
730	financings are reasonably necessary to effectuate the
731	requirements of this subsection. Any such entity may accumulate
732	reserves and retain surpluses as of the end of any association
733	year to provide for the payment of losses incurred by the
734	association during that year or any future year. The association
735	shall incorporate and continue the plan of operation and
736	articles of agreement in effect on the effective date of chapter
737	76-96, Laws of Florida, to the extent that it is not
738	inconsistent with chapter 76-96, and as subsequently modified
739	consistent with chapter 76-96. The board of directors and
740	officers currently serving shall continue to serve until their
741	successors are duly qualified as provided under the plan. The
742	assets and obligations of the plan in effect immediately prior
743	to the effective date of chapter 76-96 shall be construed to be
744	the assets and obligations of the successor plan created herein.
745	c.  In recognition of s. 10, Art. I of the State
746	Constitution, prohibiting the impairment of obligations of
747	contracts, it is the intent of the Legislature that no action be
748	taken whose purpose is to impair any bond indenture or financing
749	agreement or any revenue source committed by contract to such
750	bond or other indebtedness issued or incurred by the association
751	or any other entity created under this subsection.
752	7.  On such coverage, an agent's remuneration shall be that
753	amount of money payable to the agent by the terms of his or her
754	contract with the company with which the business is placed.
755	However, no commission will be paid on that portion of the
756	premium which is in excess of the standard premium of that
757	company.
758	8.  Subject to approval by the department, the association
759	may establish different eligibility requirements and operational
760	procedures for any line or type of coverage for any specified
761	eligible area or portion of an eligible area if the board
762	determines that such changes to the eligibility requirements and
763	operational procedures are justified due to the voluntary market
764	being sufficiently stable and competitive in such area or for
765	such line or type of coverage and that consumers who, in good
766	faith, are unable to obtain insurance through the voluntary
767	market through ordinary methods would continue to have access to
768	coverage from the association. When coverage is sought in
769	connection with a real property transfer, such requirements and
770	procedures shall not provide for an effective date of coverage
771	later than the date of the closing of the transfer as
772	established by the transferor, the transferee, and, if
773	applicable, the lender.
774	9.  Notwithstanding any other provision of law:
775	a.  The pledge or sale of, the lien upon, and the security
776	interest in any rights, revenues, or other assets of the
777	association created or purported to be created pursuant to any
778	financing documents to secure any bonds or other indebtedness of
779	the association shall be and remain valid and enforceable,
780	notwithstanding the commencement of and during the continuation
781	of, and after, any rehabilitation, insolvency, liquidation,
782	bankruptcy, receivership, conservatorship, reorganization, or
783	similar proceeding against the association under the laws of
784	this state or any other applicable laws.
785	b.  No such proceeding shall relieve the association of its
786	obligation, or otherwise affect its ability to perform its
787	obligation, to continue to collect, or levy and collect,
788	assessments, market equalization or other surcharges, projected
789	recoveries from the Florida Hurricane Catastrophe Fund,
790	reinsurance recoverables, or any other rights, revenues, or
791	other assets of the association pledged.
792	c.  Each such pledge or sale of, lien upon, and security
793	interest in, including the priority of such pledge, lien, or
794	security interest, any such assessments, emergency assessments,
795	market equalization or renewal surcharges, projected recoveries
796	from the Florida Hurricane Catastrophe Fund, reinsurance
797	recoverables, or other rights, revenues, or other assets which
798	are collected, or levied and collected, after the commencement
799	of and during the pendency of or after any such proceeding shall
800	continue unaffected by such proceeding.
801	d.  As used in this subsection, the term "financing
802	documents" means any agreement, instrument, or other document
803	now existing or hereafter created evidencing any bonds or other
804	indebtedness of the association or pursuant to which any such
805	bonds or other indebtedness has been or may be issued and
806	pursuant to which any rights, revenues, or other assets of the
807	association are pledged or sold to secure the repayment of such
808	bonds or indebtedness, together with the payment of interest on
809	such bonds or such indebtedness, or the payment of any other
810	obligation of the association related to such bonds or
811	indebtedness.
812	e.  Any such pledge or sale of assessments, revenues,
813	contract rights or other rights or assets of the association
814	shall constitute a lien and security interest, or sale, as the
815	case may be, that is immediately effective and attaches to such
816	assessments, revenues, contract, or other rights or assets,
817	whether or not imposed or collected at the time the pledge or
818	sale is made. Any such pledge or sale is effective, valid,
819	binding, and enforceable against the association or other entity
820	making such pledge or sale, and valid and binding against and
821	superior to any competing claims or obligations owed to any
822	other person or entity, including policyholders in this state,
823	asserting rights in any such assessments, revenues, contract, or
824	other rights or assets to the extent set forth in and in
825	accordance with the terms of the pledge or sale contained in the
826	applicable financing documents, whether or not any such person
827	or entity has notice of such pledge or sale and without the need
828	for any physical delivery, recordation, filing, or other action.
829	f.  There shall be no liability on the part of, and no
830	cause of action of any nature shall arise against, any member
831	insurer or its agents or employees, agents or employees of the
832	association, members of the board of directors of the
833	association, or the department or its representatives, for any
834	action taken by them in the performance of their duties or
835	responsibilities under this subsection. Such immunity does not
836	apply to actions for breach of any contract or agreement
837	pertaining to insurance, or any willful tort.
838
839	======= T I T L E  A M E N D M E N T =======
840	Remove line(s) 15-23 and insert:
841	criteria; amending s. 627.0613, F.S.; deleting a reference to an
842	arbitration panel to conform; providing additional duties of the
843	consumer advocate;  amending s. 627.062, F.S.; deleting a
844	provision relating to an arbitration panel in certain
845	administrative proceedings; requiring the filing of a statement
846	of certification for certain rate filings; providing statement
847	requirements; providing a penalty; requiring the Office of
848	Insurance Regulation to adopt rules; providing an additional
849	rate filing review factor; deleting provisions authorizing
850	insurers to require arbitration in rate filings; amending ss.
851	627.0628 and 627.351, F.S.; deleting references to required
852	arbitration to conform; amending s. 627.0629, F.S.; providing
853	legislative

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